$600,000 penalty for company’s boycott of subcontractor without an EBA following union’s industrial action threats
Introduction
Waterproofing Industries Qld Pty Ltd (WPI/the subcontractor) entered into a subcontract with J Hutchinson Pty Ltd (Hutchinson/the Company) to perform certain waterproofing works at a particular construction project called the Southpoint project.
The subcontractor did not have a CFMMEU enterprise agreement (EA) and the CFMMEU complained that it was not consulted prior to the business being engaged. Shortly after, the CFMMEU threatened to engage in industrial action if Hutchinson allowed the subcontractor to continue working on the Southpoint project.
As a result of the CFMMEU’s threats, Hutchinson capitulated and the subcontractor was excluded from the site and subsequently had its subcontract terminated.
Contraventions of Competition and Consumer Act 2010 (Cth)
The Court found Hutchinson contravened s 45E(3) of the Competition and Consumer Act 2010 (Cth) (the Act) by making an arrangement with the CFMMEU that contained a “boycott provision”.
Hutchinson also contravened s 45EA of the Act because it gave effect to the boycott provision by ceasing to acquire waterproofing services from the subcontractor and further by terminating the WPI subcontract.
The CMMFEU was found to have been knowingly concerned in, or party to, the contraventions by Hutchinson of ss 45E(3) and 45EA of the Act within the meaning of s 76 of the Act.
The CFMMEU was also found to have induced Hutchinson’s contraventions of ss 45E(3) and 45EA within the meaning of s 76 of the Act by threatening or implying that there would be conflict with, or industrial action by, the CFMMEU if Hutchinson did not cease using the subcontractor.
The Court said, “…the CFMEU’s conduct including that engaged in by … a union organiser, and … its delegate, was the catalyst or ultimate cause of the contraventions by Hutchinson of ss 45E and 45EA of the Act … the CFMEU engaged in coercive behaviour, in particular by threatening or implying that there would be conflict with the CFMEU or industrial action by the CFMEU, if Hutchinson did not cease using WPI. This was serious and deliberate conduct by the CFMEU, which was determined to have its way in terms of which waterproofer was used at the Southpoint project.”
Penalties
The Court imposed penalties on Hutchinson totalling $600,000. One of the reasons this higher than usual penalty was imposed on Hutchinson was because this was not the first time Hutchinson had turned a subcontractor away from one of its projects because it did not have an EA. The Court concluded that “a higher penalty is required in order to secure effective deterrence”.
Regarding the CFMMEU, because the two contraventions arose out of the same conduct the maximum penalty was $750,000. The Court imposed this maximum penalty on the CFMMEU.
Key take-aways
This case is a helpful reminder to businesses that responding to a union threat by engaging in boycotting can breach the Competition and Consumer Act 2010 (Cth) and lead to substantial monetary penalties being imposed on the business.
It is also a reminder for businesses that their corporate culture should promote legislative compliance and the benefits of having educational programs.
If you would like more information about the case, please contact our office on +61 2 9233 3989.
National Workplace Lawyers
Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.
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