IS THE USE OF INFORMAL ADVERSE
PUBLICITY A LEGITIMATE REGULATORY
COMPLIANCE TECHNIQUE?
by
Dr Karen Yeung
Fellow in Law
St Anne's College
University Lecturer in Law
The University of Oxford
Is the use of informal adverse publicity a
legitimate regulatory compliance technique?
by
Karen Yeung∗
1. Introduction
While the economic analysis of crime assumes that commercial actors ('firms')
are the quintessential 'rational actors', who openly flout the law if the anticipated
benefits of violation exceed its expected costs1, several commentators have suggested
that this assumption does not accurately reflect the complex and more 'communityminded' sensitivities of corporate executives.2 Academics have suggested, on the
basis of case studies and empirical observation, that firms (and their senior
executives) are particularly vulnerable to activities that have a negative impact on
their reputation and self-esteem.3 The recent and on-going battle between the
Australian Competition and Consumer Commission ('ACCC') and the big business
lobby appears to support these claims, in light of the vehement attacks by some
industry leaders on the ACCC's use of media publicity in enforcing the Trade
Practices Act 1974 ('the Act'). The salience and importance of this debate has been
underlined by the establishment of the Dawson Inquiry review of the Act's
competition provisions, established to investigate (among other things) whether the
Act 'provides adequate protection for the commercial affairs and reputation of
individuals and corporations'.4 Leading business people have been reported as
∗
St Anne's College, Oxford University. Paper presented to the Australian Institute of
Criminology Conference, Current Issues in Regulation: Enforcement and Compliance, Melbourne, 3
September 2002. I am indebted to my research assistant, Michael Rush, for his invaluable assistance
and also to Bronwen Morgan and Timothy Endicott for comments on earlier drafts. Any errors remain
my own. I am also grateful to RegNet for generous financial assistance in supporting my visit to
Australia. The author retains copyright in this work.
1
The classic work is G Becker 'Crime and Punishment: An Economic Approach' (1968) 76
Journal of Political Economy 169.
2
See section 3.2(b) below.
3
B Fisse and J Braithwaite, Corporations, Crime and Accountability (Cambridge University
Press Cambridge 1993); B Fisse and J Braithwaite, 'Sanctions Against Corporations: Dissolving the
Monopoly of Fines' in R Tomasic (ed.) Business Regulation in Australia (CCH Sydney 1984); A
Cowan 'Scarlet Letters for Corporations? Punishment by Publicity Under the New Sentencing
Guidelines' (1992) 65 Southern California Law Review 2387; DA Skeel 'Shaming in Corporate Law'
(2001) 149 University of Pennsylvania Law Review 1811; PA French, "The Virtue of Shame In
America:Hester Prynne and the Ford Motor Company" (paper presented at the Angelo State University
Symposium on American Values, St Angelo, Texas, 1984); AA Curcio 'Painful Publicity - An
Alternative Punitive Damage Sanction' (1996) 45 DePaul Law Review 341;DM Kahan 'What Do
Alternative Sanctions Mean?' (1996) 63 University of Chicago Law Review 591.
4
Review of the Competition Provisions of the Trade Practices Act 1974 (Commonwealth of
Australia Canberra 2002) ('the Dawson Inquiry'); The Committee's Terms of Reference, paragraph 1
provides that '[t]he Committee is to review the operation of the competition and authorisation
provisions of the Act, specifically Parts IV (and associated penalty provisions) and VII, to determine
whether they...(d) provide adequate protection for the commercial affairs and reputation of individuals
and corporations (in this regard, the Committee may examine the processes followed by the ACCC and
2
referring to the ACCC's so-called 'trial-by-press-release'5 as 'reputational blackmail'6,
with one senior corporate executive (who declined to be named) claiming that it
'smacks of the Gestapo'.7 The ACCC's Chairman, Professor Allan Fels, responds that
such publicity is simply a means of enhancing the transparency and accountability of
the ACCC's activities, whilst acting as an effective deterrent against regulatory
violations.8 In responding to industry complaints that such publicity may adversely
affect a firm's reputation and thereby lower its profitability, Fels sagely observes that
'horse thieves and bigamists are generally not well-regarded.'9
The aim of this paper is to present a dispassionate and scholarly analysis of the
use of adverse publicity as a regulatory compliance technique, thereby shedding light
on the controversy concerning its legitimacy. Before embarking on this analysis, it is
worth being mindful of the broader social and economic context in which regulatorinitiated adverse media publicity arises. First and foremost is the rapid and
accelerating growth in communications technology enabling the transmission of
information directly to the general public on an almost instantaneous basis, yet at
relatively low cost. This increasing sophistication in communications technology has
also been accompanied by the 'professionalisation' of communications, in which
social institutions within politics, enterprise and civil society, actively engage media
and communications management professionals as a routine part of their activities.10
The combined effect of these two trends has led to the emergence of what Blumler
and Gurevitch describe as a 'communications dependent society' which is, in their
view, symptomatic of a general spread of 'promotionalism' across political and
institutional cultures.11 Public administration has not remained immune from these
developments in the so-called information society, with the delivery of government
information to the general public gaining increasing prominence in public sector
activity12, and which might be thought of as yet further evidence of the infiltration of
the laws under which the ACCC operates, but is not to reconsider the merits of past individual cases)'.
A number of submissions to the Dawson Inquiry have singled out the ACCC's use of media releases as
objectionable, calling for an end to the ACCC's practice of issuing media releases in relation to
individual enforcement actions where judgment is pending. The Committee is due to report in
November 2002.
5
Franchise Council of Australia, spokesperson, Sydney Morning Herald, 8.7.02.
6
Dick Warburton, Caltex Chairman, Australian Financial Review 13.5.02.
7
Leading Australian chief executive who declined to be named, Australian Financial Review
12.5.02.
8
A Fels, "Australia's Competition Regulator and the Media" (paper presented at the Conseil de
la Concurrence, 15th Aniversary Conference, Paris, 13 February 2002); Also Australian Financial
Review 20.5.02.
9
Ibid.
10
A Wernick, Promotional Culture: Advertising, Ideology and Symbolic Expression (Sage
London 1991).
11
J Blumler and M Gurevitch, 'Media Change and Social Change: Linkages and Junctures' in J
Curran and M Gurevitch (eds.), Mass Media and Society (Arnold London 1996).
12
R Gualieteri, Impact of the Emerging Information Society on the Policy Development Process
and Democratic Quality (OECD Public Management Committee Paris 1999).
3
'New Public Management' techniques13 into the delivery of government services.14
New technologies in communication, especially the internet, allow political
institutions to convey their messages to the public without the intermediation of the
press.15 Thus, once media-shy government agencies, including regulators, may now
be observed as actively courting media attention, with the engagement of
communications professionals and media management techniques from the mid 1990s
onwards.16
At the same time, we are witnessing a corresponding increase in popular press
coverage lamenting the inadequacy of existing mechanisms of corporate
accountability, recently thrown into sharp relief by some of the largest corporate
collapses in history occurring in recent months. While media reports of corporate
misconduct may have been relatively infrequent in the past, this is certainly no longer
the case, with the media giving frequent and prominent coverage to corporate failures
and misconduct, often in sensationalist terms, particularly where many sectors of the
community are potentially affected.17 This apparent shift in the climate of public
opinion may be attributable, at least in part, to two developments in modern society.
First, the phenomenon of widespread share ownership by the consumer sector, either
13
New Public Management refers to a set of related reforms in public administration which
occurred in various countries from the early 1980s onwards, including Australia and the UK,
underpinned by a desire to replace the perceived inefficiency of hierarchical bureaucracy with the
presumed efficiency of markets and a drive to make the state more entrepreneurial. The literature is
considerable. For example, P Barberis 'The New Public Management and a New Accountability'
(1998) 76 Public Administration 451; C Hood and C Scott, Bureaucratic Regulation and New Public
Management in the UK: Mirror- Image Developments? No 2 (London Schoool of Economics London
1996); N Lewis 'Reviewing change in government: new public management and Next Steps' (1993)
Public Law 105; D Oliver and G Drewry, Public Service Reform: Issues of Accountability and Public
Law1996); M Power, The Audit Society (Oxford University Press Oxford 1997); M Freedland
'Government by Contract and Public Law' (1994) Public Law 86.
14
Hansen and Langer describe this as a 'skilful blend of managerialism and politics', in which
the public sector organisation assumes a pro-active identity and seeks to manage its image. They claim
the main aim is to inculcate a particular image of the public sector organisation which fuses the
principles of representation and delegation of power related to 'state' and 'democracy' with the ethos of
'work' and 'the market' in the private sector: HK Hansen, R Langer, and D Salskov-Iversen 'Managing
Political Communications' (2001) 2 Corporate Reputation Review 167 cf D Deacon and W Monk
'Executive Stressed: News Reporting of Quangos in Britain' (2000) 6 Harvard International Journal of
Press/Politics 45.
15
R Gualieteri, Impact of the Emerging Information Society on the Policy Development Process
and Democratic Quality (OECD Public Management Committee Paris 1999) para 156.
16
Ibid. Deacon and Monk observe this trend as coinciding with the trenchant criticism of the
lack of accountability of public sector agencies during the mid-late1990s: D Deacon and W Monk
'Quangos and the 'Communications Dependent Society'' (2001) 16 European Journal of
Communication 25.
17
Compare Braithwaite's comments in 1989: 'Punishment with many areas of white collar crime
is infrequently reported...because punishment is rare, the facts of the case are complex and hard to
present journalistically and fear of defamation is greater. Thus there is special reason for active pursuit
of publicity following white collar crime convictions with the extent of media attention devoted to
corporate wrongdoing': J Braithwaite, Crime, Shame and Reintegration (Cambridge University Press
Cambridge 1989), 179.
4
directly or indirectly via pension funds, has added a perceived moral dimension to
corporate wrongdoing not present in an earlier age. The practical impact of huge
corporate collapses on 'ordinary' people, particularly those facing retirement and the
prospect of pension payouts vastly below the level which they had been led to expect,
is increasingly perceived as morally scandalous when attributable to corporate greed
and irresponsible corporate behaviour.18 Secondly, the continuing decline of national
trade barriers and corresponding rise in the importance of global branding, makes
large firms acutely vulnerable to media attacks.19 It is in the light of these social and
economic trends, that the use of adverse publicity as a regulatory compliance
technique falls for consideration.
Before proceeding, it is necessary to clarify the parameters of my analysis. In
examining and evaluating the use of adverse publicity in regulatory compliance, this
paper is concerned with:
‰
informal publicity, thus it excludes publicity which follows from a judicial or
administrative decision which is formally imposed20;
‰
adverse publicity, thus it concerns publicity having a negative impact on the
targeted firm and which may be objectively regarded as, at least in part,
punitive in nature, i.e. it imposes some form of hard treatment on a person in
response to an actual or supposed violation of the law.21 In this way, excluded
from consideration is publicity thought to be predominantly 'informative' or
'remedial', in communicating information to the general public, such as
corrective advertising, although such publicity may have incidental negative
and punitive affects on the targeted firm;
‰
by regulators, and is therefore concerned with adverse publicity initiated by
regulatory enforcement agencies and excludes adverse publicity initiated by
independent third parties such as public interest groups, aggrieved individuals
or investigative journalists.
18
This might suggest that the claim that regulatory infractions are only weakly associated with
moral impropriety and therefore distinguishable from 'traditional' crimes, is becoming increasingly
tenuous.
19
Gardberg claims that globalisation will imply increased corporate vulnerability because of the
largely dispersed production chain and the omnipresence of global brands: NA Gardberg 'No Logo: The
Age of Anticorporate Activism' (2002) 4 Corporate Reputation Review 392.
20
Court-ordered publicity orders, such as those available under sections 86C and 86 D of the
Act (which empower the Federal Court to make non-punitive and punitive adverse publicity orders
respectively, on application by the ACCC: Trade Practices Amendment Act (No 1) 2001) are thus
excluded cf B Fisse 'The Use of Publicity as a Criminal Sanction Against Business Corporations'
(1971) 8 Melbourne University Law Review 107.
21
For this purpose, I draw upon HLA Hart's definition of punishment, ie (i) it must involve pain
or other consequence normally considered unpleasant, (ii) it must be for an offence against legal rules;
(iii) it must be of an actual or supposed offender for his or her offence; (iv) it must be intentionally
administered by human beings other than the offender, (v) it must be imposed and administered by an
authority constituted by a legal system against which the offence is committed: HLA Hart, Punishment
and Responsibility (Clarendon Press Oxford 1968), 4-5.
5
The following discussion is divided into six further sections. In section two, I
begin by sketching a framework for evaluating the legitimacy of regulatory
enforcement activity. According to this framework, legitimacy has two key
dimensions. Regulatory enforcement should contribute to achieving the instrumental
goals of the regulatory scheme and also satisfy basic 'constitutional values' upon
which a liberal democratic state is grounded. Drawing upon this framework, section
three considers whether adverse publicity contributes to reducing or modifying the
socially undesirable conduct that a regulatory scheme seeks to address. To this end, I
draw from both theoretical and empirical literature concerning the impact of so-called
'shaming' techniques and 'reputational' sanctions in order to assess whether, and under
what conditions, these sanctions may be expected to contribute to, or detract from,
effective compliance. In so doing I pay particular attention to their impact on
corporate actors. In section four, I consider whether informal adverse publicity
initiated by regulators meets certain clusters of constitutional values, namely those of
(i) procedural fairness; (ii) legality; (iii) accountability and transparency; (iv) certainty
and stability and (v) proportionality, consistency and rationality. In so doing, I reflect
upon the ethical obligations of prosecutors and regulatory enforcement officials, the
democratic implications of the use of media 'spin control' by public institutions, and
the claims of private interests theories of regulation. Having considered informal
adverse publicity in light of these two dimensions of legitimacy, section five then
evaluates whether, and under what conditions, it may be characterised as legitimate.
In order to make more concrete some of the difficulties associated with evaluating
legitimacy in this context, in section six I briefly consider the ACCC's experience of
informal adverse publicity based on an examination the ACCC's 2001 media releases,
and suggest ways in which the ACCC might seek to enhance the legitimacy of its
media usage. Finally, I provide a short conclusion.
2.
Legitimacy in regulatory enforcement
In order to evaluate the legitimacy of regulator-initiated adverse publicity we need
to examine the notion of legitimacy. In the context of public administration,
legitimacy is an elastic, multi-dimensional and highly contestable concept.
Academics have constructed a range of diverse models and theories that seek to
provide a frame against which the legitimacy of public administration may be
assessed, each providing justified claims to validity.22 Variation amongst academics
as to the meaning of legitimacy gives credence to Galligan's belief that there is 'no
fundamental and irreducible ideal or principle for the acceptability of governmental
processes.'23 In light of this, my own framework does not claim to provide the best or
indeed the only approach to assessing legitimacy. It simply provides one valuable
lens through which the legitimacy of regulatory enforcement can be illuminated and
22
R Baldwin, Rules and Government (Clarendon Press Oxford 1996); DJ Galligan,
Discretionary Powers in the Legal Order (Oxford University Press Oxford 1986); J Mashaw,
Bureaucratic Justice (Yale University Press New Haven 1983); M Shapiro, Who Guards the
Guardians? Judicial Control of Administration (Georgia University Press, Athens 1988) cf C Hood,
The Art of the State (Clarendon Press Oxford 2000).
23
DJ Galligan, Discretionary Powers in the Legal Order (Oxford University Press Oxford
1986).
6
evaluated.24 Unlike other models, however, my analytical framework is directed
specifically at regulatory enforcement activity rather than at public administration in
general, although it may well also provide a useful means for evaluating the
legitimacy of other aspects of regulatory activity, or perhaps even entire regulatory
schemes.
Although there is no single accepted definition of regulation, for present purposes,
I shall adopt the following definition. Regulation may be broadly conceived as the
purposive, sustained and focused control25 by the state26 over socially valued
activities27 to promote collectivist goals28 by addressing social risk, market failure or
equity concerns through rule-based direction of social and individual action.29 Two
facets of this definition are of importance in constructing a framework for legitimacy:
its instrumental nature and its public aspect. These two features provide the
foundation for two sets of normative standards which, taken together, enable us to
evaluate whether regulatory implementation and enforcement may be regarded as
legitimate.
Because the first and primary purpose of regulation is to secure the attainment of
collectivist goals, the primary criterion for evaluation is that of effectiveness, that is, it
must facilitate the effective achievement of the instrumental goals of the regulatory
scheme. Typically, this involves the reduction, modification or elimination of
conduct considered to be socially undesirable and which the regulatory regime
therefore seeks to address.
But when a public official is entrusted with the task of enforcing legal rules and is
empowered to impose sanctions for non-compliance, the coercive power of the state is
24
For the sake of brevity, I provide only a rough sketch of this framework in this paper. For a
more detailed elaboration, see K Yeung, The Public Enforcement of Competition Law: A Principled
Analysis (Hart Publishing Oxford forthcoming).
25
Majone states that 'regulation refers to sustained and focused control exercised by a public
agency over activities that are socially valued. The reference to sustained and focused control by an
agency suggests that regulation is not achieved simply by passing a law, but requires detailed
knowledge of, and intimate involvement with, the regulated activity.' See G Majone 'The Rise of the
Regulatory State in Europe' (1994) 17 West European Politics 77, 81.
26
This definition therefore excludes mechanisms of social control exerted by non-state processes
and institutions.
27
On this basis conduct sanctioned by the 'traditional' criminal law, such as crimes associated
with threats and interference to the person or personal property are excluded, because one of the
principal purposes of the criminal law is to censure conduct that is considered to be anti-social or
otherwise morally reprehensible: A Ashworth 'Is the Criminal Law a Lost Cause?' (2000) 116 Law
Quarterly Review 225. But see n.18.
28
That is, goals which are considered by the community to be socially valuable but would not
otherwise be achieved (or at least, not likely to be achieved) in the absence of regulation . T Daintith,
'Legal Measures and Their Analysis' in R Baldwin, C Hood, and C Scott (eds.), A Reader on
Regulation (Oxford University Press Oxford 1998).
29
This definition is an amalgam of ideas from several different definitions. On the contestable
nature of the definition of regulation, see R Baldwin, C Scott, and C Hood (eds.) A Reader on
Regulation (Oxford University Press Oxford 1998), 4.
7
brought directly to bear upon the citizen30 in order to secure compliance with the law.
The relentless pursuit of effectiveness in regulation is therefore shaped and
constrained by a series of 'constitutional values or principles' arising from the public
aspect of regulation. By this I refer not to the rules and precepts contained in the text
of the Australian Constitution, but to those ideals and principles which are largely
common to democratic legal systems and are often referred to collectively and
encapsulated by the idea of ‘constitutionalism’. Constitutionalism springs from a
belief in limited government.31 It embraces the various ways in which it is possible to
be committed to the notion that in any democratic political system, there are certain
transcendent values that enjoy special ‘constitutional’ status, in the sense that they
embody certain values that democracy itself presupposes and therefore cut across the
political program of particular governments.32 Although these values cannot be stated
exhaustively, in liberal constitutional democracies it is possible to identify five
clusters of constitutional values that represent the essential constitutional values that
are of importance in the regulatory context. These include the requirement that public
authorities should act in a manner which is (i) authorised by law; (ii) reasonably
certain and stable; (iii) accountable and transparent; (iv) procedurally fair; and (v)
proportional, consistent and rational.
Legitimacy in regulatory enforcement thus depends on establishing, firstly, that
the enforcement activity helps promote the collectivist goals underlying the regulatory
scheme and secondly, that in so doing, basic constitutional values are given adequate
expression. While this framework may simply stated, making such assessments in
relation to the practice of regulatory enforcement is often a complex and sometimes
contentious task. Determining whether a particular enforcement practice enhances
compliance may not be straightforward. Identifying what constitutes 'adequate'
respect for constitutional values cannot be mechanically determined. More difficult
still is the need to resolve, in a principled manner, conflict arising when these two
dimensions of legitimacy operate in tension with each other.33 Ultimately, principled
trade-offs can only be made in light of some background political theory, a
contestable matter too large to touch upon in this paper.34 In light of such complexity,
we should not be surprised to find that people differ in their evaluation of the
legitimacy of any given regulatory practice. This is not to say, however, that the
endeavour is meaningless, or not worth embarking upon, and it is this task to which I
now turn. Before doing so, I should make clear that I deliberately refrain from
30
'Citizen' denotes both individuals and legal persons, including corporations.
A Sajo, Limiting Government - An Introduction to Constitutionalism (Central European
University Press Budapest 1999).
31
32
M Hunt, 'Constitutionalism and the Contractualisation of Government' in M Taggart (ed.) The
Province of Administrative Law Determined (Hart Publishing Oxford 1997). Although these values are
more deeply anchored in moral philosophy and political theory concerning the nature and requirements
of justice and democratic governance, they have become so embedded in the political structure and
practice of western democratic legal systems that their existence and importance may often be taken for
granted.
33
This framework is explained more fully in K Yeung, The Public Enforcement of Competition
Law: A Principled Analysis (Hart Publishing Oxford forthcoming).
34
Ibid. See also R Baldwin, Rules and Government (Clarendon Press Oxford 1996), ch 5.
8
expressing firm conclusions in relation to several contentious issues arising in the
course of this evaluation. This is particularly true of debates concerning so-called
private interest theories of regulation, because their validity ultimately depends on a
background political theory, matters too large to be addressed in this paper.
3.
Does adverse publicity improve regulatory compliance?
3.1.
Introduction
Applying the first stage of this framework, that of effectiveness, requires us to
identify whether regulatory-initiated informal adverse publicity contributes to, or
detracts from, regulatory compliance. In other words, does it lead to a reduction in
the incidence of the socially undesirable conduct that the regulatory scheme is
intended to reduce? To answer this question, we must explore the mechanisms
through which adverse publicity is thought to improve compliance at both the level of
theory and practice. Accordingly, the following discussion considers why adverse
publicity might improve compliance, focusing on the use of 'shaming' techniques and
sanctions. As we shall see, several empirical studies seeking to assess the impact of
negative media publicity on firm performance suggest that adverse publicity may be a
potentially effective approach to the punishment of corporate delinquency. But even
if negative publicity can be conclusively shown to have a negative impact on firms
and individuals, it does not necessarily follow that it leads to improved compliance.
Consideration is thus given to the views of so-called 'shaming sceptics' who object to
shaming techniques on various grounds, including claims that it may in fact
exacerbate delinquent activity rather than lead to its reduction. Partly in response to
these objections, Braithwaite has developed the notion of 'reintegrative shaming',
which he claims will improve compliance and avoid many of its other problems, and
it is thus briefly considered. Finally, I touch upon 'non-shaming' based reasons why
adverse publicity might improve compliance - by raising public awareness of
regulatory laws and encouraging the timely settlement of enforcement action.
3.2.
Adverse publicity and firm performance: theory and practice
a) Adverse publicity as a punitive sanction
Within legal and criminological discourse, disenchantment with 'traditional'
forms of punishment such as imprisonment and the criminal fine has spawned a
considerable literature exploring the potential of 'alternative' sanctions, including
sanctions seeking to harness the reputational sensitivity of firms and individuals, such
as adverse publicity orders and other similar devices.35 The ‘pain’ experienced by the
35
For example, J Coffee 'No Soul to Damn, No Body to Kick: An Unscandalised Essay on the
Problem of Corporate Punishment' (1981) 79 Michigan Law Review 413; B Fisse and J Braithwaite,
Corporations, Crime and Accountability (Cambridge University Press Cambridge 1993); B Fisse and J
Braithwaite, 'Sanctions Against Corporations: Dissolving the Monopoly of Fines' in R Tomasic (ed.)
Business Regulation in Australia (CCH Sydney 1984); AA Curcio 'Painful Publicity - An Alternative
Punitive Damage Sanction' (1996) 45 DePaul Law Review 341;PA French, "The Virtue of Shame In
America:Hester Prynne and the Ford Motor Company" (paper presented at the Angelo State University
Symposium on American Values, St Angelo, Texas, 1984); A Cowan 'Scarlet Letters for Corporations?
Punishment by Publicity Under the New Sentencing Guidelines' (1992) 65 Southern California Law
Review 2387; J Braithwaite, Crime, Shame and Reintegration (Cambridge University Press Cambridge
1989).
9
offender arising from these sanctions is thought to arise from the cognitive impact of
adverse publicity on the offender.36 To this end, the offender's social environment,
particularly (in the case of corporate offenders) the mass media, plays a critical role.
Mass communications theory posits that the mass media act as agents of social
control by providing a value frame through which the public conceive of and
construct their social reality.37 It is by portraying delinquent conduct in a negative
light that adverse publicity sanctions may be expected to lower the offender's selfesteem and social standing in the community. There appear to be at least two
assumptions concerning the mechanisms through which adverse publicity sanctions
are thought to operate and which thus call for further scrutiny. First, firms and
individuals care about how they are perceived by their peers and the broader
community such that they will be sensitive to adverse publicity (cf 'sticks and stones
may break my bones but words can never hurt me'). Secondly, offenders believe that
their reputations will in fact suffer once attention is publicly drawn to their delinquent
activity. The following discussion considers whether existing evidence supports these
assumptions.
b) Adverse publicity and the corporate offender: theory and evidence
In identifying whether offenders care about their social status, we can draw
from a strand of the literature concerning alternative sanctions. Some of this literature
has focused on the well-known challenges associated with punishing the corporate
offender, given that it has 'no soul to be damned, and no body to be kicked'38 and the
limitations of the criminal fine.39 Several commentators argue, however, that adverse
36
See n.21.
37
D McQuail, McQuail's Mass Communication Theory 4th ed. (Sage London 2000); WJ Severin
and JW Tankard, Communication Theories 5th ed. (Addison Wesley Longman New York 2001); R
Surette, Justice and the Media (Charles C Thomas Springfield, Illinois 1984); JS Carrion, 'Drugs and
the Mass Media: The Social Construction of a Reality' in B Rolston and M Tomlinson (eds.), Civil
Rights Public Opinion and the State (The European Group for the Study of Deviance and Social
Control Belfast 1987).
38
Edward, First Baron Thurlow 1731-1806, former Lord Chancellor of England, quoted in M
King, Public Policy and the Corporation (1977) 1.
39
The more significant limitations of fines as a sanction against corporations include: their
ineffectiveness in leading to internal disciplinary action by firms against those responsible; they do not
ensure that corporate offenders revise their internal controls where such revision is required to guard
adequately against repetition of the contravention; they tend to convey the impression that offences are
purchasable commodities whereas the conventional understanding of serious offences is that they are
unwanted even if an offender is fully prepared to pay for them in cash; they impact only indirectly on
managers and other personnel in a position to control corporate behaviour yet may have adverse
spillover effects on shareholders, workers, consumers and other bystanders; the level of fine required to
reflect the gravity of an offence may exceed the capacity of a corporation to pay (the 'deterrence trap');
they are prone to asset-stripping, insulation through use of incorporated subsidiaries and other obvious
techniques of evasion. Safeguarding payment by means of a charge upon property that passes into the
hands of subsequent parties is an imperfect solution because the impact may be borne not by the
offender but by others who were not implicated in the offence: ALRC, Compliance with the Trade
Practices Act 1974 Discussion Paper 56 (Australian Law Reform Commission Sydney 1993). See
also B Fisse and J Braithwaite, 'Sanctions Against Corporations: Dissolving the Monopoly of Fines' in
R Tomasic (ed.) Business Regulation in Australia (CCH Sydney 1984).
10
publicity sanctions provide an exceptionally promising and effective technique for
punishing corporate misconduct. They claim that adverse publicity not only has a
direct impact on a corporation's profitability (ie in negative financial impact) but it
can also exploit the sensitivities of corporate management who value prestige and
autonomy as ends in themselves, not merely as means to profits.40
Corporate
executives are thought to be highly deterrable by adverse publicity because those in
high status occupations have more to lose in social standing and respectability by
having their reputations tarnished.41 In addition, shaming is also claimed to be low
cost, relying largely on private enforcement because it is the offender's community
who ultimately withhold approval of the offender.42 These claims are well
represented by Cowan who states that:
Adverse publicity diminishes corporate prestige by stigmatizing the corporation and by
putting it in an undesirable spotlight, thereby facilitating unwanted investigation and
regulation. In certain circumstances, adverse publicity may also cause financial loss to the
firm. If the deterrent impact of adverse publicity were confined to affecting the firm's bottom
line, then it could be persuasively argued that this sanction is unnecessary because fines would
satisfy this goal with greater certainty. The unique value of a publicity sanction, however, lies
in its ability to target the aforementioned aspects of corporate welfare that cash fines cannot
directly affect.'43
There appears to be verifiable evidence that firms are sensitive to adverse
publicity. For example, there is now a considerable number empirical studies that
have sought to explore the impact of the public announcement of events, and whether
they have a negative impact on a firm's reputation for service or quality. In these
studies, a statistically significant negative impact between adverse publicity and firm
performance is typically observed.44 Large scale market-surveys of consumer
40
ALRC, Compliance with the Trade Practices Act 1974 Discussion Paper 56 (Australian Law
Reform Commission Sydney 1993) at 70 lists the following advantages of adverse publicity orders:
they avoid the deterrence trap; they directly target corporate prestige and hence the non-financial
values in corporate decision-making; they are well-tailored to the objective of expressing community
disapproval for serious corporate offences; they can put some pressure on the corporation for reform of
internal procedures by directing explicit attention in the order itself to the types of steps which a
corporation could take or has taken to achieve such reform; ‘overspills’ could be avoided by designing
an adverse publicity order in such a way as to have primary input on managers rather than on the
shareholders and employees of a company; they can also pierce the corporate veil because its effects
inevitably transcend the particular corporation in issue and affect the holding company.
41
J Braithwaite, Crime, Shame and Reintegration (Cambridge University Press Cambridge
1989), 125.
42
DA Skeel 'Shaming in Corporate Law' (2001) 149 University of Pennsylvania Law Review
1811; DM Kahan 'What Do Alternative Sanctions Mean?' (1996) 63 University of Chicago Law
Review 591.
43
A Cowan 'Scarlet Letters for Corporations? Punishment by Publicity Under the New
Sentencing Guidelines' (1992) 65 Southern California Law Review 2387, 2398.
44
I Devine and P Halpern 'Implicit Claims:The Role of Corporate Reputation in Value Creation'
(2001) 4 Corporate Reputation Review 42; SM Rao 'The Effect of Published Reports of Environmental
Pollution on Stock Prices' (1996) 9 Journal of Financial and Strategic Decisions 25. For a fuller
survey of the literature, see C Alexander 'On the Nature of the Reputational Penalty for Corporate
Crime: Evidence' (1999) 42 Journal of Law & Economics 489 n 6 and the literature cited therein.
11
attitudes also support the existence of a direct relationship between corporate
reputation and firm performance. They report that most consumers claim that brand
quality, company image and reputation have a significant impact on their purchasing
decisions.45 These empirical studies confirm the observations of Fisse and
Braithwaites' much earlier case study involving interviews with the executives from
seventeen firms involved in media disasters, finding that firms fear the sting of
adverse publicity attacks on their reputations more than they fear the law itself.46
Several studies indicate, however, that the interaction between adverse
publicity and firm performance is not straightforward, suggesting that context is allimportant. For example, some recent empirical studies have found that while a
significant drop in a firm's market value associated with the announcement of findings
of corporate fraud is observable, the reputational loss for frauds involving regulatory
violations in which firms have not violated an implicit or explicit contract with a
stakeholder or investor is negligible. This suggests that 'related party crimes' (ie
those in direct relationships with the firm) generate reputational penalties but third
party crimes (ie those not in direct relationships with the firm) do not.47 Another study
indicates that while intense media exposure is significantly associated with changes in
corporate reputation, it is not possible to generalise about the dimensions of such
changes, for the relationship between media exposure and corporate reputation
appears to vary depending on the starting levels of corporate reputation of the relevant
firm.48
c) The rise of reputation risk management professionals and reputation studies
These empirical studies do not appear to demonstrate that firm profitability
and financial performance are acutely vulnerable to public announcements concerning
45
D Miller, Consumers Worldwide Expect Businesses to Achieve Social as Well as Economic
Goals New Study Pinpoints What Consumers Want from Corporations (Environics International Ltd,
1999 ).
46
B Fisse and J Braithwaite, The Impact of Publicity on Corporate Offenders (State University
of New York Press New York 1984). Care must be taken, however, in generalising from this study,
given that the sample of firms interviewed was not representative of a broad range of firms with
differing levels of media exposure, but taken only from those firms who had experienced media
disasters.
47
JM Karpoff and JR Lott 'The Reputational Penalty Firms Bear from Committing Criminal
Fraud' (1993) 36 Journal of Law & Economics 757; C Alexander 'On the Nature of the Reputational
Penalty for Corporate Crime: Evidence' (1999) 42 Journal of Law & Economics 489. Coffee puts
forward five reasons why adverse publicity sanctions are not effective for dealing with regulatory
violations: 1) the government is a relatively poor propagandist; 2) government publicity may be
drowned out because the communication channels of our society are already inundated with criticism
of corporations; 3) corporations can dilute this sanction through counter-publicity; 4) the efficacy of
publicity in cases involving consumer fraud or jeopardy t public safety does not imply that publicity
will be equally effective in dealing with 'regulatory crimes'; 5) if publicity directed against the
corporation is effective, it will produce the same externalities as cash fines: J Coffee 'No Soul to Damn,
No Body to Kick: An Unscandalised Essay on the Problem of Corporate Punishment' (1981) 79
Michigan Law Review 413, 425-428.
48
SL Wartick 'The Relationship Between Intense Media Exposure and Change in
Corporate Reputation' (1992) 31 Business & Society 17.
12
regulatory violations. Yet the rapid growth of so-called 'reputation risk management
professionals' suggests that the senior executives of a significant number of firms
nonetheless believe that corporate reputation is an important asset, to be cultivated,
nurtured and protected, thereby providing evidence supporting both the assumptions
upon which the punitive impact of adverse publicity depends.49 In particular, the
growth of communications professionals specialising in 'litigation public relations'50
indicates that firms actively seek to avoid the potentially damaging impact of
litigation on corporate reputation. These media management professionals engage in
what Moses terms 'legal spin control' i.e. they actively court media attention in order
to portray their client's case in its most positive light while seeking to cast doubt on
the strength and validity of the opposing party's case.51 In the US, the practice of
legal spin control is so extensive that some have suggested that not only is such a
practice legitimate, but that lawyers (at least those involved in defending those
accused of crime) should have a positive duty to engage in it.52
Further evidence of the increasing significance accorded to matters of
corporate reputation and institutional image management is provided by the growth
and diversity of academic literature examining issues of corporate reputation. For
example Fombrum and Van Riel53 identify six different theoretical approaches to
corporate reputation in academic literature, from which they attempt to construct a
universally applicable definition of corporate reputation.54
The increasing
prominence of corporate reputation thus highlights the role of the media, not only in
49
To the extent that this suggests a disjunction between their perceptions of the level of risk to
corporate reputation, and the actual level of risk, it reflects a broader phenomenon associated with
misperceptions of risk. A number of studies indicate a significant gap between the actual level of risk
of certain harms (such as violent criminal attacks) compared with their perceived risks, in which the
public systematically overestimates the level of risk: D Bailis and N Feigenson 'Air Bag Safety: Media
Coverage, Popular Conceptions, and Public Policy' (2001) 7 Psychology, Public Policy and Law 444; WJ Potter
'Misperceptions of Risk' (1998) 48 Journal of Communications 162. These misperceptions of risk lend
support to the claims of mass communication theorists in which the media influences the way in which
the public conceives of its social reality.
50
A term coined by Roschwalb and Stack: SA Roschwalb and RA Stack (eds.) Litigation Public
Relations: Courting Public Opinion (Rothman & Co Littleton 1995).
51
J Moses 'Legal Spin Control: Ethics and Advocacy in the Court of Public Opinion' (1995) 95
Columbia Law Review 1811.
52
JC Watson 'Litigation Public Relations: The Lawyers' Duty to Balance News Coverage of
Their Clients' (2002) 7 Communication Law and Policy 77.
53
C Fombrum and C Van Riel 'The Reputational Landscape: A Convergence of Research and
Practice' (1998) 1 Corporate Reputation Review 5.
54
They propose the following definition: 'A corporate reputation is a collective representation of
a firm's past actions and results that describes the firm's ability to deliver valued outcomes to multiple
stakeholders. It gauges a firm's relative standing both internally with employees and externally with its
stakeholders, in both its competitive and institutional environments.'C Fombrum and C Van Riel 'The
Reputational Landscape: A Convergence of Research and Practice' (1998) 1 Corporate Reputation
Review 5, 10.
13
disseminating information about corporate activity, but also serving as the watchdog
of companies' reputations.55
3.3.
Adverse publicity and regulatory compliance
Even if it can be conclusively proven that adverse publicity associated with
regulatory violations has a negative impact on offenders, it does not necessarily
follow that adverse publicity improves regulatory compliance.
Just as the
incarceration of street criminals can be said to have a negative impact on offenders, it
does not follow that incarceration will lead to a reduction in street crime. Thus it is
necessary to establish a positive and causal link between the negative impact of
adverse publicity and improved levels of compliance. How does adverse publicity
make company executives change their behaviour? Does it improve compliance, or
does it worsen compliance? In exploring the answers to these questions, it is useful
to draw from the insights provided by criminologists in their discussion of 'shaming'
as a formal (and typically state-sanctioned) response to criminal conduct. Hence the
following discussion examines the mechanics of shaming in an attempt to identify
whether there is a reliable and consistent link between people's sense of shame and
their tendency to observe legal norms. It also seeks to explore the conditions under
which corporate shaming might be effective.
a) Shaming, shaming sceptics and compliance
Shaming is a technique that relies upon the use of adverse publicity in sanctioning
the offender. It has been defined as 'all social processes of expressing disapproval
which have the intention or effect of invoking remorse in the person being shamed
and/or condemnation by others who become aware of the shaming'.56 One way in
which shaming is thought to improve compliance is through deterrence: the
reputational penalty suffered by the offender as a result of shaming promotes specific
deterrence, while potential offenders will be deterred by the threat of being shamed
for their offences. Cast in economic terms, shaming increases the costs of violation
by damaging the offender's reputation, and may also have the incidental effect of
raising the expected risk of enforcement, both of which can be expected to increase
the overall level of deterrence.
Deterrence is, however, considered to be only part of the attraction of shaming.
Rather, the primary and essential component of shaming is its attempt to 'moralise
with the offender'.57 It is the expressive dimension of shaming, the communication of
society's disapproval of the impugned behaviour and the reasons for that disapproval
to the offender, that is claimed to undermine the offender's reputation and is regarded
as crucial to its effectiveness.58 This communicative dimension is seen by shaming
55
C Chajet 'Corporate Reputation and the Bottom Line' (1998) 1 Corporate Reputation Review
19, 20.
56
J Braithwaite, Crime, Shame and Reintegration (Cambridge University Press Cambridge
1989) 100.
57
Ibid.
58
DM Kahan 'What Do Alternative Sanctions Mean?' (1996) 63 University of Chicago Law
Review 591.
14
advocates as distinguishing shaming from purely deterrent punishment, which may
convey the impression that violations are equivalent to tradable commodities and
capable of being priced in monetary terms.59 Accordingly, shaming advocates claim
that it is particularly effective for improving compliance by corporate offenders. For
example, Fisse and Braithwaite claim that '[t]he most important effect of shaming is
in constituting consciences, in fostering the internalisation of norms, ...the
internalisation of a sense of right and wrong among those who observe and participate
in the shaming.'
In contrast, various objections have been raised by so-called 'shaming sceptics'.
One set of objections doubt the effectiveness of shaming as a form of punishment that
leads to improved compliance. For example, it is claimed that shaming may not be an
effective deterrent of corporate misconduct because: the kinds of close-knit bonds
present in indigenous communities where shaming sanctions have been observed as
effective are not present in modern capitalist societies; if the non-financial deterrent
effect of adverse publicity is salient only to upper-level management, crime may not
be deterred insofar as much of it results from the actions of lower-level managers60;
the effect on autonomy may be too remote and uncertain to serve as a credible
deterrent; the adverse consequences associated with negative publicity may be too
speculative to deter corporations from crime; firms may engage in counter publicity
thereby 'neutralising' the shaming effects; and the nature of the misconduct and its
punishment may be unintelligible to the intended audience or too bland to compel
audience interest.61 In contrast, others express concerns of over-deterrence, rather than
under-deterrence, fearing that shaming sanctions may have a chilling effect on
entrepreneurial and innovative corporate activity.62
A second set of objections question the moral and constitutional validity of
shaming as a sanctioning technique. Thus Massaro claims that in modern capitalist
societies, shaming rituals are 'meaningless, humiliating retributive spectacles, devoid
of other positive community-expressive or community-reinforcing content'63 in which
public humiliation offends principles of human dignity.64 Constitutional objections
have also been raised, on the basis that shaming violates due process rights; may be
59
R Cooter 'Prices and Sanctions' (1984) 84 Columbia Law Review 1523.
60
A Cowan 'Scarlet Letters for Corporations? Punishment by Publicity Under the New
Sentencing Guidelines' (1992) 65 Southern California Law Review 2387, 2406.
61
Ibid.,2407.
62
J Baynard 'Reintegrative Shaming in Corporate Sentencing' (1999) 72 Southern California
Law Review 959.
63
TM Massaro 'Shame, Culture and American Criminal Law' (1990) 89 Michigan Law Review
1880.
64
Cowan responds by claiming that this ethical argument is unconvincing because corporations
are not people. Thus, he claims that concepts of human dignity and our reverence for personhood do
not relate to an organization because a corporation can neither feel shame nor be humiliated: A Cowan
'Scarlet Letters for Corporations? Punishment by Publicity Under the New Sentencing Guidelines'
(1992) 65 Southern California Law Review 2387, 2412.
15
disproportionately harsh and unpredictable in its effects (because given that the
shaming effect is not directly controlled by the state) and may thus create inequities in
the treatment of offenders.65
b) 'reintegrative shaming' and corporate misconduct
Doubts concerning the effectiveness of shaming as a technique for improving
compliance were partly attributable to empirical studies suggesting that shaming
could sometimes be counter-productive, leading to a growth in crime rates rather than
an improvement in compliance levels.66 Thus, partly in response to these and other
doubts, Braithwaite sought to refine the concept of shaming, in order to specify the
conditions under which it is likely to be effective rather than counter-productive.
Braithwaite claims that it is important to distinguish desirable forms of shaming
(which he terms 'reintegrative shaming') with counter-productive forms of shaming
(which he terms 'stigmatic' shaming). For him, reintegrative shaming seeks to nurture
dialogue with regulated entities67, defining it as 'shaming which is followed by efforts
to reintegrate the offender back to the community of law-abiding or respectable
citizens through words or gestures of forgiveness or ceremonies to decertify the
offender as deviant'68 a process which is integral to his vision of a 'restorative justice'
approach to crime and regulation.69 Reintegrative shaming is, in his view,
fundamentally different from 'stigmatic shaming', which is disintegrative - no effort is
made to reconcile the offender with the community, and which Braithwaite claims is
likely to exacerbate crime and deviance by creating sub-cultures of resistance in the
deviant community.70
Braithwaite's concept of reintegrative shaming was born out of his experience
and examination of business regulatory enforcement.71 In seeking to control
corporate misconduct, Fisse and Braithwaite argue that the first priority should be to
create a culture in which corporate crime is not tolerated, and in which the informal
processes of shaming unwanted conduct and praising exemplary behaviour is
65
Ibid., 2408. These, and other constitutional objections, are discussed more fully in the
following section.
66
Egs. L Sherman, Policing Domestic Violence (Free Press New York 1992) See the literature
cited in J Braithwaite, Crime, Shame and Reintegration (Cambridge University Press Cambridge
1989), 127-9.
67
J Braithwaite, 'Corporate Crime and Republican Criminological Praxis' in F Pearce and L
Snider (eds.), Corporate Crime: Contemporary Debates (University of Toronto Press Toronto 1995).
68
J Braithwaite, Crime, Shame and Reintegration (Cambridge University Press Cambridge
1989), 101.
69
J Braithwaite, Restorative Justice and Responsive Regulation (Oxford University Press New
York 2002).
70
J Braithwaite, Crime, Shame and Reintegration (Cambridge University Press Cambridge
1989), 129.
71
T Makkai and J Braithwaite 'Reintegrative Shaming and Regulatory Compliance' (1994) 32
Criminology 361.
16
emphasised.72 Braithwaite describes effective business regulators engaged in the
process of reintegrative shaming as those who are
flexible enough to employ informal shaming and other techniques of persuasion on those who
have slipped up on an otherwise strong commitment to compliance to use punishment coupled
with adverse publicity with maximum force against the recalcitrant. When they resort to the
latter, they monitor reform in the hope that a press release can be distributed outing the
improvements made since the conviction: they seek opportunities for ceremonies of
forgiveness and reintegration.'73
In practice, however, he laments that the western response to both 'traditional'
and organisational crime emphasises degradation ceremonies certifying deviance,
while providing almost no place in the culture for ceremonies to decertify deviance.74
So, for example, in their 1983 study of firms involved in media disasters, Braithwaite
and Fisse found that none of the companies which upgraded their corporate ethics and
defective standard operating procedures following scandals enjoyed substantial
favourable publicity as a result, although there were examples of corporate reforms
which amounted to the companies concerned becoming industry leaders in certain
aspects of compliance policy. They reported that both the news media and regulators
were uninterested in publicising the reforms of corporations whose sins they had
earlier reported. On this basis, they suggest that regulators would prevent more crime
if they 'held more press conferences to shame corporate offenders and more press
conferences to hold up as models those companies which have responded to scandal
by implementing outstanding preventive reforms.'75 But even if this notion of
'reintegrative shaming' is thought to have considerable theoretical appeal, its empirical
validity remains largely untested.76
3.4.
Raising public awareness and encouraging settlement
Thus far, we have been examining whether adverse publicity improves
compliance by virtue of its potential to harness the reputational sensitivities of
offenders through 'shaming'. There may, however, be other mechanisms through
72
B Fisse and J Braithwaite, Corporations, Crime and Accountability (Cambridge University
Press Cambridge 1993), 246.
73
J Braithwaite, Crime, Shame and Reintegration (Cambridge University Press Cambridge
1989), 131.
74
Ibid., 163.
75
J Braithwaite, Crime, Shame and Reintegration (Cambridge University Press Cambridge
1989), 164. Braithwaite's sentiments have been reflected in recent criticism by Australian industry
leaders, eg Acting Chairman of Australian Chamber of Commerce & Industry, who is reported as
commenting that '[i]t would be reassuring if we had the same degree of media publicity from the
ACCC when they found that their case wasn't substantiated': AAP News Feed, 25.4.02.
76
cf Makkai and Braithwaite's study of Australian nursing home standards regulation, which
sought to test the hypothesis of reintegrative shaming. They found that when interdependency existed
between the nursing home and the regulatory inspection team, reintegrative shaming had a stronger
positive effect on improving compliance. But in nursing homes with no link between the home and
inspection team, reintegrative shaming had no effect on compliance levels: T Makkai and J Braithwaite
'Reintegrative Shaming and Regulatory Compliance' (1994) 32 Criminology 361.
17
which adverse publicity may contribute to effective regulatory compliance. For
example, it may raise public awareness of regulatory wrongdoing and help to foster a
culture of support for the regulatory scheme by the general public.77 Regulatorinitiated efforts drawing attention to the findings of a court in regulatory proceedings
may assist public understanding by simplifying the judgment and presenting it in
easily digestible form to the general public.78 Where the regulatory framework
provides scope for private enforcement, publicity campaigns directed at regulatory
violations may encourage aggrieved individuals to mount private enforcement actions,
thereby directly contributing to the vigour of regulatory enforcement.79
In addition, by drawing media attention to the suspected misconduct of firms
and individuals, regulators might thereby strengthen their ability to negotiate a
settlement with those concerned, and this may be thought to improve compliance in so
far as it facilitates the timely resolution of enforcement actions.80 In this respect,
adverse publicity may be seen as a 'technique of persuasion'81, a strategy used with
some success in large-scale civil litigation in the USA where plaintiffs have used
media attention to pressure defendants into settling.82 Indeed, it even appears that
criminal prosecutors in the US have actively pursued media publicity in the hope of
winning public support for the prosecution. So, for example, in the OJ Simpson case,
Los Angeles Attorney-General Garcetti was reported to have engaged in a 'media
blitz' immediately after Simpson's arrest, making six network television appearances
before the accused was arraigned.83 Leaving aside the deeply questionable ethical
probity of such conduct in the Simpson case, it seems that the use of media publicity
may assist in the timely and expeditious resolution of disputes by providing the target
of such publicity with further incentives to reach an early settlement. But while
prompt dispute resolution is a laudable objective, the use of negotiated settlements in
77
Fels is reported as commenting that '[m]edia releases are a form of accountability,
disseminating information regarding the Trade Practices Act and encouraging greater compliance.
Publicity builds a culture of support for competition law and informs firms of their rights and
obligations under the TPA', per The Australian Financial Review, 20.5.02.
78
Fels argues that media releases from the ACCC can help avoid journalist error and confusion
where complexity: A Fels, "Australia's Competition Regulator and the Media" (paper presented at the
Conseil de la Concurrence, 15th Aniversary Conference, Paris, 13 February 2002). See n.106.
79
K Yeung 'Privatising Competition Regulation' (1998) 18 Oxford Journal of Legal Studies 581.
80
T Besley and R Burgess 'Political Agency, Government Responsiveness and the Role of the
Media' (2001) 45 European Economic Review 629.
81
Braithwaite and Fisse refer to informal adverse publicity as a 'technique of persuasion'; B
Fisse and J Braithwaite, Corporations, Crime and Accountability (Cambridge University Press
Cambridge 1993).
82
JC Watson 'Litigation Public Relations: The Lawyers' Duty to Balance News Coverage of
Their Clients' (2002) 7 Communication Law and Policy 77.
83
An unnamed fellow prosecutor was reported as commenting on this strategy thus, 'laying out
all that horrendous evidence - assuming it is horrendous - with live testimony, early on is a great way to
communicate', Ibid.
18
regulatory enforcement also carries with it certain risks, although these are beyond the
scope of the present discussion.84
3.5.
Summary
The preceding discussion suggests that there is substantial evidence to support
the proposition that regulator-initiated informal publicity may have a punitive impact
on firms and individuals, by 'shaming' its targets and thereby lowering their reputation
and prestige in the community. This seems especially true of corporate actors, who
are likely to be exceptionally sensitive to activities that threaten to undermine the
firm's reputation. This sensitivity is likely to be even more acute for those firms
reliant upon successful global branding as an integral part of their marketing
activities. What is less clear, however, is whether adverse publicity can be shown to
improve compliance, with some evidence that shaming techniques and sanctions can
have counter-productive effects and actually exacerbate delinquent conduct.
Although Braithwaite's vision of 'reintegrative shaming' seeks to overcome some of
the difficulties raised by so-called 'shaming sceptics', both its theoretical and
empirical validity is far from conclusively established. While the efficacy of shaming
rests on the cognitive impact of adverse publicity on its targets, regulatory-initiated
publicity may also lead to improved regulatory compliance by raising public
awareness of regulatory laws and encouraging the timely settlement of enforcement
actions.
4.
Does informal adverse publicity satisfy basic constitutional values?
Now that we have considered the legitimacy of adverse publicity in terms of
whether, and if so how, it contributes to regulatory compliance, we can focus on
whether it satisfies certain basic constitutional values, and thus meets the second set
of normative standards that contribute to assessing its legitimacy. Accordingly, the
following discussion examines the extent to which regulator-initiated informal
publicity satisfies five sets of constitutional values, namely those of (i) procedural
fairness; (ii) legality; (iii) accountability and transparency; (iv) certainty and stability;
and (v) proportionality, consistency and rationality. In so doing, consideration is
given to the ethical obligations of prosecutors and regulatory enforcement officials,
the democratic implications of the use of media 'spin control' by public institutions,
and the claims of private interests theories of regulation.
4.1.
Procedural fairness
Without doubt, the most strident objection expressed by industry leaders to the
ACCC's use of media publicity is that the ACCC engages in 'trial by media'.85
84
See K Yeung, "Negotiated Compliance Strategies: The Quest for Effectiveness and the
Importance of Constitutional Principles" (paper presented at the Penalties: Policy, Principles and
Practice and Government Regulation, Sydney, 8 June 2001) discussed in ALRC, Securing Compliance:
Civil and Administrative Penalties in Federal Regulation Discussion Paper 65 (ALRC Sydney 2002).
The editor of the Melbourne newspaper, The Age claims that the ACCC has become an 'expert at using
the threat of litigation or delay, and adverse publicity, to coerce companies away from the formal
processes provided by the Act and into informal negotiations on the ACCC's terms where it can dictate
and design the outcomes.' The Age, 11.5.02.
19
Stripped of its sound bite appeal, this objection is rooted in the constitutional
requirement of procedural fairness (or 'due process'), a fundamental right that may be
anchored to the liberal democratic requirement of respect for the dignity of persons
and is regarded as a vital component of the rule of law.86
Procedural fairness can be interpreted in two senses. In one sense, it refers to
a legal doctrine in Anglo-Australian administrative law (more commonly referred to
as natural justice) with which public authorities must comply in making decisions. In
this sense, the term procedural fairness refers to specific legal doctrines about
procedures that express fundamental principles about the fair treatment of persons and
the procedures needed to give effect to fair treatment.87 The legal doctrine of
procedural fairness has two limbs: decisions by public officials should be made in an
unbiased manner and those affected by such decisions should be given an opportunity
to participate in the decisions that affect them.88 But the term procedural fairness can
be used in another broader, but more amorphous sense. In this second sense, it refers
to the values justifying the legal rules of procedure, rather than the specific rules
themselves.89 It is sufficient for present purposes to note that the central concern is
that interested parties are treated fairly in the decision-making process, and this
includes providing them with an opportunity to participate in decisions that may affect
them. Individuals affected by regulatory decisions ought to be provided with an
account of the reasons for the decision so as to demonstrate to them that the decision
was made properly and that they were fairly treated.90
In discussing the effectiveness of 'shaming' as a technique for improving
regulatory compliance, I noted that shaming sceptics express concerns that such
techniques may fall foul of due process requirements, in circumstances where those
85
Australian Chamber of Commerce and Industry, Reviewing the Trade Practices Act - Who
Will Regulate the Regulator? (Australian Chamber of Commerce and Industry 2002).
86
D Galligan, Due Process and Fair Procedures (Oxford University Press Oxford 1996).
87
PP Craig, Administrative Law 4th ed. ed. (Sweet & Maxwell London 1999) chs 13-14.
The particular procedural requirements demanded by these two limbs vary in accordance with
the circumstances of the decision in question. A range of factors will be relevant to that end, such as
the nature of the decision to be made, the range of affected interests, the extent of the interest of the
person or persons affected and the seriousness of the implications of the decision. PP Craig,
Administrative Law 4th ed. ed. (Sweet & Maxwell London 1999) 425-438. For example, where
criminal sanctions for are contemplated, procedural fairness requires that that a person alleged to have
committed the contravention is accorded the full set of procedural rights associated with the criminal
trial process. In contrast, if an applicant has but a mere hope that an administrative discretion exercised
in one’s favour, then the applicant’s entitlement to a fair hearing will be less extensive.
88
89
A range of different justifications for procedural fairness have been suggested, which vary in
their perception of the role of fair procedures in leading to accurate outcomes and the role of nonoutcome based values:G Richardson, 'The Legal Regulation of Process' in G Richardson and H Genn
(eds.), Administrative Law & Government Action: The Courts and Alternative Mechanisms of Review
(Blackwells Oxford 1994). For the limited purposes of this paper, these various justifications need not
be explored: it is sufficient to acknowledge that procedural fairness is required in order to serve both
outcome-based and non-outcome based values that are grounded on the basic principle of respect for
the dignity of persons.
90
D Galligan, Due Process and Fair Procedures (Oxford University Press Oxford 1996), 431-4.
20
being shamed have little opportunity to defend themselves.91 The deliberate shaming
of those for whom legal guilt is in dispute appears to be an anathema to principles of
procedural fairness, and beyond the realm of principled justification, violating the
most basic tenets of the rule of law.92 Indeed publicity that occurs while criminal
proceedings are imminent or underway and creates a substantial risk of serious
prejudice to the trial process, may not only violate the requirements of procedural
fairness, but is also likely to constitute a contempt of court, itself a criminal offence.93
Even if publicity is not regarded as a contempt of court, it may nonetheless violate the
constitutional requirements of procedural fairness and/or undermine the underlying
democratic values upon which these requirements have their foundation. Whether
this is true of regulator-initiated publicity is likely to depend on a range of factors,
including the nature of the trial (as civil or criminal), the content of that publicity, and
the temporal relationship of that publicity to the defendant's trial.
Where publicity arises at the pre-trial stage, either during the course of
investigations or while formal court proceedings are underway, then it risks
undermining the requirements of procedural fairness in two respects. First, publicity
drawing attention to investigations, or to allegations of misconduct once proceedings
have been instituted, may promote a public perception of guilt and therefore risks
improperly influencing the decision-making tribunal (judge or jury) hearing the case.
Secondly, such publicity, depending on its content, may be thought to fall short of the
fair hearing requirement, in so far as those publicly named by the regulator and
against whom public allegations are made, may complain that they have not been
given a fair opportunity to respond publicly to the allegations against them. This
second claim is only partially valid: where formal court proceedings have been
mounted, then the defendant's right to appear in court and defend the allegations
remains unaffected. The objection is, rather, that the publicity of the allegations and
investigations is one-sided, and creates the impression in the minds of the public that
the defendant is guilty of the allegations and may therefore adversely impact the
defendant's reputational standing. Post-trial publicity, on the other hand, raises
neither of these difficulties for there is no longer any danger that the court will be
improperly influenced by the publicity, nor is there a risk that the public will be
mistaken in their belief of the defendant's guilt.94
91
DA Skeel 'Shaming in Corporate Law' (2001) 149 University of Pennsylvania Law Review
1811 A considerable body of the existing literature on shaming concerns the use of shaming as a formal
sanction, to be instituted after a finding of guilt.
92
AV Dicey, The Law of the Constitution (Macmillan London 1961). Even Braithwaite, a vocal
and enthusiastic proponent of reintegrative shaming, acknowledges that 'there are good arguments for
courts over restorative justice processes in cases where guilt is in dispute': J Braithwaite, Restorative
Justice and Responsive Regulation (Oxford University Press New York 2002) 164.
93
In the UK, the laws concerning contempt of court are based on the Contempt of Court Act
1981. See D Corker and M Levi 'Pre-trial Publicity and its Treatment in the English Courts' (1996)
Criminal Law Review 622.
94
Fels claims that the ACCC does not engage in 'trial by media' claiming that 'the vast bulk of
information provided by the ACCC concerns matters already resolved in court. About 90% of media
releases are issued after the courts have brought down their decisions. Usually, this is unpopular with
the businesses found to have transgressed the law. But it is not 'trial by media' to report the outcome of
the case': A Fels, "Australia's Competition Regulator and the Media" (paper presented at the Conseil de
21
In the US, attempts to justify the use of pre-trial media publicity rest on grounds
that are somewhat reminiscent of the claims made by so-called private interest
theorists of regulation. Private interest theorists conceive of regulation as a dynamic
struggle between participants in the political arena95 in which each group acts in a
self-serving ('rent-seeking') manner in order to maximise the benefits for themselves,
either in terms of wealth, prestige and/or power.96 Accordingly, it has been argued
that the use of media management techniques by parties to litigation can be viewed as
part of the adversarial process, which has the fundamental aim of resolving disputes
between parties. On this basis, attempts by litigants to harness the support of the
general public through media campaigns may be regarded as merely one aspect of the
cut and thrust of the adversarial process of dispute-resolution.97 On the other hand, if
the fundamental aim of the adversarial process of justice is thought to be the quest for
truth or fidelity in the application of legal standards, rather than merely the resolution
of disputes, then the use of media publicity as part of a broader strategy of litigation
management becomes more dubious, and may be seen as undermining the integrity of
the judicial system. While we might be willing to characterise court proceedings
between private individuals involved in a civil dispute as concerned primarily with
dispute resolution, it is considerably more problematic to characterise the resolution
of criminal charges against a citizen for violating criminal standards as simply a quest
for effective dispute resolution. Seen in this light, the 'lassiez-faire bargaining
approach' to the use of pre-trial publicity by regulatory enforcement officials becomes
untenable.
4.2.
Is informal adverse publicity lawful?
In discussing procedural fairness, I noted that procedural fairness could be used in
a hard-edged or 'thin' sense (referring to the administrative law doctrine of procedural
fairness) and a rather fuzzier, 'thicker' sense (referring to the values justifying the
legal rules of procedure, rather than the specific rules themselves). The concept of
legality also displays a similar duality when applied to the practices of law
enforcement officials. On the one hand, we may ask whether a particular practice is
lawful in the technical or 'thin' sense, by asking if it complies with specific legal rules
la Concurrence, 15th Aniversary Conference, Paris, 13 February 2002). Post trial publicity may,
however, be at risk of undermining the proportionality principle. See section 4.5 below.
95
C Scott 'Analysing Regulatory Space: Fragmented Resources and Institutional Design' (2001)
Public Law 329.
96
Eg. G Stigler, 'The Theory of Economic Regulation' (1971) Bell Journal of Economics and
Management Science 2. See section 4.2(f) and 4.3(b) below.
97
For example, JE Lukaszewski, "Managing Litigation Visibility: How to Avoid Lousy Trial
Publicity" (paper presented at the Dallas Chapter, Public Relations Society of America, Dallas Press
Club, Dallas, Texas, Oct 31 1994 1994); E Myers ' The Manipulation of Public Opinion by the
Tobacco Industry: Past, Present, and Future' (1998) 2 Journal of Health Care Law & Policy 79. Seen
in this light, Fels' implicit claim that he is simply using techniques that are already well used by big
business and should therefore not be regarded as unfair may have some valency: A Fels, "Australia's
Competition Regulator and the Media" (paper presented at the Conseil de la Concurrence, 15th
Aniversary Conference, Paris, 13 February 2002), 13.
22
and doctrine.98 But we can also enquire whether the practice conforms with more
amorphous 'ethical' or 'quasi-legal' obligations applicable to law enforcement officials
in carrying out their duties. Thus, in considering whether regulator-initiated informal
publicity is lawful, I shall consider legality in both these senses.
In identifying whether a particular regulatory activity complies with legal rules,
we must consider the legal source of authority from which enforcement officials claim
to derive their power. The legislation upon which regulatory schemes are founded
and which empower regulators to enforce regulatory provisions, do not typically
contain express authorisation for the use of publicity by regulators as a means for
securing compliance. Rather, regulators are typically invested with breathtakingly
wide discretionary powers of enforcement, with very little (if any) legislative
guidance concerning how those powers are to be exercised. It is within the confines
of this broad discretionary power that the authority of regulators to engage in informal
adverse publicity is typically sourced.99
These powers are not, however, completely unfettered. Not only are public
authorities subject to judicial review100 and liable for the tort of misfeasance in public
office101, but, as part of our inheritance of the Diceyan conception of the rule of
law102, legal restraints on public speech that apply to all citizens under the general law
are equally applicable to regulatory agencies in the absence of legislative provision to
the contrary. Thus legal constraints may apply by virtue of the general laws of
defamation (which give legal protection to reputation), contempt of court (designed to
ensure the fairness and integrity of the trial process), the tort of negligent
98
Procedural fairness in its doctrinal sense would fall within the ambit of this question.
99
Specific legislative recognition of the role of publicity may be found in the empowering
regulatory statute. For example, s. 28 of the Act instructs the ACCC 'to make available to persons
engaging in trade or commerce and other interested persons general information for their guidance with
respect to the carrying out of functions, or the exercise of powers, of the ACCC under the Act; to make
available to the public general information in relation to matters affecting interests and consumers and
make known for the guidance of consumers the rights and obligations of persons under provisions of
laws enforced in Australia that are designed to protect the interests of consumers.' Fels thus claims that
the ACCC has a 'duty' to publicise its activities: A Fels, "Australia's Competition Regulator and the
Media" (paper presented at the Conseil de la Concurrence, 15th Aniversary Conference, Paris, 13
February 2002), 5. This view was given partial endorsement in Electricity Supply Association of
Australia Ltd v ACCC (2001) ATPR 41-838. In ACCC v Nissan Motor Co (1998) ATPR 41-660, Von
Doussa J referred to the ACCC's a statutory function under s 28 to make available to the public
information in relation to matters that affect consumers.
100
Although the decision of Commonwealth regulators to engage in informal publicity does not
appear to constitute a reviewable 'decision' for the purposes of the ADJR Act. The Federal Court may
have jurisdiction to entertain common law judicial review claim under s 39B Judiciary Act: See
Electricity Supply Association of Australia Ltd v ACCC (2001) ATPR 41-838. Compare the ALRC's
disturbing proposals, recommending that regulatory decisions to prosecute should be excluded from all
review: ALRC, Securing Compliance: Civil and Administrative Penalties in Federal Regulation
Discussion Paper 65 (ALRC Sydney 2002), Proposals 10-1 and 10-2.
101
Three Rivers District Council v. Bank of England (No.3) [2000] 2 WLR 1220
102
Dicey characterised the rule of law as having three limbs, that can broadly be summarised as:
(1) no punishment without law; (2) equality before the law; and (3) that the protection of civil liberties
lies in the keeping of the courts: AV Dicey, The Law of the Constitution (Macmillan London 1961)
chapter 4.
23
misstatement (which provides compensation for losses caused by negligent
representations) and the statutory proscriptions of misleading and deceptive conduct
contained in the Act itself.103 Because the threshold requirements of each cause of
action will typically be difficult to satisfy in the present context, these legal
constraints do not offer a promising source of redress to those aggrieved by adverse
regulatory pre-trial publicity. They merely form the 'outer legal parameters' within
which regulator-initiated media publicity occurs.
a) Judicial comment
Nonetheless, in a number of cases, defendants have complained about adverse
publicity initiated by regulatory enforcement officials, generating some judicial
comment concerning its legality. The general thrust of this judicial comment
indicates that such activities are unlikely to be impugned on legal grounds, but one
can discern a growing judicial unease about the second, 'thicker' sense of legality and
which may be termed the ethical propriety of such conduct. Before considering these
ethical concerns, it is instructive briefly to examine the way in which complaints
about the use of adverse publicity have been raised in court, and the comments of
individual judges in responding to them. In this respect it is possible to identify two
classes of case: the first involve attempts by the defendant to seek a reduction in
penalty for the regulatory offence on account of the adverse publicity associated with
the trial, and the second involve direct challenges to the legality of the regulator's use
of publicity.
In a growing number of cases, those found liable for contraventions of the Trade
Practices Act have argued that ACCC-initiated adverse publicity warrants a reduction
in penalty.104 While early judicial pronouncements suggested that prosecutor-initiated
publicity is improper and may therefore warrant a reduction in penalty105, subsequent
courts have displayed a greater tolerance, provided that the publicity amounts to 'fair
103
per Trade Practices Act 1974, Part V. Some of these legal constraints are referred to by Finn
J, Electricity Supply Association of Australia Ltd v Australian Competition and Consumer Commission
(2001) ATPR 41-838, para 84.
104
ALRC, Securing Compliance: Civil and Administrative Penalties in Federal Regulation
Discussion Paper 65 (ALRC Sydney 2002) paras 3.73-3.81.
105
In Eva v Southern Motors Box Hill (1977) ATPR 40,026 Smithers J commented that 'Adverse
publicity is often one of the inevitable consequences of wrongdoing and in most cases is without
influence in the assessment of the appropriate penalty. But adverse publicity initiated by the
prosecuting authority itself requires special consideration. If the matter is publicized ahead of the trial,
and widely, and in terms likely to induce public censure of the parties concerned and those parties are
in day-to-day business relationships with the public, then there is obvious danger of injury to the lawful
business of the parties which from a practical point of view may have the effect of effectuating a
cumulative punishment: cf. Fisse, "The Use of Publicity as a Sanction Against Business Corporations",
(1971) 8 Melbourne University Law Review, at pp. 107, 109. In such a case an element has been
injected into the situation which subjects the parties to more than the natural and probable
consequences of mere publication of the fact that they are being prosecuted for named offences. In my
view this is a case in which, by reason of the press release of the prosecuting authority, the danger of
cumulative punishment along these lines is real and should be treated as part of the background against
which the penalty should be assessed. And I have so treated it.'
24
and accurate reporting'106 even if journalists subsequently provide a less balanced
account of the court's decision.107 For example, in ACCC v Cue Design Pty Ltd,
O'Loughnin J stated that
I regard the use of the word "adverse" as meaning something more than fair reporting of the
commencement of a prosecution. I take it to mean the importing of some unfair or incorrect
element into the publicity. I would have thought that a moderately worded, accurate news release,
such as that published by the Commission in this case, serves a very useful purpose. To use the
words of Smithers J it showed "appropriate restraint in tone and content". Without it, the media is
left to make its own inquiries and compile its own summaries. In doing that there is an increased
risk that, by accident, inaccuracies might occur and greater harm could be done to a defendant.108
In a second group of cases, in which defendants have sought to impugn the
legality of regulatory enforcement action due (at least in part) to the regulator's use of
publicity in the action, judges have not been quite so sanguine. So, for example, in a
judicial review application relating to a dawn raid of Citibank offices by Australian
Tax Office (ATO) personnel, Citibank complained of a press release issued by the
ATO announcing that a raid had been made on a large Sydney financial institution
(without naming Citibank) relating to tax avoidance charges.109 In the course of
commenting on the legality of the dawn raid, the court accepted that it was
permissible for tax authorities to take into consideration the publicity likely to follow
from formal prosecution in making the decision to prosecute, but commented that
The press release is a curious feature of this case. It was argued that it is inexplicable except on
the basis of enforcing the Department's policy of "voluntary compliance", in effect using a
prominent bank as an example of what may happen to others, especially banks and other financial
institutions, if they do not voluntarily comply with the Australian Taxation Office's perception of
the obligations of taxpayers under the Act and other revenue legislation....If there was a policy of
the Australian Taxation Office of ensuring "voluntary compliance" and if regard was had to it by
any decision-maker and positively relied on by him in reaching any of the impugned decisions, it
would have been a wholly impermissible consideration.110
The court again commented on ATO prosecution policy in Smiles v Federal
Commissioner of Taxation, observing that
the Prosecution Policy of the Commonwealth says nothing about publicity. Publicity if achieved
may have a deterrent effect. But to seek publicity through media releases or leaks respecting
actual prosecutions in hand would have a tendency to interfere with and distort the ordinary
process of the criminal justice system.111
106
ACCC v Cue Design Pty Ltd (1996) ATPR 41,475 at 41,835; ACCC v Nationwide News
(1996) 18 ATPR 41-519; ACCC v Nissan Motor Co (1998) ATPR 41-660. See discussion in section
4.5 below.
107
ACCC v Nationwide News (1996) 18 ATPR 41-519, per Heerey J.
108
ACCC v Cue Design Pty Ltd (1996) ATPR 41,475 at 41,835.
109
Citibank v Federal Commissioner of Taxation (1988) 83 ALR 144.
110
Ibid., 160-161.
111
(1992) 107 ALR 439, para 53 per Davies J.
25
Arguably the most critical response to regulator-initiated publicity is found in the
recent comments of Justice Finn in the Electricity Supply case.112 The case concerned
a judicial review action by the electricity supply industry directly challenging the
ACCC's use of media releases and media publicity in general. Debate had arisen
between the ACCC and electricity suppliers (ESAA) concerning the proper
interpretation of legislation affecting whether the latter were legally liable for loss or
damage suffered by consumers as a result of electrical surges and brown-outs, even
when these were not due to any fault or negligence of the supplier. Both parties had
obtained the views of Queens' Counsel, with the ACCC taking the view that the
electricity suppliers would be so liable, but with ESAA adamantly disputing this
interpretation of the relevant law. The debate attracted considerable media attention,
and in one instance Fels, as ACCC Chairman, appeared on a television news
programme, commenting that the electricity suppliers' view of the law was 'absurd'.
ESAA brought a judicial review action, challenging three decisions: (i) the ACCC's
decision to issue media releases stating that the supplier's view of the law was
erroneous; (ii) the ACCC's alleged threats to bring legal proceedings against ESAA
on the basis that by publicising its interpretation of the law, ESAA had contravened
the provisions of the Act which prohibited misleading conduct; and (iii) the ACCC's
refusal to undertake to refrain from publishing its own views on the matter.
Ultimately, the supplier's application failed on jurisdictional grounds, and because the
court concluded that, in exercising its statutory functions under s 28 of the Act, the
ACCC was entitled to publish statements of opinion about the law.
Nonetheless, Finn J concluded his judgment with a stern reprimand to the ACCC
in the following terms:
In his evidence Professor Fels indicated on a number of occasions that, in light of the issues that
have achieved prominence in this proceeding, he would have been more careful in what he said in
press releases and comments to the media. He took the view that in a media release it has to be
"really simple". I do not wish to question the use of the media made by the ACCC in publicising
its views. I would merely suggest that, as the agency responsible for policing s 52 of the TP Act, it
properly can be expected to set the example of care in its own representations to the public.
Secondly, Professor Fels has not been reluctant to question in public forums the legal advice of
those Queens' Counsel who advised ESAA or its members...
The stances so taken may constitute good public theatre. Whether they represent good public
administration is another matter. There is a very real prospect that the view the ACCC has taken of
Division 2 of Part V will be found to be incorrect. At the moment, as the ACCC's counsel in this
proceeding properly acknowledges, whether and if so how the implied conditions apply to
electricity supply contracts is a matter of debate about which there can be respectable opinions on
both sides of the argument. To describe the opinions supporting one side of the debate as "absurd"
borders on the mischievous...
While an erroneous statement of opinion can, in its particular setting, contravene the TP Act, it
will by no means necessarily do so. The stance taken by the ACCC, in at least some of the
instances in which threats were made against ESAA and the suppliers, could quite reasonably be
interpreted as simply an attempt to stifle debate. It would be censurable for so powerful and
influential a public agency to take such a course.113
112
Electricity Supply Association of Australia Ltd v Australian Competition and Consumer
Commission (2001) ATPR 41-838.
113
At paras 139-142.
26
b) Prosecutorial ethics and regulatory enforcement officials
Justice Finn's closing remarks cast doubt, not on the legality of the ACCC's
conduct in the case, which was ultimately upheld, but on its ethical propriety. In so
doing, his comments appear to engage the second, fuzzier sense of legality, which
may be seen as imposing certain ethical or 'quasi-legal' obligations on officials
entrusted with the task of law enforcement. By ethical restraints, I refer to those
deeper values and principles reflecting the 'ethos' or 'shared culture' of the community
that may not be expressly reflected in legal rules.114 In many areas where public
authorities are required to exercise discretionary powers in carrying out their duties
and functions, legal rules may provide little if any guidance and there may be no
obviously 'correct' way to proceed. In such cases, these ethical principles or values
inform and constrain the official's course of action.
In seeking to identify the ethical duties of regulatory officials when acting in the
capacity of enforcement authority, we may draw from the ethical standards applicable
to criminal prosecutors. There is a widely held view reflected in academic
scholarship concerned with legal ethics that a disparity exists between the ethical
obligations of criminal defence lawyers and those of criminal prosecutors. Within our
adversarial system of justice, the criminal defence lawyer is thought to occupy the
role of 'neutral partisanship', requiring single-minded zeal in the lawyer's pursuit of
her client's cause while simultaneously disavowing moral responsibility for the merits
of that cause.115 The prosecutor, on the other hand, is generally regarded as
occupying a different and distinctive role, which may be seen as rooted in the
prosecutor's professional role as a representative of the state.116
As the state's
overarching objective in the enforcement of law is to 'do justice', the prosecutor may
therefore be characterised as a 'minister of justice', whose duty is to pursue justice, not
merely to convict.117 In a wider sense, the prosecutor's client is the community, and
thus she occupies a dual role: in an adversarial system, the prosecutor is an advocate
for conviction at trial. But that role is always subordinate to the primary duty to act
114
K Crispin, 'Prosecutorial Ethics' in S Parker and C Samford (eds.), Legal Ethics and Legal
Practice1995).
115
D Luban, The Ethics of Lawyers (Dartmouth Publishing Aldershot 1994).
116
B Green 'Why Should Prosecutors 'Seek Justice'?' (1999) 26 Fordham Urban Law Journal
607;SK Berenson 'Public Lawyers, Private Values: Can, Should, and Will Government Lawyers Serve
the Public Interest?' (2000) 41 Boston College Law Review 789.
117
Ibid. In the USA, the classic statement of the prosecutor's ethical responsibilities were set out
by the Supreme Court in Berger v US (1935) 295 US 78: 'The United States Attorney is the
representative not of an ordinary party to a controversy, but of a sovereign whose obligation to govern
impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a
criminal prosecution is not that it shall win a case, but that justice shall be done. As such, he is in a
peculiar and very definite sense the servant of the law, the twofold aim of which is that guilt should not
escape or innocence suffer. He may prosecute with earnestness and vigor - indeed, he should do so. But
while he may strike hard blows, he is not at liberty to strike foul ones. It is as much his duty to refrain
from improper methods calculated to produce a wrongful conviction as it is to use every legitimate
means to bring about a just one' at 88.
27
fairly in the pursuit of justice.118
Both academic reflection and judicial
pronouncements thus endorse a deliberate asymmetry in the nature and scope of the
ethical obligations of criminal defence lawyers, on the one hand, and criminal
prosecutors on the other. While the former are not only permitted but ethically
obliged to act zealously in the defence of their client, the latter are expected to be
more self-restrained. As the Victorian Supreme Court has observed:
prosecutors are ministers of justice who ought not to struggle for conviction...it is their duty to
assist the court...to make certain that justice is done between the subject and the state.119
In prosecuting regulatory violations of a criminal nature, the position, and hence
ethical obligations, of the regulatory enforcement official appears largely identical to
those of the criminal prosecutor. Even where a regulatory official brings court action
against regulatory violations that are civil, rather than criminal, the analogies with the
criminal prosecutor appear directly apposite. Like the criminal prosecutor, the
regulator may also be viewed as holding the power of the state in 'public trusteeship'
on behalf of all citizens to whom public authorities are ultimately accountable and
from whom their authority is ultimately derived.120 They are thus likewise ethically
obliged to ensure that justice is done between citizen and state, albeit that harm
caused by failing in this duty may not be as damaging as a similar failing in a criminal
case.121 In the words of Green:
[r]egardless of how one characterises the government lawyer's 'client', it is not a private individual
or entity, but a public entity with public obligations that can be summed up in the overall
obligation to govern justly. In the civil context, no less than in the criminal context, the
sovereignty's obligations to act justly and to promote the law are implicated. Thus, these
obligations must at least partially define the government's objectives in [civil] litigation.122
Because the state, as 'client' of the regulatory enforcement official, owes an
overarching duty to the public to seek justice in the promulgation and enforcement of
the law, regulatory enforcement officials may also be seen as subject to the same
imperative. They must therefore temper the zealousness of their enforcement conduct
with regard to the justness of the outcome and the fairness of the process, in order to
118
K Crispin, 'Prosecutorial Ethics' in S Parker and C Samford (eds.), Legal Ethics and Legal
Practice1995). Prosecutor's obligations encompass a duty to ensure adherence to the requirements of
procedural fairness referred to in section 4.1. Prosecutor's ethical obligations may be more extensive
than the obligations of procedural justice, for they may also include obligations to seek to minimise
harms to those involved in the trial process even though they may not be directly affected by the
outcome of the trial.
119
R v Lucas [1973] VR 693, 705.
120
P Finn 'The Abuse of Public Power in Australia: Making Our Governors Our Servants' (1994)
5 Public Law Review 43.
121
The difference in magnitude of moral harm arises because a criminal conviction may lead to
the loss of liberty of the individual, whereas this risk is not present in civil enforcement proceedings,
although the harm may nevertheless be weighty for the individual in question.
122
B Green 'Legal Ethics for Government Lawyers: Straight Talk for Tough Times: Must
Government Lawyers 'Seek Justice' in Civil Litigation?' (2000) 9 Widener Journal of Public Law 235,
266.
28
give effect to one of the state's paramount objectives in promoting just outcomes and
fair process in litigation.
In the Commonwealth context, this characterisation of the ethical obligations of a
regulator in both criminal and civil enforcement proceedings finds strong support
from the Commonwealth Model Litigant Policy, which has had legal force since 1999.
The Policy obliges the Commonwealth and its agencies to act 'honestly and fairly in
handling claims and litigation brought by or against the Commonwealth or an
agency'.123 In essence, it requires them to act with 'complete propriety' and 'may
require more than merely acting honestly and in accordance with the law and court
rules',124 with the Attorney General stating that it goes 'beyond the requirement for
lawyers to act in accordance with their ethical obligations'.125
But while prosecutors are thus liberated from the need to embrace the ethic of
neutral partisanship applicable to criminal defence lawyers, the overarching obligation
to 'do justice' is an infinitely elastic, vague standard, vulnerable to the charge that it
provides 'no guidance whatsoever with respect to the details of a prosecutor's special
responsibilities.'126 To this end, Green claims that in seeking to flesh out what this
obligation may require in particular situations, recourse must be had to the animating
justification for the prosecutor's office as a minister of justice who represents and
serves the state. He states that:
Doing justice comprises various objectives which are, for the most part, implicit in our
constitutional and statutory schemes. They derive from our understanding of what it means for the
sovereign to govern fairly. Most obviously, these include enforcing the criminal law by convicting
and punishing some (but not all) of those who commit crimes; avoiding punishment of those who
are innocent of criminal wrongdoing (a goal which, as reflected in the "presumption of innocence,"
is paramount in importance); and affording the accused, and others, a lawful, fair process.
Additionally, most would agree, the sovereign has at least two other aims: (a) treat individuals with
proportionality; that is, to ensure that individuals are not be punished more harshly than deserved;
and (b) to treat lawbreakers with rough equality; that is, similarly situated individuals should
generally be treated in roughly the same way.
Sometimes these various objectives are in tension. It is the prosecutor's task, in carrying out the
sovereign's objectives, to resolve whatever tension exists among them in the context of individual
cases.127
123
In submissions to the ALRC review of the Federal justice system, the ACCC commented that
if the model litigant directions were to be given legal status, the requirement for the government and its
agencies to act with complete propriety, fairly and in accordance with the highest professional
standards leads to unrealistic assumptions in the mind of respondents about how the ACCC should
behave: ALRC, Managing Justice: A Review of the Federal Justice System Report No 89 (Australian
Law Reform Commission Sydney 1999) at para 3.140.
124
Commonwealth Model Litigant Policy.
125
See D Williams, "Justice and Accountability: The Establishment of the Administrative
Review Tribunal and the Model Litigant Obligation" (paper presented at the Government Law Group,
Australian War Memorial, Canberra, 12 September 2000 2000). The legal source of this obligation is
found in 1999 Legal Services Directions, issued by the Attorney-General pursuant to 55ZF of the
Judiciary Act 1903.
126
B Green 'Why Should Prosecutors 'Seek Justice'?' (1999) 26 Fordham Urban Law Journal
607 at n 69.
127
Ibid, 634.
29
How then do the ethical obligations of law enforcement officials affect the use of
publicity? The guiding principle must be the enforcement authorities' overriding
obligation to 'seek justice', although elucidating the precise contours of this obligation
is a slippery task.128 In the present context, it is useful to distinguish between
different points in the enforcement process, to identify what this obligation may
require in evaluating the legitimacy of regulator-initiated publicity, bearing in mind
the nature, risk and extent of the harm which the overarching obligation to seek
justice seeks to avoid, or at least minimise.
c) The investigation stage
Publicity that draws attention to investigations and names those under suspicion
generates at least two risks. First, it may threaten to undermine the efficacy of the
investigation, to the extent that it may give advance warning to potential suspects who
might then take steps to disguise or destroy relevant evidence. Secondly, it generates
the risk that, if on conclusion of the investigation, enforcement authorities determine
that there is insufficient evidence to warrant initiating court proceedings, then
innocent parties, who have already suffered the distress and inconvenience associated
with an investigation, may suffer considerable harm to their reputation and social
standing. Even though no formal proceedings were brought, the public may implicate
them in wrongdoing. In particular, comments by a prosecutors and regulators alike
may be thought to have a 'ring of authenticity'129, a view endorsed by Finn J in
Electricity Supply case.130 Therefore, at the investigative stage, there is a strong basis
for imposing an ethical obligation of confidence on enforcement authorities. As one
commentator has stated:
Confidentiality rules protect the lives and physical safety of undercover agents, individuals who
may have provided crucial help on a case and are under protection at an undisclosed location, and
others who may have played a key role in an investigation or prosecution. A public revelation that
an individual was somehow named in an investigation, regardless of the fact that the evidence did
not support an indictment or any substantial allegation of wrong doing, would cause some people
to believe the individual is guilty of some crime. Reckless disclosures may very well harm
innocent people. Imposing a duty of confidentiality on prosecutors alleviates these types of
dangers.131
d) While court proceedings are underway
128
But see the views of private interest theorists discussed at the end of this section.
129
J Moses 'Legal Spin Control: Ethics and Advocacy in the Court of Public Opinion' (1995) 95
Columbia Law Review 1811.
130
Electricity Supply Association of Australia Ltd v ACCC (2001) ATPR 41-838 at paras 80-82
acknowledging that consumers were likely to be influenced and to alter their perceptions based on
public statements of opinion made by the ACCC, even if those opinions did not alter any legal rights.
131
R Glavin 'Prosecutors Who Disclose Prosecutorial Information for Literary or Media
Purposes: What About the Duty of Confidentiality?' (1995) 63 Fordham Law Review 1809 Glavin also
says, 'people's lives, jobs, relationships, privacy and happiness are at stake when the government
commences an investigation, and they are not easily resolved after the government has disclosed
information about who it is investigating and what it is learning about them.'
30
Once formal proceedings have been issued, however, the identity of the defendant
and the nature of the allegations are placed on the court file and form part of the
public record, and the trial is held in public. This may suggest that the obligation of
confidence no longer applies. But caution is required. While proceedings are on foot,
justice requires that the court's verdict is not tainted or prejudiced by any extrinsic
material, including the potential for pre-trial publicity to affect the trial outcome.132
This is particularly true in criminal proceedings involving jury trials, where contempt
of court rules are at their most stringent, thereby safeguarding potential jurors from
being be swayed by media publicity associated with the proceedings. This harm is
also present in criminal proceedings triable by judge alone, and in civil proceedings,
although the risk of such harm is thought to be less acute in both cases.133 In addition,
there remains a real risk of harm occasioned to the reputations of those found innocent
of the allegations made against them, due to the public tendency to make negative
associations between the litigation and the accused, despite the latter's acquittal.
Given these two risks, it could plausibly be argued that the obligation to 'pursue
justice' imposes a concomitant obligation on enforcement officials to refrain from
actively publicising the proceedings while they are on foot. On the other hand, this
may be excessively stringent and unnecessary, given that the existence of the
proceedings enters the public domain once they have been formally initiated. How
broadly this obligation should be conceived is likely to be subject to differences of
opinion, depending on the extent to which one perceives the magnitude and risk of
harm. In criminal proceedings, the harm associated with the wrongful conviction of
an innocent person is a moral harm of considerable gravity, and on this basis, my
personal view would be that enforcement officials should refrain entirely from
actively pursuing publicity in criminal cases, at least where individuals are
prosecuted. Where proceedings are civil only, then the obligation of confidence may
be considerably less demanding, given that the moral harm of an erroneous finding of
liability is less serious. In these circumstances, my own view is that enforcement
officials ought to refrain from actively generating publicity that might be thought to
compromise the impartiality of the proceedings, or might encourage others to assume
the guilt of the defendant. On this basis, it may be permissible for enforcement
officials to publicise details of the allegations, provided, however, that any public
comments emphasise that they are unproven allegations, that the defendant's liability
falls to be determined by a court of law, and that such publicity is devoid of any
expressions of opinion by the enforcement authorities concerning the defendant's
guilt.134
132
See section 4.1 above.
133
It is generally assumed that that judges are less inclined to be swayed by media publicity and
more alert to the need to decide cases only on the basis of legally tendered evidence: R Surette, Justice
and the Media (Charles C Thomas Springfield, Illinois 1984). In civil proceedings, the 'moral harm'
associated with an erroneous finding of liability is not as serious as the moral harm associated with the
wrongful criminal conviction of the innocent: R Dworkin, A Matter of Principle (Harvard University
Press Cambridge, MA 1985).
134
US Department of Justice policy requires that all Attorney-General press releases announcing
arrest or indictment contain the express caution that the charges are merely accusations and that the
accused is presumed innocent until proven guilty: A Vinegrad 'Media and Law Enforcement: Law
Enforcement and the Media: Cooperative Co-existence' (1999) Annual Survey of American Law 237.
31
e) After court judgment
Once a court has made a finding of liability, both the potential harms referred to
above fall away. The effect of media publicity covering the court's findings is simply
to increase the extent of the possible reputational injury suffered by the offender, but
this may be seen as an inevitable social consequence following a finding of regulatory
violation.135 On this basis, the enforcement official would seem to be discharged
from the obligations of confidence that apply prior to final judgment, and is therefore
free to comment on the proceedings. Some might seek to argue that the enforcement
officials' obligation to pursue justice implies an obligation of fair and accurate
reporting, and ought therefore to refrain from expressing their own opinions or views
on the case.136 My own view is that objections to the use of media 'spin control', ie
attempts to project a particular message in utilising media publicity, by regulators and
other public administrations are rooted, not so much in their potential to thwart the
objectives of justice137, but their implications for democratic accountability, an issue
explored more fully in the following section.
f) Possible objections
It is possible to anticipate objections to this stance, particularly the validity of the
analogy I have drawn between the ethical responsibilities of criminal prosecutors and
those of regulatory enforcement officials. One might argue, for example, that the role
of regulators is more extensive than that of the criminal prosecutor. In particular,
regulators are typically responsible for investigating suspected violations, whereas in
enforcing 'traditional' criminal laws, this role is typically assigned to the police rather
than the prosecutor. But the combination of investigative and prosecutorial functions
in a single authority serves to reinforce, rather than to undermine, the importance of
ethical standards. In practice, the regulator's investigative functions may tend to
accentuate its role as advocate for contravention and, to the extent that it may render it
135
See section 4.5 below.
136
In the USA, debate concerning the extent to which prosecutors are free to comment on trials
following judgment has centred on the conflict between the right to free speech and the demands of
proper judicial administration, including the right to a fair trial. It is claimed that the right to freedom
of expression should not lightly be restricted. In Gentile v Nevada (1991) 501 US 1030, a defence
attorney held a press conference announcing the innocence of his client, and the majority (5:4) of the
US Supreme Court upheld the constitutional validity of a Nevada statute prohibiting attorneys making
statements to the press that would have a substantial likelihood of materially prejudicing adjudicative
proceedings. Many saw the decision as pro-prosecution, because it would inhibit defence lawyers
responding to extensive press coverage on the announcement of an indictment. This right to know is
thought to include knowledge of the administration of the law. Hence US commentators regard posttrial 'tell-alls' by prosecutors as legitimate, despite ethical duties of prosecutor to preserve
confidentiality if certain conditions respected: R Glavin 'Prosecutors Who Disclose Prosecutorial
Information for Literary or Media Purposes: What About the Duty of Confidentiality?' (1995) 63
Fordham Law Review 1809; S Matheson 'The Prosecutor, The Press, and Free Speech' (1990) 58 Fordham
Law Review 865; R Luna 'The Ethics of Kiss-and Tell Prosecution: Prosecutors and Post-trial
Publications' (1998) 26 American Journal of Criminal Law 165.
137
Particular concerns about the substantive fairness of this strategy may arise, however, in
relation to regulator-initiated publicity associated with specific trials. See section 4.5 below.
32
more difficult for regulators to be objective and even-handed, may increase the risk of
unfairness to the suspect. Alternatively, it might be argued that regulators must utilise
publicity to carry out their 'educative' function. This function might be regarded as
central to their primary duty of promoting regulatory compliance and thus superior to
their law enforcement function, the latter being merely ancillary to their primary task.
Ultimately, such a claim rests on the assertion that the ethical obligations that prima
facie apply by analogy with criminal prosecutors are displaced by the extra
compliance that the use of adverse publicity generates. But, as the discussion in
section 3 suggests, it remains to be demonstrated that extra law-abidance is produced
and, if so, that it can only be achieved by means of regulator-initiated adverse
publicity.
It therefore appears that, in order to undermine the analogy between prosecutors
and regulators, a more radical argument is required, rejecting the notion of ethical
obligations altogether. Such an approach may be found in private interest theories of
regulation, which I have already briefly alluded to. In considering the proper role of
prosecutors, private interest theorists eschew the notion of an overriding public
interest and are largely hostile to the view of prosecutors as 'ministers of justice'.138
They claim that prosecutors will not serve the public interest (even if such a 'public
interest' can be identified) but will instead seek personal reward, such as career
enhancement, in carrying out their duties.139 Attempts to impose ethical obligations
on enforcement officials to act as 'ministers of justice' would only result in selfserving conduct concealed behind the mask of prosecutorial ethics. On this basis,
regulator-initiated publicity may be seen as merely one strategy adopted by
prosecutors in carrying out their task, replicating the self-seeking media strategies that
are often employed by private parties to civil litigation.140 For private interest
theorists, such matters should instead be left to the free interplay of market forces, in
which society is seen as best served by the on-going conflict and confrontation
between regulators and regulated parties.141
g) Prosecutorial ethics and public comment
Due to limitations of length, it is not possible to explore the validity of private
interest theorists in this paper. It suffices to note that these theories ultimately rest on
a particular conception of democracy, and hence adopt a particular vision of the law
138
See sections 4.1 and 4.3(b).
139
See SK Berenson 'Public Lawyers, Private Values: Can, Should, and Will Government
Lawyers Serve the Public Interest?' (2000) 41 Boston College Law Review 789 n 113-116 and the
literature cited therein.
140
This line of argument is reflected in Fels' claims that ACCC use of the media 'counters the
tendency of many business to provide misleading information publicly and privately about how the law
works.' He 'sees no problem whatsoever in countering, in public, arguments that have been made by
self-interested parties or agents or organisations, often very well-funded, and often not overly
concerned with presenting a balanced and accurate account of an issue': A Fels, "Australia's
Competition Regulator and the Media" (paper presented at the Conseil de la Concurrence, 15th
Aniversary Conference, Paris, 13 February 2002).
141
SK Berenson 'Public Lawyers, Private Values: Can, Should, and Will Government Lawyers
Serve the Public Interest?' (2000) 41 Boston College Law Review 789.
33
and the state. Leaving aside private interest theories, there is a compelling case for
imposing ethical duties to 'pursue justice' on regulators when acting in their
enforcement capacity. Because prosecutorial ethics effectively impose higher
standards of 'fair play' on law enforcement officials than those applicable to lawyers
in general, requiring the highest degree of scruples and vigilance in seeking to ensure
that justice is done between state and citizen, this implies two things. First, regulators
should avoid initiating publicity whilst investigations are underway but before formal
proceedings have been issued. Secondly, while formal proceedings are still on foot,
care should be taken to ensure that any public comment is fair and even-handed,
emphasising that the defendant's legal guilt is not established unless and until a court
finding to that effect is made. These ethical standards suggest that, even when
defendants seek to use media publicity in a self-serving manner, enforcement
authorities (including regulators) ought to refrain from descending to the same tactics.
4.3
Does informal
accountability?
adverse
publicity
facilitate
transparency
and
The most strident defence offered by the ACCC in support of its use of the media
rests on the claim that regulator-initiated publicity enhances transparency and
accountability, qualities often claimed to be lacking in the way in which independent
regulatory agencies are thought to operate.142 In liberal democratic societies, citizens
are entitled to be fully informed of the activities of public authorities, for such
information is vital and indispensable to the exercise of democratic freedoms.143
Within a democratic system, accountability requires that public officials to whom
powers have been delegated must account for their actions to the community.144 The
underlying assumption is that all government powers are held on behalf of the
community and therefore account must be made to it.145 Transparency is directly
linked to accountability in the sense that the latter requires the body being called to
account to explain the reasons for its actions, and to justify them in accordance with a
particular set of rules or standards for evaluation. Regulatory decision-making should
therefore endeavour to be open and transparent, enabling the public to scrutinise
regulatory decisions and thereby enhancing public confidence in them.
In the context of regulatory enforcement, the importance of transparency and
accountability in public administration extends both to the regulator's enforcement
142
C Graham, 'Is There a Crisis in Regulatory Accountability?' in R Baldwin, C Scott, and C
Hood (eds.), A Reader on Regulation (Oxford University Press Oxford 1998); Cabinet Office, Opening
up Quangos: A Consultation Paper (Cabinet Office London 1997); D Deacon and W Monk 'Quangos
and the 'Communications Dependent Society'' (2001) 16 European Journal of Communication 25.
143
Except, arguably, in relation to matters of overriding public interest, such as national security.
144
'It goes without saying that it is entirely proper and constitutionally necessary that the ACCC
and its officials be subjected to an appropriate mix of regulation and review by the Parliament, the
Executive and the courts to ensure that they do not abuse, or miscarry significantly in the performance
of, those functions. The ACCC is, after all, a servant of, and is ultimately accountable to, the Australian
community,' per Finn J, Electricity Supply Association of Australia Ltd v ACCC (2001) ATPR 41-838
at para 84.
145
1986), 4.
DJ Galligan, Discretionary Powers in the Legal Order (Oxford University Press Oxford
34
activities, and the way in which judicial institutions interpret and apply the law in
enforcement proceedings. This latter requirement may be seen as part and parcel of
the requirement that 'justice must not only be done, but it must be seen to be done.' In
this context, one of the difficulties posed by the informal settlement of civil and
criminal cases is that the settlement process is largely a private matter, excluded from
public view. It may well be that the public is completely unaware that a bargain has
been struck. Even in situations where the outcome of negotiations may be made
public, the underlying reasons upon which it is based may remain undisclosed,
reducing the level of openness and transparency in decision-making.146 Viewed in
this light, publicity associated with trial proceedings (whether before, during or after
final judgment) is not merely valid, but positively desirable.147 For example, some
large US firms that have been subject to negligence claims by injured consumers have
sought to settle these actions on terms that any settlement agreement must be kept
confidential. This conceals the litigation, and keeps knowledge of the hazardous
activities giving rise to the litigation, out of public view.148 In this respect, regulatorinitiated publicity drawing attention to regulatory enforcement action and its progress
through to conclusion, either by final court judgment or negotiated settlement, may be
welcomed as a means by which transparency and accountability in regulatory
enforcement is promoted.
a) Media spin control and democratic accountability
Although increased dissemination of information is generally thought to be
synonymous with heightened democratic accountability, it is questionable whether
'selective' disclosure enhances accountability. Arguably, it provides a rather distorted
form of accountability, undermining rather than reinforcing the values upon which
democratic societies rest.149 In my opening comments, I referred to the increasing
'professionalisation' of communications and media management, and the rise of media
'spin control'. While a broad range of social actors actively engage in media 'spin
control', it is most commonly associated with politicians' obsession with trying to
influence and regulate the flow of political information and messages via the mass
media. In this process, Franklin claims that politicians and policies have become
'packaged' for media presentation and public consumption, such that the sound bite
has become all-important.150
The concept of spin has been described by one
146
K Yeung, "Negotiated Compliance Strategies: The Quest for Effectiveness and the Importance
of Constitutional Principles" (paper presented at the Penalties: Policy, Principles and Practice and
Government Regulation, Sydney, 8 June 2001) discussed in ALRC, Securing Compliance: Civil and
Administrative Penalties in Federal Regulation Discussion Paper 65 (ALRC Sydney 2002), chapter 7.
147
Fels has been strident in refuting allegations of impropriety concerning the ACCC's use of
press releases on the basis that it provides a form of accountability and makes it possible for citizens to
discriminate on important issues and act to their own benefit: A Fels, "Australia's Competition
Regulator and the Media" (paper presented at the Conseil de la Concurrence, 15th Aniversary
Conference, Paris, 13 February 2002).
148
A Gauthier 'Secret Settlements: Hiding Defects, Hurting the Public' (2000) 24 The News
Media & The Law 3.
149
R Gualieteri, Impact of the Emerging Information Society on the Policy Development Process
and Democratic Quality (OECD Public Management Committee Paris 1999).
150
B Franklin, Packaging Politics (Edward Arnold London 1994).
35
academic as a 'concept or technique...associated with extensive (often untrue or
inappropriate) efforts to frame a situation or subject in a primarily positive or
primarily negative way. It is used often to reveal or suggest an opponent's strength or
weaknesses (without any attempt to provide a balanced critique or encourage a
dialogue).'151
The use of media spin control may therefore challenge the assumption that the
increased dissemination of information heightens transparency. In exploring how
developments in communications technology has affected the way governments
handle information in the policy-making process, Guiliateri claims:
From an information diffusion or dissemination perspective, it is commonly said that knowledge is
power. This is probably true. But whereas in the past power came from hoarding, and restricting
information, power can now emanate from the ability to filter and diffuse information in a timely
manner, the ability to act as an 'information node' that continuously draws people to come back for
more.152
Political analysts are divided in their views concerning the nature of the
relationship between politicians and the mass media, and the democratic implications
of the increasing prevalence and reliance on spin doctors by politicians.153 Advocates
claim that spin doctors help to filter and manage communications in a world of
information overload.154 Sceptics, on the other hand, claim that political spin control
amounts to the selective manipulation of information for public digestion. For
McNair,
Information can be freely given out in the pursuit of democratic government, but it can be
suppressed, censored, leaked and manufactured in accordance with the more particular interests of
government and the organs of state power. For one Whitehall insider, it is about the control and
management of information for the purpose of protecting and insulating power from the critical
gaze of the public rather than empowering the latter and drawing them into the government
process.155
b) Media spin control and private interest theories of regulation
Whatever the democratic implications of spin control, professional media
management techniques appear set to become a permanent and enduring feature of the
modern political communications process.156 The concerns expressed by those wary
151
R Mitchell, 'Framing' in Communications & Leadership (2002 ); available from
http://www.csun.edu/~hfmgt001/frameC.htm..
152
R Gualieteri, Impact of the Emerging Information Society on the Policy Development Process
and Democratic Quality (OECD Public Management Committee Paris 1999).
153
B Franklin, Packaging Politics (Edward Arnold London 1994), 9; B McNair, An Introduction
to Political Communication 2nd ed. (Routledge London 1995), 40.
154
Query whether any principled distinction can be made between 'spin', on the one hand, and
'simplification' on the other.
155
B McNair, An Introduction to Political Communication 2nd ed. (Routledge London 1995).
156
The democratic implications of spin control are beyond the scope of this paper. See the
literature cited in D Deacon and W Monk 'Quangos and the 'Communications Dependent Society''
36
of the democratic implications of 'spin control' by politicians, government institutions,
industry and civil society groups echo many of the assumptions upon which private
interest theories of regulation are rooted.157 The use of media management techniques
by various institutions in the political arena striving to win the support of public
opinion can readily be characterised as simply one technique utilised by participants
in this on-going and dynamic struggle for wealth, prestige and influence. For
example, Blumler & Guervitch claim that,
the publicity system of many advanced democracies has become a power-broking sphere...media
attention is a vital source of potential influence and power, creating perceptions of key events,
issues and distributions of public-support that policy-makers must heed. Politicians, pressure
groups and other would-be opinion makers must therefore given much higher priority to the
publicity field, recognising (1) that it is a competitive arena, in which many rivals are also seeking
footholds and (2) that it is dominated by standards of journalism to which their own mediaclassified material must conform.158
So conceived, regulator-initiated publicity amounts to merely one strategy that
regulators may adopt in order to win public support, thereby bolstering their power,
enforcement budgets and institutional prestige.
In this respect, it seems
indistinguishable from the ways in which private firms seek to harness media
publicity in marketing their products, and in seeking to lobby politicians to adopt probusiness policies. One would expect, therefore, that private interest theorists would
not object to the use of regulator-initiated pre-trial publicity, and given that regulators
may often face more stringent budgetary constraints than those of large-scale
corporations, the use of publicity by regulators may be seen as a legitimate means by
which regulators seek to level the playing field.159
(2001) 16 European Journal of Communication 25. For an example of the complexity of the debate,
consider the role of civil society. Non-governmental organisations have had considerable success in
setting the political agenda through effective media management, but this might be seen as
undemocratic especially if the organisation is very small and thus not representative of the broader
populace: R Gualieteri, Impact of the Emerging Information Society on the Policy Development
Process and Democratic Quality (OECD Public Management Committee Paris 1999). This may also
raise questions concerning the accountability of the media. See D McQuail 'Accountability of Media to
Society' (1997) 12 European Journal of Communication 511.
157
See sections 4.1 and 4.2 (f).
158
J Blumler and M Gurevitch, 'Media Change and Social Change: Linkages and Junctures' in J
Curran and M Gurevitch (eds.), Mass Media and Society (Arnold London 1996), 127.
159
In the US criminal context, use of media relations management by defendants to criminal
charges to create a climate of opinion favouring the accused is seen by Shapiro as simply a means of
levelling the playing field and rebutting the 'presumption of guilt' created by making public the
pressing of charges against the accused: RL Shapiro 'Secrets of a Celebrity Lawyer: How O.J.'s Chief
Strategist Works the Press' (1994) Columbia Journalism Review 25. Such commentators often invoke
the views of Kennedy J dissenting in Gentile v Nevada (1991) 501 US 1030, who said the 'forum of
public opinion is an effective restraint on possible abuse of judicial power' and 'An attorney's duties do
not begin inside the courtroom door.... A defence attorney may pursue lawful strategies to obtain
dismissal of an indictment or reduction of charges including an attempt to demonstrate in the court of
public opinion that the client does not deserve to be tried.' Watson claims that this presumption of guilt
is facilitated by the fact that prosecutors practice litigation public relations, because prosecuting
attorneys are already obligated by state laws and U.S. Supreme Court rulings to engage in litigation
public relations, claiming that every state and the District of Columbia generally require press and
public access to information about criminal charges filed against adults. He observes that, in highprofile cases, the prosecutor often meets that obligation by holding a news conference. The Supreme
37
While this is not the place to offer a critique of private interest theories, their
conception of the regulatory process as a dynamic interchange between rival parties
provides another way in which the debate concerning regulator's use of adverse
publicity may be illuminated. For example, the polarisation of the debate surrounding
the ACCC's use of the media resonates with many of the tenets underpinning the
private interest perspective. The ACCC's most vocal opposition has been expressed
by big business, who are the most vulnerable to attacks on their reputation160 and have
sufficient resources and influence to launch the loudest protests, whilst consumers
have expressed strong support for the ACCC's publicity strategy which they regard as
providing an important means by which consumer interests are promoted and
protected.161 Likewise, Fels' claims that he merely responds to the false media claims
made by industry, given that firms manipulate the media all the time,162 thus implying
that the ACCC, like other regulators, is equally entitled to use the media in
discharging their regulatory functions.163 It therefore seems that, while the use of
adverse publicity has the potential to enhance transparency and accountability in
regulatory enforcement, whether this potential is realised in practice is likely to
depend on the quality and integrity of the information being publicised.
4.4.
Does informal adverse publicity promote certainty and stability?
The rule of law not only requires that regulatory action must be authorised by
law, but it also requires that laws should be clear and certain, and applied in a
reasonably consistent manner, in order to allow affected persons to know the laws in
advance before being subject to them ex post facto. The principle of legal certainty is
closely connected to the goals of clarity and predictability, which contribute to the
effectiveness in regulatory decision-making by enhancing the likelihood that
regulation will lead to a modification of behaviour in the desired manner. The two
sets of values may be regarded as different sides of the same coin. Viewed in
constitutional terms, it is the moral dimension associated with certainty that is of
particular importance in safeguarding the liberty of the individual and protecting them
from the exercise of arbitrary state power. But when viewed as contributing to the
Court has also ruled consistently since the 1970s that the press and public must have access, in most
cases, to criminal court proceedings and preliminary hearings where more damaging information is
usually made public: JC Watson 'Litigation Public Relations: The Lawyers' Duty to Balance News
Coverage of Their Clients' (2002) 7 Communication Law and Policy 77.
160
N Klein, No Logo (Flamingo London 2000). Klein traces the development of powerful global
corporate branding, pointing out that in this environment, the more successful global brands are, the
more vulnerable they become. 'If brands are indeed intimately entangled with our culture and our
identities, when they do go wrong, their crimes are not dismissed as merely the misdemeanours of
another company trying to make a buck. Instead, many of the people who inhabit their branded worlds
feel complicit in their wrongs, both guilty and connected.'
161
See the submissions to the Dawson Inquiry by various consumer groups.
162
For example, E Myers ' The Manipulation of Public Opinion by the Tobacco Industry: Past,
Present, and Future' (1998) 2 Journal of Health Care Law & Policy 79.
163
A Fels, "Australia's Competition Regulator and the Media" (paper presented at the Conseil de
la Concurrence, 15th Aniversary Conference, Paris, 13 February 2002).
38
effectiveness of regulatory enforcement, it is the instrumental value of legal certainty
in enabling citizens to plan for the future that is emphasised.
In examining whether adverse publicity sanctions promotes regulatory
compliance, I have already noted that adverse publicity concerning regulatory
violations may raise public awareness of regulatory wrongdoing and help to foster a
culture of support for the regulatory scheme by the general public. But while
regulator-initiated post-trial publicity drawing attention to the court's judgment may
contribute to public understanding of the relevant laws, thereby promoting certainty
and stability in the law and its application, this may not hold true for pre-trial
publicity. For example, there may be situations in which the correct interpretation of
certain provisions of a regulatory statute is unclear or disputed or where uncertainty
surrounds its proper application to a specific factual situation. In these circumstances,
a regulator may provide guidance concerning its interpretation of the matter.
Guidance may take various forms - such as informal rulings, policy statements and so
forth, although ultimately the proper interpretation of law is a matter that falls for
conclusive determination by a court. In a similar vein, regulators may pursue their
favoured interpretation of the law in the court of enforcement proceedings. If they
then seek to publicise such proceedings, this may promote the regulator's
interpretation of the law, although it may ultimately turn out to be erroneous when the
matter is finally decided in court. If either of these courses of action is pursued, then
there is a real risk that such publicity may in detract from, rather than promote, clarity
and stability in the law and its application.
4.5.
Proportional, consistent and rational
Fairness is important not merely in relation to the process of making regulatory
decisions, but also in the substance of those decisions. While the complexity of
regulatory decision-making implies that there are unlikely to be obvious, objectively
'correct’ answers to thorny issues, decision-makers should nonetheless strive to ensure
that their decisions are substantively fair in their content and application, that is, they
should be responsive to moral principles and thus conform to some substantive notion
of fairness (or justice) in rationally pursuing regulatory goals.164 Fairness would seem
to require, at minimum, proportionality, consistency and rationality in decisionmaking.165
164
D Galligan, Due Process and Fair Procedures (Oxford University Press Oxford 1996), 50; R
Dworkin, A Matter of Principle (Harvard University Press Cambridge, MA 1985), 58.
Consistency is often reflected in the maxim ‘treat like cases alike’. Although consistency in
decision-making does not necessarily guarantee that the decision will be substantively fair according to
the chosen background theory of justice, nonetheless general adherence to the principle of consistency
demonstrates a commitment to equality in the treatment of individuals and groups and reduces the
appearance of arbitrariness. Consistency also promotes stability and certainty in regulatory decisionmaking and thus provides firmer guidance to those likely to be affected. Rationality is a complex
notion, but at minimum, it requires that there be plausible and relevant reasons of sufficient weight to
justify the decision. The notion of rationality is perhaps illuminated by considering its antithesis –
irrationality, which denotes arbitrary or capricious action, or action lacking a reasoned and adequate
foundation.
165
39
In evaluating the constitutional legitimacy of regulator-initiated adverse publicity,
the most vulnerable candidate in this triumvirate is the principle of proportionality.
Proportionality requires that regulatory action seeks to pursue a legitimate aim, and
that there is a reasonable relationship between that aim and the means used to achieve
it.166 It involves some idea of balance between competing interests and objectives,
and the appropriate relationship between means and ends167 an idea underpinning the
exhortation that one ought not 'use a hammer to crack a nut'.168
One of the strongest objections expressed by those opposed to shaming as a form
of punishment is that it may violate the principle of proportionality. For example,
Whitman claims that 'once the state stirs up public opprobrium against an offender it
cannot really control the way the public treats that offender', and thereby risks
conferring 'too much enforcement power on a fickle and uncontrolled general
populace.' The essence of this objection rests in the retributivist belief that the
'punishment must fit the crime'. Although the philosophical foundations for the social
institution of punishment remain contestable and disputed169, there is a powerful
commitment by a large number of legal theorists and moral philosophers, and which
is widely reflected in the approach to sentencing in western liberal democracies, to the
moral belief that severity of state punishment should be commensurate with the
seriousness of the crime.170 Assuming then, that adverse publicity is punitive in
nature171, it is necessary to consider whether regulator-initiated publicity conforms to
the requirement that punishment should be commensurate to the seriousness of the
wrongdoing. While this issue arises in relation to publicity at all stages of the
enforcement process, the difficulties are highlighted by considering regulator-initiated
publicity at the post-judgment stage, because we can disentangle the proportionality-
166
G de Burca 'The Principle of Proportionality and its Application in EC Law' (1993) 13
Yearbook of European Law 105.
167
PP Craig, Administrative Law 4th ed. ed. (Sweet & Maxwell London 1999), 590-591.
168
MN Aaronson 'Be Just to One Another: Preliminary Thoughts on Civility, Moral Character,
and Professionalism' (1995) 8 St Thomas Law Review 113.
169
A Ashworth and A von Hirsch (eds.) Principled Sentencing (Hart Publishing Oxford 1998).
170
Ibid cf Braithwaite argues that the 'concept of proportionality has no place in a victim-centred
perspective': J Braithwaite, "Global Markets, Global Regulation" (paper presented at the Penalties:
Policy, Principles and Practice and Government Regulation, Sydney, 9.6.01 2001). He claims that 'the
most fraught issue in the values debate is whether values such as retribution, just deserts and fair
punishment should be accommodated in a restorative justice framework. My own inclination is that
they should not' : J Braithwaite, Restorative Justice and Responsive Regulation (Oxford University
Press New York 2002), 16. Yet he nonetheless claims that 'fundamental rights should set legal limits
on what restorative processes are allowed to do ' (at p 13) and 'it is just as dangerous to allow a court to
impose a punishment beyond the maximum allowed by law, so it should be forbidden for a restorative
justice process to impose a punishment beyond that which would be imposed by the courts for that kind
of wrongdoing. If there is not an upper constraint on the punishment that can be imposed in a
democracy, the citizens cannot be free in a republican sense' (at p 12). Thus he argues that the
restorative justice process should be 'constrained by all the rights that are foundational to liberal
legalism' (p 12). It is not clear how Braithwaite reconciles these apparently conflicting claims.
171
See section 3 above.
40
based objections from those based on procedural fairness once judgment has been
handed down.172
At the heart of this issue is the vexed problem of determining whether the negative
reputational impact associated with a court finding of wrongdoing should be taken
into account in sentencing.173 If we believe that court ordered punishment should be
commensurate with the seriousness of the offence, it could be argued that any extra
hardship resulting from adverse publicity associated with a finding of guilt will distort
the balance between the offence and punishment and should therefore be taken into
account by the sentencing court as part of the natural and inevitable consequences of
conviction and punishment.174 In response, it may be argued that the hardship of
reputational stigma is too difficult to estimate in comparison with the hardship of fine
or imprisonment and varies so much depending on the offender's situation and future
behaviour that it cannot be made part of a sentencing calculation, or at best must be
assumed equal for all offenders, although this assumption is obviously unrealistic.175
In short, this response amounts to the claim that the sentencing court should only be
concerned with ensuring that the official punishment is appropriate to the offender's
culpability.
When applied to the present context, it may plausibly be argued that adverse
publicity initiated by the regulator constitutes 'official' punishment, at least to the
extent that it amplifies the punitive impact of publicity that would otherwise naturally
follow from a finding of guilt. It would therefore follow that either the court should
allow a reduction in penalty where regulator-initiated publicity is thought to
exacerbate the punitive impact of publicity, or the regulator should avoid engaging in
post-trial publicity unless such publicity can be regarded as falling within the 'natural
and inevitable' consequences of conviction. Of these two courses, the first seems
unwieldy, for it would require the court to anticipate the degree to which regulatorinitiated publicity following the handing down of final judgment that is likely to
ensue.176 The preferable course then, would be to restrain the regulator from
engaging in publicity that might be seen as magnifying the reputational harm that
would ordinarily follow from a finding of guilt.
Such a restriction might, however, be thought to undermine the deterrent efficacy
of the regulatory scheme, effectively depriving regulators of an important and
invaluable tool in their enforcement armoury. What we have, in this situation, is a
direct conflict between two dimensions of legitimacy: the instrumental aims of
regulation and the constitutional values that constrain the unrelenting pursuit of those
aims. On the one hand, regulator-initiated publicity may contribute to improved
regulatory compliance by virtue of its deterrent impact. On the other hand, the
deterrent value of adverse publicity may not be in accordance with the proportionality
172
See section 4.2 above.
173
Ryan v R [2001] HCA 21.
174
N Walker, Punishment, Danger and Stigma (Blackwell Oxford 1980),161.
175
Ibid., 162.
176
cf ALRC, Securing Compliance: Civil and Administrative Penalties in Federal Regulation
Discussion Paper 65 (ALRC Sydney 2002).
41
principle, which requires that the severity of punishment should be commensurate
with the seriousness of the offence. Given that legal theorists and moral philosophers
are yet to reach a consensus on the interaction between the retributivist and utilitarian
aims of punishment, despite centuries of reflection, we can scarcely expect to find a
simple solution to this conflict. It nevertheless throws into sharp relief the difficulties
associated with forming a conclusive and unequivocal view of the legitimacy of
adverse publicity as a regulatory compliance technique.
4.6.
Summary
The foregoing discussion suggests that there are several ways in which regulatorinitiated publicity may implicate constitutional values. Such publicity has the
potential to enhance the values of transparency and accountability, although whether
this potential is realised will be a product of the accuracy and integrity of the
information publicised. On the other hand, it may tend to cleave against other
constitutional values, notably those of procedural fairness, legality, proportionality,
and legal certainty. The extent of this tension is likely to depend on the nature,
content and timing of that publicity.
5.
Legitimacy: an evaluation
Now that we have considered the use of regulator-initiated adverse publicity in
terms of both its contribution to the effectiveness of regulatory compliance and the
extent to which it satisfies certain constitutional values, we are in a position to
evaluate whether it may be regarded as legitimate. In the second part of this paper, I
sketched out a framework for evaluating the legitimacy of regulatory enforcement
activities. In essence, this framework identifies two dimensions of legitimacy arising
from the instrumentalist nature of regulation and its public aspect that provide the
foundation for two sets of normative standards which, taken together, enable us to
evaluate whether regulatory implementation and enforcement may be regarded as
legitimate. Legitimacy in regulatory enforcement thus depends on establishing,
firstly, that the enforcement activity helps promote the collectivist goals underlying
the regulatory scheme and secondly, that in so doing, basic constitutional values are
given adequate expression.
While this framework appears remarkably simple, in our attempt to apply it to the
use of adverse publicity, we have seen just how difficult, speculative and contestable
a task this is when applied to a particular enforcement activity. Thus, evaluating
whether adverse publicity enhances compliance is not a straightforward matter.
Although there is substantial evidence to suggest that that regulator-initiated publicity
may have a negative impact on individuals and firms, by 'shaming' its targets and
thereby lowering their reputation and prestige in the community, it is not clear
whether this improves compliance. It seems that, in certain circumstances, the use of
shaming techniques with which the use of adverse publicity is associated may even
increase the incidence of regulatory violations. On the other hand, refinements to the
theory of shaming, particularly Braithwaite's concept of 'reintegrative shaming' is
claimed to promote compliance by avoiding the problems of reactance by offenders
which he claims is due to the use of stigmatic forms of shaming. However the
theoretical and empirical validity of reintegrative shaming remains largely untested.
Viewed from the perspective of constitutional principle, regulator-initiated adverse
42
publicity appears to generate several difficulties, although it may also serve to
reinforce and give positive support to the values of transparency and accountability.
While some friction may arise in relation to the principle of proportionality, the most
acute difficulties concern its ethical propriety, and its potential to erode the
constitutional value of procedural fairness.
Although there are several legal bases upon which disaffected parties might
attempt to impugn the legality of regulator-initiated publicity, only the most egregious
publications are likely to fall foul of the law. But whilst such publicity may satisfy
the requirements of formal legality, it may be ethically questionable. Elucidating the
precise boundaries of an enforcement official's ethical obligations is, however, a
slippery task. The seriousness of these ethical objections will depend upon how one
perceives the likely magnitude and gravity of the harms associated with prosecutorinitiated publicity in the context of enforcement proceedings and this, in turn, is likely
to depend upon nature, content and timing of the publicity in question. The earlier
such adverse publicity occurs in the enforcement process (eg during the investigation
stage and while proceedings are on foot), the more dubious its ethical validity. If
publicity is initiated prior to court judgment, the ethical speciousness of the practice
becomes more acute, the greater the content of the publicity tends to convey the
impression of the defendant's guilt, and the more seriousness the allegations. It must
be acknowledged, however, that there are no clear boundaries delineating the proper
scope of the enforcement official's ethical obligations as a 'minister of justice', and on
this basis, there is significant room for reasonable disagreement.
The nature, content and timing of regulator-initiated publicity are also likely to
determine the extent to which it threatens the constitutional value of procedural
fairness. It is this constitutional value which is most directly challenged by adverse
publicity because of its potential to colour the judgment of the decision-making
tribunal in enforcement actions, and which may be seen as depriving those charged
with regulatory violations from an opportunity to respond to the public allegations
made against them. Regulator-initiated publicity may also operate in tension with the
principle of proportionality, in so far as it may detract from the requirement that the
punishment should be commensurate with the seriousness of the wrong. But to
impose restrictions on publicity in order to preserve strict proportionality may be
thought as unduly hampering the regulator's ability to enhance compliance by way of
deterrence.
Viewed contiguously, these two dimensions of legitimacy do not appear to
constitute resounding applause in praise of regulator-initiated informal publicity,
particularly of the pre-trial kind. Not only is there doubt about its effectiveness as a
technique for improving regulatory compliance, but significant constitutional clouds
overshadow the legitimacy of its usage. If, however, we assume that adverse
publicity can enhance regulatory compliance thereby contributing to the achievement
of the regulatory scheme's instrumentalist goals, then in certain respects, the two
dimensions of legitimacy appear to pull in opposite directions. Any assessment of its
overall legitimacy therefore requires us to resolve this conflict, in a principled
manner, so that constitutional values are sufficiently protected whilst giving due
consideration to the practical realities of the regulator's task in seeking to secure
43
compliance.177 As I have previously noted, principled trade-offs can only be made in
light of some background political theory and we can therefore expect reasonable
differences of opinion in making this evaluation.
In the final analysis, we must ask ourselves whether regulator-initiated
publicity promotes the collectivist goals underlying the regulatory scheme, whilst
giving adequate expression to the constitutional values that constrain the relentless
pursuit of regulation's instrumentalist enterprise. My own view is that adverse
publicity that tends to convey the impression of the defendant's guilt, arising before
the court's judgment on the issue, stands on very shaky constitutional grounds.
Publicity surrounding regulatory investigations and naming individual suspects seems
particularly objectionable, so much so that this undermines its legitimacy, however
successful its deterrent effect may be. Publicity arising during the course of
proceedings is arguably less problematic given that court proceedings are public,
provided, however, that such publicity does not convey the impression of the
defendant's guilt and emphasises that the allegations remain unproven until a court
finding is made. Outside this context, however, and assuming that adverse publicity
positively assists in improving levels of compliance, then there would appear to be
significant scope for its legitimate usage, provided that it does not unduly intrude on
the constitutional values referred to above.
6.
Recent ACCC experience
Before concluding, it is instructive to consider how the ACCC has used
adverse media publicity in light of the preceding discussion. The following
discussion is based on a simple review of the media releases issued by the ACCC in
2001. The methodology adopted involved a review of the content of each media
release, with a view to identifying the timing of the release, the nature and seriousness
of the allegations made and the overall balance in tone and content. A more
comprehensive attempt to evaluate the legitimacy of ACCC media usage would have
entailed an analysis of the use of other forms of media publicity (television, radio, and
other public fora) in which ACCC representatives appeared. Also, no attempt was
made to measure the extent to which ACCC publicity contributed to a reduction in
regulatory violations, arguably an impossible task in any event. To that extent, the
following evaluation must be seen as a partial evaluation of ACCC media usage, and
should therefore be treated appropriately.
6.1.
Effective compliance and reintegrative shaming
Although no attempt was made to measure the extent to which ACCC
publicity led to a reduction in regulatory violations, some attempt was made to
identify whether the ACCC might be thought to engage in a policy of 'reintegrative
shaming', or whether it appears more consistent with 'stigmatic shaming'. To this end,
all media releases concerned with specific cases of suspected non-compliance were
reviewed to identify whether their content could be classed as 'stigmatic' shaming or
177
For a more detailed elaboration of this framework, and how trade-offs may be made in a
principled manner, see K Yeung, The Public Enforcement of Competition Law: A Principled Analysis
(Hart Publishing Oxford forthcoming).
44
'reintegrative' shaming, adopting the definitions proposed by Braithwaite.178 It must
be acknowledged, however, that characterising a particular release as an expression of
'stigmatic' or 'reintegrative' shaming is fraught with subjectivity and imprecision.
Braithwaite's definitions suggest that, for shaming to be characterised as
'reintegrative, there must be some form of official 'decertification of deviance' once
the offender is shown to be behaving lawfully and in accordance with the expectations
of good corporate citizenship.
A review of the ACCC's 2001 media releases does not appear to indicate a
strategy of reintegrative shaming, as I have interpreted it. In particular, there does not
appear to be any public reporting by the ACCC of any systematic monitoring of the
conduct of firms either after a court finding of violation or the conclusion of a
negotiated settlement. Nor were there any media releases in which the ACCC
acknowledged that firms previously found to have violated the Act had subsequently
improved their procedures and their conduct or praising them for their efforts. In
other words, there did not appear to be any systematic 'decertification ceremonies' by
the ACCC after the conclusion of trial.
This content analysis did reveal, however, that in cases where the defendant
was reported as having agreed to a negotiated settlement (either by way of s 87B
undertaking179 or formal consent orders), in many cases the media release expressly
contained statements to the effect that the defendant acknowledged its wrongdoing,
co-operated with the ACCC in its investigations, acted swiftly to bring the relevant
conduct to an end, and/or undertook to refrain from engaging in such conduct in
future. Statements of this nature might be somewhat akin to the notion of
reintegrative shaming advocated by Braithwaite. On the other hand, it appears that
the aspect of the defendant's conduct typically associated with statements of this kind
was its co-operation and agreement with the ACCC, rather than its 'good' behaviour
in subsequently improving its compliance procedures and conducting itself in a lawful
manner.180 Even if this interpretation is correct, it tells us little about whether the
ACCC's use of publicity in fact contributed to, or detracted from, effective
compliance.181
6.2.
The timing of the release
Although it impossible to measure, in any reliable and scientific way, the
degree to which adverse publicity leads to improved regulatory compliance,
178
See section 3.3(b) above.
179
Trade Practices Act 1974, s 87B.
180
If this is a correct interpretation of the ACCC's strategy, then it appears largely consistent with
Ayres and Braithwaite's dymanic 'pyramid of compliance' strategy, based on a 'tit for tat' approach to
regulatory enforcement. While this might well promote effective compliance, it suffers from a number
of shortcomings too large to be canvassed here. See K Yeung, The Public Enforcement of Competition
Law: A Principled Analysis (Hart Publishing Oxford forthcoming).
181
But it is consistent with allegations that the ACCC is so powerful that it uses its bargaining
power to coerce firms into accepting a settlement where the ACCC can dictate its own terms. See The
Age, Editorial, 11.5.02.
45
evaluating the extent to which adverse publicity may create friction with various
constitutional values is possible. In the preceding examination of the impact of
regulator-initiated publicity on constitutional values, I suggested that the greatest risks
arise where the publicity occurs prior to final court judgment. Publicity associated
with on-going investigations is of the greatest concern, given that it may transpire that
there is insufficient evidence to warrant the issuing of formal enforcement
proceedings, yet the public may nonetheless tend to assume the guilt of the person
under investigation. Publicity arising while proceedings are on foot are also
problematic, at least in so far as it may tend to convey the impression of the
defendant's guilt. Therefore, an attempt was made to examine the extent to which the
ACCC engaged in both types of publicity.
To this end, each release was placed into one of the following categories:
1. Administrative decision: media releases announcing the ACCC's unilateral
decision concerning specific matters (eg. not to proceed against a merger etc);
2. Educational: media releases raising general matters for public note;
3. Public consultation: media releases announcing the ACCC's public
consultation on specific issues;
4. Investigation: media releases referring to ACCC investigations currently
underway;
5. Litigation: media releases referring to particular ACCC enforcement action.
These were further categorised into the following sub-categories:
ƒ
ƒ
ƒ
Issue of proceedings: media releases announcing that formal court
proceedings had been issued;
Settlement: media releases announcing the settlement of enforcement
action, either by way of administrative agreement, s 87B undertaking
or by consent orders;
Judgment: media releases announcing court judgment in specific
ACCC enforcement actions;
The results of this categorisation process are set out in Tables 1 and 2, graphically
depicted in Figures 1 and 2.
The preceding analysis of legitimacy suggests that the most acute threat to
constitutional values arising from regulator-initiated adverse publicity depends on the
extent to which such publicity tends to portray the appearance of wrongdoing by
specific persons. On this basis, it is only media publicity concerning specific
enforcement actions at either the investigation stage, or concerning specific litigation,
that may be at risk. It can be seen from Figure 1 and Table 1 that media releases
concerning investigation or litigation together constituted 137 of 331 releases (41.4%)
of total releases. This suggests that 41.4% of the ACCC's media releases in 2001
might have raised constitutional concerns: a substantial proportion, but nonetheless
less than half of the ACCC's media releases that year. In other words, most of the
ACCC's media releases in 2001 (ie. 58.6%) were unrelated to particular enforcement
46
actions. In light of the heated nature of the debate concerning claims by industry that
the ACCC engages in 'trial by media', it is perhaps worth noting that the majority of
the ACCC's media releases are not concerned with the enforcement of suspected
violations and hence unlikely to generate risks associated with the integrity of the trial
process.
Where regulator-initiated publicity is associated with specific instances of
violation (or suspected violation), it is publicity arising prior to final court judgment
that may impinge upon the constitutional requirements of procedural fairness and
which may detract from certainty and stability in the application of the law. In
particular, the public naming of specific individuals under investigation poses the
greatest difficulties, given that it may ultimately transpire that the regulator lacks
sufficient evidence to warrant the initiation of formal proceedings, yet the public may
nonetheless tend to associate the person so identified as guilty of the publicised
allegations. Figure 1 and Table 1 indicates, however, that only a tiny proportion of
the ACCC's total 2001 media releases concerned investigations (1.5% of total
releases). Of the investigation releases, in only one case was the suspect named in
circumstances where the suspect had not voluntarily and publicly identified itself as
subject to ACCC investigation.182 In addition, an examination of the media releases
concerning litigation indicates that approximately 26% concerned proceedings while
they were on foot, that is, before a final court judgment or negotiated settlement had
been reached. The remaining 74% of litigation releases thus concerned either final
court judgment or a negotiated settlement. While the media releases referring to
litigation before its conclusion (either by court judgment or settlement) represent
approximately one quarter of the litigation releases, they nonetheless constitutes only
10.3% of the total number of ACCC media releases in 2001, even when releases
referring to on-going investigations are included in the total of pre-trial releases, a
small but nonetheless significant minority of cases (ie 11.8%). This lends some
weight to Fel's claim that 90% of media releases arise after trial and therefore cannot
be characterised as 'trial by media'.183
6.3.
The nature and seriousness of the allegations
In discussing whether, and to what extent, regulator-initiated pre-trial publicity
impinges upon procedural fairness, I also suggested that the risks would be greater the
more serious the allegations, and where they concerned a named individual rather
than, or in addition to, a firm or institution. To this end, the content of each media
release was reviewed to identify whether the release concerned civil or criminal
proceedings and whether the enforcement action was taken against individual persons
or firms. The results are set out in Tables 3-4 and Figures 3-4.
182
These cases typically involved judicial challenges to statutory demands for information lodged
by the ACCC . Because court actions form part of the public record, the identity of the suspect is
thereby made public. In such cases, the ACCC's public identification of suspects may be less
prejudicial than it might otherwise appear.
183
A Fels, "Australia's Competition Regulator and the Media" (paper presented at the Conseil de
la Concurrence, 15th Aniversary Conference, Paris, 13 February 2002).
47
As Table 3 and Figure 3 indicate, only a very small proportion (3%) of the
ACCC's litigation and investigation media releases concerned criminal proceedings.
On this basis, the risk of harm associated with potentially prejudicing the trial, or the
general public, against a defendant in criminal proceedings appears to be very slight.
Of the litigation and investigation releases, however, Table 4 and Figure 4 shows that
a substantial proportion (21%) involved allegations directed at individuals, although
an overwhelming proportion (94%) targeted specific firms and businesses. If we
accept that the obligation of fair treatment enshrined in the demands of procedural
fairness is at least partly rooted in the requirement of respect for human dignity, then
there is a significant proportion of cases where the fair treatment obligation owed to
individual persons may be placed at risk. That an overwhelming proportion of the
releases concerned with investigation and litigation are directed at firms is consistent
with the academic literature and empirical studies suggesting that firms are
exceptionally sensitive to adverse publicity.
6.4. Overall balance in tone and content
Of the litigation and investigation releases, an attempt was made to identify
whether or not the content of each release canvassed both the views of the ACCC and
the defendant. This was done in order to gauge how 'balanced' the content of the
release could be viewed. This assessment clearly involves a degree of subjectivity,
and in order to provide more concrete criteria for this assessment, each release was
reviewed to identify two features. First, whether some reference was made to the
stance taken by the defendant in the proceedings, beyond merely stating that the
allegations were denied, or that the defendant cooperated with the ACCC. The ACCC
was given the benefit of the doubt where possible. In particular, where consent orders
were made or a negotiated settlement was reached, statements contained in the media
releases to the effect that that the defendant acknowledged that its conduct violated
the Act and agreed with the decision were counted as referring to the defendant's
stance. Secondly, an attempt was made to identify whether the release expressed the
opinion of an ACCC representative in relation to the proceedings, rather than being
confined to statements of fact.
In the preceding discussion, I have argued that one of the dangers associated
with regulator-initiated pre-trial publicity is its tendency to convey the impression of
guilt to the general public, despite the fact that the court has not yet determined the
matter. While the ethical obligations of law enforcement officials might be thought to
proscribe the use of pre-trial publicity, I have suggested that such publicity might be
acceptable provided that it does not compromise the impartiality of the proceedings,
nor encourage others to assume the guilt of the defendant. On this basis, I have
suggested that it might be permissible for enforcement officials to publicise details of
the allegations, provided that any public comments emphasises that the allegations are
unproven, that the defendant's liability falls to be determined by a court of law, and
that such publicity is devoid of any expressions of opinion by the enforcement
authorities concerning the defendant's guilt.184 It was clear from this content review
184
For example, the US Department of Justice Guidelines provide that all Attorney-General press
releases announcing arrest or indictment contain the express caution that the charges are merely
accusations and that the accused is presumed innocent until proven guilty: A Vinegrad 'Media and Law
Enforcement: Law Enforcement and the Media: Cooperative Co-existence' (1999) Annual Survey of
American Law 237.
48
that very few of the ACCC's pre-trial litigation releases contained an express
statement emphasising that the allegations mentioned in the releases were unproven or
warning recipients not to assume that the allegations were equivalent to judicial
findings of guilt. An analysis of the extent to which litigation and investigation
releases make reference to the views of the defendant is set out in Table 5 and
depicted in Figure 5.
Table 5 demonstrates that, of the releases concerned with litigation and
investigation, the views of the defendant were referred to in roughly one quarter
(25.5%) of cases. Thus in a large majority of cases (74.5%), only the ACCC
viewpoint was expressed. Even where the media releases mentioned the defendant's
view, this sometimes amounted to little more than an acknowledgment by the
defendant that its conduct was unlawful. These results seem to provide very clear
evidence of media 'spin control' by the ACCC, rather than what may fairly be
described as evenly balanced reporting.
I also noted, however, that the greatest risks posed by one-sided publicity
associated with specific cases arose at the pre-trial stage, before the action has been
concluded either by court judgment or negotiated settlement. In such circumstances,
those named publicly may be subject to some degree of risk that the general public
may assume their involvement in alleged wrongdoing, even though the matter has not
yet been resolved in court. To this end, an attempt was made to identify whether the
ACCC offered an opinion on the action for each category of litigation based release,
and for all investigation releases. The results are depicted in Table 6, Figure 6.
While the expression of opinion by an ACCC spokesperson is commonplace
in media releases concerned with investigations or litigation (per Figure 5), Table
6/Figure 6 suggest that such opinions only occurred in a small minority of cases
(12%) where the formal initiation of court enforcement proceedings was announced.
In contrast, more than 85% of litigation releases concerning either investigation,
settlement or judgment, contained some expression of the ACCC's opinion on the
case, or indicated the ACCC's view of the broader implications or lessons to be
learned from the case. This seems to suggest that, at least in so far as the initiation of
proceedings are concerned, ACCC is in fact quite cautious and generally refrains from
comment when announcing that court proceedings have been brought, and thereby
avoids increasing the risk of prejudice to the defendant.185
6.5. Media spin control and deterrence
In addition to the risks associated with prejudicing the public's opinion of the
defendant, media 'spin control' by regulators may also have a tendency to undermine,
rather than promote, the constitutional values of transparency and accountability, at
least to the extent that such publicity portrays the regulator, and its enforcement
activities, in a manner that does not fairly represent reality. While it must be
185
Note, however that interim orders were classed as 'judgment' and these media releases often
contain opinions of an ACCC representative, although the proceedings have not been finally
concluded.
49
acknowledged that attempting to identify and 'measure' the extent of spin control is
fraught with difficulties, and inevitably involves some degree of subjectivity (and
could therefore be regarded as counter-spin), an attempt was nonetheless made to
examine how the ACCC portrayed itself in litigation as either 'winning' or 'losing' an
action in its releases concerning final court judgment or negotiated settlement. In
other words, the ACCC's self-portrayal as either a 'winner' or 'loser' was adopted as a
rough and ready indicator of pro-ACCC media spin. The results of this review are set
out in Table 7, Figure 7.
Table 7/Figure 7 demonstrates that, of the releases announcing court
judgment, the ACCC is reported as 'winning' in 95% of cases. Assuming that the
ACCC accurately reports on the outcome of a court judgment, this underlines the
overwhelming degree of the ACCC's 'success' in court. But some care may be needed
when interpreting this statistic. Those involved in litigation will know only too well
that one party might well 'win' the outcome of a particular court action, but it does not
necessarily amount to a complete vindication of that party's substantive position. For
example, in the Electricity Supply case186, which I referred to in discussing the ethical
propriety of regulator-initiated publicity, I noted Justice Finn's stern reprimand of the
ACCC's conduct in the case, although the ACCC 'won' the case largely on
jurisdictional and technical grounds. Yet the ACCC's media release announcing the
court's judgment was cast in positive terms, making no mention of the court's
reprimand, stating that
[Justice Finn] endorsed the ACCC's ability to make public its views as to the rights and
obligations of consumers and electricity suppliers under the Act.
The Court's decision vindicates the position taken by the ACCC in defending the proceedings
instituted by the ESAA.
The ACCC maintains its view, which is backed by eminent Senior Counsel's advice, that the
Trade Practices Act implied conditions are included in electricity supply contracts with
consumers and that, depending on the circumstances, the implied conditions may be breached
where consumers suffer damage from power surges or 'brown-outs'. It will, of course, be for
the Court to determine this issue one day when there is an actual dispute on the issue between
a consumer and an electricity supplier. 187
Media spin control may, however, be regarded as a useful technique available
to regulators in seeking to enhance the deterrent impact of its enforcement activities.
While the effect of drawing the public's attention to the judicial outcome of particular
cases may disproportionately impact on the defendant's reputation, it may tend to
enhance the deterrent impact of the judgment and thus contribute to effective
compliance. In this respect, its interesting to observe from Table 6 that, of the
releases announcing final judgment, 87% provide for ACCC opinion, in which the
ACCC typically offers an analysis of the broader implications of the decision for the
general public and serving as a warning to other would-be violators. This may not
only enhance compliance, but regulator attempts to simplify and publicise the content
of court findings may also promote the constitutional values of clarity and stability in
the law.
186
Electricity Supply Association of Australia v ACCC (2001) ATPR 41-838.
187
ACCC Media Release, 14 September 2001 'Federal Court Dismisses ESAA Claims Against
ACCC'.
50
6.6.
Lessons from the ACCC experience
Care should be taken when attempting to draw conclusions from this study of
ACCC media usage, given that it is confined to an analysis of ACCC media releases
in a single year, and does not consider ACCC usage of other forms of media, such as
television, radio and newspaper broadcasting. Nevertheless, this analysis may help to
illuminate the continuing controversy concerning the ACCC's use of media publicity.
This study demonstrates that that the ACCC adopts a pro-active communications
strategy, issuing almost one media release per day in 2001. While it is not possible to
identify whether this strategy has led to improved compliance with the Act, it seems
clear that the ACCC's pro-active approach to media usage has served to raise public
awareness of the ACCC, and it is seen as visibly and actively engaged in seeking to
protect the interests of Australian consumers.
This study may also assist in evaluating whether there is any validity to the
vociferous claims that the ACCC engages in 'trial by media'. Several of the above
findings are of particular relevance:
‰
Most (approximately 60%) of the ACCC's 2001 media releases did not
concern specific enforcement action, and do not therefore support claims of
trial by media;
‰
Nonetheless, a substantial proportion (approximately 40%) of the ACCC's
2001 media releases concerned specific enforcement action, referring to either
litigation or to investigations. Thus, a significant proportion of ACCC media
releases may be seen as related to particular 'trials';
‰
If the objection to the ACCC's use of the media lies in the threat that such
publicity may pose to the fairness of individual trials, then an analysis of the
ACCC's 2001 releases indicates that only 12% concerned on-going
enforcement.
This suggests that the proportion of individual court
proceedings and investigations that may have been prejudiced by ACCCinitiated publicity is significant, but relatively low;
‰
If we accept that the gravest prejudice to individuals arises when they are
publicly identified and are under suspicion and investigation for suspected
wrongs, it appears that media releases concerning investigations (but before
the commencement of formal court enforcement proceedings) were only
issued in a handful of cases (1.5% of total releases);
‰
Prejudice may also arise if a regulator publicises its views on a case while it is
on foot, for this may encourage public perception of the defendant's guilt. An
analysis of the ACCC's 2001 releases may suggest, however, that the ACCC
displays some sensitivity to this risk. This study indicates that when the ACCC
issues a media release announcing that formal court enforcement proceedings
have been initiated, in a large majority of cases (88%) it refrains from
publicising its view on the case;
‰
On the other hand, releases announcing the issue of proceedings might be
regarded as one-sided, because they merely state the allegations against the
51
defendant, making make no mention of the defendant's response, or likely
response, to those allegations. Nor do these releases contain express
statements emphasising that they were only allegations, and remain unproven
until determined in court.
The complaint of 'trial by media' might, however, be interpreted more broadly
than posing a risk of prejudice to defendants in specific 'trials'. It could be interpreted
as a claim that ACCC publicity tends to portray the suspect in an exceptionally
negative light, exacerbating the natural and inevitable harm to a defendant's reputation
that would ordinarily arise from the institution of regulatory enforcement action. In
other words, the complaint may be that ACCC publicity contributes to and
accentuates the magnitude of the reputational harm the defendant would otherwise
suffer.
In this respect, a number of the above findings concerning the ACCC's use of
'media spin control' are likely to be apposite:
‰
Of the 2001 releases announcing court judgment, the ACCC reports itself as
the 'winner' of litigation in 95% of cases. Assuming that this is an accurate
description of the outcome of the case, it also includes cases where the
ACCC's substantive claims have not been successful, but the case has been
won on technical grounds;
‰
Of the 2001 releases concerned with litigation and investigation, in a large
majority of cases (74.5%), only the ACCC viewpoint was expressed;
‰
Of the 2001 releases announcing the conclusion of enforcement proceedings
either by settlement or final court judgment, almost 90% provided the ACCC's
opinion and view of the implications or significance of the case.
Taken together, these findings appear to provide strong evidence that the ACCC's
media releases provide a rather one-sided view of individual cases, rather than
providing an objective, factual account. From a media management perspective, this
suggests that the ACCC is a powerful and effective communicator, actively seeking
opportunities to convey its message to the general public. But the ACCC's media
strategy appears to be somewhat of a double-edged sword. While its use of publicity
may have enhanced its credibility as a strong and vigorous regulator with a deeply
held commitment to the underlying aims of the Act in preserving competition and
protecting the interests of consumers, it may have tended to undermine its credibility
as an even-handed enforcer of the law which is willing to afford those at risk of being
found in violation of the Act with a fair opportunity to respond to any allegations.
The above findings suggest that, while the claims of 'trial by media' may have
been overstated, there is clearly room for improvement. In particular, the ACCC may
be well advised to differentiate between those media releases concerned with specific
enforcement action, and those unrelated to individual cases. Particular care is
required where investigations and proceedings are still on foot. The constitutional
legitimacy of publicity concerning on-going proceedings would be enhanced if it
expressly stated that the allegations remain unproven unless and until they have been
determined by a court of law. Even where enforcement action has been concluded by
52
settlement or court judgment, there is considerable merit in adopting a media format
in which ACCC opinion is clearly and sharply delineated from the factual aspects of
the publication, such as the court's findings or the terms of any settlement agreement.
Although the ACCC may be very effective at 'managing the message'188 it must also
endeavour to discharge its legal and ethical obligations to ensure that suspects are
fairly treated.
7. Conclusion
This paper has examined the legitimacy of informal regulator-initiated adverse
publicity by considering first, whether it contributes to the effectiveness of regulation
and secondly, whether it gives adequate expression to important constitutional values.
Although there is substantial evidence that firms are particularly sensitive to publicity
that adversely impacts upon their reputation, existing evidence does not appear to
provide a conclusive link between adverse publicity and improvements in regulatory
compliance. There are, however, several reasons why the use of 'shaming' techniques
may be a fruitful mechanism for eliciting improved regulatory compliance, thus
promoting its legitimacy.
Regulator-initiated adverse publicity also has the potential to enhance the
constitutional values of transparency and accountability. Whether this potential is
realised, however, is largely a product of the quality and integrity of the information
publicised. But while regulator-initiated adverse publicity may promote transparency
and accountability, it places other constitutional values under considerable strain,
particularly the values of legality (defined in its broader, ethical sense) and procedural
fairness. The severity of this strain is likely to be a product of the nature, content and
timing of the publicity in question, all of which are likely to affect the risk of
prejudice to the defendant in an enforcement action.
An examination of the ACCC's 2001 media releases suggests that the ACCC
is a powerful and effective communicator, actively utilising media releases to promote
its enforcement activities. The ACCC's media strategy has a Janus-like quality.
Viewed from the perspective of regulatory effectiveness, the ACCC's pro-active
media usage has contributed to its credibility as a powerful, pro-active regulator,
vigorously endeavouring to protect competition and the interests of consumers. But
viewed from the perspective of constitutional principle, its pursuit of publicity may
have a tendency to undermine its credibility as an even-handed law enforcement
agency committed to ensuring that those at risk of violating the Act are fairly treated.
My modest suggestions are intended to enhance the constitutional legitimacy of the
ACCC's current practice, without unduly reducing the effectiveness of its enforcement
efforts.
4.9.02
St Anne's College, Oxford
188
P Hobday, Managing the Message: How the media can be influenced (London House London
2000).
53
ANNEX A
Table 1: ACCC media releases 2001 by type
Type
Number
Administrative decision
Educational
Consultation
Investigation
Litigation
139
45
10
5 (199)
132
331
Percentage of overall total
(%)
42
13.6
3.0
1.5 (60%)
39.9
100
Source: ACCC website (www.accc.gov.au) accessed 14.8.02
Figure 1: ACCC media releases 2001 by type
45
40
35
30
25
20
15
10
5
0
Admin
Educ'n
Consult'n
54
Investig'n
Litig'n
Table 2: ACCC litigation releases 2001
Type
Number
Percentage of
litigation total (%)
Issue proceedings
Settlement
Judgment
34
26
43
33
55
42
132
100
Source: ACCC website (www.accc.gov.au) accessed 14.8.02
Percentage of
overall total (%)
10.3
13
16.6
39.9
Figure 2: ACCC litigation releases 2001
2001 ACCC Litigation Releases
50.00%
40.00%
% of
litigation
releases
30.00%
% of all
releases
20.00%
10.00%
0.00%
Issuing
Settlement
Judgment
Source: ACCC website (www.accc.gov.au) accessed 14.8.02
55
Table 3: ACCC media releases 2001 - Criminal or civil action189
Type of action
Total
Criminal
4
3%
Civil
132
96%
Percentage
Source ACCC website (www.accc.gov.au) accessed 14.8.02
Figure 3: ACCC media releases 2001 - Criminal or civil action
2001 ACCC Media Releases - Criminal or Civil Action
%
100
90
80
70
60
50
40
30
20
10
0
Criminal
Civil
Source: ACCC website (www.accc.gov.au) accessed 14.8.02
189
In attempting this categorisation, there may be problems of double counting (eg if an action is
commenced and settled or judgment is given all in 2001), exclusion (an issue may cover one of these
types, but it is not mentioned in the release, obfuscation (an issue may cover one of these types, but this
is unclear in the release.
56
Table 4: ACCC media releases 2001- Individuals or firms pursued190
Total
Percentage
Individual
29
21%
Business
129
94%
Other / unclear
2
1.5%
Source: ACCC website (www.accc.gov.au) accessed 14.8.02
Figure 4: ACCC media releases 2001 - Individuals or firms pursued
2001 ACCC Media Releases: Individuals or Firms Pursued
%
100
80
60
40
20
0
Individual
Firm
Unclear
Source: ACCC website (www.accc.gov.au) accessed 14.8.02
190
Again, in attempting this categorisation, there may be problems of double counting (eg if an
action is commenced and settled or judgment is given all in 2001), exclusion (an issue may cover one
of these types, but it is not mentioned in the release, obfuscation (an issue may cover one of these
types, but this is unclear in the release.
57
Table 5: ACCC Media Releases 2001 - ACCC opinion in litigation & investigation
releases191
Viewpoints presented
Number of releases
Percentage of litigation &
investigation releases
Opposition viewpoint
35
25.5%
ACCC viewpoint only
102
74.5%
Source: ACCC website (www.accc.gov.au) accessed 14.8.02
Figure 5: ACCC Media Releases 2001
ACCC opinion in litigation & investigation releases
2001 ACCC Media Releases - Viewpoint Analysis
80.00%
60.00%
40.00%
20.00%
0.00%
Opposition
ACCC
Source: ACCC website (www.accc.gov.au) accessed 14.8.02
191
This is a nebulous concept. I have given the ACCC the benefit of the doubt in many instances.
Particularly where the orders are made by consent (in judgment cases) or in settlement decisions, and
the ACCC have said that the company has been compliant and agrees with the decision.
58
Table 6: ACCC Media Releases 2001 - ACCC opinion in litigation & investigation
releases
Type
Total Number
Investigation
5
Existence of opinion spin
(number & %)
4 (80%)
Issue proceedings
34
4 (12%)
Settlement
43
38 (88%)
Judgment
55
48 (87%)192
Source: ACCC website (www.accc.gov.au) accessed 14.8.02
Figure 6: ACCC Media Releases 2001
ACCC opinion in litigation & investigation releases
2001 ACCC Media Releases - ACCC Opinion in Litigaiton
and Investigation Releases
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
Investigation
Issuing
Settlement
Judgment
Source: ACCC website (www.accc.gov.au) accessed 14.8.02
192
Of the 7 on which there was no spin, 5 concerned mareva or interim injunctions.
59
Table 7: ACCC Media Releases 2001 - viewpoint analysis
Reported outcome
Total
Percentage
Win (even if only partial)
52
95%
Loss
2
3.5%
Other
1
1.5%
55
100
Source: ACCC website (www.accc.gov.au) accessed 14.8.02
Figure 7: ACCC Media Releases 2001 - viewpoint analysis
2001 ACCC Media Releases - Reported Outcome of Litigation
%
100
80
60
40
20
0
Win
Loss
Source: ACCC website (www.accc.gov.au) accessed on 14.8.02
60
Other