Australian Competition and Consumer Commission v April International Marketing Services Australia Pty Ltd (No 5) [2010] FCA 17 (29 January 2010)

Last Updated: 1 February 2010

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v April International Marketing Services Australia Pty Ltd (No 5) [2010] FCA 17

Citation:		Australian Competition and Consumer Commission v April International Marketing Services Australia Pty Ltd (No 5) [2010] FCA 17
Parties:		AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v APRIL INTERNATIONAL MARKETING SERVICES AUSTRALIA PTY LTD ACN 106 134 472, APRIL FINE PAPER TRADING PTE LIMITED (SINGAPORE), APRIL MANAGEMENT PTE LTD (SINGAPORE), KELVIN TAN, JAMES LO, DENNIS LIM, GUS CHOO, ASIA PULP & PAPER COMPANY LTD (SINGAPORE), PT INDAH KIAT PULP AND PAPER TBK (INDONESIA), PAUL GEORGE, and SUNIL SOOD
File number:		NSD 2394 of 2006
Judge:		BENNETT J
Date of judgment:		29 January 2010
Catchwords:		TRADE PRACTICES – alleged price fixing arrangements made at overseas meetings – ACCC and certain respondents jointly seek proposed declarations, injunctions and penalties on basis of agreed facts and admissions – whether jointly proposed penalties appropriate – no evidence of profits from contraventions, effect on market or loss caused – whether making of declarations should be deferred until after proceedings against continuing respondents completed – proposed declarations do not mention continuing respondents directly or by necessary implication
Legislation:		Federal Court of Australia Act 1976 (Cth) s 21 Trade Practices Act 1974 (Cth) ss 45, 76, 80
Cases cited:		Australian Competition and Consumer Commission v April International Marketing Services Pty Ltd (No 4) [2010] FCA 16 referred to Australian Competition and Consumer Commission v Australian Abalone Pty Ltd [2007] ATPR 42-199 cited Australian Competition and Consumer Commission v Australian Medical Association Western Australian Branch Inc [2001] FCA 1471; (2001) 114 FCR 91 applied Australian Competition and Consumer Commission v British Airways plc [2008] FCA 1977 cited Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (in liquidation) [2007] FCAFC 146; (2007) 161 FCR 513 cited Australian Competition and Consumer Commission v Econovite Pty Ltd [2003] FCA 964; [2003] ATPR 41-959 cited Australian Competition and Consumer Commission v FILA Sport Oceania Pty Ltd [2007] ATPR 42-135 cited Australian Competition and Consumer Commission v Gullyside Pty Ltd [2005] FCA 1727; [2006] ATPR 42-097 cited Australian Competition and Consumer Commission v Kokos International Pty Ltd (No 2) [2008] ATPR 42-212 considered Australian Competition and Consumer Commission v Leahy Petroleum (No 2) [2005] FCA 254; (2005) 215 ALR 281 cited Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) [2005] FCA 265; (2005) 215 ALR 301 cited Australian Competition and Consumer Commission v McMahon Services Pty Ltd [2004] ATPR 42-031 discussed Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329 cited Australian Competition and Consumer Commission v Oobi Baby Pty Ltd [2008] FCA 1488 cited Australian Competition and Consumer Commission v Qantas Airways Ltd [2008] FCA 1976; (2008) 253 ALR 89 cited Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 18; (1999) 161 ALR 79 applied Australian Competition and Consumer Commission v Roche Vitamins Australia Pty Ltd [2001] FCA 150; [2001] ATPR 41-809 cited Australian Competition and Consumer Commission v TEAC Australia Pty Ltd [2007] ATPR 42-201 cited Australian Competition and Consumer Commission v The Construction, Forestry, Mining and Energy Union [2006] FCA 1730; [2007] ATPR 42-140 cited Australian Competition and Consumer Commission v Woolworths (South Australia) Pty Ltd (t/as Mac’s Liquor) [2003] FCA 530; (2003) 198 ALR 417 applied J McPhee & Son (Australia) Pty Ltd v Australian Competition and Consumer Commission [2000] FCA 365; (2000) 172 ALR 532 applied Johnson v R [2004] HCA 15; (2004) 205 ALR 346 cited Minister for Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72; [2004] ATPR 41-993 cited Mornington Inn v Jordan [2008] FCAFC 70; (2008) 168 FCR 383 cited NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285 applied Thomson Australian Holdings Pty Ltd v Trade Practices Commission [1981] HCA 48; (1980) 148 CLR 150 cited Trade Practices Commission v Allied Mills (No. 4) [1981] FCA 142; (1981) 37 ALR 256 cited Trade Practices Commission v CSR Limited [1991] ATPR 41-076 applied Trade Practices Commission v TNT Australia Pty Limited [1995] ATPR 41-375 cited
Date of hearing:	25 November 2009
Date of last submissions:	4 December 2009
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	77
Counsel for the Applicant:	Mr D Godwin
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the First, Second and Sixth Respondents:	Mr J Lockhart SC
Solicitor for the First, Second and Sixth Respondents:	Minter Ellison
Counsel for the Fifth, Seventh, Eighth and Ninth Respondents:	The Fifth, Seventh, Eighth and Ninth Respondents did not appear but their interests were represented by Mr J Lockhart SC.
Counsel for the Eleventh and Twelfth Respondents:	Mr M Henry
Solicitor for the Eleventh and Twelfth Respondents:	Clayton Utz
Solicitor for the Thirteenth Respondent:	Ms S Karunakaran of PricewaterhouseCoopers Legal
Counsel for the Fifteenth Respondent:	The Fifteenth Respondent did not appear.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2394 of 2006

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant

AND:

APRIL INTERNATIONAL MARKETING SERVICES AUSTRALIA PTY LTD ACN 106 134 472 First Respondent APRIL FINE PAPER TRADING PTE LIMITED (SINGAPORE) Second Respondent APRIL MANAGEMENT PTE LTD (SINGAPORE) Fifth Respondent KELVIN TAN Sixth Respondent JAMES LO Seventh Respondent DENNIS LIM Eighth Respondent GUS CHOO Ninth Respondent ASIA PULP & PAPER COMPANY LTD (SINGAPORE) Eleventh Respondent PT INDAH KIAT PULP AND PAPER TBK (INDONESIA) Twelfth Respondent PAUL GEORGE Thirteenth Respondent SUNIL SOOD Fifteenth Respondent

JUDGE:	BENNETT J
DATE OF ORDER:	29 JANUARY 2010
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Each of the first and second respondents be restrained, whether by themselves or by their servants or agents, for a period of five years from the date of order from:

1.1 making any contract or arrangement or arriving at any understanding with one or more competitors for the supply of UWF paper to customers in Australia, which contains a provision with the purpose, effect or likely effect of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price at which any party to the contract, arrangement or understanding, or any related body corporate or agent, will supply UWF paper to customers in Australia (other than a contract made directly with a competitor who is a customer or agent of the respondent, for supply to that customer or by that agent); or

1.2 giving effect to any provision of a contract, arrangement or understanding of the nature set out in subparagraph 1.1 above.

2. The first respondent pay to the Commonwealth of Australia, in respect of its conduct in being knowingly concerned in the second respondent’s contraventions of the Act and the Codes, a pecuniary penalty in the amount of $750,000, such penalty to be paid within 28 days of order.
3. The second respondent pay to the Commonwealth of Australia, in respect of its conduct in contravention of the Act and the Codes, a pecuniary penalty in the amount of $3,250,000, such penalty to be paid within 28 days of order.
   

AS BETWEEN THE APPLICANT AND THE FIRST TO NINTH RESPONDENTS:

4. The first and second respondents pay a contribution to the applicant's costs of and incidental to these proceedings, as against the first to ninth respondents, in the agreed amount of $250,000 within 28 days of the date of order.
5. The notice of motion filed by the fourth, fifth, seventh, eighth and ninth respondents on 13 August 2009 be dismissed with no order as to costs.
6. The proceedings be otherwise dismissed as against the first to ninth respondents.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2394 of 2006

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant

AND:

APRIL INTERNATIONAL MARKETING SERVICES AUSTRALIA PTY LTD ACN 106 134 472 First Respondent APRIL FINE PAPER TRADING PTE LIMITED (SINGAPORE) Second Respondent APRIL MANAGEMENT PTE LTD (SINGAPORE) Fifth Respondent KELVIN TAN Sixth Respondent JAMES LO Seventh Respondent DENNIS LIM Eighth Respondent GUS CHOO Ninth Respondent ASIA PULP & PAPER COMPANY LTD (SINGAPORE) Eleventh Respondent PT INDAH KIAT PULP AND PAPER TBK (INDONESIA) Twelfth Respondent PAUL GEORGE Thirteenth Respondent SUNIL SOOD Fifteenth Respondent

JUDGE:	BENNETT J
DATE:	29 JANUARY 2010
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. Proceedings were commenced by the applicant (the Commission) against a number of parties alleging contraventions of and involvement in contraventions of s 45(2)(a)(ii) and s 45(2)(b)(ii) of the Trade Practices Act 1974 (Cth) (the TPA) and the Competition Codes as defined in s 150A and 150 of the Act (the Codes). A number of the respondents have jointly agreed with the Commission on the existence of certain facts. Those parties and the Commission have presented to the Court joint submissions and a statement of agreed facts and admissions pursuant to s 191(3)(a) of the Evidence Act 1995 (Cth). They have also made joint submissions as to the appropriate orders to be made.
2. These submissions, facts and admissions are made jointly on behalf of the Commission, the first respondent, April International Marketing Services Australia Pty Ltd (AIMS Australia) and the second respondent, April Fine Paper Trading Pte Limited (Singapore) (AFPT Singapore), collectively “the Parties”. The proceedings allege involvement in the contraventions of the Act by (inter alia) AIMS Australia and AFPT Singapore.
3. The proposed form of resolution provides:
   • for the making of orders, including the imposition of pecuniary penalties, in relation to each of AIMS Australia and AFPT Singapore; and
   • that the application against AIMS Australia, AFPT Singapore, April Management Pte Ltd (Singapore), Kelvin Tan, James Lo, Dennis Lim and Gus Choo (the April respondents) be otherwise dismissed.
4. The Commission, AIMS Australia and AFPT Singapore have reached agreement, for the purposes of these proceedings only, as to the relevant facts to be admitted for the purposes of section 191(3)(a) of the Evidence Act, which are set out at paragraphs [7] to [20] below. Agreement has also been reached as to:
   • the level of pecuniary penalties, pursuant to s 76 of the TPA and the Codes, to be recommended to the Court as appropriate for the contraventions;
   • the granting of injunctions pursuant to s 80 of the TPA and the Codes;
   • the terms of declarations to be made pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act); and
   • other orders.
5. The facts agreed to and the admissions made are agreed to and made pursuant to s 191(3)(a) of the Evidence Act, for the purpose of these proceedings only and are admissions upon which the Court may rely to pronounce judgment and make orders. The joint submissions summarise the facts relevant to the contraventions admitted only by the April parties for the purpose of these proceedings. The Commission has confirmed that it does not intend to rely on anything contained in the statement of agreed facts and submissions or draw any inference from them in the remainder of the proceedings against the continuing respondents. The continuing respondents are not a party to the submissions and are not taken as accepting the agreed facts or admissions.
6. The Parties have made joint submissions as to the appropriateness of the proposed orders but recognise that it is for the Court to determine whether the contraventions of s 45 occurred and the quantum of any pecuniary penalties and other relief that should be ordered.

FACTS AGREED BY THE PARTIES

The Conduct

7. Between December 2000 and January 2004, AFPT Singapore entered into arrangements or understandings with competitors at meetings which are referred to as “AAA Club” meetings.
8. The participants at AAA Club meetings, including AFPT Singapore, were companies involved in the manufacture and supply of uncoated woodfree (UWF) folio and cut size paper to persons including customers in Australia. UWF cut size paper consists of uncoated cut sheets of A3 and A4 copy paper in the range of 70 to 89 grams per square metre (gsm), that typically are supplied wrapped in reams of 500 sheets. UWF folio paper consists of uncut sheets of paper in the range of 60 to 350 gsm, that is measured and supplied by weight, ream or pallet load, in standard sizes larger than A3. The products supplied by AFPT Singapore include UWF folio and cut size paper.
9. AFPT Singapore is a body corporate incorporated under the laws of Singapore and a wholly owned subsidiary of April Fine Paper Holdings Pte Ltd (Singapore).
10. AFPT Singapore carried on business in Australia during the relevant period, within the meaning of s 5 of the TPA, by reason of its supply to customers in Australia of UWF folio and cut size paper. Following the formation of AIMS Australia in August 2003, AFPT Singapore continued to supply paper products to its customers in Australia assisted by that company and was otherwise connected with one or more of the States or Territories, within the meaning of s 8(2) of the Competition Policy Reform Acts, by reason of that supply.
11. AIMS Australia was formed on 29 August 2003 to assist AFPT Singapore in the supply of UWF folio and cut size paper to customers in Australia by providing marketing and promotion, shipment coordination, market research and customer support services. AIMS Australia invoiced AFPT Singapore for the performance of these services. It was also, until 1 April 2005, a wholly owned subsidiary of April Fine Paper Holdings Pte Ltd (Singapore).
12. AFPT Singapore participated in AAA Club meetings and arrived at arrangements or understandings with other participants at such meetings as to the average price per metric tonne at which they would supply folio and cut-size paper to their customers in Australia, on eighteen occasions between 6 December 2000 and 16 January 2004, including two occasions between 29 August 2003 and 16 January 2004 when AIMS Australia had been formed.
13. The meetings took place in overseas locations in south-east Asia. No AAA Club meetings were held in Australia.
14. AFPT Singapore was represented at AAA Club meetings by one or more of its employees and/or officers, including the following individuals:
    1. Dennis Lim, who held the position of Director, Sales & Marketing and subsequently, Managing Director, Sales & Marketing;
    2. James Lo, who held the position of General Manager, Sales & Marketing between December 2000 and May 2001;
    3. Gus Choo, who held the position of General Manager, Sales & Marketing and subsequently, Director, Sales & Marketing.
15. AFPT Singapore gave effect to the arrangements or understandings reached at AAA Club meetings between December 2000 and January 2004 in its pricing for the supply of UWF folio and cut size paper to customers in Australia.
16. From its formation in August 2003, AIMS Australia was knowingly concerned in the contravening conduct of AFPT Singapore by reason of the following matters:
    1. AIMS Australia was aware, through its officers, of the AAA Club meetings and arrangements.
    2. AIMS Australia operated subject to pricing control and oversight by AFPT Singapore, assisting in the supply of UWF folio and cut size paper to customers in Australia.
    3. AIMS Australia provided industry information to AFPT Singapore which AFPT Singapore used at the AAA Club meetings, and sought information as to pricing from AFPT Singapore.
17. AFPT Singapore ceased involvement in AAA Club meetings after January 2004.
18. The arrangements or understandings arrived at by AFPT Singapore at AAA Club meetings had the purpose and likely effect of fixing, controlling and maintaining the prices at which UWF folio and cut size paper were supplied to customers in Australia, between December 2000 and January 2004. By arriving at the arrangements or understandings, AFPT Singapore thereby contravened s 45(2)(a)(ii) of the TPA and the Codes, by operation of s 45A.
19. By giving effect to those agreements, as outlined above, AFPT Singapore contravened s 45(2)(b)(ii) of the TPA and the Codes.
20. The conduct of AIMS Australia between August 2003 and January 2004 described at [16] above constituted ancillary involvement in those contraventions of AFPT Singapore for the purposes of s 76 of the TPA and the Codes.

RELIEF SOUGHT

21. The Parties present proposed orders which include injunctions, declarations and pecuniary penalties. They jointly recommended those orders to the Court as appropriate in respect of AIMS Australia and AFPT Singapore.

Injunctions

22. The Court is empowered by section 80 of the TPA to grant injunctive relief. Section 80 relevantly provides:

(1) [W]here, on the application of the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:

(a) a contravention of any of the following provisions:

(i) a provision of Part IV...

...

(b) attempting to contravene such a provision;

...

the Court may grant an injunction in such terms as the Court determines to be appropriate.

...

(4) The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised:

(a) whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind;

(b) whether or not the person has previously engaged in conduct of that kind; and

(c) whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind.

23. The Commission, AIMS Australia and AFPT Singapore jointly submit:
    1. the Court has power under section 80 of the TPA to make the orders sought;
    2. the injunctive relief is not too vague or imprecise, nor does it require continuing supervision by the Court;
    3. there is no multiplicity of overlapping injunctions that may give rise to confusion about the scope of the obligations being imposed (see Australian Competition and Consumer Commission v Econovite Pty Ltd [2003] FCA 964; [2003] ATPR 41-959 at [12] per French J); and
    4. the injunctions are appropriate to deter a repetition of the conduct.
24. The Commission, AIMS Australia and AFPT Singapore therefore submit that the injunctions in the proposed short minutes of order should be made.

Declarations

25. The Parties also jointly propose forms of declarations concerning the contraventions by AFPT Singapore and AIMS Australia of s 45(2)(a)(ii) and s 45(2)(b)(ii) of the TPA and the Codes. Section 21 of the Federal Court Act gives the Court power, in relation to a matter in which it has original jurisdiction, to make binding declarations of right. There has been recognition that declarations may be appropriate for a number of reasons in proceedings commenced by the Commission for contraventions of the TPA (Australian Competition and Consumer Commission v The Construction, Forestry, Mining and Energy Union [2006] FCA 1730; [2007] ATPR 42-140 at [6] – [7] per Nicholson J, adopted by French J in Australian Competition and Consumer Commission v Kokos International Pty Ltd (No 2) [2008] ATPR 42-212 at [48]). Whether the declarations sought are appropriate depends on their terms and the circumstances of the particular case.
26. The Court is entitled to treat the consent of AIMS Australia and AFPT Singapore as involving an admission for the purposes of these proceedings of all facts necessary or appropriate to the granting of the relief sought (Australian Competition and Consumer Commission v FILA Sport Oceania Pty Ltd [2007] ATPR 42-135 at [7] per Tracey J, citing Thomson Australian Holdings Pty Ltd v Trade Practices Commission [1981] HCA 48; (1980) 148 CLR 150 at 164 per Gibbs CJ, Stephen, Mason, and Wilson JJ). Notwithstanding the parties’ consent, the Court must be careful to ensure that the proposed orders (including the declarations) are within power and are otherwise appropriate.
27. The proposed terms of the declarations sought do not refer to conduct of other respondents, which remains the subject of contested proceedings (Australian Competition and Consumer Commission v April International Marketing Services Pty Ltd (No 4) [2010] FCA 16). There is a public interest in the promotion of settlements of litigation that may be lengthy (NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285 at 291). Resolving proceedings entirely against respondents who wish to do so supports the making of declarations in the terms proposed by the Parties. However, as recorded in April (No 4), the continuing respondents have expressed concern at the making of the proposed orders, in particular the declarations that concern conduct at the AAA Club meetings, before the disposal of the proceedings against them.
28. The Commission and the Parties distinguish the present situation where, they point out, the proposed declarations do not identify the continuing respondents either directly or by necessary implication and other cases where a continuing respondent is identified. In the latter case, this can give rise to difficulty where that continuing respondent denies participating in the meetings of the AAA Club or arriving at or implementing an understanding in contravention of the TPA. This gives rise to the problem that the Court is asked to make a formal declaration of the involvement of those continuing respondents, even though the declaratory orders are sought only against the submitting respondents (as in Kokos (No 2)). In Kokos (No 2) at [49]-[50], French J observed that, although the declarations are in personam as between the Commission and the submitting respondents and would not give rise to any issue estoppel against any other parties any more than would findings of fact based upon admissions made by the submitting respondents, it is undesirable that the Court should make formal declarations naming other respondents as parties to the contravening conduct at a time when the proceedings were still continuing against those respondents. As discussed in [28] of my previous judgment of April (No 4), in a number of cases, the Court has deferred the making of declaratory orders proposed with the consent of the settling parties until after the hearing and determination of the proceedings against the continuing parties to avoid possible inconsistency in orders of the court (Australian Competition and Consumer Commission v Woolworths (South Australia) Pty Ltd (t/as Mac’s Liquor) [2003] FCA 530; (2003) 198 ALR 417 at [27]- [31] per Mansfield J, Australian Competition and Consumer Commission v Australian Medical Association Western Australian Branch Inc [2001] FCA 1471; (2001) 114 FCR 91 (AMA,WA); Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 18; (1999) 161 ALR 79).
29. The Commission and the Parties respond that, unlike in Kokos (No 2) and AMA,WA, the proposed declarations do not refer to the continuing respondents, the eleventh, twelfth, thirteenth or fifteenth respondents, either directly or by necessary implication. They merely state that AFPT Singapore arrived at arrangements with competitors for the supply to customers in Australia of UWF paper and that those arrangements had the purpose and effect or likely effect of fixing price. There were other parties alleged to be present at the AAA Club meetings with whom or with which the AFPT Singapore and AIMS Australia could have arrived at an arrangement. Further, the proposed declarations do not declare the law in relation to a legal issue central to the continuing proceedings and it is not necessary to do so to determine the case against the April respondents. The Commission and the Parties also submit that the proposed declarations do not contain terms with the potential for inconsistent findings of the Court and would not preclude the Court from finding that the Commission has not made out contraventions against the continuing respondents.
30. The Commission and the Parties also emphasise the fact that the proposed orders, including the proposed declarations, are agreed as between them and should be given effect to if appropriate (Australian Competition and Consumer Commission v Australian Abalone Pty Ltd [2007] ATPR 42-199 at [119]-[120] per Weinberg J) and at this time.
31. While the Court has in some cases stood over the making of declarations until the proceedings have been otherwise dismissed, the Commission and the April respondents submit that it has not been considered necessary and is not necessary where the continuing respondents are not identified, there is no determination of a point of law in issue in the continuing proceedings, there is no possibility of inconsistent findings and there is agreement between the Commission and the submitting respondents.
32. The Commission and the April respondents also point out that the eleventh and twelfth respondents have not limited their concerns to the making of the declarations but sought to defer the hearing of the submissions on the proposed orders and the making of any of the proposed orders (April (No 4)). The eleventh and twelfth respondents did, however, make specific submissions that the declarations ought not to be made at this stage of the proceedings.
33. The eleventh and twelfth respondents submit that, absent the express exclusion of themselves from the term ‘competitors’, there is a risk that, if made, the declarations might be inconsistent with a subsequent finding or findings of the Court and therefore, the declarations should not yet be made. They submit that this may arise where, if leave to serve them is granted, the Court will have to make findings as to which, if any, of the alleged arrangements were made, who were the parties to such arrangements and whether the alleged arrangements had the proscribed purpose, effect or likely effect.
34. As the Commission’s pleaded case is that the parties to the alleged arrangements included the Parties and the eleventh and twelfth respondents, there is a possibility that inconsistent findings would be made. In these circumstances and taking into account the fact that this means that the proposed consent orders to be made against the April respondents cannot be finalised, it is not appropriate to make the proposed declarations or any declarations at this stage. Accordingly, it is not presently necessary to consider whether declarations are appropriate in these proceedings or the content of the proposed declarations.

Pecuniary penalty

35. On the basis of the agreed facts and admissions, the Commission, AIMS Australia and AFPT Singapore jointly submit that the following levels of pecuniary penalty are appropriate in all the circumstances:
    1. in relation to AFPT Singapore, a single penalty in the amount of $3,250,000; and
    2. in relation to AIMS Australia, a single penalty in the amount of $750,000.

Penalty: Relevant Factors and Applicable Legal Principles

Assessment of an appropriate penalty

36. Section 76 of the TPA sets out matters to which the Court should have regard in determining an appropriate level of penalty. The principles relevant to the assessment of a pecuniary penalty were addressed by French J in Trade Practices Commission v CSR Limited [1991] ATPR 41-076 at 52,152-52,153. They are:
    1. the nature and extent of the contravening conduct;
    2. the amount of loss or damage caused;
    3. the circumstances in which the conduct took place;
    4. the size of the contravening company;
    5. the degree of power it has, as evidenced by its market share and ease of entry into the market;
    6. the deliberateness of the contravention and the period over which it extended;
    7. whether the contravention arose out of the conduct of senior management or at a lower level;
    8. whether the company has a corporate culture conducive to compliance with the TPA as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention; and
    9. whether the company has shown disposition to cooperate with the authorities responsible for the enforcement of the TPA in relation to the contravention.
37. Those considerations were approved and expanded upon by the Full Court of the Federal Court in NW Frozen Foods and J McPhee & Son (Australia) Pty Ltd v Australian Competition and Consumer Commission [2000] FCA 365; (2000) 172 ALR 532 to include:
    1. similar conduct in the past;
    2. effect on the functioning of the market and other economic effects of the conduct;
    3. the financial position of the contravening company; and
    4. whether the conduct was systematic, deliberate or covert.

Significance of specific and general deterrence

38. It has long been accepted that a principal object of a penalty under s 76 is deterrence of the contraventions (specific deterrence) and of others who might be tempted or disposed to contravene the TPA and engage in prohibited conduct of a similar kind (general deterrence) (TPC v CSR at 52,152; NW Frozen Foods at 294-295).
39. As Selway J observed in Australian Competition and Consumer Commission v McMahon Services Pty Ltd [2004] ATPR 42-031 at [15], penalties for collusive price fixing need to be substantial and significant, as reflected in the size of the current maximum penalty upon corporations of the greatest of $10 million, three times the benefit obtained from the contravention, and 10% of the annual turnover of the corporation (s 76(1A) of the TPA). This is because it is necessary, for the purposes of general deterrence, for the penalty to be sufficient to take account of the difficulty in detecting contraventions, the potential for large profits from such practices and the chance that those in the market place might be prepared to factor the risk of a low penalty into its pricing structure as a business cost. An object of orders under the TPA is to protect the integrity of markets and to prevent conduct that has the purpose or effect of adversely affecting competition by, inter alia, providing for penalties that will be sufficient to deter contravention of the Act (Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329 at [22] per Lee J). A significant and relevant matter is the effect on the functioning of markets and other economic effects, as to which the Court may be informed by the views of the Commission (NW Frozen Foods at 290). The views of the Commission on matters within its expertise, such as the deterrent effect of a proposed penalty in a given market, are usually given greater weight than its views on more ‘subjective’ matters (Minister for Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72; [2004] ATPR 41-993 at [51]).
40. Nonetheless, a penalty should not be so high as to be oppressive (NW Frozen Foods at 293). A penalty no greater than necessary to achieve the object of general deterrence will not be oppressive (Australian Competition and Consumer Commission v Leahy Petroleum (No 2) [2005] FCA 254; (2005) 215 ALR 281 at [9] per Merkel J – appeal allowed in part in relation to contraventions but the Full Court did not address penalty).

Totality and parity

41. In Trade Practices Commission v TNT Australia Pty Limited [1995] ATPR 41-375 at 40,169, Burchett J stated that the total penalty for related offences ought not to exceed what is proper for the entire contravening conduct involved (the 'totality principle' as known in criminal law) (see also Mornington Inn v Jordan [2008] FCAFC 70; (2008) 168 FCR 383 at [42]- [45], [91] per Stone and Buchanan JJ). The totality principle in criminal sentencing law was most recently explained by the High Court in Johnson v R [2004] HCA 15; (2004) 205 ALR 346.
42. Similar conduct should be deserving of similar penalties, all other things being equal (Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) [2005] FCA 265; (2005) 215 ALR 301 at [43] per Goldberg J), which they rarely are where contraventions of the TPA are concerned (NW Frozen Foods at 295 per Burchett and Kiefel JJ).

Determining an appropriate level of penalty

43. Determining the quantum of a penalty is not an exact science (NW Frozen Foods at 290 per Burchett and Kiefel JJ). Within a permissible range, the Courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another. In the present case, there is no quantification of the fruits of the contravention, of the loss caused or of the effect on competition. Although the sales of UWF paper by AFPT Singapore in Australia has been quantified (see [55]), AFPT Singapore does not supply paper just to Australia so it is impossible to identify the profit amounts derived from Australian sales. The Court has recognised in a number of cases that it can proceed to assess the appropriate penalty where there has been no evidence of the profits made as a result of contraventions of the TPA or where it would be difficult, if not impossible, to calculate such profits (Australian Competition and Consumer Commission v Roche Vitamins Australia Pty Ltd [2001] FCA 150; [2001] ATPR 41-809 at [41]–[42] per Lindgren J). The Parties submit that the penalties they propose are in accordance with the penalties imposed in other cases involving price fixing conduct, considering the relative seriousness and circumstances of the contravening conduct in those other cases.

The Court's approach to agreements on penalty

44. Provided that the Court is satisfied that the terms of the orders are appropriate, it is in the public interest for the Court to make orders in litigation under Part IV of the TPA on terms that have been agreed between parties, to encourage parties to assist the Commission in its investigations and achieve negotiated settlements. The Court has recognised that, in addition to savings in time and costs, there is a public benefit in imposing agreed pecuniary penalties where appropriate, as parties would not be disposed to reach such agreements were there unpredictable risks involved (NW Frozen Foods at 291) and may be encouraged to assist the Commission and make joint submissions on penalty.
45. The principles governing whether a Court should accept a penalty that has been agreed between the Commission and a respondent were considered in Trade Practices Commission v Allied Mills (No. 4) [1981] FCA 142; (1981) 37 ALR 256 at 259 by Sheppard J. His Honour accepted the propriety of the making of joint submissions on an agreed penalty and of the acceptance of that penalty by the Court. That approach was considered and approved by the Full Court in NW Frozen Foods at 298–299 to the effect that the question is not whether, unaided by the agreement of the parties, the Court would have arrived at the very figure the parties propose. It is whether, in the performance of the Court's duty under s 76 of the TPA, the particular penalty proposed with the consent of the corporation involved and of the Commission is one that the Court should determine to be appropriate. The Court does not merely give effect to the wishes of the parties. It is exercising a public function and, therefore, must have regard to the public interest and be satisfied that the proposed orders are not contrary to the public interest and are at least consistent with it (Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 18; (1999) 161 ALR 79 at [18] per French J). However, where a proper figure is one within the permissible range in all the circumstances, the Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case (NW Frozen Foods at [291]).

Penalty: Application of the principles

46. The following facts are also agreed and presented jointly by the Parties as relevant to the imposition of penalty.

Nature and extent of the contravening conduct

47. The relevant contravening conduct at the AAA Club meetings occurred over a period of approximately 3 years, from December 2000 until January 2004. The details of the conduct are set out at [7] to [20] above.
48. Relevant meetings were held overseas, in countries in south-east Asia which had no anti-trust laws in place at the time.

The effect on the market and the amount of any loss or damage caused

49. Neither the Commission, AFPT Singapore nor AIMS Australia know or can quantify the amount of loss or damage caused by the conduct. As the contraventions admitted for the purposes of these proceedings comprise conduct prohibited per se, the absence of evidence of the loss or damage caused by the conduct is neither a circumstance of mitigation nor of aggravation (Australian Competition and Consumer Commission v Gullyside Pty Ltd [2005] FCA 1727; [2006] ATPR 42-097 at [23] per Kiefel J; Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (in liquidation) [2007] FCAFC 146; (2007) 161 FCR 513 at [62]; Australian Competition and Consumer Commission v TEAC Australia Pty Ltd [2007] ATPR 42-201 at [29] per Kenny J).
50. The relevant arrangements were longstanding, over an approximate period of 3 years.
51. The paper products which were the subject of the agreements were basic commodity products.
52. The largest supplier of paper in Australia, a domestic Australian paper manufacturer with an estimated 50-60% share in the relevant period, acted as a constraint on pricing for all paper importers, including AFPT Singapore. The pricing of domestic products, supplied at a premium to imported paper, limited the extent to which the parties to the conduct could increase prices. However, arrangements arising out of AAA Club meetings sought to prevent competitive discounting between the importers.

The circumstances in which the conduct took place

53. The conduct at AAA Club meetings was an arrangement which arose in circumstances where the participants were seeking to achieve stability in pricing by avoiding competition amongst themselves. The conduct of AFPT Singapore and AIMS Australia arose in the context of volatile pricing for the relevant products, affected also by seasonality, and in an environment where levels of pricing for the importation of paper products to Australia had been the subject of anti-dumping claims by domestic Australian paper producers.

Size and financial position of the contravening company

54. AFPT Singapore and AIMS Australia are part of a multinational group of companies, which manufactured the paper they supplied.
55. The Parties submit that it is relevant that between 2000 and 2004, AFPT Singapore had the following sales of UWF paper in Australia:

Period	Volume (tonne)	Invoiced amount (USD)
December 2000	275	220,907
Calendar year 2001	18,490	14,397,449
Calendar year 2002	21,004	17,000,231
Calendar year 2003	25,251	20,695,444

Those sales were predominantly for UWF cut-size paper, with UWF folio paper constituting only a small proportion of sales. In the absence of any indication of the profit arising from those sales, the figures are not relevant.

56. From date of incorporation until the end of 2003, AIMS Australia recorded a loss of approximately AUD$17, 700. For 2004, AIMS Australia recorded a profit of approximately AUD$32,700 arising from marketing services provided by AIMS Australia to AFPT Singapore.

Degree of power it has, as evidenced by its market share and ease of entry into the market

57. It is not alleged that AFPT Singapore or AIMS Australia had a significant degree of market power in the Australian market, based on market share or otherwise. Between 2000 and 2004, AFPT Singapore held less than 6% by volume of all the sales of UWF paper in Australia.
58. At the time of the conduct, the largest supplier of paper in Australia was a domestic Australian paper manufacturer with an estimated 50-60% share. That supplier was not part of the collusive arrangements and did not participate in meetings of the AAA Club. The remaining share comprised principally the participants at AAA Club meetings.

The deliberateness of the contravention and the period over which it extended

59. The conduct involved deliberate reaching of agreement between competitors as to pricing, and the AAA Club meetings were held in secret.
60. The representatives of AFPT Singapore who attended the relevant meetings were not aware of the existence of the TPA or the prohibition of cartel conduct in Australia. The Commission submits this highlights the importance of general deterrence in determining and imposing pecuniary penalties in these proceedings. The joint submissions and facts are silent on the awareness of AIMS Australia of the existence of and the provisions of the TPA.
61. The contravening conduct admitted for the purpose of these proceedings by AFPT Singapore continued for a period of approximately 3 years, beginning in December 2000 and ceasing in January 2004. The contravening conduct of AIMS Australia took place for a period of approximately 6 months, beginning in August 2003 and ceasing in January 2004.

Whether the contravention arose out of the conduct of senior management or at a lower level

62. AFPT Singapore's representatives at relevant meetings included members of AFPT Singapore’s senior management team.
63. The price of paper for sale in Australia by AFPT Singapore was set by members of AFPT Singapore’s senior management team, some of whom also attended AAA Club meetings.
64. One of the representatives who attended the relevant meetings and was involved in setting the price of paper for sale in Australia by AFPT Singapore was also a director of AIMS Australia from the time of its incorporation until 3 December 2004.

Culture of compliance

65. At the time the contravening conduct occurred, neither AIMS Australia nor AFPT Singapore had:
    1. provided anti-trust training for its staff; or
    2. implemented any anti-trust compliance program.
66. AIMS Australia became aware of the Commission’s investigations into the subject matter of these proceedings by May 2005.
67. Anti-trust laws were not introduced in Singapore until late 2004, with a phased implementation. The Singapore Competition Commission was established in 2005 and provisions against anti-competitive agreements were implemented in 2006.
68. Immediately upon those laws being introduced, AFPT Singapore took steps to implement an anti-trust compliance programme, where part of the process included a review of commercial practices. Following implementation, anti-trust compliance training was provided to staff, including staff located overseas. The training sessions commenced on 1 December 2005 and refresher sessions have been held annually since.

Whether the company has shown disposition to cooperate with the authorities responsible for the enforcement of the TPA in relation to the contravention

69. AFPT Singapore and AIMS Australia have co-operated with the Commission by seeking to reach agreement with the Commission, admitting the conduct alleged for the purposes of these proceedings and submitting to the proposed orders. AFPT Singapore and AIMS Australia commenced discussions with the Commission shortly after AFPT Singapore was served in the proceedings in June 2009. AFPT Singapore accepts that it was aware of the proceedings prior to service by reason of the involvement of AIMS Australia but the Parties note that AIMS Australia did not oppose service and that its co-operation occurred at what was still an early stage of the proceedings for the Parties, thus saving significant costs.
70. As a result, the penalties submitted to the Court as appropriate are discounted in the order of 20% to 30% from the penalties which would have been submitted by the Commission as appropriate absent such cooperation.

Similar conduct in the past

71. AIMS Australia and AFPT Singapore have not been the subject of any previous court proceeding by the Commission or by any other person for a contravention of the TPA or the Codes.

The deterrent effect of the proposed penalty

72. The Parties submit the proposed levels of penalty are appropriate to address the need for deterrence, both specific and general.

Totality principle

73. An application of the totality principle requires that the total penalty for related offences ought not exceed what is proper for the entire contravening conduct involved. In this case, the Parties jointly submit that a single penalty in respect of each respondent, in relation to all contravening conduct, is appropriate in the circumstances and takes account of the fact that there was more than a single occasion of contravening conduct.

Parity with other respondents

74. The proposed penalties take into account the following differences between the positions of AFPT Singapore and AIMS Australia:
    1. the difference in the nature of the contraventions;
    2. the difference in the number of contraventions;
    3. the difference in the periods of time over which the contraventions occurred;
    4. the difference in the size and turnover of the companies; and
    5. the difference in the operations of the companies, with AFPT Singapore responsible for the sale and distribution of paper products in Australia, whilst AIMS Australia is responsible for providing marketing and promotion, shipment coordination, market research and customer support services to AFPT Singapore customers in Australia.
75. As to parity, the Commission says that it will take the same factors into account in seeking any penalties in the event of findings against any of the continuing respondents.

Costs

76. The Court is empowered to make an order for a gross sum order for costs under O 62 r 4(2)(c) of the Federal Court Rules. Similar orders have been made in other proceedings commenced by the Commission and resolved by consent (Australian Competition and Consumer Commission v Qantas Airways Ltd [2008] FCA 1976; (2008) 253 ALR 89; Australian Competition and Consumer Commission v British Airways plc [2008] FCA 1977; Australian Competition and Consumer Commission v Oobi Baby Pty Ltd [2008] FCA 1488). The Parties submit it is appropriate for an order to be made that AIMS Australia and AFPT Singapore pay the amount of $250,000 in respect of the Commission’s costs of and incidental to this proceeding as against the April respondents.

ORDERS TO BE MADE

77. The parties have responded to the Court’s request to engage in discussion and to reach agreement to the extent possible as to matters in dispute. Taking into account the principles concerning the application of penalties in cases involving contraventions of Part IV of the TPA and the considerations that apply to proposed orders jointly submitted by the relevant parties as appropriate, I am satisfied that the proposed orders, other than the proposed declarations, are appropriate.
    

I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

Associate:

Dated: 29 January 2010