Australian Competition and Consumer Commission v Harbin Pty Ltd - [2008] FCA 1792 - FCA 2008 case summary — Zoe

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Australian Competition and Consumer Commission v Harbin Pty Ltd

[2008] FCA 1792

Federal Court of Australia|2008-11-28|Before: Finn J

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Source facts

Court

Federal Court of Australia

Decision date

2008-11-28

Before

Finn J

Source

Original judgment source is linked above.

Judgment (14 paragraphs)

[1]

Declares that the respondent has in trade or commerce: (a) engaged in conduct that is misleading or deceptive, or likely to mislead or deceive, in contravention of s 52 of the Act; and (b) in connection with the supply or possible supply of goods or in connection with the promotion of the supply of such goods, made a false or misleading representation with respect to the price of such goods, in contravention of s 53(e) of the Act, By causing to be published in The Advertiser newspaper on 29 March 2007 an advertisement which advertised for sale at the three Ray's Outdoors Stores in South Australia during the period 29 March 2007 to 31 March 2007, amongst other products, a Rio Grand Barbecue at a sale price of $99.00 and showing a strikethrough price of $299.99 thereby representing that: (c) the price ordinary customers would have paid in Harbin's retail stores in South Australia to purchase the Rio Grand Barbecue immediately prior to 29 March 2007 was $299.99 when, contrary to such representation, the price ordinary customers would have paid immediately prior to 29 March 2007 was less than $299.99; and (d) Harbin was offering the Rio Grand Barbecue for sale to ordinary customers in Ray's Outdoors Stores at a saving of $200.99 for the period 29 March 2007 to 31 March 2007 when, contrary to such representation, Harbin was offering the Rio Grand Barbecue at a saving of less than $200.99.
Orders that Harbin cause to be published at its own expense in the Thursday edition of The Advertiser newspaper within 28 days of the date of this Order, an advertisement, in the form of Appendix 1 and: (a) of a size no less than 12 cm wide by 16 cm long; (b) with a bold type heading in at least 18 point type and the body of the notice in a type not less than 10 point, Times New Roman font and right and left justified; and (c) appearing within the first 10 pages of the newspaper.
Orders that Harbin pay the applicant's costs of the application.
Directs that a copy of these orders and the reasons for judgment be served on the auditor appointed by Harbin to audit annually its Compliance Program pursuant to its undertaking accepted by the applicant on 21 September 2004, and that the ACCC be given written notification of that service within 14 days of such service. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA

[4]

The Factual Setting 4 I begin with an abbreviated version of the parties' Statement of Agreed Facts. 5 (i) Harbin, trading as "Ray's Outdoors", carries on a business as a retailer of outdoor and camping goods at approximately 37 retail stores throughout Victoria, New South Wales, South Australia and Queensland. At the relevant time it had three such stores in South Australia, one of which, at Elizabeth, was a new store. 6 (ii) During the period 29 March to 31 March 2007, Harbin conducted an "Elizabeth Opening Sale" to promote the new store. On 29 March it caused the publication of a full page advertisement in the Advertiser newspaper promoting the sale. The Advertisement contained amongst other things an image of a barbecue adjacent to which were (a) the words "Rio Grand BBQ" in black text; (b) the characters $299.99 in black text struck through with a red line ("the Strikethrough Price"); and (c) the characters $99 in red text ("the Sale Price"). 7 (iii) By so doing Harbin represented that the price ordinary customers would have paid in Ray's Outdoors stores to purchase the barbecue immediately prior to 29 March 2007 was the Strikethrough Price ("The Price Representation"); and that it was offering the barbecue for sale to ordinary customers in Ray's Outdoors Stores at a saving of $200.99 for the duration of the sale ("the Saving Representation"). 8 (iv) It is agreed for the purposes of this proceeding that ordinary customers are members of the public other than persons who, when purchasing a product at Ray's Outdoors Store, qualify for a discount by reason of a circumstance that is additional to the purchase of a product. 9 (v) Contrary to the Price Representation, the price ordinary customers would have paid in Ray's Outdoors Stores to purchase the barbecue immediately prior to 29 March was less than the Strikethrough Price. And prior to that date, ordinary customers last paid the Strikethrough Price on 15 October 2006. 10 (vi) Contrary to the Saving Representation, Harbin was offering the barbecue for sale to ordinary customers at a saving of less than $200.99 for the duration of the sale. 11 (vii) Harbin admits that by reason of the matters referred to in paragraphs (i) to (vi) above it has, in trade or commerce: · engaged in conduct that is misleading or deceptive or is likely to mislead or deceive, in contravention of s 52 of the TP Act; and · in connection with the supply or possibly supply of goods or in connection with the promotion of the supply of goods, made false or misleading representations with respect to the price of goods, in contravention of s 53(e) of the Act, by making the Price Representation and the Saving Representation. 12 The following are other agreed facts said to be relevant to relief. 13 (viii) In 2004, the Commission conducted an investigation of Harbin regarding its failure to correctly label elastic luggage straps it offered for sale at "Ray's Outdoors Stores" in Victoria in compliance with the Trade Practices (Consumer Product Safety Standards) Amendment Regulation 1999 (No 1) (Regulation), a mandatory consumer product safety standard applicable to elastic luggage straps. On 21 September 2004, Harbin offered and the Commission accepted an undertaking pursuant to s 87B of the Act from Harbin to (inter alia) use its best endeavours to implement an upgraded corporate trade practices compliance program in accordance with Annexure C to that Undertaking. The scope of the compliance program covers Part V of the Act (including ss 52 and 53(e) of the Act). I comment further on the undertaking below. 14 (ix) On 5 July 2007, the Commission raised with Harbin its concern that the Strikethrough Price in the Advertisement was higher than the price at which the barbecue had been offered for sale immediately prior to 29 March 2007. On 10 July 2007, Harbin acknowledged and agreed with the Commission that it had not offered the barbecue for sale at the Strikethrough Price immediately prior to 29 March 2007. 15 (x) At the time of publication of the Advertisement, a range of people within Harbin were responsible for the creation, sign-off and publication of the Advertisement including procurement personnel and the advertising department. Accordingly, no one officer or employee of Harbin took ultimate responsibility for the pricing representations in the Advertisement. Harbin accepts there was a deficiency in this regard with respect to the Advertisement. 16 (xi) The Commission issued proceedings on 12 December 2007. Upon the issue of proceedings, Harbin took steps towards resolving the proceedings, including by: · making the admissions described above; and · cooperating with the Commission, including by preparing this statement of agreed facts. The proceedings are likely to be shortened as a result of Harbin's steps referred to in the preceding paragraph.

[5]

Additional factual material 17 In its 2004 undertaking to the ACCC, Harbin agreed to use its best endeavours to implement an upgraded corporate trade practices compliance program, "with a focus on prescribed product safety standards". In respect of that program, it undertook to implement the arrangements outlined in an annexure to the undertaking. The annexure required, amongst other things, that: · the compliance program was to inform the officers, employees, representatives and agents of Harbin who perform duties in Australia of the application of the Trade Practices Act 1974, with specific regard to conduct that may breach Part V of the Act, to Harbin's business; · to ensure that the compliance program complied with each of the twelve requirements specified in the undertaking, Harbin retain an independent compliance professional with expertise in trade practices law, for the purpose of assisting in developing the compliance program. · Harbin, at its own expense and for the purpose of ensuring that it maintained and continued to implement the compliance program, cause annual audits of the compliance program to be carried out in accordance with specified requirements which included the engagement of an independent compliance professional with expertise in trade practices law to conduct the audits. · Harbin was to implement promptly and with due diligence the recommendations which the Auditor might make which were reasonably necessary to ensure that Harbin maintained and continued to implement the compliance program in accordance with the requirements of the undertaking. · Harbin was, at its own expense, to cause to be produced and provided to the ACCC copies of each of the Audit Reports within 14 days of Harbin receiving them. 18 I note in passing that there is a body of opinion in decisions of this Court which questions both whether there is legislative authority for the Court acting under s 86C of the TP Act to order a respondent to instruct an expert to audit a compliance program and to deliver to the ACCC audit reports: see BMW Australia Ltd v Australian Competition and Consumer Commission (2004) 207 ALR 452 at [42]-[52]; Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329 at [50]; or, if there be some other source of power so to do: see BMW Australia at [51]; whether it would ordinarily be appropriate to make such orders: see Visy Paper (No 2) at [56]. I share these doubts. 19 The additional evidence that has been put on by both parties has not added significantly to the factors that might inform the exercise of my discretion. The only person who gave oral evidence was Tom Vukovic. He is the Chief Executive Officer of Harbin who joined the company about four months after the publication of the offending advertisement. While he could, and did, give evidence about the compliance procedures that were in place at the time, he could not illuminate how the misleading advertisement came into existence. No one who was employed by the company at that time gave evidence. All that I have by way of explanation is the agreed fact that there was no person who had ultimate responsibility for pricing representations and, seemingly, that human error was the cause of the inaccuracy. 20 The ACCC has challenged the adequacy of the steps that have been taken by Mr Vukovic to improve Harbin's compliance regime (criticism was levelled both at its compliance documentation as it related to strikethrough pricing and at Harbin's inquiries as to circumstances surrounding the making of the Advertisement especially in relation to an only now disclosed, almost contemporaneous, Easter sale). Nonetheless, it is the case that remedial steps have been taken, prompted perhaps by the ACCC's importuning. It is unnecessary that I detail the change here given that I am satisfied that they represent a genuine response to the compliance problem exposed in this proceeding and, in particular, the absence of a clear line of responsibility for pricing representations. 21 I would also add that no evidence has been advanced by the ACCC that Harbin's s 87B undertaking has not been complied with in full.

[8]

An Injunction 25 It is well accepted that an injunction is a discretionary remedy and will not be awarded as of course on proof of a contravention of the TP Act: BMW Australia at [35]-[36]. As the Full Court observed in Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liquidation) (2007) 161 FCR 513 at [111]: Many contraventions simply will not justify injunctive relief. We doubt whether unintentional misconduct in contravention of s 52 would lead to such relief. It is necessary for a claimant "to demonstrate that the injunction will serve a purpose": ibid; though it is unnecessary to that end to show that commission, continuance, or repetition of contravening conduct is threatened or apprehended: see s 80(4) and BMW Australia at [36]. 26 In the present matter the ACCC seeks to find justification for the grant of an injunction (albeit in appropriately limited terms that can be clearly understood and practically complied with: cf Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd (No 2) (2008) ATPR 42-230) in the following considerations (i) there is a need to prevent recurrence of contraventions given the inadequate procedures Harbin had in place at the time; (ii) inadequate investigations of the circumstances were made; (iii) Harbin has indicated it intends to continue to engage in two price advertising; (iv) Harbin has not provided documentary reassurance to the ACCC; and (v) the contravention occurred while Harbin had a compliance program in place. 27 For my own part, I am not satisfied that it is appropriate in the circumstances to sanction Harbin's single and unintentional contravention of the Act with the imposition of an injunction. If it be the case that Harbin needs further to be sensitised to the seriousness of breaching the TP Act and to be made more attentive to the purposes of its compliance program, this can be achieved by other more appropriate means which can be adapted to Harbin's particular circumstances, as I will indicate. Harbin has already demonstrated preparedness to change its procedures. I should add, I do not accept that its conduct after the contravention reflects so adversely upon it as to provide some justification for the award of injunctive relief.