FEDERAL COURT OF AUSTRALIA
Australian Competition & Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 794
TRADE PRACTICES – price-fixing – arrangements or understandings – whether existed between competitors within the Geelong retail petrol market – whether contained provisions for the fixing of retail petrol prices – whether necessary for parties to have commitment or moral obligation – applicant pleaded existence of seven bipartite and one tripartite interlocking arrangements or understandings and that effect was given to them on a number of occasions within a two-year period – relied on oral evidence of some alleged parties to them, circumstantial evidence in the form of data as to times of telephone communications between parties to alleged arrangements or understandings and changes in retail price of petrol, as well as admissions by some alleged parties to arrangements or understandings – whether evidence established existence, and giving effect to, of arrangements or understandings – whether evidence of origins of alleged arrangements or understandings sufficient – whether oral evidence and circumstantial evidence inconsistent – oral evidence not specific as to any particular occasion – circumstantial evidence often inconsistent with oral evidence, and with applicant’s allegations – whether judgment should be given on admissions
EVIDENCE – admissions – whether appropriate to exercise discretion to pronounce judgment based on admissions – whether reason to question correctness of facts admitted or agreed – whether previous representations made in furtherance of common purpose – whether reasonably open to find that representations were made in furtherance of common purpose – existence of common purpose established by evidence other than previous representation itself
WORDS AND PHRASES – “contract”, “arrangement”, “understanding”, “make an arrangement”, “arrive at an understanding”, “provision”
Corporations Act 2001 (Cth) s 500(2)
Evidence Act 1995 (Cth) ss 38(1)(c), 50, 57(2), 59(1), 60, 81(1), 83, 87, 87(1)(a), 87(1)(b), 87(1)(c), 87(2), 140
Federal Court of Australia Act 1976 (Cth) s 21(1)
Trade Practices Act 1974 (Cth) ss 4(1), 6A(1), 6A(2)(a), 6A(2)(d), 45, 45(2), 45(2)(a), 45(2)(b), 45A, 45A(1), 45A(5), 45A(6), 75B, 76, 76(1A)(b), 76(1B), 77(1), 80, 80(1), 84(2), 155
Federal Court Rules (Cth) O 1 r 8, O 11 r 13, O 11 r 13(1), O 18 r 4
Adams v Naylor [1946] AC 543 cited
Ahern v R (1988) 165 CLR 87 cited
Apco Service Stations Pty Ltd v Australian Competition and Consumer Commission [2005] FCAFC 161 (2005) ATPR 42-078 followed
ACCC v Apco Service Stations Pty Ltd & Anor [2006] HCATrans 272 cited
Australian Competition and Consumer Commission v CC (NSW) Pty Ltd [1999] FCA 954 (1999) 92 FCR 375 cited
Australian Competition and Consumer Commission v Francis [2004] FCA 487 (2004) 142 FCR 1 cited
Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2004] FCA 1678 (2004) 141 FCR 183 cited
Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) [2005] FCA 254 cited
British Basic Slag Ltd v Registrar of Restrictive Trading Agreements [1963] 2 All ER 807 cited
Damberg v Damberg [2001] NSWCA 87 (2001) 52 NSWLR 492 followed
Federal Commissioner of Taxation v Cooper Brookes (Wollongong) Pty Ltd (1979) 41 FLR 277 cited
Federal Commissioner of Taxation v Lutovi Investments Pty Ltd (1978) 140 CLR 434 discussed
Gramophone Co Ltd v Magazine Holder Co (1911) 28 RPC 221 cited
L Grollo & Co Pty Ltd v Nu-Statt Decorating Pty Ltd (1978) 34 FLR 81 cited
R v Macraild (unreported, NSW Court of Criminal Appeal, Sully, Dunford and Simpson JJ, 18 December 1997) cited
Royster v Cavey [1947] KB 204 cited
Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213 (2002) 118 FCR 236 cited
Symes v The Proprietors Strata Plan No 31731 [2003] NSWCA 7 cited
Termijtelen v Van Arkel [1974] 1 NSWLR 525 cited
Top Performance Motors Pty Ltd v Ira Berk (Queensland) Pty Ltd (1975) 24 FLR 286 cited
Trade Practices Commission v Email Ltd (1980) 31 ALR 53 cited
Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 cited
Tripodi v R (1961) 104 CLR 1 cited
Watt v R [2000] NSWCCA 37 cited
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v LEAHY PETROLEUM PTY LTD (ACN 078 819 431), APCO SERVICE STATIONS PTY LTD (ACN 007 229 898), PEGASUS RETAIL PTY LTD (ACN 000 641 270), UNITED GEELONG PTY LTD (ACN 004 895 881), BRUMAR (VIC) PTY LTD (ACN 084 399 879), UNITED RETAIL PTY LTD (ACN 086 310 152), LIBERTY PETROLEUM PTY LTD (ACN 071 833 844), ANDRIANOPOULOS MOTORS PTY LTD (ACN 004 975 955), IAN LESLEY CARMICHAEL, MICHAEL JOHN WARNER, PETER JOSEPH ANDERSON, BRUNO GALLUCCI, ANDREW RONALD PITMAN, EINOKALEVI HEIKKILA, GARRY VICTOR DALTON, COLIN JAMES WILLIAMSON, ALAN SHUVALY AND CHRISTOS ANDRIANOPOULOS
V 1012 of 2003
GRAY J
29 MAY 2007
MELBOURNE
| IN THE FEDERAL COURT OF AUSTRALIA |
|
| VICTORIA DISTRICT REGISTRY | V 1012 of 2003 |
| BETWEEN: | AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
|
| AND: | LEAHY PETROLEUM PTY LTD (ACN 078 819 431) FIRST RESPONDENT
APCO SERVICE STATIONS PTY LTD (ACN 007 229 898) SECOND RESPONDENT
PEGASUS RETAIL PTY LTD (ACN 000 641 270) THIRD RESPONDENT
UNITED GEELONG PTY LTD (ACN 004 895 881) FOURTH RESPONDENT
BRUMAR (VIC) PTY LTD (ACN 084 399 879) FIFTH RESPONDENT
UNITED RETAIL PTY LTD (ACN 086 310 152) SIXTH RESPONDENT
LIBERTY PETROLEUM PTY LTD (ACN 071 833 844) SEVENTH RESPONDENT
ANDRIANOPOULOS MOTORS PTY LTD (ACN 004 975 955) EIGHTH RESPONDENT
IAN LESLEY CARMICHAEL NINTH RESPONDENT
MICHAEL JOHN WARNER TENTH RESPONDENT
PETER JOSEPH ANDERSON ELEVENTH RESPONDENT
BRUNO GALLUCCI TWELFTH RESPONDENT
ANDREW RONALD PITMAN THIRTEENTH RESPONDENT
EINOKALEVI HEIKKILA FOURTEENTH RESPONDENT
GARRY VICTOR DALTON FIFTEENTH RESPONDENT
COLIN JAMES WILLIAMSON SIXTEENTH RESPONDENT
ALAN SHUVALY SEVENTEENTH RESPONDENT
CHRISTOS ANDRIANOPOULOS EIGHTEENTH RESPONDENT
|
| JUDGE: | GRAY J |
| DATE OF ORDER: | 29 MAY 2007 |
| WHERE MADE: | MELBOURNE |
THE COURT ORDERS THAT:
1. The application be dismissed.
2. The question of costs be reserved.
3. On or before 22 June 2007, any party wishing to raise any issue about costs file and serve on each other party affected by that issue a written outline of submissions, no more than six pages in length, setting out the issue or issues of costs that the party seeks to raise and a brief account of the submissions that the party wishes to make about each such issue.
4. On or before 13 July 2007, each party affected by an issue relating to costs raised by another party file and serve on the party raising the issue a written outline of submissions, no more than six pages in length, setting out the party’s response to the submissions made by the other party about the issue.
5. The proceeding be listed for hearing in relation to any issues of costs at 10.15 am on 26 July 2007.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
| IN THE FEDERAL COURT OF AUSTRALIA |
|
| VICTORIA DISTRICT REGISTRY | V 1012 of 2003 |
| BETWEEN: | AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
|
| AND: | LEAHY PETROLEUM PTY LTD (ACN 078 819 431) FIRST RESPONDENT
APCO SERVICE STATIONS PTY LTD (ACN 007 229 898) SECOND RESPONDENT
PEGASUS RETAIL PTY LTD (ACN 000 641 270) THIRD RESPONDENT
UNITED GEELONG PTY LTD (ACN 004 895 881) FOURTH RESPONDENT
BRUMAR (VIC) PTY LTD (ACN 084 399 879) FIFTH RESPONDENT
UNITED RETAIL PTY LTD (ACN 086 310 152) SIXTH RESPONDENT
LIBERTY PETROLEUM PTY LTD (ACN 071 833 844) SEVENTH RESPONDENT
ANDRIANOPOULOS MOTORS PTY LTD (ACN 004 975 955) EIGHTH RESPONDENT
IAN LESLEY CARMICHAEL NINTH RESPONDENT
MICHAEL JOHN WARNER TENTH RESPONDENT
PETER JOSEPH ANDERSON ELEVENTH RESPONDENT
BRUNO GALLUCCI TWELFTH RESPONDENT
ANDREW RONALD PITMAN THIRTEENTH RESPONDENT
EINOKALEVI HEIKKILA FOURTEENTH RESPONDENT
GARRY VICTOR DALTON FIFTEENTH RESPONDENT
COLIN JAMES WILLIAMSON SIXTEENTH RESPONDENT
ALAN SHUVALY SEVENTEENTH RESPONDENT
CHRISTOS ANDRIANOPOULOS EIGHTEENTH RESPONDENT
|
| JUDGE: | GRAY J |
| DATE: | 29 MAY 2007 |
| PLACE: | MELBOURNE |
REASONS FOR JUDGMENT
The nature of the proceeding......................................................................................... [1]
The legislation................................................................................................................ [5]
Section 45 of the Trade Practices Act and associated provisions............................ [5]
Enforcement provisions............................................................................................. [8]
Provisions relating to admissions............................................................................ [15]
Provisions relating to the standard of proof........................................................... [22]
The construction of the legislative provisions............................................................. [23]
Arrangements or understandings............................................................................ [23]
The use of admissions.............................................................................................. [42]
The parties.................................................................................................................... [56]
The applicant............................................................................................................ [56]
The corporate respondents....................................................................................... [57]
The natural person respondents.............................................................................. [63]
The Geelong petrol market.......................................................................................... [66]
The definition of the market.................................................................................... [66]
The setting of prices................................................................................................. [67]
Branding................................................................................................................... [68]
Geography................................................................................................................. [69]
The corporate respondents’ sites............................................................................. [71]
Other market participants........................................................................................ [76]
Board prices.............................................................................................................. [85]
Spotting board prices............................................................................................... [86]
The pattern of petrol price movements....................................................................... [90]
The sawtooth pattern............................................................................................... [90]
Possible causes of the sawtooth pattern...................................................................... [93]
Multiple causes......................................................................................................... [93]
Competition for market share.................................................................................. [95]
Price support............................................................................................................. [96]
Anti-competitive practices....................................................................................... [98]
Factors present in the Geelong petrol market............................................................ [99]
Competition for market share................................................................................ [100]
Price support........................................................................................................... [101]
Unsuccessful attempts at price increases.............................................................. [104]
The relationship between Melbourne prices and Geelong prices............................ [106]
The sawtooth pattern continues................................................................................. [117]
The arrangements or understandings alleged........................................................... [119]
Eight interlocking arrangements or understandings........................................... [119]
Terminology............................................................................................................ [120]
Arrangement No 1.................................................................................................. [121]
Arrangement No 2.................................................................................................. [122]
Arrangement No 3.................................................................................................. [123]
Arrangements Nos 4, 5 and 6................................................................................. [124]
Arrangement No 7.................................................................................................. [125]
Arrangement No 8.................................................................................................. [126]
Giving effect to the alleged arrangements or understandings............................. [127]
The evidence............................................................................................................... [128]
Three kinds of evidence.......................................................................................... [128]
The direct evidence................................................................................................. [131]
The leniency agreements........................................................................................ [133]
Annexure B............................................................................................................. [137]
Call cycles............................................................................................................... [147]
The origins of the alleged arrangements or understandings.................................... [150]
The direct evidence.................................................................................................... [178]
Ian Carmichael....................................................................................................... [179]
Michael Warner...................................................................................................... [204]
Graeme Chisholm................................................................................................... [224]
Alan Shuvaly.......................................................................................................... [231]
Darren Campigli.................................................................................................... [246]
Anton Maurer......................................................................................................... [257]
Gordon Primmer..................................................................................................... [261]
Wayne Purtell......................................................................................................... [266]
Phil Carmichael..................................................................................................... [272]
David Potter............................................................................................................ [279]
Eino Heikkila......................................................................................................... [280]
Garry Dalton.......................................................................................................... [298]
Robert Riordan....................................................................................................... [304]
Robert Hambrook................................................................................................... [314]
The circumstantial evidence...................................................................................... [318]
19 – 20 January 1999............................................................................................. [322]
11 – 12 March 1999................................................................................................ [328]
25 – 26 March 1999................................................................................................ [336]
9 – 10 April 1999.................................................................................................... [341]
20 April 1999.......................................................................................................... [347]
28 April 1999.......................................................................................................... [354]
7 – 8 May 1999........................................................................................................ [359]
17 – 18 June 1999................................................................................................... [368]
22 – 23 June 1999................................................................................................... [379]
29 – 30 June 1999................................................................................................... [393]
5 – 6 July 1999........................................................................................................ [404]
8 – 9 July 1999........................................................................................................ [418]
22 – 23 July 1999.................................................................................................... [425]
26 – 27 July 1999.................................................................................................... [431]
29 – 30 July 1999.................................................................................................... [436]
19 – 20 August 1999............................................................................................... [439]
26 – 27 August 1999............................................................................................... [446]
2 – 3 September 1999.............................................................................................. [449]
9 – 10 September 1999............................................................................................ [456]
13 – 14 September 1999.......................................................................................... [462]
16 – 17 September 1999.......................................................................................... [468]
21 September 1999.................................................................................................. [472]
23 – 24 September 1999.......................................................................................... [478]
27 – 28 September 1999.......................................................................................... [481]
30 September – 1 October 1999............................................................................. [485]
7 – 8 October 1999.................................................................................................. [493]
26 October 1999...................................................................................................... [498]
4 – 5 November 1999.............................................................................................. [500]
11 – 12 November 1999.......................................................................................... [508]
18 November 1999.................................................................................................. [513]
3 – 4 December 1999.............................................................................................. [514]
9 – 10 December 1999............................................................................................ [520]
30 – 31 December 1999.......................................................................................... [530]
5 – 6 January 2000................................................................................................. [539]
10 – 11 January 2000............................................................................................. [547]
1 – 2 February 2000............................................................................................... [557]
10 – 11 February 2000........................................................................................... [565]
18 – 19 February 2000........................................................................................... [581]
24 – 25 February 2000........................................................................................... [593]
2 – 3 March 2000.................................................................................................... [611]
8 – 9 March 2000.................................................................................................... [625]
10 – 11 March 2000................................................................................................ [638]
24 – 25 March 2000................................................................................................ [649]
31 March 2000........................................................................................................ [660]
14 – 15 April 2000.................................................................................................. [667]
20 April 2000.......................................................................................................... [686]
10 May 2000............................................................................................................ [695]
19 May 2000............................................................................................................ [700]
26 – 27 May 2000.................................................................................................... [707]
7 June 2000............................................................................................................. [719]
15 June 2000........................................................................................................... [729]
6 – 7 July 2000........................................................................................................ [745]
14 July 2000............................................................................................................ [754]
14 – 15 August 2000............................................................................................... [762]
23 August 2000....................................................................................................... [767]
8 September 2000.................................................................................................... [775]
4 October 2000........................................................................................................ [781]
19 – 20 October 2000.............................................................................................. [790]
27 October 2000...................................................................................................... [798]
3 – 4 November 2000.............................................................................................. [804]
17 – 18 November 2000.......................................................................................... [818]
28 November 2000.................................................................................................. [834]
15 December 2000.................................................................................................. [841]
General patterns..................................................................................................... [844]
The morning post-peak increase period: 1 January-mid-June 1999................... [848]
The midnight increase period: 17 June 1999-11 March 2000............................. [853]
The daytime increase period: 12 March-31 December 2000................................ [863]
Annexure B generally............................................................................................ [868]
The admissions........................................................................................................... [870]
Leahy, Ian Carmichael and Michael Warner....................................................... [870]
Eino Heikkila......................................................................................................... [886]
Liberty and Alan Shuvaly...................................................................................... [891]
Out of court admissions......................................................................................... [894]
Admissions in evidence.......................................................................................... [902]
Reasoning and principal findings............................................................................... [922]
Communications about prices............................................................................... [922]
Petrol price cycles................................................................................................... [926]
The circumstantial evidence.................................................................................. [932]
The oral evidence................................................................................................... [937]
Commitment........................................................................................................... [940]
Other issues............................................................................................................ [950]
Occasional arrangements or understandings....................................................... [961]
The admissions....................................................................................................... [962]
Conclusion................................................................................................................... [965]
Dismissing the application.................................................................................... [965]
Costs........................................................................................................................ [966]
Orders...................................................................................................................... [967]
The nature of the proceeding
1 This proceeding is concerned with allegations of the fixing of retail prices of petrol in the Geelong retail petrol market. The Australian Competition and Consumer Commission (‘the ACCC’) alleged that a series of arrangements or understandings existed, between competitors in that market, each containing a provision having the purpose, or having or being likely to have the effect, of fixing those prices. Further, the ACCC alleged that, on a number of occasions in 1999 and 2000, the parties to all or some of those arrangements or understandings gave effect to their arrangements or understandings, by fixing the retail price of unleaded petrol (‘ULP’). This conduct was alleged to have contravened s 45(2)(a) and (b) of the Trade Practices Act 1974 (Cth) (‘the Trade Practices Act’).
2 The relief sought is primarily the imposition of pecuniary penalties (of a civil, not a criminal, kind), but also includes declaratory and injunctive relief.
3 Some respondents have admitted the substance of the allegations against them. Some of the natural person respondents, associated with the corporate respondents, gave evidence on behalf of the ACCC at the trial of the proceeding. In addition to that direct evidence, the ACCC relied on circumstantial evidence, principally a document compiled from data available to the ACCC of records of telephone communications between participants in the Geelong retail petrol market, and records of changes to the retail price of ULP by various participants in that market. The ACCC also sought to rely on the formal admissions made by some respondents, and on other admissions. In some instances, it sought to use admissions by one party against another party, on the basis that the two parties concerned were engaged in the furtherance of a common purpose, and that the statements of one were admissible against the other.
4 These reasons for judgment deal extensively with the factual issues arising from the evidence. They also deal with some legal issues, principally those concerned with the elements necessary for the existence of an arrangement or understanding for the purposes of s 45(2) of the Trade Practices Act. They are necessarily long, because the trial occupied 31 days, and the quantity of documentary evidence tendered was substantial and required extensive analysis.
The legislation
Section 45 of the Trade Practices Act and associated provisions
5 Section 45 of the Trade Practices Act provides, so far as is relevant:
‘(2) A corporation shall not:
(a) make a contract or arrangement, or arrive at an
understanding, if:
...
(ii) a provision of the proposed contract, arrangement or
understanding has the purpose, or would have or be
likely to have the effect, of substantially lessening
competition; or
(b) give effect to a provision of a contract, arrangement or
understanding, whether the contract or arrangement was
made, or the understanding was arrived at, before or after the
commencement of this section, if that provision:
...
(ii) has the purpose, or has or is likely to have the effect,
of substantially lessening competition.
(3) For the purposes of this section and section 45A, competition, in
relation to a provision of a contract, arrangement or understanding
or of a proposed contract, arrangement or understanding, means
competition in any market in which a corporation that is a party to
the contract, arrangement or understanding or would be a party to
the proposed contract, arrangement or understanding, or any body
corporate related to such a corporation, supplies or acquires, or is
likely to supply or acquire, goods or services or would, but for the
provision, supply or acquire, or be likely to supply or acquire, goods
or services.
(4) For the purposes of the application of this section in relation to a
particular corporation, a provision of a contract, arrangement or
understanding or of a proposed contract, arrangement or
understanding shall be deemed to have or to be likely to have the
effect of substantially lessening competition if that provision and any
one or more of the following provisions, namely:
(a) the other provisions of that contract, arrangement or
understanding or proposed contract, arrangement or
understanding; and
(b) the provisions of any other contract, arrangement or
understanding or proposed contract, arrangement or
understanding to which the corporation or a body corporate
related to the corporation is or would be a party;
together have or are likely to have that effect.’
6 Section 45A of the Trade Practices Act provides relevantly:
‘(1) Without limiting the generality of section 45, a provision of a contract,
arrangement or understanding, or of a proposed contract,
arrangement or understanding, shall be deemed for the purposes of
that section to have the purpose, or to have or to be likely to have the
effect, of substantially lessening competition if the provision has the
purpose, or has or is likely to have the effect, as the case may be, of
fixing, controlling or maintaining, or providing for the fixing,
controlling or maintaining of, the price for, or a discount, allowance,
rebate or credit in relation to, goods or services supplied or acquired
or to be supplied or acquired by the parties to the contract,
arrangement or understanding or the proposed parties to the
proposed contract, arrangement or understanding, or by any of them,
or by any bodies corporate that are related to any of them, in
competition with each other.
...
(5) For the purposes of this Act, a provision of a contract, arrangement
or understanding, or of a proposed contract, arrangement or
understanding, shall not be taken not to have the purpose, or not to
have or to be likely to have the effect, of fixing, controlling or
maintaining, or providing for the fixing, controlling or maintaining
of, the price for, or a discount, allowance, rebate or credit in relation
to, goods or services by reason only of:
(a) the form of, or of that provision of, the contract, arrangement
or understanding or the proposed contract, arrangement or
understanding; or
(b) any description given to, or to that provision of, the contract,
arrangement or understanding or the proposed contract,
arrangement or understanding by the parties or proposed
parties.
(6) For the purposes of this Act but without limiting the generality of
subsection (5), a provision of a contract, arrangement or
understanding, or of a proposed contract, arrangement or
understanding, shall not be taken not to have the purpose, or not to
have or to be likely to have the effect, of fixing, controlling or
maintaining, or providing for the fixing, controlling or maintaining
of, the price for, or a discount, allowance, rebate or credit in relation
to, goods or services by reason only that the provision recommends,
or provides for the recommending of, such a price, discount,
allowance, rebate or credit if in fact the provision has that purpose
or has or is likely to have that effect.’
7 Among the definitions in s 4(1) of the Trade Practices Act, the following are relevant:
‘corporation means a body corporate that:
...
(b) is a trading corporation formed within the limits of Australia
...
price includes a charge of any description.
...
trading corporation means a trading corporation within the meaning of paragraph 51(xx) of the Constitution.’
Enforcement provisions
8 Sections 45 and 45A of the Trade Practices Act are found in Pt IV. Part VI of the Trade Practices Act relates to enforcement and remedies. The first relevant provision of Pt VI is s 75B, which provides relevantly as follows:
‘(1) A reference in this Part to a person involved in a contravention of a
provision of Part IV...shall be read as a reference to a person who:
(a) has aided, abetted, counselled or procured the contravention;
(b) has induced, whether by threats or promises or otherwise, the
contravention;
(c) has been in any way, directly or indirectly, knowingly
concerned in, or party to, the contravention; or
(d) has conspired with others to effect the contravention.
(2) In this Part, unless the contrary intention appears:
(a) a reference to the Court in relation to a matter is a reference
to any court having jurisdiction in the matter;
(b) a reference to the Federal Court is a reference to the Federal
Court of Australia’.
9 Section 76 of the Trade Practices Act provides, so far as is relevant to the present proceeding:
‘(1) If the Court is satisfied that a person:
(a) has contravened any of the following provisions:
(i) a provision of Part IV;
...
(b) has attempted to contravene such a provision;
(c) has aided, abetted, counselled or procured a person to
contravene such a provision;
(d) has induced, or attempted to induce, a person, whether by
threats or promises or otherwise, to contravene such a
provision;
(e) has been in any way, directly or indirectly, knowingly
concerned in, or party to, the contravention by a person of
such a provision; or
(f) has conspired with others 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 having regard to all relevant matters including the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission, the circumstances in which the act or omission took place and whether the person has previously been found by the Court in proceedings under this Part or Part XIB to have engaged in any similar conduct.’
10 By s 76(1A)(b), the penalty payable by a body corporate is not to exceed $10 000 000, for each act or omission to which s 76 applies, with exceptions not relevant to this proceeding. By s 76(1B), the pecuniary penalty payable by a person other than a body corporate is not to exceed $500 000 for each act or omission to which s 76 applies. By s 77(1), the ACCC may institute a proceeding in a court for the recovery on behalf of the Commonwealth of a pecuniary penalty referred to in s 76.
11 Section 80 of the Trade Practices Act provides for the grant of injunctions, relevantly 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...
(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.
...
(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.’
12 Section 84(2) of the Trade Practices Act provides:
‘Any conduct engaged in on behalf of a body corporate:
(a) by a director, servant or agent of the body corporate within the scope
of the person’s actual or apparent authority; or
(b) by any other person at the direction or with the consent or agreement
(whether express or implied) of a director, servant or agent of the
body corporate, where the giving of the direction, consent or
agreement is within the scope of the actual or apparent authority of
the director, servant or agent;
shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate.’
13 Section 155 of the Trade Practices Act provides, so far as is relevant:
‘(1) Subject to subsection (2A), if the Commission, the Chairperson or the Deputy Chairperson has reason to believe that a person is capable of furnishing information, producing documents or giving evidence relating to a matter that constitutes, or may constitute, a contravention of this Act…a member of the Commission may, by notice in writing served on that person, require that person:
(a) to furnish to the Commission, by writing signed by that person or, in the case of a body corporate, by a competent officer of the body corporate, within the time and in the manner specified in the notice, any such information;
(b) to produce to the Commission, or to a person specified in the notice acting on its behalf, in accordance with the notice, any such documents; or
(c) to appear before the Commission at a time and place specified in the notice to give any such evidence, either orally or in writing, and produce any such documents.
…
(3) The Commission may require the evidence referred to in paragraph (1)(c) to be given on oath or affirmation and for that purpose any member of the Commission may administer an oath or affirmation.
…
(5) A person shall not:
(a) refuse or fail to comply with a notice under this section;
(b) in purported compliance with such a notice, knowingly furnish information or give evidence that is false or misleading; or
(c) obstruct or hinder an authorized officer acting in pursuance of subsection (2).
(5A) Paragraph (5)(a) does not apply to the extent that the person is not capable of complying with the notice.
…
(6A) A person who contravenes subsection (5) or (6) is guilty of an offence punishable on conviction by a fine not exceeding 20 penalty units or imprisonment for 12 months.’
14 Section 21(1) of the Federal Court of Australia Act 1976 (Cth) provides:
‘The Court may, in relation to a matter in which it has original jurisdiction, make binding declarations of right, whether or not any consequential relief is or could be claimed.’
Provisions relating to admissions
15 Section 59(1) of the Evidence Act 1995 (Cth) (‘the Evidence Act’) provides:
‘Evidence of a previous representation made by a person is not admissible to prove the existence of a fact that the person intended to assert by the representation.’
16 According to the definition of ‘hearsay rule’, found in the dictionary of the Evidence Act, the hearsay rule is s 59(1). Section 60 of the Evidence Act provides:
‘The hearsay rule does not apply to evidence of a previous representation that is admitted because it is relevant for a purpose other than proof of the fact intended to be asserted by the representation.’
17 By s 81(1) of the Evidence Act, the hearsay rule does not apply to evidence of an admission. According to the Evidence Act’s dictionary, an admission means a previous representation that is made by a person who is or becomes a party to a proceeding and is adverse to the person’s interest in the outcome of the proceeding. Section 83 provides:
‘(1) Section 81 does not prevent the application of the hearsay rule…to evidence of an admission in respect of the case of a third party.
(2) The evidence may be used in respect of the case of a third party if that party consents.
(3) Consent cannot be given in respect of part only of the evidence.
(4) In this section:
third party means a party to the proceeding concerned, other than the party who:
(a) made the admission; or
(b) adduced the evidence.’
18 Section 87 of the Evidence Act provides:
‘(1) For the purpose of determining whether a previous representation made by a person is also taken to be an admission by a party, the court is to admit the representation if it is reasonably open to find that:
(a) when the representation was made, the person had authority to make statements on behalf of the party in relation to the matter with respect to which the representation was made; or
(b) when the representation was made, the person was an employee of the party, or had authority otherwise to act for the party, and the representation related to a matter within the scope of the person’s employment or authority; or
(c) the representation was made by the person in furtherance of a common purpose (whether lawful or not) that the person had with the party or one or more persons including the party.
(2) For the purposes of this section, the hearsay rule does not apply to a previous representation made by a person that tends to prove:
(a) that the person had authority to make statements on behalf of another person in relation to a matter; or
(b) that the person was an employee of another person or had authority otherwise to act for another person; or
(c) the scope of the person’s employment or authority.’
19 Section 57(2) of the Evidence Act provides, so far as is relevant, that:
‘if the relevance of evidence of an act done by a person depends on the court making a finding that the person and one or more other persons had, or were acting in furtherance of, a common purpose (whether to effect an unlawful conspiracy or otherwise), the court may use the evidence itself in determining whether the common purpose existed.’
20 Order 11 r 13(1) of the Federal Court Rules (Cth) (‘the Federal Court Rules’) provides as follows:
‘Subject to subrule (3) and to Order 43, rule 7 (which deals with persons under disability), an allegation of fact made by a party in his pleading is deemed to be admitted by the opposite party unless it is traversed by that party in his pleading or a joinder of issue under rule 14 operates as a denial of it.’
21 Order 18 r 4 of the Federal Court Rules provides:
‘(1) If an admission is made by a party, whether by a pleading or otherwise, the Court may pronounce any judgment or make any order to which the applicant is entitled on the admission.
(2) The Court may exercise its powers under subrule (1) notwithstanding that other questions in the proceeding have not been determined.’
Provisions relating to the standard of proof
22 Section 140 of the Evidence Act provides as follows:
‘(1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject-matter of the proceeding; and
(c) the gravity of the matters alleged.’
The construction of the legislative provisions
Arrangements or understandings
23 The starting point for determining the meaning of statutory provisions must be those provisions themselves. Previous authorities, in which the courts have pronounced upon the meanings of particular provisions, may be binding, and are often helpful. Sometimes, however, those pronouncements are made in the context of the resolution of particular issues, which may differ from those raised in a current case. As Merkel J recognised in Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2004] FCA 1678 (2004) 141 FCR 183 (‘the Ballarat case’) at [57], previous statements of principle can be difficult to apply in a case that raises different issues. As his Honour said, it is necessary to return to the words of the statute.
24 Section 45(2)(a) of the Trade Practices Act uses the terms ‘contract’, ‘arrangement’ and ‘understanding’. These are plainly intended to represent a spectrum of consensual dealings. The words of the statute themselves so demonstrate. They provide that a corporation is not to ‘make’ a contract or arrangement, or to ‘arrive at’ an understanding, if the contract, arrangement or understanding has a specified content. A corporation cannot ‘make’ a contract or arrangement, or ‘arrive at’ an understanding, without there being at least one other party to the contract, arrangement or understanding. The other party must also participate in the making, or the arriving at, before there can be a contract, arrangement or understanding. Clearly, it is not possible to ‘make’ something, or to ‘arrive at’ something, unless what is made or arrived at exists at the end of the process of making or arriving at. What must exist for s 45(2)(a) to apply is one of the three forms of consensual dealing.
25 The term ‘contract’ is well understood by lawyers. A contract is the result of the acceptance by one party of an offer made by another, resulting in the minds of the two parties being at one as to the agreement they have made. It must be supported by good consideration, have sufficient certainty of terms that it be possible to determine what has been agreed, and be accompanied by an intention on the part of the parties that a legally binding relationship should be established by it. In ordinary circumstances, the obligations created by a contract are enforceable in a court, but their enforceability is subject to the possibility of defences arising from the nature of the contract itself, or from external circumstances. One defence arising from the nature of the contract itself results from the illegality of its purpose. In using the word ‘contract’ in s 45(2)(a) of the Trade Practices Act, Parliament must have intended to refer to a consensual dealing having the fundamental characteristics of a contract, but not necessarily being enforceable in a court of law, because s 45(2)(a) would itself give rise to the defence of illegality, and thereby prevent enforcement. Thus, the word ‘contract’ for the purposes of s 45(2)(a) describes a consensual dealing with a high degree of formality.
26 The word ‘arrangement’ is less clearly understood, and more susceptible of elasticity as to its meaning. In general, it appears to connote a consensual dealing lacking some of the essential elements that would otherwise make it a contract. For instance, a dealing that would otherwise be a contract may be described as an ‘arrangement’ if the parties to it intended not to create a legally binding relationship, but only to give expression to their intentions as to the obligations that each felt morally bound to adhere to in relation to what was to pass between them, or to be carried out by them. Of course, an arrangement might be a broader concept than this, because it is a term the boundaries of which have not been fixed in the traditional understanding of lawyers. The Oxford English Dictionary gives as the apparently appropriate meaning of the word ‘arrangement’ ‘a settlement of mutual relations or claims between parties; an adjustment of disputed or debatable matters; a settlement by agreement’, or alternatively, ‘disposition of measures for the accomplishment of a purpose; preparations for successful performance.’ The ordinary understanding of what amounts to an ‘arrangement’ makes it difficult to envisage that an arrangement could come about without express negotiations between the parties, although there have been suggestions that an arrangement can be tacit. See Federal Commissioner of Taxation v Cooper Brookes (Wollongong) Pty Ltd (1979) 41 FLR 277 at 301 – 302 per Fisher J, with whom Brennan and Deane JJ agreed, referred to by Franki J in Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 at 24 in the context of s 45(2) of the Trade Practices Act. At the very least, there must be some express communication between the parties, although what is said may not amount to offer and acceptance for the purposes of the law of contract. The need for express communication is also suggested by the use of the verb ‘make’ in conjunction with both ‘contract’ and ‘arrangement’ in s 45(2)(a) of the Trade Practices Act. It is hard to see how two parties could ‘make’ an ‘arrangement’ without doing so expressly, at least as to the substance of the arrangement, even if the acceptance by one party of what the other has communicated is implicit in some act, rather than expressed in words.
27 The word ‘understanding’ is obviously intended to connote a less precise dealing than either a contract or arrangement. This is so because of the meaning of the word ‘understanding’ itself, and because, in the terms of s 45(2)(a), the parties to it may ‘arrive at’ it instead of making it. Once again, the Oxford English Dictionary supplies an appropriate definition: ‘a mutual arrangement or agreement of an informal but more or less explicit nature.’ It is the informal and less explicit nature of an understanding that led Smithers J to describe the concept of an understanding as ‘broad and flexible’ in L Grollo & Co Pty Ltd v Nu-Statt Decorating Pty Ltd (1978) 34 FLR 81 at 89.
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. In Top Performance Motors Pty Ltd v Ira Berk (Queensland) Pty Ltd (1975) 24 FLR 286 at 291, Smithers J (with whom Evatt J agreed) referred to what Diplock LJ said in British Basic Slag Ltd v Registrar of Restrictive Trading Agreements [1963] 2 All ER 807 at 819 in relation to English legislation in terms different from s 45(2) of the Trade Practices Act, and said:
‘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.’
29 Similarly, in Grollo 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. It is important, however, not to confuse what is required for the formation of an understanding within the meaning of s 45(2)(a) of the Trade Practices Act with what is required to be the content of an arrangement or understanding for the purposes of s 45(2)(a). Counsel for the ACCC were inclined to rely on authorities describing the formation of an understanding, when attempting to persuade the Court as to the required content.
31 Section 45(2)(a) of the Trade Practices Act, and the other provisions found in s 45 and s 45A, which are set out above, make a number of things very clear. To fall within s 45(2)(a), an arrangement or understanding must be substantial enough to contain at least one ‘provision’. The Oxford English Dictionary relevantly defines ‘provision’ as meaning:
‘Each of the clauses or divisions of a legal or formal statement, or such a statement itself, providing for some particular matter; also, a clause in such a statement which makes an express stipulation or condition; a proviso.’
32 A provision must provide for something to occur, or not to occur. Further, the kind of provision contemplated by s 45(2)(a)(ii) is a provision capable of having a ‘purpose’ or an ‘effect’. This element is supplied by the deeming effect of s 45A(1) if the provision 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, among other things, a price. By s 45A(5), the determination of whether a provision of the required kind exists is not dependent upon form, or upon express description. The requisite provision can be in the form of a recommendation, according to s 45A(6). What is important is its substance. There must therefore be sufficient substance to whatever is the result of the formation of an understanding for it to contain a provision of the required kind.
33 In Federal Commissioner of Taxation v Lutovi Investments Pty Ltd (1978) 140 CLR 434, the High Court was dealing with the meaning of the word ‘arrangement’ in legislation other than the Trade Practices Act. In a passage that has often been cited in judgments dealing with arrangements or understandings under the Trade Practices Act, Gibbs and Mason JJ (with whom Murphy J agreed) said at 444:
‘It is, however, necessary that an arrangement should be consensual, and that there should be some adoption of it. But in our view it is not essential that the parties are committed to it or are bound to support it. An arrangement may be informal as well as unenforceable and the parties may be free to withdraw from it or to act inconsistently with it, notwithstanding their adoption of it.’
34 This passage cannot be relied upon to suggest that an arrangement or understanding under s 45(2)(a) of the Trade Practices Act need have no substance at all. Plainly, it contemplates that there must be something of substance from which the parties can withdraw, or with which they can act inconsistently. By their ‘adoption’ of whatever matter of substance is part of the arrangement or understanding, the parties will necessarily have adopted a provision that they see as an appropriate way to regulate their future conduct. To say that they are able to withdraw from the adoption of such a provision, or to act inconsistently with it, is to say nothing more than that an arrangement or understanding is not enforceable in a court of law in the way that a contract is. The notion of an arrangement or understanding that each party will act as it sees fit on every occasion is entirely foreign to s 45 of the Trade Practices Act.
35 Counsel for the ACCC found it necessary to grapple with the use of the word ‘commitment’ in the judgment of the Full Court in Apco Service Stations Pty Ltd v Australian Competition and Consumer Commission [2005] FCAFC 161 (2005) ATPR 42-078 (‘Apco Service Stations’) at [43] – [47]. In that case, which concerned allegations that dealers in the Ballarat retail petrol market had been involved in an arrangement or understanding to fix the price of petrol, and which involved some of the parties to the present case, the trial judge had declined to make a finding that one dealer became committed to any price increase agreed on by the other dealers. In addition, his Honour had made a finding that the other dealers had no expectation that the uncommitted dealer’s readiness to receive telephone calls about prices meant that the uncommitted dealer would substantially match those prices. The Full Court expressed the view that these findings led to the unavoidable conclusion that the uncommitted dealer was not a party to any understanding that it would fix its prices at the same level as the other dealers or at any particular level, or even that it would increase its prices at all. In expressing this view, at [45], the Full Court pointed out that the appellants in that case had not disputed that the trial judge had enunciated the correct legal principles. The trial judge had referred, and the Full Court also referred, to observations of Lindgren J in Australian Competition and Consumer Commission v CC (NSW) Pty Ltd [1999] FCA 954 (1999) 92 FCR 375 at [141], which were specifically endorsed by a Full Court in Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213 (2002) 118 FCR 236 at [79]. Lindgren J said:
‘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.’
36 In Apco Service Stations at [46], the Full Court said that the trial judge’s findings amounted to no more than what Lindgren J described as a ‘factual expectation’, falling short of an ‘understanding’. The Full Court then referred at [47] to the judgment of Lockhart J in Trade Practices Commission v Email Ltd (1980) 31 ALR 53 as a practical illustration of the proposition that a mere hope or expectation that a party will act in a particular way is insufficient to constitute an ‘understanding’ for the purposes of s 45(2) of the Trade Practices Act. The Full Court pointed out that Lockhart J in Email held that, whilst sending price lists to a competitor assisted the competitor to follow the sender’s prices if it chose to do so, and to do so more quickly than might otherwise be the case, in the absence of any commitment such communications were not sufficient to give rise to the meeting of minds essential to an arrangement or understanding. The Full Court held that the same principle was applicable in the Apco Service Stations case. Information conveyed by some dealers to the uncommitted dealer may have been useful to the uncommitted dealer in enabling him to have his franchisees check competitors’ prices and know when to raise his own prices if he chose to do so, but the absence of any expectation that he would do so was fatal to the existence of any understanding.
37 In the present case, counsel for the ACCC recognised that the judgment in Apco Service Stations was binding on me. They made the formal submission that the Full Court was in error when it required that there be some commitment, before there could be an understanding for the purposes of s 45(2)(a) of the Trade Practices Act. The reality is that the previous authorities dealing with the content of an understanding, as distinct from its formation, provide ample support for what the Full Court said in Apco Service Stations. More than ample support is also found in the analysis of the relevant provisions, which I have already set out in [24] – [34]. As I have said, for the purposes of s 45(2)(a) there can be no such thing as an understanding that leaves each party to it free to do whatever it wishes. Whatever word may be chosen to represent the essential element of an understanding for the purposes of the relevant statutory provisions, it is clear that element involves the assumption of an obligation, unenforceable in any court of law, but merely morally binding or binding in honour. Any reservation that may have existed about this has been dispelled by the High Court, which dismissed the ACCC’s application for special leave to appeal from the Full Court in Apco Service Stations on 2 June 2006. See ACCC v Apco Service Stations Pty Ltd & Anor [2006] HCATrans 272. At line 619, giving the judgment of himself and Hayne J, Gleeson CJ said:
‘The decision of the Full Court of the Federal Court turned not upon any controversial view of the meaning of the relevant provisions of the Trade Practices Act but upon the Full Court’s view of the facts in the light of the case as pleaded and argued by the Commission. In the light of the facts as found, the case does not raise any issue of law suitable to a grant of special leave to appeal. The application is dismissed with costs.’
38 For all of these reasons, quite apart from its binding effect on me, the correctness of the Full Court’s judgment in Apco Service Stations cannot be doubted.
39 As I have said, the concepts of contract, arrangement and understanding relevant to the application of s 45(2)(a) of the Trade Practices Act are concepts representing points on a spectrum of consensual dealings. It is possible that the spectrum might be extended in one direction beyond contract, to include even more solemnly binding consensual obligations, such as deeds under seal. It is difficult to see that the spectrum of consensual dealings could extend in the other direction beyond the concept of ‘understanding’, whilst still remaining relevant for the purposes of s 45(2)(a). That end of the spectrum, therefore, lies somewhere between the outer limits of what constitutes an ‘understanding’ and the closest form of non-consensual dealing that could be imagined. It is possible that this closest form is the expectation that a party will act in a particular way, engendered by that party, to which Lindgren J referred in CC (NSW) Pty Ltd at [141]. It may be in the realm of parallel conduct, even conscious parallel conduct, such as the adoption of identical prices for homogeneous products, which clearly lies beyond the realm of ‘understanding’. See the American authorities cited by Lockhart J in Email at 56 – 57.
40 The line between what amounts to an ‘understanding’ for the purposes of s 45(2)(a) and what falls outside the spectrum of consensual dealings relevant to that provision will always be difficult to draw. This is particularly so in a case such as the present, in which there is an absence of evidence of express communications from which arrangements or understandings might have been derived, and a consequent reliance upon courses of conduct, coupled with circumstantial evidence, as the only means by which the existence of arrangements or understandings can be established. The crucial question in this case is on which side of the shadowy line delimiting ‘understanding’ the conduct of various parties fell.
41 Counsel for the ACCC cited numerous authorities on the question whether, for an arrangement or understanding to exist, it is necessary for the parties to have assumed mutual obligations, or whether an arrangement or understanding can exist where only one party assumes an obligation towards the other party. It is unnecessary to cite these authorities, or to refer to them in detail, because the question is academic so far as the present case is concerned. The ACCC has pleaded a series of arrangements or understandings to the effect that both (or all three in the case of one alleged arrangement or understanding) parties to each of them would increase their prices to the same or a similar amount at or about the same time. It is unnecessary to consider what would have happened if the allegation had been that only one party would so increase its prices, whilst the other party was free to do whatever it saw fit. Apart from anything else, it is obvious that it would be more difficult to sustain an allegation of an arrangement or understanding of that kind than it is to make good an allegation of the existence of an arrangement or understanding involving mutual obligations.
The use of admissions
42 It is clear that the power given to the Court by O 18 r 4(1) of the Federal Court Rules to pronounce judgment based on the admissions of a party is discretionary. The use of the word ‘may’ in the rule itself indicates this. If authority be needed to make good the proposition that the power is discretionary, it is found in Termijtelen v Van Arkel [1974] 1 NSWLR 525 at 529 per Hope JA and at 534 – 535 per Bowen CJ in Eq. In that case, the Court of Appeal of New South Wales was examining three separate legislative grants of power to give judgment based on admissions arising from pleadings. Their Honours held that each of the three grants of power was a grant of discretionary power.
43 There is some authority, apparently not conclusive, as to the circumstances in which the discretion might be exercised. As long ago as Gramophone Co Ltd v Magazine Holder Co (1911) 28 RPC 221, the House of Lords recognised that there were circumstances in which a court should not be bound to accept admissions. At 225, Lord Loreburn LC (with whom the Earl of Halsbury, Lord Atkinson and Lord Shaw agreed) said:
‘It is the duty of a Court to decide cases according to the truth and fact, not according to any assumed or artificial state of facts which the parties may find it convenient to present. No doubt Courts of Law allow and indeed encourage parties to simplify litigation by making admissions and to a certain extent by waiving their rights, because, when there is a real controversy depending upon real facts, everyone ought to facilitate its authoritative settlement. But that is a very different thing from allowing people to obtain an adjudication upon the footing that something exists or has happened which in truth does not exist, or has never happened. The objection to such a course is most striking when the parties agree to admit as true something which lies at the root of the jurisdiction, and any judgment obtained upon the footing of its truth may be used as a weapon in terrorem against persons not parties to the admission. A Court of Justice can never be bound to accept as true any fact, merely because it is admitted between the parties.’
44 In Damberg v Damberg [2001] NSWCA 87 (2001) 52 NSWLR 492 at [148] – [160], Heydon JA (as his Honour then was), with whom Spigelman CJ and Sheller JA agreed, engaged in a lengthy examination of the question whether, and to what extent, admissions or agreements between the parties could bind a court. At [148], Heydon JA identified the problem as being ‘the extent to which the parties, by their conduct of proceedings, can prevent the court from deciding a case in accordance with the law or the facts.’ At [149], his Honour acknowledged that the pleadings define the issues in a civil case, and that a party failing to plead a claim or defence will generally be unable to rely on it at a later time. His Honour then proceeded to discuss the various ways in which admissions of fact can be made: informal out-of-court admissions at [151]; formal admissions in answer to interrogatories at [152]; and formal admissions pursuant to rules of court at [153]. His Honour pointed out that each kind of admission can be contradicted by other evidence, or the court can choose not to act on the admissions. At [154], his Honour said:
‘A party may admit allegations made in pleadings by the opposing party, and may do so either expressly or by non-traverse. The effect of such admissions is to narrow the issues in dispute: they can thus have the effect of restricting the evidence to be tendered and can prevent evidence being called to the contrary.’
45 Heydon JA then mentioned concessions by a solicitor before a trial or by counsel during a trial, or admissions ordered by a court as an alternative to filing evidence to the contrary within a specified time. His Honour also made reference to a statutory power permitting agreed statements of facts. At [155], his Honour said:
‘There are significant limitations on the extent to which the use of the above facilities can compel a court to decide a case on a basis contrary to fact.’
46 At [157], Heydon JA pointed out that ‘the court is not bound to act on admissions made by the parties or on states of fact agreed between the parties.’ His Honour then cited the Gramophone Co case, quoting an extensive passage from the speech of Lord Loreburn LC, including the passage I have quoted at [43]. At [158] and [159], his Honour referred to two other English cases, Adams v Naylor [1946] AC 543 and Royster v Cavey [1947] KB 204, in both of which it had been held that crucial admissions on which the cases had been conducted at first instance should not be accepted, because they were contrary to fact. By way of conclusion, at [160], Heydon JA said:
‘In short, the courts are averse to pronouncing judgments on hypotheses which are not correct. To do so is tantamount to giving advisory opinions and to encouraging collusive litigation. On the other hand, the courts will act on admissions of or agreements about matters of fact where there is no reason to doubt their correctness. But they are reluctant to do so where there is reason to question the correctness of the facts admitted or agreed.’
47 In Symes v The Proprietors Strata Plan No 31731 [2003] NSWCA 7 at [45], Heydon JA (with whom Sheller JA and McClellan J agreed) referred to Damberg, saying:
‘It is true that there are cases where the courts are averse to pronouncing judgments on incorrect factual hypotheses, because to do so amounts to the giving of advisory opinions and to encouraging collusive litigation: see the cases discussed in Damberg v Damberg (2001) 52 NSWLR 492 at [148]-[160]. However, these perils do not exist here. It has not been demonstrated that the hypothesis that No 3 wall was common property is plainly incorrect. There is some evidence that it was incorrect; on this appeal evidence strongly pointing in the contrary direction has been filed. Courts commonly act on admissions in relation to matters of fact which might be disputed if the parties desired to do so, but which they have chosen to arrive at a compromise about.’
48 Counsel for the ACCC in the present case sought to draw from these authorities the proposition that, before departing from an admission made by a party on the pleadings, the Court would need to be satisfied affirmatively that the admission was ‘plainly incorrect’. The Court could not be so satisfied if it only took the view that the applicant had failed to discharge its burden of proof in relation to the fact or event admitted. To apply a lesser test, it was argued, would be to place an admitting respondent in no different position from a non-admitting one. Counsel for the ACCC also referred to the public policy encouraging the settlement of litigation, which underlies the readiness of the courts to accept admissions on the pleadings as removing the admitted facts from the field of dispute.
49 In my view, to confine the non-acceptance of admissions on the pleadings to circumstances in which their falsity has been established would be too stringent a rule. I recognise that it is important that a party whose allegations in the pleadings have been admitted ought to be entitled to rely upon those admissions. Too great a willingness to depart from those admissions would lead to the lengthening of trials and to uncertainty in the administration of justice, both of which are very undesirable. It seems to me, however, that Heydon JA’s formulation of the test in Damberg is the appropriate one, namely that the Court can (and perhaps should) decline to act on admissions when there is ‘reason to doubt their correctness’, or ‘reason to question the correctness of the facts admitted or agreed.’
50 In a case such as the present, there are particular public policy reasons for adopting this less stringent test. The size of this piece of litigation, and the expense of retaining solicitors and counsel to conduct a full-scale defence in a long trial, provide a powerful incentive to the making of admissions, in the hope of securing leniency. In a case in which admissions on the pleadings are made by parties who lack the resources to conduct lengthy litigation in their own defence, the Court should be more ready to put aside the admissions if they appear to be unreliable. Further, in a case such as this, allegations are made of the existence, and the giving effect to, of arrangements or understandings between various parties. There is no alleged arrangement or understanding the existence of which is admitted by both (or, in one instance, all three) parties to it. At best for the ACCC, one party to an alleged arrangement or understanding has admitted the existence, and the implementation, of that arrangement or understanding. The other alleged party (or, in one instance, two parties) to each such admitted arrangement or understanding has defended itself against the allegation. In those circumstances, if the applicant fails to prove against the non-admitting party (or parties) the existence of the arrangement or understanding, then there is a considerable risk that the processes of the Court will be brought into disrepute, if the Court should be required to find against the admitting party that the arrangement or understanding existed and was implemented, but finds in favour of the denying party (or parties) that it did not exist. Members of the public would have some difficulty in understanding how the Court, in a civil case, could reach such contradictory findings. Again, this provides a substantial reason for refusing to act on admissions on the pleadings if, in the light of the evidence, those admissions may be unreliable.
51 Another factor pertinent to a case such as the present is that an admission may amount to a concession as to a matter of law, or a conclusion on a matter of mixed fact and law. If the law is complex, or there is difficulty in determining on which side of an indistinct line the particular facts fall, it is necessary to be wary of accepting an admission conflicting with conclusions drawn on the evidence, and with the benefit of full submissions as to the law.
52 The other issue that may arise in this case, with respect to which it is necessary to look at some authorities, is the question of the admissibility against one respondent of an admission made by another respondent. For instance, if A gives evidence of a conversation between A and B, and A’s evidence is that, in the course of the conversation, B said something probative of the existence of an arrangement or understanding between B and C, the evidence is plainly admissible against B as an admission, pursuant to the exception in s 81(1) of the Evidence Act to the hearsay rule in s 59(1). The question is whether this admission is also admissible against C.
53 Section 57(2) of the Evidence Act does not answer this question itself. It provides in its own terms that it deals only with the relevance of evidence. Indeed, it is one of the provisions in Pt 3.1 of the Evidence Act, all of which deal with relevance. There can be no doubt that, if the statement made by B in the conversation with A is indicative of the existence of an arrangement or understanding between B and C then, consistently with s 57(2), the Court may use the content of that statement to determine whether it is evidence that the requisite common purpose existed, and therefore that the evidence is relevant to that question. Given its relevance, the evidence is still not admissible against C unless s 87(1)(c) of the Evidence Act applies. For that to apply, it must be reasonably open to the Court to find that the statement was made in furtherance of a common purpose that B and C had. It is clear that s 87(1)(c) can only operate if it is reasonably open from evidence other than the statement itself that the statement is made in furtherance of a common purpose. This follows from the terms of s 87 itself. The three paragraphs of subs (1) deal with three different situations in which a representation by one person is taken to be an admission by another person. Subsection (2) makes provision for the prerequisites to admissibility under s 87(1)(a) and (b) to be proved by a representation by the same person who made the representation that is tendered as an admission. The prerequisite representation may, and often will, be contained in the same statement that is sought to be tendered as an admission against the party who made it. Section 87(2) says nothing at all about the manner in which the prerequisite to admissibility under s 87(1)(c) is to be established. If the existence of the required common purpose could be established by the representation itself, then a statement by B that indicated that B had a common purpose with C would always be admissible against C. The statement by B would be permitted to pull itself up by its own bootstraps. This would be an undesirable, and unintended, result of the application of s 87(1)(c).
54 Some confirmation of this proposition is available from the authorities. On two occasions, the New South Wales Court of Criminal Appeal has said that s 87(1)(c) of the Evidence Act 1995 (NSW) (which is in the same form as s 87(1)(c) of the Evidence Act) reproduces the pre-existing common law. See R v Macraild (unreported, NSW Court of Criminal Appeal, Sully, Dunford and Simpson JJ, 18 December 1997) at 9 and Watt v R [2000] NSWCCA 37 at [8]. The pre-existing common law is found in Tripodi v R (1961) 104 CLR 1 at 7 and Ahern v R (1988) 165 CLR 87 at 100. In both of these cases, the High Court of Australia made it clear that the statement by B could only be admissible against C if there were ‘reasonable evidence’ establishing the existence of the common purpose, apart from the statement itself. I do not necessarily accept, as the New South Wales Court of Criminal Appeals appears to have done, that the ‘reasonable evidence’ test is identical to the formulation ‘reasonably open to find’ preferred by the legislature. For present purposes, however, Macraild and Watt stand as authority for the proposition that, so far as they are consistent with the terms of s 87(1)(c) of the Evidence Act, Tripodi and Ahern are to be taken as providing authority on the proper construction of that provision. It follows that s 87(1)(c) must be applied on the basis that the admissibility of B’s statement as against C can only be determined by reference to evidence other than the statement itself.
55 Termijtelen is authority for the proposition that the fact that an admission is a deemed admission, pursuant to a provision such as O 11 r 13 of the Federal Court Rules, does not have any effect on the question whether the Court should make a finding in accordance with it if the admission appears unreliable. It is also possible for the Court to dispense with compliance with the requirements of O 11 r 13, under the general dispensing power found in O 1 r 8 of the Federal Court Rules. See Australian Competition and Consumer Commission v Francis [2004] FCA 487 (2004) 142 FCR 1 at [42] – [43]. It is clear that the powers in O 18 r 4(1) and (2) respectively are discretionary; the Court is not obliged to give judgment on the basis of admissions made, whether in pleadings or otherwise. Nor is it obliged to give such judgment without determining the other issues remaining in the proceeding.
The parties
The applicant
56 The applicant, the ACCC, is established by s 6A(1) of the Trade Practices Act. By s 6A(2)(a), the ACCC is a body corporate and by s 6A(2)(d) it may sue in its corporate name. The ACCC is a party given standing by s 77(1) of the Trade Practices Act to institute a proceeding for the recovery on behalf of the Commonwealth of a pecuniary penalty referred to in s 76. Section 80(1) also gives the ACCC standing to apply for an injunction.
The corporate respondents
57 Among the 18 respondents to the proceeding, the first eight are corporations. They are respectively: the first respondent, Leahy Petroleum Pty Ltd (‘Leahy’); the second respondent, Apco Service Stations Pty Ltd (‘Apco’); the third respondent, Pegasus Retail Pty Ltd (‘Pegasus’); the fourth respondent, United Geelong Pty Ltd, formerly called United Fuels Pty Ltd (‘United Fuels’); the fifth respondent, Brumar (Vic) Pty Ltd (‘Brumar’); the sixth respondent, United Retail Pty Ltd (‘United Retail’); the seventh respondent, Liberty Petroleum Pty Ltd (‘Liberty’) and the eighth respondent, Andrianopoulos Motors Pty Ltd (‘Andrianopoulos’).
58 On 4 February 2004, Leahy filed a defence in this proceeding, in which it admitted some allegations against it. On 11 April 2005, Leahy entered into voluntary administration. At a creditors’ meeting on 6 May 2005, Leahy was placed in liquidation. The ACCC sought the leave of the Court, pursuant to s 500(2) of the Corporations Act 2001 (Cth) (‘the Corporations Act’), to continue the proceeding against Leahy, on the basis that it wished to obtain declaratory relief against Leahy, and to have imposed on Leahy a pecuniary penalty, which would not be provable in the liquidation. The only evidence about the affairs of Leahy discloses that, at the time it went into liquidation, Leahy’s liabilities exceeded its assets by in excess of $1 600 000. In the circumstances, I declined to grant leave to proceed. The trouble and expense of proceeding to impose a pecuniary penalty on Leahy, which is extremely unlikely ever to be collected, is unwarranted. Declaratory relief is a largely pointless exercise at the best of times, and has absolutely no point in a case in which the person about whose conduct the declaration is sought is never going to conduct any further activities. If the function of a declaration is to record in a formal way the past acts of a corporation, so that its past conduct may be taken into account against it if it should ever contravene the law in a relevant way again, there is no point in making a declaration when the corporation has ceased to function permanently. As will be seen, there are two natural persons who are alleged to have given rise to the contravening conduct alleged against Leahy. If those contraventions were to be established, and declaratory relief is of any symbolic value at all, any desire for such relief would be satisfied amply by making declarations about the conduct of the two natural persons. In the absence of leave to proceed, no relief can be sought or granted against Leahy in this proceeding.
59 On 15 August 2005, during the trial of the proceeding, the ACCC discontinued the proceeding against Pegasus. The ACCC also abandoned its allegations of conduct contravening the Trade Practices Act in relation to Pegasus.
60 United Fuels came into existence in order to merge the business interests of Eino Heikkila (the 14th respondent), which involved wholesale and retail distribution of Shell-branded petroleum products in Geelong, and Robert James Riordan, which involved similar activities in Colac. With encouragement and assistance from Shell, the two formed United Fuels, of which they and their respective spouses were directors. Responsibilities were divided between them, with Mr Heikkila being in charge of retailing in Geelong, including setting prices for the United Fuels outlets, and Mr Riordan being in charge of wholesaling, and of the operations to the west of Geelong, including Colac. With the passage of time, a personal rift developed between Mr Heikkila and Mr Riordan, and progressed to the point where they were barely able to communicate. As a result, with the cooperation of Shell, they negotiated a settlement, under which Mr Heikkila left the business, and the petroleum retailing industry, altogether. The wholesale distributorship was sold to an unrelated company, Triton Petroleum Pty Ltd (‘Triton’), which was said to be controlled by Shell. Mr Riordan formed United Retail, which he controlled, to carry on the retail business as the operator of a number of Shell outlets. Robert Keith Hambrook was employed by United Fuels as its accountant, and became the financial controller for United Retail. Mr Riordan and Mr Hambrook gave evidence on behalf of United Fuels and United Retail at the trial. United Fuels ceased to trade on 30 September 1999, and subsequently changed its name. Accordingly, conduct in contravention of the Trade Practices Act is only alleged against United Fuels up to that date. From 1 October 1999, United Retail effectively became the successor to United Fuels in the conduct of the relevant business. Accordingly, conduct in contravention of the Trade Practices Act is alleged against United Retail only after that date.
61 On 17 December 2004, Merkel J delivered judgment in the Ballarat case, to which I have referred in [23], in a proceeding in which the ACCC alleged the existence of an arrangement or understanding to fix the prices of petrol in the City of Ballarat and its surrounding area. Among those found to be parties to the Ballarat arrangement or understanding was Brumar. Merkel J also found that Brumar had given effect to that arrangement or understanding on some 53 occasions. See the Ballarat case at [382]. On 17 March 2005, his Honour imposed a pecuniary penalty of $4 000 000 on Brumar in respect of those contraventions. See Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) [2005] FCA 254 at [42]. By that date, Brumar was already in liquidation, consequent upon a creditors’ meeting on 17 February 2005. Earlier, Brumar had sold its business assets for a sum exceeding $26 000 000. Settlement of the sale occurred on 26 July 2003. After satisfaction of secured and other creditors out of the proceeds of sale, Brumar was left with $994 400. By the time of the liquidation, Brumar was said to have had total assets of $50 000 and creditors totalling $400. After investigation by the liquidator, on 18 May 2005, the liquidator expressed the view that a distribution to creditors of close to 100c in the dollar would be likely, subject to the resolution of a dispute as to whether any debt in respect of the costs awarded against Brumar by Merkel J on 17 March 2005 was provable in the liquidation. The liquidator contended that such a debt could not be proved in the liquidation. For practical purposes, any surplus of assets over liabilities of Brumar would be more than exhausted by the payment of the penalty imposed by Merkel J and the payment of any costs ordered by his Honour. The prospect of the ACCC recovering any pecuniary penalty from Brumar appears to be non-existent. Accordingly, for reasons similar to those I have given with respect to Leahy in [58], I also refused the ACCC’s application, pursuant to s 500(2) of the Corporations Act, for leave to proceed against Brumar.
62 There is no dispute that each of Apco, United Fuels, United Retail, Liberty and Andrianopoulos answers the description of ‘trading corporation formed within the limits of Australia’, and is therefore a ‘corporation’ for the purposes of the provisions of the Trade Practices Act to which I have referred. Prior to their respective liquidations, Leahy and Brumar also fell within the same provision of the definition of ‘corporation’ in s 4(1) of the Trade Practices Act.
The natural person respondents
63 The remaining respondents are all natural persons, each associated with one or more of the corporate respondents.
64 Each of the natural person respondents is an officer or employee of one (or, in two cases, two) of the corporate respondents. The ninth respondent, Ian Lesley Carmichael, was Operations and Transport Manager of Leahy. The 10th respondent, Michael John Warner, was the Corporate Accountant for Leahy. Peter Joseph Anderson, the 11th respondent, was a director and secretary of Apco, and also Apco’s General Manager. Up to September or October 1999, the 12th respondent, Bruno Gallucci, was the Retail Business Manager of Pegasus. From October 1999 until May 2000, the position of Retail Business Manager of Pegasus was held by Andrew Ronald Pitman, the 13th respondent. At the same time as it discontinued the proceeding against Pegasus, the ACCC discontinued the proceeding, and abandoned its claims, against Mr Gallucci and Mr Pitman. The 14th respondent, Eino Kalevi Heikkila (whose two given names have been joined as if they were a single name in the title to the proceeding) was a director and the secretary, and occupied the position of General Manager, of United Fuels up to 30 September 1999, when United Fuels ceased trading. The 15th respondent, Garry Victor Dalton, was the Operations Coordinator for Geelong and Ballarat of Brumar from October 1998. Colin James Williamson, the 16th respondent, was employed by United Fuels, in the management of one of its retail outlets, until 30 September 1999. Thereafter, he continued to work at the same outlet, as an employee of United Retail, with the title Customer Service Leader, and additional responsibilities. Alan Shuvaly, the 17th respondent, was National Pricing Manager of Liberty. The 18th respondent, Christos Andrianopoulos (‘Chris Andrianopoulos’), was Director of Marketing for Andrianopoulos.
65 Ian Carmichael, Michael Warner, Eino Heikkila and Alan Shuvaly filed defences, each admitting the allegations made against him and against the corporation with which he was associated. Each gave evidence on behalf of the ACCC. Garry Dalton gave evidence in his own defence. Peter Anderson, Colin Williamson and Chris Andrianopoulos did not give evidence. There was some evidence that Colin Williamson had suffered a major heart attack not long before the trial and that his poor health may have been a factor in his decision not to give evidence.
The Geelong petrol market
The definition of the market
66 In the amended statement of claim, the ACCC pleaded that the Geelong retail petrol market involved the sale of petroleum products, including ULP and super-grade petrol (‘Super’) in the metropolitan area of the City of Geelong. Although, on the pleadings, the extent of the relevant market was a matter of controversy, the controversy did not surface in the course of the trial. There was no expert evidence about the structure of the market. It was largely accepted by the parties, if not common ground, that there was a market for the sale of petroleum products, including ULP and Super, to members of the public in the Geelong metropolitan area. It is also the case that some of the retailers of petroleum products operating in the Geelong metropolitan area had retail outlets in outlying towns around Geelong, so that price movements in the Geelong metropolitan area tended to be influential on price movements in those outlying towns, which included Meredith, Lara, Bannockburn, Drysdale, Queenscliff, Point Lonsdale, Torquay and Anglesea. The reverse did not apply; price movements in those outlying towns did not themselves influence prices in the Geelong retail petrol market.
The setting of prices
67 Within the Geelong retail petrol market, there were differences between the ways in which businesses were organised. A corporation might own and operate its own retail outlets, employing its own managers and staff. In such cases, officers of the corporation would set prices for fuel sold through the corporation’s outlets, and communicate any changes in those prices to the managers and staff, usually by telephone. Alternatively, the corporation might let retail outlets to an agent or agents, and supply them with fuel for sale to the public, again at price levels set by the corporation itself. The agent at an outlet might be remunerated by a set percentage of the price, or a set amount of money per litre of fuel sold or, as in the case of Liberty’s Geelong outlet, a flat monthly fee. Such outlets are known as commission sites, and the people who operate them are known as commission agents. Some corporations had a mixture of outlets they operated themselves and outlets operated by commission agents. There were also privately-owned outlets, the operators of which set their own prices, selling to the public fuel supplied to them by a corporation which functioned for this purpose as a wholesaler.
Branding
68 The branding of petroleum products sold in the Geelong petrol market covered a wide range. A number of outlets sold products under one of the well-known brands of the multinational oil companies, BP, Shell, Mobil and Caltex. In those cases, the premises at which the products were sold would be decorated with the colours, logos and names of the brands. Fuels would come, either directly or indirectly, from the oil companies, which acted as wholesalers and distributors, even if not themselves responsible for refining the petroleum and manufacturing the fuels. Other outlets sold petroleum products in their own names, or in the names of the corporations operating them, or for which the outlets were commission sites. Many of those who gave evidence in the proceeding recognised a distinction, perhaps imprecise but nonetheless regarded as real, between the ‘majors’ and the ‘independents’. Speaking generally, the majors were regarded as those whose prices were set, or influenced strongly, by the four oil companies. The ‘independents’ were generally those free to set their own prices, subject to the constraints of the wholesale prices they had to pay to procure fuels. They tended to be the outlets selling fuels in names other than the four well-known brands, although some independents sold under the banner of the oil companies that supplied them. Some independents regarded themselves as discounters.
Geography
69 Before going into detail as to the roles of the corporate respondents, and other participants in the Geelong petrol market, it is necessary to have some idea of the geography of the market. The City of Geelong lies to the south and west of Corio Bay, with its commercial centre on the southern side, close to where the coastline of the bay turns northward. Running through the metropolitan area, south of the commercial centre, is the Barwon River, which follows a course broadly from north-west to south-east. Geelong is linked to Melbourne by the Princes Highway, which enters the metropolitan area from the north and runs in a generally southerly direction until after it has crossed the Barwon River, where it turns generally south-westerly in the direction of Colac. The Princes Highway goes by different names within the metropolitan area. Thus, in Geelong North, near the western end of Corio Bay, it is Melbourne Road. For a short distance, it becomes Keera Street. Along the western edge of the commercial centre of Geelong, it is known as Latrobe Terrace. South of the Barwon River, it is Settlement Road, before it again becomes the Princes Highway.
70 There are other major roads. At Norlane, the Bacchus Marsh Road intersects with the Princes Highway. It heads in a generally northerly direction through Meredith to Bacchus Marsh. At the point at which the Princes Highway changes from Melbourne Road to Keera Street, it intersects with Church Street. A short distance to the west, Church Street intersects with Ballarat Road, which heads in a north-westerly direction and becomes the Midland Highway. From the commercial centre of Geelong, heading in an easterly direction, Ryrie Street becomes Portarlington Road, which goes through Drysdale and Portarlington to Queenscliff. A little to the south of it and almost parallel with it in the metropolitan area is the Bellarine Highway, connecting Geelong with Point Lonsdale, via Leopold. From the Bellarine Highway, it is possible to turn southward to Ocean Grove and Barwon Heads. From Settlement Road, Torquay Road runs south and becomes the Surfcoast Highway. The Anglesea Road intersects with the Princes Highway at Waurn Ponds. West of the commercial centre, Aberdeen Street heads in a westerly direction and becomes the Hamilton Highway.
The corporate respondents’ sites
71 For all or part of the period relevant to this case, 1999-2000, Leahy supplied fuels to the public through a mixture of sites it operated and commission sites. All of the fuels were sold, and the sites were branded, in the name of BP. Throughout the period, Leahy’s owned and operated sites were at 276 High Street, Belmont (‘BP Hillford’) and 694 Bellarine Highway, Leopold (‘BP Leopold’). A site at 314 Murradoc Road, St Leonards (‘BP St Leonards’) was operated by Leahy itself until about October 1999, and thereafter was a Leahy commission site. Until about April 2000, Leahy operated its own site at 1 Newcomb Street, Portarlington (‘BP Portarlington’). From about September 1999, Leahy also operated its own site at 42 Bell Street, Torquay (‘BP Torquay’). Leahy commission sites throughout the whole period were at: 77A Roslyn Road, Belmont (‘BP Belmont Plus’); 2 Station Street, Norlane (‘Geelong Off-Road Centre’); 8 Thompson Road, Geelong North (‘BP Fairway’); 1 Forrest Road, Lara (‘BP Lara’); Bridge Road, Barwon Heads (‘BP Sandbar’); Point Lonsdale Road, Point Lonsdale (‘BP Point Lonsdale’); and Midway Highway, Bannockburn (‘BP Bannockburn’). Until the end of 1999, Leahy also had a commission site on the corner of Wallace and Wilson Streets, Meredith (‘BP Meredith’). Leahy also sold fuels under the BP brand through outlets in Ballarat.
72 In the relevant period, Apco sold fuels to the public under its own Apco brand at a number of outlets. Until about April 2000, Apco itself operated a site at 228-244 South Valley Road, Highton (‘Apco Highton’). From about April 2000, Apco Highton became an Apco commission site. Similarly, Apco operated its own site at 5 Mill Road, Lara (‘Apco Lara’), until about May 2000, when the site became an Apco commission site. Up to about April 1999, Apco sold fuels through a commission site at 367-369 Moorabool Street, Geelong South (‘Apco Geelong South’). From about April 1999, that site became an Apco-operated site. Other Apco commission sites throughout the relevant period were at: 64 Portarlington Road, Newcomb (‘Apco Newcomb’); 57 Ormond Road, Geelong East (‘Apco Geelong East’); 343-355 Thompson Road, Geelong North (‘Apco Geelong North’); 238 Princes Highway, Waurn Ponds (‘Apco Waurn Ponds’); and 41 Geelong Road, Barwon Heads (‘Apco Barwon Heads’). Apco Geelong North is of some significance, because it was adjacent to the Apco head office. Apco also had a large number of retail fuel outlets outside Geelong, including some in Ballarat.
73 The Shell branded sites in the Geelong petrol market were divided between Brumar on the one hand and United Fuels (until 30 September 1999) and United Retail (from 1 October 1999) on the other. The Brumar sites tended to be in more prominent locations, on busier roads and to be larger and more obviously decorated as Shell sites, than the sites operated by United Fuels and United Retail. The Brumar sites, all operated by Brumar itself, were at: 468 Melbourne Road, Norlane (‘Shell Norlane’); 3 Settlement Road, Belmont (‘Shell Belmont’); 202-210 Latrobe Terrace, Geelong (‘Shell Latrobe Terrace’); 247 Melbourne Road, North Geelong (‘Shell Speedwings’); 480 Moorabool Street, Geelong (‘Geelong Car Spa’); 21 Church Street, Geelong West (‘Shell Westoria’); 12 Barrabool Road, Highton (‘Shell Highton’); and 107 Great Ocean Road, Anglesea (‘Shell Anglesea’). Brumar also had sites in Ballarat. The Shell sites operated by United Fuels, and then United Retail, were at: 176 Princes Highway, Waurn Ponds (‘Shell Waurn Ponds’); 108 Geelong Road, Torquay (‘Shell Surfcoast’); 110 High Street, Drysdale (‘Shell Drysdale’); and 85 The Terrace, Ocean Grove (‘Shell Ocean Grove’). In addition, there were commission sites of United Fuels and then United Retail at 137 Victoria Street, North Geelong (‘Shell Victoria Street’) and 44 Bellarine Highway, Point Lonsdale (‘Shell Point Lonsdale’). From about February 2000, United Retail added a further site in Fellmongers Road, Breakwater (‘Shell Breakwater’).
74 From a date which is not certain, but probably early in the second half of 1998, Liberty operated a single site in the Geelong area, at the corner of Thompson Road and Victoria Street, Geelong North. This was one of many sites through which Liberty sold fuels to the public throughout Victoria and elsewhere. It sold fuel under its own Liberty brand.
75 Also throughout the relevant period, Andrianopoulos sold fuel to the public under the BP brand, through a commission site at 298-304 Princes Highway, Norlane (‘BP Norlane’). This was one of a number of sites through which Andrianopoulos, or related business interests controlled by the family of Chris Andrianopoulos, sold fuels to the public in Victoria.
Other market participants
76 The operations of the corporate respondents by no means represented the entirety of the businesses in the retail sale of fuels in the Geelong metropolitan area and surrounding towns. To gain a more complete picture of the Geelong petrol market, it is necessary to have regard to the activities of a number of other businesses. Outlets at which fuels were sold to the public under the brand name Mobil fell into three categories. There were commission sites, supplied by Pegasus. A number of sites were controlled by a company called Strasburger Enterprises (Properties) Pty Ltd (‘Strasburger’). So far as Pegasus was concerned, these were reseller sites, but so far as Strasburger was concerned, they were commission sites for it. There was also a company called Rafinc Pty Ltd (‘Rafinc’), to which Pegasus sold fuel for resale to the public. Several of the Mobil branded sites changed during the relevant period. The site on the corner of Shannon Avenue and Aberdeen Street, Manifold Heights (‘Mobil Manifold Heights’) was a Pegasus commission site until about 19 July 1999, and a Rafinc site thereafter. The site at 19 Settlement Road, Belmont (‘Mobil Belmont’) was a Pegasus commission site until about 10 March 1999, then a Strasburger site until 7 September 1999, then a Rafinc site until 23 August 2000, and again a Strasburger site for the balance of the relevant period. The site at 325 Latrobe Terrace, Geelong South (‘Mobil Latrobe Terrace’) was a Pegasus commission site until about 10 March 1999, and thereafter a Strasburger site. A similar change of regime, from Pegasus to Strasburger, on the same date, also occurred in relation to the site at 180 Barwon Heads Road, East Belmont (‘Mobil East Belmont’) and the site at 122 Torquay Road, Grovedale (‘Mobil Grovedale’). The site on the corner of Barrabool and Valley Roads, Highton (‘Mobil Highton’) followed a similar pattern, except that it ceased to be a Strasburger site in 3 October 1999. The site on the corner of Bacchus Marsh Road and Purnell Road, Corio (‘Mobil Corio Village’) was a Strasburger site until about 13 July 1999, when it became a Rafinc site. Other Strasburger sites, operated as its commission sites throughout the relevant period, were at: the corner of Thompson Road and Naughton Avenue, Geelong North (‘Mobil Geelong North’); 151 Drysdale Road, Moolap (‘Mobil Moolap’); 369 Portarlington Road, Moolap (‘Mobil Point Henry’); 194 Queenscliff Road, Newcomb (‘Mobil Newcomb’); and 189 Bellarine Highway, Newcomb (‘Mobil Gateway’). Portcliff Geelong Pty Ltd (‘Portcliff’) was the commission agent operating six sites for Strasburger: Mobil East Belmont (from about 26 October 1999); Mobil Grovedale (from about 26 October 1999 to December 2000); Mobil Moolap; Mobil Point Henry; Mobil Newcomb; and Mobil Gateway. Phillip Andrew Carmichael was the sole director and the secretary of Portcliff. He is also Ian Carmichael’s brother.
77 The principal retailer of fuels under the Caltex brand (and under the Ampol brand, after it became merged with Caltex) in the Geelong petrol market was J Chisholm Pty Ltd (‘Chisholm’). The directors of this company, who were both involved in its management, were the brothers Graeme Leslie Chisholm and Robert Stanley Chisholm. In addition, Darren John Campigli was the Manager of Chisholm’s Geelong depot. Chisholm was not a respondent to the proceeding, because at all times it cooperated with the ACCC. Both Graeme Chisholm and Darren Campigli gave evidence on behalf of the ACCC. Chisholm operated its own sites at: 272 Princes Highway, Corio (‘Chisholm Corio’); 35-37 Shannon Avenue, Geelong West (‘Chisholm Geelong West’); 406 Shannon Avenue, Newtown (‘Chisholm Newtown’); 168 Torquay Road, Grovedale (‘Chisholm Grovedale’); and 808 Bellarine Highway, Leopold (‘Chisholm Leopold’). It also sold fuel to the public through commission sites at 254 High Street, Belmont (‘Chisholm Belmont’) and 1-5 High Street, Bannockburn (‘Chisholm Bannockburn’).
78 One very prominent site carrying the Caltex brand, was under the name of the Caltex Quick Bite. It was on the corner of the Princes Highway and School Road, a site highly visible to traffic entering Geelong from Melbourne, at or near the start of the Geelong metropolitan area. It was a large site, described as having 16 fuel pumps. It is not clear by whom the Caltex Quick Bite was operated. The ACCC did not seek to gather any information about it until, at a directions hearing on 22 March 2005, counsel for Andrianopoulos and Chris Andrianopoulos complained that the ACCC had not made discovery of any information with respect to the Caltex Quick Bite. Thereafter, the ACCC did obtain, and discover, some information, and some found its way into evidence.
79 7-Eleven Stores Pty Ltd (‘7-Eleven’) operated two retail fuel outlets in the Geelong petrol market at: the corner of Sydney Parade and Swanston Street, Geelong East (‘7-Eleven Geelong East’); and the corner of Bellarine Highway and Coppards Road, Newcomb (‘7-Eleven Newcomb’). Jacques Bodourian was the Territory Manager for 7-Eleven.
80 A partnership, known as G H and K L Primmer operated a retail fuel outlet at Meredith (‘BP Meredith’), which was a Leahy commission site until the end of 1999, and a reseller of fuel supplied by Leahy from 1 January 2000. Gordon Henry Primmer was one of the partners and the principal person involved in managing the business of BP Meredith.
81 United Petroleum Pty Ltd (‘United Convenience’) sold fuels to the public through one site in Bacchus Marsh Road, Corio. United Convenience is not related to either United Fuels or United Retail. The Operations Manager of United Convenience was Stan Kerr.
82 Perrowood Pty Ltd (‘Mortimer Petroleum’) sold fuels to the public under the name and brand Mortimer Petroleum, at two outlets, which it owned and operated. They were at 495 Ballarat Road, Batesford (‘Batesford Roadhouse’) and at High Street, Drysdale. David Andrew Mortimer was the General Manager of Mortimer Petroleum.
83 For approximately 10 years up to 1998, Anton Lesley Maurer was employed by Leahy. After he had ceased to be so employed, in about March 1999, Mr Maurer became an employee of Expotech Pty Ltd (‘Expotech’). He became the Retail Site Manager at an outlet through which Expotech sold fuels to the public under the BP brand. The outlet was called ‘BP Corford Express’ and was situated at the corner of Melbourne Road and Surrey Road, Geelong North.
84 It is also necessary to mention Wayne Kingsley Purtell, who gave evidence at the trial on behalf of the ACCC. Wayne Purtell was involved in the Geelong petrol market, first on behalf of Provincial Fuels Pty Ltd (‘Provincial Fuels’), and subsequently on behalf of Westfuels Pty Ltd (‘Westfuels’), each of which operated the Brumar sites in the Geelong area in succession, before Brumar took over those sites in 1998. Until 15 February 1999, Wayne Purtell continued to be the Geelong Operations Coordinator for Brumar.
Board prices
85 The practice of participants in the Geelong petrol market was to advertise their prices, particularly those of ULP, in such a way as to make them visible to passing motorists. This was apparently a universal practice. The advent of computer technology, and its adoption in the more modern retail outlets, enabled this to be done by means of computer-operated signs. In such a case, an operator could change from a computer console inside the shop or office of the outlet not only the price displayed on the sign, but the price displayed on each of the fuel pumps at the outlet as well. Simultaneous change of prices was therefore possible. Without that technology, prices were advertised by means of sandwich boards, or other flat signs, to which could be attached (by means of hooks or otherwise) metal plates, displaying figures. Prices on the external signs could only be changed manually, sometimes only with the assistance of a pole with a hook, enabling the operator to remove metal plates and substitute others. In such cases, the prices on each individual fuel pump had to be changed manually as well. The process of effecting a change of prices could involve the advertising of a different price for ULP from the prices appearing on the pumps. Of course, it was necessary to take care not to upset customers by advertising to passing motorists cheaper prices than those for which the pumps were actually set. In an outlet at which only one person was on duty, the timing of a price change could be affected by the volume of trade experienced. It was sometimes necessary to wait for a lull, during which the driveway was empty of cars, before a price change could be put into effect. Whether they were computerised or manual, the signs on which prices were advertised to passing motorists were known as ‘boards’, and the prices displayed on them were known as ‘board prices’.
Spotting board prices
86 Board prices were one means by which those responsible for setting the prices of fuels at retail outlets were able to gain knowledge of their competitors’ prices. In some cases, it was possible for the operator of an outlet to see the board prices of a competitor from within the operator’s premises, or by walking out onto the street. There were two striking examples of this. Apco Geelong North and Mobil Geelong North faced each other across Thompson Road. Because this proximity gave passing motorists a direct choice between the two, a change in the board prices at one of them would very likely be followed swiftly by a change in board prices at the other. United Fuels, and later United Retail, had an office at 247-261 Melbourne Road, North Geelong, next door to Shell Speedwings. Mr Riordan and, while he worked from that office, Mr Heikkila could see the board price at Shell Speedwings from the office.
87 In order to obtain a broader sample of board prices, it was common for those engaged in setting petrol prices, or other employees who reported to them, to drive around the streets observing the board prices of their competitors. Several witnesses gave evidence of driving around, specifically to observe board prices, often more than once in a day. Ian Carmichael, Michael Warner, Alan Shuvaly, Darren Campigli, Wayne Purtell, Phil Carmichael, Eino Heikkila and Robert Riordan all gave evidence about spotting board prices of competitors. A circuit commonly used for this purpose involved Melbourne Road and the Princes Highway, Purnell Road, the Bacchus Marsh Road, Cox Road, Thompson Road, the Ballarat Road and Church Street. A trip around this circuit enabled the observer to see the boards of Shell Speedwings, BP Corford Express, BP Norlane, Shell Norlane, Mobil Corio Village, Apco Geelong North, Mobil Geelong North, Liberty and BP Fairway. If a broader sample were desired, a short extra loop, or short extensions at the northern end of this circuit permitted observation of the boards at Caltex Quick Bite and United Convenience. Likewise, a short extra loop at the southern end of the circuit would enable observation of board prices at Chisholm Newtown in Shannon Avenue, Mobil Manifold Heights, Shell Latrobe Terrace and Mobil Latrobe Terrace.
88 In addition, it was common for those responsible for setting prices to note any board prices they passed on their daily journeys to and from work, and to instruct their employees to do likewise, and to report their observations. Robert Riordan’s morning routine involved driving from his home in Newtown to the Geelong Football Club at Kardinia Park, for his morning exercise. His route took him down Latrobe Terrace, and enabled him to observe the board price of Mobil Latrobe Terrace, shortly after 6.00 am, when it opened. As part of his exercise program, Mr Riordan would run around the perimeter of Kardinia Park and onto Moorabool Street, past Apco Geelong South and the Geelong Car Spa. After the completion of his exercise program with a shower and breakfast, Mr Riordan would drive to his office, next to Shell Speedwings. On the way, he would observe the board prices displayed at Shell Latrobe Terrace and Mobil Latrobe Terrace. On occasions, he continued up Melbourne Road and the Princes Highway, to observe the board prices at BP Corford Express and Shell Norlane, before making a u-turn and returning to his office. When United Retail commenced business, and Colin Williamson was given additional responsibilities as well as managing Shell Waurn Ponds, Mr Riordan also gave him a mobile phone at United Retail’s expense, and instructed him to report on any board prices that Mr Williamson observed on his way to Shell Waurn Ponds each morning, and to observe board prices in the area from time to time during the day.
89 Operators who also engaged in transport of fuel often obtained information about board prices of other petrol retailers from the drivers of their trucks. In the case of Leahy, there was evidence that the drivers would sometimes provide managers with information about prices in Melbourne. Sometimes, customers would comment to a site manager about the level of prices at the outlets of competitors. In general, operators of retail petrol outlets in the Geelong petrol market were keen to obtain any information they could about fuel prices.
The pattern of petrol price movements
The sawtooth pattern
90 Prices of ULP in the Geelong market moved in a pattern, described as a ‘sawtooth’ pattern, throughout the relevant two-year period. Prices for super were usually set at a margin above the prices of ULP. The margin was reasonably consistent across the industry. The sawtooth pattern is so called because, on a line graph tracing price movements from day to day, the pattern has the appearance of teeth like those of a saw-blade. The pattern is characterised by steep rises to peaks, followed by more gentle descents to troughs.
91 A sawtooth pattern of this kind is not a feature confined to the Geelong petrol market. Such a pattern is common in the petrol markets in comparatively densely populated areas throughout Australia. Concern about variations in petrol prices led the federal government to request the ACCC ‘to examine the feasibility of placing limitations on petrol and diesel retail price fluctuations throughout Australia’, in early March 2001. The then Minister for Financial Services and Regulation requested the ACCC to provide a report as soon as possible. On 14 June 2001, the ACCC released a discussion paper. In December 2001, the ACCC produced a report entitled Reducing Fuel Price Variability. The report found that:
‘Volatility in retail petrol prices is generally confined to the major metropolitan cities and some rural towns on major highways. The price cycles in these areas are fairly regular and frequent. They generally exhibit a sawtooth pattern, that is, prices increase rapidly over a short period of time and then steadily decrease.’
92 Data available to the ACCC demonstrated that the amount of the variation in price cycles had increased between the first half of 1998 and the first half of 2001. In Melbourne, for instance, the average size of the variation of price cycles in the first half of 1998 was 3.7c. In the first half of 2001, it was 7.5c. The ACCC also found that the duration of price cycles, the number of days between the low point of one price cycle and the low point of the next, also increased between 1998 and 2001. In the first half of 1998, the average duration of a price cycle in Melbourne was 6.6 days, with the most common duration being seven days. In the first half of 2001, the average duration of price cycles in Melbourne had increased to 8.9 days, although the most common duration was still seven days.
Possible causes of the sawtooth pattern
Multiple causes
93 In Reducing Fuel Price Variability, the ACCC identified a number of causes of these price cycles. It referred to international factors, such as prices of crude oil and refined petroleum products, and the exchange rates between the Australian dollar and the US dollar. These factors were important, because, as the report said, ‘movements in Australian petrol prices generally follow movements in Singapore refined petroleum product prices.’ The report also identified the level of federal and state excise and taxes as local factors. In summarising its findings about other local factors, the report said:
‘The level and extent of competition in the petroleum industry in Australia varies between locations and over time. It is influenced by supply and demand factors, barriers to entry, the presence of independents, the potential availability of imports, and the extent of vertical integration. The causes of local price cycles are complex. Price cycles appear to be influenced by many factors. These include: competition for market share; oil company price support for their franchisees; differential wholesale petrol pricing; short-term excess product at the refineries; changes in demand; the current regulatory structure; fuel blending; possible anti-competitive practices; and movements in refiner margins.’
94 In discussion of the causes of price cycles, the report said:
‘Petrol has several characteristics which appear to make it susceptible to price volatility. These are:
· Petrol is a relatively homogenous product, with limited brand loyalty. Therefore, competition is based primarily on price. For the individual retailer, there is incentive for substantial discounting to attract sales from competitors when demand is low.
· The price of petrol is more visible than the price of most other products because of prominently located price boards. Thus there is greater incentive to discount when demand declines.
· Some consumers may be more sensitive to changes in petrol prices than other household items because petrol is purchased regularly and is a substantial part of the household budget.
· However, the overall demand for petrol is broadly inelastic (as there are no ready substitutes over the short term) and thus there may be an incentive for retailers as a group to increase the price during peak demand. As supply of, and demand for, petrol are relatively inelastic, small changes in these can lead to large changes in price.
· At service stations with shops attached, petrol may be used as a loss leader to attract consumers who may then purchase items with a greater profit margin.’ [Footnotes omitted.]
Competition for market share
95 In discussing competition for market share at the retail level, the report said:
‘At the retail level, the oil majors (who operate commission agency and franchise sites), independent chains, supermarket sites and smaller independent retailers appear to compete for market share to varying degrees. The degree of competition is mainly affected by the extent of price support retailers receive and the extent to which discounts are available at the wholesale level.
A feature of the industry is that oil majors are vertically integrated which, combined with the formal reciprocal arrangements at the refinery level, gives them advantages over other participants.
Since petrol is basically a homogenous product, any competition is largely based on price and therefore the main way to increase volume is to have a lower price than competitors. Independents typically seek volume in this way. However, this increase in volume may be short lived, as competitors will be compelled to reduce their prices to regain market share.
In general, discounting continues until prices become unsustainable (that is, they are so low that they may not cover average variable costs). One of the retailers may then decide to significantly raise prices, with competitors rapidly following suit. However, prices may also rise as a result of a successful attempt by a market participant to increase profits by raising prices in a locality. After a short period, the price cycle starts again.
The duration and extent of discounting depends on the capacity of retailers to recover their costs over the long term. Retailers bear two types of costs: fixed costs, which are incurred independently of how much the retailer sells (such as costs of the site and labour costs), and variable costs, which vary with the quantity of petrol and convenience products sold.
To recover their fixed costs, retailers need to achieve a margin on some or all of their sales of petrol and convenience products. As a result, they must maintain or increase sales. However, to retain or increase sales volume, retailers compete on price. This competition continues to a point where there is little or no margin over their variable costs. Pricing at or close to variable costs for sustained periods is unprofitable for all retailers. Therefore, at some point, retailers must achieve a margin above their variable costs of supply to recover their fixed costs. This dynamic is reflected in the market whereby retail petrol prices are gradually competed down to variable cost (or below) before rapidly adjusting upwards.
Discounting has grown in recent years possibly because retailers are responding to their competitors’ price movements more rapidly than before, as a result of more timely and thorough market information (the availability of more comprehensive data that can be easily transferred electronically).
The increase in the number and size of multi-site franchises over recent years may also have contributed to price variability. Multi-site franchises can reap the benefits of economies of scale and can assist those sites within their operation that face greater competition. Given their presence and spread in the market, multi-site franchises can also influence the timing of price rises.
Another factor is that some retailers also rely more on the sale of non-fuel items and the need to discount fuel is greater to attract more customers into the stores.’
Price support
96 Concerning price support from oil companies, Reducing Fuel Price Variability said:
‘The oil majors use price support schemes as a way to enable their franchisees to be competitive and/or to increase their influence over the pricing behaviour of retailers.
In general, price support takes the form of the oil majors guaranteeing a certain margin to their franchisee when fuel is bought from the oil majors.
Price support is given to franchisees selectively and is not available in all localities. As some franchisees operate in very competitive areas, ongoing price support may be provided for long periods of time. These operations may not be viable without this assistance.
Independents, branded or otherwise, who do not receive price support, may experience extreme pressure when substantial discounting is occurring in the market. The Commission understands that in the past the oil majors provided price support to independents, however this was removed around two to three years ago.
Price support schemes may also be a long-term strategy to maximise profit by controlling the prices of franchisees and also to remove or limit competition from independents. Such schemes also give the oil major control over the degree of support for its retail outlets, the depth of the discounting, and often the duration of the discounting.
Petrol price data examined by the Commission indicates that, in general, independent retailers rather than the oil majors tend to lead market prices down. Therefore, it appears that oil majors that provide price support may be doing so in response to competitive pressures. However, sometimes oil majors lead market prices down.
In the absence of price support schemes, prices have been less volatile, indicating that price support may contribute to price cycles.’
97 The report also mentioned submissions that had been made to it as to the importance of price support as a factor in the variation of retail prices. A submission from the Motor Traders Association of Australia even suggested that the application and subsequent withdrawal of price support was the cause of retail price fluctuations.
Anti-competitive practices
98 In discussing possible anti-competitive practices as a factor in price variations, after discussing price collusion and the provisions of the Trade Practices Act impacting on such collusion, the report said:
‘By restricting the degree of competition, it is likely that prices do not move as much as they otherwise would in the absence of price collusion and they would also be at higher average levels. It may be that the trough of the cycle is not as low or that price increases occur more quickly.’
Factors present in the Geelong petrol market
99 Not only did the Geelong petrol market reflect the standard sawtooth pattern of price movements in metropolitan areas, it also had a number of the other characteristics identified by the ACCC in Reducing Fuel Price Variability. The evidence about those characteristics is summarised as follows.
Competition for market share
100 A significant number of the outlets in Geelong also had, as part of their businesses, shops selling a range of items, including groceries, snacks and drinks. The price mark-ups on the goods in these shops were generally higher than those in supermarkets. Because the margin of the retail price over the cost price of petrol was generally very low, operators relied on the turnover of these shops to pay other business costs, and to provide a measure of profit. Attracting customers by means of discounting the prices of ULP and Super, in the hope that the customers would also purchase items from the shops, was an important consideration in the setting of prices. The evidence was generally to the effect that quite small reductions in petrol prices could have significant effects on sales at particular outlets. Because of the relative homogeneity of petrol, which limited competition to price, motorists were conditioned to looking for the lowest prices that they could obtain. It was even suggested by some witnesses that motorists were prepared to spend more than they would save, by driving to a more distant outlet at which the price was cheaper.
Price support
101 The impact of oil company price support was also the subject of a considerable amount of evidence. The variations in prices were such that, at and near the low point of each price cycle, the retail price was often lower than the wholesale price. Selling at such a loss would mean that a retail outlet would be unable to stay in business for very long. In order to keep outlets bearing their brand names open, the oil companies engaged in various forms of price support schemes. In substance, these involved the payment of subsidies to the operators to eliminate or reduce the losses they would otherwise suffer, or to give them a small profit margin. During 1998, BP ceased to pay price support subsidies to Leahy, when it introduced a new pricing system for supplying petrol, called ‘terminal gate pricing’.
102 During the period relevant to this case, Caltex continued to be involved in a price support scheme, involving what Graeme Chisholm described as a ‘rebate’, for the Chisholm outlets. According to his evidence, Caltex would engage in making payments of price support rebates for a period, perhaps for several days, towards the lower end of a price cycle, but would tire of the expense involved. Caltex would then notify the Chisholm outlets that price support would be removed, usually giving them notice of up to two hours. This would lead inevitably to Chisholm increasing its prices, because to do otherwise would have meant trading at a considerable loss. Sometimes Caltex withdrew price support after there had been a movement in the price levels in the market. At other times, the withdrawal of price support precipitated a price movement, at least by Chisholm. Darren Campigli’s evidence was to similar effect in relation to Chisholm.
103 During the relevant period, Shell also provided price support to Brumar and to United Fuels and United Retail. In relation to United Fuels and United Retail, Shell also provided a subsidy known as ‘profitability support’. Whereas price support was provided according to the number of litres sold, profitability support was based on the overall trading position, and was designed to keep United Fuels, and later United Retail, in business. If price support was withdrawn by Shell, United Fuels and United Retail would raise their retail prices of petrol, in order to avoid trading at a loss.
Unsuccessful attempts at price increases
104 A number of witnesses gave evidence that, from time to time, a retailer in the Geelong petrol market would attempt to raise the market price unilaterally, by raising its own board prices. The motivation for such a move is obvious. At the low end of a price cycle, if price support was non-existent or had been withdrawn, the incentive for a particular retailer to increase prices was very powerful. There was no choice but to increase, if the retailer wished to stay in business in the long term. A unilateral attempt would sometimes fail, because other retailers would not follow suit, even if they had spotted the increase in board prices of the attempted initiator. If that occurred, the retailer which had attempted to initiate the price increase would be forced to lower its prices again, usually to the point at which they had stood before the attempt was made, in order to retain market share. Witnesses described this chain of events as involving a price rise that did not ‘stick’.
105 For a price rise to stick, a number of witnesses saw it as necessary for most, if not all, the retailers in the Geelong petrol market to increase their prices, although clearly not all at exactly the same time, nor all to exactly the same price. According to the preponderance of the oral evidence, even one significant outlet failing to raise its prices in line with a general price increase could cause that price increase not to stick, by causing other outlets in its vicinity to begin discounting heavily, in order to retain their market share. In turn, this would cause the circle of discounting to widen, until all or most of the retailers in the market found it necessary to bring their prices down to somewhere near where they had been before the attempted price rise. Thus, there was a perceived need to ensure that all of the significant market participants were aware of an increase, to monitor the board prices of competitors to see if they had also increased, and to endeavour to persuade them to increase if they had not done so, in order for a price rise to stick. It must be said that other evidence does not support the proposition that a universal, or near-universal, response was necessary for a price rise to stick. As will be seen, a number of price rises in fact stuck without anything like the full participation of competitors in the Geelong petrol market.
The relationship between Melbourne prices and Geelong prices
106 An important aspect of the case is the relationship between prices in the Geelong petrol market and petrol prices in metropolitan Melbourne.
107 The only officer of the ACCC who gave evidence was Jane Louise Edwards, who was in charge of the team of officers conducting the investigation of possible petrol price-fixing in Geelong, after that investigation became separated from a similar investigation in relation to Ballarat. Ms Edwards did not concede that there was any correlation between petrol price movements in the Geelong petrol market and petrol price movements in Melbourne. She reached her conclusion that no such correlation existed as a result of a trial comparison of average daily Melbourne prices for ULP with daily prices for ULP at an outlet described as a Liberty site at Waurn Ponds. Apart from this trial, there was no evidence concerning prices at this site. Although described as a Liberty site, it appears not to have been operated by Liberty, or by any commission agent on Liberty’s behalf, during the relevant period. The average daily Melbourne prices were obtained from an information supplier called Informed Sources. This type of information is available for a fee. The ACCC subscribes to it, as part of its monitoring of petrol prices for the purpose of providing information to the public.
108 The comparison for the month of January 1999, presented in a graph with the prices on the vertical axis and the dates on the horizontal axis, shows five declines in price and four steep rises for each of Melbourne and the Waurn Ponds site. The lowest price point of each occurred on the same day every time. This means that the sharp rises occurred on the same day although, on three of the four occasions of sharp rises, the Melbourne peak was reached on the day after Waurn Ponds reached its peak. The two price levels were rarely exactly the same, because the comparison is between prices averaged from a number of significant outlets on the one hand and prices from a single outlet on the other. The two lines on the graph appear to follow similar paths. A similar graph for the months of February, March and April 2000 shows four rises and four declines in February. Two of the Melbourne peaks appear to have preceded the Waurn Ponds peak by a day, with the other two falling on precisely the same days. The lowest point on each cycle also shows Waurn Ponds trailing Melbourne by a day on each occasion. In March, two peaks and two troughs were a day later than Melbourne, and one peak and two troughs occurred on the same day. There is also a sharp rise, followed by a decline, shown in Melbourne over a period of several days during which Waurn Ponds continued to decline slightly. For April 2000, the graph shows another period of several days on which there was a sharp rise, followed by a decline, in Melbourne, while the price at Waurn Ponds continued to decline. There were two troughs and one peak occurring on the same day, with one trough and two peaks showing Waurn Ponds trailing Melbourne by a day. There are also graphs for the whole year, which do not show the daily comparisons in enough detail to enable a precise judgment to be made about any delay. What is clear from them is that, for the most part, the rises and falls in prices in both Melbourne and Waurn Ponds occurred in close proximity to each other. In 1999, there was a period in May and June, during which there were five or six peaks in Melbourne, but only one at Waurn Ponds. In 2000, there can be detected two periods when sharp rises occurred in Melbourne but Waurn Ponds continued to decline, and two sharp rises in Melbourne in conjunction with which the Waurn Ponds price rose but by nowhere near as much. Otherwise, the paths of the two lines are very similar.
109 Even on the basis of this material, it is somewhat surprising that Ms Edwards was prepared to deny any correlation between Geelong and Melbourne as strenuously as she did. The comparison between average daily Melbourne prices and those at the Waurn Ponds outlet demonstrates a quite high correlation. Even more significantly, among the ACCC’s documents was a graph, apparently compiled using information from Informed Sources, showing a comparison of daily average ULP prices, being averages of hourly board price surveys over a 12-hour period, from both Melbourne and Geelong. The period covered is the first three months of 1999. The graph shows a remarkable correlation between rises and declines in prices. The only dissimilarities are that, on occasions, there is a lag between the Melbourne peak and the Geelong peak, and both the peaks and the troughs tend to be lower in Geelong than in Melbourne. Even when confronted with this document, Ms Edwards refused to accept that it demonstrated a correlation, conceding only ‘an observable similarity.’
110 With the exception of Alan Shuvaly, who thought that there was no connection with Melbourne, the evidence of those actually participating in the Geelong petrol market was very consistent that a relationship existed between Geelong prices and Melbourne prices. Estimates of the time lag involved between a rise in Melbourne and a rise in Geelong varied from a matter of hours to two days, with the most common estimate being that Geelong prices rose the day after Melbourne prices had risen. There was consistency to the effect that Geelong prices followed those of Melbourne, both in the sharp upward movements and the slower declines. Michael Warner described Geelong as a suburb of Melbourne, in relation to petrol prices. Eino Heikkila agreed with this description.
111 It is no surprise that a connection between Geelong petrol prices and Melbourne petrol prices would exist. Geelong is linked to Melbourne by a freeway, and is close enough to enable those who live in Geelong to commute to Melbourne by car for work. Large numbers of people do so. Again, estimates varied, but it is clear that the number of motorists travelling from Geelong to Melbourne in the morning, and returning in the evening, on a regular basis, is in the order of tens of thousands. Most are likely to use the Westgate Freeway to gain access to the Princes Freeway to Geelong. On each side of the Westgate Freeway, before the motorists travelling from Melbourne to Geelong cross the Westgate Bridge, is a major Shell outlet, displaying board prices so that they are visible to passing motorists. At Laverton, a further Shell outlet, also displaying its board prices, is visible to motorists using the freeway. The next petrol outlet a Geelong-bound motorist encountered in the relevant period was the Caltex Quick Bite, as he or she entered Geelong. It would be in the interests of the operator of the Caltex Quick Bite to ensure that commuting motorists could rely on its prices being either identical to, or slightly lower than, those of the Shell outlets visible to returning commuters. If motorists could have some reliance on this kind of relationship between Melbourne and Geelong prices, they would be more likely to delay their petrol purchases until they reach Geelong. Similarly, it would in the interests of operators on the eastern side of the Princes Highway in Geelong to ensure that their prices matched, or were slightly better than, those of the Caltex Quick Bite. If motorists could rely on this relationship of prices, they might be induced to delay their petrol purchases until they had travelled further towards the centre of Geelong.
112 There can be little doubt that, if prices on the eastern side of the Princes Highway in Geelong were set by reference to those of the Shell outlets on the Westgate Freeway and at Laverton, this would have a significant effect on prices of other outlets in the Geelong petrol market. The sites on the eastern side of the Princes Highway were prime sites for other operators to observe board prices. In the order in which a motorist coming from Melbourne would pass them, they were BP Norlane (Andrianopoulos), Chisholm Corio, and Shell Speedwings, all encountered before the Princes Highway becomes Latrobe Terrace. Outlets on the western side of the Princes Highway in that area would undoubtedly be influenced to set their prices according to those of their competitors on the opposite side of the road. Others in the market, who spotted board prices in the manner described in [86] – [89], would be inclined to adjust their own prices to match, or to be slightly cheaper than, the sites observed by commuters returning home at the end of the day, in order to attract market share. It is therefore easy to see that the influence of Melbourne board prices in Geelong would be highly significant.
113 A further factor existed, also connecting Melbourne petrol prices to those in the Geelong petrol market. This was the fact that the people responsible for setting the prices at some of the major outlets were themselves based in Melbourne. This was the case for all the Mobil outlets, Liberty Geelong North, BP Norlane, both the 7-Eleven outlets and BP Corford Express. In addition, at least early in the period relevant to the present case, Craig Brown, a Territory Manager for Shell, also had a role in the management of Brumar and was responsible for setting the prices at the Brumar outlets in Geelong. Although it is highly likely that Melbourne-based managers setting petrol prices for the Geelong petrol market would try to obtain information about other prices in Geelong, it is also highly likely that they would take into account their own decisions, or those of their colleagues, as to the setting of prices for Melbourne outlets.
114 As well as commuter traffic, there is other significant traffic from Melbourne to Geelong. The Princes Highway carries traffic from Melbourne to places beyond Geelong, particularly the beach resorts on the Bellarine Peninsula and the Surf Coast. That traffic tends to be at its heaviest in the summer, and particularly on Friday evenings coming from Melbourne, and on Sunday afternoons and evenings returning to Melbourne. This traffic provides an opportunity for operators of retail petrol outlets in Geelong to attract market share, but only if their prices are comparable to, or more advantageous to the motorists concerned than, the prices of outlets in Melbourne.
115 The desire of the operators of petrol outlets in Geelong to exploit commuter traffic and beach resort traffic, to gain market share, might well help to explain the gaps, commonly appearing in the data, between Geelong prices and Melbourne prices. In general, both the peaks and the troughs of each price cycle tended to be lower in Geelong than they are in Melbourne. Lower prices would tend to attract people who were heading to or passing through Geelong to delay their petrol purchases until they saw a suitably cheap outlet in Geelong.
116 For all of these reasons, I find that there was a significant connection between Melbourne petrol prices and prices in the Geelong petrol market. To a considerable extent, Geelong prices were influenced by those in Melbourne. So far as there is data available in the evidence, it shows a high degree of correlation between the prices in the two places, particularly as to the timing of the sharp increases and the more gentle decreases in the sawtooth pattern of petrol price cycles. This correlation is confirmed by the oral evidence.
The sawtooth pattern continues
117 The sawtooth pattern of petrol price movements continues to be a characteristic of retail petrol markets in the relatively densely populated areas in Australia. In August 2005, the ACCC published for the information of members of the public a booklet entitled Understanding petrol pricing in Australia: Answers to some frequently asked questions. The booklet contains the information that:
‘The cycle tends to show a sawtooth pattern, i.e. prices rise rapidly over a short period and then steadily decrease.
However, while cycles follow a general pattern, they are not totally regular…
The causes of price cycles are complex and appear to be influenced by many factors including:
→ changes in demand on different days of the week
→ competition among petrol retailers for market share
→ provision of price support by oil majors to their franchisees—price
support is where the oil majors provide financial assistance to their
franchisees to price competitively
→ different wholesale prices offered to petrol retailers
→ short-term excess product at refineries which may lead to lower
wholesale prices to some retailers
→ possible anti-competitive practices—such as price fixing.
Industry participants cannot agree on the relative significance of these factors. As some factors are also interdependent, they cannot be considered in isolation. Their influence may also vary between locations and over time.’
118 The evidence in the present case is that the sawtooth pattern of price increases and decreases in the Geelong petrol market occurred throughout the relevant two-year period, even on occasions as to which there is no evidence suggesting that any of the market participants were engaging in price-fixing. Further, the sawtooth pattern of price cycles has continued to occur in Geelong since the relevant period, up until the trial. Just as the ACCC noted in Reducing Fuel Price Variability, the pattern itself has varied in some of its features with the passage of time, but it remains in essence a sawtooth pattern, characterised by steep increases and slower decreases. The fact that such a pattern occurs independently of alleged price-fixing raises a serious question as to the relevance to the occurrence of the pattern of any attempts to fix prices.
The arrangements or understandings alleged
Eight interlocking arrangements or understandings
119 Unlike the Ballarat case, this case does not involve an allegation of a single, multi-party price-fixing arrangement or understanding. In the present case, the ACCC alleged that there existed eight separate arrangements, seven of them bipartite and the eighth tripartite. Counsel for the ACCC described them as ‘interlocking’. In effect, they were alleged to have operated serially, consequent upon steps taken to give effect to the principal arrangement or understanding, alleged to exist between Apco and Leahy.
Terminology
120 In summarising the allegations made in the amended statement of claim, and for the purpose of convenience in these reasons for judgment, I describe each alleged arrangement or understanding by using the word ‘Arrangement’, followed by the abbreviation for the word ‘number’ and a number, as in ‘Arrangement No 1’. In adopting this style, I do not intend it to be understood that I have accepted from the outset that any arrangement or understanding in fact existed or was carried into effect. Nor is the use of convenient shorthand to be taken to signify that I have neglected the allegation that each of the numbered arrangements is alleged to have been either an arrangement or an understanding. It is only the complexity of designating the alleged arrangement or understanding between Leahy and Apco in such long form that has driven me to refer to it as ‘Arrangement No 1’ and the other alleged arrangements or understandings in a similar way, using different numbers.
Arrangement No 1
121 Arrangement No 1 was alleged to have existed between Leahy and Apco. It was alleged to have five distinct provisions, which are summarised as follows: (a) Leahy and Apco would communicate with each other regarding the amount and timing of proposed increases in the retail price of ULP and Super to be charged at Leahy outlets and Apco outlets, including commission sites; (b) Leahy and Apco would endeavour to agree to increase such prices to the same or about the same prices at or about the same time; (c) between them, Leahy and Apco would advise or cause to be advised some or all of the other participants in the Geelong petrol market of the amount and timing of the proposed increases, each knowing and intending that other market participants would be likely to increase their prices at or about the advised time to prices the same or about the same as the advised prices; (d) Leahy and Apco would at or about the advised time increase the retail prices for ULP and Super at Leahy outlets and Apco outlets to prices the same or about the same as the advised prices; and (e) Leahy and Apco would use their best endeavours to persuade or influence other market participants to increase the retail prices for ULP and Super at their sites to the advised prices, if they had not done so shortly after the advised time (these endeavours were described during the trial as ‘follow-up calls’).
Arrangement No 2
122 Arrangement No 2 was alleged to have been made between Apco and Pegasus. In the course of the trial, as I have said, the ACCC discontinued the proceeding against Pegasus and withdrew its allegations with respect to Arrangement No 2.
Arrangement No 3
123 Arrangement No 3 was alleged to have existed between Leahy and Chisholm. In summary, this arrangement was alleged to contain provisions that: (a) Leahy would advise Chisholm of the amount and timing of proposed increases in the retail price of ULP and Super to be charged at Leahy sites, each knowing or intending that Leahy or other market participants would advise some or all of the other market participants of the amount and timing of the proposed increases and other market participants would in the ordinary course be likely, upon being so advised, to increase their prices at or about the advised time to prices the same or about the same as the advised prices; (b) Chisholm would advise 7-Eleven of the amount and timing of the proposed increases; and (c) Leahy and Chisholm would at or about the advised time increase the retail prices for ULP and Super at Leahy sites and Chisholm sites, including commission sites, to prices the same or about the same as the advised prices.
Arrangements Nos 4, 5 and 6
124 Arrangement No 4 was alleged to have existed between Leahy and United Fuels. Its terms were similar to those of Arrangement No 3, with the substitution of United Fuels for Chisholm, and with the substitution of Brumar for 7-Eleven in the provisions. Arrangement No 5 was alleged to have been made between United Fuels and Brumar. Its provisions were in substance the same as those of Arrangement No 3, with the exception of provision (b), and with the substitution of United Fuels and Brumar for Leahy and Chisholm respectively. Arrangement No 6 was alleged to have existed between Leahy and United Retail. In substance, it was alleged to contain the same provisions as Arrangement No 5.
Arrangement No 7
125 Arrangement No 7 was alleged to have existed between Leahy and Gordon Primmer. Its provisions were alleged to be in substance the same as those of Arrangement No 3, with the substitution of Gordon Primmer for Chisholm and United Convenience for 7-Eleven.
Arrangement No 8
126 Arrangement No 8 was alleged to have existed between Apco, Liberty and Andrianopoulos. In substance, the provisions of this arrangement were alleged to be that: (a) Apco would advise Liberty and/or Andrianopoulos and Liberty and Andrianopoulos would advise each other of the amount and timing of proposed increases in the retail price of ULP and Super to be charged at Apco sites, each knowing or intending that Apco or other market participants would advise some or all of the other market participants of the amount and timing of the proposed increases, and other market participants would be likely to increase their prices at or about the advised time to prices the same or about the same as the advised prices; and (b) Apco, Liberty and Andrianopoulos would at or about the advised time increase the retail prices for ULP and Super at Apco sites, the Liberty site and the Andrianopoulos site to prices the same or about the same as the advised prices.
Giving effect to the alleged arrangements or understandings
127 In their opening address at the trial, counsel for the ACCC indicated that the evidence would establish that effect was given to the alleged arrangements or understandings, or some of them, on up to 95 occasions in the two-year period from the beginning of 1999 to the end of 2000. In their closing address, counsel for the ACCC contended that the evidence demonstrated giving effect to one or more of the alleged arrangements or understandings on 63 occasions in that two-year period. This lowering of the ambitions of the ACCC was the result of the manner in which the evidence unfolded at the trial. To understand how this occurred, it is necessary to discuss briefly the kinds of evidence that were led.
The evidence
Three kinds of evidence
128 The ACCC relied on direct evidence, circumstantial evidence, and admissions, to seek to establish the existence of the alleged arrangements or understandings, and that the corporate respondents gave effect to those arrangements or understandings. The direct evidence was principally the oral evidence of 12 witnesses who had been participants in the affairs of corporations trading in the Geelong petrol market during or prior to the relevant period. Four of those witnesses are respondents to the proceeding, who are alleged to have been directly or indirectly knowingly concerned in the contraventions of s 45 of the Trade Practices Act alleged against the corporate respondents with whom they are associated. Those four had filed defences admitting the allegations against them, and had cooperated with the ACCC after the commencement of the proceeding. Apart from Ms Edwards, the other witnesses were people who had cooperated with the ACCC prior to the commencement of the proceeding. In some cases, they might have been people the ACCC might have wished to include as respondents, if they had not cooperated.
129 The circumstantial evidence was in documents, particularly a document that became known as ‘Annexure B’. This document was originally Annexure B to the amended statement of claim. It emerged as a result of an order made prior to the trial, pursuant to s 50 of the Evidence Act, permitting the ACCC to adduce evidence of the contents of a mass of documents acquired by it in the course of its investigations, including the exercise of its powers of compulsion under s 155 of the Trade Practices Act.
130 The admissions included formal admissions made on the pleadings in this proceeding, admissions made to the ACCC in the course of interviews or examinations on oath under s 155 of the Trade Practices Act, and admissions made in written statements prepared and signed by those intending to give evidence on behalf of the ACCC. The ACCC sought to rely on admissions to make its case against each party making the admissions. It also sought to rely on admissions made by one party to an alleged arrangement or understanding as evidence against another party to that same alleged arrangement or understanding, on the basis that it could effectively treat those persons as co-conspirators, so that the acts of one were admissible against all parties to the conspiracy. This raises questions the answers to which depend upon the application of s 87 of the Evidence Act. It is necessary to apply s 87(1)(a) and (b) to determine whether admissions by natural persons are admissible against the corporate parties with which the natural persons were associated. Then, it is necessary to apply s 87(1)(c) to determine whether admissions made by one corporate party are admissible against another corporate party, where both are alleged to have been parties to an arrangement or understanding.
The direct evidence
131 Perhaps the most serious problem with the direct evidence was that almost none of it was about events on any specific date. There was no witness who could remember even a single specific conversation concerning the fixing of petrol prices, or even events that occurred in relation to any fixing of petrol prices, on any particular day. Among a dozen witnesses, giving evidence of events occurring in a two-year period, even one as long ago as 1999-2000, this lack of recollection struck me as unusual. It is relatively common for people to be able to remember specific transactions because of the temporal relationships between those transactions and other events, trivial or important, in those peoples’ lives. No-one who gave evidence could remember being distracted from some other task or pleasure by the need to deal with an issue about petrol pricing, so as to provide a clue as to the date on which that issue might have arisen. All that the witnesses could do was to give their recollections of general patterns of conversations, and of practices of making changes in the prices of petrol.
132 One problem with the lack of specific evidence was that it soon became clear that evidence of general patterns and practices did not appear to be consonant with the data available in Annexure B on a great number of occasions. In some cases, the oral evidence was inconsistent with the data in Annexure B. At an early stage, it appeared that witnesses had not been shown Annexure B before being called to give their evidence. Counsel for the ACCC told me that they had refrained from showing any witness Annexure B before calling that witness to give evidence, because they did not wish it to be alleged that they were prompting the witness to give evidence of a particular kind. I suggested that it was not necessarily fair to witnesses to encourage them to give evidence in general terms of patterns and practices, and then to endure cross-examination about the inconsistencies between that evidence and the data available in Annexure B. As a consequence, counsel for the ACCC began taking the witnesses to particular pieces of the data in Annexure B during their evidence-in-chief. Instead of prompting recollection of actual events, this process only caused the witnesses to engage in speculation as to how the data in Annexure B for particular occasions might be said to fit the general evidence already given. The process of attempting to reconcile the direct and the circumstantial evidence is one that I have to undertake in these reasons for judgment.
The leniency agreements
133 Each of the respondents who gave evidence on behalf of the ACCC, and who filed an admitting defence, did so in consequence of a written agreement with the ACCC, containing terms of settlement of the proceeding between the ACCC and that respondent. The terms of those agreements are of some importance in evaluating the evidence of those respondents as witnesses. In the agreement between Ian Carmichael and the ACCC, Mr Carmichael agreed to negotiate and file an agreed statement of facts; to be interviewed by ACCC officers or legal representatives and to provide signed statements or sworn or affirmed affidavits; to consent to orders being made against him; to use his best endeavours to negotiate an agreed pecuniary penalty; to provide information or documents reasonably requested by the ACCC; and to provide full, frank and timely disclosure to the ACCC of information or facts relevant to his own conduct or activities, or those of any other industry participant, in the Geelong petrol market. Clause 8 of the agreement provides:
‘The ACCC and Carmichael note that settlement of the Geelong proceedings, and the leniency agreed to by the ACCC, is pursuant to the ACCC Cooperation Policy for Enforcement Matters and on the basis that Carmichael has not compelled or induced any other person or corporation to take part in the price fixing conduct and that he was not a ringleader or originator of the price fixing activity.’
134 The ACCC agreed not to make further claims against Ian Carmichael; not to refer to the Commonwealth Director of Public Prosecutions allegations that he made false statements to Commonwealth officers during investigation by the ACCC; and to provide immunity in respect of the provision of information about cartel activities or conduct in any petrol market outside of Geelong or Ballarat. The agreement provides that the ACCC is entitled to withdraw from it:
‘13.1. if the ACCC becomes aware that Carmichael compelled or induced
any person or corporation to take part in price fixing conduct the
subject of the Geelong proceedings, and that he was the ringleader or
originator of that conduct;
13.2. if the ACCC becomes aware that Carmichael coerced others to
participate in any price fixing conduct which he discloses in relation to
any product or market set out in paragraph 11 above, and that he was
the clear leader of such conduct;
13.3. if the ACCC believes that Carmichael has not provided full, frank and
timely disclosure as required by this Agreement’.
135 The agreement between the ACCC and Michael Warner is in similar terms, although the clause numbered 8 in Ian Carmichael’s agreement is numbered 7 in Mr Warner’s agreement. The relevant provisions in relation to withdrawal in Mr Warner’s agreement are found in cll 12.1, 12.2 and 12.3. The agreement between the ACCC and Alan Shuvaly differs in some respects from those of Ian Carmichael and Mr Warner, particularly in that there appears to be no provision under which the ACCC is to be entitled to withdraw from the agreement on the basis that Mr Shuvaly was the ringleader or originator of any conduct in the Geelong petrol market. In addition, that agreement contains a term fixing the amount of the penalty that the parties agree should be proposed to the Court as being appropriate for the conduct admitted by Mr Shuvaly. The agreement between the ACCC and Eino Heikkila is different in form. It is constituted by correspondence between solicitors on behalf of the relevant parties. It contains agreement to $125 000 as the appropriate penalty for conduct admitted by Mr Heikkila, but does not contain any provision allowing the ACCC to withdraw from it.
136 It can be seen that the provisions of the agreement entered into between the ACCC and Ian Carmichael and Mr Warner respectively have the disadvantage that they provide an incentive to each to give evidence maximising the role of persons other than themselves as ringleaders or originators of any relevant conduct. This consideration has some importance in relation to the evidence of Ian Carmichael, the tenor of which was that, at least on most occasions, the initiator of a round of increases in petrol prices in the Geelong petrol market was Peter Anderson of Apco.
Annexure B
137 Annexure B is compiled from material obtained by the ACCC in the course of its investigations, some from the respondents and some from other sources. It is designed to enable comparison to be made between the times of telephone calls between corporations and persons operating in the Geelong petrol market, including the respondents, and changes in the prices of ULP at various outlets in that market. The document has undergone a number of changes since it was first annexed to the statement of claim. Initially, the only petrol pricing information it contained was of increases in the prices of ULP. As a result of the requests of respondents during the trial, the document was amended to show all changes in prices of ULP in the Geelong petrol market, to the extent to which the information is available to the ACCC. This includes information of price changes at the Caltex Quick Bite, an outlet not included originally because the ACCC did not obtain any information from the Caltex Quick Bite until after March 2005.
138 Annexure B does not contain any information about prices at a number of outlets, including outlets of some respondents, and does not contain information for certain periods about some outlets. According to the evidence of Robert Riordan, Annexure B in its revised form referred to about 60 per cent of retail petrol outlet sites in Geelong and those sites accounted for approximately 85 per cent of the volume of petrol sales in Geelong.
139 The source documents for Annexure B were all disclosed to the respondents as part of the process of discovery of documents by the ACCC. This enabled respondents to make comparisons between Annexure B and that source material. At a late stage in the trial, there were allegations of errors in Annexure B, said to have been found on a comparison of some source documents with the finished product. As a consequence, I requested counsel for the ACCC to ensure that a complete audit of Annexure B was carried out, by checking it against the source material, to ensure that it was free of errors and omissions. This exercise was carried out over several weeks after the conclusion of the trial. With the consent of all parties, the further revised version of Annexure B, with any errors discovered during the audit corrected, was forwarded to the Court. This does not mean that all of the respondents accept that the information contained in Annexure B is accurate. It does mean that the parties are agreed that Annexure B is a valuable working tool, enabling a comparison to be made of the times of relevant telephone calls and price changes in ULP.
140 As such a tool, Annexure B has limitations. So far as it records telephone call information, it was compiled by obtaining the office telephone numbers and mobile phone numbers of the various participants, and obtaining information from the suppliers of telephone services about records of calls made to and from those numbers. Different providers of telephone services gave information of different kinds. For instance, information about the length of telephone calls appears in some cases as the elapsed time of the calls, and in other cases as units of 30 seconds. This means that it is not possible to gauge whether a 30-second call involved a conversation or an unsuccessful attempt to contact someone. In some cases, information was available from the telephone service provider as to which calls had been diverted to message bank services. In other cases, this information was not available.
141 When United Retail took over control of the United Fuels retail outlets, it sold its distributorship business to Triton. Robert Riordan gave evidence that United Retail and Triton shared the office at 247-261 Melbourne Road. For a time, Triton had the United Retail administration number listed as its telephone number in the White Pages telephone directory. There was confusion in the Geelong petrol market between Triton and United Retail, and between phone numbers. Robert Hambrook gave evidence that Triton took over three of six telephone lines, all six of which had previously been used by United Fuels. Triton notified customers of the wrong telephone lines, so that calls came through to the United Retail numbers after 1 October 1999, and had to be transferred internally to Triton. This situation lasted somewhere between eight and 10 weeks, because of difficulties sorting out the telephone numbers with Telstra. This means that, during that period, calls recorded in Annexure B as originating in, or being directed to, United Retail’s office cannot necessarily be relied upon as communications of any substance involving United Retail.
142 So far as it records petrol pricing information, Annexure B is derived from a variety of kinds of information. In some cases, petrol retailers retained in their records daily running sheets of their outlets, giving details of the times at which prices were changed, and the amounts to which they were changed. In other cases (United Fuels, United Retail and Andrianopoulos), records simply showed that the price of ULP was increased or decreased to a particular amount at some time during a particular day, but gave no indication of the time at which the increase occurred. Some prices given for particular days have been calculated from daily average prices, usually involving a calculation using total takings for the day from sales of ULP, and the total number of litres sold on that day. With respect to the information about Liberty’s ULP prices in Geelong, Alan Shuvaly explained how the averages appearing in Annexure B had been calculated. They could be affected by the fact that the commission agents did not always close off the books at the same time of day, but rather chose a time that was convenient to themselves. They could also be affected by want of care in measuring the contents of underground tanks at the outlet.
143 Some of the data was only available from transactions in which the purchaser of petrol paid for it by means of credit cards, usually cards available for use only at outlets selling a particular brand of petrol, eg Caltex StarCard and Mobil Card. In such cases, information is only available as to the time of the first purchase involving use of such a card after a price increase. In such cases, Annexure B now records the last card transaction at the old price as well as the first card transaction at the new price, so that the time-span within which the increase occurred can be seen. In the case of Apco outlets, computer records were available, showing the times of price increases. As they are shown in Annexure B, the significant price increases for Apco Geelong South were shown as occurring approximately one hour earlier than the increases for other Apco outlets in the Geelong petrol market during periods when daylight-saving times were in operation. Counsel for Apco explained this apparent anomaly by suggesting that the computer at Apco Geelong South had not been adjusted for the time difference during those periods, and this explanation appeared to be accepted by counsel for the ACCC.
144 Information concerning records of telephone calls between operators in the Geelong petrol market and the managers or staff of their various outlets is among the information the ACCC obtained from telephone service providers. It is not included in Annexure B, with the exception of Friday, 3 December 1999, when Colin Williamson is shown as making two rounds of telephone calls to the United Retail office, Shell Waurn Ponds, Shell Breakwater, Shell Drysdale, Shell Victoria Street and Shell Torquay, as well as a United Retail outlet at Winchelsea, in a period of less than 22 minutes. The inclusion of this particular information illustrates that information about telephone calls by someone on behalf of an operator, to that operator’s outlets, might have been valuable in helping to fix the time of a petrol price increase in cases where no other information as to the time is available. Prior to the close of the ACCC’s case, I raised with counsel the non-inclusion of this information in Annexure B, and the fact that it had not been tendered in any other form. Counsel for the ACCC conceded that the information was available to the ACCC. I indicated that its non-inclusion could only lead to the inference that its inclusion would not have assisted the ACCC’s case. The information has not been included, and I therefore draw the inference that it would not have been valuable to the ACCC in showing a temporal connection between telephone calls among the participants in the Geelong petrol market and the increases in prices of ULP at outlets for which there is otherwise no information about the timing of those increases.
145 Notwithstanding these limitations, Annexure B has considerable value as a compilation of records of what actually occurred in the Geelong petrol market during the relevant period. In their opening at the trial, counsel for the ACCC submitted that Annexure B would constitute useful corroboration of the direct evidence, rather than primary evidence in the ACCC’s case. In the end, however, it was necessary for the ACCC to rely heavily on Annexure B, in their closing address, as evidence that the alleged arrangements or understandings existed and that effect was given to them.
146 Annexure B shows a very great number of telephone calls between various participants in the Geelong petrol market. The majority of these calls are not alleged to have been associated with increases in the prices of ULP. In fact, there were many reasons why those operating in the market might have needed to contact each other by telephone. These reasons encompassed such matters as the distribution of fuel and other petroleum products, and the provision of cartage services. In the case of some respondents, which operated outlets outside the Geelong petrol market as well as within it, calls might not have related to the Geelong petrol market at all. Because the information in Annexure B goes no further than information about the fact that a telephone call was made from one number to another, and the time and duration of that call, it is impossible to tell whether any particular call related to petrol pricing in the Geelong petrol market, or only to some other subject.
Call cycles
147 The ACCC therefore sought to identify patterns of telephone calls, which it called call cycles, on which it could rely as evidence that the alleged arrangements or understandings were put into effect serially. Ideally, a call cycle would involve an initial telephone contact between the Apco head office or Peter Anderson’s mobile phone on the one hand, and the Leahy office or Ian Carmichael’s or Michael Warner’s mobile phone on the other. Shortly afterwards, there would be phone calls from Leahy, Ian Carmichael or Michael Warner to other participants, particularly the Chisholm office, Graeme Chisholm or Darren Campigli; the United Fuels office or Eino Heikkila, or later Colin Williamson on behalf of United Retail; Gordon Primmer; Mortimer Petroleum or David Mortimer; Andrianopoulos or Chris Andrianopoulos; or Portcliff or Phil Carmichael. Even more ideally, this pattern would be followed closely by a telephone call from United Fuels or Eino Heikkila’s mobile to Brumar or Garry Dalton in the relevant period, and by telephone calls between Apco or Peter Anderson, Liberty or Alan Shuvaly, and Andrianopoulos or Chris Andrianopoulos.
148 In fact, such ideal patterns of phone calls occur in Annexure B rarely, if ever, even on the occasions on which the ACCC relies as the occasions on which the respondents, or some of them, gave effect to the alleged arrangements or understandings, or some of them. Instead, it is more common to find patterns of phone calls including only some of the relevant market participants, on some occasions when it is possible to make some temporal connection between those patterns of phone calls and increases in the price of ULP in the Geelong petrol market generally. Further, there are occasions when what appear to be patterns of telephone calls, not of an ideal but of a partial nature, occur without any corresponding increase in the price of ULP.
149 As Annexure B indicates, the sawtooth pattern of petrol prices in Geelong occurred in relation to ULP on a number of occasions when there is no discernable pattern of telephone calls on which reliance could be placed. At my request, the parties endeavoured to agree on the number of occasions on which significant price increases (in the order of 5c or more) occurred in the Geelong petrol market, as shown by Annexure B. The resulting figure is approximately 110 such occasions. Of those, only 63 are now alleged to have been the result of the respondents, or some of them, giving effect to the alleged arrangements or understandings, or some or one of them.
The origins of the alleged arrangements or understandings
150 For an arrangement or understanding to exist between two people, it must have had an origin. In many cases, it might be expected that an arrangement or understanding arose by reason of express communication to the effect that there should be such an arrangement or understanding. Alternatively, it might be the case that a culture has developed amongst those engaged in a particular market, so that the recipient of a certain type of information will know that there is an expectation that he or she should act upon that information in a particular way. The present case fits neither of those categories. With the possible exception of Arrangement No 7, none of the alleged arrangements or understandings was alleged to have its origin in any specific communication, written or oral, between the parties to it. There is no evidence of any retailer in the Geelong petrol market saying to another words to the effect of ‘if I nominate a price for ULP and a time, can I reasonably expect that you will increase your prices for ULP to about that amount at about that time?’ or ‘if you tell me a price and a time, you can reasonably expect that I will increase my prices of ULP to about that amount at about that time’. Nor was there any suggestion in the evidence that there was any form of code, commonly understood by retailers in the Geelong petrol market, under which the communication of a price and a time was to be understood as generating an expectation that all recipients of the communication would increase their prices of ULP to about that price at about that time.
151 In the amended statement of claim, each of the arrangements or understandings alleged was said to have been made or arrived at ‘orally or as a result of a course of conduct’. In the absence of any evidence that any alleged arrangement or understanding was arrived at orally, the ACCC was driven to rely on such evidence as it could of the arrangements or understandings having been arrived at as a result of a course of conduct, or on its alternative proposition that the existence of those arrangements or understandings could be inferred from the fact that they were given effect to.
152 In the case of Arrangement No 1, Ian Carmichael was asked in evidence-in-chief about telephone conversations Peter Anderson would make to him about prices. In answer to the question, ‘do you remember how that got started?’ Mr Carmichael replied:
‘Sir, I just think it evolved. I can’t pinpoint a time. I think it just happened, maybe because of our contact in the early 1990s. We knew each other.’
153 Michael Warner was asked in cross-examination by counsel for Apco and Peter Anderson whether he confirmed this evidence of Mr Carmichael. His answer was:
‘Yes, just evolved. It became a normal course of business.’
154 This is the entirety of the evidence of the origin of Arrangement No 1. Nothing was said as to the manner in which that arrangement or understanding was alleged to have developed during the course of the telephone calls. There is no evidence about what Mr Carmichael or Mr Warner came to believe to be the significance of the phone calls, or how they came to believe it. There is no evidence about how they perceived Mr Anderson to understand the significance of the phone calls, and how they came to perceive this. The proposition that an arrangement or understanding could develop out of a course of dealing, in this case conversations about price increases, would not be surprising. The longer the course of conduct, the more opportunities there would be for an arrangement or understanding to develop. The difficulty in the present case is that there is little enough evidence about the development of Arrangement No 1 from a course of conduct. There was little or no express evidence about the evolution of any alleged arrangement or understanding. In the case of some of the alleged arrangements or understandings, there was little or no opportunity for any course of conduct from which an arrangement or understanding could have developed to occur.
155 Neither Ian Carmichael nor Michael Warner was asked any question, and neither gave any evidence, about how Arrangement No 3 came into being, notwithstanding that Leahy is alleged to have been a party to it. In his evidence-in-chief, Graeme Chisholm was asked whether he could say from his recollection when he first received calls from Ian Carmichael about pricing. His reply was:
‘Well, I couldn’t put an actual date on it but we didn’t start retailing petrol in Geelong until some time in 1996 so it would have been – my recollection would be somewhere late in 1996.’
156 Similarly, Darren Campigli was asked in evidence-in-chief when he recalled calls from Ian Carmichael and Michael Warner with regard to price movements first happened. His reply was:
‘Look, I’m envisaging 1996 once we started retailing at the Newtown site.’
157 MrChisholm said that he never asked for the calls from Leahy, and that he didn’t know when they started or how they started, ‘but we just started getting them’. Although these answers say something about the time when communications about pricing between Leahy and Chisholm began, they say nothing about how Arrangement No 3 might be said to have developed or evolved from the communications.
158 In his evidence-in-chief, Ian Carmichael said that from 1998, he had telephone conversations with Eino Heikkila, in which each informed the other of any moves in petrol prices of which either knew, and that those conversations included references to prices and times. He also said that Mr Heikkila was not part of his regular call cycle. Mr Heikkila’s evidence-in-chief, in answer to a question as to when he had first spoken to Ian Carmichael, was:
‘We had some transactions with him, I would imagine somewhere in the mid-1990s, buying and selling oils that neither one of us were supplied by our supplying companies, and then later on we would discuss and pass information on pricing.’
159 This evidence sheds little or no light on the evolution of Arrangement No 4 from any course of conduct.
160 There was evidence possibly pointing to arrangements or understandings between United Fuels and Provincial Fuels, and between United Fuels and Westfuels, before Brumar became involved in the Geelong petrol market. Provincial Fuels operated some Shell outlets in Geelong until it sold them to Westfuels in 1997. In turn, Westfuels sold those sites to Brumar in 1998. Kieran Gerard Davison worked for Provincial Fuels until some time in 1997. One of his duties was petrol pricing in Geelong and Ballarat. His immediate superior, Denis Manton, told Mr Davison that he should ring Eino Heikkila to talk to him about pricing. Mr Davison had met Mr Heikkila on a couple of occasions, and subsequently had telephone conversations with him. He described these telephone conversations as:
‘In relation to pricing in that Geelong area that affected our service stations and, Your Honour, I was based in Ballarat and as such I really needed to talk to someone like Mr Heikkila to play interference, if you like, for that Geelong area.’
161 Although he repeated the phrase ‘play interference’, Mr Davison did not explain it. He described the conversations as:
‘along the line of either there will be a price increase or decrease hopefully because it could never be absolutely ascertained at a certain time or a certain day.’
162 After giving information to Mr Davison, Mr Heikkila would say that he would get back to Mr Davison, or something along those lines. Mr Heikkila would ask Mr Davison to ring the Provincial Fuels sites and keep an eye on the price there. Mr Davison would either telephone the Provincial Fuels sites or wait for a further call from Mr Heikkila. In cross-examination by counsel for United Fuels and United Retail, Mr Davison said that he may have committed to increasing a price at a particular time, but he could not recall an occasion on which that happened. Provincial Fuels made its own decisions about price movements.
163 This evidence is somewhat inconclusive as to whether there existed any arrangement or understanding between United Fuels on the one hand and Provincial Fuels, and later Westfuels, on the other. More importantly, there was no attempt to link Mr Davison’s evidence with the allegation of Arrangement No 5, a later arrangement or understanding alleged to have come into existence between United Fuels and Brumar, after Brumar had taken over the former Provincial Fuels sites in 1998. There was no suggestion that Brumar had inherited any arrangement or understanding from Provincial Fuels, via Westfuels, only that Brumar had made its own arrangement or understanding with United Fuels.
164 Wayne Purtell’s evidence might have shed some light on how Arrangement No 5 came into existence. He was an area supervisor for Provincial Fuels after Mr Davison. Mr Purtell remained in the same position, working for Westfuels when that company took over the Provincial Fuels sites in Geelong. He continued to fill the same role for Brumar when it took over those sites, until mid-February 1999. Setting petrol prices in Geelong and Ballarat was part of Mr Purtell’s responsibilities, but in the Brumar days the ultimate decision-maker on prices for Brumar was Craig Brown from Shell. Mr Purtell first met Mr Heikkila around 1997, when Provincial Fuels was taking over the Geelong sites. They were introduced by Denis Manton. Mr Purtell became the Geelong area coordinator for those sites in about September 1997. He was told that Mr Heikkila would be a good source of contact to talk about price changes and the fluctuating market in the area. He confirmed that telephone calls from Mr Heikkila started in about 1997 and continued until Mr Purtell left Brumar. He said that the most common of the calls ‘would be to arrange for the pricing in the Geelong area to go up.’ Mr Heikkila would ring him to see if he was receiving any information from Craig Brown. Mr Heikkila would also ring to see whether Mr Purtell could follow in the pricing structure that Mr Heikkila was trying to achieve. Most of the time, Mr Heikkila would mention a particular price and a time. Mr Purtell would report to Mr Brown, to see if he was able to go to that price. If Mr Purtell received instructions from Mr Brown that he could not go to that price, Mr Purtell would ring Mr Heikkila to tell him this. Often, Mr Heikkila would try to arrange another time for the change, or Mr Purtell would provide a time when he was authorised to change. Mr Purtell was not asked to say, and did not say, that any arrangement or understanding between Provincial Fuels or Westfuels and United Fuels was carried over to Brumar. He was not asked to give, and did not give, any evidence about the origin of Arrangement No 5, except for the proposition that his telephone interaction with Mr Heikkila remained unchanged from 1997 until Mr Purtell left Brumar.
165 In January or February 1999, Mr Purtell gave Brumar two weeks’ notice that he was leaving his employment with Brumar. He spent a good part of a day in Geelong with Garry Dalton, who became Mr Purtell’s replacement as area coordinator for Brumar, in relation to its sites in Geelong. The two returned to Brumar’s office in North Melbourne on that day. At that time, or perhaps on another day shortly afterwards, Mr Purtell discovered that Brumar did not wish him to work out his two weeks’ notice, and that Mr Dalton was to be his replacement immediately. Because Mr Purtell had to give up his company car immediately, Mr Dalton, who lived in Ballarat, drove him home to Daylesford. In the course of the trip, Mr Purtell explained to Mr Dalton that Mr Heikkila would call him. Mr Purtell could not recall taking Mr Dalton and introducing him to Mr Heikkila in the United Fuels office, adjacent to the Shell Speedwings site, on the day that he and Mr Dalton were together in Geelong.
166 Mr Dalton gave evidence that, on that day in January 1999 when Mr Purtell and he were in Geelong, they were at Shell Speedwings in the mid or late afternoon, when Mr Purtell suggested that they meet Mr Heikkila and have a cup of coffee. Mr Purtell explained to Mr Dalton that Mr Heikkila worked for the Shell wholesaler for Geelong and that Mr Heikkila would sometimes give Mr Dalton a call if he saw any price movements in the market. Mr Purtell, Mr Dalton and Mr Heikkila met over a cup of coffee in the United Fuels office and talked for 20 or 30 minutes.
167 In cross-examination by counsel for United Fuels and United Retail, Mr Dalton agreed that the purpose of the visit to the United Fuels office was to have a cup of coffee and to put a face to a name. According to his evidence, Mr Purtell was explaining to Mr Heikkila where he was going after he left Brumar, and Mr Dalton was asked about his background.
168 In cross-examination by counsel for the ACCC, Mr Dalton was asked to confirm that this conversation occurred. Apart from believing that the conversation did not occur on Mr Purtell’s final day, he agreed that it occurred. He was not asked anything about the content of the conversation. He agreed that Mr Purtell told him that Mr Heikkila would be in contact with him on matters of retail pricing, and spoke of Mr Purtell describing Mr Heikkila as ‘another pair of eyes’. At no stage was the proposition put to him that there was any discussion in the conversation between Mr Heikkila, Mr Purtell and Mr Dalton about price-fixing. At no stage was the suggestion made to Mr Dalton that he knew of any arrangement or understanding existing between Brumar and United Fuels, from Mr Purtell’s time with Brumar, and that Mr Dalton continued to operate such an arrangement or understanding. Mr Dalton volunteered that he did not recall any conversation with Mr Purtell about Mr Heikkila ringing Mr Purtell to arrange for prices in the Geelong area to go up. Despite the quite detailed evidence about the handover from Mr Purtell to Mr Dalton, the possible origins of Arrangement No 5 were never explored fully.
169 In relation to Arrangement No 6, Ian Carmichael gave evidence-in-chief that he had a conversation with Mr Heikkila when the latter was leaving the petroleum retail industry. Mr Carmichael said that he remembered Mr Heikkila mentioning ‘another couple of names that I could talk to regarding price.’ He said that Mr Heikkila mentioned Colin Williamson and a Mr Hall. In his evidence, Mr Heikkila denied that this conversation occurred. Assuming that it did, it must have occurred towards the end of September 1999, which was the date on which Mr Heikkila ceased his involvement with United Fuels, and the eve of United Retail’s taking responsibility for the relevant sites in Geelong. Ian Carmichael and Colin Williamson were old friends, who had known each other since Mr Carmichael was in his teens. They were supporters of the same football club, saw each other socially and spoke by telephone from time to time. Mr Carmichael did not give any evidence that he ever mentioned to Mr Williamson the existence of any arrangement or understanding between Leahy and United Fuels, or his expectation that any arrangement or understanding would exist between Leahy and United Retail, with respect to the fixing of petrol prices. Mr Carmichael’s only evidence was that he began making telephone calls about price information to Mr Williamson after the United Retail operation began.
170 It was Robert Riordan, on behalf of United Retail, who gave Mr Williamson some responsibility in relation to the setting of prices, along with a mobile telephone, so that Mr Williamson could contact the United Retail office and those on duty at its outlets in relation to prices. Mr Riordan’s evidence was that he was unaware of any arrangement or understanding between Leahy and United Fuels. According to his evidence, he certainly did not authorise Mr Williamson to enter into any such arrangement or understanding, or to continue in existence any that had previously existed between United Fuels and Leahy.
171 In the absence of any evidence that any prior course of conduct between Leahy and United Fuels was continued between Leahy and United Retail, the allegation that an arrangement or understanding came into existence after 1 October 1999 between Leahy and United Retail is dependent on evidence of a course of conduct from which the evolution of such an arrangement or understanding could be deduced. There is no evidence of such a course of conduct. It was alleged that effect was given to Arrangement No 6 on 3 and 4 December 1999. If that allegation were true, the arrangement or understanding would have had to exist at that date, and to have been derived from a course of conduct occurring in the preceding two months. No such course of conduct appears from the evidence. It is extremely unlikely that Mr Carmichael would not have had some express communication with his old friend Mr Williamson about any price-fixing arrangement or understanding that Mr Carmichael might have regarded as existing between Leahy and United Fuels, and might expect to exist between Leahy and United Retail, if Mr Heikkila had told Mr Carmichael that Mr Williamson was the one to whom he should talk. The origin of any arrangement or understanding between Leahy and United Retail is entirely mysterious.
172 The origin of Arrangement No 7, the alleged arrangement or understanding between Leahy and Gordon Primmer, is also unclear. In response to the allegation in the amended statement of claim of the existence of Arrangement No 7, each of Leahy, Ian Carmichael and Michael Warner made admissions in the same form. They admitted that, at or about the time that BP Meredith ceased to be a Leahy commission site in December 1999, Mr Primmer requested that Leahy inform him when it increased its retail prices for petroleum products and that, from time to time, Mr Carmichael and Mr Warner did so. This admission might have formed a basis from which the ACCC might have sought to establish an express origin for Arrangement No 7. Despite the making of this admission, when Mr Primmer gave evidence, he was not asked about it. He was not asked any questions at all about the origin of Arrangement No 7. BP Meredith became an independent reseller, receiving supplies of petrol from Leahy, at the beginning of 2000. Arrangement No 7 is first alleged to have been implemented on 1 and 2 February 2000. There was therefore little or no opportunity for the occurrence of any course of conduct from which an arrangement or understanding might have developed.
173 Alan Shuvaly and Chris Andrianopoulos had become friends in about 1980, when Mr Shuvaly was working in the petroleum industry for a company called Astron. The two went to watch football together. In the 1990s, when Mr Shuvaly resumed working in the petroleum industry, for Liberty, he re-established contact with Mr Andrianopoulos. In the middle of 1998, when Liberty was establishing its retail outlet in Geelong North, Mr Andrianopoulos and Mr Shuvaly had a conversation in which, according to Mr Shuvaly’s evidence, Mr Andrianopoulos commented:
‘It is going to be a very competitive market obviously with Liberty come [sic]into Geelong.’
174 Mr Andrianopoulos also warned Mr Shuvaly that he might receive a phone call from Peter Anderson. Mr Shuvaly knew Mr Anderson, having met him in early 1998, when Mr Anderson telephoned Mr Shuvaly and came to his office, and spoke to him about whether Liberty could be a wholesale supplier of petrol for Apco.
175 When Liberty established its site at Geelong North, Mr Shuvaly, who was responsible for setting prices, set out to obtain a significant market share by discounting aggressively. According to him, he sold at a discount of between half a cent and one cent for six to eight, or even 12, weeks. During this time, Mr Shuvaly did receive a call from Mr Anderson. He remembered Mr Anderson as sounding aggressive. According to Mr Shuvaly’s evidence, Mr Anderson said to him:
‘Fuck, mate, how long do you want to be and how aggressive do you want to be in the market, for how long?’
176 Mr Shuvaly’s reply was:
‘As long as it is going to take to build the business up, that is exactly what we will be doing.’
177 It is obvious from this account, given in Mr Shuvaly’s evidence-in-chief, and not contradicted, that no arrangement or understanding of the kind alleged existed between Apco, Liberty and Andrianopoulos in August or September 1998, the approximate time when the exchange between Mr Anderson and Mr Shuvaly took place. The ACCC alleged that Apco, Liberty and Andrianopoulos gave effect to Arrangement No 8 on 20 April 1999, eight or so months after this stand-off over Liberty’s aggressive discounting occurred. Counsel for the ACCC did not ask Mr Shuvaly to give, and he did not give, any evidence as to how an arrangement or understanding came into existence in that period. Mr Shuvaly was not invited to say, and did not say, that any arrangement or understanding evolved from a course of conduct between himself, Mr Anderson and Mr Andrianopoulos, or between anybody else on behalf of Liberty, Apco and Andrianopoulos. The origin of Arrangement No 8 was never explained.
The direct evidence
178 In this part of these reasons for judgment, I attempt to summarise the evidence of the various witnesses, so far as it bears upon the allegations of the existence in 1999-2000 of the arrangements or understandings alleged, and on the allegation that effect was given to them during that period. The evidence of those witnesses occupied a dozen or so days of the trial. It included evidence relating to matters on which I have made findings elsewhere in these reasons but, even so, the evidence dealing with the central issues is voluminous. To have it all set out would make the task of any reader enormous. I therefore endeavour to provide a fair summary, and to deal with a witness’s evidence on each topic in one place, although in the transcript that evidence might be spread through evidence-in-chief and cross-examination by various counsel.
Ian Carmichael
179 Ian Carmichael’s evidence was that, during the 1990s, he would acquire information about petrol price movements in the Melbourne petrol market, sometimes from Leahy’s transport drivers and sometimes from competitors in the Geelong petrol market who had contacts in Melbourne. If he found out that there had been an upward move in Melbourne, he would ‘try and get the price up’ in Geelong, in his conversations with competitors. Leahy liked to have all of the sites it controlled increase their prices at the same time, so they would be advised from the Leahy office of the price to which they were to move, and the time. Mr Carmichael said, ‘that was also the agreed time with some of our other competitors when we were going to move and follow the Melbourne market.’
180 Towards the latter end of the 1990s, when Safeway began operating outlets in the Geelong petrol market, and Liberty and United Convenience opened their retail outlets, it was more difficult to secure price rises, because of the presence of those discounters. This led to an increase in the number of conversations Mr Carmichael had with competitors.
181 When asked initially about his call cycle, Mr Carmichael nominated Peter Anderson, Darren Campigli, Colin Williamson and Phil Carmichael, each of whom had contacts in Melbourne, and would be likely to know of any moves in the market. Later, he said that he spoke to two named persons at the Mobil depot (‘Balgee depot’), and to David Mortimer and Chris Andrianopoulos as well. He said that he did not have direct contact with 7-Eleven. On some occasions, when Peter Anderson was away, Mr Carmichael spoke with Robert Anderson, Peter’s brother. He also spoke with Graeme Chisholm, and on occasions with Robert Chisholm, in addition to Darren Campigli at Chisholm. In an earlier period, Mr Carmichael had spoken with Robert Levick at the Balgee depot. In 1998 and 1999, Mr Carmichael had conversations with Eino Heikkila, in which each would inform the other ‘of any moves’ that they knew of, and would nominate a time for such moves. According to Ian Carmichael, as much as once a week or once a fortnight, in 1999 and 2000, he rang Anton Maurer at BP Corford Express and informed him of the board price that Leahy was intending to go to.
182 Mr Carmichael described a typical call cycle pattern, which had a number of features. Peter Anderson would ring him, and tell him that the Melbourne market had moved. Mr Anderson would nominate a price for ULP and one or other of them would nominate a time. On some occasions, Mr Anderson would suggest that Mr Carmichael ring his contacts. On a lot of occasions, the phone calls occurred in mid-afternoon (at 2.00 or 3.00 o’clock) and the nominated time would be an hour later, in order to give Mr Carmichael time to contact the others in his call cycle, and all of the Leahy sites. On some occasions, a price for liquefied petroleum gas was nominated as well as one for ULP, but there was no discussion of super prices (which were related to those of ULP in any event), or of diesel fuel, which was priced separately. On some occasions, Mr Carmichael rang Mr Anderson, if he had seen evidence of an increase in board prices while he was driving around Geelong.
183 The Apco prices did not always rise at the times mentioned in these telephone conversations. If they did rise, they might not rise to the price mentioned for ULP. On some occasions, there might be 0.2c or 0.3c difference. Because Apco did not always increase, either Darren Campigli or Phil Carmichael gave him the nickname ‘forked tongue’. In 1999 and 2000, some 70 per cent of telephone conversations between Mr Anderson and Mr Carmichael resulted in price rises in the Geelong petrol market.
184 On occasions, Mr Carmichael asked Mr Anderson if Chris Andrianopoulos knew about the price increase. Mr Anderson said that he was aware of it. Mr Carmichael said that he may have asked Mr Anderson a similar question about Liberty, and been told that they were also aware. Mr Carmichael had the impression that Mr Anderson had already been in touch with Chris Andrianopoulos and with Liberty.
185 As part of his call cycle, Ian Carmichael would ring Chisholm. If he spoke to Darren Campigli, he would tell him the price and the time of an increase for ULP. Mr Campigli would thank him and say, ‘I will pass it on.’ Mr Carmichael was aware that Graeme Chisholm was in touch with Jacques Bodourian about prices at the 7-Eleven outlets. Sometimes Mr Carmichael spoke directly to Graeme Chisholm himself. On occasions, when he spoke to Mr Campigli, Mr Campigli would ask whether Peter Anderson knew of a proposed price increase and whether ‘the Greek’, meaning Chris Andrianopoulos, also knew. Mr Carmichael would tell him that they were aware. Mr Chisholm would thank Mr Carmichael for the information and either say that he would look into it, or would pass it on. Many of Mr Carmichael’s calls to Chisholm were met with non-committal responses such as ‘I’ll look at it’. From time to time, someone from Chisholm would ring Mr Carmichael, to tell him that Melbourne had moved, and that Chisholm would also be moving. In that case, the Chisholm representative would tell Mr Carmichael the Melbourne price.
186 Chris Andrianopoulos was not part of Ian Carmichael’s normal call cycle, although he did have telephone conversations, some of which were about supplying fuel and lubricants. Sometimes, if Ian Carmichael did not see the board prices up at Andrianopoulos, he would call Chris Andrianopoulos to tell him that the market had moved in Geelong.
187 Ian Carmichael had not met Eino Heikkila, but had spoken to him on the phone. Mr Heikkila was not part of Mr Carmichael’s regular call cycle. On the occasions when they did converse, the conversation would involve the nomination of a price and a time. Subsequently, when United Retail came into operation, Mr Carmichael would telephone Colin Williamson, to inform him of any price increases that Mr Carmichael knew of. He would give him the time and the price. Mr Williamson would say that he would pass on this information. The information would include the proposition that prices in Melbourne had moved. There were also occasions on which Mr Williamson rang Mr Carmichael, to tell him that prices at Shell outlets had increased. This would initiate a call cycle by Mr Carmichael. He would inform people that Shell had gone up and that Leahy would make a move.
188 On occasions, Ian Carmichael telephoned Gordon Primmer and informed him, either of price movements that had occurred, or of price movements that were to occur. Mr Carmichael would nominate a time and a price. Sometimes he spoke to Mr Primmer’s daughter in the same way. Sometimes, Ian Carmichael rang David Mortimer to inform him of price movements.
189 Those whom Mr Carmichael called as part of his call cycle did not always increase their prices at the time stated, or to the price stated. There was never any discussion among market participants about moving the price down, only ever about moving it up.
190 Mr Carmichael also described telephone calls that were in the nature of complaint, or follow-up calls. On occasions, Phil Carmichael, one of whose Portcliff outlets was close to a 7-Eleven outlet, rang Ian Carmichael to complain that 7-Eleven had not gone up. If he received a call from his brother, Ian Carmichael would ring Chisholm and speak to either Darren Campigli or Graeme Chisholm, to inform them that 7-Eleven’s prices had not moved. Peter Anderson would sometimes ring Ian Carmichael, to tell him of sites where the prices had not been increased, which Peter Anderson saw as affecting Apco’s interests. Sometimes, Mr Anderson complained about Shell Drysdale, in which case Mr Carmichael would ring Mr Williamson. Sometimes, Mr Anderson would complain that Batesford Roadhouse had not increased its prices, and Mr Carmichael would ring Mr Mortimer, to tell him that his failure to raise the prices could cause the market to come down. Mr Mortimer would say that he would ‘get onto it.’ Conversely, Mr Mortimer sometimes complained about Apco’s prices not moving, and Mr Carmichael would ring Mr Anderson. Sometimes, Mr Anderson would blame others for Apco’s failure to increase its prices. The greatest number of follow-up or complaint calls that Ian Carmichael made were to Peter Anderson.
191 Shortly before Easter 2000, a petrol retailer in Ballarat rang a Melbourne radio station and made public the petrol price-fixing practices in Ballarat, which Merkel J subsequently found to have existed in the Ballarat case. The ACCC then announced that it would conduct an investigation into petrol pricing in Ballarat. Leahy was one of the corporations investigated in respect of its activities in Ballarat. Although he was not involved with the setting of prices for the Leahy outlets in Ballarat, Mr Carmichael became aware of a notice to Leahy under s 155 of the Trade Practices Act in relation to its Ballarat activities. He thereby became aware, about the middle of 2000, that the ACCC was using telephone call records to prove its case in Ballarat.
192 The initial announcement of the ACCC investigation in Ballarat made Ian Carmichael and Peter Anderson reluctant to discuss petrol prices on the telephone. They were not sure that the ACCC was not listening to their telephone calls. They began visiting each other’s offices and talking in person about price movements. After a time, Mr Carmichael became ‘a little bit cocky’. While he was keen on communications other than by telephone, there were occasions when Mr Carmichael would arrange to meet either Graeme Chisholm or Darren Campigli in the car park between Leahy’s depot and the Caltex depot, where Mr Chisholm and Mr Campigli worked.
193 Fear of being detected by telephone bugging also led Mr Carmichael to invent a code, by which he hoped to communicate prices and times to those to whom he spoke. He would ring up and announce to the recipient of the call (Peter Anderson, Darren Campigli, Colin Williamson or Phil Carmichael) that an aeroplane of a particular model (eg a 939, representing 93.9c per litre) was due to land at Avalon Airport at a particular time, with a specified number of passengers (which represented the price of liquefied petroleum gas). The first time Mr Carmichael used this device, the recipient of the call did not understand it.
194 When Leahy received a notice pursuant to s 155 of the Trade Practices Act in relation to the Ballarat investigation, he told some of those in his call cycle about it. He arranged a meeting with Peter Anderson at the Eureka Hotel in Geelong. The meeting took place after Mr Carmichael had been examined in relation to Ballarat. At the meeting, they discussed putting forward legitimate reasons for their telephone conversations. Such legitimate reasons did exist, and I refer to them in more detail in [195]. The tenor of the discussion was that, if questioned, both Mr Carmichael and Mr Anderson would use these legitimate reasons as a pretext for their telephone conversations. Similar discussions took place between Mr Carmichael and others on his call cycle list.
195 Mr Carmichael and Mr Anderson had good commercial reasons for speaking to each other on the telephone, reasons which involved calls initiated by either of them. A major one was that Leahy performed fuel cartage for Apco, which necessitated frequent communication. In the course of the 1999-2000 period, Apco purchased its own B-double tanker truck, to do some of its own cartage. Mr Carmichael gave Mr Anderson a good deal of assistance in relation to the purchase of the truck, particularly as to various specifications. He also assisted in relation to issues of the appropriate workplace agreements for drivers of the truck. Apco purchased diesel fuel from Leahy on occasions when its regular supplier was unable to supply, or when Leahy offered a better price. This involved frequent communications about diesel fuel wholesale prices. Sometimes, Apco ‘borrowed’ diesel fuel from Leahy, ie Leahy supplied fuel to Apco to cover a shortage and Apco replaced the fuel at a later date. Mr Carmichael also made a number of calls to Mr Anderson during the relevant period in relation to petrol prices in Ballarat. United Fuels also purchased products from Leahy, including heating oil and bulk petroleum products.
196 Mr Carmichael made numerous calls, often daily, to competitors in the Geelong petrol market, simply for the purpose of finding out what their prices, or the prices of other competitors, were at the time. Information about the prices of competitors was a very important consideration in the setting of petrol prices. He also made calls to competitors who had contacts in Melbourne, and who would be in a position to know what had happened to Melbourne prices. Sometimes, in order to obtain a Melbourne price, Mr Carmichael would ring several different competitors to crosscheck the reliability of the information he was being given. Phil Carmichael sometimes rang Ian Carmichael to tell him that the Portcliff Mobil sites had raised their prices of ULP. Mobil often led a price rise in Geelong.
197 In cross-examination, Ian Carmichael dealt with the time likely to have elapsed between a call cycle and the beginning of the rises in the price of petrol. He was definite that it would not occur that there would be a phone call at 10.00 am on one day, specifying the time of a price rise as 9.30 am on the following day. If the phone call was at 10.00 or 11.00 am, the price rise would be between 2.00 and 4.00 pm. Five or six hours was the maximum time to elapse. Mr Carmichael said that generally the elapsed time would be half an hour, sometimes an hour, rarely more than two hours. It could have been four, five or six hours, but he could not remember an occasion on which it was more than two hours. If price rises began first thing in the morning, phone calls could have begun late on the afternoon before, but they did not happen very often in Mr Carmichael’s recollection. His recollection was that price rises mostly occurred in the afternoon.
198 Mr Carmichael’s evidence was that many of his phone calls were of an indirect nature. He would say that he had heard that the market was moving and he would ask what were the plans of the recipient of the call. Most of the responses were non-committal. They were in the nature of ‘I’ll look at it’. If a call recipient said that another competitor had not moved, Mr Carmichael would use his contacts to communicate, directly or indirectly, with that competitor. His aim was to ensure that a price rise would stick. Often the indirect contacts were made in the hope that the messages sent would cause the competitor concerned to raise its price. They were not always successful.
199 Apco was often slow to rise, but Mr Carmichael did not see himself as being able to ring Mr Anderson and tell him off about Apco failing to move its price upwards. He would have expected a hostile reaction from Mr Anderson if he had attempted to do so. Mr Carmichael knew that Apco was a discounter, and would be unlikely to be the first to go up. In cross-examination from counsel for Apco and Peter Anderson, the following exchange occurred:
‘You never thought that whatever discussion you had with Mr Anderson, he was in any way obliged to move his price up, did you?---No, I could only give him the information and hope that he would move.
Yes. You always saw him, did you not, as morally free to do battle with the other discounters and if he thought commercially he couldn’t lift his price, you always at all times regarded him as morally free to not lift his price, didn’t you?---He was an independent, yes.
But do you agree with my proposition?---Yes.
You always regarded him as between him and you morally free. If he did lift his price to cycle it down as fast as he had to to compete with the other discounters, didn’t you?---That was his choice.
But he was free to do that, wasn’t he?---Yes.
He had free choice?---Yes.
For that reason alone, you never felt that you could ring him and tick him off for breaching some sort of agreement he had with you, did you?---That’s correct.
The same applies to the Chisholms, doesn’t it? You always felt that they were free in every sense of the word, including morally, to not shift their price if for commercial reasons they didn’t want to shift their price?---That’s correct. We area [sic] all free. Probably if I did tick anyone off, it was the Chisholms relating to 7-Eleven…
I think you said you were free too, you felt free to do what you liked?---We were.’
200 There were times when Mr Anderson visited the Leahy office in relation to cartage transactions, to receive delivery dockets. He sometimes used body language to signify that there would be a likely price increase in the Geelong petrol market. He would face the palms of both his hands upwards and move them up. These incidents occurred at times when the price of ULP was low, there was commercial pressure to lift prices, and Melbourne prices might already have risen.
201 Mr Carmichael agreed with the proposition that it would make no commercial sense for three discounters like Apco, Andrianopoulos and Liberty to make an arrangement to fix prices. Such an arrangement would have no effect on the market unless other competitors in the market changed their prices as well.
202 Ian Carmichael’s calls to Chris Andrianopoulos were merely by way of saying that the market had moved in Geelong. He could never tell Mr Andrianopoulos what to put his price to. He never said to Mr Andrianopoulos, or to anyone, that they should put their prices up.
203 Mr Heikkila never committed to entering into a price-fixing arrangement and always gave non-responsive answers to Mr Carmichael’s calls. Nor did Colin Williamson ever commit to a price-fixing arrangement. His response to any information about prices from Mr Carmichael was to the effect that he would pass the information on. Some of Mr Carmichael’s calls to Mr Williamson were simply to ask what was the price at Apco Highton.
Michael Warner
204 Michael Warner is an accountant. During the period relevant to this case, he was employed by Leahy as the management accountant. To some extent, he shared with Ian Carmichael duties in relation to the prices of petrol and other products. When Mr Carmichael was absent, Mr Warner would perform his functions in relation to pricing. Sometimes, even when Mr Carmichael was available, Mr Warner would also be involved in performing those duties. It was Mr Warner’s task to give instructions to Leahy’s retail outlets and commission agents as to the prices at which petrol should be sold from time to time. Consequently, if Mr Carmichael received a call from Mr Anderson, Mr Carmichael would then tell Mr Warner that there was a move on, to a particular price at a particular time, and Mr Warner would convey the instructions to the Leahy sites. Usually, Mr Warner would do this by instructing someone else in the office to make the actual telephone calls to the sites. He would do this as soon as he was aware of a price move. If he received information that the price was going to rise on the following morning, he would probably put the Leahy prices up on the night before, ie at closing time for the sites. Leahy only had one 24-hour site, BP Leopold, and one at BP Torquay that was open 24 hours a day during the summer and then closed at midnight for the rest of the year.
205 In Mr Warner’s experience, during 1999 and 2000, most of the time that Mr Carmichael told him that he had received a call from Mr Anderson about prices, prices in the market went to that level. If the price rose overnight, and Leahy had increased its prices at the closing time of its outlets, Mr Warner would look at the competitors’ prices in the morning. If the market had not risen to that level by about midday, Leahy would decrease its prices. According to Mr Warner, ‘we used to hang out for the increase in the cycle, that’s where we used to make some money.’ If others had not gone up, Leahy would make follow-up calls, to ask why they hadn’t gone up. If the particular competitors did not go up after the follow-up calls, Leahy would bring its price down in order to compete, and to maintain sales volume.
206 Sometimes, Leahy would increase its prices after a sustained period of discount, without making any contact with anybody. It would choose a price that enabled it to make a margin of three cents over the wholesale price per litre, which was necessary to pay all the outgoings. It did this in an attempt to test the market, but Mr Warner said that these attempts never worked. Leahy had to bring its prices down the next day, because it was losing too much in the way of sales volume. Account customers would complain. These solo attempts occurred three or four times during the 1999-2000 period.
207 During the relevant period, Mr Warner had telephone conversations with Peter Anderson. Mr Anderson would say that, ‘we are moving to a price of X at such and such time’. Mr Warner would say, ‘thank you, Peter’ and hang up. According to Mr Warner’s evidence, he had these conversations with Mr Anderson when Ian Carmichael was not available, four or five or more times during the 1999-2000 period. Mr Warner’s understanding of these phone calls was that Apco’s board prices would go to the stated level at the stated time. After those calls, competitors, including Liberty and Andrianopoulos, would go up. The market generally would go up.
208 After receiving a call to the effect that the market was moving, Leahy would call Chisholm (usually Darren Campigli), Phil Carmichael, and Colin Williamson, ‘to let them know what the market was doing as well.’ These calls could have occurred weekly in the relevant period.
209 When Mr Warner rang Mr Campigli, he would tell him that there was a move on to a particular price at a particular time. Mr Campigli would say, ‘thanks very much’. Sometimes there would be a follow-up call if, for example, 7-Eleven hadn’t moved up the board price of its site opposite one of Phil Carmichael’s sites. Mr Warner would ask Mr Campigli if he knew that 7-Eleven wasn’t up. Mr Campigli would say that he would call Jacques Bodourian, or let Jacques Bodourian know. Mr Warner did not think that he spoke to Graeme Chisholm during the relevant period.
210 Similar phone calls occurred with Phil Carmichael. Although Mr Warner was aware that Phil Carmichael did not set the prices for the commission sites that he ran, Mr Warner hoped that he would pass the information to the person who did set them.
211 If Leahy decided to increase its price because it felt it had been discounting for too long, it would call Peter Anderson and Phil Carmichael and name the price and the time. Mr Warner made such calls. The recipients of them would say ‘thank you, we will wait and see’. In those instances, the price rise did not stick. In Mr Warner’s experience, the only times a price rise would stick were when Leahy got a call from Peter Anderson. Chisholm was never the initiator.
212 Sometimes when Mr Anderson rang, he would put Apco’s prices up to a lower level than he had advised. There may have been a time when he did not go up. For the majority of the occasions, the Apco price went up to the level advised. Sometimes it was 0.4c or 0.2c below that price.
213 Mr Warner did speak to Eino Heikkila on two or three occasions, advising him of a price and a time. Mr Heikkila would say, ‘thanks, I’ll look into it.’ In those cases, the United Fuels sites would move to the level discussed, but later than others in the market. Mr Warner also had similar conversations with Colin Williamson. He also received calls from Colin Williamson, asking for information about possible price increases. He could remember one conversation along the same lines with David Mortimer’s mother, and similar conversations with Gordon Primmer, who would pass on the information to Stan Kerr at United Convenience. Mr Warner could also remember speaking to Chris Andrianopoulos, along similar lines. Mr Warner did not call Anton Maurer.
214 After the publicity about the investigation into Ballarat petrol pricing in April 2000, Ian Carmichael expressed a concern that the telephones were being tapped. He and Mr Warner thought that Leahy would be watched a lot more closely. Mr Warner was aware of Mr Carmichael’s code. Mr Warner himself devised a code that he used with Chisholm, that involved a fake delivery advice, the price being expressed as a number of litres and the time as the arrival time of the truck. Darren Campigli would thank him, and say that he would wait for the truck.
215 In cross-examination, Mr Warner agreed that, in any conversations he had with Peter Anderson, in Mr Warner’s mind, Mr Anderson was perfectly free to keep Apco’s prices down if there was a commercial necessity for him to do so. Leahy was equally free not to change their prices if they chose not to change them, notwithstanding any discussion with any competitor. There were occasions when Ian Carmichael commented to him that Mr Anderson hadn’t moved, and Chisholm had called Leahy to complain about this.
216 In cross-examination, Mr Warner said:
‘There was no commitment to effect a price rise. We just passed information on about what the boards were going to go to.’
217 When cross-examined about his examination under s 155 of the Trade Practices Act, Mr Warner said:
‘as far as I was concerned, I was passing on market information. I wasn’t telling people how to set their price, what to set their price to. I was passing on the information that I was given as to what the market was going to go to.’
218 He explained that, when he had denied fixing prices in the course of that examination, he believed that he was not fixing prices. At the time of giving his evidence in this case, he still believed that he was not fixing prices. He took and passed on information and made phone calls to competitors and told them the time and the price Leahy was going to. Mr Warner said that he did not have the financial resources to defend the proceeding, and the easy way out was to make admissions.
219 The period of one or two hours after a call cycle was very significant, in Mr Warner’s view, in determining whether the price rise would stick. In his view, if certain competitors did not go up during that time, there would be a quick reaction by some of the larger players to bring the price back down. Two hours was ‘the critical time’. Sometimes Mr Warner would instruct the smaller Leahy outlets to increase prices immediately he became aware of an imminent price increase, but instruct the higher-volume sites to remain at a lower price for longer. Because there was little traffic around, it was safe to increase prices in the middle of the night. This would have no impact on the volume of sales. When he was on his way to work in the morning, Mr Warner would check the prices of a number of key sites. If there had not been a general market increase, he might then instruct the Leahy sites to move their prices back down, or to hold out at the higher price for a couple of hours and see if the rest of the market rose.
220 Mr Warner spoke of receiving phone calls from Colin Williamson, who was asking him what was happening in the market place. In reference to this subject, the following exchange occurred between Mr Warner and me:
‘Were those conversations sort of Mr Williamson saying, “Look, this has gone on long enough. We need someone to go up so we can all make some money,” or was that the kind of thinking of them?---No, we were all educated into that weekly price cycle. When the prices went up, every week the price would go up to that level. We would be down at the bottom and then the cycle would start, and we were all educated to that fact and we were all waiting for it. We were all waiting for that price to go up.
It didn’t happen on the same day every week?---No, we were all hanging out waiting for Melbourne to go up because we knew that the call would come and so we just – we were all attuned to it. We were just waiting for it. It was like a lifeline for the business.’
221 Although Mr Warner aimed to have all of the Leahy outlets increase their prices at the same time, as the relevant period went on, and he became increasingly desperate to try and make Leahy’s business profitable, he sometimes arranged for prices at different outlets to go up at different times. For instance, sometimes he would arrange for BP Leopold to raise its prices during the evening peak traffic period, on the basis that the outlet was on the wrong side of the road for traffic leaving Geelong, so an increased price would not make a big difference to the volume of sales, but would offer the possibility of a small margin over the wholesale price on whatever petrol was sold. He would arrange for the other Leahy outlets to increase their prices at midnight, when most of them closed.
222 In response to a question indicating that Annexure B suggested that telephone communications between competitors in the Geelong petrol market increased, rather than decreasing after news of the Ballarat investigation, Mr Warner said:
‘Yes – no, it did, it did. I suppose as I said before, we thought – well, I thought by just passing on the information to competitors was not contravening the Act. We just – we weren’t telling people what to do with their boards. We were just saying this is what we’ve gone to, sort of, the market has gone to and just left it at that and we would then wait and see what they would do and see what the [sic] response we would get.’
223 Mr Warner made it clear that he made his admissions to the ACCC because he was given to understand that the passing of information about prices and times may have involved a contravention of the Trade Practices Act. His understanding was that it was the predictive nature of the information that involved a contravention. He said that he could not afford to contest the case.
Graeme Chisholm
224 According to Graeme Chisholm’s evidence, the principal price-setter for Chisholm was Darren Campigli. Setting prices would be Mr Chisholm’s responsibility if Mr Campigli was away. Mr Chisholm had telephone conversations with competitors, discussing either price or supply of products. He had such conversations with Ian Carmichael and Michael Warner, 90 per cent of which were with Mr Carmichael. Typically, Mr Carmichael would give him a time and a price and Mr Chisholm would thank him. This happened somewhere between 10 and 20 times in the 1999-2000 period, according to Mr Chisholm’s recollection. Calls from Mr Warner were similar to those from Mr Carmichael.
225 According to Mr Chisholm, there was always a call prior to the price going up, and there were follow-up calls, in which those from Leahy would say that they had gone up, and would ask what was happening at Chisholm.
226 Mr Chisholm gave evidence of Mr Carmichael’s use of coded language after Easter 2000. After media reports of the investigation in Ballarat, Mr Carmichael asked to meet Mr Chisholm in the car park between Chisholm’s two depots. He could not remember what the conversation was about.
227 After receiving a call, Chisholm would not simply raise its price at the time mentioned in the call. Someone from Chisholm would drive around Geelong spotting board prices. If they still had price support from Caltex, Chisholm would keep its prices low for an hour or two to try and increase the volume of sales.
228 Chisholm did cartage of fuel for 7-Eleven. Mr Campigli had a line of communication with someone there. If Phil Carmichael complained to Ian Carmichael that 7-Eleven had not increased its prices, Ian Carmichael would ring Chisholm and ask for assistance in getting the prices at 7-Eleven up. Mr Chisholm only ever rang 7-Eleven about petrol prices on one occasion.
229 In cross-examination, Mr Chisholm said that he never felt obligated to move Chisholm’s prices when he received calls. He never undertook to do anything, and regarded himself as having a total free choice as to what he would do with the information and with Chisholm prices. Nobody at Leahy ever rang Mr Chisholm and ticked him off or criticised him for not moving the Chisholm prices up at any given time. He would not have taken kindly to such a ticking off. Mr Chisholm never rang Leahy and ticked them off about their prices. It did not cross his mind to do that.
230 Also in cross-examination, Mr Chisholm said that Caltex set the price at which Chisholm purchased petrol, and the buying price was the major factor in fixing the selling price.
Alan Shuvaly
231 In the period relevant to this case, 1999-2000, according to the evidence of Alan Shuvaly, Liberty’s normal pricing policy at its many outlets was to try and set its prices at between 0.2c and 0.5c below the rest of the market. After its initial period of aggressive discounting, when it opened its Geelong outlet (see [175]), Liberty concentrated on the volume of sales at that site. The manager of the Liberty outlet in Geelong was required to spot board prices on his way to work every morning, and to fax the information to Mr Shuvaly. In addition, on one or two days each week, Mr Shuvaly visited Geelong and spotted board prices for himself. People who were required to report to Mr Shuvaly proved to be not always reliable.
232 Mr Shuvaly regarded Andrianopoulos and Apco as Liberty’s particular competitors in Geelong. He knew them as discounters, as Liberty was.
233 In the evidence-in-chief of Mr Shuvaly, the following exchange took place:
‘MR CRENNAN: Did you have telephone conversations in 1999 and 2000 with your competitors?---Yes, I did.
What subjects did you discuss with them?---Market information, share a lot of market information I guess and try to encourage the market to move once it had moved.
Which competitors did you speak with?---Most of the time it was – the information I got was through Peter Anderson because he had a fairly good knowledge about the Geelong market.
Do you recall in general terms what subjects you discussed?---The subject we spoke was I guess competitors, what the market was doing and what it was going to go to, and getting a feedback I guess that if anything happened would Liberty be part of moving the boards up in supporting the market.
Can you recall what characteristically Mr Anderson would say to you in such conversations?---There was the instance where he had seen a couple of the majors – the majors were the oil companies – had moved, a fairly strong kind of move. He made a call and said, “The market has started to move. Some independents are likely to do something. Would you be part of it if it happened?”
...
What did you say when he asked whether you would be part of it I think was your expression?---My answer was we would never go first. We would always evaluate the situation, and act accordingly.
If you had noticed that the market was moving, what would you say then?---It depends on how strong it would be, and that was the only way we would do anything.
But what would you say to him? What would be your---?---My answer was if the market was fairly strong and we felt comfortable, yes, we would support to the level it goes to.
HIS HONOUR: By that you meant if the price rise was going to stick across the market?---Yes, if there was a clean slate of the market sitting at a level, then we would definitely move, absolutely.
You would move to that or somewhere near that?---That is something I wouldn’t tell them because I always wanted to have a bit of a break. But they can rest assured that we would support it, but to what level they are not aware.
MR CRENNAN: Do you remember if any of the independents were mentioned to you at all?---There were a couple of incidents in the conversation where Leahy, Chisholm were mentioned in the conversation, that they had been spoken to and we would be interested to take part in the move. Not a great deal.
...
Did you talk to any other competitors about these matters?---Chris Andrianopoulos.
Can you tell His Honour what those conversations were about?---Chris and I shared a lot of information for two reasons, that I guess I knew Chris for a very long time and the information he fed were pretty accurate and I trusted him, I guess. And that’s the reason we sort of contacted each other, I guess, to verify if the information was right.
Do you recall characteristically what Mr Andrianopoulos said to you or not?---It was just basically seeing what was the market. If he had some information from his agents as to the market movement, he would say that he had heard something and vice versa.
Would that information be about what had happened or what was happening?---No, what they have actually seen, what has been seen in the market, what is actually present at this stage.
After such conversations, what was your practice? What did you do?---I would take it on board and wait until such time as there was a realistic move in the market for myself to react.’
234 Mr Shuvaly got information from Liberty’s own agents, by board-spotting, and from Peter Anderson and Chris Andrianopoulos. A few times, when Mr Andrianopoulos rang, he would say that he had received a call from Peter Anderson. If Mr Andrianopoulos told Mr Shuvaly that he had received a call from Mr Anderson and there was a market move, he would ask Mr Shuvaly if Liberty would be looking at moving. Mr Shuvaly’s answer was ‘always that if the market was strong enough and comfortable enough, then I would support it.’ Peter Anderson also sometimes rang Mr Shuvaly and asked him if Liberty would be moving if the market panned out the way it should. Mr Shuvaly’s answer was that Liberty would have a look at it.
235 If Liberty did not increase its prices, there would be follow-up calls. Mr Anderson would ring and tell him that if Liberty did not move, it would ‘totally fuck the market’. Mr Shuvaly was upset by this.
236 Mr Shuvaly recalled one incident when Mobil Geelong North had not moved when the rest of the market had. Liberty’s commission agent rang Mr Shuvaly and told him that Mobil Geelong North had not moved. Mr Shuvaly rang Mr Anderson and told him that Liberty would not move until such time as Mobil Geelong North moved. Mr Anderson responded that he would make a call to Mobil. After a short period, Mr Shuvaly’s agent checked and Mobil Geelong North had moved, so Mr Shuvaly increased Liberty’s price in Geelong.
237 Mr Shuvaly’s view of the Geelong petrol market was that changes in the price were initiated by the majors. Sometimes, the majors would attempt a move and see if it would be followed. If the move was not strong, they would bring their prices back down and try again later to increase them.
238 Mr Shuvaly’s evidence was consistent in that he maintained that he only ever received calls from Mr Anderson or Mr Andrianopoulos, or made calls to either of them, passing on information about what had already occurred in the Geelong petrol market. He denied receiving information about price rises that were yet to happen. This consistency led to counsel for the ACCC applying for leave, pursuant to s 38(1)(c) of the Evidence Act, to cross-examine Mr Shuvaly about a prior inconsistent statement. The statement was made pursuant to the leniency agreement between the ACCC and Mr Shuvaly, to which I have referred in [135]. The terms of the statement, which Mr Shuvaly signed, were negotiated between him and his counsel on the one hand and the ACCC on the other. There were several drafts before the final version was signed. The statement appears to have been Mr Shuvaly’s only in the sense that he signed it. It does not appear to have been his own words in any real sense.
239 After hearing argument, I granted leave to counsel for the ACCC to put certain passages from the statement to Mr Shuvaly.
240 The signed statement included the proposition that, in telephone calls from Mr Anderson about increasing retail petrol prices in Geelong, Mr Anderson told Mr Shuvaly that ‘the majors had moved or less often would be moving up to a particular price at a particular time’. When this passage was put to him, Mr Shuvaly said there was only one incident, the date or time of which he could not remember, when he was told that Mobil and the independents would be moving. Despite strenuous attempts of counsel for the ACCC in cross-examination, Mr Shuvaly would not concede anything more as to the predictive nature of Mr Anderson’s calls, other than that there was one incident in which Mr Anderson told him that Mobil would be moving at a later time. He said this was the incident to which he had intended to refer, without clarifying that, when he made the signed statement. Another assertion in the signed statement was that Mr Anderson had said to Mr Shuvaly by telephone that ‘the market will be moving to X cents per litre at Y o’clock. Are you going to support it?’ Counsel for the ACCC attempted to persuade Mr Shuvaly to agree that he had understood Mr Anderson, when he used the phrase ‘the market’ in the first sentence of that passage to mean ‘the majors’. Mr Shuvaly would not agree with this. He adhered to his evidence that, with the exception of the single incident when Mobil was mentioned, Mr Anderson only gave him information about moves that he had already seen on the part of the majors.
241 Two other passages from Mr Shuvaly’s signed statement were put to him, but he was not asked to say whether they were truthful or not. The overall effect of the attempt to cross-examine Mr Shuvaly on his signed original statement was at best minimal. He adhered strongly to the evidence he had been giving, in his own words, in answer to questions he was asked in evidence-in-chief. The only predictive element that Mr Shuvaly would concede to any significant extent in relation to his telephone conversations with Mr Anderson was the prediction that the independents would be moving. With the exception of the one incident in which Mr Anderson referred to Mobil (which may or may not have been within the period relevant to this case), predictions of moves by the independents were always based on information Mr Anderson gave to the effect that the majors had already moved, or begun to move.
242 Although Mr Shuvaly thought that Mr Anderson was a reliable source of information about what was happening in the Geelong petrol market, he had other means of checking that information, which he used regularly. One was his own commission agent, who managed the Liberty outlet in Geelong. The other was Chris Andrianopoulos. Sometimes Mr Shuvaly would ring Mr Andrianopoulos to check the accuracy of information Mr Anderson had given him. On one occasion in 1998, Mr Shuvaly said that he agreed with Mr Andrianopoulos that both of them would try and ‘support the market at a particular time when we saw the market strong enough.’ By this, he meant to increase board prices to the level that everybody else had moved to. Mr Shuvaly was aware that if he did not support a market movement, he would probably get ‘some sort of flak.’ He said he was not very concerned about this because he was looking after Liberty’s interests.
243 After he had had a discussion with Mr Andrianopoulos about prices, which included a discussion about what Mr Anderson had said to either one, Mr Shuvaly’s expectation was that prices of the independents would move. If he delayed increasing the prices of Liberty’s Geelong site, he might receive a telephone call from Peter Anderson complaining that Liberty had not moved, to which he would respond that he would ‘look at it’. Only if Mr Shuvaly felt comfortable enough about the market would he move.
244 In cross-examination by counsel for Andrianopoulos and Chris Andrianopoulos, Mr Shuvaly confirmed that, if he received a telephone call about prices in the Geelong market, he was his own man. No-one could tell him when Liberty was to change its prices, or by how much, or whether it was to change them at all. A decision to make a change depended upon Mr Shuvaly’s judgment as to the interests of Liberty. He also confirmed that he never attempted to persuade other people to move their prices up and never agreed with any suggestion of Mr Anderson or Mr Andrianopoulos that he should do so. It had always been Liberty’s policy never to discuss pricing with competitors, and Mr Shuvaly always applied that policy. On occasions when Mr Anderson attempted to talk about prices to him, he either said that he was not interested, or listened only out of politeness, because Apco was a customer of Liberty.
245 Mr Shuvaly also agreed that there was a lot of communication in the petroleum industry, including telephone communication, in which competitors sought information from each other about a variety of things and spread information, or gossip, about a variety of things. Mr Shuvaly and Mr Andrianopoulos spoke to each other about a great number of matters on many occasions.
Darren Campigli
246 Darren Campigli’s responsibilities included the setting of Chisholm’s fuel prices at its various outlets. When he was unavailable, which he estimated occurred 20 or 30 per cent of the time, Graeme Chisholm would perform that function.
247 During the relevant period, Chisholm had price support from Caltex at the rate of 2.9c per litre, by way of a rebate, to assist Chisholm to match other prices in the Geelong petrol market. The pumps at the Chisholm outlets were linked by computer network to the Caltex head office in Melbourne, so Caltex would know at what price Chisholm was selling. Price support was the main influence on setting the prices for Chisholm’s outlets. The prices of competitors were another influence, and Mr Campigli would spot board prices. The main competitor he spotted was Andrianopoulos, which was close to the Chisholm depot, but he also took into account the prices at Shell and Mobil outlets. Andrianopoulos, United Convenience and Apco seemed to lead the price down more than anybody else in the Geelong petrol market. They would be perhaps 0.2c or 0.3c cheaper than other petrol retailers. The Mobil and Shell outlets seem to follow the market down. When the market was up, Chisholm would adjust its prices to match the market.
248 Mr Campigli received calls from Ian Carmichael and Michael Warner about price movements. These were after the Melbourne market had moved up. Mr Carmichael would say that there was probably going to be a move of board prices later in the day or overnight. He would mention a price and a time. Mr Campigli would give one of three responses: he would thank the caller; on occasions would say that he would move Chisholm’s board prices as well; or sometimes he would say that he would ‘have a look at it’. Sometimes, Chisholm’s prices were already up, well above the market, because Caltex had already withdrawn price support. Sometimes, Mr Campigli asked Mr Carmichael about what Andrianopoulos was going to do, and sometimes he would ask about Apco. Mr Carmichael would say that ‘it should be alright.’ Occasionally, Mr Campigli would ask Mr Carmichael what Shell or Mobil were going to do. Once or twice, Mr Carmichael mentioned that he had spoken to Colin Williamson, and Mr Campigli assumed that this meant that United Retail would be moving their board prices up and other Shell outlets would probably be following. Mr Carmichael would only have mentioned Colin Williamson once or twice in 1999 and 2000.
249 Mr Campigli gave evidence about Mr Carmichael’s code, which he adopted after Easter 2000. Mr Campigli said he understood what Mr Carmichael was intending to convey. He asked why Mr Carmichael was using the code, and Mr Carmichael replied that he had to be careful. Mr Campigli was not scared by the Ballarat investigation, because he did not realise that what he was doing was wrong.
250 Calls from Mr Warner to Mr Campigli were similar to those from Mr Carmichael.
251 In his evidence-in-chief, Mr Campigli was asked whether Mr Carmichael or Mr Warner ever told him why they were making calls to him. His answer was:
‘They didn’t actually set out in the pattern to say – they didn’t explain why they made them. They just never ever told me that I had to move my boards or anything like that. I just assumed that by letting people know that we might adjust our price in the market and the market would be similar instead of being big differences.’
252 Mr Campigli said that after the calls were made, he found that the price generally moved to around the stated price within a couple of hours of the stated time. On most occasions after he received the calls, Mr Campigli would instruct the Chisholm sites to change their board prices to the price mentioned in the phone call at the time mentioned. On other occasions, an hour or so after the call, he would drive around spotting board prices and, if the market had moved, he would move the Chisholm prices. As for overnight price changes, there were occasions when Mr Campigli asked the managers of the Chisholm outlets to put the prices up at closing time, and occasions when he would ask them to put them up when he arrived at work in the morning.
253 On occasions, Mr Campigli would ring Ian Carmichael or Michael Warner to let them know that he was aware of competitors whose prices had not moved up. Mr Carmichael or Mr Warner would thank him and say that they would see what they could do. Sometimes the sites that had not moved were Apco or Andrianopoulos, but they could have been Shell or Mobil sites. On a couple of occasions, a BP-branded outlet at Ocean Grove had not risen, and Mr Campigli rang Ian Carmichael. Mr Carmichael said that there was not much he could do, because the site was not under Leahy’s control, but he would let the operator know what the Geelong market was doing.
254 Chisholm made deliveries of fuel to the 7-Eleven sites in Geelong, on behalf of Caltex. Mr Campigli dealt with Jacques Bodourian in relation to these deliveries. 7-Eleven’s prices in Geelong in 1999 and 2000 would generally match the market, or occasionally undercut it by 0.2c per litre. Sometimes, Mr Campigli would provide Mr Bodourian with information about prices in the Geelong petrol market, when he was speaking with him about deliveries. Mr Campigli would tell him what he knew of the price at Apco Geelong East, which was near 7-Eleven Geelong East, and also what he knew of the price at Andrianopoulos. A couple of times, Mr Campigli rang Mr Bodourian to let him know that there might be a movement in the market, but on other occasions he rang after he knew that the market had moved up. Mr Carmichael or Mr Warner sometimes rang Mr Campigli about 7-Eleven, because 7-Eleven was often a bit slow in moving its prices up. In response to these calls, which suggested that 7-Eleven had not risen, Mr Campigli would say that he would give Mr Bodourian a ring and let him know that the market was up. Even having said this, Mr Campigli did not always ring Mr Bodourian, but he sometimes received further complaint calls and then would give Mr Bodourian a ring. Mr Bodourian would thank him, and say that the sites were very busy, but that he had spoken to them. Sometimes, in their calls of this kind, Mr Carmichael or Mr Warner would mention to Mr Campigli that Peter Anderson was not happy that 7-Eleven had not gone up.
255 Mr Campigli estimated that he received calls from Ian Carmichael or Michael Warner, telling him that there would be a movement at a particular time to a particular price, about 30 or 35 times in each of the years 1999 and 2000.
256 In cross-examination by counsel for Apco and Peter Anderson, Mr Campigli agreed that Chisholm made its own decisions, as a matter of its own choice, about pricing. Regardless of anything that those from Leahy said, Mr Campigli never felt obliged to change Chisholm’s prices. His understanding was that, if Chisholm wanted to move its prices, it was up to Chisholm. Mr Carmichael and Mr Warner never told him what Chisholm had to do and he never felt obliged to raise prices just because they had telephoned. Likewise, Leahy was free to do what it liked with its pricing.
Anton Maurer
257 Anton Maurer worked in the Leahy office in Geelong from 1988 until 8 April 1998. He was one of those who communicated to Leahy outlets instructions to change prices. For the first five years of his employment, he was the main person who answered the phones and put callers through to those in the office to whom they wished to speak. He recalled one instance of someone at BP Torquay ringing to say that they did not want to put the price up because a rival Mobil outlet at Torquay had not yet risen. Mr Maurer passed on the message. Although he did not hear conversations between Mr Carmichael or Mr Warner and competitors about prices, he did remember overhearing a conversation in which Mr Carmichael was telling Peter Anderson that there was a 747 landing. (Mr Maurer must have overheard this conversation much earlier than Easter 2000, because he was no longer working in the Leahy office by Easter 2000.)
258 Mr Maurer described BP Corford Express as usually the most expensive petrol dealer in Geelong. Its prices were set from Melbourne, in response to information about the prices at nearby sites, which Mr Maurer would communicate by computer. The particular nearby sites were Shell Speedwings, Apco Geelong North and Mobil Geelong North. Mr Maurer would drive past those sites on his way to work each morning and on his two trips to the bank during each day.
259 On occasions, either Mr Carmichael or Mr Warner would ring Mr Maurer to inform him that there was to be a price rise. Mr Maurer did not recall any mention of times. Even if Mr Carmichael began by talking about horseracing or football, or social matters, the conversation would always lead to prices. Mr Maurer described these calls as ‘letting me know what the market was doing.’ He did not act on these calls, and repeatedly told Mr Carmichael and Mr Warner that the calls had no influence, because the price at BP Corford Express was totally out of his hands. There were never any calls about price decreases. Communications about the purchase by BP Corford Express from Leahy of lubricants and two-stroke fuel were always initiated by BP Corford Express. Communications about occasional cartage of fuel by Leahy for BP Corford Express were between BP and Leahy, and did not involve Mr Maurer.
260 In cross-examination, Mr Maurer said he thought that he had received 30 or 40 calls from Mr Carmichael or Mr Warner, about price increases, in the two-year period relevant to this case.
Gordon Primmer
261 Gordon Primmer and his daughter, in partnership, were commission agents, and subsequently resellers, for Leahy at BP Meredith. The change from commission agents to resellers was alleged, and admitted on the pleadings, to have occurred on 1 January 2000. Leahy set the retail petrol price at BP Meredith. The required price was communicated by phone, generally by Michael Warner and sometimes by others including, on occasions, Ian Carmichael. Mr Primmer would be told that the price was going up to a particular figure and at a particular time. Price decreases were generally left to him. There were also phone calls about the supply of petrol and other products.
262 Mr Primmer had a lot of conversations with Mr Warner. Most of them were when Mr Warner rang to tell Mr Primmer there was going to be a price rise. He usually mentioned a time. On occasions, he mentioned a couple of other people. On one occasion, when the price had not moved, Mr Warner said that Andrianopoulos would get on to him. Mr Warner asked Mr Primmer to pass on information about price rises to Stan Kerr at United Convenience or, if United Convenience had not raised its price, asked Mr Primmer to contact Stan Kerr to see what was going on. Mr Primmer would then ring Mr Kerr.
263 When Mr Primmer passed on information to Mr Kerr, Mr Kerr would give one of three responses: sometimes, he would say that he would see what he could do; sometimes, he would say that, if others moved their prices up, he would as well; sometimes, he would say that he would move his prices up. On some occasions, Mr Primmer would report these conversations back to Mr Warner.
264 When he received price information from Leahy, Mr Primmer always moved his prices to what he had been told the new price would be. After he became a reseller, sometimes he would ask whether the rest of the market was up, or suggest that Leahy should get the price at Bannockburn increased and then Mr Primmer would go up. Sometimes, Mr Primmer had to ring Mr Kerr two or three times when United Convenience was not raising its price.
265 After the Easter 2000 scare in relation to the Ballarat investigation, Mr Primmer had a conversation with Mr Warner in which Mr Warner suggested that Mr Primmer ring him on his mobile phone, not on the office phone any more, because it might be bugged. After that, Mr Primmer did not worry too much about conversing with Mr Warner. He still received some calls from Mr Warner, or others at Leahy, and did not make any further calls to Mr Kerr.
Wayne Purtell
266 Wayne Purtell was Brumar’s Geelong Area Coordinator prior to January 1999. He had a similar role with Westfuels, the previous multi-site franchisee of a number of Shell outlets in Geelong, until Brumar acquired that business. Prior to that, he was working for a company called Provincial Fuels, which then held that multi-site franchise, until Westfuels acquired it. While he was with Provincial Fuels, Mr Purtell was introduced to Eino Heikkila. Mr Purtell’s boss, Denis Manton, told him that Mr Heikkila would be a good source of contact to talk about price changes and the fluctuating market in the Geelong area.
267 From some time in 1997, until he left Brumar in January 1999, Mr Purtell received telephone calls from Mr Heikkila, which he described as ‘to arrange for the pricing in the Geelong area to go up.’ Mr Heikkila would ask if Mr Purtell had any information from Craig Brown, who was responsible for setting the prices for Brumar. Mr Heikkila would tell Mr Purtell what he was going to do, and ask whether Mr Purtell could follow ‘in the pricing structure that he was trying to achieve.’ Most times he would mention a price and a time. Mr Purtell would contact Mr Brown to find out whether he was able to go to that price. Often, Mr Purtell would have to call Mr Heikkila back, or would receive a call back from Mr Heikkila, to confirm whether he would be able to change his prices. If Mr Purtell’s instructions were not to change, Mr Heikkila would try to arrange another time, or Mr Purtell would give him another time at which he would be able to change. If Mr Purtell had instructions to change, he would let Mr Heikkila know this and tell him what the timeframe was. Sometimes, Mr Heikkila would ring about Shell sites in Geelong that had not gone up when others had. Mr Purtell had no other business or personal matters to discuss with Mr Heikkila.
268 Mr Purtell was based in North Melbourne, but spent most of his time in the different Shell sites in Geelong. Normally he would work from one of those sites, or would be solving problems at other sites. Whilst he was in Geelong, he would spot board prices. He would maintain contact with Mr Brown about what was happening in the Geelong petrol market, from what Mr Purtell learned through watching sites and from Mr Heikkila. He would sometimes report to Mr Brown if a competitor had not increased prices at a particular site. It was Craig Brown who had authority to make adjustments to prices of petrol for all of Brumar’s outlets. Prices were therefore set by Shell. Often, on a Friday, Mr Brown would delegate responsibility for price setting to Mr Purtell for the weekend, giving him a maximum and a minimum and allowing Mr Purtell to use his discretion within that range.
269 When Mr Brown gave Mr Purtell instructions about prices, he would give him a price and a time. He would often say that Mr Purtell should watch the opposition, to make sure that everybody was following suit. Mr Purtell would get information from console operators coming and going from their shifts, from his own board-spotting, or from Mr Heikkila. If a competitor hadn’t moved, he would let Mr Brown know and await further instructions. Sometimes he would be told to wait and see if the competitor responded, or to ring Mr Heikkila and see what the situation was.
270 In cross-examination by counsel for Apco and Peter Anderson, Mr Purtell agreed that, sometimes when he passed on information to Mr Brown, he was told not to do anything with prices at that stage. Sometimes he was told to match the market if the market was moving up. This required him to check that other sites were moving, or had moved to that price. Mr Purtell could not predict what response Mr Brown would give to him when he passed on information.
271 Mr Purtell also agreed that Brumar was a price follower, both on the way up and on the way down.
Phil Carmichael
272 Phil Carmichael was the sole director and the secretary of Portcliff, which ran its Mobil branded outlets as commission agent for Strasburger. Strasburger therefore set the prices for those outlets. According to Mr Carmichael, Melbourne prices generally went up on a Thursday and he would be instructed to increase Portcliff’s prices either on Thursday night or Friday morning. Mr Carmichael had authority to decrease prices to match Portcliff’s competitors. He described Portcliff as a follower as to price.
273 From late 1998 onwards, Phil Carmichael had conversations with his brother Ian Carmichael about petrol prices. Phil Carmichael remembered one occasion when he told his brother that Portcliff would be going to a certain price at a certain time, and his brother responded ‘you’ll be a shag on a rock because no-one else is moving in Geelong at that time.’ Phil Carmichael also had conversations with Michael Warner about petrol prices. Both to Mr Warner and to his brother, he would pass on information that he had been instructed to increase prices, and see if he could get a time or an indication whether the rest of the market in Geelong was intending to move. He would report this information to Aaron Incoll, who gave him instructions on behalf of Strasburger. He would sometimes try to persuade Mr Incoll to delay price increases, on the basis that he had reliable information that the Geelong market would not be moving until a later time than Mr Incoll had instructed him to move.
274 Phil Carmichael received calls from Ian Carmichael and Michael Warner when they had information about a prospective price move. He passed that information on to Mr Incoll, to let him know that there was going to be a move at a particular time in Geelong. More often, calls were initiated by Phil Carmichael, because Mobil was the first to move, so he had the information first. When he rang Mr Incoll with information from Ian Carmichael or Michael Warner, seeking to delay price increases, he was more successful as time went by, because the information he passed on from the Leahy personnel was considered to be reliable.
275 Not all of Portcliff’s immediate competitors would increase their prices at the same time. 7-Eleven tended to be fairly slow in going up when most others had gone up. Phil Carmichael would ring his brother or Mr Warner to let them know that 7-Eleven had not gone up, assuming that they may have had some form of contact to find out whether or not 7-Eleven intended to go up. Generally, they said they would get back to Phil Carmichael, or would check out the information that 7-Eleven had not gone up.
276 There were occasions when Phil Carmichael asked his brother or Mr Warner where they received the information they were giving him about proposed price increases. They did not tell him, other than that Phil Carmichael could recall asking on one occasion whether Apco was increasing its price at a particular time, and being told that someone at Leahy had had a conversation with Peter Anderson.
277 Phil Carmichael recalled his brother and Michael Warner using codes, relating to airline arrivals or fuel deliveries, after the investigation into petrol pricing in Ballarat began in 2000.
278 In cross-examination by counsel for Apco and Peter Anderson, Phil Carmichael said that he had managed Mobil Geelong North in the early 1990s. Subsequently, he would sometimes telephone Mobil Geelong North to get Apco Geelong North’s price, knowing that Apco’s prices were consistent throughout the Geelong petrol market. It would save him from going out board-spotting at an Apco site.
David Potter
279 David Potter was the principal of DE Potter Pty Ltd, which operated a number of retail petrol outlets in Geelong under the Mobil brand, some of them through Strasburger. DE Potter Pty Ltd was itself a commission agent of Mobil. Mr Potter managed Mobil Geelong North from the end of 1996 until October 1999. Mobil set the retail prices of petrol at the site. Mobil supplied price support during the low-end of a price cycle. Mr Potter reported to Mobil changes in prices that he observed from the boards at Apco Geelong North, across the road. Whereas Apco Geelong North was a 24-hour site, Mobil Geelong North closed at about 10.00 pm and opened at 6.00 am.
In Mr Potter’s view, Mobil was a price leader in Geelong.
Eino Heikkila
280 Eino Heikkila’s telephone contacts with Ian Carmichael and, on occasions when Mr Carmichael was away, with Michael Warner began in the mid-1990s, and concerned buying and selling oils. Later, at a time that Mr Heikkila did not specify, they began discussing and passing information on retail petrol pricing. Mr Carmichael or Mr Warner would advise Mr Heikkila of a possible price increase, to take place at a particular time, or would inform him of a price increase that had already occurred. They did not always mention a time in relation to future increases.
281 Mr Heikkila would drive around spotting board prices at 8.00 o’clock in the morning, again at lunchtime or in the afternoon, and on his way home from work. If he received a call from Mr Carmichael or Mr Warner, he would drive around spotting board prices and, if others had raised their prices, he would instruct the United Fuels outlets to raise their prices. In the calls, he would thank the caller for the information. He did not discourage the making of these calls, because the information he received was useful to him in United Fuel’s own business and was also of assistance for other businesses that United Fuels supplied with fuel.
282 In Mr Heikkila’s experience, Mobil was often the initiator of a round of price increases, followed by Apco.
283 Mr Heikkila could see the board price at Shell Speedwings from his office. If he noticed that Brumar had increased its price at Shell Speedwings, he would call Ian Carmichael and tell him that Shell had increased the price.
284 Once Mr Heikkila was happy that the prices in the large sites had gone up, he would telephone the managers of the United Fuels sites and instruct them to put their prices up.
285 Sometimes the time specified in the phone calls Mr Heikkila received was midnight. Sometimes it was 7.00 am. In those cases, Mr Heikkila would check the prices of competitors at 8.00 am.
286 Mr Heikkila spoke to Wayne Purtell, to pass on information he had been given about price increases, because Brumar was based in Ballarat and did not have anyone driving around in Geelong to spot board prices. He continued to make telephone calls to Garry Dalton when Mr Dalton took over Mr Purtell’s job. He would pass on the information he had received about a price and a time. The recipient of the call would thank him, and indicate that they would look at the situation.
287 Mr Heikkila described his purpose in making these calls as ‘just for market information’. He wanted to let people know what was happening in the market, so that they would not miss out on a price increase and run the risk of going broke. Generally, Brumar waited for Mr Heikkila’s call before putting their price up, because they had no other source of information about market prices in Geelong. Mr Heikkila also had other telephone conversations with Mr Dalton, because United Fuels was Brumar’s back-up supplier for bulk products and oil. He estimated that he had two or three conversations a month with Mr Dalton in the first nine months of 1999 about these matters.
288 Sometimes, Mr Heikkila received telephone calls from Ian Carmichael in relation to Brumar, if the Brumar price had not gone up. Mr Carmichael would ask Mr Heikkila if he knew what Brumar’s position was. Mr Heikkila would indicate that he would check. He would ring Mr Purtell or Mr Dalton and ask if Shell were intending to put the price up. They would say that they were looking at it, or something similar. Mr Heikkila may have confirmed with Mr Carmichael that he had done this, but not very often.
289 Mr Heikkila was asked whether he discussed the calls from Mr Carmichael with Robert Riordan. He indicated that he and Mr Riordan did not communicate with each other very often, as they were not getting on by 1999. He said that there possibly had been discussions about the calls, but only in general terms, not individually.
290 Counsel for Garry Dalton also asked Mr Heikkila if he recalled calls from Ian Carmichael about increases that were to happen within an hour or two of the call. Mr Heikkila’s recollection was that the time for an increase was generally either close of trade that evening or in the morning.
291 Mr Heikkila said that he would always go and look at the prices of competitors after he received a phone call and would not simply put up the prices at the United Fuels outlets without doing this. He accepted that, on occasions when he rang Mr Dalton, he did not mention that he had been in touch with any other competitor about pricing information. On occasions when he rang Mr Dalton, Mr Heikkila may have been in his car, providing information about board prices generally. Sometimes his calls were diverted to a message bank, because Mr Dalton’s phone was either switched off or was out of its area of communication. Mr Heikkila would not leave pricing messages, but would request a call back. From July 1999 onwards, Mr Heikkila did not call Mr Dalton at all. Mr Dalton never agreed with Mr Heikkila about what he would do with his prices. Mr Heikkila never asked Mr Dalton to agree to anything. In Mr Heikkila’s mind, Mr Dalton remained free to do what he liked with his prices. Mr Heikkila felt that he himself remained free to do what he liked with his prices. He hoped that he would get the Brumar prices up at some point after the call, but the call was made merely in the hope that this would happen. Brumar was a bit slow off the mark.
292 There were times when the market rose without Mr Heikkila making or receiving any calls, as a result of ordinary market practice. Generally, Geelong would be a day later than Melbourne.
293 Mr Heikkila accepted that, in the period from March to 8 July 1999, when calls from him to Mr Dalton were recorded in Annexure B, it was possible that he did not make any call of a follow-up nature, ie a call responding to a complaint by Mr Carmichael that a Brumar site had not increased its price.
294 In cross-examination by counsel for United Fuels and United Retail, Mr Heikkila said that, on every occasion when he received a call from Mr Carmichael and Mr Warner about fuel prices, he made his own inquiries.
295 Mr Heikkila accepted that the failure of United Fuels to increase the price of petrol at Shell Victoria Street would not be something that would cause a price increase not to stick. Similarly, Shell Waurn Ponds was not a site of great significance to the Geelong petrol market at that time.
296 In Mr Heikkila’s view, if most of the market, especially the market leaders, failed to increase their board prices within one or two hours of the beginning of a price increase, the price increase would not stick. The period of one or two hours was essential. If anyone did not follow the market up within that period, but a price increase stuck in any event, it would mean that the particular competitor was not influencing the market. The market leaders were Mobil, Apco, Andrianopoulos, United Convenience and Liberty. Sometimes Brumar led the prices up but, if it did not, and Brumar did not increase its prices, the price rise would not stick. United Fuels followed the market, and was never a market leader.
297 In cross-examination by counsel for Andrianopoulos and Chris Andrianopoulos, Mr Heikkila was asked to deal with a hypothetical situation in which Mobil initiated a price increase, followed by the other majors. He was asked if the independents did not go up, how long it would be before the majors decided that the price increase would not stick, and brought their prices down. He guessed that it would be six or eight hours.
Garry Dalton
298 Garry Dalton was involved in discussions relating to Brumar’s pricing strategies for the Geelong petrol market. Essentially, the strategy was to match competitors as the market was going down, sometimes to lag behind to gain a small amount of profit margin if possible, and then to move up as soon as the market went up. Mr Dalton saw Brumar’s main competitors as Apco, Mobil and some of the BP sites, particularly BP Corford Express. Although Mr Purtell, from whom Mr Dalton took over, had made all the pricing decisions himself, Mr Dalton gave some of the site managers in Geelong authority to change prices to match a competitor, and to inform Mr Dalton of the changes by means of his paging service. He would set a limit, so that if the price of the competitor were to drop by 8c or 10c, the site manager was instructed to page Mr Dalton before making an alteration. The site managers who had this authority were at Shell Belmont, Shell Latrobe Terrace, Shell Norlane and Shell Speedwings, which were the four main sites operated by Brumar, in the sense that they were the most high profile sites, with the highest turnover.
299 Mr Dalton recalled Eino Heikkila telephoning him every week or two. He would start with some small talk, and then say that he had just noticed that there were some price movements going on. Usually, they would be price rises. Almost always, Mr Heikkila would make the call on his mobile phone, and Mr Dalton had the impression that Mr Heikkila was driving around when he made the calls. Sometimes he would inform Mr Dalton that he had just driven past, or had just seen a particular price. Sometimes Mr Dalton received messages from his paging service asking him to call Mr Heikkila. Sometimes, Mr Dalton was already aware that prices had moved in Geelong, because the staff at Brumar sites would check their competitors on their way to work, or when they were travelling from site to site, and put the information onto the paging system. Sometimes, when Mr Dalton would telephone staff at the Brumar sites, he would ask whether they had seen anything of significance in relation to pricing.
300 When Mr Heikkila would ring and tell Mr Dalton something about Geelong prices, Mr Dalton would ring a few of the Brumar sites that had competitors within view and ask them to look and see what the price was. If the information was that the price was up, Mr Dalton would make a decision to move the sites in accordance with Brumar’s pricing policy.
301 Price support had an influence on Mr Dalton’s pricing decisions. Mr Heikkila’s information about Geelong prices never influenced Mr Dalton’s pricing decisions. Mr Dalton never rang Mr Heikkila to ask him what the United Fuels sites’ prices were. He did not ring Mr Heikkila to ask about Geelong prices in general. Indeed, after a short period of dealing with Mr Heikkila, Mr Dalton took the opportunity not to talk to him if he could. He found the calls annoying. Mr Dalton was getting good information from his own sites. He found the small talk from Mr Heikkila wasteful of time.
302 In Mr Dalton’s view, Brumar was a follower in pricing. He did not believe Mr Heikkila ever told him anything predictive about prices. Mr Heikkila never made subsequent calls to Mr Dalton about any of Brumar’s prices not having gone up. He never said anything to Mr Dalton to suggest that Mr Heikkila was in touch with other competitors about prices in Geelong. He never agreed with Mr Heikkila on the setting of Brumar’s prices.
303 In cross-examination by counsel for the ACCC, Mr Dalton agreed that he was unable to deny that, in some of the telephone calls to him, Mr Heikkila referred to prices to which United Fuels was intending to go. He did not think that Mr Heikkila said this. If Mr Heikkila had rung and told Mr Dalton that he was going to move a United Fuels site to a particular price at a particular time, Mr Dalton said he would not have taken much notice of it. He would not have factored this information into the decisions that he would have made about prices at Brumar sites. The information would have been irrelevant. As far as Mr Dalton was concerned, United Fuels was not a market leader, and its sites were small, backstreet sites, not high-volume sites. He was more interested in Mobil sites, Apco sites and sites that sold a lot of fuel.
Robert Riordan
304 While United Fuels was trading, Robert Riordan had responsibility for setting prices at its retail outlets only when Eino Heikkila was on leave or otherwise unavailable. In setting prices for United Fuels, the main factor influencing Mr Riordan was board prices. United Fuels had to function within a business plan, updated regularly in conjunction with Shell. Its pricing had to fit within that business plan. Price support and profitability support from Shell were also considerations.
305 About the middle of 1996, Provincial Fuels purchased two Shell franchise sites, Shell Speedwings and Shell Belmont, from United Fuels. Under the contract for the transfer of the franchise of these sites, which was entered into in conjunction with Shell, United Fuels had obligations to assist Provincial Fuels to become established in the Geelong market, where it was also acquiring other franchise sites. The assistance United Fuels provided included the provision of information about board prices.
306 Mr Riordan said that a price increase in the Geelong petrol market would stick if all the majors put their prices up. The rest would follow. United Fuels was a follower.
307 From 5 to 14 February 1999, Mr Heikkila was on holiday in Tasmania. From 18 to 21 February 1999, he was on holiday in Adelaide. From 6 to 14 August 1999, he was at a conference in Queensland, and from 7 to 25 September 1999, he was in Bali. During these times, Annexure B shows no calls from United Fuels office, or from Mr Riordan, to any competitors. Mr Riordan confirmed that, when Mr Heikkila was on holidays, Mr Riordan never called any competitors.
308 Mr Riordan spoke of commercial dealings between United Fuels and Chisholm and Leahy, in which United Fuels was able to supply fuel to its other competitors, and often exchanged them for other products, particularly for heating oil from Chisholm, when Shell was not manufacturing heating oil. United Fuels also supplied fuel to Mobil distributors and purchased heating oil and kerosene from them. United Fuels acted as agent for Shell, supplying Brumar and invoicing in the name of Shell for the supply. Mr Riordan said that he knew that Mr Heikkila had conversations with competitors in relation to commercial dealings, but Mr Heikkila did not tell him that he was having discussions about retail petrol prices. Mr Riordan did not know Ian Carmichael, Michael Warner, Alan Shuvaly, Wayne Purtell, Garry Dalton, Phil Carmichael, Anton Maurer or Gordon Primmer. He did know Darren Campigli and Graeme Chisholm. He saw Graeme Chisholm often through their common membership of the Geelong business club, the Pivots coterie at the Geelong Football Club and other places. He sometimes met Mr Chisholm for a drink. He denied ever having price-fixing conversations with Graeme Chisholm.
309 According to Mr Riordan, United Fuels would receive information from Shell that Melbourne prices had risen and that Shell was intending to remove price support. United Fuels would receive other information from customers, its own drivers, and radio broadcasts. Sometimes, someone from United Fuels would ring one of the Westgate Bridge Shell outlets and ask what its prices were.
310 Mr Riordan set retail fuel prices on behalf of United Retail. In the event of his unavailability, Robert Hambrook had the task. In November 1999, Colin Williamson was given a company car and a mobile phone, and responsibility for driving around the southern and western region of Geelong, to report to Mr Riordan what board prices in that region were. Mr Williamson was never authorised to increase prices on his own decision. Mr Riordan said that, when he gave Mr Williamson the mobile phone, he cautioned Mr Williamson that if he ever talked to competitors about anything, he should not talk to them about price. Mr Williamson said he would not do that. Mr Riordan was not aware of Mr Williamson having telephone conversations with Ian Carmichael or Michael Warner. Mr Williamson never told Mr Riordan that there would be a price increase to a particular sum at a particular time.
311 When Mr Riordan made decisions about price changes for United Retail, he was aware from his contact with Triton that the Melbourne market had moved. He would also spot board prices as part of his morning routine, to which I have referred in [88]. His decisions were also based on United Retail’s wholesale price, the margins it was attempting to achieve, considerations of the volume of sales and board prices in the Geelong market.
312 In cross-examination, Mr Riordan agreed with a suggestion by counsel for Apco and Peter Anderson that some petrol outlets in Geelong would occasionally raise their board prices for a short time, to see if others would follow. Mr Riordan said his own companies had tried that practice themselves. They did not have any site that influenced the market.
313 In cross-examination by counsel for the ACCC, Mr Riordan denied knowing of conversations about prices between competitors in the Geelong petrol market, and in particular conversations about prices between Ian Carmichael and Colin Williamson. He also denied that, if he got a phone call from Mr Williamson about prices in the market, he would decide immediately whether to put prices up. He said that sometimes he would go for a drive, and sometimes he would ring Triton and ask about the Melbourne market. He denied that it was more often than not the case that, before a price rise, he would get a call from Mr Williamson.
Robert Hambrook
314 Before or during the period relevant to this case, Robert Hambrook had never met or spoken to Ian Carmichael, Michael Warner, Darren Campigli, Graeme Chisholm, Alan Shuvaly, Wayne Purtell, Garry Dalton, Phil Carmichael, Anton Maurer, Gordon Primmer, Peter Anderson or Chris Andrianopoulos. He never had any discussion with any of those persons, or others, about the prices of petrol.
315 From 1 October 1999, Robert Riordan was the only person authorised to set retail prices for United Retail. When Mr Riordan was unavailable, Mr Hambrook took over that function. Even if Mr Riordan had taken leave, Mr Hambrook would telephone him after receiving information from Colin Williamson. Mr Hambrook sometimes did his own spotting of board prices.
316 Mr Hambrook said he was never aware of Mr Williamson having telephone communications with Ian Carmichael or Michael Warner. Mr Williamson never told Mr Hambrook that he had had such calls. He never told Mr Hambrook that he was speaking to Mr Carmichael or Mr Warner about pricing. He never told Mr Hambrook that Leahy would be raising its price to a particular amount at a particular time. His information concerned his observations of board prices.
317 Mr Hambrook said that he had never had any discussions with competitors about making arrangements to fix prices in the Geelong petrol market, even when both Mr Heikkila and Mr Riordan were out of the office, and Mr Hambrook was in effect in charge of the office, although this was a daily occurrence.
The circumstantial evidence
318 In this part of these reasons for judgment, I examine the circumstantial evidence, particularly that found in Annexure B. I do so for the purpose of seeing whether the general descriptions of the patterns and content of telephone calls between competitors in the Geelong petrol market, given by the witnesses, are consistent with what occurred, so far as it is known. I also undertake this analysis for the purpose of determining whether, in conjunction with the direct evidence, there is sufficient evidence to justify a finding that effect was given to any arrangement or understanding in the relevant period.
319 Annexure B contains shaded periods, which are designated by colour shading as those that the ACCC contends were periods during which effect was given to one or more of the alleged arrangements or understandings. In its original form, Annexure B had shaded periods that comprised whole or parts of days, whereas the shaded periods are now complete days. Originally, Annexure B contained 62 shaded periods in 1999 (36 of them on two days, 14 on three days, 10 on four days and two on five days), a total of 164 days, and 46 periods in 2000 (one on one day, 14 on two days, 21 on three days and 10 on four days), a total of 132 days. In the two-year period, the total number of days in Annexure B, all or part of which were shaded, was 296, shown as 108 shaded periods. These were the dates on which the ACCC then alleged that effect was given to one or more of the alleged arrangements or understandings. By the time of final addresses in the proceeding, allegations that effect was given to one or more of the arrangements or understandings had been reduced to 33 periods in 1999, of which five were only one day each and the remainder were two days, a total of 61 days, and 30 periods in 2000, of which 13 were one day and the other 17 were two days, a total of 47 days. Thus, the number of periods of alleged giving effect was reduced from 108 to 63, and the number of days from 296 to 108.
320 My detailed examination of Annexure B is confined to the periods, each of one or more days, ultimately relied on by the ACCC as demonstrating that effect was given to various arrangements or understandings. Following that examination, I attempt to analyse the data in Annexure B generally, for the purpose of comparing that data for periods other than those relied on by the ACCC.
321 In the course of this analysis, where reference is made to the name of a corporate respondent or other corporation, this is to be taken as an indication that the call originated from, or was directed to, a fixed telephone line in the office of that corporate respondent or other corporation. Where the name of a natural person is given, it indicates that the call originated, or was directed to, the mobile telephone of that person. The time of day when an event occurred is given according to the 24-hour clock, so as to avoid specifying whether a time is before or after midday. In some cases, Annexure B contains information about the times of commencement of telephone calls that reveals precise seconds, but I have preferred to list those starting times only down to minutes. Prices of petrol, and amounts of rises or falls, are given in cents per litre.
19 – 20 January 1999
322 The ACCC alleges that effect was given to Arrangement No 1 during this period.
323 Tuesday, 19 January 1999 began with prices decreasing across the market, as they had on the previous day, so far as the data in Annexure B goes. The call cycle relied on began in the afternoon at 16.47, when Peter Anderson rang Leahy. The call lasted one minute 26 seconds. Leahy immediately rang Chisholm and then Eino Heikkila. The second of these calls lasted five minutes and 36 seconds. At 16.55, Mr Heikkila rang Wayne Purtell. The call is timed at 17 seconds, suggesting that Mr Heikkila might have been unsuccessful in his attempt to speak with Mr Purtell. At 17.00, Chisholm apparently returned the earlier phone call from Leahy (which was timed at 36 seconds), in a call lasting two minutes 43 seconds. No significant price increase occurred on that day, so far as Annexure B records. No data is available during that period for any Chisholm site or any United Fuels site.
324 Price rises began occurring on the following morning at about 09.00. At precisely that time, Shell Latrobe Terrace increased its ULP price from 63.9 to 67.5. There was a series of increases by Mobil sites, the precise timing of which is unknown, as the only data available from some Mobil outlets is for sales in which the purchaser used a Mobil charge card, so the time of the price increase can only be fixed as somewhere between the last sale at the old price and the first sale at the new price, in which such a card was used. Between 08.37 and 09.45, Mobil Gateway increased from 61.9 to 67.5. Similar increases occurred between 08.24 and 10.33 at Mobil Newcomb, between 09.52 and 10.25 at Mobil Moolap, between 09.55 and 11.08 at Mobil Geelong North, and between 09.34 and 11.51 at Mobil Point Henry. In the meantime, at 09.57, Brumar lifted its price at Shell Norlane from 63.9 to 67.5. At 10.01, Leahy increased BP Hillford from 61.9 to 67.5. Similar increases are recorded for Apco Geelong South at 10.02 (assuming the correctness of the assertion that the computer at that outlet had not been adjusted for daylight saving), Apco Geelong East at 10.03, Apco Highton at 10.10, Apco Newcomb at 10.12 and Apco Geelong North at 10.18.
325 The ACCC relied heavily on the temporal proximity of the increases by Leahy and Apco, in conjunction with the phone call the previous afternoon, as indicative of the giving effect to of Arrangement No 1. In the light of the evidence about the proximity between phone calls and the stated times of price increases (see [197]), this is unlikely. Indeed, Ian Carmichael’s evidence was that it never occurred. Even if it be accepted that overnight price increases were sometimes the subject of telephone calls, these price increases occurred several hours after opening time for any of the Leahy sites (on the assumption that the evidence that Leahy liked to raise the prices for all of its sites at the same time is accepted). Further, the ACCC submission ignores the fact that two of what were regarded as the majors had already begun to move before 10.00 on 20 January. As their prices were set in Melbourne, it is safer to assume that they were the results of Melbourne price increases, rather than that the Brumar price increases were the result of the lengthy call from Leahy to Mr Heikkila, followed by the very brief call from Mr Heikkila to Mr Purtell, on the previous afternoon. (Mr Heikkila had already spoken to Mr Purtell for one minute and seven seconds at 16.19 on 19 January.)
326 At 10.19 on 20 January 1999, Leahy telephoned Peter Anderson for one minute and 41 seconds. Immediately afterwards, Leahy telephoned Mr Heikkila. At 10.23, Leahy telephoned Chisholm. At 11.11, Chisholm telephoned Jacques Bodourian and Leahy telephoned BP Corford Express. BP Corford Express increased its price of ULP from 63.9 to 67.5 at 11.31 and 7-Eleven increased its prices at 7-Eleven Newcomb and 7-Eleven Geelong East between 11.37 and 11.42, and between 11.33 and 11.50 respectively, from 61.9 to 67.9. The ACCC contended that Leahy’s call to Chisholm, and Chisholm’s call to Jacques Bodourian, should be seen as related, and should be seen as an attempt by Leahy to have 7-Eleven prices increased in accordance with its own and those of Apco. Similarly, the ACCC contended that Leahy’s call to BP Corford Express should be seen as an attempt to persuade BP Corford Express to increase. Both of these conclusions are unlikely. There is no indication of any complaint call about 7-Eleven to Leahy. Leahy telephoned Peter Anderson at 10.19, so that it can hardly be said that the purpose of the call was for Mr Anderson to complain, although Mr Anderson might have made a complaint during the call. Given that BP Corford Express had its prices set from Melbourne, and that Leahy had legitimate reasons for contacting BP Corford Express, it cannot be assumed that the phone call and the subsequent price increase are necessarily related. By 11.31, when its price was increased, BP Corford Express’s staff had had ample opportunity to become aware of surrounding price increases and to communicate them to Melbourne, where the decisions about its pricing were made.
327 On balance, my view is that the data for this period does not lend support to the ACCC’s case. On the basis of that data, when coupled with the oral evidence, I am not prepared to find that effect was given to Arrangement No 1.
11 – 12 March 1999
328 During this period, the ACCC alleges that Apco, Andrianopoulos and Liberty gave effect to Arrangement No 8. The low point of a price cycle in the Geelong petrol market appears to have been reached on Thursday, 11 March 1999, when prices as low as 58.5 were recorded. On that day, at 13.59, Chris Andrianopoulos telephoned Liberty. The call is timed at 10 seconds, suggesting that he was unsuccessful in speaking to whomever he was calling. Immediately afterwards, at 14.00, he rang Alan Shuvaly on the latter’s mobile phone. The call lasted one minute and 47 seconds. At 14.29, Peter Anderson rang Chris Andrianopoulos, and spoke for three minutes and three seconds. It is hard to see that this call was related to the earlier conversation between Mr Andrianopoulos and Mr Shuvaly, or that it was only about an impending price increase, given its length. More than two hours later, at 16.42, Mr Andrianopoulos spoke to Mr Shuvaly for 54 seconds. Mr Andrianopoulos again spoke to Mr Shuvaly for one minute and three seconds at 17.50.
329 In the meantime, at 14.30, BP Corford Express raised its price of ULP from 61.9 to 64.9. At 15.46, BP Corford Express dropped its price back to 61.9. At some time between 15.46 and 15.58, Mobil Grovedale increased its price from 58.5 to 65.9, but by 17.09, it had dropped its price back to 58.5. These attempts at testing the market, to see whether it would support an increase, appear to have no relationship whatever with any conversation between Mr Anderson, Mr Andrianopoulos and Mr Shuvaly. It is also hard to see how the calls between those parties could be said to be related to each other, because of the time lapse between them.
330 Mr Shuvaly was asked in his evidence-in-chief to look at the data for 11 and 12 March 1999. His interpretation of the phone calls between himself and Mr Andrianopoulos, and between Mr Andrianopoulos and Mr Anderson, was that they were sharing information about what they had observed by way of prices in the Geelong petrol market. They may also have been about other issues, prices outside Geelong, social matters such as football, or the Melbourne petrol market.
331 General price increases did not begin until the morning of 12 March 1999. At 09.01, Leahy increased the price at BP Hillford from 58.7 to 64.7. At 09.44, Caltex Quick Bite increased from 59.3 to 64.9. Apco began increasing its prices at 09.44, from 58.5 to 64.7. It began with Apco Geelong South at that time, followed by Apco Geelong East and Apco Geelong North at 10.04, Apco Newcomb at 10.26 and Apco Lara at 10.44. Oddly, Apco Highton is recorded as having decreased its price from 67.1 to 64.9 at 10.21. Brumar increased its prices to 64.9 or 66.9, beginning with Shell Latrobe Terrace at 10.08. The Mobil outlets increased to 64.7, beginning with Mobil Manifold Heights at 10.00. BP Corford Express caught up with the general rise late in the evening, at 22.53.
332 At some time on 12 March 1999, Andrianopoulos increased its price at BP Norlane from 58.9 to 64.7. On the same day, it dropped its price to 58.5. It increased the price again at some unknown time on Saturday, 13 March 1999 to 64.7. Liberty’s average price for 12 March 1999 moved from 58.5 to 63.2. As this is an average over some period, it cannot be said with any confidence to precisely what figure it increased its price, or at what time.
333 The ACCC submitted that the fact that Apco’s outlets and the Andrianopoulos outlet all increased to 64.7, and that Liberty also increased its price on the same day (it was submitted most likely some time in the morning, and to the same price), was evidence that the three had given effect to Arrangement No 8 by raising their prices to the same amount at or about the same time. The evidence points against this. The attempted rises by BP Corford Express and Mobil Grovedale on 11 March suggest that prices in the Melbourne petrol market had risen, and the operators of those outlets were attempting to precipitate a price increase in the Geelong petrol market. When the increase began in earnest, the data in Annexure B suggests that it was Leahy which started it, without any evidence of relevant telephone calls involving Leahy, Ian Carmichael or Michael Warner. One of the early risers on 12 March 1999 was the Caltex Quick Bite, confirming that the market move was probably a response to a move in the Melbourne market. The rises by Mobil outlets and Brumar, apparently without relevant telephone communications, suggest that they were following information from Melbourne.
334 Any telephone communication between Mr Andrianopoulos, Mr Shuvaly and Mr Anderson was many hours before any relevant price increase. The gaps between the telephone calls of those three on 11 March 1999 appear to be inconsistent with collusion about a price increase. Plainly, there was no urgency about passing on price information at that stage. The fact that Andrianopoulos, having raised its price to the market level at some time, dropped it back at some time until the following day also suggests an absence of collusion.
335 In my view, the case for giving effect to Arrangement No 8 in this period is not made out.
25 – 26 March 1999
336 The ACCC alleges that Leahy and Apco gave effect to Arrangement No 1 during this period. On Thursday, 25 March 1999, prices of ULP in the Geelong petrol market were generally falling, with a large number of outlets declining to 65.3 in the morning, and then declining further to 64.7 in the afternoon and 64.3 in the evening. At 15.45 on that day, Peter Anderson rang Leahy. The conversation lasted for one minute and two seconds. At 15.59, Leahy rang the United Fuels office and, at 16.16, Leahy rang Chisholm.
337 On the following morning, at 09.09, someone from Leahy left a 15-second message on Peter Anderson’s message bank. At 09.20, Leahy increased the price of ULP at BP Hillford from 64.7 to 70.5. It may be assumed that Leahy increased the prices at its other outlets similarly at about the same time. At 10.09, Apco began increasing its prices from 64.3 to 71.5, first at Apco Geelong South, then at Apco Geelong East at 10.12, Apco Highton at 10.20, Apco Newcomb at 10.21 and Apco Geelong North at 10.24. At 10.32, it reduced the price at Apco Geelong East from 71.5 to 70.5. This was followed by similar reductions at Apco Newcomb and Apco Geelong North at 10.50, Apco Highton at 10.52 and Apco Geelong South at 11.26. The price increase at Apco Lara was later than the general round of Apco increases, the price being increased from 64.3 to 70.5 at 10.35. In the meantime, from 10.05, the Mobil outlets also began increasing from 64.3 to 71.5, the first increase being at Mobil Latrobe Terrace. Brumar was still decreasing its prices, before joining in the increases from 11.07, with Shell Speedwings being the first to increase.
338 It is unlikely that Apco and Leahy gave effect to any arrangement or understanding on this occasion. The time elapsing between the conversation between Peter Anderson and anybody at Leahy and the commencement of any price increases is inconsistent with the oral evidence about the proximity of calls about prices to increases in prices. In his evidence, Mr Warner accepted that it was highly improbable that Leahy and Apco had agreed to go to 70.5, because they initially went to different prices. The fact that Apco subsequently reduced its prices to match those of Leahy does not suggest that the initial increase was the result of any communication between Apco and Leahy.
339 There is no data available for Chisholm during this period, so it is impossible to test whether the conversations between Leahy and Chisholm on 25 March 1999 were likely to have had any relationship to the earlier conversation between Peter Anderson and Leahy. The price at Shell Victoria Street fell from 65.7 to 64.3 at some time on 26 March, making it unlikely that the decision to reduce the price resulted from the telephone communication between Leahy and United Fuels on the previous day.
340 I am not satisfied that the increases of prices by Leahy or Apco during this period were the result of those parties giving effect to Arrangement No 1.
9 – 10 April 1999
341 The ACCC alleges that effect was given to Arrangements Nos 4 and 5 during this period. By the afternoon of Thursday, 8 April 1999, 69.5 appeared to be the most common price of petrol in the Geelong petrol market, particularly among the Apco, Mobil and Brumar outlets. It is worth noting that, on 8 April, Andrianopoulos reduced its price by 0.4 to 63.3 at some time during the day. At some time during that day, Liberty increased its price, because its average for the day moved from 63.3 on 7 April to 66.7 on 8 April. Also at some time during the day, United Fuels increased its price at Shell Victoria Street from 63.3 to 69.5. No data is available in Annexure B at that time in respect of Shell Waurn Ponds.
342 Prices remained relatively stable on 9 April. Andrianopoulos moved from 63.3 to 69.5, and then back to 63.3 at some time during the day. Liberty’s average price for the day increased to 69.5, suggesting a possible change to that price at the beginning of the day, as it is unlikely that Liberty would have adopted a price above that to which the market eventually moved.
343 The telephone call cycle on which the ACCC relied is said to have begun at 15.30, with a call from Ian Carmichael to his brother Phil Carmichael. There had already been calls from Phil Carmichael to Leahy, the first at 09.52 (lasting 15 seconds, which suggests that he did not speak to whoever he was calling) and the second at 11.09 (lasting two minutes and 50 seconds). At 14.52, someone from the Leahy office spoke to Phil Carmichael for one minute and two seconds. The call from Ian Carmichael to Phil Carmichael at 15.30 lasted one minute and 40 seconds. At 15.32, Ian Carmichael rang Chisholm, the call lasting one minute and 38 seconds. At 15.36, Ian Carmichael rang United Fuels. The call lasted only 22 seconds, suggesting that its intended recipient was not available. At 15.37, Ian Carmichael rang Eino Heikkila, the call lasting 46 seconds. At 15.38, Ian Carmichael rang Chris Andrianopoulos for 22 seconds. At 15.38, Mr Heikkila rang Garry Dalton for 40 seconds. At 15.48, Mr Heikkila again rang Garry Dalton for 17 seconds. These two calls of Mr Heikkila were transmitted through Lorne and Aireys Inlet respectively, suggesting that Mr Heikkila was travelling. The ACCC contended that the proximity of these calls to the call from Ian Carmichael to Mr Heikkila suggests that Mr Heikkila was passing on to Mr Dalton information about a forthcoming price increase, which Mr Carmichael had provided. At 16.20, Mr Heikkila rang the Leahy office from Torquay, the call lasting 59 seconds. At 16.28, the Leahy office rang Mr Heikkila back for two minutes and five seconds.
344 No significant price increases occurred until the morning of Saturday, 10 April 1999. The first such rises may well have been at the 7-Eleven outlets, whose prices were set from Melbourne, or at some Mobil outlets. At some time between 07.49 and 09.35, Mobil East Belmont increased from 69.5 to 74.5, as did Mobil Point Henry at some time between 08.00 and 13.34 and Mobil Moolap at some time between 09.27 and 13.23. At some time between 08.46 and 08.55, 7-Eleven Geelong East increased from 69.5 to 74.5. At some time between 08.52 and 09.05, 7-Eleven Newcomb recorded the same increase. Apco began to move its prices from 69.5 to 74.5 with Apco Geelong East at 08.53, Apco Geelong South at 09.13, Apco Geelong North at 09.24 and Apco Lara at 09.27. At 10.13, Apco Highton moved from 69.9 to 74.5. In the meantime, other Mobil outlets also moved from 69.5 to 74.5, with Mobil Latrobe Terrace moving at 09.15, Mobil Manifold Heights at 09.28, Mobil Newcomb between 09.02 and 09.33, Mobil Geelong North at 09.34, Mobil Highton at 09.35, Mobil Belmont at 09.39, Mobil Gateway between 09.23 and 09.51, Mobil Corio Village between 09.56 and 10.24 and Mobil Grovedale between 09.00 and 11.02. Leahy moved its prices by the same amount at 09.19, as exemplified by BP Hillford’s rise at that time. Caltex Quick Bite moved by the same amount at 09.33. The first of the Brumar sites to move from 69.5 to 74.5 was Shell Belmont at 09.37. Shell Anglesea, Shell Highton and Shell Westoria moved from 71.5 to 76.5 at 10.22, 10.29 and 12.52 respectively. Shell Speedwings and Shell Latrobe Terrace moved from 69.5 to 74.5 at 10.53 and 11.15 respectively. At 13.57, Apco began discounting to 73.7. The discounting cycle began again, with the majors (from 14.08) and Leahy (at 17.57) following. On the morning of 10 April 1999 (it closed in the afternoon) Shell Victoria Street’s average price moved from 69.5 to 74.5.
345 It is significant that the price increases of the alleged parties to Arrangements Nos 4 and 5 (Leahy, United Fuels and Brumar) came in the context of a general price rise in the Geelong petrol market, precipitated (as far as the data in Annexure B demonstrates) by a virtually simultaneous move by 7-Eleven, Apco and Mobil. There is no suggestion of telephone contact between Leahy and Apco, or between Leahy and 7-Eleven about this proposed price increase. The likelihood is that, prior to 09.00 on 10 April, either Apco or 7-Eleven began the round of price increases in Geelong East, and that the remaining participants in the market followed suit, as a result of spotting board prices. It is possible that, in one of Phil Carmichael’s conversations with Leahy or Ian Carmichael on 9 April, Phil Carmichael gave Ian Carmichael information about a proposed price increase for Mobil outlets. Phil Carmichael also had two telephone conversations with someone at the Leahy office at 09.04 and 09.15 on 10 April. The time lapse between the call cycle on 9 April and the price increases on 10 April tends to suggest that the two were not connected and is inconsistent with the oral evidence about the usual proximity of price information calls to price increases. There is also a variation between the prices to which Brumar outlets went on 10 April, suggesting that Mr Dalton’s authorisation of the site managers to set their own prices within limits was in operation.
346 I am satisfied on the balance of probabilities that the price increases that occurred at the outlets of Leahy, United Fuels and Brumar on 10 April did not involve those parties giving effect to any arrangement or understanding between them. As I have said, it is unlikely that the telephone conversations on 9 April were connected with the price increases on 10 April.
20 April 1999
347 The ACCC alleges that, on this day, Leahy and United Fuels gave effect to Arrangement No 4 and United Fuels and Brumar gave effect to Arrangement No 5. On 19 April 1999, and early on 20 April, retail prices of ULP in the Geelong petrol market were tending to move downwards. On 19 April, the average price at Shell Victoria Street dropped from 67.7 to 66.5. Most other outlets were at 66.9 by the end of the day. On 20 April, at 06.17, Apco Geelong North moved to 66.5. Several Mobil outlets also moved from 66.9 to 66.5 over the next hour and a half or so, while three significant Brumar outlets moved to 66.5, Shell Belmont at 07.54, Shell Latrobe Terrace at 07.57 and Shell Speedwings at 08.18.
348 At 08.26, Phil Carmichael rang the Leahy office. The call lasted 38 seconds. At 08.31, the Leahy office rang the Apco office for 17 seconds. At 08.57, the Leahy office again rang the Apco head office, the call lasting one minute and five seconds. Very soon after that call, the Leahy office rang the United Fuels office for one minute and 19 seconds at 09.00 and BP Corford Express for 46 seconds at 09.01. At 09.07, Eino Heikkila rang Garry Dalton for 21 seconds. The call was apparently returned at 09.11, for one minute and 10 seconds. The ACCC relied on the contact between the Leahy office and the Apco office, between Leahy and United Fuels, and between Mr Heikkila and Mr Dalton as the foundation for subsequent price increases by Apco, Leahy, United Fuels and Brumar.
349 At 09.16, the price at Apco Geelong North moved slightly downwards to 66.3. At 09.17, Leahy moved its price at BP Hillford from 66.9 down to 66.3. Someone in the Leahy office spoke to someone at Chisholm for one minute and 49 seconds at 09.25. There was also a call from the Leahy office to the United Fuels office at 09.27, lasting 31 seconds. At 09.29, Mobil Geelong North moved down from 66.5 to 66.3, and other Mobil outlets followed. At 09.39, Shell Norlane dropped from 67.8 to 66.5, and at 09.43, Shell Highton dropped from 69.7 to 68.5. Thus, prices were still moving slightly downwards.
350 The price increases may have begun with Mobil outlets. Mobil Point Henry moved from 66.5 to 74.5 between 09.22 and 10.47. Mobil East Belmont moved from 66.9 to 74.9 between 09.26 and 10.49, Mobil Gateway from 66.5 to 74.5 between 09.40 and 10.30 and Mobil Moolap from 66.5 to 74.5 between 09.44 and 10.25. The Apco moves began with Apco Newcomb at 10.03, moving from 66.9 to 74.5. This was followed two minutes later by Apco Geelong South, with an identical move. At 10.09, the price at Brumar’s Geelong Car Spa dropped from 67.7 to 66.5, but the price at Brumar’s Shell Westoria rose from 69.7 to 76.5. At 10.10, Apco increased its price at Apco Geelong East from 66.9 to 74.5. At 10.21, Shell Latrobe Terrace increased from 66.5 to 74.5. Apco Lara also increased from 66.9 to 74.5 at 10.26. At 10.28, Mobil Manifold Heights increased from 66.3 to 74.5. At 10.31, Leahy increased its price at BP Hillford from 66.3 to 74.5. Other participants in the market also increased. Notably, the price at Shell Norlane moved from 66.5 to 74.5 at 10.55. At 10.59, Caltex Quick Bite increased from 66.7 to 73.7. Although some rises were still taking place, Apco began discounting at 11.10 at Apco Geelong South, moving from 74.5 to 73.9. Over the next few minutes, it reduced its prices to 73.9 at Apco Geelong East and Apco Newcomb. Contrary to this trend, Apco did not increase its price at Apco Highton from 66.9 to 74.5 until 11.15 and, at 11.20, increased its price at Apco Geelong North from 66.3 to 73.9. At 11.57, Shell Highton moved from 68.5 to 76.5. Increases from 66.5 to 74.5 did not occur at Geelong Car Spa, Shell Belmont and Shell Speedwings until 13.49, 14.25 and 14.33 respectively. At 14.37, Leahy reduced BP Hillford from 74.5 to 73.9. In the course of the afternoon, discounting saw the prices at a number of outlets reduced to 73.5, 73.7 or 73.9. At some time during the day, United Fuels dropped its price at Shell Victoria Street from 66.5 to 66.3. That price increased from 66.3 to 73.9 at a later time, which the ACCC submitted was probably in the late morning (based on volumes of sales at the respective prices). The fact that 73.9 was chosen suggests that whoever made the decision was aware that prices were already coming down from the peak of 74.5. The average price at Shell Waurn Ponds increased from 67.2 to 71.1, making it difficult to discern the time or amount of the rise.
351 The ACCC contended that the specific terms of Arrangements Nos 4 and 5 that were said to be put into effect involved a price rise to 74.5 at around 10.00. This is one of the few occasions on which it can be said that a call cycle occurred within two hours of significant price increases, at least on the part of two parties. The connection between the two is by no means clear. As I have said, so far as the data in Annexure B shows, it might well have been the Mobil outlets that led the price increase. It may be that the initial calls from the Leahy office to the Apco office were the result of information from Phil Carmichael a few minutes earlier that Mobil prices were about to increase.
352 If the call cycle concerned a price increase to 74.5 at 10.00, it is somewhat strange that Apco, Leahy and Brumar continued to decrease their prices for some time after the calls. Decreases occurred at Apco Geelong North at 09.16, BP Hillford at 09.17, Shell Norlane at 09.39, Shell Highton at 09.43 and Geelong Car Spa at 10.09. If the phone calls gave rise to an understanding that there would be a price increase to 74.5 at about 10.00, these decreases seem at odds with that understanding. The Apco and Leahy decreases were only 0.2 and 0.6 respectively, hardly worth making if the price was due to increase by 8.0 or thereabouts within 45 minutes. The Brumar decrease at Geelong Car Spa was after the allegedly appointed time for an increase. The timing of Brumar’s price increases also suggests that it was not the result of the communication between Mr Heikkila and Mr Dalton. In addition, whenever the increase at Shell Victoria Street occurred, it was not an increase to 74.5. Rather, the decision to increase appears to have been taken with knowledge that prices had eased back to 73.9, and for the purpose of matching that price.
353 In short, despite the relative temporal proximity of the telephone communications to the price rises, there is every reason to think that the price increases by Apco, Leahy, United Fuels and Brumar on 20 April 1999 were not the result of giving effect to any arrangement or understanding, but were simply a matter of following a price rise that had occurred in the Melbourne petrol market. The fact that United Fuels did not adopt the same price as that supposedly arranged between it and Leahy, and between it and Brumar leads to the conclusion that there was no implementation of either Arrangement No 4 or Arrangement No 5, because the supposed middle link in the chain is missing: the oral evidence does not suggest that United Fuels would convey to Brumar its intention to implement a price increase proposed by Leahy, which it did not intend to implement itself.
28 April 1999
354 The ACCC alleges that, on this day, Leahy and United Fuels gave effect to Arrangement No 4. It acknowledges that there is no evidence in Annexure B of contact between Leahy and Apco, but asserts it is possible that some form of contact between those two, other than by telephone, might have been responsible for what it says is Leahy’s communication with United Fuels and also with BP Corford Express.
355 At the beginning of 28 April 1999, the most common retail price for ULP in the Geelong petrol market was 66.5. At some time on the day before, Andrianopoulos had dropped its price from 68.7 to 66.5, and then raised it to 66.7. At 09.09 on 28 April, someone in the Leahy office rang Chris Andrianopoulos. The conversation lasted one minute and 47 seconds. At 09.11, Leahy telephoned United Fuels for three minutes and 26 seconds. At 09.15, Leahy telephoned BP Corford Express for one minute and 53 seconds. The ACCC relied on the evidence of Anton Maurer that he only ever received calls from the Leahy office about price rises (although Ian Carmichael said that Mr Maurer was a keen punter, and he did speak to Mr Maurer about betting).
356 Leahy raised its price at BP Hillford (and presumably at its other outlets) from 66.5 to 71.5 at 10.40. United Fuels raised its price at Shell Victoria Street from 66.5 to 71.5 at some time on that day, probably during the morning, having regard to the volumes of sales recorded at the two different prices. The daily average price at Shell Waurn Ponds increased from 66.4 to 70.2, making it difficult to determine the amount or time of the increase. The only evidence to support the implementation of Arrangement No 4 is therefore the fact that both Leahy and United Fuels (at Shell Victoria Street) increased their prices in the morning, and there had been communication between them by telephone earlier that morning.
357 It is also necessary to look at other price movements. There can be little doubt that the rise from 66.5 to 71.5 was initiated by the Mobil outlets. Such rises occurred at Mobil East Belmont between 07.31 and 10.35, Mobil Grovedale between 08.15 and 09.59, Mobil Gateway between 08.37 and 11.36, Mobil Corio Village between 09.04 and 11.02, and other Mobil outlets during the morning. Apco began implementing the same increases at Apco Geelong South at 10.02, Apco Newcomb at 10.16, Apco Geelong East at 10.22 and Apco Geelong North at 10.43. These increases might well have been a response to Mobil increases, or to information about the Melbourne petrol market. Brumar increased its prices identically at Shell Belmont at 10.26, and Shell Norlane at 10.27. Shell Westoria dropped its price from 68.7 to 68.5 at 10.28, the same time as Shell Latrobe Terrace increased from 66.7 to 71.5. Shell Anglesea and Shell Highton moved from 68.7 to 73.5 at 10.30 and 10.34 respectively. Geelong Car Spa also moved from 66.5 to 71.5 at 10.47. Whatever motivated changes in Brumar’s prices, it was not communication from United Fuels or Eino Heikkila. According to Annexure B, Mr Heikkila rang Garry Dalton at 10.58, the call lasting only 18 seconds. Mr Dalton rang Mr Heikkila at 11.05 and they spoke for one minute and 56 seconds. 7-Eleven participated in the general run of price increases, moving its prices from 66.5 to 71.5 at 7-Eleven Geelong East at 10.46 and 7-Eleven Newcomb between 10.54 and 10.59. Interestingly, Andrianopoulos, on whose communication from Leahy at 09.09 the ACCC relied, increased its price from 66.7 to 72.5 and dropped it back to 66.5 at some time during the day. BP Corford Express increased at 11.48 from 66.7 to 71.3.
358 It is somewhat surprising that the ACCC should rely on the data in Annexure B relating to 28 April 1999 as seeking to establish that effect was given to a single arrangement. In the light of the evidence about legitimate reasons why Leahy would ring United Fuels, it is not possible to surmise that Leahy was passing on information about a forthcoming price increase, obtained from Apco by means other than a telephone call. Even assuming that someone at Leahy had received information from Apco, there is no explanation as to why no attempt was made to telephone other people in Ian Carmichael’s supposedly usual call cycle. The price data for that day provides every indication that Leahy simply followed a general increase in the market, initiated by Mobil, Apco and Brumar. In the absence of information about a precise time of any United Fuels increases, it would be speculating to suggest that they resulted from the telephone call at 09.11. If the telephone call from Leahy to BP Corford Express was about prices, it was plainly ineffective to persuade BP Corford Express to increase its prices either to the same level as others or at the same time. BP Corford Express increased its prices later than most of the market participants, and to a slightly lower amount. On the evidence, it is more probable than not that the price increases by Leahy and United Fuels on 28 April 1999 were not the result of giving effect to any arrangement or understanding between them.
7 – 8 May 1999
359 The ACCC alleges that, in this period, Leahy and Apco gave effect to Arrangement No 1, Leahy and United Fuels gave effect to Arrangement No 4 and United Fuels and Brumar gave effect to Arrangement No 5. The first thing to note about this period is that the price movements in the course of the two days were generally quite small, mostly within a four-cent range.
360 On the morning of 7 May, prices generally were falling so that, by early afternoon, the Caltex Quick Bite, a number of Mobil outlets and several Apco outlets were at 70.3. The only price rise that occurred on 7 May was at BP Corford Express, which moved from 70.9 to 72.9 at 15.00.
361 At 14.56, Peter Anderson telephoned the Leahy office for a call lasting two minutes and 52 seconds. Between 15.11 and 15.15, Ian Carmichael rang Chisholm for two minutes and 16 seconds, Phil Carmichael for 57 seconds and United Fuels for two minutes and eight seconds. At 15.18, Ian Carmichael rang Peter Anderson for two minutes and 33 seconds. The ACCC characterised this call as Ian Carmichael reporting to Mr Anderson the outcome of his call cycle, although there is no oral evidence that Ian Carmichael ever reported back to Mr Anderson, and it seems unlikely that he would have needed to do so if arrangements or understandings of the kind alleged existed.
362 At 15.43, United Fuels telephoned Garry Dalton for one minute and 37 seconds. At 16.49, the Leahy office rang the Balgee depot for 30 seconds and at 16.50, the Leahy office rang Eino Heikkila.
363 At 09.08 on the morning of 8 May, a telephone call lasting three minutes and 16 seconds was made by the Leahy office to BP Corford Express. This would be a remarkably long call for a discussion about a proposed price increase, especially one as modest as that which occurred. At 09.40 on that morning, Leahy increased its price at BP Hillford from 70.3 to 72.5. At 09.54, the price at Apco Geelong South increased from 70.3 to 73.5. Three minutes later, Shell Speedwings lowered its price from 70.5 to 69.7. Apco raised its price at Apco Geelong North from 69.5 to 72.5 at 10.04, and at Apco Geelong East and Apco Newcomb from 70.3 to 72.5 at 10.08. In the meantime, between 08.54 and 10.00, Mobil Newcomb went from 67.2 to 70.3, and some time between 09.51 and 10.05, Mobil Corio Village reduced from 69.7 to 69.5. Prices at Brumar outlets continued to fall slightly until 10.24, when Shell Belmont increased from 69.7 to 72.5. Even after that, there were other falls at Brumar outlets until 11.10, when Shell Highton moved from 71.7 to 74.5.
364 At 11.09, Ian Carmichael telephoned Chisholm for 26 seconds. At 11.15, he called Mr Heikkila for one minute and six seconds. At 11.18, Mr Heikkila called Mr Dalton for 10 seconds, suggesting that there was little, if any, conversation between them. At 11.19, Leahy dropped its price at BP Hillford from 72.5 to 69.5.
365 There then followed a round of telephone calls, in which Ian Carmichael rang Mr Heikkila at 11.26 for 30 seconds, Mr Anderson (only reaching his message bank) at 11.28, Mr Heikkila again at 11.30 for 29 seconds, and at 11.31 Phil Carmichael for one minute and 51 seconds. In the meantime, Mr Anderson rang the Leahy office for 16 seconds. Mr Anderson rang Ian Carmichael at 11.36 for 20 seconds and the Leahy office again at 11.45 for 14 seconds. At 11.50, Ian Carmichael rang Mr Anderson and they spoke for one minute and 21 seconds.
366 It was only in the course of this round of calls that Brumar’s price rose to 72.5 at Geelong Car Spa and Shell Latrobe Terrace at 11.31, and Shell Speedwings at 11.34. It was also only during this round of calls that Apco increased its price at Geelong North from 69.5 to 72.5 at 11.39. Immediately after the last call between Ian Carmichael and Mr Anderson, Apco began reducing its prices. At 11.51, Apco Geelong South moved from 73.5 to 69.5, at 11.54 Apco Newcomb moved from 72.5 to 69.5, and at 11.55 both Apco Geelong East and Apco Geelong North also reduced from 72.5 to 69.5. Prices in the market trended downwards for the rest of 8 May. At some time during the day (the ACCC submitted mid-morning, based on the volume of sales at the respective prices), United Fuels increased the price at Shell Victoria Street from 70.9 to 72.5. The only figures available for Shell Waurn Ponds are an average for three days, 7, 8 and 9 May, being Friday, Saturday and Sunday. The average price for that period decreased from 70.3 to 69.1.
367 The nature of the price movements during this period, both as to their magnitude and as to their timing, makes it very difficult to say that effect was given to any arrangement or understanding. The price movements that occurred show no sign of coordination, either among the market participants, or within their own organisations. The gap between the call cycle on the afternoon of 7 May and the start of price increases on the morning of 8 May is too long to establish any connection between the two events. At best, from the ACCC’s point of view, it could only be said that someone at Leahy (probably Ian Carmichael) was attempting to persuade others to move their prices up, but the attempt failed. This explanation would not explain why Mr Carmichael did not broaden his call cycle to include others he said were often part of it. The more likely explanation is that the price increase by BP Corford Express at 15.00 on 7 May reflected a modest increase in the Melbourne petrol market, which flowed through into the Geelong petrol market on the following day, in a sporadic fashion. Even before any such increase had taken hold, discounting was already occurring, either by reduction in prices, or by those who raised them raising them to a figure lower than that adopted by some others. Even assuming that the telephone calls to which I have referred were about petrol prices, it cannot be said that they resulted in the parties to them giving effect to any arrangement or understanding.
17 – 18 June 1999
368 The ACCC alleges that on these days, effect was given to Arrangements Nos 1, 4 and 5. There was a considerable amount of telephone contact between the parties to these alleged arrangements or understandings. Before dealing with the telephone calls, however, it is worthwhile examining the data in Annexure B as to petrol price movements.
369 On this occasion, the Apco outlets did not move in the same direction at the same time. Their movements were spread over almost a 48-hour period. Annexure B records price rises beginning on 17 June with Apco Newcomb increasing from 60.9 to 67.9 at 00.05, and Apco Lara moving from 61.1 to 67.9 at 00.14. The ACCC was inclined to suggest that, because these increases were anomalous, they had erroneously been put in Annexure B on 17 June, when they really belonged just after midnight on 18 June. In an ACCC document, which was used in the compilation of Annexure B, these entries appear and are marked as ‘confirmed’. In the circumstances, it would be wrong to assume that the ACCC’s allegation is correct, and that therefore the entries are anomalous and should be treated as if they are 24 hours out, and then to use them to prove the ACCC’s allegations. In any event, even if these figures are anomalous, there are still apparently uncoordinated movements in the Apco price.
370 At 13.26 on 17 June, Apco Geelong North moved from 61.1 to 60.9, following a general downward move by Mobil outlets, particularly Mobil Geelong North, which had made a similar move at 12.05. At 14.40, BP Hillford also dropped its price from 61.1 to 60.9.
371 Towards evening, prices at Apco outlets began to vary in an unusual way. At 18.03, Apco Geelong East rose from 61.1 to 67.9. At 18.32, Apco Geelong South dropped from 61.1 to 60.9. At 18.33, Apco Newcomb also dropped from 61.1 to 60.9 (this possibly lends support to the anomaly theory, because there is no record of Apco Newcomb having lowered its price to 61.1 during the day). At 19.24, Apco Highton moved from 61.1 to 60.9. At 22.13, Apco Highton increased from 60.9 to 67.9. At 23.46, BP Hillford changed from 60.9 to 67.9.
372 At 00.29 on 18 June, Apco Geelong North moved up from 60.9 to 67.5. If it be assumed that the moves at Apco Newcomb and Apco Lara, shown as occurring a little more than 24 hours earlier, actually occurred only a few minutes earlier, it should be noted that the price levels differed by 0.4. At 14.30, Apco Geelong East and Apco Newcomb each dropped from 67.9 to 67.5, 14 hours after Apco Geelong North had set its price at the latter level. Apco Lara similarly dropped from 67.9 to 67.5 at 14.55 and Apco Highton likewise at 15.26. BP Hillford made the same price cut at 17.31, to match what had become the generally applicable price at Apco and Mobil outlets. It was not until 23.54 on 18 June that Apco Geelong South increased its price from 60.9 to 67.9.
373 United Fuels increased its price at Shell Victoria Street from 61.1 to 67.5 at some stage during 18 June. The ACCC contended that this was on opening, apparently based on figures for sales volumes. This appears unlikely, as 67.5 was a price not adopted by anybody other than Apco Geelong North and BP Corford Express (at 08.46) until Caltex Quick Bite began a downward move from 67.9 to 67.5 at 13.24. Given that United Fuels was not a price leader, it is unlikely that Shell Victoria Street opened at 67.5 on the morning of 18 June. The data from Shell Waurn Ponds suggests some kind of an increase on 18 June, when the average price moved from 61.1 to 67.2.
374 Brumar sites recorded no change on 17 June and no increase until 08.29 on 18 June, when Shell Speedwings increased from 61.1 to 67.9. By that stage, a number of Mobil outlets had already increased to the same price, and other Mobil outlets followed suit during the morning. At 08.53, Geelong Car Spa moved from 61.1 to 67.9. Identical moves were made by Shell Belmont at 09.35, Shell Westoria at 09.40, Shell Norlane at 11.18 and Shell Anglesea at 13.51. Finally, Shell Latrobe Terrace increased from 61.0 to 67.9 at 16.56.
375 The apparently uncoordinated timing of these price increases makes it difficult to suggest that they were the result of giving effect to any arrangement or understanding as to amount and timing. When the telephone calls did come, if the data about the early Apco moves is correct, the price increases at Apco Newcomb and Apco Lara had already occurred. On 17 June, what the ACCC contended is a call cycle was precipitated not by either Apco or Leahy, but by Eino Heikkila ringing Leahy at 13.03, for 29 seconds. Immediately afterwards, Mr Heikkila rang Ian Carmichael on his mobile for 28 seconds. At 13.10, Mr Heikkila rang the Leahy office for one minute and six seconds. At 13.11, Mr Heikkila rang Garry Dalton for 29 seconds. At 13.12, the Leahy office rang Peter Anderson for 15 seconds. At 13.14, the Leahy office rang the Apco office for 32 seconds. The shortness of these two calls from Leahy suggests that Mr Anderson was unavailable either on his mobile phone or at the office. Indeed, he must have received a message, because he rang the Leahy office at 14.10, his call being transmitted through Skye. In the meantime, at 13.16, Michael Warner had rung Chisholm for two minutes and 31 seconds. Mr Warner also rang Mr Heikkila at 13.39 for 46 seconds. At 14.52, Mr Anderson again rang the Leahy office, for two minutes and one second, from Seaford. At 15.08, Mr Anderson rang Chris Andrianopoulos from Carrum Downs for 25 seconds. At 15.37, there was another call from the Leahy office to Chisholm, lasting one minute and two seconds. At 16.01, Mr Anderson rang the Liberty office for 37 seconds. At 16.19, the Leahy office rang David Mortimer. At 16.24, Mr Anderson again rang the Leahy office for one minute and two seconds. At 16.30, the Leahy office rang Chisholm for two minutes and 23 seconds. At 16.32, the Leahy office rang United Fuels for 46 seconds. At 17.34, Mr Heikkila rang Mr Dalton for 46 seconds. The Apco price changes, to which I have already referred, then occurred. Leahy’s price increase apparently occurred at or near closing time for BP Hillford that night.
376 Overnight, Mobil prices began to increase. Between 18.20 on 17 June and 07.24 on 18 June, Mobil Moolap moved from 60.9 to 67.9. A move of the same magnitude occurred at Mobil Newcomb between 18.58 on 17 June and 07.21 on 18 June. At 07.04 on 18 June, Mobil Geelong North also increased its price from 60.9 to 67.9.
377 There were more telephone calls on 18 June. At 07.49, the Leahy office called Phil Carmichael. It appears that the latter may not have been available, because the call was timed only for 10 seconds. At 07.52, the Leahy office reached Mr Heikkila’s message bank. At 07.56, the Leahy office made another attempt to reach Phil Carmichael, this time for 21 seconds. At 08.11, the Leahy office rang David Mortimer for 12 seconds. At 08.35, the Leahy office rang Mr Heikkila for one minute and 19 seconds. The Brumar increases had already begun. At 09.18, Ian Carmichael called Gordon Primmer for 21 seconds. At 09.20, Gordon Primmer rang Stan Kerr for 23 seconds. The ACCC submitted that this was an attempt by Ian Carmichael to use Mr Primmer as an intermediary, to persuade United Convenience to increase its price. At some stage on 18 June, United Convenience increased its price from 60.9 to 67.7 and later dropped it back to 67.3. At 09.23, the Leahy office also called BP Corford Express for one minute and 35 seconds. The ACCC characterised this call as an attempt to make sure that the price increase would stick.
378 Given the timing of the supposed call cycles and the timing of price changes, it is very difficult to see a relationship between them. Mr Warner indicated that he would have expected to see an earlier price rise, given the timing of the calls. While it is possible that there was information transmitted about pricing, there is none of the orderliness that would be expected if there were arrangements or understandings being put into effect. The pattern of phone calls is certainly not the classic pattern described by Ian Carmichael, in which he received a phone call from Peter Anderson, and then phoned a number of other participants in the Geelong petrol market. In this case, the call cycle did not begin with Mr Anderson, and the calls were spread over several hours. They appear to bear no relationship to the price changes. In my view, it is unlikely that any arrangement or understanding in relation to prices was put into effect by means of these calls during this period.
22 – 23 June 1999
379 In this period, the ACCC alleges that Leahy and Apco gave effect to Arrangement No 1 and that Leahy and United Fuels gave effect to Arrangement No 4. On the morning of Tuesday, 22 June, prices at Mobil and Apco sites decreased to 64.9. Some others were above this level. Shell Victoria Street and Shell Waurn Ponds had both apparently finished the previous day at 65.7. One of those above the general level was BP Hillford, which moved its price down from 65.1 to 64.9 at 12.22. In the early afternoon, Mobil and Apco outlets eased further to 64.7.
380 At 09.09 on 22 June, Peter Anderson rang the Leahy office for one minute and 40 seconds. At 10.22, the Leahy office attempted to get Mr Anderson, but reached his message bank. At 11.05, Mr Anderson again rang the Leahy office for one minute and eight seconds. Twenty minutes later, the Leahy office rang Gordon Primmer for one minute and 33 seconds. Mr Primmer then rang Stan Kerr for one minute and 10 seconds at 11.28, followed by the Leahy office for 14 seconds at 11.29. The Leahy office rang Mr Anderson at 11.31, but only for eight seconds. At 12.13, Mr Primmer again rang the Leahy office for 20 seconds, and then immediately reached Michael Warner’s message bank. The ACCC submitted that this chain of calls involved the passage of prospective price information from Mr Anderson to Leahy, to Mr Primmer and to Mr Kerr. If so, the information had no effect so far as Mr Kerr was concerned, because the price at United Convenience dropped from 65.1 to 64.5 in three falls in the course of 22 June, and followed the market up to 69.5, before discounting to 68.7 in three more steps on 23 June.
381 Another round of calls, on which the ACCC relied, began at 16.46 on 22 June, when Mr Anderson rang the Leahy office for one minute and 41 seconds. At 16.48, the Leahy office rang Chisholm. At 16.52, the Leahy office rang United Fuels. At 17.29, Chisholm rang Jacques Bodourian. If this chain of calls involved the passage of prospective price information, it is impossible to tell whether it had any effect on prices at Chisholm or 7-Eleven. No data is available at this stage in Annexure B for Chisholm. Annexure B does not contain any record of any 7-Eleven price change on either of the days in this period.
382 The price increases began at 21.35 on 22 June, and were led by Mobil outlets. At that time, Mobil Geelong North increased from 64.7 to 69.9. Identical increases were recorded at Mobil Highton at the same time and at 23.08 at Mobil Latrobe Terrace. It is possible that some Mobil sites went up earlier than Mobil Geelong North. Mobil prices went to 69.9 at Mobil Gateway between 18.46 on 22 June and 07.02 on 23 June, at Mobil Corio Village between 18.53 on 22 June and 04.37 on 23 June, at Mobil Moolap between 18.59 on 22 June and 07.14 on 23 June and at Mobil Newcomb between 19.39 on 22 June and 07.21 on 23 June. BP Hillford increased from 64.9 to 69.9 at 23.31 on 22 June. According to Mr Warner’s evidence, what probably happened was that the phone calls earlier in the day were about a price rise overnight, and he would have given instructions for this price increase to occur before he ceased work for the day. The first recorded Apco increase was at Apco Geelong East, from 64.7 to 69.9 at 23.33. Apco Lara increased by the same amount at 23.57. At 00.20 on 23 June, Mobil Belmont increased to 69.9. Apco Geelong North did not rise until 00.32, when it also moved from 64.7 to 69.9. Apco Highton followed at 01.27.
383 At 06.22, Apco Geelong North reduced its price by 0.4 to 69.5, followed at 06.30 by Mobil Geelong North. At 06.56, the first Brumar rise was recorded, at Shell Belmont, from 65.1 to 69.9.
384 Prices at Apco and Mobil outlets eased to 69.5 during the morning, apparently led by Apco Geelong North.
385 At 07.54 on 23 June, Ian Carmichael rang BP Corford Express for one minute and 18 seconds. BP Corford Express increased its price from 65.5 to 69.9 at 08.45. At 08.49, BP Hillford joined the downward trend of Mobil and Apco sites, by easing to 69.5. Brumar prices continued to increase to 69.9 or thereabouts.
386 At 10.12 on 23 June, the Leahy office rang Eino Heikkila for 39 seconds. At 10.30, the Leahy office rang BP Corford Express for 18 seconds. At 11.19, the Leahy office reached Mr Heikkila’s message bank. At 12 noon, BP Corford Express eased its price to 69.5.
387 United Fuels increased its price at Shell Victoria Street from 65.1 to 69.5 at some time on 23 June. The ACCC contended that this increase was on opening. If so, Mr Heikkila must have been aware of the easing of prices from about 06.20 that morning. He was clearly not giving effect to any arrangement or understanding that prices would increase overnight to 69.9. The average price at Shell Waurn Ponds is shown in Annexure B as increasing on that day from 65.0 to 65.5. The ACCC contended that this is an error in Annexure B, and the figure should read 68.5. Any such error ought to have been corrected as a result of the audit to which I have referred in [139], but the figure remains the same in the latest version of Annexure B. Even if there were an error, the suggested figure indicates an increase at some time during the morning of 23 June. It is inconsistent with the setting of a price at 69.9, or even at 69.5 on opening.
388 Even disregarding Ian Carmichael’s evidence about the temporal connection between telephone calls and price rises, it is clearly not possible to say that effect was given to Arrangement No 4 during this period. The only relevant call was from the Leahy office to United Fuels at 16.52 on 22 June. On the ACCC’s theory, Leahy had been in possession of information about a prospective price increase since Peter Anderson called the Leahy office at 11.05 that morning. Even assuming it was the call from Mr Anderson at 16.46 that alerted Leahy, and that earlier calls on that day should be disregarded, it is difficult to believe that Arrangement No 4 was carried into effect. The Leahy prices increased to 69.9 on closing that evening (exemplified by BP Hillford, the only data available). Accepting that Mr Warner would have given instructions for this increase shortly after the Leahy office spoke to the United Fuels office, it would have been expected that Shell Victoria Street would have lifted its price to 69.9 on opening. Instead, its price increase was to a lower amount. It would also have been expected that Shell Waurn Ponds would have increased on opening to 69.9. Manifestly, it did not.
389 It is also difficult to say that Arrangement No 1 was carried into effect. The ACCC did not attempt to characterise the call from Leahy to Chisholm at 16.48 and the call from Chisholm to Mr Bodourian at 17.29. The evidence is that, if an increase was occurring and 7-Eleven was not participating, Leahy sometimes rang Chisholm as a means of communication with Mr Bodourian, to attempt to persuade 7-Eleven to increase its prices. At the time of the call from Leahy to Chisholm, there was no price rise in progress. The time lapse between that call and the call from Chisholm to Mr Bodourian suggests no connection at all between them.
390 It is true that Leahy and Apco increased their prices to 69.9 overnight. It is also likely that Apco’s price rise to that figure in the market was precipitated by the increases at Mobil outlets. The likelihood is that the increases in Geelong were triggered by increases in Melbourne, which the Mobil outlets were following. There may have been information shared about that Melbourne increase. It is unlikely that the sharing of information involved any specific reference to a time. If it did, Apco reneged on it very swiftly when it led the price drop to 69.5 at 6.22 on 23 June.
391 The ACCC characterised Ian Carmichael’s call to BP Corford Express at 7.54 on 23 June as a follow-up call, because BP Corford Express had not increased its price. This may have been so, although it is clear that BP Corford Express was never involved in any arrangement or understanding to increase prices, which were set in its case from Melbourne. Just how the call from Leahy to BP Corford Express at 10.30 should be characterised is difficult. Leahy had already begun to reduce its prices, in line with the Mobil and Apco outlets by that time. Interestingly, BP Corford Express followed suit an hour and a half after the call, although the evidence is overwhelming that there were never phone calls about price decreases.
392 In all, it is clear that it is unlikely that effect was given to Arrangement No 4 in this period. It is not possible to say on the balance of probabilities that effect was given to Arrangement No 1.
29 – 30 June 1999
393 In this period, the ACCC alleges that effect was given to Arrangements Nos 1, 4, 5 and 8. By early afternoon, it appeared that the low point of the price cycle had been reached, with a large number of Mobil sites at 64.1. This was matched by Apco Geelong North, with the other Apco sites at 64.3, which was also the price at a large number of Brumar sites.
394 At 14.19, the Leahy office rang the Apco head office. The 12-second duration of the call suggests that the caller failed to reach the intended recipient. So does the immediate call, at 14.20, to Peter Anderson’s message bank, which lasted 20 seconds. At 14.24, the Leahy office rang Eino Heikkila for 29 seconds. At 14.37, Mr Anderson apparently returned the call to the Leahy office, for a conversation lasting one minute (Mr Anderson’s mobile phone calls were apparently being billed in 30-second units by this time, so the call may have been less than one minute).
395 At 17.00, Mr Anderson rang Chris Andrianopoulos for up to 30 seconds. Half an hour later, Mr Andrianopoulos rang Alan Shuvaly for 55 seconds. The ACCC’s case is that the call from Mr Anderson to Leahy, and the subsequent calls from Mr Anderson to Mr Andrianopoulos and Mr Andrianopoulos to Mr Shuvaly, were about a price increase to take place early the next morning.
396 What in fact happened was that the Mobil outlets began making significant upward price moves in the late afternoon or the evening of 29 June. Some time between 17.45 on 29 June and 07.49 on 30 June, Mobil Moolap moved from 61.9 to 69.7. Between 18.34 on 29 June and 06.49 on 30 June, Mobil Grovedale moved from 64.1 to 69.9. Moves from 64.1 to 69.9 were also recorded at Mobil East Belmont between 19.58 on 29 June and 06.12 on 30 June, Mobil Corio Village between 21.33 on 29 June and 06.12 on 30 June, Mobil Highton at 21.36, Mobil Latrobe Terrace at 23.03 and Mobil Belmont at 23.57 on 29 June, and Mobil Manifold Heights at 00.01 on 30 June. Andrianopoulos lowered its price from 64.9 to 64.3 and then increased it again to 64.9, at times unknown on 29 June. The Liberty average price for 29 June was 64.2. The Shell Victoria Street price dropped from 64.5 to 64.1 at some time during the day and the Shell Waurn Ponds average price for 29 June increased from 61.4 to 65.0.
397 Apco began increasing its prices to 69.9 at Apco Geelong East at 05.27 on 30 June, followed by Apco Newcomb at 06.04, Apco Geelong North at 06.08, Apco Lara at 06.21 and Apco Highton at 06.46. In the meantime, Apco Geelong North dropped its price from 69.9 to 69.7 at 06.38.
398 At 06.17 on 30 June, after the Apco price increases had begun, Peter Anderson telephoned Ian Carmichael, the call being timed at 30 seconds. At 07.13, Mr Carmichael rang Mr Anderson for one minute. Mr Carmichael then rang Phil Carmichael at 07.17 for one minute, BP Corford Express at 07.28 for one minute and Peter Anderson again at 07.33 for 30 seconds. These three calls were from different locations, suggesting that Mr Carmichael was in his car at the time. At 07.39, there is a call recorded from the Leahy office to Eino Heikkila for 31 seconds. At 07.40, the Leahy office telephoned Darren Campigli for one minute and six seconds.
399 By 08.09, a number of the Mobil outlets were easing their prices back to 69.7, apparently following the lead of Apco Geelong North. At 08.09, Leahy increased the price at BP Hillford from 64.3 to 69.7. At 08.20, Mr Heikkila rang Garry Dalton for one minute and 30 seconds. The ACCC submitted that this was the result of the earlier call from Leahy to Mr Heikkila, and involved passing on to Brumar information about a price increase. Brumar increased its prices from 64.3 to 69.7 at Shell Latrobe Terrace and Shell Speedwings at 09.02, Shell Anglesea at 09.12, Shell Belmont at 09.17 and Shell Norlane at 09.27.
400 At 09.56 on 30 June, Mr Anderson telephoned the Liberty head office for three minutes and 30 seconds. The ACCC characterised this as a complaint call, suggesting that Liberty had failed to increase its prices in accordance with the alleged arrangement or understanding. During the late morning and early afternoon, there was a large amount of telephone traffic, involving Leahy (and Michael Warner), United Fuels (and Mr Heikkila), Mr Andrianopoulos and Mr Shuvaly, David Mortimer, and the Liberty office and the Apco office (and Mr Anderson). Within a few minutes, between 12.58 and 13.04, Apco Geelong North lowered its price from 69.7 to 63.9 and then increased it to 69.5. In the late afternoon, Mobil outlets began easing the price back to 69.3.
401 At times unknown in the course of the day, the price at Andrianopoulos rose from 64.9 to 69.5, dropped to 63.9, rose again to 69.7, dropped to 64.1 and rose again to 64.3. Liberty’s average price for the day was 68.2, up from 64.2. The average price at Shell Waurn Ponds was 69.6, up from 65.0, suggesting a fairly early increaseor a larger late one. At Shell Victoria Street, the price went to 69.7. The ACCC submitted that this was shown by the data sheets to have occurred on opening. If it did, it may have anticipated the fall from 69.9 to 69.7 that was becoming apparent elsewhere in the market.
402 Precisely how this data is supposed to fit the ACCC’s theory of the giving effect to of arrangements or understandings is unclear. If, as is submitted, the crucial call about an increase occurred between Mr Anderson and the Leahy office at 14.37 on 29 June, the call was far earlier than the oral evidence suggests ever occurred in relation to an overnight increase, let alone an increase that was not to occur until the following morning. If that call contained the crucial information passed by Mr Anderson to Leahy (and was not simply returning Leahy’s two earlier attempts to reach Mr Anderson about something unrelated to price), then no-one at Leahy took any step to communicate that information until the following morning, when Apco had already increased its price. If Mr Anderson were spreading information about an impending price increase to Leahy at 14.37 on 29 June, it is odd that he delayed communicating it to Mr Andrianopoulos until 17.00, if he wished to put into effect Arrangement No 8. The occurrence of the price increases at the Mobil outlets suggests strongly that Apco’s price increases early on 30 June were related to the Mobil moves, rather than to any other information. If the phone call from Mr Anderson to Ian Carmichael at 06.17 on 30 June, probably returned at 07.13, was to pass on information about price increases, it was about price increases already occurring. Even so, there was some delay about Leahy implementing any price increase, which would not be expected if the flurry of calls between 07.17 and 07.40 were to spread the word that the prices should go up. If that were the purpose of those calls, then Mr Heikkila was fairly casual about ringing Mr Dalton. Indeed, if he rang Mr Dalton about a price increase at 08.20, on the ACCC’s case, it was a price increase that had already been put into effect by United Fuels. The greater likelihood is that Brumar responded to what was becoming the prevailing market price by beginning to move its major outlets to 69.7 after 09.00 on 30 June. It is simply impossible to tell from the price data about Andrianopoulos and Liberty whether they effected any price increases on the basis of any information they received from Mr Anderson, or from each other. The ACCC submitted that the reductions in the price at Andrianopoulos must have been at insignificant times, and for short periods, or they would have caused the general price increase to collapse. This is mere speculation. The timing or amount of Liberty’s price increase is also unclear.
403 In short, the data for this period bears no resemblance to the case pleaded by the ACCC and no resemblance to the pattern of price increases suggested by the oral evidence.
5 – 6 July 1999
404 The ACCC alleges that, in this period, Apco and Leahy gave effect to Arrangement No 1, Leahy and Chisholm gave effect to Arrangement No 3, Leahy and United Fuels gave effect to Arrangement No 4, United Fuels and Brumar gave effect to Arrangement No 5, and Apco, Andrianopoulos and Liberty gave effect to Arrangement No 8. Significantly, price data for Chisholm is available for this period.
405 On 5 July, prices were generally falling during the day. The lowest recorded was a fall from 59.5 to 59.4 at Shell Latrobe Terrace at 02.42. As the day went on, 59.5 seems to have become the most common price. There were a couple of solo attempts to secure a large rise in the course of the day. At 10.15, Caltex Quick Bite increased from 63.9 to 70.9. In the absence of market support for the move, it dropped back to 61.9 at 11.03 and to 59.9 at 11.37. Between 13.10 and 13.38, 7-Eleven Newcomb attempted a small increase, rising from 59.9 to 61.7, before dropping back to 59.9 by 14.04 and further to 59.5 by 14.18, to reflect the market price. Between 14.02 and 14.11, Mobil Moolap increased from 59.5 to 66.3. It too dropped back to 59.5 at 15.49. At 15.45, BP Corford Express increased from 66.5 to 70.9, before dropping back to 66.5 at 16.26. Between 15.23 and 16.29, Mobil Point Henry attempted a small rise from 59.5 to 61.5. At 16.29, Caltex Quick Bite rose 0.8 to 60.7. These attempts by market participants whose prices were set in Melbourne suggest that the Melbourne petrol market had already moved upwards, and, because the market price in Geelong had fallen to a particularly low level, there were market participants keen to see an increase occur.
406 The relevant phone calls began at 17.37 on 5 July, when Peter Anderson rang Ian Carmichael for one minute and 30 seconds. At 17.39, Mr Carmichael rang Chisholm for one minute. At 17.48, he rang Eino Heikkila for one minute. At 17.49, Ian Carmichael rang Phil Carmichael for one minute. Also at 17.49, Mr Heikkila rang Garry Dalton for 30 seconds. At 17.52, Mr Anderson rang Liberty for four minutes. Some time later, at 19.13, Mr Anderson rang Chris Andrianopoulos for one minute. Between 19.16 and 19.18, there were three brief calls (less than 30 seconds each) from Mr Anderson to Apco outlets at Apco Geelong East, what Annexure B there (and nowhere else) describes as ‘Apco Geelong’, and Apco Newcomb. (This is one of the rare occasions when Annexure B records communications that might have been instructions by a market participant to one of its own outlets to set prices at a particular level at a particular time.)
407 It is unclear precisely when the round of price increases began, because it is only possible to know the range of times for a number of Mobil outlets. Thus, at some time between 16.26 on 5 July and 06.48 on 6 July, Mobil Moolap increased its price from 63.0 to 70.9. At some time between 17.22 and 06.09, Mobil Geelong North increased from 61.5 to 70.9. At some time between 19.24 on 5 July and 06.44 on 6 July, Mobil Grovedale increased from 61.5 to 70.9. At some time between 19.36 and 05.38, Mobil Corio Village increased from 61.5 to 70.9. An identical rise occurred at Mobil East Belmont between 20.44 and 07.35. At some time between 21.05 and 07.12, Mobil Gateway increased from 59.5 to 70.9.
408 The first recorded actual time increases were on 5 July from 59.5 to 70.9 at 20.03 at Chisholm Grovedale and 21.38 at Chisholm Leopold. At 21.50, Mobil Highton moved from 61.5 to 70.9. At 21.55, Chisholm Geelong West moved from 59.5 to 70.9. At 23.16, Mobil Latrobe Terrace moved from 61.5 to 70.9.
409 The first Apco increase occurred at 23.38, when Apco Geelong South increased its price from 59.5 to 70.9. Leahy did the same at BP Hillford at 23.41. According to Mr Warner’s evidence, it is likely that he gave the instruction for this rise before he finished work for the day. Before midnight, at 23.56 and 23.57, both Mobil Belmont and Mobil Manifold Heights moved from 61.5 to 70.9.
410 Apco increases continued shortly after midnight on 6 July, with Apco Newcomb moving from 59.5 to 70.9 at 00.11, Apco Geelong North from 59.5 to 70.9 at 01.01, Apco Lara from 61.5 to 70.9 at 01.26 and Apco Highton from 61.5 to 70.9 at 01.56.
411 Somewhat anomalously, the first move by Brumar on 6 July was at 05.27, when Shell Speedwings dropped from 59.5 to 59.4. At 06.11, Shell Latrobe Terrace increased from 59.5 to 70.9. At 06.23, Apco Geelong East also increased from 59.5 to 70.9. Caltex Quick Bite also increased its price that morning at 07.32, but only from 60.7 to 69.5. Shell Belmont moved from 61.5 to 70.9 at 07.34. At 07.35, Ian Carmichael telephoned BP Corford Express for one minute and 30 seconds. BP Corford Express increased its price at 07.57, from 66.5 to 69.7.
412 At 08.02 on 6 July, Leahy telephoned Chris Andrianopoulos for 26 seconds. At 08.16, Michael Warner telephoned Gordon Primmer for two minutes and 30 seconds. At 08.34, Peter Anderson rang Mr Andrianopoulos for five minutes and 30 seconds, certainly longer than would be necessary to discuss prices. At 08.42, Leahy rang David Mortimer for 38 seconds.
413 At 08.50, Chisholm began easing its prices downwards, moving from 70.9 to 69.5 at Chisholm Geelong West, followed by the same decrease at 08.54 at Chisholm Leopold and 08.56 at Chisholm Grovedale. Caltex Quick Bite finally moved up to what appears to have been the preferred market price of 70.9 at 09.07. Shell Speedwings moved from 59.4 to 70.9 at 10.08 and Shell Norlane from 59.5 to 70.5 at 10.29. Mobil Point Henry even attempted to go higher, moving from 70.9 to 71.2 between 10.34 and 10.39. Prices then began to fall in earnest, with Mobil Geelong North dropping to 69.5 at 10.50, followed by Apco Geelong South, Apco Newcomb and Apco Geelong North at 10.52, 11.05 and 11.06, and Apco Geelong East and Apco Lara and Apco Highton at 11.16, 11.26 and 12.03 respectively. Brumar prices began to move down to 69.5, starting with Shell Westoria at 12.14, followed by Shell Speedwings, Shell Latrobe Terrace and Shell Belmont at 12.15, and Shell Norlane at 12.17. Other Mobil sites also settled downwards to 69.5. At 17.10, BP Corford Express moved down to 69.3.
414 United Fuels increased the price at Shell Victoria Street from 59.5 to 70.9 on opening on the morning of 6 July. The average price at Shell Waurn Ponds rose from 59.6 to 68.7, suggesting a rise at some time during the morning. Liberty’s average price for the day moved from 59.5 to 69.8, consistent with an increase early in the day to about the market price, on the basis of Mr Shuvaly’s evidence that Liberty liked to have its price set at about 0.2 below the market. On 6 July, Andrianopoulos moved from 61.5 to 69.5, then up to 70.5 and then back to 59.5 in the course of the day.
415 In his evidence, Mr Shuvaly was asked to look at the data in Annexure B for this period. His interpretation was that ‘it has probably moved at a particular stage during the day and it fell over and then there was another move later on in the evening’. By ‘it fell over’, he meant that ‘there wasn’t a strong enough move or not enough people moved, I guess’. This view is hardly consistent with the data. There were two Melbourne-initiated moves early in the day on 5 July (Caltex Quick Bite and BP Corford Express). There was one round of telephone communications in the late afternoon. There was an overnight price increase, in which a number of Mobil outlets, Chisholm, Leahy and Apco all participated. Brumar, Caltex Quick Bite and BP Corford Express joined them on the morning of 6 July. There was no collapse of the increase. Indeed, it appeared to ‘stick’ well until discounting began on that morning. What might have led to the round of telephone communications on that morning does not appear to have been a collapse of the price rise.
416 5 and 6 July 1999 is the first period in which it can be said that the data in Annexure B appears to conform with some of the oral evidence about patterns of telephone calls and price rises. It is necessary to ignore Ian Carmichael’s evidence about the maximum two-hour time-span between telephone calls and price rises, because the price increases by Chisholm, Apco and Leahy were spread overnight. Those increases also occurred in conjunction with Mobil increases, which might well have become visible earlier than the first of Chisholm’s increases. The attempts to increase the price earlier in the day, particularly those by Caltex Quick Bite and BP Corford Express, are strongly suggestive of a move having occurred in the Melbourne petrol market. The fact that each attempted to increase the market price in Geelong to 70.9, the price to which most outlets eventually moved, is significant. It may be that the phone calls in the course of the afternoon were for the purpose of spreading information about the price increase that appeared imminent. Whether they were for the purpose of indicating a time at which those alleged to be parties to the various arrangements or understandings would move remains speculative. The moves were uncoordinated, at least to the extent that Chisholm had begun to discount before Brumar had moved all of its sites up to 70.9. The possibility cannot be ignored that Chisholm was driven to leading up the market, because its supplier notified it that price support was to be terminated. Again, this is consistent with the Melbourne influence.
417 Although the data is consistent with the ACCC’s case, it is equally consistent with an innocent explanation. In the circumstances, I ought not to find that any of Arrangements Nos 1, 3, 4 or 5 was put into effect during this period. As for Arrangement No 8, it is impossible to tell how the price movements at Andrianopoulos and Liberty coordinated with those of Apco. I therefore ought not to find that Arrangement No 8 was implemented.
8 – 9 July 1999
418 In this period, the ACCC alleges that effect was given to Arrangements Nos 3, 4 and 5. It should be noted that there is no allegation that Apco and Leahy gave effect to Arrangement No 1, which is advanced generally by the ACCC as the head arrangement, from which all of the others followed. This is because, not only is it not possible to identify any relevant telephone conversation involving anyone from Leahy and anyone from Apco, but there are no relevant Apco price increases in the period.
419 The call cycle identified by the ACCC during this period occurred on the afternoon of 8 July. At 16.16, Leahy rang Chisholm for 13 seconds. At 16.17, Leahy rang United Fuels for 22 seconds. At 16.23, Leahy again rang Chisholm for 54 seconds, possibly achieving communication with someone who had been unavailable at the time of the first call. About two hours after the phone contact between Leahy and United Fuels, Eino Heikkila rang Garry Dalton for one minute at 18.18.
420 The price increases relied on by the ACCC began with Chisholm, probably at or about closing time. At 20.05 on 8 July, Chisholm Grovedale increased its price from 66.9 to 71.9. At 21.42, Chisholm put into effect the same price increase at Chisholm Leopold. At 23.36, Leahy increased the price at BP Hillford from 66.9 to 71.9. Again, if Mr Warner’s evidence is correct, he would have given the instruction for this price increase before he ceased work for the day.
421 Chisholm then increased its price at Chisholm Geelong West from 66.9 to 71.9, soon after opening time, at 06.40 on Friday, 9 July. At 07.19 on 9 July, Shell Norlane reduced its price by 0.1 from 69.6 to 69.5. Brumar’s price increases began at 07.43, with Shell Speedwings moving from 69.5 to 71.9, followed by Shell Anglesea at 07.52 and Shell Norlane at 09.32. Subsequent Brumar price changes involved smaller increases, or in some cases decreases, to 71.7 at 09.37 (Shell Latrobe Terrace), 10.20 (Shell Westoria), 10.21 (Shell Anglesea and Shell Belmont), 10.23 (Shell Norlane), 10.24 (Shell Speedwings) and 10.25 (Geelong Car Spa).
422 United Fuels increased the price at Shell Victoria Street from 66.9 to 71.9 on opening on 9 July. The average price at Shell Waurn Ponds increased from 67.0 to 71.3 on 9 July, suggesting an increase in the morning.
423 The missing ingredient to put these price changes into a context is information with respect to times of increases at many Mobil outlets. At some time between 17.46 on 8 July and 08.20 on 9 July, Mobil Moolap increased its price from 66.9 to 71.9. Other Mobil sites at which the price was increased to 71.9 (all but one from 66.7) were Mobil Newcomb between 18.09 and 07.41, Mobil Point Henry between 18.33 and 08.03, Mobil Highton (from 65.5) between 19.07 and 06.43, Mobil East Belmont between 19.41 and 06.30, Mobil Gateway between 20.48 and 07.27, Mobil Latrobe Terrace between 21.16 and 08.03, Mobil Geelong North between 21.34 and 07.21, Mobil Manifold Heights between 21.57 and 04.25, Mobil Belmont between 22.53 and 05.39, Mobil Corio Village between 23.07 and 05.38 and Mobil Grovedale between 23.08 and 06.51. It is entirely possible that the brief phone calls on the afternoon of 8 July did not involve communication about prices, but that the price increases that occurred were precipitated either by a removal of Chisholm’s price support, or the Mobil moves, or a combination of both. Again, the possibility of a preceding increase in the Melbourne petrol market cannot be ignored. The Brumar price increases came later than any of those on the part of Chisholm, Leahy or United Fuels, and probably reflected the Mobil moves, which would certainly have been apparent by the time Brumar acted. The fact that BP Corford Express moved from 66.9 to 71.9 at 07.44 on 9 July also suggests that the move followed a move in the Melbourne petrol market. The increases from 66.7 to 71.9 by 7-Eleven Geelong East between 06.36 and 07.07 and from 66.9 to 71.9 at 7-Eleven Newcomb between 08.04 and 08.13 support this view. There is a gap in Annexure B during this period, in that no data is available for Apco between 6 July and 16 July 1999. Other market participants, including Andrianopoulos, Liberty and United Convenience, all appear to have moved to 71.7, or something slightly more, at some stage during the day.
424 On the evidence available, an innocent explanation for the price increases is at least as likely as the giving effect to any arrangement or understanding, so it would be wrong for me to find that there was any such giving effect in this period.
22 – 23 July 1999
425 The ACCC alleges that Leahy and Chisholm gave effect to Arrangement No 3, and Leahy and United Fuels gave effect to Arrangement No 4 during this period. Although there were price rises at Apco outlets similar to those at Leahy and Chisholm outlets, the Apco price rises occurred later than those of Chisholm and Leahy, and there is no evidence of any relevant telephone communication. Of course, it is possible that this was a day on which Peter Anderson communicated with Ian Carmichael other than by telephone, but it would not be possible to make a finding to this effect in the absence of evidence. Once again, the timing of Mobil price increases might have been significant.
426 During the morning and early afternoon, prices in the Geelong petrol market were generally falling, the most common lowest price being 71.3. At 17.02, the Leahy office telephoned Eino Heikkila for one minute and four seconds. At the same time, a call was made from the Leahy office to Chisholm for 34 seconds. The fact that these calls overlapped suggests that they were made by different people. At 17.03, Leahy also rang BP Corford Express for 31 seconds. At 17.20, Leahy rang David Mortimer for three minutes and 26 seconds, substantially longer than would be necessary to talk about price increases. Mr Mortimer rang Ian Carmichael back at 17.26 for one minute.
427 The price rises relied on began again with Chisholm, probably at closing time for its outlets. At 19.59 on 22 July, Chisholm Grovedale rose from 71.3 to 76.7. The same increase occurred at Chisholm Leopold at 22.01 and at Chisholm Geelong West at 22.03. BP Hillford also rose from 71.3 to 76.7 at 23.10, probably approaching its closing time. Apco increases occurred from 00.01 on 23 July onwards, beginning with Apco Geelong North.
428 United Fuels increased its price at Shell Victoria Street on opening, but only from 71.3 to 75.9, 0.8 below the price adopted by Chisholm and Leahy. The average price at Shell Waurn Ponds for the three day period from Friday 23 to Sunday 25 July increased from 71.4 to 75.4. The probability is that any increase was early, unless there were other changes made during the weekend.
429 The range of times between the last sale at 71.3 and the first sale at 76.7 at Mobil outlets was as follows: Mobil Newcomb 16.30 on 22 July to 07.25 on 23 July; Mobil Moolap 17.26 to 07.28; Mobil Point Henry 18.08 to 07.37; Mobil East Belmont 18.46 to 06.19; Mobil Corio Village 19.40 to 06.22; Mobil Grovedale 20.29 to 08.08; Mobil Gateway 21.22 to 07.58; and Mobil Manifold Heights 22.12 to 04.18. The recorded times of price increases from 71.3 to 76.7 at other Mobil outlets were 22.13 on 22 July (Mobil Geelong North), 23.11 on 22 July (Mobil Latrobe Terrace) and 00.12 on 23 July (Mobil Belmont). Thus, it is possible that increases by Mobil again precipitated the market price rise, which was simply followed by Chisholm and Leahy. Certainly, by the time Mr Heikkila was on his way to work, it is probable that there were Mobil price boards showing a price of 76.7, as well as Apco price boards showing the same price.
430 The fact that the calls to Mr Heikkila and Chisholm on the afternoon of 22 July were most likely to have been made by different people in the Leahy office reduces the likelihood that both were about coordinating a price increase. None of the oral evidence suggests that Ian Carmichael and Michael Warner worked in tandem to make call cycles, and there is no evidence in Annexure B suggesting that they may have done so on other occasions. It is more probable that a previous Melbourne price increase precipitated a move in Geelong, by causing Caltex to abandon price support for Chisholm and causing Mobil to move its prices up. The ACCC’s case is not made out in respect of this period.
26 – 27 July 1999
431 Again, the allegation is that effect was given to Arrangements Nos 3 and 4. There is no Apco price data in Annexure B for this period.
432 On 26 July, in the morning, Chisholm, Leahy and United Fuels all reduced their prices to 73.9. The call cycle relied on began at 16.40, with a call from the Leahy office to Eino Heikkila, lasting 28 seconds, with no apparent preceding contact from Apco or Peter Anderson. At 16.50, Leahy rang Chisholm for 57 seconds and at 16.51, Leahy rang Mr Heikkila again for 11 seconds. The precise timing of these calls shows that they overlapped by 27 seconds, so it is likely that they were made by different people. At 16.52, Leahy rang BP Corford Express for 17 seconds and, at 16.53, Leahy rang David Mortimer for 22 seconds. At 17.25, Leahy again rang Chisholm for 31 seconds. This was followed by a 14-second call from Leahy to BP Corford Express at 17.26, a call to Mr Heikkila’s message bank at 17.28 and another call to David Mortimer at 17.32 for 23 seconds. Again, the price changes by Chisholm and Leahy were at or approaching closing time for the various outlets. At 21.58, Chisholm Geelong West moved to 76.5, the same price to which Chisholm Leopold moved at 22.07 and BP Hillford at 23.04. United Fuels increased its price on opening on the morning of 27 July, but only to 76.3. The average price for Shell Waurn Ponds for 27 July was 76.4, suggesting an increase early in the day.
433 The ACCC identified another call cycle on the morning of 27 July, which it submitted was an attempt to make the price rise initiated the previous day stick. At 08.00, the Leahy office called Chris Andrianopoulos for 22 seconds. At 08.02, the Leahy office called BP Corford Express for 16 seconds. At 08.04, the Leahy office called Chisholm for one minute 44 seconds and at 08.13, Leahy called Mr Heikkila’s message bank. At 08.56, Leahy called the United Fuels office. Why these last three calls should have been necessary, when Chisholm and United Fuels had increased their prices, is not apparent.
434 Again, the missing element in the ACCC’s scenario is the Mobil increases, which could have occurred from an early time on 26 July. The following Mobil outlets increased from 73.9 to 76.5 in the following time ranges: Mobil Moolap between 18.00 on 26 July and 06.35 on 27 July; Mobil East Belmont between 18.50 and 06.37; Mobil Newcomb between 19.18 and 07.19; Mobil Point Henry between 20.07 and 07.54; Mobil Grovedale between 20.56 and 07.56; Mobil Corio Village between 21.00 and 06.46; Mobil Manifold Heights between 22.00 and 06.14; and Mobil Gateway between 22.40 and 07.11. Mobil Highton and Mobil Latrobe Terrace also increased from 73.9 to 76.5 at 21.47 and 23.53 respectively on 26 July.
435 The comments that I have made about the previous two periods are equally applicable to this one. The Mobil increases might have reflected a Melbourne increase, flowing into the Geelong petrol market. The Melbourne increase might have caused Caltex to remove price support from Chisholm, forcing it to raise its prices, as Graeme Chisholm said often occurred. The Mobil increases may have become visible from an early time, prompting Chisholm and Leahy to take advantage of an impending upward move. In addition, the disconformity between the Chisholm and Leahy rises on the one hand and the United Fuel rise at Shell Victoria Street on the other suggests a lack of coordination as to price. The ACCC’s case is not made out in respect of this period either.
29 – 30 July 1999
436 On these dates, the ACCC alleges that Leahy and Chisholm implemented Arrangement No 3 as a stand-alone arrangement. Leaving aside the question of whether it is consistent with the ACCC’s case for Arrangement No 3 to be regarded as a stand-alone arrangement, this is an odd period to choose. The price increases concerned were of less than one cent, and occurred following similar price increases on the part of Mobil and Apco outlets.
437 The allegation depends on a telephone call from the Leahy office to Chisholm at 15.58 on 29 July, lasting three minutes and six seconds, far longer than would be required to discuss a price increase. At 17.23, Chisholm telephoned Leahy for 36 seconds. This was shortly before Leahy actually decreased its prices from 75.9 to 75.7 at BP Hillford.
438 Overnight, there were increases from 75.7 to 76.5 at Mobil Geelong North at 22.02, Mobil Latrobe Terrace at 23.40, Apco Geelong North at 23.54 and Apco Geelong East at 23.55 on 29 July, and at Mobil Belmont at 00.04, Apco Newcomb at 03.08 and Apco Geelong South at 04.14 on 30 July. In addition, there were several increases at other Mobil sites for which only a time range is available. The range is from the last sale at the old price at Mobil Newcomb at 17.33 on 29 July, and the first sale at the new price at Mobil East Belmont at 07.24 on 30 July. In this context, it is not surprising to find that BP Hillford increased its prices from 75.7 to 76.5 at 08.05 on 30 July, or that Chisholm increased its prices from 75.9 to 76.5 at Chisholm Grovedale at 08.08, Chisholm Geelong West at 08.55 and Chisholm Leopold at 09.14. It is highly unlikely that there was any connection between the telephone calls on the afternoon of 29 July and the price increases on the morning of 30 July. It is highly likely that both Leahy and Chisholm were separately following the price increases of Mobil and Apco. It is surprising that the ACCC even attempted to rely on these events in support of its case.
19 – 20 August 1999
439 The ACCC alleges the putting into effect of Arrangements Nos 1, 3 and 4 during this period. The market generally moved up during this period, with most operators moving to 78.7. Interestingly, the first outlet to move to this price, from 71.9, was Mobil Belmont as early as 11.57 on 19 August. Even though other outlets were still decreasing at that time, Mobil Belmont’s move is a sign that a market increase was a possibility.
440 The call cycle may have begun with a call from Leahy to United Fuels at 16.36 on 19 August, which lasted two minutes and five seconds, more than enough time to talk about a prospective price increase. The ACCC relied on another call at 16.42, when Leahy rang Peter Anderson for 27 seconds. Immediately, Leahy rang Chisholm for one minute and two seconds. At 16.44, Leahy rang BP Corford Express for 26 seconds. At 16.56, Mr Anderson rang Leahy for one minute.
441 At 19.57 on 19 August, probably close to closing time, Chisholm increased its price at Chisholm Grovedale from 71.3 to 78.7. The same increase was applied at Chisholm Leopold at 21.56, again probably shortly before closing time. The time for a similar increase at Chisholm Geelong West does not appear in Annexure B. At 23.26, approaching closing time at BP Hillford, Leahy increased the price from 70.9 to 78.7.
442 The Apco increases began with Apco Newcomb moving from 70.9 to 78.7 at 00.34 on 20 August, and Apco Geelong North at 02.00. Identical increases occurred through the early hours of the morning at Apco Geelong South (03.27), Apco Lara (03.38), Apco Highton (03.42) and Apco Geelong East (05.32). In the late morning, all Chisholm and Apco sites began moving slightly downwards, to 78.4.
443 Once again, the ACCC did not factor into its submissions the possible time range of the Mobil increases, which were also to 78.7. The earliest times at which these could have occurred on 19 August were 17.39 at Mobil Newcomb, 18.22 at Mobil Gateway, 19.15 at Mobil East Belmont, 19.44 at Mobil Point Henry, 19.57 at Mobil Grovedale and 20.31 at Mobil Manifold Heights. Definite Mobil increases, also to 78.7, occurred at 21.16 at Mobil Highton and 21.54 at Mobil Geelong North.
444 On 20 August, United Fuels increased the price at Shell Victoria Street from 70.9 to 78.5. The three day average for Friday, Saturday and Sunday 20, 21 and 22 August at Shell Waurn Ponds increased from 70.9 to 77.3, suggesting a rise at some time on the Friday, in the absence of data suggesting other price changes during the subsequent weekend. It is significant that, even though Shell Victoria Street appears to have increased on opening, it increased to a price lower than the rest of the market.
445 Once again, the more likely explanation for the pattern of price increases appears to be that Mobil outlets began following a previous Melbourne petrol price increase, with Mobil Belmont being the early mover. The Chisholm increases might well have been precipitated by the cessation of price support from Caltex, consequent upon the same Melbourne petrol price increase. By the time BP Hillford moved, a move in the market was already apparent, although the effect of this is lessened if Mr Warner’s evidence, that he gave instructions for increases overnight before he ceased work for the day, is to be accepted. Even so, it is possible that Mobil moves had become known by the time Mr Warner ceased work on 19 August. In the light of a possibly innocent explanation, it would be unsafe to find on the balance of probabilities that any arrangement or understanding was implemented during this period.
26 – 27 August 1999
446 The ACCC alleges that, during this period, effect was given to Arrangements Nos 3 and 4. One remarkable feature of this period is that, although the call cycle relied on by the ACCC began with the Apco office communicating with the Leahy office, the only Apco increase recorded in Annexure B is Apco Geelong East at 23.54 on 26 August from 72.7 to 78.7. Prices at other Apco outlets do not appear from Annexure B to have moved up during the period. By the afternoon on 26 August 1999, prices in the Geelong petrol market had generally moved downwards to between 72.7 and 72.9. At 16.52, the Apco office telephoned the Leahy office for two minutes and two seconds. At 17.06, the Apco office again called the Leahy office for 52 seconds. At 17.08, the Leahy office telephoned Chisholm for one minute and 13 seconds. At 17.09, the Leahy office telephoned United Fuels for 29 seconds. At 17.10, the Leahy office telephoned BP Corford Express for 30 seconds. The ACCC would have it that this call cycle involved Leahy passing on information received from Apco about an impending price increase. In his evidence, Darren Campigli imagined that the call Chisholm received would have been to provide information that the market was moving up that night or the next morning, and that he would have instructed his sites to increase their prices at closing time, in consequence of the call.
447 Indeed, the Chisholm sites did increase at or about closing time. The increases were from 72.9 to 78.7, and occurred at 20.17 at Chisholm Grovedale, 22.00 at Chisholm Leopold and 22.02 at Chisholm Geelong West. Leahy also increased at close to closing time, at 23.52 at BP Hillford. Shell Victoria Street eased from 73.7 to 72.9 at some time on 26 August, but does not appear to have increased on 27 August. The average price for Shell Waurn Ponds increased from 72.8 to 77.5, for the three-day period from Friday, 27 August to Sunday, 29 August. It is difficult to say when this increase would have occurred, in the absence of any evidence about other price movements at Shell Waurn Ponds during the weekend. The ACCC submitted that it occurred early in the three-day period, but it is unlikely to have occurred at opening time on the Friday.
448 Once again, the missing element in the ACCC’s analysis in respect of this period is the timing of the Mobil increases. Mobil sites increased to 78.7 within the following time ranges: 17.24 on 26 August to 06.45 on 27 August (Mobil East Belmont); 17.42 to 06.59 (Mobil Gateway); 17.42 to 07.41 (Mobil Moolap); 19.41 to 07.19 (Mobil Newcomb); 20.07 to 06.00 (Mobil Corio Village); 20.19 to 04.19 (Mobil Manifold Heights); 21.01 to 08.50 (Mobil Grovedale); and 21.18 to 09.28 (Mobil Point Henry). Definite Mobil increases occurred on 26 August at 21.53 at Mobil Highton and 22.03 at Mobil Geelong North, both to 78.7. It is possible that these Mobil increases, if they occurred early in the possible time ranges, were becoming apparent before Chisholm and Leahy moved up. In the circumstances, particularly the absence of an across the board Apco increase, it is not possible to say on the balance of probabilities that the increases that did occur were the result of the giving effect to of any arrangement or understanding. It is at least as likely that the Geelong petrol market was simply following news of an increase in the Melbourne petrol market, with outlets that closed overnight increasing their board prices before closing time, and others doing so at or about opening time on 27 August.
2 – 3 September 1999
449 This is another period in respect of which the ACCC alleges that effect was given to Arrangements Nos 1, 3 and 4. The call cycle relied upon began on Thursday, 2 September 1999, by which time the most common price in the market was 71.9. At 16.48, Peter Anderson rang the Leahy office for two minutes. At 16.50, the Leahy office rang Chisholm for one minute and 16 seconds. At 16.53, the Leahy office rang Eino Heikkila for one minute. At 16.55, the Leahy office rang David Mortimer for 29 seconds. The first two of these calls were longer than would be necessary to discuss a particular price and a particular time if there were in existence well-grooved arrangements or understandings.
450 That evening, and on Friday, 3 September, prices in the Geelong petrol market generally rose to 78.5. The first rises were at Mobil outlets. For those for which only a range of times is available, the earliest possible time for the rise would have been 17.03 on 2 September at Mobil Moolap, with the last possible time in its range being 06.44 on 3 September. Other time ranges for these Mobil outlets were: 18.18 to 07.45 at Mobil Newcomb; 18.19 to 07.58 at Mobil Gateway; 20.33 to 07.18 at Mobil Corio Village; 20.25 to 07.34 at Mobil Point Henry; 20.48 to 06.23 at Mobil East Belmont; 22.06 to 08.43 at Mobil Grovedale; and 23.13 to 04.13 at Mobil Manifold Heights. Increases certainly occurred on 2 September at 21.46 at Mobil Highton, at 21.59 at Mobil Geelong North and at 23.17 at Mobil Latrobe Terrace. In the meantime, BP Hillford increased to 78.5 at 23.09.
451 Apco increases did not begin until after midnight and occurred at 00.02 (Apco Geelong East), 01.59 (Apco Geelong North), 02.02 (Apco Newcomb), 02.54 (Apco Highton) and 03.34 (Apco Geelong South). Apco Lara did not move until 10.44 on 3 September, when it moved to 77.5, a price to which a number of Apco and Mobil outlets decreased in the early afternoon.
452 Chisholm did not increase its prices until the morning of 3 September, with Chisholm Leopold moving at 07.53, Chisholm Geelong West at 07.58 and Chisholm Grovedale at 08.05.
453 At 07.23 on 3 September, Ian Carmichael telephoned BP Corford Express. The ACCC submitted that this was an attempt to get the price at that outlet increased. In fact it did increase at 07.35, but only to 78.3. There is no data during this period for Shell Victoria Street, but the average price at Shell Waurn Ponds rose from 72.0 to 77.4 for a three-day period from 3 September until 5 September. If anything, this does not suggest a rise particularly early on Friday, 3 September.
454 Bearing in mind Mr Warner’s evidence that he would have given instructions for the Leahy increases to be put into effect at closing time on 2 September, there is still a long gap between any possible relevant telephone calls and price increases by other parties. If Ian Carmichael’s evidence about the maximum two-hour gap between a phone call from Mr Anderson and a price increase is to be accepted, then Apco’s increases did not fall within that period. Chisholm’s certainly did not. The increases are consistent with Mobil outlets having led the price up, consequent upon an increase in Melbourne petrol prices, with others following on the morning of 3 September, particularly Chisholm. It is highly unlikely that Chisholm would have been party to the implementation of an arrangement or understanding to increase its prices in line with those of Leahy and Apco, but would have delayed doing so until around 08.00 the following morning. Obviously, those responsible for setting prices at Chisholm were only prepared to increase if they saw that the rest of the market had actually moved. Ian Carmichael’s call to BP Corford Express may well have been for the purpose of conveying information that the Geelong petrol market had moved, and Anton Maurer may well have passed on this information to those in Melbourne who set BP Corford Express’s petrol prices. This may have resulted in a price increase, but not to the same price as Leahy or Apco.
455 The probability is that the increases occurring during this period were not the result of the giving effect to of any arrangement or understanding.
9 – 10 September 1999
456 In respect of this period, the ACCC alleges that Arrangement No 1 was implemented on a stand-alone basis. In other words, the alleged provisions of that arrangement involving Leahy contacting other competitors in the market were not put into effect.
457 The only possible relevant calls occurred on the morning of Thursday, 9 September 1999, when the Leahy office rang Peter Anderson at 10.05 for 28 seconds and then one hour and 40 minutes later the Leahy office rang the Apco office for 22 seconds. The Apco office rang the Leahy office at 14.46 for 16 seconds. At 18.15, Ian Carmichael reached Peter Anderson’s message bank, but the call was apparently not returned on that day. The ACCC contended that, as early as 14.46, Apco had advised Leahy of an overnight price increase. Although Leahy did nothing to pass on this information to any other operator in the Geelong petrol market, it is contended that both Leahy and Apco implemented the arrangement or understanding by increasing their prices overnight. The ACCC alleged that the call from Ian Carmichael to Peter Anderson’s message bank at 18.15 was an attempt to confirm the information.
458 Perhaps inconsistently with this theory, at 18.43, the price at BP Hillford diminished from 72.5 to 71.9, the latter being the most common price in the market at that time. If Mr Warner gave instructions for a price increase for Leahy before he ceased work for the day, it is hard to see how he would have given instructions for this decrease if he already knew that there was to be a price rise overnight. The data in Annexure B does not show any means by which Michael Warner would have ascertained information that would have caused him to give a subsequent instruction for an increase.
459 A more likely scenario is that Ian Carmichael learned from Phil Carmichael of an impending Mobil increase. At 18.12, Aaron Incoll from Mobil spoke to Phil Carmichael for one minute. At 18.14, Phil Carmichael rang Ian Carmichael for one minute. This was immediately prior to Ian Carmichael’s call to Mr Anderson, which may have been an attempt to pass on information about a pending Mobil increase. At 18.19, Ian Carmichael rang Phil Carmichael back for 30 seconds, following which Phil Carmichael rang Aaron Incoll for three minutes. Mobil sites did begin to increase. Again, there is the difficulty of time ranges. The possible earliest of the increases to 77.5 at Mobil outlets was Mobil Newcomb between 14.07 on 9 September and 07.27 on 10 September. Mobil Moolap moved between 17.38 and 07.03. Mobil Gateway moved between 20.03 and 06.59. Mobil East Belmont moved between 20.54 and 07.52 and Mobil Grovedale moved between 21.09 and 06.38. Definite times for Mobil increases are available for Mobil Geelong North (21.25 on 9 September), Mobil Highton (21.37 on 9 September), and Mobil Latrobe Terrace (23.24 on 9 September). Interestingly, Chisholm moved its prices at Chisholm Grovedale and Chisholm Geelong West up to 77.5 at 20.09 and 21.59 respectively, with Chisholm Leopold only going up at 09.21 the following morning.
460 In the midst of all this market movement, Leahy increased its price at BP Torquay to 77.5 at 22.53 and its price at BP Hillford to 77.5 at 23.42. The Apco increases were all to 77.5, and began at Apco Geelong East at 23.40. This was followed by Apco Newcomb at 00.58, Apco Geelong North at 02.05, Apco Lara at 02.15, Apco Highton at 03.07 and Apco Geelong South at 03.30.
461 It is stretching credulity to suggest that Arrangement No 1 was implemented by means of a telephone call at 14.46 on 9 September, with price rises by Leahy and Apco not occurring until almost midnight. Those price increases are far more likely to have been a reaction to Mobil’s lead. In the same way, Chisholm also apparently reacted to Mobil’s lead, or acquired its information about a possible market increase from sources other than Leahy, or was driven to increase its price by removal of price support consequent upon a move in the Melbourne petrol market. The period is a good illustration of the danger of assuming Chisholm’s motivation in increasing its prices at closing time to be the implementation of an arrangement or understanding. The ACCC’s case is certainly not made out in respect of this period.
13 – 14 September 1999
462 In this period, the ACCC alleges that effect was given to Arrangements Nos 1 and 3. The call cycle relied on began at 16.47 on Monday, 13 September 1999, with a call from Apco to the Leahy office for two minutes and 19 seconds. This was longer than would be required just to discuss a prospective price increase. It was followed by calls from the Leahy office to United Fuels at 16.51 for 42 seconds, Chisholm at 16.52 for 45 seconds and BP Corford Express at 16.53 for one minute and 17 seconds. Graeme Chisholm gave evidence that the call to Chisholm may have fitted in with a trend of calls in which Chisholm was told that prices were going up, and then made its own decision about what it would do. He said that Chisholm was often told that prices would rise at close of business that night, possibly for opening time in the morning.
463 Leahy increased its prices at BP Torquay at 22.42 and BP Hillford at 23.40 that night, both from 72.9 to 77.5. The Apco increases were of the same magnitude and were timed at 23.57 for Apco Geelong East, 00.41 on 14 September for Apco Highton, 00.59 for Apco Geelong North, 01.18 for Apco Lara, 01.39 for Apco Newcomb and 03.35 for Apco Geelong South.
464 In the meantime, there was the usual pattern of Mobil increases that seems to have accompanied price rises in this period. Mobil Highton increased from 72.9 to 77.5 at 21.40 on 13 September. So did Mobil Latrobe Terrace at 23.03. Mr Warner gave evidence that he would not have been influenced by the former of these increases, because he would have given instructions for the price rise at about 17.30, when he left work to go home. The ranges of other Mobil site increases were certainly later than 17.30, so that if Mr Warner’s speculation (it was not recollection) about when he would have given instructions is accurate, then he would not have been influenced by Mobil price increases. It is possible, therefore, that Leahy was influenced by information it received from Apco to increase its prices before closing time on 13 September. It is also possible that Apco waited until an increase at Mobil stations was evident before increasing its prices. Chisholm clearly waited until the morning of 14 September, increasing at Chisholm Geelong West at 07.32, Chisholm Leopold at 08.16 and Chisholm Grovedale at 08.43, each from 72.9 to 77.5. Between the Leopold and the Grovedale increases, Chisholm received a phone call from the Leahy office for one minute and 12 seconds, which Graeme Chisholm thought might have been a call to point out that Chisholm Grovedale had not increased its price. According to his evidence, normally all Chisholm sites were instructed to go up at the same time, so the operator at Chisholm Grovedale must have been too busy to put the price up earlier. If that were the case, Chisholm would not have been influenced by the call at 08.19. The decision to increase its prices had already been made. Graeme Chisholm said that the decision on this occasion would have been made after Darren Campigli had spotted board prices on his way to work and had seen that the prices had increased.
465 At 12.58, Phil Carmichael telephoned the Leahy office for one minute. At 12.59, Leahy telephoned Chisholm for one minute and 50 seconds. Graeme Chisholm said that he thought that this would have been a complaint call about 7-Eleven not having risen, but on this occasion there was no communication from Chisholm to 7-Eleven concerning that, so that the call might have been about something else altogether.
466 This period fell during the time that Eino Heikkila was on holidays, leading up to his departure from United Fuels. Although the call from the Leahy office to United Fuels at 16.51 on 13 September may have been to pass on information about a potential price increase, there was no-one at United Fuels to act on it. It was not suggested to Mr Riordan or Mr Hambrook that either of them had done so. Mr Heikkila did not suggest that anyone else at United Fuels was involved in price setting, or in acting on calls received from other market participants about prospective price increases. Interestingly, the average price at Shell Waurn Ponds rose from 73.2 to 77.0 on 14 September. Shell Victoria Street also increased from 73.4 to 76.6, suggesting a rise late in the day, when other market participants had begun to drop their prices from 77.5 to between 76.7 and 76.9. It is also interesting to notice that BP Corford Express did not increase until 07.41 on 14 September, suggesting that the telephone call from Leahy to it at 16.53 on 13 September was not influential in the decision to increase.
467 All that can be said about this period is that it is possible that Apco communicated to Leahy information about a prospective price increase in a call dealing with that as well as another subject or other subjects. Leahy may well have acted on the information in deciding to increase its price, but it is likely that Apco reserved its position until it saw that Mobil sites were increasing. It is even more likely that Chisholm did not act on the information alone, but waited to confirm that a price increase had occurred before raising its prices on the morning of 14 September. Viewed in isolation from surrounding data, the data in Annexure B is consistent with the giving effect to of Arrangement No 1, but it is unlikely that effect was given to Arrangement No 3, because Chisholm obviously waited to see what others in the market would do.
16 – 17 September 1999
468 Again, the allegation is that Arrangements Nos 1 and 3 were given effect to in this period. The relevant call cycle began with a call from Peter Anderson to the Leahy office at 16.15, lasting up to three minutes. At 16.18, Leahy rang Chisholm for one minute and 12 seconds. At 16.19, Leahy rang United Fuels for 37 seconds. At 16.23, Leahy rang BP Corford Express for 22 seconds. At 16.40, Leahy again rang United Fuels for 41 seconds. This time, Chisholm increased its prices before closing on the evening of 16 September. It moved from 74.9 to 78.7 at Chisholm Grovedale at 20.02, from 75.7 to 78.7 at Chisholm Leopold at 21.57 and from 74.5 to 78.7 at Chisholm Geelong West at 22.05. The ACCC contended that these were the first increases recorded in the market. It is possible that they were not the first increases to occur, however, because Mobil Newcomb increased from 74.9 to 78.7 between 17.56 on 16 September and 06.23 on 17 September and Mobil East Belmont increased similarly between 19.54 and 06.15.
469 The Apco increases, also to 78.7, began at Apco Geelong East at 23.59 on 16 September. This was followed by Apco Lara at 00.17 on 17 September, Apco Geelong North at 00.58, Apco Highton at 02.01, Apco Geelong South at 04.04 and Apco Newcomb at 04.07.
470 Once again, although Mr Heikkila was on holidays and no-one else at United Fuels was involved in any arrangement or understanding on its behalf, the average price at Shell Waurn Ponds increased from 75.4 to 77.8 during 17 September, and Shell Victoria Street increased to 78.4 at some time during the day, possibly late when the market was moving slightly down from 78.7 towards this figure. The United Fuels data during Mr Heikkila’s absence in September 1999 illustrates the danger of assuming a connection between a price rise and an earlier telephone call. At best, with Mr Heikkila absent, the telephone calls would have been regarded as containing an item of information to be taken into account in setting prices, and certainly would not have been regarded as determinative.
471 The principal factor suggesting collaboration in raising prices in this period is the temporal proximity between the rises of Leahy and Apco. During this period, Chisholm’s increases occurred at or near closing time for its outlets, as did those of Leahy. Consistently with Mr Warner’s evidence, instructions for the Leahy increases may have been given before he ceased work for the day on 16 September, not very long after the phone calls. Nevertheless, there are difficulties about accepting that the data is consistent with the oral evidence. The call cycle was late in the afternoon and the price rises were overnight, so it would be necessary to disregard Ian Carmichael’s evidence about the maximum of two hours elapsing between a phone call from Peter Anderson and a price increase. The Mobil increases may indicate the possibility of an increase in the Melbourne petrol market flowing to Geelong.
21 September 1999
472 The ACCC alleges that, on this day, effect was given to Arrangements Nos 1 and 3. It is a poor example from the ACCC’s point of view, because the price rise concerned was only 2.0, and was already occurring in the Geelong petrol market well before any relevant call cycle.
473 The Mobil outlets increased overnight from 20 to 21 September, each adopting 77.9 as its price. Increases to that figure were recorded at Mobil Geelong North at 21.39, Mobil Highton at 21.46 and Mobil Latrobe Terrace at 23.32 on 20 September. The range of times within which other Mobil sites might have increased began as early as 17.49 at Mobil Moolap, 18.10 at Mobil Grovedale, 18.22 at Mobil Newcomb, 18.28 at Mobil Gateway, 20.42 at Mobil Belmont, 20.52 at Mobil East Belmont, 22.24 at Mobil Corio Village and 22.26 at Mobil Manifold Heights. The Mobil sites all again lowered their prices to 75.7 during the morning on 21 September. This is evidence that a price increase had occurred in Melbourne, and Mobil had tried to introduce it into Geelong, but it had not by then taken effect. The next move was made by Caltex Quick Bite at 08.54, moving to 77.5. At 09.23, Caltex Quick Bite lowered its price to 76.9. At 10.30, Apco head office rang the Leahy office for one minute and 14 seconds. The call was fairly clearly not made by Peter Anderson, because at precisely the same time he was telephoning Bruno Gallucci on his mobile telephone, the call being transmitted through Geelong. (Mobile telephone calls from the Apco head office generally registered as having been made from Geelong North, so Peter Anderson was unlikely even to have been in the office at that time.) At 10.33, the Leahy office spoke to Mr Anderson on his mobile phone for one minute and eight seconds. At almost 10.35, the Leahy office telephoned Chisholm for one minute and 14 seconds, then immediately telephoned United Fuels for 50 seconds, Phil Carmichael for 34 seconds and BP Corford Express for 15 seconds. Within minutes, at 10.49, Apco Geelong South increased from 75.7 to 77.5. This was followed by identical increases at 10.50 at BP Hillford, 11.00 at Apco Newcomb, 11.04 at Apco Geelong North, 11.05 at Chisholm Leopold, 11.05 at Chisholm Geelong West, 11.06 at Chisholm Grovedale, 11.09 at BP Torquay, 11.15 at Apco Geelong East, 11.18 at Apco Lara, and 12.05 at Apco Highton. BP Corford Express also increased from 75.9 to 77.5 at 12.00.
474 At 11.22, Phil Carmichael rang the Leahy office. At 11.23, the Leahy office returned the call for two minutes and 36 seconds, more than long enough to talk about a price increase. This was followed by a call at 11.26 from the Leahy office to Chisholm for 52 seconds, and another one of the same length at 11.45. At 11.46, Chisholm rang Jacques Bodourian for 31 seconds. 7-Eleven Newcomb increased its price from 75.7 to 77.5 between 11.43 and 12.05, and 7-Eleven Geelong East increased from 75.9 to 77.5 between 13.17 and 13.26.
475 This is the first occasion on which it can be said that the timing of the call cycle and subsequent price increases fits the pattern described by Ian Carmichael. Other aspects of the data on this occasion do not fit that pattern, however. Once again, the ACCC’s analysis failed to take account of the possible timing of increases at Mobil outlets. Mobil Newcomb moved to 77.5 at some time between 09.15 and 11.57 on the morning of 21 September. Mobil Point Henry’s move to the same price came after 09.51 and before 14.17. It is highly likely that what was discussed in the telephone calls was information about a rise already occurring, especially in light of the early move at Caltex Quick Bite. The small size of the price increase involved (1.8 in most cases) is also an element that makes this occasion not fit squarely within Ian Carmichael’s pattern. Once again, it must be remembered that Mr Heikkila was not at United Fuels, but the average price at Shell Waurn Ponds increased from 76.0 to 76.9 on 21 September. Shell Victoria Street lifted its price to 76.6 at some stage during the day, but it is not clear when.
476 Nor is it clear why there should have been what appears to be another call cycle after Apco, Leahy and Chisholm had increased their prices. At 12.54 on this day, Ian Carmichael spoke to the Apco office for four minutes. At 13.13, he again spoke to the Apco office for one minute and 30 seconds. At 13.36, the Leahy office rang Phil Carmichael for 19 seconds. At 13.56, the Leahy office rang Chisholm for one minute and 54 seconds. At 14.06, there was a call from Ian Carmichael to Chisholm for one minute and 30 seconds. At precisely the same time, the Leahy office rang Chris Andrianopoulos, so it appears that the call was not made by Ian Carmichael, who was engaged on a conversation with Chisholm. A call from Mr Andrianopoulos to Mr Shuvaly of 18 seconds is listed as occurring at exactly the same time as the Leahy call to Mr Andrianopoulos, which is mysterious. The ACCC’s submissions ignored this and suggested that the purpose of this call was for Leahy to inform Andrianopoulos, and for Andrianopoulos to inform Liberty, of a price rise that had already occurred. At 14.07, Leahy rang Chisholm again for two minutes. At 14.36, Chisholm rang Leahy for one minute and 20 seconds. At 14.38, Leahy rang United Fuels for 59 seconds and at 14.53, Phil Carmichael rang Leahy for one minute. No further price increases beyond the limited one that had occurred that day took place. Indeed, discounting to 77.3 began at Mobil and Apco outlets from 15.04 onwards.
477 This occasion provides some support for the ACCC’s contention that information about price increases was passed by telephone by Apco to Leahy and by Leahy to other participants in the Geelong petrol market. On this occasion, however, it is unlikely to have been information that was instrumental in procuring the price increases that took place, having regard to the fact that Mobil and Caltex Quick Bite had already apparently begun to bring into Geelong a relatively small price increase from the Melbourne petrol market. It is hard to see why Phil Carmichael would have been using Leahy to approach Chisholm to attempt to procure an increase by 7-Eleven, and why Leahy and Chisholm would have acted in this respect, when the price rise generally was plainly one that would stick and was of such a small amount in any event.
23 – 24 September 1999
478 The ACCC alleges that Apco and Leahy put into effect Arrangement No 1, and that Leahy and Chisholm put into effect Arrangement No 3, during this period. Again, the call cycle was one that occurred during the afternoon. At 16.44, Peter Anderson telephoned Leahy, the call being transmitted through Werribee. The call lasted two minutes and 30 seconds, more than long enough to speak about a prospective price increase. At 16.47, Leahy telephoned Chisholm for one minute and 33 seconds. At 16.49, Leahy telephoned United Fuels for 53 seconds. Mr Heikkila was still on holidays. At 16.50, Leahy telephoned BP Corford Express for 19 seconds.
479 Again, there is the possibility that some Mobil outlets in fact led the price increase. In particular, Mobil East Belmont increased from 75.4 to 78.7 at some time between 14.25 on 23 September and 06.16 on 24 September. So far as the data in Annexure B is able to fix times, the first increase was at Chisholm Grovedale, to 78.7, at 20.04 on 23 September. This was flanked by small decreases, to 74.9 at Caltex Quick Bite at 19.03, Apco Geelong North at 19.49, Apco Lara at 20.18 and Apco Highton at 20.53. The decreases were of 0.5 to 1.0. Mobil Geelong North increased to 78.7 at 21.46. Chisholm Leopold did likewise at 21.57 and Chisholm Geelong West at 21.58. Mobil Latrobe Terrace also increased to 78.7 at 23.32. In the early hours of the morning of 24 September, there were increases to 78.7 at Apco Geelong East at 00.07, Apco Geelong North at 00.59, Apco Newcomb at 01.20, Apco Lara at 01.39, Apco Highton at 02.04 and Apco Geelong South at 03.24. Leahy did not move until 08.04 at BP Hillford and 08.19 at BP Torquay. In the meantime, prices at a large number of Mobil outlets went up, and the two 7-Eleven sites and BP Corford Express had also increased, although in two cases the amounts were slightly different. The average price at Shell Waurn Ponds increased from 75.4 to 77.3 on 24 September, and Shell Victoria Street rose at some time during the day to 78.3.
480 This is an occasion on which it is fairly clear that Leahy did not give effect to Arrangement No 1 or to Arrangement No 3, because its price increase was substantially later than those of Chisholm and Apco. The ACCC conceded that it is probable that Leahy only increased after spotting board prices on the morning of 24 September, confirming that the rise had occurred. Graeme Chisholm speculated in his evidence that the Chisholm increases were probably the result of Darren Campigli’s observation of board prices on his way home from work. He said that it would not have been normal for Chisholm to agree to go up straight away. He surmised that Chisholm must have been ‘taking a hammering’, so decided that the sooner it could get the price up, the better. I take it that this was intended to convey that it is likely that Caltex had removed Chisholm’s price support, leaving it with no choice but to increase its price. This is a period that does not support the ACCC’s case.
27 – 28 September 1999
481 Only Arrangement No 3 is alleged to have been put into effect on this day, although the call cycle involved is much wider than just Leahy and Chisholm. The call cycle began on the afternoon of 27 September at 16.16, when Leahy telephoned Chisholm for one minute and 33 seconds. At 16.18, Leahy telephoned BP Corford Express for 13 seconds. At 16.19, Leahy telephoned Phil Carmichael, but simultaneously Leahy telephoned the United Fuels office for 20 seconds. It is likely that these two calls were made by different callers in the Leahy office. Chisholm telephoned Leahy at 17.42, but only for three seconds.
482 Chisholm increased its prices from 73.5 to 78.7 at Chisholm Grovedale at 19.56, Chisholm Leopold at 21.54 and Chisholm Geelong West at 21.56, all apparently close to closing time for those outlets. Leahy increased its price at BP Hillford by the same amount at 23.43, probably close to closing, but its increase at BP Torquay did not occur until 16.22 on 28 September. Mr Warner explained this on the basis that the manager at BP Torquay probably disobeyed a direction on 27 September to increase the price earlier, as he tended to be ‘a law unto himself’.
483 Once again, the simplicity of the picture is clouded somewhat by increases at Mobil outlets. An increase from 73.5 to 78.7 occurred at Mobil East Belmont some time between 17.17 on 27 September and 06.36 on 28 September. Mobil Moolap increased similarly between 17.33 and 08.34. Mobil Newcomb’s identical increase was between 18.46 and 07.22. The earliest times for some other Mobil outlets were later in the evening of 27 September. Mobil Geelong North certainly increased at 22.01 and Mobil Latrobe Terrace at 23.25. It is clear that Mobil was introducing into the Geelong petrol market during this period a price increase following one that had probably occurred in the Melbourne petrol market. The situation is therefore consistent with Chisholm’s decision being made on the basis that Caltex had withdrawn price support, consequent upon the Melbourne increase. Bearing in mind that a call was made to United Fuels, it is also worth noting that Mr Heikkila was still on holidays, that the average price at Shell Waurn Ponds increased from 73.7 to 78.2 during 28 September, but that Shell Victoria Street rose to 78.0, probably late in the day when a number of outlets, including Chisholm, Leahy and several Mobil outlets, had dropped to 77.9.
484 This is another period in which the data is consistent with an innocent explanation and does not fit Ian Carmichael’s pattern. I ought not to find that there was any giving effect to of any arrangement or understanding in those circumstances.
30 September – 1 October 1999
485 Again, the ACCC alleges that Leahy and Chisholm gave effect to Arrangement No 3 during this period. It was during this period that United Fuels ceased to conduct its business, which was taken over by United Retail.
486 So far as Leahy and Chisholm were concerned, the price increase in this period amounted to 3.2, from 75.5 back to 78.7. It is also worth noting that an increase of this order occurred at Apco Geelong East at 23.30 on 30 September, and at Apco Geelong North at midnight, without any apparent contact between Apco or Peter Anderson and Leahy about any pricing issues. The average price at Shell Waurn Ponds increased on 1 October from 75.4 to 77.8, suggesting a rise at some time during the day, but not particularly early.
487 The relevant call cycle began at 17.24 on 30 September, when Leahy telephoned Chisholm for 33 seconds. At 17.25, Leahy telephoned United Fuels for 39 seconds. At 17.27, Leahy telephoned BP Corford Express for 38 seconds. Only after those calls had occurred, at 17.35, did Peter Anderson telephone Leahy for two minutes, longer than would be required to find out about a price increase.
488 Once again, Chisholm increased at its relevant three outlets shortly before closing, 20.10 at Chisholm Grovedale, 22.02 at Chisholm Geelong West and 22.15 at Chisholm Leopold. Leahy increased at BP Hillford at 23.27. Anomalously, it had already increased its price at BP Torquay from 76.9 to 78.7 at 08.17 on 30 September, suggesting that even as early as that there was already information current about an increase back to that figure, perhaps reflecting Melbourne petrol prices.
489 Once again, the position is complicated by the Mobil outlets, where similar price increases could have occurred as early as 18.08 at Mobil Gateway, 18.26 at Mobil East Belmont, 18.32 at Mobil Newcomb and 19.46 at Mobil Point Henry. Again, this is suggestive of a price rise in Melbourne and the real possibility of removal of price support from Chisholm, precipitating its decision to anticipate the general rise by lifting its prices at closing. Mobil Highton certainly increased at 21.41 and Mobil Geelong North at 21.52. The latter increase probably had more to do with the Apco increases than anything else.
490 The ACCC relied on Mr Warner’s evidence that he would have given instructions for the BP Hillford increase before he ceased work for the day. This does not explain the much earlier BP Torquay increase to what was to prove to be the market price in the Geelong petrol market in the evening and the following morning.
491 There is also a suggestion that a call by Phil Carmichael to Ian Carmichael at 07.51 on 1 October for one minute was a complaint call about 7-Eleven not having risen. Certainly, the call was followed immediately by a call from Leahy to Chisholm for one minute and 33 seconds, but Chisholm does not appear to have acted on the information. 7-Eleven Geelong East had already increased to 78.7 between 07.06 and 07.11, and 7-Eleven Newcomb rose similarly between 08.12 and 08.19.
492 What is somewhat mystifying is the occurrence of what appears to be a classic call cycle on the morning of 1 October, which was not followed by any price increase. At 11.28, Mr Anderson rang Leahy for one minute and 30 seconds. At 11.30, Leahy rang United Retail for 25 seconds. At 11.38, Leahy rang Chisholm for one minute and 12 seconds. This illustrates the difficulty of relying on apparent call cycles as involving the implementation of arrangements or understandings, when those call cycles are followed at some later time by price increases.
7 – 8 October 1999
493 The ACCC alleges that effect was given to Arrangements Nos 3 and 8 during this period. It does not allege the implementation of Arrangement No 1, because a significant call from Apco to Leahy was omitted originally from Annexure B. It now appears there, at the start of what is relied on as a call cycle.
494 Relevant telephone communications occurred in the afternoon of 7 October. At 14.27, Alan Shuvaly rang Chris Andrianopoulos for one minute and 30 seconds. At 15.16, Mr Shuvaly again rang Mr Andrianopoulos for 30 seconds. At 15.52, Mr Shuvaly rang Peter Anderson for 30 seconds. At 16.00, Apco rang Mr Shuvaly for two minutes and two seconds. At 16.02, Apco rang the Leahy office. The call lasted three minutes and 48 seconds, so it must at least have involved matters other than just a prospective price increase. This is the call that originally did not appear in Annexure B. At 16.03, Mr Shuvaly rang Mr Andrianopoulos for one minute. At 16.06, there began what is described as the call cycle from Leahy. Leahy rang Chisholm for one minute and 15 seconds. Leahy had already rung Chisholm at 15.20, for 18 seconds, before Leahy had received the call from Apco, so it might have been the case that Leahy was simply ringing Chisholm again at 16.06 about something unrelated to price increases. Leahy then rang BP Corford Express for 26 seconds at 16.08. Immediately, Leahy rang the United Retail office. Of course, Mr Heikkila was no longer there and Mr Williamson, whom the ACCC alleges was the channel of communication between Leahy and United Retail, worked at Shell Waurn Ponds, not in the United Retail office. This call again illustrates the danger of assuming that what appears to be part of a call cycle is necessarily related to the implementation of an arrangement or understanding. In this case, the call clearly was not about a price increase. No arrangement or understanding even existed between Leahy and United Retail one week after United Retail had begun operating, because no such arrangement or understanding had had time to evolve (see [169] – [171]).
495 Chisholm lifted its prices from 72.9 back to 78.7 at about closing time for its various outlets, Chisholm Grovedale at 20.00, Chisholm Leopold at 21.56 and Chisholm Geelong West at 22.06. Leahy increased its prices at BP Hillford from 72.5 to 78.7 at 23.35 and from 73.5 to 78.7 at BP Torquay at 23.40. In the meantime, of course, Mobil outlets were increasing in the evening, the earliest possible time for which was Mobil Moolap at 18.23. This increase, which was to 78.8, could have occurred at any time up to 06.36 on the morning of 8 October, and was fairly quickly followed by a drop from 78.8, to 78.7, to match other prices. Mobil Geelong North certainly increased at 21.47 on 7 October to 78.7. So did Mobil Latrobe Terrace at 23.48. The Apco increases began with Apco Geelong North at 00.57 on 8 October. This was followed by Apco Lara at 02.14, Apco Highton at 02.15, Apco Geelong South at 02.58 and Apco Geelong East at 05.39. The 7-Eleven outlets also rose early in the morning, 7-Eleven Newcomb between 05.57 and 06.06 and 7-Eleven Geelong East between 07.05 and 07.14. So did Shell Latrobe Terrace at 07.01, Shell Belmont at 07.38 and Shell Speedwings at 07.43, most probably reflecting the fact that a Melbourne petrol price increase was flowing into the Geelong petrol market yet again. Certainly, there was no suggestion of any equivalent of Arrangement No 5 existing by this time, and there is no record in Annexure B of any communication with Garry Dalton on the part of anybody.
496 Once again, it is unsafe to assume in these circumstances that Chisholm acted on the basis of a phone call to increase its price, since an impending increase might have brought about the cessation of its price support from Caltex. While Leahy may have acted upon the information it received from Apco, there is no reason to suppose that it did so because it had any arrangement or understanding with Chisholm.
497 The issue of giving effect to Arrangement No 8 is even more problematic. The only witness who gave oral evidence about this alleged arrangement or understanding was Mr Shuvaly. There is no suggestion in his evidence that he was ever the initiator of a move to coordinate a price increase on the part of Liberty, Andrianopoulos and Apco. It is highly likely that the calls that occurred between Mr Shuvaly and Mr Andrianopoulos, and between Mr Shuvaly and Mr Anderson at Apco on the afternoon of 7 October 1999 were for another purpose altogether. When asked about the many calls shown in Annexure B for 7 October, Mr Shuvaly said, ‘I guess there has been a market move, there were obviously some discrepancies I guess with either ourselves or somebody in the market that wasn’t moving.’ There is no support in the data for 7 October for the suggestion that anybody had made a move in the Geelong petrol market on 7 October, before Mobil or Chisholm led the price increases in the evening. The Apco increases took place in the early hours of the morning on 8 October. Liberty’s average price for that day increased from 72.6 to 78.2, making it difficult to determine when any increase or increases occurred. Andrianopoulos increased its price from 72.9 to 78.3, then lifted it to 78.7 and lowered it again to 72.5 on the same day. It is impossible to say that any arrangement or understanding to increase prices on the part of those three parties was implemented during this period.
26 October 1999
498 This is another occasion on which the ACCC alleges that Leahy and Chisholm implemented Arrangement No 3 as a stand-alone arrangement, although other telephone calls that appear to be a call cycle were made. On this occasion, a price rise in the Geelong petrol market was clearly led by Brumar. At 12.48, Shell Latrobe Terrace increased its price from 68.5 to 76.9. Shell Norlane did the same at 13.11 and Shell Anglesea increased from 69.5 to 77.9 at 13.37. Shell Belmont followed at 14.03, from 68.5 to 76.9, as did Shell Highton at 14.07. At 14.27, Leahy telephoned Chris Andrianopoulos for one minute and 38 seconds. At 14.29, Leahy telephoned Chisholm for four minutes and 23 seconds. Having regard to the respective lengths of these calls, it is unlikely that they were about price increases in any event, although information about prices may have been passed during the calls.
499 Leahy’s price increase was almost immediate, at 14.33. It matched the Brumar price of 76.9. At 14.40, Leahy increased its price at BP Torquay to 76.9. Apco, Mobil and BP Corford Express increased their prices at various outlets during the afternoon. Chisholm did not implement any increase until 16.29 when it lifted its price at Chisholm Leopold to 76.9. This was followed by similar increases at Chisholm Grovedale at 16.34 and Chisholm Geelong West at 16.42. In the meantime, Leahy had rung Chisholm at 15.15 for 20 seconds, at 15.59 for one minute and 15 seconds, at 16.03 for one minute and eleven seconds and at 16.30 for one minute and 26 seconds, and had received a phone call from Chisholm at 16.06 for 17 seconds. There was a further eight-second call from Leahy to Chisholm at 17.28. Whatever it was that Leahy and Chisholm were talking about on that day, it is far-fetched to suggest that they were implementing an arrangement or understanding to increase prices at or about the same time. The passage of time between the Leahy increases and the Chisholm increases is sufficient to discount this altogether. The fact that the market generally was moving to 76.9 makes it abundantly clear.
4 – 5 November 1999
500 The ACCC alleges again that Arrangements Nos 1 and 3 were given effect to in this period.
501 At 14.43 on 4 November 1999, Peter Anderson telephoned Leahy for 30 seconds. At 14.57, Mr Anderson again telephoned Leahy, this time for four minutes and 30 seconds. Whatever business he had with Leahy on that occasion was not only about petrol prices, although he might have passed information about them during either call.
502 Leahy made two calls to Chisholm, one at 15.01 for 36 seconds and one at 15.17 for one minute and 58 seconds. At 15.19, Leahy rang Phil Carmichael for 30 seconds. At 15.23, Leahy rang BP Corford Express for 39 seconds. Ian Carmichael made two calls to David Mortimer, one at 17.50 for 30 seconds and one at 17.51 for one minute.
503 Chisholm increased its prices from 71.5 to 78.7 at about closing time on that evening, Chisholm Grovedale at 21.07, Chisholm Leopold at 21.43 and Chisholm Geelong West at 22.09. Apco began increasing at Apco Geelong East at 22.58, from 71.3 to 78.7. Leahy increased its price at BP Hillford from 71.5 to 78.7 at 23.39 and at BP Torquay at 23.57. Other Apco outlets increased from 71.3 to 78.7, Apco Highton at 00.16 on 5 November, Apco Newcomb at 00.39, Apco Geelong North at 01.59, Apco Lara at 02.14 and Apco Geelong South at 02.30.
504 Once again, there is a considerable time-lag between telephone calls and price increases, much greater than that to which Ian Carmichael referred. Once again, there were possible Mobil increases, this time perhaps as early as 19.28 at Mobil Moolap and 19.51 at Mobil Gateway, although Mobil Geelong North did not increase until 06.00 on 5 November and Mobil Corio Village until 06.11 on that day. This presents the possibility that prices in the Melbourne petrol market had risen, and that Mobil was about to implement them. It also presents the possibility that Caltex had withdrawn price support from Chisholm, thereby precipitating Chisholm’s increase.
505 In this period, it is no doubt possible that Apco passed information to Leahy, which passed it to Chisholm and others about an impending price increase, probably based on a Melbourne increase. Even assuming that the instruction for Leahy’s increases was given before Mr Warner finished work on 4 November, there is no reason to suppose that Chisholm did not take into account other factors (such as the withdrawal of price support) or that Apco did not take into account the fact that Mobil price increases had already begun to occur, before it implemented its own.
506 The ACCC’s submission also drew attention to a phone call from Phil Carmichael to Leahy at 08.42 on 5 November, for 30 seconds, followed by a call from Leahy to Chisholm at 08.44 for 56 seconds. The suggestion was that Phil Carmichael was complaining about the failure of 7-Eleven to increase its prices, and that Leahy was attempting to use Chisholm as a channel to reach Jacques Bodourian. 7-Eleven Geelong East had already risen between 06.46 and 07.42, at least an hour earlier than Phil Carmichael’s call, but it is feasible that he was unaware of this increase when he made the call, because 7-Eleven Newcomb was closer to the Portcliff outlets at Mobil Newcomb and Mobil Gateway. Chisholm did not telephone Mr Bodourian on this occasion, and 7-Eleven Newcomb did not increase its price until between 09.39 and 09.49.
507 There were other telephone communications between Leahy and Chisholm at 09.03, 10.53, 17.14 and 17.24 on 5 November. Indeed, there was what appears to be a call cycle beginning at 17.12 that afternoon when Apco telephoned Leahy for 47 seconds, Leahy telephoned Chisholm for 28 seconds and Leahy telephoned BP Corford Express for 29 seconds, but there was no associated price increase. This again illustrates the danger of assuming that what appears to be a call cycle is related only to price increases.
11 – 12 November 1999
508 Again, Arrangements Nos 1 and 3 are the subject of the ACCC’s allegations in relation to this period.
509 The call cycle began at 15.42, with a phone call from Peter Anderson to Leahy, timed at one minute. At 15.43 on 11 November 1999, Leahy telephoned Chisholm for 49 seconds. At 15.44, Leahy telephoned Phil Carmichael for 16 seconds. At 15.45, Leahy telephoned BP Corford Express for 14 seconds. No increases occurred until close to Chisholm’s closing times, with Chisholm Grovedale moving from 71.5 to 78.7 at 21.06, Chisholm Leopold doing likewise at 21.53 and Chisholm Geelong West the same at 22.03. BP Hillford moved from 71.5 to 78.7 at 23.43. The first Apco increase was at midnight, at Apco Geelong North. This was followed at 00.24 on 12 November by Apco Highton, at 00.46 by Apco Newcomb, at 02.38 by Apco Geelong South and at 05.39 by Apco Geelong East. BP Torquay increased from 72.9 to 78.7 at 05.45 on 12 November, presumably on opening. BP Corford Express moved from 72.5 to 78.7 at 07.18 on 12 November.
510 Once again, there are Mobil increases that could have preceded any of the above increases on 11 and 12 November 1999, with the earliest time for Mobil Newcomb being 18.18, Mobil Point Henry 18.39, Mobil East Belmont 19.00, Mobil Corio Village 19.39, Mobil Belmont 21.51, Mobil Gateway 22.05 and Mobil Manifold Heights 22.32. Mobil Geelong North increased at 06.04 on 12 November.
511 The pattern is by now familiar. It appears that Mobil was in the process of implementing a price increase in Geelong, probably based on an increase in Melbourne. Chisholm may have been forced to move by the removal of price support resulting from the same Melbourne increase. Apco may have only increased its prices when it became aware of increases at Mobil outlets. Whilst the data in Annexure B for this period is consistent with the ACCC’s case, there remains the possibility that there were factors motivating Chisholm and Apco to increase other than simply their communications with Leahy, even assuming that the instructions for Leahy’s increases were given before Michael Warner finished work for the day on 11 November.
512 The ACCC also contended that a call at 07.43 on 12 November from Phil Carmichael to Ian Carmichael, lasting one minute, was probably a complaint call about 7-Eleven. This is unlikely, because it was not until 08.11 on that morning that Leahy called Chisholm for 39 seconds. Leahy called Chisholm again at 08.40. The time delays are inconsistent with the desire to pass on a complaint.
18 November 1999
513 The ACCC alleges that Arrangement No 3 was implemented on this occasion as a stand-alone arrangement. Leahy telephoned Chisholm at 16.28 for 30 seconds and then telephoned BP Corford Express at 16.29 for 20 seconds. Chisholm increased its prices at Chisholm Geelong West at 21.51 and at Chisholm Leopold at 22.06, both from 72.5 to 78.7. Leahy increased its prices at BP Torquay from 73.5 to 78.7 and at BP Hillford from 72.5 to 78.7 at 22.42 and 23.46 respectively. Once again, there are Mobil outlets that could have preceded these increases, the range at Mobil Newcomb beginning at 16.40, at Mobil Moolap at 18.08 and at Mobil Gateway at 19.06. Again, the inference is that the Melbourne petrol market had moved and Mobil was implementing the move in Geelong. Price support may well have been withdrawn for Chisholm as a consequence of the Melbourne price move. In the light of an equally available inference of innocence, it would be wrong to find that Arrangement No 3 was given effect to on this occasion.
3 – 4 December 1999
514 The ACCC alleges that Arrangements Nos 1, 3 and 6 were given effect to during this period. This is the first occasion on which such an allegation is made in respect of Arrangement No 6, alleged to be an arrangement or understanding between Leahy and United Retail.
515 The occurrence of an increase in prices in the Melbourne petrol market, about to flow into the Geelong petrol market on Friday, 3 December 1999 was signalled on the morning of Thursday, 2 December. At 09.36 on that day, the price at Shell Speedwings rose from 75.9 to 79.9. An identical rise occurred at 11.02 at Shell Norlane. These rises at two very prominent sites would have alerted those who were board-spotting in Geelong to the likelihood of a price increase. Brumar could not force the market up by itself, and both Shell Norlane and Shell Speedwings dropped back to 75.9 at 07.01 and 07.29 respectively on the morning of 3 December. Prices generally moved downwards to about 74.9 on that morning. There was a very considerable amount of telephone traffic between Leahy and Chisholm during the morning, but no reliance is placed on it. The relevant call cycle, which took place during the afternoon, was also very involved. At 16.10 on 3 December 1999, Ian Carmichael rang Peter Anderson for 30 seconds. At 16.12, Mr Carmichael rang BP Corford Express for one minute. At 16.14, he rang Chisholm for one minute. At 16.15, he rang BP Corford Express again for 30 seconds. At 16.16, Ian Carmichael rang Colin Williamson for one minute. At 16.17, Ian Carmichael rang Phil Carmichael for one minute. At 16.18, Colin Williamson rang Shell Waurn Ponds, but only for three seconds. At 16.19, Ian Carmichael rang Chris Andrianopoulos for one minute and 30 seconds. Simultaneously, Colin Williamson rang Ian Carmichael for 13 seconds, probably to leave a message, as Ian Carmichael was already on the telephone to Mr Andrianopoulos. Between 16.19 and 16.23, Colin Williamson made short calls, varying from 22 to 57 seconds to the United Retail office first and then to the United Retail outlets at Shell Breakwater, Shell Drysdale and Shell Victoria Street, as well as to another Shell outlet at Winchelsea. At 16.25, Colin Williamson also rang a Shell outlet at Torquay for 36 seconds, and at 16.26 he rang Shell Waurn Ponds for one minute and one second. At 16.37, Ian Carmichael rang Chisholm for two minutes and 30 seconds, far longer than necessary to deliver price information. At 16.37, Colin Williamson also attempted to ring Ian Carmichael, the call being timed at 26 seconds, so probably not reaching him, as he was already on the phone to Chisholm. At 16.38, Colin Williamson rang the Leahy office for 23 seconds. At 16.41, Ian Carmichael rang Colin Williamson for 30 seconds. Colin Williamson then rang the United Retail office at 16.41 for two minutes and 32 seconds, and then made another round of calls, all for less than one minute, to Shell Breakwater, Shell Drysdale, Shell Ocean Grove, the Shell outlet at Winchelsea, the Shell outlet at Torquay, Shell Waurn Ponds and again Shell Breakwater between 16.44 and 16.50. At 16.50 he then rang Ian Carmichael again for 21 seconds. This is the only occasion on which the ACCC inserted into Annexure B any of the material that it had in its possession recording telephone conversations between Colin Williamson and United Retail outlets, possibly for the purpose of giving instructions as to the level at which to set prices. Nothing happened in the way of price rises for some hours after that flurry of calls, except that Brumar increased the price at Shell Speedwings from 74.9 to 79.9 at 17.15. Brumar also increased the price at Shell Anglesea from 75.9 to 80.9 at 17.51 and, at 19.32, increased the price at Shell Highton from 75.0 to 79.9. Brumar was making another serious attempt to lead the market price upwards on a summer Friday afternoon, when much traffic would be expected to pass through Geelong, heading for the surfing resorts.
516 Chisholm increased its prices from 74.9 to 79.7 at Chisholm Grovedale at 20.59, Chisholm Leopold at 21.51 and Chisholm Geelong West at 22.12. At 23.42, Leahy increased its price to the same extent at BP Hillford. At 23.55, Mobil Latrobe Terrace also moved to 79.7.
517 The first Apco increase for this period was at 00.18 on 4 December, when Apco Lara moved from 74.9 to 79.7. At 00.23, Apco Geelong East moved by the same amount and, at 02.38, Apco Geelong South repeated the move. Leahy increased the price at BP Torquay at 05.23 from 75.7 to 79.9. Prices at a number of Mobil outlets also went to 79.7, some of them potentially earlier than the Chisholm increase: Mobil Moolap’s move was between 17.25 on 3 December and 09.21 on 4 December and Mobil Gateway’s move was between 19.11 and 08.00. Data for the initial rises from Apco outlets other than those I have specifically mentioned appears to have been unavailable for Annexure B. The first recorded entries for Apco Geelong North and Apco Highton on 4 December 1999 are decreases, later in the day.
518 Shell Victoria Street recorded an increase from 76.7 to 79.2 some time on the Saturday morning, 4 December. The only available figures for Shell Waurn Ponds are an average for the Friday, Saturday and Sunday, and involve an increase from 76.6 to 78.6 over the three days. The ACCC contended that, because sales were very much lower on Saturday and Sunday than on Friday, this suggests an increase to around 79.7 towards the end of Friday, 3 December. If that were the case, the increase is likely to have been based on awareness by Robert Riordan of Brumar’s attempt to lead the Geelong petrol market up. Shell Speedwings, which was visible from the United Retail office had been one of the early outlets to move, so Mr Riordan would have been aware of an impending increase. Exactly what all of the telephone traffic on the afternoon of 3 December was about is unclear. The ACCC conceded that it cannot advance a theory as to why there were two rounds of calls from Colin Williamson to the United Retail outlets.
519 It cannot be contended that the data supports the theory that any arrangement or understanding was implemented, on the balance of probabilities. Plainly, there was a petrol price rise from Melbourne, being carried into the Geelong market by Brumar and Mobil outlets. The possibility that Chisholm moved because of the removal of price support, based on the Melbourne petrol price increase, rather than because of any telephone contact from Leahy cannot be ignored. The elapsed time between any telephone contact and any price increase places the data outside the pattern described by Ian Carmichael, although some of Michael Warner’s evidence is more consistent with the ACCC’s case in this respect. The number of phone calls between Ian Carmichael and Chisholm, and the length of the last of them (two and a half minutes) tend to suggest that there were things other than price movements being discussed.
9 – 10 December 1999
520 In respect of this period, the ACCC alleges that Apco and Leahy gave effect to Arrangement No 1, Leahy and Chisholm gave effect to Arrangement No 3 and Apco, Andrianopoulos and Liberty gave effect to Arrangement No 8. The ACCC relied on a call cycle which it sees as beginning at 15.51 on Thursday, 9 December 1999. Prior to that, on that day, there had been no less than 18 telephone calls involving parties to those three alleged arrangements or understandings, or those who were officers or employees of them.
521 At 15.51, Peter Anderson reached Alan Shuvaly’s message bank. Mr Anderson then rang the Liberty office for up to 30 seconds at 15.52. At the same time, Leahy attempted to ring Peter Anderson, reaching his message bank. At 15.55, Mr Shuvaly, whose call was transmitted through Oakleigh at that time, reached Mr Anderson’s message bank. At 15.58, Mr Anderson reached Mr Shuvaly’s message bank. All of these calls of Mr Anderson were transmitted through Warrnambool. Finally, at 16.00, Mr Shuvaly and Mr Anderson spoke in a call from the former lasting two minutes. At 16.02, Mr Anderson rang Leahy for two minutes and 30 seconds. At 16.03, Mr Shuvaly rang Chris Andrianopoulos for one minute and 30 seconds. At 16.05, Leahy rang Chisholm for 26 seconds. At 16.06, Leahy rang BP Corford Express for 39 seconds. At 16.08, Leahy rang Phil Carmichael for 28 seconds. At 16.17, Mr Shuvaly rang Mr Andrianopoulos for 30 seconds. At 16.21, Leahy rang Mr Andrianopoulos for 24 seconds. At 16.31, Mr Shuvaly rang Mr Andrianopoulos again for 30 seconds. At 16.37, Mr Shuvaly again rang Mr Andrianopoulos for 30 seconds. At 16.40, Mr Shuvaly again rang Mr Andrianopoulos, this time for one minute. Whether he had only been reaching Mr Andrianopoulos’s message bank up till that time is unclear. At 16.41, Colin Williamson rang Ian Carmichael for one minute and 25 seconds. At 16.43, Ian Carmichael rang David Mortimer for 30 seconds. At 18.24, Mr Shuvaly again rang Mr Andrianopoulos for one minute.
522 Chisholm increased its price from 76.5 to 78.7 at Chisholm Grovedale at 21.01, and at Chisholm Leopold at 21.56. Leahy also increased from 76.9 to 78.7 at BP Torquay at 23.02, and from 76.5 to 78.7 at BP Hillford. On 9 December, Andrianopoulos moved down from 77.5 to 76.5, up to 76.7 and then up to 76.9 at times unknown during the day. Liberty’s average price for the day was 76.5.
523 Apco began increasing its outlets at 00.01 on 10 December, with Apco Lara moving from 76.5 to 78.7. Next to move was Mobil Latrobe Terrace, at 00.09, from 76.5 to 78.7. Apco then moved Apco Geelong East at 00.21, Apco Newcomb at 00.32, Apco Lara at 01.07, Apco Highton at 01.49, Apco Geelong North at 01.59 and Apco Geelong South at 02.39, all to 78.7 except Apco Lara, which moved further to 78.9. Chisholm Geelong West moved up to the same price at 05.58, presumably on opening. There were, of course, some Mobil outlets that could have increased their prices prior to any of these increases, notably Mobil Newcomb at some time after 17.17 on 9 December and before 06.50 on 10 December, and Mobil Grovedale after 19.43 and before 06.46. Other Mobil outlets moved up overnight or in the morning. BP Corford Express moved to 78.7 at 07.17 on 10 December. 7-Eleven increased its prices to 78.7 between 06.49 and 07.24 at 7-Eleven Newcomb and between 08.37 and 08.55 at 7-Eleven Geelong East.
524 Liberty’s average price for the day on 10 December was 78.7. At times unknown on that day, Andrianopoulos moved from 76.9 to 78.5, down to 76.5 and up to 78.7. These moves are probably inconsistent with a move to the last-mentioned figure early in the day.
525 The ACCC submitted that a call at 07.55 on 10 December from Ian Carmichael to Chisholm, followed by a call at 08.22 from Chisholm to Jacques Bodourian was about 7-Eleven failing to increase its prices, but Leahy had received nothing that could be characterised as a complaint call, and 7-Eleven Newcomb had in fact moved more than half an hour before the first of these calls.
526 The ACCC also submitted that a call at 12.15 on 10 December from Leahy to Gordon Primmer, followed by a call from Gordon Primmer to Stan Kerr was an attempt to persuade United Convenience to increase its price. United Convenience in fact moved from 76.3 to 78.5 at some stage during the day, but it is hardly likely that United Convenience would have brought undone a general price increase that was already prevalent in the Geelong petrol market. The Liberty average price moved from 76.5 to 78.7 on 10 December, suggesting that it moved at the beginning of the day. In his evidence, Mr Shuvaly thought it had probably moved around midnight. He thought that he would have given instructions for this move at about 22.00 or 23.00, ‘[a]fter I knew there had been a market move’. He said that he would have obtained information about a market move from competitors, or from his agent in Geelong in the course of the evening. Although he thought that the calls shown in Annexure B earlier in the day were about prices, Mr Shuvaly said that he did not receive information about price moves that were about to happen. He thought that there would have been a market move during the day, by the major oil companies, to which others did not react quickly enough, so that there would have been another attempt after the evening driving peak. He was assuming that this was what took place. Mr Warner thought that the calls were about a move to a new price that was going to happen that night.
527 Comments similar to those I have already made about other periods might be made in relation to Arrangements Nos 1 and 3 in this period. The time gap between the call cycle and the price increases was outside Ian Carmichael’s pattern of events. On a day when there appears to have been a great deal to talk about among participants in the market, isolating particular calls seems difficult. As the Mobil increases demonstrate, it is highly likely that the Geelong petrol market was following the Melbourne market upwards. Information about this may have been shared around in the telephone calls but, apart from Leahy (if Mr Warner’s evidence about when he gave instructions for price increases is to be accepted), both Chisholm and Apco appear to have waited. Again, it may have been that Chisholm was deprived of price support. It may have been that Apco became aware of moves by Mobil outlets before moving itself.
528 As to Arrangement No 8, it is very unlikely that this was put into effect during this period. Mr Shuvaly’s comments on the data in Annexure B do not support the implementation of that alleged arrangement or understanding. Nor do the price moves by Andrianopoulos, which seem to have been uncoordinated with those of Apco.
529 At best, the data is consistent with part of the oral evidence led by the ACCC, but other explanations for the decisions to make increases are equally likely. In those circumstances, it would be wrong to find that Arrangements Nos 1 and 3 were put into effect. As I have said, if Arrangement No 8 existed, it was very unlikely to have been put into effect on this occasion, particularly in the light of the absence of evidence of coordinated price increases by those and other participants in the Geelong petrol market.
30 – 31 December 1999
530 For this period, the ACCC alleges that effect was given to Arrangements Nos 1, 3, 6 and 8. The first significant price increase for the day preceded any apparently relevant telephone calls. It was at Mobil Belmont at 12.05 on 30 December 1999, a price rise from 73.9 to 79.7. It was 79.7 that effectively became the market price overnight. This suggests that there had been an increase in Melbourne, and that decisions had been made in Melbourne to spread the price increase to Geelong.
531 On 30 December 1999, Alan Shuvaly was in Brisbane. At 13.14, he rang Chris Andrianopoulos for one minute. Mr Shuvaly then rang Mr Anderson for a call timed at 30 seconds. Mr Shuvaly then rang Mr Andrianopoulos twice more, for 30 seconds at 13.54 and for one minute at 14.06. At 16.28, Mr Andrianopoulos rang Mr Shuvaly, and the call was diverted to another mobile number. At 16.38, Mr Anderson rang Mr Shuvaly for two minutes. In his evidence, Mr Shuvaly thought that the calls were the result of him obtaining information, possibly from his Geelong agent, about what was happening in the market, and his desire to check that information with Mr Andrianopoulos and Mr Anderson. At 16.40, Mr Anderson rang Leahy for one minute. Calls from the Leahy office to Chisholm followed at 16.41 for one minute and 21 seconds, BP Corford Express at 16.42 for 15 seconds, Phil Carmichael at 16.44 for one minute and 32 seconds and Colin Williamson at 17.26 for 30 seconds. Michael Warner then rang Gordon Primmer at 17.59 for four minutes and 30 seconds, a call which from its length appears not to have been part of any price call cycle. Amongst the calls from Leahy, Apco Geelong East increased its price from 73.9 to 75.7 at 17.13. This increase was somewhat anomalous when compared with other prices in the market, and with other Apco prices.
532 The price rises began with Leahy increasing BP Leopold from 73.9 to 79.7 at 18.12. Mr Warner said that he sometimes raised the price at BP Leopold during the evening peak hour, earlier than at other Leahy outlets, because it was on the wrong side of the road to capture commuter traffic from Geelong, and he was trying to ensure that the business was profitable.
533 Chisholm then increased its price at Chisholm Geelong West at 21.56, probably shortly before closing time. Chisholm did not increase its prices at Chisholm Grovedale or Chisholm Leopold until 07.04 and 07.25 the following morning. In the meantime, Leahy increased its price at BP Hillford from 73.9 to 79.7 at 23.26. Mobil Latrobe Terrace also increased by the same margin at 23.46, Apco Geelong North at 23.59 and Mobil Corio Village at 23.59.
534 As was usual, data for some Mobil outlets only supplies a range of times between which an increase occurred. In particular, Mobil Moolap increased at some time between 18.24 on 30 December and 06.28 on 31 December. Mobil Newcomb increased between 19.15 and 06.36. Mobil Point Henry increased between 20.42 and 06.55.
535 Shortly after midnight, Apco sites other than Apco Geelong North began increasing to 79.7, Apco Highton at 00.07, Apco Geelong East at 00.21, Apco Newcomb at 00.45, Apco Lara at 01.22 and Apco Geelong South at 02.23. In the midst of these increases Mobil Manifold Heights also increased at 00.09. Leahy did not increase its price at BP Torquay until 05.33 on 31 December, when it also went to 79.7. Mobil Geelong North went to the same price at 06.04. Brumar joined the rises with Shell Latrobe Terrace at 06.40, going only to 78.7, but Shell Westoria went to 79.7 at 07.04, Shell Belmont at 07.29 and Shell Norlane at 07.34. BP Corford Express also went to 79.7 at 07.19. 7-Eleven Geelong East went to the same price between 06.46 and 07.39, and 7-Eleven Newcomb between 07.53 and 08.01. At 09.01, the Geelong Car Spa went to 79.7. Caltex Quick Bite went to 79.7 at 09.09 and then to 80.5 at 09.15.
536 The ACCC sought to characterise a call from Chisholm to Jacques Bodourian at 08.06 on 31 December as a complaint that 7-Eleven had not gone up (although both 7-Eleven outlets had been up for almost half an hour before the call was made). If it were such a complaint, it was not in response to any call from Phil Carmichael to Ian Carmichael, or from Leahy or Ian Carmichael to Chisholm.
537 On 31 December, BP Norlane increased from 75.9 to 79.7, dropped to 73.7 and then increased to 73.9 at times unknown during the day. Liberty’s average went from 74.0 to 78.9, suggesting an increase at some stage during the day, or to a lower price, or both. Shell Victoria Street increased to 79.7 at some stage during the day. The average price at Shell Waurn Ponds increased from 76.0 to 78.1 over four days from 31 December to 3 January, consistent with a rise at some stage on 31 December.
538 The data for this period suggests that an increase in the Melbourne petrol market was flowing into Geelong, particularly via Mobil. It may be that information about it was spread by means of phone calls, although there must be some doubt about the calls involving the parties to Arrangement No 8, because they were spread over a long period. To a large extent, the price increases were sporadic, even among those who are alleged to have been coordinating them. Those of both Chisholm and Leahy were partly in the evening and partly in the morning, with the Apco increases around midnight and through the early hours of the morning. Given the spread of price increases, the time elapsing between the phone calls and the increases in general, the possible early moves by some Mobil outlets (signalled by Mobil Belmont’s very early rise at 12.05 on 30 December), and the absence of any data giving a clue as to time for Andrianopoulos, Liberty, and United Retail, it is not possible to find on the balance of probabilities that there was anything other than a spreading of information about a price rise that was already occurring, inherited from Melbourne, and the making of independent decisions to follow that rise.
5 – 6 January 2000
539 The ACCC alleges that effect was given to Arrangements Nos 1, 3 and 6 on this occasion. By late afternoon on Wednesday, 5 January 2000, most Apco outlets and a number of Mobil outlets had reached the apparent low point of a price cycle, with their prices at 74.9. Some other market participants were at 75.2. At 18.04, Leahy reduced its price at BP Hillford from 75.2 to 74.9.
540 At 18.36, Peter Anderson telephoned Ian Carmichael for one minute and 30 seconds. At 18.41, Mr Carmichael rang David Mortimer for 30 seconds. At 18.43, Mr Carmichael rang Colin Williamson for 30 seconds. At 18.50, Mr Carmichael rang Chisholm for 30 seconds. At 18.52, Mr Carmichael rang BP Corford Express for 30 seconds. Whether he actually spoke to anyone is unknown. The fact that all four calls were timed at what may have been a maximum of 30 seconds is perhaps significant.
541 At 19.01, Leahy increased the price at BP Leopold from 75.2 to 79.7. Mr Warner gave evidence that he sometimes raised the price at BP Leopold earlier than at other Leahy outlets, because it was 12 kilometres out of Geelong and was on the right-hand side of the road for commuter traffic leaving Geelong, so that a price rise late in the day did not have a significant effect on the volume of sales. It was not until 22.26 that evening that the price at BP Torquay rose from 76.9 to 79.7, and 23.05 that the price at BP Hillford rose from 74.9 to 79.7.
542 Apco did not commence its increases until 23.46, with Apco Highton moving from 74.9 to 79.7 at that time, Apco Lara moving similarly at 23.49 and Apco Geelong North at 23.58. Other Apco increases followed at Apco Geelong East at 00.35 and Apco Geelong South at 02.34 on 6 January 2000.
543 Chisholm did not increase at all until 07.17 on 6 January at Chisholm Geelong West, 07.34 at Chisholm Grovedale and 08.14 at Chisholm Leopold. In each case, the increase was from 75.2 to 79.7. Chisholm Geelong West and Chisholm Grovedale were both opening at 06.00 each day at that time, so the increases were well over an hour after opening time.
544 Both Shell Victoria Street and Shell Waurn Ponds increased from 75.9 to 79.7 at some time on 6 January, but the time is unknown.
545 Once again, the unknown factor is the times of Mobil increases. The data in Annexure B shows that ULP prices at a number of Mobil outlets increased to 79.7 overnight or in the morning during this period. The earliest possible time for such an increase was 14.08 on 5 January at Mobil Moolap. Mobil Gateway increased some time between 19.38 on 5 January and 06.35 on 6 January, Mobil Belmont between 20.25 and 00.21, Mobil Corio Village between 20.48 and 05.51, Mobil Grovedale between 20.45 and 08.10, Mobil Newcomb between 20.37 and 08.08, Mobil Point Henry between 22.51 and 08.23 and Mobil Manifold Heights between 23.38 and 06.44. It may also be significant that Shell Latrobe Terrace increased from 75.9 to 79.7 at 06.42 on 6 January. At 07.45 on 6 January, BP Corford Express also increased from 75.9 to 79.7.
546 The Mobil increases, and the early move at one Brumar outlet, suggest that prices in the Melbourne petrol market had already increased, and the increase was flowing into Geelong inevitably. It may be that the call cycle on 5 January was the vehicle for passing information about this price increase, but the range of times at which Leahy, Apco and Chisholm increased their prices makes it unlikely that they were doing so in a coordinated fashion. Having regard to the length of the telephone calls in the call cycle on 5 January, it may be that Ian Carmichael did not manage to speak to anyone other than Peter Anderson, and that the price increase from Melbourne just flowed through the Geelong petrol market in the usual way, as a result of decisions made consequent upon board-spotting. It is difficult to see that this period supports the ACCC’s case in any significant way. It may be that the relative proximity of some Leahy increases and the majority of Apco increases could be used to suggest that there was some coordination resulting from the telephone conversation between Ian Carmichael and Mr Anderson, but the data also makes it appear possible that Apco was simply following increases at Mobil outlets.
10 – 11 January 2000
547 In this period, the ACCC alleges that effect was given to Arrangements Nos 1 and 8. On 10 January 2000, Alan Shuvaly was in Brisbane. He made two calls of 30 seconds each to Chris Andrianopoulos from Brisbane at 12.37 and 12.57 respectively. At 13.46, Peter Anderson rang the Liberty office for 30 seconds. He then immediately rang Mr Shuvaly. The call lasted four minutes, suggesting that it was about something other than a prospective price increase, although not ruling out the possibility that price information was passed. At 13.51, Mr Shuvaly rang Mr Andrianopoulos for one minute and 30 seconds. At 14.55, Mr Shuvaly again rang Mr Andrianopoulos for 30 seconds. At 15.29, Mr Shuvaly rang Mr Anderson for 30 seconds. At 15.30, Mr Shuvaly rang Mr Andrianopoulos for two minutes. Whatever was passing between the alleged parties to Arrangement No 8 on this occasion, it appears to have been more complicated than information about a price level and a time. In his evidence, Mr Shuvaly was asked what he believed would have happened on this occasion, based on his recollections or his experience. His answer was:
‘We have had some sort of information as to what has been out in the market, and Peter Anderson has then seen it too and rang me and obviously didn’t get hold of me and rang me on my mobile. Then I rang up Chris to verify if the information was correct. From what I gather, the market had moved and we supported it overnight, and confirmed it the next day.’
548 The round of calls between the alleged parties to Arrangement No 8 was followed an hour after the last of them by a one minute call from Mr Anderson to Leahy, followed immediately by a 39-second call from Leahy to Mr Anderson. There was no call cycle from Leahy or Ian Carmichael or Michael Warner following those conversations. The only relevant contact from the Leahy office was a phone call to Chisholm at 16.41, for one minute and 43 seconds.
549 Leahy increased the price at BP Leopold from 75.9 to 79.7 at 16.58 on 10 January. This may have been in accordance with the practice, about which Michael Warner gave evidence, of increasing the price at that outlet during the afternoon traffic peak hour, because such an increase did not have a big effect on the volume of sales (see [221]). It does suggest that Leahy was aware of an impending increase before 16.58 on 10 January.
550 At that time, however, other prices were still moving down. At 16.57, Mobil Newcomb dropped from 75.9 to 75.7. Mobil Gateway did the same between 16.38 and 17.00. Price decreases continued at some Mobil and Apco outlets; Mobil Point Henry between 16.39 and 17.46, Mobil Moolap between 15.42 and 18.17, Apco Geelong East at 18.27 and Apco Newcomb at 19.55.
551 At 23.04 on 10 January, BP Torquay moved from 76.9 to 79.7 and at 23.43, BP Hillford moved from 75.9 to 79.7. Both these Leahy outlets were operating on a 24-hour basis in this high-summer period. The Apco increases began shortly before midnight, with Apco Geelong North moving from 75.9 to 79.7 at 23.49, a similar increase at Apco Lara for which a time does not appear in Annexure B, Apco Newcomb moving from 75.7 to 79.7 at 00.09, Apco Highton from 75.9 to 79.7 at 01.03 and Apco Geelong South from 75.7 to 79.7 at 02.39 on 11 January. In the meantime, of course, there were moves to 79.7 at a number of Mobil outlets. Mobil Newcomb moved between 18.40 on 10 January and 07.23 on 11 January, Mobil Grovedale between 18.41 and 07.33, Mobil Moolap between 18.42 and 06.36, Mobil Point Henry between 19.26 and 08.10, Mobil East Belmont between 19.39 and 07.14, Mobil Gateway between 21.25 and 09.00, Mobil Belmont between 21.26 and 00.59, Mobil Manifold Heights between 21.47 and 06.41 and Mobil Corio Village between 23.22 and 06.15. Mobil Geelong North moved at 06.04 on 11 January. Mobil Latrobe Terrace is the earliest of the definite Mobil price moves, at 22.53 on 10 January. Interestingly, Chisholm (the only recipient other than Apco of a phone call from Leahy on 10 January) did not increase its prices until well beyond an hour after opening time on 11 January, with Chisholm Geelong West moving to 79.7 at 07.20, Chisholm Leopold at 07.37 and Chisholm Grovedale at 07.59. Without the benefit of any phone call from Leahy, BP Corford Express moved to the same figure at 07.24 on 11 January.
552 Again, there is no definite information as to the times of movements of the alleged parties to Arrangement No 8, other than Apco. It seems that Liberty probably increased its price to 79.7 at somewhere around midnight in the relevant period, because its average for 11 January is 79.7. At some time on 11 January, Andrianopoulos moved from 76.9 to 79.7 and at some other time, it moved down to 75.9. Interestingly, both Shell Victoria Street and Shell Waurn Ponds raised their prices to 79.7 on 11 January, without the benefit of any communication from Leahy.
553 The ACCC pointed to a telephone call from Mr Shuvaly, still in Brisbane to Mr Andrianopoulos at 08.02 on 11 January, and to Mr Shuvaly’s evidence (quoted in [233] above), as confirmation that Liberty had supported a price move overnight. One other fact to which the ACCC drew attention is that Caltex Quick Bite increased from 75.9 to 79.7 at 08.21 on 11 January. The ACCC invited me to draw the inference that this was about the time of the Andrianopoulos increase.
554 This period is a good illustration of the dangers of assuming that, because price increases followed phone conversations, the two were related. As I have said, the telephone traffic between Mr Shuvaly, Mr Andrianopoulos and Mr Anderson on 10 January was far more than would have been required to pass information about a prospective price rise, especially a relatively small one of only 4.0 or thereabouts. If Mr Anderson did acquire information from Mr Shuvaly about a proposed price increase, he delayed at least an hour, and possibly almost three hours, before passing it on to Leahy. Contrary to the allegation that Arrangement No 1 contained a term that Leahy would inform other participants in the Geelong petrol market about a prospective price increase, the only call that Leahy made was to Chisholm, 10 minutes after any relevant conversation with Mr Anderson. The ACCC did not allege that the price increases at Chisholm the following morning were the result of Leahy and Chisholm giving effect to Arrangement No 3.
555 It is fairly obvious from the Mobil increases that the Melbourne petrol market must have moved up and that Mobil was implementing the increase in the Geelong petrol market. Leahy may have anticipated the move, and may have done so on the basis that it had information from someone, perhaps even Peter Anderson, that a move was in the offing. It would be strange, however, that Apco would drop the prices at some of its outlets by 0.2 if it had already appointed a time and a higher price, and would then only raise its prices at about midnight in the context of what appeared to be an overall increase at Mobil. Even if Liberty did increase at about midnight, the strong chance is that it was doing so in reliance upon knowledge acquired of an increase in Melbourne. Even if it did acquire information from Mr Anderson in the four-minute conversation between Mr Anderson and Mr Shuvaly at 13.47 on 10 January, it is unlikely that such information was the sole motivation for an increase about 10 hours later. The proposition that Andrianopoulos increased its price at about the same time as Caltex Quick Bite (if correct) would be consistent with it following the Melbourne petrol market move, translated into Geelong by Caltex Quick Bite and others, rather than implementing any arrangement or understanding with Apco or Liberty.
556 In my view, on the evidence, it was unlikely that any of the price rises in the Geelong petrol market in this period were the result of giving effect to of any arrangement or understanding.
1 – 2 February 2000
557 The ACCC alleges that the parties to Arrangements Nos 1, 3, 6 and 7 gave effect to those arrangements or understandings during this period. The period is characterised by a fairly short-lived price rise in the market to 82.7 overnight, with reductions to 79.9 on 2 February.
558 At 16.46 on Tuesday, 1 February 2000, Leahy telephoned Peter Anderson. The call lasted three minutes and 45 seconds. Its purpose is unlikely to have been to convey information about a forthcoming price increase, although such information may have been conveyed in the course of it. At 17.02, Colin Williamson rang Leahy for three minutes and 38 seconds. At 17.03, Mr Anderson rang Leahy for two minutes and 30 seconds. Again, this was longer than necessary simply to talk about a price and a time. At 17.07, Leahy rang Chisholm. The duration of the call appears in Annexure B as 0:00:94, in other words 94 seconds, but this is inconsistent with the notations of times greater than one minute, so the figure is probably unreliable. At 17.09, Leahy rang BP Corford Express for 19 seconds. At 17.11, Leahy rang David Mortimer for 49 seconds and at 17.13, Leahy rang Phil Carmichael for 38 seconds. At 17.30, Leahy rang Gordon Primmer for one minute and 35 seconds. This is the call cycle on which the ACCC relied.
559 The first of the increases, from 72.9 to 82.7 was at BP Leopold at 18.14 on 1 February. This was possibly in accordance with Mr Warner’s practice of anticipating a price increase by raising the price at BP Leopold, referred to in [221]. It is also probable that, in accordance with his evidence, Mr Warner gave the instruction to other Leahy outlets to increase their prices before he left work, about that time. Increases at Chisholm occurred at 21.48 at Chisholm Leopold and 22.03 at Chisholm Geelong West, probably prior to closing, but not at Chisholm Grovedale until 07.59 the following morning, well after opening time.
560 At 23.23 on 1 February, Apco Geelong North increased from 72.7 to 82.7. At 23.34, BP Hillford increased from 72.9 to 82.7. At 23.54, BP Torquay increased from 73.4 to 82.7. Apco Geelong East moved to 82.7 at 00.07 on 2 February, Apco Newcomb at 00.14, Apco Lara at 00.51 and Apco Geelong South at 02.33. At some time on 2 February, Shell Victoria Street moved from 73.4 to 82.7, but the Shell Waurn Ponds move appears to have been at a later time, because it was from 73.5 to 79.9. Oddly, Apco Highton is not recorded as moving to 82.7 until 23.50 on 2 February, many hours after the market, including other Apco outlets, had moved downwards to 79.9 or 79.7. BP Corford Express moved from 74.9 to 82.7 at 07.59 on 2 February. Brumar price increases to 82.7 began at Shell Latrobe Terrace at 08.21 and continued at Geelong Car Spa at 08.53, Shell Speedwings at 08.55 and Shell Belmont at 10.33.
561 Once again, an unknown factor is the precise timing of the increases at a number of Mobil outlets. The ranges are 19.01 on 1 February to 07.06 on 2 February at Mobil Moolap, 19.47 to 06.47 at Mobil Gateway, 20.26 to 13.10 at Mobil Point Henry, 20.58 to 07.03 at Mobil Newcomb and 21.14 to 07.17 at Mobil Grovedale. Definite times for Mobil moves are for Mobil Corio Village at 00.12 on 2 February, Mobil Manifold Heights at 00.18, Mobil Belmont at 00.54, Mobil Geelong North at 05.59 and Mobil Latrobe Terrace at 06.28. An interesting fact is that, apparently without the benefit of any telephone information from a competitor, 7-Eleven Newcomb moved from 72.9 to 82.1 at some time between 00.31 and 01.14 on 2 February, and 7-Eleven Geelong East moved similarly between 04.26 and 05.12 on that day.
562 There was quite a lot of telephone contact between competitors in the Geelong petrol market on the morning of 2 February, when prices generally were beginning to drop from 82.7 to 79.9. To suggest that the calls were about the price decreases would be to fly in the face of the consistent evidence that there were never attempts to coordinate price decreases.
563 The pattern of calls on 1 February is interesting. Both of the conversations between someone at Leahy and Mr Anderson were quite long, as I have already said. The call by Colin Williamson to Leahy, which was also quite long, must have been with someone other than the person Mr Anderson rang at Leahy shortly afterwards. It is unclear whether Ian Carmichael was on duty at this time. None of the calls in this period was initiated from his mobile phone. Only two calls were made to his mobile phone, one by Darren Campigli at 07.43 on 2 February, for 27 seconds, and the other at 08.13 on the same day by Colin Williamson, for 25 seconds. It is difficult to regard the call from Colin Williamson to Leahy on 1 February as part of any call cycle. In view of the apparent lack of coordination in United Retail’s price increases, it is unlikely that United Retail had any involvement in the passage of information about price increases. It is therefore unlikely that its price rises were anything to do with giving effect to Arrangement No 6.
564 Assuming that Ian Carmichael’s evidence about the time lapse between a call cycle and the time for a price increase can be disregarded, there is the possibility that the price increases by Leahy, Chisholm and Apco were the result of the passage of information between them. All went up at different times overnight. Once again, the unknown factor is the precise timing of Mobil price increases. Overall, the pattern suggests that a previous increase in the Melbourne petrol market was flowing into Geelong. It may have done so by the spread of information by telephone, with Leahy as the pivotal party. Certainly, there does not appear to have been any precise time for such an increase, which was not well coordinated. The fairly abrupt decrease on the morning of 2 February suggests that some factor other than coordination was at work. It could not be said with any degree of probability that the price increases by Apco, Leahy and Chisholm were the result of giving effect to Arrangements Nos 1 and 3. There is no information in Annexure B about price changes at BP Meredith, so any suggestion that effect was given to Arrangement No 7 can be based only on the fact that the call cycle included a call (some time after the other calls) to Gordon Primmer.
10 – 11 February 2000
565 During this period, the ACCC alleges that effect was given to Arrangements Nos 1, 3, 6 and 7. It is a period involving an unusually large number of telephone calls between participants in the Geelong petrol market on both days. The ACCC contended that it is a case of an attempt to put into effect the various arrangements and understandings, which failed, giving rise to a second attempt, which was successful.
566 One of the strange elements of this case is that the very first increase, from 76.3 to 82.7, was effected at 13.17 on Thursday, 10 February 2000 by Leahy at BP Leopold. This was not in accordance with Mr Warner’s practice of increasing the price at BP Leopold during the evening peak hour (see [221]), but Mr Warner also said that he took whatever opportunity he thought he could to increase the margin of the retail price over the wholesale price of ULP at BP Leopold, and he may have been doing that on this occasion. The increase at BP Leopold was well prior to any possible relevant telephone call, yet it was an increase to the price to which a number of Mobil outlets moved overnight during the period. Another strange feature is that, at 13.18 on 10 February, Leahy decreased its price at BP Hillford from 76.3 to 74.9, in line with previous decreases at Apco, Mobil and Chisholm outlets. The ACCC submitted that the early increase at BP Leopold was an attempt by Leahy to signal a desire for a market increase. Not only is this inconsistent with Leahy subsequently following the market down at other outlets, it could also be described as a prescient decision, having regard to the later Mobil increases to the same amount. What the early BP Leopold increase does suggest is that, as early as the middle of the day on 10 February, Leahy had information that a price rise was likely to flow from the Melbourne petrol market, and that 82.7 was likely to be the market price in Geelong. If it did have such information, Leahy did not acquire it from a competitor in Geelong, at least as far as Annexure B shows.
567 This is not the ACCC’s theory about this period, however. The ACCC pointed to a round of telephone calls, commencing with a 48-second call from the Apco office to Alan Shuvaly at 16.57. It seems to be suggesting that Apco might have obtained its information about a prospective price rise from Mr Shuvaly, who had already been involved in four telephone conversations, or attempted conversations, with Chris Andrianopoulos over the preceding few hours, three of them initiated by Mr Shuvaly and one by Mr Andrianopoulos. None of this is consistent with the Leahy increase at BP Leopold at 13.17.
568 In any event, immediately after the conversation with Mr Shuvaly, someone at the Apco office telephoned Leahy at 16.58 for one minute and 18 seconds. There was then a flurry of calls emanating from the Leahy office. At 17.00, Leahy rang BP Corford Express for 18 seconds. At 17.01, Leahy rang Chisholm for 47 seconds. At 17.02, Leahy rang Phil Carmichael for 20 seconds. At 17.04, Leahy rang Colin Williamson for 26 seconds. At 17.05, Leahy rang David Mortimer for 47 seconds. At 17.06, Leahy rang Gordon Primmer for 12 seconds. At 17.09, Leahy rang BP Meredith for one minute and 26 seconds. Leahy then rang BP Meredith again for 56 seconds at 17.53.
569 Overnight, Mobil sites began increasing to 82.7. The earliest possible increases were at 17.45 at Mobil Moolap, 21.16 at Mobil Point Henry and 22.09 at Mobil Gateway. At 23.57, Mobil Manifold Heights also increased to 82.7. On 11 February, Mobil Belmont at 00.07, Mobil Corio Village at 00.15, Mobil Latrobe Terrace at 06.15, Mobil Geelong North at 07.05 and Mobil East Belmont at 07.16 all went to 82.7. Apart from these outlets, the only increases to 82.7 were by Leahy, which raised the price at BP Hillford at 23.15 and at BP Torquay at 23.31 on 10 February. Apco did not move. Chisholm moved, but well after opening time, and only to 82.5, at Chisholm Geelong West at 07.22, Chisholm Grovedale at 07.34 and Chisholm Leopold at 07.38 on 11 February.
570 On the morning of 11 February, at 07.05, only three minutes after its increase, Mobil Geelong North dropped from 82.7 to 74.9. At 07.57, Mobil Latrobe Terrace reduced to 73.9, followed by Mobil Manifold Heights at 07.59, Mobil East Belmont also at 07.59, Mobil Geelong North at 08.01, Mobil Corio Village at 08.14 and Mobil Newcomb at 08.30.
571 At 07.37, Ian Carmichael left a message on Peter Anderson’s message bank. At 07.41, Darren Campigli rang Ian Carmichael for 54 seconds. At 07.43, Ian Carmichael rang his brother Phil Carmichael for 30 seconds. At 07.46, Ian Carmichael rang Colin Williamson for 30 seconds. At 07.50, Mr Anderson rang the Leahy office for 30 seconds. At 07.50, Mr Campigli rang Ian Carmichael for one minute and 41 seconds. At 07.52, Mr Anderson rang Ian Carmichael for 30 seconds. At 07.53, Mr Williamson rang Ian Carmichael for 26 seconds. At 07.54, Ian Carmichael again reached Mr Anderson’s message bank. Mr Anderson rang him back for 30 seconds at 07.56. At 07.58, Ian Carmichael and Peter Anderson began another conversation, for two minutes and 30 seconds. This overlapped with a phone call at 07.59 from Mr Campigli to the Leahy office for two minutes and 42 seconds.
572 At 08.13, Leahy rang Peter Anderson for one minute and 12 seconds. According to the ACCC, this initiated another call cycle. At 08.15, Michael Warner rang Phil Carmichael for two minutes and 30 seconds. At 08.17, Leahy rang Chisholm for one minute and 30 seconds. Because of the overlapping times, this call appears to have been made by someone other than Mr Warner. At 08.19, there was a call from Shell Waurn Ponds to Leahy for one minute and 20 seconds. At 08.22, Leahy dropped the price at BP Leopold from 82.7 to 73.9.
573 At 08.27, Leahy telephoned Chisholm again for one minute and 39 seconds. This call must have been made by someone other than Ian Carmichael, who rang Colin Williamson for 30 seconds at 08.28. At 08.30, Mr Warner called Gordon Primmer for two minutes, and at 08.30 the Leahy office left a message on Phil Carmichael’s message bank. At 08.31, Leahy telephoned Chris Andrianopoulos for 29 seconds.
574 The next price increase was by Caltex Quick Bite at 08.50, from 75.9 to 82.9. At 08.52, Leahy telephoned Gordon Primmer for 23 seconds and, at 08.53, Leahy telephoned Chisholm for 57 seconds. There was another call from Leahy to Mr Primmer, for 31 seconds, at 08.57.
575 Chisholm dropped its prices from 82.5 to 74.9 at Chisholm Leopold at 08.36, Chisholm Geelong West at 08.36 and Chisholm Grovedale at 08.52. It began increasing them back to 82.5 at 10.02 at Chisholm Grovedale, 10.11 at Chisholm Geelong West and 10.21 at Chisholm Leopold. These increases were roughly simultaneous with increases to 82.5 at BP Leopold at 10.03 and BP Hillford at 10.12. Apco Geelong South made the same move at 10.11, Mobil Geelong North at 10.18, Mobil Manifold Heights at 10.21, Mobil Latrobe Terrace at 10.22, Apco Highton at 10.28, Mobil Grovedale at 10.32, Apco Newcomb at 10.33, Mobil Belmont at 10.35, Mobil East Belmont at 10.36, Mobil Moolap at 10.37, Apco Geelong North at 10.39, Apco Lara at 10.50, Mobil Corio Village at 10.58 and Apco Geelong East at 11.05.
576 In the meantime, Leahy rang Apco at 10.19, Leahy rang Phil Carmichael for 16 seconds at 10.20, Colin Williamson rang Ian Carmichael for 43 seconds at 10.20, Colin Williamson rang Ian Carmichael again for 32 seconds at 10.30, Chisholm rang Jacques Bodourian for 25 seconds at 10.45 and Colin Williamson rang Ian Carmichael at 11.04. Ian Carmichael rang David Mortimer for 30 seconds at 11.09, BP Corford Express for 30 seconds at 11.12, Phil Carmichael for one minute at 11.13 and Chisholm for six minutes at 11.14. Chisholm rang Jacques Bodourian for two minutes and 26 seconds at 11.21. Also at around this time, between 10.57 and 11.16, 7-Eleven Newcomb had increased its price to 82.5 and, between 11.08 and 11.20, 7-Eleven Geelong East had increased to 82.9.
577 Other increases to 82.5 occurred at Shell Latrobe Terrace at 11.25, Mobil Gateway between 09.35 and 11.26, Mobil Newcomb between 09.09 and 11.43, Mobil Point Henry between 10.11 and 11.56, Shell Belmont at 12.02, BP Corford Express at 14.02 and Shell Speedwings at 14.21, before the market began to fall again. United Retail increases were to 82.9 at Shell Victoria Street, characterised by the ACCC as being either on opening or in the morning, and at Shell Waurn Ponds, but only to 81.9.
578 This period represents a fine example of the difficulty of trying to make assumptions about the content of telephone conversations, based on the sequence of those conversations. Although the telephone calls made on the afternoon of 10 February 2000 look very like a complete call cycle, of the kind described by Ian Carmichael, they were obviously utterly inconsequential in terms of any price increase. By the time they had begun, Leahy had already raised its price at BP Leopold to the very figure to which Mobil outlets were to move overnight and no-one else was to move at all. In fact, if the ultimate price rise is taken to have been a rise to 82.5 on 11 February, it was Chisholm that signalled it on that day. Given the lapse of time since the telephone calls on the afternoon of 10 February, the fact that Chisholm’s increase did not occur at opening time for its outlets, and the fact that it was to a different figure from that to which Leahy had gone, by far the most likely explanation for Chisholm’s attempted increase on the morning of 11 February is that it had lost its price support from Caltex and was feeling the need to increase its prices. Although it had to bring its prices down soon afterwards, Chisholm effectively led the price rise to 82.5 when it did occur. It is extremely unlikely that it did so as a result of persuasion from Leahy, given that the first three telephone conversations between anyone at Chisholm and anyone at Leahy on the morning of 11 February were all initiated by Darren Campigli, and that the calls were all of quite significant length.
579 Whatever was said by Apco or Leahy in the other conversations on 10 February, it is unlikely that it resulted in any price increase. If there were in existence well-established arrangements or understandings of the kinds alleged by the ACCC, it would be expected that the price rises would have followed the call cycle. Instead, there was the enormous amount of telephone traffic on the morning of 11 February. The fact that the Geelong petrol market eventually moved to 82.5, substantially during that morning, and only briefly, probably had nothing to do with what was said in the telephone calls. The market was moving in any event. BP Corford Express was hardly hurried up by the call from Ian Carmichael to it at 11.12, when it did not increase to 82.5 until 14.02, only an hour and a half before Chisholm began to lead the price down again (on the assumption that the Apco Geelong South computer was still showing its time inaccurately by one hour). Whether Batesford Roadhouse was or was not up before Ian Carmichael rang at 11.09 is something that cannot be gleaned from Annexure B. If Ian Carmichael’s call to Chisholm at 11.14, for six minutes, was to convey a complaint by Phil Carmichael that 7-Eleven had not yet increased, the complaint was not initiated by Phil Carmichael by means of a call. The call at 11.13 was from Ian Carmichael to his brother. In any event, 7-Eleven Newcomb either had already increased, or was on the point of increasing at the time when Ian Carmichael rang Phil Carmichael. The call from Chisholm to Jacques Bodourian at 11.21 was clearly not about any failure of 7-Eleven to increase. The call lasted for two minutes and 26 seconds. If the caller had been complaining about the failure of 7-Eleven to increase, Mr Bodourian would have informed him that instructions for the increase had already been given (and, indeed, the increases had already occurred), so the call would have been over very quickly. There is no information about price changes by BP Meredith.
580 If the identification of this period has any evidential value, it tends against the ACCC’s case that there were well-established arrangements or understandings in existence at that time and that they were being put into effect.
18 – 19 February 2000
581 Before dealing with this period in detail, it is worth looking at the afternoon of 17 February. There was considerable telephone traffic between various participants in the Geelong petrol market on that afternoon, including what appears to be a classic call cycle, beginning with two calls from Mr Anderson to the Leahy office of four minutes and one minute respectively at 16.59 and 17.06, followed by calls from Ian Carmichael to Colin Williamson at 17.08, the Leahy office to Phil Carmichael also at 17.08, Leahy to Chisholm at 17.09, Leahy to BP Corford Express at 17.10, Leahy to Chris Andrianopoulos at 17.14 and Ian Carmichael to Colin Williamson again at 17.25. There was also a call from Mr Shuvaly to Mr Andrianopoulos at 17.46. Despite all this telephone activity, there was no significant price rise in the market until almost midnight on 18 February, so far as Annexure B records.
582 On 18 and 19 February 2000, the ACCC alleges that effect was given to Arrangements Nos 1, 3, 6, 7 and 8. Prices tended generally down throughout the day on 18 February. A substantial amount of telephone communication took place between various parties in the morning and early afternoon. The ACCC case focused on a phone call from Alan Shuvaly to Chris Andrianopoulos, lasting one minute and 30 seconds, at 15.00. At 15.02, Mr Shuvaly rang Mr Anderson for 30 seconds. These two calls were made from Mount Waverley and Clayton North respectively. The ACCC contended that they were calls by Mr Shuvaly to set up a price increase, and were instrumental in the implementation of Arrangement No 8.
583 There does not appear to have been any great urgency about any price increase on this occasion, as Mr Anderson delayed for more than half an hour before ringing the Leahy office at 15.38 for 30 seconds and then, at 15.39, Ian Carmichael for 30 seconds. Mr Carmichael immediately rang Chisholm for one minute at 15.40 and BP Corford Express for two minutes at 15.41. Both of these calls were transmitted through Bellarine. The second of them was obviously longer than would be necessary just to pass on pricing information. At 15.43, Michael Warner, whose call was also transmitted through Bellarine, telephoned Gordon Primmer for one minute and 30 seconds, obviously again too long just for the transmission of pricing information. At 15.44, Ian Carmichael rang Colin Williamson for 30 seconds. Mr Williamson returned the call at 15.45 for 17 seconds. At 15.48, Gordon Primmer rang Stan Kerr for one minute. Immediately, Mr Primmer rang the Leahy office for 30 seconds. At 15.50, Mr Primmer rang Mr Warner for one minute.
584 In the meantime, at 15.49, Leahy raised the price of petrol at BP Leopold from 76.3 to 83.7. This was earlier in the day than most of the increases for BP Leopold, which Mr Warner said he caused to be made during the afternoon traffic peak, but may have been another attempt by Mr Warner to increase the profit margin at BP Leopold when he felt that he could. Subject to the unknown factor of the precise times of increases at a number of Mobil outlets, it was a lone move until almost midnight that night.
585 These calls were followed by yet more telephone communication. At 15.56, Ian Carmichael rang Mr Andrianopoulos. Immediately after that, Mr Williamson rang Mr Carmichael, but the call was timed at only three seconds. At 15.57, Shell Waurn Ponds rang the Leahy office for 36 seconds. Mr Williamson rang Mr Carmichael again at 15.58, for 20 seconds. Mr Carmichael rang Mr Mortimer at 16.03 for 30 seconds. At 16.04, Mr Mortimer returned the call for one minute. At 16.06, Mr Carmichael again rang Mr Mortimer for one minute and 30 seconds. At 16.27, Darren Campigli called Mr Carmichael for one minute and five seconds. At 18.21, Mr Shuvaly called Mr Andrianopoulos for two minutes. The ACCC submitted that this call was for the purpose of passing on information about a price rise discussed with Mr Anderson earlier in the afternoon. On the evidence, this is unlikely. The delay between Mr Shuvaly’s conversation with Mr Anderson and Mr Shuvaly’s conversation with Mr Andrianopoulos is more than three hours. The call at 18.21 was timed at two minutes. It could not have been just for the purpose of passing on information about a prospective price increase. At 18.31, Ian Carmichael rang Phil Carmichael for 30 seconds.
586 Once again, there were increases at a number of Mobil outlets within a range of times. Increases from 75.7 to 83.7 occurred at Mobil Moolap between 19.01 on 18 February and 09.32 on 19 February, at Mobil Newcomb between 19.57 and 08.32, Mobil Point Henry between 21.48 and 08.40, Mobil Gateway between 22.14 and 09.12 and Mobil Grovedale between 22.21 and 07.51 (the starting price at this outlet being 75.9). The first definitely timed Mobil outlet increasing was Mobil Manifold Heights, which moved from 75.9 to 83.7 at 23.54.
587 Slightly earlier than Mobil Manifold Heights, BP Hillford moved from 75.9 to 83.7. The first Apco move was Apco Geelong North at 00.05 on 19 February. Eighteen minutes later, however, Apco Geelong North moved down from 83.7 to 75.9 again. Other Apco outlets increased from 75.9 to 83.7, Apco Newcomb at 00.46, Apco Lara at 01.02, Apco Geelong East at 01.16, Apco Highton at 01.50, Apco Geelong South at 02.00 and Apco Geelong North again at 04.27. Mobil Geelong North then moved similarly at 05.55 and Mobil Latrobe Terrace at 06.26.
588 At some time between 07.28 and 07.40 on the morning of 19 February, 7-Eleven Newcomb moved from 75.7 to 83.7 and, at some time between 06.53 and 07.52, 7-Eleven Geelong East did the same. Although there was a one-minute call from Phil Carmichael to Ian Carmichael at 07.03, it does not appear to have been followed up by Ian Carmichael with any call to Chisholm, to prompt a call to Jacques Bodourian to attempt to persuade 7-Eleven to join the market increase. Indeed, the only possibly relevant phone call between Chisholm and 7-Eleven was at 15.10 on 18 February, when Darren Campigli rang Jacques Bodourian for one minute and five seconds, half an hour before Ian Carmichael’s call to Chisholm as part of the call cycle. It is apparent that 7-Eleven increased its prices without prompting from anyone in Geelong, so far as Annexure B shows.
589 At 07.57 on 19 February, Ian Carmichael rang Darren Campigli for one minute. At 08.07, Chisholm telephoned Leahy for 30 seconds. The ACCC sought to draw the inference that this call was to persuade Chisholm to increase its prices. Chisholm did not increase its prices to 83.7 until 08.10 at Chisholm Leopold, 08.18 at Chisholm Geelong West and 08.27 at Chisholm Grovedale. In the meantime, at 07.51, Caltex Quick Bite increased from 76.9 to 83.5. This was also the price to which Brumar outlets began moving, with Shell Highton at 08.28 and Shell Speedwings at 08.46. The ACCC also submitted that a call from Ian Carmichael to Mr Andrianopoulos at 07.56, for 30 seconds, was an attempt to persuade Andrianopoulos to raise its prices.
590 In the course of the morning, price discounting to 83.4 began. Mobil Corio Village made this move at 10.17, Mobil Manifold Heights at 10.18, Mobil Belmont at 10.19. Apco joined the trend at 11.09 at Apco Geelong East, 11.41 at Apco Highton, 11.52 at Apco Geelong North and 11.56 at Apco Newcomb and 12.01 at Apco Lara. If the Apco Geelong South computer was still showing non-daylight saving time, it made a similar move at 11.33. Leahy reduced its prices at BP Leopold at 16.43 and BP Hillford at 16.51, both from 83.7 to 83.4.
591 The average price at Liberty Geelong North moved from 76.0 to 83.6 on 19 February. The ACCC contended that this suggests an increase at a very early stage to 83.7. Batesford Roadhouse increased from 76.7 to 83.4, suggesting an increase late in the day, when the Geelong prices had already declined to this figure. Similarly, the increase at United Convenience was from 75.9 to 83.4, suggesting that it did not move up particularly early. Andrianopoulos moved from 76.7 to 83.7, down to 75.9 and up to 76.3 at times unknown. Shell Waurn Ponds moved from 77.5 to 83.7 at a time unknown on 19 February. The only available figure for Shell Victoria Street shows an increase from 76.9 to 81.9 in the course of the weekend or on the morning of Monday, 21 February.
592 The large amount of telephone communication between the various parties on 17, 18 and 19 February 2000 is inconsistent with the proposition that there existed a series of interconnected arrangements or understandings as to price-fixing, involving nothing more than the passing of information as to a price and a time, in order for the parties to those arrangements or understandings to increase their prices to the stipulated price at or about the specified time. If such arrangements or understandings did exist, it ought not to have taken the number of repeated communications that occurred in order to secure a market-wide price increase that would stick. Plainly, even allowing for an exception for Leahy’s decision to increase the price at BP Leopold very early, the price increases that did occur were spread over a considerable amount of time. After what the ACCC pointed at as the relevant call cycle, prices continued to decrease, with Leahy and Chisholm both moving down (other than at BP Leopold), to match earlier decreases at Apco and Mobil outlets to 75.9. It is true that both Leahy and Apco can be said to have moved up to 83.7, with the rises staggered from shortly before midnight on 18 February until 04.27 on 19 February (followed by the early decrease at Apco Geelong North, apparently to match Mobil Geelong North). Elsewhere, the possible influence of Mobil price increases cannot be disregarded. It suggests that a price increase from Melbourne was flowing into the Geelong petrol market in any event. The increases at the 7-Eleven outlets support this proposition. Notably, Chisholm did not increase until well after the opening time of its outlets on 19 February. If it were the case that the call from Ian Carmichael to Darren Campigli at 07.57 on that morning was to complain that Chisholm had not gone up, this would suggest that the call on the previous afternoon, as part of the call cycle, had no influence on Chisholm’s decision. Only after it was satisfied that sufficient other market participants had moved did Chisholm make its own move. This suggests that there was no implementation of any arrangement or understanding between Leahy and Chisholm in this period. Although United Retail moved its price up to the standard of 83.7 on 19 February, its failure to make any kind of move at Shell Victoria Street also suggests that there was no implementation of Arrangement No 6. The absence of price data for BP Meredith makes it impossible to say that Arrangement No 7 was implemented. The absence of any specific times for price moves by Andrianopoulos make it impossible to find on the balance of probabilities that effect was given to Arrangement No 8. In the light of the early move by Leahy at BP Leopold and the range of times for other moves, it is also impossible to say on the balance of probabilities that Leahy and Apco were giving effect to Arrangement No 1. I cannot find that the data for this period supports the general oral evidence, or the ACCC’s case.
24 – 25 February 2000
593 The ACCC alleges that, during this period, effect was given to Arrangements Nos 1, 3, 6 and 7. In fact, in the course of the two days, there were three identifiable call cycles, among a large number of other calls involving participants in the Geelong petrol market.
594 The low point of the price cycle appears to have been 79.5, to which the Apco outlets and most of the Mobil outlets had moved by late morning on Thursday, 24 February 2000.
595 The ACCC identified the first call cycle as beginning at 11.34, when Apco rang Liberty for three minutes and one second, considerably longer than would be necessary to communicate information about a prospective price increase. At 11.37, Apco rang Leahy for 29 seconds. At 11.38, Leahy rang Phil Carmichael for 27 seconds and then Chisholm for two minutes and 26 seconds, again longer than necessary if the call were only about a price increase. At 11.41, Leahy rang Colin Williamson for 52 seconds. At 11.42, Leahy rang BP Corford Express for 18 seconds. At 11.43, Leahy rang Gordon Primmer for 37 seconds and at 11.48, Leahy rang BP Meredith for 15 seconds. There were 26 further telephone calls, involving participants in the Geelong petrol market, between 12.30, when Chris Andrianopoulos rang Alan Shuvaly, and 16.08, when Leahy rang Chisholm. Five of these calls involved Chisholm and either the Leahy office or Ian Carmichael. Five more involved Colin Williamson and either Ian Carmichael or the Leahy office. Leahy rang BP Meredith twice and Gordon Primmer once, the calls being timed at one minute and 39 seconds, one minute and 48 seconds and four minutes and 20 seconds. Mr Primmer rang Stan Kerr twice and rang the Leahy office between those two calls.
596 The second call cycle identified began at 16.34, when Leahy rang the Apco office for one minute and 19 seconds. At 17.24 and 17.29, Michael Warner rang Colin Williamson for one minute and 30 seconds on each occasion. The first call was transmitted through Corio and the second through Geelong North, suggesting that Mr Warner was on the road at the time of the second call, although not far from the Leahy office. At 17.33, Leahy rang Colin Williamson for one minute and 12 seconds. At 17.34, the price at BP Leopold increased from 79.7 to 86.7. This was the earliest increase of significance during the period, and was substantially earlier than any other increase. It is clear that Leahy had formed the intention to increase its prices by this time.
597 At 17.34, Leahy rang Chisholm for 51 seconds. At 17.35, Leahy rang BP Corford Express for 18 seconds. At 17.38, Mr Warner rang Mr Primmer for one minute and 30 seconds. On this occasion, the call was transmitted through Geelong, suggesting that Mr Warner was still heading away from the Leahy office. Also at 17.38, Leahy rang Phil Carmichael, for a call lasting two minutes and 20 seconds, much longer than would be required for information about a prospective price increase. Mr Warner speculated in his evidence that this second call cycle would have concerned a prospective price increase, of which Leahy would have informed Apco an hour or so earlier at 16.34. He did not offer an explanation for the delay in contacting other competitors.
598 Early in the evening, between 19.51 and 22.16, four Brumar outlets all increased from 79.9 to 81.9, an increase of only 2.0. At 23.31, BP Torquay moved from 80.9 to 86.7 and at 23.35, BP Hillford moved from 79.7 to 86.7. Having regard to Mr Warner’s evidence about the time at which he normally gave instructions for price increases, it can be inferred that he instructed these outlets to lift their prices at close to midnight, possibly before Mr Warner left the office prior to 17.30 on 24 February, and prior to the increase at BP Leopold.
599 The Apco increases all occurred between 00.46 and 03.06 on 25 February (making the usual assumption about Apco Geelong South). They were all from 79.5 to 86.7. The ACCC contended that the fact that Leahy and Apco had both increased their prices at this time suggests that the price increase was arranged in the telephone call at 16.34 the previous afternoon, well outside the time range that Ian Carmichael insisted was never exceeded, but in accordance with the pattern that Michael Warner said sometimes occurred, in which late afternoon phone calls led to an overnight price increase.
600 It is noteworthy that there is no sign of any Mobil increases on this occasion. Both the 7-Eleven outlets, 7-Eleven Newcomb and 7-Eleven Geelong East moved from 79.5 to 85.9 within the range of 03.31 to 05.11 on the morning of 25 February. This suggests that an increase in the Melbourne petrol price, probably occurring on Thursday, 24 February, was set to flow into Geelong on the Friday. No other recipient of a phone call from Leahy, Ian Carmichael or Michael Warner on 24 February increased prices at all, until Chisholm increased to 86.5 at Chisholm Geelong West at 07.16, Chisholm Leopold at 07.23 and Chisholm Grovedale at 07.46, all substantially after opening time. By the time of the last of these increases (if the usual assumption be made about the timing of Apco Geelong South), Apco began reducing its prices to 79.5, first at Apco Geelong North at 07.45, then at Apco Geelong South at 08.00, Apco Geelong East at 08.24, Apco Highton at 08.27, Apco Newcomb at 08.30 and Apco Lara at 08.52. In the meantime, Caltex Quick Bite had increased to 86.9 at 08.17. The Brumar sites began increasing to 86.7 with Shell Speedwings at 08.38, Shell Norlane at 08.45, Shell Belmont at 08.48, Geelong Car Spa at 08.54, Shell Westoria at 08.56 and Shell Highton at 09.12.
601 There were more telephone calls on the morning of 25 February. At 07.22, Ian Carmichael rang Colin Williamson for one minute and 30 seconds. At 07.26, Phil Carmichael rang Ian Carmichael for one minute. At 07.43, Darren Campigli rang Ian Carmichael for three minutes and nine seconds. It is difficult to see what this call would have had to do with price increases, having regard to its timing and length, and to the fact that the prices at Leahy and Chisholm outlets were already up, albeit to different amounts.
602 At 08.37, apparently without any contact with Apco, but perhaps with knowledge from board-spotting that Apco prices were decreasing, Leahy rang BP Corford Express for 13 seconds. At 08.39, Leahy rang Chisholm for 26 seconds. At 08.40, Leahy rang Phil Carmichael for 16 seconds. Phil Carmichael then rang Aaron Incoll at Mobil, for two minutes at 08.41, and Mobil Geelong North for one minute at 08.47. He then rang Ian Carmichael for one minute and 30 seconds at 08.49. At 08.51, Leahy rang Mr Anderson for two minutes and 23 seconds. At 08.54, Leahy rang Mr Mortimer for 28 seconds. At 08.56, Leahy rang Colin Williamson for 32 seconds. At 09.08, there was another call from Leahy to Mr Williamson for one minute and 22 seconds and at 09.10 another call from Leahy to Mr Primmer for 33 seconds. At 09.11, Mr Primmer rang Stan Kerr for 30 seconds. Leahy rang Apco for 16 seconds at 09.11. Mr Primmer rang Leahy back at 09.12 for 30 seconds and Leahy rang Mr Primmer at 09.14 for three minutes and 28 seconds.
603 At 09.17, Leahy rang Chisholm for two minutes and 32 seconds. At 09.21, Leahy rang Chris Andrianopoulos for 19 seconds. Mr Andrianopoulos returned the call at 09.22 for 15 seconds. Shell Waurn Ponds rang Leahy for one minute and 38 seconds at 09.27 and Chisholm rang Leahy for 26 seconds at 09.29. Leahy rang BP Meredith for one minute at 09.48 and at 09.54 rang David Mortimer for 49 seconds. Mr Primmer rang Leahy at 10.14 for 30 seconds. Shell Waurn Ponds rang Leahy at 10.21 for one minute and 32 seconds. Leahy rang Mr Andrianopoulos at 10.24 for 17 seconds and Phil Carmichael at 10.28 for 42 seconds.
604 In the meantime, prices at Mobil outlets had begun to move up to 86.5. The ranges for those for which precise times are not available were Mobil Point Henry (between 08.16 and 11.38), Mobil Moolap (between 08.26 and 09.46), Mobil Newcomb (between 09.05 and 11.16), Mobil Gateway (between 09.10 and 09.55) and Mobil Grovedale (between 09.19 and 11.14). The precise times were Mobil Geelong North at 09.15, Mobil Manifold Heights at 09.16, Mobil Belmont at 09.17, Mobil Corio Village at 09.18 and Mobil Latrobe Terrace at 09.20.
605 Apco increases to 86.5 began at 10.05 at Apco Geelong South, and continued at 10.21 at Apco Highton, 10.28 at Apco Lara, 10.31 at Apco Geelong North, 10.32 at Apco Newcomb and 11.07 at Apco Geelong East. In the meantime, BP Corford Express moved to 86.9 at 10.26. Leahy had already begun decreasing its prices from 86.7 to 86.5 at 09.07 at BP Leopold, followed by BP Hillford at 09.14. There was a further move downwards on the part of Mobil outlets and Apco outlets, to 85.9, in the course of the morning and the early afternoon, which Leahy followed at 17.04 at BP Leopold and 17.54 at BP Hillford. In the meantime, there continued to be very heavy telephone traffic between participants in the Geelong petrol market throughout the day.
606 At some time on 25 February, the ACCC submitted on opening or in the morning, Shell Victoria Street increased to 86.9, suggesting a price rise based on information other than any obtained by speaking with anyone at Leahy, because its price matched those set from Melbourne at Caltex Quick Bite and BP Corford Express. When Shell Waurn Ponds increased, it was only to 85.9, suggesting an increase later in the morning or in the afternoon, when the market had settled on this price.
607 This period represents another example of the lack of smooth functioning of the alleged arrangements or understandings which, by this time, might have been expected to be well-grooved. It is hard to believe that it was necessary to make three rounds of calls to secure a price increase towards the end of a week in the summer. Plainly, Chisholm did not adjust its prices in accordance with any move conveyed by either of the call cycles on 24 February. The lapse of time between the telephone conversations and the price increases, coupled with the fact that Chisholm adopted a price different from that of Leahy, makes this clear. Similarly, the two different price levels at the United Retail sites for which data is available suggest a lack of coordination both as to price and to time with Leahy. The number of communications between Leahy and BP Meredith, and their respective personnel, would make it difficult to suggest when Mr Primmer might have been induced to move his price to 86.7. In particular, there were communications from Leahy to him both shortly before and shortly after Leahy had begun to move its prices down to 86.5.
608 The ACCC case as to this occasion appears to be that there was an attempt to give effect to Arrangement No 1, by means of the second call cycle on 24 February. Not only was this call cycle initiated by Leahy, but there was a substantial time gap between the making of the call from Leahy to Apco and the commencement of what might have been described as a call cycle. If it could be said that Apco increased its prices because of that telephone conversation, it took very little time for Apco to reverse its decision when it became apparent that there was no move from any Mobil outlet. This fact tends to support the proposition that Mobil was a significant player in the market and was influential in Apco’s decision to go up on other occasions, ie that Apco’s moves on other occasions were not made as a result of telephone conversations with anyone at Leahy. If that were the case, the likelihood that the prices were increased because of telephone contact with Leahy is also diminished on this occasion. The greater likelihood is that Apco made its own decision, perhaps after receiving information from Leahy about a price rise in Melbourne, but very quickly resorted to a price reduction to maintain its sales volume when its major competitor, Mobil, did not increase.
609 The ACCC picked out certain phone calls on the morning of 25 February and sought to have the Court draw sinister inferences from them. It submitted that, when Ian Carmichael telephoned Mobil Geelong North at 08.47, it was to complain that Mobil was jeopardising the price rise. It said that the subsequent, quite lengthy, conversation between Leahy and Anderson at 08.51 did not result in Leahy reducing its prices, because it had confidence as a result of the phone conversation that Apco would again increase its prices. This was said to have precipitated the further round of calls. If that were the case, it would be more likely that the recipients of them, such as Batesford Roadhouse, would have moved only to 86.5, which was the new price in the market, and the price to which Leahy itself was in the process of moving. It is noteworthy that all of the telephone communication involving Leahy, Gordon Primmer and Stan Kerr did not result in any increase of significance at United Convenience. As for BP Meredith, nothing can be said, as there is no data.
610 I am unable to find on the balance of probabilities that effect was given to any such arrangement or understanding as that alleged by the ACCC during this period.
2 – 3 March 2000
611 The ACCC alleges that effect was given to Arrangements Nos 1, 3, 6 and 7 during this period. On Thursday, 2 March 2000, Leahy made an attempt unilaterally to raise the market price to 87.5, by lifting its price at BP Leopold to that level from 81.3 at 13.31. 87.5 was the price to which other Leahy outlets, Apco outlets, most Mobil outlets, the Chisholm outlets and the Brumar outlets all increased overnight or in the morning. Clearly, Leahy did not derive the information on which it relied to initiate this price increase from the phone call it received from Peter Anderson at 16.03 on 2 March. It is that phone call that the ACCC pointed to as the beginning of the call cycle.
612 Indeed, there was what appeared to be a call cycle immediately after the telephone call from Mr Anderson to Leahy, which lasted for three minutes and 30 seconds, far longer than would be required to communicate a price increase and a time for that increase. The call was transmitted through Seymour. At 16.08, Leahy rang Colin Williamson for 54 seconds. At 16.10, Leahy rang BP Corford Express for 25 seconds. At 16.11, Leahy rang Chisholm for two minutes and 12 seconds. At 16.13, Leahy rang Phil Carmichael for 37 seconds. There is no telephone call recorded in Annexure B from Leahy, Ian Carmichael or Michael Warner to Mortimer Petroleum or David Mortimer until 07.09 on 3 March 2000, by which time a significant number of retailers in the Geelong petrol market had already increased their prices to 87.5.
613 There was a call from Michael Warner to Gordon Primmer at 17.43 for one minute, an hour and a half after the last call of the call cycle. Nevertheless, the ACCC argued that this was Mr Warner attempting to urge Mr Primmer to persuade Stan Kerr to increase the price at United Convenience, because Mr Primmer rang Mr Kerr for 30 seconds at 17.47. Mr Primmer then rang the Leahy office for one minute at 17.49, and Michael Warner for one minute at 17.50. The ACCC characterised these calls as being Mr Primmer’s report back to Mr Warner (who was not in the Leahy office when he made his call to Mr Primmer) about the result of his call to Mr Kerr.
614 In the afternoon of 2 March, Apco moved its prices down as low as 80.2. At 23.08 that evening, Leahy’s prices were lifted from 81.5 to 87.5 at BP Torquay and 80.4 to 87.5 at BP Hillford, the upper level being the same as that which had prevailed at BP Leopold since lunchtime on that day.
615 By that time upward moves on the part of Mobil outlets may already have been evident. Mobil Newcomb moved from 80.4 to 87.5 at some time between 17.13 on 2 March and 07.06 on 3 March. Mobil Moolap moved to 87.5 between 17.27 and 07.02. Mobil Gateway moved to 87.5 between 20.49 and 07.35. Mobil Manifold Heights moved to 87.7 at 23.47 and Mobil Belmont moved to 87.7 at 23.50.
616 As was usual at this time, the Apco increases began shortly after midnight, with Apco Geelong East at 00.16, Apco Newcomb at 00.22, Apco Geelong North at 01.58, Apco Highton at 02.00, Apco Lara at 02.07 and Apco Geelong South at 02.35 (or 03.35 if its time recording had not been adjusted for daylight saving). Mobil Geelong North did not move until 06.17 on 3 March and Mobil Latrobe Terrace also moved at 06.23 on that day, both to 87.5. In the meantime, Chisholm began its moves at Chisholm Leopold and Chisholm Geelong West at 06.13, shortly after opening, to 87.5, with a similar move later at Chisholm Grovedale at 07.28. Between 06.26 and 06.55, 7-Eleven Geelong East moved to 87.5 and at 07.20, BP Corford Express moved to 87.3.
617 Despite the move at 7-Eleven Geelong East, and the absence of any telephone call from Phil Carmichael, the ACCC submitted that calls at 08.02 and 08.03, from Leahy to Chisholm for 18 seconds and Darren Campigli for 33 seconds respectively, are likely to have been for the purpose of encouraging Chisholm to telephone Jacques Bodourian to persuade him to increase the 7-Eleven prices. It is more likely that someone at Leahy was returning a call made by Mr Campigli to the Leahy office at 07.58 for 38 seconds, than that Leahy was calling to urge a phone call to Mr Bodourian. In any event, 7-Eleven Newcomb increased its price between 08.41 and 08.47 that morning to 87.5. At 08.18, Caltex Quick Bite increased to 87.5. Brumar outlets began increasing to that figure with Shell Latrobe Terrace at 08.36, Shell Norlane at 09.16, Shell Belmont at 10.35, Shell Speedwings at 10.37, Geelong Car Spa at 10.43, Shell Westoria at 10.50 and Shell Highton at 11.11.
618 Also at 11.11, Mobil Corio Village dropped abruptly from 87.5 to 80.4. The ACCC contended that the possibility that Mobil was jepoardising the price increase by dropping its price was responsible for a flurry of telephone calls involving Leahy between 12.13 and 12.46 on 3 March. At 12.13, Leahy telephoned Gordon Primmer for 27 seconds. At 12.19, Mr Primmer called Stan Kerr for two minutes. At 12.21, Mr Primmer rang Leahy for 30 seconds. At 12.25, Leahy rang Mr Primmer again for 45 seconds. At 12.26, Leahy rang Chisholm for one minute and 12 seconds. At 12.27, Leahy rang Phil Carmichael for one minute and 22 seconds. At 12.29, Leahy rang Mr Primmer again for one minute and four seconds. At 12.30, Leahy rang Chris Andrianopoulos for one minute and six seconds. At 12.32, Leahy rang Mr Anderson for five minutes and 52 seconds. At 12.44, Mr Primmer rang Mr Kerr again for one minute. Mr Primmer then rang Leahy again for one minute at 12.46. At 12.46 also, Leahy rang Phil Carmichael for 30 seconds.
619 At 13.05, Apco Geelong North dropped from 87.5 to 80.4. This appears to have been a response to Mobil Corio Village reducing its price to that level almost two hours earlier. At 13.19, not long after Apco’s reduction at Apco Geelong North, Mobil Corio Village increased from 80.4 to 87.5. By this stage, most of the Brumar outlets had reduced their prices by 0.2 to 87.3. Prices generally began to ease back. Apart from the sharp dive at Mobil Corio Village and Apco Geelong North, the most significant decrease was at 13.30, when Leahy decreased its price at BP Leopold from 87.5 to 86.7. Oddly enough, BP Leopold was the leader again, because approximately half an hour after this, Mobil Manifold Heights at 14.01, Mobil Corio Village and Mobil Belmont all dropped to the same price, 86.7. At 14.53, Apco Geelong North followed Mobil Corio Village back up, but only to 86.7. The Apco and Chisholm sites all settled down to this price in the course of the afternoon, as did other Mobil sites and Brumar sites.
620 There was a series of telephone calls, all initiated by Michael Warner, beginning at 13.56 to Gordon Primmer for one minute, then at 13.57 to Peter Anderson for 30 seconds, at 13.58 to Ian Carmichael for 30 seconds, at 13.59 to Leahy for one minute, at 14.00 to Chris Andrianopoulos for 30 seconds and at 14.00 to Phil Carmichael for one minute. These were all transmitted through the mobile phone facility at Corio, but appear not to have been made from the Leahy office, because that was the destination of one of the calls. Mr Warner may have been on the road board-spotting at the time. It is unlikely that the decision by Leahy to reduce to 86.7 was the result of information conveyed by Mr Warner on this trip, because the price at BP Leopold had already been reduced to 86.7 and the price at BP Hillford was so reduced at 14.10.
621 Both Shell Victoria Street and Shell Waurn Ponds increased from 81.5 to 87.5 early in the day on 3 March. The price at United Convenience moved from 80.4 to 86.7 at some time during that day. The level adopted suggests that the move did not occur until after the market had begun to settle at that level.
622 The early rise at BP Leopold is a clear indication that Leahy was aware of a move in the Melbourne petrol market well before any telephone communication from Peter Anderson, and that Leahy also knew that the increase was likely to flow into Geelong and to be at that level. In this context, it is difficult to characterise the call from Mr Anderson to Leahy at 16.03 as initiating the implementation of Arrangement No 1. The call lasted for three minutes and 30 seconds. It may have involved an inquiry as to what Leahy knew of a likely price increase, but it is hard to see why the call could have occupied so much time if it were only about prices. Nevertheless, soon afterwards, there was a call cycle and there were price increases overnight. Again, the influence of Mobil outlets is apparent, but the difficulty of determining precise times of increases makes it difficult to know who was leading whom. On this occasion also, the Chisholm price increases did occur close to opening times for two Chisholm outlets, and Graeme Chisholm’s evidence that the instructions for these increases were most likely to have been given on the previous day suggests that the decision might have been based on information obtained during the rather lengthy phone call from Leahy at 16.11 on 2 March.
623 The mysterious aspect of this period is all of the telephone activity on 3 March. There were few outlets, if any, that had not moved to 87.5 by 11.11 on 3 March, when Mobil Corio Village made its 7.1 reduction. This reduction did not lead immediately to a rush to follow Mobil Corio Village down. Indeed, it took almost two hours for Apco Geelong North to make a similar reduction, which Mobil Geelong North followed at 13.41, by which time Mobil Corio Village had already moved back up. It is hard to see how this little piece of maneouvring could have caused Leahy to think that the settled price rise was jepoardised, even if United Convenience had not yet risen, and could have led to the round of telephone calls to which I have referred above. The greater likelihood is that those telephone calls were about something other than prices.
624 Although it seems certain that Leahy did not rely on Peter Anderson to supply information about a prospective price increase, but obtained information from another source and implemented it without consulting any competitor, this period provides stronger circumstantial evidence than most of the periods chosen by the ACCC to support the theory that Arrangements Nos 1, 3 and 6 were given effect to. Of course, Ian Carmichael’s time limitation must be disregarded, because the price increases were overnight, but the fact that both Chisholm and United Retail appear to have raised their prices early on the morning of 3 March, as well as the uniformity of prices adopted between Leahy, Apco, Chisholm and United Retail, makes the theory more plausible than in most instances. Again, however, the degree of influence of the Mobil outlets is unknown. The ACCC would like to have it that there was no influence on the overnight increases by a number of Mobil outlets moving at some time, but that the influence of a single Mobil outlet dropping its price on the following day was sufficient to cause a flurry of telephone calls. The latter proposition is less likely than the former. In the absence of price data for BP Meredith, it is impossible to say that effect was given to Arrangement No 7.
8 – 9 March 2000
625 The ACCC alleges that the data in Annexure B demonstrates that effect was given to Arrangements Nos 1, 3, 6, 7 and 8 during this period. This is one of only a handful of periods during the two years in question in this case on which it is even contended that all of the arrangements or understandings alleged to have been in existence at the time were put into effect. There are indications in the data in Annexure B that a price rise from Melbourne was about to flow into the Geelong petrol market. One such indication may be unreliable. The data shows Mobil Belmont increasing from 83.3 to 89.5 at midnight between 7 and 8 March. It may be that this entry should have been for midnight between 8 and 9 March, because otherwise it is isolated completely from moves at other Mobil outlets, which would be highly unusual. The Mobil outlets generally did not move totally independently of each other, so far as Annexure B shows.
626 Other indicators are more reliable, however. At 12.46 on 8 March, Leahy lifted its price at BP Leopold from 83.3 to 89.5. The fact that Mr Warner apparently felt confident enough to increase the retail margin at BP Leopold this early in the day suggests that, by that time, Leahy was in possession of information about the Melbourne increase and was signalling it to the Geelong petrol market. Whether it acquired that information from Peter Anderson in the course of two earlier phone calls from Leahy to Mr Anderson on that morning, or from some other source or sources, will never be known. At 15.18, Mobil Corio Village increased from 83.3 to 87.9. Again, this was a stand-alone increase, unless the Mobil Belmont increase really did occur at the beginning of that day. Both Mobil Belmont and Mobil Corio Village had their prices set by the same company, Rafinc. Perhaps the most significant indicator of a price increase flowing from Melbourne was that, at 15.40 on 8 March, BP Corford Express moved from 82.7 to 89.9. At 16.44, Alan Shuvaly telephoned Chris Andrianopoulos for one minute. This was in fact the fourth call by Mr Shuvaly to Mr Andrianopoulos, or the fourth attempt to reach him, there having been three 30-second calls at 15.59, 16.02 and 16.13 respectively, and an apparently returned call, lasting only two seconds, at 16.15. In the meantime, at 16.43, Mr Shuvaly reached Mr Anderson’s message bank. At 17.05, Mr Anderson rang Mr Shuvaly and reached his message bank. At 17.06, Mr Anderson spoke to the Liberty head office for three minutes and 30 seconds. At 17.10, Mr Anderson rang Leahy for two minutes. At 17.12, Leahy rang Chisholm for one minute and 42 seconds. At 17.14, Leahy rang BP Meredith for 19 seconds. At 17.15, Leahy rang Phil Carmichael, reaching his message bank. At 17.15, Leahy rang BP Corford Express for 20 seconds. At 17.16, Ian Carmichael rang Colin Williamson for one minute. At 17.21, Leahy rang David Mortimer for 23 seconds. Mr Mortimer rang back at 17.29 for two minutes. At 17.54, Ian Carmichael spoke to Phil Carmichael for three minutes and 30 seconds. Again, this was far longer than was required simply to talk about an impending price increase.
627 At 18.22, Peter Anderson telephoned Mr Shuvaly and reached his message bank. At 19.31, Mr Shuvaly rang Mr Andrianopoulos for one minute and 30 seconds. At 20.20, Mr Shuvaly rang Mr Anderson for one minute and 30 seconds.
628 At 22.53, Leahy increased the price at BP Torquay from 82.9 to 89.5. At 23.47, Leahy increased the price at BP Hillford from 82.7 to 89.5. Once again, some of the Mobil outlets may have moved at earlier times. At some time between 17.45 on 8 March and 07.11 on 9 March, Mobil Newcomb moved to 89.3. At some time between 19.07 and 07.05, Mobil Moolap also moved to 89.3. At some time between 22.09 and 07.27, Mobil Point Henry moved to 89.3. Mobil Corio Village and Mobil Manifold Heights moved at 00.09 and 00.28 respectively. Because these are both Rafinc sites, it is possible that Mobil Belmont moved at about the same time; Annexure B shows no move upwards for Mobil Belmont, but it is shown decreasing from 89.5 to 88.5, along with Mobil Manifold Heights and Mobil Corio Village, at 18.53, 18.55 and 18.56 respectively, on 9 March.
629 The Apco moves began with Apco Highton at 01.51 on 9 March and proceeded until 02.34, with Apco Geelong North at 01.59, Apco Newcomb at 02.02, Apco Geelong East at 02.16, Apco Lara at 02.18 and Apco Geelong South at 02.34. All of these increases were to 89.7, except Apco Highton, which was to 89.5.
630 At some time between 04.58 and 05.04 on 9 March, 7-Eleven Geelong East moved to 89.3. A similar move was effected at 7-Eleven Newcomb between 05.22 and 05.32 on that morning.
631 Mobil Geelong North moved to 89.5 at 06.12, Mobil Latrobe Terrace at 06.18 and Mobil East Belmont at 06.38. No doubt to match the Mobil prices, Apco Geelong North dropped to 89.5 at 06.25. The first Brumar site to move was Shell Latrobe Terrace at 06.51, the price being 89.5.
632 The Chisholm moves were again well after opening time for its outlets, and were all to 89.5, Chisholm Geelong West moving at 07.22, Chisholm Leopold at 07.49 and Chisholm Grovedale at 07.49. At 07.23, BP Corford Express dropped to 89.5. Other Apco outlets also dropped to 89.5 during the morning. At 07.57, Leahy reduced the price at BP Leopold from 89.5 to 89.3. Brumar sites when they increased during the morning all came to 89.5, as did Mobil sites that had not yet increased. Oddly enough, Mobil Corio Village dropped from 89.5 to 82.9 at 08.20, only to return to 89.5 at 10.16. Leahy seems to have led the price reduction to 89.3, with BP Hillford and BP Torquay both reducing to this at 09.14. Chisholm followed at Chisholm Leopold at 10.48. So did Apco and other Mobil outlets.
633 There was an exchange of calls between Ian Carmichael and Colin Williamson, beginning at 07.27 with a call by the former to the latter, lasting 30 seconds. The call was returned at 08.24 for one minute and 12 seconds. The ACCC tended to suggest that the motivation for these calls was that Brumar had not generally increased by this time, but there is no evidence of any line of communication between United Retail and Brumar in relation to prices, so this is unlikely. In addition, the ACCC pointed to an exchange of calls between Michael Warner and Gordon Primmer, beginning at 17.33 on 9 March, and interspersed with a call from Mr Primmer to Stan Kerr. By that stage, the market had eased substantially, with the most common prices being 88.5 or 88.9. It is hard to imagine what these calls might have been about. In the late morning and the afternoon, there was a considerable amount of telephone communication between various parties, which appears not to have been about prices at all, because the evidence is unanimous that there was never any passing of information about price decreases.
634 The average price at Liberty Geelong North increased from 82.8 to 89.0 for whatever period for which it was calculated on that day. The ACCC submitted that the magnitude of the upper figure indicates an increase early in the day. It is difficult to tell to what price Liberty increased. Andrianopoulos increased from 83.7 to 89.5, then dropped to 82.7 and increased slightly to 82.9 at times unknown during the day. United Convenience increased to 89.2 at some time during the day. Batesford Roadhouse increased from 82.7 to 89.5 and then reduced to 89.3. The amount of the first increase suggests that Mortimer Petroleum was falling in with the market price, whether because of information passed on the previous day from Leahy or because of board-spotting is unknown. Similarly, United Retail increased its price from 83.9 to 89.5 at both Shell Victoria Street and Shell Waurn Ponds, apparently early in the day. Even at that stage, Robert Riordan would have done his usual daily round. From his office, he could have seen that Shell Speedwings was at 89.5 from 08.07.
635 The circumstantial evidence for this period clearly suggests that an increase from the Melbourne petrol market was flowing into Geelong. Leahy appears to have pioneered the increase, with its very early price hike at BP Leopold, but others were also prepared to put the price up. Again, the influence of the Mobil outlets is very likely to have been significant. If nothing else demonstrates it, this is shown by the apparent ambivalence about the exact level of the price, with Apco Highton moving only to 89.5, in line with Leahy and the Mobil outlets, but other Apco outlets moving to 89.7, until Apco Geelong North was forced to discount by 0.2 to match the Mobil price. The variation in price between Leahy and most of the Apco outlets suggests that each was arriving at its own decision as to the magnitude of the increase independently of the other. This makes it likely that the price increases were not the result of the implementation of Arrangement No 1. The fact that the Chisholm increases were delayed until well after opening time suggests that Chisholm was also making its own decision, and not raising its prices overnight simply because it had heard from Leahy on the previous afternoon. The situation with United Retail is unknown. On the face of the circumstantial evidence, it might have been matching Leahy’s price because of information received about that price, or it might have been simply matching the market, particularly the Mobil outlets and Shell Speedwings. As for BP Meredith, it is simply impossible to say. It is going a very long way to say, as the ACCC attempted to do, that the calls between Michael Warner and Gordon Primmer in the late afternoon were an attempt to induce United Convenience to increase its price. By that stage, most of the market had increased, and discounting was already in progress, so it is difficult to see that the increase had not ‘stuck’.
636 The attempt to rely on the circumstantial evidence to allege that effect was given to Arrangement No 8 is pure speculation. The calls between the relevant parties were spread over a much longer period, and were more numerous and lengthy than would be expected if all that was necessary was to give a price and a time. The absence of clear data as to times of price increases makes it impossible to establish by reference to the circumstantial evidence that each of the parties to Arrangement No 8 gave effect to it by increasing to the same price at or about the same time. So far as Liberty is concerned, it is not even possible to say that it adopted the same price. The fact that Andrianopoulos, having increased, decreased by a considerable amount on the same day suggests that it was following its usual pattern of attempting to be seen as significantly lower than the rest of the market, rather than giving effect to an arrangement or understanding that a price increase would occur to a particular amount.
637 In respect of this period, the circumstantial evidence does not support the ACCC’s contention that effect was given to arrangements or understandings in relation to the price of petrol.
10 – 11 March 2000
638 This period followed immediately upon 8 and 9 March. In it, the ACCC alleges that effect was given to Arrangements Nos 1, 3, 6, 7 and 8, again the full range. The weekend immediately following Friday, 10 March was a long weekend, with a public holiday on Monday, 13 March. Prices had not had much time to decrease, and did not decrease much, from 9 March. The most common low price reached on 10 March was 87.9. The increase that did occur overnight on 10-11 March was not a very large one. The most common high price was 91.5, only 2.0 higher than the most common high price on 9 March, and less than 4.0 higher than the most common low price reached on 10 March.
639 In the morning and the early afternoon of 10 March, there was considerable telephone communication between various parties, particularly Mr Shuvaly and Mr Andrianopoulos, but also calls involving the Apco office, Mr Anderson, Leahy, Chisholm and Gordon Primmer. These are not calls on which the ACCC relied. Significantly, at some time between 15.38 and 16.02, Mobil Moolap increased its price from 87.9 to 90.4, suggesting that a further increase in the Geelong petrol market was in the offing.
640 At 16.25 on 10 March 2000, Chris Andrianopoulos rang Alan Shuvaly for 15 seconds. At 16.33, Mr Shuvaly rang Mr Anderson for one minute. At 16.38, Mr Andrianopoulos rang Mr Shuvaly back for 35 seconds.
641 At 16.39, Leahy increased its price at BP Leopold from 88.5 to 91.5, thereby signalling an increase to the price at which most of the market participants would later settle. Whether it did so on the basis of information given by Peter Anderson in a four-minute telephone call at 14.29 cannot be known. After the increase had occurred, Mr Anderson again made a four-minute call to Leahy at 16.48. At 16.53, Ian Carmichael rang Colin Williamson for 30 seconds. At 16.53, the Leahy office also rang BP Corford Express for 22 seconds. At 16.55 Leahy rang Phil Carmichael for 38 seconds. At 16.56, Colin Williamson rang Ian Carmichael back for 24 seconds. At 16.58, Leahy rang BP Meredith for two minutes and five seconds. At 17.03, Leahy rang David Mortimer for two minutes and 14 seconds. The length of these two calls, and their proximity, suggests that their principal subject at least was something other than petrol pricing. At 17.21, Apco called Leahy. The length of this call is unclear: the figure that appears in Annexure B is ‘233’. At 17.46, Mr Shuvaly rang Mr Andrianopoulos for 30 seconds. At 17.57, Mr Primmer rang Mr Kerr for 30 seconds, apparently unprompted by any communication from Leahy suggesting that he should do so, unless he delayed for almost an hour after such communication.
642 In the meantime, Leahy decreased its prices at BP Hillford at 17.55 and BP Torquay at 18.33 from 88.5 to 87.9. Apart from BP Leopold and Mobil Moolap, the first price increases in the market on 10 March were towards closing time for the Chisholm outlets. At 21.22, Chisholm Grovedale, at 21.58, Chisholm Leopold and at 22.05, Chisholm Geelong West all moved to 91.5. Mobil Latrobe Terrace also moved to 91.5 at 22.59. Leahy moved BP Hillford at 23.39, also to 91.5 and Mobil Manifold Heights moved at 23.46 to the same level. BP Torquay increased to 91.5 at 00.10 and Mobil Belmont at 00.24 on 11 March. The Apco increases probably began at 01.51 with Apco Highton, followed by Apco Newcomb at 02.20, Apco Geelong North at 02.21, Apco Lara at 02.23, Apco Geelong South at 02.38 and Apco Geelong East at 05.30. Between 03.08 and 03.26, 7-Eleven Geelong East moved to 91.5.
643 Once again, there were Mobil increases the precise times of which are unknown. The earliest may have been Mobil Moolap between 19.18 on 10 March and 10.26 on 11 March, Mobil Newcomb between 19.37 and 08.45, Mobil Point Henry between 21.33 and 10.42 and Mobil Grovedale between 22.00 and 07.39.
644 BP Corford Express moved to 91.5 at 06.55 on 11 March. Between 06.56 and 07.48, so did 7-Eleven Newcomb. Caltex Quick Bite was quite late on the scene at 09.55, as were the Brumar sites, led by Shell Speedwings at 11.40. The ACCC submitted that a call from Ian Carmichael to Colin Williamson for one minute at 07.48, a return call at 07.53 for 50 seconds, and subsequent calls from Mr Williamson to Mr Carmichael at 09.11 for 43 seconds and Mr Carmichael to Mr Williamson at 09.35 for one minute, Mr Williamson to Mr Carmichael at 10.44 for 52 seconds and Mr Carmichael to Mr Williamson at 10.50 for one minute may have been related to the fact that Brumar was not up. As I have said, the evidence is that United Retail had no line of communication with Brumar at this stage. Indeed, there had been no relevant line of communication since several months before Mr Heikkila’s departure and the switch from United Fuels to United Retail in running the relevant Shell outlets. The number of the calls between Ian Carmichael and Colin Williamson suggests that there was some other subject agitating them.
645 Peter Anderson rang Leahy at 10.57 for 30 seconds on 11 March, and then rang Ian Carmichael for four minutes at 10.58. These calls were plainly not about a price increase. Indeed, not long after they were made, Leahy reduced the price at BP Leopold from 91.5 to 87.9. Mobil Corio Village went down in two steps, from 91.5 to 90.9 at 11.34, and from 90.9 to 87.9 at 11.45. Mobil Belmont dropped to 87.9 directly from 91.5 at 11.49. At 11.51, Apco began decreasing to 90.9 at Apco Geelong North. At 12.12, Leahy raised the price at BP Leopold again to 90.9. Also at 12.12, Mobil Geelong North followed Apco Geelong North down to 90.9. Other Mobil outlets also began to decrease to the same figure, as did Chisholm at Chisholm Geelong West. Interestingly, Chisholm Leopold and Chisholm Grovedale both dropped to 87.9.
646 The ACCC submitted that a call from Apco to Leahy at 11.46 was probably a complaint call about the reduction at BP Leopold. This is unlikely, in the light of the evidence that there were never calls about discounting, particularly never calls protesting about discounting. The ACCC also speculated that calls from Ian Carmichael to Graeme Chisholm at 12.59 and 13.08, both for 30 seconds, were about the fact that Chisholm had dropped its price, and to advise that Leahy had raised its price at BP Leopold. Again, this is unlikely. The evidence is clear that there were no phone calls in which market participants attempted to persuade other market participants not to reduce their prices once they had raised them. In any event, when Chisholm did raise its prices again, it was to a price that had become the common one in the market, at a lower level than the original price increases. It is more likely that the two phone calls in which Ian Carmichael spoke to Graeme Chisholm were concerned with matters other than prices.
647 United Retail increased its prices at Shell Victoria Street and Shell Waurn Ponds on Saturday, 11 March 2000, but to different amounts. Shell Victoria Street moved from 88.5 to 90.7. This increase must have occurred at some time during the morning or very early afternoon, because Shell Victoria Street did not remain open all day. As the increase was to a price slightly below that to which the market was moving down in the late morning and early afternoon, it is highly likely that the increase was late rather than early. Shell Waurn Ponds increased from 87.9 to 91.5, apparently early in the day. The fact that the timing and the amounts were different suggest that United Retail was not acting pursuant to any arrangement or understanding when it made its decisions about the prices at those two outlets.
648 Liberty Geelong North increased its average price for 11 March from 88.1 to 91.3. If it be assumed that it moved to 91.5 as a maximum price, then its move must have been early. As is quite usual, the Andrianopoulos price movements bore little resemblance to those of any competitor. At times unknown on 11 March, Andrianopoulos increased from 89.5 to 91.5, dropped back to 87.9 and then increased to 88.5. The circumstantial evidence is not sufficient to support the allegation of collusion between Apco, Andrianopoulos and Liberty in relation to petrol prices during this period.
24 – 25 March 2000
649 The ACCC alleges that effect was given to Arrangements Nos 1, 3, 6 and 7 during this period. The most common price on the morning of Friday, 24 March was 83.5. In the course of that day, a large number of retail petrol outlets in the Geelong petrol market rose to 89.5, before easing to 89.1 and then to 88.9 (Apco and a number of Mobil outlets) before the end of the day.
650 The call cycle on which the ACCC relied began at 10.43 on 24 March, when Leahy rang Apco for one minute and 25 seconds. There was no initiating phone call from either Apco or Peter Anderson. This call followed immediately on a call from Leahy to Phil Carmichael. It is possible that, in that call, Leahy received information of a prospective Mobil price increase. Immediately after the call to the Apco office, at 10.44, Leahy rang Phil Carmichael for 26 seconds. At 10.45, Leahy rang Chisholm for 45 seconds. At 10.46, Leahy rang BP Corford Express for one minute and 23 seconds, significantly longer than would be necessary to pass on information about a price increase. At 10.48, Leahy rang David Mortimer for 38 seconds and at 10.49 Leahy rang BP Meredith for 44 seconds. At 10.53, Gordon Primmer rang Stan Kerr for one minute and 30 seconds, again longer than would be necessary to pass on information about a price increase. At 10.53, Leahy rang Chris Andrianopoulos for 19 seconds. At 11.10, Ian Carmichael rang Colin Williamson for one minute and 30 seconds, again a call of significant length.
651 Leahy began increasing its prices from 83.5 to 89.5 at 11.33 at both BP Leopold and BP Hillford. In Annexure B, these entries are followed at 11.34 by an entry suggesting that Mobil Point Henry decreased from 89.1 to 88.9 at some time between 07.59 and 11.34. This figure appears anomalous, and can probably be disregarded. There is no indication of any earlier increase at Mobil Point Henry to 89.1. The more likely explanation is that the decrease belonged to the morning of 25 March, rather than 24 March.
652 Some Mobil price increases may have begun occurring even before the Leahy increase. At some time between 10.31 and 12.17, Mobil Newcomb moved from 83.5 to 89.5, as did Mobil Gateway at some time between 11.19 and 12.38. Other Mobil sites followed shortly after. Apco increases began (on the assumption that the Apco Geelong South computer was still programmed for Eastern Standard Time) at 11.46 at Apco Highton, followed by Apco Newcomb at 11.47, Apco Geelong South and Apco Lara at 11.58 and Apco Geelong North at 12.02. Leahy increased its price at BP Torquay at 12.40, and Apco Geelong East at 12.41.
653 Chisholm also began increasing its prices, with Chisholm Grovedale moving from 83.5 to 89.5 at 11.52 and Chisholm Geelong West at 12.17.
654 Strangely, another round of telephone calls occurred during these price increases. Shell Waurn Ponds rang Leahy at 11.52 for 55 seconds. Ian Carmichael rang Peter Anderson, reaching his message bank at 11.55. At 11.59, Leahy rang Apco. At 12.21, Ian Carmichael rang Colin Williamson for two minutes and 30 seconds. At 12.28, Mr Williamson rang Mr Carmichael for 41 seconds. At 12.50, Mr Carmichael rang Mr Andrianopoulos for 30 seconds. At 13.03, Mr Carmichael then rang Gordon Primmer for one minute; at 13.08, he rang Colin Williamson for 30 seconds; at 13.10, he rang BP Corford Express for 30 seconds; and, at 13.13, he again rang Chisholm for two minutes.
655 BP Corford Express increased its price from 83.7 to 89.5 at 13.22, a minute before Caltex Quick Bite increased from 84.9 to 89.5. There were more telephone calls passing between Mr Williamson or Shell Waurn Ponds and Ian Carmichael or Leahy at about this time. The ACCC argued that these calls were related to the fact that Brumar outlets had not yet increased. This is highly unlikely. The number and duration of the telephone calls suggests strongly to the contrary. In any event, there is no evidence that anyone from United Retail was in touch with anyone from Brumar at this stage about prices; the evidence is to the contrary. Brumar increases in Geelong began at 14.28 with Shell Highton, followed by Shell Speedwings at 14.39, Shell Westoria at 14.48, Shell Belmont at 15.02, Shell Latrobe Terrace at 15.57 and Geelong Car Spa at 16.00.
656 In his evidence, Mr Warner suggested that it was possible that the phone call from Leahy to Apco at 10.43 was for the purpose of passing on to Apco what Leahy was intending to do in relation to prices. In relation to the second round of phone calls, Mr Warner said that these were probably follow-up calls, explained by the fact that price rises were spread over some hours. The problem with accepting this is that the second round of phone calls involved Chisholm, whose prices had already increased.
657 Shell Waurn Ponds increased its price at some time during 24 March from 83.5 to 88.9. The ACCC submitted that this was an early increase. If that were the case, it was clearly to a different price from the one to which other market participants went. In fact, the price matched the price to which Apco and Mobil outlets were coming down later on 24 March. It is more likely that United Retail did not increase its price at Shell Waurn Ponds until quite late in the day. Shell Victoria Street remained on 83.5 throughout the whole of 24 March, and only increased from that figure to 88.9 on the morning of Saturday, 25 March. The price data for United Retail, together with the amount of telephone traffic and the duration of some of the telephone calls all suggest that United Retail was not part of any price-fixing arrangement or understanding on this occasion.
658 At some time during the day on 24 March, United Convenience lifted its price from 83.5 to 89.1. At a later time, it reduced its price to 88.5. The only move at Andrianopoulos on that day was to reduce from 83.9 to 83.5 at some time.
659 The best that can be said about this occasion from the ACCC’s point of view is that the data is consistent with the first round of telephone calls in the morning being instrumental in the price rises by Leahy, Apco and Chisholm. Once again, the timing of Mobil price rises is unclear. As I have said, United Retail is unlikely to have been involved. There is no evidence of any increase on the part of BP Meredith.
31 March 2000
660 The ACCC alleges that effect was given to Arrangements Nos 1, 3 and 7 on this occasion. The relevant call cycle began at 08.19, when Leahy telephoned Apco for two minutes and 16 seconds, a call unlikely to have been related solely to questions of price increases. There was no immediate follow-up to this call. At 08.31, Ian Carmichael rang Colin Williamson for 30 seconds. At 08.34, Leahy rang Phil Carmichael, reaching his message bank. At 08.37, Mr Williamson rang Ian Carmichael for 32 seconds. At 08.38, Leahy rang BP Corford Express for 15 seconds. At 08.39, Leahy rang David Mortimer for 26 seconds. At 09.00 Leahy rang Gordon Primmer for one minute and 18 seconds. Mr Primmer rang Stan Kerr at 09.03 for 30 seconds. At 09.28, Leahy rang Chisholm for three minutes and 30 seconds, with a follow-up call for a further 55 seconds at 09.41. The length of these calls makes it unlikely that they were related solely to a prospective price increase. At 10.07, Leahy rang BP Meredith for one minute and 39 seconds. At 10.23, Ian Carmichael rang Mr Williamson for 30 seconds. At 10.23, Ian Carmichael rang Chris Andrianopoulos for one minute. At 10.24, Ian Carmichael rang BP Meredith for two minutes and 30 seconds, again too long to be related only to the provision of information about a prospective price increase. At 10.37, Leahy rang Mortimer Petroleum for 57 seconds. There were then five separate telephone calls between Shell Waurn Ponds or Mr Williamson and Leahy or Ian Carmichael, between 10.53 and 11.24. At 11.30, Mr Primmer rang Leahy for 30 seconds. At 11.39, Leahy rang Mr Primmer for 25 seconds and at 11.42 Mr Primmer rang Leahy for two minutes.
661 In the meantime, the first of the price increases shown in Annexure B occurred at 09.00 at BP Corford Express, which raised its price from 82.5 to 86.9. The next price rise shown in Annexure B is at 11.31, when Leahy increased its price at BP Leopold from 81.7 to 86.5. This was followed by an identical increase at 11.44 at BP Hillford.
662 Chisholm began increasing to 86.5 at Chisholm Grovedale at 12.29, Chisholm Leopold at 12.30 and Chisholm Geelong West at 12.48. In the meantime, Apco began to increase at Apco Geelong North at 12.41.
663 The range of times for increases at Mobil outlets where precise times were not recorded began at Mobil Grovedale, where the price increased from 81.7 to 86.5 at some time between 10.48 and 14.03. Mobil Moolap moved between 11.28 and 15.16. Mobil Point Henry’s range was from 11.58 to 14.30. Definite times are available for Mobil Corio Village, Mobil East Belmont and Mobil Geelong North, being 12.18, 12.21 and 12.43 respectively. Leahy’s increase to 86.5 at BP Torquay occurred at 13.03.
664 Plainly what occurred on this day was that a price rise from the Melbourne petrol market flowed into the Geelong petrol market. This is clear from the fact that the earliest price increase was at BP Corford Express, the prices for which were set in Melbourne, independently of any phone call from Leahy. If it were to be supposed that the BP Corford Express rise was the result of the telephone call from Leahy 22 minutes earlier, then it was a rise that did not conform to the time of other price increases in the Geelong petrol market; indeed, it preceded those rises by three hours or more.
665 Graeme Chisholm’s evidence was that Chisholm would have received a call to the effect that midday was the time for price rises, and would have checked board prices at other competitors before instructing its sites to increase. This evidence is consistent with the early Mobil increases, prices which were set in Melbourne and no doubt reflected what had occurred in the Melbourne petrol market. Given the lapse of time between 08.19 and the earliest Apco increase, it is unlikely that the telephone call was the trigger for that increase. It is more likely that Apco acted on other information as to Melbourne prices and possibly as to Mobil price increases. The large number of return calls between Leahy or Ian Carmichael and other market participants also tends to suggest that the calls were about matters other than price increases. If arrangements or understandings of the kind that the ACCC alleges were in place, it would appear to be unnecessary to have such a large number of calls. If it be suggested that the call from Mr Primmer to Stan Kerr at 09.03, following the call from Leahy to Mr Primmer at 09.00 was an attempt to persuade United Convenience to increase its price, it is unclear whether it was successful. At some stage, United Convenience increased from 81.9 to 86.3, a price to which Mobil Grovedale came down from 86.5 at some time between 15.49 and 16.53. Andrianopoulos had three price moves on that day, from 82.5 down to 81.7, then up to 81.9 and then up again to 82.5. Both Shell Victoria Street and Shell Waurn Ponds reduced on that day from 82.5 to 81.7.
666 It is unlikely that the price increases on this day reflected the giving effect to of any arrangement or understanding. The time lapse between the first round of telephone calls and any price increases would make the pattern inconsistent with that described by Ian Carmichael in his evidence. It is much more likely that the price rises that did occur simply reflected the flowing on of a price increase from the Melbourne petrol market to the Geelong petrol market.
14 – 15 April 2000
667 The ACCC alleges that, during this period, effect was given to Arrangements Nos 1, 3, 7 and 8. The period is characterised by a very large number of telephone calls between participants in the Geelong petrol market, as well as by some considerable price movements, both up and down.
668 In the early afternoon of Friday, 14 April, there was an apparent call cycle, on which the ACCC did not rely. At 14.42, Leahy reached Chris Andrianopoulos’s message bank for 19 seconds. At 14.48, Leahy again rang Mr Andrianopoulos, this time reaching him for 32 seconds. At 14.49, Leahy rang Chisholm for five minutes and 53 seconds. This call must have been made by someone other than Ian Carmichael because, at 14.50, he rang Phil Carmichael’s message bank on his mobile, then at 14.51 he rang BP Corford Express for one minute and then at 14.52 Colin Williamson for one minute.
669 The call cycle on which the ACCC did rely began at 15.42, with a one-minute call from Mr Andrianopoulos to Alan Shuvaly. At 15.47, Mr Andrianopoulos rang Peter Anderson for one minute and 44 seconds. At 15.54, Mr Anderson rang Mr Shuvaly for one minute and 30 seconds. At 15.57, Mr Anderson rang Leahy for five minutes and 30 seconds. At 16.03, Leahy reached Mr Andrianopoulos’s message bank for a mere seven seconds. There appears to have been little urgency about the communications between the various parties up to that time. Telephone activity began in earnest at 16.05, when Leahy telephoned Chisholm for one minute and 32 seconds. At 16.06, Mr Carmichael rang Colin Williamson for one minute. At 16.08, Leahy rang BP Meredith for 46 seconds. At 16.09, Leahy rang BP Corford Express for one minute and 32 seconds. At 16.11, Leahy rang Phil Carmichael for 20 seconds. At 16.16, Leahy rang David Mortimer for 48 seconds. At 16.28, Colin Williamson rang Ian Carmichael for 53 seconds. At 16.33, Mr Anderson rang Leahy again for one minute. At 16.35, Leahy rang Mr Andrianopoulos for 40 seconds. At 16.36, Leahy rang Mr Anderson for one minute and eight seconds.
670 At 16.31, Apco Geelong South increased from 72.9 to 83.9. The time is likely to have been recorded accurately, because daylight saving had ceased on 26 March. At 16.36, Leahy began increasing its prices, with BP Leopold from 72.9 to 83.9, followed at 16.41 by BP Torquay from 73.9 to 83.9. There was then a further flurry of telephone calls, with Mr Shuvaly ringing Mr Andrianopoulos for one minute at 16.44, Mr Shuvaly reaching Mr Anderson’s message bank at 16.45, Mr Anderson calling Mr Shuvaly for one minute and 30 seconds at 16.48, Mr Shuvaly calling Mr Andrianopoulos for 30 seconds at 16.51 and Mr Anderson calling Leahy for two minutes at 16.52. Leahy then rang Phil Carmichael for four minutes and 52 seconds at 16.53. Mr Anderson rang Leahy again for a further two minutes at 16.54. At 16.55, Mr Shuvaly rang Mr Andrianopoulos for 30 seconds.
671 At 16.55, Chisholm began increasing its prices to 83.9 at Chisholm Leopold, followed by Chisholm Grovedale at 17.06 and Chisholm Geelong West at 17.11. Caltex Quick Bite increased to the same price at 17.03. The Mobil increases began at 17.05, with an increase from 73.4 to 83.9 at Mobil Corio Village. Almost immediately, at 16.33, Apco lowered its price at Apco Geelong South to 83.5.
672 Apco continued its price increases with Apco Lara moving to 83.9 at 17.04, which it then dropped to 83.5 at 17.11, Apco Newcomb to 83.5 at 17.10 and Apco Geelong East at 17.31.
673 Still there were phone calls. At 17.43, Mr Anderson rang Mr Shuvaly for 30 seconds. At 17.45, Mr Shuvaly reached Mr Andrianopoulos’s message bank. Mr Andrianopoulos returned the call, reaching Mr Shuvaly’s message bank at 17.46. There is then recorded a one-second call from Mr Andrianopoulos to Mr Shuvaly at 17.46. Mr Shuvaly reached Mr Andrianopoulos’s message bank again at 17.47. Mr Andrianopoulos reached Mr Shuvaly’s message bank at 17.47. Finally, at 17.48, the two appear to have spoken in a call from Mr Andrianopoulos to Mr Shuvaly for 47 seconds.
674 At 17.53, Shell Speedwings, the first of the Brumar outlets to increase, moved to 83.9. At 18.00, BP Corford Express lifted its price to 83.5. Apco Highton also increased to 83.5 at 18.05. Mobil Belmont moved to 83.5 at 17.50, with other Mobil sites following some time later, Mobil Latrobe Terrace at 19.05, Mobil East Belmont at 19.10, Mobil Geelong North at 19.11, Mobil Newcomb at some time between 18.06 and 19.12 and Mobil Point Henry apparently at some time between midnight and 19.18.
675 There were yet more telephone calls. Phil Carmichael rang Ian Carmichael for two minutes and 30 seconds at 18.08, and again for one minute at 18.30. Darren Campigli rang Ian Carmichael for 41 seconds at 18.31. Ian Carmichael rang Mr Anderson for two minutes at 18.32 and then rang Phil Carmichael at 18.34. David Mortimer rang Ian Carmichael for 26 seconds at 18.37. Ian Carmichael rang Phil Carmichael for one minute and 30 seconds at 18.43. Colin Williamson apparently failed to reach Ian Carmichael shortly after this call was made. At 18.45, Ian Carmichael again rang Mr Anderson for one minute and 30 seconds. Ian Carmichael then rang Phil Carmichael for four minutes at 18.47. At 19.18, Ian Carmichael again rang Phil Carmichael for one minute. At 19.19, Ian Carmichael rang BP Meredith. At 19.20, Colin Williamson rang Ian Carmichael for 28 seconds. At 19.22, Mr Carmichael rang Mr Williamson back for one minute. At 19.24, Gordon Primmer rang Ian Carmichael, apparently returning the earlier call. Mr Primmer then rang Stan Kerr for one minute at 19.26, and rang Mr Carmichael again for 30 seconds at 19.27, with another 30-second call at 19.28.
676 At 19.35, Ian Carmichael rang BP Corford Express for one minute. At 19.37, Mr Carmichael rang Colin Williamson for two minutes and 30 seconds. At 19.37, Mr Anderson rang Mr Shuvaly for three minutes and 30 seconds. At 19.40, Ian Carmichael rang Phil Carmichael for five minutes. Also at 19.40, Mr Anderson reached Mr Shuvaly’s message bank and Mr Shuvaly reached Mr Andrianopoulos’s message bank. At 19.42, Mr Andrianopoulos spoke with Mr Shuvaly for one minute and 46 seconds.
677 Prices then began to revert to the levels at which they had been much earlier in the day. At 19.47, Mobil Manifold Heights reduced from 83.5 to 72.9. Mobil Belmont did the same at 19.48 and Mobil Corio Village at 19.50. Apco followed suit at 19.52 at Apco Lara, 19.53 at Apco Geelong East, 19.54 at Apco Geelong North and 19.59 at Apco Newcomb. The ACCC contended that this was evidence that, for some reason that is not immediately apparent, the price rise did not ‘stick’.
678 There was yet more telephone activity on 14 April. At 20.02, Mr Anderson rang Ian Carmichael for three minutes. At 20.05, Ian Carmichael rang Phil Carmichael for two minutes. At 20.10, Mr Anderson rang Mr Shuvaly for one minute and 30 seconds. At 20.13, Mr Shuvaly rang Mr Andrianopoulos for 30 seconds. At 20.15, Ian Carmichael rang Peter Anderson for two minutes and 30 seconds.
679 At 20.26, Apco began increasing its prices again, to 83.5, with Apco Geelong North at that time, Apco Lara at 20.34, Apco Geelong South at 20.48 and Apco Geelong East at 22.10. In the middle of these increases, Apco Highton dropped to 72.9 at 20.43, and then increased back to 83.5 at 21.05. These increases were closely in tandem with Mobil outlets, Mobil Geelong North moving to 83.5 at 20.27, Mobil Latrobe Terrace at 20.31, Mobil Manifold Heights at 20.34, Mobil Belmont at 21.01 and Mobil Corio Village at 21.16.
680 In the course of 14 April, Liberty’s average price decreased from 74.5 to 74.1. The price at Andrianopoulos dropped from 74.9 to 72.9, increased to 73.9 and then to 74.5. United Convenience also eased its price during the day from 73.9 to 73.4 and then to 72.9.
681 On the morning of Saturday, 15 April, some prices were still increasing, whereas others were beginning to decline. Brumar outlets were still increasing, with Shell Highton going from 74.4 to 84.9 at 07.17 and Shell Anglesea from 74.4 to 84.5 at 07.36, Shell Norlane moving from 73.4 to 83.5 at 08.15 and Shell Westoria doing likewise at 08.31. In the meantime, however, Shell Speedwings and Shell Belmont dropped from 83.9 (to which they had moved on the previous day) to 83.5. Between 06.56 and 07.42, 7-Eleven Geelong East increased from 73.9 to 83.5, as did 7-Eleven Newcomb between 07.05 and 07.47. At 10.12, Shell Highton dropped from 84.9 to 84.5 and at 11.05, Shell Latrobe Terrace declined from 83.9 to 83.5. Chisholm joined the reductions of 0.4, moving to 83.5 at Chisholm Grovedale at 12.16, Chisholm Geelong West at 12.16 and Chisholm Leopold at 12.22. Leahy joined in with BP Hillford, moving at 13.05 to 83.5. In the course of the afternoon, the Apco outlets and a number of Mobil outlets moved downwards to 82.9, and then to 82.5, the latter price being matched by Leahy at BP Leopold at 17.47 and BP Hillford at 18.16.
682 At 11.43 on 15 April, Mr Shuvaly rang Mr Andrianopoulos for two minutes. At 16.10, Mr Anderson rang Mr Andrianopoulos for three minutes and 30 seconds. The ACCC endeavoured to characterise the latter call as a complaint from Mr Anderson to Mr Andrianopoulos, about the latter failing to raise the prices at Andrianopoulos. In fact, at some time during the day, prices at Andrianopoulos moved up from 74.5 to 83.5, down to 72.9, back up to 83.5 and down again to 72.9. Given the length of the telephone call it is difficult to suggest that it was entirely concerned with a complaint about failure to raise the price. Liberty’s average price for the day increased from 74.1 to 83.2, which the ACCC submitted was indicative of a price increase early in the day. Finally, United Convenience increased from 72.9 to 83.5 at some time during the day.
683 The large amount of telephone communication on 14 April is at odds with the oral evidence of arrangements operating smoothly, in which it was only necessary for a call to be made to convey a price and a time, in order to induce the other party to increase the price to a stated level at that time. Many of the telephone conversations, which apparently occurred at crucial times for giving effect to arrangements or understandings, were of such a length as to suggest that far more was conveyed than just a price and a time. Indeed, in the light of the oral evidence, it is difficult to accept that long conversations were ever needed, whether to initiate a price rise or to complain that it had not been carried into effect. For instance, if Mr Anderson were really ringing Mr Andrianopoulos at 16.10 on 15 April to complain that Andrianopoulos had not increased its price, he would hardly have required three minutes and 30 seconds to convey that message in what was apparently his blunt style.
684 Apco’s quite swift move to reduce its prices from 83.9 to 83.5 suggests that it had no confidence in a price increase to 83.9 occurring, despite the considerable amount of telephone activity. Plainly, in so reducing its price, Apco was reacting to something other than telephone information, although the data in Annexure B does not reveal to what it was reacting. Similarly, the abrupt dropping of prices on the evening of 14 April by Apco and some of the Mobil outlets, suggests other forces at work. Leahy and Chisholm had both moved to 83.9 within a relatively short time of each other, but within that time Apco was already coming down. Having apparently been forced to reduce its prices dramatically (probably by the Mobil moves, which were set from Melbourne), Apco then made another attempt in the evening to push the price back up to 83.5, which appears to have been successful, at least as far as its Mobil competitors were concerned. The absence of any sign of an upward move on the part of either Andrianopoulos or Liberty on 14 April is entirely inconsistent with the proposition that effect was given to Arrangement No 8. Even allowing for the possibility that Liberty moved its prices up to around 83.5 fairly early in the morning on 15 April, both it and Andrianopoulos did not move until after midnight, a long time after other prices had already moved.
685 The best that can be said for the ACCC’s case for this period is that telephone communication between Leahy and Chisholm was followed closely by increases in their prices, which remained firm. Of course, it is not known whether the increase reflected an increase from the Melbourne petrol market, flowing into Geelong on a Friday, coupled with a removal of price support from Chisholm by Caltex.
20 April 2000
686 On this occasion, the ACCC alleges that effect was given to Arrangements Nos 1, 3, 6 and 7. At 10.20, Ian Carmichael rang Peter Anderson for 30 seconds, the second such call for the day (the first was at 09.13). It was not until 11.06 that Mr Carmichael engaged in what the ACCC identified to be the rest of the relevant call cycle. At 11.06, Mr Carmichael rang Colin Williamson for one minute. At 11.07, he rang Chisholm for one minute and then at 11.08 he rang Darren Campigli for one minute. At 11.09, Mr Carmichael rang Phil Carmichael for 30 seconds. At 11.10, he rang BP Corford Express for 30 seconds. At 11.11, Mr Carmichael rang Chris Andrianopoulos for 30 seconds. At 11.23, he rang Mortimer Petroleum for one minute. At 11.34, Leahy telephoned Chisholm for 11 seconds.
687 At 11.46, Leahy increased its price at BP Hillford from 76.5 to 83.5. It did the same at BP Leopold at 12.12. In the meantime, Leahy telephoned BP Meredith for 56 seconds at 11.50.
688 Mobil sites began moving up at 12.12, with Mobil Manifold Heights also moving from 76.5 to 83.5, followed by Mobil Belmont at 12.33, Mobil Corio Village at 13.03, Mobil Geelong North at 13.27, Mobil Latrobe Terrace at 13.31, Mobil East Belmont at 13.42, Mobil Moolap at some time between 12.57 and 13.43, Mobil Grovedale at some time between 13.09 and 13.45.
689 In the meantime, Shell Waurn Ponds telephoned Leahy for 29 seconds at 12.52. Colin Williamson then called Ian Carmichael for 22 seconds at 12.53.
690 Brumar began increasing its prices to 83.5 at 12.58 at Shell Latrobe Terrace, 13.00 at Shell Highton, 13.08 at Shell Speedwings, 13.41 at Shell Norlane, 14.15 at Shell Belmont and 14.43 at Shell Westoria. Leahy increased the price at BP Torquay to 83.5 at 13.14. Chisholm began its increases at 13.26, with Chisholm Grovedale, followed by Chisholm Geelong West at 13.38 and Chisholm Leopold at 13.44, all to 83.5. Apco similarly increased from 76.5 to 83.5 at Apco Geelong South at 13.31, Apco Geelong North at 13.33, Apco Newcomb at 13.38, Apco Geelong East at 14.26 and Apco Highton at 14.27.
691 As early as 14.38, discounting began, with Mobil sites beginning to move down to 82.9. BP Corford Express did not increase its price until 15.15, shortly before Leahy dropped its price at BP Leopold to 82.9 at 15.26. The Apco prices all moved to 82.9 (or in the case of Apco Newcomb to 81.9) between 15.34 and 16.29. Chisholm followed the downward movement in the evening, probably at closing time for each of its outlets.
692 At some time on 20 April, Shell Waurn Ponds increased from 77.9 to 83.5. Shell Victoria Street apparently remained on 76.9 throughout the entire day.
693 This day represents a fairly obvious example of the flowing of a Melbourne market increase into the Geelong petrol market. Apart from Leahy, with its increases at BP Hillford and BP Leopold, the first to move were the Mobil outlets. The Apco move at Apco Geelong North followed within about six minutes the move at Mobil Geelong North. Brumar was among the early movers, apparently without the benefit of telephone communications. The moves by Mobil and Brumar provide the clearest evidence that a Melbourne petrol price increase was spreading to Geelong. Ian Carmichael may have had prior knowledge of the Melbourne increase, and may have spread news of it to others. If his phone call at 10.20 did spread news of it to Mr Anderson, the latter took more than three hours to react to the news, and reacted only after Mobil Geelong North (directly across the road from Apco Geelong North, and from the Apco office) had moved. Similarly, Chisholm appears to have delayed by more than two hours after any telephone communication from Mr Carmichael. United Retail clearly did not implement any arrangement or understanding at Shell Victoria Street, and the time at which it increased its price at Shell Waurn Ponds to 83.5 probably reflected information Mr Riordan had about market moves more than it did any telephone communication.
694 On balance, the data for 20 April 2000 does not support the ACCC’s contentions with respect to any arrangement or understanding.
10 May 2000
695 The ACCC alleges that only Arrangements Nos 1 and 3 were given effect to on this day. The call cycle identified began at 13.12, with a phone call for 30 seconds from Peter Anderson to Leahy. This was followed at 13.14 by a call from Mr Anderson to Ian Carmichael, this time for three minutes, far longer than required to communicate a price and a time. At 13.18, Mr Carmichael rang Colin Williamson for 30 seconds. Colin Williamson returned the call at 13.19 for 13 seconds. Mr Carmichael rang Chisholm for two minutes and 30 seconds at 13.22, again for longer than was necessary to communicate brief information. At 13.24, Mr Carmichael reached Mr Anderson’s message bank. At 13.25, Mr Carmichael rang the Apco office for 30 seconds.
696 In the course of this chain of telephone calls, Leahy reduced the price at BP Torquay from 78.9 to 78.5. Some seven minutes after the last phone call from Mr Carmichael to Apco, Leahy increased its price at BP Hillford from 78.5 to 86.5. This was followed by an increase from 77.4 to 86.5 at BP Leopold at 13.44, and an increase from 78.5 to 86.5 at 13.45 at BP Torquay. In the meantime, Apco began increasing its prices, starting with Apco Geelong North at 13.43. Apco Newcomb moved to 86.5 at 13.45, Apco Lara at 13.46, Apco Highton at 14.17 and Apco Geelong East at 14.25. Chisholm also increased to 86.5 at 14.18 at Chisholm Grovedale, 14.31 at Chisholm Leopold and 14.32 at Chisholm Geelong West. Mobil increases began, possibly as early as 13.25 at Mobil Point Henry, but certainly at 14.23 at Mobil Latrobe Terrace, 14.28 at Mobil Belmont, 14.31 at Mobil Corio Village, 14.36 at Mobil Geelong North, 14.39 at Mobil Manifold Heights and 14.43 at Mobil East Belmont. The earliest Brumar increase to 86.5 was not until 16.27 at Shell Latrobe Terrace.
697 At 16.21 for one minute and 30 seconds, and again at 16.29 for three minutes and 30 seconds, Phil Carmichael rang Michael Warner. At 16.30, the Leahy office rang Chisholm. At this time, Mr Warner would still have been engaged in his second conversation with Phil Carmichael, so he was unlikely to have been communicating the content of that phone call to Chisholm. At 17.07, Phil Carmichael rang Mr Warner again for one minute. Leahy then rang Chisholm for one minute at 17.10, with a return call at 17.11. The ACCC submitted that these calls match the pattern described of Phil Carmichael complaining about a failure on the part of 7-Eleven to increase and Leahy attempting to urge Chisholm to use its relationship with Jacques Bodourian to persuade 7-Eleven to match the increase. In fact, between 16.21 and 16.41, 7-Eleven Newcomb had moved from 78.5 to 84.9. In between 17.08 and 17.23, it made a further move to 86.5, matching what had become the prevailing market price. 7-Eleven Geelong East also moved to that price between 17.21 and 17.36.
698 There is some evidence suggesting that an increase in the Melbourne petrol market price was flowing into Geelong on this occasion. At 17.45 on Tuesday, 9 May 2000, BP Corford Express (the prices for which were set in Melbourne) increased from 79.5 to 85.9. Some time in the morning on 10 May, BP Corford Express dropped its price to 79.9. It moved it to 86.5 at 15.14. The move on 9 May was probably the result of a price move in Melbourne, and was designed to anticipate a price move in Geelong that did not occur overnight.
699 Otherwise, the evidence for this occasion is consistent with the proposition that Mr Anderson communicated to Leahy information about a prospective price increase and that Ian Carmichael communicated it to Chisholm, although both phone calls were likely to have been about something else besides a price increase, if they were about that subject at all. The more or less simultaneous movements in the prices of Leahy, Apco and Chisholm lend some support to the proposition that effect was being given to Arrangements Nos 1 and 3. This is one of the few occasions on which less than two hours elapsed between telephone calls and price rises, although only on the part of three market participants, Leahy, Apco and Chisholm.
19 May 2000
700 The ACCC contended that effect was given only to Arrangement No 1 on this occasion. Interestingly, at 08.07 on Thursday, 18 May, Mobil Belmont increased its price by 10 to 87.9, which was to become the market price during the afternoon of 19 May, before prices eased to 87.5. At 09.17 on 19 May, Ian Carmichael telephoned Apco for two minutes. He did not engage in any call cycle immediately following this phone call. At 10.04, Apco began increasing its prices to 87.9, first at Apco Geelong North and Apco Geelong South, then at Apco Geelong East at 10.05, Apco Newcomb at 10.08, Apco Lara at 10.09 and Apco Highton at 10.44. The Leahy increases were only to 87.5, and occurred at 10.25 at BP Leopold, 10.48 at BP Hillford and 11.13 at BP Torquay. Only after they had occurred was there any sign of any communication from Leahy to other competitors. At 11.39, Mr Carmichael rang Chisholm for one minute. At 11.44, he rang Mr Anderson for 30 seconds. Chisholm increased to 87.5 at Chisholm Geelong West at 11.45 and Chisholm Leopold at 12.04. At some time between 11.50 and 12.05, 7-Eleven Geelong East moved to 87.5. At 12.26, Caltex Quick Bite increased to 87.9.
701 Shortly afterwards, at 12.30, Apco began decreasing its prices to 77.5, first at Apco Geelong East at 12.30, then at Apco Geelong South at 12.40, Apco Geelong North at 12.42, Apco Newcomb at 12.43, Apco Lara at 12.50 and Apco Highton at 13.22.
702 At 12.39, Mr Anderson again rang the Leahy office, this time for four minutes. At 12.53, Ian Carmichael rang Mr Anderson for one minute and 30 seconds.
703 Mobil sites began moving up from 13.25 with Mobil East Belmont, Mobil Geelong North, Mobil Manifold Heights and Mobil Corio Village all within 20 minutes and all to 87.9. Other Mobil sites followed. Apco moved up again from 14.04 at Apco Newcomb to 87.5, with a similar move at Apco Geelong North at 14.07, followed by Apco Geelong South at 14.24, Apco Geelong East at 14.29, Apco Highton at 14.42 and Apco Lara at 14.45.
704 Mr Anderson rang Leahy at 15.04 for four minutes and 30 seconds. At 15.26, Ian Carmichael rang BP Corford Express for one minute. BP Corford Express increased its price to 86.9 at 15.35. Brumar then began increasing to 87.5, starting with Shell Belmont at 15.44. There were several telephone calls involving Peter Anderson, Ian Carmichael and other participants in the Geelong petrol market later in the afternoon.
705 The ACCC attempted to characterise this day as one on which Leahy and Apco collaborated to attempt to increase the market price, but the rise did not stick. This is unlikely. The length of the telephone call at 09.17, and the fact that it was not followed by any call cycle, suggest that the call was about something other than a price rise. The probabilities are that Apco was attempting to increase the price, trying to push it to 87.9. When Leahy did increase its prices, it was only to 87.5, suggesting that its information about any preceding Melbourne petrol price increase caused it to choose a lesser price. Apco was forced to bring its price down when no-one else followed suit, and only went up again after the Mobil outlets began to move. This suggests the absence of collusion. The evidence about the setting of prices for BP Corford Express in Melbourne, and the choice of a price differing from that of Leahy, suggest that the phone call at 15.26 from Mr Carmichael to BP Corford Express did not influence the price increase.
706 19 May 2000 does not provide evidence supporting the proposition that effect was given to Arrangement No 1.
26 – 27 May 2000
707 In respect of this two-day period, the ACCC alleges that effect was given to Arrangements Nos 1, 3 and 7 on 26 May and to Arrangements Nos 6 and 8 on 26 and 27 May. Once again, in this period, BP Corford Express appears to have signalled an impending increase, flowing from the Melbourne petrol market, when it increased its price from 82.7 to 89.5 at 14.30 on Thursday, 25 May. At 08.14 on 26 May, BP Corford Express dropped its price back to 82.9, roughly the market price in Geelong at that time.
708 At 13.06 on 26 May, Alan Shuvaly reached Peter Anderson’s message bank. Mr Anderson rang back at 13.34, for a call timed at seven minutes, extraordinarily long to discuss a prospective price increase. At 13.45, Mr Anderson again reached Mr Shuvaly’s message bank for one minute. At 13.50, Mr Shuvaly rang Chris Andrianopoulos for 30 seconds. There is also recorded a call from the Apco office to Mr Shuvaly’s message bank at 13.57, timed at eight minutes and 19 seconds, which seems unusually long for the leaving of a message, and is therefore probably inaccurate.
709 At 14.11, Apco reduced its price at Apco Geelong North from 82.7 to 79.9, a decrease followed six minutes later by Mobil Geelong North.
710 At 14.33, Mr Andrianopoulos rang Leahy for two minutes and 40 seconds. At 14.50, Phil Carmichael rang Michael Warner for three minutes and 30 seconds. At 14.56, Leahy rang Mr Anderson for one minute and eight seconds. Mr Anderson then rang Mr Shuvaly at 14.59 for two minutes and Mr Shuvaly rang Mr Andrianopoulos at 15.03 for two minutes. Mr Anderson himself then rang Mr Andrianopoulos at 15.06 for one minute. Ian Carmichael rang Mr Anderson for one minute and 30 seconds at 15.14. Mr Shuvaly had another 30-second call to Mr Andrianopoulos at 15.15. At 15.18, Mr Andrianopoulos rang Leahy for one minute and 21 seconds and then, at 15.20, he reached Mr Shuvaly’s message bank for 11 seconds.
711 At 15.22, Ian Carmichael began what the ACCC described as a call cycle with a phone call for 30 seconds to Colin Williamson. At 15.37, Leahy rang Chisholm for 25 seconds. At 15.47, Leahy rang Gordon Primmer for 49 seconds. At 16.18, Mr Anderson rang Leahy for 30 seconds and, at 16.20, Leahy rang Apco for a mere nine seconds.
712 The price-jousting between Apco Geelong North and Mobil Geelong North continued, with the former increasing to 82.7 at 16.30, followed by the latter at 16.45. In the meantime, Ian Carmichael rang Mr Andrianopoulos for two minutes at 16.26. Mr Primmer rang Leahy at 16.49 for one minute and 36 seconds. Mr Shuvaly rang Mr Andrianopoulos for one minute at 17.32 and Mr Andrianopoulos reached Mr Anderson’s message bank for 16 seconds at 17.37. At 17.44, Mr Shuvaly made another call to Mr Andrianopoulos, which lasted two minutes. At 17.45, Leahy rang David Mortimer for 17 seconds.
713 At 18.26, Leahy began price increases to 88.9, with BP Leopold. It followed this at 19.17 at BP Torquay but did not increase BP Hillford until 20.02. In the meantime, at 18.58, Mr Anderson rang Mr Andrianopoulos for 15 minutes and 30 seconds. At 19.20, Mr Anderson rang Mr Shuvaly for two minutes.
714 Apco began increasing its prices to 88.9 at 19.49 at Apco Lara, followed by Apco Geelong East at 20.00, Apco Geelong North at 20.04, Apco Newcomb at 20.05, Apco Highton at 20.13 and Apco Geelong South at 20.15. At about this time, there were similar increases at some Mobil outlets, Mobil Latrobe Terrace at 20.02, Mobil Geelong North at 20.04 and Mobil East Belmont at 20.06. The first of the Brumar increases was Shell Speedwings at 20.26. Chisholm moved up at 19.51 at Chisholm Grovedale to 88.9, with a similar move at Chisholm Leopold at 21.12 and Chisholm Geelong West at 21.26. By this time, Apco had already begun moving down, with Apco Geelong North easing to 87.9 at 21.23, followed by Apco Geelong East at 21.24, Apco Newcomb at 21.33, Apco Geelong South at 21.33, Apco Lara at 21.41 and Apco Highton at 22.10.
715 Liberty’s average price decreased for the day from 83.0 to 82.9. Andrianopoulos moved from 84.5 to 82.9, up to 83.2 and then up to 83.9 at some time during the day. Plainly, Liberty and Andrianopoulos had not responded on 26 May to any urging for a price increase. Both United Retail sites, Shell Victoria Street and Shell Waurn Ponds, remained at 83.5 throughout the entire day. There is no data for prices at BP Meredith, so it cannot be said that effect was given to Arrangement No 7 on 26 May.
716 On Saturday, 27 May, there was more telephone contact. At 07.45, Phil Carmichael rang Ian Carmichael for four minutes and 30 seconds. At 07.50, Ian Carmichael rang BP Corford Express for 30 seconds. At 07.51, he rang Darren Campigli for 30 seconds also. At 08.05, Leahy rang Graeme Chisholm for 18 seconds. The ACCC invited me to draw the inference that these calls involved a complaint by Phil Carmichael that 7-Eleven had not increased, with Leahy attempting to persuade Chisholm to put pressure on Jacques Bodourian to effect an increase. 7-Eleven Geelong East moved from 83.0 to 88.9 some time between 08.27 and 09.11, and 7-Eleven Newcomb moved similarly between 08.50 and 09.14, apparently without communication from Chisholm to Jacques Bodourian. Prices then generally eased down during the rest of the day as discounting occurred.
717 The average price for Liberty on 27 May increased from 82.9 to 86.7, suggesting that any increase was either not particularly early or not quite up to the prevailing market price. Andrianopoulos again put into effect multiple moves. Its first was from 83.9 to 87.9, suggesting that it was matching what the price had come down to at the Apco and Mobil outlets. It then dropped the price to 82.7 and increased it again marginally to 82.9. Shell Victoria Street increased from 83.5 to 87.9 at some time on the Saturday morning. Shell Waurn Ponds increased only from 83.5 to 83.7 on that day. This variation in United Retail’s prices, together with the time elapsing between any relevant telephone call and any price increase by United Retail makes it very unlikely that effect was given to Arrangement No 6 in this period.
718 The call cycle identified for 26 May was a fairly desultory affair on the part of Leahy, with quite significant gaps between the calls. Whatever it was that involved communication between Mr Anderson and Mr Shuvaly, it occupied an inordinate amount of time for the mere discussion of a price increase at a particular time. In any event, a considerable time must have elapsed before Liberty increased its price, or else it did not increase to the level nominated. Either way, it is unlikely that it was implementing Arrangement No 8. It is impossible to tell at what time Andrianopoulos increased, so it cannot be said that it did so in response to any telephone call from either Mr Shuvaly or Mr Anderson. At best, from the ACCC’s point of view, there might be said to be some temporal connection between the price increases at Leahy, Apco and Chisholm, although the increases are separated from any relevant phone calls by several hours, and are spread over a period themselves. In addition, on the very evening on which it had gone up, Apco began to discount its prices again, suggesting that it did not feel bound to maintain them at any particular level. It could be said that the data in Annexure B is consistent with the implementation of Arrangements Nos 1 and 3, if the maximum two-hour time limit between phone calls and price rise is ignored, but the data is also open to the alternative interpretation that a market increase from Melbourne was simply flowing into Geelong on a Friday (as signalled by BP Corford Express on the previous day) and that Apco, Leahy and Chisholm, along with Mobil and Brumar, were responding to that.
7 June 2000
719 On this day, the ACCC alleges that Arrangements Nos 1, 3 and 6 were given effect to. Clearly, there had been a price increase in Melbourne, which was flowing into the Geelong petrol market. 85.9 was to be the new Geelong price. Leahy increased its prices to this level on the preceding day, 6 June, at BP Torquay from 82.9 at 13.45, and BP Leopold from 81.6 at 14.37 and BP Hillford from 81.9 at 14.38. Brumar also increased to 85.9 on that day, from 81.4, at Shell Belmont at 15.16 (easing to 85.8 at 18.40), Shell Highton at 15.33, Shell Speedwings at 15.36, Shell Latrobe Terrace at 15.45 and Shell Westoria at 19.36. Caltex Quick Bite increased from 81.5 to 84.9 at 16.35 on 6 June. At 18.03, Leahy began dropping its prices, with BP Leopold falling to 81.6 at that time, BP Hillford also to 81.6 at 18.50 and BP Torquay to 81.9 at 05.41 on 7 June. At 08.08 and 08.09 respectively on 7 June, Geelong Car Spa and Shell Norlane also increased from 81.4 to 85.9. Leahy then began increasing its prices again, with BP Torquay moving from 81.9 to 85.9 at 08.14. This was before any apparently relevant call cycle.
720 The call cycle on which the ACCC relied began at 08.30, with a call from Peter Anderson to Leahy for one minute and 30 seconds. At 08.32, Ian Carmichael rang Colin Williamson for 30 seconds. At 08.34, Mr Carmichael rang Chisholm for three minutes. At 08.38, he rang Chris Andrianopoulos for 30 seconds. At 08.39, and again at 08.49, he rang Colin Williamson, each call being timed at one minute and 30 seconds.
721 Prices in the market then began a peculiar oscillation. Shell Latrobe Terrace moved up slightly to 86.0 at 08.48 and Shell Belmont to 85.9 at 08.58, but Shell Speedwings dropped from 85.9 to 81.4 at 09.17, with Geelong Car Spa and Shell Westoria doing the same at 09.23 and 09.26. At 09.28, Leahy increased at BP Leopold from 81.6 to 85.9. The first Apco increase was at 09.40 at Apco Geelong South, from 81.4 to 85.9. At 09.45, Leahy increased at BP Hillford from 81.6 to 85.9. There were two more Apco increases from 81.4 to 85.9, Apco Newcomb at 09.56 and Apco Geelong North at 10.00. The first Chisholm move was from 81.6 to 85.9 at Chisholm Geelong West at 10.21. Mobil East Belmont and Mobil Geelong North both rose from 81.4 to 85.9 at 10.22 and 10.24 respectively, before Shell Norlane and Shell Belmont dropped from 85.9 to 81.4 at 10.24 and 10.27. Chisholm Grovedale rose from 81.6 to 85.9 at 10.28. Apco Lara rose from 81.4 to 85.9 at 10.33. Also at 10.33, BP Corford Express increased from 81.9 to 85.9, apparently without the benefit of any telephone call from anyone in Geelong to prompt such an increase. At 10.36, Caltex Quick Bite increased from 84.9 to 89.9. Mobil Latrobe Terrace at 10.37 and Apco Highton at 10.52 both increased from 81.4 to 85.9, before Caltex Quick Bite eased to 85.9 at 10.56. Shell Highton dropped to 81.4 from 85.9 at 11.07. At some time between 11.34 and 11.47, 7-Eleven Geelong East increased from 81.5 to 85.7.
722 Mobil outlets then began to fall, with Mobil East Belmont and Mobil Latrobe Terrace dropping from 85.9 to 81.4 at 12.03 and 12.53 respectively. Shell Latrobe Terrace dropped from 86.0 to 81.4 at 12.22, although BP Corford Express increased by a further 4.0 to 89.9 at 12.30. At 13.04, Leahy joined the move to drop prices, reducing from 85.9 to 81.4 at BP Leopold, followed by a similar move at BP Hillford at 13.11. In the meantime, Apco increased at Apco Geelong East from 81.4 to 85.9. At 13.30, BP Corford Express dropped back to 85.9 from 89.9. At 13.41, Shell Latrobe Terrace increased again from 81.4 to 85.9.
723 At 13.29, Mr Anderson rang Leahy for one minute and 30 seconds. At 14.06, Michael Warner rang Phil Carmichael for two minutes and 11 seconds. Phil Carmichael rang Mr Warner back for 30 seconds at 14.20, and Mr Warner rang him again at 14.24 for 45 seconds. Mr Warner then rang Chisholm for 47 seconds. Chisholm rang Leahy at 14.27 for one minute and 21 seconds. Mr Warner again rang Phil Carmichael for 40 seconds at 14.29. There were two more calls from Mr Anderson to Leahy at 14.29 for 30 seconds and 14.30 for three minutes and 30 seconds. At 14.37, Leahy rang David Mortimer for 25 seconds. At 14.56, Phil Carmichael again rang Michael Warner, this time for two minutes. In the meantime, Leahy had again increased its prices to 85.9 at BP Hillford at 14.39 and BP Leopold at 14.41. 7-Eleven Newcomb had also moved to 85.9 at some time between 14.33 and 14.42, apparently without any relevant telephone communication from anyone in Geelong. Mobil East Belmont and Mobil Latrobe Terrace moved back up to 85.9 at 15.04 and 15.13 respectively. At some time on 7 June, both Shell Victoria Street and Shell Waurn Ponds moved to 85.9, the former from 81.9 and the latter from 82.9.
724 The ACCC’s argument pointed to the fact that Leahy, Apco and Chisholm all increased at some of their sites within an hour of telephone communications between them. The ACCC contended that the price rise did not stick, because the Brumar sites and some Mobil sites moved down, but Apco’s and Chisholm’s stayed up, and Leahy increased its prices again after receiving reassurance by telephone from Mr Anderson. The ACCC also submitted that the exchange of telephone calls between Phil Carmichael and Michael Warner was to do with the failure of 7-Eleven Newcomb to increase until after those telephone calls had been made, although Chisholm appears to have taken no action to contact Jacques Bodourian after Michael Warner spoke to someone at Chisholm.
725 This argument ignores a number of features of the data for the day in question and the preceding day. The rises on the preceding day to 85.9 cannot be ignored. Plainly, Brumar and Leahy both felt a need to increase, and both settled on 85.9 as the appropriate price to increase to, apparently without any collusion. Caltex Quick Bite also made two attempts to increase late in the afternoon on 6 June, although only to 84.9. The increase to 85.9 at Batesford Roadhouse at some time on 6 June is also significant. It does not appear from the data in Annexure B that Mortimer Petroleum received its information about that price from Leahy, or from any other competitor in the market.
726 Although Leahy dropped its prices again on 6 June, when much of the market had not moved, it is clear that it had determined to increase them again before any telephone communications on the morning of 7 June. It had done so at BP Torquay before such communications occurred. The increase was not in response to any prompting from Mr Anderson, but was clearly based on information from elsewhere. This information may have been shared with Colin Williamson (but would have had no effect on Mr Riordan’s decision to increase United Retail’s prices) and with Chisholm, but it is clear that a price rise to 85.9 was coming in any event. The relatively early rises at two significant Mobil outlets, as well as the BP Corford Express rise indicate this. It is understandable that some retailers would have felt some nervousness about the security of the rise, in view of the fact that Brumar had dropped its prices at some of its highly visible outlets at a fairly early time. The fact that Leahy also dropped its prices showed that it was not acting according to any arrangement or understanding with Apco, but was reacting to moves in the market. It is significant that, approximately one hour before Leahy’s return to 85.9 early in the afternoon on 7 June, Brumar’s prominent outlet at Shell Latrobe Terrace had already increased back to that level.
727 As for the contention that the calls between Phil Carmichael and Michael Warner were related to an attempt by Phil Carmichael to engineer an increase at 7-Eleven outlets, there are several points to be made. The first is that the chain of calls was initiated by Mr Warner, in the longest of the calls that were made, not by Phil Carmichael. The second is the obvious one that, although Mr Warner and perhaps somebody else at Leahy spoke with somebody at Chisholm, nobody from Chisholm appears to have contacted Jacques Bodourian. The third is that, in any event, 7-Eleven Geelong East had already increased more than two hours before the chain of phone calls to a price that was only 0.2 below the upper market price for most outlets on this day.
728 The uncoordinated nature of the price increases generally on this day, and the preceding day, the fact that Leahy had begun to increase before any relevant phone calls, and the other factors to which I have referred make it unlikely that Leahy and Apco increased their prices by giving an effect to any arrangement or understanding that each would do so. The same can be said in relation to Leahy and Chisholm. In the absence of specific evidence as to the time of increase of the United Retail sites, and in the light of the evidence about how its prices were set, and the evidence that the board price at Shell Speedwings was readily visible from the United Retail office, it is unlikely that the increases at the United Retail sites were the result of United Retail giving effect to any arrangement or understanding with Leahy.
15 June 2000
729 This is a day on which the ACCC alleges that effect was given to Arrangements Nos 1, 3, 6 and 7. It is a day on which there were large numbers of telephone calls between market participants, and on which the ACCC submitted that an original price rise did not stick, so further telephone communication was necessary, to persuade various market participants to move up to the arranged price of 87.9.
730 The first round of relevant telephone conversations identified by the ACCC began at 08.22, when Peter Anderson rang Leahy for one minute. At 08.24, Mr Anderson reached Michael Warner’s message bank. At 08.52, Mr Warner reached Mr Anderson’s message bank. The two appear to have spoken finally for one minute and seven seconds at 09.15. There was then a brief delay before what is identified as the call cycle, beginning with a call from Leahy to Chisholm at 09.30 for two minutes and seven seconds, followed by a call from Leahy to Colin Williamson for 28 seconds at 09.32 and a call from Leahy to Gordon Primmer at 09.36 for one minute and three seconds.
731 Almost an hour later, Leahy began increasing its prices, with BP Leopold moving from 82.9 to 87.9 at 10.26, BP Hillford doing the same at 11.05 and BP Torquay moving from 83.5 to 87.9 at 11.55. Apco began moving at 11.02 at Apco Geelong South, followed by Apco Lara at 11.05, Apco Geelong North also at 11.05, Apco Newcomb at 11.12 and Apco Geelong East at 11.36, all from 82.5 to 87.9. Mobil East Belmont moved from 82.5 to 87.9 at 11.29. Shortly after the last of its upward moves, and shortly before Leahy’s upward move at BP Torquay, Apco Geelong North moved back down from 87.9 to 82.5.
732 At 12.00, Phil Carmichael rang Michael Warner for one minute and 30 seconds. At 12.02, Leahy rang Peter Anderson for 30 seconds. At 12.02, Mr Warner rang Phil Carmichael back for 20 seconds. At 12.03, Phil Carmichael rang Mobil Geelong North for one minute and 30 seconds. At 12.05, Mr Warner rang Mr Anderson for 12 seconds. Also at 12.05, Mobil Latrobe Terrace increased from 82.5 to 87.9. At 12.05, Phil Carmichael rang Michael Warner for 30 seconds. Mobil Geelong North increased from 82.5 to 87.9 at 12.13. At 12.17, Apco Geelong North returned to 87.9. In the meantime, Apco had also increased its price to that level at Apco Highton. The ACCC submitted that the sequence of phone calls leads to the inference that Mr Warner sought Phil Carmichael’s assistance in persuading Mobil Geelong North to increase its price to 87.9. Phil Carmichael’s evidence was that, in 1999 and 2000, he regularly rang Mobil Geelong North to find out what the Apco price was. The ACCC’s submission is also inconsistent with the chain of events. There was no communication from Apco to Leahy that might have contained information that Mobil Geelong North had not increased its price, and a request for assistance in that regard. The chain of telephone conversations was initiated by Phil Carmichael, not by Michael Warner, suggesting that it was about something other than prices. If, at 12.05, Mr Warner was reporting back to Mr Anderson that he had sought Phil Carmichael’s assistance, he must have been doing so without any information from Phil Carmichael as to the outcome of his call to Mobil Geelong North. The next call from Phil Carmichael to Michael Warner came after the 12.05 call by Mr Warner to Mr Anderson.
733 At 12.30, Leahy began decreasing its prices from 87.9 to 82.5, with BP Leopold at that time and BP Hillford at 13.13. BP Torquay decreased to 82.9 at 13.46. Shortly after the first of these increases, another round of telephone communications began. At 12.34, Phil Carmichael rang Michael Warner for one minute. At 12.37, Leahy rang Chisholm for one minute and 30 seconds. At 12.45, Phil Carmichael rang Aaron Incoll for three minutes. Phil Carmichael then immediately rang Mr Warner again for one minute and 30 seconds. At 12.49, Leahy rang Colin Williamson for one minute and 13 seconds. At 12.59, Mr Anderson rang Leahy for 30 seconds, and at 13.00 he reached Michael Warner’s message bank. Mr Warner rang Mr Anderson back at 13.01 for one minute and 25 seconds. At 13.03, Mr Warner rang Phil Carmichael for 58 seconds. Phil Carmichael then rang Mr Incoll for two minutes and 30 seconds. At 13.06, Leahy rang Chisholm for 52 seconds.
734 At 13.09, Apco began decreasing its prices from 87.9 to 82.9 at Apco Geelong South, followed by Apco Newcomb at 13.10, Apco Geelong East at 13.12, Apco Lara at 13.13 and Apco Geelong North also at 13.13. Apco Geelong South decreased by a further 0.4 to 82.5 at 13.37. Mobil Geelong North decreased to 82.9 at 13.56 and Mobil Latrobe Terrace at 14.01.
735 Leahy then initiated another round of increases to 87.9. It began this at BP Leopold at 14.15, with BP Hillford following at 14.58 and BP Torquay at 15.07. Brumar sites began to increase to 87.9, with Shell Speedwings at 14.20 and Shell Latrobe Terrace at 14.24. In the meantime, Apco sites were still decreasing, with Apco Geelong East moving to 82.5, Apco Highton from 87.9 to 82.9, Apco Newcomb, Apco Geelong North and Apco Lara all decreasing from 82.9 to 82.5 at 14.24 and 14.25. Similarly, Mobil Latrobe Terrace, Mobil Geelong North and Mobil East Belmont all decreased to 82.5 at 14.29, 14.30 and 14.33. Shell Westoria decreased to 82.5 at 14.39.
736 A third round of telephone calls then occurred. At 14.39, Leahy telephoned Mr Anderson for one minute. At 14.42, Leahy rang Chisholm for 35 seconds. At 14.43, Leahy rang Darren Campigli for one minute and 43 seconds. At 14.45, Leahy rang Mr Anderson for 18 seconds. At 14.50, Leahy rang Colin Williamson for 21 seconds. At 14.51, Leahy rang Gordon Primmer for 22 seconds. In the meantime, Brumar increased its price at Shell Highton to 87.9 at 14.49.
737 Chisholm began increasing at Chisholm Geelong West at 14.52, moving from 82.5 to 87.9. It followed this move at Chisholm Grovedale at 15.10 and at Chisholm Leopold at 15.13 (from 82.9).
738 At 15.04, Chisholm rang Leahy for two minutes and 22 seconds. At 15.07, Leahy rang Colin Williamson for 18 seconds. At 15.19, Leahy rang BP Corford Express for one minute and 29 seconds. At 15.24, Apco decreased its price at Apco Highton from 82.9 to 82.5. Shortly thereafter, Apco began to increase its prices, with Apco Geelong South, Apco Newcomb and Apco Geelong North all moving back to 87.9 at 15.32, 15.37 and 15.39 respectively. At 15.43, Mr Anderson rang Mr Warner for two minutes and 30 seconds. BP Corford Express increased from 82.5 to 87.9 at 15.45.
739 At 15.46, Phil Carmichael rang Mr Warner for 30 seconds. At 15.47, Leahy rang Chisholm for one minute and 30 seconds. The ACCC invited me to draw the inference that this was a complaint about 7-Eleven’s failure to increase, with Mr Warner conveying the complaint to Chisholm. If that were the case, Chisholm did not act on it.
740 From 15.48 onwards, Mobil outlets, other Apco outlets, a couple of Brumar outlets and 7-Eleven Newcomb all moved to 87.9 (7-Eleven Geelong East moved to 87.5 at 15.56), before Apco began easing its prices to 87.5 at Apco Geelong South at 17.21, a move followed by Leahy at BP Leopold at 18.23. At some time during the day, the ACCC said at an early time, Shell Waurn Ponds moved to 87.9, but United Retail maintained the price at Shell Victoria Street at 83.9 throughout the day.
741 The most obvious feature of 15 June 2000 is that the extraordinarily high amount of telephone communication passing between the parties to the alleged arrangements or understandings is inconsistent with the existence of a smoothly-operating chain of arrangements or understandings. It certainly cannot be said that, by this date, it was necessary only to have a series of brief phone conversations, in which a price and a time were nominated, in order to produce a price rise in the market to that price at about that time. The second important consideration is that this day was during a period when, according to the oral evidence, there was nervousness about discussing prices, because of the ACCC’s investigation into allegations of price-fixing in the Ballarat petrol market. This factor reduces the likelihood that the participants in the market would engage in such a high level of discussion about prices on a single day. The apparently uncoordinated manner in which prices moved is also inconsistent with the suggestion that the price moves were the result of collusion.
742 It is true that there was some temporal coincidence between the price increases by Leahy and Apco in the morning. It is also clear, however, that Apco did not have confidence in the fact that the move to 87.9 would flow through the market, by means of the chain of arrangements or understandings, because it moved swiftly to drop its price back to the low point at Apco Geelong North at 11.48, and even after the second round of telephone calls at its other outlets. That round of telephone calls obviously did not instil confidence that the higher price would be achieved. Leahy had very obviously made its decision to attempt to increase its prices again before the third round of telephone calls. It had already done so at BP Leopold, even though Apco and some Mobil outlets were decreasing. The Chisholm increases in the afternoon may have come in consequence of the third round of telephone calls, but they apparently did not occur in response to calls in either the first or the second round. Even after Leahy and Chisholm, and some Brumar sites, had increased, Apco was fairly slow in raising its prices yet again, which suggests that it was more interested in finding out what the rest of the market was doing than in relying on any information received from Leahy.
743 There was also a suggestion that Phil Carmichael was passing on to Michael Warner information about a prospective Mobil price increase. Phil Carmichael gave evidence that he sometimes passed on to Leahy such information, for the purpose of finding out if Leahy could provide a time for a price increase, so that Phil Carmichael could attempt to persuade Aaron Incoll to fall in with this time (which Phil Carmichael said he was usually unsuccessful in doing). To suggest that this was happening on 15 June 2000 is speculation. On that day, Mr Warner initiated three telephone calls to Phil Carmichael, at 08.56 (three minutes and 18 seconds), 12.02 (20 seconds) and 13.03 (58 seconds). Phil Carmichael initiated a further six telephone calls to Mr Warner, at 12.00 (one minute and 30 seconds), 12.05 (30 seconds), 12.34 (one minute), 12.48 (one minute and 30 seconds), 15.31 (six minutes) and 15.46 (30 seconds). It is unlikely that Phil Carmichael would have needed nine telephone conversations with Michael Warner to pass on information about prospective Mobil price increases. Plainly, there was something else about which the two needed to talk to each other on that occasion.
744 In summary, 15 June 2000 lends little or no support to the ACCC’s case.
6 – 7 July 2000
745 The ACCC alleges that effect was given to Arrangements Nos 1, 3, 7 and 8 during this period. This is another occasion on which it is obvious that a price increase had already occurred in the Melbourne petrol market, and was flowing into the Geelong petrol market. The increase was signalled at 14.33 on 6 July, when BP Corford Express lifted its price from 86.5 to 91.9. No competitor followed on that day, so far as Annexure B records. In the late afternoon, there were several telephone calls, which the ACCC said are significant. At 17.12, Peter Anderson rang Liberty for two minutes and 30 seconds. At 17.18, Mr Anderson rang Leahy for one minute and 30 seconds. At 17.20, Mr Anderson rang Chris Andrianopoulos for three minutes. Each of these calls must have been about something other than simply a price increase, if it was about a price increase at all. At 17.21, Leahy rang Gordon Primmer for 12 seconds. At 18.46, Alan Shuvaly rang Mr Andrianopoulos for one minute.
746 At 07.31 on Friday, 7 July, BP Corford Express reduced its price from 91.9 to 84.9. At 10.13, however, it again lifted its price to 91.9. In the meantime, at 08.26, Michael Warner had telephoned Mr Anderson for 20 seconds. More than two hours after that phone call, Apco began increasing its prices, first with Apco Geelong South at 10.29, from 85.5 to 92.9. Leahy’s first increase was at 10.59 at BP Leopold, the increase being from 85.9 to 92.9. At 11.04, Brumar began moving at Shell Speedwings, to 91.9, a move followed at Shell Norlane at 11.05, Shell Highton at 11.16 and Shell Belmont at 12.17, although Geelong Car Spa moved at 12.02 to only 89.9. In the meantime, Mobil Latrobe Terrace moved to 92.9 at 11.07, BP Hillford at 11.13, Apco Geelong North at 11.14, Apco Newcomb at 11.16, Mobil Geelong North at 11.31 and Apco Lara at 11.33.
747 Leahy telephoned Chisholm for two minutes and 35 seconds at 11.05, almost two and a half hours after the contact between Mr Warner and Mr Anderson on that morning. The length of the call suggests that it was about something other than a price rise, even if it included information about a price rise. At 11.25, Darren Campigli telephoned Leahy for 53 seconds. Chisholm’s price rises were at 11.40 at Chisholm Grovedale, 11.41 at Chisholm Leopold and 11.42 at Chisholm Geelong West. All were to 92.5, a different price from that adopted by Leahy and Apco. Leahy moved its price at BP Torquay to 92.9 at 11.46. Apco Geelong East did likewise at 12.00. At some time between 11.26 and 11.48, 7-Eleven Geelong East moved to 92.9, as did 7-Eleven Newcomb between 11.29 and 12.01. This was without any prompting from any competitor in Geelong, so far as Annexure B records.
748 At 13.21, Leahy reduced its price at BP Hillford to 91.9, matching the price at BP Corford Express, Shell Speedwings, Shell Norlane, Shell Highton and Shell Belmont. At 15.10, BP Corford Express moved up to 92.9 from 91.9. The increase at Caltex Quick Bite came at 15.12, from 85.9 to 92.5. Leahy, some of the Mobil outlets and Apco all eased their prices to either 91.9 or 91.1 during the afternoon and early evening.
749 At some time unknown during Friday, 7 July, Andrianopoulos increased from 86.5 to 92.5, then dropped back to 85.5 and moved slightly up to 85.9. The average price at Liberty rose from 86.0 to 90.0. The ACCC submitted that this indicates a price increase around the middle of the day. It might equally well indicate a lower price increase than the rest of the market adopted.
750 Based on this information, it is far-fetched to suggest that effect was given to Arrangement No 8. The only possible relevant communications were on the afternoon of 6 July, the last of them being at 18.46 when Mr Shuvaly rang Mr Andrianopoulos. The time delay between those calls and any price increase is far too long for them to have been connected.
751 It is also extremely difficult to construct a call cycle out of the calls to which I have referred. The initial contact by Mr Anderson with Leahy was at 09.58 on 6 July. Leahy did not ring Chisholm until 11.14 on that day, and did not ring any other competitor until 17.21, when it rang Gordon Primmer for 12 seconds. Mr Warner may have spoken briefly to Mr Anderson at 08.26 on 7 July, but Leahy made no call to any other competitor until 11.05, when it called only Chisholm and for a time much longer than required to deliver information about a price increase. The only other contact between Leahy and Chisholm on that morning was initiated by Mr Campigli in his two calls at 11.25 and 11.40. Chisholm’s decision to increase its prices (to a different amount from that to which Leahy had already gone) must already have been made before the last of those phone calls. To suggest that the call from Leahy to Mr Primmer at 11.34 was somehow related to the earlier conversation between Leahy and Chisholm at 11.05 and the conversation between Mr Warner and Mr Anderson at 08.26 is to depart from the oral evidence about call cycles.
752 Interestingly, what could be regarded as fitting into the pattern of a call cycle occurred from 13.40 onwards on 7 July, after all of the relevant price increases had occurred. It involved Ian Carmichael ringing Mr Anderson, Mr Warner ringing Mr Primmer, Mr Primmer ringing Leahy, Ian Carmichael ringing Chisholm, Mr Primmer ringing Mr Warner’s message bank, Mr Warner ringing Mr Primmer back, Mr Warner ringing Phil Carmichael, Ian Carmichael ringing Mr Andrianopoulos and Leahy contacting Mr Anderson’s message bank. The first of this cycle of calls occurred at 13.40, the rest were all in the space of 11 minutes from 14.25 to 14.36. Mr Anderson made three return calls to Leahy at 15.19 for two minutes, 15.22 for one minute and 17.05 for 25 seconds. These can have had nothing to do with price increases, which had already taken place. Finally, Leahy rang Mr Primmer at 17.23 for 46 seconds, which also can have had nothing to do with price increases.
753 The data in Annexure B for this period does not fit the oral evidence about the alleged arrangements or understandings at all.
14 July 2000
754 The ACCC alleges only that Arrangements 1 and 7 were given effect to on this day. The first price increase recorded in Annexure B was by BP Corford Express at 09.59, from 87.5 to 91.9, suggesting that a price increase from the Melbourne petrol market was about to flow into Geelong on a Friday.
755 Peter Anderson appears to have been in or near Wangaratta, and then travelling towards Melbourne, in the late morning. At 11.44, he rang Liberty for five minutes and 30 seconds. His call was transmitted through Wangaratta. The length of the call suggests that it was about something far more than a price increase. At 11.49, Mr Anderson rang Leahy for three minutes, the call being transmitted through Glenrowan. Again, the length suggests that the call was about something more than a price increase. At 11.54, Leahy reached Mr Anderson’s message bank. At 11.56, Mr Anderson had another three minute call with Liberty, again transmitted through Wangaratta. His 11.58 call to Leahy for one minute was transmitted through Winton. At 11.59, Leahy rang Gordon Primmer for 44 seconds. At 12.00, Mr Anderson rang Ian Carmichael for 30 seconds, the call being transmitted through Benalla. At 12.35, Mr Anderson’s next call to Leahy was transmitted through Euroa, and lasted three minutes and 30 seconds.
756 At 12.35, Apco Geelong South increased from 87.5 to 92.5, a price higher than that adopted by BP Corford Express. At 12.39, BP Leopold increased from 85.9 to 92.5. At 12.41, Mobil East Belmont increased from 85.9 to 92.5. At 12.43, Apco Lara increased from 87.5 to 92.5. At 12.43, BP Hillford increased from 85.9 to 92.5. There followed increases at Mobil Geelong North at 12.45, Mobil Latrobe Terrace at 12.47, Apco Geelong North at 12.52, Apco Newcomb at 12.54 and Apco Geelong East at 12.55, all to 92.5. Finally, Leahy increased its price at BP Torquay from 87.9 to 92.5.
757 The ACCC sought to have me draw the inference that the price rise was arranged between Peter Anderson and Ian Carmichael in one or other of the telephone calls leading up to the three-minute call at 12.00. There are two obvious points to make. One is that the amount of telephone communication involved was much more than would have been required if arrangements or understandings of the kind alleged existed. The other is that, with the possible exception of the call to Mr Primmer at 11.59, Leahy did not give effect to the provision of Arrangement No 1 that it would notify other competitors in the market. The assumption that the call was to notify Mr Primmer of a prospective price increase assumes that the price increase had already been communicated by Mr Anderson to Leahy prior to 11.59.
758 Indeed, there was considerable communication between a number of participants in the Geelong petrol market during the early afternoon on 14 July, but no allegation is made that any other arrangement or understanding was given effect to. Chisholm also increased its prices to 92.5 in the afternoon, as did most of the Brumar outlets, but in the course of the afternoon Leahy, 7-Eleven, Apco and some Mobil outlets began decreasing to 91.9 or even less.
759 The more likely explanation for the events of this day is that the calls were related to something other than prices, and that Apco, Leahy and some Mobil outlets were implementing a Melbourne petrol price increase from the previous day, already signalled by BP Corford Express, although at a lower amount than was adopted throughout most of the Geelong petrol market. It was to this lower amount that prices moved during the afternoon.
760 This is an occasion on which it would have been important for the ACCC to have provided evidence of records of telephone calls from Mr Anderson to someone else at Apco, or to Apco sites, which might have involved Mr Anderson giving instructions to implement the price increase. Counsel for Apco informed me from the bar table, without objection by counsel for the ACCC, that the telephone records discovered by the ACCC showed that no such call was made after any communication with Leahy on this day. If this were the case, the only conclusion could be that the calls between Mr Anderson and Leahy were not about petrol prices, but that each increased its prices independently of the other, on the basis of information from other sources.
761 There is, of course, no evidence of whether prices at BP Meredith rose at all, or at what time and to what level they rose if they did. It is impossible to say that effect was given to Arrangement No 7. It is highly unlikely that Leahy would have been implementing that alleged arrangement or understanding whilst neglecting Arrangements Nos 3 and 6. It is much more likely that the call to Mr Primmer was about something other than petrol prices.
14 – 15 August 2000
762 The ACCC alleges that, in this period, effect was given to Arrangements Nos 1, 3 and 8.
763 Leahy increased its prices from 93.9 to 97.9 at BP Torquay at 23.46 on Monday, 14 August, shortly before closing time. It increased at BP Hillford from 93.7 to 97.9 at 23.56 on that day. At 00.05 on 15 August, it also increased BP Leopold from 93.7 to 97.9. Apco increased only three of its sites in Geelong shortly after midnight, and only from 93.7 to 96.9. The sites were Apco Geelong North at 00.05, Apco Geelong East at 00.18 and Apco Newcomb also at 00.18. The remaining Apco sites did not increase until shortly before midday on 15 August, nearly 12 hours after the initial increases.
764 These increases by Leahy and Apco are alleged to have been by way of the implementation of Arrangement No 1. The only relevant phone call was at 15.33 on 14 August. The phone call was from Peter Anderson to Leahy and lasted two minutes and 30 seconds. If it concerned a prospective price increase, it must have concerned something else as well. Leahy did not ring any of the others in its call cycle for more than four hours after this telephone call. At 19.39, Ian Carmichael rang Darren Campigli for 30 seconds. Chisholm did not increase any of its prices until 08.22 on 15 August, when Chisholm Grovedale moved from 93.7 to 96.9. This was followed by a move from 94.7 to 96.9 at Chisholm Geelong West at 08.48, and from 93.7 to 96.9 at Chisholm Leopold at 08.58. By that stage, those who set prices for the Chisholm outlets had had ample opportunity to observe not only the boards at the Apco outlets, but also Mobil Geelong North and Mobil East Belmont, which had moved to 96.9 at 07.50 and 08.06 respectively. Indeed, shortly afterwards, Leahy began dropping its prices to 96.9, which was obviously to be the new market price. BP Leopold dropped at 08.22, the same time as the first Chisholm price rise. BP Hillford dropped at 08.30 and BP Torquay went even lower to 96.5 at 08.36. The suggestion that two phone calls, separated by more than four hours on 14 August, were what produced price rises to different amounts, at markedly different times, travels far outside any pattern identified in the oral evidence. Whatever it was that caused Leahy, Apco and Chisholm to increase their prices during this period, it was not the implementation of Arrangements Nos 1 and 3.
765 The suggestion that Arrangement No 8 was implemented in this period is even more intriguing. The first phone call identified was at 18.02 on 14 August, when Alan Shuvaly rang Chris Andrianopoulos for 30 seconds. At 19.34, Mr Shuvaly again rang Mr Andrianopoulos for one minute. At 19.41, Mr Shuvaly rang Mr Andrianopoulos for four minutes and 30 seconds. At 21.03, Mr Shuvaly rang Mr Andrianopoulos again for one minute. Only then, at 21.07, did Mr Shuvaly ring Mr Anderson for one minute. What these calls had to do with a price increase is anybody’s guess. An arrangement or understanding of the kind alleged would not require this much communication. More was to come on the morning of 15 August. At 07.32, Mr Shuvaly rang Mr Andrianopoulos for 30 seconds. At 07.56, Mr Shuvaly rang Mr Andrianopoulos again for 30 seconds. At 08.25, Mr Shuvaly rang Mr Andrianopoulos for another 30 seconds. At 08.27, Mr Shuvaly rang Mr Andrianopoulos for one minute and 30 seconds. The ACCC surmised that Mr Shuvaly was passing on in all of these calls what he had learned from Mr Anderson in the one minute call on the previous evening. This would not explain why the next communication between the relevant parties was from Apco to Mr Andrianopoulos at 12.49 on 15 August, for 24 seconds. The ACCC submitted that the fact that Apco finally increased its price at Apco Lara nine minutes after this call can be taken as an indication that the call from Apco to Mr Andrianopoulos was a follow-up call. This raises the question what Apco was following up at that stage. Apco Lara was the last of its outlets to increase, so the decision to increase all outlets must have been made at some earlier time. There was no serious suggestion that Apco Lara was in direct competition with either Andrianopoulos or Liberty.
766 It is also interesting to follow, so far as is possible from Annexure B, what occurred in relation to prices at Andrianopoulos and Liberty during this period. The average price at Liberty dropped from 94.9 to 94.1 on 14 August. At some time during that day, Andrianopoulos dropped from 94.7 to 93.9 and then rose again to 94.7. The times, of course, are unknown. On 15 August, the Liberty average price increased from 94.1 to 97.2, making it clear that Liberty had adopted a higher price than Apco’s 96.9. It was also a higher price than that of Andrianopoulos, which increased to 96.9, dropped to 93.7 and then increased again to 93.9 at times unknown during the day. Interestingly, the ACCC’s submission invites the inference that the major increase was around midday after Caltex Quick Bite had increased its price to 96.9 at 12.05. If that were the case, it would suggest that Andrianopoulos was reacting to a market move that already included, as well as Leahy, Apco and Chisholm a number of Brumar outlets, both 7-Eleven outlets and BP Corford Express. It would suggest that the Andrianopoulos increase had nothing whatever to do either with the telephone calls from Mr Shuvaly to Mr Andrianopoulos on the previous afternoon and evening, or with the apparently unconnected call from Apco to Mr Andrianopoulos at 12.49 on 15 August. On the data in Annexure B, it is highly unlikely that effect was given to Arrangement No 8 during this period.
23 August 2000
767 The ACCC alleges that effect was given to Arrangements Nos 1, 3 and 6 on this day. Price moves actually began on the previous day, when Brumar moved Shell Latrobe Terrace from 96.0 to 99.9 at 21.52, and Shell Speedwings from 95.9 to 99.9 at 22.22. At 00.01 on Wednesday, 23 August, Shell Speedwings actually increased by 0.1 to 100.0. At 06.57, Shell Highton increased to 99.99, to which Shell Speedwings dropped at 07.57. Shell Westoria moved to that price at 08.10, Shell Anglesea at 08.33, Shell Belmont at 08.34 and Shell Norlane at 08.44. Brumar was obviously attempting to push the price up in the Geelong petrol market, probably consequent upon an increase in the Melbourne petrol market. This is borne out by the fact that, between 09.40 and 09.45 on 23 August, 7-Eleven Newcomb increased from 95.5 to 99.9. The price appears to have been an over-estimate however, and the Brumar sites came back to 95.5, starting with Shell Speedwings at 08.54, followed by Shell Belmont at 09.16, Shell Westoria at 09.28, Shell Latrobe Terrace at 09.59, Shell Norlane at 10.32 and Shell Highton at 10.43. Geelong Car Spa, which had not previously gone higher, also came to this price at 09.33.
768 In the meantime, at 08.33 on 23 August, Ian Carmichael rang Peter Anderson for 30 seconds. At 08.38, Mr Carmichael rang Colin Williamson for 30 seconds. At 10.40, Mr Carmichael reached Mr Anderson’s message bank. Mr Anderson apparently returned the call, ringing the Leahy office at 10.41, for three minutes. At 10.45, Mr Carmichael rang Colin Williamson for one minute and 30 seconds. At 10.48, he rang Chisholm for two minutes and 30 seconds.
769 At 11.04, Apco increased its price at Apco Geelong North from 95.5 to 99.7. Mobil Geelong North followed suit at 11.07. Leahy made the same move at BP Leopold at 11.08 and BP Hillford at 11.14. Apco did likewise at Apco Lara at 11.16, Apco Newcomb at 11.23, Apco Geelong South at 11.25 and Apco Geelong East at 11.47. In the meantime, Mobil Latrobe Terrace also moved to 99.7 at 11.20. BP Corford Express increased from 95.5 to 99.7 at 11.50. So did Mobil East Belmont at 11.51. The first Chisholm increases were from 11.52 at Chisholm Geelong West, followed by Chisholm Grovedale at 11.56 and Chisholm Leopold at 12.10. In the meantime, Ian Carmichael rang BP Corford Express for 30 seconds at 11.53. Leahy finally increased its price to 99.7 at BP Torquay at 12.02. In the early afternoon, the Brumar sites rose to 99.7, as did the Caltex Quick Bite. At 15.10, Apco began discounting to 99.5, and subsequently to 98.7. It was followed down by Mobil, and part of the way by Leahy.
770 At some time during the day, United Retail increased its price at Shell Victoria Street from 95.9 to 99.7. The price increase recorded in Annexure B for Shell Waurn Ponds is from 95.5 to 98.7. The daily data sheet of Shell Waurn Ponds for that day is also in evidence. It records two prices for ULP, 95.5 and 99.7, and contains an endorsement, apparently written by the same person who wrote the figures, ‘PRICE CHANGE MIDDAY’. If this inscription is accurate, it would mean that Shell Waurn Ponds increased its price for ULP to the same price as Leahy, Apco and Chisholm, within an hour of the increases by them. This would make the ACCC’s case that effect was given to Arrangement No 6 much stronger than Annexure B makes it.
771 There is undoubtedly a temporal coincidence between the start of the Apco rises and the start of the Leahy rises. It is a little difficult to tell in which, if any, phone call the requisite information was passed. Ian Carmichael was the initiator of communications at 08.33, and made another attempt at 10.40. The return call from Mr Anderson for three minutes was much longer than would have been necessary to pass pricing information. It is possible that each had information from Melbourne from which the appropriate price could be calculated. The fact that BP Corford Express went to 99.7 without any prompting by telephone might suggest that those who were setting its prices in Melbourne regarded this as the appropriate price. The Mobil outlets may have had similar information, which they did not derive from any communication recorded in Annexure B, or may have derived the price from the example of Apco Geelong North, which was followed immediately by Mobil Geelong North across the road. The ACCC submitted that the phone call from Mr Carmichael to BP Corford Express was related to price, on the basis that Mr Maurer said that he only received calls from Mr Carmichael about price rises. If that were the case, it was certainly a call about a price rise that was already occurring. It is difficult to see that Mr Carmichael would have been ringing BP Corford Express at that stage to ask it to put up its prices in accordance with any arrangement or understanding that Leahy had with any other competitor, when he had not rung BP Corford Express in the first place for that purpose. Whatever the reason for the call, as I have said, BP Corford Express had already had its price increased without any prompting.
772 The delay in Chisholm implementing any price rise, if it received information from Mr Carmichael in the call at 10.48 (which was longer than was necessary for such information) suggests that Chisholm took the course of waiting to see what the market did before committing itself. The best that can be said is that what occurred on this day is consistent with the possibility that Arrangement No 1, as described by Ian Carmichael, was put into effect, but it is less likely that Arrangement No 3 was.
773 As I have said, the case for consistency between the circumstantial evidence and the allegation of giving effect to of Arrangement No 6 on this day is stronger if regard is had to the Shell Waurn Ponds daily data sheet than if reliance is placed on Annexure B. If the figure of 98.7 is accurate, it would suggest that the increase was late in the day, after various other market participants had moved down to that figure. Coupled with the increase at Shell Victoria Street, the evidence from the daily data sheet provides perhaps the best example of the possible implementation of Arrangement No 6.
774 The ACCC also contended that a call at midday from Phil Carmichael to Michael Warner for one minute, followed by a call from Leahy to Chisholm at 12.04 for two minutes and one second and a call from Ian Carmichael to Chisholm at 12.08 for one minute and 30 seconds, were related to the fact that 7-Eleven had not increased. Apart from the obvious problem of the length of the two calls to Chisholm, Chisholm certainly did not follow up these communications with any phone call to Jacques Bodourian.
8 September 2000
775 The implementation of Arrangements 1, 3, 6 and 7 is alleged on this day. This is another occasion which began with Brumar attempting to push up the price in the Geelong petrol market, apparently based on a rise that had occurred in Melbourne. On this occasion, unlike on 23 August 2000, Leahy, Apco and Chisholm all increased to a cent higher than the original Brumar increase. Shell Latrobe Terrace had the first rise recorded in Annexure B, at 20.34 on Thursday, 7 September, from 90.5 to 98.9. Shell Highton moved from 91.5 to 98.9 at 21.59. Shell Speedwings at 07.15 on 8 September, Shell Norlane at 07.18 and Shell Westoria at 07.27 all moved from 90.5 to 98.9. At 07.30, Shell Belmont moved, but only to 98.8. The rise must have appeared unsustainable, because at 07.38 Shell Speedwings reduced to 89.9, followed by Shell Westoria at 08.29, Shell Belmont at 08.35, Shell Norlane at 09.40, Shell Latrobe Terrace at 09.58 and Shell Highton (to 90.9) at 10.01. In the meantime, probably confirming that a rise flowing from the Melbourne petrol market was in the offing, between 08.52 and 09.20, 7-Eleven Geelong East increased from 89.9 to 99.8.
776 At 10.00, before any relevant phone calls, Leahy had clearly decided to put into effect what it saw as a coming increase. Its price at BP Hillford went from 89.9 to 99.9. Only at 10.02 did Leahy ring the Apco office for one minute and eight seconds. At 10.03, Leahy rang Phil Carmichael for 12 seconds. At 10.04, Leahy rang Chisholm for one minute and 18 seconds. At 10.05, Ian Carmichael rang Colin Williamson for 30 seconds. At 10.08, Leahy again rang Chisholm for 52 seconds. At 10.10, Leahy rang BP Meredith for 57 seconds. Apco then began its increases from 89.9 to 99.9 at 10.11 at Apco Geelong South, 10.12 at Apco Geelong East, 10.40 at Apco Newcomb, 10.49 at Apco Lara and 10.56 at Apco Geelong North. Leahy continued its increases, moving from 91.5 to 99.8 at BP Torquay at 10.23, and from 89.9 to 99.9 at 10.51 at BP Leopold. Mobil Geelong North made a brief attempt to push the price even higher, moving to 102.9 at 11.15, but dropping to 99.9 four minutes later.
777 Gordon Primmer rang Leahy for 11 seconds at 10.30. Chisholm delayed its increases until 11.53, when it moved the price at Chisholm Grovedale from 90.9 to 99.9, followed by Chisholm Geelong West at 11.58 and Chisholm Leopold at 12.14. BP Corford Express appears to have needed no prompting by telephone from within the Geelong petrol market to move from 90.9 to 99.9 at 12.12 and at Caltex Quick Bite made a similar move at 12.25. 7-Eleven Newcomb moved from 89.9 to 99.9 between 12.06 and 12.34. The Brumar sites then began to move up to 99.9, starting with Shell Westoria at 12.49. Interestingly, Shell Latrobe Terrace attempted a higher price at 102.5 at 13.05, dropped it to 102.4 at 13.25, and then to 99.9 at 13.38. In the afternoon, Apco began discounting to 98.5 and other outlets (including the Mobils which had also gone up to 99.9) followed it down.
778 Both Shell Victoria Street and Shell Waurn Ponds increased to 99.9. The ACCC said that the former increase occurred on opening or in the morning and the latter increase during the day.
779 The fact that Leahy had increased its price before ringing the Apco office makes it absolutely clear that the price was not arranged between Leahy and Apco. The much greater likelihood is that it was a price based on information from Melbourne. Whether this information was passed to Apco in the relevant telephone call, or whether Apco acquired it from other sources, remains unknown. The data in Annexure B for this day does not therefore support the proposition that effect was given to Arrangement No 1.
780 The delay in the implementation of any price increase by Chisholm suggests the probability that, if it did receive information about the price increase that Leahy was already undertaking in the telephone call at 10.04 or the telephone call at 10.08, it adopted a wait and see attitude for almost two hours, to see what other market participants did, before deciding to increase its prices. If, as the ACCC said, the price increases at United Retail outlets were at significantly different times, this would be another factor added to the already strong oral evidence that calls from Leahy were not influential at all in the setting of United Retail’s prices. As is usual, no data appears for prices at BP Meredith. The communications between Leahy and BP Meredith, and between Mr Primmer and Leahy, by themselves are insufficient to suggest that BP Meredith increased its price in accordance with any arrangement or understanding.
4 October 2000
781 To understand what occurred on this day, on which the implementation of Arrangements Nos 3 and 6 only is alleged, it is necessary to go to the previous day, Tuesday, 3 October 2000. At 15.10 on that day, Apco Geelong East increased from 89.5 to 99.9. No other Apco site appears to have had a similar increase on that day. Shortly afterwards, at 15.16 and 15.20 respectively, Leahy moved the prices at BP Hillford down from 91.5 to 89.5. At 15.32, Leahy moved BP Torquay from 89.5 to 99.9. There was no apparently relevant communication between Leahy and Apco, or anyone on their behalf. The Leahy rise at BP Torquay was followed by identical rises at BP Leopold at 16.11 and BP Hillford at 16.18.
782 Chisholm also increased its prices to 99.9, beginning with Chisholm Geelong West at 16.20, then Chisholm Grovedale at 16.21 and Chisholm Leopold at 16.22. At 16.24, Apco Geelong East came down by half a cent to 99.4.
783 Leahy reduced its prices at 17.13 on 3 October at BP Hillford, 17.14 at BP Leopold and 18.15 at BP Torquay, all to 89.5. There were also decreases to 90.5 at two Chisholm outlets on 3 October, at 18.10 at Chisholm Grovedale and at 18.15 at Chisholm Geelong West.
784 In the evening of 3 October, Brumar moved the prices at a number of its outlets to 99.9. The moves were at Shell Highton at 18.26 (from 90.5), Shell Westoria at 18.28, Shell Speedwings at 19.19, Shell Belmont at 20.04 and Shell Latrobe Terrace at 20.18 (all from 89.5). At a time unrecorded, Apco Geelong East appears to have decreased further to 98.9. On 4 October, Geelong Car Spa at 06.46 and Shell Norlane at 07.43 continued the Brumar moves from 89.5 to 99.9.
785 The rises attempted appear to have been unsustainable. Chisholm dropped its price to 91.5 at Chisholm Leopold at 17.05, Chisholm Geelong West at 17.06 and Chisholm Grovedale at 17.07. Brumar must also have found that it was losing volume of sales, because it reduced its prices to 89.5 at Shell Latrobe Terrace at 07.48 on 4 October, Shell Speedwings at 08.06, Geelong Car Spa at 08.15, Shell Norlane at 08.16 and Shell Belmont at 09.09, with Shell Highton coming down to 90.5 at 08.59.
786 At 07.42 on 4 October, Colin Williamson rang Ian Carmichael for 44 seconds. At 08.47, Mr Williamson rang Mr Carmichael again for 28 seconds. At 09.32, Mr Carmichael rang Chisholm for one minute. He then rang Mr Williamson for 30 seconds. Ian Carmichael then rang Phil Carmichael for one minute at 09.34. At 09.47, Leahy raised its price at BP Torquay from 89.5 to 99.9. At 09.57, Apco began increasing, apparently without any relevant communication. Apco Geelong South moved from 89.5 to 99.9 at that time, Apco Newcomb did the same at 10.15, Apco Geelong North went to 99.5 at 11.05, and Apco Highton moved to 99.9 at 11.13, as did Apco Lara at 11.19. In the course of that time, BP Hillford and BP Leopold also went up to 99.9 again. There was another call from Leahy to Chisholm at 10.42, for 18 seconds. The ACCC submitted that this was a follow-up call, because Chisholm was not yet up. Darren Campigli twice rang Leahy for 20 seconds at 11.28 and for two minutes and 47 seconds at 11.30. In the event, Chisholm waited until 11.59 before increasing its price to 99.5 at Chisholm Grovedale. It did the same at Chisholm Geelong West at 12.03 and at Chisholm Leopold at 12.26. Between 12.00 and 12.08, 7-Eleven Geelong East also moved to 99.9, apparently without any relevant communication from anyone in Geelong. Mobil Geelong North began the Mobil rises at 12.09, with Mobil East Belmont and Mobil Latrobe Terrace also moving to 99.9. BP Corford Express moved to 99.9 at 14.10, apparently without prompting from any competitor in Geelong.
787 Apco then began discounting, first to 99.4 and then to 98.9, with a number of the Mobil outlets following.
788 Shell Victoria Street increased from 92.5 to 99.9. The ACCC submitted that this was on opening or in the morning. By contrast, Shell Waurn Ponds only increased from 91.5 to 98.9. The ACCC invited the inference that this was early in the day, but it matched the price to which Apco and some Mobil outlets were moving in the course of the mid to late afternoon.
789 This is clearly another day on which the Geelong petrol market was poised to follow a move in the Melbourne petrol market. 99.9 was recognised widely as the appropriate price. One Apco outlet, all the Leahy outlets and the Chisholm outlets attempted to move to it on 3 October, but the rest of the market did not move and so they dropped again. Perhaps the strongest signal that the increase would flow into Geelong at that level was given by the Brumar outlets on the evening of 3 October and the morning of 4 October. Apco managed to achieve this level, at all its outlets except Apco Geelong North, in the morning without any apparent communication. If Colin Williamson did receive any information from Ian Carmichael about pricing in the course of his calls that morning, it was not implemented uniformly by United Retail, adding to the already strong evidence that any information received in such calls was of no effect in setting the United Retail prices. Once again, Chisholm delayed, apparently for the purpose of assuring itself that it was safe to increase. When it did increase, it adopted a price different from Leahy and from most of the other outlets. It is unlikely that either Arrangement No 3 or Arrangement No 6 was implemented on this occasion.
19 – 20 October 2000
790 The ACCC alleges that effect was given to Arrangements Nos 3 and 7 on this occasion. The first price rise in the period was at 11.24 on 19 October. Apco increased its price at Apco Geelong North from 88.9 to 99.9. The increase appears anomalous, because Apco was in the process of reducing prices at its other outlets from 89.9 or 89.5 to 88.9. In addition, the 11.0 rise at Apco Geelong North was not matched by Mobil Geelong North until 06.18 the following morning, and it was unusual for Apco to set its price so much higher than Mobil Geelong North at its outlet across the road from that Mobil outlet. The fact that Apco was prepared to endure the loss of sales volume that must have followed from this increase at Apco Geelong North on this occasion, while it was reducing its prices at its other outlets, tends to suggest that it was in possession of knowledge that a price rise from the Melbourne petrol market was about to flow into the Geelong petrol market. So far as Annexure B demonstrates, Apco did not acquire that knowledge from Leahy, or from any other competitor in the Geelong petrol market. There are no relevant telephone calls shown.
791 Nothing occurred in relation to pricing for much of the day, other than small downward movements at most outlets. At 16.22, Ian Carmichael rang Colin Williamson for 30 seconds. At 16.23, Leahy rang Chisholm for two minutes and 59 seconds. At 16.25, Ian Carmichael rang Phil Carmichael for 30 seconds. At 16.30, Leahy rang BP Meredith for 32 seconds. The call was apparently returned at 17.06 when Gordon Primmer rang Leahy for 12 seconds. He may have succeeded in getting through to the person he wished to speak to at 17.15, because a call from Mr Primmer to Michael Warner, lasting one minute and 42 seconds, is recorded at that time. At about that time, Leahy was still reducing its prices from 89.9 to 88.9, in line with most of the rest of the market. BP Leopold so reduced at 17.12 and BP Hillford at 17.19.
792 By 19.02, Leahy had apparently acquired information that a rise to 99.9 was in the offing. At that time, it increased its price at BP Hillford from 88.9 to 99.9. It did the same at BP Leopold at 19.39. BP Torquay did not increase until 07.02 on 20 October, when it also increased to 99.9. By that time, the Chisholm outlets had increased, beginning with Chisholm Grovedale at 20.00 on 19 October, then Chisholm Leopold at 20.54 and Chisholm Geelong West at 22.01, all from 89.9 to 99.9. Apco outlets also went to 99.9 between 22.24 on 19 October and 00.16 on 20 October.
793 Quite early in the morning on 20 October, Leahy began to reduce its price to 99.5, starting at BP Torquay at 07.33. This was the price to which Caltex Quick Bite had gone at 05.33 that morning. Although BP Corford Express went to 99.9 at 07.46, 99.5 appeared to become the preferred price, with Mobil Latrobe Terrace moving up to it at 08.02 and Apco moving down to it at Apco Geelong South at 08.04 and Apco Newcomb at 08.20. Apco Geelong East finally moved from 88.9 to 99.9 at 08.24.
794 Leahy rang Chisholm at 08.24 for 40 seconds. What, if anything, the ACCC would seek to make of this call is not apparent to me. Leahy continued to move down to 99.5 at BP Leopold at 08.26 and BP Hillford at 08.30.
795 Between 08.52 and 09.03, 7-Eleven Geelong East moved up from 88.9 to 98.9. The ACCC pointed to a call from Ian Carmichael to Chisholm, for two minutes and 30 seconds, at 09.18, to a return call from Chisholm to Leahy at 09.21 for one minute and 32 seconds and then to a call at 09.23 from Chisholm to Jacques Bodourian for 16 seconds, probably a message, with Jacques Bodourian ringing Chisholm back at 09.24 for two minutes and 43 seconds, as being related to the fact that 7-Eleven Newcomb moved from 88.9 to 99.9 at some time between 09.23 and 09.47. This does not accord with the oral evidence that calls to Chisholm to complain about 7-Eleven not having increased its prices were initiated by Phil Carmichael, and there is no call from Phil Carmichael recorded in Annexure B at about that time.
796 The time lapse between the communication from Leahy to Chisholm at 16.23 on 19 October and the increases in price by Leahy from 19.02 and Chisholm from 20.00 places this period outside the description given by Ian Carmichael of the pattern of telephone calls and price increases. It appears more likely that information that 99.9 was to be the new price came from Melbourne to several participants in the Geelong petrol market and caused them to move to that independently. If the information was conveyed in the telephone call from Leahy to Chisholm at 16.23, Chisholm may well have taken steps to check that it was accurate, rather than simply deciding to raise its prices at closing time of its various outlets. The anomalous move by Apco much earlier on 19 October suggests this scenario, rather than the giving effect to of any arrangement or understanding. Once again, the suggestion that Arrangement No 7 was implemented is based entirely on the fact that a telephone call was made from Leahy to BP Meredith, and that Mr Primmer rang Leahy back and subsequently spoke to Michael Warner. There is no data for price increases at BP Meredith, so it is impossible to know when Mr Primmer raised his prices.
797 Particularly in the absence of any suggested implementation of Arrangement No 1, the data for this period does not support the proposition that Arrangements Nos 3 and 7 were implemented as stand-alone arrangements.
27 October 2000
798 The ACCC alleges that effect was given to Arrangements Nos 1, 3 and 7 on this day. Apco initiated a substantial price increase in the market by lifting its price at Apco Geelong East from 90.5 to 99.7 at 09.05. This was before the first relevant telephone call, which was from Leahy to the Apco office at 09.10, and lasted one minute and 18 seconds. At 09.11, Leahy rang Chisholm for one minute and 44 seconds. At 09.12 and 09.14 respectively, Apco Newcomb and Apco Geelong South increased from 90.5 to 99.7. At 09.15, Leahy rang Chisholm again for one minute and four seconds. At 09.17, Ian Carmichael rang Colin Williamson for one minute. At 09.20, Leahy rang Andrianopoulos for 52 seconds and then immediately Ian Carmichael rang Chris Andrianopoulos for 30 seconds. At 09.22, Leahy rang Phil Carmichael for 10 seconds. The fact that Phil Carmichael immediately left a message on Aaron Incoll’s message bank, followed by a further message at 09.37, was relied on by the ACCC to suggest that Leahy had communicated pricing information to Phil Carmichael, who was passing it on to the Mobil price-setter.
799 At 09.41, Leahy began increasing its prices, with BP Torquay moving from 91.5 to 99.7. At 09.47, Michael Warner rang Gordon Primmer for 27 seconds. The call was transmitted through Meredith, suggesting that Mr Warner was on the road, adjacent to Mr Primmer’s outlet at the time, and not in the Leahy office. Apco continued to increase, with Apco Geelong North going up to 99.7 at 10.06, Apco Highton at 10.11 and Apco Lara at 10.13. Leahy increased to 99.7 at BP Leopold at 10.08 and BP Hillford at 10.21. The first Mobil increases recorded in Annexure B were for Mobil Geelong North at 10.22, Mobil East Belmont at 10.47 and Mobil Latrobe Terrace at 11.34, all to 99.7.
800 At 10.46, Leahy telephoned Darren Campigli for one minute and 40 seconds. Also at 10.46, someone in the Leahy office telephoned the Chisholm office for 15 seconds. Mr Campigli rang the Leahy office back at 10.49 for one minute and two seconds and Chisholm rang Leahy at 10.59 for 56 seconds. Chisholm then increased the prices at its sites from 11.01, but only to 98.9. Chisholm Grovedale was the first to go at 11.01, followed by Chisholm Leopold at 11.17 and Chisholm Geelong West at 11.39. Oddly, 98.9 was the price to which Caltex Quick Bite moved at 11.43. The ACCC also invited the inference that the calls between Leahy and Chisholm and between Leahy and Mr Campigli concerned the fact that 7-Eleven outlets had not risen, because at 11.02 Chisholm rang Jacques Bodourian for 30 seconds and 7-Eleven Geelong East increased between 11.02 and 11.44, with 7-Eleven Newcomb going up between 11.20 and 11.45. If this was the purpose of any communication from Leahy to Chisholm or Mr Campigli, it was not the result of any apparent complaint made by Phil Carmichael to Leahy, or to Ian Carmichael.
801 On the basis of this data, it is unlikely that Arrangement No 1, as alleged, was being implemented on this day. Apco had already risen without any reference to Leahy. The only possibly relevant communication between Leahy and Apco was initiated by Leahy at 09.10. In his evidence, Mr Warner accepted that it was highly likely that Apco had given instructions to its outlets by that time that they were to increase their prices to 99.7. He said that this was contrary to the kinds of situations he recalled being involved in with Mr Anderson. It is plain that Apco had made its decision to move and that Leahy was not involved in that decision.
802 It also appears unlikely that Arrangement No 3 was implemented. Chisholm apparently made its decision to move at some time after the moves by Leahy, and then moved to a different figure. If the telephone calls between 10.46 and 10.59 were, or involved, attempts to urge Chisholm to adhere to Arrangement No 3, in the first place it is surprising that they were necessary, and in the second place they were unsuccessful because Chisholm did not move to the price supposedly arranged.
803 As to Arrangement No 7, the only communication between anyone at Leahy and anyone at BP Meredith shown in Annexure B is the phone call at 09.47 from Mr Warner to Mr Primmer, at a time when Mr Warner was somewhere in the region of Meredith. In the absence of evidence that Mr Warner was in the Leahy office earlier that morning, at a time when information about a prospective price increase was received there, or that he received any communication from the Leahy office in the meantime, and that he had sufficient time to get to within telephone range of Meredith before ringing Mr Primmer at 09.47, I cannot assume that these things occurred. As there was no other relevant communication to Mr Primmer or BP Meredith, I cannot assume that Arrangement No 7 was implemented.
3 – 4 November 2000
804 The ACCC alleges that Arrangements Nos 1, 3, 6, 7 and 8 were all implemented during this period.
805 The first telephone call to which the ACCC pointed was at 12.28 from Chris Andrianopoulos to Alan Shuvaly, apparently for 40 seconds. Between 12.33 and 13.02, Mr Shuvaly made four separate calls to Mr Andrianopoulos of 30 seconds, one minute and 30 seconds, 30 seconds and 30 seconds respectively. Mr Shuvaly then waited until 13.23 to ring Peter Anderson. His call lasted for two minutes and 30 seconds. At 13.39, Mr Shuvaly made another call to Mr Anderson for one minute. It is not apparent why such a large amount of time needed to be spent on the phone by those who are alleged to have been parties to Arrangement No 8, if they were merely discussing a proposed increase to a particular price at a particular time.
806 The same might be said for the call from Peter Anderson to Leahy at 13.43, which lasted for four minutes. Nevertheless, the ACCC pointed to the fact that, at 13.47, Ian Carmichael rang Colin Williamson for 30 seconds and, at 13.48, Leahy rang Phil Carmichael for 16 seconds. Also at 13.48, Leahy rang Chisholm for two minutes and 56 seconds and, at 13.52, Ian Carmichael rang Mr Andrianopoulos for 30 seconds. At 13.53, Mr Andrianopoulos rang Mr Carmichael back for 24 seconds. At 13.57, Mr Andrianopoulos reached Mr Shuvaly’s message bank for 14 seconds. Leahy then rang BP Meredith at 13.58 for 26 seconds, Gordon Primmer at 13.59 for five seconds and Mr Primmer again at 13.59 for 10 seconds. Mr Andrianopoulos and Mr Shuvaly then exchanged calls at 13.59, initiated by Mr Andrianopoulos for 79 seconds and, at 14.09, returned by Mr Shuvaly for one minute.
807 The first price increase was at Apco Newcomb at 14.16, from 88.9 to 98.9. Other Apco outlets followed, Apco Geelong South at 14.18, Apco Highton at 15.05, Apco Lara at 15.09, Apco Geelong East at 15.33 and Apco Geelong North at 16.15. In the meantime, some Brumar sites began to move to 99.9, notably Shell Latrobe Terrace at 14.27 and Shell Belmont at 14.32, and BP Corford Express also raised its price from 88.9 to 98.9 at 14.30.
808 At 14.20, Mr Williamson called Mr Carmichael for 22 seconds. At 14.58, Mr Shuvaly called Mr Andrianopoulos for one minute. There was a call at 15.38 from Chisholm to 7-Eleven for 45 seconds, but it is not suggested that this was in response to any complaint about any failure of 7-Eleven to move. Indeed, at that time Chisholm had not moved. It made its first move at 15.43 at Chisholm Leopold, from 89.9 to 98.9, followed by Chisholm Grovedale at 15.44 and Chisholm Geelong West at 15.44.
809 Leahy did not move until 15.48, when BP Torquay went from 89.9 to 98.9. This was followed by BP Leopold from 88.9 to 98.9 at 16.09, and an identical move at BP Hillford at 16.16. In the meantime, Shell Highton had moved to 99.9 at 15.58. Also at 15.58, BP Corford Express dropped back to 88.9. Two minutes later, Ian Carmichael rang BP Corford Express for two minutes and 30 seconds. The call was transmitted through Corio, suggesting that Mr Carmichael was in or near the Leahy office. It can hardly be suggested that he was ringing to complain about the decrease, because it is highly unlikely that he had knowledge of it at that stage. Nor can it be suggested that he was ringing to complain of a failure to increase, because BP Corford Express had been up well before Leahy’s first increase, and to the same price.
810 From 16.00, when Mobil Geelong North moved from 88.9 to 98.9, the Mobil sites for which information is available in Annexure B joined the move to 98.9 or, in the case of Mobil Latrobe Terrace at 16.11, 99.9. At 16.17, Caltex Quick Bite increased, but only to 93.9. At 16.35, Brumar sites began to ease to 98.9, starting with Shell Westoria at that time. 7-Eleven Geelong East did not increase until some time between 17.11 and 17.23.
811 At 16.43, Ian Carmichael telephoned Chisholm. At 16.48, Mr Shuvaly telephoned Mr Andrianopoulos for one minute and 30 seconds. At 17.37, Mr Shuvaly called Mr Andrianopoulos again for 30 seconds. Mr Andrianopoulos called Mr Shuvaly twice at 18.52 and 18.55 for 21 and 42 seconds respectively. At 19.31, Caltex Quick Bite increased from 93.9 to 97.9.
812 The average price for Liberty Geelong North increased only marginally on 3 November, from 89.1 to 91.4. Andrianopoulos dropped its price from 90.9 to 88.9 and then increased it to 89.9 during the day. Shell Victoria Street moved from 89.9 to 98.9, but Shell Waurn Ponds did not increase until some time on 4 November.
813 On 4 November, at 06.13, BP Corford Express increased from 88.9 to 98.9. At 09.17, Caltex Quick Bite moved up a little more to 98.5. At 09.23, Apco began decreasing its prices to 97.9, first at Apco Lara and then at other sites around the middle of the day and early afternoon. Shell Highton attempted a minor increase from 99.9 to 100.0 at 09.25, as did Shell Anglesea at 13.18. Otherwise, prices began to move downwards, including those at Chisholm and Leahy in the course of the afternoon. Shell Waurn Ponds increased from 89.9 to 98.9 at some time during the day, the ACCC submitted early. The Liberty average went from 91.4 to 98.6, suggesting either an early increase on 4 November or the adoption of a slightly lower price than the rest of the market. Andrianopoulos increased from 89.9 to 98.9 and then dropped to 88.9 at times unknown during the day. The ACCC submitted that it did this at about 09.00, to match the 09.17 increase to 98.5 at Caltex Quick Bite.
814 For all of the telephone communications during this period, the price increases seem remarkably uncoordinated if arrangements or understandings of the kinds alleged existed. Mr Warner conceded that the timing of the price increases suggested that there was no arrangement or understanding between Apco and Leahy to increase at about 14.00 on 3 November. Shortly after that time, Apco did increase. All but one of its sites had risen before Chisholm began to increase at 15.43. Chisholm’s increases preceded those of Leahy, the most significant of which did not occur until 16.16. This staggering makes it unlikely that there was any meeting of minds about a time for an increase. It may have been that the telephone calls involved the passing of information about the level to which the market was likely to go but, in the absence of apparent coordination as to time, it cannot be said that this amounted to the implementation of Arrangements Nos 1 or 3 as they are alleged. Clearly, Arrangement No 6 was not implemented, because United Retail raised its prices at the two outlets recorded in Annexure B on separate days. Even if the increase at Shell Waurn Ponds were found to have been early in the day on 4 November, this would still leave a significant lapse of time between any relevant telephone call and that increase.
815 As to Arrangement No 7, there is no data for BP Meredith’s prices.
816 The suggestion that Arrangement No 8 was implemented during this period cannot be accepted. Quite apart from the inordinate amount of telephone communication, which would have been unnecessary simply to communicate a price and a time, there was clearly no coordination as to the timing of price increases between the parties to this arrangement. Apco was the earliest riser, from early afternoon on 3 November. If Liberty rose on that day to anything like 98.9, its rise must have been very late because the increase in its average price is only 1.5. It is more likely that, if Liberty did rise to 98.9, it was after midnight. Andrianopoulos must also have risen after midnight. The time gap between those increases and those at Apco suggests that the increases were made by independent decisions, and not by any form of collusion.
817 The data in Annexure B does not support the proposition that any arrangement or understanding was implemented during this period.
17 – 18 November 2000
818 During this period, the ACCC alleges that effect was given to the full range of arrangements or understandings alleged to have existed at that time, Arrangements Nos 1, 3, 6, 7 and 8.
819 During the morning of Friday, 17 November, Leahy rang Peter Anderson for 19 seconds at 10.38 and then immediately rang the Apco head office for 23 seconds. It appears that Mr Anderson was in Wangaratta on that day, because most of the calls recorded from him were transmitted through Wangaratta. At 11.58, Peter Anderson rang Alan Shuvaly for one minute. At 12.16, Ian Carmichael rang Phil Carmichael, reaching his message bank. The call is shown in Annexure B as being transmitted through Bathurst. A call from Phil Carmichael to Portcliff Geelong at 12.48 is also shown as having been transmitted through Bathurst, so it is possible that both brothers were in Bathurst on that day.
820 Brumar led the price rises in the Geelong petrol market on Friday, 17 November, probably flowing on a price increase from Melbourne. All of the Brumar outlets increased from either 87.5 or 88.5 to 98.5. The increases were at Shell Latrobe Terrace at 12.52, Shell Westoria at 12.56, Shell Belmont at 13.48, Shell Norlane at 14.03, Shell Speedwings at 14.45, Shell Highton at 15.02, Geelong Car Spa at 15.54 and Shell Anglesea at 15.59. In the course of these increases, at 15.09, Mr Shuvaly rang Chris Andrianopoulos for 30 seconds. At 15.13, Mr Shuvaly again rang Mr Andrianopoulos for one minute. At 15.50, Leahy rang Mr Anderson for 47 seconds. At 15.52, Mr Anderson rang the Liberty office for one minute and 30 seconds. Mr Warner’s evidence about this call was that Leahy had probably become aware of the Brumar increases and that he had probably telephoned Mr Anderson to let him know of them.
821 At 16.07, Mobil Geelong North attempted an increase, from 87.5 to 97.9. At 16.41, however, it reduced its price again, to 87.5. In the meantime, there was a series of telephone calls between the parties to Arrangement No 8. At 16.12, Mr Andrianopoulos rang Mr Shuvaly for 34 seconds. Also at 16.12, Mr Anderson rang Liberty for three minutes and 30 seconds. At 16.24, Mr Andrianopoulos rang Mr Shuvaly for 53 seconds. At 16.30, Mr Shuvaly rang Mr Anderson for one minute. At 16.31, Mr Anderson then rang Leahy for one minute and 30 seconds. At 16.34, Mr Anderson reached Mr Shuvaly’s message bank. The ACCC contended that the concentration of this block of telephone calls suggested that they were related to price. If it be assumed that Mr Anderson already knew of the Brumar price move, and if there had been an arrangement or understanding such as Arrangement No 8 was alleged to have been, it is difficult to understand why so many calls would be needed to provide information about a price and a time for an increase to be implemented.
822 Forty-five minutes after the conversation between Mr Anderson and Leahy at 16.31, Leahy and Michael Warner began what is described as a call cycle. At 17.16, Leahy rang Colin Williamson for 37 seconds. At 17.17, Leahy reached Phil Carmichael’s message bank. At 17.20, Mr Warner rang Chisholm for four minutes and five seconds, far longer than would have been necessary to convey information about a price and a time. Mr Warner then reached Mr Anderson’s message bank twice more and Phil Carmichael’s message bank again, before ringing BP Meredith for 46 seconds at 17.39 and Colin Williamson for one minute and 25 seconds at 17.42.
823 Assuming that the computer at Apco Geelong South had still not been adjusted for daylight saving time, the Apco increases began at 18.00, with Apco Geelong East moving from 87.5 to 98.5, followed by Apco Geelong North at 18.09, Apco Highton at 18.18, Apco Lara at 18.21, Apco Geelong South at 18.28 and Apco Newcomb at 18.51. Leahy began its increases at 18.29 at BP Torquay, also moving from 87.5 to 98.5, with BP Leopold following at 19.09 and BP Hillford at 19.18. Mobil sites began joining in, with Mobil Geelong North at 18.39, Mobil East Belmont at 18.41 and Mobil Latrobe Terrace at 18.52.
824 At 19.12, Mr Warner made two calls to Darren Campigli, timed at 22 seconds and seven seconds respectively. At 20.27, Mr Warner reached Mr Anderson’s message bank again. At 20.28, Mr Warner rang Phil Carmichael for two minutes and 47 seconds.
825 The Chisholm increases began at 20.53 at Chisholm Grovedale, which moved from 88.5 to 98.7, a higher price than that adopted by Apco and Leahy. At 20.57, Chisholm Leopold moved from 88.9 to 98.7 and at 21.57 Chisholm Geelong West moved from 88.5 to 98.7. By this stage, both of the 7-Eleven sites had gone up to 97.5, 7-Eleven Geelong East between 19.25 and 19.54 and 7-Eleven Newcomb between 21.16 and 21.18. On the evening of 17 November, there was more communication between Mr Anderson and Mr Shuvaly. At 21.03, Mr Anderson reached Mr Shuvaly’s message bank for a call timed at four minutes and 30 seconds, apparently a very long message if the timing is recorded accurately. This call was transmitted through Somerton, so that Mr Anderson was on his way back from Wangaratta to Geelong when he made it. At 21.56, Mr Anderson apparently spoke to Mr Shuvaly for one minute, the call being transmitted through Corio. At 22.09, Mr Shuvaly reached Mr Anderson’s message bank for six minutes and 30 seconds, again an extraordinarily long message, especially to leave information about Liberty’s intentions in relation to a price increase.
826 On that day, the average price at Liberty increased by 0.5, from 87.8 to 88.3, suggesting either a very small increase or an increase very late in the day. Andrianopoulos dropped from 92.9, to which it had risen on 16 November, to 87.5 and then increased by one cent. Shell Victoria Street dropped from 88.9 to 85.9 and Shell Waurn Ponds from 91.5 to 85.9.
827 On Saturday, 18 November, shortly after midnight, Caltex Quick Bite increased from 87.9 to 98.2. Brumar then began dropping its prices at some of its outlets to 87.4, 87.5 or 88.5. When business hours began, Mr Warner rang Chisholm for 11 seconds at 08.09, and then rang Mr Williamson for one minute and 15 seconds at 08.10. Caltex Quick Bite dropped to 96.9 at 08.15. Chisholm reduced by 0.2 at 08.18 at Chisholm Geelong West, 08.19 at Chisholm Grovedale and Chisholm Leopold. At 08.48, Mr Andrianopoulos reached Mr Shuvaly’s message bank for 13 seconds. At 08.48 and 09.00 respectively, Mobil East Belmont and Mobil Latrobe Terrace dropped their prices from 98.5 to 87.5. Also at 09.00, Caltex Quick Bite went back up to 98.2 and then, five minutes later, dropped to 96.5. There were two more calls from Mr Shuvaly to Mr Andrianopoulos at 09.15 for two minutes and 09.18 for one minute. At 09.20, BP Corford Express moved from 87.5 to 98.5, apparently without prompting by telephone from any Geelong competitor. At 09.21, Mr Shuvaly had another four-minute conversation with Mr Andrianopoulos.
828 At 09.30, Apco Geelong East dropped its price from 98.5 to 97.5. During the morning, Brumar sites continued to drop to 87.5 or 88.5, between 10.23 and 10.49. At 10.30, Caltex Quick Bite moved from 96.5 down to 94.9. At 10.53, Mr Shuvaly reached Mr Anderson’s message bank for 30 seconds. At 10.54, Mobil Latrobe Terrace again raised its price from 87.5 to 98.5. It lowered it by one cent to 97.5 at 10.59, two minutes after Mobil Geelong North had also lowered its price from 98.5 to 97.5. Apco Geelong North did the same at 11.01. At 11.03, Mr Shuvaly rang Mr Andrianopoulos for 30 seconds. At 11.09, Mr Anderson rang Mr Shuvaly for four minutes. At 11.14, the last of the Brumar sites to come down, Shell Norlane, moved from 98.5 to 87.5. Almost immediately, at 11.17, Shell Latrobe Terrace increased from 87.5 to 98.5. At 11.24, Mobil East Belmont lifted its price from 87.5 to 97.5. At 11.26, Mr Warner rang Colin Williamson. Thereafter, Brumar sites proceeded to go back up to 98.5 (98.6 in the case of Shell Latrobe Terrace), Caltex Quick Bite dropped back to 87.5 at 11.45, but most of the market began discounting in small stages to 96.5 by the end of the day.
829 Liberty’s average for 18 November increased from 88.3 to 97.3. This may be indicative that its peak price was lower than the rest of the market, that its rise was a little later, or that it also dropped its price as the day proceeded. At some time unknown, Andrianopoulos increased from 88.5 to 97.5 and dropped back to 87.5. The ACCC invited me to draw the inference that this increase happened between 09.00 and 10.00, around the time of the Caltex Quick Bite increase to 98.2. If this be accepted, it is difficult to conclude that any telephone communications between Andrianopoulos and Apco or Liberty had any effect on the decision made by Andrianopoulos. Both Shell Victoria Street and Shell Waurn Ponds increased from 85.9 to 98.5. The Shell Victoria Street increase must have been in the morning, because it closed on Saturday afternoons. The ACCC said that the Shell Waurn Ponds increase was also early in the day.
830 It is probable that Brumar was attempting to introduce into the Geelong petrol market a rise that had already occurred in the Melbourne petrol market. The degree of competitiveness of the Geelong petrol market apparently made this difficult, so that Brumar outlets dropped their prices even as some other market participants were increasing theirs, and Caltex Quick Bite fluctuated quite significantly.
831 If, as Mr Warner suggested, the call from Leahy to Mr Anderson at 15.50 on 17 November was to inform him of the Brumar rise, the information had little effect. Even assuming that Leahy waited for communication of Mr Anderson’s approval for an arranged price increase, that approval would have to have come in the call at 16.31. It is difficult to see why Leahy would then wait until 17.16 to start informing other market competitors of the prospective increase. There is something of a temporal coincidence between the Apco increases and the Leahy increases, but in the circumstances it is an inference equally available that each made its own decision about when and to what price it would increase, as that each increased because the other had said it would. Chisholm appears to have delayed somewhat longer in making any price increase, and then to have chosen its own figure. This is consistent with it making its own decision, based on other factors. Even if the United Retail price increases did take place early in the morning on 18 November, they were so separated in time from relevant telephone communications that the connection between the two is unlikely. There was one call from Mr Warner to BP Meredith at 17.39 on 17 November, and no information about BP Meredith’s prices, so it cannot be suggested that Annexure B supports the proposition that Arrangement No 7 was implemented.
832 Arrangement No 8 is even more problematic. The extraordinarily large amount of telephone communication between the three participants in this alleged arrangement or understanding is inconsistent with the proposition that there was in existence a simple arrangement or understanding by which each would raise its price to the same level at or about the same time. In the event, Apco certainly went alone, between 18.00 and 18.51 on 17 November. Nothing occurred at all by way of a price increase at Liberty until very late that evening, and more likely the following day. Certainly nothing occurred at Andrianopoulos until the following day, and then its price was one cent lower than that adopted by Apco on 17 November.
833 This period lends no support to the proposition that Annexure B demonstrates the giving effect to of the alleged arrangements or understandings.
28 November 2000
834 The ACCC alleges that, on this day, effect was given to Arrangements Nos 1, 3 and 6. At 09.16, Apco telephoned Leahy for 24 seconds. Leahy did nothing immediately. Colin Williamson rang Ian Carmichael for 25 seconds at 09.50. At 09.51, Chisholm rang Leahy for 14 seconds. At 10.03, Leahy rang Chisholm for one minute and 11 seconds and at 10.05 Ian Carmichael rang Colin Williamson for 30 seconds. This was followed by a call at 10.09 from Leahy to Phil Carmichael for two minutes and 14 seconds. The ACCC submitted that this was a call cycle, but the call from Leahy to Chisholm and the call from Mr Carmichael to Mr Williamson were more likely to have been return calls. They do not appear to have had any connection with the earlier call from Apco to Leahy.
835 Apco began increasing its prices at 10.30, with Apco Geelong North moving from 89.1 to 99.5, followed by Apco Newcomb at 10.35, Apco Highton at 10.37, Apco Geelong South at 10.48 (assuming that its computer remained unadjusted for daylight saving), Apco Geelong East at 11.02 and Apco Lara (from 89.2) at 11.02. At 10.40, Mobil Geelong North increased from 89.1 to 99.5, and other Mobil sites followed suit. Chisholm’s increases began at Chisholm Geelong West at 10.57, followed by Chisholm Grovedale at 11.09 and Chisholm Leopold at 11.11. In each case, the increase was from 89.9 to 99.5. Leahy did not begin to increase until 11.35, when BP Torquay moved from 89.1 to 99.6. BP Leopold moved from 89.1 to 99.5 at 11.36, as did BP Hillford at 12.05.
836 At 10.49, there was a further call from Mr Carmichael to Mr Williamson for 30 seconds. At 10.55, Chisholm rang Jacques Bodourian for 19 seconds. The ACCC invited me to draw the inference that Chisholm was passing on a price increase. There is nothing whatsoever to support this inference. In particular, there is no prior call from Phil Carmichael to Leahy, relayed to Chisholm, that could be characterised as a complaint about the failure of 7-Eleven to increase. In any event, the 7-Eleven sites did increase to 99.5, 7-Eleven Geelong East between 11.10 and 11.36 and 7-Eleven Newcomb between 11.15 and 11.20.
837 At 13.13, Ian Carmichael rang BP Corford Express for 30 seconds. BP Corford Express increased its price to 99.5 at 14.07. By this time, most of the Brumar sites (except Shell Belmont) and Caltex Quick Bite had increased to 99.5 and Apco had begun to ease its price to 98.9, leading the market into another discounting cycle.
838 At some time during the day, Shell Victoria Street increased its price from 89.5 to 99.5. The price at Shell Waurn Ponds remained unchanged throughout the day at 89.9, and moved to 97.9 on 29 November.
839 The data in Annexure B for this day does not fit the pattern of events accompanying the implementation of Arrangement No 1 pleaded by the ACCC or suggested in the oral evidence. The time lapse from the 24-second call from Apco to Leahy at 09.16 to the first Leahy increase was more than two hours. There is no apparent call cycle, because the calls from Leahy to Chisholm and from Mr Carmichael to Mr Williamson at 10.03 and 10.05 appear to be responses to earlier calls. Leahy appears to have waited until after Apco and Chisholm had gone up, something that Mr Warner said was unusual. For it to adopt this attitude on this occasion suggests that it did not have the prior assurance by telephone of a price rise by Apco, and that it had not passed on any information about a price rise to anybody else. The fact that United Retail behaved as it did, leaving Shell Waurn Ponds at its low price throughout the day, is altogether inconsistent with the implementation of Arrangement No 6.
840 The data for this period does not support the ACCC’s contentions.
15 December 2000
841 The ACCC alleges that Arrangement No 1 was implemented, as a stand-alone arrangement, on this occasion. The relevant telephone call is said to have been from Peter Anderson to Leahy at 17.09 for one minute. At 17.14, Ian Carmichael rang Colin Williamson for 30 seconds. This is perhaps alleged to be the implementation of the provision that Mr Carmichael would notify other market participants. The Apco increases began at 17.50, with Apco Highton moving from 91.7 to 98.9, followed by Apco Geelong North at 17.51, Apco Geelong South at 17.53 (on the same assumption), Apco Lara at 18.00, Apco Newcomb at 18.15 and Apco Geelong East at 18.27. The Leahy increases were also from 91.7 to 98.9 at BP Torquay at 18.04, BP Leopold at 18.30 and BP Hillford at 18.48. Brumar sites began to join in at 18.04 with Shell Westoria, and Mobil sites at 18.07 with Mobil Geelong North. Chisholm sites also moved from 19.04 onwards and BP Corford Express at 19.40. Apco led the market down slightly to 98.7 from 18.39. United Retail did not increase at all on that day and, on the next day, increased both Shell Victoria Street and Shell Waurn Ponds to 98.7.
842 The ACCC even contended that a call recorded from Mr Anderson to Ian Carmichael for one minute and 30 seconds at 18.36 might have been a complaint call, because Leahy was slower to go up at BP Hillford than at other places. If anything, this would be inconsistent with Leahy implementing any arrangement or understanding.
843 The occurrence of a telephone call from Mr Anderson to Leahy at 17.09, followed within an hour by Apco price increases and within two hours by Leahy price increases is consistent with part of the pattern of implementation of Arrangement No 1 alleged. These rises were also apparently the first in the Geelong petrol market. It is not clear why the provision of Arrangement No 1 that Leahy would notify other market participants was not carried into effect. If the call at 17.14 from Ian Carmichael to Mr Williamson was intended to pass on price information, it had no effect whatsoever on United Retail’s behaviour. The explanation might be that both parties had confidence that a previous price increase in the Melbourne petrol market would flow into Geelong on a Friday without much effort on their behalf in any event. This seems to be confirmed by the fact that Brumar sites also began to move shortly after the Apco moves, and Chisholm’s prices also increased early in the evening, apparently without the benefit of any communication from any market participant in Geelong. On balance, it seems more probable than not that the phone call from Mr Anderson to Leahy at 17.09 was not about price, but that Apco simply led the market up, confident that others would follow because Melbourne prices had already risen. The data for this day therefore does not provide strong support for the ACCC’s contentions.
General patterns
844 Part of the process of determining whether, and to what extent, Annexure B supports the ACCC’s case by providing specific confirmation of the oral evidence is to examine not only the periods on which the ACCC chose to rely, but also the other data in Annexure B.
845 I have chosen to look at the whole two-year period in issue in this case, in order to see what Annexure B reveals about price rises by Apco and Leahy, and their temporal relationship, as well as their proximity to telephone communications between Apco and Leahy, or those on their behalf. This choice is for several reasons. Arrangement No 1 is a pivotal feature of the ACCC’s case, and its implementation is alleged on more occasions than any other alleged arrangement or understanding. The data for price rises by Apco and Leahy is more complete than the data for price rises by many competitors alleged to be parties to arrangements or understandings other than Arrangement No 1. For the times when Annexure B contains data for Chisholm’s price rises, I have also chosen to look at that data, as well as telephone calls involving Chisholm, Graeme Chisholm or Darren Campigli, in conjunction with the Leahy and Apco information, to see if it provides any clues as to the analysis of the information in the periods on which the ACCC relies. This is largely because, for the periods for which it appears in Annexure B, the Chisholm data is complete as to times of price changes. My examination of patterns to be found in the data in Annexure B therefore involves the parties to Arrangement No 1 and Arrangement No 3. Annexure B does not contain information about precise times of price increases for both (or, in the case of Arrangement No 8, all) parties to any other alleged arrangement or understanding.
846 Some general points can be made at the outset. Annexure B contains information that does not support the existence of connections between price rises and telephone calls, as well as information that does provide that support. I have already mentioned that the ACCC identified approximately 110 occasions during the 1999-2000 period on which there were increases in the price of ULP in the Geelong petrol market, of around 5.0 or more, on the part of a significant number of operators in that market. By the time of closing addresses in the case, the ACCC was not relying on anything like that number of occasions as occasions when effect was given to one or more of the arrangements or understandings alleged. As can be seen from the above examination of the occasions on which the ACCC still relies, only a handful are said to involve effect being given to the entire chain of arrangements or understandings alleged to have been in existence at the time. That is to say, in the period between January and September 1999, when United Fuels was still trading and Arrangement No 5 was alleged to exist between it and Brumar, there is no occasion on which the ACCC contends that effect was given to all of Arrangements Nos 1, 3, 4, 5, 7 and 8. Only on six occasions during 2000 does the ACCC submit that Annexure B demonstrates that effect was given to all of Arrangements Nos 1, 3, 6, 7 and 8, the arrangements or understandings alleged to have been in existence between 1 October 1999 and 31 December 2000.
847 In addition, counsel for the ACCC conceded that Annexure B shows a significant number of occasions on which a pattern of telephone calls, apparently amounting to a call cycle, occurred without there being any indication of any possible associated price rise. They identified 93 call cycles in 1999 and 80 in 2000, by reference to the following criteria: contact between the Leahy office or Ian Carmichael or Michael Warner, and Peter Anderson or the Apco head office, followed within an hour by at least two calls from the Leahy office or Ian Carmichael or Michael Warner to at least two other participants; or, without any contact between the Leahy office or Ian Carmichael or Michael Warner and Peter Anderson or the Apco head office, at least three calls by the Leahy office or Ian Carmichael or Michael Warner to other participants within an hour of the first call to a market participant. These criteria do not necessarily reflect the generality of the oral evidence as to what was a call cycle. Even so, using these criteria, in 1999, counsel for the ACCC pointed to 72 call cycles on days on which it could be said that there was a relevant price increase, 49 of which occurred during periods on which the ACCC relies as periods in which effect was given to alleged arrangements or understandings. This left 21 call cycles in 1999 not apparently associated with any price increase at all. For 2000, of the 80 call cycles identified, 58 were in circumstances in which it was possible to identify a relevant price increase, 46 of which are in periods relied on as periods when effect was given to arrangements or understandings. This leaves 22 call cycles clearly not associated with any relevant price increase.
The morning post-peak increase period: 1 January-mid-June 1999
848 In the period between 1 January and mid-June 1999, Leahy increased its prices on 27 occasions. On all but four of these occasions, the first of its price increases occurred between 09.00 and 11.00, ie in the period following the morning traffic peak. Of the four occasions when Leahy increased its prices outside this time range, three were not very far outside it. They were 26 February (11.21), 5 May (11.32) and 8 June (11.40). The other occasion on which Leahy increased its prices outside its normal time-span for this period was 3 June (19.50).
849 During the same period, Apco increased its prices 28 times. All but three of these increases occurred between 09.00 and 11.00. The three exceptions involved one increase shortly prior to that time-span, on 10 April (08.53). The other two were 28 May (16.51) and 3 June (20.09).
850 Thus, on most occasions when there were price increases during this period, Leahy and Apco increased their prices at times close to each other’s increases. There were only two occasions when Apco increased its prices and Leahy did not. These were 30 March and 28 May. There was one occasion when Leahy increased its price and Apco did not, namely 21 May. In this period, there was therefore a total of 26 occasions when both Leahy and Apco increased their prices on the same day. On those 26 occasions, Apco’s increases were earlier than Leahy’s on 17 occasions and Leahy’s increases preceded those of Apco on nine.
851 Of the 29 occasions on which one or other, or both, of Apco and Leahy increased prices in this period, on 13 of those occasions, no telephone communication between Apco and Leahy, or anyone on their behalf, is recorded in Annexure B for more than 24 hours prior to the first of the price increases. These 13 occasions are 7 January, 15 January, 12 February, 26 February, 12 March, 17 March, 23 March, 30 March, 8 April, 28 April, 27 May, 3 June and 8 June. On the other 16 occasions, it is possible to identify from Annexure B telephone communications between Apco and Leahy, or someone on their behalf, within 24 hours prior to the first of the price increases. On 10 of those 16 occasions, the last such telephone communication was on the afternoon preceding the price rise, and at least 16 hours prior to the first of the price increases. These 10 occasions are 20 January, 26 January, 17 February, 3 March, 20 March, 26 March, 1 April, 5 May, 8 May and 21 May. On one of the 16 occasions, 10 April, when the first price increase of either Apco or Leahy was at Apco Geelong East at 08.53, the only telephone communication between the two parties within the preceding 24 hours was a call from Leahy to Apco at 09.12 on 9 April, only just within 24 hours of the price increase. On the other five occasions out of the 16, there are phone calls recorded in Annexure B on the same day as the price increase. These occasions are 3 February, 23 February, 14 April, 20 April and 28 May. It will be noted that the last-mentioned of these occasions involving a telephone call on the same day as a price increase was 28 May, on which Apco increased its price but Leahy did not. Also, on 21 May, when Leahy increased its price and Apco did not, there was a telephone call on the preceding afternoon.
852 The four occasions on which the ACCC alleges that Apco and Leahy gave effect to Arrangement No 1 during this period are 20 January, 26 March, 20 April and 8 May. Of those four occasions, all involved price increases in the 09.00-11.00 time-span. Only 20 April involved a telephone call on the same morning as the price increase. On each of the other three occasions, the last telephone communication involving parties to Arrangement No 1 was more than 16 hours before the first of the price increases. Of the occasions when the price increases occurred between 09.00 and 11.00, the shortest time gap between the first Leahy rise and the first Apco rise (on the assumption that Apco Geelong South’s computer was not adjusted for daylight saving) was two minutes and the longest gap was 65 minutes. There appears to be no discernible difference in the pattern of price increases of Apco and Leahy according to whether there was a telephone call on the same day, or on the preceding day, or no telephone call at all. Nor does the behaviour of other market participants appear to have affected the pattern.
The midnight increase period: 17 June 1999-11 March 2000
853 In the course of the summary I have made above of the data in Annexure B for the periods on which the ACCC relies, I identified 20 periods in which the ACCC relied on the fact that Leahy increased its prices within approximately one hour before midnight (ie shortly before closing time) and Apco began its increases shortly before or after midnight or in the early hours of the morning. Those 20 periods are 17-18 June, 22-23 June, 5-6 July, 19-20 August, 2-3 September, 9-10 September, 13-14 September, 16-17 September, 4-5 November, 11-12 November, 3-4 December, 9-10 December, 30-31 December 1999, and 10-11 January, 18-19 February, 24-25 February, 2-3 March, 8-9 March, 10-11 March and 14-15 August 2000. In addition, the ACCC relied on a further seven periods, when it alleged the implementation of arrangements or understandings other than Arrangement No 1, in which the Leahy price rises occurred shortly before midnight. These seven periods are 8-9 July, 22-23 July, 26-27 July, 26-27 August, 30 September-1 October, 7-8 October and 18 November 1999. I have listed the dates of all of these pre-midnight Leahy rises here, in order to demonstrate that, with one exception, every one of the periods involving a Leahy price increase shortly before midnight fell between 17 June 1999 and 11 March 2000. The exception is 14-15 August 2000.
854 An examination of the data for the period between 17 June 1999 and 11 March 2000 reveals that there were three periods, not relied on by the ACCC at all, in which Leahy increased its prices shortly before midnight and Apco began its increases shortly after midnight. On 15 July 1999, at 23.46, the price at BP Hillford increased from 71.5 to 75.5. At 01.00 on 16 July, Apco increased its prices at Apco Newcomb from 71.9 to 75.5 and Apco Geelong North from 71.5 to 75.5, followed by Apco Lara from 71.5 to 75.5 at 01.45 and Apco Geelong South from 71.9 to 75.5 at 03.44. On 14 October 1999, Leahy increased its price at BP Torquay from 72.6 to 76.7 at 23.17. The time of any increase at BP Hillford is not shown, although BP Hillford, along with BP Torquay, eased from 76.7 to 76.5 on the morning of 16 October. Apco increases to 76.7 began at 23.55 on 14 October, when Apco Lara moved to that price from 71.4, followed by Apco Geelong North at 23.57, and Apco Geelong East at 00.03, Apco Highton at 01.11 and Apco Geelong South at 03.29 on 15 October, all from 71.2 to 76.7. On 22 December 1999, BP Hillford rose from 74.7 to 79.7 at 22.41. The Apco increases began at 00.51 with Apco Newcomb and Apco Geelong North, followed at 00.58 by Apco Geelong East, 01.03 by Apco Lara and 02.20 by Apco Geelong South. All were from 74.7 to 79.7, except for Apco Geelong East, which moved to 81.9. In respect of each of these periods, Annexure B shows no telephone communication between Leahy and Apco, or anyone on their behalf, during the day on which the Leahy increase occurred.
855 In addition to those three periods, regard should be had to some possibly comparable examples. On 13 August 1999, Leahy increased its price at BP Hillford from 72.7 to 77.5 at 23.23. The first Apco increase was Apco Geelong South at 08.13 on 14 August, followed by Apco Newcomb at 08.18, Apco Geelong North at 08.44, Apco Geelong East at 09.17, Apco Lara at 09.23 and Apco Highton at 09.42. All moved from 72.3 to 77.5. Annexure B records a telephone call for one minute and 27 seconds from Leahy to Apco at 16.32 on 13 August. On 26 November 1999, at 23.29 and 23.39 respectively, Leahy increased its prices at BP Torquay from 72.9 to 79.7 and at BP Hillford from 70.9 to 79.7. There appears to have been an absence of data relating to Apco price changes on 25 and 26 November, so it is not possible to tell when Apco increased, although decreases from 78.9 to 77.9 are shown late in the day on 28 November. There were seven telephone calls between Leahy and Apco during 26 November, six of them initiated by Leahy, five of which were to the Apco office and one to Mr Anderson, and one initiated by Mr Anderson to the Leahy office. The last of these calls was at 16.12.
856 The point of referring to these periods is to demonstrate that, between 17 June 1999 and 11 March 2000, Leahy frequently increased its prices shortly before midnight. In that time-span, Leahy increased its price for ULP on 46 occasions. Annexure B shows only 15 occasions when Leahy increased its prices otherwise than shortly before midnight. These are 30 June, 14 July, 30 July, 10 August, 21 September, 24 September, 26 October and 30 December 1999, and 5 January, 20 January, 1 February, 10 February, 18 February, 8 March and 10 March 2000. Of these 15 non-midnight price increases by Leahy, 12 fell within periods relied on by the ACCC as periods when effect was given to one or more arrangements or understandings to which Leahy was alleged to be a party. Those occasions are 30 June, 30 July, 21 September, 24 September, 26 October and 30 December 1999, and 5 January, 1 February, 10 February, 18 February, 8 March and 10 March 2000. I have dealt with these 12 periods in detail above (without finding that any of them provides clear support for the ACCC’s case). On seven out of these 12 occasions (30 December 1999, and 5 January, 1 February, 10 February, 18 February, 8 March and 10 March 2000), the only price increase by Leahy not close to midnight was at BP Leopold, where Mr Warner sometimes raised the price considerably earlier than he raised the prices at other Leahy outlets, either because it sold very little volume of petrol during the evening peak hour, or because he wished to take advantage of what he perceived to be opportunities to increase the retail margin. On these seven occasions, the ACCC relied on the fact that increases occurred at other Leahy outlets shortly prior to midnight. 20 January 2000, on which the ACCC did not rely, also involved an early increase by Leahy at BP Leopold, at 17.43, with a much later increase at BP Hillford at 23.00 that night. The five other occasions (on two of which the ACCC did not rely) on which Leahy raised its prices other than shortly prior to midnight, during what I have called the midnight increase period, all involved relatively small increases. They were 14 July (3.8), 30 July (0.8), 10 August (1.8), 21 September (1.8) and 24 September 1999 (3.3).
857 Within the midnight increase period, between 17 June 1999 and 11 March 2000, with the exception of five relatively small increases, eight increases that were early at BP Leopold and otherwise near midnight, and one other exception, every one of the price increases by Leahy occurred shortly prior to midnight. There were 31 Leahy increases at or near midnight, plus another eight occasions on which the only Leahy increases not close to midnight were at BP Leopold, a total of 39. The ACCC alleges that effect was given to one or more arrangements or understandings on 31 of these occasions, leaving eight occasions on which no such allegation is made. The increases appear to have occurred shortly prior to midnight irrespective of the presence or absence of telephone communications with any other market participant, and irrespective of what other market participants did in relation to their prices, or when they did it. They occurred shortly prior to midnight on occasions when the ACCC alleges that they involved giving effect to arrangements or understandings, and on occasions when the ACCC makes no such allegation. Price rises shortly prior to midnight are a consistent feature of Leahy’s behaviour during that time. After 11 March 2000, so far as Annexure B shows, Leahy abandoned the practice of increasing shortly prior to midnight completely. With the sole exception to which I have referred, 14 August 2000, Leahy never engaged in a price increase shortly prior to midnight on any day between 12 March 2000 and the end of 2000. There was no explanation sought, or given, for Leahy’s adoption from 17 June 1999 onwards of a practice of making its price increases shortly prior to midnight, or its abandonment of that practice after 11 March 2000.
858 In what I have called the midnight increase period, Apco also increased its prices on a number of occasions close to midnight. Between 17 June 1999 and 11 March 2000, there were 38 periods when Apco is recorded in Annexure B as having increased its price for ULP in Geelong. The increases were usually spread over a few hours among its various outlets, but the first increase occurred shortly before, at, or shortly after midnight on 32 of these 38 occasions. The first increase was shortly prior to midnight on 22 June, 5 July, 29 July, 9 August, 26 August, 9 September, 13 September, 16 September, 30 September, 14 October, 4 November and 30 December 1999, and 5 January, 10 January, 20 January and 1 February 2000. The earliest time before midnight at which such an increase occurred was 22.49 on 20 January 2000. The first Apco increase occurred precisely at midnight on 11-12 November 1999. The first increase was shortly after midnight on 16 July, 23 July, 20 August, 3 September, 24 September, 8 October, 4 December, 10 December, 17 December and 23 December 1999, and 19 February, 25 February, 3 March, 9 March and 11 March 2000. The latest time for such an increase was 01.51 on each of 9 March and 11 March 2000. All of the other post-midnight increases by Apco to which I have referred were within one hour of midnight. In addition, there were increases by Apco shortly after midnight on both 17 and 18 June 1999, but that was a highly unusual period, in which Annexure B shows that Apco increases were spread over almost 48 hours (see the details in [369] – [372]). Therefore I have not included either day as a first increase close to midnight. Of the 32 occasions on which Apco increased close to midnight during the midnight increase period, there are 10 on which the ACCC does not allege that the increases concerned were part of the giving effect to of any arrangement or understanding to which Apco is alleged to be a party. These are 16 July, 23 July, 29 July, 9 August, 26 August, 30 September, 14 October, 17 December and 23 December 1999 and 20 January 2000. On 8 October 1999, Apco’s increase is alleged to have been by way of giving effect to Arrangement No 8 only. The other 21 occasions, on which the ACCC does allege that Apco gave effect to Arrangement No 1, or to both Arrangement No 1 and Arrangement No 8, are dealt with in detail above.
859 Besides 17 and 18 June, there were five occasions when Apco increased its price during the midnight increase period on which the first increase did not occur close to midnight. There were first increases by Apco at 05.27 on 30 June, 08.13 on 14 August, 10.49 on 21 September, and 15.00 on 26 October 1999, and 10.11 on 11 February 2000. Of these, 30 June, 21 September and 11 February are occasions on which the ACCC alleges that Apco gave effect to one or both of the arrangements or understandings to which it is alleged to be a party, and 14 August and 26 October are not such occasions.
860 Thus, it appears that, like Leahy, Apco had a practice of raising its prices close to midnight during the period that I have characterised as the midnight increase period. The increases took place at that time irrespective of whether there had been telephone communications between Apco and other parties to Arrangement No 1 or Arrangement No 8, and irrespective of whether competitors did, or did not, raise their prices. Like Leahy, Apco is recorded in Annexure B only once raising its price close to midnight outside the period between 17 June 1999 and 11 March 2000. That one occasion was at 00.05 on 15 August 2000. There is no explanation in the evidence as to why Apco adopted the practice of midnight increases during the midnight increase period, and then abandoned that practice.
861 For most of the midnight increase period, Annexure B contains details of the times of Chisholm’s price rises. It is interesting to look at what Chisholm did in the midnight increase period, because its outlets all closed by 22.00 at the latest. Between 5 July 1999 and 10 March 2000, Annexure B records 43 periods when Chisholm increased its prices of ULP. All but five of these can be seen to fall within three distinct ranges. The largest number, 15, were within the early evening range of 19.56-20.17, ie around the closing time for most Chisholm outlets in the non-summer months, which was 20.00 (except for Chisholm Geelong West, which closed at 22.00, and Chisholm Corio, which closed at 19.00, all year round). The occasions within the early evening range were 5 July, 8 July, 13 July, 15 July, 22 July, 5 August, 13 August, 19 August, 26 August, 9 September, 16 September, 24 September, 27 September, 30 September and 7 October 1999. Of these, five (13 July, 15 July, 5 August, 13 August and 9 September) are not the subject of allegations that Chisholm gave effect to Arrangement No 3. From the beginning of November 1999, it appears that closing time was at 22.00 for most of the Chisholm outlets. There are 12 occasions when the first price increase occurred within the late evening range, 20.51-21.58. They are 26 July, 4 November, 11 November, 18 November, 26 November, 3 December, 9 December, 16 December, 22 December and 30 December 1999, and 1 February and 10 March 2000. Of these, three (26 November, 16 December and 22 December 1999) are not the subject of allegations of giving effect to Arrangement No 3. The other distinct time range is the morning range 07.16-08.10, at least an hour after opening time for the Chisholm outlets, which opened at 06.00, except for Chisholm Corio, which opened at 07.00. The 12 occasions on which Chisholm’s first price rise occurred within the morning range are distributed throughout the midnight increase period. They are 30 July, 10 August, 3 September, 14 September and 15 October 1999, and 6 January, 11 January, 21 January, 11 February, 19 February, 25 February and 9 March 2000. Of them, four (10 August, 15 October, 11 January and 21 January) are not the subject of allegations that Chisholm gave effect to Arrangement No 3. The four Chisholm increases when the price did not fall within the early evening range, the late evening range or the morning range are 3 August (09.20, more than an hour after the morning range), 21 September (11.05), 26 October (16.29) and 3 March (06.13, shortly after opening). Of these, only 3 August is not alleged to have been a day when Chisholm gave effect to Arrangement No 3.
862 In the midnight increase period, therefore, Chisholm was a great deal less consistent than either Leahy or Apco in the timing of its price increases. The increases within the three ranges seem to have occurred irrespective of whether there were telephone calls from Leahy, or anyone on its behalf, to Chisholm, or anyone on its behalf. In relation to the periods when the ACCC does allege that Chisholm gave effect to Arrangement No 3, the ACCC’s view is often that a Chisholm increase in any of the three ranges can be said to have been at about the same time as an increase by Leahy shortly before midnight. My analysis of the data in Annexure B in respect of Chisholm increases during the midnight increase period suggests that their timing was entirely independent of Leahy increases, except in the sense that the increases by both Leahy and Chisholm might have been associated with general increases in the Geelong petrol market.
The daytime increase period: 12 March-31 December 2000
863 In the period between 12 March and 31 December 2000, there were 38 occasions when Leahy increased its prices of ULP. On all but five of these occasions, the first Leahy increases occurred earlier than 18.00. There was only one increase close to midnight, on 14 August. On all but two of the occasions, the first price increases were later than 09.00. I have therefore called this period the daytime increase period. Predominantly, Leahy’s price increases were scattered throughout the day. Apco increased its prices on 36 occasions during the daytime increase period. All but four of its first increases were earlier than 18.00 (one of the four was at 18.00 and another, on 15 August, was shortly after midnight), and only one was earlier than 09.00. Chisholm’s increases during the daytime increase period, which occurred on 38 occasions, tended to be later than those of Leahy and Apco. Seven of Chisholm’s first increases occurred after 18.00 and three before 09.00.
864 During the daytime increase period, there were six occasions when Leahy, Apco and Chisholm all made their first increases within one hour. These were 24 March, 14 April, 10 May, 23 August, 29 August and 25 September 2000. On four of these occasions, Leahy was first to increase, with Apco and Chisholm being first on one occasion each. The first four of these are occasions on which the ACCC alleges that effect was given to Arrangements Nos 1 and 3. No such allegation is made as to 29 August, when Leahy increased first and the first increases were all within 35 minutes, or as to 25 September, when Chisholm increased first, and the first increases all took place within 23 minutes, with Leahy and Apco only one minute apart. There were a further 15 occasions when the first increases of two out of the three (Leahy, Apco and Chisholm) occurred within one hour, with the third following not more than two hours after the first. These are 31 March, 28 April, 3 May, 19 May, 7 July, 14 July, 18 August, 8 September, 15 September, 22 September, 27 October, 10 November, 28 November, 8 December and 15 December. In respect of seven of these occasions (28 April, 3 May, 18 August, 15 September, 22 September, 10 November and 8 December), the ACCC makes no allegation of the giving effect to of any arrangement or understanding. There are seven occasions when the first increases of Leahy and Apco occur within one hour, but Chisholm’s increase is beyond two hours after the first of those increases. They are 15 June, 28 June, 31 July, 10 August, 14-15 August (the only midnight increase in the daytime increase period, when Chisholm’s first increase did not occur until 08.22 on 15 August), 17 November and 21 December. Of these, four (28 June, 31 July, 10 August and 21 December) are not the subject of any giving effect allegation. There are four occasions when the first increases of two out of Leahy, Apco and Chisholm occurred within one hour, but the other increased earlier than, but within two hours of, those two. They are 20 April (Leahy first, Apco five minutes after Chisholm), 26 May (Leahy first, Chisholm two minutes after Apco), 7 June (Leahy first) and 3 November (Apco first, Leahy five minutes after Chisholm). All are alleged by the ACCC to be giving effect to days.
865 A few occasions in the daytime increase period need to be dealt with more specifically. On 25 May, Leahy’s first increase followed Chisholm’s by seven minutes, but there was no increase by Apco at all. The ACCC does not allege that effect was given to Arrangement No 3 on that day. 3-4 October involved two sets of increases, one on each day. Apco increased its price at Apco Geelong East at 15.10 on 3 October, followed by Leahy’s first increase at 15.32 and Chisholm’s first increase at 16.20. Chisholm and Leahy both dropped back, starting at 17.05 and 17.13 respectively. On the morning of 4 October, Leahy’s first increase was at 09.47, with Apco’s remaining outlets beginning to go up from 09.57, but Chisholm holding off until 11.59. The ACCC makes no allegation about 3 October, but alleges that effect was given to Arrangement No 3 on 4 October. On 10 October, Chisholm attempted an early increase from 08.27, but abandoned it over the next half-hour. Leahy’s first increase was at 09.54 and Apco’s at 10.16 on that day. Chisholm finally began going up again at 11.45. The ACCC makes no allegation about this occasion. On 19 October, Leahy’s and Chisholm’s first increases were 58 minutes apart, but Apco had begun increasing more than seven hours earlier. The ACCC alleges that Leahy and Chisholm were giving effect to Arrangement No 3 on that day. Finally, 29 December is the only occasion during the daytime increase period when it can be said that no two of Leahy, Apco and Chisholm made their first increases close together in time. Leahy’s was at 17.38, Apco’s at 19.27 and Chisholm’s at 20.54. The ACCC makes no allegation about this day.
866 During the daytime increase period, there were 10 occasions when Leahy’s first increases and Apco’s first increases were to the same amount and were within one hour, but the ACCC does not allege the giving effect to of Arrangement No 1. These occasions are 28 April, 28 June, 10 August, 18 August, 29 August, 15 September, 22 September, 10 October, 10 November and 21 December. In addition, on 3 May, Leahy’s first increase was at 12.00, to 86.5. Apco’s first increase was at 12.30, to 85.5. One hour and 15 minutes after Apco’s first increase, at 13.45, Leahy began to decrease its price to 85.5. The ACCC does not allege the giving effect to of Arrangement No 1 on 3 May. Of those 11 occasions, there were five on which no telephone communication is recorded in Annexure B between Leahy and Apco or anyone on their behalf in the 24 hours preceding a price increase. Those occasions are 3 May, 18 August, 29 August, 15 September and 10 October. As with the similar occasions in the first half of 1999, on some of these 11 occasions Leahy increased its prices first and on others Apco did so. On some of these occasions, other market participants had already increased their prices and on others Leahy or Apco was the first to go up.
867 Similarly, during the daytime increase period, there were seven occasions when Leahy’s first increases and Chisholm’s first increases were within one hour, but the ACCC makes no allegation of the giving effect to of Arrangement No 3. They are 25 May, 18 August, 29 August, 22 September, 25 September, 3 October and 8 December. In respect of only one of these, 29 August, Annexure B records no telephone communication between Leahy and Chisholm, or anyone on their behalf, in the 24 hours preceding the first of the price increases.
Annexure B generally
868 An overall examination of the data in Annexure B relating to price rises by Leahy and Apco and, when they are available, Chisholm, shows a correlation between those rises, both as to price and time, that does not appear to bear any relationship to the occurrence or non-occurrence of telephone communications between them or to the behaviour of other competitors. For almost the first six months of the relevant two years, the morning post-peak increase period, both Leahy and Apco had a practice of increasing their prices in the morning increase period. For the next nine months, the midnight increase period, both had a practice of increasing their prices at around midnight. During the remainder of the two years, the daytime increase period, when neither of these practices appears to have been in operation, the prices of both still seemed to move in a parallel way.
869 These conclusions make it all the more difficult to rely on what might otherwise have been inferences drawn from Annexure B in the periods on which the ACCC relied, that correlations in time between telephone calls and price increases meant that the former were the cause of the decisions to make the latter. In fact, the presence or absence of telephone communications seems to have made remarkably little difference to the behaviour of Leahy, Apco and Chisholm in relation to prices.
The admissions
Leahy, Ian Carmichael and Michael Warner
870 In their defences filed in the proceeding, each of Leahy (while it was still in existence), Ian Carmichael and Michael Warner made a number of admissions. So far as these admissions concern conduct by Leahy, as a party to various alleged arrangements or understandings, no difficulty arises in the application of s 87(1)(a) or (b) of the Evidence Act. The admissions made by Leahy are identical with those made by Mr Carmichael and Mr Warner, so it is unnecessary to discuss the extent of the authority of Mr Carmichael and Mr Warner to make admissions on behalf of Leahy, or to determine whether the admissions they made fell within the scope of their employment or authority.
871 Leahy’s defence was filed on 4 February 2004, Mr Warner’s on 11 February 2004 and Mr Carmichael’s on 18 February 2004. At the time, the statement of claim in the proceeding was still in the form in which it had been filed at the commencement of the proceeding, on 7 November 2003. Importantly, par 41 of the statement of claim pleaded the existence of Arrangement No 1.
872 Paragraph 42 contained the allegations of the giving effect to of Arrangement No 1. The particulars to par 42 referred to Annexure B in its original form, alleging that ‘On or about each of the dates shaded in’ Annexure B, Mr Carmichael or Mr Warner on behalf of Leahy made or arranged for the making of telephone calls to, or received telephone calls from, some or all of various other market participants listed in the particulars, and that, ‘On or about each of those days,’ the retail prices of ULP at sites at which the ‘Market Participants’ supplied ULP for sale to the public increased to the same or about the same amount within a short period of the telephone call or calls between such ‘Market Participants’. The phrase ‘Market Participants’ was defined in par 38 to include the original eight corporate respondents to this proceeding, as well as the operators of Mobil outlets in Geelong, Chisholm, 7-Eleven, Gordon Primmer, United Convenience, Mortimer Petroleum and Expotech (the operator of BP Corford Express). As I have said in [319], at that time, Annexure B designated 108 periods, covering all or parts of 296 days in 1999 and 2000, alleged to be periods in which effect was given to one or more of the alleged arrangements or understandings. In its final form, Annexure B designates 63 periods, covering 108 days in the same two years, as giving effect to periods.
873 The defences of Leahy, Mr Carmichael and Mr Warner did not respond directly to the particulars, of course. In response to par 42 of the statement of claim, each admitted that effect was given to an understanding (but not an arrangement) ‘between 1 January 1999 and 31 December 2000’. If these admissions were to be taken as admissions that, on each of the occasions then included in the shaded periods in the original Annexure B, effect was given to Arrangement No 1, they would be manifestly unreliable admissions. If they are not taken to be admissions as to the giving of effect to Arrangement No 1 on any specific occasion, then plainly it remained for the ACCC to establish at the trial, otherwise than by means of the general admissions, the dates on which effect was given to Arrangement No 1. With this example in mind, I turn to the defences of Leahy, Mr Carmichael and Mr Warner themselves, to ascertain exactly what was admitted.
874 In response to par 41 of the statement of claim, each admitted that, between January 1999 and 31 December 2000, there existed an understanding between Mr Carmichael and Mr Warner on behalf of Leahy and Peter Anderson on behalf of Apco, containing the provision to the effect alleged in par 41(c) of the statement of claim. The provision alleged in par 41(c) was that Leahy and Apco:
‘between them would advise or cause to be advised some or all of the Market Participants other than themselves of the amount and timing of the proposed increases (whether by means of the arrangements or understandings referred to in paragraphs 43 to 56 below or otherwise), each knowing and intending that such other Market Participants would in the ordinary course be likely, upon being so advised, to increase their prices at or about the advised time to prices the same or about the same as the advised prices’.
875 Each of Leahy, Mr Carmichael and Mr Warner also admitted further provisions of the admitted understanding, namely:
· a provision to the effect that, in the ordinary course, Apco and Leahy would advise each other of the amount and timing of proposed increases in the retail price of ULP and Super to be charged at Leahy and Apco sites respectively, each knowing and intending that the other would in the ordinary course be likely, upon being so advised, to increase its prices at or about the advised time to prices the same or about the same as the advised prices; and
· a provision to the effect that Mr Carmichael or Mr Warner on behalf of Leahy, if some of the Market Participants had at or shortly after the advised time failed to increase the retail prices for ULP and Super at their respective sites to prices the same or about the same as the advised prices, would use their best endeavours to ensure that such Market Participants were advised of the fact of the increase of the retail price of ULP and Super being charged at Leahy sites, knowing and intending that such other Market Participants would in the ordinary course be likely, upon being so advised, to increase their prices at or about the advised time to prices the same or about the same as the advised prices.
876 Each of the defences expressly confined the term ‘Market Participants’ to mean only United Fuels (until about October 1999), United Retail (since about October 1999), Andrianopoulos, Chisholm, Mortimer Petroleum, Expotech, Balgee (until about early 1997) and Levicks (until 1998). These were defined as ‘Involved Suppliers’. Save for the admissions, the allegations in par 41 of the statement of claim were denied.
877 As to the allegations that effect was given to Arrangement No 1, made in par 42 of the statement of claim, Leahy, Mr Carmichael and Mr Warner all admitted that Mr Carmichael, Mr Warner and Mr Anderson gave effect to the understanding they had admitted by:
- discussing with each other the amount and timing of proposed increases in the retail prices of petroleum products to be charged at Leahy sites and Apco sites;
- between them advising the Involved Suppliers of their intention to increase retail prices of petroleum products to be charged at Leahy sites and Apco sites and the amount and timing of the proposed increases;
- increasing the retail prices of petroleum products at Leahy sites and Apco sites in accordance with these discussions; and
- on some occasions, if contacted by a Leahy site or by an Involved Supplier and informed that a retail site had not increased its prices, contacting the relevant Involved Supplier and informing it that the relevant site had not increased its prices.
878 Otherwise the allegations in par 42 were not admitted.
879 Arrangement No 3 was pleaded in par 45 of the statement of claim. In response to the allegation, Leahy, Mr Carmichael and Mr Warner each admitted that, between January 1999 and 31 December 2000, there existed an understanding between Mr Carmichael and Mr Warner on behalf of Leahy and Darren Campigli and Graeme Chisholm on behalf of Chisholm, containing a provision to the effect that Leahy and Chisholm would advise each other of the amount and timing of proposed increases in the retail price of ULP and Super to be charged at Leahy sites and Chisholm sites respectively, each knowing and intending that:
- Leahy or Chisholm or other Involved Suppliers would advise some or all of the Involved Suppliers other than Leahy and Chisholm of the amount and timing of the proposed increases;
- such other Involved Suppliers would in the ordinary course be likely, upon being so advised, to increase their prices at or about the advised time to prices the same or about the same as the advised prices; and
- Leahy and Chisholm respectively would in the ordinary course be likely, upon being so advised, to increase their prices at or about the advised time to prices the same or about the same as the advised prices.
880 Otherwise, the allegations in par 45 of the statement of claim were denied.
881 As to the allegations that effect was given to Arrangement No 3, each of Leahy, Mr Carmichael and Mr Warner admitted that, during the period from 1 January 1999 to 31 December 2000, effect was given to the admitted understanding by Mr Carmichael or Mr Warner, or Mr Campigli or Mr Chisholm, advising of the amount and timing of proposed increases to the retail price of ULP and Super at Leahy sites or Chisholm sites respectively and by causing such changes to be made. Otherwise, the allegations in par 46 of the statement of claim (of the giving effect to of Arrangement No 3) were denied. The effect of these admissions was to leave it unclear on how many, or which, occasions during the relevant period effect was given to Arrangement No 3. At the time, the statement of claim referred to Annexure B, but the only reference to dates in the particulars to par 46 was ‘On or about certain of the dates shaded’. In other words, the allegation itself was non-specific. Interestingly, although there was an admission that the admitted understanding contained a provision about advising other Involved Suppliers, there was no admission that effect was ever given to that provision. It is clear that the ACCC was left with the task of proving on which occasions effect was given to Arrangement No 3.
882 The admissions with respect to Arrangements Nos 4 and 6 followed the same pattern as those in relation to Arrangement No 3. It is unnecessary to detail those admissions further for present purposes.
883 As to Arrangement No 7, Leahy, Mr Carmichael and Mr Warner made an admission in a very limited form. They admitted that, at or about the time that BP Meredith ceased to be a Leahy commission site in December 1999, Gordon Primmer requested that Leahy inform him when it increased its retail prices for petroleum products at Leahy sites and that, from time to time, Mr Carmichael and Mr Warner did so. Otherwise, the allegations in par 53 of the statement of claim, in which the existence and provisions of Arrangement No 7 were pleaded, were denied. So were the allegations that effect was given to Arrangement No 7, save for the admission that, from time to time, Leahy advised Mr Primmer when it increased its retail prices for petroleum products.
884 In response to the formal pleadings relying on s 45(2)(a)(ii) and s 45A(1) of the Trade Practices Act, Leahy, Mr Carmichael and Mr Warner all admitted that the provisions of the arrangements or understandings they had admitted:
- had the purpose, or had or were likely to have the effect, of fixing or controlling or providing for the fixing or controlling of the prices for ULP and Super supplied by the parties to the respective understandings; and
- were deemed to have the purpose, or to have or be likely to have the effect, of substantially lessening competition in the retail markets for ULP and Super in the Geelong area.
885 They also admitted that, by engaging in their admitted conduct, Leahy arrived at an understanding or understandings, a provision or provisions of which had the purpose, or had or were likely to have the effect, of substantially lessening competition in the retail markets for ULP and Super in the Geelong area. Otherwise, allegations of contravention were denied. All three admitted that, by engaging in their admitted conduct, Leahy gave effect to a provision or provisions of an understanding which had the purpose, or had or were likely to have the effect, of substantially lessening competition. Each of Mr Carmichael and Mr Warner admitted that he was directly or indirectly knowingly concerned in or party to the respective contraventions by Leahy that were admitted.
Eino Heikkila
886 Mr Heikkila’s amended defence, in which he effectively admitted the allegations made against United Fuels, and his own involvement in them, was filed on 15 April 2004. In its own defence, United Fuels denied all of the material allegations against it. A question therefore arises whether Mr Heikkila’s admissions in his defence are admissible in evidence against United Fuels. It is clear that neither s 87(1)(a) nor s 87(1)(b) of the Evidence Act makes those admissions admissible evidence against United Fuels. The defence was filed well after any time at which Mr Heikkila had authority to make statements on behalf of United Fuels, and well after he had ceased to be an employee and a director of United Fuels or to have any authority to act for United Fuels. Nor can the admissions be admissible against United Fuels under s 87(1)(c). They were made after the event, in a pleading, at a time when there was no possibility that Mr Heikkila and United Fuels were any longer acting in the furtherance of a common purpose. Accordingly, the admissions are admissible against Mr Heikkila only. They cannot be used by the ACCC to assist in proving its case against United Fuels.
887 As I have said, Mr Heikkila’s defence simply admits the allegations made against him in the statement of claim in its original form. The admissions are all subject to the qualification that the defence asserts that United Fuels generally increased its fuel prices after Leahy had increased its prices.
888 In pleading the existence of Arrangement No 4, par 47 of the statement of claim alleged that, ‘At a time or times unknown to the Applicant but not before 1992,’ Mr Carmichael and/or Mr Warner on behalf of Leahy and Mr Heikkila on behalf of United Fuels:
‘made an arrangement or arrangements, alternatively arrived at an understanding or understandings, containing provisions including provisions that:
(a) Leahy would advise United Fuels of the amount and timing of proposed increases in the retail price of ULP and Super to be charged at Leahy Sites, each knowing or intending that:
(i) Leahy or other Market Participants would advise some or all of the Market Participants other than Leahy and United Fuels of the amount and timing of the proposed increases;
(ii) such other Market Participants would in the ordinary course be likely, upon being so advised, to increase their prices at or about the advised time to prices the same or about the same as the advised prices;
(b) United Fuels would advise Brumar of the amount and timing of the proposed increases;
(c) Leahy and United Fuels would at or about the advised time, increase the retail prices for ULP and Super at Leahy Sites and United Fuels Company Sites and the United Fuels Commission Sites (“United Fuels Sites”) to prices the same or about the same as the advised prices.’
889 The bald admissions (subject to the qualification to which I have already referred) in Mr Heikkila’s defence do nothing to clarify the time at which he concedes Arrangement No 4 to have come into existence. Nor do they choose among the alternatives offered in par 47 (‘arrangement or arrangements’, ‘alternatively arrived at an understanding or understandings’). They must therefore be taken to be admissions of whatever of these alternatives the ACCC is capable of establishing by evidence, if any. Similarly, as to Arrangement No 5, par 49 of the statement of claim pleaded a time or times unknown, and contained similar alternative pleadings. Again, the bald admission (subject to the qualification to which I have referred) does not indicate anything as to a time conceded for the origin of Arrangement No 5, or resolve any of the choices inherent in the alternatives.
890 The allegations of giving effect to Arrangements Nos 4 and 5 are pleaded in pars 48 and 50 of the original statement of claim respectively. The particulars then merely referred to ‘certain of the dates shaded’ in the original version of Annexure B. The admissions of those allegations in Mr Heikkila’s defence, which are also subject to the qualification about United Fuels having generally increased its fuel prices after Leahy increased its prices, do not therefore amount to admissions that effect was given to either Arrangement No 4 or Arrangement No 5 on any particular date. Insofar as pars 57, 58 and 59 of the original statement of claim contain allegations as to the purpose and likely effect of provisions in arrangements or understandings, against him and United Fuels, Mr Heikkila admits those allegations. Similarly, relevant allegations about Mr Heikkila being a person directly or indirectly knowingly concerned in or party to the contraventions by the corporate respondents are also admitted.
Liberty and Alan Shuvaly
891 The other respondents to file admitting defences are Liberty and Alan Shuvaly. Mr Shuvaly’s defence was filed on 30 April 2004, and Liberty’s on 4 May 2004. In substance, the admissions they made are the same, so it is unnecessary to be concerned as to whether Mr Shuvaly’s admissions are also admissions by Liberty, pursuant to s 87(1) of the Evidence Act. Because the admissions by Liberty and Mr Shuvaly were made in pleadings, well after any time at which Liberty and Mr Shuvaly are alleged to have been giving effect to any purpose common to them and any of Apco, Peter Anderson, Andrianopoulos or Chris Andrianoploulos, those admissions are not admissible under s 87(1)(c) of the Evidence Act against Apco, Peter Anderson, Andrianopoulos or Chris Andrianopoulos.
892 Both Liberty and Mr Shuvaly admitted the allegations in par 55 of the statement of claim, in which the ACCC pleaded the existence of Arrangement No 8. Liberty expressly admitted the alternatives as pleaded (‘arrangement or arrangements, alternatively...an understanding or understandings). Mr Shuvaly simply admitted all of the allegations in par 55, necessarily including the alternatives. As to the allegations that effect was given to Arrangement No 8, each of Liberty and Mr Shuvaly simply admitted the allegations in par 56 of the statement of claim. At that time, the particulars to par 56 referred to ‘certain of the dates shaded’ in Annexure B. Each of Liberty and Mr Shuvaly also admitted all of the purpose or likely effect allegations, and the allegation of giving effect to a provision or provisions of an arrangement or understanding in contravention of s 45(2)(b)(ii) of the Trade Practices Act. Mr Shuvaly also admitted that he was a person directly or indirectly knowingly concerned in, or party to, any contraventions by Liberty of s 45(2)(a)(ii) of the Trade Practices Act referred to in par 59 of the statement of claim. Again, these admissions are riddled with alternatives.
893 It is worth noting that Liberty’s defence, whilst expressly admitting most of par 55 of the statement of claim, did not refer to the allegation in that paragraph that the alleged arrangement or arrangements, or understanding or understandings, were made ‘At a time or times unknown to the Applicant but not before May 1998’. Counsel for the ACCC submitted that, because of the absence of a specific denial of this allegation, it was deemed to be admitted pursuant to O 11 r 13 of the Federal Court Rules. Having regard to the fact that the substance of the allegations in par 55 is admitted (subject to the problem of the alternatives pleaded), and the time is not denied, this submission is good. There remains a question whether the Court should rely on the deemed admission, in the light of the failure of the ACCC to explore with Mr Shuvaly when he was in the witness box, and to lead any other evidence of, the origin of Arrangement No 8.
Out of court admissions
894 As part of its case, the ACCC tendered a lever-arch folder containing: notes of an interview of Peter Anderson by two ACCC officers on 2 October 2001; three transcripts of examinations under s 155 of the Trade Practices Act of Mr Anderson on 14 March 2002, 24 April 2002 and 10 June 2003 respectively; extracts from the transcript of the examination under s 155 of Chris Andrianopoulos on 9 May 2002; and a transcript of a record of interview between two ACCC officers and Colin Williamson, conducted at the Geelong Police Station on 18 April 2002. In all, there were 471 pages of material in this folder. In final submissions, reference was made to some 36 pages of this material. There was no reference at all to what Mr Andrianopoulos said. A passing reference was made in oral submissions to some of what Mr Williamson said about the procedure for filling in returns from United Retail’s outlets, from which some of the material in Annexure B was derived. In oral submissions, counsel for the ACCC also referred to six answers given by Mr Williamson in his interview, all involving denials. Counsel for the ACCC invited me to find that these were false denials, on the basis of the oral evidence of Ian Carmichael and Michael Warner, for the purpose of seeking to rely on the false denials as evidence of a consciousness of guilt on the part of Mr Williamson. Of the references made to 36 or so pages of questioning of Mr Anderson, out of 297 pages, only seven pages concerned admissions. In relation to Mr Andrianopoulos, Mr Anderson said:
‘Melbourne, we have got some services [sic] stations in, right, and Chris has a number of services [sic] stations in Melbourne and he had a bit more knowledge about what is going on in the market…When something funny has happened in the market I would ring him and say, is that right, this has happened in that area on the way down? And he would say, “Yes.” Or I might ring him and say, “What has happened down there?” And sometimes a slip of the tongue, whatever it may be, you may mention a price, right, you try not to and you try to keep yourself, particularly now, a lot more vigilant about what you are saying and it is just because of a friendship. But if you think that by talking to Chris Adrianopoulos [sic] I am going to affect the price in Geelong, you have got a rude shock coming because Chris will tell you where to go, in no uncertain terms…And he won’t mince his words. And we have discussed the market in general and we have been able to get information, the same as Chris has wanted information out at Geelong.’
895 In relation to Liberty and Alan Shuvaly, Mr Anderson said that he spoke with Mr Shuvaly about ‘market information’. The following questions by counsel assisting the ACCC were then asked, and the following answers given:
‘MR McLEISH: What do you mean by market information?
MR ANDERSON: What is Shell on, what is Mobil on, what is BP on, what is Caltex on.
MR McLEISH: So really using him as a source of information about where the rest of the market is?
MR ANDERSON: Yes, and the same as he would have been using me, market information in Geelong. You have got to remember I am in the Geelong market.
MR McLEISH: And you feel obviously you could trust Mr Shuvaly to give you that information?
MR ANDERSON: Yes. You soon find out if it is wrong.
...
MR ANDERSON: What has happened, and I tried to explain it to you, is I might give him the information out of Geelong what the market is on, whether Caltex has moved, whether BP has moved, what price they are on at the time.
MR McLEISH: And what price Apco is on presumably?
MR ANDERSON: He may have asked me what Apco was on at the time.
MR McLEISH: You would have told him what Apco was on?
MR ANDERSON: Probably would have. Yes, I am on X; end of story.
MR McLEISH: You are both talking about the Geelong market in these sorts of conversations?
MR ANDERSON: Yes. Then he would do what he likes with the information.
MR McLEISH: That might account for why some of these calls are pretty short, I take it?
MR ANDERSON: Could be.’
896 Mr Anderson was asked about conversations with Adam Jacobs, whom he described as a salesman with Liberty, and conceded that he might have had ‘similar types of conversations as I said with Alan Shuvaly.’ He then went on to say, ‘And I might add market information only, what is out there.’ Subsequently, Mr Anderson said that he may have had conversations with Liberty about where the market was at the time. The questions and answers continued:
‘MR ANDERSON: Yes, I may have. Maybe a market information call, what’s the prices in Melbourne, because I had maybe heard something was moving down there, so I have made a call to find out.
MR McLEISH: Could be a call to find out where the prices are currently in Geelong?
MR ANDERSON: Yes. There may be – that information may have passed, that the prices currently in Geelong are X, Y, Z.
MR McLEISH: And people might act on that exchange of information by increasing their price later on?
MR ANDERSON: Not on an understanding or an arrangement.
MR McLEISH: But they might use that information.
MR ANDERSON: They may use that information, yes, but not on an arrangement or an understanding.
MR McLEISH: Well, they may use the information that they obtain in what – if I can call – market information calls to make a decision to increase the prices.
MR ANDERSON: Yes. What is illegal about that?
MR McLEISH: And they may ---
MR ANDERSON: Well, is it illegal? The Commission seems to think it is.
MR McLEISH: Excuse me. They may use that information as a basis of making a decision to increase prices. They may know that ---
MR ANDERSON: That is their decision.
MR McLEISH: That is their decision.
MR ANDERSON: The same as it is my decision what I will do or what Dad will do with what we see on the boards out there. What were the other prices in the town, might I add, at this stage?
MR McLEISH: People who are making these calls would also understand that the person on the other end will make their own decision as well. Isn’t that right?
MR ANDERSON: Yes.’
897 There was then an exchange about whether the assumption could be made that the current price in the Geelong petrol market was discussed in any particular conversation. There were then further questions and answers as follows:
‘MR McLEISH: Well, if they were talking about the price and the current price in the Geelong market and they were going to make a decision about their own price?
MR ANDERSON: Yes?
MR McLEISH: Using the information that they were exchanging ---
MR ANDERSON: If they got that information on that day.
MR McLEISH: If they got that information, they would know that the other person was going to make a decision based on that information for their own business as well, wouldn’t they?
MR ANDERSON: They make their own decision. It is up to them what they want to do.
MR McLEISH: And everyone knows that, that they make their own decision.
MR ANDERSON: Yes.’
898 These limited admissions are of some value to the ACCC’s case, because they do amount to evidence against Mr Anderson that he was discussing petrol prices in Geelong with Chris Andrianopoulos and Alan Shuvaly respectively. It can be taken that this evidence is admissible against Apco, pursuant to both s 87(1)(a) and s 87(1)(b) of the Evidence Act, having regard to Mr Anderson’s position with Apco. They are not admissible against Mr Andrianopoulos, Andrianopoulos, Mr Shuvaly or Liberty under s 87(1)(c), because the admissions were not made in the furtherance of a common purpose. They were made in the course of an investigation after the event.
899 Counsel for the ACCC described Mr Anderson’s admissions as having been ‘guarded’, and attempted to characterise them as admissions of more than they actually were. It would be unwise to engage in semantics about the meaning of particular admissions. It was certainly the case that Mr Anderson was reluctant to admit anything, but it is not possible to draw from that any conclusion that, when he did admit something, he was really admitting more than he was saying. Only if the other evidence proved conduct by Mr Anderson in contravention of s 45(2) of the Trade Practices Act would it be possible to say that Mr Anderson was hiding something in his interview and examinations, but in that event it would be unnecessary to say so, as the case would have been proved in any event, and a finding that Mr Anderson was admitting more than he said would be unnecessary.
900 The remainder of the interview and examinations of Mr Anderson, tendered in evidence by the ACCC, so far as it contains matters of substance relevant to this case, contains denials by Mr Anderson of most of the matters put to him, and of any wrongdoing. This includes the other specific passages from the material, to which counsel for the ACCC referred in submissions. In particular, Mr Anderson consistently denied having discussions relating to prices with Mr Carmichael and Mr Warner. Counsel for the ACCC referred in final submissions to these denials. The submission was that, as counsel for Apco and Mr Anderson had not put the denials expressly to the ACCC’s witnesses, particularly Ian Carmichael and Michael Warner, I should reach the conclusion that Mr Anderson did not give evidence because his evidence would not have assisted his case. It is true that Mr Anderson did not give evidence. What he might have said if he had chosen to give evidence, instead of exercising his right to have the case determined on whatever evidence the ACCC brought forward, must be entirely a matter of guess work. If he had given evidence consistent with his denials, it might have been possible to be critical of his counsel for not putting expressly to Mr Carmichael and Mr Warner the contradictions of their evidence inherent in the denials. If Mr Anderson had given evidence inconsistent with his denials, he might have exposed himself to prosecution for perjury, for the answers he gave on oath in the examinations under s 155 of the Trade Practices Act. These possibilities are beside the point. The case must be determined on the evidence the ACCC tendered. If there should be an issue of fact about whether some conduct of Mr Anderson, proved by other evidence, was capable of an innocent explanation, then the failure of Mr Anderson to give evidence may have some relevance to the way in which that issue of fact should be determined. That would be the case without reference to any denials of Mr Anderson in his earlier interview and examinations. I see no point in attempting to speculate on what evidence Mr Anderson might have given, and whether it would or would not have been consistent with his earlier denials. The simple fact is that he did not give evidence.
901 In final submissions, counsel for the ACCC also invited me to reject Mr Anderson’s denials in his interview and examinations, on the basis that they are inconsistent with the evidence given in this proceeding. I see no point in engaging in such an exercise. Mr Anderson’s denials are only part of the evidence in this case because the ACCC chose to tender them. Having chosen to tender them, it may well have made them evidence against its own case, but the denials are self-serving statements, and therefore evidence of very little weight. I would only reject them if I were satisfied on the other evidence led by the ACCC that Arrangement No 1 existed, and that effect was given to it. If I should be so satisfied, it would be unnecessary to take the further step of expressing findings that Mr Anderson’s denials were false. It would be enough to say that the ACCC’s case in respect of Arrangement No 1 was made out.
Admissions in evidence
902 There were several occasions during the trial when witnesses gave evidence of conversations in which parties to the proceeding made admissions as to their conduct in relation to other parties to the proceeding. There can be no doubt as to the admissibility of such admissions against the party making them, pursuant to s 81(1) of the Evidence Act. The ACCC also sought to rely on those admissions as being evidence against the other party in each case, admissible pursuant to s 87(1)(c) of the Evidence Act, on the ground that the person making the admission was doing so in furtherance of a common purpose with the other party. The following are some examples.
903 Ian Carmichael was asked in evidence-in-chief whether, in his phone calls with Peter Anderson, he had discussed anybody else. He said that he had. When asked to describe the discussions, he said, ‘I asked Mr Anderson if Chris [Andrianopoulos] had known the price.’ When asked what Mr Anderson said in response to this, Mr Carmichael said, ‘He said he [Mr Andrianopoulos] was aware of it.’ Mr Carmichael went on to say that, in 1999, he may also have asked Mr Anderson a similar question in relation to Liberty, and Mr Anderson may have also said that Liberty was aware of the price. Subsequently, Mr Carmichael gave evidence that, when he passed on to Darren Campigli information that Mr Anderson and Mr Andrianopoulos both knew about price increases, his awareness of knowledge on the part of Mr Andrianopoulos was the result of his conversation with Mr Anderson.
904 For this evidence of Mr Carmichael to be admissible against Andrianopoulos, Mr Andrianopoulos, Liberty and Mr Shuvaly, I would have to be of the view that it is ‘reasonably open to find’ that the statements attributed to Mr Anderson were made by him in furtherance of a common purpose he had with Andrianopoulos, Mr Andrianopoulos, Liberty and Mr Shuvaly. I assume that the common purpose relied on is the implementation of Arrangement No 8. It is not sufficient to say that the statements by Mr Anderson that Mr Andrianopoulos and Mr Shuvaly were aware of price increases were made in the furtherance of a common purpose between Mr Anderson and Mr Carmichael. What is required is that it be reasonably open to find that the statements were made in the furtherance of a common purpose between Mr Anderson and Andrianopoulos and Mr Andrianopoulos, or Liberty and Mr Shuvaly, respectively. It would thus be necessary for it to be reasonably open to find, from evidence other than the statements by Mr Anderson, that Arrangement No 8 was such that the parties to it had a common purpose that Mr Anderson would advise another market participant, such as Mr Carmichael, of a price increase. Such a purpose is pleaded in the amended statement of claim against the parties to Arrangement No 8, but only indirectly. There is no allegation that Arrangement No 8 contained a provision requiring any of the parties to advise any other market participant (in contrast with the pleading of Arrangement No 1, which is alleged to contain such an express provision). The relevant provision of Arrangement No 8, as pleaded in par 55 of the amended statement of claim, is that the parties to the alleged arrangement or understanding would advise each other of the amount and timing of proposed increases in the retail price of ULP and Super to be charged at Apco sites, each knowing or intending that Apco or other market participants would advise some or all of the market participants other than the parties to Arrangement No 8 of the amount and timing of the proposed increases. This may be sufficient to justify the admissibility of Mr Anderson’s statements against the parties to Arrangement No 8, and Mr Andrianopoulos and Mr Shuvaly, if there is good reason to find that Arrangement No 8 existed and contained such a provision.
905 The ACCC also sought to rely on evidence given by Mr Warner of statements made by Ian Carmichael to Mr Warner to the effect that Mr Anderson had telephoned Mr Carmichael about a prospective price increase. Counsel for the ACCC argued that s 87(1)(c) of the Evidence Act makes admissions by Mr Carmichael, made to Mr Warner, of Mr Carmichael’s conversations with Mr Anderson admissible against Mr Anderson as well as against Mr Carmichael. It could be argued that, in instructing Mr Warner to give effect to an increase in petrol prices at Leahy outlets, Mr Carmichael was acting in furtherance of a purpose common to himself and Mr Anderson, and that these admissions of Mr Carmichael are therefore admissible against Mr Anderson. The point is hardly worth considering, however, as Mr Carmichael himself gave evidence of his own conversations with Mr Anderson. The only purpose of relying on the evidence of what Mr Carmichael then told Mr Warner would be to demonstrate its consistency with Mr Carmichael’s own evidence of what Mr Anderson said.
906 In the course of giving his evidence about conversations he had with Mr Anderson, Alan Shuvaly was asked, ‘Do you remember if any of the independents were mentioned to you at all?’ His answer was:
‘There were a couple of incidents in the conversation where Leahy, Chisholm were mentioned in the conversation, that they had been spoken to and we would be interested to take part in the move. Not a great deal.’
907 It might be argued that this evidence is admissible against Leahy, on the basis that Mr Anderson was speaking in furtherance of a purpose common to himself and Leahy, being the giving effect to of the provision of Arrangement No 1 relating to advising or causing to be advised market participants other than themselves. Again, in the light of the fact that Mr Carmichael and Mr Warner gave evidence, it is hardly evidence of great weight. It is difficult to see how what Mr Anderson said could be admissible against Chisholm, because there is no allegation of the existence of any common purpose between Chisholm and Apco or Mr Anderson.
908 The ACCC also sought to rely on evidence given by Darren Campigli about his conversations with Ian Carmichael. Mr Campigli said that he sometimes asked Mr Carmichael about Andrianopoulos and Apco because he knew that Leahy had business dealings with those two companies. Mr Campigli would ask Mr Carmichael if he had any idea whether Apco or Andrianopoulos would be moving their price up as well. Mr Carmichael replied that ‘it should be all right’. These conversations occurred not all the time, but a few times while Chisholm was receiving calls in 1999 and 2000. Occasionally, Mr Campigli said that he would ask Mr Carmichael about Shell or Mobil. Once or twice, Mr Carmichael mentioned that he had spoken to Colin Williamson, and Mr Campigli assumed that that meant that United Retail would be moving its prices and other Shell outlets would be following. These conversations occurred only once or twice during 1999 and 2000. Subsequently, when giving evidence about calls from Ian Carmichael or Michael Warner concerning the failure of 7-Eleven to increase its prices, Mr Campigli said that, occasionally, Mr Carmichael or Mr Warner would mention that Mr Anderson was not happy that 7-Eleven had not gone up. Again, it is possible to argue that these admissions by Mr Carmichael or Mr Warner were made in the furtherance of a common purpose with Mr Anderson to give effect to the provision of Arrangement No 1 about advising other market participants. No common purpose is alleged between Leahy, Ian Carmichael or Michael Warner on the one hand and Andrianopoulos or Chris Andrianopoulos on the other. In any event, given that Mr Carmichael and Mr Warner gave evidence themselves about conversations with Mr Anderson, the evidence is of very little weight. In addition, its vagueness makes it of very little value.
909 Finally, in his evidence-in-chief, Phil Carmichael was asked whether, in 1999 or 2000, he had asked Ian Carmichael or Michael Warner where they had obtained information they gave him about intended price increases. He said that he asked about discussions they may have had with other competitors. He recalled asking, ‘Is Apco going at that particular time?’ He was given an affirmative answer, and told that Ian Carmichael or Mr Warner had had a conversation with Mr Anderson. Again, it might be possible to discern a common purpose in the alleged implementation of the provision of Arrangement No 1 that other market participants would be advised of price increases by Leahy, but the weight of the evidence is not significant in the light of the fact that first-hand evidence from Ian Carmichael and Mr Warner was given.
910 In the circumstances, it seems hardly worth attempting to determine whether it is reasonably open to find that these various statements were made in the furtherance of a common purpose. With the possible exception of the evidence relating to Arrangement No 8, the value of the other evidence is so slight, because direct evidence of the types of conversations alleged is available. In relation to Arrangement No 8, there might be some importance in determining whether it is reasonably open to find that Mr Anderson was making his statements in furtherance of a common purpose with Andrianopoulos, Chris Andrianopoulos, Liberty or Alan Shuvaly, because the evidence is that Mr Anderson’s statements were made in the context of conversations about impending price increases. I shall deal with this question in considering the evidence about the existence and implementation of Arrangement No 8 itself.
911 As I have said in [238] – [241], counsel for the ACCC obtained leave to cross-examine Alan Shuvaly about a number of passages in his statement. In the course of the cross-examination consequent on that grant of leave, counsel for the ACCC put to Mr Shuvaly, and read into the transcript of this proceeding, some admissions that Mr Shuvaly made in his statement. The first of those admissions was:
‘During 1999 to 2000 I spoke regularly on the telephone with Anderson about increasing retail petrol prices in Geelong, we call those price increase calls, and in these price increase calls Anderson generally discussed the following…that the majors had moved or less often would be moving up to a particular price at a particular time.’
912 Mr Shuvaly confirmed that this statement was true and correct, but as to the proposition that ‘less often’ the majors would be moving, added, ‘But that was only one incident.’ In answer to further questions, he confirmed that there was only one such incident when he was told that the majors would be moving. He did not remember when the incident was, but said that it involved a mention that ‘the Mobils and independents will be moving.’ Although pressed about the inconsistency between his use of the phrase ‘less often’, and his recollection in the witness box that there was only one such incident, Mr Shuvaly adhered to the proposition that what he was saying in the witness box was his only recollection. He agreed that he had not made this clear in the statement, but insisted that that was the way he intended his statement to be understood.
913 Another admission in his statement, put to Mr Shuvaly during this cross-examination, was:
‘To the best of my recollection the price increase calls I had with Anderson were usually in words to the following effect…
I have spoken to some of the independents and they are going up to X cents per litre at Y time. Will you support it?
…
The market is moving up. The independents are going to X cents per litre at Y time. Will you support it?
…
The market will be moving to X cents per litre at Y o’clock. Are you going to support it?
…
The market has moved to X cents per litre. Are you going to support it?’
914 Mr Shuvaly said that the third of these alternatives was the one incident to which he had referred. Counsel for the ACCC then put to Mr Shuvaly a further passage from his statement:
‘I mainly recall…Anderson referring to the market, but sometimes instead of referring to the market he referred to the majors’.
915 Mr Shuvaly interpreted the second of his alternatives as meaning that Mr Anderson had seen that the majors had already moved up and that the independents were going to follow suit. He reiterated that the reference to the majors was in the one incident, and said that the third alternative related to what Mr Anderson had seen out in the marketplace, and to his prediction that the independents would be moving if Mr Shuvaly was to ‘support the market’ or ‘participate in the move’. Again, he insisted that there was only one incident, in which Mr Anderson mentioned Mobil, that fitted within the third alternative.
916 Counsel for the ACCC then quoted another passage from Mr Shuvaly’s statement:
‘On one occasion I recall Anderson saying in a price increase call words to the following effect: Anderson said the Mobils and independents are moving to X cents per litre at Y time’.
917 Mr Shuvaly agreed that this was the one occasion to which he was referring. He was asked to explain the passage in his statement that sometimes, instead of referring to the market, Mr Anderson referred to the majors. He agreed that, sometimes when he and Mr Anderson spoke, the conversation included that ‘the majors will be moving up’. Counsel for the ACCC then put another passage from the statement:
‘Usually when Anderson told me that prices would be moving up, he said it would happen very soon, often within about an hour but it could be any time later on the same night or overnight…I recall on one occasion when Mr Anderson informed me of a price increase it was going to happen at midnight.’
918 Mr Shuvaly conceded that this part of his statement referred to what happened usually when Mr Anderson spoke to him. He agreed that Mr Anderson was not distinguishing between majors and independents, but was talking about ‘the prices that are going up’.
919 Finally, counsel for the ACCC put to Mr Shuvaly this passage from his statement:
‘On one occasion I recall Andrianopoulos saying to me words to the following effect: Andrianopoulos said The market will be moving to X cents per litre at Y time, will you support it?’
920 In answer to a question about what he understood by the expression ‘market’ when he made that statement, Mr Shuvaly said that he understood that the market was ‘the majors and the independents.’
921 The admissions made by Mr Shuvaly in his statement are admissible against him, and against Liberty, pursuant to s 87(1)(a) and (b) of the Evidence Act. Because the statement was not made in the furtherance of a common purpose with Mr Anderson, they are not admissible against Mr Anderson or Apco pursuant to s 87(1)(c). To the extent to which Mr Shuvaly adopted the admissions in the witness box, they are evidence by him against Mr Anderson and Apco.
Reasoning and principal findings
Communications about prices
922 There can be no doubt that competitors in the Geelong retail petrol market passed from one to another or others information about the levels of retail petrol prices in that market on a number of occasions. It is not possible to say on how many occasions such information was passed, or between which competitors. There is no evidence about specific conversations. All that Annexure B shows is that telephone calls occurred, but there were reasons other than petrol prices for a number of parties to the alleged arrangements or understandings to have telephone communications between them. From the call cycles identified in Annexure B, in conjunction with the oral evidence and some of the admissions, it is possible to say that the number of occasions on which price information was transmitted was substantial. There may also have been occasions on which such information was passed in face to face conversations, particularly between Ian Carmichael and Peter Anderson, but the number of occasions on which this occurred can only have been very small and the dates of them are unknown.
923 The passing of information about prices does not necessarily indicate that it was done pursuant to any arrangement or understanding, in contravention of s 45(2) of the Trade Practices Act. In a competitive market involving a number of competitors, information about the prices of others is certainly one of the most useful factors in the setting of a dealer’s own prices. In such a market, there is a tendency for prices of homogeneous commodities to move towards uniformity across the market. Petrol is such a commodity. The public display of board prices by all or most competitors would ensure a high degree of uniformity in the market in any event. Telephone calls and face to face conversations were other ways in which information about prices was conveyed.
924 Throughout the trial, the ACCC placed much emphasis on the proposition that what was being passed in the communications between competitors was advance notice of prices to be adopted, as distinct from notice by means of price boards of prices already being charged. In principle, there is little or no difference between the two. A dealer in the market who has decided to adopt a particular price communicates it to competitors, as well as to the public at large, once it is displayed on a price board. If, instead, the price is conveyed by means of oral communication, the result is the same. The ACCC does not seek to establish that whichever of Peter Anderson and Ian Carmichael initiated a communication simply told the other that his company may or may not increase its price for ULP to a particular level at a particular time. The case is that the initiating party would indicate that it had already made a decision to change its price to a particular level from a particular time. If that party had posted notices outside its outlets, advertising that its price would increase to a particular level at a particular time, and competitors took advantage of that information in making their own pricing decisions, there could have been no complaint. The practical advantage for the recipient of a communication about a decision to increase prices before the implementation of the decision is obvious. The competitor has more time to consider whether to increase its price to match the communicated price and, if so, at what time. The recipient of the communication did not have to wait until the board price was displayed by a competitor, and information of that price was conveyed as a result of observation of the board, either by the decision-maker or by someone else.
925 There is nothing inherently sinister about the use of the telephone to convey information. A telephone call in which one competitor informed another that the first had just increased its prices to a particular level, or had just observed the board price of another competitor, would not be an illegitimate means of conveying information about existing board prices. Of course, private communication of intended price increases, without communication of the intention to potential purchasers, lends itself readily to price-fixing. It does not constitute price-fixing, in contravention of s 45(2) of the Trade Practices Act, without more. Advance notice of the proposed implementation of a decision already made to increase prices would provide a competitor with the advantage of more time, but cannot itself be indicative of the existence of an arrangement or understanding containing a provision to fix prices. There are additional elements that need to be established before a finding can be made that an arrangement or understanding exists, or that effect is being given to it.
Petrol price cycles
926 The ACCC also relied heavily on the price cycle as providing an environment conducive to competitors in the Geelong petrol market entering into arrangements or understandings, and giving effect to them. To an extent, this is true, but a number of points need to be kept in mind.
927 The price cycle for petrol was not a phenomenon confined to Geelong, nor to the time prior to the end of the year 2000. It is a mistake to treat the Geelong petrol market as isolated from other petrol markets, or as unique. As the ACCC itself recognised from its research prior to the commencement of this proceeding, the sawtooth pattern of petrol prices manifests itself in Australian cities and large country towns on major highways. In particular, as the evidence in this case bears out amply, the sawtooth pattern of petrol prices was present at all relevant times in the Melbourne petrol market. The ACCC has advanced publicly a number of possible causes of this pattern, only one of which is said to be the result of conduct that would be a contravention of the Trade Practices Act. The evidence in this case discloses a clear and rational connection between prices in the Melbourne petrol market and those in the Geelong petrol market. It would not be possible to find otherwise than that the price cycles in Geelong generally followed those in Melbourne. The sawtooth pattern of price cycles has continued in the Geelong petrol market after the year 2000. As the data in Annexure B demonstrates, the same pattern was evident throughout 1999 and 2000, irrespective of the presence or absence of call cycles. It is difficult, therefore, to say that the sawtooth pattern of price cycles in those years was the result of giving effect to arrangements or understandings between competitors in the Geelong petrol market. It was a pattern that occurred in any event and, at least on many occasions, must have occurred for reasons other than telephone communications between competitors in that market.
928 There is no doubt that, when petrol prices reached the low point of a price cycle, there were powerful incentives for petrol retailers to increase their prices. Selling at a loss, ie at a retail price below the wholesale price at which the dealer purchased the petrol, is not sustainable. The incentive to increase the price to above the wholesale price is very powerful, particularly in the case of dealers who do not receive any form of price subsidy or support from the major oil companies, or whose price subsidy or support has been discontinued for that cycle. The incentive to increase is balanced, however, by the desire to maintain or increase the volume of sales. The quest for maximum volume of sales is the principal factor leading to discounting, and to the progressive reduction of the price from the top of the price cycle. The greater the volume of sales, the more customers would pass through the convenience store associated with a petrol outlet, and the greater was the potential for sales of goods in that store, at retail prices significantly in excess of wholesale prices. Thus, to an extent, a lower price leading to greater volume of sales of petrol could help to offset the loss from the sale of petrol itself by attracting customers to buy other goods. Plainly, the offset could never be sufficient to make a business profitable if it maintained its petrol prices at the lowest point in the price cycle. Otherwise, some dealers would never have found it necessary to increase their petrol prices. It may therefore be accepted that, when the price cycle approaches or reaches its low point, all dealers in the market had a substantial incentive to increase their prices, unless they were still in receipt of some form of subsidy or price support from a major oil company.
929 In this environment, it can be seen that any dealer in the market would be seeking an opportunity to increase its price, but would perhaps also be reluctant to take the initiative because of the danger that other competitors would keep their prices low, and the initiator would lose sales volume. In those circumstances, the initiative of increasing the price would be unsuccessful from a profit point of view, because there would be fewer customers both for petrol and for other goods. There can be no doubt that the existence of arrangements or understandings to the effect that all or most of the competitors in such a market would increase their prices at or about the same time, and to about the same amount, would reassure a dealer that it would be safe to increase its prices without too great a sacrifice of volume of sales, because other competitors would do likewise. In this sense, the ACCC’s case that the nature of petrol price cycles was conducive to the existence of arrangements or understandings is correct.
930 This cannot be the entire picture, however. Arrangements or understandings might not be the only source of the necessary reassurance to increase prices. Information that other competitors have already increased, or have already decided to increase, very likely would be equally reassuring. So also would information that prices in the Melbourne retail petrol market had increased, coupled with past experience that this almost inevitably resulted in a general increase in the Geelong petrol market. As Annexure B indicates, there were significant numbers of occasions when competitors in the Geelong petrol market did increase their prices in the absence of any indication that, by doing so, they were implementing any arrangement or understanding. It follows that they must have had sufficient reassurance, from sources other than communications with their competitors, that it was safe for them to increase their prices without losing too much by way of sales volume. The petrol price cycle apparently worked in the same way in any event. It is therefore not possible to say that arrangements or understandings about concerted price increases were a necessary part of that cycle. Indeed, to find that they were would be to contradict the findings from the ACCC’s own investigations into changes in the retail price of petrol. It would be to assume that, in all cases, the rises in the petrol price cycle were the result of the implementation of arrangements and understandings. It is abundantly clear that, whilst the price cycle may have provided an environment conducive to arrangements or understandings, it did not provide an environment that necessarily produced them.
931 The ACCC’s case also attempted to make good the proposition that, without arrangements or understandings to increase prices, a price rise would not stick. There is a good deal of oral evidence about the necessity for a price rise to take effect generally in the market in order for it to stick. Because of the attraction for customers of discounted petrol, with some even going to considerable lengths to find and take advantage of discount outlets, a price increase must always have been vulnerable to destruction by the dealer or dealers who opted to keep their prices low, for the purpose of increasing their sales volumes. The data in Annexure B establishes, however, that a general price rise was achievable without the implementation of any arrangement or understanding. Many such general increases did stick in the two-year period covered by Annexure B without any allegation by the ACCC, or even any hint from the data, that they stuck only because of communications between competitors about prices. There are very few occasions to be found in Annexure B when the ACCC felt able to allege that effect was given to the entire chain of what it said were arrangements or understandings. The proposition that a price rise would not stick unless every competitor was brought into it by means of the implementation of an arrangement or understanding is demonstrably false. The call cycles recorded by Annexure B had no consistency as to the recipients of the calls. The occasions when Ian Carmichael or Michael Warner chose to communicate with the whole list of those who could have been said to make up their call cycles were very few. Even fewer were the occasions when Peter Anderson, Chris Andrianopoulos and Alan Shuvaly all communicated with each other in circumstances that were such as to make it appear that the communications might have been concerned with price increases in Geelong. Plainly, implementation of the whole chain of alleged arrangements or understandings was not necessary for a price rise to stick in the Geelong petrol market. This fact underscores the point that reassurance that it was safe for each competitor in that market to increase its prices was often available by means other than communications with competitors.
The circumstantial evidence
932 At first sight, the data in Annexure B might appear to provide some support for the ACCC’s theory of the case. A more detailed examination, such as the one I have undertaken in these reasons for judgment, shows that the data is at best equivocal, and in many instances more apt to refute than to support the ACCC’s contentions. I have referred to the very small number of occasions on which what is recorded in Annexure B enables the ACCC even to allege that effect was given to the entire ‘chain’ of alleged arrangements or understandings. On a significant number of occasions, the ACCC is driven to alleging that Annexure B shows Leahy and others giving effect to alleged arrangements or understandings other than Arrangement No 1. In some cases, it is alleged that effect was given to Arrangement No 3 on a stand-alone basis. These occasions are inconsistent with the notion that Arrangement No 1 was the leading arrangement or understanding, and that the implementation of the other alleged arrangements or understandings came about by Leahy (and on a small number of occasions Apco) giving effect to the provision of Arrangement No 1 that, between them, Leahy and Apco would advise or cause to be advised some or all of the market participants other than themselves of the amount and timing of proposed increases. It is true that, consistently with the evidence of Ian Carmichael, there may have been occasions on which a call cycle in which the calls originated from Leahy, Ian Carmichael or Michael Warner, might have been prompted by a face to face conversation between Peter Anderson and Ian Carmichael. The number of such occasions must have been quite small, however, and the ACCC has not attempted to surmise from the data in Annexure B on which occasions communications other than by telephone may have occurred. It is quite impossible to find on the balance of probabilities which of the shaded periods in Annexure B that do not appear to contain relevant telephone communications between Apco or Mr Anderson and Leahy or Mr Carmichael or Mr Warner might have involved communications between Mr Anderson and Mr Carmichael by other means. There is, therefore, an inconsistency between Annexure B and the oral evidence, to the extent that the evidence of Mr Carmichael and Mr Warner is to the effect that call cycles resulted from communications with Mr Anderson. It is likely that at least some did not.
933 The data in Annexure B also tends to be inconsistent with the ACCC’s case, and with the oral evidence, when more than one call cycle occurs in a shaded period. The ACCC’s theory is that it was only necessary for a price and a time to be nominated in a series of brief telephone calls, passing through the chain or chains of competitors, for each competitor to be sufficiently reassured to bring about the price increase. Ian Carmichael and Michael Warner gave evidence that there were occasions when it was necessary to make supplementary calls to particular competitors, after the appointed time, when they had been slow in implementing a price increase. The reality, as I have shown in my detailed examination of Annexure B, is that there were significant numbers of occasions when two, or even three, call cycles preceded any price increase by any of the competitors, so far as Annexure B records. These are not cases in which Apco and Leahy have raised their prices but it has been necessary to keep urging other competitors to do so (which would in any event have been inconsistent with the ACCC’s case), but are instances of call cycles apparently not resulting in a price rise by any competitor. Interestingly, examples of the occurrence of more than one call cycle in a shaded period occur in Annexure B in the second half of 2000. If the ACCC’s case were correct, by that stage, the alleged arrangements or understandings ought to have been sufficiently well practised by all parties to them that no more than a series of brief telephone calls was necessary.
934 The other feature of the multiple call cycle occasions, and the fact that they appear in the latter months of the year 2000, is that they are inconsistent with the oral evidence about the reluctance of the parties to make telephone calls about prices once it became known that the ACCC was investigating possible petrol price-fixing, after the existence of price-fixing practices in Ballarat was made public just before Easter in 2000. The eight-month period from 1 May to 31 December 2000 contains 17 occasions on which the ACCC alleges that effect was given to one or more of the alleged arrangements or understandings, only one fewer than the eight-month period from 1 January to 31 August 1999. The eight months from 1 September 1999 to 30 April 2000 contain a significantly higher number of alleged giving effect to occasions (29), but the occasions are not distributed evenly between the months within that period. The peak occurred in September 1999, in which the ACCC alleges that effect was given to one or more of the arrangements or understandings on seven occasions, plus the two-day period on 30 September and 1 October. There are four such occasions in February and five such occasions in March 2000. Otherwise, the numbers of occasions of alleged implementation of arrangements or understandings in the months in this middle period are two or three a month, comparable with the figures in the earlier and later eight-month periods. In other words, there appears to have been no appreciable diminution in call cycles after Easter 2000. This suggests either a lack of concern that the ACCC would find out about the content of the telephone calls, or that the calls themselves were not about price-fixing. Ian Carmichael can hardly have supposed that his elementary code, involving the use of numbers representing the models of supposed aircraft and supposed arrival times, would not be cracked easily. When someone did fail to understand the code, it was of so little importance to Mr Carmichael that he was prepared to explain it in the very same telephone calls in which he used it. Whatever it was that competitors in the Geelong retail petrol market were talking about during call cycles, they were perfectly willing to continue talking about it even after they were aware that the ACCC was investigating alleged petrol price-fixing in Ballarat.
935 The unavailability of precise data about times of price increases for a number of participants in the Geelong retail petrol market makes Annexure B less useful than it might otherwise have been. It makes it impossible to make any finding based on Annexure B alone about the possible implementation of Arrangements Nos 4 and 6. It must be assumed that the ACCC took the view that it could not make its case as to the timing of price increases any better by tendering the material, available to it, of telephone calls between United Fuels and United Retail and their various outlets, from which conclusions might have been drawn as to when instructions were given to implement a price increase.
936 Where Annexure B does contain specific data for the timing of price increases, the picture becomes very confused. On the one hand, it is possible to point to price increases, particularly by Apco, Leahy and (with the exception of the early months of 1999) Chisholm, preceded by telephone calls that might have been about the prospective price increase. The ACCC sought to use Annexure B extensively in this way. On the other hand, significant parts of the data in Annexure B involving precise times of petrol price increases are inconsistent with the ACCC’s contentions. There are occasions when increases by Brumar, Mobil outlets, Caltex Quick Bite or BP Corford Express preceded increases by any of Apco, Leahy or Chisholm, thereby providing evidence that a price rise from Melbourne was finding its way into the Geelong petrol market through participants in that market whose prices were set in Melbourne. There are other occasions when it is only possible to determine the range of times during which a price increase at some Mobil outlets might have occurred, so the evidence of the flow-on of a Melbourne price increase is not so clear. Even more damaging to the ACCC’s case are the significant numbers of occasions when price increases by Apco, Leahy and Chisholm occur at times that might suggest coordination, but Annexure B contains no sign of any telephone calls that might have contained information about prospective increases. In my detailed analysis of Annexure B, I have drawn attention to the way in which price increases by Apco and Leahy, and (when information about Chisholm’s increases was available) Chisholm, fell into clear patterns, which were remarkably consistent throughout the relevant periods, whether or not there were telephone calls and whether or not the price increases by those parties were preceded by increases by other competitors. It seems clear that, although Annexure B had been available to all parties to this proceeding for some considerable time before the trial, no-one had discerned the existence of these patterns, so no attempt was made to lead any oral evidence that might have explained them. The existence of the patterns in Annexure B lends considerable support to the evidence that the petrol price cycle occurred in much the same way irrespective of the presence or absence of communications between competitors that might have concerned petrol prices.
The oral evidence
937 Neither the nature of the Geelong retail petrol market nor the data in Annexure B provides any form of sure foundation for the proposition that arrangements or understandings to fix the price of petrol existed between participants in the market. It is therefore necessary to examine closely the oral evidence to see whether the requisite elements for an arrangement or understanding are made out. In the absence of any allegation that any of the alleged arrangements or understandings had an express origin, the ACCC was driven to relying on evidence of courses of conduct, from which arrangements or understandings might have developed, and on the perceptions of the witnesses as to what it was they were engaged in and how communications between them affected their own behaviour.
938 On the question of courses of conduct, I have already pointed out in some detail that there is a considerable lack of evidence of the origins of any of the alleged arrangements or understandings. Only in relation to Arrangement No 1 is there any evidence at all. That is only to the effect that the practice of passing price information between Apco and Leahy had evolved over a number of years, as a result of many telephone conversations between Ian Carmichael and Peter Anderson.
939 As to the other alleged arrangements or understandings, there is no express evidence of a course of conduct from which an arrangement or understanding was said to have resulted. Graeme Chisholm and Darren Campigli gave evidence of when they began to receive telephone calls about price increases. Wayne Purtell spoke of his contact with Eino Heikkila between 1997 and early 1999, when Mr Dalton took over Mr Purtell’s position. Mr Heikkila did not specify when he began talking with Ian Carmichael or Michael Warner about prices, other than to say that it was in the mid-1990s. He did give evidence about his conversations with Mr Purtell, and with Garry Dalton. There is a complete absence of evidence about any course of conduct from which any arrangement or understanding between Leahy and United Retail might have come into existence. Gordon Primmer was not asked to give any evidence about a course of conduct from which an arrangement or understanding between Leahy and the partnership which operated BP Meredith may have come into being. In view of the limited nature of the admission made by Leahy, Mr Carmichael and Mr Warner (detailed at [883]), which is an admission of a conversation between Leahy and Primmer after BP Meredith ceased to operate as a commission agent for Leahy and became an independent retailer at the beginning of 2000, it is strange that Mr Primmer was not invited to give any evidence about the origins of Arrangement No 7. In view of Alan Shuvaly’s evidence about what passed between him and Peter Anderson a few weeks after Liberty opened its Geelong outlet, it is also surprising that the evidence is completely silent as to any course of conduct from which Arrangement No 8 might have developed.
Commitment
940 One curious feature of the case is that counsel for the ACCC did not ask any of its witnesses to give evidence-in-chief about one essential element of an arrangement or understanding. The judgment of the Full Court in Apco Service Stations was delivered on 17 August 2005. That was the eighth day of the trial in this case. Ian Carmichael, who was the ACCC’s first witness other than its own leading investigation officer, was still in the witness box and did not complete his evidence until part of the way through the morning of 18 August 2005. If the ACCC had been unaware of the significance of the element of commitment, or moral obligation, or obligation binding in honour only, from earlier authorities, it must have become aware from the Full Court’s judgment that it ought to give attention to that issue in this case. Even if the ACCC believed that the Full Court was wrong in Apco Service Stations (as it apparently did), it was still at risk if it did not attempt to address the issue of commitment. No application was made to reopen the evidence-in-chief of Ian Carmichael. Despite the fact that he had given evidence about the issue in cross-examination, no attempt was made to re-examine him about it. Counsel for the ACCC did not invite any witness to give evidence of his own state of mind on receiving information about a prospective price increase, as to whether he felt constrained to act on the information, or about whether he regarded the person providing the information as constrained to act on it. These subjects were left to those cross-examining.
941 In his cross-examination by counsel for Apco, Ian Carmichael assented readily and unequivocably to a number of propositions. Mr Carmichael did not see himself as being able to ring Peter Anderson and tell him off about Apco’s failure to increase its price. He did not think Mr Anderson was in any way obliged to move his price up. He could only give Mr Anderson information and hope that he would move. Mr Anderson was morally free not to lift his price and had a free choice. The same was true for Chisholm. Mr Carmichael volunteered that it was true for ‘all’. Leahy was free to do what it liked. In cross-examination by counsel for United Fuels and United Retail, Mr Carmichael agreed that neither Eino Heikkila nor Colin Williamson ever committed to a price-fixing arrangement. The former always gave non-responsive answers to Mr Carmichael’s calls, and the latter only answered to the effect that he would pass on the information.
942 In cross-examination by counsel for Apco, Michael Warner agreed that Peter Anderson was perfectly free to keep Apco’s prices down if there was a commercial necessity for him to do so. Leahy was equally free not to change its price if it chose not to change it, notwithstanding any discussion with any competitor. Mr Warner himself said that there was no commitment to effect a price rise. Leahy just passed on information about prospective price rises. He did not see himself as telling people how to set their price. He was just passing on information that he had been given as to what the market was going to do. At the time of giving evidence in this case, Mr Warner believed that he was not fixing prices.
943 Also in cross-examination by counsel for Apco, Graeme Chisholm said that he never felt obligated to move Chisholm’s price when he received a call. He never undertook to do anything. He regarded himself as having a total free choice as to what he would do with the information and with Chisholm prices. Nobody at Leahy ever rang him to tick him off or criticise him for not moving Chisholm’s prices up at any given time. Mr Chisholm never rang Leahy to tick them off about their prices. It did not cross his mind to do that.
944 Mr Shuvaly’s evidence made it clear at a number of points that he would only increase Liberty’s price at its Geelong outlet if he felt comfortable enough about the state of the market. In cross-examination by counsel for Andrianopoulos and Chris Andrianopoulos, Mr Shuvaly confirmed that he was his own man. No-one could tell him when Liberty was to change its prices, or by how much, or whether to change them at all. A decision depended on Mr Shuvaly’s judgment as to the interests of Liberty. He never attempted to persuade others to move their prices up and never agreed with any suggestion of Mr Anderson or Mr Andrianopoulos that he should do so.
945 Darren Campigli made it very clear in his evidence that Chisholm would not necessarily increase its prices in response to telephone calls on behalf of Leahy about prospective price increases. His three possible responses to such calls were to thank the caller, to say that Chisholm would move its prices, or to say that it would check what other competitors had done before making a decision. In evidence-in-chief, Mr Campigli volunteered that Mr Carmichael and Mr Warner never told him that he had to move Chisholm’s prices, or anything like that. He assumed that receipt of information allowed the adjustment of prices, so that the market would be similar, instead of having large price differentials. In cross-examination by counsel for Apco and Peter Anderson, Mr Campigli agreed that Chisholm made its own decisions, as a matter of its own choice, about pricing. Mr Campigli never felt obliged to change Chisholm’s prices. It was up to Chisholm to decide whether to increase its prices. Mr Carmichael and Mr Warner never told him what Chisholm had to do and he never felt obliged to raise prices just because they had telephoned. Leahy was also free to do what it liked with its pricing.
946 Gordon Primmer also made it clear that he did not necessarily increase his prices as a result of the receipt of information from Leahy about a prospective price rise. Sometimes he asked whether the rest of the market was up, or suggested that if a competitor at Bannockburn were to increase, then BP Meredith would also go up.
947 Wayne Purtell’s evidence also made it clear that Brumar would make its own decisions about price increases, based on information from a variety of sources, including that which Mr Purtell received from Mr Heikkila. Mr Heikkila’s evidence was that, when he made telephone calls to Mr Purtell, and later to Mr Dalton, his purpose was just to pass on market information. In cross-examination by counsel for Garry Dalton, Mr Heikkila said that he would not simply increase prices at the United Fuels outlets as a result of a telephone call, without spotting the board prices of competitors. Mr Dalton never agreed with Mr Heikkila about what Brumar would do with its prices. Mr Heikkila never asked him to. In Mr Heikkila’s mind, Mr Dalton remained free to do what he liked with his prices. Mr Heikkila felt that he remained free to do what he liked with his prices. His calls to Brumar were made merely in the hope that Brumar would increase its prices at some time after the call. In cross-examination by counsel for United Fuels and United Retail, Mr Heikkila confirmed that, whenever he received a call from Mr Carmichael or Mr Warner about fuel prices, he made his own inquiries.
948 Thus, all of the witnesses called to give evidence for the ACCC who acted on behalf of parties to the alleged arrangements or understandings confirmed to a greater or lesser degree the absence of any commitment, moral obligation, or obligation binding in honour on the part of any party to any of those arrangements or understandings. The evidence on the issue is all one way. It is not possible to dismiss it, as counsel for the ACCC attempted to do in submissions, as indicative of freedom to withdraw from, or to act inconsistently with, an arrangement or understanding on a particular occasion. The plain fact is that there was nothing by way of constraint to raise prices, felt or otherwise, from which any party had to withdraw, or with which it was necessary to act inconsistently, if prices were not increased on a particular occasion. The express evidence is overwhelmingly to the effect that an essential element of an arrangement or understanding, whether in the abstract or as pleaded, in the form of a commitment or obligation to increase prices, did not exist. The ACCC invited me to draw the inference from the circumstantial evidence that, in fact, such a commitment or obligation did exist in the case of each alleged arrangement or understanding. For numerous reasons that I have already given, the circumstantial evidence does not point to this conclusion. Even if it did, it would not do so with sufficient strength to cause me to disbelieve the oral evidence on this issue. The situation was that each party to each alleged arrangement or understanding was free to do as it wished on every occasion when information about a prospective price increase was passed to it. As I have said, an arrangement or understanding in which each party is free to do as it wishes is a creature unknown to s 45(2) of the Trade Practices Act.
949 This finding is fatal to the ACCC’s case. The absence of any element of commitment, or obligation, from any of the alleged arrangements or understandings must lead to the conclusion that none of those arrangements or understandings is capable of amounting to an arrangement or understanding within the meaning of s 45(2)(a) of the Trade Practices Act. None of them is capable of containing a provision for the fixing of prices.
Other issues
950 In relation to each of the alleged arrangements or understandings, there are additional reasons for finding that they did not exist, either at all or as pleaded by the ACCC. It is advisable that I should summarise those reasons, although I have referred to them in more detail elsewhere in these reasons for judgment.
951 From the data in Annexure B, it is clear that Ian Carmichael’s recollection of the timing of telephone conversations he had with Peter Anderson, and of subsequent price rises, is inaccurate. In evidence-in-chief, Mr Carmichael said that he would often receive a phone call from Mr Anderson between 2.00 and 3.00 o’clock in the afternoon, and the nominated time for the price rise would be about an hour later. In cross-examination, he said that his recollection was that most of the price increases occurred in the afternoon. He could not remember an occasion when the price rise was more than two hours after the telephone call. As my analysis of Annexure B demonstrates, afternoon price increases were unusual in the two-year period covered by Annexure B. Consistently during both the morning post-peak increase period and the midnight increase period, both Leahy and Apco increased their prices otherwise than in the afternoon. Even during the daytime increase period, not all of the increases occurred in the afternoon. The substantial majority of price increases by Leahy and Apco began well outside two hours of any telephone communication between them. In submissions, counsel for the ACCC tended to ignore Mr Carmichael’s evidence about timing, and to focus more on the evidence of Mr Warner, who said that some of the price increases were overnight. It is true that some were but, with one exception, those that were were concentrated entirely in the midnight increase period, when Leahy consistently raised its prices at about midnight. Elsewhere in his evidence, Mr Warner also spoke of the two hour period after a telephone call from Mr Anderson as being crucial in determining whether a price rise would stick. As Annexure B shows, the occasions on which price increases occurred within two hours of a call cycle were very rare.
952 There were other difficulties about the reliability of the evidence of Mr Carmichael and Mr Warner. On the one hand, Mr Carmichael seemed to be keen to present himself as the central figure in the process of disseminating price information in the Geelong petrol market. On the other hand, perhaps because of the clause in his leniency agreement that would have entitled the ACCC to repudiate that agreement if Mr Carmichael turned out to have been the ringleader in petrol price-fixing in Geelong, Mr Carmichael was anxious to point to Mr Anderson as the source of the information and to himself as a conduit for it to other competitors. In cross-examination, Mr Carmichael was very keen to concede that almost any proposition put to him ‘could have been’ true. A large part of his difficulty may have arisen from the fact that, when he was called to give evidence, he had no idea what the data in Annexure B showed. Had he been given the opportunity to know that that data was inconsistent with his recollection at a number of points, Mr Carmichael might have realised that his recollection was faulty, and might have been able to give evidence more helpful to the ACCC’s case. Mr Warner backed away substantially from admissions that he had made, when he adopted in cross-examination the position that all that he and Mr Carmichael had been doing was passing on information about pricing. Even leaving aside the issue of commitment, having regard to the circumstances of the Geelong petrol market and, in accordance with s 140(2)(c) of the Evidence Act, the gravity of the allegation, it would be very difficult to make a finding against Mr Anderson, on the balance of probabilities, that he was a party to an arrangement or understanding containing a provision for the fixing of the price of petrol. The evidence relating to the passing of information about intended price increases between Apco and Leahy, and about the conveying of it by Leahy to other competitors, is susceptible of the innocent explanation that it was to urge competitors to increase their prices, and perhaps to facilitate reassurance among them that the price would increase. There is insufficient substance in the evidence to warrant a refusal to accept the innocent explanation.
953 The ACCC’s inability to prove the existence of Arrangement No 1 must have a significant impact on the question whether I should find that the other alleged arrangements or understandings existed, because the ACCC’s conception of the case is that of a chain of arrangements or understandings. If Leahy’s telephone calls as part of the call cycles were not passing on a price and a time arranged between Leahy and Apco, but were merely passing on information about a prospective price increase, it is unlikely that any such arrangement or understanding as is alleged to have involved any party to this proceeding existed.
954 There are even greater problems with respect to some of the specific arrangements or understandings. Whatever might have been the case with Arrangement No 5 during Wayne Purtell’s time at Brumar (and I do not suggest that the evidence discloses that any such arrangement or understanding existed), there is no suggestion in the evidence that Garry Dalton inherited the same arrangement or understanding. Mr Dalton’s evidence that any information he received from Mr Heikkila was of no value to Brumar in making its decisions about setting prices makes it abundantly clear that there was no arrangement or understanding between United Fuels and Brumar, containing a provision for the fixing of prices. This evidence is confirmed by the fact, demonstrated by the data in Annexure B, that telephone contact between Mr Heikkila and Mr Dalton ceased in early July 1999. Mr Dalton’s evidence in this regard was not the subject of serious challenge in cross-examination on behalf of the ACCC, most of which was directed to attempting to establish that Mr Heikkila’s calls were about intended price increases by United Fuels. It was rational for Mr Dalton to regard Mr Heikkila’s information as irrelevant to Brumar’s decisions on pricing, because his view of United Fuels conforms with the other evidence about United Fuels, namely that its outlets were not high profile sites, the prices at which would be likely to impact on the rest of the market.
955 There is also great difficulty in finding that Arrangement No 6 existed. Apart from the improbability of an arrangement or understanding coming about from a course of conduct in a period of a little over two months, when no relevant conduct appears to have occurred, the allegation of such an arrangement or understanding is inconsistent with the evidence of Robert Riordan and Robert Hambrook. At the heart of that evidence is that Colin Williamson did not relay to Mr Riordan (or in his absence Mr Hambrook) information Mr Williamson had received from Leahy. In other words, such information was not taken into account in the setting of prices by United Retail. There is no reason not to accept the evidence of Mr Riordan and Mr Hambrook. That evidence went into detail about the manner in which Mr Riordan kept track of the prices of competitors in the Geelong petrol market, and the impact of Shell’s price support on United Retail’s decisions about pricing. It is impossible to accept that Mr Williamson was influencing decisions taken by Mr Riordan or Mr Hambrook about the setting of prices, by passing on to them information obtained from Leahy in the guise of some other information about prices in the market.
956 The fact that the major oil companies, particularly Caltex and Shell, operated systems of price support applicable to Chisholm, United Fuels, United Retail and Brumar is very damaging to the ACCC’s case. In particular, the evidence that a withdrawal of price support necessitated a price increase, whatever was happening in the rest of the market, coupled with the absence of any evidence as to particular dates or times of withdrawal of price support, makes it impossible to tell from Annexure B which price changes were the result of information from competitors and which were the result of decisions by the major oil companies.
957 The absence of specific times for price increases on the part of United Fuels, United Retail, BP Meredith, Andrianopoulos and Liberty means that there is no effective circumstantial evidence from which it can be said that a particular price rise may have been related to a particular telephone conversation.
958 As I have said, Leahy, Ian Carmichael and Michael Warner made only very limited admissions in relation to Arrangement No 7. What they admitted was nowhere near enough to establish the existence of an arrangement or understanding. No attempt was made to explore this issue in oral evidence. The uncertainty of what passed between Mr Carmichael and Mr Warner on the one hand and Mr Primmer on the other about prices, coupled with the absence of any price data for BP Meredith in Annexure B, makes it impossible to say that any such arrangement or understanding as is alleged between them existed.
959 Arrangement No 8 presents particular problems. There is an element of improbability inherent in the proposition that three agressive discounters would collaborate to fix the price of the commodity they were discounting. Only a Geelong-centric view of the world would lead to an assumption that all of the very many telephone calls between Peter Anderson, Chris Andrianopoulos and Alan Shuvaly recorded in Annexure B were concerned with Geelong. Each had responsibilities in relation to outlets in a number of other places in Victoria. Mr Shuvaly’s evidence is to the effect that they communicated often about a variety of subjects. Mr Shuvaly’s evidence is entirely inconsistent with the existence of any arrangement or understanding between Liberty, Apco and Andrianopoulos, both as to any possible origin for such an arrangement or understanding, and as to the possibility that effect was given to it. The ACCC could only point to 16 periods in the two years covered by Annexure B on which it is able to find data enabling it to contend that effect was given to Arrangement No 8. If an arrangement or understanding of the kind alleged did exist, it is difficult to see why it would have been put into effect on such a small number of occasions. There is so little evidence supporting the allegation that Arrangement No 8 existed, or that effect was ever given to it, that I am obliged to conclude that it is not reasonably open to find that Mr Anderson’s admissions, to which I have referred in [903] – [905], were made in furtherance of a common purpose with Andrianopoulos, Mr Andrianopoulos, Liberty or Mr Shuvaly, so as to make those admissions admissible in evidence against any one of those four parties.
960 The overall effect of the evidence in this case is that it is more probable than not that none of the arrangements or understandings alleged by the ACCC in fact existed. Not only did the evidence led by the ACCC fail to prove the existence of such arrangements or understandings, particularly the requisite element of commitment, but the preponderance of the evidence suggests that no such arrangements or understandings existed. There can be no doubt that a good deal of information about price increases was passed between competitors in the Geelong petrol market, most of it by means of telephone conversations, but this did not amount to the fixing of prices. It was more likely to have been the mere passage of such information in the hope that a general price rise could be achieved. On occasions, it amounted to urging a decision to increase a price, particularly in the case of what was designated as follow-up or complaint calls, but the fact that these were made is itself inconsistent with the existence of the alleged arrangements or understandings.
Occasional arrangements or understandings
961 To the extent to which the ACCC put an alternative case, to the effect that each occasion of a price rise following a communication about prices was itself a separate arrangement or understanding, the case must also fail. There are many reasons why it is impossible to say on the evidence that a price rise by any particular competitor in the Geelong petrol market on any particular occasion was the result of making an arrangement or arriving at an understanding that the rise would be made. The evidence abounds with factors that impacted on decisions to make price increases, so it is impossible to isolate one. The unavailability of data for price increases on the part of a number of competitors means that there is an absence of circumstantial evidence that would be crucial to making out the allegation. The case was never seriously put on the basis that each conversation amounted to the making of a separate arrangement or the arriving at of an understanding.
The admissions
962 The admissions on which the ACCC relied do not improve its situation. Those made by Leahy, Ian Carmichael and Michael Warner were quite specific in some respects. They do involve blanket admissions of the existence of understandings containing provisions for the fixing of prices, but these are admissions of conclusions from a number of different factual and legal elements, and it is unclear whether each of those elements has been admitted. In particular, there is no admission of the vital element of commitment or obligation, moral or otherwise. If the admissions were taken to amount to admissions of an understanding falling within s 45(2)(a) of the Trade Practices Act, they would be so far inconsistent with the evidence, including the evidence of Mr Carmichael and Mr Warner, that it would be necessary to decide the case without relying on them. Insofar as other respondents made formal admissions riddled with alternatives, and amounting to admissions of matters that involve both fact and law, those admissions are themselves unreliable and in conflict with the evidence, and I do not make findings in accordance with them. This includes Liberty’s deemed admission, to which I refer in [893].
963 The admissions made in interviews and examinations under s 155 of the Trade Practices Act do not amount to anything like significant evidence in relation to the crucial issues in the case. Peter Anderson’s admissions that he discussed petrol prices with representatives of competitors in Geelong are hardly necessary. The evidence makes it clear that a number of competitors in Geelong had such discussions. Mr Anderson’s admissions go no further than that in supporting the ACCC’s case. In particular, they do not go to the commitment issue. Alan Shuvaly’s admissions, in the statement that he signed in fulfilment of his obligation under the leniency agreement, are largely in conflict with his evidence. For the most part, in cross-examination he continued to insist that his evidence-in-chief was correct. Because his evidence was given in his own words, I regard it as more reliable than the words negotiated between his lawyers and those acting for the ACCC to satisfy that obligation. Counsel for the ACCC did persuade Mr Shuvaly in the witness box to make admissions that he had received predictive phone calls from Mr Anderson about price increases but, as I have said, this kind of evidence does not go anywhere near establishing the existence of an arrangement or understanding to fix prices.
964 Similarly, the issues that emerged in evidence, in relation to which the ACCC sought to rely on s 87(1)(c) of the Evidence Act, are not of great significance, particularly on the commitment issue. At best, they assist in establishing that there had been discussions about prices, a fact that is hardly contentious on the evidence. Having regard to the evidence generally, it is not reasonably open to find that arrangements or understandings existed, or that effect was given to them, so as to make the admissions of one party admissible under s 87(1)(c) against the other party or parties to that alleged arrangement or understanding.
Conclusion
Dismissing the application
965 My finding that none of the arrangements or understandings alleged by the ACCC existed requires that I dismiss the proceeding against the respondents who defended it. My refusal to rely on the admissions made by the respondents who consented to the case being decided against them, coupled with the finding that the alleged arrangements or understandings did not exist, also leads to the conclusion that I should not give effect to the consents. It follows that the application should be dismissed altogether.
Costs
966 In the normal course, costs would follow the event. The ACCC must certainly be made to pay the costs of all respondents who defended the proceeding. Issues may arise, however, in relation to the respondents who consented to the making of orders against them, which I have declined to make. So far, no party has had an opportunity to make submissions about those issues, and any other issues of costs that might arise as a result of the dismissal of the application.
Orders
967 The appropriate order, therefore, is to dismiss the application, to reserve the question of costs, with directions fixing a timetable for the filing and service of brief written outlines of submissions by parties who wish to raise issues of costs, and brief written outlines in response to those submissions, and fixing a date on which parties who wish to do so may make submissions about costs. If all costs issues cannot be resolved by consent before that date, it will be necessary for me to hear oral submissions on that day and to resolve outstanding costs issues.
| I certify that the preceding nine hundred and sixty-seven (967) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. |
Associate:
Dated: 29 May 2007
| Counsel for the applicant: | M Crennan SC with S McLeish |
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| Solicitor for the applicant: | Australian Government Solicitor |
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| Counsel for the first respondent: | The first respondent did not appear |
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| Counsel for the second and 11th respondents: | SG O’Bryan SC with DK Shirrefs |
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| Solicitor for the second and 11th respondents: | Alan Williamson |
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| Counsel for the third respondent: | NJ Young QC with MH O’Bryan |
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| Solicitor for the third respondent: | Blake Dawson Waldron |
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| Counsel for the fourth and sixth respondents: | E Szabo |
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| Solicitor for the fourth and sixth respondents: | Coulter Roache |
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| Counsel for the fifth respondent: | The fifth respondent did not appear |
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| Counsel for the seventh respondent: | The seventh respondent did not appear |
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| Counsel for the eighth and 18th respondents: | L Glick SC with R Heath |
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| Solicitor for the eighth and 18th respondents: | Schetzer Brott & Appel |
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| Counsel for the ninth and 10th respondents: | The ninth and 10th respondents did not appear |
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| Counsel for the 12th respondent: | P Anastassiou SC with P Neskovcin |
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| Solicitor for the 12th respondent: | Phillips Fox |
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| Counsel for the 13th respondent: | T North SC with P Nugent |
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| Solicitor for the 13th respondent: | Michael J Creelman |
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| Counsel for the 14th respondent: | D Burnett |
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| Solicitor for the 14th respondent: | Eric Faulkner |
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| Counsel for the 15th respondent: | J Lester on 4 August 2005, SG O’Bryan SC on and after 7 September 2005 |
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| Solicitor for the 15th respondent: | Davies Collison Cave |
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| Counsel for the 16th respondent: | B Ross |
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| Solicitor for the 16th respondent: | BJ Fennelly & Associates |
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| Counsel for the 17th respondent: | R Brett QC with D Star |
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| Solicitor for the 17th respondent: | Tisher Liner & Co |
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| Dates of hearing: | 4-5, 9-11, 15-18, 29-31 August, 1-2, 7-8, 12-13 September, 18-19, 21, 25-28 October, 2-4 and 9-11 November 2005. |
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| Date of judgment: | 29 May 2007 |
