New cartel rules are encouraging more companies to pursue ‘bid rigging’ and misleading conduct claims for M&A deals,  Corrs Chambers Westgarth partner Jonathan Farrer has said.

Farrer’s comments were made in light of a recent Federal Court decision which found that Australian mining consumables company Bradken had engaged in bid rigging and misleading and deceptive conduct in relation to an acqusiton. Farrer noted that companies across a wide range of industries are considering anti-trust legal action in the context of M&A transactions and observed that there were two other billion dollar M&A deals currently subject to such claims in the Federal Court.

“With only the Bradken case decided so far, this was the first test of new cartel and bid rigging rules and the judge applied a very broad interpretation of these rules. This will now have implications for other M&A deals,” Farrer said.

He said the Bradken decision and another recent case in the U.S. against 10 high profile private equity firms were examples of how casual communications and emails could later be used as evidence against bidders. 

“Joint bidders need to be very careful about how they develop and document their relationship to ensure they don’t breach anti-trust rules,” Farrer said.“There is a clear trend of more litigation in this area.” 
Farrer added that the issue was relevant to any Australian company dealing with competitors in an M&A bid process, even if they were buying an overseas business.

“There are also lessons for vendors.  In particular, sellers need to make sure they have adequate visibility about bidders.  A simple example is ensuring that confidentiality deeds require third party consultants or advisers to be named and disclosed,” he said.