Co-opting for governance: The use of the conditions power by the ACCC in Authorisations

Abstract

The age of the regulatory state has brought many changes to the role of the state, the operation of regulatory agencies and has challenged our way of conceptualising the nature of regulation. Regulators who are subject to the multiple goals of efficiency, clarity and predictability, with efficiency taking increasing significance, are focussed on regulating to improve the integrity of market by correcting market failure. A large amount of the regulating is in the form of self-regulation, carried out by private actors in the market including industry bodies with governments and other stakeholders taking a back seat. Many of these self-regulating structures are far from perfect, leading regulators and communities to doubt the ability of corporations to self regulate. These circumstances, that have challenged many regulators, also provide the opportunity to be innovative.

This article has two purposes. The first purpose is to examine the innovative approach of one regulator, the Australian Competition and Consumer Commission (�ACCC�), which has used its discretionary power, of imposing conditions when granting authorisations, to improve industry self regulation. It has been clearly acknowledged by both the ACCC and the Australian Competition Tribunal, which hears appeals on the ACCC�s decisions, that this discretionary power should not be used to construct the ideal or preferred system of self-regulation. However an empirical study of the these determinations over the last ten years demonstrates that ACCC has consistently used conditions for the purpose of enhancing self regulation primarily by improving the manner in which corporations are monitored. Three specific strategies for improved monitoring are evident namely, enhancing the information provided to stakeholders, improving in-house complaints and dispute resolution processes, and mandating external reviews of corporate compliance. It is argued that all these strategies, that challenge traditional views of command and control regulatory strategies, are operating to co-opt others into regulation.

The second purpose of this article is to understand the ACCC�s strategies as examples of nodal governance. Nodal governance is defined for the purpose of this article as the establishment of nodes (which possess four specific characteristics namely mentalities, technologies, resources and an institution that is able to mobilise these mentalities, technologies and resources) that are able to interact with other actors in order to govern the systems they inhabit. This type of governance sees the focus shifting from the state as the centre of governing activity, to other institutions or nodes. These nodes which can be private of public organisations include associations which develop codes of conduct; large corporate groups that may wield sufficient influence to change the behaviour of others in the industry; or a well funded activist group that is able to focus attention and hence modify the conduct of others. This article examines the ACCC�s strategies as creating governing nodes. For example by making existing associations responsible for setting up dispute resolution systems, the ACCC is making an existing node responsible for governance. By requiring that these associations involve external auditing processes, the ACCC is creating other nodes to participate in governance by monitoring the conduct of corporate and other organisations. Show more