ACCC warns construction industry on cartel behaviour

The competition watchdog has contacted 2,500 building industry executives in the past few weeks, warning them of the potential consequences of engaging in price cartel behaviour.

Australian Competition and Consumer Commission chair Rod Sims revealed the move in a speech to the Competition Law Conference, saying many businesses are still unaware that price-fixing or agreeing to restrict supply constituted cartel activity.

Sims also warned the banks about price-signalling ahead of a change to the Competition and Consumer Act that outlaws such practices.

Sims was contacted this morning, but was unavailable to reply prior to publication.

The announcement surprised the building industry; with representatives of industry bodies contacted by SmartCompany this morning saying they were not aware the speech had been made.

However, Brian Welch, chief executive of Master Builders’ Association Victoria, says he has no knowledge of any cartel behaviour occurring in the past 15 years.

“I think if you look at the profit margins of these larger businesses, they’re really quite low, so this doesn’t necessarily smack of higher margins where you’d imagine cartels would be successful.”

“Obviously, we would certainly oppose such behaviour and we’d do anything to stop it.”

Sims said in the speech the organisation is currently investigating a number of important cartel operations, including some that could contain criminal conduct. However, he said the executives who had been contacted would be given a choice.

“We’ve written to 2,500 executives in the last few weeks - in the heavy construction and construction supply industries - providing a reminder about the potential sanctions for cartel conduct, and alerting them to our dedicated web pages.”

“We also provided the name of someone they can contact if they want to report their involvement in a cartel and apply for immunity.”

Sims said the letters were part of a move by the watchdog to raise awareness of cartels. However, no actual companies were named, and industry bodies suggest the organisation is keen to hit the top end of town, rather than smaller operators.

Sims also pointed to the organisation’s own research, which showed 58% of respondents don’t know that cartel conduct is a criminal offence.

“And, amazingly, although 42% of businesses were aware that cartel conduct is now a criminal offence, almost one in 10 of the survey respondents admitted they’d still be likely to join a cartel if the opportunity arose.”

“You will see further high-profile initiatives from the ACCC in this area.”

Sims also put the major banks on notice, saying that under new regulations it will be against the law to disclose prices to competitors in private when it’s not “in the ordinary course of business”.

This article originally appeared on SmartCompany.