Transport company, executives found guilty of attempted price fixing

Justice Heerey of the Federal Court today found J McPhee & Son (Australia) Pty Ltd and three of its employees had contravened the Trade Practices Act by attempting to have a competitor enter into a collusive arrangement in tendering express freight services to a McPhee client, Just Jeans.

He also found the company had entered into a price fixing arrangement with a competitor over prices to be quoted to another McPhee customer, ACI Florapak.

The action was brought by the Australian Competition and Consumer Commission. The conduct occurred in late 1994 and mid 1995.

The charges followed an approach by a Director of McPhee, Richard Forde, to staff of another express freight company, Discount Freight Express. His lunch and premises tour invitation to the competitors was found by the Court to have been made to persuade the DFE Victorian management to put in a cover quote to McPhees client, Just Jeans. [A cover quote is a quote provided to a prospective customer but which is designed not to be competitive with the rates already being charged by the customers current supplier.]

Mr Forde, along with the other McPhee officers, were found to have contravened the Act by their involvement.

Another breach concerned a request to a DFE manager to submit a quote to a McPhee client (ACI Florapak) which would exceed the McPhee's current rates. The DFE manager had earlier sought to quote on ACI Florapak's business. The McPhee manager learnt of this and asked the DFE manager to cover McPhees rates. The DFE manager ultimately submitted a quote which contained higher rates than McPhees rates and McPhee retained the account.

The case is considered very significant by the ACCC. The allegations of attempted price fixing by McPhee involved behaviour by the McPhee representatives which was subtle in its approach to the DFE representatives.

Given the sensitivity in the road transport industry to allegations of price fixing, it is not surprising that the McPhee men put their request to DFE in guarded terms, without spelling out their intent explicitly, Justice Heerey said in his decision.

In late 1994 TNT Australia Pty Ltd, Ansett Transport Industries (Operations) Pty Ltd and Mayne Nickless Ltd admitted in the Federal Court to having an arrangement over a long period under which they agreed not to poach each others accounts in the express freight industry. McPhee is a subsidiary of TNT Limited.

Those in trade and commerce should take from this decision that, even though those who attempt to enter into price fixing arrangements may be becoming more sophisticated or subtle in their endeavours, the Court will view that behaviour in the commercial context in which it takes place, ACCC Chairman, Professor Allan Fels, said today. This was a case where McPhees attempts to enter into a price fix arrangement was more of a 'wink wink, nudge nudge' nature than a clearly expressed intention, but the Court was satisfied that, despite the subtleties employed, the company had attempted to arrange a price fix.

The ACCC was also very pleased at the quick turnaround of the case, which finished in Court only on Thursday.

Penalty submissions by all parties will be put to the Court shortly.