Review of the effectiveness and validity of operations of the MAIF Agreement:Research Paper

Appendix E - Regulatory options to implement the MAIF Agreement

Page last updated: 18 June 2012

Table 18: Regulatory options to implement the MAIF Agreement1

FormCharacteristicsAdvantagesDisadvantages
Voluntary code (e.g. MAIF Agreement) Voluntary

Low cost

Effective in circumstances where there is a high degree of confidence in an industry body and unity in an industry (at least around issue the code is seeking to address)

Often used in emerging industries as an initial response

No formal role for the ACCC in developing or monitoring the code, although parties can consult the ACCC during code development2

Low cost, and cost effective method of regulation in some circumstances

Incentive for signatories to encourage competitors to sign up so there is an even playing field

Threat of moving to heavier handed regulation can positively influence behaviour

May result in limited coverage – parties are not required to sign up

Inconsistencies in industry practice (between signatories and non-signatories) can lead to confusion

Limited ability to enforce compliance or to impose sanction

Prescribed voluntary code (Part IVB) Voluntary

Ministerial involvement to prescribe code – high barriers to prescription (current form of regulation must be inadequate in addressing identified problem)

Involves consultation process

Regulations must be passed by both houses of Parliament

There are currently no prescribed voluntary codes

ACCC has enforcement role

Incentive for signatories to encourage competitors to sign up so there is an even playing field

Strong enforceability through the ACCC

Non-signatories may get competitive advantage as they are not constrained by code

May unnecessarily restrict competition or innovation

Costs of regulation may outweigh benefits

Prescribed mandatory code(Part IVB) Mandatory

Ministerial involvement to prescribe code – high barriers to prescription (current form of regulation must be inadequate in addressing identified problem)

Involves consultation process

Regulations must be passed by both houses of Parliament

There are currently four prescribed mandatory codes

ACCC has enforcement role

Even playing field – all competitors covered by code

Strong enforceability through the ACCC

May unnecessarily restrict competition or innovation

Costs of regulation may outweigh benefits

Licencing Cost in application and administration

Blunt instrument – often limited range of sanctions (i.e. revoke licence)

Effective in circumstances where there is significant public interest, or natural monopoly assets

Effective way to regulate market entry Can be hard to monitor and enforce

Costs of regulation may outweigh benefits

Legislation Involves parliamentary process of enacting legislation Has parliamentary mandate

Has rule of law and can be enforced

Difficult to amend

Lengthy and costly to implement and enforce

Costs of regulation may outweigh benefits

1 References in this table are to the Competition and Consumer Act 2010 (Cth)
2 Parties to a voluntary industry code may apply to the ACCC for authorisation as part of a separate process.