The Federal Court of Australia has declared by consent that Palram Australia and Ampelite Australia engaged in exclusive dealing conduct with the purpose of substantially lessening competition, and has ordered them to pay penalties totaling $5.5 million.
Palram and Ampelite are two of Australia’s largest distributors of polycarbonate roofing (Polycarb) to retail stores under the brands ‘Suntuf’ and ‘Solasafe’. Polycarb is commonly used to build residential pergolas.
In about 2009, Oakmoore Pty Ltd (trading as EGR) commenced manufacturing Polycarb and, the ACCC alleges, threatened to supply directly to retail stores in competition with Palram and Ampelite.
Palram and Ampelite each admitted that it separately agreed with EGR to acquire Polycarb from it on the condition that EGR would not supply Polycarb to retail stores in competition with it.
Palram and Ampelite each admitted that its conduct had the purpose of substantially lessening competition in the market.
"Exclusive dealing and other anti-competitive practices can prevent potentially lower prices for businesses and consumers, and harms the competitive process. The ACCC considers that the penalties and the banning order imposed by the Court today will send a strong deterrence message to the business community," ACCC Chair Rod Sims said.
The Federal Court declared that Palram and Ampelite each breached the exclusive dealing prohibition in the Competition and Consumer Act (CCA)and ordered:
- Palram pay a $3.5 million penalty and $250,000 towards the ACCC’s costs
- Ampelite pay a $2 million penalty and $100,000 towards the ACCC’s costs
- Mr Hendrikus Verhagen, a director of Ampelite, pay a $100,000 penalty for being knowingly concerned in the conduct of Ampelite
- Ms Talila Horesh, a director of Palram, be disqualified from managing a corporation in Australia for three years, for being knowingly concerned in the conduct of Palram
- both Palram and Ampelite to establish a compliance program to ensure their awareness of their responsibilities and obligations under the CCA.
Ampelite provided significant and early assistance to the ACCC throughout its investigation and sought a resolution at the earliest possible opportunity, which was reflected in the penalty imposed by the Court. Palram also cooperated during the ACCC’s proceedings.
The ACCC’s proceedings against EGR and its director Mr Rodney Horwill are continuing, and a trial is scheduled before the Federal Court in September 2018.
Background
In June 2016, the ACCC instituted civil proceedings against Palram, Ampelite, EGR, Palram Industries, Ms Horesh, Mr Verhagen and Mr Horwill.
The ACCC alleged that the companies made a series of arrangements between 2009 and 2013, which had the purpose of preventing or restricting the supply of polycarbonate roofing, in contravention of the cartel provisions of the CCA.
The pleadings alleged, in the alternative, that the parties contravened the exclusive dealing provisions of the CCA, having regard to the possible application of the anti-overlap provisions. The anti-overlap provisions in the then section 44ZZRS (now section 45AR) of the CCA contains a carve-out for vertical supply relationships. The effect of this anti-overlap is that the cartel laws do not apply where giving effect to a cartel provision in a contract, arrangement or understanding would constitute exclusive dealing.
