No appeal against Geelong petrol decision

The Australian Competition and Consumer Commission will not appeal the Geelong petrol decision.

"The ACCC has carefully considered the lengthy Federal Court judgment of 29 May 2007 in which Justice Gray dismissed the ACCC's allegations of price-fixing in the Geelong petrol market during 1999 and 2000", ACCC Chairman, Mr Graeme Samuel, said.

"As a result of a previous Full Federal Court of Australia appeal, a high evidentiary burden was set in cases which involve allegations of numerous price-fixing agreements, or understandings, reached informally over a long time. In particular, it must be shown that the parties to an alleged price-fixing arrangement or understanding are committed or morally bound to the agreement.

"In the Geelong case, the court found that it could not infer a sufficient level of commitment by the parties to a price-fix. The judge himself observed that whether or not such communications between competitors amount to an understanding would always be a difficult line to draw."

Mr Samuel said there was no dispute by many of the respondents that they regularly communicated with each other about petrol prices.

"What was disputed was whether these communications amounted to an 'arrangement or understanding' about how the parties would price their petrol.

"A factor in considering an appeal was that the ACCC had to consider if the factual findings made by the trial judge could be shown to be in error.

"The ACCC had witness statements, admissions by a number of respondents that they had reached understandings in breach of the Trade Practices Act, and extensive petrol price movements and telephone call records.

"However, taking into account the oral evidence of witnesses, the judge found that the parties were not sufficiently committed to increasing petrol prices to agreed amounts."

"The ACCC considered appealing just in respect of the admitting parties. However, in considering this option the ACCC was conscious that it did not have any alleged agreements or understandings where all the parties had admitted their involvement. This would mean the appeal court would have to find that the admitting parties were part of an agreement or understanding which had been found otherwise to not exist. The ACCC considered that an appeal court was unlikely to allow such contradictory findings.

"This was a very complex, factually dense case arguing multiparty multi-transaction arrangements or understandings," Mr Samuel said. "Despite evidence in support of each arrangement or understanding, and admissions by five parties the court found, on balance, no illegal conduct existed.

"The Geelong judgment turns upon the interpretation of the facts. The ACCC has considered the court's view and decided not to appeal."

Background

On 29 May 2007 Justice Gray dismissed proceedings brought by the Australian Competition and Consumer Commission alleging price fixing conduct in the Geelong petrol market during 1999 and 2000. As noted in the news release dated 19 June 2007, the ACCC has decided not to appeal against that decision. The reasons for that decision are set out below.

• 1. In late 2003 the ACCC instituted court proceedings against a number of companies and individuals, alleging that they fixed retail petrol prices in the Geelong area, in contravention of the Trade Practices Act 1974. The corporate respondents were involved in retailing or distributing petrol in the Geelong area under the BP, APCO, Shell and Liberty brands. Certain of the corporate and individual respondents filed defences substantially admitting the allegations against them (admitting respondents). The remaining respondents defended the proceedings.
• 2. The ACCC case was that the respondents were parties to price-fixing arrangements or understandings (understandings) during 1999 and 2000. The ACCC alleged that the understandings operated by the respondents telephoning one another in advance and communicating a new (higher) price and the approximate time from which it was to apply. The ACCC led evidence of more than 100 days when it alleged that the respondents entered into or gave effect to the understandings.
• 3. The Geelong case followed closely upon a similar petrol price fixing case brought by the ACCC involving the Ballarat market. In that case, numerous contraventions were established and penalties totalling over $20 million were imposed by the Federal Court. The Ballarat case was based upon substantially similar kinds of conduct and evidence to that in Geelong.
• 4. Of significance to the Geelong case was the fact that one of the respondents in the Ballarat case (APCO) successfully appealed to the Full Federal Court. The Full Court held that in order to contravene the Act a party to an alleged price fixing arrangement or understanding must feel "committed" or morally bound to set prices pursuant to it and that in the absence of such a commitment, the regular receipt of price information from competitors was insufficient to render a person a party to any arrangement or understanding to fix prices. The Full Court decision in APCO was delivered during the early part of the Geelong trial.

Reasons for no appeal
In light of that background, the primary reasons for not appealing the decision in the Geelong case can be summarised as follows:

• (i) Nature and extent of the factual findings made by trial judge. The ACCC alleged the existence of numerous price fixing understandings between petrol suppliers in the Geelong area during the period 1999-2000. In rejecting the allegations that the conduct of the respondents amounted to reaching or giving effect to those understandings, the judgment made extensive and detailed factual findings. On any appeal, the full Federal Court would not be inclined to reverse findings of fact made by the trial judge unless satisfied they were plainly wrong, a test which would be difficult to meet in a case such as the present where the factual findings were so extensive and the underlying evidentiary material so voluminous.
• (ii) The trial judge's reliance upon the oral evidence of the admitting respondents. In this matter, the ACCC sought to rely upon witness statements from a number of the individual respondents containing admissions that they had reached understandings in breach of the Act with one or more (non-admitting) respondents. Such admissions were a critical component of the ACCC case. The judge refused to allow these statements to be led as evidence in chief and, instead, required the evidence to be given orally. That led to a situation where, to varying degrees, a number of the admitting respondents resiled from their written statements. The oral evidence of a number of them, compared to their written statements, then became somewhat vague or involved "memory lapses" on the critical issue of "commitment" to the alleged understandings. Some of this unsatisfactory (from the ACCC's perspective) oral evidence as to the "commitment" issue may well have been explicable by reference to the fact that the APCO appeal decision was delivered during the early part of the Geelong trial (see paragraph 4 above). It was further explicable by reason of the significant period of time that had elapsed between the alleged conduct and the witnesses giving evidence. Ultimately, in making his factual findings, the judge preferred the oral evidence of the admitting respondents (which was detrimental to the ACCC case), rather than relying upon the admissions contained in their statements. Whatever the merits or otherwise of the trial judge adopting such a position in making his factual findings, the difficulty for the ACCC in terms of any appeal was that, generally speaking, appeal courts are loathe to overturn factual findings based upon oral testimony where the trial judge has had the benefit of assessing the demeanour of the witnesses.
• (iii) Pursuing an appeal limited to the admitting respondents. One option considered by the ACCC was to limit any appeal to the issue of whether the trial judge had erred in law by refusing to even hold that the admitting respondents had contravened the Act. The trial judge held that the court should decline to act on admissions when there is "reason to doubt their correctness". Other cases have posed a stricter test; namely that the court should act on admissions made in the pleadings unless they are demonstrated to be "plainly incorrect". However, an appeal on this limited basis was assessed as unlikely to succeed for the following reasons:
• a. it was difficult to discern from the terms of the judgment which test the trial judge ultimately applied and it appeared that his Honour regarded the more stringent "plainly incorrect" test as having been satisfied in any event; and
• b. because no alleged understanding was the subject of admission by all parties to it, to uphold an appeal on this ground and find the admitting respondents had contravened the Act would have placed the Full Federal Court in an invidious position. The Court would have to hold in respect of a particular admitting respondent that an understanding existed and was implemented, in circumstances where the trial judge's finding in respect of the non-admitting respondent (and not the subject of appeal) was that the same understanding did not exist. Unless absolutely necessary, an appeal court was unlikely to allow such contradictory findings to stand.