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November 18, 2010 - No. 197
Monopoly Collusion to Control the
Marketplace
Not a "Net Benefit" for Canada
• Monopoly
Collusion to Control the Marketplace: Not a "Net Benefit" for Canada
• Concern for U.S. Owners of Debt, Zero Concern
for Canadians
• Monopoly Competition and Collusion
- K.C. Adams -
• Steelworkers Tackle Problems Facing the
Economy - Interview, Rolf Gerstenberger, President, USW Local
1005
• Stelco Steelworkers Meet Hamilton Government
MP in Ottawa - Press Release, USW Local 1005
Monopoly Collusion to Control the
Marketplace
Not a "Net Benefit" for Canada
Monopoly collusion to control the marketplace and prices
is both damaging and a crime or at least it used to be. Manipulation or
ignoring of Canadian laws in a pragmatic way to serve a need of the
moment is another trait of neoliberal globalization.
U.S. Steel says it broke its signed and sworn word to
Canadians for a greater cause, which was to manipulate steel prices in
its favour to assist the two other foreign monopolies that control
Canada's steel sector and not "breach its debt covenants" to U.S.
owners of capital. It then has the gall to call this a "net
benefit" for Canada!
For monopolies, signed or sworn commitments and
principles are for fools and the gullible; only cold-hearted
pragmatists win in this world of imperialism. U.S. Steel spokespeople
declare with a straight face that its shutdowns of Stelco mills and
reneging on sworn commitments to uphold the pension arrangements
are a net benefit to Canada! "Might makes right" in the neoliberal
world, so it must be true.
Canadians are determined not to endure the unprincipled
nation-wrecking and violation of Canada's sovereign rights and
trampling on the dignity of Canadians as a result of all this
neoliberal backwardness. They are striving to bring into being a
principled alternative that respects the human factor, upholds social
consciousness, defends the rights of all and builds an economy not
based on exports and foreign control but on self-reliance,
manufacturing, security and stability under the control of Canadians.
Concern for U.S. Owners of Debt,
Zero Concern for Canadians
U.S. Steel admits it broke its commitments under the Investment
Canada
Act (ICA) when it shut down its two Canadian mills to
remove 4.3 million tons of steel from the market to shore up steel
prices in North America and save the company money so that it could
meet its interest payments to its
moneylenders.
John Goodish, U.S. Steel's executive vice-president and
chief operating officer writes in an affidavit to the Federal Court,
"By the spring of 2009, there was a very real concern that U.S. Steel
would breach its debt covenants."
U.S. Steel executive managers had "very real concern"
for U.S. owners of debt yet showed in practice zero concern for the
commitments they made under the ICA and zero concern for active and
retired Stelco steelworkers, their communities, local suppliers and the
Canadian economy. For the record, U.S. Steel
has never once missed an interest or principal payment to owners of
debt during this period, has paid millions annually to a select U.S.
gang of executive managers and has continued to pay quarterly dividends
to owners of U.S. Steel shares even though it insists the monopoly is
"losing money."
Monopoly Competition and Collusion
- K.C. Adams -
U.S.
Steel asserts it helped its global competitors ArcelorMittal and Essar
by shutting its Canadian Stelco mills. Monopoly competition and
collusion reflect an interpenetration of opposites; in this case, both
are damaging;
the dialectic itself has to be overcome with a pro-social sovereign
alternative.
With all the foreign takeovers, Canadians would be
excused for wondering what happened to the neoliberal line of making
"our" monopolies competitive in the global marketplace. Canada has
become submerged into the imperialist system of states where our
resources, productive assets, market and working
class are considered "fair game" by the most powerful of the
international financial oligarchy. Nothing is considered "ours" because
"our" economy does not even exist but is merely an adjunct to the
global economy according to the Harper neoliberals and his mentors in
Washington, London and Tokyo.
 Within this situation, the global
monopolies both compete and collude to serve their narrow interests and
bring Canada and its human and natural resources more tightly under
their control. Monopoly competition and collusion represent an
interpenetration of opposites within a neoliberal globalized economy.
Monopoly
competition and collusion negate the harmonious operation of both the
particular parts of the national economy and its integrated whole and
damage the interests of Canada's actual producers and their society.
This has been starkly evident with the repeated shutdown of the U.S.
Steel-controlled Stelco mills and the
present lockout of Stelco Hamilton.
In court documents filed in defence of its breaking of
commitments under the Investment Canada Act, U.S. Steel says
it sacrificed Canadian steelworkers, their mills, communities and
Canada's economy on an altar of collusion with its competitors. Through
shutdowns of Stelco mills and manipulation
of the marketplace and price fixing, U.S. Steel says it kept steel
prices high, which helped the foreign-controlled steel sector survive
the crisis. What a noble gesture! According to U.S. Steel, Canadians
and their economy have been reduced to serving and strengthening
foreign monopolies whose base and main operations
may be in the U.S., Europe or India. Where does that leave Canadians
and our economy and needs? When we are shut down or locked out, are the
foreign monopolies going to pay our mortgages and grocery bills and
finance our social programs. Of course not, they don't even want to pay
corporate taxes!
U.S. Steel has organized its Canadian operations so that
no profit of enterprise appears in its accounts. Profit is all sucked
down south as interest-profit for owners of debt and to pay executive
managers such as the $11 million CEO Surma claimed in 2008. No profit
of enterprise -- no corporate taxes. No production
at Stelco mills -- no added-value claimed by workers, no
transferred-value bought from local suppliers, almost no taxes claimed
by governments yet more social claims on governments from those out of
work, more pressure on the Stelco pension funds and pressure on
steelworkers to give concessions on pensions.
In sum -- No Net Benefit to Canada!
It is time to turn the tide and put political pressure
on the governments to restrict monopoly control over Canadian economy.
Hamilton steelworkers and
supporters hold the weekly Thursday Meeting, November 11, 2010.
Steelworkers Tackle Problems Facing the Economy
- Interview, Rolf Gerstenberger,
President, USW Local 1005 -
November 15, a delegation of USW Local 1005 went to
Ottawa to attend a court hearing on the government lawsuit against U.S.
Steel for breaking its commitments under the Investment Canada Act
(ICA). They received a warm reception from passers-by
in front of the federal court building on Sparks
Street where they held up their banners for three hours while different
groups of workers traded places inside the courtroom. The hearing dealt
specifically with whether or not the union would be granted intervenor
status in the court case Attorney General vs. U.S. Steel on
which the Judge reserved decision.
In the afternoon, members of the local union executive
led by President Rolf Gerstenberger were received by David Sweet,
Conservative Member of Parliament for the Hamilton riding
Ancaster-Dundas-Flamborough-Westdale, who is Chair of Parliament's
All-Party Steel Caucus and Chair of the Commons
Standing Committee on Industry, Science and Technology.
TML interviewed Rolf Gerstenberger after the
meeting.
 
Ottawa, November 15, 2010
TML: Rolf, can you tell us if Mr. Sweet
was apprised of your situation with U.S. Steel.
Rolf Gerstenberger: It didn't look like
it but we are used to politicians not being informed about issues that
concern working people, especially from our point of view. So we
started by outlining what was happening with U.S. Steel -- the shutdown
of the blast furnace October 4 and then
the announcement that it had started up two blast furnaces in the U.S.,
and was now filling Canadian and other orders usually supplied from
Hamilton from its mills in the States. All this occurred still within
the three year period during which it had pledged to keep up production
and employment levels under the Investment Canada Act. We
explained that U.S.
Steel is using the situation to try to impose a contract on us to shaft
Stelco's 9,000 pensioners and attack and eventually destroy our pension
plan. We complained that these global monopolies are running roughshod
over the people and it is the Government
of Canada's responsibility to restrict this and defend Canadians.
TML: You raised the issue of Ernst &
Young's admission that U.S. Steel has been engaging in price and market
manipulation?
RG: Yes, but he was not aware of the
Ernst & Young affidavit.
TML: Why is this? Is it because the
Government of Canada's lawsuit against U.S. Steel for violating its ICA
commitments is in the Attorney General's lap, not Mr. Sweet's? Even so,
is this not of concern to all Hamilton MPs, let alone the All Party
Steel Caucus?
RG: The workers at Local 1005 are always
surprised that they know more than all of these politicians put
together. You have to understand that our system of government makes
sure that at the end of the day nobody takes responsibility for
anything except, presumably, come elections when
you can boot the entire government out of office. And even this is no
longer the case because nothing really distinguishes one party from
another when it comes to the substantial issues. Furthermore,
politicians are pigeonholed into a specific portfolio, and are only
supposed to go into action on issues pertaining to
their portfolio. Even then, we have found that they are often
astonishingly ignorant even about their own portfolio.
TML: How is that? Don't they read? Or is
it a matter that their politics are partisan to their parties and not
to the public interest?
RG: I think it is a bit of both.
Obviously some of these politicians do keep themselves informed and
they are known to be experts on various issues. Despite this they are
not very effective because partisan interests decide everything. But
generally we find that an awful lot of the politicians
don't even read. They may read some sort of briefs provided to them by
their staff or lawyers or what are called experts but they are
surprisingly uninformed about the basic issues. This must be because of
their party politics, which just require them to give the party line on
an issue. In this regard, they have "handlers"
who tell them what to say on an issue. We don't mind a team effort but
when you rely on the advice of an advisor or lawyers or what are called
experts, you had better be in a position to take responsibility for
what you are going to say!
TML: Mr. Sweet is chairman of
the All Party Caucus on Steel. What does this committee do?
RG: Well, we are not at all
clear what the All-Party Caucus does. We have made various attempts to
find out over the years and get it to take up our issues but to no
avail. We left the meeting with the impression that this caucus is
definitely not dealing with our issue. It is not up to speed
on what U.S. Steel is doing.
TML: So did anything come out of your
meeting?
RG: Not much, but it was our
responsibility to inform Mr. Sweet about our situation given the fact
that he is the MP for Hamilton in the government and given the
responsibilities he has assumed and we, the public, pay him to carry
out. It goes without saying he should be working for us,
the Canadian public, and not just the interests of big business.
Just to add to this issue of being well informed. We
would like to be surprised by finding out that politicians are up to
speed but the fact that they are not does not surprise us. It confirms
our impression that when it comes to the public interest these folks
don't really care too much to work out solutions to the
problems Canadians are facing. The last time an MP from Hamilton asked
the Prime Minister in Question Period what he was going to do about the
situation facing Hamilton steelworkers, the Prime Minister directed the
question to Tony Clement, the Minister of Industry, who arrogantly
answered that the Harper "action
plan" on the economy is bringing prosperity to Canadians. And that was
that. This behaviour is grandstanding; it is posturing of the kind
Canadians despise, a game of one-upmanship -- and one reason for the
bad reputations of the political parties in the Parliament.
TML: What about the price and market
manipulation issue?
RG: About the price and market
manipulation that Ernst & Young says motivated U.S. Steel to renege
on its commitments under the ICA, Mr. Sweet confirmed that the Competition
Act is a complaint driven process. He said that if we had any
questions we should let him know.
TML: Is that it?
RG: Pretty much. We noted that U.S.
Steel's price fixing occurred just when the Ontario industrial
heartland, including the construction sector which Mr. Sweet represents
in part, was going through its worst crisis in decades. By not "sharing
the pain" of that crisis but passing it on to consumers
of steel through price fixing, U.S. Steel conceivably made the
situation worse or at least contributed to the collapse of many small
companies that could not afford steel at the higher price, were caught
in long-term pricing contracts or simply could not pass on higher
prices to their customers. This price fixing also
means that construction projects under the federal government's "action
plan" stimulus program would cost more for less work and employment.
This is besides the direct damage U.S. Steel is responsible for by
removing possibly two billion dollars worth of purchasing from local
suppliers plus the tax and other losses
during the 2009/10 shutdowns in Hamilton and Nanticoke. Some of these
benefits went south. It could be said that in the past, Stelco in many
ways kept the region afloat during some of the toughest times and even
worse market conditions by not shutting down during its previous
Canadian-owned 100 year history.
We pointed out that if the federal government does not
intervene and break up these monopolies or otherwise exercise control
over them, especially the foreign ones that are focused more on their
global empires, they will destroy the economy.
Just to elaborate on this. Monopolies serve their own
narrow interests yet in the most self-serving manner they say, as U.S.
Steel does in its E&Y document, that their own private victories
won at the cost of so much damage to the rest of the economy, are
somehow a net benefit to Canada.
Canada must avoid at all costs the plans of the global
monopolies, under the hoax that our population is small and raw
materials plentiful, to wreck our manufacturing sector and turn us into
a colonial type supplier of basic commodities, a captured market for
U.S. and other manufactured goods, and a quaint tourist
destination that is incapable of manufacturing goods on a wide scale
that would make us self-reliant, prosperous and capable of competing
internationally. As we said to Mr. Sweet, we need local manufacturing
as the solid base from which Canadians can compete globally, not the
other way around where certain monopolies
that have only the most tenuous connection with Canada destroy our
local manufacturing and make us weak and prey to the global giants.
This requires action to restrict monopoly right and defend our rights
as Canadians.
TML: Anything else?
RG: We did raise with him that the
government could have bought and owned Stelco for $150 million coming
out of bankruptcy, which is equivalent to the amount the federal and
Ontario governments handed over to the Stelco owners as a low-interest
forgivable loan.
Just to explain. The fact that those who controlled
Stelco upon exiting bankruptcy protection were given the equivalent
amount of money they put into the company and then about a year later
sold the last remaining Canadian steel company to U.S. Steel for a big
score of over a billion dollars is something that
really bothers steelworkers and others. Many of us consider it a big
crime for which no one yet has been held to account.
TML: What did Mr. Sweet say?
RG: He did not agree! In reply to our
question that public ownership of Stelco without any additional money
was an option at the time he said the Conservative government would not
consider anything like that.
TML: What do you conclude?
RG: We have taken up the slogan: Whose
Economy? Our Economy! Manufacturing Yes! Nation-Wrecking, No! We think
this is the right way to go -- that we should continue informing
ourselves and other workers about the problems we and Canada as a whole
and workers in other countries
are facing and discussing how to deal with them. If we don't do
something, the future looks pretty grim. It is urgent someone in Canada
defend the public interest, not monopoly right. Everything pretty much
resolves down to the issue of control. Whose economy and who controls
it? We believe the actual producers,
such as steelworkers and the Canadian public should control the
economy. We have to start by restricting the global monopolies.
TML: Does this mean you are going to put
in a complaint against this price and market manipulation?
RG: Looks that way! We gave Mr. Sweet
the honour of doing so but he did not take us up on it.
TML: We wish you the best in your
efforts to hold U.S. Steel and the governments to account.
RG: Thank you.
Stelco Steelworkers Meet
Hamilton Government MP in Ottawa
- Press Release, USW Local 1005, November
15, 2010 -
On Monday, November 15, 2010 Local 1005 USW President
Rolf Gerstcnberger, Vice-President Gary Howe and Chairman of the
Political Action Committee Jake Lombardo are taking a delegation of
fifty steelworkers to Ottawa to attend a hearing of the federal court
into an appeal by U.S.
Steel to the union's request for intervener status in the case of Attorney
General
vs. U.S. Steel.
While in Ottawa, the executive members of Local 1005
will also meet with David Sweet, Conservative Member of Parliament for
Ancaster-Dundas-Flamborough-Westdale who is Chair of Parliament's
All-Party Steel Caucus and was recently made Chair of the Commons
Standing Committee
on Industry, Science and Technology.
The delegation will address the demand of Canadian
workers coast to coast that the federal government hold the foreign
monopolies to account, in particular the foreign monopolies such as
U.S. Steel, which the federal government has permitted to take over
vital sectors of the Canadian
economy.
In this regard, the steelworkers' delegation will raise
the serious problem of price fixing by these monopolies. Through an
Ernst & Young document presented as a defense in federal court to
the charge that U.S. Steel violated its commitments under the Investment
Canada
Act,
the U.S. monopoly admits to manipulating Canadian steel prices through
control of the marketplace. Ernst & Young has the audacity to say
this manipulation of the Canadian steel market by shutting down both
Stelco mills in 2009 was not a criminal act but a "net benefit" to
Canada! Despite the
fact that U.S. Steel's violation of its commitments is before the
courts, this matter of manipulating the Canadian marketplace and price
fixing is not covered under the present lawsuit, Attorney General
vs. U.S. Steel.
The Local 1005 delegation will ask the Conservative M.P.
to look into this issue and inform the steelworkers and people of
Hamilton as well as the steelworkers from Algoma and Dofasco of the
results of the inquiry. They will ask him to do his duty towards his
constituents and all Canadians
by initiating charges against U.S. Steel with the self-admitted crime
of manipulating the marketplace by shutting down two Canadian mills to
fix prices contrary to Canadian law. The union delegation will point
out that by not punishing U.S. Steel in the first case in 2009 it has
now repeated the
crime by banking the blast furnace at Stelco Hamilton Works and
subsequently closing all production at the facility under the
fabricated pretext of a labour dispute.
For Your Information
The Ernst &Young affidavit to the Federal Court on
page 105 under the heading "Raw Steel Production-Canada and the USA"
states : "If USSC (U.S. Steel Canada) had produced more steel from Q4
2008 through Q2 2009, then the supply would have exceeded demand in
Canada and a combination of the following would likely occurred:
"A price war would have occurred, resulting in lower
steel prices in the Canadian market. Incremental volume sold by USSC
would have taken away market share from other Canadian flat rolled
steel companies (Dofasco and/or Algoma.) Alternatively, Dofasco and/or
Algoma would have lowered
their sales prices in order to preserve their market share in
Canada-which would have caused a downward spiral of sales prices. There
would have been a net increase in total Canadian flat roll steel sales.
To the extent that USSC would have increased its sales volume, the
Dofasco and/or Algoma
would have experienced lower sales volume. In effect. USSC would have
taken away market share from Dofasco and/or Algoma. However, the total
size of the Canadian steel market available to USSC, Dofasco and Algoma
would not have changed."
"Canadian steel imports would not necessarily have
declined significantly, because foreign steel mills would have
potentially lowered sales prices in order to preserve Canadian market
share. There would have been excessive inventory levels at USSC (as
well as Dofasco and/or Algoma). In summary,
for each additional ton of steel that USSC would have hypothetically
produced and sold from Q4 2008 through Q2 2009 (if the Hamilton and/or
Lake Erie blast furnace was not idled) other Canadian flat roll steel
companies (Dofasco and/or Algoma) would have sold one ton less of
steel. Mandates
to produce steel for which there is no market demand are not a net
benefit to Canada."
Wikipedla on Price Fixing (excerpts):
Wikipedia writes: "In Canada, price fixing is an
indictable criminal offence under Section 45 of the Competition Act.
Bid rigging is considered a form of price fixing and is illegal in both
the United States (s.1 Sherman Act)
and
Canada (s.47 Competition Act)
In the United States, agreements
to fix, raise, lower, stabilize, or otherwise set a price are illegal
per se. It does not matter if the price agreed upon is reasonable or
for a good or altruistic cause; or if agreement is explicit and formal
or unspoken and tacit."
View of Hakemi & Company Law Corporation (from
website):
"In March 2009 the Competition
Act was significantly amended, with some changes coming into
effect this year. These included three criminal offences for
price-fixing, market division and supply restriction agreements. It is
now 'per se' illegal (i.e. without needing to show any adverse market
effects) for competitors to, for example, fix the prices of their
products or agree to divide geographic territories, customers or
product lines."
"The maximum penalties for criminal conspiracy
agreements have also now more than doubled, with fines of up to $25
million (per count), imprisonment for up to fourteen years, or both.
The penalties for criminal bid. rigging agreements have also been
increased with a new bid-rigging offence
having been introduced."
"Based on the significant penalties, as well as director
and officer liability, the potential risks associated with price-fixing
activities arc clear. Issues can, however, also arise in connection
with many types of common commercial activities including joint
ventures and strategic alliances between competitors
and trade association activities (e.g., meetings, information
exchanges, collective negotiations or attempts to regulate member fees
or marketing.)
"In addition, certain industries and markets are more at
risk than others- for example. industries that arc declining, highly
consolidated or where it is difficult to compete other than on price
(e.g., construction, cement, steel, chemical inputs, etc.)" Canadians
should keep in mind that most monopolies
are cartel organizations in themselves. They are combinations of many
companies within one enterprise. As such, their mere existence could be
considered in violation of the Competition Act."
For more information contact Rolf Gerstenberger at
905-547-1417 or e-mail: rolf.gerstenberger@uswa1005.ca or visit
www.uswa1005.ca.
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Website: www.cpcml.ca
Email: editor@cpcml.ca
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