Australian Commission Fines Companies for Scrap Metal Price Fixing

Five Australian companies and nine individuals have been penalized a total of $485,000 for cartel behavior involving price fixing and boycotts in the NSW scrap metal market. The fines were handed down by a Federal Court in Sydney, Australia. The ruling was made Dec. 9. Costs of more than $100,000 have also been ordered.

The Australian Competition and Consumer Commission began proceedings in December 2001 alleging that throughout 1999 collusive conduct occurred at scrap metal auctions in NSW.

It alleged that the respondents formed groups at auctions, known as “rings” and gave effect to agreements, that restricted the acquisition of scrap metal from auctioneers and had the purpose or likely effect of fixing, controlling or maintaining the price of scarp metal at the auction. The auctioneers were unaware of the ring.

The respondents met later to hold a second auction, known as a 'knock', to allocate the group's purchase.

In her ruling, Justice Annabel Bennett noted that but for the operation of the ring and the 'knock', the ring members would have been in or would likely to have been in competition with each other to acquire scrap metal at the auctions.

Evidence was given by witnesses that the rings had operated at scrap metal auctions in NSW for decades.

Many of the individuals and companies made voluntary admissions they had engaged in boycotts and price fixing in breach of sections 4D and 45A of the Trade Practices Act 1974. Several also admitted to having engaged in misleading and deceptive conduct in breach of section 52 of the Act. One company and three individuals contested the matter and the court found against them for price fixing and boycotts.

Injunctions were granted to restrain the parties from engaging in the conduct in future. Orders were also made for a contribution to the ACCC's costs.

One of the individuals had refused to attend court at any stage over a two-year period. Justice Bennett consented to the ACCC request that orders be made against the individual noting that a thorough attempt had been made to inform the respondent of the proceedings and to serve all documents required to be served by the court.

"People engaged in business regardless of their size needed to be aware of their obligations under the Trade Practices Act", said Graeme Samuel, ACCC chairman. “As I’ve stated at length, cartel behavior is not acceptable. Cartels will be pursued relentless by the ACCC, prosecuted with vigor and substantial penalties sought against offenders through the courts".

Commenting on Justice Bennett's statement in her decision that the parties were not aware that they were breaking the law with their activity Samuel said: "In recent years the ACCC has greatly increased its Small Business Program which provides information to small business people about their responsibilities under the Trade Practices Act and the protection it provides".