FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Tubemakers of Australia Ltd

 [2000] FCA 227

TRADE PRACTICES - price fixing - consideration of penalties under s 76 of the Trade Practices Act 1974 (Cth) where agreement between the Australian Competition and Consumer commission and the parties on the proposed orders.

Trade Practices Act 1974 (Cth) ss 45(2)(a)(i); 45(2)(a)(ii), 45(2)(b)(ii), 76

NW Frozen Foods Pty Ltd v Australian Competition & Consumer Commission (1997) 71 FCR 285 Foll

Trade Practices Commission v CSR (1991) ATPR 41-076 Cited

Australian Competition & Consumer Commission v NW Frozen Foods Pty Ltd (1996) ATPR 41-515 Cited

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v

TUBEMAKERS OF AUSTRALIA LIMITED, COASTLINE FOUNDRY (QLD)

PROPRIETARY LIMITED, ASSOCIATED WATER EQUIPMENT PROPRIETARY

LIMITED, GEOFF CLEGG ENTERPRISES PROPRIETARY LIMITED, PETER

PITTARD, GEOFFREY COLIN CLEGG AND PATRICK JOHN McAULIFFE

Q202 OF 1999

COOPER J

BRISBANE

6 MARCH 2000

THE COURT ORDERS THAT:

1.         The third respondent shall pay to the Commonwealth of Australia a pecuniary penalty in the sum of $1,000,000 in respect of :

(a)        the contraventions of ss 45(2)(a)(i), 45(2)(a)(ii) and 45(2)(b)(ii) of the Trade Practices Act 1974 (Cth) (“the Act”) described in paragraphs 17, 21, 24, 24B, 27, 33, 37, 39, 44 and 47 of the amended statement of claim herein;  and

(b)        the attempted contraventions of s 45(2)(a)(ii) of the Act described in paragraphs 49, 52 and 54 of the amended statement of claim herein.

2.         The penalty in the preceding order is to be paid as follows :

(a)        the sum of $330,000 on or before 1 March 2001;

(b)        the sum of $330,000 on or before 1 March 2002;

(c)        the sum of $340,000 on or before 1 March 2003;

(d)        if any of the above instalments is not paid on or before the due date specified, then the balance of the total penalty of $1,000,000 not then paid shall be immediately due and payable.

3.         The third respondent be and is hereby restrained for a period of three years, whether by its directors, servants or agents or otherwise howsoever, from:

(a)        making or arriving at;

(b)        giving effect to;  or

(c)        attempting to make, arrive at or give effect to

            any contract, arrangement or understanding with one or more competitors for the supply and delivery of valves and pipe fittings for ductile iron cement lined pipes and plastic pipes to local government authorities, civil contractors, wholesalers or retail purchasers, carrying on business anywhere in Australia which contract, arrangement or understanding contains a provision that :

(a)        has the purpose or has or is likely to have the effect, of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of the prices offered or charged for the supply and delivery of valves and pipe fittings for ductile iron cement lined pipes and plastic pipes anywhere in Australia.

(b)        has the purpose of preventing, restricting or limiting the supply of and delivery of valves and pipe fittings for ductile iron cement lined pipes and plastic pipes to acquirers of valves and pipe fittings for ductile iron cement lined pipes and plastic pipes.

4.         The third respondent shall pay the applicant’s costs of and incidental to these proceedings to be taxed unless agreed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

EX TEMPORE REASONS FOR JUDGMENT

1                     This is an application for the imposition of pecuniary penalties pursuant to s 76 of the Trade Practices Act 1974 (Cth) (“the Act”), and for injunctive relief in consequence of breaches of s 45(2)(a)(i), s 45(2)(a)(ii) and s 45(2)(b)(ii) of the Act.  The conduct complained of arises out of price fixing, market sharing and tender rigging in the market for the supply of fittings and valves suitable for use with ductile iron cement lined pipe and plastic pipe used in water supply systems, irrigation systems and sewerage systems.  The conduct in issue began in December 1993 and continued until May 1995.

2                     The overall size of the market for the supply of the relevant fittings and valves for the financial year ended 30 June 1995 is estimated at $85,000,000.  Sales by the third respondent in that year are estimated at between $15,000,000 and $20,000,000, being 18 per cent to 24 per cent of the overall market.  The percentage share of purchases of the valves and fittings sold are estimated at:  public utilities, 26 per cent of the value of the valves and fittings sold;  civil pipeline installation contractors, 42 per cent of the value of the valves and fittings sold;  wholesale or resellers of the fittings, 10 per cent of the value of the valves and fittings sold.

3                     The third respondent admits the conduct alleged against it in the amended statement of claim.  Such admissions are contained in the amended defence filed by it.  The applicant and the third respondent have filed joint submissions on penalty and injunctive relief for consideration of the Court.  The submissions contained a proposed penalty in a specific amount and particular injunctive relief.  The parties submit that such orders should be made as part of the agreement made between the applicant and the third respondent to resolve as between them the issues raised in the proceedings. 

4                     The question of appropriate penalty and orders for contravention of Part IV of the Act are for the Court and not for the parties.  However, the Court will often act on the view of the parties if the Court is satisfied on the material placed before it that what has been agreed is in accordance with the range of penalties and orders which the Court on its own assessment of the relevant facts and circumstances of the contravention would make:  see NW Frozen Foods Pty Ltd v Australian Competition & Consumer Commission (1997) 71 FCR 285 where the relevant principles are discussed.

5                     The conduct of the third respondent, which is admitted is set out in detail in the joint submissions and in the substantial affidavit material filed by the applicant in support of its claims.  I do not propose to set out all that material.  I have had regard to it in coming to the decision in this matter.  Additionally, the joint submissions specifically address the conduct under the heads identified in Trade Practices Commission v CSR (1991) ATPR 41-076 at 52,152 - 52,153, and the Australian Competition & Consumer Commission v NW Frozen Foods Pty Ltd (1996) ATPR 41-515 at 42,441 and following, as being relevant to the penalty to be imposed.

6                     Having considered the material and each of the submissions, I am satisfied:

(a)        the contraventions were serious contraventions; 

(b)        the third respondent has co-operated with the applicant;

(c)        the personnel responsible for the conduct are no longer employed by the third respondent, which has ceased trading;

(d)        the seventh respondent, who was general manager of the third respondent at the relevant time, has had a costs order made against him personally together with the granting of injunctive relief, by having admitted his involvement in the contraventions; 

(e)        the Crevet Group of Companies of which the third respondent is a member has initiated a Trade Practices Compliance Program for the group as a whole.

7                     I am satisfied that the agreed pecuniary penalty of $1 million to be paid by the third respondent is an appropriate penalty in all the circumstances.  I am satisfied that the orders for injunctive relief should be made accordingly.

8                     I make orders in terms of the draft orders annexed to the joint submissions of the applicant and the respondent accordingly.

Associate:

Dated:              6 March 2000