TYCO'S INVOLVEMENT
15 Mr Sam Di Scerni, the Regional Director of the Western Australian Regional Office of the ACCC, affirmed an affidavit on 3 March 2010 in which, amongst other things, he explained how the relevant conduct of Haden and Mr Roche came to the attention of the ACCC. He stated relevantly as follows:
3. On 26 March 2001, Tyco, through its solicitors Phillips Fox, wrote to the ACCC seeking leniency for Tyco's alleged collusive tendering conduct in the fire alarm equipment supply market in New South Wales (subsequently the subject of the Federal Court proceedings ACCC v FFE Building Services Ltd [2003] FCA 1542.
4. Tyco advised the ACCC that it had became aware of the alleged conduct as a result of a review of its operations and implementation of a trade practices compliance program as ordered by the Federal Court in the proceedings, ACCC v Tyco [1999] FCA1799.
5. Tyco sought leniency under the ACCC's then existing leniency/cooperation policy. The policy was broadly disseminated by ACCC Commissioners and staff and was published in the ACCC Journal, Issue 17, October 1998.
6. That policy offered leniency, including full immunity in appropriate circumstances, where a corporation or an individual came forward with valuable and important evidence of a contravention of which the ACCC was otherwise unaware or had insufficient evidence to initiate proceedings; provided full and frank disclosure; undertook to cooperate fully throughout the ACCC's investigation; and was not the ringleader nor had compelled or induced any other corporation or person to take part in the conduct.
7. On 23 July 2001, the ACCC wrote to Tyco informing it that after consideration of Tyco's earlier conduct as identified in the ACCC v Tyco [1999]proceedings and Tyco's market share in the New South Wales fire alarm equipment supply market, that it would not offer complete immunity to Tyco. The ACCC offered, instead, that subject to Tyco meeting certain conditions, the ACCC proposed to institute proceedings against Tyco seeking various orders including declarations and injunctions but would refrain from seeking a pecuniary penalty against Tyco and its current employees. Further, the leniency offer was limited to Tyco and its current employees.
8. The ACCC also advised Tyco that the offer of leniency was conditional upon, amongst other things, Tyco conducting a review of its conduct nationally with a view to identifying possible contraventions of Part IV of the Trade Practices Act and reporting the outcomes of that review to the ACCC.
9. On 21 November 2001, Tyco, through its solicitors Phillips Fox, wrote to the ACCC accepting the offer of leniency.
10. On 21 December 2001, Tyco wrote to the ACCC advising that it had conducted a national review of Tyco's activities as required under the leniency agreement and that the review had revealed that there were instances of separate conduct in three States which may raise concerns under the Trade Practices Act. The conduct in Western Australia related to the Western Australian commercial air conditioning installation and mechanical services market (WA air conditioningmarket). Subsequent ACCC inquiries could not uncover sufficient evidence on which to institute proceedings in relation to the alleged conduct in the other two States.
11. In relation to the WA air conditioning market conduct, Tyco reported that certain of its subsidiaries, namely Haden Engineering Pty Ltd (Haden), T O'Connor, and Designair, both before and to a more limited extent after they were acquired by Tyco, may have been involved in cover pricing and tender allocation conduct with competitors during a period from at least January 1996 to September 2000. The information also indicated that during the relevant period the Tyco individuals primarily responsible for preparing and finalising tenders were Mr Graham Myron and Mr Martin Roche. Neither Mr Myron nor Mr Roche was employed by Tyco at the time Tyco sought leniency from the ACCC.
12. Tyco requested leniency for these occurrences of conduct on the same basis as that granted in respect of the conduct in the New South Wales fire alarm equipment supply market.
13. On 22 February 2002, the ACCC wrote to Tyco advising it that leniency would be granted to Tyco, including its current employees with respect to the instances of State based conduct, including that in the WA air conditioning market, on the same basis and conditions as that granted in respect of the New South Wales fire alarm equipment supply conduct. The ACCC requested that Tyco comply with the requirement for full and frank disclosure and provide the ACCC with all the relevant information relating to the instances of alleged conduct.
14. At the time the ACCC granted leniency to Tyco, in relation to the WA air conditioning market conduct, Tyco did not nominate any former employeesfor whom leniency would be sought, and there was no evidence available to suggest that any current Haden employees were involved in the alleged collusive conduct.
15. If it had been otherwise, and the ACCC had been able to subsequently establish that Haden directors or employees had been involved in the alleged collusive conduct, they would not have been granted leniency unless they had agreed to cooperate fully with the ACCC; had provided full and frank disclosure; and had not been a ringleader nor had compelled or induced any other corporation or person to take part in the conduct.
16. In April and May of 2002, Tyco, through its solicitors Phillips Fox, provided the ACCC with information obtained from its internal interviews with current Tyco employees regarding the conduct in the WA air conditioning market.
17. In June 2002, staff from the ACCC's Western Australian office interviewed those employees who were either estimators or at a mid-level operational level. On the basis of the ACCC interviews and, in part on the earlier information provided by Tyco, the ACCC concluded that while the current Tyco employees were aware of certain behaviours which were suggestive of collusive tendering conduct, there was no evidence to indicate that the employees themselves were involved in the alleged conduct or that they had direct knowledge of the alleged conduct. The ACCC also concluded that the employees were not aware of any involvement by senior Haden management outside of Western Australia in the alleged conduct
18. The ACCC could not uncover any evidence from the interviews to indicate that Mr Myron had been involved in any collusive tendering conduct in the WA air conditioning market. Mr Myron was not interviewed by the ACCC in 2002, or later, because there was no prima facie basis upon which to interview him and, in any event, he had ceased employment with Haden in 1999.
19. The ACCC ascertained that Mr Myron transferred from Haden in Western Australian to Haden in New South Wales in 1996, and had left Haden in 1999, and also that Mr Roche had ceased employment with Haden in around August 2000.
20. Information obtained from the interviews did, however, indicate that Mr Martin Roche was the person most likely to have been involved in any collusive tendering conduct in that the interviewees indicated that Mr Roche was responsible for the tender pricing decisions; sometimes altered final tender prices to increase margins by amounts considered unusually high by the company's estimators; regularly attended meetings with other competitors at the Air Conditioning & Mechanical Contractors Association (AMCA); and was the subject of rumours that he was involved in collusive conduct.
21. The ACCC had no information indicating that any Haden director was involved in or was aware of the alleged collusive conduct, nor that any Haden employee, other than Mr Roche, was involved in, or aware of, the alleged collusive conduct.
16 Mr Di Scerni then deposed to his dealings with Mr Roche. The two met in late August 2002. Mr Di Scerni says, without descending to any specific allegations, that he "outlined the allegations which had been raised about the collusive conduct …". I take this to be no more than his repeating to Mr Roche what the ACCC had been told by Tyco, namely that Haden, amongst others, "may have been involved in cover pricing and tender allocation conduct with competitors during a period from at least January 1996 to September 2000."
17 He provided Mr Roche with a draft copy of the ACCC's leniency policy. He asked Mr Roche to cooperate in return for leniency from the ACCC. Mr Roche did not respond.
18 It is the case that Mr Roche did not cooperate until March 2004 when Mr Roche voluntarily submitted to a substantive interview at the Western Australian office of the Australian Government Solicitor, which was acting for ACCC. Mr Roche made certain admissions in that interview as to his direct involvement in the collusive tendering conduct. It was at this time that he asserted that Mr Whittaker, his immediate superior, had directed him to engage in the relevant conduct.
19 Mr Whittaker, when interviewed by the ACCC, denied any such involvement.
20 Mr Roche had in the previous year, in May 2003, been served with a notice under s 155(1)(a) and (b) of the TPA. These notices are not in evidence. Mr Roche responded to them on 18 June 2003. Likewise the response is not in evidence.
21 The ACCC before me submits that not only did Mr Roche not cooperate between August 2002 and March 2004 but that he lied to the ACCC as to his non-involvement. This is supported, the ACCC submits, by what Mr Di Scerni deposes at [35]-[42] as follows:
35. On Friday 30 August 2002, I returned a call from a Mr Andre Sweidan who identified himself as a solicitor from KPMG Legal.
36. Mr Sweidan said he had been consulted by Mr Roche following Mr Roche's discussion with me and had been assured by Mr Roche that he (Mr Roche) did not have any information that would be of use to the ACCC so Mr Roche was declining to attend any further interviews.
37. I asked him whether Mr Roche was saying that he didn't want to talk to the ACCC period or that Mr Roche was saying that he didn't have any information or knowledge about possible breaches of the Trade Practices Act.
38. He said that Mr Roche told him that he was not aware of any breaches having occurred.
39. I said that it appeared the Mr Roche was saying that he attended AMCA meetings with his competitors on a monthly basis, and sometimes more regularly, for a period of 4 years and yet nothing happened in any of those meetings which raised any concerns under the Trade Practices Act.
40. He said that Mr Roche was, in fact, saying just that.
41. I said that if Mr Roche did not want to cooperate and talk to the ACCC, there were other options available to the ACCC.
42. He said he and Mr Roche were aware of the ACCC's section 155 powers but they didn't think that would lead to anything. He added that if a s155 Notice was issued, could he be contacted as Mr Roche's legal representative.
22 Mr Roche swore an affidavit in response to that of Mr Di Scerni, on 10 March 2010. As to the matters involving Mr Sweidan he deposed:
60. I recollect meeting with Mr. Andre Sweidan of KMPG Legal at the offices of Direct Engineering Services in Malaga. We discussed my meeting with Mr. Di Scerni. Although I cannot recall the exact details of our discussions the topics included the Leniency Policy, s 155 Notices and the Haden/Tyco allegations against me.
61. I recall that I told Mr. Sweidan that I was concerned that the ACCC seemed to think I played a major role in the alleged collusive contact and that I had available to me some evidence that would assist them with their enquiries.
62. I also outlined to Mr. Sweidan the circumstances of my redundancy from Haden in August 2000 and how I had left the office without my personal possessions or any other items that might be described as evidence.
63. Mr. Sweidan said he was of the opinion that the ACCC appeared to have no real evidence to act on and that it would he better for me to respond to a s155 Notice, which offered some protection, should the ACCC chose to issue one. He also said that the ACCC had some strict rules to adhere to in conducting their enquiries and could not issue a s 155 Notice without sufficient grounds to do so.
64. After getting some understanding of the issues from Mr Sweidan, it is my recollection that I asked him to contact Mr. Di Scerni and advise him that I had no evidence in my possession to provide to the ACCC and that it was my preference to be issued with a s 155 Notice.
65. I was not present when Mr. Sweidan contacted Mr. Di Scerni and so can make no comment on Mr. Di Scerni's account, at paragraphs 35 to 43 of his affidavit, of what was said.
23 There was no cross-examination on either of these affidavits each of which was admitted without objection. I cannot resolve the differences which emerge as between the affidavits. Mr Roche should, in proceedings such as this, be given the most beneficial reading of matters put against him. It seems to me that, in approaching the matters this way, there is clearly room to conclude that Mr Di Scerni may have misunderstood Mr Sweidan. When Mr Roche referred to not having any evidence he was, at least arguably, referring to physical evidence. I think this is a fair reading of Mr Roche's written evidence at [62]-[64].
24 I do not regard Mr Roche, who acted on legal advice, as adopting an uncooperative attitude. He foreshadowed that he would respond to a s 155 notice. He had no computer or other records to provide to the ACCC. They were in the possession of Haden. He cooperated fully in the substantive interview in May 2004.
25 These proceedings were instituted in December 2004. As Nicholson J said at [527] Mr Roche has cooperated with the ACCC's investigation admitting his liability and has saved the parties and the Court substantial time and expense associated with a contested hearing. This finding merely reflects the statement of agreed facts at [59] and [60] which are as follows:
CO-OPERATION
59. Since the contravening conduct has been discovered, Roche has substantially cooperated and assisted the Commission with its investigations by participating in a section 155(1)(c) interview and voluntarily providing further information as requested by the Commission.
60. Further, Roche has now admitted liability to the contravening conduct.
26 I do not consider that the ACCC should now be heard to say otherwise. The ACCC ought not be permitted to resile from its agreement as to the facts which formed the basis, in part, of Mr Roche's admission of liability. The effect of the ACCC's submissions before me was an attempt to override the agreed facts in this respect. Accordingly, I propose to approach the question of penalty upon the basis of the agreed facts on the question of cooperation.