The chairman of the Australian Competition and Consumer Commission, Professor Allan Fels, has called for tougher sanctions – including jail terms — against executives who break the Trade Practices Act.
In principle, he has a very good case. Large fines and civil payments are not sufficient deterrent, particularly if they are paid by the business – directly or indirectly – rather than the erring executive. Professor Fels’ call comes in a submission to an inquiry being chaired by former High Court judge Daryl Dawson.
The call comes after a concerted attack on him and his commission by a number of chief executives of large businesses – banks, airlines and oil companies. They have asserted that the commission and Professor Fels have gone too far in maligning big business before it has had a chance to defend itself. Professor Fels has a strong media presence. He knows how to use the media. But he is always careful with his comments – often couching them in terms that whatever current deal or conduct is in the public eye “”might” face difficulties with the Trade Practices Act and then going on to the abstract level of what the Act requires. He refrains from pre-judging deals and conduct. Rather he warns. However, it can lead to some members of the public jumping to conclusions. Moreover, it leaves big business in a difficult position. They are easy targets because the public and small business often see them as the enemy. Any defence, therefore, is likely to be seen as protesting too much. The ACCC has all the armoury. It has a well-staffed commission and any Act that is laced with such wide definitions that it is easy to assert that a lot of business conduct “”might” come within it. In that environment even big business has to tread warily and accept that it is often easier to compromise and adapt business arrangements in line with the ACCC’s view of the world rather than run long and expensive court battles with an uncertain outcome.
Professor Fels rightly points out that if big business thinks the ACCC has too much power there is scope for redress through the Administrative Appeals Tribunal, the Ombudsman, federal ministers and the parliament. Even if the appeals to these bodies rarely finds him at fault, it misses a critical point. Business is not especially interested in diverting resources to an unproductive ding-dong with the ACCC. Business’s failure to take on the ACCC is not because it never has a case, but often because it does not want to waste time and money pursuing it.
Big business is also up against it when it fails to bend to the ACCC’s will or meets an ACCC allegation of misconduct. Sometimes it has to fight on the civil burden of proof. It faces some of the largest fines available on the statute book and it can face damages payouts outside the normal realm of commercial party versus commercial party.
But all that said, Australia should adopt what has been practice in most of the industrialised world and provide for jail terms for grossly anti-competitive conduct. It would be a deterrent, even if never used – as big businesses vehement opposition to jail sentences indicates.
But business should not concern itself, because, in practice, getting a conviction before a jury (as the Constitution requires) and getting a judge (with constitutional discretion) to give a businessperson a jail sentence will be much bigger hurdles for the ACCC than present requirements. Only the most egregious cases would come to court and even then the ACCC’s task would be much more difficult than the present regime.
Concerns about the ACCC’s use of publicity under the current regime are a separate argument from the question of jail terms for conspiratorial anti-competitive conduct.