ACCC accuses three Queensland building companies of price fixing

The Australian Competition and Consumer Commission has launched legal proceeding against three Queensland construction companies alleging they engaged in price fixing and misleading or deceptive conduct in tendering for Government construction projects in Queensland.

According to a statement released by the ACCC, the consumer watchdog alleges that between 2004 and 2007 the three companies – 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’.

This 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 says.

“The ACCC alleges 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.”

The watchdog alleges that John Murphy, a senior manager with J.M Kelly and George Bogiatzis, a senior manager from T.F. Woollam, “aided, abetted or were otherwise knowingly concerned in some of the price fixing conduct”.

The matter has been listed for a directions hearing in the Federal Court in Brisbane on 16 October.

The ACCC wants pecuniary penalties against the three companies involved and the two managers. It also wants orders forcing the companies to publish corrective notices in “prominent industry publications” and injunctions preventing the companies from engaging in similar conduct in the future.