Takeovers Panel proposes tougher approach to uncooperative conduct in applications

The Takeovers Panel has released a consultation paper proposing amendments to its Guidance Note 4 (GN 4), which sets out the Panel's general approach to remedies. The revisions reflect a firmer stance on uncooperative conduct by parties and their advisers and are intended to enhance the efficiency and effectiveness of Panel processes.

The Panel is concerned that uncooperative conduct, such as failing to answer questions directly or delaying the provision of requested documents, has hindered its ability to resolve matters promptly. This has led to increased costs and delays, undermining the Panel's key objective of resolving matters quickly and efficiently. The proposed amendments to GN 4 aim to address these issues and encourage greater cooperation from parties involved in Panel proceedings.

A firmer tone – no more "exception not the rule"

The revised GN 4 introduces a new purpose statement that explicitly highlights the importance of minimising conduct that impedes the timely resolution of Panel proceedings:

"This guidance note is also designed to ensure that Panel applications are “resolved as quickly and efficiently as possible by a specialist body largely comprised of takeover experts” and to help minimise conduct by parties or their legal advisers that may impede Panel proceedings (such as unnecessarily elongating proceedings by failing to answer questions directly or failing to produce documents or other materials when first requested to do so)."

This change marks a clear shift from the previous, more neutral tone of GN 4 and underscores the Panel's commitment to efficient and effective resolutions. Additionally, the current description of costs orders as "the exception not the rule" has been removed. Both changes signal a greater willingness by the Panel to make such orders where appropriate.

Broader grounds for costs orders

The Panel is proposing to expand and clarify the circumstances under which it may make costs orders against parties. Unlike the courts, costs orders do not follow to a "successful" party as a matter of course. The revised GN 4 includes a non-exhaustive list of examples to provide greater certainty about the types of conduct that may attract a costs order. These include situations where a party:

• presented a case that was not arguable, made misleading or unsubstantiated assertions, acted in a hostile manner, or defended clearly unacceptable circumstances;

• delayed or obstructed proceedings, such as by failing to answer questions directly, not providing requested documents promptly, or refusing to negotiate reasonably;

• unreasonably delayed becoming a party or providing relevant material;

• sought an unmeritorious review or introduced material at the review stage that was not presented earlier;

• wasted time or elongated proceedings on a particular issue;

• submitted materially inaccurate information;

• ignored reasonable requests to address unacceptable circumstances before or during Panel proceedings; or

• failed to comply with Panel directions, orders, undertakings, or procedural rules, including those on confidentiality and media canvassing.

Nevertheless, GN 4 recognises that a party is entitled to make, or resist, an application without exposure to a costs order, provided it presents a case of reasonable merit in a businesslike way.

Quantum of costs orders

The revised GN 4 provides updated guidance on how the Panel will assess the quantum of costs orders. In determining the recoverable amount, the Panel may have regard to the Federal Court scale of fees on costs as between party and party, ensuring that only costs that are fairly and reasonably incurred in the conduct of proceedings are recoverable.

Where appropriate, the amended GN 4 also allows for costs to be awarded on an indemnity basis, in line with the Federal Court scale of fees on costs. Additionally, it introduces the possibility of costs orders being made against the directors of a party or their legal advisers, where circumstances warrant such action.

Clearer expectations for undertakings

The proposed amendments also address the Panel's approach to undertakings, with a focus on clarity and timeliness. Under the revised GN 4, undertakings must explicitly state that they will be fulfilled "as soon as practicable", a requirement that was previously implied. This further underscores the Panel's commitment to streamlining processes and ensuring efficiency.

The Panel has also indicated that parties engaging in uncooperative behaviour or unnecessarily delaying proceedings may face a reduced likelihood of their undertakings being accepted. In some cases, the Panel may opt to issue a final order in place of an undertaking if the proposed undertaking is deemed overly complex or detailed. Accepting an undertaking may render it unnecessary for the Panel to make a declaration or orders. However, the Panel may still consider it appropriate to make a declaration in such situations (for example, where the Panel wants to send the market a signal).