I am pleased to release these updated guidelines on the prescription of industry codes of conduct under the Competition and Consumer Act 2010 (CCA).
Enforceable industry codes of conduct were introduced in 1998. While industry codes of conduct are rarely used, they are in force in a number of industries to encourage improved conduct. These include:
- in the horticulture industry, to address a power imbalance between farmers and food wholesalers;
- in the oil industry, to improve transparency of pricing and to assist industry participants to make more informed decisions when entering, renewing or transferring a fuel re–selling agreement by requiring the disclosure of specific information;
- in the franchising sector, to address issues of information asymmetry and power imbalance between franchisors and franchisees; and
- in the supermarket sector, to make it compulsory for certain grocery retailers to use unit pricing when selling non–exempt grocery items to consumers.
Where possible, markets should be allowed to operate without excessive regulation. There are clear benefits for industries who establish high standards of conduct for businesses that operate in their sector, including through self–regulating industry codes. This gives consumers and businesses faith that there is a framework in place that encourages best practice and offers appropriate redress when needed.
Where there are serious issues affecting the efficient operation of markets, or even total failures of those markets, it is appropriate for the Government to intervene. Where self regulation has not succeeded and a legislative solution is not appropriate, prescription of an industry code of conduct allows the Government to provide a clear set of rules to define the best practice for conduct of participants in an industry.
If industry decides it wishes to purse an enforceable code of conduct, it must make a compelling case before an industry code of conduct will be prescribed. Any such case will require extensive consultation and will need to stack up against detailed analysis.
I hope that these guidelines will assist those who may be considering whether a prescribed code of conduct is appropriate, in terms of both the general process that applies but also the types of considerations that may be taken into account by the Government when deciding whether to prescribe an industry code of conduct under the CCA to apply to a particular industry.
The Hon David Bradbury MP
Parliamentary Secretary to the Treasurer