Australian Competition Consumer Commission (ACCC) --- "The ACCC's draft determination" [1998] PrivLawPRpr 63; (1998) 5(4) Privacy Law & Policy Reporter 67

The ACCC’s draft determination

This summary is reproduced below from the Australian Competition and Consumer Commission (ACCC) Draft Determination on the Application for Authorisation (No A40077) for the Australian Direct Marketing Association Direct Marketing Code of Conduct, dated 7 October 1998. The full Draft Determination is available at http://gair.firstpr.com.au/public-files/drdet1.doc — General Editor

The Commission has considered an application for authorisation lodged by the Australian Direct Marketing Association (ADMA). Application A40077 was made under s 88(1) of the Trade Practices Act (‘the Act’) for an authorisation to make a contract or arrangement, or arrive at an understanding, a provision of which would have the purpose, or would or might have the effect, of substantially lessening competition within the meaning of s 45 of the Act, and to give effect to such a contract arrangement or understanding. The application concerned ADMA’s arrangements to adopt a Direct Marketing Code of Practice (the Code of Practice) and enforce the provisions contained in that Code.

ADMA’s Code of Practice contains a number of core rules which deal with standards of fair conduct generally, standards relevant to telemarketing, standards relevant to electronic commerce, and standards relevant to consumer data protection. The Commission is of the view that these core rules have the potential to give rise to public benefit through the provision of better information to consumers about their rights and about their purchases, by protecting consumers from unreasonably intrusive forms of direct marketing and their right to privacy and by improving the quality and consistency of services which consumers receive from direct marketers.

It is the Commission’s view that the extent to which these core provisions will in practice benefit the public will depend upon the level of compliance with the provisions. The Commission also acknowledges that as the core provisions restrict the conduct in which ADMA members can engage, increased compliance may also have the potential to standardise the way in which participants in the direct marketing industry conduct their business, therefore decreasing competition.

The Commission believes that the core provisions will not be subject to effective enforcement, and therefore increased compliance, unless the following amendments are made to the Code of Practice:

1. Where a complaint which may involve an alleged breach of the Code is not resolved at the business level, members are required to refer the complaint to ADMA to be dealt with via the procedures that are laid down in the Code of Practice
   
   
2. Independence of the Chair of the Code Authority is guaranteed.
   
   
3. The exact composition of the Authority is defined and equality of representation on the Authority is provided for. For example it is comprised of an independent chair, one consumer representative and one industry representative.
   
   
4. All parties to a complaint are provided with equal opportunity to participate fully in the enforcement process and are provided with reasons for decisions which are made affecting their case. Complainants have the right to request the Authority to review any decision by the Compliance Officer that the Code has not been breached.
   
   
5. The breadth of the remedial orders and sanctions which the Authority is empowered to recommend are specified. Guidelines outlining the instances when particular types of remedies or sanctions will be recommended should also be included.
   
   
6. Provide that there are no fees for lodging a complaint or defending an allegation under the Code.
   
   
7. Provide for a system which records and reports all of the complaints which have been received by the Compliance Officer in relation to alleged breaches of the Code and outlines the action which has been taken in regard to the complaints. The Commission considers that inclusion of such information in the ADMA Annual Report would be satisfactory.

In the Commission’s opinion, the issues of independence raised in points 2 and 3 above are also necessary to address concerns regarding anti-competitive detriment. The Code of Practice envisages that the Code Authority will have the power to impose sanctions, including expulsion of members, where a breach of the code is found to have taken place. The Commission is concerned that the imposition of sanctions may lead to decreased competition, especially where the independence of decision making bodies is not guaranteed.

Once the amendments contained in the list numbered 1–7 are included in the Code of Practice, the Commission is satisfied that implementation of it will give rise to public benefits which would outweigh any anti-competitive detriment that may arise. The Commission therefore proposes to grant the authorisation on the condition that the amendments listed 1–7 are included in the Code of Practice.

The Commission proposes to grant authorisation for a four year period from the date of the final determination. The proposed authorisation will apply to persons who become members of ADMA after authorisation is granted.