Factors in determining regulatory form

13.16 The Australian Government Best Practice Regulation Handbook states that direct government regulation should be considered when, among other things: the problem is high-risk, of high impact or significance; the community requires the certainty provided by legal sanctions; or there is a systemic compliance problem with a history of intractable disputes and repeated or flagrant breaches of fair trading principles, with no possibility of effective sanctions.^[7]

13.17 On the other hand, self-regulation—or by extension, more co-regulation—may be a feasible option if: there is no strong public interest concern, in particular no major public health and safety concerns; the problem is a low-risk event, of low impact or significance; and the problem can be fixed by the market itself—for example, if there are market incentives for individuals and groups to develop and comply with self-regulatory arrangements.^[8] Practical factors may also favour more self- or co-regulation if the time, effort or cost of government regulation outweighs its benefits.^[9]

13.18 In the communications and media context, the ACMA has identified 10 ‘optimal conditions’ for co-regulatory arrangements, including ‘environmental’ conditions and features of the regulatory scheme. Briefly, the factors favouring co-regulation can be summarised as follows:

• a small number of market players with wide coverage of the industry;
• a competitive market with few barriers to entry;
• homogeneity of products—that is, products are essentially alike or comparable; and
• common industry interest—that is, collective will or genuine industry incentive to co-regulate.^[10]

13.19 When used in the right circumstances, it is said that self-regulation and co-regulation can offer a number of advantages over direct regulation. These include:

• greater flexibility and adaptability;
• potentially lower compliance and administrative costs;
• an ability to harness industry knowledge and expertise to address industry-specific and consumer issues directly; and
• quick and low-cost complaints-handling and dispute resolution mechanisms.^[11]