Rug pulled out from under carpet cartel thanks to whistleblower

Rug pulled out from under carpet cartel thanks to whistleblower

A cartel was exposed after a whistleblower went to the Competition and Consumer Protection Commission and revealed details of a carpet price-fixing scam, the Central Criminal Court heard today.

The court also heard that some of the companies targeted by the scam were large corporations including Google, Dell, Mastercard and Paypal.

Brendan Smith (39), of Greenane, Dunshaughin, Co Meath, pleaded guilty last month to engaging in and implementing an anti-competitive agreement between July 2012 and April 30, 2013, contrary to the Companies Act 2002 as amended by section 2 of the Competition Act 2010.

The charge further stated that this agreement involved Aston Carpets and Flooring and another firm, Carpet Centre (Contracts) Ltd, attempting to fix prices for their products by knowingly tendering bids that were above the amount tendered by the other firm.

Mr Smith also admitted to a second charge of attempting to impede the prosecution of Carpet Centre (Contracts) by telling David Radburn to delete a number of emails on April 30, 2013.

At a hearing today Justice Patrick McCarthy heard evidence and adjourned sentencing Mr Smith and Aston Carpets until Monday May 22.

The agreement was that Mr Smith, who worked for Aston Carpets and Flooring, would agree to fix prices with another man, David Radburn of Carpet Centre Ltd.

Daniel Kenna of the Competition and Consumer Protection Commission told prosecuting counsel Remy Farrell SC that it was Mr Radburn who turned whistleblower and revealed the scam.

Mr Kenna said that the scheme offers immunity from prosecution if the whistleblower furnishes all documents required and gives a full account of what they know about the operation of the cartel.

Mr Radburn told the commission that he was approached by Mr Smith in 2011 and during a subsequent meeting they agreed that if one of them was going for a job that they thought they would get, the other would offer a higher-priced tender for the same job.

In October 2011 Mr Radburn won a contract to provide flooring for Google for which €193,000 was paid. Mr Radburn, having tendered for the contract, sent an email to Mr Smith with details so that Mr Smith would submit a higher tender.

In another case Aston won two contracts worth over €100,000 with MasterCard after submitting a tender and then getting Mr Radburn to submit a higher-priced tender.

The average price of the contracts in which the companies engaged in price fixing over the period was €137,000, Mr Kenna said. The biggest contract was for €312,000 with Paypal and was won by Aston Carpets.

The scam came to an end on April 30 when gardai raided the offices of the two companies.

During the raid Mr Smith was overheard calling Mr Radburn by phone and asking him to delete emails and was therefore charged with attempting to impede a prosecution.

Michael O'Higgins SC, for Mr Smith, told Justice Patrick McCarthy that his client had built Aston Carpets from nothing into a successful business which he sold in 2007.

He remained on as a director and an employee and took a pay cut when the economic downturn hit the business after 2008.

He asked the judge to take into account that his client had pleaded guilty and also pointed out that Mr Smith had developed a cocaine and alcohol dependency around the time of the offending.

In 2014 he sought help at a residential treatment centre and has since responded well and is now completely drug free, has a new partner, a new job and "a future ahead of him".

He asked Justice McCarthy to consider what would be gained by giving him a prison sentence and said that Mr Smith is willing and able to do community service.

Mr Patrick Gageby, acting for Aston Carpets, also pointed out that his client had pleaded guilty in advance and that the net profit to the company from all the deals involved was €31,000.

He said the conduct was "reprehensible" and "anti-competitive" but he said any fine imposed should be proportionate. He also said that the company is unlimited.

Mr Farrell told Justice McCarthy that the maximum penalties involved include a fine of up to e5million and ten years in prison for price fixing and up to five years imprisonment for obstructing a prosecution.

Justice McCarthy said he wants to know what Mr Smith's salary and assets are worth before the sentence hearing.