Case: Trade Practices Commission v Email Ltd (1980) 43 FLR 383
Outcome: considered
The authorities on s 45 of the TPA explain the concept of a 'contract, arrangement or understanding' as it is used in Pt IV: see Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2004] FCA 1678 ; (2004) 141 FCR 183 (' Leahy' ); Apco Service Stations Pty Ltd v Australian Competition and Consumer Commission [2005] ATPR 42-078 (' Apco' ); Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75 ; (2003) 216 CLR 53 (' Rural Press' ); Trade Practices Commission v Email Ltd (1980) 43 FLR 383 (' Email' ); and Trade Practices Commission v David Jones (Australia) Pty Ltd (1986) 13 FCR 446 (' David Jones' ). Some assistance is also to be gained from authorities that have considered s 45E in its original form: Gibbins ; see also Keith Russell Simplicity Funerals Pty Ltd v Cremation Society of Australia (ACT) Ltd (1982) 57 FCR 472. 106 The cases on s 45 of the TPA make it clear that for an arrangement or understanding to occur, there must be a 'meeting of the minds' of the parties: Top Performance Motors Pty Ltd v Ira Berk (Queensland) Pty Ltd (1975) 5 ALR 465; Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 2) (1979) 26 ALR 609. There must be a consensus as to what is to be done, not just a mere hope as to what might be done or might happen: Email at 385. 107 In Federal Commissioner of Taxation v Lutovi Investments Pty Ltd [1978] HCA 55 ; (1978) 140 CLR 434 (' Lutovi' ), the meaning of an 'arrangement' was considered in the context of s 260 of the Income Tax Assessment Act 1936 (Cth). Gibbs and Mason JJ (Murphy J agreeing) said at 444: 'In the context of s 260 an arrangement is something less than a binding contract or agreement, something in the nature of an understanding which may not be enforceable at law ( Newton v Federal Commissioner of Taxation). ... It is, however, necessary that an arrangement should be consensual, and that there should be some adoption of it. But in our view it is not essential that the parties are committed to it or are bound to support it. An arrangement may be informal as well as unenforceable and the parties may be free to withdraw from it or to act inconsistently with it, notwithstanding their adoption of it.' The High Court's formulation in Lutovi has been applied in the context of 'arrangement or understanding' under s 45 of the TPA: see, eg, Email at 396; and David Jones at 463-464. In Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 (' TNT' ), Franki J referred to the above passage from Lutovi and said at 25: 'I lean with respect to the views expressed by Smithers J in L Grollo &amp; Co Pty Ltd v Nu-Statt Decorating Pty Ltd ... at 89; 17,842 where he said: "I have to remember that the concept of an understanding is broad and flexible. It may arise merely where the minds of the parties are at one that a proposed transaction proceeds on the basis of the maintenance of a particular state of affairs or the adoption of a particular course of conduct."' 109 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. 112 Parallel conduct can constitute circumstantial evidence from which an arrangement or understanding may be inferred: Email at 386. Where there is no direct evidence of an arrangement or understanding, an inference that such an arrangement or understanding existed may be drawn from evidence that the parties' conduct exhibits 'a concurrence of time, character, direction and result': David Jones at 468 applying R v Associated Northern Collieries [1911] HCA 73 ; (1911) 14 CLR 387 (' Northern Collieries' ) at 400. Inferences of an arrangement or understanding are apt to be drawn from circumstantial evidence when the facts are particularly within the knowledge of a party who is not called to give evidence: Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298 (' Jones v Dunkel' ); see also David Jones at 465.