The two companies provided services to ADF bases, including Duntroon. Photo: Royal Military College Facebook.
Two companies that contract to the Department of Defence have been accused of price fixing by Australia’s consumer watchdog, which has initiated court proceedings against them.
Last week, the Australian Competition and Consumer Commission (ACCC) began civil cartel proceedings in the Federal Court against Spotless Facility Services, Ventia Australia and four of their senior executives.
The watchdog said Spotless and Ventia provided services under separate multi-billion dollar contracts to over 200 major Australian Defence Force bases and other properties, including the Royal Military College Duntroon in Canberra.
The contracts are for estate maintenance and operation services.
“The ACCC alleges that on three occasions between April 2019 and August 2022, Ventia and/or Spotless made or attempted to make arrangements or understandings containing provisions which had the purpose, effect or likely effect of fixing, controlling or maintaining the prices at which these services would be supplied to Defence under specific programs of works,” an ACCC spokesperson said.
It is alleged that on various occasions, Spotless gave effect to two of the arrangements or understandings, while Ventia gave effect to one of them.
The alleged conduct “undermined competitive public procurement processes”, a lawyer with the Australian Government Solicitor said in a statement filed with the court on behalf of the ACCC.
“It occurred without Defence’s knowledge and was engaged in by EMOS [estate maintenance and operation services] providers who were trusted suppliers of services to Defence,” the lawyer claimed.
“The Spotless EMOS Contract and the Ventia EMOS Contract are ongoing, and the value of those contracts over their duration are approximately $4 billion and $5.8 billion, respectively.”
The ACCC defines a cartel as a group of businesses that agree to act together instead of competing, while price fixing involves competitors agreeing on pricing.
The two companies also provided services to RAAF bases. Photo: FLTLT Andrew Gill, Department of Defence.
“The allegations in this case relate to alleged conduct by two large, sophisticated companies providing services which are critical to the operation of Australian Defence facilities under longstanding, publicly funded Defence procurement contracts,” ACCC chair Gina Cass-Gottlieb said.
“One of the programs of work that we allege was the subject of a price-fixing agreement related to a program funded by the Australian Government to stimulate work for small to medium enterprises during the COVID-19 pandemic when many individuals and businesses were experiencing financial hardship.”
Four senior executives are also alleged to have been involved in aspects of the claimed conduct.
The ACCC is seeking penalties and costs against the companies and senior executives, as well as disqualification orders against three of the executives.
Spotless Facility Services is a subsidiary of Downer EDI Limited, while Ventia Australia is a subsidiary of Ventia Services Group Limited.
In a statement released on the ASX, Downer said it “categorically denies” the allegations and “will vigorously defend any proceedings”.
“Downer sought to engage with the ACCC in its confidential investigation and thoroughly considered the matters raised by the ACCC,” it said.
“Downer is of the view that neither Spotless nor the two Spotless employees referred to by the ACCC engaged in unlawful conduct.
“Downer is committed to acting in accordance with the standards that have underpinned the longstanding, trusted relationship it has with Defence.”
Ventia also released a statement on the ASX about the allegations.
“Ventia is reviewing the detail of the allegations and at this stage does not intend to comment further on the proceedings or the ACCC’s media statement,” it said.
“Ventia is committed to ethical business practices and seeks to uphold the highest standards of governance and risk management in all our operations. Ventia will continue to focus on delivering high-quality services to all customers.”
While the ACCC has filed its application with the Federal Court, a court date has not been set.
Original Article published by Albert McKnight on Riotact.
