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December 3, 2017
There are a large number of vigorous and effective competitors in the Australian construction industry. These firms may independently compete or form consortiums with local or international construction firms to tender for Australian construction projects.
The Australian Competition and Consumer Commission pays special attention to the construction industry and promotes competition and fair trade in markets to benefit consumers, businesses, and the community. It also regulates national infrastructure services. Their primary responsibility is to ensure that individuals and businesses comply with Australian competition, fair trading, and consumer protection laws–in particular the Competition and Consumer Act 2010.
Although international construction firms do not generally tender independently for Australian construction projects, these international competitors act as joint venture or consortium partners with Australian construction firms to provide financial resources, project management, and technical expertise.
The ACCC is currently prioritising anti-competitive conduct in commercial construction markets and has established a Commercial Construction Unit (CCU), focused on the construction sector. This is a specialist team that has been set up to investigate allegations of anti-competitive conduct in the commercial construction sector. The focus is on the behaviour of participants in the construction industry that may raise competition concerns under the Competition and Consumer Act 2010 (CCA).
Their role in the commercial building and construction industry is to detect, investigate and stop:1. Anti-competitive behaviour including:
Serious cartel conduct, such as bid rigging, market sharing, and price fixing
Agreements or concerted practices which substantially lessen competition
misuse of market power e.g.predatory pricing
2. Unfair contract terms
Small businesses are protected from unfair contract terms in standard form contracts. The law applies if at least one of the parties is a small business (employs less than 20 people) and the upfront price payable under the contract is no more than $300 000 or $1 million if the contract is for more than 12 months.
3. Unconscionable conduct
The ACL prohibits businesses from engaging in ‘unconscionable conduct’ in their dealings with consumers and other businesses.
The ACL provides that a person must not use physical force, undue harassment or coercion in connection with the supply of goods and services. Coercion involves force or compulsion or threats of force or compulsion negating choice or freedom to act.
Given the wide-ranging responsibilities of the ACCC, the regulator must effectively allocate teams to conduct that not only results in great consumer detriment but that may also act as a deterrent to other market participants.
Further, the ACCC immunity and cooperation policy for cartel conduct sets out their policy in relation to applications for immunity from proceedings by those involved in cartel conduct, and how cooperation provided to the ACCC by cartel participants will be recognised. Cartel conducts, such as price fixing, anti-competitive agreements, and attempts to bring about collusive arrangements, are matters of grave concern to the ACCC.
2017 has seen the ACCC enforcement teams hone in on misleading and deceptive practices, anti-competitive conduct and unfair contract terms affecting small businesses. Clear priorities will be unfair contract terms, cartels, and misconduct in the health, construction, and agriculture sectors.
There are around 65 investigators in each of its competition and consumer enforcement teams, around 40 consumer product safety experts, and around 15 working on compliance education for consumer and small business.
For instance, The Australian Competition and Consumer Commission was most recently made aware of serious allegations and evidence presented to the Royal Commission into Trade Union Governance and Corruption concerning alleged cartel conduct in the construction industry in the ACT, particularly concreting and scaffolding. Under the Competition and Consumer Act (2010), there are civil and criminal penalties for cartel conduct.
The ACCC does a lot of educating and working with businesses, large and small, on compliance with laws that are set up to ensure the market economy runs as it should, to the benefit of living standards and household budgets.
Education plays an important role in compliance, but sometimes there is a need to send a stronger message to businesses. The ACCC Compliance and Enforcement Policy will prioritise and consider around 500 of the approximately 200,000 reports of potential breaches of the CCA the Competition and Consumer Act received each year from consumers and businesses. This, in turn, leads to court action around 30 times per year.
Matters are also referred to state and territory fair trading agencies and ombudsman services. In some cases, police agencies are best placed to handle issues or complaints.
Effective competition in the construction sector means ethics for all businesses. It is important that all businesses can vigorously compete for work on their merits, are not subject to unfair contract terms or the unconscionable or coercive conduct of others.
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