Between 23 August and 16 September 2019:
(a) the First Respondent made an arrangement or arrived at an understanding with MLR Slate Roofing Pty Limited (MLR Slate Roofing) and the Third Respondent that contained a cartel provision that had the purpose of ensuring that in the event of a request for bids in relation to the re-roofing of the Main Roof at Wesley College located within the grounds of the University of Sydney (Wesley College Project), each of the First Respondent, MLR Slate Roofing and the Third Respondent would bid but on the basis that the First Respondent's bid was more likely to be successful than both MLR Slate roofing's and the Third Respondent's bids within the meaning of s 45AD(3)(c)(ii) or (iv) of the Competition and Consumer Act 2010 (Cth) (CCA) and/or on the basis that a material component of each of MLR Slate Roofing's and the Third Respondent's bids was worked out in accordance with the arrangement or understanding within the meaning of s 45AD(3)(c)(v) of the CCA;
(b) the First Respondent, MLR Slate Roofing and the Third Respondent were or were likely to be, or but for the arrangement or understanding referred to in paragraph 1(a) above would have been or would be likely to have been, in competition with each other in relation to the re-roofing of the Main Roof for the Wesley College Project within the meaning of s 45AD(4)(a), (b) and (j) of the CCA,
and the First Respondent and the Third Respondent thereby each contravened section 45AJ of the CCA.
In the period between 15 September 2019 and 27 April 2020, by:
(a) the provision of the tender price breakdown by the First Respondent to each of MLR Slate Roofing and the Third Respondent;
(b) the submission of a tender for the Wesley College Project;
(c) the payments to each of MLR Slate Roofing and the Third Respondent in the amounts agreed,
the First Respondent gave effect to the cartel provision in relation to the re-roofing of the Main Roof for the Wesley College Project and thereby contravened section 45AK of the CCA.
In the period between 16 September 2019 and 27 April 2020, by:
(a) the use of the tender price breakdown provided by First Class to Mr Shingles;
(b) the submission of a tender for the Wesley College Project by Mr Shingles in accordance with the tender price breakdown provided by First Class;
(c) the issuing of an invoice to First Class in the amount agreed;
(d) the acceptance of payment from First Class in the amount agreed,
the Third Respondent gave effect to the cartel provision in relation to the re-roofing of the Main Roof for the Wesley College Project and thereby contravened section 45AK of the CCA.
The Second Respondent was directly knowingly concerned in, or a party to, the contraventions of the First Respondent declared in orders 1 and 2.
The Fourth Respondent was directly knowingly concerned in, or a party to, the contraventions of the Third Respondent declared in orders 1 and 3.
Bellevue Hill Project
On or around 17 September 2019:
(a) the Third Respondent made an arrangement or arrived at an understanding with the First Respondent that contained a cartel provision that had the purpose of ensuring that in the event of a request for bids in relation to the supply and/or installation of a Canadian slate roof for a residential property in Bellevue Hill, Sydney NSW (Bellevue Hill Project) both the Third Respondent and the First Respondent would bid but on the basis that the Third Respondent's bid was more likely to be successful than the First Respondent's bid within the meaning of s 45AD(3)(c)(ii) or (iv) of the CCA and/or on the basis that a material component of the First Respondent's bid was worked out in accordance with the arrangement or understanding within the meaning of s 45AD(3)(c)(v) of the CCA; and
(b) the Third Respondent and the First Respondent were or were likely to be, or but for the arrangement or understanding referred to in paragraph 6(a) above would have been or would be likely to have been, in competition with each other in relation to the supply and/or installation of a Canadian slate roof for the Bellevue Hill Project within the meaning of s 45AD(4)(a), (b) and (j) of the CCA,
and the Third Respondent and the First Respondent thereby each contravened section 45AJ of the CCA.
In the period between 17 September 2019 and 27 April 2020, by;
(a) the provision of the tender price breakdown to the First Respondent;
(b) the submission of a tender for the Bellevue Hill Project by the Third Respondent;
(c) the payment to the First Respondent in the amount agreed by way of a deduction from monies owed by the First Respondent to the Third Respondent,
the Third Respondent gave effect to the cartel provision for the supply and/or installation of a Canadian slate roof for the Bellevue Hill Project and thereby contravened section 45AK of the CCA.
In the period between 17 September 2019 and 27 April 2020, by:
(a) acceptance of the tender price provided by the Third Respondent to the First Respondent;
(b) the submission of a tender for the Bellevue Hill Project by the First Respondent containing a price which was substantially higher than the price provided by the Third Respondent;
(c) the deduction of monies owed by the First Respondent to the Third Respondent in the amount agreed,
the First Respondent gave effect to the cartel provision for the supply and/or installation of a Canadian slate roof for the Bellevue Hill Project and thereby contravened section 45AK of the CCA.
The Fourth Respondent was directly knowingly concerned in, or a party to, the contraventions of the Third Respondent declared in orders 6 and 7.
The Second Respondent was directly knowingly concerned in, or a party to, the contraventions of the First Respondent declared in orders 6 and 8.
THE COURT ORDERS THAT:
Pecuniary Penalties
Pursuant to section 76(1) of the CCA, the First Respondent pay to the Commonwealth of Australia a pecuniary penalty in the amount of $280,000, in instalments as follows:
(a) $23,333.33 within 6 calendar months of the date of this order;
(b) $23,333.33 within 12 calendar months of the date of this order;
(c) $23,333.33 within 18 calendar months of the date of this order;
(d) $23,333.33 within 24 calendar months of the date of this order;
(e) $23,333.33 within 30 calendar months of the date of this order;
(f) $23,333.33 within 36 calendar months of the date of this order;
(g) $23,333.33 within 42 calendar months of the date of this order;
(h) $23,333.33 within 48 calendar months of the date of this order;
(i) $23,333.33 within 54 calendar months of the date of this order;
(j) $23,333.33 within 60 calendar months of the date of this order;
(k) $23,333.33 within 66 calendar months of the date of this order; and
(l) $23,333.37 within 72 calendar months of the date of this order,
provided that if the First Respondent fails to pay any of the instalment amounts by the due date, and fails to remedy that default by paying the instalment amount within 30 days of the due date, then the full amount of the remaining penalty then outstanding shall become immediately due and payable.
Pursuant to section 76(1) of the CCA, the Second Respondent pay to the Commonwealth of Australia a pecuniary penalty in the amount of $60,000, in instalments as follows:
(a) $5,000 within 6 calendar months of the date of this order;
(b) $5,000 within 12 calendar months of the date of this order;
(c) $5,000 within 18 calendar months of the date of this order;
(d) $5,000 within 24 calendar months of the date of this order;
(e) $5,000 within 30 calendar months of the date of this order;
(f) $5,000 within 36 calendar months of the date of this order;
(g) $5,000 within 42 calendar months of the date of this order;
(h) $5,000 within 48 calendar months of the date of this order;
(i) $5,000 within 54 calendar months of the date of this order;
(j) $5,000 within 60 calendar months of the date of this order;
(k) $5,000 within 66 calendar months of the date of this order; and
(l) $5,000 within 72 calendar months of the date of this order,
provided that if the Second Respondent fails to pay any of the instalment amounts by the due date, and fails to remedy that default by paying the instalment amount within 30 days of the due date, then the full amount of the remaining penalty then outstanding shall become immediately due and payable.
Pursuant to section 76(1) of the CCA, the Third Respondent pay to the Commonwealth of Australia a pecuniary penalty in the amount of $65,000, in instalments as follows:
(a) $3,611.11 within 1 calendar month of the date of this order;
(b) $3,611.11 within 2 calendar months of the date of this order;
(c) $3,611.11 within 3 calendar months of the date of this order;
(d) $3,611.11 within 4 calendar months of the date of this order;
(e) $3,611.11 within 5 calendar months of the date of this order;
(f) $3,611.11 within 6 calendar months of the date of this order;
(g) $3,611.11 within 7 calendar months of the date of this order;
(h) $3,611.11 within 8 calendar months of the date of this order;
(i) $3,611.11 within 9 calendar months of the date of this order;
(j) $3,611.11 within 10 calendar months of the date of this order;
(k) $3,611.11 within 11 calendar months of the date of this order;
(l) $3,611.11 within 12 calendar months of the date of this order;
(m) $3,611.11 within 13 calendar months of the date of this order;
(n) $3,611.11 within 14 calendar months of the date of this order;
(o) $3,611.11 within 15 calendar months of the date of this order;
(p) $3,611.11 within 16 calendar months of the date of this order;
(q) $3,611.11 within 17 calendar months of the date of this order; and
(r) $3,611.13 within 18 calendar months of the date of this order,
provided that if the Third Respondent fails to pay any of the instalment amounts by the due date, and fails to remedy that default by paying the instalment amount within 30 days of the due date, then the full amount of the remaining penalty then outstanding shall become immediately due and payable.
Pursuant to section 76(1) of the CCA, the Fourth Respondent pay to the Commonwealth of Australia a pecuniary penalty in the amount of $15,000, in instalments as follows:
(a) $833.33 within 1 calendar month of the date of this order;
(b) $833.33 within 2 calendar months of the date of this order;
(c) $833.33 within 3 calendar months of the date of this order;
(d) $833.33 within 4 calendar months of the date of this order;
(e) $833.33 within 5 calendar months of the date of this order;
(f) $833.33 within 6 calendar months of the date of this order;
(g) $833.33 within 7 calendar months of the date of this order;
(h) $833.33 within 8 calendar months of the date of this order;
(i) $833.33 within 9 calendar months of the date of this order;
(j) $833.33 within 10 calendar months of the date of this order;
(k) $833.33 within 11 calendar months of the date of this order;
(l) $833.33 within 12 calendar months of the date of this order;
(m) $833.33 within 13 calendar months of the date of this order;
(n) $833.33 within 14 calendar months of the date of this order;
(o) $833.33 within 15 calendar months of the date of this order;
(p) $833.33 within 16 calendar months of the date of this order;
(q) $833.33 within 17 calendar months of the date of this order; and
(r) $833.39 within 18 calendar months of the date of this order,
provided that if the Fourth Respondent fails to pay any of the instalment amounts by the due date, and fails to remedy that default by paying the instalment amount within 30 days of the due date, then the full amount of the remaining penalty then outstanding shall become immediately due and payable.
Injunctions
Pursuant to section 80 of the CCA, each of the Respondents be restrained for a period of 3 years from the date of this order from making, arriving at, or giving effect to, or being in any way, directly or indirectly, knowingly concerned in, or party to, any contract, arrangement or understanding involving suppliers of roofing for the supply, installation, maintenance or repair of roofing, containing a provision which has the purpose of ensuring that in the event of a request for bids in relation to the supply, installation, maintenance or repair of roofing that one bid is more likely to be successful than the others or that a material component of at least one of those bids is worked out in accordance with the contract, arrangement or understanding, unless such conduct is authorised under section 88 of the CCA.
Compliance Orders
Pursuant to section 86C(2)(b) of the CCA, the Second Respondent, at his own expense:
(a) within 90 days of the date of this order is to attend and undertake compliance training with particular emphasis on Part IV of the CCA; and
(b) is to ensure the training referred to in Order 16(a) is administered by a qualified compliance professional or legal practitioner with expertise in the Part IV of the CCA.
Pursuant to section 86C(2)(b) of the CCA, the Fourth Respondent, at his own expense:
(a) within 90 days of the date of this order is to attend and undertake compliance training with particular emphasis on Part IV of the CCA; and
(b) is to ensure the training referred to in Order 17(a) is administered by a qualified compliance professional or legal practitioner with expertise in the Part IV of the CCA.
Disclosure Orders
Pursuant to section 86C(2)(c) of the CCA, within 21 days of the date of this order the Second Respondent and the Fourth Respondent, at their own expense, are to publish, or cause to be published, by email (or, if email is not reasonably practicable, by post) to the current members of the Roofing Industry Association of NSW Incorporated an educative notice in the form and with the content of Annexure A to these orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Annexure A
Don't do what we did - rigging bids for roofing projects is illegal!
This message is published by Scott Barton of First Class Slate Roofing Pty Limited and Damian Hand of RAD Roofing Specialists Pty Limited (trading as Mr Shingles) by order of the Federal Court of Australia, in proceedings brought by the Australian Competition and Consumer Commission (ACCC).
Our businesses both install and maintain slate roofing in Sydney.
We have both recently admitted to bid-rigging in relation to two slate roofing projects, and have been ordered by the Federal Court to pay penalties totalling $420,000, including individual penalties imposed on each of us personally. We also have to pay our own significant legal costs.
Our businesses have suffered reputational damage as a result of publicity about the case, and our illegal conduct will be permanently on the record.
This message is being circulated to all members of the Master Roof Tilers & Slaters Association of NSW, so that you can learn from our mistakes, and the very serious consequences which followed.
What we did
In 2019, we were each asked to tender for the re-roofing of the main roof at Wesley College. MLR Slate Roofing was also asked to tender.
Through text messages and phone calls, First Class (via Scott) agreed with MLR and separately with Mr Shingles (via Damian) that MLR and Mr Shingles would submit tender prices provided to them by First Class. These would be higher than First Class's tender prices.
In exchange, First Class would pay them each $10,000.
This was then put into effect by the bids submitted by MLR and Mr Shingles, and First Class was awarded the Wesley College project.
Around the same time, Mr Shingles and First Class were approached to tender for the supply and installation of slate at a house in Bellevue Hill. Damian and Scott agreed by text message that for this project Mr Shingles would provide prices to First Class on the understanding that First Class would submit a quote with prices that were substantially higher than those submitted by Mr Shingles.
In exchange, Mr Shingles would pay First Class $2,000 by way of an offset against the earlier agreed $10,000. This was then put into effect and Mr Shingles was awarded the job.
MLR and Mr Shingles submitted invoices to First Class for the agreed payments, and these payments were made.
What we did is called bid-rigging. It is a form of illegal cartel conduct. There are very serious consequences for this sort of conduct, as we discovered.
What happened next
The ACCC found out what had taken place and began an investigation.
The ACCC issued notices requiring us to produce information and documents, including texts and emails. They also required us each to attend an examination to give evidence on oath about our conduct.
The ACCC then issued civil proceedings in the Federal Court against both our companies and us personally.
Federal Court case
We each agreed at the earliest stage of the proceedings to admit that we had breached the law and to pay substantial penalties to be imposed by the Court.
Although these penalties took into account the size of our businesses and our financial circumstances, they will take us up to 6 years to pay. We also incurred significant legal costs for our lawyers acting in the ACCC investigation and Federal Court proceedings, which occurred over a total period of 19 months.
And it turns out that we were fortunate. This sort of conduct can be prosecuted criminally, including potential imprisonment. The ACCC can refer serious cartel conduct for prosecution by the Commonwealth Director of Public Prosecutions. We could have ended up with a criminal record.
Lessons to learn from our mistakes
We made very serious mistakes by engaging in illegal bid-rigging, and this has had serious consequences for us, our families and our businesses.
Do not do what we did. Learn from our mistakes and make sure you don't engage in cartel conduct.
Cartel Conduct Generally
It's pretty simple - here is what you need to know about cartel conduct:
• Avoid speaking to your competitors about customers and pricing, including bids for projects.
• Never agree or even try to agree with a competing business on the prices you or they will charge or what discounts will be offered including in tenders or quotes for jobs.
• Never limit the goods or services you or they supply or allocate customers or geographic areas.
• If you are approached by another competing business to discuss arrangements about pricing, customers or bidding, don't get involved and report it to the ACCC.
Some more detail about the law on cartel conduct
Cartel conduct is illegal and is strictly prohibited. The laws about cartel conduct are in the Competition and Consumer Act 2010, which applies to all corporations in Australia, as well as individuals involved in the conduct.
Cartel conduct is when 2 or more competitors agree to:
• fix prices, when competitors agree on pricing instead of competing against each other
• market share, when competitors agree to divide a market between themselves so they don't have to compete
• control output, when competitors agree to limit the amount or type of goods and services available
• rig bids, when suppliers discuss and agree among themselves who should win a tender, and at what price.
Individuals found to have been involved in cartel conduct in cases brought by the ACCC can face a penalty of up to $500,000 for each breach of the law.
Cartel conduct can also be a criminal offence, and individuals prosecuted by the Commonwealth Director of Public Prosecutions can face imprisonment for up to 10 years and/or fines of up to $440,000 per offence.
For corporations, the maximum penalty or fine for each contravention or offence is the greater of $10 million, 3 times the benefit obtained, or (if the value of the benefit cannot be determined) 10% of the annual turnover of the company for the year.
Further information
For questions about this notice, to make an enquiry, or report an issue, please contact the ACCC on 1300 302 021 or visit our website at https://www.accc.gov.au/contact-us/contact-the-accc/make-an-enquiry.
Anyone with information about cartel conduct is urged to call the ACCC Cartel Hotline on (02) 9230 3894. You can provide a tip-off or report cartel conduct anonymously at https://accc-cartels.whispli.com/cartels.
You can also seek immunity from prosecution and ACCC proceedings in exchange for helping the ACCC with its investigations. Remember that if you don't report suspicious activity, others may choose to report your involvement to the ACCC.
[2]
YATES J:
1 This matter is before the Court to consider joint submissions and agreed facts in relation to the making of orders in proceedings commenced by the applicant, the Australian Competition and Consumer Commission, against two companies who are providers of slate roofing in Sydney and surrounding areas, and each company's sole director. The orders are for declaratory relief, pecuniary penalties, injunctions, compliance orders, and disclosure orders.
2 Each corporate respondent - the first respondent, First Class Slate Roofing Pty Limited, and the third respondent, RAD Roofing Specialists Pty Limited (trading as Mr Shingles) - admits that it has contravened s 45AJ of the Competition and Consumer Act 2010 (Cth) (the Competition and Consumer Act) on two occasions by making an arrangement or arriving at an understanding which contains a cartel provision. Each corporate respondent also admits that it has contravened s 45AK of the Competition and Consumer Act on two occasions by giving effect to a cartel provision.
3 The two occasions involved in the s 45AJ contraventions are the two occasions involved in the s 45AK contraventions. The parties refer to the first occasion as the Wesley College Project. This was a significant project in the context of the slate roofing industry, where the value of the work exceeded $1 million. The parties refer to the second occasion as the Bellevue Hill Project. This was a domestic project.
4 The declarations I propose to make recite the essential facts of each contravention. It is sufficient for present purposes for me to simply state that each contravention involved deliberate bid-rigging in relation to tenders for slate roofing projects in the Sydney area. This is egregious commercial conduct which seriously disrupts and corrupts the process of competition.
5 The second respondent, Mr Barton, is the sole director of the first respondent. The fourth respondent, Mr Hand, is the sole director of the third respondent. Each admits to being directly knowingly concerned in, or party to, his company's contraventions.
6 The respondents accept that they benefited from the contravening conduct which, correspondingly, denied their customers the benefit of genuine competitive tender offers, including the opportunity to attempt to negotiate a lower contract price for the roofing services that were provided. The parties accept that the conduct was deliberate and involved aspects of falsification and concealment. The first respondent accepts that, through Mr Barton, it initiated the conduct on each occasion.
7 The Court's consideration of the appropriate orders to be made has been assisted by the filing of a statement of agreed facts by the parties (Exhibit A), and by the filing of supplementary agreed facts by the applicant and the first and second respondents (Exhibit B), and by the applicant and the third and fourth respondents (Exhibit C). In each case, the agreed facts have been tendered in reliance on s 191 of the Evidence Act 1995 (Cth). Each of Mr Barton and Mr Hand has made an affidavit.
8 The Court's consideration of the orders to be made has also been assisted by the parties' reliance on agreed joint submissions. I do not propose to summarise those submissions in these reasons. I will, however, draw attention to the following matters. First, while the parties have reached agreement on the orders that should be made they nevertheless recognise that it remains for the Court to be satisfied as to the appropriateness of those orders. Secondly, the parties correctly draw attention to the fact that, in civil pecuniary penalty proceedings, such as these proceedings, deterrence is the primary objective of the penalties to be imposed.
9 I accept that declarations, in the form proposed by the parties, are appropriate and should be made. In Australian Securities and Investments Commission v MLC Nominees Pty Ltd [2020] FCA 1306; 147 ACSR 266 (ASIC v MLC Nominees) I noted (at [110]):
110 The broad discretionary power to make declarations of right is conferred on the Court by s 21 of the Federal Court of Australia Act 1976 (Cth). Generally speaking, the power is properly exercised when the question in issue is real and not theoretical; when the person raising the question has a real interest in raising it; and where there is a proper contradictor: Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448; as accepted in Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 (Gibbs J) at 437-438.
10 Those requirements are satisfied in the present case. The question of contravention is real, not theoretical; the applicant, as regulator, has a real interest in raising that question; and the respondents are proper contradictors.
11 In ASIC v MLC Nominees, I observed (at [114]):
114 It is also appropriate to recognise the parties' agreement, and in particular the defendants' consent, to making declarations. That agreement and consent was achieved in the context of a partial resolution of the matters in issue in the proceeding. Although the proceeding is one involving the imposition of civil penalties, it is desirable that effect be given to agreements on appropriate civil remedies where the Court is persuaded, sufficiently, as to the accuracy of the parties' agreement as to relevant facts and their consequences, and that what is proposed, by way of relief, is appropriate: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (Commonwealth v Director, Fair Work ) at [57]-[59]. I am satisfied of both matters. It is appropriate that the declarations that are sought, be made.
12 In Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113; 254 FCR 68, the Full Court said (at [93]):
93 Declarations relating to contraventions of legislative provisions are likely to be appropriate where they serve to record the Court's disapproval of the contravening conduct, vindicate the regulator's claim that the respondent contravened the provisions, assist the regulator to carry out its duties, and deter other persons from contravening the provisions: Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2006] FCA 1730; (2007) ATPR 42-140 at [6], and the cases there cited; Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [95].
13 Those observations are apposite to the present case.
14 I accept that this is a case where it is appropriate to impose pecuniary penalties. Based on the matters advanced in the joint submissions, I accept that, even though each respondent is associated with four contraventions, it is appropriate that one pecuniary penalty be imposed on each respondent in respect of those contraventions.
15 The proposed pecuniary penalties are:
(a) in respect of the first respondent, $280,000 payable by bi-annual instalments over six years;
(b) in respect of the second respondent, $60,000 also payable by bi-annual instalments over six years;
(c) in respect of the third respondent, $65,000 payable by monthly instalments over 18 months; and
(d) in respect of the fourth respondent, $15,000 also payable by monthly instalments over 18 months.
In each case, any default in the payment of instalments, which is not remedied within 30 days, will result in the full amount of the penalty, then outstanding, to become immediately due and payable.
16 I accept that, in each case, the proposed penalty is an appropriate penalty in the circumstances. In coming to this conclusion, I have taken into account the deliberateness and other features of the conduct in question to which I have already briefly referred. However, I have also taken into account the fact that:
(a) the benefits which each respondent apparently derived from the contravening conduct appear to have been modest;
(b) each respondent has not previously been found to have engaged in cartel conduct or other conduct that contravenes the Competition and Consumer Act or been involved in other corporate misconduct; and
(c) each respondent agreed to an early resolution of the proceeding by making full admissions, agreeing to statements of facts, and agreeing to participate in the making of joint submissions, all of which have resulted in substantial savings in time and cost for the applicant as regulator, and for the Court.
17 Further, in reaching my conclusion on the appropriateness of each penalty, I have had regard to each respondent's personal circumstances, particularly as revealed through each supplementary statement of agreed facts and the relatively small scale of the parties involved. I have also had regard to the fact that the proposed penalties are part of a suite of measures which include, in addition, the imposition of injunctions, and the imposition of compliance orders and disclosure orders, all of which are directed to future compliance, and specific and general deterrence, including through public disclosure of the offending conduct to other participants in the respondents' industry.
18 For these reasons, I am satisfied that the proposed orders should be made.
I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Yates.
[3]
SCHEDULE OF PARTIES
NSD 1118 of 2021
Respondents
Fourth Respondent: DAMIAN HAND