The competition watchdog has taken a crane company to court over alleged cartel behaviour in Newcastle and Queensland, arguing it agreed with a rival not to target each other's customers.
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The Australian Competition and Consumer Commission lodged a statement of claim in the Federal Court on Monday quoting agreements, emails and meeting records involving NQCranes and MHE-Demag.
The two companies supply fixed overhead cranes, parts and servicing to warehouses and manufacturers, but the ACCC alleges the two signed a "distributor agreement" on August 26, 2016, to "operate in the service markets in a co-ordinated approach so that their current customers are not targeted by the other".
"For potential future customers the two organizations will ensure that their energies are focused on the other service competitors and not each other," the companies' agreement allegedly reads.
The ACCC's claim includes evidence of the two companies discussing their relationship to several Hunter manufacturing customers.
It quotes an email from NQC founder and managing director Wayne Pidgeon to Demag managing director Vince Di Costanzo 11 days before they signed the agreement: "As we stated last Friday myself and NQCranes are committed to making this alliance work for both parties. We look forward to a long and lasting working relationship."
Mr Pidgeon sent another email to Mr Di Costanzo on August 25, 2016: "As discussed this is a gentlemen's agreement and will require open ongoing discussion for both parties to ensure smooth operation."
The ACCC has not said why it is not taking legal action against Demag, but the commission provides immunity from cartel prosecution to parties who enter into a "cooperation agreement".
Its claim says NCQ management met in Mackay on August 17, 2016, and told its area managers that NQC was "not to target Demag's customers in Brisbane and Newcastle when seeking to acquire new customers" and "Demag would not target NQC's current customers in Brisbane and Newcastle".
The ACCC says NQC implemented the "cartel" agreement and proposed soon after that the two firms exchange customer lists.
Executives from both companies attended meetings together in late 2016 and early 2017 to discuss how the agreement was working.
The meetings included complaints from NQC that Demag was offering discounts to customers in Newcastle and targeting NQC's Newcastle clients.
In January 2017, an NCQ manager wrote to Demag passing on complaints about Demag undercutting NCQ on a service job at SETCO, a Tomago company making products for underground mining vehicles.
"Would you be able to provide an explanation why our customer (end user) is being offered a discount greater than offered to us (distributor) and the range of clients being offered this level of discount," the email reads.
"Obviously not being competitive in the market is a major concern for us and we will need to consider how this will impact on our strategy."
The ACCC statement of claim includes minutes from an NQC management meeting in August 2017 which read: "Demag in Neswcastle [sic] are gunning all our customers. We doing same to them Callan picked up 4 news service contracts.
"Our good clients have Demag knocking on door and knocking our work. Lost 2 clients to Demag on warpath but we playing nice. ... We don't bag Demag but they bag us. They are partners in crime but still opposition."
A Demag executive's email to NCQ on May 15, 2017, regarding another Tomago customer, Mill Tech, reads: "I have had reports from my Service Manager (that came from our customers) that NQC Newcastle personnel have been soliciting our service customers.
"Your people have been promising competitive spares pricing and how they can do and provide anything that Demag can.
"According the reports I'm getting, this is no accidental stumble as these are longterm MHE-Demag customers that the 2 ex Demag employees employed by NQC in Newcastle (including the service Manager) would be fully aware of.
"Can you please investigate and let me know if there's a specific reason this may be happening?
"Regardless, I would appreciate your intervention to curtail this activity. I appreciate your assistance with this."
The ACCC claim includes other examples of managers from both companies discussing approaches to each other's clients "against the spirit of our relationship".
Almost two years into the agreement, in June 2018, Mr Pidgeon wrote to Mr Di Costanzo: "My feelings are although we compete sometimes, this appears to be less and less.
"Maybe our people have almost stopped mentioning our dealings in the same area.
"My thoughts are that if we continue as we are the two companies have a larger slice of the Market. And our clients have choices other than Kone and Eilbeck."
The Newcastle Herald approached NQC management for comment.
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Michael Parris
Michael Parris reports on politics for the Newcastle Herald. He started at the Herald in 1994 after working in the ABC Newcastle newsroom. Michael spent much of his career as a sub-editor before moving into political reporting in 2017. He was a finalist in the Sports Australia national media awards for his stories about a male-only tennis club in Newcastle. He has covered NSW and federal elections, state and federal budgets and local politics. He has also written extensively about the COVID-19 pandemic with a special focus on data analysis and the effects of lockdowns on the Hunter community.
Michael Parris reports on politics for the Newcastle Herald. He started at the Herald in 1994 after working in the ABC Newcastle newsroom. Michael spent much of his career as a sub-editor before moving into political reporting in 2017. He was a finalist in the Sports Australia national media awards for his stories about a male-only tennis club in Newcastle. He has covered NSW and federal elections, state and federal budgets and local politics. He has also written extensively about the COVID-19 pandemic with a special focus on data analysis and the effects of lockdowns on the Hunter community.
