FEDERAL COURT OF AUSTRALIA Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2016] FCA 453 File number(s): QUD 295 of 2008 Judge(s): GREENWOOD J Date of judgment: 29 April 2016 Catchwords: COMPETITION – consideration of the principles governing the assessment of a pecuniary penalty under s 76 of the Trade Practices Act 1974 (Cth) now the Competition and Consumer Act 2010 (Cth) – consideration of the implications of the decision of the High Court in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476 in determining a penalty under s 76 of the Trade Practices Act 1974 (Cth) – consideration of approaches to assessing benefit derived by participants to contravening conduct and market harm caused by contravening conduct – consideration of approaches to determining the "but for" price which would have prevailed in a contestable market had the relevant participants not engaged in the contravening conduct – consideration of the utility of such an exercise Legislation: Trade Practices Act 1974 (Cth), ss 45(2)(a)(ii), 45(2)(b)(ii), 76(1) Cases cited: AB v The Queen (1999) 198 CLR 111 Attorney-General v Tichy (1982) 30 SASR 84 Australian Competition and Consumer Commission v George Weston Foods Ltd [2000] ATPR 41-763 Australian Competition and Consumer Commission v Rural Press Ltd [2001] ATPR 41-833 Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169 Australian Competition and Consumer Commission v Visy Paper Pty Ltd (No 2) (2004) 212 ALR 564 Australian Competition and Consumer Commission v Humax Pty Ltd [2005] ATPR 42-072 Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301 Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2006] FCA 1799 Australian Competition and Consumer Commission v Safeway Stores Pty Ltd [2006] ATPR 42-101 Australian Competition and Consumer Commission v Qantas Airways Ltd (2008) 253 ALR 89 Australian Competition and Consumer Commission v PRK Corporation Pty Ltd [2009] FCA 715 Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd [2010] FCA 929 Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd [1996] ATPR 41-515 Australian Competition and Consumer Commission v Pioneer Concrete (Qld) Pty Limited [1996] ATPR 41-457 Australian Competition and Consumer Commission v Foamlite (Australia) Pty Ltd [1998] ATPR 41-615 Australian Competition and Consumer Commission v J McPhee & Son (Australia) Pty Ltd [1998] ATPR 41-628 Australian Competition and Consumer Commission v Tyco Australia Pty Ltd [2000] ATPR 41-740 Australian Competition and Consumer Commission v Tubemakers Australia Pty Ltd [2000] ATPR 41-745 Australian Competition and Consumer Commission v Roche Vitamins Australia Pty Ltd [2001] ATPR 41-809 Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited [2001] ATPR 41-815; [2001] FCA 383 Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd [2002] ATPR 41-851 Australian Competition and Consumer Commission v Kokos International Pty Ltd (No 2) [2008] ATPR 42-212 Australian Competition and Consumer Commission v Cement Australia Pty Ltd (2013) 310 ALR 165; [2013] FCA 909 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2014] FCA 148 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 Barbaro v The Queen (2014) 253 CLR 58 Boral Besser Masonry Limited v Australian Competition and Consumer Commission (2013) 215 CLR 374 Clean Energy Regulator v MT Solar Pty Ltd [2013] FCA 205 Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476; [2015] HCA 46 Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1 Construction, Forestry, Mining and Energy Union and Another v Williams (2009) 262 ALR 417 Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 229 FCR 331; 320 ALR 631; 105 ACSR 403; [2015] FCAFC 59 Global One Mobile Entertainment Pty Ltd v Australian Competition and Consumer Commission [2012] ATPR 42-419 J McPhee & Son (Australia) Pty Ltd v Australian Competition and Consumer Commission (2000) 172 ALR 532 Johnson v The Queen (2004) 205 ALR 346 Kirin-Amgen Inc v Hoechst Marion Roussel Ltd (2004) 64 IPR 444; [2004] UKHL 46 Markarian v The Queen (2005) 228 CLR 357 Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 Pearce v The Queen (1998) 194 CLR 610 Refrigerated Express Lines (A/Asia Pty Ltd v Australian Meat and Livestock Corp (1980) 44 FLR 455 Registrar of Aboriginal and Torres Strait Islander Corporations v Matcham (No 2) (2014) 97 ACSR 412 Royer v Western Australia (2009) 197 A Crim R 319 Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission (2003) 127 FCR 170 Secretary, Department of Health and Ageing v Export Corporation (Australia) Pty Ltd (2012) 288 ALR 702 Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249 Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd [1978] ATPR 40-091 Trade Practices Commission v CSR Ltd [1991] ATPR 41-076 Trade Practices Commission v Axive Pty Ltd [1994] ATPR 42-782 Trade Practices Commission v Prestige Motors Pty Ltd [1994] ATPR 42-693 Trade Practices Commission v TNT Australia Pty Ltd [1995] ATPR 41-375 Trade Practices Commission v Hymix Industries [1995] ATPR 41-369 Trade Practices Commission v Hymix Industries [1996] ATPR 41-465 Trade Practices Commission v Simsmetal [1996] ATPR 41-449 Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission (2003) 131 FCR 529 Wong v The Queen (2001) 207 CLR 584 Yorke v Lucas (1985) 158 CLR 661 Date of hearing: 15 December 2014 Date of last submissions: 21 December 2015 Registry: Queensland Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 829 Counsel for the Applicant: Mr S Couper QC with Mr M Hodge Solicitor for the Applicant: Australian Government Solicitor Counsel for the First to Sixth Respondents: Ms S Brown QC with Mr P Franco and Mr C E Bannan Solicitor for the First to Sixth Respondents: Ashurst Australia Counsel for the Seventh Respondent: Mr Ian Pike SC Solicitor for the Seventh Respondent: Meridian Lawyers Counsel for Sunstate Cement Ltd: Mr J Peden Solicitor for Sunstate Cement Ltd: K&L Gates Counsel for Independent Flyash Brokers Pty Ltd: Mr D L K Atkinson Solicitor for Independent Flyash Brokers Pty Ltd: McInnes Wilson Lawyers ORDERS QUD 295 of 2008 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant AND: CEMENT AUSTRALIA PTY LTD ACN 104 053 474 (and others named in the Schedule) First Respondent JUDGE: GREENWOOD J DATE OF ORDER: 29 april 2016 THE COURT ORDERS THAT: 1. The applicant submit to the Court proposed final orders to be made having regard to the reasons for judgment and the matters set out in the following orders which have regard to the orders sought by Annexure A to the principal submissions of the Australian Competition and Consumer Commission ("ACCC"). 2. As to those draft orders, the Court expresses this position: (a) as to draft Order 1, the Court declines to make the declaration sought; (b) as to draft Order 2, the Court will make the declaration sought by the applicant; (c) as to draft Order 3, the Court declines to make the declaration sought; (d) as to the matters set out at paras 4, 5, 6 and 7 of the draft, the Court will make orders in those terms. 3. As to the Original Millmerran Contract, a pecuniary penalty is to be paid to the Commonwealth of Australia (the "Commonwealth") by the fourth respondent jointly and severally with the third respondent in respect of the making of the contract by the fourth respondent and the third respondent having been knowingly concerned in the making of the contract, of $3.5 million (Declarations 6 and 7). 4. As to the Original Millmerran Contract, a pecuniary penalty is to be paid to the Commonwealth by the fourth respondent jointly and severally with the third respondent in respect of giving effect to the relevant provisions of the contract, of $500,000 (Declarations 8 and 9). 5. No pecuniary penalty is to be ordered in respect of the fifth respondent having acted as a guarantor of the contract (Declaration 10). 6. As to the Tarong Contract, a pecuniary penalty is to be paid to the Commonwealth by the fourth respondent jointly and severally with the third respondent in respect of the making of the contract by the fourth respondent and the third respondent having been knowingly concerned in the making of the contract, of $5.5 million (Declarations 16 and 17). 7. As to the Tarong Contract, a pecuniary penalty is to be paid to the Commonwealth by the fourth respondent jointly and severally with the third respondent in respect of giving effect to the relevant provisions of the contract, of $5.5 million (Declarations 18 and 20). 8. No pecuniary penalty is to be ordered in respect of the third respondent having given effect to the Tarong Contract in the period March, April and May 2003 (Declaration 19). 9. As to the Amended Millmerran Contract, a pecuniary penalty is to be paid to the Commonwealth by the fourth respondent jointly and severally with the first respondent in respect of the making of the Amended Millmerran Contract by the fourth respondent and the first respondent having been knowingly concerned in the making of the contract, of $850,000 (Declarations 12 and 13). 10. No pecuniary penalty is to be ordered in respect of the matters at Declarations 14 and 15. 11. As to the Swanbank Contract in the period up to 31 December 2004, a pecuniary penalty is to be paid to the Commonwealth by the fourth respondent in respect of the making of the extension of the contract to 31 December 2004 by the fourth respondent, of $1.5 million (Declaration 21). 12. As to the Swanbank Contract in the period from 1 January 2005 to 30 June 2005, a pecuniary penalty is to be paid to the Commonwealth by the fourth respondent jointly and severally with the first respondent in respect of the making of the extension of the contract from 1 January 2005 to 30 June 2005 by the fourth respondent and the giving effect to the extension until 30 June 2005 by the first respondent, of $200,000 (Declarations 22, 24 and 26). 13. As to the Swanbank Contract in the period up to 31 December 2004, a pecuniary penalty is to be paid to the Commonwealth by the fourth respondent jointly and severally with the third respondent in respect of their having given effect to the contract to 31 December 2004, of $1 million (Declarations 21, 23 and 25). 14. As to the Swanbank Contract in the period 1 January 2005 to 30 June 2005, a pecuniary penalty is to be paid to the Commonwealth by the fourth respondent jointly and severally with the first respondent in respect of their having given effect to the contract to 30 June 2005, of $50,000 (Declarations 22 and 26). 15. The seventh respondent pay a pecuniary penalty to the Commonwealth in respect of the conduct set out at Declarations 27 and 28 in an amount of $20,000. 16. The first to fifth respondents pay 65% of the applicant's costs of and incidental to the proceeding up to 10 September 2013 and 100% of the applicant's costs of and incidental to the proceeding on and after 10 September 2013, on a party and party basis to be taxed if not agreed. 17. The applicant and the first to fifth respondents are to submit a schedule to the Court within 14 days setting out a list of the paragraphs containing data said to be confidential which ought to be removed from the reasons for judgment so as to preserve the confidentiality of the information and in the event that the applicant, on the one hand, and the first to fifth respondents on the other, are not able to agree a schedule, a schedule ought to be submitted by each of the parties setting out their views of the data to be removed from the judgment. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT GREENWOOD J: PART 1: INTRODUCTION AND RELATED MATTERS 1 These proceedings are concerned with the assessment and determination of an "appropriate" pecuniary penalty in respect of contraventions of provisions of Pt IV of the Trade Practices Act 1974 (Cth) (which, of course, from 1 January 2011, has been known as the Competition and Consumer Act 2010 (Cth)) (the "Act"), by the relevant contravening respondents to the proceeding. The applicant, the Australian Competition and Consumer Commission ("the ACCC") contends for an appropriate pecuniary penalty of $97.5 million (having regard to two additional matters). The respondents contend for an appropriate pecuniary penalty of up to $4 million. The parties are $93.7 million apart in their views about what is an "appropriate" penalty in the exercise of the discretion. 2 The conduct the subject of the contraventions occurred in a pleaded period from 2002 to 31 December 2006. Where it becomes necessary in these reasons to make reference to the title of the Act specifically, I will continue to refer to the Trade Practices Act and the relevant provisions of the Act in the form in which those provisions existed at the time of the contraventions. 3 On 28 February 2014, the Court determined and declared that Cement Australia Pty Ltd ("Cement Australia"), Cement Australia (Queensland) Pty Ltd (formerly Queensland Cement Ltd) ("CAQ", which I will describe as "QCL" for the period prior to the merger leading to the name change to "CAQ"), Pozzolanic Enterprises Pty Ltd ("Pozzolanic") and Pozzolanic Industries Pty Ltd ("PIPL") had engaged in a total of 22 contraventions of the Act. The Court also determined and declared that Mr Christopher White had engaged in two contraventions of the Act. 4 I will, obviously enough, return to the content of the contraventions later in these reasons but for present purposes it is enough, put simply, to note that the Court found and declared contraventions of the Act as identified in the schedule below: Synoptic matrix of the contraventions Entity Section of the Act Date of Contravention Description of the Contravention Purpose or Effect The Original Millmerran Contract ("OMC") Pozzolanic s 45(2)(a)(ii) 30 September 2002 Entering into the OMC. Purpose and Effect CAQ s 45(2)(a)(ii); s 75B 30 September 2002 By funding, being knowingly concerned in Pozzolanic's contravening conduct of entering into the OMC. Purpose and Effect Pozzolanic s 45(2)(b)(ii) 30 September 2002 to 31 December 2003 Giving effect to the provisions of the OMC. Purpose and Effect CAQ s 45(2)(b)(ii) 30 September 2002 to 31 December 2003 Giving effect to the provisions of the OMC by funding Pozzolanic's day to day performance of Pozzolanic's obligations under the OMC. Purpose and Effect PIPL s 45(2)(a)(ii); s 75B 30 September 2002 By electing to act as guarantor, being knowingly concerned with Pozzolanic's entry into the OMC. Purpose and Effect The Amended Millmerran Contract ("AMC") Pozzolanic s 45(2)(a)(ii) 28 July 2004 Entering into a variation to the OMC known as the AMC. Purpose Cement Australia s 45(2)(a)(ii); s 75B 28 July 2004 Being knowingly concerned in Pozzolanic's contravention of entering into a variation to the OMC, by causing Pozzolanic to enter into the AMC. Purpose Pozzolanic s 45(2)(b)(ii) 28 July 2004 to 30 April 2005 Causing Pozzolanic to give effect to the provisions of the AMC. Purpose Cement Australia s 45(2)(b)(ii) 28 July 2004 to 30 April 2005 Causing Pozzolanic to give effect to the provisions of the AMC. Purpose The Tarong Contract Pozzolanic s 45(2)(a)(ii) 26 February 2003 Entering into the Tarong Contract. Purpose and Effect CAQ s 45(2)(a)(ii); s 75B 26 February 2003 By funding, being knowingly concerned in Pozzolanic's contravention of entry into the Tarong Contract. Purpose and Effect Pozzolanic s 45(2)(b)(ii) March 2003 to 31 December 2006 (having regard to the pleaded end date of the conduct) Giving effect to the provisions of the Tarong Contract. Purpose and Effect CAQ s 45(2)(b)(ii) March 2003 to 1 June 2003 Giving effect to the Tarong Contract by funding Pozzolanic's performance of the Tarong Contract in the period prior to the merger. Purpose and Effect CAQ s 45(2)(b)(ii); s 75B March 2003 to 1 June 2003 By funding, being knowingly concerned in Pozzolanic's giving effect to the Tarong Contract in the pre-merger period. Purpose and Effect Cement Australia s 45(2)(b)(ii) 1 June 2003 to 31 December 2006 Giving effect to the Tarong Contract by funding Pozzolanic's performance of the Tarong Contract in the period post-merger. Purpose and Effect Cement Australia s 45(2)(b)(ii); s 75B 1 June 2003 to 31 December 2006 By funding, being knowingly concerned in Pozzolanic's giving effect to the Tarong Contract in the period post-merger. Purpose and Effect The Swanbank Contract Pozzolanic s 45(2)(a)(ii) 11 July 2002/ Exercising an option to extend the term of the Swanbank Contract to 31 December 2004 and to then further extend the amended Swanbank Contract to 30 June 2005. Effect 15 March 2005 Pozzolanic s 45(2)(a)(ii) 15 March 2005 Entering into an agreement to extend the term of the Swanbank Contract to 30 June 2005. Purpose Pozzolanic s 45(2)(b)(ii) 1 January 2001 to 30 June 2005 Giving effect to the provisions of the Swanbank Contract as extended to 31 December 2004 and then to 30 June 2005, which provisions conferred exclusive access to Pozzolanic to Swanbank flyash. Effect Pozzolanic s 45(2)(b)(ii) 1 January 2005 to 30 June 2005 Giving effect to the provisions of the Swanbank Contract as extended by exercising the option to extend the contract to 31 December 2004 and to then extend the amended Swanbank Contract to 30 June 2005, which provisions conferred exclusive access to Swanbank flyash. Purpose and Effect CAQ s 45(2)(b)(ii) 1 January 2001 to 31 May 2003 Giving effect to the relevant provisions of the Swanbank Contract as extended to 31 December 2004 and to 30 June 2005 in the period prior to the merger. Effect Cement Australia s 45(2)(b)(ii) 1 June 2003 to 30 June 2005 Giving effect to the identified provisions as extended in the period after the merger. Purpose and Effect Christopher Stephen White (Mr White) Mr White s 45(2)(a)(ii); s 75B 15 March 2005 Being knowingly concerned in Pozzolanic's contravention of entering into an agreement to extend the term of the Swanbank Contract to 30 June 2005. Purpose Mr White s 45(2)(b)(ii); s 75B 31 December 2004 to 30 June 2005 Being knowingly concerned in Pozzolanic's contravention of exercising the option to extend the term the Swanbank Contract. Effect The formal orders 5 For the sake of completeness, however, the declarations made by the Court on 28 February 2014 supported by the reasons for judgment published that day (Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2014] FCA 148 (the "final orders judgment") taken in conjunction with Australian Competition and Consumer Commission v Cement Australia Pty Ltd (2013) 310 ALR 165; [2013] FCA 909 (the "principal liability judgment")) were these: THE COURT DECLARES THAT: The Original Millmerran Contract 6. Pozzolanic Enterprises Pty Ltd ("Pozzolanic") by entering into a contract on 30 September 2002, described as the "Ash Purchase Agreement" or alternatively described for the purposes of these proceedings as the "Original Millmerran Contract" (the "OMC") as buyer; Pozzolanic Industries Pty Ltd ("Pozzolanic Industries") as guarantor; and eight companies collectively described as the Millmerran Power Partners ("MPP") as seller, containing provisions which had: 6.1 a substantial purpose of; 6.2 the likely effect of; and 6.3 until 31 December 2003 (see declaration numbered 11), the effect of preventing a rival of Pozzolanic from securing access to unprocessed flyash in the South East Queensland ("SEQ") unprocessed flyash market, and preventing a rival of Cement Australia (Queensland) Pty Ltd formerly known as Queensland Cement Ltd ("QCL") from entering the SEQ concrete grade flyash market (being a product market for fine grade concrete grade flyash), and thereby substantially lessening competition in the SEQ unprocessed flyash market and the SEQ concrete grade flyash market, contravened Section 45(2)(a)(ii) of the Act. 7. QCL, by funding Pozzolanic's entry into the OMC on 30 September 2002, with knowledge of the purpose, likely effect and effect of the provisions of the OMC contemplated by the above declaration (numbered 6) herein, was knowingly concerned in Pozzolanic's contravention of Section 45(2)(a)(ii) of the Act referred to in the above declaration (numbered 6). 8. Pozzolanic, by giving effect to the provisions of the OMC, having the purpose, likely effect and effect contemplated by the above declaration (numbered 6) herein, in the period 30 September 2002 until 31 December 2003 contravened Section 45(2)(b)(ii) of the Act. 9. QCL, by giving effect to the provisions of the OMC, having the purpose, likely effect and effect contemplated by the above declaration (numbered 6) herein, by funding Pozzolanic's day-to-day performance of the contract in the period 30 September 2002 until 31 December 2003 contravened Section 45(2)(b)(ii) of the Act. 10. Pozzolanic Industries, by electing to act as guarantor of the obligations of Pozzolanic under the terms and conditions of the OMC and by entering into the OMC as guarantor with knowledge of the purpose, likely effect and effect of the provisions of the OMC contemplated by the above declaration (numbered 6), was knowingly concerned in Pozzolanic's contravention of s 45(2)(a)(ii) referred to in the above declaration (numbered 6). 11. To the extent that the identified provisions of the OMC contemplated by the above declaration (numbered 6) had the effect or likely effect of substantially lessening competition in the relevant market upon inclusion of the identified provisions when making the OMC, that effect or likely effect became dissipated by 31 December 2003 with the result that any effect or likely effect upon competition in the relevant market was then attributable to the compromised quality of the Millmerran flyash rather than the continuing effect or likely effect of the identified provisions. The Amended Millmerran Contract 12. Pozzolanic, by entering into a variation of the OMC called, for the purposes of the proceeding, the Amended Millmerran Contract (the "AMC"), on 28 July 2004, containing provisions which had the purpose of preventing a rival of Pozzolanic from securing access to Millmerran Power Station unprocessed flyash in the SEQ unprocessed flyash market, and preventing a rival of Cement Australia Pty Ltd ("Cement Australia") from entering the SEQ concrete grade flyash market, and thereby substantially lessening competition in the SEQ unprocessed flyash market and the SEQ concrete grade flyash market with processed Millmerran flyash, contravened s 45(2)(a)(ii) of the Act. 13. Cement Australia, by causing Pozzolanic to enter into the AMC with knowledge of the provisions contemplated by the above declaration (numbered 12) was knowingly concerned in Pozzolanic's contravention of Section 45(2)(a)(ii) referred to in the above declaration (numbered 12). 14. Pozzolanic, by giving effect to the provisions of the AMC contemplated by the above declaration (numbered 12) from 28 July 2004 until 30 April 2005 contravened Section 45(2)(b)(ii) of the Act. 15. Cement Australia, by causing Pozzolanic to give effect to the provisions of the AMC contemplated by the above declaration (numbered 12) from 28 July 2004 until 30 April 2005 contravened Section 45(2)(b)(ii) of the Act. The Tarong Contract 16. Pozzolanic, by entering into a Flyash Agreement with Tarong Energy Corporation ("TEC") on 26 February 2003 (the "Tarong Contract") for the acquisition of flyash from Tarong Power Station and Tarong North Power Station (once commissioned and operating), containing provisions which had: 16.1 a substantial purpose of; and 16.2 the likely effect of; and 16.3 the effect of preventing a rival of Pozzolanic from securing access to unprocessed flyash in the SEQ unprocessed flyash market, and preventing a rival of QCL from entering the SEQ concrete grade flyash market, and thereby substantially lessening competition in the SEQ unprocessed flyash market and the SEQ concrete grade flyash market, contravened Section 45(2)(a)(ii) of the Act. 17. QCL, by funding Pozzolanic's entry into the Tarong Contract with knowledge of the provisions contemplated by the above declaration (numbered 16) was knowingly concerned in Pozzolanic's contravention of Section 45(2)(a)(ii) of the Act, referred to in declaration numbered 16. 18. Pozzolanic, by giving effect to the provisions of the Tarong Contract contemplated by the above declaration (numbered 16) on and from March 2003 contravened Section 45(2)(b)(ii) of the Act. 19. QCL, by funding Pozzolanic's performance of the Tarong Contract until 1 June 2003 contemplated by the above declaration (numbered 16), gave effect to the provisions of the Tarong Contract and thereby contravened Section 45(2)(b)(ii) of the Act, and with knowledge of the relevant provisions, was knowingly concerned in Pozzolanic's contravention of Section 45(2)(b)(ii) contemplated by the above declaration (numbered 18). 20. Cement Australia, by funding Pozzolanic's performance of the Tarong Contract in relation to both the Tarong Power Station and the Tarong North Power Station on and from 1 June 2003 gave effect to the provisions of the Tarong Contract and thereby contravened Section 45(2)(b)(ii) of the Act, and with knowledge of the relevant provisions was knowingly concerned from 1 June 2003 in Pozzolanic's contravention of Section 45(2)(b)(ii). The Swanbank Contract 21. Pozzolanic, by exercising an option on 11 July 2002 to extend the term of the Swanbank Contract to 31 December 2004 on the terms of the amendment letter of 9 September 1998 and the Agreement of 30 September 1998, and further extend the amended Swanbank Contract to 30 June 2005 incorporating the identified provisions conferring exclusive access to Swanbank flyash in Pozzolanic until 30 June 2005, being provisions that would have the likely effect, and had the effect of preventing a rival of Pozzolanic from securing access to Swanbank unprocessed flyash in the unprocessed flyash market from 1 January 2001 to 30 June 2005, and preventing a rival of QCL from entering the SEQ concrete grade flyash market up to 31 May 2003 and thereafter preventing a rival of Cement Australia entering the SEQ concrete grade flyash market, thereby substantially lessening competition in the SEQ unprocessed flyash market and the SEQ concrete grade flyash market, contravened Section 45(2)(a)(ii) of the Act. 22. Pozzolanic, by entering into an agreement to extend the term of the Swanbank Contract from 31 December 2004 to 30 June 2005 on the terms of the amendment letter of 9 September 1998 and the Agreement of 30 September 1998 incorporating the identified provisions conferring exclusive access to Swanbank flyash in Pozzolanic until 30 June 2005, being an arrangement incorporating the relevant provisions, having a substantial purpose of preventing a rival of Pozzolanic from securing access to Swanbank unprocessed flyash in the unprocessed flyash market until 30 June 2005, and preventing a rival of Cement Australia entering the SEQ concrete grade flyash market until 30 June 2005, thereby substantially lessening competition in the SEQ unprocessed flyash market and the SEQ concrete grade flyash market, contravened Section 45(2)(a)(ii) of the Act. 23. Pozzolanic, by giving effect to the identified provisions as contemplated by the above declaration (numbered 21) which conferred exclusive access to Swanbank flyash in the period 1 January 2001 to 30 June 2005, contravened Section 45(2)(b)(ii) of the Act. 24. Pozzolanic, by giving effect to the identified provisions as contemplated by the above declarations (numbered 21 and 22) which conferred exclusive access to Swanbank flyash in the period from 1 January 2005 to 30 June 2005, contravened Section 45(2)(b)(ii) of the Act. 25. QCL, by giving effect to the identified provisions as contemplated by the above declaration (numbered 21) in the period from 1 January 2001 to 31 May 2003, contravened Section 45(2)(b)(ii) of the Act. 26. Cement Australia, by giving effect to the identified provisions as contemplated by the above declarations (numbered 21 and 22), contravened Section 45(2)(b)(ii) of the Act. Christopher Stephen White 27. Mr White was knowingly concerned in Pozzolanic's contravention of Section 45(2)(a)(ii) of the Act in relation to the conduct contemplated by the above declaration (numbered 22). 28. Mr White was knowingly concerned in Pozzolanic's contravention of Section 45(2)(b)(ii) of the Act in relation to the conduct contemplated by the above declaration (numbered 21) from the period 31 December 2004 to 30 June 2005. 6 These reasons are to be read together with the final orders judgment and the principal liability judgment. However, for the purposes of these reasons, I will attempt to address the relevant considerations arising out of the principal liability judgment so that recourse to those reasons is made less necessary. In order to achieve that result, I will quote the paragraphs of the principal liability judgment containing the findings on purpose, effect and likely effect where relevant and useful. Hopefully, most of the immediately relevant paragraphs of the principal liability judgment will be contained within these reasons. When I use the term "SEQ cgf market" I am describing the market as found in the principal liability judgment. In these reasons, all references in the text to paragraph numbers in square brackets is a reference to paragraphs from the principal liability judgment unless otherwise mentioned. 7 The principal liability judgment addresses, as the description suggests, the resolution of the highly contested questions concerning whether or not any one or more of the respondents had contravened a provision of Pt IV of the Act. The assessment and determination of an appropriate pecuniary penalty that might be ordered to be paid by a particular respondent in respect of one or more contraventions of Pt IV was the subject of a separate hearing. That hearing occurred from 15 December 2014 to 18 December 2014 consequent upon quite a number of interlocutory applications in relation to the additional evidence which might be relied upon by any of the parties (and particularly responsive or reply evidence). A number of judgments were delivered on those topics. 8 At the hearing, the applicant relied upon additional material in the form of a tender bundle (being Vol 1 of 1) which was marked Ex 1 in the proceeding. The respondents also relied upon a tender bundle (comprising two volumes divided into Parts) marked Ex 2. Mr White relied upon two affidavits, the first dated 1 April 2014 and the second dated 18 September 2014. 9 At the conclusion of the hearing, the questions in issue were reserved for further consideration. 10 In the early part of 2015, it became apparent that the Full Court of the Federal Court was to consider the question (which, as a general matter, had been the subject of debate in a number of first instance decisions of this Court and other Courts) of the extent to which the decision of the High Court in Barbaro v The Queen (2014) 253 CLR 58 ("Barbaro") (and the expressions of principle discussed in that decision) might properly inform a principled approach to the determination of a pecuniary penalty under a "civil pecuniary penalty provision" (although the particular statutory regime in the proceedings before the Full Court was to engage the provisions of the Building and Construction Industry Improvement Act 2005 (Cth) ("the BCII Act")). The relevant provisions of that Act were thought to be a relevant analogue of s 76(1) of the Trade Practices Act. The Full Court delivered judgment in that matter (Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 229 FCR 331; 320 ALR 631; 105 ACSR 403; [2015] FCAFC 59) and in mid-June 2015, the Commonwealth obtained special leave to appeal from the orders of the Full Court. On 9 December 2015, the High Court delivered judgment in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476; [2015] HCA 46 ("Fair Work"). 11 As a consequence of the High Court's Fair Work decision, the parties to the present proceeding put on further submissions which had the following effect. The ACCC withdrew paras 36 to 43 of its reply submissions dated 14 December 2014 (as updated on 16 December 2014) and withdrew paras 1 to 5 of its supplementary submissions dated 2 June 2015 (filed on 3 June 2015). The respondents withdrew paras 319 to 327 of their submissions of 5 December 2014 and paras 1 to 22 of their submissions of 2 June 2015. 12 It is therefore necessary to consider aspects of the observations of their Honours in the Fair Work decision so as to identify whether matters of principle emerge from that decision relevant to the exercise of the discretion under s 76(1) of the Act in determining a pecuniary penalty in respect of a contravention of Pt IV of the Act having regard to the statutory framework of the Trade Practices Act. The provisions 13 In the relevant period, s 45(2) of the Act was, relevantly, in these terms: (2) A corporation shall not: (a) make a contract or arrangement, or arrive at an understanding, if: (i) …; 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, … if that provision: (i) …; or (ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition. [emphasis added] 14 In the relevant period, s 76 of the Act was, relevantly, in these terms: Section 76. Pecuniary penalties (1) If the Court is satisfied that a person – (a) has contravened any of the following provisions: (i) a provision of Part IV; (ii) …; (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. [The note to s 76(1) does not bear on the questions presently under consideration.] (1A) The pecuniary penalty payable under subsection (1) by a body corporate is not to exceed: (a) for each act or omission to which this section applies that relates to section 45D, 45DB, 45E or 45EA - $750,000; and (b) for each other act or omission to which this section applies - $10,000,000. (1B) The pecuniary penalty payable under subsection (1) by a person other than a body corporate is not to exceed $500,000 for each act or omission to which this section applies. [emphasis added] 15 Section 76(3) of the Act was, relevantly, in these terms: If conduct constitutes a contravention of two or more provisions of Part IV, a proceeding may be instituted under this Act against a person in relation to the contravention of any one or more of the provisions but a person is not liable to more than one pecuniary penalty under this section in respect of the same conduct. 16 Section 76 of the Act was amended in a significant respect effective from 1 January 2007. 17 The amendment has no application to the determination of a penalty in respect of any of the contraventions found against the relevant respondents in these proceedings. The significant amendment, however, concerned s 76(1A) which, operating prospectively, provides that for each act or omission constituting a contravention of a provision of Pt IV, the pecuniary penalty payable under s 76(1) by a body corporate was not to exceed (for the purposes of a provision of Pt IV other than s 45D, s 45DB, s 45E or s 45EA) "the greatest of the following: (i) $10,000,000; (ii) if the Court can determine the value of the benefit that the body corporate, and any body corporate related to the body corporate, have obtained directly or indirectly and that is reasonably attributable to the act or omission – three times the value of that benefit; (iii) if the Court cannot determine the value of that benefit – 10% of the annual turnover of the body corporate during the period (the turnover period) of 12 months ending at the end of the month in which the act or omission occurred" [emphasis added]. The new s 76(1A), like the earlier version, is directed to setting the maximum amount of a pecuniary penalty that might be determined. Such an amount would be appropriate to something in the order of the worst case of contravening conduct. The factors applicable to determining the penalty remain the s 76(1) factors as elaborated upon in the authorities. 18 Plainly enough, s 76 as enacted, maintained (and in the terms quoted at [14] and [15] of these reasons, continued to maintain in the relevant period, as it does today), a clear distinction between civil penalties and criminal penalties in respect of classes of contravention: see ss 78 and 79 of the Act and, in respect of cartel conduct, the criminal cartel provisions. 19 As to the relevant context within which their Honours considered the questions in issue in the Fair Work decision, it should be noted that so far as these proceedings are concerned, no aspect of the matters in controversy in the principal liability proceedings involved any element of agreement between the parties as to any contravention of a provision of Pt IV or the relevant facts. 20 Far from it. These proceedings represent the far end point along a continuum where agreement as to foundation facts and opinions as to an appropriate penalty represent the other end of that continuum. 21 Virtually no aspect of the matters to be considered in the determination of an amount the Court might consider appropriate in respect of any contravention found against any of the relevant respondents is the subject of agreement. 22 Much of the discussion in the Fair Work decision is concerned with the extent to which the parties might put to the Court joint submissions as to the facts to be found and joint submissions as to the penalty that might be then thought to be appropriate in respect of any contravention so established on the face of the joint submissions on the facts, or separate opinions from the parties as to penalty. 23 Plainly enough that is not this case. 24 Nevertheless, their Honours in the Fair Work decision have made observations about the very nature of civil penalty proceedings and the scope and social utility of enabling a regulator and respondents to make quite focused submissions about, especially, the amount of a pecuniary penalty that might be thought to be appropriate (based on an acceptance of a relevant contravention or, as here, in relation to relevant contraventions as found) with a view to urging the Court to order such a penalty to be paid by the contravener. 25 It is important therefore to have regard to some aspects of the observations of their Honours going to these matters of principle and apart from anything else, the observations of their Honours have, in this matter, directly led to the participants making changes to their submissions having considered the Fair Work decision. PART 2: THE FAIR WORK DECISION; THE RELEVANT PRINCIPLES TO BE APPLIED IN EXERCISING THE DISCRETION UNDER SECTION 76 OF THE ACT The Fair Work decision 26 In Barbaro, French CJ, Hayne, Kiefel and Bell JJ held that where a Court is called upon to pass sentence on an offender in criminal proceedings, the "prosecution's statement of what are the bounds of the available range of sentences is a statement of opinion" which a sentencing judge may not "take into account in finding the relevant facts, deciding the applicable principles of law or applying those principles to the facts to yield the sentence to be imposed": Barbaro at 66, [7]. That follows because, apart from the "conceptually indeterminate boundaries" of the available range of sentences (and "systemic problems" which would likely result from a criminal sentencing judge being seen to be influenced by the Crown's opinion as to the available range of sentences), the Crown's opinion would, in all probability, be informed by an assessment of the facts and relative weighting of the relevant sentencing considerations "different from the judge's assessment": Fair Work, the plurality at 491 [56]. Having regard to that consideration, the plurality at [56] also said this: "That is why it was held in Barbaro that it is inconsistent with the nature of criminal sentencing proceedings for a sentencing judge to receive a submission from the Crown as to the appropriate sentence or even as to the available range of sentences". 27 However, what was said in Barbaro "applies only to criminal proceedings": Fair Work, the plurality at [50]. 28 That follows because there are "basic differences" between a criminal prosecution and civil penalty proceedings and it is those basic differences that provide the "principled basis" for excluding the application of Barbaro from civil penalty proceedings. Those basic differences between a criminal prosecution and a civil penalty proceeding include these considerations: a criminal prosecution is an accusatorial proceeding governed by the fundamental principle that the burden lies in all things upon the Crown to establish guilt beyond reasonable doubt; civil penalty proceedings are "civil" and therefore adversarial with issues and the scope of relief framed by the parties as they choose; and, a criminal prosecution is aimed at securing a criminal conviction whereas a civil penalty proceeding is "precisely calculated" to "avoid the notion of criminality as such": see Fair Work, the plurality at [53]-[54]. 29 No less important, however, is the consideration that the imposition of criminal penalties is conditioned by notions of "retribution" and "rehabilitation" as well as general and specific deterrence, whereas the "purpose" of a civil penalty is primarily, if not wholly, "protective" in promoting the public interest in compliance with the law: Fair Work, the plurality at [55]. Civil penalties, like most other civil remedies, are "essentially deterrent or compensatory" and therefore "protective": Fair Work, the plurality at [59]. Moreover, neither retribution nor rehabilitation "have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]", and the principal, and probably the only, "object" of the penalties imposed by s 76, is to attempt to "put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act": Fair Work, the plurality at [55] adopting the observations of French J in Trade Practices Commission v CSR Ltd [1991] ATPR 41-076 at 52,152 ("TPC v CSR"). 30 Because a civil penalty and a civil penalty proceeding bear these characteristics, there is nothing exceptional about a Court approving an agreed settlement provided the Court is persuaded that the settlement is, in the statutory language, "appropriate". That additional matter is not relevant for these proceedings. However, it also follows from these propositions that the Court can quite properly receive either joint or separate submissions from the parties, and particularly a regulator, as to the facts and penalty. 31 As to the position of a regulator, the plurality said this at [60]: As was emphasised in [NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 ("NW Frozen Foods")], it is the function of the relevant regulator to regulate the industry in order to achieve compliance and, accordingly, it is to be expected that the regulator will be in a position to offer informed submissions as to the effects of contravention on the industry and the level of penalty necessary to achieve compliance. 32 At [61], the plurality note the logical qualification upon that proposition that the submissions of a regulator on those questions are to be considered on their merits (in the same way as the submissions of a respondent are to be considered), supported as they must be, by findings of fact referable to properly adduced evidence, the agreement of the parties or concessions made by the relevant respondents. The relevant facts must be exposed and the Court bears the responsibility of ensuring that those matters are properly exposed. At [61], the plurality also said this: But, subject to that imperative, there is no indication in the purpose or text of the BCII Act that the court should be less willing to receive a submission as to the terms and quantum of penalty in a civil penalty proceeding than to receive a submission as to the terms and quantum of relief put up for approval by the court in any other kind of civil proceeding. [emphasis added] 33 Equally, there is no indication in the purpose or text of the Trade Practices Act that suggests that the Court ought to be unwilling to receive submissions as to the quantum of the penalty in the exercise of the Court's discretion under s 76(1) of the Act. 34 At [56], the plurality in Fair Work also observe that in "criminal proceedings" the imposition of "punishment" is a "uniquely" judicial exercise of "intuitive" or "instinctive synthesis" (as that term is understood having regard to the observations of Gaudron, Gummow and Hayne JJ in Wong v The Queen (2001) 207 CLR 584 at 611-612, [74]-[76] and the later observations of Gleeson CJ, Gummow, Hayne and Callinan JJ in Markarian v The Queen (2005) 228 CLR 357 at 373-375, [37]-[39]) of the sentencing facts, as found by the sentencing judge, and the judge's "relative weighting" and application of relevant sentencing considerations, in accordance with established sentencing principles. The plurality in Fair Work also observe at [56] that there is "no room" in an exercise of "that nature" for the sentencing judge to take account of the Crown's opinion as to the appropriate length of sentence. 35 In contrast, however, that is not the position in relation to civil penalty proceedings: Fair Work, the plurality at [56]. 36 At [62], the plurality also observes in relation to the BCII Act, that the legislation expressly provided that the Director's functions included intervening in proceedings and making submissions in accordance with the Act. The legislation did not impose any "express limitation" or "restriction" on the evidence, materials or submissions which could be received from the Director. 37 Moreover, as a matter of construction of the BCII Act in this regard, by providing for "civil penalty proceedings", the BCII Act "implicitly assumes the application of the general practice and procedure regarding civil proceedings and eschews the application of criminal practice and procedure": Fair Work, the plurality at [62]. There is no relevant point of differentiation between the BCII Act provisions in this regard and the provisions of the Trade Practices Act. It therefore follows, as a matter of construction of the Trade Practices Act, that by providing for civil penalty proceedings the Act implicitly assumes the application of the general practice and procedure relating to "civil proceedings" and eschews the application of criminal practice and procedure (in relation to the provisions of the Act relevant to these proceedings). 38 Apart from these observations about the fundamental differences between a criminal prosecution and a civil penalty proceeding and the conclusion, as a matter of construction of the legislation, that the BCII Act eschews the application of criminal practice and procedure, the plurality made this further observation at [64] about the role of a regulator in what might be regarded as "typical" civil penalty regimes: In contradistinction to the role of the Crown in criminal proceedings, it is consistent with the purposes of civil penalty regimes of which Pt 1 of Ch 7 of the BCII Act is typical, and therefore with the public interest, that the regulator take an active role in attempting to achieve the penalty which the regulator considers to be appropriate and thus the regulator's submissions as to the terms and quantum of a civil penalty be treated as a relevant consideration. 39 There is no point of distinction, so far as the Trade Practices Act is concerned, with the BCII Act, which would render those observations of the plurality inapplicable to the exercise of the discretion under s 76(1) of the Act. 40 Although I have largely confined, in these reasons, my attention to the observations of the plurality in Fair Work, the observations of Gageler J and Keane J are consistent with the statements of principle identified by the plurality. 41 Two things follow from these considerations. 42 First, plainly enough, submissions can properly be made as to the quantum of the penalty and any terms which might attach to the imposition of a pecuniary penalty, by either side, including the regulator. 43 Second, the following question arises. If the purpose of a civil penalty is (at least primarily) protective, that is to say, essentially to deter and thus protective, and the Trade Practices Act (at least in relation to the provisions of the Act relevant to these proceedings) assumes, as a matter of construction, the application of the general practice and procedure relating to civil proceedings (thus eschewing the application of criminal practice and procedure), to what extent do the principles identified in the authorities which govern the exercise of the discretion under s 76(1) (and, for that matter, typical analogous civil penalty regimes), deriving from sentencing principles identified in a number of authorities in the context of criminal sentencing practice and procedure, continue to have any application to the exercise of the discretion under s 76(1)? 44 Further, since in criminal proceedings punishment of the offender is a uniquely judicial exercise of "instinctive synthesis" or "intuitive synthesis" (and a long line of authority holds that the purpose of a civil penalty provision is not punishment; NW Frozen Foods, 297, Burchett and Kiefel JJ); and the Trade Practices Act, so far as relevant to these proceedings, eschews the application of criminal practice and procedure, to what extent does the notion of instinctive synthesis have any application to the exercise of the discretionary judgment to be made when determining an "appropriate" pecuniary penalty under s 76(1)? 45 In exercising the discretion under s 76(1) (and analogous civil penalty regimes) the orthodox position has been to apply, as relevant to the exercise of the discretion, principles derived from a range of authorities identifying appropriate practices applied by judges in the exercise of discretionary sentencing of criminal offenders. As to relatively recent examples, Jacobson J observed in 2014 in Registrar of Aboriginal and Torres Strait Islander Corporations v Matcham (No 2) (2014) 97 ACSR 412 at [124] ("Registrar v Matcham (No 2)") that it is "well-established that the principles of sentencing which have been developed in the criminal law apply to the exercise of the discretion to impose civil penalties in those areas of the law which are regulated by civil penalty regimes". See also the approach adopted by Foster J in Clean Energy Regulator v MT Solar Pty Ltd [2013] FCA 205 applying the same principle at [68] and citing at [76] Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [42]-[46] (Stone and Buchanan JJ) ("Mornington") and Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1 at [39] ("CFMEU v Cahill"), Middleton and Gordon JJ. 46 I propose to proceed on the following basis in the exercise of the discretion under s 76(1). 47 First, the principled distinctions identified in Fair Work between a criminal prosecution and a civil penalty proceeding provide the basis for the answer to the specific question addressed by their Honours in Fair Work of whether the proposition identified at [7] by the plurality in Barbaro (see [26] of these reasons) applies only to criminal proceedings. 48 Second, as to other matters, although the principled distinctions between a criminal prosecution and a civil penalty proceeding identified by their Honours in Fair Work, and the matters of statutory construction identified by their Honours (as applied to the relevant provisions of the Trade Practices Act, see particularly [37] of these reasons) hold good for all purposes, the exercise of the discretionary judgment to be made under s 76 of the Act continues to engage the notion of instinctive synthesis as a substantive matter of methodological approach to the exercise of the discretion rather than a matter of criminal practice and procedure. 49 Third, the matters of statutory construction identified by the plurality in Fair Work and discussed at [30]-[33] and [38]-[39] of these reasons informs the exercise of the discretion under s 76 even though there is no question here of agreement or joint submissions. 50 Fourth, the statements of principle concerning the purpose of a civil penalty proceeding identified by the plurality in Fair Work and discussed at [29] of these reasons informs the exercise of the discretion under s 76 of the Act. 51 Fifth, substantive matters of methodological approach to the exercise of the sentencing discretion (rather than matters of criminal practice and procedure as such) discussed in the authorities continue to be matters relevant to the exercise of the discretion under s 76 of the Act. The relevant principles 52 Section 76(1) of the Act provides that where a person has contravened a provision of Pt IV of the Act, the Court may order the person to pay, "in respect of each act or omission by the person to which this section applies", such pecuniary penalty as the Court determines appropriate "having regard to all relevant matters". The section then inclusively identifies some of those matters as follows: the nature and extent of the act or omission; the nature and extent 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, relevantly here, Pt VI of the Act, to have engaged in any similar conduct. 53 These expressly identified factors do not exhaust "all relevant matters" but they do reflect the considerations to which the Parliament expressly turned its attention. 54 Because pecuniary penalty proceedings are not "classed as criminal proceedings", it is not necessary to measure the contravening conduct against "some general community morality in which the law is embedded". Aspects of some commercial behaviour such as "ruthlessness" and "expansionary ambition" are not elements of the "classes of conduct prohibited by Pt IV" of the Act, nor even "aggravating factors": TPC v CSR at 52,151, French J. Seeking to characterise contravening conduct in terms of "a morality larger than that which is defined by the legislative purpose is misplaced" [emphasis added]: TPC v CSR at 52,151. 55 In J McPhee & Son (Australia) Pty Ltd v Australian Competition and Consumer Commission (2000) 172 ALR 532 ("J McPhee v ACCC") at 579 [166], Black CJ, Lee and Goldberg JJ accepted that the provisions of the Act (contraventions of s 45 of the Act were there under consideration) are not designed to regulate or proscribe moral conduct, "but they are calculated and intended to proscribe particular aspects of commercial conduct" and in examining those "particular aspects" of commercial conduct, reflected in the relevant provisions of Pt IV, it is relevant, in determining the pecuniary penalty under s 76 to consider whether there has been a deliberate contravention or a deliberate attempt to contravene the Act. Such a consideration of deliberateness does not involve a moral issue but "takes into account the deliberateness or the calculated manner in which a course of conduct has been undertaken". Thus, in fixing penalties under s 76, it is appropriate and relevant to take into account whether the contravening conduct was "systemic, deliberate or covert": J McPhee v ACCC at 577 [158] and [163], Black CJ, Lee and Goldberg JJ. There needs to be "commercial realism" in fixing a penalty and the penalty should be proportionate to the deliberation with which the defendant contravened the Act: TPC v CSR at 52,153; Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd [1978] ATPR 40-091 ("Stihl Chain Saws"), Smithers J at 17,896. 56 The object of the Act, relevantly, is to "enhance the welfare of Australians through the promotion of competition" (s 2, the Act) and, as to Pt IV, its purpose is the adoption of provisions which "proscribe and regulate agreements and conduct and which are aimed at procuring and maintaining competition in trade and commerce": Refrigerated Express Lines (A/asia Pty Ltd v Australian Meat and Livestock Corp [No 2] (1980) 44 FLR 455 at 460, Deane J. The "object" to be served by s 76 is to promote competitive conduct in trade or commerce by the use of penalties sufficient to deter acts that would tend to be destructive of such competition: Trade Practices Commission v Prestige Motors Pty Ltd [1994] ATPR 41-359 at 42,699, Lee J; Australian Competition and Consumer Commission v Rural Press Ltd [2001] ATPR 41-833 at 43,289 [12] ("ACCC v Rural Press"), Mansfield J. Specifically in the context of Pt IV questions, Finkelstein J said this at [13] and [14] in Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169; [2002] FCA 559 ("ACCC v ABB (No 2)"): [13] Next I propose to say something about the seriousness of contraventions of antitrust legislation. Our economic system is based upon a philosophy of private enterprise and competition. Antitrust legislation has as its object the promotion of free competition by proscribing the misuse of monopoly or oligopoly power, and by making unlawful conduct such as market rigging, collusive tendering, price fixing, and other acts that inhibit the minimisation of production costs and the efficient allocation of resources. That is to say, antitrust legislation is founded on the underlying premise that free competition is essential for the welfare of the state. Conduct that affects the public, such as the anti-competitive behaviour that is outlawed by the Trade Practices Act, can never really be considered as anything other than serious. [14] Moreover, antitrust contraventions do not occur as a result of passion or accident. The agents of a corporation have the choice to engage or refrain from engaging in the anti-competitive behaviour. A contravention most often occurs when there is a belief that the financial gain that is anticipated to result from the anti-competitive behaviour will be considerable, and well worth the risk of detection and the cost of prosecution. In many cases the expected financial gain will be very large, and in some markets could be in the millions of dollars. The corresponding losses that are suffered will fall across a range of organisations including competitors. But ultimately the losses are borne by consumers who are usually economically weak and do not have meaningful power to obtain redress. 57 In TPC v CSR, French J notes at 52,152 the "primacy" of the deterrent purpose in the imposition of a penalty under s 76 of the Act having observed (see [29] of these reasons) that the principal and probably the only object of penalties imposed by s 76 is to attempt to "put a price on contravention" sufficiently high to deter repetition by the contravener and others tempted to contravene the Act – that is, general and specific deterrence. His Honour then formulates these factors as ones which properly serve the assessment of a penalty of "appropriate deterrent value": 1. The nature and extent of the contravening conduct. 2. The amount of loss or damage caused [by the contravening conduct]. 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 cooperate with the authorities responsible for the enforcement of the Act in relation to the contravention. 58 In Australian Competition and Consumer Commission v Kokos International Pty Ltd (No 2) [2008] ATPR 42-212 at 48,813, French J at [51] accepted that the following three matters are also relevant to the exercise of the discretion (continuing my numbering): 10. Whether the respondents have engaged in similar conduct in the past. 11. The financial position of the respondents. 12. The deterrent effect of the proposed penalty. 59 At [51], his Honour observed that he was "satisfied that the above list [1 to 12] is sufficiently comprehensive". In Trade Practices Commission v TNT Australia Pty Ltd [1995] ATPR 41-375 ("TPC v TNT") at 40,169, Burchett J identified two other considerations relevant to the exercise of the discretion: first, whether the total penalty for related offences ought not to exceed what is proper for the entire contravening conduct and second, the extent to which, by admitting the allegations, the respondents saved the community the burden of litigating a lengthy and expensive case. The inverse position might be the extent to which the respondents caused the community to incur the cost and burden of litigating a lengthy and expensive case resulting in proven contraventions. The first consideration may simply be a reference to the "totality principle", a matter discussed later in these reasons together with an anterior consideration relevant to multiple contraventions, the "one transaction" or "course of conduct" principle. The second consideration is really part of factor 9. 60 It seems to me that great caution must be exercised when considering, in the exercise of the discretion as to penalty, the circumstance that respondents have contested the claims of the ACCC. If it can be demonstrated that the defences advanced by respondents were entirely unmeritorious in the sense that upon examination of the evidence there was really no proper basis upon which, on that evidence, the claims could have been resisted, that would be one thing. If, on the other hand, respondents to the proceeding have a serious question to be tested, that is an entirely different matter. In circumstances where a matrix of fact is in controversy and out of that matrix some claims advanced by the ACCC have been unsuccessful and others successful, it becomes a difficult matter, in the exercise of the discretion, to say that the penalty ought to be informed by a failure on the part of respondents, in those circumstances, to capitulate on the matters ultimately shown to give rise to contraventions of the Act. There is a qualitative element to be examined in the conduct of the respondents. 61 French J observes in TPC v CSR at 52,153, that the first three factors (described at [57] of these reasons) are all expressly mentioned in s 76(1) and thus they ought to be regarded as measures of the scope and impact of the conduct. It follows that it is conducive to deterrence that the "greater the significance" of these elements, "the heavier the penalty should be", although, of course, all relevant matters must be weighed in the balance. 62 The determination of the penalty is also a matter which serves the public interest in the enforcement of the Act: TPC v CSR at 52,153. 63 There are other factors and particular emphasis within those factors. 64 Some of them are these. 65 Because the Act places on the shoulders of the Court the responsibility of determining the "appropriate" penalty having regard to the statutory requirement of "all relevant matters", the "effects upon the functioning of markets, and other economic effects, will generally be among the most important matters to be considered as relevant …": NW Frozen Foods at 290, Burchett and Kiefel JJ. See also the observations of Finkelstein J at [56] of these reasons. 66 In Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 659 ("ACCC v TPG Internet"), French CJ, Crennan, Bell and Keane JJ observe at [65] that general and specific deterrence must play a "primary role" in assessing the appropriate penalty in cases of "calculated contravention" of legislation where "commercial profit is the driver of the contravening conduct". In that context, their Honours at [65] took account of TPG's particular campaign in issue in those proceedings (in contravention of ss 52, 53C (a campaign of advertising broadband services at a flat monthly rate with much less prominence given to other bundled services required to be taken up); the period of the campaign (13 months); its cost ($8.9 million); the revenues generated from it ($59 million); the estimated profit deriving from it ($8 million); and the growth in the customer base (during the period of the campaign - 9,000 to 107,000 customers). The growth in customers, however, was not at the expense of TPG's competitors. At [64], their Honours observe that the Full Court in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249 ("Singtel Optus v ACCC") correctly observed that the Court, in fixing a penalty, must make it clear to the contravener and the market that the cost of courting a risk of contravention cannot be regarded as an acceptable cost of doing business. 67 As to profit gains, Finkelstein J observes in Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited [2001] ATPR 41-815; [2001] FCA 383 at [13] that "most antitrust violations are profitable" and, accordingly, "the penalty must be at a level that a potentially-offending corporation will see as eliminating any prospect of gain". As to "profit stripping", Keane CJ, Finn and Gilmour JJ said this at [61] to [64] in Singtel Optus v ACCC in the context of contraventions by Singtel Optus of ss 52 and 55A of the Trade Practices Act in relation to advertisements for Broadband data plans: Profit stripping? [61] Optus contends that considerations of deterrence do not justify a penalty of the severity imposed in this case. The primary judge found that there was a "non-trivial connection" between the campaign and the overall profits made by Optus from the plans, but the profits made from the contravention were not distinguished from other profits lawfully made. Optus contends that it is excessive to impose a penalty apt to strip Optus of profit not shown to stem directly from the contravention. [62] There may be room for debate as to the proper place of deterrence in the punishment of some kinds of offences, such as crimes of passion; but in relation to offences of calculation by a corporation where the only punishment is a fine, the punishment must be fixed with a view to ensuring that the penalty is not such as to be regarded by the offender or others as an acceptable cost of doing business. The primary judge was right to proceed on the basis that the claims of deterrence in this case were so strong as to warrant a penalty that would upset any calculations of profitability. The purpose of Optus's conduct was to generate sales, and hence, profits. The advertising deployed by Optus was calculated to win business from its rivals. The same share of business might not have been attracted by a more balanced presentation of the advantages of the plans. There is no room to doubt that Optus knows its business sufficiently well that it is safe to proceed on the footing that its course of conduct in the campaign reflected informed calculation. While one cannot isolate the profits attributable to the campaign, it is necessary and desirable to impose a penalty which is apt to affect in a substantial way the profitability of Optus's misconduct. [63] Generally speaking, those engaged in trade and commerce must be deterred from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention. The primary judge did not engage in a surgical exercise calculated to deprive Optus of the profits referable to the increase in business generated by the campaign. It cannot seriously be suggested that [his] Honour was concerned to engage in an exercise in "profit stripping". To so describe his Honour's approach is to distract from the legitimate claims of deterrence in a case like the present. [64] In the present case the sheer magnitude of the advertising campaign, and its likely effect in the market, mean that a penalty which did not substantially affect the profitability of Optus's campaign could not reasonably be countenanced. [emphasis added] 68 Apart from these statements of principle, it should be noted that the Full Court found that Optus could not be regarded as a "first offender" and, in that context, their Honours observed that the Court was required to "fashion a penalty which makes it clear to Optus, and to the market, that the cost of courting a risk of contravention of the Act cannot be regarded as [an] acceptable cost of doing business": Singtel Optus v ACCC, the Court, at [68]. 69 Australian Competition and Consumer Commission v Roche Vitamins Australia Pty Ltd [2001] ATPR 41-809 ("ACCC v Roche") was a case that concerned contraventions of per se provisions of s 45(2) of the Act read together with s 4D (exclusionary provisions) and s 45A (arrangements, put simply, in relation to prices by participants in competition with each other) in relation to market-sharing arrangements in the supply of particular animal vitamins. In determining the penalty for these admitted contraventions, Lindgren J regarded these questions as relevant to the exercise of the discretion: first, by "how much was each respondent better off as a result of its contraventions [than it would have been had the contraventions not occurred]?"; second, "what was the additional amount the market paid to each respondent as a result of its contraventions [than the market would have paid had the contraventions not occurred]?" The first question goes to "benefit" and the second goes to "market harm". Lindgren J at [34] accepted, in the circumstances of the case before him, the difficulty in isolating data which would provide properly focused answers to the two questions. Lindgren J also accepted at [42] the "thrust" of the orthodoxy reflected in the authorities discussed at [71] of these reasons to this general effect. Where information is unavailable or, alternatively, unable to be calculated so as to precisely answer the two questions of "but for" benefit and market harm, the authorities reflect other approaches to reliance upon financial data as relevant to penalty. 70 Some examples of those various approaches are these. 71 In Australian Competition and Consumer Commission v Pioneer Concrete (Qld) Pty Limited [1996] ATPR 41-457, the Court imposed significant penalties where the only material put to the Court (on these financial issues) consisted of the value of sales of pre-mix concrete the subject of the collusive arrangements. In Australian Competition and Consumer Commission v Tyco Australia Pty Ltd [2000] ATPR 41-740, the Court imposed penalties upon the corporations in question of $3.3 million and $1.4 million (as recommended by the parties) in circumstances where the Court noted that no attempt had been made to give any estimate of the order of magnitude of the losses imposed on consumers by the anti-competitive arrangements (see p 40,573). In Australian Competition and Consumer Commission v Foamlite (Australia) Pty Ltd [1998] ATPR 41-615, the Court found that the loss or damage caused to customers could not be precisely determined and assessed the deterrent effect of the penalties (suggested by the parties) of $1.2 million and $600,000 by comparing the proposed penalties with post-tax profits of the corporations. In Australian Competition and Consumer Commission v Tubemakers of Australia Ltd [2000] ATPR 41-745, the Court considered the overall size of the relevant market measured in dollar terms and sales by the corporate respondents of the relevant product in assessing and approving the recommended penalties of $1.2 million and $550,000. In TPC v TNT and Trade Practices Commission v Hymix Industries [1995] ATPR 41-369 and the penalty decision reported at [1996] ATPR 41-465, the Court imposed penalties without making any estimate of the profits made or losses sustained as a result of the contraventions. In Australian Competition and Consumer Commission v NW Frozen Foods [1996] ATPR 41-515 (the primary decision), the Court observed that in view of the period of conduct in question in that case it was not possible to determine what the price would have been but for the price fixing agreements in question (p 42,442). The Court did have regard to invoices which suggested prices, when discounting had been occurring, which were significantly lower than prices as a result of the price fixing agreements: these matters were not questions alive before the Full Court in the NW Frozen Foods decision. In Trade Practices Commission v Simsmetal [1996] ATPR 41-449, the Court was satisfied that the agreed penalties proposed by the parties had a sufficient deterrent effect to counter-balance the profit apparently derived from the contravening conduct (p 41,512) although it is not clear whether any specific "profit calculations" entered into evidence. 72 In other cases, however, it may be possible to identify the profits made by the contravener or the loss occasioned as a result of the contraventions or both for the purpose of determining an appropriate penalty. 73 In Secretary, Department of Health and Ageing v Export Corporation (Australia) Pty Ltd (2012) 288 ALR 702 at [62], Perram J in taking into account "factor (k)", namely, the "financial position of the contravener, including any benefits derived" (see [49] of these reasons), observed, based on the agreed facts put before him, that in the period January 2007 to May 2008 the goods the subject of the proceedings (80 separate acts of importation during the period comprising a total of 35 separate therapeutic goods in the course of 19 shipments) constituted 15% of the respondent's total imports and 14% of total supplies by it. His Honour observed that this conduct resulted in net earnings of $694,539 and he inferred, from those figures, that the respondent's total net earnings for the 17 month period of the contravening conduct was approximately $5 million ($4,960,992). His Honour took into account the relativity between net earnings derived from the conduct and total net earnings in the period of the conduct. 74 The Full Court in Singtel Optus v ACCC, in making the quoted observations at [61] to [64] (at [67] of these reasons), made reference to the term "punishment". In NW Frozen Foods at 296 and 297, Burchett and Kiefel JJ observe that "penalties imposed by s 76 are, as we have said, not criminal sanctions, and their purpose, established now by a long line of cases, is not punishment". However, French CJ, Crennan, Bell and Keane JJ in ACCC v TPG Internet had regard to the observations of the Full Court in Singtel Optus v ACCC; approved aspects of the observations of the Full Court; and did not express any disapproval of references to the term "punishment" in the Full Court's reasons. In Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd [2002] ATPR 41-851 at 44,543; [2001] FCA 1716, the Full Court, in imposing penalties under s 76 said this: … we see little or indeed no difference between taking into account, in computing the penalty, the deliberate nature of the conduct in question (a matter the relevance of which is not in dispute) and taking into account the fact that the penalty should act as a punishment of the offender. 75 It may be that in Fair Work at [56], the plurality regarded the notion of punishment as something adapted to a criminal prosecution rather than a notion inherent in the exercise of the discretion in a civil penalty proceeding in determining an "appropriate" penalty. In Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301 ("ACCC v Leahy"), Goldberg J, although noting at [38] the observations of the Full Court in NW Frozen Foods and the contrary proposition in Ithaca Ice Works, seems to have exercised the s 76 discretion in respect of contraventions of s 45(2)(a)(ii) and (b)(ii) by reference to specific and general deterrence: [39]. The Full Court in J McPhee v ACCC found it unnecessary to decide whether punishment is a relevant factor to be taken into account in the exercise of the discretion under s 76 of the Act: the Court, [170]. 76 I propose to exercise the discretion under s 76 having regard to all of the identified relevant matters except that I place no emphasis on the notion of "punishment" as that term is regarded in the context of a criminal prosecution. This may ultimately be a distinction without a difference in this case because the references by the Full Court to the term "punishment" in Singtel Optus v ACCC seem to me to have been used taxonomically in the sense of imposing the burden of an order for the payment of a pecuniary penalty in the exercise of the statutory discretion upon the relevant contravener having regard to all relevant matters rather than as a term properly descriptive of punishing a person as if convicted of a criminal offence. I infer that the plurality in ACCC v TPG Internet understood the references to punishment in the Full Court's reasons (which the plurality expressly considered) as a taxonomic reference in the sense I have just described. 77 In Markarian v The Queen (2005) 228 CLR 357, an accused person pleaded guilty to a charge under the Drug Misuse and Trafficking Act 1985 (NSW) of knowingly taking part in the supply of a commercial quantity of heroin. The accused was sentenced to imprisonment for two years and six months with a non-parole period of 15 months. The sentence took into account the commission of four other drug offences admitted by the accused. The contextual facts were that the accused, a heroin addict at the time of the conduct, had acted as a driver for a heroin dealer and had been paid for his services in heroin. The maximum period of imprisonment for the offence was 20 years. A Crown appeal to the Court of Criminal Appeal was allowed and a term of imprisonment of eight years with a non-parole period of four years and six months imposed. In imposing that sentence, the Court had adopted as a "starting point" the maximum period of imprisonment applicable to a less serious drug offence and then made "proportional deductions" and "increases" from that starting point so as to reflect matters specifically relevant to the circumstances of the accused. 78 The determination of a sentence is, like the exercise of the discretion under s 76, a discretionary judgment: Markarian v The Queen at [25], Gleeson CJ, Gummow, Hayne and Callinan JJ. At [27], the plurality observe that apart from express legislative provisions, principle does not dictate the particular path that a sentencer must follow in reasoning to the conclusion reached that the sentence to be imposed should be fixed as it is when passing sentence (in cases where the penalty is not fixed by statute). 79 At [27], the true principle is put this way: The judgment is a discretionary judgment and, as the bases for appellate review reveal, what is required is that the sentencer must take into account all relevant considerations (and only relevant considerations) in forming the conclusion reached. As has now been pointed out more than once, there is no single correct sentence. And judges at first instance are to be allowed as much flexibility in sentencing as is consonant with consistency of approach and as accords with the statutory regime that applies. [emphasis added] [citations removed] 80 At [30], the plurality observe that legislatures do not enact maximum available sentences as "mere formalities" particularly as judges "need sentencing yardsticks". The plurality observe that it is "well accepted that the maximum sentence available may in some cases be a matter of great relevance". 81 At [31], the plurality observe: It follows that careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick. That having been said, in our opinion, it will rarely be, and was not appropriate for Hulme J here to look first to a maximum penalty, and to proceed by making a proportional deduction from it. That was to use a prescribed maximum erroneously, as neither a yardstick, nor as a basis for comparison of this case with the worst possible case. [emphasis added] [citations removed] 82 At [32], the plurality observe that the primary judge having started where he did, at a maximum, and then making deductions from it, failed to make an assessment of the sentence called for by the "objective facts". 83 In Markarian v The Queen, the High Court was invited to reject sequential or two-tiered approaches to sentencing taking as a starting point the maximum penalty available, in favour of a process of "instinctive synthesis". However, the plurality observe that no universal rules can be stated in those terms as much turns upon what exactly is meant by a sequential or two-tiered approach to determining penalty. Similarly, the process of instinctive synthesis might be wrongly understood as enabling a sentencer to pass sentence without giving exposed reasons for the sentence. 84 At [37], the plurality observe that a sentencing Court will, after weighing all the relevant factors, reach a conclusion that a particular penalty is one that should be imposed. In doing so, adopting, as a method, a mathematical approach to sentencing in which there are to be "increments to" or "decrements from" a predetermined range of sentences (that is to say, a "two-stage approach" to sentencing), is both wrong in principle and apt to give rise to error and should not be adopted. 85 In this respect, the plurality adopted the observations of Gaudron, Gummow and Hayne JJ in Wong v The Queen (2001) 207 CLR 584 at 611-612, [74]-[76]. As to the notion of "instinctive synthesis", the plurality, again adopting the observations of Gaudron, Gummow and Hayne JJ in Wong v The Queen at [75], observe that the task of the sentencing judge is to "take account of all of the relevant factors and to arrive at a single result which takes due account of them all" [emphasis added] and that this is "what is meant by saying that the task is to arrive at an 'instinctive synthesis'". The expression is not used to "cloak the task of the sentencer in some mystery" but is intended to reflect an obligation to balance "many different and conflicting features". 86 Thus, the process of "instinctive synthesis" requires all of the factors to be balanced in a way which reflects an application of the "rules of reason" (rationality) taking into account all relevant matters, excluding extraneous or irrelevant matters and accurately having regard to the objective facts, all brought together in exposed reasons for the exercise of the discretion in the particular way, serving the public interest in transparency. 87 "Instinctive synthesis" certainly does not mean "informed gut reaction". Nor, in truth, is it a result based on "instinct" but rather, it is a synthesis of all of the factors mentioned at [85] of these reasons. The term is probably better understood by reference to the substitutable taxonomy of "intuitive synthesis": Fair Work, the plurality at [56]. 88 In determining the amount of a pecuniary penalty, having regard to all of these considerations, it nevertheless remains important to recognise that "insistence upon the deterrent quality of a penalty should be balanced by insistence that it 'not be so high as to be oppressive'": NW Frozen Foods, Burchett and Kiefel JJ at 293 F-G, adopting the observations of Smithers J at 17,896 in Stihl Chain Saws. 89 It should also be recognised that a penalty that "would deter a small company might have little effect on a very large one", for the obvious reason: TPC v TNT at 40,168, Burchett J; see also TPC v CSR at 52,154, French J; ACCC v Leahy (No 3) (2005) 215 ALR 30 at [39], Goldberg J; Luke, Ch 21, Verses 1-4, Authorised King James Version. 90 A further important consideration is the following matter. 91 In the exercise of the s 76 discretion "all relevant matters" must be considered and although the circumstances of every case will inevitably vary and the facts relevant to the contravening conduct will be different in each case and so too will the facts relevant to the 12 factors informing the exercise of the discretion, it nevertheless follows that to the extent that conduct in one case exhibits, in a broad sense, essential similarities with conduct in other cases which have attracted a particular pecuniary penalty, "similar penalties should be incurred". That follows because "a hallmark of justice is equality before the law, and, other things being equal, corporations guilty of similar contraventions should incur similar penalties": NW Frozen Foods at 295A-B, Burchett and Kiefel JJ adopting the observations in Trade Practices Commission v Axive Pty Ltd [1994] ATPR 41-368 at 42,795. 92 However, the fact-intensive inquiry inherent in the determination of whether conduct contravenes the Act and the fact-intensive inquiry going to each element of the factors informing the exercise of the discretion means that "other things" are "rarely equal" (Burchett and Kiefel JJ in NW Frozen Foods at 295B-C) where contraventions of the Trade Practices Act are concerned. 93 In NW Frozen Foods, Burchett and Kiefel JJ observe at 295B-C: In the present case, differing circumstances, size, market power and responsibility for the contraventions as well as other factors, complicate any attempt to compare the penalties imposed on the appellant with those imposed on the other corporations. 94 Other considerations concern the application of the "totality principle" and the anterior question of the "one transaction" or "single course of conduct" principle, discussed as follows. The single course of conduct principle and the totality principle 95 In Pearce v The Queen (1998) 194 CLR 610, the appellant was indicted on 10 counts. Counts 9 and 10 indicted him with maliciously inflicting grievous bodily harm with intent to do the victim grievous bodily harm; and breaking and entering the victim's dwelling-house and while in the dwelling-house inflicting grievous bodily harm upon him. Section 33 of the Crimes Act 1900 (NSW) was concerned with malicious infliction of grievous bodily harm (count 9) and s 110 was concerned with breaking and entering a dwelling-house and assaulting a person with intent to inflict grievous bodily harm (count 10). On counts 9 and 10 he was sentenced to 12 years' incarceration (less time served) made up of eight years (less time served) and an additional four years. The sentences on counts 9 and 10 were ordered to be served concurrently with each other, and cumulatively with a sentence in respect of another offence. 96 Plainly enough, each of the offences against ss 33 and 110 contained an element that the other did not. Neither offence was wholly included in the other. 97 As to the challenge on the ground of double prosecution (that is, conviction of different offences in respect of substantially the same set of facts), McHugh, Hayne and Callinan JJ said this at 623 [40]: To the extent to which two offences of which an offender stands convicted contain common elements, it would be wrong to punish that offender twice for the commission of the elements that are common. No doubt that general principle must yield to any contrary legislative intention, but the punishment to be exacted should reflect what an offender has done; it should not be affected by the way in which the boundaries of particular offenses are drawn. Often those boundaries will be drawn in a way that means that offenses overlap. To punish an offender twice if conduct falls in that area of overlap would be to punish offenders according to the accidents of legislative history, rather than according to their just desserts. [emphasis added] 98 In Johnson v R (2004) 205 ALR 346, the appellant was convicted of two offences. The first count was that on or about 2 November 2000 he attempted to obtain possession of prohibited imports (ecstasy) to which s 233B of the Customs Act 1901 (Cth) applied. The second count was that on or about 2 November 2000, he attempted to obtain possession of prohibited imports (cocaine) to which s 233B applied. The two offences (to which the appellant pleaded guilty) arose from the one transaction. The primary judge regarded a sentence of 10 years on count 1 as appropriate and five years on count 2 as appropriate with the sentences to be served cumulatively. The primary judge reduced the sentences to take account of the totality principle and other particular statutory factors. The ultimate sentence was one of eight years on count 1 and three and a half years on count 2, to be served cumulatively. 99 At [3] of the High Court's reasons, Gleeson CJ observed that the ultimate question in the appeal was whether there was adequate consideration of the merits of the appellant's contention that the sentences imposed paid insufficient regard to the common elements of the two offences. At [4], Gleeson CJ endorses the following observations of Wells J in Attorney-General v Tichy (1982) 30 SASR 84 at 92-93: … what is fitting is that a convicted prisoner should be sentenced, not simply and indiscriminately for every act that can be singled out and brought within the compass of a technically identifiable conviction, but for what, viewing the circumstances broadly and reasonably, can be characterised as his [or her] criminal conduct. Sometimes, a single act of criminal conduct will comprise two or more technically identified crimes. Sometimes, two or more technically identified crimes will comprise two or more courses of criminal conduct that, reasonably characterised, are really separate invasions of the community's right to peace and order, notwithstanding that they are historically interdependent; the courses of criminal conduct may coincide with the technical offences or they may not. Sometimes, the process of characterisation rests upon an analysis of fact and degree leading to two possible answers, each of which, in the hands of the trial judge, could be made to work justice. … Where there are truly two or more incursions into criminal conduct, consecutive sentences will generally be appropriate. Where, whatever the number of technically identifiable offences committed, the prisoner was truly engaged upon one multi-faceted course of criminal conduct, the judge is likely to find concurrent sentences just and convenient. [emphasis added] 100 At [5], Gleeson CJ also said this: Ultimately, justice requires due consideration of whether, and to what extent, the appellant "was truly engaged upon one multi-faceted course of criminal conduct", and whether the sentences imposed properly reflected the outcome of that consideration. 101 Thus it follows that "double punishment" of an offender should be avoided for the "commission of multiple offences which contain common elements": Registrar v Matcham (No 2) at 436 [196], Jacobson J. 102 Gleeson CJ otherwise agreed with Gummow, Callinan and Heydon JJ (see [18]–[35] as to these questions) that the appeal should be allowed. The notion of "one multi-faceted course of conduct" was considered by Stone and Buchanan JJ in Mornington at 397 [41] (see generally [41] to [58]) adopting the observations of Gleeson CJ in Johnson v R, at [3]-[5]. 103 In Mornington, the appellant admitted contraventions of s 400(5) (a prohibition upon a person applying duress in connection with a relevant agreement) and s 792 (a prohibition upon an employer threatening a person with particular classes of conduct, put simply, for a prohibited reason) of the Workplace Relations Act 1996 (Cth) based upon an agreed statement of facts. The appellant had breached s 400(5) of that Act in relation to B, H, T and L and had breached s 792 of that Act in relation to those four employees and also D. In the case of T only, six contraventions of each section were alleged. Those contraventions concerned events occurring on a number of occasions (six separate days in the period between 10 July 2006 and 25 July 2006) whereas in the case of B, H and L, the offences were concerned with the conduct of the appellant's employee, Mr Barry, on one occasion only with respect to each employee. All breaches occurred in July 2006. Thus there were 19 offences charged: one each concerning B, H and L under s 400(5); one each concerning B, H and L under s 792; six concerning T under s 400(5) and six concerning T under s 792; and one concerning D under s 792. In the result, although declarations were made as to 19 offences, penalties were only imposed in respect of the breaches of s 400(5) (B, H and L); six offences concerning T; and a penalty in respect of the s 792 breach concerning D. There were 10 penalties imposed each of $17,000 constituting $170,000 in all. This resulted from agreement between the parties to the proceeding. 104 Although the foundation facts were agreed and ultimately the penalties in respect of the 10 contraventions were agreed, the appellant contended on appeal that the primary judge had fallen into appellable error by failing to treat the admitted offences concerning T as one course of conduct and instead treated the admitted offences as six separate contraventions justifying a separate penalty. 105 In the context reflected at [95] and [99] of these reasons, Stone and Buchanan JJ expressed three important observations. 106 First, as already mentioned, adopting the observations of Gleeson CJ in Johnson v R, where there is one multi-faceted course of conduct (in that case a contended course of applying duress to T to bring about the signing of an AWA) concurrent sentences are likely to be "just and convenient". 107 Second, the consideration of whether the factual matrix gives rise to a properly characterised multi-faceted course of conduct is a consideration separate from and anterior to the application of the totality principle. 108 Third, even though it was open to the primary judge to have treated the events as involving, in substance, a single course of conduct so far as they involved T, the primary judge was nevertheless not bound to do so as there were other factors that suggested that the contraventions should be treated separately and as equally serious (for all the reasons set out at [58] and following in the reasons of Stone and Buchanan JJ, and particularly [68]). 109 The importance of the distinction between the totality principle and the anterior application of the course of conduct principle is mentioned in these terms by Stone and Buchanan JJ at [46]: The distinction is an important one to make in the present case because of the possibility that confusion arose concerning whether the six separate offences admitted in relation to [T] should be treated as overlapping offences in the first instance or whether any consequence of the fact that they might be treated as separate contraventions should await the application of the totality principle at the end of the case. [emphasis added] 110 In Royer v Western Australia (2009) 197 A Crim R 319 ("Royer v WA"), Owen JA said this at [21]: … there is universal recognition in the authorities on two points. First, the "rule" is not a rule at all. It is one of many sentencing principles the object of which is to guide a judicial offer in the proper exercise of the sentencing discretion. Secondly, even if offences are properly to be characterised as arising from the one transaction, a judge is not obliged to apply concurrent terms if to do so would result in an effective term that fails to reflect the degree of criminality involved. [emphasis added] 111 At [22], Owen JA also said this: At its heart, the one transaction principle [one course of conduct principle] recognises that, where there is an interrelationship between the legal and factual elements of two or more offences with which an offender has been charged, care needs to be taken so that the offender is not punished twice (or more often) for what is essentially the same criminality. The interrelationship may be legal, in the sense that it arises from the elements of the crimes. It may also be factual, because of a temporal or geographical link or the presence of other circumstances compelling the conclusion that the crimes arise out of substantially the same act, omission or occurrences. [emphasis added] 112 Owen JA also observed at [24] that due to the wide variety of circumstances in which the principle can arise, it is not always easy to reconcile the way it has been applied in individual cases although what can be detected in each case is an examination of the closeness of the interrelationship and the danger of double jeopardy in so far as punishment (rather than criminal liability) is concerned. 113 At [28], Owen JA makes the general observation adopted in the observations of McHugh J in AB v The Queen (1999) 198 CLR 111 at [14] and [15] that one objective of sentencing is to impose a sentence on an individual offender that reflects "adequate punishment" for the culpability of the convicted person having regard to the community's view concerning the need for "retribution, denunciation, deterrence, community protection and sometimes vindication". As the plurality in Fair Work observe, Old Testament retribution is not one of the purposes inherent in a civil penalty proceeding or civil penalty regimes generally. Rather, the purpose of those regimes is essentially deterrence and therefore protection of the public interest in compliance with the law: Fair Work [55] and [59] (see [29] of these reasons). The observations of the plurality in Fair Work, in particular at [55] adopting the observations of French J in TPC v CSR seem to make clear that at least in the context of the BCII Act (and the Trade Practices Act as a directly relevant analogue of the BCII Act civil penalty regime), there is no purposive role to play in the exercise of the discretion of notions of retribution, rehabilitation or compensation. Nor is specific deterrence, in the exercise of the s 76 discretion, an element or subset of "rehabilitation". The relevance and consideration of the adoption of compliance programs deployed to infuse a corporation and its decision-makers and staff with a culture of compliance with the law is an entirely separate consideration from rehabilitation. Even though the specific observations of Owen JA at [30], mentioned shortly, are predicated upon the general considerations reflected at [28], there adopting the observations of McHugh J, it seems to me that Owen JA's observations at [30], set out below, nevertheless hold good for civil penalty regimes: Against that general background [the observations at [28]] how is the one transaction principle to be understood and applied? Save for the instances in which the interrelationship between multiple offences is so close that injustice can only be avoided by concurrency of terms, the answer will usually emerge from considerations of proportionality to or with the criminality of the offender's conduct viewed in its entirety. Looked at in this way, the one transaction principle and the totality principle are closely connected. A sentencing judge is obliged to impose an effective term that she or he judges to be appropriate for the overall criminality of the offender's conduct. Even where, on a strict and literal understanding of the one transaction principle, it might be said that the concurrency of the terms can be justified, the need for proportionality might demand cumulative or partly cumulative terms. [emphasis added] 114 See also Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417 ("CFMEU v Williams"), Moore, Middleton and Gordon JJ at [14]-[33] and CFMEU v Cahill, Middleton and Gordon JJ at [28]-[42]. 115 In CFMEU v Williams, the primary judge had concluded that "no single course of conduct" arose in respect of two offences under s 43 of the BCII Act in respect of contravening coercive conduct of, first, procuring a stoppage of work by statements made at a worksite meeting, and second, threatening to procure a stoppage of work the following day, by statements made when leaving the meeting. That followed, said the primary judge, because s 43 recognised "separate and qualitatively distinct" conduct of "procuring" a stoppage and "threatening" to procure a stoppage. The Full Court concluded that the primary judge fell into error by treating, as a "disentitling factor", the circumstance that the conduct had two elements to it which s 43 of the BCII Act recognised as "separate", when deciding whether the two offences were properly to be characterised as arising from the one transaction or a single course of conduct: Moore, Middleton and Gordon JJ at [24]-[26]; see also CFMEU v Cahill, Middleton and Gordon JJ at [40], expounding upon CFMEU v Williams. 116 That followed for the Full Court because the true principle deriving from Johnson v R and Royer v WA (Owen JA) is that where there is an "interrelationship" (thus recognising that precise symmetry is not required) between the "legal and factual" elements of two or more offences for which "an offender" has been charged, the Court must ensure, by means of a "factually specific enquiry" that the offender is not punished twice for the same conduct, or put another way, punished twice for the "same criminality": CFMEU v Cahill, Middleton and Gordon JJ at [39] and [41]. 117 Once that principle is engaged, the Court "may" have regard to it as "one of the applicable sentencing principles" as a "tool of analysis" although the Court is "not compelled" to utilise it because discretionary judgments require the "weighing of elements" (see [85] of these reasons) and not the "formulation of adjustable rules or benchmarks": CFMEU v Cahill, Middleton and Gordon JJ at [41] and [42]; Royer v WA, Owen JA at [28]. 118 In CFMEU v Williams, the Full Court accepted, adopting at [20] the observations of Buchanan J at [91] in the Full Court in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 that the task confronting the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions occurred and the need to sustain public confidence in the statutory regime which imposes the obligations. The Full Court in CFMEU v Williams accepted that the principles identified in Johnson v R and the observations of Owen JA in Attorney-General (SA) v Tichy adopted by Gleeson CJ in Johnson v R are applicable to the imposition of a pecuniary penalty although, of course, the manner in which the principles are applied will vary from case to case with the result that the Court "may lower individual fines or accumulate fines". However, the "list is not exhaustive": CFMEU v Williams [29] and [30]. 119 In ACCC v Rural Press, Mansfield J observed at [19] that the conduct of the respondents involved two contraventions of s 45 of the Act, namely, the making of an arrangement and separately carrying it into effect. As to those matters, his Honour observed that in a "practical sense" the conduct that constituted the making of the arrangement was "part and parcel" of the conduct that constituted carrying it into effect. The reference to "part and parcel" is a descriptive phrase used by Black CJ, Lee and Goldberg JJ in J McPhee v ACCC at [184]. It is another shorthand way of expressing the nature of the interrelationship which might then engage recourse to the single course of conduct principle in exercising the discretion under s 76. Mansfield J also considered that the conduct which constituted a contravention of s 46 in that case was closely allied to the s 45 conduct but nevertheless remained separate and "could be dealt with separately" although because the various forms of contravening conduct were "closely interconnected and all aimed at having a particular anti-competitive effect in [the relevant market]", one penalty was imposed upon each respondent for the contraventions of the Act. Mansfield J considered that the level of penalty would not have been altered for that contravention whether the s 45 and s 46 contraventions were treated as part and parcel of the "one set of conduct" or whether they were "capable of being treated as separate contraventions": [19]. 120 In J McPhee v ACCC, the Full Court observes at [181] that the "case presented to [the primary judge]" did not distinguish the conduct of McPhee involving the formation of the proscribed arrangement or understanding from the conduct of McPhee said to constitute giving effect to the arrangement or understanding. The ACCC presented that case on the footing that the delivery of particular rates was an integral part of the conduct that constituted the contravention of s 45 in making, or arriving at, an understanding or arrangement. The ACCC contended that the same act was relied upon as the act constituting the further contravention of giving effect to the arrangement or understanding. The Full Court thus explained its conclusions in this way at [182] and [183]: [182] If the disclosure by McPhee to DFE of the rates charged by McPhee to ACI Florapak could be said to be an act giving effect to an arrangement or understanding already made or arrived at, it was not conduct distinguishable from the conduct of McPhee which constituted the making of such an arrangement or understanding. Pursuant to s 76(3) of the Act, if conduct constitutes a contravention of two or more provisions of Pt IV, a proceeding may be instituted in respect of each contravention but a person is not liable to more than one pecuniary penalty in respect of the same conduct. This was not a case involving repeated conduct concerning discrete events occurring at different times and involving disparate parties … [183] We therefore accept the submission that [the primary judge] erred in imposing separate penalties in respect of the ACI Florapak conduct. The conduct which constituted the second contravention was part and parcel of the conduct which constituted the first contravention and s 76(3) prescribed that only one penalty could be imposed. [emphasis added] 121 Although it will be necessary to mention later in these reasons some aspects of the application of the totality principle, Wilson, Deane, Dawson, Toohey and Gaudron JJ described the principle in these terms in Mill v The Queen (1988) 166 CLR 59 at 62-63: The totality principle is a recognised principle of sentencing formulated to assist a court when sentencing an offender for a number of offences. It is described succinctly in Thomas, Principles of Sentencing, 2nd Ed. (1979), pp. 56-57, as follows (omitting references): "The effect of the totality principle is to require a sentencer who has passed a series of sentences, each properly calculated in relation to the offence for which it is imposed and each properly made consecutive in accordance with the principles governing consecutive sentences, to review the aggregate sentence and consider whether the aggregate is 'just and appropriate'. The principle has been stated many times in various forms: 'when a number of offences are being dealt with and specific punishments in respect of them are being tottered up to make a total, it is always necessary for the court to take a last look at the total just to see whether it looks wrong[']; 'when … cases of multiplicity of offences come before the court, the court must not content itself by doing the arithmetic and passing the sentence which the arithmetic produces. It must look at the totality of the criminal behaviour and ask itself what is the appropriate sentence for all the offences.'" See also Ruby, Sentencing, 3rd Ed. (1987), pp. 38-41. Where the principle falls to be applied in relation to sentences of imprisonment imposed by a single sentencing court, an appropriate result may be achieved either by making sentences wholly or partially concurrent or by lowering the individual sentences below what would otherwise be appropriate in order to reflect the fact that a number of sentences are being imposed. Where practicable, the former is to be preferred. [emphasis added] PART 3: CONTEXTUAL BACKGROUND MATTERS RELATING TO THE CONTRAVENTIONS 122 The conduct events giving rise to the contraventions occurred in two separate periods. In the period prior to 31 May 2003, the ownership structure of the entities in the QCL chain of companies was this, put simply. QCL was an entity owned and controlled by a Swiss multinational corporation called "Holcim". QCL held 100% of the issued shares in "Cementco" which in turn held 100% of the issued shares in Pozzolanic Holdings which held 100% of the issued shares in PIPL which, in turn, held 100% of the issued shares in Pozzolanic. 123 In the period prior to 31 May 2003, Australian Cement Holdings Pty Ltd ("ACH") carried on business as a supplier of cement and related cementitious products to the concrete industry in Australia. The issued shares in ACH were held 50% by CSR and 50% by Hanson, commonly known in Australia as "Pioneer". On 31 March 2003, CSR undertook a de-merger resulting in a transfer of CSR's concrete and aggregate business together with its 50% interest in ACH to an entity called "Rinker". ACH was, in effect, a joint venture between CSR and Hanson and then Rinker and Hanson. In the year ending 31 March 2003, ACH supplied 78.2% of its cementitious products to those two shareholders. 124 ACH held a 50% interest in a joint venture entity called "FAA". The other 50% shareholder was "Boral". FAA carried on the business of purchasing flyash from NSW coal-fired electricity generating plants which it sold to Boral and ACH, roughly equally, at cost plus a margin. FAA operated what Mr Maycock called a "pass-through" model which he described as a model based simply on payment of an "ex-bin" cost for the ash plus a handling margin. ACH produced cement and, through FAA, secured a supply of flyash, both substitutes in the manufacture of concrete. 125 QCL was not an integrated cement and concrete company enjoying guaranteed access to shareholder buyers of cement or flyash or both. Nevertheless, the majority of its sales were made to Boral, Hanson and Rinker. Negotiating price, discounts and other terms of trade with these buyers was akin to an "arm-wrestle" according to Mr Maycock. 126 On 31 May 2003, Hanson and Rinker merged their ACH interests with Holcim. ACH acquired the issued shares in QCL thus creating the new Cement Australia "Corporate Group". ACH was re-named Cement Australia Holdings Pty Ltd ("CA Holdings") which became the holding company for the group of companies formerly controlled by QCL and ultimately Holcim. The post-merger structure consisted of a chain of wholly owned companies as follows, starting at the base: Pozzolanic → PIPL → Pozzolanic Holdings → Cementco → CAQ/QCL → CA Holdings → (Holcim (50%); Hanson (25%); Rinker (25%)) 127 FAA became 50% owned by CA Holdings, in effect, (Holcim, Hanson and Rinker) and 50% owned by Boral (through "BCSC") from 31 May 2003. As to the nature and scope of FAA's activities and the role played by Mr Shaun Clarke in it, see [835] to [881] of the principal liability judgment. 128 The new Corporate Group retained ownership of QCL's and ACH's manufacturing assets and assumed responsibility for manufacturing cementitious products. A partnership was also established in the same ownership ratio between Holcim, Hanson and Rinker to conduct the business of logistics, distribution, sales and marketing. A new company, Cement Australia Pty Ltd ("Cement Australia"), was incorporated with the shares held in the same ownership ratio by Holcim, Rinker and Hanson. The partnership was responsible for distribution, marketing and sale of cementitious products and Cement Australia was appointed as the agent of the partnership and the manager of the new corporate group of companies. 129 On 31 May 2003, CA Holdings and Cement Australia as agent for the partnership entered into a cementitious products acquisition agreement by which CA Holdings for the Corporate Group acted as seller (the "seller group") and Cement Australia acted as the agent of the partnership as buyer of all cementitious products produced by the seller group including cement, flyash and slag. 130 As to decision-making within the QCL Group up to 31 May 2003, the findings were these. 131 Between 22 February 2002 and 19 April 2003, Mr Philippe Arto was a Director of QCL, Pozzolanic and PIPL. Between February 2002 and March 2003, Mr Arto was the Managing Director of QCL and thus the bridge between the Board and the Executive Management Group of QCL. Prior to his appointment, Mr Arto had discharged a number of senior roles within the Holcim group of companies. Mr Arto reported to Mr Jerry Maycock, the Chairman of the QCL Board. Mr Maycock also held the position at that time of Area Manager for Australia and New Zealand for the Holcim group. During Mr Arto's period as Managing Director of QCL, Mr Ridoutt was the General Manager of Sales and Distribution for QCL. Mr Wilson was the Manager of Pozzolanic and he reported to Mr Ridoutt. 132 As to decision-making, Mr Arto gave evidence that because Pozzolanic was 100% owned by QCL, Mr Maycock and Mr Arto as Directors, and Mr Schodel as Secretary, sat on the Boards of QCL and Pozzolanic. The directors held the Pozzolanic Board meeting first in time so as to address aspects of the flyash business and then report to the QCL Board on the main component of the strategy to be adopted or, for example, in making requests of the QCL Board for approval of capital expenditure. The QCL Board had to approve capital expenditure items. Mr Arto also gave evidence that, for his part, Pozzolanic was a 100% owned subsidiary and was "fully managed in an integrated way with QCL, so I did not make any significant difference between the two legal entities as far as I was concerned": see [307] to [312] of the principal liability judgment. 133 In 1998, Mr Maycock ceased acting as CEO of QCL and became Area Manager and Senior Vice-President of Holcim. He was appointed Non-Executive Chairman of QCL and continued in that role until the merger with ACH on 31 May 2003 when he became the Non-Executive Chairman of the Cement Australia Group. Mr Townsend became the CEO of QCL when Mr Maycock left that position. In February 2002, Mr Arto replaced Mr Townsend. On 1 June 2003, Mr Leon was appointed CEO of Cement Australia. 134 At [320] of the principal liability judgment, I note Mr Maycock's evidence that to the extent that QCL conducted activities through separate legal entities like Pozzolanic for various reasons, the Board meetings for the relevant subsidiaries would be conducted at the same time as the QCL Board meeting. Mr Maycock said that the directors "just actually ran one meeting, and then we worked our way through the agenda and through the board report". He said that "then the company secretary, at the end of the meeting, would write separate minutes for the legal entities, you know, as required, on a sort of – well, he would just … notionally allocate the time that we had spent overall and he would allocate it to the various meetings": see [320]. Mr Maycock also said that a similar practice was adopted after the merger although things may have changed a little as companies like Pozzolanic may have just become, in effect, an organ of management: see [321]. At [322], I accepted the evidence of Mr Arto and Mr Maycock concerning the decision-making processes they had described both before and after the merger, respectively. 135 Prior to the merger, the treasury company for the QCL group of companies was QCL. The particular mechanism by which that was done is described at [296]. It is not necessary to describe that mechanism here. However, after the merger, the treasury company continued to be CAQ (QCL re-named). 136 At [301] to [304], I describe the decision-making and governance practices concerning the merged group. Just as QCL had operated, in terms of Board meetings for QCL group entities with simultaneous Board meetings, Mr Blackford gave evidence that Board meetings for the new Corporate Group were held "simultaneously" (Cement Australia Group entities and the partnership Management Committee). Mr Blackford gave evidence that while there was no requirement for the directors on each Board of the entities within the Corporate Group, Cement Australia and the Management Committee of the partnership to be common directors, "in practice they always have been". At [302], I found, accepting the evidence of Mr Blackford, that: "The attendees at these simultaneous meetings of the Boards of the Corporate Group, Cement Australia and the Management Committee of the partnership include the directors of Cement Australia, all alternate directors of Cement Australia, the Chief Executive Officer, the Chief Financial Officer, the company Secretary and other members of the Executive as and when required": see [302] and [303]. PART 4: THE CONTRAVENTIONS The Original Millmerran Contract 137 At [2998] to [3016] of the principal liability judgment, the organising principles in relation to s 45 of the Act are set out. At [3020], the relevant provisions of the "Ash Purchase Agreement" of 30 September 2002 between Pozzolanic as buyer, PIPL as guarantor and eight entities comprising Millmerran Power Partners ("MPP") as seller (otherwise called the "Original Millmerran Contract" or the "OMC") are set out: see also [930]. 138 For the purposes of these reasons, it is not necessary to set out each of the identified provisions recited at [3020]. 139 In the principal proceedings, apart from the contentions concerning s 46 of the Act, the ACCC contended (apart from, put simply, the "effects" and "likely effects" cases) that the provisions of the OMC at [3020] were included for the substantial purpose of [3017]: … first, preventing any other person from acquiring unprocessed flyash from the Millmerran Power Station, second, hindering or preventing any other person from supplying concrete grade flyash in the SEQ concrete grade flyash market, third, lessening, hindering or preventing competition in the SEQ unprocessed flyash market, and fourth, lessening, hindering or preventing competition in the SEQ concrete grade flyash market. 140 At [3021] to [3069] (and Pt 43), I examined how the provisions came to be included in the OMC; whether a substantial purpose of the provisions was to substantially lessen competition in the relevant markets; whose purpose it was if such a purpose subsisted; and when did the relevant provisions reach their final form. 141 As those paragraphs reveal, the non-conforming tender of September 2001 to MPP was signed by Mr Maycock as director and Mr Schodel as secretary. QCL, Pozzolanic and PIPL put Mr Wilson forward as the manager of the tender process and the contractor's representative. Mr Ridoutt was an important person for QCL, Pozzolanic and PIPL in the process. Mr Hunt and Ms Knox were the important actors on the Millmerran side through the MPP operating entity "MOC". Mr Cameron represented MPA Energy. I mention here the role of these individuals having regard to [3070] to [3078] of the principal liability judgment, mentioned below. 142 As to the conclusions on the question of the purpose of the identified Millmerran provisions, I made these observations and findings from [3070] to [3078] which, for ease of reference, are set out below: 3070 The objective or end QCL sought to achieve in its bid, through Pozzolanic, for the Millmerran Ash Purchase Contract at the outset of the non-conforming tender in September 2001 was to secure an exclusive supply agreement for the "sale of ash into the cementitious market" in SEQ. The commercial strategy of QCL and Pozzolanic's approach to both the Millmerran and Tarong contracts (and Tarong North) was framed and executed by Mr Ridoutt and Mr Wilson, and put to the Directors. The strategy was discussed with Mr Arto as Director and CEO of QCL. Mr Ridoutt presented the strategy to the QCL Board Meetings. Mr Arto spoke of his dependency upon Mr Ridoutt and Mr Wilson. 3071 A substantial purpose of the framing of the final commercial bid to Millmerran was to prevent a rival from securing access to Millmerran unprocessed ash and to prevent threatened entry into the SEQ concrete grade flyash market for the supply of concrete grade flyash. These purposes, serving the end sought to be achieved by QCL and Pozzolanic through Mr Ridoutt, Mr Wilson and Mr Arto, were each a substantial subjective purpose of these individuals. These purposes were not the only purposes for the reasons already mentioned but they were each a substantial purpose. Mr Ridoutt and Mr Wilson persevered in their attempts to try and secure an exclusive arrangement in the lengthy negotiations with Millmerran over the contract terms, ultimately leading to cl 26.4 (not before giving rise to Ms Knox's frustrations set out in her note of 20 June 2002). Pozzolanic and QCL were including entities and their authorised negotiators, Mr Ridoutt and Mr Wilson (with the authority and thus approval of Mr Arto) subjectively held each of the substantial purposes of preventing entry of a person into a supply relationship with MPP and thus entry into the unprocessed flyash market, and preventing entry of a person into the SEQ concrete grade flyash market, using processed Millmerran flyash. 3072 These specific purposes are the expression of a substantial subjective purpose of substantially lessening competition in each market as Mr Ridoutt, Mr Wilson and Mr Arto plainly believed that the face of future competition in each market, and particularly the SEQ concrete grade flyash market in which QCL was the seller supplier, would show contestability and rivalry in volume and price (and other aspects of the service offerings) should a competitor enter at Millmerran and enter the SEQ concrete grade flyash ash market through processed Millmerran ash. This entry would exhibit rivalrous responses and counter-responses that would likely see a volume, revenue and EBIT loss for Pozzolanic and QCL in the flyash business. The future face of competition in each market without entry of a rival at Millmerran would show diminished future (nascent) rivalry and thus impact upon the competitive process. Mr Maycock accepted that whatever shape rivalry might take, Pozzolanic and QCL would be unlikely to maintain their EBIT earnings in the flyash business once a rival entered the market for the sale of concrete grade flyash in the SEQ concrete grade flyash market having secured access to Millmerran ash for processing and supply. 3073 These ends or objectives were achieved through the vehicle of the purposes earlier described in respect of the provisions for which Pozzolanic and QCL were "including" parties. MOC accepted the provisions, no doubt because those provisions met the objectives and ends Millmerran sought to achieve of removing certain thresholds of waste ash from the site and securing an acceptable minimum revenue stream from the sale of ash. Whatever the ends, objectives or purposes of MOC may have been, the ends and objectives of Mr Ridoutt, Mr Wilson and Mr Arto were to secure the contract by adopting the final commercial minimum quantity take or pay term for at least a substantial subjective purpose (among the other purposes and reasons) of substantially lessening the competition QCL would face in the SEQ concrete grade flyash market and, in aid of that purpose, a purpose of preventing a potential rival from securing access to a source of likely contestable ash processed from Millmerran ash. 3074 Section 45 asks whether the identified particular provisions had the substantial purpose of substantially lessening competition and therefore the question is whether those substantial purposes were substantial purposes of the identified particular provisions upon which the Commission relies. 3075 Central to the contract are the commercial provisions concerning the minimum quantity of concrete grade flyash the seller must make available and allow Pozzolanic to take each Operating Year for seven years at 135,000 tonnes extracted, retrieved or processed from the volume of raw ash produced by the power station operations, at a price of $10.10 per tonne, according to the lump sum calculations and escalation provisions, of cls 5.1, 6.1, 6.2, 6.3, 7 and 10. These provisions were incorporated into the contract, at the adoption of Millmerran, by accepting the terms as put by Pozzolanic, but they were provisions initiated by Pozzolanic as the foundation commercial terms of the contract. Pozzolanic and QCL were including parties for these terms as was MOC for reasons entirely different to those actuating Pozzolanic and QCL. By these terms, Pozzolanic would have access to the necessary volume of raw ash at Millmerran to enable it to take either consistently each day, or each week, over each operating year, 135,000 tonnes of concrete grade flyash processed out of whatever volume of raw feedstock ash was required to obtain that volume, or take concrete grade flyash from the raw ash episodically throughout each operating year. In either case, the concrete grade flyash would be extracted from the required volume of raw ash through the buyer's installed facilities. 3076 I am satisfied that a substantial purpose of the inclusion of these commercial terms as framed, in substance, by Pozzolanic and QCL was to substantially lessen competition in the markets as earlier described for the reasons earlier described, by seeking to exercise a substantial degree of control over a sufficient volume of raw unprocessed Millmerran flyash necessary to extract, over time, 135,000 tonnes of concrete grade flyash and foreclose or discourage sustainable new entrant participation at Millmerran. 3077 Plainly enough, however, Mr Ridoutt and Mr Wilson thought that it would also be necessary to secure an exclusive supply arrangement with MPP so as to prevent MOC and MPP from supplying any ash to anyone else for sale into the cementitious market. This conduct brought the integrity of the Pozzolanic negotiators into serious question according to the views expressed by Ms Knox. Pozzolanic's position on this question led to all of the steps earlier described culminating in cl 26.4 in the way explained by Clayton Utz. Having regard to those exchanges, I am satisfied that at least a substantial purpose of the termination provision on 60 days notice to Millmerran after 31 December 2006 with the reduction in the annual minimum payment was to discourage Millmerran from entering into another supply contract for concrete grade flyash extracted or processed out of raw Millmerran ash during the currency of the Ash Purchase Agreement with Pozzolanic so as to constrain rivalry in the sale and supply of concrete grade flyash in the SEQ concrete grade flyash market. Clause 26.4 was included in the contract either by Mr Ridoutt and Mr Wilson, or as a consensual inclusion as a result of a mediation between both parties to the contract of what was then an impasse. Nevertheless, Mr Ridoutt and Mr Wilson were including decision-makers for Pozzolanic and their subjective purposes for the provision was at least a substantial purpose as described and thus a substantial purpose of substantially lessening competition in the way earlier described. 3078 Neither Mr Ridoutt nor Mr Wilson were called by Pozzolanic or QCL to give evidence, and to the extent that there is any ambiguity about their subjective purposes, I am willing a draw a Jones v Dunkel inference, in light of the exchanges I have described, that their evidence on purpose would not have been helpful to Pozzolanic or QCL. 143 The observations at [3070] to [3078] on this topic are important in the exercise of the discretion under s 76 of the Act. However, without distracting from the precise content of those paragraphs, I note for present purposes, the following matters. 144 First, from the very outset of the evolution of the relationship with MPP (the tender of September 2001), the objective QCL sought to achieve in striking a supply agreement with MPP was an exclusive supply agreement for the sale of ash into the cementitious market in SEQ. The commercial strategy of QCL and Pozzolanic (as the buyer and ash processing entity within the QCL group of companies (as to which see [26] of the principal liability judgment concerning the QCL group up to 30 May 2003), was framed and executed by Mr Ridoutt and Mr Wilson. It was put to Mr Arto as CEO and a director of QCL, and through him, the directors. Mr Ridoutt presented the strategy to the QCL Board meetings. It was discussed with Mr Arto and he lent his support, authority and gravitas to the proposals of Mr Ridoutt and Mr Wilson: as to some aspects of Mr Arto's position and his engagement on these issues, see [1087] to [1097]. 145 Mr Ridoutt and Mr Wilson were also influential in the formulation of the commercial strategy concerning the tender (and ultimate contract) for the ash supply arrangements with Tarong and Tarong North. 146 Although the question considered at [3070] to [3078] of the principal liability judgment concerning the OMC is whether the particular provisions (either individually or taken together) were included for any one or more of the contended substantial purposes thus giving rise to a contravention of s 45(2)(a)(ii), it remains contextually relevant to recognise, at least, by way of background, that to the extent that the relevant provisions were adopted for the purpose of substantially lessening competition in a relevant market, the provisions ultimately emerged out of an initial contextual commercial objective on the part of QCL and Pozzolanic to secure, if they could, a supply agreement under which MPP, through MOC, would exclusively supply Pozzolanic with ash and, in turn, QCL would not be confronted with a rival in the market for concrete grade flyash ("cgf") produced from Millmerran unprocessed ash. 147 Second, although there were other broader commercial purposes, the subjective purposes of preventing entry of a person (a rival or putative rival) into a supply relationship with MPP and thus entry into the unprocessed flyash market; and preventing entry of a person (a rival or putative rival) into the SEQ cgf market, using Millmerran processed ash, were substantial purposes. 148 Nevertheless, it is, of course, important to remember that in exercising the discretion under s 76(1) of the Act, an appropriate pecuniary penalty is to be imposed in respect of the contravening conduct, not a commercial strategy that reached or might have reached beyond the limits of the contravening conduct, as found. As in all things, however, context matters. 149 Third, Mr Ridoutt, Mr Wilson and Mr Arto believed (that is, they held the opinion) that, looking to the future, should a person secure access to unprocessed ash at Millmerran and should such a person enter the SEQ cgf market in which QCL was a seller/supplier (and a company that enjoyed a very substantial share of that market - a virtual monopolist; or a company enjoying a state of "dominance" as Mr Arto described it), the future face of competition in both the market for unprocessed ash and the SEQ cgf market would exhibit contestability and rivalry in the volumes sold, the price of cgf and supply-side service offerings; and that such entry would produce rivalrous responses and counter-responses that would likely see a loss of volume, revenue and EBIT earnings (and thus a decline in the preferred earnings margin of 30%-33% Mr Arto regarded as key as to which see [2266]), for Pozzolanic, and therefore QCL. 150 Moreover, Mr Maycock, the non-executive Chairman of QCL from 1998 and, from that date, a Senior Vice-President of QCL's ultimate owner, Holcim, accepted that whatever shape new entrant rivalry might take, Pozzolanic and QCL would be unlikely to maintain their EBIT earnings. See also [2408] to [2413]. 151 In the principal liability judgment I found that the identified provisions had as their purpose, securing an objective of preventing third party putative new entrant access to each market. 152 At [3073], I found that Mr Wilson, Mr Ridoutt and Mr Arto adopted the final commercial minimum quantity take or pay term for at least a substantial subjective purpose (among other purposes) of substantially lessening the competition QCL would face in the SEQ cgf market and, in aid of that purpose, a purpose of preventing a potential rival from securing access to a source of likely contestable ash processed from Millmerran ash. 153 At [3076], I found that the identified provisions discussed at [3075] were included by Pozzolanic and QCL in the OMC for a substantial purpose of substantially lessening competition in the market for unprocessed ash and the SEQ cgf market, by adopting provisions that enabled Pozzolanic and QCL (by reason of the group company structures and decision-making processes within QCL) to exercise a substantial degree of control over a sufficient volume of raw unprocessed Millmerran flyash necessary to extract, over time, 135,000 tonnes of concrete grade ash and foreclose or discourage sustainable new entrant participation at Millmerran. 154 At [3077], I found that cl 26.4 was included in the OMC for the substantial purposes held by Mr Ridoutt and Mr Wilson as described in that paragraph. 155 I also noted at [3078] that neither Mr Ridoutt nor Mr Wilson was called by the respondents to give evidence and I found that their evidence, on this topic, would not have been helpful to Pozzolanic or QCL. 156 As to the effect or likely effect of the identified provisions at the time of making the OMC on 30 September 2002, see [3079] to [3088]. 157 For ease of reference, those paragraphs are set out below: 3079 As to the effect or likely effect of the provisions substantially lessening competition at the date of making the contract containing the provisions, a question arises about the role in such an assessment of the factor that the Millmerran ash had not been produced at that date and was unknown as to its future quality. Would inclusion of the provisions have the effect of substantially lessening competition in a product when the market participants could not know the characteristics, features and qualities of the new ash until it entered the market, contested for supply and acceptance, and its substitutability became apparent? Would, viewed at the date of inclusion, the provisions be likely to substantially lessen competition in either market in a forward looking way by diminishing the future shape of the competitive process by constraining competitor entry of Millmerran ash when the future contestability of the ash could not be known until entry, contestability and substitutability were later determined? 3080 These questions were answered, in substance, for the assistance of the Court by the expert evidence of Professor Hay. 3081 Professor Hay accepted, as a matter of economics, that if a competitor won the contract at Millmerran, and Pozzolanic thought that at some time in the future the competitor would start supplying Millmerran concrete grade flyash into the concrete grade flyash market, that circumstance, "might produce a quite prompt price response on the part of Pozzolanic" (T, p 2559, lns 21-25) and that would particularly be "likely to be the case" if Pozzolanic's prices, at the time the competitor wins the Millmerran contract, were "supra-competitive prices" (prices above prices which would prevail in a workably competitive market) (T, p 2559, lns 27, 28). Professor Hay also unsurprisingly accepted that if the source of a price constraint upon QCL or Pozzolanic was loss of the Millmerran contract to a competitor, that source of constraint would not operate if Pozzolanic won both the Tarong and Millmerran contracts (T, p 2559, lns 39-41). Professor Hay also observed that if a competitor won the contract at Millmerran, that circumstance would reduce the degree of Pozzolanic's market share and therefore tend to reduce its degree of market power and would "likely" lead to the quite prompt price responses on the part of Pozzolanic earlier mentioned in Professor Hay's evidence (T, p 2559, lns 43-47; p 2560, lns 1-7). 3082 This exchange then occurred in cross-examination with Professor Hay at T, p 2561: Q I had understood you to say that if a competitor won the Millmerran contract, that would have an effect on competition as soon as the contract was won. Is that right or not? A It might, yes, and that also depends upon the assumption that there was substantial market power at the time. Q I understand what you say. And it is not only a question of "might", is it? … It is better put that it would be likely that as soon as a competitor won the Millmerran contract, there would have been an effect on competition, correct? A It is possible. It may depend upon the assumption about the quality of the ash, but yes, it is certainly possible. Q Well, if we leave hindsight to one side for a moment, when the Millmerran contract is won, nobody knows that there is going to be a problem with the colour of the ash, correct? A Well, I don't know for sure, but I will assume that to be the case. Q Assume that to be the case. Then what Pozzolanic knows is that there is a competitor who now has a source of supply of fly ash which can be used to sell fly ash into the south-east Queensland concrete-grade fly ash market, correct? A Correct. Q And that knowledge is what is likely to cause Pozzolanic to regard its prices as being constrained, correct? A It could have that effect, yes. Q And it would have that effect if Pozzolanic had been charging supra-competitive prices prior to the competitor winning the Millmerran contract? A It could have had that effect, yes. Q You say it could have that effect. It is likely to have had that effect, isn't it? A I will say it could have had that effect. I'm not sure how likely it is, but it may be likely. It is certainly possible. Q Well there was at least a real chance it would have had that effect, correct? A I think there was a chance, yes. Q A real chance? A Well, I take a chance to be a real chance. Q You agree, then, that the effect on competition is not dependent on taking a hindsight view of how long it might have taken a competitor to bring that fly ash to market? A Well, I think that's right. … if someone else had achieved the contract, then there could have been an effect and the question then is how long – would that effect last long, what would happen with the colour and how quickly would it dissipate. That's right. [emphasis added] 3083 Professor Hay's observations on this topic and the related comments in his report are made in the context of the colour variability problem which ultimately emerged throughout 2003 and resulted in the scientific investigations in the latter part of 2003 and 2004, and beyond. Professor Hay in these quoted passages accepted that there was a real chance of a likelihood of an effect upon competition once a competitor won the Millmerran contract but the constraining effect might dissipate over time as a quality, colour problem, emerged. 3084 The relativity in the degree of dissipation of the immediate constraining effect was examined in these passages (T, p 2562, lns 26-45): Q Someone else wins the Millmerran contract. At that stage, no-one knows there is a colour variability problem and we have discussed what the consequences might be. Do you accept the proposition that unless it is found that the Millmerran ash can never be sold as concrete-grade fly ash in the south-east Queensland market, there will remain a degree of constraint on Pozzolanic's prices from the existence of that competitor's alternative source of [concrete-grade fly ash]? A I think that may overstate it. It seems to me the question would be the extent to which it is anticipated that the Millmerran ash would be an alternative source of ash, or people would otherwise buy Pozzolanic ash. Whether it can be sold, the concrete-grade ash may not be the same – saying it can or cannot be sold as concrete-grade fly ash may not be the same assumption. Q So what one is looking at is whether it turns out to be a substitute for those who would otherwise have bought Pozzolanic's ash? A If it's clear that it's not a substitute, then I would expect it to have no significant constraining effect upon Pozzolanic. Q And if it remains a substitute to some extent, then it has a constraining effect. Is that right? A I would expect there to be some degree of proportion between the degree of substitution and the degree of constraint. [emphasis added] 3085 In concluding this discussion, Professor Hay accepted that if there is an assumption that the Millmerran ash is an alternative source of supply, then there is a possibility, looking forward, that a competitor winning the Millmerran contract is going to bring about "some impact" on competition in the SEQ concrete grade flyash market (T, p 2563, lns 1-6). 3086 Professor Hay accepts that the event of entry itself into the Millmerran contract by a competitor would "likely" produce "a quite prompt price response" from Pozzolanic in the SEQ concrete grade flyash market assuming, in a forward looking way, that the ash would be usable in the concrete grade flyash market. Professor Hay also accepts that Pozzolanic's "knowledge" of a competitor at Millmerran with a source of flyash that Pozzolanic would assume could be sold into the SEQ concrete grade flyash market (since no hindsight view of an emergent colour problem would be relevant at that moment in time) would give rise to at least a "real chance" of causing Pozzolanic to regard its prices as being constrained and there would be at least "some impact" on competition in the SEQ concrete grade flyash market. 3087 It follows that, at the date of entry into the contract, with the clauses I have mentioned (cls 5.1, 6.1, 6.2, 6.3, 7, 10 and 26.4), those clauses would have the immediate effect and would be likely to have, in a forward looking way, a real chance of substantially lessening competition in the SEQ concrete grade flyash market because the future field of rivalry or the future state of the competitive process with the provisions is substantially diminished, on all of the evidence as nascent competition in a Pozzolanic/QCL dominated market was hindered and prevented. However, the constraining effect would have begun to dissipate once it became clear to the market that a problem was emerging in the quality of the Millmerran flyash and that problem was unlikely to be resolved either at all, or within a period of time which would make Millmerran ash a real substitute for Pozzolanic ash, assuming a rival in Millmerran. The extent of the constraint and its potential to dissipate is ultimately a question of degree. However, I am satisfied that upon entry into the Millmerran contract by a rival, participants would have proceeded on the assumption that the Millmerran ash was, in all probability, likely usable in the SEQ concrete grade flyash market and that once a competitor had access to a source of ash at Millmerran (notwithstanding that the concrete grade flyash would not be available for some little time), there would likely be quite prompt price responses from Pozzolanic in a market which had been characterised, otherwise, by a virtual monopoly with delivered pricing, and pricing above a competitive level characterising a workably competitive market. 3088 In a market exhibiting the characteristics of the SEQ concrete grade flyash market throughout 2001 and 2002, competitive entry by a rival at Millmerran was very important to the future competitive process, in a forward-looking way, and thus the likely effect upon what would have been emerging competition based on Millmerran ash was large or significant and truly meaningful. Had the frustrations exhibited by Ms Knox in her memorandum of 20 June 2002 resulted in no further negotiations with Pozzolanic, with Millmerran contracting with FAA as the next best option, the likely price responses and counter-responses would likely have been very vigorous. Mr Maycock said that confronted with some of the scenarios postulated by Management arising out of the loss of one or more of the contracts, QCL and Pozzolanic would have found a way to compete and would have responded to the challenges presented to it. Had FAA won the contract at Millmerran, with its tied shareholder concrete producers, Pozzolanic would very likely have vigorously responded in its supply and service offerings to those major shareholders to try and hold some proportion of QCL's sales to those particular buyers, apart from contesting for all marginal sales as Mr Clarke said of FAA. The provisions described at [1347] were the expressions of these substantial purposes. 158 In those paragraphs I also note some aspects of the evidence of Professor Hay. 159 In the course of his evidence, Professor Hay considered a postulate of a "real chance" of a constraint upon QCL's prices for cgf in the SEQ cgf market, in a future world in which either a rival would have won the OMC (and Pozzolanic/QCL would not have won it) or a future world in which, alternatively, a rival would have at least secured "access" to a "source of supply of ash" from Millmerran. A rival agitating for access to Millmerran ash might secure a source of supply from Millmerran in a future world where Pozzolanic/QCL had won the contract with MPP but on terms that did not contain the identified provisions: a future "but for" world. 160 Professor Hay accepted that had a rival gained access to Millmerran ash by winning the ash supply contract at Millmerran, there was a "real chance" of a constraining effect upon QCL's prices for cgf and at least some effect upon competition. This would have been especially so, he agreed, if QCL had been charging supra-competitive prices in the absence of any competition. 161 At [3087], I found that, at the date of entry, the identified provisions had the immediate effect, and in a forward-looking way, would be likely to have the effect of substantially lessening competition in the SEQ cgf market: see particularly [3087] and [3088]. 162 Fourth, including provisions in the OMC at 30 September 2002 which had a substantial purpose of substantially lessening competition in the cgf market and had as their effect and likely effect a substantial lessening of competition in that market, was very important for the future state of rivalry and the future competitive process in a cgf market characterised, at 30 September 2002, as one in which QCL was a virtual monopolist. New entrant rivalry, depending upon the scale of entrant and the scale of entry, would have produced a greater or lesser degree of contestability and counter-responses. Competition is critical to the public interest because it is the process which causes rivals to alter supply-side offerings in response to contestable offerings and adjust prices which, in turn, creates incentives for rivals to eliminate inefficient costs. Competition, as a process, "competes away" inefficient costs. That is how the process serves the public interest. That is why most regulatory pricing models attempt to replicate "efficient cost" analogical models of "perfect competition" where only efficient costs remain and risk weighted rates of return are calculated on the efficient cost base (which has many components). 163 Provisions which have, as their purpose, effect or likely effect, a substantial lessening of competition in a relevant market are susceptible of at least a substantial statutory maximum penalty under the Act because they damage the very process of rivalry itself and the dynamic elimination of inefficient costs through contestability. 164 Thus, such provisions damage the public interest. 165 I found that had FAA won the Millmerran ash supply contract or had it secured access to Millmerran ash under a set of circumstances in which Pozzolanic/QCL had won the OMC on terms that nevertheless enabled FAA (or Transpacific) to source a supply of Millmerran ash for processing with some commercial degree of regularity (that is, absent the identified provisions of the OMC), the likely rivalry as between FAA and QCL would have been vigorous: see [3088]. Transpacific would likely have stimulated reasonably vigorous rivalry. Had the entrant not been FAA but a less resourced entrant without the benefit of shareholder buyers such as Boral, Hanson and Rinker, the rivalry would have been less vigorous. Nevertheless, I found that new entrant rivalry in a future world without the provisions would have been real, meaningful and important, for the reasons already mentioned: see [3088]. 166 Fifth, although the relevant provisions of the OMC at 30 September 2002 had the effect and would be likely to have the effect, in a forward-looking way, of substantially lessening competition as described, the effect and likely effect would have dissipated as information flows emerged into an informed market which made it plain to market participants that a problem had emerged in the quality of the Millmerran ash (as extensively outlined in the principal liability judgment). I concluded at [3236] that the provisions of the OMC had the effect or likely effect of substantially lessening competition from 30 September 2002 until 31 December 2003. 167 At Pt 50 of the principal liability judgment, I set out at [3232] to [3236] other conclusions concerning the OMC, which for ease of convenience are set out below: PART 50 The ultimate conclusions 3232 I am satisfied that a substantial purpose of entry into the Original Millmerran Contract on 30 September 2002 was to prevent a rival entering into a contract with MPP for access to unprocessed flyash and to prevent a rival from entering the SEQ concrete grade flyash market with the supply and sale of Millmerran processed ash. I am satisfied that although Pozzolanic sought to risk manage its exposure to a loss of a contract with TEC in the tender process, and thus a loss of its historical source of supply of flyash, nevertheless a substantial purpose of entry into the Millmerran Contract was each of the two purposes I have described. More importantly, however, those purposes were purposes of the identified provisions of the Millmerran Contract as discussed in these reasons and particularly the provisions by which Pozzolanic was entitled to a substantial volume of concrete grade flyash from the Millmerran Power Station processed out of raw ash produced at that station, each year. 3233 I am satisfied that upon entry into the Original Millmerran Contract containing the identified provisions, the effect and likely future effect of the provisions would be to substantially lessen competition in the SEQ concrete grade flyash market as that contract, with those provisions, would have the immediate effect of discouraging third party regular and consistent access to Millmerran unprocessed ash for processing. 3234 However, the effect and likely effect of the provisions would, like the effect of entry itself into a contract per se, dissipate as information flows emerged in the market which made it plain to market participants that a problem had emerged in the quality of the Millmerran ash of the kind extensively discussed in these reasons. At that point, the provisions, prima facie, did not operate to have the effect or likely effect of substantially lessening competition, in the with and without sense already discussed. The effect or likely effect upon competition in connection with the utility and possible use of the Millmerran flyash was an effect or likely effect of the compromised quality of the Millmerran ash itself. As I have found, the quality problems with the ash in terms of its colour and variability were not a confected or manufactured problem. They were real and enduring problems. They were the subject of extensive work and analysis by both MOC and Pozzolanic and professional third party analysts. The Millmerran ash was not substitutable for the Tarong ash, in the sense that it could not be applied as a substitute for the diversity of applications to which the Tarong ash could be applied. Mr White thought that the Millmerran ash was capable of being used in "niche" applications, in the context of his strategy paper. Others within Cement Australia thought that the Millmerran ash would be capable of use in applications which were not sensitive to colour. Others thought that the question was not so much simply one of use in non-colour prominent applications but a concern more generally that concrete producers would simply not want to be supplied with (and would not accept) dark ash one week, and light ash the next, as a general supply proposition. Consistency in the quality of the ash was seen as a critical matter. 3235 It is true that ultimately the Millmerran flyash was able to be used and a supply arrangement was ultimately struck which provided for substantial volumes of Millmerran ash to be supplied and used. However, I am satisfied that viewed in the period 2003 to 2005, that once the colour problem emerged by the end of 2003 with the problem reflecting the features described in the various reports, the effect or likely effect of a substantial lessening of competition by reason of the provisions of the Millmerran Contract had dissipated and had become displaced by an effect or likely effect upon potential contestability through the use of Millmerran ash, by reason of the colour variability of the ash itself. 3236 I am satisfied that Pozzolanic entered into the Original Millmerran Contract and adopted the identified provisions for at least a substantial purpose of preventing rival entry as earlier described, and I am satisfied that the provisions had the effect or likely effect of substantially lessening competition from 30 September 2002 until about the end of 2003. 168 In the result: (1) Pozzolanic contravened s 45(2)(a)(ii) of the Act by making the OMC containing provisions that had the purpose and likely effect of, and until 31 December 2003 the effect of, preventing a rival from securing access to Millmerran ash (in the unprocessed ash market) and preventing a rival of QCL from entering the SEQ cgf market and substantially lessening competition in those markets: see Declaration 6; [5] of these reasons. (2) QCL, by funding Pozzolanic with knowledge of the purpose, likely effect and effect until 31 December 2003, was knowingly concerned in all elements of that conduct: see Declarations 6 and 7; [5] of these reasons. (3) Pozzolanic gave effect to the provisions having the purpose, likely effect of, and until 31 December 2003 the effect of, substantially lessening competition: see Declarations 6 and 8; [5] of these reasons. (4) QCL gave effect to the provisions by funding Pozzolanic's day-to-day performance of the contract, relevantly in the period 30 September 2002 to 31 December 2003: see Declarations 6 and 9; [5] of these reasons. (5) PIPL, by electing to give, and by entering into the guarantee of Pozzolanic's obligations to MPP under the OMC containing provisions which it knew that the purpose, likely effect and until 31 December 2003, the effect of, substantially lessening competition, was knowingly concerned in Pozzolanic's contravention of s 45(2)(a)(ii): see Declarations 6 and 10; [5] of these reasons. (6) The relevant provisions of the OMC ceased to have the effect and likely effect, as found, of substantially lessening competition, by 31 December 2003. The Amended Millmerran Contract 169 On 28 July 2004, Pozzolanic and Cement Australia took the step of amending the OMC by extending the cl 2.2 deadlines (see [3020] – particularly cl 2.2(b) requiring Pozzolanic to "notify [MPP] not later than 9 months after the Substantial Completion of Unit 1 whether or not the [Millmerran flyash] falls within the Acceptable Range for [cgf], and can be practically and economically converted into [cgf]"); by extending the OMC by another year; by deleting the termination provision and adopting a new termination protocol that would operate on the footing of an assessment of the quality of the ash once tested after processing, after the construction and operation of the classifier. As to the detail of the amendments to the OMC see [2563] to [2568] of the principal liability judgment. 170 The ACCC contended that Cement Australia by causing Pozzolanic to enter into the "Amended Millmerran Contract" (sometimes called the "amended OMC") and waive its rights to bring the OMC to an end, contravened s 46(1)(b) and (c) of the Act having regard to factors summarised at [2418] and [2419] of the principal liability judgment. 171 The ACCC failed to make that case good. 172 The ACCC also contended that Pozzolanic had contravened s 45(2)(a)(ii) by entering into the Amended Millmerran Contract as provisions were adopted which had the purpose and effect, or likely effect, of substantially lessening competition in the SEQ unprocessed ash market and the SEQ cgf market. Pozzolanic was said to have contravened s 45(2)(b)(ii) by giving effect to those provisions. Cement Australia was said to have contravened s 45(2)(b)(ii) by giving effect to the provisions by funding Pozzolanic's entry into the Amended Millmerran Contract. CA Holdings, Cement Australia, PIPL and Mr Leon were said to have been knowingly concerned in Pozzolanic's contraventions of s 45(2) of the Act. 173 As to all of these matters, I examined the extensive factual controversies at [2425] to [2662]. The examination of the evidence on those questions involved (among many other things) examining the evidence of Mr Clarke and Ms Collins (and documents produced by Mr Adams, Mr Klose and Mr Chalmers, among others). 174 I made findings at [2663] to [2694]. 175 Although Mr Clarke and Ms Collins gave evidence that the purpose of entering into the Amended Millmerran Contract with its amended terms and the continuing operation of the unamended terms, was to meet growing demand for flyash in northern NSW, I found that that economic case was "overstated" and "over-emphasised" as a rationale for entering into (making) the amended agreement: [2669]. I found that the judgments made by Mr Clarke and Ms Collins were not based on any informed analysis. Although I found at [2670] that Mr Clarke and Ms Collins believed that at "some point in the life of the contract" the Millmerran ash might be needed, I found that, as to the true "burden of the imperatives actually forming the basis for their decision" (and particularly Mr Clarke's operative decision) to affirm the contract as amended, their evidence could not be accepted because they were "simply confused" about the reasons for deciding to make the Amended Millmerran Contract. I was satisfied, of course, that neither Ms Collins nor, especially, Mr Clarke, would consciously give evidence before Australia's national superior trial court that was not a correct explanation of the actual and substantial purposes informing the adoption of the provisions of the Amended Millmerran Contract. Thus, they must have been simply "confused" about it. 176 At [2671] to [2674], I said this: 2671 Notwithstanding Mr Clarke's reasoning based on his largely intuitive view of a need for the Millmerran ash at some point during the contract term (or as it might be extended), it is nevertheless plain that a substantial purpose of Mr Clarke in deciding that Pozzolanic enter into the amended contract (although not the only purpose) was a purpose of preventing a competitor from securing a commercial relationship with Millmerran Power Station and obtaining access to Millmerran ash and then entering the market for the sale of concrete grade flyash in the SEQ concrete grade flyash market in competition with Cement Australia. Ms Collins was sounding the same warning bell for the Directors. Mr Clarke gave evidence about his high regard for Mr Chalmers's views about market developments and supply/demand matters related to sales. Mr Chalmers had warned of the effect upon sales and margins should Callide C fall to a competitor. Global Cement was in mind at the time. Mr Chalmers had also warned about the steps Neilsens were taking. Ms Collins had warned of the effect on price and margins should a competitor enter the market through an arrangement with Millmerran in the event that Pozzolanic/Cement Australia walked away from Millmerran. 2672 I do not propose to repeat all of the chronological and factual examples of these concerns otherwise set out in this Part. I have had regard to all of them. It is enough to say that based on the documents and those matters accepted by Mr Clarke and Ms Collins, that the consequences for Cement Australia of not amending and extending the Millmerran Contract, in terms of competitor entry and the spectre of rivalry based on Millmerran ash was a matter Ms Collins was particularly concerned about and felt ought to be agitated with Mr Clarke and built into the Board paper for the Directors. Ms Collins had the carriage of the development of the Board Briefing paper in the period up to the making of the decision in July 2004, until Mr Adams was retained to assume the role of re-writing the paper and looking at financial data and re-casting the paper on the preferred "justification" basis. 2673 I do not accept that the remarks of Ms Collins about a $10 price reduction for flyash and the consequences for Cement Australia's EBIT margin in the flyash business in SEQ were simply a constructed "sensitivity" calculation of the effect upon Cement Australia's EBIT margin if one assumed a price reduction of $10 per tonne for one of a hundred possible reasons. Ms Collins was saying in plain and unmistakeable terms to Mr Clarke that should a competitor enter (upon Pozzolanic walking away from Millmerran) the price would likely drop by $10 per tonne and the effect upon the EBIT margin in the flyash business would be significant. Ms Collins had asked Mr Chalmers for his view on the likely volumes lost at Millmerran should a competitor secure access to the ash. 2674 Mr Clarke was also astute to Boral's potential entry at Millmerran. Mr Clarke found Global Cement's agitations and its success at Callide "worrying". Mr Clarke and Ms Collins expressly deny that competitor entry and the possible consequences for price and margins formed a consideration in the reasoning for deciding to amend and extend the Millmerran Contract. I do not accept their evidence on this issue as it cannot stand in the face of the documents but I do accept that each of them looking back to the events believed that to be so. However, it cannot be so when all of the evidence is considered, and in this sense Mr Clarke and Ms Collins although seeking to assist the Court's analysis of the events, are simply confused. 177 At [2675], I made findings about how Mr Clarke came to put the Amended Millmerran Contract in place. 178 At [2676], I said this: 2676 A substantial purpose of Mr Clarke in Pozzolanic's entry into the amended Millmerran Contract was that of preventing competitor entry at Millmerran and especially Boral's entry at Millmerran. Mr Clarke says that Mr Leon was content to adopt Mr Clarke's reasoning and his view of it. I am willing to accept that Mr Leon accepted Mr Clarke's decision-making but I am not satisfied on the evidence up to the end of July 2004 of Mr Leon's purpose in electing to accept Mr Clarke's view of the Millmerran position. 179 At [2694], I said this: 2694 However, I am satisfied that a substantial purpose of Mr Clarke in amending the Millmerran Contract was a purpose of hindering or preventing a rival from securing a relationship with MPP/MOC (and thus access to Millmerran unprocessed flyash) for processing for sale into the concrete grade flyash market. Mr Leon did not give evidence. I infer his evidence would not have helped Pozzolanic or Cement Australia. I accept that based on Mr Clarke's daily interaction with Mr Leon, Mr Clarke had a proper basis for believing that Mr Leon accepted and respected Mr Clarke's abilities and his assessment of decision-making on questions such as whether the Millmerran Contract ought to be amended or not. I find that Mr Leon gave his authority to Mr Clarke to amend the contract and instructed him to put in place the proposed changes to the particular clauses. The operative purposes on the evidence were those of Mr Clarke. The evidence does not reveal Mr Leon's own thinking on the purpose for amending the Millmerran Contract but he instructed Mr Clarke to put the amendment in place and a substantial purpose of Mr Clarke was to substantially lessen competition in both the upstream and downstream markets. 180 At Pt 50, I made these further findings: The ultimate conclusions … 3237 As to the Amended Millmerran Contract, I am satisfied that a substantial purpose of entry into the variation provisions of 28 July 2004 carrying with it the affirmation of the earlier provisions of that contract was to prevent a rival from obtaining access to unprocessed Millmerran ash for processing and to prevent a rival from entering the SEQ concrete grade flyash market with Millmerran processed flyash. I am satisfied that at the moment in time when the amendment was made Cement Australia's relevant Senior Managers as earlier described were proceeding on the assumption that the ash problem would ultimately be solved and that the ash would be contestable ash. A substantial purpose, in those circumstances, of the amendment was to preserve a continuing relationship with MPP on the footing of the established provisions of the contract but as varied by the amended terms, and a substantial purpose of doing so was to prevent rival entry at Millmerran having regard to the likely impact upon Pozzolanic's price, revenue and margins should a rival secure access to Millmerran unprocessed ash and then enter the SEQ concrete grade flyash market with Millmerran cgfa. Another purpose, plainly enough, was to put in place arrangements to enable the parties to the contract to come to grips with solutions to the colour problem. Nevertheless, in the context of the particular provisions, I am satisfied that a substantial purpose of the inclusion of those varied provisions of the new arrangement was each of the purposes just described. 3238 However, I am not satisfied that the provisions of the Amended Millmerran Contract otherwise carrying forward the identified provisions of the Original Millmerran Contract had the effect or likely effect of substantially lessening competition because, at that point, the effect upon competition was a function of the uncertainty surrounding the quality of the ash itself. 181 See also [3259]. 182 In the result: (1) Pozzolanic contravened s 45(2)(a)(ii) of the Act by making the OMC as amended containing provisions which had the purpose of preventing a rival of Pozzolanic from securing access to Millmerran unprocessed ash and preventing a rival of Cement Australia from entering the SEQ cgf market and thus had the purpose of substantially lessening competition in each market: Declaration 12. (2) Cement Australia, by causing Pozzolanic to enter into the Amended Millmerran Contract with knowledge of the purpose of the provisions was knowingly concerned in Pozzolanic's contravention of s 45(2)(a)(ii): Declaration 13. (3) Pozzolanic, by giving effect to the provisions from 28 July 2004 until 30 April 2005, contravened s 45(2)(b)(ii): Declaration 14. (4) Cement Australia, by causing Pozzolanic to give effect to the provisions of the Amended Millmerran Contract as described at Declaration 12 for the period from 28 July 2004 to 30 April 2005 contravened s 45(2)(b)(ii): Declaration 15. The Tarong Contract of 26 February 2003 between Pozzolanic and Tarong Energy Corporation ("TEC") 183 The relevant terms of the contract are set out at Pt 15 [931] of the principal liability judgment. At [1965] to [2002], I set out some of the events leading up to the making of the Tarong Contract. 184 At [3089] to [3136], I describe the circumstances which led to the adoption of the relevant provisions. 185 Although Pozzolanic and QCL sought to secure exclusivity in the supply of concrete grade flyash (in the propositions put to TEC), they sought to win the contract with TEC because Pozzolanic had been operating exclusively at Tarong since about 1984. The decision-makers within QCL and Pozzolanic regarded winning the contract with TEC (which carried with it Tarong North) as natural and important to business continuity in QCL's capacity to supply flyash to the three major concrete producers which accounted for 72% of QCL's sales of flyash at the time of entry into the contract. By the September 2002 Board paper (discussed later in these reasons), the essential commercial terms of the draft of the Tarong Contract were said to be: eight years from 1 December 2003 with possible three year extensions by agreement; a fixed payment of $2.8 million per annum (indexed); a volume guarantee of 200Kt per annum; and plant installed within 12 months of normal operating conditions (of Tarong North). On 1 October 2002, Mr Ridoutt sent an email to Mr Chalmers, Mr Wilson, Mr White and others advising that a revised contract had been received from TEC. Mr Wilson expressed the hope that the negotiations would conclude in October 2002 and approval would go to the TEC Board in November 2002. Mr Wilson observed in that email: "no longer have exclusivity so we will have to be more creative with the contract to cover our risk" [3094]. At [3094], I observe: … Had Mr Wilson been successful in achieving exclusivity in the proposed arrangements with TEC, as it had sought in its tender, Pozzolanic would not have been exposed to the risk of supply of ash by TEC to third parties, and Pozzolanic and QCL would not have needed to have mitigated the risk of third party access to Tarong ash, in creative ways under Pozzolanic's contract with TEC. 186 As to the provisions and the ACCC's contentions in relation to them, I said this at [3096] to [3103]: 3096 The Commission identifies these provisions as having the purpose, effect or likely effect of substantially lessening competition in the relevant market. First, cl 2 creates a term of five years from 1 March 2003. Clause 2 also provides that either party may terminate the agreement by giving the other party 12 months written notice "at this time" which suggests that notice might be given up to 1 March 2008 of 12 months notice of termination. Mr Collingwood in his submission to the Board for approval of the contract regarded the term as a six year term. Clause 15 provides that the agreement may be extended in increments of three years "upon the agreement of both parties" and any such agreement to extend must be reached no later than 12 months prior to the date on which the contract (or any extension) would otherwise expire. Second, during the term TEC agrees to sell and Pozzolanic agrees to buy "any and all Concrete Grade Fly Ash" [Pozzolanic] obtains from the Ash Transfer Points and processes in [Pozzolanic's] plant [emphasis added]: cl 3.1. The term Concrete Grade Fly Ash is defined to mean Fly Ash extracted by Pozzolanic from the TEC Ash Transfer Points and capable of being processed in Pozzolanic's plant for use as cementitious materials, for use with Portland and blended cement and as shown in AS 3582.1 (1998): cl 1.1. The term Fly Ash, adopted within the definition of Concrete Grade Fly Ash in cl 1.1, is defined to mean solid fly ash material extracted from the flue gases produced from the coal fired boilers at the Tarong power station and the Tarong North power station. The TEC Ash Transfer Points are defined to mean the points of connection of Pozzolanic's plant to the precipitator hoppers on Units 1 to 4 at the Tarong power station and any other points of connection approved by TEC at which Pozzolanic takes possession of Fly Ash from the Ash Disposal System. The Ash Disposal System is defined as the infrastructure adopted at Tarong and Tarong North for the disposal of ash from either station. 3097 It follows that, under these provisions, Pozzolanic was entitled to any and all solid fly ash material, extracted from the flue gases at either power station, taken by Pozzolanic at the points of inter-connection between Pozzolanic's plant and the precipitator hoppers on Units 1 to 4 at the Tarong power station (and any other points of inter-connection approved by TEC at which Pozzolanic would take possession of all or any of Tarong's solid fly ash material extracted from the flue gases) and capable of being processed in Pozzolanic's plant for use as cementitious materials conforming to AS 3582.1 (1998). All Reject Ash would remain the property of TEC and TEC would be entitled to supply or sell it to any other person for any use or application. 3098 These are the defining features of the rights granted under cl 3.1 having regard to the definition of the terms contained in cl 1.1. 3099 Third, by cl 12.2 Pozzolanic is to pay TEC, for the right to take Fly Ash, a base amount each quarter in each year of $600,000 (escalated by CPI) subject to the adjustment mechanism in cl 12.3 so that the total amount payable under cl 12.2 would not exceed the following payments. Column 1 Column 2 Payment Total volume of Fly Ash removed per annum per annum Less than 50,000 tonnes $2.6 Million 50,000 to less than 150,000 tonnes $2.5 Million 150,000 to less than 350,000 tonnes $2.4 Million 350,000 to less than 450,000 tonnes $2.2 Million 450,000 tonnes or more $2.1 Million 3100 Fourth, as to Tarong North, cl 4.4 provides that as soon as possible after (either 26 February 2003 or 1 March 2003) Pozzolanic must reasonably determine whether Tarong North Fly Ash is suitable for use with Portland cement (that is, confirms to AS 3582.1–1998), and if so suitable, TEC must "request" Pozzolanic to, "establish" a plant to extract Concrete Grade Fly Ash from the Tarong North Fly Ash, to a capacity of equal to, or greater than, the volume of Fly Ash removed from Precipitator Zone 1 hoppers of a fully operational unit at Tarong; and to, "construct" the plant according to TEC approved drawings and connect that plant to the Ash Disposal System at a TEC approved point of inter-connection. 3101 Fifth, by cl 8.3, if the quality of the six monthly average of Fly Ash available from the Tarong North Ash Transfer Points (under normal commercial operating load conditions), after processing, does not conform to AS 3582.1, or if the quantity of Concrete Grade Fly Ash is not sufficient to support "commercially viable operations", the parties agree to undertake good faith negotiations to "achieve an adjustment to the contract conditions". However, if the Tarong North Fly Ash is not suitable for use in Portland cement (and presumably the clause is intended to say "after processing"), or if Pozzolanic does not establish a plant, Pozzolanic is not entitled to any reduction in any of the amounts payable under the agreement. By cl 8.7, Pozzolanic must remove flyash from each of the "Ash Transfer Points" prior to flyash accumulating in the hoppers to the maximum design storage level and Pozzolanic when extracting flyash from the Ash Transfer Points, must ensure that all flyash is completely extracted from the ash storage hoppers every 24 hours. 3102 Sixth, by cl 17.1, Pozzolanic may at any time after 1 September 2004 terminate the agreement by giving TEC 12 months' written notice of termination with termination effected at the end of the notice period.` 3103 Apart from these provisions, cl 7 deals with the topic of "Run of Station Non Concrete Grade Fly Ash". Clause 7 provides that at the request of TEC, Pozzolanic will use its best endeavours to provide ROS non-concrete grade flyash ("rosncgfa") from Pozzolanic's plant to either TEC or a third party nominated by TEC, and the clause sets out seven functions included within that obligation. They include processing and handling rosncgfa through Pozzolanic's plant to the full limit of the capacity of Pozzolanic's plant (cl 7.1(a)); grading rosncgfa into grades requested by TEC (to the extent possible); scheduling arrival, loading and departure of vehicles of TEC and third parties; providing suitable transport if required and available at an agreed price; supplying rosncgfa at temperatures requested by TEC (to the extent possible); loading TEC and third party vehicles presented at Pozzolanic's plant; and otherwise cooperating with TEC and third parties and using its best endeavours to minimise disruption to the operation of Pozzolanic's plant, with the intention that Pozzolanic will coordinate, manage and provide all services directly or indirectly required to be provided to facilitate the removal of rosncgfa from the Tarong site. By cl 1.1, the term Run of Station Non-Concrete Grade Fly Ash is defined to mean Fly Ash removed from the Ash Transfer Points by Pozzolanic and identified for supply to TEC or third parties in an unprocessed form or in a form for use in applications other than as Concrete Grade Fly Ash. 187 At [3142] to [3154], I made findings on the issue of purpose concerning the relevant provisions of the agreement. Having regard to the importance of the Tarong Contract, and for ease of reference, I set out below the relevant parts of [3142] to [3154]: 3142 I am satisfied that a substantial purpose which actuated Mr Wilson and Mr Ridoutt in framing the terms of the bid for the Tarong Contract was the purpose of having continuity in the product it knew in order to continue to supply that product to QCL's concrete customers, and preferably exclusive access to that ash either expressly or in the terms of exclusivity as Mr Maycock understood that notion. I am satisfied that this was a substantial purpose of Mr Wilson and Mr Ridoutt and ultimately Mr Arto in the way in which he relied upon Mr Wilson and Mr Ridoutt, and also a purpose of Mr Maycock. … 3144 The question, however, is not simply whether there were good business reasons for Pozzolanic wanting to secure a contractual relationship with TEC. I am satisfied that the business objective of Pozzolanic in entering into the contract was to have concrete grade flyash to sell in SEQ. However, the real question is whether the adoption of the identified particular provisions in the contract were included for a substantial purpose of preventing others from entering the SEQ concrete grade flyash market, and in aid of that purpose, a purpose of preventing others from obtaining access to unprocessed Tarong flyash for processing, for entry into the SEQ concrete grade flyash market, and thus a substantial purpose of substantially lessening competition in those markets. 3145 The term of the contract was five years (and on TEC's view probably six years by operation of the notice provision). Pozzolanic and QCL certainly wanted an exclusive agreement that would deny Tarong concrete grade flyash to others. That proposition was pressed with TEC but not accommodated by TEC. There was no provision for express "exclusivity" although the measure of Pozzolanic's rights granted under the contract, was a right to "any and all" solid material extracted from Tarong and Tarong North flue gases, capable of being processed through Pozzolanic's plant for use as supplementary cementitious materials as shown in AS 3582.1, that is, concrete grade flyash recovered through Pozzolanic's plant from the raw flyash. All of the solid material extracted from the flue gases of each power station, collected in the hoppers, could be processed in Pozzolanic's plant. Some of it would then be of use as concrete grade flyash falling within AS 3582.1, and some of it would not and would thus be reject ash. Nevertheless, Pozzolanic enjoyed the right to any and all of the Tarong and Tarong North "Fly Ash" extracted from the hoppers for processing in Pozzolanic's plant for use in conformity with AS 3582.1, from the raw Tarong and Tarong North flyash. Pozzolanic would pay $2.6M (indexed) if it actually took less than 50Kt per annum but that was never going to be the case on any orthodox going concern basis. The likely band would be either 150Kt to less than 350Kt or 350Kt to less than 450Kt attracting payments of $2.5M or $2.4M respectively. 3146 The rights granted under the contract (and related definitions) were framed by TEC and accepted by Pozzolanic during the negotiation process described earlier. TEC formulated the incentive payment schedule to encourage Pozzolanic to extract and sell the highest volume of concrete grade flyash, from Tarong ash, as possible. Although TEC would not grant exclusivity to Pozzolanic, it wanted to see, and agitated for, provisions in the contract that created clear commercial incentives for Pozzolanic to remove as much concrete grade flyash as it possibly could from the Tarong raw ash to meet the perceived demand for concrete grade flyash in South East Queensland, rather than flyash from any other source (and presumably the anticipated entry of Millmerran flyash). These incentives, in turn, encouraged Pozzolanic to assert as much control over the raw unprocessed flyash from each station, as necessary, in order to process out of it "any and all" concrete grade flyash capable of use in conformity with AS 3582.1. Although a substantial volume of unprocessed flyash would continue to be produced each year at Tarong, and a substantial additional volume would begin to be produced from Tarong North, the rights clause, and the incentive schedule, encouraged Pozzolanic to try and extract concrete grade flyash in the aggregate of 450Kt or more to attract the lowest level of payment at $2.1M. Under the rights clause of the contract with Pozzolanic, if any third party was capable of installing plant at Tarong (or later Tarong North), and extracting concrete grade flyash by processing Tarong ROS ash, each tonne of concrete grade flyash so obtained would be a tonne of product that Pozzolanic had the right to extract from the raw ash by processing through its own facilities. 3147 Pozzolanic and QCL perceived at this time that it would require about 330Kt of concrete grade flyash in 2003 for the SEQ market. About 40Kt of that would come from Swanbank. Subject to determining the utility of the Millmerran ash, the balance of flyash supplied by QCL would come from Tarong as would any incremental growth in demand, over time, due to the sorts of factors Mr Arto and Mr Maycock spoke about. Also, Pozzolanic and QCL took into account the extent to which some reserve capacity might be needed although the supplemental 20% buffer did not properly emerge, at least in those terms, until 2004. The Tarong Power Station would produce approximately 1.4 million tonnes of unprocessed flyash each year. Pozzolanic by cl 7.1 had assumed a best endeavours obligation of providing ROS ncgfa from its plant to TEC or TEC nominated third parties including the services of processing and handling that ash through its plant to "the full limit of the capacity" of Pozzolanic's plant. The limits of the "best endeavours" obligation would, no doubt, be determined by the extent to which that ash would be required by Pozzolanic for processing for the production of concrete grade flyash for its own use in supplying its customers. 3148 Pozzolanic's entitlement to first accommodate its own requirements, at any and all times, would no doubt make it difficult for a third party to secure consistent regular access to run-of-station ash for processing into concrete grade flyash in circumstances where an existing contractor had rights of the kind enjoyed by Pozzolanic. "As available" transactional sales would not enable a supplier to confidently enter the SEQ concrete grade flyash market as concrete producers would want regular supplies of flyash to their batching plants to meet the requirements of servicing concrete pours on projects with great regularity if not each day, every other day. 3149 Clause 17.1 created the mechanism under which Pozzolanic could give written notice to TEC terminating the contract at any time after 1 September 2004 with the contract expiring 12 months later. 3150 If the Tarong Power Station was capable of producing about 1.4 million tonnes of raw flyash and Tarong North was expected to produce about 500Kt of raw flyash when commissioned and operational, it is difficult to see why Mr Ridoutt and Mr Wilson found it necessary, as an aspect of securing the objective of having ash to sell at all, from the beginning of March 2003, to include a rights provision framed on the basis that Pozzolanic would have the right to buy "any and all" flyash meeting AS 3582.1 recovered by Pozzolanic through its processing plant, extracted from the 1.9 million tonnes of raw flyash produced at both power stations over the life of the contract. … 3152 Nevertheless, I am satisfied that not only did Mr Ridoutt and Mr Wilson pursue the quite natural and rational objective (and thus have the purpose) of winning the Tarong Contract to secure a continuing source of Tarong concrete grade flyash to enable the flyash business to continue to function and supply the company's customers, but a further substantial subjective purpose in including the terms earlier described was to "creatively" or otherwise (in light of the loss of exclusivity) secure a position where "provisions" would be adopted that gave Pozzolanic (and in effect, QCL) contractual control over access to the total volume of raw flyash produced from both power stations for the life of the contract for priority processing through its own plant for the priority extraction, as it chose, of all concrete grade flyash capable of being extracted from the raw flyash at both stations. That provision was subject only to the "best endeavours" obligation under cl 7.1 concerning non-concrete grade flyash. 3153 Pozzolanic was the incumbent producer and it had its plant and equipment connected to all of the transfer points on all hoppers in Zones 1, 2 and 3 at Tarong and enjoyed the right to connect to all the hoppers at Tarong North. Although the imperative of securing a contract at Tarong, first, to have ash to sell in the immediacy of the post-Tarong tender period (and before Millmerran might come on stream, if useable) and, second, to secure access to the familiar and reliable Tarong ash as the source of proven market ash, was a fundamental objective for entry into the Tarong Contract, I am satisfied that the ubiquity in the scope of the rights provision was included for a substantial purpose of preventing or discouraging a rival from obtaining access to Tarong and Tarong North raw flyash for processing (behind Pozzolanic and QCL), and to prevent a rival entering the SEQ concrete grade flyash market with processed Tarong or Tarong North flyash. Thus, a substantial purpose of the formulation and inclusion of cls 2, 3.1, 12.2, 12.3, 4.4, 8.3 and 17.1, was a substantial purpose of substantially lessening competition in each market. These purposes were the subjective substantial purposes of Mr Ridoutt and Mr Wilson (among other purposes). The material does not reveal the decision-making process about the particular provisions as between Mr Ridoutt and Mr Wilson on the one hand and Mr Arto and Mr Maycock on the other. However, Mr Arto has made plain the degree of inter-dependency between him and Mr Ridoutt and Mr Wilson on these questions, and Mr Maycock fundamentally regarded these questions such as the precise formulation of the particular provisions as very much "matters for management". 3154 Neither Mr Ridoutt nor Mr Wilson was called to give evidence about the business purposes for including the identified provisions or, more generally, the considerations, objectives or purposes in Pozzolanic entering into the contract with TEC. I draw the inference that the failure to call Mr Ridoutt and Mr Wilson on these topics suggests that their evidence would not have been helpful to the respondents. 188 As to the effect and likely effect cases, I made findings at [3162] to [1383]. Again, having regard to the significance of the Tarong Contract in the unprocessed flyash market and the SEQ cgf market, and for ease of reference, I set out below the conclusions: Conclusions 3162 I am satisfied that cls 2, 3.1, 12.2, 12.3 and 17.1 (together with the cl 1.1 definitions) of the contract as they relate to the Tarong Power Station had the effect when the contract was made, and would be likely to have the effect of discouraging, hindering or preventing a third party from seeking to establish processing facilities (extraction and collection equipment, pumps, a classifier and related plant and equipment) at the Tarong site (or off-site) so as to collect and take raw unprocessed flyash from Zones 1, 2 or 3 into a processing facility for processing and extracting or winning concrete grade flyash for supply into the SEQ concrete grade flyash market. 3163 The essential elements of that conclusion are these. 3164 First, the provisions conferred a right to any and all "Fly Ash" as defined in the way explained earlier both in relation to Tarong (and Tarong North) for the extraction of concrete grade flyash out of raw ROS flyash using Pozzolanic's extractive plant and equipment. Pozzolanic enjoyed, by force of the provisions, the right to take all of the raw flyash into its processing facility to extract whatever volume of concrete grade flyash it wanted. It is no answer to a contention that identified provisions of a contract have an effect at the date of making the contract (or a likely future effect), that a good business reason subsisted in Pozzolanic (in making the contract with those provisions) of wanting or securing access to any or all of the concrete grade flyash that might be able to be extracted from any or all of the raw flyash containing particles meeting the description as concrete grade flyash in its own processing facility, and thus the provisions came to be included in the contract in order to serve that business end. Every contracting party that includes provisions in a contract designed to fully satisfy its own perceived need to be able to supply 95% of the relevant market for a product, produced using a particular input, no doubt fully believes that those business objectives are best served by such an arrangement. 3165 The only question (as to this limb, s 45(2)(a)(ii)) is whether the identified provisions had the effect or would be likely to have the effect, viewed at the date of making the contract, of substantially lessening competition in a relevant market. 3166 Second, the provisions had that effect and would, as to the future, be likely to have that effect because the immediate scope, and the likely future scope, of rivalry characterising the competitive process in the SEQ concrete grade flyash market, was and would continue to be diminished by the operation and effect of the provisions because any third party seeking access to Tarong Power Station raw flyash, as a feedstock for processing, for entry into the SEQ concrete grade flyash market, could have no confidence of real, genuine or effective access to any particular volume of that ash; at any particular time; with any degree of certainty; with any real degree of orthodoxy in planning the conduct of a business of processing raw ash to extract concrete grade flyash for supply each day to batching plants operated by concrete producers undertaking concrete pours each day or every other day. 3167 Concrete grade flyash is material extracted from the relevant power station ash for regular supply to buyers who are engaged in the "ready-mix" daily supply of a concrete mix. The evidence in this case makes plain that suppliers of concrete grade flyash as an input feedstock for the production of concrete must be able to obtain access to a regular and consistent (in terms of quality) source of raw flyash for the production or extraction of concrete grade flyash, rather than on an "as available" or "spot purchases" basis if such a person wants to conduct a business (comprising a sequence of regular transactions) of supplying concrete grade flyash to concrete producers. Mr White was of that view. He recognised that continuity, consistency and regularity were critical matters in the conduct of such a business. 3168 Pozzolanic's contractual command and control position over any and all volumes of raw Tarong ash, by force of the provisions, for first taking any and all Tarong ash into its own processing facilities for the extraction of any or all concrete grade flyash capable of extraction in those facilities from that ash, in priority to any other third party off-taker, either regularly or episodically, meant that the systemic arrangements a third party would need to see in place to "enter" at Tarong could not be put in place because a new third party entrant at Tarong would always be susceptible of being placed second behind Pozzolanic at all times or at any time. Also, the command and control position Pozzolanic enjoyed over any and all of the Tarong "Fly Ash" for first processing in its own facility (to the extent capable of extracting concrete grade flyash from raw Tarong ash through that facility) made it possible for discretionary decision-making by Pozzolanic that would, at all times or at any time, enable Pozzolanic, as it chose, to displace a third party in favour of Pozzolanic's prior rights. 3169 Pozzolanic's enjoyment and exercise of its priority rights during all of the period of the contract would become the daily measure of the commercial uncertainty in any third party's position. 3170 None of the incentives conducive to third party entry were present in the arrangements between Pozzolanic and TEC. The best test of this notion that Pozzolanic's first rights had, and were likely to have, the effect of discouraging third party entry at Tarong is that Mr White would not have wanted to enter, standing behind Pozzolanic's prior rights, as a theoretical third party off-taker at the Tarong Power Station in trying to conduct a new concrete grade flyash supply undertaking. 3171 A proposition was put to Mr White in evidence about the operation of the Tarong Contract to the effect that if a second off-taker had examined the question of what non-concrete grade ash such a person might expect to get for processing, day-to-day, at and from Tarong, standing behind Pozzolanic's rights, the answer would have been "no available ash". Mr White did not accept that proposition because the volume of ash taken from Zone 1 at Tarong by Pozzolanic might, for example, have been 1,000 tonnes which would have left another 2,500 tonnes of ash available for a second off-taker. Mr White took the view that a second off-taker would have been able to connect its own pumping and transfer equipment into Zone 1, connected to its own classifier. Mr White was asked this question: "Are you suggesting that a second off-taker would have regarded that [connecting its own pumping and transfer equipment into Zone 1] as being economically feasible?" Mr White said: "Well, I think … obviously, there would have to be some form of amended arrangement to provide them some guarantee of volume and probably the best arrangement would have been to [allocate] hoppers within each unit to one party or another in the way that's now proposed [in terms of the new tender]" [emphasis added]. Mr White said that other than those sorts of arrangements, there was no reason why it would not have been feasible for a second off-taker to participate at Tarong. That notion of the feasibility of a second off-taker participating at Tarong was further examined with Mr White in this way (T, p 2467, lns 12-19): Q So just let me understand. Do you agree that unless Pozzolanic's existing contract was amended so that a third party could be guaranteed volumes of ash, it was not economically feasible for a third party to be a second off-taker at Tarong Power Station? A I would say that there would have to – if I was a third party off-taker, I would want some arrangement, but I would also, at July 2006, be reflecting that the agreement only had 18 months to run, and I would probably be negotiating around the renewal or retendering of that agreement in terms of any arrangement that I would make. [emphasis added] 3172 Mr White was asked whether he had formed a view during the life of the Pozzolanic Contract about whether a third party would be interested in being a second off-taker at the Tarong Power Station. Mr White said that the Pozzolanic/Cement Australia "internal ash team" had considered that question. Mr White was asked (T, p 2468, lns 40-46): Q Are you saying you [Mr White and the internal ash team] formed the view that it was likely the second off-taker might want to build a classifier and wait behind Pozzolanic at Tarong Power Station? A I don't think we ever viewed or expressed it in those terms because clearly, that wouldn't be attractive. I think our view was that if someone was to obtain a right of access – and it seemed to be feasible at Tarong North, so I'm not sure why not at Tarong – then we would prefer that right of access to be at Tarong and, therefore, obviously, we viewed it as a feasible option. [emphasis added] 3173 Even though Mr White (and the Cement Australia ash team) viewed it as a "feasible option" for a third party to build a classifier and obtain access to Tarong ash for processing, with Pozzolanic's contractual rights derived from the provisions in place as described, it seems to me significant that Mr White, as an experienced operator and manager of an undertaking functioning in the concrete grade flyash market, standing hypothetically in the shoes of a third party, would have wanted "some form of amended arrangement" to the terms of the existing Pozzolanic TEC contract to provide such a third party with either a "guaranteed volume" of ash or, as the "best arrangement", the "allocation" of some hoppers in each unit at Tarong to the incumbent, and others hoppers to a third party. For Mr White, that view of it might not have prevailed by July 2006 because by then the Pozzolanic TEC Agreement would have only had 18 months to run and the focus for Mr White, as a hypothetical third party at that point, would probably have been upon negotiating an access arrangement to Tarong ash as part of TEC's renewal or re-tendering of the principal agreement. Nevertheless, leaving aside the focus that might have emerged in a third party's attempts to secure access towards the end of the term of the Pozzolanic TEC Agreement, the desirability of access to a guaranteed volume of ash or access to particular hoppers for a third party, from the outset of the term, remains a step that Mr White thought desirable, from a third party's perspective. 3174 As to Tarong North, Mr White accepted that once Pozzolanic installed the classifier at Tarong North, it had first right of access to the ash from Tarong North for processing for the extraction of concrete grade flyash, and the result of Pozzolanic installing a classifier at Tarong North, would be that no one else would install a classifier at Tarong North. Mr White put it this way: "I think our view was that if any party, regardless of their rights, installed a classifier first at Tarong North no other party would, including ourselves, and given that we had bought and paid for first rights and an obligation to put a facility in, we felt that was what we should do" [emphasis added]. 3175 Mr White gave evidence that having installed a classifier at Tarong North, it was Pozzolanic's "hope" that no other party would install a classifier. Mr White also accepted that it was more than a hope and that it was "certainly [Pozzolanic's] expectation it [a third party installation] wouldn't happen" (T, p 2469, lns 14-23). 3176 Had the provisions of the Tarong Contract included, for example, a power in TEC (and a clear corresponding obligation in Pozzolanic to act in conformity with the exercise of the power by TEC) to allocate or regulate, for the benefit of one or more third parties seeking access to Tarong ROS ash, either access to a guaranteed volume (a sum certain in the mind of a possible new entrant) of raw unprocessed flyash, or access to particular off-take points or "Ash Transfer Points" on particular hoppers, in particular zones, at particular times, perhaps cycled as between Pozzolanic and a third party (or third parties), or permanently allocated hopper points, at which a third party could readily connect its collection equipment and lines (with a corresponding direction to Pozzolanic to temporarily disconnect its collection plant and equipment) to remove raw Tarong ash into third party processing facilities (and then removal of concrete flyash into a temporary storage silo), the contract might well have facilitated new entrant behaviour productive of rivalry, contestability and a new dimension to the competitive process in the SEQ concrete grade flyash market. Alternatively, such provisions would have at least mitigated the collective disincentives in the grant of the rights by the identified provisions, having the effect of discouraging a new entrant from obtaining ash at Tarong for processing it in its third party facilities so as to supply concrete grade flyash into the SEQ concrete grade flyash market in competition with the incumbent supplier of 95% of all concrete grade flyash sold and supplied into the SEQ concrete grade flyash market. 3177 Confronted with the commercial disincentives contained in the provisions I have mentioned, where might a putative new entrant to the SEQ concrete grade flyash market have turned in 2003 for five years, from the date of the making of the TEC Pozzolanic Contract, for feedstock ash for processing, for entry into the SEQ concrete grade flyash market? There would be little point turning to Millmerran as Pozzolanic had a contract giving it the right to take 135,000 tonnes of concrete grade flyash out of Millmerran ROS ash (coupled with a corresponding supply obligation in MPP) and the quality of the ash had to be determined. Swanbank ash was under contract to Pozzolanic. Any new ash out of Tarong North was under contract to Pozzolanic with the same bundle of rights conferred upon Pozzolanic as those in relation to the Tarong Power Station. Buying ash from NSW power stations required a new entrant to confront the significant disincentives in the transport costs of bringing the product into SEQ. 3178 It follows that the provisions of the Tarong Contract of 26 February 2003 as they applied to access to unprocessed flyash from the Tarong Power Station, had the effect, and the continuing likely future effect, of substantially lessening competition in the market for the supply and acquisition of unprocessed flyash and the effect, and continuing likely future effect, of substantially lessening competition in the SEQ concrete grade flyash market because, first, the provisions operated to discourage and thus hinder and prevent third party entry into a supply arrangement at Tarong Power Station with TEC for raw flyash for processing for entry into the SEQ concrete grade flyash market, and discouraged and hindered and prevented third party entry into the SEQ concrete grade flyash market with processed Tarong concrete grade flyash. In addition, other SEQ raw flyash sources were not available to a third party. 3179 Second, an assessment of the future scope of rivalry and the competitive process in each market with the identified Tarong Power Station provisions in place, reveals an immediately diminished future competitive process in each market upon the making of the contract, by operating to discourage, hinder and prevent third party entry at Tarong thus removing any immediate future potential constraint upon Pozzolanic's discretionary conduct (arising out of effective third party access to Tarong Power Station ash, and the potential entry of third party Tarong concrete grade flyash into the SEQ concrete grade flyash market), as compared with the future scope of the competitive process without the identified provisions and third party entry and contestability. 3180 Third, an assessment of the likely scope of future rivalry and the competitive process in each market over the life of the Agreement with the identified Tarong Power Station provisions in place reveals a real and meaningful likelihood of a diminished future competitive process in each market upon the making of the contract. In the absence of the provisions as framed, the real likelihood was that third parties would have sought access to Tarong ROS flyash (as they attempted to do) and secured an agreement for access to Tarong ROS flyash for processing for the extraction of concrete grade flyash for supply into the SEQ concrete grade flyash market. Had a third party obtained access, processed Tarong ROS flyash and entered the SEQ concrete grade flyash market with Tarong concrete grade flyash, the strong probability is that rivalry and contestability would have operated to constrain the prices of Pozzolanic and QCL (and challenged their market share of volume) and later Pozzolanic and Cement Australia. The likely future effect of the identified provisions was to discourage, hinder and prevent such entry (and the consequential expansion in contestability and rivalry in each market that entry would have brought). The identified provisions operated to make it likely, over the life of the Agreement, that the future scope of rivalry would be meaningfully reduced or diminished as compared with the likely scope of rivalry without the provisions. The measure of the difference is the increased participation in the competitive process by a new entrant and the constraining effect which would likely have arisen, upon Pozzolanic's volume of sales and the prices for concrete grade flyash in the SEQ concrete grade flyash market. 3181 I am satisfied that having regard to the strong interest which was shown by third parties in seeking to strike a relationship with TEC for access to Tarong Power Station ash, during the tender process leading up to the Pozzolanic/TEC Agreement of 26 February 2003, and the interest which was shown by third parties in seeking to obtain Tarong ROS ash after the commencement of the Agreement (and throughout periods of the term of the Agreement and later Tarong North ROS ash), that third party access to Tarong ROS flyash under supply agreements with TEC, and the processing of that flyash into concrete grade flyash would very likely have occurred, had the identified provisions not been included in the Agreement. 3182 Because Pozzolanic and QCL and later Pozzolanic and Cement Australia enjoyed such a substantial market share and exercised such a substantial degree of influence upon pricing in the SEQ concrete grade flyash market for the product, any new entrant activity at the Tarong Power Station of obtaining access to raw flyash for processing so as to enable new entrant competition in the SEQ concrete grade flyash market, would have been significant, real and meaningful new competition. The expansion in the scope and field of rivalry would very likely have operated to constrain Pozzolanic and QCL and later Pozzolanic and Cement Australia in the way described. 3183 Fourth, the evidence demonstrates that approaches made by third parties to TEC both in relation to access to Tarong Power Station ash and, later, Tarong North Power Station ash, resulted in responses which rendered any arrangement for access subject to the prior rights of Pozzolanic. The notion that TEC would have adopted that position is entirely unsurprising because the power station operator was giving voice to its understanding of the operation of the provisions. Any new entrant could only obtain ash for processing in circumstances where its potential right to ash necessarily stood behind the prior rights of Pozzolanic to any and all "Fly Ash" as defined so as to enable Pozzolanic to extract any and all concrete grade flyash capable of being extracted from the power station "Fly Ash" as defined, in Pozzolanic's facilities. The letters generated by TEC make it plain that TEC's view was that any third party would stand, in effect, sublimated to the prior rights of Pozzolanic. Mr White had taken the view that Pozzolanic (as funded by its parent) had paid for and obtained these prior rights. However, that view, and the view reflected in the approach by TEC to its dealings with third parties demonstrates the effect of the provisions upon new entrant behaviour at the power station. As Mr White explained in his evidence, what was actually needed from the perspective of a third party was a change to the Pozzolanic/TEC Agreement to reflect provisions which entitled a third party either to a guaranteed volume of ash (rather than episodic or transactional access to ash as and when not needed by Pozzolanic) or access to dedicated and allocated hoppers. Mr White was entirely correct about this matter. Neither of those mechanisms were incorporated into the contract. Its provisions worked an effect of substantially lessening competition in the upstream and downstream markets as earlier described. 189 See also Pt 50, [3240], [3242] and [3257]. 190 Specifically as to Tarong North [3258] is in these terms: 3258 A substantial purpose of the pleaded provisions of the Tarong Contract relating to the Tarong North Power Station was also each of the purposes of the pleaded provisions of the contract relating to the Tarong Power Station. The ash produced or to be produced upon commissioning of the Tarong North Power Station was new ash and it was very likely to be of like quality and standard to the Tarong Power Station ash as each station was burning coal from the same coal source. Entry into the Tarong Contract containing those provisions involved a contravention by Pozzolanic of s 45(2)(a)(ii). Pozzolanic contravened s 45(2)(b)(ii) by giving effect to the pleaded provisions in relation to Tarong North by acquiring flyash on the terms of the contract once the power station was commissioned. Cement Australia was knowingly concerned in Pozzolanic's contravention of s 45(2)(b)(ii) by giving effect to the identified provisions by funding Pozzolanic's performance of the contract by the taking of ash by truck to Tarong for processing. 191 One further aspect of the provisions concerning Tarong North should be mentioned. Although Pozzolanic by installing the classifier configured according to the approved drawings gave effect to the relevant provisions concerning that matter, I found that because the plans for the classifier were approved on 29 May 2006 and by then the balance term of the contract was relatively short, Pozzolanic was by then giving effect to provisions which did not have the effect or likely effect, in a forward-looking way, of substantially lessening competition in the identified markets. 192 In the result: (1) Pozzolanic contravened s 45(2)(a)(ii) by making the Tarong Contract containing provisions having the purpose, effect and likely effect of substantially lessening competition (of and by) preventing a rival from gaining access to Tarong and Tarong North unprocessed ash and preventing a rival of QCL from entering the SEQ cgf market: Declaration 16. (2) QCL, by funding Pozzolanic's entry into the Tarong Contract with knowledge of the purpose, effect and likely future effect of the relevant provisions was knowingly concerned in Pozzolanic's contravention of s 45(2)(a)(ii) contemplated by Declaration 16: Declaration 17. (3) Pozzolanic, by giving effect to the provisions once made, on and from March 2003, contravened s 45(2)(b)(ii): Declaration 18. (4) QCL, by funding Pozzolanic's performance of the Tarong contract in the period from 26 February 2003 to 1 June 2003 (the commencement of the merger) containing provisions as contemplated by Declaration 16, with the knowledge contemplated by Declaration 17, contravened s 45(2)(b)(ii) and with knowledge of the Declaration 16 matters, was knowingly concerned in Pozzolanic's contravention of s 45(2)(b)(ii) as contemplated by Declaration 18: Declaration 19. (5) Cement Australia, by funding Pozzolanic's performance of the Tarong Contract (both in relation to the provisions concerning the Tarong Power Station and the Tarong North Power Station) on and from 1 June 2003, gave effect to the relevant provisions in contravention of s 45(2)(b)(ii), and with knowledge of the relevant provisions in terms of Declaration 16, was from 1 June 2003, knowingly concerned in Pozzolanic's contravention of s 45(2)(b)(ii): Declaration 20. The Swanbank Contract 193 At Pt 6 [623] to [698], I set out the history of the contractual relationship between the owner of the Swanbank Power Station and Pozzolanic. At [666] to [670], I set out matters relating to the 1998 letters and from [671] to [698], I describe the circumstances of the extension of the contract to 31 December 2004; Mr White's letter of 11 March 2005 to Mr Christy (for CS Energy ("CSE") the then owner of Swanbank) concerning Mr White's proposed new supply arrangements; the extension of the contract from 31 December 2004 to 30 June 2005; the engagement of Mr White in that matter; and the evidence of Mr Christy on the supply issues. 194 I set out below aspects of the Swanbank considerations drawn from the principal liability judgment at [3215] to [3223]: Swanbank considerations 3215 The position in relation to Pozzolanic's arrangements with Swanbank can be stated in fairly short terms. As discussed in Part 6, Pozzolanic had enjoyed a longstanding contractual arrangement with Swanbank which conferred, in substance, exclusive access to Swanbank ash subject to certain protocols apparently designed to facilitate third party access but always subject to the prior rights of Pozzolanic. The early contractual arrangements had subsisted since 1993 by force of Contract H0315/93. That contract was amended by the letter of 9 September 1998 (with the amending agreement signed on 30 September 1998) to extend the term for four years commencing 1 January 1999 and ending on 31 December 2002 subject to the option in Pozzolanic to extend the term to 31 December 2004. The event upon which the option was conditioned occurred, and in July 2002 Pozzolanic effected an extension of the amended contract until 31 December 2004. For all practical purposes, the contract was an exclusive supply agreement until 31 December 2004. … 3219 … from about the second quarter of 2005 the Swanbank ash became particularly problematic in terms of its quality. I have identified the evidence about that matter earlier and I will not repeat it here. It is reflected in the observations of Mr White, the strategic planning assessments of Mr White and the evidence of Mr Zeitlyn and others. It is reflected in Mr Blackburn's evidence and his quality assessment reports. I accept Mr Blackburn's evidence on these matters. 3220 … Mr White understood the position to be, from about the middle of 2005 (and perhaps earlier), that CS Energy was operating on the footing that it saw itself as unconstrained in its dealings with third parties. That view was entirely consistent with the evidence of Mr Christy. The content of that evidence is set out at [693] of these reasons and I will not repeat it here except to say that in Mr Christy's view, Pozzolanic did not exhibit any desire to prevent third party access to unprocessed ash at Swanbank and exhibited no obstructive approach to CS Energy giving third party access at Swanbank, if it felt inclined to do so. 3221 Of course, Mr White had put in place by his letter of 11 March 2005 a request for an extension of the terms of the contract from 31 December 2004 to 30 June 2005 and Mr Christy had agreed to that extension on 15 March 2005. There can be little doubt that the point of the request was to preserve Pozzolanic's exclusive access to the Swanbank ash at least until 30 June 2005. In Mr White's earlier strategic analysis reflected in the documents I have extensively described earlier in these reasons, Mr White saw that one of the solutions to competitor threats at Swanbank was to take all the Swanbank ash. Mr White, Mr Leon, Mr Zeitlyn and others, in December 2004, prior to the expiry of the Swanbank Contract, made a visit to Senior Management at Swanbank to talk about the strategy of Pozzolanic taking all of the Swanbank ash. 3222 Nevertheless, in the period from 1 January 2005 to 31 December 2006 Mr Christy did not regard himself as constrained in any dealing with any potential off-taker by reason of the contractual arrangements with Pozzolanic [693]. Whilst that view was inconsistent with the terms of the extended contract up to 30 June 2005, I accept that Mr White proceeded on the same footing about this question as Mr Christy. 3223 To the extent that the contract as varied by the 1998 letter and as extended to 31 December 2004, and then as extended to 30 June 2005, conferred exclusivity of access, in substance and in form, upon Pozzolanic, I accept that that position came to an end by 30 June 2005 but in terms of the dealings, CS Energy was conducting itself as if it was free of that constraint from the early part of 2005, without serious objection from Pozzolanic. … 195 As to the conclusions and findings, I set out below [3225] to [3231] (see also [3261]): 3225 I accept, however, that in the period, in particular for the purposes of this case, from the beginning of 2001 and throughout 2002 and up to and including the end of February 2003 when the Tarong Contract was signed, the contractual arrangements between Pozzolanic and CS Energy at Swanbank, conferred exclusivity of access to Swanbank ash upon Pozzolanic and QCL. That position continued until 31 May 2003 and to 31 December 2004 during the period of the Pozzolanic and Cement Australia arrangements. That position also continued, in substance, until 30 June 2005, although Mr Christy saw himself free to conduct negotiations with third parties from about January 2005. 3226 The volume of ash taken by Pozzolanic from Swanbank was, as compared with the Tarong volumes, small but yet very significant. It was flyash substitutable for, or treated by Pozzolanic as substitutable for, Tarong ash. Third party access to Swanbank ash and sales of processed Swanbank ash by a third party into the SEQ concrete grade flyash market would have had significant competition effects as it would very likely have triggered MFN consequences in Pozzolanic's supply price to its major customers. In the Pozzolanic and Cement Australia correspondence I have reviewed and described in these reasons, Pozzolanic put buyers of concrete grade flyash on notice that Tarong ash, if not available for any reason, might well be substituted with Swanbank ash. 3227 I am satisfied that the pleaded provisions of the Swanbank Contract had the effect and the continuing likely effect from the beginning of 2001, relevantly, of substantially lessening competition in the SEQ concrete grade flyash market because any new entrant to that market seeking to use Swanbank flyash, could not secure consistent or regular supply of ash for processing from Swanbank due to the provisions of the Swanbank Contract. The provisions had the effect and the continuing likely effect of substantially lessening competition by preventing access by a rival to a source of ash in the upstream unprocessed flyash market at Swanbank. The future state of competition in the SEQ concrete grade flyash market without the pleaded exclusive terms reflected in the Swanbank Contract would likely have seen third parties securing a source of supply of ash at Swanbank, processing that ash and entering the SEQ market for the supply of concrete grade flyash. Having regard to Pozzolanic and Cement Australia's substantial position in the market, any nascent competition of that kind would have been very significant for the process of competition. Apart from that likely transactional rivalry, rivalrous supply of Swanbank concrete grade flyash would likely have triggered the MFN consequences which would in turn have been productive of price competition on a broader scale. 3228 In that sense, the stand alone provisions of the Swanbank Contract with the provisions had this effect upon future competition. 3229 However, the additional significant matter in relation to the Swanbank arrangements is the combined effect of those arrangements in circumstances where not only could a third party not practically obtain a regular and consistent supply of ash for processing from Swanbank until about 30 June 2005, but such a party could not turn to the other source of supply in SEQ, namely, the Tarong Power Station. 3230 The simple fact is that Pozzolanic was standing at the gate at both places. 3231 By March 2003, Pozzolanic found itself in the position where it had the extension of the Swanbank Contract in place; it had secured the contract for Tarong and Tarong North in the terms already discussed; and it had secured the contract at Millmerran for priority access to a minimum of 135,000 tonnes of concrete grade flyash. From March 2003 to 30 June 2005, the provisions of the Swanbank Contract continued to have the effect or likely effect, in conjunction with the Tarong provisions, of substantially lessening competition in the sense that the future scope of rivalry would be diminished by reason of the provisions as compared with the likely field of rivalry which would have emerged had the provisions not had the effect of hindering and preventing third party access to Swanbank ash either at all or on any regular and consistent basis enabling new entrant competition. 196 In the result: (1) Pozzolanic contravened s 45(2)(a)(ii) by reason of the extension of the Swanbank Contract to 31 December 2004 and the extension of the amended contract to 30 June 2005 containing provisions which had the effect and would have the likely effect, when the extensions were made, of substantially lessening competition by preventing a rival from securing access to Swanbank ash up to 30 June 2005 and preventing a rival of QCL from entering the SEQ cgf market up to 31 May 2003 and thereafter preventing a rival of Cement Australia from entering the SEQ cgf market up to 30 June 2005: Declaration 21. (2) Pozzolanic contravened s 45(2)(a)(ii) by entering into the extension from 31 December 2004 to 30 June 2005 incorporating provisions for exclusive access to Swanbank ash (until 30 June 2005) where those provisions had the purpose of substantially lessening competition in the unprocessed ash market and the SEQ cgf market by preventing a rival securing access to Swanbank ash until 30 June 2005 and preventing a rival of Cement Australia entering the SEQ cgf market: Declaration 22. (3) Pozzolanic contravened s 45(2)(b)(ii) by giving effect to the identified provisions from 1 January 2001 to 30 June 2005 in the circumstances contemplated by Declaration 21: Declaration 23. (4) Pozzolanic contravened s 45(2)(b)(ii) by giving effect to the extension from 1 January 2005 to 30 June 2005 in the circumstances of Declarations 21 and 22: Declaration 24. (5) QCL, by giving effect to the identified provisions contemplated by Declaration 21 in the period from 1 January 2001 to 31 May 2003, contravened s 45(2)(b)(ii): Declaration 25. (6) Cement Australia, by giving effect to the identified provisions contemplated by Declarations 21 and 22 contravened s 45(2)(b)(ii) of the Act: Declaration 26. Mr White 197 The ACCC in the principal liability proceedings contended that Mr White was knowingly concerned in and aided and abetted particular contraventions. In the principal liability judgment I examined Mr White's role as the manager of Pozzolanic in the relevant period and his engaged contribution to the Cement Australia strategy. At Pt 50 [3272] to [3274], I made the following findings: 3272 Mr White is said to have been knowingly concerned in or a party to and to have aided and abetted contraventions on the part of Cement Australia and Pozzolanic in relation to the Tarong North installation of the classifier and the extension of the Swanbank Contract, and the performance of that contract. I have found no contravention in respect of Tarong North so far as the conduct of installing a classifier is concerned. 3273 As to the Swanbank extension, the steps taken by Mr White to extend the Swanbank Contract to 30 June 2005 need to be understood in the context of the extensive documented analysis by Mr White of the strategic position of Cement Australia and Pozzolanic; the imperatives in the market confronting those companies and the circumstances confronting Cement Australia specifically in relation to third parties attempting to secure access to Swanbank ash. Although by 2005 the Swanbank ash had become variable and of doubtful quality, it still had some utility. 3274 I am satisfied on all the material that Mr White was entirely astute to the exclusive character of the arrangements between Pozzolanic and CS Energy and sought to enable Pozzolanic and Cement Australia to secure a continuation of the contract from 31 December 2004 to 30 June 2005. I am also satisfied that Mr White was astute to all of the elements of the pre-existing contractual arrangements operating up to 31 December 2004, the events which would be necessary by June 2002 to enable the option to extend to 31 December 2004 to be exercised, and was knowingly concerned in Pozzolanic having given effect to those exclusive provisions of the Swanbank Contract. 198 In the result: (1) Mr White was knowingly concerned in Pozzolanic's contravention of s 45(2)(a)(ii) the subject of Declaration 22: Declaration 27. (2) Mr White was knowingly concerned in Pozzolanic's contravention of s 45(2)(b)(ii) the subject of Declaration 21 in respect of conduct in the period 31 December 2004 to 30 June 2005: Declaration 28. PART 5: THE CONTENTIONS OF THE ACCC 199 Apart from the contraventions found against CAQ (formerly QCL), Cement Australia, Pozzolanic, PIPL and Mr White, the ACCC seeks findings of ancillary contraventions against CA Holdings and additional findings against Cement Australia. 200 I address those matters separately at Part 17. 201 The ACCC says as a general approach that the exercise of the s 76 discretion should take account of these matters, as it characterises the factual position. 202 First, the contraventions by the corporate respondents (which I will simply call the respondents) were part of a deliberate commercial strategy of monopolising the SEQ unprocessed flyash market and the SEQ cgf market. It was a strategy conceived and implemented at the highest levels of the respondents over many years. It was deployed in full knowledge of the competition law risks and consequences. The strategy was described as the "sole supplier" strategy. It foreclosed competitive entry to each market. It preserved the volume, revenue and EBIT earnings of QCL and Cement Australia (and CA Holdings). The contravening conduct was intended to be highly profitable. The ACCC contends that QCL's assessment at 9 November 2001 of the risk to its "margins" (a reference to an adverse impact on EBIT of $1 million to $6 million per annum in the QCL Business Plan of 9 November 2001 and later) projected, by the ACCC, over seven years amounts to $42 to $44 million. The ACCC says that ex post analysis shows that the QCL assessment of that measure of loss was "reasonable". The ACCC says that the "actual benefit" may have been in the order of $50 million. 203 The ACCC says that by entering into the OMC, the amended OMC, the Tarong Contract and the Swanbank extensions, the respondents were able to maintain their "dominant position" in each market until: Sunstate Cement Ltd ("Sunstate") began purchasing run-of-station ash from Tarong North in April 2007, grinding it to the cgf standard (AS 3582.1) and supplying cgf in the SEQ cgf market; and Independent Flyash Brokers Pty Ltd ("IFB") entered the cgf market in 2008. 204 The ACCC contends that after Sunstate and IFB entered the markets, the sales volumes and market share of the respondents declined by over 40%. The revenue from the sale of flyash declined by a significant (confidential) amount. 205 Second, the conduct of the respondents is to be regarded as an extraordinary, persistent and very serious manipulation of the relevant market by companies with > $1 billion in assets; > $950 million in annual sales; > $170 million in EBIT earnings and substantial market power. 206 Third, an appropriate penalty must "eliminate any prospect of gain" and substantially exceed "any potential benefit" the corporate respondents could have earned from the conduct, if the penalty is to deter a "cynical calculation" of weighing the risk of penalty against the profitability of engaging in the contraventions. 207 Fourth, the ACCC says that there are nine aggravating factors to be taken into account. They are said to be these: (1) The contraventions involved "the deliberate monopolisation of substantial markets" by major companies over a number of years. Thus, the contraventions are in the "worst category" of contraventions of the Trade Practices Act. (2) The conduct significantly impeded the functioning of the SEQ unprocessed ash market and the SEQ cgf market resulting in higher prices and reduced consumer choices. Both impacts were felt by customers, suppliers and competitors. A corollary of this market harm is said to be the conferral of a significant financial benefit on the respondents. (3) Each contravention occurred in circumstances where the respondents "sought to defend their monopoly in the market" against new entrant competition. (4) The conduct constituting the contraventions was a deliberate and systematic implementation of the "sole supplier" flyash strategy in SEQ which was regarded as "essential to the profitability of the respondents SEQ flyash business". (5) The respondents are substantial corporations in terms of assets and revenue. (6) Throughout 2002 to 31 December 2006, the corporate respondents dominated the SEQ cgf market with market share in 2004 of 96%. This dominant position is said to be "largely attributable" to the contravening conduct. (7) Entry into the Millmerran and Tarong Contracts as part of the flyash strategy of the respondents was approved at the highest level within the corporate structure of the respondents and continued to be implemented by senior officers of the respondents. (8) Many of the individuals within the respondents had an "acute appreciation" of the competition law risks of the conduct but were willing to "take the odds". In addition, the corporate respondents offered indemnities to 16 key executives shortly after the ACCC issued notices under s 155 of the Act identifying potential contraventions. The ACCC contends that the indemnities, on their face, had an objective purpose of impeding the proper enforcement of the Act by discouraging key executives from co-operating with the ACCC. The conduct of granting the indemnities is said to show a clear "lack of a culture of compliance". (9) None of the respondents (including Mr White) co-operated with the ACCC. All factual contentions were contested. Thus, the respondents are not entitled to any discounting of a penalty for co-operation. 208 Fifth, the ACCC says that having regard to all of these factors, the contraventions are in the worst category of contraventions of the Act. The penalties the ACCC considers appropriate and which it recommends to the Court as appropriate, having regard to all relevant circumstances, are these: Contraventions Swanbank Contract (July 2002 to 31 December 2004) Swanbank Contract Extensions (January 2005 to June 2005 OMC (30 September 2002 to 28 July 2004) Amended OMC (28 July 2004 to 30 April 2005) Tarong Contract (March 2003 to 31 December 2006) Total Pozzolanic Make: $0 Make: $1 million Make: $4 million Make: $4 million Make: $4 million Adjusted for totality principal: $15 million Give effect: $2 million Give effect: Give effect: Give effect: Give effect: $1 million $4 million [no separate penalty sought] $4 million PIPL Make: $1 million $1 million QCL Make: $0 Make: $10 million Make: $10 million $45 million Give effect: Give effect: Give effect: $10 million $5 million $10 million Cement Australia Make: $2.5 million (the subject of the separate submissions) Make: $10 million Give effect: $10 million $30 million Give effect: Give effect: $2.5 million $5 million CA Holdings Make: $1.25 million (the subject of the separate submissions) Make: $5 million (the subject of the separate submissions) $6.25 million (the subject of separate submissions) 209 Thus, the ACCC contends that total penalties of $91 million are "appropriate". 210 As can be seen from the table, the ACCC also contends that in respect of the ancillary contraventions the subject of the further submissions these penalties are appropriate: (1) In making the Swanbank extension from 1 January 2005 to 30 June 2005, Cement Australia, $2.5 million. (2) In making the Amended Millmerran Contract operating for the period 28 July 2004 to 30 April 2005, CA Holdings, $5 million. 211 Should the ACCC's submissions in respect of the ancillary contraventions be upheld together with the submissions on penalty, total penalties would be $97.5 million. 212 The ACCC contends that an appropriate penalty to be imposed concerning Mr White's knowing involvement in the entry by Pozzolanic into the Swanbank extensions and giving effect to those extensions is $150,000. The "worst case" 213 Plainly enough, the penalties the ACCC recommends to the Court as appropriate in the exercise of the s 76 discretion are very significant. The ACCC says that these contraventions fall into the category of the "worst case" and thus attract the maximum penalty. I have already identified the considerations going to the exercise of the discretion and particular aspects of the contravening conduct. It is now necessary to examine in some detail the foundations upon which the ACCC recommends penalties of this order of magnitude. 214 The ACCC's submissions are concerned with each of the following topics. The roles of the relevant companies and particular individuals within them 215 I have already addressed the essential matters on this topic. However, as to matters of emphasis, the ACCC observes that in the pre-merger period, QCL was the holding company for the QCL group. As Treasury company for the group, QCL operated a single consolidated bank account for all group companies. It paid all third party invoices including royalties paid to the power stations for ash. It was the decision-maker on all capital expenditure. It contracted with customers for sale and delivered supply of flyash. It managed the group companies. I have already noted the evidence of Mr Arto and Mr Maycock concerning the conduct of Board meetings. The ACCC identifies the key decision-makers as Mr Arto, Mr Wilson and Mr Ridoutt. I also regard Mr Maycock as an important decision-maker to the extent that he sought to assert his undoubted authority and experience within the QCL group and Holcim. After the merger, QCL (CAQ) continued to act as the Treasury company for Cement Australia, CA Holdings and group subsidiaries. After the merger, QCL became a subsidiary of CA Holdings (see [126] of these reasons). 216 As to Cement Australia, that entity has never owned any shares in any of the other respondents. Its role was to provide management services from 31 May 2003 to the group of companies which came together as a result of the merger (and associated companies). It was responsible for sales, marketing and distribution of cementitious products. It employed Mr Clarke, Ms Collins and Mr Zeitlyn. The ACCC contends that Cement Australia was the "lead entity" responsible for causing the contraventions in the post-merger period. 217 As to Pozzolanic, it conducted the flyash business. It had the contracts with power stations, deployed plant and equipment on site and provided bulk materials transport of flyash. As to PIPL, it owned 100% of the shares in Pozzolanic and it gave guarantees of Pozzolanic's performance of the OMC and the amended OMC. 218 As to CA Holdings, it became the holding company for the merged group. CA Holdings and its subsidiary and associated companies own the shares in companies that manufacture cement and source flyash and slag. 219 As to the Cement Australia partnership, it was established as part of the merger between subsidiary entities of Holcim, Readymix and Hanson. Its agent and manager was Cement Australia. The partnership conducted the activities of logistics, distribution, sales and marketing. Scope of the contravening conduct and issues of benefit 220 The ACCC says that the 22 contraventions of making and giving effect to the relevant provisions of the various contracts are the expression of the respondents intention "to maintain a monopoly in the SEQ flyash market for at least seven years" in accordance with the respondents commercial strategy adopted from at least 2000 of being the "sole supplier" of cgf in SEQ. The ACCC says that before entering into the first contract in 2002, the respondents conducted a number of analyses and concluded that the financial benefit of preventing entry was as much as $42 to $44 million over the seven year term of the Millmerran Contract. Paragraphs [1076], [2271] and [2340] of the principal liability judgment are cited in support of that proposition. At [1076], I note that the QCL Business Plan for the period 2002-05 (formulated on 9 November 2001) comments upon strengths and weaknesses confronting QCL. One strength was that QCL then enjoyed a sole supplier status for ash in Queensland. A weakness was that QCL was confronting difficulty in retaining its "sole supplier status", looking forward, in an environment of large existing over-supply of flyash. The Business Plan observes that Millmerran Power Station is a new source of ash and that in tendering arrangements competing bids had been received by Millmerran from FAA, Transpacific and Wagner. The Business Plan also notes that the Tarong Contract is to be decided by tender in early 2002 and the outcome will be influenced by whichever tenderer is successful at Millmerran. Interested parties for the Tarong Contract were said to be FAA, Transpacific and Adelaide Brighton Ltd. 221 In that context, the Business Plan postulates the hypothesis that any loss of QCL's single supplier status will impact upon QCL's annual EBIT earnings by "$1m to $6m p.a.". The OMC had a commencement date of 30 September 2002. The first operating year was defined at 1 January 2003 to 31 December 2003. The expiry date was the last day of the seventh operating year: therefore 31 December 2009 subject to earlier termination (see the terms and the Dictionary at [930]). Assuming a full term of seven years and projecting the Business Plan hypothesis (of 9 November 2001 for the 2002-2005 years) of an EBIT loss each year of between $1 million and $6 million, the postulated impact on EBIT would be in the range $7 million to $42 million arising out of any loss of QCL's single supplier status. At [2271], I observe that by September 2002 the March and September Board papers of 2002 were telling the QCL directors (Mr Arto and Mr Maycock) that both the Millmerran and Tarong Contracts had to be won because a loss of either contract would result in an erosion of the EBIT margin of the order of $6 million. As to this view of the projected EBIT loss, I noted the following matters at [2271] to [2274]: 2271 … The Board papers also make it plain that Pozzolanic's objective was to secure a contract with both Millmerran and Tarong, and I so find. The reason for that could not be more plain as the Board papers from the briefing team having the carriage of the matter are telling the Board that unless Pozzolanic secures both contracts, a loss of either contract would result in a substantial loss of volume of 250,000 tonnes and an erosion in the EBIT margin of the flyash business in South East Queensland of something of the order of $6M. Mr Arto says that this view was a worst-case scenario but whatever the margin of error or exaggeration that might be thought to be encapsulated in that view from Mr Ridoutt, there is no doubt that the Board was being told, in the plainest way possible, by the principal experienced managers in whom they trusted and to whom they had entrusted the negotiations, that risk-managing QCL/Pozzolanic's market share (of volume) and profitability measured by the EBIT margin in the flyash business, required QCL/Pozzolanic to enter into both the Millmerran and Tarong contracts. 2272 That was the message that Mr Arto understood from the Board papers, and for him, the merits of the matter were all in the margin numbers, lining up with Holcim's benchmark expectations. 2273 Professor Hay expressed the opinion (rather than a fact he was instructed to assume) that if Pozzolanic lost either contract its market share would collapse virtually immediately (Ex-81, para 14). I have no doubt that Mr Arto, as an experienced Holcim engaged businessman, had already formed precisely that view at the time of these events. Although there is, it seems to me, a degree of reluctance or perhaps obfuscation in Mr Arto's evidence around the likely market share/volume/price impact arising out of a rival securing a major source of flyash and entering the market in which Pozzolanic enjoyed a high market share, high profitability and a resultant high EBIT margin in the flyash business in SEQ, Mr Arto accepted that a new entrant at either Millmerran or Tarong would give rise to competition; there would be counter-responses; one likely possibility was price tension and another was a volume solution which may or may not have involved significant price contestability. 2274 I am satisfied that, so far as Mr Arto was concerned, his position was that in order to secure the margin in the flyash business which Holcim required as its benchmark margin for flyash and slag, it was necessary for Pozzolanic to secure both contracts. The reason for securing both contracts was to prevent a rival from obtaining a contract with either power station so as to ensure that Pozzolanic preserved its market share thus avoiding the kind of market share collapse Professor Hay perceived, and to prevent an erosion in the EBIT margin in the SEQ flyash business consequent upon contestability within the new field of rivalry defined by the new entrant. 222 These were the opinions put to the directors by Mr Ridoutt and Mr Wilson and the response of Mr Arto. Mr Maycock also thought the projected EBIT loss to be a "worse case" notion and an "extraordinary number" although he had no recollection of looking at or discussing the March 2002 Board paper postulating a loss of 250,000 tonnes and an EBIT loss of $6 million. 223 The OMC was brought to an end by agreement on 20 October 2006: [3213]. By 31 December 2007, the relevant provisions of the OMC ceased to have the effect or, looking forward, the likely effect of substantially lessening competition for the reasons earlier mentioned. Market harm caused by the contraventions 224 The ACCC contends that the market harm likely to have been caused by the contraventions by "eliminating competition" is "significant". The ACCC also contends that the market harm was anticipated as having a "corresponding financial benefit to the corporate respondents". The contended market harm and contended financial benefit to the respondents is examined later in these reasons. Apart from market harm and financial benefit, the ACCC says that each of the contraventions occurred in circumstances where the respondents "sought to defend their monopoly in the market against threat of new entry" which they did, it is said, by securing long term take or pay contracts with power stations notwithstanding that the volume of flyash from power stations significantly exceeded demand for cgf. Size 225 As to the merged group and the Cement Australia partnership, the following information is drawn from Ms Boman's affidavit of 5 February 2010 for the 2009 calendar year. Combined financial information Year 2009 Net sales $957.05M Expenses (cost of goods sold) $687.95M Gross profit $269.10M Earnings before interest and tax (EBIT) $171.42M 226 The ACCC also relies upon the following information drawn from the affidavit of Mr Steger affirmed 17 April 2014 in relation to CA Holdings, QCL, PIPL and Pozzolanic, and ATB Vol 28, Tab 3 in relation to the Cement Australia Partnership: Financial Information for CA Holdings Year 2012 2013 Revenue $1.07M $1.02M Expenses (cost of sales) $46,000 $37,000 Net finance income (primarily dividends from related entities) $79.37M $118.10M Profit before income tax $78.57M $91.19M Net assets $519.99M $566.59M Financial Information for QCL Year 2012 2013 Revenue [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Expenses (cost of sales) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Profit before income tax [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Net assets [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Financial Information for PIPL Year 2012 2013 Revenue [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Expenses (cost of sales) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Profit before income tax [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Net assets [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Financial Information for Pozzolanic Year 2012 2013 Revenue [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Expenses (cost of sales) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Profit before income tax [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Net assets [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Financial Information for the Cement Australia Partnership Year 2006 2007 Revenue $808.67M $867.87M Expenses (cost of sales) $526.39M $561.33M Profit before income tax $69.50M $83.95M Net assets $21.67M $24.93M 227 Apart from these financial matters of size and scale, the ACCC emphasises findings from the principal liability judgment that at the time of entry into the OMC, QCL and its subsidiaries enjoyed a substantial degree of power in the SEQ cgf market and after the merger the respondents continued to enjoy a substantial degree of power in that market until 31 December 2006. Sunstate commenced supplying cgf in April 2007: see [1835], [1881] – [1883] and [1892]. Throughout the period of the contraventions, Pozzolanic held all available contracts with the SEQ power stations for the acquisition and processing and classification of ash: [1785], [1786] and subparas 1, 19 and 21 of [1835]. Achieving this position was an expression or outworking, it is said, of the broader commercial strategy to be the sole supplier of cgf to the SEQ cgf market: [1007], [1013], [1025] – [1027], [1076], [1079], [1106], [1117], [1124] – [1130], [2128] – [2129], [2335], [2404], [2443], [2538] – [2540], [2731] – [2733], [2737], [2820] – [2826], [2837] and [2850] – [2856]. The ACCC also notes the observation in the principal liability judgment that Pozzolanic's control over the sources of supply of unprocessed ash in SEQ made it practically impossible for a potential entrant to enter the cgf market. These contractual arrangements presented high barriers to entry into the SEQ unprocessed and SEQ cgf markets: subpara 28 of [1835]. During the period of the contraventions, Pozzolanic was virtually the sole supplier of cgf to the SEQ cgf market and by October 2004 the respondents enjoyed a market share of 96%. 228 As to constraints on pricing, QCL priced the supply of cgf on a "delivered price" basis. Buyers would compare QCL's delivered price for flyash with the landed cost at the relevant batching plant of flyash from Eraring and Bayswater made up of the ex-bin price plus the cost of transport. QCL priced its delivered supply having regard to a buyer's "next best alternative" from NSW. 229 The ACCC gives emphasis to all of these matters as relevant considerations in the exercise of the discretion in respect of the contraventions. It is important to remember that the question presently in issue is: What is an appropriate penalty the Court ought to order a relevant respondent to pay in respect of one or more contraventions of s 45 of the Act having regard to the statutory imperative of "all relevant circumstances" as elaborated in the authorities? A matter not in issue for the purposes of the exercise of the s 76 discretion is any question of a contravention of s 46. That case, concerned with whether a relevant corporation enjoying a substantial degree of power in a relevant market, had taken advantage of that power for one or more of the s 46(1)(a), (b) or (c) purposes was not made good. However, since s 76 of the statute directs the Court to have regard to "the circumstances in which the act or omission took place", I am satisfied that one circumstance relevant to the s 45 purpose, effect or likely effect cases concerning the identified provisions of each particular contract is the degree of control or influence (or put another way, the degree of market power) of the relevant market enjoyed by a respondent (and its related entities) when the contravening act or omission occurred. It is simply a fact to take into account. Deliberateness 230 The ACCC says that the conduct of the respondents was deliberate, systematically implemented and long-running. It involved "creative drafting" in the identified provisions so as to bring about de facto exclusivity of treatment between MPP and Pozzolanic, and TEC and Pozzolanic, when exclusivity could not be achieved expressly. The contraventions went to the "very heart" of the respondents' SEQ flyash business, it is said. The ACCC emphasises the notion that the respondents maintaining their commercial position as "sole supplier" of flyash was "vital" to their continued profitability. The ACCC cites the Klose memorandum of April 2002 to the Executive Management Group of QCL (ATB Vol 4, Tab 39) quoted at [1124] of the principal liability judgment. 231 On this topic, the ACCC emphasises the following matters. On 11 July 2002, Pozzolanic (by Mr Wilson) exercised its option to extend the Swanbank Contract to 31 December 2004 requiring CSE to provide Pozzolanic with exclusive access to Swanbank ash for a further two years. The option was enlivened if, at the close of business on 30 June 2002, Pozzolanic had sold over 48,000 tonnes of Swanbank ash over 12 consecutive months. It sold 49,379 tonnes. The letter exercising the option also told CSE that Pozzolanic had found it necessary to transfer customers to Tarong flyash due to the quality of Swanbank ash. Nevertheless, Pozzolanic, by exercising the option preserved exclusive access to Swanbank ash until 31 December 2004. By 11 July 2002, Pozzolanic had been notified that it was the preferred tenderer at both Millmerran and Tarong. On 30 September 2002, Pozzolanic entered into the OMC. By doing so, it commercially committed itself to expenditure of $11.744 million in royalties and capital expenditure over the seven year life of the contract: $1.392 million x 7 + $2 million - $11.744 million. A substantial purpose of entry into the OMC was to prevent a rival, Transpacific or FAA, securing direct access to Millmerran ash in SEQ: [3232], [3236] and [3256]. On 26 February 2003, Pozzolanic entered into the Tarong Contract. The QCL September Board papers included a report called "Ash Market in SEQ September 2002" (probably prepared by Mr Ridoutt) outlining the financial terms of the proposed OMC: [1138]. 232 The paper asserted that if QCL did not sign the agreement, Transpacific would in all probability match the offer and re-enter the SEQ cgf market. Transpacific was to be taken seriously because it had been founded by the person who had originally built the Pozzolanic business and sold it to QCL. The paper also set out the key elements of the current draft agreement with TEC, although negotiations were ongoing: [1140]. The paper asserted that if QCL/Pozzolanic failed to secure the Tarong Contract, it would go to FAA and since FAA had shareholder participants (Boral, CSR and Pioneer) representing 72% of SEQ cgf sales (by QCL) they would be lost leaving QCL with an available market of 85,000 tonnes of which 40,000 tonnes would probably be supplied out of Swanbank. Assuming Pozzolanic/QCL secured the contract at Millmerran, 45,000 tonnes would be supplied out of Millmerran and profitability would be a margin of $2.99 per tonne or 4.82% on total costs of $2,790,450 or a value of $134,499.69: [1142], [1143] and [2222]. 233 As to the sales to Boral, CSR and Pioneer, see also [1076] to [1078]. 234 Thus, the ACCC says QCL knew that the financial consequence of a loss of the Tarong Contract to a rival (especially FAA and with it 72% of Pozzolanic/QCL sales) would be "catastrophic". The ACCC says that on the issue of deliberateness, the commercial need to win the Tarong Contract (instead of a rival) or win it on terms that foreclosed access to a rival, was well understood within QCL and Pozzolanic. 235 On 31 May 2003, the Cement Australia merger occurred. The incoming CEO was Mr Leon. He was sent an email on 26 September 2003 from Mr Ridoutt under the heading "Flyash Strategy in Qld", as a background briefing, attaching: a capital expenditure request summary of 28 March 2002 signed by Mr Wilson and Mr Ridoutt as proposors and by the General Manager Finance and the Managing Director as reviewers; and the "Ash Market in SEQ, March 2002" document. The covering email explains the strategy to win both the Millmerran and Tarong Contracts and maintain "our single supplier status position" in the flyash market in Queensland. It explains that the strategy has worked "extremely well" and performance has been "much better than forecast". The ACCC says that in the post-merger period Cement Australia continued to implement the QCL strategy. Mr Klose was Pozzolanic's Manager from June 2003 to December 2003. From December 2003, Ms Collins became the Manager of Pozzolanic. She continued to conduct the negotiations with Millmerran concerning implementation steps under the contract and matters related to whether Pozzolanic should continue with the contract due to quality issues. 236 Mr Clarke perceived in June 2004 that a competing facility at Millmerran operated by Boral (but not by FAA as in Mr Clarke's view, FAA could be blocked [2523]) would have a "significant impact on flyash market dynamics" in Queensland. Ms Collins had the same opinion: [2603]. See also [2674]. At 16 June 2004, Ms Collins as Pozzolanic's Manager sent Mr Clarke an email attaching an edited version of a proposed Board paper addressing financial considerations she thought ought to be incorporated into the paper to be put to the directors on the topic of financial cost to Cement Australia should a competitor secure access to Millmerran ash and should such a competitor reduce the price of cgf by $10 per tonne. Her opinion (quoted at [2514]) was this: Pozzolanic has traditionally been operated with low capital investment given the impermanence of the contracts with power stations (see the attached Financial Summary). The capital investments proposed are for installation of refurbished silos, structures, pumping vessels, classifiers and buildings. If a competitor lowers the price by $10/t about $3M per annum in SEQ and several hundred thousand dollars around Callide will be reduced from the Pozzolanic EBIT. [emphasis added] 237 See also [2518] and [2519]. Mr Clarke thought that "prima facie" at least, even small sales of Millmerran ash by a competitor could have a profound effect on the income of Cement Australia derived from sales of flyash due to the impact of most favoured nation ("MFN") obligations although debate would likely arise about whether the MFN obligations had been triggered if Millmerran ash exhibited particular limitations not characteristic of other flyash such as Tarong flyash. 238 The ACCC says that on 28 July 2004, the respondents elected to proceed with the OMC containing the amended provisions (by, among other things, extending the term by one year). The total cost, it says, would then be $11.744 million plus $1.3 million for the extra year amounting to $13.05 million in all. A substantial purpose of entering into the amended OMC was to prevent a rival securing access to Millmerran ash. The likely new partner with MPP would be Boral. Boral would supply itself. Cement Australia would lose its sales to Boral. Boral would have a competing facility in the markets: [2602], [2603], [2674] and [3237]. A substantial purpose of entering into the amended OMC with the identified provisions was to prevent rival entry at Millmerran and in all probability rival entry by Boral. 239 Mr White succeeded Ms Collins as Manager of Pozzolanic in December 2004. Mr White, in preparation for a strategy meeting with the six senior managers reporting to him to be held on 10 January 2005, prepared a document (which he sent to the six managers and copied it to Mr Clarke) setting out his conception of Cement Australia's strategic objectives. At [2737], I describe those objectives in these terms, in part: The objectives for the 10 January 2005 meeting involved reviewing the history of the flyash business, defining Cement Australia's current position, looking at the options for the next two years, determining a preferred option and preparing the outline of an implementation plan. The strategic goals set out in the document were said to be: secure revenue/profitability and growth opportunities; strengthen Pozzolanic's hold on the power stations; increase competitor barriers to entry; and ensure that the three big customers were tied to Pozzolanic/Cement Australia in the long-term. The memorandum talks about "cluster issues" and says that the SEQ cluster is driven by Tarong as the (SEQ) flyash "source", and Gold Coast, Brisbane and the Sunshine Coast were seen as "markets". … Another issue was "competitor access to Swanbank" and that problem would be solved by Pozzolanic "committing to take most of the Swanbank ash". The fifth issue was seen as "limited growth in concrete market with saturation achieved for most flyash applications". … 240 Mr White's proposed solution to what he described as the SEQ cluster issues, so far as it related to Swanbank ash included this observation (at [2738]): This solution is one of many – it is a starting point for analysis and represents a low risk and low implementation costs.  Remove Swanbank ash from concrete market Problem. The differential in Swanbank/Tarong performance in concrete testing has reached a level where Swanbank is difficult to sell and the situation is getting worse. Solution. 35kt to Sunstate as mineral filler, 45kt to Bulwer as mineral filler, 15kt for FAB [fly ash blend]. No concrete sales. CAPEX.(est) $500k for ash sourcing equipment, silo. 241 On 11 March 2005, Mr White wrote to Mr Christy (CSE – Swanbank) seeking an extension of the "current terms" of the Swanbank Contract to 30 June 2005: [683]. Although Mr White was seeking the extension on the footing of providing Pozzolanic/Cement Australia "some security" during the development of a new agreement, the extension of the earlier terms was for a substantial purpose of securing all of Swanbank's ash for the period as a solution to competitor threats at Swanbank: [3221]; [2737] and [2738]. 242 All of these matters at [230] to [241] of these reasons are said to go to the calculated deliberateness with which the respondents engaged in the contravening conduct. Awareness of the character or quality of the contravening conduct 243 The ACCC contends that the respondents well understood that their contravening conduct in relation to the OMC, the amended OMC, Swanbank and Tarong engaged contraventions of the Trade Practices Act. 244 As to Swanbank, the ACCC contends that CSE repeatedly sought to negotiate between 2000 and 2005 a release from the exclusivity provisions of the contract. At [682], I note the evidence of Mr Christy for CSE (which I accepted) that by at least 2000, CSE believed that the ash sales arrangement with Pozzolanic needed to be reviewed due (in part at least) to the need to take account of the requirements of the Trade Practices Act. CSE was "unequivocal" about the need to amend the contract to adopt an "express term" conferring on CSE the right to sell flyash to third parties. These concerns were put to Pozzolanic/Cement Australia. CSE sought a release from the exclusivity obligations. Pozzolanic extended the contract on 11 July 2002. CSE continued to express concerns about the requirements of the Trade Practices Act. 245 As to MPP and TEC, the ACCC contends that in September 2001 and January 2002 respectively, Mr Wilson and Mr Ridoutt for Pozzolanic put tender terms to MPP (MOC) for an exclusive ash supply agreement (see [3021], [3023], [3035]) and TEC ([3094]) in circumstances where they "must have been aware" that "there were trade practices risks inherent in the request for exclusivity", having regard to the "history of the negotiations with CS Energy". 246 As to Millmerran, Mr Hunt and Ms Knox made it plain that an exclusive supply agreement was not possible. They were concerned about the trade practices implications of such a supply agreement: [3023], [3043], [3044] and [3053]. 247 As to TEC, once Pozzolanic was told by MPP that a term conferring exclusivity was not possible, Mr Wilson took the view that Pozzolanic/QCL would need to be "more creative with the contract [that is, the terms] to cover our risk". The risk to be creatively covered was a risk, perceived by Mr Wilson and Mr Ridoutt, of supply of ash by TEC to a third party with consequential entry into each market (and particularly the SEQ cgf market) and consequential effects of contestability on price, volume and EBIT earnings. 248 As to Tarong, in the September 2002 "Ash Market in SEQ September 2002" Board paper, the QCL directors were told that the draft contract containing the proposed provisions at [1140] (by this time Tarong was said to be simply awaiting formal contract documents for review) was being held up by Tarong's lawyers so as to address concerns centred around the trade practices implications of the proposed contract necessitating a three month extension of the existing Tarong Contract: [1141]. 249 Mr Arto accepted that by the September 2002 Board meeting, in the context of the Millmerran negotiations, QCL and Pozzolanic knew, based on advice from Clayton Utz, that the "simple deal" that Mr Arto had hoped would be able to be done for what might have been called (as he said) an "exclusive" supply agreement was not something that was "available as being legally compliant": [2230]. 250 On 1 October 2002, Mr Ridoutt received the revised Tarong Contract. He then knew (and told Mr Wilson and Mr Chalmers) that exclusivity was no longer possible: hence the need to now be more creative with the contract to cover the risk. In the continuing negotiations between Mr Wilson and Mr Collingwood (for TEC), Mr Collingwood reached a position on 13 December 2002 where he sought Mr Wilson's agreement to submit the proposed contract to the ACCC for Authorisation: [3130]. Mr Wilson sought to address TEC's concerns by sending Mr Collingwood, on 18 December 2002, a copy of a letter of advice Pozzolanic had received from Clayton Utz dated 17 December 2002 addressing the trade practices implications of the proposed contract. 251 The letter of advice is based upon Pozzolanic's instructions to Clayton Utz as to the essential provisions of the contract. The letter notes that TEC had contended that the proposed provisions could breach the Act because "it [the provisions] could result in a substantial lessening of competition in the market". The author of the Clayton Utz letter said that it was not possible to say whether making and giving effect to the provisions at [3132] (including an obligation in TEC to sell to Pozzolanic all ash that Pozzolanic obtained from the nominated ash transfer points) would contravene the Act. That was so, in the view of the author, because the content of the factors described at [3132] was unknown. A qualified observation was, however, expressed based on particular factual assumptions to the effect that the agreement (presumably with the [3131] provisions) was unlikely to cause a substantial lessening of competition. Based upon particular factual matters framed within particular assumptions, the author expressed the opinion that those matters "weighed heavily against" [3133] the possibility of the agreement resulting in a substantial lessening of competition. 252 That view seemed to be based on the notion that there was no express provision against TEC granting access to third parties; Pozzolanic would only take 250Kt of Tarong ash each year; and the total volume of ash produced was 1.3 million Kt. However, the royalty incentive scheme (described at [3135]) and Pozzolanic's contractual entitlement to all the cgf Pozzolanic obtained, taken at the critical ash transfer points and therefore the critical hoppers (in circumstances where Pozzolanic was a virtual monopolist in the cgf market), made Mr Collingwood's suggestion of seeking Authorisation for the contract from the ACCC a more than prudent suggestion. 253 As to the amended Millmerran Contract, the ACCC contends that the respondents were "keenly aware" of the competition law risks of entry into those arrangements. At [236] of these reasons, I note the opinion of Ms Collins expressed in her email of 16 June 2004 to Mr Clarke drawing his attention to her perception of the consequences for Cement Australia's EBIT earnings should a competitor emerge in the SEQ cgf market and should such a competitor lower the price of cgf by $10 per tonne: see also [2514]. Mr Clarke sought to explain this opinion as an attempt by Ms Collins to conduct "a sensitivity analysis". This question of the views of Mr Clarke and Ms Collins in the period from the early part of 2004 to 28 July 2004 and the postulated impact on EBIT earnings of "competitor entry" to the cgf market was the topic about which I found Mr Clarke and Ms Collins to be "confused" in their recollections when giving oral evidence. 254 The ACCC also places emphasis on another exchange on this topic of knowledge of the competition law risks of proposed conduct. It is this. On 28 June 2004, a Cement Australia analyst, Mr Adams, employed on 7 June 2004 as the company's "Strategy and Business Development Manager" (reporting to Mr Bailey) sent an email to Ms Collins attaching a "re-write" of the "Queensland Fly Ash Development Plans". Mr Adams had been asked to assume the role of developing the Board briefing paper on that topic including a flyash market analysis. Mr Adams expressed this view (as quoted at [2538]): Pozzolanic Enterprises, highly profitable monopoly of the Qld fly ash market is under threat from new entrants in Global Cement and potentially Boral. PE propose to minimise the damage to their margins and volumes that will result through increased competition by locking out, where possible, their competitors from access to available supplies. This will be achieved by taking up contracts with Millmerran and Callide B and agreeing to invest in these facilities. This move is seen as the most beneficial for all shareholders. 255 As to his analysis of the situation confronting Pozzolanic and Cement Australia, he said this (as quoted at [2539]): CAPL's monopoly of the Qld market is currently under threat from Global Cement and possibly Boral The supply of fly ash from Gladstone Power Station is likely to become less reliable as it will likely operate as peak demand top-up in future. The CAPL right to install ash facilities at Millmerran, the newest and lower cost Qld power station … will expire on 31 July 2004. Millmerran power station is best placed to supplement constrained NSW supply from established Fly Ash Australia Sources. Boral, a customer of CAPL, are likely to be interested in taking up a contract with Millmerran, should CAPL forego the right to take this ash. This would establish a competitor and erode the CAPL volumes. Global Cement is known to have progressed a contract with CS Energy to take Callide C fly ash and is currently supplying to a local dam project CAPL only take small volumes and currently have no facilities at Callide C which produces very high quality ash. Global Cement have recently approached PE asking what ash is not being used from Swanbank. 256 Ultimately, these views are simply the opinions of Mr Adams although, of course, he was employed as an analyst in the relevant role and no doubt formed his views based on his analysis of, presumably, all relevant data. Whether he was right or wrong in his analysis is one thing but the response from Ms Collins is the matter upon which the ACCC places emphasis. At [2542] and [2543], I note these matters: 2542 On the same day that Mr Adams emailed his paper and template to Ms Collins, 28 June 2004, Ms Collins responded at 5.41pm with some threshold advice to Mr Adams before commenting on some specific matters. 2543 Ms Collins said this: I am not sure what guidance Colin has provided [Colin Bailey], but I was under firm instructions from Shaun not to say anything that may have TPC implications wrt competition. Rather the additional facilities needed to be justified on securing enough supply to meet the future demands from our customers and to provide the quality they require. My aim was to provide enough information so that the analysis/discussion can be done on the spot without needing to be spelled out. 257 At [2544] to [2552], I examine the explanations given by Ms Collins and Mr Clarke concerning the Adams paper and the observations of Ms Collins about being wary of saying anything that might have trade practices implications. Ms Collins regarded the paper as inaccurate about a number of matters including pricing to Hanson and Rinker and the volumes of cgf in the market from the various power stations. At [2546], I said this: 2546 One aspect of the response by Ms Collins to Mr Adams's email ought to be noted. Ms Collins felt it necessary to make it plain to Mr Adams, in response to the content of his paper, that she had been "firmly instructed" by Mr Clarke not to say anything that had trade practices implications with respect to competition, rather than make it plain to Mr Adams that the content of the paper was simply wrong and entirely misconceived the Cement Australia and Pozzolanic strategy or business model being deployed in the conduct of the flyash business. The parts of the paper Ms Collins corrected were concerned with the flyash pricing arrangements with the shareholders as determined by Mr Clarke at the time of the merger. Mr Adams had asked Ms Collins to point out if he had "got anything obviously wrong". [emphasis added] 258 Mr Clarke put it this way at [2552]: 2552 Mr Clarke was asked whether he had told Ms Collins about the things she should avoid saying in a Board Briefing Paper and whether he told Ms Collins that she should not say anything that may have trade practices implications with respect to competition. He said, "absolutely". Mr Clarke said that he wanted Ms Collins not to make statements that were inappropriate, rather than, trying to avoid things being recorded in writing which might reflect reasoning underlying a decision which suggested contraventions of the Trade Practices Act. Mr Clarke said he was well aware of the Boral decision in Victoria and his recollection was that the original decision turned upon some inappropriate language to do with competitors and thus Mr Clarke was sensitive to these sorts of comments. Mr Clarke said that Ms Collins just should not have a discussion, in an inappropriate fashion, in a Board paper, at all, about anything that might have trade practices implications with respect to competition. Mr Clarke said that the Boral experience caused him to make sure that people under his control did not engage in anything that was anti-competitive. [emphasis added] 259 I have no doubt that both Ms Collins and Mr Clarke were devotees of the notion that "loose lips sink ships". I am sure they were horrified by the Adams paper. They wanted to ensure that there was discipline in the writing of Board papers and other strategic and marketing plans so as not to suggest conduct that might give, incorrectly, the impression of behaviour in disregard of the Trade Practices Act, or so as not to reveal behaviour in disregard of the Act, or both: hence Mr Clarke's "firm instructions" based on his understanding of the outcome in the Boral litigation due to, as he understood it, inappropriate language in documents. 260 A substantial purpose of entering into the Amended Millmerran Contract containing the relevant provisions was to prevent a rival entering each market with Millmerran ash and bringing into contest price, volume, sales, revenues and EBIT earnings of Cement Australia. The role of senior management 261 As to this topic, the ACCC places emphasis upon these matters. 262 Negotiations for the OMC and the Tarong Contract were conducted by Mr Ridoutt and Mr Wilson. Mr Ridoutt was a senior QCL executive reporting to Mr Arto, the Managing Director of QCL and Pozzolanic and a Director of PIPL from February 2002 to March 2003. Mr Wilson, Pozzolanic's General Manager, reported to Mr Ridoutt. Mr Ridoutt and Mr Wilson for QCL and Pozzolanic, as the authorised negotiators, were responsible for including the provisions giving rise to the contraventions. With respect to each of the contracts, Mr Ridoutt, Mr Wilson and Mr Arto each had the substantial purpose of preventing a rival from securing access to a source of flyash in the unprocessed flyash market and entering into the SEQ cgf market: [3071] – [3073], [3077], [3152] and [3153]. Pozzolanic's non-conforming tender to Millmerran which sought exclusivity was signed by Mr Maycock for Pozzolanic: [3021]. A substantial purpose of Mr Maycock's decision that Pozzolanic enter into the contract was to prevent a rival securing access to unprocessed flyash from Millmerran and to prevent the entry of a potential rival into the SEQ cgf market. Mr Maycock was concerned to ensure that QCL preserved its market position, market share, volume of sales, revenue and EBIT earnings: [2413]. Mr Arto executed both the OMC and the Tarong Contract for Pozzolanic. He executed the OMC for PIPL: [387]; [1961]; [2023]. 263 As to the Amended Millmerran Contract, the merger had by this time occurred. Mr Leon had become CEO. Shortly after that event, Mr Ridoutt sent him an email on 26 September 2003 attaching a copy of Board papers supporting QCL's "strategy to win the new contracts at Tarong and Millmerran and maintain our single supplier status position in the QLD Flyash market": [1079]. In July 2004, the amended OMC was negotiated and signed by Mr Clarke. He was then Cement Australia's General Manager Sales and Distribution. Ms Collins was then the Manager of Pozzolanic: [261] (as to Mr Clarke's role); [2462]; [2553] – [2568]; [2638]; [2639] and [2675]. Entry into the amended OMC was considered at a meeting of Cement Australia's executive and approved by Mr Leon: [302] to [304] (as to decision-making); [2443]; [2553]; [2554]; [2637] to [2639]; [2654] and [2675]. In entering into the Amended Millmerran Contract, Mr Clarke intended to prevent competitor entry at Millmerran: [2676]. Mr Clarke and Ms Collins were senior managers within Cement Australia. Ms Collins reported to Mr Clarke and Mr Clarke reported to Mr Leon. 264 As to Swanbank, Mr White had primary responsibility for extending the Swanbank Contract in 2005: [2727]. He was the Business Manager, Fly Ash, Lime, Off-White Cement for Cement Australia from 1 January 2005 to 30 June 2005 (relevantly), with responsibility for Pozzolanic's flyash business. Mr White reported to Mr Zeitlyn, Cement Australia's General Manager for Sales and Marketing. Mr White was also responsible for the flyash strategy for the respondents and responsible for the issues surrounding third party access to flyash. Mr White understood the elements of the pre-existing Swanbank Contract and the effect of extending the contract to 30 June 2005. As to the 1998 and July 2002 Swanbank Contracts, the ACCC contends that they were entered into and given effect as the expression of the respondents' "sole supplier" strategy securing, in those contracts, "exclusivity". Compliance and co-operation 265 I will return later in these reasons to the ACCC's contentions concerning whether the respondents exhibit a culture of compliance with the Act and whether they co-operated with the ACCC in relation to the contraventions. PART 6: MARKET HARM FLOWING FROM THE CONTRAVENING CONDUCT; BENEFIT ACCRUING TO THE RESPONDENTS BY REASON OF THE CONTRAVENING CONDUCT; AND A CONSIDERATON OF THE APPROACHES CONTENDED FOR BY THE ACCC TO DETERMINING OR MEASURING CONTENDED HIGHER PRICES IN THE SEQ CGF MARKET 266 The ACCC recognises that in most competition cases it is impossible to quantify the "harm to the functioning of the market" caused by adopting and giving effect to, as in this case, provisions of contracts which have the purpose, effect or likely effect of substantially lessening competition as a process. However, the ACCC contends that the contravening conduct caused "significant harm" by "eliminating competition". That proposition is sought to be made good by reference to the following data. I will examine the data in some detail as the ACCC relies upon it for the quantification of both "benefit" and "market harm". In addressing this total topic, much financial data is referred to by the ACCC. In some cases (leaving aside rounding to the nearest $1,000), the numbers deriving from the method exposed in the reasoning in the submissions are not correct. Of course, on topics of this kind that can be quite understandable. However, I have recalculated every one of the calculations set out in the ACCC's submissions with a view to having regard to accurate numbers. In other cases, the footnotes explaining the method adopted require expansion and I have set out those additional matters in the legend to a number of the tables. I have also recalculated the financial tables put on by the respondents. 267 The ACCC says that throughout the period 2002 to 2006, QCL and Cement Australia enjoyed > 85% of the sales of cgf in SEQ. Thus, the size of the QCL/Cement Australia business gives a good indication, it is said, of the overall size of the SEQ cgf market. From 2002 to 2006, the respondents sold 1.75 million tonnes of Tarong and Swanbank fine grade cgf achieving the revenues set out in the tables below. The following statistics as to volume of sales are drawn from the principal liability judgment at [613] and [679]: Year Volume/Tonnes (Tarong and Tarong North) Volume/Tonnes (Swanbank) Total 2002 271,932 44,807 316,739 2003 303,045 36,568 339,613 2004 308,039 40,952 348,991 2005 348,468 26,851 375,319 2006 379,101 17,751 396,852 Total 1,777,514 268 The ACCC says that the revenue for each of those years after rebates was this: Year Tarong Reference Swanbank Reference Total 2002 $18,344,532 [1339], $67.46 x 271,932 tonnes $2,465,729 [1342], $55.03 x 44,807 tonnes $20,810,261 2003 $22,682,918 [1340], $74.85 x 303,045 tonnes $2,112,167 [1343], $57.76 x 36,568 tonnes $24,795,085 2004* $22,856,493 [1354], $74,20 x 308,039 tonnes $2,331,806 [1354], $56.94 x 40,952 tonnes $25,188,299 2005* $26,797,189 [1354], $76.90 x 348,468 tonnes $1,588,773 [1354], $59.17 x 26,851 $28,385,962 2006* [Removed to the Confidential Schedule] [1354], [Removed to the Confidential Schedule] x 379,101 tonnes $781,576 [1354], [Removed to the Confidential Schedule] x 17,751 [Removed to the Confidential Schedule] Total [Removed to the Confidential Schedule] * The calculations for the 2004, 2005 and 2006 years for Tarong are based on an average price; the calculations for Swanbank for 2004 and 2005 are based on an average price; the Swanbank 2006 year price is based on the price at [1354]. 269 The ACCC says that throughout the relevant period (2002 to 2006) prices for SEQ cgf were "higher than the prices which would have prevailed in a competitive market" which must necessarily mean, but for the s 45 contravening conduct. A number of references from the principal liability judgment are cited in support of that proposition. 270 The first is [896]. At [890] and following I discuss aspects of Mr Clarke's views about FAA seeking to supply shareholder customers in SEQ with flyash sourced out of the NSW power stations. A business model based on that notion was regarded as "not viable". Mr Clarke gave evidence that the economics of transporting flyash required FAA to secure a flyash source in Queensland close to the customers in order to meet demand. Mr Clarke took the view that FAA would at least have the "tacit" support of its shareholder customers in seeking to supply their demand from a source of flyash acquired in Queensland provided that the flyash so sourced met the relevant cgf standard. At [896], I found, having accepted Mr Clarke's evidence on this topic that pricing by FAA of such a source, if access to it was acquired, would likely give rise to cost reductions for the shareholder customers by constraining QCL's prices for cgf. 271 The second is [1641] to [1644]. At Pt 24 of the principal liability judgment I discuss aspects of the evidence of Mr David Keating who had been the Executive Director of Transpacific since 1987. Mr Keating and Transpacific together with Mr Terry Peabody, the Managing Director, were agitating for access to a supply of flyash to enter the market for the supply of cgf in SEQ. On 14 September 2001, Transpacific bid for the contract to take and process flyash from Millmerran power station. On 14 March 2002, Transpacific was told that it had been unsuccessful in the tender as Pozzolanic had won it. At [1642], I observe that on 21 March 2002, Transpacific sent a letter to Millmerran (the Managing Director of InterGen for MPP) and in that letter Transpacific expressed disappointment about having been unsuccessful. In that letter, written under the authorship of Mr Terry Peabody, the author expresses a number of opinions about the state of the market or at least perceptions of factors characterising the market. In his affidavit, Mr Keating (whose evidence I generally accepted [1671]) adopted the letter and I inferred from that circumstance [1644] that the views put forward in the letter were views held by Transpacific as an organisation with an active interest in the dynamics of the cgf market in SEQ. I also inferred that had those views not been properly reflective of Transpacific's views, presumably Transpacific would never have written a letter under the authorship of the Managing Director of the company to InterGen. 272 Nevertheless, the matters set out in the letter are an expression of opinion. At [1643], I describe the opinion expressed by Mr Peabody and adopted by Mr Keating in these terms: 1643 In that letter, Transpacific also expressed a number of observations about the market or at least perceptions of factors characterising the market. Transpacific said that the QCL group had established exclusive marketing rights for flyash at Tarong, Swanbank, Callide B and Gladstone; the market for flyash is "primarily centred in [south east] Queensland with demand for flyash diminishing northwards as the population decreases"; the quantity of flyash marketed within Queensland from the four power stations already mentioned was less than 15% of the flyash production from those power stations; independent concrete producers had expressed concern to "us" regarding the "monopoly of the fly ash industry throughout the State" and statistically the independent concrete producers "account for approximately 33% of the concrete market" [emphasis added]; and, the "price paid for flyash in [south east] Queensland is 44% more expensive than New South Wales with QCL announcing an increase of $10.00 per tonne (a 15% increase) effective 1 April [2002] with a further $10.00 (15%) increase within the next 6 months". 273 The third is [1786]. At [1782] and following I discuss aspects of the definition of the boundaries of the "downstream market", that is, the SEQ cgf market. At those paragraphs I also discuss aspects of Mr Houston's evidence and the application of a SSNIP test. In having regard to the application of the SSNIP test, I note some factual matters relevant to the outcome of such a test applied to a price in circumstances where that price might have resulted from an exercise by a firm of a substantial degree of power in an area of transactional activity. As to the factual matters on that topic, I noted at [1785] these matters: 1785 Pozzolanic was, in essence, the sole supplier of concrete grade flyash in SEQ. Some sales of Bayswater and Eraring flyash occurred into Queensland (as discussed shortly) but the evidence overwhelmingly establishes that virtually all of the cgfa sold in SEQ for use in concrete production was sourced by Pozzolanic and sold by QCL. QCL enjoyed approximately 85% of the sales of cgfa in the SEQ area. Pozzolanic enjoyed contractual rights which gave it a preferential position in relation to access to flyash from SEQ power stations. Pozzolanic and QCL conducted their analysis of market pricing by reference to the benchmark of the next best alternative price that would otherwise be available to a concrete producer and it supplied cgfa only on a delivered price basis. Although Mr Arto considered that QCL was constrained by competition for flyash brought into South East Queensland from Bayswater and Eraring Power Stations, he described Pozzolanic's market share as "high" or "very high". 274 At [1786], I began a discussion of two factors which suggested that if it were not for Pozzolanic's position as virtually the sole supplier of cgf in SEQ, the principal source of competitive constraint would have come from other suppliers of cgf sourced from within SEQ. 275 The fourth is [1833]. At [1820] and following, I discuss aspects of the SEQ market definition and at [1824] and following, I identify a number of important considerations on that topic. At [1833], I note aspects of FAA's experience in seeking to implement its August 1999 action plan for the sale of cgf into Queensland and its efforts to reduce transport costs in moving cgf to Murwillumbah and then into SEQ at a competitive landed price to QCL's delivered price to batching plants. I note the earlier discussion of the total comparative costs including transport costs incurred by QCL in supplying Tarong cgf and Swanbank cgf for the financial years ending 30 June 2001, 2002 and 2003. I make reference to the production costs. In the context of the definition of the SEQ cgf market, I note that the election by some independent concrete producers to purchase cgf from NSW power stations was not in any practical or realistic sense an expression of an expanding geographic market boundary (for the purposes of the SSNIP test) of rivalrous substitution possibilities by a NSW cgf supplier contesting and thus constraining Pozzolanic and QCL's capacity to charge more and give less. I observe at [1833] that, rather: … the election by these buyers to purchase Bayswater sourced [cgf] (from Hyrock) is emblematic of non-rivalrous next best alternative pricing by an SEQ supplier [QCL] enjoying substantial control of SEQ flyash sources by reason of its contracts; predominant market share; and a capacity to dictate delivered pricing terms of product supply constrained only by the landed cost to batching plants at southern overlap areas of the outer edge of the geographic boundary. 276 That discussion resulted in the conclusion at [1834] that the downstream market is a market for cgf in SEQ and probably included some overlap areas immediately adjacent to the SEQ region in northern NSW. 277 The fifth is [1835]. At Pt 29, I express a number of conclusions arising out of the evidence I had accepted, concerning the finding that on 30 September 2002 when Pozzolanic and PIPL entered into the OMC, those companies enjoyed a substantial degree of power in the SEQ cgf market. 278 At subparas 22 to 26 of [1835], I find that: QCL was able to adopt a pricing policy of supplying cgf to buyers only on a delivered price basis; by enjoying the discretionary power to price the supply of cgf on such a basis, Pozzolanic and QCL were able to deploy Pozzolanic's tanker fleet as Pozzolanic chose according to its own discretionary judgments about the efficiency of its own logistics activities; buyers were unable to purchase cgf ex-plant at Tarong or Swanbank and arrange their own transport; delivered pricing selected by Pozzolanic as the only bundled supply price available to a buyer enabled Pozzolanic to structurally control the network of logistic arrangements and assets used in the movement of flyash to buyers, without the constraint of competition (hence the discretionary judgments involved); QCL was able to impose a delivered price at a buyer's batching plant constrained only by the landed cost a buyer would confront in purchasing cgf ex-bin from Eraring or Bayswater and incurring the transport cost to the batching plant; and, in making these delivered price decisions and deploying a next best alternative pricing methodology, QCL was unconstrained by workable competition in SEQ as rivalry in the supply of cgf necessarily required a rival to secure access to an SEQ source of unprocessed flyash enabling processing and classification and other facets of handling through plant and equipment deployed at an SEQ power station "arising out of appropriate contractual arrangements with the power station owner". 279 The sixth is [1882]. In that paragraph I make findings about the degree of market power enjoyed by QCL and Pozzolanic at 30 September 2002. 280 The seventh is [2659]. At [2657] and following I discuss the market power of Cement Australia at June 2004. At [2659], I find that a buyer seeking to purchase cgf in SEQ could only acquire that flyash from Cement Australia. Otherwise, buyers would source cgf from NSW power stations and make arrangements for the transport of cgf to the various batching plants. At [2659], I find that Cement Australia priced the supply of cgf on a delivered pricing basis only, measured against a price point determined by the next best alternative displacement cost a buyer would incur in purchasing from a NSW power station, plus the cost of transport. I find at [2659] that Nucon in the years 2003 and 2004 purchased particular volumes of cgf into SEQ from NSW power stations and incurred the transport cost. The volumes were quite small in the context of Cement Australia's sales. At [2659], I find that: "These transactions did not constrain Cement Australia's pricing methodology or practices. In fact, Pozzolanic price rises continued to occur, generally". Thus, Cement Australia enjoyed discretionary power to price in the way described unconstrained by rivalry in the SEQ cgf market. 281 The eighth is [3182]. At Pt 47, I make findings in relation to the effect and likely effect of the identified provisions of the Tarong Contract of 26 February 2003. At [3182], I find that any new entrant activity at the Tarong Power Station of obtaining access to raw flyash for processing so as to enable new entrant competition in the SEQ cgf market "would have been significant, real and meaningful new competition" and the "expansion in the scope and field of rivalry would very likely have operated to constrain Pozzolanic and QCL and later Pozzolanic and Cement Australia" in the way earlier described in the reasons and the conclusions. 282 Thus, the point agitated by the ACCC (although not expressly put this way) is that QCL and later Cement Australia were unconstrained in discretionary decisions concerning market pricing and terms of supply because, first, they enjoyed substantial (virtually monopoly) market power and second, they enjoyed until 30 June 2005 exclusive access to Swanbank ash; contractual provisions at Millmerran that prevented access to ash in practical terms to third parties (although the effect and likely effect of those provisions would not be to substantially lessen competition as from 31 December 2003); and contractual terms at Tarong that prevented access to ash in practical terms to third parties for the life of that contract. Further, by reason of the provisions of the Tarong Contract (and the provisions of the OMC until 31 December 2003 and the Swanbank provisions) against the background of their market power, prices in the SEQ cgf market were higher than they would have been but for the contravening s 45 conduct because, with the provisions, QCL and Cement Australia were unconstrained by rivalry. 283 Since the proposition is that prices for SEQ cgf were higher that they would have been in a competitive market but for the identified provisions of the contracts (or particularly the provisions of the Tarong Contract having regard to the significance of its contribution to quality cgf supply taken together with the Swanbank provisions to 30 June 2005 and the OMC provisions to 31 December 2003), it is important to keep in mind the contribution of the relevant provisions to the contended higher prices because, for example, higher prices due to an exercise of market power per se in the commercial sense (that is, absent a contravention of s 46 of the Act), are not necessarily a consequence of the s 45 contraventions. Of course, the provisions to the extent that they deny access in a working practical way to ash from the power stations to third parties, prevents entry and rivalry and thus is enabling of the exercise of discretionary market power in a commercial sense and, in that way, the provisions in contravention of s 45 have a relevant causative connection with higher prices. As to that contribution, I found (apart from purpose) that the identified provisions of the Tarong Contract had the effect and would be likely to have the effect across the life of the contract of substantially lessening competition. The Swanbank provisions conferred exclusivity until 30 June 2015 and the provisions of the OMC had the effect and likely effect of substantially lessening competition until 30 December 2003. 284 The ACCC says that the Court's findings concerning the impact of the contravening conduct on flyash prices are consistent with the respondents' "expectations of the effect of new entry" and evidence of "actual pricing by Sunstate Cement and IFB in the period 2011 to 2013". 285 The present question is by what margin or order of magnitude were the prices in the relevant period higher than they would have been but for the contravening conduct? 286 As to that question, the ACCC says that Mr Houston observes in his expert report that there is no single definitive means by which the ACCC can now estimate the prices that would have applied in an effectively competitive market so as to measure the difference between such a price and the prices that prevailed in fact. However, the ACCC says that Mr Houston has identified three methods by which economists seek to make such an assessment. The first is a cost and profitability analysis which operates on the principle that prices in effectively competitive markets reflect normal or average returns. The second is an analysis of benchmark prices from other geographically separate regions adjusted to take account of differences in quality, scale efficiency and other cost differences. The third is an examination of any analyses undertaken by the firm in question that reflects its own informed assessment of what would constitute a competitive price. 287 The ACCC then undertakes a discussion of four approaches which are said to support the conclusion that the contravening conduct of the respondents led to measurably higher prices in the market. 288 The first approach involves an examination of the respondents' own analysis of the likely competitive price. The ACCC says that the assessment of Pozzolanic and QCL before and after entry into the OMC and Amended OMC was that prices would have been $14 to $16 per tonne lower if another party had obtained the Tarong or Millmerran Contract. On this footing, the ACCC says that over the period 2002 to 2006 the market harm through higher prices is in the order of $[Removed to the Confidential Schedule] to $42 million. The ACCC says that Pozzolanic's view was prepared by experienced executives with detailed knowledge of the flyash market and accordingly, their views are likely to give "the best 'forward-looking' assessment of the likely effect of the conduct as at 2002". 289 The second approach involves an examination of the prices prevailing in NSW as a comparative geographic region. The ACCC says that throughout the relevant period, flyash prices in NSW were significantly lower than SEQ prices due to FAA's business model and competition with flyash sourced from Bayswater through Hyrock. The ACCC says that evidence of FAA's actual pricing in NSW supports the view expressed by the respondents that prices would have fallen if FAA had obtained a contract with an SEQ power station. 290 The third approach involves an examination of the prices that prevailed in the market once Sunstate and IFB entered the SEQ cgf market in 2007 and 2008 respectively. [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 291 The fourth approach involves an examination of the relativities between cement and flyash prices and inferences which might be drawn from those relativities. The ACCC says that an indicator of the impact of competition is the "de-coupling" of flyash and cement prices which has occurred since the entry of Sunstate and IFB into the SEQ cgf market. The ACCC says that during the period that Cement Australia maintained its virtual monopoly, it sought to ensure that flyash was "fully priced" relative to the delivered price for General Portland cement ("GP cement"). It says that over the period 2004 to 2008, Cement Australia's average delivered price for Tarong flyash was 50% to 60% of the delivered price for GP cement. [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 292 As to the approach to seeking to identify the price which would have prevailed in the market in the relevant period 2002 to 2006 but for the contravening conduct, by reference to benchmark prices in the market in 2011, 2012 and 2013, very great care must be taken in relying upon such prices as a true measure of the but for price because the calculus of market factors influencing actual market prices in a much later period may not give any proper indication of a price which would have prevailed in a hypothetically contestable market but for provisions of the kind contained in the relevant contracts, in the earlier period, unless all other contributing factors, within the calculus of factors, other than the constraints of the provisions are accounted for as non-contributing factors leaving only the absence of the constraints reflected in the provisions as causative of lower prices in the later period. The first approach: the respondents' own analysis of the likely competitive price of cgf in the SEQ cgf market 293 The ACCC says that prior to the entry into the Swanbank extension by the letter of 11 July 2002, the OMC on 30 September 2002 and the Tarong Contract on 26 February 2003, the respondents understood that, as a statement of their then market position, they enjoyed a virtual monopoly in the supply of cgf. Prices were above competitive levels: [3087]. Entry of a competitor at Millmerran would likely have led to contestability and a quite prompt price response by QCL: [3081]. The ACCC says that QCL understood the likelihood of that result and postulated in various position papers in 2001 and 2002, the likely consequences of competitor entry. 294 On 14 November 2001, the QCL Board considered a document called the "2002 QCL Group Consolidated Budget". Financial years for the respondents at that time were calendar years. In that document, prepared for the directors, the authors considered that the total market for sales of cgf would grow by 13% in 2002 although Pozzolanic's sales would grow below that trend by only 5.7% due to a potential loss of market share to others supplying processed Millmerran cgf into the SEQ cgf market. 295 The expectation of the authors was that Pozzolanic/QCL would suffer reduced sales from Tarong of 5,000 tonnes per month from July 2002 as Millmerran processed ash entered the market. The authors expected Pozzolanic to secure a renewal of the Tarong Contract from July 2002. As to what all this might mean for prices of cgf, the authors note that although a price increase of $3 per tonne had been implemented in September 2001, prices for Tarong ash would "drop by $10 per tonne because of competition from ash sourced ex Millmerran". 296 As to the prudential basis to be adopted in the 2002 budget for projections of EBIT as put to the directors, the authors said that the "effect on EBIT of competition from ash sourced ex Millmerran in the 2nd half of 2002 is –$2.8m": [1062]. The ACCC says that projecting that forecast budget assessment (for the period 1 July 2002 to 31 December 2002) to an annual figure, the EBIT loss would be $5.6 million and projected over the seven year life of the OMC, the EBIT loss due to competitor entry with Millmerran ash would be $39.2 million. 297 The assumption that the Millmerran ash would enter the cgf market from July 2002 proved to be misplaced. In fact, it never entered the market in the period 2002 to 2006. It proved to be problematic in terms of quality due to colour variability and other factors. These issues of quality were the subject of many analytical studies by recognised institutions and scientific experts and were extensively discussed in the principal liability judgment. 298 It would not be analytically sound to assert that by reason of the OMC provisions, Pozzolanic and QCL and later, Pozzolanic and Cement Australia, prevented an accumulated EBIT loss of $39.2 million, even assuming that making such a projection based on an expression of opinion for the purposes of the budget, was sound. 299 The ACCC also observes that in the Board paper prepared for the meeting of directors of the QCL group of companies on 11 April 2002, entitled "Ash Market in SEQ March 2002" (found to have been prepared, in all probability, by Mr Ridoutt), the report contains observations on the state of Pozzolanic's negotiations with MPP and TEC respectively and the proposed terms for each contract. The report observes that loss of either contract "may result in a loss [of sales] of up to 250,000t of fly ash and an EBIT of $6 million": see [1119]. The report then sets out possible inherent risks associated with securing both contracts: see [1114] to [1120]. Both contracts had to be won to prevent the perceived possible loss. The ACCC says that if that view is projected over the life of the OMC, the EBIT loss would have been $42 million (assuming a loss of the contract to a rival, entry and contestability). 300 The Board paper projection of March 2002 makes an assumption that Millmerran ash would enter the market and would prove to be a contestable and substitutable ash for Tarong ash. The authors then expressed the opinion that, in those circumstances, entry by a third party would result in a substantial loss of sales volume (250Kt) and, in consequence, a loss of EBIT of $6 million, should that contract (and with it Millmerran flyash) go to a rival. The necessary assumption that Millmerran ash would be contestable and substitutable for Tarong ash was unsound. But, nevertheless, it was an assumption that informed judgements about what might happen in the relevant market should a competitor enter with a substitutable ash. 301 On the other hand, a loss of the Tarong Contract would prove to be a loss of a tried and proven ash of cgf standard well understood and extensively used by concrete producers in SEQ. A loss of that contract would, no doubt, give rise to a very large volume loss of sales, loss of revenue and loss of earnings (EBIT). 302 Thus, at March 2002, the authors of the Board paper thought it essential to win both contracts to sustain QCL's level of sales, revenue and profitability. 303 However, if the ACCC's proposition under discussion is that but for the contraventions the prices for SEQ cgf in the period 2002 to 2006 were higher than the prices which would have prevailed in a competitive market by a margin measurable in a way related to projections of EBIT losses avoided by preventing entry, neither the Board paper of March 2002 nor the November 2001 budget document for 2002, expresses an opinion about or examines the question of: would winning the Tarong Contract but on terms not containing the offending provisions, thus enabling access (and presumably some degree of commercially relevant regular access) by a rival new entrant to Tarong ash and entry into the SEQ cgf market in competition with QCL, have produced a loss of sales of 250Kt and an EBIT loss of $6 million, in the first year of the contract and each year thereafter? 304 Clearly, the decision-makers in Pozzolanic and QCL experienced in the product and the market for it (Mr Ridoutt and Mr Wilson) and also Mr Arto, considered there was a real risk of a significant loss of sales, earnings and market share should a competitor enter the market dominated, as it was, by Pozzolanic and QCL. That result would flow from contestability, in their view, should one of the contracts be lost and a competitor be able to then enter the SEQ cgf market armed and ready for battle with contestable ash sourced out of Millmerran or Tarong. Professor Hay thought that should FAA win either of the contracts, Pozzolanic's market share would "collapse almost immediately" no doubt because FAA would deploy its "pass-through cost plus model" and win flyash sales to its shareholder buyers: [1844], [1859], [2273]. I found that in April 2002, Mr Arto held precisely that same view: [2273]. The notion that competitor entry would have a significant impact upon market dynamics flowing from contestability and a growing field of rivalry was a view held not only by those persons within Pozzolanic/QCL intimately familiar with the actual functioning of the market but also by informed potential entrants such as FAA and Transpacific. They expected prices to fall if they secured access to Millmerran ash: [896], [1635]. 305 The ACCC emphasises that at September 2002 the respondents saw themselves as unconstrained in their pricing decisions and thus prices were higher than they would have been had a competitor gained access to contestable ash. Because Pozzolanic had won the OMC, substantial additional annual royalties had been incurred: $1,323,500 in Year 1 (the 2003 calendar year). From 1 October 2002, the QCL price of cgf in SEQ was increased by $4/tonne. Based on 2003 QCL total sales of 339,613 tonnes, a price increase of $4/tonne in SEQ would raise $1,358,452. 306 The ACCC says that QCL was unconstrained in extracting this recoupment through a price increase: [1348] to [1353]. The ACCC says that by 1 October 2002 the price of cgf in SEQ was $4/tonne more than it would have been had Pozzolanic/QCL been constrained by competitor entry with Millmerran ash (the immediate actual and objective market increase), but also another $10/tonne higher, in SEQ, than it would have been had a rival gained access to Millmerran ash. That follows, it is said, because those who formulated the 2002 budget thought and planned for and expected a $10/tonne price reduction in the price of Tarong ash starting in July 2002 due to competition from Millmerran. The ACCC contends that if that was the assessment of such a major experienced market participant, why should it not be accepted as a commercially realistic quantitative measure of the margin by which the price that prevailed in the SEQ cgf market was higher than the price that would have prevailed had a rival won the contract or had a rival been able to secure access to Millmerran ash absent the identified provisions which, in a practical sense, operated to prevent such access. 307 The views or opinions about price held by informed and experienced decision-makers critically concerned to assess that matter (at the relevant time) and assess the inter-relationship between factors affecting price, should be given careful attention, due weight and consideration. They are in the business. They think about such matters expressly for the purposes of business planning and budgeting. They are disciplined about these questions because such decisions are critical to the monthly if not daily performance of the companies. Their views were that absent Pozzolanic/QCL winning the Millmerran Contract, Millmerran ash would enter the market and would take sales from QCL (of Tarong ash). The pricing rivalry would see a $10/tonne drop in their view. It seems open to infer that their view must have been (rightly or wrongly), on balance, that had Pozzolanic/QCL won the Millmerran Contract but on terms absent the identified provisions such that a third party could obtain commercially relevant regular access to Millmerran ash, rivalry, in that circumstance, may also have resulted in a $10/tonne price reduction in the SEQ cgf market. They also thought that if Pozzolanic/QCL lost the Tarong Contract they would lose 250Kt of volume and $6 million of EBIT. Did they think that if Pozzolanic/QCL won the Tarong Contract but on terms enabling access to a rival, that contestability would result in 250Kt of lost sales and an EBIT loss of $6 million? 308 By 31 December 2003, the market had become aware that Millmerran ash was not substitutable (as cgf meeting the required standard) for Tarong ash and provisions preventing access to Millmerran ash would cease to have the effect or likely effect of substantially lessening competition. In terms of an actual measure of the difference between the prices prevailing in the SEQ cgf market and prices that would have prevailed in a competitive market but for the contraventions, the opinion that contestability in the supply of (assumed) like for like ashes would have resulted, by October 2002, in a price (for Tarong ash) $10/tonne lower than the prevailing price is simply an informed forward-looking opinion based on particular assumptions on the part of the QCL decision-makers from the vantage of being a virtual monopolist in that market. 309 The ACCC says that on 16 October 2002 after Pozzolanic had entered into the OMC, Mr Wilson sent a memorandum to Mr Arto setting out his assessment of relevant financial matters under the headings: "2001 Actual"; "2002 Budget"; "2003 Estimate"; "2003 Budget". In his memorandum, Mr Wilson observes that in the budget presentation the preceding day, Mr Arto had questioned data presented to the Board in relation to securing the Millmerran and Tarong Contracts. Mr Wilson added the 2003 budget figures (Column 5) to produce a table in these terms: Indicator 2001 Actual 2002 Budget 2003 Estimate 2003 Budget Total fly ash sales 288,000t 297,000t 331,000t 342,000t Average selling price $61/t $57/t $67/t $73.11/t Total Net Sales $17,535,000 $16,934,000 $22,177,000 $25,003,000 Royalty Cost $2,606,000 $2,771,000 $4,248,000 $4,359,000 Production & Maintenance Costs $1,620,000 $1,693,000 $2,513,000 $2,262,000 Distribution Costs $5,469,000 $5,483,000 $6,589,000 $6,476,000 Gross Profit $7,831,000 $6,987,000 $8,827,000 $11,905,000 EBITDA $6,100,000 $5,256,000 $7,096,000 $9,808,000 EBIT $4,825,000 $4,896,000 $5,471,000 $9,150,000 EBITDA Margin 34.8% 31.0% 32.0% 39.2% 310 Based on this memorandum, the ACCC says that Mr Wilson is describing an increase of $8,069,000 in total net sales in 2003 ($25.003M) as compared with the 2002 Budget ($16.934M) and a budgeted increase in the average selling price per tonne of cgf of $16.11: $73.11/t - $57/t. The ACCC says that the average selling price adopted in the 2002 Budget of $57/t assumed QCL would face a competitor using Millmerran ash from 1 July 2002. The 2003 Estimate prepared in 2002 recognised that Pozzolanic/QCL had secured the Millmerran Contract. No longer would the average selling price per tonne be lower by $10/t. In the 2003 Estimate, the price would thus be $67/t. In the 2003 Budget the price adopted was $73.11/t, an increase of $6.11 above the $10 uplift reflected in the 2003 Estimate. 311 As mentioned earlier, the 2003 price contained within it a $4 increase to recoup the 2003 royalty cost payable to Millmerran. The ACCC says that Pozzolanic/QCL formulated the 2003 Budget on the footing of deriving EBIT of $9.15M which represents an increase of $4,254,000 more than the 2002 Budget which assumed competitor entry. The ultimate 2003 budgeted figure for EBIT was an increase over the 2003 Estimate for EBIT ($5.471M) of $3,679,000. 312 Thus, the ACCC says that absent competition (an absence secured through the provisions of the OMC and, from February 2003, the Tarong Contract), Pozzolanic/QCL were able to rationally budget for a price increase in the 2003 year of $16.11/t. The ACCC says that if a lower bound figure of $14/t is selected representing the projected $10/t differential coupled with the $4/t discretionary increase to recoup the Millmerran royalties, and that measure of "over-charge" beyond that which would have been a rivalrous price is then projected over the period 1 July 2002 to 31 December 2006, the increased sales revenues derived from a $14/t "over-charge" would be > $22M. 313 That follows according to the calculation set out below which adopts the actual revenue statistics set out in the table at [268] of these reasons which are slightly different to the statistics identified by the ACCC. Nevertheless, the total revenue figures are very similar: Year Total cgf sales/tonnes Actual revenue after rebates – cgf sales Revenue assuming $14/t reduction in cgf Revenue difference 2002 316,739 $20,810,261 $18,910,000 $1,900,261 2003 339,613 $24,795,085 $20,040,000 $4,754,085 2004 348,991 $25,188,299 $20,305,000 $4,883,299 2005 375,319 $28,385,962 $23,136,000 $5,249,962 2006 396,852 [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Total 1,777,514 [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 314 Although the actual revenue for 2002 was $20,810,261, it should be remembered that the OMC was entered into on 30 September 2002. Therefore, it was a relevant instrument in 2002 only for the months of October to December. The revenue in that quarter was $5,202,565. Assuming a $14/t reduction in the price of cgf, the revenue in that quarter would have been $4,727,500 and the differential would have been $475,065. The total revenue for the years 2002 to 2006 would need to be reduced by $15,607,696 to take account of revenue in the period 1 January 2002 to 30 September 2002. On that basis, total revenue in the period 2002 to 2006 would have been $[Removed to the Confidential Schedule]. Total revenue assuming a reduction of $14/t would have been $[Removed to the Confidential Schedule]. The revenue difference would have been $[Removed to the Confidential Schedule]. 315 In any event, on the footing earlier described, the ACCC contends that the measure by which the prevailing price was greater than it would have been in the period 2002 to 2006 in a contestable market but for the contraventions (that is, without the relevant provisions of each contract but particularly those provisions relating to Tarong ash as the benchmark SEQ cgf) was $[Removed to the Confidential Schedule]. 316 Adjusted as described earlier, it would have been $[Removed to the Confidential Schedule]. The respondents contend for other adjustments to the revenue to properly identify revenue derived during the period of the contraventions. Those adjustments are discussed later in these reasons. 317 The ACCC contends, in other words, that Pozzolanic/QCL was better off in terms of sales revenue by this margin. The ACCC says that this measure does not take into account the circumstance that competitor entry and rivalry would also have resulted in Pozzolanic/QCL suffering a loss of market share as well, rather than simply retaining its market share of sales at $14/t less than the non-rivalrous price: the market share scenario is discussed below. 318 The ACCC says that later documents of the respondents are also relevant on this topic: see [2441], [2759] to [2762]. 319 As to that, in September 2003, a consulting firm, LEK Consulting ("LEK"), made a presentation to the Cement Australia Board expressing the opinion that independent entry to the SEQ cgf market could bring "market prices" for cgf down by $30/t and that those lower prices would almost certainly be reflected in lower concrete prices: [2441]. In context, LEK's opinion quoted at [2441] was this: Increased competition for Pozzolanic in Queensland in the medium term could arise from either of two scenarios - An entry by Sunstate (or Boral) could result in a loss of Pozzolanic volumes equal to ~50% of the independent concrete market and 100% of Boral's concrete market (~160Kt) - A collaboration by independent concreters to source flyash directly from power stations could reduce Pozzolanic volumes by about 75% of the independent concrete market (~90Kt) While an entry by Sunstate or Boral (probably through FAA) is not expected to have much effect on flyash prices, an independent entry could bring market prices down toward cost levels (loss of up to ~$30/t). This would almost certainly be leaked to concrete customers [emphasis added] The second approach: a comparison of market prices prevailing in NSW with those of SEQ 320 The ACCC says a second "indicator" or analogical measure of the "impact" of the contravening conduct is revealed by comparing the prices for cgf in NSW where Hyrock was in competition with FAA (Boral and Cement Australia) in the supply of cgf. NSW market prices, reflective of competition in a like-for-like cgf product, are said to represent a "benchmark" against which SEQ pricing can be relevantly measured. As to FAA, Mr Maycock, as already mentioned, described its business model at the power stations as a cost "pass-through plus a margin" model. It seems to have sold cgf to its joint venture shareholders on an "ex-works" or "ex-bin" basis plus a handling margin. The shareholder buyers would either use that flyash in their own operations as a cementitious partial substitute for "cement" or on-sell it to third parties. 321 What were the "ex-works" prices charged to FAA's own shareholders, supplied into NSW? 322 Eraring, Mt Piper and Bayswater ash was sold as follows: Eraring: 2001 to 1 October 2004, $[Removed to the Confidential Schedule]/t; 1 October 2004 to 1 October 2005, $[Removed to the Confidential Schedule]/t; and 1 October 2005 to 1 December 2006, $[Removed to the Confidential Schedule]/t; Mt Piper ash: $[Removed to the Confidential Schedule]/t, $[Removed to the Confidential Schedule]/t and $[Removed to the Confidential Schedule]/t in the same periods respectively; Bayswater ash: $[Removed to the Confidential Schedule]/t in each of the respective periods. 323 Next, the ACCC says that the relative "delivered pricing" comparison for SEQ and NSW can be seen in the prices Cement Australia achieved for the sale of flyash in SEQ and NSW in the years 2003, 2005 and 2006. Equivalent information is said not to be available for 2002 and 2004. The comparison is said to be this: Relative Pricing Comparison between SEQ and NSW 324 The ACCC during the course of the hearing handed up a further table addressing the topic at [323] of these reasons but reflecting an adjustment of $5/t in the transport cost differential. It is not necessary to reproduce the adjusted table. I have taken the adjusted table into account. 325 The ACCC says that Swanbank delivered prices are significantly lower than Tarong delivered prices due to deterioration in the quality of the Swanbank ash. 326 The ACCC says that for the years 2003, 2005 and 2006 the only "credible explanation" for the difference in delivered prices in NSW when compared with SEQ delivered prices is contestability and rivalry in NSW operating to constrain prices. The notion is that had FAA or Transpacific or another rival entered the market in SEQ "it is likely prices would have fallen" during the period 2002 to 2006. I found, in the primary liability judgment, that new entrant competition at either Tarong or Millmerran (until 31 December 2003 as to the OMC provisions) would have stimulated rivalry and contestability. The future face of competition, as a process, with entry by a rival (either by a rival winning the relevant contract or by Pozzolanic/QCL winning the contract but on terms that did not constrain, in their practical operation, third party access to ash at those power stations (and particularly Tarong ash) would have been much more dynamic and significantly "better off" than it was or was likely to be (when those contracts were made), with the identified provisions. 327 The question being examined here for present purposes however, is what is a reliable measure of the difference and can it be reliably identified? 328 As to this comparative pricing approach, the ACCC says that the average delivered prices for Eraring and Bayswater flyash, in NSW were: 2003 - $37.59/t; 2005 - $45.72/t; 2006 - $53.65/t. In SEQ the delivered price of Tarong ash into SEQ was: 2003 - $74.77/t; 2005 - $76.91/t; 2006 - $[REMOVED TO THE CONFIDENTIAL SCHEDULE]. 329 Accordingly, the delivered price difference is this: Delivered Price Difference Source 2003/t 2005/t 2006/t Average Eraring/Bayswater delivered price into NSW $37.59 $45.72 $53.65 Tarong delivered price into SEQ $74.77 $76.91 [Removed to the Confidential Schedule] Margin by which Tarong delivered price higher +$37.18 +$31.19 [Removed to the Confidential Schedule] 330 The ACCC contends that had SEQ prices fallen, with competition, to analogical NSW levels, the annual revenue of the respondents would have been as follows. Again, I use the revenue statistics set out at [268] of these reasons. 331 The ACCC also handed up a further table showing a contended calculation of higher prices (NSW pricing) adjusted for a $5/t transport cost differential. Again, it is not necessary to reproduce the adjustment schedule in these reasons. I have taken the adjusted schedule into account. 332 The ACCC says that the measure of the total revenue difference in SEQ from 2002 to 2006 but for competition as compared with NSW delivered prices prevailing in a market for a relevantly comparable concrete grade ash, exhibiting competition, is said to be $[REMOVED TO THE CONFIDENTIAL SCHEDULE]. Thus, the measure of the harm to competition over the period is said to be the aggregated distortion of $[REMOVED TO THE CONFIDENTIAL SCHEDULE] in what would have been, in effect, a value transfer to participants had a rival been able to secure access to a source of ash in SEQ but for the contraventions. The third approach: an analysis of actual market pricing after the entry by Sunstate and IFB into the SEQ cgf market 333 The ACCC says that Sunstate's entry into the SEQ cgf market in 2007 and IFB's entry in 2008 enabled "independent concrete producers" to purchase cgf on "significantly more favourable terms" than those offered by Cement Australia. The ACCC says that in the period 2007 to 2013, Cement Australia increased its average delivered price for cgf from $70/t (2006) to $[REMOVED TO THE CONFIDENTIAL SCHEDULE] in 2013. The ACCC says that this price increase resulted in a significant loss of market share for Cement Australia especially from non-tied customers. 334 The methodology employed in this approach is to examine what happened to prices, volume, returns and market share in the period, in effect, from 2009 to 2013 as contestability played out and especially in 2011, 2012 and 2013. 335 It is important to keep in mind that the proposition being examined by this approach is this: in the period 2002 to 2006, prices for SEQ cgf were higher than prices which would have prevailed in a competitive market but for the contraventions and the measure by which prices were higher in that period can be seen or reasonably understood quantitatively by reference to prices which prevailed in the SEQ cgf market in 2011, 2012 and 2013. 336 It is now necessary to consider the evidence the ACCC relies upon in support of that proposition. 337 From entry, Sunstate and IFB supplied cgf on either an ex-works basis with the buyer arranging its own delivery or on a delivered basis. QCL and Cement Australia throughout 2002 to 2006 insisted upon, almost universally, delivered supply to the buyer's batching plants. In the principal liability judgment, I found that insistence (unconstrained by rivalry) upon delivered supply enabled the respondents to secure utilisation of their tanker fleet, recoup any of Pozzolanic's potential inefficient handling and transport costs and also price delivered supply per tonne according to the "next best delivered alternative price". Once IFB entered the market, it adopted a rebate scheme for its members such that members were able to purchase flyash ex-works at, in effect, cost: $[REMOVED TO THE CONFIDENTIAL SCHEDULE]/t to $[REMOVED TO THE CONFIDENTIAL SCHEDULE]/t [REMOVED TO THE CONFIDENTIAL SCHEDULE] (based on 2009 prices). The ACCC compares this 2009 new entrant price (to members) with QCL's delivered price for Tarong cgf (less rebates) in 2003 of $74.85 (of which cartage was $21.77). The EBIT in that year was $39.86/t. The ACCC contends that but for the contravening conduct, entry would have occurred in the period 2002 to 2006 and the price of cgf would have been "much lower". It says that the total ex-works price charged by IFB for classified ash in 2008 was in the range [REMOVED TO THE CONFIDENTIAL SCHEDULE] than the average EBIT margin derived by Cement Australia from selling delivered ash in 2003. 338 [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 339 As to Sunstate, the ACCC says, in reliance upon the affidavit of Mr Rajeev Ramankutty, Sunstate's General Manager, that in the period 2009 to 2013 (which seems to be the 2014 financial year), Sunstate sold fine grade cgf at an ex-works price of approximately [REMOVED TO THE CONFIDENTIAL SCHEDULE]. Depending upon the location of the buyer's batching plant [REMOVED TO THE CONFIDENTIAL SCHEDULE]. Thus, delivered prices were in the range: [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 340 The ACCC says that by 2013, Sunstate's cgf ex-works price was [REMOVED TO THE CONFIDENTIAL SCHEDULE] than Cement Australia's average price of delivered flyash into the SEQ region of [REMOVED TO THE CONFIDENTIAL SCHEDULE]: see affidavit Mr Savoury, 28 October 2014, KMS-E. 341 The point sought to be made by the ACCC (as it does with the other data) is this. The observable margin [REMOVED TO THE CONFIDENTIAL SCHEDULE] between Sunstate's ex-works prices for each of the three contestable years but particularly the 2013 year and Cement Australia's average delivered price in SEQ, calls out for an explanation and gives rise to an inference that the measure of the difference is truly a causative measure of the extent to which prices were higher in the period 2002 to 2006 by reason of the absence of competition due, in turn, to the s 45 contravening conduct. 342 The question is whether the observable facts about the price differentials in the comparative periods admit of that inference. The ACCC relies upon the following additional transactional data. Transactions concerning Rocla, Gailes 343 [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 344 Again, the ACCC says that the point of the comparison is that described at [341] of these reasons. Transactions concerning Nucon/Nucrush 345 The ACCC says, based on Ms Boman's Ex CB-1 to her affidavit of 5 February 2010 that in 2009 Nucon purchased cgf from Sunstate for use in its Gold Coast batching plants. The landed cost ("ex-works" plus delivery) was [REMOVED TO THE CONFIDENTIAL SCHEDULE]: RCTB [339]. 346 [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 347 Nucon now buys cgf from three sources: Sunstate, IFB and Hyrock (Bayswater cgf). Nucon's delivered prices to its batching plants are as follows (as drawn from MPC-1 to the affidavit of Mr Cooper sworn 10 October 2014): Source Landed Cost Millmerran [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Sunstate [REMOVED TO THE CONFIDENTIAL SCHEDULE] Bayswater [REMOVED TO THE CONFIDENTIAL SCHEDULE] Bayswater [REMOVED TO THE CONFIDENTIAL SCHEDULE] 348 The ACCC says that what follows from these data is that putting to one side the landed cost of Sunstate cgf [REMOVED TO THE CONFIDENTIAL SCHEDULE] the costs to Nucon in [REMOVED TO THE CONFIDENTIAL SCHEDULE] the Cement Australia "average" delivered prices for cgf supplied into SEQ in the calendar years 2011, 2012 and 2013: see KMS-E, 28 October 2014. 349 The differences between cgf sourced from Sunstate, Bayswater and Millmerran and the Cement Australia average delivered prices were these: Year Source Plant Differential Margin/t 2011 Sunstate (including delivery) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 2011 [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 2011 Bayswater (including delivery) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 2012 Sunstate (including delivery) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 2012 Bayswater [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 2013 Sunstate (including delivery) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 2013 Millmerran [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 2013 Bayswater [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] The fourth approach: the relationship between flyash prices and cement prices 350 The ACCC says in reliance upon a graph put in evidence by Mr Zeitlyn by affidavit that throughout the period 2004 to 2008 Cement Australia's flyash prices were, on average, 50% to 60% of the price of GP cement for which it was a partial cementitious substitute. Mr Maycock, the most senior officer of the respondents and the witness most experienced in the cement and flyash businesses in Queensland and, in particular, SEQ described the pricing of flyash as a "black art" based on its hypothetical (but actual) value as a substitute for cement. 351 The substitution rate of flyash for cement is 25% to 35% flyash for cement. 352 This substitution rate enabled QCL to calculate the price someone could theoretically afford to pay for flyash and be better off by using it rather than cement: [2308]. The rule of thumb applied by Mr Maycock was that flyash prices were 50% of the cement price. In the 2005 budget, 70% of Cement Australia's margin in the flyash business was generated in SEQ. In the context of the 2005 Cement Australia budget, Mr Adams thought (as expressed in slides supporting his presentation) that flyash was "fully priced" in SEQ relative to the cement price although flyash was regarded as under-priced relative to cement in Northern NSW and Central Queensland: [2742]. Mr White, however, did not embrace many of the views of Mr Adams in the presentation: [2743]. 353 [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 354 The ACCC says that Sunstate's pricing in 2011 and 2012 relative to cement is a "significant change in flyash pricing". PART 7: THE CONTENDED BENEFITS DERIVED BY POZZOLANIC/QCL AND CEMENT AUSTRALIA FROM MAINTAINING A HIGH MARKET SHARE 355 The ACCC contends that, first, the respondents "obtained very significant financial benefits from the maintenance of their high market share" and second, had the respondents faced a competitor whether at Millmerran ("had the flyash been shown to be useable") or at Tarong or Swanbank, their market share (of each market but particularly the SEQ cgf market) "would have fallen". 356 I understand that proposition, in substance, to be this: notwithstanding that Millmerran ash was exhibiting qualitative technical difficulties for use as cgf as a partial substitute for cement in the production of concrete, the contravening conduct of making the OMC on 30 September 2002 containing provisions which at least until 31 December 2003 had the effect and likely effect of substantially lessening competition, and making the Tarong Contract in February 2003 containing provisions that had the effect and likely effect of substantially lessening competition (and so too the Swanbank extensions), and by giving effect to those provisions, the respondents derived the benefit of maintaining a level of market share that, but for the contravening conduct, would have fallen and the measure of the difference is quantifiable with some degree of analytical integrity. 357 The ACCC says that Cement Australia enjoyed an EBIT margin of $30/t to $40/t or approximately 40% of sales revenue on SEQ cgf sales. The ACCC says that any loss of market share and thus gross sales revenue would have had a "substantial impact" on the "bottom line" (net earnings, that is, the EBIT) of the respondents. The ACCC says that following the entry of Sunstate in 2007 and IFB in 2008 to the SEQ cgf market, the respondents suffered a "significant decline in revenue and market share". The ACCC also says that during the period from 2006 to 2013, Cement Australia's total cgf sales in SEQ fell from almost 400,000 tonnes per annum in 2006 to [REMOVED TO THE CONFIDENTIAL SCHEDULE] in 2013: see [613] and [679] and also the affidavit of Mr Savoury of 19 September 2014. 358 Over the same period, sales by Sunstate, IFB and Nucon grew to approximately [REMOVED TO THE CONFIDENTIAL SCHEDULE] tonnes. 359 The ACCC says that Cement Australia's sales to independent customers largely collapsed, with sales of cgf to "non-tied" customers [REMOVED TO THE CONFIDENTIAL SCHEDULE] in the period 2006 to 2011 from 160,000 tonnes in 2006 to just over [REMOVED TO THE CONFIDENTIAL SCHEDULE] in 2011. 360 [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 361 The starting point concerning the data is that the ACCC contends that during the period 2002 to 2006 the respondents derived a "significant EBIT margin" on sales of cgf in SEQ. The statistics relied upon by the ACCC are these: EBIT contributions derived by the respondents from the sales of Tarong and Swanbank cgf in the period 2002 to 2006 362 Next, the ACCC says that even taking into account the additional costs of the Millmerran Contract, the respondents' EBIT margins in SEQ exceeded 40% of total sales revenue as shown in the table below: Profits derived by the respondents in SEQ taking account of the Millmerran costs Year Tarong/Swanbank EBIT based on the table at [361] of these reasons Ash royalty paid to MPP at Millmerran (ATB Vol 28.08) SEQ total margin after payment of ash royalty to MPP 2002 $9,995,417 $1,324,000 $8,671,417 2003 $13,181,166 $1,565,000 $11,616,166 2004 $12,890,706 $1,572,000 $11,318,706 2005 [Removed to the Confidential Schedule] $1,722,000 [Removed to the Confidential Schedule] 2006 [Removed to the Confidential Schedule] $1,782,000 [Removed to the Confidential Schedule] Total [Removed to the Confidential Schedule] $7,965,000 [Removed to the Confidential Schedule] 363 Accordingly, the ACCC says that having regard to these statistics, the EBIT margin over the period 2002 to 2006 can be measured by taking the SEQ EBIT remaining after the payment of the Millmerran ash royalties and striking that number [REMOVED TO THE CONFIDENTIAL SCHEDULE] as a proportion of total revenues across the same period. Total revenues for that period amount to [REMOVED TO THE CONFIDENTIAL SCHEDULE] and thus the margin would be [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 364 Next, the ACCC says that having regard to the September 2002 Board paper put to the directors in support of entry into the OMC, Pozzolanic forecast that entry into that contract, assuming that the Tarong Contract was not won and the OMC had to be evaluated commercially as a "stand alone" proposition, the contract would be "marginally profitable". At [2222], I note that the September Board paper contains observations on the topic of "Loss of Tarong" and observes that if the Tarong Contract is not secured it would likely go to FAA and with it would go all sales of cgf to Boral, CSR and Pioneer in SEQ which would account for 72% of QCL's market sales. The Board paper notes that the available market then left would be 85,000 tonnes of which 40,000 tonnes would most probably be supplied from Swanbank with the result that securing a contract at Millmerran as a source of cgf for servicing 45,000 tonnes of market demand annually "would be marginally profitable". A calculation of that profitability is contained at point 4 of the paper. The margin would be $2.99/t assuming a price of $65/t (as the next best available price). Total costs would be, on the analysis, $62.01/t which includes the royalty paid to Millmerran of $30.73/t which assumes a royalty payment of $1.353 million distributed over 45,000 tonnes. The "total value" of the contract to Pozzolanic and QCL would be $135,000 represented by a margin of $2.99/t over 45,000 tonnes ($134,550) representing a margin return of 4.82% on total listed costs per tonne of $62.01. The profitability analysis in the paper does not take into account any contribution or distribution of overhead costs in determining the profit. 365 At [2224], I note that Pozzolanic and QCL also agreed to make a contribution to MPA Energy by way of cross-subsidising MPA's price reduction of $1,080,000 offered to Millmerran to secure MPA's related contract. Pozzolanic agreed to pay MPA a total of $900,000 over seven years amounting to $128,571 each year. If that amount had also been taken into account in the profitability analysis, it would have reduced the annual value of the Millmerran Contract from approximately $135,000 to $6,429 per annum or $0.14/t over 45,000 tonnes rather than $2.99/t assuming a straightforward calculation adjusting the profitability table at point 4 of the Board paper, absent any other considerations. 366 At [2223], I also note Mr Arto's commercial view that he did not accept that the profitability analysis arising out of an assumed loss of the Tarong Contract necessarily meant that Pozzolanic should not enter into the Millmerran Contract, as a stand alone contract. Mr Arto's view was that having the Millmerran Contract meant that the respondents "could stay in business as a starting point with a source of flyash, otherwise we would just walk away from both contracts, which was never, obviously, an option we could be agreeable to": [2223]. 367 The ACCC contends that the difference between the profits the respondents would have earned by conducting the flyash business in reliance upon Millmerran ash having lost the Tarong Contract and incurring the MPA cross-subsidization resulting in a margin of approximately $0.14/t or $6,429 per annum, and the profits actually earned by the respondents provides "one straightforward indicator of the potential financial benefit the [respondents] earned by preventing competition". 368 Of course, loss of the Tarong Contract would have meant that Pozzolanic/QCL would have had no access to its historical best source of ash the foundation of its business undertaking. The relevant question, of course, is what would the price and market share have been had Pozzolanic and QCL won the contract at Tarong on terms which provided it with ash to supply into the SEQ cgf market but on terms which enabled a rival to obtain ash at Tarong (in a commercially relevant way) thus enabling a rival to enter the SEQ cgf market in competition with QCL. 369 The ACCC says that over the period 2003 to 2006 (calendar years), the respondents earned an EBIT contribution from the sale of Tarong ash of [REMOVED TO THE CONFIDENTIAL SCHEDULE] before accounting for the cost of the Millmerran royalties: see [408] of these reasons. Having regard to that number, the ACCC probably intended to refer to the period 2002 to 2006. The actual amount is [REMOVED TO THE CONFIDENTIAL SCHEDULE] over the 2002 to 2006 period. If the ACCC is referring to the EBIT earnings from Tarong ash in the period 2003 to 2006, the number is [REMOVED TO THE CONFIDENTIAL SCHEDULE]. Assuming that the relevant period is 2003 to 2006, the EBIT earnings in that period less the Millmerran royalty payments for that period ($6,641,000) is [REMOVED TO THE CONFIDENTIAL SCHEDULE]. If the ACCC is intending to refer to the period 2002 to 2006, the EBIT earnings less the Millmerran royalty payments over that period ($7,965,000) is [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The impact on profitability of the respondents of new entry in 2007 and 2008 370 The ACCC says that in the period 2002 to 2006 the respondents earned very high margins in the sale of cgf in SEQ. The table at [361] of these reasons shows a range of EBIT/t derived from the sale of Tarong ash of [REMOVED TO THE CONFIDENTIAL SCHEDULE] and a range in the EBIT contribution for the sale of Swanbank cgf of [REMOVED TO THE CONFIDENTIAL SCHEDULE] to $30.13/t. The ACCC says that as a result of these EBIT margins per tonne, the total EBIT contribution in the period was [REMOVED TO THE CONFIDENTIAL SCHEDULE] before taking account of the Millmerran royalties paid over that period. The ACCC says that this level of EBIT contribution was the expression of the maintenance of the "sole supplier status" strategy of the respondents. 371 The ACCC says that the entry of Sunstate and IFB into the SEQ cgf market in April 2007 and late 2008 respectively had the effect that sales to "non-tied" customers "collapsed". The ACCC says that between 2006 (the last full calendar year in which Cement Australia faced no SEQ-based competitor in the sale of cgf) and 2010, Cement Australia sales to non-tied customers declined by [REMOVED TO THE CONFIDENTIAL SCHEDULE]. Over the same period, Cement Australia experienced a [REMOVED TO THE CONFIDENTIAL SCHEDULE] in sales to its "tied customers". The ACCC says that sales to non-tied customers in 2006 were 159,933 tonnes. Sales to those customers in 2010 were [REMOVED TO THE CONFIDENTIAL SCHEDULE] tonnes. In other words, sales to non-tied customers in 2010 amounted to [REMOVED TO THE CONFIDENTIAL SCHEDULE] of the sales which had been made to those customers in 2006. Over the same period, sales to tied customers [REMOVED TO THE CONFIDENTIAL SCHEDULE] from 223,710 tonnes in 2006 to [REMOVED TO THE CONFIDENTIAL SCHEDULE] tonnes in 2010, that is, [REMOVED TO THE CONFIDENTIAL SCHEDULE] of the 2006 sales. 372 The ACCC relies upon the following data identifying sales over the period 2005 to 2010 which include the loss of sales to non-tied customers after 2006: Loss of non-tied market share in the period 2005 to 2010 Item 2005 2006 2007 2008 2009 2010 Tied 217,128 223,710 216,402 264,166 [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Non-Tied 144,919 159,933 142,632 125,116 [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Total 362,047 383,643 359,034 389,282 [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Tied 60% 58% 60% 68% [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Non-Tied 40% 42% 40% 32% [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 373 The ACCC says that in 2005, non-rivalrous sales of cgf to "non-tied" customers accounted for 40% of Cement Australia's sales and these sales represented [REMOVED TO THE CONFIDENTIAL SCHEDULE] of its SEQ EBIT earnings: [361] of these reasons ([REMOVED TO THE CONFIDENTIAL SCHEDULE] x 0.4). Based on the table at [372], the ACCC contends that had Cement Australia achieved in 2005 the level of non-tied sales in the SEQ cgf market it achieved in the rivalrous year 2010 of [REMOVED TO THE CONFIDENTIAL SCHEDULE] ([REMOVED TO THE CONFIDENTIAL SCHEDULE] of total sales volume rather than 40%) non-tied EBIT earnings in 2005 would have been (assuming the Tarong margin of [REMOVED TO THE CONFIDENTIAL SCHEDULE]) [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The EBIT in 2005 from non-tied customers, on that assumption, would have been [REMOVED TO THE CONFIDENTIAL SCHEDULE] actual EBIT, resulting in an EBIT for 2005 of [REMOVED TO THE CONFIDENTIAL SCHEDULE]. After taking into account the additional cost of the Millmerran royalties for that year [362] of these reasons, the EBIT in 2005 would have been, on the same assumption, [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 374 The ACCC also says that, in reliance upon Annexures CMS-17, CMS-18, CMS-19 and CMS-20 to the affidavit of Mr Steger affirmed on 17 April 2014 (concerning an Authorisation application before the ACCC (A91261 – 2010/2011)) concerning a new ash supply contract, Cement Australia contended, for the purposes of that application, that market circumstances had changed such that Cement Australia had lost approximately 35% to 40% market share in the SEQ cgf market as a result of entry by Sunstate and IFB. The ACCC relies on the following data for the period 2011 to 2013 as demonstrating a decline in the volume of cgf sold by Cement Australia in the context of the sales of cgf by Sunstate, IFB and Hyrock, in those years: 375 Having regard to the data at [372] and [374], the ACCC contends that if entry "on this scale had occurred in 2002 or 2003" it would have led to at least a [REMOVED TO THE CONFIDENTIAL SCHEDULE] in total profits before taking into account "the impact of any price reductions" assuming a 40% reduction in sales volume consistent with the upper range of the contention made in 2011 as described at [374]. The number, [REMOVED TO THE CONFIDENTIAL SCHEDULE], arises, it is said, in the way set out in Column 3 of the table below, according to the following method. Column 5 of that table is designed to show the impact on Pozzolanic/QCL and then Pozzolanic/Cement Australia's profitability in the period 2003 to 2006 assuming a market share loss of 40% coupled with a price reduction of $14/t as to the balance tonnes on the basis of QCL's forecast price reduction made in 2001. Impact upon EBIT of a loss of 40% of sales coupled with a $14/t price reduction in 2003 to 2006 on the balance 60% of sales 376 The ACCC formulated a new table to take account of the reduction in the SEQ EBIT contribution for the 2005 year. The amended table is in these terms: Impact upon EBIT of a loss of 40% of sales coupled with a $14/t price reduction in 2003 to 2006 on the balance of 60% of sales adjusted to reflect the reduced actual EBIT for 2005 (rounded out to $1,000 adopting the figures of the ACCC) Year Actual SEQ EBIT contribution Impact on EBIT contribution of 40% loss of sales Impact of lower prices by $14/t on remaining sales Total potential EBIT loss 2003 $13,181,000 $5,272,000 $2,853,000 $8,125,000 2004 $12,891,000 $5,156,000 $2,932,000 $8,088,000 2005 [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 2006 [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Total [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 377 The ACCC contends that the assumption that the respondents would have suffered a loss of market share of 40% is "in many respects, a conservative one". The respondents had said in their earlier assessments that had FAA entered the SEQ cgf market in 2002, QCL's expectation was that its sales to the FAA shareholders, Boral, Pioneer and Rinker, would have been lost. The ACCC says that if new entry into the SEQ cgf market had been accompanied by a reduction in prices in SEQ to the level seen in NSW (coupled with a 40% loss of market share benchmark) the respondents in the period 2003 to 2006 would have suffered a reduction in EBIT of approximately [REMOVED TO THE CONFIDENTIAL SCHEDULE]. That follows, it is said, according to the following data: Impact upon EBIT of a loss of 40% of sales coupled with a price reduction in SEQ in the period 2003 to 2006 to the price levels prevailing in NSW for sales of cgf 378 Accordingly, the ACCC says that assuming the respondents had lost 40% of their market share and that pricing for the balance 60% of the tonnes actually sold was based upon the highest NSW price set out at [330], the total EBIT loss would have been [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 379 Next, the ACCC compares Cement Australia's revenue from cgf sales in SEQ in 2005 with its revenue in 2012. The revenue in 2005 was $28,385,962. The revenue in 2012 was [REMOVED TO THE CONFIDENTIAL SCHEDULE]: affidavit Mr Savoury, 19 September 2014, Annexure KMS-A. The decline in revenue is [REMOVED TO THE CONFIDENTIAL SCHEDULE], approximately. In 2013, Cement Australia's SEQ cgf sales revenue was approximately [REMOVED TO THE CONFIDENTIAL SCHEDULE] which was, as compared with SEQ cgf 2005 revenue, a reduction of [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The ACCC also says that if the value of the revenue in 2005 is adjusted to reflect 2012 dollars, the true value of the lost revenue is [REMOVED TO THE CONFIDENTIAL SCHEDULE] per annum. That follows because according to an inflation calculator a basket of goods valued at $28,400,000 in 2005 would be valued at $34,578,005 in 2012 and thus the difference between the adjusted value of the 2005 dollars and the 2012 Cement Australia revenue of [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 380 The ACCC concludes by observing that this actual outcome is consistent with QCL's expectation in 2002 of the likely impact of new entry into the SEQ cgf market. PART 8: THE ACCC'S VIEW AS TO THE "APPROPRIATE" PENALTIES IN RESPECT OF THE CONTRAVENING CONDUCT 381 The ACCC contends that the making of and giving effect to each of the contracts containing the relevant provisions gives rise to entirely separate contraventions. 382 The ACCC says that for each contravention both the "likely level" of profit earned from the conduct and the "level of profit" expected to be earned from the conduct are significant factors to be taken into account in determining the penalty. The penalty should upset any calculations of profitability arising out of the contraventions. The ACCC makes its penalty submissions concerning the contracts by reference to the following periods. The Swanbank Contract in the period to December 2004 383 The ACCC seeks pecuniary penalties against both QCL and Pozzolanic for the conduct of giving effect to the Swanbank Contract containing the relevant provisions. Entry into the Swanbank Contract occurred more than six years before the proceedings were commenced (on 12 September 2008) and thus no proceeding can be brought reliant upon the making of the Swanbank Contract containing the identified provisions having the purpose, effect or likely effect of substantially lessening competition: s 77(2) of the Act. Nor can any proceeding be brought against Pozzolanic or QCL reliant upon "giving effect" to the Swanbank Contract containing those provisions which occurred in a period prior to the period ending six years before the commencement of the proceedings. However, contravening conduct of giving effect to the relevant provisions in the period 12 September 2002 to 31 December 2004 (the period relevant for present purposes) can properly be the subject of proceedings. 384 The ACCC says that apart from the factors to be taken into account earlier described, the following matters are said to be particularly relevant to the contraventions by QCL and Pozzolanic of giving effect to the identified provisions in the period to 31 December 2004. 385 First, a significant aggravating factor is said to be that QCL and Pozzolanic "insisted on exclusivity in the face of CSE's protests and explanation of its competition concerns". 386 Second, although Swanbank produced a much smaller volume of flyash than Tarong, Tarong North or Millmerran, Swanbank flyash nevertheless played an important part in the "sole supplier strategy" of the respondents. The ACCC says that had a competitor entered the SEQ cgf market with Swanbank ash, "this could have triggered the MFN provisions" in the supply contracts between the respondents and particular buyers (the major buyers) "leading to widespread price reductions". 387 Third, the ACCC says that QCL employed Mr Ridoutt and Mr Wilson, the key relevant individuals involved in the conduct. QCL funded giving effect to the contract. It profited from the conduct. It was QCL's position as a virtual monopolist in the SEQ cgf market (controlling > 85% of the market) which was being protected by provisions preventing third party access to Swanbank ash. Pozzolanic was the party to the contract with CSE. Pozzolanic was the wholly owned vehicle through which QCL secured the ash supply arrangements with CSE and through which it "protected its monopoly". 388 Fourth, the ACCC says that an appropriate penalty concerning QCL's conduct must take into account the "identified risk", averted by the conduct, that is, the possibility that, but for the conduct, the MFN provisions might have been engaged "leading to substantial EBIT losses". The penalty must be set at a sufficiently high level, it is said, to provide a "meaningful deterrent". The penalty must take into account, it is said, the deliberateness of the contravention and the "market harm" that resulted from "the implementation of the strategy". The ACCC contends that a penalty should be imposed upon QCL of $5 million. 389 As to the penalty to be imposed upon Pozzolanic, the ACCC says that the Court should take into account that QCL caused and funded Pozzolanic to enter into the contract. Nevertheless, Pozzolanic, it is said, "entered into a contract for the purpose of monopolising a market and which resulted in consequent market harm". The ACCC contends that the appropriate penalty to be imposed upon Pozzolanic in respect of that conduct is $2 million. 390 In making these submissions, the ACCC says that it has taken into account the penalty sought against QCL and that Pozzolanic is ultimately a wholly owned and controlled entity of QCL. The ACCC says that had that not been the case, a "significantly higher penalty" against Pozzolanic would have been appropriate. The Original Millmerran Contract and the period 30 September 2002 to 28 July 2004 391 The ACCC says that with respect to the OMC, pecuniary penalties are sought against: Pozzolanic for making and giving effect to the OMC; PIPL for being knowingly concerned in Pozzolanic's contravention of making the contract by reason of entering into the guarantee of Pozzolanic's obligations under the contract; and QCL for being knowingly concerned in Pozzolanic's contravention of making the contract and for giving effect to the contract. 392 The ACCC says that apart from the factors to be taken into account as earlier described, the following matters are particularly relevant to these contraventions. 393 First, QCL regarded the SEQ cgf market as being "saturated" and "over-supplied" with cgf and thus QCL did not need Millmerran flyash to "supply any existing or forecast unmet demand". 394 Second, a substantial purpose of incurring the cost of the royalties payable under the Millmerran Contract was to prevent either FAA or Transpacific from gaining access to a source of flyash at Millmerran so as to prevent either of those companies entering the SEQ cgf market. 395 Third, had FAA been successful in "one of its bids", QCL's market share was expected to collapse almost immediately with "catastrophic consequences for the profitability of its SEQ flyash business". 396 Fourth, Pozzolanic and QCL knew the Trade Practices Act risks associated with its purpose of preventing Transpacific or FAA gaining access to Millmerran ash. 397 Pozzolanic was the entity which contracted with MPP. It was responsible for the performance of the OMC, it is said. Again, emphasis is given to the circumstance that QCL employed the key decision-makers "involved in" the contraventions. Pozzolanic's entry into the OMC was approved by the QCL Board. QCL, as the group treasury company, and the entity responsible for making sales of cgf in the SEQ cgf market, "stood to directly profit from the contraventions". 398 The ACCC contends that in order to provide a meaningful deterrent, the total penalty to be ordered against QCL must be set at such a level that "a rational company standing in QCL's shoes as at September 2002 would not be tempted to prevent FAA from entering the market". 399 The ACCC says that the "anticipated benefit" from both making the OMC and giving effect to it, substantially exceeds the maximum penalty available for each contravention. The contraventions were deliberate, it is said. They "caused" and were "intended to cause" "market harm" by "monopolising a market". The intention subsisted at the most senior levels of QCL. QCL is part of a large corporate group and was a very large company at the time of the contravening conduct. QCL did not have a "culture of compliance". Having regard to all of these circumstances, the ACCC contends that the maximum penalty of $10 million should be imposed on QCL for "each of being knowingly concerned in [Pozzolanic's] entering into the [OMC] and for giving effect to the [OMC]". The ACCC says that the total of these two penalties would be less than half of the "expected benefit" to QCL of the conduct. Again, Pozzolanic was the vehicle selected by QCL for the contract with MPP "to maintain its monopoly of the market". 400 The ACCC contends that the appropriate penalties to impose on Pozzolanic are these: $4 million for making the contract and $4 million for giving effect to the contract. The ACCC contends that the appropriate penalties sought against Pozzolanic would have been "significantly higher" but for the fact that "a very substantial penalty is sought against QCL". 401 As to PIPL, the ACCC contends that its role was more limited than that of QCL and Pozzolanic. Nevertheless, it provided a guarantee of Pozzolanic's obligations and in that regard, two matters are said to be important. 402 First, the contraventions could not have occurred without PIPL's engagement in the contracting arrangements because the provision of a guarantee was critical to success and a precondition to winning the contract. 403 Second, PIPL acted through Mr Arto and he was entirely familiar with Pozzolanic and QCL's "strategy". The ACCC contends that an appropriate penalty to be ordered against PIPL is $1 million and, again, the ACCC contends that but for the common ownership between QCL, PIPL and Pozzolanic, the ACCC would have submitted that a higher penalty was warranted against PIPL for the provision of the guarantee. The Tarong Contract in the period March 2003 to March 2008 404 The ACCC seeks pecuniary penalties against: Pozzolanic for making and giving effect to the contract; QCL for being knowingly concerned in the making of the contract and giving effect to the contract; and Cement Australia for giving effect to the contract. 405 The ACCC says that apart from the factors to be taken into account overall as earlier described, the following matters are of particular relevance in determining the penalty. 406 First, entry into the Tarong Contract was considered necessary by QCL and Pozzolanic to guard against the risk of new entry by FAA or Transpacific. 407 Second, when TEC refused to grant an "exclusive" agreement as a term of the ash supply contract, the provisions of the Tarong Contract were drafted in a "creative" way so as to prevent a second off-taker from obtaining access to Tarong ash. The ACCC says that "an inference should be drawn" that the respondents knew the competition law risks associated with seeking to creatively frame and adopt provisions which would bring about the practical result or effect of an "exclusive" agreement in the absence of an "express term". 408 The ACCC says that the sale of Tarong ash resulted in the main EBIT contribution in the business conducted by the respondents. Over the period 2002 to 2006, the respondents earned an EBIT contribution from the sale of Tarong ash as follows: Year EBIT contribution from Tarong sales/t Tarong sales volume Tarong EBIT contribution 2002 $31.86 271,932 $8,663,753 2003 $39.86 303,045 $12,079,373 2004 $38.31 308,039 $11,800,974 2005 [Removed to the Confidential Schedule] 348,468 [Removed to the Confidential Schedule] 2006 [Removed to the Confidential Schedule] 379,101 [Removed to the Confidential Schedule] Total [Removed to the Confidential Schedule] 409 The ACCC says that in deriving this EBIT contribution, the respondents depended heavily on their "single supplier status". The Tarong Contract commenced on 1 March 2003 for a period of five years ending 1 March 2008 (subject to cl 2 relating to the "Term") and was "a necessary part of effecting that strategy until at least 2008", it is said. The ACCC places emphasis on the following matters. The contract was approved by the QCL Board of Directors. QCL employed the key decision-makers. It was responsible for the contract. It stood to profit from it. Pozzolanic was the contracting vehicle. The purpose of adopting the relevant provisions was to prevent FAA or Transpacific securing the contract. The contract operated to prevent "other would-be entrants such as IFB and Nucon from obtaining direct supply from Tarong". 410 The ACCC also gives emphasis to what is described as scenario 1(b) concerning competitor access to Tarong ash which was the subject of discussion in the early part of January 2005 and discussion otherwise: [2759] to [2762]; ATB Vol 18.04. 411 On 6 January 2005, Mr Adams who was then the Manager, Strategy and Business Development for Cement Australia, sent an email to Mr White attaching a copy of his slides in relation to a "Cement Australia Flyash Analysis". The essential conclusion Mr Adams put to Mr White was that the analysis "appears to be telling us that Tarong is really the main game in fly ash and ensuring that we are the only player (or at least have a preferential pricing arrangement) is key". By 11 and 12 January 2005, competitor access at Tarong was the subject of postulated flyash scenarios. Scenario 1 assumed that Nucon would secure 30Kt of Tarong flyash to supply customers otherwise using Bayswater flyash. On that assumption, scenario 1(a) called "hopeful" was that market pricing would nevertheless stay the same. 412 The second scenario, 1(b), described as "realistic" was that Nucon would drop the price of cgf by $10/t to increase its market share resulting in a volume loss to Cement Australia of between 10Kt and 20Kt and a triggering of Cement Australia's MFN provisions effecting a $10/t reduction in Cement Australia's prices to its major customers. The pricing loss in that scenario would be $4 million. Not only was scenario 1(b) described as "realistic" but its probability was seen, at least for the purposes of the analysis, as "high". Scenario 1(c) also assumed 30Kt of Tarong cgf sales by Nucon to former Bayswater buyers but with that circumstance having "no impact" on Pozzolanic and Cement Australia. Another scenario, 1(d), assumed the elements of scenario 1(b) but with particular advantages flowing to Pozzolanic/Cement Australia by regaining royalties. 413 The ACCC also says that having regard to the "calculated contravention" and the evidence of "actual market harm", the appropriate penalty for each contravention by each of QCL and Cement Australia in relation to the Tarong Contract is the maximum available penalty of $10 million. That follows because they "each stood to benefit by maintaining their monopoly and funded the contract". The ACCC contends that the appropriate penalties to be imposed on Pozzolanic are $4 million for making the contract and $4 million for giving effect to it. The ACCC also says that it would have submitted that significantly higher penalties were appropriate for Pozzolanic but for the fact that a very substantial penalty is sought against QCL and Cement Australia. The amended Millmerran Contract for the period 28 July 2004 to 30 April 2005 414 The ACCC seeks pecuniary penalties against: Pozzolanic for making the contract; Cement Australia for being knowingly concerned in the making of the contract and for giving effect to it; and CA Holdings for being knowingly concerned in the making of the contract. The last matter is the subject of further submissions and I will deal with that matter later in these reasons. 415 The ACCC says that apart from the factors to be taken into account as earlier described, the following factors are of particular relevance to these contraventions. 416 First, at the time of entry into the amended Millmerran Contract, it was unclear whether the flyash produced at the Millmerran Power Station could ever be used as a partial substitute for cement in the production of concrete. The ACCC says that even if the flyash could have been used, Cement Australia had not undertaken the analysis necessary to determine "precisely how much classified [Millmerran flyash] Cement Australia would need to sell from Millmerran to generate 'a decent NPV and IRR'". The best that Mr Clarke could say on this topic was that he was "fairly confident" that Cement Australia would need Millmerran ash at some point "in the long term" and probably towards the end of the contract life on the expectation that incumbency would carry Cement Australia into a longer term contractual relationship sometime after 31 December 2010 [2692]. Mr Clarke accepted that assessments of this kind were made in the context of timeframes of 10 to 20 years. Mr Clarke seemed to be of the view that he would be fairly confident that Cement Australia would need Millmerran ash over a horizon of 10 to 20 years [2692]. 417 Second, a substantial purpose of entry into the amended Millmerran Contract was to prevent competitor entry at the power station, especially by Boral. 418 Third, the ACCC says that Cement Australia was willing to commit significant funds in the order of $13 million to achieve that purpose. 419 Fourth, the assessment of Ms Collins at the time of entry into the amended arrangements was that a competing facility at Millmerran would have a significant impact on flyash market dynamics in Queensland ([2603]) and even small sales of Millmerran ash by a competitor could have a profound effect on the income earned by Cement Australia from its flyash sales: [2652]. Mr Clarke agreed with that view ([2652]) although he said that arguments would arise about whether ash which exhibited "particular limitations" (put forward as triggering MFN considerations) would have that result if the comparison was one with ash which did not exhibit those limitations supplied under contracts containing the MFN provisions. Ms Collins seemed to think that the risk of a significant impact on the income earned by Cement Australia should a competing facility be established at Millmerran could be quantified as a price reduction of $10/t or approximately $3 million per annum. 420 Fifth, an inference should be drawn that Cement Australia was "acutely conscious of the competition law risks" associated with its conduct and sought to "deliberately avoid recording its true motivations in writing". 421 Sixth, at the time of entry into the amended Millmerran Contract, the key decision-makers were employed by Cement Australia. 422 Seventh, entry into the amended arrangements was a "continuation of the sole supplier strategy" of Cement Australia. The ACCC says that having regard to the changed corporate structure as a result of the merger in May 2003, and the significant time that passed between the earlier contraventions and entry into the amended Millmerran Contract, a significant additional penalty is warranted for the contravening conduct in relation to the amended Millmerran Contract. The ACCC says that these circumstances suggest that entry into the amended Millmerran Contract is "at the most serious end of the scale of possible contraventions of [the Act]". The ACCC contends that the maximum available penalty of $10 million should be imposed on Cement Australia for being knowingly concerned in the making of the amended Millmerran Contract and a penalty of $5 million should be imposed upon it for giving effect to the contract. 423 The ACCC says that the lesser penalty for giving effect to the contract reflects the circumstance that the contract was ultimately only on foot for less than two years and Cement Australia sought to negotiate the termination of the contract in 2005. 424 The ACCC says that penalties of this order would be, in total, less than the expected benefit of preventing competition by entering into the contract and only "slightly more than the expense the corporate respondents were prepared to incur to prevent new entry". Penalties of this order are said to be appropriate having regard to the circumstances of the contravention and the requirements of specific and general deterrence. 425 Eighth, as to Pozzolanic, the ACCC contends that a penalty of $4 million should be imposed upon it for making the amended contract and that this lesser sum takes account of the circumstance that a substantial penalty has been sought against Cement Australia. 426 I will address the position in relation to CA Holdings later in these reasons. The Swanbank Contract extension and related arrangements in the period 1 January 2005 to 30 June 2005 427 The ACCC seeks pecuniary penalties against: Pozzolanic for making and giving effect to the extension of the contract from 31 December 2004 to 30 June 2005; Cement Australia for giving effect to the contract and being knowingly concerned in the making of the contract; and CA Holdings for being knowingly concerned in the making of the contract. As to the latter matter, I will deal with that later in these reasons. 428 Apart from a consideration of the general factors, the ACCC contends that the following matters are of particular relevance to these contraventions. 429 First, the purpose of the extension was to preserve the respondents' access to Swanbank flyash until 30 June 2005 and the practical effect of the extension was that a third party could not gain access to a regular and consistent supply of flyash in SEQ until about 30 June 2005: [3226] to [3227]. 430 Second, although the volume of flyash produced by Swanbank was very small, it remained significant. It was flyash substitutable for or at least treated by Pozzolanic as substitutable for Tarong ash. Third party access to Swanbank ash and sales of processed Swanbank ash by a third party into the SEQ cgf market would have had significant competition effects as it "would very likely have triggered MFN consequences in Pozzolanic's supply price to its major customers": [3226]. The notion that Pozzolanic regarded Swanbank ash as being able to be treated as substitutable for Tarong ash emerges from the correspondence reviewed in the principal liability judgment as Pozzolanic had put buyers of cgf on notice that if, for any reason, Tarong ash was not available, Pozzolanic might well substitute supply of Tarong ash with Swanbank ash, although towards the end of the life of the contract, the quality of the ash had become compromised: [3226], [2834] and [3219]. 431 At [3227], I observe that: "Having regard to Pozzolanic and Cement Australia's substantial position in the market, any nascent competition of that kind would have been very significant for the process of competition. Apart from that likely transactional rivalry [deriving from a third party securing a source of supply of ash at Swanbank], rivalrous supply of Swanbank [cgf] would likely have triggered the MFN consequences which would in turn have been productive of price competition on a broader scale". 432 Third, as the extension was only for a period of six months, the "actual harm" attributable to the extension would have been more limited. In addition, the extension occurred at a time when the quality of Swanbank flyash was declining with the result that, in July or August 2005 it was withdrawn from the market: [2834] and [3219]. 433 Fourth, the ACCC contends that the contraventions were directed towards Pozzolanic and Cement Australia securing a longer term arrangement with Swanbank "designed to provide ongoing protection of Cement Australia's dominant position in the market". 434 Fifth, the respondents persisted with the conduct despite CSE's protests about it. 435 The ACCC contends that the appropriate penalties to be imposed on Cement Australia are $2.5 million for being knowingly concerned in the making of the contract, should the Court make such a finding having regard to the additional submissions and $2.5 million for giving effect to the contract. As to Pozzolanic, the ACCC contends that a penalty of $1 million ought to be imposed upon it for making and giving effect to the contract. I will address the proposed penalty against CA Holdings later in these reasons. The application of the totality principle 436 The ACCC says that the total anticipated benefit at the time of the first contravention was an amount up to $42 million. It says that ex-post analysis suggests that the estimated anticipated benefit was broadly correct. The "actual benefit of the contraventions, by preventing competitive entry, could have been around $50 million". 437 The ACCC says that this assessment of $50 million "understates the actual benefit because it does not account for the time-cost of money". The ACCC says that total penalties that merely cause the respondents to disgorge an amount representing their "actual or anticipated benefit" would be insufficient. That follows because the total penalties must bring about the result or have the effect that a business, acting rationally and in its own best interest, will not adopt a position of treating the risk of such a penalty as simply a cost of doing business. Merely disgorging the actual or anticipated benefit of the conduct does not serve that end. Rather, it is said that a "broad assessment" must be made of the "anticipated and actual benefit of the conduct". Of particular relevance, it is said, in this case, is the "egregiousness of the conduct, the absence of a culture of compliance and the fact that the contraventions occurred in pursuance of a long-term strategy conceived at the upper levels of the company with a wilful disregard of the TPA that demonstrates a willingness to 'take the odds'". 438 The ACCC says that before any adjustment to take account of the totality principle is made, the sum of the penalties against each corporate respondent contended for by the ACCC as appropriate is this: (1) Pozzolanic - $24 million (2) PIPL - $1 million (3) QCL - $45 million (4) Cement Australia - $30 million (5) CA Holdings - $6.25 million (subject to later observations) 439 The ACCC submits that application of the totality principle "only necessitates adjustment to the total penalty sought against Pozzolanic" and its penalty should be reduced for totality considerations having regard to these matters. 440 First, although Pozzolanic was the contracting party, it was not the party that occupied the position of a virtual monopolist in the SEQ cgf market. It was the vehicle through which QCL and later Cement Australia secured ash supply arrangements incorporating the identified provisions which "protected their monopoly". 441 Second, "unlike any other respondent, [Pozzolanic] was found to have engaged in all of the contraventions" and as a result "there are a large number of contraventions for which penalties ought to be imposed". 442 The ACCC says that taking these factors into account the ACCC submits that the total penalty to be imposed against Pozzolanic should be reduced to $15 million from $24 million. 443 The ACCC contends that there is no reason to reduce penalties sought against PIPL and CA Holdings for reasons of totality. 444 As to QCL, the ACCC contends that the contravening conduct was "blatant" and falls within the "worst category" of contraventions of the Trade Practices Act. Thus, the imposition of maximum penalties is warranted. The ACCC says that the total penalty it seeks "barely exceeds the anticipated benefit of the conduct and that is only if the further benefit to QCL of the time-cost of money is ignored". The ACCC further says: "Indeed, this would be an inadequate penalty for the purposes of specific and, particularly, general deterrence if considered by itself without also having regard to the penalties sought against the other corporate respondents". 445 As to Cement Australia, the ACCC says that its conduct warrants the imposition of maximum penalties and whilst there are a number of contraventions for which a penalty is sought, the application of the totality principle does not require these penalties to be reduced. The ACCC says that Cement Australia was "fully informed of QCL's sole supplier strategy and persisted with it". It sought to "further extend the period of its monopoly by causing the entry of [Pozzolanic] into the [amended OMC] and the Swanbank Extensions". The ACCC adds that Cement Australia sought, by the indemnities it gave, to "shelter its senior executives from any personal consequences of the contraventions" and to provide them with a "significant financial incentive" not to cooperate with the ACCC. Finally, the ACCC says that but for the fact that substantial penalties are sought against other members of the corporate group, the penalties sought against Cement Australia "would be wholly inadequate and would encourage other corporations to 'take the odds'". Three other matters 446 First, as mentioned earlier, I propose to return to a consideration of whether the respondents exhibited a culture of compliance. Second, I propose to address later in these reasons the question of any further liability findings against Cement Australia and CA Holdings. Third, I propose to address later in these reasons the considerations relating to Mr White. PART 9: THE CONTENTIONS OF THE RESPONDENTS 447 Fundamentally, the respondents challenge the various methodological approaches adopted by the ACCC in seeking to establish the measure or quantification of the but for price which would have prevailed in the SEQ cgf market in the period of the contravening conduct. They also challenge the relevance and utility of the data in the period 2011, 2012 and 2013 in seeking to establish the shape and character of competition as a measure of what might have occurred in the period 2002 to 2006 but for the contravening conduct. 448 I will now identify the essential contentions of the respondents on the various matters relied upon by the ACCC. I have examined these matters in some detail having regard to the very significant penalties sought by the ACCC coupled with the ACCC's contention that the conduct the subject of the contraventions falls into the "worst case" thus attracting the maximum penalty for particular classes of conduct. That is said to be especially so having regard to the deliberateness of the conduct, the benefit derived from it and the market harm caused by it. 449 All of those matters are contested by the respondents. The essential contentions 450 First, the corporate respondents recognise the seriousness of the findings and accept, obviously enough, that a penalty should be imposed in respect of the contraventions. 451 Second, although 22 contraventions occurred, the application of the "one transaction rule" suggests that there are, in substance, four conduct contraventions which have been upheld by the Court. The four discrete classes of conduct are concerned with conduct in making and giving effect to the OMC containing the relevant provisions; making and giving effect to the amended OMC containing the identified provisions; making and giving effect to the Tarong Contract provisions and contraventions in relation to the Swanbank Contract. 452 Third, although the contravening conduct occurred over a period of time, the conduct of "giving effect" to the relevant provisions was conduct of complying with the terms of the ash supply agreements made with the owners of Tarong, Millmerran and Swanbank either entered into or extended by the particular contracting respondent. The respondents say that, for example, complying with contractual provisions requiring the payment of royalties to a power station proprietor, as conduct of giving effect to the identified provisions, is properly understood as simply doing things required to be done by the contract as "made" and thus "entry" into the agreements (that is, making a contract containing provisions having the relevant purpose, effect or likely effect) and giving effect to them is "properly characterised" as a single course of conduct. 453 Fourth, the circumstances of the conduct giving rise to the contraventions calls for a single penalty to be imposed against all of the corporate respondents and it is "not appropriate" to "inflate the overall penalty" by imposing separate and substantial penalties against each of the corporate respondents as the ACCC proposes. That follows, as a matter of substance, it is said, because the fact that contravening conduct was carried out by one entity within a group of companies or by more than one entity in that group, was not the result of "independent decision-making" but rather a function of the particular corporate structure of the group of entities. The respondents say that this is particularly so where the same "individual decision-makers" were involved within the various companies. 454 Fifth, to the extent that the Court made findings that a substantial purpose of particular conduct was a proscribed purpose, the Court nevertheless found that the proscribed purpose was not the only purpose. The circumstance that there were a number of "legitimate reasons" actuating the conduct of the corporate respondents must also be taken into account because the decision-makers (and the respondents for whom they acted) did not engage entirely in unlawful conduct within the matrix of fact informing the conduct. 455 Sixth, although the Court made findings in relation to the effect of conduct, there is no evidence that would allow the Court to draw reliably "any conclusions" in relation to the "amount of loss or damage" caused by the contravening conduct. 456 Seventh, the argument propounded by the ACCC as to "market harm" is "seriously flawed" in a number of respects and should be rejected but, in any event, fundamental to an analysis of the "amount of loss or damage" caused by the contravening conduct is recognising that the relevant counterfactual to be considered is a world in which the respondents would have won each of the contracts but without the provisions preventing, in a practical sense, access by third parties to ash from the relevant power stations. The respondents say that this was the counterfactual advanced at the trial. 457 At the trial, of course, the ACCC was required to make good its case on s 45 of the Trade Practices Act (other than purpose) by proving that the identified provisions had the effect or likely effect of substantially lessening competition in a relevant market by establishing that the future face of competition in that relevant world with the provisions was substantially lessened as compared with the future face of competition in that world without the provisions. That was the test for determining whether the conduct was unlawful. Plainly, it was made good. The question now is whether the contravening conduct gave rise to a causative benefit quantifiable and measurable by reference to both method and evidence and causative market harm quantifiable and measurable by reference to both method and evidence. 458 Eighth, the respondents say that on 14 July 2011 the ACCC authorised a contract relating to ash supply arrangements for the Tarong and Tarong North power stations. The authorisation concerned a contract which contained provisions enabling third party access broadly along the lines identified by the Court in observations made at [3176] of the principal liability judgment. The respondents say that the evidence discloses that since then, "there has been no significant off-take of fly ash by third parties following the introduction of those authorised provisions". Thus, the respondents say that by looking at the relevant market from 14 July 2011 (in effect, to the date of the submissions), in circumstances where the respondents operated under a contract for the supply of Tarong and Tarong North ash, without provisions exhibiting restrictions upon third party access, market events in 2011, 2012, 2013 and 2014 demonstrate that no significant third party off-take of flyash has occurred. Thus, apart from the point sought to be developed in reliance upon the events in those years, it seems that an examination of those events in the period 2011 to 2014 is said to be relevant and probative of the questions in issue in this penalty proceeding, at least to that extent. 459 Ninth, the corporate respondents have taken considerable steps to develop and improve upon a culture of compliance including a number of changes to their compliance program which were introduced following the commencement of the ACCC's investigation in relation to the conduct relevant to these proceeding. 460 Tenth, the corporate respondents are first offenders with no previous contraventions of the Act. 461 Eleventh, the relative area of the market affected by the conduct was confined to the SEQ cgf market as defined in the principal liability judgment: [1781], [1834] and [3232] to [3263]. 462 Twelfth, all things being equal, similar contraventions should incur similar penalties and parity of penalties is an important objective in exercising the discretion under s 76 of the Act. Although the contravening conduct is not "in any sense trivial", it is "not at the more serious end of the scale", as the ACCC suggests. 463 Thirteenth, the penalties sought by the ACCC are "unprecedented" and "completely disproportionate" to penalties imposed in similar cases or even in penalties imposed in cases involving more serious contraventions. The respondents say that the ACCC supports the penalties it seeks as "appropriate" by reference to an attempt to quantify the alleged gain secured by the respondents as a result of the contravening conduct. The respondents say that in deploying the various methods to "quantify" the "alleged gain" the ACCC in effect asks the Court to equate "profits earned" with the "effect of the conduct". This contended relativity is said to be a "gross over-simplification". The respondents say that once it is accepted that the "benefit" flowing from the contravening conduct cannot be accurately quantified, the method adopted by the ACCC is to invite the Court to impose a penalty which "extinguishes the entire profits of the corporate respondents' fly ash business". 464 Fourteenth, in so far as the ACCC suggests a benefit flowing from the contravening conduct of $42 to $44 million based upon an analysis of the documents produced by the respondents, the documents are concerned with statements about a "possible impact" upon EBIT should Pozzolanic lose either the Millmerran or Tarong contracts. The possible impact is estimated at between $1 million and $6 million per annum. The respondents say that this equates to $4.33 million to $25.5 million over the entire period from 30 September 2002 to 31 December 2006 (a period of four years and three months which represents a range of $4.25 million to $25.5 million); the relevant decision-makers regarded the estimate as "exaggerated" or "extreme"; and the assessment was based upon an assumption that Millmerran flyash would be of comparable quality with Tarong flyash. The assumption that Millmerran flyash would be of comparable and substitutable quality for Tarong ash proved to be "manifestly inaccurate". 465 Dr Philip Williams, in his report dated 3 December 2014, does not support, as a valid economic method, an assessment of the possible impact upon EBIT derived from an assessment of the internal documents of the respondents. 466 Fifteenth, the ACCC's notion that the profit derived by the respondents in the relevant period may be as much as $50 million based on the ex-post analysis is said to be based upon incorrect assumptions and reasoning not supported by economic principle. The respondents say that the analysis wrongly assumes as part of its reasoning that the market in 2011, 2012 and 2013 is "a reliable proxy for what the market would have been in 2002 to 2006 had the contravening conduct not occurred". The respondents contend that the analysis conducted by the ACCC based upon the references to the report of Mr Houston fails to recognise that Mr Houston's analysis was directed to the scope of market definition having regard to the application of the SSNIP test rather than an exercise expressly directed to the method of calculating "market harm" and the two questions are "quite different". 467 Sixteenth, as to the market share analysis, the respondents say that the ACCC's attempt to demonstrate that Cement Australia's loss of market share is to be attributed, in a causal sense, to the entry of Sunstate, IFB and Nucon, fails to make good any causal nexus between the entry of those participants into the SEQ cgf market, the consequences of entry and the contravening conduct. 468 Seventeenth, as to Nucon, Sunstate and IFB, the respondents say this. 469 As to Nucon, the Tarong Contract was authorised on 14 July 2011 with provisions providing for third party access generally and, in particular, access by Nucon. However, Nucon did not exercise its right to take flyash from Tarong and there is no evidence of any significant off-take by any third party. Moreover, the affidavit of Mr Cooper indicates that Nucon has continued to be only a purchaser of flyash, not a party securing access to enable re-supply into the SEQ cgf market. 470 As to Sunstate, following the execution of the authorised Tarong Contract, Sunstate continued to take run-of-station flyash from Tarong North as it had been doing since April 2007. It took that flyash into its grinding facilities to grind and sell into the SEQ cgf market. 471 As to IFB, the respondents say that the findings as to effect and likely effect of the provisions of the OMC were based upon the expectation of competition and that those effects had dissipated by 31 December 2003. The respondents say that these effects were thus "very confined". 472 As to one aspect of the quantum of the penalties sought by the ACCC, the respondents say that assuming that the figure of $42 million to $44 million (or the corrected figure of $4.25 million to $25.5 million) is relevant to an analysis of benefit and thus the exercise of the discretion, the ACCC nevertheless invites the Court to impose a penalty more than double the upper end of that particular range. 473 Eighteenth, the ACCC seeks to rely upon un-pleaded matters which it asserts constitute "aggravating factors" justifying the proposed penalty. The respondents say that those matters are not borne out by findings of fact in the principal liability judgment and in any event, the identified matters "could not justify the level of penalty sought by the ACCC". The "conduct characterisation" issue 474 The respondents say that the principal liability proceeding was concerned with six separate courses of conduct: different factual contentions about separate topics around particular commercial transactions at particular moments in time. Although findings were made about each of the conduct events, those findings gave rise to particular contraventions by the participating respondent entities according to the way in which ss 45(2)(a)(ii) and 45(2)(b)(ii) of the Act were each engaged. The respondents say, in effect, that the expression of particular contraventions arising out of each separate conduct event should not obfuscate the substance of the enquiry which is an examination of the legal quality of the underlying conduct itself notwithstanding that that conduct might find expression in multiple contraventions as against a respondent or contraventions against one or more companies in a group, or both. 475 Certainly, Mr Houston observed that the respondent entities although legally separate, acted "together to produce and supply [cgf] in the interests of the group as a whole" and in his view the entities ought to be considered as a "single economic entity" that "produces and supplies [cgf] in its own right". The integration of the activities of the wholly owned group of companies (although Cement Australia was separately held according to the merger proportions) through use of a treasury company; use of a single operating account; entries in inter-company accounts; single joint Board meetings for relevant group entities; common directors; and one Company Secretary, suggests, the respondents say, no truly "separate and distinct conduct" by different entities. 476 The respondents say that the ACCC's description of entry into the contracts as a "manipulation of the market" fails to recognise that the proscribed purposes found were not the only purposes; no taking advantage of market power was found; each contract was subject to a tender process; parties were represented by lawyers; and the respondents were confronting the collapse of their market share which informed their decision-making. The counterfactual world 477 Before further examining the respondents' contentions, the proper approach to the counterfactual should be noted. The factual world, as found, is one in which the respondents became the preferred tenderer at Millmerran and Tarong/Tarong North; they negotiated and won each contract; potential rivals (other bidders) were unsuccessful; and the contracts contained the identified provisions that had the purpose, effect and likely effect of substantially lessening competition as found. 478 A counterfactual world might have been one in which the respondents won the Millmerran Contract as made but failed to win Tarong; lost Millmerran but won Tarong as made; failed to win each contract; or won either or both contracts on terms without the proscribed provisions. The contravention of s 45(2)(a)(ii) of the Act arose because a contract (for example, the first one in time being the OMC, leaving aside the Swanbank Contract for the moment) had been made containing provisions which (leaving aside purpose) had the statutory effect or likely effect judged by looking to a counterfactual world in which the respondents would operate under a Millmerran ash supply contract without the proscribed provisions and the shape of competition in that world was considered as a comparative exercise with the shape of competition in a future world with the Millmerran Contract in place with the proscribed provisions. 479 The factual world as it subsisted from 1 October 2002 to 26 February 2003 was then impacted upon by entry into the Tarong Contract on 26 February 2003. Then, one counterfactual world was one in which the respondents had the Millmerran Contract in place as made with the proscribed provisions and the question of whether the identified provisions of the Tarong Contract had the effect or likely effect of substantially lessening competition would be judged by looking to a counterfactual world in which the respondents would operate, from 26 February 2003, under the Millmerran Contract as made and under a Tarong ash supply contract without the proscribed provisions of that contract. 480 In that Tarong counterfactual world the question becomes: what is the future shape of competition in such a world as compared with future competition in a world with the Tarong provisions in place? 481 Similar questions arise concerning the Swanbank extensions. 482 Also, because there are separate events each informed by their own factual circumstances and chronology, the effect and likely effect of provisions of particular contracts have incremental effects and likely effects. 483 These questions of what would the future state of rivalry and contestability look like in a future world without the proscribed provisions of the particular contract as compared with the future world under that contract with the provisions, is the orthodox method of determining whether, for example, "making" a contract with the "identified" provisions falls foul of the statutory proscription in s 45(2)(a)(ii). Similar questions arise when considering "giving effect" to identified provisions for the purposes of s 45(2)(b)(ii). That was how the case was run by the ACCC because that was the case (leaving aside purpose) it had to make good according to our jurisprudence on these sections of the Act: the "with and without test" which is not a "before and after test". 484 As to the OMC, for example, without the proscribed OMC provisions, rivals would likely have sought access to Millmerran ash so as to enter and contest the SEQ cgf market (although the technical difficulties with the ash gave rise to the dissipation effect earlier described by 31 December 2003). Rivals would likely have also sought access to the tried, proven, well-understood and well-received Tarong ash (at least some of it) had not the proscribed provisions of the Tarong Contract been adopted. 485 All of this goes to whether a contravention of s 45 on either footing arose and to a question of the damage to the future process of competition inflicted by adopting provisions of the relevant contract. The extent of that damage inflicted upon future competition or market harm might be measurable (that is, capable of quantification) or it might not. 486 When the question is one of "benefit", the Court looks to the factual world and asks: what benefit did the respondents derive by adopting the proscribed provisions of the contract (or proscribed provisions of sequential contracts). Having established that contravening conduct has occurred by examining the counterfactual with and without world, the question is, what benefit was obtained by the respondents by reason of the contravening conduct? 487 The benefit obtained by reason of the contravening conduct is that which derives from a causal link between the contravening conduct and the contended benefit. The causal link between contravening conduct and contended benefit is not found in or measured by descending into a counterfactual world and examining how much market harm has been done by adopting the provisions. Rather, the s 45(2)(a)(ii) enquiry, for example, as to benefit is: what benefit did the respondent(s) obtain because a contract was made containing a provision that would have or be likely to have the effect, when made, of substantially lessening competition? 488 That question is itself a "but for" test: did the respondent(s) obtain an identified benefit which but for the fact of the contravening conduct, the respondent would not have obtained? 489 For the purposes of the exercise of the discretion on penalty, the Court proceeds on the footing that the respondents made each contract in the terms as made and asks, as to benefit, did the respondents obtain a benefit that but for the contravening conduct (for example, making a contract with the proscribed provisions) they would not have obtained? The answer to that particular but for question does not involve examining a circumstance in which the respondents would not have won the relevant contract at all and would have been then deprived of any ash to sell at all (under the relevant contract). Otherwise, the fact of having ash to sell (along with sales of it) would itself be regarded as a benefit obtained but for the contravention. Answering the relevant but for question is the mechanism by which the causal link to benefit is tested. If the contended benefit arising out of adopting the proscribed provisions of the Tarong Contract is said to be, say, a price $20/t higher than the price that would have prevailed but for the contravening conduct, the measure of that contended benefit will be tested by asking whether the $20/t is attributable to the contravening conduct and that question will be answered by asking whether the respondents, operating under an ash supply agreement with Tarong, without the provisions, would or would not have derived a price advantage or benefit of $20/t. Revenue is overstated 490 The respondents say that the relevant period for the Tarong/Tarong North Contract is 1 March 2003 (commencement date) to 31 December 2006: three years and 10 months. As to Swanbank, the period is September 2002 to 30 June 2005: two years and nine months. Thus, the revenue statistics, they say, should exclude (using revenue at [268] of these reasons) the Tarong 2002 revenue ($18,344,352); the Tarong January and February 2003 revenue ($3,780,486); January 2002 to 30 September 2002 Swanbank revenue ($1,849,296); 1 July 2005 to 31 December 2005 Swanbank revenue ($784,386); and Swanbank 2006 revenue ($781,576): in all, $25,540,096. The adjusted 2002 to 2006 revenue is [REMOVED TO THE CONFIDENTIAL SCHEDULE] rather than [REMOVED TO THE CONFIDENTIAL SCHEDULE]: [268] of these reasons. The respondents say that the Millmerran costs (royalties) must be offset ($7,965,000) resulting in adjusted revenue of [REMOVED TO THE CONFIDENTIAL SCHEDULE]. EBIT margin is overstated 491 Holcim's benchmark EBIT was 30% to 33%. The Tarong EBIT contribution for 2002 to 2006 relied upon by the ACCC is [REMOVED TO THE CONFIDENTIAL SCHEDULE] ÷ 1,610,585 tonnes = [REMOVED TO THE CONFIDENTIAL SCHEDULE]: [361], [408] of these reasons. The EBIT contribution for Swanbank for the same period is [REMOVED TO THE CONFIDENTIAL SCHEDULE] [361] of these reasons. The ACCC says that the EBIT/t over that period for Tarong/Tarong North and Swanbank is [REMOVED TO THE CONFIDENTIAL SCHEDULE] ÷ 1,777,514 tonnes = [REMOVED TO THE CONFIDENTIAL SCHEDULE], [361] of these reasons. The respondents say that based on aspects of financial analysis contained in the primary liability judgment, the EBIT should be no higher than 33% of revenue. On that basis, assuming revenue of [REMOVED TO THE CONFIDENTIAL SCHEDULE], EBIT at 33% would be [REMOVED TO THE CONFIDENTIAL SCHEDULE]. Assuming revenue of [REMOVED TO THE CONFIDENTIAL SCHEDULE], EBIT at 33% would be [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The respondents say that EBIT is calculated in a way that does not distribute overheads to the group conducting the flyash and other components business (the "MIC group"). The respondents say based on the first Boman affidavit [43] to [51], Ex 50; the third Boman affidavit [8] to [41], Ex 52; and the Blackford affidavit at [166] to [175], Ex 60, that the EBIT figures overstate the "profitability" of the flyash business. Sales to shareholder customers should be excluded 492 The respondents say that sales from the date of the merger, 1 June 2003, to Cement Australia's own group shareholders (Rinker and Hanson) should be disregarded. Tied sales are said to represent about 60% of the SEQ cgf sales made by Cement Australia in the period 2005 to 2008. In 2009 and 2010, the proportion of tied sales to non-tied sales increased as the volume of non-tied sales fell away. The respondents say that Cement Australia did not derive the benefit of securing the SEQ cgf tied sales to its own shareholders by reason of the contravening conduct. 493 The tied sales were said to be equity assured purchases which would not have fallen to any third party and did not fall away to Sunstate, IFB or Hyrock upon entry by those parties into the SEQ cgf market. Those sales remained with Cement Australia. Dr Williams supports, they say, the view that these sales should be disregarded. 494 If tied sales from 1 June 2003 to 31 December 2006 are disregarded as having no causal connection with the contravening conduct, the EBIT calculation from 1 June 2003, on that assumed view, ought to be discounted to 40%. 40% of [REMOVED TO THE CONFIDENTIAL SCHEDULE] and the EBIT amount at 33% would then be [REMOVED TO THE CONFIDENTIAL SCHEDULE]. After Millmerran costs, 40% of [REMOVED TO THE CONFIDENTIAL SCHEDULE] is [REMOVED TO THE CONFIDENTIAL SCHEDULE] and the EBIT amount would then be [REMOVED TO THE CONFIDENTIAL SCHEDULE]. Taxation ought to be taken into account 495 The respondents say that the EBIT calculation does not take account of interest or tax. There is no evidence as to interest costs. The tax rate was 30% throughout the period. Penalties are non-deductible: s 26-5, Income Tax Assessment Act 1997 (Cth). The respondents say that the true measure of the "benefit" remaining in the hands of the relevant entity must be the after-tax amount as 30% of the profitability attributable to any contravening conduct is paid in tax. On that footing, the after tax benefit is 70% of [REMOVED TO THE CONFIDENTIAL SCHEDULE] which is [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 70% of [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 496 The result is that the respondents say that leaving aside consideration of circumstances in which a third party had entered the SEQ cgf market and the respondents had responded to rivalrous entry and sought to hold their sales through competition (in which case a proportion of the sales held by them would not be attributable to the proscribed provisions), the "maximum benefit" causally related to the contravening conduct is [REMOVED TO THE CONFIDENTIAL SCHEDULE] (approximately) or using the figures adopted by the respondents, [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The new contract reflects new circumstances 497 As a result of the restructure of government owned corporations in the generation sector, Stanwell became the contracting party for what were formerly Tarong and Tarong North Power Stations. Pozzolanic entered into a new contract for ash supply from these power stations on 19 November 2010 which was authorised by the ACCC on 14 July 2011. The contract was authorised in light of provisions which provided third parties with certainty that under normal operating conditions flyash would be available at the Tarong North silo. The provisions also qualified the general obligation on Tarong to sell and on Pozzolanic to buy "any and all flyash" that Pozzolanic obtained from the nominated "Ash Transfer Points". The short point is that the new contract, as authorised, sought to rectify the practical limitations upon access to third parties. 498 The point the respondents make is that in the context of assessing the amount of loss or damage caused by the contravening conduct, events since the operation of the new contract show that the price of flyash has not collapsed. The respondents say that the evidence discloses that Pozzolanic's average price for flyash in SEQ since entry into the new contract has increased. Mr Kevin Savoury is the General Manager, Marketing Sales and Distribution for Cement Australia. He filed an affidavit on 19 September 2014 attaching confidential exhibits KMS-A, KMS-B and KMS-C. KMS-B is a spreadsheet showing Cement Australia's "average delivered price" per tonne for cgf supplied into SEQ in the calendar years 2011 to 2013. The prices, respectively, are [REMOVED TO THE CONFIDENTIAL SCHEDULE]. However, those statistics are not correct. Mr Savoury swore another affidavit on 28 October 2014 in which he explains his mistake and says that the prices just quoted are actually the "average selling price". The "average delivered prices" in those years were [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The respondents say that from 2004 to 2010 respectively, the Cement Australia "prices" of cgf were 75.43/t, 76.91/t, [REMOVED TO THE CONFIDENTIAL SCHEDULE]: [1354]. Off-take by third parties has not been occurring 499 The respondents say that since the new contract, no significant change in the off-take by third parties has occurred at Tarong or Tarong North. Sunstate continues to take run-of-station flyash from Tarong North and grind it as it has done since April 2007 when it made a "commercial decision" to do so. As to IFB and Millmerran, the respondents say that the anti-competitive effects of the OMC provisions in the period 2002 to 2006 ceased to operate by 31 December 2003. Moreover, Nucrush has not supplied any cgf into the SEQ market. Finally, the respondents say that even if the proscribed provisions had not existed, an entrant would have needed to overcome, as Mr Houston observes, lesser logistical barriers to entry such as establishing supply contracts with a sufficient number of customers to achieve minimum scale efficiency and sufficient experience and reputation as a supplier of consistent quality cgf. The respondents say that the constraints of the proscribed provisions of the Tarong Contract are not necessarily causative of preserving Pozzolanic's market share or, put another way, the hypothetical absence of the constraints on access in the period 2002 to 2006 may not have resulted in a particular loss of market share as these other lesser barriers would have operated as relevant factors in any event. Benefit verses market harm 500 The respondents say that the ACCC impliedly suggests that the measure of the profit derived from the contravening conduct gives rise to the same measure of corresponding harm to potential competitors. They say that that notion is wrong in principle because the notion of market harm to unspecified competitors is only theoretical; there is no evidence that any potential entrant would have suffered loss; and while a potential entrant may have taken market share and profits from the respondents, the "lost profits" would not necessarily equal the profits a new entrant would have made. Thus, profits attributable to the contravening conduct are not a "proxy" for market harm or damage to potential entrants. Other contended factors 501 First, the effect and likely effect of the OMC operated from 30 September 2002 to 31 December 2003. The amended OMC had no effect or likely effect on competition. Second, since QCL's EBIT in SEQ in 2001 was $4.82 million, the QCL decision-makers were right to regard a $6 million loss of EBIT in 2002 as "exaggerated". Third, even if a new entrant had contracted with Millmerran, Tarong or Swanbank (and particularly Tarong) the time lag of installation of equipment and other start-up factors would have meant that the effect of entry of volume, pricing, market share and profits would not have been immediate. Fourth, as to Swanbank, there was no constraint operating from June 2005. The analysis of the documents of the respondents 502 The respondents say that the ACCC's analysis of QCL's internal documents assessing the potential impact of a complete loss of either the Tarong or Millmerran Contracts is "useless" as a means of assessing the loss that would have occurred had the proscribed provisions of each contract not been adopted in those contracts. As to the $42 to $44 million financial benefit over seven years of preventing entry, the respondents note the November 2001 budget document; the March 2002 Board paper; the QCL letter of June 2002 increasing the SEQ cgf price by $4/t; Mr Wilson's memo to Mr Arto of 16 October 2002; the LEK assessment of 24 September 2003 suggesting a price reduction of up to $30/t; and the postulate of Mr Adams of an EBIT loss of $15 to $20 million, and say this. 503 First, those documents are used to support a conclusion that prices were $14/t higher than they would have been in a contestable market. 504 Second, as to that conclusion, Dr Williams sees nothing in the documents to support an assumption that a margin of $4/t (the recoupment price increase) should be added to the projected $10/t such that a price which would have prevailed in a rivalrous market would have been $14/t lower than the actual prevailing price. 505 Third, the assumption that a projected $14/t 2002 lower price in a contestable market can properly be projected across the entire period from 2002 to 31 December 2006 is unsound. 506 Since the relevant period of the OMC is four years and three months, the EBIT range (which would not have been earned on this argument) is $4.25 million to $25.5 million (not $42 to $44 million) and as to the upper end of the range, they say that Mr Arto and Mr Maycock cast emphatic doubt on the $6 million projection. That projection assumes loss of one of the contracts and if it be Millmerran, the projection assumes that that ash is substitutable for Tarong ash. The respondents say that the budget assumption for 2002 of a $10/t price reduction is just an opinion and cannot be probative of the asserted fact that the prevailing price in the period 2002 to 2006 was $10/t higher or $14/t higher than it would have been with access and rivalry in the absence of the proscribed provisions. The same criticisms are made of the March 2002 Board paper and criticisms are also made of the utility of the other documents on this issue. 507 The ultimate point asserted by the respondents is that the internal documents cannot be relied upon as anything in the nature of an empirical assessment of the price which would have prevailed had the proscribed provisions not been adopted in the contracts (and especially the Tarong Contract) and had rivalry marked out the boundaries of price per tonne, service offerings and other matters of market dynamics. The comparison with NSW prices 508 The respondents say that NSW is simply a different market and Dr Williams has identified at least four differentiating factors as compared with SEQ that would require adjustments to be made or assumptions to be reviewed in making a comparison. Mr Houston also cautioned against drawing inferences that failed to take account of "any factors that differed between the two regions": Mr Houston's Report, [100]. Also, ashes have different qualities and different elasticities of demand. The respondents challenge the relative pricing comparison relied upon by the ACCC (at [323] of these reasons – based on CB-2 to the affidavit of Ms Boman). The respondents say that CB-2 contains a table that compares the prices charged in NSW and QLD after adjusting prices for "cement equivalence". The table is this: Cement Equivalent Prices (at Tarong CE equivalence) 2005/t 2006/t 2007/t 2008/t Eraring [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Mt Piper [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Tarong [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 509 As to Bayswater, the respondents say that that ash was cheaper than Tarong in the period 2003 to 2006 and remained so in the period 2011 to 2013. The respondents observe that Dr Williams concludes that the material relied upon by the ACCC does not support a conclusion that the difference between NSW (rivalrous) prices and Tarong (non-rivalrous) prices can be found, in the relevant period, in the operation of the proscribed provisions of the Tarong Contract. Market pricing after entry by Sunstate and IFB 510 The respondents contend that the Court should be wary about reaching conclusions concerning prices in the period 2002 to 2006 based on observable prices in 2011 to 2013 because there is no analysis that isolates the variable of the absence (in the later period) of constraints upon access (and thus contestability) of the kind contained within the proscribed provisions as causative of lower prices. 511 The respondents say that between 2007 and 2013 their prices (ex-Tarong) went up. However, virtually no sales were made "ex-Tarong" in those years. Only a "small volume" was sold ex-Tarong in those years. The "average selling price" in those years is based on all delivered price sales and the small volume of ex-Tarong sales. The "average selling price" in those years was [REMOVED TO THE CONFIDENTIAL SCHEDULE] respectively. The delivered prices were [REMOVED TO THE CONFIDENTIAL SCHEDULE] which demonstrate the weighting of the delivered price volumes. The Tarong delivered price for 2007 to 2010 is set out at [1354]. The respondents also say that in the period up to 2010 none of the respondents' customers invoked the MFN clauses which suggest that rivals were not supplying an equivalent product at a cheaper price. 512 As to reductions in the volume of sales from 379,101 tonnes in 2006 [267] of these reasons to [REMOVED TO THE CONFIDENTIAL SCHEDULE] in 2013 [374] (of these reasons), the respondents say that the decline is attributable to commercial considerations unrelated to any role the proscribed provisions might have played in preserving the volume of sales in the 2002 to 2006 period. 513 That follows, they say, for these reasons. First, Sunstate entered the SEQ cgf market in April 2007 with cgf ground from ash acquired from Tarong North. That circumstance occurred, in any event, notwithstanding the operative provisions. Second, Sunstate's joint venture shareholders were Adelaide Brighton Limited and Boral Limited. From 2009, they were supplied by Sunstate rather than Cement Australia. That was a function of assured equity purchases rather than a transition to Sunstate by reason of any role related to the provisions (or their absence), it is said. The volumes represented by those two former customers are unclear. Third, once IFB secured a source of ash, the members of the IFB joint venture were also supplied by IFB rather than Pozzolanic/Cement Australia. Again, the volumes are unclear. Fourth, Cement Australia from 2009 began to supply "slag" to the market and this had the effect of reducing volumes of flyash sold by the respondents: affidavit, Mr Savoury, 19 September 2014 [13] to [21]. 514 The respondents say that sales to non-tied customers fell off from 2009 with the introduction of "slag", not because of Sunstate's entry in April 2007: Mr Savoury's affidavit. 515 They also say that the objectively [REMOVED TO THE CONFIDENTIAL SCHEDULE] prices of Sunstate and IFB are, analytically, of "little consequence" without properly taking account of the cost base, margins, the quality of the ash sold, and rebates paid to shareholder buyers. [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 516 The ultimate point made by the respondents is that the decline in market share, they say, occurred over a number of years "well after the offending contracts ceased to operate" and it is "pure supposition" that the loss of market share is "causally linked" to the contravening conduct. IFB's entry occurred after the anti-competitive conduct ceased and Sunstate continued to do what it had been doing since April 2007, it is said. Relativity between flyash and Cement prices 517 The respondents say that the de-coupling of cement and cgf prices is based on two Sunstate invoices (dated 11 July 2011 and 21 October 2012; see [351] of these reasons); no attempt has been made to "adjust for other factors"; no change in ratio of flyash prices to cement occurred after Sunstate's entry in April 2007 (at least to December 2008); the two invoices do not provide a "sound economic basis" for "quantifying any benefit [said to be derived from coupling giving rise to a higher cgf price] to the [respondents] from the contravening conduct". Circumstances of conduct 518 The respondents say that as to the OMC, although findings were made of contraventions as described, nevertheless, the conduct of Pozzolanic and QCL reflected a "range of legitimate influences" which Mr Arto and Mr Maycock took into account as "other sound commercial reasons" for the conduct. Nine such considerations are identified. As to the amended OMC, at least a part of the purpose for entering into those terms was to address the colour problems. As to the Tarong Contract, although findings were made of contraventions as described, other non-contravening purposes for entry into the Tarong Contract were identified. 519 It should be noted, of course, that as to the identified provisions (especially of the Tarong Contract) as distinct from entry into a contract overall, those provisions were adopted for the substantial purpose of substantially lessening competition and the identified provisions had the effect and likely effect of substantially lessening competition. The "general" point of distinction emphasised by the respondents overall is that the contravening conduct occurred in the context of competitive tenders from each power station; no misuse of market power was alleged concerning entry into the Tarong Contract; and no misuse of market power was made out concerning entry into the Millmerran Contract. Size or financial position of the contravening companies 520 The respondents say that the principal liability judgment contains references to financial data relating to the respondents prior to the merger on 31 May 2003 to this effect: QCL's total EBIT for 2002 was approximately $100 million: [2070]; and the EBIT of QCL's flyash business for 2001 was $4.92 million of which $4.82 million was referrable to SEQ cgf sales: [1116]. The respondents rely upon the affidavit of Mr Devine sworn 16 May 2014 which addresses the size and financial position of the respondents after the merger. The respondents give emphasis to these matters: the corporate group does not produce separate accounts and thus Mr Devine has had to construct accounts for each entity based on the accounts for Cement Australia; Cement Australia at the material times derived no revenue or profits; Cement Australia incurred no liabilities and had total assets of $4.00; QCL earned profit before income tax during the period 2004 to 2013 ranging from $38.645 million to [REMOVED TO THE CONFIDENTIAL SCHEDULE] and had net asset values ranging from $94.681 million to $138.174 million in that period; Pozzolanic earned profit in the period 2004 to 2013 before income tax ranging from a figure of negative $3.317 million to $7.546 million and had net asset values in the range at $47.278 million to [REMOVED TO THE CONFIDENTIAL SCHEDULE] in that period; PIPL in the period 2004 to 2013 had [REMOVED TO THE CONFIDENTIAL SCHEDULE] other than in the 2005 year when it recorded an impairment of an investment. It had net asset values of $30 million in 2004 and [REMOVED TO THE CONFIDENTIAL SCHEDULE] each year from 2005. 521 The respondents say that the accounts for CA Holdings (having regard to the affidavit of Mr Steger affirmed 17 April 2014 at CMS-23; ATB 18.37) reveal that the CA Holdings group of companies earned profit before income tax in the period 2004 to 2013 ranging from $23.7 million in 2004 to $88.8 million in 2013 and had net asset values ranging from $1,025 billion in 2004 to $499.28 million in 2013. 522 The respondents contend that the relevant size and scale to take into account in the exercise of the s 76 discretion is the size and scale of the flyash undertaking of the respondents rather than the size and scale of the entire business operations of the group (especially because the group operations principally relate to products and services other than flyash) although there is no support for that principle in Australian Competition and Consumer Commission v Visy Paper Pty Ltd (No 2) (2004) 212 ALR 564 in the reasons of Sackville J. The respondents recognise that the size of the parent company may be relevant where the parent company bears some responsibility for the contravening conduct or where the subsidiary company lacks the capacity to pay any penalty that might be imposed or where the subsidiary lacks substantial assets: Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission (2003) 127 FCR 170, Merkel J at [49]; Black CJ agreeing at [1]; Sackville J agreeing at [2]. At [49], Merkel J examined those factors and concluded that they had no operation and thus, the size of Schneider's parent company or the size of the group of which it formed part was not a relevant factor in the particular case: see also Australian Competition and Consumer Commission v Humax Pty Ltd [2005] ATPR 42-072 at [40]. 523 In ACCC v ABB (No 2) at [40], Finkelstein J observed that: While I am not imposing a punishment on the parent, the size of the parent cannot be ignored when assessing the penalty that should be imposed upon its subsidiary. If the position were otherwise, corporations could easily organise their affairs so that if found guilty of criminal conduct, the penalty would be kept to a minimum. [emphasis added] 524 Finkelstein J then identified some illustrations of how that principle might operate in particular circumstances. That view, as to matters of principle, was adopted by the Full Court in Global One Mobile Entertainment Pty Limited v Australian Competition and Consumer Commission [2012] ATPR 42-419 at [128]. 525 The respondents say that the evidence makes clear that Cement Australia does not trade and has almost no assets and that PIPL does not trade and has limited assets. On the other hand, each of CA Holdings and QCL are corporations with significant revenue and profits. Pozzolanic has significant assets and not insignificant profit before tax. Nevertheless, the respondents say that any penalty imposed should not have regard to a particular entity's parent company. As to the Cement Australia partnership, the respondents observe that the ACCC has sought to have regard to the partnership on the footing that Cement Australia operates as its agent. The respondents say that since Cement Australia is an agent and not a subsidiary of the partnership and the ACCC chose not to join the partnership as a party to the proceedings, any "appropriate" penalty ought not to take into account the position of the partnership especially since CA Holdings is itself a substantial company. The respondents do not assert that they lack the capacity to pay any penalty. The proposition is that the "relativity of the size of the Corporate Respondents suggest that a single penalty should be imposed jointly and severally upon all Corporate Respondents". As to market power, the respondents say that although the respondents were found to have enjoyed a substantial degree of market power, the Court nevertheless found that the respondents had not "taken advantage" of that market power in entering into either the Tarong or Millmerran Contracts and, in any event, the relevant geographic market was "very discrete". Deliberateness 526 The respondents say that the deliberateness of the conduct depends upon the extent to which those responsible for including the relevant provisions in the OMC, the amended OMC, the Tarong Contract and the Swanbank Contract acted with a proscribed purpose. As to that, the respondents say as follows. The OMC 527 As to the OMC, the respondents give emphasis to these matters: the Court found that each of Mr Maycock and Mr Arto had a proscribed purpose: [2410] and [3071]; nevertheless, there were other "legitimate influences" taken into account by Mr Arto and Mr Maycock: [3232] and [2410]; Mr Arto, notwithstanding the proscribed purpose, genuinely believed many of the explanations he gave for his decision-making in deciding that Pozzolanic enter the OMC; the conduct was not covert; the OMC was the subject of a competitive tender process; MOC was legally represented. As to "giving effect" to the OMC, the conduct engages the period 30 September 2002 to 31 December 2003, a period of 15 months. The respondents give emphasis to the notion that the contravention is "effectively comprised of the entry into the [OMC] and compliance with the contractual obligations imposed by it" and it is "not the case that there are separate and independent acts" by the respondents over the 15 month period. The amended OMC 528 As to the amended OMC, the respondents give emphasis to these matters: the Court found that Mr Clarke acted with a proscribed purpose concerning entry into the amended OMC; at least part of the purpose in doing so was a non-contravening purpose. As to giving effect, the conduct extends over a period of approximately nine months. The respondents again observe that that contravention is comprised of entry and then compliance with the obligations, not a case of separate and independent acts. The Tarong Contract 529 As to the Tarong Contract, the respondents give emphasis to these matters: Mr Wilson and Mr Ridoutt and ultimately Mr Arto acted with a proscribed purpose in connection with entry into the contract; some of their purposes were non-contravening purposes; Pozzolanic had operated from the Tarong site as at February 2003 for almost 19 years; many customers sourced Tarong cgf because it was generally regarded as higher quality ash than Swanbank or Millmerran ash; the conduct was not covert; the contract was the subject of a competitive expression of interest process; TEC had the benefit of in-house legal advice. As to "giving effect" to the provisions, the conduct extends over the period from 28 February 2003 to 31 December 2006, a period of three years and 10 months. Again, the respondents emphasise that that contravention is in essence comprised of entry into the contract and then compliance with the contractual obligations imposed by it rather than a sequence of separate and entirely independent acts by group member entities over the period. The Swanbank Contract 530 As to the Swanbank Contract, the respondents give emphasis to these matters: the Court generally accepted Mr White's evidence as to the strategic role that Swanbank cgf might play for Pozzolanic; Swanbank decision-makers gave evidence that Pozzolanic did not exhibit an obstructive approach to CSE providing third party access to Swanbank ash: [693] and [3220]. As to "giving effect" to the Swanbank Contract, the conduct extends over the period from 1 January 2001 to 30 June 2005, a period of four years and six months. The respondents say that the contravention is comprised of entry into an arrangement on 9 September 1998 (as amended on 30 September 1998) which concerned the period 1 January 1999 to 31 December 2002 and that arrangement had the proscribed effect from 1 January 2001. The exercise of the option to extend the Swanbank Contract until 31 December 2004 (which occurred on 11 July 2002) was an act separate from compliance with the agreement. So too was the subsequent request for an extension until 30 June 2005 (which occurred on 11 March 2005). The respondents say that those separate acts simply extended the term of the original impugned arrangement. The role of the "sole supplier strategy" and the relevance of the implementation of that strategy to the contravening conduct 531 The respondents contend that the ACCC's contextualising of the contraventions by reference to the "sole supplier strategy" is an attempt to "revisit" the findings in the principal liability judgment on the topic of "purpose". 532 The respondents give emphasis to these matters: the ACCC, on this issue, refers to a document produced by Mr Klose (QCL's Development Manager) on 2 April 2002 and an email from Mr Ridoutt to Mr Leon dated 26 September 2003: [1124], [1079] and [2443]; although there are references to the strategic position of securing both contracts as being "vital", Mr Arto regarded that expression of opinion as putting the matter in "strong" terms: [2130]; Mr Maycock could not recall any discussion about the retention of the contracts being regarded (by the directors at least) as "vital": [2361]; Pozzolanic elected to tender for Millmerran to secure its own position because the Tarong Contract was also subject to a tender process; Pozzolanic regarded a contract at Millmerran as being marginally profitable in its own right in any event; the ash market March 2002 paper described the strategic position as one in which Pozzolanic sought to be the "preferred" ash manager not a "sole supplier" of ash; Mr Arto regarded this expression of position as consistent with the notion that the respondents did not want to "lock up" sources of supply and Mr Maycock agreed with that view: [2066], [2119] and [2325]; Mr Maycock regarded these expressions of opinion as nothing more than "motherhood" statements: [2325]; Mr Maycock could not recall any discussions with management about a "sole supplier strategy" and gave evidence that Pozzolanic did not seek to be the only supplier of flyash but rather the preferred supplier of cgf: [2334]. 533 To the extent that Mr Maycock was unable to recall discussions about these important topics, I found that the documents were a surer guide to the thinking at the time. Although Mr Maycock and Mr Arto gave evidence of the kind described by the respondents, the findings in relation to the contextual matters within which the provisions came to be adopted go beyond the limitations of the references to which the respondents refer. The ACCC's contentions as to the alleged awareness of the respondents of the competition law risks associated with adopting the identified provisions of the contracts 534 The respondents say that they accept that they were aware of the existence of the "competition law risks" associated with adopting the identified provisions but say that the findings in the principal liability judgment show that they took steps to "mitigate those risks". Those steps were not adequate. Nevertheless, in assessing the "deliberateness" of the contravening conduct, the respondents say that it is important to remember that no finding was made that the respondents acted with "disregard for any legal advice". The respondents say that no such proposition was put to the relevant witnesses, Mr Arto or Mr Maycock. The respondents give emphasis to these matters: Mr Arto wanted to have a contract that was compliant with trade practices law in respect of both Millmerran and Tarong: [2243], [2147]; QCL, according to Mr Maycock, required management to be fully conversant with the Trade Practices Act and requested management to ensure that the long term flyash contracts were not in contravention of the Act; part of Clayton Utz's mandate with respect to Millmerran was to assist QCL to find a "contractual solution" that did not involve "exclusivity": [2120]; Clayton Utz assisted Pozzolanic in negotiations with Millmerran: [3068]; each of TEC and MPP had the benefit of legal advisers; and, Pozzolanic considered a number of options and provided TEC and MPP with advice from Clayton Utz about those options. 535 As to the communications between Mr Clarke and Ms Collins about the trade practices implications of things put in writing, the respondents describe these communications as "infelicitous" communications. They say there is no basis for an inference that Mr Clarke had instructed Ms Collins not to put in writing matters that might reveal an anti-competitive purpose and no such finding was made by the Court. The respondents say that Mr Clarke expressly rejected the contention ([2552]) and gave evidence that he simply told Ms Collins to be careful with the language that she used having regard to his understanding of the findings in Boral Besser Masonry Limited v Australian Competition and Consumer Commission (2003) 215 CLR 374. The respondents say that Mr Clarke's view was consistent with the understanding of Ms Collins and, in any event, the Court found that the evidence of Mr Clarke and Ms Collins on this topic was not dishonest but merely "confused". 536 As to Swanbank, the respondents say that the ACCC contends that Pozzolanic insisted upon exclusivity "despite protests from Swanbank". They say that that proposition was not put to the witnesses and is not supported by the documents. They say that all that can be said with confidence is that Swanbank had "some concerns" that the contract with Pozzolanic was "exclusive". Involvement of senior management 537 The respondents accept that members of senior management were involved in "each of the four courses of conduct" giving rise to the contraventions. They say that it is important to note that those responsible for the contravening conduct were the senior managers and that the role of the Board of Directors and the CEO was limited and confined to the period prior to the merger. They say that in relation to the OMC, the Court found that Mr Ridoutt and Mr Wilson had the proscribed purpose and that although Mr Arto held that purpose, his purpose was based upon the authority he conferred upon Mr Ridoutt and Mr Wilson: [3071] and [3077]. So far as the Tarong Contract is concerned, Mr Ridoutt and Mr Wilson were "principally responsible" for the contravening conduct, it is said. Mr Arto and Mr Maycock held a proscribed purpose but Mr Arto's purpose was based upon his interactions with and reliance upon Mr Wilson and Mr Ridoutt, it is said: [3142] and [3153]. As to the amended OMC, the purpose was based upon the conduct of Mr Clarke and Ms Collins: [3237] and [2694]. In relation to Swanbank, the point of the exercise of the option on 11 March 2005 was to preserve Pozzolanic's exclusive access to Swanbank ash and Mr White was found to have exercised that option and had that objective: [3221] and [3224]. PART 10: CULTURE OF COMPLIANCE The contentions of the ACCC 538 The ACCC says that the willingness of the respondents to "deliberately risk a breach of the Act" is illustrative of a "complete absence" of any culture of compliance. So too is the "willingness" of senior management to be involved in the contravening conduct. These two factors are "further reinforced", it is said, by the indemnities granted by the respondents to their senior executives. 539 As to that matter, the ACCC says this. On 29 November 2006, Mr Luke Woodward and Ms Liza Carver sent a letter of advice to Ms Jackie Geraghty the then General Counsel of Cement Australia recommending that Cement Australia enter into "formal arrangements for cooperation by, and indemnification of, certain individuals who were in a position to provide Cement Australia with information relevant to the ACCC's investigation". The letter is marked LWC-1 to the affidavit of Ms Carver affirmed on 16 May 2014. The reference in the letter to the ACCC's investigation is a reference to notices issued by the ACCC under s 155(1)(a) and (b) addressed to Cement Australia, Pozzolanic and PIPL in respect of matters which became the subject of the proceedings and in respect of documents produced to the ACCC from 9 October 2006: see also the affidavit of Mr Steger affirmed 17 April 2014 and the affidavit of Ms Close sworn 14 October 2010. 540 The Commission says that on and from 14 December 2006, Cement Australia and CA Holdings offered indemnities to 16 executives "who had been involved in the operation and management of the flyash business, including Mr White". The Commission says that the indemnities were given before the ACCC conducted examinations of individuals under s 155(1)(c) of the Act. With the exception of one indemnity which was signed by Cement Australia's Chairman, Mr Cadzow, the indemnity agreements were signed by Mr Leon and Ms Geraghty. The indemnity agreements 541 The indemnity agreement refers to the investigation by the ACCC into allegations that Cement Australia may have entered into anti-competitive arrangements prohibited by the Act in the period 2002 to August 2006, the subject of the ACCC's investigation. The document refers to the possibility that, as a consequence of the investigation, the ACCC or a third party might commence proceedings against the CA Holdings group of companies and/or Cement Australia and against "current and former individual officers or employees" of entities in the CA Holdings group of companies. 542 The document records that the Board of Cement Australia has resolved to offer an indemnity in relation to costs, expenses and liabilities to which the addressee may be exposed in connection with the ACCC's investigation and any proceedings. The indemnity is subject to the Corporations Act 2001 (Cth), the Trade Practices Act and any other "applicable laws". It is also subject to the terms and conditions of the document. 543 By cl 1, the company agreed to indemnify the individual in respect of any judgment or order for the payment of money (including, without limitation, any civil penalty order or order for the payment of legal costs) which might be made by any Court in proceedings; any reasonable legal costs and disbursements incurred by the individual or payable by the individual in relation to the investigation or any proceedings; and any other civil liability, including without limitation, losses, costs, damages and expenses of whatsoever nature which the individual might suffer, incur or sustain in connection with or arising in any way out of, proceedings. 544 By cl 2, the indemnity will not apply, put simply, to any liability of any nature arising from a breach by the individual of any duty owed to the company or any related body corporate of the company, "whether under the Corporations Act 2001 (Cth), under any contract, as a matter of general law or otherwise"; any liability for a pecuniary penalty order under ss 1317G, 1317H or 1317HA of the Corporations Act 2001 (Cth); any liability owed to someone other than Cement Australia or a related body corporate which does not arise out of conduct in good faith; and legal costs incurred in (a) defending or resisting proceedings in which the outcome is that the individual has a liability for which indemnification is not permitted under cl 2 "or at law"; and (b) defending or resisting criminal proceedings in which the individual was found guilty. 545 Clause 2.5 provides that the indemnity does not apply to any liability for which indemnification is prohibited under, relevantly, the Trade Practices Act. 546 By cl 3, the indemnity is given in consideration of the individual undertaking and acknowledging that, put simply: the individual will continue to make full and truthful disclosure to the company and its legal advisers of the individual's best and honest recollection of all facts and circumstances known by him or her in relation to the subject matter of the investigation (cl 3.1); the individual assisting the company in relation to the investigation and proceedings (cl 3.2); the individual not discussing or making disclosure about the investigation or proceedings to persons other than Ms Geraghty, the company secretary or the company's legal advisers (cl 3.3); the individual making no public statement about the investigation or proceedings unless authorised to do so (cl 3.4); the individual not making any admission as to liability in the investigation or proceedings (cl 3.5); and the individual co-operating fully with the company's legal advisers and giving a truthful account of relevant matters (cl 3.6). 547 Clause 3.7 recites that it is the intention of the company to co-operate with the ACCC and to comply with any directions that are imposed on it by law "and where your co-operation is necessary to achieve these objectives, you agree to act as directed by the company". 548 Clause 3.8 records that except to the extent required by law, the individual will not disclose communications between the company and its legal advisers to anyone or disclose information gained by the individual. 549 Clause 4 sets out the rights and obligations of the individual in respect of payments made under the indemnity arrangements. Clause 4.3 provides that the individual must re-pay all monies paid by the company under the indemnity within 30 days after receiving a written request to do so if, put simply: the liability for which payment has been made is one for which the individual is not entitled to an indemnity; a court determines that the individual is not entitled to be indemnified in respect of a liability; the individual has failed to perform an obligation required to be performed under cl 3. 550 By cl 6, if the company has elected to retain lawyers to act for the individual, the company may at any time decide to instruct those lawyers to cease acting for the individual. By cl 7, except to the extent that disclosure is required by law, the individual agrees to keep confidential the giving of the indemnity and its terms. By cl 9, the individual may choose at any time not to be bound by or comply with the terms of the indemnity other than cls 3.3, 3.4, 3.8, 4.3 and 7 by giving notice in writing to the company secretary. 551 By cl 10, if the individual chooses not to be bound by or comply with the terms of the indemnity, the company is no longer bound and the offer of indemnity is treated as revoked. 552 Clause 11 is in these terms: Nothing in this indemnity shall preclude you from co-operating with the ACCC in relation to the Investigation or Proceedings, whether by your own volition or as required by law, provided that if, by your own volition, you co-operate with the ACCC then you shall be deemed to have given notice under clause 9 and the Company will no longer be bound by the terms of this indemnity, and the offer of indemnity shall be revoked, from the date of the deemed notice. For the avoidance of doubt, where notice is deemed to have been given under this clause you will not be liable to the company in relation to any amount paid or payable at the date notice was deemed to have been given except where you are liable to re-pay amounts under clause 4.3. [emphasis added] 553 The ACCC says that, on their face, these provisions would deter material witnesses from providing relevant evidence to the ACCC and the Court and the "principal vice" in the indemnity agreements is their "tendency to prejudice the administration of justice" by preventing material witnesses from conferring with the ACCC. The ACCC says that by offering indemnities to individuals involved in the contraventions, Cement Australia and CA Holdings "deliberately insulated" those individuals from the "consequences of their conduct". The ACCC says that offering these indemnities on these conditions is a "serious matter" which should be "condemned in the strongest terms". The ACCC also says that "the complete absence of a culture of compliance that these indemnities reflect is an aggravating circumstance that should be reflected in the imposition of very substantial penalties and which, in respect of a number of contraventions involving QCL and Cement Australia, the ACCC submits should include the maximum available penalties" [emphasis added]. The contentions of the respondents Culture 554 The respondents accept that the culture of compliance that existed from 2001 to 31 December 2006 was not effective to prevent the contraventions that occurred. The respondents say that in reliance upon the affidavit evidence of Mr Ian Mutton sworn 16 May 2014 and Mr Constantine Gionis sworn 16 May 2014, it is apparent that important steps have been taken since the ACCC commenced its investigation into these matters, to improve the culture of compliance. Mr Ian Mutton is the owner of Crafters Connect Pty Limited ("CCPL"). Mr Mutton is a non-practising lawyer with extensive experience in competition and product liability laws. CCPL provides competition law compliance services to the Cement Australia group of companies including the corporate respondents. Mr Constantine Gionis is a principal of Gionis Legal & Advisory, a commercial law firm. He was previously the General Counsel and Company Secretary of Cement Australia. He ceased that role in September 2012 but since February 2014 he has continued to provide "in-house" legal services and act as Company Secretary to the Cement Australia group of companies. Mr Gionis joined Cement Australia as General Counsel in August 2007 and he had "overall responsibility for overseeing the Cement Australia competition law compliance program" which included liaising closely with Mr Mutton who provided advice and training on competition law and compliance. Both Mr Mutton and Mr Gionis describe the scope and content of that training. 555 In reliance on these affidavits, the respondents say that the culture of compliance involved these things: the production of a competition law awareness guide, "around 2007", which continues to be used; the production of a trade practices compliance policy, "around 2007", which continues to be used; the introduction of a competition law mentor program in 2007; the introduction from October 2006 of an annual audit of the implementation of the compliance program with a report outlining the results to be submitted to the Board in the first quarter of each year; the introduction since 2008, as a requirement of the compliance program, that all employees in positions relevant to trade practices, sign and return a compliance certificate each February stating whether they have been involved in any breach of what is now the Competition and Consumer Act 2010 (Cth) and whether they have undertaken the required training during the preceding year; the introduction in 2008 of a procedure by which all General Managers within Cement Australia must report monthly about whether any competition law issues have come to their attention in the preceding month; the introduction, commencing in 2009, of annual competition law compliance training for all members of the Cement Australia Board presented by a competition law specialist from an external law firm; the introduction, from late 2010, of a standing item for consideration on the agenda for each meeting of the Audit & Compliance Committee of the Board of Cement Australia, of trade practices issues; the adoption of a variation to the online competition law compliance training module such that Cement Australia requires its trade practices relevant employees to complete, every second year, a program which requires an acceptance level or "pass mark" of 100%, together with other related improvements to the training program. Indemnities 556 The respondents say that the indemnities did not and could not purport to preclude or encourage the relevant executives from doing anything other than complying with their obligations or co-operating with the ACCC. The respondents say that the indemnities were entered into with the executives prior to undertaking the s 155 interviews and before any proceedings were instituted. They say that there is no proper foundation for suggesting that the indemnities, on their face, would deter material witnesses from providing relevant evidence to the ACCC or the Court. That follows, it is said, for three reasons. First, the individual was not compelled to enter into the indemnity agreement and each individual was advised to obtain independent legal advice. Arrangements had been made with Johnson Winter Slattery for each individual to do so (with a partner, Mr Aldo Nicotra). Second, cl 3.7 recites that Cement Australia intends to co-operate with the ACCC and comply with any directions imposed on it by law and that the individual's co-operation is needed to achieve that objective. Third, an individual who is subject to a notice under s 155 of the Act would be liable for an offence if they gave misleading and deceptive evidence to the Commission. 557 The respondents say that the indemnities were not designed to discourage the executives from co-operating with the ACCC "outside the framework of the notices issued pursuant to s 155 of the TPA". The respondents say that as the individuals were employees, it is not objectionable (at least at the time when the indemnities were given) that the respondents as employer took steps to give employees legal representation and indemnify them for conduct while acting on behalf of the respondents. The respondents also say that the indemnities make it plain that the relevant executives would not be indemnified in respect of any liability for which indemnification was prohibited under any applicable law: cl 2.5. Co-operation with the ACCC 558 The ACCC contends that the manner in which the corporate respondents conducted the proceedings does not mean that they are to be subjected to a penalty greater than that which would otherwise be "appropriate". However, the ACCC also says that the respondents are not entitled to any "discount" for co-operation or contrition. Apart from the point made about the effect and operation of the indemnities, the ACCC says that the respondents continued to show no willingness to co-operate with the ACCC or narrow the issues in dispute once the proceedings commenced. As a result, virtually every aspect of every factual question has been in controversy throughout the proceedings: [3276]. 559 The respondents say, that they contested liability and they were entitled to do so. Their election to do so cannot be an aggravating factor. The respondents say they complied with all of the notices issued under s 155 of the Act; voluntarily provided the ACCC with multiple folders of additional documents; and invited the ACCC to attend a site visit at Tarong Power Station. At paras 43 to 48 of his affidavit, Mr Mutton describes various co-operative steps he says the respondents took in assisting Cement Australia in responding to the ACCC's enquiries. In those paragraphs, Mr Mutton describes attending a meeting with the ACCC on 1 September 2005 and another meeting on 8 August 2008. He describes steps taken to maintain contact in 2005 and the first half of 2006 with Mr Ducret about various matters. He then expresses a state of mind opinion that he believes that Cement Australia co-operated with the ACCC in a full and timely manner. 560 The respondents say in answer to the criticism that they did not co-operate to narrow the issues in dispute and put on evidence that they ultimately did not rely upon, that the allegations in the proceedings were considerable and factually complex. They say that, as a result, they cannot be criticised because the conduct of its case changed as the proceedings developed. They also say that they successfully defended a significant number of the allegations made against them. PART 11: THE CONTENTIONS OF THE RESPONDENTS AS TO MAXIMUM PENALTY, PARITY AND THE TOTALITY PRINCIPLE 561 As to the maximum penalty, the respondents say that there are only eight cases in which a maximum penalty of $10 million has been exceeded in respect of conduct giving rise to a range of contraventions. Seven of those are concerned with cartel conduct. One case concerns a contravention of s 46. One case concerns contraventions of the Telecommunications Act 1997 (Cth). Moreover, there has been no case in which the statutory maximum has been imposed in respect of a single contravention and no case in which a penalty has been imposed close to the maximum penalty for a single contravention (in respect of the regime that applied prior to 1 January 2007). Nevertheless, the maximum penalty does not operate as a cap where multiple contraventions are involved. Also, the statutory maximum provides a yardstick for judges in respect of one or more contraventions. 562 As to parity, the respondents say that similar contraventions should incur similar penalties other things being equal. They say that "while there are few cases that are comparable to the present case", there are "various factors" which bear similarities with other cases and the Court should have regard to those cases. The respondents have put on an annexure which sets out the penalties imposed in all cases relating to Pt IV of the Act from 2000 to 2014 (63 cases). 563 The propositions drawn from these cases, by the respondents, are these. 564 First, in Australian Competition and Consumer Commission v PRK Corporation Pty Limited [2009] ATPR 42-295 ("ACCC v PRK") (a case involving contraventions of s 45(2) of the Act in which liability and penalty were agreed concerning conduct from September 2001 to November 2002 giving rise to two contraventions by each of the second and seventh respondents), Jacobson J observed at [42] that although the seriousness of the conduct there in question should not be understated, it was to be distinguished from clandestine behaviour at the heart of price-fixing cartels. Unsurprisingly, Jacobson J in assessing whether to regard the recommended penalties as "appropriate" took into account impressions and observations about the particular character, quality, gravitas and nature of the conduct. The point the respondents seek to make here is that the conduct in question, like the conduct in the above case, did not exhibit "clandestine behaviour" emblematic of "price-fixing cartels" which are particularly serious contraventions of the Act. In ACCC v PRK, penalties of $1.9 million, imposed upon each respondent (resulting in penalties of $3.8 million) is said to be useful and informative in the context of the character of the conduct in question. 565 Second, in Australian Competition and Consumer Commission v Qantas Airways Ltd (2008) 253 ALR 89 at 105, Lindgren J described cartel conduct as the most serious of the non-criminal contraventions of the Act. Thus the contravening conduct in the present case cannot properly be described as the "worst case" examples of contravening conduct. 566 Third, the respondents say that the cases relating to contraventions of s 45 (other than price-fixing cases), s 46 and s 47 of the Act are the most useful cases to consider. There are 14 cases in this category to which the respondents refer. In those cases, the penalties range from $525,000 to $14 million. 567 Fourth, the respondents say that the most closely analogous case is Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd [2010] FCA 929 ("Baxter Healthcare"). That decision is concerned with conduct related to the exclusion of competition by reason of the anti-competitive conduct of Baxter Healthcare. The features of that decision emphasised by the respondents are these. First, the case exhibits some significant differences to the present case including the circumstance that the case was concerned with contraventions of s 46 and s 47 rather than s 45 but nevertheless there are a number of similarities. Second, Mansfield J observed that in dealing with the circumstances of the case, cases with respect to cartel conduct did not provide any real guidance due to the different nature of the conduct involved. Third, in the present case, the conduct of the respondents does not involve cartel conduct. It concerned contracts with suppliers. Fourth, in Baxter Healthcare, competitors were excluded following a tender process but unlike the conduct of Baxter Healthcare, the respondents' conduct did not extend to multiple States and it remained open to competitors of the respondents to participate in subsequent tenders as demonstrated by the authorisation of the Tarong Contract in 2011 and the award of the latest contract for flyash from Tarong and Tarong North Power Stations in 2014 to a new entrant to the market in competition with the respondents. 568 Fifth, in contrast to the present case, the Court found that Baxter Healthcare was only able to engage in the contravening conduct by reason of its market power (although in the present case, the respondents recognise that they engaged in contravening conduct, in part at least, by reference to a "purpose" of substantially lessening competition). The respondents say, however, that in Baxter Healthcare competitors were unable to compete equally with Baxter Healthcare by reason of an exercise of market power. In Baxter Healthcare, the tenders were for three to five years. In the case of Millmerran, the effect on competition did not endure for the life of the contract but had dissipated by 31 December 2003. In Baxter Healthcare there were four groups of separate contraventions. Liability and penalty was contested. The conduct occurred from 1998 to 2001. Total penalties were $4.9 million. 569 The respondents say that the judgment in Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2006] FCA 1799 provides a useful point of comparison. They say that the contraventions in the present case are less serious than the contraventions in that case. That case involved contraventions of s 45(2) taken in conjunction with s 4D. The conduct occurred from August 1997 to November 2000. Liability and penalty were both contested. The content of the conduct involved Woolworths (owner of Liquorland) taking objections to applications by third parties for liquor licences and then agreeing to withdraw objections in return for third parties entering into deeds which contained various restrictions on the scope of their licences. The Court found four contraventions of s 45(2). There was no element of a "legitimate purpose" in the conduct of Woolworths. It was out-and-out contravening conduct. Penalties were imposed in relation to four groups of contraventions against Woolworths. Four penalties of $1.750 million were imposed totalling $7 million in all. 570 The respondents also give emphasis to Australian Competition and Consumer Commission v Safeway Stores Pty Ltd (No 4) [2006] ATPR 42-101 ("Safeway"). The respondents say that that case involved more serious conduct than the present case. The Court found that Safeway's conduct involved the use of its market power to dissuade suppliers from continuing to supply bread to competitors (four contraventions) and that Safeway had reached an agreement with a competitor to fix prices (one contravention). The point of distinction between that case and the present case is that there are no findings in the present case that the respondents took advantage of market power whereas there were such findings in the Safeway decision. Moreover, there was no "legitimate purpose" for the conduct in question in Safeway whereas in the present case there were some legitimate purposes as well as proscribed purposes. These factors are said to suggest that the penalties to be imposed in the present case ought to be of a lower order than those imposed in Safeway. 571 The point being made by the respondents is that contraventions of s 46 involving the taking advantage of market power for a proscribed purpose are to be regarded as more serious contraventions than the contraventions in the present case. On this point, the respondents also give emphasis to the observations of Goldberg J in Safeway at [76] to the effect that one factor which suggested that the conduct of Safeway was more serious and called for a substantially higher penalty than that imposed on Tiptop in a previous case was the circumstance that Safeway had substantial market power and took advantage of its market power whereas there was no analogous finding or agreed fact in relation to Tiptop. The respondents say that in Baxter Healthcare the four courses of conduct attracted a penalty of $4.9 million and having regard to that penalty and the absence of any contravention of s 46 in the present case, the penalty should be "considerably less" than that imposed in Baxter Healthcare. PART 12: THE CONTENTIONS OF THE RESPONDENTS AS TO THE "APPROPRIATE" PENALTY The key elements 572 The respondents say that the Court should: set the penalty by reference to four courses of conduct identified by the respondents rather than on the basis of 22 separate contraventions; not accept the profit calculations made by the ACCC; conclude that there is no evidence as to the loss or damage caused by the contravening conduct; set a penalty having regard to the circumstance that the respondents have not previously contravened the Act; set the penalty having regard to the circumstances outlined by the respondents; and take into account the penalties imposed in other cases where the contravening conduct "bears some similarities". 573 The respondents say that assuming the penalty to be imposed is less than the statutory maximum, the respondents propose that the Court impose penalties jointly and severally on the respondents. They say that provided that the penalty to be imposed is less than $10 million, the Court has jurisdiction to impose liability jointly and severally on all of the respondents and such an approach is consistent, it is said, with the fact that the ACCC did not attempt to distinguish between the different respondents. The appropriate amount is in the order of $4 million 574 The respondents say that having regard to these factors, the appropriate penalties should be in the order of $4 million. The respondents contend that Baxter Healthcare is the most analogous case in terms of the nature of the contraventions and in that case the penalty was $4.9 million. The respondents say that if the Court were to approach determining a penalty based on the contended gain made by the respondents, any such gain must necessarily be significantly less than [REMOVED TO THE CONFIDENTIAL SCHEDULE] but, in any event, an amount of $9 million must necessarily be the outer boundary of a penalty to be considered by the Court. 575 The respondents say that the Commission in their opening submissions at [38] asserted that Millmerran was the crux of the case against the respondents, no doubt on the footing that that case was centrally concerned with conduct said to be in contravention of s 46 of the Act. The respondents say that having regard to the findings on purpose and effect, a penalty "ought to be imposed". However, in relation to "purpose", the Court found a multiplicity of purposes comprising, as a substantial purpose, a proscribed purpose, but also other legitimate purposes. As to the OMC, the respondents say that a significant matter is that the effect finding is based upon a finding that there was a real chance of a likelihood of an effect upon competition and that the effect and likely effect would dissipate as information flows emerged in the market making it plain to participants that there was a problem in the quality of the Millmerran ash. The respondents say this circumstance should be weighed heavily in the balance. As to the amended OMC, the respondents say that a smaller penalty is appropriate as those provisions had no effect on competition and in relation to purpose, the conduct sought to preserve the status quo. 576 In relation to the Tarong Contract, the respondents say that they entered into the contract at a time when it was not clear whether flyash from Millmerran would be a substitute for Tarong ash and in those circumstances it was quite "natural and rational" for the respondents to seek to secure a continuing source of Tarong cgf to enable the business to continue to function. 577 As to Swanbank, the respondents say that the contraventions are at the very margins. PART 13: THE OBVIOUS DILEMMA CREATED BY SUCH PROFOUNDLY DIFFERENT CONCEPTIONS OF AN APPROPRIATE PENALTY 578 The ACCC contends that the conduct in question in these proceedings is the very embodiment of the "worst case" and thus the penalty in respect of aspects of the conduct giving rise to particular contraventions necessarily attracts the maximum penalty contemplated by the Parliament because this case is that very circumstance. Accordingly, the ACCC says that having regard to all of the conduct expressed in the various contraventions, a penalty of $97 million is to be imposed as the "appropriate penalty" (having regard also to the further propositions about CA Holdings and Cement Australia). 579 On the other hand, the respondents say that while the findings concern serious contravening conduct (and yes, a penalty should be imposed), all of the considerations relevant to the exercise of the discretion under s 76 of the Act lead to the conclusion that an appropriate penalty to be ordered against all respondents jointly and severally is $4 million in respect of all of the conduct given expression by all of the contraventions. 580 Thus, the parties are $93 million apart. 581 Not surprisingly, the canyon between these positions resulted in the ACCC putting on further submissions in which the Commission contends for flaws, errors and misconceptions both in the analysis and the facts on the part of the respondents which has led them ultimately to the conclusion that a penalty of $4 million is "appropriate" in the exercise of the s 76 discretion. 582 Equally, also without any surprise, those further submissions by the ACCC led to a range of further submissions by the respondents in which they say that a hybridisation adopted by the ACCC is unsound. They also seek to demonstrate errors both in the method and factual analysis adopted by the ACCC which has led the Commission into error and misconceptions. 583 I propose to deal, as briefly as possible, with the next iteration of these various contentions and cross-contentions which reflect diametrically opposed positions on virtually every aspect of the questions in issue. I will then address the expert evidence of Dr Williams. I will then address the further submissions concerning contentions of accessorial liability against CA Holdings and Cement Australia. I will then express conclusions on that last matter and then expression conclusions on all other matters before turning to matters in relation to Mr White. PART 14: THE FURTHER CONTENTIONS OF THE ACCC The course of conduct principle and the parity principle 584 The ACCC contends that the respondents have misconceived both principles. The ACCC says that if the course of conduct principle applies it does not have the consequence that the maximum penalty for multiple contraventions, grouped as a course of conduct, is the same as the maximum penalty that would apply for a single contravention. As to parity, the ACCC emphasises that penalties previously imposed in widely differing circumstances are not very helpful and of no particular assistance. The ACCC says that the point of distinction drawn by the respondents that cartel cases are at the extreme end of contravening conduct and the present case falls short of that, does not give rise to the conclusion that the circumstances of the present case do not warrant a maximum penalty. The ACCC says that the principle is this: the primary objective is deterrence based on the particular facts of the particular case. The ACCC reasserts a synthesis of the factors it put in its principal submissions. Legitimate purposes and sound commercial reasons 585 The ACCC says that the notion that the conduct may have been economically rational; was framed taking account of sound commercial reasons; and reflected aspects of legitimate conduct, does not derogate from the finding that the proscribed purpose was a substantial purpose. That conduct is not "legitimised" by the presence of these other factors. The point developed by the respondents is that in determining the penalty the Court will have regard to the circumstance that the conduct was not simply out-and-out unlawful conduct. Looking to the flyash business only 586 The ACCC says that there is no authority for the proposition that the Court must look only to the size of the flyash business and not the size of the entire business when determining an appropriate penalty. The ACCC says that confining attention to the flyash business is directly inconsistent with Safeway at 42 and Australian Competition and Consumer Commission v George Weston Foods Ltd [2000] ATPR 41-763 at 56 and moreover TPC v CSR at 52,152 – 52,153 requires the Court to look to the size of the contravening company when considering what might be an appropriate penalty. Market power 587 Although the Court did not find a taking advantage of market power, the relevance of the extent of the market power of the respondents goes to the notion of deterrence: what might be an appropriate penalty to deter a respondent which enjoys a greater or lesser degree of market power? The factor under consideration is the "size and strength" of the contravener. The ACCC says that the entrenched monopoly position of the respondents as parties engaging in the contravening conduct warrants "very significant penalties" as a function of deterrence. Geographic area 588 Although the respondents say that the geographic area, confined to SEQ and parts of northern NSW, is not a broad market area, the ACCC says that the area reflects a very substantial population catchment and the entirety of the market was affected by the conduct. Further, principal users of the product are manufacturers of concrete products used extensively throughout the whole community. Deliberateness 589 As to the notion that a relevant consideration is the finding at [2249] that Mr Arto "genuinely believed" many of the explanations he gave for his decision-making, the ACCC observes that at [2249] the further observation was made that Mr Arto, in giving evidence, was found to be "over-egging the pudding" although he was not being untruthful. The ACCC contends, nevertheless, that a substantial purpose of the respondents was to substantially lessen competition, conceived at the highest levels of management, so as to exclude competition. Both Mr Arto and Mr Maycock had that purpose. Mr Arto wanted to secure the margins and prevent a collapse in market share. In the absence of any detailed recollection from Mr Maycock about the considerations exercising his mind, the Court was nevertheless satisfied that he was motivated by foreclosing entry by a rival into the SEQ cgf market. As to the notion that the respondents sought to mitigate competition law risks about which they were aware by taking legal advice, the ACCC says the fact that legal advice was obtained is of "little consequence" and it is "not a discounting factor" because it "sends the wrong signal to the commercial community": Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission (2003) 131 FCR 529 at [309] and [310], Wilcox, French and Gyles JJ. Period of giving effect to the OMC 590 The ACCC says that while the Court found that the effect and likely effect of the provisions of the OMC had dissipated by 31 December 2003, the respondents continued to give effect to the provisions with the relevant contravening purpose until the end of the amended OMC on 28 July 2004. Co-operation 591 The ACCC says that there was no co-operation from the respondents. The respondents volunteered information in order to persuade the ACCC that there was no contravention of the Act and the voluntary co-operation of relevant individuals was influenced in a preclusive way by the terms of the indemnities. The ACCC says that agreements which induce a material witness not to voluntarily assist a law enforcement agency is against public policy and it is "irrelevant" that the individuals were not compelled to enter into the agreements. The ACCC says that the agreements created behavioural incentives not to co-operate or provide information. Market harm and financial benefit 592 The ACCC says that by its primary submissions, it has not sought to "quantify" the but for price which would have prevailed in the SEQ cgf market in the absence of the contravening conduct, that is, the adoption of the identified provisions, as the respondents contend. The ACCC says that the respondents have misconceived the proper purpose of the ACCC's submissions and the context within which these topics are addressed. The ACCC says that when imposing pecuniary penalties, the Court does not seek to "quantify the profits directly attributable to the contravention and then remove only those profits". Rather, the Court seeks to fashion a penalty which would "upset any calculations of profitability". The ACCC says that there are four significant considerations in approaching this principle. First, where a sophisticated market participant has undertaken a detailed analysis of the profitability of their conduct, that analysis should be the starting point for determining penalty. Second, the Court ought to have regard to both "intended or likely harm" (assessed on a forward-looking basis at the time of the conduct) and "actual harm" as assessed ex-post. Third, it is not necessary for the Court to attribute a precise value to the harm caused by the conduct. Fourth, the circumstance that the Court need not or cannot engage in a "precise quantification of benefit" is not a reason to eschew the task altogether and "label the benefit as unquantifiable". 593 The ACCC says that it has not sought to calculate a specific "but for" price or volume "in the absence of the contravening conduct". Rather, the ACCC says that it has adopted the approach of: summarising the respondents' own assessment on a forward-looking basis (as revealed in their documents) of the "likely or intended impact of their conduct"; and identifying "various indicia" that support "the respondents' conclusion that their conduct is likely to have caused significant market harm and produced a substantial financial benefit to them". 594 The ACCC notes the contention of the respondents that there is "no evidence" that reliably allows the Court to draw "any conclusions" in relation to the amount of loss or damage and that the "maximum benefit" reasonably attributable to the contravening conduct is of the order of [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The ACCC notes that six propositions are advanced in support of that assertion and they are: the ACCC has failed to have regard to the appropriate counterfactual; the ACCC overstates the revenue and EBIT in the flyash business; revenue earned on sales to Hanson and Readymix should be excluded; the internal documents of the respondents should be ignored; the comparison to NSW prices is of no assistance; market changes and the introduction of "slag" meant that the analysis of flyash prices prevailing during the relevant period is worthless. As to those matters, the ACCC says as follows. The counterfactual 595 The ACCC says that its submission as to benefit involves an analysis of the benefit the respondents derived by "preventing any competition from a rival entering with ash sourced from one of the power stations in [SEQ]". The ACCC says that that was the purpose of the respondents' conduct. The ACCC notes the respondents' contention that the "appropriate counterfactual" is one in which Pozzolanic secured the Tarong Contract on terms which facilitated increased access by third parties to Tarong ash with a resulting increase in the quantity of flyash taken by those parties and that Dr Williams supports that approach. The ACCC says that Dr Williams was not asked to express an opinion on the appropriate counterfactual and the premise of the respondents' submission is that the Court should confine its consideration to an "alternative contract", without the relevant provisions, which would have facilitated increased access by third parties with a resulting increase in the quantity of flyash "actually taken". The ACCC says that, as to the latter, there was "no existing access" and the purpose and effect of the provisions was not to prevent "increased competition" but rather to "prevent competition" and thus any new entrant had to overcome Pozzolanic entirely. The ACCC says that this purpose of preventing competition entirely was the expression of the "sole supplier" strategy and was based on an expectation that any new entry was likely to have a material effect on prices, volumes sold and profitability made. The ACCC says that the Court found that "in the absence of the impugned provisions of the Tarong contract" the strong probability was that rivalry and contestability would have operated to constrain prices and any new entry was likely to have a material impact on the respondents' profits, prices and volumes. 596 However, as discussed earlier, the with and without test is the test applied to determine whether the conduct is contravening conduct under s 45 of the Act and the question of attempting to measure such things as the extent to which a respondent has benefited, by reason of the contravening conduct, by, for example, sustaining a certain level of volume, revenue and particularly profitability involves seeking to understand in part at least what the price would have been had the proscribed provisions not been adopted in the relevant contract: [477] to [489] of these reasons. Revenue and EBIT calculations 597 The ACCC says that the volume and revenue statistics at [267] and [268] of these reasons are relevant to an understanding of the total size of the market. As to the exclusions contended for by the respondents described at [490] of these reasons, the ACCC says that the rationale adopted by the respondents for the exclusion of Tarong revenue for 2002 and January and February 2003 and also Swanbank revenue in the period January to September 2002 and from 1 July 2005 to 31 December 2006 is that there was no contravening conduct in respect of those contracts in those periods. The ACCC says this: it has not relied on any revenue prior to 1 July 2002 in analysing benefit or market harm; as to prices, it is appropriate to bring to account revenue earned on and from 1 July 2002 having regard to the basis upon which QCL formulated its budget from July 2002; it is appropriate to include "all flyash revenue" not just revenue flowing directly from contravening conduct because one of the effects of the OMC in the period September 2002 to February 2003 was to "protect the revenues earned from Tarong during the period"; as to volume, the ACCC has only taken into account sales made from 2003. The Millmerran costs 598 The ACCC says that the OMC was "an illegal contract" and whilst the corporate respondents incurred losses at Millmerran they did so "deliberately and in pursuit of an unlawful purpose". Also, the analysis of the identified reductions in prices or volumes on the respondents' revenue and EBIT arises "solely out of the loss of sales of Tarong and Swanbank ash". The circumstance that the respondents were separately losing money at Millmerran to their disadvantage is "entirely unrelated to and of no consequence for this analysis". EBIT margins 599 The ACCC says that its EBIT calculations are drawn from data contained in the principal liability judgment and sources exposed in the submissions. The ACCC notes that the respondents "purported to rely on figures [which are referred to at [309] of these reasons] in support of their proposition". The ACCC notes that the figures derive from Mr Wilson's memorandum of 16 October 2002; the low end of the EBIT range is 31% based on an assumption that QCL would face a competitor at Millmerran and prices would fall by $10/t and the high end of the range is 39.2% as an EBIT forecast for 2003 after QCL had secured the OMC and implemented a price increase. The ACCC says that as to the respondents' reliance upon Holcim's benchmark EBIT margin, the EBIT range was a minimum margin Holcim sought to achieve rather than statistics representative of the margins actually earned. The ACCC says that the document, on this topic, relied upon by the respondents showing an EBIT range of 31% to 34.8% is an earlier version of the budget figures discussed in Mr Wilson's memorandum of 16 October 2002 created before the Millmerran Contract was signed. The ACCC also observes that the respondents' reliance upon the figure of $21/t as the EBIT, is a reference to an EBIT figure for the whole of Queensland whereas the document referred to in the principal liability judgment "identifies Tarong as contributing an average EBIT of $39.30/t". 600 The ACCC also says that the figure of $24/t relied upon by the respondents as one of the alternative EBIT figures is drawn from a document drafted in September 2002. It is consistent with Pozzolanic's actual EBIT contribution at Tarong in the financial year 2001/2002 of $25.77/t: [1338]. The ACCC says that the respondents' SEQ EBIT "materially increased after this time as a result of price increases and increased sales volumes" and thus the document, it is said, is of no assistance in assessing "the likely EBIT for later years". The ACCC also says that the other EBIT figure referred to by the respondents of $29/t is drawn from a document prepared in March 2002 and the lower EBIT in this document again reflects the period in which the document was created and is not of "assistance in the likely EBIT for later years". 601 On this topic, the ACCC also says that the emphasis placed by the respondents on the Holcim benchmark EBIT (and also other figures as just mentioned) is inconsistent with the internal documents of the respondents. For example: the budgeted EBIT in 2003 for the SEQ cgf business was $9,150,000 (39.2%) after accounting for the cost of the OMC: ATB Vol 5.40; the Cement Australia flyash business in Queensland was said to be "extremely profitable, generating $17.9M EBIT on $36M of sales, a margin of 49%" in Document ATB Vol 13, Tab 21. 602 The ACCC places emphasis upon a document at ATB Vol 18, Tab 5 and places emphasis upon these matters. First, as at 2005, ash sold from the Tarong Power Station generated 64% ($14M) of the "pre Corporate Allocation" margin in the Queensland flyash market. Second, Cement Australia was budgeted to earn a net margin of $15.8M on flyash sales in SEQ with 80% coming from sales to Rinker, Hanson and Boral and approximately $2.7M on sales to independents. Third, sales of ash from Tarong and Swanbank generate the highest margins of $39.30/t and $40.10/t respectively with total margins of approximately $16 million from the two power stations. The ACCC says that the actual EBIT calculation for the SEQ cgf business in 2005 including corporate overheads can be found in Ex CB-1 to Ms Boman's first affidavit (Tab 4) together with the 2006 forecast EBIT. The information is this: 603 The ACCC notes the contention of the respondents that the profit contributed from Tarong and Swanbank over the period was [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The ACCC says that the EBIT figures set out in its principal submissions are drawn directly from the principal liability judgment and are supported by the evidence. They say that the statistics ought to be accepted. The total EBIT for QCL's cgf business for 2001 in SEQ at $4.82 million 604 On this topic, the ACCC notes the respondents' reliance upon the 2001 SEQ total EBIT of $4.82 million as support for the observation that the scenario set out in the September 2002 Board paper of a possible EBIT loss of $6 million per annum as an exaggerated scenario exceeding the entire EBIT for the cgf business. The ACCC observes that at [1109] of the principal liability judgment, a position paper of Mr Wilson is noted which observes that Tarong's total EBIT contribution for 2001 was $7.3 million for 247,000 tonnes sold. In the September 2002 Board paper, the author was examining a risk that Pozzolanic would lose the sales volume from its three major customers of 250,000 tonnes to FAA. In that context, the author forecast an EBIT impact of $6 million. The ACCC says that viewed in context, it is not correct to assert or infer from the reference to the 2001 SEQ EBIT of $4.82 million that a postulated loss of $6 million was extreme. Tax 605 The ACCC says that there is no authority for the proposition that the corporate tax the respondents might or might not have paid ought to be taken into account in the exercise of the discretion under s 76 of the Act. Moreover, the ACCC says that there is no evidence before the Court of the actual amount of tax paid by any of the respondents and whether deductions were available which might offset any tax liability. Sales to shareholder customers 606 The ACCC says that the exclusion of these sales is based upon an observation made by Dr Williams in his report. The ACCC says that Dr Williams was not provided with any assumptions in relation to sales to Hanson and Rinker and his opinion seems to be based on the footing that prices to Hanson and Rinker represent a form of transfer pricing. The ACCC says that the evidence is inconsistent with such an assumption and that the commercial significance of the flyash supply agreements for those parties is reflected in the significant length of time taken to negotiate the long term supply agreements with Cement Australia. Also, the evidence suggests, it is said, an "intense focus on possible MFN impacts within Cement Australia". The ACCC also observes that at the time of entry into the Tarong Contract and the OMC, Pozzolanic and QCL were not vertically integrated with Pioneer and CSR and a substantial purpose of entry was to avoid the risk of sales to those customers switching to FAA. The ACCC says that following the merger Hanson and Rinker each became minority shareholders in Cement Australia with a 25% interest each. Holcim held 50%. It was not vertically integrated into concrete production. Hanson and Rinker were contractually bound to buy 100% of their flyash requirements from Cement Australia. However, the ACCC says that the contracts and, in particular, the MFN provisions make it clear that each entity was concerned to ensure that it purchased flyash at a competitive price. Dr Williams disagrees with that proposition: see Part 16. 607 The ACCC says that there is no basis for excluding sales to Hanson and Rinker. The ACCC's analysis based on the respondents' documents 608 In these further submissions, the ACCC examines the criticism by the respondents of the ACCC's reliance upon a range of the respondents' own internal documents. Much of the debate about these documents has already been mentioned. NSW pricing 609 The ACCC notes that as to the comparative pricing method, the respondents criticise the approach relying on the observations of Dr Williams. Dr Williams says that economists would generally admit comparisons of the kind made in the ACCC's submissions provided that particular matters are controlled for. Dr Williams observes that the number and distribution of suppliers would need to be addressed as would any differences in transport costs between the SEQ market and the NSW market particularly since delivered pricing is an important aspect of the matter. The ACCC says that the respondents did not brief Dr Williams "with data or factual assumptions in relation to these issues". So far as transport costs are concerned, the ACCC notes the Court's finding that the respondents' insistence on delivered only supply was a significant feature of their market power enabling the respondents to price supply on a next best alternative basis. The ACCC says that data based upon Cement Australia's analysis in March 2004 "of the prices obtained and transport costs incurred in supplying Hanson batching plants in Queensland and New South Wales" shows this comparative result: Source Average Delivered Price/t Average Cartage Cost/t Effective Average Ex-Works Price/t Acquisition Cost from FAA/Average Production Cost Excluding Overheads/t Implied Average Margin/t Bayswater $37.08 $14.61 $22.48 [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Eraring $39.07 $17.39 $21.67 [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Mt Piper $36.48 $18.04 $18.43 [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Swanbank $69.06 $10.34 $58.72 [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Tarong $74.77 $19.33 $55.44 [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 610 The ACCC says that average transport cost data for NSW in 2006 is contained at ATB Vol 26, Tab 19 and that if that data is used to calculate the effective ex-works prices for each power station, the following result emerges for 2006: Source Average Delivered Price/t Average Transport Cost (2006 Budget)/t Effective Ex-Works Price/t Bayswater $54.02 $20.13 $33.89 Mt Piper $52.82 $22.30 $30.52 Eraring $54.11 $25.72 $28.39 Tarong [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 611 The ultimate result of all of this analysis is, according to the ACCC, that during the relevant period, Cement Australia incurred approximately $5/t in additional transport costs in SEQ when compared with NSW and thus, even after accounting for these costs, the margins earned in SEQ were significantly higher than the margins earned in NSW. Accordingly, transport costs "therefore cannot be the explanation for the difference in prices between the two regions". Number and distribution of suppliers 612 The ACCC notes the opinion of Dr Williams that this factor needs to be controlled for if the analysis is to be meaningful. The ACCC also notes the observation of Dr Williams that the ACCC's analysis would be particularly persuasive if the Court were satisfied that "the same competitors would have been present in NSW and SEQ but for the conduct". As to that, the ACCC notes that FAA was identified as the most likely entrant into the SEQ cgf market at 2002 and that its business model was a wholesale supply on a cost plus basis to shareholders. The ACCC says that there is "no reason" to infer a different model would have been adopted in SEQ. Quality of the ash 613 The ACCC says that the adjustment for quality differences between Tarong, Mt Piper and Eraring flyash to identify "cement equivalence figures" is a flawed analysis which should be rejected. That is said to follow for a number of reasons. First, the analysis is not supported by any evidence from a witness. Second, the analysis is drawn from Ms Boman's second affidavit and presents no evidence to establish a basis for the analysis. Ms Boman was asked to perform a calculation and provide results emerging from that calculation. Third, Ms Boman's analysis is not supported by any of the lay witnesses called by the respondents or by Professor Hay or Dr Williams notwithstanding that they were both provided with a copy of Ms Boman's analysis. Fourth, the analysis is based upon assumptions which are not otherwise supported by the evidence. Fifth, the "cement equivalence" numbers upon which the calculation is based were never accepted or agreed to by Cement Australia's shareholders as a measure of flyash quality: T, p 1376, ln 20 to T, p 1377, ln 15. Sixth, Mr Clarke understood that Bayswater produced the highest quality ash followed by Gladstone with Tarong, Swanbank, Eraring, Mt Piper and Callide all bundled together as "mid-range ashes". Seventh, while the shareholders ultimately agreed on a method to measure some aspects of the value of flyash and, in particular, "relative strength", this measure differed substantially from the "cement equivalence" methodology: affidavit, Mr Zeitlyn at [177]. Eighth, the Boman analysis makes no allowances for the costs and profits involved in supplying each product. The ACCC says that the effect of Ms Boman's analysis is to inflate the profit component by over [REMOVE TO THE CONFIDENTIAL SCHEDULE]. Slag 614 The relevance of slag is that the respondents say that sales to non-tied customers did not fall away until 2009 and this circumstance coincides with the introduction of slag into the market as a cementitious substitute rather than coinciding with the entry of Sunstate into the SEQ cgf market with ground cgf in April 2007. As to this proposition, the ACCC says this: 2009 coincided with the construction of IFB's classifier at Millmerran; the only evidence adduced by the respondents in support of their submission concerning slag is the affidavit of Mr Savoury; Mr Savoury's qualifications do not enable him to give evidence as to concrete mix designs or how concrete producers adjust between flyash and slag in their mix designs; neither Mr Clarke nor Mr Zeitlyn (Mr Savoury's predecessors), were capable of giving evidence of that kind; Mr Savoury does not attempt to quantify the impact of slag on Cement Australia's flyash volumes or selling prices; Mr Savoury gives no evidence as to the prices at which slag has been sold. 615 The ACCC says that the highest at which Mr Savoury's evidence can be put, is a statement that if the price of flyash was to increase "substantially", Mr Savoury would expect to see customers reduce their use of flyash in favour of slag. The ACCC says that Mr Savoury's evidence does not suggest that such substitution has in fact occurred at current or historical price relativities. The ACCC also says that Mr Savoury's evidence is that he has observed a strong uptake of slag as a substitute for cement. The ACCC says that evidence that slag is primarily used as a substitute for cement (rather than flyash) is consistent with the unchallenged evidence of industry witnesses in the liability hearing. Some of that evidence was this: Sunstate supplied a 30% slag blend cement (equal to the highest substitution rate identified by Mr Savoury) and had done so since the 1990s; during the relevant period, QCL also supplied a slag blend product; where concrete producers make concrete using a slag blend cement, this had no impact on their use of flyash. PART 15: THE RESPONSIVE FURTHER SUBMISSIONS OF THE RESPONDENTS Hybridisation 616 The respondents say that by the ACCC's further submissions, the Commission does not seek to quantify the "but for" price or volume yet it invites the Court to adopt what the respondents say is a "hybrid" approach representing a point between examining "benefit" and "market harm" qualitatively on the one hand and proof of benefit and market harm by particular methodologies which are said to give an indication, at least, of the measure of the benefit derived by the respondents from the contravening conduct and the market harm inflicted in the SEQ cgf market by the contravening conduct, on the other hand. 617 The respondents say that proof of benefit and market harm is complex, takes a long time and requires a proper regression analysis to be undertaken. The respondents say that quantifying benefit and market harm flowing from contravening conduct has never been part of the orthodox method deployed by Courts in assessing an appropriate penalty. The relationship between deterrence and future conduct 618 The respondents say that as the penalty is to be assessed at the date of the hearing, the ACCC's notion that the penalty should seek to "upset any calculations of profitability" needs to take into account that the calculations the ACCC is relying on are calculations made after the contravening conduct and not calculations as to benefit or advantage made by the respondents, looking forward, prior to the contravening conduct occurring. The respondents say that the calculations sought to be upset relate to conduct that has already occurred which could not be now deterred. It has happened. The ultimate point emphasised by the respondents is that "while deterrence may warrant setting a penalty having regard to the level of profit actually caused by the contravening conduct, it does not warrant setting a penalty by reference to an anticipated profit that never eventuated" [emphasis added]. The counterfactual 619 The respondents re-assert their position on the counterfactual. The respondents say that the ACCC failed to call any evidence from Sunstate or IFB as to counterfactual conduct: that is, what those entities would have done had the contravening conduct not occurred. The respondents say that an inference is open that Sunstate would have done nothing other than what it actually did, in fact. It made a commercial decision to enter the SEQ cgf market in April 2007 and had, until then, chosen commercially not to enter the market prior to that time not because of constraints upon access in the OMC or the Tarong or Swanbank Contracts but because their commercial imperatives were different. The respondents say that Nucon explored taking ash from Tarong North and ultimately tendered for Millmerran ash in November 2006. Moreover, when it had a contractual right to take ash it did not exercise the right to take ash and enter the SEQ cgf market. Internal documents 620 The respondents say that in assessing the which position would have prevailed in the SEQ cgf market as to benefit and market harm (either qualitatively or, as the respondents say, in a way that seeks to isolate the "level of profit actually caused by the contravening conduct", or both), caution is needed when looking to the internal documents of the respondents. That follows for three reasons, it is said. First, the documents assume a fact shown to be unsound, namely, that Millmerran ash would be substitutable for Tarong ash (and Swanbank ash). Second, none of the documents ask the question of what would be QCL's position should QCL win the contracts but on terms that enabled third party entry. Third, the documents relied on by the ACCC pre-date the merger of May 2003. They say that the merger would plainly have occurred regardless of the contravening conduct as flyash was only a small part of the overall undertaking conducted by the merger participants. Cement Australia from June 2003 would have then been a 50% owner of FAA with Boral holding the other 50%. 621 The respondents say, in effect, that if an element of the market harm is said to be that, by reason of the contravening conduct, QCL preserved for itself a level of market share in the SEQ cgf market expressed in non-rivalrous sales, prices and profits which it would not have enjoyed had FAA secured access to Tarong ash and entered the market (competing away some measure of those things), then the assessment of that market harm and any corresponding benefit that would have flowed to FAA needs to recognise that by June 2003 FAA was 50% owned by Cement Australia. Separate assessment 622 The respondents accept that the Court should treat separately the income from the contracts with the three power stations. Looking to Millmerran, the respondents say that more than half of the total penalties sought by the Commission relate to entry and giving effect to that contract which produced no financial gain and generated a loss of $8 million. The respondents also say that the events in relation to that contract also "arguably assisted" IFB's entry by virtue of the work carried out on treating the ash. As to Swanbank, it produced minimal financial gain. EBIT calculations 623 The respondents had contended for an EBIT calculation at 33% which amounted to an EBIT of [REMOVED TO THE CONFIDENTIAL SCHEDULE] after off-setting $8 million of losses at Millmerran: that is, Tarong and Swanbank EBIT of [REMOVED TO THE CONFIDENTIAL SCHEDULE] less $8 million of Millmerran losses. [REMOVED TO THE CONFIDENTIAL SCHEDULE], as a proportion of revenue asserted by the respondents of [REMOVED TO THE CONFIDENTIAL SCHEDULE], constitutes an EBIT margin of 30.69%. If the EBIT is [REMOVED TO THE CONFIDENTIAL SCHEDULE] (adjusting out the Millmerran losses) the EBIT margin is 38.61%. The respondents attack the ACCC's formula for calculating EBIT. They say that for 2004, 2005 and 2006 the ACCC uses the formula of revenue minus production costs minus cartage costs. The criticisms of that formula are these. First, the ACCC relies on estimates drawn from budgets but the respondents say that where the actual figures are available they should be used. Second, additional costs should be included beyond production costs and cartage costs in making the calculation. The omitted extra costs are said to amount to about $6.5 million as these "flyash" costs were "booked wholly" to another part of the business in 2006: see the affidavits of Ms Boman (at 35) and Mr Blackford (at 174). As to 2005, the respondents say that the actual EBIT contribution relied upon by the ACCC as set out at [602] of these reasons for Tarong and Swanbank is [REMOVED TO THE CONFIDENTIAL SCHEDULE] whereas the calculation as set out at [361] and [375] (based on the ACCC's contentions) of these reasons, for 2005, is [REMOVED TO THE CONFIDENTIAL SCHEDULE] and thus using the actual figures reveals a difference of [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The respondents say that the 2005 overstatement of the EBIT of [REMOVED TO THE CONFIDENTIAL SCHEDULE] taken together with the failure to factor into the calculation [REMOVED TO THE CONFIDENTIAL SCHEDULE] in 2006 for unallocated extra costs incurred in the flyash business results in an overstatement of the EBIT calculation by the ACCC of [REMOVED TO THE CONFIDENTIAL SCHEDULE]. If the EBIT starting point is regarded as [REMOVED TO THE CONFIDENTIAL SCHEDULE], the EBIT calculation on this assumption would be [REMOVED TO THE CONFIDENTIAL SCHEDULE]. If the starting point is [REMOVED TO THE CONFIDENTIAL SCHEDULE] the EBIT calculation would be [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 624 But there are other costs also identified by the respondents which have not been brought to account. 625 The respondents say that the present enquiry is directed to determining the net benefit to the respondents from the sales of flyash. They say that it is important that all flyash costs are captured and taken into account. Income tax 626 There may be some confusion in the submissions directed to income tax. The imposition of a pecuniary penalty is not deductible. The submissions of the ACCC are not directed, it seems, to a contention that a pecuniary penalty is deductible but rather to a contention that there is no authority for the proposition that the post-tax position is the relevant position to take into account. The respondents say that the consolidated financial reports for the respondents make plain that the companies paid income tax on earnings. They say that there can be no suggestion that there were arrangements, off-sets and other deductions which resulted in no tax payable. The respondents say that an example of such a financial report is the document for CA Holdings for the year ending 31 December 2006: ATB Vol 27, Tab 38. Page 17 of the document refers to the group's statutory income tax rate of 30%. The controlled entities include QCL, Pozzolanic and PIPL. The respondents say that these documents show that the earnings of the group entities were taxed at the corporate rate of 30%. Tied sales 627 The respondents say that sales to indirect shareholders should be excluded in any analysis on loss of market share because tied sales would not have been lost had the contravening conduct not occurred. As to "market harm", the respondents say that an analysis based on lower prices shows that shareholder customers suffered less market harm than other customers if the assumption is that prices were higher by reason of the contravening conduct. This result is said to follow because half of the benefit from the postulated higher prices would have been returned to those indirect shareholders whether as dividends or as an increase in the value of their shareholding. Dr Williams is said to support that proposition. The respondents say that as to the quantum of tied sales, the statistics upon which the ACCC relies (set out at [372] of these reasons) show that in 2005, 60% of the sales of cgf by the respondents were tied sales and in 2006, it was 58% of sales (that is, sales to shareholder customers). The statistics are not available for 2003 and 2004 (although they would obviously enough be plainly available to the respondents). The respondents say that an inference should be drawn that those approximate proportions would also have been the case in 2003 and 2004. 628 The respondents also say that the ACCC's notion that sales to Hanson and Rinker seem to have been excluded by Dr Williams because they seemed (to him) to represent some form of transfer pricing, was a proposition never put to Dr Williams. Misconstructions of the earlier submissions of the respondents 629 The respondents say that their postulation of a maximum benefit attributable to the contravening conduct of [REMOVED TO THE CONFIDENTIAL SCHEDULE] was not a concession of the value of a benefit derived from the contravening conduct but merely an analysis of the matters to be taken into account in reaching a calculation based on the propositions put by the ACCC, on particular assumptions. Similarly, the financial range of $4.33 million to $25.5 million was not a range accepted as such by the respondents. The NSW pricing differential 630 The respondents say that reference to Ex CB-2 to the second affidavit of Ms Boman is important on all issues. They say that the ACCC has relied upon CB-2 and the exhibit is in evidence for all purposes. The respondents say that the document is revealing because it contradicts an assumption said to be underlying the ACCC analysis that different sources of flyash can be treated as homogeneous for the purposes of this topic. The contradiction emerges from the second table which shows an equivalence ratio for [REMOVED TO THE CONFIDENTIAL SCHEDULE] while the ratio for the two NSW power stations (in the relevant NSW market) was [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The respondents say that Ex CB-2 was prepared for the very purpose of providing cement equivalent prices and it is the same document relied upon by the ACCC to establish prices for Eraring and Mt Piper flyash in 2005 and 2006. Moreover, the same cement equivalence ratios of [REMOVED TO THE CONFIDENTIAL SCHEDULE] for Mt Piper and Eraring, and [REMOVED TO THE CONFIDENTIAL SCHEDULE] for Bayswater, were adopted by Mr Houston as well. More fundamentally, the respondents say that this method of measuring higher prices by reference to the NSW analogue is problematic because the features of the NSW market were only "touched upon peripherally in evidence". Variables which were not addressed include, it is said: differences in cement equivalence between different types of flyash; differences in loss of ignition between different types of flyash; differences in colour; differences in consistency; related party pricing; differences in transport costs; reliability of supply; differences in input costs; and changes in any one or more of all of these variables over time. 631 Apart from these considerations, the respondents criticise the analysis of the ACCC to the effect that Cement Australia's NSW delivered prices were [REMOVED TO THE CONFIDENTIAL SCHEDULE] lower than Cement Australia's Tarong delivered prices in 2003 to 2006 and the proposition that competition (and the absence of constraints of the kind reflected in the provisions) is the only "credible explanation" for the difference: see [323] of these reasons as to the data and the legend. The respondents criticise the data set used by the ACCC as the foundation for the proposition. They say it is too limited and was formulated for particular purposes. It is not necessary to set out the elements of that criticism in these reasons. I have taken the commentary into account. The respondents say that the "theory" that the pricing difference evident between NSW and Tarong in the relevant years was due to competition (and thus the absence of constraints upon entry) is inconsistent with the observation that differential prices still exist seven years later. The respondents say that the evidence of Dr Williams is that the differential in pricing would be unlikely to subsist in the period 2011 to 2013 "if its existence in 2003 to 2006 was due to contravening conduct". 632 As to this pricing differential, the respondents say that a further indication of its continuing existence can be found in the affidavit of Mr Cooper of 13 October 2004 and the confidential annexure to his affidavit which shows that the majority of the Bayswater flyash purchased from Hyrock has a [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The respondents say that this price can be compared with the Tarong North flyash purchased from Sunstate which has a delivered price calculated by adding the ex-works price to the cartage costs. That exercise is said to reveal that the pricing differential still exists even if one ignores the increased costs of transporting Bayswater flyash to Queensland rather than NSW. The statistics relied upon by the respondents are these: Prices paid by Nucon in 2011 – 2013 for Bayswater and Tarong flyash Source 2011/t 2012/t 2013/t Bayswater ex-works [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Bayswater cartage (Brims price) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Bayswater delivered price [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Sunstate ex-works [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Sunstate cartage (low) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Sunstate delivered price (low) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Sunstate cartage (high) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Sunstate delivered price (high) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Difference (low) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Difference (high) [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] 633 The respondents say that the ACCC's notion that an adjustment for cement equivalence would overstate the implied margin is not sound. They say that if the cement equivalence of Mt Piper or Eraring flyash was [REMOVED TO THE CONFIDENTIAL SCHEDULE] more of that ash would need to be purchased and transported to substitute for Tarong flyash with a cement equivalence of [REMOVED TO THE CONFIDENTIAL SCHEDULE]. They say that the purchase price and transport cost would both increase by [REMOVED TO THE CONFIDENTIAL SCHEDULE] and they would therefore not remain constant. 2011, 2012 and 2013 market data 634 The respondents say that an examination of prices in this period "says nothing" about what prices would have been in 2003 to 2006 but for the contravening conduct. The analysis for the period 2011 to 2013 simply provides a potential explanation for why Cement Australia's share of non-tied customers has fallen away. The respondents say that the ACCC places emphasis upon the drop in the market share of the respondents in the period 2011 to 2013 compared with 2003 to 2006. The respondents say that the reason for the drop in market share needs to be understood and one possible explanation is [REMOVED TO THE CONFIDENTIAL SCHEDULE] adopted by the corporate respondents. The respondents accept that their prices in the period 2011 to 2013 are [REMOVED TO THE CONFIDENTIAL SCHEDULE] than the prices of their competitors. They say that another "highly likely explanation" for the drop in market share is that the amount of flyash purchased by independent purchasers "contracted significantly" and the evidence suggests, they say, that approximately 40% of their sales in 2003 to 2006 were made to independent purchasers and thus about 40% of the market in 2003 to 2006 was not "tied". The respondents say that the independent share of the market dropped from about 40% in 2006 to [REMOVED TO THE CONFIDENTIAL SCHEDULE] in 2013 and thus customers who were independent buyers in the period 2002 to 2006 were no longer independent buyers at various times after 2006. The respondents rely upon these statistics: 635 Accordingly, the respondents say that it cannot "blithely" be assumed that the changes evident in the market in 2013 would reflect the position in the period 2002 to 2006 but for the contravening conduct. De-coupling of cement and flyash prices 636 The respondents challenge the utility of the hypothesis that benefit or market harm can be demonstrated through a de-coupling of prices which would have prevailed in a market exhibiting competition which would have emerged but for the contravening conduct. There are a number of reasons for that. The respondents say that Dr Williams expressed the opinion that a finding that there had been a de-coupling of cgf and cement prices would not assist in quantifying benefit or market harm. The respondents say that Dr Williams was not challenged in cross-examination on that view. The respondents say that the relevant matter is the price of cgf itself and the only potential relevance of cement prices would be to control for one of the many factors that could vary between the period under examination for the contravening conduct (2003 to 2006) and the subsequent period relied upon by the ACCC said to give rise to the conclusion (2011 and 2012). On that view, cement prices would have "some incidental relevance" to the comparison but only for the control purposes in an analysis. The respondents say that the ACCC's approach assumes that the cement referred to in the invoices attached to Mr Cooper's affidavit is the same quality as the cement referred to in Mr Zeitlyn's affidavit (Ex 42 at [182]). The respondents say that the invoices tendered by Mr Cooper were put in evidence to show the price Nucon paid for flyash. Those invoices contain cement prices. The respondents say that the "passing reference" to cement prices in a few invoices tendered for a different purpose is not persuasive as a foundation for the argument that the ACCC seeks to make so as to support the imposition of a pecuniary penalty of some order of magnitude on that footing. 637 The ultimate point made by the respondents is that the price of cgf relative to cement is said to be no doubt attributable to the price of cement. The respondents say that, however, no attempt has been made to determine how cement prices have fluctuated or what causes such fluctuations. 638 I have already mentioned a number of tables handed up by the ACCC during the course of the hearing to reflect adjustments of $5/t in the transport cost differential. The ACCC also handed up a table identifying the contended EBIT impact of new entry (NSW prices) adjusted for a reduced 2005 EBIT to [REMOVED TO THE CONFIDENTIAL SCHEDULE] and a $5/t transport cost differential. Again, it is not necessary to reproduce that table in these reasons. I have taken the adjustment into account. Additional material relied upon by the ACCC 639 The ACCC also sought to address aspects of the affidavits of Mr Savoury (the third and fourth Savoury affidavits). Mr Savoury exhibits two spreadsheets to his affidavit containing pricing data. The difference between the two spreadsheets is explained in the body of the fourth affidavit as already mentioned in these reasons. Exhibit KMS-B to the third affidavit includes volume and revenue statistics for both delivered and ex-works sales. Exhibit KMS-E excludes ex-work sales made to Boral at Tarong during the period 2011 to 2013. The ACCC examines Cement Australia's price and volume of sales to Boral including ex-works sales by reference to the two spreadsheets and isolates the following data: Exhibit KMS-B (third affidavit 2011 2012 2013 Sales Volume [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Total Revenue [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Exhibit KMS-E (fourth affidavit 2011 2012 2013 Sales Volume [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Total Revenue [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Difference (ex-works sales 2011 2012 2013 Sales Volume [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Total Revenue [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] Average price [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] [Removed to the Confidential Schedule] PART 16: THE EXPERT EVIDENCE OF DR WILLIAMS 640 Dr Williams expresses these views in his report dated 3 December 2014 (the "WR"). I have also had regard to his oral evidence. 641 The principal challenge in estimating market harm is to estimate the counterfactual which poses the question, "What would have happened in the market had the illegal conduct not occurred?" Dr Williams describes this question as giving rise to a "but-for" price answer. Dr Williams says that an article by James A Brander and Thomas W Ross entitled "Estimating Damages from Price-Fixing", Canadian Class Action Review, Vol 3 (2006), pp 335-369, regarded by Dr Williams as authoritative, suggests that there are six methods for estimating the but for price and they are: before and after comparisons; using marginal cost or average cost as a proxy for price; analogising by reference to similar markets; structural econometric simulation of a competitive benchmark; econometric demand estimation; and market simulation under imperfect competition and reduced-form econometric estimation of price: 11, WR. 642 I have read the article by Brander and Ross. In Australia, it is more conveniently available in a book entitled Litigating Conspiracy: An Analysis of Competition Class Actions, Irwin Law Inc, 2006 at pp 335 to 369, edited by Stephen G A Pitel. That publication is a special issue of the Canadian Class Action Review. 643 Dr Williams accepted that the task of attempting to assess an estimate of market harm for the purposes of a penalty proceeding is a different exercise "in degree" to attempting to prove damages flowing from contravening conduct. Dr Williams said that he understood that the Court generally seeks to make decisions about penalties without undertaking the very detailed analysis of the kind that occurs in estimating damages: T, p 36, lns 18-23. Dr Williams gave evidence that if the task was one of assessing damage flowing from contravening conduct it would be a "very big task" and it "would take many months" and involve "econometric analysis" involving "regression analysis". An economist would try and control for the various things mentioned in the report and try and infer the extent to which the difference in prices is attributable to the contravening conduct: T, p 39, lns 17-28. 644 Dr Williams notes that the ACCC relies upon the report of Mr Houston of 15 March 2010 as identifying three approaches generally applied by economists to estimate the prices that would have applied in an economically competitive market. Dr Williams observes that Mr Houston proposes the three approaches mentioned at para 345 of his report as methodological approaches to determining the competitive price when using a SSNIP test to define a market. Dr Williams says that, contextually, Mr Houston was not talking about these methodological approaches as appropriate to determining market harm arising out of illegal or contravening conduct: 12, WR. 645 Dr Williams says that the question of determining a competitive price when using a SSNIP test to define a market is a quite different economic question from seeking to deploy appropriate methods to measure or determine market harm arising from contravening conduct. Dr Williams says that when applying a SSNIP test to define a market the analysis starts from a hypothetical price which would occur in a market in which the enterprise in question had no market power at all. However, when determining the but for price in order to determine the effect of contravening conduct on price, the analysis involves estimating the price which would have prevailed in the market but for the contravening conduct. Dr Williams says that this estimated starting point for price may well be consistent with a significant degree of market power (as contended for and as found in the case of the present respondents) and if that be so, the but for price may be well above the competitive price to which Mr Houston is referring in the SSNIP exercise: 13, WR. 646 Dr Williams observes that the ACCC proposes four approaches to determining the extent to which the contravening conduct led to higher prices: see [287] to [291] of these reasons. Dr Williams says that two of those approaches are consistent with the "major methods" adopted by Brander and Ross to estimate but for prices. The two methods are a before and after comparison and using similar markets as an analogue. 647 Dr Williams says that the two other approaches proposed by the ACCC which are concerned with an analysis of the respondents' own assessment reflected in its own documents and an analysis of the relativity between cgf prices and cement prices "would not normally be used" as methods for estimating but for prices. Dr Williams says that follows because, as Brander and Ross point out, the orthodox methodologies require the person undertaking the analysis to control for other factors that may explain the difference between actual and comparator prices. On that footing, Dr Williams concludes that two of the approaches of the ACCC for determining the "loss to the market caused by the illegal conduct" are consistent with standard practice in economics but the other two are not. In any event, before an economist can undertake the before and after comparison or the comparison with NSW prices or both (as the two accepted methodologies), the economist must be careful to control for other factors which might explain the observable differences: 15, WR. 648 Dr Williams says that he has considered the affidavit of Mr Cooper of 10 October 2014 and the annexures; the affidavit of Mr Heffernan of 10 October 2014 and the annexures; and the affidavit of Mr Ramankutty of 10 October 2014 and the annexures, providing data as to cgf prices and quantities of transactions (and cartage) for the period 2011 to 2014. Dr Williams notes that these data are used by the ACCC in formulating estimates of market harm and benefit to the respondents by reason of the contravening conduct. 649 Dr Williams then returns to the counterfactual. 650 Dr Williams says that before an analysis can be undertaken of any estimate of the harm caused to the market by contravening conduct, the economist must have "a clear idea of the nature of that harm" and the nature of the harm will depend upon the timing of the harm; the effect on prices of the harm; and the quantities that are relevant to the harm: 16, WR. 651 As to the OMC, Dr Williams notes the Court's finding that particular clauses in the OMC "lessened competition in the SEQ [cgf] market" because the future field of rivalry or the future state of the competitive process with the provisions was substantially diminished and that the clauses would have had an immediate effect on the market although the effect would have begun to dissipate once it became clear that a problem was emerging with the quality of the ash (and in any event, by 31 December 2003). 652 Dr Williams says that in estimating the harm to the market of the provisions of the OMC a judgement must be made about, first, what would have been the delay in entry had the relevant provisions in the OMC not been adopted in that contract and, second, what would have been the extent of any constraint exerted on Cement Australia from this entry given the problems with the quality of the Millmerran ash. These questions, of course, at least in part, go to the question already addressed in the principal liability judgment of whether the identified provisions had the effect or likely effect of substantially lessening competition. That question was determined adversely to the respondents and is not the subject of re-examination. The measure of the extent of the market harm and benefit is the question under examination. 653 As to the Tarong Contract, Dr Williams notes that the Court found that the identified provisions of that contract (made on 26 February 2003) had the effect of discouraging or preventing a third party from seeking to establish processing facilities at the Tarong site so as to enter the SEQ cgf market. Dr Williams notes that Sunstate began grinding ash in its grinding mills so as to produce cgf and entered the SEQ cgf market in April 2007. Dr Williams says that in estimating the harm to the SEQ cgf market of the provisions of the Tarong Contract, some judgement has to be made about "what would have been the delay in entry had the illegal provisions in the Tarong contract not been included" [emphasis added]. 654 Dr Williams then examines the ACCC's characterisation of the counterfactual world through the three elements he identified in estimating market harm: timing, effect on prices and quantities: 27, WR. The consideration by Dr Williams of actual market pricing after the entry by Sunstate and IFB 655 Dr Williams says that economists generally would admit comparisons of prices during the period when entry was deterred with prices during the period after entry had occurred providing that in undertaking the analysis one could control for other factors that might cause differences in the prices between the two periods: 28, WR. 656 Dr Williams says that any such comparison undertaken by a competent economist would need to take account of "the law of one price". In other words, the comparison must be based on the "assumption that prices of a reasonably homogeneous product would lie within a limited range". Dr Williams says that the ACCC's submissions contain many comparisons between prices of different producers in SEQ during the period 2007 to 2013 and the prices "vary markedly" from IFB's [REMOVED TO THE CONFIDENTIAL SCHEDULE] to Sunstate's price of [REMOVED TO THE CONFIDENTIAL SCHEDULE]. Cement Australia's prices in 2010 were [REMOVED TO THE CONFIDENTIAL SCHEDULE]. Dr Williams says that the "most likely factors" explaining these differential prices are that the ash products are not homogeneous; prices are "contaminated by internal transfer prices"; and/or prices may be ex-works prices or may include different allowances for transport costs: 29, WR. 657 Dr Williams says that in the before and after comparison, the exercise involves a comparison between arms-length prices charged during the period when entry was deterred with prices charged after entry occurred (after controlling for other factors that might have caused prices to change between the two periods), rather than a comparison between prices charged by different suppliers in the period after entry: 30, WR. 658 Dr Williams accepts that the ACCC does present two comparisons between prices in the two periods. However, he observes that no controls are made for other factors that may have changed between the two periods. Dr Williams notes that the first comparison concerns the statement that [REMOVED TO THE CONFIDENTIAL SCHEDULE] than QCL's price for Tarong flyash delivered to Boral's Wacol batching plant in 2003. The second comparison presents historical pricing to Boral and Rocla (the Wacol batching plant) from October 2002 to December 2009. This second comparison shows that prices rose between the two periods from $76.01/t at the start of the period of the contravening conduct to [REMOVED TO THE CONFIDENTIAL SCHEDULE] during the last date of the period after entry occurred. Dr Williams says that this second comparison does not demonstrate any decrease is prices occurring between the two periods: 31, WR. The relativity between flyash prices and cement prices 659 Dr Williams notes the contention of the ACCC that Cement Australia's flyash prices were on average 50% to 60% of the price of GP cement during the period 2004 to 2008 and that this has [REMOVED TO THE CONFIDENTIAL SCHEDULE] in the subsequent period. Dr Williams says that the "danger" with an indirect comparison of this kind is that factors may have caused this change other than "the ending of the effect of the illegal conduct". Dr Williams refers to Mr Savoury's affidavit and notes that slag has been marketed by Cement Australia as a substitute for flyash since 2009 and that this "may have caused" the relative prices of flyash and cement to change: 32, WR. In relation to the contribution that sales of slag might have made, as a substitute for flyash, as contended for by Mr Savoury, Dr Williams accepted the proposition that in order to determine whether sales of slag had "any effect upon sales of fly ash, one vital fact would be the price at which slag was being sold". Dr Williams also expressed the view that if a person wanted properly to investigate substitution, such a person would want to look at the "relative prices and the impact of that on the extent to which people shift among alternative products": T, p 34, lns 21-25. That was not done by Mr Savoury. 660 In addition, Dr Williams considers that the change in the ratio of prices, cement to flyash, does not seem to coincide with the entry of Sunstate into the market. Dr Williams says that the ACCC's submissions show that the ratio of the cgf price to the GP cement price did not change markedly during the period December 2004 to December 2008 notwithstanding that Sunstate was producing and supplying cgf by April 2007 ground from run-of-station ash purchased from Tarong North from April 2007. Dr Williams considers that the "absence of coincidence" between entry and the ratio of the prices suggests that the effect of entry on the ratio operated with a lag which would need to be explained analytically; the entry of the competitors had "little effect" on the price of cgf; and/or the ratio of the price of flyash to the GP cement price is a "poor indicator" of the effects of the contravening conduct on the price of cgf: 34, WR. 661 Apart from these two topics described above, Dr Williams offers further comments of assistance to the Court by reference to the following topics. The opinions of market participants 662 Dr Williams notes that the ACCC places emphasis upon the assessment by the respondents within their own documents of harm or consequences in the market of potential entry. Dr Williams says that the "actual effect" on market prices of the contravening conduct concerning the OMC seemed to differ from what was expected when QCL's budget was considered by the QCL Board on 14 November 2001. At that time, the budget documents predicted that prices ex-Tarong would drop by $10/t because of competition from ash sourced from Millmerran. However, subsequent events proved this prediction to be wrong. Dr Williams says that economists are "generally sceptical of estimates that are based merely on the opinions of market participants". That follows because such estimates may be influenced by "human characteristics such as hubris or advocacy": 34, WR. 663 Dr Williams gave evidence that in attempting to estimate market harm for the purposes of a penalty proceeding, it is not "inappropriate" to take into account the contravener's own judgement as to, in effect, the amount of that market harm but that, in general, economists put a lot more weight on "hard facts to do with markets" than they would with a participant's opinions as to what may or may not happen in the market. A lot more weight would be placed upon "actual behaviour" and "market outcomes" than on a person's "predictions as to what those outcomes were likely to be": T, p 36, lns 31-38. 664 Dr Williams notes that the ACCC estimates the prices were $14/t higher than they would have been in a competitive market (but for the conduct) based on an actual increase of $4/t coupled with an assessment from within the respondents' own analysis that if ash sourced from Millmerran entered the market, prices would fall by $10/t. Dr Williams says that adding $4/t to $10/t pre-supposes that the reference to the expected drop in price is a comparison between the price prior to 2002 and the price after 2002. Dr Williams says that he has seen "nothing to justify this assumption": 37, WR. Dr Williams observes that an alternative construction is that the expected drop in price reflects a comparison between the price of cgf with competition using ash sourced from Millmerran on the one hand and without competition from ash sourced from Millmerran, on the other hand. Dr Williams concludes that if the latter position were the case, the difference between the two prices would be estimated as $10/t rather than $14/t: 37, WR. 665 As to the notion that adding $4/t to the $10/t price pre-supposes that the reference to the drop in price is a comparison between the price prior to 2002 and the price after 2002 which seemed to Dr Williams to be an unsupported assumption, Dr Williams accepted that he had not read any of the evidence in the principal liability proceedings and nor was he briefed with any evidence relevant to the topic dealt with in para 37 of his report: T, p 20, lns 28-36. 666 As to the lag issue, Dr Williams says that the ACCC implicitly assumes that the counterfactual prices would have been $14/t lower than the factual prices throughout the years 2002 to 2006 inclusive and that this assumes that entry would have occurred at the beginning of the 2002 financial year (which is the calendar year) and that this "state of competition" would have been sustained throughout the five year period to the end of 2006. Dr Williams says that he has seen nothing (presumably in the principal liability judgment or materials briefed to him) to justify this assumption: 38, WR. 667 As to para 38, Dr Williams criticises the implicit assumption made by the ACCC that prices would have been $14/t lower from the beginning of financial year 2002 (and through to financial year 2006). Dr Williams questioned the assumption that entry would have occurred at the beginning of 2002 and contended that no price reduction would have occurred until entry by the competitor. Dr Williams explained that by para 38 of his report, he was saying that the approach adopted by the ACCC seemed to assume that "without the illegal conduct, competition would have been uniform throughout these years from the beginning of 2002 to the end of 2006" and that he had seen nothing to "justify that particular assumption" [emphasis added]: T, p 22, lns 18-21; T, p 22, lns 35-39. Dr Williams accepted that the findings in the principal liability judgment based upon an analysis of all the evidence not available to him resulted in the finding that there was no necessary relationship between a reduced rivalrous price and actual entry: T, p 22, lns 45-46. A realistic threat of entry through a rival securing access to substitutable ash would have been enough. 668 Dr Williams says that the assumed price difference of $14/t is applied to the total sales of fine grade flyash throughout the five years including sales made to shareholding entities. This observation goes to the "tied sales" point. Dr Williams says that applying the $14/t contended differential to the tied sales is inconsistent with "standard economics, because it includes in harm to the market, 'harm' that Cement Australia has visited upon itself": 39, WR. 669 Dr Williams says that the "standard economic analysis of general and specific deterrence indicates that a penalty should be based on the harm that one causes others" [emphasis added]: 40, WR. 670 Dr Williams says that the notion of general and specific deterrence is that the "wrong-doer will be deterred from undertaking the illegal conduct providing the expected penalty (reflecting the harm that is visited upon others) exceeds the expected gain to itself" [emphasis added]: 40, WR. Dr Williams also says that this calculus excludes the harm that a person does to himself or herself (or itself) by charging a price that is higher as a result of that person's own conduct. Dr Williams expresses the opinion that "any assessment of the quantities affected by the [contravening] conduct should not consider the quantities that are transferred within the Cement Australia group of companies including [to] its shareholding entities": 40, WR. 671 In this context, Dr Williams is using the term "expected gain" as a "technical term" by which he means "the gain times the probability of the gain in sum": T, p 16, lns 25-26. By way of example, if the harm is 100 and the probability of detection is 0.5, applying the technical approach to expected gain, one would divide 100 by 0.5 with the result that the appropriate penalty would be 200: T, p 16, lns 28-30. Dr Williams says that economic theory suggests that if a person engages in illegal conduct, that conduct imposes costs on other people generally and the economic "prescription is that those costs should be borne by the person who has undertaken the illegal conduct" and in order to "create appropriate deterrence, you want to create penalties that do precisely that": T, p 17, lns 7-11. Dr Williams says that, by way of example, if a person's conduct is in fact going to impose costs on other people of $40 million and the probability of detection is 0.5, then the appropriate penalty is $80 million: T, p 17, lns 17-19. 672 Applying the "economic principle" of deterrence, of visiting upon decision-makers as an "appropriate penalty" the expected harm "they're imposing on others" (T, p 23, lns 5-9), Dr Williams accepted that when Pozzolanic entered into the OMC as a vertically owned QCL company on 30 September 2002, it would not have been said that sales of cgf by QCL to CSR and Pioneer at higher than competitive prices was the expression of QCL inflicting harm upon itself: T, p 23, lns 36-47; T, p 24, lns 1-2. 673 As to sales to the concrete producers Hanson and Rinker by Cement Australia after the merger at the end of May 2003, Dr Williams accepted that he did not make any enquiries about the actual direct or indirect structure of the Cement Australia group or the particular content of the contractual relationships between Cement Australia and Hanson and Rinker. That was because, he said, his report was addressing the "general" point that "illegal conduct" that harms "independent parties" should be taken into account. However, because determining an appropriate penalty is concerned with "creating proper incentives for people not to undertake illegal conduct", harm imposed on the decision-making entity itself or its associated entities ought not to be taken into account, as a matter of economic principle, when seeking to serve the interests of general and specific deterrence: T, p 24, lns 4-16. Put another way, if there is a 100% ownership link to the corporate entities suffering the harm, their harm should be disregarded entirely: T, p 26, lns 20-24. 674 Dr Williams accepted that he understood that the contracts between Cement Australia and Rinker and Hanson (as purchasers) contained MFN provisions (T, p 24, lns 32-35). He also understood that the effect of those provisions was to provide those purchasers with prices for cgf [REMOVED TO THE CONFIDENTIAL SCHEDULE] to the relevant plant to which cgf was supplied: T, p 25, lns 10-16. 675 Dr Williams also accepted that there is an apparent "contradiction" between the existence of these MFN provisions and the notion that the concrete producer shareholders would regard themselves as "unharmed" by paying prices higher than those paid by independent purchasers: T, p 25, lns 22-29. Dr Williams also accepted that these concrete producers "sought to have the 'lowest available price'": T, p 25, lns 31-33. 676 Dr Williams did not accept, however, that the MFN provisions necessarily meant that these concrete producer purchasers were seeking a price "that would have been obtained if there had been a competitor in the market as opposed to the market being a monopoly" (T, p 25, lns 41-43) or that the MFN clauses reflected "a desire on the part of owners to be charged a competitive price" [emphasis added]. 677 Dr Williams was asked to assume that Holcim, a non-concrete producer, owned 50% of the shares in Cement Australia; Hanson, a concrete producer, owned 25% of the shares and Rinker, another concrete producer, owned the other 25% of the shares. Dr Williams considered that in those circumstances for every $4 of profit earned by Cement Australia, two of those dollars were merely transfers between Cement Australia and Hanson and Rinker and that if Hanson, for example, was charged $4 more and received a dollar back, it was worse off "to the tune of $3" and in those circumstances, $3 of harm is to an "external party but $1 isn't": T, p 27, lns 21-26. Rinker would also get $1 back and thus 50% of the profits go in a circle "so to speak": T, p 38, lns 20-29. As to the notion of excluding sales to concrete producer shareholders, Dr Williams considers that it makes no difference to the application of the economic principle, whether the shareholding interest is direct in the sense that the buyer owns 25% of the shares in the seller or the customer own 25% of a company that holds 100% of the shares in the seller: T, p 39, lns 12-15. 678 On this topic of prices being $14/t higher than they would have been (based on the internal analysis done by Mr Wilson and Mr Ridoutt and put to Mr Arto and ultimately Mr Maycock at the Board meeting) in the face of competition which, in turn, is foreclosed by reason of the contravening conduct, Dr Williams refers to Table 9 in the ACCC's submissions and draws attention to the observation at para 133 of the submissions that those calculations "do not make any allowance for the revenue impact of any reduction in market share that would result from competitor entry …". Table 9 is set out at [313] of these reasons although the figures are calculated according to the method identified rather than being rounded to the nearest $1,000. Subsequent tables seek to identify or "quantify" the revenue impact of a reduction in market share which would have resulted, as the ACCC contends, from competitor entry. Dr Williams says that the observation at para 133 "confounds a but-for comparison with a before/after comparison". That follows, in his view, because: Table 9 [see [313] of these reasons] purports to estimate the harm to the market from the "overcharge" facilitated by the illegal conduct. The market harm is the uplift in prices caused by the illegal conduct multiplied by the volume sold to non-tied purchasers summed over the number of years that the Court finds would be affected by the illegal conduct. For example, if 100 units were purchased by non-tied customers at a price that was $5 higher than would have been the case without the illegal conduct, the market harm (and the gain to the corporate defendants) would have been $500. It is not relevant to this calculation of market harm that, at some later period, new entry occurred and 50 units of the 100 previously purchased by the non-tied customers were then supplied by a third party. 679 As to the question of market harm, Dr Williams accepts that in some cases there may be a difference between harm to the market from contravening conduct and benefit to the contravener from conduct. Dr Williams says that the harm done to the market is regarded, from an economic perspective, as the difference between the actual price and the price that would be charged but for the conduct and that difference is not necessarily related to the competitive price at all: T, p 17, lns 32-34; [643] of these reasons. Dr Williams was asked to accept that if the difference between the actual price and the price that would have been charged but for the conduct is $14/t, the measure of market harm would be $14/t multiplied by the number of tonnes sold. Dr Williams did not accept that proposition if the tonnes of cgf had been sold to entities related to the company selling the product. Dr Williams accepted that putting to one side the discrete point about the exclusion of tied sales, "the quantification of direct market harm would involve multiplying the tonnage by the difference in price per tonne between the price actually charged and the price that would have been charged but for the conduct" if those tonnes were all sold to external parties: T, p 17, lns 43-46. Comparison with the prices prevailing in NSW 680 Dr Williams says that economists generally would admit comparisons across regions as an indicator of the harm to the market caused by contravening conduct provided that controls are adopted for other factors that may account for any differences seen in prices between the two comparative places: 43, WR. Dr Williams says that one factor that ought to have been controlled for was the cost of delivery: 44, WR. 681 As to that, Dr Williams says that Table 11 of the ACCC's principal submissions compares average delivered prices for Eraring and Bayswater flyash in NSW with the average delivered price for Tarong flyash during the period 2003 to 2006. Table 11, which is set out at [323] of these reasons, actually examines statistics for Eraring, Mt Piper and Bayswater for the years 2003, 2005 and 2006 being sales of ash from those NSW power stations entirely into NSW with the relevant statistics for Tarong and Swanbank for those years, being sales of ash from those power stations into SEQ and a "bit of northern NSW": T, p 28, lns 11-20; lns 34-36; T, p 29, lns 3-17. As to the comparison, Dr Williams says that if the average cost of delivery (contained within the average delivered prices as compared) differs between SEQ and NSW because of differences in the average distance over which delivery is made, the comparison may be worthless: 44, WR. Dr Williams says that proper control has to be adopted for this "key influence" on the delivered price "before anything can be inferred from the comparison": 44, WR. 682 Dr Williams says that another difference between SEQ and NSW may be the "number and size distribution of competitors in NSW" compared with the distribution data applying in SEQ but for the contravening conduct. Dr Williams observes that at para 137 of its submissions the ACCC says that prices in NSW were "subject to competition between Boral and Cement Australia (through FAA) and Hyrock". Dr Williams says that if NSW prices are used as a comparator, the Court would need to be satisfied that in the absence of contravening conduct SEQ would have had three producers of roughly similar size as the three entities in NSW. Dr Williams also observes that the geographic analogue of NSW for SEQ "would be particularly persuasive if it were likely that these three would have been operating in SEQ but for the illegal conduct". For Dr Williams that follows because Brander and Ross observe at p 346 of their 2006 paper that if the same producers are involved in the production of the analogous product then it is possible that the good being used as the reference point or the benchmark might itself have been subject to price pressures from anti-competitive practices: 45, WR. 683 Dr Williams observes that the ACCC presents data for FAA's ex-works prices to shareholders for cgf supplied into NSW and the prices Cement Australia was able to achieve for the sale of cgf in NSW: 46, WR; [678] of these reasons. The reference to NSW (at 46, WR) should be a reference to SEQ: T, p 28, lns 34-41. The data is contained within Tables 10 and 11: see [322] and [323] of these reasons. Dr Williams notes that the FAA ex-works prices are [REMOVED TO THE CONFIDENTIAL SCHEDULE] those of the Cement Australia prices and the difference demands an investigation because prices for products that are "close to homogeneous cannot sell at market prices that are far from each other". This rule is known as the "law of one price" in economics: 46, WR. 684 Since, objectively viewed, the prices are [REMOVED TO THE CONFIDENTIAL SCHEDULE], an explanation for that difference needs to be identified. Dr Williams says that there are two alternative explanations for these differences in prices. He says that one explanation is that the products are "not homogenous" and thus the rule would have no application. The other explanation is that the products are reasonably homogenous but that "at least some of these prices are internal transfer prices (or averages of prices that incorporate internal transfer prices) rather than arm's length prices". Dr Williams says, leaving aside the question of whether the products are homogeneous or not, any assessment of the effect of the contravening conduct on prices should compare the prices prevailing for cgf in the factual circumstances sold at arm's length and the prices which would have prevailed in the counterfactual circumstances but for the contravening conduct, in respect of cgf sold at arm's length. Dr Williams says that these prices should not be "contaminated with transfer prices between related companies": 46 and 47, WR. 685 Dr Williams put it this way in oral evidence. He said that Tables 10 and 11 of the ACCC's submissions ([322] and [323] of these reasons) suggested [REMOVED TO THE CONFIDENTIAL SCHEDULE] in prices between on the one hand FAA's prices charged to shareholders in NSW for NSW sourced ash and the prices at least in 2003 and 2005 charged for ash from Tarong and Swanbank although for 2006 Swanbank ash seemed to have a [REMOVED TO THE CONFIDENTIAL SCHEDULE] price than that in NSW. Dr Williams considered that "these relativities seem to be all over the place". 686 Dr Williams accepted that one possible explanation for the [REMOVED TO THE CONFIDENTIAL SCHEDULE] in prices between sales of Eraring, Mt Piper and Bayswater ash into NSW and the sales of Tarong and Swanbank ash into SEQ is that "the effective monopoly of Cement Australia in [SEQ] meant that it was able to charge uncompetitive prices [REMOVED TO THE CONFIDENTIAL SCHEDULE] than the [NSW] prices": T, p 29, lns 44-47; T, p 30, lns 1-2. Another explanation is that the flyash is not homogeneous. Dr Williams gave evidence that he was not expressing any view about the extent of product differentiation but that he was simply making the general observation that "there is clear evidence of product differentiation" in the materials he had been reading. The evidence suggested to Dr Williams that Tarong ash was regarded as superior to that of Swanbank and generally commanded a premium. In later periods, Tarong ash was selling at higher prices than Bayswater ash to the same purchaser and thus his "guess" was that Tarong, at least to some extent, was regarded as of superior quality to Bayswater ash. Dr Williams considered that this evidence of product differentiation would "require extensive empirical work and he had not undertaken that task": T, p 30, lns 40-47; T, p 31, lns 24-26. 687 As to Table 11, Dr Williams said that the line items to do with Bayswater suggesting a point in time price in 2003 and a budgeted price in 2006 did not enable an economist to draw inferences as to average pricing over the period from either 2002 to 2006 or 2003 to 2006 because what "one normally does … is look at all the invoice prices" and Dr Williams said he had no idea whether the Table 11 prices are representative of prices or not: T, p 39, lns 39-45. However, Dr Williams also observed that because the prices for Eraring, Mt Piper and Bayswater are "pretty close to each other", Dr Williams "would assume that they're [as sources of ash] reasonably good substitutes, if they're all made available to similar consumers": T, p 40, lns 6-8. 688 As to the second alternative that at least some of the prices represent internal transfer prices, Dr Williams explained that what he meant by that observation was that he was not aware of the "nature of transfer pricing policy between the suppliers of fly ash and the producers of concrete or between the owners and the suppliers of fly ash" and it may well be, in the view of Dr Williams, that these policies differ between suppliers and purchasers or between suppliers and owners and that this requires some investigation. Dr Williams said that "it may be that something is going on there that explains these [price] differences". Dr Williams considered that prices might be higher or lower and it might be that some participants prefer to transfer at marginal cost and some participants choose external market prices as the basis for their prices. There might be tax reasons for charging high prices so as to place the profit in the supplying entity. The point Dr Williams makes is that the price differences require investigation. 689 Dr Williams says that the prices reflected in the data at Table 11 and Table 12 ([323] and [330] of these reasons respectively) also require investigation. Those tables suggest that prices in NSW were [REMOVED TO THE CONFIDENTIAL SCHEDULE] prices in SEQ in 2003 but that prices in the two regions were "very similar" in 2006. Dr Williams says that this variation suggests either that the data are not reliable indicators of the difference in prices between SEQ and NSW or that the difference in prices is not a reliable indicator of the effect of the contravening conduct. Dr Williams says that he understands the ACCC to be claiming that during the period 2003 and 2004, average delivered prices for Eraring and Bayswater flyash in NSW were [REMOVED TO THE CONFIDENTIAL SCHEDULE] than the average delivered price for Tarong flyash in SEQ. Turning to Table 12 ([330] of these reasons), Dr Williams says that the method reflected in these data assumes that this difference can be attributed to the contravening conduct and that this difference in prices can be applied from the beginning of the financial year 2002 on the footing that that state of competition would have been sustained throughout the period 2002 to 2006: 48 and 49, WR. Dr Williams says that he has "seen nothing to justify this assumption". 690 These views were examined in oral evidence with Dr Williams and, in particular, the notion that prices in SEQ and NSW in 2006 were "very similar". Dr Williams said that the similarity in prices in 2006 resulted from a comparison of the Tarong and Swanbank prices in Table 11 ([323] of these reasons) with the Eraring, Mt Piper and Bayswater prices. Clearly enough, the Tarong price for 2006 was [REMOVED TO THE CONFIDENTIAL SCHEDULE] than the NSW prices for each NSW power station. Dr Williams said that the "similarity" derived from taking "some sort of average" of the Tarong and Swanbank prices: T, p 32, lns 32-33. Dr Williams considered that taking an average of the Tarong and Swanbank prices was appropriate. He said that Table 11 seemed to operate on the footing that the price for Swanbank ash ought to be discounted with the result that prices in SEQ are higher than those in NSW in an average sense across the NSW power stations. 691 Looking at Table 12 in the ACCC's submissions ([330] of these reasons), Dr Williams accepted that in 2006 the average SEQ flyash price was [REMOVED TO THE CONFIDENTIAL SCHEDULE] based on a calculation of total revenue for that year divided by total cgf volume: T, p 33, lns 8-9. Assuming that the highest NSW price in 2006 was $54.11, Dr Williams accepted the obvious fact that the average SEQ price was [REMOVED TO THE CONFIDENTIAL SCHEDULE] than the NSW price/t. Dr Williams said that when making the observation that prices in SEQ and NSW were very similar in 2006, he had in mind Table 11 ([323] of these reasons). Dr Williams said that in making his observation that the prices were similar he clearly looked at Table 12 but had not realised that [REMOVED TO THE CONFIDENTIAL SCHEDULE] was the average SEQ price in 2006. 692 Accepting that the average price was [REMOVED TO THE CONFIDENTIAL SCHEDULE], plainly enough there is a significant difference between that price and the highest NSW price of $54.11/t or the average of the NSW prices which is [REMOVED TO THE CONFIDENTIAL SCHEDULE]. 693 Dr Williams then says that this assumed price difference is then applied to the total sales of cgf throughout the five years including all of the tied sales and that adopting that approach is inconsistent with "standard economics, because it includes within harm to the market, 'harm' that Cement Australia has visited upon itself": 50, WR. 694 Dr Williams says that the discipline of economics provides "theory and techniques" for assessing the harm to a market caused by contravening conduct. He says that the ACCC's submissions utilise two of the recognised theories and techniques by examining SEQ and NSW prices and by examining prices before and after entry into the relevant market. The difficulty Dr Williams has with the ACCC's analysis of prices in SEQ and NSW is that the comparisons fail to control for transport costs; the comparisons do not use arm's length prices; and they apply the "estimated effect" on prices to the tied sales made by Cement Australia. 695 Dr Williams concludes his expert report by setting out his observations in answer to questions put to him concerning the reply evidence relied upon by the ACCC. He does so from the perspective of an expert economist and, plainly enough, he does not seek to comment upon the content of the evidence as such. In the result, Dr Williams says that the reply evidence does not provide a sound economic basis for concluding that the conduct resulted in actual market harm in an amount approximating "tens of millions of dollars" or a corresponding benefit to the respondents. In his view, nor does the reply evidence provide an economic basis for quantifying benefit or market harm resulting from the contravening conduct. Nor does the evidence, in his view, provide a sound economic basis for ascertaining the volume, price or profitability of sales of cgf in SEQ but for the contravening conduct. Further, Dr Williams says that the market circumstances prevailing in the SEQ cgf market in 2011 to 2013 are not a reliable proxy for the market that would have existed in 2002 to 2006 had the contravening conduct not occurred. As to the "de-coupling" of cgf and cement prices, Dr Williams accepts that "there does seem to be some evidence to this effect" but a conclusion on the facts that de-coupling has occurred does not assist the Court in quantifying any benefit to the respondents or market harm resulting from the contravening conduct: 54, WR. 696 Dr Williams recognised that the Court found that there was a dissipation of the anti-competitive effects of the provisions of the OMC once it emerged that there was a problem with the flyash. Against that background, Dr Williams accepted that in terms of looking at market harm, the consequence of the awareness by participants of a quality problem with Millmerran ash was that at least "for a certain period" Tarong and Swanbank remained the only available sources of a supply of cgf to SEQ: T, p 37, lns 19-25. 697 Dr Williams also accepted that in assessing the market harm caused by the provisions of the Tarong and Swanbank Contracts, the fact that Millmerran ash ceased to be regarded as a source of competing ash had no ameliorating effect on the market harm caused by the provisions of those contracts: T, p 37, lns 36-40. 698 In relation to the pricing differential in Table 11, Dr Williams was asked for the sake of the argument to assume that there was a pricing differential in the period 2003 to 2006 between NSW and SEQ prices and that the differential was due to the contravening conduct. On that assumption, Dr Williams was asked whether he would have expected such a pricing differential to exist in the period 2011 to 2013. He answered "probably not" and expressed the view that the only issue might be that the effects of the contravening conduct may persist "a little bit" after the contravening conduct itself and thus it might take some time before new entry occurred. During that time, the contravener "may get some benefit for a short time, anyway, depending on the lags". Dr Williams said that he did not know much about "these lags for entry": T, p 40, lns 10-19. Dr Williams said that in expressing views about lag times in answer to that question he had in mind cartel cases. He said that in cartel cases it may be a couple of years before the prices start to rise and it may take a couple of years before they start to fall after the end of the cartel. Dr Williams expressed the view that it may be that with the contravening conduct, it may take a couple of years before the market adjusts after the end of the contravening conduct. However, Dr Williams made it plain that he would not want to express an opinion about that matter as such. PART 17: THE FURTHER SUBMISSIONS CONCERNING CONTENTIONS OF ACCESSORIAL LIABILITY ON THE PART OF CA HOLDINGS AND FURTHER FINDINGS AGAINST CEMENT AUSTRALIA 699 In the principal liability proceedings, the ACCC sought, in relation to the amended OMC, a declaration that CA Holdings was "knowingly concerned in or a party to, and aided, abetted, counselled and procured" the contravention of s 45(2)(a)(ii) of the Act by Pozzolanic in making the amended contract containing provisions having, relevantly, the purpose of substantially lessening competition (among other declaratory relief concerning the amended contract): paras 8 and 9 of the amended application ("AA"), 19 December 2008; paras 147, 154.1 of the third further amended statement of claim ("TFASOC"). 700 The claim was pressed at trial: [124], [2422]. 701 The ACCC also sought a declaration that CA Holdings was "knowingly concerned in or a party to, and aided, abetted, counselled and procured" a contravention of s 45(2)(a)(ii) by Pozzolanic in entering into the extension of the Swanbank Contract on 15 March 2005 to 30 June 2005: paras 10 and 11 of the AA; paras 154.2, 156.14.2, 109 of the TFASOC. That matter was also pressed at trial. 702 The ACCC also sought a declaration that Cement Australia was "knowingly concerned in or a party to, and aided, abetted, counselled and procured" Pozzolanic's contravention of s 45(2)(a)(ii) concerning the 15 March 2005 Swanbank extension: paras 10 and 11 of the AA; paras 146, 153.5, 156.14.2, 109. That matter was pressed at trial. As to the trial submissions, see the ACCC's closing submissions at pp 54 and 55 and the reply submissions at p 10. 703 On 28 February 2014, the Court made a series of declarations arising out of the reasons for judgment published earlier: see [5] of these reasons. In the final orders judgment, I said that I was not satisfied that it was appropriate in the exercise of the discretion to make declarations in relation to matters advanced against CA Holdings. However, that question was expressly left open for further consideration after hearing argument and receiving submissions from the parties as to the position of CA Holdings. 704 The ACCC, by its oral and written submissions, contends that the principal liability judgment supports the making of a declaration that CA Holdings was knowingly concerned in Pozzolanic's contraventions of s 45(2)(a)(ii) of entering into the amended OMC and entering into the Swanbank extension. The ACCC also contends that the principal liability judgment also supports the making of a declaration that Cement Australia was knowingly concerned in Pozzolanic's contravention of s 45(2)(a)(ii) of entering into the Swanbank extension. 705 The respondents say (among other things) that the submissions of the ACCC go "well beyond" the earlier published reasons in the principal liability judgment and seek to re-argue the liability of CA Holdings. They say that, in any event, the ACCC has not raised any proper basis for further findings that would give rise to further relief and the imposition of a pecuniary penalty concerning that conduct. 706 As to Cement Australia, the respondents say that the final declarations of 28 February 2014 dispose of all matters concerning Cement Australia and in order for the ACCC to agitate the declaration now sought, it must be given leave to re-open its case as no question of any further argument on this issue was held over for further consideration by the Court. The respondents say that leave ought not to be given. 707 In order to demonstrate that CA Holdings was knowingly concerned in Pozzolanic's contravention of s 45(2)(a)(ii) in entering into the amended OMC and in entering into the 2005 Swanbank extension, the ACCC must prove that CA Holdings had "knowledge of the essential facts constituting" Pozzolanic's contraventions: Yorke v Lucas (1985) 158 CLR 661 at 670, Mason A.C.J., Wilson, Deane and Dawson JJ. It is not necessary to show that CA Holdings knew and understood that those essential facts bore a particular legal character but CA Holdings must be shown to have had knowledge of all of the essential facts going to the contravention. 708 As to CA Holdings, those essential facts are, as to the amended OMC: the making by Pozzolanic of the amended contract; the adoption in the amended contract of the particular provisions relied upon by the ACCC; and the adoption of those provisions in that contract for the purpose of substantially lessening competition. 709 The statutory phrase relied upon is "knowingly concerned in". That phrase comprehends actual knowledge of the essential facts and some degree of engagement in the conduct of Pozzolanic. That engagement might be decision-making conduct by the Board of CA Holdings or other authorised officers of CA Holdings to approve (with knowledge of the essential facts) Pozzolanic's "making" of the contract or in the relevant class of case, failing to take a step when armed with knowledge of the essential facts of Pozzolanic's conduct. Each case, of course, turns on its own facts but, obviously enough, where the participant making the contract is a wholly owned subsidiary of another entity (the holding entity) which is said to be knowingly concerned in the subsidiary's conduct, a failure on the part of the holding entity to exercise governance over the conduct (when armed with knowledge of all the essential facts) might well be a sufficient degree of engagement such as to render the holding company "concerned in" the conduct. 710 One preliminary statutory matter should be mentioned. In the submissions, mention is made of s 75B of the Act. That section provides statutory "content" to the phrase "a person involved in a contravention" (of provisions of the Parts of the Act identified in s 75B(1)) where that phrase appears in Part VI of the Act (as it does in s 82 and s 87(1), for example). The immediate present relevance of the submissions of the parties is whether CA Holdings (and for that matter, Cement Australia) was "knowingly concerned" in particular contraventions, for the purposes of s 76(1)(e). If that were to be so, a declaration to that effect would be made so as to make clear the basis upon which s 76(1)(e) would be engaged in ordering a pecuniary penalty in respect of that conduct, subject to all other considerations. However, no provision of Part VI of the Act relied upon engages the phrase "a person involved in the contravention" which would call in aid the "interpretative" meaning provided by s 75(B)(1). The question is whether s 76(1)(e) is engaged which, as a matter of construction, raises the same principles applied to the construction and operation of s 75B(1)(c). The essential contentions of the ACCC 711 The ACCC puts its contentions concerning CA Holdings in this way. 712 CA Holdings was knowingly concerned in Pozzolanic's entry into the amended OMC and the Swanbank extension because: CA Holdings played a particular role in the corporate structure for the Cement Australia group of companies; Mr Maycock had direct knowledge of the corporate strategy of the corporate respondents; so too did other Board members of CA Holdings; Mr White had the relevant knowledge and involvement; and CA Holdings "affirmed" entry into the amended OMC. 713 As to the corporate structure, the ACCC relies upon the findings at [271] to [302] of the principal liability judgment: see also [133] to [136] of these reasons. The ACCC gives emphasis to these matters. The relationship between CA Holdings, its subsidiaries and Cement Australia was governed by the agreements described at [271] and following of the principal liability judgement including a Framework Agreement, a Management Agreement, a Secondment Agreement and a Cementitious Products Acquisition Agreement. 714 Under the Framework Agreement, Cement Australia and the Corporate Group would be managed under common principles set out in that agreement. Cement Australia would manage the day-to-day decisions of the Corporate Group and the Cement Australia Partnership. The Boards of the Corporate Group and Cement Australia would oversee the business of the group. They would oversee the business of the Partnership. They would determine the overall business strategy: [276]; Framework Agreement, ATB Vol 8, Tab 1. The "businesses" would be managed day-to-day by a "Managing Director". 715 The Management Agreement was made on 31 May 2003 between Cement Australia (described as the "Manager") as agent for the Partnership and 24 companies including CA Holdings, QCL, Pozzolanic and PIPL (see [272] and [280]) (the "Companies"). Under that agreement, each company engaged Cement Australia (as agent of the Partnership) to provide management services among other services: [280]. In providing its services, Cement Australia was required to comply with all directions from the Companies including CA Holdings. Cement Australia had the benefit of an indemnity. 716 On 31 May 2003, CA Holdings and Cement Australia entered into the Secondment Agreement. Key executives such as Mr Clarke, Mr Chalmers and Mr Ridoutt were seconded to Cement Australia: ATB Vol 7, Tab 24. The Cementitious Products Acquisition Agreement was entered into on 31 May 2003 between CA Holdings and Cement Australia as agent for the Partnership. CA Holdings would act as seller for itself and all related bodies corporate, of all cementitious products and Cement Australia would act as buyer: [281]. CA Holdings agreed to procure compliance with the agreement by its subsidiaries including Pozzolanic and would be responsible for any breach of the agreement by a subsidiary. It guaranteed the liabilities of its subsidiaries: ATB Vol 7, Tab 25. 717 Under the Framework Agreement, Cement Australia was responsible for the day-to-day management of the business of the Corporate Group overseen by the Boards of the Companies of which CA Holdings was the holding company owned 50%, 25% and 25% by Holcim, Hanson and Rinker, respectively. CA Holdings provided the Cement Australia Partnership with a $20 million loan: ATB Vol 11, Tab 11. Mr Blackford described the governance of the companies at [301] to [303] in this way: 301 In making these observations, Mr Blackford speaks in his capacity as the Chief Financial Officer of Cement Australia and joint Company Secretary of CA Holdings and Cement Australia. Consistent with cl 3.1 of the Framework Agreement, the Corporate Group of companies and Cement Australia (the issued shares in which, as described earlier, are held by Holcim, Hanson and Rinker rather than by any company in the Corporate Group) each have a Board of Directors. The responsibility of each Board is to oversee the management of the business of the Corporate Group and to oversee the management of the business of Cement Australia. Each Board may do all things necessary to discharge that responsibility including determining the overall business strategy and direction for each company; performing any function allocated to a company pursuant to the Partnership Agreement, a constitution of the company or the Framework Agreement; and approving annual budgets and business plans. 302 Mr Blackford says that the applied governance arrangements operate in this way. Board meetings are held "simultaneously for the Corporate Group, CAPL [Cement Australia] and the Partnership Management Committee" (Ex-60, para 96). Mr Blackford said that while there is no requirement for the directors on each Board of the Corporate Group, Cement Australia and the Management Committee of the partnership to be common, "in practice they always have been". The attendees at these simultaneous meetings of the Boards of the Corporate Group, Cement Australia and the Management Committee of the partnership include the directors of Cement Australia, all alternate directors of Cement Australia, the Chief Executive Officer, the Chief Financial Officer, the Company Secretary and other members of the Executive as and when required. 303 From June 2003, these meetings generally occurred on a monthly basis. However, from 2004 the meetings began to be held every two months, approximately. Prior to the Board meetings, a Board report or set of Board papers is prepared and distributed to the Board. Mr Blackford was responsible for the compilation of the Board papers although the content of them is prepared by each respective General Manager. In most cases, the material distributed to the Board in the "bound pack" of materials will have been first discussed at an Executive meeting. Before the bound pack is provided to the Board members, both Mr Blackford and Mr Chris Leon, the Chief Executive Officer and Managing Director of Cement Australia, will generally review the papers. 718 Mr Blackford's evidence on these matters was accepted by the Court: [304]. 719 Having regard to those findings, the ACCC says that references to Board meetings and especially "Cement Australia" Board meetings should be understood as referring to meetings of Cement Australia, CA Holdings, Pozzolanic and PIPL. 720 As to Mr Maycock, the ACCC says that he was "plainly aware" and brought to the Board of CA Holdings as Chairman from 1 June 2003, knowledge of the "sole supplier" strategy of the respondents: [316]. He was also Chairman of Cement Australia: [2811]. Mr Leon was a Director of both companies and CEO of both. Mr Maycock was directly involved in entry by Pozzolanic into the OMC and the Tarong Contract. Mr Maycock had a view in July 2003 and July 2004 that the SEQ cgf market was, in general, over-supplied with cgf: [2664]. 721 As to knowledge of the amended OMC, the ACCC says that the Board of CA Holdings was told of the status of the negotiations with MPP/MOC prior to Pozzolanic's entry into the amended agreement. The ACCC relies upon a report tabled at the Cement Australia Board meeting of 26 June 2003 (discussed at [2430]) which notes the outcome of test results from sampling the ash and Millmerran's agreement to delay the strict contractual timetable for re-testing the ash. The report also notes the consequential "flexibility" in the contractual obligation on Pozzolanic to install capital equipment. The ACCC also relies on a presentation by consultants, LEK, to the Cement Australia Board on 24 September 2003 about "increased competition" for Pozzolanic in the "medium term": see [319] of these reasons. The presentation suggested that increased competition could come from either of two events. First, entry by Sunstate (Boral) could result in a loss of sales volume equal to "50% of the independent concrete market" and 100% of "Boral's concrete market". Second, a collaboration of "independent concreters" might source flyash directly from the power stations reducing Pozzolanic's volumes by about 75% of the "independent concrete market" (90Kt). LEK put to the Board that entry by Sunstate or Boral (probably through FAA) was "not expected to have much effect on flyash prices". However, independent entry "could bring market prices down toward cost levels (loss of $30/t)". 722 All of this meant that CA Holdings, in LEK's view, should consider selling 50% of Pozzolanic to FAA to "lock in value at the current position". That, of course, would need to be a sale approved by Holcim, Rinker and Hanson either directly or through the holding entity, CA Holdings. 723 The next document relied on by the ACCC is a report put to the Cement Australia Board meeting on 1 June 2004. In that report, the Board was told that a "briefing paper" had been "prepared" addressing contractual arrangements "with suppliers" and that expenditure requests would be circulated in respect of Millmerran and Callide C "prior to the August Board meeting". The Board was also told that extensive research on the Millmerran ash continued "ahead of the decision required by 31 July [2004] on the continuation of the Millmerran contract". 724 The ACCC says that Mr Maycock "clearly understood" that the effect of continuing the Pozzolanic Contract with Millmerran "would be to exclude competitors" because LEK had said so in September 2003 in the presentation to the point of suggesting that 50% of Pozzolanic be sold to FAA to lock in "current value". Three things are then said to have occurred. First, CA Holdings took no step to "direct Cement Australia and Pozzolanic not to enter into the [amended] agreement". Second, Mr Leon instructed Mr Clarke to enter into the amended contract. Third, Mr Clarke did so on instructions from Mr Leon and a substantial purpose of Mr Clarke in entering into the amended agreement with the identified provisions was to substantially lessen competition in both the SEQ unprocessed market and the SEQ cgf market: [2676], [2694]. 725 The amended agreement was entered into on 28 July 2004; [2685]. Entry into the amended OMC was noted in the Minutes of the CA Holdings Board meeting on 22 October 2004 "without objection", it is said. The ACCC says that when Mr Leon directed Mr Clarke to enter into the amended agreement (for Pozzolanic and Cement Australia) with MPP/MOC, Mr Leon was acting as a Director and CEO of both CA Holdings and Cement Australia. The ACCC says that the relevance of CA Holdings can be seen from the circumstance that it was CA Holdings that was later required to approve capital expenditure such as the installation of the classifier at Millmerran in March/April 2005. The contentions of the respondents 726 As to the structural issues, the respondents emphasise the findings at [267], [268], [272] to [274], [281], [301] and [2811]. Those matters go to this: CA Holdings became the holding company for QCL, Pozzolanic and PIPL; Holcim, Rinker and Hanson held their respective interests in CA Holdings; CA Holdings was the holding company for the Group companies; CA Holdings entered into the Cementitious Products Sale Agreement as earlier described; Mr Blackford was the Company Secretary of CA Holdings; and Mr Maycock was the Non-Executive Chairman of CA Holdings. This ignores [302], [303] and [304] which go to, as a legacy of the merger, the method and process of actual decision-making at Board level by entities within the Cement Australia Corporate Group of companies. 727 The respondents correctly observe that there is no finding in the principal liability judgment of "knowledge of the essential facts" in CA Holdings, in the Yorke v Lucas sense, of matters going to the contravention found against Pozzolanic concerning the amended OMC. Had there been such a finding, the Court would have made a declaration as to CA Holdings having been "knowingly concerned" in Pozzolanic's contravention as explanatory of conduct rendering CA Holdings susceptible of a penalty under s 76(1)(e) of the Act. The question of whether any such declaration should be made in disposition, one way or another, of the ACCC's claim for relief based upon contentions of CA Holdings being knowingly concerned in Pozzolanic's contravening conduct, was expressly held over for further argument. Nevertheless, the point now made by the respondents is that the further question of whether the ACCC has made out its claim against CA Holdings on this ground and whether relief ought to be granted in respect of it, was to be addressed on the basis of the reasons published and findings made in the principal liability judgment and not by reference to other evidence that might or might not support further findings which, taken together with the existing findings, makes good the contention that CA Holdings was knowingly concerned in Pozzolanic's contravention. 728 The respondents say that to look to other evidence and make further findings requires the case to be re-opened. They say that leave should not be given. 729 To the extent that it is necessary to re-open the case, I propose to do so within bounds based on these considerations. 730 First, the question of whether declarations ought to be made concerning any conduct of CA Holdings was expressly held over for further argument from the parties by both oral and written submissions. 731 Second, true it is that the question was, in principle, to be addressed having regard to the published reasons and the findings concerning relevant conduct. 732 Third, the question of having regard to other material is confined to material already put in evidence, at the trial of the many issues, with which the parties are so intimately familiar, having put all of it on in the great detail in which it was put on, all of it in controversy. 733 Fourth, this case is exceptional even within the species of exceptional cases falling within the genus of adversarial litigation. It is complex both as to fact and law. It engages a large amount of material including affidavit and oral evidence and much documentary evidence on a wide range of topics including material on costs, revenues, volumes, margins and many other such matters including production, processing, logistics and distribution, a large part of which is said to condition the environment within which decisions were taken. The case concerns a period from well prior to the contended contravening period of 2002 to 2006 to a period after 2006 including Sunstate's entry in April 2007 and IFB's later entry. 734 Fifth, the contentions of the ACCC as to CA Holdings having been knowingly concerned in the contravening conduct of Pozzolanic as to the amended Millmerran Contract and the Swanbank Contract were pressed at trial. 735 Sixth, to the extent that they remain unaddressed, the public interest requires the claims to be addressed. 736 Seventh, I am not satisfied that there is any prejudice to the respondents. They have been heard on the issues. They have put on written submissions addressing the question. They are familiar with all the evidence. The question ought to be dealt with. 737 Eighth, it is not surprising at all that in a case of this kind, a particular contention might remain to be addressed and doing so might well engage the making of further findings on the basis of evidence admitted at the trial especially in the form of the Trial Book. The amended Millmerran Contract 738 It is now necessary to examine whether CA Holdings had actual knowledge of the essential facts going to the contravention by Pozzolanic. 739 The information given to the Board of CA Holdings on 26 June 2003 by the report relied upon by the ACCC at ATB Vol 8, Tab 10 (over a year before the decision was taken to "make" the amended OMC), did not contain information as to the precise provisions or the purpose ultimately informing the adoption of the provisions. The LEK presentation to the Cement Australia Board of 24 September 2003 (10 months before the 28 July 2004 decision), certainly contained a reasonably blunt assessment of the increased competition Pozzolanic would be facing looking forward to the medium term. The two most likely sources of rivalry were identified. The report put numbers on the likely results of competition and suggested that Cement Australia sell 50% of Pozzolanic to preserve current value which must necessarily mean sell 50% of Pozzolanic as soon as possible. No doubt, LEK's thinking on this topic was taken into account by the directors. Otherwise, why would LEK have been engaged? Why would they be called upon to make a presentation to the directors?; and why would prudent directors simply ignore LEK's views? 740 However, whilst those views, no doubt, conditioned the environment within which supply issues were considered, the LEK presentation does not directly go to showing a point in time at which the directors were infused with actual knowledge of the impugned provisions. Nor does it identify whether particular provisions had been adopted. Nor does it identify whether the "substantial purpose" of Pozzolanic (and Cement Australia ultimately through the substantial purpose adopted by Mr Clarke) was a substantial purpose informing the adoption of the impugned provisions. 741 The Cement Australia Board meeting of 1 June 2004 is, of course, much closer to the actual events leading up to 28 July 2004. 742 The Board report for that meeting tells the directors of Cement Australia that a briefing paper had been prepared setting out details concerning the Queensland flyash position including the contractual arrangements with suppliers. The directors are told that expenditure requests would be put before them concerning expenditure at Millmerran and Callide C prior to the August Board meeting. The approval of capital expenditure (and perhaps recurrent expenditure) was a matter for the Board of CA Holdings. It may have required the anterior approval of the Cement Australia Board. It may not. The directors were told that extensive research into the Millmerran ash was continuing ahead of the decision to be made by 31 July 2004 on whether Pozzolanic should continue with the Millmerran Contract. Mr Blackford made clear that the Boards of the Corporate Group entities (including CA Holdings), Cement Australia and the Management Committee of the Partnership met simultaneously: [302]. There may have been a simultaneous meeting on 1 June 2004. The entities had common directors. The directors were also told about some logistical matters concerning trucking Tarong North ash for blending with Tarong ash. Some other blending processes concerning Callide C ash and the Callide products were mentioned. At this point, the "briefing paper" (the evolution of which is discussed extensively in the principal liability judgment) to be put to the directors had been prepared. However, it was not put to the directors on 1 June 2004. The directors might have thought that it would accompany the expenditure requests in August. They might have thought on 1 June 2004 that expenditure requests would come in August because a decision had been made by management to continue in and with the OMC. They might have received an oral briefing from Mr Leon as CEO and director of Cement Australia and CA Holdings about the merits of continuing the OMC, the terms and the purposes for doing so. However, Mr Leon did not give evidence. Mr Maycock did not accept that he had "actual knowledge" of the relevant "essential facts" going to Pozzolanic's contravention. Mr Clarke said that he acted on the direction of Mr Leon because Mr Leon trusted his judgment. Mr Clarke did not know, in fact, if the proposition had been put to the Board although he thought it would have been put before the Board: [2670], [2671] to [2676] and [2694]. 743 I am not satisfied that the material relied upon by the ACCC makes good the contention that CA Holdings, even assuming common directors across the Cement Australia Group entities and especially Cement Australia, CA Holdings and Pozzolanic, had "actual knowledge" of the essential facts of Pozzolanic's conduct giving rise to Pozzolanic's contravention of s 45(2)(a)(ii) of the Act brought about by Mr Clarke (albeit on the authority of Mr Leon as to which, importantly, see [2676] and [2694]) deciding (at [2676]) to continue the OMC, as amended, by adopting the particular provisions for a substantial purpose of substantially lessening competition in the relevant markets. 744 Thus, I decline to find that CA Holdings was "knowingly concerned" in that contravention by Pozzolanic and I refuse to so declare. The Swanbank extension of March 2005 to 30 June 2005 745 As to the Swanbank extension, the ACCC says this. 746 When the interim declarations were made on 10 September 2013 on publication of the principal liability judgment (as to the basis on which interim declarations were made pending submissions on final relief other than penalty and costs, see the final orders judgment; [5] of these reasons), Cement Australia and Pozzolanic were found to have contravened the Act by making and giving effect to the 2005 extension. The ACCC says that when the final declarations were made on 28 February 2014 (see [5] of these reasons), the ACCC's case (and thus its claims) concerning contraventions arising out of the "making" of the 2005 extension were not fully addressed. Thus, the ACCC says that it seeks "clarification" on the scope of final orders on that aspect of its case. 747 One aspect of the present contentions is consistent with clarification and one goes beyond it. 748 The point of clarification is that the ACCC seeks a finding that Cement Australia was knowingly concerned in Pozzolanic's contravention of s 45(2)(a)(ii) of extending the Swanbank contract to 30 June 2005 as Cement Australia had knowledge of the essential facts constituting Pozzolanic's contravention and was relevantly knowingly "concerned" in it. That matter goes to the "making" of the extension. The contravention by Pozzolanic was entry into a variation of the contract to extend it from 31 December 2004 to 30 June 2005 containing provisions adopted for a substantial purpose of substantially lessening competition by conferring upon Pozzolanic, even for a limited further period, exclusive access to Swanbank flyash. 749 The matter that goes beyond clarification is seeking a finding that CA Holdings was knowingly concerned in that contravention by Pozzolanic. 750 The exchanges leading to the extension are set out at [683] and [684]. 751 In making this case, the ACCC relies upon the role of Cement Australia and CA Holdings within the post-merger structure and the "direct knowledge" by both companies of the corporate strategy of the respondents. As to Cement Australia, it was, as described earlier, the manager of the Corporate Group. It was responsible for the overall direction of the flyash business. It employed Mr White. It employed Mr Zeitlyn as General Manager, Marketing and Sales. On 28 June 2004, the directors of Cement Australia were told that negotiations were continuing with CSE on new contracts for Swanbank and Callide. They were told that the requirement of the owners for access to be made available to Pozzolanic's facilities for third parties was still to be resolved. The Swanbank Contract was to expire on 31 December 2004. 752 The negotiations for a new contract were not concluded by 31 December 2004. In the period 1 January 2005 to 31 December 2006, Mr White held the position of Business Manager Fly Ash, Lime, Off-White Cement for Cement Australia: [2727]. In this role, he assumed responsibility for the Pozzolanic flyash business in addition to his other responsibilities. Mr Rice (responsible for the Tarong and Tarong North business), Mr Postle (the Gladstone and Callide business), Mr Blackburn (the Swanbank business), Mr Druitt (Engineering), Ms Boman (Flyash Accountant) and others, reported to him. He reported from January 2005 to Mr Zeitlyn: [2727]. Mr White began to formulate a strategy for the flyash business in December 2004, it seems, and on 29 December 2004 he sent his agenda to the managers reporting to him for a "Fly Ash Action Meeting" on 10 January 2005: [2732]. The agenda contained a commentary by Mr White: [2732]. As to Mr White's then identification of the objectives for the meeting and the strategic goals for Pozzolanic, see [2737] and following; [239] and [240] of these reasons. 753 As to Mr White's perception in January 2005 of the risks confronting Pozzolanic (and Cement Australia as the entity, as Mr White accepted, controlling about 80% of the Queensland volume of flyash sales [2750]), Mr White gave the following evidence noted at [2751]: 2751 As to margins, Mr White did not accept that margins were "at very high risk" (Slide 6) although they were at "some risk" on the footing that other parties might establish supply and offer lower prices than Pozzolanic with the expected result that "probably" Pozzolanic's prices would have to fall, either because of the MFN provisions or simply because Pozzolanic wanted to win the business (T, p 2384, lns 6-17). The risk Mr White perceived in January 2005 was that someone might become an effective competitor in SEQ to Pozzolanic (T, p 2384, lns 23-25) by obtaining a source of ash in SEQ or elsewhere (T, p 2384, lns 27-30) with the risk that Cement Australia's margins might fall as prices fell (T, p 2384, lns 32-35). Mr White's assessment was that Cement Australia remained the largest seller of concrete grade flyash in Queensland. It was the only established operator and its relationships with the power stations were mixed (Slide 7). 754 In December 2004 (on the cusp of the expiration of the Swanbank Contract), Mr White, Mr Zeitlyn and the CEO of Cement Australia, Mr Leon, visited the Swanbank site and met with Swanbank senior management to talk about Pozzolanic's proposal for taking all of Swanbank's ash. The ACCC says that in attending this meeting, Mr Leon was acting as CEO for Cement Australia and CA Holdings. Mr White put his letter of 11 March 2005 seeking the extension to 30 June 2005 to Mr Christy (CSE) consequent upon another meeting with Mr Christy on 7 March 2005 in the context of seeking to negotiate a new agreement. Mr Christy agreed to the extension on 15 March 2005. 755 Mr White was certainly at the heart of the development of the strategic direction for the flyash business and fully understood the exclusive character of the arrangements between Pozzolanic and CSE when the extension was put in place: [3274]. 756 I am satisfied that when Mr White engaged in the conduct of making the extension arrangement he not only did so on behalf of Pozzolanic as the contracting party but he did so in circumstances where Cement Australia was rendered "fully informed" of all of the essential facts constituting Pozzolanic's contravention. He was not simply acting for Pozzolanic. I am satisfied that, through the role Cement Australia expressly conferred upon Mr White and the authoritative way in which he assumed and discharged his functions as the guiding mind of both Pozzolanic and Cement Australia on this topic of the arrangements with Swanbank and other issues concerning the flyash interests of Pozzolanic and Cement Australia, Cement Australia was relevantly "concerned" in the contravention and was thus "knowingly concerned" in Pozzolanic's contravention of s 45(2)(a)(ii) of the Act. I am not satisfied, however, that CA Holdings was knowingly concerned in that conduct in the absence of clear evidence that Mr Leon, expressly in his role as CEO and a director of CA Holdings, or that the directors of CA Holdings knew and understood that Mr White was going to extend the contract for a substantial purpose of substantially lessening competition. The corporate structure and other matters relied upon by the ACCC are not sufficient to ground an inference of knowledge in CA Holdings of all of the essential facts concerning Pozzolanic's contravention. 757 Accordingly, a further declaration will be made to the effect that Cement Australia was knowingly concerned in the contravention, by Pozzolanic, described at para 22 of the orders made on 28 February 2014. PART 18: CONSIDERATIONS ARISING OUT OF ALL OF THESE SUBMISSIONS AND COUNTER-SUBMISSIONS A consideration of the factors qualitatively 758 As I have made plain earlier, I have examined the contentions of the parties in considerable detail having regard to the vastly different perceptions of what might be an appropriate penalty under s 76 of the Act particularly in light of the various analyses of benefit and market harm which are advanced by the ACCC in support of the Regulator's contentions and the cross-responses by the respondents in opposition. 759 I have addressed the merits of these various contentions by first examining qualitatively the contraventions and market harm and benefit and then assessing the state of the evidence on quantitative measurement of market harm (and benefit). 760 In addressing the submissions throughout the course of these reasons, I have expressed some views about particular matters such as the correct approach to the counterfactual as set out at [477] to [489] of these reasons. 761 I have also examined the true character of the contraventions and contextual matters relevant to those contraventions. In that regard, I have discussed the nature and extent of the contravening conduct. I have also described the circumstances in which the conduct took place. I have also mentioned aspects of the degree of power enjoyed by the respondents at relevant moments in time. I have also addressed remarks in relation to the critical individuals who were involved in the conduct. 762 As to those matters, I make these further observations. 763 There is no doubt that leading up to entry into the OMC (and a relevant starting point might be 2001) and throughout the period 2002 to 2006, QCL and Pozzolanic, in the period up to May 2003, and CA Holdings and the Cement Australia group of companies thereafter, enjoyed a substantial degree of power in the SEQ unprocessed flyash market and the SEQ cgf market. The degree of that market power amounted to, in substance, a monopoly. Those companies relevantly controlled the sources of unprocessed flyash. Both contracts, of course, were subject to tender arrangements. Pozzolanic/QCL won the tender for Millmerran and ultimately entered into a contract, through the vehicle of Pozzolanic, for the acquisition of Millmerran unprocessed ash on the relevantly identified terms which were adopted for the purpose and had the effect and likely effect of substantially lessening competition. 764 Pozzolanic/QCL entered into the OMC contract in order to risk-manage its exposure to the possibility that those companies might not win the Tarong Contract. In simple terms, that is why those companies were not found to have taken advantage of their market power. It is not necessary to re-visit the analysis of that matter. The presently important matter is that even though Pozzolanic/QCL entered into the OMC in circumstances where that conduct did not engage a contravention of s 46 of the Act, the relevant provisions of the contract identified earlier in these reasons were adopted for the purpose and had the effect and likely effect of substantially lessening competition. The rational need for a contract with Millmerran did not carry with it the need to adopt provisions for the purpose and having the effect and likely effect of substantially lessening competition, which brought about contraventions of s 45 of the Act. 765 In all of the documents examined in the course of the principal liability judgment and the documents referred to by the parties in the penalty aspects of the proceedings, one thing is perfectly clear. Nowhere is there any debate which throws up considerations by which Pozzolanic/QCL would seek to serve their own commercial rational interests by securing a contract with Millmerran but, at the same time, adopt provisions which would enable third parties who might wish to secure access to a new source of ash and enter the market, to do so. The objective and the purpose was to secure the Millmerran Contract so as to serve the rational interests of Pozzolanic/QCL but do so in a way which usefully prevented any third party securing access to any of that ash. It is also perfectly obvious that the economic analysis by officers of Pozzolanic/QCL was that those companies controlled a market for cgf in SEQ; it produced significant revenues; it generated high margins; and the entire market ought to be preserved for Pozzolanic/QCL. Pozzolanic/QCL sought exclusive supply arrangements from Millmerran and Tarong at the outset of their tender negotiations and that was undoubtedly their frame of mind. Thus, they sought to adopt provisions which had the purpose of substantially lessening competition and provisions which would have the same effect and likely effect. They did so from a standpoint of market dominance amounting to monopoly. 766 Ultimately, Pozzolanic and QCL were saved from themselves, in fact, to a considerable extent, because the Millmerran ash which they assumed would be substitutable for Tarong ash and would place in jeopardy their prices, revenues and margins should a third party obtain access to it and compete with them, proved to exhibit substantial technical and colour difficulties which made it unable to be used as fine grade concrete grade flyash in the SEQ cgf market. 767 There is also no doubt that the purpose of the identified provisions of substantially lessening competition was a purpose incubated by Mr Ridoutt and Mr Wilson and embraced by Mr Arto and ultimately Mr Maycock. Mr Ridoutt and Mr Wilson were not just subordinate line managers engaged in misadventure of their own. They were significant senior responsible managers steeped in the flyash business. Mr Arto was a Director and CEO. Mr Maycock was the Chairman and a highly experienced and sophisticated Director imbued with all of the knowledge and dynamics of the flyash and concrete markets. He was Holcim's man in Australia. Mr Arto was also from the Holcim school. 768 There is also no doubt that in adopting the particular provisions of the OMC, Mr Ridoutt and Mr Wilson and Mr Arto had a sense of the competitive pressures which would be placed upon flyash pricing and margins should a competitor enter the SEQ cgf market armed with Millmerran ash as a substitutable ash. Their views about all of those matters may have been wrong. Those views might have been formulated upon assumptions about the quality of the Millmerran ash which proved to be wrong. However, they had a view that if a new entrant came into the SEQ cgf market with substitutable ash they would not be able to maintain their margins. Price and volumes would come under pressure. 769 As things turned out, the Millmerran ash proved to be very problematic and as I have already observed, much scientific analysis was deployed in trying to understand the cause of the problems. Once the market became informed about the nature of the problems and more particularly the fact that Millmerran ash would not be readily on the market as a substitutable ash, the effect and likely effect of the provisions began to dissipate. Those effects had dissipated by 31 December 2003. 770 I accept that deterrence requires a significant penalty to be imposed upon Pozzolanic/QCL in respect of the conduct of adopting provisions for the purpose of foreclosing third party competitor entry irrespective of whether ultimately, in one sense, those companies, their senior management and directors, need not have worried about the strategic threat of unprocessed flyash from Millmerran. 771 I also accept that the conduct of crafting and adopting provisions of the OMC for the purpose of foreclosing third party entry and thus substantially lessening competition, was undertaken with the sense of deliberateness contended for by the ACCC. It is, of course, true that there were other purposes which were not unlawful purposes or which did not give rise to contraventions of the Act. However, Pozzolanic/QCL could have served those commercial purposes without engaging in, as a substantial purpose, the purpose of adopting provisions foreclosing third party entry at Millmerran having the purpose of and having the effect and likely effect of substantially lessening competition in the SEQ unprocessed flyash market and the SEQ cgf market. However, Pozzolanic/QCL chose to take a different course. 772 At the moment in time when Pozzolanic/QCL adopted the relevant provisions of the OMC, those companies understood the risks from a competition law perspective and did not have a satisfactory or effective compliance program. I accept that the respondents have now adopted a compliance program with proper integrity. 773 As to the contravening conduct so far as it relates to adopting the provisions of the OMC, I am not satisfied that the respondents have shown a disposition to co-operate with the ACCC in relation to those matters. They took a course entirely open to them to contest the question of whether they had engaged in conduct in contravention of s 45 of the Act and, of course, that stance has to be viewed in the context of their decision to challenge the contentions of contraventions of s 46 which the ACCC failed to make good. 774 In principle, having regard to the qualitative circumstances surrounding the conduct and taking into account the nature and extent of that conduct, the circumstances in which it took place, the degree of market power the relevant respondents enjoyed at that moment in time, the deliberateness of the conduct and the engagement of senior management and directors in it, I am satisfied that a substantial pecuniary penalty ought to be imposed in respect of that conduct. I accept, as the ACCC submits, that Pozzolanic/QCL were respondents conducting a very significant business when the contraventions occurred and I accept that the respondents in the post-merger circumstances are also conducting very significant businesses. I see no good reason to proceed on the basis that the Court ought to only have regard to the scope and nature of the flyash business itself. Of course, the conduct took place within the flyash segment of the overall businesses including the Cement Australia Partnership. The flyash businesses were, in their own right, significant businesses. Nevertheless, the size and scope of the respondents needs to be taken into account more generally as an aspect of deterrence in determining an appropriate penalty. In doing so, the arrangements in relation to the Cement Australia Partnership and the role of Cement Australia in that Partnership needs to be taken into account. 775 In considering the qualitative matters, I have taken into account the impact upon the SEQ unprocessed flyash market and particularly the SEQ cgf market in terms of the harm inflicted upon competition especially in the SEQ cgf market. In the principal liability judgment, I form views about what would likely have occurred had a new entrant entered the SEQ cgf market with contestable ash. Professor Hay had views about that topic as did Mr Arto, as I found. The provisions had the effect of foreclosing competition in the way described in the principal liability judgment. When Pozzolanic/QCL adopted the identified provisions which had the purpose, effect and likely effect of substantially lessening competition they simply did not know that the ash would prove to be problematic and not substitutable for and thus contestable with Tarong ash. Nevertheless, their purpose was clear. 776 Having regard to all of these qualitative matters, in the context of identifying a pecuniary penalty which serves the interests of deterrence, it seems to me that an appropriate pecuniary penalty as a matter of instinctive synthesis of all the factors in respect of the adoption of the provisions of the OMC and taking into account the matters set out at [818] of these reasons, is $3.5 million. 777 Pozzolanic was the entity that conducted the flyash business in the sense that it was the company which entered into the contracts with the power stations and it managed and operated the collection and processing facilities. QCL was the entity that sold cgf into the SEQ cgf market. Pozzolanic was ultimately a wholly owned subsidiary of QCL. Pozzolanic made the contract but it only made it because QCL caused it to be made with Pozzolanic. PIPL was the entity selected as the guarantor. It became the guarantor simply because of its position in the corporate structure and only because QCL caused it to be selected to provide the guarantee. 778 The prime mover in all of the conduct was QCL. 779 In terms of the contraventions, Pozzolanic contravened s 45(2)(a)(ii) of the Act by making the OMC with the relevant provisions having the purpose, effect and likely effect. Pozzolanic gave effect to the provisions until 31 December 2003. QCL was knowingly concerned in Pozzolanic's conduct in making the agreement and it gave effect to the provisions day-to-day by funding Pozzolanic's performance of the contract. Each class of conduct (making, giving effect to, being knowingly concerned in) gives rise to a separate contravention of s 45 of the Act. Even though that is true, I accept that there are two fundamental things informing this particular conduct. 780 The first is the making of the contract with the provisions ultimately brought about by QCL through the vehicle of Pozzolanic. 781 The second is acting upon the agreement as reached and giving effect to it and thus taking the benefit of it at least until the effects became exhausted on 31 December 2003. Although the effects had become dissipated by 31 December 2003, the provisions endured and they, of course, were adopted for the prescribed purpose. 782 In respect of the conduct of giving effect to the provisions of the contract as made in the period from the making of the contract until 31 December 2003, a further penalty ought to be imposed of $500,000. It should be remembered that the Millmerran ash failed to enter the market and was never capable of being used in the multiplicity of applications required of fine grade concrete grade flyash due to the technical and colour difficulties. 783 I also accept that the proper way to view the two classes of conduct is that they are two aspects of one class of conduct. That is not to say that a pecuniary penalty ought not to be determined in relation to the second aspect of that conduct. However, having regard to all of the relevant factors, I am satisfied that a penalty of $4 million in respect of the conduct reflecting both the making and the giving effect to the conduct is an appropriate penalty. 784 The Tarong Contract was entered into on 26 February 2003. 785 That contract was also made in circumstances where provisions were adopted for the purpose and having the effect and likely effect of substantially lessening competition in the unprocessed flyash market and the SEQ cgf market. The Tarong Contract was a much more important contract for Pozzolanic/QCL in the sense that it had been the source of Pozzolanic/QCL's cgf for sale into the SEQ cgf market for a long period of time. It was proven, well accepted, well understood and well known. Pozzolanic/QCL had a number of very good reasons for wishing to secure an ongoing ash supply contract with TEC. Pozzolanic/QCL would not lightly give up trying to secure that contract. There was no suggestion in the proceedings that Pozzolanic/QCL engaged in a contravention of s 46 by seeking to acquire that contract. 786 Nevertheless, the same point of principle remains in relation to the TEC contract as that which applies to the OMC. Pozzolanic/QCL could have secured its rational commercial objectives by entering into an ash supply contract with TEC which gave it the necessary continuity of ash supply but nevertheless on terms which enabled third parties to acquire ash from TEC and enter the SEQ cgf market in competition with QCL. 787 That, of course, was heterodoxy to Mr Wilson, Mr Ridoutt and also Mr Arto and Mr Maycock. 788 Those gentlemen were focused upon securing the ash supply contract and doing so in a way which made it, in every practical sense, a virtual impossibility for third parties to secure access to the best ash in SEQ. They could, so easily, have adopted provisions which enabled third parties to obtain quantities of ash from Tarong and Tarong North, process it in some way and enter the market. 789 There would, of course, be other barriers to entry which a new entrant would have needed to overcome such as acquisition and deployment of the appropriate capital equipment, skilling-up in operational expertise, demonstrating a supply reputation in the market and winning the confidence of buyers, and contracts, with buyers. It is highly unlikely that potential participants entirely unfamiliar with the operational and marketing aspects of flyash would have sought to enter into arrangements with TEC and enter the SEQ cgf market. In the main, the entities expressing interest in ash supply arrangements with TEC were entities in the cement, flyash, concrete and aggregates businesses. FAA and Transpacific did not suffer from these other obvious barriers to entry. 790 As to the TEC contract, Pozzolanic/QCL again sought to obtain an exclusive agreement. Once it became clear that TEC would not accept a term conferring exclusivity, Mr Wilson took the view that Pozzolanic/QCL would need to be more creative about the provisions of the contract so as to bring about circumstances of control, through the contract, over all of Tarong's ash taken at the critical ash transfer points through the critical hoppers. 791 I accept the ACCC's submissions on the deliberateness surrounding the contravening conduct so far as it relates to the Tarong Contract. There were, of course, other perfectly proper rational purposes in seeking to secure an ash supply agreement with TEC. However, Pozzolanic/QCL could have secured its own rational commercial interests in a way entirely consistent with enabling third parties to obtain commercially realistic access to Tarong ash. 792 In these reasons, I have already described the nature and extent of the contravening conduct, the circumstances in which it took place and I have expressed views about the size and scope of Pozzolanic/QCL and the later entities concerned with the Cement Australia group of companies and the Cement Australia Partnership. 793 I have described the scope of the market power enjoyed by QCL and the deliberateness of the conduct. The conduct in the case of the TEC contract was engaged in by the same individuals who were involved in the arrangements in relation to Millmerran. At the time of these contraventions, Pozzolanic/QCL did not have in place a compliance system which isolated and protected against the contraventions that occurred. I accept that the respondents have now put in place a compliance system with integrity. As to these contraventions, I am not satisfied that the respondents have demonstrated a culture of co-operation with the ACCC. Nevertheless, it remains true that parties are entitled to test the contentions of the ACCC and advance whatever evidence and arguments they might wish to make in answer to the claims. 794 I am also satisfied that the senior officers of Pozzolanic/QCL were entirely astute to the competition law risks associated with framing and adopting the identified provisions. 795 I also recognise as found in the principal liability judgment that the effect upon competition by reason of the identified provisions was significant and meaningful. It inflicted harm upon the market by depriving market participants of an opportunity to engage with a new entrant supplier who would engage in rivalry and contestability thus forcing Pozzolanic/QCL to engage in competition, compete away inefficient costs and adapt their service offerings to the market. It is likely, as Professor Hay observed, and Mr Arto believed, that there would have been a significant effect upon QCL's margins. 796 Taking account of these factors going to all of these qualitative considerations and having regard to the matters set out at [818], I am satisfied that an appropriate penalty in respect of the conduct of making the Tarong Contract with the relevant provisions is $5.5 million. 797 Having secured the contract, QCL continued to give effect to it. In the principal liability judgment, there is a vast amount of evidence about steps particular entities were seeking to take to secure some degree of access to Tarong ash or (potentially) ash from Tarong North. Apart from entirely episodic collections of ash by a possible third party at moments in time when Pozzolanic may not have required access to all the ash available through its facilities attached to the critical hoppers, no access was available to third parties. 798 Those who tried were unsuccessful. 799 The Tarong ash was particularly significant ash in the context of the SEQ cgf market. It was well known and well received. Third parties securing access to the Tarong ash and entering the SEQ cgf market would have provided meaningful and significant competition. Again, there is nothing in any of the vast amount of material relating to the formulations of strategy by Pozzolanic/QCL and their analysis of the economic impact in the market which suggests any disposition to accommodate the possibility of third party access to Tarong ash. The entire purpose of the identified provisions was to foreclose (and risk-manage) any possibility of such an outcome. Having secured provisions serving that purpose, QCL, until the beginning of June 2003, continued to give effect to the provisions and thereafter Cement Australia continued to give effect to them. 800 It is true that the conduct of giving effect to the provisions is conduct which bears an inevitable relationship with the making of the provisions. If the conduct is examined in a linear sense rather than a disjunctive sense, the conduct consists of a corporation forming a view about striking an agreement with provisions which have the purpose, effect and likely effect of substantially lessening competition and then, having secured a contract with those provisions, performing the contract which necessarily engages giving effect to the provisions so made. However, in my view, the conduct should not be viewed as simply one class of linear conduct in the context of the Tarong Contract. There are two separate classes of conduct in relation to this contract. 801 The first is the body of activity, thinking, engagement and completion of arrangements for a contract containing particular provisions which had the purpose and creatively had the effect and likely effect of substantially lessening competition ("making"). 802 The second class of conduct involved embarking upon activities to give voice to the outcome achieved by making the contract. At any moment in time when it became apparent to Pozzolanic/QCL or Cement Australia that systemically depriving third parties of access to Tarong ash was having and would be likely to have the effect of substantially lessening competition by reason of the provisions, Pozzolanic/QCL and/or Cement Australia could have elected not to take advantage of those provisions and could have put in place protocols enabling third party access to Tarong ash. Officers of those entities could have elected not to give effect to provisions which were adopted expressly for the purpose of foreclosing third party access to the best ash in SEQ from an SEQ power station. 803 They chose not to do that. Again, doing so would have been heterodoxy. 804 I am satisfied that an appropriate penalty in respect of giving effect to the Tarong provisions having regard to all of these considerations and the matters set out at [818], is $5.5 million. 805 In relation to the Tarong Contract, Pozzolanic contravened s 45(2)(a)(ii) by making the contract containing the provisions having the purpose, effect and likely effect; Pozzolanic contravened s 45(2)(b)(ii) by giving effect to the provisions; QCL was knowingly concerned in Pozzolanic's entry into the Tarong Contract containing the relevant provisions having the purpose, effect and likely effect; and QCL was knowingly concerned in Pozzolanic's contravening conduct of giving effect to the provisions. Cement Australia contravened s 45(2)(b)(ii) on and from 1 June 2003 by giving effect to the relevant provisions. 806 The Millmerran Contract was amended on 28 July 2004. 807 In these reasons, I have discussed the circumstances of the amendment. Mr Clarke and Ms Collins were the officers who were most closely engaged in the negotiations for the amendment to the contract. Mr Clarke ultimately received instructions from Mr Leon. The circumstances of that engagement have been discussed extensively in the principal liability judgment and in these reasons. 808 Mr Clarke was a senior member of the management team within Cement Australia. Ms Collins had formulated various postulations of what might occur in the market in terms of price, revenue and the impact upon EBIT earnings should a rival enter the SEQ cgf market. The evidence given by Mr Clarke about those views has been addressed extensively in the principal liability judgment. Mr Clarke thought that ultimately the technical issues with the ash would be resolved and that it would likely be useable. Mr Clarke took the view that the contract ought to be amended and extended and one of the purposes informing his mind, as a substantial purpose, was preventing a rival from securing access to Millmerran unprocessed ash and preventing a rival from entering the SEQ cgf market. 809 When Cement Australia caused Pozzolanic to enter into the amended arrangements with MPP/MOC, Cement Australia continued to enjoy a monopoly position in the SEQ cgf market. I accept the ACCC's statistics in relation to the size of the Cement Australia Group of companies and I accept that it is relevant to have regard to the Partnership arrangements and the assets and scope of undertaking of that Partnership. It was an arrangement crafted expressly for the operation of the merged entities and it was by operation of that merger arrangement that Cement Australia assumed the role of a monopoly supplier of cgf in the SEQ cgf market. 810 I am also satisfied that the conduct of amending the contract in the context of the identified provisions was conduct deliberately undertaken, at least for a substantial purpose, to foreclose the possibility of third party entry should the Millmerran ash prove to be free of the technical difficulties which had bedevilled it until then. Having caused Pozzolanic to make the amended Millmerran Contract, Cement Australia continued to give effect to it. The Millmerran ash never entered the market. The technical questions associated with the ash continued to be examined. Unlike the Tarong Contract, I regard the making of the contract and giving effect to it as one course of conduct. There is, however, an additional consideration concerning the role of Ms Collins and Mr Clarke. There can be no doubt that both Ms Collins and Mr Clarke well understood Cement Australia's monopoly position in the SEQ cgf market and well understood postulations that rival entry would have a significant impact upon prices and the EBIT margin Cement Australia used as the measure of its earnings (apart from EBITDA). I have described aspects of the engagement between Mr Clarke and Ms Collins and also Mr Adams earlier in these reasons. 811 It seems to me that an appropriate penalty in respect of the making of the amended agreement having regard to all of the factors I have discussed and the matters set out at [818], is $850,000. It was made by Pozzolanic at the direction of Cement Australia. In that sense, Cement Australia was knowingly concerned in the contravention. I regard the making of the amended contract and Cement Australia being knowingly concerned in its making as one class of conduct. 812 As to the Swanbank Contract, the role of the Swanbank ash was also important. The volumes were relatively small and that became more so by 2005. Nevertheless, the ash produced by Swanbank was ash from the power station located very close to the Brisbane catchment. It was another source of cgf able to be traded in the SEQ cgf market. Pozzolanic/QCL had secured an exclusive supply agreement with the owner of the power station which ultimately became CSE. The contract had been extended on exclusive supply terms to 31 December 2004 under the extensions described in the principal liability judgment and described in these reasons. The contract was the subject of a further extension as a result of the exchanges between Mr Christy and Mr White discussed extensively in the principal liability judgment and in these reasons. 813 The Swanbank Contract was an important part of the market power exercised by Pozzolanic/QCL. No third party could secure access to the ash having regard to the contractual arrangements in place with Pozzolanic/QCL. Pozzolanic/QCL was entirely astute to the exclusive character of the contract. Pozzolanic/QCL understood that CSE was seeking to establish terms which would enable third parties to secure access to its ash. At the time of the extension to 31 December 2004 and the further extension to 30 June 2005, Pozzolanic/QCL and then Cement Australia continued to enjoy a monopoly position in the market. The terms of the Swanbank Contract foreclosed any possibility of supply of Swanbank ash to a third party. 814 Having secured the contract to 31 December 2004 and an extension of it to 30 June 2005, Pozzolanic/QCL up until May 2003, and thereafter Cement Australia, continued to give effect to the contract. Cement Australia was knowingly concerned in Pozzolanic's extension of the contract from 31 December 2004 to 30 June 2005. 815 Mr White was responsible for the extension of the contract on 31 December 2004 to 30 June 2005. Mr White's position and his seniority have been extensively described already. 816 I accept the submissions of the ACCC in relation to the Swanbank Contract set out at [383] to [390] of these reasons except in relation to the quantum of the penalty. I also accept the submissions of the ACCC in relation to the Swanbank extension for the period 1 January 2005 to 30 June 2005 except as to the quantum of the penalty. 817 I have taken into account the nature of the market harm by reason of the provisions of the Swanbank Contract, in a qualitative sense. I have also had regard to the provisions of the principal liability judgment concerning the Swanbank Contract and all matters relevant to the contraventions. I have examined at [818], the quantitative aspects urged by the ACCC in relation to benefit and market harm which engaged questions in relation to Swanbank and the sale of Swanbank cgf. Having regard to all of these factors relevant to the assessment of penalty, it seems to me that in respect of the contravening conduct in the period up to 31 December 2004, an appropriate penalty in relation to the making of that contract with the identified provisions is $1.5 million. As indicated in the principal liability judgment, substitutable ash from Swanbank would have had a significant and meaningful effect upon rivalry, prices, revenue and margins. Prior to deterioration in the quality of the ash towards the end of the contravening period, Swanbank ash was regarded by the respondents as substitutable for Tarong ash. In respect of the making of the six month extension to 30 June 2005 by Mr White, an appropriate penalty is $200,000. The extension was for a short period. In relation to the contract up to the period 31 December 2004, Pozzolanic gave day-to-day effect to that contract as did QCL by selling cgf produced from Swanbank ash. It seems to me, having regard to all of the relevant factors, that an appropriate penalty in respect of that conduct is $1 million. Like the Tarong Contract, there are two classes of separate conduct in relation to the contraventions concerning Swanbank as an analysis of conduct overall. In respect of the giving effect to the provisions in the period 1 January 2005 to 30 June 2005, the appropriate penalty is $50,000. Cement Australia was also knowingly concerned in the extension of the contract to 30 June 2005. The conduct of Mr White for Cement Australia of making the extension and Cement Australia being knowingly concerned in the contravention is a single course of conduct and no additional penalty ought to be imposed in respect of Cement Australia being knowingly concerned in the extension conduct. A consideration of the factors of benefit and market harm quantitatively 818 In relation to the various approaches to determining market harm caused by the conduct or benefit derived by the respondents, I have formed these views. (1) An attempt to measure, quantify or estimate the prices that would have prevailed in a market but for the contravening conduct is an extremely difficult and precise task. Although the ACCC in its further submissions disavows the notion that it is seeking to establish a but for price, the substance of the submissions are really directed to that task. The task is undertaken in this case by the ACCC to try and demonstrate or estimate the difference between the prices charged for cgf by QCL and later, Cement Australia, in the period 2002 to 2006 and prices that would likely have prevailed in that period had not the respondents entered into and given effect to provisions of the contracts adopted for the purpose and having the effect or likely effect of substantially lessening competition by foreclosing access to third parties to ash from Tarong, Tarong North and Swanbank (and Millmerran at least for a time, as to effects). (2) That raises the question of the counterfactual. I will not repeat what I said at [477] to [489] of these reasons. (3) The point of undertaking this analysis of the but for price is to try and identify the extent to which the respondents were better off by securing a price, a volume of sales and revenue and a level of EBIT they would not have enjoyed had the provisions not been adopted constraining third party access and new entrant competition in the SEQ cgf market. The ACCC also seeks to identify the market harm brought about by the conduct. The application of the with and without test has already made clear qualitatively that the process of competition in a future world with the provisions was substantially lessened as compared with a future world without the provisions. Now, the ACCC seeks to bolster the serious qualitative assessment already made in the principal liability judgment without an actual measure of the difference between the actual position as to prices, volume, revenue and EBIT as it was from 2002 to 2006 with those things as they would have been but for the contravening conduct. (4) As mentioned, the ACCC says in its further submissions that it is not trying to "quantify" the but for price and consequential but for volumes, revenues and EBIT but rather it seeks to identify an estimate of those things and also the forward-looking estimates of the consequences of new entrant competition identified by the respondents themselves in their own documents. This approach is later described by the respondents as the "hybrid" approach between qualitative assessments and best informed estimates of likely differentials. (5) One of the methods of gaining a sense of how much higher cgf prices were in the period 2002 to 2006, by reason of the contravening conduct, than they would have been is the extent to which the prices of cement and cgf "de-coupled" in the years 2011 and 2012. I accept the submissions of the respondents that the two invoices identified at [353] of these reasons provides no basis for a conclusion that but for the contravening conduct cgf prices in 2002 to 2006 would have been a particular proportion or ratio of the GP cement price [REMOVED TO THE CONFIDENTIAL SCHEDULE] and thus prices would have been a lesser ratio than it was (50% to 60%) in the period 2002 to 2006 with the result that, analytically, one can say that cgf prices would have been lower in the period 2002 to 2006 than they were. (6) At [333] to [349] of these reasons, I describe another measure proposed by the ACCC of the likely price differences that would have prevailed in the period 2002 to 2006 but for the contravening conduct. That measure involves an analysis of pricing differentials between Cement Australia's delivered prices and the delivered prices for cgf of Sunstate and IFB in the years 2011, 2012 and 2013, Sunstate having entered the SEQ cgf market in April 2007 (with ground Tarong North run-of-station ash) and IFB having entered in 2008 (with Millmerran ash). The margin difference for each year is set out at [349] of these reasons as it relates to Nucon. It is not an insignificant margin. Another example is given for purchases by Rocla, Gailes. The "study" years 2011, 2012 and 2013 are 5, 6 and 7 years after the end of the contravening period 2002 to 2006. I have great difficulty with this measure for a number of reasons. First, the study years for the transactions are quite a long time after the period of the contraventions which began on 30 September 2002. The contravening period under examination in the principal liability judgment ends on 31 December 2006. Second, although that which is supplied is flyash, the source of the ash in the case of Cement Australia is Tarong and Gladstone ash each of which has its own particular properties. The source of the Sunstate ash is Tarong North as mentioned, ground in Sunstate's mill, until it reaches the cgf particulate standard. The source of IFB's ash is Millmerran and some of the other comparative ash is Bayswater ash. It is not clear to me, on the present evidence, what role in pricing in 2011, 2012 and 2013 differential sources of ash played, if any, or what the impact of any comparative cement equivalence may have been or its role in pricing. Third, more would need to be known about the transactions to draw the conclusion sought to be established which is that the significant pricing differentials are only attributable to alternative pricing made possible by entry by Sunstate and IFB and had they entered the SEQ cgf market from 2002 to 2006 (which they did not, it is said, by reason of the contravening conduct), the pricing differentials now apparent in these later years of 2011, 2012 and 2013 would have been seen in Sunstate or IFB's pricing (or other third party pricing). The ACCC says that Sunstate's "ex-works" price was [REMOVED TO THE CONFIDENTIAL SCHEDULE] than Cement Australia's "average delivered price" in 2013, and the transport costs of delivering Sunstate ash to the buyers batching plants (on this comparative basis) does not account for the difference, as the tables reveal at [333] to [349] of these reasons. However, I am not satisfied that this measure of pricing differentials for the years 2011, 2012 and 2013 tells me anything ultimately probative of prices which would have prevailed in the period 2002 to 2006 but for the contravening conduct. (7) Another measure said to reveal an analogue of prices that would have prevailed in the period 2002 to 2006 but for the contravening conduct is a comparison of SEQ prices with prevailing prices in NSW. The supply of cgf in NSW was contestable in the relevant years. Prices were a function of that contestability at least in part. The ex-works prices at Mt Piper, Eraring and Bayswater are set out at [322] of these reasons for the period 2001 to 1 December 2006. A delivered pricing comparison between the prevailing prices for delivered cgf into NSW from NSW power stations and prevailing prices for cgf delivered from Tarong and Swanbank to the batching plants of buyers in SEQ is set out for the years 2003, 2005 and 2006 at [323] of these reasons. The differences, plainly enough, are significant: see [329] of these reasons. The difference postulated for the years 2002 to 2006 are set out at [330] of these reasons. (8) The difference per tonne for each year is said to be: 2002 - $26.50/t; 2003 - $33.81/t; 2004 - $26.46/t; 2005 - $29.92/t; 2006 [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The additional revenue for the period 2002 to 2006 based on the volume sold having regard to these price differentials is [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The point emphasised by the ACCC is that NSW is a geographic catchment that represents a proper analogue of the SEQ market. The ACCC says that what follows is that had the contravening conduct not occurred, new entrant rivalry in SEQ would have brought about a level of delivered prices on the part of Cement Australia very similar to those prevailing in NSW. Thus, this method demonstrates, it is said, a measure of the margin by which prices were higher in SEQ in 2002 to 2006 than they would have been but for entry and contestability which was foreclosed by the provisions of, particularly, the Tarong and Swanbank Contracts. In NSW, FAA was competing with Hyrock. The ACCC says that FAA had agitated for entry into the SEQ cgf market through access to both Tarong and Millmerran ash and there is no reason to believe that had the contracts at Millmerran and Tarong/Tarong North (but particularly Tarong/Tarong North) not contained the identified provisions, FAA would not have sought to secure access to that ash. The merger of May 2003 resulted in Cement Australia having a 50% interest in FAA (and therefore ultimately Holcim, Rinker and Hanson, the beneficial owners of that interest). (9) Dr Williams accepts that one possible explanation for the marked differences in prices between the two regions is that the effective monopoly of Cement Australia in SEQ meant that it could charge uncompetitive prices. Dr Williams said that another possible explanation is that the ash sources are not homogenous. The product differentiation in the ashes would require extensive empirical work which Dr Williams had not undertaken. Dr Williams thought that another possible explanation was that transfer pricing might be a cause of the differences. The similarity in prices between Eraring, Mt Piper and Bayswater ash suggested to Dr Williams that those ashes were reasonable substitutes for each other. As to aspects of the pricing, Dr Williams seemed to be confused about the 2006 prices. However, he accepted that the SEQ average delivered price for 2006 was [REMOVED TO THE CONFIDENTIAL SCHEDULE] and the highest NSW price for 2006 was $54.11/t. Thus, there plainly were differentials. (10) Apart from these possible explanations, Dr Williams criticises the method of simply applying the price difference between the two regions each year across all tonnes sold in SEQ to produce an aggregated price difference of [REMOVED TO THE CONFIDENTIAL SCHEDULE] because the price difference, by doing so, is applied to all "tied sales" across each of the five years. The second criticism is that no proper controls were applied to isolate the causal influence of transport costs; whether prices charged were at arms-length; and tied sales were not excluded. (11) Again, I have difficulty with this method as a measure of the price that would have prevailed but for the contravening conduct. Dr Williams accepts that reference to a truly analogical market is one method recognised by economists for testing a but for price. Dr Williams also accepts that the price differentials are significant and that they need to be explained. Apart from the criticisms already mentioned, Dr Williams says that no conclusion can be reached about "average prices" unless all of the invoices for the period under inquiry are examined. The prices could just be point in time prices. It is not clear whether the prices set out in the tables are properly representative or not in the absence of a complete analysis of all of the invoices. (12) It seems to me that these questions of whether the ash is homogenous; the lack of control for other causative factors; and the need for an examination of all the invoices over the period under examination, does not enable a conclusion to be reached that, on this measure, prices in SEQ in the period 2002 to 2006 were higher than they would have been but for the contravening conduct, by the order suggested. (13) This measure is put forward as a measure of market harm of [REMOVED TO THE CONFIDENTIAL SCHEDULE]. That number depends upon the integrity of the pricing data to determine the differential per tonne. In principle, however, Dr Williams accepts that direct market harm can be quantified by multiplying the tonnage by the difference in price per tonne between the price actually charged and the price that would have been charged but for the conduct ([679] of these reasons) provided that those tonnes were sold to external parties: that is, not tied sales to shareholder owners. As a method of measuring market harm, therefore, Dr Williams accepts the principle of the method subject, of course, to the elimination of tied sales in the calculation and the integrity of the data. (14) Although I have expressed difficulty with the determination of the differential per tonne each year in the table at [330] of these reasons, as earlier mentioned based in part upon aspects of the evidence of Dr Williams, the differences on the face of the data are significant and they do require an explanation. The ultimate difficulty is that the evidence does not demonstrate a truly probative basis for a causative finding that the contravening conduct is the source of the differential in that measure. (15) The question of tied sales raises a much more general point of principle. Dr Williams says that tied sales should be excluded because an examination of market harm is about identifying harm caused by the contravening conduct to others: see [669] to [673] of these reasons where Dr Williams identifies the principled foundation for that view based upon his expert opinion and his understanding of the economic orthodoxy applied to determining market harm in the context of deterrence. As to the circumstances of Holcim, Rinker and Hanson and their relationship with Cement Australia, Dr Williams accepted that if Hanson, as a shareholder concrete producer buying flyash, was charged $4/t more than a rivalrous price due to contravening conduct and $1/t came back to it (due to its 25% shareholding interest) and the same result occurred for Hanson, then 50% of the higher price would go in a circle and 50% would not. If Hanson and Rinker each pay $4/t more than the "but for" price as a measure of the market harm, Cement Australia then has $8/t (and leaving aside costs for the moment) $2/t would be returned to each of Rinker and Hanson and $4/t would be returned to Holcim, a non-concrete producer. It seems then that if 60% of the sales are tied, only 50% of that 60% should be excluded. If that is so, and the market harm is said to be [REMOVED TO THE CONFIDENTIAL SCHEDULE], 60% of that amount is [REMOVED TO THE CONFIDENTIAL SCHEDULE] and 50% of that number is [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The market harm excluding tied sales would then be [REMOVED TO THE CONFIDENTIAL SCHEDULE] assuming the integrity of the pricing differentials which, of course, for the reasons mentioned, cannot be assumed. (16) I have examined the literature and the cases to try and identify judicial authorities for the proposition that tied sales ought to be excluded in measuring market harm consistent with the principle articulated by Dr Williams. I can find no authority on the point. As a matter of foundation principle, it seems to me to be correct to say that if a Court is seeking to identify the market harm caused by contravening conduct, the focus of the inquiry ought to be upon the market harm caused to parties other than entities associated with the companies engaging in the conduct. (17) Accordingly, I accept the proposition that in determining market harm, the proper course is to exclude harm inflicted upon shareholder entities who are engaging in tied acquisitions. (18) Apart from market harm, the ACCC has conducted an analysis of benefit derived by the respondents from maintaining a higher market share than would have been the case but for the contravening conduct. I accept, in substance, the accuracy of the data contained in the tables at [267] and [268] of these reasons as it relates to the full five years in those tables. The Tarong EBIT calculation for those years is at [408] of these reasons [REMOVED TO THE CONFIDENTIAL SCHEDULE] and the combined Tarong and Swanbank EBIT calculation is at [361] of these reasons [REMOVED TO THE CONFIDENTIAL SCHEDULE. After excluding the additional Millmerran costs, the five year EBIT calculation is [REMOVED TO THE CONFIDENTIAL SCHEDULE]. These financial statistics represent the value of the SEQ flyash business of and to the respondents. The EBIT of [REMOVED TO THE CONFIDENTIAL SCHEDULE] as a proportion of total revenues is an EBIT of 43.7% for the full five calendar years set out in those tables. It represents an EBIT of [REMOVED TO THE CONFIDENTIAL SCHEDULE] over 1,777,514 tonnes averaged over the five years. (19) The ACCC says that this position reflected in these statistics can be usefully and relevantly contrasted with the position the respondents would have been in across the period at least 2003 to 2006 had they lost the Tarong Contract but won the OMC. They would have earned $0.14/t or $6,429 and this difference between the two positions represents "one straightforward indicator of the potential financial benefit the [respondents] earned by preventing competition": [367] of these reasons. In other words, the ACCC sees the entire flyash undertaking of the respondents, largely derived from the sale of Tarong ash (see [408] of these reasons) as a benefit derived from the contravening conduct which should be stripped away as a function of deterrence. Plainly, that is not correct. (20) The true analytical position is that discussed at [477] to [489] of these reasons. (21) The whole of the revenues and EBIT of the flyash business from the date of the Tarong Contract (in particular) forward cannot be attributed to the adoption of the impugned provisions and thus the contravening conduct in that causal sense. Pozzolanic/QCL might have entered into the Tarong Contract with none of the impugned provisions and yet it might have sustained at least a proportion of its revenues and EBIT in the face of responding to competition notwithstanding that absent the provisions, new entrants would likely have entered with access to Tarong ash (perhaps FAA or Transpacific but also others) and brought about a significant impact on earnings through contestability with Pozzolanic/QCL and later Cement Australia. The competition impact of the provisions is significant but if the benefit brought about by reason of the contravening provisions is to be assessed, quantified or estimated, then it is necessary to approach the matter on the footing of the method identified at [477] to [489] of these reasons. (22) Another measure of the benefit said to have been derived from the contravening conduct is that once contestability occurred (foreclosed by operation of the provisions) through Sunstate and IFB, the contravening grip of the respondents on non-tied sales would have been lost and the ACCC says that the data shows that these sales collapsed from 40% of sales in 2005 to merely [REMOVED TO THE CONFIDENTIAL SCHEDULE] in 2010. The ACCC says that had Sunstate or IFB entered the market in 2005 and had that event resulted in a reduction in sales to sales of cgf by Cement Australia to only [REMOVED TO THE CONFIDENTIAL SCHEDULE] of the non-tied customers, Cement Australia would have lost [REMOVED TO THE CONFIDENTIAL SCHEDULE] of its 2005 EBIT earnings: see [371] to [372] of these reasons. This is said to give an indication of the measure of the benefit Cement Australia derive from adopting the impugned provisions. (23) Generally, the non-tied sales represented 40% of the SEQ cgf sales of the respondents from 2005 to 2007. Those sales declined throughout 2008 to 2010. In the years 2011, 2012 and 2013, Cement Australia's percentage of sales volume in SEQ declined from [REMOVED TO THE CONFIDENTIAL SCHEDULE] in 2012 and then [REMOVED TO THE CONFIDENTIAL SCHEDULE] in 2013. The volume of sales won by competitors, Sunstate, Hyrock and IFB in that period, correspondingly amounted to [REMOVED TO THE CONFIDENTIAL SCHEDULE]. (24) As described, one significant benefit derived by the respondents from the contravening conduct is said to be the retention for each year from 2002 to 2006 of sales of cgf to non-tied customers represented 40% of the sales revenue. The ACCC then postulates the impact the respondents would have suffered had the impugned provisions not been adopted. The ACCC says that instead of deriving an EBIT across those five years of [REMOVED TO THE CONFIDENTIAL SCHEDULE], the EBIT would have been [REMOVED TO THE CONFIDENTIAL SCHEDULE], a difference (or postulated benefit) of [REMOVED TO THE CONFIDENTIAL SCHEDULE]. However, if an assumption is also made that prices were $14/t higher than they would have been but for the contravening conduct, further adjustments for that price difference on the 60% of the remaining sales results in a contended potential EBIT loss of [REMOVED TO THE CONFIDENTIAL SCHEDULE]. The respondents are said to have benefited to that quantifiable extent by reason of the contravening conduct: [375] of these reasons. That amount is then adjusted by the ACCC to [REMOVED TO THE CONFIDENTIAL SCHEDULE]: [376] of these reasons. (25) A further measure along this line of thinking is that if the respondents had suffered a loss of 40% of sales for each of the five years 2002 to 2006 and prices on the remaining 60% of sales had occurred at the prevailing NSW cgf delivered price, the potential EBIT loss is then said to be [REMOVED TO THE CONFIDENTIAL SCHEDULE]. That amount is said to be a measure of the benefit the respondents derived over the five years 2002 to 2006 and as a matter of principle, that benefit ought to be removed from the respondents in the interests of serving the objective of deterrence. (26) This calculation of benefit is, in many respects, quite problematic. It assumes that there would have been a loss of non-tied sales but for the contravening conduct in the way described. The position in relation to tied sales would have been different in the period from 26 February 2003 to the end of May 2003. From 1 June 2003, the sales to the shareholder concrete producers were retained by Cement Australia not because of the contravening conduct but by reason of the shareholder equity interest those buyers held in the supplier of the product. As to the non-tied sales, plainly there would have been a significant impact upon those sales as Professor Hay suggested. What is not clear is whether responsive rivalry from QCL and later Cement Australia would have resulted in a proportion of those sales being held by QCL/Cement Australia. QCL and Cement Australia might well have been reluctant to supply Tarong cgf to non-tied buyers operating batching plants within a relevant catchment of a batching plant of a shareholder concrete producer for fear that the MFN provisions of the contracts would have required QCL/Cement Australia to provide the same price to those buyers as the non-tied buyers notwithstanding that the tied shareholder buyers enjoyed the benefit of the "50% goes around in a circle principle". (27) There is no doubt that QCL/Cement Australia derived a benefit by reason of the contravening conduct in retaining a certain level of non-tied sales during the period 2002 to 2006, a significant proportion of which would have been lost to a third party entrant. The difficulty I have with the formulations as described, in the necessary detail required of the analysis as set out in these reasons, is that as a true measure of the benefit, it is not clear to me what proportion of the non-tied sales would have been lost in the period 2002 to 2006. The other calculations are then dependent upon an assumption that the entire 40% of the sales would have been lost and, on top of that, the price in any event was $14/t higher than it would have been with the result that recalculations must be made on the balance 60% of sales to reflect the deterioration in revenue and EBIT (apart from the further table factoring in the NSW delivered price as a further calculation). (28) I am not satisfied that these calculations provide the Court with a probative analysis of a but for benefit. As I have said, I entirely accept that QCL and Cement Australia garnered to itself a real and meaningful benefit by adopting the provisions. My difficulty is that in attempting to either quantify the measure of that benefit or, as the ACCC later says, estimate that benefit on an informed basis, I cannot attribute a quantification or estimate of the kind sought to be asserted by the ACCC based on these calculations. (29) Apart from these matters, a number of other propositions need to be addressed. (30) I accept that sales to shareholder customers, in the way I have described it, ought to be removed from the calculation if the exercise is one of seeking to calculate market harm. (31) I accept that in calculating the benefit derived from the contravening conduct, the starting point is to isolate the revenue derived during the period of the contravening conduct and, in that regard, I accept that the relevantly adjusted revenue is about [REMOVED TO THE CONFIDENTIAL SCHEDULE] according to the matters described at [490] of these reasons. (32) Although I accept that the calculation of market harm ought to exclude harm, in effect, inflicted upon itself or its related corporations in the form of the shareholder concrete producers, it is not entirely clear to me that in seeking to identify a benefit derived by QCL/Cement Australia in supplying cgf at a price higher than the but for price, the returns to the equity owners who are shareholder concrete producers ought to be taken into account in off-setting the market measure of the benefit derived by the supplier. However, if the analysis involves accepting that any profit extracted from a shareholder buyer due to a higher price, is returned to the concrete producer equity owners as to 50%, the better view is that the measure of the so-called "benefit" derived through the higher but for price ought to be discounted to reflect a 50% return to the concrete producer equity owners. (33) As to the EBIT earnings, there is much controversy about the true measure of the EBIT. For the purposes of seeking to examine the EBIT earnings, it seems to me that a measure of about 37% is an average benchmark EBIT to test the calculations. (34) As to the off-setting of the Millmerran costs, Pozzolanic/QCL incurred an ongoing royalty obligation in entering into the contract. It may have been a price QCL was willing to pay to secure the contract for ash supply from the Millmerran power station without provisions which had the purpose, effect or likely effect of substantially lessening competition. In fact, Pozzolanic/QCL entered into an obligation to pay royalties under a contract which contained provisions adopted for the purpose and having the effect or likely effect of substantially lessening competition. That was a price Pozzolanic/QCL was willing to bear and an obligation Cement Australia assumed as it gave effect to the contract. To the extent that an attempt is made to quantify or estimate the benefit derived from the contravening conduct, it seems to me that costs related to the acquisition of flyash under a contract containing provisions prohibited by the Act ought not to be taken into account in reducing the measure of the contended benefit. Those costs simply lie where they fall. (35) As to the calculation of the costs to be taken into account, the respondents say that there are many other costs allocated to the MIC segment which ought to have been allocated to the flyash business. The respondents historically calculated EBIT and EBITDA on a particular basis and I can see no basis on which costs that have never been regarded by the respondents as part of the flyash business should now be treated as costs of the flyash business for the purpose of seeking to calculate the measure of the profit. (36) As to the tax, I accept that there is some evidence about earnings and the relationship between earnings and the tax liability of the respondents. However, the respondents could have put on focused, succinct material about that question directed expressly to the tax position. They chose not to do so and it is not clear to me what the tax position of the respondents is or has been and whether any non-deductible benefit ought to be reduced by the tax burden that theoretically falls upon the profit margin elevated by reason of the non-deductibility of a pecuniary penalty. (37) I accept that leaving aside the tax question but taking into account the adjustments already indicated (but not the Millmerran costs) the EBIT derived by the respondents in the precise period of the contraventions (rather than the total period 2002 to 31 December 2006) is probably an amount between $13,500 to possibly $20,000. (38) I also accept that it does not necessarily follow that all of this EBIT would have been lost in the face of rivalry and that all of it represents a true "benefit". Contestability would have resulted in QCL/Cement Australia retaining some proportion of its EBIT earnings. What the measure of that retention might have been or the measure of the actual lost EBIT is not really clear to me notwithstanding an intensive consideration of all of the data. (39) The last matter on this topic is the emphasis the ACCC attributes to the internal analysis by the respondents of the forward-looking position should a competitor enter the SEQ cgf market. Dr Williams says that it is not inappropriate to examine the thinking within the respondent group but that whatever the thinking of the relevant individuals might have been, it rises no higher than the expression of an opinion and does not reflect hard analysis of a but for price upon which economists would rely. In short, economists would want to test the opinions by reference to hard data to get the answer to the question of what the but for price might have been and that analysis might or might not align with the expressions of opinion. I accept entirely that as a true analytical exercise, the opinions expressed by individuals within the respondent group would need to be tested to determine whether their assessments of the forward-looking price were likely to be correct. It is important to remember that the opinions were forward-looking projections of the price that would, in their view, prevail in the face of competition. They were based on certain assumptions some of which proved to be untrue. Notwithstanding all of those qualifications, I do not accept that the Court ought to simply put to one side the expressions of opinion of experienced managers charged with the conduct of the business and experienced directors charged with the governance of the companies. As already indicated, those individuals are probably in the best position to make a market assessment of likely future events notwithstanding that future events might prove their judgements to be wrong. It is clear that Mr Arto and Mr Maycock thought that the assessments by Mr Wilson and Mr Ridoutt were exaggerated, strong expressions of view and perhaps a postulation of the worst possible case. It is also true that Mr Maycock did not accept those assessments as a likely result once QCL began to engage in the competitive process. (40) Nevertheless, Mr Ridoutt and Mr Wilson thought that there would be a significant price reduction should new entrant competition emerge and it would be likely to be in the order of a $10/t reduction in the price of cgf. Mr Arto seemed willing to act on that view. He certainly had his own views about the benchmark margin QCL should seek to preserve. Later, Ms Collins had very similar views about the likely price reduction should Cement Australia find itself in the very unfortunate and undesirable position of having to compete with a rival for the sale of flyash in SEQ. Revenues and EBIT earnings would be under pressure. She spoke about a $10/t price reduction. She pressed the proposition with Mr Clarke. (41) I accept that these postulations by Mr Ridoutt and Mr Wilson and later by Mr Clarke and the emerging reality which Mr White confronted are, at the end of the day, simply expressions of opinion. They remain, however, informed opinions. They cannot be in any sense determinative or probative of a price which would have emerged in the period 2002 to 2006 but for the contravening conduct and the postulations of a price reduction cannot simply be projected across the entire period of the contraventions. That is simply not a rational approach. However, these expressions of opinion make it very plain that the most informed market participant fully expected there to be a significant impact upon the price should a new entrant emerge with contestable ash and seek to compete away the margin and price enjoyed by the monopoly incumbent. Ultimately, it is not possible to put a number in any credible way on the measure of that benefit because it simply depends upon too many factors and assumptions and is ultimately not supported by hard data establishing a but for price. The entire exercise of trying to postulate, by reference to hard data and sound economic analysis, a but for price, is a very complex exercise. I have undertaken with economists such a detailed exercise in seeking to determine the but for price for electricity transformers which would have prevailed had participants in that industry not engaged in cartel conduct. The opinions of the senior managers cannot operate as a proxy for the but for conduct. However, those opinions ought not to be discounted because they tend to suggest a consistent theme accepted by Mr Maycock that in the face of competition QCL, and later Cement Australia, would not have been able to sustain the margins they enjoyed. The immediate difficulty is trying to quantify or estimate the measure of that difference. (42) In the result, it seems to me, that the trend in the opinions within the respondents' own documents ought to be taken into account in recognising that those individuals believed that QCL and Cement Australia would suffer degradation in the price and earnings should new entrant competition emerge armed with substitutable ash. The pecuniary penalty ought to take into account not the postulated measure of the price reduction projected over five years as a uniform measure but rather recognise that the internal officers believed that new entrant competition would represent a serious threat to price, earnings and margin. It cannot be put any higher than that. Ultimately, the entire matter comes back to a qualitative assessment of the conduct in the sense that the pecuniary penalty should take account and recognise that the respondents derived benefit from the conduct but the true measure of the benefit in the absence of proper economic analysis cannot be quantified in any hard way. 819 I have taken into account in the assessment of the penalty as earlier described each of the considerations mentions at [818]. 820 These further things should be mentioned. I have taken into account all of the considerations set out in the submissions of the parties both orally and in writing. I have taken into account such matters as the relevance of the indemnities and each of the other matters upon which emphasis has been placed by the parties. To the extent that I have not expressly referred to particular matters all of them have been considered in the assessment. To the extent that challenges have been made to aspects of the affidavit evidence, I admit into evidence all of the material put before me by the parties. Ultimately, that material is to be judged according to its weight and relevance to the issues I have already dealt with. 821 The only two remaining questions are those concerning the position of Mr White and the position in relation to costs of the proceedings. 822 I have taken into account all the submissions made on behalf of Mr White and the submissions on behalf of the ACCC. I have also had regard to Mr White's oral evidence, the findings contained in the principal liability judgment and the matters referred to in Mr White's affidavits mentioned earlier in these reasons. I am not persuaded to the position that the findings made against Mr White and the declarations made are such that no pecuniary penalty ought to be imposed upon him. 823 Mr White was responsible for the formulation of important strategic matters in the period throughout December 2004 and into the period of his engagement with Mr Christy. However, I recognise that the extension was for a short period of time and that it was undertaken in the context of negotiations for a further supply agreement. I also recognise that Mr Christy did not regard himself as bound by an absolute exclusivity commitment but nevertheless participants understood that Pozzolanic/Cement Australia had a particular position at Swanbank. The findings in relation to these matters are set out at [3215] to [3231] of the principal liability judgment and I accept the force of the submissions at para 6 of the written submissions on behalf of Mr White. 824 I am satisfied that a pecuniary penalty ought to be imposed upon Mr White in an amount of $20,000. 825 In determining the penalty to be imposed in respect of the contraventions, I have also had regard as a final check, to the totality principle so as to be satisfied that the penalties imposed are proportionate and properly reflect penalties which give proper regard to the conduct and serve the interests of deterrence, overall. 826 As to the question of costs, I do not propose to set out in detail all of the factors informing the exercise of the discretion. I have had regard to the submissions of the parties and I am intimately familiar with all aspects of the proceedings from beginning to end. I am satisfied that the proper order for costs, having regard to the scope of the proceedings and the intersection between the various issues, is that the respondents pay 65% of the costs of the ACCC of and incidental to the proceedings on a party and party basis up to 10 September 2013 and 100% of the ACCC's costs of and incidental to the proceeding on and after 10 September 2013. 827 As to the formal orders, the ACCC is requested to submit proposed final orders for my consideration. 828 In the judgment, the analysis of the various propositions in relation to benefit and market harm has involved setting out much financial data which is confidential. Much of it is not confidential but the data in relation to market circumstances particularly in the period 2010 to 2014 is confidential. 829 The parties are directed to review the reasons for judgment and submit a schedule within 14 days setting out the paragraphs of the judgment which contain confidential data with a view to that data being excised from the judgment before publication of the reasons for judgment. I certify that the preceding eight hundred and twenty-nine (829) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate: Dated: 29 April 2016 SCHEDULE OF PARTIES QUD 295 of 2008 Respondents Second Respondent: CEMENT AUSTRALIA HOLDINGS PTY LTD ACN 001 085 561 Third Respondent: CEMENT AUSTRALIA (QUEENSLAND) PTY LTD FORMERLY QUEENSLAND CEMENT LTD ACN 009 658 520 Fourth Respondent: POZZOLANIC ENTERPRISES PTY LTD ACN 010 367 898 Fifth Respondent: POZZOLANIC INDUSTRIES PTY LTD ACN 010 608 947 Sixth Respondent: CHRISTOPHER GUY LEON Seventh Respondent: CHRISTOPHER STEPHEN WHITE