Three construction companies were found to have engaged in “cover pricing” in relation to tenders for four separate government construction works projects in Queensland between 2004 and 2007.1
In concluding that the conduct of the companies had amounted to a breach of the law that applied at the time of the conduct (under the then Trade Practices Act 1974 (Cth) (TPA)), Logan J found that seeking and communicating a “cover price” between the companies concerned made it more likely than not that the companies came to an arrangement or understanding to control price, a form of collusive tendering.
The Court commented that whilst tender prices were not fixed, “they were controlled by an agreed ceiling in respect of the person giving the cover price; and an agreed floor in the case of the person requesting and receiving the cover price” with the requester and receiver of the cover price bidding above the floor and the giver of the cover price, bidding below the ceiling.
This, the Court held, was sufficient to meet the requirements of the then TPA given that an “arrangement” or “understanding” had been made out and the behaviour could be categorised as price-controlling behaviour for the purposes of the then section 45A. Section 45A was repealed on 24 July 2009 and replaced by prohibitions against cartel conduct in Division 1 of Part IV of the Competition and Consumer Act 2010 (Cth) (CCA). These prohibitions continue the pre-existing ban on price-fixing, price-controlling and price-maintaining behaviour. There is now also a specific prohibition on forms of bid rigging. It may be that had the conduct occurred after 24 July 2009, the case would have been run as a specific bid rigging case.
The Court also found that the conduct was misleading and deceptive2 because each of the companies expressly or impliedly represented during the tendering process that it had: no connection, knowledge or arrangements with any other tenderer in respect of the tender; and no knowledge of the price of any other tenderer at the time of the submission of the tender.