Penalties exceeding $20 million were awarded today against three premixed concrete suppliers and some executives following action against a wide-ranging price-fix brought by the Australian Competition and Consumer Commission*.
The ACCC had alleged in the Federal Court, Sydney, that a well organised cartel had existed for the supply of premixed concrete in the Brisbane, Gold Coast and Toowoomba markets between mid-1989 and mid-1994.
The Court found that Pioneer Concrete (Qld) Pty Ltd, Boral Resources (Qld) Pty Limited, and CSR Limited between mid 1989 and mid 1994, engaged in price fixing and market sharing conduct in breach of section 45 of the Trade Practices Act 1974.
Following the judgment the ACCC acknowledged the fact that the companies admitted their guilt and provided information to the Commission. If they had not, even bigger penalties would have been sought.
The cartel projects included Brisbane City Council concrete tenders struck between 1989 and 1993; the Queensland Newspapers Building, Murarrie; some construction at the Queensland University of Technology and the University of Queensland; the Australian Tax Offices at Chermside and Mount Gravatt; the World Trade Centre site; Dockside; the Commonwealth Courts Building (which includes the Federal Court); several Southbank projects; several Mater projects; several shopping centre expansion works; the 111 George Street Building (State Government); the City Plaza refurbishment; the Coca Cola Plant, Richlands; works at the Morningside TAFE; Terrica Place, City; the Queensland Convention Centre; Broncos Leagues Club; most Caboolture Shire Council work; Kelvin Grove, Australia Post building; and Quay Terraces, City. On the Gold Coast, projects included the Gold Coast Transit Centre; 50 Cavill Avenue, Surfers Paradise; Pacific Fair Shopping Centre extension; Coomera Rail Bridge; and Tweed River Bridge; In Toowoomba , the projects were the Toowoomba Base Hospital construction site and University of Southern Queensland construction site.
The former Trade Practices Commission had previously brought proceedings against Goodmix, Hymix and Rocla in late 1994 which resulted in penalties totalling $530,000 being imposed against the companies and an executive. The companies provided a great deal of the information forming the basis of today's case.
The ACCC alleged that executives of all the companies, through more than 50 regular meetings and telephone conversations, conspired to fix the base price of premixed concrete in Brisbane, on the Gold Coast and in Toowoomba. It was also alleged that it was agreed to maintain the companies' market shares at predetermined levels, effected by numerous agreements not to compete for specific major projects and concrete orders. An accountant was engaged to collate movements in market share so that the parties could monitor market share.
The ACCC alleged that either at meetings or by telephone (or both), executives of the companies agreed which company was to be successful in tendering for supply to these projects. The "unsuccessful" companies agreed to quote prices at a level designed to ensure that the nominated company secured the work. Market shares were also allegedly maintained by the companies recognising certain customers (referred to as "pets") as belonging to certain suppliers and agreeing not to compete for their business.
The court awarded pecuniary penalties today as follows:
Pioneer:
$6.6 million
Boral
$6.6 million
CSR:
$6.6 million
Robin Torrisi (Sales Manager, Pioneer):
$50,000
Geoffrey Edward Stiles (Operations Manager, Boral)
$50,000
John Brown (Sales Manager South East Qld, CSR, until 1993)
$50,000
Dennis Sheldon (Sales Manager, Brisbane, CSR from 1993)
$50,000
Russell Redenbach (Concrete Manager, Boral)
$50,000
Peter Kinsella (Queensland General Manager, Boral)
$100,000
ACCC Chairman, Professor Allan Fels, hailed the result as a victory for the Commission and a stern warning to all companies that might consider collusion with their competitors.
"This result should serve as a final warning, if any were needed, about the seriousness with which the Court and the ACCC regards collusion," Professor Fels said.
"What made the conduct particularly reprehensible in this case was that these companies, or other companies within their groups, had been fined for exactly the same thing in the past.
"Add to this the large number of public works involved, including some of the biggest building projects in Queensland in recent years, and you have a case which ought be used to set a genuine example to the community.
"It is extremely difficult to exactly assess how much this cartel has cost both the public and private sector."
In another action brought at the same time, the Court also awarded penalties of $400,000 against Hymix and $50,000 against Mr Phillip Barrett, one of Hymix's executives, in respect of its Gold Coast conduct. This conduct was not the subject of the TPC's action against Hymix last year.
None of the companies entered a defence to the action. Counsel for the ACCC made submissions to the Court on penalties with the agreement of Pioneer, Boral, CSR and Hymix and their executives.
*The ACCC was formed on 6 November 1995 following the merger of the Trade Practices Commission and the Prices Surveillance Authority.
Monier, Boral, Pioneer penalised $300,000 for price-fix, preference arrangements
In another action finalised today, Monier, Boral and Pioneer have been ordered to pay $100,000 each in penalties for their role in a price fixing arrangement and a boycott in the South Australian roof tile industry. Three employees of the companies also admitted to being knowingly concerned in the breaches, but penalties have not been imposed on them.
The South Australian Roof Tilers' Association had earlier admitted in the Federal Court, Adelaide to aiding and abetting the conduct.
Justice Lockhart, in the Federal Court, Sydney, today also ordered injunctions against the companies and the individuals for four years to restrain them from repeating the conduct.
The action was brought by the former Trade Practices Commission. The TPC has since merged with the Prices Surveillance Authority to form the Australian Competition and Consumer Commission.
Each company admitted that between 1988 and 1992 they had:
agreed by annual negotiations with the South Australian Roof Tilers Association to fix the rates paid to roof tile contractors in South Australia; and
agreed with the South Australian Roof Tilers Association and between themselves that they would only engage the services of roof tile contractors who were members of the South Australian Roof Tilers' Association.
The companies also admitted that they continued to give effect to the arrangements up to, in one case, June 1994
"The case involved serious and systematic conduct by the companies", ACCC Chairman Professor Allan Fels said today. "It involved the three major roof tile manufacturers in Australia and had significant anti-competitive effects in regard to roof tile contracting. However, the ACCC accepts there is no evidence that the meetings considered or discussed collusion or price-fixing in relation to customers or consumers in the SA roof tile industry.
"The SARTA preference arrangements hindered non-SARTA roof tile fixers in obtaining roof tile fixing work in South Australia."
As much of the conduct occurred before January 1993, the penalties were based on the scale which applied until the Trade Practices Act was amended. The maximum penalty per offence was $250,000 for a company and $50,000 for an individual. Current penalties are a $10,000,000 maximum per offence for a corporation and $500,000 maximum per offence for an individual.
The companies have also agreed to implement a trade practices compliance program to ensure their staff are aware of their obligations under the Trade Practices Act.