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An introduction to corporate evilness

An introduction to corporate evilness

What do the fines slammed on corporate entities tell us about bad behaviour? Michael Bradley, managing partner at Marque Lawyers, with senior associate Hannah Petrie, introduce the ultimate barometer: the Corporate Evilness Quotient

What do the fines slammed on corporate entities tell us about bad behaviour? Michael Bradley, managing partner at Marque Lawyers, with senior associate Hannah Petrie, introduce the ultimate barometer: the Corporate Evilness Quotient

The competition and consumer watchdog, the ACCC, recently busted medical equipment supplier Baxter Healthcare for illegal bundling, fining them $4.9M. Basically, they were forcing purchasers of Product A, of which Baxter was the sole supplier, to also buy Product B from them. That, in trade practices terms, is evil behaviour.

It got us thinking about corporate evilness. Everyone knows that corporations are soulless, being inanimate and all. It follows that they have no moral barometer like we do. They can’t tell whether what they’re doing is right or wrong, other than by reference to some external yardstick.

Do legislators and regulators provide that yardstick for them? To test that, we’ve identified what we call the Corporate Evilness Quotient (CEQ), and ranked various forms of badness accordingly.

Starting at the cheap end of the scale, misleading everyone about the adequacy of an asbestos victims compensation fund cost James Hardie only $80,000. CEQ = 1.

If you kill one of your employees, the maximum penalty is $1.65M, although one can argue whether criminal negligence is really positively evil or just a sign of poor character. CEQ = 3.

Just a few more pennies will buy you the Shen Neng 1 carving a mile long hole in the Barrier Reef. Maximum penalty $1.75M. CEQ=4, but the Queensland government has since rethought the CEQ and bumped up the maximum penalty to $10M. CEQ now = 8.

Now we get to the top end of town. These CEQs are reserved mainly for anticompetitive conduct. Baxter’s misuse of market power cost $4.9M. Given it has had a virtual monopoly since the early 90s, that’s pretty good value for money. CEQ = 6.

Meanwhile, Safeway did some price fixing and misuse of market power in the bread market, and got fined $9M. CEQ =8.

The big vitamin sellers got busted globally for running a particularly evil cartel and paid combined fines here of $26M, giving them a CEQ of 9.5.

The airlines who were price fixing fuel surcharges between 2001 and 2006 have so far paid combined fines of $41M.

But topping the scale in Australia are Qantas and Telstra. Qantas paid $20M for its part in the price fixing cartel, while Telstra was nailed for $18.5M for restricting access to its wholesale networks. CEQ=10 for both of them. And they’re Australian Icons, what an embarrassment.

Mind you, compared to what’s happened overseas, Australia’s companies are angelic. In 2004, Microsoft was fined $800M for antitrust breaches in the EU. Four years later, it was hit with a further fine of $1.4 billion for still being evil. And last year, Intel got a fine of $1.45 billion in the EU for abusing its dominance in the chip market. Guess that’s a CEQ of 700.

Is it more evil to fix prices with your competitors than carelessly kill your workers or lie to asbestosis victims? The CEQ has given a definitive answer, yes it is. That’s good to know.



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An introduction to corporate evilness
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