FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Turi Foods Pty Ltd (No 2) [2012] FCA 19

Citation:

Australian Competition and Consumer Commission v Turi Foods Pty Ltd (No 2) [2012] FCA 19

Parties:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v TURI FOODS PTY LTD (ACN 057 142 971), BAIADA POULTRY PTY LTD (ACN 002 925 948), BARTTER ENTERPRISES PTY LIMITED (ACN 000 451 374) and AUSTRALIAN CHICKEN MEAT FEDERATION INC (ABN 24 077 883 026)

File number:

VID 974 of 2011

Judge:

TRACEY J

Date of judgment:

23 January 2012

Catchwords:

CONSUMER PROTECTION – contraventions of consumer protection legislation admitted – orders sought by consent - declaratory orders – injunctions – pecuniary penalties – publication orders – whether declaratory relief available under the circumstances – proper contradictor exists where contradictor consents to orders – orders made in terms sought

Legislation:

Competition and Consumer Act 2010 (Cth) Div 1, Part 3 – 1; Sch 2, ss 18, 29, 33, 224, 232, 246

Evidence Act 1995 (Cth) s 191

Federal Court of Australia Act 1976 (Cth) s 21

Trade Practices Act 1974 (Cth) Div 1, Part 2 – 1; ss 52, 53, 55, 76E, 86

Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 Sch 7, item 6

Cases cited:

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 cited

Australian Competition and Consumer Commission v Auspine Limited (2006) 235 ALR 95 compared

Australian Competition and Consumer Commission v Midland Brick Company Pty Ltd (2004) 207 ALR 329 cited

Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) [2011] FCA 382 discussed, not followed

Australian Competition and Consumer Commission v Sampson [2011] FCA 1165 discussed

Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 considered

Medical Benefits Fund of Australia Limited v Cassidy (2003) 135 FCR 1 discussed

NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 discussed, applied

Pearce v The Queen (1998) 194 CLR 610 cited

Rural Press Limited v Australian Competition and Consumer Commission (2003) 216 CLR 53 cited

Russian Commercial and Industrial Bank v British Bank for Foreign Trade Limited [1921] 2 AC 438 cited

Stuart v Construction, Forestry, Mining and Energy Union (2010) 185 FCR 308 compared

Trade Practices Commission v CSR Limited (1991) ATPR 41-076 cited, applied

White v Construction, Forestry, Mining and Energy Union (2010) 198 IR 470 cited

Date of hearing:

19 December 2011

Place:

Melbourne

Division:

GENERAL DIVISION

Category:

Catchwords

Number of paragraphs:

50

Counsel for the Applicant:

Mr M Moshinsky SC and Ms R Orr

Solicitor for the Applicant:

Corrs Chambers Westgarth

Counsel for the First Respondent:

Mr W Rothnie

Solicitor for the First Respondent:

Gadens Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 974 of 2011

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Applicant

AND:

TURI FOODS PTY LTD (ACN 057 142 971)

First Respondent

BAIADA POULTRY PTY LTD (ACN 002 925 948)

Second Respondent

BARTTER ENTERPRISES PTY LIMITED (ACN 000 451 374)

Third Respondent

AUSTRALIAN CHICKEN MEAT FEDERATION INC (ABN 24 077 883 026)

Fourth Respondent

JUDGE:

TRACEY J

DATE OF ORDER:

19 DECEMBER 2011

WHERE MADE:

MELBOURNE

THE COURT DECLARES BY CONSENT THAT:

1.    The first respondent (“La Ionica”) has, in trade or commerce:

(a)    engaged in conduct that was misleading and deceptive and was likely to mislead and deceive, in contravention of s 52 of the Trade Practices Act 1974 (Cth) (“the Act”) and s 18 of the Australian Consumer Law (“ACL”), consisting of Schedule 2 to the Competition and Consumer Act 2010 (Cth); and

(b)    in connection with the supply and possible supply, and in connection with the promotion of the supply, of chickens raised or grown in Australia for consumption (“meat chickens”) branded “La Ionica (“La Ionica meat chickens”) made false representations that those goods had a particular history in contravention of s 53(a) of the Act and s 29(1)(a) of the ACL; and

(c)    engaged in conduct that was liable to mislead the public as to the nature and the characteristics of La Ionica meat chickens in contravention of s 55 of the Act and s 33 of the ACL.

by:

(d)    for the period from June 1998 until June 2003, producing, or causing to be produced, and distributing for display a retail promotional poster (“Health Farm Poster”), a copy of which is Annexure A to this Order, containing the statement “free to roam in large open sheds – NO CAGES”, which was displayed in independent specialty retail stores and charcoal chicken bars until October 2011, and thereby representing that La Ionica meat chickens are raised and grown in barns in which the chickens have at all times substantial space available allowing them to roam around freely;

(e)    for the period from November 2004 until April 2010, producing, or causing to be produced, and distributing for display a retail promotional poster (“Real Difference Poster”), a copy of which is Annexure B to this Order, containing the statement “Free roaming/No cages”, which was displayed in independent specialty retail stores and charcoal chicken bars until October 2011, and thereby representing that La Ionica meat chickens are raised and grown in barns in which the chickens have at all times substantial space available allowing them to roam around freely.

(f)    for the period from in or about November 2004 until on or about 4 March 2011, commissioning, or causing to be commissioned, signage to be affixed or painted on the back of La Ionica delivery trucks (Old Delivery Truck Signage), a photograph of which is Annexure C to this Order, containing the statement “Free Roaming/No Cages” and thereby representing that La Ionica meat chickens are raised or grown in barns in which the chickens have at all times substantial space available allowing them to roam around freely; and

(g)    for the period from on or about 4 March 2011 until on or about 21 September 2011, commissioning or causing to be commissioned signage to be affixed on the back of La Ionica delivery trucks (New Delivery Truck Signage), a photograph of which is Annexure D to this Order, containing the statement “Free to roam in barns:” and thereby representing that La Ionica meat chickens are raised or grown in barns in which the chickens have at all times substantial space available allowing them to roam around freely.

when, in fact

(h)    La Ionica meat chickens are raised or grown exclusively in a shed or barn in which they do not, as a practical matter, have at all times in the growth cycle substantial space available to roam around freely.

THE COURT ORDERS BY CONSENT THAT:

2.    La Ionica, within 30 days of the date of this order, cease using the Health Farm Poster and the Real Difference Poster and use its best endeavours to remove, or cause to be removed, the Health Farm Poster and the Real Difference Poster from independent specialty retail stores and charcoal chicken bars it supplies displaying the posters.

3.    La Ionica, whether by itself, its agents, servants or howsoever otherwise, in trade or commerce, be restrained for a period of three years from the date of this Order from using the statements “free to roam” and “free roaming” in the advertising or packaging for La Ionica meat chickens raised exclusively in a shed or barn.

4.    La Ionica causes to be published, at its expense, within 21 days of the date of this Order an advertisement, in the form of Annexure E to this Order, in the Saturday edition of the Herald Sun and, further, to ensure that such advertisement shall:

(a)    occupy a quarter of a page of the newspaper; and

(b)    be in the text which is Arial font and which is:

(i)    for the headline, not less than 18 point and bolded; and

(ii)    for the remaining text, not less than 12 point.

5.    Pursuant to:

(a)    section 76E of the TPA, in respect of its conduct from 15 April 2010 until 31 December 2010 in contravention of ss 53(a) and 55 of the TPA referred to in paragraph 1 of this Order; and

(b)    section 224 of the ACL, in respect of its conduct from 1 January 2011 in contravention of ss 29(1)(a) and 33 of the ACL referred to in paragraph 1 of this Order.

La Ionica pay to the Commonwealth of Australia a pecuniary penalty in the sum of $100,000.

6.    La Ionica:

(a)    establish the Trade Practices Compliance and Education/Training Programme set out in Annexure F to this Order for the employees or other persons involved in its business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to the conduct declared by the Court in this proceeding to be in contravention of Part 2.1 of Chapter 2 and Division 1 of Part 3.1 of Chapter 3 of the ACL and any similar or related conduct.

(b)    maintain and administer, at its own expense, the Trade Practices Compliance and Education/Training Programme set out in Annexure F to this Order for a period of three years; and

(c)    provide, at its own expense, a copy of any documents to be provided to the ACCC pursuant to Annexure F to this Order.

7.    No order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 974 of 2011

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Applicant

AND:

TURI FOODS PTY LTD (ACN 057 142 971)

First Respondent

BAIADA POULTRY PTY LTD (ACN 002 925 948)

Second Respondent

BARTTER ENTERPRISES PTY LIMITED (ACN 000 451 374)

Third Respondent

AUSTRALIAN CHICKEN MEAT FEDERATION INC (ABN 24 077 883 026)

Fourth Respondent

JUDGE:

TRACEY J

DATE:

23 JANUARY 2012

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

1    The first respondent, Turi Foods Pty Ltd, carries on business as a breeder, grower, processor and supplier of meat chickens. It does so under the trade name “La Ionica” (“La Ionica”). It advertised its products in various ways, including the distribution of posters to retail outlets and by signage on the sides of its delivery trucks. These advertisements used various phrases which suggested that the chickens raised by La Ionica were free to roam around in the area in which they grew.

2    The Australian Competition and Consumer Commissioner (“the ACCC”) commenced a proceeding in the Court alleging that, in making these statements, La Ionica had contravened various provisions of the Trade Practices Act 1974 (Cth) (“the Act”) and its successor, the Australian Consumer Law which appears as Schedule 2 to the Competition and Consumer Act 2010 (Cth) (“the ACL”). The Act applied to La Ionica’s conduct prior to 1 January 2011 and its successor applied to impugned conduct which occurred after that date. The relevant provisions of the pre and post 1 January 2011 legislation are not materially different. It will, therefore, be convenient, for the most part, to refer to the provisions of the Act in dealing with all of La Ionica’s relevant conduct.

3    La Ionica has admitted all of the contravening conduct alleged by the ACCC save for one allegation which is not pressed.

4    The parties have filed an agreed statement of fact and joint submissions in support of orders which it is proposed should be made by consent.

5    Having considered the written submissions and those made at a hearing conducted on 19 December 2011, I made the orders sought. I indicated that I would publish my reasons for making the orders at a later date. These are those reasons.

6    The agreed statement of facts provides a detailed account of the conduct and the circumstances in which it occurred. The following passages are drawn from that statement:

“4.    La Ionica meat chickens are, and were at all material times, raised by its growers under a shed system without cages, whereby the meat chickens are free to move around on a litter substrate in a shed with temperature and ventilation control appropriate to the location (shed system).

5.    Once La Ionica meat chickens reach a certain age or weight suitable for slaughter they are collected, by La Ionica from its growers. La Ionica meat chickens can be collected from growers at various times after placement, depending on the weight of the meat chickens that La Ionica requires. The approximate timeline for the growth cycle of a batch of La Ionica meat chickens is:

    (a)    first pick up    33 days;

    (b)    second pick up    42 days; and

    (c)    third pick up    52 days.

Conduct

6.    In or about June 1998, La Ionica produced, or caused to be produced, 500 copies of a retail promotional poster headed “Health Farm” (the Health Farm Poster”).

7.    From June 1998 until June 2003, La Ionica distributed the Health Farm Poster to independent specialty retail stores and charcoal chicken bars which sold La Ionica meat chicken products for display in those stores or bars.

8.    From in or about June 1998 until October 2011, the Health Farm Poster was displayed at independent specialty retail stores and charcoal chicken bars including:

(a)    Mount Road Charcoal Chicken, Essendon, Victoria;

(b)    Charcoal Chicken and Salad Bar, Ashburton, Victoria; and

(c)    Tasty Rooster, Coburg, Victoria.

9.    The Health Farm Poster is illustrated in cartoon style and:

(a)    depicts:

(i)    in the foreground, two chickens (one lounging on a deck chair) in a large spacious area with three chicks inside a shed-or barn-like structure; and

(ii)    in the background, four chickens lounging on deck chairs, an open doorway with a chicken walking outside with four chicks following closely behind, a blazing sun, a farmer on a tractor and two large sheds; and

(b)    contains statements

(i)    inside a banner at the top of the page in large bold font, “Health Farm”;

(ii)    in the bottom quarter of the page in bold print, “The Good Life of a La Ionica Chicken”;

(iii)    in smaller font than the statement in sub-pargraph (b)(ii) above, “The Facts are, chickens: are only fed natural grains and wheat, are not fed growth hormones, and are free to roam in large open sheds – NO CAGES”; and

(iv)    in bold font in the same size as the statement in sub-paragraph (b)(ii) above, “Processed Chemically Free!”.

    A copy is attached as Annexure A to the attached agreed orders.

10.    In or about November 2004, La Ionica produced, or caused to be produced, numerous copies of a retail promotional poster headed “LA IONICA REAL DIFFERENCE” (the Real Difference Poster).

11.    From in or about November 2004 until August 2010, La Ionica distributed the Real Difference Poster to independent specialty retail stores and charcoal chicken bars which sold La Ionica meat chicken products for display in those stores or bars.

12.    From in or about November 2004 until October 2011, the Real Difference Poster was displayed at independent specialty retail stores and charcoal chicken bars including:

(a)    Mount Road Charcoal Chicken, Essendon, Victoria;

(b)    Rooster Delight, Moonee Ponds, Victoria;

(c)    Charcoal Chicken and Salad Bar, Ashburton, Victoria; and

(d)    Ashburton Chicken Salad Bar, Ashburton, Victoria.

13.    The Real Difference Poster:

(a)    depicts:

(i)    a stylised outline of a chicken on the left hand side of the page;

(ii)    a prize ribbon next to the statement “The Real Taste of Chicken”; and

(iii)    a photograph and autograph of Geoff Jansz, together with a quote from Mr Jansz endorsing La Ionica meat chickens;

(b)    contains statements:

(i)    as a heading in large font in all capitals, “LA IONICA THE REAL DIFFERENCE” with the word “real” in larger font than the words “the” and “difference”;

(ii)    “The Real Taste of Chicken” with the word “real” in bold; and

(iii)    forming a list which includes (amongst other statements):

(1)    “Processed chemically free”;

(2)    “No genetically modified grains used”;

(3)    “Grain fed”; and

(4)    “Free roaming/No cages”; and

(c)    does not refer to La Ionica meat chickens as being raised or grown in sheds or barns.

A copy is attached as Annexure B to the attached agreed orders.

14.    In or about November 2004, La Ionica commissioned, or caused to be commissioned, signage to be affixed or painted on the back of nine La Ionica delivery trucks (Old Delivery Truck Signage).

15.    The Old Delivery Truck Signage:

(a)    depicts:

(i)    a stylised outline of a chicken on the left hand side of the sign; and

(ii)    a prize ribbon below the text “The Real Taste of Chicken”;

(b)    contains statements:

(i)    as a heading in large font, “The Real Taste of Chicken” with the word “real” in bold; and

(A)    forming a list which includes (amongst other statements):

(1)    “Processed Chemically Free”;

(2)    “Free of Hormonal Additives”;

(3)    “Grain Fed”; and

(4)    “Free Roaming/No Cages”; and

(c)    does not refer to La Ionica meat chickens being raised or grown in sheds or barns.

A photograph of an example is attached as Annexure C the attached agreed orders.

16.    Of the nine delivery trucks with Old Delivery Truck Signage:

(a)    one delivery truck was used in public until in or about March 2010; and

(b)    eight delivery trucks were used in public until on or about 4 March 2011.

17.    On or about 4 March 2011, La Ionica commissioned, or caused to be commissioned, signage to be affixed or painted on the back of nine La Ionica delivery trucks (New Delivery Truck Signage).

18.    The New Delivery Truck Signage:

(a)    depicts:

(i)    a stylised outline of a chicken on the left hand side of the sign; and

(ii)    a prize ribbon below the text “The Real Taste of Chicken”;

(b)    contains statements

(i)    as a heading in large font, “The Real Taste of Chicken” with the word “real” in bold; and

(ii)    forming a list which includes (amongst other statements):

(1)    “Processed Chemically Free”;

(2)    “Free of Hormonal Additives”;

(3)    “Grain Fed”; and

(4)    “Free to Roam In Barns”.

A photograph of an example is attached as Annexure D to the attached agreed orders.

19.    Of the nine delivery trucks with the New Delivery Truck Signage:

(a)    one delivery truck was used in public until in or about April 2011;

(b)    one delivery truck was used in public until in or about June 2011; and

(c)    seven delivery trucks were used in public until on or about 21 September 2011.

Representations

20.    By producing, or causing to be produced, and by distributing for display the Health Farm Poster containing the images and statements set out in paragraph 9 above, La Ionica made representations to the effect that La Ionica meat chickens are raised or grown in barns in which the chickens have at all times substantial space available allowing them to roam around freely (La Ionica Health Farm Poster Free to Roam Representation).

21.    Further, by producing, or causing to be produced, and by distributing for display the Real Difference Poster containing the images and statements set out in paragraph 13(a) and 13(b) above and omitting to contain the reference set out in paragraph 13(c) above, La Ionica made representations to the effect that La Ionica meat chickens are raised or grown in barns which the chickens have at all times substantial space available allowing them to roam around freely (La Ionica Real Difference Poster Free to Roam Representation).

22.    Further, by commissioning, or causing to be commissioned, the Old Delivery Truck Signage containing the images and statements set out in paragraph 15(a) and 15(b) above and omitting to contain the reference set out in paragraph 15(c) above, and by causing the delivery trucks with the Old Delivery Truck Signage to be used in public, La Ionica made representations to the effect that La Ionica meat chickens are raised or grown in barns in which the chickens have at all times substantial space available allowing them to roam around freely (La Ionica Old Delivery Truck Signage Free to Roam Representation).

23.    Further, by commissioning, or causing to be commissioned, the New Delivery Truck Signage containing the images and statements set out in paragraph 18(a) and 18(b) above, and by causing the delivery trucks with the New Delivery Truck Signage to be used in public, La Ionica made representations to the effect that La Ionica meat chickens are raised or grown in barns in which the chickens have at all times substantial space available allowing them to roam around freely (La Ionica New Delivery Truck Signage Free to Roam Representation).

24.    The La Ionica Health Farm Poster Free to Roam Representation, the La Ionica Real Difference Poster Free to Roam Representation, the La Ionica Old Delivery Truck Signage Free to Roam Representation, the La Ionica New Delivery Truck Signage Free to Roam Representation (La Ionica Representations):

(a)    were misleading and deceptive and likely to mislead and deceive;

(b)    falsely represented that La Ionica meat chickens had a particular history; and/or

(c)    were liable to mislead the public as to the nature and characteristics of La Ionica meat chickens,

because La Ionica meat chickens are raised or grown in a shed system in which they are subjected to such stocking densities that they do not, as a practical matter, have at all times in the growth cycle substantial space available to roam around freely:

(d)    in the week preceding and at the first pick up of chickens, the average stocking density is approximately 18.19 meat chickens per square metre with the target weight of the meat chickens being 1.7kg; and

(e)    between the first and second pick ups of chickens, the average stocking density is 12.12 meat chickens per square metre with the target weight of the meat chickens at the second pick up being 2.3kg to 2.4kg.

Contraventions

25.    By making each of the La Ionica Representations, La Ionica:

(a)    engaged in conduct in trade or commerce which was misleading and deceptive and likely to mislead and deceive in contravention of:

(i)    for the period from in or about June 1998 to 31 December 2010, section 52 of the TPA; and

(ii)    for the period from 1 January 2011, section 18 of the Australian Consumer Law (consisting of Schedule 2 to the CAA);

(b)    falsely represented that La Ionica meat chickens had a particular history in contravention of:

(i)    for the period from in or about June 1998 to 31 December 2010, section 53(a) of the TPA; and

(ii)    for the period 1 January 2011, section 29(1) of the Australian Consumer Law; and

(c)    engaged in conduct in trade or commerce which was liable to mislead the public as to the nature and characteristics of La Ionica meat chickens in contravention of:

(i)    for the period from in or about June 1998 to 31 December 2010, section 55 of the TPA;

(ii)    for the period from 1 January 2011, section 33 of the Australian Consumer Law.

Other Matters

26.    La Ionica supplies around 9.5% of meat chickens produced for consumption in Australia.

27.    La Ionica has not been the subject of any prior legal proceeding taken by the ACCC.

28.    La Ionica does not currently have a trade practices compliance program. La Ionica does have a complaints handling policy.”

THE LEGISLATION

7    The terms of s 52(1) of the Act are well known. It provided that:

“A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”

The equivalent provision of the ACL is s 18(1).

8    Section 53(a) of the Act provided that:

“A corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:

(a)    falsely represent that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history, or particular previous use;

…”

The equivalent provision in the ACL is s 29(1)(a).

9    Section 55 of the Act provided that:

“A person shall not, in trade or commerce, engage in conduct that is liable to mislead to public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or their quantity of any goods.”

The equivalent provision of the ACL is s 33.

10    The ACL superseded the Act with effect from 1 January 2011. By reason of transitional provisions the Act continued to apply in relation to conduct which had occurred prior to 1 January 2011: see Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010, Schedule 7, Item 6(1).

relief

11    The ACCC seeks declaratory orders, injunctions, the imposition of pecuniary penalties, an order requiring the publication of a corrective advertisement and an order requiring the first respondent to implement a compliance programme so that its employees are better informed about the requirements of the ACL.

12    La Ionica has consented to the making of the proposed orders.

13    Save for the proposed declaratory orders, the orders are of a kind which are commonly made in proceedings under the consumer protection provisions of the Act and are uncontroversial. They are, for the most part, directed to ensuring that there is no repetition of the contravening conduct either by La Ionica or others who, in the future, might be minded to make similar misleading representations.

14    There has, however, been some debate as to whether declaratory relief is available in such cases and, if so, on what conditions.

Declarations

15    The Court has the power to make declarations under s 21 of the Federal Court of Australia Act 1976 (Cth). Any declaratory order made in the exercise of this power must be directed to quelling legal controversy between parties. The applicant must have a real interest in obtaining the relief sought: see Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-2. There must also be a proper contradictor: see Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437-8.

16    Each of these requirements is satisfied in the present proceeding. A dispute has existed between the parties as to whether or not La Ionica has engaged in contraventions of ss 52, 53(a) and 55 of the Act. The ACCC is a public body which had power under the Act and its successor to bring enforcement proceedings. Declaratory proceedings of the kind proposed serve the public interest by making it plain that conduct such as that admitted by La Ionica contravenes the Act and the ACL: see Australian Competition and Consumer Commissioner v Midland Brick Company Pty Ltd (2004) 207 ALR 329 at 333; Rural Press Limited v Australian Competition and Consumer Commission (2003) 216 CLR 53 at 91.

17    In Forster Gibbs J (with whom McTiernan, Stephen and Mason JJ agreed) adopted Lord Dunedin’s description of a proper contradictor (in Russian Commercial and Industrial Bank v British Bank for Foreign Trade Limited [1921] 2 AC 438 at 448) as “one presently existing who has a true interest to oppose the declaration sought”: see at 438. In Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) [2011] FCA 382 Perram J added a requirement that the proper contradictor must not only be a party but must argue against the granting of relief: see at [32]. This added requirement would mean that a respondent, such as La Ionica, which reaches agreement with the ACCC as to the relevant facts and appropriate orders, could not be treated as a proper contradictor in respect of any declaratory relief on which the parties had agreed.

18    In Australian Competition and Consumer Commission v Sampson [2011] FCA 1165 at [13]-[18] I explained my reasons for concluding that a respondent who consents to the making of declarations may, nevertheless, be a proper contradictor in the sense described in Forster and why it is appropriate that the Court should be prepared to act on statements of agreed fact which meet the requirements of s 191 of the Evidence Act 1995 (Cth) (“the Evidence Act”). I adhere to the views which I there expressed.

19    In the present case La Ionica is a “proper contradictor” because it has a genuine interest in resisting the grant of relief. Its interest is to be distinguished from its willingness, as a litigant, to compromise the proceeding. A party may well have an interest in avoiding the making of an order by a Court but be prepared to consent to the making of that order in order to avoid the possibility that, if a trial were to proceed, the Court might be persuaded by the applicant to make findings and orders that would fall more onerously on the respondent.

20    The statement of agreed facts, in the present proceeding, when considered in the light of s 191 of the Evidence Act, provides a sufficient basis for the making of the declaration sought by the ACCC. The agreed statement clearly identifies the impugned statements and the reasons that those statements contravened the Act. The proposed declarations accurately describe the contravening conduct.

Injunctions

21    Injunctions of the kind proposed are provided for in s 232 of the ACL.

22    The parties are agreed as to the terms of the injunctions. It would enjoin La Ionica from advertising that chickens raised by it in a shed or barn are “free to roam” or “free roaming”. This injunction is to operate for a period of three years from the date of the order.

23    The stock densities, which La Ionica has admitted are to be found in the barns in which its chickens are raised, are maintained at such a level that the chickens have severe restrictions placed on their capacity to roam, if, indeed, any such capacity exists. In these circumstances La Ionica accepts that the impugned statements have given rise to contraventions of ss 52, 53(a) and 55 of the Act and the equivalent provisions of the ACL.

24    There should be no recurrence of such contraventions. The injunctions sought by the parties have been carefully framed in order to prevent such a recurrence in the next three years. It is appropriate that they should be made.

Pecuniary Penalty

25    The ACCC seeks the imposition of a pecuniary penalty on La Ionica in respect of its contraventions of ss 53(a) and 55 of the Act in the period between 15 April 2010 and 31 December 2010. The power to impose such a penalty was provided for in s 76E of the Act.

26    The ACCC also seeks the imposition of the penalty in respect of the contravention, by La Ionica, after 1 January 2011 of ss 29(1)(a) and 33 of the ACL. The power to impose penalties for contraventions of these provisions is conferred by s 224 of the ACL.

27    The parties jointly propose that the pecuniary penalty be fixed in the sum of $100,000 and be payable to the Commonwealth of Australia.

28    Notwithstanding the parties’ agreement it is a matter for the Court to determine the amount of any pecuniary penalty. In fixing a penalty the fundamental principle which guides the Court is that any penalty must be “sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act”: Trade Practices Commission v CSR Limited (1991) ATPR 41-076 at 52, 152 (per French J).

29    The Court has identified a number of potentially relevant considerations which may be brought into account in determining an appropriate monetary penalty for contraventions of the Act. In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 the Full Court recorded, with approval, the following factors which had been identified by French J in CSR:

    The nature and extent of the contravening conduct;

    The amount of loss or damage caused;

    The circumstances in which the conduct took place;

    The size of the contravening company;

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

    The deliberateness of the contravention and the period over which it extended;

    Whether the contravention arose out of the conduct of senior management or at a lower level;

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

    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.

30    To these considerations, the Full Court added:

    Whether the respondent has engaged in similar conduct in the past;

    The respondent’s financial position; and

    Whether the conduct was systematic, deliberate or covert.

31    When exercising its independent judgment as to the amount of an appropriate penalty the Court will have regard to the sum proposed by the parties and determine whether or not it falls within the range appropriate for the admitted conduct having regard to the circumstances of the case. This point was made in the joint judgment of Burchett and Kiefel JJ in NW Frozen Foods. Their Honours said (at 291) that:

“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.

32    With these principles in mind I turn to the considerations which arise in the present proceeding.

33    Since June 1998 La Ionica has sought to improve its sales by advertising that its chickens have been “free to roam” whilst growing. The advertising has taken the form of posters delivered to retail outlets and signage on nine of the company’s delivery vehicles. The representations conveyed the impression that the chickens had been raised in more spacious conditions that was in fact the case. This was misleading. At some stages of the growth cycle an average of 18.19 meat chickens were confined within the space of a square metre inside the barn. Later in the cycle this density was reduced to 12.12 chickens per square metre but, by this time, the chickens had increased in size. As already noted La Ionica accepts that the impugned statements, incorporated in its advertising, were false, misleading and deceptive in contravention of the Act and the ACL. La Ionica acknowledges that these contraventions of the Act and the ACL were serious.

34    In assessing penalty the Court is concerned with contraventions which occurred on and after 15 April 2010.

35    There was no evidence before the Court as to the number of posters which were on display at retail outlets. There was, however, agreement that the posters and the signage on delivery trucks did not, collectively, “involve an extensive advertising campaign which could have reached a larger number of consumers”.

36    La Ionica supplies about 9.5% of all meat chickens produced for consumption in Australia. In the last financial year for which figures were available (2009-10) it made a net profit after taxation of $4.77 million. It expects to make a smaller profit in the most recent financial year.

37    There are mitigatory factors which must be brought into account. La Ionica asserts (and the ACCC does not dispute) that it did not intend to mislead consumers or potential consumers: in using the “free to roam” claim it intended to distinguish its practices from those of producers who raised chickens in cages. When the ACCC’s concerns were made known to the company, it promptly removed the offending representation from the signage on its delivery vehicles. It co-operated with the ACCC in avoiding the need for a contested trial of the proceeding. This is the first occasion on which the ACCC has been moved to take any action against La Ionica for contraventions of the Act or the ACL.

38    During the relevant period two posters, which had been produced and distributed by La Ionica contained the offending representation. It also appeared, in two different forms, on delivery vehicles. Each of the four representations contravened three separate provisions of the Act. Although there were, as a result, multiple contraventions of the Act and the ACL, they formed part of the same advertising campaign in which the same “free to roam” assertion was made. It is, therefore, appropriate that, for “sentencing” purposes, La Ionica should be treated as having engaged in a single course of conduct.

39    The maximum penalty available under both the Act and the ACL for a contravention of each of the applicable provisions is $1.1m. The proposed penalty is, therefore, one eleventh of the maximum penalty available for a single contravention. The question thus arises as to whether or not it satisfies the requirements of specific and general deterrence.

40    Even if each of the manifestations of the “free to roam” advertising campaign are treated as forming part of a common course of conduct, that conduct gave rise two relevant contraventions of the Act. It is, however, to be borne in mind that there is a substantial overlap between the various elements of the provisions of ss 53(a) and 55 of the Act and that, as a result, all of the circumstances must be considered in order to ensure that La Ionica is not punished twice for the same actions: cf Stuart v Construction, Forestry, Mining and Energy Union (2010) 185 FCR 308 at 331 (per Besanko and Gordon JJ). When resentencing a respondent in civil penalty proceedings their Honours had regard to the observations of McHugh, Hayne and Callinan JJ in Pearce v The Queen (1998) 194 CLR 610 at 623:

“To the extent to which two offences of which an offender stands convicted contain common elements, it would be wrong to punish that offender twice for the commission of the elements that are common. No doubt that general principle must yield to any contrary legislative intention, but the punishment to be exacted should reflect what an offender has done; it should not be affected by the way in which the boundaries of particular offences are drawn. Often those boundaries will be drawn in a way that means that offences overlap. To punish an offender twice if conduct falls in that area of overlap would be to punish offenders according to the accidents of legislative history, rather than according to their just deserts.”

See also White v Construction, Forestry, Mining and Energy Union (2010) 198 IR 470 at 472-3 (per Kenny J).

41    In the circumstances I consider that a penalty of $100,000 is appropriate. This penalty is, in my view, towards the lower end of the proper range for contraventions of the relevant kind. It is, however, within the permissible range and I would not depart from the proposed amount simply because I might have been minded to impose a higher figure within the range but for the agreement of the parties.

Publication Orders

42    The Court has the power to make the publication orders on which the parties are agreed under s 86C(2)(d) of the Act and s 246(2)(d) of the ACL.

43    The purposes served by such orders were identified in Medical Benefits Fund of Australia Limited v Cassidy (2003) 135 FCR 1 at 20-21 (per Stone J) as including the dispelling of incorrect or false impressions created by the misleading and deceptive conduct, the alerting of consumers to the fact that such conduct has occurred and in aiding the enforcement of the primary orders and the prevention of any repetition of the contravening conduct.

44    Some retail purchasers of chicken meat are concerned about the manner in which the chickens have been raised. This concern for animal welfare has been made known to producers and some, like La Ionica, have sought favourably to distinguish their products from others by advertising that, as they have grown, the chickens have been free to roam around the sheds in which they were held. La Ionica has acknowledged that its statements to this effect have been misleading and deceptive.

45    Its customers and potential customers should be disabused. The public notice which is to appear prominently in a major daily newspaper will provide a means by which this purpose may be served.

Compliance Training

46    The Court has power under s 86C(2)(b) of the Act and s 246 of the ACL to order that a respondent establish and implement a training programme to assist in ensuring that it avoids future contraventions of the Act and the ACL.

47    La Ionica does not presently have any such programme.

48    The programme proposed by the parties requires La Ionica to appoint a compliance officer, to commission a risk assessment, to establish a compliance policy, to upgrade its existing complaints handling policy and to ensure that relevant employees receive practical training regarding the company’s obligations under consumer law.

49    The training required by the orders is linked to the impugned conduct: cf Australian Competition and Consumer Commission v Auspine Limited (2006) 235 ALR 95 at 106-7 and the authorities there collected. The training is to cover the provisions of the Division 1 of Part V of the Act and Part 2-1 and Division 1 of Part 3-1 of the ACL. These provisions deal with contraventions of the Act and the ACL of the kind which are presently under consideration.

Costs

50    The parties have agreed that no order should be made as to costs. No order will be made.

I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey.

Associate:

Dated:    23 January 2012