Wednesday, 21 December 2011

The Untold Story: The ACCC’s role in the Waterfront Dispute


Part 12:  It begins – ACCC v MUA

ACCC commences legal proceedings
The ACCC was at the end of its tether when it decided to commence legal proceedings against the MUA on 22 May 1998. Not only was the ACCC continually being baited by the MUA, but the MUA was continuing to engage in illegal boycott conduct. For example, when Patrick decided to subcontract some stevedoring work to P&O in Adelaide and Newcastle, the MUA immediately organised illegal picket lines.

When the accc commenced legal proceedings it is fair to say that we threw the book at the MUA. The following is the full text of the media release which the ACCC issued at the time:
ACCC institutes against Maritime Union of Australia[1]
The Australian Competition and Consumer Commission today instituted proceedings against the Maritime Union of Australia alleging breaches of the boycott provisions of the Trade Practices Act. 
The ACCC has instituted proceedings now because it believes there have been serious and continuing breaches of the Act by the MUA, which the union has made no effort to address.
The ACCC has alleged that the MUA has: taken steps to get the International Transport Workers Federation and its affiliates to organise and implement an international ban of ships, and shipping lines, loaded or unloaded with non-MUA labour in Australia; threatened ships, and shipping lines, that they would be the subject of such bans if they used Patrick, PCS or other stevedores using non-MUA labour; organised a campaign of domestic boycotts of Patrick operations because it used non-MUA labour, including: withdrawal of labour for tugs and lines to impede ships berthing at Patrick; and blockading Patrick to stop transport companies delivering and picking up cargo from Patrick.

The ACCC alleges that this conduct was done for the purpose and with the effect of stopping Patrick and other stevedores using non-union labour, from engaging in international trade or commerce, in breach of the primary boycott provisions of the Act. [The ACCC does allege other breaches of the Act]. The MUA has not taken any steps to respond substantively to the ACCC's previously expressed concerns in relation to either the domestic blockade activity or the ITF threat.
The proceedings will seek: urgent injunctions in relation to the alleged involvement of the MUA in international boycott activities in conjunction with the ITF; declaration that the domestic blockades, refusal to work tugs and lines and the ITF international boycott actions breach the Trade Practices Act; findings of fact (which would enable business suffering loss or damage from the MUA conduct to seek damages); and permanent injunctions restraining the MUA from engaging in relevant primary and secondary boycott action.

The proceedings also name MUA national secretary, Mr John Coombs, and Mr Trevor Charles, an MUA official and the Australian International Transport Workers Federation representative, as respondents. The ACCC concerns include: the impact on competition on the waterfront where boycotts hinder both new and established businesses from operating; that a large number of businesses have sustained significant losses due to their inability to gain access to cargo which was stranded in containers on docks around the country. In some cases cargo has been irreparably damaged; and damage to Australian exports, and Australian export businesses.

Boycott conduct by the MUA appears to be continuing. Since the High Court decision there has been further alleged boycott conduct by the MUA in Newcastle and Adelaide, where vessels have been held up by picket lines unless or until the shipper or shipowner agrees to using labour chosen by the MUA, eg in some ports work is not done unless done by firms using former Patrick's labour.

It is also relevant that a number of vessels which were loaded by non-union labour during the dispute have been subject to boycotts and harassment by affiliated unions overseas. The ACCC has been particularly concerned by the Columbus Canada boycott in the United States.
Furthermore there are real prospects that domestic picket activity and ITF bans may increase to the detriment to Australian importers and exporters.
The ACCC conveyed its concerns to the MUA over both the domestic boycott activity and ITF threats at an early stage in the dispute. Despite repeated requests, the MUA: has failed to provide any explanation as to why its conduct does not breach the Act; has failed to guarantee that it will not engage in such conduct again; and appears to be engaging in new conduct which may breach the Act.

Publicly, the MUA's initial response was to accuse the ACCC of harassment and to state that if the ACCC believed it had a case it should take proceedings. Privately, the MUA requested the ACCC not to institute proceedings and asked for more time to prepare a substantive response. The ACCC agreed to this request.
No substantive response has been provided. The MUA has not provided any assurance that its Federal Court undertakings "not to take industrial action" cover the boycott conduct of concern to the ACCC. At all times the ACCC has been willing to meet with the MUA to discuss its concerns and also to provide the MUA with extensive material outlining its concerns. The ACCC always reserved its position to take legal proceedings.
The failure of the MUA to address the ACCC's concerns has led the ACCC to institute proceedings at this time. At all times the ACCC was conscious of not taking precipitous action, particularly when issues were before the Federal Court and High Court of Australia. The ACCC considers that the current action raises a significant trade practices issue between the ACCC and the MUA; it does not bear on the dispute which exists between Patrick and the MUA.
The ACCC is taking this action as the Trade Practices Act applies equally to the MUA as it does to any other organisation in Australia. The ability of the ACCC to achieve pro-consumer results in many areas would be crippled if it started making special exceptions in defiance of clear Parliamentary intent.

Other investigations
The ACCC continues to investigate a number of competition issues on the product market side of the waterfront.

These include the contractual arrangements between Patrick and PCS, particularly any side agreements associated with the lease of facilities; possible anticompetitive agreements between Patrick and the former Port of Melbourne Authority which came to light during the OOCL litigation; alleged 'no poaching' agreements between stevedores; a protocol that existed allegedly between the Australian Wheat Board and the ITF; and transfer of contracts from Patrick to other stevedores.
There are also other investigations in progress on the labour side, including boycotts in relation to hold cleaning. 
The matter has been set down for first hearing at 10.15am on Wednesday 27 May in the Federal Court, Sydney.
As you will appreciate, it was not the typical ACCC media release – rather the ACCC went to great pains to explain precisely why it had commenced legal proceedings against the MUA at that time.

Scale of the ACCC’s case
As is apparent from the ACCC media release, the ACCC decided to commence legal proceedings against the MUA for all of its alleged illegal conduct - namely:

·       taking steps to get the International Transport Workers Federation and its affiliates to organise and implement an international ban of ships, and shipping lines, loaded or unloaded with non-MUA labour in Australia;

·       threatening ships, and shipping lines, that they would be the subject of such bans if they used Patrick, PCS or other stevedores using non-MUA labour; and

·       organising a campaign of domestic boycotts of Patrick operations because it used non-MUA labour, including: withdrawal of labour for tugs and lines to impede ships berthing at Patrick; and blockading Patrick to stop transport companies delivering and picking up cargo from Patrick. 

The ACCC had decided that there was no point holding back at this stage. Rather, we made the decision to commence proceedings in relation to virtually every act which the MUA had engaged in or been implicated in since the dispute first started.  It now appeared that one of the main benefits of delaying our action was that we were now able to run a much larger and more sophisticated case than would have been possible had we commenced at the end of April 1998.

We also decided to take legal proceedings against only two individuals, namely, John Coombs, the National Secretary of the MUA and Trevor Charles, the local representative of the ITF. The reality was that the ACCC could have sued almost every senior MUA official for having some role in the illegal conduct. However, we chose these two individuals because we saw them as the guiding minds of the domestic and global boycotts respectively.

Explaining our conduct
The ACCC believed that it was important to explain fully why it had decided to take legal proceedings against the MUA at this time.  We made it clear that the MUA’s conduct was causing a great deal of damage to innocent parties – particularly Australian businesses whose export foodstuffs were going off or rotting on the wharves. 

The ACCC’s desire to protect Australian businesses from the effects of the MUA boycotts was to become a major theme of the ACCC’s action.

The ACCC also wanted to make it clear that it had been more than reasonable in its dealings with the MUA. The ACCC took the fairly unconventional step of stating in the media release that the MUA had privately requested that the ACCC not commence legal proceedings so that the MUA could have more time to prepare a response. However, the next thing that would happen was Coombs would appear on TV or on the radio abusing and ridiculing the ACCC.

Orders sought
The ACCC sought the following orders in its case:

·       urgent injunctions in relation to the alleged involvement of the MUA in international boycott activities in conjunction with the ITF;
·       declaration that the domestic blockades, refusal to work tugs and lines and the ITF international boycott actions breach the Trade Practices Act;
·       findings of fact (which would enable business suffering loss or damage from the MUA conduct to seek damages); and
·       permanent injunctions restraining the MUA from engaging in relevant primary and secondary boycott action. 

The most notable remedy that the ACCC did not seek in its litigation was pecuniary penalties against the MUA. At the time, the maximum pecuniary penalties for a breach of section 45DB and 45D were $660,000 per contravention.  There were no pecuniary penalties available against individuals for breaches of these provisions.

The decision by the ACCC not to seek pecuniary penalties against the MUA was a significant concession to the MUA.  I think it is highly likely that had a business been engaging in such blatant and sustained breaches of the TPA that the ACCC would have sought substantial penalties.  However, by not seeking penalties against the MUA, the ACCC could not be accused of trying to destroy the MUA financially.

The most significant remedies which the ACCC sought in its action were the urgent injunctions. The ACCC sought injunctions to prevent the MUA from calling on the ITF and overseas affiliates to boycott the 25 ships which had been stevedored by non-MUA labour during the dispute. 

We believed it was important to stop the likely detriment which would result from these 25 vessels being boycotted at various ports around the world.  Such boycotts would have caused the exporters with goods on the vessels  considerable financial damage, particularly if the foodstuffs on these vessels went off or rotted before they could be unloaded.  These boycotts would also have the more general negative effect of damaging Australian reputation as a reliable exporter.

We also thought it would be relatively easy to win our urgent injunctions given that the MUA were both publicly and privately claiming that they were not actually inciting overseas unions to engage in illegal boycotts. In other words, if the MUA were not asking the ITF or any other overseas affiliates to engage in the global boycotts, they could hardly refuse to consent to the injunctions.

In this regard, we were relying heaving on sections 87(1AA), (4) and (5), which stated:

(1AA) Where an application for an injunction under subsection (1) has been made, whether before or after the commencement of this subsection, the Court may, if the Court determines it to be appropriate, grant an injunction by consent of all the parties to the proceedings, whether or not the Court is satisfied that a person has engaged, or is proposing to engage, in conduct of a kind mentioned in subsection (1).

(4)   The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised:

(a)  whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind;
(b)  whether or not the person has previously engaged in conduct of that kinds; and
(c)  whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind.

(5)   The power of the Court to grant an injunction restraining a person to do an act or thing may be exercised:

(a)  whether or not it appears to the Court that the person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing;
(b)  whether or not the person has previously refused or failed to do that act or thing; and 
(c)  whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person refuses or fails to do that act or thing.

Therefore, the ACCC believed that it could get an injunction whether or not it could prove that the MUA had engaged in particular conduct in the past and regardless of whether it could prove that the MUA was proposing to engage in particular conduct in the future.

A final advantage of pursuing urgent interlocutory orders related to our problems in obtaining evidence in a timely manner. As stated earlier, the ACCC was finding it difficult to get detailed affidavits from witnesses for use in the legal proceedings in the short time frames available.  However, we believed that this problem could be overcome, at least in the short term, because the ACCC would be permitted to file a hearsay affidavit prepared by an ACCC officer in support of its application for an urgent interlocutory injunction.

This meant that an ACCC officer could interview a market participant over the telephone or at a face to face meeting and then immediately prepare their own hearsay affidavit outlining the evidence obtained. In this way, the ACCC was able obtain evidence from market participants quickly and then provide this evidence to the court in a timely manner.

Accordingly, I spent much of the next couple of months interviewing market participants over the telephone during the day and then preparing hearsay affidavits at night. In this way, the ACCC was able to get a great deal of compelling evidence before the court very quickly.

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