The first decision to apply the latest amendments of the anti-cartel competition laws have resulted in damages of $22.4 million awarded to Norcast in an action against Bradken Limited for bid rigging and misleading and deceptive conduct. Two of Bradken’s directors, including former NSW Premier Nick Grenier were found accessorily liable. Significantly, the relevant conduct occurred outside Australia.
The full case can be found here.
On 6 July 2011 Norcast sold its portfolio company Norcast Wear Solutions, Inc (NWS) to Castle Harlan, a New-York based private equity fund for $US190 million. Approximately seven hours later, Castle Harlan sold NWS to Bradken for $US212.4 million. Norcast alleged that the events of 6 July 2011 were the result of a bid rigging arrangement between Bradken and Castle Harlan, whereby Castle Harlan agreed to bid for NWS (and subsequently sell the shares in NWS to Bradken) and Bradken agreed not to bid for NWS in contravention of the cartel provisions of the Competition and Consumer Act.
Norcast further alleged that Bradken and Castle Harlan had engaged in misleading and deceptive conduct during the course of the NWS sale process.
The Court had to consider whether:
- there had been ‘a request for bids in relation to the supply or acquisition of goods or services’;
- but for the bid rigging arrangement, it was likely that Bradken and Castle Harlan would have been in competition with each other in relation to the acquisition of NWS; and
- Bradken and Castle Harlan made or arrived at, and gave effect to, a bid-rigging arrangement in relation to bidding for NWS, which contained a provision that had the purpose of ensuring that Castle Harlan would bid for NWS, and Bradken would not.
The Court found that even though the arrangement was informal, Bradken and Castle Harlan had entered in a bid rigging arrangement. Evidence, including communications between Bradken and Castle Harlan, demonstrated that Castle Harlan had agreed to bid, at Bradken’s suggestion and with Bradken’s assistance.
Misleading or deceptive conduct
The Court found that Bradken and Castle Harlan had breached the anti-cartel conduct laws of the Competition and Consumer Act for failing to disclose the existence of their bidding arrangement with Norcast. The Court found that beyond misleading silence, Bradken and Castle Harlan had made deliberate efforts to conceal Bradken’s involvement in the purchase (including the destruction of paper trails).