FEDERAL COURT OF AUSTRALIA ACCC v Geoff Clegg Enterprises Proprietary Limited [2000] FCA 977 TRADE PRACTICES - price fixing - consideration of penalties under s 76 of the Trade Practices Act 1974 (Cth) where agreement between the Australian Competition and Consumer Commission and the parties on the proposed orders. Trade Practices Act 1974 (Cth) ss 45(2)(a)(i), 45(2)(a)(ii), 76 NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1997) 71 FCR 285 Foll Trade Practices Commission v CSR (1991) ATPR 41-076 Cited Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd (1996) ATPR 41,515 Cited AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v TUBEMAKERS OF AUSTRALIA LIMITED, COASTLINE FOUNDRY (QLD) PROPRIETARY LIMITED, ASSOCIATED WATER EQUIPMENT PROPRIETARY LIMITED, GEOFF CLEGG ENTERPRISES PROPRIETARY LIMITED, PETER PITTARD, GEOFFREY COLIN CLEGG AND PATRICK JOHN MCAULIFFE Q202 OF 1999 COOPER J BRISBANE 21 JULY 2000 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q202 OF 1999 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: TUBEMAKERS OF AUSTRALIA LIMITED (ACN 007 519 646) FIRST RESPONDENT COASTLINE FOUNDRY (QLD) PROPRIETARY LIMITED (ACN 010 584 246) SECOND RESPONDENT ASSOCIATED WATER EQUIPMENT PROPRIETARY LIMITED (ACN 010 108 077) THIRD RESPONDENT GEOFF CLEGG ENTERPRISES PROPRIETARY LIMITED (ACN 010 182 359) FOURTH RESPONDENT PETER PITTARD FIFTH RESPONDENT GEOFFREY COLIN CLEGG SIXTH RESPONDENT PATRICK JOHN MCAULIFFE SEVENTH RESPONDENT JUDGE: COOPER J DATE OF ORDER: 21 JULY 2000 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The fourth respondent shall pay to the Commonwealth of Australia a pecuniary penalty in the sum of $100,000, in respect of the contraventions of ss 45(2)(a)(i) and 45(2)(a)(ii) of the Trade Practices Act 1974 (Cth) ("the Act") described in paragraphs 17, 33, 37 and 44 of the statement of claim filed herein. 2. The penalty in the preceding order is to be paid within twenty-eight (28) days of the date of this order. THE COURT ORDERS BY CONSENT AS FOLLOWS: 3. The fourth respondent be and is hereby restrained for a period of three years, whether by itself, its directors, servants or agents or otherwise howsoever, from: (a) making or arriving at; (b) giving effect to; or (c) attempting to make, arrive at or give effect to any contract, arrangement or understanding with one or more competitors for the supply and delivery of valves and pipe fittings for ductile iron cement lined pipes and plastic pipes to local government authorities, civil contractors, wholesalers or retail purchasers, carrying on business anywhere in Australia which contract, arrangement or understanding contains a provision that : (a) has the purpose or has or is likely to have the effect, of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of the prices offered or charged for the supply and delivery of valves and pipe fittings for ductile iron cement lined pipes and plastic pipes anywhere in Australia. (b) has the purpose of preventing, restricting or limiting the supply of and delivery of valves and pipe fittings for ductile iron cement lined pipes and plastic pipes to acquirers of valves and pipe fittings for ductile iron cement lined pipes and plastic pipes. 4. The sixth respondent is hereby restrained for a period of three years, from being in any way, directly or indirectly, knowingly concerned in, or a party to (a) making or arriving at; (b) giving effect to; or (c) attempting to make, arrive at or give effect to: any contract, arrangement or understanding between two or more competitors for the supply and delivery of valves and pipe fittings for ductile iron cement lined pipes and plastic pipes to local government authorities, civil contractors, wholesalers or retail purchasers, carrying on business anywhere in Australia which contract, arrangement or understanding contains a provision that : (a) has the purpose or has or is likely to have the effect, of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of the prices offered or charged for the supply and delivery of valves and pipe fittings for ductile iron cement lined pipes and plastic pipes anywhere in Australia. (b) has the purpose of preventing, restricting or limiting the supply of and delivery of valves and pipe fittings for ductile iron cement lined pipes and plastic pipes to acquirers of valves and pipe fittings for ductile iron cement lined pipes and plastic pipes. 5. The fourth and sixth respondents shall pay the applicant's costs of and incidental to these proceedings fixed in the sum of $10,000. 6. The costs in the preceding order is to be paid within twenty-eight (28) days of the date of this order. THE COURT NOTES THAT: 7. The sixth respondent undertakes to ensure that either the fourth respondent or himself pay the above pecuniary penalty and costs within twenty-eight days hereof. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q202 OF 1999 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: TUBEMAKERS OF AUSTRALIA LIMITED (ACN 007 519 646) FIRST RESPONDENT COASTLINE FOUNDRY (QLD) PROPRIETARY LIMITED (ACN 010 584 246) SECOND RESPONDENT ASSOCIATED WATER EQUIPMENT PROPRIETARY LIMITED (ACN 010 108 077) THIRD RESPONDENT GEOFF CLEGG ENTERPRISES PROPRIETARY LIMITED (ACN 010 182 359) FOURTH RESPONDENT PETER PITTARD FIFTH RESPONDENT GEOFFREY COLIN CLEGG SIXTH RESPONDENT PATRICK JOHN MCAULIFFE SEVENTH RESPONDENT JUDGE: COOPER J DATE: 21 JULY 2000 PLACE: BRISBANE REASONS FOR JUDGMENT 1 This is an application for the imposition of pecuniary penalties pursuant to s 76 of the Trade Practices Act 1974 (Cth) ("the Act") and for injunctive relief in consequence of breaches of s 45(2)(a)(i) and s 45(2)(a)(ii) as pleaded in paragraphs 17, 33, 37 and 44 of the statement of claim filed herein. 2 The conduct complained of arises out of price fixing, market sharing and tender rigging in the market for the supply of fittings and valves suitable for use with ductile iron cement line pipe, and plastic pipe used in water supply systems, irrigation systems, and sewerage systems. The conduct in issue occurred on 5 occasions between December 1993 and May 1994. 3 The other parties who engaged in such conduct have been dealt with by the Court on 12 November 1999 and 6 March 2000. 4 The overall size of the market for the supply of the relevant fittings and valves for the financial year ended June 1995 was approximately $85 million. Sales by the fourth respondent in the 1995 financial year were $5.1 million, being 5-6% of the overall market. The fourth respondent was a supplier and distributor in the South East Queensland geographical area. 5 The fourth and sixth respondents admit the conduct alleged against them in the statement of claim. Such admissions are contained in the defence filed by them on 17 December 1999. They also accept their conduct involved major breaches of the Act. 6 The applicant, fourth and sixth respondents have filed a statement of agreed facts and joint submissions on penalty and injunctive relief for consideration of the Court. The submissions contain a proposed penalty in a specific amount and seek particular injunctive relief. 7 The question of the appropriate penalty and orders to be imposed and made for contravention of Part IV of the Act is for the Court and not the parties. However, the Court will often act on the view of the parties if the Court is satisfied, on the material placed before it, that what has been agreed is in accordance with the range of penalties and orders which the Court on its own assessment of the relevant facts and circumstances of the contravention would make: see NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1997) 71 FCR 285, where the relevant principles are discussed. 8 The conduct of the fourth and sixth respondents, which is admitted, is set out in the joint submissions and in the substantial affidavit material filed by the applicant in support of its claims. I do not propose to set all that material out in detail. I have had regard to it in coming to a decision in this matter. Additionally, the joint submissions specifically address the conduct of the fourth and sixth respondents in terms of the issues identified as relevant to penalty in Trade Practices Commission v CSR (1991) ATPR 41-076 at 52,152 - 52,153 and Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd (1996) ATPR 41,515 at 42,441 ff. 9 I am satisfied that : (a) the contraventions were serious contraventions; (b) although there is no evidence that the fourth respondent implemented the agreements, it was a party to the agreements; (c) the amount of the loss or damage caused by implementation of the agreements, although difficult to quantify did result in usual discounts being decreased by 15-25%; (d) although there is no sworn evidence of the motive of the sixth respondent in agreeing the fourth respondent became a party to the arrangements, it is reasonably clear that he feared adverse retaliatory conduct from the larger companies to the agreement if the fourth respondent did not join in; (e) the contravening company was a private company supplying valves and pipe fittings in South East Queensland. The sixth respondent was the owner and managing director at the relevant time and the company employed approximately 13 people; (f) the conduct was deliberate with the agreements being organised and regular meetings were held to report on the progress in raising prices; (g) the contravention arose out of the sixth respondent's conduct as the owner and managing director of the fourth respondent. The staff of the fourth respondent were not made aware of the agreements; (h) the fourth respondent has attended two trade practices compliance seminars and has instructed his solicitors to implement a compliance program for the fourth respondent; (i) the fourth and sixth respondents have co-operated with the applicant in admitting the allegations against them, but unlike the other respondents in this matter they did not provide further detailed information about their involvement; (j) the sixth respondent has undertaken to ensure that the fourth respondent or himself will pay the pecuniary penalty and costs that are suggested in the minutes of order provided in the joint submissions. 10 I am satisfied that the agreed penalty of $100,000 to be paid by the fourth respondent is an appropriate penalty in all the circumstances. I am also satisfied that the agreed amount of $10,000 to be paid by the fourth and sixth respondents towards the applicants costs is appropriate. Having regard to the sixth respondent personally guaranteeing payment of any pecuniary penalty imposed on the fourth respondent, I am satisfied that no pecuniary penalty order should be made against the fourth respondent. The seriousness of his conduct is adequately dealt with by the making of orders for injunctive relief against him and by ordering that he pay costs in the agreed sum within twenty-eight (28) days. 11 In respect of the fourth and sixth respondents, I make orders in terms of the draft orders annexed to the joint submissions. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper. Associate: Dated: 21 July 2000 Counsel for the Applicant: G O'Sullivan Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: B O'Donnell QC Solicitor for the Respondent: McCullough Robertson Date of Hearing: 21 July 2000 Date of Judgment: 21 July 2000