FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 2) [2016] FCA 528
ORDERS
DATE OF ORDER: |
THE COURT DECLARES THAT:
1. [Deferred]
2. [Deferred]
3. Colgate engaged in conduct in contravention of section 45(2)(a)(ii) of the Trade Practices Act (the Act) by entering into an understanding (the Laundry Information Sharing Understanding) with Unilever containing a provision that they would share with each other confidential and commercially sensitive information relating to the price of their laundry detergent products (the Laundry Information Sharing Provision), which provision had the effect of controlling the price of laundry detergents supplied by Unilever in November 2008, within the meaning of section 45A(1) of the Act, and is therefore deemed by section 45A of the Act to have had the purpose, effect or likely effect of substantially lessening competition in the market in Australia for the wholesale supply of powdered and liquid laundry detergent products for domestic use (the laundry detergent market) within the meaning of section 45(2) of the Act.
4. Colgate engaged in conduct in contravention of section 45(2)(b)(ii) of the Act by giving effect to the Laundry Information Sharing Provision, by sharing confidential and commercially sensitive information regarding the price of Colgate’s laundry detergent products with Unilever in 2008.
5. The Third Respondent, Paul Ansell (Mr Ansell), was directly or indirectly, knowingly concerned in or party to, and involved in, the contraventions by Colgate referred in paragraphs 3 and 4 above within the meaning of sections 76(1)(e) and 86E(1) of the Act.
THE COURT ORDERS THAT:
5A. The application for declaratory relief otherwise be adjourned until finalisation of these proceedings against the Second and Fourth respondents, with notice of such finalisation to be given by the applicant to the Court and to the First and Third Respondents.
5B. Liberty to apply on 7 days’ notice, such notice to be exercised by the parties on the finalisation of this proceeding.
Pecuniary Penalties
6. Colgate pay to the Commonwealth of Australia:
(a) in respect of the contraventions referred to in paragraphs 4(1) to 4(2) of the Statement of Agreed Facts and Admissions, a pecuniary penalty in the amount of $12,000,000; and
(b) in respect of the contraventions referred to in paragraphs 3 and 4 above, a pecuniary penalty in the amount of $6,000,000.
7. The pecuniary penalties referred to in paragraph 6 above be payable within 28 days of the date of the Court’s order.
Compliance Program
8. Colgate:
(a) update its Compliance and Education / Training Program in accordance with Appendix A;
(b) maintain and administer, at its own expense, the updated Compliance and Education / Training Program set out in Appendix A for a period of three years from the date of the Court’s order; and
(c) provide, at its own expense, a copy of any documents to be provided to the Applicant pursuant to Appendix A.
Disqualification Order
9. Mr Ansell be disqualified from managing corporations for a period of seven years from the date of the Court’s order.
Other Orders
10. All previous orders as to costs as between the Applicant, Colgate and Mr Ansell be vacated.
11. Colgate pay a contribution to the Applicant’s costs of and incidental to this proceeding, fixed in the amount of $450,000, within 28 days of the date of the Court’s order.
12. Mr Ansell pay a contribution to the Applicant’s costs of and incidental to this proceeding, fixed in the amount of $75,000.
13. The contribution to costs specified in paragraph 12 above is to be paid by Mr Ansell in 24 monthly instalments of $3,125 per month, commencing 28 days after the date of the Court’s order.
14. In the event there is a default by Mr Ansell in the making of any of the instalment payments referred to in paragraph 13 above, the whole of the outstanding amount of the contribution to costs specified in paragraph 12 above is immediately due and payable by Mr Ansell.
15. There be no further order as to costs as between the Applicant, Colgate and Mr Ansell.
16. Subject to these Orders, the proceeding otherwise be dismissed as against Colgate and Mr Ansell.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
JAGOT J:
1 These reasons for judgment explain why I made orders on 28 April 2016 imposing civil penalties on Colgate-Palmolive Pty Ltd (Colgate) and one of its employees, Paul Ansell. Amongst other orders I imposed on Colgate:
(1) a pecuniary penalty in the amount of $12,000,000 for its admitted contraventions of:
(a) s 45(2)(a)(i) of the Trade Practices Act 1974 (Cth) (TPA), by Colgate entering into an understanding with PZ Cussons Australia Pty Ltd (Cussons), and Unilever Australia Limited (Unilever) (the Withhold Supply Understanding) containing provisions with the substantial purpose of limiting the supply to Woolworths Limited (Woolworths), Coles Group Pty Ltd (Coles) and Metcash Limited (Metcash) of ultra-concentrated laundry detergents (Ultra Concentrates) until in or around February 2009 and standard-concentrated laundry detergents (Standard Concentrates) from in or around February 2009 (the Withhold Supply Provisions); and
(b) s 45(2)(b)(i) of the TPA, by Colgate giving effect to the Withhold Supply Provisions by limiting the supply of Ultra Concentrates to Woolworths, Coles and Metcash until in or around February 2009 and Standard Concentrates to Woolworths, Coles and Metcash from in or around February 2009;
(2) a pecuniary penalty in the amount of $6,000,000 for contraventions of:
(a) s 45(2)(a)(ii) of the TPA by entering into an understanding (the Laundry Information Sharing Understanding) with Unilever containing a provision that they would share with each other confidential and commercially sensitive information relating to the price of their laundry detergent products (the Laundry Information Sharing Provision), which provision had the effect of controlling the price of laundry detergents supplied by Unilever in November 2008, within the meaning of s 45A(1) of the TPA, and is therefore deemed by s 45A of the TPA to have had the purpose, effect or likely effect of substantially lessening competition in the market in Australia for the wholesale supply of powdered and liquid laundry detergent products for domestic use (the laundry detergent market); and
(b) s 45(2)(b)(ii) of the TPA by giving effect to the Laundry Information Sharing Provision, by sharing confidential and commercially sensitive information regarding the price of Colgate’s laundry detergent products with Unilever in 2008.
2 I also ordered that Mr Ansell, who admitted to being directly or indirectly, knowingly concerned in or party to, and involved in, the contraventions admitted by Colgate referred to in sub para (2) above, be disqualified from managing corporations for a period of seven years from the date of the Court’s order.
3 It is necessary to record that Colgate and Mr Ansell alone admitted the contraventions of the TPA described above for the purpose of these proceedings. No admissions have been made by the other entities identified above. Further, the orders I made reflected an agreed position of the parties as set out in a Statement of Agreed Facts and Admissions (SOAFA) and joint submissions on liability and relief.
The contravening conduct
4 Rather than repeating or attempting to summarise the comprehensive statements of fact and law in the SOAFA and joint submissions, I annex the documents to these reasons. They should be read as part of these reasons. They disclose the factual basis for the conclusion I reached that the orders proposed by agreement of the parties, and as made by me on 26 April 2016, were appropriate.
5 Colgate manufactures powdered and liquid laundry detergents for wholesale supply and marketing within Australia. During the relevant period, Mr Ansell held the position of “Customer Development Director” within Colgate. He was a senior manager responsible for the marketing, supply and pricing of Colgate’s laundry products. Colgate, together with its competitors, Cussons and Unilever, controlled approximately 80% of the relevant laundry detergent market.
6 In or around early 2008, Colgate and its competitors decided to replace what were previously marketed as “standard-concentrate” laundry detergent products with “ultra-concentrate” laundry products. Ultra Concentrates allow less detergent to be used to achieve a comparable level of product performance. They also yield significant cost savings and gross margin improvements for Colgate as a consequence of reduced expenditure on ingredients, packaging, transport and other logistics.
7 Colgate considered that the proposed transition meant that there was a risk that:
(1) but for a simultaneous industry wide transition of those laundry detergents that had not yet been replaced with Ultra Concentrates, consumers might be uncertain as to the value proposition of Ultra Concentrates relative to Standard Concentrates;
(2) confronted by laundry products and packaging of different sizes, at parity or closely equivalent retail prices, consumers may prefer Standard Concentrates in larger packages on the mistaken basis that they represented greater value for money than Ultra Concentrates in smaller packages; and
(3) Colgate would lose sales or market share if Colgate transitioned to Ultra Concentrates while other manufacturers continued to supply Standard Concentrates.
8 Through a series of meetings, telephone calls and correspondence between Colgate and its competitors throughout 2008, the Withhold Supply Understanding was reached to the effect that each manufacturer would participate in a coordinated transition from Standard Concentrates to Ultra Concentrates in February 2009 and that there would be a uniform in-store supermarket launch of Ultra Concentrates on the same date in March 2009.
9 From in or around early February 2009, in relation to the supply of laundry detergent products to Woolworths, Coles and Metcash:
(1) Colgate introduced powder and liquid Ultra Concentrate products across each of its brands except Love n Care, and ceased the supply of its previous powder and liquid Standard Concentrate products, save in respect of the sell-down of certain products and the supply of a small number of Standard Concentrate SKUs (stock keeping units) to Metcash and Coles;
(2) Unilever introduced powder Ultra Concentrate products across each of its brands, and ceased the supply of its previous powder Standard Concentrate products, save in respect of the sell-down of certain products; and
(3) Cussons introduced powder Ultra Concentrate products across each of its brands except Down to Earth and some additional liquid Ultra Concentrate products, and ceased the supply of most of its previous powder and liquid Standard Concentrate products, save in respect of the sell-down of certain products and the supply of a small number of Standard Concentrate SKUs to Woolworths, Coles and Metcash.
10 Colgate admits that Withhold Supply Understanding contained provisions with the substantial purpose of limiting the supply of Ultra Concentrates until in or around February 2009, and of Standard Concentrates from that date, and that supply of these goods was limited as a result.
11 Further, in 2008, Colgate wished to increase the wholesale price of its laundry products. Mr Ansell, with the apparent but not actual authority of Colgate, communicated to representatives of Unilever confidential and commercially sensitive information about the price of Colgate’s laundry detergents including Colgate’s proposed price increases. Unilever increased the wholesale list prices of specific laundry detergent products supplied by it with effect from 10 November 2008. Unilever decided to implement these price increases after receiving information from Mr Ansell to the effect that Colgate was going to introduce its own price increases. Colgate increased the wholesale list prices of specific laundry detergent products supplied by it with effect from 17 November 2008.
12 Colgate admits that by reason of these circumstances, and in contravention of ss 45(2)(a)(ii) and 45(2)(b)(ii) of the TPA, it entered into the Laundry Information Sharing Understanding and the Laundry Information Sharing Provision which had the effect of controlling the price of laundry detergents supplied by Unilever in November 2008 and is thereby deemed by s 45A of the TPA to have had the purpose or effect, or been likely to have the effect, of substantially lessening competition in the laundry detergent market.
Discussion
13 In Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 326 ALR 476, the High Court held that the Building and Construction Industry Improvement Act 2005 (Cth), by providing for civil penalties, “implicitly assumes the application of the general practice and procedure regarding civil proceedings and eschews the application of criminal practice and procedure” (at [62]). As a result a court should be no “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” (at [61]). In so deciding, French CJ, Kiefel, Bell, Nettle and Gordon JJ observed that:
(1) “Civil penalty proceedings are civil proceedings and therefore an adversarial contest in which the issues and scope of possible relief are largely framed and limited as the parties may choose” (at [53]);
(2) “…the purpose of a civil penalty… is primarily if not wholly protective in promoting the public interest in compliance” (at [55]);
(3) “…in civil proceedings there is generally very considerable scope for the parties to agree on the facts and upon consequences. There is also very considerable scope for them to agree upon the appropriate remedy and for the court to be persuaded that it is an appropriate remedy…it is entirely consistent with the nature of civil proceedings for a court to make orders by consent and to approve a compromise of proceedings on terms proposed by the parties, provided the court is persuaded that what is proposed is appropriate” (at [57]);
(4) “…there is an important public policy involved in promoting predictability of outcome in civil penalty proceedings and that the practice of receiving and, if appropriate, accepting agreed penalty submissions increases the predictability of outcome for regulators and wrongdoers” (at [46]);
(5) “…the court is not bound by the figure suggested by the parties. The court asks “whether their proposal can be accepted as fixing an appropriate amount” and for that purpose the court must satisfy itself that the submitted penalty is appropriate” (at [48]);
(6) “Subject to the court being sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and…highly desirable in practice for the court to accept the parties’ proposal and therefore impose the proposed penalty” (at [59]);
(7) “…the regulator in a civil penalty proceeding is not disinterested…That consideration, however, supports, rather than detracts from, the propriety of a court receiving joint (or separate) submissions as to facts and penalty and imposing the proposed penalty if persuaded that it is appropriate. …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” (at [60]);
14 The admitted facts sufficed to establish the existence of the contraventions.
15 Power to make the orders was not in doubt.
16 The appropriateness of the orders, to my mind, was manifest.
17 First, the joint submissions filed by the parties disclosed the careful consideration which the regulator, the Australian Competition and Consumer Commission (the ACCC), had given to the facts constituting the contraventions of the TPA, the consequences of those contraventions and the significance of those consequences, as well as the level of penalty necessary to achieve compliance with the relevant provisions having regard to the maximum penalties capable of being imposed, described as:
a) in respect of the contraventions referred to in paragraphs 1 and 2 of the Proposed Consent Order [now order 6(a)], the maximum pecuniary penalty is AUD$51.2 million, being 10% of Colgate’s turnover for the 12 months ending on 28 February 2009 of AUD$512.427 million; and
b) in respect of the contraventions referred to in paragraphs 3 and 4 of the Proposed Consent Order [now order 6(b)], the maximum pecuniary penalty is AUD$50.2 million, being 10% of Colgate’s turnover for the 12 months ending on 30 September 2008 of AUD$502.226 million.
18 Second, I accepted the joint submissions that once a court is satisfied that it has power to make the proposed orders and that those orders, including any pecuniary penalty, are appropriate, the desirability of doing so was reinforced in the present case by reason of the fact that the consenting parties are sophisticated, legally represented, and well able to understand and evaluate the desirability of the settlement.
19 Third, the joint submissions disclosed that the parties had identified and evaluated all relevant factors including those specified by s 76(1) of the TPA and as developed by judicial consideration.
20 Fourth, the evaluation disclosed in the joint submissions was demonstrably consistent with the principal object of a civil penalty, being to achieve compliance by way of deterrence, both specific and general. Of particular relevance to the need for deterrence in the present case is the agreed submission that Colgate obtained a number of benefits from the contravening conduct relating to the transition to Ultra Concentrates in that the unlawful conduct:
a) reduced or eliminated the risk of Colgate’s powdered Ultra Concentrate products, and to a lesser degree its liquid Ultra Concentrate products, competing with Standard Concentrate products supplied by either or both of the other two major suppliers;
b) reduced or eliminated the risk of consumers preferring Cussons or Unilever’s powdered Standard Concentrates or Cussons’ liquid Standard Concentrates in larger packages, over Colgate’s Ultra Concentrates on the mistaken belief that the larger Standard Concentrates ostensibly represented greater value for money than Colgate’s Ultra Concentrates;
c) reduced or eliminated the risk of loss of sales or market share or of not achieving optimal sales volume levels for Colgate’s Ultra Concentrates as quickly if Unilever or Cussons continued to supply Standard Concentrates; and
d) reduced expenditure on advertising to explain to consumers the value proposition of Ultra Concentrates compared to Standard Concentrates.
21 Further, by reason of the contravening conduct relating to the Laundry Information Sharing Provision, Colgate eliminated or reduced the risk to it of loss of sales or market share of its laundry detergent products to competitors, particularly Unilever.
22 Fifth, the joint submissions recognised the seriousness of the contraventions and their potential to harm markets and consumers of products within markets. While the benefits to Colgate could not be quantified, the contraventions meant that consumers paid higher prices for Unilever laundry detergent products and were deprived of having Standard Concentrates and Ultra Concentrates available at the same time. It is also likely that Colgate did gain financially by reason of the contraventions (albeit in an unquantifiable amount), although Mr Ansell did not. Significantly also, it was agreed that:
In 2008, the approximate market shares by volume, within the laundry detergent industry were: Colgate 45%, Cussons 20.5%, and Unilever 19.3%. The approximate markets shares by value were: Colgate 39.7%; Unilever 24.7% and Cussons 19.3%. Put simply, Colgate had the largest market share on any measure within the relevant industry.
23 Sixth, the joint submissions gave due weight to other relevant considerations including Colgate’s prior relevant conduct (it has not been found to have previously contravened provisions of Part IV of the TPA regarding cartel conduct, but has been found to have to have contravened the resale price maintenance provisions within Part IV of the TPA - see Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd [2002] FCA 619; (2002) ATPR 41-880). They also recognised that from prior to and during 2008 and 2009, Colgate had an extensive trade practices and competition law compliance programme, and that Colgate’s senior management were unaware of the nature and extent of Mr Ansell’s communications with Mr Campbell in relation to the admitted contraventions. If Colgate’s senior management were aware of those communications, they would have taken immediate disciplinary action against Mr Ansell, including recommending that his employment be terminated. Emphasis should also be given to the joint submissions which recorded that before the commencement of these proceedings, Colgate cooperated with the ACCC in its investigation of these matters, and continued to do so (including by agreeing to contribute $450,000 towards the ACCC’s costs of the proceedings), as did Mr Ansell after the proceedings were commenced. In this regard, I accepted that:
Colgate’s and Mr Ansell’s co-operation with the ACCC has saved the ACCC and the Court (and ultimately the community) the cost and burden of fully litigating these proceedings.
24 Seventh, and focusing on Mr Ansell, it was agreed that Mr Ansell has no prior relevant conduct. Further, his ability to secure and maintain work since the proceedings commenced in 2013 has been significantly adversely affected by the ACCC's investigation, these proceedings, and the publicity they have received. He is currently unemployed and at age 56 has little to no hope of working in the industry again, and if the proposed disqualification order was made, has no prospect of being engaged in a senior management role.
25 Taking into account these and all other matters in the SOAFA and joint submissions I accepted the position that was put in these terms:
… each component penalty is appropriate in all the circumstances and that a total penalty of $18 million is likewise appropriate. The parties jointly submit that the Court should be satisfied of this because the proposed penalty as a total or as component parts are:
a) within the permissible range of penalty in all the circumstances, albeit that, unassisted the Court may have selected a slightly different figure; and
b) within what an independent assessment of the appropriate range of penalties would have resulted in.
26 I also accepted the propriety of not imposing a pecuniary penalty on Mr Ansell having regard to the impact, financial and otherwise, which the proceedings have had on him, his co-operation with the ACCC including agreement to contribute $75,000 towards the ACCC’s costs of the proceedings, and the impact which will result from the disqualification order to which he consented. In respect of that order I accepted the joint submissions that:
a) disqualification orders are designed to protect the public from the harmful use of the corporate structure or from use that is contrary to proper commercial standards;
b) the banning order is designed to protect the public by seeking to safeguard the public interest in the transparency and accountability of companies and in the suitability of directors to hold office;
c) protection of the public also envisages protection of individuals that deal with companies, including consumers, creditors, shareholders and investors;
d) the banning order is protective against present and future misuse of the corporate structure;
e) the order has a motive of personal deterrence, though it is not punitive;
f) the objectives of general deterrence are also sought to be achieved;
g) in assessing the fitness of an individual to manage a company, it is necessary that they have an understanding of the proper role of the company director and the duty of due diligence that is owed to the company;
h) longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty;
i) in assessing the appropriate length of prohibition, consideration has been given to the degree of seriousness of the contraventions, the propensity that the defendant may engage in similar conduct in the future and the likely harm that may be caused to the public;
j) it is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the conduct;
k) a mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming;
l) the eight criteria to govern the exercise of the court’s powers of disqualification set out in Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519 have been influential. It was held that in making such an order it is necessary to assess:
(i) character of the offenders;
(ii) nature of the breaches;
(iii) structure of the companies and the nature of their business;
(iv) interests of shareholders, creditors and employees;
(v) risks to others from the continuation of offenders as company directors;
(vi) honesty and competence of offenders;
(vii) hardship to offenders and their personal and commercial interests; and
(viii) offenders’ appreciation that future breaches could result in future proceedings;
m) factors which lead to the imposition of the longest periods of disqualification (that is disqualification of 25 years or more) were:
(i) large financial losses;
(ii) high propensity that defendants may engage in similar activities or conduct;
(iii) activities undertaken in fields in which there was potential to do great financial damage such as in management and financial consultancy;
(iv) lack of contrition or remorse;
(v) disregard to law and compliance with corporate regulations;
(vi) dishonesty and intent to defraud;
(vii) previous convictions and contraventions for similar activities;
n) in cases where the period of disqualification ranged from 7-12 years, the factors evident and which lead to the conclusion that these cases were serious though not “worst cases”, included:
(i) serious incompetence and irresponsibility;
(ii) substantial loss;
(iii) defendants had engaged in deliberate courses of conduct to enrich themselves at others’ expense, but with lesser degrees of dishonesty;
(iv) continued, knowing and wilful contraventions of the law and disregard for legal obligations;
(v) lack of contrition or acceptance of responsibility, but as against that, the prospect that the individual may reform;
o) the factors leading to the shortest disqualifications, that is disqualifications for up to 3 years were:
(i) although the defendants had personally gained from the conduct, they had endeavoured to repay or partially repay the amounts misappropriated;
(ii) the defendants had no immediate or discernible future intention to hold a position as manager of a company;
(iii) in ASIC v Donovan (1998) 28 ASCR 583 at 602, the respondent had expressed remorse and contrition, acted on advice of professionals and had not contested the proceedings.
27 As the joint submissions disclosed, the proposed banning order will prevent Mr Ansell from managing a corporation for seven years and, based on information provided by Mr Ansell, will effectively:
a) have a financial effect extending beyond any penalty which could be awarded against Mr Ansell as it translates into an effective amount of up to $2.8 million, on the basis that Mr Ansell is unable to earn an income of up to $400,000 per year for seven years;
b) prevent him from working in a management role in an industry he has worked in for nearly three decades; and
c) take him through to retirement given he is currently 56 years of age, and require him to live on his life savings.
28 Otherwise, I accepted that it was appropriate to make the declarations and orders as the parties proposed, including that Colgate update its compliance and education/training program. As the joint submissions said, s 86C of the TPA empowers the Court to make such an order. The purpose of compliance orders and the matters that must be assessed by the Court in reviewing a proposed order and determining whether they are within power and appropriate were summarised by Gordon J in Australian Competition and Consumer Commission v Sontax Australia (1988) Pty Ltd [2011] FCA 1202 at [36] as follows:
The purpose of a probation order is to ensure a company-wide awareness of responsibilities and obligations in relation to the contravening conduct or similar or related conduct: Australian Competition and Consumer Commission v Anglo Estates Pty Ltd [2005] FCA 20; (2005) ATPR 42-044 at [46]. There must be a nexus between the terms of the compliance program and the contravening conduct: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2007) ATPR 42-138 at [96]. The compliance program should set out the steps to be taken with sufficient clarity so that it is able to be performed. It should also be in the public interest that the respondent undertake the program: LG Electronics Australia [2006] FCA 1118 at [14].
29 Finally, I should explain that proposed declarations 1 and 2 were deferred because they referred to Woolworths and Cussons which have not made admissions necessary to found those declarations. This approach, proposed by the parties, reflects the position previously adopted in various other decisions of this court (for example, Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 18; (1999) 95 FCR 114 at [38]; Australian Competition and Consumer Commission v Kokos International Pty Ltd (No 2) [2008] FCA 5; (2008) ATPR 42-212 at [49]-[50], and Australian Competition and Consumer Commission v Australian Medical Association (Western Australian Branch) Inc [2001] FCA 1471; (2001) 114 FCR 91).
I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. |
Associate:
NSD 2510 of 2013 | |
WOOLWORTHS LIMITED ACN 000 014 675 |
ANNEXURE - STATEMENT OF AGREED FACTS AND ADMISSIONS
Statement of Agreed Facts and Admissions
by the Applicant and First and Third Respondents
(21 March 2016)
A. Introduction
1 This Statement of Agreed Facts and Admissions (SAFA) is made for the purposes of section 191 of the Evidence Act 1995 (Cth) (Evidence Act) jointly by the Applicant, the Australian Competition and Consumer Commission (ACCC), the First Respondent, Colgate-Palmolive Pty Ltd (Colgate), and the Third Respondent, Paul Ansell (Ansell).
2 This SAFA concerns conduct that took place in 2008 and early 2009 in relation to:
(1) the transition by Colgate, PZ Cussons Australia Pty Ltd (Cussons), and Unilever Australia Limited (Unilever) from standard-concentrated laundry detergents (Standard Concentrates) to ultra-concentrated laundry detergents (Ultra Concentrates); and
(2) the sharing between Colgate and Unilever of confidential and commercially sensitive information relating to the pricing of their laundry detergent products.
3 This document identifies the facts relevant to the contraventions admitted by Colgate and Mr Ansell for the purpose of these proceedings only. The facts agreed to, and the admissions made, are agreed to and made for the purpose of these proceedings only and do not constitute any admission outside the context of these proceedings.
4 For the purposes of these proceedings only, Colgate admits that:
(1) in contravention of s 45(2)(a)(i) of the Trade Practices Act 1974 (Cth) (TPA), Colgate entered into an understanding with Cussons and Unilever (the Withhold Supply Understanding) containing provisions with the substantial purpose of limiting the supply to Woolworths Limited (“Woolworths”), Coles Group Pty Ltd (“Coles”) and Metcash Limited (Metcash) of:
(a) Ultra Concentrates until in or around February 2009; and
(b) Standard Concentrates from in or around February 2009 (the Withhold Supply Provisions),
being exclusionary provisions within the meaning of section 4D of the TPA;
(2) in contravention of s 45(2)(b)(i) of the TPA, Colgate gave effect to the Withhold Supply Provisions by limiting the supply of:
(a) Ultra Concentrates to Woolworths, Coles and Metcash until in or around February 2009; and
(b) Standard Concentrates to Woolworths, Coles and Metcash from in or around February 2009;
(3) in contravention of s 45(2)(a)(ii) of the TPA, Colgate entered into an understanding with Unilever (the Laundry Information Sharing Understanding) containing a provision that they would share with each other confidential and commercially sensitive information relating to the price of their laundry detergent products (the Laundry Information Sharing Provision), which provision had the effect of controlling the price of laundry detergents supplied by Unilever in November 2008, within the meaning of section 45A(1) of the TPA, and is therefore deemed by section 45A of the TPA to have had the purpose, effect or likely effect of substantially lessening competition in the market in Australia for the wholesale supply of powdered and liquid laundry detergent products for domestic use within the meaning of section 45(2) of the TPA; and
(4) in contravention of section 45(2)(b)(ii) of the TPA, Colgate gave effect to the Laundry Information Sharing Provision by sharing confidential and commercially sensitive information regarding the price of Colgate’s laundry detergent products with Unilever in 2008.
5 For the purposes of these proceedings only, Mr Ansell admits that he was directly or indirectly, knowingly concerned in or party to, and involved in, the contraventions admitted by Colgate referred to in paragraph 4 herein within the meaning of sections 76(1)(e) and 86E(1) of the TPA.
6 Colgate and Mr Ansell note that no admissions are made by either of them regarding:
(1) the effect or likely effect upon competition of the Withhold Supply Understanding or any related conduct;
(2) the purpose or actual effect or likely effect upon competition of the Laundry Information Sharing Understanding or any related conduct; and
(3) any other contraventions of the TPA or conduct alleged by the ACCC in these proceedings other than as dealt with in this SAFA.
7 For the purposes of s 191(3)(a) of the Evidence Act, the parties have reached agreement as to the terms of relief to be sought from the Court to resolve the proceedings. The parties acknowledge that, under s 76 of the TPA, it is for the Court to determine whether the contraventions occurred and the quantum of any pecuniary penalties and other relief that should be ordered.
8 The ACCC, Colgate and Mr Ansell respectfully request that the Court make orders in the form set out in the attached draft orders which include the following:
(1) declarations;
(2) pecuniary penalties to be paid by Colgate;
(3) an order that Colgate will implement an updated compliance program;
(4) an order that Mr Ansell will be disqualified from managing any corporation for a period of 7 years; and
(5) contributions to the ACCC’s costs.
B. Parties
9 The ACCC is a body corporate established by section 6A of the Competition and Consumer Act 2010 (Cth) (CCA), which was named the TPA prior to 1 January 2011, and is entitled to sue in its corporate name.
10 Colgate:
(1) was and is an Australian proprietary company, limited by shares, registered in New South Wales; and
(2) is able to be sued.
11 During the period 1 January 2008 to 31 December 2009, Colgate:
(1) was carrying on business within Australia in the manufacture, wholesale supply and marketing of a diversified range of fast moving consumer goods, including laundry products;
(2) manufactured powdered and liquid laundry detergents for wholesale supply within Australia; and
(3) engaged in the wholesale supply and marketing within Australia of domestic powdered and liquid laundry detergent products under certain brand names.
12 Colgate no longer owns any laundry detergent brands in Australia, having sold its entire range of laundry detergents and pre-wash brands in Australia and New Zealand in 2015.
13 Mr Ansell:
(1) was, between 1 January 2008 and 31 December 2009, Customer Development Director, Australia, also known as Sales Director, within Colgate;
(2) in his role as Customer Development Director, was, at all material times, amongst other things:
(a) one of the senior people at Colgate who together had responsibilities for decision-making in respect of marketing, supply and pricing of laundry products manufactured and supplied by Colgate;
(b) had overall responsibility for liaising with Colgate’s retailer customers, including Woolworths, Coles and Metcash, in respect of laundry products;
(3) was, between 1 January 2008 and 31 December 2009, a member of Colgate’s Management Committee;
(4) in engaging in the conduct set out herein:
(a) had the apparent authority of Colgate; and
(b) as a result, was, and acted as, an agent of Colgate; and
(c) is able to be sued.
14 For the avoidance of doubt, in this SAFA:
(1) Woolworths does not include Big W; and
(2) Coles does not include K-Mart.
C. Facts relevant to liability
15 Throughout 2008 and 2009, consumers within Australia acquired powdered and liquid laundry detergents for domestic use in front-load and top-load washing machines, and for hand washing, to clean fabrics.
16 Throughout 2008 and 2009:
(1) approximately two thirds of the annual volume of laundry detergents sold in Australia comprised powdered laundry detergents; and
(2) approximately one third comprised liquid laundry detergents.
17 Throughout 2008 and 2009, Colgate, Cussons and Unilever were the largest wholesale suppliers of laundry detergents in Australia, with a combined market share, measured both by value and by volume, of approximately 80%.
18 Throughout 2008 and 2009, Colgate, Cussons and Unilever, along with other wholesale suppliers of laundry detergents in Australia, made laundry detergent products available for sale to:
(1) retailers within Australia, including Woolworths and Coles; and
(2) wholesalers within Australia, including Metcash.
Other retailers or wholesalers to whom at least some suppliers made laundry detergents available included Big W, K-Mart, Franklins, Statewide Independent Wholesalers, API, Sigma, Symbion, Priceline and smaller independent retailers. From time to time, particular laundry detergent products were supplied on an exclusive basis to a particular retailer.
19 Throughout 2008 and 2009, most grocery product categories were reviewed within Woolworths and Coles, including the laundry detergent category. Most new products, including laundry detergent products, would ordinarily only be accepted for supply or introduced in stores by Woolworths and Coles at “category review” dates set by Woolworths and Coles. Category reviews for each major grocery category, including laundry detergents, were undertaken by Woolworths and Coles at least annually, but usually involved a “major” and a “minor” review, generally 6 months apart.
20 Throughout 2008 and 2009, Colgate, Cussons, Unilever and other laundry detergent suppliers (including Kao Australia Pty Ltd (Kao) and Amway of Australia Pty Ltd (Amway)) were members of Accord Australasia Limited (Accord), the national industry association for the Australasian hygiene, cosmetic and specialty products industry.
21 Mr Ansell was not a representative of Colgate at Accord and did not participate in any Accord meetings on behalf of Colgate.
22 Throughout 2008, wholesale suppliers of laundry detergents in Australia, including Colgate, Cussons and Unilever, were experiencing rising costs of manufacturing laundry detergents, including increasing costs of sodium tripolyphosphate (STPP), an input for the production of powdered laundry detergents. Further, those suppliers were also experiencing extensive competition on the price of laundry detergents supplied by them, particularly in relation to retail promotional prices.
23 Throughout 2008 and 2009, the majority:
(1) by volume;
(2) units sold; and
(3) value,
of the retail sales of laundry detergent products in Australia, including Colgate’s, Cussons’ and Unilever’s laundry detergent products, were retail sales at promotional prices.
Concentration of laundry detergents
24 References in this SAFA to concentration of laundry detergents are references to a process of reducing the volume and/or weight of a laundry detergent product but retaining the level of active ingredients in a way that maintains (or approximately maintains) product performance.
25 The term Standard Concentrates is used in this SAFA to refer to laundry detergents sold within Australia for domestic use during some or all of 2008 and 2009 that were:
(1) in the case of powdered laundry detergents, standard concentrated high density detergents, sometimes referred to within Colgate as SCHDDs or super concentrates; and
(2) in the case of liquid laundry detergents, heavy duty liquid laundry detergent products, sometimes referred to within Colgate as HDLs.
26 A list of particular Standard Concentrate products is set out in Annexure A to this SAFA.
27 The term Ultra Concentrates is used in this SAFA to refer to laundry detergents sold within Australia for domestic use, during some or all of 2008 and 2009, that were more highly concentrated than Standard Concentrates.
28 A list of particular Ultra Concentrate products is set out in Annexure B to this SAFA.
29 Prior to February 2009:
(1) the majority of powdered and liquid laundry detergent products sold within Australia for domestic use comprised Standard Concentrates; and
(2) a smaller proportion of laundry detergent products sold within Australia for domestic use were Ultra Concentrates.
30 In particular, prior to February 2009:
(1) in respect of powdered laundry detergents:
(a) Cussons only supplied powdered Standard Concentrates;
(b) in the case of Unilever’s supplies:
1. (A) the large majority were powdered Standard Concentrates;
2. (B) a small proportion of its powdered laundry detergents were less concentrated than Standard Concentrates.
(c) in the case of Colgate’s supplies:
3. (A) the large majority were powdered Standard Concentrates;
4. (B) a small proportion of its powdered laundry detergents were less concentrated than Standard Concentrates, sometimes referred to within Colgate as low density powders (LDPs). During 2008, these were not supplied to Woolworths or Coles for retail sale in supermarkets; and
5. (C) a very small proportion were powdered Ultra Concentrates.
(2) in respect of liquid laundry detergents:
(a) Colgate only supplied liquid Standard Concentrates;
(b) Cussons only supplied liquid Standard Concentrates until around January 2008, when it commenced supply of liquid Ultra Concentrates in addition to continuing to supply liquid Standard Concentrates; and
(c) Unilever only supplied liquid Standard Concentrates until around January 2008, when it commenced supplying liquid Ultra Concentrates and commenced ceasing supply of liquid Standard Concentrates.
31 The remaining Standard Concentrate products supplied by Colgate, Cussons and Unilever to Woolworths, Coles and Metcash for domestic use within Australia were, with minor exceptions, transitioned to Ultra Concentrate products commencing from in or around February 2009. Colgate and Cussons continued to supply a small number of Standard Concentrate products to Woolworths, Coles and Metcash after February 2009.
32 A list of particular Ultra Concentrate products supplied by Colgate, Cussons and Unilever from in or around February 2009 vis-à-vis the previous equivalent Standard Concentrate products is set out in Annexure C to this SAFA.
The market for laundry detergent in Australia
33 Throughout 2008 and 2009:
(1) powdered and liquid laundry detergents, for domestic use, were reasonably substitutable for, or in close competition with, each other; and
(2) Standard Concentrate products and Ultra Concentrate products, for domestic use, were reasonably substitutable for, or in close competition with, each other.
34 There was, at all material times, within the meaning of section 4E of the TPA, a market in Australia for the wholesale supply of powdered and liquid laundry detergent products for domestic use (the laundry detergent market).
35 Colgate, Cussons and Unilever were:
(1) at all material times, in competition with each other within the meaning of section 45(3) of the TPA; and
(2) at all material times, competitive with each other within the meaning of section 4D of the TPA;
within the laundry detergent market.
Key personnel
36 Details of key personnel referred to in this SAFA are set out in Annexure H.
Background to Colgate’s introduction of Ultra Concentrates
37 By late 2007, suppliers of laundry detergents in some other countries, including the United States, had transitioned to supplying more highly concentrated laundry detergents. By at least mid-2007 Colgate understood that, in the United States as part of a sustainability initiative, Walmart (a retailer) had set a date beyond which it would no longer accept non-concentrated laundry detergents from manufacturers and that, as a result of this initiative, all major manufacturers of laundry detergents in the United States decided to transition their laundry detergents to more highly concentrated detergents nationally.
38 Colgate considered that a move by it to replace its Standard Concentrates with Ultra Concentrates, or a move by all suppliers and retailers of laundry detergents from Standard Concentrates to Ultra Concentrates across all laundry detergents brands sold within Woolworths, Coles and Metcash, would be likely to achieve the following benefits:
(1) significant cost savings and gross margin improvements for Colgate (if it moved), as a consequence of reduced expenditure on ingredients, packaging, transport and other logistics;
(2) Colgate’s customers, including Woolworths, Coles and Metcash, would be:
(a) likely to be able to achieve lower internal logistics and packaging costs, with resulting gross margin improvements; and
(b) able to reduce the shelf-space required for laundry detergent products, thereby creating additional shelf space for laundry detergents or for other products;
(3) benefits to consumers, including reduced weight and reduced environmental impact; and
(4) environmental benefits, including through reductions in the use of materials for packaging and transport volumes, with attendant reductions in carbon emissions.
39 Colgate considered that:
(1) but for a simultaneous industry wide transition of those laundry detergents that had not yet been replaced with Ultra Concentrates, there was a risk that consumers might be uncertain as to the value proposition of Ultra Concentrates relative to Standard Concentrates. However, Colgate also considered that this risk might be managed to some degree by Colgate by communications at store level and in advertising as to the value proposition of Colgate’s yet to be introduced Ultra Concentrates relative to Standard Concentrates;
(2) there was a risk that, confronted by laundry products and packaging of different sizes, at parity or closely equivalent retail prices, consumers may prefer Standard Concentrates in larger packages on the mistaken basis that they represented greater value for money than Ultra Concentrates in smaller packages. However, Colgate also considered that this risk might be managed to some degree by Colgate by communications at store level and in advertising as to the value proposition of Colgate’s yet to be introduced Ultra Concentrates relative to Standard Concentrates;
(3) there was a risk that Colgate’s Ultra Concentrates may not have achieved as high sales if Standard Concentrates continued to be sold by its competitors due to the risks referred to in paragraphs 39(1) and 39(2) above. However, Colgate also considered that those risks might be managed to some degree by Colgate by communications at store level and in advertising as to the value proposition of its Ultra Concentrates relative to Standard Concentrates; and
(4) there was a risk that if Colgate transitioned to Ultra Concentrates while other manufacturers continued to supply Standard Concentrates, Colgate would lose sales or market share but that it would still achieve increased profits and margins.
40 As of late 2007, Colgate’s preference was to have an industry wide transition from Standard Concentrates to Ultra Concentrates, led by a retailer or industry body initiative. However, by at least mid-2008, Colgate would have moved, or was likely to have moved, to replace its Standard Concentrates to Ultra Concentrates in early 2009 in the absence of an industry wide transition or the Withhold Supply Understanding, although that transition may not have occurred at the same time as the other manufacturers’.
8 January 2008 meeting of Colgate (including Paul Ansell) and Woolworths
41 On 8 January 2008, a meeting was held that was attended by representatives of Colgate and Woolworths.
42 The meeting was attended by:
(1) Paul Ansell, Sean Bone, Eric Jeanmaire, Nick Ryan, Adam Simmons and Simon Russell, as representatives of Colgate; and
(2) James Aylen, Gordon Duncan and Stan Fuchs, as representatives of Woolworths.
43 Adam Simmons of Colgate prepared the Negotiating Tool Kit document COL.800.001.2597 prior to that meeting.
44 The following documents were presented by representatives of Colgate at that meeting:
(1) COL.505.007.2566, being a document entitled ‘Colgate-Palmolive ultra detergents update’ (Ultra Detergents Update); and
(2) COL.703.004.1540, being a document entitled ‘Colgate-Palmolive ultra detergents update’ which was provided to James Aylen, Gordon Duncan and Stan Fuchs of Woolworths at the meeting.
45 At the meeting, representatives of Colgate made statements orally and through slides to the effect of the following statements contained in the Ultra Detergents Update:
(1) “Recommend full category transition in January 2009” (slide 32);
(2) “Non-partisan category initiative” (slide 32);
(3) “Historically, partial transitions have either 1. Required > 10 years to achieve critical mass, or 2. Failed outright” (slide 33);
(4) “Both outcomes risk significant consumer confusion / rejection” (slide 33);
(5) “Staggered transitions promote ASP [Average Selling Price] decline – permanent price reductions to encourage trial, eroding category value” (slide 33);
(6) “Wal-Mart highlights a new paradigm for transition - All vendors to agree to transition by fixed date, Opportunity for industry sustainability initiative, Deliver significant environmental savings while reinvigorating category” (slide 33);
(7) If the transition to Ultra Concentrates was staggered, rather than simultaneous, Colgate’s estimate was that the value of:
(a) the laundry detergent category in Woolworths would be an estimated $62 million lower in total over the calendar years 2008 to 2013 (slide 38); and
(b) the “national detergent market value” would be an estimated $146 million lower in total over the calendar years 2008 to 2012 (slide 39);
(8) “Parity or better performance versus current, at half the dose weight” (slide 42);
(9) “Household Laundry Detergent Environmental PROPOSAL
Overview
Proposal to AFGC and/or ACCORD as enablers to an industry-wide, non-partisan sustainability initiative with agreement to transition to higher concentration formulas by end-January 2009
Scale and Scope
It is intended for this agreement to cover all manufacturers of laundry detergent in Australia and New Zealand (recognising near-universal common supply) and all retailers and wholesalers of those detergents. This includes, but is not limited to: 1. Woolworths Pty Ltd; 2. Coles Group Pty Ltd; 3. Metcash Pty Ltd; 4. Unilever Australasia; 5. Colgate-Palmolive Pty Ltd; 6. PZ Cussons Australia Pty Ltd.”” (slide 53);
(10) “Enable the rapid understanding, acceptance and adoption of this new generation of detergents, with a common goal of facilitating the transition of the entire detergent market to this more environmentally sustainable format in 2009. – Extract from draft Colgate-Palmolive Sustainability Proposal” (slide 58);
(11) “Propose all suppliers and retailers commit to full Ultra transition” (slide 60);
(12) “Target January 2009 transition (allow 12 months for development)” (slide 60);
(13) “Key success factors”, “Full category transition to Ultra concentrates - Powders and liquids” and “All vendors to align on category initiative - Trade partner or industry body to lead; Agreed transition date” (slide 63); and
(14) “Next Steps”, including that:
(a) “Woolworths: Confirm Jan 2009 transition plan”, “Seek stakeholder feedback from other vendors” and “Confirm timeline viability”; and
(b) “Colgate-Palmolive: Pursue legal approval for proposed industry sustainability initiative” (slide 64).
46 At the meeting with Colgate on 8 January 2008:
(1) Woolworths’ response was to the following effect:
(a) “We will be very happy to support you, to stand up in a profession meeting and say that it sounds a very good way to do it, but not beyond this”;
(b) “We are 100% behind you”;
(c) “Next steps” included “Get the legal approvement to start the process particularly with industry approach”; and
(d) “Your timing is good: aligned with the 2009 category review timing (january)”;
(2) Woolworths agreed that Colgate would keep it informed of all steps in respect of the proposal; and
(3) Woolworths agreed that the proposed industry wide transition is good for the suppliers and good for the retailers.
47 On 8 January 2008 at 8:22 pm, Eric Jeanmaire of Colgate sent the email COL.505.001.0935, attaching COL.505.001.0936 being a document entitled ‘WW Detergent ultra meeting minutes 8 jan [sic] 08’, to Paul Ansell and other Colgate recipients.
48 On 9 January 2008 at 12:38 pm, Paul Ansell of Colgate sent the email COL.501.006.9791, attaching a copy of the minutes, to Andrea Lagioia and Andrew Shepard of Colgate. In Mr Ansell’s email, he said:
“We met with Wow yesterday to excite them on CP Ultra launch in Jan 2009
To quote them "no need to sell concept, we are on same page"
Sean Bone did a very good presentation
They also shared what a great job the light bulb industry has done
They also guided that we must have a PR response plan ready to answer potential media challenge
The net issue is that they WILL NOT provide retailer leadership in the same way as Walmart US has done. (this is what we were trying to acheive [sic])
They will be supportive on our launch, they will share and encourage others ( if we wish) but they WILL NOT take punitive action against any supplier who does not convert to Ultras in 2009.
They highlighted that Unilever and Cussons were showing leadership and taking risks in liquid currently and we can jump onto this now in liquids !”
8 January 2008 internal Unilever email
49 On 8 January 2008 at 11:46 am, Dana Buchanan of Unilever sent the email UAL.006.0005.0119, attaching UAL.006.0005.0124 being a document entitled ‘NPD Brief_ Faster 8.01.08’, to Kerry Lynch of Unilever, copied to other Unilever recipients including Geoffrey Bellingham and Michelle Katz.
10 March 2008 meeting of Colgate and Accord
50 A meeting was held on 10 March 2008 and attended by representatives of Colgate and Accord.
51 The meeting was attended by:
(1) Sean Bone, Andrea Lagioia, Andrew Shepard and Sarah Whitaker of Colgate;
(2) Craig Brock and Bronwyn Capanna of Accord.
52 Colgate prepared the following documents for the purposes of that meeting:
(1) the attachments to the email COL.530.001.1176 from Sean Bone sent on 29 February 2008 at 1:36 pm:
(a) COL.530.001.1177, being a document entitled ‘Household Laundry Detergent Environmental Policy (HLDEP) PROPOSAL’ (Colgate HLDEP Proposal);
(b) COL.530.001.1181, being a document entitled ‘Household Laundry Detergent Environmental Policy Proposal - avoiding TPA issues’; and
(c) COL.530.001.1182, being a document entitled ‘Ultra detergents sustainability initiative - Notes for discussion with Executive Director of ACCORD’; and
(2) the attachments to the email COL.561.001.1433 from Sean Bone sent on 10 March 2008:
6. (i) COL.561.001.1434, being a slideshow presentation entitled ‘household detergents sustainability initiative’; and
7. (ii) COL.561.001.1539, being a ‘key points’ summary page.
53 The Colgate HLDEP Proposal was presented by representatives of Colgate at that meeting.
54 The matters discussed at that meeting included, but were not necessarily limited to, the matters recorded in the following documents:
(1) COL.530.001.1182, being a document entitled ‘Ultra detergents sustainability initiative - Notes for discussion with Executive Director of ACCORD’;
(2) the Colgate HLDEP Proposal;
(3) COL.505.001.5170, being an email from Sean Bone to Colgate recipients on 10 March at 5:55 pm; and
(4) COL.521.002.0140, being an email from Sarah Whitaker to Colgate recipients on 19 March 2008.
55 The Colgate HLDEP Proposal included the following statements:
(1) “Proposal to ACCORD as an enabler to an industry-wide, non-partisan sustainability initiative with non-mandatory agreement to transition to higher concentration detergent formulas by end-January 2009” (Page 1).
(2) “It is recognised that the best case scenario is for this agreement to be voluntarily entered into by all manufacturers of laundry detergent in Australia and New Zealand (recognising near-universal common supply) and all retailers and wholesalers of those detergents. This includes, but is not limited to:
1. Woolworths Pty Ltd
2. Coles Group Pty Ltd
3. Metcash Pty Ltd
4. Unilever Australasia
5. Colgate-Palmolive Pty Ltd
6. PZ Cussons Australia Pty Ltd
The agreement would of course be non mandatory.” (Page 2)
(3) “It is proposed that participants in this scheme will (1) Agree to adopt voluntary agreement to transition all currently non-complying laundry detergents by an agreed date in 2009” (Page 4).
(4) “Shelf impression (pack size) is recognised as a key area of competitive advantage in this market, due to its potential to influence the consumer price / value perception. As the key to improved sustainability is in reduced packaging it is proposed that a fixed duration (ie 12 month) non-partisan certification be adopted to ensure compliance with the above definition of sustainable concentration. While imposing a temporary constraint on market players, this action would in no way lessen the high and sustained level of competition already present in this market. It would however have the benefit of addressing the risk of non-compliant products being introduced during the time of the agreement. This will deter the incidence of misleading and deceptive conduct such as simply moving to a smaller dosage, without comparable increase in overall performance. Equally it will preclude attempts to gain a competitive advantage through reducing the density of products, such that while weight is reduced there is not a commensurate reduction in actual product volume/size, which would significantly lessen the intended benefit of concentration.” (Pages 2-3).
(5) “…this will need some visual reference for consumers and competitors, to ensure a fully informed market…This will allow clear, non-partisan communication of the sustainability benefit, rewarding those who comply and highlighting those products that do not comply or who may seek to engage in misleading or deceiving consumers.… This submission proposes this to 'enable' the rapid understanding, acceptance and adoption of this new generation of detergents, with a common goal of facilitating the transition of the entire detergent market to this more environmentally sustainable format in 2009. It is envisaged that common labelling and compliance stay in effect only so long as necessary to establish the initiative fully and permanently in the marketplace. This is likely to be no more than 18 months from first appearance on pack, or as agreed by parties to this agreement.” (Pages 3-4).
(6) “Next Steps” included “Target in-principal [sic] agreement from all suppliers and distributors – end Apr-08” and “All products transitioned to sustainable concentration by agreed date in 2009” (Page 4).
56 At the meeting, Colgate made statements to Accord to the following effect:
(1) “Colgate-Palmolive has developed a proposal for an industry wide sustainability initiative in relation to higher concentration detergent formulas. We would like ACCORD to act as enabler for this initiative, based on its experience as enabler of the existing Phosphate labelling agreement.”
(2) “The initiative would involve industry participants agreeing, on a voluntary basis, to transition to higher concentration laundry detergent formulas by the end of January 2009. Industry participants would include Woolworths, Coles Group, Metcash, Unilever Australasia and PZ Cussons Australia as well as Colgate-Palmolive. The initiative would, however, be open to other industry or relevant participants.”
(3) “The change to detergent concentrations would be accompanied by the introduction of non-partisan certification to ensure compliance with standards”
(4) “Common labelling would stay in effect only for as long as is necessary to permanently establish the initiative, probably for no more than 18 months”.
57 At the meeting, it was agreed that Accord would:
(1) take the Colgate HLDEP Proposal to the General Managers of each manufacturer of household laundry detergents using a proposal that was not attributed to Colgate; and
(2) organise and facilitate a meeting of household laundry detergent manufacturer General Managers to seek agreement and alignment on a proposal in similar terms to the Colgate HLDEP Proposal without attributing it to Colgate.
58 Mr Bone’s email on 10 March 2008, sent immediately after meeting with Accord stated: “Obviously the critical element is to understand the interest among Unilever, PZ Cussons and all the other players, and their stance on timings. Still shooting for January 2009 as our 'best case'.”
18 April 2008 email from Accord to Colgate, Cussons, Unilever and others
59 On 18 April 2008, at 2:32 pm, Bronwyn Capanna of Accord sent the email ACR.001.001.0012 to:
(1) Andrea Lagioia of Colgate;
(2) George Fatouros of Cussons;
(3) Jennifer Moss of Unilever;
(4) Doug French of Kao; and
(5) Ian Gamble of Amway.
60 The email attached ACR.001.001.0013, being a document entitled ‘Household Laundry Detergent Sustainability Initiative (Proposal)’ (Accord Proposal). The Accord Proposal was similar to the Colgate HLDEP Proposal, but it was titled “Household Laundry Detergent Sustainability Initiative”, it did not identify Colgate as the author, and the “Scale and Scope” section did not refer to retailers and wholesalers being parties to the proposed voluntary agreement. In particular, the Accord Proposal includes the parts of the Colgate HLDEP Proposal quoted in paragraph 55 above, except that:
(1) in relation to the extract quoted at paragraph 55(1) above, the words “Proposal to ACCORD as an enabler to” were replaced with “ACCORD has been approached to enable” and “detergent formulas” were replaced with “household laundry detergent products”; and
(2) in relation to the extract quoted at 55(2) above, the words “and New Zealand” were deleted, the words “and all retailers and wholesalers” were replaced by “with the support of all retailers and wholesalers” and the list of proposed parties was Amway, Colgate, Kao, Cussons and Unilever.
28 April 2008 visit to Unilever Centre of Excellence by Woolworths in the United States
61 On 28 April 2008, representatives of Unilever and Woolworths were present at a North American study tour organised between the two companies.
62 The representatives of Unilever and Woolworths attending the North American study tour on 28 April 2008 were:
(1) James Aylen, Gordon Duncan and Brad McCarry of Woolworths; and
(2) Ken Basha, Peter Campbell and David McNeil of Unilever.
63 On 28 April 2008, those representatives attended Unilever’s Centre of Excellence, located in New Jersey in the United States of America.
64 At Unilever’s Centre of Excellence on 28 April 2008, the Unilever and Woolworths representatives attended a number of different sessions with representatives of Unilever USA, including:
(1) a presentation on new health and beauty products; and
(2) a briefing in respect of the launch of ultra concentrated laundry products in North America.
30 April 2008 meeting of Colgate, Cussons, Unilever and others
65 A meeting was held on 30 April 2008 and attended by representatives of Colgate, Cussons, Unilever, Amway and Accord.
66 The meeting was attended by:
(1) Andrea Lagioia of Colgate;
(2) George Fatouros of Cussons;
(3) Jennifer Moss of Unilever;
(4) Ian Gamble of Amway; and
(5) Craig Brock and Bronwyn Capanna of Accord.
67 During that meeting, the attendees discussed the Accord Proposal, which was attached to the email sent to them by Accord on 18 April 2008.
68 On 23 July 2008, Bronwyn Capanna sent the email UAL.008.0001.1323.
69 The matters discussed and outcomes of that meeting included the matters recorded in that email UAL.008.0001.1323.
70 In particular, the email noted the following “draft outcomes of the meeting held Wednesday 30th April 2008”:
“Companies were asked to express their initial views. Colgate Palmolive indicated that they had been the authors of the original proposal put to ACCORD, as historically the Australian market had been slow to move to concentrated format, and there were believed to be considerable environmental advantages and benefits of promoting to much more ‘ultra’ concentrated formulations, including reduced use of packaging and transport resources.
In summary the consensus of those present at the meeting was:
In principle support was provided, noting that the project should be a part of ACCORD’s overarching sustainability framework and a component of the Washwise initiative …
Any such code needs to be open to members and non-members, voluntary, and compliant with the Trade Practices Act…
Specifics need to be considerably reviewed and redrafted e.g. needs to be simplified, less prescriptive, original timing is unrealistic, and a communication campaign would need to be better developed…
Proposal should be recast into preferably a one/two page document, reviewed by the CEOs of this group prior to being sent for subsequent review by our lawyers Middleton’s
Proposal then to be taken up with ACCC for discussion”.
15 May 2008 meeting of Colgate (including Paul Ansell) and Woolworths
71 A meeting was held on 15 May 2008 and attended by representatives of Colgate, including Paul Ansell, and Woolworths.
72 The meeting was attended by:
(1) Paul Ansell and Nick Ryan of Colgate; and
(2) James Aylen and Brad McCarry of Woolworths.
73 At the meeting on 15 May 2008, Colgate made a presentation to Woolworths, COL.800.001.5053–001 entitled ‘Business Update 15th May 2008’, which contained slides stating that:
(1) “Proposal to Accord as enablers to an industry-wide, non-partisan sustainability initiative seeking agreement to transition to higher concentration detergent formulas in Q1 2009” (slide 17);
(2) “General Managers Meeting April 08 ” (slide 18); and
(3) “In principle agreement between member companies May 08”.
74 Colgate made statements to Woolworths during the meeting to the effect of the statements extracted in paragraph 73 above.
75 On 21 May 2008 at 10.08 am, Nick Ryan sent the email COL.800.001.5053, which attached document COL.800.001.5067, to Brad McCarry, copied to Paul Ansell.
76 Document COL.800.001.5067 is entitled “Colgate/Woolworths 15th May, 2008”, and is described in the email COL.800.001.5053 as “the minutes from last week”, being the meeting held on 15 May 2008.
19-22 May 2008 internal Colgate meetings
77 There was a series of meetings held on 19, 20, 21 and 22 May 2008, attended by representatives of Colgate.
78 The meetings held on 19, 20, 21 and 22 May 2008 were divided into different meetings and sessions, each of which was variously attended by a number of representatives of Colgate including, but not necessarily limited to, Paul Ansell, Sean Bone, Jose Manuel Estrada, Pierre Fonsny, John Garside, Andrea Lagioia, Lisa Mather, Maria Fernanda Mejia, Jane Plasman, Paul Rubenach, Andrew Shepard, Tina Stoian, Michael Tangney, Alec de Guillenchmidt, Katherine Hargrove Ramundo, Robert Wilson and Jenny Pan.
79 At one of the meeting sessions on 21 May 2008:
(1) Sean Bone delivered a presentation which included, but was not necessarily limited to, slide 37 entitled “Issue 3: Execution of Smooth Transition to Ultra Detergents in 2009” (at .5774) onwards of document COL.703.005.5738; and
(2) the Colgate representatives who attended all or part of that meeting session included, but were not necessarily limited to: Sean Bone, Maria Fernanda Mejia, Michael Tangney, Alec de Guillenchmidt, Andrew Shepard, Pierre Fonsny, Robert Wilson and Jenny Pan.
80 A discussion amongst some of the session attendees followed Sean Bone’s presentation. The matters discussed included, but were not necessarily limited to, the matters recorded in COL.505.002.1037, being a document entitled ‘Mid Year Review 2—8 Mega Home Care Presentation Comments From Division’.
22 May 2008 meeting of Unilever and Woolworths
81 On 22 May 2008 at 2.41 pm, Geoff Bellingham sent the email UAL.006.0004.8764 with the subject “Follow Up from Today's Meeting” to Stan Fuchs and Susan Jones.
29 May 2008 meeting of Unilever and Woolworths
82 A meeting was held on 29 May 2008 and attended by representatives of Unilever and Woolworths.
83 The slideshow presentation UAL.009.0010.4184 entitled ‘Laundry Promotional Plan Discussion 29th May 2008’ was presented by Geoff Bellingham at that meeting.
84 On 30 May 2008 at 10.03 am, Geoff Bellingham sent an email to Stan Fuchs attaching a copy of the presentation referred to above. A copy of that email is in document UAL.009.0010.4182.
13 June 2008 meeting of Cussons and Woolworths
85 A discussion took place on or about 13 June 2008 between Stan Fuchs of Woolworths and representatives of Cussons.
86 Ben Appleby and Kym Gill were the Cussons representatives involved in the discussion.
87 The document PZC.051.002.0561, being an email from Kym Gill sent on 13 June 2008, contained notes of the discussion.
88 The document PZC.051.002.0561, being an email from Kym Gill sent on 13 June 2008, contained the following statements:
“Notes from super concentrate discussion with Stan:
Super Concentrates
- communication is CRITICAL
- if Coles change to SC & WW don’t it would be disastrous (implement in all accounts at the same time) …
- Stan’s understanding is that the industry will move to SC in June/July 09 as a category hard change
- Colgate’s will move to SC liquid in Jan 09 & powder in June 09
- Unit pricing impact - concerned about impact if the whole category does not move to SC at the same time”
16 June 2008 internal Colgate Mancom Meeting
89 On 16 June 2008, an internal Colgate management committee meeting was held, during which:
(1) a version of a presentation titled “Ultra Implementation Recommendation June 2008 Final” was presented by Robert Wilson and Sean Bone (COL.503.002.2425);
(2) the stated purpose of the meeting was to “Gain agreement to investigate a specific implementation option including completing full financial and cost analysis plus trade communication on launch plans”;
(3) as part of that presentation, it:
(a) was recognised that a “Con” accompanying a launch by Colgate of its Ultra Concentrate liquid and powder products in January 2009 is that it would be “before the ACCORD charter - Potential for sales loss if competitors don't move”;
(b) recognised Woolworths’ “Preference to go all in together in line with Category Review”;
(c) recognised Coles was “not interested in doing another layout in April- have to be inline with Category Reviews”;
(d) was recommended that the management committee decide that Colgate launch its Ultra Concentrate liquid and powder products in January 2009 “assuming validated implementation timeline”; and
(4) that recommendation was adopted by the management committee.
4 July 2008 telephone calls between Paul Ansell (Colgate) and Peter Campbell (Unilever)
90 A number of telephone calls took place between Paul Ansell and Peter Campbell on 4 July 2008, with some of those calls made by Peter Campbell to Paul Ansell and some made by Paul Ansell to Peter Campbell.
91 In particular, in the course of 4 July 2008, several telephone calls were made by Paul Ansell to Peter Campbell and by Peter Campbell to Paul Ansell:
(1) from Paul Ansell to Peter Campbell at 9:50 am for 1 minute 33 seconds;
(2) from Peter Campbell to Paul Ansell at 1:21 pm for 15 seconds;
(3) from Peter Campbell to Paul Ansell at 1:21 pm for 30 to 31 seconds;
(4) from Paul Ansell to Peter Campbell at 1:26 pm for 24 seconds;
(5) from Paul Ansell to Peter Campbell at 1:27 pm for 4 seconds;
(6) from Peter Campbell to Paul Ansell at 1:27 pm for 9 seconds;
(7) from Peter Campbell to Paul Ansell at 1:27 pm for 3 seconds;
(8) from Peter Campbell to Paul Ansell at 1:28 pm for 2 minutes and 37 seconds to 2 minutes and 39 seconds;
(9) from Paul Ansell to Peter Campbell at 1:31 for 2 minutes and 44 seconds; and
(10) from Peter Campbell to Paul Ansell at 1:41 pm for 3 minutes and 1 second.
92 During those phone calls:
(1) Mr Campbell said words to the effect of “Where are you guys at with the launch of concentrated powders next year? We are hearing from Woolworths that we are dragging the chain and that everyone else is ready to go at the end of January”;
(2) Ansell said words to the effect of, “We will make the January date but I would personally prefer a February launch simply to get over the factory shutdown, clear old stock and avoid a clash with our annual conference.”; and
(3) Mr Campbell said words to the effect of, “Well, we’ll have the conversation with them. Our preference is later rather than earlier and that is what we will try and push for.”
93 Mr Campbell does not recall whether Mr Ansell said the word “personally” before “prefer a February launch”, but even if he did, Mr Campbell would have taken that as Colgate’s position on the issue at that point in time, not simply Mr Ansell’s personal opinion.
7 July 2008 internal Unilever email
94 Peter Campbell of Unilever sent an email, UAL.011.0001.3195, to Sebastian Lazell, David McNeil, Jenifer Moss, Martin Nicholas and John Simpson of Unilever on 7 July 2008 at 11:17 am.
95 The email indicated that Peter Campbell had heard that Colgate was struggling to meet the first quarter of 2009 timeline, and would prefer an industry launch in the second quarter of 2009.
21 and 23 July 2008 internal Colgate SPMF meetings
96 On 21 July 2008, Colgate held an internal South Pacific Management Forum meeting, during which a presentation, COL.505.002.2807, was given by Robert Wilson titled “Ultra Launch Recommendation Australia”.
97 The presentation contained the following statements under the heading “Recommendation”:
(1) “Plan for launch all Ultra (except Dynamo SCHDD) in January/February in line with current category reviews”; and
(2) “Investigate opportunity of review in Q2 and either:
- Aim to retain January Review to launch liquids and push for 2nd powders review in April to help reduce field resource
- Push January Review back to Q2 to allow more time to launch”.
98 The members of the South Pacific Management Forum accepted the recommendation, subject to some minor amendments which were reflected in the presentation delivered at a meeting of Colgate’s management committee held on 23 July 2008.
99 On 23 July 2008, Colgate held an internal management committee meeting, during which:
(1) a version of a presentation titled “Ultra Launch Recommendation Australia” was given by Robert Wilson (a version of which is at COL.505.002.5480);
(2) the presentation contained the following statement under the heading “Recommendation”: “Plan for launch all Ultra (except Dynamo SCHDD) in January/February in line with current category reviews”; and
(3) the members of the management committee accepted this recommendation.
30 July 2008 meeting of Unilever and Woolworths
100 A meeting was held on 30 July 2008 and attended by representatives of Unilever and Woolworths.
101 The meeting was attended by, at least, Brad McCarry of Woolworths.
102 On 6 August 2008 at 2.33 pm, Geoff Bellingham sent the email UAL.013.0001.7104 to Brad McCarry, Stan Fuchs and Susan Jones, copied to Unilever recipients. The email attached documents UAL.013.0001.7106 and UAL.013.0001.7108.
30 July 2008 internal Woolworths email
103 Brad McCarry sent an email, LDS.100.003.0332, to Stan Fuchs on 30 July 2008 at 6.09 pm.
104 In his email, Brad McCarry said “I have a couple of key points that I want to discuss before you go into meet with Colgate.”
31 July 2008 meeting of Colgate and Woolworths
105 A meeting was held on 31 July 2008 and attended by:
(1) representatives of Woolworths including Stan Fuchs, Susan Jones and others; and
(2) representatives of Colgate including, but not necessarily limited to, Sean Bone, Mark Martin, Emma Paterson, Paul Rampling, Nick Ryan, Courtney Taylor and Robert Wilson.
106 Emma Paterson sent an email LDS.005.002.0001 to Stan Fuchs and Susan Jones, amongst others, on 24 July 2008 attaching the meeting agenda LDS.005.002.0002.
107 The slideshow presentation COL.505.002.4375 entitled ‘Ultra Detergents 31 July 2008’ was presented by Colgate to Woolworths at that meeting, and the document COL.506.003.2297 entitled ‘Ultra Detergents Supply Chain Transition Woolworths / Colgate-Palmolive Workshop Thursday 31st July 2008’ (Colgate Supply Chain Transition Presentation) was also presented by Colgate to Woolworths at that meeting.
108 The matters discussed at that meeting included, but were not necessarily limited to, the matters recorded in the following documents:
(1) COL.506.002.9861, being an email from Emma Paterson sent on 5 August 2008 to Colgate recipients, and the attached minutes COL.506.002.9862; and
(2) COL.519.001.8389, being an email from Emma Paterson sent on 8 August 2008 to Stan Fuchs, Susan Jones and Brad McCarry, amongst others, and the attached minutes COL.519.001.8390.
109 The Colgate Supply Chain Transition Presentation stated, “Processes and steps needed to ensure a smooth and efficient transition of Colgate-Palmolive detergents to the new Ultra concentrate sizes. A few points to remember… Ship date of new lines from Ingleburn is 26/1/09. Planogram to stores is due 9/2/09” (slide 18).
110 The minutes of the meeting stated:
(1) “…neither Unilever or Cussons had raised the complexities attached with a full category transition”;
(2) “Communicated industry ship date is WC 26/1 and plan is to transition all SKUs on this date”;
(3) “WW's are concerned that there will be a high degee [sic] of confusion for shoppers created during the transition period”; and
(4) “Need to confirm planned transition timings for all products”.
1 August 2008 communication from Woolworths to Cussons
111 On 1 August 2008 at 12.52 pm, Kym Gill sent the email PZC.002.001.0131 to a number of Cussons recipients.
112 The email included the following statements:
"Super concentrate update just in from WW (via Ben):
1. Unilever & Colgate both talking 500g & 1kg pack sizes
2. Both looking at around 60g scoop size
3. Both actively looking at ways to communicate/have 2x concentrate message on pack
4. WW (Stan) looking to bring range review forward to October 08 - does not expect final 'paperwork' etc but looking for mock-up samples/pricing direction etc - wants time to plan for the changeover so actual implementation timing likely not to change
5. Pick-slot management will be critical to changeover - suggest Matt McMillan attend WW Workshop now confirmed for 25th August"
7 August 2008 telephone calls by Peter Campbell (Unilever) to Paul Ansell (Colgate)
113 On 7 August 2008, Peter Campbell made two telephone calls to Paul Ansell at:
(1) 7:59 am for 43 seconds; and
(2) 4:42 pm for 22 minutes and 35 seconds.
114 During those discussions, Mr Campbell and Mr Ansell may have discussed the launch date for the transition to Ultra Concentrates.
8 August 2008 meeting of Colgate and Woolworths
115 A meeting was held on 8 August 2008 and attended by representatives of Colgate and Woolworths.
116 The meeting was attended by:
(1) Nick Ryan of Colgate; and
(2) Brad McCarry of Woolworths.
117 The matters discussed at that meeting included, but were not necessarily limited to, the matters recorded in document COL.505.002.6190 being a document entitled ‘Colgate / Woolworths Meeting – Nick Ryan / Brad McCarry 8th August, 2008’.
118 That document stated:
(1) “Brad was keen to know where the industry initiative approach was at with ACCC / Accord etc. I responded that it appears that this is going slow and that they need their own plan to make it work. I also said that we are the best placed supplier to make it work with them given our size & brands”;
(2) “Brad made the point that Woolworths had the most to lose from a bad transition & everyone flooding to Mass & discounter channel [sic] for better value (per Kg etc). He did accept my counter point that it was in fact Colgate that had the most to lose, so that we had a common interest in success!”; and
(3) “Woolworths have meet [sic] with Unilever (& us), and are meeting with Cussons next week. After that they will form a working group that Brad is already coordinating.”
11 August 2008 meeting of Colgate (including Paul Ansell) and Woolworths
119 A meeting was held on 11 August 2008 and was attended by:
(1) Paul Ansell, Tina Stoian and Nick Ryan, as representatives of Colgate; and
(2) Naum Onikul and James Aylen, as representatives of Woolworths.
120 The slideshow presentation COL.529.001.0487 entitled ‘Business Update 11 August 2008’ was presented by Colgate at that meeting (11 August 2008 Business Update Presentation).
121 The 11 August 2008 Business Update Presentation contains a slide which states “Packaging material savings est 25% reduction” and “Massive supply chain efficiencies est 37%+” and Colgate made a statement to Woolworths to that effect.
122 Document COL.101.002.0001 contains handwritten notes made by Paul Ansell during the meeting.
123 Mr Ansell made the following handwritten notes of the conversation:
“1 March
- Other suppliers
- Resources
- OOS [i.e. “out of stocks”]
- Holidays”
124 Document COL.516.004.3040 is Colgate’s internal draft minutes of the meeting with Paul Ansell’s comments highlighted in red.
125 That document states:
Ultra Conversion for detergent Category – major opportunity requiring major resource focus by Woolworths & Colgate (& all suppliers)
126 Mr Ansell’s comments to that document included “I would not reference other suppliers”.
127 Document COL.516.004.3039 is an email sent by Paul Ansell to Nick Ryan and others at Colgate sent on 12 August 2008 at 5.47 pm, which attached COL.516.004.3040.
128 The matters discussed at that meeting included, but were not necessarily limited to, the matters recorded in document COL.516.004.2610, being a document referred to as “a few brief minutes of the meeting” and which were attached to the email COL.516.004.2607 from Nick Ryan to Naum Onikul and James Aylen, and copied to Paul Ansell and Tina Stoian, sent on 12 August 2008 at 6.28 pm.
129 Those minutes state in relation to “Ultra Conversion for detergent Category”:
(1) “Woolworths to assess pushing back the review by 1 month to avoid risk to sales during peak sales period of category & historical holiday period of many merchandisers.”; and
(2) “Ultra seen as a key / one off opportunity to change some of the category dynamics.”
11 August 2008 telephone call by Paul Ansell (Colgate) to Peter Campbell (Unilever)
130 Paul Ansell called Peter Campbell on 11 August 2008 at 12.46 pm for 2 minutes and 28 seconds.
131 Paul Ansell made that telephone call to Peter Campbell whilst he was driving from the meeting that he attended with Naum Onikul and James Aylen of Woolworths at Woolworths’ offices on 11 August 2008.
132 Paul Ansell says it is possible that he told Peter Campbell about the discussion he had just had with Woolworths.
11 August 2008 email from Woolworths
133 On 11 August 2008 at 3.40 pm, Stan Fuchs of Woolworths sent the email, LDS.005.001.0074 to “undisclosed recipients”.
134 Stan Fuchs believes that he sent this email to all of the vendors who supplied Woolworths with laundry products.
135 The email was received by, at least, representatives of:
(1) Colgate;
(2) Cussons;
(3) Unilever;
(4) Kao; and
(5) FGB Natural Products.
136 Specifically, the email was received by, at least:
(1) Simon Russell of Colgate;
(2) Ben Appleby of Cussons;
(3) Geoff Bellingham of Unilever;
(4) Greg Collins of Kao; and
(5) Tegan Abbott and/or Eileen Bond of FGB Natural Products.
137 The email stated:
“G’day All,
This is a generic e-mail being sent to all of the laundry vendors.
It is my understanding that all vendors will be changing over to super / ultra concentrates in line with our next laundry review (in store 11/02/2009)
If this is not the case please can you let me know as soon as possible in order for us to plan this changeover project?
Please can you also let me know if you will be selling regular and concentrate laundry powders into any other channels?
Attached, please find a spreadsheet for you to enter all the new dimensions as we will need to do a few POG mock ups”
138 The email attached LDS.005.001.0074, being a spreadsheet entitled “Ultra Detergent Pack Dimensions.xls”.
11 August 2008 internal Colgate email
139 At 3.54 pm on 11 August 2008, by email COL.532.003.9053, Simon Russell of Colgate forwarded a copy of the email from Stan Fuchs at 3.40pm that day and its attached spreadsheet to Mark Martin and Nick Ryan of Colgate, and stated: “The ball is rolling”.
12 August 2008 email from Woolworths
140 On 12 August 2008, Stan Fuchs of Woolworths sent the email LDS.006.001.0258.
141 The email was sent by Stan Fuchs of Woolworths to “undisclosed recipients”.
142 The email was received by, at least, representatives of:
(1) Colgate; and
(2) Cussons.
143 Specifically, the email was received by, at least:
(1) Simon Russell of Colgate; and
(2) Ben Appleby of Cussons.
18 August 2008 internal Colgate emails
144 On 18 August 2008, Paul Ansell, Nick Ryan and Simon Russell of Colgate engaged in the email correspondence COL.800.001.7965 regarding Woolworths’ position on the launch date for ultra concentrated laundry detergents.
145 Specifically, at 9.13am, Paul Ansell emailed Nick Ryan saying:
“Can we confirm we are oK [sic] for 1 March
They were to respond on Friday
Coles is OK for 1March [sic] and we believe competition prefers 1 March
Do you want me to call James ?
Need an answer this morning
But we need March”
146 At 10.28 am, Nick Ryan emailed Simon Russell saying “can you get an update from Stan & press him on if they have discussed with James?”
18 August 2008 conversation between Stan Fuchs (Woolworths) and Simon Russell (Colgate) at Woolworths’ Perishables Conference in Brisbane
147 On 18 August 2008, Woolworths’ Perishables Conference was being held in Brisbane.
148 Stan Fuchs and Simon Russell had a conversation.
149 On 18 August 2008 at 1.48pm, Simon Russell sent an email, LDS.006.001.0208, to Nick Ryan.
21 August 2008 telephone conversation between Peter Campbell (Unilever) and Bill Courtier (Cussons)
150 Peter Campbell of Unilever called Bill Courtier of Cussons on 21 August 2008 at 7:06 pm for 7 minutes and 36 seconds.
25 August 2008 conversation between Nick Ryan (Colgate) and Brad McCarry (Woolworths)
151 On 25 August 2008, Nick Ryan had a telephone conversation with Brad McCarry and sent an email to Paul Ansell and others at Colgate on 25 August 2008 at 5:10 pm (COL.800.001.1330). In the email, he said:
“[Brad] said he had spoken to James, his recommendation to James was to stick to planned dates, but he also said to me he with [sic] go with James recommendation.
Earlier in the conversation he did make the comment that if people are not ready, he said it was just bad luck for them (I mentioned that we had been told by Stan Unilever may miss a couple of products). I said shipping later was about missing a key period & lowering risk.
Brad is still working out how to do this transition in Woolworths, they are meeting Cussons today (?), Brad I think is catching up with Cussons later this week, his head is currently at transition some states earlier than others to manage the SOH clearance risk / expense for Woolworths (& Colgate). So on the 1st March ship he said he was thinking WA, SA & TAS 16th Feb & then 2 weeks after that QLD & VIC & then NSW the week after that. He really is just looking at idea’s [sic] at present. I mentioned that we to [sic] had considered a state by state transition but he would need to consider what he thought about competitors having slightly different transitions, which I played down to him.”
…
“TO CLARIFY ON SHIP DATE - given the conversation I have had w/c 16/2 in WA & SA is what Woolworths are saying today & then eastern seaboard 2nd March. This is without talking to some competitors.”
152 Paul Ansell forwarded that email to Paul Rubenach, Andrew Shepard and Tina Stoian on 25 August 2008 at 6:32 pm, saying “As discussed, positive news” (COL.800.001.1330).
25 August 2008 meeting of Cussons and Woolworths
153 A meeting was held on 25 August 2008 and attended by representatives of Cussons and Woolworths.
154 The meeting was attended by representatives of Cussons including, but not necessarily limited to, Kym Gill and Scott Wilson of Cussons.
155 The document PZC.009.001.0202, being an email from Kym Gill sent on 26 August 2008, attached PZC.009.001.0203, being notes of the discussion.
25 August 2008 email at 4:37 pm from Colgate to Woolworths
156 On 25 August 2008 at 4:37 pm, Nick Ryan of Colgate sent an email to Brad McCarry of Woolworths, which is the first email in the chain COL.504.001.1195. Mr Ryan’s email referred to “your [Woolworths’] email of 12 August which was sent from Stan [Fuchs] to Simon Russell of Colgate-Palmolive, and other undisclosed recipients.” At 4:38 pm, Nick Ryan forwarded a copy of that email to Paul Ansell, Lisa Mather and Simon Russell of Colgate, being the second email in the chain COL.504.001.1195.
26 August 2008 email at 3:58 pm from Unilever to Woolworths
157 On 26 August 2008 at 3:58 pm, Geoff Bellingham of Unilever sent the email UAL.006.0001.3562 to Stan Fuchs of Woolworths.
158 The email attached UAL.006.0001.3564, being a spreadsheet entitled “Ultra Detergent Pack Dimensions – Unilever”.
26 August 2008 email at 4:59 pm from Unilever to Woolworths
159 On 26 August 2008 at 4:59 pm, Geoff Bellingham of Unilever sent the email UAL.017.0001.0735 to Stan Fuchs of Woolworths.
27 August 2008 discussion between Unilever and Woolworths
160 On 28 August 2008 at 9.51 am, Geoff Bellingham of Unilever sent the email UAL.006.0001.3655 with the subject heading “WW's Powder Concentration Update” to Unilever recipients, copied to Ken Basha.
29 August 2008 email from Coles to Colgate
161 On 29 August 2008, Paul Schadel (Coles) had a conversation with Emma Grant (Colgate) in which he “confirmed that Coles will align to the March date for Ultra detergents”, as recorded in Ms Grant’s email to various Colgate recipients at 11:00 am that day (COL.525.002.3441).
29 August 2008 internal Colgate (including Paul Ansell) email
162 Simon Pearce of Colgate sent an email, COL.505.002.7973, to various Colgate recipients on 29 August 2008 at 10:09 am.
163 One of the lines in the email stated that “We now have final confirmation from both Coles & W/W’s that they will accept a shipment later than 26 Jan. The new instore date for Ultras is 2 March… The Instore [sic] launch of Ultras in all states is Mon 2 Mar”.
Understanding as to transition date
164 By the end of August 2008, Colgate’s understanding was that:
(1) Woolworths and Coles would each accept shipments of Ultra Concentrates later than 26 January 2009 and that the in-store launch dates of Ultra Concentrates would be 2 March 2009;
(2) Woolworths’ and Coles’ shipment and in-store launch dates for Ultra Concentrates would also apply in respect of Unilever and Cussons; and
(3) Colgate, Cussons and Unilever would all be changing over their remaining Standard Concentrates to Ultra Concentrates at around the same date so as to achieve a transition in early 2009 with an in-store launch of 2 March 2009.
29 September 2008 meeting between representatives of Accord and ACCC Commissioner
165 A meeting was held on 29 September 2008 and attended by representatives of Accord and the ACCC.
166 The meeting was attended by:
(1) Bronwyn Capanna and Craig Brock of Accord;
(2) Bernard Evans of Middletons (Accord's lawyers); and
(3) Commissioner John Martin of the ACCC.
167 On 3 October 2008 at 9:43 am, Bernard Evans of Middletons (Accord’s lawyers) sent the email ACR.001.001.0206 to Bronwyn Capanna and Craig Brock of Accord. The email attached Mr Evans’ file note of the meeting on 29 September 2008, being document ACR.001.001.0207.
168 On 12 November 2008 at 6:59 pm, Bronwyn Capanna of Accord sent an email to Paul Rubenach and Lisa Mather of Colgate, Mary Weir and Jennifer Moss of Unilever, and Mark Davey of Cussons, copied to others. A copy of the email is contained in COL.504.001.2366.
10 October 2008 meeting of Accord, Colgate, Cussons and Unilever
169 A meeting was held on 10 October 2008 and attended by:
(1) Bronwyn Capanna and Craig Brock of Accord;
(2) Paul Rubenach and Lisa Mather of Colgate;
(3) Mark Davey of Cussons;
(4) Jennifer Moss of Unilever; and
(5) Bernard Evans and Erin McGushin of Middletons.
170 During the meeting, the attendees had the following discussion:
- Companies were asked to comment on this feedback and their company’s position on the proposal for a 5-star labelling scheme for concentration (as proposed at the previous meeting) and the need to include a transition for all existing products.
- Colgate Palmolive representatives stated that there had been a reconsideration of the proposal for labelling for laundry concentration and that the company was not now in favour of such a proposal. The company view was that voluntary industry labelling initiatives should only be undertaken as a pre-emptive step to avoiding regulatory action (as in the case of phosphate labelling in Australia).
- Unilever representative confirmed their support for a 5-star approach. (ACCORD also advised that Kao and Amway had expressed similar support for this proposal.)
- PZ Cussons representative expressed a preference for a 5-star approach but indicated willingness to consider a simpler alternative scheme.
- The meeting debated the respective positions.
- After much discussion the following was concluded:
o There was no agreement in support of pursuing industry wide consistent labelling and an associated standard, either five star or other readily apparent identifier;
o ACCORD could therefore not establish a scheme to meet any agreed minimum concentration standard to transition all existing products (and therefore no basis for ACCC authorisation);
o ACCORD should incorporate messages about the role of concentration in increasing sustainability on the Washwise website;
o In an attempt to develop an ‘industry’ definition for concentration in support of this, companies should individually provide ACCORD with their definitions of a ‘concentrated’ product; and
o ACCORD should also approach our Canadian sister association for any information they have on addressing concentration messages for their market.
171 The matters discussed and outcomes of that meeting included the matters in paragraph 170 above.
22 December 2008 email at 2.47 pm from Woolworths to Colgate, Cussons and Unilever
172 On 22 December 2008 at 2.46 pm, Stan Fuchs of Woolworths sent the email UAL.017.0001.0545 to:
(1) Simon Russell of Colgate;
(2) Aaron Miglioranza of Cussons; and
(3) Geoff Bellingham of Unilever.
173 The email attached UAL.017.0001.0547, being a spreadsheet entitled “Ultra Detergent Pack Dimensions”.
22 December 2008 email at 5.15 pm from Woolworths to Colgate, Cussons and Unilever
174 On 22 December 2008 at 5.15 pm, Stan Fuchs of Woolworths sent the email UAL.006.0001.5185 to:
(1) Simon Russell of Colgate;
(2) Aaron Miglioranza of Cussons; and
(3) Geoff Bellingham of Unilever.
5 January 2009 email from Woolworths to Colgate, Cussons and Unilever
175 On 5 January 2009 at 8.29 am, Stan Fuchs of Woolworths sent the email which is the first email in the chain UAL.017.0001.0751 to:
(1) Simon Russell of Colgate;
(2) Aaron Miglioranza of Cussons; and
(3) Geoff Bellingham of Unilever.
176 In the email, Stan Fuchs requested that each of Colgate, Cussons and Unilever provide him with their advertising schedule for the launch of ultra concentrated laundry detergents.
Introduction of Ultra Concentrates
177 From in or around early February 2009, in relation to the supply of laundry detergent products to Woolworths, Coles and Metcash:
(1) Colgate introduced powder and liquid Ultra Concentrate products across each of its brands except Love n Care, and ceased the supply of its previous powder and liquid Standard Concentrate products, save in respect of the sell-down of certain products and the supply of a small number of Standard Concentrate SKUs to Metcash and Coles;
(2) Unilever introduced powder Ultra Concentrate products across each of its brands, and ceased the supply of its previous powder Standard Concentrate products, save in respect of the sell-down of certain products; and
(3) Cussons introduced powder Ultra Concentrate products across each of its brands except Down to Earth and some additional liquid Ultra Concentrate products, and ceased the supply of most of its previous powder and liquid Standard Concentrate products, save in respect of the sell-down of certain products and the supply of a small number of Standard Concentrate SKUs to Woolworths, Coles and Metcash.
Margin improvement
178 On 4 May 2009, Colgate held a management committee meeting, during which:
(1) a version of a presentation titled “Australia Ultra Transition March 2009 – 2009 MYR – Ultra Detergents Results” was given by Robert Wilson and Sergio Petrillo (a version of which is at COL.507.002.8008);
(2) as part of that presentation, it was identified that, as at in or around May 2009:
(a) Colgate’s margin on its laundry detergents with Ultra Concentrates (including January SCHDD and HDL sales plus clearance of old lines) was 40.5%, compared to the margin that Colgate had previously made on its laundry detergents in 2008, which was 37%;
(b) without the transition to Ultra Concentrates, Colgate’s margin on its laundry detergents would have been 14.2% lower, at 26.3%; and
(c) the transition to Ultra Concentrates delivered $20.7 million in savings to Colgate.
Further facts in relation to the Laundry Information Sharing Arrangement
179 From mid-2008 to late 2008, Colgate was considering all opportunities to take price increases across its range of products, including laundry detergents, for reasons including rising costs of raw materials used in manufacturing laundry detergents, continuing margin pressures, and the impact of the global financial crisis and the significant drop in the Australian exchange rate on its margins.
Telephone calls between Paul Ansell (Colgate) and Peter Campbell (Unilever)
180 Paul Ansell of Colgate and Peter Campbell of Unilever called each other on numerous occasions in the period from January to October 2008.
181 On 28 October 2008, Mr Campbell was made redundant from his role at Unilever and was on ‘gardening leave’ until March 2009.
182 In particular, those calls included the 39 telephone calls detailed in Annexure D.
183 During some of those calls, Mr Ansell and Mr Campbell engaged in discussions:
(1) regarding the launch date of Ultra Concentrates;
(2) regarding the STPP shortage and the impact this was having on the pricing of STPP; and
(3) in which they shared confidential and commercially sensitive information about the price of Colgate’s laundry detergents, as explained in relation to the particular calls set out below.
8 September 2008 internal Colgate email and meeting
184 Loren Donaldson of Colgate sent an email, COL.506.003.4073, to various Colgate recipients on 8 September 2008 at 11:58 am.
185 The email stated, “Due to significant cost increases experienced in Detergents going forward, we will be taking an immediate SPI (6wks notice still required) on the Cold Power Base 2kg and the Cold Power with Cuddly 2kg bundles to shelf RRP $9.99 and RRP $10.99 respective … With this move there is a change in our promotional funding strategy from RPP $5.99 to RPP $6.99 in Coles for the Cold Power Base and Dynamo Base 2kg bundles and a funding strategy change for Cold Power with Cuddly and Dynamo with Sard 2kg bundles (bundled with Cold Power/Dynamo Base 2kg in WW/Metcash) from RPP $6.99 to RPP $7.99. Promotional funding and RPP changes should be reflected by beginning of Nov … Pls advise of any issues asap”.
186 Also on 8 September 2008, an internal Colgate meeting was held in the afternoon to discuss Colgate’s “mega home care” (including laundry detergents) price increases. The minutes of the meeting, COL.505.007.9213, record that:
(1) at the meeting, price increases were proposed in relation to laundry detergents, prewash, fabric conditioners and home care;
(2) Loren Donaldson and/or Simon Voss of Colgate were to complete financials for premium liquid laundry detergent price increases “across the range and look to go ahead as soon as possible”; and
(3) Colgate’s Commercial Team should investigate opportunities for mass price increases across all fabric care.
187 Following the meeting, Loren Donaldson prepared calculations to support each of the home care price increases proposed at the meeting. Loren Donaldson sent an email, COL.505.002.8664, to various Colgate recipients on 9 September 2008 at 3:48 pm. The email included a line which stated, “The plan would be to beat the Xmas freeze on price changes to get as many of these changes through by end Nov 08 as possible.” The email attached the proposed list price changes for home care products including laundry detergents.
9 September 2008 telephone call between Paul Ansell (Colgate) and Peter Campbell (Unilever)
188 Peter Campbell of Unilever called Paul Ansell of Colgate on 9 September 2008.
189 The call was at 8:22 am and the duration of the call was 18 minutes and 48 seconds.
190 During that call, following a conversation about Peter Campbell’s departure from Unilever, a conversation took place in relation to the laundry category in words to the effect:
Campbell: Are you taking a price increase?
Ansell: Yes, we are taking a price increase.
Campbell: We have a management meeting later today. Pricing will be discussed and reviewed at this meeting. I am sure we will discuss it then as management is nervous.
9 September 2008 internal Unilever meeting
191 On or about 9 September 2008, a “Stress Test Workshop” was held internally within Unilever. At the workshop, Peter Campbell said words to the effect that he had spoken to someone from Colgate that morning and that Colgate was taking, or wanted to take, a price increase on its laundry detergents.
192 On 9 September 2008 at 21:30, Michelle Katz (Unilever) sent the email UAL.010.0004.3637, entitled “Notes from ‘stress test’ workshop for the UALT on Thursday” to Sharon Parker (Unilever).
193 On 10 September 2008 at 8.05 am, Michelle Katz (Unilever) sent the email UAL.010.0004.3642, entitled “Summary headlines from the ‘stress test workshop’ for the UALT”, to David McNeil (Unilever), copied to Sharon Parker (Unilever). Ms Katz’s email included the following as an agreed key action:
“Prepare to take a Q4 price increase (in both Australia and New Zealand) in response to intelligence that suggests that Colgate will take +5% in Oct[ober]. However, we should ensure Colgate are moving on price before we execute”
194 On 10 September 2008 at 2.19 pm, Andrew Stone (Unilever) sent the email which is part of the email chain at UAL.010.0002.8180, entitled “Please be very careful about what you put in writing.”, to Michelle Katz (Unilever) and Albert Thai (Unilever).
195 The minutes of the Unilever Australasia Leadership Team meeting of 11 September 2008, UAL.005.0007.8614, indicate that it would “consider a price increase to offset cost pressures” for Unilever’s laundry detergent products.
15 September 2008 hard copy price increase approval forms for Colgate’s November 2008 price increases
196 On or about 15 September 2008, Loren Donaldson or Alexia Ford of Colgate prepared formal price increase approval forms for price increases to take effect in November 2008 on Colgate’s “mega home care” products, including laundry detergent products, for formal sign-off by the various Colgate signatories.
197 The price increase approval forms for Colgate’s November 2008 price increases on laundry detergents were circulated from on or around 15 September 2008 to the relevant Colgate signatories and most, but not all, of the forms had been signed by 2 October 2008.
17 September 2008 telephone calls between Paul Ansell (Colgate) and Peter Campbell (Unilever)
198 Telephone calls occurred on 17 September 2008 between Paul Ansell of Colgate and Peter Campbell of Unilever.
199 The following calls occurred:
(1) from Paul Ansell to Peter Campbell at 11:06 am for 14 seconds; and
(2) from Peter Campbell to Paul Ansell at 12:59 pm for 12 minutes 43 seconds to 12 minutes 44 seconds.
200 During the call at 12.59 pm on 17 September 2008, Ansell may have referred to the possibility of an increase in Colgate's prices in respect of its laundry detergent products.
18 September 2008 internal Colgate email
201 Alistair Wright of Colgate sent an email, COL.506.003.5791, to Paul Ansell, Loren Donaldson, Brett Pearson, Stella McGaugh, Scott Noble, Alex Opie, Nick Ryan, Adam Simmons and Aidan Tarling on 18 September 2008 at 12:39 pm.
202 That email confirmed the planned price increases for a range of Colgate’s products, including laundry detergent products which were the subject of the price increase approval forms prepared on 15 September and which were planned, at the date of the email, to take effect on 24 November 2008, but which were later changed to take effect on 17 November 2008.
203 The email attached:
(1) COL.506.003.5792, being a table of personal care products entitled ‘List Price Increase effective 24.11.08’;
(2) COL.506.003.5796, being a table entitled ‘Oral Care List Price Increases effective 24.11.08’; and
(3) COL.506.003.5798, being a table of “mega home care” products, including laundry detergents, entitled ‘List Price Increase Effective 24.11.08’.
25 September 2008 Woolworths and Unilever meeting
204 On 25 September 2008, Geoff Bellingham of Unilever attended a meeting at Woolworths’ Head Office with Stan Fuchs of Woolworths and Anthony Woo of Unilever.
205 During that meeting, Mr Bellingham informed Mr Fuchs that Unilever would be taking a price increase on its laundry powders, effective from 10 November 2008.
1 October 2008 internal Colgate email
206 On 1 October 2008 at 6:54 pm, Paul Ansell sent the email COL.503.002.5638 to Fali Umrigar.
207 In that email, Mr Ansell:
(1) requested that Mr Umrigar sign-off on the proposed Colgate price increases for a range of Colgate-Palmolive’s products (including laundry detergents); and
(2) stated that the approval was required by the end of the week (3 October 2008) to avoid a delay until February 2009 after the Christmas freeze period enforced by various customers.
October 2008 Colgate price increase notification to its customers
208 In October 2008, Colgate notified its customers that price increases to its laundry detergent products would take effect from 17 November 2008.
209 Colgate notified:
(1) Coles on 10 October 2008;
(2) Woolworths on 13 October 2008;
(3) Interfrank Holdings on 15 October 2008; and
(4) Big W on 17 October 2008.
210 The notification is recorded in the following documents:
(1) COL.531.002.4781, being an email sent by Emma Grant of Colgate to Paul Schadel of Coles on 10 October 2008 at 2:04 pm;
(2) COL.800.001.2880, being a letter from Simon Russell of Colgate to Stan Fuchs of Woolworths dated 13 October 2008;
(3) COL.518.001.8825, being a letter from Alistair Wright of Colgate to Brian Carley of Interfrank Holdings dated 15 October 2008; and
(4) COL.518.001.8670, being a letter from Alistair Wright of Colgate to Rachel Gray of Big W dated 17 October 2008.
2 October 2008 Unilever price increase notification to Coles
211 On 2 October 2008 at 2.15 pm, Peter Grant of Unilever sent the email UAL.012.0004.8234 to Paul Schadel of Coles.
212 The email attached:
(1) UAL.012.0004.8235, being a letter to “Paul” dated 2 October 2008 and entitled ‘Re: Price Increases in Omo, Surf & Drive Laundry Powders Effective 10/11/2008’; and
(2) UAL.012.0004.8236, being a spreadsheet entitled ‘Qtr 4 2008 Price Change Summary Fabrics.xls’.
5 November 2008 meeting between Colgate (including Paul Ansell) and Coles
213 A meeting was held on or about 5 November 2008 and attended by:
(1) Paul Ansell and Scott Noble of Colgate; and
(2) John Durkan of Coles.
214 At that meeting Colgate’s price increases that were planned to take effect on 17 November 2008 for a range of Colgate’s products, including in respect of its laundry detergent products, were discussed.
Coles’ rejection of Colgate’s price increases
215 In the period from 31 October 2008 to 5 November 2008, Coles purported to reject Colgate’s price increases in respect of its laundry detergent products.
Coles’ rejection of Unilever’s price increases
216 In the period from 31 October 2008 to 5 November 2008, Coles purported to reject Unilever’s price increases in respect of its laundry detergent products.
217 In particular, Paul Schadel of Coles sent an email, 1COL.001.005.1368, to Peter Grant of Unilever on 5 November 2008 at 2:45 pm. The email stated: “As discussed this week the following cost increases have been rejected by the business – awaiting further top to top dialogue”.
10 November 2008 communication between Alain Moffroid (Unilever) and Coles
218 On 10 November 2008, Alain Moffroid of Unilever informed a representative of Coles that Unilever would immediately cease supply of laundry detergent products to Coles should Coles reject Unilever’s price increases in respect of its laundry detergent products.
11 November 2008 temporary supply arrangement
219 On or about 11 November 2008, Alain Moffroid of Unilever and Gal Shivtiel of Coles entered into a temporary supply arrangement in respect of the supply by Unilever of its laundry detergent products to Coles.
13 November 2008 emails between Colgate and Coles
220 On 13 November 2008, Colgate understood that Coles had accepted Colgate’s price increases in respect of its laundry detergent products.
221 In particular:
(1) on 13 November 2008 at 12.30 pm, Emese Suto of Coles sent an email to Emma Grant of Colgate (being the first email in the chain COL.531.002.7591 and attaching COL.531.002.7592 being a document entitled ‘Colgate Maunul [sic] Cost Changes.xls’). In the email, Ms Suto stated, “Can you please confirm if all the attached costs are the correct new costs eff 17 Nov 08. Also please check if there are any items missing as I am keying these manually into our system today, eff Monday.”; and
(2) on 13 November 2008 at 2.56 pm, Emma Grant of Colgate sent an email, COL.531.002.7391, attaching COL.531.002.7393 being a document entitled ‘Mega Home Care SPI Summary 17.11.08 Fabric.xls’, to Emese Suto of Coles.
13 November 2008 article
222 On 13 November 2008, Crikey published an article, COL.305.001.0001, which stated:
“Coles is refusing to accept list price increases from its suppliers in an attempt to increase its own margins and profits. It thinks it’s getting worse supplier prices than Woolies and is less profitable as a result. SHAME. It’s never about consumer prices or savings!”
14 November 2008 email from Unilever’s external lawyer to its general counsel
223 On 14 November 2008 at 3:34 pm, John Kench of Johnson Winter & Slattery sent Mary Weir of Unilever an email, being the first email in the chain UAL.016.0002.9007, which stated:
“Mary--story is in public arena --this excerpt from yesterday's crikey newsletter, John
"Coles is refusing to accept list price increases from its suppliers in an attempt to increase its own margins and profits. lt thinks it's getting worse supplier prices than Woolies and is less profitable as a result. SHAME. lt's never about consumer prices or savings!” ”
Telephone calls between Colgate and Unilever representatives between 14 and 20 November 2008
224 In the period between 14 and 20 November 2008, various telephone calls occurred between representatives of Colgate and Unilever on the 9 occasions detailed in Annexure E.
225 Annexure E also includes two telephone calls between representatives of Unilever.
14 November 2008 telephone call between Paul Ansell and Peter Campbell
226 A telephone call occurred on 14 November 2008 between Paul Ansell and Peter Campbell.
227 In that conversation, Mr Campbell believes that Mr Ansell enquired whom within Unilever he could contact to ascertain whether Coles had also rejected Unilever’s price increase in respect of its laundry detergent products, in response to which Mr Campbell suggested Ken Basha or Alain Moffroid.
November 2008 telephone calls between Paul Ansell (Colgate) and Ken Basha (Unilever)
228 Paul Ansell of Colgate and Ken Basha of Unilever spoke by telephone on 14, 18 and 20 November 2008.
229 In those conversations, Mr Ansell and Mr Basha discussed a former Unilever employee named Joanna Black whom Ansell was in the process of interviewing. Mr Ansell and Mr Basha also had a conversation to the following effect:
(1) Mr Ansell asked whether Unilever was having problems with price rejections in the market place;
(2) Mr Ansell enquired whether Unilever was experiencing the same problem with Coles in respect of its laundry detergent products;
(3) Mr Basha said that Coles had rejected Unilever’s price increases in respect of its laundry detergent products;
(4) Mr Ansell said that Colgate had internal selling principles which meant that if there was a list price mismatch between customers, it would not supply and that it had taken a strong stance against Coles by maintaining the price increase and that he expected Unilever would have a similar approach;
(5) Mr Basha said that Unilever had also taken a strong stance against Coles by maintaining the price increase, and would only supply at the new increased prices.
14 November 2008 telephone call between Unilever and Coles
230 Gal Shivtiel of Coles telephoned Alain Moffroid of Unilever on or about 14 November 2008 at or about 6:30 pm. During the call Gal Shivtiel told Alain Moffroid that Coles would accept Unilever’s price increase.
16 November 2008 internal Unilever email
231 Alain Moffroid of Unilever sent an email, UAL.016.0002.9007, to Sebastian Lazell and David McNeil of Unilever on 16 November 2008 at 9:02 pm. The email confirmed Coles had accepted Unilever’s price increases.
Unilever price increases in late 2008
232 Unilever increased the wholesale list prices of specific laundry detergent products supplied by it with effect from 10 November 2008 as set out in Annexure F.
233 Unilever made its decision to implement those price increases after receiving information from Paul Ansell to the effect that Colgate was going to introduce its own price increases.
Colgate price increases in late 2008
234 Colgate increased the wholesale list prices of specific laundry detergent products supplied by it with effect from 17 November 2008 as set out in Annexure G.
235 Colgate made its decision to implement and maintain those price increases independently of any information received by Paul Ansell from Unilever to the effect that Unilever was going to introduce its own price increases.
D. Formal admissions
236 By reason of the matters set out above, Colgate admits that:
(1) it entered into the Withhold Supply Understanding;
(2) the Withhold Supply Understanding contained the Withhold Supply Provisions;
(3) a substantial purpose of the Withhold Supply Provisions was to limit the supply to Woolworths, Coles and Metcash, by Colgate, Unilever and Cussons, of:
(a) Ultra Concentrates until in or around February 2009; and
(b) Standard Concentrates from in or around February 2009;
(4) each of the Withhold Supply Provisions was an exclusionary provision within the meaning of section 4D of the TPA;
(5) in or around February 2009, it gave effect to the Withhold Supply Provisions by limiting the supply to Woolworths, Coles and Metcash of laundry detergents in accordance with those provisions; and
(6) it thereby contravened ss 45(2)(a)(i) and 45(2)(b)(i) of the TPA.
237 By reason of the matters set out above, Colgate further admits that:
(1) it entered into the Laundry Information Sharing Understanding;
(2) the Laundry Information Sharing Understanding contained the Laundry Information Sharing Provision.
(3) the Laundry Information Sharing Provision:
(a) had the effect of controlling the price of laundry detergents supplied by Unilever in November 2008, within the meaning of s 45A of the TPA; and
(b) by reason of the matters alleged in subparagraph (a) above, is deemed by s 45A of the TPA to have had the purpose or effect, or been likely to have the effect, of substantially lessening competition in the laundry detergent market within the meaning of s 45(2) of the TPA;
(4) in 2008, Colgate gave effect to the Laundry Information Sharing Provision by sharing information with Unilever in accordance with that provision; and
(5) it thereby contravened ss 45(2)(a)(ii) and 45(2)(b)(ii) of the TPA.
238 By reason of the matters set out above, Ansell admits that he was knowingly concerned in or party to, and involved in, the contraventions, within the meaning of sections 76(1)(e) and 86E(1) of the TPA, by Colgate of:
(1) ss 45(2)(a)(i) and 45(2)(b)(i) of the TPA as set out in paragraph 236 above; and
(2) sections 45(2)(a)(ii) and 45(2)(b)(ii) of the TPA as set out in paragraph 237 above.
E. Financial Position of Colgate
239 Colgate’s turnover (being its net sales) during 2008, 2009, 2010 and 2015 was as follows:
(1) for the 12 months ending 30 September 2008 was AUD$502.23 million and for the 2008 calendar year was AUD$509.03 million;
(2) for the 12 months ending 28 February 2009 was AUD$512.43 million and for the 2009 calendar year was AUD $527.79 million; and
(3) for the 2010 calendar year was AUD$515.73 million; and
(4) for the 2015 calendar year was AUD$492.49 million.
240 Colgate’s statutory profits during 2008, 2009 and 2010 were as follows:
(1) for the 2008 calendar year: AUD$74.29 million;
(2) for the 2009 calendar year: AUD$95.37 million; and
(3) for the 2010 calendar year: AUD$100.62 million.
241 Colgate’s current assets and liabilities for 2008, 2009 and 2014 were as follows:
(1) for 2008: Assets $127.95 million and Liabilities $89.67 million;
(2) for 2009: Assets $89.62 million and Liabilities $95.08 million; and
(3) for 2014: Assets $141.49 million and Liabilities $82.38 million.
F. Other facts relevant to relief
242 There were public benefits from the introduction of Ultra Concentrates in supermarkets in early 2009, including:
(1) environmental benefits from reductions in the use of materials for packaging and transport volumes, with attendant reductions in carbon emissions;
(2) benefits to consumers, including reduced weight and reduced environmental impact; and;
(3) benefits to Colgate’s customers, from lower internal logistics, transport, shelving and packaging costs, with resulting increases in gross margin for those customers.
243 Mr Ansell did not have the actual authority of Colgate to exchange or discuss with anyone at Unilever confidential and commercially sensitive information relating to the supply of laundry detergents, including the price of their laundry detergent products, or to engage in the discussions with Peter Campbell of the type set out in this SAFA. In fact, Mr Ansell had been directed (for example, through trade practices compliance training) not to engage in any such discussions. However, as noted at paragraph 13 above, Mr Ansell had the apparent authority of Colgate to do so.
244 Colgate’s senior management, other than Mr Ansell, were unaware of the nature of the communications between Ansell and Campbell in relation to these contraventions. If they had been aware of the nature and extent of those communications, Colgate would have taken immediate disciplinary action against Ansell, including recommending that his employment be terminated.
245 From prior to and during 2008 and 2009, Colgate had an extensive trade practices and competition law compliance programme which included the following elements:
(1) company policies and procedures, including in relation to attendance at industry events which advised employees that they must “never exchange or discuss information with competitors” regarding topics including prices, pricing methodology or any other matter relating to price, promotions or promotional timing, products, profits, costs, distribution plans, new products or product packaging;
(2) education through manuals, orientation packs and ongoing staff training;
(3) reporting and reviewing, including by compliance committees;
(4) legal approval processes, including before employees attended functions at which competitors may be present;
(5) various Colgate staff acknowledgements / certifications, for example, an annual requirement to review and certify compliance with Colgate’s Code of Conduct, which included a section on competition law;
(6) access to advice and a “hotline” in order for staff to raise queries or questions about any trade practices or competition law related query or concern;
(7) ad hoc compliance initiatives, such as ad hoc training conducted by external counsel, as well as memoranda, training, emails and guidelines on recent cases or legal developments; and
(8) disciplinary procedures.
246 Mr Ansell had acknowledged to Colgate that he understood and accepted his obligations regarding trade practices and competition law and use of confidential information. These acknowledgements and certifications included:
(1) signing an acknowledgement that he had read and understood his letter of employment, which included terms to the effect that:
i. he was to comply with Colgate’s trade practices compliance responsibilities, attend training when required and that failure to fulfil any of these responsibilities may be the subject of disciplinary action, including termination;
ii. agreed to accept and be bound to comply with all applicable laws, and the various company policies and procedures; and
iii. would maintain the confidentiality of all company related information;
(2) providing written confirmation that he had received and read Colgate’s Trade/Industry Association Compliance Procedures, that he understood the contents of the procedures and obligations, that he would comply with them and that if he had any concerns or questions about the procedure or trade practices matters he would contact the Legal Department;
(3) notifying and/or seeking approval for membership of and attendance at industry or trade association groups; and
(4) attending, both as a participant and a trainer, more than a dozen compliance training sessions as part of Colgate’s Compliance Program during the period from 2007 to 2010.
247 Ansell was a member of Colgate’s trade practices compliance committee and attended trade practices and competition law compliance training, both as a participant and a trainer on 8 occasions between August 2007 and December 2008.
248 Mr Ansell did not personally receive any direct financial benefit from the conduct admitted to in this SAFA.
249 The Court has not previously found contraventions against Colgate in relation to any types of anti-competitive arrangements with competitors.
Dated: 21 March 2016
ANNEXURE – JOINT SUBMISSIONS ON LIABILITY AND PENALTY
Joint submissions on liability and relief
by the Applicant and First and Third Respondents
(21 March 2016)
1 These submissions are made jointly on behalf of the Applicant, the Australian Competition and Consumer Commission (ACCC), the First Respondent, Colgate-Palmolive Pty Ltd (Colgate) and the Third Respondent, Paul Ansell (Mr Ansell).
2 On 12 December 2013, the ACCC commenced this proceeding against Colgate, Ansell and two other parties, being PZ Cussons Australia Pty Ltd (Cussons) and Woolworths Limited (Woolworths), alleging:
a) various contraventions by Colgate and Cussons of section 45 of the Trade Practices Act 1974 (Cth) (TPA) and section 44ZZRK of the Competition and Consumer Act 2010 (Cth) (CCA); and
b) that Ansell and Woolworths were knowingly concerned in or party to the contraventions for the purposes of sections 76(1)(e) and s 80(1)(e) of the TPA1.
3 The conduct the subject of this proceeding took place in 2008 and 2009, in relation to:
a) the transition by Colgate, Cussons, and Unilever Australia Limited (Unilever) from standard-concentrated laundry detergents (Standard Concentrates) to ultra-concentrated laundry detergents (Ultra Concentrates); and
b) the sharing, between Colgate and Unilever, of confidential and commercially sensitive information relating to the supply and pricing of their laundry detergent products.
4 Colgate and Ansell have filed defences contesting the contraventions alleged by the ACCC in this proceeding.2
5 For the purposes of this proceeding only, Colgate admits the following matters alleged by the ACCC:
a) in contravention of s 45(2)(a)(i) of the TPA (now the CCA), Colgate entered into an understanding (the Withhold Supply Understanding) with Cussons and Unilever containing provisions having the substantial purpose of limiting the supply to Woolworths Limited (Woolworths), Coles Group Pty Ltd (Coles) and Metcash Limited (Metcash) of:
(i) ultra-concentrated laundry detergent products (Ultra Concentrates) until in or around February 2009; and
(ii) standard concentrated laundry detergent products (Standard Concentrates) from in or around February 2009 (the Withhold Supply Provisions),
being exclusionary provisions within the meaning of s 4D of the TPA;
b) in contravention of s 45(2)(b)(i) of the TPA, Colgate gave effect to the Withhold Supply Provisions, by limiting the supply of:
(i) Ultra Concentrates to Woolworths, Coles and Metcash until in or around February 2009; and
(ii) Standard Concentrates to Woolworths, Coles and Metcash from in or around February 2009.
c) in contravention of s 45(2)(a)(ii) of the TPA, Colgate entered into an understanding (the Laundry Information Sharing Understanding) with Unilever containing a provision that they would share with each other confidential and commercially sensitive information relating to the price of their laundry detergent products (the Laundry Information Sharing Provision), which provision had the effect of controlling the price of laundry detergents supplied by Unilever in November 2008, within the meaning of s 45A(1) of the TPA, and is therefore deemed by s 45A of the TPA to have had the purpose, effect or likely effect of substantially lessening competition in the market in Australia for the wholesale supply of powdered and liquid laundry detergent products for domestic use (the laundry detergent market) within the meaning of s 45(2) of the TPA; and
d) in contravention of s 45(2)(b)(ii) of the TPA, Colgate gave effect to the Laundry Information Sharing Provision, by sharing confidential and commercially sensitive information regarding the price of Colgate’s laundry detergent products with Unilever in 2008.
6 For the purposes of this proceeding only, Mr Ansell admits that he was directly or indirectly, knowingly concerned in or party to, and involved in, the contraventions admitted by Colgate referred to in paragraph 5 herein within the meaning of ss 76(1)(e) and s 86E(1) of the TPA.
7 The ACCC is not pursuing the other contraventions alleged against Colgate or Mr Ansell in the Consolidated Statement of Claim, which are denied by Colgate and Ansell.
8 Facts agreed between the parties are set out in the Statement of Agreed Facts and Admissions (SAFA).3 For the purpose of this proceeding only, pursuant to s 191 of the Evidence Act 1995 (Cth), Colgate and Mr Ansell have made the admissions set out in the accompanying SAFA.
9 The ACCC, Colgate and Mr Ansell have reached agreement as to the terms of relief to be sought from the Court to resolve the proceedings as between them. It is for the Court to determine whether the contraventions occurred and the quantum of any pecuniary penalties and other relief that should be ordered. A copy of the Proposed Consent Order is at Annexure 1 to these submissions.
10 The ACCC, Colgate and Mr Ansell respectfully request that the Court make orders in the form of the Proposed Consent Order, which include the following:
a) declarations;
b) pecuniary penalties (in respect of Colgate only);
c) an order that Colgate implement an updated compliance program;
d) an order that Mr Ansell be disqualified from managing any corporation for a period of 7 years; and
e) contribution to the ACCC’s costs.
11 These joint submissions use terminology defined in the SAFA.
B. Orders by consent: Principles
12 In Commonwealth of Australia v. Director, Fair Work Building Industry Inspectorate & Ors; Construction, Forestry, Mining and Energy Union & Anor v. Director, Fair Work Building Industry Inspectorate & Anor (CFMEU) [2015] HCA 46 the High Court (French CJ, Kiefel, Bell, Nettle and Gordon JJ, Gageler and Keane JJ), while confirming the role of the court in determining the appropriate penalty, affirmed without alteration the long-standing practices of this Court when receiving and considering submissions on the amount of civil penalties: North West Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285 (NW Frozen Foods) and Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41,993 (Mobil Oil).
13 The High Court confirmed that joint (or separate) submissions as to quantum of pecuniary penalty can be received in contested civil penalty proceedings,4 and held that:
a) 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;5
b) it is consistent with the purposes of civil penalty regimes, and the public interest, that the regulator take an active role in attempting to achieve the penalty it considers appropriate;6
c) the submissions of a regulator will be considered on their merits in the same way as the submissions of a respondent and subject to being supported by findings of fact based upon evidence, agreement or concession;7 and
d) ultimately the Court must satisfy itself that the proposed penalty is appropriate, and may do so in a number of ways, including:8
(i) commencing its reasoning on the basis of the proposed penalty, and determining whether that figure is within the permissible range of penalty in all the circumstances, albeit that, unassisted the Court may have selected a slightly different figure; or
(ii) commencing its reasoning by independently assessing the appropriate range of penalties and then comparing that range to the proposed penalty.
14 There is a well-recognised public interest in the settlement of cases under the TPA. As Burchett and Keifel JJ observed in NW Frozen Foods:9
There is an important public policy involved. When corporations acknowledge contraventions, very lengthy and complex litigation is frequently avoided, freeing the courts to deal with other matters, and investigating officers of the ACCC to turn to other areas of the economy that await their attention. At the same time, a negotiated resolution in the instant case may be expected to include measures designed to promote, for the future, vigorous competition in the particular market. These beneficial consequences would be jeopardised if corporations were to conclude that proper settlement were clouded by unpredictable risks.
15 In ACCC v Real Estate Institute of Western Australia Inc (ACCC v REIWA), French J (as his Honour then was) observed:10
The Court has a responsibility to be satisfied that what is proposed is not contrary to the public interest and is at least consistent with it. … Consideration of the public interest, however, must also weigh the desirability of non-litigious resolution of enforcement proceedings.
16 In deciding whether to make consent orders proposed by the parties, the Court must be satisfied that it has the power to make the orders proposed and the orders are appropriate.11
17 Once the Court is satisfied of these matters, the Court should exercise judicial restraint in scrutinising proposed settlements. In ACCC v Target Australia Pty Ltd, Lee J said this:12
It is the Court’s duty in receiving consent orders in any matter to scrutinise such orders as to their appropriateness. However, after being satisfied as to the appropriateness of the orders, the Court should be slow to impede final settlement of such matters, particularly those involving public interest considerations. Moreover, the public has an interest in the mutual settlement of litigation, and subject to the foregoing the Court should be careful not to refuse to make orders simply because the orders may have been different had it been the Court’s task to formulate them.
18 This principle of judicial restraint in scrutinising proposed settlements finds particular application in matters such as the present, where the consenting parties are sophisticated, one is an industry-specific regulator, and each is legally represented and able to understand and evaluate the desirability of the settlement.13
19 In determining whether the Proposed Consent Order conforms with legal principle, the Court is entitled to treat the consent of each of Colgate and Mr Ansell as an admission of all facts necessary or appropriate to the granting of the relief sought against each of them respectively.14 Also germane is the fact that Colgate and Mr Ansell have made admissions in the SAFA.
20 The contraventions by Colgate are admitted and set out in the SAFA.
21 Mr Ansell’s involvement in the contraventions by Colgate is admitted and set out in the SAFA.
22 The Court has a wide discretion under s 21 of the Federal Court of Australia Act 1976 (Cth) to make declarations of right: ACCC v Albert (2005) 223 ALR 467 at 472 at [26]. The principles stated in Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437-8 (Gibbs J) and applied in this Court in ACCC v Goldy Motors Pty Ltd [2000] FCA 1885 at [30] by Carr J support the making of the proposed declarations.
23 Declarations relating to contraventions of legislative provisions are likely to be appropriate where they serve to record the court’s disapproval of the contravening conduct, vindicate the applicant’s claim that the respondent contravened the provisions and assist the regulator to carry out its duties, and deter other persons from contravening the provisions: ACCC v Construction, Forestry, Mining and Energy Union (2007) ATPR 42-140 at [6] and the cases there cited. That is the situation here. The declaration sought by the ACCC and agreed to by Colgate and Mr Ansell is of utility and is an appropriate exercise of the court’s discretion to grant declarations. It contains sufficient particulars of how and why the conduct amounted to a contravention of the TPA: cf. Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [90].
24 In Forster,15 the High Court held that the following three threshold requirements should be satisfied before a declaration will be made: the question must be a real and not a hypothetical or theoretical one; the applicant must have a real interest in raising it; and there must be a proper contradictor.
25 Each of these requirements is satisfied in this case:
a) the proposed declarations relate to conduct that contravenes the TPA and the matters in issue have been identified and particularised by the parties with precision;16
b) it is in the public interest for the ACCC to seek to have the declarations made and for the declarations to be made.17 There is a significant legal controversy which is being resolved. The ACCC is the public regulator under the TPA and CCA and has a genuine interest in seeking the declaratory relief;
c) Colgate and Mr Ansell are proper contradictors. Each is a person who contravened, or was involved in contraventions of, the TPA and is the subject of the declarations. Each has a genuine interest in opposing the declaratory relief. The court has power to make a declaration notwithstanding the consent of both parties.18
26 Having regard to the reasoning in ACCC v CFMEU19, the declarations sought are appropriate because they serve to: record the Court’s disapproval of the contravening conduct; vindicate the ACCC’s claims that Colgate contravened, and Mr Ansell was involved in, contraventions of the TPA; assist the ACCC in carrying out the duties conferred on it by the CCA in the future; assist in clarifying the law; and operate as a deterrent to other persons and corporations from contravening the CCA.
27 The proposed declarations contain sufficient indication of how and why the conduct complained of is a contravention of the CCA20. The ACCC, Colgate and Mr Ansell submit that the SAFA provides evidence in support of the proposed declarations.21 It is not necessary for parties to tender evidence in support of declarations.22 It has become the common practice in areas of public interest for the Court to make declaratory relief on the basis of agreed facts and admissions.23
E. Pecuniary Penalties – Applicable Principles
28 Pursuant to s 76 of the TPA,24 the Court may impose a pecuniary penalty on a person who has contravened, or has been in any way knowingly concerned in or a party to a contravention of, a provision of Part IV of the TPA,25 including s 45. The Court may order the person to pay such pecuniary penalties in respect of “each act or omission” as the Court determines to be appropriate.
29 The maximum penalty for a body corporate in respect of each act or omission in contravention of s 45 of the TPA is governed by s 76(1A)(b) of the TPA. The application of that section in this case is dealt with in paragraph 69 onwards below.
30 A person is not liable to more than one pecuniary penalty in respect of the same conduct.26 “Same” in this context denotes a circumstance in which the very same episode of conduct is alleged to contravene two different provisions of the TPA. In such a case, only one penalty will lie. That situation does not relevantly arise in the present case.
31 In imposing a pecuniary penalty, the court must consider all relevant factors, including the following factors, which are listed in s 76(1) of the TPA:
a) the nature and extent of the act or omission;
b) any loss or damage suffered as a result of the act or omission;
c) the circumstances in which the act or omission took place; and
d) whether the person has previously been found by the Court in proceedings under Part VI or Part XIB of the TPA to have engaged in any similar conduct.
32 In addition to those factors, in NW Frozen Foods, Burchett and Kiefel JJ identified further relevant considerations that assist in assessing a pecuniary penalty under s 76 of the TPA. The Full Court endorsed the oft-cited “French factors” in the assessment of civil penalties under trade practices legislation.27 Perram J conveniently collected these factors, in respect of the imposition of a penalty under s 76E, in ACCC v Singtel Optus Pty Ltd (No 4) (2011) 282 ALR 246 at [11], referred to without demur on appeal,28 as follows:
a) the size of the contravening company;
b) the deliberateness of the contravention and the period over which it extended;
c) whether the contravention arose out of the conduct of senior management of the contravener or at some lower level;
d) whether the contravener has a corporate culture conducive to compliance with the TPA, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention;
e) whether the contravener has shown a disposition to cooperate with the authorities responsible for the enforcement of the TPA in relation to the contravention;
f) whether the contravener has engaged in similar conduct in the past;
g) the financial position of the contravener; and
h) whether the contravening conduct was systematic, deliberate or covert.
33 In addition, the degree of market power of the contravening company and the effect on the functioning of the market may be germane.29
(ii) Deterrence as the primary consideration in pecuniary penalty
34 The principal object of a pecuniary penalty is deterrence, comprehending both the need to deter repetition of the contravening conduct by the contravener (specific deterrence) and to deter others who might be tempted to engage in similar contraventions (general deterrence). This informs the assessment of the appropriate penalty.30 This objective is of particular significance where commercial profit is the driver of the contravening conduct.31
35 In relation to both specific and general deterrence, French J (as his Honour then was) stated in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152:32
The principal, and I think 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 [Trade Practices] Act.
36 Similarly, the Full Federal Court in NW Frozen Foods said this:33
The Court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think contravention would pay…
37 The authorities emphasise the need to impose penalties of a sufficient quantum to deter businesses from weighing up the risks of a pecuniary penalty as a strategic business cost. In ACCC v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301, Goldberg J said at [39]:
The penalty imposed must be substantial enough that the party realises the seriousness of its conduct and is not inclined to repeat such conduct. Obviously the sum required to achieve this object will be larger where the Court is setting a penalty for a company with vast resources. However, as specific deterrence is only one element and general deterrence must also be achieved, consideration of the party’s capacity to pay must be weighed against the need to impose a sum which members of the public will recognise as significant and proportionate to the seriousness of the contravention.
38 In Australian Competition and Consumer Commission v Visa Inc [2015] FCA 1020 Wigney J said this at [114]:
Perhaps the primary consideration, however, is specific and general deterrence. The penalty imposed in this matter should send a clarion call to large multinational corporations that have operations in Australia that whatever decisions may be made globally, Australia will not tolerate conduct that contravenes its competition laws and will not tolerate conduct that is likely to have the effect of substantially lessening competition in Australian markets. Given the size of Visa Worldwide and the global Visa business, only a very sizeable penalty is likely to operate as an effective deterrent here. Only a very sizeable penalty is likely to ensure that in the future the risk of incurring a penalty for contravention of the Act will not be treated as a mere cost of doing business in Australia.
39 Further, in Australian Competition and Consumer Commission v Navman Australia Pty Ltd (2007) ATPR ¶42-208 the Court said, at 48,442, [115] that:
The penalty should constitute a real punishment which takes into account the size of the company and the overall commercial environment, but it should not be so high as to be oppressive…
40 In Singtel Optus Pty Ltd v ACCC (2012) 287 ALR 249, the Full Federal Court made clear the primacy of deterrence in the setting of a penalty under s 76E of the TPA at [62]-[63]:
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 that 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 reason 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.
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.
41 In ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640, the majority judgment of the High Court (French CJ, Crennan, Bell and Keane JJ) referred with approval to the comments of the Full Court in Singtel Optus that a penalty must not be regarded as "an acceptable cost of doing business" and noted at [65]-[66]:
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. TPG’s campaign was conducted over approximately thirteen months at a cost to TPG of $8.9 million. It generated revenue of approximately $59 million, and an estimated profit of $8 million. TPG’s customer base grew from 9,000 to 107,000 during this period, although it cannot be said that this was at the expense of TPG’s competitors.
The pecuniary penalty fixed by the primary judge did not exceed that which might reasonably be thought appropriate to serve as a real deterrent both to TPG and to its competitors.
42 In ACCC v McMahon Services Pty Ltd (2004) ATPR 42-031 (at 49,228 [15]), Selway J observed in relation to price-fixing:
Once it is understood that deterrence, and particularly general deterrence, is the primary principle in the imposition of penalty for price fixing, then at least two conclusions flow from that. First, it means that penalties for collusive price fixing will need to be substantial and significant. … Collusive price fixing, particularly between tenderers is difficult to detect. Public enforcement often only occurs with “a tip from an affected party or an insider” … Given these difficulties and the potential for large profits from such practices there is a chance that those in the market place might be prepared to factor the risk of a low penalty into its pricing structure as a ‘business cost’. That would be inimical to the statutory purpose of ensuring that the practices do not occur. The penalty must be sufficiently high that a business, acting rationally and in its own best interest, will not be prepared to treat the risk of such a penalty as a business cost.
43 In ACCC v Coles Supermarkets Australia Pty Ltd,34 Allsop CJ said:
General deterrence can be achieved by demonstrating to others who might engage in similar conduct that the Court will seek to ensure that any penalty imposed in these cases will be adequate to ensure that conduct that is liable to mislead or deceive consumers will not be profitable: that penalties are not just a cost of doing business.
44 A penalty must not, however, be so high as to be oppressive: NW Frozen Foods (1995) 71 FCR 285 at 293. In considering what may constitute oppression, a penalty that is no greater than is necessary to achieve the object of general deterrence will not be oppressive, as "general deterrence will depend more on the expected quantum of the penalty for the offending conduct, rather than on a past offender’s capacity to pay a previous penalty": ACCC v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 at [9]. Nevertheless, unless a penalty is sufficiently high, it may not have the appropriate deterrent effect.
45 The role of deterrence in the present case is addressed in section F below.
(iii) Where penalties sought by consent
46 Litigation to establish contraventions of the CCA can be complex, time consuming and costly. It is in the public interest for litigation under the CCA (as with other litigation) to be concluded in the shortest time frame that is consistent with justice being done between the parties, thereby allowing the Court, and the ACCC as regulator, to address other matters. To that end, the Court has looked favourably upon negotiated settlements, provided that their terms recognise that the ultimate responsibility for the terms and making of the orders that resolve the proceedings rests with the Court.35
47 Where the Court is satisfied that the terms of the orders are appropriate, it is in the public interest for the Court to make orders on the terms agreed between the parties so as to encourage parties to assist the ACCC in its investigations and achieve negotiated settlements. The Court has recognised that, in addition to savings in time and costs, there is a public benefit in imposing agreed pecuniary penalties where appropriate as parties would not be disposed to reach such agreements were there unpredictable risks involved.36
48 In NW Frozen Foods, the Full Federal Court held that the key question for the Court in relation to proposed agreed penalties is whether the amount proposed is “within the permissible range” in all the circumstances.37 In some other recent cases, it has been held that the phrase “permissible range” refers to that range that would be permitted by the Court, which is neither manifestly inadequate nor manifestly excessive.38
49 The decision of the Full Federal Court in NW Frozen Foods was considered by the Full Federal Court in Mobil Oil.39 Mobil Oil held that the decision in NW Frozen Foods disclosed no error of principle. The Full Federal Court concluded that determining whether the amount proposed is within the permissible range may be approached by the Court either by considering first the proposed penalty and then whether it falls within the permissible range, or by considering first the appropriate range and then determining whether the proposed penalty falls within that range.40
50 In NW Frozen Foods, the Full Federal Court held:41
We agree with the statement made in several of the cases cited that it is not actually useful to investigate whether, unaided by the agreement of the parties, we would have arrived at the very figure they propose. The question is not that; it is simply whether, in the performance of the Court’s duty under section 76, this particular penalty proposed with the consent of the corporation involved and of the Commission, is one that the Court should determine to be appropriate.
51 In Mobil Oil, the Court noted that the following propositions emerged from the reasoning on this issue in NW Frozen Foods42:
a) it is the Court’s responsibility to determine the appropriate penalty;
b) determining the quantum of a penalty is not an exact science;
c) there is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy;
d) the view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty;
e) in determining whether the proposed penalty is appropriate, the Court examines all the circumstances of the case;
f) where the parties have put forward an agreed statement of facts, the Court may act on that statement if it is appropriate to do so in the circumstances of the case;
g) where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement;
h) the question is whether that figure is, in the Court’s view, appropriate in the circumstances of the case;
i) in answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure; and
j) the agreed penalty will be appropriate if within the “permissible range”.
(iv) Determining penalty figure
52 The process to be applied in arriving at a particular penalty figure was considered in the context of criminal sentencing by the High Court in Markarian v R (2005) 228 CLR 357. That process is also applicable to the assessment of pecuniary penalties under s 76 of the TPA.43
53 In Markarian, Gleeson CJ, Gummow, Hayne and Callinan JJ held:
a) assessment of the appropriate penalty is a discretionary judgment based on all relevant factors (at [27]); further:
…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 (at [31])
b) it will rarely be appropriate for a Court to start with the maximum penalty and proceed by making a proportional deduction from that maximum (at [31]);
c) the Court should not adopt a mathematical approach of increments or decrements from a predetermined range, or assign specific numerical or proportionate value to the various relevant factors (at [37], citing Wong v The Queen (2001) 207 CLR 584 at 611-612 per Gaudron, Gummow and Hayne JJ);
d) it is not appropriate to determine an objective sentence and then adjust it by some mathematical value given to one or more factors such as a plea of guilty or assistance to authorities (at [37] citing Wong v The Queen (2001) 207 CLR 584 at 611-612 per Gaudron, Gummow and Hayne JJ);
e) the Court “may not add and subtract item by item from some apparently subliminally derived figure” to determine the penalty to be imposed (at [39]); and
f) since the law strongly favours transparency, accessible reasoning is necessary in the interests of all, and, while there may be occasions where some indulgence in an arithmetic process will better serve the end, it does not apply where there are numerous and complex considerations that must be weighed (at [39]).
54 While the process of fixing an appropriate penalty must not be approached as a mathematical exercise, nonetheless careful attention must almost always be given to the maximum penalty. That is so for at least three reasons: first, because the legislature has legislated for the maximum penalty and it is therefore an expression of the legislature’s policy concerning the seriousness of the prescribed conduct; secondly, because it permits comparison between the worst possible case and the case that the court is being asked to address; and thirdly, because the maximum penalty provides a “yardstick“ which should be taken and balanced with all the other relevant factors: Markarian at [31].
(v) Course of conduct principle
55 As stated above, in the case of a corporation, the Court may order a maximum pecuniary penalty calculated in accordance with s 76(1A)(b) of the TPA for each act or omission in contravention of s 45 of the TPA. However, rather than imposing separate penalties for each technically available contravention the Court may, in its discretion, apply the course of conduct or one transaction principle where there is a sufficient interrelationship between the legal and factual elements of those contraventions.
56 The principle was explained by Middleton and Gordon JJ in Construction, Forestry, Mining and Energy Union v Cahill (2010) 194 IR 461 at [39] to [43] as follows:
The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is “the same criminality” and that is necessarily a factual specific enquiry. Bare identity of motive for commission of separate offences will seldom suffice to establish the same criminality in separate and distinct offending acts or omissions.
…
A court is not compelled to utilise the principle because, as Owen JA said in Royer v Western Australia [2009] WASCA 139 at [28], “[d]iscretionary judgments require the weighing of elements, not the formulation of adjustable rules or benchmarks”. The exercise of the sentencing discretion does not fall to be exercised in a vacuum. It is a matter of judgment to be exercised according to the facts of each case and having regard to conflicting sentencing objectives: see McHugh J in AB v The Queen (1999) 198 CLR 111 at [14]. For the same reasons, and contrary to the appellants’ submissions, even if offences are properly characterised as arising from the one transaction or a single course of conduct, a judge is not obliged to apply concurrent terms if the resulting effective term fails to reflect the degree of criminality involved. Or, in the case of fines, a judge is not obliged to start from the premise that if there is a single course of conduct, the maximum fine is, in the present case, $110,000 for the CFMEU and $22,000 in the case of Mr Mates.
57 The principle has been recognised and applied in relation to imposing penalties for multiple contraventions of the TPA.44 As emerges from the passage from Cahill, using this analytical tool to group contraventions does not convert the maximum penalty for one contravention into the maximum penalty for the course of conduct as a whole. Nonetheless, the statutory maximum for each separate contravention operates as a guide to the seriousness with which Parliament regards wrongdoing of that kind.45
(vi) Totality principle
58 In determining the appropriate penalty, the totality principle must also be considered: ACCC v Baxter Healthcare Pty Ltd [2010] FCA 929 at [22]; ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [132]. And so, in Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375 the Court held that the total penalty for related offences ought not to exceed what is proper for the entire contravening conduct involved.46
59 The totality principle operates as “final check” to ensure that the penalties to be imposed on a wrongdoer, considered as a whole, are just and appropriate.47 In ACCC v Safeway Stores Pty Ltd (1997) 145 ALR 36 the Court considered the application of the principle of totality in the civil penalty context in the following terms:
The totality principle is designed to ensure that overall an appropriate sentence or penalty is appropriate and that the sum of the penalties imposed for several contraventions does not result in the total of the penalties exceeding what is proper having regard to the totality of the contravening conduct involved. But that does not mean that a court should commence by determining an overall penalty and then dividing it among the various contraventions. Rather the totality principle involves a final overall consideration of the sum of the penalties determined…48
(vii) Parity principle
60 The parity principle requires that, when penalties are imposed, “there should not be such an inequality as would suggest that the treatment meted out has not been even handed”.49 Similar contraventions should incur similar penalties, other things being equal, albeit that other things are rarely equal where contraventions of the TPA and CCA are concerned.50 The development of a consistent approach to the fixing of pecuniary penalties necessitates reference to prior decisions.51
61 However, the Court observed in NW Frozen Foods52 that penalties in one case are rarely of assistance in later cases.
62 Further, as the Full Federal Court observed in Singtel Optus v ACCC:53
…the Court is not assisted by…citations of penalties imposed in other cases, where the combination of circumstances were different from the present, as if that citation is apt to establish a “range” of penalties appropriate in this case.
63 The Full Court endorsed the following passage of Middleton J in Australian Competition and Consumer Commission v Telstra Corporation Ltd (2010) 188 FCR 238 at [215]:
It is apparent that there are many difficulties in simply referring to penalties previously imposed for contraventions of legislation in widely differing circumstances or in circumstances where some of the factors are similar but others dissimilar to those of the present proceeding. In each case, the court must take into account the deterrent effect of the penalty and the fact that the penalties “should reflect the will of Parliament that the commercial standards laid down in the Act must be observed but not be so high as to be oppressive”.54
64 In similar terms, in ACCC v Woolworths Limited [2016] FCA 44, Edelman J observed, at [129] and [133]:
Consistency and the rule of law require consideration of the penalties awarded in similar cases, particularly if it is possible to discern a range from those cases. But how can the penalties in similar cases be compared if the weight of the relevant factors differs and those factors are incommensurable? Professor Sunstein has argued that “[a]n especially large task for legal theory is to offer an adequate description of how, in legal contexts, choices should be made among incommensurable goods and among different possible kinds of valuation”: Sunstein C “Incommensurability and Valuation in Law” (1993) 92 Mich Law Rev 779, 861.
..the “parity principle”…does not suggest that incommensurable factors in the different circumstances of single cases can or should be compared. In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285, 295, Burchett and Kiefel JJ said that a “hallmark of justice is equality before the law, and, other things being equal, corporations guilty of similar contraventions should incur similar penalties”. But their Honours went on to say that different circumstances mean that “other things are rarely equal when contraventions of the Trade Practices Act are concerned”. Further, as their Honours observed, cases are authorities for matters of principle. But a penalty decided on the basis of findings of fact in one case which differs from the circumstances of another case cannot dictate the penalty in that other case.
F. Pecuniary Penalties – Application
65 The ACCC and Colgate jointly submit that the Court should make orders imposing pecuniary penalties pursuant to s 76 of the TPA on Colgate as follows:
a) in respect of the contraventions referred to in paragraphs 1 and 2 of the Proposed Consent Order, a pecuniary penalty in the amount of $12,000,000; and
b) in respect of the contraventions referred to in paragraphs 3 and 4 of the Proposed Consent Order, a pecuniary penalty in the amount of $6,000,000.
66 The ACCC and Mr Ansell jointly submit that the Court should refrain from making orders imposing pecuniary penalties pursuant to s 76 of the TPA on Mr Ansell, taking into account the other proposed orders concerning Mr Ansell (and in particular the disqualification order) and the reasons for those proposed orders.
67 The facts and admissions establishing the particular conduct that Colgate and Mr Ansell admit constitutes contraventions of the TPA are set out in the SAFA, together with other matters relevant to penalties.
68 Each of the principles set out in section E above relevant to the imposition of pecuniary penalties is considered in the context of this proceeding.
69 In relation to maximum penalty, for the purposes of the proceeding only, the ACCC and Colgate jointly submit that there were likely benefits obtained from the contravening conduct set out in paragraphs 1 to 4 of the Proposed Consent Order, but that the value of those benefits cannot be determined, as set out in further detail below. Accordingly, the maximum penalty for each act or omission by Colgate in contravention of s 45 of the TPA is calculated pursuant to s 76(1A)(b)(iii), being 10% of Colgate’s turnover in the 12 months ending at the end of the month in which the act or omission occurred.
a) in respect of the contraventions referred to in paragraphs 1 and 2 of the Proposed Consent Order, the maximum pecuniary penalty is AUD$51.2 million, being 10% of Colgate’s turnover for the 12 months ending on 28 February 2009 of AUD$512.427 million; and
b) in respect of the contraventions referred to in paragraphs 3 and 4 of the Proposed Consent Order, the maximum pecuniary penalty is AUD$50.2 million, being 10% of Colgate’s turnover for the 12 months ending on 30 September 2008 of AUD$502.226 million.
Benefits - contraventions in paragraphs 1 and 2 of the Proposed Consent Order
71 The benefits to Colgate, upon changing over from the supply of Standard Concentrates to the supply of Ultra Concentrates to Woolworths, Coles and Metcash in about February 2009, included that it:
a) made significant cost savings by reducing its expenditure on ingredients, packaging, transport and/or other logistics; and
b) improved its gross margins from the sale of laundry detergents.
72 The benefits to Colgate, upon changing over from the supply of Standard Concentrates to the supply of Ultra Concentrates in about February 2009 at the same time as Cussons and Unilever changed over the supply of their powdered Standard Concentrates to powdered Ultra Concentrates, and Cussons ceased to supply liquid Standard Concentrates, included that it:
a) reduced or eliminated the risk of Colgate’s powdered Ultra Concentrate products, and to a lesser degree its liquid Ultra Concentrate products, competing with Standard Concentrate products supplied by either or both of the other two major suppliers;
b) reduced or eliminated the risk of consumers preferring Cussons or Unilever’s powdered Standard Concentrates or Cussons’ liquid Standard Concentrates in larger packages, over Colgate’s Ultra Concentrates on the mistaken belief that the larger Standard Concentrates ostensibly represented greater value for money than Colgate’s Ultra Concentrates;
c) reduced or eliminated the risk of loss of sales or market share or of not achieving optimal sales volume levels for Colgate’s Ultra Concentrates as quickly if Unilever or Cussons continued to supply Standard Concentrates; and
d) reduced expenditure on advertising to explain to consumers the value proposition of Ultra Concentrates compared to Standard Concentrates.
73 Colgate recognised the risks referred to in sub-paragraphs 72(a), (b) and (c) above but considered that those risks could have been managed to some degree with communications in retail stores and advertising as to the value proposition of Colgate’s yet to be introduced Ultra Concentrates relative to Standard Concentrates. Further, in relation to sub-paragraph 72(d) above, Colgate was aware that it would need to increase its advertising spend at the time of any simultaneous transition in order to create consumer awareness of the value proposition of Ultra Concentrates.
74 For the purposes of the proceeding only, the ACCC and Colgate jointly submit that the monetary value of some or all of the benefits referred to in paragraph 72 above cannot be calculated. Further, in the absence of the contravening conduct referred to in paragraphs 1 and 2 of the Proposed Consent Order, Colgate would have or likely would have changed over all of its Standard Concentrates to Ultra Concentrates in early 2009 and Unilever and Cussons may have changed over some or all of their Standard Concentrates to Ultra Concentrates at the same time and thereby all or a portion of the benefits referred to above may have been obtained. However, whether Unilever and Cussons would have in fact changed over some or all of their Standard Concentrates to Ultra Concentrates, when that would have occurred, and what portion of the benefits would have been obtained by Colgate in that circumstance cannot be determined. In particular, Colgate’s transition may not have occurred at the same time as the other manufacturers’.
Benefits - contraventions in paragraphs 3 and 4 of the Proposed Consent Order
75 The benefit to Colgate of the contravening conduct referred to in paragraphs 3 and 4 of the Proposed Consent Order was the reduction or elimination of the risk to Colgate of loss of sales or market share of its laundry detergent products to competitors, particularly Unilever.
76 For the purposes of the proceeding only, the ACCC and Colgate jointly submit that the monetary value of some or all of the benefit referred to in paragraph 75 above cannot be calculated. Further, in the absence of the contravening conduct referred to in paragraphs 3 and 4 of the Proposed Consent Order, Colgate still would have implemented and maintained its price increases in around November 2008 in respect of its laundry detergent products, and thereby a portion of the benefits referred to above may have been obtained. However, whether and when Unilever would have implemented its price increases is not known and accordingly what portion of the benefits would have been obtained in the circumstances is not able to be determined.
77 Mr Ansell received no benefit or financial gain in relation to the contravening conduct.
(ii) Nature, extent and duration of conduct and circumstances in which they took place
78 The SAFA sets out the nature and extent of the contravening conduct.
79 The contraventions in the present case are serious, but not the most egregious end of the scale of seriousness. That is so for a number of reasons.
80 First, conduct that involves horizontal combinations and information sharing which results in prices being raised is intrinsically serious and may visit harm on markets and consumers purchasing goods therein. By the admitted contraventions, consumers were:
a) subject to higher prices for Unilever laundry detergent products; and
b) deprived of having Standard Concentrates and Ultra Concentrates available at the same time.
81 Secondly, it is likely that the contraventions delivered some financial gain to Colgate. As a result of the simultaneous transition to Ultra Concentrates, Colgate avoided or minimised the risks referred to in paragraph 72. As a result of Colgate sharing information regarding the price of its laundry detergent products with Unilever, the prices of Unilever’s products were also increased in November 2008, which eliminated or at least reduced the risk of loss of sales or market share by Colgate. Mr Ansell received no benefit or financial gain as a result of the contravening conduct.
82 Thirdly, the conduct was partly facilitated by Mr Ansell. Mr Ansell was one of the more senior officers at Colgate. However, Mr Ansell did not have the actual authority of Colgate to exchange or discuss with anyone at Unilever (or other competitors) confidential and commercially sensitive information relating to the supply of laundry detergents, including the price of its laundry detergents products. Nevertheless, it is accepted that Mr Ansell had Colgate’s apparent authority to act as he did and that Colgate is liable for those actions. Had others in Colgate’s senior management been aware that Mr Ansell was engaging in these activities in relation to the admitted contraventions, they would have recommended the termination of his employment by Colgate.
83 Fourthly, the conduct of Mr Ansell was contrary to acceptable conduct between competitors. The private phone calls between Mr Campbell and Mr Ansell evidences a course of conduct by Mr Campbell and Mr Ansell that led to contraventions of the TPA. It is noted that Mr Ansell was not in any way involved in the Accord.
84 Fifthly, the Withhold Supply Understanding was a one-off arrangement limited to changing from supplying Standard Concentrates to Ultra Concentrates at a particular point in time, being February 2009. However, whilst that arrangement was a one-off, it resulted in a permanent change in the products supplied in the market.
85 Sixthly, the Withhold Supply Understanding was in the context of suppliers of laundry detergents in some other countries, including the United States, having transitioned to supplying more highly concentrated laundry detergents by late 2007. In particular, by at least mid-2007 Colgate understood that, in the United States as part of a sustainability initiative, Walmart (a retailer) had set a date beyond which it would no longer accept non-concentrated laundry detergents from manufacturers and that, as a result of this initiative, all major manufacturers of laundry detergents in the United States decided to transition their laundry detergents to more highly concentrated detergents nationally.
86 Seventhly, it is accepted that there were public benefits from the introduction of Ultra Concentrates including:
a) environmental benefits from reductions in the use of materials for packaging and transport volumes, with attendant reductions in carbon emissions;
b) benefits to consumers, including reduced weight and reduced environmental impact; and
c) benefits to Colgate’s customers, from lower internal logistics, transport, shelving and packaging costs, with resulting increases in gross margin for those customers.
(iii) Similar conduct in the past
87 Colgate has not been found to have previously contravened provisions of Part IV of the TPA regarding cartel conduct.
88 However, the Court has previously found Colgate to have contravened the resale price maintenance provisions within Part IV of the TPA - see Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (2002) ATPR 41-880, in which Weinberg J found that Colgate engaged in two separate contraventions of s 48 of the TPA, which prohibited resale price maintenance, and imposed a penalty on Colgate of $500,000. The conduct in that case involved Colgate withholding supply of products to prevent discounting in the retail market. However, it did not involve any understandings or communications with competitors, so in that sense was dissimilar from the current contravening conduct.
89 The degree to which the facts of that case are cognate to the current contraventions is a matter of some significance: ACCC v AGL South Australia Pty Ltd (2015) 146 ALD 385 at [44] – [46] (White J).
90 King CJ in R v McInerney (1986) 42 SASR 111 at 113, said this:
… Offences committed prior to sentence for the offence under consideration may affect the sentence in two ways. They may diminish or abrogate any leniency by reason of good character. They may, moreover, lead to a greater sentence than would otherwise be imposed, although within the proper limits indicated by the facts of the immediate crime, for the purpose of personal deterrence; the prisoner’s record may indicate that greater punishment is needed to protect the public by deterring him from further crime. Where the other offences have been committed before the commission of the immediate offence, their relevance is clear in the generality of cases. The offender has committed the offence not as a first offender by as a person whose character is affected by previous offending. He must be sentenced against the background of his record … The effect of the prior offences is more cogent if they have been the subject of conviction before the immediate offence. In such cases, the offender has committed the immediate offence notwithstanding the formal judgment and condemnation of the law in respect of the earlier offences and notwithstanding the warning as to the future which the conviction experience implies.
91 The significance of a previous record in the sentencing process was addressed by the High Court in Weininger v R (2003) 212 CLR 629 at [32]. The plurality said:
A person who has been convicted of, or admits to, the commission of other offences will, all other things being equal, ordinarily receive a heavier sentence than a person who has previously led a blameless life. Imposing a sentence heavier than otherwise would have been passed is not to sentence the first person again for offences of which he or she was earlier convicted or to sentence that offender for the offences admitted but not charged. It is to do no more than give effect to the well-established principle (in this case established by statute) that the character and antecedents of the offender are, to the extent that they are relevant and known to the sentencing court, to be taken into account in fixing the sentence to be passed. Taking all aspects, both positive and negative, of an offender’s known character and antecedents into account in sentencing for an offence is not to punish the offender again for those earlier matters; it is to take proper account of matters which are relevant to fixing the sentence under consideration.
92 The Court has not previously found Mr Ansell to have contravened the TPA.
(iv) The size of the contravenor and its financial position
93 Colgate is part of a very large multinational group of companies. Colgate’s turnover and profit for the calendar years:
a) 2008 were: turnover of AUD$509.03 million and statutory profit of AUD$74.29 million;
b) 2009 were: turnover of AUD$527.79 million and statutory profit of AUD$95.37 million;
c) 2010 were: turnover of AUD$515.73 million and statutory profit of AUD$100.62 million.
94 As set out above, when considering the extent to which the penalty achieves deterrence, the Court has had regard to a company’s size and profitability and the need to ensure that pecuniary penalties are sufficient to achieve specific and general deterrence. In ACCC v Apple, the Court was concerned to ensure that the penalty was set at a level that would be meaningful for a corporation with substantial net assets and profitability.55
95 In ACCC v Coles Supermarkets Australia Pty Ltd [2015] FCA 330 after considering applicable authorities Allsop CJ observed:
These authorities make it clear that Coles’ financial resources do not alone justify a higher penalty than might otherwise be imposed. However, they are clearly relevant to considering the size of the penalty required to achieve the end of specific deterrence and can be weighed against the need to impose a sum which will be recognised by the public as significant and proportionate to the seriousness of the contravention for the purposes of achieving general deterrence.
96 Further, as noted above, the degree of market power of the contravening company and the effect on the functioning of the market may be germane.56 In 2008, the approximate market shares by volume, within the laundry detergent industry were: Colgate 45%, Cussons 20.5%, and Unilever 19.3%. The approximate markets shares by value were: Colgate 39.7%; Unilever 24.7% and Cussons 19.3%. Put simply, Colgate had the largest market share on any measure within the relevant industry.
97 With respect to Mr Ansell, he is an individual who has not personally gained from the admitted contraventions. Further, these proceedings have had a detrimental financial and personal effect on Mr Ansell. His ability to secure and maintain work since the proceedings commenced in 2013 has been significantly adversely affected by the ACCC's investigation, these proceedings and the publicity they have received. He is currently unemployed and at age 56 has little to no hope of working in the industry again, and if a disqualification order is made, with no prospect of being engaged in a senior management role.
(v) The period over which the contravening conduct extended
98 The Withhold Supply Understanding was reached in 2008 and given effect to from then until February 2009, with continuing effect for a period after that.
99 The Laundry Information Sharing Understanding was limited in time in that it was given effect to by conversations between Mr Ansell and Mr Campbell in September and November 2008, but with continuing effect on Unilever’s prices for a period after that.
(vi) Conduct of Mr Ansell and Colgate’s senior management
100 Colgate’s conduct was undertaken, inter alia, by Mr Ansell. At all material times, Mr Ansell was one of the senior officers at Colgate who, although not ultimately responsible for Colgate's pricing and pricing strategy of Colgate's laundry detergent products, provided input into decision making in respect of such pricing which was then considered by senior management of Colgate when making pricing decisions. Mr Ansell had no involvement in the Accord.
101 Mr Ansell was, between 1 January 2008 and 31 December 2009, Customer Development Director, Australia, also known as Sales Director, within Colgate. In his role as Customer Development Director, Mr Ansell was, at all material times, amongst other things, one of the senior people at Colgate who had responsibilities for providing input into decision-making by Colgate’s senior management team in respect of marketing, supply and pricing of laundry products manufactured and supplied by Colgate. He had overall responsibility for liaising with Colgate’s retailer customers, including Woolworths, Coles and Metcash, in respect of laundry products. Further, Mr Ansell was, between 1 January 2008 and 31 December 2009, a member of Colgate’s Management Committee.
102 During the period in which the admitted contraventions occurred, Mr Ansell reported to Mr Andrea Lagioia (until May 2008) and then to Mr Christopher Pedersen (from August 2008) (Managing Director of Colgate South Pacific). Mr Lagioia and Mr Pedersen (and the other members of Colgate’s senior management) were not aware of Mr Ansell’s conduct in relation to these contraventions.
103 Further, as was outlined above, although Mr Ansell had the apparent authority of Colgate to engage in the conduct constituting the contraventions, he did not have Colgate’s actual authority to engage in that conduct.57
104 Further, Mr Ansell had no communications with Cussons in relation to any matter which is the subject of the admitted contraventions.
105 However, the role of Mr Ansell in Colgate’s conduct contributes to the seriousness of the admitted contraventions.
106 From prior to and during 2008 and 2009, Colgate had an extensive trade practices and competition law compliance programme which included the following elements:58
a) company policies and procedures, including in relation to attendance at industry events which advised employees that they must “never exchange or discuss information with competitors” regarding topics including prices, pricing methodology or any other matter relating to price, promotions or promotional timing, products, profits, costs, distribution plans, new products or product packaging;
b) education through manuals, orientation packs and ongoing staff training;
c) reporting and reviewing, including by compliance committees;
d) legal approval processes, including before employees attended functions at which competitors may be present;
e) various Colgate staff acknowledgements / certifications, for example, an annual requirement to review and certify compliance with Colgate’s Code of Conduct, which included a section on competition law;
f) access to advice and a “hotline” in order for staff to raise queries or questions about any trade practices or competition law related query or concern;
g) ad hoc compliance initiatives, such as ad hoc training conducted by external counsel, as well as memoranda, training, emails and guidelines on recent cases or legal developments; and
107 Prior to the contraventions, Mr Ansell was required by Colgate to, and did, acknowledge and certify that he understood and accepted his obligations regarding trade practices and competition law and the use of confidential information. These acknowledgements and certifications included:
a) signing an acknowledgement that he had read and understood his letter of employment, which included terms to the effect that:
(i) he was to comply with Colgate’s trade practices compliance responsibilities, attend training when required and that failure to fulfil any of these responsibilities may be the subject of disciplinary action, including termination;
(ii) agreed to accept and be bound to comply with all applicable laws, and the various company policies and procedures; and
(iii) would maintain the confidentiality of all company related information;
b) providing written confirmation that he had received and read Colgate’s Trade/Industry Association Compliance Procedures, that he understood the contents of the procedures and obligations, that he would comply with them and that if he had any concerns or questions about the procedure or trade practices matters he would contact the Legal Department;
c) notifying and/or seeking approval for membership of and attendance at industry or trade association groups; and
d) attending, both as a participant and a trainer, more than a dozen compliance training sessions as part of Colgate’s Compliance Program during the period from 2007 to 2010.
108 The Court looks not only to the existence of compliance programmes but their effectiveness: ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 258 (Lockhart J, French J agreeing at 268); ACCC v George Weston Foods Ltd (2000) ATPR 41-763; [2000] FCA 690 at [20]-[23] and [44]-[53] (Goldberg J); ACCC v Origin Energy Electricity Ltd [2015] FCA 278 at [107]-[108] (Katzmann J).
109 There is no reason to believe that Colgate’s compliance program was ineffective merely by virtue of these contraventions. It is accepted that Colgate’s senior management, apart from Mr Ansell, were unaware of the nature and extent of Mr Ansell’s communications with Mr Campbell in relation to the admitted contraventions. If Colgate’s senior management were aware of those communications, they would have taken immediate disciplinary action against Ansell, including recommending that his employment be terminated.59
110 Another factor which is potentially relevant to the effectiveness of Colgate’s Compliance Program is the fact that Mr Ansell was one of the trainers who conducted compliance training sessions as part of the program from 2007 to 2010.
111 Further, Colgate has now agreed to a probation order under s 86C of the TPA, directing it to upgrade its compliance programme (dealt with in section G below).
(viii) Co-operation
112 Prior to the commencement of these proceedings, Colgate cooperated with the ACCC in its investigation of these matters. In particular, Colgate co-operated in the following ways:
a) bringing four former employees of Colgate, who were at the time of interview based overseas, to Australia at its own expense to be interviewed by the ACCC as part of the s 155 investigation, despite the fact that they could not be compelled: see ACCC v British Airways PLC [2008] FCA 1977 at [33]; and
b) providing detailed, comprehensive, frank and carefully prepared responses to all of the section 155 notices issued by the ACCC: see ACCC v Cathay Pacific Airways Ltd (No 3) [2012] FCA 1392 at [40].
113 After the proceedings were commenced, Colgate cooperated with the ACCC, including by:
a) after all of the lay evidence in the proceedings had been filed, Colgate approached the ACCC and indicated that they were prepared to discuss settling the proceedings;
b) the ACCC and Colgate (and Mr Ansell) met on a several occasions to discuss settling the proceedings; and
c) as a result of those discussions, the ACCC, Colgate and Mr Ansell have reached agreement as to the contraventions of the TPA admitted by Colgate and Mr Ansell, and the penalty and non-penalty relief to be sought from the Court and the terms of the SAFA.
114 After the proceedings commenced, Mr Ansell co-operated with the ACCC in respect of the section 155 notices issued by the ACCC, including travelling to Sydney at his own expense to attend one of the examinations. After the proceedings commenced, Mr Ansell co-operated with the ACCC by following Colgate's approach to engagement with the ACCC. Mr Ansell was prepared to discuss settlement with the ACCC and met with the ACCC on several occasions to discuss settlement of the proceedings.
115 Colgate and Mr Ansell are entitled to credit for having sought to cooperate with the ACCC from an early stage and for having admitted to contravening the TPA, and agreeing with the ACCC on the SAFA and non-penalty orders to be sought from the Court: Trade Practices Commission v TNT Australia Pty Ltd. Colgate’s and Mr Ansell’s co-operation with the ACCC has saved the ACCC and the Court (and ultimately the community) the cost and burden of fully litigating these proceedings.
116 There is a clear benefit to the ACCC’s investigations that respondents are encouraged to co-operate in appropriate cases. There is also a clear public interest in promoting settlement of litigation: Mobil Oil at [51].
117 The parties do not contend that there is a clear case that is commensurable, as a matter of principle with the current case. The mandatory and discretionary factors to which the Court is to have regard provide sufficient guidance as to the appropriateness of the proposed penalty. Further, the proposed penalties are significant enough to achieve general deterrence without being oppressive to Colgate.
118 In determining the appropriate penalty, it is also relevant to take into account the “totality principle”. In Trade Practices Commission v TNT Australia Pty Ltd, the Court held that the total penalty for each offence ought not to exceed what is proper for the entire contravening conduct involved.60
119 It is submitted that the penalties proposed in relation to Colgate’s contravening conduct are just and appropriate in all the circumstances of the case and appropriately take account of the entirety of Colgate’s conduct.
(xi) Maximum Penalty
120 As noted above at paragraph 54, attention must be given to the maximum penalty that may be imposed in respect of an admitted contravention. The statutory maxima are stated at paragraph 70. Having regard to those maxima and the matters traversed in Sections (i) – (x) above, a penalty:
a) in respect of the contraventions referred to in paragraphs 1 and 2 of the Proposed Consent Order, in the amount of $12,000,000 represents approximately 23.4% of the maximum penalty of AUD$51.2 million; and
b) in respect of the contraventions referred to in paragraphs 3 and 4 of the Proposed Consent Order, in the amount of $6,000,000 represents 12% of the maximum penalty of $50.2 million.
121 The parties respectfully submit that each component penalty is appropriate in all the circumstances and that a total penalty of $18 million is likewise appropriate. The parties jointly submit that the Court should be satisfied of this because the proposed penalty as a total or as component parts are:
a) within the permissible range of penalty in all the circumstances, albeit that, unassisted the Court may have selected a slightly different figure; and
b) within what an independent assessment of the appropriate range of penalties would have resulted in.
122 As noted above, the ACCC and Colgate jointly submit that the Court should make orders imposing pecuniary penalties pursuant to section 76 of the TPA on Colgate as follows:
a) in respect of the contraventions referred to in paragraphs 1 and 2 of the Proposed Consent Order, a pecuniary penalty in the amount of $12,000,000; and
b) in respect of the contraventions referred to in paragraphs 3 and 4 of the Proposed Consent Order, a pecuniary penalty in the amount of $6,000,000.
123 The present is a case, like ACCC v Visa, in which the Court can convey to large multinational corporations that have operations in Australia that whatever decisions may be made, Australia will not tolerate conduct that contravenes its competition laws.
124 As noted above, the ACCC and Mr Ansell jointly submit that the Court should refrain from making an order imposing a pecuniary penalty pursuant to section 76 of the TPA on Mr Ansell for the reasons set out in section (xiii) below and for the reasons set out in section H concerning the appropriateness and effect of the disqualification order on Mr Ansell.
(xiii) Appropriateness of orders to be made against Mr Ansell
125 No pecuniary penalty is sought against Mr Ansell. This is in the context of the actual effect that the proposed banning order will have on Mr Ansell.
126 The proposed banning order will prevent Mr Ansell from managing a corporation for seven years and, based on information provided by Mr Ansell, will effectively:
a) have a financial effect extending beyond any penalty which could be awarded against Mr Ansell as it translates into an effective amount of up to $2.8 million, on the basis that Mr Ansell is unable to earn an income of up to $400,000 per year for seven years;
b) prevent him from working in a management role in an industry he has worked in for nearly three decades; and
c) take him through to retirement given he is currently 56 years of age, and require him to live on his life savings.
127 Based on the information provided by Mr Ansell, the estimate provided at 126(a) above is based on a conservative package for a sales director in a multi-national or national company in Australia for someone who has overseas and Australian experience with a successful global company of approximately $500,000 per year (assuming that, if there is no disqualification order, Mr Ansell would now be able to obtain such a package) less an amount Mr Ansell could earn in a lower level position outside of the grocery industry estimated to be about $100,000 or less per year.
128 By consent, the ACCC and Colgate seek an order requiring Colgate to update its compliance and education/training program, as set out in paragraph 8 of the Proposed Consent Order.
129 Section 86C of the TPA empowers the Court to make such an order.
130 The purpose of compliance orders and the matters that must be assessed by the Court in reviewing a proposed order and determining whether they are within power and appropriate were summarised by Gordon J in Australian Competition and Consumer Commission v Sontax Australia (1988) Pty Ltd [2011] FCA 1202 at [36] as follows:
The purpose of a probation order is to ensure a company-wide awareness of responsibilities and obligations in relation to the contravening conduct or similar or related conduct: Australian Competition and Consumer Commission v Anglo Estates Pty Ltd [2005] FCA 20; (2005) ATPR 42-044 at [46]. There must be a nexus between the terms of the compliance program and the contravening conduct: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2007) ATPR 42-138 at [96]. The compliance program should set out the steps to be taken with sufficient clarity so that it is able to be performed. It should also be in the public interest that the respondent undertake the program: LG Electronics Australia at [14].
131 In Australian Competition and Consumer Commission v LG Electronics Australia Pty Ltd [2006] FCA 1118, Siopis J ordered, by consent, that LG Electronics review its existing trade practices compliance program and implement an upgraded program in accordance with the proposed orders. The Court concluded that there was a sufficient nexus between the terms of the proposed program and the contravening conduct, that the program set out the steps to be taken with sufficient clarity and that it was in the public interest for LG Electronics to undertake the program.
132 The proposed upgraded compliance program has a sufficient nexus with Colgate’s contravening conduct. The risk assessment to be conducted, and associated recommendations for improvements, focus on the provisions relevant to the contravening conduct, being sections 45(2)(a) and (b) of the CCA and the provisions of Part IV of the CCA which deal with similar or related conduct. The upgraded program also requires training of relevant Colgate employees to ensure their awareness of Colgate’s obligations and responsibilities in relation to those provisions.
133 The minimum requirements for the upgraded program are set out in detail in the proposed form of order and Annexure A to the Proposed Consent Order. It is therefore clear to Colgate what steps it must undertake to comply with the order.
134 It is in the public interest that Colgate implement this upgraded program.
135 The ACCC and Colgate submit that it is appropriate for the Court to make the order in the circumstances of this case.
H. Disqualification order
136 Under section 86E(1) of the TPA, the Court has power to make an order disqualifying a person from managing corporations for a period that the Court considers appropriate if the Court is satisfied that:
a) relevantly, the person has been involved in a contravention of Part IV of the TPA; and
b) the disqualification is justified.
137 The remedy of disqualification so conferred, like s 206C of the Corporations Act 2001 (Cth) on which it is modelled,61 a civil remedy. The remedy is chiefly directed at achieving the end of public protection, of general and specific deterrence, and is now recognised to have an additional, punitive effect.
138 In ACCC v Safe Breast Imaging Pty Ltd (No 2) [2014] FCA 998, Barker J said this, at [86] and [88]:
Whether or not a person should be disqualified from managing corporations requires a court to consider the nature and seriousness of the contraventions, recognising that disqualification is a consequence imposed both to prevent future occurrences, as well as to provide deterrence to persons involved in managing corporations…
It is also well understood that the power to disqualify a person from managing corporations is not a power to be exercised purely for protective purposes, but also as a punitive measure. See Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129.
139 In ACCC v South East Melbourne Cleaning Pty Ltd (in Liq) [2015] FCA 25, Murphy J observed, in similar terms, at [149], that:
following the decision in Rich at [53]…the objective of a disqualification order can no longer be characterised as purely protective. It is now clear that disqualification orders may also be imposed for the objectives of punishment and deterrence: Australian Securities and Investments Commission v Healey (No 2) (2011) 196 FCR 430 at [109] per Middleton J; Australian Securities and Investments Commission v Lindberg (2012) 91 ACSR 640 at [81] per Robson J; Australian Securities and Investments Commission v Vizard (2005) 145 FCR 57 at [35] per Finkelstein J. The need for general and specific deterrence is a central consideration in relation to whether to impose a disqualification order and if so for what period: Elliott v Australian Securities and Investments Commission and Another (2004) 10 VR 369 at [137] per Warren CJ, Charles JA and O’Bryan JA.
140 In ASIC v Rich (2004) 220 CLR 129, Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said this, at [37] (footnotes omitted):
If a disqualification order is made, the person against whom the order is made ceases to be a director, alternate director, or a secretary of a company, unless given permission under ss 206F or 206G of the 2001 Act to manage the corporation concerned. The order for disqualification thus causes the person against whom it is made to forfeit any office then held in a corporation and forbids that person from holding office in a corporation for the duration of the disqualification order. Those consequences, whether taken separately or in combination, when inflicted on account of a defendant’s wrongdoing, are penalties. That the penalty is not exacted in the form of a money payment does not deny that conclusion. As the authorities referred to earlier in these reasons reveal, equity’s concern with penalties was never confined to pecuniary penalties. If exposure to loss of office or exposure to dismissal from a police force is exposure to penalty, exposure to a disqualification order is exposure to a penalty.
141 The Court has recently made disqualification orders under the TPA/CCA in the following cases:
a) In ACCC v Halkalia Pty Ltd (No 2) [2012] FCA 535 (Halkalia), the Court exercised its power to disqualify a person from managing a corporation for 15 years in respect of his contraventions of the TPA.
b) In ACCC v Stott [2013] FCA 88 (Stott), the Court agreed with the submission made jointly by the parties that the respondent be disqualified from managing a corporation for five years in respect of his contraventions of the TPA/CCA.
c) In ACCC v Renegade Gas Pty Ltd (trading as Supagas NSW) [2014] FCA 1135, the Court agreed with the submission made jointly by the parties that one of the respondents be disqualified from managing a corporation for three years for his contraventions of the TPA.
d) In ACCC v Safe Breast Imaging Pty Ltd (No 2) [2014] FCA 998, the Court exercised its power to disqualify a person from managing a corporation for four years in respect of her contraventions of the CCA.
e) In ACCC v South East Melbourne Cleaning Pty Ltd (in liq) [2015] FCA 25 agreed to make an order by consent of the parties that a person be disqualified from managing a corporation for two years in respect of her contraventions of the CCA.
f) In ACCC v Safety Compliance Pty Ltd (in liq) and Ors (no 2) [2015] FCA 1469, the Court exercised its power to disqualify three separate respondents from managing a corporations for periods of eight years, 30 months and 18 months respectively for their contraventions of the TPA/CCA.
g) In ACCC v Clinica Internationale Pty Ltd (No 2) [2016] FCA 62, the Court exercised its power to disqualify a person from managing a corporation for five years in respect of her contraventions of the CCA.
142 The Court has also accepted undertakings to similar effect from respondents in proceedings involving contraventions of the TPA/CCA. In ACCC v Artorios Ink Co Pty Ltd (No 2)62, the Court accepted undertakings from both Tuan Nguyen and Thuan Nguyen not to be involved in the management of, or be a director of, a company for five years. The Court noted63 that the five year period sat at the lower end of the medium range for disqualifications imposed by the Courts under ss 206C and 206E of the Corporations Act 2001 (Cth) (Corporations Act).
143 A useful body of case law has developed in relation to the banning of officers under sections 206C and 206E of the Corporations Act. Section 206C of the Corporations Act is in relevantly identical terms to s 86E(1) of the TPA. In Halkalia, Tracey J stated that there was no reason to doubt that the principles developed under the Corporations Act will provide useful assistance when the court is considering applications under the TPA.64
144 In ASIC v Adler,65 Santow J distilled into 15 key propositions the principles in relation to banning orders which had been developed under the Corporations Act. One of those principles, that banning orders were purely protective in nature and not punitive, was rejected by the High Court in Rich v ASIC.66 However, the other propositions are still often applied.
145 The propositions are set out below (citations omitted):
a) disqualification orders are designed to protect the public from the harmful use of the corporate structure or from use that is contrary to proper commercial standards;
b) the banning order is designed to protect the public by seeking to safeguard the public interest in the transparency and accountability of companies and in the suitability of directors to hold office;
c) protection of the public also envisages protection of individuals that deal with companies, including consumers, creditors, shareholders and investors;
d) the banning order is protective against present and future misuse of the corporate structure;
e) the order has a motive of personal deterrence, though it is not punitive;
f) the objectives of general deterrence are also sought to be achieved;
g) in assessing the fitness of an individual to manage a company, it is necessary that they have an understanding of the proper role of the company director and the duty of due diligence that is owed to the company;
h) longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty;
i) in assessing the appropriate length of prohibition, consideration has been given to the degree of seriousness of the contraventions, the propensity that the defendant may engage in similar conduct in the future and the likely harm that may be caused to the public;
j) it is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the conduct;
k) a mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming;
l) the eight criteria to govern the exercise of the court’s powers of disqualification set out in Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519 have been influential. It was held that in making such an order it is necessary to assess:
(i) character of the offenders;
(ii) nature of the breaches;
(iii) structure of the companies and the nature of their business;
(iv) interests of shareholders, creditors and employees;
(v) risks to others from the continuation of offenders as company directors;
(vi) honesty and competence of offenders;
(vii) hardship to offenders and their personal and commercial interests; and
(viii) offenders’ appreciation that future breaches could result in future proceedings;
m) factors which lead to the imposition of the longest periods of disqualification (that is disqualification of 25 years or more) were:
(i) large financial losses;
(ii) high propensity that defendants may engage in similar activities or conduct;
(iii) activities undertaken in fields in which there was potential to do great financial damage such as in management and financial consultancy;
(iv) lack of contrition or remorse;
(v) disregard to law and compliance with corporate regulations;
(vi) dishonesty and intent to defraud;
(vii) previous convictions and contraventions for similar activities;
n) in cases where the period of disqualification ranged from 7-12 years, the factors evident and which lead to the conclusion that these cases were serious though not “worst cases”, included:
(i) serious incompetence and irresponsibility;
(ii) substantial loss;
(iii) defendants had engaged in deliberate courses of conduct to enrich themselves at others’ expense, but with lesser degrees of dishonesty;
(iv) continued, knowing and wilful contraventions of the law and disregard for legal obligations;
(v) lack of contrition or acceptance of responsibility, but as against that, the prospect that the individual may reform;
o) the factors leading to the shortest disqualifications, that is disqualifications for up to 3 years were:
(i) although the defendants had personally gained from the conduct, they had endeavoured to repay or partially repay the amounts misappropriated;
(ii) the defendants had no immediate or discernible future intention to hold a position as manager of a company;
(iii) in ASIC v Donovan (1998) 28 ASCR 583 at 602, the respondent had expressed remorse and contrition, acted on advice of professionals and had not contested the proceedings.
146 The ACCC applies for, and Mr Ansell consents to, an order that Mr Ansell be disqualified from managing corporations for a period of seven years from the date of the Court’s order.
147 This proposed period of disqualification is at the lower end of the medium range, but given Mr Ansell's age of 56, will effectively prevent him from being employed in a management role for the rest of his working life.
148 The parties jointly submit that the disqualification order, and its duration, are appropriate having regard to:
a) Mr Ansell’s senior position at Colgate and his direct involvement by engaging in communications with Peter Campbell of Unilever over the course of 2008 which included sharing of confidential and commercially sensitive information relating to the prices of laundry detergent products;
b) the nature of the contraventions as described in the SAFA and as referred to in section C of these joint submissions;
c) the contributory conduct and position of Mr Campbell within Unilever which lead to the contraventions as described in the SAFA and as referred to in section C of these joint submissions;
d) the protective purpose of a disqualification order being well served by ensuring that Mr Ansell does not hold any senior management positions until retirement;
e) the specific and general deterrence purpose of a disqualification order being well served by ensuring general deterrence by signalling that conduct that contravenes the TPA can deprive a senior officer of the future opportunity to hold that or equivalent positions;
f) the effect of the disqualification order on Mr Ansell, which will prevent Mr Ansell from working in a management role in an industry he has worked in for nearly three decades of his life; and
g) the disqualification order having a financial impact that is effectively akin to a pecuniary penalty and would exceed any amount of pecuniary penalty likely to be awarded.
149 Mr Ansell’s agreement to the proposed disqualification order provides compelling reason for the Court to grant the order in the form and for the term sought.67
I. Costs
150 Colgate has agreed to make a contribution of $450,000 towards the ACCC’s costs of and incidental to the proceeding, to be paid within 28 days of the date of the Court’s order.
151 Mr Ansell has agreed to make a contribution of $75,000 towards the ACCC’s costs of and incidental to the proceeding, to be paid in 24 monthly instalments commencing 28 days after the date of the Court’s order.
152 Although these amounts do not reflect the ACCC’s true costs in the matter, the ACCC was prepared to not fully pursue its costs in the interests of an early settlement.68
Date: 21 March 2016
The most recent statement of claim filed by the ACCC is the Consolidated Statement of Claim dated 21 March 2014.
The defence filed by Colgate is dated 22 April 2014 and the defence filed by Ansell is dated 22 April 2014.
Defined terms used in these submissions have the same meaning as those terms have in the SAFA.
CFMEU at [1], [60]. [68] and [79]
CFMEU at [60]
CFMEU at [64]
CFMEU at [61]
CFMEU at [32]
(1996) 71 FCR 285 at 291
(1999) 161 ALR 79 at 86
ACCC v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 at [1] (French J); ACCC v REIWA at 86-87.
(2001) ATPR 41-840 at [24] per Lee J.
ACCC v REIWA at 87 [20]-[21] (French J); ACCC v Econovite Pty Ltd (2003) ATPR 41-959 at [11] (French J); ACCC v Woolworths (South Australia) Pty Ltd (Trading as Mac’s Liquor) (2003) 198 ALR 417 at 424 [21] (Mansfield J)
Thomson Australia Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 164 (Gibbs CJ, Stephen, Mason and Wilson JJ)
Forster at 437-8 per Gibbs J.
ACCC v MSY Technology Pty Ltd (2012) 201 FCR 378 at [35].
See the cases referred to at ACCC v CFMEU [2007] ATPR 42-140 at [6] per Nicholson J.
ACCC v MSY Technology Pty Ltd (2012) 201 FCR 378; ACCC v Sampson [2011] FCA 1165 at [13]-[18] per Tracey J.
ACCC v CFMEU [2007] ATPR 42-140 at [6] per Nicholson J.
BMW v ACCC [2004] 207 ALR 452 at [35] quoting the High Court in Rural Press Ltd v ACCC (2003) 216 CLR 53 at 91.
Section 191 of the Evidence Act 1995 (Cth).
ACCC v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665 at 680-1, [57]-[59] (Kiefel J), endorsed by the Full Court in ACCC v Dataline.Net.Au Pty Ltd (2007) 161 FCR 513 at [92]; Hadgkiss v Aldin (No 2) [2007] 169 IR 76 at 81, [21]-[22] (Gilmour J); Secretary, Department of Health & Aging v Pagasa Australia Pty Ltd [2008] FCA 1545 at [75]-[78].
See for example, Ponzio v B & P Caeli Constructions Pty Ltd (2007) 158 FCR 542 (where the Full Federal Court made declarations on the basis of facts established by a statement of agreed facts); Hadgkiss v Aldin (No 2) [2007] 169 IR 76 at 79, [10]; Secretary, Department of Health & Aging v Pagasa Australia Pty Ltd [2008] FCA 1545 at [78]-[79]; ACCC v Skins Compression Garments Pty Ltd [2009] FCA 710, [13]; ACCC v Cosic Holdings Pty Ltd [2009] ATPR 42-304, [49]-[52].
Specifically, ss 76(1)(a)(i) and 76(1)(e) TPA.
Other than s 44ZZRF or 44ZZRG TPA.
Section 76(3) TPA.
Being the factors identified and explained by French J (as a member of the Federal Court) in relation to the Trade Practices Act in TPC v CSR Ltd (1991) ATPR 41-076 at 52,152-52,153. These have been approved and expanded upon by the Full Federal Court: NW Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285 at 292-294 (Burchett and Kiefel JJ; Carr J agreeing), J McPhee & Son (Aust) Pty Ltd v ACCC (2000) 172 ALR 532 at [150] et seq (Black CJ, Goldberg and Lee JJ) and ACCC v Dataline.Net.au (2007) 161 FCR 513 at [58] (Moore, Dowsett and Greenwood JJ).
Singtel Optus v ACCC (2012) 287 ALR 249 at [37]. That checklist was also considered by this Court in ordering a pecuniary penalty under s 224 of the ACL in ACCC v Pepe’s Ducks Ltd [2013] FCA 570 at [17]r Bromberg J. Also see ACCC v BAJV Pty Ltd [2014] FCAFC 52 at [39]-[41] (Rares, Jessup and Flick JJ); and ACCC v Mitsubishi Electric Australia Pty Ltd [2013] FCA 1413 at [10]-[11] (Mansfield J)
Global One Mobile Entertainment Pty Ltd v ACCC [2012] FCAFC 134 at [120]-[125]; ACCC v Startel Communication Co Pty Ltd [2014] FCA 352 at [46]
ACCC v Kingisland Meatworks and Cellars Pty Ltd (2013) 99 IPR 548 at [20] (Murphy J); TPC v Mobil Oil Australia Ltd (1984) 4 FCR 296 at 287 – 298 (Toohey J)
ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 (French CJ, Crennan, Bell and Keane JJ) at [65]-[66]
Also note that, at 52-152, French J went on to state that ‘[t]he assessment of a penalty of appropriate deterrent value, will have regard to a number of factors…’ before listing the often cited ‘French factors’. Accordingly, deterrence is not merely an additional factor, but is to be given primacy in the determination of an appropriate penalty.
(1996) 71 FCR 285 at 294-295
[2015] FCA 330 at [100].
NW Frozen Foods at 291.
NW Frozen Foods at 291.
NW Frozen Foods at 291.
Ponzio v B&P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [129]; ACCC v Pepe’s Ducks Ltd [2013] FCA 570 at [25].
Mobil Oil at [54]
Mobil Oil at [54].
(1996) 71 FCR 285 at 298-299.
(2004) ATPR 41-993 at [51]; see also ACCC v Pepe’s Ducks [2013] FCA 570 at [24].
ACCC v Marksun Australia Pty Ltd [2011] FCA 695 at [90]-[91]; and ACCC v BAJV Pty Ltd [2014] FCAFC 52 at [52] (Rares, Jessup and Flick JJ).
See e.g. ACCC v Marksun Australia Pty Ltd [2011] FCA 695 at [71-[81]; Singtel Optus Pty Ltd v ACCC (2012) 287 ALR 249 at [52]- [55]; ACCC v EDirect Pty Ltd (in liq) (2012) 206 FCR 160 and ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 at [60]-[61])
ACCC v Reebok Australia Pty Ltd [2015] FCA 83 at [160]
At 40,169. See also ACCC v Baxter [2010] FCA 929 at [22]
Johnson v R (2004) 205 ALR 346 at [3]-[5] and at 354-358 [18]-[35]; Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [42]; Clean Energy Regulator v MT Solar Pty Ltd & Ors [2013] FCA 205 at [80]-[83]; ACCC v Australian Power and Gas Company Limited [2013] FCA 1358 at [23]; ACCC v EnergyAustralia Pty Ltd [2014] FCA 336 at [100]-[102]; ACCC v BAJV Pty Ltd [2014] FCAFC 666 at [23].
At 53 (Goldberg J) (citations omitted). Quotation not reported in the authorised version at (1997) 75 FCR 238.
NW Frozen Foods (1996) 71 FCR 285 at 295.
NW Frozen Foods (1996) 71 FCR 285 at 295 cited with approval in several first instance judgments, including by Goldberg J in ACCC v Leahy Petroleum (No 3) (2005) 215 ALR 301 at [43]
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 229 FCR 331.
(1996) 71 FCR 285 at 295.
(2012) 287 ALR 249 at 264.
Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd [1978] ATPR 40-091 at 17,896.
ACCC v Apple at [39], [48]
Global One Mobile Entertainment Pty Ltd v ACCC [2012] FCAFC 134 at [120]-[125]; ACCC v Startel Communication Co Pty Ltd [2014] FCA 352 at [46].
SAFA [242].
SAFA [247].
SAFA [248].
(1995) ATPR 41-375 at 40,169. See also ACCC v Baxter [2010] FCA 929 at [22]
ACCC v Halkalia Pty Ltd (No 2) [2012] FCA 5353 (Tracey J).
[2013] FCA 1292.
At [36].
See also Stott at [75].
(2002) 42 ACSR 80 at [56].
(2004) 220 CLR 129.
See Halkalia at [112].
See ACCC v Pepe’s Ducks [2013] FCA 570 at [41]-[42].
