Loyal Coal Pty Ltd admits breaching competition law in relation to Mount Penny coal exploration licence tender process

5 April 2016

Loyal Coal Pty Ltd (Loyal) has today agreed to resolve the proceedings brought against it by the Australian Competition and Consumer Commission. Loyal has admitted that in early June 2009 when it was majority owned by members of the Obeid family, it:

  • entered into an understanding with Cascade Coal Pty Ltd (Cascade) which provided that Loyal would withdraw from the tender process and refrain from pursuing  competing bids in respect of Mount Penny and Glendon Brook, and in return Cascade would grant a 25 per cent interest in its mining venture in respect of the Mount Penny coal release area to Buffalo, another Obeid family company (the understanding); and
  • subsequently gave effect to the understanding by withdrawing its bids.

Subsequently, Cascade won the tender for the Mount Penny and Glendon Brook coal release areas and granted a 25 per cent interest in the Mount Penny project to Buffalo.

Loyal has admitted that by engaging in this conduct it made an understanding containing an exclusionary provision, and gave effect to the exclusionary provision, in breach of the Competition and Consumer Act 2010 (Cth). The parties will ask the Federal Court to make orders to this effect, by consent.

Whitehaven Coal Limited (Whitehaven) is the parent company of Loyal. Whitehaven acquired Loyal in August 2012 through a hostile takeover of Coalworks Limited. The ACCC acknowledges that Whitehaven was not in any way involved in, or aware of the conduct, and acquired its majority shareholding in Loyal well after the conduct occurred.

Background

The ACCC commenced proceedings in the Federal Court of Australia against eleven respondents for alleged bid rigging conduct involving mining exploration licences in the Bylong Valley, NSW. The respondents are:

  • Cascade Coal Pty Ltd (Cascade) and an associated company, Coal & Minerals Group (CMG), and the following individuals:
    • John McGuigan, director of Cascade;
    • Richard Poole, a former director of Cascade;
    • James McGuigan, a representative of Cascade;
  • Moses and Paul Obeid;
  • Companies associated with Moses and Paul Obeid, namely:
    • Loyal Coal Pty Ltd (Loyal);
    • Locaway Pty Ltd (Locaway);
    • Mincorp Investments Pty Ltd, formerly Voope Pty Ltd (Voope); and
    • Southeast Investment Group Pty Ltd (Southeast Investments).

The alleged conduct relates to the 2009 tender process conducted by the NSW Department of Trade and Investment (then the Department of Primary Industries) for exploration licences over the Mount Penny and Glendon Brook coal tenements in the Bylong Valley. It is alleged that at the relevant time both Cascade and Loyal were rival bidders in the tender process.

The hearing on liability against the remaining ten respondents is set down for four weeks and commenced on 4 April 2016. The ACCC is seeking declarations, penalties and costs, as well as orders disqualifying the individual respondents from managing corporations.

 

Release number: 
MR 43/16
ACCC Infocentre: 

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