FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Murray Goulburn Co-Operative Co Limited [2018] FCA 1964

ORDERS

OTHER MATTERS:

A.    For the purposes of these orders, the following definitions apply:

(a)    ACL means the Australian Consumer Law contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth).

(b)    Farmers means dairy farmers in the dairy regions of Victoria, South Australia and southern New South Wales who supplied milk to the First Respondent during FY16.

(c)    FMP means Farmgate Milk Price, being a weighted average price per kilogram of milk solids (per kgms) paid by the First Respondent for premium milk supplied to it by Farmers during a milk season.

(d)    Final FMP means the FMP that applied, at the end of a milk season, to the milk supplied to the First Respondent by Farmers during that season.

(e)    FY16 refers to the financial year ended 30 June 2016, and to the milk season corresponding with that financial year.

B.    The Court notes that the Second Respondent undertakes to the Court that, for a period of 3 years from the date of this order, he will not directly or indirectly be involved in the management of a corporation which carries on any business of manufacturing or supplying animal-based dairy products or services.

THE COURT DECLARES THAT:

1.    The First Respondent engaged in conduct that was misleading or deceptive, and made representations with respect to the price of goods, in connection with the supply or possible supply of goods (being milk), which were false or misleading, in contravention of ss 18 and 29(1)(i) of the ACL, by making representations to Farmers between 29 February 2016 and 27 April 2016, to the effect that:

(a)    the Final FMP for FY16 was forecast to be $5.60 per kgms;

(b)    although that forecast was subject to there being no further material deterioration in commodity prices or unfavourable changes to the current AUD:USD exchange rate, the First Respondent considered a final FMP of $5.60 per kgms to be the most likely outcome for FY16;

(c)    there were no material risk factors to achieving a Final FMP of $5.60 per kgms known to the First Respondent other than the disclosed risk factors;

(d)    the underperformance of the Ingredients and Nutritionals segments of its business, derived from the weakness in commodity prices, was expected to be partially offset by the expected strong performance of domestic and international dairy foods product sales; and

(e)    it had a genuine and reasonable basis for making each of the above representations;

(February 2016 Final FMP representations), in circumstances where:

(f)    the First Respondent's forecast of a Final FMP of $5.60 per kgms was based on assumptions for which it did not have reasonable grounds, specifically that the First Respondent would achieve a specified target of sales of 1kg milk powder packets (sachets) in FY16 which was, by 29 February 2016, likely to be missed;

(g)    there were in fact material risk factors to achieving a Final FMP of $5.60 per kgms known to the First Respondent other than those it disclosed to the Farmers; and

(h)    the First Respondent did not in fact have a genuine and reasonable basis for making the February 2016 Final FMP representations to Farmers.

2.    The Second Respondent was knowingly concerned in the First Respondent's contraventions of s 18 and s 29(1)(i) declared in paragraph 1, by:

(a)    approving the documents by which the First Respondent made the February 2016 Final FMP representations;

(b)    taking no steps to cause the First Respondent to correct the February 2016 Final FMP representations between 29 February 2016 and 27 April 2016;

when, as managing director of the First Respondent, he was aware of the relevant matters and circumstances including the following:

(c)    that the First Respondent's forecast of a Final FMP of $5.60 per kgms was based on assumptions, in particular as to the First Respondent achieving specified targets of sales of sachets in FY16;

(d)    as at 29 February 2016:

     (i)  the extent to which the First Respondent was below its forecast sachet sales for the month of February;

     (ii)  that the First Respondent had missed its forecast sachet sales for January 2016;

     (iii)  that the First Respondent did not have supply arrangements to cover the forecast sachet sales for the remainder of FY16;

     (iv)  that the forecast sachet sales targets for FY16 were likely to be missed;

     (v)  as a consequence of the foregoing, that the First Respondent did not have reasonable grounds for making the February 2016 Final FMP representations, and that there were in fact material risk factors known to the First Respondent other than those it disclosed to the Farmers; and

(e)    between 29 February 2016 and 27 April 2016, that the First Respondent's forecast of a Final FMP of $5.60 per kgms was dependent on achieving the forecast sachet sales targets, that the First Respondent was falling short of those targets, and that the First Respondent's communications with Farmers did not disclose this.

THE COURT ORDERS THAT:

3.    The Second Respondent pay the Commonwealth of Australia, within 30 days of these orders being made, a pecuniary penalty in respect of his involvement in the First Respondent's contraventions of s 29(1)(i), as declared in paragraphs 1 and 2 above, in the amount of $200,000.

4.    The First Respondent pay a contribution to the Applicant's costs in the sum of $200,000, to be paid within 30 days of these orders being made.

5.    The Second Respondent pay a contribution to the Applicant's costs in the sum of $50,000, to be paid within 30 days of these orders being made.

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

REASONS FOR JUDGMENT

BEACH J:

1    The Australian Competition and Consumer Commission seeks declarations and orders against the first respondent, Murray Goulburn Co-operative Co Limited (MG), and the second respondent, Mr Gary Helou concerning contraventions of the Australian Consumer Law (ACL) (Schedule 2 to the Competition and Consumer Act 2010 (the Act)). Mr Helou was the managing director of MG at the relevant time.

2    The ACCC alleges that MG engaged in conduct that contravened ss 18 and 29(1)(i) of the ACL. It further alleges that Mr Helou was involved in those contraventions. MG and Mr Helou have admitted, for the purposes of these proceedings only, those contraventions and Mr Helou’s knowing involvement therein. The parties have served up to me a joint proposal to deal with such transgressions, with the necessary factual foundation entitling me to make declarations and to fix a pecuniary penalty being established by a statement of agreed facts (SOAF).

3    The admitted contraventions arise from representations made by MG on and from 29 February 2016 to farmers in the dairy regions of Victoria, South Australia and southern New South Wales who supplied milk to MG (the Farmers) about the price MG forecast that it would pay them in the 2015/16 milk season. At the time, there were approximately 2,200 Farmers.

4    As sufficient factual matters have been agreed, I have not been required to determine any factual question on the merits. Accordingly, the recitation of what follows is predicated on the salient facts not being in issue between the parties, which is the consequence of invoking s 191 of the Evidence Act 1995 (Cth). So to invoke s 191 provides a sufficient factual foundation to support my exercise of judicial power, without any necessity to receive evidence let alone independently adjudicate on whether those facts exist; s 191(2)(a) expressly states that evidence is not required to prove the existence of an agreed fact. Accordingly, all that I need to be satisfied of is whether the agreed facts on their face provide a sufficient foundation for the declarations and orders sought, not whether in truth that foundation is or can be independently established. The text of s 191(2)(a) makes this plain whether expressly or by necessary implication. Let me now summarise the agreed facts.

5    MG paid Farmers for milk by reference to a pricing mechanism known as the ‘Farmgate Milk Price’ (FMP). The FMP is a weighted average price that is available to the average Farmer in the dairy regions of Victoria, South Australia and southern NSW for the supply of premium quality milk over the milk season. It is stated as a dollar amount per kilogram of milk solids (kgms). The milk season corresponds with the financial year.

6    Prior to the start of each milk season, MG announced to Farmers the FMP that would apply from the beginning of that season for milk supplied to MG. This price was known as the Opening Price. Typically, and in the 2015/2016 financial year (FY16), MG also announced to Farmers at around the same time a forecast of the FMP that would be available to the average Farmer if that Farmer supplied premium quality milk to MG for the duration of the season (the Final FMP). Prior to the start of the 2015/16 milk season MG forecast that it would achieve a Final FMP of $6.05 per kgms.

7    In the months after MG issued that forecast, there was a substantial decline in the outlook for commodity prices. MG developed initiatives and began setting sales targets for various products to offset the impact of the commodity price decline, including targets for the sale of 1kg bags of adult milk powder (known as “sachets”). Mr Helou was involved in the formulation of the initiatives and approved the first sachet target.

8    On 29 February 2016 MG revised its forecast Final FMP. It represented to Farmers that:

(a)    the Final FMP for FY16 was forecast to be $5.60 per kgms;

(b)    although that forecast was subject to there being no further material deterioration in commodity prices or unfavourable changes to the current AUD:USD exchange rate, MG considered a final FMP of $5.60 per kgms to be the most likely outcome for FY16;

(c)    there were no material risk factors to achieving a Final FMP of $5.60 per kgms known to MG other than the disclosed risk factors;

(d)    the underperformance of the Ingredients and Nutritionals segments of its business derived from the weakness in commodity prices was expected to be partially offset by the expected strong performance of domestic and international dairy foods product sales; and

(e)    MG had a genuine and reasonable basis for making each of the above representations.

9    It is convenient to describe the above as the February 2016 Final FMP Representations. As I have said, given the operation of s 191 I can proceed on the basis that the February 2016 Final FMP Representations were made by MG.

10    Now MG and Mr Helou admit for the purposes of these proceedings only that the February 2016 Final FMP Representations were misleading. By February 2016, to achieve a Final FMP of $5.60 per kgms MG was required to, inter alia, sell over 56,000 metric tonnes (MT) of sachets to both domestic and international markets by the end of the financial year. MG had never sold more than 15,000 MT of sachets in any previous year, and by 29 February 2016 had missed its forecast sales for sachets for January and February. Further, by 29 February 2016 it did not have existing supply arrangements in place with customers to sell over 56,000 MT of sachets during the financial year.

11    MG admits for the purposes of these proceedings only that by making the February 2016 Final FMP Representations it contravened ss 18 and 29(1)(i) of the ACL. Mr Helou admits for the purposes of these proceedings only that he was involved in those contraventions. Mr Helou also concedes for present purposes that he approved the letter to Farmers, the ASX presentation which he delivered, and the 29 February 2016 results announcement by which the February 2016 Final FMP Representations were made. Mr Helou further concedes that he knew the relevant circumstances that made the representations misleading. Further, it is accepted that MG and Mr Helou did not take any steps to correct the February 2016 Final FMP Representations from 29 February 2016 until Mr Helou’s resignation from MG on 27 April 2016. It is also conceded that in this period Mr Helou took positive steps to reinforce the representations, by approving the final version of a Quarterly Update emailed to Farmers on 8 March 2016 and giving a presentation to Farmers at supplier meetings in March 2016 that included the February 2016 Final FMP Representations, and by being involved in announcements MG made to the ASX on 12 and 18 April 2016 by which MG maintained the February 2016 Final FMP Representations.

12    Now the parties have jointly sought declarations and orders for contributions to costs against both MG and Mr Helou. The ACCC and Mr Helou also seek an order that I impose a pecuniary penalty of $200,000 upon Mr Helou. Mr Helou also offers an undertaking to the Court that I will discuss later.

13    As I have indicated, it is not in doubt that I can proceed to grant the relief and impose the pecuniary penalty sought taking into account and acting upon the parties’ joint proposal, providing that the parties’ agreement as to the facts provides a sufficient factual foundation, which it does, and that the orders sought including the penalty are appropriate in all the circumstances, as they are. Let me turn first to the question of declarations, and then I will address the penalty sought against Mr Helou.

DECLARATIONS AGAINST MG AND MR HELOU

14    In my view the contraventions are established by the facts set out in the SOAF and the admissions made as to their legal characterisation. Moreover, it is appropriate to make declarations as to those contraventions.

15    I have an almost unlimited discretionary power to make declarations under s 21 of the Federal Court of Australia Act 1976 (Cth) bounded only by the limits of federal judicial power and the need to act judicially. But the real question is not the existence or extent of such a power, but whether I should exercise it in the present case. In my view, declaratory relief is justified for the following reasons. First, there is a real and not a hypothetical question. There is a direct question as to whether MG contravened the provisions of the ACL in making representations to Farmers about the price they would receive for the milk they supplied to MG in FY16, and whether Mr Helou was involved in those contraventions. Second, the ACCC has a real interest in litigating the question as the statutory regulator discharging its functions in the public interest in bringing these proceedings. Third, there is a proper contradictor(s) given that MG and Mr Helou had an interest in opposing the relief. Fourth, there is utility in making declarations that set out the particular liability found and the basis for the penalty ordered, if only for general deterrence.

PECUNIARY PENALTY AGAINST MR HELOU

16    Pursuant to ss 224(1)(a)(ii) and 224(1)(e) of the ACL, if I am satisfied that a person has been in any way directly or indirectly knowingly concerned in or a party to a contravention of a provision of Part 3-1 of the ACL including s 29, I can order that person to pay a pecuniary penalty to the Commonwealth in respect of each contravening act or omission as I determine to be appropriate. But the ACL does not empower me to impose a pecuniary penalty for a contravention of s 18.

17    Now the ACCC has not sought a pecuniary penalty against MG. Apparently, it has taken this course to avoid further financial harm to Farmers who, as its shareholders, would ultimately bear the impact of any financial penalty ordered against MG. But a pecuniary penalty of $200,000 has been sought against Mr Helou.

(a)    The principal objective – deterrence

18    The principal purpose of a civil pecuniary penalty is to secure deterrence, both general and specific. Let me begin with general deterrence so far as it concerns individuals in the position of Mr Helou who work on the milk processing side.

19    A number of features of these proceedings point to the need for a penalty that will deter others who may be minded to contravene the ACL in a similar way.

20    First, milk processors, as farmers’ customers, set the price that they will pay for milk. Farmers cannot forecast such prices themselves, since a processor’s price may be affected by matters about which farmers do not have information such as a processor’s costs, its current and future product mix and demand, and likely prices for milk products in foreign countries. Farmers need information about pricing received from processors when making business decisions throughout the milk season such as whether to increase or decrease herd size, the quality and volume of feed to acquire, and when to maximise milk production. In addition, processors are able to attract farmers to supply milk if their prices are more attractive than those offered by other processors. In these circumstances, any perception that penalties for being involved in misleading farmers about price could be absorbed as a mere cost of doing business could give rise to the potential for harm to farmers.

21    Second, the conditions in which the relevant conduct occurred largely continue to exist. It is still common for processors in the dairy industry to announce a headline final or closing FMP that is subject to change over a season. This means that some farmers continue to be vulnerable to unexpected and significant changes being made to prices by processors. In these circumstances, it is important that processors, and the individuals involved in setting and announcing prices on their behalf, are aware of the importance of not misleading farmers about the prices they can expect to be paid.

22    Third, if misrepresentations in the dairy industry are not seen to attract appropriate penalties, the confidence of farmers in the industry may be undermined. This may in turn undermine market efficiency that depends upon farmers’ confidence in being given reliable and accurate information. It may also harm compliant businesses, which may wrongly be assumed by farmers to operate in a like fashion.

23    Let me now move to the question of specific deterrence. A number of matters point to the need for a penalty that will deter Mr Helou from engaging in like conduct in the future.

24    First, Mr Helou has had an extensive career at an executive level and was MG’s most senior manager and a member of MG’s board. Further, he now has a new role in the management and operation of a food products business; he may also hold other senior executive and board roles in the future. Accordingly, Mr Helou is and is likely to continue to be in a position of significant responsibility with the ability to influence an organisation’s culture. The need for specific deterrence is therefore apparent.

25    Second, MG’s revised income forecast for February 2016 set out assumptions on which its forecast FMP of $5.60 for FY16 depended, which included assumptions as to the volume and price of sachet sales. Mr Helou was involved in approving the February revised income forecast. At that time, he was closely monitoring MG’s financial performance and was receiving regular updates of sachet production volumes and sales. By 29 February 2016, Mr Helou was aware that MG had missed its forecast sachet sales for January 2016 and was likely to miss the sachet sales target for February 2016. The admitted contraventions occurred whilst Mr Helou was involved in communications that could have assisted Farmers to receive more accurate information about the forecast Final FMP. The need for specific deterrence is confirmed by that foundation.

26    Third, Mr Helou has agreed to the proposed orders including giving an undertaking that he will not be involved in the management of a corporation which carries on business in the animal-based dairy industry for the next three years. Accordingly, he has implicitly acknowledged that specific deterrence is required beyond the proposed undertaking.

(b)    Imposing penalties for multiple contraventions

27    It seems to me that each communication of the February 2016 Final FMP Representations by MG to the Farmers, whether by email or otherwise, constituted a separate contravention of the ACL. According to the SOAF, the February 2016 Final FMP Representations were communicated to Farmers in:

(a)    an announcement published to and through the ASX;

(b)    a presentation made by Mr Helou and published to and through the ASX;

(c)    a letter addressed to Farmers signed by Mr Helou;

(d)    a report produced by MG titled “Devondale Murray Goulburn Quarterly Update”, which was distributed to Farmers on 8 March 2016 by email; and

(e)    a range of communications that MG made to each of MG’s approximately 2,200 Farmers.

28    The February 2016 Final FMP Representations were also reinforced by announcements that MG made to the ASX on 12 and 18 April 2016 that regulatory change in China and interruptions to internal e-commerce trading was not expected to and did not have a material impact on MG’s business. Accordingly, the conduct for which a penalty is sought gives rise to a large number of contraventions.

29    It is therefore necessary to say something on the “course of conduct” question. Separate contraventions arising from separate acts should ordinarily attract separate penalties. But a different principle may apply where separate acts, giving rise to separate contraventions, are so inextricably interwoven that they should be viewed as one multi-faceted ‘course of conduct’ such that a single penalty should be imposed for all contraventions. This provides one way of avoiding double-punishment for those parts of the legally distinct contraventions that involve overlap in wrongdoing; the other way is to apply the totality principle. But the question of whether multiple contraventions should be treated as being a single course of conduct is a factual inquiry to be made having regard to all of the circumstances. It is a ‘tool of analysis’ which can, but need not, be used in any given case. And its application and utility must be tailored to the circumstances (Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698 at [25]). But to apply such an approach is not to downplay the wrongdoing. This does not convert the many separate contraventions into only one contravention, and nor does it constrain the available maximum penalty let alone necessarily constrain it to the maximum penalty for one contravention. And notwithstanding a grouping into a course(s) of conduct, one must ensure that any penalty imposed is of appropriate deterrent value, whether specific or general.

30    In the present case, the ACCC and Mr Helou submit that it is appropriate to treat the large number of contraventions as arising from a single course of conduct. I am prepared to accept that approach. Such an approach takes into account the significantly overlapping nature of each of those contraventions and the interrelationship between them in terms of their nature, the circumstances and any harm that may have been suffered.

31    Let me say something on the question of totality. Where multiple separate penalties are to be imposed, the totality principle requires a final check of the penalties to be imposed considered as a whole. In cases where the cumulative total of the penalties would be too low or too high, the final penalties can be altered to ensure that they are just and appropriate overall. But in the present case, grouping the penalties into one course of conduct entails that any relevant overlap is eliminated by that mechanism. Accordingly, no further reduction to the proposed penalty is required. The totality principle has no additional work to do to eliminate the overlap, and there is no other non-overlap question which requires consideration of the totality principle in the present case.

(c)    The maximum penalty and other matters

32    In addition to what I have said, a number of principles guide the determination of an appropriate penalty amount. Let me begin with the maximum penalty.

33    The maximum penalty for a contravention by an individual of a provision of Part 3-1 of the ACL is $220,000: item 2 of s 224(3). This $220,000 maximum applies to each of the multiple contraventions by MG that Mr Helou was knowingly concerned in, notwithstanding that the ACCC and Mr Helou seek the imposition of a penalty on a course of conduct basis. And as I have said, the statutory maximum for one contravention is not converted into a maximum for the entire course of conduct. The maximum continues to apply to each contravention that forms part of the course of conduct. But the maximum penalty for a single contravention can be used as a guide in some cases such as the present against which to consider the whole of the overlapping wrongdoing in that course of conduct.

34    Let me now turn to the various factors to be considered.

35    Section 224(2) of the ACL requires me to have regard to “all relevant matters” in determining the appropriate penalty. But it also specifies the following non-exhaustive but mandatory factors: the nature and extent of the wrongdoing, any loss or damage suffered, the circumstances of the wrongdoing and any court findings as to prior similar conduct. In addition, numerous other relevant factors have been identified in the case law. For the most part these have had their genesis in the ‘French factors’, which have been augmented to include the size of the contravener, whether the wrongdoing was deliberate or covert, the involvement of senior management, whether the contravener has had a culture of compliance and any relevant prior conduct. But any such list is not to be treated as a rigid or exhaustive catalogue of relevant matters.

36    Generally, the reasoning process in deriving a penalty figure having regard to the relevant factors is properly described as intuitive synthesis. If there are four levels of consciousness, then to use the label of “instinctive” rather than “intuitive” is inapposite in neuro-psychological terms; “instinctive” suggests a kind of basal or animalistic fourth level rather than a hybrid of the second and third levels, which are more accurately characterised compositely as intuitive and resonate harmoniously with the cognitive activity of a synthesis; contrastingly, the concepts of instinct and synthesis in terms of levels of consciousness deny each other.

37    Intuitive synthesis requires a weighing together of all relevant factors, rather than an arithmetical algorithmic process that starts from some pre-determined figure and then makes incremental additions or subtractions for each factor according to a set of predetermined rules. And it is also important to note that intuitive synthesis conducted in criminal sentencing does not have the same boundaries and content as intuitive synthesis in the context that I am considering. In criminal sentencing, the synthesis involves not only the facts and circumstances of the offending, but also conflicting sentencing considerations such as retribution and rehabilitation, and differing sentencing options along a broader spectrum than the civil context from a donation to the poor box through to imprisonment.

(d)    Application of the principles

38    The ACCC and Mr Helou jointly submit that the proposed penalty of $200,000 against Mr Helou for the contraventions treated as a single course of conduct is appropriate. It is contended that the proposed penalty is an appropriate deterrent to Mr Helou’s conduct as it reflects the seriousness of the contravening course of conduct. It is also contended that the penalty makes proper allowance for the fact that Mr Helou has admitted to the contraventions, agreed to declaratory orders, and has undertaken not to be involved in the management of a corporation which carries on any business of supplying or acquiring animal based dairy products as well as agreeing to make a contribution to the ACCC’s costs.

39    Let me discuss the factors relevant to my consideration of the penalty proposed.

Nature, extent and duration of conduct

40    On the sole basis of the SOAF, I am prepared to accept that MG made misleading representations to Farmers between 29 February 2016 and 27 April 2016. The information communicated by MG to Farmers in the February 2016 Final FMP Representations was significant information to Farmers, as it related to the price they were likely to receive for their milk in the FY16 year, and business decisions which flowed from that. And as noted above, MG’s misrepresentations to Farmers from 29 February 2016 included a representation that the Final FMP was forecast to be $5.60 per kgms. This was the Opening Price for the FY15/16 season, and the price by reference to which MG had been paying Farmers throughout the season to that date. Accordingly, the misrepresentations meant Farmers were not informed as to the likelihood that the Final FMP would fall below the Opening Price for the season, with potential consequences for them including potential exposure to repayments or recovery of amounts paid to them for milk supplied earlier in the year.

41    Further, on the sole basis of the SOAF I am prepared to accept that Mr Helou was involved in that conduct and was at all relevant times aware that MG’s communications about the Final FMP was significant information for Farmers. As Managing Director Mr Helou regularly attended and presented at Farmer meetings and directly discussed the Final FMP with Farmers.

42    The extent of the contravening conduct was significant. The February 2016 Final FMP Representations were made to a large number of MG’s Farmers over the period from 29 February to 27 April 2016. At the time the contraventions occurred MG was one of the largest dairy food companies in Australia, receiving over a third of all milk produced in Australia.

43    Further, the February 2016 Final FMP Representations were maintained throughout the relevant period through further MG communications that were approved of by Mr Helou. Mr Helou also reinforced the representations in the presentations given to Farmers at a number of supplier meetings that took place in March 2016.

Relevant circumstances, including deliberateness and the role of management

44    At the time of making the February 2016 Final FMP Representations, MG disclosed to Farmers that the Final FMP was subject to international commodity prices and changes to the exchange rate between the Australian and US dollar. However, as at 29 February 2016 and during the relevant period, the most significant risk to MG achieving the forecast Final FMP was its ability to meet sales targets for the sachets. I am prepared to accept that the extent of this risk was not disclosed to Farmers.

45    By August 2015, MG and Mr Helou were aware that prices for dairy commodities including milk powder, butter and cheese were declining. MG developed initiatives and set targets for consumer products to offset the impact of the commodity price decline, including targets for the sale of sachets. Mr Helou was involved in the formulation of the initiatives and approved the first sachet target. As I have said, by 29 February 2016 the Final FMP forecast of $5.60 per kgms was reliant on MG selling over 56,000 MT of sachets to both domestic and international markets by the end of the financial year. Mr Helou approved communications to the MG Board on 26 February 2016 that forecast a Final FMP of $5.60 per kgms on the assumption that this sales target was going to be met. However, at the time, Mr Helou was aware that MG had never sold more than 15,000 MT of sachets in any previous year, MG had missed its forecast sales for sachets for January and was likely to miss its sachet sales target for February 2016, and MG did not have existing supply arrangements in place with customers to sell the required 56,000 MT of sachets during the financial year.

46    Further, during the relevant period Mr Helou was again made aware on various occasions that MG was unlikely to sell the required number of sachets to enable it to pay a Final FMP of $5.60 per kgms. But he took no steps to correct the February 2016 Final FMP Representations or make Farmers aware that the forecast Final FMP relied on meeting sachet sales targets.

47    Further, as I have indicated, during the period of MG’s contravening conduct, Mr Helou was MG’s most senior manager. Mr Helou was also involved in setting targets in relation to sachet sales and was responsible as a member of the ELT and the Board for approving both MG's forecasts in relation to the Final FMP and communications to Farmers in respect of the Final FMP. Mr Helou personally monitored sachet sales and production and had senior managers report to him directly on the status of future and potential sales and distribution deals.

Loss or damage caused

48    On the limited material before me, I am not able to confidently say anything on this question other than in terms of risk or potentiality as I have earlier indicated.

Status and financial position of contravener

49    During the period when the contraventions occurred, Mr Helou was the managing director of one of Australia’s largest dairy foods business, and the highest paid of any of MG’s executives. He has also held senior executive positions in large and prominent Australian companies for over 15 years and has received substantial remuneration for those roles. It is not in doubt that he has the financial capacity to pay the penalty that I intend to impose.

Prior similar conduct and culture of compliance with ACL

50    MG did not have an ACL compliance program in place during the relevant period. And whilst he was the managing director of MG, Mr Helou did not take any steps to put a compliance program in place.

51    But I should also say that Mr Helou has not been found to have engaged in contraventions of the Act, the ACL or the Trade Practices Act 1974 (Cth) on any previous occasion.

Cooperation

52    Cooperation with the ACCC in the course of its investigation and subsequent proceedings can justify reducing the penalty that would otherwise be imposed. Such a reduction reflects the fact that such cooperation increases the likelihood of cooperation in future cases in a way that furthers the objects of the Act, frees up the ACCC’s resources thereby increasing the likelihood that other contraveners will be detected and brought to justice, and facilitates the course of justice.

53    In the present case Mr Helou has made admissions. Mr Helou has also agreed to the proposed orders and has joined in the making of submissions which reflect the seriousness of his wrongdoing. The proposed penalty amount reflects this cooperation.

Parity

54    I have considered the parity question in the present case but it adds little to the analysis. More generally, in all but the co-offender scenario or analogues thereof (cf Australian Securities and Investments Commission v Westpac Banking Corporation (No 3) [2018] FCA 1701 at [140] to [161]) it is conceptually incoherent to look at penalties in other cases to calibrate a figure in the present case when all that one has from the other cases are single point determinations produced by opaque intuitive synthesis. Deconvolution analysis of the single point determinations in order to work out the causative contribution of any particular factor is unrealistic. No juridical style Fourier transformation is possible. But unless that can be done, comparisons outside the co-offender or like scenario have little value. Moreover, the comparative value of other single point determinations is even further reduced in cases where they have been substantially influenced by the parties’ identification of and then consensus to the relevant figure or range.

(e)    Conclusion on penalty

55    Taking into account all of the above matters including Mr Helou’s preparedness to give an appropriate undertaking, and with the principal objective of deterrence in mind, both specific and general, I am satisfied that I should impose a $200,000 pecuniary penalty on Mr Helou. I should also note that in the exceptional circumstances of the present case it is within my discretion not to impose a pecuniary penalty on MG, and I have accepted the parties’ position not to do so.

56    I will order that the penalty be paid to the Commonwealth of Australia. First, that is what s 224(1) of the ACL expressly requires and all that I am empowered to do. Moreover, the creditor of the statutory liability created by the order to pay is the Commonwealth, not the ACCC. The ACCC, as an agent for the Commonwealth for the receipt of any money (s 6A(2) of the Act), may give a good discharge if the penalty is paid to it, but the order to pay constituting the statutory liability must be in favour of the creditor as principal i.e. the Commonwealth.

UNDERTAKING AND OTHER MATTERS

57    Mr Helou has offered an undertaking to the Court to the effect that he will refrain for a period of 3 years from being involved in the dairy industry. And the ACCC has not pressed its claim for alternative forms of relief in light of Mr Helou offering such an undertaking. It is appropriate for me to accept such an undertaking and I do so.

58    Finally, MG and Mr Helou have agreed to make contributions of $200,000 and $50,000 respectively towards the ACCC’s costs of the proceeding to be paid within 30 days of the date of my orders. I will make orders to this effect and declarations and orders to accord with my reasons on the substantive questions discussed above.

Associate:

Dated:    6 December 2018