The Full Federal Court has today unanimously dismissed appeals brought by Delta Building Automation Pty Ltd (Delta) and its sole director, Mr Timothy Davis, against earlier findings that they attempted to rig a tender at the National Gallery of Australia.
This upholds the Federal Court's finding on 1 August 2023 that Delta and Mr Davis attempted to induce a competitor to make an arrangement or arrive at an understanding to submit an anti-competitive bid for the National Gallery of Australia's building management system tender. Delta and Mr Davis were ordered to pay penalties of $1.5 million and $120,000 respectively for this attempt.
"Cartel arrangements, such as bid rigging, often inflate costs for consumers or other businesses and are a serious breach of the law. It is important for Australian businesses to understand that even an attempt to enter into a cartel is illegal, whether the attempt is successful or not," ACCC Deputy Chair Mick Keogh said.
The Full Court upheld the trial judge's findings that in late 2019, Mr Davis organised a meeting at a café in Canberra with the general manager of one of Delta's competitors and offered to pay the competitor in exchange for agreeing to the proposed arrangement to rig the bid.
The attempt to rig the tender was unsuccessful because the competitor rejected his offer. The National Gallery was not involved in or aware of the conduct at the time and did not suffer any losses.
"This decision, and the penalties imposed on Delta and Mr Davis, serve as a reminder of the significant consequences facing businesses and representatives who engage in or attempt to induce cartel conduct, even where the attempt fails. The conduct in this case is especially concerning, given that the tender involved was taxpayer funded," Mr Keogh said.
"It is crucial for all businesses, large or small, to ensure that any discussions they have with competitors do not propose or lead to arrangements which may interfere with the competitive process, such as bid-rigging and other cartel conduct."
Background
On 13 May 2021 the ACCC instituted civil proceedings in the Federal Court against Delta and Mr Davis.
On 1 August 2023 the Federal Court found that Delta and Mr Davis attempted to rig a bid in connection with a tender conducted by the National Gallery of Australia for the replacement of its building management system.
On 4 June 2024 the Federal Court ordered Delta and Mr Davis to pay penalties of $1.5 million and $120,000 respectively.
On 2 July 2024 Delta and Mr Davis filed a Notice of Appeal from the liability judgment.
Delta is an ACT based company that designs, installs, and maintains building management systems. Delta is part of a group of companies which operate nationally as the exclusive Australian distributor for the Delta Controls brand of building management systems.
A building management system is a computer-based system installed to manage and monitor a building's equipment such as air-conditioning, ventilation, lighting, and power systems.
Bid rigging, also known as collusive tendering, occurs when suppliers discuss and agree among themselves who should win a tender, and at what price.
Price fixing happens when competitors agree on pricing instead of competing against each other.
More information about different types of cartel conduct can be found on the ACCC's website at Cartels.
Note
The ACCC investigates cartel conduct, manages the immunity process and, in respect of civil cartel contraventions, takes proceedings in the Federal Court.
For corporations, the maximum fine for each cartel contravention before 9 November 2022 is the greater of:
- $10 million,
- three times the total benefits that have been obtained and are reasonably attributable to the commission of the offence, or
- if the total value of the benefits cannot be determined,10 per cent of the corporation's annual turnover connected with Australia.
An individual found to have been involved in civil cartel conduct before 9 November 2022 is subject to a maximum penalty of $500,000 for each act or omission.
The maximum fines and civil penalties for cartel conduct by corporations were substantially increased with effect from 9 November 2022.
Anyone who thinks they may be involved in cartel conduct is urged to call the ACCC Cartel Immunity Hotline on (02) 9230 3894. More information about the immunity process is available on the ACCC website at Cartels.
Suspected cartel conduct can also be reported by using the ACCC's anonymous cartel portal, or by using the ACCC's online form to make a general enquiry.
