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On 9 March 2017, the Federal Court of Australia dismissed allegations brought by the Australian Competition and Consumer Commission (ACCC) against Australia’s largest cable manufacturers, Olex Australia Pty Limited (Olex) and Prysmian Power Cables & Systems Australia Pty Limited (Prysmian) (together the Manufacturers), three electrical cable wholesalers, Rexel Electrical Suppliers Pty Ltd (Rexel), Australian regional Wholesalers Pty Limited (ARW) and Lawrence & Hanson Group Pty Ltd (L&H), (together the Wholesalers) and six individual respondents for cartel conduct – a cartel that the ACCC considered so serious that it, in consultation with the CDPP, deliberated prosecuting as a criminal action initially.
The Federal Court also dismissed separate allegations that Rexel and Prysmian engaged in bid rigging in relation to the supply of electrical cable for an upgrade of the Kurnell Refinery in Botany Bay, NSW.
The ACCC alleged that at a meeting of the Electrical Wholesalers Association of Australia (EWAA) on 23 June 2011 where the Wholesalers invited the Manufacturers to attend to discuss potential restructuring of the cable industry, the Wholesalers and Manufacturers together came to an alleged arrangement or understanding which had the purpose of:
The foundation of the ACCC’s principal case concerned an alleged “agreement” where the Manufacturers would increase their fee for cutting services and introduce a minimum order value for the supply of low voltage cable in Australia and the Wholesalers would either not reduce of their purchases of cable from the Manufacturers or, as later argued by the ACCC, not object to these changes.
This agreement was allegedly made during a 23 June 2011 industry association meeting of the EWAA. The alleged purpose of the “agreement” was for the Manufacturers to restrict or limit its supply to contractors and end-users and channel majority of its supply of low voltage cable through the Wholesalers – the effect of which was to manipulate the supply of low voltage cables to contractors and end-users to the Wholesalers.
The ACCC’s case was based mostly on circumstantial evidence derived from a “plethora of documents” sourced from different entities and authors tendered before the Court.
The Court found that the ACCC, despite given leave by the Court to amend its pleadings several times, failed to discharge its onus in proving that all respondents, as pleaded, were party to the alleged agreement as:
The ACCC also failed in proving separate allegations that Prysmian and Rexel reached an agreement or understanding in relation to a proposed tender for the supply of electrical cables at Caltex’s Kurnell Refinery in Botany Bay, NSW that had the purpose of ensuring that Rexel’s bid was more likely to succeed in winning the tender than Prysmian’s bid.
New competition laws will apply to generators and suppliers of electricity as of 10 June 2020.
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