COSTLY PURSUIT

A family who ran a cement company is claiming a price-fixing cartel pushed them out of business. Fighting this case in court, however, comes at an inhibitive cost, writes Michael Clifford

THE courts, like The Ritz, are open to everybody. This morning a High Court judge will decide, however, whether the principles of a small family-run firm will be let within an ass’s roar of the courts.

Tom Goode and his two sons, Barry and Peter, are claiming that the cement and concrete businesses in this country are thoroughly corrupt, and have been for decades.

The businessmen claim that cement and concrete businesses were involved in cartels in the 1980s, and in recent years to keep up the price of concrete. In this, Tom Goode in particular, is putting himself forward as an industry supergrass, somebody who benefited from what he says were corrupt practices.

Goode Concrete ceased trading earlier this year. The company claims it was driven out of business as a result of below-cost selling of concrete by a cartel in Dublin, designed to squeeze Goode out of the market. At the same time, the company principles admit they were involved in a similar cartel operating in Galway.

The defendants in the case, CRH and Kilsaran Concrete, say that it is completely without substance, and involves scandalous allegations.

Today, Mr Justice John Cooke will rule on whether he has the power to effectively eliminate affidavits filed by the Goodes, which contain some dramatic claims.

Irrespective of what he rules, he will then move on to decide whether or not the Goodes will have to stump up €1.5 million in order to take a full action against the defendants.

CRH and Kilsaran have requested that the Goodes put the money up front as security for the costs of any action. The case would be expected to cost at least that amount, and the defendants feel, quite reasonably, that they shouldn’t be left out of pocket if the case fails. Judge Cooke will have to decide whether or not the money is required.

The Goodes, for their part, claim that they don’t have the cash because their company was put out of business as a result of the below-cost selling. If the judge rules that the money must be stumped up, that will probably be the end of any action. The Goodes will not get their day in court.

If Mr Justice Cooke rules that this is an exceptional case, and therefore no security for costs is required, there will inevitably be an appeal to the Supreme Court.

In fact, there are understood to be up to eight grounds on which an appeal can be made to the higher court. Any appeal will drag out the action. A hearing and ruling from the Supreme Court can take up to three years.

All of which goes to show that while the courts are open to everybody, it is only those with the deepest of pockets who can afford to have access to the law.

If the case ever were to see evidence being presented in court, it would make for fascinating viewing. For decades, the lucrative cement and concrete businesses have been dogged by allegations of price fixing, cartels, and the use of below-cost selling to drive competitors out of business.

CRH, one of the country’s most successful companies, has consistently been at the heart of allegations, but nothing has ever been proved.

Two years ago, the company was fined €25m in Poland for price fixing by that country’s competition watchdog. The company is appealing the decision.

In the North, CRH and the Quinn Group were among five companies found to have been operating a price-fixing arrangement between 1985 and 1992. The EU also fined CRH in the mid-1990s for being part of a European price-fixing cartel.

No major case has ever been taken against the company in this jurisdiction. Philip Lee Solicitors, which is representing Goode Concrete, has acted for a number of other smaller companies which had made allegations of anti-competitive practices by CRH, none of which were ever proven.

The affidavit filed by Tom Goode in the current case details what he claims were meetings by cartels in the mid-1980s, when he was running the family business.

“Meetings of the cartel were held at least every two weeks, sometimes weekly from then on. These meetings took place in different hotels around Dublin. For example, we would meet at the Airport Hotel, the Skylon, the Townhouse Hotel in Naas or at Jurys Hotel, Ballsbridge and various other hotels.”

The affidavit was filed to demonstrate that a pattern of behaviour has existed in the cement industry dating back to those days. The defendants in the current action deny any involvement in the activities alleged.

Goode went on: “The various members of the cartel would take it in turns each week to arrange the cartel meetings and the hotel meeting room would be booked in that particular member’s name and paid for in cash.

“The chair of the meeting was rotated. The chairman would commence by indicating which contracts he was aware of that were coming up in the Dublin area... I learnt from these conversations that regular meetings of this nature were being held by the other cartel members in different locations around the country.”

Barry Goode, the operations manager for the company, has outlined allegations of a cartel operating in the Galway area through the construction boom in the last decade.

“Individual members of the cartel met with one another informally on a near-daily basis (for lunch and in pubs in the evenings). Concrete and concrete prices were invariably discussed at all of these meetings so everyone always knew what was going on in the other members’ businesses.”

The defendants say they have absolutely no knowledge of any such cartel or meetings, or price-fixing arrangements.

If any price-fixing arrangements were ruled to have occurred in somewhere like Galway, the potential fallout would be enormous. A vista would open up in which the owners of everything built over the past decade, including all the public works, could claim for damages.

Despite the evidence of price-fixing in the North and other European jurisdictions, the Competition Authority has yet to launch any probe into the cement industry. It has no role in the current proceedings. The EU’s competition arm is currently investigating the cement industry in a number of countries, but not Ireland.

As far as the Goode case is concerned, a full-blown court case would clarify matters in a definitive manner. CRH would be provided the opportunity to once and for all scotch the rumours that have dogged the company for decades. Goode Concrete would be given its day in court to see whether its evidence stands the test of the law.

The cost of doing so, however, is deemed prohibitive. Everybody is equal before the law, but there remains a major problem about accessing the law with some degree of equality.