Cartel behaviour of Australian Mining-Free-Samples for Students

Questions: 1.List potential cartel behaviour of ventures with particular reference to an Australian mining or petroleum resource joint venture. 2.List the defence to cartel behaviour. 3.List the duties and responsibilities of the manager/operator in a resource joint venture. 4.How can such duties be exploited to create a cartel behaviour. 5.What fiduciary responsibilities does the manager/operator have to the participants of tge joint venture. Answers: 1.Potential cartel behavior of ventures. A cartel is a group of businesses, operating in the same market , who instead of competing with one another, form agreements, contracts or a mutual understanding with the motive to fix and control prices, engage in collusive tendering or bid rigging, allocate market shares and suppliers, and restrict output. Any business which in collusion with a competitor, partakes in the aforementioned activities, either intentionally or unintentionally, is said to be engaged in cartel behavior or conduct[1]. Joint venture is a term referring to two or more companies pooling its resources and expertise to achieve a mutually beneficial goal. Naturally this may require the participating companies to share details regarding some of their operational details as well as lay down strategies, including agreements regarding of pricing, supply as well as market strategies. Therefore, joint ventures most certainly end up flouting anti-competitive laws by owing to its very nature[2]. The petroleum industry i s a sector which engages in a lot of joint ventures which may ultimately lead to some joint price fixing agreement or joint advertisement or agreement to sell all output to a single customer. An example would be of the joint venture of Woodside Energy, Benaris International and Origin Energy Resources which, in 2010, launched a joint marketing campaign for LPG. Consequently this implies that sale price of LPG by all the participants was pre-determined and equal to the same advertised price[3]. This technically could be classified as price fixing of cartel conduct. 2.Defense to cartel behavior. Despite the criminalization of cartel behavior in Australia as per the Competition and Consumer Act, there exists certain exemptions that are allowed for particular situations where cartel behavior might be observed. Such exceptions could include cases where there has been authorized sanctioning for the sake of public benefit where by it is deduced that the public benefits might over shadow the detrimental effects and as such upon a formal appeal to the Australian Competition and Consumer Commission (ACCC), exceptions to acts, such as, price fixing, restriction of outputs, bid rigging and allocation of market and suppliers could be granted[4]; Joint Ventures in which, if the venture deals with production or supply and has the terms of their agreement which deals with the cartel conduct compiled in the form of a binding contract, exemptions are allowed[5]; Cases relating to collective bargaining which relates to provisions involving price fixing, allocation of suppliers and customers or restriction of output and not under any circumstance include bid rigging; Collective acquisitions which deals with cases relating to mainly price fixing where the parties may seek to jointly or collectively acquire the collections from the goods or services or perhaps may be interested in joint advertisement where by it could amount to price fixing; Anti-overlap provisions which are mainly technical exemptions arising out of overlap with other provisions such as contracts that could directly or indirectly influence competition, resale prices, and exclusive dealings, companies that may be dual listed and acquisition; Finally, agreement between related corporates also fall under exemption given that they do not share a competitive positioning in the market[6]. 3.Duties and responsibilities of the manager/operator in a resource joint venture. An operator or manager in the context of a joint venture is an entity which acts as an agent of the participating organizations or companies, to undertake and oversee the management of the joint venture. It holds the responsibility of carrying out the entire operational process of the venture on behalf of the all parent companies. An operator could be a third party who is assigned to the role on a contractual basis or it could be one of the partners who have the functional expertise to carry out the project operations. Irrespectively, the manager or operator is granted exclusive authority to conduct and manage the activities of the project either through its own resources or by means of delegation after due approval of the parent companies. It is obligated to relay all information and knowledge that is accumulated in due course of the operations in order to uphold interests and rights of all members in the venture[7]. The operator is in turn answerable to the management committee, se t up for the sole purpose of representing the participants. It is to be noted that the operator is expected to act in the best interests of the joint venture and not of any individual participant or self and deliver the best service it is capable of. Additionally, the operator is responsible for all aspects of operation including engaging with third parties on a contractual basis, handling budgeted expenses of the project and dealing with emergency expenses arising out of injuries that may have resulted as a consequence of the operational process. Therefore, the operator holds the right to expend money as per requirement for the project which fall outside the sanctioned budget. It is also responsible for the joint assets including intellectual property of the participants for the duration of time it is engaged in the project. Finally the agency responsible for the operations of the joint venture is expected to transcend the cultural differences of the different parties to ensure smo oth running of the process[8]. 4.How can such duties be exploited to create a cartel behavior? Owing to the fact that an operator may engage with third parties, such as suppliers , on a contractual agreement under its own name and not as an agency of the participants, however under the authorization of the Joint operations agreement for the interest of the project in its undertaking , the parent organizations may utilize the situation as a loophole to distance itself while engaging in collusive activities such as exchanging information, limiting outputs and colluding with suppliers which amounts to cartel behavior[9]. This is made possible since, an operator, provided that it is a contractual one, is put in charge of the property, assets as well as functional control of the project and thus has the autonomy to interact with the local suppliers and other third parties who may provide scope for collusion, on behalf of the parent companies and allow them to stay under the legal radar. 5.What fiduciary responsibilities does the manager/operator have to the participants of the joint venture? Fiduciary refers to the confidentiality and loyalty that is expected out of member parties engaged in any kind of mutual agreement[10]. Fiduciary duty for the most part depends on the terms of the contract that exists between operator and the other parties involved in the venture. However, generally an operator or any participant of a joint venture is implicitly expected to act in the best interests of the joint venture entity, superseding any prospects of profits that they alone may be solely subject to which could jeopardize the venture. An operator is expected to put in their best efforts in running of the operations under their charge and abide by the confidentiality of the information regarding the participants that may be shared. It is also expected that the operator would respect the directives of any supervising authority, such as a technical committee or the management committee and report all findings, developments and expenses to the representatives of the participants[11] References Benaris International Pty Limited, Woodside Energy Limited, Origin Energy Resources Limited Response To Submission to The Australian Competition And Consumer Commission (2010)(Australian Competition and Consumer Committee, 2010) Cartels(2018) Australian Competition and Consumer Commission Competition And Consumer Act 2010 (2016) Legislation.gov.au Competition Issues in Resources Projects: Marketing Agreements between JV Partners - Anti-Trust/Competition Law - Australia (2013) Mondaq.com Cosgun, Huseyin,Criminalising Cartels: Theory and Practice in The UK And Australia(The Interdisciplinary Centre for Competition Law and Policy, 2013) Dume, Philippe and Sergey Frank, "Managing International Joint Ventures" (2015) 26(1) London Business School Review Duncan, William D.Joint ventures law in Australia. Federation Press, (2012). Harner, Michelle M., and Jamie Marincic. "The Naked Fiduciary." Ariz. L. Rev. 54 (2012): 879. Killing, Peter.Strategies for joint venture success (RLE international business). Vol. 22. Routledge, (2012). Kooroshy, Jaakko, Felix Preston and Sin Bradley,Cartels and Competition in Minerals Markets: Challenges for Global Governance(The Royal Institute of International Affairs, 2014, 2014) Cartels(2018) Australian Competition and Consumer Commission Competition Issues In Resources Projects: Marketing Agreements Between JV Partners - Anti-Trust/Competition Law - Australia (2013) Mondaq.com Benaris International Pty Limited, Woodside Energy Limited, Origin Energy Resources Limited Response To Submission To The Australian Competition And Consumer Commission (2010) (Australian Competition and Consumer Committee, 2010) Competition And Consumer Act 2010 (2016) Legislation.gov.au Duncan, William D.Joint ventures law in Australia. Federation Press, (2012). Huseyin Cosgun, Criminalising Cartels: Theory And Practice In The UK And Australia (The Interdisciplinary Centre for Competition Law and Policy, 2013) Philippe Dume and Sergey Frank, "Managing International Joint Ventures" (2015) 26(1) London Business School Review. Peter Killing, Strategies for Joint Venture Success (Rle International Business) (Routledge, 2014). Jaakko Kooroshy, Felix Preston and Sin Bradley, Cartels And Competition In Minerals Markets: Challenges For Global Governance (The Royal Institute of International Affairs, 2014, 2014) Harner, Michelle M., and Jamie Marincic. "The Naked Fiduciary." Ariz. L. Rev. 54 (2012): 879. Duncan, William D.Joint ventures law in Australia. Federation Press, (2012).