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					Australia and New
Zealand

Competition Law Enforcement and
Governance
                                                               Freshfields Bruckhaus Deringer LLP
Why a joint assessment of New Zealand and
Australia?

     Politically, economically and culturally very similar.
     ANZCERTA:
      –   Total freedom of movement of people and labour
      –   (Almost) total freedom of trade and commerce
      –   Mandate to harmonise business law
     Business law harmonisation:
      –   Synchronising policy
      –   Reducing regulatory barriers to trans-Tasman commerce (e.g.
          mutual recognition of filings)
      –   Ultimate ambition: a single agency exercising equivalent jurisdiction
          in both countries
     Result: convergence between New Zealand and Australian competition
      policy and institutional arrangements
          Freshfields Bruckhaus Deringer LLP




Mandate
                                                           Freshfields Bruckhaus Deringer LLP


Mandate
Competition                              Regulation
 Per se prohibitions:                      Objective:
    –   Price fixing/hard core cartels       –   Mimic competitive outcomes
    –   Resale price maintenance             –   Reserved for markets with
    –   Certain kinds of exclusionary            structurally limited
        arrangements                             competition

   Rule of reason:                         Mechanisms:
                                             –   Access regulation for
    –   Monopolisation
                                                 essential facilities
    –   Cooperation/collusion
                                             –   Information disclosure
    –   Mergers and acquisitions
                                             –   Negotiate/arbitrate
        (which can be cleared or
        authorised)                          –   Price/quality investment
                                                 pathways
                                                  Freshfields Bruckhaus Deringer LLP


Penalties


     Maximum (corporate) penalties of:
      a)   $10,000,000; or
      b)   Either:
           i.    Three times the commercial gain attributable to
                 the infringement; or
           ii.   If the commercial gain cannot be calculated,
                 10% of worldwide group turnover
     Fines vary for individuals: $500,000 - $750,000
     Ten years’ imprisonment for hard core cartel conduct
      in Australia
Institutional structure
                          Freshfields Bruckhaus Deringer LLP


Institutional structure
           Freshfields Bruckhaus Deringer LLP




Due process norms
                                                      Freshfields Bruckhaus Deringer LLP


Due process norms


     Due process based on civil rather than criminal expectations of
      fairness
     Principles of natural justice:
      –   Right to be heard
      –   Right to adequate notice of reasoning and evidence relied
          upon
     Investigations: agencies have substantial latitude, and
      occasionally use them in an allegedly oppressive manner
     Independence: ✔
     Proportionality: ✔
                                                       Freshfields Bruckhaus Deringer LLP


Due process norms (continued)

     Rights of review and appeal: variable:
      –   Regulatory appeals on merits severely constrained – typically
          appeals are limited to questions of law or procedure
      –   Very difficult to challenge even a manifest error in economic
          reasoning
     Challenges of criminalisation:
      –   Use of compelled testimony
      –   Giving appropriate cautions
      –   Tainted evidence
      –   Parallel criminal and civil proceedings
      –   ACCC confident, given support from CDPP, but practitioners
          convinced the first prosecutions will be problematic
             Freshfields Bruckhaus Deringer LLP




Institutional performance
                                                      Freshfields Bruckhaus Deringer LLP


Public accountability

     Accountable to courts, tribunals and ombudsman for day-to-day
      activities
     Accountable to Parliament and government departments for
      overall performance and budget
     Accountable to media
     But note deliberate trade off between accountability and
      independence




                                                                    A-
                                                      Freshfields Bruckhaus Deringer LLP


Timeliness

     Mergers:
      –   New Zealand: 40-65 days
      –   Australia: Between two and twelve weeks depending on
          complexity
     Enforcement: traditionally unduly prolonged, but an area of focus
      under the current administration and improving
     Regulatory determinations: extremely prolonged as a result of
      overly rigorous consultation obligations, to the ultimate
      dissatisfaction of both the agencies and industry



                                                                  B+
                                                       Freshfields Bruckhaus Deringer LLP


Expertise

     Agencies highly regarded by practitioners, and rated favourably in
      international comparisons
     Both agencies have successfully recruited talent internationally,
      and contracted consultant expertise for specific workstreams
     Weakness is probably in high level economic expertise:
      comparatively fewer economics PhDs than other sophisticated
      competition agencies (DOJ, OFT, DG Comp)
     New Zealand courts can sit with a lay-member to assist with
      expert economic evidence. Australian federal courts not similarly
      equipped, but the ACT sits with two lay-members.



                                                                     A-
                                                        Freshfields Bruckhaus Deringer LLP


Investigative and sanctioning powers

     Maximum penalties float according to size of company and
      magnitude of commercial gain attributable to the breach
     Broad powers to injunct conduct (including on an interim basis
      through cease and desist orders) and to disqualify directors
     Criminal penalties for hard core conduct in Australia (and soon to
      be introduced in New Zealand)
     In practice, significant penalties increasingly imposed
     Wide range of investigative tools, and plenty of latitude to use
      them
     Chairs of the agencies reported no concerns with their existing
      powers
                                                                           A+
                                                      Freshfields Bruckhaus Deringer LLP


Reasonable predictability                    A-
     Procedure governed either by statute or by guidelines issued by
      agencies, and hence very predictable (with the exception of
      investigations)
     Merger control predictable given extensive guidelines on
      substantive assessment and high level of know-how amongst
      practitioners
     Regulatory determinations predictable insofar as final outcomes
      are signaled well in advance through draft reports and
      consultation papers
     Enforcement increasingly predictable due to enforcement policies
      and guidelines, with the exception of monopolisation which is
      completely unpredictable
     Also, enforcement depends a lot on the personality of the current
      chairperson
                                                         Freshfields Bruckhaus Deringer LLP


Transparency

     Strong culture of transparency:
      –   Publicly available annual reports that report on activities and
          budget
      –   Press releases announcing significant decisions or actions
      –   Full text registers of merger clearances and restrictive trade
          practice authorisation
      –   Freedom of information legislation
      –   Wide range of information available on website
     However, both agencies are a bit reluctant to publicise decisions
      or outcomes that reflect poorly on them
     Also, ACCC publishes less information on mergers due to its
      informal merger clearance regime                                              A
                                                        Freshfields Bruckhaus Deringer LLP


Public consultation

     Public invited to participate in policy-making process through
      consultations on:
      –   Draft legislation
      –   Agency guidelines
     Public also invited to make submissions regarding merger
      clearances, RTP authorisations and regulatory determinations
     Enforcement proceeds through a private litigant model, so public
      does not participate in agencies’ litigation strategy or enforcement
      decisions



                                                                             A
Freshfields Bruckhaus Deringer LLP

				
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posted:5/20/2011
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