The Australian Federal Court has found Queensland-based oil and gas services company Qteq Pty Ltd and its executive chairman, Simon Ashton, engaged in cartel conduct in the supply of goods and services to the oil and gas industry, following proceedings brought by the Australian Competition and Consumer Commission (ACCC).
Between 2017 and 2019, the Court determined that Qteq and Mr Ashton, on five separate occasions, attempted to induce competitors or likely competitors in the upstream phase of oil and gas production to enter into contracts or arrangements containing cartel provisions.
These included attempts to persuade other suppliers not to provide certain services to major oil and gas companies, to share markets, and to rig a multi-million-dollar tender.
“We brought this action because we believed these attempts had the potential to impact competition between Qteq and other current or likely competitors for the supply of goods and services in the oil and gas industry,” said ACCC Chair Gina Cass-Gottlieb.
Cass-Gottlieb further emphasised the gravity of cartel conduct, stating: “Cartels are the most fundamental attack on competition in our economy, and taking actions against them is a high priority for the ACCC.”
She added that this decision should send a strong warning to all businesses and senior managers that attempting to enter or induce collusive agreements with a competitor is illegal and will be met with strong enforcement action by the ACCC.
The Court did not find in favour of the ACCC in relation to one additional instance of alleged cartel conduct.
A date will be set for a further hearing to consider submissions regarding penalties and other orders, with publication of the judgment pending a confidentiality review by the respondents.
Qteq, headquartered in Queensland, specialises in mining equipment and technology services for the upstream oil and gas sector.
Its core business is the sale, installation, and servicing of downhole pressure gauges (known as ‘gauge works’) primarily to coal seam gas producers.
At the relevant time, Qteq was the market leader in providing these services.
The ACCC initiated civil cartel proceedings against Qteq and Mr Ashton in December 2022, alleging that the company sought to maintain its dominant market position by attempting to neutralise competitive threats through collusive arrangements.
These attempts included persuading rivals to avoid entering the gauge works market or to limit their participation in major tenders, as well as seeking non-compete agreements with other service providers.
For corporations, the maximum penalty for each cartel offence prior to 9 November 2022 is the greater of $10 million, three times the total benefits obtained and reasonably attributable to the offence, or 10 per cent of the corporation’s annual turnover connected with Australia.
Individuals found to have engaged in civil cartel conduct face a maximum penalty of $500,000 per act or omission.
The Court will determine penalties and any further orders at a subsequent hearing.
A cartel exists when businesses agree to act together instead of competing, which can involve price fixing, market sharing, bid rigging, or controlling output.
Such conduct is illegal under Australian competition law and is considered a serious breach due to its potential to harm competition and drive up prices for consumers and businesses alike.
The ACCC continues to encourage anyone with information about cartel conduct to contact its Cartel Immunity Hotline or use its anonymous reporting portal.
