Pipeline maintenance firm warned over price-fixing

Quik-Shot Limited and its director Raad Al-Karbouli have been issued formal warnings for price fixing conduct relating to pipe rehabilitation services in Christchurch.

The Commission’s investigation was opened as a result of Fletcher Construction raising concerns about the conduct of two now former employees of its subsidiary company Pipeworks.

The investigation ultimately focused on quotes requested by a business seeking pipe rehabilitation services in November 2017.

The Commission found that the Pipeworks employees had provided Mr Al-Karbouli with the price Pipeworks would be submitting for the contract through WhatsApp, and recommended a price range that Quik-Shot should quote to win the work. Mr Al-Karbouli confirmed his receipt of this information and submitted a price for Quik-Shot within this range.

These communications between competitors were unknown to the business and it ultimately awarded the contract to Pipeworks.

“Taking into account the lack of harm caused by Quik-Shot’s unsuccessful bid and the limited duration of the anti-competitive conduct, we considered a formal warning was sufficient in this instance. However, this case is a useful reminder to businesses to maintain strict oversight of their tender and pricing processes and avoid discussing pricing information with competitors,” Commission Chairman Dr Mark Berry said.

“Fletcher Construction correctly alerted us to its concerns and fully cooperated with the Commission’s investigation.”

A copy of the warning letter can be found on the Commission’s website.

More information about price fixing can be found here.

Background
The Commerce Act prohibits contracts, arrangements or understandings between competitors that contain a cartel provision. This includes price fixing as these agreements have the purpose or effect of fixing controlling or maintaining the prices for goods and services. An individual can be fined $500,000 and/or prohibited from directing or managing a company. A body corporate can be fined the greater of $10 million or three times the commercial gain from the breach (or 10% turnover) for each separate breach.

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