Wednesday, 5 September 2012

Unfinished Business: The Hold Cleaning Case


Part 2: The Litigation

Commencement of proceedings
We commenced legal proceedings against the MUA and three senior MUA officials on 17 April 2000: The MUA officers were:

·   Mr Derrick Newlyn, the South Australian Branch Secretary of the MUA;
·  Mr James Boyle, Branch Secretary of the Northern New South Wales Branch of the MUA; and
·   Mr Michael O’Leary, National Organiser of the MUA.

It had taken us about 18 months to prepare and file the case, which was very quick given we had also been running the Sydney Mergers and Asset Sales Branch for most of that time. 

In about March 2000, I moved from the Sydney Mergers and Asset Sales Branch to GST Operations after being asked to head up the ACCC’s GST enforcement.  Even though I became the National GST Enforcement Coordinator in about April 2000, I kept working on the MUA hold cleaning case, which I considered as my pet project.

On the institution of legal proceedings, the ACCC issued the following news release:

ACCC institutes legal proceedings against MUA for hold cleaning demands[1]


The Australian Competition and Consumer Commission has instituted legal proceedings against the Maritime Union of Australia and three senior MUA officials in relation to primary boycott conduct, ACCC Chairman, Professor Allan Fels, said today. 

The ACCC has alleged the MUA, and a number of its officials and members, have been engaged in a pattern of conduct whereby they unlawfully hindered and prevented, or attempted to hinder and prevent, vessels from sailing from various Australian ports unless the ship owner agreed to use MUA labour to clean the hold of the vessel. 

The practice of hold cleaning has a long history. Demands for hold cleaning work were considered by Justice Sweeney in the 1976 Final Report of the Royal Commission into Alleged Payments to Maritime Unions and again by Mr Frank Costigan in the 1984 Final Report of the Royal Commission into the Activities of the Federated Ship Painters and Dockers Union. 

The ACCC concerns relate to the means by which hold cleaning work is demanded by the MUA. 

The practice of making a hold cleaning demand involves a union official or officials and members demanding that hold cleaning work which may be required by a ship operator be performed by particular union labour. In the past, such demands were made by officials and members of the Painters and Dockers
Union. 

The ACCC alleges that in recent times officials and members of the MUA have made unlawful demands for hold cleaning work. The ACCC alleges that on a number of occasions when a demand was not acceded to it was followed by various forms of unlawful action to prevent the vessel from sailing. In some instances, it has been alleged that persons have unlawfully sat on the bollards where the vessel was tied to the wharf so as to prevent the linesmen from releasing the lines. 

After an extensive investigation the ACCC formed the view that there had been a number of contraventions of 45DB(1) of the Trade Practice Act 1974. Accordingly, on 2 December 1999 the ACCC wrote to John Coombs, National Secretary of the MUA, to raise its concerns about hold cleaning in accordance with the clause 1 of the Alternative Dispute Resolution Procedure established by the ACCC and the MUA on 7 September 1998. (Mr Coombs is not one of the three senior officials of the union against whom proceedings have been instituted). 

The ACCC proposed to the MUA, pursuant to clause 2 of the ADRP, that a meeting be held as soon as practicable to discuss the allegations in more detail and to explore practical steps to cease or otherwise remedy any breach of the Act by the MUA or to otherwise satisfy the ACCC that legal proceedings are not appropriate. 

After some preliminary discussions, the MUA rejected the ACCC's settlement proposal. Accordingly, the ACCC believed it had no option but to institute legal proceedings under section 45DB and section 60 of the Act. In general terms, section 45DB prohibits persons from hindering or preventing the movement of goods between
Australia and places outside Australia whilst section 60 prohibits the use of physical force or undue harassment or coercion in connection with the supply or possible supply of goods or services to a consumer. 

The ACCC will be seeking injunctions, declarations, findings of fact, the implementation of a trade practices compliance program, penalties and costs. 

A notable aspect of the ACCC’s news release was the reference to the ACCC’s attempts to resolve the matter by invoking the clause 1 of the Alternative Dispute Resolution Procedure which had been established by the ACCC and the MUA as part of the Waterfront Dispute settlement. We found these meetings with the MUA to be quite pointless in terms of having any constructive dialogue with them about the ACCC’s concerns.   Unfortunately, the MUA’s attitude throughout the lead up to the commencement of litigation was that they were “bullet proof”.   

No sooner had we instituted legal proceedings than the MUA launched a media campaign accusing the ACCC of being part of yet another grand conspiracy.  The MUA claimed that the ACCC’s case had been commenced to coincide with the recent release of particular documents about the Waterfront Dispute to the Opposition transport spokesman. 

While the claim was laughable, given the time it takes to prepare complex Part IV cases cases, the ACCC was so incensed by the allegations that it decided to issue the following news release in response:

Maritime Union of Australia case innuendo[2]

The Maritime Union of Australia has accused the Australian Competition and Consumer Commission of conducting a political exercise against the union in regard to the ACCC's legal proceedings against the MUA yesterday (Australian Financial Review, p3).

"There is no justification, no skerrick of a reason for this innuendo", ACCC Chairman, Professor Allan Fels, said today. "We are simply, as always, upholding the law of the land, a law passed by Parliament, without fear or favour.

"There is a suggestion, for example, that the timing of this case is connected to the apparent release of documents to the Opposition transport spokesman regarding the 1998 dispute.

"I, and so far as I know others at the ACCC, were not aware that the Opposition was obtaining these documents and, in any case, it would not have had any effect on the ACCC's decision to institute legal proceedings nor any effect on timing.

"The ACCC's timing was driven by the breakdown of talks with the MUA. In particular, the MUA wrote to the ACCC in a letter received on 6 April advising that it rejected the ACCC's proposals for settlement that had been under discussion since last year. The ACCC instituted proceedings as soon as legally practicable after this date, ie 17 April.

"The ACCC does not generally propose to engage in ongoing public exchanges with the MUA about the litigation. However, the MUA claims that its actions in extracting money from shipowners are really to protect the environment and that the ACCC is placing the environment at risk in a political exercise.

"The ACCC's role is to uphold the law. If there is unlawful action taken then the ACCC 's role is to take appropriate legal action. It regards the actions of the union as unlawful and negotiations to resolve the matter failed.

"Whilst the ACCC regards the union's boycott motives as economic, the ACCC notes the union's claims of environmental justification. It would have been open to the union to seek authorisation for its actions on environmental grounds and this was put to the union.

"Authorisation of unlawful or anti-competitive action is permitted under the Trade Practices Act 1974 if there is a benefit to public that outweighs any anti-competitive effect of the conduct.

"Moreover the MUA is not above the law. If it wants to play a law enforcement role by establishing and enforcing its own environmental protection safeguards by means which may be unlawful, it needs authorisation rather to take the law into its own hands.

"The ACCC understands that there are environmental laws and regulations that relate to the issues raised by the MUA. If these do not work well, as the union claims, the proper course is to get them improved. Alternatively, if private enforcement of the environment law by the MUA is the true and only aim of the boycott, authorisation should have been sought.

As is apparent from the above news release, the ACCC also took the opportunity to attack the MUA’s claims that their hold cleaning demands were somehow linked to a desire to protect the environment.  Indeed, one senior MUA official said to me shortly after we had commenced legal proceedings that by the end of the trial he would have “greenies climbing over the roof of the courthouse” (which surprised me somewhat given the MUA’s long held concern about safety issues.).  

The reality was that most of the MUA businesses which were engaged in hold cleaning were highly unprofessional in the way they carried out the work. They also had a much worse track-record than their non-MUA competitors in terms of discharging cleaning effluent from the holds into the harbour.

We had established an excellent legal team to run the litigation.  We had briefed the Australian Government Solicitor as the lawyers on the case and retained David Yates SC, Peter Renehan and David Godwin as our counsel.  This proved to be a very good team which the ACCC used again in its liquor cases against Liquorland Australia Limited and Woolworths Limited a few years later.[3]

While the case was ultimately transferred from me to the Sydney Enforcement Branch, I continued to work with a small enforcement team in a consultancy-type role. 

This arrangement continued for some time until I had a run in with the Enforcement Director who had “notional” control of the case.  I had been unhappy about a couple strategic decisions which he had made in relation to the case, which I believed were wrong and demonstrated his total lack of understanding of the case. I told him my views in no uncertain terms.

Unfortunately, this individual complained about my allegedly disrespectful conduct to the then Regional Director, who decided, in the best traditions of a “Dirty” Harry Callaghan B-Grade flick to “take me off the case due to my failure to respect authority”.  However, in true “Dirty” Harry Callaghan tradition I kept working on the case for some time “behind the scenes” and “on my own time”. 

Having said that, the two enforcement staff who had carriage of the hold cleaning case on a day-to-day basis were exceptionally capable and hard-working officers.  They did a fantastic job in preparing the case and most importantly winning over the confidence of the various industry witnesses who the ACCC needed to give evidence if the ACCC was going to win the case.





[1] ACCC institutes legal proceedings against MUA for hold cleaning demands, ACCC News Release, 17 April 2000 - http://www.accc.gov.au/content/index.phtml/itemId/323079/fromItemId/378010
[2] Maritime Union of Australia case innuendo, ACCC News Release, 18 April 2000 – at http://www.accc.gov.au/content/index.phtml/itemId/323077/fromItemId/378010

[3] Federal Court penalises Liquorland $4.75 million for anti-competitive liquor deals – at http://www.accc.gov.au/content/index.phtml/itemId/687035/fromItemId/620299 and Woolworths penalised $7 million for anticompetitive liquor deals at http://www.accc.gov.au/content/index.phtml/itemId/773813/fromItemId/720536


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