Wednesday, 9 November 2011

The Untold Story: The ACCC’s role in the Waterfront Dispute - Part 1 - Beginnings

Part 1: Beginnings


The Waterfront Dispute which erupted in 1998 has been the subject of a book, Waterfront: The Battle that Changed Australia by Helen Trinca and Anne Davies and a mini-series, Bastard Boys. Both the book and the mini-series dealt in considerable detail with the respective roles of the MUA, the ACTU, Patrick Stevedores and the Howard Government in the Waterfront Dispute. However, the role of another significant actor in these events has not been dealt with in any detailed manner – namely, the involvement of the Australian Competition and Consumer Commission (ACCC).

The ACCC played a much more active and important role in the Waterfront Dispute than most people know. The ACCC was heavily involved in the Waterfront Dispute from the very beginning. In this series of articles, I will be discussing the role of the ACCC in the Waterfront Dispute based on my own first hand experience as the ACCC officer in charge of the ACCC’s investigation and litigation on a day to day basis.

I will also be discussing some of the more misguided if not downright foolhardy ideas which the ACCC both contemplated and ended up pursuing during its waterfront investigations. For example, I will outline the foolhardy (and fortunately aborted) plan to drop a number of ACCC officers, including myself, onto the Australian Endeavour via helicopter so that the ACCC could claim that it had safeguarded the passage of the vessel into Port Botany. I will also describe the misguided plan which the ACCC ultimately did pursue – namely, to “embed” two ACCC officers behind the picket lines at Botany Bay at the very height of the dispute.

Setting up the Waterfront Investigation Team

In late 1997, it was apparent that trouble was brewing on the Australian waterfront. News stories were appearing regularly in the newspapers about alleged rorts by the Maritime Union of Australia (MUA). Peter Reith, the then Minister for Workplace Relations, was making inflammatory speeches about the union movement, with particular emphasis on the alleged rorts of the MUA. It was against this background of impending trouble on the waterfront that then CEO of the ACCC decided to establish the ACCC’s own waterfront investigation team. The CEO knew there was going to be trouble and he wanted the ACCC to be prepared.

Unfortunately, it was not very easy for the then CEO find an ACCC staff member to lead this new team. The first two candidates he asked to take on the role turned down the assignment, so the CEO was forced to look for somebody else who would be willing to do the work.

The CEO approached me and my team with a proposal that we become the new Waterfront Investigation Team. This was a surprising decision given that, at that time, my team was in fact the Sydney Mergers and Assets Sales Branch – we were not even part of the enforcement branch.

Our proposed brief was to investigate any conduct in breach of the TPA by any of the major participants on the waterfront, including the various unions, stevedores, towage companies and port authorities.

After considering the CEO’s request and discussing it with my team, we agreed to accept the assignment to head up the new ACCC Waterfront investigation team. At the initial stages, my team was not required to work on waterfront matters exclusively – rather we continued to operate as the Sydney Mergers and Asset Sales Branch whilst also conducting our waterfront investigations. Our part time waterfront investigation role ended in April 1998 when Chris Corrigan sacked his entire MUA workforce.

The main reasons why I believe the ACCC’s Sydney Mergers and Asset Sales team were well placed to head up the ACCC’s waterfront investigations was because of our particular skill set.

First, it became apparent that unions often engaged in quick, strategic and opportunistic boycotts of various businesses to achieve their goals. Accordingly, any investigation team charged with investigating such conduct would have to be able to prepare a case very rapidly. Indeed, in most instances, the ACCC would be seeking urgent interlocutory injunctions to try to stop a particular union from engaging in such conduct in the short term. The ACCC’s mergers branch had more experience than the enforcement branch in terms of being able to both conduct investigations rapidly and to prepare litigation in very short time frames. The mergers branch also had more experience than enforcement in preparing urgent interlocutory proceedings.

Second, it was likely that any illegal conduct by non-union industry players, such as the stevedoring companies, towage operators or port authorities, would raise issues under the competition provisions of the TPA. Therefore, the team tasked with investigating such conduct needed to have the skills to be able to analyse and define relevant markets and obtain market evidence.

It became apparent to the Waterfront Team almost immediately that the entire competitive structure of the waterfront had major problems. The ports, which were generally owned and operated by state governments, were in most cases natural monopolies. Add to this the fact that there were only two major stevedores (Patrick Stevedores and P&O), a monopoly supplier of towage services in most ports (Adsteam), a monopoly supplier of labour (MUA) and state sanctioned cartels for liner shipping companies (Part X of the TPA), and it was quite clear to us that the whole industry needed a complete overhaul.

Almost immediately after my team became the Waterfront Investigation Team, it was inundated with complaints about the MUA. The vast majority of these complaints were given to the ACCC by representatives of Peter Reith’s Department – the Department of Workplace Relations. Later on in our role we received complaints about other industry players, such as port corporations and the two major stevedores, which we also investigated.

The complaints we received from Workplace Relations about the MUA, related to such varied issues as:
  • the MUA’s conduct in relation to off shore oil rigs;
  • the MUA’s alleged actions in seeking to prevent the granting of coastal vessel permits;
  • the conduct of cruise line baggage handlers, and
  • concerns about the way that seaman’s engagement system operated. 
The main provisions that we had reference to in assessing these complaints were sections 45D and 45DB, which provided:

Section 45D
(1) In the circumstances specified in subsection (3) or (4), a person must not, in concert with a second person, engage in conduct:
(a) that hinders or prevents:
(i) a third person supplying goods or services to a fourth person (who is not an employer of the first person or the second person); or
(ii) a third person acquiring goods or services from a fourth person (who is not an employer of the first person or the second person); and
(b) that is engaged in for the purpose, and would have or be likely to have the effect, of causing substantial loss or damage to the business of the fourth person.
Section 45DB
(1) A person must not, in concert with another person, engage in conduct for the purpose, and having or likely to have the effect, of preventing or substantially hindering a third person (who is not an employer of the first person) from engaging in trade or commerce involving the movement of goods between Australia and places outside Australia.
Section 45D was the traditional provision used to combat secondary boycotts. This section was designed to prevent unions from engaging in sympathy strikes – ie one union taking action against a business to assist another union in an employment related dispute with that business.

We quickly discovered that section 45D was very complicated and very difficult to apply in practice. Accordingly, we decided to focus our attention on section 45DB. This provision only required two persons to act in concert for the purpose or with the effect of preventing or hindering a third person from engaging in international trade. Therefore, any act by two persons to prevent the loading or unloading of a vessel which had come from overseas or was headed overseas would constitute a breach of section 45DB, subject to the ACCC being able to prove purpose or effect.

Most of the complaints which we received from Workplace Relations did not raise any issues under the TPA. Indeed, the issues were simply industrial disputes between the MUA and their employers which involved no boycotts at all.

The ACCC also declined to pursue some of the other matters referred to it by Workplace Relations because we believed that there were strong public interest arguments in support of the MUA’s conduct. For example, the MUA had been involved in a long running campaign against “flag of convenience” vessels. The MUA would often boycott these vessels because the owners were paying their employees very low wages and requiring them to work in appalling conditions.

While the MUA’s conduct against such vessels (which usually involved picketing the vessel so that it was unable to sail until the shipowner agreed to pay their workers higher wages, including back wages) was likely to constitute a breach of section 45DB of the TPA, we were very reluctant to take enforcement action. The ACCC did not want to be effectively protecting businesses which appeared to be engaging in exploitative labour practices in relation to workers from developing countries.

Unfortunately, Workplace Relations did not take very kindly to our decision to decline to pursue a large number of their complaints.

However, amongst all the complaints received by the ACCC from various sources, there was one particular complaint which stood out from all the rest. This conduct appeared to the team to constitute not only a clear breach of the TPA but highly reprehensible conduct – namely, the practice of demanding money from ship owners for hold cleaning. Accordingly, the Waterfront Team decided to make the practice of hold cleaning the focus of its first major waterfront investigation.

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