$1 million penalty for brick price-fix

9 June 2004

The Federal Court has ordered Bristile Operations, trading as Metro Brick, to pay a pecuniary penalty of $1 million for making price-fixing arrangements with Midland Brick Company Pty Ltd, trading as Midland Brick. 

A senior manager of Metro Brick, Mr Scott, was ordered to pay $25,000 for his involvement in the arrangements.  

In proceedings taken by the Australian Competition and Consumer Commission, it was alleged that between September and November 2001 Metro Brick and Midland Brick had agreed that the price of all clay bricks to be supplied by them in Western Australia would increase by approximately three per cent for trade builders from October 2001 and for major builders from January 2002. The companies also agreed that their tender pricing to major builders in WA for Maxibrick (Midland) and Verticore (Metro Brick) would not be below $570 per thousand bricks.   

In mid 2001 the companies had separately announced plans for three per cent price rises in mid-2001. Subsequently, senior managers of the companies had a number of meetings and telephone discussions during which the price-fixing arrangements were made. Both arrangements amounted to price-fixing prohibited by the Trade Practices Act 1974.  

In January 2002 Boral Ltd, of which Midland Brick is a wholly-owned subsidiary, approached the ACCC and voluntarily disclosed the potential contraventions. Metro Brick and Mr Scott also fully co-operated with the ACCC's investigation. 

Commenting on the conduct and the ACCC Leniency Policy, Justice Lee said: "The temptation will always be present for major participants in a market to engage in cartel conduct to suppress competition and maximise revenue. Such conduct will be covert and hard to detect and allegations that corporations have engaged in such conduct will be difficult to prove. Accordingly, it can be understood why the ACCC has developed and published a policy to encourage disclosure of conduct that contravenes the Act in return for more lenient enforcement of the Act against the disclosing party. Similarly it can be understood why parties to enforcement proceedings commenced by the ACCC may see some advantage in having such proceedings finalised by consent orders".  

By consent, the court declared that Metro Brick had contravened the Act and imposed the $1million penalty, granted an injunction restraining Metro Brick from engaging in similar conduct for five years, and ordered Metro Brick to implement a compliance program and pay ACCC costs.  

Mr Scott also consented to declarations, an injunction and a pecuniary penalty. Although the ACCC and Mr Scott had suggested a penalty of $50,000 the court decided the appropriate penalty was $25,000. 

By consent, the court declared that Midland Brick had contravened the Act by reaching the agreements with Metro Brick and by giving effect to one of them, granted an injunction restraining Midland Brick from engaging in similar conduct for five years, and pay ACCC costs. No pecuniary penalty was sought from Midland Brick or from its senior manager involved in the conduct.  

"The ACCC's Leniency Policy provides clear and certain incentives to the first corporation to disclose cartel conduct engaged in by two or more competitive businesses", Acting ACCC Chair, Ms Louise Sylvan, said today. 

"The policy encourages corporations and their executives to reveal the most serious and collusive contraventions of competition law such as price-fixing, bid-rigging and market sharing.   Hard core cartels are the very worst violations of competition law. They always hurt consumers and businesses by artificially inflating the price of goods and services. 

"It is in the best interest of corporate lawbreakers and their executives to cease the illegal conduct and report it to the ACCC in return for a clear, transparent and certain offer of leniency". 

Release number: 
MR 094/04
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Ms Louise Sylvan - (02) 6243 1138
Ms Lin Enright - (02) 6243 1108