02 November 2017

DNA copyright and DTC Genomics Regulation

'DNA Copyright in the Administrative State' by Dan L. Burk in (2018) 51 UC Davis Law Review comments 
For nearly three decades, academics have toyed with the question of copyright protection for recombinant DNA sequences. Recent interest in synthetic biology has prompted a resurgence of such dubious speculation. But current advocates of DNA copyright have gone further than academic conjecture, attempting to register nucleotide sequences with the United States Copyright Office. Not surprisingly, the Register of Copyrights refused the application, setting the stage for a possible appeal to federal court. This scenario raises the general administrative law question as to the degree of deference a court should give to a registration decision of the Copyright Office. The issue is surprisingly complex, and precedents are sparse. In this paper I take up the question of administrative deference as it applies to synthetic biology and other technologies that could be the subjects of questionable copyright registration.
'Regulatory controls for direct-to-consumer genetic tests: a case study on how the FDA exercised its authority' by Margaret Curnutte in (2017) 36(3) New Genetics and Society  209-226 comments
In February 2015, 23andMe received clearance from the United States Food and Drug Administration (FDA) for a carrier status test for a gene linked to Bloom syndrome. This was the first FDA authorization to market a direct-to-consumer (DTC) genetic test. Then, in April 2017, 23andMe obtained marketing clearance for an additional 10 tests that communicate information about individual disease risk. For roughly a decade it had been unclear whether FDA would regulate health-related DTC genetic tests. The recent approvals now provide an opportunity to examine how the Agency, in practice, has exercised its regulatory authority. This paper is the first case study to examine in detail how FDA has set standards for the marketing approval of DTC genetic tests.
'Valley of the unicorns: consumer genomics, venture capital and digital disruption' by Stuart Hogarth at 250-272 in the same issue comments
 Drawing on the sociology of expectations and sociology of conventions, this paper explores issues of worth and value in the bioeconomy, and the promissory character of contemporary capitalism. Arguing that the literature on biocapital has paid insufficient attention to geographical differentiation in capital accumulation strategies, this paper situates the consumer genomics firm 23andme in the entrepreneurial culture of Silicon Valley. The paper suggests that in Silicon Valley the relationship between moral worth and economic value is mediated through the concept of disruptive innovation, which functions as both ideological construct and a set of commercial practices utilized by the founders of start-up firms and the venture capitalists who invest in them. Analyzing 23andme’s status as a “unicorn” firm, the paper describes how the recent increase in private investment capital in Silicon Valley has led to a new model of business development for start-ups and considers its implications for corporate governance.
Hogarth argues
In 2007, the Silicon Valley consumer genomics firm 23andme launched with a bold mission to revolutionize healthcare and biomedical research. From the outset the firm’s ambitions were global in scale: co-founder Anne Wojcicki declared that 23andme aimed to become “the world’s trusted source of personal genetic information” (23andme 2008). These grand ambitions were underpinned by investment funding from leading players in Silicon Valley, each of them global leaders in their respective sectors: the venture capital (VC) firm New Enterprise Associates, the biopharmaceutical firm Genentech, and the Internet search firm Google. Like other start-up firms (including its rivals in the nascent consumer genomics market), 23andme was heavily dependent on continued injections of private capital as it sought to build a market for its products and services, and measured by the amount of private capital the firm has raised, 23andme has been highly successful. It raised $240M in a series of five financing rounds between 2007 and 2015 (see Figure 1), and by 2015 had achieved “unicorn” status, a term used to describe privately held firms valued at over $1 Billion. To put this achievement in perspective, of the 22 diagnostics firms listed on the NASDAQ only two raised more than $100M when they floated as public companies, that is, 23andme has raised more money in the private capital markets than its counterparts have been able to raise by going public. 
This financial success was achieved despite longstanding uncertainty about the firm’s commercial viability, public controversy about the ethics of consumer genomics, professional critique of the scientific validity of genetic risk scores offered by the firm and its rivals (Mihaescu et al. 2009 ), and then regulatory censure by the US Government. The US Food and Drug Administration (FDA) closed down the health-related aspects of 23andme’s business in 2013 (see Curnutte 2017 ). Two years later, when the FDA took regulatory action against Theranos, another high-profile Silicon Valley diagnostics firm, some media commentators suggested that the regulatory problems encountered by the two firms exemplified a broader crisis in the corporate culture of Silicon Valley. These critics pointed to failures in corporate governance, media complicity in promotional hype and a lack of due diligence on the part of investors, all fueling a dangerous new investment bubble underpinned by the ideology of disruptive innovation (McDermid 2016 ). 
How to explain 23andme’s success in attracting financial investment despite the seemingly toxic combination of commercial underperformance and regulatory scandal? Given the importance of personal networks in securing VC finance, it was helpful that 23andme was, from the outset, enmeshed in the Silicon Valley establishment, most notably through co-founder (and current CEO) Anne Wojcicki’s marriage to Sergey Brin, the co-founder of Google. Google invested $3.9M in Series A and then $2.6M in Series B, but in addition Brin provided a start-up loan of $2.6M ahead of the Series A round, and a further $10M ahead of the Series B financing round (Rao 2009 ). However, the power of personal networks is not the focus of this paper, which is concerned instead with issues of worth and value in the bioeconomy, and what Paul Martin (2015 Martin, ) has called “the promissory character of contemporary capitalism”. This paper suggests that in Silicon Valley the relationship between moral worth and economic value is mediated through the concept of disruptive innovation, which functions as both ideological construct and a set of commercial practices utilized by the founders of start-up firms and the venture capitalists who invest in them. 
In addressing matters of political economy, this paper takes an approach hitherto neglected in the literature on consumer genomics, a puzzling oversight given that in recent years a growing body of scholarly work has argued that the emergence of commercial biotechnology has generated a new form of capitalism: biocapitalism (for an overview of this literature, see Helmreich 2008 ). Attempts to characterize a distinct form of biocapital are consistent with a long tradition of middle-range theory in political economy that addresses the “specific forms and mediations of capitalist processes, such as the nature of institutions, or new forms of organization such as post-Fordism” (Sayer 1995 ). This paper offers two original contributions to the scholarship on biocapital. Firstly, by suggesting that as an attempt to understand sectoral differentiation, this literature has been too ready to generalize using data on the biotech therapeutics sector and has failed to understand the distinctive dynamics of the diagnostics sector. However, its more substantive contribution is to argue for a greater focus on geographical rather than sectoral differentiation (Sheppard 2013 ). I locate 23andme in its geographical setting of Silicon Valley, identifying the ways in which firm might be characterized as typical of the distinctive local culture of entrepreneurialism that has developed in the area since the 1980s. 
I begin by situating this paper’s conceptual framework in the broader social science literature about the bioeconomy. By way of descriptive context, I then outline the role of VC in the financing of high-technology start-ups, the growth of Silicon Valley as a geographic cluster for high-tech firms and the key features of Silicon Valley disruption. I then move on to describe how 23andme modeled itself as a disruptive firm and to discuss how that strategy may have helped attract investment funding.'
'Reading the fine print when buying your genetic self online: direct-to-consumer genetic testing terms and conditions' by  Andelka M. Phillips at 273-295 notes
Contracts are ubiquitous online. Clickwrap and browsewrap agreements are to be encountered on almost every website a person engages with when accessing services online. Through these documents, people enter into binding contractual relationships, often without reading and sometimes without noticing these documents, when they engage with a wide variety of services online. This article discusses the use of contracts by the direct-to-consumer genetic testing (DTCGT) industry, as the dominant means of industry self-regulation. To date limited attention has been paid to these contracts. This article reviews the contracts of 71 companies that provide a variety of tests for health purposes. It considers these contracts from a consumer protection standpoint and identifies a number of problematic terms that may be challengeable under the UK’s consumer legislation and concludes by discussing the recent work potential for the UK’s Competition and Markets Authority to establish and enforce clear standards for DTCGT contracts.
Phillips argues
We are living in the digital age and we are also living in the age of digital contracts. The Internet has become part of the fabric of everyday life for many people. It is used to document our lives, to access a myriad of services, including now the purchase of genetic testing services. However, almost every website you visit is subject to a contract in some form, often appearing as terms of use, terms and conditions, or terms of service, and these contracts do have important legal implications. They govern relationships between businesses and consumers and they may limit rights to redress if something goes wrong. The average person active online today will enter more contracts in a year than their grandparents did in a life-time (Felten 2011 ; Hoffman 2016 ). This paper discusses the use of contracts online and their role in regulation in a particular context, that of direct-to-consumer genetic testing (DTCGT). It focuses on the contracts of companies that provide tests for health purposes. This paper will address two research questions: from the perspective of consumer protection, what are the problems with these contracts; and how might UK law be used to improve contracts so that they afford better protection for consumers? 
The DTCGT industry can be viewed as an example of disruptive innovation (see paper by Curnutte 2017 in this issue) and also an example of a shift from patient to consumer healthcare, as it allows the purchase of genetic tests online without a medical intermediary, bringing them into the consumer space and also into the domestic space, as people can order tests online from their homes. It should be noted that the consumer space differs significantly from the medical space, but in the context of health-related testing it is also not clear that DTCGT services ought to be viewed as consumer services and not medical services (Offit 2008 ). The term “direct-to-consumer” has primarily developed in the context of advertising and sale of pharmaceutical drugs (Pines 1999  ). DTCGT can either be advertised to the public but only available through an intermediary (normally a medical practitioner), or it can be both advertised directly and available for order directly by a consumer, normally over the Internet, sometimes also with the involvement of a medical practitioner (Hogarth, Javitt, and Melzer 2008, 163–164). The process normally involves the provision of a test kit by the company which the consumer uses to collect a DNA sample, which is in turn sent back to the company, which then carries out some form of genetic analysis service and then ultimately provides the consumer with test results in digital form. A wide range of health tests are available, ranging from predisposition and pre-symptomatic testing for serious diseases to carrier tests, pharmacogenetic tests (concerned with assessing an individual’s responsiveness to particular drugs or therapies) (HGC 2010 ), and also nutrigenetic tests (deals with associations between nutrients and metabolism and genes). Companies that provide testing for health purposes are generally making services available that have previously been offered in a medical setting. There is considerable scientific and clinical skepticism about the accuracy of tests purporting to provide genetic risk assessment for common, complex diseases. 
Fourteen years have passed since the first major UK policy report on the regulation of the DTCGT industry (HGC 2003 ). The HGC also developed A Common Framework of Principles for Direct-to-Consumer Genetic Testing Services (2010 HGC ) and this Framework set out in article 6 that “Clinical utility of a genetic test shall be an essential criterion for deciding to offer this test to a person or a group of persons” (2010 HGC ). (Clinical validity and utility were also stressed by the Association for Molecular Pathology in their 2015 Association for Molecular Pathology Position Statement: Direct Access Genetic Testing ) 
A small number of prominent companies: DeCODE’s DeCODEme; 23andMe; Navigenics; Pathway Genomics; and Knome have been the subject of much of the academic literature. However, there is a greater number and diversity of firms, and the potential now for DTCGT services to be accessible more widely. If there is a corresponding wider consumer uptake of these services, the issues the industry raises are likely to increase in importance over time. 23andMe has been valued at a market cap of $1 billion (Krol 2015  ). Furthermore, a recent study by Research and Markets suggests that the “global predictive genetic testing & consumer/wellness genomics market is anticipated to reach USD 4.6 billion by 2025” (2017 Research and Markets.). Whether or not this estimate will prove to be accurate, if the industry does continue to grow there is likely to be significant consumer uptake of these services and this will include consumers who may be considered vulnerable in some way (see the Unfair Commercial Practices Directive; the Directive on Consumer Rights; and the General Product Safety Directive). The law does make distinctions between ordinary or average consumers and vulnerable consumers. The European Commission’s 2016  Consumer Vulnerability across Key Markets in the European Union.report explores consumer vulnerability and while acknowledging the lack of a universal definition, it identifies five core dimensions to vulnerability (xviii, and 39–40). Vulnerability is a spectrum and a person may become vulnerable due to a change in their circumstances, but “some personal characteristics can imply that vulnerability remains an enduring characteristic for particular groups of consumers” (xviii). 
While, DTCGT often involves feedback of results to individuals without any intermediary, in a clinical setting, a UK patient contemplating genetic testing would normally be provided with genetic counseling both prior to the test and after the test. The provision of counseling services assist patients with understanding what genetic test results mean for them and should assist them with understanding the benefits, risks, and limitations of test results. Article 8 of the HGC’s Framework set out information requirements for people undergoing genetic testing and suggested that those undergoing “predictive genetic tests” should receive genetic counseling. Drawing upon this, it would be beneficial if companies did provide genetic counseling to consumers. 
For genetic tests carried out in a clinical setting, patients are normally required to give informed consent and the rights of patients to refuse treatment are also strongly protected. Indeed Article 9(1) of the HGC’s Framework specified that a genetic test should only be carried out “after the person concerned has given free and informed consent to it.” The importance of informed consent has also been stressed in a number of policy guidance documents to date (European Society of Human Genetics 2010  ; OECD 2007  ). However, in the online environment consumers are often deemed to have consented to the terms and conditions of websites through use or viewing of a website and there is a need to improve consent mechanisms for DTCGT health services. It is also important to recognize that informed consent in a medical setting is different to how consent is treated in contract law, but not all DTCGT companies have separate consent documents and consent and agreement or acceptance of terms are often treated synonymously in the DTCGT space. 
This article focuses on the regulation of the industry from a consumer protection perspective, but it should be noted that these services do raise significant issues regarding consumer privacy and data protection. Furthermore, as highlighted by Christofides and O’Doherty’s (2016 Christofides and Doherty) recent study, consumers’ expectations regarding privacy practices of DTCGT providers, may be at odds with actual practices and disclosure policies. In relation to privacy and security risks in this context, an analogy can also be made with wearable fitness monitors. Citizen Lab and Open Effect’s report highlighted a number of vulnerabilities in common wearable devices (2016 Hilts, Parsons, and  Knockel.), and given the nature of sequenced genetic data and the difficulties in preventing re-identification of individuals on the basis of such data, the significance of privacy risks in this context should not be underestimated (Ayday et al. 2015 ; Erlich and Narayanan 2014 ; Nuffield Council 2015). As companies are often engaging in research on consumers’ data and collecting other forms of personal and potentially sensitive data, more research on the potential for data linkage and re-identification is also needed. 
In the UK, some marketing of DTCGT tests has been permitted and 23andMe has been selling their test kits through Superdrug both via the Superdrug website and in their stores (Meikle 2015 ; Wallace 2015 ). This has been possible, because their test kits have a Conformité Européene (CE) mark meaning that the kit has been approved as safe for the purposes of collecting saliva. This certification though is only an assessment of the test kit’s safety as a collection device. It does not provide an assessment of the quality of the genetic testing service provided or of any accompanying analysis or interpretation services. 
In the US, the Food and Drug Administration (FDA) has recently altered its stance regarding DTCGT services (see paper by Curnutte 2017 in this issue). In April 2017 the FDA approved 23andMe’s Genetic Health Risk tests for 10 conditions to be marketed in the US. This may lead to wider availability of  DTCGT services for health purposes in the US from other DTCGT providers as well, as the FDA intends “to exempt additional 23andMe GHR tests from the FDA’s premarket review, and GHR tests from other makers may be exempt after submitting their first premarket notification” (FDA 2017). Significantly, the FDA will be requiring consumer comprehension tests ( FDA Letter 2017), but this does not require comprehension tests of the online contracts used on DTCGT websites and as contracts do govern the relationship between DTCGT companies and consumers, there is also a need to ensure that consumers understand the content of these contracts. 
Considerable attention has been paid to the potential for consumer harm arising from the profound asymmetries of information between companies and consumers arising in the context of a fast-moving and highly complex field of biomedical science. Policy reports in the USA and Europe have expressed concerns that the public may be misled by promotional hype because they lack the scientific knowledge to assess the veracity of companies’ claims. A number of academic studies have examined the websites of DTCGT genetics companies and identified problems with the quality of information offered to consumers. Hennen, Sauter, and Cruyce (2009) undertook a review of 38 companies, assessing the quality of information provision using 12 criteria established by Datta et al.(2008). They found 276 A.M. Phillips that 55% of companies complied with four or fewer of the 12 criteria, concluding that such “fundamental information deficits [had] ...possibly far-reaching consequences for consumers.” Surveys by Geransar and Einsiedel (2008) and Sterling (2008) have drawn similar conclusions. 
More recently, there has been growing interest in the issues of privacy, security, and transparency in provision of information in the context of DTCGT services (Christofides and O’Doherty 2016). Laestadius, Rich, and Auer study (2016) analyzed 30 websites offering health and ancestry tests and examined “the extent to which DTCGT-GT companies are complying with international guidance on the transparent provision of information related to confidentiality, privacy, and secondary use of the genetic samples and data they collect” (2). They found that although there have been some improvements in industry practices since earlier studies, such as an increase in the number of DTCGT companies having terms and conditions and privacy policies publicly available there are still weaknesses that need to be addressed. One area where there is particular need for improvement is the provision of information “regarding the risks and benefits of” DTCGT services and they cite Singleton et al.’s work which argued that this “lack of transparency” violates “the ethical principle of informed choice” (2012, 6). The Singleton study used frameworks “based on two core components of an informed choice: (1) the decisionmaker has relevant, high-quality information which presents the various alternatives and outcomes; and (2) it is consistent with the decision-maker’s values” (Singleton et al. 2012, 2). They found that
in the main pages of these websites, consumers are exposed to an average of 6 times as many benefits as risks and limitations. Therefore, consumers who only read the main web pages may be getting a skewed picture of the benefits, risks, and limitations of testing. (2012, 5)
They recommended the need for companies to consider providing more educational information on their websites to assist consumers. There have been a large number of proposals for policy action, but such initiatives have tended to focus on the regulation of health-related tests, and the role of medical device regulators in premarket evaluation of tests. It is important to note though that many types of DTCGT services, such as ancestry, talent identification or nutrigenetic testing will not be covered by these regulations, and even for tests covered by medical device regulation, not all aspects of the contractual relationship between company and consumer would be addressed, so alternative or supplementary mechanisms are required (Kalokairinou, Howard, and Borry 2014). The potential role of consumer legislation has been advocated by some as a preferred mechanism to address “fraudulent, deceptive, and unfair business practice” even for health-related tests (Wright, Hall, and Zimmern 2011) and the Human Genetics Commission (HGC) envisaged a role for consumer protection mechanisms in its 2003 report, along with an increased role for the Medicines and Healthcare Products Regulatory Agency (MHRA) (HGC 2003). In the same year, Martin and  Frost provided an early attempt to map a taxonomy of different types of DTCGT services on to a range of legal and regulatory remedies, including consumer law (2003). In the US, as well as the American College of Medical Genetics and Genomics (ACMG), the American Society for Human Genetics (ASHG) has also been active in this area and released a Statement on Direct-to-Consumer Genetic Testing in the United States(2007).This Statement recommended thatthe Centers for Medicare and Medicaid Services (CMS) “create a genetic-testing specialty under CLIA, to ensure the analytic validity of tests and the quality of genetic testing laboratories” and also that “CMS should ensure that all DTCGT genetic-testing laboratories are certified under CLIA and should maintain a publicly accessible list containing the certification status of laboratories.” It went on to recommend that, “FDA and the FTC should work together to develop guidelines for DTCGT testing companies to follow, to ensure that their claims are truthful and not misleading and that they adequately convey the scientific limitations for particular tests.” It also stressed the importance of the following: transparency in companies’ practices; that they should provide appropriate information regarding the risks and benefits of DTCGT; and also that professional medical organizations should provide further education to their members, so that physicians can adequately interpret and understand DTCGTs ervices and results. However, despite some focus on consumer protection remedies, thus far scholars have paid limited attention to the contracts that bind DTCGT companies to their customers. 
There is a growing literature that examines the consumer contracts used by online businesses more generally (Ayres and Schwartz 2014; Clapperton and Corones 2007; Loos and Luzak 2015). The level of notice and transparency of these contracts to consumers varies: clickwrap contracts typically force a consumer to scroll through a document before clicking on a box labeled I agree or I accept; whereas browsewrap contracts allow for consumers to access the terms via a hyperlink and it is not necessary to click on the link in order to be held to have entered into the contract (Kim 2013, 39–41, 41–43; Manwaring 2011). Although a clickwrap contract does afford more opportunity to read, in reality consumers often do not read either clickwrap or browsewrap agreements or privacy policies and while there may be an opportunity to read, these documents tend to be extremely lengthy. In the versions of contracts examined herein, 23andMe’s Terms of Service is 9081 words, and its Privacy Statement is 32 pages long and 15,807 words long; while Gene By Gene’s DNA DTCGT Terms and Conditions is 3645 words and its consent document is 4718, which can be contrasted with the lengths of the iTunes agreement, which is 19,972 words long and Amazon’s Terms and Conditions which is 36,275 words long (Wigley 2015). 
McDonald and Cranor’s (2008) study “estimated that it would cost the average American Internet user 201 hours or the equivalent of $3534 a year to read the privacy policies of each website that he or she visits” (562). Also, where consumers do choose to read such contracts there is evidence to suggest they will not necessarily understand their content due to the complex nature of the legal language used,  which may require a high level of education to comprehend (Ayres and Schwartz 2014; Loos and Luzak 2015). It also may be difficult for a consumer to locate terms on a website. Another study by Reidenberg, McDonald et al. investigated “the differences in interpretation among expert, knowledgeable, and typical users and explores whether these groups can understand the practices described in privacy policies at a level sufficient to support rational decision-making” (2015, 42). This study found discrepancies in understanding, including among experts, showing
a number of areas where website privacy policies are too ambiguous to be meaningful and reveal a need to clarify specific data practices. The research demonstrates that policies describe websites’ datasharing practices poorly.Experts could not reach consensus on interpretation of data sharing practices generally and agreed even less as to the various nuances of data sharing. (2015, 83) 
While this study focused on the privacy policies of 6 US news and shopping websites (55–56), the study’s findings are relevant to thinking about how consumers interact with contracts and privacy policies in the DTCGT context. Given that the nature of DTCGT services for health can involve the dissemination of quite complex genetic and health information, discrepancies in people’s understanding of privacy policies for less complex services should lend support to a need to improve both contracts and privacy policies in order to enhance consumer understanding and support decision-making. 
Another matter, which needs further consideration is the design of the contracting environment online and the way consumers behave online. It has been suggested that in the online world people are becoming habituated to clicking (Kim 2013, 59–60) and may even be “click-happy” (Kim 2013, 61; Hillman 2005, 4). In Frischmann and Salinger’s recent article they “develop an original argument that the electronic contracting environment should be understood as a techno-social tool for engineering human beings to behave automatically, like simple machines. ...” They
describe the problem in Taylorist terms, as a system of scientific management that’s directed toward consumers. This view emphasizes how consumers, like laborers in Taylorist workplaces, are conditioned (and possibly deskilled) to behave in ways that are largely determined by system designers who optimize environments to meet efficiency standards. (2016, 2) 
They suggest that the electronic contracting environment“conditions human beings to behave like simple stimulus-response machines” and that if this is case there may be a need for significant reform for a number of reasons, but especially in the interests of protecting “human autonomy and sociality” (2016, 3). Frischmann and Salinger’s work is useful when we think about the use of contract to govern the purchase of DTCGT tests for health purposes. If we think about this in a more traditional medical context where protection of patient autonomy is often given significant protection the idea that the way people behave online may be  diminishing their autonomy especially in relation to decision-making in the context of the purchase of DTCGT tests is worthy of further scrutiny. 
This paper details a number of ways in which current industry reliance on standard “wrap” contracts (defined below) falls short of basic requirements for consumer protection. Having described the problem, the paper goes on to offer a regulatory solution, advocating a more active role for consumer protection agencies in governing the DTCGT industry, and in particular, exploring the potential role of the Competition & Markets Authority (CMA) in the UK context. Given the nature of DTCGT services and the importance of privacy and security issues raised by these services, the conclusion notes there is also a potential role in the UK for the Information Commissioner’s Office (ICO) and the Human Tissue Authority (HTA), as well as scope for similar bodies in other countries in improving regulation of the industry. .

31 October 2017

Drums, Trumpets, Fire Alarms and the DIN

'War Manifestos' by Oona A. Hathaway, William Holste, Scott J. Shapiro, Jacqueline Van De Velde and Lisa Lachowicz in (2018) 85 University of Chicago Law Review (Forthcoming) is characterised as
the first to examine “war manifestos,” documents that set out the legal reasons sovereigns provided for going to war from the late-fifteenth through the mid-twentieth centuries. We have assembled the world’s largest collection of war manifestos — over 350 — in languages as diverse as Classical Chinese, German, French, Latin, Serbo-Croatian and Dutch. Prior Anglophone scholarship has almost entirely missed war manifestos. This gap in the literature has produced a correspondingly large gap in our understanding of the role of war during the period in which manifestos were commonly used. Examining these previously ignored manifestos reveals that states exercised the right to wage war in ways that would be inconceivable today. In short, the right to intervene militarily could be asserted in any situation where a legal right had been violated and all peaceful channels had been explored and exhausted. The Article begins by describing war manifestos. It then explores their history and evolution over the course of five centuries, explains the purposes they served for sovereigns, shows the many “just causes” they cited for war, and, finally, considers the lessons they hold for modern legal dilemmas. The discovery of war manifestos as a set of legal documents offers lawyers and legal scholars something rare: a new window into the international legal universe of the past. That is not only valuable in itself, but it also casts entirely new light on several long-standing legal debates.
The Senate Economics Committee's interim report on aluminium composite cladding as part of its Non-conforming building products study comments
Concerns about the National Construction Code 
The committee notes the concern from witnesses and submitters that the non-compliant use of cladding is widespread and that there have been extensive delays in developing and implementing policies to address non-compliance and non-conformity in the building industry. 
As highlighted in Chapter 2, the committee notes that the Building Minister's Forum (BMF) has now released the Assessment of the Effectiveness of Compliance and Enforcement Systems for the Building and Construction Industry across Australia review's terms of reference and its timeline. The committee looks forward to following this review and learning about its outcomes. 
The committee also welcomes the recent announcement that the National Construction Code (NCC) would be amended to reflect the Australian Building Codes Board's (ABCB) new comprehensive package of measures for fire safety in high rise buildings. The committee is hopeful that this amendment to the NCC, if delivered in a timely manner, will provide greater clarity and reduce the ambiguity around interpretation which has been identified by stakeholders. 
Of particular concern to the committee, and stakeholders, is the long time lag between government responses to the Lacrosse fire in 2014 and any meaningful resolution between governments, the BMF, and the Senior Officers' Group (SOG) on possible steps forward. Furthermore, the committee notes that more disastrous fires have occurred internationally, but Australia has yet to implement any major reforms or communicate any course of action publically. Considering the prevalence of polyethylene (PE) core Aluminium Composite Panels (ACPs) across Australia, the committee considers it paramount that all governments focus attention on this issue before the next disaster occurs. 
Mandatory third party certification, national register and product auditing 
Submitters and witnesses have raised concerns about the progress of the SOG Report's recommendations, which were due to be finalised in May 2017. The committee is concerned that progress appears to have stalled and there is no clearly identified timetable for implementation. The committee is of the view that the implementation plan should be released as soon as possible to assure stakeholders that progress is being made and again makes its point about the timeliness in response to these issues. 
Proposal to ban Aluminium Composite Panels with a Polyethylene core 
The committee understands that under the NCC in its current form, there are compliant uses for PE core ACPs in low-rise buildings, as well as pathways through performance-based solutions to allow the use of PE core ACPs in high-rise buildings. The committee also understands that the signage industry uses PE core ACPs. 
In light of the Grenfell Tower fire tragedy, the committee does not consider there to be any legitimate use of PE core ACPs on any building type. The committee believes that as there are safe non-flammable and fire retardant alternatives available there is no place for PE core ACPs in the Australian market. While Australian Border Force and suppliers of ACM are currently unable to determine whether an imported building product will be used in a compliant manner, the committee believes a ban on importation should be placed on all PE core ACPs. In addition, the sale and use of PE core ACPs should be banned domestically. 
Recommendation 1 
The committee recommends the Australian government implement a total ban on the importation, sale and use of Polyethylene core aluminium composite panels as a matter of urgency. 
Greater coordination and a national approach to reform 
The committee acknowledges that greater enforcement of existing regulations is needed. However, current building regulations appear inadequate and are too easily evaded, largely due to existing deemed-to-satisfy and performance-based pathways, which provide avenues to circumvent Australian Standards in the NCC. The committee supports the BMF's decision to establish an independent review to assess the broader compliance and enforcement problems within the building and construction systems across Australia. The committee is encouraged by the fact that the terms of reference include developing recommendations for a national best practice model for compliance and enforcement to strengthen the effective implementation of the NCC. The committee believes consideration should also be given to an expanded national role for the Commonwealth government across all elements of the building and construction industry, starting with the BMF. 
National licencing schemes 
The committee considers that a national licencing scheme for all trades and professionals involved in the building and construction industry including: building surveyors, building inspectors, builders and project managers, would improve compliance and provide greater consumer protection and public safety outcomes. A national licencing scheme, including requirements for continuing professional development would ensure that building practitioners have the necessary skills and knowledge to operate in the building industry's complex regulatory environment. 
Recommendation 2 
The committee recommends that the Commonwealth government work with state and territory governments to establish a national licensing scheme, with requirements for continued professional development for all building practitioners. 
Need for greater on-site supervision and oversight 
The committee supports the implementation of nationally consistent mandatory on-site inspections throughout the construction process. Whether this is done through the reinstatement of the role of Clerk of Works or some other process is eventually a decision for governments. Either way, it is evident from the evidence received that there needs to be a central oversight role independent from industry to provide assurance to the public that structures are built according to the agreed national standards. The committee also endorses the inclusion of mandatory inspections by fire safety engineers and fire authorities to ensure buildings are compliant and public safety is upheld. 
Addressing the need for greater accountability 
The committee agrees that responsibility for building compliance is currently weighted too heavily at the end of the supply chain. Consequently, measures need to be put in place to ensure greater accountability across the supply chain. The committee considers that the Queensland bill will go some way to ensuring accountability is spread more evenly across the supply chain from designers, manufacturers, importers, suppliers and installers and supports the bill's intent. The committee also encourages other jurisdictions to examine the bill and consider developing similar approaches as a starting point to addressing this serious issue. 
Recommendation 3 
The committee recommends that the Building Minister's Forum give further consideration to introducing nationally consistent measures to increase accountability for participants across the supply chain. 
Availability of Australian Standards 
The committee is dismayed that building practitioners are expected to pay unreasonable sums of money to access Australian Standards which are required to ensure they comply with the NCC. In the committee's view, making Australian Standards freely available would have a significant impact on building compliance. More importantly it will reduce the overall cost of compliance and insurance and most significantly, it will reduce the cost and impact on future state and territory emergency, fire and medical services. 
The committee understands that Standards Australia International (SAI) Global's contract with Standards Australia is coming up for renewal. The committee believes the Commonwealth government should give serious consideration to engaging with Standards Australia to explore possible options to providing free access to Australian Standards, including reinstating online access to the Standards through Australian libraries. 
Recommendation 4 
The committee strongly recommends that the Commonwealth government consider making all Australian Standards and codes freely available. 
Role of the Federal Safety Commissioner 
The committee considers that the Federal Safety Commissioner (FSC) has an important role in ensuring compliance with the NCC of Commonwealth funded construction work. The committee is concerned that the FSC does not appear to be adequately resourced to carry out its newly legislated function to audit compliance with NCC performance requirements in relation to building materials. Mr Edwards advised the committee that his office does not have the resources or the expertise to conduct audits 
In addition, the committee believes that loss of accreditation to conduct Commonwealth funded work is not a strong enough penalty for non-compliance with the NCC. The committee is of the view that a stronger penalties regime should be imposed. 
Recommendation 5 
The committee recommends the Commonwealth government consider imposing a penalties regime for non-compliance with the National Construction Code such as revocation of accreditation or a ban from tendering for Commonwealth funded construction work and substantial financial penalties. 
Recommendation 6 
The committee recommends the Commonwealth government ensure the Federal Safety Commissioner is adequately resourced to ensure the office is able to carry out its duties in line with the new audit function and projected work flow. 
Illegal phoenix activity in the building and construction industry 
The committee is concerned that it has been nearly two years since its report on insolvency in the construction industry was tabled and the Productivity Commission's report was released and considers that a Director Identification Numbers (DIN) initiative should be considered as a matter of urgency. A DIN initiative would go some way to preventing directors engaging in illegal phoenix activity. The committee also considers that the potential for a DIN initiative to assist credit reporting agencies in identifying individuals who engage in illegal phoenix activity is worth further investigation. The committee is encouraged by the government's willingness to give further consideration to DIN's, it is concerned by the lack of a clear timeframe for consideration. 
Recommendation 7 
The committee welcomes the Commonwealth government's decision to give further consideration to Director Identification Numbers and recommends that it expedites this process in order to prevent directors from engaging in illegal phoenix activity. 
Increasing protections for end users 
The committee believes there needs to be a greater awareness and protection for consumers in the residential strata sector. The committee considers there is an urgent need to provide a statutory duty of care to cover the discovery of non-compliant or non-conforming building products for the increasing number of the Australian public who purchase residential apartments. 
Recommendation 8 
The committee recommends that state and territory governments work together to develop a nationally consistent statutory duty of care protection for end users in the residential strata sector. 
Next steps for the committee 
The committee anticipates that significant changes will arise from the reforms that the Commonwealth, state and territory governments will undertake as a result of this serious issue. The committee intends to keep a close eye on how these reforms are developed and the eventual timeliness of their implementation as this continues to be a significant shortcoming across all governments. 
The committee urges, as a matter of the upmost importance, to work effectively together and to get the job done expeditiously. The committee will also continue to monitor the progress of the BMF, its review, and also its ongoing work on the issues of non-conforming and non-complaint building products. The committee will present an interim report on the illegal importation of asbestos on 31 October 2017 and its final report for the broader inquiry by 30 April 2018.

30 October 2017

Communication Markets

The !80 page ACCC draft Communications Sector Market Study report features the following Key points
  • The Australian communications sector has been undergoing a period of significant change that is affecting how supply chains function and the nature and extent of competition in retail and wholesale markets. This change includes both structural reform, as a result of policy initiatives, at the centre of which is the rollout of the NBN, and the rapid pace of technological advance and product innovation that is occurring globally. 
  • We consider that the economic regulatory framework for the communications sector has proven to be capable of accommodating major changes to the sector and has allowed for appropriate responses during the transition to the NBN. We do not find that there is currently a need for significant changes to this regulatory regime. 
  • Notwithstanding considerable concentration in both fixed and mobile retail markets there is evidence of competition between the major service providers of broadband and voice services. Smaller providers and new entrants have the potential to provide additional competitive tension by constraining the larger providers. 
  • The rollout of the NBN is a major investment in communications infrastructure and is having a significant impact on the Australian communications sector. The changes within the supply chain and consequential impacts on consumers and retail service providers have inevitably been a key focus of the market study. 
  • The NBN rollout is now well advanced with three million premises activated and NBN Co progressing at a rapid pace to meet a commitment to complete its build by 2020. 
  • However, a number of competition and consumer issues related to the NBN transition have emerged and require immediate measures to resolve on the part of both retail service providers and NBN Co, some of which are already underway. 
  • We are undertaking measures to promote improved consumer and competition outcomes directed at ensuring availability of reliable and useful information to support consumer choice. These measures include: o broadband speed claims guidance for service providers o introduction of the broadband perfo rmance monitoring and reporting program o enforcement of the Australian Consumer Law (ACL) to address serious or systemic failures in advertising 
  • Other processes also underway to identify and address issues arising in the delivery of services over the NBN i nclude NBN Co’s consultations with its customers on its pricing construct and the Australian Communications and Media Authority’s (ACMA) review of consumer experience on the NBN. 
  • The outcomes of these various initiatives, and extent to which issues of concern persist, will be an important factor in determining the need for further regulatory responses in the short term. 
  • 5G deployment could create significant opportunities for industry and consumers. It has the potential to accelerate the extent of fixed to mobile and fixed wireless substitution thereby disrupt ing existing business models. The degree of future substitution will in part depend on the performance of NBN services, both in terms of price and service quality. 
  • We have not identified any immediate competition concerns in relation to new and emerging communications services such as over the top content services, cloud services and the Internet of Things (IoT). We propose to address any future competition concerns that may arise in relation to these services through use of our competition law powers in the first instance.  
  • Our assessment makes draft findings on a range of issues, including some of immediate concern. We have examined the issues of concern in detail to develop our proposed actions and recommendations, including the urgency with which they should be addressed. 
The draft report goes on to state -
State of competition in the supply of voice and broadband services Voice and broadband services are the essential communications services on which individuals and businesses rely. The retail provision of these services displays considerable concentration, with the four largest providers accounting for 96 per cent of services to residential premises. Telstra’s fixed line dominance has not been significantly eroded so far in the transition to the NBN despite some losses in regional areas where its dominance has been greatest. Competition for mobile services is concentrated in the hands of the three mobile network operators that account for 91 per cent of mobile services. Notwithstanding the high level of market concentration there is evidence of competition between the vertically integrated major service providers in the markets for voice and broadband services, over both fixed and mobile access technologies. This is particularly evident in the price competition between suppliers of both fixed and mobile services. However, while non-price competition extends across multiple product dimensions for mobile services with significant product differentiation, the same is less true for fixed services. To date there is less differentiation in the fixed services on offer and competition in the fixed segment of the market has not focused on quality of service dimensions, such as broadband speed. While there are signs of retail price competition occurring, we have heard from many service providers, both in submissions to the market study and at the stakeholder forum held in July 2017, that the NBN wholesale pricing construct and level is constraining their ability to provision greater capacity given consumers’ current willing ness to pay. NBN Co has expressed another view, stating that it has undertaken research that indicates consumers have a greater willingness to p ay and that service providers should be doing more to promote the adoption of higher speed services. These issues may affect efficient use of NBN infrastructure and NBN Co’s ability to recover its investment costs. In this regard, we note that an objective of the policy decision to build the NBN is to support retail competition. While we are observing some product differentiation and market segmentation in the retail plans currently in the market, there is scope for this to further develop. We anticipate that competition in the supply of fixed line and mobile voice and broadband services will increase following the entry of Vodafone into the provision of fixed line services and TPG into the provision of its own mobile network. This will result in four major carriers providing both fixed and mobile services. 
Transitioning consumers to the NBN 
The challenges faced by NBN Co include provision of services over the NBN that meet consumer expectations and deliver an efficient use of the infrastructure being deployed as well as completion of the build. A significant number of consumers are reporting unsatisfactory experience with the NBN both during and after migration from the legacy networks. Two principal concerns arise in this regard. The first concern relates to connection and activation problems at the time of migration and fault rectification after connection, including missed appointments and lack of reliable information and unsatisfactory complaint resolution processes. The primary concern is that current NBN service levels do not represent an appropriate basis to support a positive end-user experience, and there is insufficient recourse to compensation where service levels are not met. Compounding these problems is ineffective communication and coordination in the supply chain resulting in consumer misunderstanding and confusion. The second issue is the speed of services supplied over the NBN which is not always meeting consumer expectations. There are a number of aspects to this issue, the most significant of which are the choice of speed tier made by a consumer when migrating to the NBN and the provisioning of connectivity virtual circuit (CVC) capacity by service providers to deliver the speed and user experience appropriate to that speed choice dur ng the busy hours. In addition, the capability of the fibre-to-the-node (FTTN) technology to deliver certain higher speed services can be limited. These migration and experiential issues have gained significant attention, both within the industry and more broadly in the media, and in our view stem from failures in retail and wholesale markets that could largely be overcome through more accurate information, improved information flows and better coordination along the supply chain and to consumers. In this regard, we consider the issue of consumer dissatisfaction with the speed of their NBN service can be addressed directly through the provision of improved retail plan information on speeds that supports consumers in making their purchase decisions, and through retailers ensuring their retail NBN services typically operate in the manner advertised. We are introducing measures we consider have good prospects of bringing widespread improvements in the near term, via retailers implementing our 2017 broadband speed claims guidance, our introduction of a broadband performance monitoring and reporting program, and enforcement of the ACL to address serious or systemic failures in advertising practices. We consider that this strategy can bring benefits without the potential risks associated with more intrusive measures, such as mandating minimum standards, which could curtail the offering of less expensive but slower plans over the NBN even where these plans would be sufficient to meet the requirements of many consumers. 
The NBN supply chain 
We acknowledge that the above measures will not resolve all of the poor outcomes that are being delivered by retail NBN markets, and also that there are significant concerns expressed by retailers regarding their upstream supply arrangements that are potentially contributing to these outcomes. A potentially significant factor contributing to these outcomes is that current average revenues per user for NBN services may not be sufficient to meet NBN Co’s long term cost recovery requirements. One factor is that we are not seeing the degree of risk sharing and alignment of incentives we would expect in a well-functioning wholesale market. These issues are the subject of processes with the potential to improve outcomes for consumers. NBN Co is currently consulting with its customers on potential modifications of or alternatives to the current pricing model. In addition, in August 2017 the Government convened an industry roundtable to secure joint action to better support co nsumers during the NBN migration. We welcome an industry led approach to improving the NBN experience of consumers and an outcome on NBN pricing that meets the objectives of NBN Co and service providers. We consider an industry resolution can be preferable to a regulatory outcome as it is likely to be more responsive to the immediate concerns of NBN wholesale customers and should be afforded reasonable time to reach that resolution. Therefore, we are watching developments and; if needed, however, we will consider exercising our regulatory powers where this would support these market outcomes being realised sooner. In the meantime, to provide additional flexibility to the parties in negotiating pricing outcomes, we have deferred our decision on the Special Access Undertaking (SAU) variation that NBN Co has submitted. NBN Co’s proposed SAU variation incorporates FTTN, fibre to the basement (FTTB) and hybrid fibre coaxial (HFC) access technologies into the SAU, to reflect the current NBN model. If approved, the SAU variation would extend the current SAU pricing arrangements to these access technologies. Further, the ACMA is undertaking inquiries and research to provide a better understanding of the nature, extent and causes of the concerns regarding consumer experience before, during and after the migration of consumers to services provided over the NBN. We propose to examine NBN service standards and their impact on consumer experience. In particular, we will examine incentives in place along the supply chain and whether they are sufficient to support appropriate consumer outcomes. 
Key intermediate inputs 
Smaller service providers have the potential to add to the competitiveness of communications markets by constraining the behaviour of the larger providers and in creasing competitive tension. However smaller providers frequently rely on wholesale inputs, either of resale services (as in the case of mobile virtual network operators (MVNOs) ) or of intermediate inputs such as transmission between NBN points of interco nnection (POIs) and their own point of presence (POP), as well as internet interconnection services to reach the customers and the content hosted by the larger providers. In addition, some smaller service providers do not have the scale to make direct connection to NBN services at all 121 POIs and rely on wholesale services that aggregate this direct connection with other wholesale services. The market study has looked at whether these wholesale markets upstream of retail markets are operating competitively to supply key intermediate inputs that meet the needs of smaller service providers, including to build scale. An area where we have identified some concerns is the NBN wholesale aggregation market where potential limitations with the NBN wholesale aggregation services being supplied may be impeding the ability of smaller service providers from entering markets or offering differentiated products over the NBN. We consider that the development of this wholesale market to date is not as advanced as might be expected given that the NBN rollout commenced over five years ago and passed its mid-point earlier this year. Complexity in retailing on the NBN during the network build and the effect this has on the business case for investing in the supply of wholesale aggregation services may be contributing to the slow development of the wholesale market. The market study has considered options to promote the wholesale aggregation market while it is still developing. These options include potential action by NBN Co to provide transitional products or pricing measures during the rollout period to facilitate the entry of smaller or niche service providers. We have also identified concer ns in the internet interconnection market where Telstra, Optus and TPG appear to hold some market power in relation to access to their networks. We intend to continue to assess whether access to these services is available at prices and terms that support competition in the range of downstream markets they support. 
Network competition and convergence
The above issues need to be considered in the wider context in which the NBN is being rolled out. Relevantly, this context encompasses the increasing substitutability between and convergence in the use of alternative last mile access networks. Substitution of fixed line services for mobile services has been occurring for a number of years and is likely to  continue in response to the recent increase in the data inclusions offered in mobile network operators’ plans as the capacity of their networks increases. The substitutability between mobile and fixed line has the potential to be boosted when deployment of 5G begins in two to three years. The extent to which th is potential is realised will depend on relative costs of utilising the NBN compared to bypassing the NBN with fixed and mobile wireless alternatives, which is significantly influenced by NBN Co’s pricing. The NBN already faces some competition from non-NBN fixed line networks, particularly in large occupancy buildings and new estates. These networks are typically in low cost to supply areas and have consequently affected the NBN financing model which relies on a cross subsidy from services provided in low cost areas to meet the costs of providing NBN services in high cost regional and remote areas of Australia. The Government is intending to impose a charge on these networks under its Regional Broadband Scheme (RBS) to help fund the NBN’s non-commercial fixed wireless and satellite services. We do not consider this charge should be extended to other substitute networks in the future; indeed, we have a preference that all non-commercial services be funded directly from the budget. In the medium term, given the social objectives it is required to fulfil by supplying services to uneconomic parts of Australia, and depending on future developments, the Government could consider whether NBN Co should continue to be obliged to recover its full cost of investment through its prices via options that may provide it with greater flexibility regarding its cost recovery objectives. These could include direct budget funding arrangements for non-commercial services, debt relief measures or an asset revaluation. The latter step is consistent with that usually taken by private sector enterprises if and when business plans are not met.
Emerging services and issues
Beyond the large number of issues relating to the provision of voice and broadband services, the market study has considered the growth and development of services delivered over or using the internet, including IoT, and changes in supply chain structures and related services such as the use of content delivery networks and data centres. We have also considered the emergence of cloud based services which are transforming the way services traditionally provided locally to the user are consumed. We consider that these markets are highly dynamic and seem to be operating competitively. These areas are diverse, subject to rapid innovation and change and, for the main part, do not give rise to immediate concerns regarding the competitive functioning of their associated markets. However, there are instances where incumbents in the communications sector may be able to exercise market power or where market power concerns could emerge due to strong network effects to the detriment of competition in these markets. Our intention is to keep abreast of developments in these markets to ensure that rigorous competition is sustained and take appropriate competition enforcement action if necessary.
Policy implications and priorities
Finally, the draft report sets out our views in relation to policy implications and priorities. We consider that the current communications regulatory and competition arrangements that we administer have remained fit for purpose notwithstanding the evolution of the communications market to date and appear to be well suited to deal with the immediate and longer term issues we have identified in the market study. The policy priorities largely relate to reviews that are currently being conducted or have recently been completed. These policy issues have interdependencies with competition in and the efficient operation of communications markets and include: spectrum management; data availability and use; the proposed RBS; and the Government’s Mobile Black Spots Program.