PENALTIES
150 The appellants submitted that the penalties imposed were manifestly excessive; that they failed to have regard to what was said to be the minuscule economic impact that the offending conduct had or was capable of having; that they were totally disproportionate to other comparable penalties; that, in effect, they treated McPhee as if it were its parent TNT Limited ("TNT"); and that they included a component of punishment which was not a relevant factor. It was also submitted that two penalties were imposed in respect of the ACI Florapak conduct when only one penalty was proper in the circumstances.
151 It was accepted that an appellate court may interfere with a penalty imposed only if it is shown that the trial judge fell into error by acting on a wrong principle, by acting on a misapprehension of the facts, by taking into account irrelevant material or by failing to take into account relevant material. It was also submitted that error could be presumed if the penalty imposed was manifestly excessive: Pye Industries Sales Pty Ltd v Trade Practices Commission (1979) ATPR 40‑124 at 18,325‑18,327. It was submitted that the principal object, if not the only object of imposing a penalty for a contravention of Pt IV of the Act, is deterrence and not imposition of punishment: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 297.
152 The appellants submitted that his Honour made various errors which vitiated his determination of the penalties imposed. We set out and deal with those submissions in the following paragraphs.
153 Section 76(1) of the Act requires the Court, when determining an appropriate pecuniary penalty, to have regard to all relevant matters, including "the nature and extent of the act or omission". It was submitted that his Honour did not do so. It was submitted that the economic impact that would have followed from the making of the attempted arrangement with DFE in respect of Just Jeans and the economic impact of the ACI Florapak arrangement was negligible. His Honour found that the maximum over-payment which Just Jeans might have made was $391,605 per year and that for some years Just Jeans could have paid a similar amount in excess of the market price for the services to which the attempted arrangement related. It was submitted that any potential loss referred to by his Honour depended upon the attempt being successful and IPEC's quote not being accepted because of the DFE cover quote. It was said that it was too speculative to conclude that the IPEC quote would not be accepted because of DFE's cover quote and that such a conclusion was against the evidence and the weight of evidence. Further, it was submitted that his Honour failed to take into account that the Just Jeans contract was for twelve months only.
154 There is of course an important difference between a submission that his Honour failed to have regard to the nature and extent of the act or omission and a submission that, if he did so, he did not give sufficient weight to aspects of that consideration. In his reasons for judgment on the amount of the penalties, his Honour referred to, and set out in full, the provisions of s 76(1) of the Act. Later in his reasons his Honour specifically addressed the nature and extent of the act or omission and the loss or damage suffered as a result of the act or omission. His Honour said:
"Through its most senior management in Victoria, including a member of its Board, McPhee engaged in a carefully planned, covert and sophisticated attempt to bring about a price‑fixing arrangement which would cause substantial damage to a long‑standing customer, and profit to itself."
Later in his reasons his Honour said:
"The only remaining aspect that need be referred to is the potential loss or damage to Just Jeans. Exhibit J showed that the difference between McPhee's quote and the successful quote of IPEC in terms of annual cost to Just Jeans was $391,605. This gives some indication of the damage Just Jeans would have suffered if it had been led, by a cover quote from DFE, into accepting McPhee's quote. Given the present low inflationary climate and the long standing relationship between Just Jeans and McPhee, it may be inferred that, had the proposed arrangement worked, Just Jeans would have been paying a similar amount in excess of the market price for some years at least, to the detriment of its shareholders and customers and its capacity to compete effectively in its markets."
We are satisfied that his Honour did have regard to the nature and extent of the act or omission and of any loss or damage suffered or which might have been suffered as a result of the act or omission. His Honour understood that the occurrence of damage depended upon Just Jeans accepting McPhee'squote and it was appropriate for him to have some regard to the loss that might have been suffered by Just Jeans if McPhee had succeeded in its attempt substantially to lessen competition by maintaining the price at which express freight services were supplied to Just Jeans. Although the Just Jeans contract was only for twelve months, it was not inappropriate, having regard to the long‑standing relationship between Just Jeans and McPhee, for his Honour to take the view that had McPhee's attempt to get a cover quote for DFE succeeded and had McPhee retained the Just Jeans contract as a result, the commercial relationship might have continued beyond the immediate contract. The fact is that no loss or damage was in fact suffered by Just Jeans because the acts of McPhee did not proceed beyond an attempt, but his Honour quite clearly took that into account.
155 His Honour specifically addressed the issue of the nature and extent of the act in relation to ACI Florapak and of the loss or damage suffered by ACI Florapak as a result of the act when he reasoned:
"As was correctly submitted, the amounts involved were not large. The total annual turnover for the account was $17,500."
156 It was then submitted that his Honour did not advert to the fact that McPhee had never been found to have engaged in such conduct in the past but rather treated McPhee as being visited by the defaults of TNT. His Honour was required by s 76(1) of the Act to have regard to:
"whether the person has previously been found by the Court in proceedings under this Part or Part XIB to have engaged in a similar conduct".
Although his Honour had regard to the record of an interview on radio with Mr Fred Millar, Chairman of TNT, on 10 August 1994 (to which we shall return), we do not accept the submission that his Honour did not advert to the fact that McPhee had not been found to have contravened the Act in the past. His Honour did so in the following passage:
"One of the many remarkable features of this case is that on 10 August 1994, only nine months before the Just Jeans incident, TNT Australia Pty Limited (TNT Australia) withdrew its defence to a proceeding by the Trade Practices Commission alleging serious price‑fixing, including, be it noted, 'cover quoting'. TNT Australia agreed to the imposition of a negotiated penalty of $4.1 million.
TNT Australia is a fellow subsidiary with McPhee of TNT Limited, the holding company of the TNT Group. I do not treat this as a previous finding of engagement in similar conduct by McPhee for the purposes of the fourth of the express criteria in s 76(1). Nevertheless some of the circumstances of this episode are relevant to the corporate culture that existed at a high level within McPhee in relation to compliance with the TPA."
The use of the transcript of the interview with Mr Millar is relevant to another ground of appeal, but we are satisfied that his Honour did not use the transcript of the interview for the purpose of taking into account or finding that McPhee itself had previously been found to have engaged in similar conduct.
157 It was submitted that his Honour had begged the question of what level of penalty represented a sufficient deterrent in the following passage of his reasons:
"If a penalty were simply fixed at a level sufficient to cost the contravenor more than the benefit to be derived from the anti‑competitive conduct, it would not matter that the contravenor had repeatedly violated Pt IV … But Parliament has expressly made prior contraventions relevant."
It was said that established authority demonstrates that it is important in setting a penalty that it does not become a mere "cost" but is a deterrent, although without being oppressive. However, it is, of course, inappropriate to consider, in isolation, particular passages from his Honour's reasons without taking into account his reasoning a whole. The passage to which we have referred is but one part of his Honour's analysis of the principles to be applied to the determination of penalty for contraventions under Pt IV of the Act. Later in his Honour's reasons he gave consideration to the proposition that the objective of the imposition of penalties is deterrence. For example, his Honour said:
"The fact that s 76 provides for penalties for individuals also suggests that penalty considerations extend beyond an assessment of the cost and benefit of the contravention."
Later in his Honour's reasons he said:
"It hardly needs to be added that deterrence remains a primary objective of the imposition of penalty (even though not expressly mentioned in s 76).
…
By setting penalties at such a level [$10 million for corporate contraveners] Parliament clearly intended that the Court should deter conduct which is considered (perhaps more so than previously) to be very damaging to the Australian community.
…
Deterrence is especially significant in relation to price‑fixing."
We are satisfied that his Honour took into account deterrence in a substantial way in fixing the penalties.
158 In the course of his reasons his Honour referred to s 76(1) of the Act, which he said made it clear that "all relevant matters" to which regard was to be had were not limited to the four criteria specified in the subsection. His Honour said:
"In my opinion, s 76 does not limit the Court in fixing a penalty to considering the contravenor as an economic actor whose conduct is to be assessed in purely cost benefit terms. …
If a penalty were simply fixed at a level sufficient to cost the contravenor more than the benefit to be derived from the anti‑competitive conduct, it would not matter that the contravenor had repeatedly violated Pt IV …"
His Honour then continued, in the passage criticised by the appellants:
"Similarly, on a strict economic analysis of cost and benefit it would not matter that conduct was systematic, deliberate or covert. But these matters have often been taken into account in fixing penalty."
His Honour then referred to five authorities in support of this proposition. The appellants submitted that the authorities did not support the conclusion that whether "conduct was systematic, deliberate or covert" may be used to assess the degree of culpability, rather than what is required for deterrence. We reject this submission. As a matter of principle, we consider that in fixing penalties under s 76 it is appropriate and relevant to take into account whether the conduct that contravened the Act was systematic, deliberate or covert. The authorities to which his Honour then referred do take these matters into account in determining penalty. Thus in Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40‑091, Smithers J said at 17,896:
"The penalty should constitute a real punishment proportionate to the deliberation with which the defendant contravened the provisions of the Act."
The relevant appellants criticised his Honour's reliance upon this passage and submitted that Smithers J's statement should be considered by reference to the earlier statement at 17,895 that:
"It is clearly the intention of Parliament to lay down conditions for the conduct of corporate trade and commerce which will ensure that traders operate in competitive conditions and that the public has the benefits which flow therefrom."
However, the observation of Smithers J upon which his Honour relied in this case was made in the context of analysing the culpability of the defendant, as appears from the passage (at 17,896) in which the following observation was made:
"The defendant had had experience in the operation of the Act and had access to advice in matters arising thereunder. As the sole importer of Stihl products it was in a commanding position in relation to marketing thereof. It has been in business since 1971 in a large way with an annual turnover in recent years of several millions of dollars. The penalty should constitute a real punishment proportionate to the deliberation with which the defendant contravened the provisions of the Act. It should be sufficiently high to have a deterrent quality …"
159 In Trade Practices Commission v Mobil Oil Australia Ltd (1984) 4 FCR 296, the second case referred to by his Honour, Toohey J said at 298:
"The penalty should be such as to deter not only the particular offender but others who may be disposed to engage in prohibited conduct of a similar kind."
A little later (also at 298) Toohey J said:
"Clearly much depends upon the deliberateness of the offender's conduct, the extent to which retail price maintenance has been carried on and the damage caused to anyone by that conduct …
The seriousness of a contravention may also be measured by the degree to which it was initiated or acquiesced in by senior management."
160 Similarly, in Trade Practices Commission v Carlton & United Breweries Ltd (1991) 24 FCR 532 Northrop J said at 542:
"On the facts of this case regard must be given to the strength of CUB in these markets and the deterrent effect of the penalty imposed."
In the immediately preceding paragraph Northrop J said:
"It must be accepted that on the material before the Court, the conduct by Mr Bartels was deliberate. It was not accidental or unintended. This is made clear from the facts set out in pars 21 and 22 of the statement. The expression of concern in relation to the action therein described the managing director by a corporation of the size, strength and standing of CUB could only be described as a blatant, if not fully understood, contravention of s 46(1)(c) of the Trade Practices Act. This is the most serious aspect of the contravention and great weight must be given to it."
161 Again, in Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41‑375 Burchett J said, at 40,166:
"The contraventions of the law were serious, deliberate, and systematic."
Those of the appellants to whom this question was relevant submitted that, nevertheless, in assessing penalty Burchett J accepted the primacy of the deterrent purpose in the imposition of penalty and the requirement to enforce observance of the policy of the Act. Immediately preceding the passage relied on by the appellants, however, Burchett J said:
"The purpose of penalties imposed under s 76 is that the provisions of the Act shall be adhered to in commerce and industry. It follows that a serious, deliberate, and systematic course of conduct contrary to the requirements of the Act must generally be met by really severe penalties. Especially must that be so where senior management of a large company is involved."
162 Finally, in Trade Practices Commission v Prestige Motors Pty Ltd (1994) ATPR 41‑359 Lee J said, at 42,699:
"Some of the additional matters that may be relevant to the assessment of the appropriate penalty under s. 76 have been referred to in cases such as T.P.C. v Annand & Thompson Pty Ltd (1987) ATPR 40‑772 per Spender J at 48,394 and T.P.C. v C.S.R. Limited (1991) ATPR 41‑076 per French J at 52,152‑52,153 but in the end the particular facts of each case must determine the appropriate penalty having regard to the object to be served by s. 76, namely, to promote competitive conduct in trade or commerce by use of penalties sufficient to deter acts that would tend to be destructive ofsuch competition. It is also necessary to have regard to the object of the provisions of the Act that have been breached, being the contravention in respect of which the penalty has to be imposed."
The additional matters to which Lee J referred were those referred to in earlier decisions as possibly coming within "all relevant matters" to which a court must have regard pursuant to s 76, but as his Honour said "a clear statement of the purpose of s 76" is set out by Smithers J in the passage in Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (at 17,896)referred to above.
163 We therefore reject the submission that the observations in the cases relied upon by his Honour show that the conduct constituting the contravention only has relevance when considering deterrence. We are satisfied that the authorities support the proposition that among the matters relevant to the imposition of a penalty under s 76 of the Act is whether the relevant conduct was systematic, deliberate or covert.
164 In the course of his consideration of these authorities, his Honour said that he would not necessarily agree with the observations of French J in Trade Practices Commission v CSR Limited (1991) ATPR 41‑076 at 52,152 that the principal, and probably the only, object of penalties imposed by s 76 is deterrence and that the moral and amoral components of behaviour have no part to play in the fixing of pecuniary penalties under the Act. His Honour accepted that in the context of a case of abuse of market power under s 46 competition should be considered to be "… by its very nature … deliberate and ruthless": see Queensland Wire Industries Pty Ltd v The Broken Hill Proprietary Company Limited (1989) 167 CLR 177 at 191 per Mason CJ and Wilson J.
165 It was submitted that his Honour fell into error because the point of the observation in Queensland Wire Industries Pty Ltd v The Broken Hill Proprietary Company Limited said to have been overlooked by his Honour, was that the provisions of Pt IV of the Act were enacted to achieve a perceived public good and to prohibit competition which would not be unlawful at common law. While compensation might be recovered the conduct was not rendered criminal and was not to be treated as if it were upon assessment of penalty.
166 But his Honour did no more than state that he did not necessarily agree with the conclusion of French J in Trade Practices Commission v CSR Limited (above) that the moral and amoral components of a contravener's behaviour had no part to play in the fixing of pecuniary penalties under the Act. We accept that the provisions of the Act are not designed to regulate or proscribe moral conduct, but they are calculated and intended to proscribe particular aspects of commercial conduct. One of those aspects is price fixing or price collusion. In such circumstances it is relevant, in determining the amount of a pecuniary penalty under s 76, to consider whether there has been a deliberate contravention or a deliberate attempt to contravene the Act. Such a consideration does not involve a moral issue but takes into account the deliberateness or the calculated manner in which a course of conduct has been undertaken. The reservation his Honour expressed in accepting the observations made about s 76 in Trade Practices Commission v CSR Limited (above) does not reveal error in the process of assessing the penalties to be imposed.
167 It was submitted that his Honour was in error when he relied upon earlier decisions which he said took into account "matters not confined to competition policy and which might fairly be called moral considerations" when those authorities did not support the proposition that the Court should take into account moral considerations in considering the imposition of penalties under s 76. As we have observed earlier we do not consider that the Act is concerned to regulate moral conduct; rather it is concerned with commercial and business conduct. Although his Honour referred to the fact that in earlier decisions the Court had taken into account matters "which might fairly be called moral considerations", a close reading of those cases shows that what the Court was concerned with was not so much moral considerations as considerations relating to the deliberateness of the conduct and the manner in which the contravention occurred, which is the approach his Honour, in fact, applied in this case.
168 In the course of his reasons his Honour said:
"The fact that s 76 provides for penalties for individuals also suggests that penalty considerations extend beyond an assessment of the cost and benefit of the contravention. In the case of an individual there would not ordinarily be a personal benefit accruing in the way that there usually is for a corporate contravenor. There is no basis in s 76 for concluding that Parliament intended different regimes to apply to a corporate and individual contravenors. 'Person' in s 76(1) includes both bodies corporate and individuals."
It was submitted that in this passage his Honour begged the question as to what the regime was which applied to corporate and individual contraveners. We do not see any error in this passage of his Honour's reasons. All his Honour was saying, with which we agree, is that the fact that s 76 provides for penalties for individuals as well as corporations shows that there were considerations relevant to determining penalty which extend beyond an assessment of the cost and benefit of the contravention.
169 In the course of his Honour's reasons he said:
"Moreover, if the only consideration was the fixing of a price sufficiently high to outweigh the benefits to be derived from the contravening conduct there would need to be some attempt to quantify those benefits in dollar terms. This is not usually done and was not done in the present case."
It was submitted that the issue of the quantification of benefits usually comes before the Court by way of agreed facts and that the practice of litigation does not determine the parameters of the discretion. We agree, but we do not consider that his Honour was saying anything more than that the determination of an appropriate penalty requires a consideration of matters other than the assessment of the cost and benefit of the contravention.
170 It was submitted that his Honour was bound by the decision in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (above) that the purpose of the imposition of a penalty under s 76 of the Act was not punishment and that his Honour had "attempted to amend the [statutory] provisions to render the conduct 'criminal' when Parliament has not done so". Although his Honour referred to Carr J's "slight reservation" in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission that "the cases decided to date" have not ruled out or excluded punishment as one of the purposes of s 76 and the observations of Goldberg J in Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 145 ALR 36 at 45 that:
"None of the cases which have emphasised the deterrent nature of penalties makes deterrence an exclusive consideration and excludes punishment as a relevant consideration save for Trade Practices Commission v CSR Limited",
his Honour did not determine that punishment was a relevant consideration to take into account. When his Honour said that he did not read NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (above) "as making irrelevant any of the factors to which I have referred to in fixing the penalties in this case" he was not referring to punishment as being one of those factors. It is therefore not necessary for us to consider whether punishment is a relevant factor to be taken into account. His Honour did not suggest that NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission was not binding on him and we did not hear full argument as to whether NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission was correctly decided on this point.
171 We reject the submission that his Honour regarded the contraventions of the Act as criminal offences. His Honour made no observation to this effect and indeed said to the contrary in the following passage:
"While there has been a clear policy decision by Parliament that contraventions of the laws against anti‑competitive conduct contained in Part IV are not criminal offences, nevertheless s 76 imparts into the penalty fixing process concepts of moral responsibility long known to the criminal law. In other words the sources of the substantive provisions of Part IV are doubtless economic policy and theory, but the penalties for contraventions are to be applied in a moral universe."
172 His Honour then referred to the observation of Sheppard J in Trade Practices Commission v Axive Pty Ltd (1994) ATPR 41‑368 at 42,794 that:
"… ordinary sentencing principles … apply notwithstanding that this is not a criminal prosecution."
A careful analysis of this part of his Honour's reasons demonstrates, in our view, that what he was concerned with was not so much that the penalties were to reflect a moral judgment but that they were to take into account the manner in which the contravention occurred, the fact that the conduct was a breach of the relevant provisions of the Act and other matters such as remorse. This is made clear when his Honour said:
"By moral considerations I do not mean some kind of saccharine piety."
Although his Honour referred to the fact that price fixing and the kind of collusive bidding that he found had been attempted was "a form of cheating", we do not consider that his Honour was saying anything more than the conduct involved a deliberate contravention of the Act.
173 It was submitted that his Honour had, in effect, penalised McPhee for exercising its rights of appeal. His Honour had published his reasons for finding that there had been contraventions of the Act on 26 February 1998 and subsequently heard argument on the imposition of penalties and published his reasons for the penalties he imposed on 27 March 1998. We reject the submission that his Honour penalised McPhee for exercising its rights of appeal. His Honour explicitly said:
"McPhee and its executives have indicated that they intend to appeal, as of course is their right. Likewise they are not to be penalised for defending the case against them …"
There is nothing in his Honour's reasons to suggest that he penalised McPhee for exercising its right of appeal.
174 It was said that his Honour erred in the manner in which he took into account and used a transcript of an interview conducted on 10 August 1994 with Mr Millar as Chairman of TNT and the conclusion his Honour reached from the fact that McPhee had a copy of that interview in its possession. The interview was given on the day penalties were imposed by Burchett J on a fellow subsidiary of McPhee, TNT Australia Pty Limited ("TNT Australia") following an agreement as to what those penalties should be. The reasons for imposing those penalties were published on 31 January 1995. TNT Australia had admitted liability and his Honour found that Mr Millar's statements in the interview were:
"an explicit repudiation of the admission of liability for which TNT Australia received a substantial benefit in the penalty fixing process."
In that interview Mr Millar had said that TNT Australia did not acknowledge that it was guilty of the contraventions of the Act which were alleged and that it denied liability for these matters.
175 His Honour noted that a record of this interview was included in McPhee's discovered documents and his Honour then stated:
"I accept that McPhee has operational independence within the TNT Group. But for present purposes, the fact that McPhee had a transcript of this interview within its possession gives an insight into its true attitude towards compliance with the Act. Continue as before, and if caught, admit nothing. It is significant that the TPA compliance manual which McPhee now puts forward (dated July 1996) gives some 'real life examples' of penalties imposed by the Court, but does not mention TNT Australia."
There was, however, no evidence before his Honour as to why or how the transcript of the interview came into McPhee's possession and it was submitted that the fact that McPhee had the transcript of the interview in its possession did not lead to the conclusion that McPhee's true attitude was "continue as before, and if caught, admit nothing".
176 We agree with the submission that his Honour was in error in taking the interview into account in the manner in which he did. We do not agree that the fact of possession of the transcript of the interview supports the conclusion that McPhee's true attitude was as stated by his Honour. His Honour had accepted that McPhee had operational independence within TNT and we consider it was an error to assume, as his Honour did, that McPhee's attitude towards compliance with the Act was to be determined by reference to the contents of the interview and possession of a transcript of it. Apart from aspects of the relationship with DFE, the attempt to make an arrangement or understanding involved in the Just Jeans conduct and the making of an arrangement or understanding involved in the ACI Florapak conduct (the latter being separate and distinct from the former), it was not shown that McPhee or the individual appellants had an attitude of indifference to the Act. Possession of a transcript of statements made by Mr Millar in an interview does not warrant that conclusion.
177 His Honour accepted that steps had been taken since the TNT Australia contravention to enhance compliance with the Act but found that the conduct of Messrs Forde, Holland and Morton, who must have been aware of the TNT Australia contravention, indicated a lack of commitment to the principles of the Act. These conclusions were reached in the context of his Honour's consideration of the Millar interview and the TNT Australia contravention. It is apparent that the interview was a consideration his Honour took into account as a significant factor in assessing the penalty to be paid by McPhee and also the penalties to be paid by the individuals in relation to the contravention involved in the Just Jeans conduct. In this respect we consider his Honour was in error.
178 It is therefore necessary to set aside his Honour's orders as to the penalties imposed in relation to the Just Jeans conduct and to determine what we consider to be appropriate penalties. Save for the use his Honour made of the transcript of the interview with Mr Millar, the matters to which his Honour had regard were relevant and appropriate in determining the amount of the penalties. We would not have set the penalties at the levels determined by his Honour but that difference may be explained by the regard given by his Honour to the contents of the interview transcript referred to above. In all other respects however, we adopt his Honour's reasoning in relation to the determination of the appropriate penalties.
179 In the circumstances the penalty for McPhee's contravention in relation to the Just Jeans conduct should be fixed at $2 million. The respective penalties imposed on Mr Forde, Mr Morton and Mr Holland should be $80,000, $65,000 and $45,000 respectively.
180 McPhee submitted that his Honour erred in imposing two penalties in respect of the contraventions occasioned by the ACI Florapak conduct. His Honour imposed a penalty of $500,000 for McPhee's contravention of s 45 in making an arrangement or arriving at an understanding, containing an exclusionary provision or a provision having the purpose of substantially lessening competition and he imposed an additional penalty of $250,000 for the contravention of s 45 constituted by giving effect to that arrangement or understanding.
181 The case presented to his Honour did not distinguish the conduct of McPhee involving the formation of the proscribed arrangement or understanding from the conduct of McPhee said to constitute giving effect to such arrangement or understanding. According to the Commission's case, the delivery by Mr Webb to Mr Jolly of McPhee's rates was an integral part of the conduct that constituted the contravention of s 45 in making, or arriving at, an understanding or arrangement. That same act was also relied upon by the Commission as the act which constituted the further contravention by McPhee of giving effect to the arrangement or understanding.
182 If the disclosure by McPhee to DFE of the rates charged by McPhee to ACI Florapak could be said to be an act giving effect to an arrangement or understanding already made or arrived at, it was not conduct distinguishable from the conduct of McPhee which constituted the making of such an arrangement or understanding. Pursuant to s 76(3) of the Act, if conduct constitutes a contravention of two or more provisions of Pt IV, a proceeding may be instituted in respect of each contravention but a person is not liable to more than one pecuniary penalty in respect of the same conduct. This was not a case involving repeated conduct concerning discrete events occurring at different times and involving disparate parties: Trade Practices Commission v Simpson Pope Ltd (1980) 47 FLR 334 per Franki J at 336.
183 We therefore accept the submission that his Honour erred in imposing separate penalties in respect of the ACI Florapak conduct. The conduct which constituted the second contravention was part and parcel of the conduct which constituted the first contravention and s 76(3) prescribed that only one penalty could be imposed.
184 It is necessary therefore for us to assess the appropriate penalty in respect of the ACI Florapak conduct also. A salutary penalty is required for conduct that involves contraventions of the Act in reaching an arrangement or understanding and giving effect thereto, particularly when regard is given to the degree of concealment that usually attaches to such conduct and the difficulties faced by authorities charged with the duty of uncovering and prosecuting such contraventions in the public interest. His Honour noted that McPhee's conduct suggested a willingness on its part to contravene the Act for the purpose of distorting a relevant market. On the other hand, as his Honour also observed, the conduct related to a minor account and involved impulsive acts by a single officer of the company at lower managerial level. In our opinion, a penalty of $500,000 is appropriate for the conduct of McPhee in reaching an arrangement or understanding and giving effect thereto as described.
185 If it could be said that the conduct relevant to the two contraventions was not the same conduct for the purpose of s 76(3), we would be of the opinion that his Honour's discretion in calculating the appropriate penalty to be imposed miscarried, in that his Honour failed to have regard to the interlocking nature of the conduct involved in the two contraventions and to the need to set a total penalty appropriate in the circumstances. On the particular facts of this case, it was not appropriate to impose a substantive penalty for each breach of the Act arising as they did out of the one transaction. The appropriate course was to set a penalty for the conduct imposed in respect of one breach and to take the other breach into account: Trade Practices Commission v Allied Mills Industries Pty Ltd (1981) 60 FLR 1 per Sheppard J at 40; Trade Practices Commission v TNT Australia Pty Ltd (above) at 40,169; McDonald v The Queen (1994) 48 FCR 555. For the reasons we have set out above, we consider that the appropriate total of penalty would have been a sum of $500,000.