FEDERAL COURT OF AUSTRALIA Australian Competition & Consumer Commission v D M Faulkner Pty Limited [2004] FCA 1666 TRADE PRACTICES – exclusionary provisions – scrap metal industry – auctions – agreement among merchants – nominated bidder – controlled or restricted bidding at auction – subsequent allocation of a payment for goods – loss or damage unquantified – submitting respondents – defending respondents – market – whether the 'purpose' of provision in an arrangement should be approached subjectively or objectively – application of totality principle – where company is alter ego of individual – penalty – factors to be considered in determining penalties for contravention of Trade Practices Act – application of the "French factors" and the "Heerey factors" – permissible range – proposed penalties – whether variation from proposed penalty can be made where it is within the permissible range PRACTICE AND PROCEDURE – substituted service appropriate where respondent determined not to accept service – nature of the Court's discretion and power to grant injunctive relief – no case submission Trade Practices Act 1974 (Cth) ss 4D, 4F, 45, 45A, 76, 80 Federal Court Rules O 7 r 10 ACCC v ABB (2002) ATPR 41-871 ACCC v FFE Building Services Limited [2003] FCA 154 ACCC v Ithaca Ice Works Pty Limited (2002) ATPR 41-851 ACCC v Roche Vitamins Australia Pty Ltd (2001) ATPR 41-809 ACCC v Tyco Australia Pty Ltd (2000) ATPR 41-789 ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1)(1990) 27 FCR 460 Australian Competition and Consumer Commission v Australian Medical Association Western Australia Branch Inc (2003) 199 ALR 423 Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 75 FCR 238 Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (No 8) (1999) 165 ALR 468 Australian Competition & Consumer Commission v ABB Power Transmission Pty Ltd [2004] FCA 819 Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (2001) ATPR 41-815 Australian Competition & Consumer Commission v Chaste Corporation Pty Ltd [2004] FCA 398 Australian Competition & Consumer Commission v Fila Sport Oceania Pty Ltd (Administrators Appointed) [2004] FCA 376 Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd [2004] FCA 693 Australian Competition & Consumer Commission v NW Frozen Foods (1996) ATPR 41-515 Australian Competition & Consumer Commission v Pauls Ltd [2002] FCA 1586 Australian Competition & Consumer Commission v Universal Music Australia Pty Limited (No 2) [2002] FCA 192 Commerce Commission v New Zealand Milk Corporation Ltd [1994] 2 NZLR 730 Hughes v Western Australian Cricket Association (inc) (1986) 19 FCR 10 ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248 Jones v Dunkel (1959) 101 CLR 298 Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 News Ltd & Ors v South Sydney District Rugby League Football Club Ltd & Ors (2000) 200 ALR 15 NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 Postiglione v The Queen (1997) 189 CLR 295 Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Company Ltd (1989) 167 CLR 177 Schneider Electric (Australia) Pty Ltd v Australian Competition & Consumer Commission (2003) 127 FCR 170 Scoway Pty Ltd v Faxon Pty Ltd [2004] FCA 249 Trade Practices Commission v Allied Mills Pty Ltd (1981) APPR 40-241 Trade Practices Commission v Allied Mills Industries Pty Ltd (No 5)(1981) 60 FLR 38 Trade Practices Commission v CSR Limited (1991) ATPR 41-076 Trade Practices Commission v ICI Australia Operations Pty Ltd (1991) 105 ALR 115 Trade Practices Commission v Pye Industries Sales Pty Ltd (1978) ATPR 40-089 Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40-091 Trade Practices Commission v TNT Australia Pty Limited (1995) ATPR 41-375 Universal Music Australia Pty Ltd v Australian Competition & Consumer Commission [2003] FCAFC 193; (2003) 201 ALR 636 AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v D M FAULKNER PTY LIMITED (ACN 077 373 712), DAVID MUNRO FAULKNER, RIVERSIDE METAL INDUSTRIES PTY LTD (ACN 002 537 537), PAUL LEONARD CLINGAN, MICHAEL WALTER NIETNER, FERNDALE RECYCLERS PTY LIMITED (ACN 056 303 130), RONALD CHRISTOPHER BAGNALL, AJAX SHEET METAL PTY LIMITED (ACN 000 466 713), SIDNEY NEVILLE FORRESTER, T & D METALS & DEMOLITIONS PTY LIMITED (ACN 066 973 993), ANTHONY FRANKE, HENDRICUS FRANKE, ALLAN HIGGINS and WILLIAM ROBINSON N1672 OF 2001 BENNETT J 30 SEPTEMBER 2004 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1672 OF 2001 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: D M FAULKNER PTY LIMITED (ACN 077 373 712) FIRST RESPONDENT DAVID MUNRO FAULKNER SECOND RESPONDENT RIVERSIDE METAL INDUSTRIES PTY LTD (ACN 002 537 537) THIRD RESPONDENT PAUL LEONARD CLINGAN FOURTH RESPONDENT MICHAEL WALTER NIETNER FIFTH RESPONDENT FERNDALE RECYCLERS PTY LIMITED (ACN 056 303 130) SIXTH RESPONDENT RONALD CHRISTOPHER BAGNALL SEVENTH RESPONDENT AJAX SHEET METAL PTY LIMITED (ACN 000 466 713) TENTH RESPONDENT SIDNEY NEVILLE FORRESTER ELEVENTH RESPONDENT T & D METALS & DEMOLITIONS PTY LIMITED (ACN 066 973 993) THIRTEENTH RESPONDENT ANTHONY FRANKE FOURTEENTH RESPONDENT HENDRICUS FRANKE FIFTEENTH RESPONDENT ALLAN HIGGINS SIXTEENTH RESPONDENT WILLIAM ROBINSON SEVENTEENTH RESPONDENT JUDGE: BENNETT J DATE OF ORDER: 30 SEPTEMBER 2004 WHERE MADE: SYDNEY THE COURT MAKES ORDERS: 1. With respect to the first and second respondents, the orders in Annexure A to these reasons. 2. With respect to the third and fourth respondents, the orders in Annexure B to these reasons. 3. With respect to the fifth respondent, the orders in Annexure C to these reasons. 4. With respect to the tenth and eleventh respondents, the orders in Annexure D to these reasons. 5. With respect to the thirteenth and fourteenth respondents, the orders in Annexure E to these reasons. 6. With respect to the seventeenth respondent, the orders in Annexure F to these reasons. 7. With respect to the sixteenth respondent, the orders in the notice of motion filed 23 March 2004. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1672 OF 2001 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: D M FAULKNER PTY LIMITED (ACN 077 373 712) FIRST RESPONDENT DAVID MUNRO FAULKNER SECOND RESPONDENT RIVERSIDE METAL INDUSTRIES PTY LTD (ACN 002 537 537) THIRD RESPONDENT PAUL LEONARD CLINGAN FOURTH RESPONDENT MICHAEL WALTER NIETNER FIFTH RESPONDENT FERNDALE RECYCLERS PTY LIMITED (ACN 056 303 130) SIXTH RESPONDENT RONALD CHRISTOPHER BAGNALL SEVENTH RESPONDENT AJAX SHEET METAL PTY LIMITED (ACN 000 466 713) TENTH RESPONDENT SIDNEY NEVILLE FORRESTER ELEVENTH RESPONDENT T & D METALS & DEMOLITIONS PTY LIMITED (ACN 066 973 993) THIRTEENTH RESPONDENT ANTHONY FRANKE FOURTEENTH RESPONDENT HENDRICUS FRANKE FIFTEENTH RESPONDENT ALLAN HIGGINS SIXTEENTH RESPONDENT WILLIAM ROBINSON SEVENTEENTH RESPONDENT JUDGE: BENNETT J DATE: 30 SEPTEMBER 2004 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The proceedings have been brought by the Australian Competition and Consumer Commission ('the ACCC') against seventeen respondents for price fixing and collusive and anticompetitive conduct in the scrap metal market. The action was discontinued against the eighth respondent, Metals Recovery Pty Limited (ACN 003 270 666), the ninth respondent, Keith Brian Burnett (deceased), and the twelfth respondent, Peter Dunn. The amended statement of claim also alleged contraventions of s 52 of the Trade Practices Act 1974 (Cth) ('the Act'). The s 52 allegations were not proceeded with, other than by way of consent orders in respect of some of the respondents. 2 Most of the respondents (the first to fifth, tenth to fourteenth and seventeenth respondents) ('the submitting respondents'), for the purposes of these proceedings, admitted in substance the allegations in the amended statement of claim insofar as they related to contraventions of both as to factual matters and that those facts amounted to contravention of the Act and so enabled the court to proceed to impose penalties. I have referred to these agreed facts in some detail below as they contextualise the ACCC's allegations. The ACCC and the submitting respondents negotiated penalties which they considered appropriate and submitted them to the Court. Background facts agreed as between the accc and the submitting respondents 3 These allegations are of price fixing and collusive and anticompetitive conduct in the scrap metal market at the small-trader end of that market. In the market of the New South Wales scrap metal industry, the first and second respondents are small to mid-size traders when compared with the major traders Metalcorp Recyclers Pty Ltd ('Metalcorp') (a division of Smorgon Steel Group Limited ('Smorgon')) and Simsmetal Limited ('Simsmetal'). 4 Scrap metal merchants and metal recyclers purchase items manufactured from metals such as steel, iron, copper, brass, stainless steel and aluminium for processing and reselling. Scrap metal items purchased are broadly those metal items that are no longer wanted by any entity for their original functional purpose. Metal items may be those that are derelict, off-cuts, in disrepair, new and unused metal goods or second hand reusable items such as plate, beams and railway lines. 5 Most scrap items must be processed by at least being cut into smaller pieces so that they are less bulky for loading into trucks and containers and removing contaminates and can be sorted into bundles of like metal. The process of sorting and cutting bulkier items is the area in which the respondents operate. The processed metals are then on sold to a limited number of larger operations: Metalcorp, Simsmetal, BHP Billiton Limited ('BHP') or Smorgon in the case of ferrous scrap and Simsmetal or Riverside Metal Industries Pty Ltd ('Riverside Metal') in the case of non-ferrous scrap. The end users of ferrous scrap are BHP and Smorgon. A small amount of non-ferrous scrap is exported. 6 Metals can be categorised into ferrous and non-ferrous metals. Ferrous metals, which include steel products (but not stainless steel) and cast iron goods, are almost always magnetic. For resale, ferrous metals need to be cut to small specifications, usually not larger than 800 mm x 800 mm. Railway line, steel beams and steel plates are processed by oxy-cutting and/or mobile shear excavators. Whitegoods and car bodies are processed through shredding machines, which remove the plastic, and other non-metal contents. Non-ferrous materials are non-magnetic and are processed differently, depending on the metal. They include copper, aluminium, brass and stainless steel. 7 Scrap metal merchants compete with one another to purchase scrap metal items from the following sources: (a) By: (i) attending auctions where surplus trading stock or plant and machinery are sold; (ii) tendering where businesses are liquidating trading stock or parts of their business; and (iii) emptying metal off-cut bins from manufacturing sites (not all of the respondents engaged in this activity) (b) Government departments who are disposing of used goods by tender or auction; (c) Tradesmen bringing in items to the dealer's business premises such as old pipes, electrical cabling and roofing irons and members of the public disposing of old white goods, aluminium cans or cars; (d) Businesses specialising in demolishing (not all respondents engaged in this type of business); and (e) Other scrap dealers. The proportion of scrap metal acquired from these various sources will depend on the level of sophistication of a scrap dealer's processing capacity and his relative size in the market. 8 The amended statement of claim describes what is alleged to be an arrangement or understanding known as the "ring" and the "knock" that operated among scrap metal dealers in New South Wales up to the end of 1999. The scrap metal merchants were competitive with each other. The relevant market is the scrap metal market. 9 Rings occurred and operated as follows: (i) in the days preceding the auction and/or early on the day of the auction, scrap metal merchants agreed amongst themselves to participate in the ring for the duration of the auction; (ii) the scrap metal merchants agreed amongst themselves who (from amongst them) would bid; (iii) bids were made by the nominated bidder; (iv) the other members of the ring should not bid against the nominated bidder for items purchased for their scrap value. 10 Knocks occurred as follows: (i) after the auction, ring members reconvened at another location, usually a local hotel or club, to allocate amongst themselves the scrap metal purchased at the auction and to determine who (from amongst themselves) would pay for the goods purchased at the auction; (ii) the goods purchased by the bidder at auction (as referred to in above paragraph) were known collectively as "the bill"; (iii) each ring member was given the opportunity to nominate a sum; (iv) the ring member who nominated the highest sum became entitled to the bill; (v) the ring member who nominated the highest sum became obliged to pay the sum of the bill to the auctioneer, and became obliged to pay to each other member the highest sum which that member nominated at the knock. 11 These proceedings are concerned with five public auctions of scrap metal: * Chiswick (10–11 February 1999) ('the Chiswick auction') where goods worth approximately $42,861.50 were purchased by the ring and approximately $18,540 paid at the knock to ring members; * Bathurst (12 October 1999) ('the Bathurst auction') where goods worth approximately $358,198.90 were purchased by the ring and approximately $15,050 paid at the knock to ring members; * Port Kembla (28 October 1999) ('the Port Kembla auction') where goods worth approximately $35,699 were purchased by the ring and approximately $20,120 paid at the knock to ring members; * Newcastle (24 November 1999) ('the first Newcastle auction') where goods worth approximately $37,944.50 were purchased by the ring and approximately $25,000 paid at the knock to ring members; and * Newcastle (25 November 1999) ('the second Newcastle auction') where goods worth approximately $18,000 were purchased by the ring and approximately $2,000 paid at the knock to ring members. None of the submitting respondents admitted to attending the second Newcastle auction as to participating in any alleged ring or knock. 12 The largest companies in the scrap metal industry, Simsmetal and Smorgon purchase more than 90% of scrap metal. Figures for scrap metal processed in the year ending 30 June 2003 are: Company Scrap metal processed (tonnes) Sims Group 2,427,000 Smorgon 1,286,000 Riverside Metal 7,700 Statutory framework 13 Section 45 provides:- '(2) A corporation shall not: (a) make a contract or arrangement, or arrive at an understanding, if: (i) the proposed contract, arrangement or understanding contains an exclusionary provision; or (ii) a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or (b) give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision: (i) … (ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition. (3) For the purposes of this section, … 'competition', in relation to a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, means competition in any market in which a corporation that is a party to the contract, arrangement or understanding or would be a party to the proposed contract, arrangement or understanding, or any body corporate related to such a corporation, supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the provision, supply or acquire, or be likely to supply or acquire, goods or services.' The arrangement or understanding substantially lessened competition by fixing, controlling or maintaining the price of scrap metal within the meaning of s 45A as follows: '(1) Without limiting the generality of section 45, a provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be deemed for the purposes of that section to have the purpose, or to have or to be likely to have the effect, of substantially lessening competition if the provision has the purpose, or has or is likely to have the effect, as the case may be, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price for, or a discount, allowance, rebate or credit in relation to, goods or services supplied or acquired or to be supplied or acquired by the parties to the contract, arrangement or understanding or the proposed parties to the proposed contract, arrangement or understanding, or by any of them, or by any bodies corporate that are related to any of them, in competition with each other.' 14 The expression "arrangement or understanding" in the above sections requires more than a "mere expectation" but requires that at least one party "assume an obligation" or give an "assurance" or "undertaking" that it will act in a certain way (Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (No 8) (1999) 165 ALR 468 at 500). Justice Lindgren also held in that case at 504 that 'an arrangement or understanding has the effect of "controlling price" if it restrains a freedom that would otherwise exist as to a price to be charged'. Furthermore, at 506, his Honour did not consider that 'some specificity as to price is a necessary element of the notion of 'controlling' price within s 45A'. 15 'Exclusionary provisions' for the purposes of s 45 of the Act are defined in s 4D as follows: '(1) A provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if: (a) the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and (b) the provision has the purpose of preventing, restricting or limiting: (i) the supply of goods or services to, or the acquisition of goods or services persons; or from, particular persons or classes of (ii) the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions; by all or any of the parties to the contract, arrangement or understanding or of the proposed parties to the proposed contract, arrangement or understanding or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate. (2) A person shall be deemed to be competitive with another person for the purposes of subsection (1) if, and only if, the first-mentioned person or a body corporate that is related to that person is, or is likely to be, or, but for the provision of any contract, arrangement or understanding or of any proposed contract, arrangement or understanding, would be, or would be likely to be, in competition with the other person, or with a body corporate that is related to the other person, in relation to the supply or acquisition of all or any of the goods or services to which the relevant provision of the contract, arrangement or understanding or of the proposed contract, arrangement or understanding relates.' Section 4F of the Act provides: '(1) For the purposes of this Act: (a) a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, or a covenant or a proposed covenant, shall be deemed to have had, or to have, a particular purpose if: (i) the provision was included in the contract, arrangement or understanding or is to be included in the proposed contract, arrangement or understanding, or the covenant was required to be given or the proposed covenant is to be required to be given, as the case may be, for that purpose or for purposes that included or include that purpose; and (ii) that purpose was or is a substantial purpose; and (b) a person shall be deemed to have engaged or to engage in conduct for a particular purpose or a particular reason if: (i) the person engaged or engages in the conduct for purposes that included or include that purpose or for reasons that included or include that reason, as the case may be; and (iii) that purpose or reason was or is a substantial purpose or reason…' 16 The ACCC submitted that the mental element of 'purpose' was present in the allegedly anti-competative arrangements of the ring and the knock. Mr Faulkner SC, senior counsel for the ACCC, submitted that the provisions in the agreements between the alleged members of the ring and the knock, had the purpose of preventing or restricting the acquisition of goods from the vendor at each of the auction. Mr Faulkner SC referred me to News Ltd & Ors v South Sydney District Rugby League Football Club Ltd & Ors (2000) 200 ALR 15 where the High Court considered the meaning of 'purpose' in the context of s 4D of the Act. It was held by majority that purpose means nothing more than the effect which is 'sought to be accomplished by the conduct' at [18], [43], [60] and [212]. This is distinct, Gleeson CJ held, from 'the reason from seeking that end' at [18]. McHugh J at [41], refused to overrule the subjective interpretation of the section because it has 'stood for 17 years and approved by the Full Court of the Federal Court and followed on numerous occasions', despite stating (at [38]) that the objective interpretation appears 'more in accord with the Act's object of promoting competition'. His Honour expressed the view that there was probably little difference whether the objective or subjective test of purpose was applied because, in applying the subjective test, the Court will be considering the surrounding circumstances and therefore using objective considerations to determine the "purpose" of the parties (Hughes v Western Australian Cricket Association (inc) (1986) 19 FCR 10 at 38 and News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at 576). Section 4D of the Act must be read in light of the legislative context in which the task is undertaken (see Gleeson CJ at [18]). In this case, the ACCC submitted that the purpose of the ring and the knock at the four auctions was to prevent or restrict the acquisition of goods from the vendor at each of the auctions. 17 Alternatively, Mr Faulkner SC submitted that the 'deeming provision' under s 45A applies to the arrangements between the respondents. Section 45A provides that a provision in a contract or an agreement will be regarded as a price fixing provision if it has the purpose or likely effect of fixing, controlling or maintaining the price of goods or providing for that to occur. Accordingly, it was submitted that it is sufficient for the purposes of establishing the contraventions of the Act, that the provisions in the arrangements between the respondents had the purpose or likely effect of controlling the price of scrap metal at the each of the five auctions. FACTS AGREED BY THE ACCC AND THE SUBMITTING RESPONDENTS 18 To the extent that these agreed facts relate to allegations against the non-submitting respondents, they are not facts found as against those respondents except to the extent of the agreed facts in the affidavit of the fourth respondent, Paul Leonard Clingan ('Mr Clingan'), tendered against the sixth, seventh, fifteenth and sixteenth respondents. Each submitting respondent agreed to the facts in respect of the auctions attended by him on his own behalf and, where relevant, on behalf of the company of which he was a director. 19 The evidence of the submitting respondents is that the formation of a ring took place before the auctions or at the early stages of the auctions. There was no evidence of any advance planning. It is fair to say that the arrangements were not complex. The Chiswick auction 20 The Chiswick auction was held on behalf of BHP at the corner of Blackwall Point Road and Parkview Roads, Chiswick. The auctioneer was Masongreene Australasia Pty Limited ('Masongreene'). It was held to dispose of items such as trucks, plant, services equipment, other equipment, site buildings and office furniture. 21 A ring was formed consisting of at least seventeen scrap metal dealers, including Anthony Franke ('Mr Tony Franke'), Sidney Neville Forrester ('Mr Forrester'), Ronald Christopher Bagnall ('Mr Bagnall') and Hendricus Franke ('Mr Harry Franke') ('the Chiswick members'). In his agreed statement of facts, Mr Clingan does not admit to being present at the Chiswick auction or to taking part in a ring or a knock on that occasion. Other submitting respondents identified Mr Clingan as being present and active in the ring. However, that evidence was not tendered against Mr Clingan and is not taken into account in assessing his penalty. It is, however, relevant to the actions of the other non-corporate respondents who were also Chiswick members. 22 At the Chiswick auction, $292,403 was paid by various bidders for the goods available. Mr Bagnall bid on behalf of the ring and purchased goods for a total of $42,861.50 on its behalf. 23 After the auction, the ring members went to a nearby hotel to take part in the knock. Once a first bid was made, the other ring members each stated whether they would accept that amount to "drop out" of the bidding process or whether they would make a higher bid to stay in. The highest bidder was entitled to purchase the bill and had to pay each other ring member the sum at which that member dropped out of the bidding process. The total payment made at the knock was $18,540. 24 But for the ring and the knock in respect of the Chiswick auction, each of the Chiswick members would have been or would be likely to have been in competition with each other to acquire scrap metal at the Chiswick auction. By reason of the formation of the ring, each of the Chiswick members refrained from bidding for goods purchased on behalf of the ring. The Bathurst auction 25 The Bathurst auction was held on behalf of the Commonwealth of Australia (the Department of Defence) ('the Department') at Lloyde Street, Bathurst. The auction was held to dispose of items no longer required by the Department, such as tent poles, aluminium boats, refrigerators, field cool rooms, platform scales and air-conditioning units. Many of the items for sale had a resale value as second hand items so that many of the bidders at the auction were purchasing goods for their second hand rather than their scrap value. 26 A ring of scrap dealers was formed of at least twenty scrap dealers ('the Bathurst members'). They included the second respondent, David Faulkner ('Mr Faulkner'); the fourth respondent, Mr Clingan; the fifth respondent, Michael Nietner ('Mr Nietner'); the eleventh respondent, Mr Forrester; the fourteenth respondent, Mr Tony Franke; and the sixteenth respondent, Allan Higgins ('Mr Higgins'). 27 Mr Keith Burnett and Mr Les Kilpatrick bid on behalf of the ring. The bidding by Mr Kilpatrick was undertaken on the registration of Mr Forrester. This was not disclosed to the auctioneer. Mr Burnett and Mr Kilpatrick purchased goods for $358,198.90 on behalf of the ring. At the Bathurst auction $983,095 was paid for goods that were sold to 120 purchasers. 28 After the auction, the ring members met at the Bathurst RSL Club to take part in the division of goods at the knock. The total price for the bill was $358,198.90. The name of each ring member was written on a card taken from a pack of playing cards. When a card with a ring member's name on it was drawn from the pack, that member was asked to nominate a sum that he would be prepared to pay to each other ring member in order to purchase the bill. Once the first member had nominated a sum, the other ring members stated whether they would accept that amount to "drop out" of the bidding process or whether they would bid higher to stay in the bidding process. The next member then bid a higher sum and the remaining members stated whether they accepted that sum or bid a higher sum. Ultimately one member of the group remained. That member was then required to purchase the bill and pay each other member the sum at which that member had dropped out of the bidding process. 29 Mr Clingan was successful in purchasing the bill on behalf of Riverside Metal. The fact that this was on a 50/50 basis with Mr Faulkner was not disclosed to the other ring members. Mr Faulkner wrote out cheques on an account of the first respondent, D M Faulkner Pty Limited ('D M Faulkner'), to each ring member, paying a total of $15,050 to the Bathurst members for their unsuccessful bids to acquire the bill at the knock. Riverside Metal, the third respondent, a company associated with Mr Clingan, paid the auctioneer for the goods purchased on behalf of the ring. D M Faulkner reimbursed Riverside Metal for its half share. Riverside Metal reimbursed D M Faulkner for the money paid to the participants in the knock. 30 At the auction there was an arrangement or understanding amongst the scrap metal merchants in respect of the scrap metal sold at the auction: (a) to engage in controlled or restricted bidding at the auction; and (b) after the auction, to allocate and pay for the goods purchased at auction. 31 But for the ring and the knock in respect of the Bathurst auction, each of the Bathurst members would have been or would be likely to have been in competition with each other to acquire scrap metal at the Bathurst auction. By reason of the formation of the ring, each of the Bathurst members refrained from bidding for goods purchased on behalf of the ring. The Port Kembla auction 32 The Port Kembla auction was held on behalf of BHP at the company's steelworks in Five Islands Road, Port Kembla. BHP was disposing of the Clyde-Caruthers Plant and surplus equipment. The auction was conducted by Masongreene. It included a roll production plant, electroplating and effluent plant, general engineering plant and equipment, foundry equipment and transformers. Some of the plant and equipment had value predominantly as scrap metal. 33 Fifty-five people registered to bid at the auction. $143,235 was paid by various bidders for the goods available. 34 Mr Clingan and Vince Baldini bid on behalf of a ring of eight people including Mr Clingan and Mr Tony Franke ('the Port Kembla members'). Mr Clingan also identified the fifteenth respondent ('Mr Harry Franke') and Mr Higgins as members of the ring. The Port Kembla members purchased goods for $35,699 on behalf of the ring. After the auction, those goods were placed in the bill at the knock at the Port Kembla Leagues Club. Each member made a bid to purchase the bill or accepted an offer to drop out. 35 Mr Tony Franke of T & D Metals and Demolitions Pty Ltd ('T & D Metals') acquired the bill. Greg Cook of Metalcorp paid each of the other ring members their drop out amounts on behalf of Tony Franke. The total of the knock payments was $20,120. Tony Franke paid Masongreene for the goods purchased on behalf of the Port Kembla members and repaid Metalcorp for the moneys paid on his behalf at the knock. 36 At the auction there was an arrangement or understanding amongst the scrap metal merchants: (a) to engage in controlled or restricted bidding at the auction; and (b) after the auction, to allocate and pay for the goods purchased at auction. 37 But for the ring and the knock in respect of the Port Kembla auction, each of the Port Kembla members would have been or would be likely to have been in competition with each other to acquire scrap metal at the Port Kembla auction. By reason of the formation of the ring, each of the Port Kembla members refrained from bidding for goods purchased on behalf of the ring. The first Newcastle auction 38 On 24 and 25 November 1999 an auction was held on behalf of BHP at the company's plant in Newcastle. The auction was advertised in many newspapers. It was a large auction in that approximately 1000 tonnes of metal and metal items were for sale instead of the more usual 30 or 40 tonnes. The auction ran over two days. Over that time, at least $383,215 was paid for goods sold to 86 purchasers. 39 At the first Newcastle auction, the submitting respondents claim that the seventh respondent ('Mr Bagnall') bid for items on behalf of a ring consisting of at least seventeen members including D M Faulkner, Riverside Metal, Mr Nietner, and the seventeenth respondent ('Mr Robinson') ('the first Newcastle members'). Mr Clingan, Mr Faulkner and Mr Nietner also identified as members at this auction, the seventh respondent ('Mr Bagnall'), the fifteenth respondent ('Mr Harry Franke') and Mr Higgins as ring members. Mr Bagnall purchased scrap metal items for $37,944.50. 40 At the conclusion of the first Newcastle auction, the ring members retired to the Phoenix Sports Club at Mayfield in Newcastle ('the Phoenix Club') to take part in the knock. The bidding was commenced with a ring member nominating a bid. Other ring members were approached to nominate a bid. Those members who did not want to bid higher nominated an amount at which they would drop out of the bidding. Richard Best of Metalcorp was successful in acquiring the bill. D M Faulkner made payments to the ring members for their unsuccessful bids at the knock by cheque on behalf of Metalcorp. Metalcorp paid the auctioneer at the first Newcastle auction for the goods purchased on behalf of the ring and reimbursed D M Faulkner for the sums advanced at the knock. 41 At the auction there was an arrangement or understanding amongst the scrap metal merchants in respect of the scrap metal sold in the auction: (a) to engage in controlled or restricted bidding at the auction; and (b) after the auction, to allocate and pay for the goods purchased at auction. 42 But for the ring and the knock in respect of the first Newcastle auction, each of the first Newcastle members would have been or would be likely to have been in competition with each other to acquire scrap metal at the first Newcastle auction. By reason of the formation of the ring, each of the first Newcastle members refrained from bidding for goods purchased on behalf of the ring. Submitting personal respondents 43 The submitting respondents agreed that, at the auctions they had attended, they had formed a ring with certain other scrap metal dealers and that, after the auction, the members of the ring participated in a knock. By agreeing to be part of the ring, each personal respondent knew: (a) that he was expected not to bid against the dealer appointed to bid on behalf of the ring ('ring bidder') unless the ring bidder had dropped out of the bidding or he intended to buy the goods at a higher price for their functional purpose and not for their scrap value. (b) that he was entitled to participate in the "knock" after the conclusion of the auction. (c) that the knock comprised a secondary auction system whereby the goods purchased on behalf of the ring acquired by a member or group of members of the ring. The successful purchaser could (after the knock) seek to resell some of the items to other ring members or get another ring member to sell items in his market. Submitting corporate respondents 44 D M Faulkner admitted attending the Bathurst and first Newcastle auctions, through the director Mr Faulkner; Riverside Metal admitted that it attended the Bathurst, first Newcastle and Port Kembla auctions; Ajax Sheet Metal Pty Ltd ('Ajax') agreed that it attended the Bathurst and Chiswick auctions; and T & D Metals admitted that it attended the Bathurst, Chiswick and Port Kembla auctions. The admissions by each of the corporate submitting respondents, Riverside Metal and D M Faulkner, T & D Metals and Ajax are that, at the respective auctions (the Chiswick and/or Bathurst, and/or first Newcastle and/or Port Kembla auctions), the agreed facts prove: (a) that, with respect to the auctions it attended, it made or arrived at an arrangement or understanding with the Chiswick members, the Bathurst members, the Port Kembla members and the first Newcastle members to be members of a ring, to conduct itself as a member of that ring and to engage in the knock, as described herein (with respect to Riverside Metal) or as described in the amended statement of claim (with respect to D M Faulkner, Ajax and T & D Metals); (b) that each arrangement or understanding contained a provision that had the purpose of preventing, restricting or limiting the acquisition of scrap metal from persons in the scrap metal market by the ring members; (c) that, but for the provisions, the ring members would have been or would be likely to have been in competition with each other in relation to the acquisition of scrap metal at the Chiswick auction, the Bathurst auction, the Port Kembla auction and the first Newcastle auction respectively, such that, by reasons of the matters in (a), (b) and (c), Riverside Metals, D M Faulkner, Ajax and T & D Metals contravened s 45(2)(a)(i) of the Act; (d) that a provision of each arrangement or understanding had the purpose or would have or would be likely to have had the effect of substantially lessening competition by reason that the provision had the purpose or had or was likely to have had the effect of controlling the price for goods to be acquired by Riverside Metal, D M Faulkner, Ajax and T & D Metals and each of the other of the Chiswick members, the Bathurst members, the Port Kembla members and the first Newcastle members respectively, in competition with each other; such that, by reason of the matters in (a) and (d), Riverside Metal, D M Faulkner, Ajax and T & D Metals contravened s 45(2)(a)(ii) of the Act; (e) that each corporate submitting member together with the persons referred to in sub-paragraph (a) above, gave effect to: (i) the provisions referred to in (b) such that, by reason of the matters in (a), (b), (c) and (e), it contravened s 45(2)(b)(i) of the Act; and (ii) the provisions referred to in (d) such that, by reason of the matters in (a), (d) and (e), it contravened s 45(2)(b)(ii) of the Act. 45 The submitting respondents entered into an understanding and assumed the obligation not to bid against the bidder nominated by the ring and after the auction bid amongst themselves for the goods at the knock. These actions thereby restrained the freedom they otherwise would have had as individual bidders at the auction and controlled or limited the price raised at the auction for the goods by ensuring that the ring members were not bidding against each other. 46 In so making this arrangement or arriving at this understanding, the submitting respondents agreed that the submitting corporate respondents contravened s 45(2)(a)(i) of the Act. 47 Each of Mr Clingan, Mr Faulkner, Mr Forrester and Mr Tony Franke admitted that the agreed facts establish that he engaged in conduct whereby he aided, abetted, counselled or procured the contraventions of the corporate respondent of which he was a director, and that he was a person who has been directly, knowingly concerned in, and party to, the contraventions of that corporate respondent within the meaning of s 76 of the Act. 48 Mr Nietner admitted that the agreed facts proved: (a) that he arrived at an understanding with the Bathurst members and the first Newcastle members to be members of a ring, to conduct himself as a member of that ring and to engage in the knock, as described in respect of each relevant auction in the amended statement of claim; (b) that each understanding contained a provision that had the purpose of preventing, restricting or limiting the acquisition of scrap metal from persons in the scrap metal market by the ring members; (c) that, but for the provisions, the ring members would have been or would be likely to have been in competition with each other in relation to the acquisition of scrap metal at the Bathurst auction and the first Newcastle auction respectively; such that, by reason of the matters in (a), (b) and (c), each of D M Faulkner, Riverside Metal, Ferndale Recyclers Pty Limited ('Ferndale'), Ajax and T & D Metals contravened s 45(2)(a)(i) of the Act; (d) that a provision of each understanding had the purpose or would have or would be likely to have had the effect of substantially lessening competition by reason that the provision had the purpose or had or was likely to have had the effect of controlling the price for goods to be acquired by Mr Nietner and each of the other Bathurst members and the first Newcastle members respectively, in competition with each other; such that, by reason of the matters in (a) and (d), each of D M Faulkner, Riverside Metal, Ferndale, Ajax and T & D Metals contravened s 45(2)(a)(ii) of the Act; (e) that Mr Nietner, together with the persons referred to in sub-paragraph (a) above gave effect to: (i) the provisions referred to in (b) such that, by reason of the matters in (a), (b), (c) and (e), each of D M Faulkner, Riverside Metal, Ferndale, Ajax and T & D Metals contravened s 45(2)(b)(i) of the Act; and (ii) the provisions referred to in (d) such that, by reason of the matters in (a), (d) and (e), each of D M Faulkner, Riverside Metal, Ferndale, Ajax and T & D Metals contravened s 45(2)(b)(ii) of the Act. 49 Mr Nietner admitted that the agreed facts set out above prove that he engaged in conduct whereby he aided, abetted, counselled or procured the contraventions of D M Faulkner, Riverside Metal, Ferndale, Ajax and T & D Metals referred to above, and that he was a person who has been directly, knowingly concerned in, and party to, the contraventions of each of those corporate respondents, within the meaning of s 76 of the Act. 50 Mr Robinson admitted that the agreed facts set out above prove that he engaged in conduct whereby he aided, abetted, counselled or procured the contraventions of D M Faulkner, Riverside Metal and Ferndale referred to above, and that he was a person who has been directly, knowingly concerned in, and party to, the contraventions of each of those corporate respondents, within the meaning of s 76 of the Act. Matters relevant to the amount of pecuniary penalty 51 The individual respondents participated in the rings and the knocks in varying degrees and the penalties imposed must reflect that. 52 Section 76 of the Act provides that: '(1) If the Court is satisfied that a person: (a) has contravened any of the following provisions: (i) a provision of Part IV; (ii) section 75AU or 75AYA; (b) has attempted to contravene such a provision; (c) has aided, abetted, counselled or procured a person to contravene such a provision; (d) has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene such a provision; (e) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or (f) has conspired with others to contravene such a provision; the Court may order the person to pay to the Commonwealth such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the Court determines to be appropriate having regard to all relevant matters including the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission, the circumstances in which the act or omission took place and whether the person has previously been found by the Court in proceedings under this Part or Part XIB to have engaged in any similar conduct.' 53 Justice French in Trade Practices Commission v CSR Limited (1991) ATPR 41-076 at 51,152–51,153 ('CSR') referred to a number of factors that should be considered in the assessment of appropriate penalties for infringements under Part IV of the Act ('the French factors'). The first three factors are expressly mentioned in s 76 and the remainder relate to factors considered in a significant number of decisions relating to the operation of s 76, including Trade Practices Commission v Pye Industries Sales Pty Ltd (1978) ATPR 40-089 ('Pye Industries Sales'); Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40-091; Trade Practices Commission v Allied Mills Industries Pty Ltd (No 5) (1981) 60 FLR 38 ('Allied Mills'); and Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Company Ltd (1989) 167 CLR 177. These factors include: '1. The nature and extent of the contravening conduct. 2. The amount of loss or damage caused. 3. The circumstances in which the conduct took place. 4. The size of the contravening company. 5. The degree of power it has, as evidenced by its market share and ease of entry into the market. 6. The deliberateness of the contravention and the period over which it extended 7. Whether the contravention arose out of the conduct of senior management or at a lower level 8. Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention. 9. Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention.' In Australian Competition & Consumer Commission v NW Frozen Foods (1996) ATPR 41-515 ('ACCC v NW') at 42,444 – 42,445, Justice Heerey considered the following additional factors ('the Heerey factors'): '(x) 'Similar Conduct in Past (xi) Financial Position (xii) Deterrent Effect' The Heerey factors were not subject to adverse comment by the Full Court in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 ('NW Frozen Foods'). The relevant factors as discussed by French J and Heerey J need to be applied, as relevant, to each respondent. 54 An early example of the practice of the court considering and making orders based upon joint submissions by the respondent on allegations of price fixing under s 76 of the Act can be found in Allied Mills. In that case, the trial Judge made orders in accordance with the consent orders, although he did not consider he was bound by the proposed figure: 'Uninformed of their agreement, I may have selected a different figure, but I am satisfied that it would not have been very different from theirs' (at 41). Similarly in Commerce Commission v New Zealand Milk Corporation Ltd [1994] 2 NZLR 730 at 733 the Court did not object to the joint submission on penalty or to the negotiations because of the public interest in concluding the litigation. It was accepted that it was for the Court to determine the penalty with regard to such considerations as the nature and the extent of the act or omission and the nature and extent of any loss or damage suffered because of the act or admission (at 736–737). 55 The penalties imposed need to reflect the benefit to the community due to the time and expense saved by the admission of liability. However, this 'does not imply any doctrine that would increase a penalty because there was no admission…The contravenor who fights the case to the bitter end will obtain no discount, but the penalty imposed will be the proper penalty, and no more' (see Burchett J in Trade Practices Commission v TNT Australia Pty Limited (1995) ATPR 41-375 ('TNT Australia') at 40,170). 56 In NW Frozen Foods the Full Court held that the primary Judge had erred in rejecting the proposed penalty and substituting a higher penalty and in treating the quantum of penalty imposed in another case as guidance for imposing the penalty in the instant case (at 295). In this context, the primary judge erred in ignoring significant factual differences between the cases, including the fact that the ACCC in the case before him had not been previously found by the Court to have engaged in similar conduct under Pt VI, in contrast to the case which his Honour applied. The issue was not whether, unaided by the agreement of the parties, the Court would have arrived at the figure proposed by the parties. Rather, as explained by the Court at 298 – 299: '…it is simply whether, in the performance of the Court's duty under s 76, this particular penalty, proposed with the consent of the corporation involved and of the Commission, is one that the Court should determine to be appropriate.' Further Burchett and Kiefel JJ explained at 291: 'A proper figure is one within the permissible range in all the circumstances. The Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case…' 57 Justice Finkelstein in Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (2001) ATPR 41-815, a decision concerning tender arrangements in the power transformer market, held, in finding that the suggested penalties were appropriate, that departure from a penalty figure agreed by the parties 'should only occur in a clear case', such as where the proposal was outside the range of penalties that a court would have fixed, even though the court would not itself have imposed the suggested penalty (at 41,936). 58 In Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 ('Mobil Oil'), the Full Court considered the powers and responsibilities of the Court where there are joint submissions on penalties. The Court addressed the question of whether it was bound by the decision in NW Frozen Foods to impose the proposed penalty if it is within the permissible range. The decision in NW Frozen Foods was held to contain no error of principle. It was, however, made clear that the Court is not obliged to take the proposed penalty as the starting point for analysis or to limit the inquiry to whether the proposed penalty is within the appropriate range [81]. Nor should the Court be 'bound to consider the proposed penalty simply on the basis of information provided by the parties' [81]. It is open to the Court to determine the permissible range independently of the proposed figure in all the circumstances and to depart from the suggested penalty if the circumstances require a different figure to be imposed. As stated by the Full Court at [54], '[it] does not mean, in our opinion, that the Court must commence its reasoning with the proposed penalty and limit itself to considering whether that penalty is within the permissible range. A Court may wish to take that approach. However, it is open to a Court, consistently with the reasoning in NW Frozen Foods, first to address the appropriate range of penalties independently of the parties' proposed figure and then, having made that judgment, determine whether the prepared penalty falls within the range.' The joint submission is merely a relevant matter for the Court to consider [29]. 59 In Australian Competition & Consumer Commission v Chaste Corporation Pty Ltd [2004] FCA 398 Spender J said of the function of the Court where there were agreed penalties [at 5]: '…the Federal Court has looked with favour upon negotiated settlements, provided that their terms recognise that the ultimate responsibility for the terms and making of the orders that resolve the proceedings lies with the Court.' His Honour followed the decision in NW Frozen Foods and Mobil Oil in relation to the imposition of penalties. His Honour also observed 'Judges of the Federal Court, in making orders imposing penalties, do not simply rubber stamp agreements between the parties'. 60 In June 2003, the ACCC issued the "ACCC leniency policy for cartel conduct" as a guide to penalties. The aim of the policy is to encourage businesses to disclose cartel behaviour and to seek lesser penalties against companies and individuals who provide assistance and co-operation in the identification and prosecution of conduct by cartels that contravened the Act. It is described as a "compliance tool" which will provide 'benefits to all Australians by identifying, stopping and deterring harmful and illegal behaviour'. This policy was discussed by Lee J in Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd [2004] FCA 693 where his Honour assessed the penalties for contravention of s 45(2)(a)(ii) for companies and individuals who had come to arrangements or understandings to fix, control or maintain the price of clay brick products. Justice Lee expressed his understanding that the ACCC leniency policy was developed to encourage disclosure of contravening conduct. Nevertheless he stated at [16]: '…it remains the responsibility of the Court to determine that the orders made by the Court are the appropriate orders in all the circumstances. At the same time the Court will give due regard to the obvious public interest in the preservation of resources and the more efficient use of Court time that may flow from accords reached by the parties that obviate the need for a lengthy trial and for judicial time to be spent on preparation of detailed reasons for judgment.' Further, Lee J referred to Mobil Oil and to the discussion at [77] of the similarities between agreements on penalties in criminal cases and civil penalty cases where the views of both parties are considered. In such cases, the Court is not relieved of its responsibility of exercising its own judgment in the imposition of penalties and '…should be satisfied that it is being given accurate, reliable and complete information on critical questions' (Mobil Oil at [77]). 61 There is a long line of authority holding that special consideration in relation to the reduction of the amount of the penalty that would otherwise be assessed is appropriate when a respondent makes submissions acknowledging liability. This is the case even when 'the admissions arise by withdrawal of a denial, a substantial time after the proceedings were launched' (Australian Competition & Consumer Commission v ABB Power Transmission Pty Ltd [2004] FCA 819 at [73]). 62 In Australian Competition & Consumer Commission v Fila Sport Oceania Pty Ltd (Administrators Appointed) [2004] FCA 376 at [37] and [38] Heerey J discussed mitigating factors, including an assertion that the party in question had co-operated with the ACCC early in the proceedings and had ceased its illegal conduct. However, the circumstances were that the party chose to ignore earlier warnings and defended the proceedings for almost eighteen months resulting in considerable expenses for the ACCC. The withdrawal of the defence was considered to be more likely the result of financial collapse than "remorse". His Honour commented that, 'While a party is not to be penalised for defending itself (other than by an award of costs), the present case is not one for allowing any discount for co-operation'. 63 The starting point in the assessment of the appropriate level of penalty is a consideration of the express provisions of s 76 and the related factors outlined in [50] of this judgment. Any special consideration applied because of admissions made is subsequent to this assessment. Similarly, where no admissions have been made, special consideration is not applied to increase the penalty. Rather, the penalty remains the proper figure within the permissible range. Failure to make admissions neutralises any mitigation of the penalty imposed rather than leading to an aggravation of penalty (see French J, The Culture of Compliance – A Judicial Perspective, The Australian Compliance Institute 3 – 5 September 2003 at 23). 64 In the proceedings before me, the only evidence of loss or damage caused by the anti-competitive conduct was the sums of the payments made to those participating in the knock. It was suggested by the ACCC that these sums represented the additional amount which the successful bidder at the knock would otherwise have paid at the auction to obtain the lots. The ACCC did, however, concede that the loss or damage could not be quantified precisely. Absence of evidence of loss or damage will not necessarily be a mitigating factor in the imposition of penalties (cf Australian Competition & Consumer Commission v Universal Music Australia Pty Limited (No 2) [2002] FCA 192 ('Universal Music Australia') at [17] Trade Practices Commission v ICI Australia Operations Pty Ltd (1991) 105 ALR 115 at 119). Furthermore, as Hill J observed at [17] in Universal Music Australia this rule applies: '…particularly so in cases where the conduct is discontinued on intervention by the ACCC but where it can be inferred (as it can here) that the conduct would have continued but for that intervention and in circumstances where it would be likely that loss would be suffered to some extent by those who might be expected to be affected by that continuance.' Although the orders were varied on appeal, the primary judge was not overruled on this point (Universal Music Australia Pty Ltd v Australian Competition & Consumer Commission [2003] FCAFC 193; (2003) 201 ALR 636). 65 The primary object of imposing penalties has been described in much of the case law as being deterrence. Justice French in CSR at [51-152] referred to the 'primacy of the deterrent purpose in the imposition of penalty' which was identified in Pye Industries Sales. Similarly, Goldberg J in Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 75 FCR 238 at 240 stated: 'The deterrent aspect of a penalty is both specific and general. It is calculated to deter repetition by the party penalised and to serve as a warning to the community at large.' 66 In NW Frozen Foods at 294-295, Burchett and Kiefel JJ emphasised the importance of deterrence for the parties and 'others who might be tempted to think that contravention would pay, and detection lead merely to a compliance program for the future'. Justice Sackville in Schneider Electric (Australia) Pty Ltd v Australian Competition & Consumer Commission (2003) 127 FCR 170 ('Schneider Electric') referred to the different views regarding the possibility that penalties could be seen as punishment for contravention of the Act by Burchett and Kiefel JJ on the one hand and by Carr J on the other in NW Frozen Foods and by Goldberg J in Australian Safeway. Sackville J concluded at [4] that the difference of opinion regarding the object of imposing penalties is more apparent than real because, 'Even proponents of the deterrence theory have acknowledged that the deliberateness of the contravention and the period over which it has extended are matters to be taken into account in determining penalty.' Injunctions 67 The ACCC has submitted that it would be appropriate for the Court to grant injunctions as well as imposing pecuniary penalties. The submission was that an action would serve two purposes; it would protect the public interest and prevent specific contraventions of the Act. The Act, by s 80, provides a wide discretion for the Court to grant injunctions in terms it considers appropriate when it is satisfied that a person is engaged in or is proposing to engage in conduct that constitutes or would constitute contravention of the Act. This includes attempting to contravene a provision, aiding, abetting or procuring a person to contravene provisions or in any way directly or indirectly being knowingly concerned in contravention or conspiring with others to contravene the provisions of the Act: '(4) The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised: (a) whether or not it appears to the Court that the person intends to engage again, or continue to engage, in conduct of that kind; (b) whether or not the person has previously engaged in conduct of that kind; and (c) whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind.' 68 In ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248 the Full Court considered the nature of the discretionary power to grant injunctive relief in cases involving retail price maintenance. It was held that 'injunctions should be granted in clear and unambiguous terms which leave no room for the persons to whom they are directed to wonder whether or not their future conduct falls within the scope or boundaries of the injunction' (per Lockhart J at 259). Section 80 was described by French J at 268 to be a "widely drawn" and "flexible" provision that may be applied to a 'variety of functions to support the policy of the Act'. It can restrain conduct affecting the public interest and 'deter an offender from repeating the offence'. The proposed penalties 69 The ACCC has alleged that, at each auction attended by each submitting respondent, the various scrap metal dealers: (a) made an arrangement or arrived at an understanding with each of the named respondents ('the ring') which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: (i) nominating one or more of the parties to the ring to bid at the auction (ii) not bidding against the nominated bidder/s (iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ('the knock'), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock (b) gave effect to the arrangement or understanding by one or more of: (i) acting as a nominated bidder for the ring (ii) bidding for lots at an auction on behalf of the ring (iii) not bidding for lots against the ring (iv) participating in the subsequent knock (v) purchasing the goods at the knock 70 As a result of an agreement reached between the ACCC and each of the submitting respondents, each of the submitting respondent: (a) consents to declarations that it or he (as appropriate) contravened or were involved in contraventions of some or all of ss 45(2)(a)(i), ss 45(2)(a)(ii), ss 45(2)(b)(i), ss 45(2)(b)(ii); (b) consents to the imposition of injunctions permanently restraining it or he (as appropriate) from making an arrangement or arriving at an understanding of the nature set out in [8] of these reasons; (c) jointly submit with the ACCC that a pecuniary penalty of a specified amount be imposed on it or him (as appropriate) pursuant to s 76 of the Act in relation to the contraventions of ss 45(2)(a)(i), ss 45(2)(a)(ii), ss 45(2)(b)(i), ss 45(2)(b)(ii); (d) consents to orders that it or he (as appropriate) pay a specified amount towards the ACCC's costs. 71 The first and tenth respondents consented to declarations that they had contravened s 52(1) of the Act. The second and eleventh respondents consented to declarations that they had aided and abetted such contraventions. 72 No pecuniary penalty was sought to be imposed in relation to admitted contraventions of s 52, the relief in respect of which is confined to the proposed declarations and injunctions (as applicable). 73 The penalties which the ACCC and the submitting respondents jointly submit should be made are as follows: Auctions Per Auction Total D M Faulkner 2 $40,000 $80,000 Mr Faulkner 2 $5,000 $10,000 $90,000 Riverside Metal 3 $40,000 $120,000 Mr Clingan 3 $5,000 $15,000 $135,000 Ajax Sheet Metal 2 $2,500 $5,000 Mr Forrester 2 $2,500 $5,000 $10,000 T & D Metals 3 *$3,333 $10,000 Mr Tony Franke 3 $5,000 $15,000 $25,000 Mr Robinson 1 $5,000 $5,000 $5,000 Mr Nietner 2 $5, 000 $10, 000 $10, 000 * $2,500 for two auctions and $5,000 for one auction 74 I will deal with the French factors as well as the Heerey factors. the submitting respondents 75 A number of these factors are common in principle to each submitting respondent. Those are: (a) The circumstances in which the conduct took place. (b) The amount of loss or damage caused. (c) Market share and market power. (d) The deliberateness of the contravention and the period over which it extended. (e) Whether the company has a corporate culture conducive to compliance with the Act as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention. (f) The deterrent effect of the proposed penalty. (g) Parity. (h) The joint submission. (a) The circumstances in which the conduct took place 76 The arrangements or understandings were only made on the morning of or during the conduct of the auctions. The relevant auctions were public auctions attended by a significant number of purchasers who also bid. At the Bathurst auction and at the first Newcastle auction in particular, there were a significant number of bidders who were not part of the ring. There was no significant prior planning nor was the arrangement particularly complex. While the conduct was deliberate, in the sense of advertent and covert to the extent that the existence of the ring was not made known to the vendor, auctioneer or other bidders, the ACCC does not contend that the respondents knowingly contravened the Act. 77 The conduct was concerned only with scrap metal items. In the case of Riverside Metal, the auctions represented less than 1% of its source of scrap metal for processing. Riverside Metal's market share is less than 0.5% of scrap metal acquired in Australia. (b) The amount of loss or damage caused 78 The vendors of the goods sold at the various auctions are the Department (Bathurst and Chiswick), BHP (Port Kembla and first Newcastle). The ACCC has not presented any evidence of directly quantifiable loss or damage having been caused by the conduct of the ring members. So far as the Department was concerned, the items auctioned at Bathurst "had no economical benefit". 79 It is of some relevance, in considering the effect of the loss to the vendor, to take into account the size of the loss and the identity of the vendors: Trade Practices Commission v Allied Mills Pty Ltd (1981) APPR 40-241 at 43,181-43,182 although the evidence is that the rings have been operating in the scrap metal market over an extended period of time. 80 Some indication of loss to the vendor is the sum of the payments made to the knock participants, being the additional amount which the successful bidder at the knock may otherwise have paid at the auction to obtain those goods. Sometimes, the vendor received more than the value of the goods. The amounts paid out at the knock in respect to the relevant auctions were: Bathurst auction, $15,050; Newcastle auctions, $25,000; Chiswick auction, $18,540 and Port Kembla auction, $20,120. 81 There was no evidence of any damage or loss having been caused to consumers or, for that matter, to competitors by the contravening conduct. 82 Some guide to the loss or damage is the size of the payments to knock participants, although this is not a precise indication. In the case of D M Faulkner, it could be said that the value of the discount that D M Faulkner obtained by participating in the ring at the auction was approximately $7,525, or alternatively this is the additional amount that it would have had to bid to obtain the same lots at the auction. Similarly, the additional amount paid by the successful bidder at the Chiswick auction was $18,540, at the Port Kembla auction $20,120 and the first Newcastle auction $25,000. 83 In addition, as Mr Faulkner, Mr Forrester, Mr Tony Franke and Mr Robinson were aware, the ring may overpay on some items to discourage bidders outside the ring from competing with it. The effect of such conduct may well be to reduce the level of competition for goods being offered and the net effect is likely to result in less money being bid for the totality of goods on offer to the detriment of the vendor. It is impossible to attempt to quantify the extent of any such loss. 84 There are many cases where the Court has proceeded to assess the level of appropriate penalties without recourse to quantified loss or damage (see the cases referred to at [41] in ACCC v Roche Vitamins Australia Pty Limited (2001) ATPR 41-809 ('Roche Vitamins')per Lindgren J). (c) Market share and market power 85 D M Faulkner had a very small market share in the scrap market generally. Riverside Metal's market share was less than 0.5% Australia wide. They cannot be said to have possessed substantial market power in the scrap metal market in Australia. However, they had more market power (although still not substantial) in the market of scrap metal auctions in New South Wales. They were, at the relevant auctions, relatively large organisations when compared with a number of the other respondents, such as Ferndale, Ajax and T & D Metals but small by comparison with Metalcorp and Simsmetal. The formation of the ring enabled the smaller scrap metal merchants to take part in the auctions to a greater extent than they would have been able to otherwise. 86 Mr Nietner is a minor participant in the scrap metal market. His business is run in partnership with his brother. Scrap metal comprises only 50% of the business. He had neither a substantial market share nor market power. Mr Nietner's share of profits from the partnership for the years ended 30 June 2000 and 2001 was $15,000 and $17,000 respectively. 87 On any basis, Ajax is a small participant in the scrap metal market, both by comparison to organisations such as Metalcorp and, more particularly, by comparison to several of the other respondents such as D M Faulkner and Riverside Metal. It cannot be said to have market share or market power. Nonetheless it did have the financial capacity to make a reasonably large purchase of aluminium boats at the Bathurst auction for $63,851, which suggests it had both a level of resources and the capacity to on-sell those boats. 88 T & D Metals is a small participant in the scrap metal market, both by comparison to organisations such as Metalcorp, and more particularly by comparison to several of the other respondents such as D M Faulkner and Riverside Metal. It cannot be said to have any substantial market share or market power. Nonetheless, T & D Metals had enough resources to make a reasonably substantial acquisition of scrap metal at the Port Kembla auction – paying a total of $55,819 for the bill (which was made up of $27,049 for the purchases made by Mr Clingan and $8,650 for the purchases made by Mr Baldini together with the $20,120 paid to the unsuccessful knock participants). 89 Mr Robinson is a minor participant in the scrap metal market. He does not conduct his own business but rather acts as a consultant to another dealer. He works mainly in demolition so that his participation in buying and selling scrap metal is limited. This was the first auction he had attended for seven years. (d) The deliberateness of the contravention and the period over which it extended 90 It is accepted that the conduct was deliberate in that it was not inadvertent. However, each personal respondent was unaware that what he was doing was in breach of the Act. This is not challenged by the ACCC. 91 In relation to the period over which the contravention extended, there were three auctions all occurring in October and November 1999. The Chiswick auction was some eight months earlier than the Port Kembla and first Newcastle auctions but there is no evidence of any contravention in the intervening period. There is no evidence that the conduct continued after that time. No interlocutory relief was sought by the ACCC. (e) Whether the company has a corporate culture conducive to compliance with the Act as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention 92 Again, in the case of what is effectively, in each case, a one-man company, this is a factor of little relevance. The ACCC has not sought the imposition of a trade practices compliance program as, very sensibly, it has acknowledged the lack of utility of such a program in each case. There is no evidence that any of the submitting respondents had any knowledge of the Act. Each of the corporate submitting respondents except Ajax has received legal advice. 93 D M Faulkner is no longer involved in the scrap metal business. If, for whatever reason, it were to become involved in the future, it has consented to the imposition of a permanent injunction by the Court. Mr Faulkner is in semi-retirement. He too has consented to the imposition of a permanent injunction. (f) The deterrent effect of the proposed penalty 94 The total penalties are a significant sum in terms of the financial position of these respondents, the damage caused and the potential benefit to be derived from engaging in the conduct. 95 Counsel for Mr Faulkner and D M Faulkner submitted that the proposed penalty is appropriate when consideration is given to those cases which have considered contravention by small companies without significant market shares in the relevant market. Counsel provided an analysis of such cases. 96 It was submitted by counsel for Mr Clingan and Riverside Metal and is relevant to all of the submitting respondents, so far as specific deterrence is concerned, that the conduct engaged in was not entered into "in blatant disregard of the Act" and "with knowledge that it was illegal": ACCC v Ithaca Ice Works Pty Limited (2002) ATPR 41-851 ('Ithaca Ice Works') at [51]. Insofar as general deterrence is concerned, it was submitted that the level of penalty considered appropriate by the ACCC and by Riverside Metal and Mr Clingan is proportionate to other penalties imposed in other cases in respect of other contraventions of the Act. This is not a case of serious cartel behaviour. It was submitted by Riverside Metal that it is far removed from other instances of contraventions that have come before the courts in recent years, for example, the tender rigging in the electricity distribution and transmission markets (ACCC v ABB (2002) ATPR 41-871) the various tender rigging in the fire protection services markets (ACCC v Tyco Australia Pty Ltd (2000) ATPR 41-789; and ACCC v FFE Building Services Limited [2003] FCA 1542) and the international price fixing cartel-vitamins case, Roche Vitamins. It was submitted that the more moderate penalties in this case are consistent with the general deterrence aim. (g) Parity 97 The different proposed penalties as between various respondents reflect the differences between the circumstances of the various respondents, but in particular: (a) the number of auctions attended; (b) the role played in the ring and knock (participation involving recruiting for the ring, bidding for the ring, purchasing the bill at the knock or paying out cheques to the unsuccessful bidders at the knock incurring greater penalties than merely not bidding against the ring and receiving a knock cheque); and (c) the personal and financial circumstances of the various respondents. (h) The joint submission 98 The ACCC and each submitting respondent (save for Mr Nietner) have jointly submitted that the proposed penalties are appropriate. Written submissions were also provided. 99 I will now turn to a consideration of the individual circumstances of each respondent. D M Faulkner Pty Limited (first respondent) and David Munro Faulkner (second respondent) 100 The agreed contraventions occurred at auctions at Bathurst on 12 October 1999 and at Newcastle on 24 November 1999. In each case, an arrangement or understanding was reached with other members of the ring. The ring members sought to prevent, restrict or limit the purchase of scrap metal by persons outside the ring. The formation of the ring did not actually prevent the members from competing with one another but it was generally agreed that they would not do so. D M Faulkner contravened s 45(2)(b)(ii) of the Act because the arrangement or understanding had the purpose or was likely to have the effect of substantially lessening competition by controlling the price for the scrap metal. 101 Mr Faulkner has been involved in the scrap metal market since about 1959. After working as an employee with Simsmetal, he purchased an existing business in 1976. In 1981, he and his brother Michael Faulkner operated and were directors and, through several entities, principal shareholders of what became Balcombe Recyclers Pty Limited ('Balcombe Recyclers'). Balcombe Recyclers became part of Metalcorp Ltd which was floated as a public company in 1993 and became Metalcorp Recyclers (Metalcorp). Metalcorp was acquired by Smorgon in about February 2000 and became a division of Smorgon. Since July 1997 Metalcorp and Simsmetal have been the two largest metal recyclers in Australia. 102 Upon the sale to Smorgon, Mr Faulkner and the D M Faulkner Family Trust sold their interests in Metalcorp. Since then, D M Faulkner has traded on a smaller scale with some processing and demolishing activities. D M Faulkner and Mr Faulkner are small to mid-size traders in the scrap metal market, involved in the sorting and cutting of bulkier scrap metal. These processed metals are then sold on to the few larger operators, including Metalcorp, Simsmetal, BHP or Smorgon. D M Faulkner's assets as at June 2001 were approximately $10 million with $10.6 million of liabilities, including a loan from D M Faulkner Family Trust of $10,282,916.96. Mr Faulkner, together with his wife and D M Faulkner have assets, mainly real estate. Mr Faulkner is the sole director and shareholder of D M Faulkner. From 1999, D M Faulkner has purchased and re-sold scrap metal and scrapped items of equipment, undertaking demolition cartage and some scrap metal processing. 103 The trading figures for D M Faulkner are as follows: 2000 2001 2002 2003 Sales $1,382,770 $551,113 $303,258 Ceased operating Gross profit (loss) from trading $392,815 $103,852 ($279,717) 104 These sales and gross profit (loss) figures do not include non-recycling/scrap recovery activities of D M Faulkner, land development activities and rental properties. D M Faulkner is no longer in the scrap metal business. 105 D M Faulkner had a small market share compared to the larger companies, such as Smorgon, Simsmetal and Metalcorp. Simsmetal and Metalcorp have a market share in excess of 40-45% and 50-55% respectively. However, with its market share of less then 0.5%, it was relatively large compared to other members of the ring, such as Ajax and Mr Robinson. D M Faulkner no longer conducts business in the scrap metal industry. 106 There is no evidence that D M Faulkner had any educational programs in place nor that Mr Faulkner had any knowledge of the Act or compliance programs. D M Faulkner and Mr Faulkner began co-operating with the ACCC in early 2002 and agreed to facts and admissions, so saving costs related to an involved in a prolonged trial. 107 The agreement submitted by the ACCC suggests that the appropriate pecuniary penalty for D M Faulkner should be, $40,000 for the Bathurst auction and $40,000 for the Newcastle auction. The submitted penalty for David Faulkner is $5,000 for the Bathurst auction and $5,000 for the Newcastle auction. The total proposed costs to be paid by D M Faulkner and Mr Faulkner are $10,000. (aa) Nature and extent of the contravening conduct 108 Mr Faulkner's involvement covered only a two month period and there is no evidence that he was involved either before or after the Bathurst and first Newcastle auctions. He did not act as the bidder at either auction and did not recruit scrap dealers into the ring. That is, he did not organise either the ring or the knock. However, he knew the rules and, by his participation, facilitated the occurrence of the ring and the knock. 109 Mr Faulkner had a significant involvement at the Bathurst knock. The ring had purchased goods for $358,199 out of total purchases of $983,095 comprising some 36.4%. He, together with Mr Clingan, on behalf of the companies of which they were directors, successfully bid for those goods at the knock and paid an additional $15,050 to unsuccessful bidders at the knock. Cheque payments at the knock were made by Mr Faulkner on behalf of D M Faulkner. Mr Faulkner and Mr Clingan also bid together for items unrelated to the ring and the knock. 110 Mr Faulkner's involvement at the first Newcastle auction was less significant. On this occasion he purchased some goods on his own account. The ring had purchased scrap metal for $37,945 out of total purchases (over two days) of $383,215 comprising about 10%. Mr Faulkner participated in the knock but, as an unsuccessful bidder there, received a cheque for $1,500. 111 Mr Faulkner and D M Faulkner accept that their conduct was deliberate, in the sense of not inadvertent. Mr Faulkner was not, however, aware at the time that the conduct was in breach of the Act and it is not alleged that he was so aware. (bb) The size of the contravenor 112 At the time of the contravention D M Faulkner had a reasonably significant level of annual sales (in the vicinity of $1.4 million) and gross profit (in the vicinity of $392,000). Since that time its trading activities have reduced significantly (as set out in [102]). D M Faulkner had only 0.5% of the scrap metal market. (cc) Participation of senior management 113 The contravening conduct was undertaken by the director of D M Faulkner. However, this factor is of little relevance as Mr Faulkner is the sole director, shareholder and employee of D M Faulkner. To a significant extent D M Faulkner is simply Mr Faulkner's alter ego for the purpose of conducting his personal scrap metal dealing business. (dd) Disposition to co-operate 114 D M Faulkner and Mr Faulkner have co-operated with the ACCC in the disposition of the proceedings by agreeing to facts and admissions without incurring the expense of conducting a lengthy trial and by offering to give evidence on behalf of the ACCC. Further, there were a number of issues that arose in the pleadings that would have required determination but for the admissions and agreements that have been made. These respondents commenced meaningful negotiations with the ACCC in early 2002. 115 Mr Faulkner has incurred considerable expense in respect of these proceedings. As part of the settlement, he was prepared to provide an affidavit for the ACCC. (ee) Similar conduct in the past 116 There is no evidence of previous contraventions of the Act. Neither Mr Faulkner nor D M Faulkner have been prosecuted by any regulatory authority or been ordered to pay any civil or pecuniary penalty prior to these proceedings. Mr Faulkner had no understanding that his conduct at the Bathurst and first Newcastle auctions may have been in breach of provisions of the Act. After the receipt of legal advice about this matter in July 2001, neither he nor D M Faulkner have been party to a buying group at an auction or engaged in the type of conduct the subject of these proceedings. Since the proceedings commenced, Mr Faulkner has only attended one public auction. He did not make any purchases. (ff) Financial position of the respondents 117 This has been addressed above. (gg) Totality principle 118 ACCC also made submissions with respect to the application of what is known in the criminal law as the "totality principle". By this principle, it is necessary to ensure, where a penalty is being imposed for a number of offences, that the penalties are aggregate, just and appropriate. This principle is referred to by Burchett J in TNT Australia at 40,169 where his Honour held that the total penalty for related offences ought not to exceed what is proper for the entire contravening conduct involved. 119 The penalties sought to be imposed on D M Faulkner for the two auctions are $80,000 and on David Faulkner are $10,000. Given the relationship between D M Faulkner and David Faulkner, this represents a total penalty of $90,000, excluding the amount of $10,000 claimed for costs. Riverside Metal Industries Pty Ltd (third respondent) and Paul Leonard Clingan (fourth respondent) 120 Mr Clingan and his wife, Mary Clingan, are the sole shareholders in Riverside Metal. It is therefore appropriate to deal with the penalties for Riverside Metal and Mr Clingan together. Mr Clingan is the Managing Director of Riverside Metal. There is no evidence of previous contraventions of the Act. Mr Clingan is 64 years of age. He left school at 17 and studied part time to become a qualified metallurgist. He and his wife have had since 1987 the sole financial interest in Riverside Metal. Riverside Metal has 23 employees, two of whom are his daughters. 121 Mr Clingan has been involved in the scrap metal industry all his working life. After leaving school at the age of 17, he studied part-time to become a qualified metallurgist. He commenced working with Carmichael Metals in about 1956, and shortly was appointed General Manager. He worked for Carmichael Metals until that company was bought out by Simsmetal in 1980. He then worked as general manager of Simsmetal NSW until 1983. 122 In 1983, Mr Clingan resigned from Simsmetal. At that time Bill Kennedy and he purchased Riverside Metal, which was then known as Brookside Metals. Since 1983 Riverside Metal's primary activity has been manufacturing non-ferrous metal ingots for the foundries. It purchases scrap metal, occasionally at auctions, for the purpose of converting that metal into the ingots. 123 Mr Clingan bought Mr Kennedy out of Riverside Metal in about 1987. Since that time Mr Clingan and his wife have had the sole financial interest in Riverside Metal. 124 Mr Clingan owns real estate (subject to a mortgage), motor vehicles and shares in Riverside Metal. Riverside Metal's bank balance is in overdraft ($602,000), secured by a company charge. Riverside Metal will borrow monies to pay the penalties imposed. 125 The primary business (90%) of Riverside Metal is the on-site manufacture of non-ferrous ingots from raw material of non-ferrous scrap metal for sale to the foundry industry. Trade in ferrous scrap and surplus non-ferrous scrap to the domestic and international markets represents 10% of the remaining business. Approximately 0.001% of scrap metal acquired by Riverside Metal is acquired at auctions. The bulk of the scrap metal is acquired directly from the major scrap metal merchants. Only 10% of the annual turnover relates to trades in scrap metal. 126 Mr Clingan's evidence is that, until contacted by the ACCC in or about 2000 or 2001, it did not occur to him that, by being a member of 'a buying group' (a ring) and by participating in the knocks at the three auctions he attended, he was acting in contravention of the Act or that it was in any way 'illegal or wrong'. He now accepts that it was wrong and a contravention of the Act. Mr Clingan has not, since notification by the ACCC, been involved in any buying group or ring or attended any knock. He has not attended any scrap metal auction sales since 2001. 127 The sales figures for Riverside Metal are: Item 1999 2000 2001 2002 2003 Sales revenue $8,500,000 $11,700,000 $11,420,000 $11,660,000 $13,708,000 Net after tax profit (loss) ($16,673) $448,780 $469,340 $476,370 $443,619 128 The comparable figures for scrap processed for the year ended 30 June 2005 are: Simsmetal (2,427,000 tonnes globally) Smorgan (1,286,000 tonnes in Australia) Riverside Metal (7,700 tonnes) 129 Mr Clingan estimates that Riverside Metal processes less than 0.5% of scrap metal processed in Australia. The figures for Riverside Metal are not substantial in comparison with Simsmetal and Smorgon. They do, however, represent a considerably larger market share, sales and income than those for the other members of the ring and knock. Riverside Metal is a small to mid-size trader. (aa) Nature and extent of the contravening conduct 130 Mr Clingan participated in the ring and knock at three auctions – the Bathurst auction, the Port Kembla auction and the first Newcastle auction. He did not act as the bidder at Bathurst or Newcastle nor did he actively recruit scrap dealers into the ring. He did not organise the ring on any occasion. However, he knew the rules and, by his participation, facilitated the occurrence of the ring and the knock. Mr Clingan was aware of the informal rules of the ring relating to bidding and that he was entitled to participate in the knock. 131 At the Bathurst knock Mr Clingan had a significant involvement. The ring had purchased goods for $358,199 out of total purchases of $983,095 at that auction, comprising some 36.4%. He, together with Mr Faulkner of D M Faulkner, successfully bid for those goods at the knock, purchased the bill and paid an additional $15,050 to the unsuccessful bidders. The agreement to purchase the items in equal shares was made before the auction. Mr Clingan was particularly motivated to do so because of his assessment of the inaccuracy of the weights disclosed in the auction catalogue. He and Mr Faulkner also bid together for items unrelated to the ring and the knock. Riverside Metal reimbursed D M Faulkner for the money paid out to the knock participants following the Bathurst auction. 132 Mr Clingan's involvement at the first Newcastle auction was less significant. On this occasion he purchased some goods on his own account, that were not put into the knock. The ring had purchased scrap metal for $37,945 out of total purchases (over two days) of $383,215, comprising about 10%. Mr Clingan participated in the knock but, as an unsuccessful bidder there, received a cheque for $3,550. This was the second largest cheque paid to unsuccessful knock bidders that day. 133 The position at Port Kembla stands somewhat in contrast. At the Port Kembla auction there were eight members of the ring and 55 people registered to bid. Mr Clingan had a more central role. Although it was not on his own initiative, Mr Clingan agreed to Mr Kilpatrick's request to bid on behalf of the ring, and did so. His purchases on behalf of the ring were $27,049 out of a total $143,235 (18.8%) paid by bidders at the sale. Mr Baldini's purchases on behalf of the ring were an additional $8,650 (6.0%). Mr Clingan organised how the knock was to operate. He was an unsuccessful participant in the knock but nonetheless received a substantial cheque of $3,170 for his participation there. 134 Mr Clingan's receipts from the knocks were: $3,550 from the first Newcastle knock and $3,170 from the Port Kembla knock. The total payments to ring members for the unsuccessful bids were $15,050 at Bathurst, $25,000 at Newcastle and $20,120 at Port Kembla. 135 The contravening conduct at the Port Kembla auction occurred under Mr Clingan's direction. He was aware that the arrangement or understanding controlled or restricted bidding at the auction and would likely substantially lessen competition. He admitted that he engaged in conduct 'whereby he aided, abetted, counselled or procured the contraventions of Riverside Metal Industries Pty Limited'. There is no evidence of any knowledge on his part of compliance programs or educational programs. (bb) The size of the contravenor 136 At the time of the contravention, Riverside Metal was a substantially larger operation than any of the other respondents. It was a business of some magnitude. In 1999 and 2000 Riverside Metal's sales were in the vicinity of $10 million. 137 There are, however, two very significant players in the market for the acquisition of scrap metal in Australia: Simsmetal and Metalcorp. These two between them are responsible for over 90 percent of the scrap metal purchased in Australia. A simple illustration is the fact that Riverside Metal processed approximately 7,700 tonnes of scrap metal for the year ended 30 June 2003, compared to Smorgon which processed 1,286,000 for the same period in Australia. On that basis, Riverside Metal processed approximately 0.6 percent of the scrap metal processed by Smorgon. 138 In respect of the year in which the contravening conduct occurred (financial year ended 30 June 2000) Riverside Metal's sales revenue was approximately $11.76 million. The "cost of goods sold" was approximately $8.96 million. The company's pre-tax profit in respect of that year was $701,218. For the year ended 30 June 2003 total sales were approximately $13,679 million and "cost of goods sold" was approximately $10.36 million, and the company's pre-tax profit was $645,270. 139 Counsel for Mr Clingan and Riverside Metal drew attention to the size of Riverside Metal compared to the size of companies previously subject to civil penalties for breach of the Act. To illustrate: * Rural Press – sales revenues $438 million; penalty in total $400,000 * Australian Safeway Stores – sales revenues $1.28 billion; penalty in total $750,000 (section 45) and $500,000 (section 48) * George Weston Foods Limited – sales revenues $1.3 billion; penalty in total $900,000 It is jointly submitted that a penalty totalling $135,000 is appropriate. It is accepted by Riverside Metal and Mr Clingan that they have a greater ability to pay a civil penalty than many (although not all) of the other respondents but not for reasons of any greater culpability. (cc) Participation of senior management 140 The contravening conduct was undertaken by Mr Clingan, the Managing Director of Riverside Metal. The management comprises only Mr Clingan who, with his wife, have the sole financial interest in Riverside Metal. (dd) Disposition to co-operate 141 Riverside Metal and Mr Clingan have co-operated with the ACCC in the disposition of the proceedings by agreeing facts and admissions without incurring the expense of conducting a lengthy trial. Accordingly, substantial court time was saved. 142 However, that co-operation only occurred shortly prior to the trial notwithstanding that the statement of claim was filed on 24 December 2001. By the time of resolution the ACCC had concluded all pre-trial preparation including discovery, provision of affidavits and provision of a substantial tender bundle of documents to the respondents. However, an expensive and lengthy trial was avoided by the agreement as to facts and admissions. (ee) Similar conduct in the past 143 Mr Clingan has never been charged with, or convicted of any criminal offence. He has never otherwise been prosecuted by any regulatory authority or otherwise ordered to pay any civil penalty. (ff) Financial position of the respondents 144 This has been addressed. (gg) Totality principle The total penalties sought to be imposed on Riverside Metal for the three auctions are $120,000 and on Mr Clingan are $15,000. This represents a total penalty of $135,000, excluding the amount of $10,000 for costs. Michael Walter Nietner (fifth respondent) 145 Mr Nietner is in partnership with his brother ('Nietner Brothers') and is a small trader involved in the sorting and processing of scrap metal. This activity represents 50% of the business of Nietner Brothers. The remainder relates to the purchase and resale of second hand equipment. Mr Nietner has a relatively small income and could be described as "a man of limited means'. Mr Nietner's allocation of partnership profits has been: Year ended 30 June 2000 $15,000 Year ended 30 June 2001 $17,000 146 Compared to the larger scrap metal dealers such as Smorgon and Simsmetal, Mr Nietner is a very small dealer. Even in relation to the other members of the ring, such as D M Faulkner, Mr Nietner's scrap metal business is also very small. 147 Mr Nietner gave evidence in Court regarding his personal circumstances. He is married with three children. He had been in business with his brother for about 13 years. Financially he is 'not very well off' and he indicated that the penalties imposed would cause considerable difficulties for him and Nietner Brothers. 148 Initially, Mr Nietner represented himself in these proceedings, however he obtained legal representation part way through the hearing. The ACCC submitted that his liability as an individual depended on the extent to which the companies with which he was involved were engaged in infringing conduct. It was submitted that, where it could be shown that he participated in the ring and knock and obtained a cheque as an unsuccessful bidder from the successful bidder at the knock, evidence of that payment would be sufficient to find that Mr Nietner was engaged in a contract, arrangement or understanding with the successful bidder. 149 On the fourth day of the hearing Mr Nietner indicated that he would be interested in mediation to resolve the issues with a view to settlement. The matter remained unresolved for several days. He was then directed to file written outlines of any evidence on which he wished to rely. An agreement between Mr Nietner and the ACCC, including draft orders, a draft statement of facts and admissions and submission by the ACCC in relation to penalties ('the Nietner agreement') was filed in Court on Monday 15 March 2004. On 18 March 2004, Mr Nietner filed an affidavit attaching substantially similar 'agreed facts' to those filed in agreed facts which were filed in Court on Monday 15 March 2004. 150 No evidence was submitted that Mr Nietner had previously been involved in similar conduct. He participated in two separate auctions, the Bathurst auction and the first Newcastle auction. His involvement was relatively minor. He did not bid or actively recruit scrap dealers for the ring. He did not purchase the bill although he did purchase some items on his own behalf for resale second-hand. He did not recall the detail of the conduct of the Bathurst auction, such as who bid on behalf of the ring, who purchased the bill or how much was paid. He did, however, participate in the knock and received cheques as an unsuccessful bidder: $1,300 for the Bathurst auction, $550 for the first Newcastle auction, and $200 for 25 November 1999 at Newcastle. The cheques totalled $3,900. 151 In the Nietner agreement, Mr Nietner admitted the matters admitted by the corporate submitting respondents except that his understanding was that the ring members would not bid for scrap metal against the ring and, while he did not have an understanding of the informal rules of the ring, he did have an understanding that the ring operated as set out, save that he could bid if he intended to buy the goods at a higher price for their resale as second-hand goods and not for their scrap value. But for that undertaking, Mr Nietner would have been or would be likely to have been in competition to bid for scrap metal within his budget at the Bathurst and first Newcastle auctions. There is no evidence that Mr Nietner had any knowledge of the Act or compliance programs. 152 Mr Nietner admits that the agreed facts set out above prove that he engaged in conduct whereby he aided, abetted, counselled or procured the contraventions of D M Faulkner, Riverside Metal, Ferndale, Ajax and T & D Metals and that he was a person who has been directly, knowingly concerned in and party to, the contraventions of each of those corporate respondents, within the meaning of s 76 of the Act. 153 During the hearing Mr Nietner was called as a witness by Mr Harry Franke and Mr Bagnall. After questions were put to him, leave was granted on 18 March 2004 to read an affidavit by Mr Nietner annexing a slightly amended version of the statement of facts and admissions in the Nietner agreement. Mr Nietner at this stage had sought legal advice and representation. I will treat the amended document as though it were a statement of facts on the part of Mr Nietner and not disputed by the ACCC. and claimed that there was nothing remaining in contest between the ACCC and Mr Nietner. The amended document included admissions in relation to the Bathurst and first Newcastle auctions although Mr Nietner did not recall whether Keith Burnett and Les Kilpatrick had bid or whether they had purchased goods on behalf of the ring at that auction. He could not confirm the amount of the invoices, nor whether Mr Clingan for Riverside Metal was successful in purchasing the bill. Apart from the cheque that Mr Nietner received, for $1,300, he denied having personal knowledge of the remaining payments. He denied knowledge of the total amount paid by purchasers at the first Newcastle auction and of the purchases by the other ring members. He denied knowing whether Mr Bagnall and Keith Burnett organised the knock or whether Mr Bagnall began the bidding for the ring. Apart from the payment he received of $550 at the first Newcastle knock, Mr Nietner denied any personal knowledge of how much was paid at the knock to the other ring members. 154 In relation to both the Bathurst auction and the first Newcastle auction, Mr Nietner did admit that he was aware of the understanding amongst scrap metal merchants that ring members would not bid for scrap metal against the ring, that they would otherwise have been in competition with the other ring members and that there was an allocation and payment of goods purchased after the auction at the knock. He thereby gave effect to the understanding and was engaged in conduct which "aided, abetted, counselled or procured the contraventions" of the companies involved, within the meaning of s 45(2)(b)(ii), namely D M Faulkner, Riverside Metal, Ferndale, Ajax and T & D Metals. 155 The proposed penalty for Mr Nietner is $5,000 for the Bathurst auction and $5,000 for the first Newcastle auction as well as costs of $2,500, a total of $12,500. Mr Nietner proposed the same penalty in his affidavit of 19 March 2004. (aa) Nature and extent of the contravening conduct 156 Mr Nietner admitted to participating in two auctions; the Bathurst auction and the first Newcastle auction. In cross-examination, Mr Faulkner asked whether Mr Nietner received a cheque for $200, a copy of which was in evidence in respect of the second Newcastle auction. Mr Nietner answered that he received the cheque on 25 November 1999. Accordingly, I find that he did attend the second Newcastle auction and was paid for his participation at the knock. 157 Mr Nietner's involvement at the auctions was relatively minor. He did not act as the bidder, actively recruit scrap dealers into the ring or purchase the bill from the knock. However, he agreed to take part, understood the rules and, by his participation, facilitated the occurrence of the ring and knock. As an unsuccessful bidder at each knock, he received a cheque. 158 Mr Nietner's cheque for the Bathurst auction was $1,300, which was the highest knock cheque paid out (the next highest bidding being $900). The impact of the ring that day was significant – it purchased goods for $358,199 out of total purchases of $983,095, comprising some 36.4%. 159 Mr Nietner received a cheque for the first Newcastle auction for $550. That was towards the lower end of cheques paid out that day. The ring had purchased scrap metal for $37,945 out of total purchases (over two days) of $383,215 comprising about 10%. (bb) The size of the contravenor 160 The ACCC accepts and it is apparent that Mr Nietner is a man of limited means. (cc) Participation of senior management 161 Not relevant. (dd) Disposition to co-operate 162 Mr Nietner has co-operated with the ACCC in the disposition of the proceedings by agreeing facts and making admissions. However, this only occurred after the trial had been conducted for five days and the ACCC had adduced its evidence and closed its case. This is in circumstances where the statement of claim was filed on 24 December 2001 and the ACCC had engaged in extensive pre-trial preparation including discovery, provision of affidavits and provision of a substantial tender bundle of documents to Mr Nietner. It must also be noted here that Mr Nietner filed an affidavit attaching a revised set of agreed facts part way through the hearing. (ee) Similar conduct in the past 163 There is no evidence that Mr Nietner has been charged with or convicted of any criminal offence or engaged in similar conduct in the past. (ff) Financial position of the respondents 164 This has been addressed above. (ff) Totality principle 165 Not applicable. Ajax Sheet Metal Pty Ltd (tenth respondent) and Sidney Forrester (eleventh respondent) 166 There was no evidence of previous contraventions of the Act by Mr Forrester or Ajax. 167 Mr Forrester has been involved in the scrap metal market for many years. He is the director and principal shareholder of Ajax and has been for over twenty years. At all relevant times Forrester was acting on behalf of Ajax. Ajax's financial figures for 1999 – 2001 are as follows: 1999 2000 2001 Sales $362,580 $159,375 $99,837 168 Mr Forrester has had no taxable income for the past three years. He owns a property at St Mary's which he values at $200,000. Ajax and Mr Forrester represent small dealers in the scrap metal market, compared to companies such as Simsmetal and even in comparison with Riverside Metal. 169 A relevant and significant factor in assessing the appropriate pecuniary penalty for Mr Forrester is his advanced age of 85 and concomitant failing health, each of which militate against a significant penalty. 170 Mr Forrester and Ajax co-operated with the ACCC shortly before the trial, after the pre-trial preparations had been completed. They agreed with the Commission in the disposition of the proceedings, by agreeing to facts and admissions, without incurring the expense of a lengthy trial. 171 The agreement submitted by the ACCC suggests that the appropriate pecuniary penalty for Ajax should be, $2,500 for the Bathurst auction and $2,500 for the Chiswick auction. The proposed penalty for Mr Forrester is $2,500 for the Bathurst auction and $2,500 for the Chiswick auction. The total costs proposed for both parties are $2,500. The total proposed penalty for Mr Forrester and Ajax, including costs, is $12,500. (aa) Nature and extent of the contravening conduct, including its deliberateness 172 Mr Forrester participated in the ring and knock at two auctions – the Chiswick auction and the Bathurst auction. He did not act as the bidder at either auction nor did he actively recruit scrap dealers into the ring. However, he knew the rules and, by his participation, facilitated the occurrence of the ring and the knock. 173 Mr Forrester's involvement at the Chiswick auction was relatively minor. It was admitted by Mr Forrester that at the Chiswick auction he registered to bid individually on behalf of Ajax. The ring was formed before the auction began. Mr Forrester was not the successful bidder at the knock and was paid $830 for his participation. This amount represented 4.47% of the total knock payments of $18,540. 174 Mr Forrester's involvement at the Bathurst auction was more significant. Mr Forrester was invited to be part of the ring at the Bathurst auction. While he did not bid for the ring he permitted one of the ring bidders to use his registration to acquire goods, without disclosure to the auctioneer. The conduct relating to the bidding arrangements and participation in the ring and knock was deliberate and was hidden from the auctioneer and the other bidders. Purchases of $385,390.60 were made using Mr Forrester's bidder number. This included $63,851 for aluminium boats Mr Forrester purchased for himself. Mr Forrester was never going to be in a position to pay for the goods purchased on his registration. Riverside Metal paid the auctioneer for invoices made out to Mr Forrester. Ajax paid $63,851 for the boats to Mr Clingan. Mr Forrester received a cheque for $700 for his unsuccessful bid at the knock. This amount represented 4.65% of the total knock payments of $15,050. Mr Forrester banked this cheque in Ajax's account. Without the formation of the ring and the knock, Mr Forrester and Ajax would have been in competition with the other members of the ring and with the other participants at the auction. 175 The amount he received at the knock was a fairly standard amount paid to the unsuccessful knock participants (all but two of the knock participants dropping out at between $650 and $900 – only the two successful bidders and Mr Nietner bid more than $900). (bb) The size of the contravenor 176 Ajax, which is Mr Forrester's corporate alter ego, had a not insignificant level of sales at the time of the auction ($362,580 for 1999) but has substantially since reduced its activities. (cc) Participation of senior management 177 The contravening conduct was undertaken by Mr Forrester, the sole director of Ajax, although this matter is of little significance in a company which is merely Mr Forrester's alter ego. (dd) Disposition to co-operate 178 As for Mr Clingan at [140-141]. (ee) Similar conduct in the past 179 There is no evidence that Mr Forrester or Ajax had any knowledge of the Act and therefore knowingly contravened its provisions. Similarly, there is no evidence that these respondents had any knowledge of the need to implement education programs. (ff) Financial position of the respondents 180 This has been addressed above. (gg) Totality principle 181 The total penalties sought to be imposed on Ajax for the two auctions are $5,000 and on Mr Forrester also $5,000. Given the nature of Ajax's business, and its status as Mr Forrester's alter ego, this represents a total penalty of $10,000 for Mr Forrester, excluding the sum of $2,500 for costs. T & D Metals & Demolitions Pty Ltd (thirteenth respondent) and Anthony Franke (fourteenth respondent) 182 T & D Metals is a small trader in the scrap metal market in comparison the large organisations such as Simsmetal and in comparison to small to medium-sized organisations such as Riverside Metal. Mr Tony Franke is a director of T & D Metals. The contravening conduct was undertaken by Mr Tony Franke on behalf of T & D Metals. 183 Mr Tony Franke is 38 years old, married with four children. He has been working full time in the scrap metal industry since finishing school. 184 The involvement of T & D Metals and Mr Tony Franke in the scrap metal industry is as follows: (a) Mr Tony Franke has been involved full time in the industry for 20 years. (b) He commenced working for Franke Bros, a business run by his father, Frank Franke, and uncle, Mr Harry Franke. Franke Bros later changed its name to Coast Metal Recyclers. At some stage his uncle and father split. Tony continued to work for his father doing metal processing, acquiring scrap and working on demolition and removal jobs. (c) During the late 1980's and early 1990's, Mr Tony Franke ceased working for his father and went to work with Cleary Bros (Bombo) Pty Ltd where he worked as a plant operator, mainly on excavation and demolition work. (d) In the early 1990's, he left Cleary Bros and started up T & D Metals jointly with his wife. The business was incorporated in 1994 as T & D Metals. Since that time he has worked as a director of T & D Metals, which operates from premises at Unanderra. At all the relevant auctions Mr Tony Franke was acting on behalf of T & D Metals. (e) T & D Metals has five employees plus Mr Tony Franke and his wife. The employees are truck drivers, plant operators and a boilermaker. T & D Metal's main activities are: (i) hiring earth moving plants and equipment (ii) industrial demolition (iii) car recycling (iv) buying and selling scrap metal (v) earth works (vi) truck hire (f) Mr Tony Franke's main skills are in demolition and estimating the weight of scrap. He has a certificate from Miller College, a TAFE near Casula, after attending a full-time course on demolition. He also had an unrestricted demolition licence from Work Cover. (g) Mr Tony Franke has attended auctions since he was in primary school. Auctions have been a relatively minor source of scrap metal for T & D Metals. 185 The sales and income figures for T & D Metals and the income figures for Mr Tony Franke for the years, 1998, 1999 & 2000, as provided, were as follows: T & D Metals 1998 1999 2000 Sales $1.2 m $1.3 m $1.1 m Taxable income $59,392 $59,148 1998 2000 2001 Mr Tony Franke Taxable income $9,689 $74,434 $33,292 186 Mr Tony Franke admitted: (a) In respect of the Chiswick auction, each of Riverside Metal, Ferndale and Ajax contravened each of s 45(2)(a)(i), s 45(2)(a)(ii), s 45(2)(b)(i) and s 45(2)(b)(ii) of the Act. (b) In respect of the Bathurst auction, each of D M Faulkner, Riverside Metal and Ajax contravened each of s 45(2)(a)(i), s 45(2)(a)(ii), s 45(2)(b)(i) and s 45(2)(b)(ii) of the Act. (c) In respect of the Port Kembla auction, Riverside Metal contravened each of s 45(2)(a)(i), s 45(2)(a)(ii), s 45(2)(b)(i) and s 45(2)(b)(ii) of the Act. 187 Mr Tony Franke admits that agreed facts set out above prove that he engaged in conduct whereby he aided, abetted, counselled or procured the contraventions of D M Faulkner, Riverside Metal, Ferndale, Ajax and T & D Metals referred to above, and that he was a person who has been directly, knowingly concerned in, and party to, the contraventions of each of those corporate respondents, within the meaning of s 76 of the Act. 188 The agreement submitted by the ACCC suggests that the appropriate pecuniary penalty for T & D Metals should be, $2,500 for the Bathurst auction, $2,500 for the Chiswick auction and $5,000 for the Port Kembla auction. The proposed penalty for Mr Tony Franke is $5,000 for the Bathurst auction, $5,000 for the Chiswick auction and $5,000 for the Port Kembla auction. The total costs proposed for both parties are $10,000. The total amount proposed for Mr Tony Franke and T & D Metals to pay by way of penalty and costs is $35,000. 189 Prior to contact with the ACCC, Mr Tony Franke was not aware that rings and knocks or his involvement in them were in any way illegal or wrong. Immediately upon being made aware of the ACCC's concerns, he ceased his participation in buying groups and does not intend to participate in such groups in the future. He now only attends auctions very occasionally and only to purchase a particular item. (aa) Nature and extent of the contravening conduct 190 Mr Tony Franke participated in the ring and knock at three auctions – the Chiswick auction, the Bathurst auction and the Port Kembla auction. He did not act as the bidder at any of the auctions nor did he actively recruit scrap dealers into the ring or organise the ring or the knock. However, he knew the rules and, by his participation, facilitated the occurrence of the ring and the knock. 191 At the Chiswick auction, Mr Tony Franke registered to bid on behalf of T & D Metals. After the auction commenced he was invited to be a part of the ring. The ring purchased goods to the value of $42,862.50. As an unsuccessful bidder at the knock, Mr Tony Franke was paid $2,000 of the $18,540 paid out. This represented 10.79% of the payments. Mr Franke's involvement at the Chiswick auction was, save for one matter, relatively minor. He participated in the ring and knock and, as an unsuccessful bidder, received a cheque. The cheque was for $2,000 which was the second highest of the 16 knock cheques paid out that day (the only higher cheque being $4,350 paid to Mr Harry Franke). 192 Mr Tony Franke's involvement at the Bathurst auction was also relatively minor. At the Bathurst auction, Mr Tony Franke registered to bid. He agreed to be a member of the ring, consisting of about 20 scrap metal dealers. For his unsuccessful bid at the knock, Mr Tony Franke was paid $850 representing 5.6% of the value of ring items. That was a fairly standard amount paid to the unsuccessful knock participants that day (all but two of the knock participants dropping out at between $650 and $900 – only the two successful bidders and Mr Nietner bid more than $900). 193 Mr Tony Franke played a more significant role at the Port Kembla auction. He again registered to bid for T & D Metals. During the auction he agreed to participate in the ring consisting of 8 people. At the knock, Mr Tony Franke was successful in acquiring the bill on behalf of T & D Metals. Mr Franke paid cheques to Masongreene (the auctioneer) and to Metalcorp. This included the $8,650 paid to Mr Baldini for goods Mr Baldini placed in the bill. The price paid by the ring for the goods placed in the bill was $35,699 out of total payments made at the auction of $143.235, thus comprising about 24.9%. Mr Tony Franke took advantage of the ring's bidding by acquiring those goods at the knock for the total additional knock payment of $20,120 to the unsuccessful knock participants. 194 In addition to the motivation for participating the rings admitted in the agreed facts, there were other motivations for Mr Tony Franke. These related to matters such as the high cost of extracting lots from the site, skill sharing with smaller participants, financial assistance and opportunities to acquire demolition or extraction work. There was a benefit to a small operator like T & D Metals to extract lots from a site if larger volumes were acquired and extracted at one time and the benefits of combined knowledge. (bb) The size of the contravenor 195 T & D Metals, while having a similar level of turnover to D M Faulkner at the relevant time (in excess of $1 million per annum), generated a significantly lower level of annual profit (in the vicinity of $60,000 per annum). Further, trade in scrap metals is not a significant part of the business of T & D Metals, which is involved in a number of other activities but, particularly, specialising in demolition (albeit an activity related to scrap metal dealing). Auctions have always been a relatively minor source for T & D Metals' acquisition of scrap metal. 196 T & D Metals is not, unlike Ajax, merely the alter ego of Mr Tony Franke. To the contrary, he and his wife each have a 50% interest in the company and it is the employer of five other people. 197 Mr Tony Franke's personal level of taxable income has varied from $9,689 in 1998 to $74,434 in 2000. The proposed penalty represents a significant amount of Mr Tony Franke's income. (cc) Participation of senior management 198 The contravening conduct was undertaken by Mr Franke, a director of T & D Metals, although this matter is of limited significance given its small number of employees and shareholders. (dd) Disposition to co-operate 199 Mr Tony Franke was concerned about the legal costs and penalties if his case was defended could have put T & D Metals out of business and bankrupted him. He suffers from Crone's disease, which is aggravated by stress. He began to co-operate at approximately the same time as Mr Clingan (see [142]). (ee) Similar conduct in the past 200 Mr Tony Franke has never been charged with or convicted of any criminal offence. He has not otherwise been prosecuted by any regulatory body or ordered to pay any civil or pecuniary penalty. He has not previously been a party to court proceedings. (ff) Financial position of the respondents 201 This has been addressed above. (gg) Totality principle 202 The total penalties sought to be imposed on T & D Metals for the three auctions are $10,000 and on Mr Franke personally $15,000. Given that the only shareholders in T & D Metals are Mr Franke and his wife, this penalty is essentially equivalent to a penalty of $25,000 on Mr Franke as a natural person, excluding the sum of $10,000 for costs. William Robinson (seventeenth respondent) 203 Until about 15 years ago, Mr Robinson ran a company called Major Metals in partnership with John Hamar. At that time Mr Robinson sold out his interest in Major Metals to Mr Hamar. Major Metals was involved in demolition and trading in scrap metal. 204 Mr Robinson first met Johnny Chung, the principal of T & T Metals Trading Pty Limited ('T & T Metals'), a scrap metal dealer based in Alexandria, Sydney, when Mr Robinson was still associated with Major Metals. Mr Robinson and Mr Chung were involved in demolition work together. 205 Since leaving Major Metals, Mr Robinson has worked mainly in demolition but also from time to time buys and sells scrap metal on behalf of T & T Metals. Mr Robinson has a continued association with Mr Chung and T & T Metals. Mr Robinson sells scrap metal recovered from demolitions to T & T Metals. He also occasionally buys scrap metal for T & T Metals. 206 Mr Robinson is 66 years old and works as a consultant to T & T Metals, mainly supervising demolition works. He started working at 13 years of age, operating a horse and cart collecting scrap metal. He is now very experienced in demolition. 207 Mr Robinson says that he is deeply embarrassed at the effect that his behaviour, in breach of the Act, had on the conduct of the auction and he accepts responsibility. He also says that, had he known that the operation of the ring was illegal, he would not have participated in it. 208 Mr Robinson has since attended two auctions to purchase second-hand equipment, not scrap metal. 209 Mr Robinson's pre-tax income for the 2003 financial year was $61,971. The home which he and his wife own is subject to a mortgage. He works to pay the household expenses but may have to retire. Mr Robinson is not well and suffers from a number of serious ailments. For Mr Robinson, the proposed penalty of $5000 represents a significant sum. 210 The ACCC accepted that Mr Robinson has limited means His income, before tax, from his consultancy work has been: 2001 - $46,700 2002 - $50,522 2003 - $61,971 211 He does not receive money from other sources and has limited savings. He supports his wife and provides some financial assistance to his stepdaughter. He acts as a consultant to another scrap metal dealer. He had not attended such an auction for 7 years. He can be regarded as a minor participant in the scrap metal market. The ACCC did not contend that Mr Robinson knowingly contravened the Act, merely that the conduct was 'deliberate'. Mr Robinson acted as a consultant to T & D Metals. There is no evidence that Mr Robinson understood the Act or the role of compliance programs. Mr Robinson co-operated shortly before the trial. 212 The proposed penalty for Mr Robinson is $5,000 together with $5,000 for costs. The agreed orders include the imposition of an injunction. This reflects the fact that only one auction was attended, the minor role Mr Robinson played in the ring and knock and his personal and financial circumstances. (aa) Nature and extent of the contravening conduct 213 Mr Robinson participated in the ring and knock at one auction – the first Newcastle auction. The first Newcastle auction was the first auction he had attended for seven years. He had intended only to bid on machinery but became involved with the ring because he knew the people involved. He did not act as the bidder nor did he actively recruit scrap dealers into the ring or organise the ring or the knock. However, he knew the rules and, by his participation, facilitated the occurrence of the ring and the knock. 214 Mr Robinson's involvement at the auction was relatively minor. He participated in the ring and knock and, as an unsuccessful bidder, received a cheque. The cheque was for $1,100. This was towards the higher end of the 17 cheques paid out that day (there were six higher cheques) ranging from $400 to $5,200. However, the proposed penalty is significantly higher than the amount derived by Mr Robinson through his involvement in an isolated event. (bb) The size of the contravenor 215 The ACCC accepts that Mr Robinson is a man of limited means. (cc) Participation of senior management 216 Not relevant. (dd) Disposition to co-operate 217 As for Mr Clingan at [140]. (ee) Similar conduct in the past 218 There is no evidence that Mr Robinson had previously contravened the Act. (ff) Financial position of the respondents 219 This has been addressed above. (gg) Totality principle 220 Not applicable. discussion – penalties for submitting respondents 221 I have considered for each of the submitting respondents the matters set out above in respect of each of them and specifically: (a) the relationship between the individual and the company of which he is a director or managing director; (b) the total benefit to the company and the individual from participation in the various auctions; (c) the number of auctions attended and the role played in the ring and the knock; (d) the damage caused by the operation of the ring and the knock; (e) the fact that the participation in the ring enabled some scrap metal dealers to be involved in a bid which they otherwise could not afford; (f) the deterrence that the proposed penalties provide; (g) the different circumstances of the respondents and the appropriate level of parity between them; (h) the fact that they have consented to orders and filed agreed statement of facts and admissions. In Mr Nietner's case, this occurred well into the hearing. 222 This is not a mathematical exercise, where a formula can be applied and specific factors inserted to give a precise result that can account perfectly for each variable both between respondents in the present case and between the respondents in this case and other cases. I note that the same principle and analogy was adopted by Burchett J in TNT Australia: '…the fixing of the quantum of a penalty is not an exact science. It is not done by the application of a formula, and, within a certain range, courts have always recognised that one precise figure cannot be incontestably said to be preferable to another.' 223 The ACCC has submitted $5,000 as the appropriate penalty for individuals involved in the Newcastle ring, namely Mr Faulkner, Mr Clingan, Mr Nietner and Mr Robinson. 224 An application of the parity principle 'should not result in penalties that are inappropriate in the circumstances of the case' (Schneider Electric at [59]). 'Equal justice requires that like should be treated alike but that, if there are relevant differences, due allowance should be made for them' (Postiglione v The Queen (1997) 189 CLR 295 at 301). The actions of respondents who have committed similar contraventions should be taken into account in fixing penalties with allowance for different circumstances, different market power and size Ithaca Ice Works at [25]–[26]. 225 The role of Mr Faulkner and Mr Clingan, in particular, was significant in the operation of the ring and knock. Furthermore the involvement of their related companies and capacity to pay is much greater than for those respondents who operated as individual dealers. 226 The question is whether the proposed penalties are appropriate in the circumstances of this case. I am of the view that, save for the penalties proposed for Mr Forrester and Mr Robinson, they are appropriate. They are within the range of available penalties and properly reflect the gravity of the contravention of the Act in the circumstances of this case. 227 While Mr Nietner did not operate through a corporate vehicle and his financial circumstances would put him in a similar category to Mr Robinson, he only co-operated with the ACCC in the circumstances described, which resulted in the expenditure of significant costs and court time. Mr Forrester's health and financial circumstances are factors to be taken into account but he did play a significant role at the Bathurst auction. I appreciate that parity suggests the same penalty to be imposed per auction on the non-corporate respondents but the financial and personal circumstances of the individuals must also be taken into account. 228 Mr Forrester and Ajax are in effect a single entity. Considering Mr Forrester's personal circumstances in my view the penalty for Mr Forrester and Ajax should be $7,500. I note that Mr Forrester has agreed to pay costs in the amount of $2,500. 229 In addition, the circumstances of Mr Robinson's involvement in the single ring in which he participated suggests the imposition of a lower penalty for him. 230 Mr Robinson's limited involvement in the scrap metal market and the auctions, as well as his attitude towards his contravention, indicate that it is unlikely he will reoffend. In his affidavit he has expressed concern for his contravention, 'I am deeply embarrassed as to the effect that this behaviour had on the conduct of the auction…Had I known that the operation of a ring was illegal, I would not have participated in it'. He is suffering from a variety of medical conditions and his future capacity to earn income may be limited. Mr Robinson has agreed to pay costs to the ACCC of $5,000. In my view, the penalty for Mr Robinson should be $2,500. The total payment for Mr Robinson will be $7,500. These reduced penalties are still within the appropriate range. the defending respondents Ferndale, Mr Bagnall, Mr Harry Franke and Mr Higgins 231 The statement of claim filed on 24 December 2001 alleged contraventions by Ferndale, of ss 45(2)(a)(i) and (ii) as well as 45(2)(b)(i) and (ii) of the Act. Furthermore it was alleged that Mr Bagnall, Mr Harry Franke, and Mr Higgins, as individuals, had aided, abetted, procured or been directly or indirectly knowingly concerned in or party to the contraventions by the companies. The amended statement of claim was filed on 2 October 2003. 232 The amended statement of claim alleged, in summary the following matters: (a) Ferndale was a corporate respondent and a scrap metal merchant. (b) Mr Bagnall was a director of, and acting on behalf of Ferndale. (c) Mr Harry Franke was acting on his own behalf and on behalf of the business Coast Metal Recyclers. (d) The corporate respondents were competitive with each other in the acquisition and sale of second hand metal goods, including items containing ferrous and non-ferrous metals. The second hand metal goods included scrap metal. (e) At the Chiswick auction, the Port Kembla auction, the first Newcastle auction, the second Newcastle auction and the Bathurst auction, there was substantial demand to acquire scrap metal, most of which was purchased by scrap metal merchants. (f) There was a market within New South Wales for the acquisition of scrap metal by scrap metal merchants. (g) There was a market within New South Wales for the acquisition of scrap metal at each auction. (h) At each auction there operated a "ring" and a "knock". (i) By engaging in the ring and the knock, ring members made or arrived at an arrangement or understanding, each with the others, to be members of a ring, to conduct themselves as members of a ring at the auction and to engage in the knock. (j) Each of the corporate respondents which engaged in the ring and the knock thereby made or arrived at an arrangement or understanding which: (i) contained a provision contrary to s 45(2)(a)(i) of the Act; and (ii) had the purpose or would have or be likely to have the effect of substantially lessening competition in the scrap metal market by reason that the provision had or was likely to have the effect of controlling the price for the goods to be acquired by the corporate respondents in contravention of s 45(2)(a)(ii) of the Act, in which regard the ACCC relies upon s 45A(1) of the Act. (k) Each of the corporate respondents engaged in conduct that was in contravention of s 52 of the Act. (l) Each of the non-corporate respondents aided, abetted or procured the contraventions of s 45(2)(a)(i), s 45(2)(a)(ii) and s 52 of the Act and were persons who were directly or indirectly, knowingly concerned in, or parties to, the contraventions. 233 The allegations in respect of s 52 of the Act were not proceeded with. Mr Bagnall and Mr Harry Franke appeared unrepresented at the hearing. The defence for Ferndale and Mr Bagnall was filed by solicitors then acting for him and had been settled by Counsel. 234 There was no defence filed for Mr Higgins. He did not appear at the hearing. At the conclusion of the case against Mr Bagnall and Mr Harry Franke, the ACCC proceeded against Mr Higgins as I will set out. Admissions on the pleadings Mr Bagnall and Ferndale 235 Mr Bagnall denied that he carried on business as a scrap metal merchant but, in the absence of reference in the defence, admits that Ferndale carried on such business. Mr Bagnall and Ferndale admit the fact and nature of the auctions. They admitted that there was demand by various persons for the acquisition of scrap metal and that, in order to sustain their business, scrap metal merchants required access to an ongoing flow of scrap metal in large quantities. They also admitted that, on various occasions, scrap metal merchants bid at auctions of scrap metal and afterwards offered to other scrap metal merchants the right to complete the purchase of lots successfully bid for at auction. 236 Mr Bagnall admitted that he attended the first Newcastle auction and that he made successful bids at that auction. Mr Bagnall and Ferndale admitted that persons assembled at the Phoenix Club and conducted a knock but denied that it was conducted as alleged. They admitted that Mr Best of Metalcorp paid the bill and that 'Mr Bagnall (Ferndale Recyclers Pty Ltd)' repaid Mr Best. 237 The same form of admissions were made in respect of the second Newcastle auction. Ferndale and Mr Bagnall admit the auction, attendance by various persons, including Mr Bagnall, some of whom were scrap metal dealers or users or their respective representatives. It is admitted that successful bids were made by Mr Bagnall, that a knock occurred and that Mr Bagnall paid the bill. 238 The same form of admissions were made in respect of the Chiswick auction, including the fact that successful bids were made by Mr Bagnall, there was a knock and Mr Bagnall paid the bill. Mr Hendricus Franke (Mr Harry Franke) 239 Mr Harry Franke acted on his own behalf and on behalf of the business Coast Metal Recyclers. In his defence, he admitted that, in 1999 and for many years prior to 1999, most of the scrap metal available in New South Wales was purchased by scrap metal merchants who acquired most of their scrap metal as set out in the agreed facts. Further admissions were that: * Almost all of the scrap metal acquired by scrap metal merchants in New South Wales and at all material times was sourced from within New South Wales. * Scrap metal merchants sold most of their scrap metal to other scrap metal merchants, foundries or smelters. * There was at all material times a market within New South Wales for the acquisition of scrap metal by scrap metal merchants. * There was a market within New South Wales for the acquisition of scrap metal from BHP at each of the BHP auctions. 240 Mr Harry Franke admitted that knocks occurred as follows: (i) After the auction, ring members reconvened at another location, usually a local hotel or club, to allocate amongst themselves the scrap metal purchased at the auction and to determine who (from amongst themselves) would pay for the goods purchased at the auction. (ii) The goods purchased by the bidder at auction as referred above was known as "the bill". (iii) Each ring member was given the opportunity to nominate a sum. (iv) The ring member who nominated the highest sum became entitled to the goods. (v) The ring member who nominated the highest sum became obliged to pay the sum of the bill to the auctioneer, and became obliged to pay each other member the highest sum which that member nominated at the knock. 241 By reason of the matters referred to in the above paragraph, Mr Harry Franke admitted that ring members who did not acquire goods at the knock were paid for their respective participation in the ring. 242 After the knock had concluded, the member who purchased the bill could thereafter re-sell some of the goods to members, as sometimes occurred. 243 Mr Harry Franke admitted the occurrence of the first Newcastle auction and the attendance of scrap metal merchants alleged to be at that auction, including Mr Bagnall of Ferndale, Mr Clingan of Riverside Metal, Mr Faulkner of D M Faulkner , Mr Baldini of M & E Equipment Traders Pty Ltd ('M & E Traders'), Mr Best of Metalcorp, Mr Robinson of T & T Metal Trading Pty Ltd, Mr Nietner of Nietner Brothers, Mr Higgins and himself. 244 Mr Harry Franke admitted that the knock occurred but not the alleged operation of the knock. 245 Mr Harry Franke admitted the occurrence of the second Newcastle auction and the persons who attended, as above with the exception of Mr Clingan and Mr Robinson. 246 As to the second Newcastle auction, Mr Harry Franke did not admit either the occurrence of the knock or its alleged operation. 247 As to the Port Kembla auction, Mr Harry Franke admitted its occurrence and the persons attending (himself, Mr Clingan, Mr Baldini, Mr Bortignon, Mr Higgins, Mr Tony Franke and Mr Kilpatrick). He also admitted that goods were purchased upon the bids of Mr Clingan and Mr Baldini. He admitted the identity of persons who bid for small purchases, including himself and Mr Tony Franke. He admitted that the knock occurred in accordance with the system alleged: '(i) Paul Clingan sought oral offers for the bill. (ii) The ring members made oral offers. (iii) Ring members were progressively eliminated from further participation in the process upon declining to increase their respective offers until only one offer remained by Anthony Franke who thereby acquired the bill. (iv) Mr Anthony Franke paid each ring member an amount equivalent to that ring member's last offer: · Metalcorp Recyclers Pty Limited, at the request of Mr Anthony Franke, paid each member; and · Mr Anthony Franke re-paid Metalcorp Recyclers Pty Limited. (v) The 25 November 1999[sic] ring members received payment as follows: (a) Vincenzo Baldini - $13,180.00 – cheque no. 209226; (b) Hendricus Franke - $3,720.00; (c) Paul Clingan- $3,170.00; (d) Leslie Kilpatrick - $2,900.00; (e) Leslie Martin - $2,900.00; (f) Allan Higgins - $2,900.00; and (g) Gregory Cook - $2,000.00.' 248 Mr Harry Franke also admitted that Mr Tony Franke paid the bill by paying the invoice issued by the auctioneers to Mr Clingan. 249 As to the Chiswick auction, Mr Harry Franke admitted the occurrence of the auction, the attendance of at least 102 registered bidders and that persons in attendance for the purpose of acquiring scrap metal included Mr Bagnall, Mr Clingan, Mr Robinson, Mr Nietner, Mr Tony Franke, Mr Kilpatrick, Mr Forrester and himself. Mr Harry Franke admitted that goods were purchased upon the bids of Mr Bagnall and that, after the Chiswick auction, a knock was conducted in accordance with the system described for the Bathurst auction. He did admit that he received a cheque by reason of his participation in the knock. The evidence 250 A number of affidavits were relied upon by the ACCC to establish the nature of the scrap metal industry, the nature of the ring and the knock and the events at the various auctions. They were: (1) The affidavit of Gregory Alfred Cook who was, in 1999, the Trading Manager for Metalcorp for the Wollongong branch. (2) The affidavit of Leslie Kilpatrick, who has been in the scrap metal business since 1989. His business is L & M J Kilpatrick trading as Steel City Metal Company ('Steel City'). He has attended many auctions which included scrap metal for sale. Steel City purchases about 10% of its total scrap metal from tenders and auctions and sells to larger scrap metal dealers including Metalcorp and Riverside Metal. (3) The affidavit of Richard Daren Best who has worked in sales and marketing in the scrap metal industry since 1995. Since 1997, he has held the position of Trading Manager at Metalcorp, now one of the two largest recyclers of scrap metal in the country. (4) The affidavit of Vincenzo Baldini, the Managing Director of M & E Traders Pty Ltd ('M & E Traders'). The principal business activity of this company is to buy and sell second hand machinery and equipment that may be used as processing equipment in manufacturing lines. Mr Baldini also purchases scrap metal for recycling and sells scrap metal to scrap metal dealers. (5) The affidavit of Mr Nietner, including the original statement of facts in the Nietner agreement, the cross-examination of Mr Nietner and the amended statement of facts in the amended Nietner agreement. 251 Mr Cook explained the different ferrous and non-ferrous goods in which Metalcorp, Wollongong traded: '(a) Scrap metal being goods and pieces of metal goods that are no longer wanted by the owner for their original function or original purpose, or for any other purpose, and are suitable for re-processing, including metal goods that can no longer be used for the purpose for which they were made ("scrap metal"). Scrap metal includes items such as white goods, roofing and old cars. (b) Re-useable items, which can be fixed and then sold as a functioning item at higher value than scrap metal value. Scrap metal value is the value of an item based solely on its metal content and not its function or purpose ("scrap metal value"). (c) Items that are new or are in working condition. These items can be sold to end-users for a higher value than scrap metal value.' 252 Mr Cook explained that rings have been operating among groups of scrap metal dealers at scrap metal auctions since the 1980's. Mr Cook, who commenced working in the recycling metal industry in 1987, explained his understanding of the way in which the ring operated. The ring consisted of some scrap metal dealers who selected one person to bid on behalf of the ring members at the scrap metal auction. Ring members would tell the appointed bidder the lots that they were interested in buying. Ring members did not bid against the appointed bidder and after the auction the ring members would split up the purchases between themselves by a further bidding process amongst themselves, known as the knock. 253 Mr Kilpatrick's evidence is that, for many years, a system of acquiring scrap metal at scrap metal auctions in New South Wales has occurred through rings and knocks. He participated in rings and knocks on more than a hundred occasions after 1989. He described the ring as a group of scrap metal dealers at a scrap metal auction who agree not to bid against each other and have one or more nominated scrap metal dealers bid on behalf of the others who have come to this agreement. By having more than one bidder, the appearance of a normal auction where no ring is in operation was given. Other members of the ring did not bid against the bidder bidding on behalf of the ring. Mr Kilpatrick would have not known which of the scrap metal dealers intended to be at the auction before his arrival. 254 At the end of the auction, all those participating in the ring would attend a meeting, the knock, to bid between themselves to purchase the bill. Generally the bidder on behalf of the ring would only bid on items for their scrap metal value. If the bidder on behalf of the ring bid on goods that could still be used for their intended purpose or function, the bid would only be for the scrap metal value. The scrap metal value was almost always less than the resale value of the goods for their intended use. 255 Mr Kilpatrick also stated that some scrap metal dealers also deal and have dealt in used goods. It was understood that if a scrap metal dealer bid for an item for resale as a functioning item, he may bid for the item, provided he advised the other ring members that he proposed to bid on that basis. 256 At the conclusion of the auction, the members of the ring would meet at a hotel or club to conduct the knock. Often a deck of cards was used, a member's name written on a card, the cards shuffled and a card randomly selected. The member whose name was on the card would bid in the knock, the amount being what he was prepared to pay to each scrap metal dealer at the knock in order to buy the bill. Each other person had the option of accepting that amount to drop out of the bidding or rejecting the amount and remaining in the bidding. As scrap metal dealers dropped out at different stages of the bidding process, they received different amounts. The purchaser of the bill was required to pay the auction invoice for the goods purchased on behalf of the ring and to pay each ring member the amount which that person accepted to drop out of the bidding at the knock. The scrap metal dealer who purchased the bill would generally be someone keen to get the work of dismantling, transporting and processing the scrap metal purchased on behalf of the ring. Where the scrap metal auction was large, only the large scrap metal dealers had the capacity to undertake that job. The smaller scrap metal dealers tended to drop out from the bidding process of large auctions in the early bids at the knock. 257 Mr Kilpatrick did not resile from his affidavit evidence during cross-examination. 258 Metalcorp, Wollongong also purchased scrap metal from smaller scrap metal dealers such as Nietner Brothers and T & D Metals. The Chiswick, Port Kembla and first and second Newcastle auctions 259 The ACCC alleges that Ferndale and Mr Bagnall were engaged in the infringing conduct at three auctions – the Chiswick auction and the first and second Newcastle auctions. It is alleged that at these auctions Mr Bagnall bid on behalf of the ring. He did not intend to be the ultimate purchaser of the goods. The ACCC did not pursue the allegation relating to Ferndale and Mr Bagnall at the Bathurst auction. 260 The ACCC brought the proceedings against Mr Harry Franke in relation to four auctions, the Chiswick auction, the Port Kembla auction and the first and second Newcastle auctions. The ACCC submitted that Mr Harry Franke was acting on his own behalf and on behalf of the business in which he was trading, Coast Metal Recyclers. 261 It was submitted by the ACCC that Mr Harry Franke was not involved in the contravention of his Coast Metal Recyclers+, but that he was involved in the contraventions by the corporate submitting respondents and Ferndale. 262 Mr Clingan was called by Mr Harry Franke to give evidence. The statement of agreed facts between the ACCC and Mr Clingan, acknowledged by Mr Clingan as correct, was then tendered by the ACCC against Mr Harry Franke and Mr Bagnall and became evidence in the proceedings against those respondents and Ferndale. Accordingly, the account in that statement, as set out in [28] to [30], is evidence against them in respect of the Port Kembla auction and the first Newcastle auction. Mr Clingan did not identify either Mr Bagnall or Mr Harry Franke at the Bathurst auction. Mr Clingan identified Mr Harry Franke as a person who agreed to take part in a ring at the Port Kembla auction and as a participant in the knock for that auction. He identified Mr Bagnall and Mr Harry Franke as persons who agreed to take part in a ring at the first Newcastle auction and as participants in the knock for that auction. 263 On cross-examination by Mr Faulkner SC, Mr Harry Franke stated that the evidence given by Mr Clingan, Mr Kilpatrick, Mr Best and Mr Cook that he participated in rings at the auctions was false. The Chiswick auction 264 There were approximately 102 registered bidders at the Chiswick auction on 11 February 1999, held by Masongreene, for the sale of goods including scrap metal. Mr Kilpatrick recognised Mr Bagnall, Mr Harry Franke and a number of other scrap metal dealers at the Chiswick auction. He has known Mr Harry Franke for about thirty years. He reported a conversation with Keith Burnett regarding Mr Bagnall's role as the bidder for the ring. Mr Kilpatrick agreed to join the ring. 265 Mr Kilpatrick did not bid on some items because he knew that Mr Bagnall would be bidding for the ring. Mr Kilpatrick noticed that Mr Bagnall was bidding for annealing covers and believed they were being purchased for the ring, so he did not bid for them. Mr Bagnall bid for goods to the sum of $42,861.50. 266 Mr Kilpatrick stated that a Mr Byrne told him that the knock would be held at a nearby hotel. Mr Kilpatrick attended the knock. He recognised a number of scrap metal dealers, including Mr Bagnall and Harry Franke at the knock in the beer garden of the hotel and described the process of bidding and dropping out at the knock. He recognised Mr Bagnall, Mr Harry Franke and a number of other scrap metal dealers. He did not recall cards being used and stated that the bidding went around the tables. Mr Kilpatrick's bid was for $850 and he received a cheque for this amount signed by R Bagnall on the Ferndale account, on behalf of the successful purchaser of the bill. The scrap metal dealer who bought the bill did not have his cheque book, so Mr Bagnall wrote cheques for the knock amounts on his behalf. 267 Invoices tendered show that the goods bought by Mr Bagnall were to the value of $42,674 out of the $293,000 sold to all the purchasers at the Chiswick auction. Ferndale paid the auctioneer's invoice for $42,861.50. A cheque made out to Mr Bagnall for "could not be for "purchases", because Mr Harry Franke, in cross-examination, admitted he had not bought anything from Mr Bagnall and yet he had received a cheque from Mr Bagnall. There was evidence regarding a cheque for $200 signed by Mr Bagnall and identified as for "purchases". Mr Faulkner SC suggested that this was a false description to avoid reference to a knock payment. 268 Mr Harry Franke, who gave evidence and was cross-examined, admitted that he attended the Chiswick auction with his brother to bid for a building to dismantle and reassemble. It is alleged that Mr Harry Franke attended the knock and following an unsuccessful bid received a cheque for $4,350 from Ferndale, signed by Mr Bagnall and made out to Coast Metal Recyclers. This amount was to be split between four people after which Mr Harry Franke admitted to receiving $1,500. Mr Harry Franke denied that he knew that Mr Bagnall would be bidding for the ring. He stated that people attend the knock to know who is there but not genuinely to bid for the goods. He asserted that he could compete with Metalcorp and that he bid at the knock because he knew Metalcorp wanted the bill. 269 Mr Harry Franke denied that his bidding at the knock was a genuine attempt to purchase the goods, however, the evidence shows that his bid was the third highest. He was unable to explain why a person would pay extra money at the knock rather than bid more at the auction. He explained that the knock was a 'gamble like playing cards' and that the scrap metal dealers gamble that the big players want the bill, which is why he did not want to participate in the second day at Newcastle as 'none of the big players wanted to participate'. If a big player is present he explained, 'I know I can make money by just being in it'. The Port Kembla auction 270 Three affidavits, those of Mr Kilpatrick, Mr Cook and Mr Baldini were relied upon by the ACCC in relation to Mr Harry Franke's alleged participation in the ring and knock at the Port Kembla auction. Mr Kilpatrick said that he asked other scrap metal dealers, including Mr Harry Franke and Mr Higgins if they were in the ring. Each said "yes". He asked Mr Clingan if he would be the buyer and Mr Clingan agreed to do it. Mr Kilpatrick also reported a conversation between Mr Harry Franke and Mr Bortignon about involvement in the ring and another conversation between Mr Harry Franke and Mr Baldini about whether the wire that the latter had bought should have been placed in the bill, as it was said that Mr Baldini bought it contrary to the rules of the ring. 271 Mr Cook saw Mr Harry Franke at the Port Kembla auction and at the knock at the Port Kembla Leagues Club. This was the place that the Port Kembla members agreed to hold the knock. Mr Cook refers to an approach by Mr Clingan at Port Kembla concerning involvement in the ring. Mr Cook understood that he could not bid against Mr Clingan, as Mr Clingan was bidding for the ring. 272 Mr Baldini stated in his affidavit that before the auction started he discussed some of the big lots with Mr Harry Franke. Mr Harry Franke asked him if he wanted 'to be part of a group today to purchase the big parcels'. Mr Baldini agreed as long as he was able to purchase some items for himself. Mr Harry Franke said: 'No problem. After the auction, we'll settle whatever we buy'. Mr Baldini was unable to observe who bid for the group but noticed Mr Clingan bidding for lots he was hoping to purchase. Before he left the auction he was invited by Mr Harry Franke to go to the Port Kembla Leagues Club where he recognised a number of dealers including Mr Harry Franke, Mr Tony Franke and Mr Clingan. Mr Harry Franke invited him to put some scrap items he had purchased as resaleable equipment into the bill. One of the scrap metal dealers said words to the effect: 'We all get a turn to bid. And you can drop out at any time you want to. At the figure you drop out you get paid by the successful bidder'. Mr Baldini described the bidding process for the bill and his own bid of $4,500. He noticed that Mr Tony Franke was the successful bidder for the bill and that Mr Greg Cook of Metalcorp signed the cheques for the knock payments to the scrap metal dealers. Mr Baldini received a cheque for $13,180 which included his knock payment and reimbursement for lots placed in the bill. 273 Mr Kilpatrick also reported conversations with Mr Harry Franke at the knock. In his affidavit, Mr Harry Franke admitted to receiving cheque No 209224 for $3,720 made out to cash from Metalcorp for his knock drop-out payment. 274 Mr Harry Franke said that scrap metal dealers could go to the knock even though they had not participated in the ring. He admitted going to the knock but denied participating in a ring with Mr Burnett or Mr Bagnall. He agreed that he would bid at the knock and run the risk of having to make the knock payments, despite not knowing who bid for the goods or what they were. 275 Mr Harry Franke said that he bought goods for himself at Port Kembla and was there to buy a larger item with Mr Clingan for dismantling. He also admitted to asking Mr Baldini if he would be 'interested in coming with us'. Mr Baldini bid against him and became the underbidder. Mr Harry Franke explained that the purchased lot was put into the knock because neither he nor Mr Clingan had the necessary certificates to comply with BHP's conditions. 276 Mr Harry Franke denied on cross examination that he took part in the ring and denied that he was aware that it was in operation. He denied that Mr Kilpatrick was correct in asserting that he was a member of the ring or that he asked Mr Baldini to put the wire that Mr Baldini had bought at the auction into the bill. He explained that items would be put in the knock, even if purchased because the buyer wanted them. He also referred to apparent inconsistencies in the affidavits of Mr Kilpatrick and Mr Baldini in relation to the Port Kembla auction: Mr Kilpatrick had reported that Mr Harry Franke had told Mr Baldini the items he had bought should be in the bill and Mr Baldini refused; Mr Baldini stated that he agreed to put the items in the bill. However, I note that there were two invoices issued to Mr Baldini at the auction, No 36 included the electric wire which he may have wanted to keep and the other invoice No 57 covered the filters and tanks that the auctioneer offered to him because they had not been sold. It is therefore possible both statements are correct. The first Newcastle auction 277 The auctions at Newcastle on 24 and 25 November 1999, held by BHP, were for the sale of goods including scrap metal. There were approximately 85 bidders registered. 278 Mr Best recognised Mr Harry Franke and Mr Bagnall at the first Newcastle auction. Mr Best's evidence is that he was approached by Mr Bagnall who said words to the effect: 'OK. I've spoken to a lot of the other scrap metal guys. We're going to put a ring together. Do you want to be a part of it? If you don't, we're going to run the hell out of you all day.' 279 Mr Best understood that the suggestion was being made that he should participate in the ring to buy lots of scrap metal and that if he raised his hand to bid for scrap metal, Mr Bagnall would counter-bid and raise the price and that this would result in Mr Best having to pay too much for that lot of scrap metal. He understood that, by agreeing to be in the ring, one person would be bidding on behalf of the ring and that he was not to bid against that bidder. The designated bidder would endeavour to obtain the lot at scrap value. 280 Mr Best said that he was told by either Mr Clingan or Mr Harry Franke, who approached him together, in relation to Mr Bagnall, '…he'll run you all day and cost you a fortune'. Mr Best observed Mr Clingan and Mr Harry Franke talking to Mr Bagnall and, after about 10 minutes, he was told that Mr Bagnall would 'do the buying'. Mr Best then agreed to be part of the ring because, he said, he was concerned about 'commercial retaliation' if he did not. During the auction Mr Best observed Mr Bagnall bidding and stated that he overheard comments by Mr Faulkner and Mr Harry Franke that too much had been bid for some items or that a bid was "OK". Also, he reported that during the auction a dealer approached him and asked why he was bidding against Mr Bagnall on certain items. Mr Best explained he was bidding for reusable items not for their scrap metal value. Mr Bagnall made purchases on behalf of the ring for approximately $37,944.50. 281 At the subsequent knock at the Phoenix Club, a number of scrap dealers including Mr Clingan, Mr Harry Franke, Mr Bagnall, Mr Faulkner, Mr Baldini and Mr Robinson were identified by Mr Best as being present. At the club, Mr Best observed Mr Bagnall organising the knock to dispose of the lots purchased in the bill. Mr Bagnall sought and received oral offers for the bill. Mr Bagnall approached Mr Best to see if he wanted the bill. Each member of the ring was given the opportunity to bid and the bill was allocated to highest bidder. The successful bidder paid to the unsuccessful bidders the highest sum that each had nominated. Mr Best heard each of the persons present saying how much he wanted to "drop out". 282 Mr Best, wanted to purchase the scrap metal that Mr Bagnall had purchased on behalf of the ring. The bill to the auctioneer was about $30,000. He added together the cost of the bill and transport costs and subtracted that from what he thought the recycled value of the scrap metal would be. He calculated that a net profit of $8,000 could be achieved. Mr Best was the successful bidder for the bill. 283 Mr Best, who did not have a cheque book with him, used a cheque book from D M Faulkner's cheque book to pay the knock drop-out amounts. Two of the cheques were for Mr Bagnall (for $1,200) and Mr Harry Franke (for $5,200). Mr Harry Franke told Mr Best that he would take a cheque for money 'owed to me and Carlyon'. Copies of the cheques for the knock payments and the auctioneer's invoices were tendered in Court. Mr Best subsequently repaid Mr Faulkner with a Metalcorp cheque for $25,100 and paid Masongreene for the lots purchased on behalf of the ring under an invoice to Ferndale with a Metalcorp cheque. 284 Mr Harry Franke denied any knowledge of Mr Bagnall's comments concerning the bill or the amount that was spent at the first Newcastle auction. He did not recall ever bidding seriously at any knock on any occasion but attended 'purely to make a dollar'. In cross examination, Mr Harry Franke denied knowledge of a ring at the first Newcastle auction and denied the truth of the evidence in Mr Best's affidavit. He stated that he did not speak to Mr Bagnall at auctions and denied any knowledge of the alleged conversations reported by Mr Best. He recalled speaking to Mr Faulkner at the first Newcastle auction. 285 Mr Baldini also attended the first Newcastle auction, noticed Mr Bagnall bidding and saw him at the knock. Mr Clingan, who gave evidence in the proceedings, said that there were at least 17 ring members including Mr Bagnall at the first Newcastle auction. He stated that Mr Bagnall received a cheque for $1,200 from D M Faulkner, made out by David Faulkner, on behalf of Mr Best who was successful in acquiring the bill. 286 When Mr Harry Franke was cross examined by Mr Faulkner SC, he explained that he knew there was a knock because 'The people are still there (after the auction)'. He denied that his knowledge about the knock was because he had been part of the ring. He observed Mr Faulkner writing cheques but denied telling Mr Best that he would take a cheque for himself and "Carylon". Mr Harry Franke asserted that he was not bidding seriously to obtain the goods at the knock, despite the fact that his bid for the bill was the second highest. He said that he could not compete with Metalcorp, despite being shown by Mr Faulkner SC, the range of prices for goods at the auction, some of which were as low as $30. Mr Harry Franke claimed that smaller scrap metal dealers could not compete at the Newcastle auctions and that only Metalcorp could compete, despite evidence that the prices of some of the items at the auction were so low that any of the buyers could have bid. 287 Mr Baldini observed at the first Newcastle auction Mr Bagnall, Mr Harry Franke and Mr Faulkner, and a number of scrap metal dealers in attendance. He reported a number of conversations with Mr Bagnall concerning his intention to bid 'on behalf of the group' and an invitation following the auction to 'settle the bill' at a club. He observed Mr Harry Franke and about twenty other scrap metal dealers at the club and described the bids and drop-out amounts. 288 Mr Harry Franke admitted to attending the first Newcastle auction with Mr Nietner to bid for steel plate. He identified Mr Higgins as present at the knock. Mr Harry Franke admitted that he attended the knock which he understood was a further auction of the goods and received $5,000. 289 Reference was made in Mr Harry Franke's affidavit to another auction in Newcastle where he bought $28,000 worth of steel plate, machinery and an office. The second Newcastle auction 290 Mr Baldini observed Mr Bagnall and Mr Harry Franke in attendance at the second Newcastle auction. Mr Baldini purchased items for M & E Traders but made no comments regarding a ring and knock. Mr Baldini mentioned that he purchased scrap metal items and stainless steel pipes at the auction. 291 Mr Best identified Mr Bagnall and Mr Harry Franke at the second Newcastle auction as well as a number of other scrap metal dealers. He was told that Mr Bagnall wanted to have another ring that day but he declined to join. He observed Mr Bagnall bidding and leaving the auction area but, as far as Mr Best was aware, there was no ring operating that day. Under cross examination by Mr Bagnall, Mr Best did not recall receiving a cheque for $150 for a knock payment for that day, which had been referred to in the statement of claim but not in the amended statement of claim. Mr Best recounted his meeting with Mr Bagnall to settle the two invoices for the previous day. He recalled comments by other scrap metal dealers that they did not want to be part of a ring that day. Mr Best observed a number of people successfully bidding at the auction, including Mr Clingan, Mr Faulkner, Mr Carlyon and Mr Baldini. He observed Mr Bagnall making 'a few exceptionally high bids' then storming away from the auction 'gesturing wildly'. Mr Best went to the Phoenix Club for a drink with some of the scrap metal dealers but did not report seeing a knock occurring. 292 Mr Nietner provided some evidence that there was a ring that day and said that he received $200 drop-out money by two cheques. Mr Faulkner SC submitted that the two cheques indicate that Mr Bagnall successfully bid at auction and acquired the goods, took them to the knock and reacquired them at the knock at a premium and that the inference is that a ring operated on 25 November 1999. 293 It was alleged by the ACCC that Metalcorp paid for both days, although there was evidence that Mr Bagnall acquired the bill at the knock for the second Newcastle auction and that a Ferndale cheque was given to Metalcorp as repayment for the knock on 25 November 1999. At the second Newcastle auction, Mr Bagnall bid and purchased goods to the value of $18,562.50. He paid Mr Best of Metalcorp $18,562.50 by means of a Ferndale cheque. 294 Mr Harry Franke said that he went to the second Newcastle auction to purchase steel plate but only purchased minor items. Mr Faulkner SC suggested to Mr Harry Franke that the reason that he was at the second Newcastle auction was to participate in the ring and not, as he had suggested to purchase steel plate because the items available for auction on both days had been available for inspection on the 24 November 1999. Mr Harry Franke denied this. 295 Mr Harry Franke attended the knock and stated, 'I was eligible for a cheque for $200.00'. This is the cheque that he gave to Mr Nietner. He said in his affidavit that he told 'the organisers' that he did not want to go to the knock but 'they', including Mr Bagnall, 'said that I might as well come along'. He admitted receiving the cheque but said that he gave it to Mr Nietner because 'a cheque for $200 did not interest me'. Mr Harry Franke said he was not involved in the ring on 25 November 1999. He denied knowledge of the purchaser of the goods on 25 November 1999 and stated that he only attended because Mr Bagnall insisted. Mr Harry Franke's defence 296 No evidence was filed by Mr Harry Franke before the hearing. He called two witnesses, Mr Nietner and Mr Clingan and read his own affidavit sworn 15 March 2004. He gave evidence. As he was not legally represented, this evidence he gave was in the form of assertions and was a general narrative. 297 Mr Harry Franke denied that the rings existed and that he had ever participated in them. He denied that he was knowingly involved in trying 'to artificially set a price at any auction'. He admitted that knocks had been organised for a long time. In evidence, he explained that invitation to the knocks were given to those dealers who were 'established' and had been 'in the scrap metal game' for many years. He submitted that he did not bid at the auctions because they were uncompetitive, particularly at Newcastle, due to the dominance of Metalcorp 298 Mr Harry Franke's defence, can be summarised as a denial that the rings existed. However, when the question was put to him in cross-examination asking whether he had ever been involved in a ring, his denial was unconvincing and evasive. Defence of Ferndale and Mr Bagnall 299 No evidence was filed by Mr Bagnall. He was an unrepresented litigant. He sought and was granted, by consent, leave to represent Ferndale. The Court suggested mediation, however, the parties did not act upon this suggestion. Mr Bagnall did not give evidence himself, either orally or by affidavit. He cross-examined witnesses and made submissions. He made a no case submission following the presentation of the ACCC's case. The ACCC made no objection to the no case submission being raised without an election to call evidence. Mr Bagnall indicated that he was satisfied that the case could be finally determined on the evidence already filed. Mr Faulkner SC submitted that, if Mr Bagnall had adduced evidence, it would not have supported his claims and invited the Court to apply the decision in Jones v Dunkel (1959) 101 CLR 298. Mr Faulkner SC pointed out that Mr Bagnall had chosen not to contradict the assertions made by the witnesses called by the ACCC. 300 During the hearing, Mr Bagnall produced a written submission for consideration. In that submission, Mr Bagnall made a number of assertions, some of which were in the nature of submissions and others that were in the nature of evidence or matters which would, ordinarily, be required to be supported by evidence. He asserted that there was no evidence of any arrangement or understanding which would amount to an exclusionary provision. The other participants in the market were, he said, free to bid and to compete and there was no evidence presented by the ACCC that the prices paid at the auctions were less because there had been a ring bidder. Mr Bagnall submitted that the presence of a ring bidder may even have increased competition. He did not consider that evidence had been presented to show that any of the knock purchasers, other than the ring bidder, did not have the capacity to buy goods at the auction. He asserted that any of the knock members could have bid at the auction. The knock simply provided a secondary market or "joint venture" which enabled the scrap metal dealers to compete against the bigger dealers. He submitted that such action is protected by s 45A(4) because the knock process was 'an understanding for the collective acquisition of goods'. As the basic price was fixed at the auction, there was no price control by the ring. There was no arrangement to fix a minimum price. 301 Mr Bagnall denied at the hearing that there had been collusion or price fixing because no price was fixed for each lot. Nor was there, he said, an agreement between the respondents as to the exact price that was to be paid. He asserted that he bid on his own behalf at every auction using his own bidder's number for a variety of items, not just scrap metal. He denied that he was bidding for other people or for the ring and he was certainly not the 'elected ring person who was doing all the buying' because he did not attend one of the biggest auctions, at Bathurst. Any agreement formed between scrap metal dealers, he asserted, was to do a job jointly and share removal costs. When he bought the lots at the auction he owned the goods and could do what he liked with them, including taking the lots back to the knock. He asserted that no member of the ring was ever prevented from bidding or excluded from the knock. The items put into the knock included reusable items, that is, not scrap metal. The system of the knocks was not to keep the price of scrap metal down but to make a profit and compete when possible with the larger dealers, Metalcorp and Simsmetal. 302 In summing up his case, Mr Bagnall said: '…it never, ever crossed my mind that my involvement with a buying group, or as we refer to as rings, at the Chiswick and Newcastle auctions were in breach of the Trade Practices Act in any way, illegally, or wrong, which I don't – I state again, I don't think that has been proven.' Later he continued: 'I never knew I was doing anything wrong…even by forming a group or a ring to buy parcels that I couldn't handle myself, that a collective group could handle…' 303 Mr Bagnall submitted that the formation of the knock served a number of roles, including distributing the profit that could be made from the lots among the scrap metal dealers present or as Mr Bagnall referred to it – the 'pension plan', ensuring that individual lots were not stolen before the purchaser could claim them from the bottom of the pallet and to provide some competition to Metalcorp and Simsmetal. In Mr Bagnall's opinion, following this action by the ACCC, there will be less competition because it will not be worthwhile for any of the smaller scrap metal dealers to attend auctions. 304 I set these matters out but many represent Mr Bagnall's assertions. They are not evidence. I have, where they can be taken as submissions, treated them as such. The no case submission by Mr Bagnall 305 Mr Bagnall made what could be called a "no-case" submission part way through the hearing. He did not establish, however, that the ACCC had no evidence in support of their claims, nor that their evidence was unsatisfactory. Accordingly, this submission has failed. 306 The question of whether Mr Bagnall could elect to call evidence was raised at the hearing. An election may be made by the respondent that he will or will not call evidence when making a no case submission, however, it is left to the discretion of the judge. Mr Bagnall elected not to adduce evidence. I therefore do not need to consider this matter any further. 307 While this matter was ventilated to some extent, it was not necessary to pursue it to finality, as Mr Bagnall, as I have said, elected not to adduce evidence. Conclusions 308 The existence of the market for the acquisition of scrap metal by scrap metal merchants is not in dispute. Nor is the existence of a market within New South Wales for the acquisition of scrap metal from BHP at each of the BHP auctions. 309 Both Mr Bagnall and Mr Harry Franke admitted the existence of the knock system at the various auctions. There was really no dispute, on the pleadings and in the evidence, as to how the knock worked in practice. While there was an attempt by Mr Harry Franke to explain why there could be such a practice in isolation from the alleged ring, it did not, in my opinion, make sense. The knock payments were clearly not for purchases made. I found the explanations offered by Mr Harry Franke and Mr Bagnall unconvincing. I note that Mr Bagnall, in submissions, referred to a "ring" in the context of a "buying group". It may be that these respondents lack an understanding of the nature of the alleged contraventions. I have some sympathy for Mr Bagnall's submission as to the benefit to the smaller dealers in the operation of the ring, in that it enabled them to compete against the larger dealers, particularly in the purchase of large lots. I accept that Mr Bagnall was unaware that he was doing anything wrong. 310 The evidence described the operation of the ring at each of the auctions where it was formed and the operation of the knock that followed. The witnesses conceded that ring members were not specifically asked not to bid at the auction nor were they prevented from bidding. Ring members could bid for items that were not scrap metal. It was understood, however, that the bidder would bid for scrap metal items on behalf of the ring. This was the purpose of the ring. The evidence was that Mr Bagnall and Ferndale were present as described at the Chiswick and first Newcastle auctions and that a ring and a knock operated at each of those auctions. It was established that Mr Harry Franke was present as described at the Chiswick auction, the Port Kembla auction and the first Newcastle auction and that he participated in a ring and a knock at each of those auctions. I accept evidence, in particular the evidence of Mr Kilpatrick, Mr Cook and Mr Baldini, in support of the ACCC and allegations where it conflicted with the evidence of Mr Harry Franke. The evidence of the formation of and existence of a ring was largely uncontested. It directly contradicts the assertion by Mr Harry Franke that he has never participated in a ring and establishes that Mr Bagnall and Mr Harry Franke did in fact participate. 311 I have some concerns about the evidence in respect of the second Newcastle auction. Mr Baldini did not describe a ring and a knock operating at that auction. Mr Best's evidence was that there was no ring or knock on that day. There was some evidence of "drop-out" money being paid by way of a number of cheques from Ferndale but that, in my view, is insufficient to establish conduct that contravened the Act. One of those cheques was made out to Mr Best, the witness called by the ACCC who stated that there was no ring or knock in operation. 312 The evidence against Mr Bagnall and Mr Harry Franke establishes that they participated as described in rings and knocks that operated at the Chiswick, Bathurst, Port Kembla and first Newcastle auctions. Mr Bagnall admitted to the operation of the rings as "joint ventures"; Mr Harry Franke to the operations of knocks as "distribution" of lots from the auction. The evidence of the witnesses called, the evidence of cheques and invoices, as well as the admissions by these respondents indicate clear contraventions of s 45(2)(a), s 45(2)(b) and s 45A of the Act as alleged. The evidence for contraventions at the second Newcastle auction is insufficient. Therefore Mr Bagnall was involved in contraventions at two auctions, the Chiswick auction and the first Newcastle auction; and Mr Harry Franke at three auctions, the Chiswick auction, the Port Kembla auction and the first Newcastle auction. 313 At each auction, other than the second Newcastle auction, there was an arrangement to control the acquisition of goods to affect the price of the goods purchased from the vendor at the auction. In respect of these auctions, Ferndale and the corporate respondents that engaged in each ring and knock made or arrived at an arrangement or understanding which: (i) contained a provision contrary to s 45(2)(a)(i) of the Act; and (ii) had the purpose or would have or be likely to have the effect of substantially lessening competition in the scrap metal market by reason that the provision had or was likely to have the effect of controlling the price for the goods to be acquired by the corporate respondents in contravention of s 45(2)(a)(ii) of the Act, in which regard the ACCC relies upon s 45A(1) of the Act. Mr Bagnall and Mr Harry Franke aided, abetted and procured the contraventions of s 45(2)(a)(i) and s 45(2)(a)(ii) and were persons who were directly or indirectly, knowingly concerned in, or parties to, the contraventions. 314 It was submitted by the ACCC that, in entering into an understanding to form the ring and knock, the scrap metal dealers had the purpose of preventing or restricting the acquisition of goods from the vendor at the auctions, which in turn had the effect and purpose of controlling the price. 315 In respect of the market in this case, counsel for the ACCC submitted that the respondents were 'competitive with each other in the market for scrap metal in New South Wales' and that perhaps the market consisted of 'a market at each of the auctions'. In relation to s 45A, it was submitted that the Court did not have to consider the issue of market because the use of the term "competition" in relation to the provision of an arrangement or understanding refers to competition in any market. Therefore, in relation to s 45A, it is only necessary to determine that goods were being put forward for sale and bid for and this would be the market "whatever its boundaries". It does not matter whether the market is at each auction or whether it includes auctions for scrap metal generally in New South Wales. 316 The ACCC relied on the deeming provision of s 45A(1) extracted above. In Australian Competition & Consumer Commission v Pauls Ltd [2002] FCA 1586, O'Loughlin J considered whether the purpose of a provision referred to in s 45A should be approached subjective or objectively. His Honour assessed the nature of s 45A and the deeming effect which he considered at [104]: '…contradicts the presence of a subjective state of mind. The language of the section requires a dispassionate onlooker to stand back and make an objective assessment of all relevant facts and circumstances. If that assessment reveals a purpose or an effect, or a likely effect of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of prices then the provision shall be deemed to have the proscribed purpose, effect or likely effect. The words 'likely to have the effect' can only mean, in my opinion, that one has regard, objectively, to what has happened or is likely to happen, ignoring the subjective state of mind of the relevant parties.' 317 This decision was discussed by Carr J in Australian Competition and Consumer Commission v Australian Medical Association Western Australia Branch Inc (2003) 199 ALR 423 and his Honour concluded at [247] that he was 'bound to apply the subjective test explained by the Full Court in ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1)(1990) 27 FCR 460, although giving due consideration to all the circumstances of the case. He held at [246] that 'there is no basis upon which a different test should be applied to assess the purpose of a provision referred to in s 45A to that which the Full Court in ASX Operations Pty Ltd has explained should be applied in relation to s 45'. These comments should, of course, be read in light of News Ltd (discussed above). 318 It was submitted for the ACCC that the agreement or understanding of the respondents had the purpose of controlling price, in that the agreement or understanding restrained the freedom that would otherwise have existed in offering and bidding for goods at the auctions. While s 45A(4) allows purchasing collectively as a joint venture, there is no evidence that the respondents sought collectively to acquire goods to take away from the auction. Rather one person retained the bill and the others were paid out at the knock. 319 Counsel for the ACCC submitted during cross-examinationthat a reasonable conclusion was that Mr Harry Franke attended the knock because he had watched the bidding at the first Newcastle, Port Kembla and Chiswick auctions and had confidence that the person bidding on behalf of the ring had purchased the goods "at the proper price". Mr Harry Franke denied this submission. Allen Anthony Higgins (sixteenth respondent) Substituted service 320 The amended statement of claim alleges that Mr Higgins attended the Bathurst auction and received $700 for his participation in the ring and knock and that he attended the first Newcastle auction, trading as Higgins Steel Salavage, and received $550 for his participation in the ring and knock. 321 Mr Higgins did not appear at any of the directions or at the hearing, either before Sackville J or before me. His Honour made an order on 17 October 2002 that the statement of claim and application to the Court were to be taken to have been served on Mr Higgins on 18 March 2002 pursuant to O 7 r 10 of the Federal Court Rules which provides: 'Where for any reason it is impractical to serve a document in the manner set out in the Rules, but steps have been taken to bring the document to the notice of the person to be served, the Court may order that the document be taken to have been served on that person on a date specified in the order.' Justice Sackville commented that, 'It appears clearly enough that the 16th respondent is determined not to accept service of the initiating process in the proceedings'. The respondent failed to enter an appearance following the deemed service of the application and statement of claim on 18 March 2002. 322 Similar difficulties were faced subsequently when attempts were made to serve documents on Mr Higgins. Affidavits were delivered to 75 Potts Street, Ryde ('the Ryde address'), believed to be the address for Mr Higgins. Documents were left on the doorstep and others attached to the front door. Registered post was returned unopened on 28 November 2002. However, pre-paid post to that same address and notifying the respondent of hearing dates and other correspondence sent to Mr Higgins at the Ryde address was not returned. No-one at the Ryde address admitted to being Mr Higgins and the affidavit of Justin Leach indicates that he was informed Mr Higgins had gone to "Cocar". 323 The Ryde address is where an interview took place in August 2000 between officers of the ACCC and Mr Higgins. There has been no notification of a change of address. Mr Higgins subsequently responded to letters sent to the Ryde address. There were also telephone conversations between Mr Higgins and Anushua Kangatharan of the ACCC acknowledging the receipt of certain letters sent to the Ryde address. There was confirmation that a car parked outside the Ryde address belonged to Mr Higgins. 324 The affidavits filed indicate a thorough attempt to inform the respondent of the proceedings and to serve all documents required to be served by the Court. The evidence is that the last known place of abode for Mr Higgins is the Ryde address and he is the registered proprietor of that property. He is the registered owner of a Mazda sedan which is parked outside that residence and the Roads and Traffic Authority has recorded the Ryde address as the address for his driving record. The registration entries at the auctions Mr Higgins was alleged to have attended indicate that his address in 1999 was the Ryde address and his telephone number remained the same. 325 Order 7 rule 11 of the Federal Court Rules provides: '(1) Unless the Court otherwise orders, the filing of a document has effect as service of the document on a person, if personal service is not required and: (a) the person to be served: (i) is in default of appearance; or (ii) has entered an appearance but has no address for service in the proceeding; or (b) there is proof of non-delivery of the document, being a document sent by the Court to the person's proper address. (2) For paragraph (1)(b), the proper address of a person is: (a) the address for service of the person in the proceeding: or (b) if, when the document is left or posted the person has no address for service in the proceeding, the person's last known place of business or of abode.' 326 The ACCC, by notice of motion, seeks orders that certain documents are to be taken as served on Mr Higgins pursuant to O 7 r 10 of the Federal Court Rules, that the motion not be served on any respondent and variations in previous orders relating to service on Mr Higgins. 327 The issue of whether proof of service on absent respondents is required before affidavits can be read was considered in Scoway Pty Ltd v Faxon Pty Ltd [2004] FCA 249 by Hely J. His Honour at [7] gave leave, pursuant to Order 1 Rule 8 of the Federal Court Rules for the ACCC to rely upon the affidavits which had been read, even though the affidavits may not have been served upon the absent respondents. This was because his Honour considered that all the respondents had been notified by the prescribed form of application that if there was no attendance by their legal representatives or by themselves that the application would be dealt with and judgment and or orders made in their absence. 328 In the circumstances, it is appropriate to make the orders sought by way of the notice of motion filed 23 March 2004. The ACCC's submissions 329 The ACCC submitted that Mr Higgins was involved in four auctions; the Bathurst auction, the Port Kembla auction and the first and second Newcastle auctions. Counsel relied upon the evidence of Mr Cook, Mr Clingan, Mr Kilpatrick, Mr Best and Mr Baldini. Mr Clingan's agreed statement of facts was tendered against Mr Higgins. Bathurst auction 330 Mr Higgins was identified by Mr Cook at the Bathurst auction, along with other scrap metal dealers. Mr Clingan identified Mr Higgins as attending a ring and a knock in relation to that auction. Mr Clingan also asserted that Mr Higgins was paid $700 at the knock. Mr Kilpatrick also attended the Bathurst auction and identified a number of scrap metal dealers as being present at the auctions at the knock, including Mr Cook but did not mention Mr Higgins. Mr Cook was told that Mr Faulkner was bidding for the scrap metal and he agreed to be part of the ring, and that he would not bid against Mr Faulkner. He observed Mr Faulkner and Mr Kilpatrick bidding 'on behalf of the Bathurst ring' and formed the opinion that there were many items purchased for higher than the scrap metal value. After the auction he was invited to meet at the RSL Club where he understood there would be bidding for the bill at the knock. He understood that the purpose of the knock was to purchase the bill or lots purchased on behalf of the Bathurst ring. He observed 15 to 20 scrap metal dealers there, including Mr Higgins. The invoices were passed around and the knock bidding was organised by Mr Clingan and Mr Faulkner. Evidence was presented by the ACCC that a cheque No 000317 for $700 was made out to A Higgins on the account of D M Faulkner. Mr Faulkner wrote out the knock cheques. The bank statement for D M Faulkner for October 1999 showing a debit on 20 October, No 000317 for $700.00, was tendered by counsel for the ACCC. Also tendered was a copy of the sign-in forms for people attending the club where the knock was held. This is signed by Mr Higgins on 12 October and his address is indicated as the Ryde address. The auctioneers (Pickles Group) buyer's identification (a document also tendered) has been signed by Mr Higgins of 75 Potts Street, Ryde. Port Kembla auction 331 Mr Kilpatrick attended the on-site auction at the BHP Steelworks. He recognised a number of scrap metal dealers at the auction, including Mr Higgins. Mr Cook also saw Mr Higgins at the auction. Mr Kilpatrick asked if they were in the ring and Mr Higgins was among the dealers who agreed to join. Mr Clingan asserted that Mr Higgins attended the ring and the knock in relation to the Port Kembla auction, and that Mr Higgins was paid $2,900 at the knock. Mr Cook was asked by Mr Clingan to be part of the ring for which Mr Clingan would bid. Mr Cook agreed to be part of the ring and, therefore, not bid against Mr Clingan. Mr Kilpatrick observed Mr Clingan bidding at the auction. He understood that Mr Clingan was bidding on behalf of the ring. He noticed some of the dealers buying lots, including Mr Baldini who was buying copper wire cabling. After the auction he spoke to a number of dealers including Mr Higgins and it was suggested they go to the Port Kembla Leagues Club for the knock. He had lunch with Mr Martin and Mr Higgins and then sat with them at the knock. They participated in the knock. There were only a few dealers involved in the knock. Mr Kilpatrick bid about $3,000. Mr Cook, who also saw Mr Higgins at the knock, wrote out the Metalcorp cheques for the dealers and Mr Kilpatrick asked for a cash cheque. Mr Tony Franke was the successful purchaser of the bill and the cheques were written by Mr Best on his behalf. Mr Kilpatrick said that he, Mr Martin and Mr Higgins were not able to cash the cheques at the National Bank so, according to Mr Kilpatrick, they went to the Metalcorp office where they were cashed. 332 The ACCC tendered evidence of the cheques written following the Port Kembla auction. The cheques for Mr Harry Franke, Mr Clingan and Mr Baldini were identified. There was no direct documentary evidence of a cheque made out to Mr Higgins. The first Newcastle auction 333 The first Newcastle auction was attended by Mr Best. He recognized a number of scrap metal dealers including Mr Higgins. Mr Best described the role of Mr Bagnall at this auction and the operation of the ring. He noticed that Mr Higgins was with Mr Bagnall, Mr Clingan and Mr Harry Franke, standing in a huddle. Then Mr Clingan and Mr Harry Franke told him that Mr Bagnall would 'do the buying'. He did not notice Mr Higgins bidding during the auction. Mr Best overheard comments passed between Mr Higgins and Mr Burnett regarding the amount that was being bid for lots. After he had bid on some electric motors and a dealer asked him why he was bidding against Mr Bagnall he noticed the dealer returned to a group which included Mr Higgins. Mr Best made no reference to Mr Higgins' presence at the knock. Mr Baldini did not mention seeing Mr Higgins at the first Newcastle auction. Mr Clingan said that Mr Higgins attended the ring and the knock in relation to the first Newcastle auction and that Mr Higgins was paid $550 at the knock. 334 There was in evidence a cheque No 00373 for $500 made out to A Higgins by Mr Faulkner from the D M Faulkner account on behalf of Mr Best, who had successfully acquired the bill. The second Newcastle auction 335 As far as Mr Best was aware there was no ring operating at the second Newcastle auction. Mr Best made no reference to Mr Higgins as being present at the second Newcastle auction. 336 Mr Baldini recognised Mr Best, Mr Harry Franke and Mr Bagnall at the second Newcastle auction together with a number of other scrap metal dealers but he made no mention of Mr Higgins. At the hearing, Mr Baldini made no reference to the specific events of 25 November. Evidence was tendered that Mr Higgins had signed in at the Phoenix Club that day but counsel for the ACCC conceded, 'We don't have evidence of his presence at the auction that day'. A cheque No 002298 was written out to A Higgins for $350 by R Bagnall using a Ferndale cheque book and the cheque butt was tendered. Records from the ANZ bank for the Ferndale account indicated cheque No 002298 for $350.00 was presented on 26 November 1999. 337 The evidence against Mr Higgins establishes his presence at three auctions: the Bathurst auction, the Port Kembla auction and the first Newcastle auction; that rings and knocks operated at each of those three auctions; and that Mr Higgins participated in those rings and knocks as described. For the reasons I have given, I am not satisfied that a ring and a knock operated at the second Newcastle auction. I am satisfied that Mr Higgins was involved in contraventions of the Act in respect of each of those auctions as alleged. 338 Mr Higgins aided, abetted or procured the contraventions of s 45(2)(a)(i) and s 45(2)(a)(ii) and was a person who was directly or indirectly, knowingly concerned in or party to the contravention of Ferndale and the submitting corporate respondents where present at the Bathurst, Port Kembla and first Newcastle auctions. Orders 339 I make the orders as against the first, second, third, fourth, fifth, tenth, eleventh, thirteenth, fourteenth and seventeenth respondents as set out in annexures A to F to these reasons reflecting the orders agreed to between the ACCC and those respondents. 340 I also make the orders with respect to the sixteenth respondent in accordance with the notice of motion filed by the applicant on 23 March 2004. 341 I will hear from the ACCC and the fifth, sixth and fifteenth respondents and, if he appears, the sixteenth respondent, on the question of orders and penalties to be imposed for the contraventions of the Act in respect of those respondents. I certify that the preceding three hundred and forty-one (341) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. Associate: Dated: 30 September 2004 Counsel for the Applicant: I Faulkner SC with V F Kerr Solicitor for the Applicant: Australian Government Solicitor Counsel for the First and Second Respondents A J Payne Solicitor for the First and Second Respondents Bartier Perry Counsel for the Third and Fourth Respondents James Lockhart Solicitor for the Third Respondent Spooner & Hall Solicitor for Fifth Respondent R D Wilson Sixth and Seventh Respondents Seventh Respondent appeared in person for the Sixth and Seventh Respondents Tenth and Eleventh Respondents Eleventh respondent appeared in person for the Tenth and Eleventh Respondents Counsel for the Thirteenth and Fourteenth Respondents Mr I E Davidson Solicitors for Thirteenth and Fourteenth Respondents Emil Ford & Co Fifteenth Respondent appeared in person No appearance for the Sixteenth Respondent Counsel for the Seventeenth Respondent M Condon Solicitors for Seventeenth Respondent Peedoms Date of Hearing: 8 – 12, 15 – 19, 22, 23 March 2004 Date of Judgment: 30 September 2004 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES No N 1672 of 2001 DISTRICT REGISTRY Australian Competition and Consumer Commission Applicant D M Faulkner Pty Limited (ACN 077 373 712) First Respondent David Munro Faulkner Second Respondent and others ORDERS (FIRST AND SECOND RESPONDENTS) THE COURT NOTES THAT: 1. The First Respondent admits that, by the acts of its Managing Director, the Second Respondent, on 24 November 1999, at an auction in Newcastle by BHP Limited for the sale of goods including scrap metal: a) it made an arrangement or arrived at an understanding with certain other scrap metal dealers ("the ring") which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction ii) not bidding against the nominated bidder/s iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock b) it gave effect to the arrangement or understanding by: i) not bidding for lots against the ring ii) participating in the subsequent knock at the Phoenix Sports Club c) by the acts referred to in (a)(i) and (ii) and (b)(i), it represented in trade and commerce to those conducting and attending the auction that the bids made on behalf of the nominated bidder were genuine and were made in the absence of any agreement or understanding with other persons at the auction as to price control, which representation was not true. 2. The First Respondent admits by the acts of its Managing Director, the Second Respondent, on 12 October 1999, at an auction in Bathurst by the Commonwealth of Australia (Department of Defence) for the sale of goods including scrap metal: a) it made an arrangement or arrived at an understanding with certain other scrap metal dealers ("the ring") which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction ii) not bidding against the nominated bidder/s iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock b) it gave effect to the arrangement or understanding by: i) not bidding for lots against the ring ii) participating in the subsequent knock at the Bathurst RSL Club iii) purchasing the goods at the knock jointly with another ring member. c) by the acts referred to in (a)(i) and (ii) and (b)(i), it represented in trade and commerce to those conducting and attending the auction that the bids made on behalf of the nominated bidder were genuine and were made in the absence of any agreement or understanding with other persons at the auction as to price control, which representation was not true. 3. The Second Respondent admits that he made the arrangement or arrived at the understanding referred to in paragraph 1(a) and engaged in the conduct referred to in paragraph 1(b) on behalf of the First Respondent. 4. The Second Respondent admits that he made the arrangement or arrived at the understanding referred to in paragraph 2(a) and engaged in the conduct referred to in paragraph 2(b) on behalf of the First Respondent. THE COURT DECLARES THAT: 5. By making the arrangement or arriving at the understanding referred to in paragraph 1(a) the First Respondent: a) made an arrangement or arrived at an understanding containing an exclusionary provision in contravention of section 45(2)(a)(i), when read with section 4D, of the Trade Practices Act 1974 ("the Act") b) made an arrangement or arrived at an understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(a)(ii), when read with section 45A(1), of the Act. 6. By engaging in the conduct referred to in paragraph 1(b) the First Respondent a) gave effect to an arrangement or understanding containing an exclusionary provision in contravention of section 45(2)(b)(i), when read with section 4D, of the Act b) gave effect to an arrangement or understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(b)(ii), when read with section 45A(1), of the Act. 7. In the circumstances described in paragraph 1(c) the First Respondent, in trade or commerce, engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s52(1) of the Act. 8. By making the arrangement or understanding referred to in paragraph 1(a) and engaging in the conduct referred to in paragraph 1(b) the Second Respondent: a) aided, abetted or procured the First Respondent to contravene ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i), 45(2)(b)(ii) and 52 of the Act; and/or b) has been directly or indirectly knowingly concerned in or a party to the contravention by the First Respondent of ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i), 45(2)(b)(ii) and 52 of the Act. 9. By making the arrangement or understanding referred to in paragraph 2(a) the First Respondent: a) made an arrangement or arrived at an understanding containing an exclusionary provision in contravention of section 45(2)(a)(i), when read with section 4D, of the Trade Practices Act 1974 ("the Act") b) made an arrangement or arrived at an understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(a)(ii), when read with section 45A(1), of the Act. 10. By engaging in the conduct referred to in paragraph 2(b) the First Respondent a) gave effect to an arrangement or understanding containing an exclusionary provision in contravention of section 45(2)(b)(i), when read with section 4D, of the Act b) gave effect to an arrangement or understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(b)(ii), when read with section 45A(1), of the Act. 11. In the circumstances described in paragraph 2(c) the First Respondent, in trade or commerce, engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s52(1) of the Act. 12. By making the arrangement or understanding referred to in paragraph 2(a) and engaging in the conduct referred to in paragraph 2(b) the Second Respondent : a) aided, abetted or procured the First Respondent to contravene ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i), 45(2)(b)(ii) and 52 of the Act; and/or b) has been directly or indirectly knowingly concerned in or a party to the contravention by the First Respondent of ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i), 45(2)(b)(ii) and 52 of the Act. THE COURT ORDERS THAT: 13. The First Respondent, by its servants or agents or otherwise howsoever, is restrained from a) making an arrangement or arriving at an understanding with other scrap metal dealers ("the ring") which contain a provision that the parties to the ring will engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction; and ii) not bidding against the nominated bidder/s; and iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock. 14. The Second Respondent is restrained from a) making an arrangement or arriving at an understanding with other scrap metal dealers ("the ring") which contain a provision that the parties to the ring will engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction; and ii) not bidding against the nominated bidder/s; and iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock. 15. The First Respondent pay to the Commonwealth a pecuniary penalty in the sum of $80,000 in respect of the conduct referred to in paragraphs 1 - 2 above. 16. The Second Respondent pay to the Commonwealth a pecuniary penalty in the sum of $10,000 in respect of the conduct referred to in paragraphs 1 - 4 above. 17. The First and Second Respondents jointly pay the Applicant the sum of $10,000 towards its costs in these proceedings. Date: 30 September 2004 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES No N 1672 of 2001 DISTRICT REGISTRY Australian Competition and Consumer Commission Applicant Riverside Metal Industries Pty Limited (ACN 002 537 537) Third Respondent Paul Leonard Clingan Fourth Respondent and others ORDERS (THIRD AND FOURTH RESPONDENTS) THE COURT NOTES THAT: 18. The Third Respondent admits by the acts of its Managing Director, the Fourth Respondent, on 12 October 1999, at an auction in Bathurst by the Commonwealth of Australia (Department of Defence) for the sale of goods including scrap metal: a) it made an arrangement or arrived at an understanding with certain other scrap metal dealers ("the ring") which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction ii) not bidding against the nominated bidder/s iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock b) it gave effect to the arrangement or understanding by: i) not bidding for lots against the ring ii) participating in the subsequent knock at the Bathurst RSL Club iii) purchasing the goods at the knock jointly with another ring member. 19. The Third Respondent admits by the acts of its Managing Director, the Fourth Respondent, on 28 October 1999, at an auction in Port Kembla by BHP Limited for the sale of goods including scrap metal: a) it made an arrangement or arrived at an understanding with certain other scrap metal dealers ("the ring") which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction ii) not bidding against the nominated bidder/s iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock b) it gave effect to the arrangement or understanding by: i) acting as a nominated bidder for the ring ii) bidding for lots at the auction on behalf of the ring iii) not bidding for lots against the ring iv) participating in the subsequent knock at the Port Kembla Leagues Club. 20. The Third Respondent admits that, by the acts of its Managing Director, the Fourth Respondent, on 24 November 1999, at an auction in Newcastle by BHP Limited for the sale of goods including scrap metal: a) it made an arrangement or arrived at an understanding with certain other scrap metal dealers ("the ring") which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction ii) not bidding against the nominated bidder/s iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock b) it gave effect to the arrangement or understanding by: i) not bidding for lots against the ring ii) participating in the subsequent knock at the Phoenix Sports Club 21. The Fourth Respondent admits that he made the arrangement or arrived at the understanding referred to in paragraph 1(a) and engaged in the conduct referred to in paragraph 1(b) on behalf of the Third Respondent. 22. The Fourth Respondent admits that he made the arrangement or arrived at the understanding referred to in paragraph 2(a) and engaged in the conduct referred to in paragraph 2(b) on behalf of the Third Respondent. 23. The Fourth Respondent admits that he made the arrangement or arrived at the understanding referred to in paragraph 3(a) and engaged in the conduct referred to in paragraph 3(b) on behalf of the Third Respondent. THE COURT DECLARES THAT: 24. By making the arrangement or arriving at the understanding referred to in paragraph 1(a) the Third Respondent: a) made an arrangement or arrived at an understanding containing an exclusionary provision in contravention of section 45(2)(a)(i), when read with section 4D, of the Trade Practices Act 1974 ("the Act") b) made an arrangement or arrived at an understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of controlling the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(a)(ii), when read with section 45A(1), of the Act. 25. By engaging in the conduct referred to in paragraph 1(b) the Third Respondent a) gave effect to an arrangement or understanding containing an exclusionary provision in contravention of section 45(2)(b)(i), when read with section 4D, of the Act b) gave effect to an arrangement or understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of controlling the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(b)(ii), when read with section 45A(1), of the Act. 26. By making the arrangement or understanding referred to in paragraph 1(a) and engaging in the conduct referred to in paragraph 1(b) the Fourth Respondent: a) aided, abetted or procured the Third Respondent to contravene ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act; and/or b) has been directly or indirectly knowingly concerned in or a party to the contravention by the Third Respondent of ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act. 27. By making the arrangement or understanding referred to in paragraph 2(a) the Third Respondent: a) made an arrangement or arrived at an understanding containing an exclusionary provision in contravention of section 45(2)(a)(i), when read with section 4D, of the Trade Practices Act 1974 ("the Act") b) made an arrangement or arrived at an understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of controlling the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(a)(ii), when read with section 45A(1), of the Act. 28. By engaging in the conduct referred to in paragraph 2(b) the Third Respondent a) gave effect to an arrangement or understanding containing an exclusionary provision in contravention of section 45(2)(b)(i), when read with section 4D, of the Act b) gave effect to an arrangement or understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of controlling the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(b)(ii), when read with section 45A(1), of the Act. 29. By making the arrangement or understanding referred to in paragraph 2(a) and engaging in the conduct referred to in paragraph 2(b) the Fourth Respondent : a) aided, abetted or procured the Third Respondent to contravene ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act; and/or b) has been directly or indirectly knowingly concerned in or a party to the contravention by the Third Respondent of ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act. 30. By making the arrangement or understanding referred to in paragraph 3(a) the Third Respondent: a) made an arrangement or arrived at an understanding containing an exclusionary provision in contravention of section 45(2)(a)(i), when read with section 4D, of the Trade Practices Act 1974 ("the Act") b) made an arrangement or arrived at an understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of controlling the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(a)(ii), when read with section 45A(1), of the Act. 31. By engaging in the conduct referred to in paragraph 3(b) the Third Respondent a) gave effect to an arrangement or understanding containing an exclusionary provision in contravention of section 45(2)(b)(i), when read with section 4D, of the Act b) gave effect to an arrangement or understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of controlling the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(b)(ii), when read with section 45A(1), of the Act. 32. By making the arrangement or understanding referred to in paragraph 3(a) and engaging in the conduct referred to in paragraph 3(b) the Fourth Respondent: a) aided, abetted or procured the Third Respondent to contravene ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act; and/or b) has been directly or indirectly knowingly concerned in or a party to the contravention by the Third Respondent of ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act. THE COURT ORDERS THAT: 33. The Third Respondent, by its servants or agents or otherwise howsoever, is restrained from a) making an arrangement or arriving at an understanding with other scrap metal dealers ("the ring") which contain a provision that the parties to the ring will engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction; and ii) not bidding against the nominated bidder/s; and iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock. 34. The Fourth Respondent is restrained from a) making an arrangement or arriving at an understanding with other scrap metal dealers ("the ring") which contain a provision that the parties to the ring will engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction; and ii) not bidding against the nominated bidder/s; and iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock. 35. The Third Respondent pay to the Commonwealth a pecuniary penalty in the sum of $120,000 in respect of the conduct referred to in paragraphs 1 - 3 above. 36. The Fourth Respondent pay to the Commonwealth a pecuniary penalty in the sum of $15,000 in respect of the conduct referred to in paragraphs 1 - 6 above. 37. The Third and Fourth Respondents jointly pay the Applicant the sum of $10,000 towards its costs in these proceedings. Date: 30 September 2004 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES No N 1672 of 2001 DISTRICT REGISTRY Australian Competition and Consumer Commission Applicant MICHAEL NIETNER Fifth Respondent and others ORDERS (FIFTH RESPONDENT) THE COURT NOTES THAT: 38. The Fifth Respondent admits, only for the purposes of these proceedings, that he, together with each of the First, Third, Tenth and Thirteenth Respondents and others, on 12 October 1999, at an auction in Bathurst by the Department of Defence for the sale of goods including scrap metal: a) arrived at an understanding with certain other scrap metal dealers ("the ring") which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction ii) not bidding against the nominated bidder/s iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock b) gave effect to the understanding by: i) not bidding for lots against the ring ii) participating in the subsequent knock at the Bathurst RSL Club. 39. The Fifth Respondent admits, only for the purposes of these proceedings, that he, together with each of the First, Third and Sixth Respondents and others, on 24 November 1999, at an auction in Newcastle by BHP Limited for the sale of goods including scrap metal: a) arrived at an understanding with certain other scrap metal dealers ("the ring") which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction ii) not bidding against the nominated bidder/s iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock b) gave effect to the arrangement or understanding by: i) not bidding for lots against the ring ii) participating in the subsequent knock at the Phoenix Sports Club. THE COURT DECLARES THAT: 40. By arriving at the understanding referred to in paragraph 1(a) and engaging in the conduct referred to in paragraph 1(b) the Seventeenth Respondent: a) aided, abetted or procured each of the First, Third, Tenth and Thirteenth Respondents to contravene ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act; and/or b) has been directly or indirectly knowingly concerned in or a party to the contravention by the First, Third, Tenth and Thirteenth Respondents of ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act. 41. By arriving at the understanding referred to in paragraph 2(a) and engaging in the conduct referred to in paragraph 2(b) the Seventeenth Respondent: a) aided, abetted or procured each of the First, Third and Sixth Respondents to contravene ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act; and/or b) has been directly or indirectly knowingly concerned in or a party to the contravention by the First, Third and Sixth Respondents of ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act. THE COURT ORDERS THAT: 42. The Fifth Respondent is restrained from a) arriving at an understanding with other scrap metal dealers ("the ring") which contain a provision that the parties to the ring will engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction; and ii) not bidding against the nominated bidder/s; and iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock. 43. The Fifth Respondent pay to the Commonwealth a pecuniary penalty in the sum of $10,000 in respect of the conduct referred to in paragraphs 1 and 2 above. 44. The Fifth Respondent pay the Applicant the sum of $2,500 towards its costs in these proceedings. Date: March 2004 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES No N 1672 of 2001 DISTRICT REGISTRY Australian Competition and Consumer Commission Applicant Ajax sheet metal Pty Limited (ACN 000 466 713) Tenth Respondent Sidney Neville forrester Eleventh Respondent AND OTHERS ORDERS (TENTH AND ELEVENTH RESPONDENTS) THE COURT NOTES THAT: 45. The Tenth Respondent admits that, by the acts of its Managing Director, the Eleventh Respondent, on 11 February 1999, at an auction in Chiswick by BHP Limited for the sale of goods including scrap metal: a) it made an arrangement or arrived at an understanding with certain other scrap metal dealers ("the ring") which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction ii) not bidding against the nominated bidder/s iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock b) it gave effect to the arrangement or understanding by: i) not bidding for lots against the ring ii) participating in the subsequent knock at a nearby hotel c) by the acts referred to in (a)(i) and (ii) and (b)(i), it represented in trade and commerce to those conducting and attending the auction that the bids made on behalf of the nominated bidder were genuine and were made in the absence of any agreement or understanding with other persons at the auction as to price control, which representation was not true. 46. The Tenth Respondent admits by the acts of its Managing Director, the Eleventh Respondent, on 12 October 1999, at an auction in Bathurst by the Commonwealth of Australia (Department of Defence) for the sale of goods including scrap metal: a) it made an arrangement or arrived at an understanding with certain other scrap metal dealers ("the ring") which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction ii) not bidding against the nominated bidder/s iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock b) it gave effect to the arrangement or understanding by: i) permitting its bidder registration number to be used by the ring bidder ii) not bidding for lots against the ring iii) participating in the subsequent knock at the Bathurst RSL Club c) by the acts referred to in (a)(i) and (ii) and (b)(i) and (ii), it represented in trade and commerce to those conducting and attending the auction that the bids made on behalf of the nominated bidder were genuine and were made in the absence of any agreement or understanding with other persons at the auction as to price control, which representation was not true. 47. The Eleventh Respondent admits that he made the arrangement or arrived at the understanding referred to in paragraph 1(a) and engaged in the conduct referred to in paragraph 1(b) on behalf of the Tenth Respondent. 48. The Eleventh Respondent admits that he made the arrangement or arrived at the understanding referred to in paragraph 2(a) and engaged in the conduct referred to in paragraph 2(b) on behalf of the Tenth Respondent. THE COURT DECLARES THAT: 49. By making the arrangement or arriving at the understanding referred to in paragraph 1(a) the Tenth Respondent: a) made an arrangement or arrived at an understanding containing an exclusionary provision in contravention of section 45(2)(a)(i), when read with section 4D, of the Trade Practices Act 1974 ("the Act") b) made an arrangement or arrived at an understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(a)(ii), when read with section 45A(1), of the Act. 50. By engaging in the conduct referred to in paragraph 1(b) the Tenth Respondent a) gave effect to an arrangement or understanding containing an exclusionary provision in contravention of section 45(2)(b)(i), when read with section 4D, of the Act b) gave effect to an arrangement or understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(b)(ii), when read with section 45A(1), of the Act. 51. In the circumstances described in paragraph 1(c) the Tenth Respondent, in trade or commerce, engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s52(1) of the Act. 52. By making the arrangement or understanding referred to in paragraph 1(a) and engaging in the conduct referred to in paragraph 1(b) the Eleventh Respondent: a) aided, abetted or procured the Tenth Respondent to contravene ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i), 45(2)(b)(ii) and 52 of the Act; and/or b) has been directly or indirectly knowingly concerned in or a party to the contravention by the Tenth Respondent of ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i), 45(2)(b)(ii) and 52 of the Act. 53. By making the arrangement or understanding referred to in paragraph 2(a) the Tenth Respondent: a) made an arrangement or arrived at an understanding containing an exclusionary provision in contravention of section 45(2)(a)(i), when read with section 4D, of the Trade Practices Act 1974 ("the Act") b) made an arrangement or arrived at an understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(a)(ii), when read with section 45A(1), of the Act. 54. By engaging in the conduct referred to in paragraph 2(b) the Tenth Respondent a) gave effect to an arrangement or understanding containing an exclusionary provision in contravention of section 45(2)(b)(i), when read with section 4D, of the Act b) gave effect to an arrangement or understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(b)(ii), when read with section 45A(1), of the Act. 55. In the circumstances described in paragraph 2(c) the Tenth Respondent, in trade or commerce, engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s52(1) of the Act. 56. By making the arrangement or understanding referred to in paragraph 2(a) and engaging in the conduct referred to in paragraph 2(b) the Eleventh Respondent : a) aided, abetted or procured the Tenth Respondent to contravene ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i), 45(2)(b)(ii) and 52 of the Act; and/or b) has been directly or indirectly knowingly concerned in or a party to the contravention by the Tenth Respondent of ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i), 45(2)(b)(ii) and 52 of the Act. THE COURT ORDERS THAT: 57. The Tenth Respondent, by its servants or agents or otherwise howsoever, is restrained from a) making an arrangement or arriving at an understanding with other scrap metal dealers ("the ring") which contain a provision that the parties to the ring will engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction; and ii) not bidding against the nominated bidder/s; and iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock. 58. The Eleventh Respondent is restrained from a) making an arrangement or arriving at an understanding with other scrap metal dealers ("the ring") which contain a provision that the parties to the ring will engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction; and ii) not bidding against the nominated bidder/s; and iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock. 59. The Tenth Respondent pay to the Commonwealth a pecuniary penalty in the sum of $2,500. in respect of the conduct referred to in paragraphs 1 - 2 above. 60. The Eleventh Respondent pay to the Commonwealth a pecuniary penalty in the sum of $5,000 in respect of the conduct referred to in paragraphs 1 - 4 above. 61. The Tenth and Eleventh Respondents jointly pay the Applicant the sum of $2,500 towards its costs in these proceedings. Date: 30 September 2004 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES No N 1672 of 2001 DISTRICT REGISTRY Australian Competition and Consumer Commission Applicant T & D Metals & Demolitions Pty Limited (ACN 066 973 993) Thirteenth Respondent anthony franke Fourteenth Respondent and others ORDERS (THIRTEENTH AND FOURTEENTH RESPONDENTS) THE COURT NOTES THAT: 62. The Thirteenth Respondent admits that, by the acts of its Managing Director, the Fourteenth Respondent, on 11 February 1999, at an auction in Chiswick by BHP Limited for the sale of goods including scrap metal: a) it made an arrangement or arrived at an understanding with certain other scrap metal dealers ("the ring") which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction ii) not bidding against the nominated bidder/s iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock b) it gave effect to the arrangement or understanding by: i) not bidding for lots against the ring ii) participating in the subsequent knock at a nearby hotel. 63. The Thirteenth Respondent admits by the acts of its Managing Director, the Fourteenth Respondent, on 12 October 1999, at an auction in Bathurst by the Commonwealth of Australia (Department of Defence) for the sale of goods including scrap metal: a) it made an arrangement or arrived at an understanding with certain other scrap metal dealers ("the ring") which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction ii) not bidding against the nominated bidder/s iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock b) it gave effect to the arrangement or understanding by: i) not bidding for lots against the ring ii) participating in the subsequent knock at the Bathurst RSL Club. 64. The Thirteenth Respondent admits by the acts of its Managing Director, the Fourteenth Respondent, on 28 October 1999, at an auction in Port Kembla by BHP Limited for the sale of goods including scrap metal: a) it made an arrangement or arrived at an understanding with certain other scrap metal dealers ("the ring") which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction ii) not bidding against the nominated bidder/s iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock b) it gave effect to the arrangement or understanding by: i) not bidding for lots against the ring ii) participating in the subsequent knock at the Port Kembla Leagues Club iii) purchasing the goods at the knock. 65. The Fourteenth Respondent admits that he made the arrangement or arrived at the understanding referred to in paragraph 1(a) and engaged in the conduct referred to in paragraph 1(b) on behalf of the Thirteenth Respondent. 66. The Fourteenth Respondent admits that he made the arrangement or arrived at the understanding referred to in paragraph 2(a) and engaged in the conduct referred to in paragraph 2(b) on behalf of the Thirteenth Respondent. 67. The Fourteenth Respondent admits that he made the arrangement or arrived at the understanding referred to in paragraph 3(a) and engaged in the conduct referred to in paragraph 3(b) on behalf of the Thirteenth Respondent. THE COURT DECLARES THAT: 68. By making the arrangement or arriving at the understanding referred to in paragraph 1(a) the Thirteenth Respondent: a) made an arrangement or arrived at an understanding containing an exclusionary provision in contravention of section 45(2)(a)(i), when read with section 4D, of the Trade Practices Act 1974 ("the Act") b) made an arrangement or arrived at an understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(a)(ii), when read with section 45A(1), of the Act. 69. By engaging in the conduct referred to in paragraph 1(b) the Thirteenth Respondent a) gave effect to an arrangement or understanding containing an exclusionary provision in contravention of section 45(2)(b)(i), when read with section 4D, of the Act b) gave effect to an arrangement or understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(b)(ii), when read with section 45A(1), of the Act. 70. By making the arrangement or understanding referred to in paragraph 1(a) and engaging in the conduct referred to in paragraph 1(b) the Fourteenth Respondent: a) aided, abetted or procured the Thirteenth Respondent to contravene ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act; and/or b) has been directly or indirectly knowingly concerned in or a party to the contravention by the Thirteenth Respondent of ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act. 71. By making the arrangement or understanding referred to in paragraph 2(a) the Thirteenth Respondent: a) made an arrangement or arrived at an understanding containing an exclusionary provision in contravention of section 45(2)(a)(i), when read with section 4D, of the Trade Practices Act 1974 ("the Act") b) made an arrangement or arrived at an understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(a)(ii), when read with section 45A(1), of the Act. 72. By engaging in the conduct referred to in paragraph 2(b) the Thirteenth Respondent a) gave effect to an arrangement or understanding containing an exclusionary provision in contravention of section 45(2)(b)(i), when read with section 4D, of the Act b) gave effect to an arrangement or understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(b)(ii), when read with section 45A(1), of the Act. 73. By making the arrangement or understanding referred to in paragraph 2(a) and engaging in the conduct referred to in paragraph 2(b) the Fourteenth Respondent : a) aided, abetted or procured the Thirteenth Respondent to contravene ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act; and/or b) has been directly or indirectly knowingly concerned in or a party to the contravention by the Thirteenth Respondent of ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act. 74. By making the arrangement or understanding referred to in paragraph 3(a) the Thirteenth Respondent: a) made an arrangement or arrived at an understanding containing an exclusionary provision in contravention of section 45(2)(a)(i), when read with section 4D, of the Trade Practices Act 1974 ("the Act") b) made an arrangement or arrived at an understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(a)(ii), when read with section 45A(1), of the Act. 75. By engaging in the conduct referred to in paragraph 3(b) the Thirteenth Respondent a) gave effect to an arrangement or understanding containing an exclusionary provision in contravention of section 45(2)(b)(i), when read with section 4D, of the Act b) gave effect to an arrangement or understanding containing a provision that had the purpose, or had or was likely to have the effect, of substantially lessening competition, by reason that the provision had the purpose, or had or was likely to have the effect, of fixing, controlling or maintaining the prices of goods to be acquired by the parties to the arrangement, in contravention of section 45(2)(b)(ii), when read with section 45A(1), of the Act. 76. By making the arrangement or understanding referred to in paragraph 3(a) and engaging in the conduct referred to in paragraph 3(b) the Fourteenth Respondent : a) aided, abetted or procured the Thirteenth Respondent to contravene ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act; and/or b) has been directly or indirectly knowingly concerned in or a party to the contravention by the Thirteenth Respondent of ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act. THE COURT ORDERS THAT: 77. The Thirteenth Respondent, by its servants or agents or otherwise howsoever, is restrained from a) making an arrangement or arriving at an understanding with other scrap metal dealers ("the ring") which contain a provision that the parties to the ring will engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction; and ii) not bidding against the nominated bidder/s; and iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock. 78. The Fourteenth Respondent is restrained from a) making an arrangement or arriving at an understanding with other scrap metal dealers ("the ring") which contain a provision that the parties to the ring will engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction; and ii) not bidding against the nominated bidder/s; and iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock. 79. The Thirteenth Respondent pay to the Commonwealth a pecuniary penalty in the sum of $10,000 in respect of the conduct referred to in paragraphs 1 - 3 above. 80. The Fourteenth Respondent pay to the Commonwealth a pecuniary penalty in the sum of $15,000 in respect of the conduct referred to in paragraphs 1 - 6 above. 81. The Thirteenth and Fourteenth Respondents jointly pay the Applicant the sum of $10,000 towards its costs in these proceedings. Date: 30 September 2004 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES No N 1672 of 2001 DISTRICT REGISTRY Australian Competition and Consumer Commission Applicant William Robinson Seventeenth Respondent and others ORDERS (SEVENTEENTH RESPONDENT) THE COURT NOTES THAT: 82. The Seventeenth Respondent admits that he, together with each of the First, Third and Sixth Respondents and others, on 24 November 1999, at an auction in Newcastle by BHP Limited for the sale of goods including scrap metal: a) made an arrangement or arrived at an understanding with certain other scrap metal dealers ("the ring") which contained a provision that the parties to the ring would engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction ii) not bidding against the nominated bidder/s iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock b) gave effect to the arrangement or understanding by: i) not bidding for lots against the ring ii) participating in the subsequent knock at the Phoenix Sports Club. THE COURT DECLARES THAT: 83. By making the arrangement or understanding referred to in paragraph 1(a) and engaging in the conduct referred to in paragraph 1(b) the Seventeenth Respondent: a) aided, abetted or procured each of the First, Third and Sixth Respondents to contravene ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i), 45(2)(b)(ii) and 52 of the Act; and/or b) has been directly or indirectly knowingly concerned in or a party to the contravention by the First, Third and Sixth Respondents of ss45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i), 45(2)(b)(ii) and 52 of the Act. THE COURT ORDERS THAT: 84. The Seventeenth Respondent is restrained from a) making an arrangement or arriving at an understanding with other scrap metal dealers ("the ring") which contain a provision that the parties to the ring will engage in controlled or restricted bidding at the auction by: i) nominating one or more of the parties to the ring to bid at the auction; and ii) not bidding against the nominated bidder/s; and iii) after the auction, bidding amongst themselves for the goods purchased by the nominated bidder/s ("the knock"), on the basis the unsuccessful bidders at the knock would be paid for their participation in the ring and knock. 85. The Seventeenth Respondent pay to the Commonwealth a pecuniary penalty in the sum of $2,500 in respect of the conduct referred to in paragraph 1 above. 86. The Seventeenth Respondent pay the Applicant the sum of $5,000 towards its costs in these proceedings. Date: 30 September 2004