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From Protection to Competition

From Protection to Competition

The politics of trade practices reform in Australia

By Kerrie Round and Martin Shanahan

CONTENTSREVIEWS

Economists have explored the effect of restrictive practices on markets, and legal scholars have examined the legislation, policies and institutions in specific cases. This work takes a historical approach and examines the occurrence of cartels and other restrictive practices in Australia, their resilience, and the attempts to constrain them.

Fixing prices and rigging markets began with the First Fleet. Many practices were imported but home-grown firms embraced the anti-competitive culture. The small market size and population encouraged firms to stabilise their working environment. Colonial government legislation against these anti-competitive practices largely failed.

The first anti-trust legislation, passed in 1906, proved useless. Despite evidence of restrictive business practices, four Constitutional referendums to give the Federal government power to control trusts and monopolies failed, as did legislation in individual states.

Over the years business became so reliant on government-initiated price controls that they initiated their own regulations. Import restrictions and tariffs protected firms from competition. State legislation proved ineffective. By the mid-1950s the Federal government could not ignore the problem.

After much political wrangling, it was the conservative side of politics that guided legislation through Parliament in 1965. Horrified businessmen had to lodge agreements in a compulsory but secret Register of Trade Agreements. The 14,480 agreements in the Register reveal that similar competitive restrictions were repeated in different industries, at various levels, across Australia. Businesses sought security through collusive arrangements.

Though weak, the Trade Practices Act 1965 educated economists, lawyers, administrators and businessmen that restrictive practices were no longer defensible and opened the way for the Trade Practices Act 1974 that represented a great advance in consumer protection. The insights and efforts of earlier generations have much to teach contemporary regulators on how best to ensure competitive markets and prevent anti-competitive collusion.


CONTENTS

Acknowledgments
About the Authors

Overview
1.  1788-1901 Settlement to Federation
2.  1901-1939
3.  Coal Vend
4.  1939-1959 World War II to the recognition of the need for legislation to control anti-competitive practices
5.  1959-1965 The Introduction of the Trade Practices Act 1965
6.  1965-1974 The working of the Act
7.  1967-1974 The contents of the Register of Trade Agreements
Post Script

Bibliography
Index


REVIEWS

Round and Shanahan provide a detailed and well-documented analysis of legislative and legal developments and associated political and public stances concerning protectionism in Australia and the gradual and erratic shift towards greater acceptance and conceptually more coherent and focused nurturance of competition. It ranges from 1788 (very briefly of course) to the Trade Practices Act 1974, and ends with a substantial postscript. While primarily chronological in its overall structure, there are underlying recurrent themes of much interest — negative local attitudes towards “foreign” companies (generally used to mean other than British), perceived value of protectionist (especially collusive) policies for the very survival of local enterprise and employment, ambivalences in political and public attitudes and union perspectives about “good” and “bad” protection (especially whether and when the politicians were in government or opposition), local abuses of protection, court rulings especially in regard to the separation of federal and state powers but also about delineation of benign from predatory collusive behaviours, corporate efforts to escape the reach of competition laws and regulators, the initial lack of interest in competition but later frustrations of law-makers and regulators especially with delinquent businesses, and much more. The authors handle such complexities with a sure touch, delineating them well (e.g. the various forms of anti-competitive behaviours), making neat linkages, and assessing the key issues objectively and generally non-pejoratively. The lessons of history are made clear without hyperbole. Just occasionally there seem to be remnants of a too-simple contrast of “competitive” versus “cooperative” behaviours, with (for me) somewhat inconsistent recognition of the (arguable) necessity for higher-order cooperation in order to have robust but not chaotic competition. But that is to quibble about a specific choice of balance in what is, in sum, a well-written, well-presented book for the serious student of the history of the emergence and growing acceptance of competition policy and law, with appeal and considerable value for people in various callings, not just historians and political scientists.

Arthur Crook, Australian Journal of Politics and History, March 2016

This is an excellent book.
         At its narrowest, the book provides a history of competition laws in Australia from European settlement in 1788 to the passing of the 1974 Act that forms the basis of Australia’s current competition laws.
         However, the book really does much more than this. It provides a case study for the problems that face a country that is trying to develop and effectively enforce competition laws. Some issues, such as the constitutional constraints on the Australian Federal Government, are (at least partly) unique to Australia. But many of the lessons that can be drawn from the book are of broad appeal and interest. Indeed, this book provides a how to (and a how not to) manual for the many countries that are in the early stages of implementing competition laws.

... this book provides an excellent mix of well-documented facts and data together with the “stories” that make for exceptional reading. For researchers, details of various collusive arrangements, commissions of inquiry and legislation will be an invaluable resource. For practitioners and the casual reader, the discussion of the relevant debate and cases provides a vivid account of the difficulties of designing and selling competition laws. Indeed, the benefit of using Australia as a case study for the modem development of competition laws is not its success but its failure to prevent anti-competitive practices for the best part of a century. It highlights the barriers to successful implementation of competition laws and the importance of selling both the concept of competition and the benefits of competition laws to politicians, the judiciary and the general public. To economists and competition lawyers, these benefits might seem obvious. But to many parties, competition appears unfair and destructive. As a multitude of countries around the world implement new competition laws, this book provides a well-written and timely case study of what to do and not to do when regulating for competition. Read full review...

Stephen King , European Competition Law Review, 2016

The book is an historical compendium of restrictive trade practices in Australia, both of their conduct and of attempts to prohibit them. It is very well written, impressively researched (the Bibliography is 13 pages long!) and truly informative, if not revelationary. In short, it brings to life the history and politics of trade practices law reform in Australia (both, for the most part, equally saddening), which is a rare achievement.
          The publisher is to be congratulated for matching the excellence of the writing with excellence of presentation. The index is detailed and accurate, the book's size is not off-putting, the print size perfectly adequate, even for the footnotes, there is even a list of figures and tables, and the introductory page headed "About the Authors" is a nice touch.
          The book is certainly comprehensive, covering events from 1788 to the Harper Review. Each chapter is introduced by a fitting quotation and ends with a "summary". The chapters are broken up into segments, each with suitable headings (for example, "Barwick's last gasp"). The style is that of a narrative rather than a black letter legal text, which is refreshing, interspersed with gems such as describing views expressed by a Commissioner of Trade Practices, RM Bannerman, of the Trade Practices Act 1965 (Cth) after its repeal, as an "obituary".
          For lawyers whose field of practice includes competition law, but who see such jurisprudence merely as part of their business, to be researched and applied on an ad hoe basis as demand from their clients requires - this book is not for them. For those lawyers, however, who have a real and abiding interest in the rationale behind such law and its efficacy, this book is definitely for them. They deserve to read it, and it assuredly deserves to be read.

Dr R J Desiatnik, Australian Journal of Competition and Consumer Law, December 2015

This impressive book makes considerable progress towards filling an important gap in our knowledge. Trade practices have been the orphan child in the broader story of micro-economic reform, having been largely eclipsed by the extensive literatures on the winding back of tariff protection and farm subsidies. Moreover, as the authors note, more has been written about trade practices by economists and lawyers than historians. For most of us, the focal points of the history of trade practices are three pieces of legislation and snapshot judgements, the Australian Industries Preservation Act 1906 that failed, the Trade Practices Act 1965 that had been weakened in its passage through parliament, and its successor, the Trade Practices Act 1974 that had some teeth. How we got from one Act to another, and why the first two were seen as disappointments, was a mystery. This volume fills in the gaps and provides many new insights. Read full review...

David Merrett, Australian Economic History Review, November 2015

… as someone who has been involved on and off in trade practices since the day man landed on the moon, I found the book an excellent and informative read. One that I would have no hesitation in recommending to anyone with an interest trade practices, be they a practitioner, academic or student of a legal or economic bent.

Mr Robin Davey, Member Australian Competition Tribunal

   

Published 27 April 2015
Publisher The Federation Press
Hardback/256pp
ISBN 9781862879690
Australian RRP $125.00
International Price $115.00
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Economics
Australian History / Studies
Law - Consumer
Law - Industrial & Employment
Industrial Relations / EEO


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