Court orders penalties of $8.3 million for Sydney forklift gas cartel

24 October 2014

The Federal Court has by consent ordered penalties totalling $8.3 million against Renegade Gas Pty Ltd (trading as Supagas NSW, a privately owned company) (Renegade Gas), Speed-E-Gas (NSW) Pty Ltd (Speed-E-Gas) (a wholly owned subsidiary of Origin Energy Limited), and three current and former senior officers of the two companies for engaging in cartel conduct.

The Court found that from at least 2006 until 2011, Renegade Gas and Speed-E-Gas, through their senior officers and sales staff, gave effect to a no-poaching understanding between the two companies, which included each company not supplying liquid petroleum gas cylinders for forklifts (forklift gas) to each other’s customers. This involved the companies:

  • not approaching certain customers of the other;
  • not offering to supply forklift gas to certain customers of the other, or offering to supply only at prices that they knew were unlikely to induce the customer to change suppliers; and
  • communicating with each other for the purposes of implementing the understanding.

Justice Gordon ordered Renegade Gas to pay a penalty of $4.8 million, and Speed-E-Gas a penalty of $3.1 million, for engaging in cartel conduct. Speed-E-Gas cooperated with the ACCC’s investigation from a very early stage, and the penalties imposed on it reflected that cooperation.

“For companies of the size of Renegade Gas and Speed-E-Gas, these are very significant penalties which take into account the deliberate and largely covert conduct which occurred over a substantial length of time and which involved very senior management from both companies,” ACCC Chairman Rod Sims said.

“Detecting, stopping and deterring domestic and international cartels is a priority for the ACCC as cartels not only cheat consumers and other businesses, they also restrict healthy economic growth.”

Justice Gordon said “The Respondents’ conduct contravened the Act through a deliberate, largely covert, long standing understanding which had the potential to adversely affect a high proportion of manufacturing and distribution businesses across Sydney and which likely had an adverse effect on those businesses that were denied the opportunity of receiving a price competitive offer from either Renegade or Speed-E-Gas during the Relevant Period”.

Justice Gordon also ordered the following penalties for three individuals involved in the cartel conduct:

  • the former Managing Director of Renegade Gas, Paul Berman, be disqualified for three years from managing corporations and pay a pecuniary penalty of $250,000; and
  • a senior officer of Renegade Gas to pay a penalty of $100,000 and a former senior officer of Speed-E-Gas to pay a penalty of $50,000.

“The pecuniary penalty imposed on Mr Berman is one of the largest penalties ordered against an individual for engaging in cartel conduct. This penalty, in addition to a disqualification order for three years, is a further reminder that there are serious consequences for individuals who engage in cartel conduct, particularly senior officers and managers,” Mr Sims said.

The Court also ordered injunctions, compliance training for Renegade Gas and Mr Berman, and contributions to the ACCC’s costs totalling $600,000.

“LPG cylinders are used to power forklifts in a wide range of logistical operations across industries to lift and transport goods. Renegade Gas and Speed-E-Gas’ customers were both large and small businesses across the Sydney metropolitan area,” Mr Sims said.

The owner of Speed-E-Gas, Origin Energy Limited, did not participate in the cartel conduct and was not joined as respondent to the proceedings.

On 21 June 2011, the ACCC executed search warrants on the premises of Renegade Gas and Speed-E-Gas. Following a comprehensive investigation, the ACCC instituted proceedings on 23 August 2012.

Release number: 
MR 261/14
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