Allegations of Cartel Conduct in the Canberra Construction Industry
Friday 31 July 2015 @ 8.41 a.m. | Industrial Law | Legal Research | Trade & Commerce
The Australian Competition and Consumer Commission (ACCC) is aware of serious allegations and evidence presented to the Royal Commission into Trade Union Governance and Corruption concerning alleged cartel conduct in the construction industry in Canberra, particularly concreting and scaffolding.
Background
During July 2015, the Royal Commission heard allegations of price fixing in the Canberra scaffolding industry as well as claims the Construction, Forestry, Mining, and Energy Union (ACT Branch) (the CFMEU) ran a "dictatorship".
As reported in the AFR, evidence to the Royal Commission suggests that the union and building industry operated a cartel in Canberra that sought to control prices through monopoly agreements and physical intimidation.
As well as allegations of corrupt payments made in cars, cafes and restaurants, the commission heard companies say they were told they could not get building contracts unless they signed agreements with the union. Evidence has been given that employers sought to appease the union by paying union memberships even when the employees did not want to join.
The Cartel Allegations
In an opening statement to the Canberra hearings, the Commission's barrister alleges that the CFMEU encouraged employers to sign an enterprise agreement as a group and were told to agree to common minimum prices to ensure they would remain profitable despite paying generous wages - a classic example of a union-employer cartel.
CFMEU Denies Allegations
The National Secretary of the CFMEU's Construction Division, Dave Noonan, denied the union engaged in price-fixing:
"We have no interest in price fixing. We do try and set minimum standards for wages and conditions of workers. That's kind of what unions do. If there has been any cartel-like behaviour, the union doesn't encourage it, doesn't support it. It's a breach of the Trade Practices Act and if employers have engaged in it then the Master Builders should report to the Australian Competition and Consumer Commission which of their members have been engaging in cartel activity."
Reaction from the ACCC
ACCC Chairman Rod Sims said:
“Cartel conduct such as price fixing, anti-competitive agreements and attempts to bring about collusive arrangements are matters of grave concern to the ACCC. The ACCC will be looking closely at the allegations. Our enquiries will be conducted by the specialist team we have recently established to look at similar allegations in the construction industry arising from the Royal Commission into Trade Union Governance and Corruption.”
Under the Competition and Consumer Act 2010 (Cth) there are civil and criminal penalties for cartel conduct.
The ACCC does not generally comment on its investigations, but considered it was appropriate in this case due to the public nature of the allegations.
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Sources:
How the CFMEU captured control of Canberra's building industry – Article from afr.com
ACCC fears cartel conduct in Canberra construction industry – Article from canberratimes.com.au
Alleged cartel conduct in the Canberra construction industry - ACCC Release MR 136/15
