ACCC seeks $40 million fine for Telstra, Stocks slide again: Economy Roundup

The Australian Competition and Consumer Commission is reportedly seeking a $40 million penalty against Telstra for alleged breaches of competitive obligations.

The Age has reported the competition regulator is looking for a penalty of $1 million for each time the company refused to allow any competitor access to exchanges to install much-needed equipment.

The ACCC is reportedly seeking the fines on the basis that these applications were inappropriately handled by junior staff.

Meanwhile, a survey from the Melbourne Institute has revealed wages continued to grow during the three months to May as the job market has continued to recover.

Total pay rose 4.3% over the 12 months to May 2010, the survey found, with research fellow Edda Claus saying in a statement the growth was indicative of a recovering economy.

“Total pay growth outpaced hourly wage rate rises,” Claus said. “This suggests a strengthening in labour market conditions.”

About 65% of respondents to the survey said their pay rose over the past year to May 2010, up from 56% in the previous corresponding period, while respondents expected their pay to rise by 2.5% over the next 12 months.

“This means inflationary pressures arising from wages should remain low, giving the Reserve Bank of Australia room to soften their current tightening cycle,” Claus said.

The Australian sharemarket has opened over 1% lower today, as renewed fears of the European debt crisis took hold of Wall Street stocks.

The benchmark S&P/ASX200 index was down 83 points or 1.9% to 4312 at 12.10 AEST, while the Australian dollar was down to US82c.

ANZ shares fell 1.9% to $21.49 while Commonwealth Bank shares dropped 2% to $51.18. Westpac lost 2.3% to $22.63 as NAB fell 1.4% to $24.21.

Mining giant BHP Billiton could be looking for some acquisitions due to current weaknesses in the industry, a company official has said.

“We have not spent much time externally. But we are now spending more time externally,” BHP’s petroleum president Michael Yeager told reporters at a press conference. “As we grow our capabilities… this powerful balance sheet that we have is an enormous tool.”

“And when you combine our health and strength, with some slowness in the market area, it is something that we do not want to let pass us by,” he said.

While Yeager did not say whether the company would be looking at opportunities for petroleum or other commodities, he did mention the petroleum unit does need to provide a boost to its exploration program.

Gindablie Metals to receive no tax benefits

Gindalbie Metals’ iron ore project in Karara will not receive any benefits from the proposed super profits tax for the mining sector, company chairman Geoff Wedlock has said in a statement.

Wedleck said in the release the company has found itself “mid-stream”, and will not be able to access any of the Government’s infrastructure.

“The infrastructure will be available for generations to come and does not have to be built by the Government, yet Gindalbie and its investors receive no rebate, relief or recognition for this investment,” he said.

“However, the proposed tax changes will have a significant impact, as they will reduce the returns for the project and put planned and possible expansions at risk.”

Meanwhile, Transurban Group’s largest shareholder, CP2, has requested an intervention from the Takeovers Panel to prevent the company from going ahead with a $542.3 million capital raising.

According to a statement provided to the Australian Securities Exchange, CP2 has requested the board intervene to prevent the listing.

CP2 was also seeking orders that should the raising proceed, “the institutional entitlement offer be reopened and clear disclosure be made in relation to the current status of offers for securities in Transurban”.

The Australian Financial Review has reported that banks and other major financial institutions are currently fighting for deposits as they pay the highest margin above the official cash rate in over 10 years.

The publication has said the demand for cash deposits is being pushed forward by a need to move away from wholesale funding, and secondly, regulatory requirements for liquid capital.

Stocks drop on new debt fears

Overseas, financial markets are still rattled by the latest fears of a debt crisis in the Euozone. IMG chief economist Olivier Blanchard said an interview published in the La Tribune that “The markets are wondering if Greece will be able to repay its debt or not,” he said. “Given the behaviour of Greek governments in the past, their uncertainties are understandable.”

Blanchard said there also doubts about the EU’s ability to deliver the money it has promised the Greek Government, and about the EU Central Bank’s policies.

In the United States, signs of economic recovery weren’t enough to boost investor confidence regarding the debt crisis. While the National Association of Realtors said sales of new homes rose by 7.6% during April, the highest rate since November, stock markets took a fall.

On Wall Street, the Dow Jones Industrial Average dropped 126.82 points, or 1.24%, to 10,066.57 – dangerously close to the 10,000-point mark.

Meanwhile, BP shareholders have sued the company for allegedly failing to monitor safety precautions leading up to the Deepwater spill in the Gulf of Mexico.

“The Deepwater disaster will cause financial consequences to BP and the BP subsidiaries, which will be tabulated in the billions of dollars, including liability for damage to property, commercial interests and wildlife,” the complaint has stated.

US president Barack Obama has attacked the spill, saying it was caused by a “breakdown of responsibility”.