One of the largest building automation companies in Canberra has been fined $1.5 million by the Federal Court for attempting to rig the tender process to upgrade the building management system at the National Gallery of Australia.
The Australian Competition and Consumer Commission instituted civil proceedings in the Federal Court against Delta Building Automation Pty Ltd and its sole director, Timothy Davis, in May 2021. The finding was published this week.
The court was told how Mr Davis organised a meeting in a Canberra café in December 2019 to discuss the bid rig with one of Delta's competitors.
Bid rigging, also known as collusive tendering, happens when suppliers discuss and agree among themselves who should win a tender, and at what price. The maximum penalty which can be imposed is $10 million per contravention.
Mr Davis, who was unable to be contacted by The Canberra Times for comment on Wednesday, was also ordered to pay a penalty of $120,000 for his role.
The court found that at that meeting in the cafe, Mr Davis, on behalf of Delta, offered to pay a competitor in exchange for agreeing to rig bids in a 2019 tender process conducted by the NGA.
As the competitor's general manager rejected Mr Davis's offer, the attempt to rig the tender was unsuccessful.
The NGA was at no fault in the process, with the capital works project director at the NGA providing an affidavit in which he expressed the importance of the project to protect the art collection.
The finding is hugely embarrassing for the multi-national company which has won a number of large and lucrative multimillion dollar contracts around the ACT including the massive environmental management system for the 55,000-square-metre Canberra Airport Terminal building.
A contractor who works in the building automation industry but who declined to be named said that the commercial and reputational damage to the company will be enormous given that Delta has been such a dominant player in the ACT, delivering "end-to-end" contracts which included all maintenance and call-outs.
A building management system is a computer-based system installed to manage and monitor a building's equipment such as air-conditioning, ventilation, lighting, and power systems.
Federal Court Justice Robert Bromwich also ordered that Delta "be restrained from communicating with or to any competitors or potential competitors, either directly or via a third party, the tender price or terms or any proposed tender price or terms for any upcoming or ongoing tender for the installation, replacement or ongoing maintenance of a building management system in the ACT for a period of 3 years".
Mr Davis also had the same three-year restraint imposed upon him.
The court documents detailed how the meeting between the executives of the competing companies was brief and once the offer by Mr Davis to rig the tender was rejected, it wasn't pursued further.
"That the attempts failed so quickly does not stand to Mr Davis' credit, but it is still the case that it was not a protracted effort which in turn may have fed into the analysis of what might be a necessary penalty for deterrence purposes," Justice Bromwich said in his findings.
It was not disclosed what financial compensation was offered for the competitor to "run lame" in the tender.
ACCC Commissioner Liza Carver said that attempting to bid-rig was "a serious breach of our competition laws".
"This conduct in this case is particularly concerning, as it involved a tender for works being paid for with taxpayers' money," she said.
"This case should be a strong reminder to all businesses that engaging in any form of cartel conduct, including attempts that do not ultimately succeed, can lead to severe consequences."
