Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd

TRADE PRACTICES ACT 1974 - SECTION 87B Undertaking Person giving Undertaking:

This undertaking is given to the Australian Competition and Consumer Commission (ACCC) by Bristile Operations Pty Ltd (ACN 079 711 603) (Bristile) under section 87B of the Trade Practices Act 1974 (TPA). Background 1. On 27 June 2003 the ACCC instituted proceedings in the Federal Court against Bristile and others (W143 of 2003). 2. On 31 May 2004, the Federal Court found, by consent, that: . Bristile had contravened section 45(2) of the Act by making an arrangement or arriving at an understanding in about October and November 2001 with Midland Brick Company Pty Ltd ('Midland') that contained a provision that Bristile and Midland fix, control, or maintain prices for clay brick products supplied by Bristile and Midland to trade builders from in or about October 2001 and to major builders from in or about January 2002; and . Bristile had contravened section 45(2) of the Act by making an arrangement or arriving at an understanding in or about October 2001 with Midland that contained a provision that Bristile and Midland fix, control or maintain a price of $570 per thousand bricks for "Maxibrick" and "Verticore" clay bricks supplied to major builders by Midland and Bristile respectively. 3. On 9 June 2004, His Honour Justice Lee of the Federal Court made orders in the proceedings, including a probation order pursuant to section 86C of the TPA that, within 90 days of the making of the order, Bristile: …establish, and maintain for a period of three years thereafter, a compliance program and atraining and education program for employees and other persons involved in the second respondent's business of manufacture and supply of clay brick products in the State of Western Australia, being programs designed to ensure their awareness of the responsibilities and obligations in relation to the contravening conduct of Bristile set out in [paragraph 1 above], similar conduct or related conduct. 4. This undertaking sets out elements of the abovementioned probation order, and is provided, at the suggestion of His Honour Justice Lee, as an ancillary provision to that order. It is accepted by the ACCC in connection with a matter in relation to which the ACCC has a power or function under the TPA. Undertakings by Bristile 1. Prior to the implementation of the compliance program, and the training and education program Bristile will ensure the programs are approved by a firm of solicitors or compliance professionals with expertise in trade practices law. 2. Bristile shall, at its own expense, cause an audit of the Compliance Program to be undertaken annually from the date of implementation of the program for a period of three (3) years with a view to identifying deficiencies and implementing improvements to the Compliance Program (Audits). The Audits shall be performed by a firm of solicitors or compliance professionals with expertise in trade practices law that is acceptable to, and approved in writing by, the ACCC (the Auditor). The findings in relation to each of the Audits are set out in a written report to be provided to Bristile by the Auditor (Reports). 3. Bristile shall, at it own expense, cause to be produced and provided to the ACCC copies of each of the Reports, within ten (10) days of Bristile receiving them. Should any of the Reports identifying significant deficiencies in the Compliance Program, Bristile will make such alterations to the Compliance Program as are reasonably necessary within twenty eight (28) days of receiving the Reports. Such alterations and their implementation are to be notified to the ACCC within ten (10) days of implementation. Commencement of undertaking This undertaking by Bristile comes into effect when: 1. Bristile execute this undertaking; and 2. the Commission accepts the executed undertaking. Acknowledgments Bristile acknowledges and accepts that: (a) the ACCC may make this undertaking available for public inspection including by placing it on a register, publishing it and allowing third parties to publish it, and that the ACCC may from time to time publicly refer to this undertaking, including by way of media release; (b) this undertaking in no way derogates from the rights and remedies which may be available to any other person arising from the alleged conduct. IN WITNESS of these undertakings and its agreement the common seal of Bristile Operations Pty Ltd (ACN 079 711 603) was affixed by authority of the Board of Directors in the presence of: ……………………………. ……………………………. Director Director This day of June 2004

ACCEPTED BY THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION PURSUANT TO SECTION 87B OF THE TRADE PRACTICES ACT 1974 ……………………………. (Graeme Julian Samuel) Chairman This day of June 2004

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

AND: MIDLAND BRICK COMPANY PTY LTD (ACN 008 672 244)

LEE J: 1 In this matter the applicant ("the ACCC") commenced a proceeding under the Trade Practices Act 1974 (Cth) ("the Act") seeking, inter alia,declarations and injunctions against the respondents in respect of conduct said to contravene the Act, alleged to have been engaged in by the first respondent ("Midland") and the second respondent ("Bristile"), the conduct of Bristile said to be conduct in which the third respondent ("Scott") was knowingly concerned. 2 The statement of claim recited that Midland and Bristile manufacture and supply clay brick products in Western Australia. It was alleged that between September 2001 and December 2001 Midland and Bristile made arrangements, or arrived at understandings, that had the purpose, effect or likely effect, of fixing, controlling or maintaining the price of certain clay brick products manufactured and supplied by Midland and Bristile. Section 45A of the Act states that such conduct is deemed to have the purpose, effect or likely effect, of substantially lessening competition and, therefore, it was alleged by that conduct Midland and Bristile each contravened s 45(2)(a)(ii) of the Act. It was also alleged that Midland gave effect to an arrangement or understanding and thereby contravened s 45(2)(b)(ii) of the Act. 3 A summary of relevant facts set out in statements of agreed facts is as follows. 4 At the time of the said conduct the revenue produced from sales of clay brick products in Western Australia was estimated to be between $119 million and $130 million per annum of which Midland received approximately 55% and Bristile approximately 45%. The two manufacturers constituted, in effect, a duopoly in the relevant market. Midland and Bristile segmented their customers into retail customers, trade builders, and major builders and applied differential prices to each segment. 5 Between May 2001 and June 2001, Midland and Bristile, acting independently, resolved to increase by approximately 3% the price each charged for clay brick products. Each gave notice that the increase would be implemented for retail customers from 1 July 2001; for trade builders from 1 October 2001; and for major builders from 1 January 2002. By newspaper advertisements, letters and personal contacts Midland and Bristile informed their customers, the general public and each other of the new prices and the dates of introduction thereof. 6 Between September 2001 and December 2001 a series of meetings and conversations took place between the Divisional General Manager of Midland ("Arndt") and Scott as General Manager, Marketing and Sales of Bristile. It was not in issue that the acts of Arndt and Scott constituted conduct by Midland and Bristile respectively. 7 At these meetings the prices to be charged by Midland and Bristile to trade builders and major builders were discussed and the outcome was that Arndt and Scott committed Midland and Bristile to implement and maintain the proposed price increases. They agreed that each would inform the other of any instance of which they became aware that Midland or Bristile had offered discounts or had failed to implement the increased prices. That is to say, neither Midland nor Bristile would seek to gain customers by offering to supply clay brick products to trade builders or major builders at prices below the fixed price. In addition, as a result of those meetings, Arndt and Scott committed Midland and Bristile to supply particular clay brick products, namely the "Maxibrick" manufactured by Midland and the "Verticore" manufactured by Bristile, to major builders at a price not below $570 per one thousand bricks ("the Maxibrick/Verticore price arrangement"). 8 On 23 October 2001 Arndt instructed the relevant officer at Midland not to supply Maxibricks to major builders at a price below $570 per one thousand bricks without "clearing it" with Arndt and from October/November 2001 to January 2002, Midland gave effect to the Maxibrick/Verticore price arrangement. 9 The Court was informed that the ACCC did not receive a complaint from customers of Midland or Bristile and was unaware of the foregoing conduct until January 2002 when the Managing Director of the parent company of Midland informed the ACCC that possible contraventions of the Act had occurred by reason of the conduct of Midland. Thereafter Midland cooperated with the ACCC and, in particular, Arndt provided a written statement which set out in full his participation in the foregoing conduct. The ACCC commenced this proceeding on 27 June 2003. The ACCC decided that by reason of the cooperation of Arndt and the importance of his evidence to the ACCC case that Arndt not be joined as a respondent. 10 On 30 June 2003 the ACCC published its "Leniency Policy for Cartel Conduct" pursuant to which the ACCC announced that it would seek lesser penalties against corporations or individuals providing assistance and cooperation in the identification and prosecution of conduct by cartels that contravened the Act. In July 2003 Midland agreed to file a defence admitting contravention of the Act and the ACCC agreed to withdraw its application for the imposition of a pecuniary penalty against Midland. In due course Midland filed a defence which admitted salient pleadings in the statement of claim. Meanwhile, Bristile admitted relevant facts but denied that they had the consequence in law contended for by the ACCC and filed a defence accordingly. Subsequently, in December 2003, Bristile reached accord with the ACCC in which it admitted contravention of the Act and agreed that a statement of agreed facts and a joint submission on penalty be placed before the Court. Bristile agreed to seek leave to amend its defence to make full admissions. 11 Scott cooperated with the ACCC and voluntarily supplied a detailed written statement in respect of his conduct. Scott filed a defence admitting the relevant facts and later reached accord with the ACCC consenting to orders being made against him. Scott also agreed to seek leave to amend his defence to include further admissions as required. 12 I am satisfied by the statements of agreed facts filed that by reason of the acts of Arndt and Scott, Midland and Bristile are persons to whom ss 76(1)(a) and 80(1)(a) of the Act apply being persons who: (a) engaged in conduct which contravened s 45(2)(a)(ii) of the Act by making an arrangement, or arriving at an understanding, in October and November 2001 that contained a provision that fixed, controlled or maintained the price of clay brick products manufactured by Midland and Bristile and supplied to trade builders from about 1 October 2001, and to some major builders from about 1 January 2002; (b) engaged in conduct which contravened s 45(2)(a)(ii) of the Act by making an arrangement, or arriving at an understanding, in October and November 2001 that contained a provision that fixed, controlled or maintained the price of the "Maxibrick" clay brick manufactured by Midland and the "Verticore" clay brick manufactured by Bristile at $570 per 1000 bricks when supplied to some major builders. 13 I am also satisfied that between about November 2001 and January 2002 Midland gave effect to the latter arrangement or understanding and thereby contravened s 45(2)(b)(ii) of the Act. 14 With regard to Scott I am satisfied by the facts agreed that he is a person to whom s 76(1)(e) and s 80(1)(e) of the Act apply being a person who was knowingly concerned in the foregoing contraventions of the Act by Bristile. Consent Orders 15 The temptation will always be present for major participants in a market to engage in "cartel conduct" to suppress competition and maximise revenue. Such conduct will be covert and hard to detect and allegations that corporations have engaged in such conduct will be difficult to prove. Accordingly, it can be understood why the ACCC has developed and published a policy to encourage disclosure of conduct that contravenes the Act in return for more lenient enforcement of the Act against the disclosing party. Similarly it can be understood why parties to enforcement proceedings commenced by the ACCC may see some advantage in having such proceedings finalised by consent orders. 16 Notwithstanding that in such proceedings the parties may inform the Court that they consent to particular orders being made, it remains the responsibility of the Court to determine that the orders made by the Court are the appropriate orders in all the circumstances. At the same time the Court will give due regard to the obvious public interest in the preservation of resources and the more efficient use of Court time that may flow from accords reached by the parties that obviate the need for a lengthy trial and for judicial time to be spent on preparation of detailed reasons for judgment. 17 As stated in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 (at [77]): 'The position of the Court where prosecution and defence agree on the appropriate sentence, as laid down in R v Gallagher, has similarities to the position where regulator and contravenor jointly submit that a particular penalty should be imposed in a civil penalty case. Just as the criminal court will take into account the prosecution´s views on the appropriate sentence, so the court in the civil penalty case, as NW Frozen Foods explained, will take account of the regulator´s position. But in neither case is the court relieved from the responsibility of exercising its own judgment as to the appropriate sentence (in criminal cases), or whether the proposed penalty is within the appropriate range for the contravention (in civil penalty cases). In each case, the Court should be satisfied that it is being given accurate, reliable and complete information on critical questions.' 18 With the foregoing in mind I turn now to the particular orders proposed in the agreements made between the parties.

Declarations 19 The parties severally have agreed that declarations be made that Midland and Bristile contravened the Act and that Scott was knowingly concerned in the contraventions committed by Bristile. 20 On one view it may be thought to be unnecessary that there be orders declaring contraventions of the Act to have occurred when substantive orders are made by way of injunction or the imposition of pecuniary penalties based on the findings of such contraventions set out in the accompanying reasons. On the foregoing view such declaratory orders serve no additional purpose. That point of view has been set out in detail, and the relevant authorities reviewed, by Gray J in Australian Competition and Consumer Commission v Francis [2004] FCA 487 (at [92]-[119]). (See also: Warramunda Village Inc v Pryde (2001) 105 FCR 437 at [8]; Commonwealth of Australia v Evans [2004] FCA 654 per Branson J at [57]-[61]; Warramunda Village Inc v Pryde (2002) 116 FCR 58 per Finkelstein J at [46], [64]-[80]). 21 However, on the other hand it may be said that there is some utility in declaring contraventions of the Act to have occurred in order to define and publicize the type of conduct that constitutes a contravention of the Act and to set out clearly the foundation on which the consequential orders by way of injunction and pecuniary penalty, including those based on accessorial liability, are grounded. (See: Rural Press Limited v Australian Competition and Consumer Commission (2003) 203 ALR 217 per Gummow, Hayne, Heydon JJ at [95]; RAIA Insurance Brokers Limited v FAI Insurance Co Limited (1993) 41 FCR 164 per Davies J at 167, Beaumont, Spender JJ at 175‑178). 22 The object of orders made under s 76, or s 80, of the Act is to protect the integrity of markets and to prevent the subversion and distortion thereof by conduct that has the purpose or effect of adversely affecting competition. The Act sets out the norms to be met by corporations engaged in trade or commerce and in the main seeks to obtain adherence to those standards by providing for penalties to be imposed, and injunctions to be granted, that will be sufficient to deter corporations from risking, whether deliberately or negligently, the consequence of contravening the Act. Therefore it may follow that the foregoing purpose of deterrence will be served by declarations that set out particulars of contraventions of the Act. In the instant case I am satisfied that declarations should be made, albeit in a form different from that proposed by the parties having particular regard to the comments made in Rural Press by Gummow, Hayne, Heydon JJ at [89]-[90], [95].

Pecuniary penalties 23 Section 76 states that the Court may order a person to pay a pecuniary penalty in respect of each act or omission to which s 76 applies "as the Court determines to be appropriate having regard to all relevant matters including the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission, the circumstances in which the act or omission took place and whether the person has previously been found by the Court in proceedings under this Part...to have engaged in any similar conduct." 24 The statement by Smithers J in Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40-091 at 17,896 as to the manner of assessment of an appropriate penalty under the Act remains relevant today: 'The penalty should constitute a real punishment proportionate to the deliberation with which the defendant contravened the provisions of the Act. It should be sufficiently high to have a deterrent quality, and it should be kept in mind that the Act operates in a commercial environment where deterrence of those minded to contravene its provisions is not likely to be achieved by penalties which are not realistic. It should reflect the will of Parliament that the commercial standards laid down in the Act must be observed, but not be so high as to be oppressive.' 25 The principles to be applied under s 76 were considered in J McPhee & Son (Aust) Pty Ltd v Australian Competition and Consumer Commission (2000) ATPR 41-758 at [150]‑[170]. In that case their Honours said, (at [163]), that among the matters relevant to the imposition of a penalty under s 76 of the Act is whether the relevant conduct was "systematic, deliberate or covert". 26 As noted above, no penalty is sought against Midland in respect of its contraventions of the Act. With regard to Bristile the relevant parties have agreed that the appropriate penalty to be imposed is the amount of $1,000,000. Under s 76(1A)(b) of the Act the maximum penalty that may be imposed on a corporation is $10,000,000. That amount has stood since January 1993. 27 Pursuant to s 76(3) of the Act a person is not liable to pay more than one pecuniary penalty in respect of the same conduct. The two contraventions of s 45(2)(a)(ii) of the Act committed by Bristile arose out of a single course of conduct and the restriction imposed by s 76(3) should be taken to apply to that conduct. (See: McPhee at [180] - [183]). 28 The conduct by Midland and Bristile involved substantial corporations taking advantage of a duopoly to engage in price maintenance in breach of well-known and long-standing provisions of the Act. The high capital cost facing a potential brick manufacturer seeking to enter the market served to protect Midland and Bristile from the chastening effect of further competition and no doubt that fact contributed to the conduct engaged in by Midland and Bristile. Furthermore, it was unlikely that the foregoing conduct would have been uncovered without the volunteered admissions. Obviously, after making due allowance for any mitigating factors, the penalty must be sufficient to stand as a clear warning to other corporations that significant financial disadvantage and opprobrium will follow if a corporation engages in such conduct. 29 With regard to loss or damage suffered as a result of the conduct, no direct evidence in that regard was placed before the Court. It may be inferred that the conduct that contravened the Act had the potential to cause loss or damage but the only arrangement or understanding given effect was the Maxibrick/Verticore price arrangement in respect of Maxibricks supplied by Midland to major builders over a short period of several months. There is no material that justifies inclusion in the penalty imposed on Bristile any substantial component for the foregoing aspect. 30 Similarly, Bristile is not a person found by the Court "to have engaged in any similar conduct" and no component can be added to the penalty on that account. 31 I am satisfied that although Bristile, on legal advice, denied that it had contravened the Act, it cooperated with the inquiry undertaken by the ACCC at an early stage and was prepared to make admissions that reduced significantly the public cost that would otherwise have been incurred had Bristile taken the position that the ACCC had to prove the case against it. As a result of the inquiry into Bristile's conduct undertaken by the ACCC, Bristile has implemented a trade practices compliance program for its staff and has issued a trade practices compliance manual. 32 In all the circumstances I am satisfied that the proposed pecuniary penalty meets the expectations of the Act and is an appropriate penalty for the Court to impose. 33 With regard to Scott the proposed pecuniary penalty is the amount of $50,000. 34 First it should be noted that although Scott was separately represented by experienced solicitors and counsel, the fact remains that in the matter of admissions and acquiescence in the imposition of penalties proposed by a regulator possessing significant statutory powers, an individual is not in the same position as a substantial corporation in the conduct of discussions in that regard and may be overborne by considerations relating to his employment. (See: Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited [2001] FCA 383 per Finkelstein J at [5]). 35 Although Scott held the position of General Manager, Marketing and Sales for the clay brick trading division of Bristile in the State, there were six other general managers of equal rank employed by Bristile elsewhere and Scott was subordinate to two other officers within the State. According to the statements of agreed facts the meetings between Arndt and Scott took place at Midland's premises and in Arndt's office. The account of the conversations between them suggest that often Scott was following rather than leading in reaching the arrangements or understandings that constituted the contraventions of the Act. 36 Although Arndt cooperated with the ACCC at the outset it may be assumed that he was directed to do so by the Managing Director of the parent company of Midland who reported Midland's conduct to the ACCC. The fact that Arndt is not a respondent to the proceeding and, therefore, no penalty or orders are sought against him should not be taken to reflect a judgment by the ACCC that his actions were less culpable than those of Scott. The Court was informed from the bar table that Arndt is no longer employed by Midland. The Court was not told of the terms of severance. 37 Scott has continued in his position with Bristile but no doubt this proceeding has affected his future employment prospects. To some extent Scott was disadvantaged by the failure of Bristile to have instituted an appropriate training and education program for senior management in respect of the requirements and obligations of the Act, notwithstanding that he was obliged to seek better instruction, at least when appointed to the position of General Manager, Marketing and Sales. 38 Before determining the appropriate level of penalty to be imposed on a natural person the Court must have regard to the particular circumstances of that person and of the capacity to pay. The Court was informed that Scott has four children and four step-children, some of whom remain dependent or partly dependent upon Scott and his wife. No doubt the imposition of a penalty, whatever the amount, will impact adversely not only upon Scott but also on persons other than Scott. 39 The ACCC concedes that the $50,000 is a significant penalty to impose and is not at the bottom end of the available range. I am of the view that in the circumstances it would be excessive. As noted above, Scott cooperated fully at an early stage of the ACCC inquiry and it is not submitted that his conduct was able to be distinguished from that of Arndt. 40 An appropriate comparator is provided in the matter of Australian Competition and Consumer Commission v FFE Building Services Limited [2003] FCA 1542 in which the total penalty imposed upon the corporation for four blatant contraventions of s 45 of the Act was $3.5 million. As in this case a substantial trading corporation was involved. The penalty imposed on the State Manager of the corporation whose conduct occasioned one of the four contraventions was $50,000. The conduct of that officer was patently in breach of the Act and no mitigating circumstance could be advanced. The other three contraventions by the corporation were caused by acts of lesser officers of the corporation against whom no pecuniary penalty was sought. It may be assumed that the State Manager bore responsibility for the acts of those officers. 41 I note also that in Australian Competition and Consumer Commissioner v Chaste Corporation Pty Ltd [2004] FCA 398, a case in which a senior officer of a corporation was knowingly concerned in an extended contravention of s 45 of the Act constituted by a flagrant scheme of price maintenance over a period of 10 months, the pecuniary penalty imposed on that officer and accepted as appropriate was $25,000. In that case his Honour noted that the penalty took into account that the officer had cooperated with the ACCC after the proceeding was commenced. 42 Although in the latter case the corporation involved was not of the same size and substance as Bristile, I am satisfied that in all the circumstances of this case the appropriate pecuniary penalty to be imposed on Scott is $25,000 and I will so order.

Injunctions 43 It is not submitted that the circumstances of this case suggest that Bristile threatens or intends to repeat contraventions of the Act. In that regard, at law, the grant of an injunction would not ordinarily follow. However, s 80 of the Act is a statutory determination of the circumstances in which such orders may issue and, in particular, it is a sufficient circumstance under s 80(1) that a person has engaged previously in conduct of the kind sought to be enjoined. Although enlarging the grounds on which an injunction may issue at the same time the words of subss 80(4), (5) remain words of limitation and no injunction may issue in respect of conduct that does not have the relationship required by s 80 with a contravention of the Act described in s 80(1)(a)-(f). (See: Rural Press per Gummow, Hayne, Heydon JJ at [91]; ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 per Gummow J at 267; Thomson Australia Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150). 44 The comments made by Gummow, Hayne, Heydon JJ in Rural Press, (at [91]), adopt remarks made by Gummow J in ICI Australia, (at 267), and make it plain that s 80 is not to be read as permitting injunctions to be made that have other than a direct relationship with a contravention of the Act found to have occurred. The terms of the injunctions made by the trial judge in Rural Press, which their Honours considered to be impermissible, are set out in Australian Competition and Consumer Commission v Rural Press Limited (No 4) [2001] FCA 381. It can be seen that they were more confined in operation than the orders proposed in this matter. It follows that any order by way of injunction must remain within the scope of the Act and relate directly to the contraventions that Midland and Bristile have been found to have committed. Provisions of broader effect than that will be excised from the proposed orders. Similarly, with regard to Scott the injunction ordered should be limited to provisions that have sufficient relationship with the provision of the Act that subjects Scott to liability to penalty under the Act. Accordingly appropriate excisions will be made to the proposed injunction directed to Scott. 45 The parties have agreed that the proposed injunctions run for a period of five years. Given that the Act limits the terms of a "probation order" made under s 86C(2)(b) of the Act (to ensure that for a period of not more than three years a person does not engage in the contravening conduct again) it may be thought that an injunction restraining a party for a period of five years is at the outer limit of what may be said to be "appropriate" for the purpose of s 80(1). 46 However, the purpose of an injunction under s 80 is not only to instruct and restrain a person who has contravened the Act, or has been knowingly concerned in such a contravention, but also to form part of a scheme of deterrence by which the Act instils understanding in persons engaged in trade or commerce of the need to comply with terms of the Act that seek to provide for fair dealing by corporations and true competition in markets. 47 In the circumstances a period of five years for the injunctions may be accepted as appropriate.

Compliance Program 48 Pursuant to s 86C, which came into effect on 26 July 2001, the Court may make a "probation order" in relation to a person who has engaged in conduct which contravened, inter alia, s 45(2). A "probation order" is defined in s 86C(4) as an order that is made for the purpose of ensuring that the person does not engage in the contravening conduct, similar conduct or related conduct during the period of the order. As noted above the period of the order cannot be more than three years. 49 Section 86C(4) provides that the order may include the following: '(a) an order directing the person to establish a compliance program for employees or other persons involved in the person's business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to the contravening conduct, similar conduct or related conduct; and (b) an order directing the person to establish an education and training program for employees or other persons involved in the person's business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to the contravening conduct, similar conduct or related conduct; and (c) an order directing the person to revise the internal operations of the person's business which lead to the person engaging in the contravening conduct.' 50 The terms of the "probation order" proposed to be made against Bristile exceed the form of "probation order" provided for in s 86C. Section 86C does not empower the Court to order a person to instruct solicitors or other experts to "audit" a program nor to obtain and deliver to the ACCC "audit reports". 51 The foregoing elements, however, may be matters included in an undertaking provided by a person to the ACCC under s 87B(1) of the Act "in connection with a matter". If a breach of such an undertaking were alleged, the ACCC may make application to this Court under s 87B(4) of the Act to enforce the undertaking. 52 I note that in Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 French J, (at [24]), acknowledged that in respect of a "probation order" made under s 86C it may not be practicable "to prescribe with minute particularity the content of (a compliance program)". Although in that case his Honour accepted the terms of the "probation order" proposed by the parties that order was not as detailed as the order proposed in this case and I am not satisfied that it is either appropriate, or within power, for the Court to make the order suggested in the minute presented to the Court. The "probation order", therefore will be varied to reflect the terms of order considered to be appropriate. Costs 53 The respective parties have agreed the amounts of costs to be paid by Midland and Bristile and orders will be made accordingly.

Summary 54 To allow the ACCC and Bristile to settle the terms of the appropriate undertaking to be provided by Bristile as an ancillary provision to the "probation order" to be made by the Court orders pursuant to these reasons will not be made until the parties advise the Court that orders are to be entered in the terms of the minute attached to these reasons.

I certify that the preceding fifty four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.

Counsel for the Applicant: S Owen-Conway QC

Solicitor for the Applicant: Australian Government Solicitor

Solicitor for the Respondent: Blake Dawson Waldron

Counsel for the Third Respondent: C G Colvin SC

Date of Hearing: 17 March 2004

Date of Judgment: 31 May 2004 Date of Orders: 9 June 2004