FEDERAL COURT OF AUSTRALIA

BlueScope Steel Limited v Australian Competition and Consumer Commission [2025] FCAFC 118

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the costs of the first respondent, as agreed or taxed.

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

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the costs of the first respondent, as agreed or taxed.

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

REASONS FOR JUDGMENT

THE COURT:

INTRODUCTION

Overview

1    These are appeals from findings of liability and aspects of the imposition of penalty by a judge of this Court. His Honour found proven, and sanctioned, attempts to induce multiple concurrent price fixing cartels in the flat steel products industry in Australia, as alleged by the Australian Competition and Consumer Commission (ACCC). The liability judgment (LJ) is ACCC v BlueScope Steel Limited (No 5) [2022] FCA 1475. The penalty judgment (PJ) is ACCC v BlueScope Steel Limited (No 6) [2023] FCA 1029. The appellants were the respondents in the primary proceedings, BlueScope Steel Limited and Mr Jason Thomas Ellis.

2    BlueScope was, during the period of the attempts, the dominant player in the Australian flat steel market and the only domestic manufacturer of flat steel products. Mr Ellis was, at the relevant times, General Manager of Sales and Marketing for BlueScope’s Coated Industrial Products Australia (CIPA) division. BlueScope, through CIPA, sold the flat steel products it manufactured to distributors to on-sell to end-users, with or without further processing. BlueScope faced competition at that level of the market from some foreign manufacturers and the import traders that imported similar products. Primarily through its subsidiaries, BlueScope also sold directly to end-users, facing competition at that level of the market from other distributors.

3    The primary judge found that both BlueScope and Mr Ellis had attempted to induce seven distributors of flat steel products, one joint venture importer of flat steel products, and one overseas flat steel mill, to contravene s 44ZZRJ of the Competition and Consumer Act 2010 (Cth) (the Act) by arriving at understandings each containing a cartel provision, as defined in s 44ZZRD(1) of the Act. All legislative references in these reasons are to the Act unless the contrary is indicated.

4    Mr Ellis joined CIPA in September 2013. That was a difficult time for the Australian flat steel market. Falling demand caused by the global financial crisis and the increase in overseas flat steel mills led to oversupply in the Australian market and an ensuing fall in steel prices. CIPA had seen a substantial reduction in its share of Australian steel sales from 2008 to 2012. Mr Ellis understood that BlueScope wanted him to do his best to reverse that trend: LJ [1438]. CIPA sold the flat steel products it could not sell in the Australian market overseas, at a loss.

5    The primary judge’s findings subject to these appeals are that, in the period from early September 2013 until at least April 2014, by the proven attempts to procure price fixing undertakings, BlueScope and Mr Ellis sought to implement a strategy to raise and to that extent fix the prices for flat steel products in the market, referred to throughout the liability judgment as the benchmarking strategy or the recommended resale price/RRP strategy. The strategy involved the publication of price lists by CIPA, which were promoted to distributors as a base or floor for their own prices. While that finding was based on the evidence as a whole, which was addressed in some detail earlier in the liability judgment, his Honour summarised key highlights by way of 16 categories of evidence at LJ [1438]-[1453], concluding at LJ [1454]:

Having regard to the whole of the evidence, I am satisfied that the respondents intended to induce a consensus or meeting of minds, being an understanding within the meaning of the Act. The consensus was for distributors to use the list prices in CIPA’s Distribution Market price lists for flat steel products as a base or floor price for their supply of flat steel products. I do not consider that the understanding that was sought to be induced was intended to be adopted by distributors in an absolute manner, requiring strict adherence to CIPA’s price lists as a base or floor price. Rather, the understanding that was sought to be induced was a more general adherence to a principal that distribution prices should be increased to the level of CIPA’s price lists by way of a floor. CIPA’s price lists provided a clear price level around which the understanding could cohere.

6    Those price lists were also promoted to an overseas mill for use as a reference point in their pricing, with the intention that this would increase prices. The strategy in relation to the overseas mill is referred to as the overseas mill strategy.

7    The primary judge thus concluded that BlueScope and Mr Ellis had attempted to induce seven distributors, an overseas steel mill and an import trader to arrive at understandings involving what is commonly referred to as a price fixing provision.

8    The appellants do not contest on appeal the existence of the RRP and overseas mill strategies, nor that their object was to increase flat steel prices in the Australian market. That is consistent with the position they took at the trial: LJ [593]. Instead, at the centre of their liability appeals is the proper description and characterisation of those strategies. They focus first on what case law required the ACCC to prove to establish liability, especially as to intention; and second, on the proof of the proscribed intention, asserting an alleged shortfall of necessary findings by the primary judge.

9    In particular, the appellants contend that understandings must involve an assurance, undertaking or commitment by at least one party to take future action, and that this requirement extends to what is required to establish an attempt to procure such a contravention. Because the primary judge found at LJ [657] that the ACCC did not need to prove that Mr Ellis or BlueScope went so far as to seek an assurance, undertaking or commitment, they contend that this was an error such that they should not have been found to have attempted to procure the entry into the alleged proscribed understandings.

10    The primary judge later observed at LJ [1420] that a significant part of the appellants’ closing submissions seemed to be directed to whether the evidence showed that BlueScope and Mr Ellis had attempted to reach a price fixing understanding, as opposed to whether they had attempted to induce a price fixing understanding being reached. His Honour further noted that part of this approach relied upon what was asserted to be positive evidence that:

(a)    neither BlueScope nor Mr Ellis sought from the seven distributors, the import trader and the overseas mill, referred to as a matter of convenience as counterparties, to which the attempts to procure were alleged to be directed, a commitment as to the prices they would charge for flat steel products;

(b)    the alleged counterparties did not give any such commitment and instead gave evidence that they could not give any such commitment; and

(c)    neither BlueScope nor Mr Ellis offered any quid pro quo for such a commitment.

The respondents argued before his Honour that the absence of proof of such conduct was fatal to the ACCC’s case, a point that is maintained at the centre of these appeals.

11    Other features of his Honour’s liability reasoning and conclusions are also sought to be impugned so as to overturn the result. Collateral features of the penalties imposed on Mr Ellis are also challenged.

The relevant cartel proscription

12    Section 76(1)(d) provides that the Court may order a person to pay a pecuniary penalty if it is satisfied that a person has attempted to induce a person to contravene a provision in Pt IV, which includes s 44ZZRJ. Section 44ZZRJ, since renumbered as s 45AJ, prohibited a corporation from making a contract or arrangement, or arriving at an understanding that contained a cartel provision. Cartel provisions were defined in s 44ZZRD (now s 45AD). They included what is commonly referred to as a price fixing provision as a species of a proscribed cartel provision. There are two conditions which must be met for an alleged price fixing provision to be proscribed:

(a)    the provision has the purpose or has or is likely to have the effect of fixing, controlling or maintaining the price for goods supplied or likely to be supplied by any or all of the parties to the contract, arrangement or understanding: the purpose/effect condition in s 44ZZRD(2); and

(b)    two or more of the parties to the contract, arrangement or understanding are or are likely to be in competition with each other in relation to the supply of those goods: the competition condition in s 44ZZRD(3).

13    The ACCC must show that these conditions were met by the cartel provision which was in contemplation in order to show that there was an attempt to induce a person to contravene s 44ZZRJ, in breach of s 76(1)(d). It is important to keep steadily in mind the distinction between a substantive contravention, and, as in this case, an attempt to induce such a contravention.

14    This appeal tests how far an alleged contravenor must go to be found to have attempted to induce a contravention for the purpose of s 76(1)(d).

The context for the contraventions found to have taken place

The flat steel market

15    The Australian flat steel market operates at two functional levels: manufacturing/imports and distribution: LJ [5]. Through a corporate structure that is detailed further below, BlueScope and its related entities operated at both levels.

16    In the relevant period, BlueScope was the only Australian manufacturer of flat steel products. Its primary competition at the manufacturing/imports market level was from import traders, which imported flat steel products from overseas, largely from Asia: LJ [417], [426]. Both BlueScope and import traders sold to distributors, who operated at the distribution level of the market, buying these products to on-sell them to end-users, who could then use them in a variety of applications. Compared with direct supply by steel producers, distributors typically offered particular advantages such as a wider product range, shorter order to delivery times, lower minimum volumes, less onerous credit requirements and other processing services directly or by third parties, such as cutting, recoiling and drilling: LJ [380], [382].

17    The evidence established that blast furnaces in which raw steel is created must be kept constantly firing while operational: LJ [582]-[583]. Reducing capacity where demand drops is therefore usually uneconomical for producers, meaning mills’ steel production remains relatively constant: see LJ [581(c)]. The 2008 global financial crisis saw demand drop and remain depressed for some years, globally and in Australia, causing an oversupply problem for the global steel market, a problem which was compounded by increased production in Chinese and Indian steel mills over the same period: LJ [582]-[583]. Excess supply in the overseas market meant a ready supply of overseas steel products could be exported to Australia: LJ [375].

Flat steel production

18    Raw steel is produced in one of three semi-finished products known as steel slab, billets and blooms, which then undergo further processing to create a range of further products: LJ [363]-[364]. The products of concern in this matter are flat steel products, which are produced from steel slab. In summary, the products produced from steel slab include:

(a)    hot rolled coil, a product created by reheating steel slab through a rolling mill, making it thinner and longer, before being rolled: LJ [365]-[366];

(b)    cold rolled coil, a product created by passing hot rolled coil through a rolling mill at a low temperature to reduce its thickness, increase its strength and improve its finish: LJ [367];

(c)    plate products, including two forms:

(i)    pattern plate, produced by rolling steel slab to the desired thickness and cutting it to the desired length: LJ [368]; and

(ii)    coil plate, produced by uncoiling hot rolled coil and cutting it to the desired length: LJ [368];

(d)    metallic coated steel, produced by uncoiling cold rolled coil and applying a metal coating, preventing oxidization and increasing its durability; and

(e)    painted steel, produced by painting cold rolled coil and metalling coated steel.

19    In Australia, distributors ordinarily specialise in selling certain kinds of flat steel products. “Sheet and coil” distributors typically sell hot rolled coil, cold rolled coil, light gauge plate, metallic coated coil, and painted steel, while plate products are typically sold through “steel and tube” distributors: LJ [373].

20    A range of processing services can be provided in respect of sheet and coil products, including shearing, slitting and recoiling. These were offered by CIPA and distributors: LJ [1262]. Throughout the liability judgment, and this one, steel products subject to these processing services are referred to as “processed products.”

Market participants

BlueScope and its related entities

21    BlueScope carries on a significant business in the Australian steel market. At the relevant times, it was the dominant manufacturer and distributor of flat steel products. It was the only domestic manufacturer of hot rolled coil, cold rolled coil, plate and metallic coated steel, and the country’s largest producer of painted steel products: LJ [374].

BlueScope Australia & New Zealand (BANZ)

22    BlueScope Australia & New Zealand (BANZ) is a reporting division within BlueScope. At all relevant times, Mr Vassella was its Chief Executive Officer (CEO): LJ [27(a)]. While the ACCC did not rely on his conduct or knowledge in making out the understanding, the primary judge concluded that Mr Vassella was aware of key aspects of the benchmarking strategy and overseas mill strategy, though the evidence did not establish that he had been aware that, as part of those strategies, BlueScope was attempting to induce price fixing understandings: LJ [1550]-[1551].

23    Mr Ellis reported directly to Mr Vassella: LJ [291].

BlueScope Coated Industrial Products (CIPA)

24    This proceeding is primarily concerned with the conduct of CIPA, a business division within BANZ, and its employees.

25    CIPA manufactured a range of flat steel products. It supplied these to large end-users (usually manufacturing companies) and distributors, both directly and through BlueScope Distribution Pty Ltd, BlueScope’s internal distribution channel: LJ [396]. During the relevant period, CIPA supplied roughly two thirds of the flat steel in Australia: LJ [375].

26    CIPA’s management structure was comprised of two sections: Manufacturing, and Sales and Marketing: LJ [397]. During the relevant period, Mr Ellis was the General Manager of the latter section: LJ [397]. The Sales and Marketing section was further divided into four sales areas (LJ [398]):

(a)    Distribution Markets;

(b)    Building Markets;

(c)    Manufacturing Markets; and

(d)    the International Markets Group (IMG).

27    The centrally relevant figure at CIPA was Mr Ellis himself, its General Manager. He formally commenced that role on 1 September 2013, coming across from his role as President of BSL Thailand (a joint venture between BlueScope and Loxley Pty Ltd), which he had held since April 2010: LJ [289]-[290]. In Thailand, Mr Ellis had been responsible for sales and manufacturing of steel products by the BSL Thailand joint venture. He contends that this experience was relevant to identifying the purposes of the RRP strategy he implemented at CIPA. As General Manager at CIPA, Mr Ellis’ role included responsibility for the sales and marketing of steel products in Australia, and oversight of BlueScope’s supply chain: LJ [291].

28    Mr Hennessy was the Executive National Sales Manager for CIPA during the period the conduct took place: LJ [196]. From 1 September 2013 to 1 July 2014, he reported directly to Mr Ellis (LJ [199]), though he had known Mr Ellis since 1993, when the two worked at BHP Steel. Mr Hennessy was called as a witness for the ACCC and cross-examined.

29    Several Sales Managers, each with differing responsibilities for clients and geographic areas, reported to Mr Hennessy:

(a)    Mr Brian Kelso, the Queensland Sales Manager, held responsibility for CIPA’s relationships with OneSteel and Vulcan Steel at the national level, though he also dealt with other distributors, such as CMC Steel and Southern Steel in respect of their Queensland businesses: LJ [27(d)], [400(a)].

(b)    Mr Troy Gent, Sales Manager for New South Wales and Acting Sales Manager for Victoria and Tasmania. At the national level, he had responsibility for CIPA’s relationships with CMC Steel and BlueScope Distribution: LJ [27(f)], [400(b)].

(c)    Mr Luke Sparks, the National Account Manager and Sales Manager for South Australia and the Northern Territory, and from August 2014 the NSW/ACT State Manager for Distribution and Manufacturing Markets: LJ [27(e)], [227], [400(c)].

30    Several other CIPA figures bear noting:

(a)    Mr Anthony Palermo was CIPA’s National Pricing Manager during the relevant period: LJ [404]. In that role, he was responsible for the pricing of the whole range of products produced by CIPA: LJ [404].

(b)    Mr Graham Unicomb, the Pricing Manager for Distribution at CIPA, held responsibility for the Distribution Markets sales area: LJ [27(h)], [404]. His primary responsibility was collecting the prices of competing products, largely imports, in order to determine an import parity price. That price played an important role in CIPA’s pricing for its own product range. Mr Unicomb reported to Mr Palermo: LJ [404].

(c)    Mr Dieter Schulz was, in the relevant period, the president of the IMG at CIPA: LJ [205]. His team was responsible for all of BlueScope’s export sales from Australia and New Zealand: LJ [206].

BlueScope Distribution

31    CIPA also supplied flat steel products to a wholly-owned BlueScope subsidiary, BlueScope Distribution, which operated nationally as a distributor of flat steel products, trading under various business names, including Sheet Metal Supplies (SMS), Impact Steel and BlueScope Distribution (which the primary judge referred to as BSD to distinguish it from the corporate entity): LJ [22(b)], [408].

New Zealand Steel Limited (NZ Steel) and New Zealand Steel (Australia) Pty Ltd (NZSA)

32    New Zealand Steel Limited (NZ Steel) was another wholly owned subsidiary of BlueScope. It manufactured various flat steel products in New Zealand and supplied these to a further BlueScope subsidiary, New Zealand Steel (Australia) Pty Ltd (NZSA). NZSA operated as a steel trader for flat steel products in Australia, supplying distributors and occasionally end-users with products manufactured by NZ Steel: LJ [22(d)].

33    During the relevant period, Mr Sean O’Brien was the Manager of NZSA, leaving the role in July 2014: LJ [217]. He was also a Director of NZ Steel and left that role at the same time as his NZSA role. At the time he gave evidence, he no longer worked for BlueScope or its associated entities: LJ [219]. The primary judge found Mr O’Brien to be “an honest and impressive witness”, accepting his evidence in full: LJ [220].

BSL Thailand

34    BSL Thailand had no role in the conduct giving rise to the attempts. Its significance in this appeal stems only from the fact that Mr Ellis had been its President prior to joining CIPA in September 2013, where he had developed strategies that bore some similarity to the benchmarking strategy.

Distributors

35    BlueScope categorised distributors as “aligned” or “non-aligned”, meaning distributors who purchased all or most of their flat steel products from CIPA, and those that acquired all or most from import traders, respectively: LJ [445]-[446]. A non-exhaustive list is summarised in the following table:

The asterisk against the reference to Apex Steel reflects there being conflicting evidence before the primary judge as to whether it was regarded as an aligned distributor, with Mr Hennessy describing it as aligned and Mr Kelso not referring to it as such: LJ [446]. These reasons adopt the categorisation of Apex Steel used by the primary judge, namely as an aligned distributor.

36    Several persons who held roles at the distributors at the relevant times also bear noting:

(a)    Mr Dale Wood, the founder, sole director and company secretary of Selwood Steel;

(b)    Mr Rod Gregory, the owner and Managing Director of Selection Steel;

(c)    Mr Gary Collis, the General Manager, Sales and Trading at Selection Steel: LJ [255];

(d)    Mr Neil Lobb, at the relevant times, the State Manager for NSW within CMC Steel, becoming its General Manager, Sheet & Coil in May 2014: LJ [230];

(e)    Mr Rhys Jones, a director of Vulcan Steel: LJ [257];

(f)    Mr Peter Wells, the founder of the Vulcan Steel corporate group and Chairman of the Board of Directors for Vulcan Steel: LJ [257];

(g)    Mr Joseph Calleja, the Managing Director and part-owner of the Apex Steel corporate group: LJ [192];

(h)    Mr Peter Smaller, the owner and Managing Director of Southern Steel: LJ [451], [704];

(i)    Mr Kevin Smaller, the General Manager of various Southern Steel divisions: LJ [451];

(j)    Mr David Bolzan, the National Procurement Manager at the relevant times for OneSteel: LJ [337], [449].

Import traders

37    Import traders operated in the flat steel market by purchasing and importing flat steel products manufactured in overseas steel mills and selling them on to distributors or end-users in Australia: LJ [426]. These included Wright Steel (Sales) Pty Ltd and Citic Australia Commodity Trading Pty Ltd, which were the subject of one of the alleged attempts: LJ [427]. Both companies carried on an unincorporated joint venture for import trading (the Wright Steel-Citic JV).

38    Mr Malcolm Griffith Wright owned Wright Steel. The business stopped trading independently in February 2001, at which point the Wright Steel-Citic JV commenced. He provided four witness statements and was cross-examined. He was found to be an honest witness, and the primary judge generally accepted his evidence, though it contained areas of inconsistency: LJ [260].

Overseas mills

39    Overseas steel mills manufactured products that were imported into the Australian market. For the most part, products manufactured in these mills were sold to import traders for distribution in Australia, though in a limited number of cases overseas mills sold directly to Australian distributors or end-users: LJ [419]. One Taiwanese mill, Yieh Phui, was the subject of one of the alleged attempts. Yieh Phui was a significant player in the Australian market, manufacturing 70% of all coated flat steel products imported into Australia annually: LJ [420].

40    An important aspect of the market was Australia’s anti-dumping measures, which were intended to halt overseas manufacturers undercutting Australian ones. In 2013, in response to a collapse in steel prices globally, Australia became increasingly protectionist of its local steel industries, leading to an increase in anti-dumping applications: LJ [6].

The impugned conduct

The benchmarking strategy for the distributors (seven contraventions found)

41    It is not necessary to summarise all of the primary judge’s findings about the relevant conduct, though those subject to challenge by the appellants will be discussed in further detail below. The following is a broad overview of the conduct found to amount to the attempts alleged by the ACCC.

42    This proceeding is primarily concerned with the conduct of the CIPA division of BlueScope, and in particular the conduct of Mr Ellis as CIPA’s General Manager of Sales and Marketing. BlueScope’s structure and functions are explained in further detail below. It is sufficient at this stage to note that CIPA manufactured flat steel products that it sold primarily to distributors.

43    Prior to Mr Ellis starting at CIPA in September 2013, CIPA had provided monthly price lists to aligned distributors. Those price lists specified:

(a)    an “advanced offer” price, for products with standard specifications, referred to by some witnesses as an “alto” price (an acronym of “advanced lead time offer” price); and

(b)    a “custom offer” price, for products with custom specifications.

44    The price lists also specified lead times for product delivery, which varied depending on whether the product was an advanced or custom offer.

45    CIPA supplied products to aligned distributors and BlueScope Distribution at the prices specified in those price lists, with additional discounts and rebates applied for loyalty, early settlement or longer lead times: LJ [562]. These rebates and discounts were less transparent, and were negotiated, to an extent, by the distributors. The price offered after all discounts and rebates was referred to as the “net net price”. Price lists did not specify the net net price, leaving this for the distributors to calculate instead.

46    For non-aligned distributors, CIPA offered a negotiated discounted price, usually around the time those distributors were considering import offers.

47    In addition to the discounts referred to above, CIPA provided additional ad hoc discounts in response to specific requests, referred to as “tactical pricing” or “end user targeted rebates” (EUTs): LJ [566].

48    CIPA’s Distribution Markets sales team and its Pricing Team met monthly to discuss the list price, being the price before any discounts or rebates were applied, and the net net price: LJ [554], [860]. The list price and net net price were based on the prices for equivalent products supplied by overseas mills, referred to as the import parity price (often abbreviated to IPP), with a premium to reflect the value added by CIPA supplying domestically: LJ [554]-[555].

49    Mr Ellis formally commenced at CIPA on 1 September 2013: LJ [613]. Immediately prior to that formal start date, from mid-August 2013, he had meetings with customers and Sales and Marketing Staff at CIPA. Mr Ellis’ early concerns centred on CIPA’s falling sales to distributors and increased competition from foreign mills, which threatened BlueScope’s domestic position: LJ [1308], [1309]. In speaking to customers, Mr Ellis received feedback that distributors were frustrated that BlueScope Distribution and, to a lesser extent, NZSA, were undercutting them, and that it was not economically viable for distributors to compete with the prices BlueScope was offering end-users for CIPA products.

50    In conversations with some distributors, as well as Wright Steel (an import trader), Mr Ellis raised that CIPA would soon be publishing price lists, and there would be an “opportunity” to use them as a “benchmark” when setting prices, to put value back into the flat steel market. One such meeting was held at Melbourne airport on 6 September 2013, with four distributors in attendance (the Melbourne Airport Meeting). Feedback was given from representatives of one distributor, Vulcan Steel, that prices should allow a 15% margin for distributors.

51    On 16 September 2013, a spreadsheet titled “BSL CIPA Benchmarks and Premiums – December 2013” (the December 2013 Benchmark spreadsheet), was circulated to some members of CIPA’s Sales and Marketing staff. That spreadsheet listed CIPA’s flat steel products and contained various columns showing the “list price” and import parity price for each product. The discount for longer lead times was replaced by a “distributor support discount”, that applied regardless of when an order was made: LJ [964]; see also LJ [833], and Mr Kelso’s evidence at LJ [984] at the foot of p 289. The new list prices were higher than had previously been provided to distributors, and a larger discount was applied, meaning the net net prices remained roughly steady. Margins between the list and net net prices for different products ranged between 13% and 15%. The spreadsheet did not include an express reference to a recommended resale price.

52    On 17 September 2013, the spreadsheet was sent to six of the seven distributors subject to the attempts. The actual prices included in the versions of the spreadsheet sent to distributors differed to a limited extent for the distributor who received it. Members of CIPA’s Sales and Marketing team then promoted the use of list prices by distributors in setting the distributors’ own prices.

53    On 30 October 2013, prices for January 2014 were issued using the same spreadsheet format as the December 2013 Benchmark spreadsheet. CIPA price lists for February 2014 were not in evidence: LJ [1145]. The price lists for March 2014 differed however, now referring to a “base” recommended resale price (rather than list price): LJ [1167]. Versions of those price lists were issued on a number of subsequent occasions. CIPA staff promoted those lists for use by distributors in setting the distributors’ own prices.

54    Mr Ellis also directed that controls over tactical pricing must be constrained, and that BlueScope Distribution price by reference to the lists. He had developed a strategy to have NZSA price by reference to the CIPA price lists as well. Though NZSA agreed to publish list prices that matched the CIPA price lists, its general manager offered significant discounts to his customers, which was met by further pressure from CIPA to increase its net prices: LJ [1039].

55    Mr Ellis’ evidence at trial (which was substantially rejected by the primary judge, especially as to his exculpatory characterisation of what had taken place) was that the CIPA price lists were provided to serve as a recommended price which distributors could choose to take into account in their own pricing decisions: LJ [627]. He stated that the benchmarking strategy gave distributors an “opportunity” to price by reference to the CIPA price lists, and that he “hoped” that distributors would set their prices on that basis: LJ [631]. He stated, however, that it would not have been commercially feasible for BlueScope to have arrived at understandings with distributors that they would use the prices as the benchmark for their pricing, as the distributors faced a high degree of competition, needed to retain pricing flexibility to negotiate prices with large customers and needed to incorporate their own costs into their prices: LJ [631]. Arguments consistent with this evidence are raised on appeal. However, there is no challenge to the findings of the primary judge rejecting that evidence, and these arguments must be considered with that in mind.

The Wright Steel understanding

56    The attempt in relation to Wright Steel, an import trader, is distinct from those directed to distributors, but was also part of the benchmarking strategy. The primary judge found that it occurred in the course of a dinner between Mr Ellis, Mr Hennessy (who reported directly to Mr Ellis at CIPA) and Mr Wright, the owner of Wright Steel (as noted above). The dinner occurred on 12 September 2013, early in Mr Ellis’ tenure at CIPA, before the publication of the December 2013 Benchmark spreadsheet. Considering conflicting accounts of what occurred at that dinner from each of Messrs Ellis, Hennessy and Wright, the primary judge found that Mr Ellis had proposed that Wright Steel could encourage its customers, who were distributors in the Australian flat steel market, to use the CIPA price lists as a benchmark for their prices: LJ [804].

The overseas mill strategy (Yieh Phui understanding)

57    The overseas mill strategy was distinct from but closely related to the benchmarking strategy: LJ [1428]. The existence of this strategy is relevant only to an understanding directed to Yieh Phui which was, as noted above, a Taiwanese steel mill. The relevant conduct for this attempt occurred on 26 February 2014, when Mr Ellis and Mr Dieter Schulz of CIPA attended a meeting with several senior Yieh Phui representatives at Yieh Phui’s offices in Kaohsiung, Taiwan: LJ [68].

58    A recording of at least part of the 26 February 2014 meeting, and a transcript of that recording, were in evidence, having been produced by Yieh Phui to the ACCC pursuant to a notice issued under s 155 of the Act: LJ [1306], [1357]. The primary judge summarised his findings as to what occurred at that meeting at LJ [1452]:

…Mr Ellis stated that there was an opportunity for Yieh Phui to sell steel at “better prices” than they were currently achieving and that Yieh Phui was “leaving some profitability behind”. Mr Ellis explained that BlueScope’s recommended resale price lists were prices at the distribution level of the market, suggesting that Yieh Phui base its (import) prices on BlueScope’s recommended resale prices. Mr Ellis told Yieh Phui that when BlueScope set the recommended resale price in Australia, it established a “market norm” …

The primary judge’s ultimate liability conclusions

59    The penultimate part of the primary judge’s reasons recorded the ultimate findings his Honour reached with respect to the attempts alleged by the ACCC that were found to have been established. His Honour:

(a)    at LJ [1415]-[1424], gave a detailed overview of his conclusions as to the allegations overall;

(b)    at LJ [1425]-[1457], made findings as to what the appellants’ intended by their conduct; and

(c)    at LJ [1425]-[1546], separately addressed the conclusions reached for each alleged attempt, one by one, listing a summary of the conduct established by the evidence relied upon.

The attempts to induce understandings with distributors

60    The primary judge ultimately found that on the proven conduct of BlueScope and Mr Ellis, taken as a whole, they had attempted to induce seven distributors in the Australian flat steel market to arrive at separate price fixing understandings with BlueScope. Those distributors were:

(a)    Selection Steel Trading Pty Ltd;

(b)    Apex Steel Pty Ltd;

(c)    Southern Steel Group Pty Limited;

(d)    Vulcan Steel Pty Ltd;

(e)    CMC Steel Distribution Pty Ltd;

(f)    Celhurst Pty Ltd trading as Selwood Steel; and

(g)    OneSteel Trading Pty Ltd.

61    The primary judge found that each of the first five attempts to induce listed above (that is, all attempts to induce apart from those directed to Selwood Steel and OneSteel), would have resulted in an understanding including two cartel provisions:

(a)    that the distributor who was party to the understanding would use the list prices in CIPA’s Distribution Market price lists as a base or floor price when selling flat steel products to end-users in Australia; and

(b)    that BlueScope Distribution would sell flat steel products to end-users in Australia in accordance with CIPA’s Distribution Market price lists: LJ [1462], [1469] (Selection Steel); LJ [1471], [1477] (Apex Steel); LJ [1479], [1485] (Southern Steel); LJ[1487], [1493] (Vulcan Steel); LJ [1509] [1515] (CMC Steel).

62    The primary judge found that the remaining two attempts directed to Selwood Steel and OneSteel would have resulted in understandings only involving the first cartel provision identified above: LJ [1498], [1504] (Selwood Steel), LJ [1520], [1526] (OneSteel).

63    For each of the first five distributors listed above, the primary judge found that BlueScope and Mr Ellis had knowledge of the essential facts that would have rendered the contemplated understanding unlawful. As to the point reached with each distributor in respect of the attempt, his Honour found that the critical fact was that BlueScope’s proposals were capable of assent, and identified the inducement offered by Mr Ellis as the proposal that CIPA would tighten its tactical pricing with impacts on price levels that were relevant to each distributor, which would confer advantages to each of them by reducing competition at the distribution level of the market: LJ [1466] (Selection Steel); LJ [1474] (Apex Steel); LJ [1483] (Southern Steel); LJ [1490] (Vulcan Steel); and LJ [1512] (CMC Steel).

64    For Selwood Steel, the primary judge also found as a critical fact that BlueScope’s proposal was capable of assent, that Mr Wood for Selwood Steel understood that Mr Ellis was seeking a consensus, and that the inducement offered was a transactional account with BlueScope: LJ [1502].

65    For OneSteel, it is clearest to reproduce what the primary judge found at LJ [1524], rather than endeavouring to summarise it:

There is no evidence that BlueScope or Mr Ellis offered OneSteel inducements in the nature of promised commercial advantages (such as CIPA reducing its tactical pricing or even that BlueScope Distribution would increase its prices in accordance with CIPA’s price lists). Nevertheless, an inducement may comprise other persuasive conduct that is intended to induce a consensus. In the case of OneSteel, the evidence shows that what was communicated to, and understood by, OneSteel, was that the benchmarking strategy was being promoted to other distributors in the market. In Mr Ellis’s words, there was an “opportunity” for distributors to set their prices by reference to CIPA’s recommended resale prices. The opportunity was created by BlueScope and Mr Ellis seeking to persuade a significant number of distributors to set their prices by reference to CIPA’s price lists. I find that that “opportunity” was communicated to OneSteel, and that the communication of the “opportunity” was an inducement to reach a price fixing understanding within the meaning of the Act. I find that the conduct of BlueScope and Mr Ellis was sufficient to constitute an attempt to induce an understanding containing the cartel provision referred to above. The critical fact is that BlueScope’s proposals to OneSteel were capable of assent.

66    For completeness, it should be noted that the findings as to cartel provisions differed in a particular respect from those alleged in the ACCC’s pleadings, because of what emerged during the trial. Relevantly for this appeal, the ACCC had framed the alleged provisions about the use that distributors would make of CIPA’s lists as being that they would use them as a “benchmark” for their prices. Over the course of the trial, the ACCC clarified that by this it meant that the prices would be used as a “base” or “floor” price, to which an additional amount might be added reflecting the processing costs of each distributor: LJ [592]. That framing is reflected in the language by which the primary judge described the cartel provisions in his Honour’s findings.

The attempt to induce the Wright Steel understanding

67    The primary judge also found that BlueScope and Mr Ellis had attempted to induce Wright Steel and/or Citic which operated a joint venture importing flat steel into Australia, to arrive at an understanding. The cartel provisions of that understanding are summarised at LJ [1530], and repeated as findings of attempts to induce those contraventions at LJ [1535]:

(a)    Wright Steel and/or Citic would sell flat steel products to distributors in Australia at increased prices by reference to CIPA’s Distribution Market price lists; and

(b)    BlueScope CIPA and NZSA would sell flat steel products to distributors in Australia at increased prices by reference to CIPA’s Distribution Market price lists.

68    As with all seven distributor attempts, the primary judge found that BlueScope and Mr Ellis had knowledge of the essential facts that would have rendered the contemplated understanding unlawful, and that BlueScope’s proposal was capable of assent: LJ [1533]-[1534]. His Honour found that the inducement offered by BlueScope and Mr Ellis was a promise that CIPA and NZSA would be increasing their prices, coupled with a threat that if the import traders did not increase prices, BlueScope would initiate anti-dumping complaints against the imported products: LJ [1533].

The attempt to induce the Yieh Phui understanding

69    The primary judge found that BlueScope and Mr Ellis had attempted to induce Yieh Phui, the Taiwanese flat steel mill, to arrive at a price fixing understanding. The cartel provision was that Yieh Phui would sell flat steel products to import traders at a higher price than it was doing at the time of the 26 February 2014 meeting outlined at [57] above, by reference to CIPA’s Distribution Market price lists: LJ [1540], [1546].

70    As with all seven distributor attempts, and the Wright Steel attempt, the primary judge found that BlueScope and Mr Ellis had knowledge of the essential facts that would have rendered the contemplated understanding unlawful (at LJ [1545]), and that BlueScope’s proposal was capable of assent: LJ [1533]. His Honour identified the inducement offered by BlueScope and Mr Ellis as having two key aspects: an implicit promise that BlueScope would support the prices reflected in its price lists; and a threat of anti-dumping action against any imports at low prices (explicitly made in relation to low priced imports from Vietnam and India). His Honour characterised the totality of Mr Ellis’ statements to Yieh Phui as being in the nature of persuasive arguments for Yieh Phui to increase its prices, which his Honour found was sufficient to constitute an attempt to induce an understanding: LJ [1544].

THE GROUNDS OF APPEAL

Summary

71    BlueScope raises six grounds of appeal and Mr Ellis raises seven grounds of appeal, with a degree of overlap. They can be grouped together as follows, in accordance with the way they were addressed by the appellants.

BlueScope ground 1 and Ellis ground 1: the elements required to be established for an understanding

72    The appellants contend that authority, properly understood, dictates that at least one party making a commitment, or giving an assurance or undertaking, is a necessary element to be established to prove the formation of an understanding, and the primary judge erred by failing to identify this as a legal requirement.

BlueScope grounds 2-4: intention required to be established/most probable inferences

73    BlueScope contends that the factual findings on which the primary judge relied in finding that the intention element was made out were equally or more consistent with it merely hoping or intending that each of the distributors, and also Wright Steel and Yieh Phui, would raise their prices, without intending that they make a commitment to do so. As such, BlueScope contends that a finding that was necessary to ground any contravention was absent.

Ellis ground 3: proof of an inducement

74    Mr Ellis contends that the primary judge erred in finding that he had offered “inducements” to the distributors to enter into understandings, in circumstances where, on the factual findings made, he was merely informing them of steps already taken or decisions already made, regardless of any action taken by the distributors.

BlueScope ground 5, Ellis grounds 2, 4-6: benchmarking/sufficiently proximate conduct

75    The appellants contend that the primary judge erred:

(a)    in finding that the recommended resale price was a base or floor price, by concluding that the attempted understandings contained cartel provisions for “fixing, controlling or maintaining” the price for flat steel products; and

(b)    in finding that the steps taken by BlueScope and Mr Ellis were sufficiently proximate to give rise to attempts to induce entry into those understandings.

76    Mr Ellis also specifically contends that the primary judge erred in finding that, when considering whether a person has attempted to induce an understanding containing a cartel provision, the “critical fact” was whether proposals made are “capable of assent”: LJ [1524].

BlueScope ground 6: limitation period for the OneSteel attempt

77    BlueScope contends that the primary judge erred in finding that s 77(2) did not prevent the ACCC from seeking a pecuniary penalty against BlueScope in relation to the attempt to induce OneSteel to arrive at an understanding containing a cartel provision.

Ellis ground 8: non-indemnification order under s 76 of the Act

78    Mr Ellis contends that the primary judge erred in finding that s 76 empowered the Court to order that he be prevented from making any claim in respect of any applicable insurance policy for payment or reimbursement for any pecuniary penalty imposed by the Court.

The ACCC’s stance

79    The ACCC defends the primary judge’s reasoning in respect of each ground of appeal.

BlueScope ground 1 and Ellis ground 1: the elements required to be established for an understanding

80    Section 76(1)(a)(i) provides that, if the Court is satisfied that a person has contravened a provision of Pt IV (aside from, at the relevant time, s 44ZZRF or s 45ZZRG), it may order payment of a pecuniary penalty and related relief. At the relevant time, Pt IV included s 44ZZRJ (now s 45AJ), which proscribed a corporation making a contract or arrangement, or arriving at an understanding, which contains a cartel provision. Paragraphs (b) to (f) of s 76(1) create contraventions directed to the same substantive provisions which apply to accessories, attempts, conspiracies, inducement, and attempts to induce relating to the same contraventions in the same way, and make provision for the same relief. These include:

(a)    s 76(1)(b), which applies where a person “has attempted to contravene”; and

(b)    s 76(1)(d), which applies where a person “has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene”,

the specified provisions of Pt IV.

81    The contraventions found to have been established by the primary judge were attempts to induce the reaching of understandings which included a term to fix the price of flat steel, contrary to s 76(1)(d).

82    For contraventions of this kind to be proven, two foundational elements, being conduct and intention, must be established. These elements are in addition to proof that the understandings which were the subject of the attempts to induce would have contained cartel provisions (not in issue in these appeals). The need for proof of conduct and intention has been clearly stated by the Full Court for over four decades and repeatedly reaffirmed. One of the earliest statements to this effect was made by Toohey J when his Honour was a member of this Court in Trade Practices Commission v Tubemakers of Australia Ltd (1983) 47 ALR 719 at 737, 743; 76 FLR 455 at 473, 479, approved in numerous cases since then, including explicitly in Australian Competition and Consumer Commission v Australian Egg Corporation Ltd [2017] FCAFC 152; 254 FCR 311 at [92] (Besanko, Foster and Yates JJ).

83    The correctness of Tubemakers and Egg Corp has not been questioned by any party in these appeals. Rather, the dispute turns on what the requirements for a concluded understanding are. The answers to that question flow through to the appellants’ challenge to the primary judge’s findings on intention and conduct.

84    For an attempt to induce, the relevant intention is to bring about the proscribed outcome (here, an understanding), and the conduct must involve steps that are more than merely preparatory to bring about that outcome. These concepts are discussed further in addressing the appellants’ grounds relating to intention (BlueScope grounds 2-4) and conduct (BlueScope ground 5, Ellis grounds 2, and 4-6).

85    The appellants contended at trial, and maintain on appeal, that a necessary element of a concluded understanding is that at least one party makes a commitment, assumes an obligation or gives an assurance or undertaking. From this, the appellants extrapolated that, in the case of an attempt to induce an understanding, there needs to be conduct and intention directed to bringing about that commitment, obligation, assurance or undertaking.

86    For present purposes, the appellants appear to consider each of obligation, commitment, assurance and undertaking to be essentially interchangeable. That is because their cases depended on treating these four non-statutory concepts as being identical to the statutory proscription of an understanding. However, as will be seen, each of those four non-statutory terms can entail various degrees of stringency, according to the circumstances and the quality of the evidence. The appellants’ cases at least implied a higher rather than lower degree of stringency. That especially emerged in placing weight on an asserted need for a commitment for there to be a concluded understanding. These reasons will generally refer to this further element which the appellants claim is necessary to prove a concluded understanding as a commitment. This approach is adopted because “commitment” was a key term used by the appellants to refer to this concept in the conduct of the trial, especially in the cross-examination of a number of key witnesses, rather than due to any abstract conclusion that a “commitment” is an inherently more burdensome concept than an “obligation”, “assurance” or “undertaking”. To the contrary, as will be illustrated below, each of these non-statutory concepts can take on a broad range of meanings entailing varying degrees of stringency depending on the context in which they are used.

87    The primary judge ultimately rejected this argument, and expressly found that the contraventions alleged did not require seeking a commitment (or equivalent concept), but rather required no more than a step towards the inducement of a price fixing understanding that was more than merely preparatory and was not merely remotely connected with the inducement to reach the contemplated understandings: LJ [657]. The appellants assert that his Honour erred by failing to identify that seeking a commitment (or equivalent concept) was a requirement for the contraventions by way of the alleged attempts to induce, both as to conduct and as to intention.

88    Upon close consideration, the precise issue in dispute is not squarely answered by authority in terms of this degree of granular detail being required, as asserted by the appellants, but rather turns on the correctness or otherwise of the analysis and conclusions reached by the primary judge in light of careful consideration of that authority. For the reasons set out below, his Honour did not err.

The elements of an attempt to induce

89    It is convenient first to set out the apparently uncontested elements of an attempt, and an attempt to induce as set out by the Full Court in Egg Corp:

[92]    In order to establish an attempt, an applicant must prove both intention and conduct. The intention is to bring about the proscribed result which in this case is the making of an arrangement or the reaching of an understanding … (Trade Practices Commission v Tubemakers of Australia Ltd (1983) 76 FLR 455; 47 ALR 719 (Tubemakers) at 472-473; 737 and 479; 743 per Toohey J). It is not necessary in order to establish the relevant intention to prove that it was accompanied by or included an expectation of success or a belief that the purpose would be achieved (Tubemakers at 471-472; 736 per Toohey J).

[93]    The conduct which is necessary to constitute an attempt is a step towards the commission of a contravention, which is immediately and not merely remotely connected with it (Tubemakers at 472; 736 per Toohey J referring to Archbold’s Pleading Evidence & Practice 36th [Ed], para 4101). The Full Court of this Court in Trade Practices Commission v Parkfield Operations Pty Ltd (1985) 7 FCR 534 (Parkfield Operations) at 538-539 made a similar point when it said that an attempt must involve taking a step towards the commission of contravening conduct and that it is not sufficient that it be merely remotely connected or preparatory to the commission of it. In Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2002] ATPR 41-877 (ACCC v SIP Australia) at 45-015, Goldberg J made the point that what is required for an inducement is that “there be an affirmative or positive act or course of conduct directed to the person who is said to be the object of the inducement”. In addition to that point, his Honour also referred to the decision of the Full Court of this Court in Heating Centre Pty Ltd v Trade Practices Commission (1986) 9 FCR 153 at 164 where it was said that mere persuasion, with no promise or threat, may well be an attempt to induce.

[94]    For the purposes of both elements of an attempt, that is to say intention and conduct, it is not necessary for the precise terms of the proposed arrangement or understanding to have been formulated. This point was made by the Full Court in Parkfield Operations (at 539) and another way of putting the point is that it is not necessary for an attempt to be made out to establish that the relevant conduct had reached an advanced stage. Having said this, it is perhaps trite to note that the more advanced the conduct, the more likely it is that the inference of the necessary intention will be drawn.

[95]    In order for there to be an arrangement or understanding …, there must be a meeting of minds and this involves a commitment to act in a particular way. A mere expectation as distinct from an assumption of obligation, assurance or undertaking to act in a particular way is not sufficient. Unlike an arrangement, an understanding can be tacit (Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (1999) 92 FCR 375 (CC Pty Ltd) at [135]-[141] per Lindgren J; Apco Service Stations Pty Ltd v Australian Competition and Consumer Commission (2005) 159 FCR 452 at [45]-[47]; Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (2007) 160 FCR 321 at [28]-[39] per Gray J).

[96]    For some time, there has been a debate in the authorities as to whether a meeting of minds involving only one party assuming an obligation as distinct from mutual or reciprocal obligations can constitute an arrangement or understanding of a proscribed kind. The issue has not been authoritatively determined. The courts which have addressed the issue have consistently said that even if the undertaking of a unilateral obligation can constitute a contravening arrangement or understanding, such cases are likely to be rare (see, for example, Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 (Service Station Association) at 230-231 per Lockhart J, at 238 per Spender and Lee JJ; CC (NSW) Pty Ltd at [139] per Lindgren J). For reasons which we will give, it will not be necessary for us to resolve the issue in this case.

90    Egg Corp thus expressly approved the earlier Full Court decision in Trade Practices Commission v Parkfield Operations Pty Ltd [1985] FCA 545; 7 FCR 534 (Bowen CJ, Smithers and Morling JJ) as to the elements of an attempt to induce. Parkfield Operations had also been referred to by the primary judge in Egg Corp, White J, without the Full Court suggesting any error by his Honour: Australian Competition and Consumer Commission v Australian Egg Corporation Ltd [2016] FCA 69; 337 ALR 573 at [67] (Egg Corp PJ). The primary judge in the case at hand also referred to and applied Parkfield Operations: LJ [86], [97]. It is therefore instructive to refer to what was said in Parkfield Operations at 539-540 (being the main part of the passage quoted by White J):

Finally, his Honour thought that there could be no attempt to induce XL to make an arrangement of the kind alleged if there was no arrangement which was in place or could readily be effected. He thought that the evidence established no more than that there was an invitation “to start to see if an arrangement can be made”. We do not think that it was necessary for any arrangement to be in place, or readily able to be effected, with the other retailers. It was sufficient that the respondents sought to persuade XL to enter into an arrangement to increase prices. As was said in Yorke v Lucas (1983) 49 ALR 672 at 681 (affirmed by the High Court, (1985) 59 ALJR 776 [; 158 CLR 661]):

“Inducing a contravention in the context of s 75B(b) connotes, in our view, some act of compulsion by force or threat of force or some act of persuasion or stimulation aimed at ensuring that an act is committed which constitutes a contravention. The word ‘incite’ is akin to ‘induce’, though induce probably covers a wider field.”

(Emphasis added.)

91    The terms of s 75B(b) of the Trade Practice Act 1976 (Cth) reproduced by the High Court in Yorke v Lucas [1985] HCA 65; 158 CLR 661 at 664 (“has induced, whether by threats or promises or otherwise, the contravention”) are not materially different for present purposes from the language used in s 76(1)(d) (“has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene”). The debate then turns on the degree or content of persuasion or like conduct required, and the accompanying state of mind, aimed at ensuring that what has taken place constitutes a contravention.

92    At all times, it must be kept steadily in mind that the primary judge, and therefore this Court, is not concerned with even an attempt to contravene, much less a completed contravention, but rather an attempt to induce a contravention. That said, the requirements for a concluded understanding are likely to be illuminating as to what is required for an attempt to induce such a contravention, in terms of the requisite intention and conduct. The appellants appear to contend that an attempt to induce an understanding must involve an intention to seek a commitment, a proposition that seems to go further than the ordinary view of what is required. But plainly enough, if a commitment is not required for a concluded understanding, it cannot be required for an attempt to induce one.

93    Before proceeding further down the specific pathway of authority on understandings, it is instructive to have regard to some observations of more general application for this complex area of the law. In Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75; 216 CLR 53, a cartel arrangement and misuse of market power case, Gummow, Hayne and Heydon JJ (with whom Gleeson CJ and Callinan J relevantly agreed), made some observations about what is required to prove accessorial liability that are of relevance to the present debate. At [48], their Honours described an argument advanced that the accessories did not know that the principal’s conduct had the purpose or likely effect of substantially lessening competition in the defined market as wholly unrealistic, and observed (footnotes omitted.):

Only a handful of lawyers think or speak in that fashion, and then only at a late stage of analysis of any particular problem. In order to know the essential facts, and thus satisfy s 75B(1) of the Act and like provisions, it is not necessary to know that those facts are capable of characterisation in the language of the statute.

94    That observation has some relevance in these appeals due to the dangers inherent in elevating above the words used by Parliament the language of analytical tools developed by courts over time to determine whether or not a statutory proscription has been contravened. Words and phrases such as “meeting of the minds”, “consensus”, “commitment” and “obligation” in the jurisprudence of cartel conduct are not the terms of Parliament’s proscription, but rather language used to analyse whether a contravening understanding or arrangement, as legislated, has been established. The emphasised words used by the Full Court in Parkfield Operations reproduced above focus on the proscription. It is the substance of what took place, as established by the evidence, that matters most, ahead of the form of language used to assess that substance. The language of a court is not to be read as a statute, no matter how useful or instructive: Baini v The Queen [2012] HCA 59; 246 CLR 469 at [14] (French CJ, Hayne, Crennan, Kiefel and Bell JJ). Doing so creates the risk of error in the conclusion reached.

The primary judge’s findings and the appellants’ challenge

95    The primary judge addressed the principles applicable to an attempt to induce a contravention at both the general level, and separately as to both intention and conduct, by reference to what his Honour was satisfied had been shown to have taken place by the evidence. In particular, his Honour relied upon the passages in Tubemakers, Parkfield Operations and Egg Corp referred to above, enhanced by reference to more general authority on the content of attempts, including in the generally more stringent regime applicable to criminal law: see LJ [84]-[99]. No error has been suggested in any of this analysis. His Honour was clearly aware that more than merely preparatory conduct and a corresponding state of mind was required, and indeed said so. The criticism advanced by the appellants is by way of asserted omission, and in particular, by reference to what the appellants say was a requirement to find that they were seeking, or at least intending to seek, a “commitment” or an analogue.

96    The word “commitment” has not been used by Parliament but has been one of a number of longstanding analytical or linguistic tools deployed by courts in deciding whether a concluded arrangement has been arrived at, sometimes flowing over to a decision as to whether a concluded understanding has been reached. The primary judge was very much alive to this usage, but did not accept the need for conduct or state of mind couched in that language, or going that far, to have been established for either a concluded understanding, or an attempt to induce such an understanding. The line of authority on this topic is considered in some detail below, mostly being authority that was referred to and relied upon by the primary judge, but not requiring consideration by his Honour in as much detail as is now necessary because of the challenge to the explanation of the principles he enunciated.

97    The primary judge encapsulated the appellants’ trial contentions as to conduct succinctly at LJ [96], which the appellants contend should have been accepted and determinative. His Honour set out his response to these contentions at LJ [97] (emphasis in original):

[96]    The respondents drew a distinction between persuading a competitor to increase their price and persuading a competitor to arrive at an understanding containing a provision that they will increase their price. The respondents argued that conduct in the first category is lawful while conduct in the second is unlawful. The distinction can be accepted in theory but is likely to be a fine one in practice. For example, if competitor A says to competitor B that competitor B should increase its prices because they are unprofitable, that might be characterised as mere persuasion (in the form of a persuasive argument) to increase prices and may not involve an inducement to reach an understanding and a contravention of the law. An illustration of such conduct is given by the findings in Trade Practices Commission v Service Station Association Ltd (1992) 109 ALR 465 (Service Station Association) (see at 488 per Heerey J) (upheld on appeal in Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 (Service Station Association (Full Court)) at 224-225, 238 per Lockhart J, Spender and Lee JJ agreeing). However, an added statement that competitor A is intending to do likewise may, in appropriate circumstances, be characterised as an attempt to persuade competitor B to arrive at an understanding to increase prices. Further, as Heerey J observed in that case (at 488), the objective likelihood of particular conduct producing a particular result (viz, arrive at an understanding) is relevant to ascertaining what was intended by the conduct (referring to the observations of Windeyer J in Vallance v The Queen (1961) 108 CLR 56 at 82).

[97]    In Parkfield, the Full Court concluded (at 539) that an attempt to contravene does not need to have reached an advanced stage before it comes within the purview of s 76(1)(b). In respect of an attempt to induce a contravention within s 76(1)(d), the Full Court said that it is not necessary for any arrangement to be in place, or readily able to be effected – it is sufficient that the respondents sought to persuade the counterparties to enter into an arrangement to increase prices (also at 539). Those statements were approved by the Full Court in Australian Egg Corporation (at [94]): [[94] in Egg Corp was then quoted by the primary judge, as extracted at [89] above].

98    The appellants take particular issue with the penultimate sentence in LJ [96]:

However, an added statement that competitor A is intending to do likewise may, in appropriate circumstances, be characterised as an attempt to persuade competitor B to arrive at an understanding to increase prices.

99    That challenge is doubtless because this, in substance and in considerably greater detail, was at the core of what the primary judge found had taken place in relation to the alleged attempts to induce that his Honour found had been established. The conduct aspect notionally leads the charge, but it is the state of mind attendant upon the conduct alleged and proven – the intention – that is the real heart of the liability appeals. The appellants ultimately rely on the absence of any finding of an intention to seek a “commitment” as being fatal to the ACCC’s case.

100    It follows from the foregoing that, in order for ground 1 of either appeal to be able to succeed, the appellants must first establish that the primary judge erred in concluding as part of LJ [106]-[108] and LJ [145]-[148] (relevant extracts reproduced below) that a commitment is not required for an understanding to be reached – that is, for there to be a concluded understanding, as opposed to any kind of attempt directed towards arriving at it. If such a commitment is not required to establish that an understanding has been arrived at for the purposes of s 44ZZRJ (now s 45AJ), then it necessarily follows that a commitment or the seeking of a commitment is also not required for either an attempt to reach such an understanding for the purposes of s 76(1)(b) or, as presently relevant, an attempt to induce such an understanding for the purposes of s 76(1)(d). If, but only if, a commitment (or an equivalent concept) is always required for a concluded understanding in breach of s 44ZZRJ (now s 45AJ) to be made out, then the appellants must also establish that a commitment forms part of what is required for an attempt to induce such an understanding.

101    One of the difficulties in addressing the authorities in this area is the disparate factual circumstances in which an understanding can be alleged to have been reached, attempted, or attempted to be induced. It is an occupational hazard for judges to elevate what is sufficient into something that is also necessary, simply because it was a feature of the case that was being decided and perhaps necessary to make good an allegation in the particular circumstances of that case. It is easy to conflate what is sufficient for the case at hand to what is universally required for all cases – or at least for a judgment to be read in that more general or universal way.

102    This dilemma may be manifested in the way that the case was run, relevantly, by the ACCC: see the reasoning in Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd [2019] FCAFC 83 at [61]-[63] (Middleton, Perram and Bromwich JJ). In that case, the ACCC failed in its argument to the effect that something that was sufficient in the abstract had been erroneously elevated to something necessary, not because the Court made a finding to the opposite effect – their Honours expressly declined to decide that point – but rather because of the way that the ACCC’s case in Colgate-Palmolive was run at trial.

103    However, in this case, the ACCC’s case was not run in a way that self-imposed a hurdle to establish that a commitment was required for a concluded understanding, nor for an attempt to induce one. Rather, this hurdle was sought to be imposed by the appellants, by the way that they ran their cases, apparently based upon the particular way that they interpreted the authorities.

104    The burden of the ACCC’s contrary argument may be seen to be that, while a commitment would be sufficient to show an understanding has been reached, a commitment is not necessary to prove that an understanding exists, let alone to prove an attempt to reach an understanding, and even less so to prove an attempt to induce an understanding, in this case, or perhaps at all.

105    For the reasons that follow, a universal proposition that something as stringent as a commitment will never be needed is likely to be a bridge too far. What matters is whether it is needed in all cases, as the appellants contend, and, if not, whether it was needed in this case, especially as it is an attempt to induce an understanding case.

106    The primary judge considered what was needed for a concluded understanding as part of the analysis of what was needed for an attempt, and ultimately for an attempt to induce: see in particular LJ [106]-[108] and LJ [145]-[148] which are at the core of the appellants’ challenge in the context of LJ [96]-[97] and also his Honour’s antecedent summary of the applicable principles emerging from the authorities at LJ [102]-[105].

107    After addressing the way in which the primary judge addressed this topic, it will be necessary to go further into the key cases in order to ascertain whether they do or do not support the primary judge’s penultimate conclusion that a concluded understanding does not necessarily require a commitment and would not have required one in this case. On that conclusion, while evidence of a commitment being sought or intended to be sought may have made for a stronger case, it was not indispensable. If that was not required for a concluded understanding in this case, it necessarily follows that it was not required for an attempt to induce one.

108    While the first appeal ground for each appellant is expressed slightly differently, and they have some differences as to the particular paragraphs of the primary judgment that they take issue with, their cases do not differ in substance. They ultimately take issue with the correctness of the key passages within, or comprising, the paragraphs in the primary judge’s liability reasons set out immediately below, to be read in the context of the surrounding text. BlueScope identifies the bolded passages as being in error, while Mr Ellis’ paraphrasing of the findings which BlueScope says are in error is set out in the following paragraphs, to substantially the same effect: Those key paragraphs are:

(a)    at LJ [106]:

While an arrangement is well described in terms of undertaking obligations or duties, albeit not legally enforceable, an understanding is more aptly described as arriving at a common mind (or consensus) as to a particular course to be followed. … If through … communications competitors arrive at a common mind as to the adoption of a particular course of business conduct that answers the description of a cartel provision, competition and the welfare of Australians will be harmed. It is consistent with the statutory text and purpose to describe such conduct as an understanding within the meaning of the Act.

(b)    at LJ [108]:

It is important to emphasise … that in the context of an understanding containing an unlawful cartel provision, the assumption of an obligation means no more than the communication of assent to a particular course of conduct proposed by a competitor, where the communication may be by words or conduct. Language of obligation, commonly used in the law of contract, should not obscure the nature of an understanding and the means and circumstances in which it may be arrived at.

(c)    at LJ [145] (italicisation and underlining also added):

As discussed above, there has been considerable judicial explication of the words “arrangement” and “understanding” as used in the Act. Reducing those words to the single notion of a “commitment”, however that might be conceived, is an erroneous reduction in legal principle. The statutory words have a broader meaning. They require that the parties have, by words or conduct, aroused an expectation in each that they will conduct themselves in accordance with the subject matter of the arrangement or understanding. The expectation must be more than a mere hope, belief or prediction that, as a matter of fact, a person will conduct themselves in the future in a particular way. The expectation must arise out of the dealings between the parties which has resulted in what can alternatively be called the assumption of an obligation, the giving of an assurance or undertaking, or a meeting of minds, that they will act in the future in a particular way. While an arrangement is well described in terms of undertaking obligations or duties, albeit not legally enforceable, an understanding is more aptly described as arriving at a common mind (or consensus) as to a particular course to be followed. Conduct which founds an understanding can be arrived at by words or conduct and may be tacit. Further, as an arrangement or understanding is not binding on the parties in law, the parties are inevitably free to withdraw from it and act inconsistently with it, notwithstanding their consent to it.

109    Mr Ellis’ amended notice of appeal appears to paraphrase the substance of what the primary judge found in LJ [103]-[108], [145]-[148] and [657]-[658], including in particular the passage underlined above in LJ [145], in claiming that the primary judge erred in finding that:

•    while undertaking obligations or duties is necessary for an arrangement, those matters are not necessary for an understanding;

•    it is sufficient for an understanding to exist that competitors arrive at a common mind as to the adoption of a particular course of business conduct; and

•    it is not necessary for a party to an understanding to have sought a commitment, at least impliedly or indirectly, from the other party to assume a moral obligation.

110    Mr Ellis does not, in his amended notice of appeal, assert what the primary judge should have found instead. However, he does not appear to depart from BlueScope’s expression of what is said be to the correct position, being that:

•    an essential element of an arrangement and an understanding is that at least one of the parties has assumed an (even unenforceable, moral) obligation to another or given an assurance, undertaking or commitment that it will act in a certain way;

•    an arrangement or an understanding will not be found where parties have merely aroused expectations in one another that they will conduct themselves in a certain way;

•    communication of assent to a course proposed by another party merely by adopting the proposed course is not sufficient to constitute assumption of an obligation (or giving an assurance, undertaking or commitment).

111    Neither notice of appeal expressly acknowledges the further statement by the primary judge at LJ [145] reproduced and emphasised in italics above:

The expectation must arise out of the dealings between the parties which has resulted in what can alternatively be called the assumption of an obligation, the giving of an assurance or undertaking, or a meeting of minds, that they will act in the future in a particular way.

112    Reading the passage immediately above in the context of the rest of LJ [145], and indeed in the context the other impugned paragraphs, it is apparent that the primary judge considered that an understanding, in keeping with an arrangement, did require an expectation arising from what could be described as the assumption of an obligation or the giving of an assurance or undertaking. On its face, his Honour’s further statement of principle appears consistent with that urged by the appellants. But there are two further nuances to what his Honour said:

(a)    First, for an understanding, “the assumption of an obligation means no more than the communication of assent to a particular course of conduct proposed by a competitor, where the communication may be by words or conduct”: LJ [108].

(b)    Second, a further alternative way to describe those requirements is a “meeting of minds” or the reaching of a consensus, and such descriptions will be more apt for understandings than arrangements: LJ [106], [145].

113    The appellants consider this statement does not go far enough, which tells us something about the stringency which they attach to the terms “undertaking”, “assurance” and “obligation”, as well as evidently “commitment”, as well as the varying meaning which can be attributed to these terms depending on the context in which they are used. This is the nub of the first appeal ground for each appellant, and in substance, the key issue in both liability appeals, because the answer flows through to the central allegation of an attempt to induce an understanding. As foreshadowed above, in the conduct of the trial before the primary judge, and in the way that evidence was adduced, especially by the appellants in cross-examination, they used the word “commitment” to refer to the additional requirement they sought to introduce beyond what the primary judge ultimately considered was needed for proof of a concluded understanding. In the cross-examination of ACCC witnesses, evidence was adduced of the absence of a “commitment” being sought, obtained or intended. The later sections of the reasons for the first grounds of appeal (being those concerning “consideration and conclusions” and the “postscript” which follows) highlight the dangers inherent in relying upon the adducing of evidence of this kind in an endeavour to throw an exculpatory shield over the substance of what has taken place.

114    The appellants relied upon this additional element, framed as a commitment (or an equivalent, even if it was not necessarily put in this alternative way to ACCC witnesses in cross-examination), apparently to give greater stringency to what was required for there to be an attempt to induce such an understanding. As outlined above at [86] and with the qualifications set out in that paragraph, it is therefore convenient to use the word “commitment” to capture the additional element of stringency that the appellants contend was indispensable for an understanding to be reached, informing what they contend was required for an attempt to induce an understanding.

115    The primary judge did not consider that anything as stringent as a commitment was required in principle for an attempt to induce an understanding. That finding had a determinative effect when his Honour came to considering the evidence adduced in cross-examination from a number of key ACCC witnesses who were cross-examined in the manner outlined above. This was exemplified by his Honour’s approach to the evidence of Mr Hennessy. After reproducing transcript excerpts in which Mr Hennessy agreed that no “commitment was sought”, his Honour rejected a submission that this was fatal to the ACCC’s case (see again LJ [653]-[656] and also LJ [656]). His Honour gave four reasons for reaching that conclusion.

116    Of these four reasons, the first two were more conceptual in nature, while the latter two entailed finding that the evidence in question did not in any event go as far as the appellants contended (LJ [659]), particularly when proper regard was given to the totality of Mr Hennessy’s evidence (LJ [660]-[663]).

117    At the conceptual level, relevant to the first ground in each appeal, the primary judge observed:

[657]    First, for the reasons expressed earlier, an attempt to induce a price fixing understanding does not require, as a matter of law, that BlueScope or Mr Ellis sought a commitment from distributors to price in accordance with CIPA’s price lists. It requires a step towards the inducement of the price fixing understanding which is more than merely preparatory of the inducement and which is immediately and not merely remotely connected with the inducement to reach a price fixing understanding.

[658]    Second, while it is necessary for the ACCC to show that BlueScope and Mr Ellis intended to induce a price fixing understanding, that requires that the understanding be in contemplation and be the intended object of the attempts to induce. In that context, it is not necessary to speak in terms of “commitment”, which can be misunderstood, or a commitment at any particular point in time. The relevant question is whether BlueScope offered promises (or threats) or otherwise engaged in persuasive conduct that was intended to induce a consensus about the use of CIPA’s price lists, however the ultimate assent might have been communicated, whether by words or conduct.

118    As noted above, Mr Hennessy’s evidence was adduced in cross-examination in a way which implied that not only was a commitment needed, but that it also needed to be overt. The appellants contend that their argument before the primary judge was always that a commitment could be implied, and thus his Honour had failed to address their argument by dismissing it as a requirement to “expressly” seek a commitment: LJ [146]-[147].

119    BlueScope’s criticism of the primary judge for referring to there being no requirement at law for one of the parties to have expressly sought a commitment (LJ [146], [147]), essentially characterises this as a straw man argument not advanced at trial, but rather set up and then knocked down by his Honour. But his Honour’s reasons must be read in the context of the evidence the appellants relied upon. Fairly read, the evidence adduced by the appellants in the course of that cross-examination at least suggested that an overt commitment was indeed being advanced, at least as the evidentiary case, as something that was required: see again the evidence from Mr Henessy in cross-examination summarised and reproduced at LJ [653] and [654], and his Honour’s observations at LJ [655] and [710]. In any event, the primary judge should not be understood as merely saying that an express commitment was not required in the circumstances of this case, but rather that there was no need for any commitment generally, whether express or implied.

The relevant authorities

120    The appellants’ contention that proof of a commitment or the equivalent is a universal requirement for an understanding to be reached is based on references to such features in a number of cases. The ACCC contends that the primary judge was correct to conclude that this was not an essential feature of an understanding when the authorities are read carefully and regard is had to the facts and circumstances of the cases in which this terminology was used.

121    It is necessary to keep steadily in mind, as already noted, that neither the word, nor the concept, of a commitment, or anything like it, is present in the statutory proscription of an understanding, with there also being no definition to that effect. If the existence of a commitment or its equivalent is a universal requirement, that must be found to be an indispensable part of what the word “understanding” means and requires in all circumstances. Of course, even if that is not correct, that does not mean that, in a given case, a commitment or something like it may not be needed to conclude safely, on the balance of probabilities, that an understanding has been reached, but that is not the case that the appellants ran at trial or on appeal.

122    As the authorities make clear, the enquiry is necessarily heavily dependent on the facts and circumstances as established by the evidence, with inferences often playing a significant role. Judges of this Court in deciding these cases frequently consider the key evidence in almost excruciating detail. Non-pejoratively, that is what the primary judge did in carefully deciding this lengthy and complicated case.

123    It is apparent from a closer consideration of the authorities in this area that statements of principle as to what is required for a proscribed arrangement or understanding to be proven may sometimes be best understood by reference to the key facts and issues of the cases in which they emerged. The principles so stated may still hold true for a similar case but provide little assistance to a case that is materially different. Words and concepts used to explain whether or not the existence of an agreement or understanding has been proven in a particular case may understate or overstate what is needed in other circumstances. Upon closer examination, what may appear as a statement of principle of general application can sometimes be better understood as directed to the case at hand and to like cases, but not to quite different cases. That is, a requirement may not be as universal as reasons might seem to suggest when read in the abstract and without proper context.

124    Because of the fundamental nature of the dispute as to what the law requires, it is necessary to traverse a body of case law on arrangements and understandings in the competition jurisprudence in some detail to determine whether there was any error on the part of the primary judge in his Honour’s understanding of what these prior authorities have decided. The cases considered below were referred to by his Honour in a manner that demonstrated great depth of understanding of this area, and with considerable nuance. Despite that, expressed bluntly, the appellants assert in substance that his Honour’s conclusion as to the requirements established by those cases was wrong, and that more is needed for an understanding to be reached in all cases.

British Basic Slag

125    In the much-cited English Court of Appeal case of Re British Basic Slag Ltd’s Agreements [1963] 2 All ER 807 (also reported, incompletely, as British Basic Slag Ltd v Registrar of Restrictive Trading Agreements [1963] 1 WLR 727), Willmer, Danckwerts and Diplock LJJ were dealing with a legislative regime concerning anticompetitive conduct in s 6 of the Restrictive Trade Practices Act 1956 (UK) (1956 UK Act). That provision required the registration of “any agreement under which restrictions are accepted” with respect to the sale and supply of goods and services. Section 6(3) of the 1956 UK Act defined “agreement” to include any agreement or arrangement, whether or not it was intended to be enforceable by legal proceedings.

126    The British Basic Slag appeal was from a decision of Cross J in the Chancery Division: Re British Basic Slag Ltd’s Agreements [1962] 3 All ER 247 (British Basic Slag PJ). It is convenient to commence with the description of what the case was about drawn from Cross J’s primary judgment, and with his reasoning, because it better informs what the Court of Appeal decided.

127    British Basic Slag Ltd was a marketing company owned by a number of steel manufacturing companies. It was created to market a common byproduct of steel manufacturing, basic slag. As set out in the primary judgment by Cross J at 253 and following, Basic entered into substantially identical vertical marketing agreements with each of its members. All but one of the agreements was renewed in 1954, prior to the commencement of the 1956 UK Act, with an additional company joining the scheme and executing such an agreement in 1958. After the commencement of the 1956 UK Act, Basic registered a memorandum with the Registrar of Restrictive Trading Agreements which referred to an original arrangement made between the member companies in 1953 upon terms in an agreement evidenced by annexed board minutes, and to the individual agreements between each member company and Basic, including when they had been entered into. Subsequently, Basic formed the view that no registerable arrangement had been entered into and requested the Registrar to cancel the registration. The Registrar was not willing to do this and further claimed that the individual agreements were also registerable. Basic challenged both conclusions by separate summonses.

128    Justice Cross’s decision was that s 6 of the 1956 UK Act did apply to the vertical agreements between the members and Basic. His Honour also found that there had also been a horizontal arrangement, between the members, that each would enter into those agreements, to which s 6 also applied. The relief sought was therefore refused. It is the treatment of the horizontal arrangement that is of present relevance.

129    The Court of Appeal upheld Cross J’s decision. The reasoning of Diplock LJ in reaching that conclusion has been cited frequently in decisions concerning the meaning of an arrangement under the Act and by parallel reasoning, also to the meaning of an understanding (the concept of an understanding did not appear in the 1956 UK Act). The key passages are reproduced below, after a summary drawn from Cross J’s judgment, followed by determinative quotes from that judgment.

130    Directors of Basic representing four of the member companies gave evidence before Cross J, which he treated as being applicable to all of the member companies. Their evidence was to the effect that each company decided to enter into the new agreement with Basic as a matter of independent judgment and not as a result of any agreement with any other member company, nor conditional upon the execution of a similar agreement by any other member company. This was evidently an attempt by Basic to characterise the conduct of each company as being unilateral, so as to deny the existence of anything amounting to an arrangement by reason of collusion. His Honour said the following, the bolded portion of which was expressly approved and then recast by Diplock LJ in the appeal judgment (at 254-255):

The Registrar submits that the companies entered into an agreement or arrangement that each should execute an agreement with Basic which would contain restrictions in respect of some of the matters referred to in s 6(l) not relating exclusively to the goods to be supplied under the agreement. The applicants on the other hand deny that any such agreement or arrangement was made. The section draws a distinction between an agreement between two or more persons which is not legally enforceable and an arrangement between two or more persons which is not legally enforceable. In what does the distinction consist? Whether it is an agreement or an arrangement it must, I think, result from some communication between the parties–some meeting of their minds. But engagements, to use a comprehensive term, which are not legally enforceable, vary enormously in precision, formality and binding force, and it may well be that some would be more appropriately described as “arrangements” than as “agreements”. At one end of the scale one has solemn promises binding in conscience and honour the breaking of which would be far more discreditable and might entail far more serious consequences to both parties than default on many legal obligations. At the other end of the scale one has such matters as social engagements. One friend says to another, “I shall be dining at the club tomorrow night. Will you be there?” The other replies, “Yes, I will look out for you in the smoking room about 7.30.” Either is free up to the last minute to leave a message with the hall porter to say that he will not be there, and even if he forgets about the engagement altogether the worst that he can expect is a mild rebuke from his friend. Yet it could fairly be said that they had entered into an arrangement not enforceable by legal proceedings under which each accepted restrictions in respect of the place where he would dine next night. As I see it all that is required to constitute an arrangement not enforceable in law is that the parties to it shall have communicated with one another in some way and that as a result of the communication each has intentionally aroused in the other an expectation that he will act in a certain way. If that be right then as it seems to me the member companies made an arrangement that they would each of them execute the relevant agreement with Basic.

131    The arousal of an expectation described above in British Basic Slag was referring, in context, to this as something that was based on substantial evidence as to what had taken place, including in writing, such that his Honour did not need more to be satisfied that an arrangement had been arrived at. This context better explains the emphasised passage than its reproduction in isolation. Lord Diplock was necessarily aware of that context in reproducing just that passage. The concept of an arousal of an expectation emerges in the Australian cases that have considered British Basic Slag, especially Top Performance Motors Pty Ltd v Ira Berk (1975) 5 ALR 465; 24 FLR 286 (Joske, Smithers and Evatt JJ), considered in some detail below.

132    His Honour also rejected the proposition that there had never been a communication between the companies, because each had a director on the board of Basic and there were discussions between the member companies which were just as much communications as if the companies had written letters to one another. Nor was the lack of any stringent obligation to execute an agreement with Basic, or the fact that those agreements were not made conditional upon the execution of similar agreements by other member companies, found to be a reason for concluding that an arrangement had not been entered into. His Honour concluded at 255 that:

though it cannot be said that the members were under any obligation of a very hardy character to execute the agreements they can, I think, fairly be said to have made an arrangement between themselves to do so.

133    Finally, Cross J made a telling observation about the concept of an “obligation” by reference to a prior Chancery Division case of Re Austin Motor Co Ltd’s Agreements [1958] Ch 61 at 69, also referred to by the Court of Appeal. In Austin Motor Co, Upjohn J had observed that “[w]hether enforceable at law or not, it seems to me that an arrangement must at least connote an arrangement whereby the parties to it accept mutual rights and obligations”. This requirement of mutuality has not thus far endured in Australian law and is thus not relevant for present purposes: see Egg Corp at [96]. Justice Cross said of Upjohn J’s observation:

But what the judge was concerned to point out there was that one could not have an arrangement within the meaning of s 6 unless the parties to it both accepted obligations. He was not directing his mind to the question how stringent the obligations had to be and I see nothing in that case which is inconsistent with the view which I have formed in this case.

134    This observation captures a fundamental point going beyond mutuality, well appreciated by the primary judge in this case. The degree of stringency required will turn on the facts and circumstances established by the evidence. If the evidence is clear enough as to what is proposed, the proverbial nod or wink may suffice to complete an arrangement or understanding.

135    Words used by courts to describe what is needed for an arrangement or understanding proscribed by statute attempt to capture the sense of what is required for such an “engagement” to have been entered into, reached or otherwise formed. Justice Cross used the word “engagement” in the passage quoted above, which is a convenient neutral term for use in place of arrangement or understanding for reasoning purposes. They are not then words with some fixed or limited meaning to be determined in the abstract and then rigidly applied to engagements that “vary enormously in precision, formality and binding force”: British Basic Slag PJ at 254. The ultimate question is not whether there has been a “commitment” or an “obligation” or any other description in the abstract, but rather whether what has taken place, and given some convenient descriptive label for analytical purposes, can be regarded as meeting the statutory description and thus proscription, here of an understanding, or more precisely, an attempt to induce one.

136    The focus must always be on the substance of what has taken place, not only confined to the particular forms or expressions that are deployed. This includes communications and evidence about them that may be seen to have been designed to give a benign character to what has happened, or to make meeting what the statute proscribes unduly or impermissibly difficult or even impossible. It needs to be remembered that form can be used to obscure substance, for obvious enough reasons.

137    The appeal from Cross J was dismissed. Lord Diplock, whose reasons are those most commonly referred to in subsequent cases, said at 819-820:

“Arrangement” is not a term of art; and in s 6(3) of the Act I agree with my lords that it bears the meaning that an ordinary educated man would ascribe to it. It involves a meeting of minds because under s 6(1) it has to be an arrangement “between two or more persons” and, since it must be an arrangement “under which restrictions are accepted by two or more parties”, it involves mutuality in that each party, assuming he is a reasonable and conscientious man, would regard himself as being in some degree under a duty whether moral or legal to conduct himself in a particular way or not to conduct himself in a particular way as the case may be, at any rate so long as the other party or parties conducted themselves in the way contemplated by the arrangement.

No necessary or useful purpose would be served by attempting an expanded and comprehensive definition of the word “arrangement” in s. 6 (3) of the Act. Cross J said [[1962] 3 All ER 247 at 255]:

“... all that is required to constitute an arrangement not enforceable in law is that the parties to it shall have communicated with one another in some way and that as a result of the communication each has intentionally aroused in the other an expectation that he will act in a certain way.”

I think that I am only expressing the same concept in slightly different terms if I say without attempting an exhaustive definition, for there are many ways in which arrangements may be made, that it is sufficient to constitute an “arrangement” between A and B, if (i) A makes a representation as to his future conduct with the expectation and intention that such conduct on his part will operate as an inducement to B to act in a particular way; (ii) such representation is communicated to B, who has knowledge that A so expected and intended, and (iii) such representation or A’s conduct in fulfilment of it operates as an inducement, whether among other inducements or not, to B to act in that particular way.

On the evidence in the present case it is plain beyond a peradventure that the knowledge of each member acquired at the board meetings of Basic from statements made by the nominees on that board of his fellow members that each of his fellow members was going to enter into a contract with Basic in the terms of the vertical contract, or at any rate that any of his fellow members who entered into a contract for the sale of fertilisers to Basic would do so on substantially the same terms as of those of the vertical contract, operated as an inducement to each member himself to enter into a contract with Basic in the same terms as those of the vertical contract. If this is not an “arrangement” I do not know what is.

It was, however, contended on behalf of the applicant companies that the observations of Upjohn J in In re Austin Motor Co Ltd’s Agreements [[1958] Ch 61, 74] showed that the expression “arrangement” in section 6(3) of the Act of 1956 must involve mutual rights and obligations. The issue in that case was not what was comprised in the concept of “rights and obligations” not enforceable in law, but whether having regard to the evidence of the history of a bipartite agreement alleged to be registrable under Part I of the Act, any rights or obligations, whatever was comprised in that concept, were acquired by or imposed upon third persons who were not parties to that bipartite agreement. Upjohn J held upon the evidence before him in that case that no rights or obligations were acquired or imposed by the bipartite agreement by or upon anyone but the two parties to it and that the agreement was exempted from registration under section 8(3) of the Act. I see no reason for doubting the correctness of his decision, but the observations relied upon appear to me to have no relevance to the issue in the second appeal before this court.

(Emphasis added.)

The passages emphasised in bold above are those reproduced in reasons of the plurality in Australian Competition and Consumer Commission v J Hutchinson Pty Ltd [2025] HCA 10; 422 ALR 236, considered below.

138    The appellants rely on the following portion of the first paragraph of Diplock LJ’s reasons also reproduced above as support for the idea that an arrangement, and by analogy, an understanding, requires the assumption of an obligation, undertaking, assurance or commitment, but interpreted by them as requiring quite a high level of stringency:

… each party, assuming he is a reasonable and conscientious man, would regard himself as being in some degree under a duty whether moral or legal to conduct himself in a particular way or not to conduct himself in a particular way as the case may be, at any rate so long as the other party or parties conducted themselves in the way contemplated by the arrangement.

139    Additionally, in a less-frequently cited passage from British Basic Slag, Willmer LJ said, at 814:

To deal first with the meaning of the subsection, I think it is highly significant that Parliament did not see fit to include any definition of “arrangement”. I infer from this that it was intended that the word should be construed in its ordinary or popular sense. Though it may not be easy to put it into words, everybody knows what is meant by an arrangement between two or more parties. If the arrangement is intended to be enforceable by legal proceedings, as in the case where it is made for good consideration, it may no doubt properly be described as an agreement. But the statute clearly contemplates that there may be arrangements which are not enforceable by legal proceedings, but which create only moral obligations or obligations binding in honour. This seems to me to be entirely consistent with the dictum of Upjohn J [Re Austin Motor Co Ltd’s Agreements [1958] Ch 61 at 74], to which I have already referred. Nor do I consider that there is any inconsistency between that and the view expressed by the judge in the present case. For, when each of two or more parties intentionally arouses in the others an expectation that he will act in a certain way, it seems to me that he incurs at least a moral obligation to do so. An arrangement as so defined is therefore something “whereby the parties to it accept mutual rights and obligations”.

(Emphasis added.)

140    Lord Willmer’s observations in the first bolded passage above may be seen to be equally reflective of the word “arrangement” here, which is also left undefined in the Act, as well as to “understanding”, to some extent by parity of reasoning. The only qualification of note is that a requirement of mutuality is not presently a feature of Australian law, as noted above by reference to Egg Corp at [96], and addressed further below.

141    For these appeals, Willmer LJ’s observation in the second bolded passage reproduced above that intentionally arousing an expectation to act in a particular way entails incurring a moral obligation to do so is important, because it accords with the primary judge’s observation in the last sentence of LJ [108] that the term “obligation” should not “obscure the nature of an understanding and the means and circumstances in which it may be arrived at”. The second passage in bold from Willmer LJ’s reasons also indicates that not much may be needed to establish the existence of an “obligation”, flowing as it may from arousing an expectation. While a commitment, as the term is used by the appellants, may fall within the concept of an obligation, as used in the general sense by Willmer LJ, it is at the more stringent end of the spectrum of behaviours that meet that description, and on the ACCC’s case more stringent than is necessarily required in all cases, or was required in this case.

142    In British Basic Slag, Cross J at first instance, and Willmer and Diplock LJJ on appeal, suggest that an obligation will be a necessary component of a concluded arrangement, but the concept is treated with some subtlety. Their Honours acknowledge the breadth of circumstances and relations that might give rise to such an obligation, including where parties have made representations that arouse expectations as to what they will do in future. The example offered by Cross J indicates how easily these kinds of obligations might arise, and how slight they may be (at 254-255):

One friend says to another, “I shall be dining at the club tomorrow night. Will you be there?” The other replies, “Yes, I will look out for you in the smoking room about 7.30.” Either is free up to the last minute to leave a message with the hall porter to say that he will not be there, and even if he forgets about the engagement altogether the worst that he can expect is a mild rebuke from his friend. Yet it could fairly be said that they had entered into an arrangement not enforceable by legal proceedings under which each accepted restrictions in respect of the place where he would dine next night.

143    If it is in this broader sense of “obligation” that the appellants insist that an obligation is the irreducible minimum for an understanding to be reached, then perhaps that could be accepted. But that seems unlikely to be what they are really contending for. That is because they repeatedly argued, before the primary judge and on appeal, that there is no liability because there was no intention to seek such an obligation, or equivalently, a commitment. It is that degree of overtness that goes further than is required. That is because obligations, as illustrated in British Basic Slag on appeal and below, might arise even if one does not expressly seek or assume them. Instead, they may well arise from the making of representations that arouse expectations. The primary judge evidently and correctly understood that.

Top Performance Motors

144    Top Performance Motors is apparently the earliest case brought under s 45 of the Trade Practices Act 1974 (Cth) (TPA). There, the Full Court of the Australian Industrial Court refused an application for an injunction seeking to prevent the termination of a car dealership and to prevent giving effect to that termination. That application was brought on the basis of alleged proscribed anticompetitive conduct by way of, inter alia, an arrangement or understanding collateral to the termination, said to be contrary to s 45. Smithers J, after quoting from the first of the above passages in British Basic Slag, said at 5 ALR 469-470:

Section 45 is not in the same terms as s 6 of the Restrictive Trade Practices Act 1956 which is the section referred to in these remarks, but by parity of reasoning it would follow that the existence of an arrangement of the kind contemplated in s 45 is conditional upon a meeting of the minds of the parties to the arrangement in which one of them is understood, by the other or others, and intends to be so understood, as undertaking, in the role of a reasonable and conscientious man, to regard himself as being in some degree under a duty, moral or legal, to conduct himself in some particular way, at any rate so long as the other party or parties conducted themselves in the way contemplated by the arrangement.

It seems to me also that an understanding must involve the meeting of two or more minds. Where the minds of the parties are at one that a proposed transaction between them proceeds on the basis of the maintenance of a particular state of affairs or the adoption of a particular course of conduct, it would seem that there would be an understanding within the meaning of the Act.

145    The first paragraph from Top Performance Motors reproduced above paraphrases Diplock LJ’s reasoning in British Basic Slag in relation to the meaning of an arrangement. The second paragraph then uses slightly different language, some of which is adopted from British Basic Slag, to describe an understanding, which was not a term used in the 1956 UK Act being applied in that case. That is a subtlety that the primary judge was attuned to, writing at LJ [106]:

The different language used by Smithers J to explain an “arrangement” and an “understanding” within the meaning of s 45 of the Act identifies a subtle but important point. By the use of three different words, contract, arrangement and understanding, Parliament has prohibited three forms of conduct that are considered to be harmful to competition and, thereby, the welfare of Australians (as per s 2 of the Act). Each of the three words should be given meaning and effect: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [71] per McHugh, Gummow, Kirby and Hayne JJ …

146    That paragraph in Top Performance Motors was subsequently cited with apparent approval by the plurality of the High Court in Hutchinson at [19] and footnote 28, considered further below.

147    Notably absent from the reasoning in British Basic Slag and Top Performance Motors is any reference to the universal need for anything as stringent as the sort of commitment that the appellants contend is required, in order for an arrangement or any like concept to have been made, and thus also for an understanding to have been reached, by parallel reasoning. In both British Basic Slag and Top Performance Motors, where the contravention was proven, the judicial focus was on finding a way to describe how the conduct established by the evidence met the statutory proscription. The language of commitment had not crept in as part of this consideration in British Basic Slag and in Top Performance Motors, although a reference to an obligation or a duty had, at least in a moral sense.

148    But even when the concept of a “commitment” did emerge as detailed below, this needs to be understood as capturing the essence of what was proscribed for the purposes of the case at hand, to be applied with caution in different circumstances. The degree of stringency required for conduct to amount to a contravention depended on a consideration of all the circumstances, rather than identifying whether it met or failed to meet some abstract label. That label could never be a substitute for the statutory language being explained for the purposes of its application to the facts and circumstances established by evidence, which necessarily differs from case to case. In other words, there is no reason to assume that when a court uses the term “commitment” to describe a particular set of circumstances, this should be read as an endorsement of the level of stringency for which the appellants contend is indispensable, notwithstanding their use of the same descriptive label.

TPC v Nicholas Enterprises

149    In Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 2) [1979] FCA 96; 40 FLR 83, Fisher J at 89 to 90 referred to British Basic Slag and Top Performance Motors, quoting from parts of the passages of each reproduced above. As this was a case in which the Trade Practices Commission (TPC) succeeded, care has to be taken not to conflate what was proven and thus sufficient in that case, and what was necessary for the purposes of guiding future cases. Another case might need more, or less, to be proven, than was needed in Nicholas Enterprises.

150    Care must also be taken to maintain the distinction between an arrangement and an understanding, the statutory difference being plainly deliberate, even though not inherently mutually exclusive. Overlapping terms are a common enough feature of a wide range of proscriptive legislation.

151    Reaching an understanding may be something less definite than making an arrangement, but also the two may overlap, or both be proven. Justice Fisher, after citing and quoting British Basic Slag and Top Performance Motors, summarised what his Honour considered the principles as to understandings required, being a meeting of minds, where each of the parties have communicated with the other which has raised an expectation in the mind of the other; and that each has accepted an obligation qua the other: at 89. Elsewhere, Fisher J describes the requirement for an expectation being aroused as the requirement for a commitment being made, including implicitly: at 92. While what his Honour says elides any distinction between an “arrangement” and an “understanding”, it is clear that he did not consider what he said to be inconsistent with British Basic Slag. His Honour then addressed the substantial body of evidence in that case in considerable detail, before considering the sufficiency of what had been proven. His Honour ultimately found that the assumption of mutual obligations had been proven.

152    The quality of evidence adduced was clearly sufficient for Fisher J in Nicholas Enterprises, but on appeal the Full Court doubted that this much was necessary, reported as Morphett Arms Hotel Pty Ltd v Trade Practices Commission [1980] FCA 46; 30 ALR 88 (Bowen CJ, Brennan and Deane JJ). This demonstrates the dangers that may arise from successful and strong cases in setting the bar of what must be established too high. While Nicholas Enterprises was upheld on appeal, in relatively brief ex tempore reasons for the Full Court given by Bowen CJ, one obiter qualification was given to the agreement with Fisher J’s reasons and findings, rather than any overt endorsement of the principles stated by his Honour. That qualification is directly relevant to this appeal. The Chief Justice said at 91-92:

I wish to add one qualification to my general statement of agreement with his Honour’s reasons and findings in so far as they relate to the appellant. That qualification is in respect of the nature of an “understanding” for the purposes of s 45 of the Act. Fisher J reached the conclusion that it is a necessary ingredient of such an “understanding” that there be an element of mutual commitment between two or more parties in the sense that each must have accepted an obligation qua the other or others. As at present advised, it seems to me that one could have an understanding between two or more persons restricted to the conduct which one of them will pursue without any element of mutual obligation, in so far as the other party or parties to the understanding are concerned. It is not, however, necessary that I reach or express any final view on this question since Mr Justice Fisher’s view that such an element of mutual commitment was required plainly imposed a heavier burden on the respondent Commission, and thereby favoured the appellant.

(Emphasis added.)

153    Read carefully, the above passage may perhaps be read not just as casting doubt on the need for mutuality for an understanding to be reached, but perhaps also on anything as potentially stringent as a commitment as some abstract threshold to be met in all cases, as advanced by the appellants as being necessary rather than only sufficient (“could have”) for an understanding to have been reached.

TPC v Email Ltd; TPC v Service Station Association

154    In Trade Practices Commission v Email Ltd [1980] FCA 86; 31 ALR 53 (Lockhart J), an arrangement or understanding case, two main suppliers of electricity meters supplied substantially identical price lists to one another, and substantially adhered to them, including as part of supply contract tender processes. At first blush, this must have looked like an overwhelming case to the TPC. Without an exculpatory explanation, sharing price lists with a competitor and the implication of collusion might have appeared unanswerable. But it ended up not being so. With that in mind, Email Ltd was aptly described by the Full Court in Apco Service Stations Pty Ltd v Australian Competition and Consumer Commission [2005] FCAFC 161; 159 FCR 452 at [47] (Heerey, Hely and Gyles JJ) as very much a decision on its own facts, a cautionary note assuming some importance in this appeal. Apco is returned to below.

155    The TPC put its case in Email Ltd on two bases. The primary basis relied on the bare fact of each competitor providing the other with their price lists; while the secondary basis relied on an inference that additional exchanges had occurred between the competitors.

156    The secondary basis was addressed first by Lockhart J. A key aspect of that part of the TPC’s case relied upon inferring that communications had taken place between the two companies which gave rise to an arrangement or understanding between them to align their prices and mostly charge the same. The respondents’ successful defeat of this aspect of the TPC’s case largely turned on establishing, by direct evidence from executives from both companies, that a benign commercial explanation unrelated to collusion for the impugned exchange of, and adherence to, the price lists, and related conduct was more probable. Both companies were found to have independent commercial reasons to align their prices, owing to peculiarities of the market in which they operated. Justice Lockhart considered the respondents’ evidence about their communications at some length, rejecting the TPC’s challenges to it. His Honour accepted the truthfulness and reliability of those respondent witnesses in the context of the rest of the evidence, especially in denying collusive communications, in stark contrast to the rejection of the bulk of the evidence of Mr Ellis by the primary judge in this case.

157    The primary case advanced by the TPC in Email Ltd, considered second by Lockhart J, was based on the provision of price lists alone, and not upon any discussions between the respondents. The communication (that is, provision) of price lists alone was asserted by the TPC to be enough, principally on the basis that it gave rise to mutual expectations; but alternatively on the basis that only one respondent accepted inhibitions as to its conduct in using the price list of the other to submit tenders was enough.

158    Justice Lockhart considered that no such mutual expectations existed. Further, he considered that neither supplier had any certain expectation as to how the other would respond to receipt of their price list, and, in large part due to distrust between the two suppliers, neither drew any comfort from receiving the other’s price list: at 31 ALR 53 at 68 in the digital version of the report (31 ALR 53 at 70 of the printed version of the report).

159    His Honour decided that there had to be evidence proving what would be done with the price list provided by one respondent to the other to establish an arrangement (or understanding). This approach is necessarily to be understood in the particular, and unusual, factual circumstances of that case. His Honour was not satisfied that this had to come from both respondents, however impractical that might be, but it had to come from at least one side. It was in that context that his Honour said, after referring to British Basic Slag and other authority (31 ALR 53 at 66 in the printed version of the report, and 31 ALR 53 at 64 in the digital version):

It is important to bear in mind that there is a fundamental distinction between a hope or prediction of future behaviour on the one hand and the expectation of certain behaviour on the other; that is behaviour which, as a result of communication between the parties, the party restricted is at least morally bound to adopt.

For my part I find it difficult to envisage circumstances where there would be an understanding involving a commitment by one party as to the way he should behave without some commitment by the other party. Unless there is reciprocity of commitment I do not readily see why the parties would come to an arrangement or understanding. Particularly is this so when it is remembered that the alleged parties to the arrangement or understanding in the present case are two large companies. Presumably, if they were to reach an understanding or arrangement each would have some commercial objective beneficial to itself in mind. I see no point in an arrangement bare of reciprocity.

Although there is much force in the submissions on behalf of the respondents that it is difficult to imagine a practical example in trade or commerce of a party to an arrangement being subjected to a burden qua the other and that other being under no obligation himself, I incline to the view that there is no necessity for an element of mutual commitment between the parties to an arrangement or understanding such that each accepts an obligation qua the other; although in practice such cases would be rare.

160    Carefully read, the first of the above paragraphs from Email Ltd is not inconsistent with what was said in British Basic Slag, nor with the reasoning of the primary judge in this case, especially at LJ [145]. The second and third paragraphs above involve Lockhart J seeking to give further content to that statement of principle in the context of the case before his Honour. Those paragraphs were repeated by Lockhart J in the Full Court decision in Trade Practices Commission v Service Station Association Ltd [1993] FCA 582; 44 FCR 206, with Spender and Lee JJ agreeing, but declining to reach any conclusion as to the need for mutuality as it was not necessary to decide. However, Lockhart J’s words in Email Ltd, repeated in Service Station Association, need to be read with some care, so as not to attribute to them more than what is being said. Properly understood, the language is descriptive as to what would have been sufficient in the circumstances of the case, rather than prescriptive as to what is necessary in general, in order to establish the existence of an understanding.

161    Justice Lockhart observed in Email Ltd, and repeated in Service Station Association, that while it was difficult to envisage circumstances where one side has in fact given a commitment to behave in a particular way that would result in an arrangement or understanding, without there being a commitment also being given by the other side, especially when both were large companies, this mutuality was more than was required. In Service Station Association, his Honour described the passage in Email Ltd as being concerned with the question of the necessity of “reciprocity of obligation”, which was a step away from the language of commitment. In Email Ltd, his Honour was dealing with the practicalities involved in arriving at an arrangement or understanding, in order to identify the sorts of things required to prove its existence.

162    Justice Lockhart used interchangeably a number of different words or phrases to capture the essence of what his Honour was referring to: viz, “each would have some commercial objective beneficial to itself in mind”; it being hard to imagine “being subjected to a burden qua the other and that other being under no obligation himself”; but there is “no necessity for an element of mutual commitment”. It is difficult to think a judge of Lockhart J’s stature and reputation for practicality would insist on using particular labels as to the form of what was taking place, rather than characterising the substance of the conduct necessary to meet the terms of the statutory proscription. To revert to the first paragraph of his Honour’s reasons in Email Ltd reproduced above, what was being described as needed was more than just a “a hope or prediction of future behaviour”; entailing “the expectation of … behaviour which, as a result of communication between the parties, the party restricted is at least morally bound to adopt”. This is not mere label language.

163    Properly understood, Lockhart J was saying no more than that the existence of an understanding may be manifested by a commitment being given, with or without a commitment in response. His Honour should not be understood to have been making that particular manifestation of an understanding a universal requirement. This practical approach was further demonstrated in Service Station Association at 231, in which his Honour was considering whether an error by the primary judge in that case in requiring reciprocity, contrary to the conclusion he reached in Email Ltd, had led to error overall. His Honour noted that the primary judge’s reliance on the requirement from Nicholas Enterprises – a requirement which was doubted by the Full Court in Morphett Arms Hotel – had to be seen in the context in which it appeared, namely of a finding that there was no evidence of “either communication by one party to another raising an expectation in the mind of the other or of communication with each other to have accepted an obligation by the other”, such that even if the latter was not required (mutuality) the former was absent anyway. Read in that way, the error of the primary judge in Service Station Association in requiring mutuality did not produce error overall.

164    It follows from the above analysis that neither Email Ltd nor Service Station Association support the appellants’ case at trial and on appeal that a commitment, or something of equivalent stringency, is, as a matter of principle, indispensable for there to be a concluded understanding. Nor do those cases support a conclusion that the primary judge erred in finding that this was not required to be established in this case.

ACCC v CC (NSW)

165    In Australian Competition and Consumer Commission v CC (NSW) Pty Ltd [1999] FCA 954; 92 FCR 375, Lindgren J took a similar descriptive rather than prescriptive approach, when his Honour, after referring to the cases considered above, said at [141]:

The cases require that at least one party “assume an obligation” or give an “assurance” or “undertaking” that it will act in a certain way. A mere expectation that as a matter of fact a party will act in a certain way is not enough, even if it has been engendered by that party. In the present case, for example, each individual who attended the Meeting may have expected that as a matter of fact the others would return to their respective offices by car, or, to express the matter differently, each may have been expected by the others to act in that way. Each may even have “aroused” that expectation by things he said at the Meeting. But these factual expectations do not found an “'understanding”' in the sense in which the word is used in ss 45 and 45A. The conjunction of the word “understanding” with the words “agreement” and “arrangement” and the nature of the provisions show that something more is required. With respect, the first passage set out above from the judgment of Smithers J in Top Performance Motors, although addressing the term “arrangement”, seems to me to describe appropriately that further necessary element of the “understanding” to which the provisions refer.

(Original italics in the second sentence; emphasis added to the last sentence.)

166    For ease of reference, the passage in Top Performance Motors to which Lindgren J was referring is reproduced again below in context, with the passage quoted by his Honour (at [137]) emphasised in bold:

Section 45 is not in the same terms as s 6 of the Restrictive Trade Practices Act 1956 which is the section referred to in these remarks, but by parity of reasoning it would follow that the existence of an arrangement of the kind contemplated in s 45 is conditional upon a meeting of the minds of the parties to the arrangement in which one of them is understood, by the other or others, and intends to be so understood, as undertaking, in the role of a reasonable and conscientious man, to regard himself as being in some degree under a duty, moral or legal, to conduct himself in some particular way, at any rate so long as the other party or parties conducted themselves in the way contemplated by the arrangement.

It seems to me also that an understanding must involve the meeting of two or more minds. Where the minds of the parties are at one that a proposed transaction between them proceeds on the basis of the maintenance of a particular state of affairs or the adoption of a particular course of conduct, it would seem that there would be an understanding within the meaning of the Act.

167    With this context in mind, it seems that, for reasons that are not entirely clear, Lindgren J:

(a)    in the last sentence of [141] emphasised in bold above, said that the first of the two paragraphs from Top Performance Motors quoted above, which discussed the requirements for an arrangement, applied to an understanding; but

(b)    said nothing overt about the second paragraph from the above passage in Smithers J’s judgment, which referred specifically to an understanding in a way that strongly suggests that less may be required than for an arrangement.

168    In taking this approach, Lindgren J’s observations in the final sentence of [141] seem to depart from the suggestion in Top Performance Motors that less is required for an understanding compared with an arrangement.

169    It would be difficult to know what to make of this departure from the Full Court decision in Top Performance Motors were it not for the fact that two later primary judges, and the Full Courts hearing the appeals from those primary judges, quoted Lindgren J’s comments in CC (NSW) at [141], but chose to omit this final sentence. The same approach was also taken in a further subsequent Full Court decision that, properly understood, also maintained the distinction identified in Top Performance Motors between an arrangement and an understanding. These cases are outlined below. In keeping with this, the present primary judge cited the first part of his Honour’s reasons at [141], but did not follow that additional reasoning either: see LJ [108] in full.

170    The Full Court in Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213; 118 FCR 236 at [79] (Whitlam, Sackville and Gyles JJ), and the Full Court in Apco at [45], each reproduced an extract from CC (NSW) at [141], as quoted by the primary judge in each case, omitting the final sentence of that paragraph. It is impossible to know with certainty the reason for that omission, but it has the possible hallmarks of judicial courtesy in reproducing the greater part of the observations in CC (NSW) at [141], that was evidently agreed with and applied, while omitting the final sentence that was not supported, without further comment. The net effect is that this apparent departure from Top Performance Motors in CC (NSW) in the last sentence of [141] was not relied upon by the primary judge in this case and did not receive the endorsement of the Full Court in either Rural Press or Apco.

171    The endorsement in the trial and appeal judgments in both Rural Press and Apco of Lindgren J’s observations in CC (NSW) at [141], excluding the last sentence, thus stand for the requirement that at least one party must “assume an obligation”, give an “assurance” or give an “undertaking” to act in a certain way, and that a mere expectation that a party will act in a certain way is not enough. This interpretation does not go far enough to support the appellants’ argument that anything as specific or stringent as a commitment is required to prove an understanding in all cases. Moreover, it is an approach that was also endorsed by the Full Court in Country Care Group Pty Ltd v Commonwealth Director of Public Prosecutions [2020] FCAFC 30; 275 FCR 342 at [60], which expressly endorsed Top Performance Motors, necessarily including Smithers J’s description of the less stringent requirement for an understanding.

172    It is therefore appropriate to adhere to the principle which emerges from Top Performance Motors that less is required, at least in some cases, for there to be an understanding than for an arrangement, not least because it is a Full Court decision which has apparently been endorsed by the plurality of the High Court in Hutchinson (at [25]). That is what the present primary judge did as well.

173    CC (NSW) at [141] is also significant for what Lindgren J considered would not be sufficient for there to be an understanding: a “mere expectation that as a matter of fact a party will act in a certain way … even if it has been engendered by that party” (emphasis in original). The primary judge applied that reasoning, noting its endorsement by the Full Courts in Rural Press at [79], in Apco at [45] and in Country Care at [60]: LJ [108].

174    Justice Lockhart in Email Ltd made a similar distinction between “a hope or prediction of future behaviour”, which would be insufficient, and “the expectation of … behaviour which, as a result of communication between the parties, the party restricted is at least morally bound to adopt”: 31 ALR 53 at 66 in the printed version of the report; 31 ALR 53 at 64 in the digital version, reproduced above at [159]. It is useful to say a little more about this, especially in light of Mr Ellis’ repeated evidence that he had merely “hoped” distributors would adopt his proposals, but did not seek a commitment that they would do so.

175    Justice Lindgren in CC (NSW) at [141] offers an example of where mere expectations will not be sufficient to amount to an understanding: attendants at a meeting form the expectation that other attendants will drive home to their respective offices afterwards, perhaps even on the basis of representations made by those attendants at that meeting. An important component of this example is that no meeting attendee is likely to act in reliance on, or be affected by, the mere fact of other attendees driving home.

176    The same arousal of expectations may be considered in only a slightly different factual context, producing a different conclusion. Suppose attendant A at the meeting mentions to attendant B that she needs a lift back to their office afterwards, and attendant B says in response that she would be driving back to their office after the meeting. In this situation, more akin to the example offered by Cross J in British Basic Slag of friends exchanging their plans for dinner at the club (at 254), depending on all the circumstances, one might be able to infer that attendant B has assumed an obligation – certainly not one that is legally enforceable, and a very slight moral obligation in any case – to drive attendant A back to their office. No commitment has been given, nor assurance given expressly, yet one might easily say that the two have reached an understanding that B will drive A back to their office.

177    When compared with the example offered by Lindgren J, one is reminded that, in some contexts, a representation of future conduct will result in the assumption of an obligation to do so, while in others it will not. That depends not only on the nature of the representation, but the context in which it is made and the relationship between the individuals concerned. While in Email Ltd the provision of price lists alone was insufficient, owing in large part to the distrust by each party that the price lists would be adhered to by the other, there may well be circumstances where providing such pricing information alone might amount to the acceptance of a restraint giving rise to an understanding. Email Ltd does not give carte blanche to competitors sharing price lists.

ACCC v Leahy Petroleum

178    The meaning of an understanding was revisited by Gray J in Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 794; 160 FCR 321 as part of a consideration of arrangements or understandings at [23]–[41], especially at [28]-[39]. His Honour said:

[28]    However broad and flexible an understanding might be, for the purposes of s 45(2)(a) of the Trade Practices Act it must be a consensual dealing between parties. Like an arrangement, it falls outside the sphere of contractual obligations of a kind normally enforceable in a court. Unlike an arrangement, it can be tacit, in the sense that it can be arrived at by each party, either by words or acts, signifying an intention to act in a particular way in relation to a matter of concern to another party. In order to be a consensual dealing, however, an understanding must involve a meeting of minds. [his Honour then cited Top Performance Motors, reproducing the substance of the passage reproduced above]

[29]    Similarly, in Grollo [L Grollo & Co Pty Ltd v Nu-Statt Decorating Pty Ltd [1978] FCA33; 34 FLR 81] at 89, Smithers J said as to an understanding that:

It may arise merely where the minds of the parties are at one that a proposed transaction proceeds on the basis of the maintenance of a particular state of affairs or the adoption of a particular course of conduct.

[30]    This view as to what is necessary for the formation of an understanding has been followed on many occasions. It is unnecessary to set out all of the authorities in which it has been referred to. I accept the correctness of what Smithers J said without hesitation. …

(Emphasis added.)

179    The case of L Grollo & Co Pty Ltd v Nu-Statt Decorating Pty Ltd [1978] FCA 33; 34 FLR 81, referred to in Leahy Petroleum above, was decided by Smithers J just over three years after Top Performance Motors. His Honour cited, inter alia, British Basic Slag and Top Performance Motors. Grollo puts beyond doubt that Smithers J was drawing a real and substantial distinction between what is necessarily needed for an arrangement as compared with an understanding by his observations in Top Performance Motors.

ACCC v Egg Corp

180    In Egg Corp, the Full Court (Besanko, Foster and Yates JJ) said at [95] (repeating the quote above for ease of reference):

In order for there to be an arrangement or understanding within s 44ZZRJ, there must be a meeting of minds and this involves a commitment to act in a particular way. A mere expectation as distinct from an assumption of obligation, assurance or undertaking to act in a particular way is not sufficient. Unlike an arrangement, an understanding can be tacit (Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (1999) 92 FCR 375 (CC Pty Ltd) at [135]-[141] per Lindgren J; Apco Service Stations Pty Ltd v Australian Competition and Consumer Commission (2005) 159 FCR 452 at [45]-[47]; Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (2007) 160 FCR 321 at [28]-[39] per Gray J).

181    At first blush, the first sentence of the above paragraph in Egg Corp referring to “a commitment” may be read as supporting the appellants’ case. However, the statement does not endorse the necessity for anything as specific as that. Read in the context of the authority cited, the use of the word “commitment” may be seen to be infelicitous, as it seems intended to carry a different meaning to the requirement contended for by the appellants.

182    First, the citation of CC (NSW) appears in conjunction with the citation of Apco. Consequently, it needs to be understood in accordance with the reasoning above – that is, as not endorsing any approach inconsistent with the meaning given to an understanding by Smithers J in Top Performance Motors. Second, their Honours specifically endorsed Leahy Petroleum at [28]-[39], which includes the passages reproduced above and thus the reinforcement of Top Performance Motors by Smithers J in Grollo.

183    Read in that context, it is apparent that the Full Court’s observations in Egg Corp were intended to endorse the distinction between arrangements and understandings made in Top Performance Motors. Insofar as a “commitment” is necessary, the Full Court does not appear to be suggesting that this is something more stringent than an obligation, assurance or undertaking to act in a particular way (akin to the “moral obligation” referred to by Willmer LJ in British Basic Slag, see [141] above), any of which would also be sufficient.

184    It is apparent that the primary judge understood this nuance in the same way, as his Honour cited Leahy Petroleum at [28] and Egg Corp at [95] as part of his Honour’s reasoning at LJ [102(e)] in support of the proposition that an understanding can be arrived at by words or conduct and may be tacit.

ACCC v Hutchinson

185    In Hutchinson, the High Court directly dealt with the question of whether proven conduct gave rise to an understanding in the context of the secondary boycott prohibition in s 45E of the Act. The primary judge in that case found that a construction company succumbing to a union’s threat did amount to an understanding, but the Full Court found that the conduct established by the evidence fell short of what was required in all the circumstances. Thus, the issue squarely before the High Court was what was needed for the formation of an understanding, though that case was substantially factually different to the present case. The judicial focus on appeal was whether succumbing to a threat was enough to amount to an understanding without notice of assent, with the Full Court unanimously, and the High Court by majority, finding that it was not.

186    The plurality of Gageler CJ, Gleeson and Beech-Jones JJ in Hutchinson described the requirements for an understanding in the following way (footnotes emitted):

[19]    The collocation of the words “contract, arrangement or understanding” in Pt IV of the Act refers to “a spectrum of consensual dealings” between parties in which the words “arrangement” and “understanding” each describe something less than a legally binding contract…

[20]    Like an arrangement, an understanding may be informal as well as unenforceable, so that a person may be free to withdraw from it or to act inconsistently with it, notwithstanding their adoption of it. Further, for one person to arrive at an understanding or make an arrangement with another person which is of sufficient substance to be characterised as containing a provision to which one or other of them is prohibited from giving effect necessarily involves interaction between them by which one expressly or tacitly communicates by words or conduct to the other a commitment to act or refrain from acting in a particular way. For an understanding to be arrived at, there must at least to that extent be a “consensus” or a “meeting of the minds”.

187    The present primary judgment and Leahy Petroleum are cited by the plurality in Hutchinson at [19] and footnote 28 for the proposition that “contract, arrangement or understanding” in Pt IV of the Act refers to a “spectrum of consensual dealings”; and the present primary judgment is among the cases cited by the plurality in Hutchinson at [20] and footnote 31 for the proposition that an understanding requires a consensus or meeting of minds.

188    The plurality in Hutchinson at [24] held that their Honours’ reasoning on the determinative issue of whether succumbing to a threat was sufficient for an understanding was not affected by British Basic Slag, when that case is properly understood. They reproduced, with approval, the relevant parts of Diplock LJ’s reasons (emphasised in bold at [137] above), which are repeated below for ease of reference:

it is sufficient to constitute an arrangement between A and B, if (1) A makes a representation as to his future conduct with the expectation and intention that such conduct on his part will operate as an inducement to B to act in a particular way, (2) such representation is communicated to B, who has knowledge that A so expected and intended, and (3) such representation or A’s conduct in fulfilment of it operates as an inducement, whether among other inducements or not, to B to act in that particular way.

189    The plurality in Hutchinson further observed at [25] that this expression by Diplock LJ in British Basic Slag of what is required for an arrangement may be treated as applicable to an understanding, provided this is understood in its context.

190    Thus, the plurality in Hutchinson may be seen as giving some real support for the importance of context not just when considering and applying British Basic Slag, but also when evaluating the application of statements of principle emerging from cases since then. Such nuance is often central to the development of precedent, so that any universal principles can be appropriately extracted.

191    The plurality in Hutchinson plainly enough extracted the portion of Diplock LJ’s reasons in British Basic Slag that their Honours considered also captured the essence of an understanding. In that context, insofar as the plurality identifies a “commitment” as a necessary component of a concluded understanding at [20], their Honours were not apparently suggesting something more stringent than the assumption of an obligation, perhaps tacitly. And there is nothing to suggest that the term obligation, when used in this general sense, has the degree of stringency that the appellants seek to attribute to it.

192    It follows that the appellants face an immediate difficulty with their argument following Hutchinson, in that a plurality of the High Court have endorsed a description of an understanding based upon an aspect of the reasoning in British Basic Slag that accords with the primary judge’s reasoning and does not go as far as they contend his Honour was required to go in this case. For any decision before Hutchinson suggesting a contrary view, consideration must be given to whether a reference to anything more being required was a statement of general application, or no more than a reflection of what was a feature of the particular case at hand. If it is characterised as being the former, a question may arise as to whether it can stand in light of Hutchinson.

Consideration and conclusions

193    The features of a given case will ordinarily have a significant bearing on what conduct will need to be proved to establish that a contravention has taken place, or some kind of attempt directed to achieving such a substantive contravention. Adopting the language in Top Performance Motors, what is needed to prove that an understanding has been reached, or in other words, that the minds of the parties are at one on the maintenance of a particular state of affairs or the adoption of a particular course of conduct, is likely to depend on what is proposed to be done, or not done, and the context in which that fell for consideration.

194    This appeal arises in circumstances where the ACCC’s case was relatively clear and precise. The ACCC alleged in substance that the outcome sought to be induced was an anticompetitive adherence to a published price list as a base or floor price by a range of suppliers of flat steel products. This had been openly described by the appellants as a benchmarking strategy. Such a clear price list is to be contrasted with something vaguer for which greater precision of expectations and how it was envisaged they might be fulfilled may have been required. Put another way, if the means by which an outcome was sought to be achieved or avoided were attended by a degree of vagueness or imprecision, evidence of a more stringent nature may be required – either to establish that the parties’ had reached (or attempted to reach, or attempted to induce) an understanding, or to rebut evidence tending to show a benign objective. In a given case of such imprecision, the label of a “commitment”, as used by the appellant, might be appropriate to capture what was necessary to constitute a contravention. But that is not the present case where there is no such vagueness as to the outcome sought to be achieved.

195    A cautious approach to evaluative language that is deployed as an analytical tool is therefore necessary to retain the primacy of the statutory language in s 44ZZRD (since renumbered as s 45AJ), and the meaning of the same terms in other parts of the Act, including s 45. The relevant question for the primary judge and thus for this Court on these first appeal grounds is what was required to constitute a proscribed understanding, so as to inform the evaluation by the primary judge as to whether, as alleged, the appellants had attempted to induce such an understanding. As already observed in these reasons, words may be used to characterise or explain what has occurred in a particular case, but such an analytical or linguistic tool must not be confused or conflated with the statutory proscription containing the ultimate question to be answered, particularly given the propensity for the intended meaning of these words to vary according to context.

196    The use of concepts such as assuming an obligation, giving an assurance, undertaking, or even commitment, may retain a high degree of latitude in fact-finding in order to determine whether, relevantly, an understanding has been reached (or attempted or attempted to be induced). None of them compel, in all cases, anything as stringent as the notion of a commitment as it is used and contended to be indispensable by the appellants.

197    That was the reasoning expressly adopted by the primary judge at LJ [108]. As his Honour correctly pointed out, such an approach is not inconsistent with the description of an understanding in Top Performance Motors that where “the minds of the parties are at one that a proposed transaction between them proceeds on the basis of the maintenance of a particular state of affairs or the adoption of a particular course of conduct … there would be an understanding”. It represents no departure from the primary judge’s description of the kinds of circumstances which need to be present for an understanding to be reached, namely:

(a)    the arrival at a common mind, or a meeting of minds, or consensus as to a particular course to be followed: LJ [106];

(b)    where that consensus involves expectations arising out of dealings between the parties (by words or conduct) which have resulted in what can alternatively be described as the assumption of an obligation, or the giving of an assurance or undertaking or even providing a commitment (although not in the sense that word is used by the appellants), as to a particular course to be followed: LJ [102(c)], [145]; and

(c)    noting that, in the context of an understanding, the assumption of an obligation means no more than the communication of assent (by words or conduct) to a particular course of conduct proposed by a competitor: LJ [108].

198    The canvassed authority, far from displacing those statements of principles by the primary judge, reinforces that they were correctly drawn from what was evidently a careful reading and thorough understanding of the relevant cases by his Honour.

199    Where “consensus” and “meeting of minds” are used to frame the relevant requirements in the dispositive parts of the primary judge’s reasons on conduct and intention, they are to be understood in that context. Those terms are specifically endorsed by the plurality in Hutchinson in framing the requirements for an understanding (at [20]), citing with apparent approval LJ [102(b)].

200    It follows that the first ground of both appeals must fail.

A postscript on adducing exculpatory evidence

201    There is something then to be said about the practical difficulties and dangers which the appellants exposed themselves to, in adducing evidence on the assumption that something as stringent as a commitment would be necessary for a concluded understanding in all cases. Before the primary judge and on appeal, significant emphasis was placed on part of the evidence of Messrs Hennessy and Kelso, two CIPA Sales Managers that had been involved in the benchmarking strategy and who were witnesses for the ACCC: see LJ [142]-[143]. They gave evidence that they never asked any distributor for a commitment to use CIPA’s list prices. We were directed to some indicative exchanges with Mr Hennessy in cross-examination:

You understood that the strategy, which was initially Mr Ellis’ idea, was that BlueScope was distributing a price list with prices that CIPA was recommending for use by distributors when they set their prices to customers?---Yes.

And distributors could consider, consider, whether to follow that recommendation?---Yes.

Ultimately, you agree it was up to the distributors as to whether they did use those prices?---Correct.

And that was your understanding of the approach throughout the relevant period?---Yes.

…

You didn’t ask any distributor for a commitment?---No. I don’t remember asking for a commitment.

So there was a proposal – sorry. I am finding this a little difficult to, sort of, definitively answer. We were putting a proposal and encouraged them in tough conditions to use that. You don’t usually put a proposal like that with other substantial changes without expecting or encouraging, yes, people to follow that proposal.

I understand, Mr Hennessy. But what I am focusing on is you were not asking them to commit to doing it. You didn’t ask them to make a commitment to you that they would do that?---No. I think I already answered that.

202    The difficulty for evidence of that kind is, as the primary judge observed at LJ [144]:

it seeks to frame the applicable legal principles in a narrow and rigid manner and also has the effect of substituting the word “commitment” in place of the word “understanding” in the Act.

203    Looking for a “commitment” cast in such a way can result in straying too far from the statutory language the Court must apply. It suggests that something more needs to be sought than the acceptance of a proposal (or as put in cross-examination, a “recommendation”). If a commitment was always a necessary element of an understanding, the fact that a party was not bound to accept a proposal would not assist anyway. The commitment would only arise after the proposal was accepted and the understanding was complete.

204    In that sense, care should always be taken in posing questions to witnesses about the character of interactions that might amount to understandings. While evidence adduced and arguments advanced by the appellants at trial focused on the word “commitment”, and asking whether an “assurance”, “undertaking” or “obligation” had been sought, this ended up having the unfortunate effect of failing to engage with the true character of what had taken place. That is in part because framing the question in that way only allowed the witnesses to identify whether an assurance/undertaking/obligation was sought expressly. They could not meaningfully give evidence about inferences that could be drawn.

205    Additionally, particularly in the context of a legal proceeding, “commitment”, “obligation”, “undertaking” and “assurance” are liable to invoke the legally binding notions of contract, and thus become confusing concepts for witnesses when trying to identify when an understanding has arisen: see also, LJ [103], [658]. The primary judge was alive to this possibility when his Honour observed that the “[l]anguage of obligation, commonly used in the law of contract, should not obscure the nature of an understanding and the means and circumstances in which it may be arrived at”: LJ [108].

206    A further difficulty is that an understanding might be reached with only the slightest of obligations assumed. As it need not be binding in law, a party will be free to withdraw or act inconsistently with it: Leahy Petroleum at [34]. Take again Cross J’s example in British Basic Slag PJ of two people who tell one another that they will meet at a club the following evening, thus arriving at an arrangement to do so. His Honour observed that a social arrangement of such a kind would leave either party “free up to the last minute to leave a message with the hall porter to say that he will not be there, and even if he forgets about the engagement altogether the worst that he can expect is a mild rebuke from his friend”: British Basic Slag PJ at 254-255. A party to such an arrangement or understanding might sensibly deny that they had in fact assumed an obligation to do anything, based on a personal understanding of what that entails, even if that may readily be inferred from the nature of the interaction that they had, in the full context in which it occurred. Such evidence would reveal only the slight nature of the obligation in fact assumed.

207    The practical reality is that there is no silver bullet, nor any precise test that can be applied to determine whether an understanding has been arrived at in all cases. As Danckwerts LJ lamented more than half a century ago in British Basic Slag at 816:

Once the ascertainable ambit of arrangements, rights or obligations, which are legally enforceable is left behind, one flounders in a morass of inexactitudes … It may be that it is impossible to lay down any principle for application and that each case must be decided on the particular circumstances of the case; and heaven help the lawyer who has to advise a client [in such a case].

BlueScope grounds 2-4: intention required to be established/most probable inferences

208    BlueScope addressed grounds 2-4 of its appeal together, as did the ACCC in response. It is therefore convenient to respond to them in the same way.

Applicable principles and nature of the dispute

209    By ground 2, BlueScope contends that the primary judge erred in the application of legal principle in determining the question of whether it and Mr Ellis intended to induce any of the nine counterparties (the seven domestic distributors, plus Wright Steel, an import trader, and Yieh Phui, an overseas mill) to arrive at understandings containing price fixing cartel provisions. In particular, the error is said to arise from his Honour:

(a)    inferring that they had this intention from matters that, BlueScope contends, were at least equally consistent with an intention that those putative counterparties merely adopt the prices which were proposed; and

(b)    failing to inquire whether those matters, and the evidence as a whole, supported an inference that there was an intention to induce all or any of the counterparties to assume an obligation, or give an assurance, undertaking or commitment that they would act as proposed.

210    By ground 3, BlueScope takes the substance of the same point as ground 2. It contends, by specific reference to the evidence of Messrs Hennessy and Kelso, that the primary judge erred in finding that their evidence supported a conclusion that, by the benchmarking strategy, BlueScope and Mr Ellis were seeking to bring about a consensus with the counterparties, of the kind relevant for an understanding, to use the CIPA price lists as a benchmark for their pricing. BlueScope contends that none of the matters that his Honour relied upon supported the conclusion that it intended to do so, and that his Honour should instead have found that this evidence supported the opposite conclusion, namely that BlueScope and Mr Ellis did not intend to induce all or any of the counterparties to arrive at the alleged understandings.

211    Ground 4 is similar in its ultimate effect, with BlueScope contending that the primary judge erred in finding that BlueScope and Mr Ellis intended to induce all or any of the putative counterparties to arrive at understandings containing cartel provisions.

212    It is convenient to commence with the explanation of the principles stated by the primary judge as to the requisite intent for attempting to induce a cartel understanding, in contrast to actually entering into a concluded understanding, or attempting to do so. The point being addressed by his Honour is the well-established and critical distinction between the intention element for an attempted contravention, and the intention element for an attempt to induce a contravention, with the former being closer to a concluded understanding (at LJ [98]):

The relevant intention that must be established is an intention to bring about that which is attempted: Tubemakers at 737 and 743 per Toohey J. However, it is unnecessary to show that the respondent expected that the understanding would be arrived at: Tubemakers at 736 per Toohey J. Those statements were referred to with approval by the Full Court in Australian Egg Corporation at [92], where the Full Court formulated the requisite intention as “to bring about the proscribed result which in this case is the making of an arrangement or the reaching of an understanding within s 44ZZRJ”. As noted above, Tubemakers concerned an attempt to contravene a provision of Pt IV within the meaning of s 76(1)(b), whereas Australian Egg Corporation (like this case) concerned an attempt to induce a person to contravene a provision of Pt IV within the meaning of s 76(1)(d). In the context of an attempt to induce a person to arrive at an understanding containing certain provisions, it would seem to be appropriate to refer to the intention element as requiring an intention to induce the person to arrive at that understanding. Otherwise, the distinction between the conduct described in paras (b) [attempted to contravene such a provision] and (d) [induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene such a provision] of s 76(1) would be lost. In practice, though, there will not be any material difference between the two descriptions of the requisite intent – the conduct, involving inducement, must be intentionally directed to the making of an arrangement or the reaching of an understanding.

213    BlueScope did not challenge the relevant principles as to the requisite intention for an attempt to induce as summarised by reference to the authority above, either before the primary judge or on appeal. As such, it is common ground that the requisite intention, for present purposes, is the intention to induce the entering into of a proscribed understanding. In that context, it is important to emphasise three points flowing from LJ [98] reproduced above.

214    First, the primary judge astutely observed above that, while in principle there is a legal distinction between the intention element for an attempted contravention, and the intention element for an attempt to induce a contravention, in practice there will not be a material difference. That is because, for both, the conduct must be intentionally directed to the relevant objective, here, reaching an understanding. Proof of intention to achieve that overall objective is indispensable.

215    Second, as the reasoning above in rejecting ground 1 of the appeals by both BlueScope and Mr Ellis makes clear, the primary judge correctly concluded that what is required for an understanding may be materially less than for an arrangement in a given case (including in the case at hand), and in particular, that a commitment is not always necessary to prove an understanding. If a commitment is not required for a concluded understanding in all cases, it similarly could not be required in all cases for an alleged attempt to induce an understanding with a cartel provision.

216    Third, as observed in relation to the first ground in both appeals, exculpatory evidence was adduced by the appellants at trial from Mr Ellis and in the cross-examination of key ACCC witnesses, that neither thought the intention of the benchmarking strategy was to seek a commitment. The argument went that, as such a commitment was necessary, in the absence of such proof of intention the appeal must succeed. This requirement has been rejected in the resolution of ground 1 in each appeal, and that conclusion necessarily affects this set of appeal grounds.

217    The primary judge was plainly aware of the flaw in the appellants’ cases in asserting that a commitment was required for a concluded understanding, and how this flowed through to their argument as to the requisite findings for an attempt. Under the heading “Seeking a commitment”, commencing at LJ [142]-[143], the primary judge first outlined the nature of the appellants’ case at trial, namely, that there could not be an attempt to induce entry into a price fixing understanding if no commitment was sought from the counterparties to price in accordance with BlueScope’s price list. The primary judge then observed that this made it necessary to address the question of whether the ACCC’s case depended on such findings.

218    The primary judge then addressed what is required for a completed contravention at LJ [145]-[146], before turning to attempts and attempts to induce, stating:

[147]    It necessarily follows that an attempt to reach a price fixing understanding within s 76(1)(b) does not require, as a matter of law, that the relevant person has expressly sought a commitment from a competitor to price in a particular way. There are other ways in which a price fixing understanding may be brought about. That conclusion is even stronger in the case of inducing or attempting to induce a person to reach a price fixing understanding within s 76(1)(d). An inducement ordinarily refers to some proffered advantage or disadvantage, promised or threatened, which will follow if the object of the inducement adopts or fails to adopt a stipulated course of action. Mere persuasion, with no promise or threat, may also constitute an attempt to induce. It is not possible to define in any rigid or narrow manner the categories or types of conduct that may constitute inducing or attempting to induce a person to reach a price fixing understanding within s 76(1)(d). The conduct may involve a course of meetings, communications and other dealings in which inducements are proposed or offered and which are directed at reaching a consensus, or a meeting of minds, about the level of prices to be charged by one or more of the parties. It can be accepted that, for a consensus or meeting of minds to be finally arrived at, there must be some communication or indication of assent from one party to the other whether by words or by conduct. However, an attempt to induce a person to reach a price fixing understanding does not require assent to be achieved; it requires a step towards the inducement of the understanding which is more than merely preparatory and which is immediately and not merely remotely connected with the inducement to reach the understanding. It should also be reiterated that, in the context of an attempt and an attempt to induce, it is not necessary for the conduct to have reached an advanced stage or for the precise terms of the proposed understanding to have been formulated.

[148]    As to the intention element of an attempt to induce, a person may only be found to have attempted to induce a counterparty to reach a price fixing understanding if the person intended, by their conduct, to take steps which were directed at inducing the counterparty to reach the understanding. In other words, it is necessary that the understanding be in contemplation and be the intended outcome of the attempt to induce. It is not sufficient for the person to merely intend that the counterparty reflect on the prices they are charging. The intention must be directed to the ultimate end of reaching an understanding. Again, though, the use of the word “commitment” in that context is unduly limiting. The intention must be to induce the counterparty to reach an understanding, which requires a consensus or meeting of minds about acting in accordance with the subject of the understanding. It is sufficient that, by the acts that constitute the attempt to induce, the person offers promises or threats or otherwise engages in persuasive conduct that is intended to induce a consensus, however the ultimate assent may be communicated.

(Emphasis added.)

219    The above statements of principle accord with the conclusion reached above as to ground 1 of both appeals. That conclusion also supports as being correct the primary judge’s later and related conclusion as to intention (at LJ [658]):

… while it is necessary for the ACCC to show that BlueScope and Mr Ellis intended to induce a price fixing understanding, that requires that the understanding be in contemplation and be the intended object of the attempts to induce. In that context, it is not necessary to speak in terms of “commitment”, which can be misunderstood, or a commitment at any particular point in time. The relevant question is whether BlueScope offered promises (or threats) or otherwise engaged in persuasive conduct that was intended to induce a consensus about the use of CIPA’s price lists, however the ultimate assent might have been communicated, whether by words or conduct.

220    With the above principles, authority and conclusions in mind, it is necessary to identify with greater precision the aspects of BlueScope’s arguments that are untenable. BlueScope contends that in failing to comprehend the requirements of a concluded understanding – namely that it involve a commitment, assurance, obligation or undertaking – the primary judge misunderstood the requirements for intention. As ground 1 has failed, those aspects of these later grounds of appeal fall away. Their function was to identify error in the dispositive parts of the primary judge’s reasons if that ground (relating to statements of principle) succeeded, which it has not.

221    Particular issue is taken with the primary judge’s framing of the relevant question for intention as whether BlueScope and Mr Ellis had intended to arrive at a “meeting of minds” or “consensus” with the various counterparties to the attempted understandings: LJ [1436]. Following the rejection of ground 1, these words appropriately frame the enquiry into intention. The distinction that BlueScope attempts to draw with respect to these grounds of appeal, as it did for ground 1, is between an intention to induce a consensus that involves a commitment (or an analogue), and a consensus that does not. That is a false dichotomy, at least in the sense that “consensus” is used by the primary judge to reflect what is needed for a concluded understanding.

222    The proper question was that posed by the primary judge: did BlueScope and Mr Ellis intend for the CIPA price lists to serve merely as a suggested starting point for their pricing decisions; or did they intend to induce distributors to arrive at a consensus as to pricing, which is proscribed? Contrary to BlueScope’s arguments, given the facts and circumstances of the proven conduct, and the intention his Honour inferred from that conduct in all the circumstances, there was no scope for a third or intermediate option in this case sitting between those alternatives, involving seeking some kind of non-proscribed consensus which would not arise to the level of intention necessary to establish liability. It is with this question in mind that the balance of BlueScope’s arguments in support of these grounds of appeal must be assessed.

Overview of the primary judge’s findings

223    Mr Ellis was found to have devised the benchmarking and overseas mill strategies when he commenced as CIPA’s General Manager of Sales and Marketing; and to have implemented those strategies by that division of BlueScope through other people from CIPA’s Sales and Marketing team: LJ [1426]-[1427]. His intention with respect to those strategies thus formed the basis for establishing his personal liability, which was attributed to BlueScope as well: LJ [1426]-[1427].

224    The primary judge also noted that the only conduct in issue with respect to the overseas mill strategy was Mr Ellis’ meeting with Yieh Phui on 26 February 2014, again attributable to BlueScope: LJ [1427]. While the overseas mill strategy was in one sense discrete, it was closely related to the benchmarking strategy, with the primary judge finding that Mr Ellis attempted to persuade Yieh Phui in that meeting to increase its prices for the supply of flat steel products to Australia by reference to the CIPA price lists: LJ [1428].

225    The primary judge made findings in relation to Mr Ellis’ intention, and thus through him in relation to BlueScope’s intention, based on his own words and conduct and those of CIPA managers who reported to him directly and indirectly, and from evidence as to market circumstances that were known to him at the time: LJ [1429]. Those findings are contained in the following six paragraphs which are better reproduced than summarised:

[1430]    The evidence shows that a material aim or objective of the benchmarking strategy and the overseas mill strategy was to bring about an increase in prices for the supply of flat steel products both at the manufacture/import level of the market and at the distribution level of the market. That conclusion was not the subject of any real dispute and is supported by a wide range of evidence.

[1431]    It was uncontroversial that, following the global financial crisis in 2008, demand for steel world-wide had declined and remained depressed for a number of years. The reduction in demand had led to an over-supply of steel production and distribution capacity. CIPA’s reported EBIT for FY2011 to FY2013 were losses of $1,063 million, $726 million and $45 million respectively. CIPA’s internal documents reported in 2013 that import competition was “intense” and CIPA had lowered domestic premiums to the import parity price in order to minimise market share decline. BlueScope’s flat steel distribution business also faced vigorous competition from a number of distributors in each region in which it operated and flat steel distributors had substantial excess capacity. BlueScope Distribution’s underlying EBIT for FY2011 to FY2013 were losses of $34 million, $36 million and $27 million respectively, with a forecast loss for FY2014 of $18 million. During 2013, distributors were experiencing poor profitability and there was significant price competition between distributors. CIPA received frequent complaints from distributors to the effect that their margins were being impacted by the prices being offered by other distributors and that they had to reduce margins to win business. Distributors also complained about their perception that BlueScope was selling steel to its own distributors (BSD, SMS and Impact Steel) at low prices.

[1432]    Mr Ellis was aware of the state of the market when he commenced and his business strategies were designed to address these problems. In an early communication from Mr Ellis to the BANZ Sales and Marketing Team, Mr Ellis stated that his objectives included to visit as many key customers as possible to understand their key issues and areas for opportunity and to focus on actionable ideas that could reduce the level of imports coming into Australia. In early meetings with distributors, Mr Ellis received complaints about low prices and lack of profitability caused by BlueScope offering too much tactical pricing to distributors, perceived unfair competition from BlueScope Distribution (which was offering low prices in competition with other distributors) and low prices being offered by NZSA.

[1433]    The benchmarking strategy involved revising the list prices in CIPA’s Distribution Market price lists for flat steel products upwards and promoting those prices to distributors as “benchmark” prices or “recommended resale” prices. From the December 2013 price lists onwards, the list prices were revised upwards while distributors’ discounts were increased so that distributors’ net prices remained largely the same. The difference between the list prices and the net prices increased to approximately 13% to 15%. This was the gross margin able to be earned by distributors if the distributors set their prices at the level of the list prices. That was how the “recommended resale” prices were promoted by BlueScope to distributors. If the benchmarking strategy was implemented successfully and distribution customers were able to earn higher gross margins on the sale of CIPA products, that would enable CIPA to maintain the level of its “net” prices (and avoid having to offer deeper discounts).

[1434]    It was an obvious commercial fact, appreciated by the relevant BlueScope employees and distributors, that the benchmarking strategy could only succeed if a significant number of distributors implemented the strategy by adopting the prices in CIPA’s price lists as a benchmark (or floor price) in setting their own prices. Unless the strategy was adopted by a significant number of distributors, including BlueScope Distribution, those distributors that followed the strategy faced the risk of losing sales to distributors that did not (and offered lower prices). In promoting the benchmarking strategy to distributors, BlueScope made clear that the strategy was being promoted to other distributors in the market and would be followed by BlueScope Distribution. The use of CIPA’s list prices as the benchmark (or base) prices and the wide distribution of the price lists were at the core of the benchmarking strategy.

[1435]    As already noted, the respondents did not dispute that the benchmarking strategy, involving the use of the “benchmark” or “recommended resale” prices, was promoted to distributors as a way of distributors increasing their prices and margins. But the respondents submitted that the benchmarking strategy was only ever intended to promote the prices in CIPA’s Distribution Market price lists as a price that distributors could take into account in setting their prices at the distribution level of the market. The respondents submitted that the benchmarking strategy was incapable of giving rise to a price fixing understanding containing a cartel provision, because it was not possible for distributors to set their prices by reference to CIPA’s list prices. In support of that submission, the respondents relied on evidence given by a number of distributors that they could never have agreed to use the CIPA price lists to set their prices, or to increase their prices based on the price lists, because they needed pricing flexibility for a variety of reasons, including that prices were typically negotiated with customers (particularly larger customers), the market was highly competitive and they had to recover processing and other service costs. I accept that evidence to that effect was given by distributors. However, the evidence does not contradict the ACCC’s case that BlueScope and Mr Ellis attempted to induce price fixing understandings being reached. The evidence merely explains some of the likely reasons why the attempt failed. Further, I do not consider that the evidence negatives the possibility that price fixing understandings were capable of being reached in this market. The market was highly competitive, and distributors engaged in individual negotiations with customers, but those facts would not have prevented cartel conduct in which distributors reached a meeting of minds with BlueScope to use CIPA’s list prices as their base or floor prices. Nor do processing costs prevent such cartel conduct occurring. CIPA’s list prices allowed a gross margin over the cost of the steel of 13% to 15%, which would have allowed recovery of other costs of the distributors. The evidence indicates that processing costs were a relatively modest component of a distributor’s costs and that the benchmarking strategy contemplated that distributors would, if they chose, add an additional amount for processing costs.

226    BlueScope’s claim that it should not be inferred to have intended to induce an understanding because such an attempt was unlikely to succeed had the quality of a double-edged sword. This argument was recorded by the primary judge in the extract above and maintained on appeal. If an attempt to induce the nine understandings directed at achieving an increase in prices did not have real prospects of success so as to make that intention unlikely, then a strategy directed to adherence to the CIPA price lists without such an understanding being attempted to be induced would have had even poorer prospects of success and therefore would have been even less likely to have been attempted. As the discussion below reveals, the time being wasted if that was so was significant.

227    The whole point of the exercise – whether executed lawfully or unlawfully – was to achieve adherence to the CIPA price lists. No rational supplier (whether a distributor, import trader or overseas steel mill) would likely price according to the price lists on their own because of the real risk of the loss of market share to other suppliers who did not also raise their prices. That is, if an attempt to induce the understandings was so unlikely to succeed that this was a reason not to find the necessary intention to do so, then in the absence of such an intention, the conduct would have been apparently inexplicable on the basis advanced by BlueScope (and Mr Ellis). In those circumstances, it is unsurprising that the primary judge did not find this argument persuasive, as addressed in more detail below.

228    The primary judge concluded that the conduct undertaken by and on behalf of BlueScope pursuant to those strategies in the period from September 2013 until at least April 2014 was intended to induce a “consensus” or “meeting of minds” between BlueScope and the relevant counterparty that the CIPA price lists should be used (at LJ [1436]):

(a)    by distributors (both aligned and non-aligned) as a base or floor price for their supply of flat steel products; and

(b)    by Wright Steel (as an import trader) and Yieh Phui (as an overseas steel mill) as the reference point for prices at the distribution level of the market, such that each would increase their current level of pricing at the manufacture/import level of the market.

229    The primary judge relied upon the totality of the findings that his Honour had made in concluding that attempts to induce each of the understandings had been established by the ACCC, and being satisfied that the promotion by BlueScope of the CIPA price lists was a mechanism or device by which the understandings were sought to be induced. His Honour identified 16 specific factual findings on which this conclusion was based: LJ [1437], then LJ [1438]-[1453]. BlueScope does not challenge the factual findings themselves but contends that they do not, whether taken alone or together, support a finding of the requisite intention. Rather, BlueScope’s contention is that all 16 matters are equally or more consistent with an innocent intention, namely that the distributors, Wright Steel and Yieh Phui, would each raise their prices, without reaching an understanding to do so. This contention was expressed to extend to any combination or accumulation of those 16 matters going to intention. It is important to stress that it is the overall conclusion as to intention being established for each attempt to induce that must be successfully impugned for BlueScope to succeed on these appeal grounds.

230    The assessment of the arguments advanced in challenging the correctness of the primary judge’s consideration of the 16 matters below suffices, in all the circumstances, to address these grounds of appeal, because it was not suggested by BlueScope that success alternatively lay in any particular asserted error elsewhere in the primary judge’s reasons that was not covered by these matters.

231    It is useful to address the second of the 16 matters first, as it articulates reasoning that runs through most of the remaining 15 matters, and directly addresses Mr Ellis’ evidence on his intention.

Second matter – Managerial investment in the RRP strategy: LJ [1439]

232    The second matter identified by the primary judge was that substantial work had been undertaken to promote the benchmarking strategy to distributors, which suggested that there was an intention to produce a consensus. His Honour described the evidence as showing that the benchmarking strategy was a significant project which continued for at least eight months and involved numerous meetings and discussions between CIPA and the distributors. His Honour noted that a central aspect of Mr Ellis’ evidence was in substance that he had intended for the CIPA price lists to merely serve as recommended prices, which distributors could choose to take into account in making their own pricing decisions, and might be used as a starting point or reference for their pricing. His Honour considered such an intention to be inherently implausible, because, if that was how the benchmarking strategy was intended to function, it was unlikely to have made any change to the market conditions or to the commercial and financial pressures that BlueScope was facing, and thus would not have warranted the significant level of managerial investment of time that had occurred. That aspect of Mr Ellis’ evidence was therefore rejected.

233    The basis of this reasoning is that, in the context of a competitive market characterised by negotiated pricing, it would have been very unlikely or even impossible to have distributors raise their prices without arriving at a consensus to do so. As such, the primary judge inferred from the resources invested into the strategy that it intended to induce such a consensus, to ensure that the strategy could succeed. This sort of practical analysis and reasoning underpins much of his Honour’s findings on intention. This is cogent reasoning and is not squarely challenged on appeal. BlueScope instead raises three issues with the primary judge’s findings on this matter.

234    First, BlueScope contends that the primary judge misunderstood Mr Ellis’ intention, which was not that the RRP strategy might lead to an increase in pricing by reference to the CIPA price lists in the absence of an understanding, but that it would do so, and that this was a more tangible outcome which warranted the investment of managerial time and effort. However, it is not at all clear that this was, in fact, Mr Ellis’ evidence as to his intention. Before the primary judge, Mr Ellis almost invariably stated that he merely “hoped” the distributors would begin pricing by reference to the price lists: LJ [627]. Further, even if the effect of this evidence was as BlueScope contends, his Honour rejected Mr Ellis’ evidence as to intention in any event. The wide-ranging adverse credibility findings his Honour made about Mr Ellis are not challenged on appeal, even though that evidence was sometimes referred to in ways that seemed to be inconsistent with that stance.

235    In any case, implicit in the primary judge’s reasoning, is that – in the context of the Australian flat steel market, characterised by high competition and negotiated prices – a mere suggestion that distributors price by reference to the CIPA price lists, in the absence of a consensus to adopt this plan, could, at best, lead to a hope that they might do so. To expect otherwise would be contrary to commercial sense.

236    BlueScope’s argument has a further and perhaps more fundamental problem on this point, in that it tries to impugn inferential reasoning as to intention by reference to evidence going to a contrary state of mind which was rejected. It cannot be the case that BlueScope is better off with a witness whose evidence has been rejected than they would have been if there had been no evidence called from that witness at all. What is left is the evidence that the primary judge relied upon to draw inferences as to intention. The first asserted error in that reasoning has not been established.

237    The burden of the primary judge’s reasoning is that the sheer level and extent of managerial investment of time in the benchmarking strategy strongly weighed against, or at least was inconsistent with, the finding that there was no more than a mere hope that distributors would each begin pricing by reference to price lists, and instead pointed to an intention to arrive at a proscribed consensus. His Honour’s reasoning is compelling and should be accepted as being free of error contrary to BlueScope’s assertions. The suggestion of an intention going no further than a mere hope that each counterparty would independently adopt the price lists as a starting point could clearly be rejected.

238    Second, BlueScope contends that the CIPA price lists could not have been intended to function as a price floor, because they could never have effectively functioned this way. They assert that the commercial reality of the market, in which distributors needed to retain flexibility and independent decision-making, meant that the price lists would never have been able to constrain pricing decisions.

239    This argument sounds perilously like an impossibility defence to an attempt. It tends to suggest that these commercial conditions meant that all of the distributors were immune to the temptations of a cartel proposal, to the point of being impervious to any inducement, no matter how attractive or lucrative it may be, and no matter how difficult their financial circumstances were. Such an argument is clearly untenable. Even more fundamentally, it fails to recognise that pricing decisions will nearly always have constraints. Indeed, a price fixing cartel proposal may be seen as seeking to introduce a particular kind of constraint, relevantly here alleged by the ACCC to introduce a floor or base price. Another way of looking at it is that such a concluded understanding may be seen to remove a constraint on pricing – the competitive constraint of other suppliers undercutting a price by reference to the CIPA price lists. The second argument cannot be accepted for these reasons.

240    Third, BlueScope contends that this conclusion cuts against another finding by the primary judge, namely that Mr Vassella (the CEO of BANZ) was aware of the core elements of the benchmarking and overseas mills strategies, but was not aware that they were intended to induce price fixing understandings: LJ [1550]-[1551].

241    BlueScope misunderstands the primary judge’s findings. The managerial investment considered by his Honour appears primarily to be that undertaken by CIPA’s Sales and Marketing team leadership, including Mr Ellis. Mr Vassella and BANZ are not mentioned expressly (nor impliedly, it seems). In any case, the primary judge made no positive finding that Mr Vassella was not aware that BlueScope was, by either strategy, attempting to induce price fixing understandings, only that there was insufficient evidence to conclude that he was aware: LJ [1551]. His Honour concluded that the evidence did not go so far as to support that further finding, though his Honour noted in the penalty judgment that the matters of which Mr Vassella was aware should have alerted him to the risk that BlueScope employees were committing cartel conduct contraventions, concluding the relevant paragraph of his reasons by saying (PJ [74]):

There was no evidence that Mr Vassella took any steps to confirm or verify that the commercial strategies being implemented by Mr Ellis were compliant with the Act. This indicates that, at the relevant time, senior managers of BlueScope were not sufficiently attentive to the requirements of the Act.

242    The primary judge’s reasoning on the second matter was a sound factual plank from which to draw, on its own, and in the context of the other findings subsequently considered, an inference of the requisite intention (being an intention directed towards forming an understanding). It is with that framing in mind that the rest of the 16 matters can be addressed. The focus needs to be on the cumulative effect of the evidence, not just that evidence considered in isolation.

First matter – Financial pressures: LJ [1438]

243    The first matter addressed by the primary judge is that CIPA and BlueScope Distribution faced severe commercial and financial pressures in 2013, which would be alleviated to an extent if distributors used CIPA’s list prices as a base or floor price, and import traders and overseas mills set prices accordingly. Mr Ellis was aware of these pressures and believed BlueScope wanted him to do all he could to alleviate them: LJ [1438]. The presence of motivating factors can be an important contextual circumstance for deciding the most probable inferences to draw as to state of mind. Taken alone in this case, this motivation would not suffice to establish the requisite intention, but it can be, and in this case was, a circumstantial factor to add weight to the other features.

244    The appellants submit that the effect of this first matter is neutral, indicating a reason why Mr Ellis and BlueScope might have merely hoped that the CIPA price lists would be adopted, but not necessarily a reason why they would have sought a commitment from the counterparties to do adopt them. As a preliminary matter, as a result of the misplaced reliance upon the necessity of a commitment, that submission again draws the wrong distinction. If the intention was that the proposals put would result in an expression of assent, that would be sufficient for an attempt to induce. But more fundamentally, when considered alongside other matters that indicate that it would be unlikely that a mere suggestion to use the price lists in the way proposed would have resulted in their adoption, it instead provides a further or contributing reason as to why it is more likely and thus more probable that BlueScope and Mr Ellis would have intended that the benchmarking and overseas mill strategies would result in a consensus.

Third and fourth matters – “recommended resale prices” were not based on usual commercial considerations: LJ [1440]-[1441]

245    The third and fourth matters concern the primary judge’s finding that BlueScope’s description of the CIPA price lists as “recommended resale prices” was a misnomer as they were promoted not only for flat steel products supplied by it to distributors for on-sale, but also for flat steel products supplied by others and for processing services provided by distributors themselves, rather than by BlueScope. Necessarily, use of the price lists in the latter circumstances did not involve any element of reselling anything provided by BlueScope. The CIPA price lists were thus not truly recommended resale prices at all, and found by his Honour not to be underpinned by ordinary commercial considerations that might justify recommended resale prices.

246    BlueScope contends that this merely indicates that the CIPA price lists were shared with the intention that distributors would increase their prices, and that this intention alone is insufficient, citing Egg Corp PJ at [381] and [383], as accepted by the Full Court. Reliance is also placed upon aspects of the reasoning for the failure of the TPC’s case in Service Station Association and Email Ltd, which have been considered in some detail in relation to both appellants’ first grounds. So far as it goes, that statement of principle is correct. But the evidence from which an inference was drawn relating to BlueScope’s and Mr Ellis’ intention goes further than what is described by BlueScope, taking it out of the realm of those decisions.

247    The primary judge did not accept that there was merely a suggestion put to competitors with the hope that they would raise their prices. Rather, his Honour found that there was a concerted effort to have competitors adopt the CIPA price lists as a base or floor price, including in particular for goods and services that BlueScope had not produced, while making them aware that BlueScope would be taking action in accordance with that plan, and that others would be encouraged to adopt the plan as well. These were all properly found to be indicia of an intention which went much further than the limitation sought to be imposed by the appellants on the probative capacity of that evidence, especially in light of the other matters. The primary judge did not err in finding that this was material evidence going towards proving the requisite intention directed to reaching an understanding. His Honour was not considering this evidence in isolation.

Fifth matter – The Melbourne airport meeting: LJ [1442]

248    The fifth matter is that, at the first external meeting about the benchmarking strategy, held at the ParkRoyal Hotel at Melbourne Airport on 6 September 2013, Mr Ellis had brought together two aligned distributors (Southern Steel and Apex Steel) and two non-aligned distributors (Vulcan Steel and Selection Steel). The primary judge considered this supported the finding that Mr Ellis intended to induce the distributors to reach a consensus with BlueScope about adopting the CIPA price lists as a base or floor price.

249    At the Melbourne Airport meeting, Mr Ellis offered what the primary judge described as inducements for the adoption of that consensus, namely that CIPA would tighten its tactical pricing and would be increasing its prices to BlueScope’s distribution entities, BSD and SMS. His Honour further reasoned that the “pushback” from one of the attendees, Mr Gregory of Selection Steel, in response to the introduction of the “opportunity” to price using the CIPA price lists, indicated that this attendee understood that Mr Ellis was proposing for distributors to adopt a common position by using CIPA’s list prices as a base or floor price. Evidence of the meeting was offered by Mr Ellis, Mr Hennesy and Mr Calleja (the owner of Apex Steel). The primary judge largely relied upon the evidence of Mr Hennessy, with little reliance on the evidence of Mr Ellis and Mr Calleja.

250    The respondents object to those findings on several fronts. First, the inducements offered are said by BlueScope not to be inducements because they lacked any character of a quid pro quo. This is dealt with in relation to Mr Ellis’ ground 3, which contends there was no proof of inducements. It is enough to say at this stage, that an inducement need not be conditional on a party taking certain steps; it can be offered unconditionally. Here, what was offered by Mr Ellis was the removal of barriers to adopting the CUPA price lists as a base and, more broadly, indicated a willingness on the part of BlueScope to lead the way in establishing a new price norm within the market. It is impossible to see why that was not fairly characterised by the primary judge as an inducement, given the accepted breadth of the concept.

251    Second, BlueScope argues that Mr Gregory’s “pushback” and Mr Henessy’s response affirm that Mr Ellis and BlueScope did not intend that the distributors would provide a commitment to adopt the CIPA price lists in their pricing decisions. Mr Hennessy’s evidence was that either he or Mr Ellis had said words to the effect of: “[w]e will be working on our December price offer and there is an opportunity for you to use this as a pricing benchmark when you are setting your own prices”: LJ [708]. Mr Gregory responded with words to the effect of “[w]e make our own independent pricing decisions” to which Mr Hennessy responded that he understood that, once CIPA had finalised the December 2013 Benchmark spreadsheet, it would talk to each of the distributors present individually: LJ [709]. In particular, BlueScope relies upon the evidence given by Mr Hennessy that “of course, it was up to Selection Steel as to whether or not to adopt the prices that were going to be in the December price list”: T302.35-37. The primary judge accepted that neither Mr Ellis nor Mr Hennessy had expressly sought a commitment from the distributors at the meeting: LJ [712]. But as already discussed, this was not required for there to be a concluded understanding, let alone an attempt to induce one.

252    Additionally, this argument also overlooks the primary judge’s key finding about this interaction, in that Mr Gregory’s concern arose not from the fact that BlueScope was proposing the use of the CIPA price lists as a benchmark, but that Mr Hennessy had flagged that the proposal was being made to a group of distributors (that is, the four distributors present): LJ [709]. In response to the pushback, Mr Hennessy said that BlueScope would approach the distributors about the prices individually, later on, which appeared to address Mr Gregory’s concern.

253    Another way of understanding Mr Gregory’s statement is that he was emphasising that it was for the distributors to decide individually whether they would accept any proposal put by BlueScope and Mr Ellis. That does not mean that Mr Ellis and Mr Hennessy’s statements throughout the meeting did not have the character of a proposal for each of the distributors, and especially those present, to reach an understanding (albeit one of imprecise content). To this end, it should be remembered that the ACCC never argued that the appellants sought a single understanding, but rather a separate understanding for each distributor (and also with an importer and overseas producer).

254    The primary judge did not err in characterising this as compelling evidence going to the intention of the appellants. On any view, a meeting with four of the seven distributors present was well able to be used as striking evidence as to the existence of an intention to bring about a consensus, especially an intention regarding multiple separate understandings to the same end, given the reassurance that they would be discussed separately with each distributor.

255    It can also be observed that this meeting further illustrates the unreality of requiring anything as stringent as a commitment for an understanding to be reached, much less an attempt to induce an understanding, as is this case.

Sixth matter – Promotion to a large number of distributors: LJ [1443]

256    The sixth matter was that, in the days and weeks after the Melbourne Airport meeting, Mr Ellis met with numerous distributors and promoted the benchmarking strategy as a response to distributors’ concerns about the intense market pressure that was forcing prices down. At each meeting, similar language was used, with Mr Ellis stating there was an “opportunity” for distributors to use the CIPA price lists as a benchmark when setting prices: see, in particular, LJ [639], [734], [739], [742], [748], [787(c)], [833], [854], [1443], which demonstrate persistent and recurrent use of that word. The primary judge considered the significance of the use of the word “opportunity”, rejecting the benign characterisation that Mr Ellis sought to attribute to it (at LJ [641]):

… In my view, the word “opportunity”, as used by Mr Ellis, had a different meaning to that proffered by Mr Ellis in evidence. The opportunity was created by BlueScope seeking to induce a significant number of distributors to set their prices by reference to CIPA’s price lists. If a significant number of distributors adopted that course, it would create the set of circumstances in which the distributors could successfully implement the benchmarking strategy, without the commercial risk of losing sales to other distributors. The evidence shows that BlueScope promoted the benchmarking strategy to a significant number of distributors and, in doing so, made clear that the strategy was being promoted to other distributors in the market. There is also evidence of BlueScope stating to a distributor that other distributors had agreed to set their prices in accordance with CIPA’s price lists.

257    It was the promotion of the strategy to the large number of distributors, and the distributors’ awareness that it was being promoted to others, that clarified its character. The primary judge reasoned that the promotion of the RRP strategy went further than the making of a suggestion, and instead reflected that it was a proposal for which the intended effect required sufficient numbers of distributors to buy into it. At LJ [660], his Honour discussed Mr Hennessy’s evidence on this:

… Mr Hennessy explained (what I regard as an obvious fact):

The strategy that Jason Ellis and I communicated to distributors relied in its success on the overall acceptance by each of them (otherwise customers would simply choose the distributor which did not increase its price). The strategy, if it worked, would ultimately lead to an increase in profitability to all distributors in the market including BSD and SMS. Its success also depended upon distributors taking up the opportunity to raise their prices for all their products, not just BSL CIPA products, to our list prices which we provided by way of a ‘benchmark’.

258    BlueScope attacks this aspect of the primary judge’s reasoning, submitting that it does not follow from the fact that Mr Ellis had been seeking to induce a significant number of distributors to set their prices by reference to the CIPA price lists, that he intended to seek a commitment that they would do so. This argument faces two problems.

259    First, it relies on the view that a commitment, understood in a restrictive way, is necessary to found an understanding. That is not correct, as considered in relation to ground 1 of both appeals.

260    Second, it overlooks that, in these interactions, Mr Ellis was making distributors aware that he was having similar conversations with other distributors, going so far as to tell one distributor that another had already agreed to adopt the proposal: LJ [660]-[662], [894], [1127]. It is plainly the case that the benchmarking strategy could not have worked unless a critical mass of distributors adopted the proposal put to them. In making distributors aware that they were not being asked to act alone, they were being offered an opportunity to participate in a coordinated plan to increase pricing for flat steel products. That alone increased the prospects of success. To paraphrase Diplock LJ’s tart observation in British Basic Slag at 819H (“[i]f this is not an ‘arrangement’ I do not know what is”) – if that is not evidence of an intention to induce an understanding, and therefore at least of an attempt to do so, it would be hard to know what is.

261    Returning to the question of intention, once the exculpatory explanation advanced was not accepted by the primary judge as being the most probable, it would have been almost perverse to treat such behaviour as supporting any other inference than an intention to achieve the evident objective of the conduct, namely of attempting to induce the reaching of an understanding with the distributors.

Seventh matter – Mr Ellis’ statements at the Wright Steel dinner: LJ [1444]

262    The seventh matter was that the primary judge considered that Mr Ellis’ statements at a dinner with Mr Wright of Wright Steel on 12 September 2013 indicated a clear intention, with respect to the benchmarking strategy, to induce a consensus among distributors to use the CIPA price lists as a base or floor price, and a consensus with Wright Steel to support the price increase at the import level of the market. After considering the competing evidence of Mr Ellis, Mr Wright and Mr Hennessy (who had also been in attendance) as to what Mr Ellis said at this dinner, the primary judge summarised his findings at LJ [804]:

… Mr Ellis had been successful in BlueScope’s Thailand business and had returned to Australia intending to implement similar strategies; Mr Ellis considered that the prices of flat steel products were undervalued in Australia and he wanted to restore value (in other words, increase prices); Mr Ellis considered that imports were driving prices down and BlueScope intended to use anti-dumping complaints to diminish the effect of imports; and part of Mr Ellis’s strategy to raise prices was to publish a recommended resale price list for distributors to adopt, but he needed importers to support the price increase. Mr Ellis proposed that Wright Steel could encourage its distribution customers to use CIPA’s price lists as a benchmark for their prices; in that way market prices could be increased without loss of market shares and the market would see an increase in prices from NZSA in the not-too-distant future.

263    There is no challenge to those factual findings.

264    BlueScope argues that none of those findings indicate that there was any intention to seek a commitment from distributors to adopt the CIPA price lists. This threshold has already been found to be higher than legally required, especially in the circumstances of this case. Again, however, it is sufficient that it indicates an intention to induce a consensus, in the sense of a plan of coordinated action for BlueScope, distributors and Wright Steel. Mr Ellis’ statements to Mr Wright clearly support that conclusion.

265    The primary judge’s findings make clear that Mr Ellis was making a proposal that the import traders use the CIPA price lists in their pricing to distributors, though how they would do so was not made clear: LJ [1455]. Mr Hennessy’s evidence of the dinner was that Mr Ellis had said words to the following effect: “Matt [Hennessy] will send you a copy of the December price list, and we need traders to do their part, and increase their prices”: LJ [780]. That evidence is considered in some detail: see LJ [783]. The primary judge’s findings summarise this as Mr Ellis indicating that he “needed importers to support the price increase” at the dinner: LJ [804]. Mr Hennessy’s evidence was that this aspect of Mr Ellis’ proposal was made through just a few words: LJ [783]. Nonetheless, it was sufficient to communicate that a proposal was being put to Wright Steel, as an import trader, to price to distributors by reference to the CIPA price lists. It went directly to Mr Ellis’ intention to secure that outcome.

266    The content of the Wright Steel understanding is acknowledged as “considerably less precise” compared with those directed to the distributors, with “no particular level of pricing” proposed by BlueScope: LJ [1455]. Whether that means the conduct was not sufficiently proximate to amount to an attempt to induce such an understanding is considered further below, in relation to grounds 2 and 4 to6 of Mr Ellis’ appeal, and ground 5 of BlueScope’s appeal. On the question of intention however, the primary judge’s conclusions are unimpeachable. No error has been properly identified in his Honour’s reasoning, much less established.

267    It is convenient at this point to also address a contention advanced by Mr Ellis which was apparently intended to support this argument, which otherwise was primarily prosecuted by BlueScope. Mr Ellis contends that, in essence, the primary judge found that he and BlueScope attempted to induce Wright Steel to induce distributors to adopt the CIPA price lists as a benchmark for prices. That is, he asserts that the finding on the Wright Steel understanding was one of a double attempt liability that is unknown to the law. However, the present issue and the issue with which the primary judge was properly concerned, is the intention concerning the conduct directed at Wright Steel, not any indirect conduct and related intention that might ultimately have been directed to the distributors.

Eighth matter – Mr Unicomb’s email: LJ [1445]

268    The eighth matter is in a narrow compass: Mr Unicomb (Pricing Manager Distribution at CIPA) sent an email to CIPA’s senior pricing and sales managers, attaching a draft version of the December 2013 Benchmark spreadsheet, which described the benchmarking strategy as setting a recommended resale price for distributors to use as a “base” in pricing. That email reflected a discussion of CIPA’s Distribution and Pricing Teams, led by Mr Hennessy on the instructions of Mr Ellis: LJ [857]-[869]. Mr Hennessy had forwarded the email to Mr Ellis on the day it was sent, saying “I’ll call to discuss”: LJ [870]. In cross-examination, Mr Ellis did not dispute that he had received a copy of that email nor that he approved it before its release to distributors: LJ [870].

269    The relevant portion of Mr Unicomb’s email states (quoted at LJ [866]):

BSL Distribution strategy is to set a Recommended Retail Price (RRP) in the market allowing distributors to use this as a base for their pricing. This will hopefully increase margins in the channel.

270    BlueScope submits that the language in Mr Unicomb’s email of “allowing” distributors to use the recommended resale price as a base, contradicts rather than supports the notion that it sought to induce distributors to assume an obligation. The ACCC instead contends that “allowing” should be read as referring to the inducement that BlueScope was providing for distributors to price per the recommended resale price, namely, the expectation that other distributors would do so as well. The ACCC’s argument would seem to be an ambitious interpretation of Mr Unicomb’s email when it comes to conduct, but the present issue is one of intention, noting that even ambiguous evidence as to conduct may have useful work to do in proving state of mind. The reference to “use this as a base for their pricing”, is some indication of the objective sought to be pursued.

271    Mr Ellis, in support of BlueScope’s argument on this point, submits that the reference to a “base” price is also ambiguous. It could mean a “floor” – which is how the primary judge and the ACCC interpreted it – but could also mean a “basis” or a starting point for pricing decisions. That ambiguity, he submits, weighs against the concept being “an intelligible object of an understanding” and, in turn, against the likelihood that BlueScope or Mr Ellis intended to induce distributors’ entry into such an understanding. In this regard, it needs to be remembered that even evidence that may have a degree of ambiguity or neutrality in isolation can warrant a less benign characterisation in the proper context.

272    Mr Ellis’ ambiguity argument picks up on evidence he gave at trial to the effect that the CIPA price lists were intended to provide merely a benign “starting point” for distributors in setting their prices: LJ [627]. He stated that he disagreed with the reference to a “base” price in Mr Unicomb’s email, to the extent it meant something else: LJ [871]. The primary judge rejected that evidence in favour of Mr Hennessy’s, which was that the benchmarking strategy was intended to encourage distributors to use the CIPA price lists as a base or floor in order to return the distribution market to being profitable. His Honour found that account more plausible, especially in light of the December 2013 Benchmark spreadsheet which was provided to distributors in a readily usable format. While the singular reference to “base” in Mr Unicomb’s email entails a level of ambiguity, in the context of his Honour’s other findings as to Mr Hennessy’s evidence, there is no sound reason to depart from his conclusions about its more likely meaning. As such, it was evidence of an intention to seek an understanding on the part of BlueScope, but also on the part of Mr Ellis in context. His Honour did not err in the treatment of this evidence, by using it in combination with other evidence ultimately to find that the requisite intention had been proven by the ACCC.

Ninth matter – Creation and distribution of the December 2013 Benchmark spreadsheet: LJ [1446]

273    The ninth matter was the creation of the December 2013 Benchmark spreadsheet, and its subsequent distribution to distributors in a form that made it an easy-to-use ready reckoner. Mr Ellis did not dispute that he had received and approved a copy of the spreadsheet (LJ [871]); Mr Hennessy then sent it to distributors and forwarded each of those emails to Mr Ellis: LJ [870].

274    The December 2013 Benchmark spreadsheet, described in further detail above at [51], showed the sales margin if BlueScope and imported products were sold at those prices: LJ [1446]. It operated as a colour-coded easy ready reckoner, which allowed those distributors to calculate the profit margins they could expect from selling CIPA or imported steel in accordance with the price list: LJ [869]. An equivalent pricing sheet had not previously been released by CIPA: LJ [879]. This feature was regarded by the primary judge as being significant (last sentence of LJ [1446]), a conclusion readily open to his Honour. Its release had been foreshadowed by Mr Hennessy and Mr Ellis in previous conversations with at least some of the distributors, which had also made them aware that other distributors would receive equivalent documents: LJ [709]. The spreadsheet was sent to non-aligned distributors in addition to aligned distributors: LJ [946], [959]. Revised versions including updated pricing for each month were sent out on several occasions; each distributor received at least one version and most received multiple versions: LJ [1128], [1167]-[1171], [1203]-[1206], [1227]-[1229]. The December 2013 Benchmark spreadsheet and subsequent spreadsheets are otherwise referred to in these reasons as the CIPA price lists.

275    At trial, Mr Ellis’ evidence was that the prices in the December 2013 Benchmark spreadsheet were intended to be used by distributors as a “starting point” for their pricing decisions: LJ [871]. As noted above, that was rejected by the primary judge, in favour of the evidence of Mr Hennessy and Mr Kelso that the intention was that the prices in the spreadsheet would be used as a “base” for distributors’ pricing: LJ [867].

276    BlueScope places reliance on Mr Hennessy’s evidence in agreeing to a proposition put to him in cross-examination that his intention was “to provide distributors with pricing information that would assist them to consider whether they would have regard to the suggested list prices when making their own independent pricing decisions” (T-314.20); and that he was “hoping that they would see their way to using the price list” not “asking them to commit to using the prices” (T-315.5). BlueScope describes that evidence from Mr Hennessy as pointing “squarely” against it intending that the distributors would assume any obligation to adopt the benchmarking strategy, apparently using the word “obligation” in the more stringent sense akin to what it referred to elsewhere as a “commitment”. BlueScope again contends that in the context of this evidence from Mr Hennessy, the provision of the December 2013 Benchmark spreadsheet was not evidence of an intention to seek a commitment from distributors to adopt the recommended resale prices.

277    For the reasons outlined above, BlueScope’s argument misunderstands the requirements for an understanding. But in any event, the creation and distribution of the December 2013 Benchmark spreadsheet plainly clarified what was being proposed to distributors, and provided, evocatively, a reason for its adoption by each of them, namely, increased sales margins. It was promoted for adoption not only with respect to BlueScope manufactured steel, but imported steel as well. This occurred in a context where the proposal was being advanced to all of the distributors, and they were aware of that. In that sense, it was part of the conduct that clarified the proposal and sought to induce assent to it by all of them at once, albeit by individual adherence. As such, it was also a sound foundation for inferring the relevant intention to reach an understanding on the part of Mr Ellis and thus BlueScope.

278    In the context of Mr Ellis and Mr Hennessy having laid the groundwork for distributors in a number of prior conversations, the creation and distribution of the December 2013 Benchmark spreadsheet was a powerful indicator that the intention was to induce distributors to arrive at a consensus to adopt this pricing. The primary judge was justified in regarding this evidence as significant evidence going to the proof of intention. No error has been established.

Tenth matter – Conversations between CIPA representatives and distributors: LJ [1447]

279    The tenth matter was that, in a number of conversations, CIPA sales managers, including Mr Ellis, had attempted to persuade distributors to adopt the CIPA price lists as a base or floor price. The primary judge picked out two particularly significant conversations with representatives of distributors for this matter. In one conversation, Mr Ellis said if distributors adopted the price lists, “they would all be making money”, and that he had spoken to other distributors about that strategy. In the other conversation, a distributor was told that Mr Ellis had spoken to other distributors in the market, and they were in agreement with the process proposed, and that SMS (a BlueScope distributor) would follow. This is only a sample of the conversation evidence, but it gives a flavour of the evidence that the primary judge was assessing for its probative force.

280    BlueScope’s argument is again that no obligation in the sense of a commitment was sought. The basis for rejecting that argument is clear and has already been discussed in the context of the earlier of these 16 matters, and in relation to the first ground of appeal brought by BlueScope and Mr Ellis. The conversations relied upon by the primary judge conveyed a clear intention to persuade distributors of the sense in adopting the course of action proposed. It was particularly significant that Mr Ellis made at least some distributors aware that he was having similar conversations with other distributors, and saying to one distributor that others had agreed to adopt the CIPA price lists. The evidence indicates that Mr Ellis did not just refer to the fact of similar conversations, but to the content of those conversations.

281    It was this sort of behaviour, and the breadth and quality of the evidence overall, that enabled the primary judge to find that the ACCC’s case succeeded, with his Honour being fully aware that other cases with some features in common have failed, such as Egg Corp and Service Station Association. In those cases, benign interpretations were accepted because the evidence was insufficient to dispel them. The primary judge was entitled to place considerable weight on the combined effect of the evidence. His Honour was able to give substantial weight to the distributors’ awareness that similar conversations were occurring among other distributors – especially at the Melbourne Airport meeting, which involved four of the seven distributors and caused alarm due to the inherently collusive potential (at least) of such a meeting. While such awareness among competitors was also a feature of cases like Egg Corp and Service Station Association, both of which included the involvement of an industry association, it is ultimately a judge’s assessment of the totality of the evidence and its quality that determines whether the requisite state of satisfaction is reached. This assessment cannot tenably be challenged by pointing to another case in which the evidence fell short. That is not a point of difference in principle.

282    The primary judge was also entitled to place considerable weight on such conversations with distributors, the significant number of which indicated that a concerted effort was made to promote the strategy. In context, it was compelling evidence of the intention standing behind the benchmarking strategy, being the inducement of an understanding. That is particularly so given the cumulative effect of the other matters on which his Honour relied. No error on the part of the primary judge has been established in relation to this matter.

Eleventh matter – Complaints that distributors were not pricing in accordance with the CIPA price lists: LJ [1448]

283    The eleventh matter was that a number of distributors had complained to CIPA’s Distribution Markets sales managers that other distributors were not pricing in accordance with the CIPA price lists: see also LJ [1155]-[1156], [1170]-[1172]. The obvious inference that the primary judge drew from those complaints is that at least some of the distributors had begun to expect that others would price in accordance with the CIPA price lists, and that they should complain to BlueScope if they observed that not to be occurring. His Honour readily inferred that this arose from BlueScope’s promotion of the benchmarking strategy. As his Honour put it, in promoting that strategy, distributors understood that BlueScope was seeking to achieve a consensus with them that they would use the CIPA price lists as a base or floor price when setting their own prices.

284    BlueScope contends that the primary judge’s reasoning was erroneous for two reasons. The first reason advanced is that the “complaints” did not show that an expectation had arisen that other distributors would set their prices at around the level of the CIPA price lists; they were just reports to BlueScope as to what other distributors were doing. They rely on the evidence of Messrs Hennessy and Kelso that distributors had complained about each other’s pricing prior to the development of the benchmarking strategy: LJ [587], T-921.35. The submission is in essence that these complaints were nothing new and thus not evidence of an expectation engendered by BlueScope through its promotion of the benchmarking strategy.

285    The complaints in question, however, were more than mere reports of other distributors’ pricing decisions: see LJ [1155]-[1156], [1171]-[1172], [1186]-[1190], [1197]-[1201], [1211]-[1212], [1235]-[1238]. These complaints were of a different kind to those that had been made before the promotion of the benchmarking strategy, which had been general in nature. They either made explicit reference to other distributors failing to price in accordance with the recommended resale price (a concept that did not exist before), or impliedly did so, being made in the context of discussions about the benchmarking strategy. They were not merely reports that other distributors were pricing too low.

286    The second reason that BlueScope advances to impugn the primary judge’s reasoning is an assertion that the complaints were equally consistent with a more benign interpretation of the benchmarking strategy, being merely to persuade distributors to adopt it without going so far as to seek a commitment or obligation. That contention is flawed in a number of ways. First, it once again incorrectly relies upon the need for a commitment for a concluded understanding, let alone an attempt to induce. Second, the complaints in context were properly able to be treated as part of a matrix of evidence establishing an overall intention. His Honour was entitled to regard a benign explanation for the complaints as being less probable as the evidence accumulated, particularly given the considerations canvassed in the preceding paragraph which weigh in favour of the contrary explanation.

287    While evidence of distributors’ views that BlueScope had been seeking to induce an understanding in relation to the CIPA price lists is not of itself evidence that BlueScope and Mr Ellis in fact intended to do so, it is a circumstance that renders safer the drawing of an inference of this intention from other evidence. It indicates that BlueScope’s message was getting through. It is also notable that there was no evidence that BlueScope representatives attempted to disabuse distributors of their expectations, or were surprised to receive these complaints. The primary judge’s reasons at this point do not suggest his Honour gave this evidence any undue weight, either individually or as part of an accumulated assessment of whether intention had been proven as more probable. His Honour was entitled to have regard to this matter as part of the matrix of evidence going to proof of intention. No error on the part of the primary judge has been established in relation to this matter.

Twelfth matter – Inducements to distributors: LJ [1449]

288    The twelfth matter was that BlueScope took steps to restrict the availability of tactical pricing, in particular for SMS (a BlueScope subsidiary and distributor), which operated as an inducement to distributors to adopt CIPA’s list prices as a base. In relation to this matter, BlueScope repeats its earlier objection: that the conduct is no more indicative of an intention to seek a commitment than it is of an intention to have distributors merely adopt the strategy. The above reasoning on this point applies to the same effect.

289    The operation of inducements is discussed further in relation to ground 3 of Mr Ellis’ appeal, below. The very fact of restricting availability of tactical pricing and communicating that restriction was not just relevant to conduct as an obvious form of inducement. Remembering that the idea was to encourage, and to be seen to be encouraging, a consistent approach across the board, such conduct is also inherently relevant and cogent as proof of intention. The primary judge was entitled to have regard to this in forming a view as to the proof of intention.

Thirteenth matter – Increase to NZSA’s pricing: LJ [1450]

290    The thirteenth matter was that BlueScope had taken action to bring NZSA’s prices into line with CIPA’s list prices, including by introducing the terminology of “recommended resale prices”. It should be noted that, while the primary judge had concluded that representations that this was to occur would have been capable of being inducements for distributors to adopt the CIPA price lists, the only distributor it was in fact communicated to (and thus operated as an inducement for) was Southern Steel: see LJ [1460], [1467], [1475], [1480(g)], [1483], [1491], [1497], [1507], [1513], [1518]. It was also communicated to, and was found to be an inducement to arrive at an understanding for, Wright Steel: LJ [1533].

291    Nonetheless, his Honour found that conduct to be significant, as it reduced NZSA’s ability to compete with CIPA in the Australian market, which otherwise would have undermined BlueScope’s ability to sell the benchmarking strategy as a concept to distributors. There is no error with that line of reasoning. As such, it was also evidence that supported the inference of the requisite intention.

292    As noted above, BlueScope repeats its earlier objection: that the conduct is not more consistent with an intention to seek a commitment than it is with an intention to have distributors merely adopt the strategy. This reliance on the need for a commitment must be rejected for the same reasons.

293    BlueScope also makes submissions that bringing NZSA’s prices in line were not inducements, but part of an ongoing strategic imperative of BANZ. The primary judge accepted evidence that there had been concerns raised within BlueScope for some time about the effect NZSA’s lower prices had on CIPA, and thus BlueScope as a whole: LJ [557]-[558], [567]-[579].

294    In particular, Mr O’Brien gave evidence, which was apparently accepted by the primary judge, that in a phone conversation in mid-2013, Mr Hennessy had bluntly told him that NZSA was selling too cheap, which was undercutting the value of CIPA’s steel in the market: LJ [578]. Mr O’Brien said that he had repeated conversations of that kind with Mr Hennessy until Mr Ellis commenced at CIPA, at which point the pressure on NZSA in relation to pricing increased: LJ [579]. Mr Palermo, the National Pricing Manager at CIPA during the relevant period, gave evidence to a similar effect: LJ [1038].

295    It is useful to give a brief overview of how the pressure on NZSA changed after Mr Ellis was appointed at CIPA. Mr O’Brien gave evidence that Mr Ellis had first described the benchmarking strategy in words to the following effect (at LJ [671]):

I am concerned about the lack of profits around the reseller channel. I want to increase channel profitability for the resellers and CIPA.

CIPA wants to introduce a recommended resale price that we can publish broadly to the market so that they can show their customers that ‘this is the market price’ and resell at this level.

We need you to tow [sic] the line.

You will need to introduce an RRP in line with CIPA’s price list so that they are both the same.

296    On 17 September 2013, Mr O’Brien provided NZSA’s pricing for its December shipment to a distributor, Southern Steel: LJ [903]. Mr Ellis had made an earlier representation to Southern Steel that NZSA’s pricing would be brought into line with CIPA’s: LJ [480(g)]. Southern Steel forwarded NZSA’s pricing to Mr Ellis, asking why it had not increased: LJ [904]. Mr Ellis subsequently had a conversation with Mr Hennessy that NZ Steel’s pricing needed to be brought into line with CIPA’s to support the benchmarking strategy, and that they needed to talk to Mr O’Brien about this: LJ [1016].

297    In early October 2013, Mr Ellis sought a meeting with Mr Vassella (BANZ’s CEO) and Mr Garey (the head of NZ Steel) to discuss changing the relationship between CIPA and NZSA: LJ [998]-[999]. Mr Ellis then told Mr O’Brien that BlueScope wanted NZSA to introduce a list price (a recommended resale price), and that having one list price across the market would give distributors a benchmark price: LJ [1014]. A number of discussions and emails between Mr O’Brien and CIPA representatives subsequently occurred, where NZSA was encouraged and pressured to increase their pricing in line with CIPA’s: see, eg, LJ [1018], [1024], [1030].

298    It is therefore clear, that CIPA had held the view for some time – prior to Mr Ellis’ arrival and the development of the benchmarking strategy – that NZSA’s prices should be increased. It is equally clear, however, that the conduct directed to NZSA increased on Mr Ellis’ appointment, with the development and implementation of the benchmarking strategy. It was expressly communicated at CIPA, and to Mr O’Brien, that NZSA’s pricing should be increased in order to support the benchmarking strategy. Properly understood in context, this conduct, taken as a whole, indicated an intention to facilitate the arrival at an understanding with distributors. The primary judge was therefore entitled to proceed upon that basis.

Fourteenth matter – Internal CIPA reporting: LJ [1451]

299    The fourteenth matter is that the CIPA Sales and Marketing division intermittently reported internally, in the relevant period, that the “benchmarking concept is gaining some traction”. This reflects the primary judge’s findings that distributors were beginning to adopt the CIPA price lists as a base or floor price for their own pricing, and this was seen by CIPA staff as the benchmarking strategy succeeding. The primary judge found that this was the intended outcome of the strategy.

300    BlueScope mounts the same challenge as for previous matters, focusing on the requirement for an obligation in the stringent sense of a “commitment”. BlueScope submits that this evidence at most suggested that it was hoping or wanting distributors to adopt the benchmarking strategy as a “matter of fact”. This argument cannot succeed for the reasons already discussed. The internal reporting clarifies the object of the benchmarking strategy, in the context of the evidence of attempts to persuade distributors to price according to the CIPA price lists. As such, the primary judge was entitled to treat this as an indication that BlueScope and Mr Ellis held the requisite intent to induce an understanding. The primary judge was entitled to find that this was the intended outcome of the strategy, and that it constituted evidence contributing to a conclusion as to intention, when considered in the context of other relevant matters.

Fifteenth matter – Meeting between Mr Ellis and Yieh Phui representatives in Taiwan: LJ [1452]

301    The fifteenth matter is what was said by Mr Ellis to representatives of Yieh Phui at a meeting with them in Taiwan, in particular, that BlueScope had 85% of the market’s share and established a “market norm” when it set recommended resale prices. The primary judge reasoned in LJ [1452] that the statement indicated Mr Ellis’ intention that “the benchmarking strategy would result in a consensus with distributors to adopt CIPA’s list prices as base or floor prices, thereby establishing a ‘market norm’ ”.

302    BlueScope makes the same objection described above, relying on the concept of an assurance or commitment to say that it did not support a conclusion that the requisite intention had been established and referring to Mr Ellis sprinkling his conversation with Yieh Phui with references to it making its own decision. The commitment aspect has been rejected and does not need to be repeated.

303    BlueScope also describes this aspect of the ACCC’s case as analogous to Service Station Association in which there had been encouragement by an industry association to increase their margins. However, this analogy is misplaced when due regard is had to the very different circumstances in that case, as discussed in some detail in the context of each of the appellants’ first grounds of appeal above, and Mr Ellis’ second ground of appeal below.

304    In context, whilst the statement by Mr Ellis to Yieh Phui relied upon by the primary judge describes the object of the strategy with respect to distributors and is to that extent telling, it is less illuminating as to what Mr Ellis intended with respect to Yieh Phui itself. But that is not the point, nor the way in which this aspect of his Honour’s reasoning was framed. Viewed as a whole, it was not just strong evidence going to intention for the attempts to induce distributor understandings, being in a sense the main game, but also contributing evidence going to the parallel intention for the Yieh Phui understanding.

305    The primary judge was right to consider that the statement of the recommended resale price in Australia establishing a “market norm” reflected Mr Ellis’ belief and intention that the benchmarking strategy would produce this consensus outcome, being the end pursued by the attempts to induce the understanding alleged by the ACCC. Although the conversation was with Yieh Phui, it was revealing as to the intention of Mr Ellis and thus of BlueScope in relation to the benchmarking and overseas mill strategies more broadly. The primary judge was entitled to deploy this evidence in that way.

Sixteenth matter – Presentation Mr Ellis gave to Mr Vasella: LJ[1453]

306    The sixteenth matter was that, in a presentation Mr Ellis delivered to Mr Vasella on 17 April 2014, the objective of the benchmarking strategy was described as “to improve the profitability of our Distribution channel customers by attempting to set a price floor for each major product category within the sector”: LJ [1248]. The primary judge considered that to be an accurate reflection of Mr Ellis’ goal for the benchmarking strategy, and reasoned that it could only be accomplished by reaching a consensus with distributors: LJ [1453].

307    BlueScope again argues that this does not indicate that there was an intention to seek a commitment from distributors to adopt the price lists. That argument must again be rejected at the level of principle. The primary judge’s conclusion about this evidence was sound: that the presentation delivered to Mr Vasella was an accurate reflection of Mr Ellis’ aim or objective, and thus intention, to set a floor price for flat steel products at the distribution level of the market that could only be achieved by BlueScope reaching a consensus or meeting of the minds with distributors.

308    Beyond that, Mr Ellis challenges the significance of this evidence for indicating his understanding of the benchmarking strategy, which is considered below in relation to grounds 2 and 4-6 of his appeal.

Conclusion following the 16 matters

309    The primary judge said the following after considering the 16 matters, addressing first the seven distributors and then Wright Steel and Yieh Phui:

[1454]    Having regard to the whole of the evidence, I am satisfied that the respondents intended to induce a consensus or meeting of minds, being an understanding within the meaning of the Act. The consensus was for distributors to use the list prices in CIPA’s Distribution Market price lists for flat steel products as a base or floor price for their supply of flat steel products. I do not consider that the understanding that was sought to be induced was intended to be adopted by distributors in an absolute manner, requiring strict adherence to CIPA’s price lists as a base or floor price. Rather, the understanding that was sought to be induced was a more general adherence to a principal that distribution prices should be increased to the level of CIPA’s price lists by way of a floor. CIPA’s price lists provided a clear price level around which the understanding could cohere.

[1455]    In relation to Wright Steel and Yieh Phui, I am satisfied that the respondents intended to induce an understanding, although the provisions of the understanding were considerably less precise. The contemplated understanding was that Wright Steel and Yieh Phui would increase their prices at the manufacture/import level of the market in recognition that distributors would increase their prices to the level of CIPA’s price lists by way of a floor. No particular level of pricing at the manufacture/import level of the market was proposed by BlueScope to either Wright Steel or Yieh Phui.

310    The primary judge then stated the findings reached with respect to each of the nine alleged attempts to induce an understanding in turn. It is not necessary to descend into that degree of detail in these reasons given the way that the appeals were argued. What matters is that no error has been established in the primary judge’s finding that the requisite intention had been established.

Conclusion on BlueScope’s grounds 2 to 4

311    No error on the part of the primary judge has been established in relation to his Honour’s conclusions as to BlueScope having the necessary intention for all nine attempts to induce an understanding. It follows that that grounds 2 to 4 in BlueScope’s appeal must fail.

Ellis ground 3: proof of inducements

Overview of the appeal point

312    This ground of appeal is limited to the attempt to induce understandings found by the primary judge to have been proven in relation to the seven distributors, and does not extend to those also found in relation to Wright Steel or Yieh Phui. Mr Ellis contends that his Honour erred in finding that he had offered inducements to the seven distributors to enter into understandings, in circumstances where, on the factual findings made, he was merely informing them of steps already taken or decisions already made, regardless of action taken by those distributors. The question is whether what was represented to the distributors was capable of being such an inducement as found by the primary judge. On this argument, there was nothing offered to the distributors that could operate as an inducement.

313    Mr Ellis’ submissions on the practical functioning of the benchmarking strategy, going primarily to the conduct element, are addressed further below, but it can readily be seen that the primary judge was entitled to regard the evidence as supportive of an intention that went further than the appellants contend was permissible or appropriate. It was material evidence going to the question of proof of the requisite intention.

What is it to induce or attempt to induce?

314    It is convenient first to consider what inducement means, before turning to the circumstances of this case. It is therefore appropriate to commence by repeating the Full Court’s observations as to the relevant principles in Egg Corp at the second half of [93]:

In Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2002] ATPR 41-877 (ACCC v SIP Australia) at 45-015, Goldberg J made the point that what is required for an inducement is that “there be an affirmative or positive act or course of conduct directed to the person who is said to be the object of the inducement”. In addition to that point, his Honour also referred to the decision of the Full Court of this Court in Heating Centre Pty Ltd v Trade Practices Commission (1986) 9 FCR 153 at 164 where it was said that mere persuasion, with no promise or threat, may well be an attempt to induce.

315    Mr Ellis has not challenged the correctness of that statement of principle, grounded in long-standing authority, although he does suggest that Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2002] FCA 824; ATPR 41-877 and Heating Centre Pty Ltd v Trade Practices Commission [1986] FCA 72; 9 FCR 153, cited in the passage above, are somehow of lesser significance because they were resale price maintenance cases. It is not readily apparent why that should be so, especially as it was applied in Egg Corp, a case which concerned an alleged attempt to induce a cartel understanding. In any event, given the centrality of the meaning of inducement to this appeal ground, it is appropriate to put this beyond doubt by endorsing what Goldberg J said on this topic in SIP Australia at [112], also in relation to an alleged attempt to induce conduct amounting to resale price maintenance, as being equally apposite to the present case:

An attempt to induce particular conduct can take a number of forms. As is made clear by s 76(1)(d) of the Act, an inducement may occur although no threat or promise is involved. Section 76(1)(d) of the Act empowers a court to impose a penalty where a person has induced or attempted to induce a person to contravene a provision of the Act “whether by threats or promises or otherwise”. What is required for an inducement is that there be an affirmative or positive act or course of conduct directed to the person who is said to be the object of the inducement. Accordingly “mere persuasion, with no promise or threat, may well be an attempt to induce”: The Heating Centre Pty Ltd v Trade Practices Commission (1986) 9 FCR 153 at 164. See also Yorke v Lucas (1983) 49 ALR 672, at 681-682 (affirmed on appeal (1985) 158 CLR 661)…

316    A number of observations may be made about the concept of an attempt to induce and the related concept of an inducement as described in the passage above from SIP Australia.

317    First, the reference in s 76(1)(d) that it may be “by threats, promises or otherwise”, as noted by the primary judge at LJ [91], indicates that an inducement is not limited to persuasion, stimulation or compulsion by promises or threats alone.

318    Second, this accords with the breadth of the ordinary meaning of “induce”, as described in a number of dictionary definitions:

(a)    the online Macquarie Dictionary (2025) definition of “induce” and “inducing” relevantly includes “to lead or move by persuasion or influence, as to some action, state of mind, etc.: to induce a person to go”;

(b)    the online Oxford English Dictionary (2025) definition of “induce” relevantly includes “transitive. To lead (a person), by persuasion or some influence or motive that acts upon the will, to (†into, †unto) some action, condition, belief, etc.; to lead on, move, influence, prevail upon (a person) to do something”.

319    The concept of inducement can therefore be more broadly stated as entailing conduct that can be seen to act upon the will of someone else to do something, or refrain from doing something, by way of persuasion or influence or even motive or encouragement. Of course, this is another example of the use of analytical and linguistic tools to capture the essence of the legislative expression, rather than being a substitute for the words that Parliament has enacted. Irreducibly, the question remains whether the ACCC has proven that the alleged attempt to induce has taken place; and on appeal, whether the primary judge has erred in being satisfied that it did so.

320    Third, the only temporal requirement for words or conduct to amount to an inducement (or an attempt to induce), is that they are said or done at a point in time when they have the potential to affect the future action or conduct of the person(s) to whom they are directed. There is nothing to suggest that only representations of intended future conduct are able to induce behaviour. A reference to a past act may be just as persuasive, influential or motivational as a reference to a future act. Indeed, a reference to a future act may well be less persuasive or influential or motivational than a reference to something done in the past, depending on the circumstances.

321    What matters is the likely effect of what is being offered. A promise to do something in the future may not constitute an inducement because, in all the circumstances, it is unpersuasive or not influential or provides no motive, on the basis that, for example, what is being offered is, in all the circumstances, fanciful, unbelievable or otherwise unlikely to transpire. A past act or decision may be highly persuasive or influential or motivational, including in circumstances in which it can be reversed if it does not have the desired motivational effect.

322    Indeed, it is doubtful that anything is necessarily required for an inducement beyond the conduct that encourages to a proscribed degree certain behaviour of another. The contravening conduct may be nothing more than making a persuasive argument about existing facts and circumstances. After all, the word “induce” in the phrases “to induce” or “attempt to induce” is used as a verb and not a noun; even if it may entail offering to take some action in the future, or pointing out some action taken in the past, there is no indication that it must do so. It requires conduct directed to achieving a proscribed result in part by what someone else does, here the reaching of an understanding. What matters is the likely causal impact on the future conduct of the person to whom it is directed, whether that be new action, or perhaps even maintenance of current conduct or a current state of affairs in otherwise changed circumstances.

323    In a criminal context, it has even been found that the dishonest concealment of a material fact, being past conduct resulting in an unknown but important state of affairs, can be an inducement. In Bond v The Queen (1992) 62 A Crim R 383 (WACCA, Nicholson, Murray and Anderson JJ), an indictment that was upheld as valid (the appeal succeeding on a separate fresh evidence point) alleged that the applicant, one Alan Bond, induced or attempted to induce another person to deal in securities as a sub-underwriter in a contemplated corporate rescue transaction by concealing that Mr Bond’s company would receive a success fee related to the transaction when it went ahead. Mr Bond’s concealment of his entitlement to this fee was characterised as a dishonest act, albeit that such a characterisation was required by the terms of the inducement offence provision being applied (“A person shall not ... by any dishonest concealment of material facts ... induce or attempt to induce another person to deal in securities.”). It was found that Mr Bond did induce the sub-underwriter to deal in securities, including through this concealment of an existing state of affairs brought about by prior conduct.

324    The point is that there is nothing conceptually incoherent or even improbable in finding that a past act by one person (or the way in which that person refers or fails to refer to such a past act) is capable of inducing a future act by another person. This serves to demonstrate the potential breadth of the concepts of inducing, attempting to induce and what may be such an inducement.

The general circumstances in this case

325    Before turning to the particular facts and circumstances established by the evidence, a number of preliminary points are worth making about the general nature of what took place, in the context of the above reasoning.

326    First, it cannot be accepted that decisions made but not yet implemented, inherently cannot constitute an inducement, or amount to inducing or attempting to induce. As discussed above, what matters is the likely causal effect of what is conveyed. That is especially so in a case such as this when a predictable and even dominant consideration in deciding whether to adhere to the CIPA price lists was the risk that others would not follow suit. There were also other disincentives in the form of market conditions and practices which had the effect of suppressing prices. To the extent that Mr Ellis’ argument relies solely on the fact that what was offered had already taken place or been decided before the offer was made, that reliance is, in itself, inconsistent with the relevant principles, as discussed above. That argument is even weaker where the asserted past conduct was incomplete or yet to be fully implemented.

327    Second, it follows that the inquiry is necessarily fact and circumstance specific. It must be determined whether the conduct that the primary judge found to constitute a series of different attempted inducements properly meets that description. It would require, if carried out, an affirmative or positive act or course of conduct directed to the person who is said to be the object of the inducement, rising at least as high as material persuasion or influence or the like.

328    While what was offered to the distributors, considered in more detail below, was not expressly conditional on any of them taking certain action, such reciprocity is not an inherent feature of an inducement, much less an attempt to induce, even if it might make for a more compelling case. Conditional offers can in any event amount to inducements even where they lack any quid pro quo element. Here, what was represented related to addressing barriers that would or might inhibit distributors from taking up the benchmarking strategy made by BlueScope and Mr Ellis. This end is not a benign one, contrary to the characterisation advanced by Mr Ellis.

329    Distributors were not all offered the same inducements, and the majority were offered more than one. This is illustrated in the table below, which sets out five categories of inducements. Each of these categories is addressed specifically below, as they relate to the present ground of appeal.

330    In each of the liability judgment paragraphs listed in the above table, the primary judge concluded that BlueScope’s proposals were capable of assent, so as to constitute reaching a concluded understanding had that assent been forthcoming. His Honour described this as a critical fact in each case. That was true also for the remaining two counterparties who were not distributors, being Wright Steel (LJ [1533]) and Yieh Phui (LJ [1544]). That degree of proximity to a concluded understanding, even if such assent was never in fact going to be given by any given distributor, indicates the difficulty in acceding to Mr Ellis’ submissions in relation to this ground of appeal, as it indicates that the attempts were quite advanced.

(1) and (2) in the table at [329] above: CIPA would tighten tactical pricing and increase pricing to BlueScope distributor subsidiaries

331    The focus of this ground of appeal is on the representations about tightening tactical pricing and CIPA increasing its prices to BSD and SMS. These were found by the primary judge to be operative inducements for five of the seven distributors (with the distinction for CMC Steel that this was confined to SMS, as noted in parentheses in the table above). To explain why his Honour reached this conclusion, it is convenient to again canvas certain relevant aspects of the benchmarking strategy, which were also summarised in the introduction section of these reasons.

332    Tactical pricing referred to ad hoc price offers given by CIPA to some distributors on request, if those distributors sought a lower price because an end-user had requested further discounts. For that reason, they were also referred to as “end-user targeted rebates” (EUTs): see LJ [566]. Tactical pricing enabled distributors to compete with import offers for a particular parcel of steel to an end-user. It was common ground before the primary judge, as on appeal, that CIPA did take steps in September 2013 to tighten tactical pricing: LJ [622]. Restricting the availability of tactical pricing (item (1) in the above table) would limit the amount of price discounting to distributors.

333    BSD and SMS were distribution businesses operated by BlueScope Distribution, a BlueScope subsidiary. They bought flat steel products from CIPA and competed against other distributors for sales to end-users. Increasing CIPA’s prices to BSD and SMS (item (2) in the above table) would be expected, all other things being equal, to result in BSD and SMS offering higher prices to end-users. Coupled with restraining tactical prices, it would confer advantages on distributors by reducing competition at that level of the market: see, e.g., LJ [1483].

334    At the Melbourne Airport meeting, Mr Ellis and Mr Hennessy made representations to four of the five distributors that tactical pricing would be tightened and pricing to BSD and SMS increased: LJ [1442], [1460], [1466], [1474], [1483], [1512]. For the remaining distributor, CMC Steel, those representations were made at a separate meeting by Mr Ellis a few days later, and in subsequent phone calls by him as well: LJ [736], [894].

335    Importantly, the representations that were found to amount to inducements were made alongside introducing the concept that distributors would soon have the “opportunity” to price using new CIPA price lists. As such, the primary judge considered that the benchmarking strategy was introduced (at least at the Melbourne Airport meeting) as a “package”, which would involve distributors raising their prices and margins, and conduct taken by BlueScope that would facilitate those price increases: LJ [729]. His Honour also found that Mr Hennessy likely communicated that BSD and SMS would set their prices in accordance with the CIPA price lists: LJ [729].

336    Mr Ellis’ argument on appeal is that the timeline of events indicates that a decision to limit tactical pricing and increase pricing to BSD and SMS had already been made by the time representations were made to that effect to distributors, and that representations about action already taken or decisions already made could not operate as an inducement. As discussed above, this is not an accurate reflection of the relevant principles, because there is no reason that a representation relating to prior conduct could not constitute an inducement. Notwithstanding this flaw in Mr Ellis’ argument, close attention to the timeline of events indicates that these decisions had not in fact already been made, or at least that the situation was more fluid or less absolute than Mr Ellis’ submissions suggest.

337    When Mr Ellis was appointed as General Manager of CIPA, he almost immediately held a number of meetings with distributors to assess what action could be taken to increase their sales from CIPA. The initial meetings occurred on 2 and 4 September 2013, with representatives of Southern Steel. Complaints that BSD and SMS were offering prices that were unsustainably low, and that CIPA was supporting SMS with tactical pricing, were raised squarely at the 2 September meetings (two such meetings were held on the same day), and again at the 4 September meeting. The primary judge found that Mr Ellis had indicated at the 4 September meeting that CIPA would look to address this concern by increasing its prices to BSD and SMS: LJ [686]. That statement suggested an incipient plan rather than a fully-formed one, and thus could be distinguished from the representations made soon after at the Melbourne Airport meeting. Mr Peter Smaller of Southern Steel was then asked to organise a meeting of distributors to further discuss the matter, which became the Melbourne Airport meeting.

338    The Melbourne Airport meeting occurred shortly thereafter, on 6 September 2013. In attendance were Mr Ellis and Mr Hennessy, as well as representatives from four distributors: Southern Steel and Apex Steel, which were aligned, and Selection Steel and Vulcan Steel, which were not. At the Melbourne Airport meeting:

(a)    Mr Ellis said that CIPA was interested in selling more volume to domestic distributors, and that they wanted to know what distributors thought CIPA needed to do to achieve that: LJ [706];

(b)    a representative of one of the distributors then complained that distributors were unprofitable, because BlueScope Distribution and OneSteel were acting as channels for the mill, that is, selling at very low prices: LJ [707];

(c)    Mr Ellis said CIPA would tighten its tactical pricing, and that he had instructed Mr Hennessy to approve all tactical pricing: LJ [707];

(d)    Mr Ellis also said that CIPA would be increasing its prices to BSD and SMS: LJ [707], [729]; and

(e)    Mr Hennessy introduced the benchmarking strategy, explaining that CIPA would be releasing its pricing for December, and that there would be an “opportunity” to use this as a pricing benchmark when distributors set their prices: LJ [708].

339    Importantly, it was not until after that meeting, on 9 September 2013, that steps were taken at CIPA to actually restrain tactical pricing. Mr Hennessy sent an email to his direct reports that evening saying that he would now need to approve all tactical pricing decisions: LJ [723].

340    What Mr Hennessy said in that email, and at the Melbourne Airport meeting, had been coordinated with Mr Ellis beforehand. Mr Hennessy’s evidence, which was accepted by the primary judge (LJ [650]) and not challenged on appeal, is that the first time Mr Ellis spoke to him about the benchmarking strategy was en route to the Melbourne Airport meeting, when Mr Ellis said words to the following effect (LJ [648]):

There are three things that we need to do.

One – We need to find a way to increase our price to BSD and SMS.

Two – We need to tighten our controls substantially around tactical pricing. I want you to approve all tactical pricing offers.

Three – we need to encourage the distributors to use the BSL CIPA price list as a benchmark when they are setting their prices. That is the way it used to work when I was at CMC. At that time, the distributors used the Bluescope price list as a benchmark for their prices.

341    It is true that there was nothing expressly conditional about the representations that CIPA was, or would be, restraining tactical pricing and increasing prices to BSD and SMS. The inference that may well have been drawn, though was not by the primary judge, was that there was an implicit conditional aspect to these representations. That is because it is difficult to see why BlueScope would persist with restrained tactical pricing and higher pricing for BlueScope’s subsidiary distributors, both of which made it less competitive in the market, if other distributors did not follow and raise their prices. There is also an obvious reason why those kinds of representations could not be entirely conditional on the action of any given distributor: a number of distributors were being asked to take certain action, and BlueScope could only take this corresponding action once.

342    Nevertheless, it is also inaccurate to characterise what was said as merely representations as to decisions that had already been made. While one aspect of what was said indicated that action had already been undertaken – Mr Ellis stating that he had directed Mr Hennessy to approve all tactical pricing – most of what was said suggested action to be undertaken: CIPA would tighten its tactical pricing and would be increasing its prices to BSD and SMS: LJ [707], [715], [729]. Perhaps in error, senior counsel for Mr Ellis characterised what Mr Ellis had said to Mr Hennessy on the way to the Melbourne Airport meeting (see [340] above) as merely an internal communication at CIPA, which showed that tactical pricing would be restrained independently of what was said to distributors. That is clearly not the case. In context, in preparation for the imminent meeting, Mr Ellis was clearly trying to nail down the points that would be (and in fact were) conveyed to the distributors at the meeting, indicating that, for him too, each point was part of the benchmarking strategy “package”.

343    More to the point, however, it was significant that those three things were in fact given as responses to distributors’ complaints about the unsustainably low prices in the Australian flat steel industry. The benchmarking strategy was thus introduced to distributors as a “package” (LJ [729]) of action by the distributors (pricing by reference to the CIPA price lists) and CIPA itself (tightening tactical pricing and increasing prices to BSD and SMS), that would address distributors’ complaints. The primary judge justifiably rejected Mr Ellis’ evidence that the decision to tighten tactical pricing and increase pricing to BSD and SMS was not connected to the promotion of the CIPA price lists, concluding instead that they were “closely connected” to the benchmarking strategy: LJ [726].

344    The representations that CIPA would reduce tactical pricing and would increase its pricing to distribution entities indicated that it was committed to increasing pricing in the market, the stated purpose of the benchmarking strategy. As such, it may fairly be regarded as being in the nature of a good faith contribution being offered to help to address the pricing problem that had been identified. BlueScope was offering to move first, encouraging the distributors to follow. It also removed some reasons not to use the CIPA price lists, namely by reducing the prospect that distributors would be undercut by BlueScope’s distribution entities or other distributors to whom CIPA offered further discounts. That aspect is captured in the instructions given to the CIPA Distribution Markets sales team by Mr Hennessy, who stated at a 16 September 2013 meeting that “You should communicate to your customers that they should have confidence to sell at the RRP because we are also reducing tactical pricing”: LJ [874]. In that context, these representations were clearly directed at encouraging distributors to whom they were made to adopt CIPA’s list prices in their own pricing.

345    Attempts to bring about coordinated action to raise prices in a market – especially a highly competitive market – will face the central difficulty that market participants who raise their prices are likely to suffer unless all, or at least a critical mass of, other participants raise their prices as well. Without that level or degree of participation, those who raise their prices are likely to suffer by losing business to those who continue to offer lower prices. To be successful, a coordinated price increase therefore requires market participants to believe that their competitors will also raise their prices. Thus, in a market where a dominant player is trying to bring about a new pricing norm, an inducement to others may take the form of that dominant player raising its prices and incurring losses, acting as a message to the effect: “trust us, this is actually happening, you should increase your prices too.”

346    Thus, the inducements offered had a dual character: they removed material barriers that would inhibit distributors from pricing at the higher recommended resale price level, as they addressed the rational fear that they would be undercut by BlueScope’s distributors, or by other distributors to whom CIPA offered tactical pricing; and they were encouraged to believe that others would also be taking up the recommended resale price as a base or floor price, with BlueScope (via CIPA) leading the way in relation to its own distributors.

347    For completeness, key aspects of the same inducements in substance were presented in a similar way to CMC Steel on a later occasion. On 9 September 2013, Mr Hennessy and Mr Ellis met with two representatives of CMC Steel, and asked them how CIPA could work more closely with the company. After one of those representatives said that they would like help landing large customers, Mr Ellis responded that there was another way to improve profitability, namely by using CIPA’s December 2013 Benchmark spreadsheet as a benchmark for CMC Steel’s prices: LJ [736]. He also said that they would be substantially tightening tactical pricing: LJ [736]. Around mid-September 2013, over two or three phone calls with a different representative of CMC Steel, Mr Ellis said that: CIPA was increasing its list prices; CMC Steel could price to that level to their customers; the increase in the list price would be offset by other rebates and discounts; Southern Steel had agreed to price to CIPA’s list prices; SMS would be following suit as well; and other import distributors had also agreed to price to CIPA’s list prices: LJ [894].

348    Again, representations that CIPA would be tightening tactical pricing and increasing pricing to SMS were made alongside introducing the benchmarking strategy. In context, it was clear that they formed a proposal “package” that was directed to increasing profitability for distributors in the market.

(3) in the table at [329] above: NZSA would increase its pricing

349    In addition to the inducements found by the primary judge described above, the inducements for one distributor (Southern Steel) were found to include representations that NZSA would be increasing its prices in the market: LJ [1483]. There was no direct evidence that such a representation was made. Rather, it was an inference drawn by the primary judge from the sequence of events following Mr Larkin, of Southern Steel, complaining that NZSA had not increased their pricing for December 2013: LJ [905]. The following events form the relevant general context:

(a)    on 2 September 2013, in a meeting with Mr Ellis and Mr Hennessy, Mr Larkin had complained that NZSA was selling steel at low prices, which was contributing to the low prices of steel in the Australian market: LJ [1480(a)];

(b)    on 4 September 2013, Mr Ellis had asked Mr Peter Smaller of Southern Steel to bring together a group of distributors to discuss the opportunity to sell more steel domestically: LJ [683];

(c)    on 6 September 2013, Mr Smaller of Southern Steel attended the Melbourne Airport meeting, at which the benchmarking strategy had been introduced by Mr Ellis and Mr Hennessy.

350    It is therefore clear that the representation was made at some point in a relatively short period of time, during which Southern Steel had complained that NZSA was pricing too low, and BlueScope had proposed to distributors including Southern Steel that they use CIPA’s list prices as base or floor prices. While the connection between the NZSA representation and the proposal to adopt CIPA’s list prices is therefore less clear on the evidence than for the inducements discussed above, it was open to the primary judge to conclude that it formed part of the “package” that was proposed to Southern Steel. The primary judge correctly observed that it was “an obvious commercial fact” that the benchmarking strategy would be undermined if NZSA continued to offer lower prices than those in the CIPA price lists in the Australian market: LJ [1075]. The conclusion that the representation that this would cease to occur operated as an inducement to take up the proposal was therefore a cogent one.

351    Like the other inducements, Mr Ellis contends that this representation merely informed Southern Steel of a decision BlueScope had already made; and that as a result it lacks a quid pro quo character and was incapable of being an inducement. As discussed above, however, while the difficulties created by NZSA pricing lower than CIPA had been acknowledged within BlueScope for some time, efforts to control NZSA’s pricing by CIPA ramped up after Mr Ellis’ appointment: see [293]-[298] above. The timing of those changes, and evidence of how they were discussed within CIPA, strongly indicates that it was conceived to be a part of the benchmarking strategy. The attempt to wrest control of NZSA’s ability to offer discounts from NZSA did not occur until after this representation was made: see LJ [994]-[999], [1014]-[1060]. In any event, as discussed above, there is no reason as a matter of principle that prior conduct cannot form the basis for an inducement in the relevant sense.

352    Like the representations that CIPA would restrict tactical pricing and increase prices for BSD and SMS, the representations in relation to NZSA operated as inducements by removing a barrier that would inhibit Southern Steel taking up its proposal.

(4) in the table at [329] above: The benchmarking strategy was being promoted to other distributors in the market

353    For OneSteel, the only inducements found were representations that the benchmarking strategy was being promoted to other distributors in the market: LJ [1524]. Mr Ellis’ challenge to the finding of this inducement was that persuasion alone is not sufficient to amount to an inducement, which is contrary to the authority cited in the passage from Egg Corp at [93], reproduced above at [314]. In any event, the important context to this kind of representation is that OneSteel would stand to gain by taking up Mr Ellis’ proposal, but only if a sufficient portion of other distributors took up the proposal as well, so that OneSteel was not undercut at its higher price point. In that sense, the representation was more than persuasive language, because it was, indirectly, offering a material benefit for taking up the proposal.

354    Further to the general observations made above addressing the specific inducements identified by the primary judge, it should be noted that by their very nature, inducements may take a number of forms, as observed by Goldberg J in SIP Australia at [112], reproduced above at [315]. They might be carrots to encourage certain action or sticks to discourage other kinds of action. But it might also be the case that the action a party is being encouraged to take is the carrot itself, but that “carrot” is contingent on other factors. Here, pricing in accordance with CIPA’s list prices would result in higher prices and a larger profit margin, but that “carrot” was contingent on a sufficient number of distributors taking similar action.

355    That much is made clear in an exchange between a representative of OneSteel, Mr Bolzan, and Mr Kelso, the CIPA Sales Manager with responsibility for the OneSteel account (quoted at LJ [812]):

Mr Bolzan:    How can I be sure that the other distributors will do the same?

Mr Kelso:    Until now, distributors are continuing to sell based on price alone and undercut the value of their steel by pricing to the levels of import offers in order to secure sales. You can either continue to go down that path or try this and use the RRP as a baseline. Think about how following and lowering your prices to import prices is working out for you?

Mr Bolzan:    It will take me a while to believe that it is going to work.

356    As the primary judge reasoned at LJ [813], this exchange confirmed that OneSteel understood that the benchmarking strategy needed the support of other distributors to be successful. That was an obvious commercial fact. In such a case, an inducement might involve representations that another market participant will be bringing about a certain state of affairs, such that the object of the inducement will be able to reap the rewards of acting in a certain way. Here, the representation that other distributors were being encouraged to take up CIPA’s list prices as well was sufficient to act in itself as an inducement. That this was being sought from other distributors, and that OneSteel (via Mr Bolzan) was aware of that, is implicit in Mr Bolzan’s scepticism that other distributors would do the same, indicating his doubt that the market was disciplined enough to make the benchmarking strategy work (a clear enough reference to a collective move to price by reference to that strategy) and his comment to Mr Kelso that it would take him “two to three months to be completely confident that the market has adopted the RRP strategy and moved away from the move the tons mentality”, a reference to volume sales at low prices: see LJ [811]-[815].

(5) in the table at [329] above: Transactional account

357    For completeness, the inducement for the remaining distributor (Selwood Steel) was the offer of a transactional account with BlueScope: LJ [1502]. The substance of the primary judge’s factual findings was that this was offered as an implicit quid pro quo, with Mr Ellis offering Mr Wood of Selwood Steel a transactional account with BlueScope, before seeking Selwood Steel’s support in BlueScope’s promotion of the use of the CIPA price lists to distributors: LJ [1086], [1089]. Mr Wood gave evidence that he had formed the impression that the transactional account was offered as a “carrot” to Selwood Steel: LJ [1091]. The appellants do not challenge the characterisation of that as an inducement.

Conclusion on Mr Ellis’ ground 3

358    Each of the representations identified was capable of operating as an inducement for the distributors taking up the benchmarking strategy proposed. It follows that this ground of appeal must fail.

BlueScope ground 5, Ellis grounds 2, 4-6: benchmarking/sufficiently proximate conduct

359    Ground 5 of the BlueScope appeal and grounds 2 and 4 to 6 of Mr Ellis’ appeal are principally directed at the findings made by the primary judge in relation to the conduct element of the s 44ZZRJ causes of action advanced by the ACCC against BlueScope and Mr Ellis. Ground 5 of the BlueScope appeal essentially advances in summary terms grounds 2 and 4 to 6 of Mr Ellis’ appeal. In neither its written nor oral submissions did BlueScope raise any substantive issues in addition to those advanced by Mr Ellis and it otherwise adopted the more extensive written and oral submissions of Mr Ellis. It is therefore unnecessary to address separately ground 5 of the BlueScope appeal.

Overview of the primary judge’s findings

360    The primary judge proceeded on the basis that the conduct element of the alleged attempt to induce counterparties to arrive at understandings in contravention of s 44ZZRJ required a consideration of whether (at LJ [1419(b)]):

the conduct of BlueScope and Mr Ellis constituted steps towards the inducement of a price fixing understanding being reached with each counterparty, which steps were more than merely preparatory of the inducement and which were immediately and not merely remotely connected with the inducement.

361    This statement of principle was uncontroversial and accepted by the appellants.

362    The primary judge, however, then observed at LJ [1420], that:

… As noted earlier in these reasons, the respondents submitted that the evidence showed that neither BlueScope nor Mr Ellis sought a commitment from the counterparties as to the prices they would charge for flat steel products, that the counterparties did not give any such commitment and the counterparties gave evidence that they could not give any such commitment, and that neither BlueScope nor Mr Ellis offered any quid pro quo for such a commitment. The respondents argued that the absence of such conduct was fatal to the ACCC’s case.

363    The primary judge did not accept, as explained above, that the absence of any explicit request for a commitment from each counterparty was fatal to the ACCC’s case. His Honour stated at LJ [1421] that:

… The categories or types of conduct that may constitute inducing or attempting to induce a person to reach a price fixing understanding within s 76(1)(d) cannot be defined in such a rigid or narrow manner. The conduct may involve a course of meetings, communications and other dealings in which inducements are proposed or offered and which are directed at reaching a consensus, or a meeting of minds, about the level of prices to be charged by the parties. While a consensus or meeting of minds requires some communication of assent from one party to the other whether by words or by conduct, an attempt to induce a price fixing understanding does not require assent to be achieved. It is also not necessary for the conduct to have reached an advanced stage or that the precise terms of the proposed understanding have been formulated. It necessarily follows that the fact that the counterparties did not agree to the proposal, and did not consider that the proposal was commercially feasible, affords no absolute defence.

364    For the reasons explained above, the primary judge was correct in proceeding on the basis that a commitment from a counterparty was not a necessary integer of an understanding for the purposes of s 44ZZRJ. The appellants’ challenge to that finding failed and accordingly, this finding must frame the requirements of both intent (dealt with above) and conduct for an attempt to induce an understanding.

365    The primary judge then proceeded to make detailed factual findings, none of which are disputed, of the conduct that his Honour was satisfied constituted attempts to induce a “consensus or meeting of minds on cartel conduct, however the ultimate assent may be communicated”: LJ [1422].

366    By way of summary, that conduct for the counterparties other than Yieh Phui and Wright Steel comprised various combinations of representations made by the appellants that (a) CIPA would tighten, that is reduce, its “tactical pricing”; (b) CIPA would increase its pricing to BSD and SMS; (c) a consensus was being sought about setting prices “in accordance” with CIPA price lists; (d) an “opportunity” was being provided to set prices by reference to CIPA price lists; (e) NZSA was increasing prices in the market; (f) the benchmarking strategy was being promoted to other distributors; (g) a transactional account was being offered with BlueScope; and (h) SMS would follow price increases in CIPA’s Distribution Market price lists: LJ [1466], [1474], [1483], [1490], [1502], [1512], [1524].

367    The conduct that the primary judge found constituted attempts to induce, promises offered and threats made or persuasive conduct toward Yieh Phui and Wright Steel can be summarised as follows: representations by the appellants that (a) when BlueScope set the recommended resale price, it established a market norm, thus implicitly promising that BlueScope would support the price increases in the price lists, and (b) anti-dumping action was likely to be taken against low priced imports of steel products from Vietnam and India, which constituted a threat that similar action would be taken against the importation of any steel products at low prices. His Honour also found that the “totality of Mr Ellis’s statements” to Yieh Phui were “in the nature of persuasive arguments for Yieh Phui to increase its prices” and were sufficient to constitute an attempt to induce an understanding: LJ [1533], [1544].

368    The primary judge found that the representations made to each of the counterparties were proposals advanced by the appellants that were capable of assent: LJ [1466], [1474], [1483], [1490], [1502], [1512], [1524], [1533], [1544].

369    Further, the primary judge found that any rebuffing or absence of assent from Selection Steel and Selwood Steel to the proposals advanced by the appellants did not preclude a finding that the conduct of the appellants constituted an attempt to induce an understanding with those counterparties: LJ [1465]-[1466], [1501]-[1502].

Ellis ground 4: Floor or minimum price finding

Overview

370    By ground 4, Mr Ellis contends that the primary judge erred in finding, at LJ [1454], that the appellants attempted to induce an understanding between BlueScope and distributors in which strict adherence to the recommended resale price was not required, and that the recommended resale price provided a price level around which the understanding could cohere, in circumstances in which:

(a)    such an understanding was not alleged by the ACCC;

(b)    such an understanding was inconsistent with findings by the primary judge to the effect that Mr Ellis intended the recommended resale price would operate as a base or floor price;

(c)    the primary judge did not make any finding that Mr Ellis told any of the distributors that the recommended resale price should operate as a floor price, a baseline price or a minimum price;

(d)    the primary judge found the sole reference to the recommended resale price being a minimum price was in a presentation prepared by another employee of BlueScope and sent to Mr Ellis to be presented to Mr Vassella;

(e)    the primary judge did not make any finding that any of the distributors understood the term benchmark to refer to a minimum price;

(f)    each of Mr Hennessy, Mr Kelso and Mr Ellis gave evidence to the effect that it would not have been possible to simply to fix prices at the level of the recommended resale price because distributors needed to retain pricing flexibility;

(g)    the distributors gave evidence, some of which is referred to in the LJ, to the effect that it would not have been possible for the distributors to follow the recommended resale price because they needed to retain pricing flexibility.

371    Ground 4 does not fairly or accurately capture the primary judge’s findings as to the understanding that his Honour concluded was sought to be induced by the appellants. It is convenient in framing what follows to extract the primary judge’s finding at LJ [1454]:

…The consensus was for distributors to use the list prices in CIPA’s Distribution Market price lists for flat steel products as a base or floor price for their supply of flat steel products. I do not consider that the understanding that was sought to be induced was intended to be adopted by distributors in an absolute manner, requiring strict adherence to CIPA’s price lists as a base or floor price. Rather, the understanding that was sought to be induced was a more general adherence to a principle that distribution prices should be increased to the level of CIPA’s price lists by way of a floor. CIPA’s price lists provided a clear price level around which the understanding could cohere.

372    It is not the last sentence, but the penultimate one that clarifies what the primary judge saw to be the content of the understanding, namely “a more general adherence to a principle that distribution prices should be increased to the level of CIPA’s price lists by way of a floor”.

373    That subtlety must be borne in mind when considering what follows and informs his Honour’s findings elsewhere that the purpose of the benchmarking strategy was to promote the CIPA price lists for use as a “base” or “floor” price. The nature of his Honour’s findings is described further at [430] below.

Did the ACCC advance a case that the recommended resale price was a floor or minimum price?

374    Mr Ellis contends that the ACCC advanced a case that distributors could use the recommended resale price as a benchmark when selling flat steel products. He argues that it was not in any sense alleged that it was a minimum price.

375    Senior counsel for Mr Ellis was careful to note that this ground of appeal is not a mere pleading point. Rather, she submitted the way in which the ACCC built and led its case could not support the findings the primary judge made.

376    It is therefore necessary to consider both how the ACCC pleaded its case based on the RRP strategy, and how it was explained in its opening and closing submissions.

377    The appellants submit that the ACCC’s written opening submissions before the primary judge did not mention the notion of a floor or minimum price, nor was there any reference to it in the further amended statement of claim (FASOC). They acknowledge that the word “floor” appeared in the FASOC at [149], but only in a reference to Mr Vassella’s knowledge. They submit that the first reference to a floor or minimum price occurred in the oral opening address of the ACCC on 30 August 2021, more than two years after the proceeding had been filed. In those circumstances, they submit that the evidence filed by the ACCC does not support, and is inconsistent with, the recommended resale price acting as a minimum price.

378    The primary judge referred on several occasions to “minimum net prices” in the primary judgment but otherwise consistently referred to the benchmarking strategy as using the recommended resale price as a “base or floor price”. In describing the strategy, his Honour did not use the language of using the recommended resale price as a “floor or minimum price”. We do not consider, however, there is any material or substantive difference between the use of the recommended resale price as a “base or floor price” and its use as a “floor or minimum price”. In responding to Mr Ellis’ second and fourth to sixth grounds of appeal, we have used the language that Mr Ellis has used in those grounds of “floor or minimum price”.

379    The ACCC pleaded the components of the “Benchmarking Strategy” in the FASOC at [23] in the following terms:

The Benchmarking Strategy comprised:

23.1.    providing information to Australian Steel Distributors as to proposed prices for Flat Steel Products:

23.1.1.    in the form of a suggested or recommended retail price (pricing information):

23.1.2.    that would be or were higher than the market price before the implementation of the Benchmarking Strategy;

23.2.    persuading Australian Steel Distributors to use the pricing information to set the price at which those distributors would sell Flat Steel Products to Australian Steel Users if BlueScope caused BlueScope-Owned Distributors to price in accordance with the pricing information; and

23.3.    causing BlueScope-Owned Distributors to set their prices for Flat Steel Products sold to Australian Steel Distributors and Australian Steel Users in accordance with the pricing information, including by limiting the use and availability of Tactical Pricing.

380    The primary judge accepted at LJ [592] that the benchmarking strategy was not stated clearly in the FASOC.

381    The pleading of the benchmarking strategy does not in terms simply provide for the setting of specific minimum prices. It is more nuanced. It provides for the information as to prices above prevailing market prices to “be used” to set prices for flat steel products if BlueScope caused distributors to price “in accordance” with the pricing information. It does not necessarily follow that if a price is “used” for the purpose of setting a price, or a price is determined “in accordance” with pricing information, the price set by the distributor would be the same as the price proposed under the benchmarking strategy. Rather, the pricing information was contended to be used as a “benchmark” in the sense of a base, as in a standard or a point of reference, for the purpose of determining the price to be set by the distributor.

382    In both its opening and closing submissions at trial, the ACCC more explicitly clarified how the recommended resale price was intended to be used as a benchmark.

383    The ACCC opened its case before the primary judge on the basis that:

… the essence of the ACCCs case is that Jason Ellis was trying to bring about a situation in which he could set a floor price or set a floor for the price of flat steel products in Australia, and the way in which he went about trying to achieve that was by publishing or proposing to publish a price list and proposing to competitors that they should act and price in accordance with that price list. [T 10.28-34]

384    The contention that a distributor should “act and price in accordance” with a price list, in the context of references to an intention of “setting a floor price” or “setting a floor for the price” of flat steel products, is largely indistinguishable from a strategy to set a floor or minimum price for flat steel products. It is necessary, however, to distinguish between the objective of the strategy, that is to “bring about a situation in which he could set a floor price” and the means by which that strategy was to be effected, namely, publishing a price list and proposing to distributors that they “should act and price in accordance” with that price list. As with the pleaded case, a distributor could price “in accordance” with those prices by using them as a “benchmark” in the sense of a base for the purpose of determining their prices. The use of a price list as a benchmark in that sense is consistent with the objective of setting a floor price above the prevailing market price and, if followed by all or substantially all distributors, it could be expected to set a minimum price above the prices prevailing prior to the publication of the price list.

385    The ACCC closed its case on the basis that its case fundamentally remained: [T 1483.12-25]

… that BlueScope and Mr Ellis put a proposal to distributors – and I’m dealing here just with the seven distributors and leaving aside Wright and Yieh Phui for a moment – have put a proposal they would price the steel products in accordance with or at or up to – that is, raising the price up to the list price, and because the bulk or the majority of steel was sold in processed form, which meant that there were processing services that were added on, insofar as there was some additional charge that was levied for the processing services then that – and because the price that was ultimately given to a customer of a distributor was a single price that included both the steel and any amount attributable to the processing services.

The consequence in relation to processed steel would be that, using the list price in the way that the Commission says that BlueScope and Mr Ellis were seeking for distributors to use it, would mean that that would set a floor price in the market.

386    Again, the ACCC maintained the subtle distinction between the end sought to be achieved, the “setting of a floor price”, and the means to achieve that, by proposing that distributors price their steel products “in accordance with” or “at or up to, that is, raising the price up to the list price”. The strategy was not expressed as simply proposing that distributors price their steel products at the recommended resale price. In that sense, the “floor price” being set would be a floor or minimum price above prevailing prices, but not necessarily at prices that were the same prices as the prices in the CIPA price lists.

387    For these reasons, the contention that the ACCC did not advance a case that the recommended resale price was not in any sense a minimum price cannot be accepted. The ACCC’s case as pleaded, and more specifically as opened and closed before the primary judge, did encompass the use of the recommended resale price to achieve a minimum price above prevailing prices.

Distinction between benchmark and floor price or minimum price

388    Mr Ellis contends that the primary judge erred in consistently treating the term “benchmark” as equivalent to a floor price or minimum price. Mr Ellis identifies a number of paragraphs in the LJ which he contends demonstrate that error. By way of example, the first of these paragraphs is at LJ [662], in which the primary judge stated:

The benchmarking strategy could only succeed if a significant number of distributors implemented the strategy by adopting the prices in CIPA’s price lists as a benchmark (or floor price) in setting their own prices. Unless the strategy was adopted by a significant number of distributors, those distributors that followed the strategy faced the risk of losing sales to distributors that did not (and offered lower prices). As the evidence below shows, BlueScope promoted the benchmarking strategy widely amongst distributors and also to Wright Steel. As stated above, the evidence shows that, in promoting the benchmarking strategy to distributors, BlueScope made clear that the strategy was being promoted to other distributors in the market. The use of CIPA’s price lists as the benchmark (or base) prices and the wide distribution of the price lists were at the core of the benchmarking strategy.

389    As explained above, there is no necessary inconsistency or tension between the use of pricing information as a “benchmark” and the use of pricing information as a floor or minimum price.

390    Further, the price fixing understanding postulated by the ACCC also contemplated that distributors would have retained freedom with respect to prices. The postulated understanding was that distributors would use the CIPA price lists as a base or floor for their pricing of flat steel products, to which they might add additional amounts in respect of processing costs or other costs. The ACCC’s case was that the contemplated understanding would be likely to control or maintain prices, not fix prices. It is readily apparent that the primary judge was approaching his consideration of the benchmarking strategy on the basis that the CIPA price lists were to be used by distributors as a “benchmark” in the sense of a “floor price” or a “minimum price”, consistently with the manner in which the ACCC had advanced its case. The primary judge correctly recognised that the use of pricing information as a benchmark could, and in the manner contended by the ACCC did, encompass the use of the recommended resale price as a floor or minimum price.

Could the recommended resale price operate as a floor price or minimum?

391    Mr Ellis contends that the recommended resale price could not function as a floor price or a minimum price for distributors for two principal reasons.

392    First, Mr Ellis contends that the recommended resale price could not function as a floor price or a minimum price for distributors because before arriving at a price for their customers, it was necessary to add warehousing, packing, processing, freight and other costs and to apply customer discounts and rebates.

393    The contention is both simplistic and erroneous. The addition of the cost of warehousing, packing, processing, freight and other costs to the recommended resale price enhances, not detracts from, the recommended resale price operating as a floor price or minimum price. Pricing above the recommended resale price would have been entirely consistent, and would have in no way offended, the use of the recommended resale price as a floor price or minimum price. Moreover, to the extent that the counterparties’ costs exceeded the recommended resale price, the counterparty could not be expected to price below the recommended resale price and, conversely, if its costs were lower than the recommended resale price, it would have every incentive to price at a level at least equal to the recommended resale price.

394    Next, the application of any customer discounts and rebates could only potentially preclude the RRP strategy from operating as a floor price or minimum price if their quantum exceeded the cost of warehousing, packing, processing, freight and other costs. Then, in turn, if those discounts and rebates did exceed those costs, it does not necessarily follow that the recommended resale price could not operate as a floor price or minimum price because the distributor could reduce those discounts or rebates or otherwise increase its prices, so that the prices that it ultimately set were not below the recommended resale price. In any event, as a practical matter, given the recommended resale price was to be set at a price higher than prevailing prices in order to restore profitability, it might be thought highly unlikely that using the recommended resale price as a benchmark would lead to the imposition of a price that would be lower than the recommended resale price after existing deductions, either by way of a fixed percentage or specific amount, were made to the new higher recommended resale price.

395    Second, Mr Ellis contends that the recommended resale price could not function as a floor price or a minimum price for distributors because of the high level of competition in the market for rolled steel products. He argues that any attempt to induce counterparties to price by reference to the recommended resale price is inherently problematic as distributors require pricing flexibility to respond effectively to competitive pressures.

396    The primary judge considered the contention that the high degree of competition and the prevalence of negotiated prices in the market would make it impossible for the benchmarking strategy to have the effect that the ACCC contended it was intended to have at LJ [631]. His Honour accepted those submissions to an extent, but only insofar as they identified a problem in achieving adherence to the CIPA price lists by way of cartel conduct:

It can be accepted that those features of the distribution market increased the difficulty of engaging in cartel conduct in that market. Generally, a high degree of competition in a market is associated with numerous competitors (a feature of the distribution market), which increases the difficulty of bringing about an arrangement or understanding. So too, a market that is characterised by negotiated prices which are not publicly disclosed increases the difficulty of cartel conduct because the cartel cannot be easily enforced (non-compliance cannot be monitored).

397    But his Honour then reasoned that these market characteristics cut both ways:

However, those features of the distribution market are not a barrier to cartel conduct (far less to attempting to induce cartel conduct). A high degree of competition renders cartel conduct more difficult, but it also creates the commercial incentive to attempt to engage in cartel conduct to increase prices and thereby increase profits (or reduce losses). Negotiated prices make cartel enforcement more difficult, but they create an incentive to reduce competitive pressures by moving toward a common price “benchmark”.

398    His Honour then further considered that the same market characteristics would also make it difficult for the benchmarking strategy to function in the way that Mr Ellis claimed it was intended to work:

Mr Ellis’s evidence in this respect also suffered from a degree of inconsistency. Mr Ellis repeatedly said that he believed that the benchmarking strategy gave distributors an “opportunity” to price by reference to CIPA’s price lists and that he “hoped” that distributors would set their prices on that basis. That “opportunity” required distributors to do the very thing that Mr Ellis said was too difficult because of a high degree of competition and the existence of negotiated prices.

399    We see no error in that line of reasoning. To the contrary, the primary judge’s reasoning is compelling. A competitive market can readily be expected to make the reaching of understandings between competitors with respect to prices difficult but at the same time it would provide the impetus or incentive for attempting to induce competitors to reach such understandings. Any perceived impetus or incentive, however, to enter into understandings with competitors to fix, control or maintain prices in markets that are not competitive is much reduced. Suppliers that are not closely constrained in their pricing decisions can price largely independently of their competition and be at much less risk of losing sales and market share.

400    The primary judge squarely addressed the question of whether this component of the evidence supported an innocent intention, or whether it indicated an intention to arrive at a consensus, finding the latter more probable. We agree with that conclusion.

Was a floor price or minimum price supported by findings or evidence?

401    Next, Mr Ellis contends that the finding made by the primary judge that the recommended resale price was to operate as a minimum price is not supported by any findings of fact or evidence. Mr Ellis relies on the following principal contentions to make good that proposition.

402    First, Mr Ellis contends that there is no finding or evidence that he said to any person that the recommended resale price was to be used as a floor price.

403    The ACCC accepts that there was no finding by the primary judge that Mr Ellis said words to the effect to any distributor that the recommended resale price was to be used as a “minimum price” or a “floor price”.

404    The absence of any evidence of such statements being made by Mr Ellis does not carry any significant weight. As the primary judge found, Mr Ellis was acutely aware of the sensitivity of the discussions that he was having with distributors with respect to the RRP strategy. In his affidavit evidence Mr Ellis stated that he was conscious in his discussion at the Melbourne Airport Meeting with four distributors, who were competitors, that “it was important to be careful about the topics discussed”: LJ [702]. Additionally, in the Yieh Phui meeting, Mr Ellis referred to the topic of the RRP strategy as “maybe a little bit more sensitive” and that he was being “very, very sensitive and very, very careful for the correct … legal discussion”: LJ [1370], [1378]. He also said that he regarded the contents of the report prepared for Mr Vassella “as a sensitive matter”: LJ [1411]. Furthermore, in cross-examination, Mr Ellis accepted that he “understood that there was a significant legal risk for competitors in discussing prices”: LJ [424].

405    Second, Mr Ellis contends there is no finding that any person understood him to be suggesting the recommended resale price was intended to be used as a floor price or minimum price or base price. That contention cannot be accepted.

406    The primary judge made the following findings that established that BlueScope employees, who had the RRP strategy explained to them, understood that it was seeking to set a base for pricing by distributors:

(a)    Mr Hennessy considered that the benchmarking strategy was to encourage distributors “to use CIPA’s list prices as a base or floor for their pricing” in order to restore profitability: LJ [871];

(b)    by mid-September 2013, Mr Kelso had come to understand that BlueScope was implementing a strategy to set a recommended resale price in the market which would allow distributors “to use CIPA’s list price as a base for their pricing”: LJ [665]; [747]; [867];

(c)    Mr Unicomb explained the RRP strategy to CIPA’s senior pricing and sales managers in December 2013 as being to set recommended resale prices in the market for distributors to “use as a base for their pricing”: LJ [1445];

(d)    Mr Ellis gave a slide presentation on 17 April 2014 to Mr Vassella, in the presence of at least Messrs Palermo, Kari and Nedeski, entitled “CIPA Sales and Marketing FY15 Pricing and Volume Review” that included a slide entitled “Other Pricing Initiative” in which it was stated that the aim of the RRP strategy was to “improve profitability of our Distribution channel customers by attempting to set a price floor for each major product category within the sector”: LJ [1248].

407    Mr Hennessy confirmed in his witness statement that although he was not sent the slide presentation at the time it was presented to Mr Vassella, the “Other Pricing Initiative” slide was an accurate summary of the benchmarking strategy: LJ [1250]. The primary judge made findings that distributors did understand that they were being encouraged to price at or above CIPA’s list prices. The primary judge found that:

(a)    Mr Bolzan of OneSteel had told Mr Kelso that he agreed if the list price could be used as the “rock bottom price”, their “business health” would be significantly better going forward, and in that conversation or a later conversation, Mr Kelso explained to Mr Bolzan that the list price was “a baseline or benchmark” that OneSteel could use in pricing products to their end customers: LJ [811];

(b)    Mr Gregory of Selection Steel understood that BlueScope’s proposal was for distributors to adopt a common position of using the “CIPA list prices” as a “base or floor in setting prices”: LJ [1442];

(c)    Mr Lobb of CMC understood that the changes to the price list proposed by Mr Ellis effectively created “a headline price that distributors could price to, to increase their profitability” and the proposal “was effectively to raise the market price”: LJ [895].

408    Third, Mr Ellis contends there was evidence from each of Mr Ellis, other BlueScope employees (Mr Hennessy and Mr Kelso, who reported to Mr Hennessy) and distributors that is inconsistent with the recommended resale price acting as a floor price or minimum price.

409    The primary judge rejected the evidence of Mr Ellis. He found the evidence given by Mr Ellis on the benchmarking strategy to be inconsistent, lacking credibility, obfuscatory, rehearsed and contrived: LJ [630]-[634]. Those findings are not challenged on appeal.

410    The appellants seek to rely on Mr Hennessy’s statement, made in a contemporaneous internal email, that the purpose of the changes to the CIPA price lists was to communicate a recommended resale price “for our Distribution customers to consider when they set their prices for our products to their customers”: LJ [1207]. Given Mr Hennessy’s statement was proposed to be included on an internal BlueScope social media platform that was widely available within the company, the primary judge concluded that Mr Hennessy’s statement, and evidence in cross-examination to similar effect, had to be treated with caution as any description of the RRP strategy “would have been written in careful language and may not disclose the underlying objective of the recommended resale prices”. It was a conclusion clearly open for the primary judge to have reached.

411    The appellants contend that Mr Hennessy’s evidence as to the need for distributors to have “pricing flexibility” is inconsistent with the recommended resale price acting as a floor or minimum price. They submit that in the majority of cases distributors were not simply resupplying the raw steel product purchased from mills but rather customised packages of the products and additional value-add services, including processing, warehousing and delivery. In those circumstances, they submit that once the additional service costs were factored in, the final price for the overall package could still differ between distributors and between customers.

412    They submit that equally the evidence of Mr Lobb of CMC Steel – that it was not commercially feasible to price at the recommended resale price because of the need for flexibility to meet competition in the market – is inconsistent with the recommended resale price acting as a floor or minimum price.

413    The RRP strategy, as found by the primary judge, however, was not to price at the recommended resale price but rather to use the recommended resale price as a floor or minimum price. Distributors would be free to price above the recommended resale price and at least, to that extent, would retain “pricing flexibility”. Mr Lobb gave evidence that CMC Steel would never have agreed or committed to price in accordance with the price list but, consistently with the objective of the RRP strategy, accepted “as a broad concept, a minimum recommended resale price was something that could have been followed”: LJ [897].

414    Fourth, Mr Ellis contends the solitary reference in the evidence to the operating as a price floor or minimum price appears in a presentation Mr Ellis gave to Mr Vassella. Mr Ellis contends that the presentation was prepared by Mr Nedeski and Mr Palermo, who were members of BlueScope’s finance team (and not the sales team in which Mr Ellis and Mr Hennessy worked).

415    The presentation was titled “CIPA Sales and Marketing FY15 Pricing & Volume Review”. It is designated version 2 and is dated 9 April 2014. Toward the end of the document is a slide titled “Other Pricing Initiative” and subtitled “Recommended Resale Price Project – Distribution … Building market coming” (RRP Slide). The first bullet point in the RRP Slide stated:

A project was undertaken to incorporate the concept of a “Recommended Resale Price (RRP)” into the Distribution Sector.

–    Aim was to improve the profitability of our Distribution channel customers by attempting to set a price floor for each major product category within the sector.

–    We have not yet measured success but anecdotal feedback has suggested that our Distributors have had some wins.

–    The concept is attempting to be expanded into Sheet & Coil Processing, as well as the Building Market rollformers.

416    Mr Ellis contends his involvement in the preparation of the presentation was limited and there is no evidence that he had any input into the RRP Slide. He submits that following an initial meeting that he attended on 7 April 2014 to discuss the proposed presentation, he sent an email to those preparing the presentation with the “key takeaways” that he wanted included but those takeaways did not include any reference to the recommended resale price, let alone it acting as a price floor.

417    The RRP Slide was prepared by Mr Palermo and forwarded to Mr Nedeski and Mr Churchin at 10.37am on 8 April 2014.

418    Mr Ellis first received a copy of the RRP Slide, as part of an updated pack of the 15 slides included in the presentation, at 12.43pm on 8 April 2014. Mr Ellis acknowledged that he had then sent the presentation, including the RRP Slide, to Mr Vassella by email that evening. Mr Ellis gave evidence, however, that he did not make any amendments to the presentation before emailing it to Mr Vassella, he glanced briefly at the presentation but did not recall seeing the “floor price” statement and if he had noticed it, he would have modified it because it was not accurate: LJ [1251].

419    The primary judge did not accept that Mr Ellis was not significantly involved in the preparation of the presentation. His Honour reasoned at LJ [1253]:

I do not accept Mr Ellis’s evidence with respect to the correctness of the statement in the presentation concerning the benchmarking strategy. I consider it implausible in all the circumstances. The evidence shows that the presentation had been requested by Mr Ellis’s boss, Mr Vassella, and Mr Vassella stated in an email, when requesting the presentation, that he wanted to review it in detail with Mr Ellis. The evidence also shows that Mr Ellis had significant involvement in the preparation of the presentation and was sent additional slides in response to his input. One of those additional slides was the page describing the benchmarking strategy. Mr Ellis reviewed the final form of the presentation before sending it to Mr Vassella in the evening of 8 April 2014. In the email by which Mr Ellis sent the presentation to Mr Vassella, Mr Ellis stated that the presentation included “Recommended Resale pricing – Distribution and Building Markets”, which was the subtitle of the page that contained the description of the benchmarking strategy. Mr Ellis then presented the presentation to Mr Vassella on 17 April 2014, in the presence of Messrs Palermo, Kari and Nedeski, and the presentation lasted an hour. Although Mr Ellis denied that he read the presentation carefully, I do not accept that denial in circumstances where Mr Ellis was responsible for the presentation and in fact presented it. Further, if the statement in the presentation concerning the benchmarking strategy was inaccurate, one or more of the persons present at the presentation would have identified the statement as being inaccurate. No evidence was given by Mr Ellis to that effect.

420    The reasoning of the primary judge was compelling and persuasive. His Honour was entitled to reason in this manner. No error on the part of the primary judge has been established in relation to this matter.

421    Fifth, Mr Ellis contends that none of the 16 matters identified by the primary judge at LJ [1438]-[1453] support a finding that, by the benchmarking strategy, Mr Ellis intended to induce an understanding in which the recommended resale price would be adopted by distributors as a minimum price. For the reasons advanced at [228]-[310] above, no error has been established in the primary judge’s reliance on those matters.

422    It follows that ground 4 in Mr Ellis’ appeal must fail.

Ellis ground 2: Capability of acting as an understanding for the purposes of s 44ZZRJ

Overview

423    Ground 2 is advanced by Mr Ellis in the alternative to grounds 1 and 4. As explained above, the primary basis on which Mr Ellis challenges the decision of the primary judge is that his Honour erroneously found that the recommended resale price was a floor price or minimum price and was not a price around which an understanding could cohere. Mr Ellis contends that if that proposition is not accepted then an understanding alleged to provide for a price around which prices could cohere is merely an understanding to increase prices falling outside s 44ZZRJ.

424    The distinction sought to be drawn between ground 2 and ground 4 is inapposite and does not accurately reflect the findings made by the primary judge. As explained above, the primary judge did not find that the recommended resale price was simply a starting point or a price around which pricing could cohere in the sense of being above or below the recommended resale price.

425    By ground 2, Mr Ellis contends that the primary judge erred in finding that understandings with the following features were capable of amounting to an understanding for the purposes of s 44ZZRJ:

(a)    an understanding between BlueScope and distributors pursuant to which strict adherence with the recommended resale price as a base or floor price was not required and the recommended resale price was a price level around which an understanding could cohere;

(b)    an understanding between BlueScope and Wright Steel pursuant to which Wright Steel could sell flat steel products to distributors at increased prices by reference to the recommended resale price;

(c)    an understanding between BlueScope and Yieh Phui which contemplated that Yieh Phui would sell flat steel products to import traders at a higher price than it was currently doing by reference to the recommended resale price.

426    Ground 2(a) is directed at the finding that an understanding in which the recommended resale price was proposed as a price around which an understanding could cohere, and strict adherence to the recommended resale price as a base or floor price was not required, can fall within s 44ZZRJ.

427    In contrast, grounds 2(b) and (c) are directed at the more specific findings that understandings which only contemplate increased or higher prices, albeit by reference to the recommended resale price, could constitute understandings for the purposes of s 44ZZRJ.

Can there be an understanding without strict adherence to a base or floor price?

428    His Honour reasoned at LJ [1454] that:

Having regard to the whole of the evidence, I am satisfied that the respondents intended to induce a consensus or meeting of minds, being an understanding within the meaning of the Act. The consensus was for distributors to use the list prices in CIPA’s Distribution Market price lists for flat steel products as a base or floor price for their supply of flat steel products. I do not consider that the understanding that was sought to be induced was intended to be adopted by distributors in an absolute manner, requiring strict adherence to CIPA’s price lists as a base or floor price. Rather, the understanding that was sought to be induced was a more general adherence to a principal that distribution prices should be increased to the level of CIPA’s price lists by way of a floor. CIPA’s price lists provided a clear price level around which the understanding could cohere.

429    Mr Ellis contends that it is not at all clear what the primary judge’s finding at LJ [1454] – that the recommended resale price was not a strict minimum for the seven distributors, but a price around which an understanding could cohere – means. In particular, he argues it is not clear in what circumstances a party could complain that another party was not acting in accordance with such an understanding.

430    The only reference that the primary judge made to the use of the recommended resale price as a price level around which the understanding “could cohere” was at LJ [1454]. It is important to construe that phrase in the context of both the paragraph in which it appears and the judgment as a whole. It seems plain that the primary judge at LJ [1454] was drawing a distinction between, on the one hand, pricing at the exact levels in the CIPA price lists, that is by pricing in an “absolute manner” and through “strict adherence” to the price lists, and on the other hand, increasing prices to the level of the CIPA price lists as a minimum, by way of a floor, that is by a “more general adherence to principle”. Understood in that context, pricing by reference to a more general adherence to a principle can be seen to be consistent with the CIPA price lists performing the function of providing a clear price level “around which the understanding could cohere”. Textually, to “cohere around” means a “coming together in a meaningful way” or “to operate effectively”. Read fairly, and in context, the primary judge was not stating or implying that the understanding sought to be induced by the appellants was merely pricing around, as in above or below, the CIPA price lists. Rather, as the primary judge stated in the penultimate sentence of LJ [1454], the understanding that his Honour found that was sought to be induced was “a more general adherence to a principle that distribution prices should be increased to the level of CIPA’s price lists by way of a floor”.

431    Further, Mr Ellis contends that the use of the recommended resale price as a price around which prices can “cohere” could not relevantly constitute an understanding in the context of the following findings of the primary judge: (a) prices to distributors were constantly changing, at least on a monthly basis (LJ [482]-[483]), (b) costs for processing and freight needed to be added to the recommended resale price and discounts and rebates would need to be deducted (LJ [455], [469]), and (c) the market for rolled steel was highly competitive, products and services offered were essentially homogenous and there was significant industry-wide overcapacity in the market (LJ [387]-[389]). Mr Ellis argues that there is no authority to support the proposition that it is possible to have an understanding for the purposes of s 44ZZRJ around, what is, in effect, a moving target, such as the recommended resale price, to which both costs must be added and discounts applied.

432    These contentions cannot be accepted.

433    The purpose/effect condition in s 44ZZRD(2) is relevantly satisfied if the impugned understandings, the subject of the attempts to induce the counterparties to reach, had the purpose or likely effect of “fixing, controlling or maintaining” the “price for” the supply of goods. The case advanced by the ACCC and accepted by the primary judge was that the appellants were attempting to induce an understanding that had the purpose of controlling or maintaining, not fixing, the price for flat steel products.

434    In CC (NSW) at [168]–[169], Lindgren J stated:

The word “control” is not defined in the Act. Its natural or ordinary meaning is “to exercise restraint or direction over” (the Macquarie Dictionary) or “to exercise restraint or direction upon the free action of” (the Oxford English Dictionary) a person or thing. There are degrees of control and there may be control although the “restraint” or “direction” is not total. An arrangement or understanding has the effect of “controlling price” if it restrains a freedom that would otherwise exist as to a price to be charged.

Concretes submits that the notion of “fixing, controlling or maintaining” price involves a degree of “specificity” as to price and a degree of “proximity” between the arrangement or understanding and price. I accept that an arrangement or understanding which no one intends, and is not objectively likely, to have any effect on price, but which, by reason of unforeseeable supervening circumstances has had that effect, is not caught. But, with respect, I do not find the general proposition relied on by Concretes determinative of the present case. Of course, I accept that “likelihood” is to be assessed as at the time when the arrangement is made or the understanding is arrived at.

435    The impugned arrangement or understanding in CC (NSW) was reached at a meeting between four construction contractors who had tendered to undertake the construction of a project in Haymarket in Sydney. The arrangement or understanding that was found to have been reached at the meeting was that if its tender were accepted, the successful tenderer would pay each of the three unsuccessful tenderers the sum of $750,000 from “the proceeds of the job”. In framing its tender, each tenderer would take into account its obligation to make these payments and would not disclose the existence of the “undisclosed tender fee” to the company awarding the contract for the construction of the project: CC (NSW) at [23]-[24].

436    The impugned arrangement or understanding did not mandate or require any tenderer to submit any particular price. Indeed, it was considered that, while each tenderer had independent expectations that the other tenderers would take into account their obligations to pay the unsuccessful tenders fee when calculating their tender prices, that did not form part of the understanding: CC (NSW) at [160], [162]. Each tenderer was free to submit their own price for the tender but in determining that price they would have to have regard to the need to pay $750,000 to each of the three unsuccessful tenderers.

437    At that time, s 45A of the then TPA (now renamed and recast as the Competition and Consumer Act) relevantly provided that, without limiting the generality of s 45, a provision of an arrangement or understanding was deemed for the purposes of s 45 to have the purpose, or to have or to be likely to have the effect, of substantially lessening competition, if the provision had the purpose, or had or was likely to have the effect, as the case may be, of fixing, controlling or maintaining the price for goods or services to be supplied by the parties or by any of them in competition with each other.

438    In that context, Lindgren J stated at [176]-[178]:

I do not think that some specificity as to price is a necessary element of the notion of “controlling” price within s45A. To insist on such a requirement would be to introduce an unauthorised general limitation on the notion and would allow the statutory prohibition to be easily circumvented - a result that cannot have been intended and should not be lightly accepted.

On the assumption in favour of Concretes that the concept of controlling price involves a degree of proximity between the arrangement or understanding and the price charged or to be charged, in my view that requirement is satisfied in the present case, even though the UTF understanding did not encompass some of the elements contended for by the Commission. True, the UTF understanding was, but was no more than, that the successful Tenderer would pay a UTF of $750,000 to each of the three unsuccessful Tenderers. But the question that arises is simply the factual one whether, on the evidence, that limited understanding was likely as at the time of the Meeting to have the effect of controlling the price to be charged to ACS. In my opinion, on the evidence before me and for reasons mentioned later, it was, and, if it should be relevant, the Tenderers understood that it was.

Concretes also submits that because the supposed UTF understanding left the Tenderers with a great deal of freedom as to the price which they would charge, it did not have the effect of controlling price competition and therefore did not fall within the terms of s45A. It seems to me, however, that putting to one side de minimis cases, the degree of control, although relevant to penalty, is not relevant to the issue of contravention. I do not consider the degree of control here to have been de minimis.

439    In Australian Competition and Consumer Commission v PT Garuda Indonesia Ltd [2016] FCAFC 42; 244 FCR 190, after referring to the statements by Lindgren J in CC (NSW) at [178], Dowsett and Edelman JJ stated at [555]:

In Australian Competition and Consumer Commission v Australian Medical Association Western Australia Branch Inc [2003] FCA 686 ; (2003) 199 ALR 423 at 461–462 [193]–[195] Carr J appears to have disagreed with the proposition that the degree of control is relevant only to penalty. The disagreement may simply disclose different views as to the meaning of the protean term “de minimis”. It is clear, however, that total control is not necessary. It is also clear that there may be price-fixing in the absence of agreement as to the precise price (see Trade Practices Commission v Parkfield Operations Pty Ltd, above, and Trade Practices Commission v Service Station Association Ltd (1992) ATPR 41–179 ; (1992) 109 ALR 465 (Heerey J) at first instance and, on appeal see Trade Practices Commission v Service Station Association Ltd [1993] ATPR 41–260 ; (1993) 44 FCR 206, 228 per Lockhart J (Spender and Lee JJ concurring)).

440    Mr Ellis contends that PT Garuda is distinguishable on the basis that the relevant surcharges would always make the price for the carriage of air freight higher because the surcharges would be fixed and therefore necessarily control the final price.

441    Mr Ellis argues that the position in this case more closely resembles the price fixing case advanced in Australian Competition and Consumer Commission v Olex Australia Proprietary Limited [2017] FCA 222. Mr Ellis seeks to rely, in particular, on the following reasoning by Beach J at [655]-[657]:

As to the alternative assertion that the cutting fee provision had the purpose or a substantial purpose and/or likely effect of controlling the price of electrical cable supplied by the Manufacturers, the evidence does not support the allegation. The cutting fees were a modest component of the overall price of electrical cable. As such, there was no commercially realistic ability to control the price of electrical cable by controlling the price charged for cutting services. Moncrieff’s evidence was that Olex had to compete on the total price/service package offered to its customers. Moreover, the price of cable supplied by the Manufacturers was not visible to each other. Accordingly, there was no means by which they could assess whether the overall price of cable including cutting fees increased or decreased over time. The ACCC’s case on this aspect lacked commerciality.

There was no evidence adduced to suggest that the purpose was to control the price of cut cable, which is a composite. There was no restraint on either Olex or Prysmian in the amount it charged overall for cut cable. The only restraint, assuming in favour of the ACCC that there was a consensus, was that an item appeared in a bill for $85 for each cut. But it was not in doubt that customers bought by reference to the overall price.

Generally, more needs to be shown than merely that a provision has the likely effect of controlling a component of the price. It must have the likely effect of controlling the overall price, ie be a materially significant proportion of the price. Competition occurs for the total price of the cut cable. There was no evidence of discussions between any of the Wholesalers or Manufacturers of a commitment to exercise control over the price of cut cable.

442    The reasoning of Beach J in Olex at [655]-[657] does not assist the appellants. Unlike the quantum and transparency of the recommended resale price in the present case, the cutting fees were only a modest component of the overall price of electrical cable, the manufacturers had no visibility as to the price of the cable supplied by other manufacturers, and the manufacturers could not assess whether the overall price of cable, including cutting fees, increased or decreased over time. Moreover, no evidence was adduced in Olex, unlike in the present case, that the purpose was to control the price of the products in issue. It was in that context, that Beach J concluded that more needs to be established than merely that a provision had the likely effect of controlling a component of price. Further, as the Full Court determined in PT Garuda, controlling a component of an overall price is sufficient, it is not necessary to establish that it is a “materially significant proportion of the price”.

443    Unlike in PT Garuda, the attempt to control the price of the products or services found by the primary judge was not by way of a fixed price over a specific component of a final overall price, but was no less a control over the price of rolled steel products. The control in this case was found to be the attempt to induce the counterparties to use the recommended resale price as a floor or minimum price for the overall price of rolled steel products. Such a finding was not only open to the primary judge but plainly consistent with the reasoning both in CC NSW, that freedom as to the price which would ultimately be charged was not antithetical to a price fixing arrangement or understanding, and in PT Garuda that there may be price-fixing in the absence of agreement as to the precise price.

Wright Steel and Yieh Phui understandings

444    Mr Ellis advances two principal contentions in support of grounds 2(b) and (c).

445    First, Mr Ellis contends that the attempts to induce the understandings with Wright Steel/Citic and Yieh Phui, the subject of grounds 2(b) and (c) respectively, are even more problematic than the attempts to induce understandings with distributors because the proposition that one can have an understanding simply to increase prices or increase margins is directly contrary to authority, at least in the circumstances of this case.

446    Mr Ellis argues, citing the reasoning of Heerey J in Trade Practices Commission v Service Station Association Limited (1992) 109 ALR 465 at 483, that a general understanding to sell at increased prices could not operate to control or maintain prices because it remained necessary for counterparties to add both costs and discounts, and their price might therefore ultimately be higher or lower than the recommended resale price, if it were adopted as a benchmark. They seek to rely, in particular, on the following statement by Heerey J at 483:

…a general arrangement or understanding merely to increase margins over those existing at some previous period could not in my view conceivably constitute an arrangement or understanding to fix, control or maintain prices

447    The appellants also refer to the finding by Heerey J that a more specific alleged arrangement to increase prices “in the order of 10%” or “approximately 6.5 cents a litre”, had “obvious problems” because it “may lack the degree of certainty inherent in the concept of fixing, controlling or maintaining prices” (at 483-484).

448    The reliance sought to be placed by the appellants on these statements and findings of Heerey J again illustrates the inherent danger in taking statements expressed in relatively general terms and applying them in fundamentally different factual circumstances.

449    Unlike in the present case, the alleged arrangement or understanding in Service Station concerned recommended resale prices published by an industry association, Service Station Association Limited (SSA), for the benefit of its members, who were petrol retailers in New South Wales. Discussions of pricing and profitability between an industry association and its members on the one hand, and discussions of pricing and profitability between competitors on the other hand, raise very different competition concerns.

450    Further, and significantly, Heerey J concluded at 485:

The only real attempt of the TPC to erect an arrangement or understanding from direct evidence was its reliance on the arrangement in Mr Bailey’s group at the first Forestville RSL meeting that he would ascertain the SSA recommended retail price from time to time and pass it on. To my mind that is not inconsistent with this small group simply agreeing that Mr Bailey would, as a matter of convenience, do on their behalf what they could equally do themselves; that is, obtain the recommended price from the SSA. What they did when they got that price, and whether they followed it wholly or partly, was to remain a matter for each individual without obligations to other members of the group or other members of the SSA or the SSA itself.

451    It was in the context of that finding that Heerey J concluded that there was an absence of any evidence of mutual promises or undertakings as between dealers, and as between dealers and the SSA, and the communications from the SSA did not “urge such mutual binding of dealers between themselves”. To the contrary, the “explicit and repeated message is that dealers have to make their own decisions with the consequence (again specifically stated) that differing prices will often be charged”.

452    Statements made by an industry association to its members in connection with the circulation of recommended resale prices about the need to make their own decisions on pricing is factually distinct from a situation, as in the present context, where a firm is telling its competitors that they remain free to set their own prices in the context of a foreshadowed provision of a recommended resale price. Absent some price fixing arrangement or understanding, it is axiomatic and self-evident that competitors can set their own prices. Unlike an industry association, it is difficult to conceive of any circumstances in which a firm would consider that it was necessary to tell its competitors that they were “always free to set their own prices” independently of communications in which the firm was discussing or advancing pricing proposals intended to improve mutual profitability. Certainly, any attempt to rely on statements between competitors to that effect as providing an antidote or elixir to claims of price fixing would elevate form over substance and emasculate the price fixing prohibitions in the Act. The primary judge, with respect, was justified in giving no substantive weight to such protestations by the appellants in their communications with counterparties, including Wright Steel and importantly, Yieh Phui, as considered further below at [489] – [491].

453    Second, Mr Ellis contends that there is no sense in which the recommended resale price could operate as a floor or minimum price for Wright Steel or Yieh Phui. He submits that the flat steel products supplied by BSL CIPA generally traded at a premium to imported products and therefore, the recommended resale price would be higher than the price for equivalent Yieh Phui products. He submits that insofar as Yieh Phui was making pricing decisions, it was doing so at a different functional level – that is, the price at which Yieh Phui would supply flat steel products to Wright Steel; not the price to be charged to the customers of distributors.

454    Mr Ellis submits that, given Yieh Phui was selling to its import trader Wright Steel, who was in turn selling to distributors, Yieh Phui would need to make certain assumptions in order to make any use of the recommended resale price. These assumptions would include the margin applied by Wright Steel when on-selling to distributors, as well as the margins applied by distributors when selling the rolled steel to end customers.

455    The primary judge found that that the conduct of the appellants relied upon by the ACCC with respect to Wright Steel and/or Citic constituted steps towards the inducement of an understanding being reached between BlueScope and Wright Steel and/or Citic containing the following cartel provisions (at LJ [1530]):

(a)    Wright Steel and/or Citic would sell flat steel products to distributors in Australia at increased prices by reference to CIPA’s Distribution Market price lists; and

(b)    BlueScope CIPA and NZSA would sell flat steel products to distributors in Australia at increased prices by reference to CIPA’s Distribution Market price lists.

456    The primary judge concluded that the proposal made by the appellants to Wright Steel and/or Citic was capable of assent and the inducement offered by the appellants was that CIPA and NZSA would be increasing their prices and the threat that, if import traders did not increase prices, BlueScope would initiate anti-dumping complaints against the imported products (at LJ [1533]).

457    The primary judge found at LJ [1540] that that the conduct of the appellants relied upon by the ACCC with respect to Yieh Phui constituted steps towards the inducement of an understanding being reached between BlueScope and Yieh Phui containing a cartel provision (at LJ [1540]):

that Yieh Phui would sell flat steel products to import traders at a higher price than it was doing at the time of the Yieh Phui meeting by reference to CIPA’s Distribution Market price lists.

458    The primary judge concluded that the proposal made by the appellants to Yieh Phui was capable of assent and the following inducements were offered by the appellants (at LJ [1544]):

459    First, Mr Ellis stated that when BlueScope set the recommended resale price, it established a market norm. The statement was an implicit promise that BlueScope would support the price increases reflected in its price lists. Second, Mr Ellis referred to the likelihood of anti-dumping action against low priced imports from Vietnam and India, which constituted a threat of such action against any imports at low prices. Third, the totality of Mr Ellis’ statements to Yieh Phui were in the nature of persuasive arguments for Yieh Phui to increase its prices, which is sufficient to constitute an attempt to induce an understanding.

460    The understandings that the primary judge found the appellants had attempted to induce with Wright Steel and Yieh Phui were less specific than those contemplated with the distributors but on no view were they simply proposals to increase prices. The primary judge concluded at LJ [1455]:

The contemplated understanding was that Wright Steel and Yieh Phui would increase their prices at the manufacture/import level of the market in recognition that distributors would increase their prices to the level of CIPA’s price lists by way of a floor. No particular level of pricing at the manufacture/import level of the market was proposed by BlueScope to either Wright Steel or Yieh Phui.

461    The proposal to increase prices was not at large but inextricably linked to increases that would enable distributors to increase their prices to the recommended resale price by way of a floor. Yieh Phui and Wright Steel may have been operating at different functional levels to distributors, but it does not necessarily follow that each of them did not have reasonable visibility as to prices being charged by distributors to their customers, and in particular, whether they were at or above the recommended resale price. The finding by the primary judge that no particular level of pricing at the manufacture/import level was proposed does not carry with it any implication that the understandings that the appellants were attempting to induce Wright Steel and/or Citic and Yieh Phui to enter into could not contain a cartel provision.

462    Ultimately, the primary judge was satisfied that inducing a counterparty to price “by reference” to the recommended resale price was sufficient in the case of Wright Steel/Citic and Yieh Phui to constitute an inducement to reach an understanding containing a cartel provision because it was capable of controlling the prices that Yieh Phui (as an overseas manufacturer), would charge to Wright Steel/Citic (as importer traders) and that Wright Steel/Citic would charge to distributors: LJ [1531] and [1535], LJ [1540] and [1546].

463    It was a conclusion that was open to the primary judge. Pricing by reference to a benchmark was less direct than using a benchmark as a floor or minimum price. Nevertheless, it was capable of providing an objective basis by which prices could be adjusted to reflect the recommended resale price ultimately to be charged by distributors to their customers.

464    It follows that ground 2 in Mr Ellis’ appeal must fail.

Ellis ground 5: Capable of assent

465    By ground 5, Mr Ellis contends that the primary judge erred in finding that, in deciding whether conduct is sufficiently proximate to amount to an attempt to induce an understanding containing a cartel provision, the critical fact is that a proposal is made by that person that is capable of assent.

466    Mr Ellis advances two specific contentions in support of this ground.

467    First, Mr Ellis contends that in assessing the conduct element of an attempt to induce entry into a proscribed understanding, it is not sufficient that a statement may be made to a counterparty who “might express assent”. He argues, by way of example, that a suggestion to a competitor that it would be a good idea to increase prices, might be capable of assent in that the competitor could indicate that they agreed it would be a good idea to do so and subsequently increased their prices, but that would not constitute an attempt to induce an understanding.

468    A proposal which is not capable of being the subject of any assent clearly could not relevantly give rise to an understanding for the purposes of s 44ZZRJ. The more relevant and critical issue is the necessity to distinguish between a compelling argument to increase prices unilaterally and a compelling argument to enter an understanding to do so. The former may be capable of assent but would be unlikely to be sufficient in itself to constitute an attempt to induce an understanding.

469    The distinction between a mere proposal to increase prices and a proposal to enter an understanding to increase prices was recognised by the primary judge at LJ [96], in which his Honour stated:

The respondents drew a distinction between persuading a competitor to increase their price and persuading a competitor to arrive at an understanding containing a provision that they will increase their price. The respondents argued that conduct in the first category is lawful while conduct in the second is unlawful. The distinction can be accepted in theory but is likely to be a fine one in practice. For example, if competitor A says to competitor B that competitor B should increase its prices because they are unprofitable, that might be characterised as mere persuasion (in the form of a persuasive argument) to increase prices and may not involve an inducement to reach an understanding and a contravention of the law. An illustration of such conduct is given by the findings in Trade Practices Commission v Service Station Association Ltd (1992) 109 ALR 465 (Service Station Association) (see at 488 per Heerey J) (upheld on appeal in Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 (Service Station Association (Full Court)) at 224-225, 238 per Lockhart J, Spender and Lee JJ agreeing). However, an added statement that competitor A is intending to do likewise may, in appropriate circumstances, be characterised as an attempt to persuade competitor B to arrive at an understanding to increase prices. Further, as Heerey J observed in that case (at 488), the objective likelihood of particular conduct producing a particular result (viz, arrive at an understanding) is relevant to ascertaining what was intended by the conduct (referring to the observations of Windeyer J in Vallance v The Queen (1961) 108 CLR 56 at 82).

(Emphasis in original.)

470    It was certainly open to the primary judge to characterise the element in those terms. Moreover, on no view did the primary judge proceed on the basis that finding that a proposal was capable of assent was sufficient to establish the existence of an understanding. No error has been demonstrated.

471    Second, Mr Ellis contends that in any event the statements made by the appellants to the counterparties were not capable of assent. He argues that because prices required the addition and subtraction of various components that varied constantly over time, it was not possible to speak sensibly about an increased price.

472    The error in that contention is that it proceeds on the flawed assumption that the statements made by the appellants were relevantly limited to an inducement to increase prices. For the reasons explained above, the inducements found by the primary judge travelled substantively beyond such a statement. The recommended resale price was not a static or inflexible price nor was the use of the recommended resale price a simple exhortation to increase prices. The use of the recommended resale price as a benchmark in the sense of a minimum or floor price provided a flexible mechanism by which counterparties could price rolled steel products, after taking into account any addition or subtraction of “various components”. Any ultimate pricing above the recommended resale price that took place was consistent with the use of the recommended resale price as a minimum or floor price. Further, as explained above, any existing rebates or discounts offered by the counterparties to their customers prior to the use of the recommended resale price, given the highly competitive market for rolled steel, could be expected to be revisited if the recommended resale price was adopted as a relevant benchmark to set floor or minimum prices.

473    Mr Ellis also contends that this difficulty cannot be overcome by simply saying that the increased price may be formulated “by reference to” the recommended resale price (LJ [1546]). He submits the following hypothetical, by way of example: let it be assumed that, at the date of the meeting that Mr Ellis attended with Yieh Phui on 26 February 2014, Yieh Phui was selling a flat steel product for $1,500 per tonne and the recommended resale price was $2,000 per tonne; and that by 26 March 2014, BlueScope’s recommended resale price had changed to $1,800 per tonne. Mr Ellis submits that if Yieh Phui had expressed assent to a proposal to increase price by reference to the recommended resale price on 26 February 2014, it is impossible to say what that means for Yieh Phui pricing as at 26 March 2014.

474    The flaw in this contention is that the proposed understanding sought to be induced with Yieh Phui pursuant to the overseas mill strategy was not to price by reference to the recommended resale price as at 26 February 2014, rather it was to price by reference to the recommended resale price generally. In the example advanced by Mr Ellis, as and from 26 March 2014, if Yieh Phui were to price “by reference” to the recommended resale price, Yieh Phui could then make a similar 10% reduction in the price that they were selling flat steel products from $1,500 per tonne to $1,350 per tonne. The example, however, propounded by Mr Ellis was perhaps a little contrived because the clear implication of the recommended resale price was to increase, not decrease, the price for rolled steel products. Yieh Phui could be expected to have the benefit of increased prices for its rolled steel products, not decreased prices.

475    The relevant assent being sought was not to charge specific prices for rolled steel products. Rather, in the case of the distributors it was an assent to the use of the recommended resale price as a floor or minimum price in setting their prices and in the case of Wright Steel/Citic and Yieh Phui to use the recommended resale price as a reference point in setting manufacturing/import prices.

476    It follows that ground 5 in Mr Ellis’ appeal must fail.

Ellis ground 6: Conduct not sufficiently proximate

Overview

477    By ground 6, Mr Ellis contends that the primary judge erred:

(a)    to the extent that his Honour concluded that Mr Ellis impliedly or indirectly sought a commitment from the seven distributors, Wright Steel and Citic;

(b)    having found that Mr Ellis said to Yieh Phui that everything he said had been practised maybe 20 times before, in failing to find that Mr Ellis had practiced what he had said to Yieh Phui in previous meetings with distributors and Wright Steel, and in failing to make any finding as to what was meant by those words;

(c)    in failing to find that the words used by Mr Ellis in the meeting with Yieh Phui, and in previous meetings with the distributors and Wright Steel, were inconsistent with an attempt to induce the alleged understanding.

Distributors and Wright Steel/Citic

478    In relation to (a), the primary judge did not make any explicit finding that Mr Ellis impliedly or indirectly sought a commitment from the distributors or Wright Steel/Citic. The paragraphs in the primary judgment relied upon by Mr Ellis in his notice of appeal as containing a finding by the primary judge to that effect do not establish that such a finding was made. Rather, the findings made by the primary judge in those paragraphs do not rise above findings that “neither Mr Ellis nor Mr Hennessy directly sought a commitment” (LJ [712] and [718]), “neither Mr Ellis nor Mr Hennessy sought a commitment” (LJ [730]) and references to submissions made by the appellants that no commitment was sought by BlueScope (LJ [1420]). The primary judge’s finding at LJ [712] that it was “probable that Mr Hennessy communicated either expressly or implicitly that BSD and SMS would set their prices in accordance with CIPA’s list prices” to those present at the Melbourne Airport meeting may well have been an incentive for those present at the meeting to embrace the benchmarking strategy but it was not an explicit finding that Mr Ellis had impliedly or indirectly sought a commitment from those distributors present at the meeting.

479    The contention was not further developed by Mr Ellis in his written or oral submissions on appeal.

480    The primary judge did not make such a finding. It necessarily follows that no error has been established.

Yieh Phui

481    In relation to (b), the primary judge addressed the “practised maybe 20 times before” reference in the transcript of the meeting that Mr Ellis attended with Yieh Phui in the following terms in the LJ:

[1395]    The above statement was followed by some brief laughter and then a longer conversation in Mandarin ensued involving a number of participants. At the end of that conversation, Mr Huang said (at page 21 of the transcript):

Yeah, yeah, so that’s why we focus on the spirit of the ACCC. You know, it’s a competitive market without any artificial restriction, so I guess this question is so sensitive, so that’s why we – we – okay, we – you know, at least nobody can bear 10 million of the – the fine or – or 10 years in – in gaol.

[1396] Mr Ellis interjected (at page 21 of the transcript):

I think you are confusing the conversation. I have been very careful with my words to make this, ah, very, very, ah, ah - very, ah, ah, legal and very allowable. So everything I’ve said today has been practised maybe 20 times before.

[1397]    That statement was again followed by laughter. Mr Ellis continued:

So, please, Robert, no, no, no, no – no concern, no. So again, I just reiterate we are, ah, we’re not suggesting anything. Ah, we are not, ah, recommending any pricing setting or anything like that. All we are saying is there – there is publicly available information which you can access, which should enable YP to extract more value from the Australia market. What you do is up to you. So, ah, we – we are very comfortable for that.

482    Ultimately the primary judge concluded at LJ [1404(h)]:

Eighth, Mr Ellis stated during the course of the discussion that he had received legal advice about the subject of the discussion, that his lawyer had given him “very strict instructions”, that he was being very careful with his words, and that everything Mr Ellis said had been practised maybe 20 times before. Those statements were generally followed by laughter in the room. It is apparent from listening to the recording that those statements were understood by those present as indicating that, under legal advice, Mr Ellis was using careful language in what he was seeking to convey. Further, given Yieh Phui’s repeated objections to the subject matter being discussed at all, I infer that Yieh Phui understood that Mr Ellis was seeking to persuade Yieh Phui to increase its prices into the Australian market. I also find that that was Mr Ellis’s intention.

483    The primary judge had earlier rejected Mr Ellis’ evidence that the “maybe 20 times before” was a reference to using the same form of words on the many occasions in previous meetings that he had attended with distributors, finding at LJ [333(a)]:

In his affidavit, Mr Ellis proffered an explanation of a comment that he had made in his meeting with Yieh Phui that his statements in the meeting had “been practised maybe 20 times before”. Mr Ellis deposed that he was referring to the fact that he had met with distributors on numerous separate occasions and had said something to similar effect to that which he said in the meeting with Yieh Phui (being an explanation of BlueScope’s recommended resale prices). In support of that evidence, Mr Ellis included a list of 26 meetings he had attended between 27 August 2013 and 26 February 2014 with distributors in Annexure A to his affidavit. In cross-examination, Mr Ellis agreed that the list in Annexure A had been prepared and included in the affidavit to support his evidence concerning statements made in meetings with distributors. However, when pressed, Mr Ellis accepted that that was not true, and that nine out of the 26 meetings listed in the annexure were not meetings in which the RRP strategy was discussed. Mr Ellis then attempted to explain the inconsistency by suggesting that he had made a mistake when preparing the annexure and had listed all meetings that he had held with distributors in the period. When pressed again, Mr Ellis conceded that the annexure did not contain a list of all such meetings. I find that the annexure represented a deliberate distortion of the truth for the purpose of bolstering Mr Ellis’s evidence concerning the comment that he had made in the meeting with Yieh Phui.

484    The appellants contend that given the primary judge’s findings that Mr Ellis attended 17 meetings with distributors in which the RRP strategy was discussed, his Honour should have found that the statement made by Mr Ellis during the meeting with Yieh Phui that he had “practised everything he had said maybe 20 times before” strongly supported a finding that Mr Ellis had used similar language, whatever the precise number, to what he used in the Yieh Phui meeting in his 17 meetings with distributors and Wright Steel.

485    Mr Ellis contends that the range of likely meanings of the words that he had “practised everything he had said maybe 20 times before” was limited to practising it in “front of a mirror 20 times” or practised it “20 times with other third parties”, and “plainly it means the latter” [T 119.4-5]. Mr Ellis argues that the words that he used in the meeting with Yieh Phui are inconsistent with attempting to induce an understanding and inconsistent with a recommended resale price operating as a minimum price. Mr Ellis submits that the transcript of the Yieh Phui meeting makes clear that he was trying to communicate to Yieh Phui using a standard form of words, that were inconsistent with attempting to induce an understanding. He submits that the transcript shows that he was “proceeding with great care entering this meeting. He is conscious of limits. He is conscious of legalities” [T 119.30-34]. That is, he was providing information in “a legally acceptable format”.

486    The primary judge’s decision not to make any specific finding as to what the “practised everything he had said maybe 20 times before” statement meant cannot give rise to any relevant error. His Honour, however, did directly address the purportedly exculpatory language that Mr Ellis was using in the Yieh Phui meeting, concluding in the following portion from LJ [1404(h)] reproduced above at [482]:

… It is apparent from listening to the recording that those statements were understood by those present as indicating that, under legal advice, Mr Ellis was using careful language in what he was seeking to convey. Further, given Yieh Phui’s repeated objections to the subject matter being discussed at all, I infer that Yieh Phui understood that Mr Ellis was seeking to persuade Yieh Phui to increase its prices into the Australian market. I also find that that was Mr Ellis’s intention.

487    The primary judge’s general rejection of Mr Ellis’ evidence and, in particular, his unchallenged finding at LJ [330(a)] make plain that he placed no reliance on the evidence of Mr Ellis that the reference to “20 times before” was to meetings that had he had attended on numerous separate occasions with the distributors and Wright Steel in which he had provided similar explanations in the course of explaining the benchmarking strategy. Given the transcript produced from the audio recording made by Yieh Phui of the meeting, it was common ground that the words were said by Mr Ellis. The transcript, however, cannot establish the truth of what Mr Ellis was asserting, that is, whether he had in fact done what he represented to Yieh Phui that he had done, nor equally significantly, the specific circumstances in which he had previously made those statements. In effect, the primary judge is being criticised for not drawing an inference in the absence of any sound evidentiary foundation, which must be rejected.

488    Nor, given the more specific nature of the understandings that the primary judge found the appellants attempted to induce with the distributors, is it apparent how his Honour could have drawn any inference that Mr Ellis would have provided an explanation of the benchmarking strategy in the same terms as the explanation that he provided to distributors and Wright Steel as he provided to Yieh Phui in the context of the related, but distinct, overseas mill strategy.

489    In relation to the contention outlined at [477(c)], even if the primary judge were to have drawn an inference that Mr Ellis had made similar statements in the 17 meetings he had attended with distributors and Wright Steel prior to meeting with Yieh Phui, it would not establish that such conduct was inconsistent with an attempt to induce the impugned understandings or with the recommended resale price operating as a minimum price. As the ACCC submits:

… there is no form of words that can or should shield conduct from the reach of the cartel provisions if, in substance, the conduct amounts to reaching or attempting to reach a prohibited understanding. Otherwise, it would effectively allow gaming of the statutory provisions.

490    It was certainly open to the primary judge to treat with significant scepticism the explanation given by Mr Ellis of the RRP strategy to Yieh Phui given the statements made by Mr Ellis in the course of explaining the strategy that he had obtained legal advice about the subject of the discussion, his lawyer had given him “very strict instructions” and that he was being very careful with the words that he was using, that were met with nervous laughter by Yieh Phui. In that context, the portion of the findings at LJ [1404(h)] reproduced at [482] above were both readily open to the primary judge and reflected the limited weight that his Honour placed on the explanation that Mr Ellis gave to Yieh Phui of the RRP strategy.

491    Any statement or statements made by Mr Ellis to the effect that the counterparty retained its “independent discretion as to pricing” must be viewed in that context. One could of course ask rhetorically why Mr Ellis would have thought it necessary to state the self-evident proposition, absent any arrangement or understanding to the contrary, that a competitor remained free to price its own products.

492    Given those findings, it is not apparent how any finding that Mr Ellis provided similar explanations of the RRP strategy at earlier meetings with distributors and Wright Steel would necessarily have been inconsistent with an attempt to induce the impugned understandings or with the recommended resale price operating as a minimum price.

493    It follows that ground 6 in Mr Ellis’ appeal must fail.

BlueScope ground 6: was the ACCC precluded by s 77(2) of the Act from seeking a pecuniary penalty in respect of the OneSteel contravention?

494    BlueScope contends, in ground 6, that the primary judge erred in concluding in the penalty judgment (PJ [56]-[60]) that s 77(2) of the Act did not prevent the ACCC from seeking a pecuniary penalty against it in respect of the finding in the liability judgment (LJ [1520], [1522], [1524], [1526] and [1552(g)]) that BlueScope attempted to induce OneSteel to arrive at an understanding containing a cartel provision.

495    Section 77 of the Act provides as follows:

77     Civil action for recovery of pecuniary penalties

(1)    The Commission may institute a proceeding in the Court for the recovery on behalf of the Commonwealth of a pecuniary penalty referred to in section 76.

(2)    A proceeding under subsection (1) may be commenced within 6 years after the contravention.

496    As noted earlier, s 76(1) of the Act relevantly provides that “[i]f the Court is satisfied that a person: (a) has contravened … (i) a provision of Part IV [which relevantly included s 44ZZRJ] … or … (d) has … attempted to induce, a person, whether by threats or promises or otherwise, to contravene such a provision … the Court may order the person to pay to the Commonwealth such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the Court determines to be appropriate…”.

497    It was effectively common ground before the primary judge that s 77(2) operates as a limitation provision that applies from the date on which the relevant cause of action created by s 76 is complete: see PJ [55]; PT Garuda at [547] (Dowsett and Edelman JJ).

498    As will be discussed in more detail shortly, the primary judge granted the ACCC leave to amend its originating application to include a claim for a pecuniary penalty in respect of the allegation that BlueScope attempted to induce OneSteel to arrive at an understanding containing a cartel provision which was included in its statement of claim. That amendment was to take effect from 19 December 2019, being the date that the ACCC filed its statement of claim including that allegation.

499    In the liability judgment, the primary judge found that the “conduct of Bluescope and Mr Ellis with respect to OneSteel relied upon by the ACCC, taken as a whole, constituted steps towards the inducement of an understanding being reached between BlueScope and OneSteel containing a cartel provision, which steps were more than merely preparatory of the inducement and which were immediately and not merely remotely connected with the inducement”: LJ [1520] (emphasis added). The conduct of BlueScope relied on by the ACCC comprised conduct that occurred during the period from 10 September 2013 to 2 June 2014: see LJ [1522]. As can be seen, that conduct straddled the date 19 December 2013, that being the date six years before the date that the ACCC was taken to have relevantly commenced the proceeding against BlueScope insofar as it related to the alleged attempt to induce OneSteel to contravene s 44ZZRJ.

500    At the penalty stage of the proceeding, BlueScope argued that the conduct that it engaged in before 19 December 2013 was “more significant” than the conduct that it engaged in after that date: PJ [59]. The primary judge concluded, however, that the relevant “act or omission” by BlueScope to which s 76(1) applied was the “attempt to induce OneSteel to arrive at an understanding containing a cartel provision” which was “committed or was complete on 2 June 2014”: PJ [60]. It followed that s 77(2) of the Act “did not prevent the ACCC from seeking a penalty in respect of that conduct”: PJ [60].

501    BlueScope now argues that the primary judge’s finding in that regard was wrong. Indeed, BlueScope goes so far as to argue that the ACCC’s cause of action against it in relation to the attempt to induce OneSteel was statute barred because the cause of action was complete prior to 19 December 2013.

502    The ACCC argues that there is no merit in BlueScope’s contention that the primary judge erred in finding that s 77(2) of the Act did not prevent the ACCC seeking a penalty in respect of BlueScope’s conduct that constituted an attempt to induce OneSteel to arrive at an understanding containing a cartel provision. It also argued that the arguments now advanced by BlueScope in respect of this issue were not advanced before the primary judge, that BlueScope therefore requires leave to advance those arguments and that leave to advance those arguments should be refused.

503    It is necessary to first consider the ACCC’s submission that BlueScope should be refused leave to advance the arguments it now advances, or seeks to advance, in respect of ground 6. To address those submissions, it is necessary to go into a little more detail in respect of the procedural history.

504    The ACCC commenced this proceeding on 29 August 2019 by filing an originating application and concise statement, neither of which included any allegation involving BlueScope attempting to induce OneSteel to arrive at an understanding containing a cartel provision. The ACCC filed a statement of claim on 19 December 2019 which included that allegation, however the ACCC did not immediately seek leave to amend its originating application to seek any relief in respect of that allegation. It eventually did so, however, and on 12 May 2020, the primary judge, over BlueScope’s opposition, granted the ACCC leave to file an amended originating application which sought that relief on the basis that the amendments took effect on 19 December 2019: see Australian Competition and Consumer Commission v BlueScope Steel Limited (No 2) [2020] FCA 625 (amendment judgment or AJ).

505    In opposing the ACCC’s application for leave to amend its originating application, BlueScope contended that the claim alleging that it attempted to induce OneSteel was statute barred. BlueScope argued that “most” of the conduct in which it allegedly engaged occurred in September 2013 and that the conduct that occurred after that date did not relevantly constitute an attempt at inducement: AJ [27]. The ACCC, however, argued that its allegation concerning the attempt to induce OneSteel concerned a course of conduct by BlueScope that continued until June 2014: AJ [26]. The primary judge held that it was open to the ACCC to argue that BlueScope engaged in that course of conduct, though he observed that whether the ACCC was able to establish that allegation would depend on the evidence that was adduced at trial: AJ [28]. Moreover, his Honour noted that, assuming that the ACCC was able to establish the allegation, “whether the conduct so proved satisfies the limitation period in s 77(2) is also a question that should be determined at trial”: AJ [28]. The primary judge accordingly concluded that “the proposed amendment may not be time-barred and the question of the application of the applicable limitation period should be determined at trial”: AJ [28].

506    Following the handing-down of the amendment judgment, the ACCC filed a further amended statement of claim and BlueScope filed a defence to the further amended statement of claim. In response to the ACCC’s plea (in [153] of the further amended statement of claim) for the maximum pecuniary penalty for each of the pleaded attempt to induce contraventions, BlueScope pleaded (at [153] of its defence) that: the ACCC’s claim for relief in respect of the conduct relating to the alleged attempt to induce OneSteel had not been included in the ACCC’s originating application; the facts out of which that claim for relief was alleged to arise, were not pleaded in the ACCC’s concise statement; and that relief was statute barred under s 77(2) of the Act. The defence provided no further particulars of that plea.

507    BlueScope did not press its contention that the ACCC’s claim for relief in respect of the alleged attempt to induce OneSteel was statute barred, either at the liability stage or the penalty stage of the proceeding. The issue appears not to have arisen at all at the liability stage of the proceeding and is therefore not addressed in the liability judgment. The issue arose at the penalty stage, however BlueScope did not contend, or contend in clear and unequivocal terms, that the ACCC’s claim in respect of OneSteel was statute barred. Rather, it simply contended that its acts or omissions before 19 December 2013 concerning OneSteel could not be the subject of a penalty, or taken into account in determining the penalty, as that would “create a risk that BlueScope would be penalised for conduct which Parliament has said should not be subject to a penalty”: PJ [54].

508    It is apparent from the penalty judgment that BlueScope did not press its plea that the ACCC’s claim in respect of the attempt to induce OneSteel was statute barred, or at least did not advance the argument that it now seeks to advance in support of the contention that the claim is statute barred. In the penalty judgment, after reiterating that the conduct by BlueScope that the ACCC alleged constituted an attempt to induce OneSteel “spanned the time period from 10 September 2013 until 2 June 2014”, the primary judge noted (at PJ [59]):

… In the Liability Judgment, I found that that conduct, taken as a whole, constituted the attempt. Neither the ACCC nor BlueScope advanced a case at trial that, if an attempt occurred, the conduct constituting the attempt was complete prior to 19 December 2013. In the penalty hearing, BlueScope submitted that the conduct that occurred before 19 December 2013 was more significant than the conduct that occurred after that date. It did not submit, however, that the attempt was complete prior to 19 December 2013.

(Emphasis added.)

509    As adverted to earlier, BlueScope now wishes to argue that the ACCC’s claim for relief in respect of the attempt to induce OneSteel was statute barred because the attempt was complete prior to 19 December 2013. The ACCC submits that BlueScope should not be permitted to advance that argument because it did not advance that argument before the primary judge.

510    The principles that apply where leave is sought to raise an argument on appeal that was not advanced at first instance are well-established. In VUAX v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 158; 238 FCR 588, the Full Court held (at [46]) that leave should only be granted “if it is expedient in the interests of justice to do so” and observed (at [48]):

… The Court may grant leave if some point that was not taken below, but which clearly has merit, is advanced, and there is no real prejudice to the respondent in permitting it to be agitated. Where, however, there is no adequate explanation for the failure to take the point, and it seems to be of doubtful merit, leave should generally be refused. …

511    In CVRZ v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2021] FCAFC 205, the Full Court observed (at [19]), that requiring an appellant to show that it is expedient and in the interests of justice for an appellate court to grant leave “endeavours to strike an appropriate balance between securing the role of the court at first instance, protecting the integrity of the appellate process, and meeting the needs of justice as understood within the judicial process”. Perhaps more significantly, in Khalil v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2022] FCAFC 26 (Katzmann, Banks-Smith and Rofe JJ), the Full Court stated (at [34]):

The Court’s power to grant leave must be exercised in the way that best promotes the overarching purpose of the civil practice and procedure provisions of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and Rules: FCA Act, s 37M. That purpose is the facilitation of “the just resolution of disputes… according to law” and “as quickly, inexpensively and efficiently as possible”. It includes objectives such as the just determination of all proceedings before the Court; the efficient use of the Court’s judicial resources; the efficient disposal of the Court’s overall caseload; and the timeous disposal of all proceedings. Dealing with a point for the first time on appeal does not serve those objectives.

512    BlueScope did not provide an adequate explanation for why they did not argue before the primary judge that the ACCC’s claim for relief was statute barred because the alleged attempt to induce OneSteel was complete before 19 December 2013. Rather, it pointed to the fact that the primary judge accepted (at PJ [60]) the ACCC’s argument that the alleged attempt was complete on 2 June 2014. It also argued that the ACCC’s objection was not to the raising of a new “ground” but was in substance an objection only to the raising of one of its four arguments as to why the primary judge erred. There is, however, no merit in that submission. BlueScope’s argument that the alleged OneSteel attempt was complete by 19 December 2013 is central to its ground that the ACCC’s claim for relief in respect of the attempt is statute barred. It is an argument that was not advanced before the primary judge. No adequate explanation has been proffered as to why that argument was not advanced. Further, BlueScope ultimately conceded that the argument that it advanced before the primary judge was different to the argument it now seeks to raise on appeal.

513    More significantly, the ACCC contended that it would suffer prejudice if BlueScope was now permitted to raise the new argument. It submitted, in that regard, that if BlueScope had pressed its contention that the OneSteel claim was statute barred because the alleged attempt was complete by 19 December 2013, it could have applied for leave to amend its pleading to allege, in the alternative, that the conduct BlueScope engaged in after 19 December 2013 was capable of constituting an attempt to induce OneSteel. The conduct that was engaged in before 19 December 2013 would, on that possible alternative plea, be relevant in establishing BlueScope’s intention in engaging in the post-19 December 2013 conduct, but would not itself be considered to be conduct constituting the contravention. BlueScope’s rejoinder is that there would have been no basis for permitting the ACCC to amend as the ACCC was aware, from BlueScope’s defence, that there was an issue as to whether the ACCC’s claim in relation to OneSteel was statute barred, but the ACCC persisted with its case that the attempt to induce OneSteel was constituted by a course of conduct.

514    There is merit in the ACCC’s contention that it would suffer prejudice if BlueScope is permitted to argue that the ACCC’s cause of action concerning the OneSteel attempt is statute barred on the basis that the cause of action was complete by 19 December 2013. Had BlueScope advanced that argument before the primary judge, the ACCC may have sought to amend its pleading to raise the alternative case based on the alleged attempt being constituted by conduct that occurred after 19 December 2013. It cannot be said that the primary judge would necessarily have refused any such amendment application. Nor, for reasons explained later, could it be said that the alternative case would necessarily have failed. It may be accepted that the conduct that occurred after 19 December 2013 was far less significant than the conduct that occurred before that date, however it does not necessarily follow that the post-19 December 2013 conduct was not capable of constituting an attempt to induce. There is also merit in the argument that the pre-19 December 2013 conduct would remain relevant to establishing BlueScope’s intention in engaging in the post-19 December 2013 conduct.

515    There is, in those circumstances, considerable force in the ACCC’s submission that BlueScope should not be permitted to argue on appeal that the ACCC’s cause of action in respect of the OneSteel attempt was statute barred because it was complete by 19 December 2013. That is particularly so given the absence of any adequate explanation for why that argument was not advanced before the primary judge. Ultimately, however, it is the nature and merits of the argument in question which is the most significant factor in considering whether it is expedient and in the interests of justice to permit BlueScope to advance it on appeal. The argument raises an important question that appears not to have been the subject of any direct or relevant authority. That question concerns how the limitation period in s 77(2) of the Act applies in the case of contraventions constituted by conduct which straddles the applicable limitation date or period.

516    As for the merits, while BlueScope’s arguments in support of ground 6 are not entirely devoid of merit, for the reasons that follow, the primary judge was correct to find that the relief sought by the ACCC in respect of BlueScope’s attempt to induce OneSteel was not statute barred and the ACCC was not otherwise prevented from seeking a pecuniary penalty in respect of that conduct. It is, however, necessary to clarify or supplement some of his Honour’s reasoning. The preferable course, in all the circumstances, is to grant BlueScope leave to raise the argument and deal with it on the merits.

517    The critical question that must be determined is when the limitation period, for the purposes of s 77(2) of the Act, commenced in respect of the ACCC’s claim for the imposition of a pecuniary penalty, pursuant to s 76(1) of the Act, in respect of conduct in attempting to induce OneSteel, to contravene s 44ZZRJ of the Act. It was essentially common ground before the primary judge that the question was to be resolved by determining when the ACCC’s cause of action accrued, the relevant cause of action being the cause of action under s 76(1) of the Act constituted by the conduct (act or omission) of BlueScope that amounted to an attempt to induce OneSteel to contravene s 44ZZRJ of the Act: see PJ [56].

518    The primary judge referred (at PJ [56]) to Bradford Old Bank Ltd v Sutcliffe [1918] 2 KB 833, in which Scrutton LJ stated (at 848) in essence that a cause of action may be taken to have accrued “after the occurrence of all the facts which the plaintiff must prove as part of his case – that is, at the time when the plaintiff could first have brought his action and proved sufficient facts to sustain it”. Effectively applying that test, his Honour stated that determining the date of the accrual of the relevant cause of action involving the OneSteel attempt required the “identification of all the facts that the ACCC must prove in order to establish the contravention”, where “contravention” in that context means “each act or omission to which s 76(1) applies and for which a penalty may be imposed”: PJ [58].

519    It was in that context that the primary judge noted both that the conduct that the ACCC alleged constituted the attempt to induce OneSteel “spanned the time period from 10 September 2013 until 2 June 2014”, and that in the liability judgment he had “found that that conduct, taken as a whole, constituted the attempt”: PJ [59]; see also PJ [53] referring to the findings in LJ [1520] and [1522]. Having noted (at PJ [59]) that BlueScope had not advanced a case at trial that the attempt was complete prior to 19 December 2013, the primary judge concluded that the “attempt to induce OneSteel to arrive at an understanding containing a cartel provision, was committed or was complete on 2 June 2014”: PJ [60]. That in effect amounted to a finding that the time period, for the purposes of the limitation period in s 77(2) of the Act, did not commence to run until 2 June 2014 when BlueScope’s acts or omissions that the primary judge had found amounted to the attempt to induce OneSteel concluded.

520    BlueScope advanced four reasons why the primary judge’s conclusion to that effect was wrong. None of them can be accepted.

521    BlueScope’s first argument is that the primary judge was required to determine the date “when the ACCC was first able to issue a statement of claim necessary to support its entitlement to judgment” (citing Central Electricity Board v Halifax Corporation [1963] AC 785 at 806 per Lord Guest), but that his Honour instead “treated the end date of the pleaded conduct as determinative of when the cause of action accrued”. That argument, however, does not take into account the fact that the cause of action in question in this case, unlike the cause of action considered in Halifax, was a continuing or ongoing contravention – an attempt to induce OneSteel constituted by conduct that continued throughout the period 10 September 2013 to 2 June 2014. That was the case that the primary judge found that the ACCC had made out at trial. The allegation of an attempt to induce, constituted by conduct that occurred over a period of time, or as a course of conduct, is akin to the criminal law concept of a continuing or ongoing offence: see R v Moussad [1999] NSWCCA 337; 152 FLR 373 at [17]-[67].

522    The date upon which a limitation period may be taken to have commenced in the case of a continuing contravention of the sort alleged by the ACCC is properly regarded as being the date that the conduct constituting the contravention ceased – in this case, the date that the ongoing attempt to induce OneSteel ceased. It is artificial and erroneous to approach the issue on the basis that the ACCC could have first commenced proceedings against BlueScope alleging an attempt to induce OneSteel after the first act that could be said to constitute an attempt, even though the attempt continued after that date.

523    BlueScope argued that the date on which the limitation period commences in the case of a continuing contravention should not be taken to be the end date of the pleaded conduct because “an applicant could unilaterally extend limitation periods simply by alleging further material facts which arose after the date the cause of action arose”. That argument has no merit in the present context. In the case of a continuing or ongoing contravention, such as an ongoing attempt, the material facts would include conduct that constituted the ongoing attempt. It would be correct to take the limitation period as only commencing after that conduct ceased and it would be entirely proper for an applicant to allege those facts. An applicant who alleges material facts of that nature is not properly to be taken to be unilaterally extending the limitation period. If the suggestion is that an applicant could artificially extend a limitation period by pleading facts that do not genuinely form part of the continuing contravention, the answer is that the respondent in those circumstances could apply to strike out those facts, or argue that those facts should not be taken into account in determining the date from which the limitation period commenced. That did not occur in this case. Nor could it have.

524    BlueScope’s second argument was that the ACCC did not in fact advance a case at trial to the effect that the cause of action was not completed until 2 June 2014. There is no merit in that contention. As the primary judge found, the ACCC’s case was that the conduct constituting the alleged attempt to induce continued up until 2 June 2014 and that it was BlueScope’s conduct during the period 10 September 2013 to 2 June 2014 “taken as a whole” that constituted an attempt. The finding that the ACCC’s case was that the impugned conduct continued up to 2 June 2014 is borne out by the ACCC’s pleading, which includes (at [119] of the further amended statement of claim) conduct that occurred on “20 December 2013, 4 February 2014, 6 March 2014, 2 April 2014, 30 April 2014 and 2 June 2014” and alleges that the conduct alleged in several paragraphs of the pleading, including [119], “severally or in any combination” constituted the alleged attempt to induce.

525    BlueScope argues that the facts alleged in [119] of the ACCC’s pleading (which include facts occurring up to 2 June 2014) are “not alleged to give rise to any inducement” and are not elements of the “cause of action for attempt”. There is no merit in that argument. It is based on an incomplete and unfair analysis of one paragraph of the pleading considered in isolation. Considered in context, it is clear that the conduct alleged in [119] of the pleading, which involved BlueScope sending monthly pricing information to OneSteel, was conduct which formed part of BlueScope’s continuing and ongoing attempt to induce OneSteel to arrive at a cartel arrangement. The sending of price lists was integral to, or at least formed part of, BlueScope’s efforts to induce OneSteel to arrive at the impugned understanding.

526    BlueScope’s third argument is that the primary judge’s conclusion that the ACCC’s cause of action in respect of the OneSteel attempt was complete on 2 June 2014, was erroneous because it amounted to an implicit conclusion that none of the events that occurred before 2 June 2014 were sufficient to give rise to a cause of action. That argument is based on an erroneous reading or characterisation of the primary judge’s reasons. The primary judge did not implicitly conclude that none of the events that occurred before 2 June 2014 were sufficient to constitute an attempt by BlueScope to induce OneSteel to arrive at the impugned arrangement. Rather, his Honour concluded that the events that occurred before 2 June 2014 were an integral or important part of the continuing or ongoing attempt by BlueScope to induce OneSteel to arrive at the understanding.

527    The primary judge’s conclusion that the alleged “attempt to induce OneSteel to arrive at an understanding containing a cartel provision, was committed or was complete on 2 June 2014” should not be construed, as BlueScope effectively contends, as amounting to a finding that the last element of the ACCC’s cause of action occurred on 2 June 2014. Read in context, it amounted to no more than a finding that the continuing or ongoing attempt by BlueScope to induce OneSteel continued up to 2 June 2014.

528    BlueScope’s fourth argument is also based on a misreading or mischaracterisation of the primary judge’s reasons. BlueScope’s argument fixes on one paragraph (LJ [1524]) of the primary judge’s reasons in the liability judgment in which his Honour explains, in brief terms, why BlueScope’s conduct, as set out at length in earlier paragraphs, constituted or comprised an inducement. In short, BlueScope, through Mr Ellis, had told OneSteel that it was promoting an opportunity to distributors, including OneSteel, which involved distributors setting their prices by reference to the CIPA price lists. His Honour concluded that the communication of that “opportunity” to OneSteel constituted or comprised an inducement to OneSteel to arrive at a price fixing understanding and that BlueScope’s proposals to OneSteel in that regard were capable of assent. BlueScope argued that each of those matters occurred prior to 13 December 2013 and that the cause of action must therefore have arisen by 19 December 2013. That argument cannot be accepted.

529    The primary judge did not find (at LJ [1524] or anywhere else) that BlueScope’s conduct that constituted its inducement all occurred before 19 December 2013. Indeed, it is clear from his Honour’s reasoning at LJ [1524], read fairly and in context, including in the context of the findings summarised at LJ [1522(i) to (n)], that the provision to OneSteel of monthly pricing information, including in the months of February, March, April and June 2014, was part of the overall conduct which constituted the attempt to induce OneSteel to arrive at the impugned understanding. Indeed, as the primary judge explained, the price lists that were sent to OneSteel and other distributors on and after 20 December 2013 for the first time contained an express reference to the “recommended resale price”: LJ [1522(i)]. That change was intended to give prominence to the recommended resale price: LJ [1170]. It is not to the point that BlueScope’s conduct in sending the recommended prices lists to OneSteel in 2014 may not have been a “necessary element” of the primary judge’s reasoning that BlueScope’s conduct, taken as a whole, constituted an attempt to induce OneSteel.

530    The primary judge’s reasoning and conclusion that the ACCC’s claim that BlueScope was liable to pay a pecuniary penalty pursuant to s 76(1) of the Act in respect of its conduct in attempting to induce OneSteel to contravene s 44ZZRJ of the Act by arriving at an understanding containing a cartel provision was correct. BlueScope’s arguments that the primary judge erred in so concluding are rejected. Appeal ground 6 has not been made out.

Ellis ground 8: does the Court have the power to make a non-indemnification order?

531    Having ordered Mr Ellis to pay pecuniary penalties totalling $575,000 pursuant to s 76(1) of the Act (PJ order 5), the primary judge made the following order (PJ order 6):

Ellis is not to pursue any claim or accept any indemnity under any directors and officers insurance policy to which BlueScope or Ellis is a party or an insured for payment or reimbursement of any part of the pecuniary penalty the subject of order 5.

532    The primary judge and the parties called that order the non-indemnification order.

533    Mr Ellis’ appeal ground 8 is, in essence, that the primary judge erred in concluding that s 76 of the Act confers power on the Court to make the non-indemnification order.

534    The context for the making of the non-indemnification order was that there was evidence that BlueScope had taken out a Directors and Officers Liability Policy with an insurance company which the insurer was obliged to “pay to or on behalf of Insured persons any amount the Insured Person is legally obligated to pay as a fine or penalty, to the extent permitted by law”: PJ [161]. It was uncontentious that Mr Ellis was an Insured Person for the purposes of the policy.

535    The ACCC sought the non-indemnification order against Mr Ellis given his “central, ongoing and relentless role in the attempts to induce the price fixing understandings, his conduct during the investigation and trial, and his absence of contrition”: PJ [162]. The ACCC submitted before the primary judge that a non-indemnification order was “necessary to ensure that he [Mr Ellis] feels a ‘real sting or burden’ of any penalty ordered and that the penalty achieves the required deterrent effect”: PJ [162]. As for the power to make the order, the ACCC relied on the decision of the majority in the High Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; 262 CLR 157 (ABCC) concerning the cognate pecuniary penalty provision in the Fair Work Act 2009 (Cth) (s 546) and argued, by analogy, that s 76(1) of the Act included the power to make a non-indemnification order.

536    Mr Ellis opposed the making of the non-indemnification order on the basis that the decision in ABCC was distinguishable because it was concerned with the question whether one respondent (a union official) could be ordered to pay a pecuniary penalty personally and not seek or receive an indemnity from the other respondent (the union in question). It was not concerned with whether a respondent could seek or receive an indemnity from an insurer who was not a party to the proceeding. Mr Ellis also argued that the constructional issue in respect of s 76(1) of the Act was different to the issue in respect of s 546 of the Fair Work Act because the Act included s 77A, which provided that a body corporate must not indemnify an officer in respect of a pecuniary penalty. Mr Ellis also relied on the fact that the Act does not contain a provision like s 199B of the Corporations Act 2001 (Cth), which prohibits a company from paying a premium for a contract insuring an officer of the company against liabilities arising from, among other things, contraventions of certain provisions of that Act.

537    The primary judge accepted the ACCC’s submissions, rejected Mr Ellis’ submissions (PJ [164]-[173]) and found that the Court had power under s 76(1) of the Act to make the non-indemnification order: PJ [174]. His Honour found that it was appropriate to make the non-indemnification order: PJ [175].

538    Mr Ellis contends that the primary judge erred in concluding that the Court was empowered to make the non-indemnification order. His submissions largely mirrored those that he advanced before the primary judge.

539    The primary judge did not err in concluding that the Court has powers to make personal payment or non-indemnification orders of the sort he made against Mr Ellis. The Court has the power to make such orders essentially for the reasons given by the majority in ABCC. While ABCC involved a different statutory provision and some different circumstances, the reasoning of the majority in that case applies equally to s 76(1) of the Act and the statutory scheme in the Act in relation to pecuniary penalties more generally. The points of distinction relied on by Mr Ellis have no real significance.

540    In ABCC, the primary judge in this Court had made pecuniary penalty orders against a union and one of its officials for contravening a civil remedy provision of the Fair Work Act and made an order that the union must not indemnify the official against the pecuniary penalty orders made against him. The primary judge held that the Court was empowered to make such an order by s 545 of the Fair Work Act, which relevantly provided that the Court may make any order it considered appropriate if the Court was satisfied that a person had contravened a civil remedy provision. The Full Court of this Court allowed an appeal from that order, holding that s 545 of the Fair Work Act did not empower the Court to make such an order. That finding was unanimously upheld in the High Court.

541    The majority in the High Court, however, held that the power in s 546 of the Fair Work Act to make a pecuniary penalty order carried with it an implied power to make an order that a person against whom a pecuniary penalty order is made pay that penalty and not seek or accept an indemnity from a co-contravenor. Section 546(1) of the Fair Work Act is in relevantly the same terms as s 76(1) of the Act. It relevantly provides that the Court “may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision”. While the finding by the majority was directed to whether the Court was empowered to make an order that a contravenor not seek or accept an indemnity from a co-contravenor, that was simply a product of the fact that the order in question involved co-contravenors. Careful attention to the reasoning of the majority judges reveals that the finding was not limited to the power to make a non-indemnification order as between co-contravenors, but extended to orders requiring a contravenor pay a pecuniary personally, or not seek or accept an indemnity from a third party.

542    Chief Justice Kiefel observed (at [40]) that “[e]very court possesses jurisdiction arising by implication, upon the principle that a grant of power carries with it everything necessary for its exercise” and that the term “necessary” in that context means “reasonably required or legally necessary to the accomplishment of what is specifically provided to be done by the statute”. Her Honour reasoned (at [41]) that it was difficult to see how an order requiring a pecuniary penalty to be paid by the union official and not the union “in order that the effect of the penalty to a much greater extent be felt by him … could not be seen as necessary to the exercise of the power given by s 546(1), particularly when regard is had to its principal, if not its only, purpose”.

543    The Chief Justice’s reference, in that context, to the purpose of the power to impose a pecuniary penalty was a reference to the principle that the principal, if not only, purpose of imposing a pecuniary penalty is to deter the contravenor and others from engaging in the same or similar contravening conduct: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 at [55]. Her Honour concluded (at [44]) that a “personal payment order” (an order preventing the contravenor from seeking indemnification with respect to the payment of the penalty – see [7]) “adds only to the effect which is felt by a contravenor” and thereby “seeks to accomplish the purpose for which the power is given by s 546(1) within the limits of what is necessary to its effective exercise”. It followed, her Honour held (at [49]), that the “power to make a pecuniary penalty order given by s 546(1) carries with it a power to make the person the subject of such an order pay the penalty personally”.

544    It may be observed that none of that reasoning hinged on, or was in any way influenced by, the fact that the personal payment order in question in ABCC prevented one contravenor from seeking or accepting an indemnity from a co-contravenor. The reasoning focussed on the fact that the purpose of imposing a penalty is to deter, and that an order requiring a person to personally pay a penalty (and not seek or accept an indemnity from anyone else) may be necessary to ensure that the power to impose a pecuniary penalty is effectively exercised. The same can be said in respect of the reasoning in the joint judgment of the other majority judges, Keane, Nettle and Gordon JJ.

545    Like Kiefel CJ, Keane, Nettle and Gordon JJ noted (at [115]) that from the express conferral of power in s 546 of the Fair Work Act to order a person to pay a pecuniary penalty “arises an implied power to make such other orders as are necessary for or facilitative of the type of orders expressly provided for”. Their Honours reasoned (at [118]) that it followed that the express grant of power in s 546 of the Fair Work Act to impose a pecuniary penalty carried with it an “implied power to make such further orders as are reasonably required for, or legally ancillary to, the accomplishment of the deterrent effect that the penalty is calculated to achieve” and (at [119]) “to achieve the effect which a pecuniary penalty is calculated to achieve by ordering that a contravenor pay the penalty personally”.

546    The reasons of Keane, Nettle and Gordon JJ also included the following (at [120]):

Given that s 546 expressly empowers the court to order a specific person to pay a pecuniary penalty, it is no stretch to accept that there is power in s 546 to make orders designed to ensure that the person against whom the order is made cannot avoid the incidence of the penalty. It is to take too narrow a view of the purpose of s 546 to regard the provision as being concerned with no more than that an amount of money be paid by someone in discharge of a debt created by order of the court. Section 546 is not about the creation and collection of debts; it is about penalising a contravention of the law. It is to take too narrow a view of the extent of the power conferred by s 546 to deny that it extends to the making of orders designed to ensure that a particular person cannot defeat the purpose of an order that the person pay the penalty imposed on him or her.

547    As can be seen, that reasoning applies to any form of order, directed to the contravenor in question, that the contravenor personally pay the pecuniary penalty and not seek or accept an indemnity from anyone else. It is not limited to orders preventing a contravenor from seeking or accepting an indemnity from a co-contravenor.

548    It follows that, while the decision in ABCC was factually concerned with whether the Court could order that a contravenor (the union official) not seek or accept an indemnity or payment of the penalty imposed on him from his co-contravenor (the union), the principle enunciated by the majority was not so limited. Mr Ellis’ submission to the contrary is rejected.

549    There is no other reason why the reasoning in ABCC could be said to be inapplicable to s 76(1) of the Act. As already noted, s 76(1) of the Act is in relevantly similar terms to s 546(1) of the Fair Work Act. Mr Ellis’ contention to the contrary focussed on the fact that the statutory scheme in relation to the imposition of pecuniary penalties under the Act included s 77A(1) which provides as follows:

77A    Indemnification of officers

(1)    A body corporate (the first body), or a body corporate related to the first body, must not indemnify a person (whether by agreement or by making a payment and whether directly or through an interposed entity) against any of the following liabilities incurred as an officer of the first body:

(a)    a civil liability;

(b)    legal costs incurred in defending or resisting proceedings in which the person is found to have such a liability.

Penalty: 25 penalty units.

550    As can be seen, s 77A(1) of the Act essentially prohibits a company (or related company) from indemnifying a person against a civil liability that the person incurred as an officer of the company. It would, in the present case, prohibit BlueScope from indemnifying Mr Ellis against the pecuniary penalty imposed on him. It would not, however, prohibit Mr Ellis from seeking or accepting an indemnity in respect of the pecuniary penalties under the insurance policy referred to earlier. Nor would it (or did it) prohibit BlueScope from taking out, or paying the premiums in respect of, the insurance policy which relevantly covered Mr Ellis.

551    The Fair Work Act does not include a provision like s 77A of the Act. That is, Mr Ellis submitted, another point of distinction between the constructional issue in this case and the issue considered in ABCC.

552    It may be accepted, as Mr Ellis submitted, that the process of construing s 76(1) of the Act includes considering the statutory text in the context of the statutory scheme of which it forms part and that an implied statutory power must cohere with that statutory scheme. Accordingly, in construing s 76(1) of the Act, s 77A of the Act cannot be set aside. Equally, it is necessary to have regard to other contextual considerations, including any relevant legislative history.

553    Section 77A was originally inserted in the Act which preceded it, the Trade Practices Act 1974 (Cth), by the Trade Practices Legislation Amendment Act (No 1) 2006 (Cth). The Explanatory Memorandum to the Trade Practices Legislation Amendment Bill (No 1) (2005) stated as follows in relation to the insertion of s 77A in the Trade Practices Act:

Part 3 — Indemnities

… Part 3 of this Schedule addresses recommendation 10.2.3 of the Dawson Review. To that end, corporations will be prohibited from indemnifying officers against pecuniary penalties imposed, and legal costs incurred, as a result of proceedings pursuant to section 76 for a contravention of Part IV of the TP Act. Such a prohibition is consistent with the prohibition in section 199A of the Corporations Act 2001.

554    As adverted to in that statement, s 199A of the Corporations Act is in relevantly the same terms as s 77A of the Act. Mr Ellis submitted that it was of significance that the Explanatory Memorandum did not refer to s 199B of the Corporations Act, which, as noted earlier, prohibits a company from paying a premium for a contract insuring an officer of the company against liabilities arising from, among other things, contraventions of certain provisions of the Corporations Act. Indeed, he went so far as to contend that there was a deliberate legislative choice to limit the application of s 77A to the scope of operation of s 199A and not s 199B of the Corporations Act. That contention rather overstates the matter and it is at best doubtful whether such an inference can be drawn.

555    As the statement in the Explanatory Memorandum notes, the insertion of s 77A followed a recommendation made in the 2003 Report of the Trade Practices Review Committee, commonly referred to as the “Dawson Review” as one of its lead authors was Sir Daryl Dawson, AC KBE CB. The relevant recommendation in the Dawson Review was as follows:

The New Zealand legislation also prohibits a corporation from indemnifying a director, servant or agent of the corporation against liability for payment of a pecuniary penalty imposed for price fixing. The Committee considers that there should be a similar provision in our Act, but that it should extend to indirect as well as direct indemnification and should apply generally to pecuniary penalties imposed for breaches of Part IV.

556    As can be seen, the recommendation was that a provision similar to a provision in New Zealand’s equivalent to the Trade Practices Act (the Commerce Act 1986) should be included in the Trade Practices Act. The recommendation said nothing about the existence of an equivalent provision in the Corporations Act, let alone recommend that a provision like s 199B should or should not be inserted in the Act. The available and preferable inference, in the circumstances, was that no consideration was given to insertion of a provision like s 199B of the Corporations Act, either by the Dawson Review or the legislature when s 77A was inserted into the Trade Practices Act. That is hardly surprising given that s 199B of the Corporations Act is a bespoke provision which essentially prevents a company from indemnifying its officers in respect of breaches of duties owed by officers to the company itself.

557    In any event, the presence of s 77A in the Act, and the absence of a provision like s 199B of the Corporations Act, does not compel a conclusion that s 76(1) of the Act does not carry with it an implied power to make a personal payment or non-indemnification order of the sort that the primary judge made against Mr Ellis. The majority in ABCC considered the relevance of provisions like s 77A of the Act to the constructional task, albeit in the context of the construction of s 546 of the Fair Work Act. The appellant in ABCC had argued that the fact that Parliament had determined that it was necessary to provide an express prohibition of indemnification in the Act and the Corporations Act indicated that a similar express prohibition in the Fair Work Act would be necessary to achieve the same result. That argument was rejected. Chief Justice Kiefel stated (at [46]):

The prohibitions in the statutes mentioned [s 77A of the Act and s 199A of the Corporations Act] reflect a policy which the legislature has determined should be applied universally. It is not suggested that such a policy is to be found in s 546(1). These statutory provisions do not provide assistance in determining the question of construction with respect to s 546(1), as to whether a power may be implied in order to render a pecuniary penalty order effective.

558    Justices Keane, Nettle and Gordon similarly observed (at [128]) that s 77A of the Act and s 199A of the Corporations Act “are grounded in policy considerations applicable in all cases falling within the ambit of those sections regardless of the circumstances” and “apply whether or not it is considered that it is otherwise necessary or desirable that indemnity be prohibited”. Their Honours reasoned that it followed that those provisions contributed “nothing to the task of determining the scope of the power implicit in s 546 to accomplish the specific remedy imposed by a pecuniary penalty order according to the circumstances of each case”. While those observations were made in respect of construing s 546 of the Fair Work Act, the same reasoning applies in respect of the construction of s 76(1) of the Act. The fact that the Act does not contain a provision like s 199B of the Corporations Act is of no moment for essentially the same reasons. Like s 77A of the Act and s 199A of the Corporations Act, s 199B of the Corporations Act is undoubtedly grounded in policy considerations and contributes nothing to the task of determining the scope of the implied powers that are reasonably required or legally necessary to the accomplishment of the power in s 76(1) of the Act.

559    The reasoning of the majority judges in ABCC concerning the relevance of s 77A of the Act and like provisions applies to the constructional issue in respect of s 76(1) of the Act, even though the issue in ABCC was the proper construction of s 546 of the Fair Work Act.

560    It might also be added that s 77A and like provisions, such as ss 199A and 199B of the Corporations Act are different in another respect to the implied power in s 76(1) of the Act to make a personal payment or non-indemnification order. Unlike personal payment orders and non-indemnification orders, which are directed to the person upon whom the pecuniary penalty has been imposed, s 77A of the Act and ss 199A and 199B of the Corporations Act are directed at a third party, namely a company of which the person is an officer. That company need not be a co-contravenor. The prohibitions in those provisions may ultimately have the effect that it is more likely that the contravening officer will pay the pecuniary penalty himself or herself, though they may not necessarily secure that result and they do not, in terms, directly require the contravening officer to personally pay the penalty.

561    In any event, the reasoning in ABCC relevantly applies and Mr Ellis’ arguments based on s 77A of the Act and ss 199A and 199B of the Corporations Act have no merit and should be rejected.

562    Two final points should be noted. First, many of Mr Ellis’ arguments in support of the proposition that s 76(1) of the Act does not carry with it an implied power to make a personal payment or non-identification order echo the reasoning of the dissenting judge in ABCC, Gageler J (as the Chief Justice then was). Mr Ellis made the formal submission that Gageler J was correct in his reasoning in ABCC and, by implication, the majority judges were incorrect. It is unnecessary to address that formal submissions other than to note that no persuasive argument was advanced as to why this Court should not follow the reasoning of the majority in ABCC and that, for the reasons already given, that reasoning applies equally to the circumstances of this case.

563    Second, Mr Ellis submitted that there was evidence before the primary judge that he had limited financial means to pay a pecuniary penalty. It followed, so it was submitted, that that the non-indemnification order rendered the pecuniary penalty order less efficacious, presumably because it made it less likely that the penalty would in fact be paid.

564    It may be accepted that evidence in relation to Mr Ellis’ financial circumstances was adduced at the penalty stage of the proceeding. The primary judge considered that evidence: PJ [142]-[155]. It would be fair to say that the primary judge was somewhat sceptical in respect of Mr Ellis’ contention that he had limited access to financial resources to pay any pecuniary penalty. His Honour inferred that Mr Ellis “currently owns no assets by reason of his own financial planning choices, and that such wealth that he has gained over the years is held by other members of his family”: PJ [155]. His Honour also accepted that whatever pecuniary penalty he imposed, it would “only be paid if others, no doubt at Mr Ellis’ request, choose to make funds available for that purpose”: PJ [155].

565    It does not necessarily follow, however, that the imposition of a pecuniary penalty on Mr Ellis was somehow rendered less efficacious by the making of the non-indemnification order. The pecuniary penalty order would undoubtedly be denuded of any sting or burden if Mr Ellis was able to claim or accept indemnification pursuant to an insurance policy. It is also difficult to see how the penalty would have any deterrent effect in those circumstances. If Mr Ellis was not able to claim or receive any such indemnification, the pecuniary penalty would still carry some sting or burden for Mr Ellis. It would also have a deterrent effect, not only on Mr Ellis himself, but on others in like circumstances to him.

566    In any event, the argument based on Mr Ellis’ financial circumstances has no significance to the issue of construction to which this appeal ground is directed. It has no bearing on the question whether the primary judge had the power to make the non-indemnification order. The question of whether the primary judge’s exercise of the discretion to make the order somehow miscarried is beyond the scope of the appeal ground.

567    Mr Ellis failed to establish or demonstrate that the primary judge erred in concluding that s 76(1) of the Act confers power on the Court to make an order that he be prevented from pursuing any claim or accepting any indemnity under any insurance policy to which he or BlueScope was a party or insured for payment or reimbursement of any part of the pecuniary penalty imposed on him. Mr Ellis’ appeal ground 8 must accordingly be dismissed.

DISPOSITION

568    The appeals are to be dismissed and the appellants are to pay the costs of the ACCC, as agreed or taxed.

Associate:

Dated:    29 August 2025