FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Auspine Limited
[2006] FCA 1215
Held: Court’s power to accept undertakings subject to same limitations as Court’s power to grant injunctive relief – undertakings must be in clear and unambiguous terms and not involve an impermissible delegation of power – inappropriate or beyond power for Court to accept undertaking allowing third party to determine the major obligations of a party or allowing third party to determine whether obligations complied with – undertaking for external review of compliance programme permissible where major aspects of compliance programme defined in undertakings – within power and appropriate for Court to accept undertaking to the effect that a party will ‘consider’ a course of action in some circumstances – undertaking to ‘consider’ must itself be mandatory.
Federal Court Act 1976 (Cth) s 23
Trade Practices Act 1974 (Cth) ss 45, 45A, 80, 84
Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 referred to
Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 referred to
Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 referred to
BMW Australia Ltd v Australian Competition and Consumer Commission (2004) 207 ALR 452 referred to
Foster v Australian Competition and Consumer Commission (2006) 149 FCR 135 referred to
N W Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 referred to
Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 referred to
SAD 179 OF 2005
BESANKO J
7 SEPTEMBER 2006
ADELAIDE
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IN THE FEDERAL COURT OF AUSTRALIA |
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SOUTH AUSTRALIA DISTRICT REGISTRY |
SAD 179 OF 2005 |
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BETWEEN: |
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
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AND: |
AUSPINE LIMITED (ACN 004 289 730) First Respondent
FRANCIS GERALD MCDONALD Second Respondent
GEO J BONE & SONS PTY LTD (ACN 007 872 184) Third Respondent
ANDREW HOWARD BONE Fourth Respondent
JAG TIMBER PRODUCTS PTY LTD (ACN 007 264 717) Fifth Respondent
GARY GORDON DANIEL Sixth Respondent
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BESANKO J |
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DATE OF ORDER: |
7 SEPTEMBER 2006 |
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WHERE MADE: |
ADELAIDE |
THE COURT ORDERS THAT:
1. The application by the applicant and the respondents for the making of orders and the acceptance of undertakings be refused.
2. The applicant and the respondents have liberty to apply.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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IN THE FEDERAL COURT OF AUSTRALIA |
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SOUTH AUSTRALIA DISTRICT REGISTRY |
SAD 179 OF 2005 |
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BETWEEN: |
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
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AND: |
AUSPINE LIMITED (ACN 004 289 730) First Respondent
FRANCIS GERALD MCDONALD Second Respondent
GEO J BONE & SONS PTY LTD (ACN 007 872 184) Third Respondent
ANDREW HOWARD BONE Fourth Respondent
JAG TIMBER PRODUCTS PTY LTD (ACN 007 264 717) Fifth Respondent
GARY GORDON DANIEL Sixth Respondent
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JUDGE: |
BESANKO J |
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DATE: |
7 SEPTEMBER 2006 |
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PLACE: |
ADELAIDE |
REASONS FOR JUDGMENT
1 The Australian Competition and Consumer Commission (‘the Commission’) brings proceedings against three corporations and three individuals claiming relief under the Trade Practices Act 1974 (Cth) (‘the Act’). In the proceedings, the Commission alleges contravening conduct by the three corporate respondents and accessorial liability for the contraventions by the three individual respondents. The Commission seeks various declarations, pecuniary penalties, injunctions and other orders against the respondents.
2 The parties to the proceedings entered into negotiations and they have agreed to settle the proceedings. The respondents have not admitted the contravening conduct alleged by the Commission. Subject to certain undertakings to be given by the respondents, the settlement of the proceedings involves orders that the proceedings be dismissed and that there be no order as to costs including reserved costs. The issue before me is whether the Court has the power to accept the undertakings proffered by the respondents and whether it is appropriate to accept the undertakings.
3 Five undertakings are proffered. The first undertaking is proffered by the three corporate respondents and, for reasons I will give, the Court has the power to accept the undertaking and, in my opinion, it would be appropriate to do so. The second undertaking is proffered by the individual respondents and again, for reasons I will give, the Court has the power to accept the undertaking and it would be appropriate to do so.
4 The third undertaking is proffered by the first corporate respondent (Auspine Limited) and is to the effect that the first corporate respondent will implement the recommendations contained in the March 2006 ‘Report on the Implementation and Effectiveness of Auspine Ltd’s Trade Practices Compliance Program’. The report was prepared by a company called Watchdog Compliance Pty Ltd. For reasons I will give, I do not think that even if the Court has the power to accept this undertaking it would be appropriate for it to do so.
5 The fourth undertaking is proffered by the second and third corporate respondents (Geo J Bone & Sons Pty Ltd and JAG Timber Products Pty Ltd) and is to the effect that those respondents will implement a trade practices corporate compliance program in accordance with a document annexed to the proposed minutes of order. For reasons I will give, I do not think the Court has the power to accept this undertaking, or, in the alternative, that it would be appropriate to do so.
6 The fifth undertaking is proffered by the individual respondents and is to the effect that each of them will attend a trade practices compliance seminar in accordance with a document annexed to the proposed minutes of order. For reasons I will give, the Court has the power to accept the undertaking and, in my opinion, it would be appropriate to do so.
7 In the circumstances, I do not propose to make any orders at this stage. The undertakings and orders are part of an overall settlement. I will adjourn further consideration of the proceedings to enable the parties to consider these reasons and, if so advised, to proffer undertakings which are within power and which are appropriate.
The allegations made by the Commission
8 The first respondent Auspine Limited (‘Auspine’), the third respondent Geo J Bone and Sons Pty Ltd (‘Bone Timber’), and the fifth respondent JAG Timber Products Pty Ltd (‘JAG Timber’) (‘the corporate respondents’) were at all material times companies under the Corporations Act 2001 (Cth) and trading corporations under the Act. Each of them carried on business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia. In these reasons, ‘material times’ means the period between, in or about 1 July 2001 and 18 June 2003.
9 Auspine carried on its business through its Pre-fab Division from premises located at 140 Eastern Parade, Gillman, Penola Road, Tarpeena, and North-East Terrace, Kalangadoo, in the State of South Australia. Bone Timber carried on its business under the trading name Bone Timber Industries from premises located at 856 South Road, Edwardstown, in the State of South Australia. JAG Timber carried on its business from premises located at 4-10 Alfred Street, Alberton, in the State of South Australia.
10 The second respondent is Mr Francis Gerald McDonald and, at all times between July 2001 and December 2002, he was an employee or agent of Auspine and he occupied the position of General Manager of Auspine’s Pre-fab Division. The fourth respondent is Mr Andrew Howard Bone and, at all material times, he was a director of Bone Timber and an employee or agent of the company and occupied the position of Sales Manager. The sixth respondent is Mr Gary Gordon Daniel and, at all material times, he was one of the two directors and shareholders of JAG Timber and an employee or agent of the company. With respect to the matters alleged by the Commission, each of the second, fourth and sixth respondents acted within his authority as an employee or agent of the respective corporate respondents.
11 There are other persons and entities who are relevant to the allegations made by the Commission. They are as follows:
1. At all material times, Mrs Julie Daniel was one of the two directors and shareholders of JAG Timber.
2. Dubsky Timber Pty Ltd (‘Dubsky Timber’) is and was at all material times a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia from premises located at 4 Hookina Road, Burton, in the State of South Australia.
Mr Adolph Dubsky was Managing Director of Dubsky Timber and an employee or agent of Dubsky Timber. In relation to the allegations made by the Commission, he was acting within his authority as an employee, agent or director of Dubsky Timber.
3. Footers Pty Ltd trading as Footersville (‘Footersville’) is and was at all material times a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at 250 Regency Road, Regency Park, in the State of South Australia.
Mr Mark Footer was Managing Director of Footersville and an employee or agent of the company. In relation to the allegations made by the Commission, he acted within his authority as an employee, agent or director of Footersville.
4. Freeman Wauchope Pty Ltd (‘Freeman Wauchope’) is and was at all material times a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia from premises located at 93 Morphett Road, Camden Park, in the State of South Australia.
Mr David Thomas was Managing Director of Freeman Wauchope and an agent or employee of the company. In relation to the allegations made by the Commission, he acted within his authority as employee, agent or director of Freeman Wauchope.
5. Timbertech Pty Ltd (‘Timbertech’) is and was at all material times a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at 74 Days Road, Croydon Park, in the State of South Australia.
Mr Brian Stewart was Manager of Timbertech and an employee or agent of the company. In relation to the allegations made by the Commission, he acted within his authority as employee or agent of the company.
6. MSP Group Pty Ltd trading as Wingfield Timber Supplies (‘Wingfield’) is and was at all material times, a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from 79 Cavan Road, Gepps Cross in the State of South Australia.
Mr Francesco Pietrobon was General Manager of Wingfield and an employee or agent of Wingfield. In relation to the allegations made by the Commission, he acted within his authority as employee or agent of Wingfield.
7. Keith Timber and Hardware Pty Ltd (‘Keith Timber’) is and was at all material times, a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at Hender Street and Park Terrace, Keith, in the State of South Australia.
8. Dahlsens Building Centres Pty Ltd (‘Dahlsens’) is and was at all material times, a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at Bay Road, Mt Gambier, in the State of South Australia.
9. South Coast Timber and Hardware Pty Ltd (‘South Coast Timber’) is and was at all material times, a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at Port Elliot Road, Port Elliot, in the State of South Australia.
10. D J and L K Tarca were persons who at all material times were in partnership trading under the business name of D J and L K Tarca (‘Tarca’) carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at 9 Crompton Road, Mt Barker, in the State of South Australia.
11. W M and J P Wray (‘Wray’) were persons who at all material times were in partnership trading under the registered business name of Clare Building Supplies carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at Neagles Rock Road, Clare, in the State of South Australia.
12. Timco Pty Ltd (‘Timco’) is and was at all material times a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at 172 Park Terrace, Salisbury Plain, in the State of South Australia.
12 On 17 December 2002, the Timber Truss and Wall Frame Association was incorporated as Timber Truss and Wall Frame Association (SA) Incorporated (‘the TT & W Association’).
13 The Commission alleges that, at all material times, there was a demand by the public and the building industry in South Australia for timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing, and for pre-fabricated steel truss and wall framing and ancillary services, including estimating services and/or quotations derived therefrom. The Commission alleges that, at all material times, the corporate respondents and the other entities and persons (other than Mrs Daniel) (collectively, the timber suppliers) carried on the business of supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing persons in South Australia in competition with one another and in competition with suppliers of pre-fabricated steel truss and wall framing and ancillary services, including estimating services and/or quotations derived therefrom. The Commission alleges that by reason of the aforesaid matters, at all material times, there was a market in South Australia for timber and ancillary services, including estimating services and/or quotations derived therefrom for truss and wall framing and for pre-fabricated steel truss and wall framing ancillary services, including estimating services and/or quotations derived therefrom (‘the market’).
14 At all material times prior to 1 January 2003 each of the corporate respondents engaged estimators for the purposes of preparing take-off lists, providing quotations to customers derived therefrom and in so doing and supplied estimating services to customers. Auspine and JAG Timber employed estimators directly, and from time to time engaged third party estimators. Bone Timber from time to time engaged third party estimators. At all material times prior to 1 January 2003, it was the regular practice of each of the corporate respondents to absorb estimating charges as part of their business overheads and not to specify an estimating charge when providing a quotation or invoice to its customers.
15 The Commission alleges that in or about the period 1 November 2002 to 11 December 2002, Mr McDonald, on behalf of Auspine, Mr Bone, on behalf of Bone Timber, and Mr Daniel, on behalf of JAG Timber, made an arrangement or arrangements, or alternatively, arrived at an understanding or understandings, containing provisions including provisions that:
1. Auspine, Bone Timber and JAG Timber would no longer provide estimating services without charge, but would pass on to the customer any charges incurred at cost; and
2. Auspine, Bone Timber and JAG Timber would procure, or attempt to procure or induce, other timber suppliers to make an arrangement or arrangements, alternatively, to arrive at an understanding or understandings, containing a provision to the same effect, but including such other timber suppliers or some of them, as the provisions set out in subparagraph (1) above.
16 It is alleged that Mr McDonald, on behalf of Auspine, Mr Bone, on behalf of Bone Timber, and Mr Daniel, on behalf of JAG Timber, made the arrangement or arrangements, or arrived at the understanding or understandings, both in writing and orally. It is alleged that in or about late October to early November 2002, Mr McDonald, on behalf of Auspine, and Mr Bone, on behalf of Bone Timber, discussed with one another by telephone and in person, among other things, a proposal to obtain the support of timber suppliers to charge all customers a fee for service for the cost of providing or obtaining take-off lists. It is alleged that in early November 2002, following the discussions with Mr Bone, referred to above, Mr McDonald, on behalf of Auspine, prepared a final version of a notice to be sent to timber suppliers regarding the said proposal and that the final version of the notice was addressed ‘Dear customer’ and stated, among other things, that estimating charges, ‘can no longer be provided as a free service’ and that ‘charges incurred will be current estimating rates and passed on at cost’. It is alleged that on or about 7 November 2002, Mr McDonald, on behalf of Auspine, with the approval of Mr Bone on behalf of Bone Timber, drafted a letter to timber suppliers to accompany the final version of the notice referred to above, and distributed copies of the letter and that notice to timber suppliers (‘the 7 November 2002 letter and notice’). The letter was on letterhead titled ‘Timber Truss and Wall Frame Association (SA)’ dated 7 November 2002 and signed by Mr McDonald. The letter stated that it was their intention that the notice would be sent to all customers advising of their intentions ‘of charging for all estimates’. The letter asked recipients for their ‘support’ and advised that it was their intention to send out the notice (which was attached) with everyone’s signature on it as a ‘consolidated front’. A copy of the letter and notice was sent to timber suppliers, including Keith Timber, Dahlsens, Footersville, JAG Timber, Tarca, Wray, Dubsky Timber, Bone Timber and Timco.
17 On 11 November 2002, Mr and Mrs Daniel, on behalf of JAG Timber, sent an e-mail to Mr McDonald and Mr Bone, on behalf of Auspine and Bone respectively, indicating JAG Timber’s ‘support to the idea of advising customers on estimating charges’ and including a version which they prepared of the notice referred to above. The e-mail was sent to Mr McDonald’s e-mail address at Auspine and copied to Mr Bone’s e-mail address at Bone Timber. The said version of the notice was addressed to ‘Dear customer’ and stated that ‘timber merchants and truss manufacturers’ would, from 1 January 2003, no longer provide estimating services free of charge and provide customers with a list of available estimators so that customers could obtain their own take-off lists from estimators at their own expense or pass on their customers’ plans to estimators and any estimating charges incurred in obtaining and providing the take-off lists would be passed on to customers at cost. In the period from 11 November 2002 to 21 November 2002 Mr McDonald, on behalf of Auspine, and Mr Bone, on behalf of Bone Timber, and on another occasion Mr McDonald and Mr Daniel, on behalf of JAG Timber, discussed the draft version of the notice from JAG Timber referred to above.
18 In or about the period 21 November to early December 2002, Mr McDonald, on behalf of Auspine, adopted, converted to letter form and dated as 21 November 2002 the version of the notice provided by JAG Timber referred to above and prepared a final version in letter form of the notice on letterhead titled ‘Timber Truss and Wall Frame Association (SA)’ and bearing the names of 25 potential signatories (‘the proposal’). In or about the period 21 November to early December 2002 Mr McDonald, on behalf of Auspine, Mr Bone, on behalf of Bone Timber, and Mr Daniel, on behalf of JAG Timber, signed the proposal.
19 The Commission alleges that each of the provisions referred to above had the purpose or substantial purpose, or had or were likely to have had the effect, of fixing or controlling, or providing for the fixing or controlling, of the prices of estimating services supplied or to be supplied by the parties to the respective arrangements or understandings in competition with each other. The price of estimating services was fixed or controlled at the ‘cost’ to the parties to the respective arrangements or understandings of obtaining or providing the estimating services. Each provision was a provision that, by virtue of s 45A of the Act, is 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 in the market. By reason of s 84(2) of the Act the conduct of Mr McDonald, Mr Bone and Mr Daniel is deemed to have been the conduct of Auspine, Bone Timber and JAG Timber, respectively. It is alleged that by engaging in the conduct each of Auspine, Bone Timber and JAG Timber as therein referred to, made an arrangement or arrangements, or arrived at an understanding or understandings, a provision or provisions of which had the purpose or substantial purpose, or had or was or were likely to have the effect, of substantially lessening competition in the market in contravention of s 45(2)(a)(ii) of the Act, being a provision of the Act referred to in s 76(1)(a) and 80(1)(a) and 80(1)(a)(i) of the Act. It is alleged that each of Mr McDonald, Mr Bone and Mr Daniel was within the meaning of s 76(1)(e) and s 80(1)(e) of the Act directly or indirectly knowingly concerned in, or party to, the respective contributions by Auspine, Bone Timber and JAG Timber under s 45(2)(a)(ii) of the Act.
20 It is alleged that on or about 11 December 2002, Mr Bone, on behalf of Bone Timber, advised its customers that it would no longer provide estimating services without charge, but would pass on its customers’ plans to estimators and charge the cost of the estimation to customers’ accounts at cost, and, from about 12 February 2003, Bone Timber charged its customers for estimating charges at cost on a number of occasions. It is alleged that as from 11 December 2002, Bone, on behalf of Bone Timber, sent, to approximately 20 to 25 of its customers, an open letter (‘the open letter’) which attached the 21 November 2002 letter and referred to it as having ‘been sent to and signed by all the major timber merchants in South Australia’ and stated that as from 1 January 2003, Bone Timber would no longer be bearing the cost of estimating services, would be happy to continue to handle customers’ plans and send them on to estimators but would charge the cost of the estimation to customers’ accounts and any estimating charges put to customers’ account would be passed on at cost. It is alleged that as from 12 February 2003, Bone Timber charged estimating charges at cost to at least 43 customers. It is alleged that on or about a date presently unknown, but some time in or about November 2002, Mr Daniel, on behalf of JAG Timber, sent an open letter to some of its customers referring to future estimating arrangements in terms materially similar to those found in 7 November 2002 letter and notice or 21 November 2002 letter or both, and that from about 20 March 2003, JAG Timber charged its customers for estimating charges at cost on a number of occasions. It is alleged that from about 28 March 2003, JAG Timber charged estimating charges at cost to at least eight customers. It is alleged that by reason of the above matters that each of Mr Bone, on behalf of Bone Timber, and Mr Daniel, on behalf of JAG Timber, gave effect, or alternatively intended or attempted to give effect, to the provision referred to in paragraph [15] above.
21 It is alleged that in or about the period 21 November to early December 2002, Mr McDonald, on behalf of Auspine, and Mr Bone, on behalf of Bone Timber, discussed the proposal with other timber suppliers and procured their signatures to the proposal intending and expecting that the timber suppliers whose signatures or agents’ signatures appeared on the proposal would no longer provide estimating services without charge but would pass on to the customer any charges incurred at cost and thereby, in the case of each of Mr McDonald, on behalf of Auspine, and Mr Bone, on behalf of Bone Timber, gave effect to or intended and attempted to give effect to the provision of the arrangement or understanding referred to in paragraph [15] above. It is alleged that in or about the period 21 November to early December 2002 McDonald, on behalf of Auspine, and Mr Bone, on behalf of Bone Timber, telephoned and attended on Mr Thomas of Freeman Wauchope and Mr Dubsky of Dubsky Timber. It is alleged that Mr McDonald, on behalf of Auspine, telephoned and/or attended on Mr Stewart of Timbertech, Mr Footer of Footersville and Mr Pietrobon of Wingfield to discuss and obtain their companies’ acceptance of the proposal. It is alleged that in or about the period 21 November to early December 2002 Mr Thomas, on behalf of Freeman Wauchope, signed the proposal at the time of the attendance of Mr McDonald and Mr Bone and that Mr Dubsky, on behalf of Dubsky Timber, signed the proposal at the time of the attendance of Mr McDonald and Mr Bone, and that each of Mr Stewart, on behalf of Timbertech, Mr Footer, on behalf of Footersville, and Mr Pietrobon, on behalf of Wingfield, signed the proposal at the time of the attendance of Mr McDonald as referred to above.
22 It is alleged that by s 84(2) of the Act the conduct of Mr Bone and Mr Daniel and the conduct of Mr McDonald and Mr Bone is deemed to have been the conduct of Auspine, Bone Timber and JAG Timber respectively. It is alleged that, by engaging in the conduct, each of Bone Timber and JAG Timber gave effect to a provision or provisions of an arrangement or understanding which provision or provisions had the purpose or substantial purpose, or had or was or were likely to have the effect, of substantially lessening competition in the market in contravention of s 45(2)(b)(ii) of the Act, being a provision of the Act referred to in s 76(1)(a)(i) and 80(1)(a)(i) of the Act or, in the alternative, intended and attempted to give effect to such a provision or provisions being conduct of the kind referred to in ss 76(1)(b) and 80(1)(b) of the Act. It is alleged that, by the conduct, each of Auspine and Bone Timber gave effect to a provision or provisions of an arrangement or understanding which provision or provisions had the purpose or substantial purpose, or had or was or were likely to have the effect, of substantially lessening competition in the market in contravention of s 45(2)(b)(ii) of the Act, being a provision of the Act referred to in s 76(1)(a)(i) and s 80(1)(a)(1) of the Act or, in the alternative, intended an attempted to give effect to such a provision or provisions in conduct of the kind referred to in s 76(1)(b) and s 80(1)(b) of the Act. It is alleged that each of Mr McDonald, Mr Bone and Mr Daniel was within the meaning of s 76(1)(e) and s 80(1)(e) of the Act directly or indirectly, knowingly concerned in, or party to, the respective contraventions by Auspine, Bone Timber and JAG Timber, of s 45(2)(b)(ii) of the Act.
23 In the alternative to the above, it is alleged that Auspine, Bone Timber and JAG Timber, by their agents, intended and attempted to make an arrangement or arrangements, or intended and attempted to arrive at an understanding or understandings, in the terms set out in paragraph [15] above and which had the purpose or substantial purpose, or effect or likely effect, of substantially lessening competition in the market, and thereby attempted to contravene s 45(2)(a)(ii) of the Act.
The Orders and Undertakings
24 Before considering each undertaking it is appropriate to make some general points about the Court’s power to accept undertakings and the exercise of that power.
25 First, the Court’s power to accept an undertaking is subject to the same limitations that apply to its power to grant an injunction. In other words, the Court cannot accept an undertaking in terms which go beyond the Court’s power to grant an injunction in similar terms. This proposition is well-established: Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 per Gibbs CJ, Stephen, Mason and Wilson JJ at 164-165 (‘Thomson’).
26 An undertaking to the Court is given in lieu of an injunction and the remedies for breach of an undertaking are the same as those for breach of an injunction. In Thomson, Gibbs CJ, Stephen, Mason and Wilson JJ said (at 165):
‘As an undertaking is given in lieu of an injunction and is enforceable in like manner, the principles which govern the grant of an injunction by a court must guide it in deciding whether it should accept an undertaking. Limitations which affect the court’s jurisdiction or power to grant a final injunction must be observed in the acceptance of an undertaking when it is offered as a substitute for a final injunction.’
27 In a case such as this one where the contravening conduct is neither admitted nor proved, the Court’s power to grant an injunction is contained in s 80(1AA). The relevant provisions of s 80, including that subsection, are as follows:
‘(1) Subject to subsections (1A), (1AAA) and (1B), where, on the application of the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:
(a) a contravention of any of the following provisions:
(i) a provision of Part IV, IVA, IVB, V or VC;
(ii) section 75AU or 75AYA;
(b) attempting to contravene such a provision;
(c) aiding, abetting, counselling or procuring a person to contravene such a provision;
(d) inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision;
(e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or
(f) conspiring with others to contravene such a provision;
the Court may grant an injunction in such terms as the Court determines to be appropriate.
…
(1AA) Where an application for an injunction under subsection (1) has been made, whether before or after the commencement of this subsection, the Court may, if the Court determines it to be appropriate, grant an injunction by consent of all the parties to the proceedings, whether or not the Court is satisfied that a person has engaged, or is proposing to engage, in conduct of a kind mentioned in subsection (1).
…
(4) The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised:
(a) whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind;
(b) whether or not the person has previously engaged in conduct of that kind; and
(c) whether or not there is an imminent danger of substantial damage to any person if the first‑mentioned person engages in conduct of that kind.
…
(5) The power of the Court to grant an injunction requiring a person to do an act or thing may be exercised:
(a) whether or not it appears to the Court that the person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing;
(b) whether or not the person has previously refused or failed to do that act or thing; and
(c) whether or not there is an imminent danger of substantial damage to any person if the first‑mentioned person refuses or fails to do that act or thing.’
28 Secondly, the Court’s power to grant an injunction in the case of a contravention of the Act is contained exclusively in s 80 of the Act and no reliance can be placed on s 23 of the Federal Court of Australia Act 1976 (Cth): Thomson per Gibbs CJ, Stephen, Mason and Wilson JJ at 161-162; Foster v Australian Competition and Consumer Commission (2006) 149 FCR 135 (Ryan, Finn and Allsop JJ) at 145 [22] (‘Foster’).
29 Thirdly, in the same way as an injunction must be couched in clear and unambiguous language, so must an undertaking. As the learned authors of Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (4th ed, 2002) at [21-505] say, ‘the recipient of it must be placed in a position where he knows exactly what he is obliged to do’. (See also Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 per French J at 88-89 [26] (‘REIWA’)). An undertaking should not be accepted if it is vague and uncertain or if enforcement is likely to prove impossible. This proposition is subject to a narrow qualification. I agree with the point made by French J, albeit in the context of s 86C, that in the context of compliance programmes it is neither practicable nor useful to prescribe with minute particularity the content of such programmes: Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 at [24]. An order or undertaking which contains objectives to be fulfilled, or aims to be achieved, might be too uncertain to be enforceable, although the problem might be overcome by making the obligation a best or reasonable endeavours obligation: REIWA per French J at 90 [35].
30 Fourthly, there must be a relevant nexus between the injunction or undertaking and the alleged or established contravening conduct. It is not the case that an injunction or undertaking can only be framed in terms of restraining a repetition of contravening or alleged contravening conduct: Foster. As far as future conduct is concerned, an injunction or undertaking may be in wider terms. The question of what is a relevant nexus between the alleged or established conduct and the proposed order or undertaking has been discussed in the context of orders or undertakings requiring a compliance or educational programme to be implemented. Of course, there is no denying the desirability of an extensive compliance or educational programme, but that is a different issue from the question of the Court’s power to order such a programme or to accept an undertaking to implement such a programme. In Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 (‘Z-Tek’), Merkel J considered the scope of an appropriate order implementing a trade practices compliance programme. His Honour said (at 203):
‘In summary, in determining whether an injunction under s 80 is "appropriate" there are, at least, three limitations on the Court's power.
First, the power is confined by reference to the scope and purpose of the TPA and in particular s 80. It is within the scope and purpose of s 80 to grant injunctive relief which is designed to prevent a repetition of the conduct for which the relief is sought.
Secondly there is a contextual limitation within s 80 itself. As the jurisdiction to grant an injunction is enlivened by an alleged or actual contravention of a provision of Pt IV, IVA or V of the TPA, there must be a sufficient nexus or relationship between the contravention and the injunction granted. It is that nexus or relationship that enables determination by the Court of whether the injunction sought is "appropriate".
Thirdly, there is the constitutional limitation which requires that the injunction granted be related to the case or controversy the subject of the proceeding.’
A little later, his Honour said (at 205):
‘The trade practices compliance program agreed to relates to the TPA generally rather than to the specific provisions in Pt V which are alleged to have been contravened by Z-Tek. It was contended by counsel for the ACCC that the program was "appropriate" because it arose as a result of a breach of the TPA. In my view the contention is based on an unwarranted and excessively broad view of s 80. The jurisdiction to make orders under s 80 only arises as a result of advertising and representations by Z-Tek which are alleged to have contravened ss 52, 53(e) and 53C of the TPA. As the order is sought under s 80(1AA) I do not have to be satisfied that the conduct contravened the particular provisions of the TPA. Nevertheless, I must determine whether the orders are "appropriate".
For the reasons discussed earlier any order requiring the implementation of a trade practices compliance program should be one which has a sufficient nexus or relationship to the conduct alleged to constitute a breach of a particular provision of the TPA. Given that the orders are sought by consent I am prepared to take a broad view of the conduct which may fairly be described as misleading or deceptive advertising and the making of representations in contravention of ss 52, 53(e) and 53C of the TPA. The compliance program, which the Court may order, should be no wider than one which is designed to prevent repetition of that conduct.
The orders sought require a compliance program in respect of all parts of the TPA which will include, for example, Pt IV and other parts which have no connection whatsoever with the alleged conduct giving rise to the case or controversy in the Court. In my view it is not appropriate to make orders which require a compliance program which relates to conduct other than the alleged contravening conduct as characterised by the Court.’
The comments of Merkel J (at 203) were referred to in Foster. The Full Court did not say anything to suggest that they did not agree with his observations.
31 French J considered the same issue in REIWA. His Honour said (at 88):
‘The question whether there is a sufficient nexus between the order sought and the contravention alleged involves an evaluative judgment. At one level the orders sought may be so remote from the contravention alleged that the question is readily resolved as one of power. Thus an injunction directing implementation of a compliance program covering all of the provisions of Pt V in answer to an alleged contravention of Pt IV of the Act might well be thought so remote from the contravention as to be beyond the purpose of s 80 and thus beyond its power. A fortiori such an order might be thought inappropriate even if strictly within power. I respectfully agree with his Honour in relation to that aspect of his approach in the Z-Tek case.
A contravention of a basic prohibition of competition law may be indicative of lack of awareness of the requirements of that law generally. To enter into a blatant price fixing arrangement with a competitor might well fall within that category. In such a case an order for a compliance program providing for development of awareness of the provision contravened and related areas of competition law may be seen as appropriately connected to the contravention and designed to prevent the diversion of public resources to further enforcement action whether in relation to the contravention grounding the claim or contraventions in the same general area. What is “a sufficient nexus” between the conduct the subject of the injunction and the conduct alleged or found to constitute a contravention of a provision of the Act is a matter of judgment. In ACCC v Z-TekMerkel J accepted that the making of orders or the acceptance of undertakings to implement a trade practices compliance program are within the power conferred upon the court by s 80 of the Trade Practices Act.
In that case his Honour considered ordering a compliance program with respect to Pt V generally but declined to do so on the basis of the disparate nature of the provisions of Pt V which were as far removed from the contravention complained of as Pt V is from the provisions of Pt IV. In the event this was a question of judgment of the sufficiency of the nexus between the compliance program ordered and the particular contravention. I do not take his Honour’s approach to preclude the possibility of a compliance program which covers the provisions of Pt IV generally.’
32 I respectfully agree with those observations.
33 Before leaving this point, I should mention s 86C of the Act which was introduced in 2001. It relevantly provides:
‘(1) The Court may, on application by the Commission, make one or more of the orders mentioned in subsection (2) in relation to a person who has engaged in contravening conduct.
(2) The orders that the Court may make in relation to the person are:
(a) a community service order; and
(b) a probation order for a period of no longer than 3 years; and
(c) an order requiring the person to disclose, in the way and to the persons specified in the order, such information as is so specified, being information that the person has possession of or access to; and
(d) an order requiring the person to publish, at the person’s expense and in the way specified in the order, an advertisement in the terms specified in, or determined in accordance with, the order.
(3) This section does not limit the Court’s powers under any other provision of this Act.
(4) In this section:
community service order, …
contravening conduct means conduct that:
(a) contravenes Part IV, IVA, IVB, V or VC or section 75AU or 75AYA; or
(b) constitutes an involvement in a contravention of any of those provisions.
probation order, in relation to a person who has engaged in contravening conduct, means an order that is made by the Court for the purpose of ensuring that the person does not engage in the contravening conduct, similar conduct or related conduct during the period of the order, and includes:
(a) an order directing the person to establish a compliance program for employees or other persons involved in the person’s business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to the contravening conduct, similar conduct or related conduct; and
(b) an order directing the person to establish an education and training program for employees or other persons involved in the person’s business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to the contravening conduct, similar conduct or related conduct; and
(c) an order directing the person to revise the internal operations of the person’s business which lead to the person engaging in the contravening conduct.’
34 This section is not directly relevant in this case because it is only engaged on a finding that a person has engaged in contravening conduct (s 86C(1)) and that is not the case here. I note that the type of ‘probation order’ which may be made under the section may only relate to the ‘contravening conduct, similar conduct or related conduct’ so the section itself requires a nexus between the contravening conduct and the order or undertaking. I did not hear submissions on whether s 86C bears upon the interpretation of s 80 and I will say nothing on that topic. I will proceed by having regard to the principles developed in the context of s 80 of the Act.
35 Fifthly, a question which has arisen in the cases, and which arises in this case, is the Court’s power to make an order or accept an undertaking requiring an external audit of a compliance programme or, alternatively, the appropriateness of so doing. It seems that such an order may not be made under s 86C: BMW Australia Ltd v Australian Competition and Consumer Commission (2004) 207 ALR 452 (Gray, Goldberg and Weinberg JJ) at 468 [51]. It is important to have a clear understanding of what is meant by an external audit of a compliance programme. In my opinion, an order or undertaking which leaves the definition of the major obligations undertaken by a respondent to a third party or which makes the question of whether there has been a breach turn on the assessment or opinion of a third party is beyond power, or at the very least inappropriate. A court should not grant an injunction leaving the scope of the injunction to be determined by a third party and should not accept an undertaking to similar effect. Such an injunction or undertaking would not be in clear and unambiguous terms and it would involve an impermissible delegation of the Court’s power to formulate the terms of the order and to determine the question of breach. None of this is to say that an order or undertaking might not include a provision for an external audit providing the major obligations are defined and it is clear that the question of breach is for the court to determine, having regard to the facts and the terms of the order or undertaking.
36 I turn now to consider the particular undertakings proffered in this case.
37 The first undertaking which is proffered by the corporate respondents is in the following terms:
‘Each of Auspine Limited, Geo J Bone & Sons Pty Ltd and JAG Timber Products Pty Ltd, for a period of 5 years, whether by its directors, servants or agents or otherwise howsoever, undertakes to the Court to refrain from:
(a) making or attempting to make any contract or arrangement, or arriving at or attempting to arrive at any understanding, with a competitor or competitors containing a provision or provisions that:-
(i) any or all of them would no longer provide estimating services without charge but would pass on to the customer any charges incurred at cost;
(ii) any or all of them would procure or attempt to procure or induce other competitors to make an arrangement or arrangements, alternatively to arrive at an understanding or understandings, containing a provision to the same effect, but including such other competitors or some of them, as the provision set out in subparagraph (i) above; or
(iii) any or all of them would charge customers for estimating services at a particular price or particular prices or in accordance with or by reference to a particular mechanism, process or procedure by which the price or prices of estimating services to be charged by all or any of them would be fixed or controlled.
(b) giving effect to any such contract, arrangement or understanding with a competitor or competitors containing a provision or provisions that:-
(i) any or all of them would no longer provide estimating services without charge but would pass on to the customer any charges incurred at cost;
(ii) any or all of them would procure or attempt to procure or induce other competitors to make an arrangement or arrangements, alternatively to arrive at an understanding or understandings, containing a provision to the same effect, but including such other competitors or some of them, as the provision set out in subparagraph (i) above; or
(iii) any or all of them would charge customers for estimating services at a particular price or particular prices or in accordance with or by reference to a particular mechanism, process or procedure by which the price or prices of estimating services to be charged by all or any of them would be fixed or controlled.’
38 This is an undertaking which restrains conduct which would be a contravention of the Act and, as it is within the power of the Court to grant an injunction in similar terms, it is within the power of the Court to accept the undertaking. I have the power to accept the first undertaking and I think that it would be appropriate to do so. The undertaking has been proffered as part of a negotiated settlement of what is a complex dispute. Unless there was good reason not to do so, and there is no such reason here, then, providing the adoption of the settlement is within power, I should give effect to the settlement reached between the parties. All the corporate respondents were legally represented as was the Commission and I see no reason why it would not be appropriate to accept the first undertaking: N W Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 per Burchett and Kiefel JJ at 291; REIWA per French J at 87 [20]-[21].
39 The second undertaking is proffered by the three individual respondents and is in the following terms:
‘Each of Mr Frank McDonald, Mr Andrew Bone and Mr Gary Daniel, for a period of 5 years, undertakes to the Court to refrain from inducing or attempting to induce or being directly or indirectly, knowingly concerned in, or party to the making of, or the arriving at, or the giving effect to, any such contract, arrangement or understanding between a corporation and one or more of its competitors which contains a provision or provisions that:
(i) any or all of them would no longer provide estimating services without charge but would pass on to the customer any charges incurred at cost;
(ii) any or all of them would procure or attempt to procure or induce other competitors to make arrangement or arrangements, alternatively to arrive at an understanding or understandings, containing a provision to the same effect, but including such other competitors or some of them, as the provision set out in sub-paragraph (i) above; or
(iii) any or all of them would charge customers for estimating services at a particular price or particular prices or in accordance with or by reference to a particular mechanism, process or procedure by which the price or prices of estimating servicesto be charged by all or any of them would be fixed or controlled.’
40 As with the first undertaking, I have the power to accept the undertaking and I think it would be appropriate to do so. The individual respondents, other than Mr McDonald, had legal representation, and Mr McDonald told me that he had received legal advice.
41 The third undertaking is proffered by Auspine, the fourth is proffered by Bone Timber and JAG Timber, and the fifth is proffered by the individual respondents. All undertakings require positive measures to be undertaken by those proffering them and the measures involve compliance or education programmes.
42 I will deal first with the fifth undertaking because it is straightforward and can be disposed of briefly. It is in the following terms:
‘An undertaking given to the Court by each of Mr Frank McDonald, Mr Andrew Bone and Mr Gary Daniel that he will attend a Trade Practices Compliance seminar in accordance with the terms of Annexure 2 hereto.’
43 Annexure 2 provides as follows:
‘1. The Respondent will attend a Trade Practices Compliance Seminar conducted by an independent person with appropriate knowledge of trade practices law within 3 months of this Undertaking.
2. The Seminar will address the provisions of Part IV of the Trade Practices Act 1974 (“the TPA”) proscribing restrictive trade practices and will, in particular, address the issue of price fixing and anti-competitive collusion in the context of contracts, arrangements and understandings.’
44 In my opinion, the undertaking is within power and it would be appropriate to accept it. It is true that the seminar will go beyond the particular provisions in issue in this case, but I think there is a sufficient nexus between the alleged contravening conduct and the subject matter of the proposed seminar. The seminar is to relate to Part IV of the Act and, in particular, the issue of price fixing and anti-competitive collusion in the context of contracts, arrangements and undertakings. In my opinion, a knowledge of the other provisions of Part IV of the Act will assist in an understanding of the operation of s 45 and s 45A.
45 The third undertaking is proffered by Auspine and is in the following terms:
‘An undertaking given to the Court by the first respondent that it will implement the recommendations contained in the March 2006 ‘Report on the Implementation and Effectiveness of Auspine Limited’s Trade Practices Compliance Program’ prepared by Watchdog Compliance Pty Ltd which forms exhibit DCJ-1 to the affidavit of David Charles Johnson filed on behalf of the First Respondent in these proceedings.’
46 Mr Johnson is the author of the report. He holds qualifications in economics and law and was employed in the Commission’s compliance section for a number of years. He appears to be well-qualified to express the opinions set out in the report.
47 The purpose of the report was to review the implementation and effectiveness of Auspine’s trade practice compliance programme over five years. The aim or purpose of the report is stated in paragraph 13 as follows:
‘This report aims to provide Auspine with a summary of the trade practices compliance measures that Auspine has taken over the preceding five years and our independent assessment of how effective those measures have been.’
48 The conclusions of Mr Johnson are generally favourable to Auspine in terms of the effectiveness of its trade practices compliance programme. However, in the course of his report Mr Johnson makes a number of recommendations, and those recommendations are the subject of the undertaking. They are as follows:
‘46. Auspine may wish to consider the development of short, targeted information sheets that could be made available to staff as relevant (eg restrictive trade practices issues, consumer protections issues). These would be more likely to be read and referred to by staff than the longer manuals and policies that are currently available.
47. It may also benefit Auspine to engage in a process (eg regular e‑mails, notices or short regular training sessions for staff) which are designed to raise staff awareness of their everyday trade practices obligations.
…
62. That Auspine, in consultation with its current Company Secretary and Legal Counsel review whether any additional support or resources are required to effectively perform the role of Compliance Manager.
…
75. Auspine may wish to consider strengthening its program by arranging regular “reminder” sessions for staff and business managers on how trade practices issues can be identified and referred. For example, as resources permit, Auspine’s Legal Counsel may be able to provide regular brief presentations at various Business Unit meetings within Auspine on current trade practices related matters that may have an impact on Auspine. This will also allow that person to “touch base” with staff and keep trade practices compliance current in the minds of staff in between the planned biannual training sessions.
…
88. If training is to be rolled out to Auspine staff every two years, steps should be taken during that time to ensure that staff remain aware of current trade practices issues and any changes to the legislation.
89. Auspine may wish to consider short, regular trade practices “information” sessions that could be conducted for targeted staff on topics of relevance to Auspine’s operations. This will assist Auspine by reducing the time between training sessions, ensuring more targeted training is conducted while minimising disruption to everyday duties of staff and general business operations of Auspine.
…
104. Auspine may wish to strengthen the Program by taking steps to remind staff on a regular basis of the trade practices risks that are relevant to their everyday operations. This could be done by way of targeted brief information sessions for groups of staff or regular presentations by Auspine’s Legal Counsel at Business Unit or staff meetings.’
It seems to me that there are two difficulties with this undertaking. The first difficulty is that the compliance programme to which the undertaking relates goes beyond the provisions of ss 45 and 45A of the Act and indeed the provisions in Part IV of the Act (Z-Tek, REIWA). This difficulty can be overcome by linking the recommendations to the provisions in Part IV of the Act.
49 The second difficulty relates to the nature of the recommendations. Is it within power or appropriate to impose nothing more than an obligation to consider doing something? Counsel for the Commission said that it was, likening the obligation to that placed on the holder of a power to appoint property of a testator or settlor to third parties. I am prepared to accept that in the circumstances of this case it is within power and appropriate to impose an obligation (or accept an undertaking) requiring Auspine to consider doing something. The undertaking is proffered as part of a commercial settlement. Auspine is a large organisation which has a detailed trade practices compliance programme and an obvious interest in improving the same. The difficulty with some of the recommendations set out above is that they do not even place an obligation on Auspine to consider taking a particular course of action. I would not accept an undertaking in such terms. This particular problem can be overcome by making the obligation to consider mandatory.
50 The fourth undertaking is proffered by Bone Timber and JAG Timber and is in the following terms:
‘An undertaking given to the Court by each of the Third and Fifth Respondents that it will implement a Trade Practices Corporate Compliance Program in accordance with the terms of Annexure 1 hereto.’
51 There are difficulties with this undertaking which arise from the terms of the programme referred to in the undertaking. To understand these difficulties, it is necessary to set out in full the terms of the programme:
‘1. The Respondent shall appoint a Trade Practices Compliance Officer to be responsible for the implementation of the Program. The Program will be implemented within two calendar months of this Undertaking.
2. The Respondent shall ensure that The Trade Practices Compliance Officer receives training in trade practices law.
3. The Respondent will ensure that the Program, including processes which the Respondent intends to implement in order to comply with the Program, are approved by an independent external consultant with appropriate knowledge of trade practices law prior to implementation.
4. The Respondent shall require the Trade Practices Compliance Officer to review:
4.1 The contents of any media and material containing training or operational information for its staff to ensure that it adequately addresses and informs about:
4.1.1 restrictive trade practices proscribed by Part IV of the Trade Practices 1974 [sic] (‘the TPA’), including in particular price fixing and anti-competitive collusion in the context of contracts, arrangements and understandings; and
4.1.2 consequences of breaching the TPA.
4.2 Training and operating procedures for its staff involved in any way in quoting or providing takeoffs for supply of timber, or in organizing, attending or otherwise participating in any meetings with competitors concerning matters relevant to the trading activities of such persons, to ensure that its staff are adequately informed and advised about:
4.2.1 restrictive trade practices proscribed by the TPA, including in particular price fixing and anti-competitive collusion in the context of contracts, arrangements and understandings;
4.2.2 not contravening the provisions of Part IV of the TPA; and
4.2.3 consequences of breaching the TPA.
5. The Respondent shall require the Trade Practices Compliance Officer to maintain a documentary record of the compliance review of:
(a) The Respondent’s training and operational media and material;
(b) The Respondent’s training and operating procedures for staff involved in any way quoting or providing takeoffs for supply of timber, or in organizing, attending or otherwise participating in any meetings with competitors concerning matters relevant to the trading activities of such persons.
Such documentary record will include:
(i) a description of the media and materials;
(ii) a copy of the materials;
(iii) written advice that the relevant media and materials have been reviewed and cleared by the Trade Practices Compliance Officer (including the date on which they were reviewed);
(iv) written advice of any improvements that could be made to reduce the risks of possible contraventions of the TPA that were identified by the Trade Practices Compliance Officer and the action taken to implement those improvements.
6. The Respondent shall ensure that the documentary records of the compliance reviews are available to the Australian Competition and Consumer Commission to be reviewed from time to time. Such records are to be available from one week after the date of review for a period of three years after that date. Such records are to be provided to the Australian Competition and Consumer Commission within five working days of a written request for those records.
7. The Respondent shall ensure that an independent external consultant with expertise in trade practices law conducts training on the Program including in relation to price fixing and anti-competitive collusion in contravention of Section 45 of the TPA, to the Respondent’s staff on six occasions during the three year period following the making of this Undertaking. The first of these training programs is to be completed within three calendar months of this Undertaking and the remaining five on a six monthly basis thereafter.
8. The Respondent shall retain an independent external consultant with expertise in trade practices law to provide the Australian Competition and Consumer Commission with three annual reports (being at 12 months, 24 months and 36 months following the making of this Undertaking) on the Respondent’s compliance with the Program, and these reports shall be provided to the Australian Competition and Consumer Commission within:
(a) 13 months of this Undertaking;
(b) 25 months of this Undertaking; and
(c) 37 months of this Undertaking
respectively.
9. The annual reports shall include the review and reporting of:
(a) The Respondent’s adherence to the Program;
(b) The implementation of the Program, its consistency with Australian Standard AS-3806 and the achievement of its objectives over the preceding twelve months; and
(c) Any recommended changes to the Program that may be necessary to ensure achievement of its objectives.’
52 The principal problem is that the major aspects of the programme are not defined. The formulation of the programme is left to the respondent and the external consultant (clause 3). The suggestion is that it is up to an independent external consultant to determine if whatever programme is formulated is appropriate and is implemented from time to time (clauses 8 and 9). As I have said, I do not see a difficulty with a requirement that an independent external consultant review the question of compliance with a programme providing the major aspects of the programme are defined and providing the question of whether there has been a breach of the programme is not made to turn solely on the consultant’s opinion. A further difficulty is that there is a suggestion (see clause 9(c)) that the programme may be changed from time to time.
53 I do not think that I have the power to accept this undertaking or, in the alternative, I do not think that it is appropriate to do so.
Conclusion
54 For these reasons, I refuse to accept the undertakings proffered by the respondents and to make the orders sought by the parties. I will give the parties liberty to apply so that the parties can make a further application if so advised.
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I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. |
Associate:
Dated: 7 September 2006
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Counsel for the Applicant: |
E Strong QC and N Wilson |
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Solicitor for the Applicant: |
Norman Waterhouse |
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Counsel for the First Respondent: |
R Ross-Smith |
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Solicitor for the First Respondent: |
T Nguyen |
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The Second Respondent: |
The Second Respondent appeared in person. |
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Counsel for the Third and Fourth Respondents: |
S Lumsden |
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Solicitor for the Third and Fourth Respondents: |
Wallmans Lawyers |
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Counsel for the Fifth and Sixth Respondents: |
P Britten-Jones |
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Solicitor for the Fifth and Sixth Respondents: |
Cowell Clarke |
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Date of Hearing: |
17 July 2006 |
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Date of Judgment: |
7 September 2006 |
