Ideas@TheCentre
Antitrust Vs FuelWatch
In December last year, the federal government’s FuelWatch legislation was defeated in the Senate. And in May 2007, the Full Federal Court handed down the decision of ACCC v Leahy Petroleum Pty Ltd [2007] FCA 794. What could these two developments possibly have in common?
The short answer is that they illustrate some of the contradictions in the very concept of antitrust or competition law.
For the long answer, read on.
In ACCC v Leahy, the Federal Court, after four years of litigation by the Australian Competition and Consumer Commission (ACCC) at great financial cost to all parties concerned, dismissed price fixing charges against a group of petrol stations in Geelong. The ACCC had alleged that these petrol stations had engaged in price fixing through telephone calls discussing the amount and timing of petrol price rises.
The Federal Court dismissed the case because the oral evidence of witnesses tendered by the ACCC merely established that there had been discussions about prices between the petrol station owners. The ACCC was, however, unable to establish that there had been any commitment on the part of these owners to act in any particular way as a result of such discussions.
Indeed, the Federal Court noted other evidence that contradicted any such interpretation – for instance, sustained price rises were routinely made even when there were no phone calls and station owners continued to make such calls even after it was revealed that the ACCC was investigating these practices!
So, all that the ACCC had been able to establish was the exchange of pricing information between petrol station owners.
Fast forward to December 2008 when the government’s FuelWatch bill was defeated in the Senate. The government had been selling this bill as a win for the consumer, yet the scheme would have involved requiring petrol service stations to publish their prices on a government website once a day, and keep their price at that level for the next 24 hours.
In other words, a scheme trumpeted as a pro-consumer policy would in effect have involved imposing the same sort of ‘information exchange’ that the ACCC spent four years prosecuting, except it would have entailed hooking up petrol stations throughout Australia and not just Geelong and forcing these stations not to compete for a 24-hour period.
But wait – there’s more.
With no apparent sense of irony, the ACCC Petrol Commissioner had, during the FuelWatch debate, expressed reservations about a commercial website called Informed Sources that was already providing a similar service on the basis that it could facilitate ‘tacit collusion.’
The joys of government – heads I win, tails you lose.
