The Fels Effect

Abstract

As chair of the Australian Competition and Consumer Commission, Professor Allan Fels blasted his way into popular consciousness by aggressively using the media to promote no- holds-barred enforcement against businesses that breached competition and consumer protection laws. Opinions were sharply divided on the desirability and effectiveness of Allan Fels’ media approach during his chairmanship of the ACCC. This article argues that opinions of the ‘Fels effect’ were based on two opposed, mono-dimensional theories as to how a regulator should behave: one based on conflict and deterrence and the other on cooperation and voluntary compliance. Responsive regulation theory, however, suggests that regulators should be evaluated on multiple dimensions, including whether they are both tough and fair, strategic and sophisticated. This paper reports and analyses survey evidence as to how large businesses do in fact perceive the ACCC across multiple dimensions. We find that Australian businesses may be divided into three groups: those that see the ACCC as threatening; those that see the ACCC as unthreatening; and those that see the ACCC as a professional or responsive regulator. The article goes on to test what impact such differences in opinions have on businesses’ compliance attitudes and compliance management behaviours. Seeing the ACCC as a deterrent threat has some influence on compliance management behaviour. However, when businesses see the ACCC as both strong and fair, this improves both compliance management behaviour and attitudes towards compliance. These findings support responsive regulation theory, but only a minority of businesses in fact saw the ACCC as a responsive regulator.