The Australian Competition and Consumer Commission (ACCC) announced it has commenced legal proceedings alleging three construction companies engaged in price fixing and misleading or deceptive conduct in tendering for Government construction projects in Queensland.
The ACCC has alleged that between 2004 and 2007 T.F. Woollam & Son Pty Ltd, J.M. Kelly (Project Builders) Pty Ltd and Carmichael Builders Pty Ltd were involved in a practice known within the building industry as 'cover pricing'.
Cover pricing involves one company colluding with another during the tender process to obtain a price that is intended to be too high to win the contract for the project on price alone. The company then submits this price as a genuine tender.
This practice, which has developed within the building industry over many years, is allegedly used in situations where a construction company may not have the time, resources or inclination to prepare an accurate tender, but still wants to be seen as tendering for the project.
The ACCC alleged that in each instance of cover pricing the companies involved in the conduct also warranted to the client that they had not collaborated or discussed their tender with another company tendering for the project, when in fact they had done so through the exchange of a cover price.
It is alleged that the conduct breached sections of the Trade Practices Act 1974.
It is also alleged that John Murphy and George Bogiatzis, senior managers from J.M. Kelly and T.F. Woollam respectively, aided, abetted or were otherwise knowingly concerned in some of the price fixing conduct.
The ACCC is seeking:
- declarations that the conduct contravened the Act;
- injunctions restraining similar conduct in the future;
- pecuniary penalties against all five respondents;
- orders requiring the companies to publish corrective notices in a prominent industry publication;
- orders requiring the companies to implement trade practices compliance programs for their employees;
- orders requiring the individuals to undergo trade practices training; and
- costs.
The matter has been listed for a directions hearing before Justice Logan in the Federal Court, Brisbane, on October 16.
22 September, 2009
