The Australian competition watchdog is “prioritising” investigation of the construction sector amid concerns that large software providers are charging exorbitant rates to transfer data to other providers and maintain backups of old data.
The Australian Competition and Consumer Commission (ACCC) has a Commercial Construction Unit to investigate various allegations of anti-competitive conduct in the commercial construction sector and is welcoming anonymous complaints and tip-offs. The watchdog listed the construction sector as a priority area for 2020.
InnovationAus has heard from a number of construction companies that had been looking to switch software providers but had been told they would be charged fees of up to $250,000 to have their data transferred and historical records kept on the system.
This has prevented some of these companies from moving to a new software provider. Construction companies are legally required to keep all data related to their work for several years.
The competition watchdog is proactively investigating anti-competitive behaviour in the construction sector.
“Generally speaking, under competition law, companies must not engage in conduct that would have the purpose, effect, or likely effect of substantially lessening competition in a market,” an ACCC spokesperson told InnovationAus.
“The ACCC is currently prioritising anti-competitive conduct in commercial construction markets and has a specialist Commercial Construction Unit to conduct those investigations. Construction companies are encouraged to contact the Unit directly to raise any concerns about behaviours in the industry that make it less competitive.”
The issue of high fees for data transfer and retaining data on the system when a company is looking to switch software providers appears to be a prevalent issue in the construction sector.
One executive at a construction company, who requested to remain anonymous, said the firm was charged tens of thousands of dollars to migrate data, and was left with little choice but to pay the fee.
“It felt like you were being robbed. There’s no justification for it – it’s to get access to data you should rightly have access to,” they told InnovationAus.
“They would charge you phenomenal amounts of money to get your data out of the system afterwards – it was tens of thousands of dollars depending on how much data there was.”
It is a significant problem in the construction sector, they said, exacerbated by the legal need to keep data for sometimes up to a decade.
“If the enterprise agreement finished and you didn’t renew, they would have just charged you a phenomenal amount of money to download and retrieve it, just to have access to it. They’d still charge tens of thousands of dollars to archive the account, and then it’s hard to filter and decipher,” the construction executive said.
“It’s incredibly hard to try to navigate through it. We have to retain our data legally for seven years – we need to get to that data. We had no choice. It’s a common issue. We’re not the only ones in that boat.”
InnovationAus has also heard from another construction company that was quoted $250,000 to keep two current projects and historical projects on their legacy provider’s system for two years.
The company felt locked out of potentially moving to another tech provider due to these costs, and the risks of the data migration not being completed.
Earlier this year ACCC chair Rod Sims listed the commercial construction sector as a priority area for the competition watchdog in 2020, with a focus on “large public and private projects and conduct impacting small business”.
“The focus is on the behaviour of participants in the construction industry that may raise competition concerns under the Competition and Consumer Act 2010,” the ACCC said.
“Effective competition in the construction sector will deliver fairness to all businesses. It is important that all businesses can vigorously compete for work on their merits, are not subject to unfair contract terms, or the unconscionable or coercive conduct of others.”
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