Price-fixing to price-gouging

Economy, Politics, World

Mar 9, 2024

‘…price-protection is, and must always, remain the very first and foremost plank in any fighting platform worthy of the name, and hang the public!’ Southern Grocer, 1912.

For most capitalists in the first six decades of last century, tariff protection took second place to price-fixing, which undermined the ‘frugal comfort’ of the basic wage by driving up the cost of living. The enforcement of agreed prices ranged from bakers in a country-town to the largest confectioners, Hoadley and MacRobertson, who were part of an international glucose cartel. Patent-medicine firms had formed a Propriety Articles Trade Association in 1903 to maintain set prices for pharmacy lines, before covering other branded goods; in 1909, its Queensland branch gained the support of four of the largest manufacturers to supply its members at or below cost in order to undercut and thus drive out interlopers.

Of immediate interest to many male workers was the creation of a price-ring in 1903 by six Melbourne breweries which combined in 1907 as Carlton and United to supply half of Victoria’s beer; they also bought up the pubs.

After a 1911 NSW Royal Commission reported on collusive tendering for public works, the Master Builders’ Association protested that illegal commissions ‘should be openly recognised’ as ‘universal and worldwide.’

Having conspired to fix prices, businesses had to conceal the fact. Melbourne barrister and later High Court judge, H.E. Starke, advised the Master Printers not to sue for defamation by a victim of their collusion because legal action would further expose their price-fixing.

The Swan Brewery managers in Perth used twenty-four code words to inform their Melbourne directors of discounts and other anti-competitive devices, safe from the eyes of the authorities. Under investigation, coastal shippers destroyed all records of the combine they had set up in 1902, which they codenamed ‘Collins’ as if their ‘pool’ were an individual customer. A Melbourne cartel of wool-brokers fleeced consumers through two world wars and the depression.

Resale Price Maintenance (RSM) held until 1971 when the ACTU formed an alliance with Bourkes Department store in Melbourne. R.J. Hawke recalled the outrage at union interference with a free market where manufacturers supplied retailers on the condition that the goods were sold at the set price. If the retailer attempted to sell at a lower prices, supplies were refused. Dunlop refused to supply Bourke Stores. but capitulated once unionists made it clear that they would stop its business.

More outlets do not make prices more competitive. The demise of the corner shop across the suburbs and its displacement by the likes of the 7-Elevens which rip-off customers and staff alike. IGAs are several cents higher than the same items at the duopoly.

The supermarket price is the last in a long line of the gouging that runs all the way up and all the way down every supply chain.

The Trade Practices Commission made no effort into stopping the rackets of transfer pricing, for instance, in the uranium and aluminium cartels. Instead, its Chairman allocated no further cases to George Venturini, the one Commissioner who tried to do something from early 1975 to July 1977. He documented the rackets in his Malpractice.

In 2008-09, QANTAS paid regulators around the world $200m. in fines. Conspirators added $US0.05 on every kilo of freight. ‘Doesn’t sound a hellava lot, But give it to me every kilo …’ In 2018, Flight Centre was fined $12.5m. and Air New Zealand $15.00m.

Dick Pratt stole hundreds of millions from every Australian in a price-fixing racket between his box-making business, Visy, with its rival, AMCOR. Their conspiracy added to the price of every retail item. In October 2007, the ACCC fined him $36m. Had he been the boss of a bikie gang, the authorities would have confiscated his assets as the Proceeds of Crime. Next year he was charged with lying to the ACCC. Pratt used a slice of his ill-gotten gains to buy good-will with tax-deductable philanthropy.

Co-founder of the Transfield Corporation, and fellow patron of the arts, Franco Belgiorno-Nettis, told its official historian that his ilk cover-up their corruption and strong-arm tactics with ‘a veneer of civilisation.’