Tender-rigging cops building automation firm $1.5m fine

government tender

The Federal Court has handed down a $1.5 million fine for Delta Building Automation Pty Ltd (Delta), after it was determined that the company and its sole director had interfered with a tender at the National Gallery of Australia (NGA).

The Australian Competition and Consumer Commission (ACCC) first initiated proceedings against Delta and director, Timothy Davis, in May 2021 after alleging he engaged in “cartel conduct” with a fellow competitor in 2019 related to a tender for the replacement and ongoing maintenance of a computer-based building management system at the gallery – which would control and monitor equipment such as air-conditioning, ventilation, lighting and power.

The Court ruled in favour of the ACCC in August 2023, after it was found that Davis organised a meeting with a competitor representative and offered to pay them in exchange for agreeing to rig the bids during the NGA tender process, either by fixing the price of their bids or ensuring Delta would be selected. Despite rejecting the offer, the competitor was also ordered to pay a penalty of $120,000 by the Court.

“Attempting to bid-rig is 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,” ACCC Commissioner, Liza Carver, 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.”

The Court also imposed restraining orders against Delta and Davis from communicating with other competitors about tenders for building management systems in the Australian Capital Territory for three years. Delta was also ordered to pay the ACCC’s costs of the proceedings and to implement a Competition Law Compliance program.

“The alleged cartel behaviour, involving an attempt to bid rig with a competitor in respect of bids for the tender of a government institution like the National Gallery of Australia, is of particular concern as it had the potential to impact the cost to taxpayers,” ACCC, Chair Rod Sims, said back in 2021.

“It is illegal for any corporation to make or attempt to make cartel arrangements with its competitors. Cartel arrangements usually drive up prices to the detriment of consumers or other businesses and organisations, and are strictly prohibited.”