This case involved price fixing, bid rigging and market sharing by four foreign companies that supplied rubber hosing to transfer oil and gas from production and storage facilities to offshore tankers. The four companies involved (Dunlop Oil & Marine, Bridgestone Corp., Trelleborg Industrie SAS and Parker ITR) each appointed members to a committee that allocated jobs and coordinated bidding and quoting for these jobs. The designated winner of the contract was referred to as the ‘champion’ and the cartel used such codes and other covert tactics to conceal their activities.
The cartel was international and the key meetings were held oversees, but the successful court action was based on the cartel giving effect to their agreement in the Australian market, following global enforcement action taken by competition authorities in the USA, UK, Europe and Japan. In 2010 the Federal Court of Australia made orders restraining the parties from repeating such conduct and imposed penalties exceeding $8 million.
In late 2000, the Commonwealth Department of Defence conducted a tender for demolition and asbestos removal at its Salisbury site in South Australia. The project was valued at over $2 million. McMahon Services and SA Demolition and Salvage, the two companies bidding for the job, along with the preferred asbestos removal subcontractor (D&V Services) met to discuss the tender. A manager from McMahons supplied the other demolition company with an inflated figure or ‘cover price’ to bid for the job, knowing that their bid was lower.
McMahons consequently won the job and awarded the asbestos removal subcontract to D&V Services, as agreed at the meeting.
An insider alerted the ACCC and in 2004 the Federal Court penalised the companies and several key individuals more than $535 000. The companies and individuals also provided undertakings to the Court not to repeat the conduct and agreed to attend compliance training.
In a remote region of South Australia, a truck and tractor mechanic quoted on the repair to a front end loader. The customer stated that they would seek a competitive quote. As there was only one other operator in the region, the mechanic wrote a note on the quote inviting the other mechanic to ‘cover’ him on this job (quote higher) and that he would return the favour in the future. He asked his secretary to fax the quote to his competitor. The secretary made an error and faxed the note to the customer, who promptly informed the ACCC. The matter was settled by the mechanic giving court enforceable undertakings not to repeat the conduct, among other things.
For about 10 years until 1997 most of the companies in the fire alarm and fire sprinkler installation industry in Brisbane held regular meetings, at which they agreed to allow certain tenders to be won by particular competitors.
Calling themselves the ‘Sprinkler Coffee Club’ and the ‘Alarms Coffee Club’, the groups would meet up over a cup of coffee at hotels, cafes, and various sporting and social clubs.At these meetings they would share tenders and decide who was to submit ‘cover prices’ to make the tender process look legitimate, while ensuring the agreed company won the tender.
It has been estimated that this conduct affected contracts worth more than $500 million. The Federal Court imposed more than $14 million in penalties on the companies and some of their executives.
The Pioneer, Boral and CSR cartel involved bid rigging, price fixing and market sharing in the pre-mixed concrete market in south-east Queensland from 1989 until 1994. The participants had more than 50 regular meetings and phone conversations. In addition to fixing prices, they agreed on market shares and not to compete on specified major projects.
Market shares were maintained by the companies recognising certain customers (referred to as “pets”) as belonging to certain suppliers and agreeing not to compete for their business. The participants even engaged an accountant to monitor market shares so they could enforce compliance with the agreement. The arrangement led to considerable overcharging on major construction jobs, including federal, state and local government projects.
Penalties of $6.6 million were imposed on each company. Penalties were also imposed on six executives, the maximum being $100 000. The case demonstrated a blatant disregard for the law, as each of the corporate groups had previously been found to have engaged in similar conduct.
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, called a meeting of the four firms bidding for the contract. It was agreed that 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 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.
