Federal Court finds cable manufacturer engaged in cartel conduct

21 July 2016

The Federal Court has found that an Italian corporation, Prysmian Cavi E Sistemi S.R.L. (Prysmian), engaged in cartel conduct in relation to the supply of high voltage land cables in Australia, in proceedings brought by the Australian Competition and Consumer Commission.

The Court found that Prysmian entered into and gave effect to agreements in breach of the price fixing and exclusionary arrangement provisions of the Trade Practices Act 1974 (now called the Competition and Consumer Act 2010).

The agreement related to a 2003 invitation by Snowy Hydro Limited (Snowy Hydro) to tender for the supply of high voltage land cables and accessories. The Court found that Prysmian was a party to an agreement with other cable manufacturers and suppliers to ‘allocate’ the tender to Prysmian and then gave effect to that agreement by providing pricing guidance to its competitors so that they could submit higher amounts in an attempt to ensure that Prysmian won the tender.

Justice Besanko found that the agreement in relation to the Snowy Hydro tender was part of a wider over-arching agreement between Japanese and European cable manufacturers and suppliers, which provided for the allocation of high voltage land and submarine cable projects in various parts of the world. As part of this cartel arrangement, projects offered for tender were ‘allocated’ to either the Japanese or the European group of manufacturers and then to a particular company within that group. That company would then provide ‘pricing guidance’ to competitors to ensure that other bids were higher and increase the likelihood that the company allocated the project would win the tender.

“This is another example of the ACCC enforcing Australian cartel laws in relation to collusive arrangements made outside of Australia but which have the potential to affect Australian consumers and businesses,” ACCC Chairman Rod Sims said.

The ACCC’s case against a French corporation, Nexans SA, was dismissed. Justice Besanko found that a Nexans company was part of the over-arching cartel agreement and that Nexans SA had been aware of the Snowy Hydro tender process. However, His Honour found that the ACCC had not established that Nexans SA was a party to the agreement concerning Snowy Hydro because the ACCC had not established that Nexans SA had made an arrangement or arrived at an understanding in relation to that specific project.

A hearing on penalty and other relief sought by the ACCC against Prysmian will take place on a date to be fixed by the Court.

Background

In 2013, the Federal Court imposed a penalty of $1.35 million against a Japanese cable supplier, Viscas Corporation, for its part in this cartel conduct, following the filing of joint submissions and agreed facts.

High voltage cables are used by generators and distributors of electricity and by major construction, mining, and development companies. These cables are designed to either pass under land or under oceans or water courses.

 

Release number: 
MR 132/16
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