Discussion Paper for Interim Report No. 5: Updating competition and consumer law for digital platform services
The Law Council of Australia provided a submission in response to the Australian Competition & Consumer Commission’s Discussion Paper for Interim Report No. 5, released as part of the ongoing Digital Platform Services Inquiry.
The ACCC has sought views on whether existing competition and consumer laws are sufficient to address harms arising from digital platform services in Australia or if changes are required.
In this submission, the Law Council seeks to set out the principles that it considers the ACCC and the Government should take into account from a policy perspective in determining whether changes to Australia's competition and consumer laws are required.
The Law Council does not seek to comment on whether, and to what extent, the conduct of digital platforms has caused (or has the potential to cause) harm to consumers and businesses. It also does not seek to express a view on whether any changes to Australia's competition and consumer laws are required. Rather, the Law Council wishes to respond to the ACCC's question of whether the Competition and Consumer Act 2010 (Cth) (CCA) and Australian Consumer Law are sufficient to address competition and consumer harms arising from digital platform services in Australia and to draw to the ACCC's attention the principles that should be considered before recommending the implementation of new legislation or regulation, particularly industry-specific regulation. While some members of the Business Law Section consider that the ACCC has already addressed a number of these principles to date, the majority of views received from legal practitioners is that further consideration is required consistent with best practice in the development of regulation prior to the implementation of new law reform proposals. The Law Council notes the dissenting view of some members of the Business Law Section that consider the ACCC has already found significant competition and consumer harms in a broad range of digital services markets.
The Law Council acknowledges that the ACCC's work in relation to digital platforms has received international attention.
The key matters the Law Council wishes to bring to the ACCC’s attention based on the majority of views received from legal practitioners are as follows:
- Best practice in development of regulation – As a general principle, the critical starting point for sound regulatory intervention is to establish a clear case for action before addressing a problem. In this context, evidence of harm is highly relevant. The ACCC should have regard to any evidence of harm, where appropriate drawn from its Digital Platforms Inquiry and related inquiries,3 or from other sources. In terms of the form of intervention, a range of feasible options must be considered including self-regulatory, co-regulatory and non-regulatory approaches, adopting the option that generates the greatest net benefit for the community. The Law Council commends the ACCC for considering a range of issues in its Discussion Paper.
- Learn from international experience – If the Australian Government determines that the competition and consumer harms the ACCC has identified justify specific regulatory reform, there is considerable law reform being considered on this issue in multiple jurisdictions and the Law Council encourages the ACCC to leverage off those learnings, having regard to market conditions in Australia where appropriate, to ensure Australia maintains a fit for purpose regulatory regime which supports the domestic economy and facilitates cross border international trade, unless there are compelling reasons for departures. In this regard, it is appropriate that the Government considers the approaches in the United Kingdom (UK) with the recently finalised Digital Markets Act, as well as the European Union's (EU’s) Digital Services Act, which is in the final stages of negotiation, and the bills currently under consideration in the US Congress.
- Harmonisation across regulatory frameworks – The growth of the digital economy and changes to the way in which businesses engage with their supply chains and end users is driving regulators in several specialist areas to consider the effectiveness of their regulatory frameworks. It is critical that a harmonised approach is taken across various Australian regulators with overlapping responsibilities to ensure consistency, avoid duplication and avoid fragmentation of regulation.
- Consumer protection and competition regulation – The Australian Consumer Law provides for both general and specific protections. Before recommending any industry-specific legislation, the ACCC should, as a threshold matter, have regard to whether there is a clear legislative gap such that harm to consumers and businesses cannot be addressed by current legislation. The ACCC should also have regard to whether any additional measures are better suited to economy-wide application rather than sector specific.
- Mergers and acquisitions – As with consumer protection issues, the ACCC should have regard to whether there is evidence of market harm that warrants changes to the current merger regime. It should also closely consider whether the additional complexity associated with any separate regime for digital platforms may outweigh benefits to consumers, and the impact of any changes it recommends on benign or beneficial mergers.
- Privacy and data protection – In addition to consumer protection matters as noted above, it will be important that any changes do not diminish individual privacy and, where possible, enhance such rights. Further, any changes that may impact on privacy should be consistent with or be made in parallel with the other law reform processes impacting on privacy regulation.
- Effectiveness and efficiency of existing remedies – As recognised by the ACCC, private actions by Australian businesses and individuals to enforce relevant competition and consumer law protections against large digital platforms can potentially face considerable challenges. This should be taken into account when considering whether there is a need for reform or designing any reforms.
- Rule-making powers – If it is shown there is a need to grant rule-making powers to the ACCC or another body that enables it to impose prohibitions and obligations without the need for legislative approval, such powers should be subject to appropriate checks and balances.
- Transparency – The Law Council supports, in principle, measures which would improve transparency and improve the ability of consumers and businesses to make informed choices about digital platform services.