Qantas fined $20 million

The Australian Competition and Consumer Commission (ACCC) took Qantas to court, alleging Qantas had fixed fuel surcharges on air cargo with other international airlines between 2002 and early 2006. The action has now resulted in a AUD 20 million fine, on top of an earlier  USD 300 million fine in the US for price fixing.
The Federal Court in Sydney has ordered Qantas Airways Limited to pay $20 million in pecuniary penalties for breaching the price fixing provisions of the Trade Practices Act 1974.
The Australian Competition and Consumer Commission instituted proceedings on 28 October 2008 alleging Qantas reached an understanding with other international airlines in relation to the imposition of fuel surcharges on air cargo across its global networks between 2002 and early 2006.
Qantas admitted to making and giving effect to the understanding, repeatedly exchanging assurances amongst airlines in the implementation of fuel surcharge increases and reaching local agreements in certain Asian countries collectively.
"Cartels – particularly those that are engaged in by large businesses with broad application over a period of time – have a significant effect on consumers. They are an unseen fraud on the community that must be uncovered and punished," Australian Competition and Consumer Commission Chairman, Mr Graeme Samuel said.
This penalty reflects the serious nature of the cartel contraventions and Qantas’ large share of the Australian segment of the market. However, they also take into account the high cooperation Qantas gave in the course of the ACCC’s investigation. Qantas made extensive admissions and joined with the ACCC in making recommendations to the court as to the penalty and other orders which might be made.
"Having become aware of the conduct, Qantas undertook an exhaustive investigation. It gave the ACCC relevant documents and made staff available for interview. Qantas has promised to provide ongoing assistance in the ACCC’s investigations in relation to the conduct of other airlines," Mr Samuel said.
Justice Lindgren also made orders restraining Qantas from engaging in similar conduct for a period of three years and to pay $200,000 contribution towards the ACCC’s costs.
Justice Lindgren indicated he would publish his reasons in January 2009.

Stevedores warned of duopoly

The Port of Melbourne.

The Port of Melbourne…warned.

The Australian Competition and Consumer Commission (ACCC) has warned a lack of competition in the stevedoring sector would get in the way of future growth.

According to the ACCC’s latest annual monitoring report of container stevedoring, throughput volumes recorded an increase of 10.7 per cent in 2007-08, with productivity levels jumping almost 47 per cent over the last decade.

ACCC chairman Graeme Samuel said the report showed decade-old waterfront reforms have significantly boosted the stevedoring sector, but a lack of competition in the industry was worrying. 

“During this time, demand for stevedoring services has doubled. The cost of using stevedoring services has fallen in real terms.

“In turn, the stevedoring businesses have become more productive and profitable, even during a period when significant expenditure on assets was made,” Mr Samuel said.

“However, as the ACCC has noted in previous reports, questions remain about the extent to which the stevedores actually compete to win each other’s business. This is important when we look forward ten years and consider the high rates of demand that are forecast to continue.”

Mr Samuel said while the ports of Sydney and Brisbane were well progressed in testing the market for new competitors, the Port of Melbourne was lagging behind with a third container terminal not set to open until 2017.

He said the delayed development at Australia’s largest port would make its two incumbents, Patrick and DP World, settle for the convenience of the current duopoly.

“Any unnecessary delays in establishing additional container terminal facilities could result in lost opportunities for greater competition.

“More intense levels of competition can not only improve efficiency but may also result in a greater share of the benefits being passed on to users and the wider community that reply on the movement of goods into and out of Australian ports,” he said.

Postage rates set to rise

The basic postage rate is set to rise from 50 cents to 55 cents as the Australian Competition and Consumer Commission (ACCC) has upheld Australia Post’s proposal.

The ACCC has issued its final decision to concede Australia Post’s proposal to lift letter prices, including large ordinary letters, and small and large PreSort Bulk Mail.

“The ACCC has decided not to object to Australia Post’s proposal because the proposed price increases do not involve Australia Post over-recovering the costs of providing these letter services,” ACCC chairman Graeme Samuel said.

“The ACCC did not identify a concern that Australia Post’s current proposal did not provide sufficient certainty for some customers. Therefore, in its decision, the ACCC has established a framework for future price notifications that will encourage Australia Post to continue to reduce costs, improve productivity, and provide more certainty for Australia Post’s customers.”

Following the decision, Australia Post needs to give written notice of the postage rate increase to the communications minister, who has the power to disapprove proposals to vary the rate within 30 days after receiving the notice.

This February, Australia Post lodged a draft notification, seeking to lift the letter rates amid the growing operational costs.

The company’s group manager letter Allan Robinson has previously said due to rising fuel, wages and other transportation costs, domestic reserved letters profitability dropped by 18 per cent last year, with a loss around $12 million expected this year.

“The number of delivery addresses for home and businesses has increased by over 800,000 since the last price rise in 2003,’ Mr Robinson said.

“The task has got bigger, the costs have increased, but growth in the letters area has only been modest.

“Even with the proposed 55 cent stamp rates…it is, and still will be, the third lowest basic postage rate in the OECD.”

Australia Post proposes to increase postal prices with effect from 15 September 2008. 

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