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E L E CT R I C AL CONNE CT I ON
AUTUMN 2 01 5
LEGAL MATTERS
Tackling cartel behaviour
T
he Australian Competition and
Consumer Commission (ACCC)
has issued proceedings in the
Federal Court against five companies, six
individuals and an industry association for
alleged cartel and exclusionary conduct
in the supply and acquisition of electrical
cable throughout Australia.
The conduct primarily involves low
voltage electrical cables used within
residential and commercial buildings.
Proceedings have been filed against:
>
Australia’s two largest manufacturers
of electrical cable, Olex Australia and
Prysmian Power Cables & Systems
Australia;
>
The electrical wholesaling businesses
L&H and Rexel;
>
Six senior executives from these
manufacturing and wholesaling
companies; and,
>
Industry association, Electrical
Wholesalers Association of Australia
Limited (EWAA).
Olex and Prysmian supply electrical cable
and other services throughout Australia
from manufacturing facilities largely based
in Victoria and New South Wales.
The ACCC alleges that during 2011, Olex,
Prysmian, Rexel and L&H entered into and
gave effect to an arrangement that included
provisions that had the purpose of:
>
preventing, restricting or limiting the
supply of electrical cable by Olex and
Prysmian directly to contractors and
other customers;
>
allocating electrical contractors and
other customers to the wholesalers;
>
preventing, restricting or limiting the
acquisition of electrical cable by certain
wholesalers from suppliers other than
Olex and Prysmian; and,
>
fixing, controlling, or maintaining the
price of cutting services provided by
Olex and Prysmian.
The alleged conduct mainly occurred at
industry association meetings. The ACCC
is alleging that the EWAA aided, abetted
and/or was knowingly concerned in the
contraventions of the manufacturers and
wholesalers.
The ACCC also alleges that Rexel and
Prysmian engaged in bid rigging by making
and giving effect to a contract, arrangement
or understanding that Prysmian would
submit a higher bid to Caltex than the
price it submitted to Rexel for the supply of
electrical cable for an upgrade of the Kurnell
Refinery in Botany Bay, NSW.
“Identifying and prosecuting cartel
conduct is a key priority for the ACCC
because of the significant damage that
cartels can cause to competitors and
consumers by driving up prices,” ACCC
chairman Rod Sims says.
“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.
“Indeed, the investigation of this matter
was triggered by user complaints.
“At the time the arrangement was
entered into, manufacturers were
supplying not only to wholesalers but also
directly to contractors and end users (such
as industrial companies like BHP and Rio
Tinto), and wholesalers were increasing the
amount of electrical cable they imported.
We allege that the alleged conduct was
entered into to address these issues.
“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.”
It is also alleged by the ACCC that
a senior executive from each of Olex,
Prysmian, Rexel, and L&H aided, abetted,
counselled, procured, induced, and/or
was knowingly concerned in the alleged
conduct of their company.
In addition, the ACCC alleges that two
senior executives from wholesaler CNW
attended EWAA meetings on behalf of the
wholesaler buying group Gemcell, and
were involved in the contraventions by the
manufacturers and wholesalers.
The ACCC is seeking pecuniary
penalties, declarations, and costs against
the companies and individuals, as well as
orders for compliance programs against
the companies.
Directions were heard in court in
February, with a verdict expected in
December 2015.
The ACCC says it has identified
cartel-like behaviour in the
electrical cablemaking industry
and has taken legal action
against those involved.
“Identifying and prosecuting
cartel conduct is a key priority for
the ACCC.”