Australian Competition and Consumer Commission v Fewstone Pty Ltd [2025] FCA 1636 | Case summary

Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13

Australian Competition and Consumer Commission v Fewstone Pty Ltd [2025] FCA 1636 | Case summary | Zoe

[54]

Notifications and warnings concerning the Mandatory Standards were also given to individual City Beach employees by regulators other than the ACCC between September 2022 and October 2023 on three occasions.
On 15 September 2022, NSW Fair Trading issued a letter to the regional manager of a City Beach store in Tuggerah, New South Wales (15 September letter). The 15 September letter was addressed to the directors of City Beach but was not sent to the registered office of City Beach.
The 15 September letter contained a formal warning to the Tuggerah store that one of its products did not comply with the Information Standard. In response, the employees of the Tuggerah store removed all stock of the identified non-compliant product from their store, but did not notify senior management of their receipt of the 15 September letter nor take any action to ensure future orders of the product identified in the 15 September letter were not placed on the store floor or sold to consumers.
On 1 December 2022, NSW Fair Trading issued a letter to a City Beach store in Charlestown, New South Wales (1 December letter). The 1 December letter was addressed and emailed to the Head of Commercial and Compliance of City Beach. It stated that NSW Fair Trading had carried out an inspection of the Charlestown store and had identified that certain button battery products which had been sold were non-compliant with the Information Standard. It noted that the Charlestown store had subsequently represented that it would remove the identified products from sale and stated that NSW Fair Trading was issuing a formal warning to the Charlestown store.
In response, the Charlestown store worked in conjunction with the member of the buying team who was responsible for purchasing the identified products to remove the identified products from the store and to notify the members of the buying team about the existence of legislative requirements relating to the sale of button battery products. However, the 1 December letter was never brought to the attention of the City Beach directors.
On 6 October 2023, Queensland Fair Trading issued an email to a member of the buying team in relation to an inspection carried out at a City Beach store in Queen Street, Brisbane, Queensland (6 October email). The 6 October email stated that the inspection had identified that one product sold at the Queen Street store was non-compliant with the Information Standard and requested that all stock of that product be removed from store floors and quarantined. It also suggested that City Beach check all other products that contain button batteries to ensure compliance with the Mandatory Standards and provided directions on how to ensure compliance with the Information Standard.
As set out below, by this date, the ACCC had already contacted City Beach's head office in relation to City Beach's compliance and the commencement of an ACCC investigation. Consequently, City Beach sent an email in response which confirmed that City Beach had already identified that the product referenced in the 6 October email was non-compliant with the Mandatory Standards and had issued immediate directions to all City Beach stores to remove the relevant products. A copy of the direction issued was provided to Queensland Fair Trading.
However, the manager in charge of the Queen Street store failed to action City Beach's direction to remove the product.

[55]

On 30 August 2023, the ACCC first contacted City Beach by way of a letter addressed to City Beach's head office (30 August letter). The 30 August letter outlined the ACCC's concerns about City Beach's potential non-compliance with the Mandatory Standards. The letter requested that City Beach conduct a risk assessment of its products and advise the ACCC of the outcome and any steps that City Beach planned to take to reduce the safety risk posed. The letter also requested that City Beach take steps to ensure that its products and their packaging comply with the Mandatory Standards, and conduct a voluntary recall by the online form linked in the ACCC's letter where they did not comply.
This letter was the first time that the senior management of City Beach became aware of the existence of the Mandatory Standards, the application of the Mandatory Standards, or City Beach's obligation to comply with the Mandatory Standards.
In response, City Beach commenced reviewing its compliance with the Mandatory Standards, obtained legal representation to assist it and commenced action to comply with and respond to the ACCC's requests for information.
On 14 September 2023, City Beach's Head of Commercial and Compliance responded to the 30 August letter providing details of the compliance status of the listed products and the remediation steps being taken by City Beach. The response also outlined the further steps that City Beach would be taking, including to conduct a full assessment of all products that could contain button batteries, auditing of purchase orders, and updates to City Beach's "Product Information Management" system.
On 27 October 2023, the ACCC sent a letter to City Beach's head office and emailed it to City Beach's Head of Commercial and Compliance. The letter reiterated the ACCC's concerns about City Beach's non-compliance and requested that City Beach provide further information and documents. It stated that the ACCC required City Beach to take immediate action to address non-compliance, including by conducting a voluntary recall, and provided a link to the ACCC's recall guidelines.
On 21 November 2023, City Beach provided a substantive response to the ACCC letters. City Beach:

[60]

On 21 February 2024, the ACCC issued a letter to City Beach requesting the provision of further information and documentation. City Beach responded on 6 March 2024 and provided, to the extent which it was able, the information and documentation requested by the ACCC.
On 28 June 2024, the ACCC served upon City Beach a notice issued under ss 155(a) and (b) of the CCA (First Notice).
On 26 July 2024, City Beach submitted its response to the First Notice. It also discovered the existence of two products which had previously been sold by City Beach which had not been identified by City Beach to the ACCC as being potentially non-compliant with the Mandatory Standards (which were defined by the parties as the June products). This was also communicated to the ACCC.
In response, the ACCC requested City Beach to provide reasons why the June products were not identified earlier, and to file a supplementary response to the First Notice which included information relating to the June Products.
On 13 August 2024, City Beach provided a letter to the ACCC detailing why it had not identified the existence of the June products prior to submitting its response to the First Notice. Without being exhaustive, this letter stated that the June products were not identified earlier owing to the fact that City Beach had neither ordered nor stocked either of the June products from mid-2023 onwards and it did not have internal reporting that allowed it to accurately ascertain whether its previously offered (but since discontinued) products contained or may have contained button batteries.
On 16 August 2024, City Beach provided the ACCC with its supplementary response to the First Notice and updated its voluntary recall to include the June products.
On 6 December 2024, the ACCC served upon City Beach a further notice issued under ss 155(a) and (b) of the CCA (Second Notice).
On 28 January 2025, City Beach responded to the Second Notice. The response stated that City Beach had identified four additional products (which were defined by the parties as the January products) which had been acquired, offered for supply and supplied by City Beach between December 2022 and March 2024 and were non-compliant with the Information Standard. City Beach stated that it had been unable to previously identify the January products for the same reasons as the June products.
The 28 January 2025 response by City Beach also identified that, despite City Beach both issuing various store-wide directions to quarantine and cease all sales of non-compliant products and implementing a systems block designed to prevent the sale of non-compliant products, 18 non-compliant products had been sold to consumers following the commencement of City Beach's voluntary recall (post-recall products). The post-recall product sales involved 16 different products, as two of those products were sold twice. The last date of supply of the post-recall products was 24 October 2024. City Beach further said that the sale of the post-recall products appeared to have occurred as a result of certain individual City Beach stores failing to comply with City Beach's directions concerning the non-compliant products.
On 4 February 2025, City Beach updated its voluntary recall to encompass the January products.
On 6 February 2025, the ACCC issued a letter to City Beach which requested (inter alia) statements to be provided by each of City Beach's directors which detailed the steps that City Beach had taken to (a) ensure City Beach had identified all products it had offered for sale and sold which were not compliant with the Mandatory Standards and (b) ensure City Beach would not engage in further sales of non-compliant products.
On 24 February 2025, City Beach responded with the information requested by the ACCC. The letter also stated that following further investigations carried out by City Beach, it appeared that the sales of the post-recall products were also enabled by a software error which served to partially nullify the point-of-sale systems' block which City Beach had implemented to prevent the occurrence of such sales. City Beach further said that this software error had since been rectified.

[75]

Following the decision of the High Court in Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13, it is well-established that the primary purpose of civil penalties is specific deterrence in respect of the actual contravener, and general deterrence of others who may be disposed to engage in similar conduct: Pattinson at [10], [15]-[19] (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ). See also viagogo AG v Australian Competition and Consumer Commission [2022] FCAFC 87 at [149] (Yates, Abraham and Cheeseman JJ); Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25; [2016] FCAFC 181 at [44] (Jagot, Yates and Bromwich JJ).
Therefore, in seeking to ensure compliance, the penalty imposed must not be so low as to be regarded by the "offender or others as an acceptable cost of doing business", so that it will deter them from "the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention": Pattinson at [17], [40]-[41]; Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249; [2012] FCAFC 20 at [62] (Keane CJ, Finn and Gilmour JJ).
City Beach submits that the approach in Singtel is not applicable because, unlike the contraventions in that case, City Beach's contraventions were not "offences of calculation" which were engaged in to generate sales. However, the observation in Singtel is not just directed at the contravener, but also at "others" (being other than the contravener), reinforcing the need for general deterrence and the promotion of a public interest in compliance.
Insistence upon the deterrent quality of a penalty must not be so high as to be oppressive: Pattinson at [40]. Therefore, the penalty to be imposed must be proportionate, in the sense that it strikes a balance between deterrence and oppressive severity: Reckitt Benckiser at [152].
Importantly, in cases that involve the breach of provisions relating to safety standards intended to be used by infants and young children, deterrence (both specific and general) must be given significant weight: see Australian Competition and Consumer Commission v Decathlon (Australia) Pty Ltd [2021] FCA 964 (Nicholas J) at [28]; Australian Competition and Consumer Commission v Online Dealz Pty Ltd [2016] FCA 732 at [251]-[253] (Markovic J).

[90]

Admissions to liability that are accepted by the regulator in full discharge of the contraventions alleged in an originating application are always going to be an important consideration in determining the final pecuniary penalty to be imposed. They are relevant both to specific and general deterrence.

The specific deterrence rationale for giving discounts for admissions of liability is that they are often one of the most potent indications of acceptance of wrongdoing, and therefore the strongest indication of reduced risk of recurrence, and therefore reduced need for deterrence in the penalty imposed. The earlier the admission, the more potent an indicator that is likely to be.

An admission of liability may also be taken to be an indication of contrition, which also goes to the need for specific deterrence. However, that will generally need to be evaluated through the lens of the strength of the regulator's case. It may be that the admissions reflect the inevitability of the outcome. In this case, the FWO's case for proof of the franchise the contraventions was likely to have been compelling. However, while the FWO's case on the state of mind of 85 Degrees was also likely to have been reasonably compelling in light of the past contravening history, success on that front was less certain and therefore some greater weight can be given to admissions in that regard. Where contravenors have previously made admissions, but continued contravening regardless, admissions will also carry less weight as evidence of contrition. Such was the case here.

Such admissions also advance the objectives of general deterrence, by freeing regulator resources to be deployed for other investigations and compliance activities, a point acknowledged in Commonwealth v Fair Work Building Inspectorate [2015] HCA 46; 258 CLR 482 (Agreed Penalties Case) at [108]-[109] (Keane J) and reinforced by the focus on deterrence to the exclusion of proportionality to the seriousness of conduct in Pattinson. Such admissions have the capacity to increase the overall deterrence effect of the work of a regulator, here the FWO. That is because each proceeding that does not need to go to a trial on liability is likely to increase compliance and investigation activities in other cases, increasing the risks of detection, investigation, proceedings being brought successfully and other penalties being imposed to advance deterrence: see the analogous reasoning in the Agreed Penalties Case at [46] (French CJ, Kiefel, Bell, Nettle and Gordon JJ).

I consider it useful to give a general indication of the appropriate approach to be taken in relation to the discounts for cooperation, structured towards the objective of deterrence in the manner already outlined. The particular percentage figures that I indicate below are not of universal application. They are not rigid.

The following is the approach to discounts for cooperation that I have decided to apply to an otherwise appropriate penalty in this case, and perhaps to future cases, each of which is predicated upon the regulator accepting the admission as being in full satisfaction of the contraventions alleged in the originating application and any associated concise statement or statement of claim:

[94]

City Beach submits that comparable cases may give some broad guidance to the appropriate penalty to be applied, citing Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) (2018) 260 FCR 68; [2018] FCAFC 53 at [69] (Allsop CJ, Davies and Wigney JJ). In particular, City Beach seeks to rely upon Decathlon as a case which it says is closely analogous to this one.
However, the decision of Decathlon is not an appropriate comparable case. While it involved contraventions of the ACL in connection with the offer for supply of products which did not comply with relevant safety standards over a three-year period, the quantity of products sold in that case (being 432: see [32]) differs significantly from the quantity of products sold in this case (being more than 50,000). Most of the contraventions took place when the maximum penalty was $10 million, rather than the current $50 million, with the balance taking place when the maximum penalty under s 224(3A)(a) for a single contravention was $1.1 million. The contravener was a relatively new entrant into the Australian market which had experienced losses for each year that it sold the contravening products (see [52]-[53]) and the relevant products may have complied with European safety standards (see [71]).
Taking these and other matters into account, Nicholas J imposed a penalty of $1.5 million. His Honour placed particular weight on the fact that general deterrence was a significant consideration and that the legislature's substantial increase in the maximum penalty from $1.1 million to $10 million after 1 September 2018 demonstrated a legislative intention that "non-compliance with mandatory safety standards, especially in relation to products that are to be supplied for use by children, will in appropriate cases attract significant penalties": see [73].
As the ACCC submits, a more appropriate comparable case is that of Australian Competition and Consumer Commission v Mercedes-Benz Australia/Pacific Pty Ltd (2022) 163 ACSR 645; [2022] FCA 1059 (Middleton J) which concerned the imposition of pecuniary penalties on a respondent which admitted that it had failed to comply with a compulsory recall notice and contravened s 127(1) of the ACL. On 27 occasions, the respondent made statements to customers that failed to comply with its obligations to use "attention-capturing, high-impact language" as its call centre workers stated that the recall was only being undertaken as a precaution and that a particular type of airbag that precipitated the recall in other manufacturers' vehicles had not had any faults or caused any accidents, injuries or deaths: see [19]-[21].
No harm was caused to these consumers as the relevant vehicles were recalled and the affected airbags were replaced: see [47]. Further, the respondent obtained no financial or other form of gain from the contraventions: see [64]. The contraventions amounted to 27 interactions out of over 52,000 interactions, but came following the respondent having previously entered an enforceable undertaking pursuant to s 87B of the CCA: see [45]-[46]. These contraventions also occurred over the period in which the the maximum penalty for a single contravention under s 224(3A)(a) increased from $1.1 million to $10 million, with six contraventions occurring prior to 1 September 2018 and the balance occurring after. The maximum penalty was, accordingly, $216.6 million. In these circumstances, Middleton J accepted a joint submission (the respondent having cooperated and agreed to findings on liability and a penalty) that a pecuniary penalty in the sum of $12.5 million was appropriate.
By way of comparison, there was a risk of serious injury or death to the occupants of 27 vehicles in Mercedes-Benz (as a result of not having their airbags replaced) and a risk of serious injury or death to more than 50,000 young children in this case. The contravener in both scenarios received little or no financial benefit from the contraventions, and they each cooperated with the ACCC, including making admissions on liability. The penalty sought in this case by the ACCC is $14 million in circumstances where the maximum penalty for a single contravention at the time of most of the contraventions was $50 million. In Mercedes-Benz, the maximum penalty for a single contravention at the time of most of the contraventions was $10 million, and the penalty imposed by the Court was $12.5 million. Thus, the outcome in Mercedes-Benz provides strong support for the quantum of penalty sought by the ACCC.

[108]

The ACCC accepts that the conduct of City Beach was not deliberate in the sense that it did not involve senior management making a deliberate decision to contravene the law as the directors of City Beach were ignorant of the existence of the Mandatory Standards. However, their ignorance is astonishing having regard to the publicised dangers of button batteries, that the ACCC had issued media releases about infringement notices served on suppliers of non-compliant products, and the Mandatory Standards were subject to an 18-month transition period since 21 December 2020.
The contraventions occurred over an extensive period in which City Beach ought to have known of the existence of the Mandatory Standards by reason of it being informed by its suppliers and by it being warned on three occasions by State-based regulators of its failure to comply with the Mandatory Standards. City Beach relies on the fact that each contact was dealt with by the individual City Beach buyer or regional store manager, and that its senior management was not made aware of the correspondence. This does not assist City Beach but rather highlights City Beach's failure to implement any basic corporate compliance, and for senior management to exercise proper supervision and control over its stores and employees.
Once City Beach became aware of the Mandatory Standards and the concerns raised by the ACCC in August 2023, it did not take steps to voluntarily recall products until told by the ACCC on 12 February 2024 that it expected such a recall to occur. That is so despite the letter which was sent by the ACCC on 30 August 2023 including a request that City Beach submit a voluntary recall via the online form linked in that letter (being an agreed fact). Further, City Beach identified in its letter to the ACCC on 21 November 2023 that it ought to recall the products which it had sold and which failed to comply with the Mandatory Standards.
Mr Elliott gave evidence in cross-examination that the voluntary recall was not undertaken immediately as City Beach was waiting for further information and permission from the ACCC before it commenced the recall.
In circumstances where City Beach was provided with the relevant link on 30 August 2023, this explanation does not assist City Beach which appears, even now, to not appreciate the gravity of the risk to children which arose from its unlawful conduct. The lack of urgency in seeking to recall the non-compliant products is condemnable.
Although City Beach advised the ACCC on 21 November 2023 that it had issued directions to all City Beach stores to remove all non-compliant products, 41 product lines that failed to comply with the Safety Standard and 43 product lines that failed to comply with the Information Standard were sold after that date.
Despite City Beach commencing a voluntary recall on 1 March 2024, City Beach sold 14 product lines after this date that failed to comply with the Safety Standard and 11 product lines that failed to comply with the Information Standard, despite having issued a recall notice for those product lines. Products in these product lines continued to be supplied by City Beach until 24 October 2024, and one product was supplied in the August 2025 sale.
For its part, City Beach submits that the contraventions that occurred after City Beach commenced the voluntary recall were from a combination of human error, technological errors in its point-of-sale block and unforeseen errors in its information system, which City Beach rectified promptly once detected.
Although I accept that City Beach did not intend to continue contravening the Mandatory Standards by way of the sales of the June products, the January products and the August 2025 sale, and took steps to remedy the continuing contraventions once detected, the fact that the continuing contraventions occurred is of real concern, and supports a higher penalty being imposed on City Beach for the purpose of specific deterrence.

[109]

As City Beach accepts, the contraventions arose out of senior management's failure to implement appropriate systems that would ensure that City Beach was meeting its responsibilities under the ACL.
Moreover, the contraventions were perpetuated as a consequence of a failure to implement any form of compliance program for middle management to escalate their awareness of the Mandatory Standards, despite being notified of their application on more than one occasion. This is entirely unsatisfactory and demonstrates that City Beach's culture was not one of proactive compliance. City Beach admits that its approach to compliance with the Mandatory Standards was "ill-informed and inadequate".
City Beach submits that it has taken substantial action since its first contact with the ACCC on 30 August 2023 to ensure that its systems and practices promote compliance with the Mandatory Standards and other applicable mandatory standards, and submits that this supports a lower penalty being imposed.
The evidence relating to City Beach's compliance efforts is contained in two affidavits of Mr Elliott, which were affirmed on 10 October 2025 (Elliott 1) and 21 November 2025 (Elliott 2). Mr Elliott was also called by City Beach as a witness at the penalty hearing.
In Elliott 1, Mr Elliott outlined that on 27 October 2023, a training guide was issued to members of the buying team and production department which focussed on compliance with the Mandatory Standards. An educational video was also issued to all City Beach employees in early 2024 which concerned ongoing compliance with Mandatory Standards.
Since October 2023, it has been City Beach policy that members of the buying team obtain testing certificates from manufacturers or suppliers, which are uploaded to City Beach's system, and that City Beach does not offer button battery products for sale where it does not have testing certificate compliance on record.
An updated audit tool for regional managers was also implemented by City Beach in December 2024, which includes a requirement for regional managers to check legislative and regulatory directives which apply to their store. It also includes a function for regional managers to confirm the removal of all stock which is the subject of an active recall by City Beach.
In Elliott 2, Mr Elliott gave evidence that "at various times since the ACCC contact" he discussed with the directors of City Beach that City Beach had not sufficiently invested in compliance measures. Mr Elliott gave evidence that a director of City Beach did not want to employ an internal compliance officer but wanted to investigate "external options" for assisting with City Beach's compliance procedures.
However, an external compliance provider was not engaged until 18 June 2025, when Mr Elliott engaged Black White Engineering Solutions Compliance and Consulting (BWES) to provide advice "in respect of product compliance and ensuring City Beach's products are compliant with the Button Battery Standards, and other standards and laws applicable to products supplied by City Beach, on an ongoing basis". On 7 July 2025, BWES was requested to provide a document which outlined the mandatory standards which apply to City Beach and the steps to be taken to ensure that City Beach's products are compliant, and BWES provided that document on 1 August 2025.
Although City Beach has subsequently made attempts to hire an internal compliance manager, these efforts did not commence until 16 October 2025, were unsuccessful, and were aborted on 7 November 2025.
City Beach relies on the fact that it has engaged legal representation since August 2023 to provide it with advice on its compliance obligations, and that since 20 November 2025, City Beach has engaged a law firm to develop a procedure to ensure City Beach's ongoing compliance, which includes a lawyer being present in City Beach's head office for three days per week until the procedures have been effectively implemented.
However, the letter of engagement issued by the law firm and dated 20 November 2025 states that stage 1 of the work to be performed by the law firm is the development of "policies, processes, procedures and checklists" to ensure City Beach's ongoing compliance. Mr Elliott accepted at the penalty hearing that this was because such policies had not been completed or implemented to date.
The law firm was also engaged to provide annual seminars to all City Beach employees and directors dealing with compliance with mandatory safety standards. However, City Beach did not request this until 8 August 2025, and the first seminar was only delivered on 21 November 2025.
It was not explained why these steps to facilitate compliance with City Beach's legal obligations were not pursued until two years after the ACCC first contacted City Beach and City Beach's directors became aware of City Beach's obligations to comply with the Mandatory Standards. Therefore, while I accept that internal procedures and compliance information were provided to City Beach's employees, some of which were undertaken promptly after the ACCC raised its concerns, and that there is evidence of City Beach attempting to embed a culture of compliance since August 2023, there has also been a lack of urgency in City Beach's response which belies its acceptance of the seriousness of the contravening conduct.
Furthermore, there appears to remain a lack of accountability within City Beach for compliance. At the penalty hearing, Mr Elliott was unable to identify the person within the senior management of City Beach who has overall responsibility for the company's compliance, including compliance by the buying team:

[115]

Both parties accepted that it was appropriate for me to fix a single pecuniary penalty in respect of all admitted contraventions.
In terms of quantification of the penalty, the ACCC submits that the appropriate penalty is $14 million. City Beach submits that the ACCC's proposed penalty is "excessive and oppressive" and contends that the appropriate penalty for the admitted contraventions is $4.5 million with a 30% discount in recognition of its early admissions and co-operation, resulting in a figure of $3.15 million.
In conducting the exercise of instinctive synthesis, each relevant factor must be weighed. In this case, there are several critical aspects deserving of substantial weight.
First, this is a case in which general deterrence looms large as the most significant factor and it is important that any pecuniary penalty is more than what would be an acceptable "cost of doing business" if it is to deter potential contraveners "from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention": Singtel at [62]-[63].
Relatedly, the danger to children of the products sold and offered for supply is such that they have been recognised as being deserving of specific regulation in the Mandatory Standards. Those who supply such products need to be put on notice that ignorance of the Mandatory Standards will not suffice as an excuse.
Secondly, given the extensive nature of the conduct over about two years, the contraventions in this case are very serious. They involved the sale of over 54,000 products that failed to comply with the Safety Standards - many of which were marketed for or targeted at children. Similarly, over 56,000 products were sold that failed to comply with the Information Standard - many of which were also marketed or intended for children.
Given that number of contraventions, the theoretical maximum penalty is far beyond the range of what is required to secure deterrence and would be oppressive. However, just because the maximum penalty does not provide a useful yardstick, it would be an error to assess the need for deterrence, and hence the appropriate penalty, based only on the extent of the benefit obtained, which the evidence showed was not significant in this case.
The steady increase in the penalty made available by the legislature to the Court to secure deterrence, as well as the structure of s 224(3A) itself, indicates that the penalty is not tethered to the extent of the contravener's gain.
Thirdly, this is a case with several aggravating factors. Those include the absence of any systems being in place prior to the detection of the contraventions to ensure compliance with the ACL, the failure of staff to escalate serious compliance issues to senior management when those were notified to City Beach, the continued sale of products after the ACCC raised its concerns with senior management, and the continued sale of products after the delayed issuing of recall notices. These incidents demonstrated pervasive failures by City Beach to inform itself of its obligations under the ACL and to comply with its obligations as a retailer of products which may cause serious harm. They also demonstrate a lack of appreciation by City Beach of the manner in which its conduct has put children at risk of physical harm.
Fourthly, while co-operation is commendable and relevant, it does not, in this case, demonstrate contrition because the ACCC's case on liability was compelling. Nor does it demonstrate a willingness on City Beach's part to remediate its internal corporate culture to a satisfactory standard having regard to the events which transpired after August 2023. In short, the penalty proposed by the ACCC will achieve the objective of specific deterrence in a way that the penalty proposed by City Beach would not.
Fifthly, City Beach is a substantial corporation with significant turnover and profits. Its failure to implement compliance programs prior to detection indicates an ongoing failure of corporate compliance and a continuing lack of regard for its obligations under the ACL. It is evident from the lack of compliance programs and processes, and the directors' ignorance of the Mandatory Standards, that City Beach did not direct resources to the creation or implementation of a compliance program.
For these reasons, the appropriate penalty to be imposed for City Beach's contraventions is $14 million. This figure is less than 1.5 times the maximum penalty for a single contravention for the period until 10 November 2022, and less than 30% of the maximum penalty for a single contravention after that date: see s 224(3A)(a) of the ACL.
While this penalty equates to more than half of City Beach's average annual profit, it does not reach a level of undue severity or oppressiveness having regard to the importance of ensuring that City Beach and other retailers are properly deterred from neglecting to comply with the requirements of the Mandatory Standards so as to ensure the safety of children.
In my view, it appropriately balances the various factors, particularly having regard to the seriousness of the contraventions and to the risk created by those contraventions. I am also satisfied that, having regard to the totality principle, the penalty of $14 million is just and appropriate.

[116]

The ACCC sought additional relief in the form of declarations, an injunction restraining City Beach from engaging in future contraventions of the Mandatory Standards, an order requiring City Beach to conduct certain compliance measures and an order requiring City Beach to commercially advertise the recall of the non-compliant products.
There was agreement between the parties in relation to the form of these orders, and the parties agreed that they should be made at the penalty hearing on 9 December 2025.
These are my reasons for making those orders.
First, the contraventions which are the subject of the declaratory relief sought are admitted by City Beach and City Beach consents to the declarations being made, being the party which has a proper interest in opposing declaratory relief.
Secondly, it is appropriate that the injunction be issued for the purposes of preventing future non-compliance by City Beach with the Mandatory Standards. Such orders are specifically contemplated by the ACL and the jurisdiction to make the orders arises by reason of the contraventions. The fact that City Beach's contraventions occurred over an extended period of time and that there were continuing contraventions after City Beach became aware of the non-compliant products renders it appropriate that the injunction be issued.
Thirdly, pursuant to s 246(2)(b) of the ACL, it is appropriate to order that City Beach have its compliance programs reviewed by an independent expert, considering that prior to August 2023, City Beach did not have any processes, procedures or systems designed to promote compliance with the Mandatory Standards. It is also proposed that City Beach be required to obtain annual training for its employees regarding its mandatory obligations under the ACL and I consider that such order is also appropriate in the circumstances.
Finally, pursuant to s 247(2) of the ACL, it is appropriate to make the proposed orders in relation to City Beach advertising the recall of the non-compliant products. This serves to enhance public safety by increasing the likelihood that the voluntary recall will be brought to the attention of consumers, and is important in light of the admitted dangers posed by button batteries.

Australian Competition and Consumer Commission v Fewstone Pty Ltd

At a glance

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Judgment (122 paragraphs)

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Legislation Cited (3)

Cases Cited (11)