Australian Competition and Consumer Commission v Cambur Industries Pty Ltd [2006] FCA 1027 (Corrigendum dated 22 August 2006)

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FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Cambur

Industries Pty Ltd [2006] FCA 1027

CORRIGENDUM

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v CAMBUR INDUSTRIES PTY LTD & ANOR

SAD 230 OF 2005

BESANKO J

11 AUGUST 2006 (CORRIGENDUM 22 AUGUST 2006)

ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 230 OF 2005

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
AND:	CAMBUR INDUSTRIES PTY LTD FIRST RESPONDENT JOHN JAMES CAULFIELD SECOND RESPONDENT
JUDGE:	BESANKO J
DATE OF ORDER:	11 AUGUST 2006
WHERE MADE:	ADELAIDE

CORRIGENDUM

1. In declaration 2.1.3, replace ‘late June 2004 to early June 2004’ with ‘late June 2004 to early July 2004’.

2. At par 49, final sentence, replace ‘13 July 2004’ with ‘13 July 2005’.

3. At par 51, final sentence, replace ‘13 July 2004’ with ‘13 July 2005’.

4. At par 109, order 2.1.3, replace ‘late June 2004 to early June 2004’ with ‘late June 2004 to early July 2004’.

I certify that the preceding four (4) numbered paragraphs are a true copy of the Corrigendum to the Reasons for Judgment of the Honourable Justice Besanko.

Associate:

Dated: 22 August 2006

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Cambur

Industries Pty Ltd [2006] FCA 1027

TRADE PRACTICES – application for orders under Trade Practices Act 1974 (Cth) – where respondents admitted engaging in the practice of resale – principles relevant to fixing of pecuniary penalty – price maintenance in contravention of the Act – declarations – whether injunctive relief appropriate – power of Court to accept undertaking.

Held: pecuniary penalties fixed – declarations made – injunctive relief not appropriate in circumstances – further submissions required before undertaking as to compliance programme accepted in proffered terms.

Trade Practices Act 1974 (Cth) ss 4, 4F, 48, 75B, 76, 83, 96

Federal Court Act 1976 (Cth)

Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (ACN 008 799 040) (2001) ATPR 41-802 referred to

Australian Competition and Consumer Commission v Dermalogica Pty Ltd (2005) 215 ALR 482 referred to

Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 referred to

Australian Competition and Consumer Commission v Westminster Retail Pty Ltd (2005) ATPR 42-084 referred to

Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 referred to

Foster v Australian Competition and Consumer Commission (ABN 83 975 695 966) (2006) 149 FCR 135 referred to

ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 referred to

NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 referred to

Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 referred to

Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 referred to

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v CAMBUR INDUSTRIES PTY LTD & ANOR

SAD 230 OF 2005

BESANKO J

11 AUGUST 2006

ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 230 OF 2005

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
AND:	CAMBUR INDUSTRIES PTY LTD FIRST RESPONDENT JOHN JAMES CAULFIELD SECOND RESPONDENT
JUDGE:	BESANKO J
DATE OF ORDER:	11 AUGUST 2006
WHERE MADE:	ADELAIDE

THE COURT DECLARES THAT:

1. Cambur Industries Pty Limited (‘Cambur’) engaged in the practice of resale price maintenance in contravention of s 48 of the Trade Practices Act 1974 (Cth) (‘the Act’) in its dealings with Pete N Peppa Pty Ltd (‘Pete N Peppa’) in that Cambur:

1.1 attempted to induce Pete N Peppa not to sell and advertise Cambur Products (being Bamix branded kitchen products and Magimix branded kitchen products, including the dual branded Nespresso/Magimix coffee making machines (‘Nespresso Machines’)) at prices less than prices specified by Cambur, by reason of:

1.1.1 in about May 2003 John James Caulfield (‘Caulfield’) telling Pete N Peppa that Pete N Peppa would not need to discount Cambur Products and Cambur did not like discounting;

1.1.2 on about 6 June 2003 Caulfield delivering to Pete N Peppa price lists and indicating that Pete N Peppa could not set a price for Cambur Products between the listed wholesale and the listed retail prices;

1.1.3 on about 6 June 2003 Caulfield delivering to Pete N Peppa a newsletter dated July 2003, which stated that the Bamix Cassette Swissline (Model 7BA00240D) would retail at $349.00;

1.1.4 between about October 2003 and January 2004 Caulfield telling Pete N Peppa that Pete N Peppa could not discount various Cambur Products on three separate occasions.

1.2 made it known to Pete N Peppa that it would not continue to supply Cambur Products to Pete N Peppa unless Pete N Peppa agreed not to sell and advertise Cambur Products at prices less than the prices specified by Cambur, and attempted to induce Pete N Peppa not to sell and advertise Cambur Products at prices less than prices specified by Cambur, by reason of:

1.2.1 in about early August 2003 Caulfield telling Pete N Peppa that if any Cambur Products were discounted, Cambur would come into Pete N Peppa’s premises and take the Cambur Products off the shelf and that Cambur would provide no warnings to Pete N Peppa;

1.2.2 in about mid-November 2003 Caulfield, after learning that Pete N Peppa was discounting the Nespresso Machines, telling Pete N Peppa that Pete N Peppa was to take the discount sign off the Nespresso Machines straight away and if Pete N Peppa discounted, Caulfield would remove all Cambur Products form Pete N Peppa’s premises;

1.2.3 on about 10 May 2004 Caulfield, after learning that Pete N Peppa was discounting the Nespresso Machines, telling Pete N Peppa, in response to Pete N Peppa’s explanation that it had no option but to discount the Nespresso Machines because it could not sell them, that he would take the Nespresso Machines back and provide Pete N Peppa with a credit;

1.3 withheld supply of all Cambur Products to Pete N Peppa for the substantial reason that Pete N Peppa had sold and was likely to sell and had advertised and was likely to advertise Cambur Products at prices less than prices specified by Cambur, by reason of:

1.3.1 on about 28 June 2004, after learning that Pete N Peppa was again discounting Cambur Products, Caulfield telling Pete N Peppa that Cambur was not going to do business with Pete N Peppa anymore; and

1.3.2 on about 10 September 2004, Caulfield telling Pete N Peppa that Cambur was not going to supply Pete N Peppa with the goods it had ordered.

2. Cambur engaged in the practice of resale price maintenance in contravention of s 48 of the Act in its dealings with Tabletop & Kitchen Pty Ltd (‘Tabletop & Kitchen’) in that Cambur:

2.1 induced Tabletop & Kitchen not to sell and advertise Cambur Products at prices less than prices specified by Cambur, by reason of:

2.1.1 on about 29 December 2001 Caulfield telling Tabletop & Kitchen that Tabletop & Kitchen had done the wrong thing by advertising a sale that provided a discount on Cambur Products and that Tabletop & Kitchen was to remove Cambur Products from its shelves during that sale;

2.1.2 in about December 2002 Caulfield telling Tabletop & Kitchen that it had to remove Cambur Products from its shop floor for the duration of the sale that began on about 26 December 2002;

2.1.3 in about late June 2004 to early June 2004 Caulfield telling Tabletop & Kitchen that he would take immediate action to deal with Pete N Peppa discounting Cambur Products.

2.2 made it known to Tabletop & Kitchen that it would not continue to supply Cambur Products to Tabletop & Kitchen unless Tabletop & Kitchen agreed not to sell and advertise Cambur Products at prices less than the prices specified by Cambur, and induced Tabletop & Kitchen not to sell and advertise Cambur Products at prices less than prices specified by Cambur by reason of, in about May or June 2002, Caulfield telling Tabletop & Kitchen that Cookaholic’s advertising Bamix at $10 off the price specified by Cambur was not on and that if Cookaholic’s made that offer again, its stock would be taken away.

3. Caulfield by reason of him engaging in the conduct referred to in paragraphs 1 and 2 and with the knowledge of the constituents of those matters, was directly and knowingly concerned in, and party to each and every contravention by Cambur of section 48 of the Act as referred to in those paragraphs.

THE COURT ORDERS THAT:

1. Cambur Industries pay to the Commonwealth of Australia a pecuniary penalty in the sum of $280,000.

2. Mr Caulfield pay to the Commonwealth of Australia a pecuniary penalty in the sum of $32,000.

3. Cambur Industries and Mr Caulfield pay the applicant’s costs of and incidental to the proceeding to be agreed or taxed.

4. Leave is given to the parties to make further submissions as to:

(1) The terms of the undertaking by Cambur Industries to maintain a compliance program; and

(2) The time within which the respondents and each of them are to pay the pecuniary penalties imposed by these orders.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 230 OF 2005

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

APPLICANT

AND:

CAMBUR INDUSTRIES PTY LTD

FIRST RESPONDENT

JOHN JAMES CAULFIELD

SECOND RESPONDENT

JUDGE:	BESANKO J
DATE:	11 AUGUST 2006
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

1 This is an application by the Australian Competition and Consumer Commission (‘the Commission’) for orders under the Trade Practices Act 1974 (Cth) (‘the Act’). The Commission alleges that the first respondent, Cambur Industries Pty Ltd (‘Cambur Industries’), engaged in the practice of resale price maintenance, contrary to s 48 of the Act. The second respondent, Mr John James Caulfield, is alleged to have been directly and knowingly concerned in, and party to, each and every contravention by Cambur Industries. Mr Caulfield is an employee of Cambur Industries.

2 Cambur Industries and Mr Caulfield have filed a joint Defence, and they have been represented by one firm of solicitors and one counsel. I will refer to them as the respondents, except where it is necessary to distinguish between them.

3 In their Amended Defence filed and served on 2 February 2006, the respondents admitted in substance the allegations made against them by the Commission.

4 I will set out my findings of fact based on the pleadings, including the admissions, and on the evidence put before me by way of affidavits. Neither party sought to cross-examine any of the deponents of the affidavits.

5 The issues which are in dispute are the fixing of the appropriate pecuniary penalties under s 76 of the Act, and one or two related factual matters. It is agreed by the parties that it is appropriate for me to make declarations, but it is necessary for me to carefully consider the form of the declarations which should be made. There is a dispute between the parties as to whether I should grant injunctions against the respondents. Cambur Industries has proffered an undertaking to maintain a trade practices compliance programme and I must consider the terms of that undertaking.

6 The Commission asked me to incorporate in the orders the findings of fact made for the purpose of determining the appropriate penalties and other remedies. I do not think that it is appropriate to do that for a number of reasons. First, it would make the orders of the court unnecessarily lengthy and it would raise the question of what findings should or should not be included. Secondly, such a course would create a risk of inconsistency between the findings in the orders and the findings in the reasons for judgment: Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (ACN 008 799 040) (2001) ATPR 41-802. Reference was made by the Commission to s 83 of the Act, but that section does not suggest that such a course is necessary or appropriate. The findings of fact in the reasons for judgment can be proved in the manner contemplated by the section.

Facts – background

7 Cambur Industries was incorporated in 1962 and it carries on business as an importer and wholesale supplier of electrical goods, homeware products and tableware products. The company’s business is divided into three divisions, which correspond to those different types of goods. The evidence is that for the most part the divisions operate separately.

8 The electrical goods supplied by Cambur Industries include kitchen products manufactured under two well-known brand names, Bamix and Magimix, such as stick mixers, juicers, food processors and coffee machines. The coffee machines are referred to as ‘dual branded’ Nespresso/Magimix. The contraventions in this case relate to the supply of the Bamix and Magimix products and the Nespresso/Magimix coffee machines. I will refer to these products as ‘the Cambur products’, except where it is necessary to distinguish between them.

9 The head office of Cambur Industries is in Victoria and the company has a regional office in New South Wales. The company has salespeople in Victoria, New South Wales and Adelaide. In the other States and Territories it operates through commission agents. Cambur Industries has about 35 employees, of whom approximately 60 per cent are full-time employees and 40 per cent are part-time employees.

10 The electrical goods division of Cambur Industries has four employees, one of whom is Mr Caulfield, who is the sales and marketing manager. The other three staff members report to him and he in turn reports to the managing director. Mr Caulfield is 57 years old and has worked as a salesperson for a number of years. Mr Caulfield and his wife have a small shareholding in Cambur Industries. Mr Caulfield is effectively the product manager for the Bamix and Magimix products, including the Nespresso/Magimix coffee machines. At the time of the conduct that contravened the Act, he was the one who made the decisions on behalf of Cambur Industries about the marketing and distribution of the Cambur products. At the time of the contravening conduct, Mr Caulfield was working in South Australia.

11 Mr Leigh Spencer Jeffs is the managing director and major shareholder of Cambur Industries. At the time of the contravening conduct, Mr Jeffs was working in Victoria.

12 In the financial year ended 30 June 2005, the sales revenue of Cambur Industries from all activities was $10,592,482. The gross profit was $7,719,173 and the net profit after expenses was $458,891.

13 In terms of the revenue and profit after tax of the electrical goods division of Cambur Industries over a five-year period, the following table sets out the position:

Financial year	Revenue $	Profit after Tax $
2001	2,500,000	100,000
2002	3,900,000	200,000
2003	4,100,000	100,000
2004	4,700,000	100,000
2005	3,800,000	100,000

14 In the evidence put before me, Mr Jeffs expresses an opinion about the market share of Cambur Industries in the gift and homewares market (excluding electrical goods) and in the electrical goods market. His opinion is that Cambur Industries is a mid-size player in the gift and homewares market, although, in monetary terms, its share is ‘tiny’. As far as the market for electrical products is concerned, Cambur Industries’ share of the total market for stick mixers, food processors and coffee machines is, according to Mr Jeffs, ‘very small’ and, in his opinion, in the order of approximately 3.3 per cent. The Commission did not put forward any evidence on the question of the market share of Cambur Industries in the electrical products market, but it did suggest that there were deficiencies in the evidence of Mr Jeffs. The evidence on market share is imprecise, and it goes no further than supporting a general finding (which I make) that the market share of Cambur Industries in the electrical products market is, and was at the time of the contravening conduct, relatively small.

15 Cambur Industries sold Cambur products to a number of retail outlets in South Australia and it is the conduct of the company and Mr Caulfield in relation to two retailers carrying on business in South Australia that is alleged to have contravened s 48 of the Act.

16 Pete N Peppa Pty Ltd conducts a business under the name ‘Pete N Peppa’. It has a shop in Rundle Mall, Adelaide, where it sells kitchenware products and homeware products. The business commenced trading on 13 June 2003. The two directors of Pete N Peppa are Mr Peter Milosevic and Mr George Caroscio, and the manager of the shop is Ms Janet Beth Hunter.

17 Tabletop and Kitchen Pty Ltd conducts a business under the name ‘Tabletop and Kitchen’ from various premises in Adelaide, including a shop in Gawler Place. It also sells kitchenware products and homeware products. Mr William Mitchell is the managing director of Tabletop and Kitchen and Ms Elizabeth Gilbert is employed by the company as a buyer.

18 It is convenient at this point to set out the provisions of the Act which define the practice of resale price maintenance.

The resale price maintenance provisions of the Act

19 Section 48 of the Act prohibits a corporation or other person from engaging in the practice of resale price maintenance. The practice of resale price maintenance is the practice identified in Part VIII of the Act: s 4.

20 The key section in Part VIII is s 96, which provides:

‘(1) Subject to this Part, a corporation (in this section called the supplier) engages in the practice of resale price maintenance if that corporation does an act referred to in any of the paragraphs of subsection (3).

(2) Subject to this Part, a person (not being a corporation and also in this section called the supplier) engages in the practice of resale price maintenance if that person does an act referred to in any of the paragraphs of subsection (3) where the second person mentioned in that paragraph is a corporation.

(3) The acts referred to in subsections (1) and (2) are the following:

(a) the supplier making it known to a second person that the supplier will not supply goods to the second person unless the second person agrees not to sell those goods at a price less than a price specified by the supplier;

(b) the supplier inducing, or attempting to induce, a second person not to sell, at a price less than a price specified by the supplier, goods supplied to the second person by the supplier or by a third person who, directly or indirectly, has obtained the goods from the supplier;

(c) the supplier entering into an agreement, or offering to enter into an agreement, for the supply of goods to a second person, being an agreement one of the terms of which is, or would be, that the second person will not sell the goods at a price less than a price specified, or that would be specified, by the supplier;

(d) the supplier withholding the supply of goods to a second person for the reason that the second person:

(i) has not agreed as mentioned in paragraph (a); or

(ii) has sold, or is likely to sell, goods supplied to him or her by the supplier, or goods supplied to him or her by a third person who, directly or indirectly, has obtained the goods from the supplier, at a price less than a price specified by the supplier as the price below which the goods are not to be sold;

(e) the supplier withholding the supply of goods to a second person for the reason that a third person who, directly or indirectly, has obtained, or wishes to obtain, goods from the second person:

(i) has not agreed not to sell those goods at a price less than a price specified by the supplier; or

(ii) has sold, or is likely to sell, goods supplied to him or her, or to be supplied to him or her, by the second person, at a price less than a price specified by the supplier as the price below which the goods are not to be sold; and

(f) the supplier using, in relation to any goods supplied, or that may be supplied, by the supplier to a second person, a statement of a price that is likely to be understood by that person as the price below which the goods are not to be sold.

(4) For the purposes of subsection (3):

(a) where a price is specified by another person on behalf of the supplier, it shall be deemed to have been specified by the supplier;

(b) where the supplier makes it known, in respect of goods, that the price below which those goods are not to be sold is a price specified by another person in respect of those goods, or in respect of goods of a like description, that price shall be deemed to have been specified, in respect of the first‑mentioned goods, by the supplier;

(c) where a formula is specified by or on behalf of the supplier and a price may be ascertained by calculation from, or by reference to, that formula, that price shall be deemed to have been specified by the supplier; and

(d) where the supplier makes it known, in respect of goods, that the price below which those goods are not to be sold is a price ascertained by calculation from, or by reference to, a formula specified by another person in respect of those goods or in respect of goods of a like description, that price shall be deemed to have been specified, in respect of the first‑mentioned goods, by the supplier.

(5) In subsection (4), formula includes a set form or method.

(6) For the purposes of subsection (3), anything done by a person acting on behalf of, or by arrangement with, the supplier shall be deemed to have been done by the supplier.

(7) A reference in any of paragraphs (3)(a) to (e), inclusive, including a reference in negative form, to the selling of goods at a price less than a price specified by the supplier shall be construed as including references to:

(a) the advertising of goods for sale at a price less than a price specified by the supplier as the price below which the goods are not to be advertised for sale;

(b) the displaying of goods for sale at a price less than a price specified by the supplier as the price below which the goods are not to be displayed for sale; and

(c) the offering of goods for sale at a price less than a price specified by the supplier as the price below which the goods are not to be offered for sale;

and a reference in paragraph (3)(d), (e) or (f) to a price below which the goods are not to be sold shall be construed as including a reference to the price below which the goods are not to be advertised for sale, to the price below which the goods are not to be displayed for sale and to the price below which the goods are not to be offered for sale.’

Section 4F of the Act provides that a person shall be deemed to have engaged in conduct for a reason if that reason was a substantial reason.

Facts – the contravening conduct

21 By way of introduction, I note that both the Commission and the respondents asked me to approach the question of the fixing of the pecuniary penalties and the other relief sought by treating the conduct of the respondents involving Pete N Peppa as one course of conduct and the conduct involving Tabletop and Kitchen as another course of conduct. I did not understand either party to submit that the precise number of contraventions was of particular significance. I will adopt that approach, but, at the same time, because I think it is relevant to the fixing of the pecuniary penalties, I will identify the number of acts of engaging in the practice of resale price maintenance and the period over which the conduct occurred.

Pete N Peppa

22 Pete N Peppa was an authorised stockist of Cambur products from 13 June 2003 to about 28 June 2004. It purchased Cambur products in its own right and sold those products to the public. From time to time, it received documents from the respondents consisting of Bamix stockist’s order forms, Magimix price list or order forms, promotional leaflets for Cambur products and authorised stockist’s newsletters. Those documents contained prices specified, suggested or recommended for Cambur products. I will refer to these prices as ‘the specified prices’.

23 In May 2003, Mr Caulfield went to the shop and took Pete N Peppa’s first order for Cambur products from Mr Milosevic. In the course of his conversation with Mr Milosevic, Mr Caulfield showed him a Bamix stockist’s order form and a Magimix price list or order form. Mr Caulfield said words to the effect that Pete N Peppa would purchase Cambur products from Cambur at Cambur’s wholesale price and Cambur would provide Pete N Peppa with the list of recommended retail prices. Mr Milosevic asked Mr Caulfield about discounting Cambur products and, in response, Mr Caulfield said words to the effect that Pete N Peppa would not need to discount Cambur products and that Cambur Industries did not like discounting.

24 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, attempted to induce Pete N Peppa not to sell and advertise Cambur products at prices less than the prices specified by Cambur Industries.

25 On or about 6 June 2003, Mr Caulfield went to the shop and gave Mr Milosevic a folder containing, among other things, Bamix stockist’s order forms and Magimix price list or order forms. Mr Milosevic asked Mr Caulfield if Pete N Peppa could set a price for Cambur products between the wholesale price and the specified prices. Mr Caulfield said ‘no’.

26 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, attempted to induce Pete N Peppa not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries.

27 The folder of documents previously referred to also contained a Cambur Newsletter dated July 2003 for authorised stockists. The newsletter included a statement to the effect that the Bamix cassette Swiss-line (Model 7BA00240D) would retail at $349.

28 It is admitted by the respondents that, by providing the Cambur Newsletter, Cambur Industries, through Mr Caulfield, attempted to induce Pete N Peppa not to engage in advertising Cambur products at prices less than prices specified by Cambur Industries.

29 On three occasions between October 2003 and January 2004, Cambur Industries, through Mr Caulfield, told Pete N Peppa that Pete N Peppa could not discount various Cambur products. The first occasion was in October or November 2003 and occurred during a meeting at the shop between Mr Caulfield and Mr Milosevic. Mr Milosevic asked Mr Caulfield if it would be possible for Pete N Peppa to have special offers on Nespresso coffee machines in the period leading up to Christmas. Mr Caulfield told Mr Milosevic that Nespresso coffee machines were not to be discounted and that Cambur Industries had a deal with Nescafe that the machines were not to be discounted. He also told Mr Milosevic that Cambur Industries did not discount and that Nescafe would discount the Nespresso coffee machines if they felt it was necessary.

30 The second occasion was in early November 2003 and occurred after Mr Milosevic had obtained information that Tabletop and Kitchen was discounting Bamix products. Mr Milosevic made a telephone call to Mr Caulfield and asked him why Tabletop and Kitchen was discounting when he had told Pete N Peppa not to discount. Mr Caulfield said that that was impossible, because no one discounted Cambur products, and that he would make some telephone calls. About two hours later, Mr Caulfield made a telephone call to Mr Milosevic. He told Mr Milosevic that it was a mistake, that he had just been to Tabletop and Kitchen, and that there were no Bamix products on sale. He told him that no one discounts Bamix products and that Pete N Peppa was not to discount or price-match on Bamix products. He said that Cambur’s prices were firm and that Cambur Industries did not discount any Cambur products.

31 The third occasion was on 19 January 2004, when Mr Caulfield visited the shop and spoke to Mr Caroscio. Mr Caroscio told Mr Caulfield that Pete N Peppa would like to discount its Nespresso coffee machines because it had not been able to sell them. Mr Caulfield said that under no circumstances was Pete N Peppa to discount Cambur products, that Bamix and Magimix products had a market reputation that needed to be protected, and that Bamix and Magimix did not want Cambur products falling into the category of discounted items. Mr Caulfield told Mr Caroscio that Cambur products were premium products and needed to be sold at a premium price, and that all other retailers were in the same situation so that Pete N Peppa was not being singled out. He told Mr Caroscio that the reason Pete N Peppa was not allowed to discount was so that everyone sold Cambur products at the same price. He told Mr Caroscio that Pete N Peppa was not allowed to advertise or display sale signs that showed Cambur products at a discounted price. He told Mr Caroscio that Pete N Peppa had already agreed verbally when it became a stockist of Cambur products that it would not advertise discounts on Cambur products below the prices set out in the various forms, promotional leaflets and newsletters.

32 The allegations concerning these three occasions are admitted by the respondents. In its proposed declarations, the Commission alleges that the three occasions give rise to one act of attempting to induce Pete N Peppa not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries. I am prepared to proceed on that basis.

33 In early August 2003, Mr Caulfield conducted a training session in relation to Cambur products at the shop. The training session was attended by Mr Milosevic and staff of Pete N Peppa. During the training session, Mr Milosevic asked Mr Caulfield if there was any flexibility at all around the specified prices. Mr Caulfield said that Pete N Peppa was not to discount Cambur products. Mr Caulfield said that if any Cambur products were discounted, Cambur Industries would come into the shop and take the Cambur products off the shelf and that Cambur Industries would provide no warnings to Pete N Peppa.

34 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, made it known to Pete N Peppa that it would not continue to supply Cambur products to Pete N Peppa unless Pete N Peppa agreed not to sell and advertise Cambur products at prices less than the prices specified by Cambur Industries, and attempted to induce Pete N Peppa not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries. This is a case of one act falling within two paragraphs in s 96(3) of the Act (ie, s 96(3)(a) and (b)). For the purposes of determining the number of acts of engaging in the practice of resale price maintenance, it is to be treated as one act.

35 In about mid-November 2003, Pete N Peppa had discounted all the Nespresso coffee machines that it had on display, and it had placed a sign on the machines offering the machines for sale at less than the specified price. Within three or four days of the sale commencing, Mr Caulfield visited the shop and told Mr Milosevic that he had heard that Pete N Peppa was discounting the Nespresso coffee machines and that Pete N Peppa could not discount the machines. He told Mr Milosevic that he needed to take the sign off the machines straight away. He told Mr Milosevic that Pete N Peppa must not discount the Nespresso coffee machines, and that it was part of Cambur Industries’ policy not to discount the machines. He told Mr Milosevic that if the Nespresso coffee machines were to be discounted, they were to be discounted by Cambur Industries and not by retailers, and that if Pete N Peppa discounted, Mr Caulfield would remove all Cambur products from Pete N Peppa’s premises. He told Mr Milosevic that if Pete N Peppa lost the Nespresso coffee machines, it would cease to be a retailer of all Cambur products.

36 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, made it known to Pete N Peppa that it would not continue to supply Cambur products to Pete N Peppa unless Pete N Peppa agreed not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries, and attempted to induce Pete N Peppa not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries. Again, this is a case of one act falling within two paragraphs in s 96(3) of the Act (ie, s 96(3)(a) and (b)).

37 On or about 3 May 2004, Pete N Peppa again offered for sale some of its Nespresso coffee machines at below the specified prices. On 10 May 2004, Mr Caulfield visited the shop and asked Mr Caroscio ‘what was the meaning of’ discounting the Cambur products. He said to Mr Caroscio that he should be aware that Cambur products were not to be discounted and that Pete N Peppa was not allowed to discount Cambur products. He told Mr Caroscio that Cambur Industries had a market to protect and that other retailers were complaining that Pete N Peppa was discounting Cambur products. He told Mr Caroscio that other retailers were asking why Pete N Peppa was allowed to discount but not them, and that those retailers were getting customers asking them why they were not discounting when Pete n Peppa was discounting. Mr Caroscio told Mr Caulfield that Pete N Peppa had no option but to discount the Nespresso coffee machines because Pete N Peppa had been unable to sell them. Mr Caulfield said that he would take the Nespresso coffee machines back and give Pete N Peppa a credit for them. Several days after 10 May 2004, Mr Caulfield collected four of the machines and Cambur Industries subsequently gave Pete N Peppa a credit for those machines.

38 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, made it known to Pete N Peppa that it would not continue to supply Cambur products to Pete N Peppa unless Pete N Peppa agreed not to sell and advertise Cambur products at prices less than prices specified by Cambur, and attempted to induce Pete N Peppa not to sell and advertise Cambur products at less than prices specified by Cambur Industries. Again, this is a case of one act falling within two paragraphs in s 96(3) of the Act (ie, s 96(3)(a) and (b)).

39 It is also alleged by the Commission that during each of the conversations in early August 2003, mid-November 2003 and 10 May 2004, outlined above, Mr Caulfield told Pete N Peppa that Pete N Peppa could not discount Cambur products. I would not treat these as separate contraventions of the Act. The statements are ‘part and parcel’ of acts or conduct previously identified as contraventions.

40 On 13 June 2004, Pete N Peppa had a birthday sale, and as part of that sale it offered, among other things, a store-wide discount of 5 per cent off all electrical products, including Cambur products. On or about 28 June 2004, Mr Caulfield went to the shop and spoke to Mr Caroscio. He asked him ‘what was the meaning of’ selling Cambur products at a 5 per cent discount. He told him that Pete N Peppa was not allowed to discount Cambur products and that other retailers were complaining that Pete N Peppa was discounting. He told Mr Caroscio that nobody else was allowed to discount Cambur products, so ‘why should Pete N Peppa be allowed to’. He said to Mr Caroscio that Cambur Industries had a market to protect and words to the following effect:

‘That’s it. Cambur is not doing business with Pete N Peppa any more. Pete N Peppa is no longer a stockist. Pack everything up of Cambur’s and send it back. Cambur will give Pete N Peppa a credit.’

41 On or about 10 September 2004, Mr Caroscio called the head office of Cambur Industries in Melbourne and placed an order for Cambur products. Mr Caulfield made a telephone call to Mr Caroscio later that day and said to Mr Caroscio that Pete N Peppa was no longer a stockist of Cambur products and that Cambur Industries was not going to supply Pete N Peppa with the goods it had ordered.

42 The respondents submitted that Cambur Industries had experienced difficulties in securing payment of its accounts from Pete N Peppa. It was suggested that this was also a reason for the withholding of the supply of Cambur products to Pete N Peppa. That was not put forward to qualify the admission as to the substantial reason, but was said to be relevant to penalty.

43 There is evidence that Cambur Industries did experience difficulties with Pete N Peppa in terms of obtaining payment of its accounts. I am prepared to accept that that was a matter in Mr Caulfield’s mind at the relevant time. However, I find that, the predominant reason for the withholding of supply was that alleged by the Commission. That conclusion follows, I think, from the course of events leading up to the withholding of supply and the contents of a telephone conversation in October 2004 between Mr Caulfield and Mr Milosevec, to which I refer below (at [87]-[88]).

44 The Commission alleges that, by all of the conduct in relation to Pete N Peppa referred to above, Cambur Industries, through Mr Caulfield, used a statement of price or statements of prices that were likely to be understood by Pete N Peppa as the price below which Cambur products were not to be sold and advertised for sale. This allegation is admitted by the respondents. However, I would not treat this as a separate contravention because the conduct relied on is part of the individual contraventions referred to above.

45 Although, as I have said, the parties focused on a course of conduct between Cambur Industries and Pete N Peppa, it is appropriate in assessing the pecuniary penalty to note that the respondents’ conduct involved eight acts of engaging in the practice of resale price maintenance over a period of about 16 months.

Tabletop and Kitchen

46 Tabletop and Kitchen was an authorised stockist of Cambur products. Like Pete N Peppa, it purchased Cambur products in its own right and sold those products to the public. From time to time, it also received documents from the respondents consisting of Bamix stockist’s order forms, Magimix price list or order forms, promotional leaflets for Cambur products and authorised stockist’s newsletters. Those documents contained prices specified, suggested or recommended for Cambur products. I will refer to those prices as the specified prices.

47 On 26 December 2001, Tabletop and Kitchen advertised in the Adelaide Advertiser newspaper a 10-50 per cent off store-wide sale with no exceptions. The sale was held from about 27 December 2001. On or about 29 December 2001, Mr Caulfield went to the shop in Gawler Place and had a conversation with Mr Mitchell. He said to Mr Mitchell that he had ‘done the wrong thing’ by advertising the sale and providing a discount on Cambur products and that Mr Mitchell was to remove Cambur products from the shelves. By reason of that conduct, during the period from early January 2002 to about 13 July 2005, Tabletop and Kitchen refrained from offering Cambur products for sale at prices less than the specified prices.

48 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, induced Tabletop and Kitchen not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries.

49 On 26 December 2002, Tabletop and Kitchen again advertised in the Adelaide Advertiser newspaper a 10-50 per cent off store-wide sale with no exceptions. The sale was held from about 26 December 2002. Before the sale was advertised and commenced, Mr Gilbert made a telephone call to Mr Caulfield to notify him of the sale. Mr Caulfield told Mr Gilbert that Tabletop and Kitchen had to remove Cambur products from the floor of the shop in Gawler Place for the duration of the sale. By reason of that conduct, from about 26 December 2002 to about 13 July 2004, Tabletop and Kitchen continued to refrain from offering Cambur products for sale at prices less than the specified prices.

50 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, induced Tabletop and Kitchen not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries.

51 In about late June to early July 2004, Mr Mitchell telephoned Mr Caulfield to inform him that Pete N Peppa was discounting Cambur products and he asked Mr Caulfield to deal with the discounting. Mr Caulfield told Mr Mitchell that he would take immediate action. By reason of that conduct, during the period from about late June 2004 to about 13 July 2004, Tabletop and Kitchen continued to refrain from offering Cambur products for sale at prices less than the specified prices.

52 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, induced Tabletop and Kitchen not to sell and advertise Cambur products at prices less than the prices specified by Cambur Industries.

53 In or about May or June 2002, Ms Gilbert contacted Mr Caulfield by telephone and informed him that Ms Athanasea Retsas, trading as Cookaholic’s, was advertising some Bamix products at 10 per cent off the specified prices. Mr Caulfield said to Ms Gilbert that Cookaholic’s conduct was ‘not on’ and that if Cookaholic’s made the offer again, its stock would be taken away. He said that the conduct of Cookaholic’s would not be repeated. By reason of that conduct, during the period from about May 2002 to about 13 July 2005, Tabletop and Kitchen continued to refrain from offering Cambur products for sale at prices less than the specified prices.

54 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, made it known to Tabletop and Kitchen that it would not continue to supply Cambur products to Tabletop and Kitchen unless Tabletop and Kitchen agreed not to sell and advertise Cambur products at prices less than the prices specified by Cambur Industries, and induced Tabletop and Kitchen not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries. Again, this is a case of one act falling within two paragraphs of s 96(3) of the Act (ie, s 96(3)(a) and (b)).

55 The Commission alleges that, by all of the conduct referred to above, Cambur Industries, through Mr Caulfield, used a statement of price or statements of prices that were likely to be understood by Tabletop and Kitchen as the price below which Cambur products were not to be sold and advertised for sale. This allegation is admitted by the respondents. Again, as with Pete N Peppa, I would not treat this as a separate contravention, because the conduct relied on is part of the individual contraventions referred to above.

56 Although the parties focused on a course of conduct between Cambur Industries and Tabletop and Kitchen, it is appropriate in assessing the pecuniary penalty to note that the respondents’ conduct involved the four acts of engaging in the practice of resale price maintenance.

57 The respondents admit that, by his conduct, Mr Caulfield was directly and knowingly concerned in and/or a party to each and every contravention by Cambur Industries of s 48 of the Act.

58 I turn now to consider the pecuniary penalties which should be imposed.

Pecuniary penalties

59 Section 76(1) of the Act provides as follows:

‘(1) If the Court is satisfied that a person:

(a) has contravened any of the following provisions:

(i) a provision of Part IV;

(ii) section 75AU or 75AYA;

(b) has attempted to contravene such a provision;

(d) has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene such a provision;

(e) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or

(f) has conspired with others to contravene such a provision;

the Court may order the person to pay to the Commonwealth such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the Court determines to be appropriate having regard to all relevant matters including the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission, the circumstances in which the act or omission took place and whether the person has previously been found by the Court in proceedings under this Part or Part XIB to have engaged in any similar conduct.’

60 The pecuniary penalty payable by a body corporate for each act or omission is not to exceed $10 million, and a pecuniary penalty payable by a person other than a body corporate for each act or omission is not to exceed $500,000. Section 76(3) provides as follows:

‘(3) If conduct constitutes a contravention of two or more provisions of Part IV, a proceeding may be instituted under this Act against a person in relation to the contravention of any one or more of the provisions but a person is not liable to more than one pecuniary penalty under this section in respect of the same conduct.’

61 Taking the approach that the respondents should be penalised for a course of conduct in relation to Pete N Peppa and a course of conduct in relation to Tabletop and Kitchen, the Commission submits that I should approach the fixing of the appropriate pecuniary penalties in the following way:

	Cambur	Caulfield
Course of conduct in respect of Pete N Peppa	$245,000 - $280,000	$25,000 - $40,000
Course of conduct in respect of Tabletop and Kitchen	$165,000 - $190,000	$20,000 - $30,000
Subtotal	$410,000 - $470,000	$45,000 - $70,000
Less discount of 20% for cooperation	$82,000 - $94,000	$9,000 - $14,000
Total Proposed Pecuniary penalty (Actual)	$328,000 - $376,000	$36,000 - $56,000
Total Proposed Pecuniary penalty (Rounded)	$330,000 - $375,000	$35,000 - $55,000

62 I start by reminding myself of some well-known general principles relevant to the fixing of pecuniary penalties. What follows is taken from the reasons for judgment of Burchett and Keifel JJ in NW Frozen Foods v Australian Competition and Consumer Commission (1996) 71 FCR 285.

63 First, the effect of the respondent’s conduct on the function of markets and other economic effects of the conduct will generally be regarded as a significant matter, and the court is likely to be assisted by views put forward by the Commission, or by experts called on behalf of the parties (at 290). In this case, the Commission put forward no direct evidence as to the effects of the respondents’ conduct on the function of the relevant market.

64 Secondly, deterrence (both general and personal) is important in assessing the appropriate penalty. It has been described as a ‘principal purpose’ of s 76 and a factor of ‘particular significance’ (see the cases referred to at 293). However, at the same time, it is important that the penalty imposed is not oppressive.

65 Thirdly, cooperation and the implementation of a compliance programme by the contravener is also an important matter in fixing the appropriate penalty. Burchett and Keifel JJ said (at 294):

‘Where the Commission established to administer the Act is satisfied that an appropriate programme has been undertaken, or the undertaking of it is proved to the Court, this is the most important matter to take into account on penalty.’

66 Fourthly, the penalties imposed in one case cannot dictate the appropriate penalty in another case. That follows from the fact that the circumstances in two cases are rarely the same or equal.

67 The fifth point is perhaps an observation more than anything else. Burchett and Keifel JJ expressed the view that the penalties imposed by s 76 are not criminal sanctions and their purpose, established now by a long line of cases, is not punishment (at 296-297). Carr J, on the other hand, considered that the question was an open one (at 299).

68 Section 76 identifies four matters which are relevant to the determination of the appropriate pecuniary penalty. They are:

1. the nature and extent of the act or omission;

2. the loss or damage suffered as a result of the act or omission;

3. the circumstances in which the act or omission took place; and

4. whether the contravening company and accessory have been found guilty of previous relevant contraventions.

69 In Trade Practices Commission v CSR Ltd (1991) ATPR 41-076, French J identified other relevant matters as follows:

5. the size of the contravening company;

6. the degree of power it has, as evidenced by its market share and ease of entry into the market;

7. the deliberateness of the contravention and the period over which it extended;

8. whether the contravention arose out of the conduct of senior management or at a lower level;

9. whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programmes and disciplinary or other corrective measures in response to an acknowledged contravention; and

10. whether the company has shown a disposition to cooperate with the authorities responsible for the enforcement of the Act in relation to the contravention.

70 The above matters are not exhaustive of all the relevant circumstances: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (supra) per Burchett and Keifel JJ (at 292). Other factors have also been identified, such as the respondents’ financial position and any profit made by the contravening company. A number of the matters overlap and, clearly, the significance or weight to be accorded to any particular matter will depend on the circumstances of the particular case.

71 As to the nature and extent of the acts constituting the contravening conduct, in the case of Pete N Peppa I have found that there were eight acts which contravened s 48 of the Act. Those acts occurred over a period of about 16 months and the conduct culminated in the withholding of supply of Cambur products. In the case of Tabletop and Kitchen, there were four acts which contravened s 48. Those acts occurred over a period of about three-and-a-half years from January 2002 to July 2005, during which time, as a result of the respondents’ conduct, Tabletop and Kitchen did not discount Cambur products.

72 As to any loss or damage suffered as a result of the contravening conduct, there are two groups which may have suffered loss or damage and they are the retailers and consumers. There is no precise evidence of loss or damage suffered by either group. As far as retailers are concerned, it was suggested that retailers other than Pete N Peppa or Tabletop and Kitchen may have been induced not to discount. Certainly there is evidence to suggest Mr Caulfield was speaking to other retailers about the price of Cambur products, but I do not think that I could find on the evidence that other retailers suffered loss or did not discount so that they or consumers suffered loss and damage. Mr Milosevic of Pete N Peppa gives some general evidence of loss and damage suffered by Pete N Peppa when he says that the Bamix and Magimix products were the best on the market and Pete N Peppa lost money because they were not selling them and were sending customers to other stores. There is no evidence from Mr Mitchell or Ms Gilbert of Tabletop and Kitchen of the effect of the contravening conduct on the business of Tabletop and Kitchen. I am prepared to assume that some loss was suffered by Pete N Peppa and Tabletop and Kitchen, but I can be no more precise than that. The conduct in each case occurred over a considerable period of time and Bamix and Magimix products were popular in the marketplace. Both businesses sought to discount the products. As far as the effect on consumers is concerned, I am prepared to assume that some loss and damage was caused because consumers could not buy discounted Cambur products from Pete N Peppa and Tabletop and Kitchen.

73 As to the circumstances in which the acts took place, there is no question here of accident or mistake. Neither Mr Jeffs nor Mr Caulfield had any real knowledge of the provisions of the Act at the time of the contravening conduct. Mr Jeffs did not know that the contravening conduct was taking place, but, at the same time, it was accepted by Cambur Industries that he should have exercised greater control over Mr Caulfield’s activities.

74 As to whether the respondents have previously been found by the Court to have engaged in similar conduct, I find that neither Cambur Industries nor Mr Caulfield has been found by the Court to have engaged in similar conduct.

75 As to the size of the contravening company, Cambur Industries is a small company.

76 As to the degree of power of Cambur Industries, as evidenced by its market share and ease of entry into the market, I refer to my earlier finding in [14] above. The market share of Cambur Industries in the electrical products market is relatively small. There is no evidence before me which would enable me to make a finding as to the ease of entry into the market.

77 As to the deliberateness of the contravening conduct and the period over which it extended, the conduct was clearly deliberate and it extended over a considerable period of time. Mr Jeffs did not know that the conduct was taking place. Mr Caulfield was engaged in the conduct, but I am satisfied, having regard to all the evidence, that he did not know that what he was doing was in contravention of the Act.

78 As to the issue of whether the contravening conduct arose out of the conduct of senior management or at a lower level, the contravening conduct was carried out by Mr Caulfield, who held a position in the senior management of Cambur Industries. At the same time, it is relevant to note that Cambur Industries is a small company.

79 As to whether the company had a corporate culture conducive to compliance with the Act, I find that at the time of the contravening conduct and prior to that, Cambur Industries had in place no education programmes, disciplinary or other corrective measures for the purposes of compliance with the Act. As I have said, Mr Jeffs and Mr Caulfield had very little knowledge of the provisions of the Act.

80 Since the contravening conduct, Cambur Industries has made considerable efforts to ensure that the company complies with the Act in future. I am satisfied that its efforts, which I describe below, are genuine.

81 After the proceedings were instituted, Mr Jeffs caused a memorandum to be sent to the staff and agents of Cambur Industries advising them of the allegations made against Cambur Industries and that Cambur Industries could only recommend a retail price, and that stockists could advertise the sale of Cambur products for prices below the recommended retail prices.

82 Mr William Gerard Dee is a consultant who provides advice to companies about appropriate compliance systems to ensure they comply with the provisions of the Act. He was, for a time, head of the Commission’s compliance unit. His expertise and qualifications are not challenged by the Commission. In January 2006, he was engaged by Cambur Industries to develop a compliance programme. He developed such a programme and that programme has been approved by the company. Mr Jeffs has agreed to be the compliance officer for the company. A training session for staff was held in February 2006. Further training sessions will be held.

83 On 3 March 2006, Mr Jeffs caused Cambur Industries to send a letter to all stockists advising them of the allegations made by the Commission, that they were admitted, and that its conduct was unlawful. It advised stockists that Cambur Industries had implemented a corporate compliance programme and that all stockists were absolutely free to sell Cambur products at prices they determined.

84 I am satisfied that Cambur Industries has taken appropriate steps to ensure compliance with the provisions of the Act in the future.

85 As to whether the respondents have shown a disposition to cooperate with the authorities responsible for the enforcement of the Act in relation to the contravention, I find that, subject to a couple of qualifications, the respondents have cooperated.

86 After a complaint had been made to it, the Commission wrote to Cambur Industries on 20 December 2004 about the alleged contravening conduct. The Commission sought certain documents, which, as I understand it, were provided by the company. The Commission also sought to interview Mr Jeffs and Mr Caulfield, who both attended interviews on 28 January 2005. They were both sent a transcript of the respective interviews, which was in evidence before me and which I have read. I find that during the interview Mr Caulfield did not admit aspects of the contravening conduct and was by no means as frank as he could have been.

87 Thereafter, nothing occurred until 22 September 2005, when the Commission filed and served the Application and Statement of Claim in these proceedings. There followed correspondence between the solicitors for the Commission and the solicitors for the respondents, wherein the latter indicated in general terms that they were prepared to cooperate with the Commission. The respondents filed and served a Defence on 30 November 2005. Some admissions were made in the Defence. However, as to the reason for the alleged withholding of supply of Cambur products to Pete N Peppa, the respondents denied the allegation that Cambur Industries withheld supply of its products for the substantial reason that Pete N Peppa had sold, or was likely to sell, or had advertised, or was likely to advertise, Cambur products at less than prices specified by Cambur Industries. It is unnecessary to set out the details of the pleas in the Defence, but it is fair to say that the suggestion in the Defence is that the reason for the withholding of supply was the failure of Pete N Peppa to comply with the payment terms of Cambur Industries. It should be noted that this was in the face of a plea by the Commission in the Statement of Claim that there was a telephone conversation between Mr Milosevic and Mr Caulfield on 29 October 2004 wherein Mr Caulfield said to Mr Milosevic words to the effect that the decision by Cambur Industries to no longer supply its products to Pete N Peppa was because Pete N Peppa was going into ‘discount mode’.

88 On 22 December 2005, the Commission filed and served its affidavits in accordance with orders made by this Court, and those affidavits included an affidavit of Mr Milosevic. The telephone conversation in October 2004 between Mr Milosevic and Mr Caulfield had been recorded and a copy of a transcript of the conversation was an exhibit to Mr Milosevic’s affidavit.

89 The respondents filed and served an Amended Defence on 20 February 2006, wherein they admitted that the substantial reasons for withholding supply of Cambur products to Pete N Peppa was as alleged by the Commission. This position had been foreshadowed by the respondents in a letter from their solicitors to the Court dated 2 February 2006 wherein they advised the Court that they would be admitting all of the allegations in the Statement of Claim.

90 By the Amended Defence, the respondents have admitted in substance the allegations made by the Commission, thereby avoiding the need for a trial. The incurring of costs has been avoided, and the Commission and its officers and the Court are free to deal with other matters. Both Mr Jeffs and Mr Caulfield have offered to attend seminars of suppliers and retailers and speak publicly of their conduct in order to assist in the understanding of others of the operation of the provisions of the Act. I accept Mr Caulfield’s evidence that he has been very worried by the investigations and court proceedings and that his health has suffered. I accept that he is remorseful for what he has done.

91 As against those matters, Mr Caulfield was not forthcoming during the interview in January 2005, and the allegation as to the reason for withholding supply of Cambur products to Pete N Peppa was not the subject of an admission at the first available opportunity. The respondents’ cooperation must be viewed in light of these qualifications.

92 Another matter which has been mentioned in the authorities is the financial position of the respondents and the extent to which they have profited by their conduct. Cambur Industries is a small company and Mr Caulfield’s financial position is modest. Both have asked for time to pay the pecuniary penalties which are imposed. Mr Jeffs has given evidence that Cambur Industries did not profit by its conduct, and I accept that evidence. There is no evidence to suggest that Mr Caulfield profited by his conduct.

93 In fixing the pecuniary penalties, I have had regard to the cases to which I was referred. It is important to bear in mind that other cases are no more than a guide and there is an obvious danger in attempting too close a comparison for the purposes of fixing a penalty. In particular, there is a danger in taking a broadly analogous case and the penalty imposed in that case and then adding for circumstances considered more serious, and subtracting for circumstances considered less serious. Bearing those observations in mind, two cases which I have found quite helpful are Australian Competition and Consumer Commission v Dermalogica Pty Ltd (2005) 215 ALR 482 and Australian Competition and Consumer Commission v Westminster Retail Pty Ltd (2005) ATPR 42-084.

94 In my opinion, the appropriate pecuniary penalty in the case of Cambur Industries is $280,000 and the appropriate pecuniary penalty in the case of Mr Caulfield is $32,000. In the case of Cambur Industries, I have reached the figure of $280,000 by fixing a figure of $160,000 in the case of its conduct in relation to Pete N Peppa and a figure of $120,000 in the case of its conduct in relation to Tabletop and Kitchen. In the case of Mr Caulfield, I have reached the figure of $32,000 by fixing a figure of $18,400 in the case of its conduct in relation to Pete N Peppa and a figure of $13,600 in the case of its conduct in relation to Tabletop and Kitchen. A reduction has been made for the respondent’s cooperation and admissions. There is no set figure, or indeed range of figures, for the allowance to be made for these matters as each case must very much turn on its own particular facts. In this case, I have made an allowance of about one-fifth of the pecuniary penalties which I would otherwise have considered appropriate.

95 I will give the parties leave to make further submissions as to the time within which the respondents and each of them are to pay the pecuniary penalties which I have imposed.

Declarations

96 It is common ground that it is appropriate to make declarations and the only question is the form of those declarations. A declaration under the Act and s 21 of the Federal Court Act 1976 (Cth) must identify the contravening conduct. It must be precise in its terms, such that a person reading the declaration understands the nature of the contravention and, in broad terms, the conduct constituting the contravention. On the one hand, it is not necessary to put all the relevant findings of fact in the declaration, but, on the other, the gist of the conduct (as found) should be identified: Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at 91 [89]-[90] per Gummow, Hayne and Heydon JJ.

97 The declarations I am prepared to make are set out at the end of these reasons. They are similar to the declarations put forward by the Commission, with the qualification that I have identified eight acts of resale price maintenance in relation to Pete N Peppa and four acts of resale price maintenance in the case of Tabletop and Kitchen. I do not think it offends any principle to declare that some acts referred to in the declarations fall within more than one paragraph of s 96(3) of the Act and I have framed the declarations accordingly.

Injunctions

98 The Commission seeks a series of injunctions against the respondents. The injunctions it seeks against Cambur Industries would restrain it from engaging in conduct in breach of s 48 of the Act by virtue of engaging in conduct which falls within the terms of s 96(3)(a), (b), (d) and (f) of the Act for a period of three years. Similar injunctions are sought in relation to Mr Caulfield, the first restraining him from being involved in contravening conduct by a corporation and the second restraining him from being involved in conduct where the recipient of the goods is a corporation (see s 96(2)).

99 Under s 80 of the Act, the court may grant an injunction in such terms as the court determines to be appropriate. The section provides that the court may grant an injunction whether or not the person intends to engage in the relevant conduct again, whether or not the person has previously engaged in the relevant conduct and whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in the relevant conduct: s 80(4) of the Act. These matters, which are often highly relevant to whether a court exercising equitable jurisdiction grants an injunction in an action between private parties, are of much less relevance when a court is considering the power to grant an injunction under s 80. However, they are not irrelevant to the exercise of that power: ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 253-257 per Lockhart J.

100 The Commission in this case only seeks injunctions to restrain conduct which would constitute a contravention of the Act and does not seek to restrain conduct which would not or may not constitute a contravention of the Act. In an appropriate case it seems the court has the power to make such orders: Foster v Australian Competition and Consumer Commission (2006) 149 FCR 135. In this case, the granting of injunctions would add only one remedy, ie, a remedy for contempt of court, to those provided by the Act.

101 Generally speaking, injunctions which do no more than restrain contraventions of the Act will have little impact in terms of general deterrence. The pecuniary penalties are likely to have the greatest impact in that respect. Injunctions restraining no more than contraventions of the Act may have an effect in terms of personal deterrence and may be granted because of that consideration. They may also be granted because, in a particular case, they will reduce the likelihood of further contraventions. In this case, I am satisfied that the possibility of further contraventions is slight. Although Cambur Industries should have exercised greater control over Mr Caulfield, it was Mr Caulfield who was responsible for the contraventions. I am satisfied that the investigation, court proceedings, and pecuniary penalty I propose to impose has had and will have a very significant impact on him in terms of deterrence and, coupled with the compliance programme put in place by Cambur Industries, means it is very unlikely that he will engage in contravening conduct in the future.

102 As far as Cambur Industries and Mr Jeffs are concerned, I am satisfied that Mr Jeffs’ lack of knowledge of the provisions of the Act, his lack of control and supervision of Mr Caulfield, and the lack of education programmes and checks and balances to ensure compliance with the Act have now been addressed and, coupled with the pecuniary penalty I propose to impose on Cambur Industries, means it is very unlikely that the company will engage in contravening conduct in the future.

103 Injunctions might still be appropriate even if the likelihood of future contraventions is slight, if future contraventions are likely to cause significant damage to other persons: cf Australian Competition and Consumer Commission v Dermalogica Pty Ltd (supra) at [111] per Goldberg J. Without wishing to minimise the seriousness of the contravening conduct here, I do not think this case falls into that category.

104 For these reasons, I decline to grant the injunctions sought by the Commission.

Costs

105 The Commission seeks an order that the respondents pay its costs of an incidental to the proceeding to be agreed or taxed. The respondents do not dispute the fact that they must pay the applicant’s costs. The parties have attempted to agree an amount for costs, but have been unable to do so. In the circumstances, it is appropriate to make the order sought by the Commission.

Undertaking

106 Cambur Industries proffers an undertaking that it will maintain the compliance programme formulated by Mr Dee in January 2006 for a period of three years. The Court’s power to accept an undertaking is constrained by the limits of its power to make an order to similar effect as the undertaking. The Court’s power to make an order that a contravener comply with a compliance programme is contained in s 80 or s 86C of the Act. As far as s 80 is concerned, a training programme may go no further than the contravening conduct, or, it seems, that Part of the Act in which the section contravened appears: Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197; Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 at 88-90 [25], [26] and [36] per French J. The programme which may be the subject of an order under s 86C is a programme relating to ‘the contravening conduct, similar conduct or related conduct’.

107 Mr Dee’s programme makes reference to, among other things, a training programme as to the consumer protection provisions as they apply to promotional material. In view of the authorities to which I have referred and the terms of s 86C of the Act, I would wish to hear further from the parties before accepting the undertaking in the terms in which it is proffered. I will give the parties leave to make further submissions as to the terms of the undertaking by Cambur Industries to maintain a compliance programme.

Conclusion

108 For these reasons I will make the following declarations and orders.

109 The Court declares that: