A glimpse behind the figleaf
A good deal of the decisions that most affect our lives are made in secretive and confidential meetings by senior corporate executives — those with the power to invest, speculate, close down factories and manipulate markets. Very rarely does the ordinary person ever get to overhear the goings-on at that level. That's why the evidence released last week regarding the operation of an express-freight rigging cartel between TNT Ltd and Ansett Transport Industries Ltd is so welcome.
The Trades Practices Commission case against TNT and Ansett was so tight that, after a stalling operation in the Federal Court, the two transport giants decided to call it quits: they copped $5 million in fines rather than face the likelihood of a $17 million bill. (A third defendant, Mayne Nickless, is continuing to fight the case.) The players in the game had a five-point agreement:
- They would not poach each other's customers. (An over-zealous TNT executive who lifted the Castrol account from Ansett subsidiary Wards Express was told to "get back onto fucking Castrol and get out of there".)
- If a customer switched to the "wrong company" compensation would be paid or attempts made to drive the customer back into the right camp by lifting rates or providing poor service.
- Accounts would be kept of customers lost and gained and compensation paid.
- Firms would not offer quotes to other firms' customers over the phone.
- There was a uniform price for air satchels.
The establishment media is trumpeting the decision as a victory for "competition policy". Besides the $5 million penalty, Judge Burchett issued an order that TNT and Ansett not enter into any cartel arrangements without the approval of the TPC until the end of 1998.
But even the TPC's counsel Charles Sweeney regarded the $5 million penalty as a figure "considerably discounted" for TNT and Ansett's "good behaviour" in reaching a deal with the regulator. That is, over the life of the scam, the loss to customers (and the gain to TNT and Ansett's profit margins) would have been of a much higher order.
The TNT-Ansett deal was a particularly crude cartel. That it could flourish for so long is testimony to the historical toothlessness of Australian corporate regulators.
More importantly, "competition policy" goes right against the only genuine way of reducing Australia's high transport and freight costs — through sharply boosted investment in the rail system. When the toll of environmental damage, road upkeep and traffic accidents are incorporated into the cost of road transport, transport by rail (even on the present ramshackle system) comes out ahead.
What's more, "competition policy" only serves to entrench the present freight system based on the exploited sub-contractor who is driving up to 80 hours-a-week to keep the wolf from the door.
The best deal to customers and transport workers would come from modernising and upgrading rail and nationalising the corporate road transport giants as part of a national transport plan. By contrast, trying to impose "competitiveness" on the TNTs and Ansetts of this world is like fighting bushfires with the garden hose.