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Business Roundup: Australia
May 2002
Competition watchdog investigates big guns
The Australian Competition and Consumer Commission (ACCC), acting on a tipoff from a whistleblower, has opened investigations into the country's telecom and oil industries.
The ACCC swooped in on eight oil and petrol company sites, including multinational oil companies Caltex, Mobil and Shell, to gather evidence of collusion among the companies in setting petrol prices.
Both the government and the public welcomed the very public raids. Petrol prices tend to jump in unison before public holidays, such as last month's ANZAC Day long weekend.
ACCC chairperson Allen Feels said it would take the commission months to determine if the companies had been price fixing. He defended the quick, public raids by saying the media had been tipped off and therefore he wanted to catch the companies by surprise.
The ACCC also has Telstra, Australia's largest telecommunications provider, in its sights. The commission is concerned that Telstra has cornered the market for broadband Internet by not meeting its commitment to share its Digital Subscriber Line technology at a reasonable price.
Doctor's insurer goes bust
The majority of Australia's doctors could find themselves without indemnity insurance after the nation's largest doctors' insurer applied for liquidation.
The directors of United Medical Protection (UMP) said the company would apply to the court to appoint a provisional liquidator.
UMP covers the indemnity insurance for 60 percent of Australia's doctors and 90 percent of the doctors in New South Wales.
Although healthy, the company could not meet its coverage needs because of a massive increase in litigation and awards against doctors in the past year.
The application for liquidation comes despite an A$35 million capital guarantee by the Federal government.
The liquidation will not disrupt medical services. The Federal Treasurer, Peter Costello, said the government would try to get other insurers to pick up UMP's business before June 30.
Costello said the insurer is in trouble because it did not price its premiums properly.
"The doctors were responsible for setting their own premiums and meeting their own payouts and they've got themselves into financial trouble", he said.
Auto industry hit by striking parts makers
The Australian auto industry has ground to a halt after 400 workers at Walker Australia downed tools this month.
The strike has shut down the Ford and Holden factories and is threatening Mitsubishi and Toyota. These major factories rely solely on Walker Australia for their spare parts.
The striking workers claim that Walker has not set up a promised trust fund to protect their entitlements.
So far, the strike has cost the auto industry at least A$80 million in lost productivity.
News Corp. dumps Andersen
Australia's largest media company has taken the drastic step of sacking its auditor in the run-up to the end of the financial year.
News Corp. announced last month that it applied to the Australian Securities and Investments Commission for permission to change auditors from scandal-hit Andersen to Ernst & Young.
The media conglomerate is believed to be the first company to do so in Australian history. A News Corp. spokesperson said the move would not adversely affect the company because most of its auditing team had abandoned Andersen for Ernst & Young.
Andersen has been doubly hit in Australia by the fallout from the Enron scandal as well as its auditor role for the collapsed HIH Insurance group.
FAI acquisition blamed for HIH collapse
An Australian Royal Commission has blamed the ill-timed, and possibly criminal, acquisition of the floundering FAI for the spectacular failure of the HIH Insurance group.
HIH fell apart last year in an A$5 billion collapse that set the record for Australia's largest bankruptcy.
The commission has found that the primary reason HIH went under was its decision to buy FAI for A$300 million, even with serious reserve shortages and obvious reinsurance problems.
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