Additional comments by Senator Xenophon
The formation of cartels is, in Adam Smith's well-known
words, 'a conspiracy against the public...a contrivance to raise price'.[1]
Cartels distort the market place. While making the cartelists better off, they
make the overall community worse off. Tougher legislation against cartels is
welcome. In particular the prospect of a gaol sentence should concentrate the
minds of business leaders thinking of engaging in cartel behaviour in a way
that a fine may not.
Overseas studies confirm that criminalisation provisions can
usefully add to the armoury of the competition authorities:
...the US has been very successful with a dual track. The movement
in the international arena is towards the dual rather than single track,...[2]
This bill's aim of criminalising cartel conduct should
therefore be supported. But this does not mean the current bill cannot be
improved. Particularly when matters are going before a jury rather than just a
judge, it is desirable that the law be as clear as possible.
The bill could be streamlined to focus more narrowly on the
conduct it seeks to prevent, and assuage concerns that other conduct will be
inadvertently criminalised.
There is therefore merit in the suggestions of Mr Speed and Professor
Zumbo that the bill make clear that it is cartel behaviour that disadvantages
consumers which is the target, not innocuous behaviour involving some
cooperation between suppliers which does not have the intent or effect of
disadvantaging consumers.
For example, in the 'two country doctors' example discussed
in Chapter 3, if the rostering is just to ensure there is always one doctor
available, without both having to work seven days a week, and there is no
impact on price, then this should not be regarded as criminal behaviour. But if
the doctors are effectively establishing a monopoly and using this to hike fees
on weekends, then this is reprehensible conduct which the law should not allow.
Professor Zumbo suggests adding the following wording to the
bill which would specify that the focus is on outlawing conduct that:
has the purpose, or effect or likely effect of, directly or
indirectly, fixing, raising, controlling, maintaining, stabilising or
influencing the price for, or a discount, surcharge, allowance, rebate or credit
in relation to, the supply or acquisition of goods or services.[3]
An alternative would be to draw on the factors listed in the
proposed MOU between the ACCC and the DPP. This would involve amending the bill
to outlaw conduct which:
caused, or could cause, significant detriment to the public, or
a class thereof, or caused, or could cause, significant loss or damage to one
or more customers of the alleged participants.[4]
Either approach should remove the concern of some witnesses
about what they regard as innocuous activities being in breach of the law. Amending
the bill to make clear it only outlaws behaviour that hurts consumers, rather
than anything that affects output, would be a preferable way of addressing
concerns about unintended consequences than broadening the terms of exemptions
which could provide cover for activities which actually do harm consumers.[5]
Another means of reducing any uncertainty the bill might
cause is requiring, and resourcing, the ACCC to streamline their approvals
process so firms in doubt about the legality of their proposed operations can
achieve some assurance quickly.
The comprehensibility of the legislation would also be aided
if the amendments could be inserted in a way that avoided the need to refer to
complicated sub‑sub‑sub‑sections such as 'subsection 44ZZRF'
and so on. Associate Professor Zumbo suggests:
The easiest solution would be to insert a new Part or Division
at the end of the Trade Practices Act. That would make available a whole
new set of numbers without the need to add letters to a number if the cartel
offences were inserted within the existing body of the Trade Practices Act.[6]
The problem of complexity in trade practices legislation is
not confined to the parts of the Trade Practices Act with which this
bill is concerned. There is a need for a comprehensive, independent, review of
the Act, by a body such as the Productivity Commission or a committee like the
Henry Tax Review, to produce a simple act which promotes fair markets that
operate in the interests of the whole community.
Senator Nick Xenophon
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