Compliance Professionalism and Regulatory Community: The Australian Trade Practices Regime
| Author | Christine Parker |
| DOI | http://doi.org/10.1111/1467-6478.00123 |
| Date | 01 June 1999 |
| Published date | 01 June 1999 |
Contemporary state governance relies increasingly on regulatory strate-
gies encouraging self-regulation and compliance for corporate regulation.
This paper examines the conditions in which such strategies might be
effective by reference to the Australian trade practices regime. The paper
argues that regulators will only use compliance strategies effectively when
(i) a community of compliance professionals with both professional
integrity and commercial ‘street’ credibility exists to make compliance
come alive in everyday corporate activities, and (ii) regulators invest in
meta-evaluation of compliance professionals’ activities.
I. COMPLIANCE AND CORPORATE REGULATION
1. Introduction
Despite the dominance of organizational actors in contemporary social life,
law is desperately short of doctrines, institutions, and regulatory techniques
that adequately control corporate entities.1The corporate veil frequently
deflects the penetration of legal values into and, indeed, the imposition of
legal sanctions upon the corporate entity. Adversarially-trained lawyers
often facilitate avoidance and evasion of corporate liability through ‘creative
© Blackwell Publishers Ltd 1999, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA
* Law Faculty, The University of New South Wales, Sydney 2052, Australia
I would like to thank Allan Asher and Bill Dee of the Australian Competition and Consumer
Commission for their time and help, the compliance practitioners who were generous enough
to share their experiences with me, and John Braithwaite for comments on a draft of this paper.
215
JOURNAL OF LAW AND SOCIETY
VOLUME 26, NUMBER 2, JUNE 1999
ISSN: 0263–323X, pp. 215–39
Compliance Professionalism and Regulatory Community:
The Australian Trade Practices Regime
CHRISTINE PARKER*
1J. Coffee, ‘No soul to damn: no body to kick: An unscandalised inquiry into the problem
of corporate punishment’ (1981) 79 Michigan Law Rev. 386; J. Coleman, ‘Responsibility in
corporate action: A sociologist’s view’ in Corporate Governance and Directors’ Liabilities:
Legal, Economic and Sociological Analyses on Corporate Social Responsibility eds. K. Hopt
and G. Teubner (1985) 69; M. Dan-Cohen, Rights, Persons and Organisations: A Legal Theory
for Bureaucratic Society (1986) 13; B. Fisse and J. Braithwaite, Corporations, Crime and
Accountability (1993).
compliance’ with legal requirements.2From Stone to Selznick, a commonly
proffered solution to the problem of ensuring that legal values permeate the
internal workings of the corporation is to require large institutions to regu-
late themselves in a way that is responsive to social concerns.3The strategy
of using regulatory strategies of self-regulation and compliance to enforce
preventive and proactive engagement by boards, managers, and employees
with collective public responsibilities is most comprehensively set out in
Braithwaite’s corporate criminology.4Critics of self-regulation, on the other
hand, see deterrence as the most reliable means for legal sanctions to affect
corporate behaviour. They argue that since all corporations have profit-
maximization as their main goal, they will always be ‘amoral calculators’
who only ever comply with regulatory requirements when the penalties are
heavy enough to ensure their calculations come up with the correct answer.5
Incentives for self-regulation must therefore be backed up by public
regulation sufficiently punitive to make sure companies consistently do their
sums right.
In recent years, self-regulatory and compliance-oriented models of corpo-
rate regulation have been adopted in areas as varied as occupational health
and safety, equal employment opportunity, environmental regulation,
consumer dispute resolution, securities regulation, and antitrust.6Regulators
are experimenting by providing incentives to companies that demonstrate
commitment to preventive compliance, and companies are increasingly using
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© Blackwell Publishers Ltd 1999
2D. McBarnet, ‘Legal creativity: Law, capital and legal avoidance’ in Lawyers in a Postmodern
World: Translation and Transgression, eds. M. Cain and C. Harrington (1994) 73; D.
McBarnet and C. Whelan, ‘Creative compliance and the defeat of legal control: The magic
of the orphan subsidiary’ in The Human Face of Law, ed. K. Hawkins (1997).
3C. Stone, Where the Law Ends: The Social Control of Corporate Behaviour (1975); P. Selznick,
The Moral Commonwealth (1992) 336 ff. See, also, E. Bardach and R. Kagan, Going by the
Book: The Problem of Regulatory Unreasonableness (1982); A. Chayes, ‘The modern
corporation and the rule of law’ in The Corporation in Modern Society, ed. E. Mason (1960)
25; J. Sigler and J. Murphy Interactive Corporate Compliance: An Alternative to Regulatory
Compulsion (1988).
4J. Braithwaite, Crime, Shame and Reintegration (1989); I. Ayres and J. Braithwaite,
Responsive Regulation: Transcending the Deregulation Debate (1992); Fisse and Braithwaite,
op. cit., n. 1.
5F. Pearce and S. Tombs, ‘Ideology, hegemony, and empiricism: Compliance theories of
regulation’ (1990) 30 Brit. J. of Criminology 423; F. Pearce and S. Tombs, ‘Hazards, law
and class: Contextualising the regulation of corporate crime’ (1997) 6 Social and Legal Studies
79–107; S. Tombs, ‘Stemming the flow of blood? The illusion of self-regulation’ (1992) 3 J.
of Human Justice 75.
6R. Baldwin, ‘Regulation after “command and control”’ in Hawkins, op. cit., n. 2, p. 65; E.
Geltman and A. Skroback, ‘Reinventing the EPA to conform with the new American
environmentality’ (1998) 23 Colombia J. of Environmental Law 1; Sigler and Murphy, op.
cit., n. 3; M. Sparrow, Imposing Duties: Government’s Changing Approach to Compliance
(1994). One of the best known regulatory strategies providing incentives for companies to
introduce compliance programmes is the US Federal Sentencing Guidelines for corporations:
see ‘Growing the carrot: Encouraging effective corporate compliance’ (1996) 109 Harvard
Law Rev. 1783.
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