Roofing cartel hit with $420k penalty

·2-min read

The Federal Court has hit two roofing companies with $420,000 in total fines, ordering them to send out a warning to others not to engage in illegal cartel conduct.

"Don't do what we did - rigging bids for roofing projects is illegal!" a Federal Court-ordered letter by First Class Slate Roofing and RAD Roofing Specialists begins.

On Wednesday, Justice David Yates ordered the notice and penalties after the two firms admitted the cartel conduct and contravening consumer law.

First Class and RAD Roofing engaged with a third firm MLR Slate Roofing to put in fake bids for the tender of the re-roofing of Wesley College at University of Sydney and a residential home in Sydney's affluent suburb of Bellevue Hill in 2019.

They would take turns putting in higher bids than one chosen firm, so that company would obtain the tender. The two losers would then be paid a commission in return.

"What we did is called bid-rigging. It is a form of illegal cartel conduct. There are very serious consequences for this sort of conduct, as we discovered," First Class and RAD Roofing wrote.

"Our businesses have suffered reputational damage as a result of publicity about the case, and our illegal conduct will be permanently on the record."

After an investigation, the Australian Competition and Consumer Commission launched the lawsuit in October last year.

Justice David Yates fined First Class $280,000 and its director Scott Barton $60,000. RAD Roofing will have to pay $65,000 while its sole director Damian Hand will have to pay $15,000.

"I accept that, in each case, the proposed penalty is an appropriate penalty in the circumstances," the judge wrote.

The benefits obtained by the illegal conduct was "modest" and the firms and their directors had admitted the breaches at the earliest possible opportunity, Justice Yates added.

Due to the small size of the businesses, the amounts will be paid in instalments over up to six years.

ACCC Commissioner Liza Carver said the court had accepted that the deliberate cartel involved falsification and concealment which denied customers the benefit of genuine competitive tender offers.

"Cartel conduct, including bid rigging as was engaged in by these firms and individuals, distorts and corrupts the competitive process and denies customers the benefits of fair competition," she said.