ACCC Takes Aim at Construction Unions 6

Tuesday, January 13th, 2015
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The ACCC has defended itself against criticism of its handling of the Boral case in Victoria, and called for members of the construction industry to speak out publicly against union misconduct.

Australia’s competition regulator has voiced its determination to deal harshly with any misconduct on the part of the country’s unions, in the wake of criticism of its failure to deal more promptly with an alleged boycott case in the building sector.

The Australian Competition and Consumer Commission (ACCC) has indicated that its case against the Construction, Forestry, Mining and Energy Union (CFMEU) for alleged boycotting of building materials company Boral will be a key priority for 2015, and called for members of the industry to speak out publicly about any other cases of union malfeasance.

The ACCC launched its case against CFMEU in November following long-standing allegations that the union had boycotted concrete manufactured by Boral on at least a dozen commercial construction sites throughout Melbourne.

The CFMEU boycott has reportedly run for the past several years, costing Boral as much as $10 million in lost business. According to Sims the lawsuit is the largest secondary boycott case ever undertaken by the ACCC, with the union facing fines of up to $10 million and two state officials accused of breaches that incur a maximum penalty of $220,000.

The ACCC has been censured, however, for not acting more promptly, with the Royal Commission into Trade Union Governance and Corruption issuing a report towards the end of 2014 that referred to the legal system as “fundamentally defective” for its failure to address the allegations earlier.

ACCC chairman Rod Sims has defended the competition watchdog against such criticism, pointing instead to the difficulties of mounting the case in the absence of witnesses willing to provide evidence against union misconduct.

Rod Sims

Rod Sims

“I know people said we were a bit slow in tackling the CFMEU case” said ACCC chairman Rod Sims to the Australia Financial Review. “I don’t think we were. We were right out of the blocks but nobody wanted to talk to us.”

According to Sims the ACCC experienced significant difficulty in persuading members of industry to provide testimony, claiming that the organisation met with widespread denial of any such problems.

Sims hailed the decision of Boral chief executive Mike Kane to speak publicly on the issue, and called for other members of industry to follow his lead when it came to union misconduct.

“It was only when Mike Kane came out and went more public on it that it opened people up and got them talking about it,” said Sims.

Sim said he hopes the case will spur other victims of union bullying tactics to take their grievances to the authorities.

“We’re hopeful the CFMEU case will encourage others to come and talk to us about secondary boycott activity,” said Sims. “We do find when we bring a case like this to court, people often come forward and tell you about other related cases, so bringing one case can often lead to more.”

Mike Kane

Mike Kane

Kane told the royal commission in June 2014 that the CFMEU’s control of building sites in Melbourne had reached the point where “the law doesn’t apply.”

According to sworn statements by other executives from Boral, CFMEU state leader John Setka allegedly admitted at an April 2014 meeting that the company was a collateral victim of the union’s ongoing conflict with Grocon.

“We are at war with Grocon and in a war you cut the supply line,” Setka is alleged to have said.

CFMEU blockades at Grocon’s Myer Emporium worksite on Melbourne’s Lonsdale Street had previously turned violent in August and September 2012, compelling police to close down parts of the city.

The union was subsequently fined $1 million for contempt of court in relation to the Emporium blockade, as well as $250,000 for protests staged at two other Grocon sites.

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  1. Andrew

    When will the ACCC investigate builders? Every job suffers from builders under quoting to win and then screwing everyone down the line to make a profit. This must be misleading conduct and uncompetitive as the builder quotes on something that can not be built for the quoted price. The client ends up with a building that is not what was promised due to cost cutting.

    • Beatrice

      Fair enough. But clients also need to have more realistic expectations about what things cost. One reason why some builders may underquote is to meet unrealistic consumer expectations.

    • Stephen Dean

      Tendering is like the "weather forecaster" and the Estimator uses an enormous amount of skill and experience to forecast what the costs are for all of the construction RISKS, services, including mechanical, electrical, hydraulics, plaster, tiling, painting and above all interest and exchange rates are 12-18 months down the track when the boffins in Canberra can't tell us what the Banks and / or Unions want tomorrow !
      Tendering only gives you the start price, not the completed price, and furthermore if the developers, authorities, consultants and tenants knew what they wanted to buy up front and got their scope and documents correct then the builder would have more that half a chance to avoid "Dutch Auctions" due to everyone working together rather than this adversarial I screw you, you screw me, I thought you had that included attitude.
      Typically, there is 'enough' in a building price to deliver a fair product for a fair price, but we must move away from the Tender Processes currently practiced to what I believe is a better more transparent and functional system known as ECI (Early Contractor Involvement), which gets everyone on the same page before the final contract is signed

  2. Bea

    Great to see the ACCC finally getting its act together somewhat on secondary boycotts! But it's a bit rich of Sims to complain about difficulties in getting people to come forward. The ACCC's tardiness in taking action is a big part of the problem – people will be reluctant to complain about union conduct when the regulators aren't proactive in cracking down. If Sims wants more people to come forward with evidence he should be more proactive. The ACCC also has very wide powers similar to that of the ATO to gather evidence which they might also consider using when dealing with the CFMEU.

  3. Stephen Dean

    The old underworld adage of "Those that know DON'T TALK, and those that DON'T KNOW Talk"
    The ALP, past and present Law Makers must accept total responsibility for the anarchy in the Commercial Construction & Property Industries and should not be 'surprised' when they hear, see and are effected by the high level of intimidation bought about by third party 'conspirators' (such as outlaw motorbike gangs, phoenix developers, unions and political game slayers) that gleefully bring pain on the innocent hard working Australian worker for no or little community or long term sustainable benefit.
    Why would any industry member want to martyr themselves when they can simply pass on all of the 'ill-gotten gains' to the consumer via variations, inflated rates and excessively high 'uncompetitive' Tenders ?
    It's time for the innocent victims to take VOICE, however if the ACCC is having significant difficulties in persuading members of industry to provide testimony, when the protagonists know "Those that KNOW DON'T TALK, and those that DON'T KNOW Talk" and participate in a useless non-productive game of 'Brinkmanship' denying any such problems exist and paying 200K to lazy DESAL workers is fair !

  4. GARY

    CFMEU are too strong and are a law unto themselves and it appears no one has the ability to stand up and say enough. Its the same old story construction workers against the finishing trades. What should happen is let the construction finish and handover, THEN, let the finishing trades ie secondary builders come in and fit off for the tenants. Pacific Fair is rife with extortion, standover tactics, bullying and industrial sabotage to those who dont accept the unions terms. In fact you can take all construction site where the UNIONS are involved and you will find the same story, it will never change. They will ruin this country.