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Why on earth did Alan Fels quietly drop his court battle against the NAB just before Easter. The banking cartel is out of control and Fels was the only hope. Now it is in the hands of the Reserve Bank which has a woeful record when it comes to keeping them in line.

In an uncharacteristic backdown which propelled it to the lead in the 2001 wmcrOTY Award stakes, Professor Alan Fels’ ACCC quietly discontinued its credit card intercharge fee action against the National Australia Bank just before Easter.

What the ACCC previously charged as illegal was apparently suddenly not illegal and could be forgotten.

Front runner in the 2001Weakest and Most Compliant Regulator of the Year (wmcrOTY Award ) of the year is, surprisingly, the ACCC. In an exceptionally strong field that counts among its members the RBA, APRA, and ASIC, the ACCC was a surprise entrant.

In an uncharacteristic backdown which propelled it to the lead in the 2001 wmcrOTY Award stakes, Professor Alan Fels’ ACCC quietly discontinued its credit card intercharge fee action against the National Australia Bank just before Easter.

What the ACCC previously charged as illegal was apparently suddenly not illegal and could be forgotten.

Astute observers used to inside runs by weak Australian regulators should not have been surprised. The ACCC had a week or two earlier laid the groundwork by tossing the ball to the Reserve Bank of Australia to “regulate” card payments whilst the Prime Minister applauded from the sidelines. The damp lettuce leaf that is the RBA had stood by apathetically for years whilst the bank cartel made hay, seemingly impervious to the Trades Practices Act.

The National Australia Bank’s purported defence to the ACCC litigation that the payments cartel was a “joint venture” was simply laughable. One can imagine the other would-be-price-fixing cartels now scrambling to enter into similar “joint ventures”. Arguably, the RBA should have been in the dock as well as a defendant. Now it’s back to the RBA supervising the “joint venture” as it has been doing successfully for years.

The RBA is no substitute for tough legal action by the ACCC. In fact, it’s hard to think of the RBA as being a substitute for anything useful.

Was this little matter was discussed between the National’s Frank Cicutto and Prime Minister Howard at the cosy little dinner party at Ron Walker’s Toorak home a couple of weeks or so before?

On the face of it, Fels and Howard have got plenty of explaining to do on this one. Don’t count on the mainstream Australian press, bastion of free speech and investigative journalism, to cover this one though. They are doing it tough right now in Australia and need all the help and government rent they can get.

So have Cicutto and his fellow directors at the National Australia Bank plenty of explaining to do for that matter. The departure of the ACCC litigation monkey from the National’s back did nothing for the share price as they must have hoped.

The National whinged away to the press and anyone who would listen about how the ACCC litigation had damaged the National’s brand name yabba jabba yabba jabba do. What tripe. They did it all on their own. But was this bluster a smokescreen for other serious monkey problems at the National?

In the last two years, the National will have by this year increased its profit to around $3.5 billion projected by some banking analysts, a rise of 75% from around $2 billion two years ago. But the National’s stock price has gone down from above $30 two years ago. And that’s after the MLC acquisition of around $4.6 billion and booking a “profit” of over $2 billion on the sale of its Michigan National Bank this year. By rights, the National’s stock price should be around $50 a share, or $30 odd billion more in market capitalisation terms. The word on the streets is that foreign institutional investors are running shy of supporting National’s stock and have told the National they won’t be supporting the stock while it is under what they call a cloud. It looks like the ACCC litigation monkey may not have been the cloud to blame after all.

With the National’s share price carrying about a $20 worth of monkey, and definitely unhelpful to any UK merger ambitions, the time is surely coming when Cicutto and his Board are going to have to look up the dictionary under B – Board duties, C – cloud, M- monkey, back of shares and E – Explanation to shareholders. Some cloud. Some monkey. Some explanation.

Peter Fray

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Peter Fray
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