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Parker, Christine; Nielsen, Vibeke Lehmann --- "What do Australian Businesses Really Think of the ACCC, and Does it Matter?" [2007] FedLawRw 8; (2007) 35(2) Federal Law Review 187

[*] Australian Research Fellow, Faculty of Law, The University of Melbourne.

[†] Associate Professor, Department of Political Science, University of Aarhus. The authors wish to thank John Braithwaite and DataCol International (especially Malcolm Mearns) for helping set up and administer the empirical research on which this article is based. Thanks also to Natalie Stepanenko for assisting with most of the qualitative interviews for this research and other research assistance, and also to Zoe Jackson for research assistance and to Julia Black and John Braithwaite for comments on an earlier draft. We also thank the ACCC (through its support for the Centre for Competition and Consumer Policy, Australian National University), the Australian Research Council and the Regulatory Institutions Network, Australian National University for funding this research. Substantial parts of the original research for this article were completed while both authors were on secondment at the Regulatory Institutions Network, Australian National University and later while Dr Christine Parker was a Visiting Fellow at the Centre for Socio-Legal Studies, University of Oxford.

[1] The business complaints resulted in the federal government commissioning an extensive independent review of the Trade Practices Act 1974 (Cth) ('TPA') and the way it had been administered by the ACCC: Trade Practices Act Review Committee, Review of the Competition Provisions of the Trade Practices Act (2003) ('Dawson Review'). It also may have led to the federal government offering Professor Fels a shorter second term as Chair of the ACCC: see Fred Brenchley, Allan Fels: A Portrait of Power (2003) 214–15. Professor Fels himself, however, commented that, given the amount of business lobbying against him, he was surprised that he had lasted as long as he did: 'Allan Fels Surprised He Lasted So Long at the ACCC', Australian Associated Press Financial News Wire (Sydney), 29 June 2003.

[2] Quotations from Dick Warburton, Chairman of Caltex, and Roger Corbett, CEO of Woolworths, respectively: reported in Ross Gittins, 'Perhaps This is Why Big Business is Ganging Up on Allan Fels', The Age (Melbourne), 10 July 2002, 13. See also Brenchley, above n 1, 22, 143, 211–36 for further instances of private and public business lobbying of government against Professor Fels and the ACCC. For allegations by business leaders that the ACCC used 'its position of strength to "bully" business into complying with its directives without necessarily sticking to the formal legal process', see House of Representatives Standing Committee on Economics, Finance and Public Administration, Parliament of Australia, Competing Interests: Is There Balance? Review of the Australian Competition and Consumer Commission Annual Report 1999–2000 (2001) 41.

[3] David Murray, CEO of the Commonwealth Bank, and Geoff Dixon, CEO of Qantas, reported in Gittins, above n 2.

[4] Damon Kitney and Katharine Murphy, 'Big Business Steps Up Attack on ACCC', The Australian Financial Review (Sydney), 13 May 2002, 1, quoting a 'leading Australian chief executive, who declined to be named'.

[5] Gerry Harvey, CEO of the Harvey Norman chain of retailers, quoted in Christian Catalano, 'Gloves Off as Retailer Hits Out', The Age (Melbourne), 30 June 2003, 2. Harvey went on to say: 'I think he is egotistical, I think he is a megalomaniac … I think that he is the most powerful man in Australia … In the years to come he will be judged, and others that are intimidated at the moment will speak out and say what they really think.'

See also Richard Gluyas, 'A Last Mauling for Retiring Watchdog Fels', The Australian (Sydney), 30 June 2003, 29.

[1] Cameron Stewart, 'Making Markets Add Up', The Weekend Australian (Sydney), 8–9 June 2002, 21.

[2] Brenchley, above n 1, 220. See criticisms of the ACCC's approach to mergers at 220–9; Trade Practices Act Review Committee, above n 1, 43–71; Toni O'Loughlin, 'Process Slow But Not Too Tough', The Australian Financial Review (Sydney), 17 April 2003, 5. Cf Alan Dignam, 'The Role of Competition in Determining Corporate Governance Outcomes: Lessons from Australia's Corporate Governance System' (2005) 68 Modern Law Review 765.

[3] Professor Fels in Malcolm Maiden, 'The Bell Tolls for Fels at ACCC Kennel', Business and Money, The Age (Melbourne), 21 June 2003, 1. Elsewhere Professor Fels was reported as having commented about Gerry Harvey's criticisms of him (quoted above): 'Professor Fels said Mr Harvey had been "totally uncooperative" during every step of the ACCC's proceedings against his company, and had dragged the inquiry to exhaustive lengths': Catalano, above n 5.

[4] Allan Fels, 'ACCC Needs Support From the Top', The Australian Financial Review (Sydney), 30 June 2003, 55. Professor Fels was also quoted as saying: 'Some business people are throwing a trial-by-media slogan at practices that are quite normal in the field of law enforcement': Kitney and Murphy, above n 4.

[5] See, eg, Robert Baxt, 'Thinking About Regulatory Mix — Companies and Securities, Tax and Trade Practices' in Peter Grabosky and John Braithwaite (eds), Business Regulation and Australia's Future (1993) 117, 118; Peter Grabosky and John Braithwaite, Of Manners Gentle: Enforcement Strategies of Australian Business Regulatory Agencies (1986) 91; Stuart Simpson, 'Keeping Business Honest: Trade Practices Commission Runs Lame', The National Times (Sydney), 17–23 October 1982, 41; V G Venturini, Malpractice: The Administration of the Murphy Trade Practices Act (1980).

[6] Miranda McLachlan, 'Section 46 to be Samuel's Big Test', The Australian Financial Review (Sydney), 4 July 2003, 15. See also 'Use it Properly', The Newcastle Herald (Newcastle), 2 July 2003, 8. One of our survey respondents commented in their answer to an open-ended question at the end of the survey (see below n 60):

With the appointment of a new head of the ACCC, I believe businesses are reassured that the approach of the ACCC is more reasonable and less media hungry or keen to grab headlines. A more considered and conciliatory approach seems to be evident which in turn encourages openness by business.

This sentiment was repeated in several other comments.

[7] Laura Tingle and Mark Skulley, 'ACCC Posting Signals Policy Shake-Up', The Australian Financial Review (Sydney), 11 October 2002, 10.

[8] Toni O'Loughlin, 'Competition Regulator Has Lost its Hard Edge: Dossier', The Australian Financial Review (Sydney), 4 June 2004, 29.

[9] But he also pointed out that the ACCC was investigating up to 40 cartels, among other things: Toni O'Loughlin, 'ACCC Boss Backs Away from Litigation', The Australian Financial Review (Sydney), 4 June 2004, 1. See also Graeme Samuel, 'Heal Thyself: Voluntary Compliance is Much Better than Prosecution', BRW (Melbourne), 9 October 2003, 50.

[10] Adele Ferguson and Kristen Le Mesurier, 'The Red-Tape Stranglers', BRW (Melbourne), 7 September 2006, 42, 44. Chair Graeme Samuel was reported as saying that 'he is litigating less but with "sharper" force': at 44.

[11] For example, their behaviour should be authorised by law, certain and stable, accountable and transparent, procedurally fair, and proportionate, consistent and rational: Karen Yeung, Securing Compliance: A Principled Approach (2004) 36–43.

[12] As we shall see, businesses' normative assessments of the ACCC are also relevant to this compliance-oriented approach.

[13] See Søren Winter and Peter May, 'Motivation for Compliance with Environmental Regulations' (2001) 20 Journal of Policy Analysis and Management 675 for a helpful typology of 'normative', 'social' and 'calculative' motivations as explanations for compliance. Our summary of the literature in the text is based on this typology. Like Winter and May, most researchers of regulatory compliance now find that motivations for compliance are plural with different types of explanations being true in different circumstances and interacting in complex ways: see Ian Ayres and John Braithwaite, Responsive Regulation: Transcending the Deregulation Debate (1992); Joseph Dimento, 'Can Social Science Explain Organizational Non-Compliance with Environmental Law?' (1989) 45 Journal of Social Issues 109; Neil Gunningham and Peter Grabosky, Smart Regulation: Designing Environmental Policy (1998); Jon Sutinen and Karen Kuperan, 'A Socio-Economic Theory of Regulatory Compliance' (1999) 26 International Journal of Social Economics 174. Certain 'extended' deterrence theories also end up taking into account most of these plural factors within the umbrella of deterrence theory: see Henk Elffers, Peter van der Heijden and Merlijn Hezemans, 'Explaining Regulatory Non-Compliance: A Survey Study of Rule Transgression for Two Dutch Instrumental Laws, Applying the Randomized Response Method' (2003) 19 Journal of Quantitative Criminology 409; Harold G Grasmick and Robert J Bursik Jr, 'Conscience, Significant Others, and Rational Choice: Extending the Deterrence Model' (1990) 24 Law and Society Review 837.

[14] See Sally Simpson, Corporate Crime, Law and Social Control (2002) 22–44 for a thorough review of the literature and empirical evidence on deterrence. See also Paul Robinson and John Darley, 'Does Criminal Law Deter? A Behavioural Science Investigation' (2004) 24 Oxford Journal of Legal Studies 173; John Scholz, 'Enforcement Policy and Corporate Misconduct: The Changing Perspectives of Deterrence Theory' (1997) 60 Law and Contemporary Problems 253; Winter and May, 'Motivation for Compliance with Environmental Regulations', above n 18, 676–7.

[15] Simpson, above n 19, 41 concludes from her survey of the literature testing the power of perceptual deterrence to explain crime by corporations that 'most corporate decision makers, even though they share many characteristics thought to maximize deterrent effects, are unaffected by formal punishment risks and outcomes.' For other empirical evidence of failure of deterrence see John Braithwaite and Toni Makkai, 'Testing an Expected Utility Model of Corporate Deterrence' (1991) 25 Law and Society Review 7; John Braithwaite and Toni Makkai, 'The Dialectics of Corporate Deterrence' (1994) 31 Journal of Research in Crime and Delinquency 347; Dorothy Thornton, Neil Gunningham and Robert Kagan, 'General Deterrence and Corporate Environmental Behavior' (2005) 27 Law and Policy 262.

[16] Simpson, above n 19, 28, 40–2.

[17] On the importance of awareness for compliance, see Søren Winter and Peter May, 'Information, Interests, and Environmental Regulation' (2002) 4 Journal of Comparative Policy Analysis: Research and Practice 115. See also Dimento, above n 18; cf Elffers, van der Heijden and Hezemans, above n 18 (finding no effect of knowledge of and clarity of rules on compliance).

[18] Winter and May, 'Motivation for Compliance with Environmental Regulations', above n 18, 677–8. See also Tom R Tyler and John M Darley, 'Building a Law-Abiding Society: Taking Public Views About Morality and the Legitimacy of Legal Authorities into Account when Formulating Substantive Law' (2000) 28 Hofstra Law Review 707; Sutinen and Kuperan, 'A Socio-Economic Theory of Regulatory Compliance', above n 18, 182; K Kuperan and Jon G Sutinen, 'Blue Water Crime: Deterrence, Legitimacy, and Compliance in Fisheries' (1998) 32 Law and Society Review 309 (significance of moral development).

[19] See Tom Tyler, Why People Obey the Law (2nd ed, 2006) especially 269–76 for a succinct summary of the theory and empirical evidence supporting it; Tyler himself and co-authors have adduced much empirical evidence supporting procedural justice theory at least in relation to individual regulatees: see Tom R Tyler, 'Trust and Law Abidingness: A Proactive Model of Social Regulation' (2001) 81 Boston University Law Review 361. See also Kristina Murphy, 'Procedural Justice and Tax Compliance' (2003) 38 Australian Journal of Social Issues 379; Kristina Murphy, 'The Role of Trust in Nurturing Compliance: A Study of Accused Tax Avoiders' (2004) 28 Law and Human Behavior 187.

[20] Tyler, Why People Obey the Law, above n 24, 276.

[21] Winter and May, 'Motivation for Compliance with Environmental Regulations', above n 18, 678. For empirical studies supporting the significance of social influence on compliance, see Neil Gunningham, Robert A Kagan and Dorothy Thornton, Shades of Green: Business, Regulation, and Environment (2003); Joseph Rees, 'Development of Communitarian Regulation in the Chemical Industry' (1997) 19 Law and Policy 477.

[22] As Winter and May ('Motivation for Compliance with Environmental Regulations', above n 18, 678) point out, social influence 'may over time have a socializing effect on regulated parties leading to normative commitment'. This is also a central claim of institutional theories: see, eg, Andrew Hoffman, From Heresy to Dogma: An Institutional History of Corporate Environmentalism (1997); W Richard Scott, Institutions and Organizations (1995).

[23] Winter and May, 'Motivation for Compliance with Environmental Regulation', above n 18, 678. Tyler's procedural justice theory also sees social influence between regulator and regulated as important since '[i]t has been shown that people care more strongly about procedural justice when their identities are linked to a social relationship with a group or person': Tyler, Why People Obey the Law, above n 24, 276.

[24] John Braithwaite has also argued, on the basis of empirical evidence, that 'the proffering of trust, praise, and the nurturing of pride in corporate social responsibilities' by the regulator might be part of an effective dialogic approach to regulation: John Braithwaite, Restorative Justice and Responsive Regulation (2002) 112.

[25] Eugene Bardach and Robert A Kagan, Going by the Book: The Problem of Regulatory Unreasonableness (1982) 123–51; Raymond J Burby and Robert G Paterson, 'Improving Compliance with State Environmental Regulations' (1993) 12 Journal of Policy Analysis and Management 753, 756, 766; Kathryn Harrison, 'Is Cooperation the Answer? Canadian Environmental Enforcement in Comparative Context' (1995) 14 Journal of Policy Analysis and Management 221, 222–3; Peter J May and Søren Winter, 'Regulatory Enforcement and Compliance: Examining Danish Agro-Environmental Policy' (1999) 18 Journal of Policy Analysis and Management 625. Note that most of these empirical studies find that it is actually a mix of cooperation and deterrence that is effective.

[26] Valerie Braithwaite, 'Dancing with Tax Authorities: Motivational Postures and Non-Compliant Actions' in Valerie Braithwaite (ed), Taxing Democracy: Understanding Tax Avoidance and Evasion (2003) 15.

[27] Motivational postures theory comes from Valerie Braithwaite's analyses of survey data about regulatees' experiences of nursing home and tax regulation and compliance: 'Motivational postures are conglomerates of beliefs, attitudes, preferences, interests, and feelings that together communicate the degree to which an individual accepts the agenda of the regulator, in principle, and endorses the way in which the regulator functions and carries out duties on a daily basis': Valerie Braithwaite, Kristina Murphy and Monica Reinhart, 'Taxation Threat, Motivational Postures, and Responsive Regulation' (2007) 29 Law and Policy 137, 138. See also Valerie Braithwaite, John Braithwaite, Diane Gibson and Toni Makkai, 'Regulatory Styles, Motivational Postures and Nursing Home Compliance' (1994) 16 Law and Policy 363; Valerie Braithwaite, 'Games of Engagement: Postures within the Regulatory Community' (1995) 17 Law and Policy 225; Valerie Braithwaite, 'Tensions Between the Citizen Taxpaying Role and Compliance Practices' (Working Paper No 13, Centre for Tax System Integrity, Australian National University, 2001); Braithwaite, 'Dancing with Tax Authorities', above n 31. Note that motivational postures theory has so far been developed primarily in relation to individuals. While we would expect similar phenomenon to apply to firms, the social psychological dynamics are likely to be more difficult to measure in organisations.

[28] Braithwaite, Murphy and Reinhart, 'Taxation Threat, Motivational Postures, and Responsive Regulation', above n 32.

[29] Braithwaite, 'Dancing with Tax Authorities', above n 31, 33.

[30] Braithwaite, 'Tensions Between the Citizen Taxpaying Role and Compliance Practices', above n 32, 9.

[31] Braithwaite, 'Dancing with Tax Authorities', above n 31, 35. See also Winter and May, 'Motivation for Compliance with Environmental Regulations', above n 18, 679 for a description of the complex mix of formalism and flexibility, coercion and negotiation that they hypothesise would best promote compliance.

[32] Braithwaite, Restorative Justice and Responsive Regulation, above n 29, 35. See also Ayres and Braithwaite, above n 18.

[33] Braithwaite, Restorative Justice and Responsive Regulation, above n 29, 119.

[34] Note that Braithwaite does not explicitly typify theories of compliance according to the three categories we have used. This is our interpretation of the attraction of responsive regulation theory. This paper is concerned with assessing how businesses perceive the ACCC in terms of all three of the sets of theories described above. We do not go on in this paper to assess whether it meets the specific requirements of a responsive regulator as set out by Braithwaite.

[35] For further information about the methodology for this part of the research and a general preliminary analysis of this data, see Christine Parker and Natalie Stepanenko, Compliance and Enforcement Project: Preliminary Research Report (2003). See also Christine Parker, 'Restorative Justice in Business Regulation? The Australian Competition and Consumer Commission's Use of Enforceable Undertakings' (2004) 67 Modern Law Review 209; Christine Parker, 'The "Compliance" Trap: The Moral Message in Responsive Regulatory Enforcement' (2006) 40 Law and Society Review 591; Michelle Sharpe and Christine Parker, 'A Bang or a Whimper? The Impact of ACCC Unconscionable Conduct Enforcement' (2007) Trade Practices Law Journal (forthcoming).

[36] The questionnaire was to be filled in by the most senior person in the organisation responsible for trade practices compliance, with a focus on contacting first the compliance manager, then the in-house counsel, the company secretary, the chief financial officer and, finally, the chief executive officer, in that order, as the people most likely to be able to fill out the questionnaire on behalf of the business. Forty-two percent of those who filled out a questionnaire were chief executive officers, company secretaries or chief financial officers, and a further 20 percent general counsel or compliance managers. For further information about this part of the project and its methodology, see Vibeke Nielsen and Christine Parker, The ACCC Enforcement and Compliance Survey: Report of Preliminary Findings (2005).

[37] In fact this underestimates the actual response rate — we cut 4.3 per cent of the responses actually received from the study because we discovered that the respondents were too small (less than 100 employees) to fit into our sample of large businesses. If we, quite reasonably, assume that similarly 4.3 per cent of the entire list of companies surveyed (including non-respondents) were 'too small', then we would have a response rate of 45 per cent.

[38] Yehuda Baruch, 'Response Rate in Academic Studies — A Comparative Analysis' (1999) 52 Human Relations 421 reports that the average response rate for questionnaire research where the targets for filling out the questionnaire were top managers or someone acting as a representative of a business in articles published in high quality management journals in 1975, 1985 and 1995 was 35.5 per cent. See also Michael Bednar and James Westphal, 'Surveying the Corporate Elite: Theoretical and Practical Guidance on Improving Response Rates and Response Quality in Top Management Survey Questionnaires' in David Ketchen and Donald Bergh (eds), Research Methodology in Strategy and Management (2007) (forthcoming).

[39] Nielsen and Parker, The ACCC Enforcement and Compliance Survey, above n 41, 12–13.

[40] Further details of this test are reported in ibid 279–82.

[41] The six indices have been arranged in order with the one that garnered the highest level of agreement from our respondents first, and so on, down to the sixth. The items within each index have been arranged from the ones that fit best in each index to the one that is least important to the index. The mean rating for each individual item is shown in brackets. The division into the six separate indices is supported by a factor analysis. The Cronbach's Alphas for each of the six indices are shown in Table 1. Cronbach's Alpha measures how reliably a set of items (for example, questions in a survey) measures a single uni-dimensional latent variable. An index with a Cronbach's Alpha score of 0.70 or higher is considered a strong index, but it is difficult to get a high score when the index contains few variables. The Cronbach's Alphas for 'accommodating behaviour', 'not biased in targeting', and 'undogmatic behaviour' shown in Table 1 are rather low: the main reason for this is that these indices contain only two to four variables each. In the case of 'undogmatic behaviour' (which has four items), it may also be that the items do not fit together as well as the items in some of the other measures.

[42] Tested by calculating the Pearson's Product Moment Correlation Coefficient ('Pearson Correlation') between size and each of the six dimensions of opinion. The Pearson Correlation is a measure of strength of the linear correlation between two variables with 0.00 representing no correlation and 1.00 representing perfect correlation. In this Table and all other places in this paper showing Pearson Correlations: ** = sig. 0.01; * = sig. 0.05 (two-tailed); and statistics shown without asterisk are not significant. We also tested for significant difference by industry but found no significant difference, as explained in the text.

[43] According to the factor analyses, 'wide range of effective sanctions', 'politically difficult to ride roughshod over my organisation' and 'the ACCC is generally keeping a close eye on our industry' were together a separate factor. But by adding them to 'Likelihood and Severity of ACCC Enforcement Action', we only lowered the Cronbach's Alpha score for that item from 0.82 to 0.77, which still indicates a strong index.

[44] The Cronbach's Alpha would be slightly better if we left out '[i]f an organisation cooperates with the ACCC they are treated more leniently'.

[45] The Cronbach's Alpha would be 0.80 if we left out '[t]he investigative staff of the ACCC are very competent compared to the staff and lawyers of the companies they are regulating'.

[46] Although the factor analysis and Cronbach's Alpha supports putting the elements in this index together, it should be noted that in theoretical terms this index contains a number of sub-dimensions that are discussed below.

[47] The questionnaire included a third related question, '[The ACCC] [c]atches only small organisations'. However, there is no significant negative or positive correlation between this item and the item '[The ACCC] [c]atches mostly big organisations'. The Pearson Correlation is -0.015. The item about small organisations has not been included as it correlates significantly with size (whereas the item about large organisations did not). This suggests there is some bias in the way respondents answered that particular item. There is a significant negative correlation between the two items that have been included in the index (Pearson Correlation = -0.333), and neither of them correlates significantly with size.

[48] Not able to get better by deleting a variable.

[49] See discussion of opinion of 'Biased in Targeting' below.

[50] For constitutional reasons, the TPA was only extended to cover certain sectors of the economy well after its first introduction: see Russell V Miller, Miller's Annotated Trade Practices Act: Australian Competition and Consumer Law (27th ed, 2006) 41–3 (extension of the TPA to cover business activities of states and territories), 125–7 (extension of the TPA to cover individuals/unincorporated entities).

[51] Statistics in Appendix 1 below. Mean scores for each industry grouping were calculated, and then tested for significant differences using one-way Analysis of Variance ('ANOVA') testing. One-way ANOVA is a powerful statistical technique for comparing variance between different groups within a population in order to determine whether another factor explains some of that variance.

[52] Tested by calculating the Pearson Correlation between each of the six dimensions of opinion. See above n 47 for explanation of Pearson Correlation and meaning of asterisks.

[53] The remaining proportion of the respondents in each case chose the neutral option of 3 on a scale from 1 to 5.

[54] Christine Parker, Interview with anonymous lawyer (Perth, 25 February 2003). See also Parker and Stepanenko, above n 40, 57–9; Parker, 'The "Compliance" Trap', above n 40, 606–8.

[55] One (anonymous) respondent's response to an open-ended question in the survey. An open-ended question at the end of our questionnaire asked '[i]f your organisation has any comments about the ACCC which you would like to add, please write them below.' All of the responses to this question are reported in Nielsen and Parker, The ACCC Enforcement and Compliance Survey, above n 41, 268–78.

[56] See Braithwaite, Restorative Justice and Responsive Regulation, above n 29, 30–4; Bridget M Hutter, 'Variations in Regulatory Enforcement Styles' (1989) 11 Law and Policy 153; Robert A Kagan, 'Regulatory Enforcement' in David H Rosenbloom and Richard D Schwartz (eds), Handbook of Regulation and Administrative Law (1994) 383, 387–90; Peter J May and Raymond J Burby, 'Making Sense Out of Regulatory Enforcement' (1998) 20 Law and Policy 157; Peter J May and Robert S Wood, 'At the Regulatory Front Lines: Inspectors' Enforcement Styles and Regulatory Compliance' (2003) 13 Journal of Public Administration Research and Theory 117; John T Scholz, 'Managing Regulatory Enforcement in the United States' in David H Rosenbloom and Richard D Schwartz (eds), Handbook of Regulation and Administrative Law (1994) 423, 441–6.

[57] Christine Parker, Interview with anonymous lawyer (Sydney, 1 April 2003).

[58] Christine Parker, Interview with anonymous lawyer (Melbourne, 13 September 2003). For further examples of these criticisms from the qualitative interviews, see Parker and Stepanenko, above n 40, 53–7. See also n 85 and n 86 below and accompanying text.

[59] Parker, Interview with anonymous lawyer, above n 62.

[60] Anonymous response to an open-ended question at the end of our survey. See above n 60.

[61] Braithwaite, Restorative Justice and Responsive Regulation, above n 29, 33.

[62] More formal economic-style modelling of deterrence usually multiplies businesses' (perception of the) chance of being caught by the chance of being prosecuted and found guilty and by the severity of the sanction if prosecuted. We have chosen instead to add these items into an index. We see all these items (as well as others that were included in our questionnaire and are not reported here) as potentially involving different dimensions of the business perception of deterrence and therefore find the multiplicative model described above as too simplistic to deal with the range of elements that might effect deterrence.

[63] There were lower responses for the items asking the businesses for the extent to which they agreed that 'it is hard for the ACCC to find out when organisations breach the law' and 'in light of the size and complexity of their task the ACCC has few resources'.

[64] The sanctions available under the TPA were up to $10 million for corporations and $25 000 for individuals. But the sanctions actually in use were much lower: David Round, John Siegfried and Anna Baillie, 'Collusive Markets in Australia: An Assessment of the Economic Characteristics and Judicial Penalties' (1996) 24 Australian Business Law Review 292, 298. The penalties levied in three cartel cases are demonstrated to be inadequate according to deterrence theory in Parker, 'The "Compliance" Trap', above n 40, 597. For criticism of the deterrence impact of the previous sanctions and recommendations for new higher sanctions, see Trade Practices Act Review Committee, above n 1, 161–5 for. As of 1 January 2007, the penalties available are up to three times the benefit received by a corporation because of their breach, or 10 per cent of annual turnover if the benefit cannot be determined, and $500 000 for individuals: Trade Practices Legislation Amendment Act (No 1) 2006 (Cth). The Federal Government has also committed to introduce criminal sanctions for breaches of the price-fixing provisions to increase the deterrent threat even further: Peter Costello, 'Criminal Penalties for Serious Cartel Behavior' (Press Release No 4, 2 February 2005) <http://www.treasurer.gov.au/tsr/content/pressreleases/2005/004.asp> at 14 January 2007. See also Julie Clarke, 'Criminal Penalties for Contraventions of Part IV of the Trade Practices Act' [2005] DeakinLawRw 8; (2005) 10 Deakin Law Review 141.

[65] Again of course it might be argued that it would be preferable for deterrence to have much closer to 100 per cent of businesses disagreeing or strongly disagreeing with the statements quoted above.

[66] Christine Parker, Interview with anonymous lawyer (Sydney, 3 April 2003). See Parker and Stepanenko, above n 40, 43–6 for further evidence from the qualitative interviews of the deterrent impact of the ACCC.

[67] Organisation for Economic Cooperation and Development, Hard Core Cartels: Recent Progress and Challenges Ahead (2003) 27.

[68] See Braithwaite, Restorative Justice and Responsive Regulation, above n 29, 119–22.

[69] See discussion under heading '[n]ot biased in targeting' below.

[70] See above n 59 and accompanying text.

[71] ACCC, Summary of the Trade Practices Act 1974 (2001) 10.

[72] See above n 24, and accompanying text on the meaning of 'procedural justice' in this context.

[73] In Tyler and Darley, above n 23, 723–4, 736, a distinction is made between the extent to which people voluntarily defer to law because it accords with people's sense of morality and the extent to which they voluntarily defer because legal authorities are seen as legitimate (based on assessment of the authority's procedural fairness). Tyler finds that the two reinforce each other, but are not the same thing: at 725–6. Tyler, Why People Obey the Law, above n 24, distinguishes between people's assessments of the distributive (substantive) justice and procedural justice of authorities' decision-making — finding procedural justice to be more significant in building legitimacy and therefore compliance.

[74] The Cronbach's Alpha for the whole index of procedural and substantive justice would drop from 0.886 to 0.881 if we excluded 'most organisations get what they deserve' from the measure. The Cronbach's Alpha would drop from 0.886 to 0.865 if we excluded 'just' from the measure. Furthermore, 'most organisations get what they deserve' and 'just' are equally as highly correlated with each of the other variables as the other variables are correlated to each other.

[75] See the contributions to Valerie Braithwaite and Margaret Levi (eds), Trust and Governance (1998); Murphy, 'The Role of Trust in Nurturing Compliance', above n 24. Note that the remaining proportion of respondents in relation to each of the statistics quoted were neutral about the relevant statement.

[76] See above n 7. But it should be noted that if not all businesses are very positive about the ACCC's level of procedural and substantive justice, their assessment of the ACCC in this area is not actively negative. Nevertheless the open-ended question at the end of our survey (see above n 60) did receive some positive responses about the fairness of the ACCC. For example: 'We have only had one experience with the ACCC and have found them fair not only to the consumer but to our business. Their judgments were based on facts and they seemed to keep an open mind on all the circumstances surrounding the complaint.'

[77] Trade Practices Act Review Committee, above n 1, 182. The Dawson Review also commented that the 'ACCC's use of the media was one of the issues most frequently raised with the Committee', with the complaint made that the ACCC's use of publicity amounted to a 'trial by media' that denied natural justice: at 182. For further examples of criticisms of the ACCC's allegedly unfair use of publicity from our qualitative interviews and in relation to specific cases, see above n 59 and accompanying text.

[78] Quotation from Dick Warburton, a high profile company director, then Chairman of Caltex and David Jones, reported in Kitney and Murphy, above n 4. See also Jill Margo, 'Dick: The Brick Thrower', The Australian Financial Review (Sydney), 8 June 2002, 24. The Australian Chamber of Commerce and Industry ('ACCI') has also complained that 'business goodwill is being undermined merely on the basis of suspicions held by the regulator': Lyndon Rowe (Acting Chief Executive of the ACCI), 'Business United Against Stronger ACCC', The Australian Financial Review (Sydney), 14 May 2002, 71.

[79] Summary of comments made in the following interviews: Parker, Interview with anonymous lawyer, above n 59; Christine Parker, Interview with anonymous lawyer (Melbourne, 29 August 2002).

[80] For example, one business claimed that the ACCC 'did not allow it time to put its side of the story...'. Their solicitor was reported saying that '[t]he ACCC was not prepared to listen to what we had to say. It was as if our client was guilty until proven innocent': Jason Clout, 'ACCC Acted Unfairly, Franchisor Alleges', The Australian Financial Review (Sydney), 13 July 1999, 40.

[81] Note that respondents' assessments of how reasonable the ACCC is was an item in the procedural and substantive justice measure (see Table 1). We have already seen that respondents' views of how accommodating the behaviour of the ACCC is and the ACCC's procedural and substantive justice are positively and significantly correlated (see Table 2): see above n 66 and accompanying text.

[82] See above n 66 and accompanying text.

[83] Parker, Interview with anonymous lawyer, above n 62. See also above n 59 and accompanying text, and above n 76 and accompanying text.

[84] See Table 1 above.

[85] There is no logical connection between being biased in targeting on the basis of size and being accommodating, so the lack of any significant correlation here is not surprising.

[86] This is true for each individual item in the measure also, as shown in Table 1. A disproportionate number of respondents fall on the negative side of the index rating how undogmatic the ACCC is, but meanwhile a fairly large group is also clustered around the middle of the index.

[87] Two of the items on this measure — '[d]oes not fight back if an organisation is non-cooperative' and '[n]ot keen on taking organisations to court' — are ambiguous as to whether they are measures of lack of dogmatism or simply measures of whether the ACCC is perceived as likely to take serious enforcement action (perhaps reflected in the lower Cronbach's Alpha of 0.57 for this measure). We have interpreted those two items as relating, at least partially, to businesses' perceptions of the flexibility that the ACCC demonstrates in the way it chooses to enforce the law in individual cases. These questions were placed on the questionnaire with the positive version on the left hand side and the negative version (shown in Table 1) on the right hand side. In the context of the ACCC and the way it has been criticised in the media (as reflected in our qualitative interviews and the quotations cited in the text above), to the extent that businesses agree that the ACCC is 'keen on taking organisations to court' or 'fights back if an organisation is non-cooperative' we interpret our respondents to be saying that the ACCC has an inflexible, stubborn approach to enforcement strategy in individual cases. Placing these two items in the measure of 'undogmatic behaviour' was supported by our statistical analysis as shown in Table 1 (see also accompanying explanation). Taking these two items out of the measure of undogmatic behaviour did not change the correlations reported in Table 2. Individually the two items do correlate significantly and negatively with opinions on likelihood and severity of ACCC enforcement action (as does the whole measure of undogmatic behaviour as shown in Table 2).

[88] Response to the open-ended question at the end of the survey. See above n 60.

[89] Christine Parker, Interview with anonymous lawyer (Melbourne, 12 December 2002).

[90] Christine Parker, Interview with anonymous lawyer (Melbourne, 24 August 2002).

[91] Similar to May and Wood's dimension of 'facilitation' in regulatory enforcement style ('the willingness of inspectors to help regulatees and be forgiving'): May and Wood, above n 61, 119.

[92] More consistent with May and Wood's concept of 'formalism' ('the rigidity with which the rules are interpreted and applied'): ibid. See also the comments on how we interpret the items in this scale at above n 92.

[93] Winter and May, 'Motivation for Compliance with Environmental Regulations', above n 18, 679. A series of empirical studies in various areas of regulation have shown that when regulators are perceived as unreasonable or unresponsive to those who they regulate, this can break down the good will and motivation of those that were already willing to comply: John Braithwaite, To Punish or Persuade: Enforcement of Coal Mine Safety (1985); Eugene Bardach and Robert A Kagan, Going by the Book: The Problem of Regulatory Unreasonableness (1982); Toni Makkai and John Braithwaite, 'Reintegrative Shaming and Regulatory Compliance' (1994) 32 Criminology 361; Murphy, 'Procedural Justice', above n 24.

[94] The ACCC's practice of refusing to settle matters, without the offender agreeing to court declarations (by consent) that they have breached the law (or more rarely the offender making admissions that they breached the law in an enforceable undertaking) was particularly contentious for some of the interviewees: 'The Commission is obsessive about getting declarations of guilt. In Part IV matters the clients would deny all and offer undertakings and the Commission would still demand a confession …' (Parker, Interview with anonymous lawyer, above n 71).

[95] Parker has previously discussed these difficulties in more detail in 'The "Compliance" Trap', above n 40.

[96] Measured by asking: 'Has your organisation ever — as far back as you have knowledge —had any interaction with the ACCC? By "interaction" we mean both investigations (whether the case was dropped or not), and different kinds of formal or informal discussions about eg applications for authorisation, notification or proposed merger, as a potential consumer, making a complaint or in the context of enforcement activities.' 70 per cent have had no interaction with the ACCC. For those who have had an interaction with the ACCC the most common interactions concerned either being the subject of an investigation or complaint (15 per cent of the total respondents) or mergers and acquisitions, notifications and authorisations (10 per cent of the total sample). For further details see Nielsen and Parker, The ACCC Enforcement and Compliance Survey, above n 41, 13–15.

[97] Independent Samples T-test for Equality of Means ('T-test'). The T-test compares the mean scores of two groups in relation to a given variable. Here and in Table 3 *** = p< .001 (two-tailed sig.); '-' = not significant.

[98] However even if estimation of likelihood and severity of ACCC enforcement is increased via interaction with the ACCC, this does not necessarily mean that respondents' overall calculus of costs and gains of compliance vis-à-vis non-compliance would be tipped more in favour of compliance by interaction with the ACCC. It may be that other costs of non-compliance are seen as lesser as result of interaction with ACCC. See Nielsen and Parker, The ACCC Enforcement and Compliance Survey, above n 41, 140–2.

[99] See above n 101.

[100] See Trade Practices Act Review Committee, above n 1, 49.

[101] Tested using T-tests. See above n 102 for an explanation of the T-test and the meaning of the asterisks.

[102] Trade Practices Act Review Committee, above n 1, 60–1.

[103] The questions asked on the questionnaire only allow us to compare opinions before and after interaction with the ACCC in relation to opinions about procedural and substantive justice, strategic sophistication, and how undogmatic and how accommodating the ACCC is. Therefore we can only discuss changes in these four sets of opinions. We are not able to examine more closely whether businesses change their opinion about the likelihood and severity of ACCC enforcement action and the ACCC being biased in targeting as a direct result of their interaction with the ACCC.

[104] Note the responses discussed in the subsections above all related to the time at which the questionnaire was actually filled out; that is after any interaction the respondent had had with the ACCC.

[105]Another difficulty is that we have measured opinion of the ACCC before interaction with the ACCC retrospectively (that is after the interaction had already occurred). It would have been more reliable to ask the respondents what their opinion of the ACCC was at two points in time — both before and after the interaction. However since our survey occurred at only one point in time, this was impossible. Therefore our results in this section should be treated with caution. Nevertheless the fact that the respondents did answer the two questions about their opinion of the ACCC before and after interaction differently give us some confidence that we have reliably measured their change in opinion.

[106] Calculated using One-Way ANOVA. See explanation at above n 56. *** = p< .001 (two-tailed sig.); — = not significant.

[107] On the other hand it is possible that they took into account these more procedural factors in deciding how pleased they were with the outcome in their own case. A better test might have been if we had asked to what extent the substantive outcome accorded with their self-interest.

[108] A January 2006 government-commissioned review of regulation (the 'Regulation Taskforce') listed a number of 'allegations' that business submissions to the review had made about the operation of various regulators. These criticisms were similar to those expressed about the ACCC. But by this time the Regulation Taskforce commented that 'there was a particular focus on the financial and corporate regulators', APRA and ASIC. They went on to comment that '[s]imilarly, business strongly criticised the [ACCC] a few years ago for its approach to merger and other regulation, culminating in the Dawson Review, whereas it hardly rated a mention in this review': Regulation Taskforce 2006, Rethinking Regulation: Report of the Taskforce on Reducing Regulatory Burdens on Business (2006) 158–9.

[109] We also checked whether there was any correlation between size of the organisation and their opinion of the toughness of each of the four regulators. Only in relation to the ACCC was there a significant correlation between size and opinion of toughness with a Pearson Correlation of 0.141 significant at the 0.01 level (two-tailed). The other Pearson Correlation statistics were ASIC (0.012), ATO (0.013) and APRA (0.037).

[110] For the year to 30 June 2005, the ATO had 158 criminal convictions and 102 jailings from 164 prosecutions in relation to 336 fraud investigations: Australian Taxation Office, Annual Report 2004-2005, para. 2.4. See John Braithwaite, Markets in Vice, Markets in Virtue (2005), 178.

[111] There was no significant difference as to opinion by industry. Nor was there any significant correlation between size and positive opinion of the ACCC, ATO and APRA. However, there was a significant negative correlation between size and opinion about ASIC. The bigger the business, the more negative is their opinion of ASIC. Statistics on file with the authors, and also reported in Nielsen and Parker, The ACCC Enforcement and Compliance Survey, above n 41, 156–60.

[112] This was partly because the questionnaire was very long already and it was not possible to ask all the questions about each regulator that we asked about the ACCC. It is also because the indices for the six opinions for the ACCC were fine-tuned by statistical analysis after the results came in, and therefore well after the questionnaire had been designed.

[113] Ideally, we would go on to test what influence opinions of the ACCC and different attitudes towards compliance each have on actual compliance behaviour by our respondents. However, it was impossible to find a reliable, meaningful and practical measure of compliance for this research. Official statistics are bound to be under-inclusive since the ACCC is a reactive regulator that does not monitor or inspect for compliance, and only takes enforcement action in a small fraction of the cases of potential breaches that come to its attention through complaints (let alone all the non-compliance that is never the subject of complaint). Yet self-reported measures of compliance are unreliable especially where one is seeking to measure compliance with a whole piece of legislation that contains prohibitions expressed in broad terms with clear purposes but uncertain applications to particular fact scenarios. For a description and evaluation of the various ways compliance could have been measured in this study, see Vibeke Nielsen and Christine Parker, 'Is It Possible to Measure Compliance?' (Legal Studies Research Paper No 192, Faculty of Law, The University of Melbourne, 2006).

[114] We have drawn on and adjusted Valerie Braithwaite and colleagues' measures of motivational postures for our measure of compliance attitudes: see above n 32 and accompanying text.

[115] This measure is similar to Valerie Braithwaite's motivational posture of 'commitment': see Braithwaite, 'Dancing with Tax Authorities', above n 31, 18, 20.

[116] Factor analysis showed that the way the respondents answered the question clearly split into these aspects. The Cronbach's Alphas for these two indices are also good, as shown in Table A2.

[117] Consistent with the motivational posture of 'resistance': Braithwaite, 'Dancing with Tax Authorities', above n 31, 18, 20. However, Braithwaite's measure of resistance also includes items that relate more to beliefs about the regulator such as we have included in Table 1 above.

[118] Ibid 19 following Doreen McBarnet, 'When Compliance is Not the Solution but the Problem: From Changes in Law to Changes in Attitude' in Valerie Braithwaite (ed), Taxing Democracy: Understanding Tax Avoidance and Evasion (2003) 229.

[119] See above n 47 for explanation of Pearson Correlation and meaning of asterisks.

[120] See sources cited above n 24.

[121] Christine Parker, Interview with anonymous lawyer (Sydney, 4 April 2003).

[122] We do not look at the relationship between perceptions of the ACCC and calculations of the costs and benefits of compliance with the TPA in this paper. However our survey did collect data on businesses' perceptions of a range of costs and benefits of compliance and non-compliance with the TPA, which we intend to report in a later paper. See Nielsen and Parker, The ACCC Enforcement and Compliance Survey, above n 41, 119–43.

[123] See above n 98 and accompanying text.

[124] Braithwaite, Murphy and Reinhart, 'Taxation Threat', above n 32, 150. Braithwaite and colleagues had also found in a study of taxpayers' motivational postures that 'higher perceived deterrence was associated with lower dismissiveness [a measure combining disengagement and game-playing]': at 150.

[125] That is, they will not see the polity and community taking business regulation in a morally serious way: see Keith Hawkins, Law as Last Resort: Prosecution Decision-Making in a Regulatory Agency (2002) 416–18; Parker, 'The "Compliance" Trap', above n 40; Laureen Snider, 'The Regulatory Dance: Understanding Reform Processes in Corporate Crime' (1991) 19 International Journal of the Sociology of Law 209; Frank Pearce and Stephen Tombs, Toxic Capitalism: Corporate Crime and the Chemical Industry (1998).

[126] To use the term that Valerie Braithwaite gives to one of her respondents' possible motivational postures. She defines 'capitulation' as 'acceptance of the tax office as the legitimate authority and the feeling that the tax office is a benign power as long as one acts properly and defers to its authority': see Braithwaite, 'Dancing with Taxation Authorities', above n 31, 18.

[127] Parker, Interview with anonymous lawyer, above n 71.

[128] Parker, Interview with anonymous lawyer, above n 126. This lawyer suggests that clients may simply be spending more money on advice about compliance before taking action in the market and this may be a completely appropriate and desirable response to the potential for ACCC enforcement that enhances compliance.

[129] Parker, Interview with anonymous lawyer, above n 62.

[130] The Dawson Review of the TPA was prompted by both big business and small business complaints about the ACCC: Trade Practices Act Review Committee, above n 1.

[131] Deputy Commissioner Allan Asher, a Labor government appointment, was not re-appointed by the conservative Coalition government, presumably because of the unpopularity of his vigorous enforcement methods. When the former Chair, Professor Allan Fels, announced his imminent retirement, at least one prominent CEO made it clear he was glad to see him go: see above n 5.

[132] Grabosky and Braithwaite, Of Manners Gentle, above n 10.

[133] Tom Tyler's research and writing on procedural justice certainly acknowledges that people's views about the morality or substantive justice of regulation, as well as its procedural justice, can affect their views of the legitimacy of regulation: see, eg, Tyler and Darley, above n 23. Indeed one of Tyler's strongest and clearest arguments is that it is both of these normative assessments of regulation that are likely to be a more democratic and robust basis for compliance than the calculative and fear-based motivations on which deterrence relies: Tyler, Why People Obey the Law, above n 24.

[134] See Parker, 'The "Compliance" Trap', above n 40.

[135] On the other hand, in doing so, of course, they sometimes lack clarity and predictability.

[136] It is also possible that our more ambiguous findings in relation to dogmatism arise from difficulties in the way we have measured dogmatism (as reflected in the low Cronbach's Alpha for this measure). See the discussion at n 92 above. Moreover, this cross-sectional study of broad opinion of the ACCC does not provide a thorough test of the specific claims of responsive regulation in relation to how a regulator should utilise a pyramid of enforcement strategies in a particular enforcement matter.

[137] For each item respondents were asked to '[m]ark the number closest to the opinion held by most managers in your organisation'.

[138] The actual question asked was: 'The Trade Practices Act is the main Australian government law that sets out rules and standards on competition and consumer protection for all Australian business and trading activity (for profit and not for profit). The following trading practices are each regulated by the TPA. To what extent do you believe that each is damaging or beneficial to Australian economic well-being?'

[144] Pearson Correlations as explained in above n 47.