The Graeme Samuel puzzle

July 29 is officially the final day that Graeme Samuel will spend as the chairman of the Australian Competition and Consumer Commission.

And he’s marked it in a particularly curious way – by announcing that he will immediately take up the role as the head of the Melbourne office of investment bank Greenhill Caliburn.

Samuel is a former investment banker, so his new job probably isn’t a massive surprise.

But given that Samuel has been criticised throughout his tenure as being too close to the top end of town, perhaps he (or more specifically his new employer) could have waited until next week to make the announcement.

The announcement will probably have many SMEs reflecting on Samuel’s tenure and how small business stands at the end of it.

In his round of farewell interviews (we’ve tried all week to get one without success) Samuel has reflected on the difficulties he has faced in dealing with the small business community.

“[If] you look at what some sections of small business, some representative groups of small business would like the ACCC to do, there is a big expectation gap, a very big one,” he told Business Spectator a few weeks ago.

“What some small business groups would like us to do is not what Parliament has mandated that we should do… In unconscionable conduct for example we’ve taken many cases particularly in the area of franchising and we’ve succeeded, but there are many cases, where you’ve got thousands of franchisees and franchise operations. There can be many causes for disgruntlement or disaffection or failure of franchise businesses, you know, many of which won’t relate to any breaches of the law.”

Samuel has a very good point here. One of the first actions of any lobby group that feels its members are under threat from the big end of town is to call on action from the ACCC; sometimes that action can be taken, sometimes it cannot.

Supporters of franchisee rights have been particularly strident in their criticism of Samuel’s ACCC although as we have seen in the countless Parliamentary inquiries into franchising, finding evidence of rogue franchisors is harder than it sounds.

Indeed, franchising provided Samuel with one of his most important victories in the SME space, when an ACCC investigation resulted in 55 franchisees of telco franchisee Allphones being awarded $3 million in compensation for a prolonged campaign of unconscionable conduct that involved the franchisor withholding income from franchisees.

Samuel’s victory against the cartel run by Richard Pratt’s Visy Industries and Amcor was another great SME victory – remember that most of the victims of this cartel were in fact small businesses.

Under Samuel, the ACCC has also worked to take more of an educational approach to dealing with SMEs, ramping up information campaigns well before the introduction of new regulations, such as the changes to consumer laws over the last few years.

And Samuel has done a good job of keeping telcos in line, working hard to try to clean up and clarify confusing pricing regimes.

But there have been a few real lowlights for the SME community.

The near-collapse of the DFO shopping centre empire in which Samuel was a major investor has become a real distraction in the last few years. While Samuel has consistently pointed to the fact his stake was held in a blind trust, legal claims made by fellow investors David Goldberger and David Wieland raised questions about how blind the trust really was.

Samuel always protested his innocence and no evidence has been provided to support the allegations. But the fact the story has run on and on has not reflected well on Samuel’s office.

But this incident was in many ways outside of Samuel’s control. His biggest error while in charge of the ACCC was undoubtedly the approvals of the mergers of Commonwealth Bank and BankWest and Westpac and St George early in the GFC.

Both deals led to a substantial lessening of banking competition, which has affected SMEs more than any other group.

Samuel has since said both deals would not have been approved if the GFC and credit crisis had not occurred. But the relative ease which the Australian economy came through the GFC – and the strong position the banking sector has maintained throughout – did raise questions about whether Samuel misjudged the balance between short- and long-term considerations.

To make matters worse, Samuel argued strongly against any Government action to try and ease the credit squeeze on SMEs. At a CPA roundtable in May 2010, he dismissed this idea of a government-backed SME bank like that used in Canada and Singapore, saying the experience of a similar Australian body, the Victorian Economic Development Corporation, highlighted why governments should not become bankers.

“It was shown to be economically totally irresponsible.”

“With all respect to my friends in Canberra, I doubt that there are any bureaucrats that have got greater abilities than the banking sector to assess the credit worthiness of SMEs.”

Perhaps this wasn’t the right idea. But it would have been great to see the ACCC chair come up with a few strategies to help SMEs at a most difficult time.

Samuel’s replacement, Rod Sim, is seen by many as a steady hand. But he too will face the challenge of dealing with the SME expectation gap that Samuel has described above.

Samuel has done a pretty good job, but he knows there will be some thinking he could have done more.