On 24 August 2011, the Federal Court in Brisbane found that three Queensland based construction companies had engaged in price fixing and misleading or deceptive conduct by using “cover pricing” in tenders for Government public works projects in Queensland. Cover pricing is a form of bid rigging in which two companies come to an understanding that company A, who did not otherwise intend to participate in the tender, will submit a price that exceeds company B’s tender price. Company B had a better chance of winning because its price is lower than the cover price.
A number of the construction companies admitted that they discussed submitting “cover prices”, but denied that they had come to a contract, arrangement or understanding. They also denied that the purpose, effect or likely effect of the any arrangement was to fix, control or maintain prices of the services. The Federal Court found that the parties did come to certain arrangements, and that the conduct “amounts to controlling of the price at which services are to be supplied”. The conduct was also found to be misleading and deceptive because each company represented that it had no knowledge of the price of any other company’s tender.