Australian Competition and Consumer Commission v Renegade Gas Pty Ltd (trading as Supagas NSW)

[2014] FCA 1135

FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Renegade Gas Pty Ltd (trading as Supagas NSW) [2014] FCA 1135

Citation:	Australian Competition & Consumer Commission v Renegade Gas Pty Ltd (trading as Supagas NSW) [2014] FCA 1135
Parties:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v RENEGADE GAS PTY LTD (TRADING AS SUPAGAS NSW) (ACN 074 008 496), SPEED-E-GAS (NSW) PTY LTD (ACN 064 624 915), PAUL BERMAN, COREY JOHN SMITH and JAY RUSSELL WILSON
File number:	NSD 1239 of 2012
Judge:	GORDON J
Date of judgment:	24 October 2014
Catchwords:	CONSUMER LAW – Penalty hearing – admitted contraventions – orders sought by consent – appropriate relief in the circumstances – declaratory relief – pecuniary penalties – injunctions – probation order – disqualification order – Competition and Consumer Act 2010 (Cth), ss 21, 44ZZRD, 44ZZRK, 45, 76, 80, 86C, 86E
Legislation:	Competition and Consumer Act 2010 (Cth) Evidence Act 1995 (Cth) Federal Court Act 1976 (Cth) Trade Practices Act 1974 (Cth) Trade Practices Amendment (Cartel Conduct and Other Measures) Act 2009 (Cth) Trade Practices Legislation Amendment Act (No 1) 2006 (Cth)
Cases cited:	Australian Competition & Consumer Commission v 4WD Systems Pty Ltd [2003] FCA 850 Australian Competition and Consumer Commission v ABB Transmission and Distribution (No 2) (2002) 190 ALR 169 Australian Competition & Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030 Australian Competition & Consumer Commission v Energy Australia Pty Ltd [2014] FCA 336 Australian Competition & Consumer Commissionv Fila Sport Oceania Pty Ltd(admin appt’d) [2004] FCA 376 Australian Competition & Consumer Commission v Francis (2004) 142 FCR 1 Australian Competition & Consumer Commission v Halkalia Pty Ltd (No 2) [2012] FCA 535 Australian Competition & Consumer Commission v Harbin Pty Ltd [2008] FCA 1792 Australian Competition & Consumer Commission v Hewlett-Packard Australia Pty Ltd [2013] FCA 653 Australian Competition & Consumer Commission v IPM Operation & Maintenance Loy Yang Pty Ltd (No 2) [2007] FCA 11 Australian Competition & Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 Australian Competition & Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378 Australian Competition & Consumer Commission v Pepe’s Ducks Ltd [2013] FCA 570 Australian Competition & Consumer Commission v Powerballwin.com.au Pty Ltd [2010] FCA 378 Australian Competition & Consumer Commission v Rural Press Ltd [2001] FCA 1065 Australian Competition & Consumer Commission v Safe Breast Imaging Pty Ltd (No 2) [2014] FCA 998 Australian Competition & Consumer Commission v Seal-A-Fridge Pty Ltd [2010] FCA 525 Australian Competition & Consumer Commission v Telstra Corporation Ltd (2010) 188 FCR 238 Australian Competition & Consumer Commission v TF Woollam & Son Pty Ltd (2011) 196 FCR 212 Australian Competition & Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54 Australian Competition & Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 Australian Competition & Consumer Commission v Wizard Mortgage Corp Ltd [2002] FCA 1317 Australian Competition & Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 Australian Securities Commission v Donovan (1998) 28 ACSR 583 Australian Securities Commission v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 Australian Securities Commission v Roussi (1999) 32 ACSR 568 Australian Securities & Investments Commission v Hutchings (2001) 38 ACSR 387 Australian Securities & Investments Commission v Ingleby (2013) 93 ACSR 274 Australian Securities & Investments Commission v Parkes (2001) 38 ACSR 355 Australian Securities & Investments Commission v Pegasus Leveraged Options Group Pty Ltd (2002) 41 ACSR 561 Australian Securities & Investments Commission v Vizard (2005) 145 FCR 57 BMW Australia Ltd v Australian Competition & Consumer Commission (2004) 207 ALR 452 Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519 Director of Consumer Affairs Victoria v Dimmeys Stores Pty Ltd [2013] FCA 1371 Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCA 1014 Fair Work Ombudsman v A Dalley Holdings Pty Ltd [2013] FCA 509 Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 Gillfillan v Australian Securities & Investment Commission [2012] NSWCA 370 Global One Mobile Entertainment Pty Ltd v Australian Competition & Consumer Commission [2012] FCAFC 134 ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 IMF (Australia) Ltd v Sons of Gwalia Ltd (admin apptd) (2004) 211 ALR 231 J McPhee & Son (Australia) Pty Ltd v Australian Competition & Consumer Commission (2000) 172 ALR 532 Kerkhoffs v Registrar of Aboriginal and Torres Strait Islander Corporations [2014] FCAFC 66 Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 NW Frozen Foods Pty Ltd v Australian Competition & Consumer Commission (1996) 71 FCR 285 Re Civica Investments Ltd [1983] BCLC 456 Re Gold Coast Holdings Pty Ltd (in liq); Australian Securities & Investments Commission v Papotto (2000) 35 ACSR 107 Re Tasmanian Spastics Association; Australian Securities Commission v Nandan (1997) 23 ACSR 743 Rural Press Ltd v Australian Competition & Consumer Commission (2003) 216 CLR 53 Schneider Electric (Aust.) Pty Ltd v Australian Competition & Consumer Commission (2003) 127 FCR 170 Singtel Optus Pty Ltd v Australian Competition & Consumer Commission [2012] FCAFC 20 Tax Practitioners Board v Shanahan [2013] FCA 764 Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 TPG Internet v Australian Competition & Consumer Commission (2012) 210 FCR 277 Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd [1978] ATPR 40-091
Date of hearing:	30 September 2014
Date of last submissions:	3 October 2014
Place:	Sydney
Division:	GENERAL DIVISION
Category:	CATCHWORDS
Number of paragraphs:	320
Counsel for the Applicant:	Mr D Fagan SC with Mr T Brennan
Solicitor for the Applicant:	Corrs Chambers Westgarth
Counsel for the First Respondent:	Mr I Wylie
Solicitor for the First Respondent:	TressCox
Counsel for the Second Respondent:	Dr RCA Higgins
Solicitor for the Second Respondent:	Clayton Utz
Counsel for the Third Respondent:	Mr AJ Payne SC with Mr J Arnott
Solicitor for the Third Respondent:	HWL Ebsworth Lawyers
Counsel for the Fourth Respondent:	Mr P Carr
Solicitor for the Fourth Respondent:	Yeldman Price O'Brien Lusk
Counsel for the Sixth Respondent:	Ms N Dewan
Solicitor for the Sixth Respondent:	LS LAW Litigation and Dispute Resolution Lawyers

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1239 of 2012

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant

AND:

RENEGADE GAS PTY LTD (TRADING AS SUPAGAS NSW) (ACN 074 008 496)
First Respondent

SPEED-E-GAS (NSW) PTY LTD (ACN 064 624 915)
Second Respondent

PAUL BERMAN
Third Respondent

COREY JOHN SMITH
Fourth Respondent

JAY RUSSELL WILSON
Sixth Respondent

JUDGE:	GORDON J
DATE OF ORDER:	24 OCTOBER 2014
WHERE MADE:	SYDNEY

DEFINITIONS
In these Orders:
(a)       Act means the Competition and Consumer Act 2010 (Cth);
(b)       Berman means the Third Respondent;

(c)Exceptions means particular non exhaustive circumstances in which customers might be recruited by either Renegade or Speed-E-Gas on a basis other than price, being:

(i)where a customer cited poor service as the reason in deciding to change suppliers;

(ii)where a customer initiated contact with Renegade or Speed-E-Gas and was generally seeking quotes from the market in an effort to change supplier;

(iii)      where a customer was part of, or joined, a buying group;

(iv)where a customer’s business was acquired on the basis of an agreement to supply that was made in another State or anywhere outside of Sydney; or

(v)where a customer sought to consolidate their gas supply requirements and have all their gas products, including Forklift Gas, supplied by one supplier.

(d)      Forklift Gas means delivered liquid petroleum gas in cylinders for use in forklifts;
(e)       Relevant Period means the period between 24 August 2006 and June 2011;
(f)       Renegade means the First Respondent, which trades as “Supagas NSW”;

(g)Replacement Provision means a provision of the Understanding that, if contrary to the Stay Away Provision, one party supplied Forklift Gas to a customer(s) of the other party in Sydney, it would not be a breach of the Stay Away Provision for the second mentioned party to supply Forklift Gas limited to approximately the amount required to replace the volume or value lost to the first mentioned party;

(h)       Smith means the Fourth Respondent;

(i)        Speed-E-Gas means the Second Respondent;

(j)Stay Away Provision means a provision of the Understanding that, subject to the Exceptions, each party would not supply or seek to supply Forklift Gas to customers of the other in Sydney;

(k)Understanding means the understanding in place between Renegade and Speed-E-Gas containing the Stay Away Provision and the Replacement Provision relating to the supply in Sydney of Forklift Gas;

(l)        Wilson means the Sixth Respondent.

THE COURT ORDERS THAT:
FIRST RESPONDENT – RENEGADE
Declarations

1.        The Court declares that, during the Relevant Period, Renegade by:

1.1      its conduct of:

(a)       not approaching certain Forklift Gas customers in Sydney;

(b)not offering to supply or declining to supply Forklift Gas to certain customers in Sydney;

(c)making offers to supply Forklift Gas to certain customers in Sydney only at prices that Renegade knew were not likely to induce customers to change suppliers,

for the reason that those customers were customers of its competitor, Speed-E-Gas; and

1.2managing its response to breaches by Speed-E-Gas of the Stay Away Provision so that Renegade sought only to replace approximately the volume or value of Forklift Gas lost to Speed-E-Gas; and

1.3      communicating with Speed-E-Gas to the effect:

(a)that Speed-E-Gas should stay away from Renegade customers in Sydney;

(b)of inquiring as to why Speed-E-Gas had quoted, attempted to supply or commenced the supply of Forklift Gas to certain customers of Renegade in Sydney for the purpose of determining whether Speed-E-Gas’ supply or attempt to supply was consistent with the Understanding;

(c)of informing Speed-E-Gas why Renegade had quoted, attempted to supply or commenced the supply of Forklift Gas to certain customers of Speed-E-Gas in Sydney for the purpose of persuading Speed-E-Gas that the supply or attempt to supply was consistent with the Understanding,

gave effect to the Stay Away Provision and Replacement Provision both of which were provisions of the Understanding which had the purpose of restricting or limiting the supply of Forklift Gas to customers in Sydney, in contravention of s 45(2)(b)(i) of the Act.

2         The Court declares that, from 24 July 2009 to June 2011, Renegade by:

2.1      its conduct of:

(a)       not approaching certain Forklift Gas customers in Sydney;

(b)not offering to supply or declining to supply Forklift Gas to certain customers in Sydney;

(c)making offers to supply Forklift Gas to certain customers in Sydney only at prices that Renegade knew were not likely to induce customers to change suppliers,

for the reason that those customers were customers of its competitor, Speed-E-Gas; and

2.2managing its response to breaches by Speed-E-Gas of the Stay Away Provision so that Renegade sought only to replace approximately the volume or value of Forklift Gas lost to Speed-E-Gas; and

2.3      communicating with Speed-E-Gas to the effect:

(a)that Speed-E-Gas should stay away from Renegade customers in Sydney;

(b)of inquiring as to why Speed-E-Gas had quoted, attempted to supply or commenced the supply of Forklift Gas to certain customers of Renegade in Sydney for the purpose of determining whether Speed-E-Gas’ supply or attempt to supply was consistent with the Understanding;

(c)of informing Speed-E-Gas why Renegade had quoted, attempted to supply or commenced the supply of Forklift Gas to certain customers of Speed-E-Gas in Sydney for the purpose of persuading Speed-E-Gas that the supply or attempt to supply was consistent with the Understanding,

gave effect to the Stay Away Provision and Replacement Provision both of which were provisions of the Understanding which had the purpose of:

2.4directly or indirectly preventing, restricting or limiting the supply or likely supply of Forklift Gas to certain customers of Speed-E-Gas in Sydney, within the meaning of s 44ZZRD(3)(a)(iii) of the Act; and

2.5allocating between Speed-E-Gas and Renegade, customers in Sydney who had acquired or were likely to acquire Forklift Gas from Speed-E-Gas or Renegade, within the meaning of s 44ZZRD(3)(b)(i) of the Act,

in contravention of s 44ZZRK of the Act.

Pecuniary Penalty Order

3The Court orders that Renegade pay to the Commonwealth of Australia a pecuniary penalty in respect of the contraventions referred to in paragraphs 1 and 2 in the total amount of $4,800,000.

Injunction

4The Court orders that Renegade be restrained, for a period of 5 years from the date of these Orders, from:

4.1making any contract or arrangement or arriving at an understanding with one or more of its competitors for the supply of Forklift Gas to customers in Sydney containing a provision which:

(a)has the purpose of preventing, restricting or limiting the supply of Forklift Gas (or of preventing, restricting or limiting the supply of Forklift Gas in particular circumstances or under particular conditions) by all or any of the parties to that contract, arrangement or understanding, to customers in Sydney; or

(b)has the purpose of allocating between the parties to the contract, arrangement or understanding customers who had acquired or were likely to acquire Forklift Gas in Sydney; or

4.2      giving effect to such a provision,

unless:

4.3the conduct referred to in 4.1 and 4.2 is authorised under s 88 of the Act or any other Australian statute in accordance with or not a contravention by reason of s 51 of the Act;

4.4the contract, arrangement or understanding referred to in 4.1 is for the purpose of a joint venture which joint venture is carried on jointly by all parties in the contract, arrangement or understanding, within the meaning of s 44ZZRP of the Act; or

4.5that contract, arrangement or understanding is only between Renegade and a related body corporate.

Other Orders

5         The Court orders that Renegade:

5.1implement an updated compliance and education / training program to accord with the Compliance and Education / Training Program set out in Appendix A to these Orders:

(a)for the employees or other persons involved in its business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to the conduct declared by the Court in this proceeding to be in contravention of Part IV of the Act or any similar or related conduct; and

(b)revising the internal operations of its business which led to it engaging in the conduct declared by the Court in this proceeding to be in contravention of Part IV of the Act or any similar or related conduct;

5.2maintain and administer, at its own expense, the Compliance and Education / Training Program set out in Appendix A for a period of three years;

5.3provide, at its own expense, a copy of any documents to be provided to the Applicant pursuant to Appendix A.

6The Court orders that Renegade pay a contribution to the Applicant’s costs of and incidental to these proceedings, in the agreed amount of $400,000.

7The Court orders that the pecuniary penalty in paragraph 3 and the costs contribution in paragraph 6 are to be paid to the Commonwealth of Australia as follows:

7.1      $1.5 million within 60 days of the date of these Orders;
7.2      $925,000 within 13 months of the date for payment set out in paragraph 7.1;
7.3      $925,000 within 26 months of the date for payment set out in paragraph 7.1;

7.4$925,000 within 39 months of the date for payment set out in paragraph 7.1; and

7.5      $925,000 within 52 months of the date for payment set out in paragraph 7.1.

SECOND RESPONDENT – SPEED-E-GAS
Declarations

8         The Court declares that, during the Relevant Period, Speed-E-Gas by:

8.1      its conduct of:

(a)       not approaching certain Forklift Gas customers in Sydney;

(b)not offering to supply or declining to supply Forklift Gas to certain customers in Sydney;

(c)making offers to supply Forklift Gas to certain customers in Sydney only at prices that Speed-E-Gas knew were not likely to induce customers to change suppliers,

for the reason that those customers were customers of its competitor, Renegade; and

8.2managing its response to breaches by Renegade of the Stay Away Provision so that Speed-E-Gas sought only to replace approximately the volume or value of Forklift Gas lost to Renegade; and

8.3      communicating with Renegade to the effect:

(a)that Renegade should stay away from Speed-E-Gas customers in Sydney;

(b)of inquiring as to why Renegade had quoted, attempted to supply or commenced the supply of Forklift Gas to certain customers of Speed-E-Gas in Sydney for the purpose of determining whether Renegade’s supply or attempt to supply was consistent with the Understanding;

(c)of informing Renegade why Speed-E-Gas had quoted, attempted to supply or commenced the supply of Forklift Gas to certain customers of Renegade in Sydney for the purpose of persuading Renegade that the supply or attempt to supply was consistent with the Understanding,

gave effect to the Stay Away Provision and Replacement Provision both of which were provisions of the Understanding which had the purpose of restricting or limiting the supply of Forklift Gas to customers in Sydney, in contravention of s 45(2)(b)(i) of the Act.

9         The Court declares that, from 24 July 2009 to June 2011, Speed-E-Gas by:

9.1      its conduct of:

(a)       not approaching certain Forklift Gas customers in Sydney;

(b)not offering to supply or declining to supply Forklift Gas to certain customers in Sydney;

(c)making offers to supply Forklift Gas to certain customers in Sydney only at prices that Speed-E-Gas knew were not likely to induce customers to change suppliers,

for the reason that those customers were customers of Renegade; and

9.2managing its response to breaches by Renegade of the Stay Away Provision so that Speed-E-Gas sought only to replace approximately the volume or value of Forklift Gas lost to Renegade; and

9.3communicating with Renegade between 24 July 2009 and June 2011 to the effect:

(a)that Renegade should stay away from Speed-E-Gas customers in Sydney;

(b)of inquiring as to why Renegade had quoted, attempted to supply or commenced the supply of Forklift Gas to certain customers of Speed-E-Gas in Sydney for the purpose of determining whether Renegade’s supply or attempt to supply was consistent with the Understanding;

(c)of informing Renegade why Speed-E-Gas had quoted, attempted to supply or commenced the supply of Forklift Gas to certain customers of Renegade in Sydney for the purpose of persuading Renegade that the supply or attempt to supply was consistent with the Understanding,

gave effect to the Stay Away Provision and Replacement Provision both of which were provisions of the Understanding which had the purpose of:

9.4directly or indirectly preventing, restricting or limiting the supply or likely supply of Forklift Gas to certain customers of Renegade in Sydney, within the meaning of s 44ZZRD(3)(a)(iii) of the Act; and

9.5allocating between Speed-E-Gas and Renegade, customers who had acquired or were likely to acquire Forklift Gas from Speed-E-Gas or Renegade, within the meaning of s 44ZZRD(3)(b)(i) of the Act,

in contravention of s 44ZZRK of the Act.

Pecuniary Penalty Order

10The Court orders that Speed-E-Gas pay to the Commonwealth of Australia a pecuniary penalty in respect of the contraventions referred to in paragraphs 8 and 9 in the total amount of $3,100,000 within 30 days of the date of these Orders.

Injunction

11The Court orders that Speed-E-Gas be restrained, for a period of 5 years from the date of these Orders, from:

11.1making any contract or arrangement or arriving at an understanding with one or more of its competitors for the supply of Forklift Gas to customers in Sydney containing a provision which:

(a)has the purpose of preventing, restricting or limiting the supply of Forklift Gas (or of preventing, restricting or limiting the supply of Forklift Gas in particular circumstances or under particular conditions) by all or any of the parties to that contract, arrangement or understanding, to customers in Sydney; or

(b)has the purpose of allocating between the parties to the contract, arrangement or understanding customers who had acquired or were likely to acquire Forklift Gas in Sydney; or

11.2     giving effect to such a provision;

unless:

11.3the conduct referred to in 11.1 and 11.2 is authorised under s 88 of the Act or any other Australian statute in accordance with or not a contravention by reason of s 51 of the Act;

11.4the contract, arrangement or understanding referred to in 11.1 is for the purpose of a joint venture which joint venture is carried on jointly by all parties in the contract, arrangement or understanding, within the meaning of s 44ZZRP of the Act; or

11.5that contract, arrangement or understanding is only between Speed-E-Gas and a related body corporate.

Other Order

12The Court orders that Speed-E-Gas pay to the Commonwealth of Australia a contribution to the Applicant's costs of and incidental to these proceedings, in the agreed amount of $75,000, within 30 days of the date of these Orders.

THIRD RESPONDENT – BERMAN
Declaration

13The Court declares that Berman, having determined that, subject to the Exceptions, Renegade would adopt the business practice of implementing the Stay Away Provision, by:

13.1     not changing that business practice when he had the authority to do so; and by

13.2instructing Smith and other staff of Renegade to implement or adopt that business practice; and by

13.3authorising and instructing Smith to instruct other staff of Renegade to manage Renegade’s response to breaches by Speed-E-Gas of the Stay Away Provision by implementing the Replacement Provision; and by

13.4communicating from time to time with Mr Geoffrey Hobby who was the manager of Speed-E-Gas and Wilson to the effect that Speed-E-Gas should comply with the Stay Away Provision or concerning whether the Stay Away Provision applied to certain customers,

was directly or indirectly knowingly concerned in, or a party to, conduct by which Renegade gave effect to the Stay Away Provision and the Replacement Provision, both of which were provisions of the Understanding, in contravention of:

13.5 section 45(2)(b)(i) of the Act throughout the Relevant Period; and

13.6section 44ZZRK of the Act throughout the period from 24 July 2009 to June 2011 (because the Stay Away Provision and Replacement Provision was each a cartel provision within the meaning of ss 44ZZRD(3)(a)(iii) and 44ZZRD(3)(b)(i) of the Act).

Pecuniary Penalty Order

14The Court orders that Berman pay to the Commonwealth of Australia a pecuniary penalty in respect of the contraventions referred to in paragraph 13 above in the total amount of $250,000, to be paid within 30 days of the date of these Orders.

Injunction

15The Court orders that Berman be restrained for a period of five years, by himself, his servants or agents or otherwise howsoever, from being in any way, directly or indirectly, knowingly concerned in, or party to, any conduct of a corporation which supplies Forklift Gas in making, or giving effect to, any contract, arrangement or understanding with any other supplier of Forklift Gas containing a provision which:

15.1has the purpose of preventing, restricting or limiting the supply of Forklift Gas (or of preventing, restricting or limiting the supply of Forklift Gas in particular circumstances or under particular conditions) by all or any of the parties to that contract, arrangement or understanding to customers in Sydney; or

15.2has the purpose of allocating between any of those parties customers who had acquired or were likely to acquire Forklift Gas in Sydney,

unless:

15.3when the said contract, arrangement or understanding was made it stipulated that the provision would not come into force unless the Applicant granted an authorisation to give effect to the provision; or

15.4the provision was permitted because of the operation of an authorisation, notification or collective bargaining notice under any of ss 88, 93 or 93AD of the Act; or

15.5each of the corporations which was a party to that contract, arrangement or understanding was a related body corporate of the other corporation or corporations which were also such a party; or

15.6the provision was for the purpose of a joint venture for the production and / or supply of goods or services; or

15.7the provision was for the joint advertising of the price for the resupply of goods or services collectively acquired by the parties to that contract, arrangement or understanding.

Other Orders

16The Court orders, pursuant to s 86E(1) of the Act, that Berman be disqualified from managing corporations for a period of three years from the date of these Orders.

17The Court orders that within six months of these Orders being made and again at least once per year for the following five years, Berman will procure and attend practical trade practices training administered by a qualified compliance professional or legal practitioner with expertise in competition law, which training is to focus, in particular on the responsibilities and obligations imposed by and the consequences of contravening, Divisions 1 and 2 of Part IV of the Act and be tailored to the types of trade practices issues that may arise in the market for the supply of LPG gas in Sydney.

18The Court orders that Berman take all reasonable steps to ensure that the qualified compliance professional or legal practitioner referred to in paragraph 17 above provides confirmation in writing to the Applicant of Berman’s participation in this training within one month of the conclusion of the training each year.

19The Court orders that Berman pay to the Commonwealth of Australia a contribution to the Applicant’s costs of and incidental to the proceedings, in the agreed amount of $100,000, within 30 days of the date of these Orders.

FOURTH RESPONDENT – SMITH
Declaration

20       The Court declares that Smith by:

20.1implementing and enforcing the business practice, subject to the Exceptions, of Renegade implementing the Stay Away Provision and by instructing other Renegade staff to adopt that business practice; and by

20.2managing Renegade’s response to breaches by Speed-E-Gas of the Stay Away Provision by implementing the Replacement Provision,

was directly or indirectly knowingly concerned in or a party to conduct by which Renegade gave effect to the Stay Away Provision and Replacement Provision, both of which were provisions of the Understanding, in contravention of:

20.3 section 45(2)(b)(i) of the Act throughout the Relevant Period; and

20.4section 44ZZRK of the Act throughout the period from 24 July 2009 to June 2011 (because the Stay Away Provision and Replacement Provision was each a cartel provision within the meaning of ss 44ZZRD(3)(a)(iii) and 44ZZRD(3)(b)(i) of the Act).

Pecuniary Penalty Order

21The Court orders that Smith pay to the Commonwealth of Australia a pecuniary penalty in respect of the contraventions referred to in paragraph 20 above in the total amount of $100,000, to be paid within 30 days of the date of these Orders.

Injunction

22The Court orders that Smith be restrained for a period of five years, by himself, his servants or agents or otherwise howsoever, from being in any way, directly or indirectly, knowingly concerned in, or party to, any conduct of a corporation which supplies Forklift Gas in making, or giving effect to, any contract, arrangement or understanding with any other supplier of Forklift Gas containing a provision which:

22.1has the purpose of preventing, restricting or limiting the supply of Forklift Gas (or of preventing, restricting or limiting the supply of Forklift Gas in particular circumstances or under particular conditions) by all or any of the parties to that contract, arrangement or understanding to customers in Sydney; or

22.2has the purpose of allocating between any of those parties customers who had acquired or were likely to acquire Forklift Gas in Sydney,

unless:

22.3when the said contract, arrangement or understanding was made it stipulated that the provision would not come into force unless the Applicant granted an authorisation to give effect to the provision; or

22.4the provision was permitted because of the operation of an authorisation, notification or collective bargaining notice under any of ss 88, 93 or 93AD of the Act; or

22.5each of the corporations which was a party to that contract, arrangement or understanding was a related body corporate of the other corporation or corporations which were also such a party; or

22.6the provision was for the purpose of a joint venture for the production and / or supply of goods or services; or

22.7the provision was for the joint advertising of the price for the resupply of goods or services collectively acquired by the parties to that contract, arrangement or understanding.

Other Order

23The Court orders that Smith pay to the Commonwealth of Australia a contribution to the Applicant’s costs of and incidental to the proceedings, in the agreed amount of $25,000, within 30 days of the date of these Orders.

SIXTH RESPONDENT – WILSON
Declaration

24The Court declares that Wilson, having determined with Mr Geoffrey Hobby who was the manager of Speed-E-Gas, that subject to the Exceptions, Speed-E-Gas would adopt the business practice of implementing the Stay Away Provision, by:

24.1     not changing that business practice when he had the capacity to do so; and by

24.2instructing other staff of Speed-E-Gas to implement that business practice; and by

24.3instructing other staff of Speed-E-Gas to implement a practice of dealing with prospective customers who were Renegade customers in Sydney by:

(a)       not approaching the customer; or

(b)not offering to supply or declining to supply Forklift Gas to the customer; or

(c)restricting any offer to supply Forklift Gas to the customer to a price that Speed-E-Gas knew was not likely to induce the customer to change suppliers; and by

24.4managing Speed-E-Gas’ response to breaches by Renegade of the Stay Away Provision by implementing the Replacement Provision; and by

24.5communicating from time to time with Berman and Smith to the effect that Renegade should comply with the Stay Away Provision or concerning whether the Stay Away Provision applied to certain customers,

was directly or indirectly knowingly concerned in or a party to conduct by which Speed-E-Gas gave effect to the Stay Away Provision and Replacement Provision, both of which were provisions of the Understanding, in contravention of:

24.6 section 45(2)(b)(i) of the Act throughout the Relevant Period; and

24.7section 44ZZRK of the Act throughout the period from 24 July 2009 to June 2011 (because the Stay Away Provision and Replacement Provision was each a cartel provision within the meaning of ss 44ZZRD(3)(a)(iii) and 44ZZRD(3)(b)(i) of the Act).

Pecuniary Penalty Order

25The Court orders that Wilson pay to the Commonwealth of Australia a pecuniary penalty in respect of the contraventions referred to in paragraph 24 above in the total amount of $50,000, to be paid as follows:

25.1     $25,000 within 30 days of these Orders;

25.2Three further payments of $8,333.33.  The first payment is to be paid within one year from the date of these Orders, the second payment is to be paid within two years from the date of these Orders and the third payment is to be paid within three years from the date of these Orders; and

25.3If any amount is not paid by its due date, all amounts outstanding are to be paid within six months of that failure to pay.

Injunction

26The Court orders that Wilson be restrained for a period of five years, by himself, his servants or agents or otherwise howsoever, from being in any way, directly or indirectly, knowingly concerned in, or party to, any conduct of a corporation which supplies Forklift Gas in making, or giving effect to, any contract, arrangement or understanding with any other supplier of Forklift Gas containing a provision which:

26.1has the purpose of preventing, restricting or limiting the supply of Forklift Gas (or of preventing, restricting or limiting the supply of Forklift Gas in particular circumstances or under particular conditions) by all or any of the parties to that contract, arrangement or understanding to customers in Sydney; or

26.2has the purpose of allocating between any of those parties customers who had acquired or were likely to acquire Forklift Gas in Sydney,

unless:

26.3when the said contract, arrangement or understanding was made it stipulated that the provision would not come into force unless the Applicant granted an authorisation to give effect to the provision; or

26.4the provision was permitted because of the operation of an authorisation, notification or collective bargaining notice under any of ss 88, 93 or 93AD of the Act; or

26.5each of the corporations which was a party to that contract, arrangement or understanding was a related body corporate of the other corporation or corporations which were also such a party; or

26.6the provision was for the purpose of a joint venture for the production and / or supply of goods or services; or

26.7the provision was for the joint advertising of the price for the resupply of goods or services collectively acquired by the parties to that contract, arrangement or understanding.

Other Order

27The Court orders that Wilson and the Applicant bear their own costs of the proceedings insofar as they relate to Wilson.

GENERAL

28       The proceedings against the Respondents otherwise be dismissed.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).

APPENDIX A

COMPLIANCE AND EDUCATION / TRAINING PROGRAM

Interpretation

1.In this Appendix:

1.1.Act means the Competition and Consumer Act 2010 (Cth);

1.2.Commission means the Australian Competition and Consumer Commission;

1.3.Compliance Advisor means the person defined in paragraph 6 below;

1.4.Compliance Officer means the person appointed under paragraphs 2 or 3 below;

1.5.Compliance Policy means the report defined in paragraph 8 below;

1.6.Compliance Program means the Trade Practices Compliance and Education / Training Program in this Appendix;

1.7.Compliance Program Review Report is the report defined in paragraph 19 below;

1.8.Compliance Trainer is defined in paragraph 14 below;

1.9.Contravening Conduct means the conduct declared by the Federal Court of Australia in proceeding NSD 1239 of 2012 to be in contravention of Part IV of the Act or any similar or related conduct;

1.10.External Reviews means the reviews required by paragraph 18 below;

1.11.Order of the Court is the order of the Federal Court of Australia made in proceeding NSD 1239 of 2012 to which this Appendix A is attached;

1.12.Relevant Provisions means ss 44ZZRK and 45 of the Act, which were contravened by the Contravening Conduct and Part IV of the Act which deals with similar or related conduct;

1.13.Renegade means the First Respondent in proceeding NSD 1239 of 2012;

1.14.Respondent’s Program means the steps taken by Renegade to comply with the Orders of the Court;

1.15.Reviewer is defined in paragraph 18.2 below;

1.16.Risk Assessment means the assessment required by paragraph 6 below;

1.17.Risk Assessment Report means the report required by paragraph 7 below; and

1.18.Training means the training required by paragraph 13 below.

Compliance Officer

2.Renegade must, within one month of the Order of the Court, appoint a Director or a Senior Manager with suitable qualifications or experience in corporate compliance as Compliance Officer with responsibility for ensuring that the Compliance Program is effectively established, maintained and administered in accordance with the Order of the Court.

3.After the appointment of the Compliance Officer in accordance with paragraph 2, Renegade must take all reasonable steps to ensure that, for the duration of the Order of the Court, there is a Director or a Senior Manager with suitable qualifications or experience in corporate compliance appointed as Compliance Officer with responsibility for ensuring that the Compliance Program is effectively established, maintained and administered in accordance with the Order of the Court.

4.Renegade must take all reasonable steps to ensure that for the duration of the Order of the Court the Compliance Officer discharges his or her responsibility of ensuring that the Compliance Program is effectively established, maintained and administered in accordance with the Order of the Court.

5.Renegade must take all reasonable steps to ensure that the Compliance Officer reports in writing to Renegade’s board of directors every six months with respect to the on-going maintenance and administration of the Compliance Program including, in particular, whether the Respondent’s Program is effectively:

2.1.ensuring an awareness by the employees and other persons involved in the respondent’s business of their responsibilities and obligations in relation to the Relevant Provisions; and

2.2.revising the internal operations of Renegade’s business which led to the respondent engaging in the Contravening Conduct.

Risk Assessment

6.Renegade must, within one month of the Order of the Court, appoint a qualified, internal or external, compliance professional with expertise in trade practices issues (Compliance Advisor) to conduct a risk assessment to:

6.1.identify the areas of Renegade’s business where it is at risk of contravening the Relevant Provisions;

6.2.assess the likelihood of any such contravention occurring;

6.3.identify where there are deficiencies in Renegade’s procedures for managing any such risk;

6.4.make findings concerning sub-paragraphs 6.1 to 6.3 above; and

6.5.make recommendations for action having regard to sub-paragraphs 6.1 to 6.4 above (Risk Assessment).

7.Renegade must instruct the Compliance Advisor to set out, and must take all reasonable steps to ensure that the Compliance Advisor sets out, the findings and recommendations of the Risk Assessment in a written report (Risk Assessment Report), to be provided to Renegade’s board of directors within two months of his or her appointment.

Compliance Policy

8.Renegade must, within 30 days of the Order of the Court, establish a policy (Compliance Policy) which is communicated in writing to all employees or other persons involved in Renegade’s business regarding trade practices compliance, which must include:

8.1.a statement of commitment by Renegade to comply with the Relevant Provisions;

8.2.a direction to all employees or other persons involved in Renegade’s business to report any compliance related issues and trade practices compliance concerns to the Compliance Officer;

8.3.a statement guaranteeing that employees or other persons involved in Renegade’s business making a complaint or report in relation to Renegade’s compliance with the Relevant Provisions will not be prosecuted or disadvantaged in any way by reason of their complaint or report and that their complaint or report will be kept confidential and secure; and

8.4.a statement that Renegade will take disciplinary action against any persons who are knowingly or recklessly concerned in a contravention of the Relevant Provisions and will not indemnify them.

9.Renegade must take all reasonable steps to ensure that the Compliance Program is maintained and administered in a manner that is consistent with the Compliance Policy for the duration of the Order of the Court.

10.Renegade will provide a copy of the Compliance Policy to all new staff at the commencement of their employment with Renegade.

Complaints Handling

11.Renegade must establish, maintain and administer a trade practices complaints handling system.

12.Renegade must take all steps that are necessary to ensure that the trade practices complaints handling system is in accordance with AS/ISO 10002:2006 Customer satisfaction - Guidelines for complaints handling in organizations, though tailored to its own circumstances.

Training

13.Renegade must take all reasonable steps to ensure that all directors, officers, employees, representatives and agents of Renegade, whose duties could result in them being concerned with conduct that may contravene the Relevant Provisions, receive practical trade practices training (Training) no less than once during each 12 month period over which the Compliance Program is in operation.

14.The Training must be conducted by either a suitably qualified compliance professional or legal practitioner with expertise in trade practices law (Compliance Trainer).

15.Renegade must instruct the Compliance Trainer to design the Training, and must take all reasonable steps to ensure that the Training is designed, to ensure that the persons at the Training are made aware of:

15.1.the responsibilities and obligations in relation to the Relevant Provisions;

15.2.the potential consequences of contravening the Relevant Provisions;

15.3.the areas of Renegade’s business where it is at risk of contravening the Relevant Provisions, as identified in the Risk Assessment Report;

15.4.the content of the Compliance Policy; and

15.5.the content of the Compliance Program.

16.Renegade, for the purposes of conducting the Training, must provide the Compliance Trainer with a copy of:

16.1.the Order of the Court;

16.2.the Compliance Policy; and

16.3.the Risk Assessment Report.

17.Renegade must take all reasonable steps to ensure that an awareness of the Compliance Program, the Compliance Policy and the complaints handling system forms part of the induction of all new directors, officers, employees, representatives and agents, whose duties could result in them being concerned with conduct that may contravene the Relevant Provisions.

External Review

18.Renegade must take all reasonable steps to ensure that annual reviews of Renegade’s compliance with the Order of the Court are carried out in accordance with sub-paragraphs 18.1 to 18.4 below (External Reviews):

18.1.Scope of the External Reviews – The External Reviews are to ascertain whether the Respondent’s Program:

18.1.1.has made the employees or other persons involved in Renegade’s business aware of their responsibilities and obligations in relation to the Relevant Provisions;

18.1.2.has revised the internal operations of Renegade’s business in relation to the Relevant Provisions and the circumstances that led to the Contravening Conduct;

18.1.3.effectively maintains and administers the Compliance Program.

18.2.Independence of Reviewer – Renegade must take all reasonable steps to ensure that all External Reviews are carried out by a suitably qualified, independent compliance professional with expertise in competition law (Reviewer).  The Reviewer will qualify as independent on the basis that he or she:

18.2.1.is not a present or past director, employee or officer of Renegade;

18.2.2.has no significant shareholding or other interests in Renegade;

18.2.3.has not acted for or consulted to, and does not act for or consult to, Renegade in any matters involving alleged contraventions of Australian competition or consumer protection legislation;

18.2.4.has not acted for or consulted, and does not act for or consult to, Renegade or provide other services in relation to this Compliance Program, other than as the Reviewer in a previous year; and

18.2.5.has no conflict of interest in carrying out the Reviews.

18.3.Evidence – Renegade must take all reasonable steps to ensure that in the conduct of the External Reviews the Reviewer has access to all relevant sources of information in Renegade’s possession or control, including access to:

18.3.1.any officers, employees, representatives or agents of Renegade;

18.3.2.any relevant records of Renegade, including its complaints register/reports and any documents relevant to its training or induction program; and

18.3.3.any documents created by Renegade’s consultants or legal advisers for use in relation to the Respondent’s Program.

18.4.Timing – Renegade must take all reasonable steps to ensure that the first External Review is completed within one year of the Order of the Court and that each subsequent External Review is completed within one year thereafter, save that all steps to be taken by Renegade in relation to the final External Review are to be completed one month prior to the expiration of the Order of the Court.

19.Renegade must instruct the Reviewer to set out, and must take all reasonable steps to ensure that the Reviewer sets out, the findings of each of the External Reviews in a written report (Compliance Program Review Report) which addresses each of the following:

19.1.details of the evidence gathered and examined during the External Review;

19.2.the name and relevant experience of the person appointed as the Compliance Officer;

19.3.if, and to what extent, the Respondent’s Program includes all the elements and requirements of the Compliance Program;

19.4.if, and to what extent, the Respondent’s Program adequately covers the areas identified in the initial Risk Assessment; and

19.5.recommendations that the Reviewer considers are reasonably necessary to ensure that the Respondent’s Program effectively maintains and administers the Compliance Program.

20.Renegade must instruct the Reviewer to complete and provide the Compliance Program Review Report to it, and must take all reasonable steps to ensure that the Compliance Program Review Report is completed and provided to it, within one month of each Review.

21.Renegade must retain each Compliance Program Review Report.

22.Within 30 days of the receipt of each Compliance Program Review Report, Renegade’s board of directors must hold a meeting to consider:

22.1.the Compliance Program Review Report;

22.2.whether to make any changes to the Respondent’s Program to more effectively implement the Compliance Program for the purposes of:

22.2.1.ensuring an awareness for the employees or other persons involved in Renegade’s business of their responsibilities and obligations in relation to the Relevant Provisions; and

22.2.2.revising the internal operations of Renegade’s business in relation to the circumstances that led to the Contravening Conduct;

22.3.any recommendation of the Commission for the purposes of sub-paragraph 22.2 above.

23.At the meeting referred to in paragraph 22 above held by Renegade, Renegade’s board of directors must consider:

23.1.the Compliance Program Review Report;

23.2.whether to make any changes to the Respondent’s Program to more effectively implement the Compliance Program for the purposes of:

23.2.1.ensuring an awareness for the employees or other persons involved in Renegade’s business of their responsibilities and obligations in relation to the Relevant Provisions; and

23.2.2.revising the internal operations of Renegade’s business in relation to the circumstances that led to the Contravening Conduct;

23.3.any recommendation of the Commission for the purposes of sub-paragraph 23.2 above.

24.Within 14 days of holding the meeting referred to in paragraph 23 above, Renegade must advise the Commission in writing of:

24.1.details of when the meeting was held and who was present;

24.2.the outcome of the meeting, including:

24.2.1.what, if any, changes Renegade decided to make to the Respondent’s Program to more effectively implement the Compliance Program and details of the proposed implementation of any changes; and

24.2.2.the decisions made by Renegade about each of the recommendations that had been made by the Commission (if any).

25.Within 14 days of holding a meeting referred to in paragraph 23 above at which Renegade decides to make changes to the Respondent’s Program it must take all reasonable steps to communicate those changes to all employees or other persons involved in Renegade’s business.

Supply of Documents to the Commission

26.Renegade must within 14 months of the Order of the Court, cause to be produced and provided to the Commission copies of each of the following documents:

26.1.documents evidencing the appointment of the Compliance Officer and Compliance Adviser;

26.2.the Risk Assessment Report;

26.3.the Compliance Policy and the documents evidencing its implementation; and

26.4.documents evidencing the provision of Training, including all materials used in the Training.

27.Renegade must provide a copy of each Compliance Program Review Report to the Commission within 14 days of its receipt from the Reviewer.

28.If requested in writing by the Commission, Renegade must, at its own expense, provide copies of documents and information constituting or evidencing compliance or non-compliance with the Orders of the Court.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1239 of 2012

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant

AND:

RENEGADE GAS PTY LTD (TRADING AS SUPAGAS NSW) (ACN 074 008 496)
First Respondent

SPEED-E-GAS (NSW) PTY LTD (ACN 064 624 915)
Second Respondent

PAUL BERMAN
Third Respondent

COREY JOHN SMITH
Fourth Respondent

JAY RUSSELL WILSON
Sixth Respondent

JUDGE:	GORDON J
DATE:	24 OCTOBER 2014
PLACE:	SYDNEY

REASONS FOR JUDGMENT

A.       INTRODUCTION

1. These proceedings relate to the supply of delivered liquid petroleum gas (LPG) cylinders for use in forklifts (Forklift Gas) in Sydney between 24 August 2006 and June 2011 (the Relevant Period).  From the early 2000’s to June 2011, the First Respondent (Renegade) and the Second Respondent (Speed-E-Gas) competed to supply Forklift Gas in Sydney.  During the Relevant Period, an understanding between Renegade and Speed-E-Gas existed in respect of the supply of Forklift Gas in Sydney that neither would try to secure the other business’ Forklift Gas customers in Sydney and, if one did, the other business would retaliate for the customers it lost.  During the Relevant Period, Speed-E-Gas and Renegade gave effect to that understanding.  That understanding was in contravention of the Competition and Consumer Act 2010 (Cth) (the Act). The Respondents’ conduct contravened the Act through a deliberate, largely covert, long standing understanding which had the potential to adversely affect a high proportion of manufacturing and distribution businesses across Sydney and which likely had an adverse effect on those businesses that were denied the opportunity of receiving a price competitive offer from either Renegade or Speed-E-Gas during the Relevant Period.

2. The Applicant (ACCC) seeks declarations, injunctions, pecuniary penalties and other relief against Renegade, Speed-E-Gas, the Third Respondent (Mr Berman), the Fourth Respondent (Mr Smith) and the Sixth Respondent (Mr Wilson) for contraventions of the Act. Mr Berman is a shareholder of Renegade and, until recently, was its managing director. Mr Smith was, and remains, employed by Renegade as its Sydney Branch Manager. Mr Smith reported to Mr Berman. Mr Wilson was Speed-E-Gas’ Sales Manager. He is no longer employed by Speed-E-Gas. Each respondent has made certain admissions. It will be necessary to consider those admissions later in these reasons for judgment.

3. These reasons for judgment will consider the factual background, the applicable principles and then turn to consider the individual circumstances (including the relief sought) against each respondent.

   B.       FACTS

4. For the purposes of this proceeding only, various statements of agreed facts between the ACCC and the respondents were filed within the meaning of s 191 of the Evidence Act 1995 (Cth). There was an overarching statement of agreed facts between the ACCC, Renegade, Mr Berman, Mr Smith and Mr Wilson. There was a separate statement of agreed facts between the ACCC and Speed-E-Gas. There was also a supplementary statement of agreed facts between the ACCC and each of Renegade, Mr Berman, Mr Smith and Mr Wilson. Mr Berman also tendered an extract dated 29 September 2014 from the Australian Securities and Investments Commission database for Renegade. Finally, Mr Smith filed an affidavit and tendered four character references. Mr Smith was not cross-examined. A joint submission was filed by the ACCC, Renegade, Mr Berman, Mr Smith and Mr Wilson. A separate joint submission was filed by the ACCC and Speed-E-Gas. The facts recorded in these documents were the entirety of the facts considered by the Court.

5. The following factual summary has been extracted from those documents.  Unless otherwise specified, the facts are admissions against each respondent.

   1.        Forklift Gas

6. LPG is a fuel used to operate forklifts.  Forklifts powered by LPG, unlike other forklifts, can be operated in both indoor warehouse environments and outdoor environments.  LPG for forklifts is supplied in gas cylinders which have a liquid withdrawal mechanism.  The most common system for supply of LPG for forklifts is cylinder exchange, whereby the LPG supplier periodically attends the customer’s premises and exchanges full LPG cylinders for empty cylinders.  The empty cylinders are then refilled and redistributed.  This supply of LPG for forklifts by cylinder exchange is what has been defined earlier as Forklift Gas.  Renegade sells Forklift Gas in 15kg cylinders, and Speed-E-Gas sells Forklift Gas in both 15kg and 18kg cylinders.  Renegade and Speed-E-Gas also sell LPG for domestic use (primarily for heating and cooking) in 9kg and 45kg cylinders.

7. Suppliers of Forklift Gas in Sydney have always had the practice of retaining ownership of the cylinders in which they supply LPG, collecting empty LPG cylinders when delivering full cylinders of LPG and only refilling cylinders owned by it.  That has meant there has been an industry-wide practice of marking of cylinders.  Renegade marked cylinders it owned with red colouring on the top or bottom of the cylinders, while Speed-E-Gas marked its cylinders with green colouring on the top or bottom of the cylinders.  Other suppliers of Forklift Gas each used their own unique cylinder markings.  Generally customers who had obtained Forklift Gas from a particular supplier would continue to obtain Forklift Gas from that supplier unless and until the customer decided to change to another supplier.

8. It is common for customers of Forklift Gas to store the cylinders in an outside area on their premises.  Full cylinders of LPG are often stored outdoors at various warehouses, factories and workshops with each supplier’s cylinders bearing unique colouring.  That meant that the identity of the customer’s supplier of Forklift Gas was usually apparent to sales representatives of competitors of that supplier who were able to observe the cylinders stored at the customer’s premises, or in use on a forklift.

9. Further, when a customer changed supplier of Forklift Gas, the identity of the outgoing supplier was apparent to the incoming supplier from the marking of the empty cylinders which were present at the customer’s premises at the time of change of supplier.  Speed-E-Gas commenced supplying LPG in Sydney in about 1993 or 1994.  Renegade commenced doing so in about 1999.  A core part of each of their businesses was the supply of Forklift Gas.  They were not the only suppliers of Forklift Gas.  Other substantial suppliers were BOC, Elgas and Kleenheat.  BOC, Elgas and Kleenheat were active in selling in Sydney during the Relevant Period.  During this period, both of Renegade and Speed-E-Gas won customers from, and lost customers to, each of BOC, Elgas and Kleenheat.

   2.        Managers of Renegade and Speed-E-Gas

   Renegade

10. Mr Berman has been employed by Renegade since September 2000 and has been a director of Renegade since July 2001.  He held the title of Managing Director from January 2004.  Mr Berman resigned as a director on 23 September 2014.  Mr Smith has also been employed by Renegade since 2000.  Mr Smith had supervisory responsibility for the sales functions in Sydney at all times.  Mr Smith reported directly to Mr Berman throughout the Relevant Period.

    Speed-E-Gas

11. Mr Geoffrey Hobby (Mr Hobby) was employed by Speed-E-Gas or an associated company from 1992 until December 2011.  In 2006, Speed-E-Gas was purchased by Origin Energy LPG Limited, a subsidiary of the publicly listed Origin Energy Limited (Origin).  From that time, Mr Hobby was responsible for the management of Speed-E-Gas’ business until he was stood down from his duties in July 2011.  In December 2011, Mr Hobby ceased to be employed by Origin.  Mr Hobby recently died.

12. Mr Wilson was employed by Speed-E-Gas as a Sales Manager from the mid-1990s until February 2012.  Mr Wilson managed the sales function of Speed-E-Gas until he was stood down from the position on 15 July 2011, as a result of the ACCC’s investigations.  His employment was terminated on 24 February 2012.  From the time Mr Wilson commenced employment with Speed-E-Gas until he was stood down, he reported to and was subject to the direction of Mr Hobby.

    3.        Renegade and Speed-E-Gas operations

13. Renegade and Speed-E-Gas were close competitors in the supply of Forklift Gas in Sydney.  Each promised customers “next day delivery”.  Each operated from a single refilling depot in Sydney’s western suburbs:  Renegade from Wetherill Park and Speed-E-Gas from Minto.  Each used “cold calling” as a primary means for marketing of their Forklift Gas.  Sales representatives engaged in cold calling would visit business premises where it would ordinarily be apparent that LPG was being used to fuel forklifts – because the forklifts were visible or the LPG cylinders were visible. 

1. Each generally offered discounted prices in order to win the business of potential Forklift Gas customers.  Where discounted pricing was offered, both Renegade and Speed-E-Gas were usually prepared to offer prices of about $21 per cylinder to win a customer.  Where Speed-E-Gas sales representatives sought to offer pricing below that, sales representatives were required to speak to Mr Wilson.  Occasionally during price wars, Speed-E-Gas would quote as low as $18 per cylinder to win or retain an account.  It was rare for Speed-E-Gas to quote such low prices outside of price war periods because this pricing was unsustainable.

2. Renegade’s position was that on those occasions when Renegade or Speed-E-Gas offered discounted prices to win the business of a customer of the other, the customer typically obtained a price reduction of between $1 and $18 per cylinder or between 2% and 50%, relative to the price being paid before the discount offer was made.  The reduced price was, in such cases, given either by the incoming supplier (if it won the business) or by the original supplier (reducing its price to retain the business).  When a discounted price was offered by Renegade or Speed-E-Gas to a customer of the other, the customer who was the subject of such competition typically obtained a discount in the order of $7 or 20% (the average effect of competition relative to original price).

3. This paragraph and the following paragraph are only relevant to one of the corporate respondents.  The system of increasing prices adopted by Renegade and Speed-E-Gas was different.  Renegade regularly increased its prices for all, or almost all, of its LPG customers in line with increases in a commonly accepted index of LPG prices known as the Saudi Gate Price.  Those increases occurred as frequently as monthly when the Saudi Gate Price was rising, but only on one occasion when the Saudi Gate Price was not rising.  The Saudi Gate Price fluctuated both up and down from time to time.  Except for high volume customers, Renegade did not generally reduce its prices when the Saudi Gate Price reduced.  As a result, over time the margin earned by Renegade from each customer would usually increase.

4. Speed-E-Gas increased its list prices from time to time, usually in response to increases in the Saudi Gate Price.  Increases in list prices were calculated so that increases in the cost of LPG and Speed-E-Gas’ own operating costs were accommodated, so that even with negotiated discounts to customers, it was intended that Speed-E-Gas would be able to earn a profit on sales.

5. During the Relevant Period, Speed-E-Gas’ position was that Renegade and Speed-E-Gas had the two largest volumes of sales of Forklift Gas in Sydney.  Renegade’s position was that between them they supplied between 50% to 70% of Forklift Gas in Sydney and that Renegade supplied 20% to 30% of that market.  These positions are not inconsistent.

6. Renegade and Speed-E-Gas were able to achieve commercial synergies by selling Forklift Gas and 45kg cylinders together, as follows:

   1.The LPG is the same in each cylinder type and is sourced from the same location;

   2.Greater volumes of LPG purchased lead to cheaper prices per tonne;

   3.As the infrastructure required to fill cylinders is the same regardless of cylinder size, as more cylinders are filled and sold (regardless of size), the use of the infrastructure becomes more cost effective; and

   4.With a larger potential customer base, there is greater potential to make additional sales, resulting in delivery synergies as the distribution method for each size of cylinder is the same.  With more customers, there are better opportunities to organise distribution runs so as to minimise delivery costs.

   4.        Formation of the Understanding

7. Shortly after Renegade started operating in Sydney, Mr Wilson initiated contact with Mr Berman.  From that time Mr Wilson, acting subject to Mr Hobby’s authority and direction, communicated with Mr Berman and Mr Smith.  Discussions between them developed over time until they were in regular communications, including in person, by telephone, text message and occasionally email.  Those communications were usually about individual customers and directed to dissuading the other party from making or continuing with a competitive approach to a customer, or, seeking to explain why a customer had been “poached” to dissuading the competitor from seeking to poach a further customer to replace the lost business.  Those communications developed into an understanding between Mr Wilson and Mr Berman that Renegade and Speed-E-Gas would avoid approaching each other’s customers.

8. An example occurred in May 2003 when Mr Wilson sent an email to Mr Berman in which he referred to a customer which Speed-E-Gas had recently lost to Renegade.  Mr Wilson said:

   ... I visited our client seeking an explanation for their decision to change suppliers and their response was as I had expected that [Renegade] had pursued them relentlessly for the past few weeks masquerading behind [Mr Smith’s] initial phone call.

   Throughout our association I have adhered to our mutual agreement with very few exceptions the same however can not be said for your company.  As you would expect retaliatory action is imminent given the circumstances behind this incident and furthermore please don’t fall under the misapprehension that one here and there wont (sic) matter, it will.  Like you, we too miss out on business opportunities because of active competition between [Renegade] and Speed-E-Gas.  You too have customers paying reasonable prices and your decision to poach Speed-E-Gas will affect this greatly.

9. As noted above, the conduct in issue in the proceedings is limited to conduct during the Relevant Period.  The end of the Relevant Period is when the ACCC executed search warrants at Renegade’s and Speed-E-Gas’ premises.  It was admitted on the pleadings, and was an agreed fact, that by 23 August 2006 there was an understanding (Understanding) in place between Renegade and Speed-E-Gas containing the Stay Away Provision and the Replacement Provision relating to the supply of Forklift Gas in Sydney as described below. 

10. The Stay Away Provision was a provision that, subject to Exceptions (described in [25] below), each party would not supply or seek to supply Forklift Gas to customers of the other in Sydney.  The Replacement Provision was a provision that, if contrary to the Stay Away Provision, one party supplied Forklift Gas to a customer(s) of the other party in Sydney, it would not be a breach of the Stay Away Provision for the second mentioned party to supply Forklift Gas limited to approximately the amount required to replace the volume or value lost to the first mentioned party. 

11. The Understanding was formed before the Relevant Period.  The subject matter of these proceedings is the conduct of each of the respondents in giving effect to that Understanding during the Relevant Period. 

12. The Exceptions to the Understanding are also admitted on the pleadings and are the subject of agreed facts.  They were, in essence, those circumstances in which customers might be recruited by either Renegade or Speed-E-Gas on a basis other than price, being:

    1.Where a customer cited poor service as the reason in deciding to change suppliers;

    2.Where a customer initiated contact with Renegade or Speed-E-Gas, and was generally seeking quotes from the market in an effort to change supplier;

    3.Where a customer was part of, or joined, a buying group;

    4.Where a customer’s business was acquired on the basis of an agreement to supply that was made in another State or anywhere outside of Sydney; or

    5.Where a customer sought to consolidate their gas supply requirements and have all their gas products, including Forklift Gas, supplied by one supplier.

    5.        Communicating to implement the Understanding

13. Throughout the Relevant Period, Mr Berman had principal responsibility for giving effect to the Understanding on behalf of Renegade by taking responsibility for the majority of communications with Speed-E-Gas.   

14. From 2006 to late 2007, Mr Wilson was the person directly responsible for implementation of the Understanding at Speed-E-Gas, though at all times he had the full authority of Mr Hobby who was kept informed by Mr Wilson of the Understanding and its day to day implementation.  In late 2007, Mr Hobby assumed direct responsibility for communications with Mr Berman for the purpose of implementing the Understanding.

15. Implementation of the Understanding was managed through communication between the competitors about individual customers.  Those communications between Mr Berman and Mr Wilson, the majority of which concerned the Understanding, took place by telephone, voicemails and text messages:

    1.From August 2006 to December 2006, nine communications were exchanged, with five in December;

    2.In 2007, 45 communications were exchanged, with nine in April, seven in February and five in September;

    3.In 2008, 15 communications were exchanged, with five in September and four in March.  Mr Berman and Mr Wilson agreed that of those calls, 10 were calls originated by Mr Berman which resulted in voicemail messages left for Mr Wilson; and

    4.In 2009, one communication was exchanged on 20 May 2009.  Mr Berman and Mr Wilson agreed that the call was originated by Mr Berman and resulted in a voicemail message left for Mr Wilson.

16. Many of the communications between Mr Berman and Mr Wilson from August 2006 until the end of 2007 concerned retaliations for approaching each other’s customers in which words to the following effect were exchanged:

    “Why have you taken [name of customer A] from us?”

    “We took them because you took [name of customer B] from us”

    “That customer used to be ours and you took it from us.  They are fair game.”

    “You guys have been in and taken ... [a Renegade customer].  Why?”

    “You should speak with your guys.  That customer actually came to us due to a service issue with you guys.  We did not poach that one.”

    “Stop trying to undermine me with Geoff [Hobby].  I have told him the facts on the customers you have taken from us.”

17. There was one occasion in around September 2008 when Mr Wilson received a missed call from Mr Berman on his mobile phone.  Mr Berman left a message asking who Matthew Jackson was.  Mr Wilson returned the call and had a conversation to the following effect:

    Mr Wilson said:        “Mathew Jackson is an account manager at Speed-E-Gas.  Why what’s the problem?”

    Mr Berman replied:     “Oh he’s been in to a customer of ours offering $24”

18. The majority of calls in 2008 and the call in 2009 were initiated by Mr Berman and resulted in voicemail messages left for Mr Wilson.  Mr Wilson did not respond to the majority of those calls, as a result of a decision he had made not to communicate with Mr Berman in relation to the Understanding.  Mr Wilson also had some telephone conversations with Mr Smith.  There were no telephone conversations, voicemails or text messages between Mr Berman and Mr Wilson in 2010 or 2011.

19. From about late 2007 until June 2011, Mr Berman and Mr Hobby also had regular and numerous telephone communications, which included text messages, concerning the Understanding.  At some time in late 2007, Mr Hobby said to Mr Berman words to the effect:

    Jay [Wilson] doesn’t want to talk to you now.  If you want to talk about a customer you need to speak to me from now on.

20. The telephone communications between Mr Berman and Mr Hobby were irregular in terms of their frequency, sometimes occurring monthly and sometimes there were no communications for extended periods of time:

    1.In 2007, 22 communications were exchanged, with nine in April;

    2.In 2009, 31 communications were exchanged, with 26 in September;

    3.In 2010, 25 communications were exchanged, with 15 in December; and

    4.In 2011, 7 communications were exchanged, with three in June.

21. Telephone communications in late 2007 to June 2011 occurred frequently between Mr Berman and Mr Hobby and largely concerned staying away from each other’s customers.  Mr Berman and Mr Hobby both said to each other words to the following effect:

    “Leave our customers alone.”

    “Stay out of our customers.”

    “Your blokes have been in to see [customer name].  They’re offering a ridiculous price.”

    “I’ll look into it.”

    “You guys have been into [customer name].  We're just going to replace the volume.”

    “I’ll look into it.”

22. From about late 2007 to June 2011, Mr Berman and Mr Hobby also communicated with each other at face to face meetings that occurred on at least three occasions at various locations.

23. There was no legitimate business reason for Renegade and Speed-E-Gas to engage in this significant number of communications. 

    6.        Renegade’s internal implementation of the Understanding

24. This section is not relevant to Speed-E-Gas.  It is relevant to all other respondents.  Mr Berman managed the internal implementation of the Understanding within Renegade.  At some time before August 2006, Mr Berman instructed Mr Smith about the existence and terms of the Understanding and instructed him to implement them.  He had also instructed Mr Smith that he should not mention the existence of the Understanding to other staff of Renegade.  Mr Berman instructed Mr Smith and other sales staff in words to the effect of:

    “I’ve had a conversation with [Mr Wilson].  [Renegade] have an understanding with [M Wilson] not to approach Speed-E-Gas customers and vice versa”

    “We don’t approach [Speed-E-Gas], I don’t want you to touch them”

    “Stay away from them, I don’t want you to start a war with [Speed-E-Gas]”

25. Mr Berman instructed Mr Smith to implement the Understanding on behalf of Renegade by adopting strategies which included the following:

    1.Instructing Renegade sales representatives not to approach Speed-E-Gas Forklift Gas customers; or

    2.Instructing Renegade sales representatives if they did approach Speed-E-Gas Forklift Gas customers they were:

    (a)       not to offer a price for the supply of Forklift Gas to that customer; or

    (b)to offer prices for the supply of Forklift Gas to that customer that were higher than they were currently paying to Speed-E-Gas in an effort not to win the business; or

    (c)to quote list price for the supply of Forklift Gas which both Mr Berman and Mr Smith knew was likely to be higher than the price the customer was currently paying to Speed-E-Gas; or

    (d)      not to follow up the customer.

26. The ACCC, Renegade and Mr Berman, but not Mr Smith, submitted that pursuant to those instructions from Mr Berman, Mr Smith gave detailed and repeated instructions to Renegade sales staff to act in accordance with those instructions. The following facts are not in dispute. Consistent with Mr Berman’s instructions, throughout the Relevant Period, Mr Smith gave instructions to Renegade staff. The statements of agreed facts between the ACCC, Renegade, Mr Berman, Mr Smith and Mr Wilson records that 17 instructions were given by Mr Smith, as listed at [44] below. Counsel for Mr Smith submitted that 13 of these were instructions not to approach Speed-E-Gas customers, two were instructions about what to do when a staff member came across a Speed-E-Gas customer and two were instructions that there was the Understanding and that the direction came from Mr Berman. In addition, the ACCC and Mr Smith have separately agreed that Smith did not formally brief sales representatives or Renegade’s sales coordinator about the Exceptions. Rather, Mr Smith instructed Renegade’s sales representatives and the sales coordinator about the Exceptions and how they applied to their sales activities as and when the need arose. In light of the agreed facts, the finding that Mr Smith gave detailed and repeated instructions to Renegade sales staff to act in accordance with those instructions is not only open but the only conclusion to be drawn. Instructions were given over a period of approximately five years, on 17 separate occasions and were delivered “as and when the need arose”. In other words, instructions were delivered repeatedly by Mr Smith with the content varying depending on the needs of the particular circumstances.

27. In 2008, as part of a reorganisation at Renegade, Mr Dominic Grayson was appointed to have direct responsibility for sales in Sydney.  The ACCC, Renegade and Mr Berman, but not Mr Smith, submitted that Mr Smith instructed Mr Grayson to ensure that sales staff took the steps necessary to implement the Understanding.  There is no dispute that when Mr Grayson was a sales representative in Sydney, Mr Smith instructed him “Do not go after Speed-E-Gas customers.  Focus on the other competitors because they are slower to react”.  There is also no dispute that Mr Smith instructed Mr Grayson to provide that instruction to sales representatives and that Mr Smith understood that he did so.  I reject Mr Smith’s submission that these instructions should not be characterised as Mr Smith instructing Mr Grayson to ensure that sales staff took the steps necessary to implement the Understanding.  The instructions were specific and direct – to implement the Understanding.  The fact that the instructions did not refer to the existence of the Understanding or, it would seem, all aspects of it, do not detract from that characterisation.  The matter may be tested this way – why else give the instruction? 

28. Next, the ACCC and Mr Berman, but not Renegade and Mr Smith, submitted that Renegade’s sales staff were trained in the processes and strategies to be adopted in order for Renegade to avoid making competitive offers to Speed-E-Gas customers and that those instructions were regularly communicated at formal sales staff meetings, which were minuted.  I reject the submissions of Renegade and Mr Smith.  The following facts that were agreed to by the ACCC, Renegade, Mr Berman and Mr Smith support those findings.

29. Throughout the Relevant Period, Mr Berman gave Mr Smith and other sales staff general instructions regarding the approach to be taken with customers who were being supplied by Speed-E-Gas.  Throughout the Relevant Period, Mr Berman’s instruction to Mr Smith and other sales staff about staying away from Speed-E-Gas customers remained unchanged and consistent with the Understanding.

30. Mr Berman said words to the following effect:

    (a)To Smith: “I’ve had a conversation with Jay.  We [Renegade] have an understanding with Jay not to approach Speed-E-Gas customers and vice versa.”

    (b)To sales representatives: “We are not allowed to touch Speed-e-gas customers.”

    (c)To sales representative … : “This [the attacks on Speed-e] stops now.  I want you to tell the reps to stop attacking Speed-e-gas.”

    (d)To sales representative: “We just don’t touch each other’s customers because Speed-E-Gas and [Renegade] have an arrangement not to touch each other’s customers.”

    (e)To sales representative: “It’s not on to take Speed-E-Gas customers because together we don’t touch each other’s customers, that’s how it is.”

    (f)To sales representative: “We have an arrangement, you are not allowed to touch them [Speed-E-Gas].”

    (g)To sales representative: “Jay Wilson and I have an agreement not to undercut each other on price.”

    (h)To sales representative: “We don’t approach them [Speed-E-Gas], I don’t want you to touch them.”

    (i)To sales representatives: “Just remember guys, don't approach Speed-E-Gas customers”.

    (j)To a sales representative: “Stay away from them, I don’t want you to start a war with Speed-E”.

    (k)      To a sales representative: “Don’t attack Speed-E”.

31. The strategies that Mr Berman instructed Mr Smith to adopt throughout the Relevant Period are set out in paragraph [38] above.  What then did Mr Smith do?  On Mr Berman’s instructions, Mr Smith provided oral instructions about the Understanding in sales and other meetings and in conversations (in person and by telephone) using words to the following effect:

    (a)       “Leave Speed-e alone.”

    (b)      “We are not allowed to touch Speed-e-Gas customers.”

    (c)“We are not allowed to get Speed-e-Gas customers based on price.  All Speed-E-Gas issues, especially price, need to go through me.”

    (d)      “We don’t go and attack Speed-e customers.”

    (e)       “Don’t approach any Speed-e-Gas customers.”

    (f)       “Don’t approach or sign up any Speed-e-Gas customer.”

    (g)       “You can’t go after any of Speed-e-Gas’ customers.”

    (h)“Do not go after Speed-E-Gas customers.  Focus on other competitors because they are slower to react.”

    (i)       “Don’t go after Speed-E-Gas’s forklift customers.”

    (j)“If you come across a Speed-E-Gas customer, pass their details onto me, or if I’m not around, pass it onto Paul.  We’ll look after them.”

    (k)“The deal is that we do not touch Speed-E-Gas customers, that’s what Paul wants, that’s what we do.”

    (l)“We are not allowed to go to their customers and they aren’t allowed to come to ours.”

    (m)“When you come across a Speed-E customer find out what they are paying and speak to ... me about what to do next.”

    (n)“Stay away from Speed-E customers or we won't be paying the commissions.”

    (o)“We've got a verbal agreement with Speed-E [to stay away from each other’s customers]”.

    (p)      “The directive not to take Speed-E Gas customers comes from Paul”.

    (q)      “Go and approach any customers you want, except Speed-E-Gas customers.”

Other Order

23The Court orders that Smith pay to the Commonwealth of Australia a contribution to the Applicant’s costs of and incidental to the proceedings, in the agreed amount of $25,000, within 30 days of the date of these Orders.

SIXTH RESPONDENT – WILSON
Declaration

24The Court declares that Wilson, having determined with Mr Geoffrey Hobby who was the manager of Speed-E-Gas, that subject to the Exceptions, Speed-E-Gas would adopt the business practice of implementing the Stay Away Provision, by:

24.1     not changing that business practice when he had the capacity to do so; and by

24.2instructing other staff of Speed-E-Gas to implement that business practice; and by

24.3instructing other staff of Speed-E-Gas to implement a practice of dealing with prospective customers who were Renegade customers in Sydney by:

(a)       not approaching the customer; or

(b)not offering to supply or declining to supply Forklift Gas to the customer; or

(c)restricting any offer to supply Forklift Gas to the customer to a price that Speed-E-Gas knew was not likely to induce the customer to change suppliers; and by

24.4managing Speed-E-Gas’ response to breaches by Renegade of the Stay Away Provision by implementing the Replacement Provision; and by

24.5communicating from time to time with Berman and Smith to the effect that Renegade should comply with the Stay Away Provision or concerning whether the Stay Away Provision applied to certain customers,

was directly or indirectly knowingly concerned in or a party to conduct by which Speed-E-Gas gave effect to the Stay Away Provision and Replacement Provision, both of which were provisions of the Understanding, in contravention of:

24.6 section 45(2)(b)(i) of the Act throughout the Relevant Period; and

24.7section 44ZZRK of the Act throughout the period from 24 July 2009 to June 2011 (because the Stay Away Provision and Replacement Provision was each a cartel provision within the meaning of ss 44ZZRD(3)(a)(iii) and 44ZZRD(3)(b)(i) of the Act).

Pecuniary Penalty Order

25The Court orders that Wilson pay to the Commonwealth of Australia a pecuniary penalty in respect of the contraventions referred to in paragraph 24 above in the total amount of $50,000, to be paid as follows:

25.1     $25,000 within 30 days of these Orders;

25.2Three further payments of $8,333.33.  The first payment is to be paid within one year from the date of these Orders, the second payment is to be paid within two years from the date of these Orders and the third payment is to be paid within three years from the date of these Orders; and

25.3If any amount is not paid by its due date, all amounts outstanding are to be paid within six months of that failure to pay.

Injunction

26The Court orders that Wilson be restrained for a period of five years, by himself, his servants or agents or otherwise howsoever, from being in any way, directly or indirectly, knowingly concerned in, or party to, any conduct of a corporation which supplies Forklift Gas in making, or giving effect to, any contract, arrangement or understanding with any other supplier of Forklift Gas containing a provision which:

26.1has the purpose of preventing, restricting or limiting the supply of Forklift Gas (or of preventing, restricting or limiting the supply of Forklift Gas in particular circumstances or under particular conditions) by all or any of the parties to that contract, arrangement or understanding to customers in Sydney; or

26.2has the purpose of allocating between any of those parties customers who had acquired or were likely to acquire Forklift Gas in Sydney,

unless:

26.3when the said contract, arrangement or understanding was made it stipulated that the provision would not come into force unless the Applicant granted an authorisation to give effect to the provision; or

26.4the provision was permitted because of the operation of an authorisation, notification or collective bargaining notice under any of ss 88, 93 or 93AD of the Act; or

26.5each of the corporations which was a party to that contract, arrangement or understanding was a related body corporate of the other corporation or corporations which were also such a party; or

26.6the provision was for the purpose of a joint venture for the production and / or supply of goods or services; or

26.7the provision was for the joint advertising of the price for the resupply of goods or services collectively acquired by the parties to that contract, arrangement or understanding.

Other Order

27The Court orders that Wilson and the Applicant bear their own costs of the proceedings insofar as they relate to Wilson.

GENERAL

28       The proceedings against the Respondents otherwise be dismissed.

APPENDIX A

COMPLIANCE AND EDUCATION / TRAINING PROGRAM

Interpretation

6.In this Appendix:

6.1.Act means the Competition and Consumer Act 2010 (Cth);

6.2.Commission means the Australian Competition and Consumer Commission;

6.3.Compliance Advisor means the person defined in paragraph 6 below;

6.4.Compliance Officer means the person appointed under paragraphs 2 or 3 below;

6.5.Compliance Policy means the report defined in paragraph 8 below;

6.6.Compliance Program means the Trade Practices Compliance and Education / Training Program in this Appendix;

6.7.Compliance Program Review Report is the report defined in paragraph 19 below;

6.8.Compliance Trainer is defined in paragraph 14 below;

6.9.Contravening Conduct means the conduct declared by the Federal Court of Australia in proceeding NSD 1239 of 2012 to be in contravention of Part IV of the Act or any similar or related conduct;

6.10.External Reviews means the reviews required by paragraph 18 below;

6.11.Order of the Court is the order of the Federal Court of Australia made in proceeding NSD 1239 of 2012 to which this Appendix A is attached;

6.12.Relevant Provisions means ss 44ZZRK and 45 of the Act, which were contravened by the Contravening Conduct and Part IV of the Act which deals with similar or related conduct;

6.13.Renegade means the First Respondent in proceeding NSD 1239 of 2012;

6.14.Respondent’s Program means the steps taken by Renegade to comply with the Orders of the Court;

6.15.Reviewer is defined in paragraph 18.2 below;

6.16.Risk Assessment means the assessment required by paragraph 6 below;

6.17.Risk Assessment Report means the report required by paragraph 7 below; and

6.18.Training means the training required by paragraph 13 below.

Compliance Officer

7.Renegade must, within one month of the Order of the Court, appoint a Director or a Senior Manager with suitable qualifications or experience in corporate compliance as Compliance Officer with responsibility for ensuring that the Compliance Program is effectively established, maintained and administered in accordance with the Order of the Court.

8.After the appointment of the Compliance Officer in accordance with paragraph 2, Renegade must take all reasonable steps to ensure that, for the duration of the Order of the Court, there is a Director or a Senior Manager with suitable qualifications or experience in corporate compliance appointed as Compliance Officer with responsibility for ensuring that the Compliance Program is effectively established, maintained and administered in accordance with the Order of the Court.

9.Renegade must take all reasonable steps to ensure that for the duration of the Order of the Court the Compliance Officer discharges his or her responsibility of ensuring that the Compliance Program is effectively established, maintained and administered in accordance with the Order of the Court.

10.Renegade must take all reasonable steps to ensure that the Compliance Officer reports in writing to Renegade’s board of directors every six months with respect to the on-going maintenance and administration of the Compliance Program including, in particular, whether the Respondent’s Program is effectively:

2.3.ensuring an awareness by the employees and other persons involved in the respondent’s business of their responsibilities and obligations in relation to the Relevant Provisions; and

2.4.revising the internal operations of Renegade’s business which led to the respondent engaging in the Contravening Conduct.

Risk Assessment

29.Renegade must, within one month of the Order of the Court, appoint a qualified, internal or external, compliance professional with expertise in trade practices issues (Compliance Advisor) to conduct a risk assessment to:

29.1.identify the areas of Renegade’s business where it is at risk of contravening the Relevant Provisions;

29.2.assess the likelihood of any such contravention occurring;

29.3.identify where there are deficiencies in Renegade’s procedures for managing any such risk;

29.4.make findings concerning sub-paragraphs 6.1 to 6.3 above; and

29.5.make recommendations for action having regard to sub-paragraphs 6.1 to 6.4 above (Risk Assessment).

30.Renegade must instruct the Compliance Advisor to set out, and must take all reasonable steps to ensure that the Compliance Advisor sets out, the findings and recommendations of the Risk Assessment in a written report (Risk Assessment Report), to be provided to Renegade’s board of directors within two months of his or her appointment.

Compliance Policy

31.Renegade must, within 30 days of the Order of the Court, establish a policy (Compliance Policy) which is communicated in writing to all employees or other persons involved in Renegade’s business regarding trade practices compliance, which must include:

31.1.a statement of commitment by Renegade to comply with the Relevant Provisions;

31.2.a direction to all employees or other persons involved in Renegade’s business to report any compliance related issues and trade practices compliance concerns to the Compliance Officer;

31.3.a statement guaranteeing that employees or other persons involved in Renegade’s business making a complaint or report in relation to Renegade’s compliance with the Relevant Provisions will not be prosecuted or disadvantaged in any way by reason of their complaint or report and that their complaint or report will be kept confidential and secure; and

31.4.a statement that Renegade will take disciplinary action against any persons who are knowingly or recklessly concerned in a contravention of the Relevant Provisions and will not indemnify them.

32.Renegade must take all reasonable steps to ensure that the Compliance Program is maintained and administered in a manner that is consistent with the Compliance Policy for the duration of the Order of the Court.

33.Renegade will provide a copy of the Compliance Policy to all new staff at the commencement of their employment with Renegade.

Complaints Handling

34.Renegade must establish, maintain and administer a trade practices complaints handling system.

35.Renegade must take all steps that are necessary to ensure that the trade practices complaints handling system is in accordance with AS/ISO 10002:2006 Customer satisfaction - Guidelines for complaints handling in organizations, though tailored to its own circumstances.

Training

36.Renegade must take all reasonable steps to ensure that all directors, officers, employees, representatives and agents of Renegade, whose duties could result in them being concerned with conduct that may contravene the Relevant Provisions, receive practical trade practices training (Training) no less than once during each 12 month period over which the Compliance Program is in operation.

37.The Training must be conducted by either a suitably qualified compliance professional or legal practitioner with expertise in trade practices law (Compliance Trainer).

38.Renegade must instruct the Compliance Trainer to design the Training, and must take all reasonable steps to ensure that the Training is designed, to ensure that the persons at the Training are made aware of:

38.1.the responsibilities and obligations in relation to the Relevant Provisions;

38.2.the potential consequences of contravening the Relevant Provisions;

38.3.the areas of Renegade’s business where it is at risk of contravening the Relevant Provisions, as identified in the Risk Assessment Report;

38.4.the content of the Compliance Policy; and

38.5.the content of the Compliance Program.

39.Renegade, for the purposes of conducting the Training, must provide the Compliance Trainer with a copy of:

39.1.the Order of the Court;

39.2.the Compliance Policy; and

39.3.the Risk Assessment Report.

40.Renegade must take all reasonable steps to ensure that an awareness of the Compliance Program, the Compliance Policy and the complaints handling system forms part of the induction of all new directors, officers, employees, representatives and agents, whose duties could result in them being concerned with conduct that may contravene the Relevant Provisions.

External Review

41.Renegade must take all reasonable steps to ensure that annual reviews of Renegade’s compliance with the Order of the Court are carried out in accordance with sub-paragraphs 18.1 to 18.4 below (External Reviews):

41.1.Scope of the External Reviews – The External Reviews are to ascertain whether the Respondent’s Program:

41.1.1.has made the employees or other persons involved in Renegade’s business aware of their responsibilities and obligations in relation to the Relevant Provisions;

41.1.2.has revised the internal operations of Renegade’s business in relation to the Relevant Provisions and the circumstances that led to the Contravening Conduct;

41.1.3.effectively maintains and administers the Compliance Program.

41.2.Independence of Reviewer – Renegade must take all reasonable steps to ensure that all External Reviews are carried out by a suitably qualified, independent compliance professional with expertise in competition law (Reviewer).  The Reviewer will qualify as independent on the basis that he or she:

41.2.1.is not a present or past director, employee or officer of Renegade;

41.2.2.has no significant shareholding or other interests in Renegade;

41.2.3.has not acted for or consulted to, and does not act for or consult to, Renegade in any matters involving alleged contraventions of Australian competition or consumer protection legislation;

41.2.4.has not acted for or consulted, and does not act for or consult to, Renegade or provide other services in relation to this Compliance Program, other than as the Reviewer in a previous year; and

41.2.5.has no conflict of interest in carrying out the Reviews.

41.3.Evidence – Renegade must take all reasonable steps to ensure that in the conduct of the External Reviews the Reviewer has access to all relevant sources of information in Renegade’s possession or control, including access to:

41.3.1.any officers, employees, representatives or agents of Renegade;

41.3.2.any relevant records of Renegade, including its complaints register/reports and any documents relevant to its training or induction program; and

41.3.3.any documents created by Renegade’s consultants or legal advisers for use in relation to the Respondent’s Program.

41.4.Timing – Renegade must take all reasonable steps to ensure that the first External Review is completed within one year of the Order of the Court and that each subsequent External Review is completed within one year thereafter, save that all steps to be taken by Renegade in relation to the final External Review are to be completed one month prior to the expiration of the Order of the Court.

42.Renegade must instruct the Reviewer to set out, and must take all reasonable steps to ensure that the Reviewer sets out, the findings of each of the External Reviews in a written report (Compliance Program Review Report) which addresses each of the following:

42.1.details of the evidence gathered and examined during the External Review;

42.2.the name and relevant experience of the person appointed as the Compliance Officer;

42.3.if, and to what extent, the Respondent’s Program includes all the elements and requirements of the Compliance Program;

42.4.if, and to what extent, the Respondent’s Program adequately covers the areas identified in the initial Risk Assessment; and

42.5.recommendations that the Reviewer considers are reasonably necessary to ensure that the Respondent’s Program effectively maintains and administers the Compliance Program.

43.Renegade must instruct the Reviewer to complete and provide the Compliance Program Review Report to it, and must take all reasonable steps to ensure that the Compliance Program Review Report is completed and provided to it, within one month of each Review.

44.Renegade must retain each Compliance Program Review Report.

45.Within 30 days of the receipt of each Compliance Program Review Report, Renegade’s board of directors must hold a meeting to consider:

45.1.the Compliance Program Review Report;

45.2.whether to make any changes to the Respondent’s Program to more effectively implement the Compliance Program for the purposes of:

45.2.1.ensuring an awareness for the employees or other persons involved in Renegade’s business of their responsibilities and obligations in relation to the Relevant Provisions; and

45.2.2.revising the internal operations of Renegade’s business in relation to the circumstances that led to the Contravening Conduct;

45.3.any recommendation of the Commission for the purposes of sub-paragraph 22.2 above.

46.At the meeting referred to in paragraph 22 above held by Renegade, Renegade’s board of directors must consider:

46.1.the Compliance Program Review Report;

46.2.whether to make any changes to the Respondent’s Program to more effectively implement the Compliance Program for the purposes of:

46.2.1.ensuring an awareness for the employees or other persons involved in Renegade’s business of their responsibilities and obligations in relation to the Relevant Provisions; and

46.2.2.revising the internal operations of Renegade’s business in relation to the circumstances that led to the Contravening Conduct;

46.3.any recommendation of the Commission for the purposes of sub-paragraph 23.2 above.

47.Within 14 days of holding the meeting referred to in paragraph 23 above, Renegade must advise the Commission in writing of:

47.1.details of when the meeting was held and who was present;

47.2.the outcome of the meeting, including:

47.2.1.what, if any, changes Renegade decided to make to the Respondent’s Program to more effectively implement the Compliance Program and details of the proposed implementation of any changes; and

47.2.2.the decisions made by Renegade about each of the recommendations that had been made by the Commission (if any).

48.Within 14 days of holding a meeting referred to in paragraph 23 above at which Renegade decides to make changes to the Respondent’s Program it must take all reasonable steps to communicate those changes to all employees or other persons involved in Renegade’s business.

Supply of Documents to the Commission

49.Renegade must within 14 months of the Order of the Court, cause to be produced and provided to the Commission copies of each of the following documents:

49.1.documents evidencing the appointment of the Compliance Officer and Compliance Adviser;

49.2.the Risk Assessment Report;

49.3.the Compliance Policy and the documents evidencing its implementation; and

49.4.documents evidencing the provision of Training, including all materials used in the Training.

50.Renegade must provide a copy of each Compliance Program Review Report to the Commission within 14 days of its receipt from the Reviewer.

If requested in writing by the Commission, Renegade must, at its own expense, provide copies of documents and information constituting or evidencing compliance or non-compliance with the Orders of the Court.