Case: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285
Outcome: considered
Litigation to establish contraventions such as those admitted by Messrs Knight and Ross can be very complex, time consuming and costly. It is in the public interest for litigation to be concluded in the shortest time frame that is consistent with justice being done between the parties, freeing the ACCC to deal with other matters and reducing the public cost of a lengthy hearing in the Court. Consequently, the Court has encouraged negotiated resolution of proceedings by the ACCC, provided that their terms recognise that the ultimate responsibility for determining the existence of a contravention or contraventions, and as to the proper orders to resolve the proceedings lies with the Court (see Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285). 8 That approach was considered and approved by the Full Federal Court in NW Frozen Foods 71 FCR 285. In that case, the Court held at 298 299: We agree with the statement made in several of the cases cited that it is not actually useful to investigate whether, unaided by the agreement of the parties, we would have arrived at the very figure they propose. The question is not that; it is simply whether, in the performance of the Court's duty under section 76 , this particular penalty, proposed with the consent of the corporation involved and of the Commission, is one that the Court should determine to be appropriate. 9 The Full Court further stated at 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. 10 The Full Court noted (at 290) that generally the most significant and relevant matters that the Court needed to consider about penalty were effects upon the functioning of markets and other economic effects. Although the Court is responsible for determining the appropriate penalty, the Full Court considered that it would be informed by the views of the ACCC about those effects. 11 The decision of the Full Court in NW Frozen Foods 71 FCR 285 was followed by a later Full Court in Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993. In that case, the Full Court at 48,626 also said that it considered that the following proposition emerged from NW Frozen Foods 71 FCR 285: ...the views of the regulator on matters within its expertise (such as the ACCC's views as to the deterrent effect of a proposed penalty in a given market) will usually be given greater weight than its views on more 'subjective' matters. 71 Those considerations were approved and expanded upon by the Full Court of the Federal Court in NW Frozen Foods 71 FCR 285 and by Heerey J in Australian Competition and Consumer Commission v J McPhee &amp; Son (Australia) Pty Ltd (1998) ATPR 41-628 to include: (a) whether the person has previously been found by the Court to have engaged in similar conduct (a matter required to be taken into account by section 76); (b) the effect on the functioning of the market and other economic effects of the conduct; (c) the financial position of the contravening company; and (d) whether the conduct was systematic, deliberate or covert. 73 It has long been accepted that a principal object of a penalty under s 76 is deterrence (see Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40-091 at 17,896 per Smithers J). In Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152, French J stated: The principal, and I think probably the only, object of the penalties imposed by s. 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act. This approach was approved by the majority of the Full Federal Court in NW Frozen Foods 71 FCR 285 . 74 Deterrence has two aspects: specific deterrence in respect of the actual contravener and general deterrence of others "who may be disposed to engage in prohibited conduct of a similar kind" ( Trade Practices Commission v Mobil Oil Australia Ltd (1984) 4 FCR 296 at 298, per Toohey J). The Full Court in NW Frozen Foods 71 FCR 285 made it clear (at 294-295) that: 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 contravention would pay ...