The duration and scale of the offending conduct
176 The following points may be made about the duration, scale and scope of WWO's offending conduct.
177 First, the specific incidents of conduct encompassed by the offence occurred between about 1 June 2011 and about 31 July 2012, a period of just over one year (14 months). The fact that WWO's offending comprised a course of conduct over such a lengthy period is important.
178 Second, WWO has admitted two additional offences against s 44ZZRG(1) that took place in 2009. Those offences do not form part of the charged conduct. The extent to which the Court can and should have regard to them will be considered later in the context of ss 16A(2)(b) and 16BA of the Crimes Act. It suffices to note for now that those incidents demonstrate that the offence for which WWO is to be sentenced did not occur in isolation and was certainly not a spur of the moment or one-off aberration.
179 Third, and related to the previous point, the duration of the incidents the subject of the charge cannot be considered in isolation. The Respect Arrangement, including the relevant cartel provision, had been on-foot since before 2009. As just noted, cartel conduct was only criminalised in Australia as recently as July 2009. WWO could not and cannot be punished for any conduct it engaged in prior to that date. Nor could any such conduct be considered to aggravate the offence that was committed by WWO. It is, however, nevertheless of some relevance that the offence occurred in the context of a longstanding global cartel.
180 Fourth, there was no evidence that WWO continued to give effect to the Respect Arrangement or market allocation provision after 31 July 2012. Nor, however, was there anything to suggest that WWO voluntarily withdraw from the cartel at that time. It can be inferred, to the requisite standard, that the Respect Arrangement only ceased when the JFTC and the DOJ effectively put an end to it by their actions in September 2012.
181 Fifth, it is relevant, in terms of the scale and scope of WWO's offending, that it occurred in a market for services that were and are of considerable economic importance to Australia: the supply of ocean shipping services for "roll-on, roll-off" cargo on international routes including to and from Australia. The total value of automotive imports to Australia in 2012 was $34.8 billion. The cartel to which WWO was a party involved many of the major global suppliers of those services. WWO had the fifth largest global capacity of those carriers, between 8.2% and 10.5% of global capacity. There can be little doubt that the anti-competitive conduct engaged in by WWO had the capacity to limit or distort substantially the competitive setting of freight rates on the relevant routes to Australia, the likely result being that in many instances those rates were likely to be higher than they would have been in a competitive market: see CDPP v NYK at [226]; CDPP v K-Line at [287].
182 WWO's submissions highlighted various features of its conduct which were said to be relevant to assessing the nature and seriousness of its offending behaviour.
183 First, WWO submitted that its offending conduct occurred to "varying degrees" and that, more importantly, the conduct "was not adhered to in every case". It noted, for example, in relation to Incident 6, that while WWO had informed NYK that it would quote a rate of US$90/m3 or US$95/m3, WWO in fact quoted a rate of approximately US$40/m3 plus BAF.
184 There are a number of difficulties with that submission. It may be accepted that there were occasions where the parties to the Respect Arrangement did not adhere to the guiding principle. It was, however, an agreed fact that those occasions were unusual. More significantly, it was an agreed fact that each of the eight specific incidents in which WWO gave effect to the market allocation provision involved adherence to the Respect Arrangement. That includes Incident 6, the incident relied on by WWO in support of its submissions concerning non-adherence.
185 It may be accepted, in relation to Incident 6, that the freight rate submitted by WWO in response to Toyota's feasibility study may have been less than the rate that it had indicated to NYK it would submit. However, that was not the end of the matter. After WWO had submitted that freight rate, WWO and NYK engaged in further meetings and discussions which resulted in a revised offer by WWO some months later. It is abundantly clear, considering the conduct involved in Incident 6 in its entirety, that the final freight rates that were submitted to Toyota by both WWO and NYK were the product of collusion and were not truly competitive rates. It is, in all the circumstances, highly questionable whether the example of non-adherence relied on by WWO in fact amounted to non-adherence. Even if it did, it was non-adherence in an extremely minor and inconsequential respect.
186 On the question of WWO's adherence to the cartel generally, WWO submitted that the evidence of senior managers of MOL and NYK concerning WWO's close adherence to the Respect Arrangement regarding routes from Japan to Europe (as included in the agreed facts) was not directly relevant to this offence. That may be so. That evidence did, however, tend to suggest that it was very unusual for WWO not to adhere to the Respect Arrangement overall. The difficulty with WWO's submission concerning that evidence is that, on the one hand, it relied on a general statement in the agreed facts which suggested that the parties to the Respect Arrangement did not always adhere to it; and, on the other hand, it took issue with agreed facts which tended to suggest that WWO's non-adherence to the Respect Arrangement was unusual.
187 The most significant point in relation to WWO's submissions concerning its adherence to the Respect Arrangement, however, is that non-adherence, in the context of cartel arrangements, is not necessarily a significant mitigating factor. Even if WWO somehow "cheated" on the arrangement with NYK in the case of Incident 6, which in any event is doubtful, the competitive process was nonetheless restricted or distorted by its actions. Moreover, cheating between cartelists is a common feature of many cartels. It is in the cartelist's own self-interest to cheat on the cartel: doing so maximises profits and is economically rational behaviour. Cartelists certainly do not cheat for the benefit of the consumer or the market generally. A cheating cartelist is simply seeking to take further advantage of an already distorted or compromised competitive environment: see CDPP v NYK at [231]; CDPP v K-Line at [291].
188 It follows that, to the extent that there was any general non-adherence to the guiding principle by WWO, or any specific non-adherence in relation to Incident 6, that non-adherence was not, in all the circumstances, a significant or material mitigating circumstance.
189 Second, WWO submitted that the offending conduct was "relatively confined" in both duration and scale. As for duration, it noted that the offending conduct spanned "just over one year". As to its scale, WWO observed that it only gave effect to the cartel provision on less than 10 separate occasions, only 6,083 vehicles were shipped to Australia by WWO pursuant to the contract affected by its anti-competitive conduct (and that contract resulted in a loss to WWO) and the offending conduct only concerned three customers (Renault, Fiat and Toyota) on a confined number of routes (Europe, Turkey and the Americas to Australia).
190 It may be accepted that WWO's conduct was perhaps relatively confined as compared to the offending conduct of NYK and K-Line. That issue is discussed in more detail later in the context of parity. It does not follow, however, that the duration, scale and scope of WWO's offending was not significant. Nor does it follow that WWO's offending was not serious.
191 It is difficult to accept that the 14-month period during which WWO gave effect to the cartel provision can accurately be said to be a "confined period". It is equally difficult to accept that the fact that the specific incidents of WWO giving effect to the cartel arrangement only involved routes from Europe, Turkey and the Americas to Australia in respect of three customers means that the scale of the cartel can relevantly be characterised as confined. In any event, the identified incidents in which WWO gave effect to the market allocation provision of the Respect Arrangement should not be disaggregated and considered in isolation. Rather, they should be considered in the context of WWO's participation in a world-wide cartel in an important global market.
192 Third, WWO contended that it was a "smaller market participant" than NYK and K-Line during the charge period. It noted, in that regard, that WWO's share of global capacity was only 8.2% to 10.5% (compared to NYK's share of 15.5% to 17.2% and K-Line's share of 11.6% to 11.9%), and that, unlike the other carriers, WWO's trade was predominantly driven out of Europe (rather than the Asia Pacific) and was therefore focused on routes to and from Europe, rather than on the Asia to Oceania trade. This, according to WWO, explained why it shipped lower numbers of vehicles on routes to and from Australia compared to the other carriers.
193 The extent to which WWO's size or market share relevantly distinguishes its offending conduct from NYK and K-Line is again considered later in the context of the parity principle. For present purposes, it suffices to note that WWO's smaller size, as compared to NYK and K-Line, does not significantly reduce the seriousness of the offending conduct. WWO was undoubtedly still a very large corporation and a major participant in the relevant market. WWO's size and significance in the market can be seen, for example, in the number of vehicles it shipped to and from Australia in the financial year ending June 2012 (190,425) and the revenue it received that year ($606,330,486, including for logistical services). It was certainly not so small in size that its role in, or significance to, the Respect Arrangement can or should be discounted.
194 Finally, WWO took issue with some of the Director's submissions concerning the duration and scale of the offending conduct which drew on findings made in CDPP v NYK and CDPP v K-Line concerning the overall nature of the cartel arrangements. WWO contended that the Director's submissions that sought to draw on findings made in those cases must be "treat[ed] with caution", there being "no sound evidentiary basis to transpose factual findings made in other proceedings about K-Line and NYK to WWO". It is unnecessary to address that submission in any detail. It may of course be accepted that WWO can only be sentenced on the basis of the agreed facts and evidence adduced in this proceeding. That said, the agreed facts and evidence in this case generally support the same findings as those made in CDPP v NYK and CDPP v K-Line concerning the general nature and scope of the global cartel to which WWO was a party.