You run a medium-size company that sells building supplies. Growth has been excellent over the last three years, largely due to the efforts of your 'number one’ sales manager. They are on a bonus that rewards them for margins achieved as well as volume of sales.
When reviewing the sales figures, you note that several regional centres that used to generate small sales no longer record any business. When you inquire, your sales manager replies that it wasn’t worthwhile working those areas and it was best to leave the business to a competitor that had served the regions for years. You are sceptical but think ‘If it ain’t broke, don’t fix it’.
Warning! If the decision to withdraw from a market was made independently, you need not have any concerns. However, if the move was made in concert with competitors, it may be a market allocation and/or price fixing arrangement.
You make further inquiries and are sure that there is opportunity in the regions. When you inform the sales manager, they are adamant that such a move will break ‘industry agreements’, start a price war and be counterproductive. They reveal that they meet with the competitors’ sales managers monthly and it’s best to leave the matter alone.
Warning! You are now aware of a market share deal. You should seek legal advice and contact the ACCC.
You challenge the sales manager. They admit to market-sharing deals and also assert that the price list is healthy due to agreements with competitors not to compete under agreed prices. They point out that this has delivered good profits, and threaten to resign if you keep butting in.
Act now! Despite the fact that you and other senior managers were unaware of the arrangements, your company is liable for breaches of the TPA. You should seek legal advice and report to the ACCC. Don’t be beaten to it by a competitor!
A company is responsible for the actions of its employees, even if senior management is ignorant of illegal conduct. The best policy is to establish a trade practices compliance program to reduce and manage the risks.
