FEDERAL COURT OF AUSTRALIA

Prysmian Cavi E Sistemi S.R.L. v Australian Competition and Consumer Commission [2018] FCAFC 30

ORDERS

THE COURT ORDERS THAT:

1.    The appeal is dismissed with costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

INTRODUCTION

1    The appellant in this appeal is Prysmian Cavi E Sistemi (‘Prysmian’), part of a large group of companies operating at a global level as a major supplier of land and submarine energy cables.

2    Prysmian appeals certain orders of the primary judge made on 28 July 2017, the principal reasons for which were given in Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi S.R.L. (No 12) [2016] FCA 822 (‘Reasons’).

3    The background to this proceeding is set out at [1]-[29] in the Reasons of the primary judge. In summary, it was alleged that Prysmian entered into an arrangement with a number of other companies involving market sharing and price fixing in the cable market (the ‘A/R Cartel Agreement’). One of the procedures envisaged by the A/R Cartel Agreement was alleged to involve an initial agreement between two sets of companies (the ‘A Group’ and the ‘R Group’) as to which of these Groups would be allotted a given tender or project, followed by a subsequent agreement within the allotted Group to determine which company within that Group would be allotted the tender or project. The alleged contraventions of the Trade Practices Act 1974 (Cth) (‘Act’) were said to flow from a particular instance in which the A/R Cartel Agreement was given effect through this procedure, namely an instance in which Prysmian was the allocated a tender as a member of the R Group. This impugned conduct was referred to as the ‘Snowy Hydro Project Agreement’.

4    The relevant provisions of the Act are set out in the Reasons of the primary judge, but it is convenient to set them out here:

45    Contracts, arrangements or understandings that restrict dealings or affect competition

…

(2)    A corporation shall not:

(a)    make a contract or arrangement, or arrive at an understanding, if:

(i)    the proposed contract, arrangement or understanding contains an exclusionary provision; or

(ii)    a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or

(b)    give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision:

(i)    is an exclusionary provision; or

(ii)    has the purpose, or has or is likely to have the effect, of substantially lessening competition.

(3)    For the purposes of this section and section 45A, competition, in relation to a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, means competition in any market in which a corporation that is a party to the contract, arrangement or understanding or would be a party to the proposed contract, arrangement or understanding, or any body corporate related to such a corporation, supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the provision, supply or acquire, or be likely to supply or acquire, goods or services.

…

45A    Contracts, arrangements or understandings in relation to prices

(1)    Without limiting the generality of section 45, a provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be deemed for the purposes of that section to have the purpose, or to have or to be likely to have the effect, of substantially lessening competition if the provision has the purpose, or has or is likely to have the effect, as the case may be, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price for, or a discount, allowance, rebate or credit in relation to, goods or services supplied or acquired or to be supplied or acquired by the parties to the contract, arrangement or understanding or the proposed parties to the proposed contract, arrangement or understanding, or by any of them, or by any bodies corporate that are related to any of them, in competition with each other.

…

4D    Exclusionary provisions

(1)    A provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if:

(a)    the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and

(b)    the provision has the purpose of preventing, restricting or limiting:

(i)    the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons; or

(ii)    the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions;

by all or any of the parties to the contract, arrangement or understanding or of the proposed parties to the proposed contract, arrangement or understanding or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate.

(2)    A person shall be deemed to be competitive with another person for the purposes of subsection (1) if, and only if, the first‑mentioned person or a body corporate that is related to that person is, or is likely to be, or, but for the provision of any contract, arrangement or understanding or of any proposed contract, arrangement or understanding, would be, or would be likely to be, in competition with the other person, or with a body corporate that is related to the other person, in relation to the supply or acquisition of all or any of the goods or services to which the relevant provision of the contract, arrangement or understanding or of the proposed contract, arrangement or understanding relates

5    The appellant describes the principal issue for determination on appeal in the following terms:

The central issue on this appeal is whether, in circumstances where the ACCC’s case required the existence of an arrangement involving the second respondent at first instance (Nexans), the primary Judge’s conclusion that Nexans had not been shown to have made any commitment ought to have been dispositive of the case against Prysmian.

6    In essence, the appellant argues that the case pleaded by the Australian Consumer and Competition Commission (‘ACCC’ or ‘respondent’) required an agreement between the A Group and R Group members, and required the R Group members – namely, Prysmian and the second respondent at first instance, Nexans SA RCS Paris 393 525 852 (‘Nexans SA’) – to reach a consensus between themselves as to which member of that Group would obtain the project at issue in the Snowy Hydro Project Agreement. The primary judge’s finding that Nexans SA did not commit to the Snowy Hydro Project meant that, according to the appellant, it was not open to the Court to nonetheless find contraventions by Prysmian on the basis of the Snowy Hydro Project Agreement conduct.

7    The appellant pursues a number of other grounds of appeal that are related to, or consequential upon, this principal issue.

8    In view of the principal issue before us, it is convenient to begin with an overview of the relevant pleadings of the ACCC, particularly as they relate to the A/R Cartel Agreement and the Snowy Hydro Project Agreement. We then set out the specific grounds of appeal and findings of the primary judge that are alleged to be in error, before setting out the parties’ arguments on each ground of appeal and our conclusions.

9    We also observe as a preliminary matter that the proceeding was one involving the imposition of pecuniary penalties. We are cognisant of the significance of this in relation to matters of evidence and the application of s 140 of the Evidence Act 1995 (Cth) and the principles contained in Briginshaw v Briginshaw (1938) 60 CLR 336.

PLEADINGS

10    The ACCC essentially pleaded its case before the primary judge in terms of three tiers of agreements or arrangements. It alleged that there was the overarching cartel arrangement in the form of the A/R Cartel Agreement, pursuant to which the impugned conduct in the form of the Snowy Hydro Project Agreement was undertaken, which in turn involved an agreement between the A Group and R Group, and another separate internal agreement within the R Group.

11    In respect of the A/R Cartel Agreement, the ACCC specifically pleaded, in relevant part, as follows:

16.1.    that the cartel members, by their nominated representatives, would meet and communicate as a cartel to co-operate with one another in markets for land cables and submarine cables worldwide, including in the Australian land cable market and the Australian submarine cable market, alternatively the Australian cable market (the A/R Cartel);

16.2.    that one group of the A/R Cartel, referred to by the cartel members as the “A Group”, consisted of the Japanese companies Viscas and Sumitomo;

16.3.    that the other group of the A/R Cartel, referred to by the cartel members as the “R Group”, consisted of the European companies, including a member or representative of the Pirelli group of companies and Nexans;

16.4.    that a natural person who was the secretary of the A Group, and a natural person who was the secretary of the R Group, would each be the principal point of contact for communications between the A Group and the R Group;

16.5.    that the A/R Cartel members would not compete with one another on price in tendering for projects for the supply of land cables or submarine cables, but would reach agreements when particular projects arose as to which of them would be the successful tenderer for the project, referred to as the Allottee;

16.6.    that when a member of the A/R Cartel received an initial inquiry, request for budgetary price, or quotation or invitation to tender from a customer for, or otherwise first became aware of, a potential project for the supply of land cables or submarine cables, that member would provide a Notification, by notifying the other members as soon as possible, either directly or through the member’s group secretary, of the identity of the customer, the country where the project was located and the basic specifications of the project;

16.7.    that if the project was at a preliminary or budgetary price stage only, the A/R Cartel members would agree a minimum price above which they would each submit their budgetary prices if invited to do so by the customer, which minimum price was referred to as the Floor Price;

16.8.    that if the project was at a quotation or tender stage, the project would be allocated by the A/R Cartel members agreeing either:

16.8.1.    as to a particular Allottee; or

16.8.2.    that the project would be allocated to either the A Group or the R Group, which was referred to as giving the project an A Preference or R Preference respectively;

16.9.    that allocations to a particular Allottee would occur by the A/R Cartel members reaching agreement as to which of the members who were invited to tender for the project would be the Allottee for that project, taking into account factors including:

16.9.1.    whether the project was in a geographic region close to a particular member’s production facilities, or otherwise favoured by a member, which was sometimes referred to as a home territory or home market;

16.9.2.    whether the project was for a customer with whom a particular member had a strong existing relationship;

16.9.3.    whether a member was already associated with the project, by assisting in preparing specifications, or because the project was to connect to or upgrade existing cable supplied by that member;

16.9.4.    capacity and workloads of particular members;

16.9.5.    requests by particular members to be allocated the project, which were referred to as Preferences;

16.10.    if a project was given an A Preference or R Preference, the members of the A Group or the R Group respectively would then agree between themselves as to which of them would be the Allottee;

16.11.    the A/R Cartel members would communicate in relation to prices for the project, to ensure the Allottee submitted the lowest price of the members tendering, with the intended consequence that the Allottee would be the successful tenderer for the project;

16.12.    the Allottee would notify the other A/R Cartel members, either directly or via the secretaries, of the prices at or above which they should submit their tenders for the project, so as to ensure the Allottee’s price was the lowest of the members tendering, which notification was referred to as the Price Guidance for the project;

16.13.    the A/R Cartel members who were not the Allottee for the project either:

16.13.1.        would not submit a bid for the project; or

16.13.2.    would submit a bid in accordance with the Price Guidance provided to them;

with the intended consequence that the Allottee would be the successful tenderer for the project;

16.14.    that if agreement could not be reached as to the Allottee, or whether a project should be allocated to A Group or R Group, the project could be expressly agreed to be a “Free Fight”, which meant that any member could tender for the project at their own price without consulting further with the other members.

12    In respect of the Snowy Hydro Project Agreement, the ACCC specifically pleaded, in relevant part, as follows:

Notification of invitation to tender

29.    On 12 September 2003 JPS, by its employee and representative Takeo Osada, sent by email a notification of its receipt of the invitation to tender to:

29.1.    Prysmian;

29.2    Exysm;

29.3.    Nexans; and

29.4.    Viscas

30.    The above notification was a Notification pursuant to the provisions of the A/R Cartel Agreement.

Particulars

The Notification and request for an A Preference was made by way of email dated 12 September 2003, 7.39am which was sent by Takeo Osada, addressed to Jay (Nexans) and sent to Jay, Corbellini (Prysmian) and Comber (Prysmian) as well as Yasutoshi (JPS), Yamaguchi (JPS), Tsubaki (Viscas) and Inoue (Exysm).

31.    On 16 September 2003 Exysm, by its representative Inoue, sent by email a notification of its receipt of the invitation to tender, to JPS.

Particulars

The Notification was made by way of email dated 16 September 2003, 4:11am which was sent by Toshihisa Inoue (Exysm) to Takeo Osada (JPS).

32.    The above notification was a Notification sent pursuant to the provisions of the A/R Cartel Agreement.

Allocation of Snowy Hydro Project

33.    On 12 September 2003 JPS, by its employee and rpresentative Takeo Osada, and on behalf of the A Group members, requested that the Snowy Hydro Project be allocated to the A Group as an A Preference.

Particulars

The Notification and request for an A Preference was made by way of email dated 12 September 2003, 7:39am which was sent by Takeo Osada, addressed to Jay (Nexans) and sent to Jay, Corbellini (Prysmian) and Comber (Prysmian) as well as Yasutoshi (JPS), Yamaguchi (JPS), Tsubaki (Viscas) and Inoue (Exysm).

34.    On 24 September 003, the A Group members and R Group members arrived at an arrangement or understanding (the Snowy Hydro Project Agreement) that:

34.1.    the Snowy Hydro Project would be allocated to a member of the R Group as an R Preference;

34.2    pursuant to the provisions of the A/R Cartel Agreement:

34.2.1.    the R Group would be entitled to nominate the Allottee;

34.2.2.    the R Group would notify the A Group of the Price Guidance, being the price at or above which a member of the A Group who was tendering for the Snowy Hydro Project should submit its tender, so as to ensure the R Group Allottee was the tenderer with the lowest price of the members tendering for the project;

34.2.3.    the A Group representative would communicate the Price Guidance to the A Group members, if they were not already copied in to the original communication from the R Group representative concerning the Price Guidance;

34.2.4.    any A Group members submitting tenders for the project would tender in accordance with the notified Price Guidance for the project.

Particulars

The agreement that the R Group would be the allocated group was confirmed by an email from Takeo Osada dated 24 September 2003, 5.44am, as secretary and representative of the A Group, addressed to Jay, as secretary and representative of the R Group, and also sent to Corbellini, Comber, Yamaguchi, Watanabe, Tsubaki and Inoue.

35.    Between 24 September 2003 and 3 October 2003, the members of the R Group reached agreement that Prysmian would be the Allottee for the Snowy Hydro Project.

36.    The provisions of the Snowy Hydro Project Agreement had the purpose, effect or likely effect of:

36.1.    fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, prices for land cables supplied or to be supplied to Snowy Hydro by the A/R Cartel members (or by any bodies corporate related to any of them) in competition with each other, within the meaning of section 45A(1) of the TPA and the Competition Code; and

36.2    by reason of the matters referred to in paragraphs 7 to 14 and 36.1 above, and by operation of section 45A(1) of the TPA and the Competition Code, substantially lessening competition in the Australian land cable market, alternatively the Australian cable market, within the meaning of section 45(2) of the TPA and the Competition Code.

37.    Further or alternatively, the provisions of the Snowy Hydro Project Agreement:

37.1.    had the purpose of preventing, restricting or limiting the supply of land cables, or preventing, restricting or limiting the supply of land cables in particular circumstances or on particular conditions, bu the A?R Cartel members (or by any bodies corporate related to them), to Snowy Hydro;

37.2.    by reason of the matters referred to in paragraphs 7 to 14 and 37.1 above, constituted exclusionary provisions, within the meaning of sections 4D and 45(2) of the TPA and Competition Code.

…

Contraventions

Snowy Hydro Project Agreement

50.    By reason of the matters pleaded above, by making or arriving at the Snowy Hydro Project Agreement as pleaded in paragraphs 34 to 37 above, each of:

a.    Prysmian;

b.    Nexans and

c.    Viscas;

50.1.    contravened section 45(2)(a)(i) and further or alternatively section 45(2)(a)(ii) of:

50.1.1.    the TPA; and

50.1.2    the Competition Code; and

50.2    gave effect to the provisions of the A/R Cartel Agreement, and thereby contravened section 45(2)(b)(i) and further or alternatively section 45(2)(b)(ii) of:

50.2.1.    the TPA; and

50.2.2.    the Competition Code.

13    We turn now to the relevant findings of the primary judge.

RELEVANT FINDINGS OF THE PRIMARY JUDGE

14    In broad terms, the primary judge found there to be ‘an arrangement or understanding similar to that described by [the ACCC’s principal witness] Mr Osada, and referred to as the A/R Cartel Agreement between Sumitomo, Alcatel, a Pirelli company and others’ (Reasons, [78]). ‘Alcatel’ refers to Nexans, and ‘a Pirelli company’ refers to Prysmian. The finding that Nexans was committed to the A/R Cartel Agreement is an important finding to keep in mind when considering Nexans’ role and participation in the Snowy Hydro Project Agreement.

15    In reaching that finding, the primary judge considered the evidence of Mr Osada, despite being very general, to have substantial probative value (Reasons, [56]). Mr Osada’s evidence regarding the basic operation of the A/R Cartel Agreement was as follows (Reasons, [55] and [57]):

He described the steps in the process, including the following: receipt of an inquiry as to a project; a request from the A Group or the R Group for preference; agreement at the Group level as to which group would receive preference; agreement within the Group as to who would be the allottee; factors taken into account in deciding who would be the allottee; notification of prices, and the scope of projects covered by the agreement.

…

Mr Osada’s evidence was that when an inquiry in relation to a project was received, the following steps were taken. The first step involved the participants agreeing as to which of them would be allocated the project out of the group of participants who had been asked by a potential purchaser to quote or lodge a tender in relation to the project. This could involve agreement at two levels. The Japanese participants were referred to as the “A” Group and the European participants were referred to as the “R” Group. The A Group may ask the R Group for preference or vice versa.

16    The primary judge noted that the probative value of Mr Osada’s evidence on these points was strengthened by the corroborating contemporaneous documentation (Reasons, [56]). This documentation was surveyed extensively by the primary judge at [52]-[115], and for present purposes it suffices to reproduce two particular documents considered by his Honour relating specifically to the Snowy Hydro Project Agreement. The first is an email extracted at [52] of the primary judge’s Reasons (‘12 September Osada-Jay Email’):

From:        Takeo Osada ˂osada.takeo@jpowers.co.jp˃

Sent:        Friday, September 12, 2003 7:39 AM (GMT)

To:    Jeanmarie.Jay@nexans.com; watanabe.yasutoshi@jpowers.co.jp; yamaguchi.joji@jpowers.co.jp; federico.corbellini@pirelli.com; e tsubaki@viscas-j.co.jp; Toshihisa_Inoue@exsym.co.jp; robert.comber@pirelli.com

Subject:    Inquiry Notification, Australia

________________________________________

Dear Mr. Jay:

Inquiry Notification

Country;    Australia

Project Name;    Contract No. 90061

Customer;    Snowy Hydro

Bid date;    Oct. 10, 2003

Voltage;    330kV

Insulation;    Fluid filled

Quantity;    525 meters plus 555 meters option

A is interested and would like to ask preference.

Best regards

T.Osada for J. Yamaguchi

osada.takeo@jpowers.co.jp

17    The second is an email extracted at [86] of the primary judge’s Reasons (‘24 September Osada-Jay Email’):

From:        Takeo Osada ˂osada.takeo@jpowers.co.jp˃

Sent:        Wednesday, September 24, 2003 5:44 Am (GMT)

To:    Jeanmarie.Jay@nexans.com; watanabe.yasutoshi@jpowers.co.jp; yamaguchi.joji@jpowers.co.jp; federico.corbellini@pirelli.com; e tsubaki@viscas-j.co.jp; Toshihisa_Inoue@exsym.co.jp; robert.comber@pirelli.com

Subject:    Aus. Snowy Hydro

________________________________________

Dear Mr. Jay:

We agree on R-Pref.

Please send guidance by September 30.

Best regards

________________________________________

Inquiry Notification

Country;    Australia

Project Name;    Contract No. 90061

Customer;    Snowy Hydro

Bid date;    Oct. 10, 2003

Voltage;    330kV

Insulation;    Fluid filled

Quantity;    525 meters plus 555 meters option

T. Osada for J. Yamaguchi

osada.takeo@jpowers.co.jp

18    We observe that the primary judge, after referring to the 24 September Osada-Jay Email, made the following observation (Reasons, [87]):

Mr Osada said that he could not have advised Mr Jay that the Japanese participants agreed on an “R Pref.” (i.e., an R preference) without the European participants requesting such a preference (although he does not have a record of such a request) and without the Japanese participants having discussed the request and agreed to it.

19    Based on these emails and other evidence, the primary judge found the following in respect of the Snowy Hydro Project Agreement (Reasons, [201]):

I am prepared to infer from all the evidence that the A Group agreed to ask for an A preference for the Snowy Hydro Project. I infer that someone on the R Group side asked for an R preference to which the A Group agreed. I infer that the request on the R Group side was made by Prysmian. I infer that Nexans SA was aware of the Snowy Hydro Project as Mr Osada sent his email dated 12 September 2003 to Mr Jay, among others.

20    We will return to these particular findings later in our consideration of the grounds of appeal.

21    Although the primary judge inferred that Nexans SA was aware of the Snowy Hydro Project, his Honour was unwilling to infer that there was a ‘commitment’ by Nexans SA in respect of that project insofar as Nexans SA did not provide ‘consent … to the allocation of the Snowy Hydro Project’ (Reasons, [202]). His Honour stated in respect of ‘Nexans SA’s action in relation to the Snowy Hydro Project…, I consider that there are evidentiary gaps which cannot be overcome by the application of the above principles’ (referring to principles on the drawing of inferences from evidence and the failure to call witnesses by a party) (Reasons, [43]).

22    The undisputed evidence was that Nexans was not invited to tender for the Snowy Hydro Project. It logically flows that the conduct of refraining from tendering altogether, or submitting a tender in accordance with the price guidance, would not be evidence of it being a party in this particular instance, unlike the other cartel participants that were invited to tender or had a direct commercial interest. The primary judge found that cartel participants not invited to tender nonetheless had an interest in allocations, such as in terms of the value of a given project allocated to each Group, and that their consent would be necessary for them to be ‘committed’ to a project as distinct from merely knowing about its existence and doing nothing (see Reasons, [199] and [202]).

23    The primary judge found that, having been allotted the preference for the project, Prysmian sent a guidance to the A Group concerning the pricing level at which other cartel members should submit a tender for the Snowy Hydro Project Agreement (the ‘Price Guidance’) as envisaged by the A/R Cartel Agreement (see Reasons, [60] and [88]).

24    The primary judge concluded as follows (Reasons, [212]):

The A/R Cartel Agreement contained a price fixing provision, and the Snowy Hydro Project Agreement contained an exclusionary provision and a price fixing provision. The issuing of the Price Guidance (at [88]) and the issuing of the price direction (at [120]) and the lodging of a tender by Pirelli Australia (at [119]) gave effect to the A/R Cartel Agreement insofar as it contained a price fixing provision and the Snowy Hydro Agreement.

25    Accordingly, the primary judge found that, in making the Snowy Hydro Project Agreement, Prysmian contravened s 45(2)(a)(i) and (ii) of the Act and gave effect to the A/R Cartel Agreement in contravention of s 45(2)(b)(ii) of the Act. In issuing the Price Guidance, the primary judge found that Prysmian gave effect to the Snowy Hydro Project Agreement in contravention of s 45(2)(b)(i) and (ii) of the Act and gave effect to the A/R Cartel Agreement in contravention of s 45(2)(b)(ii) of the Act.

26    We turn now to the grounds of appeal.

GROUNDS OF APPEAL

27    The appellant lists five grounds of appeal that are, though distinct, nonetheless interrelated and to some extent consequential upon one another. It is convenient at this juncture to set out each of these grounds as well as the specific passages of the primary judge’s Reasons that are claimed to be in error in respect of each ground.

28    In respect of ground 1, the appellant claims:

The primary Judge:

a.    erred in finding (at J[201] and J[203]) that the Appellant made or arrived at the “Snowy Hydro Project Agreement”, in circumstances where, on the case run by the Respondent at trial, Nexans SA RCS Paris 393 525 853 (Nexans) was a necessary party to the existence of any such agreement and Nexans was found (at J[202]) not to have been a party to the alleged agreement;

b.    erred in finding (at J[201] and J[203]) that the Appellant was a party to a different agreement from that alleged by the Respond, and further an agreement which was not made “pursuant to” the A/R Cartel Agreement, and therefore a sui generis agreement of a kind not pleaded or alleged by the Respondent at trial.

29    The paragraphs referred to by the appellant in this ground, namely [201] and [203] – as well as [202] which is referred to in subsequent grounds – are as follows:

[201]    I am prepared to infer from all the evidence that the A Group agreed to ask for an A preference for the Snowy Hydro Project. I infer that someone on the R Group side asked for an R preference to which the A Group agreed. I infer that the request on the R Group side was made by Prysmian. I infer that Nexans SA was aware of the Snowy Hydro Project as Mr Osada sent his email dated 12 September 2003 to Mr Jay, among others. However, in order to be held to be a party to the Snowy Hydro Project Agreement, there must have been a meeting of minds, including the “the mind” of Nexans SA and a commitment by Nexans SA (Apco Service Stations at [51]).

[202]    I am not satisfied on the evidence that there was a commitment by Nexans SA. I have considered whether the evidence about the operation of the A/R Cartel Agreement is such that I can infer that the consent of Nexans SA to the allocation of the Snowy Hydro Project was necessary and must have been given. As I have said, there is evidence suggesting a party which was never going to be the particular allottee nevertheless had such an interest in the allocation that its consent was necessary. The maintenance of Position Sheets, the statement in an email which appears to have been sent by Mr Jay to Mr Osada on 25 December 2001 about the position of the R Group being totally unacceptable and the suggestion by Viscas that the A Group pursue an alternative project to the Snowy Hydro Project are suggestive of this, but I do not think the evidence is sufficiently clear to enable me to conclude that Nexans SA must have committed, as distinct from simply knowing about the Snowy Hydro Project and doing nothing. The fact that Nexans SA has not called witnesses who might have addressed the issue cannot be used to overcome the lack of evidence.

[203]    I see no reason why my conclusion that Nexans SA was not a party to the Snowy Hydro Project Agreement means that I am precluded by the ACCC’s pleading from concluding that Prysmian was a party.

30    In respect of ground 2, the appellant claims:

The primary Judge:

a.    erred in finding (at J[201]) that the Appellant engaged in conduct that was an essential element to the making of the so-called “Snowy Hydro Project Agreement” and which the Respondent had alleged at trial that only Nexans, and not the Appellant, had undertaken (being the requesting, on behalf of the so-called “R Group”, an “R Preference” for the Snowy Hydro Project), in circumstances where the primary Judge found (at [202]) that Nexans was not a party to any contravening agreement concerning the Snowy Hydro Project;

b.    thereby erred in finding (at J[203]) that by engaging in that conduct (which was not alleged to have been undertaken by the Appellant, the Appellant reached the agreement identified as the “Snowy Hydro Project Agreement”.

31    The paragraphs referred to in this ground are set out above in respect of ground 1.

32    In respect of ground 3, the appellant claims:

The primary Judge erred in finding (at J[288]) that the making of the “Snowy Hydro project Agreement” gave effect to the overarching “A/R Cartel Agreement” alleged by the Respondent, in circumstances where the primary Judge’s findings as to the making of the Snowy Hydro project Agreement (at J[201] – [203]) departed in fundamental respects from the process envisaged by, and requirements of, the A/R Cartel Agreement (set out at J[14] and J[167]).

33    Certain paragraphs referred to in this ground are set out above in respect of ground 1, with the other paragraphs providing:

[14]    The ACCC alleges that the provisions of the A/R Cartel Agreement were as follows:

16.1.    that the cartel members, by their nominated representatives, would meet and communicate as a cartel to co-operate with one another in markets for land cables and submarine cables worldwide, including in the Australian land cable market and the Australian submarine cable market, alternatively the Australian cable market (the A/R Cartel);

16.2.    that one group of the A/R Cartel, referred to by the cartel members as the “A Group”, consisted of the Japanese companies Viscas and Sumitomo;

16.3.    that the other group of the A/R Cartel, referred to by the cartel members as the “R Group”, consisted of the European companies, including a member or representative of the Pirelli group of companies and Nexans;

16.4.    that a natural person who was the secretary of the A Group, and a natural person who was the secretary of the R Group, would each be the principal point of contact for communications between the A Group and the R Group;

16.5.    that the A/R Cartel members would not compete with one another on price in tendering for projects for the supply of land cables or submarine cables, but would reach agreements when particular projects arose as to which of them would be the successful tenderer for the project, referred to as the Allottee;

16.6.    that when a member of the A/R Cartel received an initial inquiry, request for budgetary price, or quotation or invitation to tender from a customer for, or otherwise first became aware of, a potential project for the supply of land cables or submarine cables, that member would provide a Notification, by notifying the other members as soon as possible, either directly or through the member’s group secretary, of the identity of the customer, the country where the project was located and the basic specifications of the project;

16.7.    that if the project was at a preliminary or budgetary price stage only, the A/R Cartel members would agree a minimum price above which they would each submit their budgetary prices if invited to do so by the customer, which minimum price was referred to as the Floor Price;

16.8.    that if the project was at a quotation or tender stage, the project would be allocated by the A/R Cartel members agreeing either:

16.8.1.    as to a particular Allottee; or

16.8.2.    that the project would be allocated to either the A Group or the R Group, which was referred to as giving the project an A Preference or R Preference respectively;

16.9.    that allocations to a particular Allottee would occur by the A/R Cartel members reaching agreement as to which of the members who were invited to tender for the project would be the Allottee for that project, taking into account factors including:

16.9.1.    whether the project was in a geographic region close to a particular member’s production facilities, or otherwise favoured by a member, which was sometimes referred to as a home territory or home market;

16.9.2.    whether the project was for a customer with whom a particular member had a strong existing relationship;

16.9.3.    whether a member was already associated with the project, by assisting in preparing specifications, or because the project was to connect to or upgrade existing cable supplied by that member;

16.9.4.    capacity and workloads of particular members;

16.9.5.    requests by particular members to be allocated the project, which were referred to as Preferences;

16.10.    if a project was given an A Preference or R Preference, the members of the A Group or the R Group respectively would then agree between themselves as to which of them would be the Allottee;

16.11.    the A/R Cartel members would communicate in relation to prices for the project, to ensure the Allottee submitted the lowest price of the members tendering, with the intended consequence that the Allottee would be the successful tenderer for the project;

16.12.    the Allottee would notify the other A/R Cartel members, either directly or via the secretaries, of the prices at or above which they should submit their tenders for the project, so as to ensure the Allottee’s price was the lowest of the members tendering, which notification was referred to as the Price Guidance for the project;

16.13.    the A/R Cartel members who were not the Allottee for the project either:

16.13.1.    would not submit a bid for the project; or

16.13.2.    would submit a bid in accordance with the Price Guidance provided to them;

with the intended consequence that the Allottee would be the successful tenderer for the project;

16.14.    that if agreement could not be reached as to the Allottee, or whether a project should be allocated to A Group or R Group, the project could be expressly agreed to be a “Free Fight”, which meant that any member could tender for the project at their own price without consulting further with the other members.

…

[167]    Based on Mr Osada’s evidence and the documents, and subject to my consideration of whether the persons identified by Mr Osada were, in fact, representing Prysmian and Nexans SA respectively, and two matters, I find that there was an A/R Cartel Agreement with the provisions pleaded by the ACCC. The two matters are matters where the ACCC’s pleading goes beyond, or is at least different from, Mr Osada’s evidence. First, Mr Osada said, and I accept, that the A/C Cartel Agreement related to various countries, including Australia (but not the United States of America) whereas the ACCC’s pleading refers to “worldwide” markets. Secondly, Mr Osada said, and I accept, that the factors taken into account in determining which participant would be the allottee were as I have set out above (at [57]). They did not include the matter identified in paragraph 16.9.1 of the ACCC’s pleading (set out above at [14]).

…

[288]    In making the Snowy Hydro Project Agreement, Prysmian contravened s 45(2)(a)(i) and (ii) of the Trade Practices Act and gave effect to the A/R Cartel Agreement in contravention of s 45(2)(b)(ii) of the Trade Practices Act. In issuing the Price Guidance, Prysmian gave effect to the Snowy Hydro Project Agreement in contravention of s 45(2)(b)(i) and (ii) of the Trade Practices Act and gave effect to the A/R Cartel Agreement in contravention of s 45(2)(b)(ii) of the Trade Practices Act.

34    In respect of ground 4, the appellant claims:

The primary Judge erred (at J[212] and [288]) in concluding that Prysmian gave effect to the A/R Cartel Agreement and the Snowy Project Agreement in issuing the Price Guidance, as a consequence of the error or errors identified in grounds 1 – 3, and because on the ACCC’s case the issuing of the Price Guidance depended upon an anterior steps of an agreement between the R-Group (being Nexans and Prysmian), and an agreement between the R-Group (including Nexans) and the A-Group, in relation to the Snowy Hydro project.

35    Certain paragraphs referred to in this ground are set out above in respect of ground 3, with the other paragraph providing:

[212]    The A/R Cartel Agreement contained a price fixing provision, and the Snowy Hydro Project Agreement contained an exclusionary provision and a price fixing provision. The issuing of the Price Guidance (at [88]) and the issuing of the price direction (at [120]) and the lodging of a tender by Pirelli Australia (at [119]) gave effect to the A/R Cartel Agreement insofar as it contained a price fixing provision and the Snowy Hydro Agreement.

36    In respect of ground 5, the appellant claims:

The primary Judge erred (especially at J[37], [55], [56], [115], and [201]) in admitting and relying on the evidence of Mr Osada (in the course of concluding that the Appellant made the Snowy Hydro Project Agreement and thereby gave effect to the A/R Cartel Agreement, and gave effect to the A/R Cartel Agreement and the Snowy Hydro Project Agreement in issuing the Price Guidance) and in drawing inferences against the Appellant based inter alia on that evidence, in circumstances where:

a.    Mr Osada could not give direct evidence of the events in question and instead gave evidence of a practice; and

b.    the primary Judge concluded (at J[201], [202]) that the following of this practice (which necessarily involved Nexans) was not established in the present case.

37    Certain paragraphs referred to in this ground are set out above in respect of ground 1, with the other paragraphs providing:

[37]    Mr Osada gave evidence and produced documents which the ACCC contended established the A/R Cartel Agreement and the Snowy Hydro Project Agreement. Certain aspects of his evidence were criticised by Prysmian and Nexans SA. For reasons I will give, I reject those criticisms. I find that Mr Osada was generally a satisfactory witness. There are certain matters about which Mr Osada was not able to give direct evidence and, with respect to those matters, the ACCC’s case depends on the drawing of inferences.

…

[55]    Mr Osada described how the arrangement or understanding between the participants worked in practice in paragraphs 17-30 inclusive of his affidavit. He described the steps in the process, including the following: receipt of an inquiry as to a project; a request from the A Group or the R Group for preference; agreement at the Group level as to which group would receive preference; agreement within the Group as to who would be the allottee; factors taken into account in deciding who would be the allottee; notification of prices, and the scope of projects covered by the agreement. The respondents objected to this evidence on the ground that it could not be admitted because it was irrelevant (s 56(2) of the Evidence Act) and that it infringed the opinion rule (s 76(1) of the Evidence Act). In addition, the respondents submitted that it should not be admitted because the probative value of the evidence was substantially outweighed by the danger that the evidence might be unfairly prejudicial to them, the evidence was misleading or confusing or would cause or result in undue waste of time (s 135 of the Evidence Act). I ruled that the evidence should be admitted and I said that I would give my reasons for that ruling in my reasons on the substantive application.

[56]    The evidence was plainly relevant because it went to the existence of the A/R Cartel Agreement. As I understood it, the gravamen of the respondents’ objection was that the statements by Mr Osada were expressions of opinion and were rendered inadmissible by the opinion rule. The statements were inferences from observed and communicable data (Lithgow City Council v Jackson [2011] HCA 36; (2011) 244 CLR 352 (“Lithgow City Council v Jackson”) at [27] per French CJ, Heydon and Bell JJ). I accept that Mr Osada’s evidence in paragraphs 17-30 is expressed in very general terms and I think that it does contain a number of conclusions which are properly characterised as opinions. However, I considered that the evidence was admissible because it fell within the terms of s 78 of the Evidence Act. I accept that Mr Osada, albeit Mr Yamaguchi’s assistant, was the Japanese “window” for or in relation to the arrangement or understanding, and I accept that he had sufficient knowledge of the events about which he was to give evidence. The evidence fell within the terms of s 78 of the Evidence Act because the facts that form the basis of the opinion were so numerous and evanescent that they could not be held in the memory and detailed to the Court as they appeared to Mr Osada at the time (Lithgow City Council v Jackson at [46] per French CJ, Heydon and Bell JJ; Australian Competition and Consumer Commission v Air New Zealand Ltd and Another (2012) 207 FCR 448 at [71] and [72] per Perram J). I considered whether the evidence should be excluded by reference to one of the grounds in s 135 of the Evidence Act. I considered that the evidence was clear and, therefore, it should not be excluded on the basis that it was misleading or confusing. Nor did I think that the evidence would cause or result in undue waste of time. Although the evidence is very general, I considered that it had substantial probative value, particularly when the contemporaneous documentation was taken into account. I did not consider that the probative value of the evidence was substantially outweighed by the danger that the evidence might be unfairly prejudicial to the respondents.

…

[115]    I accept Mr Osada’s evidence as far as it goes. As I have said, I think that he was generally a satisfactory witness and his evidence is supported by contemporaneous documentation. I say “as far as it goes” because a number of factual matters remain to be considered. For example, there are issues as to whether Prysmian and Nexans SA were parties to the A/R Cartel Agreement and whether it involved the necessary degree of commitment to be an arrangement or understanding within the Trade Practices Act. Similar issues arise in relation to the Snowy Hydro Project Agreement, particularly in light of Nexans SA’s submission that there is no evidence that it had anything to do with that agreement. The ACCC’s case involved me inferring in relation to the Snowy Hydro Project that the A Group agreed to seek an A preference, that the R Group sought an R preference, and that the A Group agreed to an R preference. I will return to these issues.

CONSIDERATION

38    We now set out the arguments of the appellant and respondent in respect of each ground of appeal, and our conclusion on each. We address applicable legal principles where relevant within our conclusions on the specific grounds.

Ground 1

Arguments of Prysmian

39    The appellant contends that it was not open to the primary judge to make findings of contraventions by Prysmian in view of the primary judge’s conclusions regarding Nexans. In particular, the primary judge found that, notwithstanding the absence of Nexans’ participation, Prysmian contravened the Act by reaching an agreement with the A Group members in respect of the Snowy Hydro Project, and thereby gave effect to the A/R Cartel Agreement. For the appellant, those conclusions were not open to the Court because no such agreement was alleged in the case that was pleaded and run by the ACCC, and further, such an agreement was inconsistent with the ACCC’s case.

40    According to the appellant, the ACCC’s case regarding the Snowy Hydro Project was based on two stages of agreement, each of which required agreement by both members of the R Group (Prysmian and Nexans). First, all five cartel members needed to agree upon whether the Snowy Hydro Project would be an ‘A Preference’ or an ‘R Preference’. Second, once the project was allocated an ‘R Preference’, the R Group members were required to agree which of them would be the allottee. In particular, the ACCC alleged that the R Group members agreed that Prysmian would be the allottee sometime between 24 September 2003 and 3 October 2003.

41    Thus, the appellant submits that it was fundamental to the ACCC’s case against Prysmian at trial that Prysmian acted together with Nexans. According to the appellant, their mutual participation was a necessary integer to the existence and operation of the A/R Cartel Agreement and the making of any agreement ‘pursuant to’ or ‘giving effect’ to it. Nowhere did the ACCC contend that Prysmian alone had reached some sui generis agreement with the A Group members.

42    Therefore, once finding that the evidence did not establish Nexans had reached a ‘meeting of minds’ or that there ‘was a commitment by Nexans’ in relation to the Snowy Hydro Project, the appellant contends that the primary judge should have dismissed the case against Prysmian. For the appellant, the failure to do so meant that the primary judge effectively decided the proceedings on a basis other than the pleadings, despite this not being the type of case where such an approach is permitted. In view of the procedural fairness function of pleadings to state the case that must be met by a defendant, the appellant submits that to go beyond the pleadings – particularly where a trial has been run on the pleadings in a civil penalty case – would amount to a denial of natural justice. The appellant notes that it led no evidence and made no submissions about a contention relating to it reaching an agreement with the A Group independent of its dealings with Nexans SA, or that Nexans SA was merely some form of postbox or agent, and if such an alternative case had been run against it at trial, it would likely have responded differently.

Arguments of the ACCC

43    The respondent contends that the appellant wrongly asserts that its case required the existence of an arrangement involving the Nexans SA at first instance. Such a proposition, according to the respondent, was not its case, was wrong in law, and formed no part of the primary judge’s reasoning.

44    The respondent accepts that it was its case that Nexans SA was a party to the A/R Cartel Agreement. However, according to the respondent, it was not necessary to the primary judge’s finding that Prysmian was an active member of that cartel that Nexans SA was also a party. The precise identity of all of the counterparties to a cartel, like the precise identity of all of the parties to a criminal conspiracy, is not a necessary condition of a conclusion that the cartel exists or that a particular person or company is a member of the cartel, or a co-conspirator. The respondent contends that no such requirement exists in the legislation, nor has one been adopted by the courts.

45    The respondent emphasises that the primary judge found that the Snowy Hydro Project Agreement was made by members of the A/R Cartel, including Prysmian, and – in accordance with the procedures of the A/R Cartel Agreement – the A Group initially asked for an A Preference to tender for the Snowy Hydro Project. In response, the R Group asked for an R Preference. Contrary to the submissions of the appellant, therefore, the respondent contends that it was neither its case nor the primary judge’s finding that Prysmian acted ‘unilaterally’ in asking for an R Preference. The primary judge’s findings on the involvement of other cartel participants, including in respect of the allocation of preferences and price guidance, demonstrate that the Snowy Hydro Project Agreement was not a ‘sui generis’ agreement, but rather functioned as a typical example of the A/R Cartel Agreement’s operation.

Consideration

46    The parties dispute the nature of the case pleaded by the ACCC. In particular, the parties dispute whether the primary judge’s conclusions concerning the involvement of Nexans in the Snowy Hydro Project Agreement and the consequences these conclusions had on the position of Prysmian aligned sufficiently with that case. Further, the parties appear to dispute how to properly characterise or understand what the primary judge actually concluded on Nexans’ involvement in the implementation of the Snowy Hydro Project Agreement.

47    We therefore begin by setting out our understanding of the primary judge’s conclusions concerning the nature and degree of Nexans’ involvement in the Snowy Hydro Project Agreement. We then assess the extent to which these conclusions comport with the case pleaded by the ACCC at trial.

48    The key passages of the Reasons of the primary judge in relation to ground 1 are found at [201]-[202]. These are set out in full above. It is important to appreciate that these passages are not to be read in isolation. In particular, it is to be recalled that the primary judge had already concluded that Nexans was a party to the A/R Cartel Agreement and that Nexans could nevertheless have an interest in the Snowy Hydro Project even though it had not been invited to tender. Returning to [201]-[202], the primary judge reached the following conclusions:

    Someone from the R Group side asked for an R preference to which the A Group agreed;

    The request on the R Group side was made by Prysmian;

    Nexans SA was aware of the Snowy Hydro Project;

    For Nexans SA to have been a ‘party’ to the Snowy Hydro Project Agreement, there needed to be evidence that it consented or committed as distinct from simply knowing about it but doing nothing;

    The evidence was insufficiently clear to conclude that Nexans SA did in fact make a commitment in that regard.

49    Further, at [203], his Honour came to the view that he could see:

… no reason why my conclusion that Nexans SA was not a party to the Snowy Hydro Project Agreement means that I am precluded by the ACCC’s pleading from concluding that Prysmian was a party.

50    It is apparent that the primary judge was aware of the pleading and was focusing on the question of the relevant parties to the Snowy Hydro project Agreement. As the primary judge made clear at [201], the inquiry his Honour was making was whether Nexans could be held to be a party to the Snowy Hydro Project Agreement. It was in that context that the primary judge inquired as to whether there was a meeting of minds and a commitment by Nexans.

51    In order to understand properly the meaning and implications of these conclusions, they must also be read in the context of other relevant and interrelated conclusions elsewhere in the primary judge’s Reasons. Some of this context has already been referred to by us. In particular, the primary judge stated at [200] that ‘Nexans SA could not commit to doing an act or refraining from doing an act’ in respect of the Snowy Hydro Project. This was because Nexans SA was never going to engage in the public tender process (Reasons, [200]). It was in that context that his Honour considered at [201] that ‘a party which was never going to be the particular allottee nevertheless had such an interest in the allocation that its consent was necessary’. His Honour thus considered that a participant’s explicit consent was necessary for it to ‘commit’ to a particular instance in circumstances where that participant was never otherwise going to be a potential allottee. This stands to reason. If a participant was never going to be engaged or interested in a given tender (in a direct commercial sense), such a participant would be unlikely to engage in the kinds of conduct that would otherwise demonstrate it being a party to that given instance, such as submitting a tender in accordance with the Price Guidance or choosing to refrain from submitting a bid.

52    Beyond that, the primary judge did not articulate any conclusions stating or implying that Nexans SA had removed itself entirely from the typical operation of the A/R Cartel Agreement for the purposes of the Snowy Hydro Project. In our view, this is significant. It would be erroneous to conflate, on the one hand, a participant’s non-involvement in the typical A/R Cartel Agreement altogether in a given instance with, on the other hand, a participant’s tacit non-involvement in a given instance due to a lack of direct commercial interest. In particular, a participant may fail to ‘commit’ itself in an instance where it has no direct commercial interest. However, it does not necessarily follow that the participant has therefore eschewed the A/R Cartel Agreement entirely. Rather, in such circumstances, it is conceivable that a participant could essentially observe the procedures of the A/R Cartel Agreement – including through a certain passivity or acquiescence – but could nonetheless decline to ‘commit’ itself to the given instance of conduct.

53    In that connection, we also consider it significant that the primary judge posed ‘[t]he question [of] whether the parties considered they would undertake the process envisaged by the A/R Cartel Agreement in the circumstances identified in the agreement’, and concluded that ‘[t]here is abundant evidence that they did’ (Reasons, [173]). The primary judge therefore concluded the participants (including Nexans) understood themselves to be generally bound by the A/R Cartel Agreement. Additionally, the primary judge appeared to accept that there was a specific procedure for instances of disagreement where a project was not subject to the A/R Cartel Agreement (Reasons, [59], [93] and [173]), which did not appear to have been activated by Nexans.

54    Accordingly, when the primary judge concluded that Nexans SA did not ‘commit’ itself to the Snowy Hydro Project Agreement, this did not imply a finding that Nexans SA abdicated the A/R Cartel Agreement entirely in that instance. Such an implication would not be consonant with the abovementioned conclusions in the Reasons that the participants considered that they would undertake the process envisaged by the A/R Cartel Agreement. Nor would it be consonant with the existence of a specific procedure for instances of disagreement where a participant wished effectively to suspend its ordinarily operation, and which does not appear to have been activated for the Snowy Hydro Project Agreement.

55    The documentary evidence surveyed and cited by the primary judge supports this understanding. In particular, although Nexans SA was not invited to tender for the Snowy Hydro Project, Mr Jay of Nexans was nonetheless the addressee of the A Group’s email request for allocation of 12 September 2003 and the A Group’s email acceptance of the R Groups request for allocation of 24 September 2003. The reasonable inference can be drawn from this correspondence that Mr Jay of Nexans continued to facilitate the process envisaged by the A/R Cartel Agreement (including as the ‘window’ for the R Group) despite Nexans itself not specifically ‘committing’, as such, to the particular instance in question.

56    In this regard, it is important to recall the role of Mr Jay as found by the primary judge. It is true that primary judge found that Mr Jay (among others) was not an employee of Nexans SA and was not granted any delegation of power by the Board of Nexans SA or the chief executive officer (Reasons, [148] and [238]). His Honour concluded at [240] that:

I do not think that there can be any doubt that Mr Romand, a senior executive, and Mr Jay were acting on behalf of a Nexans company and that that company was a major company in the Nexans Group of companies. The alternatives seem to be their employer, Nexans France, or Nexans SA. The question is whether they were acting for Nexans France or Nexans SA. …

57    However, Mr Jay also acted, as we have just mentioned, as the so-called ‘window’ for the R Group (Reasons, [52], [54], [86], and [115]). This is not to conclude that Mr Jay was necessarily an agent of the R Group in any technical or legal sense; just that the participants acted on the basis that Mr Jay would be the relevant natural person to act between the two Groups on behalf of the R Group.

58    In summary, we understand the primary judge to have concluded that Nexans SA did not ‘commit’ to the Snowy Hydro Project Agreement. This was because Nexans SA had no direct commercial interest in that instance (and thus was never going to be a participant in the sense of following the Price Guidance issued for that project), and did not otherwise provide explicit consent to committing to that instance. Importantly, however, we also understand the primary judge to have concluded that Nexans SA would have undertaken the process envisaged by the A/R Cartel Agreement to the extent relevant and applicable (Reasons, [173]). To that extent, the evidence suggested that Mr Jay of Nexans continued to facilitate the process envisaged by the A/R Cartel Agreement acting in the way we have described on behalf of the R Group.

59    We turn now to whether these conclusions comport with the case pleaded by the ACCC before the primary judge. We recall, in that regard, the appellant’s contention that, according to the ACCC’s pleadings, it was fundamental to the ACCC’s case against Prysmian at trial was the proposition that Prysmian acted together with Nexans. For the appellant, their mutual participation was a necessary integer to the existence and operation of the A/R Cartel Agreement and the making of any agreement “pursuant to” or “giving effect” to it, and nowhere did the ACCC contend that Prysmian alone (or, for that matter, Nexans alone) reached some sui generis agreement with the A Group members (see Further Amended Statement of Claim, [34]). Further, mutual participation was required within the R Group by Nexans and Prysmian (see Further Amended Statement of Claim, [35]).

60    Looking at the pleading in [34] of the Further Amended Statement of Claim, reference is made therein to the arrival of an arrangement and understanding between two groups. We consider that in the context of the allegations and the findings of the primary judge, this arrangement and understanding was in fact reached. The essence of the complaint concerned the allocation to a member of the R Group of the Snowy Hydro Project as an R Preference and pursuant to the processes of the A/R Cartel Agreement (to which Nexans was a participant). The allocation was confirmed to the R Group through Mr Jay.

61    Turning attention to the pleading in [35] of the Further Amended Statement of Claim, this aspect of the ACCC’s case in respect of the Snowy Hydro Project Agreement flowed from its pleading in respect of the A/R Cartel Agreement generally that ‘if a project was given an A Preference or R Preference, the members of the A Group or the R Group respectively would then agree between themselves as to which of them would be the Allottee’ (Further Amended Statement of Claim, [16.10] emphasis added). The pleadings do not prescribe further the specific form that such an ‘agreement’ must take, and in our view the nature and extent of any such ‘agreement’ will logically rest on the particular circumstances of a given instance. In the case of the Snowy Hydro Project Agreement, the ACCC submitted that (Applicant’s Amended Outline of Closing Submissions, [30.9]):

… sometime between 12 September 2003 (Tab 318) and 24 September 2003 (Tab 319) Mr Jay agreed with a representative from Prysmian that Prysmian would be the R Group’s allottee in respect of the Snowy Hydro project pursuant to the A/R Cartel and that Mr Jay communicated this to Mr Osada and sought an R preference. On 12 September 2003 the A representatives were seeking ‘preference’ in respect of the project. By 24 September, however, it was agreed that the R representatives would be given preference. A powerful inference arises that there must have been some communication between the R representatives, and then between Mr Jay and Mr Osada, confirming the R preference prior to the email which resulted in the rejection of the request for an A preference by Mr Osada.

62    This contention of the ACCC suggests that the internal agreement within the R Group to seek an R Preference for the Snowy Hydro Project and the internal agreement that Prysmian would be the allottee would have essentially been part of the same transaction or correspondence in this instance. In our view, this is not an unreasonable approach for the purposes of the Snowy Hydro Project Agreement. The fact that only one member of the R Group was invited to tender and had any direct commercial interest in that project would likely attenuate the nature and extent of any internal R Group agreement on its allocation. Indeed, in those circumstances, it is entirely plausible that the very fact of agreeing to seek a preference for the R Group for that tender would likely also discharge the internal agreement on which member of R Group would be allocated such a preference if granted. Further, such an understanding would accord with the evidence of Mr Osada that ‘[a]s quotes or tenders for a cable project could generally only be submitted by those Participants contacted and invited by a customer to submit a price in relation to the project, arrangements were reached as to which of those Participants contacted by the customer should be the successful tenderer’, and further, that allocation determinations within groups seemed to pertain to “who, of those who had received inquiries from the customer, would win the project” (Osada Affidavit, [17] and [20] emphases added).

63    According to the primary judge’s findings, ‘someone from the R Group side asked for an R preference’ and ‘the request on the R Group side was made by Prysmian’ (Reasons, [201]). It seems to us that the primary judge therefore considered – consistent with the pleadings of the ACCC – that the R Group agreed that Prysmian would be the allottee. The documentary evidence in the form of the 24 September Osada-Jay Email records an understanding on the part of A Group that the request for a preference originated from the R Group, as do Mr Osada’s personal ‘position sheets’ on all cartel activities and notes from an A/R Cartel meeting on 27 November 2003 (see Reasons, [67] and [72]). It can also be reasonably inferred from the documentary evidence in the form of both the 12 September Osada-Jay Email and the 24 September Osada-Jay Email that the request was progressed through the usual channels used by the R Group, namely Mr Jay of Nexans.

64    If Nexans did not agree to the allocation to Prysmian of the Snowy Hydro Project within the R Group, then it would not make sense for Nexans to agree to seeking an R Preference in the first place, nor for Mr Jay to be complicit in the correspondence that characterised the such a preference as being from the ‘R Group’. It would also be discordant with Mr Jay’s inclusion of the Snowy Hydro Project on the ‘position sheets’ of A/R Cartel projects that were distributed to the cartel participants (see Reasons, [62]-[66]).

65    Accordingly, and contrary to the submissions of the appellant, we are satisfied that the primary judge’s findings regarding Nexans’ involvement are consistent with the ACCC’s Further Amended Statement of Claim. Indeed, not only did the ACCC not contend that Nexans was invited to tender for the Snowy Hydro Project, but it also appeared to accept that Nexans’ involvement was essentially limited to observing the procedural aspects of the A/R Cartel Agreement. In particular, we note the following submissions put by the ACCC (see transcript, p 3, lines 2-30; p 4 lines 2-4):

Nexans, having made or arrived at the Snowy Hydro project agreement… did not thereafter participate in the Snowy Hydro tender as it occurred, but instead it appears, and the commission will invite your Honour to draw the inference, that some arrangement or understanding was entered into between Nexans and Prysmian, they being the European R Group representatives in the A/R Cartel. …

Some arrangement was entered into between them, inferentially, that Prysmian would be the successful tenderer for the Snowy Hydro transaction in 2003, and Nexans did not, it appears, take any further interest in that transaction and did not itself submit a bit. So whilst it made the agreement in the ways that I will come to in more detail later in this opening, your Honour, it did not do anything, it appears to give effect to it. …

…Nexans, it appears, was not interested in this particular transaction or, alternatively, had entered into some arrangement with Prysmian that it should have this particular contract …

66    For the avoidance of doubt, our findings in this regard should not be taken to mean that Nexans ‘gave effect’ to the A/R Cartel Agreement in respect of the Snowy Hydro Project Agreement. Such a question is not before us on appeal, and it is not inevitably the case that undertaking the process envisaged by the A/R Cartel Agreement equates to ‘giving effect’ to that agreement in a given case. Rather, whether this is so would depend on the nature of the alleged conduct in a given case and whether it meets the requirements of the legal standard under s 45 of the Act. We express no views in that regard on appeal, and nothing before us suggests the primary judge’s findings should be disturbed.

67    We consider our foregoing considerations to be sufficient in discharging the first ground of appeal in favour of the respondent. However, we will nonetheless address the broader issue of whether the primary judge’s findings undermined the due process that ought to have been afforded to the respondent at first instance, given that this was a main focus of dispute between the parties on appeal.

68    The appellant suggests that the approach of the primary judge reflected such a departure from the case run by the ACCC that it was denied natural justice. According to the appellant, if it had anticipated a case run on the basis of Nexans not ‘committing’ to the Snowy Hydro Project Agreement, it would likely have responded differently, for instance in terms of the evidence led or submissions made.

69    Relevant guidance on the principles applicable to due process in this regard was provided by the Full Court in Betfair Pty Ltd v Racing New South Wales (2010) 189 FCR 356 at [50]-[52] (this aspect of the matter was not taken on appeal to the High Court). The Full Court outlined the relevant principles in the following paragraphs, which we adopt for the present case:

[50]    Pleadings provide a structure for a proceeding for the purpose of the attainment of justice. The pleadings identify the material facts upon which the parties rely and the issues the parties seek to have determined. Because the pleadings require the parties to identify all material facts and issues, the pleadings provide the benchmark for discovery before trial and the admissibility of evidence at trial. Parties are required to plead the material facts upon which the party relies and the issues which that party seeks to have resolved for the further purpose of giving the opposing party fair notice of the case to be met at trial thereby minimising any risk of injustice by taking the opposing party by surprise. Pleadings incidentally are the record of the proceeding for the purpose of any subsequent arguments relating to res judicata or issue estoppel or any like issue.

[51]    At trial a party is entitled to have the opposing party confined to that party's pleadings because the first party is entitled to come to trial to meet only the issues raised on the pleadings. However, if the first party does not seek to so confine the opposing party but allows the other party to raise other material facts and issues for the determination of the Court, then in our opinion the Court is permitted and possibly obliged to decide the proceeding on the further material facts and issues raised and addressed at trial: Banque Commerciale at 296-297; Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in Liquidation) (1916) 22 CLR 490 at 517. If it were otherwise, the party who has failed to plead all of the material facts or issues upon which the party's case relies, but has brought those material facts or issues to the attention of his or her opponent at trial, would be denied natural justice if at the end of the trial the Court decided the proceeding on the pleadings without notice to that party. The first party in those circumstances would have been denied the opportunity to apply to amend those pleadings so as to formalise what was in fact addressed at the trial.

[52]    Pleadings are a means to an end and not an end in themselves (Banque Commerciale per Dawson J at 292-3). As early as 1916 Isaacs and Rich JJ said, in Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in Liquidation) (1916) 22 CLR 490 (at 517):

Undoubtedly, as a general rule of fair play, and one resting on the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting the case against him, pleadings should state with sufficient clearness the case of the party whose averments they are. That is their function. Their function is discharged when the case is presented with reasonable clearness. Any want of clearness can be cured by amendment or particulars. But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest.

70    In addition, it is to be recalled that in deciding whether a point was taken at trial, ‘no narrow or technical view should be taken’ (see Water Board v Moustakas (1988) 180 CLR 491 at 497 per Mason CJ, Wilson, Brennan and Dawson JJ).

71    We do not accept the appellant’s proposition that a ‘commitment’ on the part of Nexans was ‘fundamental’ or ‘essential’ to the case it faced, such that natural justice was denied. Regardless of our findings above that Nexans did indeed appear to follow the process envisaged by the A/R Cartel Agreement, it is not apparent to us that Nexans’ participation assumed such an importance. The ACCC did not plead that Nexans was invited to participate in the Snowy Hydro Project tender. The ACCC’s pleading focused on the fact that Nexans and Prysmian agreed on allocation matters in accordance with the process envisaged by the A/R Cartel Agreement.

72    The primary judge was entitled to proceed to make the findings he did regarding the involvement of Nexans. The appellant itself led no evidence at trial disputing this aspect, despite submitting that it should not be inferred that Nexans SA did anything at all in relation to the Snowy Hydro Project (see Reasons, [196]). The primary judge noted generally that ‘the onus was on Prysmian to explain the absence of relevant witnesses from the witness box and it did not discharge that onus’ (Reasons, [43]). We do not consider that the findings of the primary judge in respect of Nexans’ involvement in the Snowy Hydro Project Agreement and his Honour’s ultimate conclusions arising from these findings gave rise to a denial of natural justice to the appellant.

73    In conclusion, we reject the appellant’s proposition that the primary judge’s findings were inconsistent with the case pleaded by the ACCC, or gave rise to a denial of natural justice to the appellant. Accordingly, we reject the appellant’s first ground of appeal.

Ground 2

Arguments of Prysmian

74    According to the appellant, the findings of the primary judge that: (i) ‘I infer that someone on the R Group side asked for an R preference to which the A Group agreed’; and (ii) ‘I infer that the request on the R Group side was made by Prysmian’, were contrary to the evidence before the Court and inconsistent with the ACCC’s case. This is because the case run by the ACCC was that Mr Jay of Nexans agreed with a representative from Prysmian that Prysmian would be the R Group’s allottee in respect of the Snowy Hydro Project, and Mr Jay communicated this to Mr Osada and sought an R preference. According to the appellant, the only real evidence about the request for an ‘R Preference’ is an email directed to Mr Jay of Nexans. The appellant submits that the primary judge could not have properly relied on Mr Osada’s evidence on this issue.

Arguments of the ACCC

75    The respondent submits that the appellant misstates the ACCC’s argument. In particular, the ACCC’s Further Amended Statement of Claim did not allege that Nexans SA or Prysmian requested an R Preference, only that an R Preference was ultimately agreed by the A/R Cartel. At the hearing, the ACCC submitted that a representative of Prysmian and Mr Jay of Nexans decided that Prysmian would be the R Group’s allottee, and that Mr Jay communicated this to Mr Osada. According to the respondent, this submission was clearly made in the context of the broader allegation that Prysmian entered into the Snowy Hydro Project Agreement, and suggested that Prysmian was involved in the making of the R Preference request, rather than the opposite. The primary judge inferred from the evidence that the R Group request was made by Prysmian, which was a logical inference that was plainly open to him, especially when Prysmian called no evidence to establish the opposite.

76    In any case, however, the respondent submits that the finding as to which of the R Group members requested the preference is ultimately of limited importance. This is because the request for preference is not the substantive conduct that contravened the Act. Rather, Prysmian’s winning of the R Preference, issuance of the Price Guidance and submission of a tender with inflated prices pursuant to the A/R Cartel Agreement is the behaviour that contravened s 45 of the Act.

Consideration

77    The appellant construes the primary judge’s finding that ‘the request on the R Group side was made by Prysmian’ to mean that Prysmian ‘Prysmian acted unilaterally to reach an agreement with A Group members’ (see Outline of Appellant’s Submissions, [29]). We do not share this construction of the primary judge’s finding. Rather, we understand that, by inferring that a ‘request was made by Prysiam’, the primary judge was conveying the sense that Prysmian was the demandeur from within the R Group for an R Preference.

78    The context provided by other findings supports this understanding. In particular, as we have set out earlier, Mr Jay continued to function as the ‘window’ despite Nexans not being an invitee as evidenced by the 12 September Osada-Jay Email. Further, it is clear from the 24 September Osada-Jay Email that the A Group addressed its response accepting an R Preference (despite initially seeking an A Preference) to Mr Jay. Thus, the reasonable inference could be drawn that the request made to the A Group for an R Preference was made through Mr Jay. We do not understand the primary judge to have concluded – implicitly or explicitly – that Prysmian acted unilaterally in contacting A Group to request an R Preference. We reject this ground of appeal.

Ground 3

Arguments of Prysmian

79    The appellant submits that the ACCC alleged that Nexans and Prysmian contravened the Act by ‘giving effect to’ the A/R Cartel Agreement by making (and in Prysmian’s case, also giving effect to) the Snowy Hydro Project Agreement. According to the appellant’s understanding, the agreement found by the primary judge to have been made by Prysmian was not made in accordance with the process envisaged by the A/R Cartel Agreement. Yet the primary judge found, without further reasoning or analysis, that by unilaterally making with the A Group Members the Snowy Hydro Project Agreement in the manner described at [201] of the Reasons, Prysmian gave effect to the A/R Cartel Agreement.

Arguments of the ACCC

80    The respondent submits that, contrary to the contention that the Snowy Hydro Project Agreement differs fundamentally from the A/R Cartel Agreement, the primary judge found that the making of the Snowy Hydro Project Agreement closely followed the processes of the A/R Cartel Agreement. According to the respondent, it was not alleged that the A/R Cartel Agreement required each member to tender for, or participate in, each tender that was the subject of discussions by members of the A/R Cartel Agreement.

81    Thus, the findings concerning Nexans SA did not result in a departure in ‘fundamental respects’ from the requirements of the A/R Cartel Agreement and nor were they inconsistent with the overwhelming evidence which pointed towards Prysmian’s culpability.

Consideration

82    We reject this ground of appeal for the reasons set out in respect of the first ground. We do not share the understanding that Prysmian acted ‘unilaterally’ and outside of the process envisaged by the A/R Cartel Agreement.

Ground 4

Arguments of Prysmian

83    The appellant submits that, in the case of the Snowy Hydro Project, the ACCC alleged that the arrangement or understanding was arrived at with the R Group, and that a term of that arrangement was that the R Group would provide the Price Guidance. However, for the appellant, the ACCC did not allege an arrangement between the A Group and Prysmian alone, or that any Price Guidance was provided pursuant to such an arrangement. The appellant explains that this ground of appeal is consequential upon the earlier grounds.

Arguments of the ACCC

84    The respondent repeats, for this ground, the submissions already made in respect of the earlier grounds. That is because this ground is both consequential to and repetitive of earlier grounds. For the respondent, Prysmian wrongly asserts that the ACCC’s case ‘depended’ on whether Nexans SA was a party to either agreement. In the circumstances of this case, the finding that Prysmian gave effect to those agreements is not inconsistent with the conclusion that Nexans SA was not a party.

Consideration

85    The appellant accepts that the outcome on this ground is consequential on our findings on the earlier grounds, all of which we have rejected. We reject this ground of appeal for the same reasons as the earlier grounds.

Ground 5

Arguments of Prysmian

86    The appellant submits that the evidence of Mr Osada consisted primarily of evidence of a practice, and evidence by way of inference and conclusion about what certain documents were likely to mean in light of that practice. The appellant notes that Mr Osada did not have any memory of matters relating to the Snowy Hydro Project, and that his evidence was the subject of objection.

87    In that context, the appellant contends that – if admissible at all – Mr Osada’s evidence could only provide support for a case based on the usual practice. It could not support a case where the parties had acted in any manner different from that practice. For the appellant, the agreement found by the primary judge was not open on the case as pleaded and run. However, if it was open, then the evidence of Mr Osada was not admissible to support it (because it was not relevant to such a case, and the inferences sought to be drawn and reasoning would not have connected with such case), and did not support it. Thus, the appellant contends that the primary judge should not have had regard to Mr Osada’s evidence for the purpose of considering whether a Snowy Hydro Project Agreement which did not involve Nexans had been made.

Arguments of the ACCC

88    The respondent submits that the primary judge had the obvious advantages of having heard and seen first-hand the evidence presented at hearing, including the testimony of Mr Osada., reflect on his evidence, manner, and overall credibility.

89    The respondent submits that his Honour found that the Mr Osada’s evidence was ‘clear’ and ‘had substantial probative value’. Its generality was ameliorated by highly probative contemporaneous documents. His Honour weighed the probative value of the evidence against the possibility of unfair prejudice and found that the balance favoured the admission of the evidence. His Honour found that there were matters on which Mr Osada was unable to give direct evidence, and matters on which his evidence was unclear, and his Honour did not act upon that evidence.

90    The respondent further submits that it is trite law that the existence of an agreement or understanding may be inferred from circumstantial evidence, and the learned primary judge properly considered the documentary and testimonial evidence as a whole.

91    The respondent notes that Mr Osada could not and did not give evidence that Nexans SA itself participated in the Snowy Hydro Project Agreement, which was consistent with, and largely the basis of, his Honour’s finding that Nexans SA was not a party to the agreement.

Consideration

92    We do not consider that the usual practice was not followed in the present case in the way that the appellant contends for. We have stated earlier that a participant may fail to ‘commit’ itself in an instance where it has no direct commercial interest. But it does not necessarily follow that the participant has therefore eschewed the A/R Cartel Agreement entirely. Rather, in such circumstances, it is conceivable that a participant could essentially observe the procedures of the A/R Cartel Agreement – including through a certain passivity or acquiescence – but could nonetheless decline to ‘commit’ itself to the given instance of conduct.

93    With that in mind, we recall our earlier conclusion that, when the primary judge found that Nexans SA did not ‘commit’ itself to the Snowy Hydro Project, this did not imply a finding that Nexans SA abdicated the A/R Cartel Agreement entirely in that instance. Such an implication would not be consonant with the conclusions elsewhere that the participants considered that they would undertake the process envisaged by the A/R Cartel Agreement, and that there existed a specific procedure for instances where a participant wished effectively to suspend its ordinarily operation which does not appear to have been activated for the Snowy Hydro Project Agreement.

94    In any case, the documentary evidence surveyed and cited by the primary judge establishes key elements of the Snowy Hydro Project Agreement. We have already reviewed the 12 September Osada-Jay Email and the 24 Osada-Jay Email in this connection. We also draw attention to the documentary evidence on the issuing of the price guidance (Reasons, [88]) and the issuing of the price direction (Reasons, [120]). This documentary evidence in respect of the Snowy Hydro Project Agreement in particular corroborates the more general evidence given by Mr Osada concerning the usual practice, and how it would have applied in the given instance.

95    We therefore reject this ground of appeal.

CONCLUSION

96    For the above reasons, the appeal is dismissed with costs.

Associate:

Dated:    13 March 2018