Sunday, April 23, 2006

Visy & Amcor: Spy-vs-spy-vs-spy….

I posted earlier on the case involving Amcor and Visy’s alleged cartel in the packaging market between 2000-2004. According to Amcor, the firms agreed not to take away each other’s customers and to charge hefty prices to established customers. The ACCC action on Amcor and Visy, seeks to prosecute the alleged cartel but exempts Amcor from prosecution because it has acted first in coming forward as a whistleblower. It seems interesting as an instance of how the corporate regulator can exploit well-known instabilities (of the Prisoners Dilemma type) in attacking cartel agreements.

But it seems Graeme Samuel at the ACCC got it all wrong! Visy are now claiming they were not colluding at all. They were taking Amcor for a ride. It was all an elaborate subterfuge to enable Visy to poach customers from Amcor. Visy was duping Amcor into leaking information that allowed Visy to steal Amcor customers. Visy has claimed it gained market share while Amcor lost it as a result of the subterfuge.

Matthew Stevens in The Australian characterises this version of the tale as a cunning plan – Cold War double bluff. Visy’s claims attempt to thwart damning and self-incriminating evidence from Amcor. Its claim is that whatever Amcor thought was going on was delusional. Amcor is then left well and truly in the lurch – although it can escape ACCC prosecution it is still subject to a class action claim from Australia’s largest food and beverage companies that the Australian Financial Review today (subscription only) could amount to $300 million.

Its fascinating stuff. I guess the evidence on whether actual competition occurred will be crucial. But if the basis of the claim is that prices were fixed and that competition was thereby limited, if the Visy defence stands could Amcor still be liable for class action damages? And does their exemption from prosecution rule need revision? Stay tuned.

No comments: