EGR to pay $6m penalty for exclusive dealing

28 September 2018

Oakmoore Pty Ltd, trading as EGR, and its director Mr Rodney Horwill were today ordered to pay $6.35 million in penalties for being knowingly concerned in exclusive dealing conduct with the purpose of substantially lessening competition.

The Federal Court recently imposed penalties of $3.5 million against Palram Australia and $2.1 million against Ampelite Australia and one of its directors in respect to the same matter, bringing the total penalties to $11.95 million.

Palram Australia and Ampelite are two of Australia’s largest distributors of polycarbonate roof sheeting (polycarb) to retail stores such as Bunnings and Mitre 10 under the brands ‘Suntuf’ and ‘Solasafe’. Polycarb is commonly used in commercial and home building projects such as pergolas and verandas.

EGR started manufacturing polycarb roofing material around 2009 and threatened existing distributors, Palram Australia and Ampelite, that unless they each purchased significant amounts of polycarb from EGR, it would supply polycarb directly to retailers.

In order to avoid competition from EGR, Palram Australia and Ampelite separately agreed to buy polycarb from EGR, on condition that EGR didn’t supply polycarb to retailers. EGR admits that by refraining from supplying polycarb directly to retailers, it was knowingly concerned in the exclusive dealing conduct of Palram Australia and Ampelite.

The Federal Court declared today that between 2009 and 2013 EGR and Mr Horwill were each knowingly concerned in three contraventions of the exclusive dealing prohibition in the Competition and Consumer Act (CCA) and ordered:

  •     EGR to pay a $6 million penalty;
  •     Mr Horwill, a director of EGR, to pay a $350,000 penalty;
  •     EGR and Mr Horwill to jointly pay $450,000 towards the ACCC’s costs; and
  •     EGR to establish a compliance program to ensure their awareness of their responsibilities and obligations under the CCA.

The penalty ordered against Mr Horwill is the highest penalty ever imposed on an individual for a breach of the competition provisions of the CCA. This is also the first time the court has imposed a penalty for a party being “knowingly concerned” in a contravention of the exclusive dealing provision.

“The penalties ordered by the court show that exclusive dealing conduct is serious illegal behaviour,” ACCC Chair Rod Sims said.

“The ACCC is determined to push for substantial penalties to deter businesses from breaking competition laws. Conduct which circumvents competition when a new player enters a market may prevent lower prices and innovation. This kind of conduct is likely to cause loss or damage to customers and consumers.”

Background

EGR is a Brisbane based manufacturer and supplier of building and automotive products.

In June 2016, the ACCC instituted civil proceedings against Palram Australia, Ampelite Australia, EGR, Palram Industries, Ms Horesh, Mr Verhagen and Mr Horwill.

In August 2018, the court declared by consent that Palram Australia and Ampelite each engaged in exclusive dealing conduct with the purpose of substantially lessening competition, and ordered them to pay penalties totaling $5.5 million.

Mr Verhagen, a director of Ampelite was ordered to pay a penalty of $100,000 for being knowingly concerned in the conduct of Ampelite and Ms Talila Horesh, a director of Palram Australia, was disqualified from managing a corporation in Australia for three years for being knowingly concerned in the conduct of Palram Australia.

Release number: 
197/18
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