Competition and Consumer Protection Law

Messcash: A Comedy of Errors

2012-01-15T18:53:00.000-08:00

This article firstappeared in the CCH Australian Competition & Consumer Law Reporter, Issue636, 14 October 2011,pp. 1-6.

Introduction[1]

On 25 August 2011, Emmett J of the Federal Court in Australian Competition and ConsumerCommission v Metcash Trading Limited (2011) ATPR ¶42-368;[2011] FCA 967 decided that Metcash’s proposed acquisition of Franklins wouldnot substantially lessen competition in breach of section 50 of the Competition and Consumer Act 2010 (CCA) (formerly the Trade Practices Act 1974).[2] Indeed, Emmett J found that the proposedacquisition was likely to enhance competition.

Subsequently, many commentators in the media trumpetedEmmett J’s decision as a triumph of practical, commercial common-sense reasoningover the Australian Competition and Consumer Commission’s (ACCC) increasinglyhypothetical and theoretical approach to merger analysis.[3]The commentary went so far as to suggest that the ACCC’s entire approach tomerger analysis would have to change in the light of Emmett J’s judgment.

On 20 September 2011, Jacobsen J denied the ACCC’s application for an interiminjunction to prevent the sale.[4] The ACCC’s appeal will be considered by theFull Federal Court over three days, commencing on 24 October 2011.[5]

A Comedy of Errors

The reality is that Emmett J’s judgment in the Metcash case is deeply flawed and highlyunlikely to survive an appeal. The court appears to have ignored bindingprecedent in relation to market definition and made a number of significantlegal and analytical errors in applying the relevant legislation.

Unfortunately, the ACCC also made a number of significanterrors in the way it ran its case. These errors ranged from pleading errors to majorstrategic errors such as selecting the wrong counterfactual prior to the trialand then having to switch to a new counterfactual during the trial.

Background to thecase

In July 2010, Metcash entered an agreement to purchase the FranklinsSupermarket business for $215m.

The ACCC opposed the proposed acquisition because itbelieved it would substantially lessen competition. The ACCC subsequentlycommenced legal proceedings in the Federal Court to prevent the acquisitionfrom proceeding.

Metcash is a specialist wholesaling company which suppliesgroceries, fresh produce and liquor products on a national basis. Metcash supplies independent retailers withgrocery products principally under the IGA brand and owns a number of privatelabels which it makes available to its retail customers.

Franklinsoperates as both a vertically integrated retailer and an independentwholesaler. Franklins is verticallyintegrated through its ownership of 80 supermarkets in NSW. It also operates asan independent wholesaler to 10 Franklinsfranchises in NSW. Franklinsowns the No Frills brand which it makes available to its company owned and franchise stores.

The ACCC’s case

The most significant error made by the ACCC in its case wasits failure to amend its pleadings in relation to the relevant market prior tothe trial commencing.

The ACCC initially pleaded that the market was the marketfor the wholesale supply of packaged groceries to independent supermarkets inNSW and the ACT. However, a problemarose when the expert for the ACCC, Dr Christopher Pleatsikas, appeared todefine a different market to the ACCC’s pleaded market in his expert report. DrPleatsikas defined the market as the market for the supply of wholesaleservices for dry groceries (at {121}).

In order to understand the difference between the ACCC’spleaded market and the market found by the ACCC’s expert, one has to understandthe goods and services which Metcash supplies to its customers.

Metcash effectively charges its customers for three differentthings:

· dry groceries;

· a service fee for providing a wholesalingservice; and

· a fee for freight.

In other words, while Metcash charges its customers for thedry groceries (goods), it also charges its customers for two related services –ie wholesaling services and freight services.

The problem for the ACCC arose when Metcash’s lawyers wroteto the ACCC on 2 March 2011pointing out the discrepancy between its pleaded market and the conclusionscontained in its expert report (at {122}). Metcash’s lawyers invited the ACCC to amend its pleadings at that stageto reflect the market described in the ACCC’s expert report, but the ACCCdeclined to do so.

Subsequently on the ninth day of the hearing, the ACCC soughtleave from Emmett J to amend its pleading to make the same amendment whichMetcash’s lawyers had suggested that it make three weeks previously. Justice Emmett refused the ACCC’s applicationfor leave to amend its pleadings (at {123}).

Justice Emmett’s decision not to grant leave to the ACCC toamend its pleading had profound consequences for the way in which the case wasrun. Indeed, the court’s decision meantthat the case was effectively fought by the parties on the wrong marketdefinition – ie that the ACCC was concerned that following the acquisition,Metcash would be able to increase the wholesaleprices of groceries to independent retailers by between 5-10%. However, theACCC’s true concern was that following the acquisition, Metcash would be ableto increase the price of wholesalingservices to independent retailers by between 5-10%.

The practical difference between these two markets issignificant. In the pleaded market, the ACCC would have had to prove thatMetcash had the ability, following the acquisition, to increase its prices fordry grocery supplies by between 5-10%, which would have amounted to a doublingof its profit margin. However, under the alternative wholesale services market,the ACCC would only have been required to prove that Metcash could haveincreased its wholesale service fee from, for example, 3% of the value of thegroceries supplied to its independent retailers to 3.15% to 3.3%. Obviously itwould have been much easier for the ACCC to prove the latter.

Ultimately, the ACCC attempted to circumvent this pleadingproblem by arguing that the market it has pleaded was effectively the same asthe wholesale services market. However, Emmett J did not accept this argument.

The other significant mistake made by the ACCC in the case relatedto the selection of its counterfactual. The ACCC claimed prior to hearing, and for the first few days of thehearing, that SPAR was the likely counterfactual in the event the proposedacquisition by Metcash did not proceed. However, it should have been abundantlyto the ACCC, based on even a cursory review of SPAR’s financial accounts, thatit simply did not have the financial resources to purchase the Franklinsbusiness. SPAR’s total wholesale salesof groceries in each of the 2009 and 2010 financial years was only $150 million(at {76}).[6]

On the other hand, the strength of the alternative consortiumheaded by Supabarn made it a much superior counterfactual to SPAR.

Not only did the Supabarn-led consortium have greaterfinancial resources, but it had significant wholesale grocery volumes which it couldhave redirected to Franklin’swholesale operations. The addition of this volume would have significantlyenhanced the overall efficiency of Franklins’wholesale operations and driven down the costs of providing wholesale services.

Mr Perlov, the Managing Director of Franklins advised TMT,the advisers to the Supabarn-led consortium, that the Franklins wholesaleoperations were currently operating at only 60% capacity and that it neededanother 20 good stores to achieve scale efficiency (at {373}). The consortium itself could have added 13 qualitystores to the Franklins wholesaleoperation overnight.

Unfortunately, the ACCC did not recognise that the Supabarn-ledconsortium was the most likely counterfactual until after the trial hadcommenced. The ACCC had to change itsposition mid-way through the trial by abandoning SPAR and embracing theSupabarn-led consortium as its preferred counterfactual. The ACCC’s decision to change counterfactualsin the middle of the case significantly undermined the credibility of its argumentsin favour of the Supabarn-led counterfactual.

Federal CourtJudgment

The first unfortunate decision made in the conduct of thetrial was the refusal by Emmett J to allow the ACCC to amend its pleadings. In deciding not to allow the ACCC to amendits pleadings, the court treated the ACCC as a private litigant to privateproceedings, rather than a public interest litigant. The court appears to havetaken the view that because the ACCC had not amended its pleadings when it hada chance to do so prior to the commencement of the trial, it had lost itsopportunity to do so once the trial started.

Despite the ACCC not being permitted to amend its pleadingsto include the wholesale services market, the ACCC still had every right toexpect that they would be successful in establishing the market which they hadpleaded – namely the market for the supply of wholesale groceries toindependent grocers. This was because there was a clear binding precedent whichshould have determined the issue in the ACCC’s favour.

In 1996 the Full Federal Court handed down its judgment in Davids Holdings Pty Limited & Ors vAttorney-General of the Commonwealth (1994) ¶ATPR 41-304 In this case, Davids was proposing toacquire another independent wholesaler, Queensland Independent Wholesalers. Therefore, the market definition issuesconsidered in the Davids case wereidentical, in product and functional terms, to the market definition issuesraised in the Metcash case.

The Attorney-General[7] wassuccessful in arguing both at first instance and before the Full Federal Court,that the relevant markets in the Davidscase were:

· the market in Queenslandand northern NSW for wholesaling groceriesby independent wholesalers to independent retailers; and

· the market for retailing groceries, includingindependent retailers and chain stores.

Not only did the court in Metcash define a different market to the market found by the Full FederalCourt in the Davids case, but Emmett Jdid not discuss the Davids case inhis judgment. It is surprising that EmmettJ did not at least try to distinguish the Davidsdecision as it related to market definition before defining a completelydifferent market.

Unfortunately it is not a simple exercise to state withprecision the market which Emmett J ultimately found in the Metcash case. This is because his description of therelevant market is far from clear. However, it would appear that Emmett Jdefined the relevant market as follows:

· the national market for the supply of packagedgroceries, encompassing both the wholesale supply of groceries and the retailsupply of groceries by independent grocers and vertically integrated chains.

The other significant mistake which the court made in the Metcash case relates to the appropriate counterfactualtest to apply in merger cases. In hisjudgment, Emmett J defined the counterfactual test as involving the following two-stepprocess (at {146}):

· “thatit is more probable than not that one of the Commission’s counterfactuals willcome to pass if the proposed acquisition does not proceed; and

· thatthere is a real chance that, if the proposed acquisition does proceed, thatwould result in a substantial lessening of competition compared to the scenarioin which one of those counterfactuals comes to pass.”

While Emmett J cited French J’s decision in the AGL case[8] asestablishing the relevant test for assessing competing counterfactuals, a closereading of the two tests shows that Emmett J’s formulation is significantlydifferent to the French test.

In AGL, French J explainedthe test for assessing the counterfactual as follows:

“The ACCC submits that AGL must satisfy the Court thatits hypothesis against any likely substantial lessening of competition in anyrelevant market is more probable than the competing hypotheses which areadvanced to suggest a real chance of competition being substantially lessenedin any such market. I accept that formulation of the approach which should betaken in this case. I accept also the proposition advanced by the ACCC that AGLis not entitled to relief if:

(a) the Court is left in a position of uncertaintyabout the competing hypotheses; or

(b) the Court concludes that the hypotheses suggestinga real chance of competition being substantially lessened are more probablethan the opposing hypotheses.[9]

Theformulation established by French J in AGLis that the counterfactual has to be “moreprobable” than the competing hypothesis. This is clearly a relative testwhich looks at the likelihood of one of two competing hypothesis eventuating.

However,Emmett J described the counterfactual test differently as requiring that the courtbe satisfied that the counterfactual be “more probable than not.” This is an entirely different test to thetest established in AGL.

TheFrench test looks at how probable one counterfactual is when compared toanother counterfactual. This means thata counterfactual with say, a 30% chance of occurring would be selected as thecounterfactual if the competing counterfactual only had a 20% chance ofoccurring. However, under Emmett J’sformulation the only way that any counterfactual could succeed is if itsprobability of occurring was more than 51% - ie more probable than not.

Themistake of using this test was further compounded by Emmett J’s application of thetest to the relevant facts. In his judgment, Emmett J set out an extensiverange of factors which the ACCC’s counterfactual would have to meet in orderfor it to be considered as the likely counterfactual. The actual application of the test to the factsraised the standard of proof significantly higher than even the balance ofprobabilities. Indeed the standard bears more resemblance to proof beyondreasonable doubt.

Furthermore,Emmett J did not apply his counterfactual test with the same rigour to thecounterfactual put forward by Metcash and Franklins – namely, that there wouldbe a store sale if the acquisition did not proceed.

Conclusions

Theclaims that Justice Emmett’s judgment represents a triumph of common sense overeconomic theory are entirely misplaced. Nothing could be further from thetruth.

Itwas the ACCC which argued a common-sense market definition. The ACCC asked thesimple question – to whom will independent grocers turn if Metcash increasesits wholesale grocery prices? The ACCC believed that these independentretailers would have nowhere to turn because Franklins was their only viablepotential source of wholesale supply.

Inreality, it was the court in the Metcashcase which defined the more economically theoretical and speculativemarket. The court found that because competitionat the wholesaling level is constrained by downstream competition at the retaillevel, that the functional dimension of the market should be broadened to includethis downstream retail competition. Put another way, the court found thatMetcash would not increase its prices to its independent retail customersbecause it would recognise that if it tried to increase its prices to thesecaptive customers, this action would make these customers uncompetitive againstColes, Woolworths and Aldi stores at the retail level which would in time forcethese customers out of business.

Itis highly unlikely that the decision in the Metcashcase will survive an appeal, despite Jacobsen J’s recent comments. The courthas made too many fundamental legal and factual mistakes for the judgment to beallowed to stand.

The remaining question is why has both the ACCC and the courtmade so many apparent errors. The simpleexplanation is “time”. It is notpossible for the ACCC to prepare a merger case properly in the very short timeframes imposed upon it by the court. Inboth the AGL case and the Metcash case, the ACCC had only a coupleof months to fully prepare its cases. It is no coincidence that the ACCC lostboth of these cases quite comprehensively. The court will also struggle toproperly adjudicate on all the relevant (and irrelevant) issues raised during amerger case.

Given the importance of merger analysis under section 50 ofthe CCA – namely to ensure the future competitiveness of Australian markets inthe medium to long term – more time should be given to both the ACCC and the courtto get the decision right.

Postscript

On 20 September 2011, the Full Federal Court handed down its decision in Australian Competition and ConsumerCommission v Metcash Trading [2011] FCA 1079[10],rejecting the ACCC’s appeal against Emmett J’s judgment. Accordingly, myprediction that Emmett J’s judgment would not survive an appeal has proven tobe incorrect.

I will be discussing the Full Federal Court’s Metcash decision in an upcoming post, whereI will be arguing that the Court’s decision should be characterisedas Act 2 (and fortunately the Final Act) in the Messcash Comedy of Errors.

[1] I actedfor TMT, the financial adviser to the Supabarn led consortium, in the Metcashcase.

[2] Australian Competition and Consumer Commission v Metcash Trading Limited [2011] FCA 967 (25 August 2011) -
http://www.austlii.edu.au/au/cases/cth/FCA/2011/967.html

[3] For example Bryan Firth, “Metcash black eye puts ACCC's new boss Rod Sims in a spot”, The Australian,http://www.theaustralian.com.au/business/opinion/metcash-black-eye-puts-acccs-new-boss-rod-sims-in-a-spot/story-e6frg9kx-1226122403750

[4] Australian Competition and Consumer Commission v Metcash Trading Ltd [2011] FCA 1079 (20 September 2011) -
http://www.austlii.edu.au/au/cases/cth/FCA/2011/1079.html

[5] SeePostscript at end of article.

[6] Iexpressed the view to the ACCC’s lawyers prior to the Metcash trial commencingthat they were arguing the wrong counterfactual and should change their focusfrom SPAR to the Supabarn-led consortium.

[7] TheDavids proposed acquisition of QIW was challenged under section 50 of the Trade Practices Act 1974, by theCommonwealth Attorney General.

[8] Australian Gas Light Company v AustralianCompetition and Consumer Commission (No.3) [2003] 137 FCR 317.

[9] AGL at 356.

[10] http://www.austlii.edu.au/au/cases/cth/FCA/2011/1079.html

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

2012-01-05T17:46:00.000-08:00

Part 13: The ACCC’s case in detail

ACCC’s case
As stated in the last instalment of the Untold Story, the ACCC’s case against the MUA was a large and sophisticated case. The ACCC alleged that the MUA had engaged in a significant number of contraventions of the TPA. In this instalment, I will describe the ACCC’s case in more detail.

International Solidarity Contract
The ACCC pleaded that on 10 June 1997, the MUA entered into an International Solidarity Contract with the ITF and other affiliated unions.

The ACCC claimed that by entering into this Contract, the MUA and other signatories had committed to supporting each other in the future in the event that:

any ITF affiliated dock workers’ union was confronted with the introduction of port reforms (including privatisation);

an employer or employers tried to replace ITF affiliated dock workers with non-union labour; and

employers or authorities attempted to undermine the strength of ITF affiliates.

The MUA and affiliated ITF unions agreed to take all available practical means to achieve the above outcomes.

The fact that the Contract was to have practical application was made clear in a letter send by David Cockcroft, the General Secretary of the ITF, to Coombs which stated:

May we recall the resolution aimed at stopping anti-trade union policies by authorities and employers as well as the International Solidarity Contract, both unanimously adopted by the world wide ITF Dockers Section Conference in June this year (1997). This resolution and this contract could be the basis of further international support for the MUA.

Please let us know if we should start to prepare a world wide campaign towards the cancellation of Government policies aimed at the destruction of the waterfront workers’ union. The ITF guarantees you all the support you need.[1]

There were further reports that the Contract was to have practical application. Mr Marges, the Secretary of the Dockers Section of the ITF was quoted as saying:

At our Miami docker's section conference, we unanimously adopted a resolution aimed at stopping the anti-trade union policies of employers.

We also adopted an International Solidarity Contract. Recent developments in Sri Lanka and Australia have given cause for the development of a campaign aimed at the practical implementation of the resolution and the contract.

According to the decision in Miami the steering committee should be consulted if a campaign needs to be developed, including a strategy for targeting ships bound for ports where anti trade union policies were to be taken extremely seriously (sic).

As you may recall MUA’s National Secretary, John Coombs, arrived late at the docker’s section conference in Miami as a result of union activities to stop the government’s interference in labour disputes in the Australian ports on 10 June.

As discussed in Miami we need to be prepared to select our targets and plan our action carefully and continue to organise all kinds of actions until we have won.

An action aimed at stopping all ships for one day will not be sufficient and we should look more to establishing a permanent threat to terminal operators and subsequently ship owners to disrupt their business as long as they make use of ports where unionised workers are being made victims of port reforms or attempts are carried out to destroy trade unions.[2]

The ACCC pleaded the International Solidarity Contract to lay the platform for arguing that the subsequent actions by the ITF and overseas affiliated unions in boycotting vessels during the Waterfront Dispute were in performance of this Contract.

Cairns and Dubai incidents
The ACCC also pleaded the Cairns and Dubai incidents as earlier examples of the MUA calling on the ITF and other overseas unions to support it in relation to domestic issues.

In relation to Cairns, the ACCC pleaded that Trevor Charles, the local ITF representative, and James Tannock, a National Organiser of the MUA, contacted Central Gulf Shipping, the time charterer of the Java Sea, to advise that it was the ITF’s intention to organise a world wide boycott of all ships owned by the owner of the Java Sea.

The ACCC based its pleading on various MUA and ITF documents then publicly available in which they openly bragged about how they have been able to organise a global boycott in relation to Cairns. For example, the ITF made the following statement on its website:

In a stunning demonstration or the effectiveness of international solidarity, the Maritime Union of Australia (MUA) and the ITF have joined forced to prevent a shipping company from introducing non-union labour.

The MUA organised a demonstration picket line and publicly called upon the ITF to support the sacked union members.

The ITF also warned the company that world wide actions would be organised against ships calling at ports such as Cairns where de-unionisation had taken place.

Following this intervention the company instructed the captain of the Java Sea to anchor outside Cairns and await further instructions.

Intensive negotiations were then held between the MUA and the company which resulted in an agreement to rehire the unionised dockers.[3]

In relation to Dubai, the ACCC pleaded that Coombs had announced publicly that the MUA and ITF had acted together to take whatever steps were necessary to frustrate the training of the Australian workers in Dubai. This announcement was made after a meeting between Coombs and Charles with the ITF in London.

The ACCC also pleaded that Coombs and Cockcroft, the President of the ITF, had met with the UAE ambassador to the United Kingdom to advise him that ITF affiliates would boycott vessels using the Port of Dubai unless the trainees were expelled.

The ACCC’s argument was that given this history, it was highly likely that the MUA had again called on the ITF and affiliated unions to boycott vessels stevedored by Patrick’s non-union labour during the Waterfront Dispute.

Global boycott
The ACCC also pleaded that shortly after Patrick sacked its MUA workforce, the MUA resolved that it would take all available steps to ensure that Patrick had “no business, no ships and no cargo moving across its ports”. Coombs made this announcement to the media on 10 April 1998.

Coombs confirmed these threats during an interview with Mike Carlton on 2UE on 14 April 1998. During this interview, Coombs stated that the blockades would remain in place until the MUA members were re-employed by Patrick. He also made it clear that no cargo would move in or out of the Patrick’s facilities until the reinstatement of the MUA workers had been achieved.

Indeed, Coombs had made similar threats the day before during an interview with Graham Richardson on 2GB.

The ACCC pleaded that the MUA and ITF had acted in concert to organise and incite the various global boycotts of vessels stevedored by Patrick’s non-union labour.

The ACCC included a Schedule to its Statement of Claim listing the concerted actions of the MUA and the ITF.

In the Schedule, the ACCC drew attention to various statements made by the MUA before Patrick sacked its MUA workforce that it would not hesitate to call overseas affiliates to oppose the introduction of non-union labour to the Australian docks. For example, on 29 January 1998 Coombs told reporters that the MUA would oppose the introduction of non-union labour “with all the international force we can muster”.

Furthermore, comments were made by other senior MUA officials in January 1998 in response to the establishment of the PCS business at Webb Dock that international contacts would be called upon to assist.

The ACCC also pleaded that the MUA and the ACTU had held discussions with the ITF to devise a campaign to provide “full support to Australian unions”.

On 31 January 1998, Coombs was reported to have requested the ITF to black ban any ship loaded by PCS at Webb Dock and to pursue any such ships with global boycotts “forever”.

On 30 January 1998, Marges of the ITF stated the following during a radio interview in relation to the PCS business:

[The ITF is prepared to go] far enough to support the MUA in their struggle to get farmers out and the union in which means that any ship loaded by non-union labour will be prepared a warm welcome in any other port in the world. So the ship owners should know that if they allow one of their ships to be loaded by non-union labour that ship will be followed all over the world…We will be pleased to prove that we are more than a paper tiger and we will prove that.

And as I have said, any ship owner allowing a ship into the port where the farmers are involved in loading or unloading their ship can be assured that a ship is completely useless and is better to make it into scrap than using it any more.

In any port where we can stop that ship or delay cargo handling on that ship we will do that. We will follow that forever, all over the world, even if that ship has another name, we will find it and it will be followed everywhere.

On 2 February 1998, Greg Combet, the then Assistant Secretary of the ACTU, told reporters that the ITF had pledged its full support for the MUA.

In early February 1998, the ITF started issuing circulars to its members to advise them of development in Australia and calling on them to be prepared to take action against any vessels loaded or unloaded by PCS.

On 13 February 1998, Coombs made a speech at Dallas Brooks Hall in which he reportedly made the following statements:

From Cairns through Dubai, to Webb Dock and we gave him (Peter Reith) a taste of what’s in store in Cairns and a slightly better example of what’s in store in Dubai.

This union has enormous international support as well.

And we ask for that support, as we asked for it internationally and which we got internationally. So that we can say that any ship which leaves this port with this cargo loaded by other than MUA members, the cargo will rot through the bottom of that ship before it ever breaks any union power.

And for that level of commitment we are thankful to the world organisations, the ITF who intervened in the Dubai exercise. You will never have to worry about the MUA’s support in any of your scuffles, in any of the battles, nationally or internationally, we will be there.

Towards the middle of February 1998, Coombs started becoming more cautious about making statement that the MUA were seeking the support of international union affiliates.

For example, on 19 February 1998, in response to a question from a reporter whether the MUA had international union support, Coombs said, “I am not allowed to talk about that”.

On 22 February 1998, Coombs stated:

Well, I’m not going to comment on what they might do out of London, given Mr Fels has threatened the Crimes Act on me: so we will just let London do what London does.

Prior to Patrick’s sacking its MUA workforce, there were many other examples of MUA officials bragging about the level of international support which the MUA enjoyed. The ACCC made sure that it pleaded every single statement made by any MUA officials along these lines.

The day after Patrick sacked its MUA workforce, Cockcroft and Marges of the ITF appeared on television and radio to make it clear that the ITF and its affiliates were now targeting Patrick.

MUA domestic conduct
The ACCC also pleaded that the MUA’s domestic conduct which consisted of refusals to provide services and the blockades, breached of the TPA.

The refusals to provide services included such conduct as MUA linesman failing to attend to release or attach the lines of vessels which had been loaded or unloaded by non-MUA workers. The most well known example of this conduct was the failure by the linesmen to attend to attach the lines for the Australian Endeavour when it arrived at Port Botany on Easter Saturday.

There were numerous other examples including:

Tasman Venture at Darling Harbour on 8 April 1998;

Star Global Bridge at Newcastle on 1 3 April 1998;

Direct Falcon at Darling Harbour on 15 April 1998; and

Star Seabridge at Newcastle on 13 to 15 April 1998.

We only pleaded examples where we had obtained evidence to prove the breach. There were many other examples of such conduct where the shipping company did not want to assist the ACCC by providing evidence.

The ACCC also pleaded instances where MUA had refused to provide towage services. Again, the most well known example was the refusal by the MUA towage employees to provide services to the Australian Endeavour on Easter Saturday. In this case, the refusals continued for over 7 hours before the MUA eventually agreed to provide the services.

The ACCC also pleaded that the MUA and its members had established and maintained blockades outside Patrick terminals at each of the following locations:

Melbourne – Webb Dock;

Melbourne – East Swanson Dock;

Sydney – Darling Harbour;

Sydney – Port Botany;

Newcastle;

Brisbane – Maritime;

Townsville; and

Fremantle.

Rather than plead a general blockade, the ACCC pleaded specific instances of trucks and trains, which had been contracted to pick up or unload cargo at Patrick’s terminals, being turned back by the picket lines.

The ACCC pleaded incidents in which it could identify specific MUA members as being part of the blockades. For example, on 10 April 1998 a train containing 94 containers of goods from South Australia was due to deliver these containers to East Swanson dock. A picket line of approximately 200 persons gathered across the rail lines at the rail gate entrance and prevented the train from entering East Swanson dock. The ACCC alleged that amongst these 200 persons were four identifiable MUA members, who appeared to be in charge of the picket line.

The ACCC also pleaded the specific details of some of the blockades. For example, on 11 April 1998 a truck carrying cargo to be loaded on vessels at Patrick’s Townsville terminal was stopped by a picket line. The ACCC pleaded the following conduct then occurred:

Members of the gathering then climbed up on the vehicle and began punching glass and doors whilst yelling abuse at the driver. Indicator and clearance lights were destroyed on the vehicle.

The ACCC alleged that in another incident at East Swanson on 13 April 1998, that Mick O’Leary, a National Organiser of the MUA, addressed the picket line in the following way:

Two trucks are expected to arrive at the dock shortly and attempt to enter. From day one our aim has been to make sure that nothing goes in or out of the gates and that is what we intend to do today.

Another example occurred in Fremantle on 20 April 1998, when a National Rail train was stopped by a picket line. The Regional Manager of National Rail was approached by an MUA official and told that the train could not pass because there was a safety issue. The MUA official then advised the National Rail Manager that he should go to the MUA headquarters to discuss the issue.

The National Rail Manager went to the MUA headquarters, as directed, and was told by senior MUA officials that the train could access Fremantle Wharf as long as no Patrick’s containers were loaded. The National Rail Manager agreed to this condition.

There were other very blatant examples of breaches of the boycott provisions of the TPA. My personal favourite was at Fisherman’s Island in Brisbane where the MUA members decided to place a sign at the level crossing where the National Rail Freight trains entered the terminal which stated:

MUA Picket Line, Stop.

As is apparent, the MUA were not making much of an effort to hide their involvement in the picket lines.

Specific contraventions
The ACCC alleged the following specific contraventions:

1. damage to Patrick Stevedores – section 45D;

2. damage to shipping corporations, road and rail transport corporations, importing corporations and exporting corporations – section 45D;

3. preventing or hindering Patrick Stevedores – section 45DB;

4. preventing or hindering shipping operators, importers and exporters – section 45DB;

5. preventing or hindering road and/or rail transport operations – section 45DB;

6. preventing or hindering non-union stevedores - section 45DB; and

7. preventing or hindering overseas shippers - section 45DB.

The ACCC was quite confident of winning its case due to the blatancy of the MUA’s conduct. In particular, we believed that our evidence concerning the global boycotts and the various refusals to provide services was very strong. The weaker part of our case related to the blockades, as we suspected that the MUA would argue that whilst their members were in attendance at the various blockade, they were not actually in charge.

[1] As reported on page 1 of the Daily Commercial News, 11 September 1997.
[2] Kes Marges quotes on page 3 of the Daily Commercial News on 23 September 1997.
[3] De-unionisation attempt blocked with ITF help – Victory for Australian Dockers, ITF website

Warranties Against Defects: Coming to grips with Regulation 90 of the Competition and Consumer Regulations 2010

2011-12-28T17:07:00.000-08:00

This article first appeared in the December 2011 edition of the NSW Law Society Journal, Vol. 49 No. 11, pp. 71-73.

Businesses have a nine-month amnesty to provide the prescribed warranties against defects in their goods, but lawyers need to make their clients aware of the Australian Consumer Law (ACL) requirements or retailers could face enforcement action.

Recently competition and consumer law practitioners have been in up in arms about the implications of Regulation 90 of the Competition and Consumer Regulations 2010 (CCR).

The proposed regulation, which commences on 1 January 2012, will have a profound effect on the voluntary warranties provided by many manufacturers, importers and retailers to their consumers, as well as the way they promote such warranties. In broad terms, reg. 90 will be to introduce prescriptive requirements and obligations in relation to the provision of voluntary warranties against defects to consumers.

Legal practitioners with clients who supply goods with a warranty against defects document will need to understand the requirements of reg. 90 and the risks of providing a non-compliant warranty.

Despite the highly prescriptive nature of the legislation, the ACL Regulators have shown a willingness to take a practical and commonsense approach to enforcing the new laws; for example, the recent announcement of a nine month amnesty for suppliers who make a good faith effort to comply with the reg. 90.

However, businesses should also recognise that if they do not make a good faith effort to comply with reg. 90 from 1 January 2012, the ACL Regulators are highly likely to take enforcement action against businesses which come to their attention.

What it is a warranty against defects?
Whenever a consumer purchases a product, they will often receive a warranty against defects document from the manufacturer, importer or retailer. This is not an express warranty such as a statement printed on a label on a scooter that states: “This scooter is suitable for use by riders who weigh less than 100 kgs”.

Rather, warranties against defects are usually general representations communicated to a consumer that a business will:

repair or replace goods (or part of them);

resupply or fix a problem with services (or part of them); or

provide compensation to the consumer, if the goods or services (or part of them) are defective.

In some cases, the warranty document will have to be returned to the manufacturer for it to be valid. In other cases, all the consumer has to do is retain their proof of purchase to take advantage of the warranty at a later date.

Less expensive consumer goods, such as home appliances and electrical goods, often have 12-month warranties. However, warranties on new motor vehicles will be considerably longer, usually between three and five years.

Currently there are no legislative requirements that voluntary warranties have to meet, other than they cannot be misleading or deceptive about the mandatory statutory consumer guarantees. However, from 1 January 2012, all such warranties will have to meet the prescriptive requirements contained in reg. 90 of the CCR. There will also be civil and criminal penalties for failing to comply with these new laws.

Who needs to comply?
Manufacturers, importers and retailers, will all have to comply with the new laws. Section 102(2) of the Competition and Consumer Act 2010 (CCA) makes it illegal for a person to:

give to the consumer a document that evidences a warranty against defects that does not comply with the requirements of reg 90; or
represent directly to the consumer that the goods and services are goods or services to which such a warranty against defects relates.

The use of the word “give” in s.102(2)(b) indicates that any person in the supply chain who physically provides a document to a consumer which purports to be a warranty against defects will be caught by the provision.[1] For example:

if a manufacturer places a warranty against defects document in a box with a product after 1 January 2012, then sells it directly to a consumer and the document does not comply with reg. 90, the manufacturer will contravene s.102(2)(b) of the CCA; and[2]

it would appear that if a salesperson working at a retail outlet hands a consumer a document which purports to be a warranty against defects and it does not comply with reg. 90, that salesperson may have contravened s.102(2)(b) of the CCA.[3]

The use of the word “give” suggests that a manufacturer will not be liable under s.102(2)(a) for supplying a good with a non-compliant warranty to a retailer which is then sold to a consumer. This is because the manufacturer is not physically “giving” the non-compliant warranty to the consumer – perhaps an unintended consequence of the use of the word “give” in s.102(2)(a).

The other prohibition contained in s.102(2) is that it will be illegal for a person to represent directly to a consumer that a good or service has a warranty against defects if the warranty does not comply with reg. 90. In other words, if a consumer asks a salesperson at a retail outlet whether a product comes with a warranty against defects, it is illegal for that person to say “yes” if the warranty against defects does not comply with reg. 90.[4]

The Australian Competition and Consumer Commission (ACCC) and state fair trading regulators (collectively known as the ACL Regulators) could allege that the failure by a manufacturer, importer or retailer to “provide” a consumer with a compliant warranty against defects constitutes false and misleading conduct in breach of ss.18 or 29 of the ACL. This would avoid the problems in relation to the use of the word “give” in s.102(2)(a).

Retail staff in every retail outlet who sell goods which include a warranty against defects are going to have to receive some training as to what to say to consumers about warranties against defects or risk contravening the CCA.

What are the penalties?
A contravention of s.102(2) can be either a criminal offence[5] or a civil contravention.[6] The financial penalties for a contravention under both regimes will be the same - $50,000 for a corporation for each contravention and $10,000 for an individual per contravention.

The maximum financial penalties for a breach of s.29 are $1.1 million for a corporation for each contravention or $220,000 for an individual for each contravention.

What does Regulation 90 require?
Sections 192 and 224 of the ACL require that from 1 January 2012 all warranty against defects documents provided by manufacturers, importers and retailers to consumers will have comply with reg. 90.

Reg. 90 establishes the following requirements in relation to all warranty against defects documents. The document must:

be transparent – that is, it must be expressed in reasonably plain language, legible and presented clearly;
concisely state what the person who gives the warranty must do so that the warranty will be honoured and what the consumer must do to be entitled to claim the warranty;
prominently state the name, business address, phone number and email address (if any) or the person providing the warranty;
provide the period or periods within which a defect in the goods or services to which the warranty relates must appear if the consumer is to claim the warranty;
provide a procedure for the consumer to claim the warranty including the address to which a claim may be sent;
state who will bear the expense of claiming the warranty and if the expense is to be borne by the person who gives the warranty, how the consumer can recoup expenses incurred in making the claim;
state that the benefits to the consumer given by the warranty are in addition to other rights and remedies of the consumer under a law in relation to the goods or services to which the warranty relates; and
must include the following text:

Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and for compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure.

The above requirements in relation to warranties against defects will provide a number of benefits for consumers.

First, warranty documents will be easier for consumers to understand as they will have to be written in reasonably plain language.

Second, consumers must be provided with all the relevant contact details of the person offering the warranty. This should make it much easier for the consumer to claim the warranty.

Third, the new warranties will be more specific about the consumer’s legal rights under the warranty. The consumer will know how to claim the warranty, how long the warranty is valid for, and what their costs will be of claiming the warranty.

Finally, by requiring the mandatory text in each warranty document, consumers will understand that the warranty against defects does not replace or restrict any other mandatory consumer guarantees which they may have under the ACL.[7]

What are the problems with Regulation 90?
There are a number of potential practical problems with the way reg. 90 will operate.

The most significant problem is that it will apply by reference to when the warranty against defects document is physically given to the consumer rather than by reference to when the product was manufactured. The obvious problem with this requirement is that many manufacturers, importers and retailers are likely to be selling goods after 1 January 2012 that were manufactured prior to that date. Such goods are likely to already have warranty documents included with the product, either in a sealed box or tamper proof plastic packaging, which do not comply with reg. 90.

As a consequence, a range of organisations lobbied the ACL Regulators for some transitional arrangements to avoid the cost and disruption of manufacturers, importers and retailers having to replace existing warranty documents with new ones which complied with reg. 90.

As a result of this lobbying, the ACL Regulators recently announced a nine-month amnesty for businesses which do not comply with the requirements of reg. 90:[8]

A number of businesses have advised ACL Regulators that due to the long lead times associated with many consumer products, and the nature of the packaging of those products, there will be some goods in the supply chain that, as at 1 January 2012, do not contain warranty documents that are compliant with the warranty against defects requirements of the ACL.

The ACL Regulators recognise that transitional practical difficulties may arise in the application of the new provisions. Accordingly, until September 2012, when considering the appropriate enforcement response to any contravention of the warranty against defects requirements that apply to stock in the supply chain manufactured and packaged prior to 1 November 2011, the ACL Regulators will have regard to:

whether there are serious practical difficulties in updating warranty documents—e.g. the warranty is in a tamper-proof package; and
whether the supplier has taken all reasonable steps to otherwise convey the mandatory text and information required by the ACL to consumers—e.g. by placing a compliant sticker on the outside packaging.

In these circumstances the ACL Regulators are unlikely to take enforcement action.

In other words, until September 2012, ACL Regulators are unlikely to take enforcement action in response to contraventions of the warranty against defects requirements that apply to stock in the supply chain manufactured and packaged prior to 1 November 2011.

However, in order to qualify for this amnesty a business will have to demonstrate that they meet the following three conditions:

the relevant goods were manufactured and packaged prior to 1 November 2011,

there were serious practical difficulties in updating warranty documents; and

the supplier has taken all reasonable steps to convey the required information to consumers.

Legal practitioners should be explaining the terms of the above amnesty, particularly the three conditions, to their clients with a view to determining whether these clients qualify for the amnesty. Practitioners should also advise their clients that the amnesty will not apply to any goods manufactured after 30 October 2011.

Another problem is that manufacturers will also be liable for any point-of-sale material which they provide to retailers which states that a good has a warranty against defects if the actual warranty against defects document does not comply with reg. 90. The key issue here is whether the manufacturer has made that representation directly to the consumer, for example, by placing a sticker on the product or by placing written point-of-sale material near the product.

It will also be important for legal practitioners to assist their retailer clients in understanding the new laws. As stated above, s.102(2)(a) of the ACL states that the mere act of “giving” a non-compliant warranty against defects to a customer, say in a box or in tamper proof packaging, may expose a retailer to liability. However, it seems that in practice such an outcome is unlikely.

During a Webinar organised by the ACL Regulators in relation to the ACL,[9] a colleague asked a representative of one of the ACL Regulators whether the mere act of a retailer passing onto a consumer a manufacturer’s non-compliant warranty against defect document, given to the retailer by the manufacturer, would make the retailer liable for a breach of s.102(2)(a).[10] The representative of the ACL Regulator responded that this conduct would not result in liability for the retailer.

However, retailers may be liable under s.102(2)(b) if they make a representation about a warranty against defects which is incorrect or misleading. For example, a retailer will breach s.102(2)(b) if they tell a consumer that a product comes with a warranty against defects, when that warranty does not comply with reg. 90.

Accordingly, legal practitioners have three options when providing guidance to their retailer clients about their obligations:

advise their client that they must check every warranty against defects document which is being provided to consumers with any of the goods which they are selling to make sure they comply with reg. 90; or

direct their salespeople not to make any representations to customers about the warranties against defects provided with any of the goods which they are selling; or

check the warranty documents in relation to goods where they believe consumers are more likely to ask warranty questions, for example in relation to more expensive or technically complicated goods, and direct staff to only make representations to consumers about the warranties against defects on these particular goods and no other goods.

Some large retailers have taken the approach of demanding that their suppliers provide them with indemnities in relation to the warranties against defects documents for the goods which the retailer is selling. The idea behind seeking an indemnity appears to be that if the particular retailer is pursued by ACL Regulators for a breach of s.102(2) of the ACL, they can effectively shift liability back onto their supplier. While this is a possible fourth strategy, it is both impractical and likely to be unenforceable.

[1]Unfortunately, the ACCC has used the word “provide” rather than “give” in itsadvice on how the new provisions will operate - http://www.accc.gov.au/content/index.phtml/itemId/996742. I agree with other commentators that the word“give’ in s.102(2)(a) requires the physical act of providing the warrantydocument to the consumer - see Geoff Taperell, “Warranties Against Defects – ANew Regulation will Apply from 1 January 2011”, http://www.dlapiper.com/Global/publications/detail.aspx?pub=f1a532d6-f6ac-4f8f-808d-1327a3cd6e1f,dated 16 May 2011

[2] Subjectto “amnesty” discussed below.

[3] Subjectto Webinar advice discussed below.

[4]Unfortunately, s.102(2)(b) has been very poorly drafted. The use of the word “or” between ss.102(2)(a)and 102(2)(b) suggests that these sections should be read disjunctively.However, reading the provision in this way makes no sense. For the provision tomake any sense, it has to be read conjunctively.

[5] s.192ACL

[6] s.224ACL

[7] Under the ACL there are a range of mandatory consumerguarantees which are implied into every consumer contract and which cannot beexcluded by manufacturers, importers or retailers.

[8]Warranties Against Defects, ACCC website – see http://www.accc.gov.au/content/index.phtml/itemId/996742

[9] “TheAustralian Consumer Law – Be Prepared”, ACCC Webinar, held on 29 October 2010, http://webcast.viostream.com/?viocast=3041&auth=cd52b9dd-0a50-4444-a188-53acf89cd811.Unfortunately, a recording of this Webinar is not currently available on theACCC website.

[10] DavidJohnson, Managing Director, Watchdog Compliance - http://www.watchdogcompliance.com.au.

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

2011-12-21T15:14:00.000-08:00

Part 12: It begins – ACCC v MUA

ACCC commences legal proceedings

The ACCC was at the end of itstether when it decided to commence legal proceedings against the MUA on 22 May 1998. Not only was the ACCC continuallybeing baited by the MUA, but the MUA was continuing to engage in illegalboycott conduct. For example, when Patrick decided to subcontract some stevedoringwork 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 threwthe book at the MUA. The following is the full text of the media release whichthe 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 mediarelease, the ACCC decided to commence legal proceedings against the MUA for allof its alleged illegal conduct - namely:

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

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

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

The ACCC had decided that there wasno point holding back at this stage. Rather, we made the decision to commenceproceedings in relation to virtually every act which the MUA had engaged in orbeen implicated in since the dispute first started. It now appeared that one of the main benefitsof delaying our action was that we were now able to run a much larger and moresophisticated case than would have been possible had we commenced at the end ofApril 1998.

We also decided to take legalproceedings against only two individuals, namely, John Coombs, the NationalSecretary of the MUA and Trevor Charles, the local representative of the ITF. Thereality was that the ACCC could have sued almost every senior MUA official for havingsome role in the illegal conduct. However, we chose these two individualsbecause we saw them as the guiding minds of the domestic and global boycottsrespectively.

Explaining our conduct

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

The ACCC’s desire to protectAustralian businesses from the effects of the MUA boycotts was to become amajor theme of the ACCC’s action.

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

Orders sought

The ACCC sought the followingorders in its case:

· urgent injunctions in relation to the alleged involvementof the MUA in international boycott activities in conjunction with the ITF;

· declaration that the domestic blockades, refusal to worktugs and lines and the ITF international boycott actions breach the TradePractices Act;

· findings of fact (which would enable business sufferingloss or damage from the MUA conduct to seek damages); and

· permanent injunctions restraining the MUA from engagingin relevant primary and secondary boycott action.

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

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

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

We believed it was important tostop the likely detriment which would result from these 25 vessels being boycottedat various ports around the world. Suchboycotts would have caused the exporters with goods on the vessels considerable financial damage, particularly ifthe foodstuffs on these vessels went off or rotted before they could beunloaded. These boycotts would also havethe more general negative effect of damaging Australian reputation as areliable exporter.

We also thought it would berelatively easy to win our urgent injunctions given that the MUA were bothpublicly and privately claiming that they were not actually inciting overseasunions to engage in illegal boycotts. In other words, if the MUA were notasking 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 relyingheaving on sections 87(1AA), (4) and (5), which stated:

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

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

(a) whetheror not it appears to the Court that the person intends to engage again, or tocontinue to engage, in conduct of that kind;

(b) whetheror not the person has previously engaged in conduct of that kinds; and

(c) whetheror not there is an imminent danger of substantial damage to any person if thefirst-mentioned person engages in conduct of that kind.

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

(a) whether or not it appears to the Court thatthe 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 previouslyrefused or failed to do that act or thing; and

(c) whether or not there is an imminentdanger of substantial damage to any person if the first-mentioned personrefuses or fails to do that act or thing.

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

A final advantage of pursuing urgentinterlocutory orders related to our problems in obtaining evidence in a timelymanner. As stated earlier, the ACCC was finding it difficult to get detailedaffidavits from witnesses for use in the legal proceedings in the short timeframes available. However, we believedthat this problem could be overcome, at least in the short term, because the ACCCwould be permitted to file a hearsay affidavit prepared by an ACCC officer insupport of its application for an urgent interlocutory injunction.

This meant that an ACCC officercould interview a market participant over the telephone or at a face to facemeeting and then immediately prepare their own hearsay affidavit outlining the evidenceobtained. In this way, the ACCC was able obtain evidence from marketparticipants quickly and then provide this evidence to the court in a timelymanner.

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

[1] http://www.accc.gov.au/content/index.phtml/itemId/87310/fromItemId/378006

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

2011-12-18T18:55:00.000-08:00

Part 11 – ACCC - MUA face off

MUA Meeting

On 6 May 1998, I travelled down to Melbournewith my colleagues from the Waterfront team for our first face to face meeting with theMUA. The MUA had called for the meetingso that they could explain their position in relation to the boycotts, inparticular the global boycotts which had been threatened by ITF affiliates.

I remember sitting on the plane andasking one of my colleagues what he thought the MUA would want to discuss atthe meeting. He said it was simple, justread page 4 of The Australian. Hethen handed me a copy.[1]

The waterfrontunion will today use its partial victory in the High Court to pressure theAustralian Competition and Consumer Commission to abandon plans to prosecutetwo senior MUA officials.

MUA and ACCClawyers were due to meet at 11am in Melbourne to discuss the watchdog's claimsthat John Coombs and Trevor Charles had breached the Trade Practices Act byaiding the International Transport Workers Federation’s planned boycottcampaign during the height of the waterfront dispute.

The MUA has deniedany illegal involvement with the ITF and its legal team of Val Gosternik andKevin Bell will today argue the ACCC should no longer have concerns given thisweek's High Court ruling in favour of the union and the expected return to workby 2000 wharfies sacked by stevedore Patrick last month.

The ACCC will berepresented by lawyers from the Australian Government Solicitors office –including General Counsel Luke Woodward and Senior Counsel Glen Owbridge– andspecial investigator Michael Terceiro, who has headed up the commission's MUAprobe.

An unsworn affidavitby Mr Terceiro, who spent six months examining union publications and websitesaround the world, is part of the ACCC's documentation.

A spokesman forACCC chairman Allan Fels declined yesterday to comment on the precise nature ofthe talks, but said the ACCC was yet to decide if charges would be laid.

I must admit that I liked the titleof “special investigator” in the newspaper article. I thought that it made mesound like Kenneth Starr or somebody of similar investigatory stature.However, I wasn’t quite as keen on the next paragraph which stated that I hadspent “six months examining union publications and websites”. I thought that thismade me sound like a computer geek who just sat in my office all day surfingthe web, rather than a hardcore investigator who was willing to get my hands dirty.

From the beginning of the meeting,it became apparent to me that this was not going to be a normal ACCC settlementmeeting. Usually when the ACCC has a meeting with a business about a suspected breach ofthe TPA, it believes that it is the party which enjoys the moral high ground.However, I remember at this meeting it was the MUA which was continuallytrying to assert the moral high ground, while at the same time being completelydismissive of the ACCC's concerns. TheMUA’s confidence had been greatly enhanced by its recent win inthe High Court.

A major issue we discussed at themeeting was whether the MUA would abide by undertakings which they had given tothe Federal Court not to engage in any boycott conduct towards Patrick. We also asked whether these undertakingswould extend to any ships loaded at Webb Dock by the PCS. Unfortunately, we received vague answers tothese specific questions. It became apparent to us that the MUA and its legaladvisers had come to the meeting with the intention of playing games,rather than to make any genuine effort to resolve our concerns.

The most annoying part of themeeting was when the representatives of the MUA looked us right in theeye and said that the MUA had nothing to do with the ITF’s threatened globalboycotts. We knew at the time that this was simply false.

Regardless of the MUA’s games, itwas apparent to me that the MUA were very concerned about the ACCC taking legalaction against them. Indeed, the MUA appeared to be quite desperate to stop that happening.

TheMUA’s main concern appeared to be that if the ACCC took legal action againstthem, that this may turn public opinion against their cause. At that time, the ACCC had a good reputationas an independent and fearless regulator, which no doubt gave added weight to its concerns about the MUA's conduct. I also think that the fact that the ACCC hadnot commenced legal proceedings immediately after the sacking convinced manypeople that the ACCC was not operating at the direction of the HowardGovernment, but rather was operating independently.

After the meeting, the Waterfrontteam was scheduled to return to Sydney.However, before returning I wanted to go to have a look at Webb Dock. At this time, there was still a large picketline at Webb Dock and the mood of the picket line was veryaggressive.

I turned to my AGS colleague andtold him of my plan. He looked verynervous about the idea of going to Webb Dock. He had been my unfortunatecompanion on the earlier visit to the MUA head office, so it was fair to say thathe didn’t trust me very much. Iassured him that we were only going to have a look and that I doubted we wouldbe able to get very close to Webb Dock because of the picket lines.

I flagged down a taxi and told thetaxi driver we wanted to go to Webb Dock. He looked at me in terror and said,“You want to go to Webb Dock?” I confirmedthat that was where we wanted to go. Despite the fact that he clearly did not want to accept the fare, heheaded off to our destination with little enthusiasm.

We headed off to Webb Dock. I was sitting in the front seat of the taxi and the AGS lawyer was in the back. After driving for some time, we arrived atthe port precinct. I was very surprised to see that the whole area lookedabandoned – there were no people anywhere.

We arrived at what appeared to bethe Webb Dock gate and then proceeded to drive through it. We then drove downto the actual dock area where there were a few containers and a large number ofmotor vehicles. It dawned on me that wehad somehow driven behind the picket lines. But, where was the picket line?

The taxi driver then turned the taxi around and started driving back to the gate. As we were driving back, the then CEO of the ACCC called me on my mobilephone to find out how our meeting with the MUA had gone. Just as he started talking to me, a fewhundred picketers appeared at gate between where we were and where we wanted togo. It seemed that the picket line had left the gate for a short time which,coincidentally, had also been the precise moment that we had driven through thegate.

Now the picket line was back andlooking very angry at the two guys in suits who had somehow gotten behind thepicket line. I suspect they were actually angry with themselves for having somehowlet us through the picket line without their knowledge.

As we drove towards the picketline, the picketers formed a human barrier in front of us. The CEO, who was still on the phone to me, realised something was up bythe fact I had gone silent mid-sentence. He asked me what was wrong. I told himthat we had inadvertently driven behind the picket line and that we now had afew hundred picketers in front of us who were looking at us with extrememalice. I said to the CEO that I thought we were going to be beaten up.

At that moment, the poorunfortunate tax driver asked me what he should do. I gave him the following instructions withouteven thinking – slow down, keep driving, and whatever you do, don’t stop. Ithought that if we slowed down to about 5 kms an hour and continued on our path, that the picket line may part and let us through. I added one further important instruction to the taxi driver - “Make sure you don’t hit anyone”.

As we came close to the picketline, I remember seeing all the picketers looking at me and then looking ateach other. I knew that it would only take one person to do something and therest would follow suit. For example, if someone had decided to stand in frontto the taxi and not move, I am sure that other picketers would have done thesame. Alternatively, if someone had tried to drag us out of the taxi, I knewthat the entire mob would have joined in. Fortunately, in that very long 1 minute as we drove towards the picketline, nobody on the picket line could decide what to do.

When we got to the front of the picketline, it started to part slowly. We started driving through. The picket line continued to part. I knew that at any second everything couldchange. It would take just one member of the picket line to do something andthe rest would follow – luckily for us, that didn’t happen. The picket line continued to part until wehad made it to the other side. Once we made it through the picket line, we droveaway, with considerable relief.

I remember looking back over my shoulder at the picket line. The members of the picketline were all staring at us with a look of disbelief on their faces. I think that they were quickly coming to therealisation that they should have done something rather than just let us breachtheir picket line twice.

When we had driven for a shorttime, the AGS lawyer asked me whether I had had a Plan B just in case my Plan Ahad not worked. I replied, “Of course Ihad a Plan B. If the picket line had stopped us, I was going to push you out ofthe taxi and tell them to play with you for a while”. While the AGS lawyer laughed, it seemed to methat he was, like me, still quite shaken by the whole experience.

When we arrived back at the CBD, Iasked the taxi driver what the fare was. He looked down at his meter and saidin a sheepish way that he had forgotten to turn on his meter. The taxi driver hadbeen so scared at the prospect of going to Webb Dock that he had forgotten to turnon his meter! That event alone probably demonstrates quite well just howdangerous the atmosphere at the waterfront was at the time.

I asked the taxi driver how much hethought the fare would be had he remembered to put his meter on. He told me an amount. I gave him the fare plus a very healthy tip,which I thought might make up in some small way for the terror I had just puthim through.

Provocation

In the first couple of weeks of May1998, there was a distinct possibility that the ACCC may not in fact end up taking legal action against the MUA. Given the High Court’s decision that Patrickcould only hire its former MUA workers, there seemed to be no sensible reasonfor the MUA and the ITF to maintain their threatened boycotts. Indeed, on 5 May 1998, the first MUA workersreturned to work, admittedly on an unpaid basis, to clear the backlog ofcontainers.[2] If the boycotts had stopped at that time, the ACCC could have just walked away.

Given these events, one has to askwhy the ACCC ended up taking legal action against the MUA?

The simple explanation was extremeprovocation. Despite winning their case in the High Court, the MUA continued toincite global boycotts of Australian shipping. The MUA did this in reprisalagainst the parties who had dared to use non-MUA labour during thedispute. The MUA continued engaging insuch conduct in the face of many clear warnings from the ACCC that they must desist.

While the MUA’s earlier illegalboycott conduct could be excused to some extent because of Patrick’s extremelyprovocative actions, this current boycott activity could not be defended in thesame way. To continue inciting boycotts of ships which had been stevedored with non-union labourin the then current circumstances was industrial thuggery, pure and simple.

At the ACCC, we saw the newsreports that the global boycotts would remain in force until there was a“definitive end” to the waterfront dispute.[3]What this meant was that the MUA and its overseas affiliates would continue their illegal boycotts until all the MUA workers were given theirjobs back. As stated earlier, the MUAdecided on this course of action despite the High Court’s decision that theadministrator of the Patrick labour hire companies was the one who had thelegal right to decide how many workers went back.

In mid-May 1998, the InternationalLongshore and Warehouse Union (ILWU) picketed the Columbus Canada at Longbeach, California because it had been loaded in Australiausing non-MUA labour.

David Cockcroft, the then head ofthe International Transport Workers Federations (ITF) was quoted as saying:

I imagine the banson the Columbus

Canada

won’t end at Longbeach. This ship is likelyto get a similar reception when it goes to San Francisco, Seattle and Vancouver.[4]

When the media asked John Coombsabout this incident, he quite innocently said that he was unaware of what hadhappened.

The ITF also started playing gameswith the ACCC. The ITF was aware thatthe ACCC had asked the MUA to withdraw any requests which it had made to theITF and ITF affiliates to boycott ships which had been loaded or unloaded bynon-MUA labour.

The ITF subsequently put messageson its website addressed to all of its affiliates in which they told these affiliatesto ignore any requests from the MUA to cease boycott action.[5] Wefound it somewhat strange that the ITF would have published such a message onits website if the MUA had not in fact asked the ITF and other unions to engagein the illegal boycott conduct in the first place.

The MUA’s apparently bloody-mindedattitude to getting all its workers re-employed was just a ruse. What it reallywanted to achieve were generous redundancy payments, entirely funded by theHoward Government, for any excess Patrick MUA workers who the administrator did not re-employ. The MUA believed that itwould have greater leverage in achieving this outcome if the boycott activityagainst international shipping was continuing.

The MUA’s irresponsible andreckless approach to the global boycotts put it on an inevitable collisioncourse with the ACCC.

[1] “MUA bidto tame watchdog”, The Australian, 6 May 2011, p. 4.

[2]“Wharfies back on the job for free”, Australian, 6 May 1998, p. 1.

[3] Ibid.

[4] ‘Anotherfor ships face USdock ban”, Australian, 12 may 1998, p. 6.

[5] “ACCCmay sue on port delays”, Lloyds List, 18 May 1998, p. 132.

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

2011-12-14T06:41:00.000-08:00

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

ACTU defiant

Towards the end of April 1998, JudgeBarry Beach of the Victorian Supreme Court granted Patrick a range ofinjunctions preventing the continuation of the boycotts at its Melbournecontainer 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 EastSwanson and Webb Docks. The injunctions appliedto “anybody” protesting at Patrick’s facilities - they were not limited to eitherMUA members or even to an identifiable group of individuals. Furthermore, theprotestors 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 thatJustice Beach’s injunctions would be overturned on appeal. However, that wouldtake time. It also became apparent to us that the MUA could not afford to calloff the boycotts because that would have given the non-union workers anopportunity to get on the wharfs to show what they could do. Accordingly, theMUA simply decided to ignore the injunctions.

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

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

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

The actions of the ACTU and Combetmarked a significant deterioration in the dispute. The ACCC had understood up until that timethat the parties to the dispute would obey court orders. Even though most of the partiesappeared 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 theparties would draw the line at ignoring court orders. However, the statements and actions of theMUA, the ACTU and Combet in relation to Justice Beach’s orders signalled to us thateven court orders were going to be ignored by the parties if they did not likethe consequences of complying with those orders.

I think it is fair to say that therule 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 ofthe ACTU, in publicly stating that it was going to engage in contempt of court,to the actions of its international counterpart, the InternationalConfederation of Free Trade Unions (ICFTU).

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

The ICFTU announced in late April1998 that it had written to the Prime Minister Mr Howard to advise him that itwould 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 toengage in, or seek to facilitate, illegal boycotts. Rather the ICFTU announcedthat it was proposing to engage in a series of entirely lawful actions to placepressure on the Howard Government and Patrick to try to facilitate a resolutionof the dispute.

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

At the time, I was very impressedat the way the ICFTU had decided to approach the issues. It had decided tofocus its efforts on legal means of pressuring Patrick and the HowardGovernment to fix the dispute rather than to promote illegal conduct, includingengaging in conduct which would constitute a contempt of court. It wasunfortunate that both the MUA and ACTU did not decide to adopt a similarapproach to the ICFTU. Indeed, the approacheswhich the ICFTU decided to take were clearly available to the ACTU.

Criticisms of ACCC

At this time, the ACCC was beingcriticised relentlessly by the then Labor opposition. Professor Fels was beingcriticised by a number of Labour politicians for even threatening to take legalaction 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 theShadow Minister for Transport. Thegeneral line which the Labor Party took in its criticism of Professor Fels was thathe was being partisan in threatening to pursue the MUA and not Patrick andother businesses involved in the Waterfront.

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

In early May 1998, Professor Felsdecided to get on the front foot in explaining the ACCC’s approach to thedispute. In a lengthy article in The Ageentitled “Watchdog and the Waterfront”, Professor Fels made the followingcomments:[3]

What is the roleof the Australian Competition and Consumer Commission in the waterfrontdispute? Is it taking sides? No. It is just doing the job the FederalGovernment gave it to do…

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

The employers –Patrick, PCS and P&O – and the Maritime Unionof Australiahave engaged in conduct which the commission is investigating for possiblebreaches of the act.

The commission isnot taking sides. Its role is simply to ensure that no one breaks the law. Ifit turned a blind eye to breaches of the law (as some suggest would beappropriate in this case), its hard won credibility and integrity across theboard would suffer.

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

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

It isinvestigating: the lease arrangements between Patrick and the National FarmersFederation owned by PCS Stevedoring at Webb Dock; possible anti-competitivearrangements which came to light in the OOCL litigation (an investigation thathas accelerated now that Supreme Court documents are available); andallegations of (a) “no-poaching of customers” agreement during the disputebetween Patrick and P&O.

Theseinvestigations have received less publicity than the labour-marketinvestigations partly because the MUA (acting within its rights) has released mostof the correspondence about itself, whereas the businesses involved have not.

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

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

It is followingstandard and proper processes, despite allegations by the MUA of commissionharassment. It is customary, when it learns of behaviour that would breach theTrade Practices Act, to warn participants in the hope of stopping thebehaviour.

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

It is regrettablethat the effect of the MUA comments is simply to discredit an independentagency doing its job properly.

Should thecommission exercise its discretion to apply the law leniently because unionsare involved? There are no signs the Parliament intended this. If anyone thinksthe law is undesirable, they should get it changed by Parliament rather thanexpect the regulator to nullify it.

In any case whenprospective breaches are announced with maximum publicity, the commission haslittle choice but to act….

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

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

Professor Fels made it quite clearthat the ACCC would be doing its job properly and that we would not beinfluenced into taking action by either side in the dispute. We assessed allthe complaints we received in the usual way, always being careful to maintainour 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 breachesof the TPA" was a clear reference to both the ACTU and Labor opposition.

As stated by Professor Fels, theACCC had decided to commence a number of business-side investigations becauseit wanted to be balanced in its approach during the Waterfront Dispute. Byinvestigating both the unions and businesses, the ACCC hoped that nobody could accuseit 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 thatthe ACCC was being partisan against them.

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

I was also very frustrated that theACCC 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 Courthanded down its decision in relation to Corrigan’s appeal against the order thathe reinstate his MUA workers. The ACCChad decided to await the outcome of the High Court decision before deciding whetherto commence legal action against the MUA.

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

However, soon after the decision, itbecame 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 torehire the sacked MUA workers, it also decided to vary Justice North’s orders.The High Court varied the orders to grant theadministrators of the Patrick labour hire companies discretion as to whetherthey would rehire all of the sacked MUA workers, or only some of the workers. In other words, whilst thePatrick labour hire companies could only hire the former MUA workers, theadministrators in charge of those businesses could decide whether to rehireonly part of the sacked MUA workforce if this would improve the financialviability of these companies.

As stated by the majority:

It is one thing torestrain Patrick operations from giving effect to the termination of the laboursupply contracts…It is a very different thing to fetter the discretion of theadministrators. There was an appealable error (in Justice North’s initialorders) which can be rectified by the insertion of an appropriatequalification.

Coombs and the MUA were very unhappywith the High Court’s decision. Coombs wasimmediately quoted in the media as saying:

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

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

In other words, the MUA did notcare that the High Court had made a decision concerning the legal position of theparties to the dispute. Even though High Court had provided clear guidance on howthe dispute may be resolved, the MUA was determined to ignore this directionand to continue engaging in the illegal boycott conduct until they got exactly what they wanted.

The MUA’s pronouncements that itwould effectively ignore the High Court’s ruling was probably the lowest pointin the dispute in terms of the parties showing a blatant disregard of the ruleof law. If the parties were willing toignore the highest court in the land then there was little hope of the courts providing a legalresolution.

We were also concerned that if the MUAand 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’sand the Howard Government from ignoring any court rulings that they did notlike.

[1] “UnionsDefy 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] “Anysettlement will come on the wharves and not in the courts”, SMH, 5 May 1998, p. 7.

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

2011-12-10T22:56:00.001-08:00

Part 9 - Things get uglier

Kids on the pickets

Undoubtedly, the most shockingimage of the entire Waterfront Dispute was the appearance of terrified childrenon the picket lines. On the Tuesdayafter the Easter Weekend a number of children were brought to Port Botany bytheir parents. When police startedtrying to remove these children, the children became very upset and startedscreaming and crying. The media wasthere to capture the children’s distress and the story featured heavily ontelevision news broadcasts over the next few days. Indeed, this footage became one of the definingimages of the whole dispute.

But what was the response of bothsides of the dispute to this upsetting event?

Both sides of the dispute immediatelytried to turn these terrible events to their own political and media advantage.

Peter Collins, the former NSWLiberal opposition leader, immediately branded the use of children as a“deliberate stunt by union organisers to use children to gain sympathy fortheir cause”.[1] Headded:

…people certainlydon’t like seeing children used as human shields in an inflamed industrialtheatre, as they were on Tuesday. Using children in this fashion is abhorrent,inexcusable and unacceptable by any standard.

Vic Slater, the Assistant NationalSecretary of the MUA responded with one of the most ludicrous statements of thewhole dispute[2]:

Let’s hope thatthe hypocrisy of politicians complaining about wharfies allegedly usingchildren on the hustings is not entirely lost on the public. No doubt our Federal MP’s kissing babies forphoto opportunities in the lead-up to the next election will become daily farein the media.

How Vic Slater could seriouslycompare MP’s kissing babies to young children being forcibly removed fromviolent picket lines in tears is beyond me.

Slater went on to claim that theperson who brought the children to the “peaceful assembly” was not a member ofthe MUA. He added that the person had only brought his kids because he couldnot organise suitable child care. He made the following promise[3]:

And it won’thappen again. The Port Botany picket has set up it’s “mobile crèche” away fromthe picket – like those already operating in Fremantle, Melbourne and Brisbane.People donated toys and food for children.

I will quote the rest of Slater’sarticle because it has always shocked me at its cynicism in trying to turn aterrible event into a public relations win for the MUA[4]:

Wives andchildren, however, do have the right to be with their families in times ofcrisis. Their husbands and fathers have lost their jobs. Who will feed them?Who will pay the mortgage so they are not booted out of their homes? Who willpay the child-care fees, now they are out of a job?

The ACTU, otherunions and other MUA members are doing all they can, but the myth ofAustralian’s “feeling comfortable and safe” under the Howard government is goneforever. Union bashing is not a family value.

The media are wellaware of this. They have been phoning us each day asking to interview familiesabout their plight. And it is the media which had requested our members getfamilies behind officials during television broadcasts.

WorkplaceRelations Minister Peter Reith claims “the picket line is no place forchildren”. No doubt he believes women should stay in the kitchen and childrenshould be seen and not heard.

The truth is thatwives and children are even more affected by this dispute and the men who havelost jobs. And they have a right to be there as a family and have their say.

What's more, thisis Easter. It is not only a time when families are traditionally together, itis a time when schools and preschools are on holidays. Childcare is even moredifficult to arrange, especially given this government has cut $800 millionfrom the children's services budgets – putting centre–based care, familyday–care, pre–school, after–hours programs, occasional and respite care out ofthe reach of the majority of Australians.

This dispute,which Mr Reid has manufactured, affects all family members, not just MUAmembers.

It may bedifficult for readers to grapple with the reality that these 2000 wharfies thatPatrick has effectively sacked are human beings with mothers and fathers andwives and children of their own – not the faceless demons painted by thegovernment. They are people. What's more, they are people with a long traditionof sticking together and working as a community.

And they are notjust fighting for their jobs, their fighting for their children's futures. Itis only natural that such a time their children want to be near them.

I think the debate between Collins andSlater provides a stark illustration of the moral bankruptcy of both sides.Neither side truly cared about those kids in the middle of the picket line, norabout any of the other people who were injured and victimised during the dispute.Every person involved in the dispute at the grass roots level were seen by theMUA, ACTU, Patrick and the Howard Government as little more than props to bemoved around in front of the media to try to win over popular support.

International action

In mid April 1998, it became apparentthat the MUA’s efforts in gaining international support for its cause was startingto be successful.

As reported in the media at thetime, the American Federation of Labor and Congress of Industrial Organisations(AFL-CIO) asked its 17 million members to boycott Australian farm products.[5]

This was followed by anannouncement by the International Longshore and Warehouse Union (ILWU) that itwas calling on all union members to stop buying Australian beef and produce. The ILWU president, Brian McWilliams, wasreported as saying:

The ILWU sees thisattempt to break the Maritime Union of Australia aspart of a larger global strategy by international shipping and stevedoringcompanies and various conservative national governments to bust dock workerunions around the world. We will not stand for this kind of activity.[6]

These announcements caused a greatdeal of concern in Australia.

However, these proposed boycotts offarm produce did not seem to make a great deal of sense in the context of theAustralian dispute, as only a few ships had been loaded using non-union labour. The ILWU’s explanation for the boycott was:

The NationalFarmers Federation is one of the main instigators of this attack on the MUA sowe will begin by targeting it.[7]

The ILWU also hinted that it wasproposing to black ban any ships which had been loaded or unloadedby Patrick Stevedores. In this regard, McWilliams was quoted as saying:

It will be severalmore days before any ships using Patrick’s scab docks can make it to our shoresand time is of the essence.[8]

After these threats were made,Professor Fels weighed into the debate in a significant way. He announced that the ACCC, through itslawyers, had sent a letter to the MUA the previous Friday, 17 April 1998,warning them about their conduct in seeking to facilitate a global boycott.

In the letter, the ACCC demandedthat the MUA:

· cease aiding, abetting, counselling, procuringor conspiring with the ITF to facilitate a global boycott;

· advise the IFT not to threaten or implement anyboycott of Australian shipping; and

· refuse to provide the ITF or any other overseasaffiliates with information about any ships which had used non-unionstevedoring services in Australia.[9]

The ACCC also demanded that the MUAmaintain all relevant records relating to the matter, including emails and anyother computer records. The ACCC warned the MUA that if it did not preservethese documents it could subsequently face contempt of court proceedings:

Destruction ofsuch material in anticipation of the obligation to produce documents in discoveryis contempt of court.[10]

The letter ended with the threatthat the ACCC reserved the right to commence legal proceeding against the MUAwithout further notice.

The ACCC demanded a response by 10am on Monday, 20 April 1998.

The MUA’s response was swift anddirect. Coombs was reported as saying in response to the ACCC letter:

Our lawyerslaughed (when they saw the ACCC’s letter), they thought it was a joke.[11]

Vic Slater was also quoted assaying that it was “unlikely” that the MUA would respond by the ACCC’s deadlineas the ACCC was “well down on our list of priorities at the moment”.[12]

The MUA did provide some more sensiblereasons for their decision not to provide the undertaking. For example they subsequentlyclaimed to the ACCC that they did not need to ask the ITF to take action as theITF could see what was going on in Australia and could decide to take its own action unilaterally.

However, Fels had a response tothis claim:

The ITFconstitution requires it to take boycott action only when recommended by itslocal affiliate and there is other evidence implicating the MUA in theboycotts.[13]

Professor Fels concluded by sayingthat:

The commission isat the point where it would have little choice but to seriously consider legalaction against the MUA.[14]

However, the MUA had somejustification for feeling cocky about the ACCC’s legal threats. This wasbecause of the recent outcome in separate legal proceedings commenced byPatrick in London against the ITF.

Shortly after the dispute started Corrigan commenced legal proceedings in Londonseeking injunctions to prevent the ITF from facilitating a global boycott of shipsstevedored using Patrick non-union labour. Corrigan had been successful in the first instance in obtaining aninterim injunction.

However, the British High Court hadlater decided not to continue the injunction. In his judgement, Justice Thomassaid: [15]

This courtis being asked to use its injunctive powers on an interlocutory basis inconnection with an industrial and political dispute in a another sovereignstate by requiring the ITF in this jurisdiction and throughout the world not toinduce its affiliates to take industrial action that is accepted can be lawfulin other sovereign states. It may well be that such action in relation to thispolitical and industrial dispute in Australia might be entirely in accordancewith the law as well as the social and political views prevalent in that state,though contrary to the law currently applicable in Australia and the policiesbeing pursued by the Government of Australia.

It is clear that the granting of the injunction would severely impairthe ability of the ITF to lend support to the MUA in a bitter and politicalindustrial dispute in Australia.The ITF's support appears on the evidence before me to be of vital significancegiven the history of their support in relation to what happened at Cairns, Dubai and with PCS at Webb dock. To deny thatsupport at the commencement of an industrial and political dispute would beeven more detrimental; as Lord Diplock said in NWL v Woods [1979] ICR at p 879:

"it is in the nature of industrialaction that it can be promoted effectively only so long as it is possible tostrike whilst the iron is hot; once postponed it is unlikely that the actioncan be revived.

The ACCC had never contemplatedtrying to take legal proceedings against the ITF in another country to preventit from inducing other unions to engage in boycotts in support of the MUA.Rather, our focus had always been on trying to take legal proceedings againstthe MUA in Australia for inducing the ITF and any foreign unions from engagingin boycotts against Australian shipping.

MUA's response to the ACCC
The MUA’s lawyers had written tothe ACCC to ask for more time to respond to the ACCC's legal threats. They had also foreshadowed that the MUA would bedenying the allegations of facilitating the global boycott.[16] TheACCC agreed to extend the MUA’s deadline to provide the undertakings afterthese requests from the MUA’s lawyers.

While the MUA’s lawyers werepolitely asking for more time to respond to the ACCC’s allegations, Coombs wastaking an entirely different approach. He went on ABC radio to make thefollowing colourful comments:

The man’s(Professor Fels) got an ego bigger than Ayers Rock and harassing me with faxesand threats, you know, if he’s got evidence of something, why doesn’t he dosomething about it.

I don’t know howthey (ACCC) expect me to call off international boycotts. Whatever theseaffiliates of the ITF do is their business.[17]

By the end of April 1998, the ACCChad prepared a very strong case against both the MUA and a number of MUA and ITFofficials. The ACCC could have commenced legal proceedings at the end of April 1998. Indeed, the Waterfront Team and many of theACCC’s senior management wanted to commence legal proceedings at that time. However, everybody appreciatedthat it was a very significant decision to commence legal proceedings againstthe MUA.

Professor Fels and theCommissioners decided to wait until the result in the MUA’s legalproceedings against Patrick were known before making a call about whether tocommence our own legal proceedings. Asstated above, the MUA had won an injunction before Justice North of the FederalCourt requiring Patrick to reinstate its MUA workers. Corrigan hadimmediately appealed North’s decision to the Full Federal Court and won a stayof North’s reinstatement injunction pending a final decision from the FullFederal Court.

On 23 April 1998, the Full FederalCourt dismissed Corrigan’s appeal against North’s order and reaffirmed theorder requiring Patrick to reinstate its MUA workers. As reported at the time, this was a “stunningblow” for Corrigan and the Howard Government.[18] Corrigan immediately appealed to the HighCourt of Australia and again sought a stay on the order to reinstate hisworkers. Justice Hayne of the High Court granted Corrigan a stay of theinjunction pending a final hearing of his appeal by the High Court of Australia.

[1]“Children in the front line”, The Sydney Morning Herald, 16 April 1998, p.17.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] “US dock banshit”, The Sunday Age, 19 April, 1998, p. 1.

[6] “USunions call boycott”, Sunday Herald Sun, 19 April 1998, p. 6.

[7] Ibid.

[8] Ibid.

[9] “Felsthreatens Coombs over foreign action”, Australian, 20 April 1998, p. 2.

[10] Ibid.

[11] “ACCCweights in on docks war”, Financial Review, 20 April 1998, p.4.

[12] “Felsthreatens Coombs over foreign action”, op. cit., p. 2.

[13] “ACCCweights in on docks war”, op. cit., p. 4.

[14] “Felsthreatens Coombs over foreign action”, op. cit., p. 2.

[15] PatrickStevedores Operations Pty Ltd v International Transport Workers, 21 April 1998 at http://www.austlii.edu.au/au/special/patrick_uk.rtf- NB: this appears to be an unfinished draft of the final judgement by JusticeThomas. Strange that such a document should be publicly available.

[16] “Felsholds back for another day”, Financial Review, 21 April 1998, p. 4.

[17]“Stevedore ‘deal’ under investigation”, Australian, 23 April 1998, p. 4.

[18]“Stunning blow to Government”, The CanberraTimes, 24 April 1998.

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

2011-12-07T04:05:00.001-08:00

Part 8 – Easter Aftermath

Close call

When I got back to work on EasterMonday, I found out that it had not just me and my Assistant Director who hadbeen in the thick of things over Easter. The ACCC’s NSW Regional Director (RD) had also had a very closecall.

It turned out that our RD haddecided to go down to the picket line on Saturday morning to observeevents. Unfortunately, he had gonealone, as no other Sydney staffmember had been willing to go with him. On arrival, he did what most of the ACCC’sRD's had been doing – he introducedhimself to the leaders of the picket line as the ACCC’s NSW Regional Director andadvised them that he was there to observe events.

During the picket, a number of MUAmembers and their supporters had been listening to the radio. There had been arunning commentary on the radio about developments at Port Botany and themovements of the Australian Endeavour.

At some stage during the broadcast,Professor Fels had come on the radio and announced that the ACCC had a numberof officers observing events at Port Botany. While this was supposed to be areference to me and my colleague, who were behind the picket lines, it wasimmediately understood by everybody on the picket line to be a reference to theACCC RD who, it now seemed,was on the “wrong side” of the picket line. After Professor Fels made his comment, one of the picketers immediatelyturned to the rest of the picket line shouted - “That’s the ACCC guy” andpointed at our RD. At this, half a dozen picketers started walking rapidlytowards the RD.

It was apparent to the RD thatthese pickets meant to cause him harm. Accordingly, the RD started to move awayfrom the men and towards his car, very quickly. He got to his car, jumped inand drove away at speed. Unfortunately, he noticed that some of the men who hadbeen coming towards him had also apparently jumped into a car and were comingafter him.

After a short time, the RD realisedthat the car pursuing him only had one occupant. While this greatly reassuredhim, he was still concerned about what this pursuer may do to him if hecaught him.

After trying to lose the pursuerthrough the streets of Port Botany for some time, the RD had a clever idea. Hedecided to simply stop on the side of the road, with the engine running andthen sit in his car. He reasoned thatif the pursuer decided to get out of his car to come over to the RD’s car, thenthe RD could wait until the pursuer got quite close and then slam his foot onthe accelerator and drive off at speed. Inthis way, there was a chance he could lose the pursuer once and for all.

The pursuer obviously had notexpected this development and was unsure of what to do next. I suspect that the pursuer also did themaths. He probably realised that if there was any trouble it would be a one-on-one contest rather than the more comfortable 30-to-1 odds which he had enjoyeddown at the picket lines.

Accordingly, the pursuer decided todrive away, leaving our RD sitting nervously in his car.

After a little while, the RDsteadied his nerves and drove home. That was the last time the RD went down toobserve the picket lines.

Recriminations and harassment

In the days following the Easterweekend, the recriminations were flying thick and fast between the MUA and theACCC. John Coombs accused the ACCC ofharassing the MUA.

Professor Fels responded to thesecriticisms by saying[1]:

It was in everypaper and TV screen in the country that the MUA were proposing to breachsection 45D and DB of the Trade Practices Act and, in those circumstances wehad to respond.

We were quitesurprised Mr Coombs said we here harassing him. We were reacting to widelypublicised comments from him that the MUA would be breaching the Act.

We have beeninterviewing people from the waterfront over the last couple of months inresponse to a couple of possible breaches on the waterfront that have come toour notice.

We are on no one’sside in this dispute. We will look atany alleged breach of the Act by anyone on either side, whether on the productmarket or the labour market side, in an impartial manner.

The fact is thatthe Parliament has recently passed the law prohibiting secondary boycotts andour duty is to apply the normal techniques of law enforcement in thisarea.

Coombs’ references to the ACCC“harassing” the MUA may have been a reference to an incident which occurred onenight around Easter when I insisted on hand delivering a letter to the MUA’snational office.

I was with two AGS lawyers onenight after we had prepared yet another warning letter to the MUA about itsboycotts. Ordinarily we would have emailed the letter or had it delivered by a process server to the MUA’s Head Office.

On this particular occasion, Iannounced to the two AGS lawyers that I had decided to personally, hand deliverthe ACCC’s letter to the MUA’s Head Office that night. When the lawyers askedme why, I explained that I was sick of the fear and intimidation that we hadbeen forced to accept since the Waterfront Dispute broke out. I said it was not right for the team involvedin the Waterfront matter to live in the constant fear of being beaten up justbecause we were doing our jobs.

I probably added a few more clichésfor good measure – for example, if we change the way we live our lives, thenthe proponents of violence have won and so on. I have never been terribly slowat climbing up on my high horse.

The two AGS lawyers looked at mequite nervously. I think the question on both of their minds was “Do we have tocome with you?” So much for stirringthem both up into an idealistic fervour with my fighting words!

I remember turning to one of thelawyers and saying “You don’t have to come with me if you don’t want to. I knowyou have a young family.” I had said this as a joke to try to relieve thetension which my announcement had created. However, the lawyer that I had directedmy comment to, just looked at me and said, “Thanks Mike” and left.

I must say this lawyer’s decisionto leave made me realise the stupidity of my plan. However, despite having thisrealisation, it did not dissuade me.

The other AGS lawyer (whoincidentally had a grown-up family) and I started the fairly long trek from theACCC offices, which at that time were at 175 Castlereagh Street in Sydney,to the MUA’s Head office on Sussex Street.

When we arrived at the MUA’s headoffice we observed that the front door was locked, and that there was nobodydownstairs in the small lobby. However, we noticed that there was an intercom. In addition, all the lights inthe offices upstairs were on and it sounded to us like there were a greatnumber of MUA staff upstairs working back late.

I buzzed the intercom and a mananswered. I announced that I was Michael Terceiro from the ACCC and that I hada letter which I had to hand deliver to the MUA. The intercom went quiet for afew seconds, before the voice came back and said, “Just slide it under thedoor”. The AGS lawyer immediately turnedto me with a look on his face which said, “Well, we tried.”

However I was determined. I buzzedthe intercom again. The voice again answered and I again explained who I wasand that I had to deliver the letter personally to an MUA official. This time the voice was much more decisive –he commanded me to slide the letter under the door.

I was quite annoyed by this stage.I buzzed the intercom a third time. This time the voice did not answer. I buzzed a fourth time and again there was no answer.

I must admit I was getting more andmore annoyed. I had wanted to prove a point - ie I was not going to live infear of getting beaten up for just doing my job. But how could I prove my pointunless I could actually come face to face with at least one MUA official oremployee late at night on their own turf and deliver my letter?

I then remembered that I had thegeneral switchboard number for the MUA in my mobile phone. Accordingly, I tookout my mobile and called the MUA’s reception.

Coincidentally, I got through to the same voice that I had been speakingto earlier over the intercom. I again explained to him who I wasand that I needed to hand deliver the letter to an MUA official. I probably made it sound like I would get thesack unless I personally delivered this letter to somebody at the MUA, which was clearly not the case.

The voice on the telephone wasobviously getting sick and tired of me by this stage. He told me with considerable exasperationthat:

· nobodyfrom the MUA was going to come downstairs to get the letter off me;

· hewas very busy; and

· Ishould just slide the letter under the door and go away.

He then hung up.

I was totally miffed by this stage,so I again called the MUA’s switchboard number. I heard someone answer thephone but as soon as they heard my voice, they hung up.

It was at that stage that I finallyaccepted that no MUA person was going to come downstairs to get the letter offme and that I had no other option but to slide the letter under the door.

Accordingly, I slid the letterunder the door (putting the AGS lawyer and my “former” friend out of hismisery) and we left.

Despite not actually handdelivering the letter to an MUA official, I found this entire episode quite satisfying.We had not let fear dictate our actions (which is not to say that we were notterrified the entire time when we outside the MUA offices trying to deliver ourletter).

It dawned on me later that maybethe MUA had not come downstairs because they had been scared of us. The MUA mayhave suspected that my request to serve a letter on the MUA late atnight, was simply a ruse to try to get them to open the front door, so that 100SAS Commandos could immediately swarm into their offices and beat them all up. Maybe fear did actually triumph that day.

Legal actions

During the Waterfront Dispute,there was a plethora of legal actions. I will not be discussing all of theselegal actions in any detail in the Untold Story because they have been dealtwith in considerable detail in both Waterfrontand the Bastard Boys mini-series. Iwill only be touching on various aspects of these actions as they relate to theACCC's investigation and litigation.

The MUA had commenced legalproceedings against Patrick, almost immediately after the sacking, seeking the reinstatement of the MUA workforce. These legal proceedings raised various allegations including claimsthat Patrick had breached the Corporations Law by effectively stripping assetsfrom its operating companies.

Patrick then commenced its ownlegal proceedings against the MUA in Australiaand against the ITF in London. In Australia,Patrick was seeking damages against the MUA for the effect of the variouspicket lines on its business. In London,Patrick was seeking various orders to prevent the ITF fromfacilitating a global boycott.

The MUA subsequently commenced furtherlegal proceedings against Patrick, Corrigan and Peter Reith alleging that they had beeninvolved in a conspiracy to sack the MUA workers.

Corrigan was continually tellingthe media at the time that he had advice from his lawyers that all of theactions he had taken to get rid of his MUA workforce were “completelylawful”.

We at the ACCC wanted to knowwhether Corrigan’s views about the sacking were legally correct. After speaking to our own lawyers, we formed an entirely different view toPatrick on the legality of its actions. Our view was that Patrick’sactions in sacking its entire MUA workforce were almost certainly unlawful. We also believed that the MUA would ultimatelybe successful in its primary case – namely, that the sacking of the MUA workershad been illegal and that they should be reinstated.

We also formed the strong view thatthe MUA must have known that their prospects of winning their case for thereinstatement was very strong.

This raises the obvious question:

Why did the MUAdecide to engage in blatant breaches of the TPA, and to ignore numerouswarnings from the ACCC about their conduct, if they must have known thatultimately they were going to win their case?

I believe that the reason the MUA decidedto engage in unlawful picket activity, despite knowing that they would wintheir case, was because they did not want to take the chance that the MUA wouldbe shown up as lazy and incompetent by the non-union labour. In other words, the MUA feared that if thenon-union workers were able to work unimpeded, that they may be able to achievehigher container lift rates than the MUA. No doubt if this had happened,Corrigan and Reith would have both used this information to argue that the MUAhad been out performed by a bunch of half-trained farmers.

I think it was one of the MUA’sgreatest propaganda successes to convince the various unions and other people whosupported them during the dispute that the MUA needed to engage in boycottactivity because the outcome of their legal proceedings was uncertain. The MUA neverhad any doubts that they would win their case for reinstatement. Indeed, theywon their case quite convincingly at every stage in the court process – ie atfirst instance, on appeal to the Full Federal Court and finally on appeal tothe High Court.

I also have my doubts that Corriganever actually believed that his extreme strategy of sacking his entire MUAworkforce was going to work. While I am sure that Corrigan hoped that he wouldbe successful in getting rid of his MUA workforce, he always knew that this wasgoing to be a highly unlikely outcome. Ithink Corrigan knew that whatever happened, he was likely to receive asignificant handout from the Howard Government to assist him in retrenchingmany of his MUA workers. That is exactly what happened – the stevedoringindustry was permitted by the Government to impose a levy on containers whichwas then used to fund MUA redundancies.

Simply put both the MUA and Patrickhad highly cynical motives for their actions, although they continually triedto dress up these motives as ideological convictions. Both the MUA and Patrick were alsoable to win over a great deal of support by parading these false ideologicalconvictions – ie the MUA were successful in "taking in" most of the unionmovement as well as a great deal of public opinion, while Patrick wassuccessful in "taking in" Peter Reith and the Howard Government.

Both parties presented the case to the media and the general public asthe quintessential battle of capital against labour – however, nothingcould have been further from the truth. The MUA’s primary goal in the dispute was to maintain its closed shop on thewaterfront and to preserve the high wages and excellent working conditions enjoyed by its members. Corrigan’s primary goal was to cut his costs sothat he could make lots of money. However, rather than cut costs like mostbusinesses by economising, becoming more efficient and innovating, Corriganwanted to cut his costs by getting corporate welfare from the HowardGovernment.

Ironically both the MUA and Patrickcame out of the Waterfront Dispute as winners. The main losers from the disputewere the Australian taxpayer, who ended up effectively funding the redundancies, and a large number of Australian businesses which suffered financial damage becauseof the boycotts. However, more about the winners and losers later in the UntoldStory.

[1] “Felswalks the industrial relations tightrope without fear or favour”, TheAustralian, Monday, 13 April 1998,p. 2.

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

2011-12-03T04:36:00.001-08:00

Part 7 - Easter 1998 - Continued

Violence on thepicket lines

By about 11am thepicket line was becoming very agitated. They were shaking the gates at theentrance to the facility and it looked like they were going to breakthrough. We knew if this happened, wewould be in a great deal of trouble. Webelieved that it was fairly certain that if the picketers got through the gatethey would beat up everybody on the wrong side of the picket line.

I remember I turned to my colleague when it looked like thefence was going to collapse and the picketers were going toswarm into the facility, to ask him what he thought we should do if thathappened. We both decided that we weretoo tired to run away and anyway there wouldn’t be anywhere on the dock to hidefrom the 1000 plus picketers. We werealso quite certain at the time that if the gates came down the fact we wereACCC officers would not matter to the picketers. Accordingly, we decided thatour only option was to stand our ground and try to fight our way out. I knowthis sounds very dramatic, but that is what we had resolved to do at the time.

The manager of security came across to us and told us thatwe had to go inside. He explained that as part of the deal with the MUA, allthe security guards and guard dogs had had to be “secured” in a room so theywould not threaten the safety of the tugboat crews. Apparently, some picketers had seen me and mycolleague outside and had complained to Patrick that we had not been“secured”.

At the time, I thought this was the most ridiculous thing Ihad ever heard. On the one side of the picketline, there were about 15 security guards, six guard dogs, one former BritishSAS officer, 2 Freehills lawyers, 1 cameraman and two ACCC officers. On theother side, there were at least 1000 picketers shouting out at the top of theirvoices that they were going to kill us. And the MUA had the gall to claim that we posed a threat to them?

Anyway, we agreed to the manager’s request and went insidethe building near the entrance to the container facility. This way we would beout of the sight of the picketers. Onentering this building, we were struck by how the entire inside of the buildinghad been destroyed by the MUA workers when they were removed from the premises onthe previous Tuesday. All the filingcabinets had been opened and the documents strewn all over the floors, everypiece of furniture which could be pushed over had been pushed over, propertysuch as computers and other electrical equipment had been smashed, cabling hadbeen pulled out of the walls, and the windows had been smashed. Obviously, theMUA had not gone quietly!

We were inside this building when the tugboats brought inthe Australian Endeavour. Once thevessel had berthed and been tied up, we were able to leave the building towatch the unloading.

Fortunately, for us the gates did not collapse. I cannotremember precisely what distracted the mob, but it may have been the arrival ofthe bus with the non-union labour force.

I remember watching as the bus of non-union workers approachedthe picket line. The picketers were hurling abuse at the occupants of the busand throwing rocks. As soon as the buswas close to the picket line it was swarmed upon by the picketers, whoproceeded punch, kick and spit on the bus, and to hit the bus various makeshiftclubs. As far as I could see, the policewho were in attendance did nothing to stop the wholesale destruction of thebus.

The bus finally made it inside the fence. I immediately wentup to the bus to examine the damage.

Most of the windows had been smashed and there were hundreds of dents on every side of the bus. There was great deal of saliva on the sideof the bus from where all the picketers had spat on it. I suspect that the bus was so badly damagedthat it had to be written off - every panel and almost every window would havehad to be replaced.

The non-union labour force had obviously been expecting thisless than friendly reception and had taken some precautions. They had broughtmattresses on the bus, which they pushed up against the windows to protect theoccupants from being assaulted or struck with projectiles. Even though thepicketers were able to smash the windows, they were unable to assault any ofthe non-union workers inside because of the mattresses. Unfortunately, this wasnot the case at some other sites where non-union workers were assaulted bypicketers.[1]

When the non-unionists got off the bus, they were visiblyshaken. I remember some of the workers lookedas white as sheets when they got off the bus.

This whole episode made me very angry. These non-union workers were being used byboth sides as the proverbial pawns in the entire Patrick – MUA game.

First, I could not believe the barbarism of the picketers. Ihave no doubt that if the picketers had been able to get their hands on the occupantsof the bus that they would have seriously injured or even killed these people.

Second, it seemed to me that it would have been very easy forPatrick to bring these workers in by boat or even by helicopter rather thanrequiring them to run the gauntlet of the picket line. I suspected then andstill suspect now that these workers were sent through the picket line byPatrick for the cynical purpose of provoking the picketers into violence which Patrick could later use to try to turn public opinion against the MUA.

Arrival of theAustralian Endeavour

Some time after the Australian Endeavour arrived at Port Botany,the non-union labourers started unloading the vessel. It was at this time thatCorrigan arrived via helicopter. He wasfollowed by a steady stream of helicopters carrying journalists from everymajor news agency. Corrigan had plannedto helicopter in the reporters and then to holda press conference.

Once all the reporters had arrived, Corrigan gave a shortspeech during which he declared that today was a momentous day. He said that itwas the first time in 50 years that a container ship had been loaded in Australiausing non-MUA labour. It was obvious toall that this was the story which Corrigan wanted all the reporters toreport.

Having worked with Professor Fels for a few years, I hadlearnt a great deal about dealing with the media. I knew immediately that 30journalists were not going to write 30 stories with the same angle at the request ofCorrigan. Each one of these journalists would be looking for their ownindividual angle on the day’s events.

As soon as Corrigan opened the press conference forquestions, he was hammered with questions from a multitude of different angles- very few of which adopted the line which Corrigan wanted them toreport. I have to admit that I enjoyed seeing Corrigan’s discomfort at thequestions which he was being asked. He was becoming more and more exasperated andangry at the media’s questioning.

When the press conference was over, the helicopters startedshuttling the reporters and Patrick’s management out of Port Botany. At one stage Patrick’s then CompanySecretary, who had also been shuttled in with Corrigan, saw me amongst thecrowd. He immediately came across to me for the sole purpose of telling me off becausethe ACCC had not yet commenced legal proceedings against the MUA.

At this stage, I had been working for 31 hours straight andwas in no mood to stand there and listen to abuse from anybody, much less somebodyemployed by Patrick. I must admit that at the time I gave some serious thoughtto just punching him in the head. Ithought that while this person was probably sitting at his local yacht club sippinga latte, approximately 30 non-union workers were taking their lives in theirhands by trying to get through a 1000-strong mob.

I hate to say it but the APS Code of Conduct did not play apart in my decision not to punch him in the head. Rather, the main reason I didn’t punch him inthe head was because I was so exhausted – I am sure it would not have been muchof a punch! Instead, I decided to walk away.

Extraction

After the press conference, the Assistant Director and I decidedthat it was time to leave.

The problem was that we had not worked out how we were goingto get out. It seemed that there was nooption but to catch a helicopter ride out of Port Botany, as trying to walk outthe front gate would have been suicide. By this time, the picket line was even moreincensed as the non-union workers had started unloading the vessel.

I should add that even to our untrained eyes, the non-unionworkers did not seem to very adept at unloading containers. They were goingvery slowly and we witnessed a few near mishaps. However, given what these workers had justbeen through I think it was only fair to give them the benefit of thedoubt. I doubt I would be able to focuson my job properly either, if I had just been attacked by a mob of 1000 people.

I realised that by this stage myAssistant Director was well and truly over the whole Port Botany experience. Indeed,I recalled an earlier warning sign that he was at the end of his tether and neededto go home.

A few hours before we had beenwandering around the container facility by ourselves without the mandatorysecurity guard and guard dog. A securityguard had approached us to tell us off for not following the securityprotocols. My Assistant Directorimmediately turned to this security guard (who by the way must have 6 foot 6, agym-junkie and armed with what appeared to be a extendable baton) and started toberate him at the top of his voice for 5 minutes about how theentire security arrangements were a joke and that one measly guard and a guarddog were not going to protect us from 1000 picketers. The security guard just listened patiently tomy Assistant Director's tirade and then simply said “okay” before walking away.

There were also a few signs that Iwas losing it as well. For example, Iremember going up to one of the security guards at one stage and asking him ifI could pat his guard dog. He looked atme as if I was mad and said “Yea, if you want to lose a hand!”

When the opportunity came for usto hitch a helicopter ride, I made sure my Assistant Director got on one of thefirst helicopters out.

I was forced to wait until the verylast helicopter. Despite the fact that Ihad been working over 30 hours by this stage, I soon discovered the futility oftrying to push in front of a journalist for a seat on a helicopter when they arefacing an Easter Saturday deadline.

I eventually got onto the very lasthelicopter ride out of Port Botany. Istrapped in, and tried to avoid eye contact with my fellow passengers.

I had a nervous moment when theperson immediately next to me in the helicopter asked me, when we were in theair, whether I was one of the “Freehills lawyers”. When I replied that Iwasn’t a Freehills lawyer but rather was an ACCC officer I thought from thelook on the guy's face that he was going to push me out of thehelicopter. Fortunately for me, Corrigan just shook his head and turnedaway with a slightly miffed look on his face.

When we landed over at Mascot, Iasked Corrigan’s bodyguard whether I could get a lift with them back to thecity. His bodyguard refused so I askedCorrigan directly. He agreed quite unenthusiastically.

As we drove back to the city inCorrigan’s security van, he discussed with a colleague his frustration with themedia and how they didn’t seem to want to run the story he wanted them to run. Ithought to myself “This guy really needs some media training from ProfessorFels”.

I felt like telling him that hecouldn’t expect 30 journalists to run a story about the days events from exactly the same angle – rather he should have tried to give the story exclusively to one paper and one television network. In this way, he may have beensuccessful in getting somebody to run his preferred spin on the story. However, I decided against giving Corriganany media advice partly because I was bumming a ride and partly because I couldsee Corrigan was in a very bad mood. He has started the day believing that itwould be his crowning glory– but it was now rapidly turning into a mediafiasco.

When I got back to work, I jumpedin a cab and went home. By the time Igot home, it was about 7pm. It dawnedon me that I had been working continuously for 34 hours except for a five-minutenap on the wharf earlier that day. Ifell asleep as soon as I got home and woke up 17 hours later.

When I woke up, I asked myself whether our tripto Port Botany had been worthwhile?

It was clear that the entire escapade had been extremelydangerous for both of us – we had been chased by boats on Port Botany, strandedon a wharf at 1am, forced to climb over a deep pit in pitch darkness, had rocksthrown at us and had come perilously close to having to fight our way out ofthe container facility with our fists. Addto that the fact that we had obtained virtually no evidence and you couldhardly call it a red-letter day.

However, we did gain one important bit of intelligence fromthe whole Port Botany experience - we now knew unequivocally that both sides of thedispute hated us. It was apparent that Patrick hated us because they thought wewere not sufficiently involved in the dispute, while the MUAhated us because they thought we were too involved in thedispute!

[1] “Attackon bus leaves four injured”, SHM, 16 April 1998, p. 16.

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

2011-11-29T21:55:00.001-08:00

Part 6 - Easter 1998

Introduction

One of the most significant events in the entire disputeoccurred on the Easter Weekend, which fell in early April 1998. The Australian Endeavour container ship,which was part of ANL, then a government owned shipping company, was to berthat Port Botany on Easter Saturday and be unloaded using non-union labour. Thiswas to be the first time in over 50 years that an Australian container ship wasto be unloaded by somebody other than the MUA. Indeed, Corrigan and Peter Reithwere very publicly talking up this event as the decisive moment in the wholedispute. It was inevitable that the ACCC would be dragged in, whether we liked it or not.

We were obviously very busy trying to investigatesimultaneous pickets in almost every container port in Australia,as well as trying to investigate the overseas conduct by the ITF in organisinga global boycott. Accordingly, I had startedwork at 9am on Good Friday.

I had been working in my office for a few hours when Ireceived a call from a senior manager who floated an idea by me. He explainedthat the Australian Endeavour was scheduled to arrive in Port Botany the nextday, on Easter Saturday, 11 April 1998. He said Professor Fels wanted to get someACCC officers onto the Australian Endeavour before it arrived at Port Botany sothat he could announce that he had officers on the vessel who were safeguardingits passage into Port Botany. The ideawas that the two officers would be put on the vessel – namely, me and myAssistant Director - via helicopter.

I carefully considered this proposal for about a nanosecondand politely but firmly refused the assignment. I decided to decline theassignment after carefully weighing up the following factors:

· the very strong emotions that had been stirredup in the last few days;

· the significance of the Australian Endeavourmaking it into Port Botany and being unloaded by non-union labour;

· the fact that the Australian Endeavour waslikely to be crewed by between 15 to 20 people, most of whom would be MUAmembers; and

· (the decisive factor) the fact that I was not avery strong swimmer.

I was genuinely concerned that both I and my AssistantDirector may end up going over the side of the Australian Endeavour eitheraccidentally or on purpose. I thought our presence would be much tooinflammatory for the dozen or so angry MUA crew members on board the vessel.

I subsequently discovered that the ship’s captain was also notvery keen on the plan. In addition to having concerns about our safety, he wasalso concerned that the two ACCC landlubbers would end up getting seasick.

A while later I received another call from this same seniormanager who suggested a different and marginally less hair-brained scheme –namely to “embed” both me and my Assistant Director inside the Patrick PortBotany container facility, behind the picket lines. This would allow ProfessorFels to say that he had ACCC officers on the wharf. For some reason I agreed tothis proposal, mainly because I though it was a much safer option that Plan A.

I started to regret my decision when I received my detailedinstructions on how we were supposed to get to Port Botany. We had to meet two of Corrigan’s lawyers,from the Freehills law firm, at the Opera House wharf at midnight on Good Friday and then get on board a high speedcharter vessel, which would take us to Port Botany. I seem to recall I may have been providedwith a password to use when we met up with the Freehills lawyers. I cannot recallwhat the password was, but it was probably something like “Rosebud”.

Getting behind thepicket lines

Accordingly, we made our way down to the Opera House and metup with the two Freehills lawyers at midnight. We went around behind the Opera House to thewharf and there boarded a high speed charter vessel which was to take us toPort Botany under cover of darkness.

Once we were aboard the charter boat, we met our fellowpassengers in addition to the two Freehills lawyers:

· the captain and his first mate who appeared tome to be quite terrified at the prospect of taking us to Port Botany;

· a former British SAS officer who had been hiredby Corrigan to provide advice on security issues; and

· a cameraman whose role it was to capture videofootage of the boycott activity.

We set sail for Port Botany. The former British SAS officer surprisingly decided to take a nap,presumably to prepare himself for the tasks ahead. The Freehills lawyers went up to the deck tokeep an eye out for any MUA any vessels which may be trying to intercept us.

Meanwhile I, the cameraman, and the Assistant Directordecided to avail ourselves of the hospitality on the charter vessel. After a couple of beers and bourbons, we weresummoned onto the deck by the Freehills lawyers. They explained to us that the MUA had set upa makeshift flotilla of small vessels in Port Botany whose role it was tointercept any vessels seeking to get in behind the picket lines from the opensea. I admitted that I could not see anyof these MUA vessels because it was so dark. The reason I could not see thesevessels was because they had all turned off their lights so they would not bespotted by people like us.

However, the Freehills lawyers had come prepared – they hada pair of night vision binoculars. Iwas so excited at the prospect trying out a pair of night vision binoculars,that I grabbed the pair from the Freehills lawyer’s neck without first givinghim an opportunity to take the strap off. After apologising for accidentally garrotting him, I was able to makeout a few small MUA crewed vessels sailing around Port Botany looking forintruders.

I was curious why the people on these vessels appearedunable to see us. The captain explained to me that the reason they could not seeus was because he had also decided to leave his lights off. He was worried thathis vessel may be identified by the MUA, which may subsequently result inrecriminations and reprisals.

Fortunately, the charter vessel we were in was much morepowerful and manoeuvrable than the small MUA vessels which were trying tointercept us, so we were able to navigate our way through the flotilla withoutincident. One vessel was able to getquite close to us, but all the person on board could do was hurl a few insults atus before we left him in our wake.

Unfortunately, when we arrived at Port Botany the captain,in his haste to get away, dropped us off at the wrong location. Instead ofletting us off on the Patrick’s wharf, he let us off on a small wharf which wasnot actually attached to the Patrick’s wharf. Accordingly, we had to get across a fairly large gap between the placewhere we had been dropped off and the Patrick wharf without falling into a darkhole which appeared to be four or five metres deep. What made our task more difficultwas that it at about 1am in themorning and pitch dark.

One of the security guards on the Patrick’s wharf had beenexpecting us. When he realised we were stranded on the wrong side of the wharf,he went and retrieved a ladder which he put over the gap. The idea was that we wouldclimb across the ladder to get to the correct side of the wharf.

I climbed across quite slowly. When I got to the other side,I thought I should assist the next person to come across by holding down theend of the ladder to make sure it was secure. Foolishly, rather than putting myfoot on the ladder where it was resting on the wharf, I put my foot on theladder at the point where it overhung the wharf. The result was that the ladder shot up in theair just as the former British SAS officer was seeking to cross the ladder.Unfortunately, it struck him between the legs.

Even though I immediately apologised, he did not look veryimpressed by what I had done. I thoughtfor a moment whether it might be safer for me if he did not actually get acrossto the Patrick wharf. Accordingly, I gave a fleeting thought to pulling theladder across to my side and leaving him stranded on the other side. I decidedagainst this strategy as it would no doubt have just have antagonised him evenmore.

Embedded behind thepicket lines

Once we had all made it over to the correct side of thewharf, we travelled to the main office to meet the manager in charge ofsecurity. On entering the main office,we noticed that all the offices had been trashed – papers were all over thefloor and furniture had been smashed or pushed over. We asked what theFreehills lawyers what had happened. They told us that the MUA staff hadtrashed most of the offices when they were removed from the premises the previousTuesday.

We met the manager in charge of security at Port Botany, whoexplained the safety rules. We were togo nowhere outside the main office without being escorted by at least onesecurity guard and a guard dog. He also advised us that he could not be responsible for our safety if we did not follow thisdirection.

The site was occupied by about 15 security guards and abouthalf a dozen Doberman or German shepherd guard dogs. I must admit they looked like a very toughlot. Contrary to what I had expected,they did not walk around with balaclavas.

We immediately asked to do a tour of the facility. We leftthe office with a couple of security guards and guard dog. It must have been about 2am by the time we started inspecting the facility.

The first thing we noticed was that there was a small groupof protestors outside the facility. On seeing us, these protestors decided tofollow us around the facility from the other side of the fence.

This small band of protesters initially hurled a variety ofinsults at us, which did not phase us very much. However, when we got a little bittoo close to the perimeter fence a hail of rocks of various sizes rained downon us. We quickly retreated to a saferdistance.

I noticed that my Assistant Director appeared to be pickingup one of the recently launched projectiles. I worked out that it may have beenhis intent to send the projectile back to its source. I immediately stopped him and explained thatwhile my knowledge of the Australian Public Service Code of Conduct was fairlysketchy, I was pretty sure it did not permit us to throw rocks at thepicketers, even if they had thrown rocks at us first.

I also noticed a small red light flickering around on ourhead and torsos. We were quite puzzledat what this red light was. The securityguard explained to us that it was the infrared light from a laser pointer. Hesaid that the picketers had brought some of these laser pointers to the docks totry to scare the guards at night into believed that the light was in fact theinfrared sight on a high powered rifle.

I had decided before heading to Port Botany not to bothercarrying a note book as in pitch darkness and being on the move it would havebeen impossible to take written notes. Rather I brought a small hand held taperecorder, which I could use to make audio recordings of any observations orpotential witness interviews. I decidedto tape a few examples of the abuse being hurled at us by protestors so that Iwould be able to give the staff back at the ACCC some idea of what it was likeat the facility.

After doing our tour, we spent some time thinking about thelikely course of events later that day when the Australian Endeavourarrived. We knew that there were threepossible places where the MUA could take action to impede the AustralianEndeavour arriving and being unloaded- either:

(a) the MUA staff on the Australian Endeavour may dosomething to prevent that vessel coming into Port Botany;

(b) the MUA staff on the tugboats may refuse to bring theAustralian Endeavour into Port Botany; and/or

Given that we knew that the Australian Endeavour was ownedby the Commonwealth Government, we doubted that the MUA would be able to domuch to stop the vessel from coming into the port.

We thought the main risk was that the MUA may withdrawtowage services. It was for this reasonthat we had sent the MUA yet another warning letter the day before cautioningthem against withdrawing towage services to the Australian Endeavour.

As morning approached, there was a great degree ofanticipation. The picket line at theentrance to the facility had grown so that it was now more than 1000 picketers. The picketers started chanting and hurlinginsults at anybody they could see inside the facility, including us. It was apparent to us that the picket linewas getting to such a size that the few police outside the facility would notbe able to do anything to restrain its actions. That was assuming that they hadbeen of a mind to do so, which they clearly were not.

Word got to us that the MUA crews on the tugboats had refusedto bring the Australian Endeavour into port. The MUA’s alleged concern had beenwith safety – namely, that the tugboat crews were at risk from the securityguards and guard dogs. Accordingly, the Australian Endeavour had to wait offthe coast for a number of hours until a solution could be worked out.

I remember the Managing Director of Adsteam, which owned thetugboats, arriving at the MUA office to try to convince the MUA to change theirdecision about providing towage services. After a number of hours, he had brokered a deal with the MUA, wherebythey agreed to provide the towage services. The MUA would provide towageservices on condition that the security personnel and dogs were placed in asecure area well away from the tugboat crew prior to the tugs arriving.

We went out to the loading area of the wharf to await thearrival of the Australian Endeavour. By this time, I had been working for morethan 24 hours straight and I was incredibly tired. I had been sitting on the wharf for a shorttime, when I closed my eyes for a couple of seconds. Before I knew it, I wasfast asleep on the middle of the wharf near one of the large cranes. I was wokenup by the sound of helicopters above me. I quickly realised that the helicopters were from various televisions networksand that a number of them had cameramen hanging out of the helicopters to film activity (andpotentially inactivity) on the wharf.

I realised that it would have been very embarrassing notonly for me but also for the ACCC and for Professor Fels if the evening news hadfeatured images of one of the ACCC’s apparently fearless and intrepid investigatorslying flat on his back asleep on the wharf. Accordingly, I quickly woke myselfup and tried to look as fearless and intrepid as I could.

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

2011-11-25T15:19:00.001-08:00

Part 5: First moves

Office of EmploymentAdvocate

As stated in Part 3 of the Untold Story, the HowardGovernment had very high expectations of the OEA in the event of a dispute withthe MUA. However, these expectationswere not met. Very soon after thedispute broke out, the OEA expressed the view that it did not have jurisdictionto get involved in the dispute. In other words, the OEA ended up vacating thefield and leaving the entire enforcement effort to the ACCC.

As I understood the OEA's reasons at the time, they claimed that as the MUA staff had been sacked by Corrigan they were no longer technicially employees and as such the OEA did not have jurisdiction.

However, one can understand OEA’s position. The expectation prior to the sacking had beenthat Corrigan may seek to use non-union labour at some of his stevedoringfacilities. Clearly if the MUA had sought to impede non-union workers gettingto their workplaces, the OEA would have been expected to assure the safepassage of these non-union workers through picket lines. Indeed, there werereports in relation to other disputes, that OEA officers had boarded trains andtrucks to assist non-union workers employed in other industries to get thoughpicket lines

The problem which the OEA faced in the current case was thatCorrigan’s actions in sacking his entire MUA workforce looked very much like aclear breach of the Freedom of Association provisions of the WRA – ie the MUAworkers had been sacked for the sole reason that they belonged to a union.There was a very strong argument that the OEA’s priority should have been toinvestigate Corrigan for breaching the WRA, rather than helping Corrigan to getnon-union workers through the picket lines.

Despite the dilemma which the OEA faced, the way it chose toget out of this dilemma was highly unprincipled. It decided not to assisteither party to the dispute – ie it did not help Corrigan get non-union labourthrough picket lines nor did it investigate Corrigan for a Freedom ofAssociation breach for sacking his entire MUA workforce. Ultimately, the OEA’sdecision to do nothing during the Waterfront Dispute severely damaged it’scredibility as an organisation.

At the ACCC we were very disappointed by the OEA’s decisionto stay out of the dispute - this meant we would have to do the whole job ourselves.

MUA’s first moves

The MUA was very quick to move after the sackings. Indeed,it was very impressive to see just how fast they were able to pursue so manydifferent strategies simultaneously.

First, the MUA were able to mobilise a great number ofprotestors to get down to the wharves by skilfully playing the media. Havingsaid that, it was not too hard for the MUA to get the media’s sympathy giventhe extreme nature of Corrigan’s actions. The MUA clearly had a flare fordealing with the media, particularly John Coombs who was very articulate andflamboyant. Corrigan on the other hand was very poor at dealing with the mediabecause he came across as he was, namely cold and unsympathetic.

Second, the MUA went to the Federal Court to get interiminjunctions preventing Corrigan from:

· sacking his MUA workforce;

· disposing of any assets or

· using alternative workers.

The MUA were very fortunate to get Justice North as thejudge on their matter. He was probably the best federal Court judge for the MUAas he was clearly quite sympathetic to the union movement. Indeed, he made hisname as a silk by representing unions in various in high profile boycott cases.

In particular, Justice North had been the counsel for theAustralasian Meat Industry Employees Union (AMIEU) which had been taken tocourt on a number of occasions for allegedly contravening the boycott provisionsof the TPA.

Justice North granted the interim injunctions sought by theMUA.

Third, the MUA appeared to have already approached the ITF totry to get them involved in the dispute. Mr Kees Marges, the ITF Docker’s Section Secretary was quoted as sayingthe day after the dispute:

Shipping lines should be aware that if their ships use Patrick in thefuture they will be targeted in ports around the world.[1]

Fourth, the Australian Workers Union (AWU) announced that itwas contemplating taking boycott action to close down the whole Australian oil industry insupport of the MUA.

Mood within the ACCC

It is fair to say that virtually nobody in ACCC enforcementwanted to work on the Waterfront Investigation, particularly in Sydney.

The main reason enforcement staff did not want to assist wasbecause many of them had a philosophical objection to doing the work. Most enforcement staff, particularly in Sydneysympathised with the MUA and believed that Patrick had done the wrongthing. Ironically, the entire WaterfrontTeam also believed that Corrigan had done the wrong thing. However, we alsoknew that because Corrigan had not breached the TPA in sacking his MUA staff,there was nothing the ACCC could do about his conduct.

The Waterfront team was of the view that if Corrigan hadbreached the Workplace Relations by sacking his MUA staff that it was up to theOEA to pursue him for that conduct. By the same token, if Corrigan had engagedin any illegal corporate activities, such as asset stripping it was up to ASICand the ATO to look into that conduct.

Another reason why some Sydneyenforcement staff did not want to help was because they were concerned aboutthe violence which was a daily occurrence on the picket lines. This was an entirely legitimate concern.

Nobody in senior management wanted to force anybody toassist in the waterfront investigations against their will. Unfortunately, theconsequence of this was that the ACCC’s Waterfront Team remained very small –ie three officers for the duration of the dispute. Occasionally, we would get some assistancefrom a Regional Director for a specific task but that was quite rare.Accordingly, the small ACCC team and the external legal team ended up workingenormously long hours.

Unfortunately, some senior enforcement staff could not help but share their opinions about the ACCC’s role in the Waterfront Dispute with theWaterfront team. On one occasion, a senior ACCC enforcement colleague called me a “Nazi” and "a collaborator” to my face and in front of some juniorstaff because of my role in the ACCC’s Waterfront investigation.

I responded by saying that the ACCC could not concernitself with whether Corrigan had done the wrong thing. Rather the ACCC had tofulfil its statutory function and enforce the TPA. The important principle wasthat for the ACCC to respect and uphold the rule of law. This was particularly important in circumstanceswhere every other party involved in the dispute was breaking or ignoring lawswith impunity and every other regulator was just sitting on the sidelines and doingnothing.

I added that the ACCC could not simply choose which laws itwanted to enforce. If the ACCC turned a blind eye to the blatant andpremeditated breaches of the TPA by the MUA, the ACCC would lose its integrityand credibility as an enforcement body.

Unfortunately, my arguments did not convince my seniorcolleague of our bona fides. Accordingly, it was with some frustration that I facetiouslyasked him whether there were any other particular sections of the TPA that hewas philosophically opposed to enforcing. I suggested that ACCC management couldcirculate a questionnaire to all enforcement staff asking them to identify whichsections of the TPA they were happy to enforce and which they did not want toenforce!

Later, another fairly senior enforcement staff memberdecided to organise a collection in the office to raise money to support theMUA financially. I kept this informationto myself as I doubt more senior ACCC management would have been very impressed with his actions in collecting money for the MUA. Indeed, it would have been a major mediacoup for the MUA if they had been able to say that even ACCC staff were contributing to the MUA cause.

ACCC’s response

As stated in Part 3 of the Untold Story, the ACCC had beeninvestigating the ITF for some time prior to the sackings. Accordingly, the ACCC was quite advanced inits understanding of the way the ITF operated, how it was structured and whereit possessed true industrial power.

Accordingly, Professor Fels was in a good position to makethe following statement as soon as the ITF started making threats againstAustralian shipping:

We are focusing quite closely on the ITF threat – we are investigatingthat matter both in marketplace and legal terms at the moment…The ITF and anyperson in Australia associated with it, directly or indirectly would more thanlikely be in breach of the act if they attempt to apply boycotts in support ofthe MUA.

Even at this early stage, we believed we had an effective legal strategy for dealing with ITF threats to Australiashipping. The starting point was section 5 of the TPA which states:

Parts IV, IVA and V (other than Division 1AA) extend to the engaging in conduct outside Australia by bodies corporateincorporated or carrying on business within Australia or by Australian citizensor persons ordinarily resident within Australia.

Part IV of the TPA contained the relevant boycott provisions– sections 45D, 45DB, 45DA, 45E and 45EA.

Section 76 of the TPA created accessorial liability – namelya person would be liable for aiding, abetting, counselling, procuring, inducingor attempting to induce, being knowingly concerned, or conspiring with othersto engage in a breach of the TPA.

The MUA was also a body corporate incorporated in Australia.

Therefore, we believed that we would be able to take actionagainst the MUA in Australiafor aiding, abetting, counselling, procuring, inducing or attempting to induce,being knowingly concerned, or conspiring with the ITF or any overseas unions orentities to engage in a boycott of ships which had been loaded in Australiaby non-union labour.

The ACCC also believed that it could take legal actionagainst MUA and ITF officials who aided, abetted, counselled, procured, inducedor attempted to induce, or were knowingly concerned in, or conspired with theITF or any overseas unions or entities to engage in a boycott of ships whichhad been loaded in Australia by non-union labour if these individuals wereAustralian citizens or persons ordinarily resident in Australia.

I remember doing nationality checks on a number of seniorofficials of the ITF and other overseas unions to find out whether, just bychance, any of them were Australian citizens. For example, I discovered that until 1977 the head of the InternationalLongshore and Warehouse Union (ILWU), based on the West Coast of the US,was an Australian, namely the legendary Harry Bridges.

We did not believe that we could take legal proceedingsagainst the ITF directly as it was not engaging in conduct in Australia nor didit satisfy the other elements of section 5. We also did not believe there wouldbe much point taking action against the ITF in Australiaunder the boycott laws if we would be unable to enforce our orders overseaswhere the ITF was based.

While the ACCC had a good legal theory about how to provethe MUA’s liability, it did not yet have the evidence to prove its legal theoryor even know how to go about getting this evidence. Getting evidence that theMUA was conspiring with the ITF to organise a global boycott of Australianshipping was not going to be an easy task.

I am also sure that most of the unions who supported the MUAby joining picket lines during the Waterfront dispute never understood how easyit would have been for the ACCC to take action against them under the TPA fortheir conduct.

Under section 45DC(1), if two or more persons who weremembers or officials of the same union were involved in a picket line, theunion would be automatically deemed to be involved in the picket line. The union would then have to prove that theywere not involved in the picket line because, for example, it had been an independent decision ofthe two members or officials to get involved.

Section 45DC(2) also provided that any loss or damage causedby the conduct of two or more members or officials of the union would beautomatically deemed to have been caused by the union. Again the union had theonus of proof in relation to displacing this presumption.

I doubt the MUA or ACTU ever explained these legaltechnicalities to these other unions.

Despite the ease with which the ACCC could have taken actionagainst these other unions, it decided to focus its attentions exclusively onthe MUA because it appeared to be the party which was orchestrating all of the boycottconduct.

ACCC’s Investigation

Investigating the MUA’s conduct during the WaterfrontDispute was a unique experience.

A significant amount of the evidence which the ACCC used inits cases came from media reports. Senior officials of the MUA would often hold press conferences in whichthey would brag about how they had engaged in illegal boycott activity or hadencouraged other groups to engage in such conduct. Indeed, it got to the stage where the ACCC’sevidence collection often involved no more than putting a blank video cassettein the video recorder, turning on the TV and pressing record every time a MUAofficial, usually John Coombs, appeared on television to make admissions aboutthe MUA’s latest boycott.

I always thought that my mum should have been put on theACCC payroll at that time, as she was remarkably diligent in recording any suchtelevised admissions by the MUA at that time and then sending me copies of hervideos. Given how few ACCC staff were involved in the investigation, I was grateful for any investigatory assistance I could get.

What was more difficult was actually obtaining witness statementsfrom industry players. We would generally try to get statements fromindividuals who had been the victim of boycott action or who had witnessed sucha boycott. Unfortunately, most industryplayers did not want to give evidence to the ACCC for fear of reprisals fromthe MUA or other unions in the future.

Another problem we faced were the time frames in which wehad to obtain evidence. It was simplytaking us too long to get detailed statements from the few industry witnesseswho were willing to give evidence.

Accordingly, we knew we had to work out a better way ofobtaining and presenting evidence if we were going to be able to commenceurgent litigation to try to stop the boycotts.

First ACCC action

The first major action by the ACCC related to the threats bythe AWU to go on strike in support of the MUA. As stated above, the AWU hadthreatened to close down the Australian oil industry by going on strike in all refineries and off shore oil rigs.

The ACCC responded to the threat from the AWU by writing avery threatening letter advising them that the ACCC would take immediate legalaction against the union if it went ahead with its threat. Indeed, we explained to the AWU that theirconduct would have been a clear contravention of section 45DA which prohibitssecondary boycotts which substantially lessen competition. Section 45DA carrieda maximum penalty of $10 million per contravention.

We told the AWU in no uncertain terms that if they wentahead with their threat the ACCC would commence legal proceedings against themseeking the maximum penalties available under the TPA.

The AWU backed down very quickly. Indeed, I think AWU wantedto save face by stating publicly that they would make good their threat if theywere asked to by either the MUA or the ACTU. In reality, the AWU must have realised that if the ACCC had taken legalproceedings against them we would have won the case and the financial costs arising from thecase would have most probably have destroyed the union.

We were fairly happy with ourselves for having averted thethreatened closure of the Australian oil industry by the AWU. Indeed, this became a major focus of theACCC’s activities over the next few weeks – trying to prevent the dispute fromspreading by stopping other unions from taking sympathy action in otherindustries in support of the MUA.

[1]“International action may see ships boycotted”, Australian Financial Review, 9 April 1998, p. 7.

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

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Part 4: The Sacking

Industry Warning

One thing I almost forgot to mention was that a few monthsprior to Corrigan sacking his MUA workers, the ACCC issued a generalwarning to the entire industry to abide by the TPA. In the ACCC’s media release,dated 5 February 1998, itstated[1]:

ACCC waterfront investigations

The Australian Competition and ConsumerCommission has warned all participants in the waterfront and shippingindustries of their obligations to comply with the provisions of the TradePractices Act.

"The ACCC is monitoring behaviour in these sectors", ACCC ChairmanProfessor Allan Fels said today, speaking at an industry conference oncompliance with the law in Sydney.

"The ACCC is ready to act in the public interest to enforce the primaryand secondary boycott provisions of the Trade Practices Act, if necessary.

"Section 45D of the Act prohibits boycotts which have the purpose, andwould have or be likely to have the effect of, causing substantial loss ordamage, a substantial lessening of competition or preventing or substantiallyhindering trade or commerce," he said. "Section 45E prohibitscontracts, arrangements or understandings which have the purpose of preventingor hindering the supply or acquisition of goods or services. Section 45prohibits anti-competitive agreements generally.

"The ACCC has been monitoring events at Webb Dock and has had contact withmajor players. In the current circumstances there is potential for persons ororganisations involved in the industry to engage in activity, especiallyboycott activity, which may breach the Act.

"In particular, members of the industry should be aware of the law,especially the above provisions, and, for example, avoid: involving themselvesin the unlawful withdrawal of services to a ship or stevedore; unlawfullyinducing other persons or organisations not to supply goods or services to aship or stevedore; or unlawfully hindering the transport of goods to and fromports where any of these actions are in breach of sections 45D and E or anyother provisions of the Act.

"The ACCC will enforce the boycott provisions of the Act in the samemanner as it would enforce the Act against other anti-competitive practices.

"The ACCC is continuing its investigations of other waterfront issuesincluding hold-cleaning demands, the existence of alleged exclusionaryagreements between shippers, terminal operators and employee organisations, andsome other matters.

"Whilst the ACCC investigates complaints from industry, it is worth notingthat whether or not it receives complaints the ACCC can independently initiateinvestigations into breaches of the Act. A prerequisite for legal action,however, is market information and evidence. Industry participants who areconcerned at breaches of the Act can bring forward such information andevidence to the ACCC on a confidential basis or any other basis, and the ACCCwill consider whether it provides grounds for legal action.

"The ACCC also has power under Section 155 of the Act to require, where itbelieves that there may have been a contravention of the Act, persons ororganisations to provide documents or other evidence or to answer questionsthat would assist the ACCC in determining whether there have been any breachesof the law."

The idea behind this media release had been to make it clearto all participants that the ACCC would not hesitate to enforce the relevantlaws if there was a contravention. We also wanted to make it clear that we werelooking at the conduct of both businesses and unions.

The media release was also aimed at letting potentialwitnesses know that the ACCC could compel them to provide evidence in the eventthere were reluctant to do so voluntarily. Even at this early stage, it was apparent to us that many potentialwitnesses did not want to be seen to be assisting the ACCC. However, if weserved them with a section 155 Notice they could claim they had been forced toassist the ACCC against their will.

The ACCC was criticised by a number of groups for this mediarelease, including the Labor opposition, which saw the media release as anattempt to intimidate the MUA. Inreality, the media release was a naïve and misguided attempt by the ACCC tokeep a lid on tensions on the waterfront.

The Sacking

At 11pm on Tuesday, 7 April 1998, Chris Corrigansacked his 1400 MUA employees.

When I came into work on the Wednesday morning, the generalfeeling was one of considerable surprise. Nobody that I was working with onwaterfront matters had any idea that Corrigan was going to take this extremestep.

In hindsight, there certainly were many warning signs thatthis action was about to take place. I immediately recalled an article whichhad appeared in The Age only a fewdays before. This article had quoted a PCS trainee, Mr Jamie Meek, who claimedthat his Webb Dock instructors had told him that Patrick was going to sack itsworkforce on Easter Tuesday.[2] Admittedly, his prediction had been out by aweek, but it turned out to be surprisingly accurate.

During the course of the day, more details of what had happenedthe night before emerged.

First, there were reports that Corrigan had given PeterReith advance warning of his decision to sack his MUA workforce.

Second, it also became apparent that there had been a greatdeal of forward planning by Corrigan. The logistics of coordinating a lockout of 1400 MUA employees simultaneouslyat 17 different locations around Australiawas not something that anybody could have organised overnight. Furthermore,Chubb Security had been hired to facilitate the removal of the MUA and tosecure the worksites. This would have required considerable lead-times.

It was apparent that Corrigan had been planning the sackingfor many weeks.

ACCC’s first actions

The ACCC realised that it had to work out what we should doin response to the sacking. It was obvious that the waterfront was going toexplode and that would need to be in a position to take action.

The first thing the ACCC did was make my waterfront team thefull time waterfront investigation team. My three-person waterfront /mergers and asset sales team was now officiallythe full time waterfront investigation team!

The second thing we did was organise selected ACCC staff aroundthe country to observe the picket lines. We decided to do this by nominating two ACCC staff members from eachACCC office whose role it would be to observe local developments, namely theconduct of the picket lines. In most cases, we selected the regional directorin each office and one other person.

However, these officers were not to become part of theWaterfront team – ie they were not called on to collect evidence or assist inthe preparation of the any potential litigation in the longer term. Rather their role was to assist the Waterfrontteam on an ad hoc basis, which turned out to be limited to the first couple ofweeks after the sacking. The role ofcarrying out the investigation and preparing any potential litigation remainedthe responsibility of three-person Waterfront Team and its legal team. Indeed,the core Waterfront Team throughout the entire dispute never got larger thanthree people.

However, a key decision maker during the Waterfront Disputewas Luke Woodward, the General Counsel of the ACCC at that time.

The third thing we did was increase the size of our legalteam. The ACCC decided to use the Australian Government Solicitor as itslawyers on the case. The members of theWaterfront team had enjoyed a very good relationship with a number of the AGSlawyers, so they seemed like the logical choice.

We also immediately retained a number of barristers toassist in the matter. Prior to the sackings, the ACCC had been using onebarrister to assist it on the hold cleaning case, namely a Queenslandsilk by the name of George Brandis QC. However, staff were never entirelycomfortable with Mr Brandis as they had not selected him in the first place andhad never worked with him before.

When the sackings happened, the team decided that it wouldnot be appropriate to continue using Mr Brandis because of his lengthy andapparently quite close relationship with the Liberal Party. The Waterfront teamwanted to avoid any perception that the ACCC was involved with the HowardGovernment in any way. Accordingly, eventhough I am sure Mr Brandis would have done a competent job, the ACCC neverused him on the waterfront case again.

The ACCC decided to retain a brilliant barrister, Mr PeterComans, as the key legal advisor in the investigation and in any future litigation.The ACCC had used Peter quite extensively in the past and we had a very highopinion of his legal knowledge and technical skills. However, the quality which I liked most aboutPeter was his creativity. Given that the ACCC was now embroiled in a uniquesituation and dealing with legislation which was largely untested (or in thecase of section 45DB entirely untested) we knew that we needed a barrister whowas highly creative. We knew that in the circumstances we would not be able torely on traditional investigation and litigation strategies, particularlytraditional approaches to evidence gathering.

We also retained a junior barrister, David Godwin, becauseof his extensive knowledge and experience in industrial relations laws. We didnot want to make the mistake of only using lawyers who knew a great deal aboutthe TPA but were ignorant of industrial laws and the way the Workplace Relations Actworked. David proved invaluable in explaining to the team the industrialrelations issues which arose in relation to Corrigan’s conduct in sacking hisMUA workforce.

Over the course of the dispute, we hired a number of otherbarristers to assist us including:

· John Trew QC (an industrial relations silk);

· Richard Tracey QC (now Justice Tracey of theFederal Court);

· Stephen Gaegler, SC (the current CommonwealthSolicitor General); and

· Simon White.

Observing the picketlines

The initial role of our handpicked ACCC observers was toattend various waterfront locations and simply observe what was happening. These staff then were to prepare reportswhich formed the basis of briefings for the Chairman, Commissioners and seniormanagement.

Being typical investigators, these ACCC staff could not justsimply attend the picket lines and anonymously observe events. Rather most ofthem could not resist the temptation of getting heavily involved. Most of them,on arriving at the picket line, immediately sought out the person in charge ofthe picket line, introduced themselves as an ACCC officer and explained thatthey were there to observe the picket lines. In the circumstances, this was a very audacious thing to do, as ACCCwere highly unpopular with the MUA.

In fact, the ACCC had the unfortunate distinction of beingunpopular with all of the major protagonists in the dispute. The union movementdid not like the ACCC because they believed that the ACCC should stay out ofthe dispute. Corrigan and the Howard Government did not like the ACCC becausethey believed we did not intervene in the dispute quickly enough. I had a feeling we must be doing our jobright if both sides were unhappy with our approach.

Emotions running high

It is important, in order to fully appreciate later events,to have some understanding of how high emotions were running during theWaterfront Dispute.

A good example of how inflammatory the situation was can begained from the following incident. Jennie George, the then President of the ACTU,was addressing a few hundred sacked MUA workers at Port Botany the day after thesacking. She reportedly shouted the following “fighting words” to the assembledaudience:

I couldn’t believe it, when I woke at 5am, to hear that blackshirts, dogs on chains, had been used (to clearworkers off the docks). Is this

Australia

or is it Nazi

Germany

These statements were quite representative of the way thatmany people in the union movement, including senior members of the ACTU, spoke aboutCorrigan’s actions at the time. There were many references to “Nazi Germany”, “Hitler”,“storm troopers” and “the blackshirts”.

I found such comments to be reprehensible at the time and Istill do. These comments had the inevitableeffect of whipping up MUA members and their supporters into an absolute frenzyof hatred towards anybody behind the picket line or anybody trying to getthrough the picket line. This hatred oftenspilled over to anybody who was not clearly “with the picketers”, includingACCC staff.

The popular image presented in the media about theWaterfront Dispute was generally that Corrigan’s security personal were violentthugs and that the MUA and its supporters were the peaceful and innocent victims. I cannot agree with this characterisation.

I witnessed the wholesale destruction of buses full ofnon-union labour in Port Botany by out of control picket lines while the policestood idly by. I also had to dodge rocksthrown at me by MUA supporters simply because I was on the wrong side of apicket line. I had to escape from PortBotany by helicopter because it was simply too dangerous to try to leave theport by the public road because of rampaging picket lines. Indeed, on one occasion I, an AGS lawyer anda poor unfortunate taxi driver came within seconds of being set upon by a fewhundred picketers in Melbourne whenwe were again caught on the wrong side of a picket line.

The reality is that in most of the ports, Corrigan had between15 – 30 staff behind the picket lines consisting almost entirely of securitypersonnel. On the other hand, the picket lines had often more than 1000picketers shouting insults, throwing stones at anybody behind the picket, andtrying to push over perimeter fences to try to get at those inside.

The picketers also had a practice of trying to take photosof the people inside the picket lines and then trying to identify these people by name. If they were successful in identifying one ofthe people behind the picket line, they would shout out the following threats thenext time they saw that person:

“We know who you are and where you live.”

Picketers shouted this threat at me on a few occasions.However, I was not too worried, as I strongly doubted they did in fact know whoI was or where I lived.

There is a very simple reason why the security guards worebalaclavas - it was because they were terrified that the MUA may identify them andsubsequently take reprisal action against them.

I do not blame the individual MUA picketers or theirsupporters for all the violence, fear and destruction. Rather, I blame theleadership on both sides of the dispute for cynically using the events topursue their own selfish aims. By doingso these leaders put the safety of thousands of people at risk, includingunionists, non-union workers, security personnel, members of the general public,police officers as well as a handful of ACCC staff.

[1] “ACCC waterfrontinvestigations” ACCC News Release, dated 5 February 1998 - http://www.accc.gov.au/content/index.phtml/itemId/87384/fromItemId/378006

[2] “Youngand rural, is this the wharves’ new face?”, The Age, News Extra, 4 April 1998, p. 5.

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

2011-11-16T04:46:00.001-08:00

Part 3: Prelude to the Sacking

Introduction

Prior to discussing the events of April 1998, it isnecessary to provide some relevant background.

There was great deal happening on the waterfront in late1997 and early 1998. The general feel atthe time was that the Howard Government was trying to encourage the two majorstevedores to take on the MUA.

Prior to the decision by Chris Corrigan to sack his entireMUA labour force in April 1998, there had been three significant events which Iwill discuss in some detail – the Cairns dispute, the Dubai trainees incidentand the Webb Dock hand over. Thecombined effect of these three events was to create a strong presentiment that somethingmajor was going to happen very soon.

Cairns dispute

The first skirmish started in Cairnson 13 September 1997. This dispute involved the decision by a smallshipping agent, International Purveyors, to terminate its stevedoring contractwith the MUA and to use non-union labour instead. The stevedoring contract was very small inthe scheme of things – namely, to load one vessel, the MV Java Sea, withsupplies for Freeport in Irian Jayaor West Papua.

The MUA responded to this decision by setting up a picketline with the intention of stopping the MV Java Sea from berthing.

On seeing the media reports, the ACCC’s Waterfront Team immediatelycommenced an investigation of the conduct. These media reports were the first thatthe ACCC had heard about the dispute. Afterlooking at the matter, we formed the view that any breach of the TPA would onlyoccur once the MV Java Sea actually berthed and was prevented from loadingsupplies. We believed that this conductwould breach section 45DB of the TPA. Prior to that event, the picket would nothave interfered with international trade and as such would not have constituteda breach of section 45DB.

The Waterfront Team worked extensively with the Chairman,Commissioners and General Counsel on drafting a letter to the MUA. The aim of ourletter was to warn the MUA not to do what it was proposing to do – namely, toboycott the MV Java Sea when it berthed. I doubt I have ever spent as much time in my entire career in trying tofinalise a simple two-page letter. However, the length of time we spent on this letter was an indicationthat we recognised, even at this early stage, that the MUA was not the type oforganisation to whom the ACCC could make idle threats. We knew that if we were going to make anythreats to the MUA about their proposed conduct our threat had to be credible.

Unbeknown to the ACCC, the MUA had decided to take anentirely different approach to this dispute than just organising a traditional domesticboycott. As explaining in detail inHelen Trinca and Anne Davies’ book Waterfront:The Battle that Changed

Australia

(Waterfront), the MUA had been focusedon trying to reverse the decision made by International Purveyors to ceaseusing MUA labour. The MUA sought to do this by placing pressure on InternationalShipholding Inc., the owner of the MV Java Sea.

Waterfrontrecounts how Mr Trevor Charles the local representative of the InternationalTransport Workers Federation had been trying to contact International Shipholding Inc toconvince the company to intervene in the matter. It has subsequently beenreported that the MUA and ITF made it clear to International Shipholding Inc.that unless it did its best to convince the relevant parties to rehire the MUAstevedores in Cairns its entirefleet could become the target of a global boycott.

Apparently, the ship owner agreed to intervene by contactingFreeport, the ultimate customer, toconvince them to reverse their agent’s decision to use non-MUA labour.

The ACCC did not know all these details. All the ACCC knewwas that the owner of the MV Java had intervened in some way and that the MUAstevedoring contract had been reinstated.

It is quite embarrassing to admit that the ACCC was entirelyunaware of what was happening in the background to this dispute.

In addition, we had not anticipated that the MUA would gooff shore to try to influence the course of the dispute. We had expected that they would have continued their domestic boycott until the MV Java Seaarrived.

After this matter resolved on 18 September 1997 (a mere five days after it had started)the Waterfront team carefully considered what had just occurred. We realisedthat while we had not done anything of any significance, except spend anenormous amount of time on a two-page letter, we had learnt a number ofimportant things, including a number of important things about the way the MUAoperated.

First, it seemed to us that everybody else knew a lot more aboutwhat was happening on the waterfront than we did. It was clear to us that Peter Reith’s officeknew a great deal more than the ACCC about this particular dispute. However, wewere not actually able to confirm our suspicions about Peter Reith’s role, untilwe read about what had happened in the Waterfrontbook a few years later.

Second, we realised that we needed a strategy in the futureto deal with any MUA conduct which occurred overseas. We needed to know whether the ACCC could takeaction against the MUA under the TPA for offshore conduct. We also had to workout a strategy as to how to get the evidence to prove such an “offshore” breach.

Third, time was going to be a more significant problem thanwe had anticipated. This entire disputehad only lasted five days. To collect evidence and launch a case in this timeframe was almost impossible unless we took a radically different approach toour investigation and litigation.

Dubai trainees incident

The Dubaidispute was a very strange event. Inearly December 1997, stories started appearing in the Australian media that aband of former Australian soldiers were being trained in Dubaias part of a plot to take over the Australian waterfront and oust the MUA. As you can imagine, we did not believe thesereports when they first appeared as the entire scenario seemed much toofarfetched.

From what we could understand at the time, various partieshad funded a band of former Australian soldiers to go to Dubaito receive training on the operation of stevedoring equipment. We alsounderstood that these individuals would be returning to Australiaonce they had received their training to become stevedores. Everyonesuspected that Corrigan would end up employing these individuals.

On becoming aware of this latest plan, the MUA immediatelymoved offshore. The MUA effectivelysought to put pressure on the Dubaigovernment to prevent these individuals from getting training in Dubai. It was also reported that the MUA hadinvolved the head of the ITF, Mr David Cockcroft in its discussions with the Dubaigovernment.

In mid-December 1997, the ACCC heard that the Dubaigovernment had withdrawn the visas for these individuals so that they had toleave the without getting any stevedoring training.

The ACCC’s Waterfront team did not really know what to makeof this entire event. One thing we did know at the time was that the MUA’sactivities in Dubai did not contravenethe TPA. The MUA and ITF had pressured theDubai government to cancel these individuals’visas so they could not receive training in Dubai.This conduct did not breach either section 45D or 45DB of the TPA.

Accordingly, the ACCC never wrote a letter to the MUA aboutthis particular incident. However, we again learnt a number of valuable lessonsfrom having been a passive witness to these strange events.

First, we understood that the MUA was likely to call on theITF in any dispute. This was asignificant development, as it suggested to us that the MUA might be able toprotect itself from the TPA by seeking to mobilise overseas groups to act onits behalf.

Second, I remember being very impressed by way the MUA haddealt with this issue. Not only had theymoved with lightening speed but they had also been able to identify and exploitthe weakest spot in the strategy being employed against them. The MUA immediately saw that their bestapproach was to target the Dubai governmentand put maximum pressure on them to stay out of the dispute.

Finally, we now focused a great deal of our research on findingout more about the ITF. We discoveredthat the ITF was an international trade union body which represented theinterests of a large number of local trade union organisations in the transportarea. One of its most active members wasthe MUA.

The aims of the ITW were set out in its Constitution asfollows:

· to promote respect fortrade union and human rights worldwide

· to work for peacebased on social justice and economic progress

· to help its affiliatedunions defend the interests of their members

· to provide researchand information services to its affiliates

· to provide generalassistance to transport workers in difficulty

However, another significant activity of the ITF was tocoordinate “protest messages, demonstrations and political pressure,to direct industrial action in the form of strikes, boycotts etc” in relationto local labour disputes.

After looking into the ITF organisation in more detail at alater stage we were able to establish that it had structured itself in such away that it would be effectively immune from liability to pay penalties ordamages in the event it was sued for breaching or facilitating a breach ofboycott laws.

Having said this we were also able to establish that theITF’s power was derived entirely from the power of its local union affiliatesin their home countries. For example,the ITF had a great deal of power in

Australia

because theMUA had a great deal of power here. The only other place where it appeared thatthe ITF had considerable industrial power on the waterfront was on the WestCoast of United States due to the industrial power of the InternationalLongshore and Warehouse Union (ILWU).

Finally, we came to the clear realisation that nobody waskeeping the ACCC in the loop on developments. We were not being told anything by the Department of Workplace Relationsabout what was going on, nor was Chris Corrigan providing us with anyinformation. The irony was that when we went to interviewpotential witnesses, they seemed to think we knew all the details of thebroader “plan” and that we were a part of this “plan”.

In hindsight, it was much better that we did not know aboutthe broader “plan”. While it was quiteembarrassing to be regularly unaware of the behind-the-scenes machinations of theGovernment and Corrigan, the ACCC would have been placed in a very difficultposition had it know about this plan. Infact, the MUA would have probably joined the ACCC in its conspiracy actionagainst Corrigan and the Howard Government had we actually been in the loop.

Webb Dock handover

The third and final event relates to the decision by Patrickin January 1998 to lease Webb Dock No 5 in Melbourneto a new company called Producers and Consumers Stevedores (PCS). Like the Dubaifiasco, details of this plan were again leaked to the MUA and the media beforethe actual handover of the site had been carried out.

When details emerged about PCS, it became apparent that ithad been set up by the National Farmers Federation and Don McGauchie. Also, included in its ranks were a number ofthe individuals who had been part of the failed Dubaitraining exercise.

After looking into the matter, the Waterfront team formedthe view that the PCS operation appeared to be little more than a trainingoperation. In other words, PCS was planning to train various non-MUA individualsto be stevedores. We fully expected that the MUA would be focusing onpreventing these individuals from getting employment as stevedores after theyhave been trained. However, for the moment it appeared that the MUA intended tomaintain only a watching brief.

It also seemed to us that the MUA were desperately tryingnot to engage in any conduct which may constitute a boycott. Even though the MUA did have a picket line atWebb Dock, it did not actually prevent the passage of individuals or vehiclesonto the premises, although some buses got pretty smashed up on the occasionsthat they drove through the picket lines. We were satisfied that while there was the occasional stoush between theMUA and the PCS employees as vehicles went through the picket line, thatgenerally the MUA were doing their best to avoid engaging in an illegalboycott.

Office of EmploymentAdvocate

The final issue which is relevant to understanding subsequentevents relates to the anticipated role of the Office of the Employment Advocate(OEA).

The OEA was set up by Peter Reith in 1997 to enforce the Workplace Relations Act 1997 (WRA). TheOEA had jurisdiction to enforce a range of the provisions of the WRA, includingthe Freedom of Association provisions. These provisions made it an offence for an employer to dismiss anemployee because he or she was, or was not, a member of a union.

I remember attending a talk given by Peter Reith prior tothe Waterfront Dispute (we were given some free tickets). In his talk, Mr Reithmade no secret of the fact that something had to change on the waterfront. Healso made it abundantly clear that any attempt by the MUA to prevent such achange would most likely lead to the union having problems under the Freedom ofAssociation provisions of the WRA. Inother words, if the MUA tried to take action to prevent somebody using non-MUAunion labour on the wharves, the OEA's role was to ensure that that didn't happen. Furthermore, he made it clear that theCommonwealth Government agency which would be keeping the MUA on the straightand narrow would be the OEA. I do notrecall Reith referring to the ACCC once during his talk.

I came away from Reith’s talk with the distinct (and pleasing)impression that it would be the OEA, rather than the ACCC, who would be at theforefront of any action against the MUA in what seemed to be the inevitabledispute. I also got the strong impression that the ACCC was not seen by thegovernment as the agency which was feted to take the lead role in any actionagainst the MUA. This probably explainedwhy the ACCC seemed to know so little about what was going on in relation to Cairns,Dubai and Webb Dock.

I was very relieved after hearing Reith’s speech. While Idid not like some of the MUA’s conduct, particularly hold cleaning, Iempathized with other MUA campaigns such as their campaign against flags ofconvenience vessels. I had also seenenough of the MUA in action to respect their skills in dealing with disputesand to acknowledge their consummate ability to play the media. While the MUAwas not the largest union, it seemed to me to be the smartest and mostdisciplined union, with a very strong leader in John Coombs.

However, I was also not entirely convinced that the OEA, assuch a new agency, would be up to the challenge of “taking on” the MUA. This is precisely what happened when thedispute broke out - the OEA immediately jumped ship, leaving the enforcement fieldentirely to the ACCC.

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

2011-11-13T05:28:00.001-08:00

Part 2: Hold Cleaning

Introduction

The practice of cleaning out the holds of vessels had beenaround for a very long time. Thepractice started in Sydney’sBalmain in 1900 with the establishment of the Balmain Labourers Union whosemembers were engaged primarily in painting, cleaning, docking and undocking ofvessels.

In 1916, the Balmain Labourers became the Federated ShipPainters and Dockers Union (Painters and Dockers).

The Painters and Dockers came to prominence in 1980 when itbecame the subject of the Royal Commissionon the Activities of the Federated Ship Painters and Dockers Union, better knownas the Costigan Royal Commission.

In the course of the Royal Commission, the Royal Commissioner Mr Frank Costigan,concluded that the Painters and Dockers union was in actual fact anorganised criminal organisation.

Mr Costigan summarised the activities of the Painter and Dockers in thefollowing way in his Report:

I became satisfied that the union, at least in Victoria, Newcastle, Queensland and South Australia (if not in Sydney as well), was an organised criminal groupfollowing criminal pursuits. At least in Victoria, those in charge of the union recruitexclusively those who have serious criminal convictions. The union gives activeassistance to those criminals, be it in the selection of criminal activity, orin harbouring and protecting the criminals from the consequences of theircrimes.

The criminal activities of the members of the union were notrestricted to any particular sphere of crime. In my reports, I referred tocrimes of violence, theft, extortion, intimidation, fraud, illegal gambling andtrafficking in drugs. There was evidence of wide-scale racketeering, loan sharkingand active participation in organised prostitution. I doubt whether there wereany forms of criminal activity in which there was not some activeparticipation. In this respect, the union presented no different picture tothat found on the eastern seaboard of the United States of America, where longshoremanwere found to be engaging in similar widespread criminality.

The Painters and Dockers were also surprisingly implicatedin tax evasion – namely, the aptly named Bottom of the Harbour tax evasionschemes.

The Costigan Royal Commission was probably best known forthe Goanna controversy – namely, an unsubstantiated rumour that the late MrKerry Packer was involved in a range of criminal activities.

Another practice which the Royal Commission highlighted inits report were the extortionate practices by the Painters and Dockers inrelation to the provision of hold cleaning services to ship owners.

Historically, the Painters and Dockers had been the relevantunion responsible for cleaning out the holds of a vessel whenever a ship ownerrequired that service. Such cleaning wasnecessary if, for example, a bulk vessel came to Australiato discharge fertiliser and was proposing to load a different cargo. The riskwas the residue from the discharged cargo would contaminate the new cargo. The level of cleaning which was required dependedon what the nature of the cargoes; for example, if the second cargo was food,such as grain, the holds would have to be cleaned very thoroughly beforeloading that cargo.

Shipowners did not have to use the Painters and Dockers todo such work. In fact, many shipowners did not like to hire the Painter andDockers because they claimed that they were very expensive and did not do thework properly.

To the extent that members of the Painters and Dockers Unionsimply approached a ship owner and offered to carry out the hold cleaning work,there was obviously no breach of the TPA.

However, the problem arose when the Painters and DockersUnion demanded the work and the vessel owner refused. In these circumstances,the Painters and Dockers would often organise a “picket line” (of sorts) of thevessel to prevent it from sailing from the port until its holds had been cleanedby members of the Painters and Dockers Union.

The way the “picket” was organised was quite novel. Usually a number of unidentified persons, most probably Painters and Dockers union members, would simply turn up at the vessel at thescheduled sailing time and sit on the bollards which held the line tying the vesselto the wharf. The linesmen (who were alsomembers of the Painters and Dockers) would then arrive at the vessel to releasethe lines. However, when the linesmen arrived at the bollard, they would seethe unidentified men sitting on the bollards and refuse to release the line onthe basis that to do so would cause a safety issue. The linesmen claimed that if they tried tomove the men sitting on the bollards, the men may be injured in some way, forexample by falling off the wharf.

After the vessel had missed its scheduled time window to sailfrom the port, the men who had been sitting on the bollards would simply wanderoff, only to mysteriously reappear on the next occasion that the vessel wouldbe scheduled to sail.

Such conduct had significant financial consequences for theshipowner and/or the charterer. The costs of delaying a bulk cargo vessel foreven one day could be as much as $10,000 a day in charter fees alone. The ship owner or charterer would also incur demurragecosts and the costs of the linesmen, towboats, and pilots who had not been ableto do their work due to the picket.

This conduct would continue for many days until theshipowner relented and agreed to use the Painters and Dockers for the cleaning work.

In some situations, the Painters and Dockers would demand toclean the holds and receive payment even if cleaning was not evenrequired.

However, the most serious conduct related to cases where thePainters and Dockers either:

· demanded payment for hold cleaning in situationswhere the cleaning work had already been completed by another cleaning company or

· demanded payment for hold cleaning where thevessel had left Australian waters without being cleaned at all.

In the latter case, the Painters and Dockers would take reprisalaction against the shipowner’s next vessel to Australiato punish the shipowner for not having paid the Painters and Dockers for thehold cleaning work on the earlier occasion.

The Painters and Dockers union was deregistered in 1993. Itwas deregistered under the Hawke union reforms because it had less than 1000members and not because it had been found by Costigan to be a criminalorganisation. Members of the Painters and Dockers joined either the MUAor the Australian Manufacturing Workers Union.

The ACCC’s Waterfront investigation team was very surprisedto discover that this illegal practice, which had been exposed by the CostiganRoyal Commission in 1984, was still continuing unabated in 1997 in a number ofAustralian ports. The practice of eitherforcing vessel owners to use MUA labour to carry out required or unnecessary holdcleaning work or demanding payment for hold cleaning work already carried byanother cleaning company was occurring quite regularly in the bulk cargo portsin Western Australia, South Australia, Newcastle and Port Kembla.

Although some of the allegations from the Costigan RoyalCommission about hold cleaning had been referred to various police agencies,including the NSW State Crime Commission, the practice had not been stamped out. What was even more surprising was that someof the particular individuals named during the Costigan Royal Commission werestill engaging in the same conduct almost 20 years later.

ACCC’s investigation

The first stage in the ACCC’s investigation of the holdcleaning conduct involved trying to gain the trust of the major bulk shippingcompanies operating in Australia. We needed their assistance if we were goingto obtain the evidence to establish the contraventions. However, the majorproblem which the ACCC faced was a lack of credibility.

The industry did not have a high opinion of the ACCC as aneffective and fearless regulator. The industry was also sceptical that the ACCCcould clean up hold cleaning when the Costigan Royal Commission itself hadfailed to stop the conduct. Accordingly, we spent a great deal of time andeffort trying to convince the industry that we were willing and able to stampout the practice. We did this a numberof ways.

First, we sought to present ourselves to the industry asuncompromising, no nonsense investigators who were up to the task of stampingout illegal hold cleaning. This meant wetalked very tough with everybody we interviewed, sometimes to the point of being quite belligerent.

By way of example, on one occasion we were interviewing anumber of staff from a large European owned shipping company when the ManagingDirector of the company walked into the interview and started to tell us thatthe ACCC would never succeed in its hold cleaning case and that we were wastinghis staff’s time. I immediately turned to the Managing Director, looked him straight in the eye and said in themost serious sounding voice I could muster that he was wasting our time andthat it would be better if he left so we could get on with our investigation. He immediately walked out of the room lookingdecidedly sheepish.

Incidentally, this company continued to assist us throughout the investigation and provided the ACCC with valuable evidence which we used in our legal proceedings.

We also nonchalantly dismissed the concerns raised byindustry participants that there may be a risk of violence if we sought totackle the hold cleaning issue.

Second, we spent a great deal of time explaining to theindustry the way we were proposing to approach our investigation and whatoutcomes we would be seeking to achieve. One advantage that we had was that section 45DB had recently beenintroduced into the TPA which made it much easier for us to establish acontravention of the TPA. Providing such detailed explanations to the industrywas an important element in winning the industry’s trust. The industry wouldonly trust us if they believed that we knew what we were doing and that wewere confident of being successful.

Third, we had to convince the industry we were not part ofsome broader Howard Government plot to destroy the MUA. We quickly realised that while the industrywas quite reluctant to get involved in litigation against the MUA, it was evenmore reluctant to get involved in the political machinations of the government.

This final issue proved to be the most difficult aspect ofthe investigation due to the interference of two Howard Government consultantsin our investigation. Shortly after we had commenced our investigation, it came to ourattention that two individuals were seeking to reinterview the same people we had beeninterviewing. We soon discovered that these individuals were Dr David Trebeckand Mr Stephen Webster, who hadbeen hired as consultants to the Howard Government to investigate variousstrategies in relation to the MUA. Theseindividuals had heard about our investigation and were trying to find outmore.

We were very concerned that the actions of these individualswould seriously jeopardise our investigation by blurring the fact that the ACCCwas an independent statutory body which was enforcing the TPA and not anorganisation which was simply doing the government’s bidding.

Industry participants started to ask us whether we wereworking with “Dr Trebeck and his people.” We were very direct in our response to the industry stating in nouncertain terms (and in the toughest sounding way we could) that:

· we had nothing to do with “Dr Trebeck and hispeople”;

· we did not know what “Dr Trebeck and his people”were doing;

· we did not appreciate “Dr Trebeck and hispeople” interfering in our investigation; and

· “Dr Trebeck and his people” better stay wellaway from our investigation.

Ultimately, we were successful in gaining the trust of alarge part of the industry. Based on ourpreliminary investigation we were able to issue a number of section 155 noticesto ship owners and shipping agencies to obtain information and documents. Wethen started the chore of reading and analysing thousands of pages of documentsabout hold cleaning incidents going back over ten years to work out how manypotential contraventions of the TPA we may be looking at.

Unfortunately, an unexpected and very significant event occurred which forced us to put our hold cleaning investigation on hold – namely the 1998Waterfront Dispute.

Despite putting the hold cleaning investigation on the backburner, we were always determined to run this case once things returned tonormal. However, it would be one yearbefore we could recommence our hold cleaning investigation and two years beforewe were able to commence legal proceedings against the MUA for its holdcleaning activities.

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

2011-11-09T18:43:00.000-08:00

Part 1: Beginnings

Introduction

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

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

I will also be discussing some of the more misguided if notdownright foolhardy ideas which the ACCC both contemplated and ended uppursuing during its waterfront investigations. For example, I will outline the foolhardy(and fortunately aborted) plan to drop a number of ACCC officers, includingmyself, onto the Australian Endeavour via helicopter so that the ACCC couldclaim that it had safeguarded the passage of the vessel into Port Botany. I will also describe the misguided plan whichthe ACCC ultimately did pursue – namely, to “embed” two ACCC officers behindthe picket lines at Botany Bay at the very height of thedispute.

Setting up theWaterfront Investigation Team

In late 1997, it was apparent that trouble was brewing onthe Australian waterfront. News stories were appearing regularly in thenewspapers about alleged rorts by the Maritime Union of Australia (MUA). Peter Reith, the then Minister for WorkplaceRelations, was making inflammatory speeches about the union movement, withparticular emphasis on the alleged rorts of the MUA. It was against thisbackground of impending trouble on the waterfront that then CEO of the ACCCdecided to establish the ACCC’s own waterfront investigation team. The CEO knew there was going to be troubleand he wanted the ACCC to be prepared.

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

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

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

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

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

First, it became apparent that unions often engaged inquick, strategic and opportunistic boycotts of various businesses to achievetheir goals. Accordingly, anyinvestigation team charged with investigating such conduct would have to beable to prepare a case very rapidly. Indeed, in most instances, the ACCC wouldbe seeking urgent interlocutory injunctions to try to stop a particular union fromengaging in such conduct in the short term. The ACCC’s mergers branch had more experience than the enforcementbranch in terms of being able to both conduct investigations rapidly and to preparelitigation in very short time frames. The mergers branch also had moreexperience than enforcement in preparing urgent interlocutory proceedings.

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

It became apparent to the Waterfront Team almost immediatelythat the entire competitive structure of the waterfront had major problems. Theports, which were generally owned and operated by state governments, were inmost cases natural monopolies. Add to this the fact that there were only twomajor stevedores (Patrick Stevedores and P&O), a monopoly supplier oftowage 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 WaterfrontInvestigation Team, it was inundated with complaints about the MUA. The vast majority of these complaints were givento the ACCC by representatives of Peter Reith’s Department – the Department ofWorkplace Relations. Later on in our role we received complaints about otherindustry players, such as port corporations and the two major stevedores, whichwe also investigated.

The complaints we received from Workplace Relations aboutthe MUA, related to such varied issues as:

· the MUA’s conduct in relation to off shore oilrigs;

· the MUA’s alleged actions in seeking to prevent the granting ofcoastal vessel permits;

· the conduct of cruise line baggage handlers, and

· concerns about the way that seaman’s engagement systemoperated.

The main provisions that we had reference to in assessingthese complaints were sections 45D and 45DB, which provided:

Section 45D

(1) In the circumstances specified insubsection (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 causingsubstantial loss or damage to the business of the fourth person.

Section 45DB

(1) A person must not, in concert withanother person, engage in conduct for thepurpose, and having or likely to have the effect, ofpreventing or substantially hindering a third person (who is not an employer of thefirst person) from engaging in tradeor commerce involving the movement of goods between Australia and placesoutside Australia.

Section 45D was the traditional provision used to combatsecondary boycotts. This section was designed to prevent unions from engagingin sympathy strikes – ie one union taking action against a business to assistanother union in an employment related dispute with that business.

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

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

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

While the MUA’s conduct against such vessels (which usuallyinvolved picketing the vessel so that it was unable to sail until the shipowneragreed to pay their workers higher wages, including back wages) was likely toconstitute a breach of section 45DB of the TPA, we were very reluctant to takeenforcement action. The ACCC did notwant to be effectively protecting businesses which appeared to be engaging inexploitative labour practices in relation to workers from developing countries.

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

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