Australian Competition and Consumer Commission v Qteq Pty Ltd [2025] FCA 371

[3]Australian Competition and Consumer Commission v Qteq Pty Ltd [2025] FCA 371 | Case summary | Zoe

[8]

Sensibly, no separate, serious and substantive argument was advanced by the respondents that the conduct and state of mind requirements for each of the alleged attempts had not been met in relation to Qteq if the remaining aspects of the case for the ACCC that were contested succeeded. The conduct in that respect was reasonably clear cut once those contested issues were addressed, and findings made in the ACCC's favour. Mr Ashton argues that the evidence as to attempt only went far enough to implicate him in Qteq's conduct and did not go far enough for him to be directly liable. I am unable to accept that is so. Mr Ashton was actively involved in the attempt to induce Eastern Well No 2 to enter into each of the agreements containing the cartel provisions.
The evidence clearly established, and it was not disputed, that Qteq provided to Eastern Well No 2 the two draft agreements containing the express non-compete clauses, constituting the Easternwell 2017 Non-Compete Agreement and the Easternwell 2018-2019 Non-Compete Agreement (in two variations), and then sought to have them entered into. Each clause was wide ranging and explicit in stating the legal obligations sought to be imposed on Eastern Well No 2, to not compete. There was no nuance or subtlety involved. Both Qteq, via Mr Ashton and Mr Meldrum, and Mr Ashton simultaneously in his own capacity, took active steps to seek to have Eastern Well No 2 enter into those agreements. The proximity to a concluded agreement being formed is readily demonstrated in that nothing more needed to be done by Eastern Well No 2 other than to execute the proposed agreements to have established an actual contravention of s 45AJ by each party. That is, the only impediment to a successful agreement containing a cartel provision in each instance was Eastern Well No 2's refusal to enter into either. Of course, had the first attempt succeeded, the second would not have been needed.
On all the evidence, I have no doubt that Qteq and Mr Ashton saw Eastern Well No 2, via Eastern Well Operations, as a competitive threat as a result of the training obligations imposed upon Qteq by QGC as part of the transition terms and obligations. That assessment was realistic and understandable. The practical effect of success on the QGC gauge tender would have been an obligation on Qteq to create a viable competitor by the provision of what has been loosely described as its intellectual property. Qteq had little practical option but to seek bid for the QGC gauge contract if this lucrative part of its business was to survive and prosper.
As to state of mind, I infer, and infer more readily in the absence of any contradicting evidence from Mr Ashton or Mr Meldrum, that Qteq, via Mr Ashton and Mr Meldrum, intended the natural consequences of their action, namely to make (or in the alternative to induce) Eastern Well No 2 to make each of the two agreements. I also infer that same conclusion to be reached in relation to Mr Ashton in his own capacity, being that he intended to induce Eastern Well No 2 to make each of the two agreements. The knowledge and conduct of Messrs Ashton and Meldrum are attributable to Qteq, and that of Mr Meldrum is attributable to Mr Ashton as his direct superior, in accordance with s 84(1), (3) and (4).
It follows that I am satisfied that the attempts alleged against Qteq and Mr Ashton have been comfortably proven on the balance of probabilities, paying due regard to the seriousness in reaching such a conclusion:

[38]

The ACCC also submits that ultimately whether I accept that the 19 September 2017 email from Mr Ashton to Mr Wayne deals with one subject or two in the consecutive third and fourth paragraphs "I spoke with Norwest and Triangle at Good Oil and punted an early production system for Xanadu ..." and "We need to talk about FireTail and gauge systems & Fibre systems because I want avoid us being in competition. Can you chat it through with Q [Mr Quentin Morgan]", does not matter, and either view permits me to find in its favour. The apparent reason for that is that the fourth paragraph is about avoiding competition with Firetail in relation to gauges either way. On the ACCC's case, Mr Ashton's reference to the Xanadu well is a component of the inducement for the Firetail Understanding. The ACCC contends that Mr Ashton was providing Firetail with details of the Xanadu well which, being a conventional oil well, was aligned with Firetail's business, but not with Qteq's business which was limited to CSG and mining.
The respondents in closing submissions describe the ACCC's construction of the 19 September 2017 email chain reproduced above as problematic. They point out that there is no evidence to suggest that the Xanadu well project would involve gauge works, so that references in the email to gauge works had to be references to something other than Xanadu, points with which the ACCC would seem to agree and indeed rely upon. The ACCC's case is that the object of the alleged understanding was gauge works more generally, with explicit references to QGC work in the 20 September 2017 email, being Mr Ashton's record of his telephone conversation with Mr Wayne that day. Work for QGC was undoubtedly Qteq's major concern at the time as it was the incumbent gauge supplier wishing to succeed in retaining that work out of the tender process. The respondents also submit that there was no evidence that Qteq could have had any role in the Xanadu opportunity. That is not inconsistent with the ACCC's case, although it formed no part of it.
The respondents contend that the 19 September 2017 email chain should be interpreted as referring to the Xanadu opportunity throughout, with the focus necessarily being on Mr Ashton's email in that chain. That interpretation is difficult to sustain in light of the express reference to QGC in the 20 September 2017 email, which had nothing to do with Xanadu, and the contextual inference to the contrary available to be drawn, and drawn more readily in the absence of evidence from Mr Ashton. The respondents further submit that Mr Ashton's reference to having "punted" an early production system for Xanadu should be interpreted as Mr Ashton pitching such a system to Norwest and Triangle, and that this should be read as Mr Ashton proposing something that he would be involved in, and was not, for example, the language of providing a referral or introduction. While Qteq operated in the CSG industry, and Xanadu was a conventional oil well, the respondents submit, without evidentiary support, that conventional oil wells often have gas, presumably to bridge the logical gap between the CSG work that Qteq did, and the conventional oil well work that Qteq apparently did not do.
I am prepared to assume that conventional oil wells, at least some of the time, will also have gas, as this accords with common sense and in any event does not appear to be determinative of anything of importance, or perhaps anything at all, especially as the presence of gas as a matter of logic says nothing of it being in any commercially viable quantity. In any event, the additional step of interpreting "punted an early production system for Xanadu" as meaning proposing involvement in the Xanadu project by Qteq is a step further than I am willing to take. In truth, I would be speculating, rather than inferring or interpreting what Mr Ashton was talking about. It just as likely could have been a reference to an early production system for a conventional oil well provided by someone else (for which Firetail could provide gauge services). That is not inherently improbable if this was a part of the inducement the ACCC alleges, but I do not find that meaning either, as that too would be speculation. The "punted" reference therefore cannot assist the respondents in the way that they suggest and rely upon.
The respondents also submit that Qteq had experience in pressure testing and fluid sampling, being processes that were required at the Xanadu well according to an ASX release by the operators, albeit in the conventional oil industry rather than CSG industry, and that I should infer that this is what Mr Ashton was referring to in his 19 September 2017 email to Mr Wayne. On the respondents' submission, Mr Ashton is making a proposition to Mr Wayne that Firetail may be able to provide well testing services for Xanadu. This is a somewhat detailed and specific inference to draw, with no evidence from the most obvious source to support that interpretation, namely Mr Ashton. I do not consider that this rises above speculation either, and accordingly decline to draw that inference.
The respondents also submit that the ACCC's interpretation of these emails would require the first sentence to refer to Xanadu, being an inducement, while the second refers to CSG opportunities, being a commitment sought. They contend that this is an unnatural reading of the email, as opposed to the email referring only to a single opportunity.
However, that argument requires ignoring Mr Ashton's 20 September 2017 email, which recorded him discussing both Xanadu and CSG opportunities with Mr Wayne the same day. There is nothing unnatural about reading the 19 September 2017 email as containing an inducement followed by the seeking of a commitment, especially since one was related to a conventional oil well and the other to CSG. Again, I more comfortably read the email in this way in the absence of contrary evidence from Mr Ashton.
In relation to the Xanadu well, the respondents directed me to an email sent by Mr Wayne to the Xanadu well operators on 21 September 2017, the day after his telephone conversation with Mr Ashton. In that email, Mr Wayne offers Firetail's well test packages for Xanadu and attaches the Firetail product catalogue and well test technical specifications sheets, offering to put together a specific package for Xanadu. Mr Wayne states that he has been following the Xanadu ASX updates and noticed that NorWest Energy had plans for a long-term production test. The ASX update referred to was released on 18 September 2017, and is discussed in more detail elsewhere in these reasons (at [549]).
The respondents submit that Mr Wayne is just writing to the email address he got off the website. It is not clear how that conclusion was arrived at, but there is nothing inherently improbable about this being the source of an email address and nothing seems to turn on it. The respondents also point to the product sheets provided by Mr Wayne to NorWest Energy in relation to Xanadu, which include images of GeoPSI gauges and references to data acquisition, as evidence that the Xanadu opportunity included work of a type that Qteq could have been involved in, as it included gauges and data acquisition, both of which Qteq had experience with in relation to CSG.
To the extent that the respondents submit that this means that it is therefore wrong to say that Xanadu did not include gauge works, it needs to be remembered that gauge works for the purposes of these proceedings is confined to CSG, not conventional oil wells. It follows that this submission goes nowhere.
The respondents submit that while Xanadu would have been a new venture for Qteq, it could use its knowledge about data acquisition and gauges in the CSG industry and apply this in relation to a conventional oil well. This argument, that it would be easy for Qteq to transfer its knowledge of gauge works in relation to CSG to do work in conventional oil wells, appears to contradict some of the respondents' other submissions in relation to the inability of Firetail to move between the provision of gauge services in the conventional well industry and the provision of gauge services in the CSG industry. Despite this, the respondents rely upon this apparently contradictory reasoning to submit that it is wrong to say that Xanadu did not include gauge works, seemingly overlooking the fact that the term gauge works for the purposes of this proceedings is itself a reference to doing so in relation to CSG. It is difficult to see how this reasoning assists the respondents.
In relation to Mr Wayne's 19 September 2017 email reply to Mr Ashton's email of the same day, which is relevant to context rather than directly to the existence of an attempt_,_ the ACCC accepts that Mr Wayne's reference to "good shows of Oil" is a reference to Xanadu, and his statement that "we have everything required to help out there" should be understood as Mr Wayne saying that Firetail can service Xanadu's conventional oil testing requirements. The ACCC relies upon Firetail's product catalogue which states that Firetail provides production testing services for reservoir wells, demonstrating its capacity to do the kind of work available at Xanadu.
It is important at this juncture to note that the ACCC's case does not entail any proposition that Firetail would not seek to be involved in Xanadu, but rather that Qteq was endeavouring to ensure that Firetail would not compete on gauge works in CSG, especially for QGC. This aligns with any conclusion able to be reached about Firetail doing Xanadu work, because that is to be contrasted with the alternative of Firetail competing with Qteq.
An alternative interpretation of Mr Wayne's statement advanced by the respondents is that Mr Wayne is stating that he has everything required to help Qteq with the Xanadu well, which the respondents submit is a more natural reading of that statement considering the following paragraph in which Mr Wayne says he is "happy to work something out where we are helping each other out." The respondents submit that this interpretation is consistent with Mr Wayne's email having referred only to the Xanadu opportunity, and that the emails read together show that what is being discussed is a possible opportunity for Qteq and Firetail to work together on the Xanadu project. I have difficulty in accepting that this is the more natural reading. I would more readily interpret this as Mr Wayne picking up that Mr Ashton is referring both to Xanadu as an opportunity for Firetail, and collaboration with Qteq separately in its field of work with CSG. In any event, little can turn on how Mr Wayne interpreted Mr Ashton's email_._
The respondents point out that during the Good Oil conference, Mr Ashton emailed a number of people at Nu-Energy conveying that he was pleased to meet the recipients, and promoting Qteq as a specialist CSG technology service company that could work with them in the Indonesian gas market. It is not readily apparent how this assists the respondents' case and has been recorded for completeness, but it tends to assist the ACCC's case in confirming the CSG focus of Qteq's work, and Mr Wayne's knowledge or understanding to that effect.
The ACCC submits that read as a whole, the documentary evidence shows that the respondents wanted to avoid Firetail competing for the QGC gauge tender and viewed it as a competitive threat in that respect. That is the context in which the 20 September 2017 telephone call occurred. The ACCC's case in relation to the Firetail Understanding is not limited to or dependent upon the QGC gauge tender.
The respondents seek to contest the overall conclusion that the ACCC urges by giving the key 19 September 2017 email, and thereby all of the documentary evidence read together, a different or otherwise more benign interpretation, which entails revisiting some aspects already addressed above. Before turning to that argument, it bears repeating the Jones v Dunkel point that the respondents, and accordingly the Court, did not have the benefit of hearing evidence from Mr Ashton, who would have been the best source for the meaning of the 19 September 2017 email sent by him to Mr Meldrum and Mr Morgan. His absence from the witness box does not enable that email to carry an interpretation or inference that it does not reasonably bear on its own, but an adverse inference or conclusion may more readily be drawn from the text in context without an evidentiary reason not to draw that inference or conclusion. It is with that in mind that I have assessed the respondents' proposed interpretation.

[40]

The parties agree on the substance of the meaning of points 1 to 7 in Mr Ashton's 20 September 2017 email (quoted above at [504]), which followed the lengthy telephone conversation between Mr Ashton and Mr Wayne earlier that day. However, there is some disagreement in their interpretations of points 8 and 9.
The respondents contend that point 8 is a reference to Mr Ashton wanting Qteq to collaborate with, rather than compete with, Firetail, specifically in relation to the Xanadu opportunity, which was brought to Mr Wayne's attention for that purpose, following Mr Wayne's disclosure of Firetail's financial difficulties.
The ACCC submits that there is no evidence that this statement is directed to Xanadu, which was not a CSG well, and that without any evidence adduced by the respondents to the contrary, I can comfortably draw an inference that it was not a reference to Xanadu. The respondents also submit that Xanadu required some gauge works, albeit not CSG gauge works.
I am not prepared to read point 8 in the way that the respondents urge. It requires an unduly contorted and unrealistically benign reading to accept the respondents' interpretation. First and foremost, point 8 is not on its face talking about competition in relation to work that Qteq is not already performing and may never perform given that was not its existing work area. The natural reading is that Mr Ashton is trying to head off competition in relation to work that Qteq is already performing and, realistically, intends to continue performing via a successful bid for the QGC gauge tender. Rhetorically, if it was not in relation to something known, how and why would Mr Wayne have immediately agreed? The logical temporal interpretation is difficult if not impossible to resist. If that was not what Mr Ashton meant, being the most logical and most probable conclusion to reach, there needed to be evidence from him to that effect.
The ACCC's interpretation of point 8, which refers to "gauge work", is that it is referring to gauge work within the CSG industry generally, rather than gauge work in relation to Xanadu. Accordingly, this links to the final two paragraphs in the 19 September 2017 email:

[42]

The ACCC submits that the statement in the penultimate paragraph about "boosting" Firetail confidentially to get 20% of the QGC work is inconsistent with any notion that point 8 is limited to Xanadu, and instead has a clear meaning that Mr Ashton did not want Firetail competing with Qteq on gauge works.
The ACCC places particular reliance on point 8: "I told Mike that I do not want [Firetail] competing with us on gauge work. He agreed." It is important to read that sentence in the context of the last substantive paragraph as a direct indication of Mr Ashton's, and therefore Qteq's, state of mind at the time: "I support FT confidentially, we boost them to the position of the second gauge installation company, they get 20% of the QGC work, I take them out?". There is no evidence from Mr Ashton or any other source to refute or qualify what is being expressly contemplated by him as a strategy, namely to financially support Firetail so that it can become the second gauge installation company, enabling it to get 20% of the work from QGC, and then be taken over. It is evidence that cuts both ways: it proves what Mr Ashton had in mind, but it also proves that he did not view Firetail as being, at that time, in a position to achieve the outcome of being the second gauge installation company without assistance. This is therefore an important reference point for what follows, including the email exchange that took place following Mr Ashton's 20 September 2017 email.
The absence of Mr Ashton's evidence is even more telling when regard is had to the third and second last paragraphs, reproduced above immediately after point 9, about Qteq's existing operations.
When those paragraphs are read with the preceding point 8 - "I told Mike that I do not want FT competing with us on gauge work. He agreed." - the position becomes even more clear. In context, it is apparent that this was all about Qteq's existing gauge work. There is no evidence from Mr Ashton to resist such an interpretation readily available from the text in his email. The thought Mr Ashton was suggesting or floating for Mr Meldrum and Mr Morgan to consider in the "back of our minds" was, in the context of the agreed position that Firetail would not compete with Qteq on gauge work recorded at point 8, that:

[44]

This was not the immediate proposal, but rather the next step, being a collaboration for the additional work that Qteq could not presently perform. Non-competition was the immediate consideration, with Mr Wayne agreeing to that proposition, at least in principle. By way of a general observation, it seems that Mr Ashton was seeing if this was another way for Qteq to solve the problem about not being able or willing to perform the additional gauge work for QGC arising out of the expansion of the number of rigs required for the gauge tender and, considered earlier in these reasons, perhaps as an alternative to seeking to have Pro-Test cover this gap.
The respondents argue that, rather than attempting to curtail Firetail's opportunities for the QGC gauge tender, Mr Ashton was considering "boosting" Firetail, which otherwise would not have been a contender, by making Firetail a viable gauge installation company so that it could be a "friendly" contractor in relation to the QGC gauge tender. The respondents argue that the reference to reducing competitive exposure relates to competitive exposure to companies other than Firetail for the QGC tender, by securing this friendly provider to be awarded the other gauge contract. The respondents submit that Mr Ashton's statement that he would "support FT confidentially" is referring to financially supporting Firetail to turn it from a non-viable competitor into a viable competitor for the QGC gauge tender. It was therefore not linked to point 8 in Mr Ashton's 20 September 2017 email in relation to the bid for work with QGC, nor point 5, concerning a potential bid for Origin. Instead, the respondents, adopting an idea I had put in a question in the course of arguments, contend that it came out of the blue.
An important ultimate purpose of this argument is to bolster the argument addressed below that the competition condition had not been proven. The respondents rely upon this as evidence that Firetail was not, without that proposed assistance from Qteq, in any position to compete with Qteq. That is, Firetail was not in any position to be in competition with Qteq unless and until a financial boost or cultivation took place. This is advanced in contradiction to the ACCC's case that the cultivation was to reduce existing competitive exposure from Firetail.
In support of that argument, the respondents seek to have an additional part of Mr Ashton's s 155 examination transcript, at p 209.4 to .29, admitted into evidence as context, and once admitted, treated as evidence of the truth (implicitly pursuant to s 60 of the Evidence Act). The ACCC opposes this additional examination transcript being received into evidence upon the basis that this part of the s 155 examination of Mr Ashton was not an admission about Firetail's capability to provide gauge works, but rather to the separate topic of what Mr Ashton meant in his 19 September 2017 email to Mr Wayne concerning Xanadu, and especially the passage highlighted above "We need to talk about FireTail and gauge systems & Fibre systems because I want avoid us being in competition", being the critical passage relied upon for this attempt.
Explicit in the ACCC's objection was the absence of any opportunity to test what amounts to an exculpatory account from Mr Ashton, without him giving evidence, and necessarily not meeting the admissions exception to the hearsay rule. In the alternative, the ACCC seeks a direction under s 136 of the Evidence Act, limiting the use of this additional examination transcript as evidence of the fact it was said by Mr Ashton, not as evidence of the truth.
The conclusion I have reached is that the additional examination transcript should be admitted as context for the portion already admitted, because the opening question that has already been admitted "Were you concerned that Firetail more broadly not be involved in gauge system[s] and fibre systems?" is directly and contextually connected to the immediately preceding cross-examination about the email which contained that very passage, as reproduced above. However, it is only context evidence, to assist in understanding the admission transcript evidence that follows. It is neither fair nor appropriate that the additional evidence be admitted as untested evidence of the truth, so I confine its use as evidence of the fact of what was said by Mr Ashton, to give context to the question and answers that followed, which were admissions. I have read and considered that additional contextual evidence and taken it into account, but do not see a need to reproduce it.
While the question of whether or not a company is in competition with another is an objective fact, I accept, as the respondents submit citing BlueScope (No 5) [85] and [110], that the purpose condition involves an inquiry into the subjective purpose of the alleged contravener in proposing a cartel provision. Based upon that accepted principle, they submit that the evidence establishes that Mr Ashton did not know that Firetail could be a likely competitor, such that his subjective purpose cannot have been to prevent Firetail from supplying PDHGs. The respondents submit that this interpretation is consistent with Mr Ashton's email in relation to the Good Oil conference and seeking more work for Qteq. I consider the competition condition, and Mr Ashton's knowledge of Firetail's likelihood to be in competition with Qteq as it relates to the intention element, in greater detail later in these reasons.
The difficulty for the respondents once again is that Mr Ashton did not give evidence, and it is difficult to conclude that the reference to supporting Firetail financially was directed to a benign purpose, rather than the purpose more naturally apparent on the face of the email dated 19 September 2017 of avoiding competition between Firetail and Qteq. I am fortified in the contrary interpretation I have arrived at by reason of there being no evidentiary contradiction to the best interpretation available on the face of this email, in the context of the surrounding evidence. However, going the other way, while perception is an aspect of rivalry and the evidence indicates that Mr Ashton perceived Firetail to be a competitive threat, this may not be enough to lead to a conclusion that the competition condition was met if the reality did not support the perception. Perceptions may exceed reality, or be precautionary as to a future position that has not yet arisen and may never arise.
The respondents further argue that even if the ACCC can prove that the alleged conduct giving rise to the Firetail Understanding did occur, that conduct does not rise to the level of an attempt as neither the conduct nor intention elements of an attempt are satisfied, and the conduct falls short of being even "merely preparatory". The point being made is that the number of steps that would have needed to occur for Firetail and Qteq to jointly supply services in relation to the Xanadu well means that the conduct was not sufficient to be characterised as a "step" towards a contravention for the purposes of the conduct element of an attempt. The respondents submit that Mr Ashton's comments were not a proposal capable of being the subject of the necessary intention but rather speculative ideas, incapable of assent.
I am unable to accept this submission. An attempt to reach an understanding does not need to be so advanced. It is not an attempt to do an act. The conduct by the respondents in respect of Firetail constituted steps towards an inducement of an understanding between Qteq and Firetail containing a cartel provision, and Mr Ashton's statement that he did not want Firetail competing on gauge works was one that was capable of assent, and so was more than merely preparatory.
Turning to state of mind, in the submission of the respondents, the intention of Mr Ashton, and thus at the same time of Qteq, was not to propose a cartel provision, but instead to discuss potential collaboration on the Xanadu well with a company he did not regard as a likely competitor. While the respondents argue that Firetail was not a potential competitor of Qteq in relation to the supply of PDHGs, they additionally submit that a failure to prove actual knowledge by the respondents that Firetail might be a putative alternative supplier of PDHGs would be fatal to the ACCC's case regardless of whether Firetail was a potential competitor.
The respondents further submit that there is no "quid pro quo" or countervailing benefit in the alleged Firetail attempt, and while not always the case, ordinarily a person in business would not make an arrangement or understanding in the absence of a reciprocal or mutual obligation. They argue that the ACCC has failed to establish why, and it is commercially implausible that, Mr Ashton would seek a commitment from a company he did not perceive to be a threat, or why Firetail would agree to such a demand without a reciprocal commitment as a quid pro quo.
While no overt quid pro quo has been identified in relation to the Firetail Understanding, and no such quid pro quo is strictly necessary, the ACCC submits that Mr Ashton was providing Mr Wayne with information about the potential Xanadu project as an opportunity for him to take on conventional oil well testing work, being a commercial inducement held out for the alleged attempted understanding. The ACCC further submits that Mr Ashton intended to use financial support he had provided Firetail, in the nature of a $150,000 investment into the company, as well as his long relationship with Mr Wayne who he had employed in his first job at 19 years old, as leverage. With Firetail, what was proposed was a combination of an inducement and leverage from Mr Ashton's financial involvement with Firetail by way of the $150,000 loan.
The respondents submit that a press release from NorWest Energy dated 18 September 2017 about hydrocarbons encountered at Xanadu and drilling results demonstrates two things. First, that the Xanadu well was no secret at the time of the alleged Firetail Understanding, and so Mr Ashton would not be using its existence as part of the inducement of Firetail in the alleged understanding. Second, that while Xanadu was drilled as a conventional oil well, it did have elements of pressure testing and fluid sampling that Qteq was familiar with, albeit in a CSG environment. I do not find either of those submissions helpful. As to the first point, Xanadu not being a secret did not mean there was no value in drawing it to Mr Wayne's attention, or causing him to think about it as a prospect. As to the second point, it remained the case that Qteq was an operator in the CSG industry, that QGC was its biggest customer, and it wanted to win the gauge tender. However, Qteq was concerned about not being able to service all of the QGC gauge contract if its bid was successful and was exploring ways to meet that gap by encouraging another provider of gauge services, Firetail, to become involved, but with a restraint on competing with it being in place.

[46]

The competing arguments are spelt out in some detail above, in order to assess them in relation to a documentary case unassisted by any witness evidence. In the end it comes down to the interpretation to be given to documentary evidence both on its face, and in relation to the best, clearest and most probable inferences available to be drawn from that material, without the benefit of any explanation, qualification or contradiction from those involved in the communications, most notably Mr Ashton. In those circumstances, as the above discussion indicates, the ACCC's interpretation better meets that description and is to be preferred and accepted. I am satisfied on the balance of probabilities that the conduct element has been proven by the evidence and most of the arguments relied upon by the ACCC. I am also satisfied that the purpose condition has been established. That is, I am satisfied on the balance of probabilities, and having regard to the quality of evidence required to sustain such serious allegations, that Qteq, through the conduct of Mr Ashton, attempted to make an arrangement or arrive at an understanding with Firetail containing a cartel provision that Firetail would not supply gauge works in competition with Qteq. This conclusion is, however, incomplete, because it leaves for determination the question of whether, at that time, Firetail was likely to be in competition with Qteq in relation to the supply of gauge works, so as to satisfy the competition condition and prove Attempt #6.
Necessarily, the purpose condition is also satisfied in relation to the ACCC's alternative case that Qteq, through the conduct of Mr Ashton, attempted to induce Firetail to arrive at the Firetail Understanding, and also that Mr Ashton himself attempted to induce Firetail to arrive at the Firetail Understanding, again with the competition condition aspect to be addressed.
In making these findings, I am satisfied that Mr Ashton and thus Qteq subjectively believed that Firetail was likely to be in competition with Qteq in relation to CSG gauge works, in the sense of believing that there was a real and not remote possibility that this could transpire. However, it remains for determination whether that subjective belief was sound. If it was not, Mr Ashton and thus Qteq had the necessary intention, but the objective competition condition would not be established, and the ACCC's case on this attempt must therefore fail.

[48]

It is not contentious that Firetail and Qteq were not actually in competition with one another at the time of the attempts. The companies operated in different parts of the oil and gas industry, with Firetail being a well testing business focusing on exploration stage wells in the conventional oil industry and Qteq being a data acquisition business focussed on the production stage of the CSG industry. There is no evidence that Firetail had supplied gauge works at the time of the alleged attempt. The respondents submit that there were multiple impediments to Firetail becoming a competitor in relation to CSG gauge works because it needed financial capital, a team of specialist personnel, base facilities, operating procedures and materials, field operational capability, and a demonstrated track record.
The ACCC submits that Firetail was nonetheless likely to be in competition with Qteq in the supply of gauge works at the relevant time, and had the intention and ability to supply gauge works.
The respondents argue that the ACCC has failed to establish that Firetail was a "likely" supplier, as the evidence only shows that Firetail would have liked to be a supplier of PDHGs, and not that it could have realised that ambition.
This was an astute way to pose the problem facing this aspect of the ACCC's case. For the ACCC to prove that the competition condition was met, the ultimate question that needed to be answered was whether the evidence establishes that it was likely that Firetail would be in competition with Qteq in relation to CSG gauge works, or, adopting the respondents' characterisation, was that shown to be little or no more than something which Firetail would have liked to have been in the position to do in relation to CSG gauge works more generally? Or to use a characterisation that arose during the course of the hearing, was Firetail anything more than a mere pretender? This is not to reverse the onus, as the respondents did not have to prove anything on this point, but rather to characterise neatly the defensive response to the evidence relied upon by the ACCC.
The core of the ACCC's case is that:

[63]

The respondents submit that the QGC gauge tender was a critical test of Firetail's ability to compete as a viable supplier. While it is an agreed fact that Firetail was not on the invitation list for the QGC gauge tender, for the reasons that follow, I am of the view that the respondents overstate the significance of that fact. Their argument suggests that competitors should be confined to final round tenderers, which undervalues the fluid dynamics of rivalry and thus competition. It appears from the evidence that Firetail did intend to supply gauge works under the QGC gauge tender, or at least intended to put itself in a position to be awarded that tender contract to supply gauge works to QGC, even if it did not advance far into the tender process.
The ACCC's case in relation to Firetail is not dependant on whether Firetail was in fact in competition with Qteq in relation to the QGC gauge tender, especially as Firetail was actively seeking to supply gauge works to a number of customers. Nonetheless, Firetail not being on that list does suggest that it was not seen, at least by QGC, as a serious contender for such work.
On 10 August 2017, Mr Wayne emailed Shell, stating that Firetail would like to be invited to the upcoming QGC gauge tender, and that Firetail believed it had the products and experience to be able to provide Shell with an attractive bid. Mr Wayne detailed his experience starting and managing the permanent monitoring business unit at Welldog in 2011, stating that he designed, procured, installed and managed the entire permanent monitoring business (inferentially, the PDHG monitoring business) and oversaw the installation of over 1,500 gauge systems in CSG wells. He further discussed what Firetail could offer regarding the development of wireless gauges and supplier relationships. A Firetail product catalogue was also attached to that email, which describes Firetail's offerings, including permanent monitoring of downhole reservoir conditions.
On 13 September 2017, Mr Wayne sent a follow-up email to Shell enquiring about when the upcoming gauge tender was expected to be released and whether Firetail would be on the invitee list. Mr Wayne also let Shell know that Firetail was keen to present some recent developments in its wireless capabilities. Shell replied that the expected tender release date would be in early October. In its response, Shell did not dismiss Mr Wayne and thus Firetail out of hand, but nor was any encouragement given.
Firetail was not included in the tender invitee list for the QGC tender package released on 24 October 2017, that tender being in respect of the invitation to tender for a contract for the provision of PDHGs. The ACCC submits that there is no evidence as to why Firetail was not on the QGC tender list, but that I should not infer that the absence of Firetail from that tender list means that QGC rejected Firetail because it formed the view that Firetail was incapable of supplying the gauge works. The respondents contend that this is a reversal of the onus, as it is for the ACCC to prove that Firetail was a likely competitor. There is no doubt that the ACCC bears the onus, and I do not think that this was sought to be reversed. It is no more than a debate about what to make of this evidence.
The respondents submit that while it is unknown why Firetail was not on the invitee list, the evident reason it was not included was not that it did not seek to be included as it had sent two emails to seek a place on the list, and that I can infer that QGC had an incentive to place all viable candidates on the invitee list to maximise the commerciality of the tender. The respondents contend that I should therefore infer that Shell did not consider Firetail to be a viable competitor.
I infer only that Shell did not consider Firetail was likely to be a sufficiently viable competitor relative to other contenders to be included on the invitee list, but do not think this can go so far as supporting an inference that Shell considered Firetail as being unable to compete at all. If Firetail had been on the invitee list, that evidence would have greatly assisted the ACCC, whereas its absence from that list means that this is not a factor that assists the ACCC in that way, because the market view taken of Firetail's competitive status by Shell/QGC is otherwise unknown. However, nor is this evidence that QGC rejected Firetail because it formed the view that Firetail was incapable of supplying the gauge works. On the whole, it is some evidence in support of the ACCC's case, but not as significant as it would have been if Firetail had been on the tender invitee list. It is consistent with Firetail being likely to compete, but again not sufficient evidence on its own.

[64]

There is evidence of discussions between Firetail and two potential suppliers of gauge products in 2017, GeoPSI and DataCan. There is also evidence of Mr Wayne telling a potential customer that Firetail had CanadaTech gauges available for rental, which I discuss in more detail later in these reasons. Additionally, Firetail had access to some equipment through an equipment hire agreement with Farley Riggs entered into in December 2016. However, the scope and nature of that access is unclear and it is not established whether it amounted to Firetail actually having access to equipment that would enable it to compete. That interpretation is borne out by a measure of at least aspiration, if not desperation, in Mr Wayne's attempts to source this equipment in the email correspondence considered next.
As noted above at [564], Mr Wayne had contacted GeoPSI on 6 January 2017, raising his interest in going to market with GeoPSI's products. In response, Mr Wilson replied on 10 January 2017, supplying some literature on GeoPSI's gauge systems. That document shows that GeoPSI offered PDHGs for sale, including 4-20mA gauges and associated equipment.
On 15 January 2017, Mr Wayne asked GeoPSI for a quote for certain products for a client "who wants to monitor fluid levels in some deep wells." On 17 January 2017, GeoPSI provided a sales quote to Mr Wayne for equipment, including a quote for four "Tool-4-20ma IECEx 3000psi with WHFT" which is described in the quote as a "cost-effective downhole sensor designed to accurately measure real-time pump intake pressure or fluid level". The ACCC submits that this quote was for downhole gauges and related equipment, and that 4-20mA gauges were the type being used by Qteq.
On 22 January 2017, Mr Wilson again emailed Mr Wayne, providing a quote for products that Firetail had requested earlier that month to help fulfil a client request for Firetail to monitor fluid levels in some deep wells.
The GeoPSI sales quote was for gauges with a PSI rating of 3000. There is disagreement as to whether those gauges could have been used in CSG wells, or only conventional wells, discussed below. It is clear from the way in which the ACCC has pleaded its case that the relevant area of competition is the CSG industry, which does not extend to the conventional oil well industry. The ACCC submits that a 4-20 GeoPSI gauge is the type of gauge that would be needed for the QGC tender. I discuss the issue of gauge types in more detail below. What matters here is that Firetail had the supply chain means to access a range of gauges, but the evidence casts doubt on its ability to capitalise on that access. Although the suppliers were apparently keen to supply in relation to viable contracts, the contents of the emails suggest that they were short of being satisfied that any such viable contracts were actually on offer to Firetail.
On 18 March 2017, Mr Wayne again emailed Mr Scott of GeoPSI saying that while nothing in particular had come up yet, some things might happen in the second half of the year and Firetail might need help with EM tools (I infer, electromagnetic tools), as the company was still pushing to get some PDHG installations work and DST work was starting to pick up. While this may indicate that Mr Wayne was more aspirational than successful, it also indicates active conduct in seeking to obtain contracts, and thereby to compete.
On 12 and 13 April 2017, Mr Wayne emailed Mr Loades at Firetail saying he had spoken to Tim (I infer, Mr Dabrowski) and that it looked like Firetail would be taking on some gauge work soon. Mr Wayne asked about how quickly their red spooler could be ready for field operations and other things about the spooler and associated toolkit, as well as how long it would take to get spoolers built locally if needed. Mr Loades indicated that he had not used the spooler or the associated kits and would need someone who had used the equipment to answer Mr Wayne's questions, but that 4-6 weeks seemed like an achievable timeframe for building new ones. Mr Loades then offered to start that process, to which Mr Wayne told him to refrain from starting. The ACCC submits that this communication is evidence that Firetail was anticipating supplying gauge works. Again, that anticipation has an aspirational quality to it, when the evidence is read carefully.
On 26 April 2017, Mr O'Hare of Emerson Automation Solutions emailed Mr Wayne with the subject line "Downhole Gauging Opportunity", saying "I am sure you have heard of Welldog going into voluntary administration and I thought this might be the catalyst for Firetail to look into moving in to the down hole gauge market?" and offering Emerson's "solutions" if that were the case (Emerson provides pressure and temperature sensors). Mr Wayne replied on the same day saying:

[66]

The ACCC submits that this email with Emerson is further proof that the prospects of Firetail in relation to gauge work was not limited to the QGC tender. That is plainly correct, although it remains at the level of an aspiration.
The respondents submit that the email of 13 April 2017 referred to above at [580] shows the true position of Firetail, contrary to the email of 26 April 2017, that Firetail is far from being ready to provide services using the spooler, given Firetail's engineering manager did not know its condition or how to run it. The respondents submit that this paints the true picture of Firetail - a company which was telling potential customers and suppliers that they were a likely competitor, despite not having any real commercial likelihood of being able to compete. The ACCC advances that this is no real impediment to there being a real chance of Firetail providing gauge works. I am unable to accept that submission. It is necessary to establish an underlying reality to Mr Wayne's and thus Firetail's aspirations.
In July 2017, Mr Wayne emailed Mr Hartwell of DataCan to let him know that there were some larger gauge works contracts coming up at the end of 2017 in Queensland and asked if they could use DataCan spec sheets in Firetail brochures, to which Mr Hartwell agreed.
Also in July 2017, Mr Wayne emailed Mr Nazarovs at GeoPSI for a quote and enquired about the lead time for the supply of 1500psi 4-20 Gauges and encapsulated cables, following up on his earlier request on 2 August 2017. On 7 August 2017, Firetail received quotes from Mr Nazarovs regarding the supply of 4-20 mA IECEx downhole sensor systems and other equipment. In Mr Nazarovs' email, he states that he would like to discuss how GeoPSI can support the Queensland market and Mr Wayne's business.
On 2 August 2017, Mr Wayne emailed Mr Nadeau and Mr Hartwell from DataCan, stating that he had been asked to quote "one of the largest clients here in Qld" for some downhole gauge systems. I infer that this is a reference to QGC. Mr Wayne states that tenders are coming up soon so if Firetail can give them the right pricing, he thinks they will be able to gather some momentum and use that business as a foot in the door for other kinds of work, noting that just a 25% market share would be 250 systems a year. Mr Wayne then lists "4-20mA Analog 1500psi Sensor" and "Wellhead Outlet II" as the equipment he needs, and asks DataCan to let him know if they could do that as he will be able to get a quote in and sort the rest of the system out.
In summary, the response from Mr Nadeau (a director at DataCan) was pessimistic. He observed that the economics of that kind of project may not work for them unless the volume was high enough (100 systems, 50 at a time), but offered to keep the discussion going. Mr Wayne replied that the QGC gauge tender is "our only real time to get into the market if we want to do it" but that he believes that they can make it work. The balance of the email chain is cast in optimistic terms, as referred to below, but more so from Mr Wayne. There was no flat rejection of what Mr Wayne was proposing, but nor was there overt acceptance as to viability. The stumbling block was stated in terms of the overall economics of the possible contracts, rather than any expression of reservation about Mr Wayne's capability to provide the services.
On 10 August 2017, after a couple of emails from Mr Wayne to DataCan to which there was evidently no response, Mr Wayne emailed DataCan again asking if they were interested in moving forward with his proposal as Firetail is "now on the Shell gauge tender invite list", and it is "just a matter of getting the 4-20 [gauge] pricing right". Firetail was not, at that time or at any time after, on the QGC gauge tender invitee list, although Mr Wayne repeatedly emailed to achieve that. The ACCC submits that it could be inferred that Mr Wayne believed at that time that he was on the tender list or likely to be added to it. That inference, while not impossible to draw, is hard to favour over the more obvious one, namely that Mr Wayne was being somewhat economical with the truth as to the current state of affairs, and was perhaps projecting confidence, in order to persuade DataCan to accept his proposal. Mr Wayne's willingness to overstate Firetail's position, which could not have been accidental given his repeated and ultimately unsuccessful attempts at being added to the tender invitee list, indicates that the situation fell more on the aspirational than realistic side of the ledger.
In any event, DataCan replied that they were interested and asked for a couple of more days to try and figure out how to make the 4-20 gauge reliable and cost competitive. DataCan and Mr Wayne agree in this email chain that they can likely work out the specifics after they have obtained the order - in context, to be read as if they obtained the order - and after some further exchanges back and forth conclude that they most likely would be in a position to sort out the mechanics of a contract once obtained. The ACCC points to this email as evidence that there was a real chance of Firetail obtaining gauges from DataCan, and not just from GeoPSI, in order to fulfil any downhole gauge work orders that were obtained. The problem with this submission is that it indicates a likelihood of being able to obtain the gauges and thereby being able to compete if the contracts were obtained, which remains a step short of being able to compete. The evidence does not go so far as to establish that Firetail was yet in a position to compete, because it was not able to take concrete steps towards realising the aspirations held for it by Mr Wayne.
On 15 November 2017, Mr Wayne submitted a response to a request for a proposal from Origin Energy in relation to service line capability and wellsite services. That response stated that, in the category of "Permanent Downhole Gauges" Firetail had "1x Hydraulic Suspended System Winch & Toolkit" and "1x Pneumatic Tubing Conveyed Gauge Installation Kit". The Origin opportunity was for a CSG well. The concern I have with this evidence is that it still falls short of showing that Firetail was yet in any position to obtain the gauges themselves.
The totality of the evidence as to Firetail's access to gauges, which were indispensable for it to be able to compete, falls short of establishing that there was in fact any such supply available to it. While there were indications that supply was possible, that was expressed on a highly contingent basis, not just predicated on Firetail being able to get an installation contract, but also on viable contracts being on offer. This is not sufficient evidence to advance the ACCC's case to any marked degree.

[70]

The ACCC refers to several documents that it contends support the view that Firetail had access to the relevant gauges.
First, a GeoPSI document which detailed a patented "easy connect advantage" PDHG system and included the kind of gauge used by Qteq, being a PT105 SR0 4-20mA downhole pressure and temperature gauge. The detailed product page for that gauge type shows that it is available in pressure ranges of 500, 1000, 2000 and 3000 psiA. In this document, GeoPSI held itself out as a "one-stop manufacturing" supplier, being able to provide all equipment for downhole gauges and carriers. On this basis, the ACCC submits that Firetail could have obtained all relevant goods from GeoPSI, and, when combined with Mr Wayne's expertise, be capable of supplying gauge works.
Second, a sales quote provided by GeoPSI to Firetail in August 2017. The sales quote was for a 4-20mA IECEx1000psi with WHFT, a 4-20mA IECEx1500psi with WHFT, as well as some other equipment including clamps and seals, described as "downhole sensor systems" in the email which attached the sales quote. The ACCC submits that this sales quote from GeoPSI related to the relevant kind of gauges for the supply of gauge works, and that this is supported by the email from GeoPSI asking to talk with Firetail about the best model to support the Queensland market and Firetail's business.
Third, a 17 June 2017 email chain between Messrs Ashton, Morgan, Meldrum and a Mr Smith of ProXoilfield. This email chain is referred to above at [158] and [243]. In that email chain, Mr Morgan stated that he, unlike Mr Meldrum, was not convinced that QGC will not entertain the use of "another type of 4-20mA analogue gauge", and that Qteq needed to find a way of cornering or getting preferential pricing for the GeoPSI GE 4-20mA gauge. The ACCC submits, and I accept, that "another type of 4-20mA analogue gauge" was a reference to an equivalent gauge from a supplier other than GeoPSI. The ACCC relies on that email to contend that references to 4-20mA gauges in the documents above can be taken to be references to gauges that could be used for gauge works for QGC.
I understand the ACCC's argument to be that, even if I were to conclude that the sales quote provided to Firetail by GeoPSI referred to above relates to gauges not used in gauge works, since GeoPSI could provide all relevant goods in relation to downhole gauge works, and Firetail was in discussions with GeoPSI regarding supply of equipment, Firetail could have obtained the necessary equipment from GeoPSI if it had obtained a contract for gauge works. Unfortunately for the ACCC, this argument then runs into the difficulty identified in the preceding section dealing with Firetail's access to equipment.
The substance of inference that the ACCC seeks to have drawn is that commercial negotiations in relation to prospective transactions mean that such transactions, for that reason alone, inherently have a real chance to occur, even when there is no evidence that they have ever occurred in the past. While this is part of a matrix of intermediate inferences that the ACCC contends should be drawn as a contribution to the ultimate inference of capacity, the foundation for drawing it at all must be demonstrably sound. However, the general impression I glean from Mr Wayne's dealings on behalf of Firetail is that he was more of an optimist than a realist, and was really chasing business opportunities at an early stage imbued with an apparent surplus of optimism that was not shared with those to whom he was communicating. I am not able to accept that this evidence provides a sound basis for inferring that this negotiations evidence is sufficient, in Mr Wayne's particular circumstances, to amount to actual capacity. The gap between initial negotiation and ultimate transaction had to surmount barriers such as supply at a cost that Firetail could accept, an acceptable timeline for supply, and whether Firetail could make the cost work with any contract it was seeking to obtain. There was no real evidence, let alone satisfactory evidence, to that effect.

[71]

In March and April 2017, Mr Wayne was in email discussions with Mr Barnes, a petroleum engineer at Bridgeport Energy Limited, in relation to equipment that Firetail could supply to Bridgeport. Mr Barnes was initially seeking wireless gauge capabilities, which Firetail could not offer. Mr Wayne told Mr Barnes that Firetail had a full range of wired permanent capabilities, all of the installation kit in Adelaide, as well as gear in Queensland, Moomba and Perth. The ACCC points to that information to support the assertion that Firetail had the necessary equipment to perform gauge work. The reservation I have about this evidence is that it is unclear that Mr Wayne's assertions in that regard were necessarily reflective of the true position, noting that the evidence shows a willingness on his part to overstate Firetail's position, in keeping with his aspirational or optimistic approach.
Mr Barnes then sought further information about what equipment Firetail had on hand, stating that he was looking for surface test equipment that could handle gas/oil/water for extended production testing. Mr Wayne replied that he could provide a quote for memory gauges if he knew the downhole conditions, and that they also had extensive well test capabilities. Later in that email chain, Mr Wayne says that Firetail have CanadaTech memory gauges in stock, and for permanent systems can offer both GeoPSI and DataCan at 6000 psi. Mr Barnes clarified that he needed a gauge for reservoir testing, and Mr Wayne referred to the CanadaTech gauges as "similar in size to DataCan which are 0.75" O.D." and "in ranges of 1500, 3000 and 6000 psi". The respondents submit that memory gauges are used in the exploratory stage and are a different type to those used for lengthier periods, but again that submission was made without evidential support. That said, there was no evidence that these gauges could have been used in CSG gauge works. I am left with a shortage of evidence as to precisely what work these gauges were capable of being used for.

[75]

Santos is a large CSG operator in Australia. Mr Wayne had also contacted Santos in mid-July 2017 for the purpose of offering Santos some of Firetail's product lines. In those communications, Mr Wayne stated that Firetail has a huge range of equipment and expertise and is beginning to supply more services in the CSG industry, including with innovative products specifically for that industry. It is difficult to read those assertions as being anything more than marketing, rather than concrete or reliable evidence as to the true state of affairs.
Mr Wayne also approached Mr Andrew Vigor of Schlumberger NV (SLB). On 14 February 2017, Mr Vigor forwarded to Mr Ashton an email he had received from Mr Wayne informing SLB that he had started Firetail, and attaching a product catalogue. The email from Mr Wayne states that Firetail combined the capability of Farley Riggs and Production Solutions and has been providing equipment rentals to companies like SLB. It also states that Firetail could help out with PDHG Systems. Mr Vigor asks Mr Ashton "just checking that you are aware of this and no funny business is going on?" I interpret that comment as raising questions about what is being communicated by Mr Wayne.
On 21 February 2017, Mr Wayne emailed out a weekly shareholder report. The attachment to that email includes summaries about Firetail, including its customers and staff. Under "Corporate Image" and the subheading "What is our strategy?", the report states "SWT & DST as normal" as well as "Well Integrity, Flowback & PDHG market share". PDHGs are also listed under "Product lines" and "Downhole Gauges" appear to be listed as one of Mr Wayne's primary technical skills in the document.
As already noted above, by March 2017 Mr Wayne was communicating with Bridgeport about Firetail and its asserted capabilities.
On 21 June 2017, Mr Wayne and Mr Pereira of Beach Energy emailed each other about upcoming DST work. Mr Wayne mentioned that Firetail had expanded into PDHG work as well. That seems to overstate what had been achieved by that time - Firetail undoubtedly wanted to expand into PDHG work, but the evidence falls short of establishing that this had been achieved at that time, or indeed at any time subsequently. Mr Wayne attached Firetail's product catalogue which stated that Firetail had a range of downhole DST tools, experience in CSG, as well as advanced permanent monitoring technology. Again, this needs to be read with caution as the evidence suggests that Firetail's capabilities and inventory did not necessarily extend to the gauges that were needed to perform this work.
In June 2017, Firetail also contacted Westside Corporation to let them know about their services, which included PDHGs. In response, Westside Corporation told Mr Wayne they would at least put Firetail on their tender list. This evidence requires the same level of caution due to the risk of overstating the actual position.
On 17 July 2017, Mr Wayne emailed Firetail's product brochure to Mr Reid of Senex Energy and asked to meet, saying that Firetail is "making a push into CSG" and has been providing services all over Australia including Queensland. Once again, this is consistent with the aspirations that Mr Wayne had for Firetail.
On 17 July 2017, Mr Wayne emailed a Mr Mato of BG Group, attaching Firetail's product catalogue, holding out Firetail's services as including PDHG systems and permanent downhole fibre optic systems, and stating that Firetail is making a push into CSG. The caution to be taken with this sort of evidence needs to be repeated.
On 15 August 2017, Firetail provided a quote for data acquisition services to Westside Corporation in relation to the provision of downhole gauges, specifically 0-3000 psi downhole memory gauges. Again, caution needs to be taken with this sort of evidence.
On 15 November 2017, Mr Wayne submitted a response to a request for a proposal from Origin Energy in relation to service line capability and wellsite services. Again, this document is high on aspiration, but the evidence standing behind it as to actual capability is sparse for the reasons already identified.
In this period, Firetail had also prepared presentations about its capabilities to Strike Energy and Empire Oil and Gas. This again is aspirational evidence.
In December 2017, Firetail provided its product catalogue to Cal Energy. Mr Wayne lists Firetail's operations as including the supply of downhole gauges and other downhole equipment. The above cautionary observations apply.
Overall, I conclude that Firetail's customer communications do little to advance the ACCC's case on the competition condition.

[77]

The respondents' knowledge of Firetail being a likely competitor is relevant to intention and also to the fact of likely competition, as the views of market participants on whether a company was a likely competitor can be relevant to that fact. The ACCC submits that the respondents had knowledge of the essential facts that would have rendered the Firetail Understanding cartel conduct, being that Firetail was likely to be in competition with Qteq in relation to the supply of gauge works, and Mr Ashton's statement that he did not want Firetail competing with Qteq on gauge works meant that the respondents knew that the proposed Firetail Understanding contained a provision that had the purpose of preventing Firetail from supplying gauge works. The ACCC submits that Mr Ashton and Qteq viewed Firetail as a likely competitor for the supply of gauge works. The evidence they refer to in support of this position is as follows.
Mr Wayne provided Mr Ashton with a business case for Firetail on 21 November 2016 (pre-Qteq's incorporation in June 2017), indicating that he wanted to start an oilfield services company which provided services including downhole gauge systems. The four attachments to that email related to Firetail's financial forecast and an oilfield service company opportunity. Mr Wayne said that things were coming together on the "FR deal" and sought to have a chat with Mr Ashton to get business pointers, gauge his interest in providing capital, as well as to outline the plan to introduce other technologies.
One attachment to that email stated that Mr Wayne wanted to start an oilfield services company providing various services, apparently a reference to Firetail. The document refers to an offer from Farley Riggs to lease all well test, DST and well integrity equipment, under an arrangement where Firetail would lease the equipment but no loans, employee benefits or debts would transfer over. The document also referred to an offer from "Production Solutions" to lease some other equipment, though does not go into comprehensive detail about what that equipment is. The two company development options put forward are to continue offering a similar suite of services as Farley Riggs, or to additionally expand into other areas, including downhole gauge work, potentially internationally.
Mr Ashton was also aware of Mr Wayne's new business from other industry participants, as on 14 February 2017 Mr Vigor of SLB forwarded Mr Ashton an email he had received from Mr Wayne informing Mr Vigor of the creation of Firetail, referred to above at [610]. That email from Mr Wayne listed PDHG systems among Firetail's offerings.
On 27 July 2017, Mr Fitz-Henry, then at Welldog, emailed Mr Meldrum to let him know that Mr Wayne had told him that a Mr Ryan Phillips had informed him that "'the Americans' from Welldog had been into QGC to try and sell them gauges". Mr Fitz-Henry added that this is what Welldog had suspected but was not sure it had been confirmed, and that Mr Wayne had been speaking to Mr Phillips about flowback testing, frac trees and possibly fibre optic gauges.
Mr Meldrum then forwarded this email to Mr Ashton stating, "we need to get the GE gauge removed from GSTC's (Welldog) reach" and "need to discuss with [Mr Wayne] on non compete". The ACCC submits that this last statement from Mr Meldrum to Mr Ashton should be interpreted as communicating a need to talk to Firetail about not competing on gauge works, noting that this occurred less than two months prior to the Firetail Understanding.
Later that same day, Mr Wayne emailed Mr Ashton that there had been "lots of action for Firetail on the integrated Flowback services and Fibre Optic side of things" and that "a few customers have asked me to provide them with quotes for Permanent Downhole Gauge Systems". Mr Ashton replied to Mr Wayne stating that they needed to talk about the "fibre issue" as it seemed like an area of potential conflict for the companies and they should find areas of common ground.
Mr Meldrum replied to the email from Mr Ashton to Messrs Meldrum and Morgan on 20 September 2017, which is the relevant conduct, stating "I like your thinking on the last point". The "last point" refers to Mr Ashton supporting Firetail confidentially, boosting them to the position of the second gauge installation company and enabling them to get 20% of the QGC work, after which Mr Ashton would "take them out". Mr Morgan replied to Mr Meldrum's email on 21 September 2017 stating, "what's the risk that QGC then simply award [Firetail] work elsewhere - they seem determined to want 2 separate gauge service providers." Each of these emails are reproduced earlier in these reasons at [531] and [506(b)].
On 24 July 2017, Mr Wayne emailed Mr Ashton with the subject line "Fietail Slides" (sic). That email attached a "Capability Presentation" for Strike Energy, with Mr Wayne telling Mr Ashton that the slides would be of interest to him and that he could "slide" in for Qteq. Mr Wayne also told Mr Ashton in this email that he had been keeping in touch with the drilling team and gave them a presentation recently as they were interested in Firetail's services. The Firetail slide deck attached to that email includes information about the company on a slide titled "who is Firetail?". The slide deck states that Firetail supplies permanent monitoring systems to the O&G industry. It also states that Mr Wayne has 12 years of experience, and that his areas of expertise include "well testing, permanent downhole gauge systems, frac tree, downhole completions". Of the four other employees listed on this slide, none of them have "permanent downhole gauge systems" listed as an area of expertise. Another Firetail slide deck lists Mr Wayne's "roles & responsibilities" as including "Primary technical - Downhole Gauges" and "Well Testing". As Mr Ashton received this slide deck, he was likely aware that Mr Wayne intended and aspired for Firetail to provide PDHG services_._
On 27 July 2017, Mr Wayne emailed Mr Ashton again. This email was referred to above but is repeated for convenience. He stated that there had been "lots of action for Firetail on the integrated Flowback services and Fibre Optic side of things" and that "a few customers have asked me to provide them with quotes for Permanent Downhole Gauge Systems". Mr Ashton replied "obviously we need to talk about the fibre issue as it seems that is an area of potential conflict for the companies. Let's find areas of common ground".
The evidence from Mr Ashton's s 155 examination establishes that he did not regard Mr Wayne as a scientist, but still saw him as a "very capable" operator who had "good knowledge of downhole gauges" and who might have aspirations to provide gauge services.
Regarding the knowledge of competition, the ACCC also relies upon the emails between Messrs Ashton, Meldrum and Morgan on 20 and 21 September 2017 to show that Mr Ashton was aware that Firetail had sought quotes for the purpose of bidding for the Origin gauge tender after Origin requested Firetail to make a proposal. The ACCC submits that this goes to Mr Ashton's state of mind regarding the competitive threat of Firetail at that time, evidenced by his email to Messrs Morgan and Meldrum on 21 September 2017 where he states that they should cultivate Firetail and reduce their competitive exposure.
The burden of this evidence supports the conclusion that Mr Ashton was concerned that Firetail might pose a competitive risk to Qteq and was prepared to take steps to reduce the risk of that ever eventuating. Such a precautionary approach falls short of supporting the competition condition.

Parties

Applicant/Plaintiff:

Australian Competition and Consumer Commission

Respondent/Defendant:

Qteq Pty Ltd [2025] FCA 371

Legislation Cited (3)

Consumer Act 2010

Court Rules 2011

Practices Act 1974

Cases Cited (33)

Australian Competition and Consumer Commission v Air New Zealand Ltd [2014] FCA 1157; 319 ALR 388

Australian Competition and Consumer Commission v Australian Egg Corporation Ltd [2017] FCAFC 152; 254 FCR 311

Australian Competition and Consumer Commission v BlueScope Steel Ltd (No 5) [2022] FCA 1475

Australian Competition and Consumer Commission v Cascade Coal Pty Ltd [2019] FCAFC 154; 374 ALR 90

Australian Competition and Consumer Commission v Delta Building Automation Pty Ltd [2023] FCA 880

Australian Competition and Consumer Commission v J Hutchinson Pty Ltd [2015] HCA 10

Australian Competition and Consumer Commission v Olex [2017] FCA 222; ATPR 42-540

Australian Competition and Consumer Commission v Pacific National Pty Ltd [2020] FCAFC 77; 277 FCR 49

Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2002] FCA 824; ATPR 41-877

Commissioner of Taxation v Comber [1986] FCA 92; 10 FCR 88

Doney v The Queen [1990] HCA 51; 171 CLR 207

Ellison v Sandini Pty Ltd [2018] FCAFC 44; 263 FCR 460

Holdsworth v Commissioner of Police (NSW) [2020] NSWSC 228

J Hutchinson Pty Ltd v Australian Competition and Consumer Commission [2024] FCAFC 18; 302 FCR 79

Jones v Dunkel [1959] HCA 8; 101 CLR 298

Minister for Immigration and Border Protection v Makasa [2021] HCA 1; 270 CLR 430

Muller v Dalgety & Co Ltd [1909] HCA 67; 9 CLR 693

Newcastle Airport Ltd v Chief Commissioner of State Revenue [2014] NSWSC 1501; 99 ATR 748

News Ltd v South Sydney District Rugby League Football Club Ltd [2003] HCA 45; 215 CLR 563

Queensland v Congoo [2015] HCA 17; 256 CLR 239

R v Campbell [2008] NSWCCA 214; 73 NSWLR 272

Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75; 216 CLR 53

South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 1541; 177 ALR 611

South Sydney District Rugby League Football Club Ltd v News Ltd [2001] FCA 862; 181 ALR 188

Trade Practices Commission v Parkfield Operations Pty Ltd [1985] FCA 545; 7 FCR 534

Trade Practices Commission v Tubemakers of Australia Ltd [1983] FCA 99; 76 FLR 455; 47 ALR 719

Visy Paper Pty Ltd v Australian Competition and Consumer Commission [2003] HCA 59; 216 CLR 1

Weissensteiner v The Queen [1993] HCA 65; 178 CLR 217

Wellington Capital Ltd v Australian Securities and Investments Commission [2014] HCA 43; 254 CLR 288

Before turning to the evidence for each Pro-Test Attempt, a dispute as to pleadings must be dealt with. The respondents, by way of an application made during the trial, sought an evidential ruling arising from what may conveniently be described as a pleading issue, noting that in the strict sense there are no pleadings because the proceeding has not been the subject of formal pleading by way of a statement of claim, but rather by way of a concise statement and additionally a statement of case voluntarily furnished by the ACCC, supported by a procedural order to do so. Nothing turns on that distinction, because what matters is whether the respondents have been afforded procedural fairness by being given clear enough notice of the case that they have to meet: see Australian Securities and Investments Commission v National Australia Bank Limited (No 2) [2023] FCA 1118; 171 ACSR 176 [12]-[20] (Derrington J).
The respondents raise a pleading issue, which grounds the evidentiary ruling they seek. That pleading issue is whether or not the ACCC is to be held to the cartel conduct allegations as articulated, as the respondents characterise them, in the final version of the ACCC's concise statement. The respondents were not entirely clear as to the role of the ACCC's statement of case. In my view, the statement of case was intended to articulate the ACCC's case more fully and could properly be relied upon to resolve any ambiguity and improve upon the clarity of that case. It is the overall effect of what was conveyed by the ACCC to the respondents as to what their case was that matters.
The ACCC contends that there was, fairly read, always an allegation of there being two cartel provisions for each of the alleged Pro-Test Attempts, in the context of s 44ZZRD(1)/45AD(1) of the CCA referring to a single provision of a CAU being a cartel provision. That is, the ACCC contends that it always alleged, in relation to each of the three Pro-Test attempts, two provisions, and that it could succeed by proving one cartel provision, or the other, or both.
The parties are implacably divided on the interpretation to be given to the case the ACCC brings in relation to the three Pro-Test Attempts. The ACCC seemed to acknowledge a degree of infelicity in the way in which its allegations were expressed, but says there is no ambiguity when the allegations are read as a whole and not in isolation as it contends the respondents were doing. The respondents' primary position is that the notice they had of the ACCC's case aligns with their interpretation of the allegations. In the alternative, the respondents contend that there is at least sufficient ambiguity that this should be resolved in their favour, pointing to this being a civil penalty proceeding. It is not in doubt that genuine ambiguity as to the way in which a case is brought, on a fair reading in all the circumstances, including the totality of the allegations, would tend to favour the more beneficial understanding of what has been alleged, from the perspective of the respondents, to prevail.

What is plain is that while the subsection requires the relevant persons to be "competitive", it does not require them to be so with each other at the time the contract, arrangement or understanding is entered into: News Ltd v Australian Rugby Football League Ltd [1996] FCAFC 870; (1996) 64 FCR 410. It is enough that they are likely to be in competition, or but for an actual or proposed contract, etc, they would be or would be likely to be in competition. In other words the time when the parties are "in competition" for s 4D(2) purposes may pre-date or post-date the time of entry into the contract, etc. The subsection on its face, then, envisages a variety of possible times at which the parties can relevantly be competitive.

(1976) 8 ALR 481

(1996) 64 FCR 410

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