Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd - [2004] FCA 1678

FEDERAL COURT OF AUSTRALIA
ACCC v Leahy Petroleum [2004] FCA 1678
TRADE PRACTICES – price-fixing understanding – whether communications between competitors concerning retail petrol price increases constitute evidence of an understanding that provides for the fixing or controlling of prices – whether participation in the communications and increasing the retail price of petrol constitute giving effect to the understanding – consideration of circumstances in which a servant’s or agent’s conduct in making and giving effect to a price-fixing understanding is binding on the principal
COURTS – practice and procedure - submission of no case to answer – whether respondents should not be permitted to make no case submissions at the conclusion of the applicant’s case unless all of the respondents elect not to call evidence
EVIDENCE – whether the Ahern principle applies to persons involved in a contravention of s 45(2) of the Trade Practices Act 1974 (Cth) – consideration of circumstances in which admissions of a servant or agent in relation to past events are admissible against the principal - consideration of circumstances in which false denials may constitute evidence of consciousness of guilt
Trade Practices Act 1974 (Cth) ss 4(1), 45(2)(a)(ii), 45(2)(b)(ii), 45A, 75B(1) and 84(2)
Evidence Act 1995 (Cth) s 57(2), 87(1)(b) and 87(1)(c)
Federal Court Rules O 35 r1
Amadio v Henderson (1998) 81 FCR 149
Yorke v Lucas (1985) 158 CLR 661
Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1982) 44 ALR 557
Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2003) 201 ALR 414
Australian Competition and Consumer Commission v Australian Medical Association Western Australia Branch Inc (2003) 199 ALR 423
News Limited v South Sydney District Rugby League Football Club Limited (2003) 215 CLR 563
Australian Competition and Consumer Commission v Pauls Ltd (2003) ATPR 41-911
Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1983) 48 ALR 361
Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (No 8) (1999) 92 FCR 375
Trade Practices Commission v Parkfield Operations Pty Ltd (1985) 5 FCR 140
Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd (2000) 169 ALR 344
Trade Practices Commission v Service Station Association Limited (1993) 44 FCR 206
Trade Practices Commission v Email Ltd (1980) 31 ALR 53
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (2003) 129 FCR 339
Trade Practices Commission v David Jones (Australia) Pty Ltd (1986) 13 FCR 446
Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236
Ahern v The Queen (1988) 165 CLR 87
Briginshaw v Briginshaw (1938) 60 CLR 336
Trade Practices Commission v George Weston Foods Ltd. (No 2) (1980) 43 FLR 55
Menzies v Australian Iron & Steel Ltd. And Hill (1952) 52 SR (NSW) 62
Hummerstone v Leary [1921] 2 KB 664
James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347
J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (Western Australian Branch) (No 2) (1992) 38 FCR 458
Trade Practices Commission v Allied Mills Industries Pty Ltd (No 3) (1981) 37 ALR 225
Trade Practices Commission v Queensland Aggregates Pty Ltd (1982) 44 ALR 391
Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1
Lloyd v Grace, Smith & Co. [1912] AC 716
Trade Practices Commission v Tubemakers of Australia Ltd (1983) 47 ALR 719
Walplan Pty Ltd v Wallace (1985) 8 FCR 27
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 3) (2001) 119 FCR 1
Tesco Supermarkets Ltd. v Nattrass [1972] AC 153
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500
Armagas Ltd v Mundogas S.A. [1986] 1 AC 717
Clayton Robard Management Ltd & Anor v Siu (1988) 6 ACLC 57
Freeman & Lockyer v Buckhurst Park Properties [1964] 2 QB 480
Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) 26 ALR 609
Australian Competition and Consumer Commission v Mayo International Pty Ltd (1998) ATPR 41-653
Shears v Chisholm [1994] 2 VR 535
Edwards v The Queen (1993) 178 CLR 193
Challenge Charter Pty Ltd and Ors v Curtain Bros (Qld) Pty Ltd and Others [2004] VSC 1
R v Camilleri (2001) 119 A Crim R 106
Jones v Dunkel (1959) 101 CLR 298
Weissensteiner v The Queen (1993) 178 CLR 217
Tradestock Pty Ltd v TNT (Management) Pty Ltd (1978) 17 ALR 257
Dowling v Dalgety Australia Limited (1992) 34 FCR 109
R v Blake & Tye (1844) 6 QB 126
Tripodi v The Queen (1961) 104 CLR 1
R v Masters (1992) 26 NSWLR 450
Milandinovic v The Queen (1993) 47 FCR 190
R v Associated Northern Collieries (1911) 14 CLR 387
Sheldon v Sun Alliance Limited (1988) 50 SASR 236
Sheldon v Sun Alliance Australia Limited (1989) 53 SASR 97
Italiano v Barbaro (1993) 40 FCR 303
Beach Petroleum NL v Johnson (1993) 43 FCR 1
Coomera Resort Pty Ltd v Kolback Securities Limited [2004] 1 Qd R 1
Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34
Hamilton v Whitehead (1988) 166 CLR 121
Nescor Industries Group Pty Ltd v MIBA Pty Ltd (1997) 150 ALR 633
ACCC v LEAHY PETROLEUM PTY LTD AND OTHERS
V315 OF 2002
MERKEL J
17 DECEMBER 2004
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 315 OF 2002

BETWEEN:

ACCC
APPLICANT

AND:

LEAHY PETROLEUM PTY LTD
FIRST RESPONDENT

LEAHY PETROLEUM - RETAIL PTY LTD
SECOND RESPONDENT

TRITON 2001 PTY LTD
THIRD RESPONDENT

J. CHISHOLM PTY LTD
FOURTH RESPONDENT

JUSTCO PTY LTD
FIFTH RESPONDENT

APCO SERVICE STATIONS PTY LTD
SIXTH RESPONDENT

BRUMAR (VIC) PTY LTD
SEVENTH RESPONDENT

JOHN ROBERT GOURLEY
EIGHTH RESPONDENT

ROBERT ANDREW LEVICK
NINTH RESPONDENT

ROBIN HERBERT PALMER
TENTH RESPONDENT

ANTHONY BRIAN ROSENOW
ELEVENTH RESPONDENT

JUSTIN MATTHEW BENTLEY
TWELFTH RESPONDENT

PETER JOSEPH ANDERSON
THIRTEENTH RESPONDENT

GARRY VICTOR DALTON
FOURTEENTH RESPONDENT

CAVALLO VOLANTE PTY LTD (FORMERLY KNOWN AS BALGEE OIL PTY LTD) (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
FIFTEENTH RESPONDENT

PETER ROBERT MULLER
SIXTEENTH RESPONDENT

JUDGE:

MERKEL J

DATE OF ORDER:

17 DECEMBER 2004

WHERE MADE:

MELBOURNE

THE COURT DIRECTS THAT within 14 days the parties file minutes of proposed directions for the further hearing in relation to penalty or any other remedies or relief that is appropriate.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 315 OF 2002

BETWEEN:

ACCC
APPLICANT

AND:

LEAHY PETROLEUM PTY LTD
FIRST RESPONDENT

LEAHY PETROLEUM - RETAIL PTY LTD
SECOND RESPONDENT

TRITON 2001 PTY LTD
THIRD RESPONDENT

J. CHISHOLM PTY LTD
FOURTH RESPONDENT

JUSTCO PTY LTD
FIFTH RESPONDENT

APCO SERVICE STATIONS PTY LTD
SIXTH RESPONDENT

BRUMAR (VIC) PTY LTD
SEVENTH RESPONDENT

JOHN ROBERT GOURLEY
EIGHTH RESPONDENT

ROBERT ANDREW LEVICK
NINTH RESPONDENT

ROBIN HERBERT PALMER
TENTH RESPONDENT

ANTHONY BRIAN ROSENOW
ELEVENTH RESPONDENT

JUSTIN MATTHEW BENTLEY
TWELFTH RESPONDENT

PETER JOSEPH ANDERSON
THIRTEENTH RESPONDENT

GARRY VICTOR DALTON
FOURTEENTH RESPONDENT

CAVALLO VOLANTE PTY LTD (FORMERLY KNOWN AS BALGEE OIL PTY LTD) (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
FIFTEENTH RESPONDENT

PETER ROBERT MULLER
SIXTEENTH RESPONDENT

JUDGE:

MERKEL J

DATE:

17 DECEMBER 2004

PLACE:

MELBOURNE

REASONS FOR JUDGMENT
Page No.

1.        Introduction  5-6
2.        The Ballarat Petrol Market  6-16
(a)Background  6-8
(b)The competitors  8-13
(i)     Triton – Wholesaler  8-10
(ii)Leahy Petroleum, Chisholm and Balgee –
Wholesalers and Retailers  10-11

(iii)     Leahy Retail, Justco, Brumar – Pure Retailers  12
(iv)     Apco – Discounter  12-13
(c)The Ballarat Price Cycle  13-16

3.        Price-fixing Arrangements and Understandings  16-23
(a)      The Act  16-18
(b)      The cases  18-23

4. The ACCC’s Case Under ss 45(2)(a)(ii) and 45(2)(b)(ii) of the Act 24-32
(a)      The existing arrangements  24-28
(b)      The June 1999 arrangement  28-29
(c)      The 1999-2000 arrangements  29
(d)      Categories of evidence  29-32

5.        The Defences  32-34
6.        The No-Case Submissions  34-38
7.        Authority of Anderson, Dalton and Rosenow  38-48
(a)      The law  39-43
(b)      The facts  43-46
(i)     Dalton  43-44
(ii)     Rosenow  44-46

(c) Admissions in the s 155 examinations 46-48
(i) Dalton 48
(ii) Rosenow 48

8.        Evidence Relating to the Existing Arrangements  48-53
9.        Evidence Relating to the Price-Fixing Understanding During the
Relevant Period  53-128
(a)      Apco/Anderson  55-68
(i)     Zala-Anderson  55-56
(ii)     Bentley-Anderson  56-63
(iii)     Palmer and Carmichael-Anderson  63-65
(iv)     Apco Franchisees-Anderson  65-66
(v)     Conclusions  66-68

(b) Brumar/Dalton 69-77
(i)Evidence of Brumar/Dalton’s role in the price-fixing
understanding 70-76

(ii) Conclusions 76-77

(c)      Triton/Rosenow  77-96
(i)     Rosenow’s role in the existing arrangements  77-80
(ii)Evidence of Triton’s and Rosenow’s role in the
price-fixing understanding  80-95
Zala  81-82
Levick  83-84
Dow  84-85
Bentley  85-86
Edwards  86
Triton’s s 155 responses 87-89
Rosenow’s s 155 examination 89-92
Rosenow’s diary  92-95

(iii) Conclusions 95-96

(d)       False denials  96-106
(i)     The law  96-98
(ii)     Brumar’s and Dalton’s statements  98-104
(iii)     Rosenow  104-106

(e)       Jones v Dunkel  106-107
(f)        Meetings  107-113
(i)     Meeting at John Gourley’s house (June 1999)  107-108
(ii)     Meeting at Zala’s office (August 2000)  108-109
(iii)     Meeting at the Olive Grove Cafe (December 2000)  109-111
(iv)     Other meetings  111-112
(v)     Conclusion  112-113

(g)      Annexure A and Exhibit DA 13  113-117
(h)Evidence of giving effect to the price-fixing understanding during
the relevant period  117-128
(i)     The ACCC’s case  117-122
(ii)     Triton  122-123
(iii)     Rosenow  123
(iv)     Brumar  123-124
(v)     Apco  124-125
(vi)     Conclusion  125-128

10.      Ahern  128-144
(a)      The law  128-131
(b)      The price-fixing understanding  132-133
(c)      Summary of findings  133-138
(i)      Apco/Anderson  134-135
(ii)      Brumar/Dalton  135-136
(iii)     Triton/Rosenow  136-138

(d)      The Ahern evidence  138-144
(i)      Apco/Anderson  138-140
Levick’s testimony  138-139
Zala’s testimony  139
Palmer’s testimony  139-140

(ii) Brumar/Dalton 140-143
(iii) Triton/Rosenow 144

11. Contraventions of ss 45(2)(a)(ii) and 45(b)(ii) 144-150
(a)      Triton and Rosenow  145-146
(b)      Apco and Anderson  147-148
(c)      Brumar and Dalton  149-150
(d)      Balgee  150

12. Conclusions 150-151
1. Introduction

The applicant (“the ACCC”) has applied to the Court for declarations, injunctions, pecuniary penalties and other relief in relation to conduct alleged to have been engaged in by the corporate respondents in contravention of ss 45(2)(a)(ii) and 45(2)(b)(ii) of the Trade Practices Act 1974 (Cth) (“the Act”).
The ACCC’s claims are as follows. The corporate respondents arrived at a price-fixing arrangement or understanding (“the price-fixing understanding”) to which they gave effect between 22 June 1999 and 8 December 2000 (“the relevant period”). Under the price-fixing understanding the individual respondents, acting on behalf of their respective corporate principals, brought periods of discounted retail petrol prices to an end by fixing or controlling, or providing for the fixing or controlling of, increases in the retail prices of unleaded liquid petroleum and super grade petrol (“petrol”) in the wider Ballarat area of Victoria. Pursuant to s 75B(1) of the Act the individual respondents were persons involved in the contraventions of the Act by their respective corporate principals, who were the corporate respondents.
The parties to the price-fixing understanding were the eight corporate respondents, each of which was engaged in the business of supplying petroleum within the Ballarat retail or wholesale petrol market during the relevant period. Those respondents were Leahy Petroleum Pty Ltd (“Leahy Petroleum”) and Leahy Petroleum - Retail Pty Ltd (“Leahy Retail”) (which together are referred to as “the Leahy Companies”); Triton 2001 Pty Ltd (“Triton”); J. Chisholm Pty Ltd (“Chisholm”); Justco Pty Ltd (“Justco”); Apco Service Stations Pty Ltd (“Apco”); Brumar (Vic) Pty Ltd (“Brumar”); and Balgee Oil Pty Ltd (“Balgee”) (which recently changed its name to Cavallo Volante Pty Ltd).
The relationship between the eight individual respondents ‑ John Robert Gourley (“Gourley”), Robert Andrew Levick (“Levick”), Robin Herbert Palmer (“Palmer”), Anthony Brian Rosenow (“Rosenow”), Justin Matthew Bentley (“Bentley”), Peter Joseph Anderson (“Anderson”), Garry Victor Dalton (“Dalton”), Peter Robert Muller (“Muller”) and an individual Brendan Zala (“Zala”), who is not a respondent ‑ and the corporate respondents was as follows:

Corporate Respondent Brand Representative Position

Leahy Petroleum BP Palmer General Manager

Leahy Retail BP Palmer General Manager

Triton Shell Rosenow Ballarat Area Manager

Chisholm Ampol/Caltex Zala Ballarat Manager

Justco Swift Bentley Director and General Manager

Apco Apco Anderson Director and General Manager

Brumar Shell Dalton Retail Area Manager

Balgee Mobil Gourley
Muller
Levick General Manager
Ballarat Operations Manager
Ballarat Area Sales Representatives

The Leahy Companies, Chisholm, Justco and some of the individual respondents (Palmer, Bentley, Gourley, Levick and Muller) admitted to the contraventions of the Act alleged against them. Balgee did not admit, but did not contest, the ACCC’s claims against it. The remaining corporate respondents (Triton, Brumar and Apco) and the individual respondents who acted on their behalf (Rosenow, Dalton and Anderson), who I compendiously refer to as “the contesting respondents”, contested the ACCC’s claims against them although they did not seriously challenge the ACCC’s case against the Leahy Companies, Chisholm, Justco and Balgee. Nonetheless, there were scarcely any points of law and fact that were not taken by one or other of the contesting respondents. In order to ensure that these reasons are not unacceptably long, I have confined them to the significant and consequential issues that are capable of affecting the outcome of the ACCC’s claims: see Amadio v Henderson (1998) 81 FCR 149 at 175.
2. The Ballarat Petrol Market
(a) Background
The Ballarat petrol market was alleged to encompass the area in and around Ballarat. However, the evidence focused primarily on the retail and wholesale supply and sale of petrol in Ballarat itself. In that market petrol was purchased by consumers during the relevant period primarily on the basis of price, rather than brand name. Because of the significance of price, retailers prominently posted their prices (“board prices”) at their sites. Also, during the relevant period, Ballarat had a large number of retail outlets with the consequence that the retail market in Ballarat was intensely competitive and was so highly price sensitive that even a difference in price of less than one cent per litre (“cpl”) could significantly influence the volume of petrol sold at a particular retail outlet.
In addition to the outlets of the corporate respondents there were other retail petrol outlets in Ballarat which were owned by entities which are not parties to the present proceeding. The outlets were United, Safeway Plus, Alien, Ampol Road Pantry (a Caltex franchisee), and Liberty (IGA/Jewel). While the ACCC has not alleged that the entities conducting those outlets contravened any provision of Pt IV of the Act, the price movements of the outlets were influenced by the price-fixing understanding alleged by the ACCC.
The price of petrol in Ballarat was usually determined by the board price at the high visibility sites, which are large multi-bowser sites located on major roads with significant passing traffic. Such sites, which include the sites of companies that operate as petrol discounters, turn over a high volume of petrol due to their prominent locations and their capacity to accommodate a large number of customers. A reduction in the board price at the high visibility sites can have a significant impact on the volume of petrol sold at other sites operating in Ballarat if an equivalent price reduction is not also made at the other sites. The high visibility sites included sites operated by the Leahy Companies (BP), Apco (Apco), Chisholm (Ampol/Caltex), Justco (Swift), Brumar (Shell), United (United), and Balgee (Mobil).
In general, retailers who are independent of their petrol suppliers purchase petrol from the distributors at the posted lessee price (“PLP”). The PLP is treated as a nominal price because distributors offer their independent retailers price support to enable the retailers to maintain market share and competitiveness. Price support is given by way of a rebate to the retailer. Thus, during a period of discounting, price support enables the retailer to remain competitive by discounting to below the PLP in order to match the prices of its competitors, but making a gross profit which is usually 3 cpl.
The low visibility sites are generally smaller sites that are not located on main roads and are usually operated in conjunction with another business such as an automotive repair business. While these sites also need to be price competitive, they tend to follow the market price at high visibility sites although, being lower volume sites, they are not as dependent on sales volumes for their economic sustainability. In Ballarat the low visibility sites included sites of independent Shell retailers supplied by Triton and the sites selling the Liberty (IGA/Liberty) and Alien (Alien) brands. In addition, the Leahy Companies (BP) and Chisholm (Ampol/Caltex) operated a number of low visibility sites in Ballarat.
Finally, petrol pricing in Ballarat followed a cyclical pattern of falling and rising retail prices. The pattern involved prices being discounted to relatively low levels by stepped decreases over a period until they bottomed out, after which the discounting came to an abrupt end with a substantial price increase. If that increase took effect in the market (ie by “sticking”) the discounting period terminated until the discount cycle re-commenced.
(b) The competitors
Each of the corporate respondents operated as a wholesale distributor or retailer of petrol in Ballarat. The corporate respondents’ respective purchase arrangements influenced the extent to which they had the capacity to compete with the other corporate respondents during a discount cycle.
(i) Triton - Wholesaler
Triton was a wholesale distributor which supplied Shell branded petrol to the independent retail outlets known as Brown Hill, Sunset Strip, Barkly Street, B & G Beaufort and Taxi Co-op (“the independent Shell retailers”). Although the retailers determined the retail prices of the petrol they sold, the ACCC contends that during discount cycles Triton, through its PLP and price-support system, effectively determined the retail price of petrol sold by the independent Shell retailers.
Triton received price support from its supplier, Shell, and provided price support to the independent Shell retailers during discount cycles. The two price-support systems differed substantially. As between Shell and Triton an in-principle level of support was set on an annual basis, based on Triton’s entire business across all geographic markets. Due to the small size of the Ballarat market relative to Triton’s overall business, periods of discounting in Ballarat did not tend to significantly impact the overall level of support that Triton received from Shell.
Under Triton’s price-support system Triton provided a guaranteed 3 cpl margin to the independent retailers on all petrol sold. In situations where the retail price of petrol exceeded the PLP by at least 3 cpl, resellers were able to make their 3 cpl margin without price support being provided. To the extent that the independent retailers could not achieve that margin, for example when the market price of petrol was lower than the PLP price, Triton made up the difference by offering price support sufficient to enable the retailers to achieve their 3 cpl margin. Although price support was given as a rebate, its effect was to reduce the PLP payable by the independent retailers to Triton.

The purpose of price support was to enable the independent Shell retailers, which were low volume sites in Ballarat, to survive in the highly competitive market. Consequently, Triton’s supported price was usually the current discounted market price. In practice, although the independent Shell retailers were under no obligation to set their board prices at the supported price, the independent Shell retailers adjusted their board prices to that price. The reason for that can be understood from the following example.
If Triton’s PLP was 80 cpl but the Ballarat market had discounted the retail price to 75 cpl, price support was usually given by Triton to its retailers to 75 cpl. As the supported price was calculated to guarantee the retailer a 3 cpl margin, the rebate of 8 cpl meant the effective PLP was reduced to 72 cpl in respect of the petrol sold at the supported price. If the retailer dropped below the supported price, as it was entitled to do, it would bear the cost of doing so. Thus, if its retail price was 74 cpl it would only be receiving a gross profit of 2 cpl as the rebate of 8 cpl remained constant, thereby reducing the effective PLP to 72 cpl. While, in theory, dropping below the supported price may increase volume by pricing below the market, the reality was that competitors were likely to quickly match the lower board price so as to defeat any temporary advantage to be gained by a decrease in price. In any event, it was generally accepted that the independent retailers required a margin of 3 cpl to maintain the profitability of their petrol sales. As a result, there was little incentive for the independent Shell retailers to drop below the supported price.
If a retailer rose above the supported price, as it was entitled to do, it might earn more than 3 cpl but it would be likely to lose volume because its price would be above the market. Further, as price support was designed to enable Triton and its independent retailers to maintain market share, Triton may not have taken a favourable view of a retailer seeking to gain additional profit at the cost of losing market share. As a result, there was also little incentive for the independent Shell retailers to sell above the supported price.
Without price support, in order to make the 3 cpl margin that was considered by the retailers as the benchmark for their board pricing, the independent Shell retailers would have had to increase their board prices to PLP plus 3 cpl.
In practice, Triton offered price support during the discount cycle to enable its independent Shell retailers to follow the market down but retain their 3 cpl profit. When price support was reduced or withdrawn, the price set by the independent Shell retailers generally rose to the higher supported price or, in the absence of support, to the price that was necessary to secure the 3 cpl margin.
While Triton argued that it was not a competitor in the retail market, it is clear that in the usual course of events any reduction in, or withdrawal of, the price support provided by Triton to its retailers would be likely to enhance its profitability. Thus, Triton had a commercial interest in price increases occurring as they enabled it to withdraw or reduce price support without Triton or its independent retailers losing market share or competitiveness. Of course, the price support provided by Shell to Triton better enabled Triton to support its retailers. However, any additional price support given by Shell during a discount cycle could be expected to be reduced or withdrawn when prices increased.
(ii) Leahy Petroleum, Chisholm and Balgee – Wholesalers and Retailers
Leahy Petroleum supplied BP branded petrol as a wholesale distributor to independent retail outlets and sold BP branded petrol to the public at sites that it owned and operated as well as at consignment sites that it owned but did not operate. Leahy Petroleum controlled the retail price of petrol at its company-owned and consignment sites.
Chisholm was a wholesale distributor of petrol to Caltex and Ampol branded service stations and, on rare occasions, Chisholm would distribute petrol to Caltex franchisees on behalf of Caltex. Chisholm also retailed Ampol/Caltex branded petrol to the public at sites that it owned and operated, as well as at consignment sites that it did not operate. Chisholm had direct control over the retail price of petrol at both its company-owned and its consignment sites.
Finally, Balgee also had wholesale and retailing arms that distributed Mobil branded petrol to independent resellers for sale to the public and sold Mobil branded petrol to the public via company owned and operated sites and commission agents. Balgee set the retail price of petrol at the latter two types of sites.
It is unnecessary to consider the detail of the pricing mechanisms employed by the Leahy Companies, Chisholm, Justco and Balgee to ensure that petrol price increases took effect pursuant to the price-fixing understanding at the sites for which they were responsible. It is sufficient to observe that it is likely that the discount cycle was a costly exercise for these respondents, and therefore they had a substantial incentive to increase their prices in order to restore profitability. Thus, one or more of those respondents (“the initiating respondents”) sought to bring the discount cycle to an end by triggering, or participating in, a coordinated price increase during the relevant period by increasing board prices to a targeted retail price. The proposed price increase was often initiated by a price-increase call (see below) between Levick (Balgee) and Zala (Chisholm) and the proposed increase was usually made without delay by the intiating respondents. The mechanism usually employed was that one or more of the initiating respondents would initiate the proposed price increase by taking the necessary steps to ensure that notice of the increase (“a price-increase call”) was given to the other corporate respondents and by increasing retail prices to the proposed price. The price increase would not “stick” unless all of the high visibility sites in the Ballarat petrol market increased their retail prices to match the increase of the initiating respondents. If that did not occur within a relatively short period the price increase would collapse and the prices at the various retail outlets controlled by the initiating respondents, and any other respondents that had increased their prices, would return to the discounted levels they were at before the increase.
(iii) Leahy Retail, Justco, Brumar – Retailers
Three of the corporate respondents operated exclusively as retailers. Leahy Retail sold BP branded petrol, Justco sold Swift branded petrol and Brumar sold Shell branded petrol. Leahy Retail and Justco, who were initiating respondents, retailed petrol to the public at company owned and operated sites, while Brumar was a Multisite Shell Franchisee (“MSF”).
Brumar’s position was different. It received price support from Shell which guaranteed a 3 cpl margin on petrol sold. Shell’s price support to Brumar was designed to enable it to compete in the Ballarat market. Thus, the level of price support Brumar received from Shell generally determined Brumar’s retail price during a discount cycle. Similarly, a reduction in, or withdrawal of, Shell’s price support would be likely to result in a corresponding increase in Brumar’s retail price. In addition, profit support was given by Shell to a MSF on a monthly basis to cover any shortfall or loss. Of the 86 sites that Brumar operated, some made a profit but many made a loss. The combined site profits and losses were calculated and any net loss was to be paid to the MSF by Shell in the form of profit support. While Shell’s price and profit support are likely to have shielded Brumar from the losses it would otherwise have incurred during discounting cycles it was obviously in Shell’s interest for a discount cycle to be brought to an end. Although it is not altogether clear that Brumar had a direct interest in the cycle coming to an end, it is likely that it saw its interest and Shell’s interest as coinciding in that regard.
(iv) Apco-Discounter
Apco sold Apco branded petrol to the public through commission agents who received a commission of between 1.1 and 1.5 cpl on petrol sold. Apco purchased petrol direct from oil companies at significantly discounted rates but, in return, Apco had no entitlement to seek price support. It operated as a discounter with the consequence that when the price cycle was at the higher levels it was able to discount and still make significant profit. On the other hand, when the cycle was at the lower price levels its margins were reduced and in many instances, subject to income it earned from store trading, it traded at a loss. Accordingly, it was generally in Apco’s commercial interest for the discount cycle to be brought to an end so that it could continue its role as a petrol discounter but at higher, rather than lower, price levels. However, the royalties payable on store sales and Apco’s petrol sales in other areas alleviated the losses that were being incurred at the Ballarat sites at the lower end of the cycle.
(c) The Ballarat Price Cycle
Board prices at retail sites during the relevant period in the Ballarat petrol market followed a price cycle that was characterized by gradual decreases in price followed by a sudden and significant increase. The Ballarat price cycle commenced with board prices being at about the same level at most sites. The discounters in the market would reduce their board prices by up to 2 cpl, thus offering petrol at prices that were lower than at most of the other sites. In response, other sites in the market would reduce their board prices to approximate the new lower price. After the market price had moved to the lower price, the discounters would again reduce their board prices by up to 2 cpl. Other sites would again follow. Significant reductions were less frequent at the lower end of the cycle reflecting the fact that the lower prices were more difficult to sustain.
When petrol prices were at the lowest end of the cycle one or more sites would increase their board prices suddenly and significantly by up to 8 to 10 cpl. When the high visibility sites matched the increase by raising their board prices to the same price or a similar price, the new higher price took effect or, as was put by the ACCC, the new price “stuck.” Some time after the increase, the discount cycle would recommence, but from the higher, rather than the lower, levels in the cycle.
For a price increase to “stick” it was critical for all of the key sites to increase their price within a short period of time. Generally speaking the discounters, such as Apco and United, endeavoured to be the last to increase, and first to decrease, their board prices. If the discounters did not increase their board prices within a relatively short period, the price rise would not “stick” and board prices at most sites would fall back to the pre-increase level. Likewise, if the high visibility sites did not follow the rise, the increase would not “stick.”
The duration of the Ballarat petrol price cycle altered over time. In the period prior to 1999, when competition in the Ballarat petrol market was not fierce, cycles endured for periods of at least four to six weeks. During this period, there were occasions when the retail price of petrol remained constant for as long as three months.
When the United branded service station entered the Ballarat market in March 1999, price competition increased and the price cycle accelerated dramatically, with the discount cycle becoming more frequent. This happened because United, a discounter, aggressively challenged Apco’s position as the discount leader. During this period, if United’s board price fell below that of Apco, Apco would quickly reduce its price and vice versa. The rest of the retail sites followed the discounters down in order to maintain market share. In this extremely volatile market, price cycles could occur over periods of one to two weeks.
Professor Philip Williams, an economist, gave evidence about whether, in terms of economic theory, the Ballarat price cycle reflected a highly competitive market or, rather, reflected collusion among retailers in that market. Professor Williams’ evidence may be summarised as follows. Discounters attempt to gain volume by undercutting the prevailing market price. The stepped decreases in the Ballarat market evidenced the fact that discounters had an incentive to reduce the retail price by only as much as was necessary to increase their sales volume. Since the market was extremely price sensitive, even a small decrease in price could provide the benefit of increased volume to discounters. In order to protect their market share, other retailers were forced to follow the discounters’ stepped decreases.
The upward cycle in the Ballarat petrol market was characterised by sudden and significant increases that brought the discount cycle to an end. Professor Williams explained the market forces at work in respect of such increases as follows:
“So if the Maskin and Tirole explanation is correct, each service station would be hoping that somebody - perhaps somebody else in particular - would increase the price, because the current level was unsustainable in a long-run sense. The reason somebody may not wish to increase the price is because it’s risky; if you increase the price, then it may not be followed. But I guess the risk may be lessened if there was some pattern to the price increases, and so a particular pattern of price increases, or a particular periodicity, may give somebody who’s going to initiate a price increase a little bit of faith that it might be followed – a bit more faith that it might be followed, than if it was undertaken perhaps sooner than a price increase had previously been undertaken.
…
HIS HONOUR:   Professor Williams, I just wanted to ask you one or two questions. You were taken before to the chart that sort of showed ‑ from the ACCC's, I think, records. Yes, that chart there. It showed that there were steps on the way up occurring over some days, sometimes?
PROFESSOR WILLIAMS:   Yes.
HIS HONOUR:   Certainly not within a day, and a number of steps on the way down. One of the pieces of evidence in this case which - just assume it for the moment, there may be some debate about it later but just assume it - that on the price rise days in this case there's an absence of any step. Just a significant rise up within a fairly short period of time. I asked Mr Holland this morning, who has been in the market, could he explain why different competitive forces would be at work on the way down and not to those that are on the way up. He thought about it and couldn't really give any answer. Can you suggest an explanation?
PROFESSOR WILLIAMS:   Yes, I was in ‑ ‑ ‑
HIS HONOUR:   In terms of economic theory?
PROFESSOR WILLIAMS:   Yes, I was in court at the time and I was surprised at his answer. I'll tell you why. When you increase - sorry. If your competitor across the road nominates a price you have no incentive at all to charge a price - just to set your price subsequently a little bit above theirs. Why? Because if you set your price a little bit above theirs, they're going to get all the market. So you're going to have no advantage at all. The only reason why you might want to set your price above theirs is that you hope that other people are going to follow you up. So you wouldn't set your price knowingly a little bit above theirs. You'd try to bump it up as high as you thought it could go. So if the price fluctuates generally between 80 and 90 and the price has fallen down to 80, you wouldn't try 81 because there would be no conceivable advantage you would get from that. The conceivable advantage that you may get, however, if it's down at 80, is if you push it back up to 90 and people, even if they don't follow you, they at least charge 89. So that even if you're not making many sales at least you're getting a much fatter margin.
…
HIS HONOUR:   I want to ask you another question which is associated with that. I noted, but it may not have been accurate because I didn't pick it up from your exact words, but you seem to suggest something along the lines that a price increase in this kind of market is risky if it's not followed. I noted that what you seemed to be getting at is that therefore the confidence that competitors have in a pattern of price rises can give a degree of comfort about the increase. Now, they are probably more my words than yours but is that in substance what you were suggesting?
PROFESSOR WILLIAMS:   Yes, Maskin and Tirole, but other authors as well speak about trust. That is, even if you're not overtly talking to your competitors about the price, if you increase the price you want to have some confidence that other people are going to follow you. Now, what might lead to that confidence?”
The gravamen of Professor Williams’ evidence is that it is inherently unlikely that a competitive petrol retailer in a highly competitive market would initiate a significant price increase without being confident that the major competitors in the market would match the increase. The evidence in relation to the Ballarat market during the relevant period establishes that the high risk involved in a significant price increase, of which Professor Williams spoke, would clearly be reduced if the party or parties increasing the price were confident that other competitors in the market would become aware of the increase and would be likely to match it. There was no real contest about that fact. The real contest between the parties related to whether the quick awareness and matching of the increases during the relevant period arose from independent observation of board prices of competitors (ie of competitive market forces at work) or rather, from ongoing collusion between competitors about the price increases (ie of anti-competitive market forces at work).
3. Price-fixing Arrangements and Understandings
(a) The Act
The price-fixing understanding is alleged to have contravened ss 45(2)(a)(ii) and 45(2)(b)(ii) of the Act which provide:
“(2) A corporation shall not:
(a)make a contract or arrangement, or arrive at an understanding, if . . .
(ii)a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or
(b)give effect to a provision of a contract, arrangement or understanding … if that provision . . .
(ii)has the purpose, or has or is likely to have the effect, of substantially lessening competition.”
Section 45A declares price-fixing contracts, arrangements and understandings to be illegal per se. Section 45A(1) provides:
“Without limiting the generality of section 45, a provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be deemed for the purposes of that section to have the purpose, or have or to be likely to have the effect, of substantially lessening competition if the provision has the purpose, or has or is likely to have the effect, as the case may be, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price for, … goods … supplied … or to be supplied … by the parties to the contract, arrangement or understanding, or by any of them, or by any bodies corporate that are related to any of them, in competition with each other.”
Section 4(1) of the Act states that a “provision” in relation to an understanding, means any matter forming part of the understanding. The sub-section also states that “give effect to” in relation to a provision of a contract, arrangement or understanding, includes “do an act or thing in pursuance of or in accordance with or enforce or purport to enforce.” Section 4F(1) provides that for the purposes of the Act a provision of a contract, arrangement or understanding shall be deemed to have had, or to have, a particular purpose if the purposes of the provision include that purpose and that purpose was or is a “substantial purpose.”

With respect to the contraventions alleged against the individual respondents, s 75B(1) of the Act provides:
“A reference in this Part to a person involved in a contravention of a provision of Part IV … shall be read as a reference to a person who:
(a)has aided, abetted, counselled or procured the contravention;
(b)has induced, whether by threats or promises or otherwise, the contravention;
(c)has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
(d)has conspired with others to effect the contravention.”
For liability under s 75B(1) to be made out the person must have knowledge of the essential ingredients of the contravention: see Yorke v Lucas (1985) 158 CLR 661 (“Yorke v Lucas”) at 670.
The Act provides for the imposition of pecuniary penalties pursuant to s 76(1). The sub-section provides that if the Court is satisfied that a person has contravened a provision of Pt IV, or has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision:
“… the Court may order the person to pay to the Commonwealth such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the Court determines to be appropriate having regard to all relevant matters …”
Sections 76(1A) and (1B) provide:
“(1A)The pecuniary penalty payable under subsection (1) by a body corporate is not to exceed:
(a)for each act or omission to which this section applies that relates to section 45D, 45DB, 45E or 45EA—$750,000; and
(b)for each other act or omission to which this section

applies—$10,000,000.
(1B)The pecuniary penalty payable under subsection (1) by a person other than a body corporate is not to exceed $500,000 for each act or omission to which this section applies.”
Section 80(1) of the Act empowers the Court to grant an injunction restraining conduct that constitutes or would constitute a contravention of a provision of Pt IV of the Act. The section also empowers the Court to grant an injunction restraining any person from “being in any way, directly or indirectly, knowingly concerned in, or party to, a contravention by a person of such a provision.”
Finally, s 84(2) of the Act provides:
“(2)Any conduct engaged in on behalf of a body corporate:
(a)by a director, servant or agent of the body corporate within the scope of the person’s actual or apparent authority; or
(b)by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent;
shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate.”
(b) The cases
In Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1982) 44 ALR 557 (“Radio 2UE”) at 565-566 Lockhart J observed in respect of s 45A:
“Section 45A was introduced into the Act by Act No. 81 of 1977 and came into operation on 1^st July, 1977. To my knowledge this is the first time the section has been considered by a court. The section renders price fixing (I use this term for convenience to encompass also controlling or maintaining price) among competitors unlawful per se. It applies to any contracts, arrangements or understandings between competitors which in purpose or effect inhibit price competition.
The court’s task is to characterize the conduct before it in a given case. Care must be taken in performing that task because, by its very nature, the violation of s. 45A is deemed, for the purposes of s. 45, to substantially lessen competition per se. Such a finding may have far reaching consequences to the competitors concerned.
It is important to distinguish between arrangements (I use this expression for convenience to encompass also contracts and undertakings) which restrain price competition and arrangements which merely incidentally affect it or have some connexion with it. Not every arrangement between competitors which has some possible impact on price is per se unlawful under the section.”
When regard is had to the different and separate roles alleged by the ACCC to have been played by each of the initiating respondents, and by Triton, Brumar and Apco, it is more appropriate to consider the issues arising under ss 45(2) and 45A in terms of a price-fixing “understanding”, rather than a price-fixing “arrangement.” Also, it is unnecessary to consider any specific price-fixing “provisions” of the alleged understanding as s 4(1) provides that a “provision” in relation to an understanding means any matter forming part of the understanding. Gleeson CJ, McHugh, Gummow and Hayne JJ in Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2003) 201 ALR 414 at 416 [7] observed that the word “provision” in Pt IV of the Act invites attention to the content, rather than the form, “of what has been, or is to be, agreed, arranged or understood” and stated that the definition in relation to a provision in s 4(1) emphasises that point. In any event, the understanding alleged was solely concerned with providing for the fixing or controlling of petrol prices in Ballarat. I say that as, although the ACCC put its case on the basis that the price-fixing understanding fixed or controlled prices and provided for the fixing and controlling of prices, the alleged understanding provided a process by which price increases may be fixed or controlled. In those circumstances it is more apposite to consider the present case in terms of an understanding that provides for the fixing or controlling of prices.
Finally, as it is not in dispute that most of the parties to the alleged understanding were in competition with each other in the Ballarat retail petrol market it is not to the point that some of the parties, for example Triton, may not have been a direct competitor in that market. The reason for that is that s 45A(1) only requires that at least two parties to the understanding, or their related companies, be in competition with each other.
Thus the critical issue is whether, during the relevant period, Triton, Brumar or Apco were parties to, or gave effect to, an understanding that had the purpose, or had or was likely to have the effect, of providing for the fixing or controlling of the price of petrol in Ballarat. Although little may turn on the point in the present case, in the context of s 45A purpose is to be viewed subjectively: see Australian Competition and Consumer Commission v Australian Medical Association Western Australia Branch Inc (2003) 199 ALR 423 (“ACCC v AMA”) at 471-472 and News Limited v South Sydney District Rugby League Football Club Limited (2003) 215 CLR 563 at 573 [18], 577-581 [32]-[46], 584-587 [59]-[65], 636-637 [211]-[212] cf Australian Competition and Consumer Commission v Pauls Ltd (2003) ATPR 41-911 (“ACCC v Pauls”) at 46-622.
In Radio 2UE Lockhart J (at 567) considered price “fixing”:
“The Shorter Oxford English Dictionary defines the verb ‘fix’ as: ‘To fasten, make firm or stable; … to attach firmly; … to settle permanently.’ The Macquarie Dictionary defines the word as: ‘1. To make fast, firm, or stable. 2. To place definitely and more or less permanently. 3. To settle definitely; determine: to fix a price.’
In my view the fixing of a price for the purpose of s. 45A does not necessarily connote an element of permanency but generally suggests the settling or determining of a price for a period of time that is not instantaneous or merely ephemeral. A person may fix a price for his goods knowing that he may wish to vary it at some future time, but generally not so soon as would to business people be regarded as merely momentary or transitory.”
On appeal in Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1983) 48 ALR 361 at 363 a Full Court, in upholding the decision of Lockhart J, observed that “price-fixing” requires an element of intention or likelihood to affect price competition.
The natural or ordinary meaning of the term “control” is “to exercise restraint or direction over” (The Macquarie Dictionary) or “to exercise restraint or direction upon the free action of” (The Oxford English Dictionary) a person or thing. There are degrees of control and there may be control although the “restraint” or “direction” is not total. Thus, an arrangement or understanding has been found to have had the effect of “controlling price” if it restrains a freedom that would otherwise exist as to a price to be charged: see Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (1999) 92 FCR 375 (“ACCC v CC”) at 413 [168] per Lindgren J and ACCC v Pauls at [123]. In ACCC v AMA at 461-462 [193]-[195] Carr J stated that, in the context of s 45A, the word “control” indicates “a degree of control towards the higher end of the scale.”
It is clear from the evidence of the initiating respondents, who admitted to the contraventions alleged by the ACCC, that the increases pursuant to the understanding were coordinated and substantial increases to prices that substantially matched the price proposed or targeted by one or more of the initiating respondents and the purpose, and the likely effect, of the understanding was for that price to “stick” even though the parties were at liberty to recommence the discount cycle when they wished to do so: cf Trade Practices Commission v Parkfield Operations Pty Ltd (1985) 5 FCR 140 at 143. Also, the purpose and likely effect of the understanding was to exercise restraint and direction over the retail prices by seeking to bring the discount cycle to an end through the coordinated and substantial increase in retail prices to prices that substantially matched the price proposed or stipulated by one or more of the initiating respondents.
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 (“ACCC v Amcor”) at 360, Trade Practices Commission v Service Station Association Limited (1993) 44 FCR 206 at 230-231 and Trade Practices Commission v Email Ltd (1980) 31 ALR 53 (“Email”) at 66. 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) 129 FCR 339 (“Australian Safeway Stores”) at 426 [409]. However, as was stated by Fisher J in Trade Practices Commission v David Jones (Australia) Pty Ltd (1986) 13 FCR 446 (“David Jones”) at 463-464:
“In Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 at 22-26 Franki J referred to the cases arising under s 45 and judicial consideration of the section’s requirements. As with Franki J, I also favour the views expressed by Smithers J which are referred to in the following paragraph of the former’s reasons for judgment at 25:
‘I lean with respect to the views expressed by Smithers J in L Grollo & Co Pty Ltd v Nu-Statt Decorating Pty Ltd (1978) 34 FLR 81 at 89 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.’’
As Franki J also said, on that page of his reasons, judicial consideration has tended to equate ‘arrangement’ with ‘understanding’. In indicating that he proposed to proceed on that basis he said in relation to s 45 prior to its amendment in 1977:
‘… I would not necessarily reject a proposition that the requirements for entering into an understanding may be somewhat different and more easily satisfied than the requirements for making an arrangement.’
In their joint judgment in Commissioner of Taxation (Cth) v Lutovi Investments Pty Ltd (1978) 140 CLR 434, Gibbs J (as he then was) and Mason J said at 444 of the requirements of an arrangement in the context of s 80B(5) of the Income Tax Assessment Act 1936 (Cth):
‘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.’”
In Email at 56-57 Lockhart J considered the circumstances in which parallel conduct may constitute evidence from which the Court can infer the requisite arrangement or understanding:
“Parallel conduct may constitute circumstantial evidence from which an arrangement or understanding may be inferred. It depends on the facts of each case. In the present case, the respondents point to a large number of matters in support of their contention that the inference of an arrangement or understanding cannot be supported. Plainly, when a credible explanation is given by a defendant it may be sufficient to negate the inference of an arrangement or understanding: see TPC v Nicholas Enterprises Pty Ltd (1979) 26 ALR 609 at 631…
In the United States there is powerful authority for the proposition that, while parallel business conduct may provide circumstantial evidence from which an inference as to the existence of an unlawful agreement may be drawn, it is not sufficient by itself to support an allegation of conspiracy under the Sherman Act and it may be the result of independent decisions of competitors or other economic forces: see for example Theatre Enterprises Inc v Paramount Film Distributing Corporation (1954) 346 US 537; Esco Corporation v United States (1965) 340 F (2d) 1000; US v FMC Corporation 1969 Trade Cases 87,405; Bogosian v Gulf Oil Corporation 1975 Trade Cases 60,284, p 66,104.
Instances where parallel prices in respect of homogenous products has resulted, not from parallel business conduct, but from independent decisions of competitors and intense competition are Pevely Dairy Co v US (1949) 178 F (2d) 363; US v Ward Baking Co. (1965) 243 F Supp 713; and US v National Malleable & Steel Castings Co (1957) Trade Cases 68,890, affirmed on appeal (1958) US 38.”
In ACCC v CC at 408 Lindgren J stated:
“The cases require that at least one party ‘assume an obligation’ or give an ‘assurance’ or ‘undertaking’ that it will act in a certain way. A mere expectation that as a matter of fact a party will act in a certain way is not enough, even if it has been engendered by that party.”
See also Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 at 257-258. While the above statements of principle are helpful, they can be difficult to apply in a case such as the present where the parties are numerous, the roles alleged to have been played by each party differ, and the alleged understanding involves a process for the fixing or controlling of prices, rather than the direct fixing or controlling of prices. Ultimately, one must return to the words of the statute and determine whether the parties “arrived at” an understanding of the kind identified in s 45A and proscribed by s 45(2)(a). If the parties reach a consensus as to a particular course of conduct or where their minds are at one as to the adoption of a particular course of conduct and they adopt that course of conduct (see David Jones at 463-464) there are strong grounds for contending that the requisite meeting of minds has been established.
The major area of contest at trial related to whether the ACCC established that there was the requisite meeting of minds in relation to a price-fixing understanding that involved Triton, Brumar or Apco. In particular, the contesting respondents denied that there was any consensus at any time as to what was to be done by any of them in relation to the fixing or controlling of petrol prices in Ballarat. In order to resolve that contest it will be necessary to carefully consider the evidence that is admissible against each of those parties and to determine whether that evidence establishes that they were parties to the price-fixing understanding alleged by the ACCC.
4. The ACCC’s Case Under ss 45(2)(a)(ii) and 45(2)(b)(ii) of the Act
The ACCC alleges that the price-fixing understanding is deemed to have the purpose or effect of substantially lessening competition in a market by virtue of s 45A(1) of the Act. The price-fixing understanding was said to have been constituted by the continuation of the pre-June 1999 arrangements (“the existing arrangements”), an arrangement made in June 1999 (“the June 1999 arrangement”) and coordinated price increases on approximately 69 days during the relevant period (“the 1999-2000 arrangements”).
(a) The existing arrangements
The ACCC contends that in or about June 1999 there were arrangements or understandings which contained a provision or provisions that had the purpose, or had or was likely to have the effect, of fixing or controlling or providing for the fixing or controlling of the retail price of petrol in the Ballarat petrol market at service stations controlled or supplied by the corporate respondents. Specifically, it contends that arrangements existed whereby:
·    any one of the corporate respondents that wished to increase its prices for petrol at the service stations controlled or supplied by it could telephone or contact one or more of the other corporate respondents to communicate the amount of the increase, the approximate time of the increase or the fact of the price increase proposed or in progress. The communication was alleged to have either been made expressly or indirectly by means of expressions such as “Go for a drive”, “Have you been for a drive”, “The market has changed”, “ The majors have moved” or “The market is starting to change.” The ACCC called these calls “board price calls” but I refer to them in these reasons as “price-increase calls”;
·    any corporate respondent receiving such a call would telephone or contact the sites controlled or supplied by that corporate respondent in order to implement a similar board price increase at about the same time (in the case of sites controlled by the relevant corporate respondent) or to use its best endeavours to do so (in the case of other sites);
·    any corporate respondent which became aware that a service station controlled or supplied by another corporate respondent had not implemented the price increase, could inform a corporate respondent of that fact and the corporate respondent which was best placed to communicate with the respondent that had not increased its price would use its best endeavours to have that respondent’s service station implement the board price change. The ACCC called those calls “complaint calls” but I refer to them in these reasons as “follow-up calls”;
·    any corporate respondent which became aware of any service station controlled or supplied by it that had not put the price increase into effect, would also make a follow up call to that service station.
The ACCC alleges that the existing arrangements evolved over a period of years before 1999 by a combination of individuals acting on behalf of the corporations that had been carrying on business within the Ballarat petrol market. Those individuals and corporations included combinations of the following:
·Balgee, which carried on the business of a distributor and retailer under the Mobil brand from at least the early 1990’s. Lindsay Evans (“Evans”) acted on behalf of Balgee until about mid 1990. Muller acted on behalf of Balgee from about mid 1990 to at least about early 1997. Levick acted on behalf of Balgee from about early 1997 onwards.
·Leahy Petroleum, which carried on the business of a distributor and retailer under the BP brand from on or about 1 July 1997 to about December 2000. Palmer and/or Ian Carmichael (“Carmichael”) acted on behalf of Leahy Petroleum in this period.
·Leahy Retail, which carried on the business of a distributor and retailer under the BP brand under the name Leahy Petroleum Pty Ltd from at least late 1991 to about June 1997 and after that on about 1 July 1997 to about December 2000 it carried on the business of a retailer under the BP brand under its current name. Palmer and/or Carmichael acted on behalf of Leahy Retail in this period.
·Central Petroleum Pty Ltd (“Central Petroleum”), which carried on the business of a distributor and a retailer under the Shell brand from at least the mid 1980’s until about late 1994. Denis Manton (“Manton”) and/or Kieran Davison (“Davison”) acted on behalf of Central Petroleum from at least early 1991 to about late 1994.
·Beasam Pty Ltd (“Beasam”), which carried on the business of a distributor under the Shell brand from about late 1994 to about 31 August 1998. Rosenow acted on behalf of Beasam in this period.
·Triton, which carried on the business of a distributor under the Shell brand from on or about 1 September 1998 to about December 2000. Rosenow acted on behalf of Triton in this period.
·Central Petroleum (Retail) Pty Ltd (“Central Petroleum Retail”), which carried on the business of a retailer under the Shell brand from at least the late 1980’s to about late 1994. Manton and/or Davison acted on behalf of Central Petroleum Retail in this period.
·Provincial Fuels Pty Ltd (“Provincial”), which carried on the business of a retailer under the Shell brand from about late 1994 to about August 1997. Davison acted on behalf of Provincial from about late 1994 to about May 1997.
·Friway One Pty Ltd (“Friway One”), which carried on the business of a retailer under the Shell brand from on or about August 1997 to on about September 1998. Dalton acted on behalf of Friway One in this period.
·Brumar, which carried on the business of a retailer under the Shell brand from on or about September 1998 to about December 2000 and commenced operating in the Ballarat petrol market in November 1998. Dalton acted on behalf of Brumar in this period.
·Anderson Petroleum Company Pty Ltd (“Anderson Petroleum”), which carried on the business of a distributor and a retailer under the Ampol brand from at least 1994 to about late 1996. Zala acted on behalf of Anderson Petroleum in this period.
·Chisholm, which carried on the business of a distributor and a retailer under the Ampol or Caltex brand from at least early 1997 to about December 2000. Zala acted on behalf of Chisholm in this period.
·Apco, which carried on the business of a retailer under the Apco brand from at least the early 1990’s to about December 2000. Anderson acted on behalf of Apco in this period.
·Justco, which carried on the business of a retailer under the Swift brand from at least about mid 1996 to about December 2000. Bentley acted on behalf of Justco in this period.

There was little dispute about the evidence concerning the existing arrangements that did not involve the contesting respondents, although there was considerable dispute over the relevance of that evidence, which I will deal with later in these reasons. The evidence, which I generally accept, establishes the following. The existing arrangements developed from calls in the early 1990’s between Evans, the principal of the Mobil distributor Balgee and a school friend of his, Manton, who was the managing director of Central Petroleum (which operated the Shell wholesale distribution in Ballarat) and Central Petroleum Retail. Manton and Evans made price-increase calls to each other and to other competitors in the Ballarat petrol market over the phone about coordinating price increases. In the mid 1990’s Evans’ role was taken over by Muller and, around August of 1997, Manton delegated his responsibilities with respect to setting Shell board prices to Davison.
During the 1994 to 1997 period: (1) Muller at Balgee made price-increase calls to Zala at Anderson Petroleum who in turn passed the information about the increase on to Peter Anderson at Apco; (2) Muller at Balgee made price-increase calls to Palmer at Leahy Retail and Davison at Provincial; and (3) Davison at Provincial made price-increase calls to Rosenow at Beasam and Zala at Anderson Petroleum. In order to ensure that the price increases sought to be achieved took effect there were follow-up calls and site visits.
In the period from about 1997 to about mid-1999, an established pattern of communication evolved to accommodate various industry and personnel changes. In particular, during this period: (1) Levick at Balgee assumed Muller’s role and made price-increase calls to Zala at Chisholm, Palmer or Carmichael at the Leahy Companies, Rosenow at Beasam (which later traded as Triton Petroleum) and Bentley at Justco; (2) Zala at Chisholm, ceased passing on price-increase information to Anderson at Apco; (3) Levick at Balgee sought to pass on price information to Anderson at Apco by making the calls to Palmer or Carmichael at the Leahy Companies; (4) Carmichael sought to pass on price information to Anderson at Apco; (5) Zala at Chisholm made price-increase calls to Rosenow at Beasam and similar calls to Bentley at Justco; (6) Rosenow at Beasam sought to make price-increase calls to Bentley at Justco and Dalton at Friway One (later Brumar) at Zala’s request; and (7) Levick at Balgee made follow-up calls to Zala at Chisholm, and received similar calls from him. The follow-up calls related to the failure of a particular competitor or competitors to increase prices.
Putting to one side for the moment the role of the contesting respondents, and the question of whether they were parties to the existing arrangements, the evidence about those arrangements establishes that a price-fixing understanding involving the initiating respondents and others evolved throughout the 1990’s with adjustments being made from time to time to meet changes in personnel and market forces.
(b) The June 1999 arrangement
The June 1999 arrangement is contentious. The ACCC’s claims are as follows. The existing arrangements served as the foundation for a price-fixing understanding made or arrived at between the corporate respondents in or about June 1999 whereby they agreed to implement the existing arrangements on a more frequent and more efficient basis. The catalyst for the June 1999 arrangement was United’s entry into the Ballarat petrol market in February 1999, which had the effect of significantly increasing the frequency of the discount cycle by driving petrol prices down and increasing the level of competition in Ballarat.
The June 1999 arrangement was partly oral and partly to be implied. Insofar as it was oral, the ACCC asserts that Gourley or Levick at Balgee, Zala at Chisholm, and Bentley at Justco made the arrangement at a meeting at Gourley’s house in about June 1999 (“the Gourley meeting”). The arrangement made at the Gourley meeting was communicated orally to Palmer and/or Carmichael at the Leahy Companies, Rosenow at Triton, Anderson at Apco, and Dalton at Brumar.
In so far as the June 1999 arrangement is to be implied, it is to be implied from the corporate respondents giving effect to the existing arrangements and/or the June 1999 arrangement, and from the coordination and timing of telephone calls and price increases. The existence of the June 1999 arrangement may also be inferred from (1) the fact of a meeting at Zala’s office in about August 2000 and (2) the fact of a meeting at the Olive Grove Cafe in about December 2000. Levick at Balgee, Rosenow at Triton, Zala at Chisholm and Bentley at Justco allegedly attended these meetings, at which the retail price of petrol was discussed. In particular, it is alleged that at the Olive Grove Cafe meeting participants discussed whether they should vary the existing arrangements by more frequently coordinating their price increases to match the discounts being offered by Safeway.
The ACCC claimed that the June 1999 arrangement contravened s 45(2)(a)(ii) of the Act in that it contained a provision which, by virtue of s 45A(1) of the Act, is deemed to have had the purpose, or had or was likely to have the effect, of fixing or controlling or providing for the fixing or controlling of the retail price of petrol in the Ballarat petrol market at the service stations controlled or supplied by the corporate respondents. The ACCC also claimed that the individual respondents were involved in the contravention of s 45(2)(a)(ii).
(c) The 1999-2000 arrangements
The alternative case of the ACCC is that the corporate respondents made an arrangement or arrived at an understanding to fix or maintain the retail price of petrol on each separate occasion between June 1999 and December 2000, when the price-fixing conduct occurred. The ACCC also alleges that each of the individual respondents was involved in each of the contraventions.
The ACCC alleges that the 1999-2000 arrangements were partly oral and partly to be implied. Insofar as they were alleged to be oral, they were made by price-increase and follow-up calls between respondents. The pattern of the calls is alleged to be similar to the pattern that developed during the 1997 to 1999 period. In so far as the arrangements were alleged to be implied, they were to be implied from the corporate respondents allegedly giving effect to the existing arrangements and the June 1999 arrangement during the relevant period on about 69 occasions, although not by every corporate respondent in each instance. Details of the dates relied upon by the ACCC are set out in Revised Annexure A (“Annexure A”) to the Further Amended Statement of Claim.
Although the ACCC relied upon the June 1999 arrangement and the 1999-2000 arrangements in their own right as contraventions of s 45(2)(a)(ii) of the Act, the evidence was more consistent with a continuing price-fixing understanding which had to adapt from time to time to changes in personnel and market forces. The real issue is whether the contesting respondents were parties to or were involved in that understanding during the relevant period and, if so, whether the resulting contraventions of s 45(2) of the Act fall within the case pleaded by the ACCC.
(d) Categories of evidence
The ACCC sought to prove its case through direct and circumstantial evidence as well as by inference. The ACCC’s case relies primarily on three categories of evidence:
·direct evidence by the adoption of witness statements and oral testimony of individuals operating in the Ballarat petrol market before and during the relevant period, including individuals who have admitted to the contraventions of the Act alleged by the ACCC;
·circumstantial evidence, which includes evidence of the making of numerous phone calls between respondents, which calls were said to correlate with increases in the retail price of petrol; and
·hearsay statements made by witnesses, which are argued by the ACCC to be admissible under, among other things, the principle established in Ahern v The Queen (1988) 165 CLR 87 (“Ahern”).
The circumstantial evidence comprised two key documents that summarise, in chart form, voluminous source data. The first document, Annexure A, is a chart and graphical representation of telephone activity and price increases on 69 non-consecutive days during the period from 22 June 1999 to 8 December 2000 (“price-increase days”). The 69 days are the occasions on which the ACCC alleges that it can establish that there were both telephone communications between the respondents and price increases. The source data for the telephone calls summarized in Annexure A were the relevant telephone accounts of the respondents, which were provided by them to the ACCC pursuant to s 155 of the Act. However, save for the period from 1 February to 30 April 2000, the telephone records were incomplete. Also, although certain of the corporate respondents own or operate more than one retail petrol site in the Ballarat petrol market, the ACCC did not request price data from all of the sites. Rather, the ACCC’s methodology was to choose a “representative” site for each corporate respondent and gather telephone account and price information that was relevant to an increase in the retail price of petrol sold at the site. Although Annexure A does not reveal the content of the telephone conversations, the ACCC relies on the direct and hearsay evidence, as well as inference, on that matter.
The analysis in Annexure A is linked to a second key ACCC document, Exhibit DA-13, which is a comprehensive and complete record and graphic representation of telephone activity between the respondents for each day in the three months between 1 February 2000 and 30 April 2000. Exhibit DA-13 also contains the price-increase information in Annexure A for that period. Unlike Annexure A, Exhibit DA-13 is based on a complete record of call charges during a period of three months. Thus, during that period, every call on every day between respondents is listed, regardless of whether the call coincided with a petrol price increase. The ACCC seeks to have the inference drawn from Annexure A and Exhibit DA-13 that there was a correlation between the corporate respondents’ telephone calls with each other, and increases by them in the retail price of petrol. More specifically, the inference is based on the above two documents which are said to establish that on days when the price of petrol did not change there were few or no telephone calls between the corporate respondents, but on the days when the initiating respondents sought to increase the price of petrol there was an established pattern of telephone calls between the corporate respondents. The ACCC alleges that in the latter case, the only reasonable inference is that the calls were primarily price-increase and follow-up calls. The price-increase calls were said to communicate that a price increase was proposed or was in progress. The follow-up calls were said to be an endeavour to ascertain whether the price increase was being or would be matched by competitors. In addition, there were site calls, by which a corporate respondent communicated with its sites concerning board prices or, in Triton’s case, price support.
The ACCC made the following response to the suggestion of the contesting respondents that, because the competitors’ current prices were available for all to see, there was no need for calls of the kind alleged by the ACCC:
“At various times, parties have suggested that the market is one where prices are available for all to see. To an extent that is true, but it does not answer the case. The implication is that the competitors did not need to exchange price information; but if that is the suggestion, it leaves unanswered the question: Why all the telephone contact, over so long a time? We submit that the answer lies in the need for increases to be well co-ordinated so as to maximise the prospects of the increase sticking. If word of an increase did not get to all competitors quickly, the first to rise would lose market share rapidly, and no-one would get the benefit of a non-competitive price. It emerges clearly from the evidence that:
·petrol is price-sensitive
·everyone wanted prices to increase whenever possible
·unless all sites (or all bar a few minor ones) increased within a short time of each other, the increase was less likely to stick
·the first to increase took a risk, unless it had the comfort of knowing that the competitors would match the increase.”
Finally, the ACCC accepted that the standard of proof discussed in Briginshaw v Briginshaw (1938) 60 CLR 336 (“Briginshaw”) was applicable. The standard was stated by Heerey and Sackville JJ (with whom Emmett J agreed) in Australian Safeway Stores at 432 [438] to be as follows:
“… the so-called Briginshaw standard, …requires the trier of fact, in determining what inferences to draw from the primary facts, to have regard to the seriousness of the allegations and the gravity of the consequences flowing from an adverse finding. But Briginshaw does not require a court to exclude all alternative possibilities before drawing an inference from the primary facts adverse to one of the parties. The question is whether the Court is reasonably satisfied that the fact in issue has been established, having regard to ‘the nature and consequences of the fact or facts to be proved’: Briginshaw at 362 per Dixon J. In this connection, the Court must take into account not only the seriousness of the allegation made and the gravity of the consequences of an adverse finding, but ‘the inherent unlikelihood of an occurrence of a given description’: Briginshaw at 362.”
5. The Defences
The contesting respondents denied that any of them were parties to the existing arrangements, the June 1999 arrangement or the 1999-2000 arrangements. They claim that the case pleaded against them had not been established by the evidence. They also strongly contested the adverse inferences the ACCC sought to draw from Annexure A and Exhibit DA-13.
All of the contesting respondents asserted that, in so far as they were concerned, their price increases in the Ballarat petrol market during the relevant period were the result of competitive market forces. In particular, they point to the highly competitive and price sensitive nature of the market and to the fact that competitors’ board prices were openly advertised and were constantly checked and re-checked by them to enable them to remain competitive. It was not disputed that in Ballarat communications between competitors such as “Take a drive” or “The market has moved” signified that a price increase was in progress. However, the contesting respondents claim that there is nothing sinister in such communications, as they do no more than state publicly available knowledge, which was either known, or would have become known.
The contesting respondents also claimed that there was no consensus as to what was to be done by the parties to the alleged price-fixing understanding and that the mere hope as to the role to be played by them, as opposed to a commitment or expectation as to that role, could not constitute contravening conduct under s 45(2).
Triton denied that Rosenow had authority to make it a party to any price-fixing arrangement or understanding or to give effect to any such arrangement or understanding. It also contended, inter alia, that due to its status as a wholesaler at no relevant time was it a “competitor” with any of the other corporate respondents. Triton maintains that it merely supplied petrol to independent retailers of Shell branded petrol who made their own retail pricing decisions based upon their particular commercial circumstances.
Rosenow, who did not give evidence on his own behalf or on behalf of Triton, claims that the elements of s 75B(1) have not been established. Specifically, he argues that he had no knowledge of the essential elements of the alleged contravention and that he was not a participant in any price-fixing arrangement or understanding. Rosenow also submits that he had no capacity to control, fix or maintain prices as Triton’s policy of price support, which was implemented by him, did not restrain the freedom of the independent Shell retailers to set their own prices for petroleum products.
Apco and Anderson argue that Apco’s strict policy of independence and its business strategy of matching United’s retail prices establish its innocence. They claim that, rather than Apco being a party to any arrangement or understanding, it was actually in vigorous competition with the other respondents as it was a discounter that could, and often would, foil attempted price increases by them. In addition, Apco and Anderson claim that Anderson had valid business reasons to speak over the phone with Carmichael at the Leahy Companies and Bentley at Swift, and they contend that any conversations in which prices were mentioned merely conveyed known price movements and not planned increases. They also argue that the pattern of Carmichael’s and Bentley’s calls to Anderson was no different on price-increase days than on non-increase days and that no inference adverse to them can properly be drawn from Annexure A and Exhibit DA-13.
Brumar and Dalton, who did not give evidence on his own behalf or on behalf of Brumar, deny wrongdoing and assert that the evidence relied upon by the ACCC does not relate specifically to Brumar or Dalton and, as such, does not establish the case pleaded against them. There is also an issue about whether Dalton had any authority to act on Brumar’s behalf in relation to any price-fixing arrangement or understanding. In addition, Brumar and Dalton claim that Brumar’s pricing policy was generally to match Swift’s prices, subject to the restrictions placed upon Brumar by the price support provided by Shell. Accordingly, they contend that Brumar’s price increases and decreases were a result of competitive market forces.
6. The No-Case Submissions
At the conclusion of the ACCC’s case a number of the contesting respondents applied to make no-case submissions which raised some important issues in respect of Pt IV cases.
The ACCC tendered statements by a large number of witnesses and adduced voluminous documentary evidence in support of its claims. A number of the witnesses gave additional evidence in chief and were cross-examined. Credit issues were raised by some of the contesting respondents against certain of the ACCC’s witnesses, some of whom were other respondents who had admitted to the contraventions claimed against them.
The contesting respondents requested that the Court adjourn the matter for two to three days to enable them to put detailed and comprehensive submissions explaining why the ACCC’s evidence was not sufficient to establish the contraventions claimed. They claimed that they should not be required to elect whether to adduce evidence as a condition of submitting there was no case to answer.
The ACCC claimed that the contesting respondents should not be permitted to put no-case submissions unless they elected not to call evidence and that if any respondent was not prepared to make that election, the no-case submissions of the other respondents who were prepared to make that election should not be permitted to be made until all of the evidence that might be relevant to the no-case submissions was before the Court.
After some of the contesting respondents indicated to the Court that they proposed to adduce evidence if their no-case submissions failed, I outlined my concerns about a no-case submission being made prior to all of the evidence that might be relevant to the submission being before the Court. Subsequently those respondents, correctly in my view, indicated that they had decided not to proceed with their no-case submissions. It is appropriate to briefly set out my reasons for concluding that no-case submissions were not appropriate in the present matter unless all respondents elected not to call evidence that could be of relevance to the no-case submission.

The Ahern evidence does not greatly advance the ACCC’s case, but it is consistent with and corroborates the findings I have already made in relation to Apco and Anderson. Nonetheless, in so far as it is more specific about Anderson’s comments about other sites not increasing their prices and about Anderson saying he is “looking” at an increase, it adds further support to the finding that Anderson was fully aware of, and participated in, the processes by which the price-fixing understanding was to achieve its purpose of a sudden and significant price increase to bring an end to the discount cycle.
(ii) Brumar/Dalton
The ACCC contends that certain hearsay statements of Rosenow are admissible against Brumar and Dalton. Because I have found that there is reasonable evidence of Rosenow’s and Dalton’s participation in the common purpose, I need only consider whether the statements were made in furtherance of that common purpose in order for them to be admissible.
First, Levick’s testimony was as follows.
Levick stated:
“Mr Rosenow was the main contact for Mr Dalton’s sites. On the odd occasion that I had price move and reminder calls with him, he told me that he would pass or had passed the message through to Mr Dalton in words to the effect ‘I’ll pass it on to Dalton.’ or ‘I’ve passed it on to Garry.’ On a few occasions, Mr Rosenow added in effect ‘Garry plays his own game, but I’ll pass the information on’ … .”
Levick said he remembered making reminder calls to Rosenow regarding Dalton’s sites:
“BURNSIDE: Did you ever make any reminder calls to Mr Rosenow?
LEVICK: On the odd occasion, yes.
BURNSIDE: Doing the best you can, would you tell his Honour what you said and what he said?
LEVICK: The only time I'd ring Mr Rosenow is when I couldn't get on to Mr Zala, and I would say to Tony that - what was happening with Sturt Street and with the Shell sites.
BURNSIDE: What did Mr Rosenow say?
LEVICK: He would say, ‘Leave it with me’.
BURNSIDE: Did you ever hear back from him after you'd left it with him?
LEVICK: On the odd occasion, yes.
BURNSIDE: When he rang back what did he say?
LEVICK: That he'd either spoken to Garry and it was going to happen, or that Garry had cracked the shits and wasn't going to do anything.
BURNSIDE: Who did you understand Garry was?
LEVICK: I understand Garry to be Mr Dalton, who my understanding was he ran the major Shell sites in Ballarat.
BURNSIDE: Was there one time you can recall when Mr Rosenow rang back and told you of a particular reaction of Garry Dalton on that occasion?
LEVICK: As I said in the last paragraph, that he'd cracked the shits and was going to play his own game.”
These statements are admissible as they were made in furtherance of the price-fixing understanding, because, as with the statements relating to Apco, they relate to the price-increase and follow-up calls that were made for the purpose of having the price increases “stick.”
Second, Levick testified that Zala rang him and said, in effect, “Rosenow has rung Garry and Garry told him to piss off and that he’s not going up this time.” This statement is in the same category as Rosenow’s evidence. Although it is double hearsay, that is not fatal because, as explained above, an exception to the hearsay rule exists for each layer of hearsay. The evidence supports the ACCC’s contention that Dalton received price-increase calls, even though it also supports the other evidence that Dalton maintained his independence in relation to determining whether to increase Brumar’s prices.
Zala’s testimony about follow-up calls concerning Brumar’s sites was as follows:
“BURNSIDE: Okay. Can I ask you about follow-up calls that you received or made when you were at Chisholm, okay? First of all, did you ever make follow-up calls to Mr Rosenow?
ZALA: When I was at - sorry, Chisholms or Andersons, did you say?
BURNSIDE: When you were at Chisholm?
ZALA: Chisholms, yes.
BURNSIDE: As best you can recall, when you made a follow-up call to Mr Rosenow, what did you say and what did he say?
ZALA: On the occasions that I rang Mr Rosenow it was to say that one of the high visibility Shell sites had not gone, and ‘Did you pass the message on?’ and he would say, ‘Yes, I have’ or ‘Yes, look, I've passed the message on. I'll ring him and remind him.’
BURNSIDE: That happened on?
ZALA: A number of occasions. But, again, not a lot of occasions, because Shell would generally follow the lead of the others.
BURNSIDE: Who operated those high visibility sites that he referred to?
ZALA: Well, after we took over the lease in June of 2000 of the Hertford Street site, I then became aware - I dealt with Mr Dalton, and I then became aware that the company that operated the high volume sites that were branded Shell in Ballarat were run by a company by the name of Brumar.
BURNSIDE: Could you tell us, please, whether you ever received - when you made a follow-up call to Mr Rosenow, in the terms you have described, did you ever hear back from him?
ZALA: Occasionally Mr Rosenow rang me back and said, ‘Yes, they're on their way,’ or, ‘They're in the process of going,’ or, ‘Yes, the message didn't [get through] at the original call,’ or whatever, but yes, occasionally Mr Rosenow would ring me back and say, ‘Yes, they're on their way.’
BURNSIDE: Did you make observations of the board prices at the Brumar sites after you had made a follow-up call to Mr Rosenow?
ZALA: Yes, at times, if I - it was during the course of my duties, with going to the bank and going to the post office and going to sites or whatever, I would drive past a Brumar site, just to see that that's what happened, but I would say that when Mr Rosenow rang and said that, ‘Yes, they're on their way,’ or something, I would take it that that would always happen.
BURNSIDE: Did you check, and when you checked, did it happen?
ZALA: Yes.
BURNSIDE: Yes to both, is it?
ZALA: Sorry.
BURNSIDE: Did you check?
ZALA: Yes, I did check.
BURNSIDE: And had it happened?
ZALA: Yes, it had.”
The follow-up calls were in furtherance of the common purpose and the evidence about them is admissible against Brumar and Dalton
As with Apco, the Ahern evidence is consistent with and corroborates the findings I have already made in relation to Brumar and Dalton. Further, the evidence affords additional and more specific evidence of Dalton’s participation in price-increase and follow-up calls with Rosenow. The evidence also gives instances of price increases by Brumar after a follow-up call to Dalton by Rosenow.
(iii) Triton/Rosenow
The ACCC has alleged that certain hearsay statements are admissible against Triton and Rosenow pursuant to Ahern. As I have already concluded that the direct evidence against those parties is compelling I do not regard the hearsay evidence as advancing the ACCC’s case.
The remaining issue is whether, on the findings I have made, the ACCC has established the contraventions it has alleged against the contesting respondents.
11. Contraventions of ss 45(2)(a)(ii) and 45(b)(ii)
It is clear from the findings I have made that the price-fixing understanding had the purpose, and had or was likely to have the effect, of fixing or controlling the price of retail petrol supplied in Ballarat by the parties to the understanding during the relevant period. In so far as the initiating respondents were concerned, there can be little doubt that there was the requisite meeting of minds and a consensus as to what was to be done. The consensus aroused expectations (see Australian Safeway Stores at 426 [409]) in each of the participants that the others would act in the manner set out in [330] above. It is likely that there was also a commitment in relation to the first three steps set out in [330] above on the part of the respondents initiating the price increase.
The price-fixing understanding provided for a process by which the increased price could take effect in Ballarat in order to bring to an end a discount cycle. That was its purpose and likely effect. In my view the understanding plainly meets the statutory requirement that it provide for the fixing of the price of petrol supplied by parties to the understanding (cf Radio 2UE at 567). Also, the purpose, effect or likely effect of the understanding was to significantly restrain the continuation of the discount cycle by providing for the cycle to be brought to an end by a sudden and substantial price increase. The restraint is such that it falls within the alternative statutory requirement that the understanding provide for the controlling of the price of petrol supplied by parties to the understanding (cf ACCC v Pauls at [121]-[125] and ACCC v AMA at 461-462 [193]-[195]).
There was little contest about the above matters in so far as the initiating respondents were concerned. As already outlined, the contest was about whether the contesting respondents were parties to the understanding. In the course of submissions it was contended that the ACCC’s case at trial departed from the case pleaded. The contention was that the understanding pleaded was, in effect, a pre-arranged increase to a specifically nominated price. In response to the submissions the ACCC, without objection, amended its pleadings to make it clear that its case was that the understanding provided for a coordinated price increase by communicating “the amount of and/or approximate time of and/or the fact of the price increase proposed, or in progress”.
The amendment appeared to meet the main contentions of the contesting respondents. However, even if it did not, I am satisfied that the case conducted and litigated at trial was whether the price increases during the relevant period were a result of collusion that involved the contesting respondents (ie by reason of their participation in the price-fixing understanding) or were a result of free market forces. That issue may fairly be described as the issue that was “in the ring” and was strongly contested at trial: see Nescor Industries Group Pty Ltd v MIBA Pty Ltd (1997) 150 ALR 633 at 640, 647 and 650 and the authorities there cited. It is to that issue I now turn.
In the context of s 45A of the Act, the question of whether the contesting respondents were involved in collusion in respect of the price increases during the relevant period requires consideration of whether, applying the Briginshaw standard, I am satisfied that there was the requisite meeting of minds between two or more parties to the understanding, and a consensus as to what was to be done, not merely a hope as to what might be done or might happen (see [54] above).
(a) Triton and Rosenow
I am satisfied that there was the requisite meeting of minds and consensus in so far as Rosenow, acting on behalf of Triton, is concerned. At [337] I summarised the findings that led me to conclude that there was reasonable evidence of those matters. In terms of the price-fixing understanding described at [330] both prior to, and during, the relevant period Rosenow actively participated in price-increase and follow-up calls with Zala (Chisholm) and Bentley (Justco). Also, Rosenow acted on those calls by generally withdrawing or reducing price support to the proposed or targeted price to Taxi Co-op and other independent retailers to whom Triton supplied petrol, and by participating in price-increase and follow-up calls with Dalton who was acting on behalf of Brumar.
In so far as Zala (Chisholm), Bentley (Justco) and Rosenow (Triton) were concerned, they were each aware of the price-fixing understanding and its purpose, and, in participating in it, they adopted it and aroused an expectation on the part of each other that they would fulfil their respective roles in relation to the understanding, as they, in general, did. Save for maintaining the initial increase in price by one or more of the initiating respondents for such time as was necessary to ascertain if it was to take effect, there may not have been any other commitment by any of the participants to increase their price to the targeted or proposed price. However, the initial increase or increases and the consequential price-increase calls were significant because they gave the other participants the necessary confidence that a coordinated increase pursuant to the understanding was in progress. Also, I infer that there was an expectation on the part of the initiating respondents that Rosenow would “cause” Triton’s independent retailers to move to the proposed or targeted price but, as his primary role was as a conduit to Brumar, there was also an expectation by the initiating respondents that Rosenow would make price-increase and follow-up calls to Dalton. I also infer that there was an expectation by Rosenow that the initiating respondents would maintain their price increases while the high visibility sites were deciding whether to match the increases.
In the above circumstances I am satisfied that not only is there reasonable evidence that Triton was a party to the understanding but also that the case against it in that regard is compelling. The case of Rosenow’s involvement as an intentional participant in the understanding is equally compelling. I can more confidently arrive at those conclusions as a result of Rosenow’s false denial, his failure to give evidence, his participation in two meetings at which a consensus on a price increase was reached and by the additional evidence of Dow that he performed aspects of Rosenow’s role in relation to the understanding in Rosenow’s absence.
The finding that Triton was a party to the price-fixing understanding during the relevant period strongly supports the view I have formed that its role in relation to the price increases on 45 price-increase days during the relevant period resulted in it, acting through Rosenow, giving effect to the understanding on those days. I am satisfied that my findings on the evidence upon which I have relied satisfy the Briginshaw standard.
(b) Apco and Anderson
The position of Apco is more difficult because, unlike Triton, its involvement was primarily limited to receiving price-increase or follow-up calls from Bentley and Carmichael. It did not initiate such calls nor did it initiate price increases. Also, unlike Triton, there was no expectation by any of the respondents that Apco’s preparedness to receive calls from Bentley and Carmichael meant that Apco would substantially match the increased prices. Some of the witnesses could go no further than stating that it was their “hope” that Apco would increase its prices.
Nonetheless, I have found that there is reasonable evidence that Anderson, acting on behalf of Apco, was aware that:
·the purpose of the price-increase and follow-up calls was to influence or persuade him to substantially match the increase;
·those calls were part of a longstanding and collusive process involving a number of the corporate respondents coordinating price increases to bring to an end a discount cycle in the Ballarat retail petrol market.
With this awareness, Anderson continued to receive such calls during the relevant period and acted upon the calls by closely monitoring the price increases and then determining whether to match them.
In my view Anderson’s preparedness to receive the price-increase and follow-up calls in the above circumstances, his occasional responses to Carmichael that other outlets had not yet increased their prices and that he was “looking” at whether he would increase his prices, together with his decision from time to time to increase his prices to match the market increase by the other corporate respondents, aroused an expectation in at least Bentley (Justco) and Palmer and Carmichael (the Leahy Companies) that during the relevant period:
·Anderson would continue to receive those calls;
·Anderson would continue to act upon the calls by closely monitoring the prices of the other corporate respondents in Ballarat and decide whether to participate in the coordinated increases being sought;
·Anderson’s receipt of the calls made it more likely that he would substantially match an increase than if he did not receive the calls.
Importantly, Anderson was aware that, in the usual course, his decision was likely to be determinative of whether the coordinated price increase being sought by the other participants would “stick” so that on each occasion that he made the decision to increase his prices after the receipt of price-increase or follow-up calls he was aware that his increase was likely to ensure that the collusive process achieved its purpose on that occasion. In the circumstances I am prepared to infer that Anderson expected that the participants in the collusive process would maintain their price increases while Apco was deciding whether to match the increases.
The above matters amount to participation in, and adoption of, the understanding by Anderson. I would add that Anderson’s responses to follow-up calls from Carmichael, when Anderson said that certain sites had not yet increased their prices or that he was looking at whether to increase his prices, constitute evidence that is confirmatory of his adoption of, and participation in, the understanding.
Accordingly, I have concluded that the matters set out above constitute the requisite meeting of minds and consensus in so far as Anderson is concerned with at least Bentley (Chisholm) and the Leahy Companies (Carmichael) as to what was to be done by the various parties to the understanding.
The finding that Apco was a party to the price-fixing understanding during the relevant period affords persuasive evidence in support of the conclusion I have formed that Apco’s role in increasing prices on the 29 price-increase days during the relevant period resulted in it, acting through Anderson, giving effect to the understanding on 29 price-increase days during the relevant period. I am satisfied that my findings on the evidence upon which I have relied satisfy the Briginshaw standard.
(c) Brumar and Dalton
Brumar’s position is analogous to that of Apco. Brumar did not initiate price increases or price-increase calls. Also, as with Apco there was no expectation on the part of the participants that, by receiving or participating in price-increase or follow-up calls with Rosenow, Brumar would increase its prices.
Nonetheless, I have found that there is reasonable evidence that Dalton, acting on behalf of Brumar, was aware that:
·the purpose of the price-increase and follow-up calls in which he participated with Rosenow was to influence or persuade him to match the increase;
·there was a connection between the calls and the sudden and significant increases at the time, which were not merely the product of market forces.
Also, the false s 155 responses suggest a consciousness that truthful answers would implicate Brumar and Dalton in the collusive arrangements suspected by the ACCC.
In all the circumstances, Dalton would have been aware that, as his sites included high visibility sites in Ballarat, a decision by him to match the increase sought by those participating in the understanding was important if the collusive process was to achieve its purpose. Also, Dalton’s preparedness to participate in the calls, and his conduct in usually matching the increases, aroused an expectation in at least Zala, Bentley and Rosenow that during the relevant period:
·Dalton would continue to participate in those calls;
·Dalton would continue to act on those calls by monitoring price increases in Ballarat and, in particular, at Swift, in the knowledge that the increases were likely to be part of a collusive process involving other retailers and Triton in Ballarat;
·Dalton’s participation in the calls made it more likely that he would match the increases.
In the circumstances outlined above, I infer that Dalton expected that the participants in the collusive process would maintain their price increases while Brumar was deciding whether to match the increases.

The Ahern evidence supports the above findings, and Dalton’s failure to give evidence on his own behalf and on behalf of Brumar enables me to be more confident about making those findings.
I am satisfied that by reason of the above matters, Brumar, acting through Dalton, participated in and adopted the understanding. Accordingly I have concluded that, in so far as Brumar was concerned, there was the requisite meeting of minds and consensus with, at least, Triton as to what was to be done. I am also satisfied that Dalton was also aware that Rosenow was not on a frolic of his own but, rather, was providing him with price-increase information as part of a coordinated and collusive process to increase prices that involved other major petrol retailers in Ballarat.
In the above circumstances I am satisfied that Brumar, acting through Dalton, was a party to the understanding. That finding affords persuasive evidence in support of the view I have formed that Brumar’s role in increasing prices on 53 price-increase days during the relevant period resulted in it giving effect to the understanding on 53 occassions during the relevant period. I am satisfied that my findings on the evidence upon which I have relied satisfy the Briginshaw standard.
(d) Balgee
For the reasons given earlier I am satisfied on the basis of the Briginshaw standard that Balgee was a party to the price-fixing understanding and gave effect to it on 68 days during the relevant period.
12. Conclusions
I have concluded that the ACCC has established that Triton, Apco, Brumar and Balgee contravened s 45(2)(a)(ii) by arriving at the price-fixing understanding and contravened s 45(2)(b)(ii) by giving effect to the understanding during the relevant period on 45 occasions, 29 occasions, 53 occasions and 68 occasions respectively. I have also concluded that Rosenow, Anderson and Dalton were persons who were involved in each of the contraventions by their respective corporate principals. The contraventions, which involve serious and on-going breaches of important provisions of the Act, resulted in the price of petrol in Ballarat being the subject of a cartel type of arrangement or understanding over a substantial period of time. It was an arrangement or understanding that led to the public paying higher retail prices for petrol than they would have paid if the prices had been determined by market forces, rather than by a collusive arrangement between competitors.
In the light of the above conclusions it is appropriate to require the parties to file minutes of consent directions concerning a further hearing in relation to penalty and any other remedies or relief that is appropriate.

I certify that the preceding three hundred and eighty five (385) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel.

Associate:
Dated: 16 December 2004

Counsel for the Applicant:

Mr J Burnside QC with

Ms EA Strong SC

Solicitor for the Applicant:

Australian Government Solicitor

Counsel for the Third Respondents:

R Kendall QC with

AK Panna

Solicitor for the Third Respondents:

Macpherson & Kelly

Counsel for the Sixth and Thirteenth Respondents:

M Dreyfus QC with

S O’Bryan SC

Solicitor for the Sixth and Thirteenth Respondents:

Alan Williamson B. Juris, LL.B

Counsel for the Seventh and Fourteenth Respondents:

CM Scerri QC with

PJ Cosgrave

Solicitor for the Seventh and Fourteenth Respondents:

Griffith Hack

Counsel for the Eleventh Respondent:

J Middleton QC with

R Moore

Solicitor for the Eleventh Respondent

Home Wilkinson & Lovey

Date of Hearing:

3, 4, 5, 6, 7, 10, 11, 12, 13, 17, 18, 19, 20, 24, 25, 26 and 27 May and 16, 19, 20, 21, 22 and 26 July 2004

Date of Judgment

17 December 2004

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 315 OF 2002

BETWEEN:	ACCC APPLICANT
AND:	LEAHY PETROLEUM PTY LTD FIRST RESPONDENT LEAHY PETROLEUM - RETAIL PTY LTD SECOND RESPONDENT TRITON 2001 PTY LTD THIRD RESPONDENT J. CHISHOLM PTY LTD FOURTH RESPONDENT JUSTCO PTY LTD FIFTH RESPONDENT APCO SERVICE STATIONS PTY LTD SIXTH RESPONDENT BRUMAR (VIC) PTY LTD SEVENTH RESPONDENT JOHN ROBERT GOURLEY EIGHTH RESPONDENT ROBERT ANDREW LEVICK NINTH RESPONDENT ROBIN HERBERT PALMER TENTH RESPONDENT ANTHONY BRIAN ROSENOW ELEVENTH RESPONDENT JUSTIN MATTHEW BENTLEY TWELFTH RESPONDENT PETER JOSEPH ANDERSON THIRTEENTH RESPONDENT GARRY VICTOR DALTON FOURTEENTH RESPONDENT CAVALLO VOLANTE PTY LTD (FORMERLY KNOWN AS BALGEE OIL PTY LTD) (SUBJECT TO DEED OF COMPANY ARRANGEMENT) FIFTEENTH RESPONDENT PETER ROBERT MULLER SIXTEENTH RESPONDENT
JUDGE:	MERKEL J
DATE OF ORDER:	17 DECEMBER 2004
WHERE MADE:	MELBOURNE

Corporate Respondent	Brand	Representative	Position
Leahy Petroleum	BP	Palmer	General Manager
Leahy Retail	BP	Palmer	General Manager
Triton	Shell	Rosenow	Ballarat Area Manager
Chisholm	Ampol/Caltex	Zala	Ballarat Manager
Justco	Swift	Bentley	Director and General Manager
Apco	Apco	Anderson	Director and General Manager
Brumar	Shell	Dalton	Retail Area Manager
Balgee	Mobil	Gourley Muller Levick	General Manager Ballarat Operations Manager Ballarat Area Sales Representatives

Counsel for the Applicant:	Mr J Burnside QC with Ms EA Strong SC
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Third Respondents:	R Kendall QC with AK Panna
Solicitor for the Third Respondents:	Macpherson & Kelly
Counsel for the Sixth and Thirteenth Respondents:	M Dreyfus QC with S O’Bryan SC
Solicitor for the Sixth and Thirteenth Respondents:	Alan Williamson B. Juris, LL.B
Counsel for the Seventh and Fourteenth Respondents:	CM Scerri QC with PJ Cosgrave
Solicitor for the Seventh and Fourteenth Respondents:	Griffith Hack
Counsel for the Eleventh Respondent:	J Middleton QC with R Moore
Solicitor for the Eleventh Respondent	Home Wilkinson & Lovey
Date of Hearing:	3, 4, 5, 6, 7, 10, 11, 12, 13, 17, 18, 19, 20, 24, 25, 26 and 27 May and 16, 19, 20, 21, 22 and 26 July 2004
Date of Judgment	17 December 2004