Rod Sims leaves proud legacy: outgoing ACCC boss deserves high marks overall

ACCC chairman Rod Sims has not been afraid to take on difficult cases. Picture: NCA NewsWire / Gary Ramage

The era of rock star regulators in Australia is over for the moment, with Rod Sims departing the ACCC next month to be replaced by the dream team of commercial lawyers Gina Cass-Gottlieb, Liza Carver and Stephen Ridgeway.

The change in operating style at the consumer and competition regulator will be marked, with Gottlieb expected at least in her early days to take a low public profile and arguably the lowest since the late Bob Baxt handed the keys to Alan Fels 31 years ago.

Whether this is good news and is sustained remains to be seen, but what is beyond dispute is Cass- Gottlieb’s excellent credentials for the job.

The first guide to her priorities comes next week, when Sims delivers his annual CEDA enforcement address, which was vetted by Gottlieb given she will be the one to put it into action.

Reports this week of Sims’s concerns on AGL and other corporate moves are of academic interest only, given Gottlieb will be in the chair from March 20.

The former Gilbert & Tobin partner will be joined by former colleague, Herbert Smith Freehills partner Liza Carver, and King and Wood Malleson’s Stephen Ridgeway as enforcement and merger commissioners respectively. Another commissioner, Delia Rickards will depart in the next few months from her consumer role, and small business commissioner Mick Keogh is up for renewal in January next year.

Together with recently appointed Anna Brakey and Peter Crone, Cass-Gottlieb takes charge of a regulator with a bunch of relative newcomers in charge, but they have plenty of private practice experience.

Carver, it should be noted, will be excluded from discussion of the AGL takeover, given her long time working for the company.

After 11 years of Rod Sims, change in the executive ranks is also possible, but the good news is morale at the regulator is high and governance standards strong.

The changing of the guard comes as the US and other counties from China to the UK and South Korea are taking on high profile aggressive antitrust cases.

Just where Gottlieb stands on these issues remains to be seen.

Outside the investment banking industry, Sims scores eight out of 10 for his reign, with universal plaudits for being accessible, happy to explain his position and to listen. The negatives were his perceived tendency to jump to a conclusion too quickly and then work back to justify his stance – rather than building the case from square one.

Maybe this was what went wrong with the ANZ criminal cartel case which was dropped by the Director of Public Prosecutions after a dismal run through the preliminary court proceedings.

The case was undoubtedly a black mark on his reign, with some in the banking industry saying Sims was merely “an economist and bush lawyer”.

The mistake was to make the case criminal – not civil – but few outside the industry would agree with the industry defence that “we have always done it this way and there are no casualties”.

Good for the bank, but arguably not for an efficient market.

The fact is it is better for a regulator to take a case and lose than not taking action in the first place.

Treasurer Josh Frydenberg has followed his appointment of a highly regarded experienced practitioner in Joe Longo at ASIC with Cass-Gottlieb, sparking some comments he has deliberately put the regulators in the back seat with a low public profile.

A different view is that he has found some highly professional and competent people to run the shops.

ASIC is being reviewed by Nicholas Moore’s Regulatory Assessment Authority, with the report due mid-year. By chance one of its members, Cass-Gottlieb, will be leaving next month to take up her new role at the ACCC.

Sims was a long-time potential candidate for the ACCC before his 2011 appointment and the so-called “lefty from Lorne” laid down his plans from day one in a speech to the Law Council in August 2011.

He criticised the ACCC’s 100 per cent success rate in court, promising to take on risky cases. He flagged a high public profile on policy issues and said he would push the abuse of market powers (section 46) cases.

He delivered on the first two but section 46 cases were light-on with only three cases under the new law and only one victory, in the Tasports case, last May.

The run rate in court is 81.3 per cent this financial year, 80.6 per cent last year and 68 per cent in 2020, down from the 100 per cent rate pre-Sims.

In his 11 years Sims publicly knocked back just 18 mergers. Another 28 were withdrawn after concerns were raised, so few could paint him as standing in the way of big business.

Nine criminal cartel cases and 15 civil cases were launched.

His high public profile gets mixed reviews, with one opponent saying “he huffed and puffed but didn’t blow the house down”.

Sims has successfully taken consumer protection cases against big-name companies from Google to VW and Telstra, and while competition lawyers downplay their impact, with penalties increasing by a factor of 10, behaviour will change.

Most support the high profile as helping to promote and enforce the law, and Frydenberg clearly endorsed his stance, given the array of market studies he and the government handed the ACCC, ranging from gas to the Murray River Basin to rapid antigen tests to digital platforms.

Such briefs only work politically if the agency is seen as credible and while the competition lawyers have complained about case management, the fact is their practices have thrived under Sims.

The digital platforms reports have won international plaudits but some are waiting on the ACCC to follow through with actual litigation mirroring its US peers.

Likewise, early in his term Sims fought off attempts to split up the agency into a policy and enforcement arm, to hive off networks like telecoms and ports into a separate arm and to split off consumer protection.

By maintaining the broad church, Sims was able to boost the ACCC’s political and market clout, including the pivotal ­consumer protection mandate, because this meant the folk in ­Parliament House took an ­interest when their electorates complained that they were ripped off by some charlatan in big ­business.

After a stunningly successful career in Canberra and then in business consulting, Sims lists one of his big policy failures as not talking the late Bob Hawke into splitting Telstra into a retail and wholesale arm in 1990, and later failing to stop its merger with the OTC.

That failure later morphed into the $50bn NBN snafu, which underlines Sims’ campaign against politicians who privatise assets with an eye on the sale price – not the consumer detriment caused by structural failures.

When Sims departs next month he can do so knowing he has demonstrably left the administration of the law in a better place than when he arrived.

That’s about as good as it gets.