Banking Competition Inquiry Report
The Senate Economics References Committee (SERC) has released the report (May 2011) of its inquiry into competition within the Australian banking sector. The SERC has made a number of recommendations, including that a “broad ranging inquiry into the Australian financial system be established, modelled on that conducted by the Campbell Committee”, and “covering the role of banks and other financial institutions in a post-[global financial crisis] financial environment”.
Further information from the SERC
Related media and news items:
Australian Bankers’ Association’s (ABA) media release (6 May 2011)
The Australian: Lenders back Senate’s call for finance inquiry (7 May 2011)
(Source: SERC; ABA; The Australian)
Commission to Appeal Cardboard Cartel Ruling
The New Zealand Commerce Commission (NZCC) has announced that it will appeal an April 2011 ruling that limited its case in a cardboard cartel action. The High Court of Auckland decided to reduce the number of claims the NZCC can pursue against Visy Board Pty Ltd (Visy) and its former general manager Rod Carroll on account of jurisdictional matters, however did allow the NZCC to take up claims that Visy and Amcor Ltd colluded on prices in relation to a Fonterra tender. Commerce Commission General Counsel for Enforcement Mary-Anne Borrowdale has condemned the ruling stating it “sets an unhelpful precedent for future enforcement cases”.
NZCC’s media release (6 May 2011)
Doctors’ Association Settle Anti-Competitive Charges
The US Federal Trade Commission (FTC) has announced that Southwest Health, an independent practice association representing 900 physicians, has agreed to an Order (undated) that prevents it from entering into agreements to fix the prices and terms at which it would contract with health plans, and has negotiated the terms and conditions under which it would deal with health plans. According to the FTC, the association has restricted competition by entering into “agreements [which] eliminated competition and harmed consumers by increasing prices for physician services”, since 2000. In addition to the proposed negotiations, Southwest Health is barred from “facilitating the exchange of information between physicians concerning the terms on which they will contract with insurers”. The proposed order expires in 20 years and allows the FTC to supervise Southwest Health’s compliance with its terms during this period.
FTC’s media release (10 May 2011)
Major Bank Charged With Bid Rigging to Settle for US$160 Million
The US Securities and Exchange Commission (SEC) has announced that UBS Financial Services (UBS) has agreed to pay US$47.2 million to municipalities affected by UBS’s fraudulent rigging of at least 100 municipal bond reinvestment transactions in 36 states, as alleged by the SEC. According to the SEC, UBS’s practices “undermined the competitive bidding process and affected the prices that municipalities paid for the reinvestment products being bid on by the provider of the products”, and as a result “jeopardized the tax-exempt status of billions of dollars in municipal securities”. By acting as a bidding agent UBS allegedly diverted business to favoured bidders acting as providers of reinvestment products. UBS and others have also agreed to pay US$113 million to settle a related action brought by other federal and state authorities.
SEC’s media release (4 May 2011)
Qantas Accused of Protecting Monopoly
The Australian reports that Strategic Airlines (Strategic) has asked the Australian Competition and Consumer Commission to investigate whether Qantas subsidiary QantasLink is acting in an “anti-competitive and predatory” manner by drastically reducing prices and increasing services on the Brisbane-Gladstone route. Reportedly, Strategic chief commercial officer Damien Vasta stated that “there appeared to be no need for the additional peak-hour services” and that QantasLink’s price reduction to $69 was “dramatic”. However, a QantasLink spokesperson has reportedly attributed its actions to “growing demand in the region”.
The Australian: Strategic accuses Qantas of dumping, ‘predatory pricing’ (25 April 2011)
(Source: The Australian)