Federal Court of Australia
Commonwealth Director of Public Prosecutions v Bingo Industries Pty Ltd;
Commonwealth Director of Public Prosecutions v Tartak
[2024] FCA 121
JUDGMENT SUMMARY
Reasons or remarks on sentence in criminal matters are traditionally delivered orally. Given the length of the reasons in this matter, that course is not desirable. In those circumstances, the appropriate course is to provide a short summary of the reasons for imposing the sentences that are to be imposed on the offenders today. The summary is intended to assist the offenders and others to understand the reasons for imposing the sentences that are to be imposed. It is not a complete statement of the findings and conclusions reached by the Court. The only authoritative statement of the Court’s reasons is that contained in the published reasons for judgment which will be provided to the parties and made available on the internet at the Court’s website. This summary is also available there.
Bingo Industries Pty Limited and its former chief executive officer, Mr Daniel Charbel Tartak have each pleaded guilty to two cartel offences under the Competition and Consumer Act 2010 (Cth). The Court must now impose sentences in respect of those offences.
Bingo is a large waste management company based in New South Wales. At the time the cartel offences were committed, Bingo was a public company and was the largest provider of collections services and processing services for building and demolition waste in the Sydney metropolitan region. Collections services involve the collection and transportation of waste in skip bins to facilities for processing. Processing services involve the sorting, processing, and recycling of waste.
Mr Tartak was Bingo’s chief executive officer at the time the offences were committed.
Many other small companies provided processing and collections services in Sydney. The second largest provider of collections services in Sydney at the time was Aussie Skips Bin Services Pty Ltd (Aussie Skips), though it was a much smaller company and had a significantly smaller market share than Bingo. A related company, Aussie Skips Recycling Pty Ltd (Aussie Recycling), was also a small provider of processing services in Sydney. Those two companies will collectively be referred to as the Aussie Companies, other than where it is necessary to distinguish between them. Mr Emmanuel Nickolas Roussakis was the chief executive officer of the Aussie Companies.
Needless to say, Bingo competed with Aussie Skips in the market for collections services, and with Aussie Recycling in the market for processing services, in Sydney.
Over a five-day period commencing on 20 May 2019, Mr Tartak, on behalf of Bingo, and Mr Roussakis, on behalf of the Aussie Companies, engaged in a series of communications during which they made arrangements which contained provisions concerning the prices at which their respective companies would provide collections services and processing services. Mr Tartak and Mr Roussakis first met in a café at Mr Tartak’s request. They then engaged in a series of WhatsApp messages, WhatsApp being an encrypted messaging service.
It is unnecessary, for the purpose of this summary, to detail the content of those messages. Suffice it to say that through those messages Mr Tartak and Mr Roussakis made an arrangement about the prices Bingo and the Aussie Companies would charge for collections services and processing services in the Sydney metropolitan region.
The essence of the arrangement in respect of collections services was that Bingo would maintain a price increase of 25% (other than for some “top tier” customers, where the price increase may be as low as 22%) and that Aussie Skips would increase its prices by at least 20%. The essence of the arrangement concerning processing services was that Bingo would maintain a price increase of at least $60/tonne and $35/m3 at its facilities which were near Aussie Recycling’s Strathfield South facility and that Aussie Recycling would increase its prices at its Strathfield South facility by at least $50/tonne and $27.50/m3.
Over the following three months, Bingo, aided by Mr Tartak, gave effect to the arrangements that it had made with Aussie Skips and Aussie Recycling. So too did the Aussie Companies, aided by Mr Roussakis.
The average price Bingo charged customers for building and demolition waste for the most common type of skip bin increased from approximately $790 in June 2019 to approximately $940 in July 2019, and $915 in August 2019. The average price Bingo charged account customers for processing building and demolition waste increased from $192.46/tonne in June 2019 to $246.70/tonne in July 2019, and $241.68/tonne in August 2019.
While a portion of those price increases may have been referrable to an increase in Bingo’s costs arising from the imposition of a waste levy by the Queensland government which came into effect on 1 July 2019, there could be no doubt that it was likely that some customers paid more than they otherwise would have paid for collections services and processing services as a result of the anti-competitive arrangements between Bingo and the Aussie Companies. Mr Tartak was no doubt aware of the likely effects of the arrangements.
The arrangements between Bingo and the Aussie Companies were effectively abandoned by about 1 September 2019. That was a product of both commercial considerations and the fact that there had been some instances of non-compliance with the arrangements, or at least allegations of non-compliance, by the parties.
Bingo pleaded guilty to two charges: one charge of intentionally making arrangements containing cartel provisions contrary to s 45AF(1) of the Competition and Consumer Act and one charge of giving effect to cartel provisions in arrangements contrary to s 45AG(1) of the Competition and Consumer Act. The particulars of those charges referred to both the arrangement with Aussie Skips containing the cartel provision concerning the prices for collections services and the arrangement with Aussie Recycling containing the cartel provision concerning the prices for processing services.
Mr Tartak pleaded guilty to two charges: one charge of aiding and abetting Bingo to contravene s 45AF(1) of the Competition and Consumer Act by making an arrangement containing a cartel provision; and one charge of aiding and abetting Bingo to contravene s 45AG(1) of the Competition and Consumer Act by giving effect to an arrangement containing a cartel provision. Those charges both concerned only the arrangement containing the cartel provision concerning the prices for collections services.
Mr Tartak also asked the Court to take into account, when passing sentence upon him in respect of the offences to which he had pleaded guilty, the fact that he had admitted his guilt in respect of two other offences. That procedure is available pursuant to s 16BA of the Crimes Act 1914 (Cth). The offences which the Court was asked by Mr Tartak to take into account were offences of being knowingly concerned in Bingo’s contraventions of s 45AF(1) and s 45AG(1), being the contraventions arising from it making and giving effect to the cartel arrangement with Aussie Recycling which contained the cartel provision concerning prices in respect of processing services.
On just about any view, the offences committed by Bingo and Mr Tartak were extremely serious offences against Australia’s laws which prohibit cartel conduct. The task for the Court is to impose appropriate sentences on Bingo and Mr Tartak for those serious offences.
In considering the appropriate sentence in any criminal case, the Court is required to have regard to, and weigh in the balance, a broad range of relevant factors and considerations and then arrive at a value judgment as to the appropriate sentence. In broad terms, those factors and considerations generally relate to either the objective seriousness of the offending conduct or the subjective circumstances of the offender in question. The overarching principle is that the sentence imposed by the Court must be of a “severity appropriate in all the circumstances of the offence”.
The sentence to be imposed on Bingo
I will commence with the sentence to be imposed on Bingo.
The maximum penalty for each of the offences committed by Bingo is $40,200,000. As explained in more detail in the judgment, the maximum penalty for each of the offences committed by Bingo is, by virtue of the terms of the relevant offence provisions and the facts of the case, calculated by reference to Bingo’s annual turnover during the 12-month period preceding the offences.
The maximum penalty for an offence is generally seen as a “yardstick” that bears on the ultimate discretionary determination of the sentence for the offence. That is essentially because it represents the legislature’s assessment of the seriousness of the offence. It also essentially invites comparison between the worst possible case and the case before the court at the time.
There are a number of factors or considerations that tend to weigh in favour of the imposition of substantial fines on Bingo in respect of each of its offences.
The offences committed by Bingo were very serious offences in all the circumstances. Cartels are widely condemned as the most egregious forms of anti-competitive behaviour. At its heart, a cartel is an agreement between competitors not to compete. Cartel conduct harms consumers, businesses, and the economy, and is likely to increase prices, reduce choice and distort innovation processes.
The cartel conduct encompassed by Bingo’s offences undoubtedly involved serious criminality.
The price-fixing arrangements between Bingo and the Aussie Companies persisted for about three months before they were abandoned. They had the effect of suppressing and distorting price competition in respect of collections services and processing services in the Sydney metropolitan region or a significant part thereof. The markets for collections services and processing services in that region were large and lucrative. The effect of the cartel conduct was that some consumers of collections services and processing services in the region were likely to have paid more for those services than they otherwise would have. Correspondingly, Bingo was likely to have benefited from its unlawful conduct. Among other things, it was able to increase its prices, and profit from those increased prices, without the usual associated risk of losing customers to the Aussie Companies and perhaps even other suppliers.
Bingo’s conduct was also covert, deliberate and carried out by its most senior executive officer, who also instigated the arrangements. There appears to have been little or no corporate culture of compliance at Bingo at the time of the offences, at least in respect of anti-competitive conduct. Bingo was the largest provider of collections services and processing services in the relevant markets and was a very large and profitable public company. It derived substantial revenue from its provision of collections services and processing services in the markets in question.
There are, however, some mitigating circumstances in Bingo’s case.
Bingo provided some assistance to the Australian Competition and Consumer Commission (ACCC) in respect of its investigation into the then suspected cartel conduct. It had discussions, through its legal advisers, concerning a possible plea of guilty and effectively facilitated similar discussions between the Aussie Companies and the ACCC.
Bingo’s discussions with the ACCC were fruitful and it entered pleas of guilty in this Court at the earliest opportunity. The early pleas were made in circumstances which avoided the need for any committal proceedings. The early plea also meant that it was unnecessary to conduct what would likely have been a relatively lengthy and costly trial in this Court.
Bingo’s early guilty pleas were also reflective of its genuine contrition and remorse and a willingness to facilitate the course of justice.
Bingo’s prospects of rehabilitation are also good. Prior to committing these offences, Bingo had not been convicted of any criminal offences and had no history or record of having engaged in anti-competitive conduct. Since the offending conduct came to light, Bingo has taken several positive steps to improve its policies, procedures, and training so as to minimise, if not eliminate, the risk of any similar conduct occurring in the future.
It is generally accepted that deterrence, both specific and general, are important considerations in imposing penalties for offences like cartel offences. Cartel conduct is notoriously difficult to detect, investigate, and prosecute. It is also an essentially economic or commercial crime that generally involves an offender weighing up whether the expected financial or other benefit from the conduct outweighs the risk of detection and the resulting imposition of a penalty. The fines imposed for such offences must be sufficiently high that they could not be regarded to be an acceptable cost of doing business. They must also be sufficiently high that others who may be tempted to offend will come to appreciate that the risk of having a substantial penalty imposed well outweighs the likely benefits from the anti-competitive conduct.
In sentencing Bingo, I must also have regard to the principle of parity. That principle requires that co-offenders should be treated in a like manner, though allowance must be made for different sentences to be imposed upon like offenders to reflect different degrees of culpability and different circumstances. I must ensure that there is no marked disparity between the sentences imposed on co-offenders which would give rise to a justified sense of grievance.
In Bingo’s case, I must ensure that there is no unjustified or unjustifiable disparity between the sentence I impose on it and the sentence I impose on its co-offenders, the Aussie Companies.
The application of the parity principle in this case is particularly difficult and complex. The Aussie Companies were the subject of separate sentence proceedings. The agreed facts and evidence before the Court in the sentence proceedings involving the Aussie Companies differed in some, albeit relatively minor, respects from the agreed facts and evidence in these proceedings. The offence to which each of the Aussie Companies has pleaded guilty is different to the offences to which Bingo has pleaded guilty. Perhaps more significantly, the maximum penalties for the offences committed by Bingo are significantly higher than the maximum penalty for the offence committed by each of the Aussie Companies, essentially because Bingo was and is a significantly larger company then either of the Aussie Companies. Finally, there are also some differences between the objective seriousness of the offences committed by Bingo and those committed by the Aussie Companies. There are also some differences between the subjective circumstances of the offenders in each case.
I do not propose to refer in this summary to the sentences that I will shortly impose on the Aussie Companies. Suffice it to say that the fines I will impose on those companies are lower than those that I propose to impose on Bingo. For the reasons given in the judgment, however, I do not consider that the disparity is such as to give rise to a justifiable sense of grievance on the part of Bingo.
Having regard to all of the factors and considerations to which I have referred, and giving them appropriate weight, I have determined that the appropriate sentences to impose on Bingo in all the circumstances are:
(a) in respect of the offence against s 45AF(1) of the Competition and Consumer Act, a fine of $15,000,000; and
(b) in respect of the offence against s 45AG(1) of the Competition and Consumer Act, a fine of $15,000,000.
I should note that those fines incorporate a discount of 30% having regard to Bingo’s early plea of guilty and cooperation with the authorities. The fines have also been moderated having regard to the principle of totality.
The total or aggregate fine to be paid by Bingo is accordingly $30,000,000.
The sentence to be imposed on Mr Tartak
Turning, then, to the sentences to be imposed on Mr Tartak, the maximum penalty for each of the offences committed by Mr Tartak is a term of imprisonment not exceeding 10 years, or a fine not exceeding $420,000, or both.
I have had regard to several important factors and considerations in considering the appropriate sentence to impose on Mr Tartak.
For the reasons referred to earlier in the context of the sentence to be imposed on Bingo, the offences committed by Mr Tartak were undoubtedly very serious offences. In summary, and at risk of repetition, cartel offences are inherently serious offences, a fact reflected in the fact that, where the offence is committed by an individual, the legislature has seen fit to provide a penalty involving imprisonment for up to 10 years. The cartel offences which Mr Tartak committed were also undoubtedly serious. He was the chief executive officer of a very large public company which was a major player in the market for waste collections services in the Sydney metropolitan region. He caused that company to make and give effect to an arrangement which included a cartel provision with a competitor in that market. His conduct in that regard was covert and deliberate. The arrangement, which persisted for a not insubstantial period of time, stifled and distorted price competition in that market to the benefit of Bingo and to the detriment to consumers of collections services in the Sydney metropolitan region.
I have also taken into account Mr Tartak’s admission of guilt in respect of corresponding offences relating to making, and giving effect to, an arrangement with Aussie Recycling which included a cartel provision concerning prices in the market for waste processing services in the Sydney metropolitan region. Those were also serious offences.
While the offences committed by Mr Tartak are serious, his subjective circumstances compel a degree of leniency.
Mr Tartak has no prior convictions. His commission of these offences was out of character.
Putting to one side Mr Tartak’s commission of these offences, he is widely considered to be a man of exceptional character. He is a devoted and supportive family man who was, and still is, highly respected and admired by business colleagues and church, school, and community leaders. He has contributed to many community and charitable ventures and associations. His fall from grace has been significant. I have also taken into account the evidence of a psychologist concerning Mr Tartak’s personal circumstances.
Mr Tartak cooperated and assisted the ACCC in its investigation by engaging with the ACCC and encouraging his co-offender, through his and the co-offender’s legal advisers, to engage with the ACCC in respect of the ACCC’s investigation. He subsequently agreed to be interviewed by the ACCC and signed an induced statement.
Mr Tartak also entered guilty pleas at the earliest opportunity. He indicated his intention to plead guilty in circumstances which avoided the need for the ACCC to compile a brief of evidence and permitted the Prosecutor to file an indictment directly in this Court without the need for committal proceedings. His early pleas also avoided a potentially lengthy and costly trial in this Court.
Mr Tartak’s early plea of guilty is also demonstrative of his contrition and remorse, as well as a willingness to facilitate the course of justice.
There is, in any event, ample evidence of Mr Tartak’s genuine contrition and remorse.
I am satisfied that the risk of Mr Tartak reoffending is low and that the prospects of his rehabilitation are good.
I have also taken into account the fact that, on the application of the Prosecutor, I have decided to disqualify Mr Tartak from managing corporations for a period of five years.
For the reasons referred to earlier, the need for sentences imposed in respect of cartel offences to have a deterrent effect is an important consideration. In the particular circumstances of this case, the need for specific deterrence is not particularly significant given the findings I have made concerning Mr Tartak’s character, low risk of reoffending, and good prospects of rehabilitation. It is, nevertheless, a consideration that must be weighed in the balance. The need for the sentence to generally deter is also a weighty consideration. Officers of corporations in similar positions to that of Mr Tartak should be left in no doubt that they will face condign punishment if they cause their corporations to enter into, or give effect to, cartel arrangements.
As was the case with the sentence imposed on Bingo, I am required to have regard to the parity principle when sentencing Mr Tartak. In particular, I must avoid any marked disparity between the sentences imposed on Mr Tartak and his co-offender, Mr Roussakis, that cannot be reasonably justified or explained.
Some of the difficulties and complexities in applying the parity principle that were discussed earlier in the context of Bingo’s sentence also apply in the context of the application of the parity principle to the sentences imposed on Mr Tartak and Mr Roussakis. Mr Roussakis pleaded guilty to a different charge and was the subject of separate sentence proceedings involving different facts and evidence. There are also some differences between the objective seriousness of Mr Roussakis’s offences and the objective seriousness of Mr Tartak’s offences and some material differences between their respective subjective circumstances.
I will shortly be imposing a sentence on Mr Roussakis, though I again do not propose to foreshadow at this point what that sentence will be. It is sufficient to say that I do not consider that the differences between the sentence that I will impose in each case is such as to give rise to a justifiable sense of grievance on the part of either Mr Tartak or Mr Roussakis.
Having regard to all of the factors and considerations to which I have referred, and giving them appropriate weight, I have determined that the appropriate sentence to impose on Mr Tartak in all the circumstances is as follows:
(a) in respect of the offence of aiding, abetting, counselling or procuring Bingo to contravene s 45AF(1) of the Competition and Consumer Act, imprisonment for 18 months to commence on 23 February 2024 and to be served by way of intensive correction in the community pursuant to s 7(1) of the Crimes (Sentencing Procedure) Act 1999 (NSW) (Sentencing Procedure Act), and a fine of $50,000; and
(b) in respect of the offence of aiding, abetting, counselling or procuring Bingo to contravene s 45AG(1) of the Competition and Consumer Act, imprisonment for 18 months to commence on 23 August 2024 and to be served by way of intensive correction in the community pursuant to s 7(1) of the Sentencing Procedure Act, and a fine of $50,000.
The effective term of imprisonment, taking the element of concurrency into account, is two years. I should also note that the sentences of imprisonment incorporate a discount of 40% for Mr Tartak’s early plea of guilty and assistance and cooperation with the authorities. The total fine to be paid by Mr Tartak is $100,000.
The intensive corrections orders pursuant to which the term of imprisonment is to be served will be subject to the standard conditions prescribed by s 73 of the Sentencing Procedure Act, namely that Mr Tartak must not commit an offence and must submit to supervision by a community corrections officer, and an additional condition pursuant to s 73A(2)(d) of the Sentencing Procedure Act, being that Mr Tartak perform community service work for 400 hours.
I will also make an order, pursuant to s 86E of the Competition and Consumer Act, that Mr Tartak be disqualified from managing corporations for a period of five years commencing on 23 February 2024.
JUSTICE MICHAEL WIGNEY
23 February 2024
Sydney
