CFMEU and builder engaged in boycott of subcontractor, court rules

Construction union and employer face significant penalty after successful legal action by the competition watchdog.

ACCC chairman Rod Sims. Picture: Chris Pavlich

The competition watchdog has won significant proceedings against the CFMEU and construction company Hutchinson after the Federal Court found they engaged in unlawful conduct by boycotting a subcontractor.

Hutchinson, one of the country’s biggest construction companies with 1800 staff and $2.5 billion worth of projects annually, engaged Waterproofing Industries Qld (WPI) on the Southpoint A Apartments project in Brisbane in 2016.

But after WPI started supplying services, the Construction, Forestry, Maritime, Mining and Energy Union told Hutchinson it would not permit WPI to work on the Southpoint Project because it was not covered by an enterprise agreement with the union.

The court found Hutchinson and the CFMEU reached agreement that Hutchinson would no longer acquire services from WPI and the company would terminate WPI to avoid conflict with, or industrial action by, the union at the site.

Another waterproofing contractor that had an enterprise agreement with the CFMEU was later engaged on the site.

The court found 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.

Australian Competition and Consumer Commission chair Rod Sims said the regulator was “extremely pleased” with the court decision.

“Boycotts are a kind of anti-competitive conduct which harms the economy as a whole as well as individual businesses,” Mr Sims said.

“We took this action because we considered the agreement between Hutchinson and the union prevented or hindered Hutchinson’s choice about which businesses to hire, and limited subcontractors’ access to construction markets.

“This type of agreement is likely to have inflated the costs of construction projects.”

Justice Kylie Downes said evidence by the ACCC’s witnesses supported a finding that the motive for the arrangement was “to return to a situation where, as a general rule, subcontractors engaged by Hutchinson at the Southpoint project would have an EBA, being something the CFMEU pressured Hutchinson to do and which Hutchinson did to avoid industrial action”.

The CFMEU was found to have been knowingly concerned in, or party to, the contraventions of sections 45E and 45EA by Hutchinson.

Justice Downes also found the CFMEU induced Hutchinson’s contraventions by threatening or implying that there would be conflict with, or industrial action by, the union if Hutchinson did not stop using WPI.

“We believe this was very serious conduct, and will be putting forward submissions to the court about the appropriate penalty for this behaviour at a later court hearing,” Mr Sims said.

Penalties will be decided at a later date.