The Federal Court has found building giant Hutchinson breached consumer law by supporting a boycott.

The Court says construction company J Hutchinson Pty Ltd (Hutchinson) and the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) entered an agreement to boycott a subcontractor at a building site in Brisbane. 

Hutchinson is one of Australia’s biggest privately owned construction companies with around 1,800 staff and over $2.5 billion worth of projects annually.

In 2016, Hutchinson engaged Waterproofing Industries Qld Pty Ltd (WPI), an independent waterproofing contractor, on the Southpoint A Apartments construction project in Brisbane. 

Shortly after WPI began supplying services, the CFMMEU informed Hutchinson that it would not permit WPI to work on the Southpoint Project because it was not covered by an enterprise bargaining agreement (EBA) with the union. 

Hutchinson and the CFMMEU reached an agreement that Hutchinson would no longer acquire waterproofing services from WPI and that Hutchinson would terminate WPI to avoid conflict with, or industrial action by, the CFMMEU at the site. 

Another waterproofing contractor with an EBA with the CFMMEU was later engaged on the site.

The motive for the arrangement was “to return to a situation where, as a general rule, subcontractors engaged by Hutchinson at the Southpoint project would have an EBA, being something the CFMMEU pressured Hutchinson to do and which Hutchinson did to avoid industrial action”, the Court found.  

By making and acting on the agreement, Hutchinson contravened sections 45E and 45EA of the Competition and Consumer Act, which prohibit contracts, arrangements or understandings for the purpose of preventing or hindering the acquisition of goods or services from a supplier, which is also referred to as a boycott.

“The ACCC is extremely pleased with the Court’s decision today. Boycotts are a kind of anti-competitive conduct which harms the economy as a whole as well as individual businesses,” Australian Competition & Consumer Commission (ACCC) chair Rod Sims said.

“We took this action because we considered the agreement between Hutchinson and the union prevented or hindered Hutchinson’s choice about which businesses to hire, and limited subcontractors’ access to construction markets. This type of agreement is likely to have inflated the costs of construction projects.”

The CFMMEU was found to have been knowingly concerned in, or party to, the contraventions of sections 45E and 45EA by Hutchinson. 

The Court also found that the CFMMEU induced Hutchinson’s contraventions by threatening or implying that there would be conflict with, or industrial action by, the CFMMEU if Hutchinson did not stop using WPI.

The Court will decide on penalties and other orders at a later date.