Case: Minister for Industry, Tourism &amp; Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 ; (2004) ATPR 41-993
Outcome: referred to
in mind the process as set out by the High Court in Markarian v The Queen [2005] HCA 25 ; (2005) 228 CLR 357 for the assessment of criminal sanctions where penalties are not fixed by statute, the ACCC and the AKA jointly submit that a total pecuniary penalty of $10,000 imposed on the AKA is appropriate and within the range of penalties that a Court would order in these circumstances. The parties point out that in considering the proposed agreed penalty, the Court should take into account the fact that a negotiated resolution may be expected to include measures designed to promote, for the future, vigorous competition in the particular market. The imposition of penalty is a matter for the Court ( NW Frozen Foods at 290) and the assessment of the appropriate penalty involves exercising a discretion taking into account all relevant factors ( Markarian at [27]). However, the parties submit that the Court should not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure except in a clear case ( NW Frozen Foods at 291, approved and explained in Minister for Industry, Tourism &amp; Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 ; (2004) ATPR 41-993). The imposition of a financial penalty is a matter for the Court, whether or not the parties propose an agreed figure ( Mobil Oil ). I am aware that the AKA can pay the proposed penalty of $10,000 without going out of business or seriously impeding its activities. I am also aware of the strictures as enunciated in the cases of not substituting an amount by way of penalties simply because another sum comes to mind. I am mindful of the fact that the AKA has agreed to pay a contribution to the ACCC's costs of the proceedings in an amount to be agreed. I am conscious of the fact that this is a voluntary organisation conducting kart racing in the interests of an interested section of the public. I have taken into account the various factors elucidated in Mobil Oil regarding the public interest in the settlement of litigation. Further, I take into account the following: I am satisfied that the agreed amount of $10,000 is within the permissible range in the present circumstances. I am satisfied that it is appropriate to make the orders as proposed by consent. I will make the orders in Annexure A to these reasons, which, apart from one proposed declaration as to which there was no supporting evidence in the statement of agreed facts, accord with the orders proposed by the parties. I certify that the preceding one hundred (100) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. Associate: Dated: 6 November 2009 Counsel for the Applicant: Mr D Godwin Solicitor for the Applicant: Corrs Chambers Westgarth Counsel for the Respondents: Mr J Stephenson Solicitor for the Respondents: Simpson &amp; Partners Solicitors Pty Limited Date of Hearing: 24 September 2009 Date of Judgment: 6 November 2009 Annexure A THE COURT DECLARES THAT: Each of the first respondent ("the AKA"), second respondent ("Wagga Kart Club"), the third respondent ("Newcastle Kart Club") and the fourth respondent ("Manning Valley Kart Club"), by making a contract or arrangement or arriving at an understanding containing provisions that: (a) each of the AKA clubs with bitumen kart circuits ("Kart Circuits") would not offer to supply, and would not supply Kart Circuit hire services at a price less than $4,000 plus GST per day for country clubs and $6,000 per GST per day for metropolitan clubs ("Minimum Hire Fee"); and (b) any negotiations for the supply of Kart Circuit hire services would be conducted by the AKA; made a contract or arrangement or arrived at an understanding ("Kart Circuit Hire Understanding") that: (c) had the purpose or the effect, or were likely to have the effect, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price for Kart Circuit hire services supplied by AKA clubs with Kart Circuits in competition with each other to customers or prospective customers in New South Wales and the Australian Capital Territory within the meaning of section 45A of the Competition Code of New South Wales ("the Code"); and (d) by reason of the matters alleged in subparagraph (c) above, is deemed to have the purpose or effect, or to be likely to have the effect, of substantially lessening competition in the market in New South Wales and the Australian Capital Territory for the supply of Kart Circuit hiring services within the meaning of section 4E of the Code ("Kart Circuit Market"), for the purposes of section 45(2)(a)(ii) of the Code; and thereby engaged in a contravention of section 45(2)(a)(ii) of the Code. Each of the AKA, Wagga Kart Club, Newcastle Kart Club and Manning Valley Kart Club, by making or arriving at the Kart Circuit Hire Understanding in circumstances where two or more parties to the Kart Circuit Hire Understanding supplied Kart Circuit hire services in competition with each other, made a contract or arrangement or arrived at an understanding which contained a provision, the purpose or a substantial purpose of which was to prevent, restrict or limit one of more of the following: (a) the supply by AKA clubs with Kart Circuits of Kart Circuit hire services to any kart series operator who is not an AKA member on condition that the customer pay at least the Minimum Hire Fee; and (b) the acquisition by any kart series operator who is not an AKA member of Kart Circuit hire services from AKA clubs with Kart Circuits on condition that the customer shall pay at least the Minimum Hire Fee; being an exclusionary provision within the meaning of section 4D of the Code, and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the Code. The fifth respondent ("Dubbo Kart Club"), by its conduct in corresponding with the AKA regarding the hire of the Lincoln County Raceway by Prokart for the Minimum Hire Fee or a higher fee, gave effect to the provisions of the Kart Circuit Hire Understanding as characterised in declarations 1 and 2 above and thereby: (a) engaged in conduct in contravention of section 45(2)(b)(ii) of the Code; and (b) engaged in conduct in contravention of section 45(2)(b)(i) of the Code. The AKA, by its conduct in liaising with Prokart and Dubbo Kart Club regarding the hire of the Lincoln County Raceway for the Minimum Hire Fee or a higher fee, gave effect to the provisions of the Kart Circuit Hire Understanding as characterised in declarations 1 and 2 above and thereby:: (a) engaged in conduct in contravention of section 45(2)(b)(ii) of the Code; and (b) engaged in conduct in contravention of section 45(2)(b)(i) of the Code. 5. Manning Valley Kart Club, by its conduct in: (a) advising Prokart that any negotiations for the supply of Kart Circuit hire services would be conducted by the AKA; and (b) liaising with the AKA regarding the hire of the Manning Valley Kart Circuit by Prokart for the Minimum Hire Fee; gave effect to the provisions of the Kart Circuit Hire Understanding as characterised in declarations 1 and 2 above and thereby: (c) engaged in conduct in contravention of section 45(2)(b)(ii) of the Code; and (d) engaged in conduct in contravention of section 45(2)(b)(i) of the Code. The AKA, by its conduct in liaising with Prokart and Manning Valley Kart Club regarding the hire of the Manning Valley Kart Circuit for the Minimum Hire Fee, gave effect to the provisions of the Kart Circuit Hire Understanding as characterised in declarations 1 and 2 above and thereby: (a) engaged in conduct in contravention of section 45(2)(b)(ii) of the Code; and (b) engaged in conduct in contravention of section 45(2)(b)(i) of the Code. Newcastle Kart Club, by its conduct in liaising with the AKA regarding the hire of the Newcastle Kart Circuit by Prokart for the Minimum Hire Fee, gave effect to the provisions of the Kart Circuit Hire Understanding as characterised in declarations 1 and 2 above and thereby: (a) engaged in conduct in contravention of section 45(2)(b)(ii) of the Code; and (b) engaged in conduct in contravention of section 45(2)(b)(i) of the Code. The AKA, by its conduct in liaising with Prokart and Newcastle Kart Club regarding the hire of the Newcastle Kart Circuit, gave effect to the provisions of the Kart Circuit Hire Understanding as characterised in declarations 1 and 2 above and thereby: (a) engaged in conduct in contravention of section 45(2)(b)(ii) of the Code; and (b) engaged in conduct in contravention of section 45(2)(b)(i) of the Code. The sixth respondent ("Mr Erdmann") by his involvement in the making of or arriving at the Kart Circuit Hire Understanding with the knowledge of the essential elements of the contraventions of section 45(2)(a)(ii) and section 45(2)(a)(i) of the Code referred to in declarations 1 and 2 above, was a person directly or indirectly knowingly concerned in, or party to, those contraventions, which constitutes conduct of the kind referred to in section 75B(1)(c) and/or section 80(1)(e) of the Code. The seventh respondent ("Mr Whiting") by his involvement in the making of or arriving at the Kart Circuit Hire Understanding with the knowledge of the essential elements of the contraventions of section 45(2)(a)(ii) and section 45(2)(a)(i) of the Code referred to in declarations 1 and 2 above, was a person directly or indirectly knowingly concerned in, or party to, those contraventions, which constitutes conduct of the kind referred to in section 75B(1)(c) and/or section 80(1)(e) of the Code. AND, the Court orders that: The AKA pay to the Commonwealth a total pecuniary penalty of $10,000 within three months of the date of this order. That the AKA be permanently restrained whether by itself, its servants or agents from: (a) making, or arriving at; (b) giving effect to; or (c) attempting to make or arrive at, or give effect to; any contract, arrangement or understanding with any two or more AKA members in Australia which contains a provision that: (d) has the purpose or the effect, or is likely to have the effect, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price for Kart Circuit hire services supplied by AKA clubs with Kart Circuits to customers or prospective customers in New South Wales and the Australian Capital Territory; or (e) has the purpose of preventing or restricting one or more of the following: (i) the supply by AKA clubs with Kart Circuits of Kart Circuit hire services to any kart race series operator who is not an AKA member on condition that the customer pay at least a minimum hire fee; or (ii) the acquisition by any kart race series operator who is not an AKA member of Kart Circuit hire services from AKA clubs with Kart Circuits by the imposition of a condition that the customer pay at least a minimum hire fee. An injunction permanently restraining each of Wagga Kart Club, Newcastle Kart Club, Manning Valley Kart Club, Dubbo Kart Club whether by themselves, their servants or agents from: (a) making, or arriving at; (b) giving effect to; or (c) attempting to make or arrive at, or give effect to; any contract, arrangement or understanding with any other AKA member in Australia which contains a provision that: (d) has purpose or the effect, or is likely to have the effect, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price for Kart Circuit hire services supplied by AKA clubs with Kart Circuits to customers or prospective customers in New South Wales and the Australian Capital Territory; or (e) has the purpose of preventing or restricting one or more of the following: (i) the supply by AKA clubs with Kart Circuits of Kart Circuit hire services to any kart race series operator who is not an AKA member by the imposition of a condition that the customer pay at least a minimum hire fee; or (ii) the acquisition by any kart race series operator who is not an AKA member of Kart Circuit hire services from AKA clubs with Kart Circuits by the imposition of a condition that the customer pay at least a minimum hire fee. An injunction permanently restraining each of Mr Erdmann and Mr Whiting whether by themselves, their servants or agents from: (a) attempting to induce the making, or arriving at, or the giving effect to; or (b) being knowingly concerned in, or party to, the making or arriving at, or giving effect to; any contract, arrangement or understanding with any two or more AKA members in Australia which contains a provision that: (c) has purpose or the effect, or is likely to have the effect, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price for Kart Circuit hire services supplied by AKA clubs with Kart Circuits to customers or prospective customers in New South Wales and the Australian Capital Territory; or (d) has the purpose of preventing or restricting one or more of the following: (i) the supply by AKA clubs with Kart Circuits of Kart Circuit hire services to any kart race series operator who is not an AKA member by the imposition of a condition that the customer pay at least a minimum hire fee; or (ii) the acquisition by any kart race series operator who is not an AKA member of Kart Circuit hire services from AKA clubs with Kart Circuits by the imposition of a condition that the customer pay at least a minimum hire fee. 15. The AKA shall: (a) within three months of the date of this order, establish an education training and trade practices compliance program ("Compliance Program") for officers and employees of its business, which is designed to instil an awareness of the prohibitions contained in Part IV of the Code (including section 45 and section 45A) in relation to the contravening conduct in this proceeding or any similar or related conduct; b) within one month of the date of this order, appoint a legal adviser to advise the AKA as to the content of the Compliance Program; (c) implement and administer the Compliance Program for a period of three years from the date it is established; (d) within three months of the date of this order, prepare a written report to the applicant ("the ACCC") on the content of the Compliance Program; and (e) provide a further report to the ACCC on the implementation and administration of the Compliance Program at the conclusion of each period of 12 months during which the Compliance Program is being implemented and administered. The AKA shall within three months of the date of this order, cause to be sent to each member of the AKA a letter substantially in the form of Attachment 1. The AKA to pay a contribution to the ACCC's costs of the proceedings in an amount as agreed between the parties. ATTACHMENT 1 Letter to AKA members [To be placed on the AKA letterhead] [Date] Dear Sir/Madam Anti-competitive arrangement by the AKA Following civil proceedings instituted by the Australian Competition and Consumer Commission ("ACCC"), the Federal Court of Australia has found that the Australian Karting Association (NSW) Incorporated ("the AKA") and three AKA members made an anti-competitive arrangement at the annual general meeting of the AKA which was held on 19 July 2008. The Court has declared that the AKA engaged in anti-competitive conduct (contravening the Competition Code of New South Wales ("the Competition Code")) by making an arrangement: to fix the minimum price for the hire of kart circuits by AKA clubs (which is said to substantially lessen competition); and to prevent, restrict or limit the hire of kart circuits by AKA clubs to non-AKA members by imposing a condition that the non-AKA members pay at least the minimum price (which is an exclusionary provision); and later giving effect to the above arrangement. The Competition Code has the same provisions as the Trade Practices Act 1974 (Cth), but applies to individuals and non-trading associations such as AKA clubs. One of the Court's orders is that the AKA must write to each member to notify them of the outcome of these proceedings and to inform them of the illegality of making and giving effect to arrangements which substantially lessen competition or contain an exclusionary provision. The AKA has been ordered to pay a penalty of $10,000 and to pay a contribution to the ACCC's costs. The Court has also granted injunctions restraining the AKA from making arrangements of this kind in the future and has ordered that the AKA establish a trade practices compliance program. If as an AKA member you: agree with other AKA members to a minimum or set price for the hire of kart circuits; agree with other AKA members to prevent, restrict or limit the hire of kart circuits by AKA clubs to a particular class of persons on particular conditions; or give effect to an agreement set out above, you may be in breach of the Competition Code and may be liable to pay fines of up to $10,000,000 for a company or $500,000 for an individual, as well as damages for any loss that is caused. You can obtain further information about the ACCC's proceedings against the AKA and the Trade Practices Act 1974 / Competition Code from the ACCC website at www.accc.gov.au . Yours sincerely President AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2009/1255.html