Corporate Advisory Bulletin - January 2019

In the media

First GDPR sanction: GOOGLE fined with €50 million by the French Data Protection Authority

The European Union General Data Protection Regulations (the GDPR) contains new data protection requirements that have come into effect. These laws will harmonise data protection requirements across the EU and replace existing national data protection rules. The intention of the new laws is to build legal certainty for businesses and enhance consumer trust in online services. From an Australian perspective, these laws affect all companies that conduct business in the EU or with EU businesses.

On 21 January 2019, the French Data Protection Authority (CNIL) issued the first major sanction under the regime since its inception, namely a pecuniary sanction of €50 million against Google LLC.

In May 2018, the None Of Your Business (NYOB) and La Quadrature Du Net (LQDN) associations filed five collective complaints with the CNIL against Facebook, Google, Apple, Amazon and LinkedIn. Among these, two complaints were directly targeting Google.

The investigations carried out by the CNIL revealed two series of breaches, namely, a failure to comply with transparency and information obligations (articles 12 and 13 of the GDPR). The regulator stated that it was too difficult for consumers to find essential information, “such as the data-processing purposes, the data storage periods or the categories of personal data used for the ads personalisation”, by splitting them across multiple documents, help pages and settings screens.

The impact on consumers being that most were not adequately informed about how Google collected data to personalise its advertising and that it had no valid legal basis to do so.

To read the GDPR decision, see https://www.cnil.fr/en/cnils-restricted-committee-imposes-financial-penalty-50-million-euros-against-google-llc.

Drive-through disaster – Guzman y Gomez facing legal action

Guzman y Gomez is facing court action following accusations of misleading and deceptive conduct regarding a former franchised restaurant in Bendigo.

The confirmation comes after reports of a former franchisee claimed a defective drive-through, poor visibility and an inflated valuation of the outlet’s revenue projection contributed to the franchisees $530,000 operating loss in the first six months. The claim comes after reports of growing franchisee dissatisfaction.

To read more, see https://www.franchisebusiness.com.au/news/drive-through-disaster-guzman-y-gomez-facing-leg.

In Practice and Courts

Simplifying, clarifying and enhancing the integrity and efficiency of the ASX listing rules: Consultation

ASX Limited (ASX) has released a consultation paper Simplifying, clarifying and enhancing the integrity and efficiency of the ASX listing rules seeking feedback on a major package of proposed listing rule amendments.  The consultation paper is accompanied by a number of annexures.  Feedback on the consultation package is due by 1 March 2019.

If you would like to review the paper, or provide feedback, see https://www.asx.com.au/documents/asx-compliance/consultation-paper-28-nov-2018.pdf.

Cases

Australian Competition and Consumer Commission v Ultra Tune Australia Pty Ltd [2019] FCA 12

The Federal Court has imposed a $2,604,000 penalty against Ultra Tune Australia Pty Ltd (Ultra Tune) for breaching both the Franchising Code of Conduct and the Australian Consumer Law (ACL).

Ultra Tune is a franchisor for motor vehicle engine repair and maintenance services provided by a national network of approximately 200 franchises operating in New South Wales, Queensland, Victoria and Western Australia.

Justice Bromwich found that Ultra Tune had failed to act in good faith in breach of the Franchising Code, and had made false or misleading representations in breach of the ACL, in its dealings with a prospective franchisee. The representations were about the price of the franchise, the ongoing rent of the premises, and the age of the franchise. The prospective franchisee was also told that a $33,000 deposit was refundable when it was not.

Ultra Tune also breached the Franchising Code by failing to prepare marketing fund statements within the required timeframes, failing to provide these statements and audit reports to franchisees, and failing to include sufficient detail in the statements.

Ultra Tune also felt the wrath of Justice Bromwich for their attempt to mislead the court by relying on documents purportedly sent to franchisee in question.

This was the first case brought by the ACCC in regards to a franchisor breaching their “good faith” obligations and poses a significant deterrence to franchisors engaging in similar conduct in the future.

To read the full judgment, please see http://www6.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2019/12.html.

For further information, please do not hesitate to contact us.

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