Consideration of the circumstantial case
379 The circumstantial nature of the ACCC case requires that each of the elements to which the ACCC referred be considered collectively. It is their combined effect which must be assessed. Considered in that way, the ACCC case has some force. I consider that the ACCC has established conduct which, looked at generally, could be characterised as a form of affirmative action directed towards the inducement it alleges.
380 However, the case also has some limitations and in my opinion does not establish the attempt alleged by the ACCC. In particular, the evidence does not warrant a finding that the respondents who participated in the trial had the intention of inducing a proscribed arrangement or that any conveyed to the Attendees the potential for such an arrangement or understanding.
381 There is a distinction between a circumstance in which industry participants are brought to an appreciation that it is in their interests, independently of what others are doing, to act in a certain way, on the one hand, and a circumstance in which industry participants are invited to agree to act in a certain way in the expectation of reciprocal conduct by others, on the other. Conduct of the former kind does not contravene s 44ZZRJ. The respondents submitted that the evidence supported only this alternative.
382 Mr Doyle SC, for AECL and Mr Kellaway, summarised the respondents' position on this topic by contending that the evidence was "perfectly consistent with the outcome being, "We want everybody to think harder about their own circumstances and what they can do to solve the problem which is, in part, theirs and, in part, the industry's". In my opinion, that is an appropriate characterisation of the evidence received in the trial, noting that suggestions and recommendations as to particular conduct which producers could take were also made. I also note again that the admissions by Mr Lendich in his agreement with the ACCC were not put into evidence against the remaining respondents.
383 The evidence warrants a finding that the means by which egg production could be reduced (removing one hen from each cage and bringing forward the disposal of hens by 6-8 weeks) were canvassed at the Summit, but there is insufficient evidence to warrant the conclusion that these options were propounded as a form of collective action involving reciprocal obligations or understandings by the egg producers. It is one thing to conclude that suggestions, even firmly expressed suggestions, were made that removing a hen from a cage and bringing forward hen disposal were forms of action which producers, making independent judgments about their own commercial interests, could (or even should) adopt: it is another thing to conclude that the respondents were proposing that producers agree that each would pursue either or both of these options on the understanding that their competitors would do likewise. There is no persuasive evidence that a proposal to that effect was articulated.
384 It is pertinent to this consideration that a considerable focus at the Summit was on those producers who had increased their production rapidly, and in excess of the general increase in demand for eggs. By a number of means, moral pressure was brought to bear on those (unidentified) producers. To my mind, the highlighting by Mr Kellaway of the fact that some producers were more responsible for the oversupply than others is inconsistent with an attempt, at least by him, to induce all producers, including the "innocent" producers, to agree to action to address a problem created by others.
385 I refer in this respect to Mr Kellaway's evidence that the Attendees were informed for the first time that some of their number had increased their production very rapidly, despite the warnings about oversupply. Their particular responsibility for the oversupply of eggs was highlighted in the PowerPoint slides for all to see. By this means moral pressure was brought to bear on those "culpable" producers. Those "innocent" attendees who had not increased their production, or had increased it by modest amounts only, were unlikely to be receptive to the notion that they should reduce their production in order to address the problem caused by the "culpable" producers. For them, the more obvious solution was for the "culpable" producers to bring their egg production back to levels which were sustainable. In this respect, the inference arising from Mr Ahmed's email of 9 February that there had been some disharmony, and possibly "finger pointing", at the Summit arising from a recognition that some were more responsible than others for the industry's predicament is pertinent.
386 To my mind, the fact that Mr Kellaway chose to highlight for the Attendees that some of their members were particularly responsible for the oversupply is inconsistent with him having had an intention to induce all of the Attendees to agree upon a form of mutual and reciprocal action.
387 The ACCC case placed considerable reliance on Mr Kellaway's reference to "a path forward in a co-ordinated and consolidated fashion". I agree that that expression is capable of a sinister connotation in the context of s 44ZZRJ as it may connote co-ordinated action by agreement by the various producers. However, in context it is also readily capable of an innocent explanation. In his slides headed "Solutions", Mr Kellaway suggested short, medium and long term solutions. Under the heading of short term solutions, he suggested the alternatives of action to reduce production of eggs by the culling of hens, action to increase consumer demand for eggs, and action to reduce the existing inventory of eggs by donations to FoodBank or dumping. These were not mutually exclusive options as each could be pursued simultaneously and in a co-ordinated way. I consider that Mr Kellaway's reference to "co-ordinated and consolidated" action is capable of referring to the adoption simultaneously of each of these different strategies in a planned way and accordingly does not necessarily have the sinister connotation for which the ACCC contended. At the least, the ACCC case has not negatived this as a reasonable understanding, and it is consistent with Mr Kellaway's evidence.
388 I agree with the ACCC that the reference in Mr Kellaway's slide to an independent auditor is particularly significant. I have already made findings about that. However, the retention of an independent auditor for the identified purpose may also have an "innocent" explanation. The reports of an independent auditor would have provided a means by which AECL, and through it egg producers, would know whether each producer was heeding the AECL's warnings and whether each was, by voluntary and independent action, reducing its hen numbers. In this way, the proposed retention of an independent auditor does not point persuasively to an intention that producers enter into an agreement or understanding with respect to reduction of hen numbers.
389 The respondents emphasised the evidence indicating the competitive nature of the egg industry. I have already referred to some of that evidence. The respondents submitted that, given the competitive nature of the industry, it was inherently unlikely that egg producers would co-operate with one another and, accordingly, unlikely that AECL would have expected them to do so.
390 AECL and Mr Kellaway, in particular, submitted that this was an important aspect of the factual matrix against which the contemporaneous statements relied upon by the ACCC were to be assessed. This provided an explanation, they submitted, for the absence of statements by Mr Kellaway or others to the effect that AECL expected the Attendees would act on the information only when it was in their own individual commercial interest to do so. Such statements were unnecessary given what was known to all at the Summit about the nature of the industry. Similarly, this knowledge made it unlikely that AECL or Mr Kellaway would have been proposing some form of collective action.
391 I accept that the egg industry is generally of a competitive kind and that it was likely that individual egg producers would take action only if they perceived it to be in their own individual interest to do so, and practical for them to do so. Accordingly, this submission has some force but its significance should not be overstated. It is very apparent that AECL was making an appeal to the individual interests of the egg producers, by particular reference to the decline in egg prices. The slide presentations of Mr Kellaway and Mr Quirke pointed out in graphic terms the effect on returns to egg producers of the oversupply. This was the same circumstance about which Mr Lendich and Mr Pace had spoken passionately at the Board meeting on 19 January. In my opinion, the evidence shows that AECL was making an appeal by reference not only to the interests of the industry as a whole, but to the interests of each individual egg producer.
392 The respondents submitted that the circumstance that several short term solutions to the egg oversupply were proposed also made it inappropriate to conclude that anyone could have expected, let alone intended, that the requisite degree of mutuality or reciprocity could be achieved. They noted that one egg producer may, for example, choose to make donations to FoodBank, another to cull hens, and another to cancel or reduce its orders for new hens, and so on. They submitted that AECL's intention did not go beyond explaining to the selected members the full nature and extent of the oversupply problem and the various actions which AECL itself considered might be undertaken by producers individually, but not collectively, to address the problem.
393 I agree that these are relevant considerations. The egg producers represented by the Attendees had operations in different parts of Australia and, although the evidence on this topic is limited, it is reasonable to infer that many had their own market or markets which did not coincide fully, or at all, with the market or markets of others. In particular, the evidence does not support a conclusion that there is a single Australian egg market. These circumstances made it likely that the oversupply affected some more than others. Some producers may have had a market for all the eggs they were producing. Twelve Oaks, operated by IMS, provides an example as its operations had been significantly damaged by Cyclone Yasi. I accept Mr Ironside's evidence that Twelve Oaks was still seeking to return to its pre-cyclone levels of production. Circumstances of these general kinds must have been known to AECL and Mr Kellaway, and to my mind militate against them having sought to induce an agreement or understanding of a proscribed kind amongst the Attendees generally.
394 It is true that an attempt to induce a contravention of s 44ZZRJ does not require that a single form of action be proposed. A contravention could occur if one producer agreed on one course of action (earlier culling of hens) and another producer on a different course of action (donation of eggs already produced to FoodBank). However, an agreement or understanding of this kind would be unusual and in the practical context of a meeting such as the Summit, one which would be difficult to achieve. This counts against the respondents having attempted to achieve an agreement or understanding for individual producers to take different forms of action.
395 The respondents emphasised that there was no evidence of any proposal having been put to a vote at the Summit, nor any evidence of a call for an indicative show of support.
396 I accept that that is so, while keeping in mind that the ACCC case turns very much on the inferences said to arise from the written material. The absence of evidence of the kind to which the respondents refer is not so significant in that context. If there was more detailed direct evidence of what had occurred at the Summit, the absence of evidence of a particular proposal being formulated and put to the meeting would be more significant. In this regard, the evidence concerning Mr Lendich's suggestion that one bird be removed from each cage is pertinent. The oral evidence from the Attendees at the Summit did not indicate what, if any, response was made this suggestion. It is possible, as Mr Ironside said in his evidence, that Mr Lendich's suggestion was not regarded as practical, or as favouring unduly those who produced barn laid or free range eggs over cage egg producers.
397 AECL and Mr Kellaway emphasised that AECL was not an industry participant and not an industry representative body. They submitted that AECL had nothing to gain by suggesting or encouraging collective action. In addition, AECL and Mr Kellaway submitted, that while it may be natural to infer some intention and expectation of reciprocity or mutuality in the case of suggested solutions to industry problems made solely by industry participants, such an inference did not arise in the case of communications from a non-participant such as AECL. It is more natural to expect that it would encourage action in accordance with the interests of the individual participants and circumstances and without any expectation of reciprocity or mutuality between them. These submissions were part of the wider submission of AECL and Mr Kellaway to the effect that the fact that individual action by multiple egg producers may have more general benefits for the industry did not mean that those individual actions acquired a collective character.
398 I accept that AECL was not an industry participant in the sense that it was not an egg producer. However, that does not mean that AECL was not a participant in the egg industry at all. The evidence already summarised indicates that AECL was, in a particular way, a participant in the Australian egg industry. One could hardly give an accurate description of the Australian egg industry without including a summary of the activities of AECL.
399 The question of whether AECL is an "industry representative body" involves definitional issues which, to my mind, it is unnecessary to address as I consider that the evidence already summarised indicates that AECL does, in some respects, act as an entity representing the Australian egg industry.
400 I accept, nevertheless, the respondents' submission that the role and character of AECL is important. In particular, I accept the submission made by reference to Trade Practices Commission v Service Station Association Ltd [1993] FCA 405; (1993) 44 FCR 206, that trade associations and their officers may legitimately encourage their members to examine their profitability and to make production and pricing decisions in order to maintain profitability. Conduct of that kind, at least when directed to the decisions of industry participants in their own businesses and without any suggestion of cooperative action, does not amount to cartel conduct, or even an attempt to induce cartel conduct.
401 The respondents also emphasised that the ACCC pleaded case did not include a contention as to the precise form of the alleged intended arrangement or understanding. Earlier in these reasons, I indicated that I did not regard this consideration as being fatal to the ACCC case. I accept however, the respondents' submission that this makes it more difficult to be satisfied that the respondents did seek to induce an agreement or understanding which contravened s 44ZZRJ.
402 Finally, I note again that the acknowledgement by Mr Lendich of his contravention does not bind any of the other respondents. Despite the ACCC having reached an agreement with Mr Lendich, it did not seek to adduce any evidence from him in the trial. It is not possible to conclude, on the basis only of the evidence received in the trial, that Mr Lendich had the requisite intention.
403 As already indicated, I consider that the ACCC evidence does establish conduct by the respondents which could constitute an attempt in the requisite sense. However, in my opinion, the ACCC case falls short of establishing that the respondents who participated in the trial had an intention to bring about an arrangement or understanding with the proscribed qualities and that any proposed an arrangement or understanding between producers for the reduction of the supply of eggs. It does establish that these respondents intended that the Attendees should take action to address and correct the oversupply of eggs but not (to the requisite degree of persuasion) that this action should be pursuant to an agreement or understanding involving reciprocal obligations.
404 The ACCC case, as presented and on my findings, was strongest as against AECL and Mr Kellaway. Although I consider that that case has some force, I am not satisfied, to the requisite degree of persuasion, that AECL and Mr Kellaway took the action they did with the intention of inducing Attendees to reach an agreement or understanding for a form of collective action. The case against them fails.
405 Although I regarded a number of the aspects of the evidence of Mr Ironside as unreliable, I am not persuaded that the ACCC has established the attempt by him and IMS which it alleges. It has not established particular conduct of Mr Ironside which would warrant a finding that he had made such an attempt or that he had the requisite intention.
406 I reach the same conclusion with respect to Farm Pride, although in its case, I have made findings about conduct by Mr Lendich at the 19 January Board meeting and at the Summit. I am not satisfied that these findings, by themselves, warrant the finding of the alleged attempt.
407 This conclusion is not inconsistent with the Court acting in due course on the agreement reached between the ACCC and Mr Lendich. In the case against Mr Lendich, the Court can rely on the additional material comprised in his admissions.
408 In these circumstances, it is unnecessary to consider the ACCC submission that conduct constituting an attempt could be constituted, at least in part, by an omission by a respondent to disassociate himself from statements or conduct of another.
409 Having regard to this conclusion, it is not necessary to consider whether conduct of Mr Lendich and Mr Ironside is to be attributed to Farm Pride and IMS respectively. However, in case the matter goes further, I set out in the next section my conclusions concerning the ACCC claim that Mr Bell's conduct should be attributed to Farm Pride. I add that, had it been necessary to do so, I would have found that Mr Lendich's conduct was to be attributed to both AECL and Farm Pride and Mr Ironside's conduct to both AECL and IMS.