Case: Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission [2003] FCAFC 2 ; (2003) 127 FCR 170
Outcome: applied
In Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission [2003] FCAFC 2 ; (2003) 127 FCR 170 ( "Schneider v ACCC" ) Sackville J said at 174-175: "Secondly, I would not place particular emphasis on the size of Schneider's Australian business, as such, as an additional factor distinguishing it from WTC and Tyree. Schneider's size and profitability doubtless explain why it did not dispute its capacity to pay any penalty that might reasonably be expected to be imposed and, to that extent, its size has already been taken into account. As I have said, from the point of view of deterrence, it is the nature of the contravening conduct that is the central determinant in determining an appropriate penalty. The size of a corporation may bear on the assessment of the seriousness of the contravening conduct, as when a large corporation has substantial market power which it uses to intimidate or cajole others to join in contravening conduct." 21 The Commission submitted that although the penalties sought for Safeway's contraventions were substantial, the penalties were appropriate having regard to the available maximum and the importance of deterring the abuse of market power that is the essence of s 46. The Commission relied on the observations of Finkelstein J in Australian Competition and Consumer Commission v ABB Transmission &amp; Distribution Ltd (No 2) (2002) 190 ALR 169 at [13]: "... antitrust legislation is founded on the underlying premise that free competition is essential for the welfare of the state. Conduct that affects the public, such as the anti-competitive behaviour that is outlawed by the Trade Practices Act , can never really be considered as anything other than serious." and Merkel J on appeal in Schneider v ACCC at 184: "... it is appropriate to emphasise the need to ensure that penalties are not fixed in sums that do not have adequate regard to the nature and extent of the contravention, the losses caused by the contravention and the need to deter not only the offending parties but also others from engaging in similar conduct." I agree with these observations. 47 In the present circumstances, I consider it of little relevance to the imposition of the penalties to take into account the fact that Safeway is a wholly-owned subsidiary of a major public company. Safeway is a large company in its own right. At the relevant time it operated some 130 supermarkets in Victoria and Albury. It employed approximately 18,000 to 20,000 employees and had some 28,000 product lines and 1,500 suppliers. I adopt and apply the observation of Merkel J in Schneider v ACCC at 181: "The size of a parent may be of relevance where, for example, the parent bore some responsibility for the subsidiary's conduct or where it is relevant to the subsidiary's capacity to meet a substantial pecuniary penalty. However, I do not regard the size of Schneider's parent company, or of the group of which it forms part, to be a relevant factor in the present case for three reasons. First, it is not suggested that the parent had any involvement in Schneider's contraventions. Second, Schneider did not put in issue its capacity to pay any penalty that may be imposed. Third, it is clear that Schneider operates a substantial business in Australia in its own right. In 2000 it employed 420 employees and had an annual turnover in excess of $200 million. Since 1996, other than in 2000, it has regularly earned net annual profits before tax well in excess of $18 million. Thus, the present case is not one in which it is necessary to determine the circumstances in which the size of a parent of an offending subsidiary will be relevant to the quantum of the penalty that is appropriate." 48 The relevant fact remains Safeway is a very large corporation, with a significant presence in the commercial community. 49 The Commission submitted that the involvement of Mr Brookes, merchandise manager for Safeway, in the four s 46 incidents was an exacerbating factor that the Court ought to take into account in imposing penalties. The Commission said that Mr Brookes was directly involved in the Frankston incident as he made the decision to delete.