The Australian Competition and Consumer Commission (ACCC) has started legal action against 11 parties in the Federal Court for alleged bid rigging for a coal exploration licence in New South Wales (NSW).
Those accused in the Bylong Valley include Cascade Coal, as well associated company Coal & Minerals Group (CMG).
From Cascade, there is director John McGuigan, former director Richard Poole, and company representative James McGuigan. In addition, others accused include Moses and Paul Obeid, and companies associated with them such as Loyal Coal, Locaway, Mincorp Investments, and Southeast Investment Group.
According to ACCC, in 2009 the NSW Department of Trade and Investment conducted a tender process for exploration licences over the Mount Penny and Glendon Brook coal tenements in the Bylong Valley.
The Australian regulator alleged that Cascade and Loyal were rival bidders in the process at that time.
Cascade signed a contract, arrangement or understanding with Loyal and its affiliated companies Voope, Locaway, Buffalo Resources, and United Pastoral Group in early June 2009, which Loyal would not pursue a competing bid in respect of the coal tenements by withdrawing from the tender process.
Under the deal, Cascade would grant a 25% interest in its mining venture to Buffalo in respect of the Mount Penny coal tenement in return; and later on signed agreements with certain land owners represented by Paul and Moses Obeid to buy their properties at four times the land value
Cascade would also acquire the mortgage obligations of the landowners.
Subsequently, when Loyal withdrew its bid, Cascade won the tender for the Mount Penny and Glendon Brook coal tenements.
Buffalo, which acquired the 25% interest, transferred it to Southeast Investments in 2010, which later sold the interest back to Richard Poole-controlled entity CMG and received benefits valued by the parties at $60m, including $30m in cash payments.
This was allegedly distributed to Paul and Moses Obeid, as well as their immediate families, the regulator said.
ACCC chairman Rod Sims said: "This case involves serious allegations of cartel conduct. Stopping cartel conduct is an ACCC enforcement priority as it causes harm to both consumers and to the competitive process.
"There is also a real public interest in ensuring that competitive public tender processes are not undermined by bid rigging or other cartel conduct."
Image: The NSW Department of Trade and Investment conducted a tender process in 2009 for exploration licences over the Mount Penny and Glendon Brook coal tenements. Photo: courtesy of SOMMAI/ FreeDigitalPhotos.net.