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[2001] FCA 1343
Federal Court of Australia
2001-04-05
Finkelstein J
Original judgment source is linked above.
THE COURT DECLARES THAT: 1. The conduct of the sixth respondent, Alstom Australia Ltd, in relation to the making of the First Arrangement between ABB and Alstom that is referred to in paragraph 72 of the statement of agreed facts signed by the applicant and the sixth, fifteenth and sixteenth respondents and filed in the proceedings ("the Alstom statement of agreed facts"): (a) constituted the making of an arrangement or the arriving at of an understanding that contained an exclusionary provision in contravention of s 45(2)(a)(i) of the Trade Practices Act 1974 (Cth); and (b) constituted the making of an arrangement or the arriving at of an understanding, which: (i) contained provisions to which the provisions of s 45A of the act applied; and (ii) accordingly substantially lessened competition for the supply of distribution transformers in Australia in contravention of s 45(2)(a)(ii) of the Act. 2. The conduct of the sixth respondent in relation to the giving effect to the First Arrangement between ABB and Alstom that is referred to in paragraphs 73 to 75 of the Alstom statement of agreed facts: (a) constituted the giving effect to a provision of an arrangement or understanding that contained an exclusionary provision in contravention of s 45(2)(b)(i) of the Trade Practices Act 1974; and (b) constituted the giving effect to an arrangement or understanding which: (i) contained provisions to which the provisions of s 45A of the Act applied; and (ii) accordingly substantially lessened competition for the supply of distribution transformers in Australia in contravention of s 45(2)(b)(ii) of the Act. 3. The conduct of the sixth respondent in relation to the making of the Second Arrangement between ABB and Alstom that is referred to in paragraph 80 of the Alstom statement of agreed facts: (a) constituted the making of an arrangement or the arriving at of an understanding that contained an exclusionary provision in contravention of s 45(2)(a)(i) of the Trade Practices Act 1974; and (b) constituted the making of an arrangement or the arriving at of an understanding, which: (i) contained provisions to which the provisions of s 45A of the Act applied; and (ii) accordingly substantially lessened competition for the supply of distribution transformers in Australia in contravention of s 45(2)(a)(ii) of the Act. 4. The conduct of the sixth respondent in relation to the giving effect to the Second Arrangement between ABB and Alstom that is referred to in paragraphs 81 to 83 of the Alstom statement of agreed facts: (a) constituted the giving effect to a provision of an arrangement or understanding that contained an exclusionary provision in contravention of s 45(2)(b)(i) of the Trade Practices Act 1974; and (b) constituted the giving effect to an arrangement or understanding which: (i) contained provisions to which the provisions of s 45A of the Act applied; and (ii) accordingly substantially lessened competition for the supply of distribution transformers in Australia in contravention of s 45(2)(b)(ii) of the Act. 5. The fifteenth respondent, Paul Grabham, by reason of his conduct referred to in paragraphs 69 to 75 of the Alstom statement of agreed facts: (a) was knowingly concerned in or a party to the contraventions by the sixth respondent of s 45(2)(a)(i) and s 45(2)(a)(ii) of the Trade Practices Act 1974 referred to in paragraph 1 above; and (b) was knowingly concerned in or a party to the contraventions by the sixth respondent of s 45(2)(b)(i) and s 45(2)(b)(ii) of the Act referred to in paragraph 2 above. 6. The sixteenth respondent, Colin James, by reason of his conduct referred to in paragraphs 77 to 83 of the Alstom statement of agreed facts: (a) was knowingly concerned in or a party to the contraventions by the sixth respondent of s 45(2)(a)(i) and s 45(2)(a)(ii) of the Trade Practices Act 1974 referred to in paragraph 3 above; and (b) was knowingly concerned in or a party to the contraventions by the sixth respondent of s 45(2)(b)(i) and s 45(2)(b)(ii) of the Act referred to in paragraph 4 above. THE COURT FINDS THAT: 7. For the purposes of s 83 of the Trade Practices Act 1974, the relevant facts in these proceedings in relation to sixth, fifteenth and sixteenth respondents are the facts set out in the Alstom statement of agreed facts filed in these proceedings. THE COURT ORDERS THAT: 8. The sixth respondent pay to the Commonwealth of Australia a pecuniary penalty pursuant to s 76 of the Trade Practices Act 1974 in the sum of $1,500,000 within thirty days of the making of this order. THE COURT ORDERS BY CONSENT THAT: 9. The sixth respondent be restrained, for a period of 4 years, by its directors, servants and agents or otherwise howsoever, from: (a) making or arriving at; (b) giving effect to; (c) attempting to make or arrive at or give effect to; or (d) inducing, or attempting to induce, any person to make or arrive at or give effect to; or (e) being in any way, directly or indirectly, knowingly concerned in, or party to, the making or arriving at or giving effect to by any person of: any contract, arrangement or understanding between manufacturers or suppliers of distribution transformers which contains a provision that: (f) has the purpose, or has or is likely to have the effect, of: (i) fixing, controlling or maintaining, or (ii) providing for the fixing, controlling or maintaining, of tender prices submitted by such manufacturers or suppliers; or (g) has the purpose of preventing, restricting or limiting the supply of distribution transformers by such manufacturers or suppliers to electricity utilities or any other purchasers of distribution transformers at particular prices or at all. 10. Each of the fifteenth and sixteenth respondents be restrained, for a period of 4 years, from being in any way, directly or indirectly, knowingly concerned in, or party to the: (a) making or arriving at; (b) giving effect to: any contract, arrangement or understanding between manufacturers or suppliers of distribution transformers which contains a provision that: (c) has the purpose, or has or is likely to have the effect, of: (i) fixing, controlling or maintaining, or (ii) providing for the fixing, controlling or maintaining: of tender prices submitted by such manufacturers or suppliers; or (d) has the purpose of preventing, restricting or limiting the supply of distribution transformers by such manufacturers or suppliers to electricity utilities or any other purchasers of distribution transformers at particular prices or at all. 11. The sixth respondent pay the applicant's costs of and incidental to these proceedings in the agreed amount of $40,000 within thirty days of the date of this order. THE COURT ACCEPTS THE UNDERTAKING OF THE SIXTH RESPONDENT THAT: 12. The sixth respondent will use its best endeavours to ensure that its trade practices compliance program continues to conform to the Australian Standard, AS3806-1198.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
AND: ABB TRANSMISSION AND DISTRIBUTION LIMITED
REASONS FOR JUDGMENT 1 This is an application by the Australian Competition and Consumer Commission for the imposition of pecuniary penalties and the grant of injunctions against the respondents arising from, in the case of the sixth respondent, Alstom Australia Limited, contraventions of s 45 of the Trade Practices Act 1974 (Cth), and in the case of the fifteenth respondent, Mr Grabham, and the sixteenth respondent, Mr James, their knowing involvement in those contraventions. 2 I deal for now only with the case put forward against the sixth, fifteenth and sixteenth respondents. They have asked for their case to be determined separately to the claims against the remaining respondents, which will be heard later this year. 3 The Commission and the relevant respondents have reached agreement on what they regard as the appropriate orders to be made. They ask the court to act in accordance with their agreement. They accept that the imposition of penalties and the grant of other relief for a contravention of Pt IV of the Trade Practices Act is not a matter for their agreement, but is for the court. However, as the cases show, the parties' agreement should be followed by the court unless there is good reason to the contrary. 4 The Commission alleges, and Alstom, Mr Grabham and Mr James agree, that, from 1993 until 1995, certain Australian manufacturers and suppliers of distribution transformers were parties to an arrangement or understanding not to compete with each other for contracts let to tender by electricity distribution utilities for the supply of distribution transformers, so as to ensure that the party with an existing contract to supply distribution transformers to a particular utility would retain the contract. From 1995 until 1999, those parties, as well as another manufacturer and supplier, were parties to a further arrangement or understanding not to compete. 5 Alstom is a leading global supplier of components, systems and services in various infrastructure sectors. The total annual sales of distribution transformers in Australia is estimated to be approximately $100 million. In 1994 Alstom held about 4 per cent of this business. By 1999 its share had dropped to about 3 per cent. 6 Alstom was not a party to the two arrangements or understandings. However, Mr Grabham, the general manager of Alstom's transformer division (1990-1992) and general manager and later chief executive of Alstom's heavy engineering division (1992-1994), and Mr James, the general manager of Alstom's power transformer division (1993-1994) and later chief executive of that division, were parties to separate arrangements or understandings not to compete in respect of two tenders for the supply of distribution transformers to Queensland electricity distribution utilities. In circumstances hereafter set out, Alstom was party to an arrangement with the second respondent, ABB Power Transmission Pty Ltd (in liquidation), in respect of a tender in 1994, and with the first respondent, ABB Transmission and Distribution Limited, in respect of a tender in 1996. 7 In early February 1994, South East Queensland Electricity Board, now known as Energex, called for tenders for the supply of distribution transformers. The total value of the tender was $13.1 million over two years. 8 In March 1994, Mr Grabham had a discussion with an executive of ABB Power Transmission, Alstom's competitor, in relation to the tender. It was agreed that if Alstom revealed to ABB Transmission and Distribution the costs at which it was proposing to tender, ABB Power Transmission would ensure that Alstom won one item in the tender. This would be achieved by ABB Power Transmission submitting a tender with a higher capitalised cost than the Alstom tender. Mr Grabham informed the ABB Power Transmission executive of the cost at which Alstom intended to tender and in due course Alstom won business worth $1.915 million from the South East Queensland Electricity Board tender. 9 In July 1996 South East Queensland Electricity Board called for tenders for transformers to a total value of $7.6 million over two years. Later in July, Mr James received a number of telephone calls from the executive of ABB Transmission and Distribution in relation to the tender. An arrangement was made to the same effect as the first arrangement between ABB Power Transmission and Alstom. However, Alstom was not awarded any work under this tender, as the entire contract was awarded to ABB Transmission and Distribution. 10 The penalty that has been suggested for Alstom is $1.5 million. It is not proposed that any penalty be imposed on Mr Grabham or Mr James. In addition to pecuniary penalties under s 76, the relevant respondents agree that injunctions under s 80 should be ordered against Alstom and mr Grabham and Mr James, to restrain them for four years from engaging in like conduct. Finally, Alstom has agreed to pay the Commission's costs fixed in the sum of $40,000. 11 Having regard to what is said in the joint submission, and taking into account penalties imposed in other similar cases, I consider that the orders suggested by the parties are appropriate. I am persuaded that what is proposed is reasonable, having regard to the objective sought to be achieved by the imposition of the penalties and the nature of the penalties imposed in like cases, namely Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR ¶40-091; Trade Practices Commission v CSR Ltd (1991) ATPR ¶41-076; Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR ¶41-375; Australian Competition and Consumer Commission v Pioneer Concrete (Qld) Pty Ltd (1996) ATPR ¶41-457; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1997) ATPR ¶41-546; and Australian Competition and Consumer Commission v Australian Safeway Stores Pty Limited (1997) ATPR ¶41-562 . 12 There will be orders in accordance with the minutes submitted. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.
Associate: Dated: 5 April 2001 Counsel for the Applicant: Mr A Myers QC Mr S White
Solicitor for the Applicant: Deacons
Counsel for the 6th, 15th and 16th Respondents: Mr G Hilton Mr M Pearce
Solicitor for the 6th, 15th and 16th Respondents: Gilbert & Tobin
Dates of Hearing: 29 March 2001
Date of Judgment: 5 April 2001
Australian Competition and Consumer Commission
ABB Transmission and Distribution Limited