BuildLaw Issue 35 April 2019 | Page 7

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.
Liquidated damages before and after termination
In GPP Big Field LLP v Solar EPC Solutions SL (Formerly Prosolia Siglio XXI) [2018] EWHC 2866 (Comm), Richard Salter QC, sitting as a deputy judge of the High Court, held that the liquidated damages provision was not a penalty and that the contractor's parent company was liable for those damages under a contract of indemnity. This detailed judgment provides a helpful summary of the operation of liquidated damages clauses in commercial contracts and also considers the obligations arising under parent company guarantees and indemnities.
The dispute concerned five Engineering, Procurement and Construction (EPC) contracts for the design and construction of solar generation power plants in the south of England. GPP’s claims were to recover liquidated damages for Prosolia’s failure to commission the solar plants by the date specified in each contract.
Solar argued the LD Clauses should be construed as unenforceable penalties, because the daily rate of liquidated damages accruing under each of the Contracts was the same, despite applying to different plants with differing energy outputs. Further, the LD Clauses had not been subject to detailed negotiation between the parties, and were each referred to as a “penalty”.
Applying the Supreme Court’s recast penalties test from Cavendish Square Holding BV v Talal El Makdessi and ParkingEye Ltd v Beavis [2015], the court rejected Solar’s argument that the clauses were unenforceable as penalties. It found that the provisions did not exceed a genuine pre-estimate of loss, and that the sums were not in any way extravagant or unconscionable in comparison with the legitimate interest of the employer in ensuring timely performance of the contracts. The Court noted that liquidated damages clauses were commonplace in construction contracts and that all parties were experienced and sophisticated commercial entities.