Nexans SA RCS Paris 393 525 852 v Australian Competition and Consumer Commission

Federal Court of Australia|2013-03-07|Before: Besanko J

Counsel for the Applicant: Mr M Hoffmann QC with Mr S Nixon

Solicitor for the Applicant: Clayton Utz

Counsel for the First Respondent: Mr N O'Bryan SC

IN THE FEDERAL COURT OF AUSTRALIA ADELAIDE DISTRICT REGISTRY GENERAL DIVISION SAD 314 of 2012

AND: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

PRYSMIAN CAVI SISTEMI ENERGIA S.R.L. (FORMERLY PIRELLI CAVI E SISTEMI ENEGIA S.P.A.)

JUDGE: BESANKO J DATE OF ORDER: 7 MARCH 2013 WHERE MADE: ADELAIDE

The application for leave to appeal is refused Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA ADELAIDE DISTRICT REGISTRY GENERAL DIVISION SAD 314 of 2012

AND: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

PRYSMIAN CAVI SISTEMI ENERGIA S.R.L. (FORMERLY PIRELLI CAVI E SISTEMI ENEGIA S.P.A.)

JUDGE: BESANKO J DATE: 7 MARCH 2013 PLACE: ADELAIDE

Background 1 The Australian Competition and Consumer Commission ("ACCC") has brought proceedings against three respondents including Nexans SA RCS Paris 393 525 852 ("Nexans SA") which is the second respondent. The ACCC seeks declarations, injunctions, pecuniary penalties and other orders against the respondents under the following Acts: 1. Section 21 of the Federal Court of Australia Act 1976 (Cth); 2. Sections 76 and 80 of the Trade Practices Act 1974 (Cth) ("TPA"); and 3. Sections 76 and 80 of the Competition Codes of New South Wales, Victoria, Queensland, Western Australia, South Australia, Tasmania and the Australian Capital Territory. I will not set out the name of each code. They are the same with the necessary variation for the State or Territory concerned. For example, the New South Wales Act is the Competition Police Reform (NSW) Act 1995. I will simply refer to them as the Competition Codes. 2 The relief is sought in respect of alleged contraventions of ss 45(2)(a)(i) and (ii), and ss 45(2)(b)(i) and (ii) of the TPA and the Competition Codes. Broadly described, the allegations against Nexans SA are of price fixing, market sharing and other anti-competitive conduct. 3 Nexans SA is incorporated in France. The ACCC alleges that it supplied and offered to supply products including land cables and submarine cables to customers in places including Australia and that it carried on business in Australia and in a state or territory of Australia and that it is and has been a foreign corporation within the meaning of s 4 of the TPA. 4 On 24 November 2009 this Court granted the ACCC leave to serve its application and statement of claim outside Australia upon Nexans SA. In doing that, the Court exercised the power in O 8 r 3 of the Federal Court Rules 1979. Nexans SA was served in accordance with the requirements for service in France. 5 On 29 March 2010 Nexans SA filed a notice of motion which was subsequently amended on 11 May 2010. In its notice of motion it sought an order that the grant of leave to serve it be discharged, or that the service of the originating process on it be set aside. Nexans SA's application was made under O 9 r 7 of the Federal Court Rules 1979. 6 On 17 October 2011 this Court made an order under r 1.04(3) of the Federal Court Rules 2011 that the notice of motion issued by Nexans SA be determined under the Federal Court Rules in force immediately before 1 August 2011 (ie., the Federal Court Rules 1979). 7 The notice of motion issued by Nexans SA came on for hearing before a judge of this Court. Both parties accepted that on an application under O 9 r 7 the Court should conduct a rehearing and take into account any additional material put before the Court. On such a rehearing the applicant has the onus of establishing that it was appropriate to make the order giving leave for service outside Australia. 8 On 24 November 2009 O 8 r 3(2) of the Federal Court Rules 1979 provided as follows: The Court may give leave to a party to serve an originating process on a person in a foreign country in accordance with a convention or the law of the foreign country, on such terms and conditions as it considers appropriate, if the Court is satisfied that: (a) the Court has jurisdiction in the proceedings; and (b) the proceeding is of a kind mentioned in rule 2; and (c) the person seeking leave has a prima facie case for the relief claimed by the person in the proceeding. 9 There was an amendment to O 8 r 3(2)(c) which took effect on 3 July 2010 (Federal Court Amendment Rules 2010 (No. 1)). Order 8 Rule 3(2)(c) was amended to read: (c) the person seeking leave has a prima facie case for all or any of the relief claimed by the person in the proceeding. 10 On 26 November 2012 Nexans SA's notice of motion was dismissed. The formal orders made by the judge were as follows: 3. The application filed by the second respondent on 29 March 2010 and amended on 11 May 2010 that the grant of leave to serve the second respondent be discharged, or that service of the originating process upon the second respondent be set aside, be dismissed. 4. The first and second respondents pay the applicant's costs. 11 The judge delivered lengthy reasons for his decision (Australian Competition and Consumer Commission v Prysmian Calvi E Sistemi Energia S.R.L. (No 4) [2012] FCA 1323). Those reasons also dealt with a similar application by Prysmian Calvi E Sistemi Energia S.R.L., which is the first respondent.

The Application for Leave 12 Nexans SA issued an application for leave to appeal from the orders made by the primary judge on 26 November 2012. The application is supported by an affidavit of one of its lawyers (Mr Nicholas Mavrakis) sworn on 10 December 2012. Mr Mavrakis annexes to his affidavit the orders, the primary judge's reasons, a draft notice of appeal, the statement of claim and the application. 13 Nexans SA accepts that the orders made by the primary judge are interlocutory orders and that it needs leave to appeal (Federal Court of Australia Act 1976 (Cth) s 24(1A)). Section 25(2) of the Act provides as follows: (2) Applications: (a) for leave or special leave to appeal to the Court; or (b) … must be heard and determined by a single Judge unless: (e) a Judge directs that the application be heard and determined by a Full Court; or (f) the application is made in a proceeding that has already been assigned to a Full Court and the Full Court considers it is appropriate for it to hear and determine the application. 14 Nexans SA asks me to refer its application for leave to the Full Court. Alternatively, it asks me to grant leave to appeal. 15 The draft notice of appeal contains ten grounds of appeal. Grounds one, two, six and seven were abandoned during the course of submissions. As I understand it, grounds eight, nine and ten are said to be dependent upon the success of grounds three, four and five. 16 Grounds three, four and five are in the following terms: 3. His Honour erred at paragraphs [248]-[259] of the Reasons in finding that, for the purposes of section 5(1) of the Trade Practices Act 1974 (Cth), the Appellant carried on business within Australia: (a) in its own right; and (b) through its subsidiaries. 4. His Honour erred at paragraphs [261]-[266] of the Reasons in finding that the Appellant: (a) for the purposes of section 8(1)(a) of the Competition Codes, carried on business within any State or Territory of Australia: (i) in its own right; (ii) through its subsidiaries; and (b) for the purposes of section 8(1)(d) of the Competitions Code, was otherwise connected with a State or Territory of Australia. 5. His Honour erred at paragraphs [350], [355], [358] and [359] of the Reasons in finding that the Respondent had established a prima facie case that Mr Jay and Mr Ramond had authority to act on behalf of and bind the Appellant. 17 In essence, Nexans SA submits that the primary judge erred in two respects. Both relate to the requirement that the ACCC, as the person seeking leave, must have "a prima facie case for the relief it claims". The first alleged error relates to whether the TPA and the Competition Codes applied to Nexas SA. In the case of the TPA that question turns on whether Nexans SA was "carrying on business within Australia" within s 5(1). In the case of the Competition Codes a similar point arises, but, there is a further jurisdictional basis where the proposed defendant falls within the description of "persons otherwise connected with this jurisdiction". The second alleged error relates to whether the ACCC had established a prima facie case that Messrs Jay and Ramond had authority to act for, or bind, Nexans SA.

The Relevant Principles 18 The meaning of a prima facie case for the purposes of O 8 r 3(2)(c) of the Federal Court Rules 1979 has been considered in a number of authorities. It is sufficient for me to refer to the decision of the Full Court of this Court in Ho v Akai Pty Ltd (in liq) ACN 001 500 714 [2006] FCAFC 159. The Court said (at [10]): As has been observed on many occasions, the prima facie case requirement has to be met at the outset, usually on an ex parte basis, and without the advantage of discovery and other procedural aids to the making out of a case: see e.g. Merpro Montassa Ltd v Conoco Specialty Products Inc (1991) 28 FCR 387 at 390. It "should not call for a substantial enquiry": WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472 at 476; see also Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 549. For present purposes it is sufficient to say that a prima facie case for relief is made out if, on the material before the court, inferences are open which, if translated into findings of fact, would support the relief claimed: Western Australia v Vetter Trittler Pty Ltd (in liq) (1991) 30 FCR 102 at 110. Or, to put the matter more prosaically as Lee J did in Century Insurance (in provisional liquidation) v New Zealand Guardian Trust [1996] FCA 376: "What the Court must determine is whether the case made out on the material presented shows that a controversy exists between the parties that warrants the use of the Court processes to resolve it and whether causing a proposed respondent to be involved in litigation in the Court in Australia is justified." 19 I also refer to the Full Court decision in Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317 at 340 [97] per Carr J; at 357 [191] per Branson J. 20 It is plain enough from the terms of the test that the applicant is not required to establish that he or she will succeed. It is not without significance that in Western Australia v Vetter Trittler Pty Limited (in liq) (1991) 30 FCR 102 French J (as his Honour then was), after referring to the above paragraph, went on to say (at 110): I would add that, whatever is required to satisfy the court that there is a prima facie case, that satisfaction should leave open the possibility that the respondent once served could move to strike out the statement of claim or invoke other provisions of the rules which provide for summary disposition of proceedings. To the extent that it does not, the rules may be setting too high a threshold for service out of the jurisdiction. 21 The test on an application for leave to appeal is well established and it was not in dispute in this case. There are two limbs to the test. The first relates to the prospects of the proposed appeal and is stated in terms of "whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court". The second limb is stated in terms of "whether substantial injustice would result if leave were refused, supposing the decision to be wrong" (Décor Corporation Pty Limited & Anor v Dart Industries Inc (1991) 33 FCR 397 at 398-399). 22 In this case most of the submissions were directed to the first limb of the test. I did not understand the ACCC to suggest that the injustice which would result if leave were refused supposing the decision to be wrong could not be characterised as substantial. Such an argument would have been untenable and I think it can be said that Nexans SA would suffer a substantial injustice should the primary judge have erroneously declined to set aside the originating process or the service of the originating process on it. If the primary judge was wrong and leave to serve Nexans SA should not have been granted, then it would not face serious and potentially lengthy proceedings in Australia. 23 I have reached the conclusion that the decision is not attended with sufficient doubt to warrant its being reconsidered by the Full Court. In this case, that means that sufficient doubt does not attend the primary judge's conclusions that the ACCC has a prima facie case against Nexans SA for the relief it claims.

THE APPLICATION OF THE tpa and the competition codes 24 Section 5(1) of the TPA provides as follows: Parts IV, IVA, Part V (other than Division 1AA), Part VB and Part VC extend to the engaging in conduct outside Australia by bodies corporate incorporated or carrying on business within Australia or by Australian citizens or persons ordinarily resident within Australia. 25 Section 8 of the Competition Codes is in the following terms: 8 Application of Competition Code (1) The Competition Code of this jurisdiction applies to and in relation to: (a) persons carrying on business within this jurisdiction, or (b) bodies corporate incorporated or registered under the law of this jurisdiction, or (c) persons ordinarily resident in this jurisdiction, or (d) persons otherwise connected with this jurisdiction. (2) Subject to subsection (1), the Competition Code of this jurisdiction extends to conduct, and other acts, matters and things, occurring or existing outside or partly outside this jurisdiction (whether within or outside Australia). 26 In the case of the TPA the ACCC had to show a prima facie case that Nexans SA carried on business within Australia, and in the case of the Competition Codes, it had to show a prima facie case that Nexans SA was carrying on business within the relevant jurisdiction or was otherwise connected with the relevant jurisdiction. 27 The primary judge referred to Bray v F Hoffman-La Roche Ltd (2002) 118 FCR 1 at 17 [57] and said that the relevant date for the purposes of determining whether a respondent was carrying on business in Australia was the date that the alleged contravention occurred. In this case, that was in September/October 2003. No complaint is made by Nexans SA about those conclusions. The primary judge referred to the decision of Mason J (as his Honour then was) in Hope v The Council of the City of Bathurst (1980) 144 CLR 1 at 8-9 as to the meaning of carrying on a business. No complaint is made by Nexans SA about that reference. 28 The primary judge noted the submission of the ACCC that Nexans SA carried on business in Australia at the relevant date by reason of its own provision of services and also through its subsidiaries including Nexans Australia Pty Ltd ACN 094 715 956 ("Nexans Australia"). He noted the submission that Nexans SA carried on two businesses in Australia, namely an investment business through its wholly owned subsidiary paying it dividends and a contracting business because it entered into a contract with its subsidiary in Australia and charged a monthly commission based on turnover. 29 The primary judge said that the evidence showed that Nexans Australia was a wholly owned subsidiary of Nexans Participations and that Nexans SA owned 99.99 per cent of Nexans Participations. 30 The primary judge referred to the following evidence: 1. A company search for Nexans Australia. 2. The 2003 annual report of the Nexans group of companies. 3. Copies of documents filed by Nexans Australia with Australian Securities and Investments Commission pursuant to ASIC Class Order 98/0098. 4. Copies of 2001 and 2002 annual reports of the Nexans group of companies. 5. A media release obtained from the website of Nexans SA addressing a contract to supply cabling to "Daydream Island in Australia". 6. Affidavit evidence of Ms Susan Jacquier (assistant director of the ACCC) concerning information provided to Ms Jacquier by several persons that they had engaged in trade "with Nexans or Nexans Australia within Australia between 2001 and 2006" (paragraph 23 of the affidavit sworn on 13 November 2009). 7. The 2001, 2002 and 2003 financial reports of Nexans Australia. 8. The directors' reports for the year ended 31 December 2002 and 31 December 2003. 9. Minutes of meetings of directors of Nexans Australia. 10. A document which the ACCC submitted showed that Nexans Australia incurred commission fees payable to Nexans SA for research and development and administrative services. 11. An e-mail sent on 4 October 2001 from the managing director of Nexans Australia purportedly to a customer. 31 The primary judge referred to the submission of the ACCC that Nexans SA carried on business in Australia directly and the submission of the ACCC that Nexans SA carried on business in Australia through Nexans Participations' subsidiary Nexans Australia. As to the latter submission, the primary judge described the submission in the following terms (at [225]): The applicant submitted that Nexans Australia supplied products under the Nexans brand that were manufactured by, and acquired from, other companies within the Nexans Group to customers in Australia, and that Nexans Australia was dependent upon Nexans to the extent that it can be said that Nexans Australia was not carrying on its own business but was carrying on the business of the Nexans group of companies and thus of that group's ultimate parent, Nexans. 32 The primary judge's conclusions may be summarised in the following way. 33 First, the evidence supported a finding, at least to a prima facie level, that Nexans acted as a treasury for its subsidiaries. The primary judge considered that that would constitute the carrying on of a business in Australia insofar as Nexans provided that service to Nexans Participations or, more particularly, to Nexans Australia. Secondly, the evidence suggested that Nexans SA's subsidiaries paid a percentage of their turnover for Nexans SA to provide administrative services. Thirdly, the evidence supported a conclusion that Nexans SA was involved in the supply of submarine cables for power supply at Daydream Island and this again indicated that it was carrying on business in its own right in Australia. Fourthly, the conversations deposed to by Ms Jacquier indicate that Nexans SA "in its own right, or through a subsidiary, carried on business during that period". Fifthly, the evidence supported a conclusion that Nexans Australia was dependent upon Nexans SA for its ability to continue to operate as a going concern. Furthermore, Nexans SA provided products under the Nexans brand to Nexans Australia who was dependent upon it for the supply of those products. 34 The primary judge referred to the submissions made by Nexans SA. He rejected those submissions and in the course of doing so he said (at [254]: The individual criticisms that were made by Nexans of each of the documents do not address the totality of the evidence that Nexans was either carrying on business by itself or through its subsidiary. For example, where Nexans said that the financial statements did not show whether the financial support would come from Nexans or some other related entity, the submission overlooks the reference in the documents to the ultimate parent company. 35 The primary judge also referred to evidence which had been put forward by the ACCC after it had been given permission to re-open its case. That further evidence concerned a decision of Murphy J delivered on 2 March 2012 in a proceeding between Nexans SA and Nex 1 Technologies Co. Ltd (Nexans S.A. v Nex 1 Technologies Co. Ltd [2012] FCA 180). The proceeding was an appeal by Nexans SA from a decision of a delegate of the Registrar of Trade Marks. The ACCC relied in particular upon an affidavit affirmed by a Mr Thierry Roucher on 29 September 2011 and a statutory declaration of Mr Michel Rousseau and a collection of press releases by Nexans SA annexed to Mr Roucher's affidavit. Mr Roucher described himself as the marketing and communications director of Nexans SA and Mr Rousseau described himself as the corporate VP technical of Nexans. Nexans SA was the owner of the trademark and Nexans Australia was, and had been since 2001, its authorised user of the mark in Australia. The primary judge summarised the significance of the evidence as follows (at [257]-[258]): As already mentioned, Mr Roucher had claimed that the approximate retail sale for goods sold in Australia under the "NEXANS" mark in 2005 and 2006 was €6.5 million and €7.407 million respectively. Annexed to his affidavit was the Rousseau declaration, which referred to the use of "NEXANS" mark throughout Australia in 2001. Mr Rousseau's declaration referred to sales for Nexans' products in 2004 and 2005 as €5,624,683 and €9,467,863. Those sales were made by various Nexans subsidiaries described as "Nexans selling unit[s]". The Rousseau declaration and the Roucher affidavit did not refer to 2003, in particular September/October 2003, but it may be inferred, as the applicant argued, that retail goods were sold under the Nexan mark in that year. It is highly unlikely that there were no sales in 2003, having regard to the use of the "NEXANS" mark before 2003, and to the volume of sales in the years after 2003. 36 The primary judge concluded that at the relevant time Nexans SA carried on business in Australia both in its own right and through its subsidiaries. He held that the company was therefore within the reach of the TPA and the Competition Codes. 37 The ACCC made a further submission and that was that Nexans SA was "otherwise connected" with a state or territory for the purposes of each of the Competition Codes. The primary judge accepted that submission. He considered that the words "otherwise connected" were wider and different from the concept of "carrying on business". He considered that the words should be given a broad construction and that the matters he relied upon in order to conclude that Nexans SA was carrying on business in Australia would, in the alternative, be sufficient to support a finding that Nexans SA was "otherwise connected" with a relevant state or territory. 38 The primary judge decided that even if he was wrong in concluding that Nexans SA carried on business in Australia at the relevant time, the ACCC's claims under the TPA were "not colourable". His Honour held that they were not an attempt to fabricate jurisdiction and that this Court had jurisdiction as part of its accrued jurisdiction to decide claims made by the ACCC against Nexans SA under the Competition Codes.

The authority OF MR JAY AND MR RAMOND 39 Nexans SA contended before the primary judge that there was not a prima facie case that Mr Jeanmarie Jay and Mr Alain Ramond had the authority to act for, or bind Nexans SA. 40 The evidence before the primary judge included a number of affidavits of Ms Jacquier. Ms Jacquier's first affidavit was based on a statement by a Mr Takeo Osada. Mr Osada occupies a senior position in one of the companies which is said to have been part of the cartel arrangements. His statement was subsequently released and received and, as the primary judge put it, that statement included a first hand account of the hearsay evidence in Ms Jacquier's affidavit. 41 Mr Osada referred to the cartel arrangements and the fact that his contacts within Nexans were Mr Jay and Mr Ramond. He referred to the fact that Mr Jay of Nexans was responsible for keeping a table recording the allocations of projects, including Australian projects, between the cartel members and that Mr Jay forwarded the table to him by e-mail from time to time. He attached to his statement one of the tables he received from Mr Jay in relation to Australian projects. Mr Osada referred to the fact that Mr Jay was the "window" or contact point for the "R Group" which, according to Mr Osada was the European group consisting of Prysmian and Nexans SA. Mr Osada wrote a number of e-mails in September and October 2003. He annexed to his statement e-mails to Mr Jay and others on 12 September 2003 and 24 September 2003 respectively. There is also an e-mail from a Mr Robert Combar to Mr Osada, Mr Jay and others dated 3 October 2003. Mr Jay's e-mail address is shown as "@nexans.com". 42 Nexans SA submitted that there is no sufficient evidence in terms of a prima facie case to show that Mr Jay or Mr Ramond engaged in conduct on behalf of Nexans SA. They submitted that at best it had been shown that they had acted on behalf of a Nexans subsidiary. 43 The primary judge referred to the fact that a number of e-mails were sent to Mr Jay at Nexans SA and that it may be inferred that he acted on behalf of Nexans SA. The primary judge expressed his conclusions on this point in the following way (at [358]-[359]): The evidence would not at this stage allow for a finding that Mr Jay and Mr Ramond were employed by Nexans. However, the evidence is sufficient to find that the applicant has made out a prima facie case that Mr Jay and Mr Ramond had authority to act on behalf and bind Nexans. On Mr Osada's account, Mr Jay had been acting on behalf of Nexans for years to the point of accepting the position of secretary of one of the groups. The table kept by Mr Jay to which I will shortly refer confirms that. I reject Nexans' submission that it requires a "leap of faith" to accept that the emails show Mr Jay, on behalf of Nexans, entered into the Snowy Hydro Agreement. In any event, at this stage of the proceeding, I need only be satisfied, and I am, that there is a prima facie case that the evidence shows that Mr Jay, on behalf of Nexans, caused Nexans to make or arrive at the Snowy Hydro Agreement, which provided that Prysmian would be the allottee for the Snowy Hydro Agreement.

CONCLUSIONS 44 The primary judge did not misdirect himself on any matter of law. 45 In relation to the submission concerning the application of the TPA and the Competition Codes, there was a suggestion by Nexans SA that the primary judge had not recognised sufficiently the distinct legal personalities of a holding company and its subsidiary. Alternatively, or as a development of the previous point, Nexans SA submitted that the primary judge was unduly influenced by the fact that Nexans SA was the head of a global enterprise. I reject both of these submissions because I do not think the primary judge made such errors. His analysis of individual items of evidence indicates that he was alive to these issues and did not fall into the error discussed by Merkel J in Bray v F Hoffman-La Roche Ltd (2002) 118 FCR 1 at 21 [72]. 46 I have considered the evidence to which I was taken by counsel and the primary judge's reasons. 47 I do not feel uncertain about my conclusions. Nor is this a case where while some grounds warrant a grant of leave others are more doubtful. In those circumstances, I reject Nexans SA's application that I refer its application for leave to the Full Court. It is appropriate that I decide the application myself. 48 As I have said, I accept that the applicant has satisfied the second limb of the test for a grant of leave, and indeed, I am prepared to proceed on the basis that it has a strong case on that ground. 49 Nevertheless, I am not satisfied that there is sufficient doubt about the correctness of the primary judge's decision to warrant its reconsideration by the Full Court of this Court. I have reached the conclusion that there is no real or genuine doubt about the correctness of the primary judge's decision. Put shortly, I think that the primary judge was correct to conclude on the material before the Court that inferences were open which, if translated into findings of fact, would support the relief claimed. 50 I would add that even if I am wrong and there is a substantial doubt about the primary judge's conclusion on the carrying on business point, there was nothing put by Nexans SA to suggest that his Honour's alternative approach that the evidence was sufficient for a finding that Nexans SA was "otherwise connected" with the relevant State or Territory, was not sound. 51 The application for leave to appeal is refused. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.

Trade Practices Act 1974(Cth)ss 4, 5(1), 45(2)(a), 45(2)(b),76, 80

(Federal Court of Australia Act 1976(Cth)s 24(1A)).

Federal Court of Australia Act 1976(Cth)ss 21, 24(1A), 25(2)

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