Nestle ‘Kit Kat’ chocolate bar.
Source: Supplied
BANKING, chocolate, travel, e-books. If the latest series of headlines is anything to go by, it seems there is barely an industry untouched by price fixing.
But far from being loan sharks and scammers out to fleece consumers, some of the world’s biggest and most-trusted brands have been embroiled in brazen price fixing scandals.
Last week, the Federal Court dished out an $11 million fine to Flight Centre after the Australian Competition and Consumer Commission (ACCC) alleged the company attempted to collude with Singapore Airlines, Malaysia Airlines and Emirates to stop offering fares lower than those advertised by the agency.
An ACCC spokesman said price fixing — cartel behaviour where companies work together to set minimum prices — happens in a huge range of industries and is terribly destructive for consumers and small businesses.
“The ACCC has taken action against price fixing in industries as diverse as international air cargo, photocopy paper, construction, bread, petrol and power transformers,” a spokesman for the agency said.
“The ACCC is currently undertaking a number of in-depth cartel investigations in a range of industries, involving both local and international conduct.”
In light of the Flight Centre charges, here are just some of the world’s biggest brands that have been linked to the practice.
Nestle, Mars, Hershey
Nestle is alleged to have fixed prices for chocolate in Canada.
Source: News Limited
They might make delicious chocolate but life is not so sweet for the Canadian branches of Nestle, Mars and ITWAL, which were charged with fixing the price of chocolate by the country’s Competition Bureau.
Their actions were labelled “a serious criminal offence” that “harms Canadian consumers” by Competition Commissioner John Pecman. Hershey received lenient treatment after co-operating with the investigation, while Nestle and Mars denied wrongdoing but agreed to pay settlements. They are still set to face criminal charges in a separate investigation.
HSBC, UBS, Citigroup and 13 of the world’s biggest banks
UBS is one of the banks named in a global rate-rigging scandal that impacted millions of customers.
Source: AP
It’s not the first time the banking world has been rocked by scandal, but allegations of rate rigging at 16 of the world’s biggest banks is certainly one of the most prolific.
The US Federal Deposit Insurance Corporation (FDIC) is suing banking giants including Bank of America, Citigroup, JPMorgan, Credit Suisse, Royal Bank of Canada and HSBC claiming they rigged the London interbank offered rate, known as LIBOR, from August 2007 to mid 2011 by falsely estimating their borrowing costs.
The fixing — revealed after Barclays admitted submitting false information in 2012 — was used to keep a key global interest rate low and make banks even richer as it’s used as a benchmark to set trillions of dollars worth of mortgage and loan contracts around the world.
The FDIC is currently seeking economic and punitive damages from the banks.
Colgate-Palmolive, Cussons, Unilever
Unilever, which owns Omo, blew the whistle on Project Mastermind.
Source: Supplied
The supposedly squeaky clean laundry industry came undone last year when Unilever came clean over Project Mastermind, a plot hatched with Colgate-Palmolive and Cussons to fix prices in the laundry powder market to return $146 million in sales.
The companies colluded to stop supplying standard concentrate in favour of ultra concentrate without passing cost savings on to consumers according to the ACCC.
However Unilever rolled on the deal in return for immunity and the ACCC sought damages from Colgate, Cussons and Woolworths.
Visa
Visa is being sued by Walmart for allegedly conspiring with banks to fix prices.
Source: News Limited
Payment giant Visa is being sued by the world’s largest retailer Walmart for more than $5 billion for allegedly conspiring with banks to fix fees for accepting Visa card payments.
Walmart claims “Visa has used its price-fixing schemes to establish, maintain and enhance its long-held market power,” in a lawsuit filed in Arkansas. They also accuse the company of issuing cards that can be easily defrauded then shifting the cost of losses on to merchants.
Visa has declined to comment on the case.
Apple
Apple was found guilty of colluding to fix prices on e-books.
Source: AFP
Apple was found guilty of colluding with publishers Macmillan, Penguin, Hachette, HarperCollins, and Simon Schuster to fix the price of e-books in July last year.
Manhattan Judge Denise Cote said the tech giant played a central role in working with publishers to set prices above the $9.99 Amazon was charging for e-books.
“Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010,” she said at the time.
The publishers opted to pay $166 million to settle the case but Apple has denied allegations and fought the charges, currently facing another trial to determine the amount of damages to be paid.
Qantas, British Airways and others
Qantas was fined $20 million for an international air cargo hotel in 2006.
Source: AFP
In 2006, Qantas was one of 15 international airlines fined by the ACCC in their highest-ever penalty for price fixing, which led to multiple fines worth nearly $100 million.
German carrier Lufthansa blew the whistle on the international air cargo cartel in return for immunity. Qantas copped a $20 million fine, British Airways was fined $5 million and Japan and Korean Airlines were fined $5.5 million each.
Qantas eventually received a 50 per cent discount for co-operating with the ACCC although a senior executive was jailed for six months in the US, the ACCC reports.
Hefty penalties
Despite the prevalence of price fixing, there is little consumers can do to protect themselves.
The ACCC said detecting and stopping cartel activity is a priority and they run an immunity program to incentivise disclosure of illegal behaviour with penalties of up to $500,000 for individuals and 10 years in jail. Companies can face fines of up to $10 million or three times the total value of benefits attributed to the offence.
Who have we missed? Do you know of any other large price-fixing scandals? Continue the conversation on Twitter @newscomauHQ |
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