The Federal Court has today ordered the Construction, Forestry, Maritime, Mining and Energy Union (CFMEU) and construction company J Hutchinson Pty Ltd (Hutchinson) to pay penalties of $750,000 and $600,000 respectively for boycott conduct in breach of competition laws, in proceedings brought by the ACCC.
This follows the Court’s earlier finding that the CFMEU and Hutchinson entered into an agreement to boycott a waterproofing subcontractor at a Brisbane building site, meaning the subcontractor could no longer perform the work.
The penalty imposed on the CFMEU is the maximum penalty that could be imposed for the CFMEU’s contravening conduct in this case.
“Given the penalties available for breaches of the boycott provisions, the Court’s decision should send a strong deterrence message to the union and Hutchinson, as well as to other businesses, that boycott conduct is illegal,” ACCC Chair Gina Cass-Gottlieb said.
In her judgment imposing these penalties, Justice Downes said the conduct of the CFMEU was to be regarded as another instance of its “pursuit of a strategy of deliberate recalcitrance in order to have its way” and that “its determination to adhere to its strategy of requiring subcontractors on construction sites to have an EBA in defiance of the law is a significant consideration”.
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In 2016, Hutchinson engaged Waterproofing Industries Qld Pty Ltd (WPI), an independent waterproofing contractor, on the Southpoint A Apartments construction project in Brisbane. Shortly after WPI began supplying services, the CFMEU informed Hutchinson that it would not permit WPI to work on the Southpoint Project because it was not covered by an enterprise bargaining agreement (EBA) with the CFMEU.
The Court found that Hutchinson and the CFMEU reached an agreement that Hutchinson would no longer acquire waterproofing services from WPI and that Hutchinson would terminate WPI to avoid conflict with, or industrial action by, the CFMEU at the site. Another waterproofing contractor which did have an EBA with the CFMEU was later engaged on the site.
The Court also held that the CFMEU induced Hutchinson’s contraventions by threatening or implying that there would be conflict with, or industrial action by, the CFMEU if Hutchinson did not stop using the subcontractor.
“This type of conduct not only impacts the targeted company, but also competition in the industry more generally and is likely to inflate the cost of construction projects,” Ms Cass-Gottlieb said.
The Court also made other orders including CFMEU publishing the outcome of the Court’s decision on its website and the CFMEU and Hutchinson to pay the ACCCs costs of the proceedings.
Background
Hutchinson is one of Australia’s biggest privately owned construction companies with over $2.5 billion worth of projects annually.
The Construction, Forestry, Maritime, Mining and Energy Union is a trade union organisation that represents over 65,000 member employees in a number of industries including the construction industry. At the time of the alleged conduct it was known as the ‘CFMEU’, and today as the ‘CFMMEU’.
On 4 December 2020 the ACCC instituted proceedings against Hutchinson and the CFMEU.
On 14 February 2022 the Federal Court found that by making and acting on the agreement, Hutchinson contravened sections 45E and 45EA of the Competition and Consumer Act, which prohibit contracts, arrangements or understandings for the purpose of preventing or hindering the acquisition of goods or services from a supplier, which is also referred to as a boycott.
The CFMEU was found to have been knowingly concerned in, or party to, the contraventions of sections 45E and 45EA by Hutchinson. The Court also found that the CFMEU induced Hutchinson’s contraventions by threatening or implying that there would be conflict with, or industrial action by, the CFMEU if Hutchinson did not stop using the particular subcontractor.
The ACCC was assisted by the Australian Building and Construction Commission during the course of its investigation. The ACCC and the ABCC signed a Memorandum of Understanding in 2017, which was extended in 2021.
