Price-fix fine for paper company

The Australian:  March 1, 2011: Andrew Burrell

ONE of the world’s biggest pulp and paper companies engaged in “systematic, sophisticated and long-running” collusion to fix the price of paper in Australia, the Federal Court has found.

Singapore-based Asia Pulp & Paper and its Indonesian subsidiary were ordered to pay penalties totalling $4.2 million after admitting to 16 secret meetings at which prices in the Australian market were decided.

APP was founded by Indonesia’s Widjaja family, which had close links to president Suharto in the 1980s and 90s.

The company has also attracted scorn from environmentalists, who have accused it of involvement in illegal logging.

The secret talks to fix the average price of photocopy and folio paper in Australia — referred to by the participants as the AAA Club — were held across Southeast Asia between December 2000 and January 2004.

At the time, APP had about 16 per cent of the market in Australia, with sales of $US50m a year. In total, the companies involved in the cartel had about 40 per cent of the market, according to the court.

The action against APP was launched by the Australian Competition & Consumer Commission in 2006.

ACCC chairman Graeme Samuel said last night the case showed how the commission would pursue cartel arrangements even if they were made overseas by foreign companies.

He told The Australian the regulator had received help in prosecuting the case from fellow competition authorities overseas: “International agencies are working very closely on cartels.”

In her judgment, judge Annabelle Bennett found representatives of APP’s management team were involved in setting the price of paper for supply into Australia by giving directions to local managers at APP Australia.

“The conduct involved the competitors at the AAA Club meetings deliberately reaching agreements as to pricing of their products, with the AAA Club meetings being held in secret,” Justice Bennett said.

“The AAA Club meetings involved systematic, sophisticated and long-running cartel arrangements between the participants.

She said anti-trust laws were not introduced in Singapore until late-2004 and the Singapore Competition Commission was established a year later. Anti-trust laws were introduced in Indonesia in 1999.

At the time the conduct occurred, APP and its Indonesian subsidiary, Indah Kiat, had not provided anti-trust training for staff.

“No training has been provided subsequently by APP Singapore or Indah Kiat,” she said.

The judgment against APP on Friday came after a court found in January last year that Singapore-based April Fine Paper Trading was involved in the cartel and fined $4m.

APP could not be reached for comment.


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