Australia: Australian Court Construes Collaborative Bidding In M&A Sale Process To Constitute Cartel Conduct & Misleading And Deceptive Conduct

Surprising litigation in the Australian Federal Court highlights the potential risks for parties engaging in back to back transactions and consortium, intermediary or other collaborative bidding, including in relation to transactions outside Australia. Two multinational suppliers of mining consumables, Norcast S.ár.L and Bradken Limited, recently settled litigation in which Norcast alleged that Bradken had engaged in bid rigging in a tender process for the purchase of Norcast's subsidiary, Norcast Wear Solutions, Inc. (NWS). This followed a decision against Bradken at trial. The settlement also resolved allegations that Bradken engaged in misleading and deceptive conduct in the tender process. The settlement means that the Full Federal Court of Australia will not hear an appeal on a number of M&A and competition law issues important for companies doing business in Australia.

Although an unusual context, this is the first private litigation to apply the antitrust "cartel" prohibitions that Australia introduced in 2009, which provide for substantial criminal penalties in addition to the pre-existing civil penalties. Given the trial court decision in Bradken, would-be participants in an M&A sale process must be alert to potential breaches of Australian competition law and should ensure that any collaboration arrangement and the conduct of their tender is carefully thought out and managed.


In early 2011, Norcast (owned by Pala Investments, a Swiss private equity firm) decided to sell its wholly owned subsidiary NWS (a Canadian company). UBS conducted the sale process and invited bids from a number of potential buyers. Bradken was not specifically invited to bid (and during the litigation submitted that it had been excluded from the process). Bradken therefore approached the New York based private equity firm, Castle Harlan, and encouraged it to bid for NWS, in the hope that Bradken might thereafter subsequently acquire NWS from Castle Harlan.

Castle Harlan ultimately was selected as the successful bidder and acquired NWS through its subsidiary BC for US$190 million. Earlier that same day, Bradken had entered into an agreement with BC giving Bradken the right to acquire BC. Within hours of the sale of NWS to BC, Bradken exercised the right and acquired BC and hence also acquired NWS. The total amount paid to Castle Harlan entities by Bradken was approximately US$212 million. Given the strategic advantages for Bradken in acquiring NWS (including synergies), Norcast alleged that Bradken would have paid a higher price to Norcast than Norcast ultimately accepted from Castle Harlan.

Norcast brought a lawsuit under the Australian Competition and Consumer Act (Act), claiming that Bradken's arrangement with Castle Harlan constituted "bid rigging" in contravention of the Act's "cartel" prohibitions and claiming that the conduct of Castle Harlan and Bradken during the sales process constituted breaches of the Act's prohibition of misleading or deceptive conduct.

In March last year, the trial court upheld Norcast's claims, ordering Bradken to pay damages of US$22.4 million to Norcast (the difference between what Bradken ultimately paid to Castle Harlan and what Castle Harlan had paid to Norcast). Bradken appealed this decision to the Full Federal Court and the ACCC was granted leave to intervene. The litigants then reached an accommodation with each other and sought appeal orders by consent. However, the Court decided that it would not determine an appeal on that basis and finally the parties settled the case for an undisclosed amount.

The bid rigging claim

Determining that the cartel provisions had been breached, the trial judge rejected Bradken's submission that, to give rise to a breach of the Act, a request for bids must be a request directed to the parties to the alleged bid rigging agreement. The judge decided that there was no barrier to a successful bid rigging claim merely by the fact that Bradken had not been invited to participate in the tender process.

Further, the court found that there is no requirement that the request for bids need be in Australia nor that the parties must be in competition with respect to a market in Australia; that is, there is no territorial limitation on such claims. As a result of this, parties who carry on any kind of business in Australia may be subject to Australian competition actions, even relating to tenders unrelated to Australia or arrangements with other potential bidders who do not compete with that party in Australia.

Notwithstanding Bradken's arguments that it had been excluded from and never intended to participate in the NWS tender process, the Court found that Castle Harlan and Bradken were competitors for this tender. Castle Harlan wanted to acquire NWS for resale at a profit, while and Bradken, the logical purchaser, also wished to acquire NWS; hence, absent the arrangement between them, it was possible that the two would have competed with each other in bidding for NWS.

The misleading or deceptive claim

The court found that both Bradken and Castle Harlan had engaged in misleading or deceptive conduct, simply as a result of their failure to disclose their arrangement to Norcast. Under Australian law, silence can constitute misleading and deceptive conduct in breach of the Act, although this is difficult to establish where there is no duty to disclose in the circumstances no reasonable expectation that a fact would be disclosed. Full disclosure in commercial negotiations is not required, but that this does not give commercial negotiators "licence to deceive." In this case, the court determined that the parties had by their silence acted to "deceive" Norcast and hence were in breach of the Act. Importantly, the Court found that Bradken and Castle Harlan had taken deliberate steps to conceal their arrangement from Norcast and that Castle Harlan had also made express representations to Norcast that were misleading and deceptive.

The judgement emphasizes that participants in an M&A sales process or negotiation need to be alert both to what is said and what is omitted, to ensure a balance is maintained between the party's own interests and its compliance with obligations under Australian competition and consumer law.


The Bradken judgement means that future parties responding to M&A tenders will need to pay much greater attention to the structure of any collaborative bidding arrangement. The Bradken case will be relevant to intermediary or nominee arrangements, consortium bids, and partial or complete flow-on transactions. Participants in such arrangements will need to consider whether they could be considered competitors for the target in their own right. The restrictions on each member of a consortium will also need to be carefully thought through, as potentially giving rise to a bid rigging arrangement or other cartel conduct.

Participants in commercial negotiations will also need to bear in mind the broad application of the misleading and deceptive conduct prohibitions under the Act and consider carefully what is said and not said in light of the particular circumstances of each transaction. Sellers may wish to include express obligations of disclosure in pre-transaction agreements and both buyer and seller should also consider the role of clauses excluding or indemnifying a party against post-completion statutory claims.

Court decision

The trial judge's decision stands on a number of important points. In particular, the judgement:

  1. confirms that Australian courts are willing to take a broad view of when parties are in competition, or likely to be in competition, with each other to acquire a target.
  2. acts as a timely reminder that Australian courts will actively enforce misleading or deceptive conduct claims in the context of M&A transactions (this has particular relevance to bidders who wish to conceal their identity for any part of the tender process); and
  3. indicates that international firms conducting business in Australia and engaging in off-shore M&A with little to no Australian connection may still be subject to potential claims under Australian law.

The Bradken judgement can be found here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions