Economics: Flight Centre and Visy and Amcor

1.0 MARKET STRUCTURES: 

In the world of economists, there are a range of different market structures. These structures include: Monopolies, in which there is only one producer/ seller for a product. Gaining entry in such a market is restricted due to the high costs associated in the entry. An example of a Monopoly market place is in Saudi Arabia where the government has full control and rights over the oil industry. (Investopedia)

The Oligopoly market place is structured in such a way where there only few firms in a particular industry. The few firms in that industry have full control over the price and like a Monopoly marketplace; Oligopolies have high barriers to enter the market place. (Investopedia)

Perfect competition, is when there are many buyers and sellers and when there are many products and services. Due to the many sellers, there are many substitutes in the market. In a perfect competition marketplace, there are very few barriers of entry and the price is determined by the consumers and no one can affect the market. (Investopedia)

Monopolistic Competition market places include many firms that produce similar but not perfectly substitutable products. (Investopedia) Each of the firms make an independent decision on pricing and there are very few barriers of entry and exit. (Economics Online)

2.0 ANTI- COMPETITIVE ACTS:

Anti- competitive practises include ways that limit or prevent competition in the market place. This is against the law! (ACCC) 

Common anti- competitive practises include: dumping- company sells a product in a competitive market at a loss, exclusive dealing- a retailer or wholesaler is obliged by contract to only purchase from contracted suppliers, price fixing- companies collude prices, refusal to deal- two companies agree not to use a certain supplier and dividing territories- agreement by two companies to stay out of each other’s way. Criminal penalties of such acts can be up to $220, 000 per offence and or up to 10 years of imprisonment.  (Australian Government)

3.0 ACCC:

The ACCC is Australia’s competition regulator and national consumer law champion. They mainly promote market competition and fair trading. (ACCC) It was formed in 1995 to administer the Trade Practises Act 1974 and Consumer Act 2010. 

The ACCC’s primary role is to educate both consumers and businesses as to their rights and responsibilities in these acts. As well as to improve market conduct, use resources efficiently and effectively enhance competition in our regulatory activities. (Scam Watch) 

4.0 FLIGHT CENTRE: 

On the 28^th of March, 2014. Flight Centre was ordered to pay penalties of a whopping $11 million for infringing the Trade Practises Act on six occasions between 2006 and 2010. (ACCC)

 The company attempted to enter anti- competitive arrangements with three international airlines: Malaysian Airlines, Singapore Airlines and Emirates. Flight Centre wanted to eliminate differences in the air fare by attempting to induce the above airlines to enter into a price fixing arrangement. More specifically, Flight Centre wanted to stop these three major airlines from offering and booking their own fares at prices less than what Flight Centre offered. (Bainbridge A, 2013) 

Between 2005 and 2009, representatives of Flight Centre sent multiple emails to the three airlines to induce the airlines to begin price fixing. Flight Centre did not dispute that the alleged emails has been sent to the different airlines but had a very different idea of how it should have been interpreted. They claim that the communication was in the context of a principal- agent relationship in which Flight Centre was the agent and was trying to gain assurance that they were being given access to the same air travel service as other travel agencies. (ACCC) 

The Flight Centre price fixing scandal was so the company could obtain the benefit of prices greater than those which would be obtained in a competitive market and be able to state that they are the cheapest in the air fare market place. (ACCC)

5.0 VISY AND AMCOR:

Another example of the illegal act of price fixing was committed by Visy and Amcor, the cardboard box giants. (Sydney Morning Herald, 2011)

Between the two companies, Visy and Amcor had control over around 90% of the corrugated fibre packaging market segment. This segment was worth between $1.8- 2 billion per year. In the span of 2000- 2004, the two companies joined forces to raise prices of their products while also maintaining their particular market shares. (ACCC) 

The two companies consulted with each other to coordinate frequent price rises and customer quotes. (Main A, 2011) If a customer were to receive quotes from the other company, they would swap information regarding that particular transaction to ensure that the competitors quote was higher than the other. (ACCC)

 The ACCC was seeking declarations, injuctions, pecuniary penalties, orders relating to trade practises training or compliance programs and costs from Visy and Amcor. (ACCC) 

Both Visy and Amcor reached a $95 million settlement in a class action against their price fixing scandal. Amcor will pay two thirds of the settlements and Visy will pay one third. (Mallesons, 2006) The cartel went on for almost five years and had it not been formally reported, would have still been active. (ACCC)

• Investopedia, Market Structures, http://www.investopedia.com/university/economics/economics6.asp
• Economics Online, Monopolistic Competition, http://www.economicsonline.co.uk/Business_economics/Monopolistic_competition.html 
• Australian Government, Anti- competitive Behaviour,  http://www.accc.gov.au/business/anti-competitive-behaviour 
• http://www.australiancompetitionlaw.org/overview.html 
• Australian Government, 2014, About ACCC, http://www.scamwatch.gov.au/content/index.phtml/itemId/694363 
• http://www.accc.gov.au/media-release/11-million-penalties-imposed-on-flight-centre 
• Bainbridge A, 2013, Flight Centre loses ACCC case on attempts to price fix with major airlines, http://www.abc.net.au/news/2013-12-06/accc-flight-centre-judgement/5141294 
• Main A, 2011, Visy, Amcor payout a cartel record, http://www.theaustralian.com.au/business/visy-amcor-payout-a-cartel-record/story-e6frg8zx-1226019365905 
• Sydney Morning Herald, 2011, Amcor, Visy settle for $95 million, http://news.smh.com.au/breaking-news-business/amcor-visy-settle-for-95-million-20110310-1bomq.html 
• Mallesons , 2006, The Visy cartel proceedings- a roadmap, http://www.mallesons.com/publications/marketAlerts/2006/Documents/8275376w.htm 

GLOBALIZATION IS A GOOD THING!

Source:  Pirie M., 2012, Ten very good things, http://www.adamsmith.org/blog/international/ten-very-good-things-9-globalization

WHY IS GLOBALIZATION IMPORTANT?

·         Third world countries get the chance to sell their low cost items to world markets.

·         Brings lower cost goods to those in richer countries.

·         Workers in wealthier countries are required to be more efficient so they do not risk losing their job to other countries.

·         Global competition increases.

·         Creativity and innovation are at its maximum.

·         Spreading of knowledge between countries.

HOW DOES GLOBALIZATION AFFECT THE PEOPLE?

·         Improved technology.

·         Improved transportation.

·         Creates jobs for those in developing countries.

·         Allows those in richer countries to spend more money.

Source: Kulkarni A., 2012, http://www.buzzle.com/articles/positive-effects-of-globalization.html

WHY IS GLOBILIZATION IMPORTANT?

·         Multinational countries invest in developing countries; this allows the push up of foreign exchange.

·         Technical knowledge is shared around the world.

·         New inventions and medicines are released.

·         Spreading of culture is an effect.

·         Education is shared and adopted in different countries.

·         Legal and ethical teachings are shared.

·         Governments are able to work with each other closely. 

Loyalty in the Outsiders novel!

1. Page 8, “They didn’t hurt you too bad did they?”
2. Page 16, “Soda always takes up for me”
3. Page 33, “When you’re in a gang, you stick up for the other members. If you don’t stick up for them, stick together, make like brothers, it isn’t a gang anymore.”
4. Page 147, “The truth of the last statement hit me. We couldn’t get along without him.”

1. This quote shows that when a member gets hurt the gang comes together and checks up on the injured member.
2. This quote shows that Soda protects Ponyboy as a brother, whereas Dally acts as his father.
3. This quote shows the closeness and brotherliness of the gang members.
4. This quote shows that the gang cannot live harmoniously without Johnny, it shows that the relationship between one member and another is very close. 

Diet Coke and Mentos Experiment

The reason why this occurs is because the Mentos has little "dimples" in it that make it's surface, well, sort of like the Moon, all craters and everything. Yep. Anyway, these littles dimples allow CO2 from the mentos to rise up. This causes the Diet Coke to spray everywhere. Normally one would make a medium sized explosion. Now we aren't normal publishers. The reason I say that is maybe because of the fact  that we used 7 mentos, and 1.25L of Diet Coke. The result? It spurted about 4 metres in to the air, and went on for about 15 seconds long. Now that is an explosion! Cups, anybody?

Science Command Terms

OBJECTIVE 1
Define	Give the precise meaning of a word, phrase or physical quantity
Draw	Represent by means of pencil lines
Label	Add labels to a diagram
List	Give a sequence of names of other brief answers with no explanation
Measure	Find a value for a quantity
State	Give a specific name, value or other brief answer without explanation or calculation
OBJECTIVE 2
Annotate	Add brief notes to a diagram or graph
Apply	Use an idea, equation, principle, theory or law in a new situation
Calculate	Find a numerical answer showing the relevant stages in the working (unless instructed not to do so)
Describe	Give a detailed account
Distinguish	Give the differences between two or more different items
Estimate	Find an approximate value for an unknown quantity
Identify	Find an answer from a given number of possibilities
Outline	Give a brief account or summary
OBJECTIVE 3
Analyse	Interpret data to reach conclusions
Comment	Give a judgment based on a given statement or result of a calculation
Compare	Give an account of similarities and differences between two (or more) items, referring to both (all) of them throughout
Construct	Represent or develop in graphical form
Deduce	Reach a conclusion from the information given
Derive	Manipulate a mathematical relationship(s) to give a new equation or relationship
Design	Produce a plan, object, simulation or model
Determine	Find the only possible answer
Discuss	Give an account including, where possible, a range of arguments, for and against the relative importance of various factors, comparisons of alternative hypotheses
Evaluate	Assess the implications and limitations
Explain	Give a detailed account of causes, reasons or mechanisms
Predict	Give an expected result
Show	Give the steps in a calculation or derivation
Sketch	Represent by means of a graph showing a line and labelled but unscaled axes but with important features (for example, intercept) clearly indicated
Solve	Obtain an answer using algebraic and/or numerical methods
Suggest	Propose a hypothesis or other possible answer

Division of the CCEs into the Five Criteria of QCS tests

a Comprehend and Collect

Recognising letters, words and other symbols

Finding material in an indexed collection

Recalling/remembering

Interpreting the meaning of words or other symbols

Interpreting the meaning of pictures / illustrations

Interpreting the meaning of tables or diagrams or maps or graphs

Translating from one form to another

Compiling lists / statistics

Recording / noting data

Emphathising

Identifying shapes in two and three dimensions

Searching and locating items / information

Observing systematically

Gesturing

Manipulating/operating/using equipment

b Structure and Sequence

Structuring / organising extended written text

Structuring / organising a mathematical argument

Comparing, contrasting

Classifying

Interrelating ideas / themes / issues

Applying strategies to trial and test ideas and procedures

Generalising from information

Perceiving patterns

Visualising

q Analyse, Assess and Conclude

Reaching a conclusion which is necessarily true provided a given set of assumptions is true (deducing)

Reaching a conclusion which is consistent with a given set of assumptions (inferring)

Inserting an intermediate between members of a series (interpolating)

Extrapolating

Hypothesising

Criticising

Analysing

Synthesising

Judging / evaluating

Justifying

p Create and Present

Using correct spelling, punctuation, grammar

Using vocabulary appropriate to a context

Summarising / condensing written text

Compiling results in a tabular form

Graphing

Setting out / presenting / arranging / displaying

Explaining to others

Expounding a viewpoint

Creating / composing / devising

Sketching / drawing

f Applying Techniques and Procedures

Calculating with or without calculators

Estimating numerical magnitude

Approximating a numerical value

Substituting in formulae

Applying a progression of steps to achieve the required answer

Probability

  In a large bucket there are 6 red balls and 19 blue balls.

(a)  State Pr(red).

            (b)One of each colour is added. What is the new Pr(red)?

   The letters of the word AUSTRALIAN are written on cards and then one card is drawn from a hat at random.

(a)  List the sample space.

(b)  Find Pr(the letter A is chosen).

(c)  Find Pr(a vowel is chosen).

(d)  Find Pr(a consonant is drawn).

(e)   Find Pr(the letter chosen is not an N).