Cement companies fined $18.62m for anti-competitive conduct
The Federal Court in Brisbane, Australia has ordered four cement companies pay more than $18 million in penalties for anticompetitive conduct.
The court in Brisbane found the companies prevented competition in the concrete market when they entered into contracts with power stations in south-east Queensland to acquire a product called “flyash”. Flyash is a by-product of burning black coal at power stations and can be used as a cheap substitute for cement in concrete. The corporations, Cement Australia Pty Ltd, Cement Australia Queensland Pty Ltd, Pozzolanic Enterprises Pty Ltd, and Pozzolanic Industries Pty Ltd, entered into the contracts between 2002 and 2006, in breach of the then Trade Practices Act 1974.
No allegations were made against the power stations involved in the contracts, the Millmerran, Tarong, Tarong North, and Swanbank stations. The Australian Competition and Consumer Commission (ACCC), which brought the proceedings against the companies in 2008, said a fine of $90 million would have been more sufficient.
“I’m afraid for companies of this size and the nature of the behaviour and the importance of it to the companies, I’m afraid $18 million could be seen as just the cost of doing business,” ACCC chairman Rod Sims said. “We really do need to get higher penalties to get appropriate deterrence.
“The behaviour that was being undertaken was excluding competitors, that’s very damaging for the Australian economy, and the productivity of the Australian economy, so it’s important this sort of behaviour does not occur.”
In his judgement against the cement companies, Justice Greenwood found they had such a substantial market share, and exercised such a substantial degree of influence on pricing in the local market for concrete grade flyash, that the impact of new competition in the market would have been significant.
The Federal Court ordered the companies pay a total of $18,620,000 in penalties.
The ruling follows an $18 million fine imposed on Colgate-Palmolive for cartel conduct, over the price and supply fixing of laundry detergents.