Mr Osada and the evidence concerning the A/R Cartel Agreement and the Snowy Hydro Project Agreement
44 Mr Osada's evidence-in-chief was directed to three main topics, being the operations of the A/R Cartel Agreement, the making of the Snowy Hydro Project Agreement, and three other projects in Australia in which the participants in the A/R Cartel Agreement were involved.
45 In his position at JPS of Specialist between 2001 and 2004 or 2005, Mr Osada reported to one of two group managers and those group managers, in turn, reported to the general manager of JPS who, at the relevant times, was a Mr Joji Yamaguchi. Mr Osada said that he was responsible for a specific geographic sales area which did not include Australia and that he did not have direct contact or dealings with customers in Australia. He said that after he became Group Manager at JPS in 2004 or 2005, he was directly involved in dealing with customers in Australia and that, from time to time, he travelled to Australia.
46 After Mr Osada had taken up his position with JPS in 2001, he began assisting Mr Yamaguchi with certain arrangements which JPS had with its competitors. Between 2001 and 2004, Mr Osada, on behalf of JPS, communicated with major competitors of JPS about the supply of high voltage (and in the case of land cables extra high voltage) land and submarine cables in various countries, including Australia (but not including the United States of America).
47 The competitors with whom Mr Osada communicated with were as follows:
(1) two Japanese companies, being Viscas and Exsym; and
(2) two European companies, being Prysmian (previously known as Pirelli) and Nexans.
48 Viscas, Prysmian and Nexans supplied both land and submarine cables. Exsym supplied mainly land cables and not submarine cables. Mr Osada referred to these companies, including JPS, as the "participants" and he referred to JPS, Viscas and Exsym as the Japanese participants, and Nexans and Prysmian as the European participants.
49 Before proceeding further, the following matter should be noted. I think that it was established in the cross-examination of Mr Osada that he acted as Mr Yamaguchi's assistant, rather than independently. In other words, he was acting under Mr Yamaguchi's direction. Ultimately, I do not think that it makes a great deal of difference in terms of the effect of Mr Osada's evidence.
50 Mr Osada's understanding of the participants and their representatives was as follows:
(1) Viscas: Mr Tsubaki and Mr Morita;
(2) Exsym: Mr Toshihisa Inoue, Mr Nakamura and Mr Nakajima;
(3) Prysmian: Mr Gianfranco Acquaotta, Mr Federico Corbellini, Mr Alan Jones and Mr Richard Comber; and
(4) Nexans: Mr Jeanmarie Jay and Mr Alain Romand.
51 The representatives of the participants communicated with each other mainly by email, but on occasions they communicated by telephone or facsimile. The representatives of the participants also met in person from time to time, perhaps once every three to five months.
52 A person wishing to purchase a high voltage land cable or submarine cable might want a budgetary price or a quotation or might issue an invitation for a manufacturer or supplier to tender for the project. Where that occurred in the case of one of the participants, then the practice was that that participant would notify the other participants of the project. Mr Osada was involved in this process and he produced, as an example, the notification that he gave to the participants in relation to the Snowy Hydro Project on 12 September 2003. The email was as follows:
From: Takeo Osada ˂osada.takeo@jpowers.co.jp˃
Sent: Friday, September 12, 2003 7:39 AM (GMT)
To: Jeanmarie.Jay@nexans.com; watanabe.yasutoshi@jpowers.co.jp; yamaguchi.joji@jpowers.co.jp; federico.corbellini@pirelli.com; e-tsubaki@viscas-j.co.jp; Toshihisa_Inoue@exsym.co.jp; robert.comber@pirelli.com
Subject: Inquiry Notification, Australia
Dear Mr. Jay:
Inquiry Notification
Country; Australia
Project Name; Contract No. 90061
Customer; Snowy Hydro
Bid date; Oct. 10, 2003
Voltage; 330kV
Insulation; Fluid filled
Quantity; 525 meters plus 555 meters option
A is interested and would like to ask preference.
Best regards
T.Osada for J. Yamaguchi
osada.takeo@jpowers.co.jp
53 As can be seen, with this particular notification was a request for an A preference.
54 Mr Osada said that he was the Japanese "window" for communications with the European participants. Mr Jay was the European "window".
55 Mr Osada described how the arrangement or understanding between the participants worked in practice in paragraphs 17-30 inclusive of his affidavit. He described the steps in the process, including the following: receipt of an inquiry as to a project; a request from the A Group or the R Group for preference; agreement at the Group level as to which group would receive preference; agreement within the Group as to who would be the allottee; factors taken into account in deciding who would be the allottee; notification of prices, and the scope of projects covered by the agreement. The respondents objected to this evidence on the ground that it could not be admitted because it was irrelevant (s 56(2) of the Evidence Act) and that it infringed the opinion rule (s 76(1) of the Evidence Act). In addition, the respondents submitted that it should not be admitted because the probative value of the evidence was substantially outweighed by the danger that the evidence might be unfairly prejudicial to them, the evidence was misleading or confusing or would cause or result in undue waste of time (s 135 of the Evidence Act). I ruled that the evidence should be admitted and I said that I would give my reasons for that ruling in my reasons on the substantive application.
56 The evidence was plainly relevant because it went to the existence of the A/R Cartel Agreement. As I understood it, the gravamen of the respondents' objection was that the statements by Mr Osada were expressions of opinion and were rendered inadmissible by the opinion rule. The statements were inferences from observed and communicable data (Lithgow City Council v Jackson [2011] HCA 36; (2011) 244 CLR 352 ("Lithgow City Council v Jackson") at [27] per French CJ, Heydon and Bell JJ). I accept that Mr Osada's evidence in paragraphs 17-30 is expressed in very general terms and I think that it does contain a number of conclusions which are properly characterised as opinions. However, I considered that the evidence was admissible because it fell within the terms of s 78 of the Evidence Act. I accept that Mr Osada, albeit Mr Yamaguchi's assistant, was the Japanese "window" for or in relation to the arrangement or understanding, and I accept that he had sufficient knowledge of the events about which he was to give evidence. The evidence fell within the terms of s 78 of the Evidence Act because the facts that form the basis of the opinion were so numerous and evanescent that they could not be held in the memory and detailed to the Court as they appeared to Mr Osada at the time (Lithgow City Council v Jackson at [46] per French CJ, Heydon and Bell JJ; Australian Competition and Consumer Commission v Air New Zealand Ltd and Another (2012) 207 FCR 448 at [71] and [72] per Perram J). I considered whether the evidence should be excluded by reference to one of the grounds in s 135 of the Evidence Act. I considered that the evidence was clear and, therefore, it should not be excluded on the basis that it was misleading or confusing. Nor did I think that the evidence would cause or result in undue waste of time. Although the evidence is very general, I considered that it had substantial probative value, particularly when the contemporaneous documentation was taken into account. I did not consider that the probative value of the evidence was substantially outweighed by the danger that the evidence might be unfairly prejudicial to the respondents.
57 Mr Osada's evidence was that when an inquiry in relation to a project was received, the following steps were taken. The first step involved the participants agreeing as to which of them would be allocated the project out of the group of participants who had been asked by a potential purchaser to quote or lodge a tender in relation to the project. This could involve agreement at two levels. The Japanese participants were referred to as the "A" Group and the European participants were referred to as the "R" Group. The A Group may ask the R Group for preference or vice versa. In the email dated 12 September 2003 (at [52]), the A Group asks for preference. If the Groups agreed as to which of them should have preference, then the companies within the particular group (i.e., the A Group or the R Group) would decide as between themselves which of them was to be given preference. In determining which participant would be the allottee in relation to a particular project, the following matters would be taken into account:
(1) whether a participant had been involved in assisting the company to put together the tender specifications at the pre-bid stage;
(2) whether a participant had a long relationship with the particular company;
(3) whether the project was a replacement or upgrade of work previously done by a participant; and
(4) work levels of the participants.
58 The decision-making usually occurred by an exchange of emails, sometimes telephone calls and, on occasions, meetings in person. Sometimes the Japanese participants met before communicating with the European participants.
59 If the participants could not agree about the allottee of a project, then they could agree a minimum price above which all of them would quote or agree that they could quote as they saw fit. Projects for which participants could set their own prices were referred to in communications between participants as "FF" or "fighting free" or "friendly free".
60 The second step, once the allottee had been identified, was that that company would notify a price to the other participants. This was the price below which the notified party should not tender so as to ensure that the allottee secured the project. It could be a notification from group to group or from the allottee to other participants. The communication was referred to by the participants as a Price Guidance. It is important to note, having regard to one of the arguments advanced by the respondents, that Mr Osada said that not all participants submitted prices for a project and that the usual course was that it would only be those participants invited by the customer to do so who would submit a tender or price.
61 Mr Osada's understanding was that the agreement between participants covered all projects for land cables above 220kV and all projects for submarine cables, although it was the case that some projects for land cables below 220kV were discussed and that the participants would try to make an arrangement if they thought they could.
62 A record in the form of a table was kept of the projects which were allocated and Mr Osada referred to this record or table as a Position Sheet. The practice was that initially the Position Sheet was prepared by the European "window" who sent it to Mr Osada from time to time and before and after meetings. At meetings, Mr Osada saw that other participants had copies of the Position Sheets and at times, the European "window" distributed the Position Sheets when the participants met in person. The European "window" updated the Position Sheets after meetings to record what had been agreed.
63 Mr Osada produced a number of emails passing between mainly Mr Jay at the email address Jeanmarie.jay@nexans.com and himself dealing with the updating of the Position Sheets between November 2001 and March 2004. I do not need to deal with those emails in detail. It is sufficient to say that they show requests for current or amended Position Sheets before or after A/R meetings (which Mr Osada identified as meetings of the participants) and included responses from Mr Jay, including a response to which he attached a "tentative draft" and advice that he would bring paper copies to the meeting. There is a statement in an email in December 2001 to the effect that the position for R was totally unacceptable. There is also an email dated 20 February 2002 from Mr Jay to Mr Osada where Mr Jay seems to be discussing the possibility of involving another party in the A/R Cartel activities.
64 Mr Osada also produced emails which passed between participants in the A/R meetings, including emails which passed between Mr Acquaotta of Pirelli Cavi e Sistemi Energia S.p.A. and Mr Osada about A/R meetings in early 2002.
65 Mr Osada also produced a copy of a Position Sheet showing the information prepared by the European "window" and further information which he, Mr Osada, added. The Position Sheet contains various columns with headings, and the European "window" prepared the table up to the column headed "RA Totals" which showed the value in millions of US dollars of the projects allocated to the European participants. On 16 December 2002, Mr Osada added to the Position Sheet his own notes concerning the projects which were relevant to the Japanese participants. His reason for doing that was to compare the position among the Japanese participants and to record when they each received inquiries or were allocated projects or both. The Position Sheet as amended by Mr Osada was distributed by him to the Japanese participants.
66 Mr Osada produced the following additional Position Sheets:
(1) 17 November 2003 which includes a reference to the Snowy Hydro Project;
(2) 9 January 2004 (including his amendments) which includes a reference to the Snowy Hydro Project; and
(3) 26 March 2004 which includes a reference to the Snowy Hydro Project.
67 Quite apart from the Position Sheets, Mr Osada kept his own table of all cable projects in which JPS had an interest. The projects included, but were not restricted to, the projects which were the subject of an allocation between the participants. For the Snowy Hydro Project, the table shows a reference number of L3, the country as Australia, the customer as Snowy Hydro, the project as Contract No 90061, the voltage as 330, the quantity as 0.5 km, the type as fluid filled, and the due date as 10 October 2003. The comments Mr Osada made in the table were as follows:
Reported and asked for A - Pref (JP 030912 [i.e., 12 September 2003]). Agreed on R-Pref. (030924 [i.e., 24 September 2003). Guidance received (031006 [i.e., 6 October 2003]).
68 Mr Osada, who said that the participants met at three to five monthly intervals, produced the notes he kept of the meetings which were held on 14 November 2002 and 27 November 2003 respectively.
69 The attendees at the first meeting were recorded in the notes by their initials and an abbreviation for the company name. I am satisfied that at the meeting on 14 November 2002, there were the following attendees:
(1) Nexans: Mr Romand and Mr Jay;
(2) Pirelli: Mr Jones and Mr Corbellini;
(3) Viscas: Mr Tsubaki and Mr Morita;
(4) JPS: Mr Yamaguchi and Mr Osada; and
(5) Exsym: Mr Toshihisa Inoue; Mr Nakamura and Mr Nakajima
The notes record details of various projects around the world.
70 At the meeting on 27 November 2003, the attendees were Mr Romand, Mr Jay, Mr Corbellini, Mr Tsubaki, Mr Inoue, Mr Yamaguchi and Mr Osada. Again, these notes record details of various projects around the world.
71 Mr Osada said, and I accept, that at some of the meetings he attended, the participants discussed submarine and land cables in Australia. He said, and I accept, that the meetings usually occupied most of a day and that they were arranged particularly for the purposes of the arrangements between the participants and, so far as he could recall, were not held in conjunction with conferences or meetings arranged for other purposes.
72 In Mr Osada's notes of the meeting held on 27 November 2003, the following note appears under the heading "3. Current":
"Australia, Snowy Hydro stop, 0.3M RP".
73 I accept Mr Osada's explanation of this note. The note related to a current project which was a project which was the subject of discussion or arrangements between the participants, but which had not yet been awarded to a particular supplier by a customer. The "0.3M" is a reference to a project value of US$300,000 and the "RP" is a reference to the fact that the allottee was Prysmian of the R Group of participants (i.e., the European participants). Mr Osada could not recall the meaning of the word "stop".
74 It is convenient to record at this stage that I received into evidence notes of meetings held in Zurich on 18 February 1999, London on 26 July 1999 and Kuala Lumpur on 19 October 1999. These notes were produced by Sumitomo Electrical Industries Ltd which owned half of the shares in JPS between July 2001 and 31 March 2014 and was an applicant for immunity. I admitted the documents into evidence because I was satisfied that they had come from the business records of Sumitomo Electrical Industries Ltd.
75 I am satisfied that there was a meeting in Zurich and that representatives of Alcatel (Mr Romand), Pirelli (Mr Tessari) referred to as "R", and Sumitomo (Mr Yamaguchi) and other parties referred to as "A" attended. Later in these reasons, I will identify the relationship between the Nexans Group of companies and Alcatel and Mr Tessari's involvement in the Pirelli Group of companies. I am satisfied that at the meeting in Zurich, a Position Sheet was discussed.
76 I am satisfied that there was a meeting in London and that Mr Romand, Mr Tessari, Mr Yamaguchi and others attended and that there was reference to "A" and "R". There is a reference in the notes to R agreeing that "[i]n principle, below 220kV is free" and "A/R have a routine and regular meeting to exchange the situation". There is reference to "A/R" agreeing to the next meeting being held in Kuala Lumpur on 19 October 1999. In addition, the following appears in the notes:
R proposed that A should nominate authorised A-cordinator to avoid mis. communication because the last Egypt Tender (Composit one) had been Free due to the time limit and both cordinators' absence. A noted but partially".
77 I am satisfied that there was a meeting in Kuala Lumpur on 19 October 1999 and that Mr Romand, Mr Jay, Mr Tessari, Mr Yamaguchi and others attended the meeting. There is reference in the notes to "A coordinator" and "R strongly requested A to nominate A coordinator to avoid misunderstanding/miscommunication between A and R". There is a reference to a Position Sheet and the allocation of two projects in Dubai and one in Kuwait which "A/R finally decided … would be free ...".
78 The notes of these meetings support the conclusion that in 1999, there was an arrangement or understanding similar to that described by Mr Osada and referred to as the A/R Cartel Agreement between Sumitomo, Alcatel, a Pirelli company and others.
79 I turn now to Mr Osada's evidence about the Snowy Hydro Project. Mr Osada's notification of the project by email to the other participants is set out above (at [52]). Mr Osada's email asks for an "A" preference. Mr Osada said that he could not recall discussing the matter with Viscas and Exsym, but thinks that he would have done so before asking for an "A" preference. He said that he would not have asked for such a preference from the European participants without discussions with Viscas and Exsym having occurred.
80 Mr Osada received an email from Mr Inoue of Exsym on 16 September 2003 and in that email, Mr Inoue advised that Exsym had also received notice of the project. Mr Inoue's email is in the following terms:
From: Inoue Toshihisa ˂Toshihisa_Inoue@exsym.co.jp˃
Sent: Tuesday, September 16, 2003 4.11 AM (GMT)
To: Takeo Osada ˂osada.takeo@jpowers.co.jp˃
Subject: Re: Inquiry Notification, Australia
Dear Mr. Osada
Received same inquiry as reported below which is repalcement [sic] of BICC/Pirelli circuit installed in 1961 and 1959 respectively.
Thanks and best regards
EXM/T. Inoue
********************************************
EXSYM Corporation
T. Inoue
1-8-10, Azabudai, Minato-ku, Tokyo
106-0041, Japan
Tel: +81-3-4523-5030; Fax: +81-3-4523-5070
E-mail: Toshihisa_Inoue@exsym.co.jp
*********************************************
The reference to the "same inquiry as reported below" is a reference to Mr Osada's email of 12 September 2003.
81 Mr Inoue's email refers to the project as one involving the replacement of a "BICC/Pirelli circuit" and Mr Osada said, and I accept, that that would be a factor favouring allocation of the project to Prysmian.
82 Mr Osada received an email from Mr Tsubaki of Viscas dated 18 September 2003 which dealt with another project in Australia. However, it is convenient to refer to it at this point because it identifies the context in which Mr Tsubaki sent an email dated 22 September 2003. I will refer to this project as the Energex 110kV project. The email of 18 September 2003 was as follows:
From: Eiji Tsubaki ˂e-tsubaki@viscas-j.co.jp˃
To: YAMAGUCHI(JPS) ˂yamaguchi.joji@jpowers.co.jp˃; WATANABE(JPS) ˂watanabe.yasutoshi@jpowers.co.jp˃; OSADA(JPS) ˂osada.takeo@jpowers.co.jp˃
Cc: MORITA˂t-morita@viscas-j.co.jp˃
Sent: Thursday, September 18, 2003 11:42 AM
Subject: Inq. Not./Australia 110kV Oil-filled Cable
Dear Mr. Osada,
Please be notified that VC received following inq.;
Country … Australia
Customer … ENERGEX
Tender No. CJ57
Tender C/D … Oct. 8, 2003
Cable … 110kV AL-Oil Filled Cable 1Cx300mm2 … 1,680m
Best regards,
VC/E. Tsubaki
83 On 22 September 2003, Mr Osada received a second email from Mr Tsubaki of Viscas which read as follows:
From: Eiji Tsubaki ˂e-tsubaki@viscas-j.co.jp˃
Sent: Monday, September 22, 2003 6.17 AM (GMT)
To: YAMAGUCHI(JPS) ˂yamaguchi.joji@jpowers.co.jp˃; WATANABE(JPS) ˂watanabe.yasutoshi@jpowers.co.jp˃; OSADA(JPS) ˂osada.takeo@jpowers.co.jp˃
Cc: MORITA(???????) ˂t-morita@viscas-j.co.jp˃
Subject: Fw: Inq. Not./Australia 110kV Oil-filled Cable
Dear Mr. Osada,
I think that as yet the inquiry report below hasn't been reported to R yet. Please check.
In OF cases even if less than 220kV reporting is required isn't it?
Can {you/they} back away from this for A instead of 330kV?
Tsubaki
The "inquiry report below" was a reference to the email dated 18 September 2003.
84 Mr Osada's translation of this email differed from Ms Shimoji's translation. He said that it read as follows:
Dear Mr Osada,
I believe that the inquiry below has not been reported to R. Please confirm. In the case of OF, is a report necessary even when it is less than 220kV? Can we have an A-preference for this instead of the 330kV one?
However, none of the parties suggested that anything turned on the difference in translations.
85 Mr Osada did not have an independent recollection of this email, but he was able to say that the Snowy Hydro Project was the only 330kV cable project which he had recorded in his notes as being on foot in Australia at the time. He understood Mr Tsubaki of Viscas to be asking whether the A Group could have preference for the Energex 110kV project rather than the Snowy Hydro Project.
86 Mr Osada sent an email to the other participants in relation to the Snowy Hydro Project on 24 September 2003. It read as follows:
From: Takeo Osada ˂osada.takeo@jpowers.co.jp˃
Sent: Wednesday, September 24, 2003 5:44 Am (GMT)
To: Jeanmarie.Jay@nexans.com; watanabe.yasutoshi@jpowers.co.jp; yamaguchi.joji@jpowers.co.jp; federico.corbellini@pirelli.com; e-tsubaki@viscas-j.co.jp; Toshihisa_Inoue@exsym.co.jp; robert.comber@pirelli.com
Subject: Aus. Snowy Hydro
Dear Mr. Jay:
We agree on R-Pref.
Please send guidance by September 30.
Best regards
Inquiry Notification
Country; Australia
Project Name; Contract No. 90061
Customer; Snowy Hydro
Bid date; Oct. 10, 2003
Voltage; 330kV
Insulation; Fluid filled
Quantity; 525 meters plus 555 meters option
T. Osada for J. Yamaguchi
osada.takeo@jpowers.co.jp
87 Mr Osada said that he could not have advised Mr Jay that the Japanese participants agreed on an "R-Pref." (i.e., an R preference) without the European participants requesting such a preference (although he does not have a record of such a request) and without the Japanese participants having discussed the request and agreed to it.
88 Mr Osada's email dated 24 September 2003 asks for guidance by 30 September 2003. On 3 October 2003, Mr Comber of Pirelli sent the guidance by email and it was in the following terms:
From: Comber Robert, IT ˂robert.comber@pirelli.com˃
Sent: Friday, October 3, 2003 12:19 PM ( GMT)
To: Takeo Osada ˂osada.takeo@jpowers.co.jp˃; Jeanmarie.Jay@nexans.com; watanabe.yasutoshi@jpowers.co.jp; yamaguchi.joji@jpowers.co.jp; Corbellini Federico, IT ˂federico.corbellini@pirelli.com˃ e-tsubaki@viscas-j.co.jp; Toshihisa_Inoue@exsym.co.jp
Subject: Re: Aus. Snowy Hydro
Dear Mr. Osada,
I apologize for rather late reply.
Hereunder you will find DDP prices in AUS Doll (inclusive of your commission and GST):
-cable: 510/m
-Outdoor termination: 121,000.
-Oil imm termination: 101,500.
-Joint: 60,400
Thanks.
Best regards,
Robert L.P. Comber
HV Systems
Ph 0039-02-64422936
Fax 0039-02-64422682
Mr Osada said, and I accept, that "oil imm" refers to "oil immersed termination" which is a reference to the particular type of end to the cables. I will refer to Mr Comber's email as the Price Guidance.
89 Mr Osada said that when JPS prepared its own tender for the Snowy Hydro Project, he would then have notified the person in JPS responsible for the Australian market of the pricing level that it was agreed that JPS would tender at. He does not have a record of that communication in relation to the Snowy Hydro Project. I think that the evidence of Mr Osada is admissible based, as it is, on his practice. Mr Osada said that for some projects in Australia, JPS manufactured cable for supply by Mitsui & Co, Japan, or Mitsui's Australian subsidiary, to the customer in Australia. Prior to the formation of JPS, there had been a similar relationship between Sumitomo and Mitsui in Australia, and Mitsui was frequently the representative of Sumitomo for land cable projects in Australia. After the formation of JPS, this relationship continued between JPS and Mitsui. JPS had a similar relationship with Marubeni Metals in relation to submarine cable projects. Mr Osada said that neither Mitsui nor Marubeni Metals were involved in the arrangements between the participants.
90 Mr Osada produced an email from Mr Hideki Matsuura of JPS to Mitsui & Co, Japan, dated 8 October 2003. Mr Matsuura was a member of the sales staff of JPS who reported to a group manager and whose role included preparing quotations for JPS projects. The email was to Mitsui Japan and attached documents for "Snowy Hydra [sic]/Australia". It referred to a price or total amount of "about A$690K".
91 I turn now to Mr Osada's evidence about other projects in Australia in which the participants in the A/R Cartel Agreement were involved. There were three such projects. The evidence of the other projects was tendered by the ACCC as evidence of the existence of the A/R Cartel Agreement not of other contraventions. The respondents submitted that the evidence can only be evidence of Mr Osada's understanding of the identity of the participants and this was accepted by the ACCC. Nexans SA submitted that the evidence of the other projects could not be used as evidence of it carrying on business in Australia because it had not been pleaded.
92 The first project is the Energex 110kV project. I have already referred to two emails from Mr Tsubaki of Viscas (at [82] and [83]). Mr Osada advised the European participants of this project by email dated 22 September 2003. The email was in the following terms:
From: Takeo Osada ˂osada.takeo@jpowers.co.jp˃
Sent: Monday, September 22, 2003 6:58 AM (GMT)
To: Jeanmarie.Jay@nexans.com; watanabe.yasutoshi@jpowers.co.jp; yamaguchi.joji@jpowers.co.jp; federico.corbellini@pirelli.com; e-tsubaki@viscas-j.co.jp; Toshihisa_Inoue@exsym.co.jp;
Subject: Inq. Not./Australia 110kV Oil-filled Cable
Dear Mr. Jay,
Inquiry Notification
Country … Australia
Customer … ENERGEX
Tender No. CJ57
Tender C/D … Oct. 8, 2003
Cable … 110kV AL-Oil Filled Cable iCx300mm2 … 1,680m
Best regards,
T. Osada for J. Yamaguchi
osada.takeo@jpowers.co.jp
93 By email dated 23 September 2003, Mr Inoue of Exsym advised Mr Osada that Exsym had had the same inquiry. Mr Tsubaki of Viscas wrote to Mr Osada and others with respect to this project by email dated 7 October 2003 in the following terms:
From: Eiji Tsubaki ˂e-tsubaki@viscas-j.co.jp˃
Sent: Tuesday, October 7, 2003 1:27 AM(GMT)
To: YAMAGUCHI(JPS) ˂yamaguchi.joji@jpowers.co.jp˃; WATANABE(JPS) ˂watanabe.yasutoshi@jpowers.co.jp˃; OSADA (JPS) ˂osada.takeo@jpowers.co.jp˃
Cc: MORITA ˂t-morita@viscas-j.co.jp˃
Subject: Fw: Inq. Not./Australia 110kV Oil-filled Cable
Dear Mr. Osada,
Please send the following message to R.
QUOTE:
As there has been no response from any of you for the below-mentioned case, this sould [sic] be treated as FF. Please confirm.
Best regards,
UNQUOTE:
VC/E Tsubaki
As Mr Osada explained, "FF" means "fighting free" or "friendly free" and that means that the project is not subject to the arrangement as to prices and that those participants submitting tenders or quotes in response to an approach from the customer could submit such prices as they wished.
94 Mr Osada wrote to Mr Jay and the other participants with respect to this project by email dated 7 October 2003 in the following terms:
From: Takeo Osada ˂osada.takeo@jpowers.co.jp˃
Sent: Tuesday, October 7, 2003 2:45 AM (GMT)
To: Jeanmarie.Jay@nexans.com; watanabe.yasutoshi@jpowers.co.jp; yamaguchi.joji@jpowers.co.jp; federico.corbellini@pirelli.com; e-tsubaki@viscas-j.co.jp; Toshihisa_Inoue@exsym.co.jp; robert.comber@pirelli.com
Subject: Inq. Not./Australia 110kV Oil-filled Cable
Dear Mr. Jay:
As there has been no response from any of you for the below-mentioned case, this sould [sic] be treated as FF. Please confirm.
Best regards,
T. Osada for J. Yamaguchi
osada.takeo@jpowers.co.jp
95 Mr Osada could not recall whether JPS or the other participants submitted competitive tenders for this project and nor could he remember the outcome of the project.
96 The second project involved two small projects for the supply of cable joints to Energy Australia in April 2003. I will refer to this as the Energy Australia Cable Joint Project. Mr Osada gave notice of this project to Mr Jay and the other participants by email dated 1 April 2003 which was in the following terms:
From: Takeo Osada ˂osada.takeo@jpowers.co.jp˃
Sent: Tuesday, April 1, 2003 4:03 AM (GMT)
To: Jeanmarie.Jay@nexans.com; watanabe.yasutoshi@jpowers.co.jp; yamaguchi.joji@jpowers.co.jp; federico.corbellini@pirelli.com; e-tsubaki@viscas-j.co.jp; Toshihisa_Inoue@exsym.co.jp; robert.comber@pireli.com
Subject: Inqiry [sic] Notification (Cable Joints)
Dear Mr. Jay:
Inqiry [sic] Notification (Cable Joints)
End User: Energy Australia
Products: 12 x Transition Joints to connect existing BICC FF Cable and new OLEX XLPE.
Please advise your comments
The same customer also requested us to quote 6 x 132kV Trnsition [sic] Joints (existing Sumitomo's FF and new OLEX XLP). We would like you to cover if you are asked for quotation.
T. Osada for J. Yamaguchi
osada.takeo@jpowers.co.jp
97 Mr Osada said that Pirelli was the most likely allottee for that part of the project which involved the supply of 12 transition joints because the project involved an existing BICC cable (Pirelli had taken over their existing cable plants) and that JPS had requested preference for that part of the project which involved the supply of six transition joints because it involved an existing Sumitomo cable.
98 Mr Comber of Pirelli wrote to Mr Osada and others by email dated 1 April 2003 in the following terms:
From: Comber Robert, IT ˂robert.comber@pirelli.com˃
Sent: Tuesday, April 1, 2003 8:24 AM (GMT)
To: Takeo Osada ˂osada.takeo@jpowers.co.jp˃ Jeanmarie.Jay@nexans.com; watanabe.yasutoshi@jpowers.co.jp; yamaguchi.joji@jpowers.co.jp; Corbellini Federico, IT ˂federico.corbellini@pirelli.com˃; e-tsubaki@viscas-j.co.jp; Toshihisa_Inoue@exsym.co.jp
Subject: RE: Inqiry [sic] Notification (Cable Joints)
Dear Mr. Osada,
Thanks for your mail.
We confirm having the first enquiry calling for 12 trans joints. We will provide you with our relevant offer.
We do not have the second enquiry for the time being, but would appreciate receiving your offer anyway.
I believe we should possibly coordinate in order not to submit conflicting offers.
Kindly comment. Thanks.
Best regards,
Robert L.P. Comber
HV Systems
Ph.0039-02-64422936
Fax 0039-02-64422682
E-mail: robert.comber@pirelli.com
99 Mr Comber wrote again on 3 April 2003 in the following terms:
From: Comber Robert, IT ˂robert.comber@pirelli.com˃
Sent: Thursday, April 3, 2003 11:46 AM (GMT)
To: osada.takeo@jpowers.co.jp
Cc: Corbellini Federico, IT ˂federico.corbellini@pirelli.com˃; jeanmarie.jay@nexans.com
Subject: FW: Inqiry [sic] Notification (Cable Joints)
Dear Mr Osada,
Following my email of Tue, please be advised we have quoted the 12 trans joints at a CFR price of 16,500 €. We would appreciate A adding a 6-7% commission.
Thank you.
Best regards,
Robert L.P. Comber
HV Systems
Ph.0039-02-64422936
Fax 0039-02-64422682
E-mail: robert.comber@pirelli.com
Of particular note in this email, is Mr Comber's request that A add a 6-7% "commission".
100 Mr Osada passed on Mr Comber's email of 3 April 2003 to the Japanese participants on that day.
101 On 29 April 2003, Mr Comber advised Mr Osada and others that Pirelli had lost against CCC "who quoted substantially lower". CCC was a manufacturer of accessories for power cables and was based in Europe. On the following day, Mr Osada passed that information on to the Japanese participants.
102 The third project involved the supply of 900 metres of fluid-filled cable for Energy Australia. I will refer to this project as the Energy Australia 900 metres fluid-filled cable project. Mr Osada sent a notification in relation to the project in the following terms:
From: Takeo Osada ˂osada.takeo@jpowers.co.jp˃
Sent: Wednesday, October 8, 2003 5:57 AM (GMT)
To: Jeanmarie.Jay@nexans.com; watanabe.yasutoshi@jpowers.co.jp; yamaguchi.joji@jpowers.co.jp; federico.corbellini@pirelli.com; e-tsubaki@viscas-j.co.jp; Toshihisa_Inoue@exsym.co.jp; robert.comber@pireli.com
Subject: Inquiry Notification (Australia)
Dear Mr. Jay:
Inquiry Notification
Country; Australia
Project Name; Green Square
Customer; Energy Australia
Bid date; Budgetary
Voltage; 132kV
Insulation; FF
Quantity; 900m
Diversion work for old Sumi line. Request A-pref when out. If anyone is asked for budgetary price, please ask for guidance.
Best regards,
T.Osada for J. Yamaguchi
osada.takeo@jpowers.co.jp
103 The project related to an "old Sumi line" (i.e., Sumitomo line) and, therefore, the most likely allottee was JPS. Mr Osada believes that he would have discussed the fact that it should be a JPS project with the other Japanese participants.
104 Mr Osada agreed in cross-examination that as a result of arrangements made with the ACCC, he had been interviewed about the matters in his affidavit in September 2009 and that he affirmed his affidavit in October 2014. He agreed that he was required to cooperate under a grant of conditional immunity. He agreed that he was aware that the immunity of his employer was in part conditional on his cooperation with the ACCC and that his own immunity was conditional on his cooperation. It seems that the ACCC also made arrangements to interview Mr Yamaguchi.
105 Mr Osada agreed in cross-examination that another person had drafted his affidavit, although he could not identify that person. He agreed that he could not be sure that some of the words in his affidavit were his words. He said that he had no idea what a "loose agreement" was which was a term he had used in his affidavit.
106 Mr Osada agreed in cross-examination that it was Mr Yamaguchi who coordinated the matters which he addressed in his affidavit and that he was Mr Yamaguchi's assistant. Basically he acted on Mr Yamaguchi's instructions and he had no authority to commit JPS to any particular course of action. When he referred in his affidavit to the fact that "we reached agreement" he was referring to Mr Yamaguchi reaching agreement.
107 In cross-examination, Mr Osada was shown the business cards of Mr Romand and Mr Jay which refer to them being from Nexans France and he agreed that he understood them to be from Nexans France.
108 Mr Osada agreed that the arrangement between the participants came to an end in about the middle of 2004. He agreed that Mr Yamaguchi was the coordinator and that he, Mr Osada, attended to the daily emails and the exchange of information by telephone. Mr Osada agreed that, in relation to a particular project, there was no commitment by a participant until there was some agreement or arrangement between participants. Mr Osada apparently agreed with the proposition that if a particular participant was not invited to tender on a particular project, then "this company has nothing to do with the project". I will need to come back and carefully consider the effect of this evidence.
109 Mr Osada agreed that he did not have any involvement in the Snowy Hydro Project. The parties who were invited to tender for the project were Mitsui & Co (Australia) Ltd, JPS, Pirelli and Midland Metals.
110 Prysmian submitted the ACCC had chosen not to call Mr Yamaguchi who was the coordinator of the arrangements even though it appears that it interviewed him. Mr Osada basically did as Mr Yamaguchi instructed and he did not have authority to commit JPS to arrangements. It submitted that Mr Osada had no direct contact or dealings with customers in Australia between 2001 and 2004 or 2005, and he did not have any involvement in the Snowy Hydro Project. It submitted that Mr Osada's affidavit and annexures was prepared by the ACCC and Mr Osada did not have reference to other documents in checking it. Nexans SA added to these submissions the fact that Mr Osada was not interviewed until 2009 and not asked to affirm his affidavit until 2014.
111 Prysmian also submitted that Mr Osada's recollection was deficient bearing in mind that the ACCC's case is that on 24 September 2003, the A Group members and the R Group members made an arrangement or arrived at an understanding that the Snowy Hydro Project would be allocated to a member of the R Group as an R Group preference. Mr Osada had no recollection or record of the R Group communicating and asking for an R Group preference. Mr Osada had no recollection of discussing the Snowy Hydro Project with the Japanese companies (i.e., Viscas and Exsym), although by reference to his practice, he thinks that that must have happened. He assumed the Japanese companies had agreed. He agreed that he would not have been the one to reach agreement with the Japanese companies. The other important point made by Prysmian in relation to Mr Osada's evidence is that (as I have already said) he agreed that if a company was not invited to tender, then it had "nothing to do with the project". Viscas and Exsym were not invited to tender for the Snowy Hydro Project.
112 Nexans SA was more critical of Mr Osada's evidence describing his evidence-in-chief as "plainly unreliable, indeed misleading, in fundamental respects".
113 In addition to a number of submissions similar to those made by Prysmian, Nexans SA made the following criticisms of Mr Osada's evidence. First, it submitted a number of expressions used by Mr Osada in the affidavit were expressions he had no real knowledge or understanding of, for example, "loose agreement", "arrangement" and he could not be sure whether the words "there were also other communications between the representatives about the participants' competitive behaviour" were his words. Secondly, it submitted that Mr Osada failed to mention the involvement (albeit lesser) of other companies. I record at this stage that I reject that criticism. The evidence suggested (and it went no further than that) that there might have been other companies interested in joining the A/R Cartel Agreement or companies which might have had a more limited involvement in the arrangement or understanding. Mr Osada did not mention that in his affidavit, but I do not think he is to be criticised for that. It is not as if the evidence establishes that there was a regular and major participant he neglected to mention. Thirdly, Nexans SA submitted that Mr Osada provided no explanation of the various Position Sheets. That is true, but of no particular significance if the substance of his evidence is accepted. Fourthly, Nexans SA submitted that, in light of the matters it identified, Mr Osada's evidence about how the A/R Cartel Agreement worked in practice must be qualified by the preceding matters. I am not sure what it means by that submission. I think Mr Osada was able to give the evidence he did. He was involved in the arrangement and the contemporaneous documentation supports his evidence.
114 In the result, I think Nexans SA's major points were similar to those of Prysmian, that is to say, that Mr Osada had no recollection or record of the R Group requesting an R preference in relation to the Snowy Hydro Project and he had no recollection of discussing an R preference with the Japanese companies and, in any event, he did not have the authority to agree an R preference with the Japanese companies. The other point is that Nexans relies heavily on Mr Osada's evidence that a company not invited to tender (such as Nexans SA in the case of the Snowy Hydro Project) "has nothing to do with the project". Nexans SA also relies on Mr Osada's evidence that he understood Mr Romand and Mr Jay to be from Nexans France.
115 I accept Mr Osada's evidence as far as it goes. As I have said, I think that he was generally a satisfactory witness and his evidence is supported by contemporaneous documentation. I say "as far as it goes" because a number of factual matters remain to be considered. For example, there are issues as to whether Prysmian and Nexans SA were parties to the A/R Cartel Agreement and whether it involved the necessary degree of commitment to be an arrangement or understanding within the Trade Practices Act. Similar issues arise in relation to the Snowy Hydro Project Agreement, particularly in light of Nexans SA's submission that there is no evidence that it had anything to do with that agreement. The ACCC's case involved me inferring in relation to the Snowy Hydro Project that the A Group agreed to seek an A preference, that the R Group sought an R preference, and that the A Group agreed to an R preference. I will return to these issues.