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The Last Frontier: Enforcement Issues

OCCASIONAL PAPER

| Merv Keehn

What has the ACCC done to enforce breaches of the Trade Practices Act in the industrial relations area and how effectively has it done it?

In this discussion, I will deal primarily with the secondary boycott provisions (sections 45D to 45E) of the Trade Practices Act (TPA), though some legal actions have also involved other sections of the TPA, eg, section 60, harassment and coercion.

On recent form, the ACCC has been active in this area---on 16 May it announced that it had instituted proceedings against three unions, the AMWU, AWU and CEPU, alleging secondary boycott breaches through a picket at the Patricia Baleen gas plant construction site. And there was considerable publicity a couple of years ago when the ACCC took action against the MUA over the container wharf dispute with Patrick Partners.

But realistically, the ACCC has not frequently been involved in section 45D and 45E enforcement, which has been the cause of criticism at the Cole Royal Commission. As the Commissioner said in his report:

The victims of such unlawful conduct have rarely sought to pursue their remedies through the courts. The result has been that few of the many instances of secondary boycotts which have occurred in the building and construction industry and which have come to the Commission's attention have been referred to or pursued by the ACCC.[1]

So while the ACCC has not been particularly active in this area, one of the reasons is that it has not often been asked to investigate these matters. The ACCC generally initiates investigations on the basis of complaints it receives, rather than undertaking investigations on its own initiative---it just does not have sufficient resources to do that.

There are various reasons why the victims of secondary boycott action do not complain to the ACCC. They may think that making a complaint would not achieve anything, because the ACCC would not pursue it. This perception has a fairly sound basis. To quote the enforcement agency on enforcing secondary boycott breaches:

The Commission would propose to limit court proceedings it might bring to cases affecting competition ... because it is probably more appropriate that the right of private action or the Minister's right to bring proceedings should be exercised in cases not affecting competition. The Commission is a competition authority and it would seem desirable to avoid, where competition is not affected, getting involved in industrial disputes where the ultimate decisions as to the continuing or settling cases may need to be taken by companies on commercial grounds or the government on political grounds.[2]

This is a statement made by the ACCC's predecessor, the Trade Practices Commission, in 1978. It was still an accurate reflection of the TPC's attitude to secondary boycotts in 1992, when quoted in a standard trade practices textbook,[3] and I think it is a reasonable reflection of the ACCC's approach in 2003.

Are secondary boycotts like other restrictive trade practices?

The answer is, in my view, clearly not, which is part of the explanation why the ACCC (and its predecessor, the TPC) takes a different approach in dealing with secondary boycott breaches from that it adopts in relation to breaches of the other competition provisions (Part IV) of the TPA. This is recognised in the history of sections 45D to 45E.

Section 45D was introduced in 1977 at the same time as a considerable number of other amendments to the TPA were being made as a result of a major review of the TPA.[4] However, the Swanson Committee did not consider secondary boycotts; section 45D was introduced by the government because at that time there was, and had been for some months, major industrial disputation by the AMIEU over the export of live sheep from Portland, involving pickets and secondary boycotts. The TPA was an appropriate vehicle in which to put the secondary boycott prohibitions, because its constitutional validity had been tested and confirmed and the Act was being amended at that time.

But even then, it was recognised that secondary boycotts were not like the other prohibitions in the competition provisions of the TPA. Boycotts for legitimate industrial purposes were specifically excluded (and still are) and, more significantly, boycotts were prohibited even though they had no effect on competition.

More recently, it is still recognised that secondary boycotts are more an industrial issue than a competition issue; when sections 45D to 45E were last amended in 1996, that was done through the Workplace Relations and Other Legislation Amendment Act 1996, not through a Trade Practices Amendment Act.

In light of this, it is not surprising that the ACCC sees sections 45D and 45E as lower down its priorities than other breaches of the TPA. And the ACCC must prioritise; it received 57,000 complaints in 2001-2, of which it pursued 3,900 including 1,374 Part IV (competition) complaints (which include any section 45D complaints).[5]

But there is another important reason why the ACCC may be reluctant to take up section 45D investigations. These disputes are often resolved, one way or another, through the complainant and the party complained of negotiating a settlement, either through industrial relations processes or otherwise, sometimes with involvement by government at the political level, because of the wider ramifications of the industrial action.

In those circumstances, legal action by the ACCC may be sought by one party to the dispute as a bargaining chip, to put pressure on the other party, and if the pressure works and the dispute is resolved, the complainant has no further interest in assisting the ACCC in its enforcement action. Indeed, the complainant may want the ACCC to cease any legal action as a condition of the complainant's settlement with the other party. In that case, the ACCC would not surprisingly be reluctant to take on an investigation using public funds where its action may only benefit one party and where the ACCC may not be in control of the course of its own investigation. Because it has very limited public resources to use for enforcement, the ACCC will always give priority to investigations which are in the public interest to pursue, or where the complainant does not have the capability or resources to take its own action in the court. This applies to all ACCC enforcement activities, including secondary boycotts.

Could the Australian Building and Construction Commission enforce secondary boycott breaches better than the ACCC?

Some with a particular point of view may say that it could probably do no worse than the ACCC. But I don't think this is necessarily correct. While the ABCC would not be deterred from investigating because the conduct had no effect on competition, the other reasons why the ACCC is reluctant to take on secondary boycott actions apply equally to the ABCC. Why should the ABCC use public funds to investigate and take proceedings against one party to a dispute, where the other party has sought the ABCC's intervention simply to put pressure on the other party to reach a settlement, and where the ABCC may not be able to pursue its own legal action because the complainant no longer finds it commercially convenient?

Concurrent enforcement by the ACCC and ABCC---could it work?

Recommendations 181 of the Cole Royal Commission proposes that sections 45D-45E be mirrored in the Building and Construction Industry Improvement Act, but limited in operation to the building and construction industry. Recommendation 182 proposes that the ABCC share jurisdiction with the ACCC in investigating and taking legal action concerning secondary boycotts in the building and construction industry.

While I can see why it may seem desirable for the ABCC to be able to enforce sections 45D and 45E, I think implementing these recommendations would have significant problems and difficulties.

First, the mirror provisions, and the ABCC's jurisdiction, would be limited to the building and construction industry. The Royal Commission recommends a definition of "building and construction industry", which is essentially that used in the Royal Commission's terms of reference. Putting to one side the logical inconsistency of the definition covering construction of multiple and commercial buildings, but not single dwellings, that definition would be inadequate for many secondary boycotts in that industry.

At least one of the parties involved in a secondary boycott in the building and construction industry will frequently be a supplier of building materials of one sort or another. Those materials may, in some cases, also be used outside that industry. Yet on the definition of the industry recommended by the Royal Commission, those boycotts would be outside the jurisdiction of the ABCC. While it may be possible to craft a definition which casts the net wide enough to cover boycotts involving suppliers, there would be a real risk that the net would be cast too wide. Many building suppliers also supply non-builders, with the same products or with other products.

Even if a definition can be crafted which covers those who, for practical purposes, should be covered and which excludes those who should not, the mere fact that the secondary boycott provisions in the Building and Construction Industry Improvement Act are limited to a defined industry, would provide fertile ground for challenge in the courts and would, I fear, have the capacity to considerably prolong any litigation brought by the ABCC (or by private parties, for that matter) with argument whether the conduct occurred in relation to the industry as defined.

On a broader level, shared or parallel jurisdiction for enforcement authorities is always difficult at best and is generally undesirable. If secondary boycotts were regarded as part of competition law (although, as I have explained above, I do not think they are), having two competition enforcement agencies would not work well. In the United States, the Federal Trade Commission and the Antitrust Division of the Department of Justice bump along together, but not happily, which is why the FTC now devotes much more of its energy to consumer protection, where the Antitrust Division has no involvement. In the United Kingdom, the former Monopolies and Mergers Commission and the Office of Fair Trading had sufficient structural problems sharing jurisdiction that they have been replaced.

Outside competition law, shared jurisdiction has just as many problems. The National Crime Authority, in investigating criminal conduct, had shared jurisdiction with State and Territory police forces and with the Australian Federal Police, while having mirror legislation in the Commonwealth and all States and Territories. As a result there was an enormous amount of wasted time and effort on the part of all police forces and the NCA, for most of the NCA's nearly twenty year existence, while the effectiveness of the NCA was considerably diminished by those jurisdictional overlaps. Much effort is going in to attempting to overcome those jurisdictional problems with the NCA's successor, the Australian Crime Commission, but it has yet to be seen whether that will work.

The problem with joint jurisdiction is not confined to internecine "turf wars" between agencies; problems can arise even where the agencies have the best will in the world to avoid jurisdictional clashes. These problems include:

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    • To whom should a complaint be made?
    • What happens if a complainant, trying to cover all bases, complains to both agencies?
    • What happens if both agencies take up the complaint?
    • What if the target of a complaint then complains to the other agency?
    • If both agencies investigate the same conduct, what if they adopt inconsistent approaches or reach differing conclusions?
    • If a complainant is dissatisfied with the conclusion reached by one agency, can he then complain about the same conduct to the other agency, and get it to replicate the investigation?
    • If one agency takes legal action and the other decides not to, can the respondent raise in it s defence the second agency's decision not to take action?
    • If both agencies exercise their statutory investigative powers when investigating the same conduct, could the target of the investigation claim that, having given information or evidence to one agency about the conduct being investigated, he would be prejudiced if he had to give information or evidence to the other agency about the same conduct?
    • Both the complainant and the target of the complaint have the opportunity (and will often take that opportunity) to play one agency off against the other.

Many of these issues may be able to be resolved or ameliorated through appropriate coordination between the two agencies. However, the existence of joint or parallel jurisdictions means a number of these difficulties will always be there.

For those reasons, I do not favour jurisdiction in secondary boycotts in the building and construction industry being shared by the ABCC and the ACCC.

Alternative approaches

While I have explained why the ACCC's priorities in enforcing the secondary boycott provisions in the TPA are low, that lack of action continues to cause a problem in some industries, and is perceived as a problem in the building and construction industry. However, the solution proposed by the Royal Commission of having joint enforcement by the ABCC and the ACCC is in my view, for the reasons outlined above, not practicable or desirable.

The best alternative, in my view, would be to leave the secondary boycott provisions in the TPA and not replicate them in the Building and Construction Industry Improvement Act and leave the enforcement function with the ACCC. If the ABCC discovers such unlawful conduct in the building industry, it could, consistent with recommendation 180 of the Royal Commission, refer those issues to the ACCC as the agency better equipped by way of legislative power, experience, resources and expertise.

If the government considers that more investigative effort should be devoted by the ACCC to secondary boycott complaints, it could give the ACCC a special additional budget allocation for that purpose, as it did in 2000, when the ACCC was given significant additional resources for two years specifically for enforcement against price exploitation and misrepresentation when the GST was introduced.

Another alternative approach to give greater prominence to secondary boycott enforcement would be to remove sections 45D to 45E from the TPA altogether and have them re-enacted in other legislation, probably industrial relations legislation, where they could be enforced either by an agency under the portfolio of the Minister for Workplace Relations, or by the ABCC, or both. Any secondary boycotts which had an anticompetitive effect would still be prohibited under section 45 of the TPA, while secondary boycotts in industrial matters would be dealt with in the industrial relations environment.

Other Issues

Apart from secondary boycotts, there are some other recommendations from the Royal Commission which have implications from a trade practices enforcement point of view.

Section 51(2)(a)It is recommended that there be no change to the employment conditions exemption in section 51(2)(a) of the TPA. I agree that the exemption should stay as it is. To interfere with this exemption to either expand it or narrow it, would generate much more problems than it would solve.

The ABCC's investigation powersRecommendation 184 proposes that the ABCC be given the same powers that the ACCC has under sections 155 and 156 of the TPA. Those powers are very strong and potentially quite intrusive. The ACCC's use of those powers has been the subject of considerable discussion in recent times, including in the recent report of the Dawson Committee which reviewed the TPA. This included some criticism of the ACCC's power to enter premises to seek documents, following the "raids" on oil company premises last year.

The ACCC's powers under the TPA are in the context of corporate misbehaviour, which is different, to some degree, from the sort of criminal behaviour which the ABCC would be investigating. The ACCC can only exercise its powers if it has "reason to believe" that a breach of the TPA has occurred and that the object of its powers can supply information or documents. In my view, a more appropriate analogy for investigative powers for the ABCC may be in the National Crime Authority Act 1984 or its successor, the Australian Crime Commission. This may require that the ABCC have some quasi-judicial supervision of the exercise of at least some of its investigative powers, but the draconian nature of those powers, including the power to examine witnesses on oath, may justify that level of oversight.

The ABCC's power to obtain information from Commonwealth or State agenciesRecommendation 185(h) proposes that the ABCC have power to obtain information from other agencies (both Commonwealth and State) notwithstanding any relevant secrecy or privacy provisions. I personally have considerable disquiet with one particular agency being given power to obtain information which by statute is specifically required to be kept secret or private, presumably for good reason. I do not see that the building and construction industry is so special that all other secrecy laws should be overridden.

But more particularly, I have considerable doubt whether the power to demand information from State agencies is within the Commonwealth's constitutional power. No doubt this would be fully considered before adopting this recommendation.

Attaching DPP officers to the ABCCRecommendation 188 proposes that officers from the Australian Federal Police and the Commonwealth Director of Public Prosecutions be attached to the ABCC. While there are numerous precedents for AFP officers being attached or seconded to other agencies, the same is not the case with the DPP. The Director of Public Prosecutions is an independent statutory office and any attachment of its staff to an investigation agency threatens that independence. I am not aware of any instance where that has occurred, though the DPP has always been prepared to allocate staff to concentrate their efforts on the work of particular agencies, if required. That would be the most that could be requested for the ABCC, not attachment.

National Code of Practice for the Construction IndustryThe Royal Commission proposes that this Code be considered for inclusion as a mandatory or voluntary code of conduct under the TPA. This seems to me to be a sound approach, which would strengthen compliance with the Code.

Conclusion

While the ACCC's enforcement of the secondary boycott provisions may, for understandable reasons, not have been as rigorous as some may wish, the solution proposed by the Royal Commission to enact mirror provisions, limited to the building and construction industry, and to give the ABCC and the ACCC joint jurisdiction, would not resolve the situation, but would create many more problems than it solves. There are other ways to improve the current enforcement regime, either through existing legislation and ACCC powers and functions, or through re-enacting the secondary boycott provisions in industrial legislation where they more appropriately belong.

 

 

 

Endnotes

 

1. Royal Commission Report Vol 11 para 152.
2. TPC Fourth Annual Report 1978.
3. Miller's Annotated Trade Practices Act 13th edition.
4. Trade Practices Act Review Committee Report 1976.
5. ACCC Annual Report 2001-2.

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