30 April 2016

Soapsuds Cartel and Cement

The Federal Court has made orders that Colgate-Palmolive Pty Ltd pay aggregate penalties of $18 million for anti-competitive activity - centred on cartel provisions of the Trade Practices Act 1974 (Cth), precursor of the current Competition and Consumer Act 2010 (Cth).

Unilever applied for immunity under the Australian Competition & Consumer Commission's’ Immunity Policy for Cartel Conduct. Colgate admitted to entering understandings with competitors that limited the supply, and controlled the price, of laundry detergents - a consumer staple. Colgate agreed with the ACCC to joint submissions on penalty being put to the court ($12 million for an understanding to withhold supply and $6 million for the information sharing understanding). Action against cartel members PZ Cussons Australia Pty Ltd and Woolworths is listed for hearing in June 2016

In ordering the penalties against Colgate the Court described the conduct as serious and the penalty as significant but proportionate.

ACCC Chair Rod Sims commented
The information sharing understanding involved phone calls between senior managers of competing companies, many of which started as social calls, but turned to unlawful exchanges of pricing information. Any contact between competitors carries risk and while discussion of price is particularly serious, there are many topics which may lead to an anticompetitive understanding.
This is the equal third largest penalty that the court has ordered for breaches of the competition provisions of the Act and is an indicator of how seriously the court views the conduct.
These penalties were based on Colgate’s turnover, under the current penalty regime for anticompetitive conduct. The ACCC regards this regime as a key tool in obtaining appropriate penalties for breaches of the Act.
Colgate admitted that it made, and gave effect to, an understanding with Unilever Australia Limited (Unilever) and PZ Cussons whereby they agreed to cease supplying standard concentrate laundry detergents in early 2009 and supply only ultra concentrates from that time.

Colgate also admitted that it and Unilever shared sensitive market information, including information about when they would increase the price of their laundry detergents through telephone contact between  senior Colgate and Unilever executives.

By consent the ACCC resolved its proceedings against former Colgate sales director Paul Ansell,who admitted to being knowingly concerned in the conduct. Ansell is disqualified from managing corporations for seven years and is to pay a contribution of $75,000 towards the ACCC’s costs.

The Federal Court also made other orders by consent that Colgate update its trade practices compliance program and maintain that program for three years and pay a contribution of $450,000 towards the ACCC’s costs.

The ACCC has meanwhile stated
The Federal Court has ordered penalties totalling $18.6 million against Cement Australia Pty Ltd and related companies, for numerous contraventions of section 45 of the Trade Practices Act 1974, in proceedings brought by the Australian Competition and Consumer Commission.
... “It is extremely important for the ACCC to take action whenever the competitive process is damaged by any behaviour that substantially lessens competition. The operation of our market economy depends upon competition to drive innovation and benefit consumers,” ACCC Chairman Rod Sims said. “It has been a very long road for the ACCC, and the penalty judgment is an important milestone in the proceedings,” Mr Sims said.
The ACCC first brought the proceedings in 2008 against five related corporate respondents; Cement Australia Pty Ltd (currently 50% owned by Holcim and 50% owned by the Heidelberg Cement’s subsidiary Hanson), Cement Australia Holdings Pty Ltd, Cement Australia Queensland Pty Ltd (formerly Queensland Cement Ltd), Pozzolanic Enterprises Pty Ltd and Pozzolanic Industries Pty Ltd. The proceedings relate to contracts that were entered into by Cement Australia between 2002 and 2006 with the operators of the Millmerran, Tarong, Tarong North, and Swanbank power stations in South East Queensland to acquire flyash (no allegations were made by the ACCC against the power stations). Flyash is a by-product of burning black coal at power stations, and can be used as a cheap partial substitute for cement in ready-mix concrete.
Following a lengthy fully contested hearing, the Court found numerous contraventions of s 45 of the Act by all companies but Cement Australia Holdings Pty Ltd. The extent of the findings in this matter demonstrate the significance of this competition case. Justice Greenwood found that the conduct had the purpose and effect of preventing a competitor from entering the market by preventing them from obtaining direct access to a source of flyash in South East Queensland.
As a result, Justice Greenwood found that the contracts had both the purpose and effect of substantially lessening competition. In reaching this conclusion, Justice Greenwood observed that Pozzolanic Enterprises Pty Ltd and Cement Australia Pty Ltd enjoyed such a substantial market share, and exercised such a substantial degree of influence upon pricing in the South East Queensland concrete grade flyash market, that the competitive effect of new entry by a competitor would have been significant.

Great Expectations

'Probate Lending' by David Horton and Andrea Cann Chandrasekher in (2016) 126 Yale Law Journal comments
One of the most controversial trends in American civil justice is litigation lending: corporations paying plaintiffs a lump sum in return for a stake in a pending lawsuit. Although causes of action were once inalienable, many jurisdictions have abandoned this bright-line prohibition, opening the door for businesses to invest in other parties’ claims. Although some courts, lawmakers, and scholars applaud litigation lenders for helping wronged individuals obtain relief, others accuse them of exploiting low-income plaintiffs and increasing court congestion.
This Article reveals that a similar phenomenon has quietly emerged in the probate system. Recently, companies have started to make “probate loans”: advancing funds to heirs or beneficiaries to be repaid from their interest in a court-supervised estate. The Article sheds light on this shadowy practice by empirically analyzing 594 probate administrations from a major California county. It finds that probate lending is a lucrative business. Nevertheless, it also concludes that some of the strongest rationales for banning the sale of causes of action — concerns about abusive transactions and the corrosive effect of outsiders on judicial processes — apply to transfers of inheritance rights. The Article thus suggests several ways to regulate this nascent industry.
They note
On December 28, 2007, Eva Bell died in Alameda County, California. She did not create a trust, which meant that her assets should have passed through the courtsupervised probate system to her children and grandchildren. But shortly after the probate matter began, something happened that transformed the succession process. Eva’s son assigned $26,100 of his expected payout from the estate to a company, Advance Inheritance, in return for $15,000.  In turn, by purchasing heirship rights, Advance Inheritance acquired standing as an “interested person” in Eva’s probate case. It capitalized on this privilege by successfully petitioning to become Eva’s personal representative (the party responsible for managing her possessions). It then evicted tenants from an apartment that Eva had owned, sold the building, and paid itself thousands of dollars in fees from the estate.
Meanwhile, another firm, Inheritance Funding, entered into several contracts with Eva’s other relatives, buying a $57,200 cut of the estate for a total of $39,000. The final such deal—in which one of Eva’s children sold $7,600 in inheritance rights for $5,000—came just three weeks before the probate ended, and was the equivalent of a loan with an annualized interest rate of almost 1,000%.
Firms like Advance Inheritance and Inheritance Funding lurk on the peripheries of one of the most divisive issues in American civil justice. For the last two decades, there has been a contentious debate over whether third parties should be allowed to purchase, invest in, or control legal claims.  The ancient doctrine of champerty once barred strangers from obtaining an interest in pending cases. Likewise, although most rights are assignable — transferrable to others — medieval English judges refused to enforce assignments of complaints.  Nevertheless, these rules have eroded over the centuries, blurring the line between causes of action and other forms of property, which can be freely divided, alienated, and pledged as collateral. Recently, venerable enterprises such as Credit Suisse and Allianz have poured money into other parties’ lawsuits, and sophisticated litigation-investment boutiques have emerged. These companies typically provide a lump sum payment to plaintiffs in exchange for a share of any future verdict or settlement. In dozens of articles in newspapers and law journals, this business model has been praised for opening the courthouse doors to low-income plaintiffs and condemned as a predatory lending practice  that subsidizes vexatious litigation.
Yet despite the attention lavished on the litigation-finance industry, inheritance-purchasing companies have flown beneath the radar. No law review article has even mentioned the issue, and only one state statute expressly regulates the practice. To be sure, there are meaningful differences between assigning a pending civil claim and transferring inheritance rights. The former invites strangers into bare-knuckled adversarial proceedings, whereas the latter merely opens the door to the bureaucratic and normally non-contentious world of probate. But as Eva Bell’s estate illustrates, both transactions raise concerns about consumer exploitation and the disruptive effect of outsiders on the judicial process. And in any event, the chasm in our knowledge about probate lending is glaring. Because the death of the baby boom generation will funnel $52 trillion through the succession process in the next half-century — the largest wealth transfer in history — probate lenders will only become more entrenched and powerful.
This Article brings the probate lending industry into sharp relief. It does so by analyzing every estate administration stemming from deaths that occurred during a year in a major California county. This originally-collected dataset, which spans 594 cases, capitalizes on a state law that requires probate lenders to lodge their contracts with the court.  Thus, it offers insight into a variety of issues that would normally be private, such as the frequency of loans, their terms, their effective interest rates, and whether estates with loans are more likely to degenerate into litigation than their counterparts.
This trove of empirical evidence yields three main conclusions. First, probate loans are more common than one might expect. There are seventy-seven such deals in the files. Although probate lending may be more prevalent in California than elsewhere, the fact that there are millions of probate matters throughout the nation each year suggests that there is a robust market for inheritance rights. Second, these transactions raise serious fairness concerns. Companies handed out a meager $808,500 in exchange for $1,378,785 in decedents’ property. Because these advances occurred, on average, 373 days before the lenders were repaid, the mean markup on the principal was a whopping 163% per year. Third, probate lenders are active litigants. They sought to remove or surcharge the decedent’s personal representative in nearly one-third of the matters in which they appeared. Thus, at least in this context, opening the courthouse door to third parties increases friction.
The Article then discusses the policy implications of these findings. It starts by considering whether probate loans are usurious. Usury statutes, the oldest form of consumer protection, prohibit creditors from charging excessive interest rates. Yet usury laws only govern advances that are “absolutely repayable.” Thus, most courts have exempted litigation loans from usury regulation, reasoning that firms will lose the money they have fronted if the plaintiff neither settles nor prevails at trial. We prove that probate loans involve no such contingency. Indeed, the probate lenders in our dataset recouped the principal 96% of the time. Even more remarkably, all the probate loans in our dataset that were repaid surpass California’s usury limit. Accordingly, these companies are violating the usury laws on a massive scale.
Next, the Article turns its attention to the Truth in Lending Act (“TILA”). The TILA, a federal statute, imposes strict liability upon creditors that violate its intricate disclosure mandates.” In the sole case involving probate loans, a federal court dismissed allegations that the TILA applied to an assignment of inheritance rights, reasoning that the statute does not cover “non-recourse advances.” But our data reveal that probate loans are not truly non-recourse. Indeed, lenders recover both the principal and interest in all but the most extraordinary circumstances. On top of this, we show that their disclosures routinely flout the TILA’s commands. Finally, the Article analyzes whether probate loans violate the champerty doctrine. To be sure, unlike litigation loans, which often seek to facilitate claiming, probate loans are not usually made for the purpose of funding a lawsuit. Indeed, most estate administrations glide along without the heirs or beneficiaries filing a pleading or setting foot in court. Thus, at first blush, the presence of a third party among their ranks seems unlikely to affect the probate process. But when we excavate deeper, we find a surprisingly strong connection between loans and conflict. Our linear probability regression confirms that loans increase the odds of a contest far more than any other variable, including intestacies, holographic wills, and testators who disinherit family members. We therefore conclude that there is a stronger case for deeming probate loans to be champertous than one would think.
The Article contains three Parts. Part I surveys the rules that govern the sale of rights that are rooted in the legal system. It shows that the expansion in the market for civil claims has spilled over into the realm of decedents’ estates. Part II explains how we gathered our data and offers an overview of the probate lending industry. Part III uses insights from our study to outline ways in which courts and lawmakers can regulate probate lenders.

Productivity Commission's draft Intellectual Property Arrangements report

The Productivity Commission yesterday released its draft report on Intellectual Property Arrangements, ie the inquiry into the intellectual property regime noted here.

Quick comments feature in a piece here.

The report features the following findings and recommendations
The analytical framework
Draft Recommendation 2.1 In formulating intellectual property policy, the Australian Government should be informed by a robust evidence base and have regard to the principles of: • effectiveness, which addresses the balance between providing protection to encourage additional innovation (which would not have otherwise occurred) and allowing ideas to be disseminated widely • efficiency, which addresses the balance between returns to innovators and to the wider community • adaptability, which addresses the balance between providing policy certainty and having a system that is agile in response to change • accountability, which balances the cost of collecting and analysing policy–relevant information against the benefits of having transparent and evidence–based policy that considers community wellbeing.
Copyright term and scope
Draft Finding 4.1 Australia’s copyright system has expanded over time, often with no transparent, evidence based policy analysis demonstrating the need for, or quantum of, new rights.
Draft Finding 4.2 While hard to pinpoint an optimal copyright term, a more reasonable estimate would be closer to 15 to 25 years after creation; considerably less than 70 years after death.
Draft Recommendation 4.1 The Australian Government should amend the Copyright Act 1968 (Cth) so the current terms of copyright protection apply to unpublished works.
Copyright accessibility: licensing and exceptions
Draft Recommendation 5.1 The Australian Government should implement the recommendation made in the House of Representatives Committee report At What Cost? IT pricing and the Australia tax to amend the Copyright Act 1968 (Cth) to make clear that it is not an infringement for consumers to circumvent geoblocking technology. The Australian Government should seek to avoid any international agreements that would prevent or ban consumers from circumventing geoblocking technology.
Draft Recommendation 5.2 The Australian Government should repeal parallel import restrictions for books in order for the reform to take effect no later than the end of 2017.
Draft Recommendation 5.3 The Australian Government should amend the Copyright Act 1968 (Cth) (Copyright Act) to replace the current fair dealing exceptions with a broad exception for fair use. The new exception should contain a clause outlining that the objective of the exception is to ensure Australia’s copyright system targets only those circumstances where infringement would undermine the ordinary exploitation of a work at the time of the infringement. The Copyright Act should also make clear that the exception does not preclude use of copyright material by third parties on behalf of users. The exception should be open ended, and assessment of whether a use of copyright material is fair should be based on a list of factors, including: • the effect of the use on the market for the copyright protected work at the time of the use • the amount, substantiality or proportion of the work used, and the degree of transformation applied to the work • the commercial availability of the work at the time of the infringement • the purpose and character of the use, including whether the use is commercial or private use. The Copyright Act should also specify a non–exhaustive list of illustrative exceptions, drawing on those proposed by the Australian Law Reform Commission. The accompanying Explanatory Memorandum should provide guidance on the application of the above factors.
Patent system fundamentals
Draft Recommendation 6.1 The Australian Government should amend ss. 7(2) and 7(3) of the Patents Act 1990 (Cth) such that an invention is taken to involve an inventive step if, having regard to the prior art base, it is not obvious to a person skilled in the relevant art. The Australian Government should state the following in the associated Explanatory Memorandum: • the intent of this change is to better target socially valuable inventions • the test should be applied by asking whether a course of action required to arrive at the invention or solution to the problem would have been obvious for a person skilled in the art to try with a reasonable expectation of success. The Australian Government should explore opportunities to further raise the overall threshold for inventive step in collaboration with other countries in international forums.
Draft Recommendation 6.2 The Australian Government should incorporate an objects clause into the Patents Act 1990 (Cth) (Patents Act). The objects clause should describe the purposes of the legislation as being to enhance the wellbeing of Australians by providing patent protection to socially valuable innovations that would not have otherwise occurred and by promoting the dissemination of technology. In doing so, the patent system should balance the interests of patent applicants and patent owners, the users of technology — including follow–on innovators and researchers — and Australian society as a whole. The Australian Government should amend the Patents Act such that, when making a decision in relation to a patent application or an existing patent, the Commissioner of Patents and the Courts must have regard to the objects of the Patents Act.
Draft Recommendation 6.3 The Australian Government, with input from IP Australia, should explore the costs and benefits of using higher and more pronounced renewal fees later in the life of a standard patent, and making greater use of claim fees to limit the breadth of patent protection and to reduce strategic use of patents. The Australian Government should seek international cooperation on making greater use of patent fees to help ensure that patent holders are not overcompensated and to limit the costs of patent protection on the community.
Innovation patents
Draft Recommendation 7.1 The Australian Government should abolish the innovation patent system.
Business methods and software patents
Draft Recommendation 8.1 The Australian Government should amend s. 18 of the Patents Act 1990 (Cth) to explicitly exclude business methods and software from being patentable subject matter.
Pharmaceutical patents
Draft Recommendation 9.1 The Australian Government should reform extensions of patent term for pharmaceuticals such that they are calculated based only on the time taken for regulatory approval by the Therapeutic Goods Administration over and above one year.
Draft Recommendation 9.2 Regardless of the method of calculating their duration (draft recommendation 9.1), extensions of term in Australia should only be granted through a tailored system which explicitly allows for manufacture for export in the extension period.
Draft Recommendation 9.3 There should be no extension of the period of data protection, including that applicable to biologics. Further, in the context of international negotiations, the Australian Government should work with other nations towards a system of eventual publication of clinical trial data in exchange for statutory data protection.
Draft Recommendation 9.4 The Australian Government should introduce a transparent reporting and monitoring system to detect any pay-for-delay settlements between originator and generic pharmaceutical companies. This system should be administered by the Australian Competition and Consumer Commission. The monitoring should operate for a period of five years. Following this period, the Australian Government should institute a review of the regulation of pay-for-delay agreements (and other potentially anticompetitive arrangements specific to the pharmaceutical sector).
Draft Recommendation 9.5 The Australian Government should reform s. 76A of the Patents Act 1990 (Cth) to improve data collection requirements. Thereafter, extensions of term should not be granted until data is received in a satisfactory form. After five years of data has been collected, it should be used as part of a review to consider the ongoing costs and benefits of maintaining the extension of term system.
Registered designs
Draft Recommendation 10.1 Australia should not join the Hague Agreement until an evidence-based case is made, informed by a cost–benefit analysis.
Draft Finding 10.1 Despite the deficiencies of the registered design system, Australia has committed internationally to protecting designs and there is no clear superior alternative.
Trade marks and geographical indications
Draft Recommendation 11.1 In order to improve the effectiveness of the trade mark system, the Australian Government should: • restore the power for the trade mark registrar to apply mandatory disclaimers to trade mark applications, consistent with the recommendation of the Advisory Council on Intellectual Property in 2004 • repeal part 17 of the Trade Marks Act 1995 (Cth) (Trade Marks Act) • amend s. 43 of the Trade Marks Act so that the presumption of registrability does not apply to the registration of marks that could be misleading or confusing • amend the schedule of fees for trade mark registrations so that higher fees apply for marks that register in multiple classes and/or entire classes of goods and services.
IP Australia should: • require the Trade Marks Office to return to its previous practice of routinely challenging trade mark applications that contain contemporary geographical references (under s. 43 of the Trade Marks Act). Challenges would not extend where endorsements require goods and services to be produced in the area nominated • in conjunction with the Australian Securities and Investments Commission, link the Australian Trade Mark On-line Search System database with the business registration portal, including to ensure a warning if a registration may infringe an existing trade mark, and to allow for searches of disclaimers and endorsements.
Draft Recommendation 11.2 The Australian Government should amend s. 123 of the Trade Marks Act 1995 (Cth) to ensure that parallel imports of marked goods do not infringe an Australian registered trade mark provided that the marked good has been brought to market elsewhere by the owner of the mark or its licensee. Section 97A of the Trade Marks Act 2002 (New Zealand) could serve as a model clause in this regard.
Plant Breeder’s Rights
Draft Recommendation 12.1 The Australian Government should proceed without delay to implement the Advisory Council on Intellectual Property 2010 recommendation to amend the Plant Breeder’s Rights Act 1994 (Cth) to enable essentially derived variety declarations to be made in respect of any variety.
Competition policy
Draft Recommendation 14.1 The Australian Government should repeal s. 51(3) of the Competition and Consumer Act 2010 (Cth) (Competition and Consumer Act). The Australian Competition and Consumer Commission should issue guidance on the application of part IV of the Competition and Consumer Act to intellectual property.
IP and public institutions
Draft Recommendation 15.1 All Australian, and State and Territory Governments should implement an open access policy for publicly funded research. The policy should provide free access through an open access repository for all publications funded by governments, directly or through university funding, within 12 months of publication. The policy should minimise exemptions. The Australian Government should seek to establish the same policy for international agencies to which it is a contributory funder, but which still charge for their publications, such as the Organisation for Economic Cooperation and Development.
Institutional and governance arrangements
Draft Finding 16.1 Model agreements on intellectual property would have the benefit of being fully transparent to Australian industry and to the broader community, as well as to foreign governments, so that all stakeholders are aware of what Australia sees as the ideal outcomes from a treaty.
International cooperation
Draft Finding 17.1 Approaches to international cooperation and lowering transaction costs will be most effective when pursued multilaterally rather than through bilateral arrangements. Moreover, harmonisation of laws is not the sole, or necessarily desirable, form of cooperation. Other approaches to international intellectual property cooperation can achieve their goals at lower cost and with greater flexibility.
Draft Recommendation 17.1 Australia should revive its role in supporting opportunities to promote global cooperation on intellectual property policy among intellectual property offices through the World Intellectual Property Organization and the World Trade Organization to avoid duplication and reduce transaction costs.
Compliance and enforcement
Draft Recommendation 18.1 The Australian Government should expand the safe harbour scheme to cover the broader set of online service providers intended in the Copyright Act 1968 (Cth).
Draft Finding 18.1 The evidence suggests timely and cost effective access to copyright-protected works is the most efficient and effective way to reduce online copyright infringement.
The report also features requests for further information -
Request  5.1 Other than for libraries and archives, to what extent are copyright licence conditions being used by rights holders to override the exceptions in the Copyright Act 1968 (Cth)? To what extent (if any) are these conditions being enforced and what are the resulting effects on users? Would amendments to the Copyright Act 1968 (Cth) to preserve exceptions for digital material have any unintended impacts?
Request  5.2 Is the code of conduct for copyright collecting societies sufficient to ensure they operate transparently, efficiently and at best practice?
Request  5.3 Will the Australian Government’s proposed reforms to simplify and streamline education statutory licences result in an efficient and effective scheme? Should similar reforms be made to the operation of the government statutory licence scheme?
Request  6.1 The Commission is seeking further information from participants on the likely costs and benefits from reforming patent filing processes. Would there be any unintended consequences from requiring applicants to construct their claims in the two–part form that applies in Europe or articulating why their invention is non–obvious? Are there better approaches available?
Request  6.2 The Commission is seeking information from participants on the costs and benefits of an exemption from infringement for experimental activities that use a patented invention. Are there any examples in Australia where the efforts of researchers have been hindered by the lack of such an exemption?
Request  8.1 What approaches or tests could be used to differentiate between inventions where the contribution of embedded software is trivial and inventions where the contribution of embedded software is genuinely deserving of patent protection? Should such tests be implemented in law or patent examination practices?
Request  9.1 How can transparency requirements for pay for delay settlements be implemented in a manner that retains effectiveness but minimises compliance cost? • Should there be public reporting of aggregated data? • How can the system adequately capture agreements that involve the transfer of non monetary benefits such as licences or transfer of rights?
Request  11.1 To what extent — in terms of incidence and costs — is trade marked metadata used in a way to confuse consumers? Is such a problem likely to get worse or better?
Request  11.2 To what extent and in what form does consumer confusion arise from the provision of wine and spirit geographical indications? Under what circumstances should wine and spirit geographical indications be amended or repealed? Who should make such decisions?
Request  12.1 Would extending essentially derived variety coverage to all plants reduce the potential for patent ‘sniping’ of varieties protected by Plant Breeder’s Rights? The Commission is also seeking feedback on the practicalities of developing and implementing a market–impact test to complement existing tests of essentially derived variety status.
Request  13.1 What would be the implications of repealing the Circuit Layout Act 1989 (Cth)? Are there better ways to provide circuit layout rights?
Request  14.1 Is there any evidence that grant back obligations or economic hold up are widespread problems in Australia? Is there a risk of these becoming problems in the future?
Request  16.1 What institutional and governance settings would best ensure that IP policy benefits from a policy champion and is guided by an overarching policy objective and an economywide perspective? Would vesting IP policy responsibility in a single department further these goals, and if so, which department would be best placed to balance the interests of rights holders and users, including follow on innovators? Are there any complementary or alternative measures that would help facilitate more integrated and evidence based IP policy making?
Request  16.2 Is there merit in establishing a clearer separation between policy and administrative functions for intellectual property, and if so, where should the dividing line lie? What mechanisms are available for transparently setting out the separation of IP policy and administration responsibilities?
Request  16.3 What features should be included in a model agreement covering intellectual property if one were to be adopted?
Request  17.1 How extensively have mechanisms such as the Patent Cooperation Treaty and patent prosecution highways been used to reduce the transaction costs of obtaining IP protection overseas? Have Australian businesses utilised opportunities for licensing through SourceIP? Are there other options that would facilitate and promote the licensing and transfer of intellectual property between Australia and other countries?
Request  18.1 Would changes to the jurisdiction of the Federal Circuit Court improve access to dispute resolution by small– and medium–sized enterprises? Should additional rules be introduced, such as caps on the amount of costs claimable in a case? What is the upper limit on damages claims the court should hear? Are there resourcing impediments to the proposed reforms to the Federal Circuit Court? Can greater use be made of cost orders in the Federal Court, including for discovery, to reduce costs further? Should additional Federal Court rules be introduced, such as caps on the amount of costs claimable in a case?

Human Services Contestability

The Productivity Commission is to undertake 
an inquiry into Australia's human services, including health, education, and community services, with a focus on innovative ways to improve outcomes through introducing the principles of competition and informed user choice whilst maintaining or improving quality of service.
The first stage of the inquiry will deliver an initial study report 'identifying services within the human services sector that are best suited to the introduction of greater competition, contestability and user choice'. That will involve examination of
  •  the current level, nature and future trends in demand for each major area of service delivery 
  • the current supply arrangements and future trends, including the scope for diversity in provision and informed user choice, alternative pricing and funding models, and the potential for contestability in supply by government, not-for-profit and private sector providers 
  •  the effectiveness of previous reforms intended to introduce greater competition and user choice, and the pathway taken to achieve those reforms, through investigating case studies of existing practices and trials in Australian jurisdictions, international examples of best practice. 
In the second stage, the Commission will undertake a more extensive examination and provide an inquiry report making recommendations on how to introduce greater competition, contestability and user choice to the services that were identified above.

The Commission is expected to identify the steps required to implement recommended reforms. In developing policy options to introduce principles of competition and informed user choice in the provision of human services, the Commission will have particular regard, where relevant, to
  •  the roles and responsibilities of consumers within the human service sector, and the service or services being considered 
  •  the factors affecting consumer use of services and preferences for different models of service delivery, noting the particular challenges facing consumers with complex and chronic needs and/or reduced capacity to make informed choices the role of the government generally, and as a commissioner, provider and regulator, in the delivery of human services 
  •  the role of government agencies in designing policy, commissioning and, in some cases, delivering human services in a client-centred way that encourages innovation, focusses on outcomes and builds efficiency and collaboration the role of private sector and not-for-profit providers 
  •  the benefits and costs of applying competition principles in the provision of human services, including improving competitive neutrality between government, private and not-for-profit service providers 
  •  how best to promote innovation and improvements in the quality, range and funding of human services the challenges facing the provision of human services in rural and remote areas, small regional cities and emerging markets 
  • the need to improve Indigenous outcomes the development of systems that allow the performance of any new arrangements to be evaluated rigorously and to encourage continuous learning. 
The reference statement indicates
 The Australian Government is committed to working in partnership with State and Territory Governments and non-government service providers to ensure that all Australians can access timely, affordable and high quality human services, which are appropriate to their needs, and are delivered in a cost-effective manner. The human services sector plays a vital role in the wellbeing of the Australian population. It covers a diverse range of services, including health, education and community services, for example job services, social housing, prisons, aged care and disability services. There are some features that are common across the range of services and models of service provision, while other features are unique in nature. Complexity arises from differences in the characteristics of the services, and of the individuals receiving the services, the objectives sought, and the jurisdiction and market in which the services are being supplied. While governments have made progress in introducing competition, contestability and user choice to human services provision, the efficiency and effectiveness of the delivery of services within the sector varies significantly between jurisdictions. Service delivery frameworks in the human services sector that are inefficient and/or ineffective can result in significant costs to the economy and individuals, including poorer outcomes and reduced productivity.
Australia's human services sector is facing significant challenges, including increasing demand for services due to the ageing population, the effect of technology and cost increases associated with new and more complex service provision demands. Finding innovative ways to improve the efficiency and cost effectiveness of the human services sector, and to target services to those most in need, will help ensure that high quality service provision is affordable for all Australians and leads to improved outcomes for the economy and individuals. The Commission's [policy options] to improve outcomes ... should lead to improvement in the sector's efficiency and effectiveness and help to ensure all Australians can access timely, affordable and high quality services, which are appropriate to their needs, and are delivered in a cost-effective manner. 
 The Commission will publish the initial study report within six months of receiving these Terms of Reference. The report will set out the findings from case studies and international experiences and identify which services within the human services sector are best suited to the application of competition, contestability and informed user choice principles. The final inquiry report, including policy recommendations and a path and process to ensure sustainable, efficient and effective reform, will be provided within 18 months of receiving the Terms of Reference.

Consumer Law Inquiry

The Productivity Commission has been tasked by the Treasurer with an inquiry into the administration of consumer law, for completion by March 2017.

The Commission states that
The Australian Consumer Law (ACL) commenced on 1 January 2011 as a single, harmonised consumer law bringing together the consumer protection provisions of the Trade Practices Act 1974 and previous state and territory fair trading laws. The ACL operates under a 'single-law, multiple regulator' model where the ACL is jointly enforced and administered by the Australian Competition and Consumer Commission (ACCC) and state and territory consumer agencies. The Australian Securities and Investments Commission (ASIC) administer similar provisions under the ASIC Act in relation to financial products and services.
A review of the ACL is being undertaken by Consumer Affairs Australia and New Zealand (CAANZ), on behalf of the Legislative and Governance Forum on Consumer Affairs. CAANZ will examine the effectiveness of the provisions of the ACL, the extent to which the national consumer policy framework has met the objectives agreed by COAG and the flexibility of the ACL to respond to new and emerging issues.
Clause 23 of the Intergovernmental Agreement for the Australian Consumer Law provides that a review of the enforcement and administration arrangements supporting the ACL be undertaken within seven years of its implementation. This study satisfies this requirement. 
The study is
 to examine the effectiveness of the 'multiple regulator' model in supporting a single national consumer policy framework and make findings on how this model can be strengthened drawing from the experience of regulators in the period since the ACL commenced in 2011, including the risk-based approach of regulators to enforcement. The study will also review the progress that has been made in addressing issues with the previous framework raised by the Commission in its 2008 'Review of Australia's Consumer Policy Framework', including regulatory complexity, inconsistency, gaps and overlap in enforcement, and unclear delineation of responsibilities between Commonwealth, state and territory governments.
In undertaking the study the Commission should
  • assess the complementary roles played by ACL regulators and the effectiveness of existing mechanisms in improving the coordination, consistency of approach and collaboration between ACL regulators having regard to the Memorandum of Understanding agreed by regulators 
  • examine the roles of specialist safety regulatory regimes  (such as therapeutic goods, food safety, building and construction industry and electricity and natural gas regimes) in protecting consumers, their interaction with ACL regulators and the extent to which the responsibilities of different regulators are clear 
  • consider the implications of changes in the level of resourcing and regulator involvement in the administration of the ACL, including the national product safety law 
  • report on other regulatory models, including models or approaches to consumer protection overseas that may inform improvements to the current model to ensure it remains flexible and responsive in addressing new and emerging issues.