Case: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285
Outcome: considered
The cases have, in addition, referred to other matters as relevant in the determination of the appropriate pecuniary penalty. French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152, a Full Court of Burchett, Carr and Kiefel JJ in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, and a Full Court of Black CJ, Lee &amp; Goldberg JJ in J McPhee &amp; Son (Aust) Pty Ltd v Australian Consumer and Competition Commission (2000) 172 ALR 532 identify, not exclusively, as further factors relevant to the determination of penalty: (a) The size of the contravening company; (b) The degree of power the company has, as evidenced by its market share and ease of entry into the market; (c) Whether the conduct was systematic, deliberate, or covert; (d) The period over which the conduct occurred; (e) The effect on the functioning of the market and other economic effects of the conduct; (f) Whether the contravention arose out of the conduct of senior management or at a lower level; (g) Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and discipline, or other corrective measures in response to an acknowledged contravention; and (h) Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention. 84 As the Full Court of Burchett, Carr and Kiefel JJ in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at pp 294-295: 'The Court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think that a contravention would pay, and detection lead merely to a compliance program for the future.' 110 I give very great weight to that circumstance, and note the comments by the Full Court in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at p 291: 'There is an important public policy involved. When corporations acknowledge contraventions, very lengthy and complex litigation is frequently avoided, freeing the courts to deal with other matters, and investigating officers of the Australian Competition and Consumer Commission to turn to other areas of the economy that await their attention. At the same time, a negotiated resolution in the instant case may be expected to include measures designed to promote, for the future, vigorous competition in the particular market concerned. These beneficial consequences would be jeopardised if corporations were to conclude that proper settlements were clouded by unpredictable risks. A proper figure is one within the permissible range in all the circumstances. The Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case.' 111 In my judgment, this case is not a clear case where the Court should depart from the figures agreed by properly informed and legally assisted parties with different interests in the outcome of these proceedings. 112 For the above reasons, I make the declarations as agreed by the parties, and I make following orders: 1. Jurlique International, Jurlique Distribution, J &amp; J Franchising and Jurlique Spa, whether by itself or its directors, servants, agents, employees or otherwise howsoever, be restrained, within Australia and in respect of agreements for supply between Australia and places outside Australia, for a period of 5 years, from: 1.1 inducing, or attempting to induce, a person not to advertise or sell products under the 'Jurlique' brand, supplied to the person directly or indirectly by that respondent at a price less than a price specified by that respondent; 1.2 entering into an agreement, or offering to enter into an agreement, for the supply of products under the 'Jurlique' brand, to a person being an agreement one of the terms of which is, or would be, that the person will not sell the products at a price less than a price specified, or that would be specified, by that respondent; 1.3 withholding supply of products under the 'Jurlique' brand, to a person (other than a person who within the preceding year has sold products obtained from the respondent at less than their cost to the other person, not being by way of genuine seasonal or clearance sale or with consent of the respondent) for the reason that the person has sold or is likely to sell, or has not agreed not to sell, the products supplied to him or her by that respondent at a price less than the price specified by that respondent as the price below which the products are not to be sold; or 1.4 using in relation to products under the 'Jurlique' brand, supplied, or that may be supplied, by that respondent to a person, a statement of price that is likely to be understood by the person as the price below which the products are not to be advertised or sold. 2. Each of Jurlique International, Jurlique Distribution, J &amp; J Franchising and Jurlique Spa be restrained, within Australia and in respect of agreements for supply between Australia and places outside Australia, for a period of 5 years, from being directly or indirectly knowingly concerned in or party to a corporation engaging in the conduct set out in pars 1.1 to 1.4 above in relation to the supply of skincare, cosmetic or herbal medicine products, or products under the 'Jurlique' brand. 3. J &amp; J Franchising, whether by its directors, servants, agents, employees or otherwise howsoever, be restrained, within Australia, for a period of 5 years, from making, arriving at or giving effect to any contract, arrangement or understanding: 3.1 with another corporation that supplied Jurlique treatments (other than an agreement to supply Jurlique treatments jointly, or an agreement with a related entity); 3.2 which contains a provision that has a substantial purpose or effect or likely effect of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices charged for Jurlique treatments supplies or offered for supply by any of the parties to the contract, arrangement or understanding in competition with each other. 4. Dr Klein be restrained, within Australia and in respect of agreements for supply between Australia and places outside Australia, for a period of 5 years, from being directly or indirectly knowingly concerning in a corporation which supplies to another person skincare, cosmetic or herbal medicine products, or products under the 'Jurlique' brand: 4.1 inducing or attempting to induce that other person not to sell those products at a price less than a price specified by that corporation; 4.2 entering into an agreement, or offering to enter into an agreement for supply of products to that other person one of the terms of which agreement is that the other person will not sell the products at a price less than that specified by the corporation; 4.3 withholding the supply of the product to that other person (other than a person who within the preceding year has sold products obtained from the respondent at less than their cost to the other person, not being by way of genuine seasonal or clearance sale or with consent of the respondent) for reason that the other person has sold or is likely to sell, or has not agreed not to sell, the products at a price less than a price specified by the corporation as a price below which the goods are not to be sold; or 4.4 using in relation to those products a statement of price likely to be understood by that other person as a price below which the products are not to be sold. 5. Dr Klein be restrained, within Australia, for a period of 5 years, from being directly or indirectly knowingly concerned in, or aiding, abetting, counselling or procuring, a corporation that supplies health treatment service making, or arriving at, or giving effect to any contract or arrangement or understanding (other than an agreement to jointly supply such services, or an agreement with a related entity), which contains a provision that has a substantial purpose or effect or likely effect of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices charged for the services supplied or offered for supply by any of the parties to the contract, arrangement or understanding in competition with each other. 6. Jurlique International pay to the Commonwealth of Australia, within 21 days of the date of this order, a pecuniary penalty in the amount of $1,000,000 in respect of its contraventions of s 48 of the Trade Practices Act 1974 (Cth) and of its ancillary involvement in contraventions of that section alleged in pars 76 to 79 of the statement of claim, occurring after 14 August 2000; 7. Jurlique Distribution pay to the Commonwealth of Australia, within 21 days of the date of this order, a pecuniary penalty in the amount of $1,400,000 in respect of its contraventions of s 48 of the Act alleged in pars 80 to 83 of the statement of claim, occurring after 14 August 2000; 8. J &amp; J Franchising pay to the Commonwealth of Australia, within 21 days of the date of this order, a pecuniary penalty in the amount of $700,000 in respect of its contraventions of ss 45(2)(a)(ii) and 45 (2)(b)(ii) of the Act and of its ancillary involvement in contraventions of s 48 alleged in pars 84 to 87 of the statement of claim, occurring after 14 August 2000; 9. Jurlique Spa pay to the Commonwealth of Australia, within 21 days of the date of this order, a pecuniary penalty in the amount of $100,000 in respect of its ancillary involvement in contraventions of s 48 of the Act alleged in par 88 of the statement of claim, occurring after 14 August 2000; 10. Dr Klein pay to the Commonwealth of Australia, within 21 days of the date of this order, a pecuniary penalty in the amount of $200,000 in respect of his ancillary involvement in contraventions of ss 45(2)(a)(ii) , 45 (2)(b)(ii) and 48 of the Act alleged in pars 89 to 95 of the statement of claim, occurring after 14 August 2000; 11. The seal of the Court be affixed to the judgment and the reasons for judgment given in this proceeding for the purpose of s 83 of the Trade Practices Act 1974 (Cth); 12. Jurlique International, Jurlique Distribution, J &amp; J Franchising and Jurlique Spa pay the applicant's costs of and incidental to these proceedings as against them in the agreed amount of $125,000, within 21 days of the date of this order; 13. Dr Klein pay the applicant's costs of and incidental to these proceedings as against him in the agreed amount of $20,000, within 7 days of the date of this order. I certify that the preceding one hundred and twelve (112) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender. Associate: Dated: 8 February 2007 Counsel for the Applicant: Mr Simon Couper QC Solicitor for the Applicant: Australian Government Solicitor Counsel for the 1st-4th Respondents: Mr Patrick O'Shea SC Solicitor for the 1 st -4 th Respondents: Minter Ellison Lawyers Counsel for the 5 th Respondent Solicitor for the 5 th Respondent Mr Andrew Musgrave King and Company Date of Hearing: 10 October 2006 Date of Judgment: 8 February 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/79.html