Australian Federal Court hands down its decision in bid rigging cartel case ACCC v Cascade Coal & Ors

The reasons are currently subject to a non-publication order that will lapse on 13 July 2018 if no extension of the order is sought. The order was sought by the seventh respondent, Mr Moses Obeid, over fears that it may unfairly prejudice his criminal trial over conspiracy charges set down for May 2019.

The ACCC has foreshadowed that it may appeal this decision to the Full Federal Court, having sought (and been granted) an extension of time to file any notice of appeal by 3 August 2018.

This is one of a number of high profile cartel cases that the ACCC has brought in the last few years, including most recently the criminal cartel charges laid against ANZ, Citigroup and Deutsche Bank, and the $46 million penalty imposed by the Full Federal Court in ACCC v Yazaki Corporation.

What was the alleged bid rigging?

The case relates to 2009 government tenders for mining exploration licences over the Mount Penny and Glendon Brook areas in New South Wales, Australia.

The ACCC argued that rival bidders Cascade Coal Pty Ltd (Cascade) & Loyal Coal Pty Ltd (Loyal), as well as Loyal affiliated entities Buffalo Resources Pty Ltd (Buffalo), Voope Pty Ltd (Voope), Locaway Pty Ltd (Locaway), and United Pastoral Group Pty Ltd (UPG) entered into a contract, arrangement or understanding (CAU) that:

• required Loyal to withdraw its bids in the Mount Penny or Glendon Brook tender processes,
• In exchange for doing so, Cascade would grant Buffalo a 25% interest in the Mount Penny mining venture (valued by the parties at $60 million), and
• Cascade would also purchase Obeid land in the coal release area at 4 times its land value, and would take over their mortgages.

4 days after this CAU was allegedly formed, Loyal withdrew its bids, and Cascade won the Mount Penny and Glendon Brook tenders.

The ACCC's case included 11 corporate and individuals respondents (including Paul and Moses Obeid) who were said to be involved in the making and/or giving effect to the CAU.

Key arguments of the parties

The ACCC argued that the respondents entered into and/or gave effect to a CAU that contained an exclusionary provision and/or a cartel provision. The respondents in reply argued that:

• Loyal was not a competitor to the tender processes because another entity (not it) submitted the bids; 
• Loyal could never have become a 'likely competitor' because it would not be able to secure the necessary funds to win the bid;
• The respondents did not 'give effect to' any exclusionary or cartel provision because they were complying with a landowner's agreement; and
• The respondents had intended to enter into a joint venture.
• Key takeaways from the case

The reasons for judgment are likely to provide useful guidance on what is an actual or likely competitor for the purposes of the CCA, and what is required to satisfy the joint venture defence (noting that this defence has since been amended by the Harper Review reforms).