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  Per se prohibitions: – Price fixing/hard core cartels – Resale price maintenance – Certain kinds of exclusionary arrangements  Rule of reason: – Monopolisation – Cooperation/collusion – Mergers and acquisitions (which can be cleared or authorised) Regulation  Objective: – Mimic competitive outcomes – Reserved for markets with structurally limited competition  Mechanisms: – Access regulation for essential facilities – Information disclosure – Negotiate/arbitrate – 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: 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  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 A-

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