These ASX 200 shares are down 7% and 22% on price fixing allegations

There have been a number of declines on the ASX 200 index on Thursday.

But two ASX 200 shares that are falling very heavily today are Downer EDI Ltd (ASX: DOW) and Ventia Services Group Ltd (ASX: VNT).

At the time of writing, the Downer share price is down 7% to $5.32.

Whereas the Ventia share price is down 22% to $3.35.

Why are these ASX 200 shares being sold off?

Investors have been selling Downer and Ventia shares today after the two companies were accused of price fixing by the Australian Competition & Consumer Commission (ACCC).

According to the release, the ACCC has started civil cartel proceedings in the Federal Court against Downer subsidiary Spotless Facility Services and Ventia Australia, as well as four senior executives, for alleged price fixing.

The senior executives include Jacob Bonisch and Jeffrey Collins from Spotless and Gavin Campbell and Lena Parker from Ventia.

This legal action relates to estate maintenance and operation services for the Department of Defence (DoD).

The ACCC notes that the two ASX 200 shares each provide services to the DoD under separate billion-dollar contracts covering over 200 major Australian Defence Force (ADF) bases and other properties across Australia.

The competition regulator alleges that on three occasions between April 2019 and August 2022, Ventia and/or Spotless fixed or attempted to fix the prices that these services would be supplied under specific programs of works. The ACCC alleges that this is a breach of the cartel provisions in the Competition and Consumer Act.

Direct harm to the Commonwealth and taxpayers

Commenting on the allegations, ACCC Chair, Gina Cass-Gottlieb, said:

We allege this conduct caused direct harm to the Commonwealth and ultimately Australian taxpayers. One of the programs of work that we allege was the subject of a price fixing agreement related to a program funded by the Australian government to stimulate work for small to medium enterprises during the COVID-19 pandemic, when many individuals and businesses were experiencing financial hardship.

The ACCC is seeking declarations, civil penalties, and costs against the companies, as well as the four senior executives, and also disqualification orders against three of them in relation to the alleged conduct.

Response

Ventia responded briefly to the news, stating:

Ventia is reviewing the detail of the allegations and at this stage does not intend to comment further on the proceedings or the ACCC's media statement.

Whereas Downer advised that it "will vigorously defend any proceedings." It adds that it "is of the view that neither Spotless nor the two Spotless employees referred to by the ACCC engaged in unlawful conduct."

The post These ASX 200 shares are down 7% and 22% on price fixing allegations appeared first on The Motley Fool Australia.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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