Asia Pacific

Supermarket Milk Pricing given the Green Light by Watchdog

The Australian Competition and Consumer Commission (ACCC) has announced its findings that Coles Supermarkets (Coles) did not act in breach of the predatory pricing provisions, stipulated under ss. 46(1) and 46(1AA) of the Competition and Consumer Act 2010 1974 No. 51 (Cth), when it reduced the price of its house brand milk. The ACCC’s inquiries found that Coles’ intention was to “increase its market share by taking sales from its supermarket competitors”, which is consistent with the ACCC’s expectations of a competitive market. ACCC chairperson Graeme Samuel stated that the major impact of the price reduction appears to have been “a reduction in the supermarkets’ profit margins on house brand milk … [which] have benefited consumers who purchase house brand milk”, and emphasised that “[p]rice cutting, or underselling competitors, does not necessarily constitute predatory pricing”. The ACCC also found that on the whole, “most milk processors pay the same farm gate price to dairy farmers irrespective of whether it is intended to be sold as branded or house brand milk”.
ACCC’s media release (22 July 2011)

Related news item:
ABC News: Milk price cuts cost supermarkets not farmers: ACCC (22 July 2011)
(Source: ACCC; ABC News; Lawlex Legislative Alert & Premium Research)

Phone Company Charged with Contempt of Court
Business Ethics and Corporate Culture, Employment and Workplace Issues, Other

The Australian Competition and Consumer Commission (ACCC) has announced that the Federal Court has charged Allphones Retail Pty Ltd (Allphones) $45,000 for contempt of court after the company breached two undertakings given in October 2008. The orders followed court proceedings initiated by the ACCC and related to a prohibition on Allphones forcing franchisees to sign agreements that released Allphones from liability. According to the ACCC, Allphones has acknowledged that its conduct was both wrongful and culpable, and has issued an apology.
ACCC’s media release (20 July 2011)
(Source: ACCC)

SFC Investigating Corporate Governance Report
Anti-Bribery and Anti-Corruption, Anti-Money Laundering, Business Ethics and Corporate Culture, Financial Integrity, Other

Reuters reports that China’s Securities and Futures Commission (SFC) is conducting an investigation into the accuracy of a recent Moody’s report on the corporate governance practices of Chinese firms. The report, Red Flags for Emerging-Market Companies: A Focus on China, was reportedly critical of the corporate governance and accounting practices of a number of Chinese firms. Its release also reportedly led to a sharp decline in the stock and debt prices of a number of┬áthe identified firms listed in the Hong Kong bourse. According to Reuters, a number of firms and market analysts have been critical of the report’s veracity and risk framework. These concerns have reportedly prompted the SFC to examine the report under the auspices of its new regulatory authority over credit rating agencies. Reuters reports that the SFC will determine whether the report complied with the mandatory code of conduct which requires credit rating agencies to act “honestly and fairly”.
Reuters: Moody’s China red flag report under scrutiny by HK regulator (21 July 2011)
(Source: Reuters)

Former Telco Executive Sentenced to Death for Bribery, Others Investigated
Anti-Bribery and Anti-Corruption, Business Ethics and Corporate Culture

Xinhua reports that Zhang Chunjiang, a former executive of China’s biggest state-owned telecommunications company China Mobile, has been sentenced to death with a two year repreive for accepting more than $1.15 million in bribes while working for state-run telco companies. According to the The New York Times (NYT), the sentence is part of a major corruption sweep in which at least seven other executives from China Mobile are being investigated.
Xinhua: China Mobile’s former deputy general manager gets suspended death penalty for bribery (22 July 2011)
NYT: Former China Mobile Official Sentenced in Bribery Case (22 July 2011)
(Source: Xinhua; NYT)

Insider Trading Fallout of Carbon Tax
Confidentiality and Intellectual Property, Insider Trading

The Sydney Morning Herald (SMH) reports that a leak of confidential information relating to carbon tax compensation for the steel industry has led to certain investors “making a killing” out of steel stock trading.

According to the SMH, steel maker’s share price has been marked down over previous months in anticipation of the carbon tax, however, the share price climbed more than 6% in the week before the 10 June 2011 announcement of a $300 million concession package for the steel industry. Reportedly, Australian Securities and Investments Commission chairman Greg Medcraft will face increasing pressure to conduct an investigation to find a “needle in the haystack” over the information leak.
SMH: Carbon tax and insider trading: looking for the needle in a smokestack (22 July 2011)
(Source: SMH)