ACCC secures significant penalties against Hutchinson Builders and the CFMEU
The Federal Court has imposed significant penalties against Queensland construction giant J Hutchinson Pty Ltd (Hutchinson) and the CFMEU for conduct linked to the removal of a subcontractor without a union EBA from a Brisbane construction project in 2016.
Federal Court Justice Kylie Downes had previously determined that Hutchinson contravened s 45E(3) of the Competition and Consumer Act 2010 (CCA Act) by making an arrangement or arriving at an understanding with the construction union, the CFMEU, that the company would no longer acquire waterproofing services from Waterproofing Industries Qld Pty Ltd (WPI) at the Southpoint A construction project. Further, in terminating their contract, Hutchinson gave effect to the boycott provisions and thereby contravened s45EA of the CCA Act.
In addition, Justice Downes determined that the CFMEU was knowingly concerned in, or party to, the contraventions by Hutchinson and that the union threatened or implied that there would be conflict with or industrial action by the union if Hutchinson did not cease using WPI.
The case originated from Hutchinson being the principal contractor for the Southpoint A construction project in South Brisbane, Queensland. At that time, Hutchinson was covered by a CFMEU (as the union was then known) enterprise bargaining agreement, the terms of which included an obligation on the builder to consult with its employees and the union about the appointment of any subcontractors and that any subcontract employees on the project would receive the same terms and conditions (or equivalent) as Hutchinson employees.
WPI, who did not have an EBA with the CFMEU, entered into a subcontract with Hutchinson on 22 March 2016 to perform certain waterproofing works. Shortly thereafter, the union claimed they had not been consulted about the selection of WPI and threatened to engage in industrial action if Hutchinson allowed the subcontractor to continue on the project. Hutchinson subsequently excluded WPI from the project on 11 June 2016, and their subcontract was terminated by a letter dated 26 July 2016.
An affidavit from the Project Manager recalled a conversation with the CFMEU site delegate in June 2016, “Damon Clarke: They don’t have an EBA. I’ve got strict instructions from Justin to sit the job down if WPI come onsite”. Two days later, he emailed his manager and stated, “I was onsite Saturday morning and Damo (CFMEU Delo) approached me about Charlie (WPI) being on site. He let it go but is under strict instructions from Justin Steele to sit the job down if they come onsite”.
Justice Downes determined that, in all of the circumstances of the case, it is appropriate to impose penalties against Hutchinson totalling $600,000. As she noted, “Such an amount will serve to protect the public interest from further contraventions of the Act by Hutchinson as well as by others in the construction industry which are in the same position as Hutchinson”.
The total fine comprised $300,000 in respect of Hutchinson’s conduct in making an arrangement or arriving at an understanding with the
Justice Downes imposed the maximum penalty available of $750,000 against the union. As she noted, “It is apparent from the above analysis that no lesser penalty will be an effective deterrent against future contraventions of like kind by the CFMEU as well as by others which are in the same position as the CFMEU”. CFMEU containing a boycott provision, thereby contravening s 45E(3) of the Act and a further $300,000 in respect of its conduct in ceasing to acquire waterproofing services from WPI and terminating its contract with WPI, which amounted to giving effect to the arrangement or understanding containing the boycott provision, in contravention of s 45EA of the Act.
Both parties were also directed to pay the ACCC’s legal costs in the matter.
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