Price fixers get it easier: New study

Small business concerns that too little is being done about cartel and price fixing behaviour in Australia will be fuelled by a new report showing those guilty of cartel behaviour are being fined less than they were in the previous decade.

Caron Beaton-Wells, a director of studies at the law school at the University of Melbourne, reports that the average penalty faced by companies that participated in cartels was $1.97 million.

The median penalty for price fixing for the last seven years was $52,543. Between 1993 and 1999, the medium penalty was $72,196.

Billionaire Richard Pratt and his company Visy has been fined a record $36 million for cartel participation. But Beaton-Wells says this does not suggest attitudes in Australia are changing fast enough.

She says it has been four and a half years since the Dawson inquiry, which recommended criminal prosecution. But every time that this comes up, the Liberal Government shies away from it. “They have a moral or ideological problem,” she says.

She says it is not just important to introduce criminal prosecution but to ensure the ACCC has enough power and resources to investigate. “That means they get electronic surveillance powers and telephone tapping technology. Then you need to get 12 lay people to see this type of behaviour as criminal. On top of that you need a judge who can exercise the sentencing options available, and judges have trouble sentencing business people for this when otherwise they are outstanding members of the community.”

Beaton-Wells says it is hard to work out how prevalent cartel behaviour is in Australia. “It is largely anecdotal because the behaviour is underground, but the ACCC reports that since establishing new policy it has about 30-40 cases under review at any one time, which suggests it is a big problem for an economy of that size.

Industries in Australia are dominated by two or three players and that is conducive to collusion as it is easier to get together to reach arrangements on prices and market share.

She says there are particular problems in the following industries: pharmaceutical, resourcing, transport and electrical equipment. Many of the cartels are now globally organised,” she says.