It has been a big week for competition regulator Rod Sims, who is facing some potentially nasty fights in the financial services sector and in the volatile sugar industry.
Sims this week upset the chief executive of Link Group, John McMurtrie, with the publication of a statement of issues published on Thursday that virtually accused McMurtrie of running a monopoly in the outsourced superannuation administration market.
The statement of issues has made it crystal clear that the Australian Competition and Consumer Commission will oppose Link's purchase of Pillar Administration from the NSW government.
More on that stoush later but safe to say it is most likely headed for the Australian Competition Tribunal. Sims will not resile from a courtroom fight, but the ACCC's track record in the tribunal is not brilliant.
The other big fight that landed on Sims' desk this week is between cane growers in far north Queensland and the powerful Singaporean sugar milling and marketing company Wilmar International.
This ugly fight, which has been brewing for months, came to a head this week when Liberal National Party MP George Christensen wrote to the ACCC calling for an investigation into Wilmar's treatment of cane growers in the Burdekin region.
Sims confirmed that the ACCC would investigate the way in which Wilmar is dealing with cane growers as they try to lock in contracts for the 2017 season.
Christensen used a speech in parliament on Wednesday to accuse Wilmar of unconscionable conduct and anti-competitive behaviour.
The speech followed a meeting on Tuesday in Canberra which included Deputy Prime Minister Barnaby Joyce, Christensen and representatives of the Burdekin cane growers.
The timing of Christensen's speech was interesting. It happened at the same time that Singapore's Prime Minister, Lee Hsien Loong, was having lunch with Prime Minister Malcolm Turnbull. They had earlier signed trade and defence deals.
Under the protection of parliamentary privilege, Christensen said: "All sugar mills in the Burdekin are owned by the Singaporean milling company Wilmar. In 2014, that company announced it would take over the role of sugar marketing from QSL for the 2017 season and beyond.
"The lack of transparency this move created was one of great concern to farmers, and the Queensland parliament legislated in December last year to ensure those farmers would retain choice in marketing of their product.
"Other milling companies have complied with the sugar-marketing laws and have worked with farmers to achieve the best outcome for the industry as a whole. Wilmar, however, have sought to circumvent the law and exploit their monopoly position.
"While such behaviour may still comply with the letter of the law, it is most certainly not within the spirit of the law. Wilmar's failure to negotiate a deal with QSL means farmers cannot choose QSL for marketing and are therefore being railroaded into accepting whatever deal Wilmar puts in front of them.
"The supply agreements they are asking farmers to sign are extraordinarily long, complicated, detrimental and, I have to say, very heavy-handed and unwieldy for farmers. Wilmar's unconscionable conduct in this matter is extremely anti-competitive and precisely the kind of conduct that prompted the establishment of the Australian Competition and Consumer Commission.
"I have written to the ACCC today requesting an urgent investigation into Wilmar's anti-competitive behaviour as the industry in the Burdekin, in particular, is now at crisis point."
Christensen went on to point out that "of the more than 300 farmers that have been represented by grower groups within the Burdekin region, only a dozen or so farmers had signed supply agreements for the next season, for which farmers are already planting.
"Planting without a contract is highly risky," he said. "Farmers who do so are at the mercy of the mill and must accept whatever deal is placed in front of them. The only other alternative is to let the crop rot in the field. For two years, farmers have attempted to negotiate reasonable outcomes for themselves and for the long-term viability of the industry, but Wilmar's tactics have been to delay wherever possible, because they know that, as the deadline looms, their negotiating power grows.
"With sugar prices over $600 a tonne – the best prices that farmers have seen in decades—it is tempting for them to sign whatever deal they can to lock in those prices."
The cane growers have launched a three-pronged attack on Wilmar. The second prong also involves the ACCC.
They have lodged an application to have their authorisation for collective bargaining under the law expanded to include the right to have marketing agreements imposed on all mill owners.
The third prong of their attack has been taken under the Sugar Industry (Real Choice in Marketing) Amendment Bill, which was passed last year on the sponsorship of the Katter Party and opposed by the Labor government in Queensland.
On September 28, the Burdekin growers filed a claim demanding Wilmar finalise negotiations with growers by today.
If Wilmar fails to do so, the whole issue will automatically go to arbitration.
Wilmar said it was disappointed that the cane growers in the Burdekin had taken the action.
"We have all been warned by the Queensland Productivity Commission that arbitration under this legislation is likely to be very expensive and a lengthy process that could cost each party up to $1.5 million and take 12-18months to conclude," according to John Pratt, Wilmar's executive general manager of North Queensland.
"This a challenging situation for all concerned as we try to work with a flawed piece of legislation that has done all damage and no good for the industry. Wilmar has done everything possible to comply with the law and to propose reasonable and acceptable arrangements for cane supply."
Economic rationalists would argue that Wilmar, which invested more than $1.75 billion in the Queensland sugar industry, is acting within its rights in trying to negotiate agreements that take account of the new law.
After all, the Queensland Productivity Commission and the federal Productivity Commission have said the legislation offering growers choice in marketing should be repealed.
Returning to the likely fight between the ACCC and Link, the core issue is the definition of the market for superannuation administration.
McMurtrie argues the market includes all administration done in-house by super funds, while the ACCC argues that the outsourced administration is a separate market.
Link dominates the outsourced market with 80 per cent market share.
The Pillar deal was meant to be the latest in a series of deals by Link under the leadership of McMurtrie, who is one of the few investment bankers to prove that he can actually run a business.
McMurtrie has made it clear he would not die in a ditch over trying to buy Pillar. But the sharemarket reaction on Thursday – a 7per cent fall in Link's share price – suggests that investors take a different view of the importance or otherwise of the transaction.
