Former Bingo Industries CEO sentenced to community service as company fined $30m for cartel conduct

A formerly ASX-listed skip bin operator that is now owned by a Macquarie Group (ASX: MQG) subsidiary has been fined $30 million for cartel conduct by the Federal Court of NSW over price fixing practices with competitors in Sydney, to the detriment of consumers and collection services.

The $30 million fine given to Bingo Industries represents a 30 per cent discount due to its early plea of guilty and cooperation with the authorities, and is the second-largest fine imposed for criminal cartel offences under the Competition and Consumer Act.

In mid-2019 Bingo and two affiliates of its competitor Aussie Skips reached an arrangement to lift prices for demolition waste collection services by 25 per cent and at least 22 per cent respectively, assisted by Bingo's then CEO Daniel Tartak and Aussie Skips' then chief executive Emmanuel Roussakis.

The pair first met in a café at Tartak's request and then engaged in a series of WhatsApp messages to make the arrangements.

"Over the following three months Bingo, aided by Mr Tartak, gave effect to the arrangements that it had made with Aussie Skips and Aussie Recycling. So too did the Aussie companies aided by Mr Roussakis," Justice Michael Wigney said this morning.

"There could be no doubt that it was likely that some customers paid more than they otherwise would have paid for collection services and processing services as a result of the anti-competitive arrangements between Bingo and the Aussie companies.

"Mr Tartak was no doubt aware of the likely effects of the arrangements," the judge said, noting the arrangements were "effectively abandoned" in September of that year.

Justice Wigney emphasised the seriousness of Tartak's offence, describing his conduct as "covert and deliberate".

"Cartel offences which Mr Tartak committed were also undoubtedly serious. He was the chief executive officer of a very large public company, which was a major player in the market for waste collections services in the Sydney metropolitan region," Justice Wigney said.

"He caused that company to make and give effect to an arrangement that included a cartel provision with a competitor in that market.

"The arrangement which persisted for a not insubstantial period of time stifled and distorted price competition in that market to the benefit of Bingo, and to the detriment to consumers and collection services in the Sydney metropolitan region."

He said that officers of corporations in similar positions to Tartak should be left in no doubt that they will face "condign punishment if they cause their corporations to enter into or give effect to cartel arrangements".

But the judge also took into account Tartak's early plea of guilty, and said his subjective circumstances compelled a degree of leniency. With no prior convictions, Justice Wigney said Tartak's actions were out of character for a devoted and supportive family man who is "highly respected and admired by business colleagues and church, school and community leaders".

"His fall from grace has been significant. I've also taken into account the evidence of a psychologist concerning Mr Tartak’s personal circumstances," the judge said.

"His early pleas also avoided a potentially lengthy and costly trial in this court. Mr Tartak’s early plea of guilty is also demonstrative of his contrition and remorse as well as a willingness to facilitate the course of justice.

"I'm satisfied that the risk of Mr Tartak reoffending is low and that the prospects of his rehabilitation are good."

Balancing the considerations of deterrence with Tartak's character and demonstrations of remorse, Justice Wigney sentenced him to an effective term of two years imprisonment, representing a 40 per cent discount due to the early guilty plea, to be "served by intensive correction in the community".

This will involved 400 hours of community service work, and Tartak will also need to pay fines worth $100,000 and will be banned from managing corporations for five years.

This compares to the maximum possible sentencing for an individual convicted of a criminal cartel offence of up to 10 years imprisonment, fines of up to $444,000, or both. 

Similarly, Roussakis was sentenced to 18-months imprisonment to be served by an intensive correction order involving 300 hours of community service, and will also be banned from managing a corporation for five years. 

The Aussie Skips companies - Aussie Skips Recycling and Aussie Skips Bin Services - have been fined a total of $3.5 million, split as $1.75 million each and representing a 25 per cent discount based on early guilty pleas.

"While the offence committed by Mr Roussakis is serious, his subjective circumstances compel a degree of leniency," Justice Wigney said in a separate ruling to the case concerning Bingo and Tartak.

"Mr Roussakis has some prior convictions. They mostly involve fairly minor summary offences that were dealt with many years ago. He was however, more recently convicted of a Workplace Health and Safety offense associated with the offense committed by Aussie Recylcing.

"He has not been convicted of the offences similar to the one currently under consideration."

The judge said Roussakis is generally considered to be a man of character, and is "well regarded and respected by his colleagues, employees and friends".

The case stems from an investigation from the Australian Competition and Consumer Commission (ACCC) that began in June 2019 after it received complaints concerning price increases which came into effect from 1 July 2019 after the introduction of a government levy.

ACCC Chair Gina Cass-Gottlieb says the sentences handed down today should serve as a strong reminder that criminal cartel conduct is a serious offence attracting serious consequences, including criminal convictions, significant fines, banning orders, and potential imprisonment for individuals.

"Cartel conduct is illegal because it increases the prices consumers and businesses have to pay, and restricts healthy competition and economic growth," Cass-Gottlieb said.

"We will continue to investigate cartel conduct and refer appropriate matters to the Commonwealth Director of Public Prosecutions for consideration of criminal prosecution.

"We encourage anyone who observes anti-competitive conduct in their industry or workplace to contact the ACCC confidentially. We will review their concerns and take action if warranted.

"We have special arrangements for anyone who wants to anonymously report cartel conduct, via a secure third party platform that protects their identity and by anonymously calling our dedicated hotline."

In a statement released following the judgment, Bingo Industries said it "deeply regrets" that the matter occurred, claiming it does not reflect the company's values or standards of behaviour and has since led to significant improvements to its governance and compliance protocols.

Bingo's chief executive officer Chris Jeffrey says that under the ownership of Macquarie Infrastructure and Real Assets, Bingo is now a materially different company.

"We’ve got a new owner, a new board, a new chair and a new executive team,” he said.

“Since the matter occurred close to five years ago, we’ve significantly improved our focus on governance and compliance."

Jeffrey pointed to a comprehensive review of Bingo's internal processes and an implementation of enhanced compliance training programs to "ensure the situation is never repeated". These include improved protocols for dealing with competitors and issuing price change communications, regular competition law training for all sales staff, and internal quality assurance reviews.

During the course of the proceedings the Commonwealth Department of Public Prosecutions (CDPP) acknowledged the improvements BINGO had made to its governance processes.

"We’re pleased to put this matter behind us. Our focus remains on achieving our vision of a waste-free Australia and assisting in the transition to a circular economy," Jeffrey said.