In a hearing before Federal Court Justice Michael Wigney on Thursday in the criminal cartel cases against Tartak and Bingo Industries, prosecutor Paul McGuire SC pressed a sentence including imprisonment for Tartak, but said the Commonwealth Director of Public Prosecutions was not opposed to him serving the sentence in the community through an intensive corrections order, with the performance of community service as a condition of his release.

“In our submission any sentence that doesn’t include a period of imprisonment, even if it’s to be served by ICO, wouldn’t adequately reflect the seriousness of the conduct or take into account the need for general deterrence,” he said.

The CDPP is also seeking a five-year disqualification order against Tartak.

McGuire also said the CDPP was seeking a penalty against Bingo Industries “precisely” within the range of $32 million to $36 million, while Bingo submitted that the penalty should be awarded in the lower range, noting that it would exceed the company’s entire 2019 yearly profits after tax of $22 million in any case.

Bingo and Tartak cooperated with the Australian Competition and Consumer Commission in its investigation as well as the CDPP, the court heard. While many issues were agreed between the party, the parties made competing submissions as to the extent of any sentencing discounts for cooperation, the overall seriousness of the cartel conduct, and the relevance of Bingo’s size, with the court hearing that Bingo commanded a “large segment of the market.”

McGuire also argued that Bingo made oblique submissions that the cartel conduct was a “victimless crime”, although the waste giant denied ever advancing such an argument.

Tartak’s barrister Tim Game SC and counsel for Bingo, Kate Morgan SC, both emphasized that the cartel conduct, while serious, lasted only around three months, was limited in its geographical scope and was voluntarily ceased by the defendants.

In October last year, Tartak pleaded guilty to aiding and abetting Bingo Industries in fixing prices for demolition waste services in Sydney. The Macquarie Group-owned company entered its guilty plea in August, following an industry-wide investigation by the ACCC.

The company is accused of agreeing with competitors Aussie Skips Bin Services and Aussie Skips Recycling to fix and increase prices for the supply of skip bins and waste processing services for building and demolition waste in Sydney in mid-2019.

In February, Aussie Skips Recycling, Aussie Skips Bin Services, and CEO Emmanuel Roussakis each pleaded guilty to a criminal cartel offence charge. The Aussie Skips proceeding will be heard by Justice Wigney on Friday.

Tartak remorseful for ‘unbelievably stupid cartel conduct

Game told the court that short of a term of imprisonment served in the community by way of ICO or through a recognizance release order, it was open for Justice Wigney to instead slap Tartak with a “very substantial fine” as well as other conditions such as a community corrections order and a good behaviour bond.

Gain urged the judge to hand down a lenient sentence, arguing that Tartak, who has five young children, has been “very much humbled by that which he has done” and has expressed genuine remorse for his involvement in the cartel conduct.

“He was a very young CEO, he was under a lot of pressure to succeed, and he did this unbelievably stupid and foolish thing – and the facts bespeak that kind of explanation and characterization of what he did,” Game said.

“He well understand in every single way the gravity of it – it’s been brought home to him in many different ways.”

Game also said Tartak not only entered an early guilty plea and cooperated with his own prosecution, but also “took steps to bring Aussie Skips in…and [CEO] Mr Roussakis.”

But McGuire said Tartaks’ “fall from grace” and related issues of extra-curial punishment, such as his poor employment prospects, should be given little weight in regard to the need for general and specific deterrence, adding that they were the “inevitable consequences of this type of offending.”

“It’s not in dispute that Mr Tartak was previously of good character, but as we’ve submitted…good character may be afforded less weight given the nature of the offending and the need for general deterrence.”

McGuire also challenged Tartak’s submission that he should receive a 50 per cent sentencing discount for his cooperation providing an early guilty plea, saying the figure was “out of the range.”

Cartel conduct a response to re-introduction of landfill levy, court heard

Also on Thursday, Morgan told the court that the seriousness of the cartel conduct at the heart of the case was in the “low to mid range” – noting the short-lived nature of the arrangement between Bingo and Aussie Skips, which “faltered and failed within a couple months.”

Morgan said that Bingo had ‘commercial reasons’ for entering the agreement, citing Queensland legislation which introduced a landfill levy of $75 per tonne for most waste.

The ACCC predicted the levy, which would increase the cost of transporting waste to Queensland, would lead to an increase in prices for dry landfill services in NSW, potentially making competition between local landfills more important.

Morgan also submitted that the arrangements were limited in that they only involved Bingo and Aussie Skips and in that the waste collections arrangement was confined to the Sydney metropolitan area, while the waste processing arrangement was confined to three of the company’s nine waste processing sites in proximity to Aussie Skips’ sites.

But McGuire argued those factors did little to diminish the seriousness of the conduct, which he said “had a direct impact on the relevant market or markets in Australia.”

“It’s a matter of objective seriousness that this conduct must have had…a direct impact on the prices in the local Australian markets,” he said.

“It is the kind of damage, or even the potential for that kind of damage, that these offence provisions seek to prevent.”

McGuire said this was especially so where Bingo “was by far the largest provider of collections and processing services in the Sydney metro region by some large margin.”

The court also heard that while the value of the benefits to the company could not be conclusively determined, the court could “infer that there must have been a benefit” in the scheme, which McGuire said allowed Bingo to “maintain profits and revenue which could not otherwise have been maintained” under the new levy.

Justice Wigney noted his impression from communications between the parties that the companies were worried about being undercut by competitors and losing their market share if they had to increase their prices but their competitors did not.

McGuire said Bingo had obliquely argued that the conduct was a victimless crime and noting evidence of increased prices for customers. McGuire also said the conduct “had the potential to influence other competitors to raise their prices,” particularly given Bingo’s large market share.

While Morgan denied that the company argued the arrangement was “a victimless crime,” she said any price increases were not caused solely by the cartel arrangements.

“I accept, the increases that….came into operation on the first of July, did exceed what was needed to cover the Queensland levy,” she said.

“But it’s also accepted…there were additional operating costs and commercial considerations which were factors in the price increase.”

“There was a real chance that certain customers would pay more than they otherwise would – that’s what you have…in terms of potential harm.”

McGuire further said that the company creating the role of internal risk manager after the ACCC investigation had commenced was like “closing the door after the horse has bolted” and that the company’s cooperation with the regulator and the CDPP could not be described as “extensive” and did not merit a 35-40 per cent discount as argued for by Bingo.

Morgan told the court that Bingo had taken “significant steps” to address the matters identified by the regulator’s investigation, including a requirement to use only company communication channels monitored by general counsel and a new competition law training program.

The CDPP is represented by Paul McGuire SC and Sarah Andrews. Tartak is represented by Tim Game SC and Ruth Higgins SC, instructed by Law Corporation Pty Ltd. Bingo Industries Ltd is represented by Kate Morgan SC and Georgia Huxley, instructed by Herbert Smith Freehills.

The cases are Commonwealth Director of Public Prosecutions v Bingo Industries Ltd, and Commonwealth Director of Public Prosecutions v Daniel Charbel Tartak.

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