Case: J McPhee &amp; Son (Australia) Pty Ltd v Australian Competition and Consumer Commission (2000) 172 ALR 532
Outcome: applied
There was no dispute between the parties as to the principles which govern the imposition of a penalty under s 76(1). The relevant principles have been discussed at length in numerous cases: see Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 ( 'CSR' ) at 52,151 52,153 per French J; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 ( 'NW Frozen Foods' ) at 291-295 per Burchett and Kiefel JJ; Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission [2003] FCAFC 2 ; (2003) 127 FCR 170 at 172 173 [2]-[6] per Sackville J and at 181 184 [47]-[60] per Merkel J; J McPhee &amp; Son (Australia) Pty Ltd v Australian Competition and Consumer Commission (2000) 172 ALR 532 ( 'McPhee' ) at 577-579 [158]-[166]; Australian Competition and Consumer Commission v Visy Paper Pty Ltd (No 2) (2004) 212 ALR 564 ( 'Visy Paper (No 2)' ) at 571-572 [28]-[32] per Sackville J; Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2 ) (2005) 215 ALR 281 at 283 285 [5]-[12] per Merkel J; and Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301 ( 'Leahy (No 3)' ) at 307-311 [31]-[43] per Goldberg J. 16 In McPhee , the Full Court (comprising Black CJ, Lee and Goldberg JJ) reviewed the authorities, including Stihl , Trade Practices Commission v Mobil Oil Australia Ltd (1984) 4 FCR 296 at 298 and Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375 ( 'TNT' ) at 40,166, in which the courts attached importance to the deliberateness of the contravening conduct. The Full Court concluded that in fixing penalties under s 76 it is appropriate and relevant to take into account whether the conduct that contravened the TPA was systematic, deliberate or covert: at 577 [158] and at 579 [163]. In doing so, the Court does not stray into irrelevant moral considerations. 30 The decision of Mansfield J in Rural Press illustrates the proposition that s 76(3) and the totality principle can produce similar results. His Honour said at 43,290 [19]: 'The ACCC is correct in stressing that, as I have found, the conduct of the respondents involved two contraventions of s 45 of the Act, namely the making of an arrangement and separately carrying it into effect. In a practical sense, I consider that the conduct that constituted the first of those contraventions was "part and parcel" of the conduct that constituted the second of those contraventions: see for example J McPhee &amp; Son (Australia) Pty Ltd v Australian Competition and Consumer Commission (2000) ATPR |P41-758; (2000) 172 ALR 532 ( "McPhee" ), per Black CJ, Lee and Goldberg JJ at ATPR 40,923; FCR 583 [182]. However, although the conduct constituting the contraventions of s 46 was also closely allied to that conduct, in my view the contraventions of s 46 are separate and could be dealt with separately. For the reasons proposed by the ACCC, and accepted by the respondents, I will however impose one penalty upon each respondent for the contraventions of the Act by that particular respondent, or in which that particular respondent was involved. In this matter, the level of pecuniary penalty which I impose would not alter whether the s 45 and s 46 contraventions had to be treated as part and parcel of the one set of conduct by reason of s 76(3) or were capable of being treated as separate contraventions.' 31 In McPhee at 583 [181]-[183], the Full Court considered the imposition of penalties for making and giving effect to an arrangement or understanding in contravention of s 45. The Court concluded that s 76(3) applied because the conduct which constituted the second contravention of giving effect to the arrangement was part and parcel of the conduct which constituted the first contravention of making the arrangement: 'The case presented to his Honour did not distinguish the conduct of McPhee involving the formation of the proscribed arrangement or understanding from the conduct of McPhee said to constitute giving effect to such arrangement or understanding. According to the Commission's case, the delivery by Mr Webb to Mr Jolly of McPhee's rates was an integral part of the conduct that constituted the contravention of s 45 in making, or arriving at, an understanding or arrangement. That same act was also relied upon by the Commission as the act which constituted the further contravention by McPhee of giving effect to the arrangement or understanding. If the disclosure by McPhee to DFE of the rates charged by McPhee to ACI Florapak could be said to be an act giving effect to an arrangement or understanding already made or arrived at, it was not conduct distinguishable from the conduct of McPhee which constituted the making of such an arrangement or understanding. Pursuant to s 76(3) of the Act, if conduct constitutes a contravention of two or more provisions of Pt IV , a proceeding may be instituted in respect of each contravention but a person is not liable to more than one pecuniary penalty in respect of the same conduct. This was not a case involving repeated conduct concerning discrete events occurring at different times and involving disparate parties: Trade Practices Commission v Simpson Pope Ltd (1980) 30 ALR 544; 47 FLR 334 at 336 per Franki J. We therefore accept the submission that his Honour erred in imposing separate penalties in respect of the ACI Florapak conduct. The conduct which constituted the second contravention was part and parcel of the conduct which constituted the first contravention and s 76(3) prescribed that only one penalty could be imposed.' 37 Another difficulty with the ACCC's submission is that, as in McPhee , the ACCC conducted the trial without attempting to draw any distinction between the conduct on the part of the CEPU that was relevant to its involvement in Edison's contravention of s 45E(3) and that which was relevant to Edison's contravention of s 45EA. Quite the contrary; the ACCC relied on the same conduct for its contention that the CEPU was involved in both contraventions. This is confirmed by paras 41 and 42 of the ACCC's amended statement of claim. At trial, senior counsel for the ACCC expressly submitted that the ACCC relied on the same conduct by the CEPU over a relatively short period of time between 9 August and 23 August 2001 in connection with both contraventions. 38 The ACCC's submission fails to take into account the full ambit of my findings concerning the contract, arrangement or understanding between Edison and the CEPU. In my principal judgment, I found that prior to 23 August 2001 Edison and the CEPU made or entered into an arrangement that included a provision that Edison would not engage electrical contractors to perform work at Loy Yang B unless they have a certified agreement with the CEPU prior to commencing work at the site: at [142]. However, I also found that the heads of agreement was entered into on 23 August 2001 in accordance with, and was controlled by, this broader arrangement: at [142] and [173]. Even if the heads of agreement were the only relevant arrangement between Edison and the CEPU, I concluded that cl 4.1 of the heads of agreement constituted a provision that was included in the heads of agreement for a purpose which infringed s 45E(3): at [192]. When I turned to consider the CEPU's liability as an accessory to Edison's contraventions of ss 45E and 45EA, I pointed out that the evidence established that the CEPU made demands which instigated, induced and procured Edison to make both the broader arrangement and the heads of agreement: at [220]. In these circumstances, the implementation steps which the CEPU took on 15 and 23 August 2001 can be regarded as actions by which the CEPU induced, counselled or procured Edison to sign the heads of agreement, which relevantly formed part of the contravening arrangement. Put another way, there is no reason to conclude that the implementation steps which the CEPU took on 15 and 23 August 2001 are relevant only to the contravention of s 45EA and not to the contravention of s 45E(3). In my opinion, they are relevant to both, given the findings I have made concerning the heads of agreement and the relationship between the heads of agreement and the broader arrangement that Edison and the CEPU made some days earlier. 39 For the sake of completeness, I note that the ACCC advanced a different argument in its written submissions on penalty, but it did not pursue that argument in its oral submissions. Shortly stated, the argument was that the CEPU's conduct in relation to s 45EA included its failure to prevent the continuation of Edison's new practice between August 2001 and November 2003. The ACCC did not advance this argument at the principal hearing and, assuming it was not abandoned during the penalty hearing, it is now too late to raise it. At all relevant times, the ACCC's case was that the CEPU was involved in Edison's contravention of s 45EA because the CEPU had counselled, procured or induced Edison to give effect to the offending provision by means of the demands which the CEPU made to Edison in the period leading up to Edison's execution of the heads of agreement on 23 August 2001. At the principal hearing, senior counsel for the ACCC submitted that the ACCC could not point to anything that the CEPU did after the making of the arrangement on or about 23 August that made it an accessory to Edison's contravention of s 45EA. The ACCC did not mount a case that the CEPU policed or sought to enforce the arrangement after it was entered into in August 2001. The ACCC did not ask any questions of Burns or Sutherland or any other witness to the effect that the CEPU had taken any steps to enforce the arrangement after it was entered into in August 2001. 42 If the CEPU's conduct that is relevant to Edison's contravention of s 45EA can be distinguished from its conduct in relation to the s 45E(3) contravention, with the consequence that s 76(3) does not apply, I consider that the approach described in Allied Mills , Advance Bank and in McPhee at 584 [185] should be applied in the circumstances of this case. In substance, the CEPU engaged in a single course of conduct that was related and interlocking and which involved it in both contraventions. To my mind, it would be artificial to distinguish between the conduct that is relevant to the making of the arrangement and that which is relevant to Edison's giving effect to the arrangement. The CEPU's conduct in relation to the two contraventions is so interconnected that the appropriate course is to apply the totality principle to set a penalty for the CEPU's accessorial conduct in respect of one breach and to take the CEPU's involvement in the other breach into account. Adopting that approach, I have concluded that the appropriate penalty would not differ from that which I would impose on the basis that s 76(3) applies.