The Australian government did that already. Region encoding was deemed 'anti-competitive', against consumer interests, and therefore illegal.
If you buy a DVD player in Australia you will find that it will play any DVD regardless of its region code =)
Sometimes, just sometimes... governments get it right, too.
Really? Are you sure? Because I live in Australia... I visit electronics stores, and I see a LOT (read that as 98.394%) of DVD players which have the "Region 4" logo on them. LG, Sony, Panasonic, Pioneer, Sanyo, Sharp, you name it. Having said that, most of the time it is a pretty simple thing to region unlock them, but they are still shipped, and sold, as region 4. Most of the DVD players that you see around that are sold region unlocked are the no brand generic DVD players.
From Wikipedia (yes, I know it isn't the final say in any argument):
"The Australian Competition and Consumer Commission (ACCC) has warned that DVD players that enforce region coding may violate their Trade Practices Act"
From what I gather, from visiting the ACCC website, DVD players can still be sold in Australia locked to Region 4, however it is not illegal for them to be modified to play all regions. There is a case that is mentioned in regards to this dated in 2002 regarding Playstation 2, mod chips and region locked games.