The Federal Court in Melbourne has penalised SIP Australia Pty Ltd and its director Filippo Ippaso a total of $700,000 for conduct breaching the price-fixing and market-sharing provisions of the Trade Practices Act.
The court found that SIP had in 1994 made and given effect to a contract that fixed the price for compressors supplied by SIP and Baker Bros (Aust) Pty Ltd. It also found that SIP had given effect to a market sharing agreement at that time and that Mr Ippaso was knowingly concerned in both contraventions. A penalty of $580,000 was imposed on SIP and $120,000 on Mr Ippaso.
The court also found that SIP had attempted to make a later contract with the same competitor between November 1997 and February 1998, which had the purpose of preventing the supply of compressors and compressor parts to classes of persons by the companies in contravention of section 45 of the Act. Mr Ippaso was found by the court to have attempted to induce this later attempted contravention.
In his reasons for judgment, Justice Goldberg stated he was "satisfied that the contraventions by SIP of the Act … were the result of a deliberate and well considered course of conduct by Mr Ippaso to insulate SIP from competition".
Justice Goldberg was satisfied that a consequence of the 1994 agreement was that the market for compressors was distorted and purchasers and potential purchasers were denied the benefit of competitive conduct from Sip and Baker Bros. He found that the conduct was intended to ensure prices were maintained above those that would otherwise have prevailed in a competitive market. He stated that Mr Ippaso's conduct was continuous from the later part of 1993 through to March 1998 when his attempt to have a further agreement with Baker Bros entered into finally collapsed. He concluded that some purchasers of compressor equipment had purchased at higher prices than they would have obtained in the absence of the conduct.
He noted that "the central determinant of a penalty decision is the character of the offence in the absence of ameliorating circumstances". He went on to say "that in the present case the offences can be characterised as blatant and deliberate contraventions of the Act with a later attempt to contravene the Act with no ameliorating circumstances".
He noted that five separate and distinct contraventions had been established and stated that the conduct "was rendered all the more serious by the compounding of the price fixing conduct with the market sharing conduct".
He found that "Mr Ippaso’s intention and purpose was to create a regime in which he would be free from a significant measure of competitive conduct”.
He also noted that "there was little in the conduct of SIP and Mr Ippaso that could be claimed as cooperation with the regulator for the purposes of mitigating the level of penalty to be imposed".
ACCC Chairman, Professor Allan Fels, welcomed the court's decision noting that it highlights the seriousness with which the court considers price fixing and market sharing and in particular the compounding effect of such conduct when it occurs simultaneously.
"No doubt the presence of this duality of conduct was a factor in the court imposing higher penalties on both SIP and Mr Ippaso than those sought by the ACCC. It should clearly demonstrate to business the disapproval such conduct will attract from the court".