plaintiff. Court declared that the First Respondent engaged in resale price maintenance contrary to s 48 in respect of specified conduct (Orders 1-3); declared the Second Respondent was knowingly concerned in...
Key principles
A court retains ultimate responsibility for imposing pecuniary penalties, even where penalties are proposed by consent; it will not make consent orders for penalties unless...
A court will accept a proposed pecuniary penalty by consent if the figure is within the permissible range in all of the circumstances of the case, having regard to the...
Declarations and injunctive relief under the Trade Practices Act may be ordered by consent where the agreed facts disclose contraventions of the Act (Reasons [6], [9], [16]).
Issues before the court
Whether IGC Dorel engaged in resale price maintenance contrary to s 48 of the Trade Practices Act 1974 (Cth).
Whether the second respondent (Robert Berchik) aided, abetted, counselled, procured or was knowingly concerned in the First Respondent's...
Whether the agreed pecuniary penalties proposed by consent were appropriate to be imposed by the Court under s 76 of the Trade Practices Act.
Plain English Summary
The ACCC sued IGC Dorel and its CEO alleging resale price maintenance. The parties agreed the facts showed the supplier threatened retailers and used RRP price lists to prevent discounting. By consent the Court declared those contraventions, restrained similar conduct for three years, ordered IGC Dorel to implement compliance training and notify retailers, and imposed penalties of $80,000 on IGC Dorel and $20,000 on the CEO, with a costs contribution of $25,000. The Court emphasised it must independently be satisfied consent penalties are appropriate (Reasons [7], [10]-[12], [15]).
AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.
The ACCC commenced proceedings against IGC Dorel Pty Ltd (IGC Dorel) and its director/CEO, Mr Robert Berchik, alleging resale price maintenance contrary to s 48 of the Trade Practices Act 1974 (Cth) (TPA). The parties agreed a statement of facts and proposed consent orders. Those agreed facts recorded a series of communications by IGC Dorel personnel to retailers in which recommended retail prices (RRP) were presented as prices that should not be discounted, threats to withdraw product were made, and a retail price list was circulated. Key incidents recorded in the agreed facts were: statements to Baby Bella in early 2007 (Orders/Reasons [1]); a store visit to Pram Warehouse about 2008 where the sales representative referred to past stock removal as an illustration of seriousness (Orders/Reasons [2]); and a meeting and accompanying email to BabyCo on or about 6 April 2009 in which the Second Respondent and an employee asserted that Bertini products were 'not to be discounted' and that stock would be removed if retailers varied below the RRP (Orders/Reasons [3]). The parties reached a negotiated resolution, sought court approval of declarations, injunctions, pecuniary penalties and ancillary relief, and provided a joint statement of facts and submissions for the Court's evaluation (Reasons [6]-[9]).
The Court (Lander J) examined the agreed materials, accepted that the agreed facts disclosed contraventions of s 48 (Reasons [9], [16]-[17]) and made consent declarations that the First Respondent had engaged in resale price maintenance by (among other things) making known it would not supply unless retailers agreed not to discount, attempting to induce non-discounting and using price statements likely to be understood as minimum prices (Orders/Reasons [1]-[3]). The Court also accepted the agreed position that the Second Respondent was knowingly concerned in and participated in the contraventions (Orders/Reasons [3], [4], [16]). By consent orders the Court imposed penalties of $80,000 (First Respondent) and $20,000 (Second Respondent), granted three-year injunctions restraining specified conduct, ordered notification letters to retailers, required establishment and maintenance of a compliance and training program (Annexure C), and ordered a contribution of $25,000 to the ACCC's costs (Orders 5-13; Annexures A-C).
Why the court decided this way
The threshold issue for the Court was not whether the conduct occurred; the parties had admitted and adopted agreed facts. Rather, the central judicial question was whether the consent orders, particularly the pecuniary penalties, were appropriate for the Court to make. Lander J emphasised the principle that the Court retains responsibility for imposing penalties even where the parties propose an outcome by consent (Reasons [7], [10]). To discharge that responsibility the Court required an outline of facts and submissions explaining the proposed orders (Reasons [7]-[9]). The judge explained that the Court would accept an agreed penalty if it was within the permissible range of penalties in all the circumstances of the case and that it would give regard to the regulator's views (Reasons [12]).
Having received the parties' agreed facts and joint submissions, the Court concluded those materials demonstrated contraventions of the type alleged (Reasons [9]) and that the proposed pecuniary penalties were within the permissible sentencing range (Reasons [13]-[15]). The judge therefore approved the consent declarations and orders. The Court also signalled its general encouragement of negotiated settlements but reminded parties the ultimate responsibility for terms of orders lay with the Court (Reason [11]).
In short, the Court's decision rests on two linked findings: (1) the agreed factual matrix disclosed conduct catchable by the statutory descriptions of resale price maintenance (ss 96(3)(a), (b), (c), (f) and 96(7)(c)); and (2) the agreed pecuniary penalties, injunctive relief and ancillary orders were appropriate when judged against the permissible range and the ACCC's position (Reasons [9], [12], [15]).
Before and after state of the law
Before this decision, the Court's supervisory role over consent orders and pecuniary penalties under the Trade Practices Act was established by the jurisprudence the judge referenced, in particular Australian Competition and Consumer Commission v TEAC Australia Pty Ltd (2007) ATPR 42-201 and NW Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285 (Reasons [10]-[11]). Lander J relied on those authorities to reiterate the settled principle that consent among parties does not bind the Court where a penalty is to be imposed; the Court must be satisfied the penalty is appropriate.
After this decision, the practical consequence is reinforcement of that supervisory approach: courts will require sufficient factual material and submissions before approving consent pecuniary penalties, and will assess whether proposed figures fall within a permissible range in the circumstances. This judgment provides a concise instance of the practice: parties provided agreed facts and joint submissions; the Court used those materials to assess appropriateness and approved the orders (Reasons [6]-[9], [13]-[15]). The judgment does not create new statutory tests for resale price maintenance; it applies established statutory provisions and established principles about consent orders and judicial oversight.
Key passages with plain-English translation
Reason [7]: "if I were to make an order for a pecuniary penalty, even if it be by consent, I needed to be sure that the penalty to be imposed was appropriate."
Plain English: Even when parties agree on penalties, the judge must personally be satisfied the penalties are suitable.
Reason [10]: "The Court is therefore not bound to make orders which the parties have agreed upon unless the Court is satisfied that those orders are appropriate."
Plain English: The court will not rubber-stamp parties' agreements about penalties; it must independently review and approve them.
Reason [11]: "The Court however encourages the parties to arrive at negotiated settlements..."
Plain English: The court prefers settlement where possible, but only if courts' oversight is preserved.
Reason [9]: "Those documents have satisfied me that it is appropriate to make the declarations sought as the evidence disclosed contraventions..."
Plain English: The judge found the agreed facts and submissions showed the unlawful conduct, so the declarations should be made.
Reason [15]: "I am satisfied that the penalties which the parties have arrived at are within a permissible range..."
Plain English: The judge concluded the agreed penalties were acceptable in all the circumstances and therefore approved them.
What fact patterns trigger this precedent
The sorts of supplier conduct that, in this judgment, fall within the statutory acts leading to declarations include (see Orders/Reasons [1]-[3]):
Making known to a retailer that supply will be withheld unless the retailer agrees not to sell below supplier-specified prices (Orders [1.1], [2.1], [3.3]).
Attempting to induce a retailer not to sell below supplier-specified prices by threats or pressure (Orders [1.2], [2.2], [3.4]).
Using statements of prices, price lists, brochures or RRPs in a manner likely to be understood by retailers as signalling a minimum price below which goods must not be sold (Orders [1.3], [2.3], [3.6]).
Entering into supply agreements containing express terms requiring retailers not to sell below supplier-specified prices (Order [3.5]).
Threatening or effecting removal of stock or range de-ranging to enforce non-discounting (Orders [2], [3]).
Where those acts are established (even by agreed facts), a court is prepared to make declarations, injunctive relief and, after assessing appropriateness, impose pecuniary penalties by consent.
How later courts have treated it
This judgment itself cites earlier authorities about the Court's role in approving consent orders and penalties (TEAC at Reasons [10], NW Frozen Foods at Reasons [11]). The Reasons do not contain discussion of any treatment of this particular decision by later courts. Practitioners wishing to know how later courts have applied or distinguished this decision should check later citation histories and subsequent authorities, because Lander J's reasoning focused on principle and process rather than novel legal tests. The judgment serves primarily as an example of the Court applying established supervisory principles to consent penalties in the resale price maintenance context.
Still-open questions
The judgment confirms the Court will assess consent penalties for appropriateness, but it leaves several practical and doctrinal questions open within this concise decision:
Quantification methodology: The judgment accepts the parties' agreed figures were within a permissible range (Reasons [15]) but does not set out a detailed mathematical or factor-based methodology for calculating what that permissible range is in a given case. Practitioners must therefore rely on other authorities and sentencing-type materials for guidance on calibration of penalties.
Weight to regulator views: The Court notes it will have regard to the regulator's views (Reason [12]) but does not specify how much weight is to be accorded to those views relative to other factors.
Granularity of evidence required: Lander J required an outline of agreed facts and submissions (Reasons [7]-[9]) but did not specify the minimum content or detail necessary in every case for the Court to be satisfied. The level of factual particularity needed to support consent penalties remains a case-by-case judgement.
Interaction with corporate compliance measures: The Court ordered a detailed compliance and training program (Annexure C). The decision does not elaborate how such programs affect penalty quantum. The extent to which prompt remediation and compliance programs should mitigate penalties remains an open area requiring reference to broader jurisprudence.
In sum, the judgment is a compact affirmation that consent settlements with penalties will be enforced only after judicial scrutiny; it supplies a practical template of orders (declarations, injunctions, penalties, letters to retailers, compliance programs) in resale price maintenance cases, while leaving finer points of penalty calculus to be informed by other authorities and later jurisprudence.
The First Respondent, by its Queensland sales representative, when introducing products in the Bertini Lifestyle range (Bertini Products) to a retailer, Baby Bella Pty Ltd (Baby Bella) in or about early 2007, by referring to a price list containing the recommended retail prices for Bertini Products (Bertini Retail Price List) and stating to a representative of Baby Bella words to the following effect:
'IGC Dorel wants retailers to make the greatest margin possible and does not expect Bertini Products to be discounted. If Baby Bella is found to be discounting it will be liable to lose the range.'
1.1 made it known to Baby Bella that the First Respondent would not supply the Bertini Products to Baby Bella unless Baby Bella agreed not to sell or offer for sale the Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Trade Practices Act 1974 (the Act) by engaging in an act referred to in sections 96(3)(a) and 96(7)(c) of the Act;
1.2 attempted to induce Baby Bella not to sell or offer for sale Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(b) and 96(7)(c) of the Act; and
1.3 used, in relation to the supply or possible supply of Bertini Products to Baby Bella, statements of prices that were likely to be understood by Baby Bella to be prices below which the Bertini Products were not to be sold or offered for sale and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(f) and 96(7)(c) of the Act.
The First Respondent, by its Queensland sales representative, during a routine store visit to a retailer trading as Pram Warehouse in or about 2008, by referring to prices in the Bertini Retail Price List and stating to a representative of Pram Warehouse words to the following effect:
'IGC Dorel wants to see the recommended retail prices of Bertini Products maintained. IGC Dorel has previously taken stock away from a store as an illustration that IGC is serious about maintaining the RRP.'
2.1 made it known to Pram Warehouse that the First Respondent would not supply the Bertini Products to Pram Warehouse unless Pram Warehouse agreed not to sell or offer for sale the Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(a) and 96(7)(c) of the Act;
2.2 attempted to induce Pram Warehouse not to sell or offer for sale Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(b) and 96(7)(c) of the Act; and
2.3 used, in relation to the supply or possible supply of Bertini Products to Pram Warehouse, statements of prices that were likely to be understood by Pram Warehouse to be prices below which the Bertini Products were not to be sold or offered for sale and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(f) and 96(7)(c) of the Act.
The First Respondent,
3.1 by the Second Respondent, during a meeting with representatives of Swallow Baby Carriages Pty Ltd, Baby Holdings Pty Ltd and Dynacross Investments Pty Ltd (in liquidation) trading as BabyCo (BabyCo) on or about 6 April 2009, by referring to prices in the Bertini Retail Price List and stating to representatives of BabyCo words to the following effect:
'We set the prices of Bertini, you are not to discount. If you're found to be discounting we'll send in trucks and we'll no longer be supplying you. I don't want the product bastardized. I designed this product and it's well worth the RRP.'; and
3.2 by one of its employees sending a Bertini Retail Price List to BabyCo with an accompanying email stating:
'As I am sure you will notice, there have been substantial changes to our pricing - which allows you the more generous margin Robert was wanting to give you. That said, I sincerely hope that is the case - instead of pricing discount. This is even more important when it comes to the Bertini X & Z series.
It has been a long standing arrangement with our retailers that Bertini is not to be discounted at any time. The brand reputation and the high quality product are a perfect fit for the RRP and we intend to continue uphold the brand integrity and not lending it to discount wars.
As part of the Bertini ranging agreement, any retailer that is found to vary (even slightly) under the RRP, will have the stock removed from store immediately and further ranging halted. That said there really is no need to discount to sell - as they (sic) range sells itself!'
3.3 made it known to BabyCo that the First Respondent would not supply the Bertini Products to BabyCo unless BabyCo agreed not to sell or offer for sale the Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(a) and 96(7)(c) of the Act;
3.4 attempted to induce BabyCo not to sell or offer for sale Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(b) and 96(7)(c) of the Act;
3.5 entered into an agreement with BabyCo a term of which was that BabyCo could not sell or offer for sale the Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(c) and 96(7)(c) of the Act; and
3.6 used, in relation to the supply or possible supply of Bertini Products to BabyCo, statements of prices that were likely to be understood by BabyCo to be prices below which the Bertini Products were not to be sold or offered for sale and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(f) and 96(7)(c) of the Act.
The Second Respondent aided, abetted, counselled or procured and/or was directly or knowingly concerned in and party to the First Respondent's contravention of section 48 in respect of paragraph 3 above by:
4.1 engaging in the conduct set out in paragraph 3.1 above; and
4.2 causing or directing an employee of the First Respondent to engage in the conduct set out in paragraph 3.2 above.
The First Respondent pay to the Commonwealth of Australia a pecuniary penalty under section 76 of the Act in the sum of $80,000, such payment to be made within 30 days of the date of this Order.
The Second Respondent pay to the Commonwealth of Australia a pecuniary penalty under section 76 of the Act in the sum of $20,000, such payment to be made within 30 days of the date of this Order.
The First Respondent, by its servants or agents or howsoever otherwise, be and is hereby restrained for a period of three years from the date of this order, in relation to the supply or potential supply of Bertini Products from:
7.1 making it known to a person that the First Respondent will not supply Bertini Products to the person unless that person agrees not to sell or advertise Bertini Products at a price less than a price specified by the First Respondent;
7.2 inducing or attempting to induce a person not to sell or advertise Bertini Products supplied or that may be supplied to that person by the First Respondent at a price less than a price specified by the First Respondent;
7.3 entering into or offering to enter into an agreement for the supply of Bertini Products to a person, being an agreement one of the terms of which is that the person will not sell or advertise Bertini Products at a price less than a price specified by the First Respondent; and
7.4 using, in relation to Bertini Products supplied, or that may be supplied, by the First Respondent to a person, a statement of price or prices which is likely to be understood by that person as the price or prices below which Bertini Products are not to be sold or advertised for sale.
The Second Respondent, by himself, his servants or agents or howsoever otherwise be and is hereby restrained for a period of three years from the date of this order, in relation to the supply or potential supply of Bertini Products from:
8.1 making it known to a person that the First Respondent will not supply Bertini Products to the person unless that person agrees not to sell or advertise Bertini Products at a price less than a price specified by the First Respondent;
8.2 inducing or attempting to induce a person not to sell or advertise Bertini Products supplied, or that may be supplied, to that person by the First Respondent at a price less than a price specified by the First Respondent;
8.3 entering into or offering to enter into an agreement for the supply of Bertini Products to a person, being an agreement one of the terms of which is that the person will not sell or advertise Bertini Products at a price less than a price specified by the First Respondent; and
8.4 using, in relation to Bertini Products supplied, or that may be supplied, by the First Respondent to a person, a statement of price or prices which is likely to be understood by that person as the price or prices below which Bertini Products are not to be sold or advertised for sale.
The First Respondent, within 14 days of the date of this order, shall send a letter to each of its current retailers of Bertini Products (as specified in Annexure A) in the terms of Annexure B to this order.
The First Respondent, within 21 days of the date of this order, shall notify the Applicant of its compliance with paragraph 9 above.
The First Respondent:
11.1 establish, at its own expense, the Trade Practices Compliance and Education / Training Program set out in Annexure C for the employees and other persons involved in its business, being a program designed to ensure their awareness of their responsibilities and obligations in relation to the conduct declared by the Court in this proceeding to be in contravention of the Act and any similar or related conduct;
11.2 maintain and administer, at its own expense, the Trade Practices Compliance and Education / Training Program set out in Annexure C for a period of three years; and
11.3 provide, at its own expense, a copy of any documents to be provided to the Applicant pursuant to Annexure C.
The First Respondent pay a contribution to the Applicant's costs of the proceedings in the amount of $25,000 to be paid on or before 30 days after the date of this Order.
The proceedings the subject of this Order be otherwise dismissed.
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 Federal Law Search on the Court's website.
[2]
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION SAD 102 of 2010
[3]
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
[4]
JUDGE: LANDER J
DATE: 30 november 2010
PLACE: ADELAIDE
[5]
REASONS FOR JUDGMENT
1 The applicant has sought a number of declarations against the two respondents to this proceeding. Against the first respondent the applicant seeks a declaration that the first respondent engaged in resale price maintenance in contravention of s 48 of the Trade Practices Act 1974 (Cth) (TPA) by engaging in conduct referred to in ss 96(3)(a), 96(3)(b), 96(3)(f) and 96(7)(c). The applicant seeks a declaration that the second respondent aided and abetted counsel or procured or was directly or knowingly concerned in and a party to the first respondent's contravention of s 48 in respect of one aspect of the declarations sought against the first respondent.
2 The applicant also seeks orders that the first and second respondents pay to the Commonwealth of Australia a pecuniary penalty under s 76 of the TPA.
3 Moreover, the applicant seeks injunctions against both respondents restraining them from contravening the TPA in a manner or like manner to the contravention the subject of the declarations.
4 The applicant also seeks an order that the first respondent send a letter to each of its retailers in the terms annexed to the order. An order is sought against the first respondent that it establish at its own expense the Trade Practices Compliance and Education/Training Program set out in the annexure to the orders for the employees and other persons involved in its business and maintain and administer that program for a period of three years at its own expense.
5 Lastly, the applicant seeks an order that the first respondent pay a sum towards the applicant's costs.
6 The applicant and the respondents agreed upon the declarations which were to be made and the consequential orders relating to publication and the like, and the order for costs. They also agreed upon the pecuniary penalty which was to be imposed upon the first and second respondents. Short minutes of order were provided to the Court and all parties sought the approval of the Court to those orders.
7 It seemed to me that if I were to make an order for a pecuniary penalty, even if it be by consent, I needed to be sure that the penalty to be imposed was appropriate.
8 To that end, I insisted that the parties provided the Court with an outline of the facts and circumstances upon which the orders were based and submissions as to why the orders should be made.
9 The parties cooperated and provided the Court with a statement of agreed facts and a joint outline of submissions. Those documents have satisfied me that it is appropriate to make the declarations sought as the evidence disclosed contraventions of the kind the subject of the declarations.
10 As to the penalty, the Court retains the responsibility for imposing penalties and the making of orders: Australian Competition and Consumer Commission v TEAC Australia Pty Ltd (2007) ATPR 42-201. The Court is therefore not bound to make orders which the parties have agreed upon unless the Court is satisfied that those orders are appropriate.
11 The Court however encourages the parties to arrive at negotiated settlements provided that the parties recognise that the ultimate responsibility for the terms and making of the orders lies with the Court: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285.
12 In determining whether the agreed penalty is appropriate, the Court will accept a proposed figure if it is within the permissible range in all of the circumstances of the case. Ordinarily a court would not refuse to make an order for an agreed penalty unless the court were satisfied that the proposed penalty was not within the range of penalties for the contravention. In determining whether the proposed penalty is appropriate, regard is had to the views of the regulator.
13 I have read the statement of agreed facts and the joint submissions made by the parties to determine whether the penalties agreed upon are within the appropriate range.
14 The parties have agreed that:
(1) the first respondent pay to the Commonwealth of Australia a pecuniary penalty under s 76 of the TPA in the sum of $80,000, such payment to be made within 30 days of the date of this order; and
(2) the second respondent pay to the Commonwealth of Australia a pecuniary penalty under s 76 of the TPA in the sum of $20,000, such payment to be made within 30 days of the date of this order.
15 I am satisfied that the penalties which the parties have arrived at are within a permissible range and that it would be appropriate for the Court to make the orders.
16 I am also satisfied that the agreed facts and the joint submissions support the making of the declarations and the further orders directed to the second respondent.
17 I will therefore make the following orders which are agreed upon by the parties:
[6]
Associate:
Dated: 30 November 2010
ANNEXURE A
BABIES CHOICE - SUNBURY FRONTLINE STORES AUSTRALIA LTD - CANTERBURY
BABY BELLA - GOONELLABAH KID ESSENTIALS - CANBERRA ACT
BABY BELLA AUSTRALIA - LISMORE KIDDIE COUNTRY - ARMADALE
BABY BUNTING - EAST BENTLEIGH KIDDIE CULTURE - SHEPPARTON
BABY BUNTING - MARIBYRNONG KIDDIES CORNER PTY LTD - COORPAROO
BABY HAVEN - GLADSTONE LITTLE ONES ON FITZROY - GRAFTON
BABY MODE - EPPING MOTHERS WORLD - TOOWOOMBA
BABY MODE - SUNSHINE MY BABY WAREHOUSE - BANKSTOWN
BABY WOMBATS - BELCONNEN MY BABY WAREHOUSE - CHATSWOOD
BABY ZONE - WOLLONGONG MY BABY WAREHOUSE - LANSVALE
BABYTIME PTY LTD - ASHMORE MY BABY WAREHOUSE - LEICHHARDT
BABYWORLD - BALLARAT MY BABY WAREHOUSE - MINCHINBURY
BABYWORLD - BURNSIDE OKE'S TOY WAREHOUSE - ALBURY
BACKYARD KIDS - BILOELA OKE'S TOY WAREHOUSE - SHEPPARTON
BANANA BABY - KOGARAH ORANGE BABY KINGDOM - ORANGE
BETTER BABY DEALS - BUNBURY WA PRAM CITY - NERANG
BONNIE BABIES - BENDIGO PRAM WAREHOUSE - LOGANHOLME
BRISBANE BUBS - FORTITUDE VALLEY SWEET LULLABIES - TRARALGON
BUBS BABY SHOP - AUBURN SYDNEY'S BABY KINGDOM - ALEXANDRIA
BUBS BABY SHOP - GOLD COAST SYDNEY'S BABY KINGDOM - BANKSTOWN
BUSTER'S BABY WAREHOUSE - MANDURAH SYDNEY'S BABY KINGDOM - CAMPBELLTOWN
COUNTRY CHICKS - SEA LAKE VIC SYDNEY'S BABY KINGDOM - CASTLEHILL
COUNTRY KIDS - BALLARAT SYDNEY'S BABY KINGDOM - PENRITH
CRADLE ROAD - TAYLORS LAKES TWINKLE TOTS - NORTHCOTE
[7]
ANNEXURE B
Letter to retailers of Bertini Products
[To be placed on IGC Dorel letterhead]
[To retailers of Bertini Products listed in Annexure A][Insert Address]
BY ORDER OF THE FEDERAL COURT OF AUSTRALIA
Dear Sir/Madam (or personalise),
Resale price maintenance by IGC Dorel Pty Ltd
You may be aware that IGC Dorel Pty Ltd (IGC Dorel) has been involved in legal proceedings with the Australian Competition and Consumer Commission (ACCC). We are writing to you as part of the resolution of those proceedings by consent.
Following civil proceedings instituted by the ACCC, the Federal Court of Australia has declared that IGC Dorel engaged in resale price maintenance in relation to the supply of Bertini Products.
As an explanation, resale price maintenance is an attempt by a supplier (i.e. IGC Dorel) to set a minimum price below which its retailers cannot sell, advertise, display or offer goods for sale. It is prohibited by section 48 of the Trade Practices Act 1974 (Cth).
One of the Court's orders is that IGC Dorel must write to each retailer of Bertini Products in the form of this letter to notify them of the outcome of these proceedings and to inform them of the illegality of resale price maintenance.
IGC Dorel has been ordered to pay a penalty of $80,000 and to pay a contribution to the ACCC's costs of $25,000. The Court has also granted injunctions restraining IGC Dorel from engaging in resale price maintenance in relation to Bertini Products for a period of 3 years.
As a Bertini Products retailer, you are free to set the price at which you advertise or sell the products you purchase from us. This freedom is protected by the Trade Practices Act. Any "brochure price" or "recommended retail price", "suggested retail price" or "RRP" used or set by us (or any other supplier for that matter) is a suggestion only.
I have enclosed a copy of the ACCC publication entitled "Resale Price Maintenance" for your perusal. You can also obtain further information about the ACCC's proceedings against IGC Dorel and the Trade Practices Act generally from the ACCC website at www.accc.gov.au.
Yours sincerely
Mr Robert BerchikChief Executive OfficerIGC Dorel Pty Ltd
ANNEXURE C
TRADE PRACTICES COMPLIANCE AND EDUCATION/TRAINING PROGRAM
Interpretation
In this Annexure:
(a) "ACCC" means the Australian Competition and Consumer Commission;
(b) "Act" means the Trade Practices Act 1974 (Cth);
(c) "Compliance Officer" means the person appointed under paragraph 2 or 3 below;
(d) "Compliance Policy" means the policy defined in paragraph 6 below;
(e) "Compliance Program" means the Trade Practices Compliance and Education/Training Program in this Annexure;
(f) "Compliance Trainer" is defined in paragraph 13 below;
(g) "Contravening Conduct" means the conduct declared by the Federal Court of Australia in these proceedings to be in contravention of Part IV of the Act;
(h) "IGC Dorel" means IGC Dorel Pty Ltd ACN 124 078 762;
(i) "Order of the Court" means the relevant order(s) of the Federal Court of Australia made in these proceedings;
(j) "Relevant Provisions" means section 48 and 96 of the Act which were contravened by the Contravening Conduct, and sections 96A, 97, 98, 99 and 100 of the Act;
(k) "Respondent's Program" means the steps taken by IGC Dorel to comply with the Order of the Court in relation to the Compliance Program;
(l) "Training" means the training required by paragraph 12 below.
Compliance Officer
Parties
Applicant/Plaintiff:
Australian Competition and Consumer Commission
Respondent/Defendant:
IGC Dorel Pty Ltd
Legislation Cited (1)
Trade Practices Act 1974(Cth)ss 48, 76, 96
Cases Cited (1)
(1996) 71 FCR 285
AI Analysis
Outcomeplaintiff
Disposition:
Court declared that the First Respondent engaged in resale price maintenance contrary to s 48 in respect of specified conduct (Orders 1-3); declared the Second Respondent was knowingly concerned in that conduct (Order 4); ordered pecuniary penalties of $80,000 against the First Respondent and $20,000 against the Second Respondent (Orders 5-6); imposed 3-year injunctive restraints on both respondents relating to resale price maintenance (Orders 7-8); ordered notification letters to retailers and a Trade Practices Compliance and Education/Training Program and reporting obligations (Orders 9-11; Annexures B and C); ordered contribution to ACCC costs of $25,000 (Order 12); and otherwise dismissed the proceedings (Order 13).
The First Respondent, by its Queensland sales representative, when introducing products in the Bertini Lifestyle range (Bertini Products) to a retailer, Baby Bella Pty Ltd (Baby Bella) in or about early 2007, by referring to a price list containing the recommended retail prices for Bertini Products (Bertini Retail Price List) and stating to a representative of Baby Bella words to the following effect:
'IGC Dorel wants retailers to make the greatest margin possible and does not expect Bertini Products to be discounted. If Baby Bella is found to be discounting it will be liable to lose the range.'
1.1 made it known to Baby Bella that the First Respondent would not supply the Bertini Products to Baby Bella unless Baby Bella agreed not to sell or offer for sale the Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Trade Practices Act 1974 (the Act) by engaging in an act referred to in sections 96(3)(a) and 96(7)(c) of the Act;
1.2 attempted to induce Baby Bella not to sell or offer for sale Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(b) and 96(7)(c) of the Act; and
1.3 used, in relation to the supply or possible supply of Bertini Products to Baby Bella, statements of prices that were likely to be understood by Baby Bella to be prices below which the Bertini Products were not to be sold or offered for sale and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(f) and 96(7)(c) of the Act.
The First Respondent, by its Queensland sales representative, during a routine store visit to a retailer trading as Pram Warehouse in or about 2008, by referring to prices in the Bertini Retail Price List and stating to a representative of Pram Warehouse words to the following effect:
'IGC Dorel wants to see the recommended retail prices of Bertini Products maintained. IGC Dorel has previously taken stock away from a store as an illustration that IGC is serious about maintaining the RRP.'
2.1 made it known to Pram Warehouse that the First Respondent would not supply the Bertini Products to Pram Warehouse unless Pram Warehouse agreed not to sell or offer for sale the Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(a) and 96(7)(c) of the Act;
2.2 attempted to induce Pram Warehouse not to sell or offer for sale Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(b) and 96(7)(c) of the Act; and
2.3 used, in relation to the supply or possible supply of Bertini Products to Pram Warehouse, statements of prices that were likely to be understood by Pram Warehouse to be prices below which the Bertini Products were not to be sold or offered for sale and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(f) and 96(7)(c) of the Act.
The First Respondent,
3.1 by the Second Respondent, during a meeting with representatives of Swallow Baby Carriages Pty Ltd, Baby Holdings Pty Ltd and Dynacross Investments Pty Ltd (in liquidation) trading as BabyCo (BabyCo) on or about 6 April 2009, by referring to prices in the Bertini Retail Price List and stating to representatives of BabyCo words to the following effect:
'We set the prices of Bertini, you are not to discount. If you're found to be discounting we'll send in trucks and we'll no longer be supplying you. I don't want the product bastardized. I designed this product and it's well worth the RRP.'; and
3.2 by one of its employees sending a Bertini Retail Price List to BabyCo with an accompanying email stating:
'As I am sure you will notice, there have been substantial changes to our pricing - which allows you the more generous margin Robert was wanting to give you. That said, I sincerely hope that is the case - instead of pricing discount. This is even more important when it comes to the Bertini X & Z series.
It has been a long standing arrangement with our retailers that Bertini is not to be discounted at any time. The brand reputation and the high quality product are a perfect fit for the RRP and we intend to continue uphold the brand integrity and not lending it to discount wars.
As part of the Bertini ranging agreement, any retailer that is found to vary (even slightly) under the RRP, will have the stock removed from store immediately and further ranging halted. That said there really is no need to discount to sell - as they (sic) range sells itself!'
3.3 made it known to BabyCo that the First Respondent would not supply the Bertini Products to BabyCo unless BabyCo agreed not to sell or offer for sale the Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(a) and 96(7)(c) of the Act;
3.4 attempted to induce BabyCo not to sell or offer for sale Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(b) and 96(7)(c) of the Act;
3.5 entered into an agreement with BabyCo a term of which was that BabyCo could not sell or offer for sale the Bertini Products at prices less than those in the Bertini Retail Price List and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(c) and 96(7)(c) of the Act; and
3.6 used, in relation to the supply or possible supply of Bertini Products to BabyCo, statements of prices that were likely to be understood by BabyCo to be prices below which the Bertini Products were not to be sold or offered for sale and, thereby, engaged in the practice of resale price maintenance in contravention of section 48 of the Act by engaging in an act referred to in sections 96(3)(f) and 96(7)(c) of the Act.
The Second Respondent aided, abetted, counselled or procured and/or was directly or knowingly concerned in and party to the First Respondent's contravention of section 48 in respect of paragraph 3 above by:
4.1 engaging in the conduct set out in paragraph 3.1 above; and
4.2 causing or directing an employee of the First Respondent to engage in the conduct set out in paragraph 3.2 above.
The First Respondent pay to the Commonwealth of Australia a pecuniary penalty under section 76 of the Act in the sum of $80,000, such payment to be made within 30 days of the date of this Order.
The Second Respondent pay to the Commonwealth of Australia a pecuniary penalty under section 76 of the Act in the sum of $20,000, such payment to be made within 30 days of the date of this Order.
The First Respondent, by its servants or agents or howsoever otherwise, be and is hereby restrained for a period of three years from the date of this order, in relation to the supply or potential supply of Bertini Products from:
7.1 making it known to a person that the First Respondent will not supply Bertini Products to the person unless that person agrees not to sell or advertise Bertini Products at a price less than a price specified by the First Respondent;
7.2 inducing or attempting to induce a person not to sell or advertise Bertini Products supplied or that may be supplied to that person by the First Respondent at a price less than a price specified by the First Respondent;
7.3 entering into or offering to enter into an agreement for the supply of Bertini Products to a person, being an agreement one of the terms of which is that the person will not sell or advertise Bertini Products at a price less than a price specified by the First Respondent; and
7.4 using, in relation to Bertini Products supplied, or that may be supplied, by the First Respondent to a person, a statement of price or prices which is likely to be understood by that person as the price or prices below which Bertini Products are not to be sold or advertised for sale.
The Second Respondent, by himself, his servants or agents or howsoever otherwise be and is hereby restrained for a period of three years from the date of this order, in relation to the supply or potential supply of Bertini Products from:
8.1 making it known to a person that the First Respondent will not supply Bertini Products to the person unless that person agrees not to sell or advertise Bertini Products at a price less than a price specified by the First Respondent;
8.2 inducing or attempting to induce a person not to sell or advertise Bertini Products supplied, or that may be supplied, to that person by the First Respondent at a price less than a price specified by the First Respondent;
8.3 entering into or offering to enter into an agreement for the supply of Bertini Products to a person, being an agreement one of the terms of which is that the person will not sell or advertise Bertini Products at a price less than a price specified by the First Respondent; and
8.4 using, in relation to Bertini Products supplied, or that may be supplied, by the First Respondent to a person, a statement of price or prices which is likely to be understood by that person as the price or prices below which Bertini Products are not to be sold or advertised for sale.
The First Respondent, within 14 days of the date of this order, shall send a letter to each of its current retailers of Bertini Products (as specified in Annexure A) in the terms of Annexure B to this order.
The First Respondent, within 21 days of the date of this order, shall notify the Applicant of its compliance with paragraph 9 above.
The First Respondent:
11.1 establish, at its own expense, the Trade Practices Compliance and Education / Training Program set out in Annexure C for the employees and other persons involved in its business, being a program designed to ensure their awareness of their responsibilities and obligations in relation to the conduct declared by the Court in this proceeding to be in contravention of the Act and any similar or related conduct;
11.2 maintain and administer, at its own expense, the Trade Practices Compliance and Education / Training Program set out in Annexure C for a period of three years; and
11.3 provide, at its own expense, a copy of any documents to be provided to the Applicant pursuant to Annexure C.
The First Respondent pay a contribution to the Applicant's costs of the proceedings in the amount of $25,000 to be paid on or before 30 days after the date of this Order.
The proceedings the subject of this Order be otherwise dismissed.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.
IGC Dorel must, within one month of the date of the Order of the Court, appoint a Director or a senior employee with suitable qualifications or experience in corporate compliance as Compliance Officer with responsibility for ensuring that the Compliance Program is effectively established, maintained and administered in accordance with the Order of the Court.
After the appointment of the Compliance Officer in accordance with paragraph 2, IGC Dorel must take all reasonable steps to ensure that, for 3 years from the date of the Order of the Court, there is a Director or a senior employee with suitable qualifications or experience in corporate compliance appointed as Compliance Officer with responsibility for ensuring that the Compliance Program is effectively established, maintained and administered in accordance with the Order of the Court.
IGC Dorel must take all reasonable steps to ensure that for 3 years from the date of the Order of the Court the Compliance Officer discharges his or her responsibility of ensuring that the Compliance Program is effectively established, maintained and administered in accordance with the Order of the Court.
IGC Dorel must take all reasonable steps to ensure that the Compliance Officer reports in writing to IGC Dorel's board of directors annually with respect to the on-going maintenance and administration of the Compliance Program including, in particular, whether the Compliance Program is effectively ensuring an awareness by officers, employees, representatives and agents of IGC Dorel of their responsibilities and obligations in relation to the Relevant Provisions.
Compliance Policy
IGC Dorel must, within two months of the date of the Order of the Court, establish a policy (Compliance Policy) which is communicated in writing to all officers, employees, representatives and agents of IGC Dorel regarding compliance with the Relevant Provisions of the Act, which must include:
(a) a statement of commitment by IGC Dorel to comply with the Relevant Provisions;
(b) a direction of all officers, employees, representatives and agents of IGC Dorel to report any compliance related issues and Act compliance concerns to the Compliance Officer;
(c) a statement guaranteeing that officers, employees, representatives and agents of IGC Dorel making a complaint or report about another person in relation to IGC Dorel's compliance with the Relevant Provisions will not be prosecuted or disadvantaged in any way by reason of their complaint or report and that their complaint or report will be kept confidential and secure; and
(d) a statement that IGC Dorel will take disciplinary action against any officers, employees, representatives and agents of IGC Dorel who are knowingly or recklessly concerned in a contravention of the Relevant Provisions and will not indemnify them.
IGC Dorel must take all reasonable steps to ensure that the Compliance Program is maintained and administered in a manner that is consistent with the Compliance Policy for 3 years from the date of the Order of the Court.
IGC Dorel will provide a copy of the Compliance Policy to all new staff at the commencement of their employment with IGC Dorel.
Complaints Handling System
IGC Dorel must establish, maintain and administer a trade practices complaints handling system relating to Part IV of the Act for a period of 3 years.
IGC Dorel must take all reasonable steps to ensure that the trade practices complaints handling system is in accordance with AS/ISO 10002:2006 Customer satisfaction - Guidelines for complaints handling in organizations, though tailored to its own circumstances (Complaints Handling System).
IGC Dorel must provide the ACCC with an outline of the Complaints Handling System within 2 months of the Order of the Court.
Training
IGC Dorel must take all reasonable steps to ensure that all directors, officers, employees, representatives and agents of IGC Dorel, whose duties could result in them being concerned with conduct that may contravene the Relevant Provisions, receive practical training regarding the Relevant Provisions (Training) no less than once annually.
The Training must be conducted by either a suitably qualified compliance professional or legal practitioner with expertise in the Act (the Compliance Trainer).
IGC Dorel must instruct the Compliance Trainer to design the Training, and must take all reasonable steps to ensure that the Training is designed, to ensure that the persons at the Training are made aware of:
(a) the responsibilities and obligations in relation to the Relevant Provisions;
(b) the potential consequences of contravening the Relevant Provisions;
(c) the areas of IGC Dorel's business where it is at risk of contravening the Relevant Provisions; and
(d) the content of the Compliance Program.
IGC Dorel must provide to the Compliance Trainer, for the purposes of conducting the Training, a copy of:
(a) the Order of the Court;
(b) the Compliance Policy; and
(c) the Complaints Handling System.
IGC Dorel must take all reasonable steps to ensure that an awareness of the Compliance Program forms part of the induction of all new directors, officers, employees, representatives and agents, whose duties could result in them being concerned with conduct that may contravene the Relevant Provisions.
Supply of Documents to the ACCC
IGC Dorel must within 14 months of the date of the Order of the Court, cause to be produced and provided to the ACCC copies of each of the following documents:
(a) documents evidencing the appointment of the Compliance Officer;
(b) the Compliance Policy and the documents evidencing its implementation; and
(c) documents evidencing the provision of Training, including all materials used in the Training.
If requested in writing by the ACCC, IGC Dorel must, at its own expense, provide copies of documents and information constituting or evidencing compliance or non-compliance with the Order of the Court.