60 Mr Wright has agreed that on or after 22 July 2004 he gave effect to the contravening provisions by:
· nominating abalone purchasers in mainland South-Eastern Australia to whom the quota holders were to make their unshucked abalone available;
· negotiating with abalone purchasers in relation to the Beach Price and "premium" applicable to the sale of abalone by the quota holders;
· acting, and procuring Mr Bilborough, to utilise the combined volume from the quota holders to efficiently control the supply to abalone purchasers and to maximise the promotion and marketing of abalone for the purposes of the business of Australian Abalone; and
· cooperating with Mr Bilborough to maximise income to Australian Abalone from the business of promoting and marketing abalone, including by providing advice and information from time to time.
61 It is agreed that Mr Morgan gave effect to the contravening provisions in that:
· he sent an email on 2 August 2004 to a number of quota holders and to Mr Bilborough, in which he advised that the business of Australian Abalone had commenced and that Australian Abalone was dealing principally with two abalone purchasers;
· on 31 August 2004 he attended and participated in a meeting of the directors of Australian Abalone; and
· on 10 March 2005 he attended and participated in a further meeting of the directors of Australian Abalone.
62 Finally, in relation to Mr Bilborough, it is agreed that he gave effect to the contravening provisions in that on or after 22 July 2004 he:
· procured the quota holders to make their unshucked abalone available to Australian Abalone;
· procured Mr Wright to nominate the abalone purchasers to whom the quota holders were to make their unshucked abalone available;
· negotiated, with Mr Wright, with abalone purchasers in relation to the Beach Price and "premium" applicable to the sale of abalone by the quota holders;
· received an email sent by Mr Morgan to him and the quota holders, which referred to the business of Australian Abalone, named the abalone purchasers with which Australian Abalone was dealing and advised that it was critical for quota holders to coordinate their divers to the named abalone purchasers;
· wrote and distributed a document entitled "The Inaugural Aussie Abalone Newsletter" dated 10 August 2004, which referred to agreements in place that would allow Australian Abalone to make a "premium"; and
· attended and participated in meetings of the directors of Australian Abalone held on 31 August 2004 and 10 March 2005.
Cessation of the contravening conduct
63 On 11 August 2004 (which was prior to the ACCC's investigation) Mr Bramley notified Australian Abalone of Ronda's intention to terminate its "Supply and Marketing Agreement" with immediate effect. As indicated above, it appears that fees were only paid to Australian Abalone in respect of Ronda's unshucked abalone on four occasions, between 29 July 2004 and 2 August 2004.
64 On 8 October 2004 the ACCC wrote to Mr Morgan, in his capacity as company secretary of Australian Abalone, expressing its concern that Australian Abalone's selling arrangements might be in breach of Pt IV of the TPA, and s 45 in particular. It seems that this letter was not received by Mr Morgan until 11 November 2004, who provided a written response to it on 18 November 2004. That response stated that Australian Abalone was not buying or selling any abalone, it was a marketing company. It also stated that although the respondents did not consider that they had breached any provision of the TPA, if the ACCC still had concerns about the arrangements they would be happy to meet to "resolve any ongoing issues".
65 For whatever reason, no such meeting took place. However, the arrangements with Australian Abalone appear to have ceased within a relatively short time after the ACCC's letter was received. In relation to each of the quota holders other than Ronda the last recorded sales of unshucked abalone in respect of which a fee was paid to Australian Abalone occurred on the following dates:
· for MI Lee Marine, on 20 October 2004;
· for Leckford, on 10 January 2005;
· for Bob's Marine, on 11 January 2005;
· for Mr Warn, on 25 January 2005;
· for PJ & H Johnston, on 14 February 2005;
· for A & A Reynolds, on 24 February 2005; and
· for Mr Hunt, on 24 February 2005.
THE NATURE OF THE CONTRAVENTIONS
66 In broad terms, the ACCC's case has four separate components. It claims that the respondents entered into an arrangement:
(a) that contained an exclusionary provision; and/or
(b) that contained a provision that had the purpose, or the effect, or likely effect of substantially lessening competition.
In addition, the ACCC claims that the respondents gave effect to a provision of that arrangement which:
(c) was an exclusionary provision; and/or
(d) had the purpose, effect or likely effect of substantially lessening competition.
67 The ACCC's exclusionary provision case turns upon s 4D of the TPA, and the fact that the arrangement among the quota holders contained a provision that had the purpose of preventing, restricting or limiting the supply of goods or services to particular persons in particular circumstances on particular conditions.
68 Its price-fixing case focuses upon the Beach Price and the "premium". In ordinary competitive circumstances, each quota holder would negotiate with each processor seeking to get the best possible price for its abalone. However, under the impugned arrangement a quota holder would not supply a processor unless that processor was prepared to pay a premium on top of the Beach Price, and was nominated by Australian Abalone. The Beach Price would go to the quota holder, and the premium would go to Australian Abalone.
ADMISSIONS BY THE RESPONDENTS, AGREED PENALTIES AND SUBMISSIONS REGARDING PENALTY
The first, second, fourth to eleventh, thirteenth, fourteenth, seventeenth and nineteenth respondents
69 These respondents, principally quota holders, were represented before me by Mr North SC and Mr Nugent. They were instructed by Fitzpatrick Legal.
70 Australian Abalone, Bob's Marine, Leckford, PJ & H Johnston, A & A Reynolds, MI Lee Marine, Colbrash and QO Nominee all admit that they contravened s 45(2)(a)(i) of the TPA in that during 2004 they made an arrangement which contained provisions that had the purpose of restricting the supply of unshucked abalone to certain processors. They admit that the provisions in question were "exclusionary provisions" within the meaning of s 4D.
71 Those same respondents all admit that they contravened s 45(2)(a)(ii) of the TPA in that the arrangement referred to above also contained provisions which had the purpose, effect and likely effect of controlling the price paid for unshucked abalone taken from the central abalone zone.
72 Australian Abalone, Bob's Marine, Leckford, PJ & H Johnston, A & A Reynolds and MI Lee Marine all admit that from about July 2004 to March 2005 they contravened s 45(2)(b)(i) and (ii) of the TPA by giving effect to the provisions referred to above.
73 Mr Warn and Mr Hunt admit liability for having, during 2004, and from July 2004 to March 2005, contravened the analogous provisions of the Code.
74 Mr Peime, Mr Johnston, Mr Reynolds and Ms Bilborough all admit that they were knowingly concerned in the various contraventions of the TPA by the companies of which they are directors. They also admit that they were knowingly concerned in the contraventions of the Code committed by Mr Warn and Mr Hunt.
75 The pecuniary penalties that are proposed, and agreed, between the ACCC and Mr North's clients are as follows:
· Bob's Marine - $160,000;
· Leckford - $110,000;
· PJ & H Johnston - $110,000;
· A & A Reynolds - $60,000;
· MI Lee Marine - $80,000;
· Mr Warn - $120,000;
· Mr Hunt - $45,000;
· Mr Peime - $20,000;
· Mr Johnston - $20,000;
· Mr Reynolds - $20,000; and
· Ms Bilborough - $20,000.
76 No pecuniary penalties are sought against Australian Abalone, Colbrash and QO Nominee.
77 As regards Mr North's clients, it should be noted that Messrs Peime, Johnston and Warn were members of the "steering committee", set up after the original meeting in October 2003 to develop the arrangement. These three individuals were also directors of Australian Abalone, and had control over its day to day management. However, Mr Peime and Mr Johnston's liability, and that of Mr Reynolds and Ms Bilborough, is ancillary only. Messrs Hunt and Warn are directly liable under the Code. As indicated above, Mr Hunt entered into the arrangement some two months after the other quota holders.
78 It is agreed that the contraventions of the TPA and the Code arose as part of a single course of conduct, and that the respondents should not therefore be punished for each separate act or omission. It is also agreed that the conduct was of relatively short duration, and that there is no specific or precise evidence as to the amount of loss or damage caused as a result of the contravening conduct.
79 The ACCC accepts that the respondents did not set out to contravene either the TPA or the Code. It accepts that they did not act dishonestly. These concessions were properly made. It is an unusual feature of this case that the respondents acted, at all times, in an open manner. They documented all of their actions. Unlike almost all cases brought under s 45, there was no secrecy in what they did. That speaks volumes as to their state of mind.
80 In their defences, these respondents admitted all issues relevant to the structure of the corporate respondents. They also admitted matters leading up to the execution of the relevant agreements, and the agreements themselves. They are entitled to some credit for having acted responsibly in that regard.
81 Mr North's clients invited me to find that by entering into and giving effect to the arrangements, they acted in the belief that what they were doing was not merely legal, but actually for the benefit of the industry. I do not think that the evidence supports a finding of total selflessness on their part, though it does suggest a concern for all quota holders within the central abalone zone. I am, however, prepared to accept that they had no idea that by making or giving effect to the arrangement, they might be contravening the provisions of the TPA.
82 I accept that the relevant respondents ceased their involvement in this arrangement within a relatively short time after the ACCC wrote to them on 8 October 2004. Accordingly, the arrangement was in place for a comparatively short time, a few months at most.
83 The relevant respondents invited me to find that the moneys received by Australian Abalone, through the premiums negotiated with various processors, were in total somewhere between approximately $43,000 and $71,000. They submitted that all of those moneys were used in running costs, which included a trip (and sale) to China. Accordingly, the shareholders in Australian Abalone never received any payment by way of dividend. That submission seems to me to accord with the general picture presented, and I am prepared to act upon it.
Third and Twelfth Respondents
84 These respondents, Ronda and Mr Bramley, were represented by Mr Graham, instructed by Hall & Wilcox.
85 Ronda admits that it contravened s 45(2)(a)(i) and (ii) by making an arrangement in about July 2004 with Australian Abalone, the other respondent quota holders (except Mr Hunt), Mr Wright, Colbrash and QO Nominee which contained provisions that had the purpose of restricting or limiting the supply of unshucked abalone to certain processors, and which had the purpose, effect or likely effect of controlling or maintaining the price paid for unshucked abalone taken from the central abalone zone.
86 In addition, Ronda admits that in about July and August 2004 it gave effect to the provisions set out above, and thereby contravened s 45(2)(b)(i) and (ii).
87 Mr Bramley admits that he was knowingly concerned in and party to Ronda's contraventions.
88 The pecuniary penalties that are proposed, and agreed, between the ACCC and the third and twelfth respondents are as follows:
· Ronda - $65,000; and
· Mr Bramley - $20,000.
89 The ACCC accepts that Ronda and Mr Bramley cooperated in its investigation into this matter. They were also the first respondents to admit their contraventions, and to agree to penalties. They were the only respondents who fully accepted liability for what they had done, and agreed on penalties to be imposed, before the trial began.
90 In addition to the mitigating circumstances relied upon by the other respondents, Mr Bramley was not a member of the steering committee formed to develop the arrangement, and was not a director of Australian Abalone. He had no involvement in drafting any of the notices, newsletters or other correspondence to quota holders referred to in the ACCC's pleading. Neither Ronda nor Mr Bramley made any profit out of the arrangement, and there is no evidence that they caused loss or damage to anyone. The ACCC accepts that Mr Bramley believed that competent solicitors had been retained, and that there was nothing untoward about what was being done. The ACCC also accepts that Mr Bramley is remorseful, both on his own and Ronda's behalf.
91 In addition, it is agreed that Mr Bramley is 57 years old, and semi-retired. He has no tertiary education, and formerly worked as a butcher before becoming an abalone diver. Ronda is a small, closely held company which has no assets and does not trade. The probabilities are that it will be wound up. Its Abalone Fishery (Central Zone) Access Licence was transferred to a different company in December 2004, and the ACCC accepts that this transfer had nothing to do with the ACCC's investigation or the matters which are the subject of this proceeding.
92 Ronda and Mr Bramley have borne legal costs in engaging their own solicitors and counsel in relation to the ACCC's investigations and this proceeding. They have not had the advantage of sharing these costs in the way that other respondents have.
Fifteenth respondent
93 Mr Wright, the fifteenth respondent, was represented by Mr Scott, instructed by Browne & Co.
94 Mr Wright admits that during 2004 he contravened s 45(2)(a)(i) and (ii) of the Code by entering into an arrangement with various of the other respondents which contained provisions essentially in the same terms as those previously identified. In addition, he admits that from about July 2004 to March 2005 he contravened s 45(2)(b)(i) and (ii) of the Code by giving effect to those provisions.
95 The pecuniary penalty that is proposed, and agreed, between the ACCC and Mr Wright is $50,000.
96 Mr Wright calls in aid the same mitigating circumstances as are relied upon by Mr North's clients. In addition, he points out that he was not a member of the steering committee, and that he was not involved in drafting the relevant documentation. Mr Wright only became involved in the arrangement after it was reduced to writing. The ACCC accepts that he understood that the arrangement was intended to improve the quality and reliability of supply of unshucked abalone to the market. It also accepts that Mr Wright was not aware of the illegality of the conduct. In addition, it is common ground that Mr Wright will have to borrow money in order to pay the agreed penalty.
Sixteenth respondent
97 Mr Morgan, the sixteenth respondent, represented himself. As previously indicated, Mr Morgan is legally qualified.
98 Mr Morgan admits that, in his capacity as a director of Australian Abalone, he was knowingly concerned in, and therefore liable for, various of the breaches of ss 45(2)(a)(i) and (ii) and 45(2)(b)(i) and (ii) of the TPA and the Code by Australian Abalone, a number of the quota holders, Mr Wright, Colbrash and QO Nominee.
99 The pecuniary penalty that is proposed, and agreed, between the ACCC and Mr Morgan is $20,000.
100 In his capacity as director of Australian Abalone, Mr Morgan acted as the nominee of Mr Bilborough. As indicated above, he was also the company secretary.
101 Mr Morgan played a significant role in the arrangement. On the instructions of Messrs Bilborough and Wright, between 22 April 2004 and 10 May 2004, he prepared drafts of the three critical documents, namely the Shareholders' Agreement, the Supply and Marketing Agreement, and the Irrevocable Authority. He communicated with a number of the respondent quota holders and attended and participated in meetings of Australian Abalone.
102 It is agreed that Mr Morgan advised quota holders of which processors were nominated by Australian Abalone, and emphasised the importance of the catch being supplied only to those processors.
103 Mr Morgan is entitled to rely upon the mitigating circumstances that the other respondents have invoked. In addition, he did not and does not hold an Abalone Fishery Access Licence, and had no previous involvement in the abalone industry. His liability is ancillary only. The ACCC accepts that, although a qualified lawyer, he was not experienced in trade practices law.
104 I should note that Mr Morgan filed written submissions dated 19 October 2007 in which he either challenged, or sought to place a gloss upon the joint submissions that were filed on behalf of the ACCC and himself. In his written submissions he argued that no processor was ever made aware of the Beach Price which was simply a hypothetical, notional figure used to calculate the payment to the quota holder, with the excess moneys being payable to Australian Abalone. He also commented upon the mechanics of the arrangement, pointing out that Australian Abalone was sometimes able to negotiate an extra payment in return for better quality abalone, or because of cost savings. In other words, on some occasions the "premium" that was paid was fully justified by the added value that was provided.
105 Mr Morgan also wished to emphasise that the respondent quota holders had a real and genuine grievance against the processors, believing that they were being manipulated by them. He also emphasised his own high level of cooperation with the ACCC throughout its investigation. He stressed that any contravention of the TPA on the part of the respondents was entirely inadvertent.
Eighteenth respondent
106 Mr Bilborough, the eighteenth respondent, was not legally represented.
107 Mr Bilborough admits that in his capacity as a consultant and advisor to Australian Abalone he was knowingly concerned in, and therefore liable for, various of the breaches of ss 45(2)(a)(i) and (ii) and 45(2)(b)(i) and (ii) of the TPA and the Code by Australian Abalone, a number of the quota holders, Mr Wright, Colbrash and QO Nominee.
108 The pecuniary penalty that is proposed, and agreed, between the ACCC and Mr Bilborough is $50,000.
109 Mr Bilborough is the husband of Natalie Bilborough who relevantly controlled Colbrash and MI Lee Marine. As indicated above, in about February 2004 he prepared the "Aussie Abalone: Information Summary February 2004" in which he proposed the creation of a new company.
110 In March or April 2004 Mr Bilborough was also responsible for having prepared and presented a PowerPoint presentation containing a proposal to establish the new corporate entity, coordinate diving, and negotiate with processors with a premium to cover management costs and increased efficiencies. Throughout this period he met with various quota holders with a view to encouraging them to enter into the arrangement.
111 On 10 August 2004 Mr Bilborough wrote and distributed a document entitled "The Inaugural Aussie Abalone Newsletter" which referred to agreements in place that would allow Australian Abalone to make a "premium". As indicated above, he also attended and participated in meetings of the directors of Australian Abalone held on 31 August 2004 and 10 March 2005.
112 It seems to be agreed that it was Mr Bilborough who first came up with the idea of extracting a premium from nominated processors by using the combined power of any quota holders who ultimately entered into the arrangement.
113 Mr Bilborough is, of course, entitled to rely upon what may be described as the usual mitigating circumstances. In addition, he did not, and does not, hold an Abalone Fishery Access Licence. He is an undischarged bankrupt. Although he eventually agreed to the penalties and other orders proposed, he was one of the last respondents to do so, and even then, invited me to conclude that the pecuniary penalty to which he had agreed was excessive, and should be reviewed. Any reliance on his part on contrition must be viewed in that light.
CONSIDERATION
Factors relevant when fixing pecuniary penalties
114 The factors relevant to the Court's discretion in fixing pecuniary penalties for contraventions of Pt IV of the TPA are well established. Although such contraventions are not criminal offences, they are regarded as serious.
115 Plainly, the matters to be considered include:
· the nature and extent of the contravening conduct;
· the amount of loss or damage caused, if any;
· the circumstances in which the conduct took place;
· the size of the contravening company;
· the deliberateness of the contravention;
· the period over which the contravention extended; and
· whether the respondents have shown a disposition to cooperate with the regulatory authorities.
See generally Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 per French J at 52,152-52,153.
116 A pecuniary penalty is intended to achieve various goals. These include punishment, proportionate to the gravity of the contravening conduct, and deterrence, both specific and general.
117 At the same time, any penalty that is imposed should not be so high as to be oppressive. Among the factors that may be taken into account by way of mitigation are a blameless prior history, genuine contrition, and a willingness to settle any proceeding so as to avoid unnecessary expense.
118 It is also worth noting that the fact that a company has ceased trading and has no assets are not circumstances which ought to prevent the imposition of a penalty: Australian Competition and Consumer Commission v Commercial and General Publications Pty Ltd (No 2) (2002) ATPR 41-905 at 45,441 per Heerey J. As O'Loughlin J stated in Australian Competition and Consumer Commission v The Vales Wine Company Pty Ltd (1996) ATPR 41-528 at 42,776:
"Even though [the penalties] may not be recovered, they will serve as a warning throughout the wine industry and elsewhere of the attitude of the Court to offences of this nature."
Principles governing agreed penalties
119 There is a public interest in the settlement of cases brought under the TPA and the Code. Such settlement avoids lengthy and complex litigation, with attendant savings of costs. It also leaves the Court free to deal with other urgent matters, and relieves the ACCC of the burden of conducting the litigation, freeing up investigating officers to deal with other matters.
120 The Court must ensure that any consent orders sought as part of the settlement of a proceeding which alleges breaches of the TPA are within power, and otherwise appropriate. However, it should not refuse to give effect to a proposed settlement merely because it would have made different orders had the matter not been resolved. There is no doubt in this case that the declarations sought are within the power of this Court, and are otherwise appropriate.
121 The real question is whether the pecuniary penalties which are now sought, and which have been agreed by the respondents, should be approved. In answering that question it must be emphasised that, in the final analysis, it is for the Court, and not the parties, to determine the amount of any pecuniary penalty. The Court is not to be regarded as a "rubber stamp". See generally NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285; and Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993.
122 Nonetheless, it is a fact that in the vast majority of cases where pecuniary penalties have been agreed the Court has approved those penalties. That is because the Court is concerned only with whether the agreed penalties are within what is described as the "permissible range". Because the determination of a penalty is not an exact science, that range may be quite broad. If an agreed penalty is "within the range" the Court will generally give it effect.
123 In determining whether or not an agreed penalty is "within the range" the Court will have regard to various matters. These include pecuniary penalties imposed in other cases, particularly those imposed in like circumstances. Questions of parity will also be important. The Court will accord particular weight to the view of the regulator, as representing the public interest, that the penalty is adequate in all the circumstances.
124 The parties have jointly submitted, and I accept, that the Court is entitled to treat the respondents' consent to these orders as involving an admission of all facts necessary or appropriate to the grant of the relief sought. See Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 164.
The penalties in this case
125 The pecuniary penalties that are sought, and agreed, are for the most part well within what I would regard as the "permissible range". Cartel conduct can take many different forms. On the one hand, it may be so grave as to warrant massive pecuniary penalties on the scale of those recently imposed by Heerey J in Australian Competition and Consumer Commission v Visy Industries Holdings Pty Ltd (No 3) [2007] FCA 1617.
126 Cartel behaviour of the kind with which Heerey J was concerned can, as his Honour noted (at [306]) be extremely damaging to the prosperity of a free market economy. Often the profits to be made can be immense, and the risk of detection slight. That explains, in part, why the legislature has progressively increased the maximum penalties available in relation to this type of conduct.
127 Heerey J went on to observe (at [309]) that many countries with free market economies have enacted laws which make cartel conduct by individuals subject to criminal sanctions, including imprisonment. I note that in April 2003 the Dawson Committee recommended the introduction of criminal sanctions for serious cartel behaviour. I also note that on 2 February 2005 the Treasurer announced proposals for the criminalisation of serious cartel conduct. He stated that the maximum penalties for the new cartel offence would be a term of imprisonment of five years and a fine of $220,000 for individuals, and a fine for corporations that would be the greater of $10 million or three times the value of the benefit from the cartel. Where the value could not be determined the fine would be 10% of annual turnover.
128 Although not all cartel conduct should be viewed as warranting the imposition of criminal sanctions, including imprisonment, plainly that option should be available in relation to serious cases of such conduct. See generally B Fisse, "The Cartel Offence: Dishonesty?" (2007) 35 Australian Business Law Review 235 at 236. I interpolate that in the event such conduct is criminalised in Australia, problems may arise in formulating a cartel offence in terms that would be comprehensible to ordinary jurors. Section 45 is complex enough. The idea, which has been mooted, of simply adding the notion of "dishonesty" to what is already a daunting provision may be counterproductive. As Fisse notes, no country other than the United Kingdom (the Enterprise Act 2002 (UK)) has made dishonesty an element of a cartel offence, and perhaps for good reason.
129 It ought to be possible to define serious cartel conduct in relatively simply terms. Fisse (at 237) makes several useful suggestions as to how this might be done. Whatever else might be said, in appropriate cases imprisonment should be available as a sentencing option. Pecuniary penalties may be seen as simply part of the price of doing business.
130 Nonetheless, there are cases, of which the present is a prime example, where the cartel conduct should be viewed in quite a different light. Heerey J observed that "of its nature" cartel behaviour is likely to occur in secret. That is of course correct as a general proposition. However, nothing could be further from the truth in this case. A feature of the arrangement that lies at the heart of this proceeding is that it was fully documented through a series of meetings that were open to virtually any quota holder to attend. There was no attempt at concealment. Minutes of meetings were kept, and formal resolutions noted. All of these documents were preserved and provided by the respondents, upon request, to the ACCC.
131 That of itself makes this case entirely unusual.
132 Even more remarkable is the fact that a number of lawyers and accountants cast their eyes over the relevant documents, and failed to detect a possible breach of Pt IV of the TPA. In any event, it is agreed that in entering into and giving effect to this arrangement, the respondents believed that what they were doing was lawful. They had no idea that they were engaged in price-fixing of a kind specifically prohibited by s 45 of the TPA.
133 The arrangement was carried out openly and transparently. Not surprisingly, the ACCC learned of it soon after it came into effect. As previously indicated, it wrote to Australian Abalone on 8 October 2004 seeking clarification of the relevant arrangement, and warning the respondents that they might be acting in contravention of Pt IV of the TPA.
134 As indicated above, it is also common ground that on 18 November 2004 Mr Morgan replied to the ACCC's letter, asking for a meeting in order to resolve any concerns that there might be regarding the arrangement.
135 There are other mitigating circumstances. The key documents were executed between 22 July 2004 and 16 September 2004. Australian Abalone received its last fee in February 2005. In broad terms, therefore, the arrangement lasted for only about six months.
136 As I have already indicated, Australian Abalone did not make any significant profit out of the arrangement.
137 There is no evidence as to the amount of loss or damage, if any, caused as a result of the contravening conduct. The ACCC submitted that this is of little weight in the context of contraventions that are illegal per se. It further submitted that it could be inferred that the contravening conduct of sales being made:
· at an average beach price plus a payment of a premium; and
· only to processors nominated by Australian Abalone,
is likely to have caused loss or damage to other processors not nominated, as well as those processors who were required to pay the premium. In addition, the ACCC submitted that the arrangement was likely to have caused harm to the competitive process for the supply of abalone taken from the central abalone zone. It relied upon the evidence of Dr Williams in support of that inference.
138 Notwithstanding the various mitigating circumstances to which I have referred, it must be remembered that in this area ignorance of the law is no excuse. The respondents had a responsibility to ensure that they knew the law, and that the law was obeyed.
139 In Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission (2003) 131 FCR 529 at [308]-[309] the Full Court regarded the fact that legal advice had been obtained as being of little consequence and not as a discounting factor. In that case it was said merely to illustrate that the risk was appreciated.
140 I would regard the principle formulated in Universal Music as being inapplicable to this case. Here it is not so much that legal advice was obtained that is relevant. Rather it is the fact that not one of a bevy of lawyers who were involved in structuring and documenting the arrangement considered for a moment that there might be a breach of s 45. It is that which lends support to the respondents' claim, accepted by the ACCC, that they did not act dishonestly and had no idea that they were contravening that section. In no sense did they "appreciate" the risk, and choose to run it.
141 I am satisfied that all but two of the pecuniary penalties that are agreed are within the permissible range, and that they should be imposed. These penalties are appropriate because they may deter others from engaging in similar conduct. They are not insubstantial, totalling, for example, in the case of Mr North's clients $765,000.
142 The two exceptions are the penalties agreed in relation to Ronda, $65,000, and Mr Bramley, $20,000. Try as I might, and despite the fact that neither of these respondents wished to make any further submissions after discovering what penalties had been agreed between the ACCC and the other respondents, I can see no reason why penalties as severe as these should be imposed upon these two respondents.
143 The difficulty with the penalties agreed in relation to Ronda and Mr Bramley is that they offend the requirement of parity, as between co-offenders. Parity is as much a relevant consideration when dealing with pecuniary penalties as it is when sentencing for a criminal offence.
144 In Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission (2003) 127 FCR 170 at [57] Merkel J (with whom Black CJ and Sackville J relevantly agreed) accepted that the parity principle applies to pecuniary penalties imposed under s 76 of the TPA. His Honour referred to two earlier decisions of the Full Court in support of that proposition, namely NW Frozen Foods at 295, and Australian Competition and Consumer Commission v Ithaca Iceworks Pty Ltd (2002) ATPR 41-851 at 44,539. See also Australian Competition and Consumer Commission v SIP Australia Pty Limited (2003) ATPR 41-937 at [57]-[58] per Goldberg J; Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 4) (2006) ATPR 42-101 at [71]-[74] per Goldberg J; and Australian Competition and Consumer Commission v IPM Operation and Maintenance Loy Yang Pty Ltd (No 3) [2007] FCA 144 at [11] per Tracey J.
145 In Lowe v The Queen (1984) 154 CLR 606 Mason J, as his Honour then was, underlined the importance of the parity principle. His Honour said (at 610-611):
"Just as consistency in punishment - a reflection of the notion of equal justice - is a fundamental element in any rational and fair system of criminal justice, so inconsistency in punishment, because it is regarded as a badge of unfairness and unequal treatment under the law, is calculated to lead to an erosion of public confidence in the integrity of the administration of justice. It is for this reason that the avoidance and elimination of unjustifiable discrepancy in sentencing is a matter of abiding importance to the administration of justice and to the community."
146 In Postiglione v The Queen (1997) 189 CLR 295 the principle was further explained. Dawson and Gaudron JJ stated (at 301):
"The parity principle upon which the argument in this Court was mainly based is an aspect of equal justice. Equal justice requires that like should be treated alike but that, if there are relevant differences, due allowance should be made for them. In the case of co-offenders, different sentences may reflect different degrees of culpability or their different circumstances. If so, the notion of equal justice is not violated. On some occasions, different sentences may indicate that one or other of them is infected with error. Ordinarily, correction of the error will result in there being a due proportion between the sentences and there will then be equal justice. However, the parity principle, as identified and expounded in Lowe v The Queen, recognises that equal justice requires that, as between co-offenders, there should not be a marked disparity which gives rise to "a justifiable sense of grievance". If there is, the sentence in issue should be reduced, notwithstanding that it is otherwise appropriate and within the permissible range of sentencing options."
(Footnotes omitted.)
147 I appreciate that the ACCC, Ronda and Mr Bramley have all agreed that the pecuniary penalties proposed are appropriate. It should be noted, however, that these two respondents were entirely unaware of the pecuniary penalties that were agreed between the ACCC and the other respondents until I raised the matter during the course of submissions. Counsel for Ronda and Mr Bramley had only a brief opportunity to obtain instructions as to whether there were any parity considerations that might have caused his clients to reconsider their position. It was not surprising in these circumstances that neither Ronda nor Mr Bramley sought to revisit the entire question of their agreed penalties.
148 None of this absolves me from having to consider the application of the parity principle to their particular case. I understand full well that they may have had good reason to agree to these penalties, rather than face what was at that stage thought to be a long and very costly trial. I also understand that there are some matters that I may not be privy to which explain why the ACCC sought penalties of this order against these respondents. However, I can only act upon the basis of the material before me. In my view, both Ronda and Mr Bramley would have a justifiable sense of grievance if they were required to pay the pecuniary penalties to which they have agreed, having regard to the greater culpability of other respondents who appear to have been treated far more leniently.
149 It is sufficient to recapitulate briefly some of the factors that operate in favour of these respondents. They clearly played a lesser role in the arrangement than many of the other participants. Their involvement was extremely brief, a matter of days only. They were separately represented, and were likely therefore to have incurred proportionately greater legal costs than those expended by Mr North's clients. Most importantly, they acknowledged their liability, and agreed on penalties before the commencement of this trial. In my view, they are entitled to a considerable discount for that fact alone.
150 The authorities make it plain that this Court should not tinker with an agreed penalty. It is only when it seems to be entirely outside the range, whether because it is too high or too low, that the Court should substitute a different amount. I think parity requires that the pecuniary penalties imposed on Ronda and Mr Bramley be significantly reduced. I consider that in each case a reduction of 50% is warranted. That means that Ronda should pay a pecuniary penalty of $32,500, and Mr Bramley a pecuniary penalty of $10,000.
151 The total of the pecuniary penalties to be imposed in this case is therefore $927,500. The fact that the Court has fixed penalties of that order for cartel conduct that is plainly at the less serious end of the scale should send a message to those who might be minded to enter into arrangements of this nature. It also indicates just how seriously cartel conduct is viewed by the Courts.
Costs
152 The parties have agreed that the respondents should pay for the ACCC's costs of this proceeding in the following amounts:
· Bob's Marine and Mr Peime - $20,000
· Ronda - $5,000
· Leckford, PJ & H Johnston and Mr Johnston - $20,000
· A & A Reynolds and Mr Reynolds - $10,000
· MI Lee Marine and Ms Bilborough - $20,000
· Mr Warn - $20,000
· Mr Hunt - $5,000
· Mr Bramley - $5,000
· Mr Wright - $16,000
· Mr Morgan - $20,000
· Mr Bilborough - $20,000
· Australian Abalone, Colbrash and QO Nominee - there be no order as to costs.
153 The costs orders total, in all, $161,000. These costs orders all seem appropriate, including those proposed in relation to Ronda and Mr Bramley. The lesser amounts payable by those respondents reflect the fact that they acknowledged their liability before the trial commenced.
I certify that the preceding one hundred and fifty-three (153) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.