Australian Competition and Consumer Commission v Visy Industries Holdings Pty Ltd (No 3)

[2007] FCA 1617

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Visy Industries Holdings Pty Limited (No 3) [2007] FCA 1617

TRADE PRACTICES – cartel conduct – Visy companies and Amcor companies held 90 per cent of the corrugated fibreboard packaging market in Australia – between January 2000 and October 2004 Visy and Amcor engaged in price-fixing and market sharing contrary to s 45 of Trade Practices Act 1974 (Cth) – Amcor received conditional immunity from action by the Australian Competition and Consumer Commission – Commission brought action against Visy companies and three of its senior officers four categories of contraventions: Over-arching Understanding in 2000 to maintain market share and increase prices; Annual Price Increase Understandings each year for 2000 to 2003, Customer Price Understandings and Compensation Understandings – respondents admitted liability – parties submitted an agreed statement of facts

Held

1. Visy committed 69 contraventions of the Trade Practices Act;

2. Pecuniary penalties imposed on Visy for 37 contraventions that came from different conduct for the purposes of s 76(3);

3. Penalty of $36 million imposed for the 37 contraventions;

4. Mr Pratt was knowingly concerned in Visy’s contraventions, however, no pecuniary penalty against him because as owner of Visy he will bear the burden of the corporate penalty;

5. Mr Debney was knowingly concerned in 14 contraventions; penalty of $1.5 million;

6. Mr Carroll was knowingly concerned in 49 contraventions; penalty of $500,000.

Corporations Act 2001 (Cth), ss 199A(2)
Evidence Act 1995 (Cth) s 191
Industrial Relations Reform Act 1993 (Cth) s 46
Sherman Act 15 U.S.C.
Trade Practices Act 1974 (Cth) ss 4D, 45, 45A, 76, 77A, 77B, 80
Trade Practices Legislation Amendment Act (No. 1)2006 (Cth), Sch 9 Pt 1.
Trade Practices Legislation Amendment Act 1992 (Cth) s 10

Australian Competition and Consumer Commission  v Commercial and General Publications Pty Ltd (No 2) (2002) ATPR 41-905 cited
Australian Competition and Consumer Commission  v Ithaca Ice Works Pty Ltd (2000) ATPR 41-777 cited
Australian Competition and Consumer Commission v J McPhee & Son (Australia) Pty Ltd (No 5) (1998) ATPR 41-628 cited
Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd (1996) ATPR 41-515 cited
Australian Competition and Consumer Commission v Visy Industries Holdings Pty Ltd (No 2) [2007] FCA 444 referred to
Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993 cited

The Queen v Shannon (1979) 21 SASR 442

Trade Practices Commission v Axive Pty Ltd (1994) ATPR 41-368 cited
Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 cited

Warner, K Sentencing in Tasmania, 2^nd ed, The Federation Press, 2002

Organisation for Economic Co-operation and Development, Hard Core Cartels – Third Report on the Implementation of the 1988 Recommendation, Paris, 2006
The Dawson Committee, Review of the Competition Provisions of the Trade Practices Act, April 2003

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v VISY INDUSTRIES HOLDINGS PTY LIMITED & ORS (No 3)

VID 1650 OF 2005

HEEREY J

2 NOVEMBER 2007

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 1650 OF 2005

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant

AND:

VISY INDUSTRIES HOLDINGS PTY LIMITED
First Respondent

VISY INDUSTRIES AUSTRALIA PTY LIMITED
Second Respondent

VISY BOARD PTY LIMITED
Third Respondent

RICHARD PRATT
Fourth Respondent

HARRY DEBNEY
Fifth Respondent

ROD CARROLL
Sixth Respondent

JUDGE:	HEEREY J
DATE OF ORDER:	2 NOVEMBER 2007
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The Third Respondent ("Visy"), by making a contract or arrangement or arriving at an understanding with Amcor Limited ("Amcor") in approximately January to April 2000 containing provisions that:

   (i)Visy and Amcor would permit each other to maintain approximately their then current share of the market in Australia for the supply of corrugated fibreboard packaging ("CFP");

   (ii)Visy and Amcor would not seek to enter into contracts for the supply of CFP with each other's principal CFP customers;

   (iii)if, for one reason or another, Visy did enter into a contract for the supply of CFP with a principal CFP customer of Amcor, then Visy would not prevent or seek to prevent Amcor from entering into a supply contract with a customer or customers of Visy in order to replace the share of the market in Australia for the supply of CFP ("CFP Market") that Amcor had lost as a result of losing the supply contract to Visy;

   (iv)if, for one reason or another, Amcor did enter into a contract for the supply of CFP with a principal CFP customer of Visy, then Amcor would not prevent or seek to prevent Visy from entering into a supply contract with a customer or customers of Amcor in order to replace the share of the CFP Market that Visy had lost as a result of losing the supply contract to Amcor;

   (v)Visy and Amcor would, in future, collaborate with each other in order to increase the prices at which they supplied CFP in the CFP Market from their then current levels;

   (vi)Visy would appoint the Sixth Respondent ("Carroll") as its nominated contact person with Amcor for the purpose of effecting the implementation of the contract, arrangement or understanding; and

   (vii)Amcor would appoint Edward Laidlaw as its nominated contact person with Visy for the purpose of effecting the implementation of the contract, arrangement or understanding,

   made a contract or arrangement or arrived at an understanding (the "Over-arching Understanding") which:

   (A)contained an exclusionary provision, within the meaning of section 4D of the Trade Practices Act 1974 (Cth) (“TPA”), and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the TPA; and

   (B)contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

2. By engaging in each instance of:

   (a)the conduct alleged in paragraphs 22-27, 29, 30, 32 and 33 of the Second Further Amended Statement of Claim;

   (ab)the conduct constituted by the Fourth Respondent (“Pratt”) meeting with the CEO of Amcor, Mr Russell Jones (“Jones”) at his request on 21 May 2001 and communicating to Jones that Visy would adhere to an understanding that the Fifth Respondent (“Debney”) had reached with Mr Peter Brown of Amcor (“Brown”) being the Over-arching Understanding referred to in paragraph 1 above;

   (b)the conduct alleged in paragraph 37 of the Second Further Amended Statement of Claim;

   (c)the conduct alleged in paragraphs 41, 42 and 44 of the Second Further Amended Statement of Claim;

   (d)the conduct alleged in paragraph 49 of the Second Further Amended Statement of Claim;

   (e)the conduct alleged in paragraphs 54 and 56 of the Second Further Amended Statement of Claim;

   (f)the conduct alleged in paragraph 60 of the Second Further Amended Statement of Claim;

   (g)the conduct alleged in paragraphs 64, 65, 67 and 69 of the Second Further Amended Statement of Claim;

   (h)the conduct alleged in paragraph 73 of the Second Further Amended Statement of Claim;

   (i)the conduct alleged in paragraphs 77, 78 and 85 of the Second Further Amended Statement of Claim;

   (j)the conduct alleged in paragraph 91 of the Second Further Amended Statement of Claim;

   (k)the conduct alleged in paragraphs 95, 96 and 99 of the Second Further Amended Statement of Claim;

   (l)the conduct alleged in paragraph 107 of the Second Further Amended Statement of Claim;

   (m)the conduct alleged in paragraphs 111, 111A, 111B, 111C, 112, 112B, 112C, 113 and 113A of the Further Amended Statement of Claim;

   (n)the conduct alleged in paragraph 119A of the Second Further Amended Statement of Claim;

   (o)the conduct alleged in paragraphs 119E, 119G and 119H of the Second Further Amended Statement of Claim;

   (p)the conduct alleged in paragraph 120 of the Second Further Amended Statement of Claim;

   (q)the conduct alleged in paragraphs 127 and 130 of the Second Further Amended Statement of Claim;

   (r)the conduct alleged in paragraph 135 of the Second Further Amended Statement of Claim;

   (s)the conduct alleged in paragraphs 139, 140, 142, 143, 145, 146 and 147 of the Second Further Amended Statement of Claim;

   (t)the conduct alleged in paragraph 153 of the Second Further Amended Statement of Claim;

   (u)the conduct alleged in paragraphs 158 and 160 of the Second Further Amended Statement of Claim;

   (v)the conduct alleged in paragraph 163A of the Second Further Amended Statement of Claim;

   (w)the conduct alleged in paragraphs 163E, 163G, 163H and 163I of the Second Further Amended Statement of Claim;

   (x)the conduct alleged in paragraph 163AA of the Second Further Amended Statement of Claim;

   (y)the conduct alleged in paragraphs 163EA, 163EE, 163KK and 163MM of the Second Further Amended Statement of Claim;

   (z)the conduct alleged in paragraph 164 of the Second Further Amended Statement of Claim;

   (aa)the conduct alleged in paragraphs 169 and 171 of the Second Further Amended Statement of Claim;

   (bb)the conduct alleged in paragraph 175 of the Second Further Amended Statement of Claim;

   (cc)the conduct alleged in paragraphs 181 and 183 of the Second Further Amended Statement of Claim;

   (dd)the conduct alleged in paragraph 187A of the Second Further Amended Statement of Claim;

   (ee)the conduct alleged in paragraphs 187F, 187G, 187I, 187J, and 187N of the Second Further Amended Statement of Claim;

   (ff)the conduct alleged in paragraph 188 of the Second Further Amended Statement of Claim;

   (gg)the conduct alleged in paragraphs 194, 195 and 198 of the Second Further Amended Statement of Claim;

   (hh)the conduct alleged in paragraph 204 of the Second Further Amended Statement of Claim; and

   (ii)the conduct alleged in paragraphs 208, 210, 213 and 214 of the Second Further Amended Statement of Claim,

   Visy gave effect to a provision of the Over-arching Understanding that:

   (i) was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

   (ii) was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

3. By making a contract or arrangement or arriving at an understanding with Amcor in approximately January to March 2000 containing provisions that:

   (a)Visy would increase its prices for CFP supplied to its non-contract customers by approximately 7% with effect from about May 2000; and

   (b)Amcor would increase its prices for CFP supplied to its non-contract customers by approximately 7% with effect from about May 2000,

   Visy made a contract or arrangement or arrived at an understanding (the "2000 Price Increase Understanding") which contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

4. By engaging in the conduct alleged in paragraphs 41, 42 and 44 (in respect of most of its non-contract customers) of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the 2000 Price Increase Understanding that was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

5. By making a contract or arrangement or arriving at an understanding with Amcor in approximately October 2000 to approximately January 2001 containing provisions that:

   (a)Visy would increase its prices for CFP supplied to its non-contract customers by approximately 8.25% with effect from about early April 2001; and

   (b)Amcor would increase its prices for CFP supplied to its non-contract customers by approximately 8.5% with effect from about mid March 2001.

   Visy made a contract or arrangement or arrived at an understanding (the "2001 Price Increase Understanding") which contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

6. By engaging in the conduct alleged in paragraphs 54 and 56 (in respect of most of its non-contract customers) of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the 2001 Price Increase Understanding that was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

7. By making a contract or arrangement or arriving at an understanding with Amcor in approximately early 2001 containing provisions that:

   (a)Amcor would compensate Visy for the CFP volume Visy had lost as a result of Amcor entering into a supply agreement with Visy's former customer, Lion Nathan Australia Pty Ltd ("LNA"); and

   (b)Amcor would allow Visy to enter into a CFP supply agreement with Inghams Enterprises Pty Ltd ("Inghams"), an existing customer of Amcor, as compensation to Visy for Amcor entering into a CFP supply agreement with LNA,

   Visy made a contract or arrangement or arrived at an understanding ("the Inghams Compensation Understanding") which:

   (i)contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the TPA; and

   (ii)contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

8. By engaging in the conduct alleged in paragraphs 64, 65, 67 and 69 of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the Inghams Compensation Understanding that:

   (a)was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

   (b)was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

9. By making a contract or arrangement or arriving at an understanding with Amcor in approximately early 2001 containing provisions that:

   (a)Visy would not seek to enter into contracts for the supply of CFP to Goodman Fielder Ltd ("GFL") and Nestle Australia Ltd ("Nestle"), two of Amcor's principal customers; and

   (b)if GFL or Nestle requested Visy to provide a quote for the supply of CFP, Visy would quote prices higher than the prices Amcor quoted to GFL and Nestle,

   Visy made a contract or arrangement or arrived at an understanding (the "GFL & Nestle Price Understanding") which:

   (i)contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the TPA; and

   (ii) contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

10. By engaging in the conduct alleged in paragraphs 77, 78 and 85 of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the GFL & Nestle Price Understanding that:

    (a)was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

    (b)was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

11. By making a contract or arrangement or arriving at an understanding with Amcor in approximately January 2001 to approximately March 2001 containing provisions that:

    (a)Amcor would not seek to enter into a contract for the supply of CFP to Fosters Brewing Group Ltd ("Fosters"), a principal customer of Visy;

    (b)Amcor would quote prices to Fosters higher than the prices Visy quoted to Fosters;

    (c)Amcor would not seek to enter into a contract for the supply of CFP to Coca Cola Amatil Ltd ("Coke"), a principal customer of Visy; and

    (d)Amcor would quote prices to Coke higher than the prices Visy quoted to Coke,

    Visy made a contract or arrangement or arrived at an understanding (the "Fosters & Coke Price Understanding") which:

    (i) contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the TPA; and

    (ii)contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

12. By engaging in the conduct alleged in paragraphs 95, 96 and 99 of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the Fosters & Coke Price Understanding (insofar as it relates to Fosters) that:

    (a)was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

    (b)was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

13. By making a contract or arrangement or arriving at an understanding with Amcor in approximately mid 2001 containing provisions that:

    (a)Visy would compensate Amcor for the CFP volume Amcor had lost as a result of Visy entering into supply agreements with Amcor's former customers Inghams and The Smith's Snackfood Company Ltd ("Smith's"); and

    (b)Visy would allow Amcor to enter into a CFP supply agreement with George Weston Foods Ltd ("GWF"), an existing customer of Visy, as compensation to Amcor for Visy entering into CFP supply agreements with Inghams and Smiths,

    Visy made a contract or arrangement or arrived at an understanding (the "GWF Compensation Understanding") which:

    (i)contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the TPA; and

    (ii)contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

14. By engaging in the conduct alleged in paragraphs 111, 111A, 111B, 111C, 112, 112B, 112C, 113 and 113A of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the GWF Compensation Understanding that:

    (a) was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

    (b)was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

1. By making a contract or arrangement or arriving at an understanding  with Amcor in approximately mid 2001 containing provisions that:

   (a)Visy would compensate Amcor for the CFP volume Amcor had lost as a result of Visy entering into supply agreements with Amcor's former customers Inghams and Smith's; and

   (b)Visy would allow Amcor to enter into a CFP supply agreement with OSI  International Foods (Australia) Ltd ("OSI"), an existing customer of Visy, in  respect of OSI's CFP requirements in NSW, as compensation to Amcor for Visy entering into CFP supply agreements with Inghams and Smith's,

   Visy made a contract or arrangement or arrived at an understanding (the "OSI/Hans Compensation Understanding") which:

   (i)contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the TPA; and

   (ii)contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

2. By engaging in the conduct alleged in paragraphs 119E, 119G and 119H of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the OSI/Hans Compensation Understanding that:

   (a)was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

   (b)was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

3. By making a contract or arrangement or arriving at an understanding with Amcor in approximately late August 2001 to approximately December 2001 containing provisions that:

   (a)Visy would compensate Amcor for the CFP volume Amcor had lost as a result of Visy entering into a supply agreement with Mrs Crockett's Kitchen Pty Ltd ("Mrs Crockett's"), formerly a customer of Amcor; and

   (b)Visy would allow Amcor to enter into a CFP supply agreement with Merino Pty Ltd (formerly Paper Converting Pty Ltd) ("Merino"), an existing customer of Visy, as compensation to Amcor for Visy entering into a CFP supply agreement with Mrs Crockett's,

   Visy made a contract or arrangement or arrived at an understanding (the "Merino Compensation Understanding") which:

   (i)contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the TPA; and

   (ii)contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

4. By engaging in the conduct alleged in paragraphs 127 and 130 of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the Merino Compensation Understanding that:

   (a)was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

   (b)was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

5. By making a contract or arrangement or arriving at an understanding with Amcor in approximately early December 2001 containing provisions to the effect that:

   (a)both Visy and Amcor would seek a continuation of the their then current supply of CFP to Mildura Fruit Company ("MFC") whereby part of the customer's requirements was supplied by Visy and the remainder was supplied by Amcor;

   (b)Amcor would increase its prices for CFP supplied by it to MFC by approximately the same amount as Visy with effect from the expiration of the term of Amcor's then current supply agreement with MFC on 31 May 2002; and

   (c)Visy would increase its prices for CFP supplied by it to MFC by approximately the same amount as Amcor with effect from the expiration of the term of Visy's then current supply agreement with MFC on 31 March 2002,

   Visy made a contract or arrangement or arrived at an understanding (the "MFC Price Increase Understanding") which:

   (i)contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the TPA; and

   (ii)contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

6. By engaging in the conduct alleged in paragraphs 139, 140, 142, 143 and 145 to 147 of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the MFC Price Increase Understanding that:

   (a)was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

   (b)was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

7. By making a contract or arrangement or arriving at an understanding with Amcor in approximately December 2001 to approximately February 2002 containing provisions that:

   (a) subject to making some exceptions of its own choosing, Amcor would increase its prices for CFP supplied to its non-contract customers by approximately 3.75% with effect from about mid March 2002; and

   (b) subject to making some exceptions of its own choosing, Visy would increase its prices for CFP supplied to its non-contract customers by approximately 3.25% with effect from about early April 2002,

   Visy made a contract or arrangement or arrived at an understanding (the "2002 Price Increase Understanding") which contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

8. By engaging in the conduct alleged in paragraphs 158 and 160 (in respect of most of its non-contract customers) of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the 2002 Price Increase Understanding that was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

9. By making a contract or arrangement or arriving at an understanding  with Amcor in approximately mid to late April 2002 containing provisions that:

   (a)both Visy and Amcor would seek a continuation of their then current supply of CFP to National Foods Limited ("National Foods") whereby part of the  customer's requirements was supplied by Amcor and the remainder was supplied  by Visy;

   (b)both Visy and Amcor would ensure that their tender prices to supply CFP to National Foods reflected the additional CFP manufacturing costs which would be required to meet National Foods product specifications;

   (c)Visy and Amcor would discuss with each other the prices each proposed to include in its tender to supply CFP to National Foods; and

   (d)in respect of the parts of National Foods CFP requirements supplied by the other (the “incumbent supplier”), both Visy and Amcor would submit CFP tender prices to National Foods which were generally higher than those submitted to National Foods by the incumbent supplier.

   Visy made a contract or arrangement or arrived at an understanding (the "National Foods Price Understanding") which:

   (i)contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the TPA; and

   (ii)contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

10. By engaging in the conduct alleged in paragraphs 163E, 163G to 163I of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the National Foods Price Understanding that:

    (a)was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

    (b)was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

11. By making a contract or arrangement or arriving at an understanding with Amcor in approximately December 2002 to approximately January 2003 containing provisions that:

    (a)subject to making some exceptions of its choosing, Amcor would increase its prices for CFP supplied to its non-contract customers by approximately 3.5% with effect from about early March 2003; and

    (b)subject to making some exceptions of its choosing, Visy would increase its prices for CFP supplied to its non-contract customers by approximately 3.25% with effect from about mid March 2003,

    Visy made a contract or arrangement or arrived at an understanding (the "2003 Price Increase Understanding") which contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

12. By engaging in the conduct alleged in paragraphs 169 and 171 of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the 2003 Price Increase Understanding that was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

13. By making a contract or arrangement or arriving at an understanding with Amcor in approximately July 2003 containing provisions that:

    (a)Visy would compensate Amcor for the CFP volume Amcor had lost as a result of Visy entering into a supply agreement with Huhtamaki Australia Ltd ("Huhtamaki"), formerly a customer of Amcor; and

    (b)Visy would allow Amcor to enter into a CFP supply agreement with Gillette Australia Pty Ltd ("Gillette"), an existing customer of Visy, as compensation to Amcor for Visy entering into a supply agreement with Huhtamaki,

    Visy made a contract or arrangement or arrived at an understanding (the "Gillette Compensation Understanding") which:

    (i)contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the TPA; and

    (ii)contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

14. By engaging in the conduct alleged in paragraphs 181 and 183 of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the Gillette Compensation Understanding that:

    (a)was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

    (b)was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

15. By making a contract or arrangement or arriving at an understanding  with Amcor in approximately early 2003 containing provisions that:

    (a)Visy would not seek to enter into a contract for the supply of CFP to Parmalat Australia Limited ("Parmalat"), one of Amcor's then principal customers;

    (b)Visy would discuss with Amcor the prices Visy proposed to include in its tender to Parmalat; and

    (c)Visy would submit CFP tender prices to Parmalat which were higher than those submitted by Amcor to Parmalat,

    Visy made a contract or arrangement or arrived at an understanding (the "Parmalat Price Understanding") which:

    (i)contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the TPA; and

    (ii)contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

16. By engaging in the conduct alleged in paragraphs 187F, 187G, 1871, 187J and 187N of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the Parmalat Price Understanding that:

    (a) was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

    (b) was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

17. By making a contract or arrangement or arriving at an understanding with Amcor in approximately May 2004 to approximately June 2004 containing provisions that:

    (a)Visy would not seek to enter into a contract for the supply of CFP to the Food & Beverage division of Cadbury Schweppes Pty Limited ("Cadbury Schweppes"), one of Amcor's then principal customers;

    (b)Visy would discuss with Amcor the prices Visy proposed to include in its tender to Cadbury Schweppes; and

    (c)Visy would submit CFP tender prices to Cadbury Schweppes which were higher than those submitted by Amcor to Cadbury Schweppes

    Visy made a contract or arrangement or arrived at an understanding (the "Cadbury Schweppes Price Understanding") which:

    (i)contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the TPA; and

    (ii)contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

18. By engaging in the conduct alleged in paragraphs 194, 195 and 198 of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the Cadbury Schweppes Price Understanding that:

    (a)was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

    (b)was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

19. By making a contract or arrangement or arriving at an understanding with Amcor in approximately July 2004 to approximately October 2004 containing provisions that:

    (a)both Visy and Amcor would seek a continuation of their then current supply of CFP to Hardy Wine Company Pty Limited ("Hardy") whereby part of the customer's requirements was supplied by Visy and the remainder was supplied by Amcor;

    (b)Visy and Amcor would discuss with each other the prices each proposed to include in its tender to supply CFP to Hardy; and

    (c)in respect of the parts of Hardy's CFP requirements supplied by the other (the "incumbent supplier"), both Visy and Amcor would submit CFP tender prices to Hardy which were generally higher than those submitted to Hardy by the incumbent supplier,

    Visy made a contract or arrangement or arrived at an understanding (the "Hardy Price Understanding") which:

    (i)contained an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(a)(i) of the TPA; and

    (ii)contained a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.

20. By engaging in the conduct alleged in paragraphs 208, 210, 213 and 214 of the Second Further Amended Statement of Claim, Visy gave effect to a provision of the Hardy Price Understanding that:

    (a)was an exclusionary provision, within the meaning of section 4D of the TPA, and thereby engaged in conduct in contravention of section 45(2)(b)(i) of the TPA; and

    (b)was a provision that had the purpose or the effect or was likely to have the effect of substantially lessening competition in the CFP Market, and thereby engaged in conduct in contravention of section 45(2)(b)(ii) of the TPA.

21. Pratt was directly or indirectly, knowingly concerned in the contravention of the TPA by Visy referred to in sub-paragraph (ab) of paragraph 2 above, within the meaning of sections 76(1)(e) and 80(1)(e) of the TPA.

22. Debney was, directly or indirectly, knowingly concerned in, or party to, the contraventions of the TPA by Visy referred to in:

    (a)paragraph 1 above;

    (b)sub-paragraph (a) of paragraph 2 above;

    (c)sub-paragraph (b) of paragraph 2 above;

    (d)sub-paragraph (f) of paragraph 2 above;

    (e)sub-paragraph (j) of paragraph 2 above;

    (f)sub-paragraph (l) of paragraph 2 above;

    (g)sub-paragraph (n) of paragraph 2 above;

    (h)sub-paragraph (z) of paragraph 2 above;

    (i)paragraph 3 above;

    (j)paragraph 7 above;

    (k)paragraph 11 above;

    (l)paragraph 13 above;

    (m)paragraph 15 above; and

    (n)paragraph 25 above,

    within the meaning of sections 76(1)(e) and 80 (1) (e) of the TPA.

23. Carroll was, directly or indirectly, knowingly concerned in, or party to, the contraventions of the TPA by Visy referred to in:

    (a)sub-paragraph (a) of paragraph 2 above, insofar as it refers to paragraphs 22-26 and 33 of the Second Further Amended Statement of Claim;

    (b)sub-paragraph (d) of paragraph 2 above;

    (c)sub-paragraph (g) of paragraph 2 above;

    (d)sub-paragraph (h) of paragraph 2 above;

    (e)sub-paragraph (i) of paragraph 2 above;

    (f)sub-paragraph (k) of paragraph 2 above, save that paragraph 96 of the Second Further Amended Statement of Claim is to be taken to be amended to accord with paragraph 168 of the Agreed Statement of Facts dated 5 October 2007 agreed by the parties to this proceeding pursuant to s 191 of the Evidence Act 1995 (Cth) (“Agreed Statement of Facts”)

    (g)sub-paragraph (l) of paragraph 2 above;

    (h)sub-paragraph (m) of paragraph 2 above;

    (i)sub-paragraph (n) of paragraph 2 above;

    (j)sub-paragraph (o) of paragraph 2 above;

    (k)sub-paragraph (p) of paragraph 2 above;

    (l)sub-paragraph (r) of paragraph 2 above;

    (m)sub-paragraph (s) of paragraph 2 above;

    (n)sub-paragraph (t) of paragraph 2 above;

    (o)sub-paragraph (v) of paragraph 2 above;

    (p)sub-paragraph (w) of paragraph 2 above;

    (q)sub-paragraph (x) of paragraph 2 above;

    (r)sub-paragraph (y) of paragraph 2 above;

    (s)sub-paragraph (z) of paragraph 2 above;

    (t)sub-paragraph (bb) of paragraph 2 above;

    (u)sub-paragraph (dd) of paragraph 2 above;

    (v)sub-paragraph (ee) of paragraph 2 above;

    (w)sub-paragraph (ff) of paragraph 2 above;

    (x)sub-paragraph (gg) of paragraph 2 above, save that paragraph 194 of the Second Further Amended Statement of Claim is to be taken to be amended to accord with paragraphs 343 and 344 of the Agreed Statement of Facts;

    (y)sub-paragraph (hh) of paragraph 2 above;

    (z)sub-paragraph (ii) of paragraph 2 above;

    (aa)paragraph 5 above;

    (bb)paragraph 8 above;

    (cc)paragraph 9 above;

    (dd)paragraph 10 above;

    (ee)paragraph 12 above, save that paragraph 96 of the Second Further Amended Statement of Claim is to be taken to be amended to accord with paragraph 168 of the Agreed Statement of Facts;

    (ff)paragraph 13 above;

    (gg)paragraph 14 above;

    (hh)paragraph 15 above;

    (ii)paragraph 16 above;

    (jj)paragraph 17 above;

    (kk)paragraph 19 above;

    (ll)paragraph 20 above;

    (mm)paragraph 21 above;

    (nn)paragraph 23 above;

    (oo)paragraph 24 above;

    (pp)paragraph 25 above;

    (qq)paragraph 27 above;

    (rr)paragraph 29 above;

    (ss)paragraph 30 above;

    (tt)paragraph 31 above;

    (uu)paragraph 32 above, save that paragraph 194 of the Second Further Amended Statement of Claim is taken to be amended to accord with paragraphs 343 and 344 of the Agreed Statement of Facts;

    (vv)paragraph 33 above; and

    (ww)paragraph 34 above,

    within the meaning of sections 76(1)(e) and 80 (1) (e) of the TPA.

Pecuniary Penalties

1. An order that Visy pay a pecuniary penalty in the sum of $36 million.

2. An order that Debney pay a pecuniary penalty in the sum of $1,500,000.

3. An order that Carroll pay a pecuniary penalty in the sum of $500,000.

Injunctive orders

1. Visy be permanently restrained, whether by its directors, servants or agents or otherwise howsoever, from:

   (a)making a contract or arrangement or arriving at an understanding with Amcor containing one or more of the following provisions or provisions to like effect, namely that:

   (i) Visy and Amcor permit each other to maintain approximately their current share of the market in Australia for the supply of CFP;

   (ii) Visy and Amcor not seek to enter into contracts for the supply of CFP with each other's CFP customers;

   (iii) if, for one reason or another, Visy entered into a contract for the supply of CFP with a CFP customer of Amcor, then Visy not prevent or seek to prevent Amcor from entering into a supply contract with a customer or customers of Visy in order to replace the share of the CFP Market that Amcor had lost as a result of losing the supply contract to Visy;

   (iv) if, for one reason or another, Amcor entered into a contract for the supply of CFP with a CFP customer of Visy, then Amcor not prevent or seek to prevent Visy from entering into a supply contract with a customer or customers of Amcor in order to replace the share of the CFP Market that Visy had lost as a result of losing the supply contract to Amcor; or

   (v) Visy and Amcor collaborate with each other in order to increase the prices at which they supplied CFP in the CFP Market from their then current levels;

   (b)giving effect to any contract, arrangement or understanding with Amcor containing any provision or provision to like effect as one or more of the provisions set out in sub-paragraph (a) above;

   (c)requesting Amcor to quote a price or prices to a purchaser or potential purchaser of CFP at or above a level proposed by Visy;

   (d)requesting Amcor to compensate Visy for the loss by Visy to Amcor of any account for the supply of CFP; or

   (e)communicating to Amcor any price or prices at which Visy supplies or proposes to supply CFP to a customer or customers in Australia pursuant to any contract, arrangement or understanding with Amcor containing any provision referred to in sub-paragraph (a) above or provision to like effect.

2. Each of Pratt, Debney and Carroll be permanently restrained, by themselves, their servants or agents or otherwise howsoever, from being in any way, directly or indirectly, knowingly concerned in, or party to, any conduct of Visy in:

   (a)making a contract or arrangement or arriving at an understanding with Amcor containing one or more of the following provisions or provisions to like effect, namely that:

   (i)      Visy and Amcor permit each other to maintain approximately their current share of the market in Australia for the supply of CFP;

   (ii)     Visy and Amcor not seek to enter into contracts for the supply of CFP with each other's CFP customers;

   (iii) if, for one reason or another, Visy entered into a contract for the supply of CFP with a CFP customer of Amcor, then Visy not prevent or seek to prevent Amcor from entering into a supply contract with a customer or customers of Visy in order to replace the share of the CFP Market that Amcor had lost as a result of losing the supply contract to Visy;

   (iv) if, for one reason or another, Amcor entered into a contract for the supply of CFP with a CFP customer of Visy, then Amcor not prevent or seek to prevent Visy from entering into a supply contract with a customer or customers of Amcor in order to replace the share of the CFP Market that Visy had lost as a result of losing the supply contract to Amcor; or

   (v)    Visy and Amcor collaborate with each other in order to increase the prices at which they supplied CFP in the CFP Market from their then current levels;

   (b)giving effect to any contract, arrangement or understanding with Amcor containing any provision or provisions to like effect as one or more of the provisions set out in sub-paragraph (a) above;

   (c)requesting Amcor to quote a price or prices to a purchaser or potential purchaser of CFP at or above a level proposed by Visy;

   (d)requesting Amcor to compensate Visy for the loss by Visy to Amcor of any account for the supply of CFP; or

   (e)communicating to Amcor any price or prices at which Visy supplies or proposes to supply CFP to a customer or customers in Australia pursuant to any contract, arrangement or understanding with Amcor containing any provision referred to in sub-paragraph (a) above or provision to like effect.

   Other orders

3. Pratt and each of the first, second and third respondents shall implement within four months from the date of these orders, and undertake, at Mr Pratt’s expense, for a period of three years from the date of implementation, a trade practices compliance program that is in accordance with the Australian Standard for Compliance Programs AS-3806-1998 and provides for implementation of the program to be audited by an independent auditor, and is in a form agreed with the ACCC or approved by the Court, with regard to section 45 of the TPA.

4. Visy shall pay the costs of the ACCC of and incidental to this proceeding.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 1650 OF 2005

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant

AND:

VISY INDUSTRIES HOLDINGS PTY LIMITED
First Respondent

VISY INDUSTRIES AUSTRALIA PTY LIMITED
Second Respondent

VISY BOARD PTY LIMITED
Third Respondent

RICHARD PRATT
Fourth Respondent

HARRY DEBNEY
Fifth Respondent

ROD CARROLL
Sixth Respondent

JUDGE:	HEEREY J
DATE:	2 NOVEMBER 2007
PLACE:	MELBOURNE

REASONS FOR JUDGMENT
TABLE OF CONTENTS

1.0     Introduction........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [1]
2.0     The CFP market........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... [9]
3.0     Visy’s CFP operations........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [16]
4.0     Visy personnel........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [31]
5.0     Amcor personnel........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [35]
6.0     The Over-arching Understanding........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [41]

6.1  Giving effect to the Over-arching Understanding........ ........ ........ ........ ........ ........ ....... [48]

7.0     Annual Price Increase Understandings ........ ........ ........ ........ ........ ........ ........ ........ ........ ...  [61]

7.1  2000 Price Increase Understanding........ ........ ........ ........ ........ ........ ........ ........ ........ .. [61]

7.1.1  Arriving at the 2000 Price Increase Understanding........ ........ ........ ........ ........ .. [61]
        7.1.2  Giving effect to the 2000 Price Increase Understanding........ ........ ........ ........ ... [63]

7.2  2001 Annual Price Increase Understanding........ ........ ........ ........ ........ ........ ........ ....... [69]

7.2.1  Arriving at the 2001 Price Increase Understanding........ ........ ........ ........ ........ .. [69]
        7.2.2  Giving effect to the 2001 Price Increase Understanding........ ........ ........ ........ ... [72]

7.3  2002 Price Increase Understanding........ ........ ........ ........ ........ ........ ........ ........ ........ .. [76]

7.3.1  Arriving at the 2002 Price Increase Understanding........ ........ ........ ........ ........ .. [76]
        7.3.2  Giving effect to the 2002 Price Increase Understanding........ ........ ........ ........ ... [79]

7.4. 2003 Price Increase Understanding........ ........ ........ ........ ........ ........ ........ ........ ........ .. [83]

7.4.1  Arriving at the 2003 Price Increase Understanding........ ........ ........ ........ ........ .. [83]
        7.4.2  Giving effect to the 2003 Price Increase Understanding........ ........ ........ ........ ... [89]

8.0     Customer Price Understandings ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [93]

8.1  Goodman Fielder and Nestlé........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [93]

8.1.1  Arriving at the Goodman Fielder and Nestlé Price Understanding........ ........ .... [95]
        8.1.2  Giving effect to the Goodman Fielder and Nestlé Price Understanding........ ..... [97]

8.2  Fosters and Coke Price Understandings........ ........ ........ ........ ........ ........ ........ ........ . [109]

8.2.1  Arriving at the Fosters and Coke Price Understanding........ ........ ........ ........ ... [113]
        8.2.2  Giving effect to the Fosters and Coke Price Understanding........ ........ ........ .... [115]

8.3  Mildura Fruit Co Price Understanding........ ........ ........ ........ ........ ........ ........ ........ .... [123]

8.3.1  Arriving at the Mildura Fruit Co Price Understanding........ ........ ........ ........ ..... [124]
        8.3.2  Giving effect to the Mildura Fruit Co Price Understanding........ ........ ........ ...... [126]

8.4  National Foods Price Understanding........ ........ ........ ........ ........ ........ ........ ........ ...... [139]

8.4.1 Arriving at the National Foods Price Understanding........ ........ ........ ........ ....... [140]
        8.4.2  Giving effect to the National Foods Price Understanding........ ........ ........ ........ [142]

8.5  Parmalat Price Understanding........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [149]

8.5.1  Arriving at the Parmalat Price Understanding........ ........ ........ ........ ........ ........ . [150]
        8.5.2  Giving effect to the Parmalat Price Understanding........ ........ ........ ........ ........ .. [152]

8.6  Cadbury Schweppes Price Understanding........ ........ ........ ........ ........ ........ ........ ...... [165]

8.6.1  Arriving at the Cadbury Schweppes Price Understanding........ ........ ........ ...... [166]
        8.6.2  Giving effect to the Cadbury Schweppes Price Understanding........ ........ ....... [168]

8.7  Hardy Price Understanding........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [176]

8.7.1  Arriving at the Hardy Price Understanding........ ........ ........ ........ ........ ........ ..... [178]
        8.7.2  Giving effect to the Hardy Price Understanding........ ........ ........ ........ ........ ...... [182]

9.0     Compensation Understandings........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [194]

9.1  Inghams Compensation Understanding........ ........ ........ ........ ........ ........ ........ ........ ... [194]

9.1.1  Arriving at the Inghams Compensation Understanding........ ........ ........ ........ .... [195]
        9.1.2  Giving effect to the Inghams Compensation Understanding........ ........ ........ ..... [199]

9.2  George Weston Compensation Understanding........ ........ ........ ........ ........ ........ ........ [208]

9.2.1  Arriving at the George Weston Compensation Understanding........ ........ ........ [209]                
        9.2.2  Giving effect to the George Weston Compensation Understanding........ ........ . [215]

9.3  OSI/Hans Compensation Understanding........ ........ ........ ........ ........ ........ ........ ........ . [227]

9.3.1  Arriving at the OSI/Hans Compensation Understanding........ ........ ........ ........ . [228]
        9.3.2  Giving effect to the OSI/Hans Compensation Understanding........ ........ ........ .. [232]

9.4  Merino Compensation Understanding........ ........ ........ ........ ........ ........ ........ ........ ..... [241]

9.4.1  Arriving at the Merino Compensation Understanding........ ........ ........ ........ ..... [242]
        9.4.2  Giving effect to the Merino Compensation Understanding........ ........ ........ ...... [246]

9.5  Gillette Compensation Understanding........ ........ ........ ........ ........ ........ ........ ........ ..... [255]

9.5.1  Arriving at the Gillette Compensation Understanding........ ........ ........ ........ ...... [256]
        9.5.2  Giving effect to the Gillette Compensation Understanding........ ........ ........ ....... [259]

10.0   Conduct Concerning Eagle Boys........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [268]
11.0   Contraventions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [286]
12.0   Accessories........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. [293]
13.0   Penalties proposed........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [297]
14.0   Assessment of penalties........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [302]
15.0   Cartel conduct........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [306]
16.0   Visy’s conduct........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [312]
17.0   Mr Pratt’s conduct........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [322]
18.0   Mr Debney’s conduct........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [327]
19.0   Mr Carroll’s conduct........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [332]
20.0   Other orders........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [333]

1.0      Introduction

1. The applicant Australian Competition and Consumer Commission alleges that between January 2000 and October 2004 companies in the Visy Group and certain officers of those companies engaged in price fixing and market sharing with companies in the Amcor Group, contrary to s 45 of the Trade Practices Act 1974 (Cth). The respondents have admitted liability. The Court has been asked to impose penalties and make other appropriate orders. The parties have tendered an agreed statement of facts. This means that the parties agree that, for the purposes of this proceeding, the facts in this statement are not to be disputed: see Evidence Act 1995 (Cth) s 191. The parties say that this agreement is not to be taken as an admission to those facts outside the context of this proceeding. I am not bound to accept facts merely because they have been agreed between the parties. Also I can draw inferences from such of the agreed facts as are accepted.

2. Visy and Amcor were the major participants in the market for the supply of corrugated fibreboard packaging (CFP) products in Australia.  Between them they held over 90 per cent of that market. 

3. Broadly speaking, the contraventions fall into four categories. 

4. First, there was an Over-arching Understanding made in early 2000 under which Amcor and Visy agreed to maintain their respective market shares and not to deal with each other’s customers.  If a customer did change suppliers, the firm receiving that new customer would provide one of its own to the other by way of “compensation”.  In effect, there would be a swapping of customers (although the customers were not to know this).  Further, Visy and Amcor would collaborate with each other in order to increase prices. 

5. Secondly, there were Annual Price Increase Understandings whereby increases in prices were agreed in each of the years 2000, 2001, 2002 and 2003.

6. Thirdly, there were Customer Price Understandings whereby prices were agreed in respect of particular customers.

7. Fourthly, there were Compensation Understandings whereby, in respect of particular customers who had changed from one supplier to the other, that supplier would provide another customer or customers in exchange.  It worked this way.  If, say, Amcor customer X decided to switch to Visy, Amcor and Visy would get together and decide on a Visy customer, say Y, who would be provided to Amcor as “compensation” for the loss of X.  When Y’s contract came up for renegotiation, Visy and Amcor would exchange details of proposed prices and other terms so as to ensure that the deal offered to Y by Visy was much less attractive than Amcor’s.  Y would then, as Visy and Amcor intended, accept Amcor’s offer.

8. The Commission has not proceeded against those on the Amcor side of this cartel because in late 2004 Amcor approached the Commission and admitted liability.  The Commission applied its Leniency Policy for Cartel Conduct, published in 2003, under which the first party to disclose a cartel of which the Commission is unaware will receive an immunity, provided it is not the “clear leader”, gives full and frank disclosure, and continues to cooperate with the Commission. In unrelated litigation Amcor had sued former executives and obtained a Court order for a search of their premises.  Incriminating material, including tape recordings of conversations, was discovered and on its solicitors’ advice Amcor approached the Commission.  Details of these events will be found in my earlier judgment on an interlocutory application: Australian Competition and Consumer Commission v Visy Industries Holdings Pty Ltd (No 2) [2007] FCA 444 at [7]-[52].

2.0      The CFP market

1. A vast range of consumer goods are packaged in CFP.  They include groceries, beverages, dairy products, fruit, produce, meat, poultry, seafood and confectionery.  Returnable plastic crates, shrink wrap and other packaging products compete in segments of the CFP market, but otherwise there are no packaging materials which are reasonably substitutable for, or in close competition with, CFP products in relation to the packaging of the goods mentioned.  CFP is used to make the ubiquitous cardboard box.

2. The type of CFP products and associated services supplied by Visy and Amcor would vary substantially between customers due to differing customer requirements in terms of board paper type, strength, construction, sheet size, design style, print characteristics and method of assembly.  Different board grates were used in the manufacture for supply of CFP products to suit the different applications of the products.  Corrugated boxed were supplied in a number of different styles.  CFP products could have printing applied either in a pre-print or post-print process.

3. In most cases CFP products were supplied to the customer’s specifications.  In particular industries, some standard sized CFP boxes were used, such as fruit and other produce.  However, further value adding could be required such as the individual customer’s logo or product information.

4. The CFP services supplied by Visy and Amcor in connection with the supply of CFP products included performance and quality testing, art graphics and printing services, packaging design, performance and cost optimisation, development services, tooling and packaging systems, transport and delivery, warehousing of stock and supply chain cost analysis services. 

5. The cost of supplying different CFP products is affected by product type, dimensions, board grade, printing, order quantity, freight and other factors.

1. From 2000 to 2004 the value of the CFP market was between $1.8 and $2 billion per annum.  Details of some individual customers’ requirements have been the subject of confidential evidence.  However, it can be said that some of the larger customers would have annual purchases of the order of $20 million or more.  There were thousands of non-contract customers who contributed approximately $212 million per annum in gross sales, constituting 30 per cent in value of Visy’s customers

2. Visy and Amcor were in competition with each other in the CFP market, except where such competition was reduced or eliminated as a result of the cartel conduct with which this case is concerned.

3.0      Visy’s CFP operations

1. The relevant company of the Visy Group is the third respondent Visy Board Pty Limited to which I shall refer hereafter simply as Visy.  Visy manufactures CFP products from both recycled and kraft (ie virgin) paper.  It has manufacturing plants at Dandenong, Campbellfield and (since 2002) Wodonga in Victoria, Warwick Farm and Smithfield in New South Wales, Carole Park in Queensland; Gepps Cross in South Australia, and O’Connor in Western Australia. 

2. Visy is a vertically integrated operation.  It purchases packaging paper from another member of the Visy Group, Visy Pulp and Paper Pty Ltd, which operates seven manufacturing establishments in Australia.  They produce annually more than 1 million tonnes of packaging paper, of which 750,000 tonnes is made from recycled paper and 300,000 tonnes from kraft.

3. Since 2000 the Visy Group has increased its production capacity and production of both pulp and paper products and CFP products. 

4. Since 1995 Visy increasingly experienced production capacity constraints, particularly in Queensland.  Transport of products across State borders alleviated these constraints, but this added to distribution costs.  In 2002 Visy’s new Wodonga plant commenced operation.  This substantially increased Visy’s production capacity for Victoria, New South Wales and South Australia. 

5. The best available estimate of market share of CFP supplied is the estimated share by volume per square metre of CFP sheet manufactured.  The following table sets out the approximate share of the CFP market in Australia between the financial years 1999 and 2005:

1999	2000	2001	2002	2003	2004	2005
Visy	46	47	49	51	52	53	55
Amcor	47	45	44	42	40	38	36

1. During the period January 2000 to October 2004 Visy supplied approximately 250 to 300 companies that had been customers of the Amcor Group immediately beforehand.  The estimated annual sales value of those customers was $75 to $80 million per annum.  During the same period Visy ceased supplying approximately 100 to 125 companies by reason that they had entered into supply arrangements with the Amcor Group.  Estimated annual sales value of those customers was $40 to $45 million per annum.  The numbers of customers moving between Amcor and Visy during that period includes customers referred to hereafter as having been transferred as “compensation”.

2. Most of Visy’s and Amcor’s largest customers were supplied under specifically negotiated contracts.  These contracts specified the manner in which prices would be reviewed during the term of the contract.  Typically, prices were held constant for a period and then increased by a specified fraction of CPI increases or cost movements.

3. The contracts negotiated between suppliers of CFP and individual customers dealt with a number of practical matters, including technical specifications of each product which for some of the large customers could run to sometimes thousands of different products, order quantities, special palletising requirements, special packaging equipment, delivery, and timing of deliveries.

4. Such matters affected the price to be charged by suppliers of the CFP for the products and services to be supplied.  The charges could be affected by terms as to the period during which prices would be held constant and the manner of the increase, charges for the cost of tooling, volume rebates, discounts for early payment, sign on fees and contribution to capital requirements of a customer.  Contracts sometimes included a “meet the market” clause by which the customer was entitled to seek prices from another supplier and, if the supplier did not agree to meet that price, the customer could obtain supply from the other supplier.

5. The majority of contracts with customers are renewed or extended with the existing supplier.  However a customer might seek an offer from an alternative supplier under a “meet the market” clause.  In such a case supply may not change but the method is used to market check the price levels or competitiveness. 

6. If a customer decides to seek an offer or tender from an alternative supplier, the tender process typically lasts several months and requires substantial expenditure, both for the potential alternative supplier and the customer.  This is because typically the customer purchases a large number of CFP products and the alternative supplier must undertake a process of learning about the customer’s requirements and its current products.

7. An incumbent supplier has a number of advantages during that tender process, including the existing commercial relationship, a better understanding of the customer’s product requirements, forecasting schedule and order patterns, current equipment on site, less transaction costs for the customer, familiarity with the customer’s intellectual property and technology and the operation of the “better the devil you know” factor.

8. Costing an offer for a new customer depends on a number of factors including board grades, box design, printing requirements, the number of passes in the separate manufacturing task, minimum quantities for each order, the number of stock keeping units (SKU) that is an individual CFP product with a designated order number, delivery times and waste levels. 

9. During 2000 to 2003 Visy implemented a general price increase to its non-contract customers once a year.  Its standard terms and conditions permitted Visy to increase prices on giving 30 days notice.  Visy would determine the amount and date of the increase and advise its State managers to write to non-contract customers.  State mangers had the discretion to determine whether to implement in respect of any particular customer the four general price increases which occurred from 2000 to 2003.  That discretion was in fact exercised on some occasions.

10. In the two year period to late 1999 both Visy and Amcor had incurred significant net trading losses due in part to a price war between them.  From January 2000 Visy adopted some strategies to return the business to profit including cessation of free equipment deals, improved trading terms, increased charges for tooling services and volume focus to shift to retention of large accounts and growth in small/medium accounts.

4.0      Visy personnel

1. At the time of the contraventions, the fourth respondent Mr Richard Pratt was a director of Visy.  It is a private company owned by Mr Pratt and his family.  As can be seen from the brief description of its operations, Visy is a very large company.  The Visy Group of which it is a member is larger again.

2. The fifth respondent Mr Harry Debney was the Chief Executive Officer of Visy. 

3. The sixth respondent Mr Rod Carroll was the General Manager of Visy.

4. Mr Pratt is still a director of Visy.  Mr Debney and Mr Carroll have resigned their respective positions.

5.0      Amcor personnel

1. Mr Russell Jones was the Managing Director and Chief Executive Officer of Amcor Limited, the holding company of the Amcor Group and a company listed on the Australian Stock Exchange.

2. Mr Peter Brown was the Managing Director of Amcor Australasia, a division of Amcor Limited which conducted the business of manufacturing and supplying CFP.

3. Mr Peter Sutton was from 1 July to 30 September 2003 Deputy Managing Director of Amcor Australasia and from 1 October 2003 until 6 December 2004 the Managing Director of that division. 

4. From 1 February 2000 until 30 June 2000 Mr James Hodgson was Group General Manager, Corrugating, Northern Region, of Amcor Fibre Packaging Australasia (AFPA), a subdivision of Amcor Australasia.  From about 1 July 2000 until 1 October 2004 Mr Hodgson was Group General Manager of AFPA. 

5. From January to July 2000 Mr Edward Laidlaw was General Manager Sales/Group Marketing Executive of Amcor Australasia.  From August 2000 until September 2002 he was General Manager - Sales and Marketing of AFPA.  On 2 September 2002 he was appointed General Manager, Sales - Beverage and Processed Food Packaging of AFPA until 28 February 2003.  From 1 March 2003 until 30 November 2004 Mr Laidlaw was Group General Manager, Marketing and Technology of Amcor Australasia. 

6. From July to December 2001 Mr Ian Sangster was Regional General Manager, Northern Region of AFPA.  From January until December 2002 Mr Sangster was National Marketing Manager for CFP for fresh foods of AFPA.  He was Acting General Manager, Sales and Marketing of AFPA from December 2002 until August 2003.  He then was appointed General Manager Sales and Marketing Australia of Amcor Australasia and remained in this position until October 2004. 

6.0      The Over-arching Understanding

1. Between January and April 2000 Visy and Amcor arrived at the Over-arching Understanding.  It contained the following provisions:

   (a)Visy and Amcor would permit each other to maintain approximately their then current share of the CFP market;

   (b)Visy and Amcor would not seek to enter into contracts for the supply of CFP with each other’s principal CFP customers;

   (c)If, for one reason or another, Visy did enter into a contract for the supply of CFP with a principal CFP customer of Amcor, then Visy would not prevent or seek to prevent Amcor from entering into a supply contract with a customer or customers of Visy in order to replace the share of the CFP market that it had lost as a result of losing the supply contract to Visy;

   (d)The converse would apply when Amcor entered into a contract with a principal CFP customer of Visy;

   (e)Visy and Amcor would, in future, collaborate with each other in order to increase the prices at which they supplied CFP;

   (f)Visy would appoint Mr Carroll as its nominated contact person with Amcor to effect the implementation of the Over-arching Understanding; and

   (g)Amcor would appoint Mr Laidlaw as its nominated contact person with Visy.

2. In these reasons, where there is an account of a conversation, such account is based on the agreed statement of facts.  Unless otherwise indicated, the statement of agreed facts records what was the substance of conversations.  It uses the formula “X said words to the effect that”.  It does not purport to be an agreement as to the actual words used.  Also it seems unlikely that the term “Over-arching Understanding” was actually used at the time.  However, the term captures the essence of the understanding which the parties arrived at.  It is convenient to use it in this descriptive sense.

3. The Over-arching Understanding was arrived at as a result of a series of meetings between Mr Debney and Mr Brown at Mr Brown’s home in Glen Iris, Melbourne between January and April 2000.  Mr Debney said to Mr Brown that he believed it was not in Visy’s interests to continue the price war with Amcor and that Visy intended to increase its CFP prices to more realistic levels.  He said he wanted the intense competition between Visy and Amcor to cease so that each company could then sell CFP at sustainable price levels.

4. Mr Debney proposed that Visy and Amcor would continue to enjoy roughly the current share each had of the CFP market.  They would not poach each other’s customers and prices would be increased from their current unsustainable levels.  Mr Debney said that these proposals were the basic principles which Visy and Amcor should agree to and abide by.  They should comply with those principles and not take any action which would precipitate a return to price war conditions.  He intended to ensure that Visy abided by these principles.

5. Mr Brown said that Amcor would agree to act in accordance with the principles proposed by Mr Debney, subject to Visy also agreeing to so act.  Mr Debney said that Visy would.  (For the purposes of this proceeding only, Mr Debney agrees with the version of events generally set out in [42]-[44] save and except that he does not agree with the precise chronological sequence of the discussions.)

6. Mr Debney said that he would appoint Mr Carroll to be the Visy nominated contact person between Visy and Amcor on the issues raised.  Mr Brown said that he would appoint Mr Laidlaw to be the Amcor contact person.

7. In this and other instances of Understandings, the agreed statement of facts says, and I accept, that the Understanding is proved not only by the conversations, but is also to be implied from the conduct which constitutes giving effect to the Understandings.

6.1      Giving effect to the Over-arching Understanding

1. Mr Debney told Mr Carroll that he was Visy’s nominated contact person with Amcor and at around the same time Mr Brown told Mr Laidlaw that he was Amcor’s nominated contact person.

2. In July 2000 Mr Carroll met with Mr Hodgson and Mr Laidlaw at Rockman’s Regency Hotel in Melbourne.  Mr Carroll or Mr Hodgson said to the other that Visy and Amcor had agreed that they would not poach each other’s principal CFP customers, that their respective shares of the CFP market would remain at roughly their current levels and each would focus on increasing its prices for CFP.

3. Mr Carroll said that he had been appointed as the contact person at Visy with whom Amcor could discuss issues and that Mr Laidlaw should deal with him.  He said that he would buy Mr Laidlaw a pre-paid mobile phone so that he and Mr Carroll could contact each other.  Mr Hodgson said to Mr Carroll that Visy and Amcor should agree on minimum floor prices for CFP.  Mr Carroll responded that Visy and Amcor should give some thought to the suggestion and talk about it later. 

4. Between July 2000 and November 2004 Mr Carroll and Mr Laidlaw met some 30 to 40 times to discuss issues or matters arising from the Over-arching Understanding.  These meetings were held at Rockman’s Regency Hotel in Melbourne, the Tudor Motel in Box Hill, the Elizabethan Lodge in Blackburn North, Westerfolds Park on Fitzsimons Lane, Templestowe, the Templestowe Park on Porter Street, Templestowe, the Cherry Hill Tavern in East Doncaster and Myrtle Park on Severn Street, North Balwyn.  Mr Carroll and Mr Laidlaw also discussed matters arising from the Over-arching Understanding by telephone on numerous occasions.  The telephone discussions were generally initiated from public telephones and received on Mr Carroll’s or Mr Laidlaw’s mobile telephones.  They had exchanged mobile telephone numbers either at the meeting referred to at [49] – [50] or soon after.  (For the purposes of this proceeding only, Mr Carroll agrees with the version of events generally set out in this paragraph, save and except that he does not agree that he and Mr Laidlaw met or spoke on average more than once per month.)

5. In late 2000 Mr Carroll provided Mr Laidlaw with an Optus pre-paid mobile telephone and the telephone number for it and a new mobile number on which Mr Laidlaw was to contact him.  Mr Carroll told Mr Laidlaw he should use the Optus mobile for the purpose of contacting him in relation to the Over-arching Understanding.

6. Between late 2000 and late 2001 Mr Carroll and Mr Laidlaw used their mobile telephones to contact each other to discuss issues arising from the Over-arching Understanding.

7. Later in these reasons there is frequent reference to discussions between Mr Carroll and Mr Laidlaw.  Those discussions occurred either at the various venues referred to in [51] above or by telephone.

8. Between July 2000 and October 2004 Mr Hodgson attended about five to ten of the meetings between Mr Carroll and Mr Laidlaw.

9. Between mid 2000 and September 2003, about twice to three times per year, Mr Debney met with Mr Brown to discuss various industry matters and issues or matters arising from the Over-arching Understanding.  These meetings were generally held at Crown Towers, Southbank.

10. Towards the middle of 2001 Amcor became concerned that the Over-arching Understanding was in danger of collapsing.  On 21 May 2001 at Mr Jones’ request Mr Pratt met with Mr Jones at the All Nations Hotel in Richmond.  Mr Pratt communicated to Mr Jones that Visy would adhere to an understanding that Mr Debney had reached with Mr Brown, that is to say, the Over-arching Understanding.

11. On 27 September 2002 Mr Debney met with Mr Brown at the Crown Crystal Club in Crown Towers, Southbank.  Mr Brown said that Mr Hodgson had some concerns about Visy’s behaviour in the CFP market and that Mr Hodgson wanted to meet with Mr Debney to discuss these matters and to have Mr Debney confirm that Visy would continue to honour the Over-arching Understanding.  Mr Debney agreed.  As a result, on 20 October Mr Debney met with Mr Hodgson at Crown Towers to discuss the Over-arching Understanding. 

12. On 3 September 2003 Mr Debney met with Mr Brown and Mr Sutton at the Crown Crystal Club.  Mr Brown said that Mr Sutton had his full confidence and that he believed that Mr Sutton would be able to work with Mr Debney to continue implementing the Over-arching Understanding to maintain a stable market.  Mr Debney said that he believed he could work with Mr Sutton to maintain the stable market.  Mr Sutton said the same thing.

13. Between January and October 2004 Mr Sangster attended about three to five of the meetings between Mr Carroll and Mr Laidlaw. 

7.0      Annual Price Increase Understandings

7.1      2000 Price Increase Understanding

7.1.1    Arriving at the 2000 Price Increase Understanding

1. Between January and mid-March 2000 Visy and Amcor arrived at the 2000 Price Increase Understanding.  It contained provisions to the effect that Visy would increase its prices for CFP supplied to its non-contract customers by about 7 per cent with effect from about May 2000 and Amcor would increase its prices by approximately 7 per cent with effect from the same time. 

2. The 2000 Price Increase Understanding was arrived at as a result of meetings between Mr Debney and Mr Brown between January and mid-March 2000.  At the meetings Mr Debney said to Mr Brown that Visy had conducted an evaluation that a general price increase was justified and had determined to implement such an increase.  Mr Debney said Amcor should agree to implement a price increase for non-contract customers from around May 2000 and that Visy would lead with an increase of its prices for non-contract customers of 7 per cent if Amcor would agree to follow that increase.  Mr Brown said to Mr Debney that Amcor would follow a price increase by Visy for non-contract customers of 7 per cent but Visy must go first. 

7.1.2    Giving effect to the 2000 Price Increase Understanding

1. On 8 March 2000 Visy notified certain of its non-contract customers that its prices for the supply of CFP wax boxes would increase by 8 per cent with effect from 10 April 2000.  Wax boxes constitute a very small percentage of boxes supplied to non-contract customers. 

2. On 21 March 2000 Visy notified certain of its non-contract customers that its prices for the supply of CFP would increase by 7 per cent with effect from 1 May 2000.

3. From about 21 March 2000 Visy sent letters to its non-contract customers (with some exceptions) informing them that Visy would increase its prices for the supply of CFP by 7 per cent with effect from 1 May 2000.

4. From about 11 April 2000Amcor sent letters to its non-contract customers informing them that it would increase its prices for the supply of CFP by 7 per cent with effect from 8 May 2000. 

5. From about 1 May 2000 Visy increased its prices for the supply of CFP to many of its non-contract customers by 7 per cent. 

1. In February 2004 Amcor submitted the tender to Gillette for the supply of CFP containing prices at around the prices that Amcor believed Visy was then supplying.  Amcor’s belief was based on previous quotes by Amcor to supply CFP to Gillette, information obtained by Amcor representatives from the CFP market and Amcor’s relationship with Gillette.  Mr Laidlaw was not directly involved in the tender negotiations.

2. On about 6 February Visy submitted a tender to Gillette and on 9 February, at the request of Gillette, the same prices were submitted in a different format. 

3. To go back a little in time, towards the end of the previous year, Mr Paul Meldrum of Visy and the Visy account manager, Mr Scott Kerr, had attended a meeting at Gillette’s plant and head office in Scoresby, Victoria with Ms Nevenka Odnoral at which Ms Odnoral said that Gillette had obtained some prices from competitors of Visy and that Visy’s current prices were higher than the price Gillette had received. 

4. Shortly after 9 February 2004 Mr Meldrum received a phone call from Mr Michael Sirakoff of Gillette who told him that Visy’s prices were not the most competitive and invited him to submit a revised tender.

5. On 16 February Visy submitted a revised price schedule to Gillette reflecting a 5 per cent reduction in respect of the price of certain products and services. 

6. Gillette through its representative Mr Sarakoff held the belief, on the basis of his review of the proposed prices of the two companies, that Visy’s prices were higher than Amcor’s.

7. In late February Mr Sirakoff had a discussion with Mr Meldrum by telephone.  Mr Sirakoff told him that Gillette had received Visy’s tender and wanted to know whether Visy was interested in revising its tender to offer lower prices.  Mr Meldrum responded to the effect that Visy’s prices were firm and he would not submit any further revised prices.

8. On 20 July 2005 Gillette entered into a CFP supply agreement with Amcor for a period of three years commencing on 20 July 2004.

10.0     Conduct concerning Eagle Boys

1. Eagle Boys Dial-A-Pizza Australia Pty Limited is a takeaway and delivery pizza company located in south east Queensland.  It operates approximately 170 franchised stores around Australia, mostly in Queensland, Western Australia and New South Wales. 

2. Between about mid-2002 and November 2002 Mr Laidlaw told Mr Carroll that the prices that Amcor proposed to quote to Eagle Boys.  Either Mr Carroll or Mr Laidlaw said to the other that they should continue to discuss the prices to be submitted to Eagle Boys.  The other said he agreed. 

3. By engaging in the conduct referred to in the preceding paragraph Visy gave effect to the Over-arching Understanding.

4. In August 2002 Visy submitted a proposal to Eagle Boys for the supply of CFP.  On 14 November it submitted a revised proposal. 

5. On 27 November 2002 Amcor submitted a proposal to Eagle Boys. 

6. Eagle Boys representatives Mr Tom Potter and Mr Ian Smallwood, on the basis of their review of the proposed prices, held the belief that Visy’s average prices were higher than Amcor’s prices.

7. On 28 January 2003 Mr Potter informed Mr Peter Allen of Visy that Visy’s proposals were uncompetitive.  He invited Visy to submit a revised proposal.

8. After that conversation, and before 6 February, Mr Allen telephoned Mr Potter and offered to reduce Visy’s price for a 12 inch pizza box by a specified amount and said that if the resulting price was attractive to Eagle Boys, Mr Allen would reconsider Visy’s prices for other size pizza boxes.

9. On about 6 February  Mr Potter sent to Mr Allen a letter attaching a table purporting to compare Visy’s prices for large pizza cartons with those that Potter believed Visy charged Pizza Hut and Domino’s for the same product.  Mr Potter also referred to the original quote and a subsequent reduced quote for that product provided by Visy to Eagle Boys. 

10. On 19 February Mr Allen wrote to Mr Potter rejecting Mr Potter’s comments and reconfirming the prices quoted by Visy. 

11. On 26 February  Mr Potter informed Mr Carroll that Visy’s proposal to Eagle Boys was higher than the prices at which Visy supplied Eagle Boys’ competitors Pizza Hut and Domino’s.

12. Visy believed throughout the period 2000 to 2003 that Visy’s supply arrangements with Domino’s and Pizza Hut were not comparable to Eagle Boys.  Eagle Boys required 8 million boxes per annum as against 30 million for Domino’s and 28 million for Pizza Hut.  Eagle Boys required distribution to regional centres in New South Wales whereas Domino’s and Pizza Hut generally required distribution to capital city distribution centres only.  Eagle Boys’ printing requirements were more difficult.  Eagle Boys sought the more expensive B Flute rather than the E flute supplied to Pizza Hut. 

13. On 28 February  Visy submitted confirmation of its lower quote.

14. In relation to the prices proposed by Amcor, Eagle Boys’ representatives Mr Potter and Mr Smallwood held the belief, on the basis of their review of the proposed prices of Visy and Amcor, that Visy’s average prices were higher than Amcor’s.

15. Between late February and early March 2003, Mr Carroll and Mr Laidlaw had a discussion in which Mr Carroll told Mr Laidlaw the prices Visy had quoted to Eagle Boys.  Mr Laidlaw asked Mr Carroll not to lower the prices that Visy had quoted and to increase those prices.  Mr Carroll said that Eagle Boys had told him that it believed that the prices Visy had quoted were not as competitive as Visy supplied to other customers in the pizza industry, including Pizza Hut, such that Visy would not increase the prices that it had quoted to Eagle Boys.  Mr Carroll said Amcor was seeking to obtain unrealistically high prices from Eagle Boys and would need to lower its prices to finalise the supply agreement.  Mr Laidlaw said that Amcor would consider what Mr Carroll had proposed and try to reach an agreement with Eagle Boys.

16. On about 3 March and 17 March Amcor submitted a revised proposal to Eagle Boys containing prices and a rebate structure.

17. On about 16 April Amcor entered into a supply agreement with Eagle Boys.

18. By engaging in the conduct referred to in [271]-[282] above Visy gave effect to the Over-arching Understanding.

11.0     Contraventions

1. Relevantly for present purposes, s 45 of the Trade Practices Act prohibits corporations arriving at, or giving effect to, anti-competitive understandings as therein defined.

2. Section 45(2)(a) provides that a corporation shall not “arrive at” an understanding if it contains

   (i)        an “exclusionary provision”; or

   (ii)a provision which has the purpose, or would be likely to have the effect, of “substantially lessening competition”.

3. Section 45(2)(b) provides that a corporation shall not “give effect to” a provision of an understanding if the provision

   (i)is an “exclusionary provision”; or

   (ii)has the purpose, or has or is likely to have the effect, of “substantially lessening competition”.

4. “Exclusionary provision” is defined in s 4D. A provision of an understanding is an “exclusionary provision” if (again, relevantly for the circumstances of this case)

   (a)the understanding was arrived at between persons competitive with each other; and

   (b)the provision has the purpose of preventing, restricting or limiting the supply of goods to particular persons.

5. Section 45A deals specifically with price fixing. Section 45A(1) provides that a provision which has the purpose, or is likely to have the effect, of fixing, controlling or maintaining prices is deemed to have the purpose or effect of substantially lessening competition. So once price fixing is established, the “substantial lessening of competition” test is satisfied, without any need for further evidence.

6. In arriving at the Understandings with Amcor which concerned the fixing of prices, Visy contravened s 45(2)(a)(ii), as it applies by virtue of s 45A. Insofar as the Understandings involved market sharing, swapping of customers and the like, they contained exclusionary provisions because they prevented or restricted the supply of goods by Visy and Amcor to particular customers. In arriving at such Understandings, Visy contravened s 45(2)(a)(i). By its conduct in applying those Understandings in the case of particular customers, Visy gave effect to the unlawful Understandings and thus contravened s 45(b)(i) and (ii).

7. The orders I pronounce today are in a form agreed by the parties. They record the Court’s declaration as to what the Court finds to be the contraventions of the various respondents. The formal orders are made by reference to the paragraphs in the Commission’s statement of claim. The orders include declarations that Visy has committed 69 contraventions. However, s 76(3) provides that a person is not liable for more than one pecuniary penalty in respect of the same conduct. The net result is that penalties may be imposed for a total of 37 contraventions by Visy.

12.0     Accessories

1. Under s 76(1)(e) of the Trade Practices Act a person who has been knowingly concerned in, or a party to, a contravention of certain provisions of the Act, including s 45, is liable to a pecuniary penalty. Under s 80(1)(e) the Court may grant an injunction against such a person.

2. By meeting with Amcor’s CEO Mr Jones at the All Nations Hotel and confirming that Visy would adhere to the Over-arching Understanding, Mr Pratt was knowingly concerned in Visy’s giving effect to that Understanding.  The Commission does not seek the imposition of a pecuniary penalty on Mr Pratt because he and his family are the owners of Visy and thus the burden of the penalty on the company (not to mention legal costs) will fall on him personally.  Decisions of this Court recognise that it is legitimate to avoid double counting where an individual contravenor is an owner of a corporate contravenor: Australian Competition and Consumer Commission  v Ithaca Ice Works Pty Ltd (2000) ATPR 41-777 at [13], Australian Competition and Consumer Commission v Commercial and General Publications Pty Ltd (No 2) (2002) ATPR 41-905 at [27]-[29]. I accept this should be so in the present case. However, Mr Pratt’s ownership of Visy has other significance for this case. I shall return to this aspect.

3. Mr Debney was knowingly concerned in, or a party to, 14 contraventions.

4. Mr Carroll was knowingly concerned in, or a party to, 49 contraventions.

13.0     Penalties proposed

1. The maximum penalties applicable at the time of the contraventions in this case were, in respect of each contravention, $10 million for a corporation and $500,000 for an individual: s 76(1A)(b) and (1B). In 1993 and 1994 the maximum penalties had been increased to their present level from $250,000 and $50,000 respectively: s 10 of the Trade Practices Legislation Amendment Act 1992 (Cth) and s 46 Industrial Relations Reform Act 1993 (Cth). As from 1 January 2007 the penalties for a corporation may exceed $10 million where the Court can determine the benefit obtained as a result of the contravening. The maximum penalty is three times the value of that benefit or 10 per cent of annual turnover, whichever is the greater: Trade Practices Legislation Amendment Act (No. 1)2006 (Cth), Sch 9 Pt 1. However, these penalties only apply to contraventions committed after 1 January 2007.

2. In the case of Visy, the Commission proposes, and Visy does not contest, a penalty of $36 million.  It is sufficient to impose one penalty rather than separate penalties for each contravention.  The Commission arrives at the proposed figure as follows:

   1.The single most serious contravention was Visy’s arriving at the Over-arching Understanding.  It should attract a significant penalty, and the Commission submits that a penalty in the vicinity of $7 million is appropriate (in the context of the maximum available penalty being $10 million);

   2.The measures subsequently taken by Visy over the relevant period to give effect to the Over-arching Understanding (putting to one side the specific conduct relied upon as constituting the arriving at and giving effect to the 16 sub-understandings admitted by the respondents, addressed in the next three sub-paragraphs) should attract a penalty in the vicinity of $4 million;

   3.The four annual Price Increase Understandings (2000 to 2003) were very serious contraventions involving price fixing.  The conduct of Visy in arriving at the 2000 and 2001 Price Increase Understandings on the one hand was, to a certain degree, more serious than its conduct in arriving at the 2002 and 2003 Price Increase Understandings, because the latter understandings were expressly qualified so as to allow each of Visy and Amcor to make “some exceptions [to the implementation of the price increase] of its choosing”, whereas the former understandings were not qualified.  Visy’s contravention in arriving at the 2000 Price Increase Understanding should attract a $2 million penalty, and its contravention in arriving at the 2001 Price Increase Understanding should attract a further $2 million penalty.  Visy’s two contraventions in arriving at the 2002 and 2003 Price Increase Understandings should attract a $1.5 million penalty for each contravention.  In the case of all four annual Price Increase Understandings, Visy’s penalty for giving effect to the understandings should be $1.25 million each.  The total of the penalties which should be imposed in respect of the four annual Price Increase Understandings is therefore in the vicinity of $12 million;

   4.The Mildura Fruit Co Price Increase Understanding stands outside the contraventions by Visy in relation to the other named customer understandings, as it involves price fixing, and is a more serious set of contraventions.  It should attract a penalty of $2 million, made up of $1 million in respect of arriving at the understanding, and $1 million in respect of giving it effect;

   5.The 11 instances of arriving at further understandings in relation to named customers, and giving effect to them, should attract $1 million penalties each, $500,000 being attributable to arriving at the understanding, and $500,000 being attributable to giving effect to the understanding.  Each instance involves a pair of contraventions, independent from the fact that the same conduct constituted giving effect to the Over-arching Understanding;

   6.The Over-arching Understanding was largely given effect by Visy arriving at, and giving effect to, the 16 further understandings admitted in the proceeding. However, by reason of s 76(3) of the Trade Practices Act, it is not submitted that any further penalties should be attributed to each instance of giving effect to the Over-arching Understanding constituted by the same conduct which constituted the contraventions referred to in the preceding three sub-paragraphs.

3. In the case of Mr Debney, the Commission proposes, and he accepts, a total penalty of $1.5 million as follows:

   1.Arriving at the Over-arching Understanding is in the category of the most serious conduct in the subject of this case.  A penalty of $400,000 should be imposed;

   2.Giving effect to the Over-arching Understanding (viewed separately from arriving at the separate understandings) should attract a substantial penalty near the top end of the range: $320,000;

   3.His other conduct, arriving at six understandings, should incur a penalty of $130,000 each, totalling $780,000.

4. In the case of Mr Carroll, the Commission proposes, and he accepts, a total penalty of $500,000.  He was a senior Visy executive who had a very substantial role in giving effect to the Over-arching Understanding over almost five years. He was appointed by Mr Debney to have the day to day management of that understanding.  He was involved in making or giving effect to 15 of the 16 sub-understandings.

5. The Commission accepts that Mr Carroll was appointed to his position by Mr Debney after the latter had arrived at the Over-arching Understanding and at all times he reported to Mr Debney and was acting under his instructions.

14.0     Assessment of penalties

1. Section 76(1) of the Trade Practices Act provide that the Court may order the payment of such pecuniary penalty as the Court determines to be appropriate “having regard to all relevant matters” including four matters expressly mentioned:

   (i)the nature and extent of the act or omission constituting the contravening conduct;

   (ii)the nature and extent of any loss or damage suffered as a result of the contravening conduct;

   (iii)the circumstances in which the act or omission took place; and

   (iv)whether the contravenor has previously been found by the Court to have engaged in similar conduct.

2. Decisions of this Court have identified additional relevant factors which can be taken into account (see Trade Practices Commission v CSR Ltd (1991) ATPR 41-076, at 52,152-52,153; Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd (1996) ATPR 41-515 at 42,444-42,445):

   (v)the size of the contravening company;

   (vi)the degree of its power, evidenced by its market share and the ease of entry into the market;

   (vii)the deliberateness of the contravention and the period over which it extended;

   (viii)whether the contravention arose out of the conduct of senior management or at a lower level;

   (ix)whether the company had a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention;

   (x)whether the contravenor has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention;

   (xi)similar conduct in the past;

   (xii)financial position;

   (xiii)deterrent effect.

3. Section 76 imports into the penalty fixing process concepts of moral responsibility long known to the criminal law. Ordinary sentencing principles apply: Trade Practices Commission v Axive Pty Ltd (1994) ATPR 41-368 at 42,794, Australian Competition and Consumer Commission v J McPhee & Son (Australia) Pty Ltd (1998) ATPR 41-628 at 40,891.

4. The fact that the Commission and the respondents have proffered a penalty agreed as between themselves is relevant, although not of course conclusive, since the responsibility of imposing penalties is conferred by the Trade Practices Act on the Court: see generally Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993.

15.0     Cartel conduct

1. Cartel behaviour of the kind with which this case is concerned is extremely destructive of the competition on which the prosperity of a free market economy depends.  Often the profits can be immense, and the risk of detection slight.  Of its nature, cartel behaviour is likely to occur in secret and between parties who seek mutual benefit.  In the present case, detection occurred purely by chance when Amcor’s solicitors, in the course of quite unrelated litigation, stumbled across incriminating material.  Even then the present resolution may not have been reached were it not for two additional factors.  First, the Commission’s immunity policy and, secondly, the fact that there were not only witnesses prepared to give evidence, but also tape recordings of damning conversations.

2. The progressive increase in the maximum penalties mentioned above shows how gravely the legislature regards this kind of conduct.  Price fixing and market sharing are not offences committed by accident, or in a fit of passion.  The law, and the way it is enforced, should convey to those disposed to engage in cartel behaviour that the consequences of discovery are likely to outweigh the benefits, and by a large margin.

3. Critical to any anti-cartel regime is the level of penalty for individual contravenors.  We tend to overlook the fact that corporations are constructs of the law; they only exist and possess rights and liabilities as a consequence of the law.  Heavy penalties are indeed appropriate for corporations, but it is only individuals who can engage in the conduct which enables corporations to fix prices and share markets.

1. Many countries with free market economies have recognised this reality by enacting laws which make cartel conduct by individuals subject to criminal sanctions, including imprisonment.  In the United States this happened as long ago as 1890 with the Sherman Act 15 U.S.C.  More recently, as shown by the Organisation for Economic Co-operation and Development report Hard Core Cartels – Third Report on the Implementation of the 1988 Recommendation, Paris, 2006, the following countries have laws providing for terms of imprisonment for cartel conduct: Canada, France, Germany, Ireland, Israel, Japan, South Korea, Mexico, Norway, Slovak Republic and the United Kingdom.

2. The Australian Government appointed an expert committee chaired by former High Court Justice Sir Daryl Dawson to report on Australia’s competition laws.  In  April 2003 the Dawson Committee in its report (Review of the Competition Provisions of the Trade Practices Act) recommended (Report p 163) that, in the light of submissions made to it and growing overseas experience, criminal sanctions deter serious cartel behaviour and should be introduced.    

3. On 2 February 2005 the Treasurer, the Honourable Peter Costello MP, announced acceptance of the recommendations of the Dawson Committee and stated that the Government would amend the Trade Practices Act to provide for a term of five years imprisonment, as well as increases in other penalties. The Treasurer noted:

   Dishonesty goes to the heart of serious cartel conduct, where customers are deceived when purchasing goods or services unaware that the price and supply of those goods and services were determined by collusion, rather than competition.

Although, as already mentioned, the Act was amended last year to raise corporate penalties, the Government hasn’t yet got around to introducing criminalisation. 

16.0     Visy’s conduct

1. Every day every man, woman and child in Australia would use or consume something that at some stage has been transported in a cardboard box.  The cartel in this case therefore had the potential for the widest possible effect. 

2. The agreed statement of facts includes the following:

   NO ALLEGATION OF LOSS
   374. In relation to the conduct of Visy alleged in respect of named customers specified in the Second Further Amended Statement of Claim, the ACCC does not allege as part of its case in this proceeding that the conduct, insofar as it is admitted to constitute either making an unlawful arrangement or giving effect to such an arrangement, had any negative financial impact on or caused loss to any of the named customers.

3. That statement may be accepted.  The Commission’s case sought the imposition of penalties, the making of declarations, the granting of injunctions and other relief.  It did not set out to prove that any particular customer of Visy suffered any particular loss.  However, that is not to say that the conduct in which Visy engaged was victimless.  The whole point of price fixing and market sharing is to obtain the benefit of prices greater than those which would be obtained in a competitive market.  It must follow that customers pay more than they would in a competitive market, and so suffer loss.  The conduct involved here was inherently likely to cause loss.  The fact that no particular loss has been alleged in respect of any particular customer cannot alter that.

4. The cartel here went on for almost five years.  Had it not been accidentally exposed, it would probably still be flourishing.  It was run from the highest level in Visy, a very substantial company.  It was carefully and deliberately concealed.  It was operated by men who were fully aware of its seriously unlawful nature.

5. It is appropriate to make some allowance for the fact that the respondents have admitted liability and thus saved a great deal of public expense for a trial which could well have lasted six months or more.  Traditionally criminal courts are inclined to give less weight to a plea of guilty when it does not result from genuine remorse, repentance or contrition: The Queen v Shannon (1979) 21 SASR 442 at 452-453, Warner, K, Sentencing in Tasmania, 2^nd ed, The Federation Press, 2002, at 3.603.  Also the weight to be given to an admission of guilt might be less when it comes late, or when it is virtually bowing to the inevitable.

6. I shall say something about remorse in the context of consideration of the individual respondents.  In the meantime, I note that the principal positive defence pleaded, and maintained until recently, was that any communications between Visy and Amcor were “commercial tactics” against Amcor aimed at “camouflaging” what Visy was doing and a means of obtaining “market intelligence” from its rival (amended defence par 222 (c) and (d)).

7. In light of what is now admitted to be the facts, it may be doubted that this John Le Carré defence had any prospects of success. Section 45 prohibits contracts, arrangements or understandings containing provisions of a specified kind, whether or not a party harboured a secret intention to cheat. Moreover, entering into a prohibited contract, arrangement or understanding is a free-standing contravention in itself, whether or not it has been given effect. In any case, a contract, arrangement or understanding can still be given effect even if there is some cheating between the parties (as distinct from cheating the customers, which is the raison d’être of a cartel) or the cartel does not work as well as some of the parties might have hoped.

8. The corporate culture of Visy in relation to its obligations under the Trade Practices Act was non-existent. None of the most senior people hesitated for a moment before embarking on obviously unlawful conduct. There was in evidence a Visy document entitled “Trade Practices Compliance Manual” dated February 1998. It was signed by Mr Pratt. It bears a distribution list, signed by Mr Debney, with the names of 50 or so personnel covering every State and Head Office. On the front cover it is said:

   This is an important document. It is essential that it be read and understood by you. Visy Industries requires strict compliance with its policy on the Trade Practices Act.

The document includes the stern warning that price fixing and market sharing are “strictly prohibited” and that readers of the document “must never make (such) arrangements with a competitor”.  Further, it is said Visy personnel

should avoid all contact with competitors or their employees other than contact approved by senior management or Visy Industries’ Legal Counsel.  All necessary contact with competitors should be conducted in formal settings.

I doubt that Westerfolds Park and the Cherry Hill Tavern could be regarded as formal settings.  The Visy Trade Practices Compliance Manual might have been written in Sanskrit for all the notice anybody took of it.

1. Parity with penalties imposed in other cases is a relevant consideration.  Counsel referred to a number of other cases.  I do not think it necessary to analyse these in detail.  Ultimately each case turns on its own facts.  Suffice it to say that the penalty proposed is more than twice the highest previous penalty imposed by this Court.  That is reflective of the fact that this must be, by far, the most serious cartel case to come before the Court in the 30 plus years in which price fixing has been prohibited by statute.

2. The penalty of $36 million proposed for Visy is appropriate in the circumstances.  I accept the analysis by which the Commission has arrived at this figure.

17.0     Mr Pratt’s conduct

1. Visy, Mr Pratt, Mr Debney and Mr Carroll through their counsel accepted responsibility for their conduct.  They expressed contrition, accepted the serious nature of the contraventions and accepted that they warranted a very substantial penalty.  They apologised for their conduct, regretted the circumstances which had occurred and repented their contraventions.  They accepted that they stepped “well over the line of the boundaries prescribed by the Act”.  However, contrition here probably has a substantial element of regret at being found out.

2. While Mr Pratt’s conduct, as revealed in the statement of agreed facts, was limited to the one meeting with the Amcor CEO at the All Nations Hotel, that was of major importance to the operation of the cartel.  It would not be expected that somebody in his position would get involved in the day to day running of the cartel, like Mr Debney or, to a greater extent, Mr Carroll.  Yet he gave his personal sanction to this obviously unlawful arrangement and an assurance of its continued operation.  It would not have continued without his approval.

3. In a public statement which went out to Visy staff and customers over Mr Pratt’s name as Chairman of the Visy Group on 8 October, and after it had become public knowledge that the respondents would admit liability, it was said:

   Visy takes its obligations under the TPA very seriously. The company deeply regrets what happened and its poor appreciation of the complexities and application of the various provisions.

   Later in the statement it is said:

   Visy’s actions were motivated by a desire to take advantage of our competitor.

This appears to be an attempt to revive Visy’s defence which, for the reasons already stated, I think to be quite without merit.  In any case, the statement is hardly consistent with a frank admission of wrongdoing.

1. More importantly, there is nothing complex about the law that prohibits price fixing and market sharing.  Mr Debney and Mr Carroll certainly knew about this law.  That is why they met with their competitor in parks and suburban hotels and used pre-paid mobile phones.  There cannot be any doubt that Mr Pratt also knew that the cartel, to which he gave his approval, and in which he has admitted to being knowingly concerned, was seriously unlawful.

2. There is also the factor that the cartel was to operate for Mr Pratt’s personal benefit, via his ownership, or part ownership, of Visy.  This was not the case of an employee acting out of some misguided sense of corporate loyalty.

18.0     Mr Debney’s conduct

1. Mr Debney was a joint instigator of the cartel.  He personally directed his subordinate, Mr Carroll, to operate it (to Mr Carroll’s great cost, apart from anything else).  From time to time Mr Debney personally participated in it.  He was the senior officer of a large company operating in a market which affects the whole community.  His conduct showed no regard for the law.

2. The proposed penalty of $1.5 million is appropriate.

3. I was informed that Mr Debney’s (and Mr Carroll’s) penalties will be borne by a Visy entity or a related entity. Such indemnities are now unlawful by virtue of ss 77A and 77B of the Trade Practices Act. These sections were introduced by the 2006 amendments following recommendations in the Dawson Committee Report. They only apply to contraventions committed after 1 January 2007.

4. However, s 199A(2) of the Corporations Act2001 (Cth), effective from 1 July 2004, provides:

   (2) A company or a related body corporate must not indemnify a person (whether by agreement or by making a payment and whether directly or through an interposed entity) against any of the following liabilities incurred as an officer or auditor of the company:

   (a)a liability owed to the company or a related body corporate;

   (b)a liability for a pecuniary penalty order under section 1317G or a compensation order under section 1317H or 1317HA;

   (c)a liability that is owed to someone other than the company or a related body corporate and did not arise out of conduct in good faith.

   This subsection does not apply to a liability for legal costs.

5. Paragraph (a) would not be applicable. Paragraph (b) is concerned with pecuniary penalties payable under the Corporations Act. However par (c) would seem to apply to a liability to pay a pecuniary penalty to “someone other than the company” (ie the Commonwealth) under s 76 of the Trade Practices Act. Unlawful cartel conduct would not be “conduct in good faith”. The section would seem to apply to the time when the indemnity is given and not to the time of the underlying conduct which gave rise to the indemnity. Anyway, Visy and any other related corporate entity will have to satisfy themselves that any indemnity to Messrs Debney and Carroll is lawful.

19.0     Mr Carroll’s conduct

1. Although he committed the largest number of contraventions, Mr Carroll’s conduct, because of his lower position in the company and the fact that he was not an instigator, is less blameworthy than Mr Pratt’s or Mr Debney’s.  Nevertheless, he engaged over a long period in knowingly unlawful conduct.  The proposed penalty of $500,000 is appropriate.

20.0     Other orders

1. There will be declarations as to the contraventions, injunctions, an order for a trade practices compliance program and an order that the respondents pay the costs of the Commission of and incidental to this proceeding.

I certify that the preceding three hundred and thirty-three (333) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.

Associate:

Dated:        2 November 2007

Counsel for the applicant:

P J Jopling QC C M Caleo SC, K Judd, P R D Gray and P Wallis

Solicitor for the applicant:

Australian Government Solicitor

Counsel for the first to fifth respondents:

J Beach QC, D G Collins SC, P D Crutchfield, M H O’Bryan and D Crennan

Solicitors for the first to fifth respondents:

Arnold Bloch Leibler

Counsel for the sixth respondent:

Solicitors for the sixth respondent:

J W K Burnside QC and D Clough

Minter Ellison

Date of Hearing:

16 October 2007

Date of Judgment:

2 November 2007