Tuesday, 10 April 2012

The Untold Story: The ACCC’s role in the Waterfront Dispute - Part 16 - The Settlement

Part 16: The Settlement 


After our successful interlocutory hearing before Justice North, our primary aim should have been to focus on preparing our two cases against the MUA for the final hearing.

However, events took a much different direction due to a number of leaked documents which showed that the then Howard Government had been heavily involved in the entire waterfront dispute. These documents, which included a number of cabinet-in-confidence documents, showed that the Howard government had been supportive of the implementation of an aggressive waterfront strategy to remove the power of the MUA once and for all.

Because of these revelations, it appeared to us that the Howard Government was now very keen to settle the matter with the MUA. The deal which emerged from these discussions was that the Federal Government would fund 400 MUA redundancies in return for the MUA dropping its conspiracy action against Patrick and the Howard Government. Ultimately, the redundancies were to be paid through an additional levy to be applied to all containers.

Unknown to the ACCC a further condition of the settlement (which had been insisted upon by the MUA) was that the ACCC drop both of its boycott cases against the MUA.

MUA’s position

The MUA made is very clear that there would be no settlement unless the ACCC agreed to drop its actions against them. For example, Mr Coombs stated:

If they (the ACCC actions) are not dealt with, the agreement goes absolutely nowhere. The ACCC seems somewhat less than interested in finalising arrangements.

The ACCC has a requirement to take into account the public interest. It could hardly be in the public interest for them to abort this agreement.[1]
On another occasion, Mr Coombs stated:
What I’m not going to do is allow the ACCC to get binding orders on the union when the union believes it has done nothing wrong other than protecting the rights of its members.

The ACCC ought to butt out…nothing will be implemented as long as the ACCC remain a threat.[2]
We were somewhat bemused at John Coombs invoking the public interest in support of his view that the ACCC should terminate its court actions. Coombs had shown scant regard for the public interest up until that date, preferring instead to zealously pursue the narrow private interests of his MUA members.

We were also surprised at Coombs’ statement that he believed that the MUA had done nothing wrong. It must have been abundantly clear to him on the basis of his legal advice that the conduct which he and his members had engaged in constituted clear contraventions of the boycott provisions of the TPA. While he may have felt that the MUA had done nothing morally wrong, it was hard to understand how he could have believed the MUA had not broken the law.

ACCC’s position

The problem facing the ACCC was that it could not terminate its legal actions without obtaining any sanctions against the MUA given that the MUA had engaged in blatant and premeditated contraventions of the TPA. Furthermore, the MUA’s actions had resulted in a large number of innocent businesses incurring significant financial losses, which were unlikely to be covered by insurance. The ACCC believed that it owed it to these innocent businesses to continue its legal actions with a view to recovering some compensation.

Initially, Professor Fels had been particularly guarded about the nature of the ACCC’s settlement negotiations with the MUA. For example, he stated:

I wouldn’t like to say whether they (settlement discussions) are going well or not well, just that they are going.
We’re talking with the MUA about their wish to try and get a resolution of it and there are also some other public interest questions so it’s not unusual for there to be discussions about these types of issues during a piece of litigation.[3]
Despite Professor Fels’ caution in explaining what the ACCC was seeking in the settlement, it was not very long until details leaked to the media – namely that the ACCC were seeking:
  • injunctions to prevent the MUA engaging in similar conduct in the future and
  • damages for the small businesses which had suffered financial loss during the dispute due to the MUA’s conduct
As reported at the time:
The competition watchdog is understood to be insisting that the Maritime Union of Australia pay damages of $10 million, a stand that is threatening to scuttle the peace deal that ended the bitter waterfront dispute.

It is understood the Australian Competition and Consumer Commission has estimated potential damages at $25 million and put a compromise proposal to the MUA that it set up a $10 million trust fund for damages payouts.

Such a settlement – of allegedly illegal boycott activity during the dispute – would financially cripple the MUA, which has net assets of $19 million.[4]
ACCC – MUA Settlement meeting

Contrary to some media reports at the time, we did not have a series of settlement meetings with the MUA. Rather I remember only one very high-level settlement meeting which was held at the ACCC’s Sydney offices.

The MUA were represented at this meeting by John Coombs of the MUA and Greg Combet of the ACTU. The ACCC was represented by Professor Fels, a number of Commissioners and senior legal staff. I did not attend the meeting. In hindsight, this was quite fortunate as I think I would have found it very exasperating to have had to sit there listening to John Coombs telling the ACCC that the MUA had done nothing wrong and should not be punished in any way.

As was the case with most events during the waterfront dispute, this settlement meeting did not go as planned. I remember that after a relatively short period of time had elapsed, the meeting broke up in disarray. When I asked the ACCC representatives who had been at the meeting what had happened, I was informed that Coombs had become so angry about the ACCC's demands, that he had stormed out of the meeting with Greg Combet chasing after him.

I was sitting in my office having a discussion with my colleagues about what we would do next, given that the settlement meeting had just imploded, when a member of my waterfront team came into my office and told us that Coombs and Combet would be back. He explained that he had been walking back to the ACCC offices after lunch when he had seen two men standing at the corner of Castlereagh and Market Streets shouting at each other at the top of their voices.

The ACCC officer explained to us that one of the men had been shouting at the other man, words to the following effect: “I’m not agreeing to any orders on the MUA”. The other man had responded with: “John, what you have to understand is that the ACCC will only sue you again if you do it again”. As you can probably work out, the first man was John Coombs and the second was Greg Combet.

Obviously, from this roadside discussion it was apparent that Combet knew that the ACCC could not settle its cases against the MUA, unless it had obtained some injunctive orders which prevented the MUA from engaging in similar boycott action in the future.

Luckily for us, Combet was able to get this message through to Coombs and they returned to the ACCC’s offices shortly after to resume the settlement discussions.

In late July 1998, Coombs became very irate about his suspicions that the Professor Fels had leaked confidential information to the media about our settlement discussions. In particular, Coombs claimed that Professor Fels had publicly disclosed without prejudice confidential correspondence from the MUA to the ACCC. This led Coombs to conclude that:

I think it brings into question the appropriateness of Allan Fels in his position. He seems to have lost all objectivity in terms of this and I think it’s unprecedented for anyone to disclose the content of information from my lawyers to him.[5]
These allegations seemed very strange given the fact that Coombs and Combet had quite recently been arguing about the proposed terms of the settlement at the top of their lungs on the corner of Castlereagh and Market Streets in Sydney in front of hundreds of passers-by.

ACCC digs in

Despite the pressure on the ACCC to simply drop its legal actions against the MUA without seeking any remedies, the ACCC was always committed to settling its cases against the MUA in way it usually settled litigation – namely, with the respondent providing appropriate remedies.

Professor Fels had made it clear to the MUA that it had to offer “tangible concessions to the victims of the illegal boycotts” if they wanted the court action to end.[6]

These public comments by Professor Fels provoked a hostile response not only from the MUA but also from Greg Combet who stated:

To debate the issue in public as Professor Fels seems to like to do provides no assistance at all in solving the issue and may indeed be counterproductive.[7]
Rather than accepting Combet’s premise that any settlement had to be done quietly and in private, Professor Fels responded by issuing a comprehensive media release on 3 August 1998 which ensured that all the relevant issues were made entirely transparent. The media release also ensured that the already strained relations between the ACCC, MUA and ACTU about the settlement would deteriorate even further.
Waterfront dispute[8] 
The Australian Competition and Consumer Commission is not responsible for any delay there may have been so far in resolving the waterfront dispute, ACCC Chairman, Professor Allan Fels, said today.
'The parties approached the ACCC around June 19, about six weeks ago, to ask about a settlement. The ACCC indicated its interest in a settlement and following discussions with the Maritime Union of Australia and its lawyers outlined the relevant parameters and set these out confidentially in a letter to the MUA, copied to Patricks. The proposals included some modifications in light of the discussions. Subsequently, some selective details of this letter appeared in the Press. Essentially we've not heard from the parties since then.
There have been a few inconclusive discussions at lawyer level. There have been around 30 public statements to the media by the MUA about the matter. The parties have repeatedly told us that they will come back to us with a proposal and that there has been no need to settle the matter with them up till now. 'The ACCC has been available at all times, and remains so, to discuss the issues.
The parties have effectively not been in touch with us and so it has not been possible to advance discussions. 'Suggestions last week that the ACCC was causing a delay on the settlement are wrong. ' 
The ACCC has advice from the parties that there has been no need for the ACCC matter to be resolved until after the creditors' meeting and that there has been no urgency to this stage.
'Maritime Union of Australia lawyers have also advised that they will come back to the ACCC with something.
'The parties to the waterfront dispute, which is essentially a private dispute, have reached or nearly reached a private settlement of their dispute.
'They have apparently made it a condition of the settlement that the ACCC withdraws its case.
'The ACCC has never taken sides on the rights and wrongs of the dispute.
'Its role has been to try to see that there is compliance with the Trade Practice Act 1974, including recent laws passed by Parliament relating to boycotts affecting 'the movement of goods into or out of Australia'.
'In the course of the private dispute, some actions were taken which the ACCC believes breached the laws and which caused some damage to some small businesses and exporters. It is up to the parties to come forward and address those issues if they want the case to be dropped.
'One matter of concern to the ACCC is that: in the course of a private dispute economic damage has been done to small business and exporters. We have details. The damage in our view was done by unlawful boycotts, in breach of the Trade Practices Act. Something needs to be done about this.
'The ACCC has not sought a penalty in regard to the boycotts but everyone else in Australia who breaks the Trade Practices Act in any substantial way has to give some kind of commitments undertakings about not repeating unlawful behaviour in future.
'Some people are suggesting that there are only two alternatives: That the ACCC backs off totally or that the settlement collapses as a result of the self-imposed condition of the parties to that settlement. These are false alternatives.
What is required is that some steps be taken by the parties to meet the ACCC concerns. Once this is done it will be possible to move forward.
'Let me emphasise, the ACCC has not taken sides in the dispute. It has been investigating behaviour on both sides of the waterfront. 
Its duty is to seek compliance with the law. Following private and then public warnings, boycott action affecting Australian exports and small business that we considered unlawful continued. We had no choice but to go to Court. To turn a blind eye to substantial, very public breaches of the law would have been to override the clear intent of Parliament and would damage the credibility of the Trade Practices Act.'

Professor Fels believed it was important to emphasize how the MUA had been making public comments about the settlement in a selective way to put maximum pressure on the ACCC to settle on the MUA’s terms. The MUA did not want to have any sensible discussions with the ACCC – rather its approach was to try to use the media to stir up public opinion against the ACCC, yet again.

Fels also wanted to make it clear that the MUA was the party which had delayed in coming to talk to the ACCC about a settlement rather than the other way around. It would be the MUA’s fault alone if the broader settlement were derailed.

[1] MUA wants watchdog’s action to be called off, Financial Review, 24 June 1998, p. 3.
[2] It’s almost over: wharfies agree to back settlement, Sydney Morning Herald, 25 June 1998, p. 8.
[3] ACCC urged to drop MUA case, Daily Commercial News, 1 July 1998, p. 1.
[4] ACCC demands MUA pays up, Australian, 17 July 1998, p. 5 and ACCC urges an MUA strike trust fund, Financial Review, 17 July 1998, p. 9.
[5] MUA boss slates Fels over delay in dispute resolution, Australian, 24 July 1998, p. 2.
[6] Fels warns on wharf peace, Australian, 30 July 1998, p. 2.
[7] Ibid.
[8] Waterfront dispute, ACCC news release, 3 August 1998 - http://www.accc.gov.au/content/index.phtml/itemId/87253/fromItemId/378006

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