Australian business leaders woke up yesterday morning to an extraordinary outburst from a public servant. The Australian Financial Review published a threatening and patronising opinion piece penned by Graeme Samuel. Mr Samuel is the Chairman of the ACCC — a government regulatory body that has in the last 18 months been responsible for policies such as FuelWatch and GroceryWatch. In 2005 the ACCC admitted, in court, to fabricating evidence leading to charges being dropped in a price fixing case. The existing CartelWatch policy has been ramped up with criminal sanctions applying to cartels after Friday.

It is entirely appropriate that Mr Samuel take the time and effort to explain the law to business. Yet it is not at all clear that patronising, threatening and thuggish commentary is appropriate. Mr Samuel explains:

Let me make it very simple — if you don’t want the risk of going to jail, don’t get involved in illegal cartels. This is the only advice lawyers will need to provide their clients.

There you go — just don’t do it. That is all very well and good, except the problem is that business is not entirely clear what an “illegal cartel” comprises. In other words, Mr Samuel’s advice is next to useless. For example, there has been some doubt as to whether franchise agreements constitute cartel-like behaviour. The bottom line is that this op-ed is not aimed at business, but rather at his political masters and anti-business constituencies.

The problem with the ACCC is that it has absolutely no accountability for its primary functions. These functions are spelt out in its name; competition and consumers. While the ACCC often speaks about competition and consumers, there is no evidence that supports the notion that it does anything at all to promote either of these two things. Consider, for example, competition; prices in a competitive market should be lower than prices in a monopolistic or oligopolistic market. Yet, we know that following the ACCC prosecution of Visy that prices rose and didn’t fall.

So how exactly did the ACCC actions promote either competition or consumers? We know for example that the Petrol Commissioner was investigating Coles and Woolworths to discover whether their petrol discounts of up to 40c per litre were legal. How does lowering prices to consumers make them worse off?

To be sure, the ACCC may claim that they are merely enforcing the law as it stands. But why should consumers, taxpayers and voters accept at face value that the ACCC, or any other government agency, performs its stated functions well? Audits and accountability need to be put in place, and not just tick-a-box accountability either. When alleging cartel behaviour the ACCC should have to nominate how and when consumers will benefit from lower prices and increased competition.

The Auditor-General should have to verify that the process and outcomes that the ACCC nominated have in fact occurred. If those outcomes have not transpired the injured parties should have an action for damages against the Commonwealth. As it currently stands, the ACCC operates an all care and no responsibility system of law enforcement.

This is a change from how law-enforcement normally operates but would go a long way to creating a level playing field whereby the ACCC cannot simply engage in trial by media and trial by fishing expedition, but would have to exercise far more caution in future than it has in the past.

Sinclair Davidson is a professor in the School of Economics, Finance and Marketing at RMIT University and a senior fellow at the Institute of Public Affairs.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey