How Much Does it Hurt? How Australian Businesses Think About the Costs and Gains of Compliance with the Trade Practices Act
Posted: 18 Jan 2008 Last revised: 13 Aug 2014
Date Written: December 10, 2007
Law-makers, courts and regulators all assume that businesses' compliance with the law is at least partly influenced by management's rational calculations about the costs and gains of compliance and non-compliance. In this paper we use evidence from a survey of 999 large Australian businesses' experience of compliance and enforcement under the Trade Practices Act (TPA) to examine how large Australian businesses perceive the costs and gains of compliance and non-compliance with the TPA. First, we look at how seriously they perceive the threat of financial penalties and criminal convictions as well as economic and social losses from a range of stakeholders in the event of non-compliance, and whether they see positive benefits such as organisational learning and better ways of handling customer complaints as gains of compliance. Second, we examine whether ACCC enforcement action or stakeholder criticism changes the way they calculate the costs and gains of compliance and non-compliance. We conclude by drawing some policy conclusions for the TPA and ACCC.
Keywords: deterrence, compliance, regualtory enforcement, competition law, consumer protection
JEL Classification: K42
Suggested Citation: Suggested Citation