Putting the ‘Art’ in ‘Cartel’: Australian competition regulator successful in attempted bid rigging proceedings
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In May 2021, we published a short article noting that civil proceedings had been commenced by the Australian Competition and Consumer Commission (“ACCC”) against Delta Building Automation Ltd (“Delta”) for alleged contraventions of the cartel conduct prohibition.
Now, in a decision handed down on 1 August 2023, the Federal Court of Australia has found that Delta and its sole director – Mr Timothy Davis – had engaged in attempted bid-rigging in connection with a tender being run by the National Gallery of Australia for a new building management system and its ongoing maintenance.
What was the alleged bid ridding?
At the centre of the proceedings was a claim that over a 2019 cup of coffee in a Canberra café, Mr Davis had attempted to induce the manager of a competitor into an arrangement which would result in Delta being more likely to win the tender. Mr Davis allegedly offered to pay the competitor in order to rig their bid.
The civil cartel prohibitions in Part IV Division I of the Competition and Consumer Act 2010 (Cth) (“CCA”) prohibit any person or corporation from making a contract, arrangement or understanding that contains a cartel provision, or giving effect to a contract, arrangement or understanding that contains a cartel provision. In this case, Mr Davis’s coffee companion (and Delta competitor) ultimately rejected the approach, and the proposed bid-rigging arrangement was not made. However, s 76 of the CCA also prohibits attempts to contravene the civil cartel prohibitions, and any “attempt to induce” another person to contravene those prohibitions.
The Federal Court determined that Delta and Timothy Davis had contravened the CCA in the attempt to rig the bid for the National Gallery tender.
In the past, the ACCC has scarcely relied on the “attempt to induce” provision in the CCA. However, in 2022, the Federal Court found that Bluescope Steel and its former general manager, Jason Ellis, had attempted to induce businesses to enter agreements to fix or raise prices. The ACCC had not alleged that the attempts were successful. In reaching its conclusions, the Court found that an “attempt to induce” does not require assent, but rather a step towards the inducement of an understanding. It’s also not necessary for the conduct to have reached an advanced stage.
In regard to the Delta case, Gina Cass-Gottlieb, Chair of the ACCC made clear regarding the Delta case:
“The attempt by Delta and Mr Davis to bid rig for the tender of a government institution like the National Gallery of Australia is a serious matter as it had the potential to increase the cost of the project to taxpayers … Attempting to agree to the terms of bids with competitors, just like agreeing to share markets or allocate customers, is anti-competitive conduct which is against the law. Bid rigging damages markets.”
Further orders and penalties are set to be decided at a later date. The ACCC, in its press release, outlined that they were seeking declarations, pecuniary penalties, injunctions and costs, as well as an order disqualifying Mr Davis from managing a company, and orders for Delta to conduct compliance training. The ACCC will be emboldened to pursue “attempt to induce” cases going forward.
Businesses should keep in mind that cartel conduct is one of the six enduring enforcement priorities published by the ACCC. Corporations and individuals that contravene Australia’s cartel laws can face significant monetary penalties and, in criminal cases, potential jail terms.
For more information, please contact Thomas Jones, Matthew Bovaird, Patrick Cordwell or Dylan McGirr.
