FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Eternal Beauty Products Pty Ltd [2012] FCA 1124

REASONS FOR JUDGMENT

1    In this proceeding the applicant, the Australian Competition and Consumer Commission (“ACCC”), filed a fast track application and statement of claim alleging contraventions by the respondents of s 48 of the Competition and Consumer Act 2010 (Cth) (“the CCA”), and the predecessor provision in the Trade Practices Act 1974 (Cth) (“TPA”). The first respondent, Eternal Beauty Products Pty Ltd (“Eternal Beauty"), is a wholesaler and retailer of women's beauty products. The second respondent, Ms Penny Rider, is a director of Eternal Beauty and the owner of 60 of its 100 issued shares. ACCC alleged that Eternal Beauty engaged in seven separate acts of resale price maintenance, and that Ms Rider was directly knowingly concerned in and a party to those acts.

2    The parties later filed an agreed statement of facts, a joint outline of submissions, and proposed consent orders. The proposed consent orders provided for declarations regarding the respondents’ breaches of the CCA, pecuniary penalties against the first respondent and against the second respondent personally, and for the implementation of a compliance program. I earlier made the orders sought and now set out my reasons for the same.

the facts

3    The facts are set out in the parties’ agreed statement and can be summarised as follows. From early 2010 to mid 2011 Eternal Beauty was the sole Australian distributor of two beauty products, “Eyesential” eye cream and “The Lift Petite” face cream (collectively “the Products”). The Products were supplied to Eternal Beauty by a UK company pursuant to an exclusive distribution licence, and sold by it to online retailers through an intermediary wholesaler.

4    Eternal Beauty admits that during the relevant period it engaged in acts of retail price maintenance in its dealings with two online retailers of women’s beauty products, Bepharmacy Pty Ltd (‘Bepharmacy”) and Slender Body Pty Limited (“Slender Body”). The admitted conduct involved Eternal Beauty and Ms Rider inducing and also attempting to induce Bepharmacy and Slender Body not to sell Eyesential below the price of $99.00 or The Lift Petite below the price of $235.00 (collectively “the Minimum Price”) on their online retailing websites.

Contravening conduct in respect of Bepharmacy

5    The conduct admitted by Eternal Beauty and Ms Rider in relation to Bepharmacy consists of a telephone conversation between Ms Rider and Mr Anfernee Chang, the director of Bepharmacy, on about 4 May 2010, and emails sent on behalf of Eternal Beauty to Mr Chang on 24 December 2010, and 10 January, 9 February and 10 February, 2011.

6    In the telephone conversation on about 4 May 2010 between Ms Rider and Mr Chang, Ms Rider requested that Mr Chang increase to the Minimum Price the prices at which Bepharmacy offered the Products. Mr Chang complied with this request and Ms Rider replied by email to thank him for his prompt compliance.

7    In around December 2010 Bepharmacy again offered the Products below the Minimum Price. On 24 December 2010, Ms O’nions, an employee of Eternal Beauty, was directed by Ms Rider to send an email to Mr Chang stating (without alteration/sic):

This is a follow up to Penny Rider’s email. Your web team are still using Eyesential as a advert and the pricing for the products is not allowed.

The lift must not be sold for lower then $235.00 and the Eyesential $99.00.

please amend immediately.

8    On 10 January 2011, at the direction of Ms Rider, Ms O’nions sent another email on behalf of Eternal Beauty to Mr Chang stating (without alteration/sic):

Following my email sent 24/12/2010 regarding the pricing of our products on your website, they still have not been changed.

Please can you change the prices too the following.

•    Eyesential $99.00 plus p&h

•    The Lift Petite $235.00 plus p&h

I will check again tomorrow to ensure this has been done.

9    On 9 February 2011 Ms Rider sent an email on behalf of Eternal Beauty to Mr Chang stating (without alteration/sic):

Yourself and Skin Essentials are really causing me problems with salon owners that sell the products. I am getting complaints from them every day.

I have asked you both to match the price we all sell at which is $99. And you both are saying to me only if the other wones does first.

I am wasting so much time on this. Please can you keep your price at $99 for online sales.

10    Mr Chang replied by email on 10 February 2011 stating, in summary, that he did not believe it was reasonable to ask online retailers to match the prices products were offered for by retail salons and that, in any event, Bepharmacy was offering Eyesential at only a marginal discount from the requested price of $99.00.

11    On the same day Ms Rider replied by email to Mr Chang stating:

Maybe its best that you just stop selling our products and I will give you a refund for any stock you are holding.

I am hoping to do the same with Skin Essentials too.

It just isn’t worth the hassle.

Contravening conduct in respect of Slender Body

12    The conduct admitted by Eternal Beauty and Ms Rider in relation to Slender Body consists of telephone conversations between Ms Rider and Ms Danila, the director of Slender Body, in the week prior to 29 April 2010 and an email sent on behalf of Eternal Beauty to Ms Danila on 29 April 2010.

13    In or about January 2010, Slender Body offered the Products for sale at below the Minimum Price on its website.

14    In the week prior to 29 April 2010 Ms Rider made several telephone calls to Ms Danila in which she said words to the effect that:

(a)    Slender Body should increase the prices at which it offered the Products for sale to the Minimum Price; and

(b)    Eternal Beauty would direct Salon First to stop supplying Slender Body with the Products if it did not increase the prices at which it offered the Products for sale to the Minimum Price.

15    On 29 April 2010, at the direction of Ms Rider, Ms O’nions sent an email on behalf of Eternal Beauty to Ms Danila stating (without alteration/sic):

I have been asked to contact you by the CEO of the company, Penny Rider. She said she talked to the boss off your company last week and it was agreed that the price of the Eyesential should be put up to $99. It’s still at the same price as it was last week so please can it be changed?

16    On or about 5 May 2010 Slender Body increased the prices that it offered the Products on its website so that they were no longer below the Minimum Price.

relevant legislation

Prohibition on resale price maintenance and deemed corporate liability

17    Section 48 of the CCA provides:

A corporation or other person shall not engage in the practice of resale price maintenance.

18    Section 96 relevantly 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:

…

(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;

    …

(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;

…

(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:

    …

(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

…

19    Section 84(2)(a) provides:

(2)     Any conduct engaged in on behalf of a body corporate:

(a)     by a director, employee or agent of the body corporate within

the scope of the person’s actual or apparent authority;

…

shall be deemed, for the purposes of this Act, to have been engaged

in also by the body corporate.

Pecuniary penalties for contraventions

20    Section 76 of the CCA gives the Court power to impose pecuniary penalties against a contravening party and relevantly provides:

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

(a)     has contravened any of the following provisions:

(i)     a provision of Part IV (other than section 44ZZRF or 44ZZRG);

(iii)     section 95AZN; or

(b)     has attempted to contravene such a provision; or

(c)     has aided, abetted, counselled or procured a person to contravene such a provision; or

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

(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.

(1A)     The pecuniary penalty payable under subsection (1) by a body corporate is not to exceed:

(aa)     for each act or omission to which this section applies that relates to section 44ZZRJ or 44ZZRK—the greatest of the following:

(i)     $10,000,000;

(ii)     if the court can determine the total value of the benefits that have been obtained (within the meaning of Division 1 of Part IV) by one or more persons and that are reasonably attributable to the act or omission—3 times that total value;

(iii)     if the Court cannot determine the total value of those benefits—10% of the annual turnover (within the meaning of Division 1 of Part IV) of the body corporate during the period (the turnover period) of 12 months ending at the end of the month in which the act or omission occurred; and

(a)     for each act or omission to which this section applies that relates to section 45D, 45DB, 45E or 45EA—$750,000; and

(b)     for each act or omission to which this section applies that relates to any other provision of Part IV—the greatest of the following:

(i)     $10,000,000;

(ii)     if the Court can determine the value of the benefit that the body corporate, and any body corporate related to the body corporate, have obtained directly or indirectly and that is reasonably attributable to the act or omission—3 times the value of that benefit;

(iii)     if the Court cannot determine the value of that benefit— 10% of the annual turnover of the body corporate during the period (the turnover period) of 12 months ending at the end of the month in which the act or omission occurred; and

(c)     for each act or omission to which this section applies that relates to section 95AZN—$33,000; and

(d)     for each other act or omission to which this section applies— $10,000,000.

(1B)     The pecuniary penalty payable under subsection (1) by a person other than a body corporate is not to exceed:

(a)     for each act or omission to which this section applies that relates to section 95AZN—$6,600; and

(b)     for each other act or omission to which this section applies— $500,000.

I note that s 76(1)(c) provides that an individual may be liable for a pecuniary penalty where he or she has been in any way, directly or indirectly, knowingly concerned in, or party to, a contravention.

The admissions of liability

21    Eternal Beauty admits that Ms Rider’s and Ms O’nions’ conduct as described is deemed to be its conduct by operation of ss 84(2)(a) and (b), 96(4)(a) and 96(6) of the CCA.

22    Eternal Beauty admits that by engaging in the conduct described it engaged in two acts of resale price maintenance of the kind referred to in s96(3)(b) in contravention of s 48 of the CCA by inducing Bepharmacy and Slender Body not to sell the Products at prices below the Minimum Price. It also admits that by engaging in the conduct described it engaged in five further acts of resale price maintenance of the kind referred to in s 96(3)(b) in contravention of s 48 of in attempting to induce Bepharmacy and Slender Body not to sell the Products at prices below the Minimum Price.

23    Ms Rider admits that she was knowingly concerned in, and a party to, Eternal Beauty’s admitted contraventions of s 48 of the CCA within the meaning of s 76(1)(e) of the CCA.

24    Ms Rider and Eternal Beauty admit that they engaged in the impugned conduct with the intention of inducing Bepharmacy and Slender Body not to sell the Products below the Minimum Price.

principles regarding contravention of section 48

25    The parties made joint submissions regarding the principles applicable to a finding of breach of s 48 of the CCA and I endorse those submissions as correctly stating the law.

26    The parties submit that the respondents engaged in conduct within the meaning of s 96(3)(b) by inducing resale price maintenance on two occasions and by attempting to induce resale price maintenance on five other occasions.

27    “Inducing” in this context conveys both the means employed and the result. The statutory provision will be satisfied in respect of an inducement where the necessary causal connection is shown between the supplier’s words or actions and the maintenance of price: ACCC v Mayo International Pty Ltd (1998) 85 FCR 327 (“ACCC v Mayo”) at 329. The parties agree, and I accept, that such a connection is present in respect of the two occasions referred above in which the price was increased in response to the conduct.

28    In respect of the admitted attempts to induce, the essential question is whether the supplier can be shown by the conduct in question to have intended to induce the reseller to maintain prices: ACCC v Mayo at 329. Such intention has been admitted by the respondents.

relief

29    I have ordered declaratory relief, pecuniary penalties against both Eternal Beauty and Ms Rider, the institution of a compliance program by Eternal Beauty, and that Ms Rider undergo compliance training, in the form of the consent orders sought.

30    The Court is entitled to treat the respondents’ consent to the relief sought as involving an admission of all facts necessary or appropriate to the granting of the relief sought: Thomson Australian Holdings Pty Ltd v TPC (1981) 148 CLR 150 at 164 per Gibbs CJ, Stephen, Mason and Wilson JJ. The agreed facts and the parties’ joint submissions provide additional foundation for the relief sought. In my view the content of the declarations, the quantum of the penalty, and the compliance program sought by the parties are appropriate and reflect a sound application of the relevant principles to the circumstances of this case.

31    Accordingly these reasons draw heavily on the parties’ joint submissions.

32    There is a public interest in the settlement of cases under the CCA and in this regard, Burchett and Keifel JJ’s observations in NW Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285 at 291 (“NW Frozen Foods”) are relevant:

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.

33    The Court will ordinarily not refuse to give effect to settlements under the CCA which are within its jurisdiction and are otherwise not inappropriate. As explained by Lee J in ACCC v Target Australia Pty Ltd (2001) ATPR 41-840 at [24]:

It is the Court’s duty in receiving consent orders in any matter to scrutinise such orders as to their appropriateness. However, after being satisfied as to the appropriateness of the orders, the Court should be slow to impede final settlement of such matters, particularly those involving public interest considerations. Moreover, the public has an interest in the mutual resolution of litigation, and subject to the foregoing the Court should be careful not to refuse to make orders simply because the orders may have been different had it been the Court’s task to formulate them.

34    I am satisfied that the proposed consent orders are appropriate and are within the Court’s power to make. I do not consider that they raise any of the difficulties that have previously caused the Court to refuse to make consent orders as discussed in ACCC v Econovite Pty Ltd (2003) ATPR 41-959 per French J at [12].

declaratory relief

35    Section 21 of the Federal Court of Australia Act 1976 (Cth) provides the Court with power to award declaratory relief and relevantly provides:

(1)    The Court may, in civil proceedings in relation to a matter in which it has original jurisdiction, make binding declarations of right, whether or not any consequential relief is or could be claimed.

…

36    In Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437 to 438 the High Court held that three threshold requirements should be satisfied before a declaration will ordinarily be made:

(a)    the question must be a real and not a hypothetical or theoretical one;

(b)    the applicant must have a real interest in raising it; and

(c)    there must be a proper contradictor.

37    I am satisfied that each of these requirements is satisfied in this case. Firstly, the proposed declarations relate to conduct that contravenes the CCA and the matters in issue have been identified and particularised by the parties. Secondly, the ACCC’s pursuit of the declarations is in the public interest. Thirdly, although the respondents do not oppose the making of declarations, they each possess an interest in opposing declaratory relief and are therefore proper contradictors: see ACCC v MSY Technology Pty Ltd [2012] FCAFC 56 at [30] per Greenwood, Logan and Yates JJ.

38    By virtue of s 191 of the Evidence Act 1995 (Cth), the agreed facts provide, a sufficient basis to support the making of the declarations sought: see ACCC v Sampson [2011] FCA 1165 at [18]. The agreed statement of facts clearly identifies the impugned conduct and the reasons that the conduct breaches s 48 of the CCA. The proposed declarations are within the Court’s power to make and contain sufficient indication of how and why the conduct complained of is a contravention of the CCA.

compliance program

39    Eternal Beauty admits that during the period of the contravening conduct it did not have a compliance program or a corporate culture conductive to compliance with the CCA. It is accepted by the ACCC that Ms Rider’s conduct was largely the result of a lack of attention to compliance with, and knowledge of, the CCA, and not a deliberate disregard for the prohibition against resale price maintenance.

40    The parties sought orders requiring Eternal Beauty to establish a compliance and education program and orders requiring Ms Rider to attend practical training regarding Part IV of the CCA. The program set out in the orders of 18 May 2012 clearly identifies the straight-forward steps required of Eternal Beauty and Ms Rider to comply with the orders. Such orders are within the Court’s power under ss 80 and 86C(2)(b), and are appropriate in the circumstances.

pecuniary penalty

41    The parties submit that the appropriate pecuniary penalties are as follows:

(a)    In the case of Eternal Beauty, $80,000 payable by four equal monthly instalments; and

(b)    In the case of Ms Rider, $10,000 payable within 30 days of the order being made.

They argue that an appropriate combined penalty would be in the range of $120,000 to $160,000 and that after having discounted 25% from the lower end of the scale for the respondents’ cooperation and early acknowledgement of liability, the above penalties are appropriate in the circumstances of this case.

The Court’s approach to agreements on pecuniary penalty

42    The Court’s approach to the making of pecuniary penalty orders on the basis of an agreement between the parties is well-established: see Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375 (“TPC v TNT Australia”); NW Frozen Foods; ACCC v Real Estate Institute of Western Australia Inc. (1999) 161 ALR 79.

43    The Court looks favourably on negotiated settlements, provided that their terms recognise that the ultimate responsibility for the terms and making of the orders that resolve the proceedings lies with the Court: TPC v TNT Australia; NW Frozen Foods. Where the court is satisfied that the terms of the orders are appropriate, the making of orders in the terms agreed between the parties serves the public interest so as to encourage parties to assist the ACCC in its investigations and in achieving negotiated settlements. In addition to savings in time and costs, there is a public benefit in imposing agreed pecuniary penalties where appropriate, as parties would not be disposed to reach such agreements were there unpredictable risks involved: NW Frozen Foods at 291.

44    In Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993 at 48,626, the Full Court also noted that one proposition which emerged from NW Frozen Foods is that:

…the views of the regulator on matters within its expertise (such as the ACCC’s views as to the deterrent effect of a proposed penalty in a given market) will usually be given greater weight than its views on more “subjective” matters.

I have borne this in mind in endorsing the parties’ joint submissions as to the factors relevant to the quantum of penalty.

Factors relevant to the quantum of pecuniary penalties

45    The factors relevant to the exercise of the Court’s discretion which are expressly referred to in s 76 of the Act are:

(a)    the nature and extent of the act or omission constituting the contravening conduct;

(b)    the nature and extent of any loss or damage suffered as a result of the contravening conduct;

(c)    the circumstances in which the act or omission took place; and

(d)    whether the contravener has previously been found by the Court to have engaged in similar conduct.

46    In addition, in TPC v CSR Limited (1991) ATPR 41-076 at 52,152 to 52,153, French J (as he then was) identified further factors which are relevant to the exercise of the discretion:

(a)    the size of the contravening company;

(b)    the degree of its power, evidenced by its market share and the ease of entry into the market;

(c)    the deliberateness of the contravention and the period over which it extended;

(d)    whether the contravention arose out of the conduct of senior management or at a lower level;

(e)    whether the company had a corporate culture conducive to compliance with the Act, as evidenced by education programs and disciplinary or other corrective measure in response to an acknowledged contravention; and

(f)    whether the contravener has shown a disposition to cooperate with the authority responsible for the enforcement of the CCA in relation to the contravention.

47    Further, in addition to those factors Heerey J in ACCC v NW Frozen Foods Pty Ltd (1996) ATPR 41-515 at 42,444 to 42,445 identified as additional relevant factors the financial position of the respondent(s) and the deterrent effect of the penalty. This suit of factors has been approved in subsequent decisions of the Full Court, for example Universal Music Australia Pty Ltd v ACCC (2003) 131 FCR 529.

48    Deterrence (both specific and general) is the principal object of imposing a pecuniary penalty under s 76 of the CCA: ACCC v High Adventure Pty Limited [2005] FCAFC 247 (“ACCC v High Adventure”) at [11]. The penalty for related offences ought not exceed what is proper for the entire contravening conduct: see TPC v TNT Australia at 40,169 per Burchett J; ACCC v Baxter Healthcare Pty Ltd [2010] FCA 929 at [22]. Similar contraventions should incur similar penalties, other things being equal, albeit bearing in mind the Full Court’s caution in NW Frozen Foods at 295 that “other things are rarely equal where contraventions of the Trade Practices Act are concerned”.

Application of the principles to the present case

Deterrence

49    I accept the parties’ submission that the proposed penalties are necessary and appropriate in order to satisfy the principal object of deterrence under s 76 of the CCA. Contraventions of s 48 are necessarily serious: ACCC v High Adventure at [7]. In my view the penalties sought by the parties will have a sufficient deterrent effect both generally and specifically and pay proper regard to both the aggravating and mitigating factors in the circumstances of this case.

Nature and extent of the contravening conduct/circumstances in which the contravening conduct took place

50     While resale price maintenance constitutes serious conduct in contravention of the CCA, the contravening conduct by the respondents is at the lower end of the scale of seriousness in relation to the contraventions of the resale price maintenance provisions of the Act. For example, there is no allegation that the respondents withheld supply of the Products to Bephramacy or Slender Body, an element generally considered to be at the more serious end of the scale of resale price maintenance conduct.

Amount of loss and damage caused

51    While there is no specific evidence as to the amount of loss or damage caused as a result of the contravening conduct, this is not a mitigating factor in the imposition of penalties: ACCC v Dermalogica Pty Ltd [2005] 215 ALR 482 at [81]. The consideration of this factor in the present case must be applied in the context that contraventions of s 48 are illegal per se without the need to prove any loss or effect in or on a market: ACCC v McMahon Services Pty Ltd (2004) ATPR 42-031 at [16] per Selway J. His Honour’s observations in that case considered contraventions of price fixing prohibitions under s 45 of the TPA, but they are equally applicable to cases involving breach of s 48.

Prior Contraventions

52    Eternal Beauty and Ms Rider have not been found to have contravened the CCA previously, and this weighs as a mitigating factor in the circumstances of this case.

The size of the contravening company/degree of power

53    Eternal Beauty operates out of offices in Port Melbourne, Victoria, and employs three permanent staff and two part-time staff. In the 2009 to 2010 financial year EBP had gross revenue of $3,562,303, total assets of $870,700 and a pre-tax profit of $351,916. In the 2010 to 2011 financial year those same figures were $3,562,3030, $620,829 and $27,309 respectively. As at 30 June 2011, EBP had net assets of $634,857. There is no evidence of Eternal Beauty’s market power in the supply of women’s beauty products and the parties submit that it has no such power. In the 2010 to 2011 financial year, Ms Rider earned director’s fees of $303,495 from Eternal Beauty and her taxable income for that year was $261,735. In light of these facts, I am satisfied that the penalties sought are appropriate to the size of Eternal Beauty and Ms Rider and that each of the respondents has the capacity to pay.

The deliberateness of the contravention and the period of the conduct

54    The contravening conduct involved statements made to Bepharmacy between May 2010 and February 2011 and to Slender Body in late April 2010. It is accepted by the ACCC that Eternal Beauty and Ms Rider’s conduct was largely the result of a lack of attention to compliance with, and a lack of knowledge of the CCA, and not a deliberate disregard for the prohibition against retail price maintenance. However, ignorance of the law is no excuse and the respondents had a responsibility to know the law and to see that the law was observed: ACCC v Leahy Petroleum Pty Ltd (No 3) [2005] FCA 265 at [51]; ACCC v SIP Australia Pty Ltd (1999) ATPR 41-702 at [29]. Resale price maintenance has long been illegal in Australia before even the commencement of the Trade Practices Act.

The involvement of senior management

55    It is relevant to the quantum of penalty that Ms Rider is the most senior officer involved in Eternal Beauty’s day-to-day business and has admitted direct involvement in the contravening conduct.

Corporate culture of compliance

56    During the period of the contravening conduct Eternal Beauty did not have a compliance program or corporate culture conducive to compliance with the CCA. However, in about late March or early April 2012 Ms Rider engaged Thomsons Lawyers to provide competition and consumer law training to Eternal Beauty and its staff. In mid April 2012 Eternal Beauty also voluntarily wrote to stockists of the Products and brought to their attention the ACCC proceedings against it and Ms Rider. Eternal Beauty’s letter also identified that resale price maintenance is illegal and that their stockists were free to independently set the price at which they offer the Products.

Cooperation with the ACCC

57    The parties submit that Eternal Beauty and Ms Rider have cooperated with the ACCC through their willingness to resolve the matter by consent, which has avoided the need for a trial and a contested hearing as to penalties. This has resulted in savings of significant legal costs. Eternal Beauty’s conduct in instituting compliance training and writing to its stockists also form part of an observable attitude of cooperation. A discount has been applied by the penalty which would ordinarily be sought by the ACCC in recognition of this cooperation. I consider that such a discount is appropriate in the circumstances.

Parity principle

58    I consider that while the penalty imposed in one case is rarely of much assistance in a different case, I am satisfied that the penalties sought by the parties are broadly in accordance with penalties imposed in other resale price maintenance cases, and this weighs in favour of making the orders sought.

Totality Principle

59    I am further satisfied that the penalties sought by the parties are consistent with the proper application of the totality principle as discussed by Goldberg J in ACCC v Australian Safeway Stores Pty Ltd (No 4) [2006] FCA 21 at [82]. The total of the penalties sought for the separate contraventions are proportionate to their significance and severity.

Conclusion on penalties

60    The penalty must be a discretionary judgment synthesising all of the relevant factors, but with due regard to the maximum for each contravening act: Markarian v R (2005) 228 CLR 357 at [31], and [35] to [39]; ACCC v Liquorland (Australia) Pty Ltd [2005] FCA 683 at [68]. Having considered the relevant factors. I am satisfied that the penalties sought by the consent of the parties are within the range appropriate in the circumstances, and should be ordered by the Court.

Payment of penalty by instalment

61    It is open to the Court to order payment of penalties by instalments where there is sufficient financial material before the Court to justify the instalment arrangements: see ACCC v Humax Pty Ltd [2005] FCA 706 per Merkel J at [12]. In light of Eternal Beauty’s financial circumstances, outlined above at [48], I consider that it is appropriate that the penalty ordered against EBP be paid by instalments as sought by the parties.

conclusion

62    On the basis of the agreed facts and the parties’ joint submissions I made the orders for the relief sought by the parties.

63    I also made the costs order sought by consent which required the respondents to pay the ACCC $10,000 as contribution to its costs of the proceedings. This is appropriate in circumstances in which the respondents have cooperated in bringing the proceeding to an early settlement.

Associate:

Dated:    17 October 2012