FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Emma Sleep GmbH [2025] FCA 618

ORDERS

THE COURT ORDERS THAT:

1.    The matter be listed for a case management hearing on a date to be fixed.

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

REASONS FOR JUDGMENT

HILL J:

A.    INTRODUCTION

1    The Applicant (ACCC) contends that the Respondents contravened ss 18 and 29(1)(i) of the Australian Consumer Law (ACL) during the period between 15 June 2020 to 27 March 2023 (known as the “Relevant Period”), by making certain representations (known as the “Savings Representations” and the “Limited Time Sale Representations”) in its advertisements to Australian consumers that were misleading or deceptive, and false and misleading.

2    The Third Respondent (Emma Sleep AU) has admitted to these contraventions of the ACL (except for one representation that is no longer pressed). However, the First Respondent (Emma Sleep GmbH) and the Second Respondent (Bettzeit) deny any liability. The issue in these proceedings is whether either or both of Emma Sleep GmbH and Bettzeit are liable for the representations that are admitted to be contrary to the ACL (the impugned representations). The ACCC contends that Emma Sleep GmbH and Bettzeit are liable both as principal contraveners, and derivatively through the application of s 139B(2) of the Competition and Consumer Act 2010 (Cth) (CCA). The relief that should follow from the admitted contraventions will be determined in later proceedings.

3    For the following reasons, I find that Bettzeit also contravened ss 18 and 29(1)(i) of the ACL in respect of the impugned representations, both as a principal contravener and through the operation of s 139B(2)(b)(i) of the CCA. However, I find that Emma Sleep GmbH did not contravene the ACL. The next step is to list a case management hearing to make arrangements for the penalty proceeding.

B.    AGREED FACTS

4    The parties have agreed a “Statement of Agreed Facts Regarding Liability” dated 14 November 2024 (SOAF), a “Supplementary Statement of Agreed Facts Regarding Liability” dated 26 March 2025, and a “Second Supplementary Statement of Agreed Facts Regarding Liability” dated 15 May 2025 (2SSOAF). These are made for the purposes of s 191 of the Evidence Act 1995 (Cth).

5    Respondents: Emma Sleep GmbH is a bedroom furniture supplier incorporated in Germany. Bettzeit and Emma Sleep AU are subsidiaries of Emma Sleep GmbH. Bettzeit is incorporated in the Philippines, and Emma Sleep AU is incorporated in Australia (SOAF [2]).

6    Emma Sleep AU advertising platforms: Emma Sleep AU commenced operations in Australia in November 2019 and began to make regular sales to consumers in 2020. Emma Sleep AU advertises and supplies mattresses, bed frames, pillows and accessories to Australian consumers, primarily through its website (referred to as the “Emma Sleep Website”) (SOAF [3]).

7    Emma Sleep AU also advertises its products to Australian consumers through online platforms, including Facebook, Instagram, and by email (SOAF [4]). Emma Sleep AU also advertises its products on third-party retailer websites (including Woolworths Everyday Market), and advertises its products to Australian consumers on television, radio, and by other offline means including emails, text messages, and physical billboards (SOAF [5]). The various media platforms on which Emma Sleep AU advertises its products to Australian consumers are referred to collectively as “the Platforms” (SOAF [6]).

8    Emma Sleep AU’s products are also advertised on a product review website (referred to as “Top 5 Best Mattress Website”), which is registered to Emma Sleep AU. The website is operated by a different subsidiary of Emma Sleep GmbH (DIBMat GmbH), in conjunction with a group of staff known as “Country Team Australia” (SOAF [4], as amended by 2SSOAF [3]).

9    Country Team Australia: Country Team Australia is a division or business unit of Emma Sleep AU. It is responsible for:

(a)    the operations of Emma Sleep AU in Australia, including business development, operations and retail/wholesale; and

(b)    the management of content on online Platforms (namely the Emma Sleep Website, Facebook, Instagram, email and third-party retailer websites).

See SOAF [8].

10    Country Team Australia was responsible for developing, approving and updating the advertising of Emma Sleep AU’s products on the Platforms on behalf of Emma Sleep AU (SOAF [7]).

11    Relationship between Emma Sleep entities: Paragraph 9 of the SOAF sets out the following facts about the relationship between the different Emma Sleep entities during at least the Relevant Period (15 June 2020 to 27 March 2023):

    Employers for leadership roles: Country Team Australia was comprised by persons employed by Emma Sleep AU and Bettzeit (SOAF [9](a)). The persons occupying the position of “Team Lead” (who led Country Team Australia) were employed by Bettzeit and Emma Sleep AU (SOAF [9](b)). The persons occupying the positions of “Country Manager” or “Head of Australia” (which sat above Country Team Australia) were employed by Bettzeit, and were “responsible for steering the business operations of Emma Sleep AU” (SOAF [9](c)).

    Share ownership: Emma Sleep GmbH held 99.40% of the issued share capital in Bettzeit (with the remaining 0.60% split evenly between Mr Schmoltzi, Mr Müller, and Mr Quiroga-Rivera) (SOAF [9](d)). Emma Sleep AU was a wholly-owned subsidiary of Emma Sleep GmbH (SOAF [9](j)).

    Directorships: Mr Schmoltzi, Mr Müller, and Mr Quiroga-Rivera were directors of Bettzeit. Mr Quiroga-Rivera (the “Country Manager” or “Head of Australia”) held the position of Managing Director of Bettzeit (SOAF [9](e)). Mr Schmoltzi and Mr Müller were also directors of Emma Sleep GmbH, and directors of DIBMat GmbH (SOAF [9](f) and (h)).

    Management: Mr Müller, Mr Schmoltzi, and senior managers of Emma Sleep GmbH, “generally provided guidance at a strategy level to Country Team Australia and the persons occupying the positions of Team Lead, Country Manager and Head of Australia with respect to the operations of Emma Sleep AU” (SOAF [9](g)). Reference is made to four email chains including Mr Schmoltzi and Mr Müller, dated 1 August 2022; 15 to 16 September 2022; 31 October to 1 November 2022; and 23 to 24 March 2022.

    The directors of Emma Sleep AU “were appointed to fulfil statutory requirements for company registration, and were not involved in the day-to-day business of Emma Sleep AU” (SOAF [9](i)).

12    Management and administrative service agreement: Emma Sleep GmbH, Bettzeit and Emma Sleep AU were parties to a “management and administrative service agreement” dated 15 March 2021 (2021 Agreement), pursuant to which Emma Sleep GmbH was appointed to provide specified management services to Emma Sleep AU and Bettzeit. Those services included:

(a)    providing “advice and assistance in the marketing of business operations and direct services, including the identification of potential customers as well as administrati[ve] support and direct services for daily business operations in sales and any related sales activities (e.g. logistics services)” (cl 3.3.8);

(b)    causing Emma Sleep GmbH’s employees to perform as officers of Emma Sleep AU and Bettzeit or provide such general administrative services as may be required by them, including by providing advice and assistance in the general administration and management of Emma Sleep AU and Bettzeit, with all of the duties of officers of Emma Sleep AU and Bettzeit (as applicable) (cl 3.3.9); and

(c)    Emma Sleep GmbH was permitted at its discretion to sub-contract any services provided by it under the agreement to any other company in the Emma Sleep group (including Bettzeit and Emma Sleep AU) (cl 3.2).

See SOAF [10].

13    The 2021 Agreement was terminated as between Emma Sleep GmbH, Bettzeit and Emma Sleep AU by an addendum to the agreement dated 28 December 2022, with a retroactive termination date of 1 January 2022 (SOAF [11]).

14    Financial assistance: Emma Sleep GmbH provided financial assistance to Emma Sleep AU, by way of:

(a)    a loan agreement dated 24 September 2020 pursuant to which Emma Sleep GmbH provided a loan to Emma Sleep AU of $1,214,107.01, $1,183,964.27 of which pertained to supplier invoices paid by Emma Sleep GmbH on behalf of Emma Sleep AU; and

(b)    a “revolving credit facility agreement” dated 15 January 2022, pursuant to which Emma Sleep GmbH granted Emma Sleep AU a revolving credit line of $1,800,000, which was subsequently increased to $4,000,000 by an addendum to the revolving credit facility agreement dated 1 December 2021, effective from 1 March 2021.

See SOAF [12].

15    False and misleading representations: Part F of the SOAF sets out the statements in advertisements known as the “Savings Statements” (SOAF [13]-[22]) and the “Limited Time Sale Statements” (SOAF [23]-[26]).

16    Emma Sleep AU made the following representations:

(a)    that the advertised price for purchase was a discounted price (the “Savings Representations”) (SOAF [27]); and

(b)    the products were only on sale for the advertised price for a limited period of time and/or consumers could only purchase the products at the advertised sale price during the period of the relevant sales campaigns (the “Limited Time Sale Representations”) (SOAF [28]).

17    These representations were false, misleading or deceptive or likely to mislead or deceive consumers (SOAF [29]). On each occasion that a consumer viewed the Savings Representations or the Limited Time Sale Representations, Emma Sleep AU contravened ss 18 and 29(1)(i) of the ACL (SOAF [30]).

C.    LIABILITY FOR CONDUCT ENGAGED IN ON BEHALF OF A BODY CORPORATE (CCA S 139B(2))

18    The agreed facts refer to the impugned representations being made by Emma Sleep AU. The issue in contention is whether Emma Sleep GmbH or Bettzeit are also liable for these representations.

19    The ACCC puts its case on two bases:

(a)    The impugned representations were made not only by Emma Sleep AU, but also by Emma Sleep GmbH and/or Bettzeit in their own right;

(b)    Alternatively, the impugned representations were made by Emma Sleep AU not only in its own right, but also:

(i)    as the agent for either Emma Sleep GmbH and/or Bettzeit within the scope of Emma Sleep AU’s actual or apparent authority under that agency; and/or

(ii)    at the direction of a director, employee or agent of Emma Sleep GmbH and/or Bettzeit, where the direction was within the scope of the actual or apparent authority of the director, employee or agent.

20    The ACCC’s alternative cases are reflected in an agreed list of legal and factual questions on liability to be determined, provided to chambers on 21 May 2025 pursuant to a previous order.

C.1    CCA s 139B(2)

21    Section 139B(2) of the CCA provides as follows for a body corporate to be liable for the conduct of a director, employee or agent:

139B Conduct of directors, employees or agents of bodies corporate

...

(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 actual or apparent authority of the director, employee or agent; or

(b)    by any other person:

(i)    at the direction of a director, employee or agent of the body corporate; or

(ii)    with the consent or agreement (whether express or implied) of such a director, employee or agent;

if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, employee or agent;

is taken, for the purposes of this Part or the Australian Consumer Law, to have been engaged in also by the body corporate.

22    Section 139B(2) is materially the same as s 84(2) of the CCA, and thus cases on s 84(2) are relevant to its interpretation: see, for example, Australian Competition and Consumer Commission v Cornerstone Investment Aust Pty Ltd (in liq) (No 4) [2018] FCA 1408 at [280] (Gleeson J); Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (t/as Captain Cook College) (No 3) [2021] FCA 737; (2021) 154 ACSR 472 at [111] (Stewart J).

23    The ACCC’s case engages s 139B(2)(a) and (b)(i). Those provisions contain the following requirements:

    s 139B(2) applies to conduct engaged in “on behalf of” a body corporate;

    s 139B(2)(a) requires additionally that a director, employee or agent of the body corporate is acting “within the scope of [their or its] actual or apparent authority”;

    alternatively to (a), s 139B(2)(b)(i) requires additionally that another person is acting “at the direction of” a director, employee or agent of the body corporate; and that the giving of the direction is within the scope of the actual or apparent authority of the director, employee or agent.

24    Thus, s 139B(2)(a) and (b)(i) contain three different concepts: “on behalf of”; “within the scope of … actual or apparent authority”; and “at the direction of”. Those concepts are considered in turn.

25    Conduct “on behalf of” a body corporate (s 139B(2)): The first concept, contained in the chapeau to s 139B(2), is that conduct is engaged in “on behalf of” a body corporate. The phrase “on behalf of” is not one with strict legal meaning and is used in a wide range of relationships. The phrase suggests some involvement by the person or entity concerned with the body corporate’s activities, and conveys a similar meaning to “in the course of the body corporate’s affairs or activities”: Walplan Pty Ltd v Wallace [1985] FCA 479; (1985) 8 FCR 27 at 37 (Lockhart J, with Sweeney and Neaves JJ agreeing); Consolo Ltd v Bennett [2012] FCAFC 120; (2012) 207 FCR 127 at [79] (the Court).

26    In NMFM Property Pty Ltd v Citibank Ltd (No 10) [2000] FCA 1558; (2000) 107 FCR 270 at [1244], Lindgren J stated that an act would be done “on behalf of” a corporation within s 84(2) if either of two conditions is satisfied:

    The person whose conduct is in question engaged in the conduct intending to do so “for” or “as the representative” of the corporation; or

    The person engaged in the conduct in the course of the corporation’s business, affairs or activities.

That statement has been approved in cases including Australian Competition and Consumer Commission v Bluescope Steel Ltd (No 5) [2022] FCA 1475 at [155] (O’Bryan J) and Cornerstone (No 4) at [299].

27    However, there is no requirement that the person whose conduct is in question intended their conduct to be for the benefit of the body corporate, let alone that the conduct in fact be for its benefit: NMFM at [1243]; Walplan at 38.

28    Within the scope of actual or apparent authority (s 139B(2)(a) and (b)): The second concept, contained in both s 139B(2)(a) and (b), is that a person or entity was acting “within the scope of [their or its] actual or apparent authority”. This concept invokes common law principles concerning the authority of employees and agents: Bluescope Steel (No 5) at [156]; Cornerstone (No 4) at [303] (Gleeson J). Those principles raise two issues: whether there is an agency relationship; and, if so, the scope of the agent’s actual or apparent authority.

29    Whether there is an agency: On the first issue of whether there is an agency, the Respondents emphasise that agency is a consensual relationship, and therefore it must be shown that there is consent or assent on the part of both the purported principal and agent: Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 at [177] (Allsop P, with Bathurst CJ and Campbell JA agreeing); Australian Securities and Investments Commission v BHF Solutions Pty Ltd [2022] FCAFC 108; (2022) 293 FCR 330 at [193] (O’Bryan J, with Besanko and Lee JJ agreeing); South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 1541; (2000) 177 ALR 611 at [132] (Finn J). That is, agency is determined by an analysis of the consensual legal relations between parties and “is not merely a conclusion drawn from the performance by A of a function important, even necessary, to the operation or functioning of the business enterprise of P”: Tonto at [194]; see also [192]. At the same time, the label that the parties give to their relationship is not determinative, although it will be given due weight: Cornerstone (No 4) at [286]; BHF Solutions at [194].

30    An agency relationship requires that (a) one party acts on the other’s behalf but (b) subject to that other’s control or direction. This latter requirement figures prominently when the issue is whether a company is the agent of its parent company, shareholders, or of particular officers because of the control it or they exercise over the company: South Sydney at [136]-[137]; TX Australia Pty Ltd v Australian Competition and Consumer Commission [2020] FCA 1100; (2020) 147 ACSR 201 at [50](5) (Jagot J). Given the different shades of meaning of “agent”, it can be helpful to use the term “legal agent” for a person who is an agent in the sense identified above.

31    Scope of agent’s authority: If there is an agency relationship, the second issue is the scope of the agent’s authority. Actual and apparent authority are independent of each other: Bluescope Steel (No 5) at [157], [159]; Productivity Partners (No 3) at [115].

    The scope of a person’s actual authority is ascertained from the person’s contract of employment, and includes not only express powers but implied powers necessary for and incidental to those express powers.

    By contrast, apparent authority arises from representations made by the principal as to the agent’s scope of authority. Those representations include representations by conduct, where the principal permits the agent to act in some way in the conduct of the principal’s business with other persons. The principal must be shown to know of and acquiesce in the ostensible agent’s professing to act on the principal’s behalf.

32    Normally, an agent would not have actual authority to engage in unlawful conduct; however, the power to make a representation (that is later found to be false and misleading) may be within the scope of the employee’s or agent’s apparent authority: Bluescope Steel (No 5) at [160]; Cornerstone (No 4) at [304]-[305]; Trade Practices Commission v Tubemakers of Australia Pty Ltd [1983] FCA 99; 47 ALR 719 at 742 (Toohey J).

33    Authority of directors: Slightly different issues might arise if the relevant conduct is engaged in by a director of a body corporate (rather than an employee or agent), particularly a director of a foreign-registered corporation such as Bettzeit or Emma Sleep GmbH. Under Australian law, directors (particularly managing directors) have broad power to manage a company, and may exercise all the powers of the company, subject to certain powers that must be exercised by the company in general meeting: see Corporations Act 2001 (Cth), ss 198A, 198C. In the absence of any evidence about the powers of directors under German law or Philippines law, or any evidence of the relevant corporations’ constituting documents, I will assume that the directors of Emma Sleep GmbH and Bettzeit have similar powers to those of the directors of an Australian company: see Neilson v Overseas Projects Corporation of Victoria Pty Ltd [2005] HCA 54; (2005) 223 CLR 331 at [16] (Gleeson CJ), [125] (Gummow and Hayne JJ).

34    “At the direction” of a director, employee or agent (s 139B(2)(b)(i)): The third concept, contained in s 139B(2)(b)(i), is that the person or entity whose conduct is in question was acting “at the direction” of a director, employee or agent of the body corporate. (That direction must also have been within the scope of the actual or apparent authority of the director, employee or agent, as discussed above.)

35    Section 139B(2)(b) as a whole is sometimes described as applying to conduct when a person is acting “at the behest” of the director, employee or agent of the body corporate: Bennett v Elysium Noosa Pty Ltd (in liq) [2012] FCA 211; (2012) 202 FCR 72 at [223] (Reeves J), citing Walplan at 37. In Elysium Noosa at [225], Reeves J applied dictionary meanings to find that a “direction” in s 139B(2)(b)(i) means to give “authoritative guidance, instruction ... of keeping in right order; management, administration”. (Although the Full Court in Consolo upheld an appeal in relation to the orders made against the certain respondents in Elysium Noosa, the Full Court’s reasons do not cast doubt on this aspect of his Honour’s reasons: see Consolo at [82].)

36    In Australian Competition and Consumer Commission v Yazaki Corporation (No 2) [2015] FCA 1304; (2015) 332 ALR 396 at [214], Besanko J stated that a direction may be express or implied, and may be inferred from all the circumstances. In that case, although there was no direct evidence of an express direction, his Honour found that it was an “irresistible” inference that a parent company (Yazaki) had given a direction to its subsidiary (Australian Arrow Pty Ltd) to submit agreed prices to a third company, in contravention of s 45(2)(b) of the CCA (as it then was): Yazaki (No 2) at [215]. Although Besanko J was not considering the meaning of “direction” in s 84(2) of the CCA in terms, this direction seems to underpin his Honour’s later finding that AAPL was acting as the agent of Yazaki, within s 84(2), in submitting those prices: Yazaki (No 2) at [217]. In any event, the conclusion that a direction may be inferred from all the circumstances would seem to follow as a matter of principle.

C.2    Liability of related companies under s 139B(2)

37    The particular issue in applying s 139B(2) in this proceeding is determining when liability can be attributed to the parent company (Emma Sleep GmbH) or a sister company (Bettzeit) of a company that has engaged in prohibited conduct (Emma Sleep AU).

38    General comments: At a general level, the purpose of s 139B(2) of the CCA, like s 84(2), is to extend, rather than limit, the liability of corporations for the conduct of others (including related corporations): see, for example, Walplan at 36-37; NMFM at [1241]; Cornerstone (No 4) at [281]. At the same time, s 139B(2) does not mean the Court may disregard the fact that the three Respondents in this case are different legal entities. As the Full Court stated in Consolo (considering s 84(2)(b) of the CCA):

[83]    While it is true to say that s 84(2) is not to be read down, there is no warrant in s 84(2)(b) to disregard the fundamental principle that companies are entities with rights and liabilities separate from their shareholders and holding companies are entities separate from their subsidiaries. …

[85]    Section 84 of the TPA proceeds on the assumption that corporations are entities separate and distinct from their shareholders and directors. It also proceeds on the assumption that business is routinely and legitimately conducted through corporate structures which confer the benefit of limited liability on shareholders. It does not purport to dissolve corporate business structures or to effect a wholesale shift of liability to shareholders. …

39    Accordingly, it is not sufficient for the purposes of s 139B(2) merely to point to the fact that a parent company has a “general economic interest” in the success of the operations of its subsidiary: Consolo at [78]; see also Tonto at [192]. Similarly, whether a company is a “mere cypher” of another company or companies is a “pure question of fact”, requiring more than simply pointing to the ownership of shares and a capacity to control the subsidiary: see Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549 at 555 (Meagher JA); see also 577 (Rogers A-JA). The same must be true of the concepts in s 139B(2), such as whether a subsidiary company was acting “on behalf of” its parent company, or acting as its agent.

40    Although each case will ultimately turn on its own circumstances, it is still useful to identify comparable cases, to see the factors and circumstances that are influential to a finding that a corporation is liable under s 139B(2) for conduct by a related corporation. There are three cases of particular relevance here.

41    Austcorp (2009): The first case is Ackers v Austcorp International Ltd [2009] FCA 432. In this case, promotional materials made representations about the value of leasing apartments in a resort development at The Entrance, in New South Wales: Austcorp at [1]. One or more of the companies in a group of companies controlled by Austcorp International Limited (Austcorp) was or were involved in developing the resort and promoting the sale of apartments in it. Senior Austcorp executives (its managing director, and executive director) wrote or approved the promotional materials: Austcorp at [2]. The promotional materials were provided to some of the customers directly by real estate agents (including PRD Realty (PRD), who employed a Mr Walker): Austcorp at [3].

42    Rares J held that Austcorp made the relevant representations even if one or more of its subsidiaries did too: two entities can contravene the predecessor to s 18 of the ACL simultaneously: Austcorp at [154]. Rares J held that Austcorp was liable for misleading representations made by its subsidiaries, PRD and Mr Walker, by reason of s 84(2)(b):

[217]    Austcorp’s business, affairs and activities were centred on property development. … I am satisfied that the course of Austcorp’s ordinary business, affairs and activities in relation to the development and marketing of apartments in the resort involved it in the range of activities in which, its officers, and any subsidiary, PRD and Mr Walker acted in its or his dealings with each applicant. The conduct complained of in making the representations was engaged in on behalf of Austcorp by those, officers, subsidiaries, PRD and Mr Walker. Thus s 84(2) has the consequence that it is deemed to have been engaged in by Austcorp.

43    That conclusion rests on a number of findings, neatly summarised in Austcorp at [152]: Austcorp conducted itself in trade and commerce as a promoter of the resort. It associated itself by the use of its logo on promotional materials. The message that Austcorp conveyed to the public was that Austcorp, as the ultimate owner of the brand, was responsible for its development.

44    Productivity Partners (No 3) (2021): The second case is Productivity Partners (No 3). In this case, the ACCC contended that Productivity Partners Pty Ltd (trading as Captain Cook College) had engaged in systematic unconscionable conduct through changes to its enrolment and withdrawal processes. The ACCC also contended that Site Group International Ltd (which wholly owned Productivity Partners) and Mr Blake Wills (who was Site’s Chief Operating Officer (COO), and acting Chief Executive Officer (CEO) of the College at relevant times) were knowingly concerned in, or a party to, the College’s contraventions: Productivity Partners (No 3) at [2]-[3].

45    Mr Wills knowingly concerned: For Mr Wills to be knowingly concerned, it was necessary to establish that he had actual knowledge of each of the essential elements of the contravention, and that he was implicated in or practically connected to the contravention: Productivity Partners (No 3) at [555]. Stewart J found that the essential facts of the system were well known to Mr Wills, and he was very much associated with it and was a participant in key aspects of it: Productivity Partners (No 3) at [575]. On that basis, his Honour was satisfied that Mr Wills was knowingly concerned in the unconscionable system or pattern of conduct of the College: Productivity Partners (No 3) at [576].

46    Site liable under s 139B(2): The ACCC then contended that Mr Wills’ conduct could be attributed to Site, under s 139B(2) of the CCA. Site submitted that Mr Wills’ conduct could not be attributed to it because he had different roles at different times; namely COO of Site and acting CEO of the College. Site submitted that, when Mr Wills was acting CEO of the College, he was not acquiring knowledge or undertaking conduct on behalf of Site: Productivity Partners (No 3) at [580].

47    Stewart J rejected that argument, reasoning as follows:

[581]    The reality of Mr Wills’s position … is that the college was one of several business units of Site, albeit located in a separate company wholly owned by Site, for which Mr Wills was responsible. It was also the most significant of those business units. There was significant vertical integration within the activities of Site, illustrated by the consolidated financial reporting between the different business units including those housed in separate companies. When Mr Wills took on the position of acting CEO of the college, which was an appointment made either by himself as COO of Site or by the Site executive team, he did that as a means of asserting Site’s oversight of the college.

[582]    In the circumstances, it would be artificial to consider Mr Wills’s conduct as acting CEO of the college to not also be conduct on behalf of Site. The separate corporate personality of Site and Productivity Partners does not have the effect of Mr Wills not doing the work of and on behalf of Site when he was acting CEO of the college. That is illustrated by, for example, Mr Wills using his Site email address and continuing to use his Site COO electronic signature even when he was doing work as acting CEO of the college. …

[583]    There was no suggestion in the evidence, and no basis in the evidence for any submission, that Mr Wills’s involvement with the college including as acting CEO was anything other than in the course of his authority and responsibilities for Site. There is no suggestion, for example, that as acting CEO of the college he was remunerated separately by the college as opposed to [his] usual remuneration by Site as its COO.

48    There was an appeal to the High Court: Productivity Partners Pty Ltd v Australian Competition and Consumer Commission [2024] HCA 27; (2024) 98 ALJR 1021; however, nothing in the High Court’s judgment disturbs the conclusions of Stewart J set out above.

49    Hillside (2015): The third case (relied on by both parties) is Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd t/as Bet365 [2015] FCA 1007. This case concerned three companies: Bet365 Group Ltd (Bet365GL), a company based in England and the ultimate holding company; Hillside (Shared Services) Ltd (Hillside UK), a company based in England and the chief operating entity of the group; and Hillside (Australia New Media) Pty Ltd (Hillside Australia), the Australian subsidiary: Hillside at [3]. Beach J found that Hillside Australia and Hillside UK were both liable as principal contraveners for breaches of ss 18 and 29 of the ACL; however, his Honour held that the conduct and representations were not engaged in “on behalf of and as agent of” Bet365GL, and therefore the case against Bet365GL was dismissed: Hillside at [9]-[10].

50    Links between respondent companies: The evidence established the following links between these three companies:

(1)    Bet365GL is the owner of Australian registered trademark “bet365” for goods and services including internet betting, and is the registrant of “bet365.com.au” and “bet365.com”. Bet365GL has licensed Hillside Australia to use the trademark “bet365” and the domain name “bet365.com.au”: Hillside at [13].

(2)    Hillside Australia has been dependent on the ongoing financial support of Bet365GL: Hillside at [17].

(3)    Hillside UK has provided marketing, IT support, website infrastructure, software development, customer support services and management support to Hillside Australia for the purposes of developing and maintaining the bet365.com.au website: Hillside at [19], [124].

(4)    Hillside UK’s design and publishing department has been responsible for the marketing of the “Free Bets” and “Deposit Bonus” offers (with Hillside Australia); setting the value of those offers; and the preparation of promotional material for those offers. Departments within Hillside UK have been responsible for developing the terms and conditions of the Free Bets and Deposit Bonus offers. Departments within Hillside UK were responsible for the design, site architecture and modification of the bet365.com.au website; and for dealing with customer inquiries or complaints. Hillside UK and Hillside Australia were jointly responsible for compliance: Hillside at [19]-[23], [125]-[126].

(5)    At all material times, Bet365GL and Hillside UK shared an identical board of four directors. Further, at all material times, the person who was General Counsel for Hillside UK was also General Counsel or In-House Solicitor for Bet365GL: Hillside at [138].

51    Beach J held that the ACCC had not made out its case that the relevant representations were made by Hillside Australia and Hillside UK on behalf of, and as agent for, Bet365GL: Hillside at [140].

52    Not liable merely because parent company: First, the fact that Bet365GL was the parent company of a global group, or that it was the ultimate controlling entity of Hillside Australia did not establish Bet365GL’s liability. Hillside Australia is a separate legal entity and not merely a proxy for its shareholders (as is Hillside UK): Hillside at [141]. Further, the annual reports and accounts indicate that Bet365GL was not the main operating entity: Hillside at [143]-[146].

53    No direct evidence of day-to-day control: Second, there was no direct evidence of any day-to-day control or direction by Bet365GL of the conduct of Hillside UK and Hillside Australia: Hillside at [147]. There was evidence of emails passing between Hillside Australia and individuals who have a function both within Hillside UK and Bet365GL; however, these emails were consistent with Hillside UK’s direction and involvement. Those emails did not establish that the communications were made in the person’s role in Bet365GL: Hillside at [148]. Further, the ACCC did not tender any minutes of directors’ meetings to establish that control was being exercised by Bet365GL: Hillside at [149].

54    Licensing of trade marks and domain name not sufficient: Third, the licensing of trade marks or a domain name does not without more establish Bet365GL’s liability as a principal. There was no evidence of Bet365GL giving or issuing any specific instruction, direction or request to Hillside Australia or Hillside UK concerning use of the domain name, or concerning offers of incentives to new customers to open accounts: Hillside at [150]-[151]. Group guidelines about the use of the logo “bet365”, and broader marketing of the brand “bet365.com” did not carry the ACCC far enough: Hillside at [152]-[154].

55    Coincidence of company name and trademark not sufficient: Fourth, the fact that Bet365GL has “bet365” in its name does not establish its involvement in the impugned conduct. Hillside Australia engaged in the conduct under the name “bet365” with the use of a trade mark; that does not mean that the conduct is that of the owner of the trade mark: Hillside at [155].

56    Overlapping directorships not sufficient: Fifth, the fact that there are common or overlapping directorships or a common general counsel does not per se establish control in the relevant sense: Hillside at [156].

57    Austcorp is distinguishable: The general marketing of the group as “bet365” did not establish any ostensible authority: Hillside at [158]. Austcorp was distinguishable, because that was a case where a holding company communicated to the public that it adopted or endorsed for itself what its subsidiary represented in specific promotions: Hillside at [159].

58    Jones v Dunkel inference not available: Finally, the ACCC did not derive any support from Jones v Dunkel. There was no sufficient evidence from the ACCC that Bet365GL authorised or directed the impugned conduct of the subsidiaries, or that this conduct was done on its behalf. Negative inferences require a foundation that was absent in that case: Hillside at [161]. (Jones v Dunkel is considered further at [87]-[90] below.)

59    Bowes Street (No 3) (2024): The Respondents also referred to Commissioner for Fair Trading v Bowes Street Developments Pty Ltd (No 3) [2024] ACTSC 315. However, that case turned on the construction of particular inter-company agreements. The Respondents relied on the fact that a related company (which provided labour hire services) was not joined as a party in the Bowes Street (No 3) proceedings. As explained below, I consider the role of Bettzeit is not properly characterised in that way.

60    The ACCC’s case can be considered with these general principles in mind.

D.    ACCC CASE

61    The ACCC analyses the conduct of the three Respondents as follows.

D.1    Conduct of Emma Sleep AU

62    The directors of Emma Sleep AU were appointed only to fulfil statutory requirements, and were not involved in the day-to-day business of Emma Sleep AU (SOAF [9](i)). Further, charts of team structures for Emma Sleep AU for the Relevant Period (between 15 June 2020 to 27 March 2023) indicate that there was a maximum of four employees based in Australia at any one time (in July 2022, out of a total of 21 people), with the remaining employees based mainly in Manila and a few in Frankfurt.

D.2    Conduct of Country Team Australia, Bettzeit

63    Country Team Australia determines prices, responsible for advertising: The evidence shows that Country Team Australia was responsible for determining the price of Emma Sleep AU’s products. Country Team Australia was also responsible for advertising those products on the relevant platforms (see SOAF [7], [8](b)).

64    Employment of Country Team Australia and Country Manager/Head of Australia: The ACCC contends that the great majority of persons working within Country Team Australia during the Relevant Period were employed by Bettzeit. Team charts reveal the following:

    At July 2020, there were 11 people, who were all employed in Manila (that is, by Bettzeit).

    At November 2021, there was one Australian employee in a team of 17 people. The remainder were employed in Manila.

    Between March and October 2022, there were between two and four Australian employees, in a team of between 17 and 21 people. The remainder were employed in Manila.

    At May 2023, there were two Australian employees in a team of 12 people. The remainder were employed in Manila.

65    The ACCC points out that, at July 2023 and September 2023 (after the Relevant Period), Country Team Australia had no active employees located in Australia. The Respondents observe that only a small proportion of Bettzeit’s staff were part of Country Team Australia; for example, at September 2023, Bettzeit had 270 employees, of whom 12 were part of Country Team Australia.

66    Country Manager, Team Lead: Of particular significance is the position of Country Manager or Head of Australia, and also the position of “Team Lead” (when filled). Persons occupying these positions have been identified in correspondence from the Respondent’s lawyers as the persons responsible for pricing strategy, and for determining the presentation on the relevant platforms.

    During the Relevant Period, the following people held the position of Country Manager or Head of Australia: a Mr Quiroga-Rivera (2020-June 2021, as well as from July 2023); a Mr Baumgarten (June 2021-July 2023); and a Mr Ong (December 2022-May 2023). Each was employed by Bettzeit.

    During the Relevant Period, the following people held Team Lead positions: a Mr Rocha (Marketing Lead Australia, May 2023 onwards); a Mr Anore (Marketing Lead Australia, June-December 2022), and a Mr King (Wholesale/Sales Director, December 2021-October 2023). The first two were employed by Bettzeit, and Mr King was employed by Emma Sleep AU.

67    Involvement of Country Manager in Emma Sleep AU strategies: The ACCC contends that persons occupying the position of Country Manager or Head of Australia were regularly involved in decision-making regarding Emma Sleep AU’s operations, including strategies for its advertising campaigns.

68    Mr Quiroga-Rivera: The ACCC contends that Mr Quiroga-Rivera was regularly involved in decision-making regarding Emma Sleep AU’s operations, including the conduct and location of Emma Sleep AU’s advertising campaigns. The ACCC’s written submissions refer to three examples:

(1)    In an email chain dated March to April 2020 (before the Relevant Period), Mr Quiroga-Rivera approved the decision to extend advertising by the Top 5 Best Mattress Website to extend from Sydney and Melbourne to include Brisbane and Adelaide; and also directed “can you halt all sales after this Sunday please”;

(2)    In an email chain in October 2020 with persons from Emma Sleep GmbH, the ACCC says that Mr Quiroga-Rivera is responsible for setting the level of aggressiveness of Emma Sleep AU’s advertising campaigns, including discounts offered to Australian consumers. He stated (on 9 October) “Unfortunately Emma Australia is going to have to strongly lower our advertising aggressiveness over the next few weeks in order to maintain 1 week delivery times and save enough stock for Black Friday period”, then (on 16 October) “I think we can be a bit more aggressive in terms of Digital Performance in Australia”, then (on 20 October) stated “We don't ever sell ‘Long Single’ and ‘Supe[r] Kings’. These are just added to give a sense of urgency/limited availability to our mattresses”. The ACCC’s oral submissions emphasised that Mr Quiroga-Rivera used “we” in describing actions taken in relation to Emma Sleep AU’s business.

(3)    In an email chain dated 20 October 2021 with Mr Baumgarten and Mr King, Mr Quiroga-Rivera observed in respect of the potential introduction of Emma Luxe into the Australian market that “we can grab Sleeping Duck customers with attractive discount/promotions”. Mr King responded that “We are absolutely on the same page. I want to devour all of Koala and Sleeping Ducks business”. (Mr King is identified as “Country Director, Australia & New Zealand, Emma Sleep GmbH”, but the Respondents submit (and the ACCC does not appear to challenge) that this is a different position from “Country Manager” or “Head of Australia”, which headed Country Team Australia.)

69    The ACCC’s oral submissions elaborated on these examples as follows. First, it was observed that the March to April 2020 emails were headed “Emma AU Weekly Update” with a number following, from “#7” to “#12”. That was said to indicate that Mr Quiroga-Rivera was receiving regular updates on Emma Sleep AU’s business. Second, the 20 October 2021 email chain shows Mr Quiroga-Rivera and Mr Baumgarten undertaking a “little bit of planning” to arrange for Choice Australia to review Emma Sleep AU’s products. Later advertisements of Emma Sleep AU’s products included “Choice recommended”. The ACCC separately referred to the fact that in September 2023 Mr Quiroga-Rivera signed a response to a notice issued by the ACCC as “Country Manager Australia”.

70    Mr Baumgarten: The ACCC contends that Mr Baumgarten was directly involved in Emma Sleep AU’s marketing, advertising, and pricing strategies. The ACCC’s written submissions provide the following examples:

(1)    The ACCC refers to Mr Baumgarten being party to the 20 October 2021 email chain summarised above.

(2)    Mr Baumgarten was also party to an email chain dated 25 October to 10 November 2021, between persons principally employed by Bettzeit. On 26 October 2021, a Mr Chong (Junior Business Development Manager) states that they will be maintaining an alternating discount strategy, because “offering only the optimum discount constantly is legally problematic in AU”. In an email sent later that day, a Ms Gao (who is agreed to be employed by Emma Sleep GmbH) states:

Regarding the discount strategy, I don't understand why alternating discount is causing less attention as we are still discounting. I think we should balance between risks and opportunities, i.e. if we can make more revenue and CM with more aggressive discount with calculated risks, we should go for it, that's how we boosted UK growth in the last 2 months. So what we need to understand here is 1) how big is the fine, 2) how likely competitors will attack us based on their size and their discount strategy, 3) how can we be creative to get around with the legal constraints (e.g. new customer discount). Before we get more attention, we should grow as faster [sic] as we can. (emphasis added)

The ACCC’s oral submissions again emphasise the use of “we”. On 27 October 2021, Mr Baumgarten replies to that email, and states (among other things): “Fully aligned on growing the business further and supporting Emma”. The action points include reference to calculating the risk.

(3)    Mr Baumgarten is party to an email chain dated 16 to 20 December 2021, which the ACCC describes as a performance review of Emma Sleep AU’s sales. Mr Baumgarten is also included in an email dated 16 February 2023 that summarises a marketing workshop, which includes the statement that “Urgency-based messaging has the best ROA[S]” (that is, return on ad spend).

71    Further matters raised in oral submissions: The ACCC’s oral submissions raised the following further matters:

(1)    An email chain dated 16 to 21 December 2021 shows Bettzeit employees (including Mr Shappit, Global Production – Senior Supply Chain Manager) organising the suppliers for Emma Sleep AU. This was said to demonstrate the extent of Bettzeit’s involvement in every aspect of Emma Sleep AU’s business. Mr Baumgarten provides advice at the end of this email chain.

(2)    Certain emails refer to the “Big Lever”, said to be lever arch folders used to present marketing workshops. These emails include an email from Mr Baumgarten dated 27 October 2021 (part of the exchange summarised in [70](2) above), and an email from a Ms Kirschner of Emma Sleep GmbH dated 1 August 2022 (discussed below). The Court Book includes the papers from two Australia and New Zealand “Big Lever Workshops”, which seem to have occurred on 3 February 2021 and 1 November 2021. The February 2021 papers set out a “four-pronged year-long strategy”. The ACCC also referred to an email chain dated 16 February 2023, which also referred to “Big Levers” in discussing marketing strategies for Emma Sleep AU.

(3)    The ACCC also observes that Dr Schmoltzi and Mr Müller are directors of Bettzeit, as well as Emma Sleep GmbH (SOAF [9](e)).

D.3    Conduct of Emma Sleep GmbH

72    Input and guidance of senior Emma Sleep GmbH executives: Turning to Emma Sleep GmbH, the ACCC contends that directors and senior managers of Emma Sleep GmbH generally provided guidance at a strategy level to Country Team Australia, and to the persons occupying the positions of Team Lead, Country Manager, and Head of Australia, with respect to the operations of Emma Sleep AU.

73    Dr Schmoltzi and Mr Müller: The directors are Dr Schmoltzi (Emma Sleep GmbH CEO) and Mr Müller (Emma Sleep GmbH Managing Director). The ACCC’s written submissions refer to the following as examples:

(1)    In an email chain dated 1 August 2022 (involving Dr Schmoltzi, Mr Müller and Mr King), a Ms Kirchner summarises the key points for the AU Wholesale Strategy. This includes a statement that certain promotional activity “is not in line with ACCC regulations”. Dr Schmoltzi responded that, given that Australian prices are among the highest in the world, “[c]ould we be more successful with more marketing at higher margins, i.e. increasing prices and given only 25-30% discount?” He also refers to building on pre-existing guidelines when reworking the portfolio “(maybe also for D2C [direct to customer] given that we need to improve our discounting to adhere to the marketing standards)”. Mr King replies “Australia, New Zealand and Canada are quite unique in this perspective and we could absolutely be less aggressive and drive equal NR [net revenue] and double down on absolutely CM [contribution margin]”.

(2)    In an email chain dated 15 to 16 September 2022 (to a group of eleven including Dr Schmoltzi and Mr Müller), Mr Quiroga-Rivera asked for a session to discuss how “Emma D2C” currently approaches pricing.

(3)    In an email chain dated 31 October 2022 to 1 November 2022, Mr Müller set out to a group including Dr Schmoltzi and Mr Quiroga-Rivera some ideas and questions on pricing. He stated “[t]he example from AUS is still quite positive on the back of my head, where we could drastically increase prices whilst being relatively stable for the CR [conversion rate]. Knowing that AUS is a different animal, I would still think there is a potential for other countries as well”. The reply by Ms Gao states (among other things) that “country teams own this topic and execute it” (of pricing and discounts).

(4)    In an email chain dated 23 to 24 March 2020 (including Dr Schmoltzi and Mr Müller), a Mr Yang asked Dr Schmoltzi if he would “agree on developing the real-time number solution to show the urgency message”, and that he sought Dr Schmoltzi’s “feedback on this topic as it might lead to legal concerns and it requires more effort of development”. Dr Schmoltzi stated that they needed to have a “realistic number for our large countries”. A Mr Khandouk added that multiple watchdogs are cracking down on “manipulation tactics” and “[e]specially UK and Australia and EU are tight here”. He asked “Ben” (meaning Mr Quiroga-Rivera) to check on whether trivago had been required to pay a settlement. Dr Schmoltzi replied:

So as long as we build a roughly working tool that counts the views and displays them just as an information of “X viewed the product”, it is ok. (But don't do something: “Hurry, X viewed the product, could be gone soon” – that would be wrong and, hence, misleading [wink emoji])

74    The ACCC’s written submissions contend that, at times, decisions about the use of urgency tactics and price discounts in sales campaigns in Australia were made by Dr Schmoltzi and Mr Müller.

(1)    The ACCC’s written submissions refer to the email from Dr Schmoltzi dated 23 March 2020, summarised immediately above.

(2)    The ACCC’s written submissions also refer to a letter from Emma Sleep GmbH to the ACCC dated 24 November 2023, which states that the directors and senior managers of Emma Sleep GmbH (including Dr Schmoltzi and Mr Müller) “generally do not give specific directions or instructions in relation to matters such as the use of Discounted Prices, Regular Prices, or the Countdown Timer, however, they may have done so from time to time during the Relevant Period in response to a query from the country team”.

75    Collaboration with Mr King: The ACCC also contends that there was a high level of collaboration between Mr King, and people including Mr Müller, Dr Schmoltzi, Mr Quiroga-Rivera, and Mr Baumgarten on the marketing strategy and performance in Australia. In addition to the 20 October 2021 email summarised in [68](3) above, the ACCC refers to the an email chain dated 6 to 7 October 2021 (where Mr King emailed a group including Dr Schmoltzi, Mr Müller, Mr Baumgarten, and Mr Quiroga-Rivera seeking input into a Go-to-Market plan). Dr Schmoltzi’s reply to Mr King included the following:

On the pricing strategy: we have done plenty tests on the right pricing and discount strategy. We always revert back to these high discounts because they work best and help us scale. We try to prevent advertising the frequent discounts in TV, but once someone is on the website and feels he is “lucky” to be there during a promotional period, it just increases conversion rate and absolute profit(!) so much that it is worthwhile for us to do. I'm sure Ben can share more insights from the many countries he has been responsible for.

76    Involvement of other Emma Sleep GmbH executives: The ACCC also contends that other senior executives at Emma Sleep GmbH were also “directly involved in reviewing and advising on Emma Sleep AU’s performance and future direction”. The ACCC’s written submissions refer to two matters:

(1)    The first is an email chain dated 15 to 16 September 2022 (involving 10 executives including Dr Schmoltzi and Mr Müller), which starts with an email from a Mr Meci (Vice President Marketing, Emma Sleep GmbH) asking why the Emma Sleep Group was decreasing prices when inflation was increasing. His email sets out the impact on 16 countries, including Australia. Mr Quiroga-Rivera’s response refers to the position in the UK, Mexico and Australia (and the result of a 6-week price test in Australia). I do not think it can be said that Mr Meci in this email was “directly involved in reviewing Emma Sleep AU’s performance metrics and the use of discounting advertising with Mr Quiroga-Rivera”, as the ACCC contends.

(2)    The second is an email chain dated 2 October to 10 November 2020 (involving multiple executives) is headed “Emma AU – metrics for October 2020”. These are the emails where Mr Quiroga-Rivera discusses the aggressiveness of online advertising: see [68](2) above. On 20 October 2020, Mr Brechmann states “I’ve increased my bids by 20% across the board and will also re-run the bidding macro to shift spend to better performing keywords”. It may be going too far to say that Mr Brechmann and Mr Quiroga-Rivera “reviewed and assessed what language to use in Emma Sleep AU’s advertising campaigns”, as the ACCC contends. It certainly is going too far to attempt to include Ms Marealle (Growth Lead Australia, NZ & Southeast Asia, Emma Sleep GmbH) in this particular exchange, whose sole contribution is “Thanks, Best regards”.

77    Oral submissions: The ACCC’s oral submissions referred to further email exchanges involving other senior Emma Sleep GmbH executives. In an email chain dated March to April 2020, Ms Marealle (at this point Junior Team Lead Business development (UK, Ireland & Australia), Bettzeit GmbH) advises Ms Caedo in an email dated 9 March 2020 on the wording of an order confirmation email, and on 6 April 2020 suggests that the new “AU agents” should take Manila holidays, not holidays on the Australian calendar, because Ms Marealle’s understanding is that their contracts are “also under Manila”. The ACCC also referred to the advice from Ms Gao on discounting strategy in her email dated 26 October 2021, mentioned in [70](2) above.

78    2021 Agreement: As set out above, the Respondents have entered into the 2021 Agreement, under which Emma Sleep GmbH has been appointed to provide specific services to Emma Sleep AU and Bettzeit. The ACCC’s written submissions refer to the following:

(1)    By cl 3.3.4, Emma Sleep GmbH (referred to as “the Manager”) shall assist “in all matters relevant to the financing” of the companies’ activities, “including the identification of sources of potential of financing, negotiation of financing arrangements, and coordination of financing with other Emma Sleep Group companies for the benefit of” the companies;

(2)    By cl 3.3.8, Emma Sleep GmbH shall provide “advice and assistance in the marketing of business operations and direct services, including the identification of potential customers as well as administrati[ve] support and direct services for daily business operations in sales and any related sales activities (eg, logistics services)”; and

(3)    By cl 3.3.9, Emma Sleep GmbH shall cause certain of its employees to perform as officers of its subsidiaries (such as Emma Sleep AU and Bettzeit) or provide such general administrative services as may be required by them, including advice and assistance in the general administration and management of the relevant company, with all of the duties of officers of that company.

79    In oral submissions, the ACCC emphasised that these clauses provide that Emma Sleep GmbH “shall” do something, whereas cl 3.2 provides that Emma Sleep GmbH “may” sub-contract services to be provided to companies within the Emma Sleep Group.

80    Other matters: The ACCC refers also to three other matters in relation to Emma Sleep GmbH.

81    Financial assistance: Emma Sleep GmbH has provided financial assistance to Emma Sleep AU, as set out in SOAF [12]: see [14] above. The ACCC submits this level of financial assistance goes beyond mere commonality of business interests. In oral submissions, the ACCC submitted that the payment by Emma Sleep GmbH of supplier invoices on 24 September 2020 was to meet “establishment costs” of Emma Sleep AU. The ACCC also referred to Emma Sleep AU’s financial statements dated 31 December 2021 and 31 December 2022, both of which state that Emma Sleep AU’s ability to continue as a going concern “is dependent on the continuing financial support from its parent entity, Emma Sleep GmbH”.

82    Response to ACCC from Emma Sleep GmbH: The ACCC observes that Emma Sleep GmbH’s Legal and Compliance Department responded directly to the ACCC’s requests for information addressed to Emma Sleep AU in February and November 2023. In oral submissions, the ACCC noted that the February 2023 response by Emma Sleep GmbH referred to reviewing “our” website.

83    Top 5 Best Mattress Website: Finally, the ACCC relies on the fact that Emma Sleep AU’s products are advertised on the Top 5 Best Mattresses Website. That website is registered to Emma Sleep, and operated by a German subsidiary of Emma Sleep GmbH (DIBMat GmbH) in conjunction with Country Team Australia.

E.    CONSIDERATION

E.1    Approach to fact finding

84    It is convenient to begin with three general comments about the approach to fact finding in these proceedings.

85    Standard of proof: The first comment concerns the appropriate standard of proof. The ACCC of course bears the burden of proof in all matters, on the balance of probabilities: Evidence Act, s 140(1). That standard of proof is informed by s 140(2) of the Evidence Act, which requires that the Court take into account (among other things) the nature of the subject-matter of the proceeding, and the gravity of the matters alleged (s 140(2)(b) and (c)). In Bluescope Steel (No5) at [178], O’Bryan J explained the effect of s 140 as follows:

[T]here is only one civil standard of proof, being the balance of probabilities. However, satisfaction on the balance of probabilities is affected by the nature of the issues being determined and their gravity. Issues which have serious consequences, including particularly the imposition of civil penalties, are weighed by the Court. In reaching my findings and determining whether I am satisfied that the ACCC’s case has been proved on the balance of probabilities, I have taken into account the gravity of the matters alleged.

See also Australian Building and Construction Commissioner v Parker [2017] FCA 564; (2017) 266 IR 340 at [58]-[59] (Flick J).

86    Inferences: The second comment concerns the approach to drawing inferences. A finding may be made in the absence of direct evidence; however, the “more probable” civil standard means that it is not sufficient that the circumstances give rise to conflicting inferences of an equal degree of probability or plausibility, or that the choice between them can only be made by conjecture: Bluescope Steel (No 5) at [180], quoting Australian Competition and Consumer Commission v Olex Australia Pty Ltd [2017] FCA 222 at [479] (Beach J). As with any civil proceedings, any inference must be “reasonable and definite”: Luxton v Vines [1952] HCA 19; (1952) 85 CLR 352 at 358 (Dixon, Fullagar and Kitto JJ); Director of the Fair Work Building Industry Inspectorate v McCullough [2016] FCA 1291 at [151] (Barker J); Australian Securities and Investments Commission v GetSwift Ltd (Liability Hearing) [2021] FCA 1384 at [1898] (Lee J).

87    Jones v Dunkel: The third comment concerns the availability of the rule in Jones v Dunkel (1959) 101 CLR 298, on which the ACCC seeks to rely. This rule is available, as a matter of law, in civil penalty proceedings: see Australian Securities and Investments Commission v Big Star Energy Ltd (No 3) [2020] FCA 1442; (2020) 389 ALR 17 at [39] (Banks-Smith J); Australian Securities and Investments Commission v Macks (No 4) [2020] SASC 209 at [393] (Doyle J), and the cases cited.

88    Jones v Dunkel, when it applies, permits (but does not require) the drawing of two inferences from a party’s failure to call a witness:

    First, a court might infer that the evidence of the absent witness would not have assisted the party that failed to call that witness; and

    Second, a court might draw, with greater confidence, any inference unfavourable to the party that failed to call the witness, if that witness appears to be in a position to cast light on whether that inference should be drawn.

See, for example, Bluescope Steel (No 5) at [345]; Big Star (No 3) at [33]; Macks (No 4) at [387].

89    Jones v Dunkel applies if three conditions are satisfied: (a) the missing witness would be expected to be called by one party rather than the other; (b) the court is satisfied that the witness’s evidence would probably elucidate a particular matter; and (c) the witness’s absence is unexplained: Payne v Parker [1976] 1 NSWLR 191 at 201-202 (Glass JA, dissenting in the result); Big Star (No 3) at [34]; Macks (No 4) at [387].

90    However, the rule in Jones v Dunkel does not entitle the Court to speculate about what other evidence might possibly have been led. The rule does not enable the absence of a witness to make up any deficiency in the evidence, and it will not support an adverse inference unless the evidence otherwise provides a basis on which that unfavourable inference can be drawn: Olex at [484]; Bluescope Steel (No 5) at [345]; see also Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 247 CLR 345 at [165] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ).

E.2    Do the ACCC’s arguments go beyond its pleaded case?

91    Another preliminary point is that the Respondents contend that the ACCC’s case, as put in its submissions (particularly its oral submissions), goes beyond its pleaded case. The Respondents cite Australian Securities and Investments Commission v National Australia Bank Ltd (No 2) [2023] FCA 1118 (ASIC v NAB (No 2)), where Derrington J stressed the importance of a regulator putting a respondent on notice of the issues to be determined.

    Derrington J stated that it is “axiomatic that a regulator must frame the case that it seeks to bring against an alleged contravener with a degree of specificity, and must clearly identify the relief that it seeks in the event that its case is made out”: ASIC v NAB (No 2) at [10]. Accordingly, in a proceeding for a civil penalty, a statement of claim must allege a contravention with a sufficient statement of material facts to alert a respondent to the case to be met: ASIC v NAB (No 2) at [14], quoting Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2015] FCAFC 25; (2015) 230 FCR 298 at [65] (the Court). At the same time, the Court does not approach these matters dogmatically, but as a practical evaluation in the circumstances of a given case: ASIC v NAB (No 2) at [19].

    Derrington J held further that these general principles did not apply in any materially different fashion when a regulator elects to use a concise statement in place of conventional pleadings: ASIC v NAB (No 2) at [35].

92    ACCC amended concise statement: Here, the ACCC’s amended concise statement contended (in [16]-[17]) that “Emma Sleep” (meaning the three Respondents collectively) made the impugned representations, by engaging in the conduct set out in [6]-[8] (constituted by “Emma Sleep” advertising products for sale). The ACCC contended (at [4]) that the relevant conduct was engaged in by “Emma Sleep”. The ACCC contended further (at [20]) that Emma Sleep AU’s conduct was engaged in on its own behalf and (a) as the agent of Emma Sleep GmbH and/or Bettzeit and within the scope of its actual or apparent authority under that agency; and (b) at the direction of Emma Sleep GmbH and/or Bettzeit. The allegations in the amended concise statement (while broad) match the ACCC’s case, as summarised in [19] above.

93    ACCC particulars: The ACCC elaborated on these allegations in its answers to the Applicant’s request for particulars (dated 13 February 2024) as follows:

    In relation to concise statement [4], the particulars state (in [3]) that the relevant conduct is alleged to have been engaged in by each of the Respondents, by reason of the following matters: (a) the division or business unit of Emma Sleep responsible for the operations of Emma Sleep AU was Country Team Australia; (b) save for the Top 5 Best Mattress Website, the division or business unit of Emma Sleep responsible for the online platforms was Country Team Australia; (c) the division or business unit responsible for the Top 5 Best Mattresses Website was a German subsidiary of Emma Sleep GmbH, whose managing directors were also managing directors of Emma Sleep GmbH and Bettzeit (Mr Müller and Dr Schmoltzi); (d) in the circumstances, Country Team Australia was responsible for advertising the Products on all other platforms.

    In relation to concise statement [5], the particulars state (in [4]) that the conduct of Country Team Australia is attributable to each of the Respondents, by reason of the matters set out in paras 4(a) to (i) of the particulars. In summary, those matters related to corporate structure, directorships and shareholdings (paras (a), (e) to (g), (i)(iii)); the fact that persons in and leading Country Team Australia were mainly employed by Bettzeit (paras (b) to (d)); certain executives of Emma Sleep GmbH gave directions and guidance to Country Team Australia (para (h)); and the facts that the directors of Emma Sleep AU were not involved in its day-to-day business, and those responsible for steering the business operations were not based in Australia (para (i)(i) and (ii)).

    In relation to concise statement [20], the particulars state (in [6]) that Emma Sleep AU’s conduct was engaged in on its own behalf and as the agent of Emma Sleep GmbH and/or Bettzeit within the scope of its actual or apparent authority under that agency, and/or at the direction of Emma Sleep GmbH and/or Bettzeit, by reason of the matters in [3] and [4] of the particulars (summarised above) and the following: (a) the provisions of the 2021 Agreement; (b) the termination of that agreement in 2022; (c) Emma Sleep AU entering into a different “sales support services agreement” with a different wholly-owned subsidiary of Emma Sleep GmbH (Emma Matratzen GmbH) in 2022; and (d) the financial assistance provided to Emma Sleep AU by Emma Sleep GmbH in September 2020 and January 2022.

94    It can be seen that these particulars are narrower than the ACCC’s case as summarised in section D above. To take one example, the particulars do not refer to the extensive emails from persons employed by Bettzeit (especially from Mr Quiroga-Rivera and Mr Baumgarten): cf section D.2 above. (I note that para 4(h) of the particulars refers to directions and guidance from persons in Emma Sleep GmbH, not in Bettzeit.)

95    Issue is whether procedural fairness provided: In response, the ACCC contends, correctly, that the purpose of pleadings is (relevantly) to give notice to the other party of the case that it has to meet, that pleadings are not an end in themselves, and that the Court does not take an unduly technical or restrictive approach to them: Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15 at [13] (the Court). Further, as the ACCC submits, particulars do not modify or alter the cause of action, but rather furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it. Where there is no departure during trial from the pleaded cause of action, a disconformity between the evidence and particulars earlier furnished will not disentitle a party to a verdict based on the evidence: Dare v Pelham [1982] HCA 70; (1982) 148 CLR 658 at 664 (the Court); Brosnan v Katke [2012] FCA 1249 at [21] (Greenwood J). In other words, any mismatch between the evidence and the ACCC’s particulars is not necessarily disqualifying; the overriding question is whether the Respondents have been provided with procedural fairness, noting that the evidence comes within the overarching allegations in the ACCC’s amended concise statement.

96    In this case, as explained in section E.3 below, the two key issues concerning Bettzeit are whether Emma Sleep AU’s operations were under the direction and control of the Country Manager of Country Team Australia; and how to understand the place and role of Country Team Australia (cf SOAF [7] and [8]). On the first issue, the agreed facts make it clear that the head of Country Team Australia directed and controlled the operations of Emma Sleep AU during the Relevant Period, and indeed counsel for the Respondents frankly admitted as much. On the second issue, I have relied on an answer by Emma Sleep GmbH given in a written response to the ACCC to interpret the critical paragraphs of the SOAF. In these circumstances, I consider there is no breach of procedural fairness, and it is open to me to consider the ACCC’s case, as set out in its amended concise statement and the list of legal and factual questions on liability to be determined. That said, I have focused particularly on the ACCC’s case in its written submissions (of which the Respondents were given notice), rather than any expansion of the materials referred to in oral submissions, such as the reference to the “Big Lever” material.

E.3    Position of Bettzeit: Were the impugned representations made “on behalf of” Bettzeit?

97    Starting with the position of Bettzeit, the crucial issue for s 139B(2) of the CCA is whether the admitted conduct of Emma Sleep AU in making the impugned representations was “on behalf of” Bettzeit, within the meaning of s 139B(2) of the CCA.

(1)    As explained next, it can be inferred from the agreed facts that the impugned representations would have been made “at the direction of” the person holding the position of Country Manager of Country Team Australia, who was either a director or employee of Bettzeit. Accordingly, the only remaining issue under s 139B(2)(b)(i) is the threshold requirement of whether Emma Sleep AU’s conduct was engaged in “on behalf of” Bettzeit.

(2)    That issue is also indirectly relevant to the ACCC’s argument that Bettzeit is liable as a principal contravener. A finding that the directions given by Bettzeit directors and employees were “on behalf of” Bettzeit (and thus as part of its business operations) goes some way towards establishing that liability as a principal, and the main issue then becomes whether Bettzeit “made” the representations, together with Emma Sleep AU.

98    Representations made “at the direction” of a Bettzeit director/employee: It is convenient to begin by identifying who directed and controlled the business of Emma Sleep AU. The agreed facts establish the following:

    The Australian directors were not involved in the day-to-day running of the business of Emma Sleep AU (SOAF [9](i)).

    The persons occupying the position of “Country Manager” or “Head of Australia” were responsible for steering the business operations of Emma Sleep AU (SOAF [9](c)). Those persons were employed by Bettzeit (ibid); indeed, one of those persons (Mr Quiroga-Rivera) was the Managing Director of Bettzeit (SOAF [9](e)).

99    Country Manager/Head of Australia directed and controlled business of Emma Sleep AU: These agreed facts establish that it is the “Country Manager” or “Head of Australia” who directed and controlled the business of Emma Sleep AU. That fact is amply illustrated by the email chains involving Mr Quiroga-Rivera and Mr Baumgarten summarised in [68] and [70] above, where they provide detailed instructions on all aspects of the business strategy for Emma Sleep AU. From that fact (and the fact that the Australian directors were not involved in running the business), it can be inferred that any direction to make the impugned representations would have been given by the “Country Manager” or “Head of Australia”.

100    Were representations made pursuant to a direction? That leaves the question of whether the Court can and should draw a further inference that the impugned representations would have been made pursuant to a direction given by the person who directed and controlled the business. There is no direct evidence of a direction being given; however, the giving of a direction can be inferred from all the circumstances: see [36] above. Here, the evidence establishes that persons within Country Team Australia (and other people doing work relevant to that business) consulted with the “Country Manager” or “Head of Australia” in making decisions about all aspects of the business, including marketing, advertising, and pricing: see the email chains summarised in [68] to [70] above. The team charts provided by the Respondents suggest (as one would expect) an organisation where the people in Country Team Australia report to a single person. In my view, it is a permissible inference (and not mere speculation) to infer that any representation made by Emma Sleep AU would have been made with the knowledge and at the direction of the Country Manager or Head of Australia at the time. I did not understand Respondents’ counsel seriously to contest this proposition.

101    “At the direction” requirement satisfied: Accordingly, the requirement in para (b)(i) of s 139B(2) is satisfied: the impugned representations were made “at the direction” of a person who was either a director or employee of Bettzeit (the Country Manager/Head of Australia). Given this person’s general responsibility over the business operations of Emma Sleep AU, the direction came within the person’s apparent authority as director or employee: see [32] above.

102    On whose behalf was the conduct engaged in? The remaining question under s 139B(2) is therefore whether the impugned representations were made “on behalf of” Bettzeit. As noted, this conveys a similar meaning to in the course of a body corporate’s business, affairs or activities: see [25]-[26] above.

103    ACCC argument: The ACCC submits that plainly the conduct of a person employed by Bettzeit, leading a team of people principally employed by Bettzeit, is in the course of Bettzeit’s business, affairs or activities, even if that conduct might also be seen as being in the course of Emma Sleep AU’s business.

104    This proposition has a simple appeal: in the absence of evidence pointing to the contrary, it would usually be inferred that the conduct of a company’s employees is in the course of that company’s business, otherwise those employees would, by definition, likely be acting outside the scope of their employment. That inference would seem to follow as a matter of common sense, in the light of ordinary human experience: as to which, see G v H [1994] HCA 48; (1994) 181 CLR 387 at 390 (Brennan and McHugh JJ); Roberts-Smith v Fairfax Media Publications Pty Ltd (Appeal) [2025] FCAFC 67 at [984] (the Court).

105    Respondents’ argument – Bettzeit employees acting pursuant to “labour hire”: The Respondents argue, however, that the various Bettzeit employees (including the Country Manager and Head of Australia) were provided to Emma Sleep AU pursuant to a “labour hire” arrangement, such that these employees were acting only on behalf of Emma Sleep AU, and were not acting on behalf of Bettzeit. The Respondents rely on the following matters:

    The 2021 Agreement provides for one company in the Emma Sleep Group (here, Bettzeit) to provide certain types of services to another company in the Group (here, Emma Sleep AU), including marketing and general administrative services: see cl 2.2, read with cll 3.3.8 and 3.3.9.

•    An officer providing general administrative services under cl 3.3.9 has “all of the duties of officers of the Company [ie Emma Sleep AU]”. The “Manager” (Bettzeit) shall always act in accordance with the direction of the Board of Directors of the “Company” (Emma Sleep AU) (cl 3.1).

•    By cl 5.1, the “Company” (Emma Sleep AU) agrees to reimburse the “Manager” (Bettzeit) for all costs and expenses reasonably incurred by the Manager in connection with the provision of the management services for the quarter. By cll 5.2 to 5.4, the Company “shall pay to the Manager a management fee based on the Costs and Expenses for such calendar quarter including a fair markup on arm’s length based on the local market conditions of the recipient of the services”, payable quarterly, less any applicable withholding taxes. Similarly, cl 6 provided for a Company to indemnify the Manager against any and all liabilities, costs, claims etc.

•    The Respondents pointed to the statements in Emma Sleep AU’s 2021 financial statements describing transactions with related parties. These transactions included payments for “Administrative and marketing recharges” both to its “Parent” (ie Emma Sleep GmbH) and to “Subsidiaries” (said to include Bettzeit). Emma Sleep AU’s 2022 financial statements set out transactions with related parties, and referred to payments for “Price adjustment for sales support services” to subsidiaries.

    The Respondents emphasise that the agreed facts state that Country Team Australia was responsible for developing, approving and updating the advertising of products on the platforms “on behalf of Emma Sleep AU” (SOAF [7]), and state that Country Team Australia is a division or business unit “of Emma Sleep AU” (SOAF [8](a) and (b)). The Respondents submit that it would impermissibly contradict or qualify these agreed facts to find that the impugned conduct was also on behalf of Bettzeit.

    More generally, the Respondents submit that Emma Sleep AU conducted a substantial business, involving millions of dollars in revenue, and millions of dollars in expenses such as advertising and warehousing. The Respondents submit that the natural inference is that any conduct engaged in for the purposes of this substantial business is engaged in solely on behalf of that business (that is, on behalf of Emma Sleep AU).

106    For the following reasons, I do not accept that the relevant conduct was engaged in on behalf of Emma Sleep AU alone, but find that it was engaged in on behalf of Bettzeit as well.

107    Bettzeit staff not engaged pursuant to “labour hire”: First, I do not accept that the Bettzeit staff who constituted Country Team Australia were provided as a “labour hire” arrangement pursuant to the 2021 Agreement. That agreement was in force from March 2021 until 28 December 2022 (when it was terminated retroactively from 1 January 2022): see [12]-[13] above. As noted, the 2021 Agreement provided for the company providing the services to be reimbursed for costs and expenses by the company to whom the services were provided, and paid a “management fee” (cll 5.1, 5.2 to 5.4). Those payments were to be made quarterly.

108    Accordingly, if there had been a “labour hire” arrangement pursuant to the 2021 Agreement, there would have been payments by Emma Sleep AU to Bettzeit. However, Emma Sleep AU’s financial statements for 2021 (during the currency of the 2021 Agreement) do not record any payments to Bettzeit: there is an item setting out payments to “subsidiaries” (meaning other subsidiaries of Emma Sleep GmbH), but the list of “main related parties” in the 2021 financial statements, which includes other subsidiaries of Emma Sleep GmbH, does not refer to Bettzeit. The same is true of the 2022 financial statements, albeit that the 2021 Agreement had been terminated retroactively from 1 January 2022 by the time of the 2022 financial statements.

109    Any argument based on the 2021 Agreement would face the separate difficulty that this agreement only operated for part of the Relevant Period: that period began on 15 June 2020 (9 months before the 2021 Agreement was entered into), and ended on 27 March 2023 (roughly 3 months after the 2021 Agreement was terminated in fact, and more than 15 months after the 2021 Agreement was taken to have been terminated). This timing issue led to discussion at the hearing of whether the ACCC is required to establish that Bettzeit or Emma Sleep GmbH is liable for the entire Relevant Period: the Respondents submit that liability of these respondents was “all or nothing”, and that it was not open to the Court to find that Bettzeit is liable for only part of the Relevant Period. Given my other findings, it is not necessary to resolve this issue.

110    Other matters tend against the Respondents’ “labour hire” argument, without being conclusive. As a general matter, it is significant that the Country Manager or Head of Australia of Country Team Australia for significant periods (Mr Quiroga-Rivera) is also the Managing Director of Bettzeit: it would be surprising if conduct of the Managing Director of a company was not undertaken on behalf of that company, even if it was also on behalf of a related company. The purported “labour hire” analysis also sits uneasily with an email from 6 April 2020, in which Ms Marealle from Emma Sleep GmbH advises that the “new AU agents” should work according to Philippines holidays, not Australian holidays, because “the contracts they have are also under Manila”: see [77] above. That email is shortly before the Relevant Period, but after Emma Sleep AU had commenced operations in Australia.

111    It is not necessary to rely on Jones v Dunkel to draw this inference: the Respondents’ explanation for why the conduct of Bettzeit employees was not on behalf of Bettzeit is contradicted by the evidence. Once that explanation is rejected, an inference can readily be drawn that the conduct of Bettzeit employees is in the course of Bettzeit’s business, even if that conduct is also in the course of the business of Emma Sleep AU.

112    No contradiction or qualification of agreed facts: Second, I consider that it does not contradict or qualify the agreed facts in SOAF [7] and [8] to find that the impugned conduct was engaged in on behalf of Bettzeit, as well as Emma Sleep AU.

    In my view, a statement that conduct is engaged in on behalf of Emma Sleep AU does not carry within it an implicit negative that the conduct was engaged in only on behalf of that company. Cases such as Hillside and Productivity Partners (No 3) illustrate how conduct can be engaged in on behalf of more than one company. Indeed, the potential for conduct to be engaged in on behalf of more than one company is especially obvious in the context of a group of companies that have a common, or at least overlapping, purpose (here, to sell Emma Sleep products).

    The statements in SOAF [8] that Country Team Australia is a division or business unit “of Emma Sleep AU” cannot be determinative of whether conduct engaged in by that business unit is on behalf of Emma Sleep AU only, or on behalf of Emma Sleep AU and another related company. A business unit is not a separate legal entity. A surer guide as to the roles of Emma Sleep AU and Country Team Australia is the description set out in a letter to the ACCC from Emma Sleep GmbH dated 24 November 2023, which states:

Emma Sleep Group’s business operations in Australia (which are conducted by Emma Sleep Group’s Country Team Australia) are conducted via Emma Sleep [AU].

It is notable that Country Team Australia is described as belonging to Emma Sleep Group, and that the business operations in Australia are conducted “via” Emma Sleep AU. This description runs counter to treating the business of Emma Sleep AU as separate and distinct from the business of Bettzeit.

113    Size of revenue inconclusive: I do not think the analysis is greatly advanced by the parties’ attempts to describe the nature of Emma Sleep AU’s operations, with the ACCC describing Emma Sleep AU as a “shell company” because of the small number of Australian employees, and the Respondents submitting that Emma Sleep AU is carrying on a “substantial business” in Australia given the size of its revenues and liabilities.

114    A more relevant matter is the nature of Bettzeit’s business. I do not think that Bettzeit is in the position of a mere “labour hire” company (where it may be possible, in principle, to separate the business of that company from the business of a related company that engages in misleading and deceptive conduct, as in Bowes Street (No 3)). In this case, however, other officers of Bettzeit (not in Country Team Australia) provided advice from time to time about matters relevant to the business of Emma Sleep AU, such as Mr Shappit (Global Production – Senior Supply Chain Manager), who provided advice on obtaining a supplier: see [71](1) above. Further, the team charts from July and November 2021 show Country Team Australia sharing staff with “APAC Ops” (presumably Australia and Pacific Operations), who are based in Manila, and who have job titles referring to logistics, customer service and procurement. It might be noted that Bettzeit had 270 active employees at September 2023, of whom 12 were members of Country Team Australia. These facts indicate that Bettzeit is not a specialist “labour hire” entity within the Emma Sleep Group, but a corporation with its own role in selling Emma Sleep products.

115    Conclusion – the conduct was engaged in “on behalf of” Bettzeit: As stated above, the starting position in my view is that one would usually expect that conduct engaged in by the employees and directors of a company is engaged in on behalf of that company (even if the conduct is also on behalf of another company). Here, the Respondents sought to provide an explanation (the “labour hire” arrangement) of why the conduct of Bettzeit employees was actually engaged in solely on behalf of Emma Sleep AU. I have rejected that explanation, and nothing in the agreed facts or the evidence before the Court provides any reason to depart from the starting position just identified.

116    It follows that the conduct of Emma Sleep AU in making the impugned representations was “on behalf of” Bettzeit and can be attributed to Bettzeit, through s 139B(2)(b)(i) of the CCA.

117    Bettzeit liable as principal? It is convenient to consider next whether Bettzeit is liable as a principal offender, independently of its liability pursuant to s 139B(2) of the CCA.

118    Bettzeit closely involved in preparing the representations: The agreed facts state that Country Team Australia (which was largely comprised of people employed by Bettzeit) was responsible for the operations of Emma Sleep AU in Australia, and responsible for the management of content on the online platforms (SOAF [8]).

    As explained above, the business of Emma Sleep AU was directed and controlled by the Country Manager or Head of Australia, who was employed by Bettzeit (and, in the case of Mr Quiroga-Rivera, also Managing Director of Bettzeit). Further, it can be inferred that the impugned representations were made at the direction of the person(s) occupying this position.

    The great majority of people who worked in Country Team Australia were employed by Bettzeit. These people advised on every aspect of Emma Sleep AU’s business, from marketing, pricing and even arranging distributors of Emma Sleep products. For the reasons just given, this work was done on behalf of Bettzeit, as well as Emma Sleep AU.

119    The extent of the involvement of Bettzeit employees (including at various points Bettzeit’s Managing Director) in determining the marketing strategy of Emma Sleep AU, and taking responsibility for developing, approving and updating the advertising on the platforms strongly indicates that Bettzeit is liable for these representations in its own right.

120    Did Bettzeit “make” the representations? The Respondents submit, however, that Bettzeit could not be liable in its own right, because it did not “make” the impugned representations, within the meaning of ss 18 and 29(1)(i) of the ACL. The agreed facts state that the impugned representations were made by Emma Sleep AU (SOAF [27]-[28]). The Respondents submit that a person does not “make” representations simply by preparing material that is published by another person (even if that is the natural and probable consequence of their preparation), citing Cassidy v Saatchi & Saatchi Australia Pty Ltd [2004] FCAFC 34; (2004) 134 FCR 585 at [29], [39]-[40] (Moore and Mansfield JJ). The Respondents submit that Bettzeit could only be taken to have “made” the impugned representations if its name were added to the representations (similar to Austcorp), or if Emma Sleep AU made the representations as Bettzeit’s legal agent.

121    I do not think that Saatchi was intending to lay down any absolute rule of the sort contended for by the Respondents. Moore and Mansfield JJ held that the question of whether a person has “made” a representation involves a question of fact to be determined in the light of all the relevant circumstances and the pleadings: Saatchi at [40].

122    The Respondents’ argument also runs counter to the result in Hillside.

(1)    In Hillside, Beach J found that Hillside Australia and Hillside UK were both liable as principal contraveners: Hillside at [9], [162].

(2)    Hillside Australia held the Australian licence allowing it to transact with customers based in Australia for sports betting. Hillside Australia operated the online wagering business using an Australian website (www.bet365.com.au): Hillside at [14]. Anyone with an internet address based in Australia who attempts to visit the international website (www.bet365.com) is automatically redirected to the Australian site: Hillside at [16].

(3)    Hillside UK was extensively involved in the preparation and publication of the impugned representations through the provision of various services summarised in Hillside at [124]-[126]: see [50](4) above.

123    Although Beach J does not state so in terms, it appears that Hillside UK did not publish the relevant misrepresentations (which were published by Hillside Australia on its website). It appears that Hillside UK was liable as a principal, because of its close involvement in the preparation of those representations, as well as their publication (arising from the services that Hillside UK provided in designing and maintaining the Australian website).

124    In my view, the involvement of Bettzeit in every stage of the making of the representations here is at least as extensive as the involvement of Hillside UK in the making of the representations considered in Hillside. On that basis, I would also find that Bettzeit is liable as a principal for the impugned representations. That liability is independent of the liability attributed through s 139B(2)(b)(i) of the CCA.

125    Liability through agency (s 139B(2)(a))? The final issue concerning Bettzeit is whether the impugned conduct can be attributed to Bettzeit on the basis that Emma Sleep AU was acting as an agent, within the scope of its actual or apparent authority: see CCA s 139B(2)(a). Given my other conclusions, I can deal with this point briefly.

126    I have not been taken to anything that would establish an express relationship of agency between Bettzeit as principal and Emma Sleep AU as agent. The issue then becomes whether Emma Sleep AU had any apparent authority to act as the legal agent of Bettzeit. I accept the Respondents’ submission that the ACCC cannot point to any holding out of Emma Sleep AU as the agent of Bettzeit. This case is very different from Austcorp (as discussed in [43] above): the impugned representations refer to “Emma Sleep” generally, similar to the advertisements in Hillside, which referred to the “bet365” brand generally. Bettzeit has not associated itself with the representations through the use of its logo or letterhead or the like.

127    Conclusions on Bettzeit: For the reasons set out above, I find that Bettzeit is liable for the impugned representations, because this conduct can be attributed to it under s 139B(2)(b)(i) of the CCA. I also find that Bettzeit is liable as a principal contravener, because its employees in Country Team Australia (including in one period Bettzeit’s Managing Director) were closely involved in the making of the representations by Emma Sleep AU.

E.4    Position of Emma Sleep GmbH

128    I turn now to the position of Emma Sleep GmbH. As noted, the ACCC contends that Emma Sleep GmbH is liable both as a principal, and liable by reason of s 139B(2) of the CCA because (it is said) Emma Sleep AU’s conduct was engaged in either as the agent of Emma Sleep GmbH, or at the direction of a director or employee of Emma Sleep GmbH.

129    Emma Sleep GmbH liability under CCA s 139B(2)? Starting with s 139B(2), the ACCC’s case raises three questions:

(1)    Whether Emma Sleep AU’s conduct was engaged in “on behalf of” Emma Sleep GmbH;

(2)    If yes to (1), whether in doing so Emma Sleep AU was acting as the agent of Emma Sleep GmbH, within the scope of Emma Sleep AU’s actual or apparent authority as agent;

(3)    If yes to (1) but no to (2), whether:

(a)    in doing so Emma Sleep AU was acting at the direction of a director, employee or agent of Emma Sleep GmbH; and

(b)    the direction was within the scope of the actual or apparent authority of the director, employee or agent.

130    It is convenient to focus on questions (2) and (3)(a), starting with the latter.

131    Any direction issued to Emma Sleep AU? The most pressing question raised by the ACCC’s case against Emma Sleep GmbH is whether the impugned representations were made “at the direction of” an employee or director of Emma Sleep GmbH within s 139B(2)(b)(i) of the CCA, particularly Dr Schmoltzi or Mr Müller.

132    It is clear that Dr Schmoltzi and Mr Müller (and others in Emma Sleep GmbH) provided detailed advice on marketing and pricing strategy for Emma Sleep AU during the Relevant Period, as revealed by the emails summarised in [73]-[76] above. However, none of the emails relied on by the ACCC amount to a “direction”, in the sense of authoritative guidance, that can be connected to the impugned representations. This is consistent with the agreed facts, which state only that these executives “generally provided guidance at a strategy level” (SOAF [9](g)). And an email from Ms Gao of Emma Sleep GmbH dated 1 November 2022 states that “country teams own this topic and execute it” (meaning the topics of pricing and discounts): see [73](3) above. This statement is directly contrary to the ACCC’s case on this point. The fact that Ms Gao is included and participates in an email discussion involving very senior executives in the Emma Sleep Group, such as Dr Schmoltzi, Mr Müller, and Mr Quiroga-Rivera, suggests that her understanding of the position can be given weight.

133    The ACCC points to the fact that a letter from Emma Sleep GmbH dated 24 November 2023 states that Emma Sleep GmbH directors and senior managers generally do not give specific directions or instructions in relation to matters such as discounts and countdown timers, but “they may have done so from time to time during the Relevant Period in response to a query from the country team” (emphasis added): see [74](2) above. However, this guarded statement does not provide a sufficient basis for inferring that a direction was given by a director or employee of Emma Sleep GmbH in respect of the impugned representations.

134    In the case of Bettzeit, it can be inferred that the person in the “Country Manager” or “Head of Australia” position must have given a direction in relation to the impugned representations, because that person directed and controlled the business of Emma Sleep AU, and the representations would have been made pursuant to a direction: see [99]-[101] above. By contrast, in the case of Emma Sleep GmbH, there is no sufficient reason for inferring that the parent company must also have given a direction in relation to the impugned representations. The evidence indicates that pricing and discounts were managed by the local country teams. On the evidence before the Court, it could only be speculation as to whether the impugned representations were made at the direction of a director or employee of Emma Sleep GmbH.

135    Was Emma Sleep AU acting as the legal agent of Emma Sleep GmbH? The other main question in the case against Emma Sleep GmbH is whether the impugned representations were made by Emma Sleep AU as the legal agent of Emma Sleep GmbH (cf CCA s 139B(2)(a)).

136    None of the matters referred to by the ACCC establish that Emma Sleep AU was acting as the legal agent of Emma Sleep GmbH in making the impugned representations (noting that a person can be a legal agent for some purposes but not others).

    The 2021 Agreement did not make Emma Sleep AU the legal agent of Emma Sleep GmbH. Due weight should be given to the statement in cl 13.2 that the relationship between the parties is that of an independent contractor, although it is not determinative. And if anything, some provisions of the 2021 Agreement would suggest that Emma Sleep GmbH is the agent of Emma Sleep AU, not the other way around: see particularly the requirement that the Manager (Emma Sleep GmbH) shall act in accordance with the direction of the board of directors of the Company (Emma Sleep AU) when providing services (cl 3.1); and the requirements for Emma Sleep AU to reimburse and pay fees to Emma Sleep GmbH for the services provided (cll 5 and 6).

    The fact that Emma Sleep AU is a wholly-owned subsidiary of Emma Sleep GmbH does not make Emma Sleep AU the legal agent of Emma Sleep GmbH: see Hillside at [141]; Consolo at [83]-[85]. And the fact that the parent company provided financial assistance to Hillside Australia did not establish an agency relationship either: cf Hillside at [134]. On that last point, it is relevant that the initial financial assistance in September 2020 was by way of paying “establishment costs” (see [81] above), and that the financial assistance since January 2022 has been by way of a revolving credit facility. In neither case does the form of financial assistance suggest that Emma Sleep GmbH is injecting itself into the day-to-day running of Emma Sleep AU’s business.

    It is true that Dr Schmoltzi and Mr Müller are both directors of Bettzeit as well as the principal directors of Emma Sleep GmbH. However, common directorships do not establish agency, by themselves: see Hillside at [156]. And at least Dr Schmoltzi’s emails (in the email chains provided to the Court) consistently identify him in his role as CEO of Emma Sleep GmbH: see, for example, the email chains from 1 August 2022, 23 to 24 March 2020, and 6 to 7 October 2021, summarised in [73](1) and (4), and [75] above.

137    Conclusion – Emma Sleep GmbH not liable under s 139B(2): For these reasons, the making of the impugned representations by Emma Sleep AU cannot be attributed to Emma Sleep GmbH under s 139B(2)(a) or (b)(i) of the CCA. Given the requirements in paras (a) and (b)(i) of s 139B(2) are not met in respect of Emma Sleep GmbH, it is not necessary to consider whether the impugned conduct was “on behalf of” Emma Sleep GmbH.

138    Emma Sleep GmbH liability as principal contravener? The final issue is whether Emma Sleep GmbH is liable as a principal contravener for the making of the impugned representations by Emma Sleep AU. The ACCC’s submissions did not clearly articulate the matters that were said to give rise to Emma Sleep GmbH’s liability as a principal, as distinct from the matters that were said to give rise to liability under s 139B(2) of the CCA. As a general comment, however, in a case like the present, if the evidence does not establish liability under s 139B(2) (which extends the liability of corporate entities beyond the common law position), it is unlikely that the same evidence would establish that the parent entity is liable as a principal contravener.

139    Here, the matters relied on by the ACCC (set out above), whether taken individually or together, do not establish that Emma Sleep GmbH is liable as a principal contravener for the impugned representations.

    It is true that executives from Emma Sleep GmbH (including Dr Schmoltzi and Mr Müller) provided advice and guidance at a strategy level to Country Team Australia. However, as concluded above, none of that advice amounted to a “direction” in respect of the impugned representations: see [131]-[134] above. Nor could this advice be seen as Emma Sleep GmbH itself being sufficiently involved in the making of the impugned representations to be liable as a principal contravener.

    Similarly, the various factors said by the ACCC to establish a relationship of agency (summarised in [136] above) do not establish any liability of Emma Sleep GmbH as a principal contravener either.

140    Conclusion – Emma Sleep GmbH is not liable: For these reasons, I find that Emma Sleep GmbH is not liable for the impugned representations made by Emma Sleep AU, whether as a principal contravener or through the operation of s 139B(2) of the CCA.

F.    CONCLUSIONS

141    For these reasons, I have concluded that Bettzeit is liable for the impugned representations (both as a principal contravener and through s 139B(2)(b)(i) of the CCA), but that Emma Sleep GmbH is not. I will list the matter for case management on a date to be fixed. There will need to be a hearing in relation to relief, including pecuniary penalties. I will hear from the parties at the case management hearing as to whether declarations should be made at this stage or after the further hearing.

Associate:

Dated:    16 June 2025