Case: Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206
Outcome: cited
In Leahy , Merkel J discussed the concepts of 'arrangement' and 'understanding' where multiple parties were alleged to have been involved, in different capacities, in price fixing contravening s 45 of the TPA. In that case, the ACCC brought proceedings against eight corporations and eight individuals. A number of the respondents admitted to contraventions of the TPA. The remaining respondents did not seriously challenge the ACCC's case against the admitting respondents, but rather they sought to distinguish their actions from those of the admitting respondents. The contesting respondents submitted that, unlike the other respondents, they had not initiated any of the price increases in the pricing 'cycle' at the heart of the ACCC's case. While the contesting respondents did not dispute that price increases were communicated amongst competitors in the Ballarat petrol market, they argued that their price increases were the result of competitive market forces and not made pursuant to an understanding to increase petrol prices in the event of a 'price-increase call' by the initiating respondents. His Honour stated at 200 [54]: 'It is well established that, for the purposes of ss 45(2) and 45A , the term "understanding" is apt to describe something less than a binding contract or arrangement. An understanding will usually, but may not necessarily, involve some reciprocity of obligation: see Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd (2000) 169 ALR 344 at 360 (ACCC v Amcor); Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 at 230-231 and Trade Practices Commission v Email Ltd (1980) 43 FLR 383 at 397. At the least, there must be a meeting of minds of those said to be parties to the understanding and a consensus as to what is to be done; not merely a hope as to what might be done or might happen. Thus, ordinarily, an understanding involves communication between the parties arousing expectations in each party that the other party/parties will act in a particular way: see Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd [2003] FCAFC 149 ; (2003) 129 FCR 339 at [409] '. 111 As these passages from Leahy and Apco indicate, the authorities have expressly refrained from holding that the consensus or meeting of minds required by the words 'arrangement' or 'understanding' must involve a reciprocity of obligation. In Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd (2000) 169 ALR 344 (' Amcor' ) at 359-360 [75], Sackville J said: 'An arrangement or understanding for the purposes of s 45(2) of the TP Act is apt to describe something less than a binding contract or agreement: Top Performance Motors Pty Ltd v Ira Berk (Qld) Pty Ltd (1975) 5 ALR 465; 24 FLR 286 at 290 1 (Aust Ind Ct, FC) per Smithers J. However, in order for there to be an arrangement or understanding for the purposes of s 45(2), there must be a meeting of the minds of those said to be parties to the arrangement or understanding. There must be a consensus as to what is to be done and not merely a hope as to what might be done or happen: Trade Practices Commission v Email Ltd (1980) 43 FLR 383 at 385 (Lockhart J); Ira Berk at FLR 291 per Smithers J. Ordinarily, an arrangement or understanding involves communication between the parties arousing expectations in each that the other will act in a particular way: Email at 395. There is no necessity for an element of mutual commitment between the parties to an arrangement or understanding, although in practice such an arrangement or understanding would ordinarily involve reciprocity of obligation: Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 at 230 1; 116 ALR 643 per Lockhart J.' There are, however, several cases in which the courts have said that an assumption of mutual obligations or reciprocal commitments will be the common situation: eg Trade Practices Commission v Parkfield Operations Pty Ltd (1985) 5 FCR 140 at 144. In Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 at 230-231 and 238, the Full Court endorsed Lockhart J's observation in Email at 397 that it is difficult to envisage circumstances where there would be an understanding involving a commitment by one party as to the way it should behave, without some reciprocal obligation by the other party.