ACCC asks Forrest for a ‘please explain’

The ACCC has asked FMG chairman Andrew “Twiggy” Forrest to explain calls for the world’s biggest iron ore producers to work together to put a cap on iron ore production.

Speaking at an Austcham business dinner in Shanghai, Forrest said he was happy to cap FMG’s production in order to usher in an iron ore price rise.

Forrest challenged Rio Tinto, BHP Billiton, and Vale to put a lid on their current production increases, saying if they did “we'll find the iron ore price goes straight back up to US$70, US$80, US$90”.

"I'm happy to put that challenge out there, let's cap our production right here and start acting like grown-ups," Forrest said.

But the ACCC chairman Rob Sims said the comments and the context in which they were made need to be investigated.

“In general terms, any attempt by Australian businesses to encourage competitors to restrict outputs is a matter of grave concern to the ACCC,” Sims said.

“Ultimately, any success in increasing the price of iron ore in an anti-competitive way would be expected to lead to an increase in prices that Australian consumers pay for items such as whitegoods and cars.”

The ACCC said cartel conduct, anti-competitive agreements, price fixing and attempts to bring about collusive arrangements “are very serious matters” that it “vigilantly detects, disrupts and deters”.

Treasurer Joe Hockey also criticised Forrest for his remarks, stating the federal government was “not supportive of cartels at all”.

"It's important that we continue to believe, as we always have as Liberals, in free markets,” Hockey said.

"I'm as concerned at the falling iron ore price as anyone else, and I'm meeting with Rio and speak regularly to other iron ore producers."

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