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 Financial Happenings Blog 
Thursday, November 01 2007

I have to point out some bias in this blog up front.  I hate 'white collar' crime.  I think that it is often understated - however whether you take money from people through straight theft, or through so called 'white collar crime', it has the same impact on the victims.

Consider the crooks selling fake investment schemes.  The impact that has on their victims is no different to theft - and the perpertrators of such theft should be dealt with harshley.

So to today's announcement that Richard Pratt has only been dealt a fine for price fixing in the cardboard market.

As consumers, we all use carboard.  From pizza's to new computers each of us was impacted by the price fixing between Visi and Amcor.  Let's try and put a figure on this.  The Australian cardboard market has two basic players, and is worth about $2 billion a year.  Let's assume that the price fixing ran for three years - although it almost certainly ran for longer.  If the price fixing allowed them to overcharge by 5%, that means that Visi and Amcor would be benefiting to the tune of $100 million a year in extra revenue - or $300 million over three years.  That is $15 for every man woman and child in Australia.  So what were the total fines for this price fixing? - $38 million. 

Amcor and Visi have fixed prices, stolen $300 million from Australian consumers and businesses and been fined less than $38 million.  Good work if you can get it.

(PS - there is a $700 million class action against Visi and Amcor for damages, so our $300 million estimate even looks a bit conservative).

Posted by: Scott Francis AT 07:49 pm   |  Permalink   |  Email
 
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