Industry association legal cases

ACCC v CC Constructions and others (1999)

The tender for the Commonwealth Office at Haymarket, Sydney, in 1988 led to the exposure of long-term collusive practices by large construction firms.

Before the close of tender the industry association, the Australian Federation of Construction Contractors (AFCC), called a meeting of the four firms bidding for the contract. It was agreed that to enable recovery of overheads associated with preparing tenders the winning firm should pay the three losers $750 000 each, and the AFCC $1 million. The project was worth around $200 million. The transactions were to be concealed by invoices for consultancy services.

The arrangement was difficult to detect because it added fixed price components to the final tender prices, which were otherwise prepared in competition with each other.  The competitive positions of each of these companies were not disturbed.

The arrangement was exposed by a New South Wales Royal Commission into the construction industry. The Federal Court issued penalties of $1.75 million on the companies and individuals involved. It came out in the case that ‘loser’s fees’ were a common arrangement in the industry.

The court found that there was an expectation (thus an agreement) that these fees were levied in addition to the contract price. As such, they were an imposition on the developer, in this case the Commonwealth government, and therefore on the taxpayer.

ACCC v Tasmanian Salmon Growers Association (TSGA) and others (2003)

When the TSGA proposed that its members cull stocks to reduce supply, it sought legal advice as to whether the scheme would breach the then Trade Practices Act. However, it did not correctly or completely brief its lawyers. The advice it received was based on an understanding that the cull was merely a recommendation to members, whereas the TSGA intended to seek written undertakings from its members to ensure that all complied with the cull. Consequently the advice was flawed.

The ACCC and the Federal Court took this into account, along with the cooperation shown by the parties. No penalties were sought but the court ordered that no future culls be attempted, and that trade practices training be undertaken and compliance programs established. The TSGA and Tassal, the one company that had begun the cull, were ordered to contribute to the ACCC’s costs.