The Australian Competition and Consumer Commission today concluded court proceedings against the largest price-fixing cartel in Queensland's history that has resulted in penalties and costs of more than $15 million.
The case involved 38 individuals and more than 20 companies in the Queensland fire protection industry.
The Federal Court, Brisbane imposed further penalties and costs of almost $600,000 against the remaining respondents, one company and two individuals, who were involved in the Queensland fire protection industry cartel.
In total the court has imposed penalties of $14.79 million against members of the cartel, as well as making orders for the payment of almost $600,000 of the ACCC's costs.
Today the Federal Court found that Premier Fire Protection (Qld) Pty Ltd and its director, Gregory John Bourke, had engaged in price-fixing and market-sharing conduct in breach of the Trade Practices Act 1974.
The Court also found that Terence McDonald, formerly national General Manager Fire and Safety Products for FFE Building Services Ltd, responsible for overseeing FFE's fire protection operations nationally in 1995, was knowingly concerned in price fixing and market sharing conduct of FFE. During 1995 Mr McDonald became aware that some of his subordinates in FFE's Queensland office were arranging with their competitors as to which company would win tenders to install fire protection equipment in Queensland buildings. Mr McDonald informed FFE's Queensland managers that he disapproved of such anti-competitive arrangements, but he did not take any steps during his 10 months as national General Manager to stop the anti-competitive behaviour or to ensure that it had ceased. Justice Drummond stated that Mr McDonald's disapproval indicated little more than his awareness of the conduct's illegality. In January 2001 FFE was ordered to pay a penalty of $5 million for its participation in the cartel.
Following admissions by the respondents and joint submissions by the parties, Justice Drummond imposed the following pecuniary penalties and awarded payments of agreed amounts towards the ACCC's costs:
| Party | Penalty | Costs |
|---|---|---|
| Premier Fire Protection (Qld) Pty Ltd | $420,000 | $35,000 |
| Gregory John Bourke | $65,000 | |
| Terence Michael McDonald | $50,000 | $20,000 |
Justice Drummond noted that the penalty of $50,000 was very light given Mr McDonald's seniority in FFE, however he took into account Mr McDonald's ill health, parlous financial circumstances and his greatly diminished earning capacity. His Honour refused Mr McDonald's application that his affidavit as to personal circumstances be kept confidential. The affidavit is to be open to public inspection to explain why such a low penalty for a senior executive was appropriate in this case.
The Federal Court ordered injunctions against the respondents prohibiting them from engaging in similar conduct for a period of three years. Premier Fire Protection (Qld) Pty Ltd has undertaken to implement a trade practices compliance program in consultation with the ACCC. Mr McDonald has undertaken to take part in trade practices compliance training.
"The ACCC is pleased to announce that the proceedings against this cartel have now been finalised", ACCC Chairman, Professor Allan Fels, said today. "Today's hearing culminates four years of investigation and 18 months before the Courts".
"The Court's approach to the penalty imposed upon the senior manager of FFE, Mr McDonald, should alert company executives and managers that they cannot bury their heads in the sand if they become aware or suspect employees are colluding with competitors. Acting like ostriches, or turning a blind eye to such conduct, places them personally at risk of the maximum penalty of $500,000 per offence."
The case before the Federal Court involved building projects including the following:
- Van de Veld Polyurethane Foam Factory, Carole Park
- Waterford Apartments
- TC Beirne Centre
- Foodworld Mt Gravatt
- Capalaba Park Shopping Centre
- HIS Gold Coast Hotel
- Performing Arts Centre (Stage 5)
- Goldhill Plaza
- 444 Queen Street
- Mineral Research Centre
- Grace College, University of Queensland
- Logan City Administration Centre
- Bli Bli Telephone Exchange
- Caboolture Court House
- New Psychiatric Centre, Royal Brisbane Hospital
- Sunshine Coast University
- Optus Vision Station Rochedale
- Enoggera Army Base, 2nd Field Hospital.