Testing times for the ACCC.
The fact that Treasurer Peter Costello has had to resort to appointing Graeme Samuel as acting chairman of the Australian Competition and Consumer Commission says more about the Australian federal system than perhaps anything in recent years.
While the courts from time to time hand down decisions which expose the weaknesses of our constitution in allowing the Federal Government to regulate those areas of commerce and life that clearly require national regulation (for example, the Re Wakim decision which nearly destroyed our prospects for a National Corporations Act), it is quite extraordinary that state and territory governments cannot bury their petty differences and embrace a national approach to issues as important as the regulation of consumer protection and competition.
There is little doubt that Graeme Samuel is a person with the right credentials to be appointed permanent (five year) chairman of the ACCC. Apart from the fact that he practiced in this area of the law for a number of years at Phillips Fox and Masel and later was a merchant banker, he has for the last few years been president of the National Competition Council which is the main competition policy advisory body to the Federal Government. In that role he and the council have made some tough decisions which may have irritated some of the states.
Readers may recall that under the National Competition Policy Regime introduced in 1995 the states and territories agreed to embrace a regime of a national competition law evidenced by the Trade Practices Act. Failure on the part of the states and territories to fully embrace these principles could lead to the council recommending to the Government that state and territory funding – set up to encourage the introduction of a national regulatory regime for competition law – should be reduced in appropriate years.
One provision of the scheme of regulation introduced in 1995, which saw the ACCC replace the Trade Practices Commission, was to give the states and territories a vote on who would be appointed to the ACCC.
It is not unlikely that federal MPs of the Labor Party, which was the government which championed that particular initiative, might now regret conceded on that issue. While sensible to have the States and Territories providing advice to the Treasurer (or the responsible federal minister) on these matters, it seems quite extraordinary that they can actually block the permanent appointment of the chairman of the ACCC.
Twelve months is not a very long time for Graeme Samuel to make a mark in this area. He will be taking on a very difficult task in succeeding the current chairman, Allan Fels. Fels has relied a great deal on stark publicity to achieve his aims.
Such publicity was used successfully in cases where companies breached provisions of the legislation, but the use of it in relation to the GST, and most recently in relation to oil raids, has led to significant criticism and the recommendation that a code of conduct be introduced for the regulator.
One of the most interesting questions that Graeme Samuel and the ACCC will face is how hard they will support the Dawson Committee recommendations for the revision of merger administration. Readers may recall that the test for assessing mergers under the TPA will not be changed as a result of the Dawson recommendations. But the ACCC will have a less significant role to play in the "clearing of mergers" and will be subject to a review by the Australian Competition Tribunal in relation to a new system of formal regulation clearance. The current regulation clearance system is not a legally binding one – the formal clearance system will become formal but subject to appeal. Also, the fact that parties can go direct to the tribunal for authorisations in the merger area will again require the ACCC to take a back seat.
It has been suggested by Fels, that these changes will weaken the rights of businesses and consumers in this area. In my view, that observation is not an accurate one. The changes will only enhance the rights of businesses and others who are affected by mergers whether they support them or oppose them. These organisations and persons will now have the ACCC as their amicus tribunal. Before that body the ACCC should be pushing the best arguments forward in relation to the merger – these should take into account the interests of the whole of society affected by the merger, including those who support the merger and those who oppose the merger. The ACCC should not necessarily be taking sides in a particular matter but rather achieving the most effective and fair result in a particular situation.
Graeme Samuel has indicated that he strongly favours the role of competition in evaluating the operation of the TPA and in particular the impact of section 46 of that legislation. He has stated publicly that he does not believe there should be any special protection for small business as such in the context of misuse of market power.
If competition and the competitive process is damaged as a result of the misuse of market power by particular companies then in Samuel's view the TPA should bite, and the ACCC should act on behalf of the players hurt by the relevant conduct. Small business may seek special legislateon to deal with their rather peculiar position in certain industries (eg the grocery trade etc). Samuel would favour some kind of investigation – for example, by the Productivity Commission – before any changes are made in this particular regard. This attitude is certainly encouraging.
It is unlikely that Samuel will use the courts except as a last resort. But he will use them if necessary if breaches of the TPA occur. He will be vigorous, fearless and a hardworking chairman who will continue represent Australians in ensuring that we have an effective competition and consumer protection law.
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