62 I start by reminding myself of some well-known general principles relevant to the fixing of pecuniary penalties. What follows is taken from the reasons for judgment of Burchett and Keifel JJ in NW Frozen Foods v Australian Competition and Consumer Commission (1996) 71 FCR 285.
63 First, the effect of the respondent's conduct on the function of markets and other economic effects of the conduct will generally be regarded as a significant matter, and the court is likely to be assisted by views put forward by the Commission, or by experts called on behalf of the parties (at 290). In this case, the Commission put forward no direct evidence as to the effects of the respondents' conduct on the function of the relevant market.
64 Secondly, deterrence (both general and personal) is important in assessing the appropriate penalty. It has been described as a 'principal purpose' of s 76 and a factor of 'particular significance' (see the cases referred to at 293). However, at the same time, it is important that the penalty imposed is not oppressive.
65 Thirdly, cooperation and the implementation of a compliance programme by the contravener is also an important matter in fixing the appropriate penalty. Burchett and Keifel JJ said (at 294):
'Where the Commission established to administer the Act is satisfied that an appropriate programme has been undertaken, or the undertaking of it is proved to the Court, this is the most important matter to take into account on penalty.'
66 Fourthly, the penalties imposed in one case cannot dictate the appropriate penalty in another case. That follows from the fact that the circumstances in two cases are rarely the same or equal.
67 The fifth point is perhaps an observation more than anything else. Burchett and Keifel JJ expressed the view that the penalties imposed by s 76 are not criminal sanctions and their purpose, established now by a long line of cases, is not punishment (at 296-297). Carr J, on the other hand, considered that the question was an open one (at 299).
68 Section 76 identifies four matters which are relevant to the determination of the appropriate pecuniary penalty. They are:
1. the nature and extent of the act or omission;
2. the loss or damage suffered as a result of the act or omission;
3. the circumstances in which the act or omission took place; and
4. whether the contravening company and accessory have been found guilty of previous relevant contraventions.
69 In Trade Practices Commission v CSR Ltd (1991) ATPR 41-076, French J identified other relevant matters as follows:
5. the size of the contravening company;
6. the degree of power it has, as evidenced by its market share and ease of entry into the market;
7. the deliberateness of the contravention and the period over which it extended;
8. whether the contravention arose out of the conduct of senior management or at a lower level;
9. whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programmes and disciplinary or other corrective measures in response to an acknowledged contravention; and
10. whether the company has shown a disposition to cooperate with the authorities responsible for the enforcement of the Act in relation to the contravention.
70 The above matters are not exhaustive of all the relevant circumstances: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (supra) per Burchett and Keifel JJ (at 292). Other factors have also been identified, such as the respondents' financial position and any profit made by the contravening company. A number of the matters overlap and, clearly, the significance or weight to be accorded to any particular matter will depend on the circumstances of the particular case.
71 As to the nature and extent of the acts constituting the contravening conduct, in the case of Pete N Peppa I have found that there were eight acts which contravened s 48 of the Act. Those acts occurred over a period of about 16 months and the conduct culminated in the withholding of supply of Cambur products. In the case of Tabletop and Kitchen, there were four acts which contravened s 48. Those acts occurred over a period of about three-and-a-half years from January 2002 to July 2005, during which time, as a result of the respondents' conduct, Tabletop and Kitchen did not discount Cambur products.
72 As to any loss or damage suffered as a result of the contravening conduct, there are two groups which may have suffered loss or damage and they are the retailers and consumers. There is no precise evidence of loss or damage suffered by either group. As far as retailers are concerned, it was suggested that retailers other than Pete N Peppa or Tabletop and Kitchen may have been induced not to discount. Certainly there is evidence to suggest Mr Caulfield was speaking to other retailers about the price of Cambur products, but I do not think that I could find on the evidence that other retailers suffered loss or did not discount so that they or consumers suffered loss and damage. Mr Milosevic of Pete N Peppa gives some general evidence of loss and damage suffered by Pete N Peppa when he says that the Bamix and Magimix products were the best on the market and Pete N Peppa lost money because they were not selling them and were sending customers to other stores. There is no evidence from Mr Mitchell or Ms Gilbert of Tabletop and Kitchen of the effect of the contravening conduct on the business of Tabletop and Kitchen. I am prepared to assume that some loss was suffered by Pete N Peppa and Tabletop and Kitchen, but I can be no more precise than that. The conduct in each case occurred over a considerable period of time and Bamix and Magimix products were popular in the marketplace. Both businesses sought to discount the products. As far as the effect on consumers is concerned, I am prepared to assume that some loss and damage was caused because consumers could not buy discounted Cambur products from Pete N Peppa and Tabletop and Kitchen.
73 As to the circumstances in which the acts took place, there is no question here of accident or mistake. Neither Mr Jeffs nor Mr Caulfield had any real knowledge of the provisions of the Act at the time of the contravening conduct. Mr Jeffs did not know that the contravening conduct was taking place, but, at the same time, it was accepted by Cambur Industries that he should have exercised greater control over Mr Caulfield's activities.
74 As to whether the respondents have previously been found by the Court to have engaged in similar conduct, I find that neither Cambur Industries nor Mr Caulfield has been found by the Court to have engaged in similar conduct.
75 As to the size of the contravening company, Cambur Industries is a small company.
76 As to the degree of power of Cambur Industries, as evidenced by its market share and ease of entry into the market, I refer to my earlier finding in [14] above. The market share of Cambur Industries in the electrical products market is relatively small. There is no evidence before me which would enable me to make a finding as to the ease of entry into the market.
77 As to the deliberateness of the contravening conduct and the period over which it extended, the conduct was clearly deliberate and it extended over a considerable period of time. Mr Jeffs did not know that the conduct was taking place. Mr Caulfield was engaged in the conduct, but I am satisfied, having regard to all the evidence, that he did not know that what he was doing was in contravention of the Act.
78 As to the issue of whether the contravening conduct arose out of the conduct of senior management or at a lower level, the contravening conduct was carried out by Mr Caulfield, who held a position in the senior management of Cambur Industries. At the same time, it is relevant to note that Cambur Industries is a small company.
79 As to whether the company had a corporate culture conducive to compliance with the Act, I find that at the time of the contravening conduct and prior to that, Cambur Industries had in place no education programmes, disciplinary or other corrective measures for the purposes of compliance with the Act. As I have said, Mr Jeffs and Mr Caulfield had very little knowledge of the provisions of the Act.
80 Since the contravening conduct, Cambur Industries has made considerable efforts to ensure that the company complies with the Act in future. I am satisfied that its efforts, which I describe below, are genuine.
81 After the proceedings were instituted, Mr Jeffs caused a memorandum to be sent to the staff and agents of Cambur Industries advising them of the allegations made against Cambur Industries and that Cambur Industries could only recommend a retail price, and that stockists could advertise the sale of Cambur products for prices below the recommended retail prices.
82 Mr William Gerard Dee is a consultant who provides advice to companies about appropriate compliance systems to ensure they comply with the provisions of the Act. He was, for a time, head of the Commission's compliance unit. His expertise and qualifications are not challenged by the Commission. In January 2006, he was engaged by Cambur Industries to develop a compliance programme. He developed such a programme and that programme has been approved by the company. Mr Jeffs has agreed to be the compliance officer for the company. A training session for staff was held in February 2006. Further training sessions will be held.
83 On 3 March 2006, Mr Jeffs caused Cambur Industries to send a letter to all stockists advising them of the allegations made by the Commission, that they were admitted, and that its conduct was unlawful. It advised stockists that Cambur Industries had implemented a corporate compliance programme and that all stockists were absolutely free to sell Cambur products at prices they determined.
84 I am satisfied that Cambur Industries has taken appropriate steps to ensure compliance with the provisions of the Act in the future.
85 As to whether the respondents have shown a disposition to cooperate with the authorities responsible for the enforcement of the Act in relation to the contravention, I find that, subject to a couple of qualifications, the respondents have cooperated.
86 After a complaint had been made to it, the Commission wrote to Cambur Industries on 20 December 2004 about the alleged contravening conduct. The Commission sought certain documents, which, as I understand it, were provided by the company. The Commission also sought to interview Mr Jeffs and Mr Caulfield, who both attended interviews on 28 January 2005. They were both sent a transcript of the respective interviews, which was in evidence before me and which I have read. I find that during the interview Mr Caulfield did not admit aspects of the contravening conduct and was by no means as frank as he could have been.
87 Thereafter, nothing occurred until 22 September 2005, when the Commission filed and served the Application and Statement of Claim in these proceedings. There followed correspondence between the solicitors for the Commission and the solicitors for the respondents, wherein the latter indicated in general terms that they were prepared to cooperate with the Commission. The respondents filed and served a Defence on 30 November 2005. Some admissions were made in the Defence. However, as to the reason for the alleged withholding of supply of Cambur products to Pete N Peppa, the respondents denied the allegation that Cambur Industries withheld supply of its products for the substantial reason that Pete N Peppa had sold, or was likely to sell, or had advertised, or was likely to advertise, Cambur products at less than prices specified by Cambur Industries. It is unnecessary to set out the details of the pleas in the Defence, but it is fair to say that the suggestion in the Defence is that the reason for the withholding of supply was the failure of Pete N Peppa to comply with the payment terms of Cambur Industries. It should be noted that this was in the face of a plea by the Commission in the Statement of Claim that there was a telephone conversation between Mr Milosevic and Mr Caulfield on 29 October 2004 wherein Mr Caulfield said to Mr Milosevic words to the effect that the decision by Cambur Industries to no longer supply its products to Pete N Peppa was because Pete N Peppa was going into 'discount mode'.
88 On 22 December 2005, the Commission filed and served its affidavits in accordance with orders made by this Court, and those affidavits included an affidavit of Mr Milosevic. The telephone conversation in October 2004 between Mr Milosevic and Mr Caulfield had been recorded and a copy of a transcript of the conversation was an exhibit to Mr Milosevic's affidavit.
89 The respondents filed and served an Amended Defence on 20 February 2006, wherein they admitted that the substantial reasons for withholding supply of Cambur products to Pete N Peppa was as alleged by the Commission. This position had been foreshadowed by the respondents in a letter from their solicitors to the Court dated 2 February 2006 wherein they advised the Court that they would be admitting all of the allegations in the Statement of Claim.
90 By the Amended Defence, the respondents have admitted in substance the allegations made by the Commission, thereby avoiding the need for a trial. The incurring of costs has been avoided, and the Commission and its officers and the Court are free to deal with other matters. Both Mr Jeffs and Mr Caulfield have offered to attend seminars of suppliers and retailers and speak publicly of their conduct in order to assist in the understanding of others of the operation of the provisions of the Act. I accept Mr Caulfield's evidence that he has been very worried by the investigations and court proceedings and that his health has suffered. I accept that he is remorseful for what he has done.
91 As against those matters, Mr Caulfield was not forthcoming during the interview in January 2005, and the allegation as to the reason for withholding supply of Cambur products to Pete N Peppa was not the subject of an admission at the first available opportunity. The respondents' cooperation must be viewed in light of these qualifications.
92 Another matter which has been mentioned in the authorities is the financial position of the respondents and the extent to which they have profited by their conduct. Cambur Industries is a small company and Mr Caulfield's financial position is modest. Both have asked for time to pay the pecuniary penalties which are imposed. Mr Jeffs has given evidence that Cambur Industries did not profit by its conduct, and I accept that evidence. There is no evidence to suggest that Mr Caulfield profited by his conduct.
93 In fixing the pecuniary penalties, I have had regard to the cases to which I was referred. It is important to bear in mind that other cases are no more than a guide and there is an obvious danger in attempting too close a comparison for the purposes of fixing a penalty. In particular, there is a danger in taking a broadly analogous case and the penalty imposed in that case and then adding for circumstances considered more serious, and subtracting for circumstances considered less serious. Bearing those observations in mind, two cases which I have found quite helpful are Australian Competition and Consumer Commission v Dermalogica Pty Ltd (2005) 215 ALR 482 and Australian Competition and Consumer Commission v Westminster Retail Pty Ltd (2005) ATPR 42-084.
94 In my opinion, the appropriate pecuniary penalty in the case of Cambur Industries is $280,000 and the appropriate pecuniary penalty in the case of Mr Caulfield is $32,000. In the case of Cambur Industries, I have reached the figure of $280,000 by fixing a figure of $160,000 in the case of its conduct in relation to Pete N Peppa and a figure of $120,000 in the case of its conduct in relation to Tabletop and Kitchen. In the case of Mr Caulfield, I have reached the figure of $32,000 by fixing a figure of $18,400 in the case of its conduct in relation to Pete N Peppa and a figure of $13,600 in the case of its conduct in relation to Tabletop and Kitchen. A reduction has been made for the respondent's cooperation and admissions. There is no set figure, or indeed range of figures, for the allowance to be made for these matters as each case must very much turn on its own particular facts. In this case, I have made an allowance of about one-fifth of the pecuniary penalties which I would otherwise have considered appropriate.
95 I will give the parties leave to make further submissions as to the time within which the respondents and each of them are to pay the pecuniary penalties which I have imposed.