Ground 10
97 In Ground 10 the Commission alleged that the trial judge had made 11 errors of fact which it set out in an annexure to its Amended Notice of Appeal.
98 The first was that the trial judge had erred in finding that:
Woolworths and Coles drove the timing and scope of the transition from the supply, by Colgate, Cussons and Unilever of Standard Concentrates to Ultra Concentrates and decided that, once Colgate, Cussons and Unilever began supplying Ultra Concentrates, Woolworths and Coles would cease to stock Standard Concentrates on their shelves for sale to consumers.
99 In its written submissions the Commission accepted that this was the same factual challenge as was dealt with under 'Section E'. Section E of its amended notice of appeal dealt with the Commission's factual challenges by saying they were set out in Annexure A. Consequently, this reference is circular. On the other hand, Section E of the Commission's written submissions dealt with Section D of its amended notice of appeal which does not match up with this factual claim. It appears to us that the Commission intended to refer to Section C of its amended notice of appeal which was dealt with in Section D of its written submissions. We have rejected that argument above.
100 During her oral submissions, senior counsel for the Commission made a series of points outlining its evidence for why this conclusion should not have been reached. However, these submissions did not suggest any particular error on the part of the trial judge. No doubt, the Full Court could set aside this inference drawn by the trial judge if, taking into account the advantages the trial judge enjoyed, it nevertheless had a sufficiently clear difference of opinion such that it could be sure that an error had been made (as explained in Branir and Moroccanoil above at [44]). We do not have such an opinion. The view that Woolworths and Coles drove the process was certainly an open and reasonable one as our summary of the facts above shows.
101 The second finding challenged was that:
[t]he evidence did not support an inference that Cussons, Colgate and Unilever reached an arrangement or understanding containing the Withhold Supply Provisions, or that those manufacturers and Woolworths reached any such arrangement.
102 In its written submissions the Commission said that this finding was also addressed in 'Sections C and D'. Sections C and D of the amended notice of appeal do not relate to this finding. Section C of the written submissions concerns conscious parallelism. It is possible to read this as relating to the finding now challenged. On the other hand, Section D of the written submissions appears to have nothing to do with this finding. Making the assumption that the Commission intended to refer to Section C of its written submissions, we have detected no error in that Section for the reasons we have already given. To the extent that this is an argument that the Full Court should draw the inference the trial judge refused to draw because it had a sufficiently strong difference of opinion, we simply do not have that view. As the summary above shows, the refusal by the trial judge to draw the inference that the Suppliers reached an arrangement or understanding was open to his Honour.
103 If the reference to 'Sections C and D' is to something other than Section C of the written submissions, we do not understand the submission.
104 The third finding challenged was that:
[a]ny arrangement or understanding reached by Cussons, Colgate and Unilever did not arise from, and was not facilitated by, discussions that their representatives had at meetings of the Accord or by information that Cussons, Colgate and Unilever provided to, or received from, Woolworths.
105 In its written submissions, the Commission submitted that the challenge to this finding was to be found in Section E. Section E of its amended notice of appeal is concerned with factual findings and makes the reference circular. Section E of its written submissions is concerned with giving effect to the understanding which has no connection with this finding. Indeed, the trial judge made no findings as to whether the understanding had been given effect to because his Honour found that no such arrangement or understanding was reached. In that circumstance, the Commission has made no submission about this fact and there is nothing for us to address.
106 The fourth finding challenged was:
[t]hat the substantially simultaneous and uniform transition from Standard Concentrates to Ultra Concentrates by Cussons, Colgate and Unilever was explicable for reasons other than an arrangement or understanding between them.
107 This was said to relate to Section D. In fact, it seems reasonably clear that the submission related to the argument it mounted about parallel conduct under Section B of its amended notice of appeal (Ground 4). We have rejected that argument above. If the submission is that this Court should interfere with this inference because it is of a sufficiently clear contrary view, we are not of that view. As the summary above shows, this conclusion was open to the trial judge.
108 The fifth finding challenged was
[t]hat Cussons' receipt of legal advice in relation to a proposal for Cussons, Colgate and Unilever to transition from Standard Concentrates to Ultra Concentrates reduces the likelihood that there was an arrangement or understanding between those manufacturers in relation to that transition.
109 The finding is at [154]:
The Commission criticised Mr Davey and Cussons in relation to this legal advice. It pointed out that the advice was only directed to the Accord proposal, that Mr Davey did not seek general advice about the proposed transition to ultra concentrates, that the advice was not reduced to writing until much later, and that the advice was not distributed to nor understood by "all relevant persons". Those criticisms have no merit and in any event entirely miss the point. While Mr Davey did specifically seek advice about the proposal, it is readily apparent from the written advice subsequently provided that the advice extended well beyond the terms of the proposal. And while Mr Davey initially only relayed the advice to Mr Fatouros, that was no doubt because it was Mr Fatouros who was to attend the first Accord meeting concerning the proposal. Mr Davey's evidence was that the advice was subsequently discussed more generally at Cussons in any event. Mr Davey was also later involved in issuing guidelines to all persons involved in Project Mastermind. The main point, however, is that Mr Davey's actions in obtaining advice revealed a concern that Cussons not enter into any sort of arrangement or understanding that might limit Cussons' ability to compete and might contravene competition laws.
110 This was said to be erroneous for three reasons. First, the trial judge had misinterpreted Mr Davey's evidence. When Mr Davey had said the evidence had been 'discussed more generally' he had not meant that it was discussed in the context of matters more generally. The relevant part of the transcript is at T712.28-29:
So you read the advice, which we will come to in a minute, from Mr Brewster as being limited to the Accord proposal? --- Well, we did - it was discussed more generally, as I referred to the guidelines but it was based on the Accord proposal.
111 Also relevant is T830.3-5:
Sir, the basis of the advice from David Brewster, how that would - we didn't just limit it to any time that someone raised the Accord subject. If other related matters came up, we did discuss the advice from David Brewster.
112 It is not clear to us what this evidence means. The Commission drew attention to paragraphs 44 and 64 of Mr Davey's affidavit:
On 29 April 2008 I met with David Brewster. In relation to whether Cussons could discuss the Proposal at the 30 April meeting, his advice was to the effect that George Fatouros could attend the meeting of Accord directors on 30 April 2008 and engage in discussions regarding the Proposal but that he should not agree or give the impression that Cussons would agree to any aspect of it. Soon after, I spoke with George Fatouros and relayed this advice to him.
…
I spoke with George Fatouros soon after receiving this advice. I said words to the effect that the advice had reinforced my view that the focus of any industry agreement should be on assisting with consumer understanding of ultra concentrates and that Cussons should not agree to the Proposal or the revised version of the Proposal. George Fatouros and I also discussed making sure that Cussons' employees did not have any discussions that could put Cussons at risk of breaching competition laws. Soon after I started preparing the guidelines that I discuss in paragraphs 78 to 80 below.
113 Taken together this evidence is equivocal. We do not think the trial judge is shown to have erred.
114 Secondly, it was submitted that Mr Davey did not distribute the 'Mastermind Guidelines' until 18 September 2018 and that there was no evidence that they were provided to the Cussons' representative who had closest contact with Colgate, Mr Miglioraranza. Assuming that fact in the Commission's favour, it does not establish that it was erroneous for his Honour to conclude that the receipt by Cussons of legal advice about the proposal reduces the likelihood that there was an arrangement or understanding.
115 Thirdly, it was then submitted that the mere fact that a corporation obtains legal advice or has a compliance program which discourages anti-competitive behaviour does not defeat the existence of an arrangement or understanding. The trial judge did not say that it did, however.
116 We therefore reject the challenge to the fifth finding.
117 The sixth finding challenged by the Commission was:
[t]he fact that Unilever and Woolworths undertook a joint study tour to the United States in April/May 2008 at which the role the retailers could play in coordinating an industrywide transition to more concentrated detergent products was irrelevant to determining whether there was an arrangement or understanding between Cussons, Colgate and Unilever.
118 The finding is at [170]-[171]:
During the 2008 Centre of Excellence visit, the Unilever and Woolworths representatives attended a number of different sessions with representatives of Unilever in the United States. Those sessions included a presentation on new health and beauty products, and a briefing in respect of the launch of ultra concentrated laundry products in North America. It would appear that the discussions during those sessions included discussions about the role that Walmart had played in the United States in coordinating the transition to concentrated products in such a way as to avoid consumer confusion.
There was no evidence that Cussons knew anything about this engagement between Unilever and Woolworths. It is difficult to see how this evidence advanced the Commission's case against Cussons in any material way.
119 The Commission submitted that the trial judge had concluded that this evidence was irrelevant and had erred in so concluding. However, his Honour's finding was that Cussons did not know about this (a finding which is not challenged) and it was in that context that his Honour said that could not see how this advanced the Commission's case against Cussons. The Commission submitted that it was relevant because it showed that Unilever and the Commission were aware of how retailers performed a similar role overseas. As we understood the Commission's argument, it was as follows: the evidence disclosed a case that Woolworths and Unilever were sufficiently aware of the role of Walmart that it might be inferred that as between them, there was an understanding that Woolworths would lead the transition just as Walmart had. The second step in the argument was not articulated in the Commission's submissions but it must be that this showed that Unilever had reached, or was more likely to reach, an understanding about the transition with the other Suppliers using Woolworths as the hub. The final step was that having established such a case, this was capable of being relevant against Cussons, for at that point all that was required was for Cussons to have been found to have joined an understanding the existence of which was already arguable as against Unilever (and perhaps Woolworths).
120 We do not read the trial judge as saying that this evidence was irrelevant. We do, however, agree with his Honour that it was difficult to see that this advanced the case against Cussons in any material way. The second step, in particular, is very thin. Showing that Unilever had the knowledge that such an arrangement had been put in place in the United States, is a long way from showing that it reached such an understanding with the other Suppliers.
121 The seventh finding challenged by the Commission was that:
[c]ommunications between manufacturers other than Cussons do not bear upon the question of whether an arrangement or understanding existed between Cussons, Colgate and Unilever.
122 The impugned finding is at [196]-[198]:
On 4 July 2008, Mr Ansell of Colgate had a telephone conversation with Mr Campbell of Unilever. This was one of the Commission's pleaded communications …
Mr Campbell's evidence was that Mr Ansell had called his mobile phone earlier in the day and that he called Mr Ansell back later in the day. At some stage during the conversation, Mr Campbell said: "Where are you guys at with the launch of concentrated powders next year? We are hearing from Woolworths that we are dragging the chain and that everyone else is ready to go at the end of January". Mr Ansell said in reply: "We would prefer a February launch as we would have everything ready by then, but we could go with a January launch, it just wouldn't be as complete as we would like it". Mr Campbell then said: "Well, we'll have the conversation with them. Our preference is later rather than earlier and that is what we will try and push for".
Mr Campbell's evidence was that in this discussion with Mr Ansell he was seeking to obtain reliable information that would assist Unilever about how best to advance the transition to ultra concentrated detergents. He did not suggest that his purpose was to facilitate or make an arrangement or understanding with Colgate. In any event, while it is perhaps not difficult to see why this communication might be significant in any case against Colgate, and perhaps Unilever, it is not so easy to see its probative value in the Commission's case against Cussons.
123 The submission here was similar to that in relation to the sixth challenged finding. If it could be found that Colgate and Unilever had reached an arrangement, it was more likely that it could be shown that Cussons was a party to it. That may be so, but that becomes very difficult when it is shown that the putative conspirator is unaware of the primary conspiracy. We accept, however, that it is not impossible. The difficulty is that the trial judge did not say that it was. His Honour just thought that it was not easy to see its probative value in the case against Cussons. We do not think that in context this involved error.
124 The eighth finding challenged was that:
[t]here was uncertainty within each of Cussons, Colgate and Unilever as to each other's plans to transition from Standard Concentrates to Ultra Concentrates, which uncertainty supports a finding that there was no arrangement or understanding between them.
125 This was said to be outlined in Section C. Neither Section C of the amended notice of appeal (the role of Woolworths and Coles) nor of the Commission's written submissions (conscious parallelism) deal with this fact. Counsel for the Commission touched on this fact at the hearing describing it as a global finding challenged by the Commission. That submission was that a finding of uncertainty did not logically support a finding that there was no arrangement or understanding. But uncertainty could assist in showing that there was no arrangement without any want of logic. Increased uncertainty decreased the likelihood of the arrangement existing. This finding did not involve error.
126 The ninth finding challenged by the Commission was that:
[b]y November 2008, Cussons, Colgate and Unilever's plans to transition from Standard Concentrates to Ultra Concentrates were finalised, such that communications from that time do not bear upon whether there was an arrangement or understanding.
127 The Commission submitted that this error was to be found at [352], [359], [368], [505] and [506]:
352 The communications which occurred in November 2008 tend to suggest that the Suppliers' transition plans were effectively finalised and that the retailers, both Woolworths and Coles, had clearly communicated to the Suppliers that their new ultra concentrated brands were to be launched as part of the retailers major review which had been moved from February 2009 to March 2009.
…
359 It is readily apparent that, by that time at least, Cussons' transition plans were effectively set in stone.
…
368 It is difficult to see how any of the meetings and communications that occurred in January 2009 and thereafter could bear significantly, or at all, on the question whether Cussons was a party to any arrangement or understanding with Colgate and Unilever. That is because the Suppliers' plans were effectively finalised: they had commenced production of their new 2x ultra concentrates, must have finalised details concerning the packaging sizes and communications, and were working towards Woolworths' and Coles' launch dates in March 2009.
…
505 There is considerable force in Cussons' submissions in that regard. The evidence does not support a finding that Cussons was only irreversibly bound from 22 January 2009. As Cussons pointed out, preparations for the transition were significantly advanced well before that date. So much is clear from the fact that some of Cussons' ultra concentrated products were on Woolworths' shelves approximately three weeks later. The Commission's submission ignored the commercial reality that from mid-2008 onwards Cussons was highly invested in preparing for the transition to ultra concentrates, and would not lightly have abandoned its plans. However, that does not necessarily mean that Cussons plans were "irreversible". It was theoretically possible that if Cussons had learned that one or both of the other Suppliers suddenly deferred or abandoned their plans to transition in late 2008, that information may have caused Cussons to reconsider or change its plans. Nevertheless, the communications between the Suppliers and Woolworths from mid-2008 onwards should be considered in light of the fact that the key decisions in respect of Cussons' transition to ultra concentrated detergents had been made by September 2008.
506 In any event, it is clear from the terms of most of the communications between Cussons and Woolworths between October 2008 and February 2009 that they concerned details relating to final planning and implementation of Woolworths' launch of ultra concentrates in March 2009. They did not evidence the formation or existence of any arrangement or understanding between Cussons and the other Suppliers.
128 The best of these for the Commission is [368]. The Commission's position was that subsequent communications could be probative of the Withhold Supply Arrangement and this could be so even if the communications post-dated the time at which the Suppliers had finalised their transition plans.
129 We do not read the trial judge's reasons as the Commission submitted. His Honour did not say that such communications were irrelevant, but rather that they were of little or no weight. His Honour was indicating that he thought that the capacity of the subsequent communications to make good the Withhold Supply Arrangement was very greatly degraded when the Suppliers had already 'effectively finalised' their plans and had commenced manufacture. But that statement must be seen in context which includes the fact that his Honour was quite unpersuaded on the evidence up to December 2008 that the Withhold Supply Arrangement had then been reached. The Commission is correct, in theory, that communications subsequent to the finalisation of the Suppliers' plans could provide corroborative support for the existence of the Withhold Supply Arrangement. However, this proposition becomes more problematic in circumstances where the trial judge concluded that at no point prior to the finalisation of the Suppliers' plan had an arrangement been reached. For, on that hypothesis, there was nothing for the subsequent communications to corroborate, hence the finding as to weight.
130 In any event, it is apparent that his Honour was cognisant of the subsequent communications because he made findings about them at [369]-[371]. This finding did not involve error.
131 The tenth finding challenged by the Commission was that:
[i]f any collusive arrangement or understanding had been reached by Cussons, Mr Davey and Mr Wilson would have been aware of it.
132 This is said to relate to [549] and [561]:
That is an important consideration in all the circumstances. Given Mr Davey's position and involvement in aspects of Project Mastermind, including the Accord meetings, if any collusive arrangement or understanding with Unilever and Colgate was made, arrived at or existed, it is difficult to imagine that Mr Davey would not have been aware of it.
…
Nothing that was put to Mr Wilson in cross-examination, and none of the evidence that he gave, suggested in any way that he was involved in or had any knowledge of the existence of any arrangement or understanding along the lines of the alleged Withhold Supply Arrangement. As was the case with Mr Davey, that is of some significance. If any collusive arrangement or understanding with Unilever and Colgate was entered, arrived at or existed, it is difficult to imagine that Mr Wilson would not have been aware of it.
133 We reject this submission. As Cussons pointed out in its submissions, the Commission in fact alleged that Mr Davey and Mr Wilson made the arrangement on Cussons' behalf. It was not coherent to suggest that they could have made the arrangement on Cussons' behalf unknowingly. The Commission also said that this submission was dealt with in 'Section C'. Neither Section C of the amended notice of appeal nor of the Commission's written submissions deal with this fact.
134 The eleventh finding challenged by the Commission was that:
[t]he supplies of Ultra Concentrates that were made prior to March 2009 by Cussons, Colgate and Unilever were material and on a scale inconsistent with an arrangement or understanding.
135 This is said to relate to Section E. This makes no sense whether it is construed as a reference to Section E of the amended notice of appeal, which dealt with these factual contentions so as to make this reference circular, or to Section E of the Commission's written submissions, which dealt with giving effect to the Withhold Supply Arrangement. We therefore disregard the Commission's written submissions on this finding. However, the Commission made submissions about the matter at the hearing of appeal. The relevant paragraphs of the trial judge's reasons are [606] and [632]:
The Commission contended that the supplies of ultra concentrates that occurred before the supposedly agreed transition date of March 2009 were so small or disparate to be immaterial. That submission is rejected. The supplies were of a size and scale that was inconsistent with the existence of any arrangement or understanding including provisions of the sort alleged by the Commission.
…
Finally, it should be noted that, contrary to the Commission's submissions, Cussons did continue to sell some standard concentrates to Metcash after March 2009. The evidence in that regard was discussed earlier in the context of the detailed factual chronology. While the number and nature of those supplies was fairly limited, they were nonetheless inconsistent with the existence of the third of the Withhold Supply Provisions.
136 The Commission developed the submission this way. One of Cussons' witnesses, Mr Messina, had given evidence that some ultra-concentrate products were sold by Woolworths before March 2009. He did this by reference to a spreadsheet which set out the number of stock keeping units sold of ultra-concentrates sold from Woolworths, Coles and Metcash distribution points (i.e. loosely, stores) between 1 February 2009 and 26 April 2009. The Commission submitted that this spreadsheet showed that substantial numbers had really only been distributed in the last week of February 2009. Consequently, it was wrong of his Honour to say that these supplies were inconsistent with the existence of the Withhold Supply Arrangement.
137 But the fact is that the supplies which occurred in the last week of February were substantial and are inconsistent with the existence of an arrangement or understanding to commence supplies in March. The Commission's submission in substance is that the evidence was not very inconsistent with its case. From such a submission, however, error cannot be distilled. The trial judge set the evidence out in detail and characterised it in terms which are not wrong. We reject the Commission's submission.