The Federal Court in Melbourne has ordered four foreign based suppliers of marine hose to pay penalties exceeding $8.24 million for engaging in cartel conduct.
In June 2009, the Australian Competition and Consumer Commission instituted court proceedings alleging that Dunlop Oil & Marine, Bridgestone Corporation, Trelleborg Industrie SAS and Parker ITR gave effect to an international cartel arrangement which included the Australian market from 2001 to 2006 for the supply of marine hose.
Marine hose is rubber hose used at offshore moorings to transfer crude oil and gas products from production facilities to tankers or buoys.
The ACCC alleged the companies submitted 'rigged' bids to supply marine hose to customers in Australia such as Woodside Energy Ltd, BHP Billiton Petroleum Pty Ltd and ConocoPhillips (03-12) Pty Ltd.
ACCC chairman Graeme Samuel said this conduct was very serious. It was deliberate, ongoing and involved high value transactions.
"This was a highly organised and covert cartel of large multinational companies which worked to suppress and/or eliminate competition by rigging bids, controlling prices and allocating market share in Australia and elsewhere during an extended period of time.
"Since the customers were mostly large oil and gas producers, the cost of the cartel ultimately fell on oil and gas end-users, namely the general public," Mr Samuel said.
"Such losses are not ascertainable, but nevertheless real, and it is clear that the price of marine hose rose significantly in the period after the making of the Marine Hose Club Arrangement."
Mr Samuel said international cooperation was key to this successful court outcome.
"These are foreign corporations which were supplying or offering to supply marine hose to Australian companies or projects as part of an international cartel arrangement.
"ACCC investigators were greatly assisted by both the United States Department of Justice and the United Kingdom Office of Fair Trading in the provision of documents and information located overseas. The ACCC's request for documents was the first the United Kingdom Office of Fair Trading had granted to any overseas regulator under the Enterprise Act 2002 UK," Mr Samuel said.
Justice Finkelstein ordered the following penalties for engaging in cartel conduct in breach of Section 45 of the Trade Practices Act 1974:
- Trelleborg Industrie SAS - $3.2 million
- Dunlop Oil & Marine - $2.68 million
- Bridgestone Corporation - $1.6875 Million, and
- Parker ITR - $675,000.
The penalties reflect a number of contraventions found against each respondent with some discount for cooperation with the ACCC.
The Federal Court also made declarations and injunctions restraining the respondents from engaging in similar conduct, and they were ordered to pay the ACCC's costs.
The actual making of the cartel arrangements occurred outside Australia. As a result, the penalties imposed relate only to dealings by the companies which gave effect to cartel conduct, and not to the separate contravention of making a cartel, arrangement or understanding.
The international cartel was effectively terminated in May 2007 following searches and arrests conducted simultaneously by the US Department of Justice, the UK Office of Fair Trading, the European Commission and Japan's Fair Trade Commission. Since then cartel members have been, to varying degrees, the subject of global enforcement action.
Criminal sanctions for serious cartel conduct do not apply in this instance because the activity pre-dates the 2009 amendments to the Trade Practices Act.
"However, criminal sanctions could apply to any cartel active after 24 July 2009. These amendments bring us into line with overseas sanctions and further enhance the ACCC's enforcement against both domestic and international cartels," Mr Samuel said.