The Australian Competition and Consumer Commission has launched proceedings in the Federal Court against a suite of companies and individuals, including the two largest Australian manufacturers of electrical cable, for alleged cartel and exclusionary conduct.
The ACCC alleges in 2011 electrical cable suppliers Olex, Prysmian, Rexel and L&H entered into an arrangement for the purpose of restricting supply of electrical cables to contractors and other customers, as well as fixing the price of cutting services provided by Olex and Prysmian.
According to the competition watchdog, the conduct primarily involved low voltage electrical cables used within residential and commercial buildings. Olex and Prysmian supply electrical cables throughout the country. However, their manufacturing facilities are largely based in Victoria.
The ACCC alleges cartel conduct mainly occurred at industry association meetings and the Electrical Wholesalers Association of Australia Limited knowingly aided and abetted the conduct in question.
TressCox Lawyers partner Alistair Little told SmartCompany cartel conduct refers to an agreement between competitors who carry out certain activities in “an anti-competitive way”.
“So the two parties that otherwise appear to be competitors do something that is in fact anti-competitive,” Little says.
“It is conduct which almost always happens in secret and is generally regarded as amongst the most damaging anti-competitive conduct that any company can engage in.”
Cartel conduct can take the form of two businesses agreeing to fix their prices or not approach one another’s customers. Little says this issue is something the competition watchdog has indicated is a “permanent priority”.
“There are some matters they [the ACCC] regard as permanent priorities and cartel conduct is one because it is particularly damaging in a small economy where there might not be a large number of competitors,” Little says.
Little points out that the competition watchdog has even managed to convince Federal Parliament to legislate so that serious cartel conduct can result in jail terms.
ACCC chairman Rod Sims said in a statement identifying and prosecuting cartel conduct is a key priority for the competition watchdog because cartels can hurt consumers by driving up prices.
“This alleged cartel spanned most of the major players in the supply chain for electrical cable, so the potential for harm to customers such as electricians and commercial contractors, and therefore ultimately businesses and households, was considerable,” Sims said.
“This case also serves as a warning that the ACCC will act if it suspects an industry association or any other forum is being used as an apparatus for collusion.”
SmartCompany contacted the companies in question and the Electrical Wholesalers Association of Australia but did not receive responses prior to publication.
The matter has been filed in the Federal Court in Melbourne and a directions hearing has been listed for February next year.
Last year a Japanese cable supplier was hit with a $1.3 million fine by the Federal Court in Adelaide for cartel conduct.