Australian Competition and Consumer Commission v Malaysia Airline System Berhad (No 2) [2012] FCA 767

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Malaysia Airline System Berhad (No 2) [2012] FCA 767 Citation: Australian Competition and Consumer Commission v Malaysia Airline System Berhad (No 2) [2012] FCA 767

Parties: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v MALAYSIAN AIRLINE SYSTEM BERHAD ARBN 000 996 903 and MALAYSIA AIRLINES CARGO SDN BHD

File number: NSD 373 of 2010

Judge: EMMETT J

Date of judgment: 14 June 2012

Legislation: Trade Practices Act 1974 (Cth) ss 45, 76

Date of hearing: 14 June 2012

Place: Sydney

Division: GENERAL DIVISION

Category: No catchwords

Number of paragraphs: 32

Counsel for the applicant: NJ O'Bryan SC

Solicitor for the applicant: Australian Government Solicitor

Counsel for the respondents: PJ Brereton SC, V Whittaker

Solicitor for the respondents: Gilbert + Tobin

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 373 of 2010

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Applicant

AND: MALAYSIAN AIRLINE SYSTEM BERHAD ARBN 000 996 903

First Respondent

MALAYSIA AIRLINES CARGO SDN BHD

Second Respondent

JUDGE: EMMETT J DATE OF ORDER: 14 JUNE 2012 WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. The second respondent pay the Commonwealth of Australia a pecuniary penalty in the total sum of $6 million in respect of contraventions of ss 45(2)(a)(ii) and (b)(ii) of the Trade Practices Act 1974 (Cth), now the Competition and Consumer Act 2010 (Cth) (the Act) occurring after April 2004, in that: 1.1. the second respondent: 1.1.1. between about April 2002 and September 2005, reached understandings with certain of its competitors for the supply of services, from Indonesia to other countries including Australia, for the carriage of air cargo containing a provision that they would each impose a charge of a specified amount, described as a fuel surcharge, in respect of those services; and 1.1.2. between about October 2001 and October 2005, reached understandings with certain of its competitors for the supply of services from Indonesia to other countries including Australia for the carriage of air cargo containing a provision that they would each impose a charge of a specified amount described as a security surcharge, in respect of those services; and 1.1.3. between about May 2004 and October 2005, reached an understanding with certain of its competitors for the supply of services from Indonesia to other countries including Australia for the carriage of air cargo containing a provision that each would impose a charge of a specified amount, described as a customs fee, in respect of those services; 1.2. the provisions of the said understandings had the effect of fixing, maintaining or controlling prices for the said services within the meaning of s 45A of the Act and are therefore deemed to substantially lessen competition within the meaning of ss 45(2)(a)(ii) and (b)(ii) of the Act; and 1.3. the second respondent gave effect to those provisions: 1.3.1. of the understandings referred to in 1.1.1 in the period from May 2003 to September 2005 inclusive; 1.3.2. of the understandings referred to in 1.1.2 from October 2001 to October 2005 inclusive; and 1.3.3. of the understanding referred to in 1.1.3 from May 2004 until October 2005 inclusive. 2. The pecuniary penalty of $6 million is to be paid to the Commonwealth of Australia in instalments as follows: 2.1. $1.2 million within 14 days of the date of this order; 2.2. $1.2 million within 6 calendar months of the date of this order; 2.3. $1.2 million within 12 calendar months of the date of this order; 2.4. $1.2 million within 18 calendar months of the date of this order; and 2.5. $1.2 million within 24 calendar months of the date of this order, provided that if any instalment is not paid on or before the specified date, the whole of the remaining penalty then outstanding shall become immediately payable. BY CONSENT, THE COURT ORDERS THAT: 3. The second respondent be restrained, for a period of five years from the date of this order, from making, arriving at, or giving effect to, any contract, arrangement or understanding with any of its competitors for the supply of services for the carriage of goods to or from Australia, containing provisions which have the effect of fixing, controlling or maintaining the price or any part of the price at which it or any of them will supply those services in competition with each other unless: 3.1. the said contract, arrangement or understanding is necessary for the purpose of interlining between two or more carriers in the course of supplying services of the carriage of international air cargo; 3.2. the said contract, arrangement or understanding is for the purpose of a joint venture for the supply of the said services, which joint venture is carried on jointly by all parties to the contract, arrangement or understanding, within the meaning of s 44ZZRP of the Act; or 3.3. the second respondent is specifically authorised to do so under s 88 of the Act or any other Australian statute in accordance with s 51 of the Act. 4. The second respondent be restrained for a period of five years from the date of this order, from entering into, or giving effect to, any contract, arrangement or understanding with any of its competitors for the supply of services for the carriage of goods to or from Australia containing provisions to the effect that any of them will propose, develop, prepare, follow, implement, adopt or otherwise use any index, model, methodology or formula for the change of prices or any part of prices to be charged by any of them for services provided or which would otherwise likely be provided in competition with any other of them unless: 4.1. the said contract, arrangement or understanding is necessary for the purpose of interlining between two or more carriers in the course of supplying services of the carriage of international air cargo; 4.2. the said contract, arrangement or understanding is for the purpose of a joint venture for the supply of the said services, which joint venture is carried on jointly by all parties to the contract, arrangement or understanding, within the meaning of s 44ZZRP of the Act; or 4.3. the second respondent is specifically authorised to do so under s 88 of the Act or any other Australian statute in accordance with s 51 of the Act 5. The respondents pay the applicant within 14 days of the date this order is made a contribution towards its costs of and incidental to these proceedings, in the sum of $500,000. 6. The proceedings against the first and second respondents otherwise be dismissed. Endorsement pursuant to Rule 41.06 To: Malaysian Airline System Berhad and Malaysia Airlines Cargo Sdn Bhd You will be liable to imprisonment, sequestration of property or punishment for contempt if: for an order that requires you to do an act or thing - you neglect or refuse to do the act or thing within the time specified in the order; or for an order that requires you not to do an act or thing - you disobey the order. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.