Wednesday, 14 December 2011

The Untold Story: The ACCC’s role in the Waterfront Dispute - Part 10 - Rule of law...going, going gone


Part 10 – Rule of law…going, going, gone

ACTU defiant
Towards the end of April 1998, Judge Barry Beach of the Victorian Supreme Court granted Patrick a range of injunctions preventing the continuation of the boycotts at its Melbourne container facilities. 

There was little doubt when these injunctions were made that they were probably too broad to be enforceable. Effectively, Justice Beach ordered that no protestors were to come within 200 metres of East Swanson and Webb Docks.  The injunctions applied to “anybody” protesting at Patrick’s facilities - they were not limited to either MUA members or even to an identifiable group of individuals. Furthermore, the protestors were not allowed to take photos of people behind the picket lines, which obviously caused considerable problems for the media.

There was a strong expectation that Justice Beach’s injunctions would be overturned on appeal. However, that would take time. It also became apparent to us that the MUA could not afford to call off the boycotts because that would have given the non-union workers an opportunity to get on the wharfs to show what they could do. Accordingly, the MUA simply decided to ignore the injunctions. 

In a remarkably irresponsible act, the ACTU and its main spokesperson in relation to the Waterfront dispute, Mr Greg Combet announced publicly that the ACTU would also defy Justice Beach’s orders and continue with the boycotts in Melbourne.  The ACTU encouraged its union membership to do the same and defy Justice Beach’s injunctions.

In a further act of industrial irresponsibility the ACTU publicly gave formal approval to national industrial action in support of the MUA.[1]

The ACTU and Combet did not seem to care that by blatantly ignoring the Court’s orders, and encouraging others to do the same, they were committing a clear and very serious contempt of court.  

The actions of the ACTU and Combet marked a significant deterioration in the dispute.  The ACCC had understood up until that time that the parties to the dispute would obey court orders.  Even though most of the parties appeared to be ignoring almost every law which applied to them, such as the TPA, the Workplace Relations Act and the Corporations Law, we all believed that the parties would draw the line at ignoring court orders.  However, the statements and actions of the MUA, the ACTU and Combet in relation to Justice Beach’s orders signalled to us that even court orders were going to be ignored by the parties if they did not like the consequences of complying with those orders.   

I think it is fair to say that the rule of law had been well and truly abandoned by this stage in the dispute.  Unfortunately, worse was to come!

ICFTU acts legally
One should compare the actions of the ACTU, in publicly stating that it was going to engage in contempt of court, to the actions of its international counterpart, the International Confederation of Free Trade Unions (ICFTU).

By way of background, the ICFTU is an international confederation of trade unions based in Belgium.  At the time it represented 206 different local unions around the world, with approximately 125 million members.

The ICFTU announced in late April 1998 that it had written to the Prime Minister Mr Howard to advise him that it would be organising a range of union actions in support of the MUA.[2] However, in contrast to the actions of the ACTU, the ICFTU was not proposing to engage in, or seek to facilitate, illegal boycotts. Rather the ICFTU announced that it was proposing to engage in a series of entirely lawful actions to place pressure on the Howard Government and Patrick to try to facilitate a resolution of the dispute.

For example, the ICFTU announced that it was proposing to mount a legal challenge against the Australian Government through the International Labour Organisation for alleged breaches of the freedom of association laws. It also said that it would be contacting institutional investors in Patrick and its parent company Lang Corporation to try to get these institutional investors to put pressure on the companies to change their approach to dealing with the MUA.

At the time, I was very impressed at the way the ICFTU had decided to approach the issues. It had decided to focus its efforts on legal means of pressuring Patrick and the Howard Government to fix the dispute rather than to promote illegal conduct, including engaging in conduct which would constitute a contempt of court. It was unfortunate that both the MUA and ACTU did not decide to adopt a similar approach to the ICFTU. Indeed, the approaches which the ICFTU decided to take were clearly available to the ACTU.

Criticisms of ACCC
At this time, the ACCC was being criticised relentlessly by the then Labor opposition. Professor Fels was being criticised by a number of Labour politicians for even threatening to take legal action against the MUA. The main critics of Professor Fels were Kim Beasley, the then leader of the Opposition and Lindsay Tanner, who was at that time the Shadow Minister for Transport.   The general line which the Labor Party took in its criticism of Professor Fels was that he was being partisan in threatening to pursue the MUA and not Patrick and other businesses involved in the Waterfront.

In actual fact, the Labor opposition was trying to pressure the ACCC into not intervening at all.  Ironically, I am fairly confident that the Labor opposition would have been up in arms if they had obtained any evidence that the Howard Government had been trying to pressure the ACCC into intervening in the dispute against the MUA.

In early May 1998, Professor Fels decided to get on the front foot in explaining the ACCC’s approach to the dispute. In a lengthy article in The Age entitled “Watchdog and the Waterfront”, Professor Fels made the following comments:[3]

What is the role of the Australian Competition and Consumer Commission in the waterfront dispute? Is it taking sides? No. It is just doing the job the Federal Government gave it to do…

The Parliament made the commission responsible for upholding the law. It also decreed that the commission must act impartially, independently and without fear or favour.

The employers – Patrick, PCS and P&O – and the Maritime Union of Australia have engaged in conduct which the commission is investigating for possible breaches of the act.

The commission is not taking sides. Its role is simply to ensure that no one breaks the law. If it turned a blind eye to breaches of the law (as some suggest would be appropriate in this case), its hard won credibility and integrity across the board would suffer.

The commission’s job is to ensure there are no breaches of the law by anyone – although, interestingly, it is nearly always portrayed by affected parties as taking sides when it intervenes in the public interest and this case has been no exception.

The commission has tried to be even-handed when applying the law.

It is investigating: the lease arrangements between Patrick and the National Farmers Federation owned by PCS Stevedoring at Webb Dock; possible anti-competitive arrangements which came to light in the OOCL litigation (an investigation that has accelerated now that Supreme Court documents are available); and allegations of (a) “no-poaching of customers” agreement during the dispute between Patrick and P&O.

These investigations have received less publicity than the labour-market investigations partly because the MUA (acting within its rights) has released most of the correspondence about itself, whereas the businesses involved have not.

On the labour market side, the commission has been investigating: alleged MUA collusion in international boycotts of Australian goods and services; alleged refusal by tugboat employees to cooperate in the berthing of ships at Patrick terminals; alleged MUA boycotts in relation to hold–cleaning practices; and the general picketing activities, insofar as they go beyond being peaceful (although there are already injunctions and other orders imposed by courts under other laws in relation to these). 

The commission has been concerned to play a difficult situation with a straight bat.

It is following standard and proper processes, despite allegations by the MUA of commission harassment. It is customary, when it learns of behaviour that would breach the Trade Practices Act, to warn participants in the hope of stopping the behaviour.

The MUA announced on television, radio and newspapers that efforts would be made to block the loading and unloading of ships at Patrick terminals. The commission sent the MUA a standard warning letter and telephoned the MUA secretary to tell him that the letter had been sent.

It is regrettable that the effect of the MUA comments is simply to discredit an independent agency doing its job properly.

Should the commission exercise its discretion to apply the law leniently because unions are involved? There are no signs the Parliament intended this. If anyone thinks the law is undesirable, they should get it changed by Parliament rather than expect the regulator to nullify it.

In any case when prospective breaches are announced with maximum publicity, the commission has little choice but to act….

In conclusion, difficult and emotional though the dispute may be, the commission is a public institution which can only maintain integrity and respect if it is seen to be fearlessly objective in pursuing its statutory responsibilities.

In that process, it is almost inevitable that parties whom the commission seeks to regulate will be aggrieved and angry. Unfortunately, for the commission, this is a fact of life it must face in fulfilling its functions.

Professor Fels made it quite clear that the ACCC would be doing its job properly and that we would not be influenced into taking action by either side in the dispute. We assessed all the complaints we received in the usual way, always being careful to maintain our independence. We never decided to pursue any complaint at the request of any external parties. Every investigation had to meet the ACCC's usual enforcement priorities before we decided to commence an investigation.

The reference in Professor Fels’ article to "the various parties who wanted the ACCC to turn a blind eye to breaches of the TPA" was a clear reference to both the ACTU and Labor opposition. 

As stated by Professor Fels, the ACCC had decided to commence a number of business-side investigations because it wanted to be balanced in its approach during the Waterfront Dispute. By investigating both the unions and businesses, the ACCC hoped that nobody could accuse it of being partisan.  Unfortunately, this was not what happened. All the ACCC achieved by commencing investigations into players on both sides to the dispute was to give them both the ammunition to argue that the ACCC was being partisan against them.

While I didn’t mind conducting these business-side investigations, it seemed to me to be a bit strange that our small team had to devote its meagre resources to investigating these less obvious alleged breaches of the TPA, at a time when the MUA was engaging in blatant breaches of the TPA and taunting the ACCC about its illegal conduct. I thought there would be plenty of time to go after anybody else in the industry that was breaching the TPA once we had commenced legal proceedings against the MUA.

I was also very frustrated that the ACCC was giving the MUA so many warnings - indeed, more warnings than they deserved. Contrary to what Professor Fels said in his article, it was not standard ACCC operating procedure to give a warning to a party which the ACCC believed was contravening the TPA. Rather, the ACCC would usually seek an explanation from the party about its conduct and ask the party to stop engaging in that conduct.  If the business did not provide an adequate explanation and also did not agree to stop their conduct, the ACCC would generally be seeking to immediately commence legal proceedings against that party.  

High Court victory for MUA
On 4 May 1998, the High Court handed down its decision in relation to Corrigan’s appeal against the order that he reinstate his MUA workers.  The ACCC had decided to await the outcome of the High Court decision before deciding whether to commence legal action against the MUA.

In a 6-1 decision (Justice Callinan dissenting) the High Court upheld the injunction forcing Corrigan to reinstate his MUA workers. It initially appeared to everyone that the MUA had won a comprehensive legal victory and the sacked workers would soon be getting their jobs back.

However, soon after the decision, it became apparent that the High Court had not ruled entirely in the MUA’s favour. While the High Court affirmed Justice North’s orders requiring Patrick to rehire the sacked MUA workers, it also decided to vary Justice North’s orders. The High Court varied the orders to grant the administrators of the Patrick labour hire companies discretion as to whether they would rehire all of the sacked MUA workers, or only some of the workers. In other words, whilst the Patrick labour hire companies could only hire the former MUA workers, the administrators in charge of those businesses could decide whether to rehire only part of the sacked MUA workforce if this would improve the financial viability of these companies.

As stated by the majority:

It is one thing to restrain Patrick operations from giving effect to the termination of the labour supply contracts…It is a very different thing to fetter the discretion of the administrators. There was an appealable error (in Justice North’s initial orders) which can be rectified by the insertion of an appropriate qualification.

Coombs and the MUA were very unhappy with the High Court’s decision.  Coombs was immediately quoted in the media as saying:

I’m not interested in getting one-third or two-thirds or three-quarters of them back. They’ll all be going back or none of them will be going back.[4]

We are not going back on their terms, and if we have to stay out a bit longer to get back on our terms, we will stay out a bit longer.[5]

In other words, the MUA did not care that the High Court had made a decision concerning the legal position of the parties to the dispute. Even though High Court had provided clear guidance on how the dispute may be resolved, the MUA was determined to ignore this direction and to continue engaging in the illegal boycott conduct until they got exactly what they wanted.

The MUA’s pronouncements that it would effectively ignore the High Court’s ruling was probably the lowest point in the dispute in terms of the parties showing a blatant disregard of the rule of law.  If the parties were willing to ignore the highest court in the land then there was little hope of the courts providing a legal resolution.

We were also concerned that if the MUA and the ACTU could be so blasé about the consequences of ignoring the court’s rulings, including the High Court’s ruling, there would be nothing to stop both Patrick’s and the Howard Government from ignoring any court rulings that they did not like.


[1] “Unions Defy Court Ban”, Australian, 21 April 1998, p. 1.
[2] See “Global unionists threaten Australia”, Financial Review, 23 April 1998.
[3] “Watchdog and the waterfront”, The Age, 4 may 1998, p. 132
[4] “Checkmate: Wharfies rejoice but it’s a move too soon”, Daily Telegraph, 5 May 1998, p. 1.
[5] “Any settlement will come on the wharves and not in the courts”, SMH, 5 May 1998, p. 7.

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