The Australian Competition and Consumer Commission has written to the major tobacco manufacturing companies seeking an explanation about recent Press reports of industry 'cooperation' in the context of the prices charged for tobacco products. ACCC Chairman, Professor Allan Fels, said today the letters followed articles in the Australian, The Sydney Morning Herald, and The Canberra Times.
The articles included reports on 16 April 1997 that Phillip Morris chief executive, Mr Henry Goldberg, had said in the context of discussing industry prices:
'They [other tobacco companies] have been totally irresponsible, they have blown up industry cooperation'.
The ACCC is concerned that the comments may suggest an a 'arrangement or understanding' between cigarette manufacturers which would be at risk of breaching the anti-competitive provisions of the Trade Practices Act, including the price-fixing sections.
"The ACCC is concerned that a further part of this cooperation may also be the use of statements to the media to signal likely pricing behaviour in relation to the prices of its competitors, " Professor Fels said. "For example, also on April 16, corporate affairs director of Rothmans, Mr Peter Alexander, was reported as saying:
'We won't start a price war. (But) if it starts we will not be left wanting in reacting to it.'
On April 17, in the Australian Mr Stuart Watterton, chief executive officer, of WD and HO Wills said the company would not be provoked into 'desperate discounting'. "The ACCC is concerned that companies may be using public statements to signal to other players in the industry pricing behaviour, for example, that they will be not moving from current price levels," Professor Fels said.
"The ACCC is also concerned that there have been comments by key industry executives just prior to the end of the discounting war. "Price signalling can in certain circumstances, especially in concentrated industries, constitute an 'arrangement or understanding' that would have the purpose or effect of fixing prices and thus constitute a breach of the price-fixing provisions of the Act. The ACCC has written to the companies drawing their attention to their obligations under the Act and seeking their explanation about the reported statements.
"The ACCC is particularly concerned why such statements have been made as the companies move towards the total end of prices surveillance which is due in November 1997," Professor Fels said.
Further information Professor Allan Fels, Chairman, (03) 9290 1812 or pager (016) 373 536 Ms Lin Enright, Director, Public Relations, (06) 264 2808
