Pecuniary penalties totalling $60,000 have been imposed by the Federal Court on a supplier of compressors, Baker Bros (Aust) Pty Ltd and its two directors, Andrew Clive Baker and Guy Edwin Baker, for price fixing and market sharing.
In an action brought by the Australian Competition and Consumer Commission, it was alleged that Baker Bros (Aust) Pty Ltd and two of its directors arrived at an agreement with Sydney compressor supplier, SIP Australia Pty Limited, to supply separate categories of customers for Italian-made ABAC compressors, as well as charge a certain range of prices for those products. Baker Bros is a Melbourne based supplier of engineering equipment.
The Federal Court, Melbourne, accepted joint submissions on behalf of Baker Bros and the ACCC regarding injunctions and penalty for breaches of the Trade Practices Act 1974. The joint submissions took into account the assistance and cooperation provided by Baker Bros to the ACCC in its investigations. The submitted penalties of $50,000 for Baker Bros and $5,000 each for Andrew and Guy Baker, were accepted by the court as being appropriate in this instance. This is the first time the ACCC has offered joint submissions using its leniency policy.
It was alleged that in 1994, directors of Baker Bros and SIP signed an agreement allowing Baker Bros to exclusively supply assemblers, engineering and power tool distributors with ABAC direct drive compressors and SIP to exclusively supply major retailers and automotive dealers with those products. The agreement also stipulated a certain level of prices that were to be charged by Baker Bros and SIP for ABAC direct drive compressors.
It was further alleged that between November 1997 and February 1998, Baker Bros and SIP entered into an agreement whereby they would each supply separate discrete sections of customers with direct drive and belt drive ABAC compressors. The ACCC also alleged that this later agreement involved an attempt to agree on prices to be charged for those products.
"Baker Bros and its directors were prompt in admitting the conduct and cooperated fully in providing information and documents to the Commission after it advised them of its concerns," Acting ACCC Chairman, Mr Allan Asher, said today. "This high-level of cooperation obviated the ACCC from expending resources on lengthy and expensive litigation.
"The ACCC encourages such cooperation and will often show leniency, including complete or partial immunity from ACCC legal action or submissions to the court for reduced penalties, as in this instance.
"But for the strong level of cooperation provided by Baker Bros and its directors, the ACCC may have sought penalties far higher than $60,000. Price fixing and market sharing can attract penalties of up to $10 million dollars for companies and up to $500,000 for individuals".
The ACCCs leniency policy stipulates that leniency is most likely to be considered where companies and individuals:
- come forward with valuable and important evidence of a contravention of which the ACCC is otherwise unaware or has insufficient evidence to initiate proceedings;
- take prompt and effective action to terminate their part in the activity upon discovery of the breach; provide the ACCC with a full and frank disclosure of the activity and all relevant documentary and other evidence available to them and cooperate fully with the ACCCs investigation and any ensuing prosecution;
- have not compelled or induced any other corporation to take part in the anti-competitive agreement and were not a ringleader or originator of the activity;
- are prepared to make restitution where appropriate;
- are prepared to take immediate steps to rectify the situation and ensure that it does not happen again; and
- do not have a prior record of Trade Practices Act offences.
In its joint submission to the court, the ACCC submitted that Baker Bros had substantially satisfied these requirements and accordingly recommended penalties of a relatively low order.
In handing down his judgment, Justice Goldberg stated that while the court is not bound by the ACCCs leniency policy, nor required to take it into account in any given case, "the matters which the policy takes into consideration are matters relevant to a determination of the appropriate penalties to impose for contraventions of Part IV of the Act."
"Although the proposed penalties fall at the lower end of the range I am satisfied that it is appropriate that those penalties be imposed having particular regard to the absence of any market power held by Baker Bros, the assets of the company and its directors and the immediate and full assistance and cooperation offered to the Commission," he said.
Baker Bros also agreed to provide a section 87B undertaking to implement a trade practices corporate compliance program, as well as pay part of the ACCCs legal costs.
SIP Australia Pty Limited was not a party to the joint submissions and is required to file a defence in the court by 30 June 1999. A directions hearing has been set down for 22 September 1999.