Collusive behaviour not constructive

The ACCC has instituted proceedings in the Federal Court against three Queensland-based construction companies and two of their managers, alleging that the companies engaged in price fixing and misleading or deceptive conduct and that the managers aided, abetted or were otherwise knowingly concerned in some of the price fixing conduct.

The ACCC alleges that between 2004 and 2007, T.F. Woollam & Son Pty Ltd, J.M. Kelly (Project Builders) Pty Ltd and Carmichael Builders Pty Ltd colluded on tender prices for various building contracts. Companies who did not intend to win the tender but still wished to be seen to bid allegedly tendered excessively inflated prices, in a practice known in the building industry as ‘cover pricing’.

The ACCC also alleges that the companies engaged in misleading or deceptive conduct in breach of section 52 of the Trade Practices Act 1974 (Cth) (Trade Practices Act), as the bids involved the companies warranting to clients that there was no collaboration in the relevant bid.

The companies involved are contracted for tens of millions of dollars worth of work under the Rudd government’s schools stimulus package, as well as in other state-funded construction projects. The Queensland Government has indicated that it will fully cooperate with ACCC investigations, and will take steps to recover any loss if a breach of the Trade Practices Act is proven.

As the alleged anti-competitive conduct occurred before the introduction of criminal offences for ‘cartel conduct’, the actions are not brought under the new (criminal) cartel laws.

A similar investigation by the UK Office of Fair Trading (OFT) recently resulted in a fine of STG £129.5 million against 103 UK construction firms for cover pricing. The OFT said that it had uncovered approximately 4,000 tenders that had been distorted by collusive tendering, in what was one of its largest competition-related investigations.

Cabcharge denies allegations of anti-competitive conduct

Cabcharge has now filed its defence in proceedings instituted against it by the ACCC, which we covered in our July edition of the Competition and Market Regulation Update.1 The allegations made by the ACCC in the proceedings are that Cabcharge:

  • misused its market power to damage, prevent or limit competition by refusing to deal with competitors seeking agreement with Cabcharge to allow Cabcharge payment instruments to be processed on the competitors’ electronic payment processing systems
  • misused its market power to damage, prevent or limit competition by:
    • integrating Cabcharge’s payment system with Cabcharge meters and not allowing competitors taxi equipment to be integrated in the same way, and
    • supplying Cabcharge taxi meters and fare schedule updates either below cost or free of charge, and
  • entered into a contract, arrangement or understanding with a taxi network operator in Queensland for the purposes of substantially lessening competition.

Cabcharge has denied these allegations in its defence. It says that its refusal to deal with competitors and its conduct in relation to Cabcharge meters was conduct designed to achieve legitimate business objectives and did not involve it taking advantage of its power in any of the alleged markets. In relation to the supply of meter updates without charge, it says that this was done without authority and without the knowledge or approval of the Cabcharge board.

Air freight price fixing prosecutions continue

The ACCC continued its investigation and prosecution of participants in an alleged cartel in the air cargo industry by commencing Federal Court proceedings against PT Garuda Indonesia Ltd (Garuda). The ACCC alleges that Garuda entered into various arrangements between 2001 and 2006 with other international air cargo carriers that had the purpose or effect of fixing the price of a fuel surcharge and a security surcharge that were applied to air cargo carried by Garuda and other airlines.

Garuda is the tenth airline that the ACCC has proceeded against for alleged price fixing in the air cargo industry. The Garuda proceedings follow court imposed penalties on airlines including Qantas, British Airways and Air France. Proceedings against Singapore Airlines, Cathay Pacific and Emirates continue.