The decision by the Australian Competition and Consumer Commission to take legal action against the Construction, Forestry, Mining and Energy Union over alleged secondary boycotts on Boral products is a good first step, but it is only the tip of a very expensive iceberg involving the relationship between large corporations in the building industry and powerful unions.
The simple situation was that Boral was banned from supplying various building projects, because it was a supplier to Grocon, and the builders brought in other concrete suppliers. Those suppliers benefitted from the boycott on Boral. And they must have known what was happening.
The ACCC has exonerated those subcontractors and the concrete suppliers. They can consider themselves lucky. The industrial relations act greatly limits the power of the ACCC to act in such situations.
But one day the ACCC might be able to prosecute building subcontractors who pay unions for the right to be able to tender for large projects. Remember, under the cartel-style arrangements between unions and big builders the unions approve which groups can be subcontractors. The enormous cash balances which exist in many unions makes me believe that there is at least at prima facie case that some subcontracts pay the unions for the right to be able to tender.
Unfortunately the royal commission into unions has not explored this activity in the corporate sector. And of course, payments by large companies to the unions go well beyond the building industry.
Previously, we saw Toll pay the unions and in exchange the unions investigated Toll’s competitors and reported back to Toll. After I pointed out last month that the ACCC appeared to have effectively rubber-stamped the practice pioneered by Toll (Toll's ACCC victory sets a dangerous precedent, October 17), the ACCC informed me that they are conducting an investigation into Toll’s arrangement with the Transport Workers Union (The ACCC turns its spotlight on Toll, October 21).
The provisions in the ACCC act make prosecution of such behaviour difficult but for our national productivity it’s very important to stamp out these sorts of cosy arrangements between large companies and big unions. The biggest sufferer is always the small enterprise.
Hopefully the Harper review will set a new blueprint to protect our small companies from these sorts of deals, and widen the powers of the ACCC.
The national productivity of Australia is at stake.
Part of the problem is that executives in too many large Australian companies have achieved their positions because of their ability to do these sorts of deal with unions. If the deals can’t be done, and the companies have to compete openly, then different styles of executives are required. Changing corporate cultures is therefore a very difficult process but one that is essential for corporations, and the nation.