Economic Analysis of Cartels and Their Impact on an Oligopoly Market Structure

Topics: Cartel, Monopoly / Pages: 9 (2153 words) / Published: Sep 29th, 2008
“To catch a cartel”

Author: Elisabeth Sexton.
Date: 21 March 2008
Source: The Sydney Morning Herald

The competition watchdog 's tactic of offering corporate whistleblowers legal immunity to expose cartels is under threat as the government moves to make price-fixing a criminal offence. Elisabeth Sexton reports.
Graeme Samuel has a clear recollection of the events of November 22, 2004. In the morning, the chairman of the Australian Competition and Consumer Commission received the phone call every regulator longs for. On the other end of the line was a partner of law firm Allens Arthur Robinson, Patrick Ryan. He was acting for packaging giant Amcor and wanted a meeting that day.
"It was fairly dramatic," Samuel says, recalling the sight of three Allens partners accompanying Amcor 's chairman, Chris Roberts, and then managing director, Russell Jones, into one of the ACCC 's conference room in the afternoon. "None of us had any idea at the time what it was about."
Amcor wanted to strike a deal: immunity from prosecution in return for full and frank disclosure about a price-fixing cartel in the cardboard-box market.
"It suddenly hit us," Samuel says. "It was obviously a very serious matter, in terms of both the size of the alleged cartel and the people involved."
The drama ended in the Federal Court in November last year when Amcor 's co-conspirator, Visy Industries, admitted its participation. Justice Peter Heerey fined Visy $36 million for 37 contraventions of the Trade Practices Act.
The high profile of Visy 's owner, the billionaire Richard Pratt, ensured intense media interest in what the judge called "by far the most serious cartel case to come before the court in the 30-plus years in which price fixing has been prohibited by statute".
True to the deal Samuel struck soon after the meeting with Roberts and Jones, the ACCC did not prosecute Amcor.
It was a triumph, and a highly publicised one, for the whistleblower immunity policy adopted



References: – Bajada, C. (eds.) 2007, Economic Principles 2nd ed., McGraw-Hill Irwin, Australia. – Parkin, M (eds.) 1996, Microeconomics 2nd ed., Addison-Wesley Publishing, America. – Quayle, M (eds.) 1994, Microeconomics: A contemporary introduction, Thomson Nelson Publishing, America. – O’Sullivan, M 2008, ‘Another chief quits at Amcor’, The Age, 17 March www.theage.com.au, last accessed: 30th April. – Sexton, E 2008, ‘To catch a cartel’, Sydney Morning Herald, 21 March, http://business.smh.com.au/to-catch-a-cartel/20080320-20r0.html, last accessed: 29th April.

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