Benefits obtained as a result of the conduct
116 In assessing the seriousness of a cartel offence, it is relevant to have regard to any benefits that the offender obtained as a result of the offence. That is no doubt why one of the methods by which the maximum penalty may be calculated involves the determination of the financial benefits that were obtained as a result of the offence. Experience shows, however, that it is frequently very difficult to calculate or quantify, in monetary terms, the benefits obtained that may be said to be reasonably attributable to the commission of the offence.
117 As adverted to earlier, the Aussie Companies and Mr Roussakis appeared to concede that it was not possible to determine the "total value of benefits" obtained by one or more persons that were reasonably attributable to the commission of the offence for the purposes of s 45AF(3)(b) of the Competition and Consumer Act. They did, however, adduce evidenced from an accountant, Mr Zappacosta, in order to establish the benefit which accrued to them as a result of their offending conduct.
118 The Aussie Companies and Mr Roussakis contended that the "gross benefit" derived from the offences was reflected in the increased turnover of Aussie Skips and Aussie Recycling during the period that the cartel arrangements were in place. That was the period between 24 May and 31 August 2019. The relevant "turnover", in that context, was said to be "total sales revenue … derived in the ordinary course of business". That apparently excluded inter-group transactions, including invoices issued by Aussie Skips to Aussie Recycling and vice versa. Mr Zappacosta calculated that Aussie Skips's turnover while the cartel provisions were in place increased by $107,120, and that Aussie Recycling's turnover increased by $162,131. Those amounts were said to reflect the benefits derived from the offending conduct. Mr Zappacosta also appeared to suggest that, once the increased costs incurred by Aussie Skips as a result of the reintroduction of the Queensland landfill level were factored in, Aussie Recycling suffered a loss of $662,659 during the period that the cartel arrangements were in place.
119 Based on Mr Zappacosta's calculations, the Aussie Companies and Mr Roussakis submitted that they accrued only a "minimal gross benefit" from their offending. Moreover, in their submission, the "aggregate turnover increase was much lower than the increased costs resulting from the introduction of the [Queensland] levy". It followed, so it was submitted, that the offences were not objectively very serious.
120 There are a number of problems with Mr Zappacosta's analysis and the submissions which were based on it.
121 First, some aspects of the methodology employed by Mr Zappacosta are highly questionable. The methodology involved examining invoices for the period 1 May 2019 to 31 August 2019 and calculating the difference between the minimum and maximum prices for that period. In relation to processing services, the analysis was limited to mixed waste only and consideration was only given to price increases that Mr Zappacosta considered exceeded the price increases that were agreed as part of the cartel arrangement ($54.99 per tonne or $27.49 per cubic metre). For collections services, the analysis was limited to price increases of 20% or more. Mr Zappacosta then deducted the entirety of the increased costs from his figure for increased turnover to produce what he suggested was a net loss figure.
122 There are at least three problems with the methodology employed by Mr Zappacosta.
123 The first problem is that, in limiting the analysis to invoices issued between 1 May 2019 and 31 August 2019, the analysis ignored price increases relating to customers who had not been invoiced in the period between 1 May and 30 June 2019. For example, if a customer was invoiced before 1 May 2019, but not invoiced again until July 2019, the analysis would ignore any price increases referable to that customer. In contrast, the ACCC's analysis of the invoices included the consideration of invoices in January, February, March, and April 2019. That is apparent from the agreed facts and was not disputed by the Aussie Companies or Mr Roussakis. There is therefore a possibility, if not a likelihood, that Mr Zappacosta's analysis ignored some relevant price increases.
124 The second problem with the methodology is that, in limiting the analysis to price increases that exceeded what Mr Zappacosta considered to be the agreed increase (in the case of processing services) and price increases which equalled or exceeded the agreed price (in the case of collections services), the analysis ignored price increases after the cartel arrangements that were in place that were equal to or slightly less than the agreed increase (in the case of processing services) or slightly less than the agreed increase (in the case of collections services). Price increases below those that were agreed may equally have been facilitated by the cartel arrangements: see, in analogous circumstances, the reasoning in CDPP v NYK at [233]. The problem with this aspect of Mr Zappacosta's methodology is particularly acute in the case of the processing services. That is because Aussie Recycling's agreed price increase was $50 per tonne, not $54.99 per tonne as Mr Zappacosta appears to have assumed. More significantly, it was an agreed fact that Aussie Recycling increased its prices by exactly $50 per tonne or $27.5 per cubic metre in approximately 25% of cases. Mr Zappacosta's analysis appears to have ignored all those price increases.
125 The inference or conclusion that Mr Zappacosta's methodology and analysis is likely to have significantly miscalculated and underestimated the price increases that followed the cartel arrangement is supported by the fact that his own analysis appears to suggest that Aussie Recycling's turnover in the period 1 July to 31 August 2019 increased by $480,341 as a result of the total price increases that occurred during that period. Even that figure may be unreliable given that it appears to have been the product of Mr Zappacosta's examination of only those invoices dated after 1 May 2019.
126 The third problem with Mr Zappacosta's methodology concerns his calculation of a net loss figure by deducting the figure for increased costs flowing from the Queensland levy from his figure for the Aussie Companies' increased turnover arising from all price increases during the period 1 July 2019 to 31 August 2019. That aspect of the methodology is at best questionable. The increased costs resulting from the Queensland levy were no doubt incurred in respect of, or spread across, all Aussie Companies customers, not just those customers who suffered a price increase in accordance with Mr Zappacosta's limited analysis.
127 Second, even putting to one side the problems with Mr Zappacosta's methodology, his findings and opinions are inconsistent with, or at least difficult to reconcile with, the agreed facts. The agreed facts include that between 1 July and 31 August 2019, Aussie Skips increased its prices in respect of collections services by 20% or more in 46% of cases and Aussie Recycling increased its prices for processing services by $50/tonne or $27.5/m3 or more in 39% of cases. Mr Zappacosta's analysis, on the other hand, would suggest that only 17.7% of the Aussie Companies' customers (250 out of 1,411) were affected by a price increase. That perhaps underlines the inaccuracy and unreliability of Mr Zappacosta's analysis. The agreed facts should be preferred to Mr Zappacosta's questionable analysis.
128 In all the circumstances, I am far from persuaded that Mr Zappacosta's calculation of the increased turnover during the period is accurate or reliable. I am equally unpersuaded by and reject his opinions concerning the benefit derived by the Aussie Companies as a result of the offences.
129 Third, and perhaps more fundamentally, the underlying premise of the submissions based on Mr Zappacosta's evidence is that the benefits derived from the cartel conduct were limited to the financial benefit derived from the price increases that occurred during the period of the cartel arrangements. That is a fundamental misconception.
130 The benefits that a corporation may derive from a cartel are not limited to quantifiable financial benefits, but include more intangible, but nonetheless extremely valuable, benefits: CDPP v NYK at [247]; CDPP v K-Line at [307]; CDPP v Alkaloids at [89]-[91]. In particular, where the cartel arrangements involve a form of price fixing or price maintenance, the benefits that flow to the parties to the cartel arrangement are not limited to those benefits that may be calculated by analysing the prices charged after, or as a result of, the arrangement. The benefits may include benefits that flow from the suppression or distortion of competition. Those benefits are unlikely to be able to be quantified. This case is a case in point.
131 It can be inferred from the facts of this case that Aussie Skips and Aussie Recycling benefitted from the cartel arrangements, albeit in a way that cannot be precisely quantified. There is no doubt that Aussie Skips and Aussie Recycling increased their prices following, and in accordance with, the cartel arrangements. It may be accepted that it was likely that both companies would have had to increase their prices to some extent following the reintroduction of the Queensland levy, though it cannot necessarily be inferred that they would have increased them to the same extent were it not for the cartel. Indeed, it is clear from some of Mr Roussakis's WhatsApp exchanges with Mr Tartak that, but for the cartel arrangements, it was unlikely that Aussie Skips and Aussie Recycling would have increased their prices to the extent that they did. In one exchange, for example, Mr Roussakis said: "I can't go up to say … 25% if you don't".
132 The more important point is that it is quite clear that the main point of the cartel arrangements that Aussie Skips and Aussie Recycling made with Bingo was to avoid the loss of customers which they might otherwise have suffered if they unilaterally increased their prices in response to the reintroduction of the Queensland levy. It may readily be inferred from the WhatsApp exchanges that both Mr Roussakis and Mr Tartak believed that if the Aussie Companies and Bingo coordinated their price increases, it was less likely that they would lose customers, not only to each other, but to other suppliers. As Mr Roussakis put it in one of his communications with Mr Tartak: "[w]e need to be on the same page if this is going to work … [i]n order for us to retain our current customers we need to play fair". Mr Tartak agreed and Mr Roussakis replied: "I'm trusting you DT".
133 While there were other service providers, the available inference is that Mr Roussakis and Mr Tartak both believed that if both the Aussie Companies and Bingo increased their prices, or maintained their increased prices, as they had agreed, the other smaller service providers would soon follow. During one of the WhatsApp exchanges, Mr Roussakis indicated that his feedback was that some of the other service providers were not going to put up their prices. He said, in that context: "[s]o we will definitely lose customers to them". Mr Tartak responded: "[d]on't believe it …[t]hey have to go up". Mr Roussakis replied: "I hope so" and Mr Tartak said: "[t]rust me stick to your guns". There was a sound basis for the belief that the other service providers - the companies that competed with Bingo and the Aussie Companies - would put up their prices if the Aussie Companies and Bingo did. There was at the very least a real chance that the prices charged by the two largest providers of collections services in the region would have an impact on how other competitors decided to set their prices.
134 It may accordingly be inferred that, putting to one side the direct financial benefits that accrued to Aussie Skips and Aussie Recycling as a result of their increased prices, both companies also benefited from the cartel arrangements because they were able to increase their prices without losing the customers they might otherwise have lost if they had unilaterally increased their prices. That was the very point of the arrangements with Bingo. It may readily be inferred that the Aussie Companies would not have continued to give effect to the arrangements for over three months if they were not deriving, or did not believe they were deriving, any benefit from them.