Federal Court of Australia

Commonwealth Director of Public Prosecutions v Wallenius Wilhelmsen Ocean AS [2021] FCA 52

ORDERS

THE COURT ORDERS THAT:

1.    Wallenius Wilhelmsen Ocean AS is convicted of the offence of, between about 1 June 2011 and about 31 July 2012, in Japan and elsewhere, in connection with the transport of vehicles to Australia, intentionally giving effect to cartel provisions in an arrangement or understanding reached with others in relation to the supply of ocean shipping services, knowing or believing that the arrangement or understanding contained cartel provisions contrary to s 44ZZRG(1) of the Competition and Consumer Act 2010 (Cth).

2.    Wallenius Wilhelmsen Ocean AS is fined the sum $24 million in relation to that offence.

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

REASONS FOR JUDGMENT

WIGNEY J:

1    Wallenius Wilhelmsen Ocean AS (WWO) is a large Norwegian company which supplies global shipping services, including the shipment of motor vehicles, trucks, buses and other commercial vehicles on routes to Australia. It ostensibly competed with other large global shipping companies who also supplied shipping services in that market. From at least July 2009, however, WWO (then known as Wallenius Wilhelmsen Logistics AS) and a number of other global shipping companies gave effect to provisions in an arrangement or understanding which had the effect of limiting or distorting that competition. That arrangement or understanding only came to an end in September 2012 when action was taken by the Japan Fair Trade Commission (JFTC) and the United States Department of Justice (DOJ). The Australian Competition and Consumer Commission (ACCC) subsequently conducted an investigation into the conduct of WWO and the other shipping companies. That investigation culminated in the laying of criminal charges against three of the companies.

2    On 3 August 2017, Nippon Yusen Kabushiki Kaisha (NYK) was convicted of intentionally giving effect to cartel provisions contrary to s 44ZZRG(1) of the Competition and Consumer Act 2010 (Cth) (CCA). NYK was fined the sum of $25 million: Commonwealth Director of Public Prosecutions v Nippon Yusen Kabushiki Kaisha (2017) 254 FCR 235 (CDPP v NYK).

3    On 2 August 2019, Kawasaki Kisen Kaisha Ltd (K-Line) was convicted of the same offence. K-Line was fined the sum of $34.5 million: Commonwealth Director of Public Prosecutions v Kawasaki Kisen Kaisha Ltd [2019] FCA 1170; 137 ACSR 575 (CDPP v K-Line).

4    On 18 June 2020, WWO pleaded guilty to a single rolled-up charge of intentionally giving effect to cartel provisions contrary to s 44ZZRG of the CCA. That charge, which was in terms that essentially mirrored the charges against NYK and K-Line, was in the following terms:

Between about 1 June 2011 and about 31 July 2012, in Japan and elsewhere, in connection with the transport of vehicles to Australia, Wallenius Wilhelmsen Logistics AS (now Wallenius Wilhelmsen Ocean AS) intentionally gave effect to cartel provisions in an arrangement made or understanding reached with others in relation to the supply of ocean shipping services, knowing or believing that the arrangement or understanding contained cartel provisions contrary to section 44ZZRG(1) of the Competition and Consumer Act 2010 (Cth).

5    The facts of the offence to which WWO has pleaded guilty are, in summary, that on a number of occasions over a period of just over a year, WWO intentionally gave effect to a cartel provision in an arrangement or understanding it had reached with some of its ostensible competitors in the market for the supply of ocean shipping services. WWO’s conduct in giving effect to the cartel provision involved at least two other parties to the arrangement or understanding: NYK and Mitsui OSK Lines Ltd (MOL). The arrangement or understanding involved or included what was said to be a “rule of respect” or “guiding principle” the effect of which was that the parties to the arrangement or understanding would seek to allocate certain customers between themselves on certain international shipping routes, including routes to Australia, and would not attempt to win each other’s existing business. They thereby sought to ensure that their existing market shares were not altered. The arrangement or understanding has been referred to generally as the Respect Arrangement.

6    Needless to say, the conduct engaged in by WWO in giving effect to the cartel provision in the Respect Arrangement amounted to a very serious offence against Australia’s laws prohibiting cartel conduct.

7    The task for the Court is to impose a penalty that is of a severity appropriate in all the circumstances. The maximum penalty for the offence, in WWO’s circumstances, is a fine not exceeding $48,532,493. While the central issue in sentencing WWO is the size of the fine that it should be ordered to pay having regard to, inter alia, the objective seriousness of the offence and WWO’s subjective circumstances, consideration must also be given to the issue of parity with the fines which have previously been imposed on NYK and K-Line.

Facts relating to the offence

8    The primary facts relating to the offence upon which WWO is to be sentenced were and are not in dispute. The prosecutor, the Commonwealth Director of Public Prosecutions, tendered a Statement of Agreed Facts which was made for the purposes of s 191 of the Evidence Act 1995 (Cth).

9    The Statement of Agreed Facts is a detailed and comprehensive document. It is obviously unnecessary to refer verbatim to all of the facts referred to in it. Following is a summary or distillation of the material facts.

Overview of the offending conduct

10    WWO is a large Norwegian shipping company.

11    The shipping services supplied by WWO included the shipment of motor vehicles, trucks, buses, commercial vehicles and agricultural, mining and construction equipment. It supplied those services to a number of customers, including the manufacturers of those vehicles and equipment, on a number of routes, including routes from Europe, Turkey and the Americas to Australia.

12    WWO competed with a number of other shipping companies for the supply of those ocean shipping services. From at least July 2009, however, WWO and some of its competitors, relevantly including NYK and MOL, applied what was said to be a “rule of respect” or “guiding principle” to their ostensible competition. The substance and effect of that rule or principle was that they would “respect” each other’s businesses by endeavouring to allocate between themselves the business for certain customers on certain routes and by not attempting to “win” or secure shipping contracts which were held by one of the other companies when those contracts came up for tender or renewal. They thereby sought to ensure that their existing shares of the relevant market for ocean shipping services were not materially altered.

13    As has already been noted, the rule or principle which was applied by, relevantly, WWO, NYK and MOL, has been referred to as the Respect Arrangement. The Respect Arrangement constituted or comprised an arrangement or understanding between the relevant carriers for the purposes of the CCA. It also contained a cartel provision within the meaning of s 44ZZRD(3)(b)(i) of the CCA because it relevantly had the purpose of directly or indirectly “allocating between any or all of the parties to the arrangement or understanding the persons or classes of persons who have acquired, or who are likely to acquire, goods or services from any or all of the parties to the arrangement or understanding”. The relevant cartel provision in the Respect Arrangement may conveniently be called the market allocation provision.

14    The parties to the Respect Arrangement, including WWO, would from time to time engage in conduct which gave effect to the Respect Arrangement and the market allocation provision. In general terms, that conduct included the following types of conduct.

15    First, the sharing of information between the parties about the freight rates for the supply of services to customers on particular routes to and from Australia, including information about the rates that were charged, the rates that were proposed to be charged, or the changes or proposed changes to those rates.

16    Second, the reaching of agreements, arrangements or understandings about what freight rates, or approximate freight rates or changes to freight rates, each of the parties would bid, quote, submit or otherwise communicate to customers or potential customers in respect of the supply of services on particular routes to and from Australia. On occasion, the agreement would include that one or more of the parties would not bid or submit for the relevant business.

17    Third, the submission, or non-submission, as the case may be, of bids or quotes to customers or potential customers of freight rates, or approximate freight rates or changes to freight rates, in respect of the supply of services on particular routes to and from Australia in accordance with agreements, arrangements or understandings entered into or arrived at between the parties.

18    The charge to which WWO ultimately pleaded guilty involved six specific incidents of conduct of that nature by officers or employees of WWO which gave effect to the market allocation provision of the Respect Arrangement. That conduct occurred between 1 June 2011 and 31 July 2012.

19    WWO also admitted that it had committed two other offences of giving effect to the market allocation provision in the Respect Arrangement. The specific incidents of conduct constituting those offences occurred in 2009. With the agreement of the Director, WWO asked that the Court take those offences into account in passing sentence for the offence of which it had been convicted in accordance with s 16BA of the Crimes Act 1914 (Cth).

20    The following table summarises the six incidents of conduct which are the subject of the offence of which WWO has pleaded guilty and will be convicted and the two additional incidents which are the subject of the offences to be taken into account in accordance with s 16BA of the Crimes Act.

21    The specific facts relating to each of these incidents will be detailed later.

22    There is no evidence that WWO continued to give effect to the Respect Arrangement after 31 July 2012.

WWO

23    WWO is a global organisation, with offices and agents in Europe, Africa, North East Asia, South East Asia, Japan, North America, Central and South America, India, Middle East and Oceania, including Australia. Its major offices are in Tokyo, Japan, and New Jersey, United States of America (US). WWO currently operates globally a fleet of more than 55 pure car carriers and pure car truck carriers.

24    In Australia, WWO provides logistical services for the processing and distribution of “roll-on, roll-off” vehicles and breakbulk cargo imported from the US and Europe. It has offices and agents in each major port, including Brisbane, Fremantle, Melbourne, Newcastle, Port Kembla and Sydney.

25    Between 2009 and 2012, part of the relevant corporate or managerial structure of WWO was as described in Figure 1 below:

26    WWO’s regional offices had authority to enter into agreements with customers in their respective regions up to a spending limit of US$50 million.

Services on routes to Australia

27    In 2012, approximately 1.1 million new motor vehicles, including passenger vehicles, SUVs, light trucks and heavy vehicles, were sold in Australia. The total value of automotive imports to Australia for that year was $34.8 billion, consisting of both vehicle imports ($26.4 billion) and component imports ($8.4 billion). Automotive imports from Japan comprised the largest share of total automotive imports (30%) with a value of $10,565 million, followed by Europe ($7,582 million), North America ($5,936 million), South East Asia ($5,075 million), Korea ($2,740 million) and China ($1,546 million).

28    Between 2009 and 2012, approximately 80% of sales of new passenger vehicles to private and fleet purchasers in Australia were passenger motor vehicles that had been imported into Australia.

29    Eight companies supplied ocean transport services globally during the charge period. Those companies were NYK, K-Line, WWO, MOL, Nissan Motor Car Carrier Co. Ltd (Nissan MCC), Eukor Car Carriers Inc, Höegh Autolines Holdings AS and Toyofuji Shipping Co. Toyofuji was majority owned and controlled by Toyota Motor Corporation. Nissan MCC was originally owned and controlled by Nissan Motor Co Ltd, but during the charge period was majority owned by MOL.

30    During the charge period, WWO’s global share of capacity for “roll-on, roll-off” services, based on the number of specialised car carriers, was between 8.2% and 10.5%. NYK’s share of capacity was between 15.5% and 17.2%, K-Line’s share was between 11.6% and 11.9% and MOL’s share was between 12.1% and 14.1%. The market shares of the other participants in the market were: between 10.9% and 11.6% for Eukor; between 6.3% and 8.8% for Höegh; between 0.9% and 1.0% for Toyofuji; and between 1.9% and 2.8% for Nissan MCC.

31    Between 2009 and August 2012, WWO shipped 645,740 motor vehicles to Australia, including 114,953 vehicles in 2009, 146,868 vehicles in 2010, 159,987 vehicles in 2011, 190,425 vehicles in 2012 and 33,507 vehicles by August 2012. During this same period, it shipped 3,707 motor vehicles from Australia, including 874 vehicles in 2009, 517 vehicles in 2010, 1,372 vehicles in 2011, 871 vehicles in 2011 and 73 vehicles by August 2012.

32    Between 2009 and 2012, the revenue generated by WWO from the shipping services provided by it and its related entity (Wallenius Wilhelmsen Logistics Australia Pty Ltd) for each financial year was: US$219,344,708 in 2009; US$312,619,748 in 2010; US$462,559,434 in 2011; and US$581,382,231 in 2012. WWO’s revenue generated from its logistical services provided by WWO and the same related entity for each financial year totalled US$31,562,665 in 2009, US$37,049,091 in 2010, US$42,506,092 in 2011 and US$48,746,727 in 2012. WWO’s total revenue (the addition of the preceding amounts) totalled $301,425,490 in 2009, $377,642,346 in 2010, $485,324,934 in 2011 and $606,330,486 in 2012.

General operation of the Respect Arrangement

33    The overarching arrangement or understanding which has been referred to as the Respect Arrangement was in existence from at least July 2009. The general nature and effect of the Respect Arrangement, including the market allocation provision, was referred to earlier. The specific incidents where WWO gave effect to the Respect Arrangement are detailed later. Following is a more detailed description of the general operation of the Respect Arrangement.

34    The shipping companies or carriers who were parties to the Respect Arrangement engaged in a range of conduct in order to give effect to the market allocation provision. The conduct often occurred in the context of requests for tenders or bids, or contract renewals or renegotiations, by a freight customer for a particular route or routes. The conduct was often instigated by the incumbent carrier who had the business for that route or routes. It included the following types of conduct.

35    First, the incumbent carrier would, in some cases, confirm or reach an agreement, or endeavour to reach an agreement, with one or more of the other carriers to the effect that they would not respond to a tender or request for freight rates by a customer.

36    Second, the incumbent carrier, in some cases, would discuss freight rates with the other carriers, determine what it considered to be the appropriate freight rates, or approximate freight rates or range of freight rates, for each of the other carriers to bid to the customer. The incumbent carrier would then take the lead in reaching agreement with each carrier about how they would respond to the customer.

37    Third, in some cases, the incumbent carrier would discuss with other carriers whether the existing freight rates on a route for a particular manufacturer should either generally remain unchanged, or be increased by an amount or approximate amount or decreased by an amount or approximate amount. The incumbent carrier would then seek to reach an agreement with some or all of the carriers to the effect that they would respond accordingly to a tender or request for freight rates by the manufacturer, without necessarily disclosing the actual rates at which each carrier would provide in response to the tender or request for prices.

38    Where none of the carriers who were party to the Respect Arrangement had existing business with a particular customer or a particular route, or a new route was proposed or introduced, that business was considered to be “new business”. In those circumstances, the carriers might do their best to obtain as much of that business as they could in competition with each other. After the initial contract had been awarded, however, that business would generally then be considered to be business to which the Respect Arrangement would apply.

39    While the carriers who were party to the Respect Arrangement were sometimes unable to reach an agreement in order to adhere or give effect to the market allocation provision, those occasions of non-adherence were unusual. In any event, as will be seen, that that was not the case for WWO in respect of the six specific incidents of conduct encompassed by the offence of which it has pleaded guilty, or the two incidents of conduct relevant to the two s 16BA offences.

40    There was also evidence, referred to in the agreed facts, concerning WWO’s general adherence to the Respect Arrangement, albeit that that evidence specifically related to WWO’s conduct in respect of routes that did not involve Australia. In respect of routes from Japan to Europe, for example, the evidence of the Senior Managing Executive Officer of MOL’s Car Carrier Division was that WWO almost never violated the Respect Arrangement. Similarly, the evidence of the General Manager of NYK’s Car Carrier Group, again in the context of routes from Japan to Europe, was that he could not recall a single occasion between 2011 and 2012 when WWO did not act in accordance with the Respect Arrangement, or where there was disagreement between the carriers that required the carriers’ counterparts to be contacted in order to discuss the issue and reach agreement.

WWO’s knowledge of antitrust law

41    From at least June 2003, WWO provided competition law training for its employees. Further training was offered to its staff in 2004, 2006, 2008, 2009, 2011, 2012 and 2013.

42    WWO’s competition law training comprised face-to-face training sessions or e-learning modules. This training material included: a manual which set out employees’ obligations in the event the JFTC searched WWO’s offices without prior notice; WWO’s 2003 Code of Ethics for the Asia Region, which contained a general obligation to observe the law and outlined possible disciplinary actions for staff who failed to comply; and WWO’s 2007 Code of Conduct, which included a specific obligation to not “engage in anti-competitive behaviour” and informed WWO employees that “[WWO] is committed to complying fully with all applicable laws relating to fair competition, fair pricing and consumer protection”.

43    The compliance training and procedures which WWO had in place at the time of the offending, and put in place after the offending, were the subject of evidence adduced by WWO. That evidence is discussed in detail later.

44    It should perhaps be noted in this context that, despite the clear reference in the 2003 Code of Ethics to disciplinary action for staff who failed to comply with the obligation to observe the law, none of the WWO staff identified in connection with the six specific incidents of conduct were subjected to disciplinary action as a result of their conduct.

WWO’s conduct in giving effect to the Respect Arrangement – Specific incidents

45    WWO gave effect to the market allocation provision in the Respect Arrangement from time to time through face-to-face and telephone discussions between manager-level employees or senior executives of WWO and their counterparts at the other carriers who were party to the arrangement. As adverted to earlier, the offence for which WWO is to be sentenced involved or encompassed six specific incidents in which it gave effect to the market allocation provision. WWO also requested the Court to take into account two additional offences which involved specific incidents in which it gave effect to the market allocation provision in 2009. Following is the relevant details of each of the eight incidents.

Incident 1: Renault Nissan – US to Australia

46    In mid-2011, Renault Nissan Purchasing Organisation (RNPO) issued a global tender. The tender included a request for bids for the provision of shipping services on the US to Australia route. The tender required a response by 11 October 2011.

47    On or around 7 October 2011, WWO’s Vice President and Head of Global Commercial (VP), Oslo, telephoned the Group Leader of the Motor Vehicle Group (MVG) of WWO Japan, and requested information about MOL’s position. On the same date, the Group Leader of the MVG sent an email to a number of people, including the Manager of the MVG, which requested that information about MOL’s approach to the tender be passed on to the VP. The subject line of the email included the words “Destroy after reading”. The Manager of the MVG sent an email response to the Group Leader of the MVG which stated that he had made enquiries with MOL and expected to receive an answer from MOL in relation to its position concerning the tender on 11 October 2011.

48    Between 7 October and 11 October 2011, the Manager of the MVG had a number of conversations with the Assistant Manager or the Manager of the Cross Trade Team in MOL’s Car Carrier Division. During those conversations, the WWO manager said words to the effect that WWO considered the US to Australia route to be an important trade route for WWO, that Nissan cargo was classified as WWO cargo and that WWO did not want MOL to be aggressive for new trade on that route. During one of the conversations, the relevant MOL manager said that he considered the tender to be “new business” and that MOL would therefore be competing for it. The WWO manager replied that WWO would retaliate if MOL sought to compete for this business.

49    Following those conversations, the Manager of the MVG telephoned the Assistant Manager of the Cross Trade Team in MOL’s Car Carrier Division. During that conversation, the Manager of the MVG disclosed the freight rate that WWO would be submitting in response to the tender and said that MOL should submit a rate “higher than the market rate” that WWO intended to submit. The MOL manager agreed.

50    On 11 October 2011, the Manager of the MVG emailed the President of WWO Japan. One of the emails informed the President that MOL considered the business to be “new business” and provided a comparison of WWO’s and MOL’s shipping services on the US to Australia route. The other reported that MOL was planning to submit a freight rate in response to the tender.

51    WWO submitted its bid for cargo from the US to Australia in response to the Nissan tender on 12 October 2011.

52    WWO was awarded 100% of the Nissan cargo from the US to Australia.

53    WWO shipped 6,083 Nissan passenger vehicles over the relevant contract period. It generated revenue of US$6,305,008 but that revenue ultimately resulted in a loss of US$1,233,446.

Incident 2: Renault Nissan – Europe and Turkey to Australia

54    In mid-2011, RNPO issued a global tender which included a request for bids for the provision of shipping services on routes from Europe to Australia and Turkey to Australia for the 2012-2013 contract period.

55    In about May or June 2011, the Manager of the MVG of WWO Japan and the Manager of the Cross Trade Team of NYK had a telephone conversation and meeting concerning the tender. During a conversation which occurred either over the telephone or at the meeting, the WWO manager told the NYK manager the freight rates that WWO was proposing to submit to RNPO for the route from Europe to Australia for cars, light commercial vehicles and vans (being US$855, US$990 and US$1615, respectively) and the NYK manager provided the WWO manager with NYK’s proposed freight rate for the Turkey to Australia route (being US$930/unit). He also requested that WWO bid higher than this rate. The WWO manager said that he understood NYK’s request.

56    On 15 November 2011, WWO submitted freight rate quotations to RNPO for the Europe to Australia route which were identical to the rates that its manager had told the NYK manager that it would submit. It also submitted a rate of US$1250/unit for the Nissan cargo on the Turkey to Australia route.

57    No Nissan cargo was shipped by WWO on the routes from Europe to Australia or Turkey to Australia for the 2012-2013 contract period.

Incidents 3-5: Fiat Chrysler – Europe to Australia

58    In or around early August 2011, Fiat issued a request for quotation, which included Fiat passenger vehicle cargo and Iveco truck cargo on the Europe to Australia route to commence in 2012. NYK was Fiat’s existing carrier for passenger vehicle cargo. WWO did not have a contract with Fiat, or provide any services to Fiat, in respect of Fiat passenger vehicle cargo on the Europe to Australia route.

Incident 3: Europe to Australia – cars

59    In or about August 2011, following Fiat’s request for quotation, the Manager of the Cross Trade Team within NYK’s Car Carrier Division contacted the Manager of the MVG of WWO Japan. A conversation took place between those two managers in relation to quotations for the Fiat passenger vehicle cargo. During that conversation, the NYK manager provided the WWO manager with the details of the freight rate level which NYK wanted WWO to bid. The WWO manager said that he understood the request.

60    WWO subsequently submitted a freight rate around the level that had been communicated by NYK.

61    In 2012, NYK entered into an agreement with Fiat for the provision of shipping services, including for the shipping of Fiat passenger vehicles on the Europe to Australia route.

Incident 4: Europe to Australia – trucks

62    In or around early August 2011, after receiving Fiat’s request for quotation, the Manager of the MVG of WWO Japan contacted the Manager of the Cross Trade Team within NYK’s Car Carrier Division. A conversation took place between those two managers in relation to quotations for the Iveco truck cargo. During that conversation, the WWO manager told the NYK manager a particular freight rate and requested that NYK submit a freight rate above that rate. The NYK manager agreed.

63    Following the submission of bids in response to Fiat’s request, NYK retained all of its existing Fiat business.

Incident 5: Europe to Australia – mid-contract period

64    In or around 1 May 2012, Chrysler Australia Pty Ltd took over the distribution of Fiat and Alfa Romeo vehicles in Australia. At that time, NYK was Fiat’s existing carrier for Fiat’s passenger vehicle cargo on the Europe to Australia route.

65    On or around 23 April 2012, an officer of Chrysler Australia approached a WWO Contract Manager for Business Development Oceania in Australia. The Chrysler Australia officer indicated that Chrysler Australia wanted to change service providers from NYK and asked the WWO manager to provide WWO’s proposed freight rate for the Europe to Australia route.

66    On or around 4 May 2012, WWO’s Australian office provided Fiat Chrysler with a freight rate quotation for shipping services on the Europe to Australia route.

67    On or around 21 May 2012, two senior WWO managers, WWO’s Key Account Manager (Europe) and Head of Commercial (Europe), met with Fiat Group Automobiles S.p.A’s (FGA) representatives. During that meeting, discussions took place concerning the supply of shipping services and rates for shipping certain vehicle models on the Europe to Australia route. The FGA representatives advised the WWO managers that Fiat was very interested in changing service provider on this route as NYK was transhipping units in Singapore and did not have good frequency and transit time.

68    On or around 24 May 2012, WWO’s Head of Commercial (Europe) emailed WWO executives including WWO’s Key Account Manager (Europe). The email stated that, in the past, WWO had stayed away from Fiat’s business due to “rate levels” and “in order to avoid retaliation from NYK”. The manager indicated, however, that a number of things had changed that may lead WWO to pursue the business.

69    On or around 16 July 2012, a representative of Chrysler Australia contacted a WWO representative and asked whether WWO could provide shipping services from Europe to Australia at a rate lower than the rate it quoted in May 2012. WWO provided a further revised freight rate quotation in response to that request on 24 July 2012.

70    On or around 25 July 2012, the Manager of the MVG of WWO Japan had a conversation with the Head of Oceania Trade in the WWO Europe Office. During that conversation, the Manager of the MVG said that he had heard from NYK and from within WWO that WWO was seeking to obtain Fiat Chrysler as a customer on routes to Australia. He said that given the Fiat volumes in question were still under contract to NYK, if WWO proceeded with that course, it would interfere with NYK’s current contract and NYK would want WWO to respect its existing business. The Manager of the MVG reiterated that if WWO took any of the Fiat cargo from NYK on the Europe to Australia route, WWO would be contravening the arrangement between the carriers to “respect” each other’s customers, which would lead to repercussions and retaliation by NYK. In that context, he requested the Head of Oceania Trade to provide him with the freight rate figures so he could speak to his counterpart at NYK in Japan. The Head of Oceania Trade informed the Manager of the MVG that he was aware of the arrangement between WWO and NYK to “respect” each other’s customers.

71    On or around 26 July 2012, the Manager of the MVG sent an email to WWO’s VP. The email noted that the Fiat cargo on the Europe to Australia route was historically very important business for NYK and he was afraid of NYK’s reaction if WWO went after that business.

72    On 27 July 2012, the Manager of the MVG sent an email to the President regarding Chrysler Australia’s request. The email explained that it was a serious situation as WWO’s Key Account Manager (Europe) had already submitted a freight rate quotation. He proposed that WWO’s Oslo office stop the Key Account Manager from continuing.

73    The President replied to that email on the same date. In that email, the President indicated that he would intervene if the Manager of MVG could not handle the situation. In an email in reply, the Manager of the MVG told the President that, regardless of what Fiat had said, WWO would not attempt to win this business and that he would “lead the FIAT business to reach the point that [WWO] will answer No Space … and not accept any booking” and that “whatever the customer says [WWO] shouldn’t touch NYK business”.

74    On about 30 July 2012, the Manager of the MVG had a telephone conversation with the Deputy Manager of the Global Marketing and Cross Trade team in NYK’s Car Carrier Group. During that conversation, NYK’s manager said that he had heard a rumour that WWO had made a competitive rate offer to Fiat Chrysler for NYK’s business on the Europe to Australia route, that this business was still under contract to NYK and that, as a result, WWO was interfering with NYK’s current contract. He said that NYK wanted WWO’s respect for this business and requested that WWO submit a new quote with increased rates. The WWO manager said, in reply, that Chrysler Australia had approached WWO for a freight rate quotation for Fiat cargo on the Europe to Australia route and that WWO did not want to interfere with NYK’s Fiat business. He indicated, however, that WWO would be responding to Chrysler with a quote because of its relationship with Fiat on other routes.

75    On 30 July 2012, the Manager of the MVG sent an email to WWO’s VP. A copy of that email was sent to the President. In the email, the Manager of the MVG requested information concerning WWO’s freight rate for the Fiat cargo on the Europe to Australia route, noted that urgent action was required and requested that he and WWO’s VP have a telephone discussion about the matter.

76    Following that email, the Manager of the MVG and WWO’s VP had a telephone conversation. During that conversation, the Manager of the MVG conveyed that he or his supervisor had spoken to his counterpart at NYK, that the situation with NYK was serious, that NYK would retaliate if WWO did not revise its quote to Chrysler Australia and that he would speak to his counterpart at NYK to provide the freight rates that WWO had submitted to Chrysler Australia.

77    In an email sent on 31 July 2012, WWO’s VP stated that WWO “will not offer rates on any other models due to space constraints”. On the same day, the Manager of the MVG sent an email to the President. The Manager of the MVG stated that he had advised WWO’s VP of the seriousness of the situation and that he had obtained the freight rate that WWO had quoted to Fiat. He also informed the President that Fiat was considering terminating its contract with NYK and that he believed that, although WWO’s freight rate submitted to Fiat was relatively high, in light of the situation and NYK’s requested increased freight rate for this cargo, there was a possibility that WWO’s rate would not be considered too high by Fiat. The Manager of the MVG also noted that he had an upcoming meeting with NYK about the matter.

78    Shortly afterwards, NYK’s Deputy Manager telephoned the Manager of the MVG. During the ensuing conversation, the WWO manager told the NYK manager the rates that WWO had quoted to Chrysler Australia. The WWO manager also told the NYK manager that it would be difficult for WWO to increase the freight rate immediately, but that WWO would tell Fiat that it did not have space to carry Fiat cargo on the Europe to Australia route.

79    On 31 July 2012, the Manager of the MVG met with NYK’s Deputy Manager and the Manager of the Global Marketing and Cross Trade Team of NYK’s Car Carrier Division in a conference room at NYK’s headquarters in Tokyo. During that meeting, the WWO manager told the NYK manager the rates that WWO had quoted to Fiat, which were higher than the rates that NYK charged to Fiat.

80    On the same date, WWO confirmed to FGA that its rates quoted on 24 July 2012 for two specific vehicle models were valid and that WWO could not quote for further models or volumes because of space constraints.

Incident 6: Toyota – US to Australia

81    On or about 16 February 2012, Toyota Logistic Services (TLS), a company based in the US, issued a request for quotations as part of a feasibility study, including quotations for the provision of shipping services for Toyota Highlander cargo (known in Australia as the “Kluger”) on the US to Australia route. Until this time, Klugers were not transported from North America to Australia, and NYK was the incumbent carrier of Toyota cargo for the Japan to Australia route.

82    On or about 29 February 2012, the Manager of the MVG telephoned the Deputy Manager of the Global Marketing and Cross Trade team in NYK’s Car Carrier Group. During this conversation, the WWO manager told the NYK manager that WWO intended to submit a bid for the Kluger cargo but, in doing so, did not want to interfere with NYK for this business. He indicated that WWO’s intended rate was in the range of US$50/m3 and US$70/m3. The NYK manager asked WWO not to submit a quote with rates within that range and to instead quote a rate that was much higher. The NYK manager informed the WWO manager that NYK was proposing to submit a freight rate of US$105/m3. In response, the WWO manager asked whether a rate of US$90/m3 or US$95/m3 would be acceptable to NYK. The NYK manager replied that a quote of US$95/m3 would be acceptable. The WWO manager told the NYK manager that WWO management would be consulted about the quote to be submitted to TLS.

83    In February 2012, WWO responded to TLS’ feasibility study with a freight rate of approximately US$40/m3 plus a bunker adjustment factor (BAF).

84    On 17 May 2012, TLS sent an email to bid participants. The email referred to a TLS tender and the TLS system for submitting bids, including the bids for the provision of shipping services for Kluger cargo on the US to Australia route.

85    After receiving that email, NYK’s Deputy Manager of the Global Marketing and Cross Trade team telephoned the Manager of the MVG. The NYK manager asked the WWO manager whether WWO would allow NYK to charter space on the WWO direct service from the US to Australia. The WWO manager said, in reply, that WWO would support NYK and offer space on its direct service if WWO could carry some part of the Kluger business on its own bill of lading.

86    On 28 May 2012, the Deputy Manager and Manager of NYK’s Global Marketing and Cross Trade team met with the Manager of the MVG at NYK’s Tokyo offices to discuss the Kluger tender. During that meeting, the WWO manager informed the NYK manager of WWO’s proposed freight rates to be submitted to the TLS tender.

87    On 30 May 2012, the Manager of the MVG had a telephone conversation with the Deputy Manager of NYK’s Global Marketing and Cross Trade team. During that conversation, the WWO manager informed the NYK manager that WWO proposed to offer a rate of US$80/m3 in response to the TLS tender on the US to Australia route. That was lower than the rate that WWO had submitted in response to the TLS feasibility study.

88    In June 2012, WWO submitted to the TLS tender a base freight rate of US$69.80/m3 plus BAF and other surcharges for routes from the US to Australia. In July 2012, WWO submitted a revised base freight rate of US$61.80/m3 to the TLS tender for the US to Australia routes.

Incidents 7-8: the s 16BA offences

89    As has already been noted, Incidents 7 and 8 did not occur within the charge period and are not part of the conduct the subject of the offence of which WWO has pleaded guilty. These incidents constitute the two offences that WWO has requested the Court to take into account, pursuant to s 16BA of the Crimes Act, in sentencing it for the offence of which it has pleaded guilty. The manner in which these offences and the incidents they encompass are to be taken into account in sentencing WWO will be considered in more detail later.

Incident 7: Toyota – US to Australia (2009)

90    On or around 18 November 2009, the Assistant Manager of the MVG had a conversation with the Manager of the America Team in NYK. During that conversation, the NYK manager said that he had been contacted by a customer in relation to the provision of shipping services on the US to Australia route. He asked the WWO manager, in that context, what freight rate he should quote. The WWO manager said, in reply, that NYK should submit freight rates higher than US$90/m3 – US$100/m3.

91    On or about 25 November 2009, Toyota issued a request for quotation to WWO as part of a feasibility study for the shipment of Klugers from the US to Australia. It became apparent to WWO, as a result of the issuing of this request, that Toyota was the customer referred to by the NYK manager during the telephone call with the WWO manager on 18 November 2009.

92    On 26 November 2009, the President emailed the Assistant Manager of the MVG. The President suggested that the quote that WWO proposed to submit to Toyota should be discussed with NYK in accordance with the Respect Arrangement. He indicated that he would speak to NYK the next day.

93    No cargo was ultimately shipped by Toyota on the US to Australia route.

Incident 8: Mitsubishi – Europe and Turkey to Australia (2009)

94    In around May or June each year, Mitsubishi sought annual freight rate renewals and occasionally ad hoc quotations on specific routes from shipping carriers.

95    On or just prior to 12 November 2009, Mitsubishi contacted NYK and requested that it submit freight rate quotations, including for the routes from Europe to Australia and Turkey to Australia.

96    After receiving that request, on 12 November 2009, the Deputy General Manager of NYK, who was responsible for Europe Trade and Cross Trade within NYK’s Car Carrier Division at the time, telephoned his counterpart at WWO.

97    During that conversation, the NYK manager said that Mitsubishi had requested a freight rate quotation for the aforementioned routes and told the WWO manager the freight rates NYK had provided. He indicated to the WWO manager that if WWO was contacted by Mitsubishi, it should provide rates “in line with” NYK’s freight rates.

98    WWO did not have a contract with Mitsubishi at this time. Nor did it provide shipping services to Mitsubishi on the Europe to Australia or Turkey to Australia routes.

elements of the offence

99    The elements of the offence created by s 44ZZRG of the CCA were analysed in some detail in CDPP v NYK at [171]-[188] and CDPP v K-Line at [171]-[185]. It is unnecessary to repeat that detail here. It suffices to observe again that, while the offence provision in s 44ZZRG may at first blush appear to be beguilingly straightforward, the devil is in the detailed and complex definition of the term “cartel provision” in s 44ZZRD of the CCA. It is also necessary to have regard to other relevant definitional provisions in s 4F and s 44ZZRB of the CCA, as well as provisions of the Criminal Code Act 1995 (Cth) which provide for, inter alia, the fault elements applicable to federal criminal offences, including those in the CCA. It should also be noted, in this context, that since WWO committed the charged offence, the relevant offence provisions have been renumbered; relevantly, the former s 44ZZRG is now s 45AG of the CCA. The content of the provision, however, remains unchanged.

100    In short and simple terms relevant to the particulars of the offence to which WWO has pleaded guilty, the relevant elements of the offence are as follows.

101    First, there was in existence a contract, arrangement or understanding that contained a “cartel provision”: s 44ZZRG(1)(a) of the CCA.

102    The Respect Arrangement was, relevantly, an arrangement or understanding for the purposes of s 44ZZRG(1)(a) of the CCA.

103    A provision is a “cartel provision” if, relevantly: it has the purpose of directly or indirectly allocating between any or all of the parties to the contract, arrangement or understanding the persons or classes of persons who have acquired, or who are likely to acquire, goods or services from any or all of the parties to the contract, arrangement or understanding; and at least two of the parties to the contract, arrangement or understanding are or are likely to be, or but for any contract, arrangement or understanding would be or would be likely to be, in competition with each other in relation to the supply, or likely supply, of goods or services: ss 44ZZRD(1), (3)(b)(i) and (4)(a), (b) and (c) of the CCA.

104    The Respect Arrangement relevantly contained a cartel provision because it contained a provision, the market allocation provision, which had the purpose of allocating the supply of shipping services, including shipping services to Australia, between the parties to the Respect Arrangement who were in competition with each other in relation to the supply of such services.

105    Second, the accused corporation knew or believed that the relevant contract, arrangement or understanding contained a cartel provision: s 44ZZRG(2) of the CCA; see also s 5.3 of the Criminal Code which defines the fault element of knowledge.

106    It is implicit in WWO’s plea of guilty that it knew or believed that the Respect Arrangement contained the market allocation provision which was a cartel provision.

107    Third, the corporation gave effect to the cartel provision: s 44ZZRG(1)(b) of the CCA.

108    WWO gave effect to the relevant cartel provision in the particularised six incidents in which its officers or employees engaged in communications with officers or employees of other parties to the Respect Arrangement, specifically NYK and MOL, in relation to the freight rates that the respective companies would bid in response to requests for bids by motor vehicle manufacturers for the shipping of motor vehicles to Australia.

109    Fourth, the corporation intended to give effect to the cartel provision. No fault element is specified in relation to s 44ZZRG(1)(b) of the CCA. Section 5.6(1) of the Criminal Code provides that, where the fault element for a physical element of an offence that consists only of conduct is not specified, the fault element is intention.

110    It is implicit in WWO’s plea of guilty that it intended to give effect to the market allocation provision.

111    It should also be noted, in this context, that s 5 of the CCA provides that the provisions of, inter alia, Pt IV of the CCA extend to, relevantly, engaging in conduct outside Australia by bodies corporate incorporated or carrying on business in Australia. WWO was not incorporated in Australia; however, it is an agreed fact that WWO carried on business in Australia. It is on that basis that s 44ZZRG of the CCA extends to WWO’s offending conduct. That is important because all of the offending conduct otherwise occurred outside Australia. All of the collusive arrangements and discussions, and all of the contracts that resulted from them, were engaged in or entered into overseas. None of the WWO managers who were involved in the relevant conduct were Australian citizens or residents.

maximum penalty

112    The penalty for an offence against s 44ZZRG(1) is set out in s 44ZZRG(3) of the CCA.

113    In simple terms, the maximum penalty is the greater of three amounts: first, the sum of $10,000,000; second, an amount consisting of three times the total benefits that were obtained from the commission of the offence, if those benefits can be determined; third, if the benefits cannot be determined, an amount consisting of 10% of the corporation’s annual turnover during the 12-month period ending at the end of the month in which the corporation committed, or began committing, the offence. The expression “annual turnover” is defined in s 44ZZRB of the CCA as the sum of the values of all the supplies that the corporation, or any related corporation, made or was likely to have made during the relevant 12-month period, other than certain specific types of supplies, including supplies that are not connected with Australia.

114    It was common ground that the total value of the benefits obtained by WWO which were attributable to the commission of the offence could not be determined.

115    It was an agreed fact for the purpose of this proceeding that WWO’s annual turnover, as defined, in the relevant 12-month period from 1 July 2010 to 30 June 2011, was approximately $485,324,934. The Director accepted that the annual turnover calculated by WWO provided an appropriate basis for the calculation of the maximum penalty pursuant to s 44ZZRG(3) of the CCA.

116    Accordingly, the maximum penalty in respect of the offence committed by WWO is $48,532,493.

Evidence adduced by wwo

117    WWO adduced affidavit evidence from Ms Marianne Frisell Schreuder, a senior legal counsel of WWO.

118    Ms Schreuder had been employed by WWO since 1996 and had worked in many different roles and positions. She took up a role as Legal Counsel Region Asia & Oceania in the Global Legal & Ocean Services division in 2002 and remained in that role until 2012. During that time, she was based in Tokyo from 2002 to 2006 and again from 2010 to 2012. In that role, she was responsible for providing legal advice, support and training for WWO’s Asia and Oceania business activities, including advice on competition law matters. In 2013, she was promoted to the role of Head of Global & Legal Compliance and Global Compliance Officers in WWO, a new position within the organisation. In that role, she was part of WWO’s Global Leadership Team and reported directly to the Chief Executive Officer. She held that role for almost four years.

119    In April 2017, following a company restructure, Ms Schreuder was appointed to her current role as Senior Legal Counsel. In that role, she is responsible for managing WWO’s regulatory and legal response to ongoing investigations by various competition authorities around the world. Ms Schreuder noted that she has now worked for WWO for over 20 years in both a legal and compliance role.

120    Ms Schreuder’s evidence focused on WWO’s compliance training and procedures and the penalties paid by WWO in other jurisdictions. Ms Schreduer was not cross-examined and her evidence was not challenged.

Compliance training and procedures

121    Ms Schreuder’s evidence was that from at least June 2003, WWO employees have been required to attend compliance and code of conduct training in accordance with WWO’s Compliance Program. That training was provided in various countries where WWO carried on business, including Australia, and included training sessions concerning the local competition laws that applied in the relevant country.

122    WWO also had a Code of Conduct from at least June 2003. That Code was most recently updated in 2016. Ms Schreuder’s evidence concerning the Code of Conduct included the following:

The Code of Conduct stipulates that no employee should engage in anti-competitive behaviour, including the disclosure of information about the company, a customer or competitor not publically known, and all employees should be aware that the penalties for non-compliance are severe. The Code of Conduct notes that violations of the Code of Conduct or applicable laws may result in disciplinary action as well as termination of employment and legal proceedings.

123    Ms Schreuder also gave evidence that from 2012 to 2015, WWO implemented a revised global Compliance Program. The revised program included: the creation of a Global Compliance Policy; the creation of a compliance section within WWO, including the appointment of a Global Compliance Officer and other key compliance managers; updated jurisdiction-specific compliance manuals and policies; jurisdiction-specific compliance training; separation of the commercial and operational departments within WWO; the introduction of an Alert Line; and regular auditing to ensure compliance with the revised program.

124    The Global Compliance Policy was introduced in or around 2012 to 2013 and outlined the organisational structure, responsibilities and reporting lines for the implementation of WWO’s revised Compliance Program. It included a statement of commitment by management to compliance with relevant competition laws. Responsibility for the policy’s implementation rested with the Chief Executive Officer, the Heads of Division and Heads of the Regional Market Performance Areas.

125    Ms Schreduer’s evidence was that from around September 2012 to February 2020, more than 100 competition law training sessions with WWO employees have been conducted globally, with eight sessions specific to competition compliance in Australia delivered to employees in Australia. She further stated that in her role as Global Compliance Officer, she delivered approximately 14 of those sessions. Ms Schreuder’s evidence concerning the training sessions included the following:

From around 2014, all of [WWO’s] workforce have been required to complete in-person training and/or e-learning programs from time to time. These training and e-learning programs form part of the compliance training program and are targeted at the prevention of anti-competitive practices and anti-bribery and anti-corruption practices. In 2015, employees were required to complete an e-learning program specifically focused on anti-competitive practices. For completeness, I note that the [WWO] employees who did not complete this program were those production employees involved in the provision of land-based services.

126    Ms Schreuder also noted that from 2013, WWO made a number of significant changes to its senior management personnel, including the President and CEO, Chief Commercial Officer, Chief Operating Officer for Ocean Services and the President of WWO’s Japan office. None of the new personnel that were appointed had prior involvement with the conduct the subject of this proceeding.

127    Finally, Ms Schreuder stated that in June 2014, WWO established a new department with sole responsibility for ocean operations that was functionally separate from the company’s commercial department. It also established an anonymous hotline in 2013 to encourage the reporting of anti-competitive behaviour or conduct otherwise in breach of the Code of Conduct or other WWO policies.

128    Two matters should perhaps be noted in the context of considering Ms Schreuder’s evidence concerning WWO’s compliance training and programs. First, it is self-evident that the training and programs that were in place before 2012 were plainly either deficient, ineffective or perhaps both. Either the WWO managers and executives who engaged in the conduct which gave effect to the Respect Arrangement were unaware that their conduct was unlawful anti-competitive conduct which breached WWO’s Code of Conduct, in which case the training and programs were manifestly deficient, or the managers and executives knew that their conduct was unlawful and contrary to the Code of Conduct, but engaged in that conduct anyway, in which case the training and programs were manifestly ineffective. As discussed later, the latter is more likely to have been the case.

129    Second, the significant changes to WWO’s compliance training and programs in and after 2012 can largely be explained by, or were the product of, the JFTC and DOJ raids. Although Ms Schreuder’s evidence does not make this link expressly or directly, it is difficult to avoid the inference that the new measures implemented by WWO in and after 2012 were a result of the fact that the competition authorities had discovered and exposed its participation in the global cartel.

Penalties paid in other jurisdictions

130    Ms Schreuder’s evidence also included the following detail concerning fines paid by WWO in other jurisdictions as a matter of public record. The relevance of the imposition of those penalties and the appropriate weight to be given to them in the exercise of the sentencing discretion is addressed later.

United States

131    In October 2011, WWO entered into a Compromise Agreement with the US Federal Maritime Commission (FMC) and paid an agreed administrative penalty of US$800,000 in relation to alleged conduct concerning the transportation of automobiles and other motorised vehicles by “roll-on, roll-off” specialised car carrier vessels. That conduct occurred pursuant to agreements that were not filed with the FMC.

132    On 11 July 2016, WWO agreed to plead guilty and pay a criminal fine of US$98.9 million in the US in relation to its participation in a combination and conspiracy to suppress and eliminate competition by allocating customers and routes, rigging bids and fixing prices for international ocean shipping services for “roll-on, roll-off” cargo to and from the Port of Baltimore and other locations in the US during the period February 2000 until February 2012. This fine related in part to conduct affecting certain volumes of commerce on routes to Australia, though the extent to which that was the case is unclear.

133    In November 2016, three WWO employees were indicted on charges of conspiring with competitors to allocate certain customers between routes, rig bids and fix prices for the sale of international ocean shipments of “roll-on, roll-off” cargo to and from the US and elsewhere.

Europe

134    On 21 February 2018, the European Commission fined WWO and three other maritime car carriers for participating in a cartel concerning intercontinental maritime transportation of vehicles in breach of European Union antitrust rules. WWO was fined EUR207,335,000 (approximately US$171 million at that time) in relation to conduct on various routes to and from the European Economic Area during the period 18 October 2006 to 6 September 2012. The conduct for which WWO was fined by the European Commission included some conduct which affected volumes of commerce on routes to Australia, though the extent to which that was the case is again unclear.

Japan

135    On 18 March 2014, the JFTC found WWO and other carriers had illegally coordinated their responses to requests for prices from customers in breach of Japanese legislation. WWO was issued with an administrative surcharge payment order in the amount of JPY3,495,710,000 (approximately US$33 million at that time) in relation to the North America to Japan route and Europe to Japan route from mid-January 2008 until 6 September 2012.

China

136    On 15 December 2015, China’s National Development and Reform Commission fined eight carriers for reaching and implementing monopoly agreements which eliminated and restricted competition in the car carrying industry. WWO was fined CNY45,061,269 (approximately US$7 million at that time) in relation to conduct occurring between 2008 to September 2012 involving import and export ocean shipping on routes between China and North America, Japan, Europe and Turkey.

South Africa

137    On 13 August 2015, the Competition Tribunal of South Africa approved a settlement agreement filed by the South African Competition Commission and WWO. The conduct by WWO which was the subject of that settlement agreement included it entering into, and giving effect to, agreements to fix prices, divide markets and collude on tenders issued by vehicle, equipment, rolling construction and agricultural machinery manufacturers with its competitors for the transportation of motor vehicles to and from South Africa by sea. WWO agreed to pay an administrative penalty of ZAR95,695,529 (approximately US$6.4 million at that time) for conduct occurring from 2008 to September 2012 in relation to certain volumes of commerce on routes between South Africa and Europe, North Africa, North America and Asia including Japan, Thailand and Indonesia, and conduct occurring from 1999 to 2012 in relation to certain volumes of commerce on the Thailand to South Africa route.

Mexico

138    On 9 June 2017, Mexico’s Federal Economic Competition Commission fined WWO and six other carriers for entering into collusive agreements to allocate between them portions of the car carrier and “high and heavy” carrier markets in Mexico. The fine of approximately US$4.2 million at that time concerned WWO’s conduct in 2012 in relation to certain volumes of commerce on the route from Europe to Mexico.

Brazil

139    On 9 November 2016, WWO agreed to pay fines totalling BRL28,627,814.01 (approximately US$4.1 million at that time) to Brazil’s Administrative Council for Economic Defence following an investigation into alleged anti-competitive behaviour in the car carrying industry.

South Korea

140    On 1 September 2017, the Korean Fair Trade Commission issued a total fine of KRW43 billion (approximately $47.68 million at that time) on WWO and eight other international shipping companies for agreeing to and implementing conduct having an anti-competitive effect on the automobile marine transport market for exports and imports of automobiles from or into Korea between 2002 and 2012. WWO was also fined KRW5,515,000,000 (approximately US$3.6 million at that time) in relation to conduct occurring from 2005 to 2012 in relation to certain volumes of commerce on routes between South Korea and North, Central and South America, Europe and the Mediterranean and the rest of Asia including Japan.

Contrition

141    It is noteworthy that Ms Schreuder’s evidence did not include an express or even implicit apology or statement of contrition and remorse on behalf of WWO. Nor was there any other direct evidence of contrition or remorse, though as discussed later, WWO’s early indication that it would plead guilty to the offence is demonstrative of some measure of contrition.

Guilty plea

142    On 23 August 2019, the Director filed an indictment in this Court ex officio pursuant to s 23AB(1)(b) of the Federal Court of Australia Act 1976 (Cth). That indictment contained one rolled-up offence under s 44ZZRG of the CCA.

143    On 29 August 2019, at the first case management hearing in this matter, the Court was advised that the matter would proceed by way of a plea of guilty and sentencing hearing.

144    On 20 February 2020, following two additional case management hearings that focused largely on the delays in finalising the Statement of Agreed Facts, the matter was listed for a sentencing hearing on 18 June 2020 with an estimate of one day. The Director noted that WWO, at that time, had not formally entered a plea of guilty. The parties agreed that the plea could and would be entered at the commencement of the sentencing hearing, with neither party anticipating any change in the plea.

145    A formal plea of guilty to the indictment containing the single rolled up charge under s 44ZZRG of the CCA was eventually entered on 18 June 2020.

the appropriate sentence

146    WWO, a corporation convicted of a federal offence, is to be sentenced in accordance with Pt 1B of the Crimes Act. The relevant provisions of Pt 1B and the applicable sentencing principles were considered at length in CDPP v NYK and CDPP v K-Line. Given the obvious similarities and connections between the offending behaviour of NYK, K-Line and WWO, the following discussion largely repeats or reiterates much of what was said in the sentencing judgment in those matters. Where appropriate, however, relevant distinguishing facts or features will be highlighted.

147    Section 16A(1) of the Crimes Act states that the “overarching principle” of Pt 1B is that any sentence imposed by the Court must be of a “severity appropriate in all the circumstances of the offence”: see CDPP v NYK at [202]; CDPP v K-Line at [264].

148    Section 16A(2) details the matters that the Court must take into account so far as they are relevant and known to the Court. Those matters relevantly include: the nature and the circumstances of the offence; other offences (if any) that are required or permitted to be taken into account; if the offence forms part of a course of conduct, that course of conduct; the personal circumstances of any victim of the offence; any injury, loss or damage resulting from the offence; the degree to which the offender has shown contrition for the offence; if the offender has pleaded guilty, that fact; the degree to which the offender has co-operated with law enforcement agencies in the investigation of the offence and other offences; the deterrent effect of any sentence on the offender or any other person; the need to ensure that the offender is adequately punished for the offence; the character and antecedents of the offender; and the prospect of rehabilitation of the offender.

149    The “checklist” of matters detailed in s 16A(2) does not, however, exclude other relevant considerations, including common law sentencing principles: Direction of Public Prosecutions (Cth) v El Karhani (1990) 21 NSWLR 370 at 377-8; Bui v Director of Public Prosecutions (Cth) (2012) 244 CLR 638 at [18]; Johnson v The Queen [2004] HCA 15; 78 ALJR 616 at [15]. Sentencing principles such as parity and proportionality are important considerations in fixing a sentence of a severity appropriate in all the circumstances: Hili v The Queen (2010) 242 CLR 520 at [25]; Wong v The Queen (2001) 207 CLR 584 at [78].

150    The following is a more detailed consideration of the relevant matters set out in s 16A(2) and other matters insofar as they are relevant to the offence committed by WWO and WWO’s particular circumstances.

Section 16A(2)(a) of the Crimes Act – The nature and circumstances of the offence

151    As has already been noted, the offence committed by WWO was, on any view, a very serious offence which requires condign punishment. WWO did not contend otherwise. A number features of the offence and the offending conduct compel that conclusion.

Course of conduct – a “rolled-up” offence

152    WWO has pleaded guilty to a single offence in contravention of s 44ZZRG(1) of the CCA. That should not, however, detract from the fact that, strictly speaking, WWO committed multiple offences against s 44ZZRG(1). A separate offence against s 44ZZRG(1) is committed each time a corporation engages in conduct which gives effect to a cartel provision. The agreed facts disclose that WWO engaged in conduct between June 2011 and July 2012 which gave effect to a cartel provision on six separate occasions. Each of those occasions could have been charged as a separate offence. WWO also committed two other offences which it has requested the Court to take into account, pursuant to s 16BA of the Crimes Act, in sentencing it for the offence of which it has pleaded guilty.

153    Notwithstanding that the facts reveal that WWO committed multiple offences, it is permissible for the Director to present an indictment containing a “rolled-up” charge on a plea (or expected plea) of guilty for a federal offence. A “rolled-up” charge is a charge in which more than one contravention of the relevant offence provision, or more than one episode of criminality, is particularised as part of the charge. A rolled-up charge would, but for the accused’s plea of guilty and consent, be liable to be quashed on the basis that it would offend the rule against duplicity: see CDPP v NYK at [206] and CDPP v K-Line at [269], both citing Environment Protection Authority v Truegrain Pty Ltd (2013) 85 NSWLR 125 at [31]-[52].

154    The relevant principles regarding rolled-up charges were summarised as follows in CDPP v K-Line at [270] (see also CDPP v NYK at [207]):

In sentencing a rolled-up charge, the Court is required to assess the criminality of an offender’s conduct as particularised. The issue for the Court on sentence is the criminality disclosed by the offence, not the number of charges: R v Knight [2004] NSWCCA 145 at [25]-[26]. The more contraventions or episodes of criminality that form part of the rolled-up charge, the more objectively serious the offence is likely to be: R v Richard [2011] NSWSC 866 at [65(f)]; R v Glynatsis [2013] NSWCCA 131; 230 A Crim R 99 at [66]; R v De Leeuw [2015] NSWCCA 183 at [116]. That said, the maximum penalty for the rolled-up charge is the maximum penalty for one offence, not the aggregate of the penalties for what could have been charged as separate offences: R v Richard at [105]; R v Donald [2013] NSWCCA 238 at [85].

155    Putting aside the fact that the offence to which WWO has pleaded guilty is a “rolled-up” offence, it is, in any event, relevant in assessing the nature and seriousness of the offence that WWO’s offending involved a course of conduct over a lengthy period of time. The scale and duration of the offending is discussed in more detail later.

The maximum penalty

156    The maximum penalty for the one offence committed by WWO is $48,532,493.

157    The maximum penalty for an offence is often viewed as a “guidepost” or “yardstick” that bears on the ultimate discretionary determination of the sentence for the offence: Elias v The Queen (2013) 248 CLR 483 at [27]. It can also be taken to represent the legislature’s assessment of the seriousness of the offence: Muldrock v The Queen (2011) 244 CLR 120 at [31]. It is, however, only one of many factors that may or must be taken into account when determining the appropriate sentence. Indeed, in some cases and in some circumstances it may provide little to no assistance: Markarian v The Queen (2005) 228 CLR 357 at [65], citing R v Geddes (1936) 36 SR (NSW) 554 at 555-556. As the High Court has observed, “[i]t is wrong to suggest that the court is constrained, by reason of the maximum penalty, to impose an inappropriately severe sentence on an offender for the offence for which he or she has been convicted”: Elias at [27].

158    The maximum penalty for an offence against s 44ZZRG of the CCA is not a single, specified sum or formula. The provision instead provides for alternative maximum penalties. The Director submitted that this “flexibility” indicates the seriousness with which the Parliament views cartel conduct.

159    As discussed earlier, the maximum penalty in WWO’s circumstances is based on its annual turnover, as defined in s 44ZZRB of the CCA. That is because, as was agreed by the parties, it was impossible to determine the total value of the benefits obtained by one or more persons that were reasonably attributable to the commission of the offence and 10% of WWO’s agreed annual turnover was greater than the sum of $10,000,000: see s 44ZZRG(3) of the CCA.

160    The relevance of this basis of assessment of the maximum penalty was explained in CDPP v K-Line at [274] as follows (see also CDPP v NYK at [211]):

One can readily comprehend why the legislature chose to include a maximum penalty for cartel offences which may be based on the offending corporation’s annual turnover. Specific deterrence is a major consideration in determining the appropriate size of the fine to impose in relation to a cartel offence. The fine should be such as to ensure that the penalty is not to be regarded by the offender or others as an acceptable cost of doing business. The sum required to achieve that objective will generally be larger where the offending corporation is a very large corporation, as may be reflected in its annual turnover. That said, in some cases a maximum penalty based on the offending corporation’s annual turnover may not provide a realistic guide to the objective seriousness of the offending conduct or criminality involved in the offence. It is, for example, possible to imagine a case where a large corporation with a very high annual turnover committed a single relatively minor offence against s 44ZZRG of the [CCA].

161    WWO submitted that this was a case in which “the offending corporation’s annual turnover may not provide a realistic guide to the objective seriousness of the offending conduct”. It referred, in that regard, to the facts of “Instance 1”: the shipment of 6,083 Nissan passenger vehicles by WWO from the US to Australia at a loss of US$1,233,446. The fact it had made a loss, rather than a profit, was said by WWO to be “itself significant”, suggesting that annual turnover as a “point of reference … must be applied with great caution”. The effect of WWO’s submission was that the maximum penalty should be treated with circumspection because there was a level of disconnect between WWO’s size and the seriousness of its offending conduct based on the fact that it had not been shown to have directly profited from it.

162    It may be accepted, essentially for the reasons given in the passage from CDPP v K-Line just cited, that where the maximum penalty for an offence against s 44ZZRG of the CCA is calculated by reference to the offending corporation’s annual turnover, some degree of caution or circumspection should generally be applied in treating the maximum penalty as a relevant “guidepost” or “yardstick” in determining the appropriate penalty. It cannot, however, be accepted that there was any relevant disconnect between WWO’s size, reflected in its annual turnover, and the seriousness of its offending, such that the maximum penalty of $48,532,493 provides no useful or reliable guidepost or yardstick in determining the appropriate penalty. WWO’s submission to that effect is based on an overly simplistic and flawed approach to the assessment of the seriousness of cartel offences generally and the offence committed by it specifically.

163    While the profit that a corporation derived from cartel conduct may be one indication of the seriousness of that offending conduct, it is by no means the only measure of the seriousness of the offending conduct. It is obviously not always possible to quantify accurately the profits that may be derived from a cartel offence. That is no doubt why the maximum penalty prescribed for such offences provides for alternative methods by which to calculate the penalty if the benefits attributable to the offence cannot be ascertained. The fact that it cannot be demonstrated that a corporation derived a direct financial benefit from giving effect to a cartel provision does not mean that the offence was not serious. Nor does the fact that the corporation can be shown to have made a loss from one incident of giving effect to the cartel provision.

164    The benefits that a corporation may derive from a cartel offence are clearly not limited to profits. Indeed, the benefits that a corporation may derive from a cartel are not limited to quantifiable financial benefits of any kind, but include more intangible, but nonetheless extremely valuable, benefits. That is no doubt why the concept of benefit in s 44ZZRG(3) is not limited to profits or other direct financial benefits.

165    This is a case in point. There could be little doubt that WWO benefited from its participation in the Respect Arrangement and its giving effect to the market allocation provision specifically. The very point or purpose of the Respect Arrangement and market allocation provision was the maintenance of stable market shares amongst the parties and the absence of effective price competition or other competitive pressures. The agreed facts reveal that those objectives were largely achieved. The maintenance of a stable market share, the maintenance of its existing business and the absence of effective price competition in the market were undoubtedly benefits that WWO derived from its offending conduct.

166    The seriousness of a cartel offence is also not to be measured simply on the basis of the benefits derived by the offender. A cartel offence committed by a corporation may undoubtedly also be considered to be a serious offence if the benefits from that offending mainly flowed to the other participants in the cartel. This again is a case in point. There could be no doubt that the other participants in the cartel, in particular NYK, benefited from some of the specific incidents in which WWO gave effect to the cartel arrangement. That is because those incidents involved WWO showing “respect” to NYK by not attempting to submit a bid or competitive bid in respect of customers or routes where NYK was the incumbent carrier. That allowed NYK to retain that business at freight rates that were likely to have been higher than would have been the case if there had been any effective price competition.

167    Finally, it is in any event overly simplistic to approach the analysis of the seriousness of cartel offending solely by reference to the benefits that can be shown to have been derived by the offender and other participants in the cartel. That would largely ignore the serious economic damage that may be caused by such anti-competitive conduct, particularly anti-competitive conduct engaged in by a very large corporation in a strategically important market. This case is again a case in point. WWO was undoubtedly a large corporation and the market for ocean shipping services was undoubtedly an important market for an island nation such as Australia. To assess the seriousness of WWO’s offending conduct solely on the basis of the profit or loss it may have derived from that offending would ignore the serious deleterious effects that its conduct had, or was likely to have had, on competition in that important market.

168    It is no doubt of some relevance in assessing the seriousness of WWO’s offending that it incurred a small loss from one of the shipping contracts which was affected by its conduct and that there is no evidence that it derived any direct financial benefit from any of the other incidents by which it gave effect to the market allocation provision. It perhaps overstates the position, however, to say that that fact is “itself significant”. More importantly, it provides no sound basis for WWO’s submission that there was a disconnect between WWO’s size, as reflected in its relevant annual turnover in the period prior to the offending, and the seriousness of its offending, nor any sound basis for the submission that the maximum penalty applicable in WWO’s case should not be considered to be a relevant or reliable guidepost in the assessment of the appropriate penalty.

169    Finally, it should perhaps be reiterated that, in any event, the maximum penalty is no more than a guidepost or yardstick. It is but one of the many relevant considerations in fixing the appropriate penalty.

Cartel offences generally

170    It is trite to observe that cartel conduct generally involves anti-competitive conduct of a very serious nature that should be emphatically condemned and deterred by the imposition of appropriately stern penalties. Prior to 2009, cartel conduct attracted only civil penalties. The fact that cartel conduct was criminalised in 2009 no doubt reflects the fact that Parliament regarded it sufficiently serious as to attract “opprobrium and societal condemnation in a way that the imposition of a civil penalty cannot”: CDPP v NYK at [215]-[216], also at [1] which reproduces the Minister’s Second Reading Speech; CDPP v K-Line at [275], [278].

171    While WWO is to be sentenced for a criminal offence, as opposed to being punished for contravention of a civil penalty provision, it is nonetheless useful to consider what has been said concerning the objective seriousness of cartel conduct in the civil penalty context. Much of what has been said about the seriousness of cartel conduct in that context applies equally in the criminal context.

172    In Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (No 2) [2002] FCA 559; 190 ALR 169, Finkelstein J observed as follows (at [13]-[15]):

… Our economic system is based upon a philosophy of private enterprise and competition. Antitrust legislation has as its object the promotion of free competition by proscribing the misuse of monopoly or oligopoly power, and by making unlawful conduct such as market rigging, collusive tendering, price fixing, and other acts that inhibit the minimisation of production costs and the efficient allocation of resources. That is to say, antitrust legislation is founded on the underlying premise that free competition is essential for the welfare of the state. Conduct that affects the public, such as the anti-competitive behaviour that is outlawed by the [CCA], can never really be considered as anything other than serious.

Moreover, antitrust contraventions do not occur as a result of passion or accident. The agents of a corporation have the choice to engage or refrain from engaging in the anti-competitive behaviour. A contravention most often occurs when there is a belief that the financial gain that is anticipated to result from the anti-competitive behaviour will be considerable, and well worth the risk of detection and the cost of prosecution. In many cases the expected financial gain will be very large, and in some markets could be in the millions of dollars. The corresponding losses that are suffered will fall across a range of organisations including competitors. But ultimately the losses are borne by consumers who are usually economically weak and do not have meaningful power to obtain redress.

In addition, it is necessary to recognise the fact, for it is a fact, that many breaches of antitrust laws will be carried out over several months, if not years, before they are detected. To be effective, when engaged in by cartels, they require at least a minimum degree of co-ordination and planning. When imposing a sentence in a criminal case it is always said that regard should be had to the deliberateness of the actions which constitute offence. With few exceptions, conduct that results in a contravention of antitrust legislation is necessarily deliberate and usually with full knowledge that the conduct is unlawful.

173    Similarly, in Australian Competition and Consumer Commission v Visy Industries Holdings Pty Limited (No 3) [2007] FCA 1617; 244 ALR 673, Heerey J noted the following (at [306]-[307]):

Cartel behaviour of the kind with which this case is concerned is extremely destructive of the competition on which the prosperity of a free market economy depends. Often the profits can be immense, and the risk of detection slight. Of its nature, cartel behaviour is likely to occur in secret and between parties who seek mutual benefit…

… Price fixing and market sharing are not offences committed by accident, or in a fit of passion. The law, and the way it is enforced, should convey to those disposed to engage in cartel behaviour that the consequences of discovery are likely to outweigh the benefits, and by a large margin.

174    It is well-accepted that the factors which are considered to be relevant in fixing the civil penalties for cartel conduct and like contraventions are equally applicable to criminal penalty proceedings. That is because the task of appraising the nature and seriousness of contravening conduct in a civil penalty proceeding is in many respects similar to that undertaken in imposing a criminal sentence: CDPP v NYK at [220]; CDPP v K-Line at [280]. The factors or matters which are generally considered to be relevant when fixing penalties for the contravention of civil penalty provisions of the sort presently under consideration were conveniently summarised in Australian Competition and Consumer Commission v Australia and New Zealand Banking Group Limited [2016] FCA 1516; 118 ACSR 124 (ANZ) at [86]-[89] as follows:

In general terms, the factors that may be relevant when fixing a pecuniary penalty may conveniently be categorised according to whether they relate to the objective nature and serious of the offending conduct, or concern the particular circumstances of the contravenor in question (what sentencing judges commonly refer to as the offender’s “subjectives” or the “subjective circumstances”).

The factors relating to the objective seriousness of the contravention include: the extent to which the contravention was the result of deliberate, covert or reckless conduct, as opposed to negligence or carelessness; whether the contravention comprised isolated conduct, or was systematic or occurred over a period of time; if the contravenor is a corporation, the seniority of the officers responsible for the contravention; the existence, within the corporation, of compliance systems and whether there was a culture of compliance at the corporation; the impact or consequences of the contravention on the market or innocent third parties; and the extent of any profit or benefit derived as a result of the contravention.

The factors that concern the particular circumstances of the contravenor (where the contravenor is a corporation) generally include: the size and financial position of the contravening company; whether the company has been found to have engaged in similar conduct in the past; whether the company has improved or modified its compliance systems since the contravention; whether the company (through its senior officers) has demonstrated contrition and remorse; whether the company had disgorged any profit or benefit received as a result of the contravention, or made reparation; whether the company has cooperated with and assisted the relevant regulatory authority in the investigation and prosecution of the contravention; and whether the company has suffered any extra-curial punishment or detriment arising from the finding that it had contravened the law.

The size of the contravening corporation does not of itself justify a higher penalty than might otherwise be imposed: Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; 327 ALR 540 at 559-561 [89]-[92]. The size of the corporation may, however, be particularly relevant in determining the size of the pecuniary penalty that would operate as an effective deterrent. The sum required to achieve that object will generally be larger where the company has vast resources: Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) [2005] FCA 265; 215 ALR 301 at 309 [39]; Australian Competition and Consumer Commission v Apple Pty Limited [2012] FCA 646 at [38].

175    Many of the relevant factors or considerations that have been noted in the civil penalty context have been replicated, to varying degrees, in the list of mandatory considerations found in s 16A(2) of the Crimes Act. It is also important to emphasise that those factors or considerations should not be treated as a “rigid catalogue or checklist” to be applied in each case: see CDPP v NYK at [220]; CDPP v K-Line at [281]. It ultimately remains a matter for the Court to consider the nature and objective seriousness of the offending conduct by assessing all of the relevant facts and considerations. It is nevertheless useful and convenient to consider and analyse the facts and circumstances of this case by reference to the relevant factors that have been identified in the civil penalty context.

The duration and scale of the offending conduct

176    The following points may be made about the duration, scale and scope of WWO’s offending conduct.

177    First, the specific incidents of conduct encompassed by the offence occurred between about 1 June 2011 and about 31 July 2012, a period of just over one year (14 months). The fact that WWO’s offending comprised a course of conduct over such a lengthy period is important.

178    Second, WWO has admitted two additional offences against s 44ZZRG(1) that took place in 2009. Those offences do not form part of the charged conduct. The extent to which the Court can and should have regard to them will be considered later in the context of ss 16A(2)(b) and 16BA of the Crimes Act. It suffices to note for now that those incidents demonstrate that the offence for which WWO is to be sentenced did not occur in isolation and was certainly not a spur of the moment or one-off aberration.

179    Third, and related to the previous point, the duration of the incidents the subject of the charge cannot be considered in isolation. The Respect Arrangement, including the relevant cartel provision, had been on-foot since before 2009. As just noted, cartel conduct was only criminalised in Australia as recently as July 2009. WWO could not and cannot be punished for any conduct it engaged in prior to that date. Nor could any such conduct be considered to aggravate the offence that was committed by WWO. It is, however, nevertheless of some relevance that the offence occurred in the context of a longstanding global cartel.

180    Fourth, there was no evidence that WWO continued to give effect to the Respect Arrangement or market allocation provision after 31 July 2012. Nor, however, was there anything to suggest that WWO voluntarily withdraw from the cartel at that time. It can be inferred, to the requisite standard, that the Respect Arrangement only ceased when the JFTC and the DOJ effectively put an end to it by their actions in September 2012.

181    Fifth, it is relevant, in terms of the scale and scope of WWO’s offending, that it occurred in a market for services that were and are of considerable economic importance to Australia: the supply of ocean shipping services for “roll-on, roll-off” cargo on international routes including to and from Australia. The total value of automotive imports to Australia in 2012 was $34.8 billion. The cartel to which WWO was a party involved many of the major global suppliers of those services. WWO had the fifth largest global capacity of those carriers, between 8.2% and 10.5% of global capacity. There can be little doubt that the anti-competitive conduct engaged in by WWO had the capacity to limit or distort substantially the competitive setting of freight rates on the relevant routes to Australia, the likely result being that in many instances those rates were likely to be higher than they would have been in a competitive market: see CDPP v NYK at [226]; CDPP v K-Line at [287].

182    WWO’s submissions highlighted various features of its conduct which were said to be relevant to assessing the nature and seriousness of its offending behaviour.

183    First, WWO submitted that its offending conduct occurred to “varying degrees” and that, more importantly, the conduct “was not adhered to in every case”. It noted, for example, in relation to Incident 6, that while WWO had informed NYK that it would quote a rate of US$90/m3 or US$95/m3, WWO in fact quoted a rate of approximately US$40/m3 plus BAF.

184    There are a number of difficulties with that submission. It may be accepted that there were occasions where the parties to the Respect Arrangement did not adhere to the guiding principle. It was, however, an agreed fact that those occasions were unusual. More significantly, it was an agreed fact that each of the eight specific incidents in which WWO gave effect to the market allocation provision involved adherence to the Respect Arrangement. That includes Incident 6, the incident relied on by WWO in support of its submissions concerning non-adherence.

185    It may be accepted, in relation to Incident 6, that the freight rate submitted by WWO in response to Toyota’s feasibility study may have been less than the rate that it had indicated to NYK it would submit. However, that was not the end of the matter. After WWO had submitted that freight rate, WWO and NYK engaged in further meetings and discussions which resulted in a revised offer by WWO some months later. It is abundantly clear, considering the conduct involved in Incident 6 in its entirety, that the final freight rates that were submitted to Toyota by both WWO and NYK were the product of collusion and were not truly competitive rates. It is, in all the circumstances, highly questionable whether the example of non-adherence relied on by WWO in fact amounted to non-adherence. Even if it did, it was non-adherence in an extremely minor and inconsequential respect.

186    On the question of WWO’s adherence to the cartel generally, WWO submitted that the evidence of senior managers of MOL and NYK concerning WWO’s close adherence to the Respect Arrangement regarding routes from Japan to Europe (as included in the agreed facts) was not directly relevant to this offence. That may be so. That evidence did, however, tend to suggest that it was very unusual for WWO not to adhere to the Respect Arrangement overall. The difficulty with WWO’s submission concerning that evidence is that, on the one hand, it relied on a general statement in the agreed facts which suggested that the parties to the Respect Arrangement did not always adhere to it; and, on the other hand, it took issue with agreed facts which tended to suggest that WWO’s non-adherence to the Respect Arrangement was unusual.

187    The most significant point in relation to WWO’s submissions concerning its adherence to the Respect Arrangement, however, is that non-adherence, in the context of cartel arrangements, is not necessarily a significant mitigating factor. Even if WWO somehow “cheated” on the arrangement with NYK in the case of Incident 6, which in any event is doubtful, the competitive process was nonetheless restricted or distorted by its actions. Moreover, cheating between cartelists is a common feature of many cartels. It is in the cartelist’s own self-interest to cheat on the cartel: doing so maximises profits and is economically rational behaviour. Cartelists certainly do not cheat for the benefit of the consumer or the market generally. A cheating cartelist is simply seeking to take further advantage of an already distorted or compromised competitive environment: see CDPP v NYK at [231]; CDPP v K-Line at [291].

188    It follows that, to the extent that there was any general non-adherence to the guiding principle by WWO, or any specific non-adherence in relation to Incident 6, that non-adherence was not, in all the circumstances, a significant or material mitigating circumstance.

189    Second, WWO submitted that the offending conduct was “relatively confined” in both duration and scale. As for duration, it noted that the offending conduct spanned “just over one year”. As to its scale, WWO observed that it only gave effect to the cartel provision on less than 10 separate occasions, only 6,083 vehicles were shipped to Australia by WWO pursuant to the contract affected by its anti-competitive conduct (and that contract resulted in a loss to WWO) and the offending conduct only concerned three customers (Renault, Fiat and Toyota) on a confined number of routes (Europe, Turkey and the Americas to Australia).

190    It may be accepted that WWO’s conduct was perhaps relatively confined as compared to the offending conduct of NYK and K-Line. That issue is discussed in more detail later in the context of parity. It does not follow, however, that the duration, scale and scope of WWO’s offending was not significant. Nor does it follow that WWO’s offending was not serious.

191    It is difficult to accept that the 14-month period during which WWO gave effect to the cartel provision can accurately be said to be a “confined period”. It is equally difficult to accept that the fact that the specific incidents of WWO giving effect to the cartel arrangement only involved routes from Europe, Turkey and the Americas to Australia in respect of three customers means that the scale of the cartel can relevantly be characterised as confined. In any event, the identified incidents in which WWO gave effect to the market allocation provision of the Respect Arrangement should not be disaggregated and considered in isolation. Rather, they should be considered in the context of WWO’s participation in a world-wide cartel in an important global market.

192    Third, WWO contended that it was a “smaller market participant” than NYK and K-Line during the charge period. It noted, in that regard, that WWO’s share of global capacity was only 8.2% to 10.5% (compared to NYK’s share of 15.5% to 17.2% and K-Line’s share of 11.6% to 11.9%), and that, unlike the other carriers, WWO’s trade was predominantly driven out of Europe (rather than the Asia Pacific) and was therefore focused on routes to and from Europe, rather than on the Asia to Oceania trade. This, according to WWO, explained why it shipped lower numbers of vehicles on routes to and from Australia compared to the other carriers.

193    The extent to which WWO’s size or market share relevantly distinguishes its offending conduct from NYK and K-Line is again considered later in the context of the parity principle. For present purposes, it suffices to note that WWO’s smaller size, as compared to NYK and K-Line, does not significantly reduce the seriousness of the offending conduct. WWO was undoubtedly still a very large corporation and a major participant in the relevant market. WWO’s size and significance in the market can be seen, for example, in the number of vehicles it shipped to and from Australia in the financial year ending June 2012 (190,425) and the revenue it received that year ($606,330,486, including for logistical services). It was certainly not so small in size that its role in, or significance to, the Respect Arrangement can or should be discounted.

194    Finally, WWO took issue with some of the Director’s submissions concerning the duration and scale of the offending conduct which drew on findings made in CDPP v NYK and CDPP v K-Line concerning the overall nature of the cartel arrangements. WWO contended that the Director’s submissions that sought to draw on findings made in those cases must be “treat[ed] with caution”, there being “no sound evidentiary basis to transpose factual findings made in other proceedings about K-Line and NYK to WWO”. It is unnecessary to address that submission in any detail. It may of course be accepted that WWO can only be sentenced on the basis of the agreed facts and evidence adduced in this proceeding. That said, the agreed facts and evidence in this case generally support the same findings as those made in CDPP v NYK and CDPP v K-Line concerning the general nature and scope of the global cartel to which WWO was a party.

The extent to which the conduct was deliberate, systematic and covert

195    Cartels, by their very nature, are likely to be deliberate, covert and systematic, requiring a significant degree of planning and deliberation that includes an intent of avoiding detection by regulatory authorities: CDPP v NYK at [239]; CDPP v K-Line at [298]. WWO’s participation in the Respect Arrangement, and its giving effect to the market allocation provision, was no exception.

196    The agreed facts reveal that WWO’s participation in the Respect Arrangement, and its conduct in giving effect to the market allocation provision, was systematic, well-orchestrated and involved a high level of planning and coordination. The central feature of the cartel was a practice whereby the relevant managers of the carriers who were parties to the cartel, including WWO, would communicate with their counterparts in advance of and during the bidding and contract negotiation cycle. In some incidents, senior management at WWO, including WWO’s President and VP, directed those discussions to occur, or were at the very least aware that they were occurring. There could be no doubt that knowledge of the communications, and their outcomes, was relatively widespread at WWO, including at its most senior levels.

197    The agreed facts also disclose that steps were taken, including by senior management, to ensure that the collusive conduct would not be readily apparent to those who might seek to put an end to it. That is perhaps best evidenced by the practice amongst the relevant carriers of generally communicating through face-to-face and telephone discussions. None of the particularised incidents of WWO’s conduct involved written communications between the carriers. It can also be seen in WWO’s internal communications; for example, an email sent by the Group Leader of the MVG in October 2011 included the words “Destroy after reading” as the subject. It may readily be inferred that such steps were taken by WWO with a view to avoiding the risk of detection. It may readily be inferred or concluded that the relevant conduct was covert and deliberately so.

198    It should also be noted, in this context, that it can be inferred to the requisite standard that WWO managers knew that their conduct was, or was likely to be, illegal. That is because WWO’s own evidence revealed that all WWO staff received training in relation to competition laws from at least 2003, including in the years relevant to the charged conduct. It was no doubt for that reason that the steps taken to give effect to the cartel were covert in nature. It can also be inferred that when WWO’s collusive conduct involved routes to Australia, WWO managers were aware, or were likely to have been aware, that there was at least a significant risk that the conduct might breach Australian law. If they did not, that would simply suggest that WWO’s competition law training and education was inadequate. It would not, in any event, constitute a mitigating circumstance.

199    WWO submitted that it would be incorrect to characterise its offending conduct as systematic; rather, it simply comprised “ad hoc, opportunistic, bilateral contracts” with “no evidence of a systemic culture”. It made three points in support of that submission. First, it contended the facts did not disclose “any long-standing or overarching agreement” between the carriers, with the relevant tenders and feasibility studies “not necessarily annual nor frequent”. Second, it pointed out that the six incidents the subject of the charge involved only one business unit within WWO, the MVG. Third, it argued that there was a “disconnection” within WWO’s divisions and offices, as demonstrated by Incident 5, which involved WWO’s Japan, Australian and European offices having separate discussions with FGA and Chrysler Australia.

200    WWO’s submission that its conduct was ad hoc, opportunistic and not systematic is without merit and is rejected. It again suffers from the defect of focusing on the specific incidents of giving effect to the cartel arrangement in isolation, rather than in the context of the longstanding and overarching Respect Arrangement.

201    As to the first point, the mere fact that the instances of giving effect to the cartel provision generally occurred during customer tenders which were not necessarily annual or frequent does not mean that the conduct was ad hoc or opportunistic. It just demonstrates that it was only necessary for WWO to engage in conduct to give effect to the cartel provision when the necessity or occasion arose. That was generally when a relevant contract with a customer was up for renewal, renegotiation or tender. Contrary to WWO’s contentions, the conduct of WWO and the other carriers on those occasions followed a clear pattern and was planned and systemic. The managers who participated in the impugned communications were plainly acting, and knew they were acting, in pursuance of and within the framework of the longstanding and overarching Respect Arrangement, not in some ad hoc or opportunistic manner. The very essence of the Respect Arrangement was the systematic sharing of information about freight rates and bidding in a way which showed “respect” to the incumbent.

202    As to the second point, the fact that the six incidents the subject of the charge involved only one business unit within WWO is largely immaterial in terms of assessing the seriousness of the offending. It simply flows from the fact that it was only that business unit which was relevantly involved in negotiating contracts or responding to tenders involving routes to Australia. In any event, even though only one business unit within WWO may have been involved, the relevant conduct nevertheless extended to WWO’s offices in Japan, Australia and Europe. It certainly was not confined to a limited number of individuals. Even more significantly, as discussed in more detail later, those individuals who were involved included a number of very senior officers.

203    As to the third point, Incident 5 does not suggest any disconnect within WWO concerning the knowledge of and approach to the Respect Arrangement. To the contrary, it supports the finding that there was a widespread culture within WWO of cooperation with competitors. Specifically, it demonstrates that senior executives outside of WWO Japan were aware of, and participated in, the relevant arrangement with its competitors. To give but one example, WWO Europe communicated to other WWO executives that WWO had “in the past” stayed away from Fiat’s business to avoid retaliation from NYK. Likewise, the fact that the Manager of the MVG of WWO Japan consulted with the Head of Oceania Trade in the WWO Europe office speaks to the contrary of WWO’s submission.

204    WWO’s submission that the conduct was ad hoc, opportunistic and infrequent is rejected. To the contrary, the agreed facts support a finding that WWO’s conduct in giving effect to the relevant cartel provision was planned, systemic and systematic.

Seniority of employees, corporate culture and compliance programs

205    As adverted to earlier, there could be no doubt that senior managers at WWO knew about, and were even involved in, the Respect Arrangement and the steps taken to give effect to it. It suffices to refer to two specific examples.

206    In Incident 1, WWO’s VP and the Group Leader of the MVG were both concerned with, and involved in, communications with MOL regarding Renault’s US to Australia tender. The President was also kept informed of those conversations. In Incident 5, WWO’s President, VP, Key Account Manager (Europe), Head of Commercial (Europe) and Head of Oceania Trade (Europe) were, to varying degrees, all involved in communications which ultimately resulted in WWO giving effect to the cartel provision in relation to Fiat’s Europe to Australia tender. Indeed, the President indicated that he would “intervene” if the Manager of the MVG could not handle the situation, while WWO’s VP affirmatively stated WWO’s position; namely, that it would not offer any rates to Fiat by feigning “space constraints”.

207    All of the incidents of giving effect to the market allocation provision of the Respect Arrangement concerned or involved, at the very least, the Manager of the MVG. He was on any view a fairly senior manager at WWO.

208    The agreed facts also support the inference that there was a widespread corporate culture at WWO, extending to the most senior levels of management, which effectively fostered or encouraged cooperation or collusion with competitors under the auspices of the Respect Arrangement.

209    As discussed earlier, the evidence adduced by WWO revealed that all WWO staff received training in relation to competition laws from at least 2003, including in the years relevant to the charged conduct. It can therefore be inferred, particularly given the extensive period of training and education, that the senior officers of WWO who were involved in giving effect to the cartel provision knew about, but deliberately or flagrantly disregarded, relevant competition laws. Alternatively, if those WWO managers were not aware that their conduct contravened antitrust laws, it could be inferred that their competition law training and education was manifestly inadequate and ineffective.

210    WWO sought to downplay these considerations in assessing the seriousness its offending conduct. As to seniority, it submitted that there was no evidence of senior management directly or regularly communicating with the carriers. Nor, it was contended, did senior management direct those communications to occur. As to corporate culture, WWO argued that the charged conduct predominantly concerned WWO Japan and individuals who worked at levels below senior management. The involvement of those lower level officers was said not to reflect the corporate culture of WWO as a whole. As to compliance programs, it noted that those programs were provided on a “regular basis” such that it could not be said that WWO’s culture was one of anti-competition or non-compliance.

211    Those submissions cannot be accepted.

212    In respect of seniority, the agreed facts reveal that that the Head of Global Operations and the Heads of the Divisions for Europe, the Americas, Oceania and Asia reported directly to the Chief Executive Officer of WWO. The next tier in the corporate hierarchy included the President, VP, Head of Commercial (Europe) and Head of Oceania Trade. As noted earlier, the President, VP, Head of Commercial (Europe) and Head of Oceania Trade were all involved in, or at least were aware of, Incident 5. Given their knowledge of or involvement in that incident, it may readily be inferred that those senior officers were all aware of the Respect Arrangement generally and were aware that relevant managers at WWO communicated with their counterparts at NYK and MOL so as to give effect to it.

213    It may equally be inferred that the more senior managers were frequently involved in directing the conduct of the relevant managers who were directly involved in communicating with their counterparts at NYK and MOL. The Manager of the MVG had “no real decision-making power” and, in a number of instances, his communications with his counterparts at the other carriers emanated from, or were endorsed by, senior management. The Manager of the MVG also frequently reported on the outcome of discussions with the other carriers to more senior executives within WWO. Overall, the fact that the more senior managers were often not directly involved in the discussions with WWO’s competitors and either directed or left it up to the more junior managers to deal with their counterparts at WWO’s competitors does not lessen the seriousness of WWO’s offending.

214    In respect of WWO’s corporate culture and compliance programs, as has already been noted, it may be inferred that the corporate culture of WWO in relation to its obligations under competition law and its own compliance programs was largely one of active disregard when it came to giving effect to the Respect Arrangement. None of the most senior people, including the President, hesitated before endorsing or embarking on self-evidently unlawful behaviour. WWO’s code of conduct and compliance programs may as well have been written in hieroglyphics for all the notice anyone senior took of it: cf Visy at [319].

215    Contrary to WWO’s submissions, the agreed facts support a finding that the charged conduct was engaged in by, known about and authorised, promoted or facilitated by, a number of senior managers within WWO. The corporate culture at WWO must have been conducive to that behaviour. It occurred in circumstances where WWO staff had received competition law training which was presumably designed to ensure compliance with such laws.

The profit or benefit attributable to the conduct

216    As has already been discussed at length, it is not possible in the circumstances to determine or quantify precisely the profit or benefit derived by WWO, or other persons, from the offending conduct. Four inferences, however, may be drawn from the agreed facts.

217    First, it may be inferred that WWO engaged in the offending conduct for the purpose of obtaining a benefit from a stable market share and the absence of any real price competition in respect of, relevantly, its business in respect of shipping routes to Australia. That was the very purpose of the Respect Arrangement and the conduct engaged in to give effect to it.

218    Second, it may be inferred that WWO obtained some tangible or financial benefits from its offending conduct. If it did not, it is unlikely that it would have continued to engage in the conduct. What would have been the point? While it may be accepted that the agreed facts do not support a finding that WWO directly derived a profit from any of the specific incidents encompassed by the offence, it does not follow that it can be concluded that it derived no financial or tangible benefits from its participation in the cartel.

219    Third, it may be inferred that the offending conduct also gave rise to some benefits of a more intangible nature. Those indirect and intangible benefits were likely to be derived from the increased certainty arising from the stable market shares and customer allocations and the absence of any, or any effective or aggressive, price competition that resulted from the collusive conduct.

220    Fourth, it may be inferred that the overall benefits, monetary and otherwise, to WWO arising from it remaining a party to the Respect Arrangement, and its conduct in giving effect to that arrangement, must have been, or must have been perceived to have been, sufficient to outweigh the risk of detection and subsequent punishment.

221    WWO submitted that the second and third inferences – that WWO obtained a profit or financial benefit from the charged conduct, and that WWO obtained an intangible or non-monetary benefit – were “unsubstantiated” and “speculative”. It relied again, in that regard, on the facts concerning Incident 1, which indicated that WWO incurred a loss of US$1,233,446 from the shipments pursuant to the contract in question. It also relied on the facts concerning Incident 6, which it contended involved a freight rate quoted to the manufacturer that was “significantly lower” than that discussed with WWO’s competitors. WWO also pointed out, in this context, that its market share remained “relatively stable” over the charge period.

222    The essence of WWO’s submission that it effectively derived no benefit from its offending conduct has already been considered at length. It suffices to reiterate that reference to a single loss-making incident (Incident 1) does not bar the inference that WWO ultimately benefited, both financially and otherwise, from its participation in the overall cartel arrangement and the other incidents in which it gave effect to that arrangement. WWO’s reliance on one aspect of Incident 6 as somehow demonstrating that WWO did not benefit from the cartel is also misplaced. As for the fact that WWO’s market share remained relatively stable, that itself may be taken to be a benefit or advantage to WWO. Indeed, the maintenance of stable market shares and the avoidance of any aggressive competition was the very point of the Respect Arrangement. Stability, in the circumstances, demonstrated the success of the collusive conduct: see Visy at [314].

223    The fact that it is not possible to quantify precisely the profit or other financial benefit derived by WWO from the six specific incidents of giving effect to the cartel arrangement which are the subject of the charge does not lessen or mitigate the seriousness of WWO’s offending conduct. It may be inferred WWO benefited from its participation in the cartel arrangement in ways that are not possible to quantify precisely from the agreed facts. That is why it continued to give effect to that arrangement over a 14-month period.

Sections 16A(2)(b) and 16BA of the Crimes Act – Other offences

224    Section 16A(2)(b) provides that the Court must take into account “other offences (if any) that are required or permitted to be taken into account”.

225    Section 16BA(1) provides that where a person is convicted of a federal offence and the Court is satisfied of certain conditions, the Court may, with the consent of the prosecutor, ask the convicted person whether he or she admits his or her guilt in respect of all or any other specified offences and wishes them to be taken into account by the Court in passing sentence. Section 16BA(2) provides that if that person admits his or her guilt in respect of all or any of the other specified offences and wishes to have them taken into account, the Court may, if it thinks fit, take into account all or any of the those other offences in passing sentence on that person.

226    The general effect and operation of similar provisions which operate in New South Wales was helpfully explained by Spigelman CJ in Attorney General’s Application Under s 37 of the Crimes (Sentencing Procedure) Act 1999 (No 1 of 2002) (2002) 56 NSWLR 146 (AG’s Application). The reasoning in AG’s Application applies equally to s 16BA of the Crimes Act: see R v Lamella [2014] NSWCCA 122 at [48].

227    The objective of taking other offences into account pursuant to provisions such as s 16BA of the Crimes Act is to ensure that the sentence imposed “is one which best meets the situation”: AG’s Application at [30]. The Court takes into account the other offences “with a view to increasing the penalty that would otherwise be appropriate for the particular offence” for which the offender is to be sentenced: AG’s Application at [42]. The increased penalty is effectively the product of the Court giving greater weight to two elements in the sentencing process: the first being the need for personal deterrence, as the commission of other offences will frequently indicate that the accused has engaged in a course of conduct; the second being “the community’s entitlement to extract retribution for serious offences when there are offences for which no punishment has in fact been imposed”: AG’s Application at [42]. The additional penalty as a result of taking the s 16BA offences into account will not necessarily be small; sometimes it will be substantial: AG’s Application at [18].

228    The manner and degree to which other offences, which are taken into account pursuant to provisions such as s 16BA of the Crimes Act, can impinge upon elements relevant to the sentencing process will depend on a range of other factors pertinent to those elements and the weight to be given to them in the overall sentencing task. For that reason it will rarely be appropriate for a sentencing judge to attempt to quantify the effect on the sentence of taking those other offences into account: AG’s Application at [44].

229    Section 16BA must be applied having regard to the basic common law principle that no one should be punished for an offence of which he or she has not been convicted. Section 16BA offences constitute an admission of guilt only: there is, relevantly, no conviction: AG’s Application at [23]. It follows that in taking the s 16BA offences into account, the sentencing judge is not imposing any punishment for those offences: AG’s Application at [29]. Rather, when taking the other (s 16BA) offences into account, the Court is concerned and concerned only with imposing a sentence for “the principal offence”; it is no part of the task of the sentencing court to determine appropriate sentences for s 16BA offences or to determine the overall sentence that would be appropriate for all the offences and then apply a “discount” for the use of the procedure under s 16BA: AG’s Application at [39]. The use of the s 16BA procedure, however, will generally result in a lower effective sentence than would have been imposed if the offender had been separately sentenced for the s 16BA offences: AG’s Application at [34].

230    The Court is given an overriding discretion to refuse to accede to the wishes of the prosecution and the offender in terms of the utilisation of the s 16BA procedure: AG’s Application at [47]. That is a wide discretion which “should not be confined by the identification of a list of situations in which it should not be exercised”: AG’s Application at [48].

231    The practical effect of the application of these principles to the exercise of the sentencing discretion in WWO’s case is essentially twofold.

232    First, although the Court is sentencing WWO for the principal offence, being the single charge in the indictment of giving effect to a cartel provision between about 1 June 2011 and 31 July 2012, the Court may, in the exercise of its sentencing discretion, take into account the two s 16BA offences which WWO has admitted by increasing the penalty that would otherwise be appropriate for the principal offence. Needless to say, neither the Director nor WWO submitted that the Court should not, in the exercise of its discretion, take the two s 16BA offences into account. Nor were there any considerations which would suggest that the Court should not take those two offences into account as envisaged by s 16BA of the Crimes Act.

233    Second, the Court is not convicting WWO or imposing a punishment in respect of the two s 16BA offences which WWO has admitted. Nor is the Court required to quantify the effect on the sentence of taking the two s 16BA offences into account. It may be expected that the use of the s 16BA procedure will result in a lower effective sentence than would have been imposed if WWO had been sentenced for the principal offence and separately sentenced for the two s 16BA offences. It does not follow, however, that the increase to the penalty as a result of taking the two s 16BA offences into account will necessarily be small.

234    As was addressed in detail earlier, the two s 16BA offences involved two instances of WWO giving effect to the market allocation provision in the Respect Arrangement in November 2009. The first incident (Incident 7) involved discussions and the exchange of information between a WWO manager and a NYK manager concerning the submission of quotes to Toyota for the purpose of a feasibility study in relation to shipping particular vehicles from the US to Australia. Ultimately no cargo was shipped by Toyota on that route. The second incident (Incident 8) involved discussions between a WWO manager and a NYK manager concerning the submission of quotes to Mitsubishi in relation to the shipping of vehicles from Europe and Turkey to Australia. WWO did not provide any shipping services to Mitsubishi on those routes.

235    WWO submitted that the two incidents the subject of the s 16BA charges “bore no material consequence for WWO” and, in the circumstances, demonstrate that its communications with the other carriers were “opportunistic”. It also contended that the two incidents “do not increase the overall criminality of the conduct”. It noted, in that regard, that NYK was the “lead actor” in Incident 8.

236    It may perhaps be accepted that the two incidents the subject of the s 16BA offences were not as serious as the incidents which are encompassed by the offence to which WWO has pleaded guilty and is to be sentenced. It does not follow, however, that the two s 16BA offences do not increase the overall criminality of WWO’s conduct. Nor does it follow that the penalty to be imposed on WWO in respect of the charged conduct should not be increased as a result of taking the additional two offences into account.

237    The two s 16BA offences, like the charged conduct, reveal the willingness of senior managers at WWO to enter discussions and exchange information about freight rates and bids with their counterparts at NYK so as to give effect to the Respect Arrangement. The fact that those incidents may have had no direct financial consequences for WWO does not significantly detract from the fact that they comprised serious anti-competitive conduct. Perhaps more significantly, they demonstrate that the charged conduct, which occurred in 2011 and 2012, was by no means isolated or aberrant, but formed part of a longstanding course of deliberately collusive and anti-competitive conduct by WWO managers in pursuance of the Respect Arrangement.

238    The submission that the two incidents the subject of the s 16BA offences simply showed opportunism has no merits for the reasons already given.

239    The s 16BA offences represent additional criminality that should be reflected in the sentence imposed for the principal offence. That additional criminality is not insubstantial. The s 16BA offences also heighten the importance of deterrence in the exercise of the sentencing discretion in WWO’s case.

Section 16A(2)(c) – Course of conduct

240    The rolled-up nature of the charge reflects the fact that the charged offence involved an ongoing course of conduct between 2011 and 2012 (separate to, as just discussed, the two incidents that occurred in 2009). That course of conduct consisted of a series of criminal acts of the same or similar character. The principles to apply when sentencing for a rolled-up charge were considered earlier.

Sections 16A(2)(d) and (e) of the Crimes Act – Personal circumstances of any victim; injury, loss or damage resulting from the offence

241    The most, and perhaps only, direct victims of WWO’s offending conduct were the foreign-owned vehicle manufacturers who, it may be inferred, at times paid higher freight rates as a result of the collusive behaviour of the carriers, including WWO. It is not possible to quantify the extent of any injury, loss or damage suffered by the manufacturers. The vehicle manufacturers were also all very large foreign corporations and any direct loss or damage suffered by them had little, if any, direct connection with Australia.

242    It would be wrong, however, to approach this offence as if it were a victimless offence, simply because no specific individual or quantified loss can be identified. The cartel offence in s 44ZZRG(1) is part of a suite of provisions in the CCA that are designed to protect the integrity of Australia’s markets and economic system: see also s 2 of the CCA. Australia’s economy, like other free-market economies, is based on the philosophy that private enterprise and competition will foster productivity, efficiencies and innovation for the greater good of the economy and the community generally. Cartel conduct, like other anti-competitive behaviour, is inimical to, destructive of and may lead to a loss of public confidence in, Australia’s markets and economic system. That is so even where the conduct, as here, is eventually uncovered and punished.

243    WWO submitted that the possibility of its conduct having had a “direct impact” on Australian consumers by reason of higher freight rates was “no more than theoretical”. This was, in its view, particularly so given it shipped a “relatively low number of motor vehicles (6,083)” to Australia pursuant to a single, loss-making contract. In those circumstances, the Court could not infer that the “likely result” of its conduct were rates higher than they would have been in a competitive market, nor any “substantial damage” to the Australian economy or consumers.

244    It may readily be accepted that there was no direct evidence that WWO’s offending conduct resulted in higher freight rates in relation to the shipping of vehicles to Australia. It may, however, be inferred that its conduct was likely to have had some impact on those freight rates. It is not to the point that WWO shipped only a relatively small number of vehicles pursuant to one contract that was affected by its conduct. That is because WWO’s conduct relevantly included declining to submit any, or any competitive, bids or quotes in respect of contracts where its competitors were the incumbent carriers. Its conduct was likely to have had an effect on the freight rates in the contracts awarded in those incidents, which were not the product of any, or any effective or genuine, price competition.

245    It may also be accepted that there was no direct evidence that any increased freight rates which may have resulted, directly or indirectly, from WWO’s offending conduct were directly passed on by the manufacturers to Australian consumers; for instance, in the form of higher priced motor vehicles. Nor could that be inferred from the limited facts. However, as was explained in CDPP v K-Line at [312], it is difficult to accept that any higher cost of shipping motor vehicles to Australia would have been completely absorbed by the motor vehicle manufacturers, or indeed by the Australian motor vehicle wholesalers and retailers. The likelihood is that some portion of any higher shipping costs would have been indirectly passed on to Australian consumers in some way, even if not in the form of higher retail prices. It can certainly be inferred, at the very least, that there was a risk that Australian consumers would be impacted in some way by the cartel behaviour.

Section 16A(2)(f) – The degree to which the offender has shown contrition

246    WWO entered a plea of guilty in this matter at a relatively early stage. It was common ground that a plea of guilty demonstrates remorse, acceptance of responsibility and a willingness on the offender’s part to facilitate the course of justice.

247    Beyond the guilty plea, however, there is little if anything to demonstrate that WWO was or is genuinely contrite or remorseful. There was certainly nothing in the evidence of Ms Schreuder which approached an apology or expression of regret or remorse.

248    WWO submitted that its contrition is evidenced by its implementation of a “number of tangible compliance and training measures to prevent further re-offending”. Those measures will be considered later in the context of s 16A(2)(n): WWO’s prospect of rehabilitation. The Director submitted, in relation to contrition, that “it is open to accept that [WWO] is contrite” but went no further as to whether or not that finding should be made, or the weight that should be given to it.

249    The absence of any apology or express statement of regret and contrition by Ms Schreuder, or any other senior officer of WWO, makes it difficult to accept that WWO is genuinely remorseful and contrite. While the implementation of compliance and training measures and the plea of guilty demonstrate that WWO knows that it has done wrong and needs to change its ways, that falls well short of the sort of genuine contrition and remorse that is deserving of any significant weight in the sentencing exercise.

Section 16A(2)(g) – Plea of guilty

250    Whether the rationale or basis for taking a plea of guilty into account in federal sentencing is expressed in subjective terms — acceptance of responsibility and a willingness to facilitate the course of justice — or objective terms — the utilitarian value of saving the community the expense of a contested trial — a plea of guilty is a weighty mitigating circumstance. The following considerations are relevant to determining the extent of any discount or reduction in sentence that should be given or applied as a result of a plea of guilty. The appropriate discount to apply in WWO’s case is addressed later.

251    First, it is relevant to have regard to the timing of the entry of a plea of guilty; specifically, whether it was entered at the first reasonable opportunity: Cameron v The Queen (2002) 209 CLR 339 at [22].

252    As mentioned earlier, the Director filed an indictment in this Court on 23 August 2019. At the first case management hearing on 29 August 2019, the Court was advised that the matter would proceed by way of a plea of guilty and sentencing hearing. At a later case management hearing on 20 February 2020, the Court listed the matter for a sentencing hearing to commence on 18 June 2020 with an estimate of one day. WWO formally entered a guilty plea before the commencement of the sentencing hearing.

253    The Director accepted that WWO’s plea was indicated at the earliest possible opportunity and therefore had significant utilitarian value. The Director also acknowledged that WWO’s plea to the ex officio indictment avoided the need for committal proceedings in the Local Court. The Director submitted, however, that the Statement of Agreed Facts was not filed until 6 March 2020, over five months after WWO indicated its plea of guilty. WWO, in reply, contended that this period does not constitute any delay, it being “customary and appropriate” for the prosecutor and the offender to confer about the relevant facts to be put before the Court.

254    It may be accepted that it is not unusual for there to be a need for the prosecutor and offender to confer about the facts to be put before the Court on a plea of guilty. While it is, of course, possible for there to be contested facts at a sentence hearing, it is generally desirable for there to be some agreement as to the facts. That said, the time taken to finalise the agreed facts in this matter was somewhat excessive and unfortunate. That delay does not, however, significantly or materially detract from the fact that there was an indication of a plea of guilty at the earliest opportunity and no real suggestion at any point that that position was likely to change.

255    Second, it is sometimes relevant to consider the strength of the prosecution case in assessing the weight to be given to a plea of guilty. If there is a very strong prosecution case, for example, the Court may conclude that the guilty plea was simply a “recognition of the inevitable” rather than a plea motivated by contrition or a genuine willingness to facilitate the course of justice: Tyler v R; R v Chalmers [2007] NSWCCA 247; 173 A Crim R 458 at [114]; Zhang v R [2011] NSWCCA 233 at [18]. The Director submitted, in this regard, that WWO’s guilty plea “should be viewed in light of a strong Prosecution case”.

256    The difficulty here, however, is that the Court is in no real position to assess the strength or otherwise of the Crown case. The sentence proceedings were conducted on the basis of agreed facts. The Court was not provided with the prosecution brief of evidence or any evidence or agreed facts in relation to the nature of the brief, including the witnesses who would be called, or the nature of the documents that would be tendered or even whether the prosecution case in respect of the key elements of the offence was supported by direct evidence or depended on the drawing of inferences. WWO did not agree or concede that the case against it was strong. It may also be observed in this context that the relevant offence provisions are such that even an otherwise straightforward case involving allegations of giving effect to a cartel provision is likely to involve considerable difficulty and complexity.

257    It follows that it cannot be concluded that WWO’s plea of guilty was necessarily one which was entered in the face of a strong Crown case, let alone that it reflects WWO’s recognition of the inevitable.

258    It should be noted, however, that WWO also submitted that its guilty plea was “foreshadowed to the [ACCC] well before proceedings had commenced without complete knowledge of the [Director’s] brief of evidence”. That submission cannot be accepted for the simple, yet crucial, reason that there is no evidence of that fact. Nor was this fact agreed or conceded by the Director.

259    Third, it is relevant to consider the extent of any “utilitarian value” in the plea of guilty: Xiao v R [2018] NSWCCA 4; 329 FLR 1.

260    There could be little doubt that WWO’s guilty plea had a high utilitarian value. It ultimately resulted in a significant saving of Court time as well as the considerable expense that the Director and the ACCC would undoubtedly have incurred in conducting what would almost certainly have been a lengthy and complex trial. The Director conceded as much.

Sections 16A(2)(h) and 16AC of the Crimes Act – Degree of cooperation with law enforcement agencies; future cooperation

261    Section 16A(2)(h) is expressed in the past tense and may be taken to refer to cooperation with, or assistance provided to, law enforcement agencies up to the point in time that the offender is sentenced. That interpretation is reinforced by the terms of s 16AC which, because it refers to undertakings by the offender to cooperate with law enforcement agencies in proceedings, and makes provision for the Director to appeal if the offender does not cooperate in accordance with the undertaking, must relate to cooperation that is to occur after the sentence is imposed.

262    Matters which may be relevant to an assessment of the degree to which an offender has provided cooperation to law enforcement agencies include: the effectiveness of the cooperation and its practical value to law enforcement agencies; the extent to which the offender has disclosed everything of relevance and not tailored the disclosure to material already known; the extent to which the cooperation relates to offences which are otherwise difficult to detect and investigate; the extent to which the cooperation disclosed the offender’s guilt in respect of other offences; the motive for the cooperation, including whether it was motivated by genuine contrition rather than self-interest; and whether the offender’s cooperation caused others to cooperate: CDPP v NYK at [262] (and the cases cited therein); CDPP v K-Line at [330] (and the cases cited therein).

263    Section 16AC of the Crimes Act concerns undertakings by an offender to cooperate with law enforcement agencies in proceedings. WWO has not given any undertaking to cooperate in terms of s 16AC.

264    The Director submitted that WWO did not provide any past cooperation to law enforcement agencies. In its written submissions, WWO, contended that it had cooperated and assisted the ACCC and the Director in this matter in the following terms:

[WWO’s] cooperation with both the ACCC and the [Director] is a factor which should be afforded appropriate weight. In respect of the ACCC's long-running investigation occurring over 2012 to 2018, WWO provided responses to the ACCC's request for information and documents, in accordance with deadlines, including by providing on a voluntary basis business records and convenient English translations of certain documents. This cooperation occurred in circumstances where [WWO] knew that immunity under the ACCC’s Immunity Policy for Cartel Conduct was unavailable because another member of the cartel had already obtained a "marker" under that policy.

[WWO], when contacted by the ACCC, immediately and substantively engaged in an attempt to resolve the matter expeditiously. Through this process, [WWO] agreed to make admissions in relation to the 6 instances of conduct the subject of the charge as well as the 2 incidents in the schedule and cooperated with the ACCC in settling the factual basis for these admissions. This cooperation assisted the ACCC to compile its brief of evidence to the [Director].

[WWO cooperated and indicated] that it would enter a plea of guilty …

… [WWO cooperated] with the [Director] on the wording of the indictment and the formulation of the [Statement of Agreed Facts].

Although there was a slight delay in the filing of the [Statement of Agreed Facts], WWO submits that it took all steps to progress this document including by initiating meetings with the [Director] and working constructively with the [Director] to finalise the document to the satisfaction of both parties.

265    The Director submitted, in reply, that WWO’s production of documents to the ACCC was considered by the ACCC to have been production pursuant to compulsory process, aside perhaps from the production of English translations of some documents.

266    The difficulty with WWO’s contentions concerning cooperation with the ACCC is that those contentions were entirely unsupported by any evidence. As just noted, the Director did not agree or concede that WWO had provided any assistance to the ACCC, or any other agency, in relation to the investigation of the relevant cartel conduct. There is no mention of cooperation in the agreed facts which, as discussed earlier, were apparently the product of considerable consultation between the Director and WWO or its legal advisers. In the absence of any agreed facts or any concession by the Director, if WWO wanted to be sentenced on the basis that it had provided cooperation to the ACCC or any other investigatory body, it was incumbent on it to adduce evidence concerning that matter. It did not do so.

267    In all the circumstances, the contentions in WWO’s written submissions concerning cooperation with the ACCC cannot be accepted, though in light of the Director’s submissions in reply, it may be accepted that WWO voluntarily provided the ACCC with English translations of some documents. That is hardly a weighty consideration.

268    As for WWO’s contentions concerning cooperation with the Director, as has already been noted, WWO is to be given credit for its early indication of its guilty plea. As for the agreed facts, it appears to be common ground that there was some discussion between the Director’s office and WWO’s legal advisers concerning the content of the agreed facts. In the absence of any agreed facts or evidence concerning the nature or character of WWO’s involvement in those discussions, it is difficult to characterise them as cooperation or as having been of any material assistance.

Sections 16A(2)(j) and (ja) – Deterrence

269    Deterrence is a significant consideration in sentencing for cartel offences. That is the case for a number of reasons.

270    First, cartel conduct is notoriously difficult to detect, investigate and prosecute. It often involves large and sophisticated corporate offenders who can deploy their considerable resources and position to minimise the risk of detection. It is well-accepted that general deterrence is a weighty consideration in sentencing for offences which are difficult to detect and investigate: see R v Curtis (No 3) [2016] NSWSC 866; 114 ACSR 184 at [51]-[53]; R v Hannes [2000] NSWCCA 503; 36 ACSR 72 at [394]; R v Rivkin (2004) 59 NSWLR 284 at [423]. The importance of general deterrence has also been accepted in imposing penalties for anti-competitive conduct in the civil penalty context: ABB Transmission at [16]; Australian Competition and Consumer Commission v J McPhee & Son (Australia) Pty Ltd (No 5) [1998] FCA 310; ATPR 41-628; J McPhee & Son (Aust) Pty Ltd v Australian Competition and Consumer Commission [2000] FCA 365; 172 ALR 532 at [157].

271    Second, cartel conduct is an essentially economic or commercial crime that generally involves the offender weighing up whether the benefit or profit from the conduct is likely to outweigh the risks of detection and punishment. Sentences imposed for such offences should be set so that others who may engage in such a weighing exercise will come to appreciate that the risks are likely to outweigh the benefits: that the likely penalty will be such that it could not be regarded as an acceptable cost of doing business. This consideration has also been accepted in the civil penalty context: Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; 287 ALR 249 at [62]-[63]; Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [65]-[66]; Australian Competition and Consumer Commission v Visa Inc [2015] FCA 1020; 339 ALR 413 at [114].

272    As for specific deterrence, it may be accepted that WWO has established training programs and implemented certain other measures which are plainly intended to minimise the risk of a similar cartel offence being committed in the future. That goes some way towards reducing the need for specific deterrence, but does not obviate the need for the imposition of a stern penalty.

273    Another issue that needs to be considered in the context of specific deterrence is the offender’s size. As discussed earlier, it has generally been accepted, particularly in the civil penalty context, that the size of the offending corporation is a relevant consideration in imposing a penalty for contraventions and offences involving anti-competitive behaviour. That is primarily because deterrence is a major consideration in determining the appropriate penalty in respect of such contraventions or offences. Size is particularly relevant to specific deterrence because, as just discussed, the penalty must generally be sufficiently large that the corporation will not view the risk of imposition of such a penalty as a price worth paying for anti-competitive behaviour. The larger the corporation, the higher that price must generally be.

274    There was relatively limited evidence or other information in relation to WWO’s size during the period of the charged conduct. Perhaps most significantly, it was agreed that WWO’s annual turnover during the 12-month period prior to the charge period was $485,324,934 for services (shipping and logistical) on routes to Australia. Shipping vehicles to Australia was unlikely to represent a large part of WWO’s overall business. The fact that it nevertheless turned over almost $500,000,000 from that business would suggest that, on just about any view, WWO was or must have been a very large corporation at the time the offence was committed.

275    Other facts which tend to suggest that WWO was and is a large corporation include that its share of the market for the supply of “roll-on, roll-off” shipping services during the charge period was between 8.2% to 10.5% and it shipped 190,512 vehicles to and from Australia during the 2012 financial year (which overlaps with the charge period). A corporation with that market share in the ocean shipping market, and which has the capacity to ship almost 200,000 cars to Australia in a year, is unlikely to be a small corporation. It is also clear that WWO was (and is) a global company with offices and agents in every continent and, so far as Australia is concerned, every major port.

276    There was regrettably very little evidence in respect of WWO’s size and financial capacity as at the date of the sentence hearing. It may nevertheless be inferred from the evidence, such as it was, concerning WWO’s size at the time of the offence, that it remained a very large corporation.

277    WWO submitted that it was a materially smaller corporation than both NYK and K-Line. That submission will be considered later in the context of parity.

Section 16A(2)(k) – Need for adequate punishment

278    The need to impose an adequate punishment in all the circumstances is largely self-evident and requires little elaboration.

279    One issue that requires consideration in this context, however, is the relevance or weight that is to be attached to the fact that WWO has been penalised in other jurisdictions in respect of conduct relating to, or arising from, the cartel the subject of this matter. Those penalties were detailed earlier.

280    There is no doubt that in sentencing an offender, the Court can take into account “extra-curial” punishment. Extra-curial punishment is “loss or detriment imposed on an offender by persons other than the sentencing court, for the purpose of punishing the offender for his [or her] offence or at least by reason of the offender having committed the offence”: Silvano v R [2008] NSWCCA 118; 184 A Crim R 593 at [29]; see also R v Wilhelm [2010] NSWSC 378 at [21]. Administrative penalties imposed upon an offender are a form of extra-curial punishment: R v Whitnall (1993) 42 FCR 512 at 517-518; R v Ronen [2006] NSWCCA 123; 161 A Crim R 300 at [50]-[52]; R v Hannigan [2009] 2 Qd R 331 at [25].

281    The weight to be given to any extra-curial punishment will depend on the particular facts and circumstances of the case. Relevant considerations include: the nature and size of the extra-curial punishment; the extent to which the penalty related to the conduct the subject of the offence; the capacity of the offender to pay; the effect that the other penalty had in real terms on the offender; and other questions of hardship. Each case must be considered on its own merits. In some circumstances, extra-curial or extra-judicial punishment may attract very little or no weight: R v Daetz [2003] NSWCCA 216; 139 A Crim R 398 at [62].

282    The Court was regrettably provided with relatively incomplete, inadequate and insufficient information in relation to the overseas penalties. The precise nature of the orders or penalties, for instance, was for the most part fairly unclear. So too was the precise nature and details of the law which was transgressed in each foreign jurisdiction and the precise nature and details of the conduct which gave rise to the relevant order or penalty, including the maximum penalties that may have been applicable to the transgressions. In the circumstances, it is extremely difficult to assess realistically the extent to which the overseas penalties were imposed in respect of conduct that overlapped with the conduct for which WWO is to be penalised in this proceeding and therefore the extent to which the overseas penalties actually comprise relevant extra-curial punishment.

283    It is nevertheless clear that some weight must be given to the overseas penalties imposed on WWO. They are undoubtedly very large penalties, albeit mostly civil or administrative, which were imposed as a result of WWO’s involvement in the global cartel pursuant to which the offending conduct the subject of the charge relates. Those penalties have undoubtedly already gone some way towards deterring WWO from re-offending.

284    There are, however, a number of reasons why the overseas penalties should not be given significant weight.

285    First, and perhaps most importantly, the overseas penalties, subject to two possible exceptions, were not demonstrated to have been imposed in respect of the conduct the subject of the charge in this matter. While the agreed facts in relation to the overseas penalties are fairly sparse, it would appear, or at least can be inferred, that they were imposed in respect of WWO’s collusion or anti-competitive conduct in relation to freight rates on routes other than routes to Australia. In short, the overseas jurisdictions imposed sanctions or penalties in respect of conduct that occurred in, or in relation to or otherwise affected, those jurisdictions, not Australia.

286    The two exceptions concern one of the penalties imposed in the US in July 2016 and another imposed by the European Commission. Those penalties were said to relate “in part to conduct affecting certain volumes of commerce on routes to Australia the subject of admissions made in these proceedings”. It follows that there is likely to have been at least some degree of overlap between the conduct that led to the imposition of that part of the US and European Commission orders, and the conduct the subject of the charge in this matter. That is a relevant consideration because the Court should strive to avoid any element of double punishment.

287    That said, it may be inferred, again notwithstanding the relative sparsity of evidence on this issue, that those penalties were imposed having regard to the respective laws and public policy considerations of the jurisdictions in question; the US and Europe. The concerns of the relevant regulator in those jurisdictions were unlikely to relate to the impact that the conduct had on Australian-related commerce or Australian consumers. The relevant overlap is, in those circumstances, likely to be minimal.

288    Second, and relatedly, the sentence imposed on WWO must be sufficient to operate as a deterrent, both specific and general, in relation to cartel conduct that relates to Australia and Australia’s laws. Large multinational corporations who engage in global cartels or other anti-competitive conduct must be sent a clear and strong message that they will be punished in Australia in respect of conduct which breaches Australia’s laws irrespective of what penalties may have been imposed in other jurisdictions. Whatever decisions may be made globally, Australia will not tolerate anti-competitive conduct in respect of the supply of goods and services to, or relating to, Australia or Australian consumers: cf Visa at [114].

289    Third, while the overseas penalties are very large, so too is WWO. There is no evidence to suggest that WWO does not have the capacity to pay any significant fine imposed in relation to this matter in addition to the overseas administrative penalties. Nor is there any evidence that WWO will suffer any relevant or particular hardship if a significant penalty is imposed in this matter in addition to the penalties that have been imposed in other jurisdictions.

290    Finally, it is noted, in this context, that overseas penalties, and the appropriate reduction in the sentence to reflect them, should not be approached having regard to the totality principle: s 16B of the Crimes Act; cf Mill v The Queen (1988) 166 CLR 59 at 66; CDPP v K-Line at [373]-[384], citing Postiglione v The Queen (1997) 189 CLR 295 at 314 footnote 7.

Section 16A(2)(m) – The character and antecedents of the offender

291    WWO does not have a prior record of corporate criminal misconduct in Australia or elsewhere. There is also no evidence that it has any such criminal record anywhere overseas, save for any criminal convictions overseas which related to its participation in the Respect Arrangement. That is no doubt an important consideration.

292    It does not necessarily follow, however, that WWO should be sentenced on the basis that it was of good character – that it was a good corporate citizen – at the time of the conduct the subject of the charge: cf R v Adler [2005] NSWSC 274; 53 ACSR 471 at [51]. The fact that it had been a party to, and giving effect to, the Respect Arrangement in multiple jurisdictions from at least July 2009 rather suggests otherwise. It may relevantly be inferred that WWO had not been a good corporate citizen prior to the commission of this offence: it just had not been caught. Prior good character is also not generally given significant weight in sentencing for offences where general deterrence is a significant consideration: R v Williams [2005] NSWSC 315; 216 ALR 113 at [60]; McMahon v The Queen [2011] NSWCCA 147 at [76]; ABB Transmission at [28].

Section 16A(2)(n) of the Crimes Act – Prospect of rehabilitation

293    Rehabilitation is undoubtedly an important purpose of criminal sentencing. The fact that an offender has good prospects of rehabilitation, or has already demonstrated rehabilitation at the time of sentence and is considered unlikely to re-offend, is an important mitigating consideration.

294    It may be accepted that WWO has taken relevant steps towards rehabilitating itself, or has at the very least demonstrated reasonable prospects of rehabilitation. There is unchallenged evidence that since its offending behaviour was detected, WWO has established training programs, and implemented other changes, systems and practices with a view to preventing any re-offending. To that extent, at least, it has demonstrated a desire to change its corporate compliance culture. It has endeavoured to re-model its corporate thinking and behaviour so that it may re-establish itself as a good corporate citizen: cf R v Pogson (2012) 82 NSWLR 60 at [122]-[123].

295    Against this, however, is the fact that WWO has essentially failed to renounce expressly its wrongdoing and demonstrate genuine contrition and remorse. As discussed earlier, its evidence in this proceeding did not include any express statement of contrition or remorse. Equally, it is noted that WWO did not take disciplinary action in respect of any staff identified in the incidents the subject of the charge, though it apparently did replace a number of senior managers within the company from 2013. None of the new personnel had been involved in any of the conduct the subject of the offence.

296    Despite the somewhat puzzling absence of any direct or clear evidence of contrition or remorse, WWO should be sentenced on the basis that its prospects of rehabilitation are reasonable and that the prospect of it re-offending is low.

Section 16C of the Crimes Act – financial circumstances

297    Section 16C(1) of the Crimes Act requires the Court to take into account the financial circumstances of an offender before imposing a fine for a federal offence. Section 16C(2) provides, however, that the inability to determine an offender’s financial circumstances does not prevent the Court from imposing a fine. Nor does the offender’s financial circumstances dictate the fine to be imposed. Capacity to pay is only one of many factors to be considered: Jahandideh v R [2014] NSWCCA 178 at [15]-[17].

298    WWO did not adduce any evidence concerning its financial circumstances. The agreed facts also did not include any facts concerning WWO’s current financial circumstances or capacity to pay any fine imposed on it as a result of its offending. WWO’s written submissions asserted that the “Wallenius Wilhelmsen Group” had been impacted by the COVID-19 pandemic and had recorded a loss in the first calendar quarter of 2020. That submission was unsupported by any oral or documentary evidence and cannot, in those circumstances, be accepted.

Parity

299    In imposing a sentence on WWO, the Court must have regard to the principle of parity. That principle requires that like offenders should be treated in a like manner, though allows for different sentences to be imposed upon like offenders to reflect different degrees of culpability and/or different circumstances: Green v The Queen (2011) 244 CLR 462 at [28]. The notion of consistency does not equate to numerical equivalence: see Hili at [46]-[54]. Rather, equal justice “requires that, as between co-offenders, there should not be a marked disparity which gives rise to ‘a justifiable sense of grievance’”: Postiglione at 301. Disparity between the sentences imposed on co-offenders will be justified by differences such as “age, background, criminal history, general character and the part each has played in the relevant criminal conduct”: Green at [31]; see also R v Li [2010] NSWCCA 125; 202 A Crim R 195 at [5].

300    Both NYK and K-Line pleaded guilty to a single rolled-up count involving 20 or more incidents of giving effect to a cartel provision in the same overarching arrangement or understanding. The maximum penalty for both NYK and K-Line was $100 million as they both had the same relevant annual turnover in the 12 months preceding the offending conduct. The charge period in respect of both NYK and K-Line was three years between 24 July 2009 and 6 September 2012.

301    The sentence imposed on NYK was a fine of $25 million. That fine incorporated a global discount of 50% for NYK’s early plea of guilty and past and future assistance and cooperation, together with the contrition inherent in the early plea and cooperation. But for the early guilty plea and past and future assistance, the fine would have been $50 million. Of the 50% discount, 10% related to future cooperation. But for the discount for future assistance, NYK’s fine would have been $30 million: see CDPP v NYK at [299].

302    The sentence imposed on K-Line was a fine of $34.5 million. That fine incorporated a global discount of just over 28% for K-Line’s early plea of guilty and assistance and cooperation, together with the contrition inherent in the early plea and cooperation. But for the early guilty plea and past cooperation, the fine would have been $48 million. The slightly lower starting point, as compared to the starting point for the sentence imposed on NYK, primarily reflected the slightly different objective seriousness of the offending conduct and the slightly different subjective circumstances of K-Line, in particular the fact that K-Line was a smaller company than NYK at the time K-Line was sentenced: see CDPP v K-Line at [412].

The parties’ submissions concerning parity

303    WWO contended that it was not NYK’s or K-Line’s co-offender in respect of the same charged conduct. It accepted, however, that “parity considerations” arose because of the similarities between the charged conduct in each of the cases. It submitted that the “appropriate undiscounted sentence” should be “significantly lower” than the penalties imposed on NYK and K-Line. That was said to be because the objective criminality of the offence it committed was lower than the criminality of both NYK and K-Line and also because its subjective circumstances were different.

304    WWO contended that the criminality of its offending was lower because: it was involved in less incidents than both NYK and K-Line; the nature of its conduct was “sporadic” and “ad hoc” and limited to specific individuals in one division; the charge period in its case was shorter than in the case of both NYK and K-Line; it made a loss as a result of its offending conduct, whereas both NYK and K-Line earned significant revenues from shipping vehicles pursuant to the contracts affected by their conduct; it was a smaller participant in the relevant market; and it only gave effect to the market allocation provision in the Respect Arrangement, whereas both NYK and K-Line also gave effect to other cartel provisions in the Respect Arrangement.

305    As for its subjective circumstances, WWO relied on the fact that it indicated that it would enter a guilty plea at the earliest stage. It also contended that it had cooperated with the ACCC and the Director and that not only was the “evolution” of its case “significantly quicker and less costly compared with both NYK and K-Line”, but that its cooperation was “more fulsome and timely compared to K-Line”. It went so far as to submit that the appropriate discount for its cooperation and guilty plea should “not be significantly less than the 40% discount given to NYK in respect of its past cooperation and assistance, and should be significantly higher than the 28% discount given to K-Line”.

306    The Director accepted that the objective circumstances of WWO’s offending was “necessarily lower” than that of NYK and K-Line because in its case the number of incidents was lower and the charge period shorter than was the case in respect of both NYK and K-Line. The Director maintained, however, that the “conduct underlying the charge” was relevantly the same in each of the three matters and that WWO “participated to a similar degree” in the Respect Arrangement and “performed a similar role” to the role performed by both NYK and K-Line. In the Director’s submission, it was largely immaterial that NYK and K-Line gave effect to other cartel provisions in the Respect Arrangement because the market allocation provision was effectively the same as those other cartel provisions. The Director also emphasised that the two s 16BA offences added to WWO’s criminality. In the Director’s submission, once the s 16BA offences are taken into account, WWO’s offending occurred over a “relevantly similar” period as the offending of both NYK and K-Line.

307    As for WWO’s objective circumstances, the Director accepted that WWO’s “smaller market power” was relevant, but pointed out that WWO was nevertheless a “very large corporation”. The Director also accepted that it was “open to accept” that WWO was contrite and had reasonable prospects of rehabilitation. In the Director’s submission, however, WWO’s subjective circumstances “significantly” differed from those of NYK and K-Line because those two companies had cooperated with the authorities to different degrees, whereas WWO “obtains no discount for cooperation or assistance.”

Application of the parity principle

308    There can be no doubt that it is necessary for the Court, in sentencing WWO, to have regard to the sentences imposed on NYK and K-Line and apply the parity principle. While it may be strictly correct that WWO was not a co-offender of NYK or K-Line, that fact is essentially immaterial because the parity principle applies in the sentencing of persons who were in substance involved in the same criminal enterprise; formal identity of charges is not a relevant condition: Green at [30]; Elias at [30]. The application of the principle to the facts and circumstances of this case is not, however, entirely straightforward because of the different degrees of culpability and different circumstances of WWO as compared to both NYK and K-Line.

309    The objective seriousness of WWO’s offending was undoubtedly less than the objective seriousness of the offending by both NYK and K-line. That appeared to be common ground. The extent or degree by which WWO’s offending was less serious was, however, not as great as WWO contended but more than the Director was prepared to concede.

310    The offending conduct of both NYK and K-Line involved 20 incidents of them giving effect to cartel provisions in the Respect Arrangement over a period of more than three years. In NYK’s case, the cartel provisions included not only the market allocation provision, but also provisions involving price fixing and bid rigging. In K-Line’s case, the cartel provision involved price fixing. WWO’s offending, in contrast, involved six incidents of it giving effect to one cartel provision, the market allocation provision, over a one year period.

311    Even taking into account the two s 16BA offences committed by WWO, WWO’s offending only encompassed eight incidents in which it gave effect to the market allocation provision. And while the two additional incidents occurred in 2009, contrary to the Director’s submission, it does follow that WWO’s offending occurred over a period which was relevantly similar to the period over which the offending by NYK and K-Line occurred. The offending conduct by NYK and K-Line occurred consistently or continually over a three year period, whereas WWO’s specific offending conduct occurred on two occasions in 2009 and then over a period of one year between June 2011 and July 2012.

312    It may be the case, as the Director submitted, that the underlying nature of the conduct engaged in by WWO was essentially the same as the conduct engaged in by NYK and K-Line. The incidents of giving effect to the Respect Arrangement involved the same sort of conduct by officers of WWO, NYK and K-Line. In each case, the conduct was deliberate, systematic and covert and was engaged in, directed by or known to, senior officers of the corporations in question. For the reasons already given, it cannot be accepted that the nature of WWO’s offending was sporadic and ad hoc. Nor, for the reasons already given, is it particularly significant that WWO’s conduct was largely limited to the conduct of only one of its divisions.

313    The fact remains, however, that the conduct engaged in by NYK and K-Line involved significantly more specific incidents of giving effect to a cartel provision, or cartel provisions, in the Respect Arrangement and occurred over a significantly longer period. The scale and scope of the specific offending conduct of NYK and K-Line was undoubtedly larger than the scale and scope of WWO’s offending conduct, even though the general nature of that conduct was much the same. It is noted, in this regard, that WWO did not form part of the “Three Js” – comprising NYK, K-Line and MOL – which held larger global shares of capacity for shipping services: see CDPP v NYK at [13]; CDPP v K-Line at [32]. However, as noted previously, there is no evidence or basis for inferring that WWO was an outlying participant in the cartel, nor any suggestion that its participation in the cartel was less rigorous or less willing than the other participants.

314    It is also of some relevance, as WWO submitted, that the conduct engaged in by both NYK and K-Line could be shown to have directly affected a number of contracts pursuant to which those corporations shipped very large numbers of vehicles to Australia and earned significant revenues. There were and are no estimates of the total number of vehicles imported into Australia pursuant to contracts entered into as a result of bids affected by WWO’s charged conduct, nor of the revenue derived from shipments pursuant to such contracts – both facts were available in NYK’s and K-Line’s proceedings. It may also be accepted that WWO was, at the relevant time, a smaller participant in the market for ocean shipping services. It had a lower capacity and share of the relevant market than NYK and K-Line, shipped less vehicles to Australia than both those corporations and its relevant annual turnover was significantly lower than the relevant annual turnover of both NYK and K-Line. The latter fact resulted in a significantly lower maximum penalty, a relevant consideration in itself given that, as discussed earlier, the maximum penalty is generally considered to be a relevant guidepost or yardstick in fixing the appropriate penalty.

315    For the reasons given earlier, however, it is overly simplistic to approach the assessment of the seriousness of cartel conduct by reference only to the profit that may have been earned as a direct result of that conduct. It follows that WWO’s reliance on the fact that it made a loss from its shipment of vehicles pursuant to a contract which was affected by one of the relevant incidents in which it gave effect to the market allocation provision is also somewhat misplaced or overstated. While the agreed facts suggested that the direct financial benefit to WWO from its offending conduct may have been fairly limited, it may nevertheless be inferred that WWO benefited from its conduct in less direct and tangible ways and that its conduct also relevantly benefited NYK, K-Line and the other cartel participants. By giving effect to the market allocation provision in the Respect Arrangement, WWO played its part in ensuring both an absence of price competition in the relevant market and the stable market shares of the cartel participants.

316    As for different subjective circumstances, the critical difference between WWO and both NYK and K-Line is that, as discussed in detail earlier, while it may be accepted that WWO indicated that it would plead guilty at an early stage, there are no agreed facts and no evidence to support WWO’s contentions concerning cooperation with the ACCC or the Director. Nor did the Director concede that WWO had provided any relevant or material assistance or cooperation. In contrast, in NYK’s case there was uncontested evidence concerning the degree and value of the past assistance provided by it, which was extensive and valuable. In K-Line’s case, there were agreed facts detailing the more limited assistance provided to the ACCC by K-Line. It is also of some relevance that, as discussed earlier, there was, in WWO’s case, no express evidence of contrition or remorse on the part of WWO.

The parties’ submissions in relation to the appropriate penalty

317    As this is a criminal prosecution, it was open to WWO to make a submission which identified what it considered to be the appropriate penalty range in all the circumstances: Barbaro v The Queen (2014) 253 CLR 58; Matthews v The Queen (2014) 44 VR 280; CMB v Attorney General for New South Wales (2015) 256 CLR 346 at [38], [64]; Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [40], [74]. It was not open to the Director to specify what the Director considered to be the appropriate sentencing range. If, however, WWO made a submission as to the appropriate penalty range, the Director was able, if not effectively required, to respond to that submission by indicating whether, in the Director’s submission, it would be open to the Court to impose a sentence within that range, or whether imposing a sentence within that range might lead to appellable error: Matthews at [25].

318    As events transpired, WWO identified what in its submission would be the appropriate range of discount for its plea of guilty and cooperation. As noted earlier, the discount range nominated by WWO was, in effect, somewhere between 28% and 40%. WWO also submitted that the appropriate starting point for the sentence, before the discount for the guilty plea and assistance was applied, should be significantly lower than the penalties imposed on NYK and K-Line. While WWO did not nominate a specific starting point or discount, it ultimately submitted that, after applying the relevant discount, a fine of $20 million would be appropriate.

319    The Director’s response to WWO’s submission concerning the appropriate range of the discount for the plea of guilty and cooperation was that WWO was not entitled to any discount for past cooperation. As for WWO’s submission that a fine of $20 million was the appropriate penalty, the Director submitted, in effect, that it was not open to WWO to propose a “specific figure”, as opposed to an appropriate penalty range. Notwithstanding that submission, the Director responded to the specific figure proposed by WWO by saying that “no submission is made … that the Court would fall into appellable error if a fine of $20 million is imposed”. That was, in effect, no more than a concession that a fine of $20 million penalty was, so far as the Director was concerned, within the range of penalties that could properly be imposed. The Director otherwise submitted that “the monetary penalty to be imposed on WWO should be significant”.

The appropriate sentence in this case

320    The sentencing process requires the sentencing judge to weigh all the circumstances and make a judgment as to what is the appropriate sentence: Markarian at [66]. This value judgment has frequently been described as an “instinctive synthesis of all the various aspects involved in the punitive process”: R v Williscroft [1975] VR 292 at 300. It is a “method of sentencing by which the judge identifies all the factors that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case”: Markarian at [51].

321    The relevant factors or features in this matter have been discussed at length throughout these reasons. Findings or observations have been made concerning the significance and weight that should be given to those factors in the particular circumstances of this case. The remaining task is to weigh all those factors in the balance and make a value judgment as to the appropriate sentence.

322    The starting point, in some respects, is the maximum penalty for the offence. The maximum penalty provides a yardstick for the determination of the appropriate penalty. In this case, the maximum penalty, based on WWO’s relevant annual turnover in the 12 months preceding the offence, is a fine of $48,532,493.

323    The factors or considerations which tend to weigh in favour of a substantial monetary penalty, somewhere towards or approaching that maximum penalty, include, in short summary: the very serious nature of the offence, involving as it did a course of deliberate, systematic and covert anti-competitive conduct engaged in or directed by relatively senior management over a not insubstantial period in an important or significant market; the damage, or potential damage, caused by the conduct to competition in the relevant market and the integrity of Australia’s open market system generally; and the need to impose a fine which will provide effective deterrence, particularly given the particular nature of the offence and the fact that WWO is a large multinational corporation. It is also appropriate, in all the circumstances, to have regard to the two additional offences committed in 2009 which WWO admitted and asked the Court to take into account, pursuant to s 16BA of the Crimes Act, in passing sentence for the principal offence.

324    The mitigating factors, which would tend to reduce the size of the fine to be imposed, include: WWO’s reasonable prospects of rehabilitation, particularly given the steps already taken by it to establish systems and practices that should prevent any re-offending; the early indication of a plea of guilty, including both the significant utilitarian value of that early plea and the contrition reflected by it; the fact that WWO has not previously been convicted of any offence, or otherwise transgressed Australia’s competition laws; and the fact that WWO has already suffered at least some relevant extra-curial punishment arising from its participation in the relevant international cartel, being punishment in the form of penalties imposed by courts, tribunals and competition authorities in overseas jurisdictions.

325    Having regard to all of the relevant features and factors, and giving them appropriate weight, the appropriate sentence in all the circumstances is a fine of $24 million. That fine incorporates a discount of 20% for WWO’s early plea of guilty. For the avoidance of doubt, it should be noted that, but for the early plea of guilty, the fine that would have been imposed would have been $30 million.

326    In terms of parity, the starting point (before the discount for the plea of guilty) of $30 million, which is significantly lower than the relevant starting point in the case of the sentences imposed on both NYK and K-Line, is primarily a product of, or reflects, the significantly lower maximum penalty in WWO’s case (given WWO’s significantly lower relevant annual turnover) and, perhaps more significantly, the fact that WWO’s offending conduct was not as objectively serious as the offences committed by NYK and K-Line respectively, particularly given that WWO’s conduct occurred over a materially shorter period and involved less incidents of giving effect to the relevant cartel arrangement. Regard has, however, been given to the two 2009 offences which WWO asked the Court to take into account pursuant to s 16BA of the Crimes Act. But for those offences, the starting point would have been lower.

327    The lower discount in WWO’s case is almost entirely a product of the fact that WWO’s discount is only for its early indication of a plea of guilty. WWO is not entitled to any, or any material, discount for assistance or cooperation with the relevant investigatory or prosecution authorities, whereas NYK and, to a lesser extent K-Line, were entitled to discounts for such assistance and cooperation.

328    While the fine imposed on WWO is lower than the fines imposed on both NYK and K-Line, it is nevertheless substantial and reflects the fact that the sort of cartel conduct engaged in by WWO warrants stern denunciation and condign punishment. It is inimical to, and destructive of, the competition that underpins Australia’s free market economy. It is ultimately detrimental to, or at the very least highly likely to be detrimental to, Australian businesses and consumers. It must be made clear to multinational corporations that they will be dealt with harshly if they give effect to cartel arrangements in a way which transgresses Australia’s competition laws.

Application to pay by instalments

329    In its written submissions, WWO made a fleeting reference to an application pursuant to s 79A(3) of the CCA to pay any fine imposed on it by instalments. In its oral submissions, however, WWO stated that it would, having corresponded with the Director on that issue, make a separate application before a Registrar of this Court, the Director having indicated that such an application would not be opposed. It therefore need not be addressed in these reasons.

Conclusion and Dispositoin

330    WWO has pleaded guilty to and is convicted of the offence of giving effect to a cartel provision contrary to s 44ZZRG(1) of the CCA. The sentence imposed in respect of that conviction is a fine of $24 million.

Associate:

Dated:    4 February 2021