Controversial Australian mining tycoon Andrew “Twiggy” Forrest has once again dodged prosecution, with the Australian Competition and Consumer Commission (ACCC) declaring that they would not charge him over comments which may have breached cartel laws.
At a dinner in Shanghai last month, Mr. Forrest made several comments implying that iron ore producers should adopt a market cap and spike the price of the commodity.
“I’m absolutely happy to cap my production right now,” Mr. Forrest beamed. “All of us should cap our production now and we’ll find the iron ore price will go straight back up to $70, $80, $90. The tax revenues which that will generate will build more schools, more hospitals, more roads, more of everything which Australia needs, universities … by a quantum than this foolhardy attitude of deepening your expansions into a falling price.”
Unfortunately, Mr. Forrest seemed unaware that his comments outright implied a cartel-type scenario currently illegal under Australian law. In short, corporate heavyweights cannot drive the value of their products sky-high by limiting the flow of the product; if one were to collude with other market forces, it would essentially lead to a monopoly.
In the past, ACCC chairman Rod Sims has been highly critical of the lapse in judgement, reinforcing the legal philosophy behind anti-cartel laws.
“Attempting to cap pricing or fix pricing, even making the attempt, is illegal,” Mr. Sims explained last month.
But this Thursday, Mr. Sims’ attitude had softened.
“In deciding not to take further action on the comments that have been made, the ACCC has taken into account Fortescue’s position that Mr Forrest’s comments were made ‘off-the-cuff’ in response to audience questions,” he told the media. “[The comments] were hypothetical and intended to encourage a policy debate about the long-term future of the iron ore industry.”
Mr. Forrest’s company, Fortescue Metals, maintains that its chairman did not make a mistake as his comments related to exclusive exports only. But it seems very few people are convinced by that facile argument.
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