Monitoring and enforcement

Role of the ACCC

24.90 The ACCC is the statutory authority responsible for enforcing the TPA. Generally, it deals with complaints and inquiries about possible breaches of the Act; proposed mergers; applications for authorisation and notifications; determinations and undertakings under the access regime; inquiries made on its own initiative; and government directions and references.^[113]

24.91 Nielsen has commented that although various forms of conduct in relation to gene patents could contravene Part IV of the TPA, very few of these dealings are ever queried or litigated. She suggested several possible reasons for this, including:

• the resources necessary to monitor the licensing practices of companies;
• the confidential nature of most patent licence agreements;
• the resources necessary to challenge the terms on which a patent licence is granted, or a refusal to licence a patent; and
• the uncertain outcome of any proposed litigation, which may deter potential litigants from bringing proceedings.^[114]

Submissions and consultations

24.92 DP 68 proposed that the ACCC should review the conduct of firms dealing with patented genetic materials and technologies, as the need arises, to determine whether their conduct is anti-competitive within the meaning of Part IV of the TPA.^[115] Most of the submissions supported this proposal.^[116]

24.93 The Centre for Law and Genetics agreed in principle with the proposal, but considered that it would be difficult to monitor all potentially anti-competitive dealings, given their commercial nature. The Centre emphasised the practical difficulty of identifying anti-competitive conduct, its investigation and enforcement.^[117]

24.94 In a supplementary submission, the Centre suggested several alternatives to this approach, including:

• Resourcing the ACCC so that it may conduct a comprehensive investigation into the structure, conduct and performance of biotechnology companies to ensure the market is sufficiently competitive.
• Providing a comprehensive education regime to all stakeholders in the biotechnology industry, to ensure that they are fully aware of the benefits of a competitive marketplace, and the risks associated with non-compliance.
• Examining the contractual arrangements between stakeholders within the biotechnology industry to ensure that they accord with competition policy.
• Promoting the ‘leniency policy’ that is available under the ACCC’s policies and procedures, to open the channel of communication between market participants adversely affected by anti-competitive conduct. According to the Centre, this would enable a greater appreciation of existing conduct, and would increase the prospect of civil action against those engaging in conduct that is contrary to Part IV of the TPA.^[118]

24.95 The ACCC submitted that it did not consider it necessary to monitor the impact of gene patents and licences on competition specifically. Instead, it noted that it would ‘vigorously enforce the TPA as it applies to intellectual property, including gene patents, in the same way as it enforces the TPA for all other forms of property’.^[119]

24.96 The ACCC noted that it has developed enforcement priorities, which are regularly reviewed and targeted to react to trends in the economy, and areas that it identifies as strategically important—including new areas of the law or industries resulting from technological change. It noted that a key element in identifying its priorities is that they reflect the public interest. In selecting matters to prioritise for investigation or litigation, it will consider whether the conduct falls within one or more of its enforcement priorities.^[120]

24.97 The ACCC has specific objectives and priorities in regard to anti-competitive conduct in developing and innovative markets. It noted that the amendment of s 51(3) might focus its attention on matters relating to intellectual property—but stated that it is too early to say with certainty that this will occur.^[121]

24.98 The ACCC emphasised that it is predominantly a complaint-driven regulator. Once it receives a complaint it must determine whether and how to proceed with an investigation, and the appropriate enforcement response. This could involve informal resolution, court enforceable undertakings, or litigation. In deciding on an appropriate course of action, the ACCC will be influenced by factors that include:

• the nature of the alleged breach in terms of its impact on third parties in the community; the type of practice; the product or service involved; and the size of the business or businesses involved;
• the history of complaints against the business or businesses, and of complaints involving the practice; the product or the industry generally; and any relevant previous court or similar proceedings;
• the cost effectiveness for all parties of pursuing an administrative resolution instead of court action; prospects for a resolution of the matter; and
• the apparent good faith and culture of the business involved.^[122]

24.99 The Queensland Government submitted that, provided the ACCC conducted informal price monitoring of patented medical genetic tests and other genetic inventions involved in the provision of healthcare services, this approach would not be necessary.^[123]

Role of health departments

24.100 DP 68 proposed that the ACCC should liaise, on an ongoing basis, with Commonwealth, state and territory health departments and other stakeholders to identify and assess any emerging competition concerns in the genetics field.^[124] While many submissions supported this proposal,^[125] the ACCC raised concerns regarding the appropriateness of such ongoing liaison. It considered that this might be seen to compromise its capacity to determine an appropriate, impartial response to the complaints of health departments and other stakeholders.^[126] In addition, it suggested that such liaison could, in itself, have competition implications.^[127] The ACCC suggested that other entities would be more appropriate to facilitate the identification and exchange of information on emerging issues relating to gene-based medical technologies.^[128]

24.101 In addition, the ACCC suggested that participants in the genetic materials and technology market, including Commonwealth, state and territory health departments, could refer any concerns of possible anti-competitive conduct to it for consideration; and that it could engage in communication and liaison activities in relation to genetic material and related technologies as, and if, the need arises.^[129]

ALRC’s views

24.102 The ALRC considers that there is a public interest in ensuring that firms with intellectual property rights in genetic materials or technologies do not abuse these rights for anti-competitive purposes. This is particularly so where such conduct might adversely affect healthcare provision or further research and development.

24.103 Accordingly, the ALRC recommends that, as the need arises, the ACCC should review the conduct of firms dealing with intellectual property rights in genetic materials and technologies to determine whether their conduct is anti-competitive within the meaning of Part IV of the TPA.

24.104 The ALRC initially proposed that the ACCC should conduct ongoing liaison with Commonwealth, state and territory health departments, and other stakeholders, to identify and assess any emerging concerns in this field. While this proposal received general support, the ALRC accepts the ACCC’s argument that this may not be appropriate because of the ACCC’s investigation and enforcement responsibilities and the need for it to remain impartial.

24.105 However, while it may not be appropriate for the ACCC and health departments to establish a system of on-going liaison, the ALRC suggests that it would be appropriate for health departments and other stakeholders to make use of existing complaint procedures where evidence arises of potentially anti-competitive conduct. This would reflect that the ACCC is a complaint-driven regulator.

24.106 The ALRC recommends that the Commonwealth, state and territory health departments, and other stakeholders, should make use of existing complaint procedures under the TPA where evidence arises of conduct that may breach Part IV and have an adverse impact on medical research or the cost-effective provision of healthcare.