The Federal Court examined a company involved in a tender process at the National Gallery of Australia. Photo: Federal Court of Australia.
An appeals court has upheld the finding that a company tried to rig a tender at Canberra’s National Gallery of Australia (NGA) for which it was fined $1.5 million.
Last year, the Federal Court found that Delta Building Automation Pty Ltd and its sole director, Timothy Dixon Davis, had engaged in attempted cartel conduct in relation to the tender for the replacement of a building management system at the gallery.
This attempt was found to have taken place during a meeting at a Canberra coffee shop in 2019 between Mr Davis and the general manager of one of Delta’s competitors.
As previously reported, the Federal Court found Davis tried to bribe the general manager in exchange for agreeing to rig bids in the 2019 tender process. The manager rejected Davis’s alleged offer.
The court ultimately handed fines of $1.5 million to Delta and $120,000 to Mr Davis.
Delta and Mr Davis appealed, challenging the reasoning process and conclusions of the court’s judge on the findings.
They argued Mr Davis did not propose to control the outcome of the tender process during the meeting, nor say the general manager’s company should not make a bid.
Additionally, they argued that Mr Davis did not specify the precise ways in which the bid could have been rigged.
Last week, three appeal judges on the Federal Court said the general manager reported the alleged details of the meeting to the original judge.
“Look mate, I know you’ve had a long association with the gallery,” the manager said Mr Davis told him.
“To appease you, I would like to offer you a payment so that you are not wasting your time.
“The tender is going to be released early in the New Year. There will only be two tenderers and I am confident to win even from second place.”
The appeal judges said the inference was that Mr Davis’s “statement of confidence” was intended to undermine the general manager’s belief that his company could win the tender. That would make him more amenable to accepting a payment to not bid by suggesting his company was going to lose anyway.
The judges said when Mr Davis made the offer of payment to the general manager at the meeting, “By making that offer, Mr Davis had unequivocally crossed the Rubicon and burnt his boats”.
The judges stated that no error had been established, dismissed the appeal, and ordered Delta and Mr Davis to pay the Australian Competition and Consumer Commission’s (ACCC) legal costs of the appeal.
“The inchoate status of the proposal did not have the necessary consequence that Mr Davis could not have knowledge of the essential facts that would have rendered the alleged arrangement or understanding unlawful,” they said.
The ACCC’s deputy chair, Mick Keogh, said cartel arrangements, such as bid rigging, often inflate costs for consumers or other businesses and constitute a serious breach of the law.
“This decision, and the penalties imposed on Delta and Mr Davis, serve as a reminder of the significant consequences facing businesses and representatives who engage in or attempt to induce cartel conduct, even where the attempt fails,” he said.
“The conduct in this case is especially concerning, given that the tender involved was taxpayer-funded.
“It is crucial for all businesses, large or small, to ensure that any discussions they have with competitors do not propose or lead to arrangements which may interfere with the competitive process, such as bid-rigging and other cartel conduct.”
An ACCC spokesperson stated that the NGA was not involved in or aware of the conduct at the time and did not incur any losses.
A building management system is a computer-based system that monitors and controls the internal environment of buildings.
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