Watchdog to crack down on big bullies
Scott Murdoch | July 04, 2007 The Australian
THE Australian Competition and Consumer Commission's boss admits the regulator has gone soft on bigger businesses that try to bully their smaller counterparts.
ACCC chairman Graeme Samuel yesterday revealed that he had ordered the case law surrounding unconscionable conduct be tested.
The conduct clauses mostly apply to franchisees and business-tenancy lease arguments, and lawyers said the laws would be hard to test.
The cases mostly involve disputes between larger firms accused of acting unfairly to smaller operations.
In a speech to the Council of Small Business Organisation conference in Sydney, Mr Samuel admitted the ACCC had been lax in pursuing unconscionable cases.
The ACCC has had mixed success in taking on fuel companies, but has taken action over alleged price-fixing and the misuse of market powers.
"In most unconscionable conduct cases there is also an element of misleading and deceptive conduct, which is much easier to prove," Mr Samuel said.
"As a result, there has been a tendency for us to say 'let's just tackle the misleading and deceptive conduct rather than take the most difficult route of going after the unconscionable elements of a case'.
"While this approach often works in shutting down the conduct, it is sometimes a bit too easy for our investigators to let the unconscionable behaviour slide."
The best-known unconscionable conduct case involved property giant Westfield in a dispute with a lessee at a Brisbane shopping centre in 2004.
The conduct laws under section 51 of the Trade Practices Act are currently being strengthened by new legislation before parliament.
The plan is to increase the maximum allowed damages from $3 million to $10 million to cover more small business operators.
The ACCC has been persistently criticised for being too soft and not pursuing enough prosecutions.
"We are changing our focus to take a much more aggressive attitude to pursuing unconscionable conduct," Mr Samuel said.
"And this means pushing to get more matters before the court.
"By doing so we will not only test the law; we firm up a better definition of what constitutes unconscionable conduct, thereby providing more guidance to businesses."
Lawyer Geoff Carter, a competition partner at Minter Ellison, said the number of conduct cases taken on by the ACCC had been relatively low in the past decade.
A tougher approach by the agency could prompt an increase in private cases being pursued, he said.
"There has not been much case law, but the more cases bought by the regulator on this particular section should start more," he said.
Mr Carter said unconscionable conduct had been hard to argue, as each court tended to read the legislation differently.
It would most likely apply in franchising situations, where the franchiser was seen to take advantage of the franchisee.
The competition regulations, particularly regarding predatory pricing, will not change under the tougher conduct approaches.
In his speech, Mr Samuel also criticised small business operators for not taking greater advantage of the allowable collective bargaining laws in negotiating business rental lease agreements.