Price-fixing and market sharing will cost Tubemakers of Australia Limited and a former subsidiary $3 million.
Tubemakers and its former subsidiary will pay $1.75 million in penalties for their role in the price-fix and market-share arrangements in the fittings and valves for ductile iron cement lined pipe market between December 1993 and the end of 1994.
"Customers will be reimbursed $1.23 million and the ACCC will receive $20,000 towards costs," Australian Competition and Consumer Commission Chairman, Professor Allan Fels, said today.
The Federal Court, Brisbane on Friday accepted a joint submission on injunctions and penalties after Tubemakers and Coastline Foundry (Qld) Proprietary Limited admitted they had entered in the arrangement with their major competitors.
"Mr Peter Pittard, then national marketing manager for Tubemakers and Coastline, and Mr Patrick McAuliffe, former general manager of Associated Water Equipment, a wholly owned subsidiary of Crevet Ltd, admitted meeting to set maximum discount levels off list prices, to agree to increase the price list bases in their companies and to agree pricing strategies for particular tenders. Both employees were based in south east Queensland".
The ACCC alleged that the first meeting between the participants was held at Oskars Restaurant at Coolangatta, close to Christmas in 1993. Subsequent arrangements are alleged to have been made between them over the telephone, in mid-morning meetings at a coffee shop in Hamilton in Brisbane, and at a Breakfast Creek restaurant.
Justice Cooper considered the parties' submissions and accepted the suggested orders. Tubemakers has been penalised $1.2 million and Coastline $550,000.
The Court also issued injunctions restraining Tubemakers, Coastline Foundry, Mr McAuliffe and Mr Pittard for three years from repeating the conduct.
The ACCC alleged that Tubemakers and Coastline colluded with Associated Water Equipment Proprietary Limited, through Mr McAuliffe, and Geoff Clegg Enterprises Proprietary Limited (then called Watergear Distributors Proprietary Limited) through its director, Mr Geoff Clegg. Proceedings against Associated Water Equipment and Geoff Clegg Enterprises continue.
"This was a blatant case in which Mr Pittard, operating without corporate approval, colluded with his major opposition to raise prices in the market for fittings and valves," Professor Fels said.
"Price-fixing and market-sharing have been deemed by Parliament as being inherently anti-competitive under the Trade Practices Act 1974.
"The cooperation offered to the ACCC by Tubemakers, Coastline Foundry and Peter Pittard was of a very high order.
"The level of penalty reflects that cooperation and that the companies have voluntarily undertaken to undo the harm caused by the conduct by offering customers compensation. Tubemakers had a compliance program in place at the time the conduct occurred but has since upgraded it.
"It is apparent that Tubemakers took very strong internal action against Mr Pittard and that the case has had a devastating effect on him. Mr Pittard was a senior executive who was regarded highly within the company, with expectations of strong career advancement within Tubemakers ahead of him. This matter has had a devastating financial impact on both Mr Pittard and Mr McAuliffe, having to pay their own legal costs, as well as contributing towards those of the ACCC".
Tubemakers has recently sold Coastline Foundry and the division of the company where the conduct occurred.
Tubemakers has identified customers who suffered damage and will contact them to provide them with compensation soon. The refunds will primarily go to local government councils particularly those in rural and regional Queensland, NSW and Victoria. Any customers wishing to discuss the compensation program with Tubemakers can call:
Mr Bruce Arnott 02 9721 6699 or 0417 013167 or
Mr John Sackett from Tyco Water 02 49411 773