Looks like another pair of socks for Christmas
The Government’s latest Response to the ongoing Digital Platform Services Inquiry is efficient in its brevity. The ACCC’s fifth interim report issued in September last year contains a blueprint for the proposed regulation of digital markets in Australia. In a 200 page analysis, the ACCC identifies a range of harms that it says require “new and strengthened laws” to better protect consumers and promote competition in digital markets. Over four pages the Government provides its long awaited response, but ultimately tells us only that there are more consultations to come.
The ACCC’s blueprint is set out over seven chapters in the fifth interim report which focuses on regulatory reform. It includes proposed legislative amendments which are categorised as:
- Economy-wide consumer measures
- Digital platform specific consumer measures
- Additional competition measures for digital platforms
- Targeted competition obligations
The Government “supports in principle” each of these categories but does not engage with any of the detail.
Instead, the Response leads with what we already know:
- The Government has implemented changes to the unfair contract terms regime (which came into effect in November this year) and is consulting on a new economy-wide prohibition to address unfair trading practices (category 1). That consultation is at an early stage, and still taking evidence on the nature and extent of any consumer harms not caught by existing laws.
- The Government is also concerned about combating scams, harmful apps and fake reviews, but still exploring the regulation needed to address them (category 2).
The Response also does not say very much about the ACCC’s specific recommendations for consumer redress (category 2). It acknowledges that digital platforms do not have adequate complaints handling processes but does not say that that it supports the ACCC’s recommendations for mandatory minimum standards backed by an external dispute resolution scheme. This is surprising as the proposals were first made in 2019 and further developed by the Department of Infrastructure, including by engaging Accenture for a ten-week project to map the issues and options and devising plans for a pilot scheme. Instead, the Government is calling on industry to develop voluntary internal dispute resolution standards by mid-next year, whilst remaining committed to ensuring that consumers have “access to appropriate pathways” to resolve issues faced online.
The Government is most emphatic in supporting “a strong case” for competition reform (categories 3 and 4), but still hesitant to fully endorse the ACCC’s recommendations. It has tasked Treasury to commence work on the design of a possible legislative framework, which could enable the creation of service specific codes of conduct that could include targeted obligations, applying to certain designated digital platforms; again, this is subject to extensive consultation on an appropriate framework. There is no explanation about why the Government has accepted the ACCC’s view that the existing regime is inadequate, and where it stands on key issues such as who should make designations and what conduct could be addressed in the codes.
Finally, the Response overlooks the ACCC’s proposals for implementation. The ACCC proposes that the regulations be added to the Competition and Consumer Act 2010 (Cth), and that the relevant regulator be backed by a well-functioning enforcement and compliance toolkit including monitoring, investigation and enforcement powers, very similar to the ACCC’s. There are two issues to be resolved here: should the ACCC be the regulator, either alone or in conjunction with other regulators or a new agency set up, and should the new regime include the same administrative and enforcement powers as the current competition and consumer law. The Government does hint that it also thinks the role might be filled by the ACCC, but otherwise says only that designing the new framework would include considering powers for the regulator to enforce the regime.
Despite all the work that has gone into the Digital Platform Services Inquiry, the Government has also referred a number of digital markets issues to the Competition Taskforce Advisory Panel — which is advising on a range of productivity-related concerns over a period of two years. At a recent conference, Chief Advisor to the Taskforce, Marcus Bezzi, confirmed that the Taskforce is considering data and digital economy issues such as incentives for the appropriate trade of data as a tool for innovation and competition, and how to ensure that digital and data services markets remain competitive. Needless to say the proposed ex ante regime also depends on this Taskforce advice.
Unfortunately, the Government Response does not provide a clear indication of the Government’s regulatory intent and is not the Christmas gift we hoped for. The Digital Platform Services Inquiry has been going since October 2020 with seven interim reports so far and is due for completion in just over twelve months. Whether one supports or opposes intervention, a more substantive response would have enabled more focused debate, and made a more satisfying holiday read.