Qantas expects tough talks with regulator

By NZPA

Monday 2nd December 2002

When Qantas and Air New Zealand announced their planned alliance last week, Geoff Dixon, the Australian carrier's chief executive, was asked what concessions might be on offer if the regulators rejected the deal.

"Look, it's going to be difficult enough negotiating with Allan Fels without trying to do it through you now," Dixon told the journalist who posed the question.

As if to back that up, Fels, the professor who chairs the Australian Competition and Consumer Commission (ACCC), issued an immediate statement to say the proposal, at first sight, looked anti-competitive and would need "close scrutiny".

His reaction contrasted with that of the New Zealand Commerce Commission, which offered no immediate comment.

The Qantas-Air NZ agreement needs the approval of both regulatory bodies if it is to proceed, with the ACCC saying its decision was likely to be months away.

Fels, reviled by big business but loved by consumers, is seen as the sole hurdle standing in the way of the deal on this side of the Tasman.

Dixon has had a long-running feud with Fels, who has been described variously as the third most powerful man in Australia, the most boring person in the country and the "evil genius" of competition policy.

With Qantas having 80 percent of the domestic market after the demise of Ansett and Impulse last year, the airline has found itself under the ACCC spotlight.

One example was the commission's opposition to Qantas' bid to take over regional airline Hazelton on that grounds that it would have too much dominance in New South Wales.

But Dixon is just one of a number of leading Australian business figures to have crossed swords with Fels.

Gerry Harvey, founder of retail chain Harvey Norman, last month admitted: "I hate him with a passion."

The ACCC has begun proceedings against three companies in the Harvey Norman group over alleged "bait advertising" and "misleading and deceptive conduct".

Earlier in the year, when Fels announced he would not seek an extension to his term, Harvey's reaction was that he would buy the retirement home Fels went to.

Fels stands down next year.

"That way I can treat him the way he's treated me."

A major complaint against Fels -- once dubbed by former prime minister Paul Keating as a "nymphomaniac for publicity" -- is what his adversaries see as trial by media.

Dixon has alleged in the past that Fels uses the media "in a way that damages companies before they are proven guilty".

Woolworths chief executive Roger Corbett believed the commission "really doesn't have a line of accountability at all".

The anti-Fels campaign reached a peak in April, when 90 ACCC officials entered the offices of Caltex, Mobil Oil and Shell in Sydney, Melbourne and Newcastle and copied documents.

The commission, relying on information from a whistleblower, had launched an investigation in whether the Trade Practices Act had been breached.

A photograph of its staff carrying boxes out Caltex's offices was published in newspapers around the country.

Caltex chief executive Dick Warburton described the photo as "trumped up", while Commonwealth Bank chief David Murray said Caltex should have sued.

However, it is Fels' very unpopularity within Australia's board rooms that has made him a hero to economic rationalists and to the person in the street.

"If the ACCC was popular with big business, there would be prima facie grounds for suspecting it wasn't doing its job," ANZ chief economist Saul Eslake said.

While Fels might have been upset in the past, he said he had come to accept personal criticism as being part of the job.

Despite being offside with many prominent business people, he still considered himself a capitalist, because his role was to make the market work better.

"You need intervention by the government, by the ACCC, to get the market to work well," he said.

"Indeed, that's almost the biggest question in economics these days, after the fall of the Wall. I think just about every country decided it's going to rely on markets, and getting them to work well is largely competition law."

While Fels was appointed by the Keating Labour government when the ACCC was established in 1995, he was reappointed by the Liberal-National coalition in 2000.

The Howard government is seen as being in his debt over the implementation of the goods and services tax that year.

Australian Consumers Association chief executive Louise Sylvan described it as the smoothest introduction of a consumption tax in the world.

"He has gone out of his way to create a message that the ACCC is watching and that the marketplace will be fair," Sylvan said.

"I think it has given consumers enormous confidence."

Fels, 60, gave a number of reasons for deciding to stand down as ACCC chairman, one being the schizophrenia suffered by one of his daughters.

He will leave the commission next June to head the new Australian and New Zealand School of Government.

A promising cricketer in his youth, he once said he would have given it all away to have been Shane Warne for a day, and his impending departure has already created a sticky wicket.

There is no successor in sight, after state governments last month rejected Treasurer Peter Costello's preferred replacement, National Competition Council president Graeme Samuels.

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