Unfinished Business: The Hold Cleaning Case - Part 4 - Conclusions

Part 4: Conclusions

Aftermath
After Justice Hill’s decision the ACCC issued what I think must be one of the longest news releases in the history of the ACCC or the TPC:

Court imposes penalties and costs of $210,000 for breach of secondary boycott provisions of Trade Practices Act on MUA[1]

In a precedent setting case, Justice Hill of the Federal Court of Australia has ordered that the Maritime Union of Australia pay penalties and costs totalling $210,000 for breach of the secondary boycott provisions of the Trade Practices Act 1974. He also made declarations that the union's conduct constituted undue harassment and coercion in breach of the Act. 

"As part of the orders, the court has imposed permanent injunctions restraining the MUA from engaging in undue harassment or coercion in connection with the supply of hold cleaning services to shipowners, charterers or their agents", ACCC Chairman, Professor Allan Fels, said today. "The court noted that the MUA had admitted to breaching section 45DB of the Act in relation to boycott conduct on two separate occasions and found the admissions to be properly made.

"In relation to the boycott conduct, the court imposed a penalty of $150,000 on the union. This is the first time a penalty has been imposed for a breach of section 45DB. 

"The behaviour involved especially serious coercion and undue harassment and it is appropriate that the Federal Court has held that this breaches section 60.

"This is particularly serious, intentional behaviour which has no place in Australian life".

After an extensive investigation, the ACCC commenced legal action on 14 April 2000 alleging that the MUA, and a number of senior officials breached section 45DB of the Act by unlawfully hindering and preventing, or attempting to hinder and prevent, vessels from sailing unless the ship owner/charterer agreed to use MUA labour to clean the vessel's holds. It was alleged that on a number of occasions, where such demands were not accepted, various forms of unlawful action to stop the vessel sailing followed (i.e. pickets, threats of pickets, action to delay, demands for payment in lieu of cleaning). The ACCC further alleged that certain aspects of the conduct amounted to undue harassment and coercion, in breach of section 60 of the Act.

In general terms, section 45DB prohibits persons from hindering or preventing the movement of goods between Australia and places outside Australia. Section 60 prohibits the use of physical force or undue harassment or coercion in connection with the supply or possible supply of goods or services to a consumer.

The ACCC believes that the means adopted by the MUA to ensure shippers use MUA labour to clean holds had the potential to affect, and had in fact affected, the ability of companies to conduct international trade and commerce. This resulted in a loss of international reputation and direct financial cost, leading to an overall reduction in consumer welfare.

Justice Hill made orders in which:

• it is noted that the MUA admits to contravening section 45DB of the Act on two separate occasions and that two of its senior officials admit to being knowingly concerned in these contraventions

• it is ordered that the MUA will pay a penalty of $150,000 in relation to the two section 45DB claims

• it is declared that the MUA contravened sections 45DB and 60 of the Act on two separate occasions, that two of its senior officials were knowingly concerned in the MUA’s section 45DB contraventions and that one of its senior officials was knowingly concerned in the MUA’s section 60 contraventions

• it is noted that the MUA and three of its senior officials have undertaken to the court not to engage or attempt to engage in similar conduct in the future in relation to section 45DB of the Act

• it is noted that the MUA has undertaken to implement a trade practices compliance program

• it is ordered that the MUA and one of its senior officials be permanently restrained from using undue harassment or coercion in connection with the supply of hold cleaning services to ship owners, charterers or their servants

• it is ordered that the MUA will pay the ACCC’s costs in relation to the contraventions of section 60 of the Act and will contribute $60,000 towards the ACCC’s costs in relation to the section 45DB claim

• it is ordered that the MUA publish a notice to its members and employees informing them of these orders and the ramifications of breaching them

The undertakings given to the court by the MUA and its senior officials will ensure that a company’s ability to conduct international trade and commerce, and the passage of ships containing goods bound for import or export, will not be adversely affected as a result of boycott action by MUA members. The undertakings will also ensure that shipowners will be able to enforce their right to choose who cleans their ship’s holds without interference by the union.

The ACCC took proceedings in relation to section 60 not only to ensure that conduct that may amount to undue harassment or coercion was not used to detract from a person’s ability to make effective independent business decisions, but also to obtain judicial clarification as to the realms of conduct which may amount to undue harassment or coercion".

The maximum pecuniary penalty available for a breach of section 45DB of the Act is $750,000 per contravention. No criminal fine was sought in relation to section 60.

This case follows orders by Justice French in the Federal Court, Perth in August 2000 that a debt collection agency, Cash Return Mercantile Pty Limited, and its former agent, Sharyn McCaskey, had engaged in undue harassment or coercion and is an important expansion of the realm of conduct to which section 60 of the Act applies. That case was the first of its kind under the Act. The MUA case, the second, is the first concerning a trade union and trade union officials"

Conclusions

The ACCC’s case against the MUA in relation to hold cleaning was a very successful case in a number of respects. Not only was the MUA ordered to pay a total pecuniary penalty of $150,000 for two breaches of section 45DB, but the ACCC also established that a number of MUA officials had been knowingly concerned in contraventions of both sections 45DB and 60.

It was also the first time that:

• a pecuniary penalty had been imposed for a contravention of section 45DB; and 

• section 60 had been used to attack the illegitimate use of picket lines by a trade union.

However, the most significant achievement of the hold cleaning case was that it actually succeeded in stamping out the practice of holding cleaning in Australia. By publicly exposing this outrageous practice through the courts and the media, the ACCC was able to force the MUA to formally abandon the conduct and take steps to make sure that such conduct never happened again.

The hold cleaning case was one of the most personally satisfying cases in which I have been involved. It was an excellent outcome for the ACCC and the industry. It was also a good outcome for the union movement. Unfortunately, when thuggish and extortionate practices are engaged in by even one union, such practices have a tendency to put the entire union movement in a very negative light. In this regard, the ACCC did the union movement a favor by taking action to stop the illegitimate and ugly practice of hold cleaning, once and for all.

The success of the hold cleaning case also made up, in a large way, for my personal disappointments about the MUA settlement following the Waterfront case. The MUA had been able to settle the Waterfront case on very favourable terms and with an enhanced reputation. However, these benefits were short-lived. The MUA came crashing back down to earth following the hold cleaning case, as the truth about some of its less savory practices became known. I was personally satisfied that the ACCC’s “unfinished business” with the MUA was now complete.

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[1] Court imposes penalties & costs of $210,000 for breach of secondary boycott provisions of Trade Practices Act on MUA, ACCC News Release at http://www.accc.gov.au/content/index.phtml/itemId/87905/fromItemId/378012