Thursday, December 11, 2008

The ACCC fines Qantas $20m. What about the RBA?

For something called 'price fixing' and engaging in 'cartel like behaviour'. In plain English, it means for "setting their own prices the way they bloody well please and ought to be entitled to do in a free society".

The Federal Court of Australia has ordered national carrier Qantas Airways to pay $20 million in pecuniary penalties for breaching the price-fixing provisions of the Trade Practices Act.

The Australian Competition and Consumer Commission (ACCC) instituted proceedings in October 2008 alleging Qantas had reached an understanding with other international airlines in relation to the imposition of fuel surcharges on air cargo across its global networks between 2002 and early 2006.

The ACCC said Qantas admitted to making and giving effect to the understanding, repeatedly exchanging assurances among airlines in the implementation of fuel surcharge increases and reaching local agreements in certain Asian countries collectively.


ACCC chairman Graeme Samuel said today the penalty reflected the seriousness of the contraventions and Qantas' large share of the market.

''Cartels - particularly those that are engaged in by large businesses with broad application over a period of time - have a significant effect on consumers,'' Mr Samuel said.

Wow.. price fixing is a criminal act for businesses like Qantas. So I wrote the following letter to the ACCC on their complaints website.

I recently noticed that Qantas was fined $20m for price fixing and cartel behaviour. I would like to draw to your attention that The Reserve Bank of Australia is engaging in cartel-like behaviour with its member banks, setting the price of interest for the entire Australian banking system. By setting a cash rate target and engaging in open market operations whereby it purchases securities of varying durations, it is trying to fix and control interest rates. This is plainly admitted by the RBA on their website:

Setting interest rates is the most substantial form of price fixing in Australia's history. Interest rates are also known as the cost of acquiring money itself, and the RBA should be heavily penalised. In fact, in recent months, the RBA has been trying to force interest rates in a downward direction, by injecting money and purchasing securities. By pushing rates below the market price, they are certainly engaging in the criminal act of predatory pricing.

There is no need to guess what the RBA's intent is, they openly admit it at their meetings and all statements made by the RBA governor. Seeing as the ACCC has a responsibility to prosecute these criminal acts, it will be interesting to see if they carry this out or if they set themselves a different set of rules for the private sector whilst government bureaucracies are free to do as they please.

I eagerly await your response.

Somehow I doubt the ACCC will take on the RBA. One illegitimate bureaucracy is not going to take on another.

By the way, this is not the only approach that can be used to attack the RBA. For example, there are incredibly harsh laws against counterfeiting. I could ring the police and notify them that the RBA is continually issuing new currency. Or that banks are engaging in fraud by issuing deposit receipts well beyond their actual reserves.

It falls upon politicians with a bit of brains and backbone to abolish our central bank and restore a free market in banking. None seem to be up to the challenge.