ACCC to Take Court Action in Cartel Conduct Case

It has reported that the Australian Competition and Consumer Commission (ACCC) has instituted proceedings in the Federal Court against four companies and three individuals for alleged cartel conduct in relation to the supply of polycarbonate roof sheeting (“polycarb”) to retailers in Australia. Polycarb is commonly used in commercial and home building projects such as pergolas and verandas.

Background to the Case

The ACCC alleges manufacturer EGR did a deal with two big distributors, Palram and Ampelite, under which it would not supply direct to retailers provided the latter two agreed to buy its output and cut back imports.

The proceedings have been instituted against:

• Oakmoore Pty Ltd trading as EGR (EGR);
• Palram Australia Pty Ltd (Palram Australia) and its Israeli parent company, Palram Industries (1990) Ltd (Palram Industries);
• Ampelite Australia Pty Ltd (Ampelite);
• Talila Horesh, a director of Palram Australia and a senior manager of Palram Industries;
• Rod Horwill, a director of EGR; and
• Hendrikus Verhagen, a director of Ampelite.

Palram Australia and Ampelite are two of Australia’s largest distributors of polycarb to retailers, including hardware stores and construction companies. EGR commenced manufacturing polycarb in 2008.

The ACCC alleges that over a five year period from 2008 until 2013, the listed companies made and gave effect to a number of cartel arrangements which had the purpose of preventing or restricting the supply of polycarb to retailers. The ACCC also alleges that these agreements had the purpose and likely effect of substantially lessening competition.

The Particulars of the Alleged Breach

The ACCC alleges that from late 2008, EGR had discussions with Palram Australia and Ampelite about supplying them with polycarb. EGR indicated that it would supply polycarb direct to retailers in competition with Palram Australia and Ampelite, unless it could obtain sufficient supply commitments from them. In response, it is alleged that Palram Australia and Ampelite each agreed that they would purchase polycarb from EGR to avoid this competition and a likely reduction in prices and their margins.

It is alleged that subsequent to this, Palram Australia and Ampelite each made agreements with EGR to buy minimum quantities of polycarb and EGR agreed that it would not commence supplying polycarb directly to retailers. It is also alleged that Palram Australia and EGR again made similar arrangements in 2010 and 2012 and Ampelite and EGR attempted to make further arrangements in 2012 and 2013.

In the action taken against Talia Horesh from Palram, Rod Horwill from EGR and Hendrikus Verhagen from Ampelite, the ACCC alleges they were knowingly concerned with the agreement. It is also alleged that the agreement avoided competition and hence the chance of a cut in prices and subsequent reduced margins.

The ACCC is seeking declarations, pecuniary penalties against the companies and individuals, orders disqualifying the individuals from managing corporations, orders for competition law compliance programs and costs.

Comment from the consumer watchdog

The ACCC Chairman Rod Sims said:

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ACCC still yet to take criminal action in cartel case – theaustralian.com.au

ACCC takes action against alleged cartel conduct in the polycarbonate roofing industry - ACCC Release MR 114/16