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section References
The Collusion
and Price Fixing Scandal
The many extracts on these pages are from
copyright material. They are owned by the reference
given or its owner. They are reproduced here for
educational purposes and to stimulate public debate
about the provision of health and aged care. I
consider this to be "fair use" in the common
interest. They should not be reproduced for
commercial purposes. The material is selective and
I have not included denials and explanations. I am
not claiming that all of the allegations are true.
The intention is to show the general thrust of
corporate practices as well as the nature and
extent of any allegations made.
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References and extracts
Mayne Nickless
COMMENT:- Over the years before the price fixing scandal Mayne Nickless had been involved in a variety of disputes and investigations. These provide some earlier clues to the nature of the company and its culture. Following the scandal there were ongoing exposures of unsavoury conduct.
This page contains references to all of these matters. I have included extracts from many of the articles. They are intended to give the thrust and feel of the many allegations made against the company and its staff. The majority of these transgressions were denied and are still denied. Because of the manner in which the company handled the issues they have not been tested in court.
The extracts are not necessarily representative of the full articles and do not necessarily give a complete picture. In this instance the company provides health care and vulnerable citizens may be at risk if the company places its interests ahead of their welfare. The interests of the community and patients have been set above those of this corporation. For the purpose of my arguments I have therefore assumed that there is substance to most of the allegations. The comments of the judiciary, the TPC and the press are congruent.
Cover notes: review of Mayne Nickless v.
Pegler., PASH-R-J; EVANS-T-C
ADELAIDE LAW REVIEW 7 (4) May 1981: 517-526
Analyses the law as it stands after Pegler especially with regard to the duty of disclosure and the test of materiality.
[Uberrima fides : quo vadis? Where to
from here?
BOND LAW REVIEW 7 (2) December 1995 : 18-41
Abstract: Insurance contracts classified as uberrimae fidei have an obligation that parties act in good faith towards one another - important features of the duty of good faith - remedies available for breach of the duty of good faith at common law - - - - - - duty of good faith incumbentupon an insured party and upon the insurerCASE: Vermeulen v SIMU (1987) 4 ANZIC 60-812; Mayne Nickless Ltd v Pegler (1974)
SHOULD fines be tax deductible?
DIRECTORS LAW REPORTER 12 (8) September 1984: 2
Mayne (Nickless) sued over computer
piracy
SMH - 02 Nov 1990 p.23
Mayne won't copy computer software (from
Word Perfect and Lotus Development Corporation, in first court action
from BSAA over piracy)
SMH - 29 Nov 1990 p.27
A SENSE OF DEJA VU
Australian Financial Review 03/08/1993
LAST time the Trade Practices Commission took on TNT and Mayne Nickless , it lost spectacularly.The suit, known as the Tradestock case after the transport broker who initiated it, lasted seven years from claim to judgement, took 14 months in formal hearings, and amassed 16,000 pages of transcript from 105 witnesses and 1,000 exhibits.
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But it will be very embarrassing for the TPC if it loses such a big case again.In the Tradestock case, the TPC alleged that nine freight forwarders (by the time the case ended mostly owned by TNT, Mayne Nickless and Brambles Industries Ltd) had made a collective decision to boycott transport brokers.
Justice Franki of the Federal Court found that the TPC had proved that all but two of the companies were parties to such an arrangement, but that the arrangement was not in breach of the law.
THE FELING OF TNT
Australian Financial Review 08/11/1994
For his part, Allan Fels was determined not to fail. The TPC had suffered an ignominious defeat in 1985 at the hands of TNT, Mayne Nickless, Brambles and others in what was known as the Tradestock case. The TPC alleged at the time that nine freight forwarders had collectively tried to boycott transport brokers. After seven years of litigation, the TPC was ordered to pay costs of nearly $5 million. It broke the regulator's budget and it had to go cap in hand to the Government to survive the financial year.
TNT, MAYNE NICKLESS 'IN PREDATORY PRICING
COLLUSION'
The Australian Financial Review 19 Nov 1991
The Trade Practices Commission is likely to examine complaints that Australia's two express freight operators, TNT Ltd and Mayne Nickless Ltd, have been in collusion over pricing practices.
TRANSPORT COMPANIES ACCUSED OF
PRICE-FIXING
Sydney Morning Herald 11/02/1992
Mr Bill Bytheway, the managing director of the transport giant Mayne Nickless, is one of 19 senior executives named in an anti-cartel action bought by the Trade Practices Commission.
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The commission has launched legal action against the country's three biggest express freight companies - TNT Australia Pty Ltd, Ansett Transport Industries (Operations) Pty Ltd and Mayne Nickless Ltd - alleging that they operated for many years as a cartel to fix prices and set market shares.
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"We're aware of the investigation taking place over the last couple of years, but we haven't received any notice, so I'm not in any position to comment."
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It alleges that the company representatives agreed not to compete against each other on prices and rates.They also allegedly agreed that where one of the companies in the cartel had an existing customer, the others would not submit competing quotes to that customer. If they were to quote, they agreed to quote at a rate higher than that already charged.
The commission also alleges that the cartel members agreed to assist any member who wanted to charge a customer more by refusing to submit a competing quote to that customer, or else putting in a higher quote.
And where one cartel member got a contract from a customer who was previously with another company, that member would allegedly try to induce the customer to return to the original company by raising prices, or rates. If the customer did not return, the company would compensate the original company.
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The TPC Act provides for penalties of $250,000 for companies for each offence committed. For individuals, the maximum penalty is $50,000 per offence.
TPC Claims Freight Giants Act As
Cartel
The Age 11/02/1992
The 150-page statement of claim was lodged in Sydney's Federal Court on Friday and makes public what is expected to be the biggest and most far-reaching TPC action ever launched.
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The TPC alleges that senior representatives of the three companies held a meeting in 1987, reaffirming a cartel arrangement allegedly in place since the 1970s.
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All the express freight divisions of the three companies were allegedly involved in the cartel.
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As an example of illegal practices, the commission alleges TNT Air quoted a lower rate and acquired part of the express freight business of a Tasmanian Skyroad (Mayne) customer.``In accordance with the cartel agreement, Skyroad then allegedly required TNT Air to withdraw its services, TNT allegedly did so, and Skyroad then allegedly resumed the company's business, charging rates higher than those charged by TNT,'' the TPC said in its statement.
--------------------
The commission is also seeking restraining injunctions to stop the alleged cartel from operating.
Freight Move Is TPC's
Biggest
The Age
11/02/1992
The Federal Court action launched by the Trade Practices Commission against the TNT and Mayne Nickless express-freight groups is the biggest since its inception in 1974. It was sparked by complaints from the only independent national competitor left in the industry, the Sydney-based Discount Freight Express.
------------------------------------
``We have given the TPC a lot of information, a lot of evidence,'' Mr Poche said last night. ``More than enough to mount a serious investigation.'' Mr Poche said he first learned of the alleged cartel in the late 1960s, when, as national sales manager for a pharmaceuticals company, he tried to sack TNT as the company's freight handler.
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He said he was told by a Mayne Nickless executive that, under the terms of a cartel agreement, Mayne Nickless was not allowed to quote for the freight business at a lower price. This was legal at the time.
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At least 10 express-freight companies have gone out of business or been taken over by TNT or Mayne Nickless since 1974.
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The Mayne Nickless and TNT groups have built up their combined market share from a little over 50 per cent to about 90 per cent in the past 15 years.TNT and the TPC have been tied up in legal action in the Federal Court for almost a year over the right of the TPC's chairman, Professor Alan Fels, to ask questions and seek information from TNT.
TNT has argued that Professor Fels has been seeking information for use by the Prices Surveillance Authority, of which is chairman, and that this is a misuse of power.
The TPC and Professor Fels personally defended the challenge until it was withdrawn last Monday to clear the way to proceed with the litigation against the alleged cartel.
TPC ACTION AGAINST TRANSPORT
MAJORS
Australian Financial Review 11/02/1992
The action is being taken under section 45(2) of the Trade Practices Act which prohibits agreements between companies in areas such as market sharing or restricting the supply of goods for the purpose of substantially decreasing competition.
---------------------------------
The TPC alleges that the three companies operated for many years as a cartel in order to fix prices and regulate their market share in the $1 billion-per-year express-freight industry.
-------------------------------
The three companies targeted by the TPC action are the major forces in the Australian express-freight marketAnnouncing the action the TPC said yesterday it was alleging the companies agreed to maintain a number of illegal trade practices, including:
* "Agreeing not to compete against each other on prices and rates.
* "Agreeing that where one of the companies in the cartel had an existing customer, other companies in the cartel would not submit competing quotes to the customer. Should they submit a quote, the companies allegedly agreed to quote at a rate known to be higher than that already charged.
* "Helping any company in the cartel which wanted to increase its prices to a customer by refusing to submit a competing quote to that customer, or else submitting a higher quote.
* "In the event that one company obtained a contract from a customer previously with another company, then taking steps to induce the customer to return to the original company, by increasing prices or rates or by other means.
* "In the event the customer did not return, the new company would compensate the original company."
For the past year the TPC has been in court issuing notices seeking information from the parties. These actions were initially challenged by TNT and Mayne Nickless. Mayne later dropped the challenge and the TPC withdrew its notices ahead of filing its claim on Friday.
----------------------------
The TPC alleges that senior representatives of the three companies held a meeting in 1987 at the Mascot offices of TNT, during which they discussed and reaffirmed a cartel arrangement allegedly in force for many years.The TPC alleges:
* That at the meeting it was agreed that the corporate respondents had been successfully bidding for each others' customers too much in the past. They also allegedly agreed that no existing customers of any of the respondents were to be taken by any other corporate respondents for any reason whatsoever
* That in addition, if an existing customer was lost to another member of the alleged cartel, that customer or a customer of similar revenue value had to be returned or provided to the first company by the second company.
* That it was further agreed that the method to be used to ensure this would occur was that the second company would substantially increase the express-freight rates being charged or deliberately provide poor service to that customer.
The TPC alleges that at this meeting it was also agreed among the respondents there would be a balancing of the accounts of customers recently lost or gained by each of the respondents to the others. The only people to be informed of the agreements were those holding the position of State sales managers, State managers and national sales managers or above.
A second meeting allegedly took place in late-1987 at the Sydney Regent hotel.
It is alleged that at this meeting it was agreed that when a customer was secured that the company securing the customer was obliged to replace the revenue value and that there would be a uniform minimum price to customers for the use of air satchels established and maintained by each of the companies.
At an alleged third meeting in 1988, the companies' representatives allegedly agreed there was no point in competing with one another so as to drive prices down, thereby benefiting customers. It was allegedly agreed each was in a better position when it was able to increase rates without interference from each other and ensure stability in the market.
It is alleged that yet another meeting was held in November 1990 at the Sydney Airport Hilton hotel at which the respondents agreed that companies were lacking control and causing prices to be reduced and that there was too much competition between them and this should cease.
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Other allegations include:* That in about January 1987 Prime Computer of Australia Ltd, based in Sydney, was primarily a customer of Kwikasair. Prime called for tenders and Jetspress and Kwikasair provided a quote - and Jetspress quoted lower. However, Kwikasair required Jetspress to withdraw, which it did.
* That in November 1989 the Northern Territory Government was a customer of Wards. The NT Government invited tenders for services for three years to 1992. Wards required TNT Air, Ansett Air Freight, Kwikasair and Comet to refrain from tendering competitive quotes. Ansett Air Freight provided an uncompetitive tender and the NT Government remained a customer of Wards.
* That in about mid-1987 Security Express increased the express-freight rates it was charging to the South Australian-based Soccer Pools Pty Ltd. Soccer Pools sought a quote from TNT Air and was given a rate lower than that charged by Security Express. Security Express required TNT Air to withdraw its quote and TNT Air did so.
* That in mid-1988 TNT Air gave a quote to the Australian Mining Industry Council which was lower than the existing Wards rate. Wards contacted TNT Air and required it to withdraw its quote. TNT Air did so.
TPC WITNESSES A WHO'S WHO OF TOP
EXECUTIVES
Sydney Morning Herald 11/03/1992
- - - - - - the roll call of those who will be giving evidence over many weeks will read like a who's who of business and senior executives.
----------------------
The three companies' list of clients included Pacific Dunlop, Prime Computer, Combined Banks Transport Committee, Davids Holdings, Castrol Australia, the Australian Mining Industry Council, Australian American Assurance, Ranger Uranium Mines, Bain & Co, Oxford Clothing, Kalamazoo(Australia), Australian Newsprint Mills, Woolworths (SA), the Northern Territory Government, Websters, Smith & Nephew, and Pioneer Silicon Industries.The 150-page statement of claim, filed in the Federal Court, details accounts of dozens of alleged meetings held between senior executives of the three groups of their subordinates, and subsidiaries within the groups between April 1987 and last year. Topics allegedly discussed at these meetings -said to be held at offices at Mascot, The Airport Hilton, the Regent, TNT's headquarters at Redfern and other locations - were whether the companies were stealing one another's clients, why the companies should refrain from competing on freight rates, and the "balancing of accounts" of customers gained and lost by the three groups.
There are also detailed allegations about subordinates being instructed by senior executives to attend the meetings, to keep the contents of the meetings confidential, and being instructed to comply with the agreement struck and how to keep ledgers of lost and gained clients. The conversations outlined include alleged telephone conversations.
------------------
Yesterday, Mr Ian Webber, the chairman of Mayne Nickless, said his company would "vigorously contest all allegations made against it" but would not be making further comments "while the matter is sub judice".The managing director of TNT, Mr David Mortimer, said he had not had a chance to read all 150 pages of the statement of claim, but that all allegations would be defended.
Executives Named In Action By
The TPC
The Age 11/03/1992
When the Trade Practices Commission action against the transport companies TNT Australia Pty Ltd, Ansett Transport Industries (Operations) Pty Ltd and Mayne Nickless is heard some time next year, the roll call of those who will be giving evidence will read like a who's who of business and senior executives.There are also detailed allegations about subordinates being instructed by senior executives to attend the meetings, to keep the contents of the meetings confidential, and being instructed to comply with the agreement struck and how to keep ledgers of lost and gained clients.
MAYNE CHIEF HITS TPC
ALLEGATIONS
Australian Financial Review
11/03/1992
MAYNE Nickless Ltd chairman, Mr Ian Webber, lashed out at the Trade Practices Commission yesterday, saying the company would vigorously contest all allegations made against it.
TNT, MAYNE NICKLESS ON TRIAL
Australian Financial Review
03/08/1993
GREG Poche doesn't like the term "whistleblower". He prefers the more sober description of "complainant". For complaining is something that has occupied much of his time since he set up his small express freight business, Discount Freight, in the early 1970s.Mr Poche aimed to tackle the dominant position of the two big boys in the lucrative road and air-express-freight market - TNT and Mayne Nickless. But Mr Poche, himself a former TNT manager, soon found that task would not be an easy one.
After years of fighting a David-versus-Goliath-style war with his competitors on the roads, Mr Poche took his complaints about the industry to the umpire, the Trade Practices Commission and its then chairman, Professor Bob Baxt.
----------------------------
And no one will be more anxiously awaiting the outcome of the case than the man who set the ball rolling, Greg Poche.He said it took him 15 years to assemble the box full of documents -letters, memos, recollections of conversations - that he dropped on the TPC's desk in May, 1990.
"I went to Bob Baxt with some very well-documented information and some evidence of the problems within the industry," said Mr Poche.
"He accepted readily that it fell right within the priorities of the TPC. For (express freight) was a major industry with a major impact on the economy
"I'm the first person who stuck his head up. Companies have gone broke. Independent operators have gone out of business and still not appealed to the umpire, or called the police - and that is what the TPC is in this area."
-----------------------------
About 20 express businesses would be swallowed up by the big players in the ensuing years. Many other names would disappear.
-------------------------------
Analysts recalled the "sensational" profits posted by Mayne Nickless and TNT in express freight during those times, when businesses like Comet were considered TNT's flagship operations. But small independents like Discount Freight would say that success had come at their expense.According to Mr Poche, the majors went on a price "under-cutting" spree in the late 1980s - and Discount Freight with about 3 per cent of market share was a main target.
"We were going downhill fast," he recalled. "We were running around everywhere trying to deal with customers offered deals too good to be true. Our future was pretty shaky."
But the company fought back. It even took out full-page press ads - "Who's up who, who pays the rent?" - to advertise its plight as the minnow in the market. That aggressiveness helped lift the company's market share to about 6 per cent. Mr Poche also resisted offers from the majors to sell. "We told them to jump in the lake," he said. Mr Poche, of course, also went to the TPC.
Since then, TNT and Mayne Nickless have been lamenting the declining fortunes of express freight. Mayne Nickless' Mr Greenshields said its volumes had dropped "20 and 30 per cent" in some areas. Both Mayne Nickless and TNT said they had chased declining volumes with prices 10-15 per cent below those of two years ago. And this was on top of a pilots' strike that cost Mayne Nickless $8 million in lost revenue alone, according to Mr Greenshields.
Both groups have entered into a programme of rationalisation and retrenchments to head off the losses. TNT has reduced fleet sizes and rationalised terminals, integrating those of Comet and Kwikasair so far in two States.
-------------------------
Some analysts believed the recession had shaken out the industry, spurring increased competition.Mr Poche however remains unconvinced:
"We just don't see any change in the market of any relevance," he said.
FIRST ROUND GOES TO TPC IN
FREIGHT CASE
Australian Financial Review 03/10/1994
AFTER more than two years of legal jostling, round one in the potentially huge case against major players in the $1 billion express freight industry has gone to the Trade Practices Commission.
EXECUTIVES' STAY MOTION
FAILS
Sydney Morning Herald 03/10/1994
Justice Burchett in the Federal Court dismissed the stay motions by the executives, who claimed the TPC had engaged in an abuse of process in seeking documents and information from them under the discovery process.The executives submitted that the purpose of the document discovery was to make the individuals concerned "buckle under the pressure of the proceedings and offer to give evidence against the corporations in exchange for immunity". Justice Burchett said there was no such evidence.
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"In my opinion, the evidence does not come up even to that standard. I think it is quite fanciful to see the abandonment of reliance on section 155 as providing any basis whatever for an inference that an improper attempt would be made to use the proceedings in the present case for a predominant purpose of coercing the applicants into providing evidence.
Price-fixing Case - TNT
Withdraws Its Defence
The Age 07/26/1994
The transport group TNT has withdrawn its defence against allegations of price fixing brought against it by the Trade Practices Commission.The dramatic turn in the largest corporate case ever mounted by the TPC occurred yesterday when TNT said its decision to withdraw its defence had been taken for purely commercial reasons. The case is scheduled for a hearing in the Federal Court next month.
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The penalties are expected to be handed down under the old Trade Practices Act, which carries a fine of up to $250,000 for each offence.However the potential fines could have been much larger if the alleged offences occurred after the TPC was amended to extend the penalties to up to $10 million for each offence.
LESSONS FROM THE TPC'S WIN
Australian Financial Review 07/26/1994
IT WOULD be nice to think that the TPC's prosecution of TNT and Ansett for allegedly running a price-fixing cartel in the express-freight market will prove a powerful deterrent to companies tempted to engage in illegal anti-competitive behaviour.
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However, while this case may provide business with an impressive example of the cost and (probably more importantly) the embarrassment of being fined, it will also serve to make another, less socially desirable point.It is alleged that the companies were illegally fixing prices and regulating market share for years. If that is so, it must have been obvious to both their competitors and many of their customers. And yet only one person came forward with the information which prompted the TPC to launch the prosecution.
The other, unfortunate lesson from this case may be that illegal cartels are hard to catch, mainly because there is usually too little incentive for people to come forward. Indeed, the decision to increase the maximum fine to$10 million is evidence of the difficulty in mounting a successful prosecution.
To be a serious deterrent, the fine has to be very high to counteract the very low chances of being caught.
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In the US, for example, the penalties for being convicted of pricing fixing and market rigging are more severe than in Australia.American company executives also face the possibility of three years' jail, and under the Reagan and Bush administrations more than 300 people were sent to jail for price fixing, bid rigging and market sharing schemes.
There is good reason to suspect that the possibility of a jail sentence would prove more of a deterrent than even the $10 million fine now available in Australia.
--------------------------
The US law also provides a stronger incentive - - - - - - - However, in the US, successful plaintiffs can receive awards for "treble damages" (that is, an amount equal to three times the actual damage caused). That can be a powerful incentive to act, especially where the illegal activity has contributed to bankruptcy.
COSTS FORCE TNT, ANSETT
BACKDOWN
Australian Financial Review 07/26/1994
TNT AND Ansett announced yesterday that it had all become too expensive to continue defending the massive legal action brought against them by the Trade Practices Commission.
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In two weeks TNT and Ansett will bow to the decision of the court on penalties. This after ferociously fighting and blocking the TPC's every move for four years.It's somewhat different from the last time the TPC locked horns with TNT and Mayne Nickless. On that occasion the warfare continued for seven years until the regulator was vanquished in the 1980s.
TRANSPORT GIANTS CAVE IN TO
TPC
Australian Financial Review 07/26/1994
Their decision not to contest the allegations has exerted considerable pressure on Mayne Nickless - the other member of the "big three" in express freight - which has been left to fight on alone.
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With 150 prosecution witnesses and 13 volumes of evidence, it is the most demanding and complex action undertaken by the TPC and poses widespread implications for practices within the industry.
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"Contesting the allegation would involve the continuation of high litigation costs and excessive management involvement at a time when the companies' senior management are dedicated to rebuilding the companies and growing shareholder value."
TPC DISCUSSES TERMS OF
SETTLEMENT WITH TNT, ANSETT
Australian Financial Review 07/27/1994
The domestic express freight industry has undergone dramatic changes since the late 1980s when TNT, Ansett Transport and Mayne Nickless maintained a stranglehold on the market with 85 to 90 per cent of business.As it returns to stability with volumes rising for the first time since the recession, the sector is likely to emerge in a fragmented form with smaller players eroding the dominant positions of the "big three".
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Mayne Nickless has also restructured its express freight operations in Australia to reduce overlapping functions and merge some brands after, at best, breaking even or suffering a small loss in 1991-92 and 1992-93
TPC Takes Centre Stage With Big
Victories
The Age 08/02/1994
And its success has led to criticism. Some argue that by intervening to get courts to freeze merger plans he disagrees with, the cop in effect has taken over the power of the judge.
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Canberra in the 1990s has adopted a world view in which competition between business is central. It wants a strong competition regulator: the TPC is it. If the big companies it takes on are not happy, tough luck.
---------------------------------
Since 1990 competition policy has moved from the wings to centre stage of policy. The key steps have included: The tariff reductions (and loss of quotas) which are changing Australia from one of the most protected Western economies to perhaps the most open of all.
---------------------------------
The transfer of the TPC and the competition bureaucracy from the Attorney-General's Department to the hub of economic policy in Treasury, and the choice of Professor Fels, an economist, to run an agency hitherto dominated by lawyers.The Hilmer report's plans to expand competition policy to cover state-owned enterprises, the professions and other state-regulated occupations, and agricultural marketing boards.
For the second time in 20 years, a Labor government is trying to force business into genuine competition, not monopolies or cartels. For the second time, Allan Fels is riding the wave - and this time a more substantial one, from a very different direction.
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He (Fels) is similarly blunt about the TNT-Ansett claim that they abandoned their defence against price-fixing charges only because of concern about potential costs. ``A case is only costly if you lose it,'' he observes. ``Typically, the TPC's costs are only about one-tenth those of the other side. That's the way Mr Plod works.''
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The new order of competition could give Allan Fels more influence still. Even if the Hilmer report's proposals are watered down, as seems likely, the TPC and the PSA would be merged as the Australian Competition Commission, with expanded powers. At 52, Professor Fels is clear favorite to head the new body, and usher in what he calls ``a welcome outbreak of competition''.
Record Fine For TNT, Ansett Over
Price-fixing
The Age 08/11/1994
The transport giant TNT strongly proclaimed its innocence yesterday despite a record $6.5 million in fines and costs imposed by the Federal Court on TNT and its half-owned associate Ansett for alleged price-fixing.
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But the TPC chairman, Professor Allan Fels, said yesterday the companies had been found guilty of the ``most sustained and systematic'' case of anti-competitive behavior on record.
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The fines were well above the previous maximum fine for price-fixing - $100,000 - and arrived at by agreement between the companies on the basis of the pre-1993 scale of fines, which allowed for a maximum of $250,000 for each company offence.The fines could have been far higher if the new scales, which were 40 times higher than the old amounts, had been used.
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``I wish to emphasise that the withdrawal of our defence was taken for purely commercial reasons and under no circumstances does TNT accept guilt or liability, nor do we have any evidence that these alleged activities ever took place,'' Mr Millar said.``In fact, if we had continued with the defence, we believe we could have won.''
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The TPC had a powerful case against the companies, involving 150 witnesses, and would have argued for higher penalties - including some allowance for the economic ``detriment'' caused by the companies' actions - if agreement had not been reached with the companies, Professor Fels said.
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``One of the main lessons of this case is that big firms can no longer hope to use money and legal resources to beat the TPC,'' Professor Fels said.
THE FELING OF TNT
Australian Financial Review 08/11/1994
WHEN Allan Fels picked up the telephone in his office nine weeks ago to find David Mortimer on the other end, he knew instinctively there was only one reason the TNT chief executive would be calling him.
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A phone call from Mortimer could only mean one thing. Fels had always suspected that, despite its aggressive defence against the breathtaking array of allegations, the transport giant might eventually try to reach an accommodation with the Trade Practices Commission.
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Fels believed there was no way the TPC would lose. It soon became obvious that the only real option was for TNT to withdraw its defence. - - - - If the case went to court, TNT estimated its total legal costs could reach $17 million.
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Eventually they agreed on penalties of $5 million ($4.1 million for TNT and$900,000 for Ansett) and between $50,000 and $75,000 for the individuals named by the TPC. - - - - - - The TPC also revealed its final demand on TNT at this meeting. This was to pay part of the TPC's costs. Mortimer and Millar agreed on $1.07 million.
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By the withdrawal of their defence the companies had effectively admitted to the TPC allegations but only for the purposes of determining penalties, Mr Sweeney told the court.He also revealed that the TPC regarded the $5 million penalty for the companies as a considerably discounted figure - for good behaviour as corporate citizens. They had saved the public the expense of a long court case and the penalties reflected the credit to which the companies were entitled, Mr Sweeney said.
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IT is more than four years since Greg Poach first marched into the TPC's offices with a thick dossier and a file of complaints under his arm.Poach's company, Discount Freight Express, had been trying to carve a niche in the express freight market for 16 years. He believed the industry was involved in predatory pricing and had even warned the big companies he planned to collect evidence in a bid to prove it. They denied his claims and laughed him off, he says.
Not to be deterred, Poach began his mission, gradually collecting a file of information on the operations of the industry. In May 1990, he telephoned the TPC and made an appointment to see then chairman Bob Baxt. He took his dossier, which by this time had expanded substantially. The TPC went on the alert and investigations began immediately.
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The TPC swiftly lodged formal notices under section 155 of the Trade Practices Act, requiring the companies to supply information. The companies challenged the notices and although Mayne Nickless later supplied responses, TNT fought every inch of the way.
---------------------------
For his part, Allan Fels was determined not to fail. The TPC had suffered an ignominious defeat in 1985 at the hands of TNT, Mayne Nickless, Brambles and others in what was known as the Tradestock case. The TPC alleged at the time that nine freight forwarders had collectively tried to boycott transport brokers. After seven years of litigation, the TPC was ordered to pay costs of nearly $5 million. It broke the regulator's budget and it had to go cap in hand to the Government to survive the financial year.
-------------------------
The denouement also shows that even the biggest corporate heavyweights may no longer be prepared to spend their way out of trouble with shareholders'funds.
TRANSPORT GIANTS: $5M WIN FOR TPC
Australian Financial Review 08/11/1994
The record fines handed out by the Federal Court yesterday for 21 breaches of the Trade Practices Act - in effect, operating an express-freight cartel rigging market shares and prices - are 20 times the previous biggest fine under anti-competitive legislation.
-----------------------
Professor Fels said: "- - - - The behaviour in this case represents the worst ever before the court under the (act); the most serious economic detriment, the most sustained and systematic price-fixing case that's ever been before the courts in Australia.
------------------------
Mr Charles Sweeney QC, for the TPC, said "many of the major features of a competitive market were suppressed by cartel arrangements" involving TNT and Ansett which enabled them to protect their market shares and fix prices.He said agreements were reached between representatives of TNT and Ansett at "one or more" of five meetings held between 1987 and 1990 that:
--------------------------
He said the contraventions were "very serious" and "formed part of a systematic course of conduct" at the companies. He said that, by withdrawing their defences as part of its deal with the TPC, the two companies"effectively admit" the allegations for the purposes of the penalty proceedings. However, neither has accepted guilt or liability.
---------------------------------
Employees of the companies called their arrangement:The Cartel
The Orderly Marketing Arrangement
The Accord
The Honda
Detente
The Peace
THE INSIDE STORY: HOW THE
FREIGHT MARKET WAS RIGGED
Australian Financial Review 08/12/1994
There will be no exceptions to this agreement whatever, for any reason, even if it is for reasons of poor service. Let me tell you on behalf of TNT, there will be no reasons why accounts will change hands.THUS unfolded one of the most secretive and confidential meetings of executives in the express-freight business, according to documents lodged with the Federal Court on Wednesday.
The Trade Practices Commission has alleged that the speaker was Paul Vincent Chadwick Brown - then general manager of TNT Australia. And the scene was a meeting in the TNT boardroom at Mascot airport, attended by 20 or more executives from TNT, Ansett and Mayne Nickless.
-------------------
On or about March or April 1987 - - - - - It's a meeting of all Mayne Nickless and TNT senior managers. It appears that the boys feathers are a little ruffled. It looks like we've been taking too many accounts.
-----------------------
Brown opened proceedings. Using words to the following effect, he said he intended to put an end to the competitive sniping between the companies."Gentlemen, thank you all for coming. You know why we're here. This nonsense has been going on long enough.
"We've made these arrangements, let's stick to them. Accordingly, you all have your own complaints and let's sit down and work them out. If you've got a problem, let's work it out now.
"Gentlemen, if you have been remiss in taking someone's account, then let's square it off now. Let's see if we can balance the books. The arrangement is falling apart. There is too much sniping going on, and such sniping between the groups will not be tolerated ... it has to stop."
--------------------------
"In a situation where a customer, for one reason or another, has decided that he no longer wants to use a particular carrier, if he is unhappy with the service or the rates being charged or for any other reason, it is forbidden for someone else to go in and take advantage of the situation. Every assistance is to be given to the original carrier to keep the account."
------------------------
(Witness) said conversations to the following effect took place:Manager A: OK, we're guilty, we took that one. I don't think it can be given back; we'll have to replace it. I'll find a replacement and give you a ring next week.
Manager B: It was worth (here would be mentioned an amount the account was worth in dollar terms) per month. I'll want one worth the same.
--------------------------------
"You are all to do what is required of you under the agreement and you are to advise the appropriate staff about the agreement ... You are to be extremely cautious about who knows about it and how it is discussed."
Mayne Sure To Lose Price-fixing
Case - TPC
The Age 08/15/1994
The chairman of the Trade Practices Commission, Professor Allan Fels, has warned Mayne Nickless it is ``certain to lose'' its case against charges of price-fixing because the TPC only bets on virtual certainties.
----------------------------
``The great lesson of this case is that a firm is not going to beat the TPC just by throwing huge amounts of money into an expensive legal defence,'' Professor Fels said.
------------------------------
But Professor Fels dismissed TNT's claims. ``They have withdrawn their defences and thereby pleaded guilty,'' he said. ``The court has found them guilty and imposed a massive fine.
FEDERAL COURT RULING ENDS USE OF
PRIVILEGE CLAIM
Australian Financial Review 09/12/1994
COMPANIES being sued by corporate regulators for civil penalties have been dealt a heavy blow by a recent ruling of the Full Federal Court which removes the privilege against self-incrimination.The four-to-one decision to overturn established practice means companies can be forced to hand incriminating documents to regulatory agencies such as the Trade Practices Commission or the Australian Securities Commission in proceedings seeking to impose a civil penalty or fine.
-----------------------------------
Professor Bob Baxt, a partner of Arthur Robinson & Hedderwicks and a former TPC chairman, said the decision "is a body blow for all corporations".
Mayne To Pay $7m For Role In
Cartel
The Age 12/07/1994
The Trade Practices Commission claimed complete victory over Australia's biggest price-fixing cartel involving the three key players in the freight industry yesterday, when Mayne Nickless and seven of its current and former executives were ordered to pay out a record $7.7 million.
------------------------------
In the Federal Court yesterday, Justice Burchett ordered Mayne to pay $6 million in fines and $1.3 million in costs.Mayne's managing director, Mr Bill Bytheway, was ordered to pay $40,000 for what the TPC described as his ``central role in directing his senior executives to continue to abide by the price-fixing cartel''.
------------------------------
In its settlement reached earlier this year TNT paid out $6.6 million. Professor Fels estimated yesterday that including the legal bills for both sides and fines, the case may have cost the three companies between $20 million and $25 million.
-----------------------------
``It has cost consumers and business dearly,'' Professor Fels said.``Almost everyone using air and road express freight services during the period of collusion has been adversely affected.''
For its part, Mayne Nickless said yesterday it had ``reluctantly'' made a stricly commercial decision not to continue fighting the action.
-------------------------------
``Unfortunately we will now be unable to test in court the veracity of the TPC's witness statements,'' he said.The TPC filed 175 witness statements from 155 witnesses, of which more than 75 were former employees of the three companies.
--------------------------------
The TPC alleged in a 202-page statement of claim that the cartel was referred to by several names including ``the orderly marketing arrangement'', ``the peace'', ``the accord'', ``the Honda'', and the ``detente''.
MAYNE FINED $7.7M FOR
PRICE-FIXING
Sydney Morning Herald 12/07/1994
TPC chairman Professor Allan Fels said the penalties imposed by the Federal Court yesterday represented the end of the most blatant and extensive market-rigging case investigated by the TPC in its 20year history.
Mayne Nickless fined $7.7
million`
The Financial Review 7 Dec 1994
$7.7 m in penalties as Mayne
Nickless withdraws defence`
The Australian 7 Dec. 1994
The arrangement `
The Australian 7 Dec. 1994
THE CARTEL
Sydney Morning Herald 12/09/1994
The TPC has performed a great public service by taking legal action against Mayne Nickless, TNT and Ansett, to break the cartel they had maintained for about 20 years. As Professor Fels has said: "It has cost consumers dearly. Almost everyone using air and road express freight services during the period of collusion has been adversely affected." In court, there seemed no doubt about the matter. An agreed statement read in court on Tuesday said: "By the withdrawal of their defences, Mayne Nickless and the remaining individual respondents effectively admit (in the case of market definition, for the purpose of these proceedings only) the allegations made by the (Trade Practices) Commission's pleadings. Hence the court should proceed to the fixing of penalties from the standpoint that each of the allegations in the pleadings is made out." In other words, in court at least, Mayne Nickless admitted the breaches it was accused of and accepted the penalty.
------------------------------
Why then, out of court, has Mayne Nickless been behaving as if it has been denied an opportunity to defend itself? "Unfortunately," the company said on Tuesday, "we will now be unable to test in court the veracity of the TPC's witness statements." That attempt to minimise the effect of the total of 165 witness statements in the TPC case against Mayne Nickless is disingenuous. In one witness statement, for example, the managing director, Mr Bill Bytheway, is alleged to have said words to this effect: "Orderly marketing is a built-in feature of how we do business in Australia. We have to keep our margins up. The Australian market-place is too small to cut each other's throats. If we get into a price war with TNT, the only winner is the customer." If Mayne Nickless disputed this and the numerous other statements to the same effect it could have done so.
--------------------------
But that (Mayne Nickless statement) is unconvincing. The few more million dollars the company would have had to commit would have been insignificant compared with the value of clearing its name - had that been possible.The simple truth is that Mayne Nickless knew - as it has formally admitted in court - it was guilty. Its attempt to pretend otherwise outside court reflects a certain unacceptable aspect of commercial culture. It is as much a reflection of arrogance as its refusal to apologise to the customers it dudded over the years. So, too, is its threat to sue Professor Fels for defamation for one of his statements to the media explaining the case. Overall, the company's actions suggest it would do it all the same again, if it thought it could get away with it. It is just as well the TPC will be there, watching for signs of recidivism.
MAYNE HITS BACK OVER TPC
PRICE-FIX CHARGE
Sydney Morning Herald 12/20/1994
The board of Mayne Nickless yesterday hit out at the Trade Practices Commission saying there was no truth in TPC claims that Mayne's managing director, Mr Bill Bytheway, had played a central role in a freight industry price-fixing cartel.The chairman of the transport giant, Mr Ian Webber, pledged the board's support for Mr Bytheway in a letter to shareholders - - - - - -. "May I say at the outset, in the strongest possible terms, that the board of Mayne Nickless does not condone illegal or improper practices and that it will take all necessary steps to eliminate such practices and ensure that they do not occur again in the future,"
----------------------------
"When the board became aware of the nature of the TPC's allegations in 1991, a formal compliance program was introduced, and has become an important part of company management education and practice,"
TRADE PRACTICES COMMISSION v. TNT
AUSTRALIA PTY LIMITED, ANSETT TRANSPORT INDUSTRIES (OPERATIONS)
PROPRIETARY LIMITED, MAYNE NICKLESS LIMITED AND OTHERS No. NG807 of
1992 FED No. 13/95 Trade Practices - Civil Penalties (1995) ATPR
41-375
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT
REGISTRY GENERAL DIVISION BURCHETT J HRNG
SYDNEY, 6 August and 6 December 1994 #DATE 31:1:1995
JUDGE BURCHETT
The conduct pleaded against the respondents related to ss. 45 and 45A of the Act. For a substantial time after the proceedings were launched, they were defended. The allegations concerned arrangements and conduct extending over a period of years, and it was anticipated that the matter would be both extremely expensive and very lengthy. A contested hearing might have taken up to a year, or even more
-------------------------
But, subject to that, the public interest was obviously served by what was done in the present case, insofar as great expense to a public authority was avoided, as well as the inevitable unavailability of its human and material resources for other tasks. At the same time, considerable further cost to the community in other ways was averted, including the clogging effect of very lengthy litigation upon the Court lists.
------------------------
9. I turn to the facts of the case. What was alleged, supported by voluminous evidence, and is now admitted, is that at five primary meetings attended by representatives of the three companies, which took place between 1987 and 1990, a series of agreements were reached, as follows:
--------------------------
10. As a result, between 1987 and mid 1991, the market shares of the companies were systematically protected from the effects of competition, and in particular their ability to set prices in the relevant market, the express freight market, was freed from the constraints of competition. Not only were the arrangements and their objects and consequences in flagrant breach of the obligations imposed on the companies, in the public interest, by law; the means for effecting the intended illegal results were themselves damaging to the public interest in a healthy economy, and were in direct conflict with the fundamental purposes of the Trade Practices Act. From the point of view of those purposes, an arrangement to maintain a cartel by deliberately providing poor service in order to compel customers to turn or to return to a supplier with whom they might be dissatisfied, must be particularly pernicious.
-------------------------------
11. Arrangements so fundamentally affecting the operations of the companies could not have been reached, and maintained for such a lengthy period, without the involvement of senior management. The contraventions of the law were serious, deliberate, and systematic.
-----------------------
13. It need hardly be said that, on any view of the purposes of the law providing for penalties, very considerable penalties must be called for by a case of this kind. The law cannot tolerate systematic and deliberate defiance of rules laid down by Parliament in the interests of the community as a whole.
------------------------------
With reference to the maximum penalties referred to in the section, it should be noted that the conduct involved in the present case occurred before the current levels of penalty were fixed, and the appropriate maximum penalties for the purposes of this matter are $250,000 in respect of bodies corporate and $50,000 in respect of other persons. It should also be noted that by virtue of s. 78 the conduct in question, though attracting these penalties, is not criminal.
------------------------------
21. It was also, in my opinion, appropriate to give weight to the fact that the respondents had saved the community the burden of litigating a lengthy and expensive case by withdrawing their defences and admitting the allegations. The saving in costs alone, quite apart from the matter of the time and energies of officers of the Trade Practices Commission which can now be devoted to other tasks, was agreed to be extremely large.
--------------------------------
However, the penalties I have ordered to be paid here do not represent what I would have imposed as proper in such circumstances, since I have made substantial allowance for the admissions, both as indicative of a true resolve to comply with the law in future, and as involving a benefit to the community, belated though it was, that ought to be recognized in the fixing of penalties that are just in all the circumstances.
Court Hits Out At Freight Price
Fixing
The Age 02/01/1995
The Trade Practices Commission last night welcomed a judgment by Justice Burchett, who described the contraventions by the companies and some senior executives as ``serious, deliberate and systematic''.
--------------------------
``A serious, deliberate and systematic course of conduct contrary to the requirements of the act must generally be met by really severe penalties,'' he said.``Especially must that be so where the senior management of a large company is involved.
``Arrangements so fundamentally affecting the operations of the companies could not have been reached, and maintained for such a lengthy period, without the involvement of senior management.''
Judge Slams Role Of Senior
Executives
Australian Financial Review 02/01/1995
A FEDERAL Court judge has underlined the role played by senior executives in the "serious, deliberate and systematic" breaches of law at the core of Australia's biggest price-fixing action, the $14.2 million express freight case.
--------------------------
Mr Justice Burchett said the arrangements represented a "flagrant breach of the obligations imposed on the companies, in the public interest, by law" and "the means for effecting the intended illegal results were themselves damaging to the public interest in a healthy economy"Mr Justice Burchett described their practices as "pernicious" and "damaging to the public interest in a healthy economy".
----------------------------
Mr Justice Burchett said the arrangements represented a "flagrant breach of the obligations imposed on the companies, in the public interest, by law" and "the means for effecting the intended illegal results were themselves damaging to the public interest in a healthy economy".
HOW COMPANIES HANDLE POISONOUS
PUBLICITY
Australian Financial Review 03/06/1995
INSURANCE giant the AMP Society was slugged $50 million in compensation payments to policy-holders last month after the Trade Practices Commission said it had breached regulations
---------------------
TNT and Ansett struck the deal with the TPC, which involved an agreed fine and joint statement, to avoid a public stoush with the regulator.
------------------------
To a public relations consultant, the AMP, TNT and Ansett might know a thing or two more than Mayne Nickless about crisis management.
--------------------------
Crisis management has been a buzz word in the board rooms of corporate America for more than a decade. However, it has been slow to take off in corporate Australia.
Mayne Nickless Chief Quits
The Age
06/17/1995
Bill Bytheway has quit as managing director of Mayne Nickless only three days after the company signalled a profit downturn for the year.In a shock announcement yesterday Mayne said Mr Bytheway, 46, had resigned over differences with the board on the group's future direction.
-------------------
On Tuesday Mr Webber told the Australian Stock Exchange the company's 1995 earnings were likely to be lower, citing problems with its British armored-cars operation, lower returns from Australian transport, and warehouse commissioning costs in Europe.
----------------------
The downgrade, made after the close of trading on Tuesday, sent Mayne shares sliding, with the group's stock shedding 35 cents to $5.80 on Wednesday, and a further 17 cents on Thursday to $5.63.
-------------------------
``I don't think the TPC was a large part of it but certainly business performance, the revised profit announcement and the share price slide over a number of months were significant elements of it.
--------------------------
``I must admit it's very sad. I liked Bill a lot. He's a very genuine, honest, hardworking guy.''
THE MAYNE EVENT
THE AUSTRALIAN, Edition 0FRI 14 JUL
1995, Page 031
IT was 1991 and a group of about 20 Mayne Nickless executives had gathered in Melbourne for a top-level management meetingThe meeting, ostensibly called to see a training video, was clearly unusual, given that representatives of all the group's business units had been summoned. - - - - - - Also distinguishing the gathering that day was the presence of the Mayne Nickless group counsel, as well as the director of personnel and corporate affairs, a man, according to Mayne Nickless lore, "you would not want to cross". Years later, the subject matter of the video - trade practices law - still looms large in the corporate life of Mayne Nickless.
--------------------
His (Bytheway) departure was preceded by two other senior executives, both of whom were fined $75,000 for alleged transgressions of the Trade Practices Act. Speculation of a link between the fines levied and their subsequent decisions to leave Mayne Nickless could not be substantiated.
-------------------------
Back in 1991, as the meeting settled, the video presentation started with an on-screen introduction from Bytheway. Actors then portrayed two executives from rival companies entering into a price-fixing arrangement which subsequently came to the attention of competition regulators. Bytheway intoned that Mayne Nickless would not tolerate such behaviour and that offenders left themselves open to fines and even a jail sentence.
-------------------------
As one attendee recently recalled: "No one was in any doubt about the seriousness of the situation. Until then I believed the so-called arrangement had been condoned by senior management. Now the message clearly was, `You're on your own, Jack'. "After the meeting, though, we had a good laugh. Some of us thought, `Well, what a wank that was. It's a bit late for all that now'."Indeed it was a bit late, because the Trade Practices Commission had already started a wide-ranging investigation into allegations of anticompetitive behaviour in the multibillion-dollar express freight industry.
----------------------------
Seven senior executives were also penalised by the TPC. A change to the company's articles of association, however, created the prospect of indemnification against any personal loss. The amendment, the thrust of which contrasted sharply with the tenor of that corporate video in 1991, was voted through by shareholders at the annual meeting last November, less than a month before the TPC action was settled.
-------------------------------
Group chairman Ian Webber's explanatory letter to shareholders on December 19, after the TPC settlement, is now viewed by some of the company's institutional owners as having fallen well short of the required level of contrition and remedial action. As the representative of one major institution said: "There's no doubt Mayne did not cover itself in glory in its response to the TPC."
----------------------------
At Mayne Nickless, there was an added piquancy in that a considerable part of the evidence compiled by the TPC related to a period when Webber himself was managing director. Was Webber the most appropriate person to respond to the allegations, one institution questioned, when he was at least accountable?Webber, on behalf of the board, proceeded in his letter to shareholders to strongly defend the man who had succeeded him as managing director in October 1991.
"The claim by the TPC that he (Bytheway) played a central role in events is vigorously denied. Mr Bytheway continues to have the full support of the board," Webber wrote.
-----------------------------
But the stark reality is that since late January, the all industrials index has surged 15 per cent from 2700 to a point where it is hovering near 3100. Mayne Nickless's throttle has been in reverse for most of that period, with the share price falling 8 per cent from $6.18 on January 31 to its present level of around $5.70.On the surface, the prognosis for Mayne Nickless is not good. The choice of a new chief executive, however, presents the company with another chance to break with the past.
TPC Sets $21m Fine In
Concrete
Sydney Morning Herald 10/17/1995
The Trade Practices Commission is expected to sting building products giants Boral, CSR and Pioneer International with a record $21 million fine for price-fixing in the pre-mix concrete market.
-----------------------------------
Now, after about two years of investigations, the TPC and the three companies have reached an agreement. The companies have agreed to pay a $21 million fine, by far the largest ever penalty for contravening the Trade Practices Act.
-----------------------------------
Whereas the freight case was contested in a bitter legal battle, Boral, CSR and Pioneer are understood to have fully cooperated with the Commission in its investigations.
TPC Has Changed The Culture -
Fels
The Age 10/26/1995
The anti-competitive behavior of the early '70s had been largely eradicated from Australian business, the chairman of the Trade Practices Commission, Professor Allan Fels, said yesterday.Professor Fels, speaking after the tabling of the commission's final annual report, said it was ``foolish'' to believe all anti-competitive behavior had been eliminated, but he said breaches had become the exception rather than the rule.
-------------------------------
In the report, the commission said it regarded its success in extracting penalties from TNT Australia, Ansett Transport Industries (Operations) and Mayne Nickless for price-fixing in the express-freight market as its most significant achievement in 1994-95.
Fels Warns Of Jail Terms
The Age 12/05/1995
The chairman of the Australian Competition and Consumer Commission, Professor Allan Fels, warned yesterday that executives could face jail terms if they continued to collude with their competitors.Speaking after a court levied record price-fixing penalties totalling more than $20 million on CSR, Boral and Pioneer, Professor Fels said: ``Jail sentences have to be on the agenda if the fines aren't working. They already have them (fines) in the US and Canada to deter executives from getting into price fixing . . . they are worthy of consideration.''
-------------------------
``There was a blatant breach of the law, something like 50 meetings were held, numerous telephone calls were made and these companies have been fined for exactly the same thing in the past and they should have known better,'' Professor Fels said.``It is extremely difficult to exactly assess how much this cartel has cost both the public and private sector. For big business, it's inexcusable, this kind of behavior.''
------------------------------------
The incidence of ``whistle-blowers'' in industry was on the rise, he said.The ACCC alleged the regional executives conspired to fix the base price of pre-mix concrete at more than 50 regular meetings in Queensland clubs and pubs and through telephone conversations.
They agreed to maintain the companies' market shares at pre-determined levels and agreed not to compete for specific projects and orders.
Watchdog Strains At The
Leash
Australian Financial Review 12/05/1995
THE record fine imposed by the Australian Competition and Consumer Commission on three concrete companies involved in a price-fixing cartel yesterday is another sign of the watchdog's vast appetite for tougher and more vigilant regulation.
--------------------------------
Just days after the ACCC was officially launched on November 6, it was already moving in on an area new to trade practices scrutiny - the medical profession.The ACCC hit private health fund giant, MBF, on November 10 after the fund sent "false and misleading" letters to customers in NSW, South Australia and Queensland about the upgrading to its 100 per cent cover.
At the time, deputy chairman of the ACCC, Mr Allan Asher said the health sector would be "a major focus of the new ACCC's priorities" and warned that transgressions would be "acted upon swiftly".
------------------------------------
There was also a big victory in September when two members of the Leighton Group - Builders Multiplex Constructions and Leighton Contractors - were fined maximum penalties amounting to $1 million by the Federal Court for their involvement in collusive tendering.
Freight cartel claims revived
THE AUSTRALIAN, Edition 0WED 10 APR 1996, Page 027
MAYNE Nickless Ltd, TNT and Ansett Transport Industries Ltd are being sued by a Sydneybased freight company Discount Freight Express for more than $100 million damages and costs, arising from an alleged pricefixing cartel over which the freight giants were convicted in 1994.The case comes before the Federal Court in Sydney today, when TNT and Mayne Nickless are expected to move for it to be struck out.
-------------------------
DFE's damages action is spearheaded by Mr Greg Poche, the company's founder and managing director, whose 1990 complaint to the Trade Practices Commission (which has since been subsumed into the Australian Competition and Consumer Commission) about an alleged price-fixing cartel in the express freight industry resulted in the successful prosecution of TNT, Mayne Nickless and ATI.
------------------------
Mr Poche said DFE's civil action, which also names another TNT associate, J McPhee & Son, had been suspended during the ACCC action.
---------------------------
In its preliminary statement, DFE alleges Mayne Nickless, TNT and the associates effectively tried to drive it out of business by fixing prices in order to hinder or prevent competition in the domestic express freight market."The defendants took advantage of their market power for the purpose of . . .
eliminating or substantially damaging the plaintiff (and) . . . deterring or preventing the plaintiff from engaging in competitive conduct in the market for express freight transportation services," the statement says.
DFE is claiming damages, account of profits, interest, costs and any further orders the court may think fit.
--------------------------
"But it's very, very major and covers a 20-year period it will be in excess of $100 million," he said."Our claim is that what the companies were found guilty of - running a cartel allowed them to mount anticompetitive practices against us over a long period of time."
TPC Looks Again At Mayne
Sydney Morning Herald 01/04/1995
The Trade Practices Commission (TPC) has reopened its inquiries into alleged price-fixing agreements in the security services industry following allegations that Mayne Nickless participated in collusive bidding for security contracts in Queensland. - - - - - allegations that price rigging extended to tendering for security contracts. The allegations were revealed on Monday night's 7.30 Report on the ABC.
Mayne Nickless Will Wait For TPC
Claim
Australian Financial Review 01/04/1995
The commission has alleged that the transport giant's security operation misled its customers by undertaking to deliver services it knew it could not provide.In a statement of claim filed in the Queensland Federal Court on December 16, the commission alleged that between 1986 and 1993 Mayne's security patrol operation, Metropolitan Security Services, had failed to provide promised or contracted patrol services.
------------------------
The new allegations - which were first aired after the Christmas break and were repeated on national television on Monday night - have had little impact on Mayne's share price.
----------------------------
However, the commission had decided to commence proceedings because the alleged false and misleading conduct had potentially affected a large number of consumers, none of whom might have the capacity or inclination to pursue litigation individually.
Court orders MSS to compensate
customers
THE WEEKEND AUSTRALIAN, Edition 0SAT
01 JUL 1995,
EMBATTLED transport group Mayne Nickless Ltd will have to provide compensation to some customers of its MSS Security Services arm after admitting it did not always provide contracted servicesThe Trade Practices Commission took MSS to court alleging misleading and deceptive conduct over allegations the company misled some of its Brisbane customers over the number of inspections its mobile security patrols would provide.
Some customers who paid MSS to check their premises three times a night complained they had not been visited at all.
Mayne yesterday reached an agreement with the TPC after an internal review found service in some cases had fallen short of what MSS had undertaken to provide.
No fines were imposed but MSS is required to contact anyone who may have been affected by the lapses, which occurred between July 1990 and mid-1994, offering credit to current customers and free service or money in lieu to former customers.
A Federal Court injunction restraining MSS from making false or misleading representations will be in place for two years and the company will also have to implement a corporate compliance program.
MSS will pay the TPC's legal costs of $30,000.
ACCC Wins Case Against M
Nickless
Australian Financial Review 02/26/1996
MAYNE Nickless Ltd - trading as MSS Alarm Services - has admitted that it misrepresented the reliability of a personal alarm and monitoring service it provides to elderly and infirm people in Queensland and northern NSW.The Australian Competition & Consumer Commission took civil legal action against Mayne Nickless for marketing its Neva Alone device - a small security pendant that enabled the wearer to raise the alarm in an emergency - as an "around the clock" personal emergency call system that was continuously monitored.
Based on the evidence of a former senior operator in the control room, the ACCC alleged that MSS had misrepresented the Neva Alone and some other general alarm services, because the monitoring equipment did not operate effectively on all occasions.
The ACCC also alleged that the customer database, which contained pre-identified contacts for distress callers, was not kept up-to-date and the company had fallen behind on its six-monthly maintenance schedule.
-----------------------------------
MSS has also agreed to:* Write to its customers advising them of the ACCC's views about interruptions to the monitoring service.* Provide a compensation package to all existing 144 Neva Alone customers in Queensland, consisting of six months' free service or the cash equivalent.
* Appoint an independent expert to review and report on the current alarm monitoring system.
------------------------------------
In a separate action brought by the TPC, a consent injunction was granted against the company last July after allegations that MSS had misled customers about the number of inspections security patrols would make of premises in the Brisbane area in the period 1990-94.The ACCC chairman, Professor Allan Fels, said in a statement that the commission's concerns in the latest case were heightened by the fact that MSS was dealing with vulnerable people who might be dependent on the efficiency and reliability of the emergency service.
Injunctions add to Mayne Nickless woes
Australian Financial Review 05 Sep 1996
Australian transport giant Mayne Nickless has admitted it misled customers over its air freight operations, following an extensive Australian Competition and Consumer Commission investigation. Two consent injunctions - restraining Mayne Nickless from engaging in misleading or deceptive conduct - - -
Major Transporter misled clients on air
parcels claims
Courier Mail 6 Sept 1996
Australia's consumer watchdog hid an altimeter in a parcel to prove a major transport firm sent goods by road when they were supposed to be air freighted.
---------------------
The Federal Court yesterday granted two consent injunctions against Mayne Nickless and ordered the company to pay the ACCC's legal and investigation costs of $20,000.
Fels brings TNT air freight back to
earth
Courier Mail Oct 1996
Reports similar case to above against TNT
AMA, health giant facing fines
The Age 7/27/2000
The Western Australian branch of the Australian Medical Association and health care giant Mayne Nickless are facing fines of up to $10million over allegations of illegal price fixing at a Perth hospital.The Australian Competition and Consumer Commission has started proceedings in the Federal Court against Mayne Nickless and the AMA over allegations that they had struck a deal that fixed the price for visiting doctors to provide services to public patients.
----------------------------------
The allegations relate to the Joondalup Health Campus, run by the Mayne Nickless subsidiary Health Care of Australia on behalf of the Western Australian Government, and the visiting medical practitioners who work there.
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"When the association became aware there may be a breach of the new competition laws, it sought legal advice and, based on that advice, it advised HCoA it was withdrawing from the agreement."It also advised the Health Department and Minister for Health. The AMA then formally contacted the ACCC."
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History
This page created November 2001 by
Michael
Wynne
Format changed Nov 2005
