Paper, Scissors Rock: Cutting out Visy Cartels

In November last year, ACCC Chairman Graeme Samuel decided that he’d had a gutful of small businesses being at the mercy of big companies and cartels à la Visy Paper and Amcor while nothing was being done to stop it.

“Thus the reason why we have advocated... indeed, since 2004 when this cartel was first discovered, was first brought to light, we have advocated over and over again that we need criminal penalties, that is jail sentences for cartel offenders and I think the jury’s not out on that.” (From interview with, Inside Business, November, 2007)

If you’re not quite up to date on this outstanding example of corruption, here’s a quick re-cap: Paper rivals Amcor and Visy were discovered to be paper mates after they were caught ripping off consumers – many of them small businesses – by price fixing to the tune of around $700 million.

Visy owner Richard Pratt, Australia’s third richest man, (trailing just behind James Packer and Westfield shopping mall king Frank Lowy) is worth an estimated $5.4 billion, yet he was given a comparative slap-on-the-wrist fine of only $36 million. He avoided criminal sanctions because competition laws prohibiting price fixing and other cartel behaviour only attract civil penalties. 

But, thankfully that’s all about to change. New laws announced in January 2008 will have a sting worse than a summer sunburn. Under draft legislation of the 

Trade Practices Amendment (Cartel Conduct and Other Measurers) Bill 2008, those found guilty of serious cartel conduct will face up to five years in prison and/

or fines of up to $220,000 for individuals and $10 million for corporations. 

In extreme cases the penalty would be three times the value of the benefit of the cartel. Vis-à-vis Visy, that would equate to a LOT of cardboard boxes. 

These new laws will bring Australia into line with the US, the UK, Germany, Ireland and Canada.

Where do I come in and how can I help you? As the laws are only in the draft stage, small businesses and anyone else can lodge a submission; such as your thoughts on whether telephone interception warrants should be permitted in order to catch the bad guys in the act. 

If you have an opinion on how the bigshots should be handled once they’ve been found out, and you can get it into a coherent argument, please do take action – the information you need is in the box on this page.

While the laws are designed as a deterrent they will offer some type of protection for small businesses who, in the case of Visy, have been seriously left out of pocket and out in the cold. 

While Australia’s biggest Pratt has escaped criminal prosecution, a few class actions are set to cause him and his old mates in the boys’ club at Amcor some headaches. Customers are suing Amcor and Visy for allegedly overcharging by up to $700 million for cardboard boxes during the cartel period. And Cadbury Schweppes has jumped on the bandwagon too, launching its own $120 million claim.

A lot of froth and bubble for small business and you’re invited to stir the pot, before they put the lid on the legislation later this year.