Concrete firm accused of 'scandalous' claims

CEMENT giant CRH, in affidavits filed in High Court proceedings, has accused Goode Concrete of making “scandalous” claims that it and others engaged in anti-competitive practices in the concrete industry for decades.

Declan McGrath, for CRH, told Mr Justice John Cooke yesterday his client wanted the court to strike out “scandalous” material, including claims of anti-competitive conduct dating back to the 1980s.

The disputed material is included in affidavits opposing CRH’s application for Goode to provide €1.5 million security for costs of its legal action in which Goode claims anti-competitive practices in recent years by CRH and the Kilsaran Group effectively forced it out of business earlier this year.

Goode has said it cannot pay the €1.5 million sought and contends that security for costs should be refused on grounds the alleged conduct of the defendants created a situation where Goode went out of business and could not provide security.

When the security issue came before Mr Justice Cooke yesterday, Mr McGrath argued the disputed material in the affidavits did not relate to Goode’s claim for security in an action where it alleged below-cost selling since autumn 2007.

He was very surprised to get claims of anti-competitive conduct dating back to the early 1980s and such material was inadmissible, scandalous and aimed at prejudicing the court and embarrassing the defendants, he said. It would be a huge task to reply to this material and, if the court ruled some or part of it was admissible, he would need time to deal with it.

In exchanges with Mr McGrath, the judge observed one of the claims made was that Kilsaran was under the control of Irish Cement or CRH plc and there had been co-ordinated control of some kind. He believed the argument would be made that the history of alleged collusion was relevant to this case.

Mr McGrath argued the claims of secret control of Kilsaran were not relevant to the case being made by Goode regarding security for costs. Goode had made profits “in the good times”, it would be “remarkable” if it had not, he added.

Counsel for Kilsaran supported Mr McGrath’s application to strike out the material. The claims ranged over a 30-year period and included claims related to the market in the west of Ireland where Kilsaran did not even operate, she said.

John Hennessy SC, for Goode, said the claims were “not some kind of scandalous comment” but were “sworn evidence” by his client. If the claims were untrue, it would be straightforward for the defendants to reply stating that and they would not have to trawl, as they contended, through material dating back some decades.

After hearing from the sides, the judge said he would deal later this month with CRH’s application to strike out the disputed material before determining the security issue. If he decided some or all of the material was admissible, he would give the defendants time to reply to it before dealing with the security application, he said.

Goode Concrete ceased trading last February. Its managing director Peter Goode has made a series of allegations of anti-competitive practices against CRH and Kilsaran.

Goode failed earlier this year to get a High Court injunction, to apply pending the outcome of the full case, restraining CRH and Kilsaran Group selling concrete allegedly below cost.

Goode alleged CRH and Kilsaran had lowered their prices to a point where they were submitting bids of €52 and €50 a cubic metre for concrete when Goode’s costs during 2010 amounted to approximately €65 a cubic metre. It was also alleged Kilsaran was secretly controlled by CRH.

CRH and Kilsaran have denied the allegations. In refusing the interlocutory order, Mr Justice Cooke found Goode had failed to show that if it won the substantive action, damages would not be an adequate remedy.

Small rivals claim big players using too much muscle

BUILDING MATERIALS groups CRH and Kilsaran are facing a number of lawsuits accusing them of colluding to fix prices and other anti-competitive behaviour.

Smaller rivals have long claimed the two companies, and a number of other concrete and cement suppliers, have been using their muscle to put small operators in the Republic out of business.

Yesterday, the High Court heard that Dublin-based Goode Concrete, alleges that CRH and Kilsaran colluded to sell their products below cost, forcing it to cease trading. The company also claims CRH secretly controls Kilsaran.

Framus, a concrete business from the west of Ireland owned by the Maye family before it ceased trading, is taking a similar case against CRH, Kilsaran and Grafton subsidiary, Concrete Products of Ireland.

The Framus case has been brewing for 15 years, but now looks like it could go to a hearing relatively soon.

CRH, which last year had global sales of €17 billion and ranks as the biggest company on the Irish Stock Exchange, is the main target of the actions, which maintain that it secretly controls Kilsaran.

A verdict against CRH and Kilsaran would have serious consequences for both. However, as a quoted company with an international shareholder base, CRH has the most to lose.

This is not new territory for the group. Last year, the Polish competition regulator fined it €26 million for competition law offences. It is appealing that ruling. The group maintains the Polish regulator got it wrong. It is preparing to tell the High Court exactly the same thing about Goode, and presumably Framus when it comes up. Lawyers for both CRH and Kilsaran yesterday made it clear that the pair intend defending themselves as vigorously as possible.

Goode Concrete ceased trading in February after the High Court refused its application for an injunction banning CRH and Kilsaran from selling concrete products below a certain average price, which it maintained was below cost. That ruling will have no bearing on the case that it is now taking. Once the court has dealt with issues relating to costs and evidence, there is a chance that a full hearing could start in the autumn.

Such a hearing is likely to be long and drawn out, with both sides offering lots of expert evidence. Given the stakes, it is unlikely any party will let the matter rest with whatever verdict the High Court delivers. BARRY O'HALLORAN