This was an appeal from the judgment in Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (2004) FCA 1678, in which Apco was found to have arrived at a price fixing understanding.

Apco and its managing director (Anderson) contended 'that they were not a party to any price-fixing understanding because they did not, as between themselves and the other parties to the alleged understanding, commit themselves to Apco’s charging the same prices or any particular prices or to increasing prices being charged by it.'

The Court accepted Apco's contention and upheld the appeal.

Key passages on meaning of understanding:

[43] ... [the Trial Judge] says that while it “may not matter” if the understanding he has found involves an expectation, rather than a commitment, as to what was to be done, the evidence did establish a commitment on the part of the initiating respondents. Thus his Honour in explicit terms declined to make a finding that Apco (not being an initiating respondent) became committed to any price increase agreed on by the initiating respondents. This is consistent with the later passage at [368] in which his Honour found that there was no expectation by the other respondents that Anderson’s readiness to receive calls from Bentley and Carmichael meant that Apco would substantially match the increased prices. ...

[44] These findings lead to the unavoidable conclusion that Apco was not a party to any understanding that it would fix its prices at the same level as the other respondents or at any particular level or even that it would increase its prices at all. ... Certainly Apco received information about price increases (albeit the fact of an increase rather than the amount) from Bentley and Carmichael, as it did from other sources such as its franchisees, but it reserved to itself the decision, as a matter of commercial judgment, whether to follow those prices up. More often than not (40 occasions out of 69) it did not, or at the very least, there is no evidence that it did.

[45] ... the appellants ... did not dispute that the primary judge had enunciated the correct legal principles which are applicable in determining whether parties have entered into an understanding. In particular, the primary judge referred to the following observations of Lindgren J in Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (1999) 92 FCR 375 at [141] (emphasis in original) which were specifically endorsed by the Full Court in Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 at [79]:

“The cases require that at least one party ‘assume an obligation’ or give an ‘assurance’ or ‘undertaking’ that it will act in a certain way. A mere expectation that as a matter of fact a party will act in a certain way is not enough, even if it has been engendered by that party. In the present case, for example, each individual who attending the Meeting may have expected that as a matter of fact the others would return to their respective offices by car, or, to express the matter differently, each may have been expected by the others to act in that way. Each may even have ‘aroused’ that expectation by things he said at the Meeting. But these factual expectations do not found an ‘understanding’ in the sense in which the word is used in ss 45 and 45A. The conjunction of the word ‘understanding’ with the words ‘agreement’ and ‘arrangement’ and the nature of the provisions show that something more is required.”

[46] The primary judge’s inference at [371] that Anderson expected that his competitors would hold their increased price for a time whilst he was deciding whether or not to match their prices represents Anderson’s assessment of what was likely to occur, without any assurance being given to him that the competitors would act in that way. It is no more than what Lindgren J described as a “factual expectation” which falls short of an “understanding”.

[47] ... although the information conveyed by Bentley and Carmichael may have been useful to Anderson because it helped him to know when to tell his franchisees to check competitor’s prices and when to raise Apco’s prices if he chose to do so, the primary judge specifically found at [368] that there was no expectation by any of the respondents that Apco’s preparedness to receive calls from Bentley and Carmichael meant that Apco would substantially match the increased prices. ...

[51] In the present case, as his Honour found, the “process” never involved the commitment of Apco to fixing its prices at the same level as the others or at any particular level or even raising its prices to any level. At most, the initiating respondents hoped that Apco would, in the light of the timely information they were providing, reach a decision that it was in its own interests to go along with the increase. Sometimes that happened, sometimes it did not. The reality was that the independent stands of the two discounters, Apco and United, was a problem that the initiating respondents confronted in giving effect to their understanding.

[52] The ACCC’s case against all respondents depended heavily on circumstantial evidence of the coincidence of telephone conversations between the parties and sharp price increases. This provided a powerful case against the initiating respondents. However, in the case of Apco it rather pointed the other way. ...

[53] Thus, the circumstantial evidence was consistent with the finding that Apco and Anderson were not committed to increasing prices and Anderson made decisions whether or not to increase prices on the basis of his assessment of the market.

[56] ... Unilaterally taking advantage of a commercial opportunity presented is not to arrive at or give effect to an understanding in breach of the Act.

[57] The appeals of Apco and Anderson will be allowed and the orders and declarations made against them set aside. ...

Click here for the judgment of the Full Federal Court at AustLII