Federal Court finds Delta and its director attempted to rig National Gallery of Australia tender

The Australian Competition & Consumer Commission (ACCC) has advised that the Federal Court found Delta Building Automation Ltd (Delta) and its sole director, Timothy Davis to have attempted to rig a bid in connection with a tender conducted by the National Gallery of Australia for the replacement and ongoing maintenance of its building management system.

In December 2019, Davis organised a meeting at a café in Canberra with the general manager of one of Delta’s competitors. The Court found that during the meeting Davis attempted to induce the competitor to enter into an arrangement or understanding, so that Delta was more likely to be successful in winning the tender.

The Federal Court found Davis offered to pay the competitor in exchange for agreeing to the proposed arrangement which would have rigged the bid for the National Gallery’s building management system tender.

A building management system is a computer-based system installed to manage and monitor a building’s equipment such as air-conditioning, ventilation, lighting, and power systems.

According to the ACCC, the attempt to rig the tender did not succeed because the competitor’s general manager rejected Davis’ offer.

ACCC Chair Gina Cass-Gottlieb advised “The attempt by Delta and Mr Davis to bid rig for the tender of a government institution like the National Gallery of Australia is a serious matter as it had the potential to increase the cost of the project to taxpayers.

“Attempting to agree to the terms of bids with competitors, just like agreeing to share markets or allocate customers, is anti-competitive conduct which is against the law. Bid rigging damages markets by driving up prices to the detriment of consumers, other businesses or taxpayers.

“Businesses must be vigilant when they are dealing with competitors to ensure that any discussions do not propose or lead to anti-competitive arrangements, including cartel conduct.”

The ACCC does not allege any involvement by the National Gallery of Australia in the conduct of Delta or Davis, and it ultimately did not suffer any losses.

On 13th May 2021, the ACCC instituted civil proceedings in the Federal Court against Delta and Timothy Davis. Delta Building Automation Pty Ltd is part of a group of companies (the Delta Group) which operate as the exclusive Australian distributor for the Delta Controls brand of building management systems. The Delta Group designs, installs and maintains building management systems and operates in most states and the ACT. Davis is a director of each company in the Delta Group.

The Federal Court will decide on penalties and other orders at a later date. The ACCC is seeking declarations, pecuniary penalties, injunctions and costs, as well as an order disqualifying Davis from managing a company, and orders for Delta to conduct compliance training.

The ACCC noted that bid rigging, also known as collusive tendering, happens when suppliers discuss and agree among themselves who should win a tender, and at what price.

Price fixing happens when competitors agree on pricing instead of competing against each other.

The ACCC investigates cartel conduct and can take civil cartel proceedings in the Federal Court or refer serious cartel conduct to the Commonwealth Director of Public Prosecutions (CDPP).

The ACCC works to detect cartels including through education programs, proactive intelligence gathering and data assessment and working with overseas counterparts to identify cartels that operate on a global level.

The ACCC also manages an immunity program that enables past or present cartel members to confess their actions and cooperate with investigations in exchange for immunity from civil cartel proceedings brought by the ACCC and criminal cartel charges laid by the CDPP.

Anyone who thinks they may be involved in cartel conduct is urged to call the ACCC Cartel Immunity Hotline on (02) 9230 3894. More information about the immunity process is available on the ACCC website at Cartels.  

Cartel conduct can also be reported via the anonymous cartel portal.

Public procurement officials who want to know more about detecting cartels are encouraged to contact the ACCC Cartel Outreach team at carteloutreach@accc.gov.au.