Federal Court Adjourns Non-Publication Order Applications

OUTCOME: Other

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v [COMPANY_1] (No. 2) [2010] FCA 1082

Citation: Australian Competition and Consumer Commission v [COMPANY_1] (No. 2) [2010] FCA 1082

Parties: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v [COMPANY_1] 104 053 474, [COMPANY_3] [PHONE], [COMPANY_4] [COMPANY_5] [PHONE], [COMPANY_6] [PHONE], [COMPANY_7] [PHONE], [NAME_9] and [NAME_11] number(s): QUD 295 of 2008

Judge: GREENWOOD J

Date of judgment: 4 October 2010

Catchwords: PRACTICE AND PROCEDURE – consideration of applications for non-publication orders under s 50 of the Federal Court of Australia Act 1976

Legislation: Federal Court of Australia Act 1976, s 50

Cases cited: Australian Broadcasting Commission v [NAME_14] (1980) 29 ALR 228 – cited and quoted [NAME_15] v Australian Crime Commission (2010) 240 CLR 651 – cited and quoted [COMPANY_16] v [NAME_16] (No. 12) [2009] FCA 1519 - cited [COMPANY_16] v [NAME_16] Wales (No. 15) [2010] FCA 736 - cited

Date of hearing: 1 October 2010

Date of last submissions: 1 October 2010

Place: Brisbane

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 25

Counsel for the Applicant: [redacted]

Solicitor for the Applicant: [redacted]

Counsel for the Respondents: [redacted]

Solicitor for the Respondents: [redacted]

Counsel for [NAME_24]: [NAME_25]

Solicitors for [NAME_24]: [NAME_26]

Solicitors for [NAME_27]: [NAME_28], [NAME_29]

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION QUD 295 of 2008

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Applicant

AND: [COMPANY_1] 104 053 474

First Respondent

[COMPANY_3] [PHONE]

Second Respondent

[COMPANY_4] [COMPANY_5] [PHONE]

Third [COMPANY_6] [PHONE]

Fourth [COMPANY_7] [PHONE]

Fifth Respondent

[NAME_9]

Sixth Respondent

[NAME_11]

Seventh Respondent

JUDGE: GREENWOOD J

DATE OF ORDER: 4 OCTOBER 2010

WHERE MADE: BRISBANE

THE COURT ORDERS THAT:

1. The applications for non-publication orders under s 50 of the Federal Court of Australia Act 1976 are adjourned for the submission of proposed orders.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION QUD 295 of 2008

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Applicant

AND: [COMPANY_1] 104 053 474

First Respondent

[COMPANY_3] [PHONE]

Second Respondent

[COMPANY_4] [COMPANY_5] [PHONE]

Third [COMPANY_6] [PHONE]

Fourth [COMPANY_7] [PHONE]

Fifth Respondent

[NAME_9]

Sixth Respondent

[NAME_11]

Seventh Respondent

JUDGE: GREENWOOD J

DATE: 4 OCTOBER 2010

PLACE: BRISBANE

REASONS FOR

JUDGMENT 1 During the course of pre‑trial preparation of the principal proceeding, non‑party discovery applications were made which resulted in orders for the production of classes of documents from third parties in accordance with a confidentiality regime reflected in the annexures to the particular orders. 2 Documents were produced in accordance with those orders, obtained on the application of the respondents, from [COMPANY_30] ("[NAME_24]"); Tarong Energy Corporation [COMPANY_31] (jointly called "Tarong"); [COMPANY_27] and [COMPANY_27] (jointly called "[NAME_27]"); [COMPANY_32]; [COMPANY_33], [COMPANY_34] and [COMPANY_35] (all jointly called "Nucon"); Wagner Investments Pty Limited; [COMPANY_36] ("[COMPANY_36]"); [COMPANY_37]; and [NAME_38]. 3 In addition, [COMPANY_39] informally produced particular documents to the respondents under an agreed confidential regime. 4 The respondents propose when opening their case, to tender, as part of their Confidential Tender Bundle, documents produced by those third parties under the confidentiality arrangements. In accordance with that regime, the respondents' solicitors gave notice to the third parties (or their lawyers) of the proposal to now put some of the confidential documents into evidence. They did so in accordance with the terms of the confidentiality regime so as to give third parties an opportunity to be heard on the question of whether they continued to assert confidentiality over any (or all) of the documents to be tendered and if so whether they proposed to seek any form of order designed to preserve the confidentiality of particular documents or information within them, from disclosure. [ADDRESS] indicated that it would deal with the question of any application for a non‑publication order under s 50 of the Federal Court of Australia Act 1976 by (or on behalf of) third parties as a preliminary matter (together with other preliminary matters) at the conclusion of the opening of the case by the applicant, the Australian Competition and Consumer Commission ("[NAME_40]"). The trial of the action commenced on Monday, 27 September 2010. The applicant's counsel closed his opening address on Wednesday. On Thursday, 30 September 2010 [NAME_24] by its counsel proposed a final form of order arising out of discussions with counsel for the respondents and the counsel for the applicant. 6 [NAME_27] seeks, by its solicitors, orders in the same terms as those sought by [NAME_24], in respect of its particular confidential documents produced under the relevant orders. 7 The respondents' solicitors have been advised by the other third parties that those parties continue to assert confidentiality over the documents produced under the confidentiality regime.

Accordingly, since the respondents propose to put some of the third party documents into evidence, they seek (and they support the orders sought by [NAME_24] and [NAME_27]) an order restricting the publication of the evidence (the documents or information contained within them) on the footing that non‑publication of the evidence is necessary in order to prevent prejudice to the administration of justice. That prejudice is said to arise in this way. 8 In the principal proceeding the [NAME_40] contends, put simply, that the respondents have contravened s 45 (or alternatively s 47) and s 46 of the Trade Practices Act 1974 (Cth) in the period from 30 September 2002 and 31 December 2006 arising out of conduct concerning the supply and acquisition in south east Queensland of unprocessed fly ash (from coal‑fired electricity generators – power stations) and the supply and acquisition of concrete‑grade fly ash or fine‑grade fly ash in the relevant product markets in south east Queensland. The claims involve an examination of the scope of the relevant markets; whether the particular respondents had a substantial degree of market power in the relevant market; whether that power was used in the way asserted for the contended proscribed purpose; whether the respondents acted in furtherance of a legitimate business purpose; and whether the relevant provisions of the particular agreements had upon entry into those agreements (or upon their being given effect to) the purpose or effect of preventing potential competitors from entering the relevant fly ash markets. That examination involves looking into the terms and conditions upon which the respondents acquired fly ash from power stations; bids, propositions put and pricing proposals made or discussed by rivals of the respondents to or with power stations; terms of supply by the respondents to concrete producers or re‑sellers and the terms of supply by rivals of the respondents to those buyers and other buyers in the relevant markets. 9 The confidential documents include documents relating to: · the costs of producing fly ash and other cementitious materials for third parties; · the costs of transporting fly ash for third parties; · the volume of fly ash produced by third parties; · whether importing fly ash was likely to produce an adequate return on investment; and · the price for fly ash purchased or sold by particular third parties.

10 As to [NAME_24], some of its documents produced under the confidentiality regime are no longer subject to a claim of confidentiality. A list of 21 documents has been prepared over which confidentiality is asserted on the footing that the information is market‑sensitive and disclosure would prejudice [NAME_24] in its trade rivalry. I am satisfied that the documents fall into this category. Neither the respondents nor the [NAME_40] contend to the contrary. 11 The question to be determined is whether I can be satisfied that non‑publication of the [NAME_24] documents set out in the schedule (now to be admitted into evidence) is necessary in order to prevent prejudice to the administration of justice. Although Bowen CJ in Australian Broadcasting Commission v [NAME_14] (1980) 29 ALR 228 spoke of the "exercise [of] the discretion under s 50", presumably having regard to the phrase "[ADDRESS] may …", the High Court in [NAME_15] v Australian Crime Commission (2010) 240 CLR 651 per French CJ, Gummow, Hayne, Heydon and Kiefel JJ, said this (at [33]): It may tend to distract attention from the particular terms of s 50 to describe the Federal Court as embarking upon the exercise of a "discretion" when entertaining an application under s 50 (Dwyer v Calco Timbers Pty Ltd (2008) 234 CLR 124). Once the Court has reached the requisite stage of satisfaction, it would be a misreading of s 50 to treat it as empowering the Court nevertheless to refuse to make the order … 12 At [32], their Honours said this: If it appears to the Federal Court … to be necessary to make a particular order forbidding or restricting the publication of particular evidence … then the power of the Federal Court under s 50 is enlivened. The appearance of the requisite necessity … having been demonstrated, the Court is to implement its conclusion by making or vacating the order. The expression in s 50 "may … make such order" is to be understood in this sense. [emphasis added] 13 In the case of documents containing information relevant to trade rivalry in particular markets or in upstream or downstream markets of the market in issue, the litigation ought not to become the forum or a vehicle for trade‑sensitive disclosures. The administration of justice is concerned with quelling controversies between parties and the public has an interest in courts doing justice, according to law, in the disposition of each controversy. Disclosure of the [NAME_24] documents and information contained within those documents is likely to be damaging to [NAME_24]. It is necessary in the administration of justice that the proceeding be tried without bringing about that result: [NAME_15] v Australian Crime Commission (supra); [COMPANY_16] v [NAME_16] (No. 12) [2009] FCA 1519; [COMPANY_16] v [NAME_16] Wales (No. 15) [2010] FCA 736. 14 In a broader sense, the third parties have no interest in the controversy other than sharing in the public interest in the Court quelling the controversy between the particular parties by ensuring that justice is done. The third parties have produced their confidential documents relating to their own rivalrous conduct under compulsion. [ADDRESS] has an interest in (and thus the administration of justice is served by) enabling cooperation from third parties in performing orders that concern documents a third party may well prefer not to produce at all. That is not to say that a claim of confidentiality by itself is enough. Each application will turn ultimately on its own circumstances judged against the background of the requirement for open justice undertaken in public: s 17, Federal Court of Australia Act. However, documents disclosing the content of prices and costs paid and incurred by trade rivals warrant a non‑publication order. 15 The proposed form of order concerning the [NAME_24] documents contemplates protocols addressing admission of the documents into evidence; how oral evidence will be dealt with; orders in relation to transcripts; and the release of the "Nominated Individuals" from confidentiality obligations in respect of those documents no longer the subject of a confidentiality claim by [NAME_24]. The order will be limited, in terms, "until earlier order". An order in similar terms will be made in relation to the [NAME_27] documents and the documents of the other third parties. The proposed form of order in [NAME_24]'s application, subject to further discussion and the submission of a final form of order, is set out as a schedule to these reasons. 16 The final preliminary matter on this topic concerns an application by the respondents for a non‑disclosure order in relation to its own confidential documents incorporated within the [NAME_40]'s proposed tender bundle. The application is supported by an affidavit sworn by the general counsel and company secretary for the [COMPANY_1], [NAME_41]. The first to fifth respondents have isolated a number of documents (comprising three volumes in all) within the [NAME_40]'s tender bundle which they contend ought to be the subject of a non‑publication order. The documents are grouped into three categories identified by Schedules A, B and C to [NAME_41]'s affidavit. The category 1 documents concern contracts with [NAME_1]'s customers including draft versions of those contracts. Category 2 contains contracts between [NAME_1] and power stations for the acquisition of fly ash including draft versions of those contracts. Category 3 contains documents that disclose the way in which pricing and competitive rebates are calculated. The category 1 documents identify the terms and conditions of supply by [NAME_1] to its customers and those details include all aspects of supply; the delivered prices at the time of execution of the agreements; cartage rates; and, importantly, the working operation of competitive rebate clauses. [NAME_41] describes this information as highly sensitive commercial information which would be of significant value to trade rivals and the disclosure of which would be prejudicial to the [COMPANY_1]. 17 I accept that this is so. 18 The category 2 information concerns the terms and conditions upon which the [NAME_1] respondents acquire fly ash from four power stations in Queensland for supply to its customers. The three agreements set out in Schedule B to [NAME_41]'s affidavit in which the category 2 information lies discloses the current terms of the acquisition arrangements. Those terms include price escalation formulas for the prices paid to the power stations for fly ash (and, in one instance, the price to be paid to the power station at the time of the draft agreement). The draft agreements substantially reflect the agreements that were ultimately reached between the parties. The information concerning [NAME_1]'s pricing and the operation of its price escalation formulas are not publicly available and trade rivals would have an interest in understanding those terms and the way in which they operate between the participants. The terms and conditions not only concern the [COMPANY_1] but engage information which concerns the power station suppliers of fly ash. 19 I am satisfied that the information is market‑sensitive as between trade rivals and ought not to be disclosed. 20 The third category concerns documents which record [NAME_1]'s pricing and competitive rebates or the foundation upon which rebates are available to particular parties and the method of calculation of the rebate. The particular documents which contain this information are internal [NAME_1] emails that talk about the basis on which [NAME_1] calculates a competitive rebate; agreements [NAME_1] has with its shareholder customers which disclose the way in which competitive rebates and project prices are calculated; documents which disclose pricing and cartage rates to specific locations along the east coast of Australia; and a spreadsheet which discloses the basis upon which competitive rebates are calculated and whether a rebate might apply at all having regard to particular locations along the east coast of Australia. 21 The information contained in these documents is not in the public domain. Disclosure of the information might be used by competitors of the [COMPANY_1], customers and suppliers to damage [NAME_1] in its trade rivalry in markets for cementitious materials. The particular concern is that knowledge of the foundation upon which rebates are calculated might enable competitors to engage in conduct which would have the effect of "trigger[ing] competitive rebates … which would not occur unless [competitors] understood the way in which pricing and competitive rebates are calculated". A number of the documents contained in Schedule C (comprising the category 3 information) have dates such as 2 May 2003 (email); 6 May 2003 (a spreadsheet); 2 June 2003 (Cement Supply Agreement); 6 April 2005 (email); 13 June 2005 (email). It might be thought that email exchanges and drafts of agreements (or the agreements in final form) which were generated (in some instances) between five and seven years ago ought not to attract a non‑publication order on the footing that they have lost their contemporary relevance. It might be thought that events in the market have moved on and non‑publication of this material is not necessary in order to prevent prejudice to the administration of justice. 22 I have examined a number of the documents falling within Schedule C and two things should be noted. First, the documents concern and discuss matters relating to rivalrous conduct between market participants. They therefore fall within that particular category of material. Secondly, although the material relates back some time, there remains an inter‑relationship between the current working operation of particular agreements, present market conduct and the documents in question. In other words, they throw up matters concerning formulas and ratios for the calculation of rebates; pricing formulas, information relating to customers and the relevance of particular plants, their location and the way in which rebate arrangements work. 23 The present proceedings ought not to become a vehicle for advantaging or prejudicing trade rivals in relation to rebate rivalry or other aspects of trade rivalry. 24 I am satisfied that it is necessary in order to prevent prejudice to the administration of justice that a non‑publication order be made. Counsel for the respondents will formulate a proposed order which will reflect a symmetrical approach to non‑publication having regard to the orders to be made concerning [NAME_24], [NAME_27] and other third parties. 25 The draft [NAME_24] order is set out in the schedule below. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

Associate:

Dated: 4 October 2010

SCHEDULE [NAME_24]

THE COURT ORDERS THAT, UNTIL FURTHER

ORDER:

1. The documents listed in subparagraphs (a), (b), (c), (d) and (e) below ("[NAME_30] documents") and all information contained within such documents ("[NAME_30] information") be the subject of restrictions as to publication as set out in this Order or until earlier Order. The [NAME_30] documents are: 1.1 confidential annexure A to the affidavit of [NAME_43] filed 16 October 2009; 1.2 Confidential annexures GAW-2, GAW-4 and GAW-5 to the affidavit of [NAME_43] filed 16 October 2009; 1.3 Confidential annexures JDN-5, JDN-7 and JDN-8 to the affidavit of [NAME_44] filed 15 October 2009 (being copies of Confidential annexures GAW-2, GAW-4 and GAW-5 referred to above); 1.4 documents titled "Bayswater Ash" dated April 2007 and "Callide Ash" dated April 2007; and 1.5 document titled "[COMPANY_30] for Flyash for April – June 2007" dated April/June 2007.

2. Prior to the tender by any party of any original or copy of any of the [NAME_30] documents, such document be marked on each page or stamped by the party with the words "[NAME_30] document for use in Court proceedings QUD295 of 2008".

3. All such [NAME_30] documents that are admitted into evidence: 1.6 be identified on any list of exhibits as such; and 1.7 not be further copied or reproduced, by any means, including by electronic or photocopy means or handwritten summary thereof.

4. Any oral testimony of any witness concerning the [NAME_30] documents or the [NAME_30] information be heard in camera ("Confidential testimony").

5. Any transcript of the Confidential testimony be masked by the Court prior to release to the parties.

6. The transcript of Confidential testimony be made available to the solicitors for the parties on the basis that the transcript pages are Confidential documents, and the information in those pages Confidential information, within the meaning of those terms in the confidentiality regimes executed pursuant to the Order of this Court dated 23 December 2009, and the transcript pages be thereafter treated in accordance with the provisions of the confidentiality regimes.

7. Any witness, excluding [NAME_43] and any Nominated Individual under the confidentiality regimes executed pursuant to the Order of this Court dated 23 December 2009, to whom [NAME_30] information has been disclosed, either before or during the trial of this proceeding, is hereby prohibited from communicating or publishing to any person any of the [NAME_30] information other than to a Judge of this Court for the purposes of these proceedings.

8. Each of the Nominated Individuals under the confidentiality regimes entered into pursuant to the Order of this Court dated 23 December 2009 be released henceforth from any obligations under those confidentiality regimes in respect of documents numbered 1 to 17 and 20 to 21 listed in paragraph 14 of the affidavit of [NAME_43] filed 30 September 2010, namely those documents listed in Annexure A hereto.

9. The First Respondent pay to [COMPANY_30] its costs of and incidental to this Notice of Motion to be assessed on an indemnity basis if not otherwise agreed.