Paul McIntyre: Big business put on notice

Australia's big business is on notice after the national competition regulator sent a warning this week about illegal corporate behaviour, revealing it had identified 40 suspected cartels, of which at least half were under investigation.

Graeme Samuel, chairman of the Australian Competition and Consumer Commission, told a meeting of international agencies in Sydney that cartels were acting like a cancer on the national economy.

He vowed to clean up illegal behaviour, which he described as a "form of theft and little different from classes of corporate crime that already attract criminal sentences".

Samuel's forthright comments on cartel activity have intensified the debate over tough criminal penalties for corporate crooks, which the Federal Government has stalled on since a government report two years ago recommended the introduction of jail terms and much tougher fines for corporate misbehaviour.

Samuel had already leapt into battle a week ago against Chris Corrigan, head of the transport and logistics empire Patrick Corporation.

Samuel said that gains from the reform of the Australian waterfront were at risk of being replaced by a cosy duopoly. It was Corrigan who helped to smash trade union influence on the waterfront in 1998 by placing his own labour on the docks. Corrigan abruptly told Samuel to "butt out" of the issue of competition on the waterfront.

Samuel and Corrigan tried to resolve the dispute by phone but that ended up a dry gully. Samuel kept punching in public and Corrigan sniped that the commission's new head was on a power trip.

He claimed Samuel was attempting to control the number of players in the stevedoring industry and deliberately trying to damage Patrick Corporation, which impressed stock market investors with a record profit two weeks ago.

The spat is filled with delicious irony because Patrick is a 46 per cent shareholder in the discount airline Virgin Blue, which, in the middle of the bun fight between Corrigan and Samuel, had called on the commission to regulate rising prices charged to airlines by newly privatised airports operations.

Samuel quickly latched on to the demands from Virgin, accusing Corrigan of the "ultimate hypocrisy".

When Samuel was appointed to head the Australian Competition and Consumer Commission in August last year, he vowed that he wouldn't bow down to corporate interests and that he owed favours to no one.

His corporate background had some consumer bodies and the media concerned that he would be less forceful in attacking bad corporate behaviour compared to his predecessor, Professor Allan Fels, who wasn't afraid to use the media to champion his own causes.

Critics of Samuel's appointment voiced concerns that he was a "hardline economic rationalist", too close to corporate Australia, as he had worked as a merchant banker and lawyer and was a former president of the Chamber of Commerce and Industry. However, Samuel also held senior positions with the National Competition Council for eight years, where he was president until last year.

But his public statements over the cartel investigations and his aggressive swipe at the most powerful man in the waterfront industry have laid any of those concerns to rest, and put pressure on the Government to seek tougher legislative penalties for corporate cartel merchants.

The cartel investigations could affect a range of industries, including building supplies, which have been pinged for price collusion in the past.

The waterfront debate with Corrigan was kicked off by the release of a commission report that said while waterfront operations had become more efficient, average revenues and costs had risen in the past year, placing a question mark over the industry's willingness to offer competitive services.

The report said that "from a competition perspective there would be grounds for concern if an industry experiencing capacity constraints while earning higher margins of rates for return on assets did not respond by expanding capacity."

In essence, Samuel said the waterfront industry risked not passing on productivity gains to importers and exporters, in the pursuit of higher margins and better profits for themselves.

Yesterday Samuel was not cowed by his first big stoush with Australia's corporate heavyweights. He revealed that the ACCC would join the European Commission to mount global raids on large corporations involved in price-fixing, manipulating bids and contracts, or taking part in other cartel activity.

Samuel said the co-ordinated dawn raids against Australian and international companies were the start of a growing battle against global cartels that were stealing "billions of dollars from business both here and abroad".

Those who questioned Samuel's willingness to tackle nefarious corporate activity have now one less leg to stand on.

 

Paul McIntyre is a Sydney journalist.