The billionaire businessman is facing Federal Court charges for allegedly misleading the Australian Competition and Consumer Commission (ACCC).
Pratt's lawyer Robert Richter QC on Tuesday said Pratt was "set up" when he signed an agreed statement of facts during a 2005 court hearing after being told there would be no criminal investigation.
"They entrapped Mr Pratt into agreeing to the agreed facts," he said.
"What we now suspect is that it was a set-up to get Mr Pratt to sign an agreed statement.
"Mr Pratt was targeted for criminal investigation ... led into the belief that there wasn't going to be any (criminal investigation)."
The charges stem from Pratt's denial at the 2005 hearing into alleged price-fixing that he had a conversation about a price-fixing agreement with his rivals from Amcor in a Melbourne pub in 2001.
Pratt was not in the Melbourne Federal Court for Tuesday's directions hearing.
Richter said the charges were driven by ACCC chairman Graeme Samuel, who had for years been trying to make cartels illegal.
"He wants to use this to advance his agenda to criminalise cartel conduct," he said.
Richter indicated he would seek a permanent stay of proceedings.
But prosecutor Mark Dean SC rejected suggestions of a conspiracy.
"These proceedings concern a relatively narrow matter and that is in our submission the truth or otherwise of the evidence Mr Pratt gave," Dean said.
"(To say we) have somehow targeted his client for some unproven and presumably personal purpose is an extremely serious allegation that Mr Richter makes.
"The proposition that this is somehow a conspiracy is, really well ... the evidence will speak for itself."
Pratt, 74, the chairman of Visy Industries, faces up to four years in prison if convicted.
He has not yet been required to enter a plea.
Justice Donnell Ryan adjourned the case to a date to be fixed.
