5 The Leahy Companies, Chisholm, Justco and some of the individual respondents (Palmer, Bentley, Gourley, Levick and Muller) admitted to the contraventions of the Act alleged against them. Balgee did not admit, but did not contest, the ACCC's claims against it. The remaining corporate respondents (Triton, Brumar and Apco) and the individual respondents who acted on their behalf (Rosenow, Dalton and Anderson), who I compendiously refer to as "the contesting respondents", contested the ACCC's claims against them although they did not seriously challenge the ACCC's case against the Leahy Companies, Chisholm, Justco and Balgee. Nonetheless, there were scarcely any points of law and fact that were not taken by one or other of the contesting respondents. In order to ensure that these reasons are not unacceptably long, I have confined them to the significant and consequential issues that are capable of affecting the outcome of the ACCC's claims: see Amadio v Henderson (1998) 81 FCR 149 at 175.
2. The Ballarat Petrol Market
(a) Background
6 The Ballarat petrol market was alleged to encompass the area in and around Ballarat. However, the evidence focused primarily on the retail and wholesale supply and sale of petrol in Ballarat itself. In that market petrol was purchased by consumers during the relevant period primarily on the basis of price, rather than brand name. Because of the significance of price, retailers prominently posted their prices ("board prices") at their sites. Also, during the relevant period, Ballarat had a large number of retail outlets with the consequence that the retail market in Ballarat was intensely competitive and was so highly price sensitive that even a difference in price of less than one cent per litre ("cpl") could significantly influence the volume of petrol sold at a particular retail outlet.
7 In addition to the outlets of the corporate respondents there were other retail petrol outlets in Ballarat which were owned by entities which are not parties to the present proceeding. The outlets were United, Safeway Plus, Alien, Ampol Road Pantry (a Caltex franchisee), and Liberty (IGA/Jewel). While the ACCC has not alleged that the entities conducting those outlets contravened any provision of Pt IV of the Act, the price movements of the outlets were influenced by the price-fixing understanding alleged by the ACCC.
8 The price of petrol in Ballarat was usually determined by the board price at the high visibility sites, which are large multi-bowser sites located on major roads with significant passing traffic. Such sites, which include the sites of companies that operate as petrol discounters, turn over a high volume of petrol due to their prominent locations and their capacity to accommodate a large number of customers. A reduction in the board price at the high visibility sites can have a significant impact on the volume of petrol sold at other sites operating in Ballarat if an equivalent price reduction is not also made at the other sites. The high visibility sites included sites operated by the Leahy Companies (BP), Apco (Apco), Chisholm (Ampol/Caltex), Justco (Swift), Brumar (Shell), United (United), and Balgee (Mobil).
9 In general, retailers who are independent of their petrol suppliers purchase petrol from the distributors at the posted lessee price ("PLP"). The PLP is treated as a nominal price because distributors offer their independent retailers price support to enable the retailers to maintain market share and competitiveness. Price support is given by way of a rebate to the retailer. Thus, during a period of discounting, price support enables the retailer to remain competitive by discounting to below the PLP in order to match the prices of its competitors, but making a gross profit which is usually 3 cpl.
10 The low visibility sites are generally smaller sites that are not located on main roads and are usually operated in conjunction with another business such as an automotive repair business. While these sites also need to be price competitive, they tend to follow the market price at high visibility sites although, being lower volume sites, they are not as dependent on sales volumes for their economic sustainability. In Ballarat the low visibility sites included sites of independent Shell retailers supplied by Triton and the sites selling the Liberty (IGA/Liberty) and Alien (Alien) brands. In addition, the Leahy Companies (BP) and Chisholm (Ampol/Caltex) operated a number of low visibility sites in Ballarat.
11 Finally, petrol pricing in Ballarat followed a cyclical pattern of falling and rising retail prices. The pattern involved prices being discounted to relatively low levels by stepped decreases over a period until they bottomed out, after which the discounting came to an abrupt end with a substantial price increase. If that increase took effect in the market (ie by "sticking") the discounting period terminated until the discount cycle re-commenced.
(b) The competitors
12 Each of the corporate respondents operated as a wholesale distributor or retailer of petrol in Ballarat. The corporate respondents' respective purchase arrangements influenced the extent to which they had the capacity to compete with the other corporate respondents during a discount cycle.
(i) Triton - Wholesaler
13 Triton was a wholesale distributor which supplied Shell branded petrol to the independent retail outlets known as Brown Hill, Sunset Strip, Barkly Street, B & G Beaufort and Taxi Co-op ("the independent Shell retailers"). Although the retailers determined the retail prices of the petrol they sold, the ACCC contends that during discount cycles Triton, through its PLP and price-support system, effectively determined the retail price of petrol sold by the independent Shell retailers.
14 Triton received price support from its supplier, Shell, and provided price support to the independent Shell retailers during discount cycles. The two price-support systems differed substantially. As between Shell and Triton an in-principle level of support was set on an annual basis, based on Triton's entire business across all geographic markets. Due to the small size of the Ballarat market relative to Triton's overall business, periods of discounting in Ballarat did not tend to significantly impact the overall level of support that Triton received from Shell.
15 Under Triton's price-support system Triton provided a guaranteed 3 cpl margin to the independent retailers on all petrol sold. In situations where the retail price of petrol exceeded the PLP by at least 3 cpl, resellers were able to make their 3 cpl margin without price support being provided. To the extent that the independent retailers could not achieve that margin, for example when the market price of petrol was lower than the PLP price, Triton made up the difference by offering price support sufficient to enable the retailers to achieve their 3 cpl margin. Although price support was given as a rebate, its effect was to reduce the PLP payable by the independent retailers to Triton.
16 The purpose of price support was to enable the independent Shell retailers, which were low volume sites in Ballarat, to survive in the highly competitive market. Consequently, Triton's supported price was usually the current discounted market price. In practice, although the independent Shell retailers were under no obligation to set their board prices at the supported price, the independent Shell retailers adjusted their board prices to that price. The reason for that can be understood from the following example.
17 If Triton's PLP was 80 cpl but the Ballarat market had discounted the retail price to 75 cpl, price support was usually given by Triton to its retailers to 75 cpl. As the supported price was calculated to guarantee the retailer a 3 cpl margin, the rebate of 8 cpl meant the effective PLP was reduced to 72 cpl in respect of the petrol sold at the supported price. If the retailer dropped below the supported price, as it was entitled to do, it would bear the cost of doing so. Thus, if its retail price was 74 cpl it would only be receiving a gross profit of 2 cpl as the rebate of 8 cpl remained constant, thereby reducing the effective PLP to 72 cpl. While, in theory, dropping below the supported price may increase volume by pricing below the market, the reality was that competitors were likely to quickly match the lower board price so as to defeat any temporary advantage to be gained by a decrease in price. In any event, it was generally accepted that the independent retailers required a margin of 3 cpl to maintain the profitability of their petrol sales. As a result, there was little incentive for the independent Shell retailers to drop below the supported price.
18 If a retailer rose above the supported price, as it was entitled to do, it might earn more than 3 cpl but it would be likely to lose volume because its price would be above the market. Further, as price support was designed to enable Triton and its independent retailers to maintain market share, Triton may not have taken a favourable view of a retailer seeking to gain additional profit at the cost of losing market share. As a result, there was also little incentive for the independent Shell retailers to sell above the supported price.
19 Without price support, in order to make the 3 cpl margin that was considered by the retailers as the benchmark for their board pricing, the independent Shell retailers would have had to increase their board prices to PLP plus 3 cpl.
20 In practice, Triton offered price support during the discount cycle to enable its independent Shell retailers to follow the market down but retain their 3 cpl profit. When price support was reduced or withdrawn, the price set by the independent Shell retailers generally rose to the higher supported price or, in the absence of support, to the price that was necessary to secure the 3 cpl margin.
21 While Triton argued that it was not a competitor in the retail market, it is clear that in the usual course of events any reduction in, or withdrawal of, the price support provided by Triton to its retailers would be likely to enhance its profitability. Thus, Triton had a commercial interest in price increases occurring as they enabled it to withdraw or reduce price support without Triton or its independent retailers losing market share or competitiveness. Of course, the price support provided by Shell to Triton better enabled Triton to support its retailers. However, any additional price support given by Shell during a discount cycle could be expected to be reduced or withdrawn when prices increased.
(ii) Leahy Petroleum, Chisholm and Balgee - Wholesalers and Retailers
22 Leahy Petroleum supplied BP branded petrol as a wholesale distributor to independent retail outlets and sold BP branded petrol to the public at sites that it owned and operated as well as at consignment sites that it owned but did not operate. Leahy Petroleum controlled the retail price of petrol at its company-owned and consignment sites.
23 Chisholm was a wholesale distributor of petrol to Caltex and Ampol branded service stations and, on rare occasions, Chisholm would distribute petrol to Caltex franchisees on behalf of Caltex. Chisholm also retailed Ampol/Caltex branded petrol to the public at sites that it owned and operated, as well as at consignment sites that it did not operate. Chisholm had direct control over the retail price of petrol at both its company-owned and its consignment sites.
24 Finally, Balgee also had wholesale and retailing arms that distributed Mobil branded petrol to independent resellers for sale to the public and sold Mobil branded petrol to the public via company owned and operated sites and commission agents. Balgee set the retail price of petrol at the latter two types of sites.
25 It is unnecessary to consider the detail of the pricing mechanisms employed by the Leahy Companies, Chisholm, Justco and Balgee to ensure that petrol price increases took effect pursuant to the price-fixing understanding at the sites for which they were responsible. It is sufficient to observe that it is likely that the discount cycle was a costly exercise for these respondents, and therefore they had a substantial incentive to increase their prices in order to restore profitability. Thus, one or more of those respondents ("the initiating respondents") sought to bring the discount cycle to an end by triggering, or participating in, a coordinated price increase during the relevant period by increasing board prices to a targeted retail price. The proposed price increase was often initiated by a price-increase call (see below) between Levick (Balgee) and Zala (Chisholm) and the proposed increase was usually made without delay by the intiating respondents. The mechanism usually employed was that one or more of the initiating respondents would initiate the proposed price increase by taking the necessary steps to ensure that notice of the increase ("a price-increase call") was given to the other corporate respondents and by increasing retail prices to the proposed price. The price increase would not "stick" unless all of the high visibility sites in the Ballarat petrol market increased their retail prices to match the increase of the initiating respondents. If that did not occur within a relatively short period the price increase would collapse and the prices at the various retail outlets controlled by the initiating respondents, and any other respondents that had increased their prices, would return to the discounted levels they were at before the increase.
(iii) Leahy Retail, Justco, Brumar - Retailers
26 Three of the corporate respondents operated exclusively as retailers. Leahy Retail sold BP branded petrol, Justco sold Swift branded petrol and Brumar sold Shell branded petrol. Leahy Retail and Justco, who were initiating respondents, retailed petrol to the public at company owned and operated sites, while Brumar was a Multisite Shell Franchisee ("MSF").
27 Brumar's position was different. It received price support from Shell which guaranteed a 3 cpl margin on petrol sold. Shell's price support to Brumar was designed to enable it to compete in the Ballarat market. Thus, the level of price support Brumar received from Shell generally determined Brumar's retail price during a discount cycle. Similarly, a reduction in, or withdrawal of, Shell's price support would be likely to result in a corresponding increase in Brumar's retail price. In addition, profit support was given by Shell to a MSF on a monthly basis to cover any shortfall or loss. Of the 86 sites that Brumar operated, some made a profit but many made a loss. The combined site profits and losses were calculated and any net loss was to be paid to the MSF by Shell in the form of profit support. While Shell's price and profit support are likely to have shielded Brumar from the losses it would otherwise have incurred during discounting cycles it was obviously in Shell's interest for a discount cycle to be brought to an end. Although it is not altogether clear that Brumar had a direct interest in the cycle coming to an end, it is likely that it saw its interest and Shell's interest as coinciding in that regard.
(iv) Apco-Discounter
28 Apco sold Apco branded petrol to the public through commission agents who received a commission of between 1.1 and 1.5 cpl on petrol sold. Apco purchased petrol direct from oil companies at significantly discounted rates but, in return, Apco had no entitlement to seek price support. It operated as a discounter with the consequence that when the price cycle was at the higher levels it was able to discount and still make significant profit. On the other hand, when the cycle was at the lower price levels its margins were reduced and in many instances, subject to income it earned from store trading, it traded at a loss. Accordingly, it was generally in Apco's commercial interest for the discount cycle to be brought to an end so that it could continue its role as a petrol discounter but at higher, rather than lower, price levels. However, the royalties payable on store sales and Apco's petrol sales in other areas alleviated the losses that were being incurred at the Ballarat sites at the lower end of the cycle.
(c) The Ballarat Price Cycle
29 Board prices at retail sites during the relevant period in the Ballarat petrol market followed a price cycle that was characterized by gradual decreases in price followed by a sudden and significant increase. The Ballarat price cycle commenced with board prices being at about the same level at most sites. The discounters in the market would reduce their board prices by up to 2 cpl, thus offering petrol at prices that were lower than at most of the other sites. In response, other sites in the market would reduce their board prices to approximate the new lower price. After the market price had moved to the lower price, the discounters would again reduce their board prices by up to 2 cpl. Other sites would again follow. Significant reductions were less frequent at the lower end of the cycle reflecting the fact that the lower prices were more difficult to sustain.
30 When petrol prices were at the lowest end of the cycle one or more sites would increase their board prices suddenly and significantly by up to 8 to 10 cpl. When the high visibility sites matched the increase by raising their board prices to the same price or a similar price, the new higher price took effect or, as was put by the ACCC, the new price "stuck." Some time after the increase, the discount cycle would recommence, but from the higher, rather than the lower, levels in the cycle.
31 For a price increase to "stick" it was critical for all of the key sites to increase their price within a short period of time. Generally speaking the discounters, such as Apco and United, endeavoured to be the last to increase, and first to decrease, their board prices. If the discounters did not increase their board prices within a relatively short period, the price rise would not "stick" and board prices at most sites would fall back to the pre-increase level. Likewise, if the high visibility sites did not follow the rise, the increase would not "stick."
32 The duration of the Ballarat petrol price cycle altered over time. In the period prior to 1999, when competition in the Ballarat petrol market was not fierce, cycles endured for periods of at least four to six weeks. During this period, there were occasions when the retail price of petrol remained constant for as long as three months.
33 When the United branded service station entered the Ballarat market in March 1999, price competition increased and the price cycle accelerated dramatically, with the discount cycle becoming more frequent. This happened because United, a discounter, aggressively challenged Apco's position as the discount leader. During this period, if United's board price fell below that of Apco, Apco would quickly reduce its price and vice versa. The rest of the retail sites followed the discounters down in order to maintain market share. In this extremely volatile market, price cycles could occur over periods of one to two weeks.
34 Professor Philip Williams, an economist, gave evidence about whether, in terms of economic theory, the Ballarat price cycle reflected a highly competitive market or, rather, reflected collusion among retailers in that market. Professor Williams' evidence may be summarised as follows. Discounters attempt to gain volume by undercutting the prevailing market price. The stepped decreases in the Ballarat market evidenced the fact that discounters had an incentive to reduce the retail price by only as much as was necessary to increase their sales volume. Since the market was extremely price sensitive, even a small decrease in price could provide the benefit of increased volume to discounters. In order to protect their market share, other retailers were forced to follow the discounters' stepped decreases.
35 The upward cycle in the Ballarat petrol market was characterised by sudden and significant increases that brought the discount cycle to an end. Professor Williams explained the market forces at work in respect of such increases as follows:
"So if the Maskin and Tirole explanation is correct, each service station would be hoping that somebody - perhaps somebody else in particular - would increase the price, because the current level was unsustainable in a long-run sense. The reason somebody may not wish to increase the price is because it's risky; if you increase the price, then it may not be followed. But I guess the risk may be lessened if there was some pattern to the price increases, and so a particular pattern of price increases, or a particular periodicity, may give somebody who's going to initiate a price increase a little bit of faith that it might be followed - a bit more faith that it might be followed, than if it was undertaken perhaps sooner than a price increase had previously been undertaken.
…
HIS HONOUR: Professor Williams, I just wanted to ask you one or two questions. You were taken before to the chart that sort of showed ‑ from the ACCC's, I think, records. Yes, that chart there. It showed that there were steps on the way up occurring over some days, sometimes?
PROFESSOR WILLIAMS: Yes.
HIS HONOUR: Certainly not within a day, and a number of steps on the way down. One of the pieces of evidence in this case which - just assume it for the moment, there may be some debate about it later but just assume it - that on the price rise days in this case there's an absence of any step. Just a significant rise up within a fairly short period of time. I asked Mr Holland this morning, who has been in the market, could he explain why different competitive forces would be at work on the way down and not to those that are on the way up. He thought about it and couldn't really give any answer. Can you suggest an explanation?
PROFESSOR WILLIAMS: Yes, I was in ‑ ‑ ‑
HIS HONOUR: In terms of economic theory?
PROFESSOR WILLIAMS: Yes, I was in court at the time and I was surprised at his answer. I'll tell you why. When you increase - sorry. If your competitor across the road nominates a price you have no incentive at all to charge a price - just to set your price subsequently a little bit above theirs. Why? Because if you set your price a little bit above theirs, they're going to get all the market. So you're going to have no advantage at all. The only reason why you might want to set your price above theirs is that you hope that other people are going to follow you up. So you wouldn't set your price knowingly a little bit above theirs. You'd try to bump it up as high as you thought it could go. So if the price fluctuates generally between 80 and 90 and the price has fallen down to 80, you wouldn't try 81 because there would be no conceivable advantage you would get from that. The conceivable advantage that you may get, however, if it's down at 80, is if you push it back up to 90 and people, even if they don't follow you, they at least charge 89. So that even if you're not making many sales at least you're getting a much fatter margin.
…
HIS HONOUR: I want to ask you another question which is associated with that. I noted, but it may not have been accurate because I didn't pick it up from your exact words, but you seem to suggest something along the lines that a price increase in this kind of market is risky if it's not followed. I noted that what you seemed to be getting at is that therefore the confidence that competitors have in a pattern of price rises can give a degree of comfort about the increase. Now, they are probably more my words than yours but is that in substance what you were suggesting?
PROFESSOR WILLIAMS: Yes, Maskin and Tirole, but other authors as well speak about trust. That is, even if you're not overtly talking to your competitors about the price, if you increase the price you want to have some confidence that other people are going to follow you. Now, what might lead to that confidence?"
36 The gravamen of Professor Williams' evidence is that it is inherently unlikely that a competitive petrol retailer in a highly competitive market would initiate a significant price increase without being confident that the major competitors in the market would match the increase. The evidence in relation to the Ballarat market during the relevant period establishes that the high risk involved in a significant price increase, of which Professor Williams spoke, would clearly be reduced if the party or parties increasing the price were confident that other competitors in the market would become aware of the increase and would be likely to match it. There was no real contest about that fact. The real contest between the parties related to whether the quick awareness and matching of the increases during the relevant period arose from independent observation of board prices of competitors (ie of competitive market forces at work) or rather, from ongoing collusion between competitors about the price increases (ie of anti-competitive market forces at work).
3. Price-fixing Arrangements and Understandings
(a) The Act
37 The price-fixing understanding is alleged to have contravened ss 45(2)(a)(ii) and 45(2)(b)(ii) of the Act which provide:
"(2) A corporation shall not:
(a) make a contract or arrangement, or arrive at an understanding, if . . .
(ii) a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or
(b) give effect to a provision of a contract, arrangement or understanding … if that provision . . .
(ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition."
38 Section 45A declares price-fixing contracts, arrangements and understandings to be illegal per se. Section 45A(1) provides:
"Without limiting the generality of section 45, a provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be deemed for the purposes of that section to have the purpose, or have or to be likely to have the effect, of substantially lessening competition if the provision has the purpose, or has or is likely to have the effect, as the case may be, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price for, … goods … supplied … or to be supplied … by the parties to the contract, arrangement or understanding, or by any of them, or by any bodies corporate that are related to any of them, in competition with each other."
39 Section 4(1) of the Act states that a "provision" in relation to an understanding, means any matter forming part of the understanding. The sub-section also states that "give effect to" in relation to a provision of a contract, arrangement or understanding, includes "do an act or thing in pursuance of or in accordance with or enforce or purport to enforce." Section 4F(1) provides that for the purposes of the Act a provision of a contract, arrangement or understanding shall be deemed to have had, or to have, a particular purpose if the purposes of the provision include that purpose and that purpose was or is a "substantial purpose."
40 With respect to the contraventions alleged against the individual respondents, s 75B(1) of the Act provides:
"A reference in this Part to a person involved in a contravention of a provision of Part IV … shall be read as a reference to a person who:
(a) has aided, abetted, counselled or procured the contravention;
(b) has induced, whether by threats or promises or otherwise, the contravention;
(c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
(d) has conspired with others to effect the contravention."
41 For liability under s 75B(1) to be made out the person must have knowledge of the essential ingredients of the contravention: see Yorke v Lucas (1985) 158 CLR 661 ("Yorke v Lucas") at 670.
42 The Act provides for the imposition of pecuniary penalties pursuant to s 76(1). The sub-section provides that if the Court is satisfied that a person has contravened a provision of Pt IV, or has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision:
"… the Court may order the person to pay to the Commonwealth such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the Court determines to be appropriate having regard to all relevant matters …"
43 Sections 76(1A) and (1B) provide:
"(1A) The pecuniary penalty payable under subsection (1) by a body corporate is not to exceed:
(a) for each act or omission to which this section applies that relates to section 45D, 45DB, 45E or 45EA - $750,000; and
(b) for each other act or omission to which this section
applies - $10,000,000.
(1B) The pecuniary penalty payable under subsection (1) by a person other than a body corporate is not to exceed $500,000 for each act or omission to which this section applies."
44 Section 80(1) of the Act empowers the Court to grant an injunction restraining conduct that constitutes or would constitute a contravention of a provision of Pt IV of the Act. The section also empowers the Court to grant an injunction restraining any person from "being in any way, directly or indirectly, knowingly concerned in, or party to, a contravention by a person of such a provision."
45 Finally, s 84(2) of the Act provides:
"(2) Any conduct engaged in on behalf of a body corporate:
(a) by a director, servant or agent of the body corporate within the scope of the person's actual or apparent authority; or
(b) by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent;
shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate."
(b) The cases
46 In Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1982) 44 ALR 557 ("Radio 2UE") at 565-566 Lockhart J observed in respect of s 45A:
"Section 45A was introduced into the Act by Act No. 81 of 1977 and came into operation on 1st July, 1977. To my knowledge this is the first time the section has been considered by a court. The section renders price fixing (I use this term for convenience to encompass also controlling or maintaining price) among competitors unlawful per se. It applies to any contracts, arrangements or understandings between competitors which in purpose or effect inhibit price competition.
The court's task is to characterize the conduct before it in a given case. Care must be taken in performing that task because, by its very nature, the violation of s. 45A is deemed, for the purposes of s. 45, to substantially lessen competition per se. Such a finding may have far reaching consequences to the competitors concerned.
It is important to distinguish between arrangements (I use this expression for convenience to encompass also contracts and undertakings) which restrain price competition and arrangements which merely incidentally affect it or have some connexion with it. Not every arrangement between competitors which has some possible impact on price is per se unlawful under the section."
47 When regard is had to the different and separate roles alleged by the ACCC to have been played by each of the initiating respondents, and by Triton, Brumar and Apco, it is more appropriate to consider the issues arising under ss 45(2) and 45A in terms of a price-fixing "understanding", rather than a price-fixing "arrangement." Also, it is unnecessary to consider any specific price-fixing "provisions" of the alleged understanding as s 4(1) provides that a "provision" in relation to an understanding means any matter forming part of the understanding. Gleeson CJ, McHugh, Gummow and Hayne JJ in Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2003) 201 ALR 414 at 416 [7] observed that the word "provision" in Pt IV of the Act invites attention to the content, rather than the form, "of what has been, or is to be, agreed, arranged or understood" and stated that the definition in relation to a provision in s 4(1) emphasises that point. In any event, the understanding alleged was solely concerned with providing for the fixing or controlling of petrol prices in Ballarat. I say that as, although the ACCC put its case on the basis that the price-fixing understanding fixed or controlled prices and provided for the fixing and controlling of prices, the alleged understanding provided a process by which price increases may be fixed or controlled. In those circumstances it is more apposite to consider the present case in terms of an understanding that provides for the fixing or controlling of prices.
48 Finally, as it is not in dispute that most of the parties to the alleged understanding were in competition with each other in the Ballarat retail petrol market it is not to the point that some of the parties, for example Triton, may not have been a direct competitor in that market. The reason for that is that s 45A(1) only requires that at least two parties to the understanding, or their related companies, be in competition with each other.
49 Thus the critical issue is whether, during the relevant period, Triton, Brumar or Apco were parties to, or gave effect to, an understanding that had the purpose, or had or was likely to have the effect, of providing for the fixing or controlling of the price of petrol in Ballarat. Although little may turn on the point in the present case, in the context of s 45A purpose is to be viewed subjectively: see Australian Competition and Consumer Commission v Australian Medical Association Western Australia Branch Inc (2003) 199 ALR 423 ("ACCC v AMA") at 471-472 and News Limited v South Sydney District Rugby League Football Club Limited (2003) 215 CLR 563 at 573 [18], 577-581 [32]-[46], 584-587 [59]-[65], 636-637 [211]-[212] cf Australian Competition and Consumer Commission v Pauls Ltd (2003) ATPR 41-911 ("ACCC v Pauls") at 46-622.
50 In Radio 2UE Lockhart J (at 567) considered price "fixing":
"The Shorter Oxford English Dictionary defines the verb 'fix' as: 'To fasten, make firm or stable; … to attach firmly; … to settle permanently.' The Macquarie Dictionary defines the word as: '1. To make fast, firm, or stable. 2. To place definitely and more or less permanently. 3. To settle definitely; determine: to fix a price.'
In my view the fixing of a price for the purpose of s. 45A does not necessarily connote an element of permanency but generally suggests the settling or determining of a price for a period of time that is not instantaneous or merely ephemeral. A person may fix a price for his goods knowing that he may wish to vary it at some future time, but generally not so soon as would to business people be regarded as merely momentary or transitory."
51 On appeal in Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1983) 48 ALR 361 at 363 a Full Court, in upholding the decision of Lockhart J, observed that "price-fixing" requires an element of intention or likelihood to affect price competition.
52 The natural or ordinary meaning of the term "control" is "to exercise restraint or direction over" (The Macquarie Dictionary) or "to exercise restraint or direction upon the free action of" (The Oxford English Dictionary) a person or thing. There are degrees of control and there may be control although the "restraint" or "direction" is not total. Thus, an arrangement or understanding has been found to have had the effect of "controlling price" if it restrains a freedom that would otherwise exist as to a price to be charged: see Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (1999) 92 FCR 375 ("ACCC v CC") at 413 [168] per Lindgren J and ACCC v Pauls at [123]. In ACCC v AMA at 461-462 [193]-[195] Carr J stated that, in the context of s 45A, the word "control" indicates "a degree of control towards the higher end of the scale."
53 It is clear from the evidence of the initiating respondents, who admitted to the contraventions alleged by the ACCC, that the increases pursuant to the understanding were coordinated and substantial increases to prices that substantially matched the price proposed or targeted by one or more of the initiating respondents and the purpose, and the likely effect, of the understanding was for that price to "stick" even though the parties were at liberty to recommence the discount cycle when they wished to do so: cf Trade Practices Commission v Parkfield Operations Pty Ltd (1985) 5 FCR 140 at 143. Also, the purpose and likely effect of the understanding was to exercise restraint and direction over the retail prices by seeking to bring the discount cycle to an end through the coordinated and substantial increase in retail prices to prices that substantially matched the price proposed or stipulated by one or more of the initiating respondents.
54 It is well established that, for the purposes of ss 45(2) and 45A, the term "understanding" is apt to describe something less than a binding contract or arrangement. An understanding will usually, but may not necessarily, involve some reciprocity of obligation: see Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd (2000) 169 ALR 344 ("ACCC v Amcor") at 360, Trade Practices Commission v Service Station Association Limited (1993) 44 FCR 206 at 230-231 and Trade Practices Commission v Email Ltd (1980) 31 ALR 53 ("Email") at 66. At the least, there must be a meeting of minds of those said to be parties to the understanding and a consensus as to what is to be done; not merely a hope as to what might be done or might happen. Thus, ordinarily, an understanding involves communication between the parties arousing expectations in each party that the other party/parties will act in a particular way: see Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (2003) 129 FCR 339 ("Australian Safeway Stores") at 426 [409]. However, as was stated by Fisher J in Trade Practices Commission v David Jones (Australia) Pty Ltd (1986) 13 FCR 446 ("David Jones") at 463-464:
"In Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 at 22-26 Franki J referred to the cases arising under s 45 and judicial consideration of the section's requirements. As with Franki J, I also favour the views expressed by Smithers J which are referred to in the following paragraph of the former's reasons for judgment at 25:
'I lean with respect to the views expressed by Smithers J in L Grollo & Co Pty Ltd v Nu-Statt Decorating Pty Ltd (1978) 34 FLR 81 at 89 where he said: 'I have to remember that the concept of an understanding is broad and flexible. It may arise merely where the minds of the parties are at one that a proposed transaction proceeds on the basis of the maintenance of a particular state of affairs or the adoption of a particular course of conduct.''
As Franki J also said, on that page of his reasons, judicial consideration has tended to equate 'arrangement' with 'understanding'. In indicating that he proposed to proceed on that basis he said in relation to s 45 prior to its amendment in 1977:
'… I would not necessarily reject a proposition that the requirements for entering into an understanding may be somewhat different and more easily satisfied than the requirements for making an arrangement.'
In their joint judgment in Commissioner of Taxation (Cth) v Lutovi Investments Pty Ltd (1978) 140 CLR 434, Gibbs J (as he then was) and Mason J said at 444 of the requirements of an arrangement in the context of s 80B(5) of the Income Tax Assessment Act 1936 (Cth):
'It is, however, necessary that an arrangement should be consensual, and that there should be some adoption of it. But in our view it is not essential that the parties are committed to it or are bound to support it.
An arrangement may be informal as well as unenforceable and the parties may be free to withdraw from it or to act inconsistently with it, notwithstanding their adoption of it.'"
55 In Email at 56-57 Lockhart J considered the circumstances in which parallel conduct may constitute evidence from which the Court can infer the requisite arrangement or understanding:
"Parallel conduct may constitute circumstantial evidence from which an arrangement or understanding may be inferred. It depends on the facts of each case. In the present case, the respondents point to a large number of matters in support of their contention that the inference of an arrangement or understanding cannot be supported. Plainly, when a credible explanation is given by a defendant it may be sufficient to negate the inference of an arrangement or understanding: see TPC v Nicholas Enterprises Pty Ltd (1979) 26 ALR 609 at 631…
In the United States there is powerful authority for the proposition that, while parallel business conduct may provide circumstantial evidence from which an inference as to the existence of an unlawful agreement may be drawn, it is not sufficient by itself to support an allegation of conspiracy under the Sherman Act and it may be the result of independent decisions of competitors or other economic forces: see for example Theatre Enterprises Inc v Paramount Film Distributing Corporation (1954) 346 US 537; Esco Corporation v United States (1965) 340 F (2d) 1000; US v FMC Corporation 1969 Trade Cases 87,405;Bogosian v Gulf Oil Corporation 1975 Trade Cases 60,284, p 66,104.
Instances where parallel prices in respect of homogenous products has resulted, not from parallel business conduct, but from independent decisions of competitors and intense competition are Pevely Dairy Co v US (1949) 178 F (2d) 363; US v Ward Baking Co. (1965) 243 F Supp 713; and US v National Malleable & Steel Castings Co (1957) Trade Cases 68,890, affirmed on appeal (1958) US 38."
56 In ACCC v CC at 408 Lindgren J stated:
"The cases require that at least one party 'assume an obligation' or give an 'assurance' or 'undertaking' that it will act in a certain way. A mere expectation that as a matter of fact a party will act in a certain way is not enough, even if it has been engendered by that party."
57 See also Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 at 257-258. While the above statements of principle are helpful, they can be difficult to apply in a case such as the present where the parties are numerous, the roles alleged to have been played by each party differ, and the alleged understanding involves a process for the fixing or controlling of prices, rather than the direct fixing or controlling of prices. Ultimately, one must return to the words of the statute and determine whether the parties "arrived at" an understanding of the kind identified in s 45A and proscribed by s 45(2)(a). If the parties reach a consensus as to a particular course of conduct or where their minds are at one as to the adoption of a particular course of conduct and they adopt that course of conduct (see David Jones at 463-464) there are strong grounds for contending that the requisite meeting of minds has been established.
58 The major area of contest at trial related to whether the ACCC established that there was the requisite meeting of minds in relation to a price-fixing understanding that involved Triton, Brumar or Apco. In particular, the contesting respondents denied that there was any consensus at any time as to what was to be done by any of them in relation to the fixing or controlling of petrol prices in Ballarat. In order to resolve that contest it will be necessary to carefully consider the evidence that is admissible against each of those parties and to determine whether that evidence establishes that they were parties to the price-fixing understanding alleged by the ACCC.
4. The ACCC's Case Under ss 45(2)(a)(ii) and 45(2)(b)(ii) of the Act
59 The ACCC alleges that the price-fixing understanding is deemed to have the purpose or effect of substantially lessening competition in a market by virtue of s 45A(1) of the Act. The price-fixing understanding was said to have been constituted by the continuation of the pre-June 1999 arrangements ("the existing arrangements"), an arrangement made in June 1999 ("the June 1999 arrangement") and coordinated price increases on approximately 69 days during the relevant period ("the 1999-2000 arrangements").
(a) The existing arrangements
60 The ACCC contends that in or about June 1999 there were arrangements or understandings which contained a provision or provisions that had the purpose, or had or was likely to have the effect, of fixing or controlling or providing for the fixing or controlling of the retail price of petrol in the Ballarat petrol market at service stations controlled or supplied by the corporate respondents. Specifically, it contends that arrangements existed whereby:
· any one of the corporate respondents that wished to increase its prices for petrol at the service stations controlled or supplied by it could telephone or contact one or more of the other corporate respondents to communicate the amount of the increase, the approximate time of the increase or the fact of the price increase proposed or in progress. The communication was alleged to have either been made expressly or indirectly by means of expressions such as "Go for a drive", "Have you been for a drive", "The market has changed", " The majors have moved" or "The market is starting to change." The ACCC called these calls "board price calls" but I refer to them in these reasons as "price-increase calls";
· any corporate respondent receiving such a call would telephone or contact the sites controlled or supplied by that corporate respondent in order to implement a similar board price increase at about the same time (in the case of sites controlled by the relevant corporate respondent) or to use its best endeavours to do so (in the case of other sites);
· any corporate respondent which became aware that a service station controlled or supplied by another corporate respondent had not implemented the price increase, could inform a corporate respondent of that fact and the corporate respondent which was best placed to communicate with the respondent that had not increased its price would use its best endeavours to have that respondent's service station implement the board price change. The ACCC called those calls "complaint calls" but I refer to them in these reasons as "follow-up calls";
· any corporate respondent which became aware of any service station controlled or supplied by it that had not put the price increase into effect, would also make a follow up call to that service station.
61 The ACCC alleges that the existing arrangements evolved over a period of years before 1999 by a combination of individuals acting on behalf of the corporations that had been carrying on business within the Ballarat petrol market. Those individuals and corporations included combinations of the following:
· Balgee, which carried on the business of a distributor and retailer under the Mobil brand from at least the early 1990's. Lindsay Evans ("Evans") acted on behalf of Balgee until about mid 1990. Muller acted on behalf of Balgee from about mid 1990 to at least about early 1997. Levick acted on behalf of Balgee from about early 1997 onwards.
· Leahy Petroleum, which carried on the business of a distributor and retailer under the BP brand from on or about 1 July 1997 to about December 2000. Palmer and/or Ian Carmichael("Carmichael")acted on behalf of Leahy Petroleum in this period.
· Leahy Retail, which carried on the business of a distributor and retailer under the BP brand under the name Leahy Petroleum Pty Ltd from at least late 1991 to about June 1997 and after that on about 1 July 1997 to about December 2000 it carried on the business of a retailer under the BP brand under its current name. Palmer and/or Carmichael acted on behalf of Leahy Retail in this period.
· Central Petroleum Pty Ltd ("Central Petroleum"), which carried on the business of a distributor and a retailer under the Shell brand from at least the mid 1980's until about late 1994. Denis Manton ("Manton") and/or Kieran Davison ("Davison") acted on behalf of Central Petroleum from at least early 1991 to about late 1994.
· Beasam Pty Ltd ("Beasam"), which carried on the business of a distributor under the Shell brand from about late 1994 to about 31 August 1998. Rosenow acted on behalf of Beasam in this period.
· Triton, which carried on the business of a distributor under the Shell brand from on or about 1 September 1998 to about December 2000. Rosenow acted on behalf of Triton in this period.
· Central Petroleum (Retail) Pty Ltd ("Central Petroleum Retail"), which carried on the business of a retailer under the Shell brand from at least the late 1980's to about late 1994. Manton and/or Davison acted on behalf of Central Petroleum Retail in this period.
· Provincial Fuels Pty Ltd ("Provincial"), which carried on the business of a retailer under the Shell brand from about late 1994 to about August 1997. Davison acted on behalf of Provincial from about late 1994 to about May 1997.
· Friway One Pty Ltd ("Friway One"), which carried on the business of a retailer under the Shell brand from on or about August 1997 to on about September 1998. Dalton acted on behalf of Friway One in this period.
· Brumar, which carried on the business of a retailer under the Shell brand from on or about September 1998 to about December 2000 and commenced operating in the Ballarat petrol market in November 1998. Dalton acted on behalf of Brumar in this period.
· Anderson Petroleum Company Pty Ltd ("Anderson Petroleum"), which carried on the business of a distributor and a retailer under the Ampol brand from at least 1994 to about late 1996. Zala acted on behalf of Anderson Petroleum in this period.
· Chisholm, which carried on the business of a distributor and a retailer under the Ampol or Caltex brand from at least early 1997 to about December 2000. Zala acted on behalf of Chisholm in this period.
· Apco, which carried on the business of a retailer under the Apco brand from at least the early 1990's to about December 2000. Anderson acted on behalf of Apco in this period.
· Justco, which carried on the business of a retailer under the Swift brand from at least about mid 1996 to about December 2000. Bentley acted on behalf of Justco in this period.
62 There was little dispute about the evidence concerning the existing arrangements that did not involve the contesting respondents, although there was considerable dispute over the relevance of that evidence, which I will deal with later in these reasons. The evidence, which I generally accept, establishes the following. The existing arrangements developed from calls in the early 1990's between Evans, the principal of the Mobil distributor Balgee and a school friend of his, Manton, who was the managing director of Central Petroleum (which operated the Shell wholesale distribution in Ballarat) and Central Petroleum Retail. Manton and Evans made price-increase calls to each other and to other competitors in the Ballarat petrol market over the phone about coordinating price increases. In the mid 1990's Evans' role was taken over by Muller and, around August of 1997, Manton delegated his responsibilities with respect to setting Shell board prices to Davison.
63 During the 1994 to 1997 period: (1) Muller at Balgee made price-increase calls to Zala at Anderson Petroleum who in turn passed the information about the increase on to Peter Anderson at Apco; (2) Muller at Balgee made price-increase calls to Palmer at Leahy Retail and Davison at Provincial; and (3) Davison at Provincial made price-increase calls to Rosenow at Beasam and Zala at Anderson Petroleum. In order to ensure that the price increases sought to be achieved took effect there were follow-up calls and site visits.
64 In the period from about 1997 to about mid-1999, an established pattern of communication evolved to accommodate various industry and personnel changes. In particular, during this period: (1) Levick at Balgee assumed Muller's role and made price-increase calls to Zala at Chisholm, Palmer or Carmichael at the Leahy Companies, Rosenow at Beasam (which later traded as Triton Petroleum) and Bentley at Justco; (2) Zala at Chisholm, ceased passing on price-increase information to Anderson at Apco; (3) Levick at Balgee sought to pass on price information to Anderson at Apco by making the calls to Palmer or Carmichael at the Leahy Companies; (4) Carmichael sought to pass on price information to Anderson at Apco; (5) Zala at Chisholm made price-increase calls to Rosenow at Beasam and similar calls to Bentley at Justco; (6) Rosenow at Beasam sought to make price-increase calls to Bentley at Justco and Dalton at Friway One (later Brumar) at Zala's request; and (7) Levick at Balgee made follow-up calls to Zala at Chisholm, and received similar calls from him. The follow-up calls related to the failure of a particular competitor or competitors to increase prices.
65 Putting to one side for the moment the role of the contesting respondents, and the question of whether they were parties to the existing arrangements, the evidence about those arrangements establishes that a price-fixing understanding involving the initiating respondents and others evolved throughout the 1990's with adjustments being made from time to time to meet changes in personnel and market forces.
(b) The June 1999 arrangement
66 The June 1999 arrangement is contentious. The ACCC's claims are as follows. The existing arrangements served as the foundation for a price-fixing understanding made or arrived at between the corporate respondents in or about June 1999 whereby they agreed to implement the existing arrangements on a more frequent and more efficient basis. The catalyst for the June 1999 arrangement was United's entry into the Ballarat petrol market in February 1999, which had the effect of significantly increasing the frequency of the discount cycle by driving petrol prices down and increasing the level of competition in Ballarat.
67 The June 1999 arrangement was partly oral and partly to be implied. Insofar as it was oral, the ACCC asserts that Gourley or Levick at Balgee, Zala at Chisholm, and Bentley at Justco made the arrangement at a meeting at Gourley's house in about June 1999 ("the Gourley meeting"). The arrangement made at the Gourley meeting was communicated orally to Palmer and/or Carmichael at the Leahy Companies, Rosenow at Triton, Anderson at Apco, and Dalton at Brumar.
68 In so far as the June 1999 arrangement is to be implied, it is to be implied from the corporate respondents giving effect to the existing arrangements and/or the June 1999 arrangement, and from the coordination and timing of telephone calls and price increases. The existence of the June 1999 arrangement may also be inferred from (1) the fact of a meeting at Zala's office in about August 2000 and (2) the fact of a meeting at the Olive Grove Cafe in about December 2000. Levick at Balgee, Rosenow at Triton, Zala at Chisholm and Bentley at Justco allegedly attended these meetings, at which the retail price of petrol was discussed. In particular, it is alleged that at the Olive Grove Cafe meeting participants discussed whether they should vary the existing arrangements by more frequently coordinating their price increases to match the discounts being offered by Safeway.
69 The ACCC claimed that the June 1999 arrangement contravened s 45(2)(a)(ii) of the Act in that it contained a provision which, by virtue of s 45A(1) of the Act, is deemed to have had the purpose, or had or was likely to have the effect, of fixing or controlling or providing for the fixing or controlling of the retail price of petrol in the Ballarat petrol market at the service stations controlled or supplied by the corporate respondents. The ACCC also claimed that the individual respondents were involved in the contravention of s 45(2)(a)(ii).
(c) The 1999-2000 arrangements
70 The alternative case of the ACCC is that the corporate respondents made an arrangement or arrived at an understanding to fix or maintain the retail price of petrol on each separate occasion between June 1999 and December 2000, when the price-fixing conduct occurred. The ACCC also alleges that each of the individual respondents was involved in each of the contraventions.
71 The ACCC alleges that the 1999-2000 arrangements were partly oral and partly to be implied. Insofar as they were alleged to be oral, they were made by price-increase and follow-up calls between respondents. The pattern of the calls is alleged to be similar to the pattern that developed during the 1997 to 1999 period. In so far as the arrangements were alleged to be implied, they were to be implied from the corporate respondents allegedly giving effect to the existing arrangements and the June 1999 arrangement during the relevant period on about 69 occasions, although not by every corporate respondent in each instance. Details of the dates relied upon by the ACCC are set out in Revised Annexure A ("Annexure A") to the Further Amended Statement of Claim.
72 Although the ACCC relied upon the June 1999 arrangement and the 1999-2000 arrangements in their own right as contraventions of s 45(2)(a)(ii) of the Act, the evidence was more consistent with a continuing price-fixing understanding which had to adapt from time to time to changes in personnel and market forces. The real issue is whether the contesting respondents were parties to or were involved in that understanding during the relevant period and, if so, whether the resulting contraventions of s 45(2) of the Act fall within the case pleaded by the ACCC.
(d) Categories of evidence
73 The ACCC sought to prove its case through direct and circumstantial evidence as well as by inference. The ACCC's case relies primarily on three categories of evidence:
· direct evidence by the adoption of witness statements and oral testimony of individuals operating in the Ballarat petrol market before and during the relevant period, including individuals who have admitted to the contraventions of the Act alleged by the ACCC;
· circumstantial evidence, which includes evidence of the making of numerous phone calls between respondents, which calls were said to correlate with increases in the retail price of petrol; and
· hearsay statements made by witnesses, which are argued by the ACCC to be admissible under, among other things, the principle established in Ahern v The Queen (1988) 165 CLR 87 ("Ahern").
74 The circumstantial evidence comprised two key documents that summarise, in chart form, voluminous source data. The first document, Annexure A, is a chart and graphical representation of telephone activity and price increases on 69 non-consecutive days during the period from 22 June 1999 to 8 December 2000 ("price-increase days"). The 69 days are the occasions on which the ACCC alleges that it can establish that there were both telephone communications between the respondents and price increases. The source data for the telephone calls summarized in Annexure A were the relevant telephone accounts of the respondents, which were provided by them to the ACCC pursuant to s 155 of the Act. However, save for the period from 1 February to 30 April 2000, the telephone records were incomplete. Also, although certain of the corporate respondents own or operate more than one retail petrol site in the Ballarat petrol market, the ACCC did not request price data from all of the sites. Rather, the ACCC's methodology was to choose a "representative" site for each corporate respondent and gather telephone account and price information that was relevant to an increase in the retail price of petrol sold at the site. Although Annexure A does not reveal the content of the telephone conversations, the ACCC relies on the direct and hearsay evidence, as well as inference, on that matter.
75 The analysis in Annexure A is linked to a second key ACCC document, Exhibit DA-13, which is a comprehensive and complete record and graphic representation of telephone activity between the respondents for each day in the three months between 1 February 2000 and 30 April 2000. Exhibit DA-13 also contains the price-increase information in Annexure A for that period. Unlike Annexure A, Exhibit DA-13 is based on a complete record of call charges during a period of three months. Thus, during that period, every call on every day between respondents is listed, regardless of whether the call coincided with a petrol price increase. The ACCC seeks to have the inference drawn from Annexure A and Exhibit DA-13 that there was a correlation between the corporate respondents' telephone calls with each other, and increases by them in the retail price of petrol. More specifically, the inference is based on the above two documents which are said to establish that on days when the price of petrol did not change there were few or no telephone calls between the corporate respondents, but on the days when the initiating respondents sought to increase the price of petrol there was an established pattern of telephone calls between the corporate respondents. The ACCC alleges that in the latter case, the only reasonable inference is that the calls were primarily price-increase and follow-up calls. The price-increase calls were said to communicate that a price increase was proposed or was in progress. The follow-up calls were said to be an endeavour to ascertain whether the price increase was being or would be matched by competitors. In addition, there were site calls, by which a corporate respondent communicated with its sites concerning board prices or, in Triton's case, price support.
76 The ACCC made the following response to the suggestion of the contesting respondents that, because the competitors' current prices were available for all to see, there was no need for calls of the kind alleged by the ACCC:
"At various times, parties have suggested that the market is one where prices are available for all to see. To an extent that is true, but it does not answer the case. The implication is that the competitors did not need to exchange price information; but if that is the suggestion, it leaves unanswered the question: Why all the telephone contact, over so long a time? We submit that the answer lies in the need for increases to be well co-ordinated so as to maximise the prospects of the increase sticking. If word of an increase did not get to all competitors quickly, the first to rise would lose market share rapidly, and no-one would get the benefit of a non-competitive price. It emerges clearly from the evidence that:
· petrol is price-sensitive
· everyone wanted prices to increase whenever possible
· unless all sites (or all bar a few minor ones) increased within a short time of each other, the increase was less likely to stick
· the first to increase took a risk, unless it had the comfort of knowing that the competitors would match the increase."
77 Finally, the ACCC accepted that the standard of proof discussed in Briginshaw v Briginshaw (1938) 60 CLR 336 ("Briginshaw") was applicable. The standard was stated by Heerey and Sackville JJ (with whom Emmett J agreed) in Australian Safeway Stores at 432 [438] to be as follows:
"… the so-called Briginshaw standard, …requires the trier of fact, in determining what inferences to draw from the primary facts, to have regard to the seriousness of the allegations and the gravity of the consequences flowing from an adverse finding. But Briginshaw does not require a court to exclude all alternative possibilities before drawing an inference from the primary facts adverse to one of the parties. The question is whether the Court is reasonably satisfied that the fact in issue has been established, having regard to 'the nature and consequences of the fact or facts to be proved': Briginshaw at 362 per Dixon J. In this connection, the Court must take into account not only the seriousness of the allegation made and the gravity of the consequences of an adverse finding, but 'the inherent unlikelihood of an occurrence of a given description': Briginshaw at 362."
5. The Defences
78 The contesting respondents denied that any of them were parties to the existing arrangements, the June 1999 arrangement or the 1999-2000 arrangements. They claim that the case pleaded against them had not been established by the evidence. They also strongly contested the adverse inferences the ACCC sought to draw from Annexure A and Exhibit DA-13.
79 All of the contesting respondents asserted that, in so far as they were concerned, their price increases in the Ballarat petrol market during the relevant period were the result of competitive market forces. In particular, they point to the highly competitive and price sensitive nature of the market and to the fact that competitors' board prices were openly advertised and were constantly checked and re-checked by them to enable them to remain competitive. It was not disputed that in Ballarat communications between competitors such as "Take a drive" or "The market has moved" signified that a price increase was in progress. However, the contesting respondents claim that there is nothing sinister in such communications, as they do no more than state publicly available knowledge, which was either known, or would have become known.
80 The contesting respondents also claimed that there was no consensus as to what was to be done by the parties to the alleged price-fixing understanding and that the mere hope as to the role to be played by them, as opposed to a commitment or expectation as to that role, could not constitute contravening conduct under s 45(2).
81 Triton denied that Rosenow had authority to make it a party to any price-fixing arrangement or understanding or to give effect to any such arrangement or understanding. It also contended, inter alia, that due to its status as a wholesaler at no relevant time was it a "competitor" with any of the other corporate respondents. Triton maintains that it merely supplied petrol to independent retailers of Shell branded petrol who made their own retail pricing decisions based upon their particular commercial circumstances.
82 Rosenow, who did not give evidence on his own behalf or on behalf of Triton, claims that the elements of s 75B(1) have not been established. Specifically, he argues that he had no knowledge of the essential elements of the alleged contravention and that he was not a participant in any price-fixing arrangement or understanding. Rosenow also submits that he had no capacity to control, fix or maintain prices as Triton's policy of price support, which was implemented by him, did not restrain the freedom of the independent Shell retailers to set their own prices for petroleum products.
83 Apco and Anderson argue that Apco's strict policy of independence and its business strategy of matching United's retail prices establish its innocence. They claim that, rather than Apco being a party to any arrangement or understanding, it was actually in vigorous competition with the other respondents as it was a discounter that could, and often would, foil attempted price increases by them. In addition, Apco and Anderson claim that Anderson had valid business reasons to speak over the phone with Carmichael at the Leahy Companies and Bentley at Swift, and they contend that any conversations in which prices were mentioned merely conveyed known price movements and not planned increases. They also argue that the pattern of Carmichael's and Bentley's calls to Anderson was no different on price-increase days than on non-increase days and that no inference adverse to them can properly be drawn from Annexure A and Exhibit DA-13.
84 Brumar and Dalton, who did not give evidence on his own behalf or on behalf of Brumar, deny wrongdoing and assert that the evidence relied upon by the ACCC does not relate specifically to Brumar or Dalton and, as such, does not establish the case pleaded against them. There is also an issue about whether Dalton had any authority to act on Brumar's behalf in relation to any price-fixing arrangement or understanding. In addition, Brumar and Dalton claim that Brumar's pricing policy was generally to match Swift's prices, subject to the restrictions placed upon Brumar by the price support provided by Shell. Accordingly, they contend that Brumar's price increases and decreases were a result of competitive market forces.
6. The No-Case Submissions
85 At the conclusion of the ACCC's case a number of the contesting respondents applied to make no-case submissions which raised some important issues in respect of Pt IV cases.
86 The ACCC tendered statements by a large number of witnesses and adduced voluminous documentary evidence in support of its claims. A number of the witnesses gave additional evidence in chief and were cross-examined. Credit issues were raised by some of the contesting respondents against certain of the ACCC's witnesses, some of whom were other respondents who had admitted to the contraventions claimed against them.
87 The contesting respondents requested that the Court adjourn the matter for two to three days to enable them to put detailed and comprehensive submissions explaining why the ACCC's evidence was not sufficient to establish the contraventions claimed. They claimed that they should not be required to elect whether to adduce evidence as a condition of submitting there was no case to answer.
88 The ACCC claimed that the contesting respondents should not be permitted to put no-case submissions unless they elected not to call evidence and that if any respondent was not prepared to make that election, the no-case submissions of the other respondents who were prepared to make that election should not be permitted to be made until all of the evidence that might be relevant to the no-case submissions was before the Court.
89 After some of the contesting respondents indicated to the Court that they proposed to adduce evidence if their no-case submissions failed, I outlined my concerns about a no-case submission being made prior to all of the evidence that might be relevant to the submission being before the Court. Subsequently those respondents, correctly in my view, indicated that they had decided not to proceed with their no-case submissions. It is appropriate to briefly set out my reasons for concluding that no-case submissions were not appropriate in the present matter unless all respondents elected not to call evidence that could be of relevance to the no-case submission.
90 The power to entertain a no-case submission finds its source in O 35 r 1 of the Federal Court Rules, which gives the power to the Court at any stage of the proceedings, on the application of any party, to pronounce such judgment or make such orders as the nature of the case requires, notwithstanding that the applicant does not claim such an order in the originating process: see ACCC v Amcor at 356-357 [58]-[60] per Sackville J. In ACCC v Amcor at 357-358 [61]-[64] Sackville J discussed the principles which have been applied by the Court in determining whether the moving party should be required to elect not to call evidence.
91 Special problems arise when no-case submissions are sought to be made in a matter, such as the present case, where multiple respondents are alleged to be parties to an unlawful arrangement or understanding. The first problem involves the difficulty inherent in making factual findings when all the relevant evidence is not yet adduced. For example, the evidence against a particular party may be sparse or weak at the close of the applicant's case but if further evidence is given by any of the other respondents the strength of the evidence against that party may well change. Thus, it is undesirable that the case against a respondent be dismissed prior to the reception of all the evidence that might be relevant to that case: see Trade Practices Commission v George Weston Foods Ltd. (No 2) (1980) 43 FLR 55 at 61-62, ("George Weston"), Menzies v Australian Iron & Steel Ltd. And Hill (1952) 52 SR (NSW) 62 at 64-65, Hummerstone v Leary [1921] 2 KB 664 at 667, James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 at 401-403 and J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (Western Australian Branch) (No 2) (1992) 38 FCR 458 at 462-465. A number of the above cases are concerned with the situation where only some of the respondents wished to make a no-case submission. The problem of a no-case submission being resolved at an interlocutory stage against only some of the respondents will necessarily arise where any particular respondent, whose evidence might be relevant to the claims against the other respondents, is unwilling to elect not to call evidence as a condition of making a no-case submission.
92 The second problem relates to the issue of trial management. In the present case, a 25 day hearing was fixed to commence on 3 May 2004 and to conclude on 4 June 2004. The represented respondents indicated that their no-case submissions would require a detailed examination of all aspects of the ACCC's claims. Thus, the no-case submissions and the time that would be required to consider and deal with them had the potential to dislocate the conduct of the hearing and could have led to the trial not being completed within the allocated period if the no-case submissions were unsuccessful. That may have given rise to problems about the delay in any resumed hearing, which is a particular problem where issues of credit have been raised. An associated difficulty is that, if the no-case submission failed, the lengthy no-case submissions would inevitably be repeated, with appropriate modification in light of further evidence and the different criteria to be applied in closing submissions. Under these circumstances, there is a very real risk that much of the same evidence would be required to be considered twice.
93 The third problem concerns evidence that has been admitted subject to an objection that was to be dealt with at the close of the evidence. That problem is particularly acute in the present case where a significant body of hearsay evidence has been admitted into evidence subject to the objection of the contesting respondents that the hearsay evidence is not admissible against their clients because it did not meet the Ahern criteria. One of the criteria in issue was whether the acts and declarations of one of the respondents alleged to be party to the price-fixing arrangement, in the absence of the other respondents, are admissible against the other respondents because there is "reasonable evidence" (excluding those acts and declarations) of the existence of the unlawful arrangement or understanding involving the persons in question. The parties, quite correctly in my view, accepted that a ruling on the Ahern issue could not be expected to be made until the Court had before it the entirety of the evidence that was relevant to that ruling. While it is a matter of discretion for the Court to determine the appropriate time at which that ruling is to be made, there is obviously a sound reason why the ruling ought not to be made prior to all of the evidence that might be relevant to the ruling being before the Court. In the present case any evidence that might be adduced by a respondent who is unwilling to elect not to call evidence as a condition of putting a no-case submission could plainly be relevant to the determination of the Ahern issue.
94 While the problems I have addressed in relation to the Ahern issue would not prevent a no-case submission being made on the assumption that the Ahern evidence is admissible against the respondents against whom it is tendered, the requirement to consider the detail of that evidence at an interlocutory stage only serves to emphasise the complexity and difficulty of the task that would be required to be undertaken by the Court in order to deal with a no-case submission.
95 In George Weston Davies J had to consider similar issues. His Honour stated at 58-62:
"Generally, justice is not done by considering the state of the evidence before all the parties have closed their case. It is inconvenient to the judge to form conclusions of fact during the course of the trial; the drawing of inferences from sparse evidence is often a very difficult and fallible method of arriving at the truth of the matter, argument on the submission often delays the hearing and the consideration of the submission and perhaps appeal on the interlocutory order may further delay it. Generally, it is better that a judge should come to his conclusions of fact only at the close of the evidence and for the purpose of giving judgment. In those cases where the discretion not to put a defendant to an election has been exercised, there has generally been a sound reason why justice would best be done by considering the submission and, if allowing it, by bringing the action to a premature end. Such a case may arise where the issue does not depend on the resolution of a subtle state of facts or where the evidence for the plaintiff is so palpably inadequate that it would appear to be an unnecessary waste of time and money to continue the trial.
…
In my view, it would be unsatisfactory to determine the issues involved in this case upon the evidence which is presently before the court. To come to a conclusion at the present time would involve the drawing of inferences from meagre facts, facts which arguably call for an explanation and which have not been explained. I do not wish to indicate that I have formed any view that they should be explained or that necessarily any inference will be drawn against the defendants if they are not explained. I have no view on that matter. Nevertheless, I think that Mr Masterman might reasonably put an argument that the increases which took place on the particular days call for an explanation. I am further of the view that, if the facts alleged in the statement of claim are established, the plaintiff will have an arguable case on the law. I have not attempted to form any concluded view as to whether, if those facts are established, the plaintiff will succeed. It is sufficient at the present time that I think that the plaintiff will have an arguable case.
In my view, justice would best be done by calling upon the defendants to elect whether or not to call evidence so that the submission of no case to answer, if it is made, proceeds upon the whole of the evidence which is to be taken into account in this action. …
If direct evidence of the circumstances in which the increases in price came about is given, the nature of the case will change from one in which inferences are drawn from sparse facts to one in which direct evidence as to the events which occurred is considered. It is true that an election will be a matter of very considerable significance to the defendants but I do not think that that is a particular reason why they should not be put upon their election. In my view, it is preferable that evidence be obtained from persons who have direct knowledge of material facts rather than that inferences be drawn from meagre publicly known facts. …
The evidence against some defendants is weaker than the evidence against others. However, if further evidence is given, the strength of the evidence against a particular defendant may well alter. In Menzies v. Australian Iron & Steel Ltd.and Hummerstone v. Learyit was established that in such a circumstance it is undesirable that one or more of the defendants should be dismissed from the action prior to the reception of all the evidence."
96 I have set out his Honour's observations at some length as I regarded them as applicable to the present case at the time the parties applied to make no-case submissions. His Honour's observations may also be applicable to many other cases which allege breaches of Pt IV of the Act. I would only add that generally, unless all the respondents whose evidence might be relevant to the no-case submission elect not to call evidence relevant to the no-case submission, the appropriate procedure is to defer hearing the no-case submission of the other respondents until all of the relevant evidence is before the Court: cf Trade Practices Commission v Allied Mills Industries Pty Ltd (No 3) (1981) 37 ALR 225 ("Allied Mills") at 230-231 and 254. Of course, at that stage there may be no point in making a no-case submission as the case would have then moved to final submissions. That, however, will not usually involve any injustice to the parties. Rather, justice will have been done by ensuring that the claims and defences of the parties have been determined on the basis of all of the evidence that is relevant to those claims and defences.
7. Authority of Anderson, Dalton and Rosenow
97 The ACCC alleges that Anderson, Dalton and Rosenow had authority to bind Apco, Brumar and Triton respectively, and that statements regarding past events made by these individuals in the context of the s 155 examinations are admissible as admissions against their respective employers. Additionally, the ACCC contends that the s 155 admissions of Dalton and Rosenow are admissible, pursuant to the Ahern principle, against Triton and Brumar respectively. The following issues arise for decision: (1) in so far as the individual respondents were involved in the price-fixing understanding, was their involvement authorised by their corporate employers; and (2) are admissions or representations made by the individual respondents in their respective s 155 examinations admissible against their respective employers and other corporate respondents?
98 These issues were only seriously disputed with respect to Dalton and Rosenow. Apco did not contend that Anderson lacked authority to bind the company or that his s 155 statements were not admissible against it. Anderson was a director of Apco and during the relevant period he was responsible for acting for and on behalf of Apco with respect to all aspects of Apco's petrol retailing business. In addition, as at the time of his s 155 examinations, 14 March 2002 and 24 April 2002, Anderson was still a director of Apco and was the person who was responsible for acting on its behalf in relation to dealings with the ACCC. In accordance with the principles stated below, there can be little doubt that Anderson was authorised to act on behalf of Apco in relation to all matters concerning its petrol pricing and that statements or representations made by him in the course of his s 155 examinations are admissible against Apco.
(a) The Law
99 The law concerning a servant's or agent's authority to bind a corporate principal in relation to conduct that contravenes the Act is well established. In Trade Practices Commission v Queensland Aggregates Pty Ltd (1982) 44 ALR 391 ("Queensland Aggregates") Morling J considered whether a servant or agent had authority to engage in exclusive dealing by including in the offers made by him to various contractors a condition that they acquire certain equipment from a particular third-party supplier. The principal denied that its servant or agent had authority to include the condition that constituted exclusive dealing and claimed that, as a result, it did not contravene s 47(6) of the Act. Morling J, after noting that: (1) the agent essentially managed this aspect of the principal's business; and (2) the manager was in effect given complete authority to negotiate and settle terms and conditions with various contractors; held that the principal had become answerable for the manner in which the agent conducted himself in performing its business, notwithstanding that the directors of the principal were not aware of the imposition of the condition. Morling J concluded (at 403) that, as the servant or agent had authority to make contracts of the kind or type in question, he had actual authority under common law principles to bind his principal. It was not to the point that he did not have actual authority to impose the offending condition. See also Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 ("TNT Management") at 14-15 and Lloyd v Grace, Smith & Co. [1912] AC 716 ("Lloyd v Grace").
100 Similarly, in Trade Practices Commission v Tubemakers of Australia Ltd (1983) 47 ALR 719 ("Tubemakers") it was again pointed out that the agent's authority was not determined by whether the agent was authorised to enter into a particular illegal transaction but, rather, was determined by whether, in general, transactions of the sort in question were within the scope of the agent's employment. Toohey J, in rejecting a submission that an agent's authority is limited to lawful conduct, observed at 742:
"It may be assumed to be an implied term in every contract of employment that the servant or agent will not act unlawfully. And that will have consequences between employer and employee. Yet unlawful conduct has not been held inevitably to be outside the scope of employment.
On the contrary, if a servant or agent has authority to enter into transactions of the sort in question, it is no answer for a principal to say that in the particular circumstances the servant or agent acted wrongfully. Australasian Brokerage Ltd v Australia and New Zealand Banking Corporation Ltd (1934) 52 CLR 430 at 451-2."
101 Toohey J (at 739) also considered the application of s 84(2) of the Act and agreed with the opinion of Morling J in Queensland Aggregates at 404 that the sub-section was intended to "extend, rather than limit, the liability of corporations for the actions of others." See also Walplan Pty Ltd v Wallace (1985) 8 FCR 27 at 36-37. Toohey J based his conclusion on the agent in question possessing actual authority to bind the principal on common law principles of agency. However, his Honour stated (at 741) that the same conclusion would have been reached pursuant to s 84(2) which, relevantly for present purposes, deems the conduct of any director, servant or agent of the corporate principal to be conduct of the principal if the conduct was engaged in "on behalf of" the principal and was within "the scope of the person's actual or apparent authority." Toohey J observed at 739-740:
"It is unnecessary to attempt an exhaustive statement of the meaning and operation of s 84(2) of the Act. However, some propositions may be advanced with reasonable confidence. To treat the phrase as implying benefit to the body corporate is to place an unwarranted restriction on the words used and is to ignore the general context of s 84 which otherwise shows an intention to extend the liability of corporations. In Re Ross (1980) 54 ALJR 145 at 149, Stephen, Mason, Murphy and Aickin JJ stressed the many possible relationships to which the words 'on behalf of' may be applied, saying of the expression: '… it may be used in conjunction with a wide range of relationships, all however in some way concerned with the standing of one person as auxiliary to or representative of another person or thing.' And the words 'do not necessarily imply that the transaction was with the actual authority of the person represented' (Otzen v Beabout (1947) 75 CLR 116 at 122).
Sub-section (2) of s 84 is concerned with the conduct of persons representing a body corporate and of others acting at the direction or with the consent or agreement of those persons. It makes that conduct the conduct of the body corporate. The terminology of s 84(2), the reference to conduct by 'a director, agent or servant … or by any other person at the direction or with the consent or agreement … of a director, agent or servant …' is not the terminology of Tesco with its directing mind and will. It is more the conventional language of agency.
In my view s 84(2) is an extension of the principles expressed in Tesco and, where proceedings are brought under Pt IV of the Trade Practices Act, a corporation may be held liable either in accordance with the principles in Tesco or by the application of s 84(2). In the latter case questions of the nature and scope of the authority of the representative will arise. The answers will depend upon the particular circumstances. And this is so although proceedings under Pt IV are not criminal proceedings."
102 More recently, in Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 3)(2001) 119 FCR 1, Goldberg J considered the relationship between the common law principles of agency and s 84(2) of the Act. His Honour (at 186-189) compared the previously accepted "directing the mind and will" approach of Tesco Supermarkets Ltd. v Nattrass [1972] AC 153 ("Tesco") to the "authorized employee" approach of Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 ("Meridian"), which was relied upon by the ACCC. The Tesco approach is to ask whether the relevant employee functioned as part of the directing mind and will of the company in relation to the transaction in question. Goldberg J (at 188-189) described the different Meridian approach as follows:
"A different approach was taken in Meridian Global Funds Management Asia Ltd v Securities Commission[1995] 2 AC 500. The question arose whether the knowledge of a company's investment managers that the company was a substantial security holder in a listed public company and that it had not given a notice which it was required to give under securities legislation was to be attributed to the company. The Privy Council answered the question in the affirmative. Lord Hoffman approached the matter by considering what should be the position where the law was intended to apply to companies but a company's primary rules of attribution would defeat that intention. Lord Hoffman continued (at 507):
'In such a case, the court must fashion a special rule of attribution for the particular substantive rule. This is always a matter of interpretation: given that it was intended to apply to a company, how was it intended to apply? Whose act (or knowledge, or state of mind) was for this purpose intended to count as the act etc. of the company? One finds the answer to this question by applying the usual canons of interpretation, taking into account the language of the rule (if it is a statute) and its content and policy.'
Lord Hoffman concluded [at 511] that the company's knowledge was to be found in the knowledge of the employee who had the authority to undertake the transaction which required notice to be given by the company."
103 Goldberg J observed (at 191):
"The amendment of s 84(2) to include conduct engaged in within the scope of a person's 'apparent' authority, as well as conduct engaged in within the scope of a person's 'actual' authority leads, in my view, to a narrowing of any difference between the application of the common law principles, such as are found in Tescoand Meridianand the application of s 84(2)."
104 Although the conclusion of Goldberg J that the agent in question lacked authority to act on behalf of his employer was overturned on appeal because his Honour had erred by applying a more rigorous standard of proof than was necessary to the facts of the case (see Australian Safeway Stores at 430-432), the Full Court did not express any disapproval of the discussion by Goldberg J of the law of agency or of s 84(2).
105 In the context of the Act the different approaches in Tesco and Meridian may be of little significance as s 84(2) provides the statutory answer to the issue of attribution.
106 In so far as s 84(2) refers to ostensible authority the principles in that regard are also well established. Apparent authority can arise where the employer by words or conduct has represented that the employee, who has purported to act on behalf of the employer, is authorised to do what he is purporting to do: see Armagas Ltd v Mundogas S.A. [1986] 1 AC 717, 783; Clayton Robard Management Ltd & Anor v Siu (1988) 6 ACLC 57 ("Clayton Robard"); Lloyd v Grace; Freeman & Lockyer v Buckhurst Park Properties [1964] 2 QB 480 per Diplock LJ at 643-646. In Clayton Robard Kirby P (at 60) explained the rule as follows:
"The basis of our law on ostensible authority is fundamentally that of estoppel by representation. See Pearson L.J. in Freeman & Lockyer (supra) at p 498. The intermediary professes to act on behalf of the principal. He thereby impliedly represents and warrants that he has authority from the principal to do so. The principal must be shown to know of and to acquiesce in the intermediary's professing to act on its behalf to become bound by such profession. Thereby it impliedly represents that he has the principal's authority to act as he does. In these circumstances, the principal is considered to have made the representation or to have caused it to be made or 'at any rate to be responsible for it', Freeman & Lockyer, loc. cit.:
'Accordingly, as against the other contracting party, who has altered his position in reliance on the representation, the company is estopped from denying the truth of the representation.'
The principles stated in Freeman & Lockyer were approved and applied by the High Court of Australia in Crabtree-Vickers Pty. Ltd. v Australian Direct Mail Advertising & Addressing Co Pty. Ltd. (1975) CLC 40-244 at p. 28,474; (1975) 133 CLR 72 at p 78."
(b) The facts
(i) Dalton
107 Dalton was the senior retail area manager of Brumar. During the relevant period Dalton was responsible for 30 Brumar sites located in country Victoria. Five of the sites were located in the Ballarat city area. Dalton had authority to determine the prices at which Brumar sites would retail petrol and regularly authorised and directed personnel at Brumar's sites to alter the retail price at which the stations' petrol was being sold. Dalton ultimately reported to Mr Bruce Holland ("Holland"), managing director of Brumar.
108 In his role as senior retail area manager Dalton had complete discretion to determine the manner in which, and the process by which, the retail price of petrol at service stations operated by Brumar in Ballarat was to be determined in order to enable Brumar to retain market share and profitability. While the evidence suggests that there was a general directive to Brumar employees not to discuss fuel prices with other retailers, there is no evidence that Dalton was specifically informed of the policy. Further, having regard to the discussion in Queensland Aggregates and Tubemakers set out above, such a directive cannot, alone, be relied upon to contend that Dalton's conduct could not bind Brumar in relation to a contravention of s 45(2) of the Act.
109 It was within the scope of Dalton's employment to increase Brumar's prices in order to match those of the other competitors in Ballarat, particularly when he was confident that the price increase was likely to be matched by all of Brumar's competitors. Brumar effectively delegated to Dalton control over its retail pricing in Ballarat and it was plainly within the scope of Dalton's employment to take such steps as he deemed appropriate to ascertain whether the increased prices were likely to "stick." To the extent that those steps involved communications with competitors about price increases, such communications were within the scope of Dalton's employment. When Dalton took any steps in relation to Brumar's retail prices he did so on behalf, and for the benefit, of Brumar. Brumar, by delegating authority to Dalton over retail prices, held him out as having authority to act on behalf of Brumar in relation to the prices and any steps he deemed appropriate to take in order to establish those prices.
110 Indeed, but for ss 45(2) and 45A of the Act, I doubt that it would be seriously contended that Dalton did not have actual authority to make such enquiries as he saw fit, including communicating with competitors, in order to raise retail prices to more profitable levels. As explained above, the fact that such communications may contravene those sections, and the fact that the employee was not authorised by his employer to engage in conduct that contravened the sections, does not result in the conduct of the employee not being attributed to the employer. Thus, Dalton's conduct in relation to Brumar's retail pricing in Ballarat is to be attributed to Brumar on common law principles and under s 84(2) of the Act.
(ii) Rosenow
111 From August 1998 to July 2001, Triton employed Rosenow as Ballarat area manager. His responsibilities were as follows:
"Core purpose:
Management and responsibility for sales and customers activities within your designated territory, whilst ensuring compliance to [T]riton's business ethics, statutory regulations and all HS & E policies.
Role accountabilities:
1. Selling:
· Achieve the volume and margin budgets for your territory…."
112 Rosenow was responsible for the administration of Triton's price-support system in the Ballarat area. Communication to each of the independent Shell retailers of the support levels down to which, and by reference to which, price support would from time to time be provided to them by Triton was integral to the administration of Triton's price-support system. Generally, Rosenow was not required to seek prior approval of his price-support decisions from anyone at Triton. Until September 1999, the only constraint upon Rosenow's decision-making power about price support was that he could only lower Triton's support levels to a point that would enable the independent Shell retailers to match the prevailing market price and achieve their guaranteed 3 cpl margin. Subsequently, a limitation was imposed on Rosenow's discretion to provide price support that was more than 6 cpl below the retailer's purchase price, but there was no similar limitation on his power to withdraw or reduce price support when petrol prices were increasing.
113 Rosenow's position is analogous to that of Dalton, save that Rosenow's control over the independent Shell retailers' price increases was indirect and could only be exercised by use of the price-support system. Rosenow was effectively given complete authority to ensure the price competitiveness of the independent Shell retailers. He executed this task by selling fuel to the retailers at a nominal PLP and by providing them with price support to a level that allowed them to remain competitive and retain a gross profit of 3 cpl in respect of the petrol sold. Thus, at all relevant times Rosenow was authorised to provide, withdraw or reduce price support and thereby cause, albeit indirectly, the retail price of the retailers to decrease or increase accordingly. Aside from the limitation on price support over 6 cpl, Rosenow was not required to seek approval of his price-support decisions from anyone at Triton.
114 Although Triton strenuously argued that retail prices were set by the independent retailers, and not by it or by Rosenow, that argument ignores the fact that the supported price generally became the price at which the retailers sold their petrol. Indeed, a purpose of price support was to achieve that outcome.
115 While there may have been a time lag in some of the retailers making the increase, the evidence establishes that they eventually did so. As the Triton sites were not high visibility sites the time lag did not appear to prevent the high visibility sites matching the proposed or targeted increases. If the Triton sites had failed to increase their prices and, as a result gained market share, it is likely that the high visibility sites would have become more concerned about Triton. That situation did not arise because the retailers' prices generally increased to the new supported price.
116 Thus, the only relevant distinction between Dalton's and Rosenow's authority was that any involvement by Rosenow in arranging for price increases was by means of implementing the price-support scheme to achieve the proposed increase rather than by directly increasing the price. While it can be accepted that Rosenow was not authorised to enter into illegal arrangements or understandings, it was within the scope of Rosenow's employment by Triton for Rosenow to take such steps as he deemed appropriate to determine Triton's supported price in order to match the current market price. To the extent that those steps involved communications with competitors about price increases, such communications were also within the scope of Rosenow's employment by Triton. When Rosenow took those steps, with the consequential impact on retail prices, he did so on behalf and for the benefit, of Triton. Triton, by delegating authority to Rosenow over price support, held him out as having authority to so act on behalf of Triton.
117 Accordingly, under both the common law principles of agency and s 84(2) of the Act Rosenow's actions are to be attributed to Triton.
(c) Admissions in the s 155 examinations
118 Although s 84(2) of the Act does not extend to admissions (see TNT Management at 19 and Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) 26 ALR 609 at 633 ("Nicholas Enterprises")), there are a number of circumstances in which the admissions of a servant or agent in relation to past events may be admissible against the principal. A servant or agent may have authority to make admissions about past events by virtue of the servant's or agent's general or specifically delegated authority to answer inquires of a particular nature: see TNT Management at 18. The inquiries may include dealing with investigating authorities in any matter concerning the business: see Nicholas Enterprises at 632.
119 More relevantly for present purposes, s 87(1)(b) of the Evidence Act 1995 (Cth) ("the Evidence Act") provides:
"For the purpose of determining whether a previous representation made by a person is also taken to be an admission by a party, the court is to admit the representation if it is reasonably open to find that:
when the representation was made, the person was an employee of the party, or had authority otherwise to act for the party, and the representation related to a matter within the scope of the person's employment or authority."
120 Section 87(1)(b) has been applied in the context of cases brought pursuant to the Act. In Australian Competition and Consumer Commission v Mayo International Pty Ltd (1998) ATPR 41-653 ("Mayo International"), a case involving the retail price maintenance of hair care products, the issue was whether a statement by a company's sales representative was to be taken as an admission by the company. The case involved allegations that a director of Mayo International Pty Ltd ("Mayo International") sought to have one of its franchising companies direct or persuade its franchisees not to sell Mayo International's products at a discount. It was further alleged that this directive was accompanied by a threat to withdraw the discount that franchisees received from Mayo International if the franchisees were noncompliant. The statement in issue was made by a Mayo International sales representative in the course of responding to a franchisee's inquiry regarding why her purchasing discount had been withdrawn. The sales representative advised the franchisee that her discount had been withdrawn in part because Mayo International had discovered that certain other franchisees had been discounting. In Mayo International, it was not disputed that the employee in question had at least some authority to act for the company, however, the company argued that the particular representation went beyond the scope of his authority. The court, after noting that (1) it was the sales representative's duty to answer franchisee questions; and (2) company representatives were often informed of the rationale behind changes to trading terms; held that the sales representative had authority to make the statement and, as a result, the admission was admissible against the company under s 87(1)(b).
121 Finally, under the Ahern principle, s 155 admissions of one corporate respondent's agent may constitute admissible evidence against another corporate respondent where both of the corporate respondents and the agent are party to the same illegal enterprise and the admissions were made in furtherance of the illegal enterprise. A similar issue to the one presented here was considered in Shears v Chisholm [1994] 2 VR 535 ("Shears") in the context of the admissibility of oral evidence given at an earlier trial. At the trial in Shears JD Phillips J stated that the oral evidence was admissible against co-conspirators as admissions only if the declarations were done or uttered in furtherance of the conspiracy: see Shears, transcript of proceedings, 7 April 1992, at 2198. Specifically, at transcript 2198 his Honour stated:
"To my mind, that means that the alleged co-conspirators must have contemplated, as part of their conspiracy, the giving of this evidence (or at least evidence having such content) as distinct from merely the giving of evidence. And, as earlier remarked, the two are quite different. It might be easier in the case of an affidavit to show that the conspirators did have in contemplation the giving of such evidence. It must surely be the more difficult when the evidence is given orally and in the course of cross-examination."
(i) Dalton
122 At the time of his s 155 examination, Dalton was still employed by Brumar as its senior retail area manager. However, there is no evidence that dealing with the ACCC in respect of matters arising under Pt IV of the Act was within the scope of Dalton's position or was in furtherance of the price-fixing understanding. As a result, any s 155 admissions by Dalton are not admissible against Brumar under the common law principles stated above. But Dalton's s 155 admissions are admissible against Brumar pursuant to s 87(1)(b) of the Evidence Act. At the time when the statements were made, Dalton was an employee of Brumar and his statements plainly related to matters within the scope of his employment.
123 I would add that I accept the submission on behalf of Brumar and Dalton that self-serving aspects of Dalton's s 155 evidence that contradict or explain the admissions, and are therefore favourable to Brumar and Dalton, may be tendered: see Cross on Evidence, 7th Australian Edition at [33420] and [33455]. However, it is for the Court to determine the weight to be attached to the s 155 examination evidence and Brumar accepted that any consideration of the different aspects of the s 155 evidence may reflect the fact that the self-serving aspects of the evidence might not be given the same weight as the admissions: see Cross on Evidence at [33455].
(ii) Rosenow
124 Any s 155 admissions by Rosenow are not admissible against Triton. I am not satisfied that any admissions were within the scope of Rosenow's employment or in furtherance of the alleged price-fixing understanding. Also, Rosenow was not an employee of Triton at the time of his s 155 examination and was not authorised by Triton to make any admissions. Accordingly, s 87(1)(b) of the Evidence Act does not apply.
8. Evidence Relating to the Existing Arrangements
125 In the period leading up to June 1999, Central Petroleum, Beasam, Provincial, Balgee, the Leahy Companies, Anderson Petroleum, Chisholm and Justco were parties to the existing arrangements. The evidence establishes that the representatives of these companies communicated with each other regularly for the purpose of initiating and maintaining coordinated price increases in the Ballarat petrol market.
126 The existing arrangements developed from calls in the early 1990's between Evans, acting on behalf of Balgee, and a school friend of his, Manton, who was the managing director of two companies - Central Petroleum, which operated the Shell wholesale distribution in Ballarat and Central Petroleum Retail. Manton stated that during this period he engaged in price-increase calls with Evans and Muller (representatives of Balgee) as well as with Palmer (a representative of the Leahy Companies). According to Manton, Evans said to him that if he moved board prices in Ballarat the other retailers in the market would follow. On some occasions, Manton made follow-up calls if certain sites had not increased their petrol prices.
127 At the end of 1994, Central Petroleum was dissolved and its wholesale distribution business was sold to Beasam and the retail side of the business was taken over by Provincial, which was controlled by Manton. Triton, which was unrelated to Beasam, was not incorporated until August 1998 and did not commence business until September 1998. Beasam, however, used "Triton Petroleum" as a business name prior to August 1998.
128 Davison followed Manton to Provincial while Rosenow remained in the wholesaling side of Beasam's business, and later continued his employment with Triton. Manton stated that when he left the Ballarat area in August 1997, the situation was such that when he wanted prices to rise, he would phone either Evans or Muller at Balgee and from that point he had confidence that all the boards in Ballarat would go up.
129 After Manton's departure, Davison assumed responsibility for setting board prices at all Provincial sites and the existing arrangements continued in much the same form. Davison stated that it was his usual practice to arrange price increases with at least one representative of at least one other distributor or retailer prior to increasing Provincial's board prices. He said that his customary contact was Muller, as he considered Muller to be "the ringmaster." In addition, during the pre-June 1999 period, Davison had price-increase calls with Palmer, Rosenow and Zala, an employee of Anderson Petroleum and later Chisholm.
130 Additionally, Davison said that he received follow-up calls from Muller, Palmer and Zala when certain sites had not increased their boards. Davison testified that his goal in making price-increase calls was to help the other retailers know when to increase their prices so the increase would stick. Davison said that when he left the business in May 1997, these types of calls were still taking place.
131 Palmer, a representative of the Leahy Companies, stated that from the start of his employment with Leahy Petroleum Pty Ltd he was aware that representatives of suppliers of petrol conducting business in Ballarat communicated with each other about coordinating increases in the retail price of petrol. Palmer testified that he participated in price-increase calls with Muller (during the 1990 to mid 1997 period) and Levick (from mid 1997 to December 2000), both representatives of Balgee. In addition, Carmichael, Palmer's subordinate who was the operations/transport manager in Geelong, stated that he also participated in the existing arrangements on behalf of the Leahy Companies. Specifically, Carmichael stated that, at Palmer's request, he had advised Anderson at Apco of retail price increases in Ballarat. Carmichael said his calls to Anderson took place from about mid 1997 until at least the end of 2000.
132 Zala, a representative of Anderson Petroleum and later Chisholm, also testified that during the pre-June 1999 period he made price-increase calls to, and received price-increase calls from, Evans and Muller at Balgee. Zala said that while he was an employee of Anderson Petroleum, he would pass any price-increase information he received on to Anderson. Zala said that when he left Anderson Petroleum in December 1996 and started working at Chisholm in January 1997, the price-increase calls continued in much the same form, except that he no longer passed price-increase information on to Anderson. Zala said that after he was employed by Chisholm he telephoned Anderson and told him there was a board price movement on in Ballarat but Anderson told Zala that he no longer wanted to talk to him about board pricing or to take his calls. Zala made no further calls to Anderson.
133 Anderson did not dispute Zala's evidence and said he could only recall telling Zala not to ring him. Anderson said that he took that course with Zala because he was now with a competitor of Apco's and wanted "to keep my arms length from somebody like Chisholms." Anderson explained that he took a different approach in respect of Bentley (Justco) because there had been a longstanding family relationship and although he was a competitor he saw Bentley "as a friend and ally and there was nothing wrong in the information that he was giving me."
134 Once at Chisholm, Zala said he began receiving calls from Levick, a sales representative of Balgee. Zala testified that he made price-increase calls to Bentley and Rosenow. Zala stated that his purpose in participating in these calls, which continued on a regular basis until the end of 2000, was to ensure that board price increases stuck. Levick and Bentley both acknowledged that they participated in the price-fixing understanding during this period as representatives of Balgee and Justco respectively.
135 In particular Levick, who was in charge of retail pricing at Balgee sites, stated that during the pre-June 1999 period he talked pricing with Zala and Palmer on a regular basis and that he was aware that other people and brands in the Ballarat petrol market were also talking about their petrol pricing.
136 Evidence was also adduced of meetings from time to time in relation to the existing arrangements.
137 Putting to one side for the moment the position of the contesting respondents, the evidence establishes that:
· the existing arrangements constituted a price-fixing understanding that was arrived at and given effect to in the pre-June 1999 period by Central Petroleum, Balgee, the Leahy Companies, Anderson Petroleum, Chisholm, Beasam, Provincial and Justco;
· the understanding was one whereby the parties to it initiated and implemented coordinated price increases in the Ballarat petrol market;
· the arrangement evolved throughout the 1990s to accommodate business and personnel changes in the Ballarat petrol market;
· although the parties to the understanding changed over time it remained operative as at June 1999; and
· as at June 1999 Balgee, the Leahy Companies, Justco and Chisholm were parties to the understanding.
138 While I will consider the situation of the contesting respondents in the context of the price-fixing understanding during the relevant period, it is relevant to observe that it is highly unlikely that experienced participants in the Ballarat petrol market who made pricing decisions concerning the retail price of petrol in Ballarat during the 1990's would not have been aware of the understanding. As explained earlier, the process of stepped price decreases with a sudden and significant price increase by one or more outlets was risky unless the parties increasing their prices were confident that the increases would be matched by their major competitors. The existing arrangements, which successfully achieved the objective of coordinated price increases to bring a discount cycle to an end, provided the basis for that confidence. While some participants in the market might have believed that free-market forces, rather than collusion, were the reason for the increases, experienced participants, such as Rosenow and Anderson who were informed of the increases and had wide and long standing experience in the Ballarat market, would have been aware that there was collusion in relation to the increases. This would certainly have been the case with Rosenow, who was directly involved in the communication process.
139 Anderson's involvement was not as direct as that of Rosenow. However, Anderson was the recipient of price-increase information prior to the relevant period from Zala, and before and during the relevant period, from Bentley and Carmichael. When he received the price-increase information from Bentley and Carmichael, Anderson was aware that the purpose of the communication of that information was to induce or persuade him to cause Apco to match the increases that had occurred or were in progress in Ballarat.
140 The main relevance of the above findings is that I am satisfied that as at June 1999 Rosenow and Anderson were well aware of the existing arrangements and of the purpose of the price-increase and follow-up calls that were being made to them. To the extent that Rosenow (in his s 155 examination) and Anderson (in his evidence) gave evidence that is inconsistent with these findings, I do not accept that evidence. Their evidence is inconsistent with the evidence of the ACCC's witnesses, which is set out above and also later in these reasons, which I accept. Any inconsistent evidence of Rosenow in his s 155 examination is self serving and does not carry sufficient weight for me to act on it in preference to the other evidence. As I later explain in respect of Anderson, his endeavours to put a version of events consistent with his innocence led him to present his recollection of many of the relevant events in a manner that was not reliable and that was also inconsistent with other evidence that I have accepted as reliable.
9. Evidence Relating to the Price-Fixing Understanding During the Relevant Period
141 In order to appreciate the role, if any, played by the contesting respondents in relation to the price-fixing understanding during the relevant period it is necessary to consider in detail the witnesses' evidence concerning the respective roles of those respondents in any price-fixing understanding pre- and post-June 1999. The analysis which, in part, is necessary in order to determine the application of Ahern to hearsay evidence, must necessarily exclude such evidence at this stage. However, where hearsay statements are admissible for the fact of having been made (rather than for the truth of the matter asserted), or as statements by parties which are admissions against interest, the statements are included in the analysis in respect of the relevant party. Thus, for example, a statement made by Rosenow to Zala about a price-increase call Rosenow made to Dalton may be admissible against Rosenow, but it is not admissible against Dalton unless Ahern is found to apply to the statement.
142 Before turning to the evidence it is appropriate to make certain observations about the ACCC's witnesses. Certain criticisms were made about some of the ACCC's witness statements, which were said to reflect the views of the person drafting the statement rather than the evidence of the witness. I do not regard those criticisms as well founded. In a case such as the present it is not surprising that some of the witness statements may employ language that is more familiar to the drafter than to the witness, but I am satisfied that the statements were drafted in a manner that sought to reflect the evidence of the witnesses. Further, the trial proceeded on the basis that any contentious evidence about significant conversations would be required to be given orally, rather than by the tender of the relevant parts of the witness statement, if that was requested by a party against whom the evidence was to be tendered. Thus, there was little risk of an ACCC witness statement being tendered that did not truly reflect the views of the witness.
143 Subject to the specific observations I make concerning Bentley and particular evidence given by other witnesses, I am satisfied that, generally, the ACCC's witnesses gave their evidence honestly and to the best of their recollection. Those observations apply particularly to witnesses such as Davison, Palmer, Carmichael, Timothy Dow ("Dow"), Zala, Levick and Manton who gave evidence of their roles from time to time in relation to price-increase and follow-up calls. I would add that to the extent that witnesses such as Palmer and Carmichael might have given evidence at their s 155 examinations that differed from their evidence to the Court I am satisfied that their evidence to the Court is reliable and is to be preferred.
144 Specific criticism was made of Levick on the ground that his evidence on oath at trial was totally in conflict with his evidence on oath at his s 155 examination, at which he denied having participated in price-increase or follow-up calls. Levick explained that he gave false evidence at the time because he was following the company line. I am satisfied that the evidence Levick gave at trial, rather than the evidence he gave in the s 155 examination, was reliable and should generally be accepted as it reflected his honest recollection of the relevant events and conversations. I would add that Levick's evidence at trial was consistent with and was also corroborated by the evidence of the other ACCC witnesses who gave evidence about their conversations with him. Levick's s 155 evidence was inconsistent with that other evidence, which I have found to be reliable, and was plainly untruthful.
145 Bentley needs to be considered separately. He appeared to be a reluctant ACCC witness who did not wish to give evidence that implicated Anderson, and to a lesser extent Rosenow, in the price-fixing understanding. I had the distinct impression from the manner in which Bentley gave his evidence that he was seeking to be protective of Anderson in particular. Also, Bentley appeared to be less than fully frank and honest concerning his conversations with Anderson and Rosenow and, in particular, he endeavoured to play down his role in relation to conversations about retail prices with Anderson and Rosenow. Also, his evidence in that regard sat uncomfortably with the clear and uncontradicted evidence of other witnesses about Bentley's role as a willing, active and ongoing participant in the price-fixing understanding. It is clear that Bentley, acting in his own financial interest, used his conversations with Anderson and Rosenow to induce or influence them to cause Apco and Shell sites to match the proposed or actual price increases of the initiating respondents so that the increases would not collapse. I am in no doubt that, given the importance to Bentley of those sites matching the increases, and therefore of Bentley's communications with Apco and Rosenow, he was as forthright as the circumstances permitted in imparting sufficient information to Anderson and Rosenow to encourage them to match the increases and, in Rosenow's case, to influence him to communicate the increases to Brumar. Thus, some of the comfort that might otherwise have been derived by Apco, Anderson, Triton and Rosenow from the lack of specificity of Bentley's evidence is considerably diminished by his general unreliability as a witness.
(a) Apco/Anderson
146 It was generally accepted by Apco's competitors in the market that if Apco's sites did not increase their prices to generally match (albeit with some discount) the prices at the other high visibility sites in Ballarat, the price increase would not stick. Consequently, it was critical to the success of the price-fixing understanding, and therefore of particular importance to the initiating respondents (or their predecessors), that Anderson at Apco be made aware of and participate in coordinated price increases.
(i) Zala-Anderson
147 Prior to January 1997, when Zala was at Anderson Petroleum, Zala was the link to Apco and Anderson. Zala stated that after receiving price-increase calls from Muller, he would ring Anderson in Geelong and let him know that prices were going to go up. He also confirmed that he made follow-up calls to Anderson. Zala stated that Anderson would inform him if specific sites of competitors had not yet moved.
148 Anderson acknowledged that he received price calls from Zala during this period but said that the information Zala communicated to him had no bearing on the decisions he made about Apco's price because it was information that he already knew due to the fact that his own franchisees regularly kept him informed of what was happening in the Ballarat market. Anderson stated that he did not consider pricing discussions between him and Zala to be forbidden communications between competitors because, as director of both companies (ie Apco and Anderson Petroleum), Anderson believed he was entitled to know Anderson Petroleum's proposed prices. In addition, Anderson stated that Zala never gave him any reason to believe he was talking to competitors about prices. Zala, on the other hand, stated that he did mention to Anderson that he was speaking with competitors. In view of the credit findings I make in these reasons in relation to Zala and Anderson, and also of the relevance and likelihood of Zala informing Anderson of his conversations with competitors, I accept Zala's evidence on this issue. Zala also stated that he was unable to predict whether, on any given occasion, Anderson would or would not follow the rise.
149 As explained above, when Zala left Anderson Petroleum in December 1996 and starting working for Chisholm in January 1997, Anderson told him that he would no longer take his calls. As a result, the initiating respondents (or their predecessors) needed a new means of communicating their proposed price increases to Anderson. Because Anderson was independent, and was regarded as difficult to deal with, the initiating respondents (or their predecessors) sought to channel price-increase communications through persons that Anderson trusted. It was in that context that Bentley and Carmichael became the link to Anderson.
(ii) Bentley-Anderson
150 Anderson and Bentley were family friends. Bentley stated that he was thankful to Anderson for the guidance which he provided when Justco was establishing its business. Bentley confirmed that he spoke with Anderson frequently regarding business matters having nothing to do with the retail price of petrol, but also admitted that sometimes he would pass on market information to Anderson. Bentley said that he only ever passed on to Anderson information regarding competitors' current retail prices and past movements in competitors' retail prices. He testified that he did not relay to Anderson information about future prices.
151 Bentley said that he recognised Anderson's sensitivity to receiving price information and acknowledged that there was "some risk involved" in communicating the information to Anderson. Bentley said that he took the risk because he wanted prices to go up. He noted that he was careful not to "cross that line" with Anderson because he feared that Anderson would become agitated and would cease providing him with the business advice, which he greatly valued. To that end, Bentley testified that he usually "slipped the information into conversation", rather than stating it directly, and that he used coded language like "Go for a drive" to indicate to Anderson (who was located in Geelong) that prices in Ballarat were on the rise. Bentley stated that Anderson did not react to the information given to him and never solicited price information. He also stated that he was not able to predict whether Anderson, on any given occasion, would follow the rise.
152 Anderson did not dispute that he received calls from Bentley in which Bentley gave "hints" that the Ballarat petrol market was moving. Anderson confirmed that when Bentley said things like "Go for a drive" he understood it to mean that prices in Ballarat were on the rise. Anderson testified that he was reluctant to receive this type of information from Bentley, but admitted that he never asked Bentley to stop giving him the information. Anderson confirmed on cross-examination that he received this information reluctantly:
"BURNSIDE: You said in your section 155 examination, didn't you, that you had taken calls like that reluctantly?
ANDERSON: Yes.
BURNSIDE: Would you tell his Honour why it is - is it the fact that you took the calls reluctantly?
ANDERSON: Took that information reluctantly, yes. I never - - -
BURNSIDE: You did take it reluctantly?
ANDERSON: Yes, I wasn't - - -
BURNSIDE: Okay. Will you tell his Honour why you took that information reluctantly when you say there was nothing at all wrong with it? ---
ANDERSON: It wasn't information that I wanted because it was something that I already knew in the marketplace, but Justin being - his father and my father being friends for the last 30-odd years, or 20 years anyway, he was telling me probably because he was concerned that I wasn't aware that there had been a move, probably I hadn't moved my [signs] and he was just dropping a little hint. Now, I didn't want the information. I didn't tell him not to. But I was just happy to just move along with the conversation as I did. I didn't acknowledge him, I didn't ask him to give it to me. He just did and I didn't acknowledge it in any way, shape or form and it was always in the past tense, like the prices had moved when he rang me and told me to go for a drive, sort of thing. I already knew the prices had moved because of the franchisees earlier in the day I'd been in contact with.
BURNSIDE: If there's nothing at all wrong with what he told you and if you've been family friends for ages, why would you be at all reluctant to receive that information?
ANDERSON: If he doesn't know what I'm going to do, and I never told him what I was going to do, you keep sort of at arm's length away from people, you create that independence. I was an independent. I had my own information from my own franchisees and that's all I required.
BURNSIDE: You've told his Honour you didn't think there was anything wrong?
ANDERSON: There's not.
BURNSIDE: With what he was saying?
ANDERSON: No.
BURNSIDE: Why would you be reluctant to hear it?
ANDERSON: I didn't encourage him to do it.
BURNSIDE: Why would you be reluctant?
ANDERSON: Well, I probably used a different word at the time, at the 155.
BURNSIDE: No, you've already acknowledged today that you were in fact reluctant to hear his information. Why?
ANDERSON: I didn't need the information.
BURNSIDE: I don't want to make it boring, but why would you be reluctant to hear it?
ANDERSON: I don't know.
BURNSIDE: You can't explain it, can you?
ANDERSON: No, I can't explain it, no. I really can't explain it."
153 Initially, Anderson denied that the information he received from Bentley was useful, stating that in all cases his franchisees would have already supplied him with the same information. Under cross-examination, however, Anderson conceded that the information which he received from Bentley was useful because it helped him to know precisely when to tell his franchisees to check prices, which helped him to ascertain the appropriate time to raise Apco's prices. Anderson also testified that the information was helpful information in that it allowed him to confirm that his franchisees were "doing the right thing" (ie providing price-increase information in a timely and accurate fashion). Anderson was aware that if he raised his prices to generally match the price increase, that would probably prevent the price increase from collapsing. Anderson said he knew that Bentley's purpose in sharing this information was to get him to increase his price and that he understood that unless Apco went up, the price rise would not stick. Anderson testified: