A costly lesson: Federal Court imposes $6 million in penalties in ACCC v Qteq

17 April 2026

Tamara Hunter and Zali Anderson explore the substantial penalties imposed by the Federal Court against Qteq and its executive, Mr Simon Ashton, following its earlier liability decision finding attempted cartel conduct

The Federal Court of Australia in Australian Competition and Consumer Commission v Qteq Pty Ltd (Penalty) [2026] FCA 356 has imposed $5 million in pecuniary penalties on Qteq Pty Ltd (Qteq) and $1 million on its CEO and Executive Chairman, Mr Ashton. This follows the Federal Court’s finding that both Qteq and Mr Ashton made 5 attempted cartel contraventions. Mr Ashton also received a non-indemnification order preventing him from using his insurance to satisfy his penalty.

The significant penalties further demonstrate the weight the Federal Court puts on deterrence, personal accountability and corporate compliance in cartel cases.

Facts and Background

In April 2025, the Court found that:

Qteq, a supplier of permanent downhole gauges and related ‘gauge works’ to coal seam gas (CSG) well operators, and Mr Ashton had, on five occasions, attempted to enter into contracts, arrangements or understandings (CAUs) with competitors or likely competitors containing cartel provisions.
Those attempts were directed at:
1. protecting Qteq’s position as the supplier of gauge works to QGC Pty Ltd (QGC), a Shell‑operated CSG joint venture, and
2. limiting broader competitive threats in gauge works, completions and drill stem testing.
Mr Ashton, in his personal capacity, also attempted to induce the relevant competitors, or likely competitors, to enter each of the five CAUs.

A sixth alleged attempt involving Firetail Energy Services Pty Ltd failed because the Australian Competition and Consumer Commission (ACCC) could not establish that Qteq and Firetail were in, or likely to be in, competition for the relevant services, and so did not meet the ‘competition condition’. This attempt played no role in the penalty decision.

Our summary of the liability judgment can be found here.

In addition to the ‘usual’ penalty factors, the judgment provides a detailed framework for ‘extra-curial detriment’. In summary, reputational harm, lost current and future contracts are relevant to penalty assessment – but only to the extent they independently reduce the need for deterrence, as the court will not double-count ordinary consequences of contravention. A failed tender (with limited evidence tying the ‘failure’ to these proceedings), the sale of the business itself (with limited evidence tying the reduced business value to these proceedings), the personal impact of Mr Ashton (absent evidence), and the respondents’ ordinary legal costs were factors that did not count towards the court’s consideration of extra-curial detriment. The framework from this judgment is likely to be useful for future penalty decisions, as a general analysis about how reputational and commercial fallout should be considered in relation to penalties.

The calculation of pecuniary penalties

Maximum penalty

The applicable maximum aggregate penalties under the Competition and Consumer Act 2010 (Cth) (CCA) at the time the conduct occurred were:

Qteq: $50 million (5 x $10 million)
Mr Ashton: $2.5 million (5 x $500,000)

The maximum penalties have since significantly increased (see our analysis of these changes here), but the court applies the regime as it was at the time of the contraventions.

Considerations in deciding the applicable penalty

In determining the appropriate pecuniary penalty, the CCA requires the court to have regard to:

The nature and extent of the act or omission and any loss or damage caused
The circumstances in which the conduct took place
Whether the person has previously been found to have engaged in similar conduct.

In making his judgment Justice Bromwich considered the following:

Principle	Respondents’ arguments	Court’s findings
Deterrence as the primary objective (Note: the Qteq business was sold prior to the delivery of the penalty judgment)	They were faced with unusual and challenging circumstances so the need for specific deterrence is limited. There is no evidence to show that they did the conduct with knowledge of the CCA provisions. There is no longer a need for specific deterrence as the business has been sold.	Deterrence, both general and specific, is the ‘primary objective of pecuniary penalties’. The unusual tender situation calls for stronger penalties to deter others in difficult situations from being tempted to contravene the cartel provisions. An absence of a finding of knowledge does not reduce the level of deterrence required. Specific deterrence is no longer has a significant role in Qteq’s sentencing as it has been sold. However, even though the business had been sold, the need for general deterrence weighed against the imposition of a lower penalty. This is because other contraveners must not consider that the impact of a penalty could be mitigated by divestment. Note: many of the court’s findings under the below principles are also made with the intention of achieving deterrence
Course of conduct and totality	Two of the three attempts to induce Pro-Test, and similarly the two attempts to induce Eastern Well 2, should be treated as a single course of conduct because they pursued a common objective.	The attempts were treated separately (not as a single course of conduct), but the totality principle applied. The Pro-Test attempts used materially different means and were substantively distinct. The Eastern Well 2 attempts had the same ultimate objective and the same method of achieving the conduct, but the attempts were 12 months apart.
Nature and seriousness of the conduct	Their conduct was not ‘deliberate, sustained or systematic’. The conduct was merely a ‘seriously misguided’ response to an unusual tender. The parties had legitimate reasons to engage with one another (the tender process allowed them to partner with one another). The conduct was not deliberately concealed.	The conduct was ‘sustained, systematic and deliberate’ occurring over a prolonged period and involving multiple strategies. The conduct formed part of a corporate strategy to ‘guard jealously and protect vigorously’ the QGC tender. The unusual tender situation does not make the conduct less serious; it actually makes deterrence more important. There was a legitimate reason to engage, and the conduct was not deliberately concealed. However, the difficulty in detecting these cases is still relevant. Qteq sought to deploy ignorance of the law as a mitigation of the penalty. However, it did not provide evidence of its state of mind. This is a reminder that respondents require evidence when submitting that misconduct ‘took place innocently’.
Financial motivation and anticipated benefits	No benefit would have been achieved if they succeed in their attempts. The benefit sought was not as high as the ACCC was submitting it to be. That the revenue associated with the QGC contract was not a relevant consideration. There was no effect on competition because the attempt failed. The attempts were aimed at maintaining the status quo.	The revenue associated with the QGC contract was an important indication of the scale of the benefit that Qteq sought and can contribute to the assessment of the deterrence required. Qteq anticipated direct profit from the tender and an intention to profit may include broader benefits such as economies of scale, stability of cash-flow, reputational advantages and pricing freedom. A failed attempt does not attract a lighter penalty. It is irrelevant that the only aim was to maintain the status quo.
Corporate size, financial position and capacity to pay	Qteq was a small, low-margin business with limited capacity to pay a high penalty and risked insolvency. The $11-13 million penalties proposed by the ACCC would be ‘crushing’ and unfair to creditors. Mr Ashton did not dispute his ‘considerable wealth’.	This is a necessary part of determining what penalty will meet the objective of deterrence. Accepted that Qteq’s financial position was uncertain and could not be reliably quantified. The interests of creditors do not override the statutory objective of deterrence. The limited capacity to pay cannot prevent the imposition of a penalty adequate for general deterrence. Mr Ashton is not to call upon any insurance policy to pay his penalty in order to achieve deterrence.

Penalties imposed

The parties did not place specific reliance on any comparative cases. On the balance, Justice Bromwich concluded that a $5 million penalty for Qteq was appropriate to achieve the objective of deterrence. To achieve the same objective, Mr Ashton was handed a $1 million penalty and ordered not to call on any insurance policy for payment of the penalty.

Key takeaways

Deterrence remains the primary objective of the pecuniary penalties for cartel conduct.
Attempted conduct does not receive a discount where it is in ‘extremely difficult or unusual circumstances’, if anything it increases to further deter cartel conduct in these situations.
The maximum penalties have significantly increased since the conduct occurred, so future contraventions are expected to attract even higher penalties.
Divestment of a business is unlikely to materially reduce the penalty, due to the need for general deterrence.
If a respondent relies on ignorance of unlawfulness, or some other benign state of mind, in mitigation, that state of mind must be proved on the balance of probabilities; the absence of a finding that the respondent knew the conduct was unlawful is not enough.
Extra-curial detriment may be relevant to the penalty only to the extent it has an independent deterrent effect that reduces the need for deterrence, and care must be taken not to give separate weight to ordinary consequences of contravention proceedings or to overlapping matters that would involve double-counting.

In Competition