about the magic 1.5b

Im not sure as to the source of the 1.5b magic number that Pratt-Visy were supposed to have cost every Australian.

Im not sure whether $1 is better than $1.5b but the magic number has come up so much that it appears hat the size of it does matter... so I thought I would challenge the number.

Lets start by examining the size of the packaging industry between Amcor and Visy. Its total sales (estimated) are about 1.5b dollars. Possibly a bit more, possibly a bit less.

Hmm.

Now, lets say that the cartel was running for... what? 50 years? 20 years? Ill say 5 years, as that was about the tenure of the CEOs involved... and lets say that from the moment they took on the role they were busy making sure every single contract conformed to "price fixing".

Given that packaging contracts are typically signed up for 3 odd years, how on earth could a whole extra years revenue be fit into this 5 year cartel life? [oh I know someone will now tell me it was running for 50 years...] ... and furthermore, no matter what price laws exist, what does any reasonable person expect will happen in a duopoly? If it is such a concern, then force the duopoly to break up - no matter what price policies are in place, just like any other industries, prices will reach "market" value - being what hte market is willing to pay ...

Lastly, given that packaging prices didnt appreciate by anywhere near 20% in the period... which they would have had to do to arrive at anywhere near the 1.5b figure - I just cant make it add up.

What did however happen, is the international spot price of paper moved up, as did nearly every other commodity - and that, more than any other factor usually accounts for price movements in packaging.

Maybe the judge mentioned 1.5b ... maybe the media did... maybe we imagined it. I cant seem to rationally find it though - although it is a number that would certainly sell more papers! Maybe they should have suggested it was closer to 11b. That might have sold more papers too.

But to be more fair, lets halve it, to only be 750m ... as it takes two to be in a cartel, and lets not forget Amcor - who didnt exactly come running to the ACCC - it was only after they took some of hteir own executives to court and incriminated themselves publically through a mistaken release of recorded telephone conversations they had made themselves that they found themselves hat in hand before the ACCC begging to blow the whistle.

What amazes me, is if all members of such a rich cartel were rolling in money, where did publically listed Amcor hide their share? Sales didnt seem to appreciate by 20% year on year - which would have been a requirement to meet the magic 1.5bn number.

Its sensationalism. If size counts, it just couldnt be as big as that. Doesn't add up.

Im not condoning such old school activities - and pratt-visy conducted themselves "old school" - of that there is no doubt. But they also conducted themselves appropriately thereafter - and took more than reasonable steps to rectify a nasty situation. That should be the end of the matter. Australia is better for it, as long as it ends there.