Graeme Samuel appears likely to succeed Allan Fels as Australia’s competition czar but is he really the right man for the job.

The man who spends an hour a day fielding calls from journalists has
been Australia’s most successful competition regulator with his open
and transparent approach to the job and it was telling that his
apparent successor refused all media requests yesterday because his
appointment has to be approved by the States.

This may be no mean feat and NSW is already grumbling. Do eight
Labor governments in the states and territories really want a former
Liberal Party treasurer and friend of business as the competition
watchdog?

Samuel has a fetish for mergers so we’ll be curious to see what
sort of merger he doesn’t like. He merged the Australian Opera with the
Victorian Opera which has not been a raging success.

As a long term AFL commissioner he was a champion of mergers
between struggling clubs. However, both of these issues involved
staunching losses and struggling operations which is different to the
concept of pushing a merger between two flourishing competitors that
would create a dominant player such as Coles Myer or News Ltd in
newspapers.

He was also pivotal to Jeff Kennett’s hospital mergers in Victoria, which were subsequently dismantled by the Bracks government.

None of Crikey’s comments about Samuel came from Fels as he seemed
positive about the appointment last Thursday night but his only comment
was that the story would be in the paper the following day.

Fels pointed out the irony of giving a Free Speech award to
someone who regularly drags people off to court for making misleading
and deceptive comments.

Previous Voltaire recipients in former Media Watch host Richard
Ackland, former Victorian auditor general Ches Baragwanath and yours
truly all got up and asked Felsy questions.

Ackers was interested in the Foxtel-Optus Vision merger, Ches felt
consumers were getting ripped off by Qantas and I asked if Felsy was
comfortable with his performance in the banking sector given that he’d
approved a series of mergers that had contributed to the banking sector
quadrupling profits to $10 billion during his tenure in the job.

Felsy appeared to have some ongoing reservations about the Westpac
takeover of Bank of Melbourne but claimed consumer savings on home
loans outweighed the increase in fees which seems a little hard to
believe given the extra $8 billion a year in profits being made. It had
to come from somewhere, but we recognise that branch closures and staff
cuts were a big factor.

However, he did talk up the action being taken by the Reserve Bank
at the moment for the credit card fix – an action that was first
initiated by the ACCC before it was handed over to the more powerful
banking regulator.

Samuel’s rich oil mates

One irony in Samuel’s appointment is the fact that his two best
friends in life, David Goldberger and David Wieland, got seriously rich
out of an ACCC deal.

The boys went into the petrol business together 30 years ago and
eventually sold the Solo chain to Ampol for $90 million in 1989.

We’ll let BRW take over the story from here as it explains their $320 million combined wealth:

“Goldberger and Wieland agreed to stay out of the petrol retail
market 10 years, but the Trade Practices Commission allowed them to
return in 1995 as Liberty Oil (This was done in the interests of
competition after Ampol and Caltex merged.) Liberty now has a about 8%
of national petrol sales. Last year the pair signed a deal to lease
their 69 Liberty outlets to Woolworths. Another 30 sites are operated
under an agreement with Caltex. Goldberger and Wieland, who live next
door to each other in Toorak, also owns 50 per cent of a property
development business, Austexx. The other 50 per cent is owned by the
company’s managing director, Geoff Porz, and the president of the
National Competition Council, Graeme Samuel.”

As ACCC chairman, you’d think Samuel could surely not remain in
business with two players in the oil game. Interestingly, it was
apparent connections with ACTU Secretary Bill Kelty which helped the
Liberty Oil boys in dealing with the ACCC. Samuel may have been getting
involved with competition policy at the time but he had no involvement
in this deal.

The problems with Samuel’s appointment

Crikey is concerned that Samuel’s huge business network will
inevitably create conflicts of interest. For instance, he went on the
record with a letter to the Fin Review a few years back supporting
Solly Lew as chairman of Coles Myer.

Coles will always remain relevant to the ACCC given its market dominance.

He’s also close to Peter Scanlon whose cosy stevedoring duopoly
through Patrick Stevedores has made him hugely wealthy. Patrick was
greatly assisted by the ACCC’s intervention during the docks dispute.

And he should not retain any ongoing interest in corporate adviser
Grant Samuel as it regularly gets paid plenty to do independent
valuations on merger deals that have ACCC implications.

Crikey tried to organise a major profile of Samuel in 1996 when
business editor of the Herald Sun but it fell apart when the freelancer
who had the access refused to cover two controversial issues from his
past which were as follows:

1. When he advised BHP to spend about $500 million buying Elders
IXL convertible bonds during the battle with Robert Holmes a Court in
the mid 1980s, did he know that the beneficial owners included John
Elliott, Peter Scanlon and co who, according to Ken Jarrett, shared in
$78 million in profits. Samuel maintains that he didn’t know and you’ve
got to believe him.

2. Was it Graeme Samuel who erroneously told then Victorian Shadow
Treasurer Alan Stockdale that proposed Tricontinental Royal
Commissioner Bill Gurry, now a Coles Myer director gunning for Solly
Lew, was close to John Cain. Gurry quit and successfully sued Stockdale
for defamation and to this day still believes that it was Samuel who
stitched him up with the inaccurate claim that Curry and Cain went on a
holiday to Noosa together. The big question remains why? Were some of
Samuel’s mates worried about facing a Royal Commissioner with intimate
knowledge of the banking business. The Kroger brothers were also
suspected as being part of this Gurry stitch-up. Andrew Kroger was a
former Tricontinental client who repaid all his loans. Andrew Kroger
used to also share an office with Graeme Samuel and they’ve sat on
boards together.

It was no surprise to see Terry McCrann supporting the Samuel
appointment in the Herald Sun last Friday. One rival commentator used
to claim that Samuel was McCrann’s only contact.

Samuel was certainly invited by McCrann into the News Ltd
corporate box during Crikey’s time at the Hun and we’ll be curious to
see how Samuel handles the debate around the Foxtel-Optus merger given
that McCrann has been vehemently and blatantly pushing his boss’s
commercial interests.

This might all sound a bit negative on Samuel but was should point
out that he is one of the brightest blokes going around and has
excellent competition credentials through his time on the National
Competition Council.

He’s a free marketeer who hates tariffs, protection and subsidies
so there is a chance he could be a champion of breaking down barriers
to entry in markets where the incumbents operate cosy cartels and
duopolies. Let’s hope so.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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