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[2013] FCA 14
Federal Court of Australia
2013-01-18
Lander J
Original judgment source is linked above.
APPENDIX 2 COURT ORDERED ADVERTISEMENT [Insert Zamel's Logo] By Order of the Federal Court of Australia Following legal action by the Australian Competition and Consumer Commission (ACCC), the Federal Court has declared that The Jewellery Group Pty Ltd trading as Zamel's (Zamel's) engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, and made false representations in breach of sections 52 and 53(e) of the Trade Practices Act 1974 (which on 1 January 2011 was renamed the Competition and Consumer Act 2010 and amended to include the Australian Consumer Law). Zamel's had, in respect of 44 jewellery items included in our May 2010 catalogue and, in respect of 20 of those items, in other catalogues and/or a flyer during the period from November 2008 to January 2010, advertised items during the sale period by the use of statements such as "$99 $49.50" or "Was $275 Now $149". In fact, we did not sell, or rarely sold, the items at the higher price in the period immediately before the relevant catalogue and the flyer sale period. The Federal Court declared that, in relation to customers who were unaware of the ability to obtain a discount on the item prior to the relevant catalogue or flyer sale period, this advertising falsely represented the savings to be made. The Federal Court has also imposed penalties on Zamel's in the amount of $250,000 for the false representations in the May 2010 Catalogue in relation to the 44 jewellery items. APPENDIX 3
Interpretation
Compliance Officer 2. The Respondent 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. 3. After the appointment of the Compliance Officer in accordance with paragraph 2, the Respondent must take all reasonable steps to ensure that, for the duration 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. 4. The Respondent must take all reasonable steps to ensure that for the duration 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. 5. The Respondent must take all reasonable steps to ensure that the Compliance Officer reports in writing to the Respondent's board of directors every six months with respect to the on-going maintenance and administration of the Compliance Program including, in particular, whether the Respondent's Program is effectively: (a) ensuring an awareness by the employees and other persons involved in the Respondent's business of their responsibilities and obligations in relation to the Relevant Provisions; and (b) revising the internal operations of the Respondent's business which led to the Respondent engaging in the Contravening Conduct.
Risk Assessment 6. The Respondent must, within one month of the date of the Order of the Court, appoint a qualified, internal or external, compliance professional with expertise in trade practices issues (Compliance Advisor) to conduct a risk assessment to: (a) identify the areas of the Respondent's business where it is at risk of contravening the Relevant Provisions; (b) assess the likelihood of any such contravention occurring; (c) identify where there are deficiencies in the Respondent's procedures for managing any such risk; (d) make findings concerning sub-paragraphs (a) to (c) above; and (e) make recommendations for action having regard to sub-paragraphs (a) to (d) above (Risk Assessment). 7. The Respondent must instruct the Compliance Advisor to set out, and must take all reasonable steps to ensure that the Compliance Advisor sets out, the findings and recommendations of the Risk Assessment in a written report (Risk Assessment Report), to be provided to the Respondent's board of directors within two months of his or her appointment.
Compliance Policy 8. The Respondent must, within 30 days of the date of the Order of the Court, establish a policy (Compliance Policy) which is communicated in writing to all employees and other persons involved in the Respondent's business regarding compliance with the Act, which must include: (a) a statement of commitment by the Respondent to comply with the Relevant Provisions; (b) a direction to all employees or other persons involved in the Respondent's business to report any compliance related issues and Act compliance concerns to the Compliance Officer; (c) a statement guaranteeing that employees or other persons involved in the Respondent's business making a complaint or report in relation to the Respondent'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 the Respondent will take disciplinary action against any persons who are knowingly or recklessly concerned in a contravention of the Relevant Provisions and will not indemnify them. 9. The Respondent 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 the duration of the Order of the Court. 10. The Respondent will provide a copy of the Compliance Policy to all new staff at the commencement of their employment with the Respondent.
Complaints Handling System 11. The Respondent must establish, maintain and administer a trade practices complaints handling system. 12. The Respondent 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).
Training 13. The Respondent must take all reasonable steps to ensure that all directors, officers, employees, representatives and agents of the Respondent, whose duties could result in them being concerned with conduct that may contravene the Relevant Provisions, receive practical training regarding the Act (Training) no less than once annually. 14. The Training must be conducted by either a suitably qualified compliance professional or legal practitioner with expertise in the Act (the Compliance Trainer). 15. The Respondent 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 the Respondent's business where it is at risk of contravening the Relevant Provisions, as identified in the Risk Assessment Report; and (d) the content of the Compliance Program. 16. The Respondent 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; (c) the Complaints Handling System; and (d) the Risk Assessment Report. 17. The Respondent 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.
External Review 18. The Respondent must take all reasonable steps to ensure that annual reviews of the Respondent' compliance with the Order of the Court are carried out in accordance sub-paragraphs (a) to (d) below (External Reviews): (a) Scope of the External Reviews - The External Reviews are to ascertain whether the Respondent's Program: (i) has made the employees and other persons involved in the Respondent's business aware of their responsibilities and obligations in relation to the Relevant Provisions; (ii) has revised the internal operations of the Respondent's business in relation to the Relevant Provisions and the circumstances that led to the Contravening Conduct; (iii) is effectively maintaining and administering the Compliance Program. (b) Independence of Reviewer - the Respondent must take all reasonable steps to ensure that all External Reviews are carried out by a suitably qualified, independent compliance professional with expertise in the Act (Reviewer). The Reviewer will qualify as independent on the basis that he or she: (i) is not a present or past director, employee or officer of the Respondent; (ii) has no significant shareholding or other interests in the Respondent; (iii) has not acted for or consulted to, and does not act for or consult to, the Respondent in any matters involving alleged contraventions of the Act; (iv) has not acted for or consulted, and does not act for or consult to, the Respondent or provide other services in relation to this Compliance Program, other than as the Reviewer in a previous year; and (v) has no conflict of interest in carrying out the Reviews. (c) Evidence - the Respondent must take all reasonable steps to ensure that in the conduct of the External Reviews the Reviewer has access to all relevant sources of information in the Respondent's possession or control, including access to: (i) any officers, employees, representatives or agents of the Respondent; (ii) any relevant records of the Respondent, including its complaints register/reports and any documents relevant to the Training or its induction program; and (iii) any documents created by the Respondent's consultants or legal advisers for use in relation to the Respondent's Program. (d) Timing - the Respondent must take all reasonable steps to ensure that the first External Review is completed within one year of the date of the Order of the Court and that each subsequent External Review is completed within one year thereafter, save that all steps to be taken by the Respondent in relation to the final External Review are to be completed one month prior to the expiration of the Order of the Court. 19. The Respondent must instruct the Reviewer to set out, and must take all reasonable steps to ensure that the Reviewer sets out, the findings of each of the External Reviews in a written report (Compliance Program Review Report) which addresses each of the following: (a) details of the evidence gathered and examined during the External Review; (b) the name and relevant qualifications/experience of the person appointed as the Compliance Officer; (c) if, and to what extent, the Respondent's Program includes all the elements and requirements of the Compliance Program; (d) if, and to what extent, the Respondent's Program covers the areas identified in the Risk Assessment; and (e) recommendations that the Reviewer considers are reasonably necessary to ensure that the Respondent's Program effectively maintains and administers the Compliance Program. 20. The Respondent must instruct the Reviewer to complete and provide the Compliance Program Review Report to it, and must take all reasonable steps to ensure that the Compliance Program Review Report is completed and provided to it, within one month of each Review. 21. The Respondent must retain each Compliance Program Review Report. 22. Within 30 days of the receipt of each Compliance Program Review Report, the Respondent's board of directors must hold a meeting to consider the matters described in paragraph 23 below. 23. At the meeting referred to in paragraph 22 above, the Respondent's board of directors must consider: (a) the Compliance Program Review Report; (b) whether to make any changes to the Respondent's Program to more effectively implement the Compliance Program for the purposes of: (i) ensuring an awareness for the employees or other persons involved in the Respondent's business of their responsibilities and obligations in relation to the Relevant Provisions; and (ii) revising the internal operations of the Respondent's business in relation to the circumstances that led to the Contravening Conduct; (c) any recommendations of the ACCC for the purposes of sub-paragraph (b) above. 24. Within 14 days of holding the meeting referred to in paragraph 22 above, the Respondent must advise the ACCC in writing of: (a) details of when the meeting was held and who was present; (b) the outcome of the meeting, including: (i) what, if any, changes the Respondent decided to make to the Respondent's Program to more effectively implement the Compliance Program and details of the proposed implementation of any changes; and (ii) the decisions made by the Respondent about each of the recommendations that had been made by the ACCC (if any). 25. Within 14 days of holding a meeting referred to in paragraph 23 above at which the Respondent decides to make changes to the Respondent's Program it must take all reasonable steps to communicate those changes to all employees or other persons involved in the Respondent's business.
Supply of Documents to the ACCC 26. The Respondent 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 and Compliance Adviser; (b) the Risk Assessment Report; (c) the Compliance Policy and the documents evidencing its implementation; and (d) documents evidencing the provision of Training, including all materials used in the Training. 27. The Respondent must provide a copy of each Compliance Program Review Report to the ACCC within 14 days of its receipt from the Reviewer. 28. If requested in writing by the ACCC, the Respondent must, at its own expense, provide copies of documents and information constituting or evidencing compliance or non-compliance with the Order of the Court.
IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION SAD 57 of 2011
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
JUDGE: LANDER J DATE: 18 January 2013 PLACE: ADELAIDE
REASONS FOR JUDGMENT 1 The Australian Competition and Consumer Commission (the ACCC) brought an application seeking declarations that The Jewellery Group Pty Limited, which carries on a business under the name of "Zamel's" (Zamel's), engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 52 and s 53(e) of the Trade Practices Act 1974 (Cth) (TPA). 2 The ACCC also sought other orders including a pecuniary penalty in respect of the contraventions of s 53(e) of the TPA; an order that Zamel's publish corrective advertisements; and an order that Zamel's establish a compliance and education/training program. 3 The parties agreed that the proceeding should be heard by way of a two-stage process; first, by an inquiry into whether the ACCC had established the contraventions of which it complained; and secondly, if the ACCC had established those contraventions, the relief that should follow. The matter proceeded in that way and on 16 August 2012 I published my reasons for finding that the ACCC had established that Zamel's had contravened s 52 and s 53(e) of the TPA as alleged: Australian Competition and Consumer Commission v Jewellery Group Pty Limited [2012] FCA 848. 4 The proceeding was adjourned to allow the parties to present any further evidence upon which they intended to rely on the hearing for relief. 5 In my reasons published on 16 August 2012, I found that Zamel's contravened the sections referred to by the use of its advertising of its "was/now" and "strike through/sale" pricing, also referred to as "dual pricing". 6 I found that the ACCC had established that Zamel's had contravened those provisions in respect of 44 items in the Zamel's May 2010 catalogue, and in respect of 20 of those items, in one or more of the following Zamel's catalogues and flyer: 1.1 pre-Christmas 2008 catalogue; 1.2 February 2009 catalogue; 1.3 May 2009 catalogue; 1.4 July 2009 catalogue; 1.5 pre-Christmas 2009 catalogue; and 1.6 January 2010 flyer; as alleged by the ACCC in its statement of claim. 7 I accepted the ACCC's contention that Zamel's, in its advertising in the catalogues and flyers referred to, by using the "was/now" or "strike through/sale" pricing, represented that there would be a saving of an amount being the difference between the "was" price and the "now" price, or the "strike through" price and the "sale" price during the relevant catalogue or flyer sale period. 8 The representation was false and misleading to consumers who were unaware of the ability to obtain a discount at Zamel's stores outside of a sale period (unaware customers) and who would not have paid the "was" or "strike through" price and achieved the savings, if the items had been purchased outside the relevant sale period. 9 The ACCC sought at the further hearing: (1) a declaration that Zamel's had contravened s 52 and s 53(e) of the TPA; (2) an order imposing a pecuniary penalty of $600,000 on Zamel's in relation to contraventions of s 53(e) of the TPA made in the May 2010 catalogue; (3) an order that Zamel's publish corrective advertising; (4) an order that Zamel's implement a compliance program; (5) an order that Zamel's pay the ACCC's costs. 10 The ACCC provided written submissions in support of the orders sought and draft minutes of order. Zamel's provided written submissions in opposition to some of the orders sought. 11 At the completion of the hearing, Zamel's accepted that it would be appropriate to make the orders sought by the ACCC, save that the declaration should be in a form slightly different to that proposed by the ACCC and the pecuniary penalty should not exceed $50,000. 12 Section 21 of the Federal Court Act 1976 (Cth) provides that the Court may in civil proceedings make binding declarations of right even if no other consequential relief is or could be claimed. The source of the power in s 21 is s 39B(1A)(c) of the Judiciary Act 1903 (Cth). The Court has a wide discretion under s 21 to make a declaration which reflects the outcome of the proceeding. 13 The jurisdiction of the Court to make a declaration that a respondent has contravened a provision of the TPA is undoubted: RAIA Insurance Brokers Ltd v FAI General Insurance Co Limited (1993) 41 FCR 164. 14 A declaration will only be made if there is some utility in making the declaration. A declaration might be made where it is appropriate to record the Court's disapproval of the contravening conduct: Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 at 99-100. A declaration will be more likely to be made in circumstances of that kind where the proceeding in which the declaration is sought involves a matter of public interest. 15 The declaration which is to be made should not be in general terms. It should state precisely why the conduct complained of amounted to a contravention of the TPA: BMW Australia Ltd v Australian Competition and Consumer Commission (2004) 207 ALR 452. 16 As I have already said, in the end result Zamel's did not dispute that a declaration should not be made - a position which, in my opinion, was appropriately taken. 17 In this case, a declaration will have utility. It will inform the parties and the public, and other persons engaged in advertising of the kind engaged in by Zamel's, the circumstances in which "was/now" and "strike through/sale" price advertising will contravene the TPA. 18 It will also record the Court's disapproval of the conduct engaged in by Zamel's in contravening the TPA. 19 The ACCC submitted a form of declaration in its draft minutes of order. During the hearing, Zamel's conceded that a declaration should be made but, as I have said, questioned the form submitted by the ACCC. 20 The parties agreed to reconsider the form of the declaration and, after the hearing, the parties provided a declaration that was agreed with one minor exception. The declaration upon which the parties agreed more precisely identified the contravening conduct. The point of disagreement was whether, as Zamel's submitted, the words "some or all of" should be included in the body of the declaration before paragraphs (e) and (f). The ACCC submitted that the words are unnecessary. I accept Zamel's submission because it is consistent with my earlier reasons. It cannot be said that all of the unaware customers would necessarily have not paid the "was" or "strike through" price, so that it would be appropriate to make the declaration in the terms submitted by Zamel's. 21 Zamel's did not dispute that the Court should make a publication order of the kind which will be made, accepting that such jurisdiction arose under s 86C(2)(d) and s 86D of the TPA. The publication order will require Zamel's, at its expense, to publish, in newspapers circulating in the States and the Australian Capital Territory, an advertisement prominently displayed in the form of Appendix 2 to the orders made. Zamel's will also be required to publish on its website, for a period of 60 days, a notice exhibiting corrective advertising again in the form of Appendix 2 to the orders made. 22 In my opinion, directing advertising orders are appropriate in this case for the reasons given in Medical Benefits Fund of Australia Ltd and Another v Cassidy and Another (2003) 135 FCR 1 at [49]-[53]. The three principal reasons are first to protect the public interest by dispelling incorrect or false impressions caused by earlier advertising that amounts to conduct that is misleading and deceptive; secondly, to alert consumers to the fact that the contravening party has engaged in misleading and deceptive conduct; and thirdly, to provide personal deterrence to ensure there is to be no repetition of the contravening conduct. 23 In this case, as the ACCC has contended, there has been widespread publication of the representations that amounts to misleading and deceptive conduct. Approximately three million copies of each of the pre-Christmas 2008, February 2009, May 2009 and July 2009 catalogues were distributed by letterbox nationally. A further 200,000 copies were made available to consumers in Zamel's stores. In addition, each catalogue was published on Zamel's website during the catalogue sale period. 3.4 million copies of each of the pre-Christmas 2009 and May 2010 catalogues were distributed by letterbox drop nationally. Again, a further 200,000 copies were made available to consumers in Zamel's stores throughout Australia. Again, each of these catalogues was published on the Zamel's website during the catalogue sale period. 48,000 copies of the January 2010 flyer were made available to consumers in Zamel's stores throughout Australia. It was also published on Zamel's website during the flyer sale period. 24 Not only were the representations widely distributed, the representations were made over a lengthy period of time between mid-November 2008 and the end of May 2010. 25 For those reasons, Zamel's was right to concede that the publication order should be made. 26 A compliance order can be made under s 86C of the TPA. Zamel's concedes, rightly in my opinion, that a compliance order should be made. In this case, a compliance order should be made to ensure that Zamel's and its officers and agents are made fully aware of their obligations under the Australian Consumer Law, which now includes the equivalent provisions to the repealed s 52 and s 53(e) of the TPA, which would make it more likely that future contraventions would not occur. The compliance order sought by the ACCC will be made. 27 That leaves the question of the civil penalty to be imposed. 28 The jurisdiction to order a person to pay a pecuniary penalty is given by s 76E(1) of the TPA, which was introduced into the TPA by the Trade Practices Amendment (Australian Consumer Law) Act (No 1) 2010 (Cth) and commenced on 15 April 2010. A pecuniary penalty can, therefore, only be imposed in relation to any contravening conduct that took place on or after 15 April 2010. That means, in this case, the only pecuniary penalty that can be imposed is in respect of Zamel's contravening conduct arising from its publication of the May 2010 catalogue. 29 Item 2 of s 76E(3) of the TPA and s 4AA of the Crimes Act 1914 (Cth) jointly provide that the maximum pecuniary penalty that can be imposed upon a body corporate under s 76E for each act or omission in contravention of s 53(e) is $1.1 million. The penalty is to be imposed upon The Jewellery Group Pty Ltd (ACN 124 077 729), the owner of the Zamel's business. 30 The contravening conduct which has been established in relation to the May 2010 catalogue is in respect of 44 separate items, which were published in 3.6 million copies of the May 2010 catalogue and published on Zamel's website. 31 It would not be appropriate, however, to address the question of a pecuniary penalty by an itemisation of the number of units and the number of times that the misleading and deceptive conduct was made in each of the catalogues that were distributed but, as the ACCC contended, by imposing a single pecuniary penalty in respect of the contravening conduct in the publication of the May 2010 catalogue. 32 Section 76E(2) requires the Court to have regard to the following matters in determining the appropriate level of a pecuniary penalty: (1) the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; and (2) the circumstance in which the act or omission took place; and (3) whether the person has previously been found by the Court … to have engaged in any similar conduct. 33 Section 76 of the TPA also addresses pecuniary penalties but in respect of other contraventions of provisions of the TPA. In Trade Practices Commission v CSR Limited [1991] ATPR 41-076 ("TPC v CSR Ltd") at 52,152-52,153, French J said the following matters were matters to which regard should be had in determining the appropriate pecuniary penalty: (1) The nature and extent of the contravening conduct. (2) The amount of loss or damage caused. (3) The circumstances in which the conduct took place. (4) The size of the contravening company. (5) The degree of power [the contravening company] has, as evidenced by its market share and ease of entry into the market. (6) The deliberateness of the contravention and the period of which it extended. (7) Whether the contravention arose out of the conduct of senior management or at a lower level. (8) Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention. (9) Whether the company has shown a disposition to cooperate with the authorities responsible for the enforcement of the Act in relation to the contravention. 34 In Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd [1996] ATPR 41-515 ("ACCC v NW Frozen Foods") at 42,444, Heerey J added to that list the need for an inquiry into whether the conduct was systematic, deliberate or covert. 35 In Global One Mobile Entertainment Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 134, the Full Court said that the principles that had been developed in relation to the assessment of a pecuniary penalty under s 76 were relevant in the assessment of a penalty under s 76E. However, the Court must keep in mind the differences between contraventions of Part IV of the TPA, which s 76 addresses, and contraventions of Division 1 of Part V of the TPA which contains s 53(e), which s 76E addresses. 36 The principal object of a pecuniary penalty is deterrence: Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd [1978] ATPR 40-091 at 17,896. There are two aspects of deterrence which are important in assessing the appropriate penalty; specific and general. 37 The penalty must be high enough to deter any repetition by the contravening company and any like-minded company which might be tempted to contravene the TPA: TPC v CSR Ltd at 52,152. The Court must have regard to ensuring that the penalty is not so low as to encourage corporations to take a strategic decision to contravene the TPA. 38 In assessing that part of the pecuniary penalty that embraces specific deterrence, regard must be had to the size of the contravening corporation and its market share. 39 In ACCC v Liquorland (Australia) Pty Ltd (ACN 007 512 419) [2005] ATPR 42-070 at [68], Gyles J, and in Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [2011] FCA 372 at [36], Gordon J, and more recently in Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) [2012] FCA 629 at 140, Murphy J, said that in considering a pecuniary penalty the Court should proceed in accordance with the principles identified in Markarian v The Queen (2005) 228 CLR 357. 40 I do not disagree with that proposition but, of course, it must be remembered that Markarian v The Queen involved an accused who had pleaded guilty to knowingly taking part in the supply of a commercial quantity of heroin, which was an offence that attracted a maximum period of imprisonment of 20 years. There are elements of a sentence in the criminal law which are not relevant to the appropriate assessment of a pecuniary penalty; for example, retribution. 41 However, I do not disagree that a Court in assessing a pecuniary penalty can determine that penalty by proceeding in a similar manner to that suggested by the High Court for a sentence in the criminal law. 42 The Court will have regard to the maximum penalty that is available to be imposed, because that penalty has been set by the legislature and is reserved for the worst possible case, and in that sense provides a yardstick for the penalty to be imposed. 43 In assessing the penalty, the Court will not adopt a mathematical approach of increments or decrements from the maximum penalty or from some other pre-determined range, or assign specific numerical or proportionate value to the various relevant factors. The Court will not determine a sentence and then adjust it mathematically for a respondent's acceptance of the contraventions or a respondent's assistance with the ACCC. 44 The Court's processes must be transparent and therefore the Court must give reasons why it is of the opinion that a particular pecuniary penalty to be imposed is appropriate in the circumstances of the case. 45 It will reach that view by having regard to all of the matters to which I have referred in s 76E and in TPC v CSR Ltd and ACCC v NW Frozen Foods. 46 At the time of the contraventions, i.e. the publication of the May 2010 catalogue, there was somewhere between 93 and 101 Zamel's stores that employed approximately 1,000 people operating in Australia. The May 2010 catalogue was a Mother's Day catalogue, with a catalogue sale period which ran for six weeks. As I have already said, 3.6 million copies of the catalogue were distributed, of which 200,000 were made available in Zamel's stores around Australia. Again, as I have already said, the catalogue was published on Zamel's website between 26 April 2010 and 23 May 2010. 47 The cost of publishing the catalogue was around $400,000. The purpose of the publication of so many catalogues was to interest and induce as many consumers as possible to purchase jewellery. It is not clear how many of those consumers who read the catalogue or visited the website were unaware customers but, as I have said in my reasons of 16 August 2012, the size of the audience was significant enough to warrant the cost of the advertising campaign, although it must be recognised that the May 2010 catalogue did not restrict itself to the 44 items to which reference has been made. 48 At the time the catalogue was published, Zamel's had a vigorous discounting policy, which meant that Zamel's customers rarely paid the ticketed prices of items during the periods outside catalogue sales period. 49 The Jewellery Group Pty Limited acquired Zamel's business from Ascot Four Pty Ltd in April 2007 when a proceeding was on foot concerning representations made by way of a "strike through/sale price" in respect of 11 jewellery items in Zamel's Christmas 2005 catalogue. In August 2008, Ascot Four Pty Ltd was found guilty of 11 counts of making a false or misleading representation in contravention of s 75AZC(1)(g) of the TPA, for which a fine of $380,000 was imposed. Mr Murphy, who is the CEO of The Jewellery Group Pty Limited, was aware of those proceedings. 50 Zamel's sought legal advice from Minter Ellison and received advice in July/August 2009. The advice that it was given was that Zamel's ought to utilise actual sales when identifying the appropriate "was" price or "strike through" price for any items. 51 For reasons unexplained, Zamel's did not adopt the advice that was given and, instead, adopted the contravening conduct to which I have referred. 52 Zamel's was on notice prior to the publication of the May 2010 catalogue that it was being investigated in relation to its advertising, because it received on 8 April 2010 a notice pursuant to s 155 of the TPA requiring it to provide information and documents to the ACCC. 53 Zamel's conduct was deliberate in that it did what it did knowing the advice that it had been given by its solicitors and knowing that it was subject to investigation by the ACCC for its previous advertising policy. 54 It is very difficult to identify the amount of loss or damage caused because of the difficulty in ascertaining the size of the class of unaware customers. 55 As I said in my reasons, the unaware customers comprised a significant audience greater than 10 per cent of persons to whom the catalogue was published. In the period prior to the sales period of the May 2010 catalogue, the sales of the 44 items totalled $273,992. In the catalogue sales period following the publication of the May 2010 catalogue, the same 44 items brought a total price of $389,572. It would be inappropriate to attempt to analyse those sales any more than by reference to the raw figures, because there is not sufficient data available to make an informed decision. 56 Zamel's considered its solicitor's advice and approved the full recommended retail price advertising campaign, specifically resolving that Zamel's should adopt a policy of ticketing items at the full recommended retail price for a six week period prior to a scheduled promotion, for the purpose of using the ticketed price as the "was" or "strike through" price. Mr Murphy approved each promotion. The conduct complained of was determined at the highest level. 57 The Jewellery Group Pty Limited has not previously been involved in any contravening conduct, although the business which it had acquired from Ascot Four Pty Ltd (Zamel's) had been. Nevertheless, it is not the business which is the respondent in this proceeding. It is The Jewellery Group Pty Limited and the Court should proceed upon the basis that it has not previously engaged in contravening conduct of the kind now under consideration. 58 The Jewellery Group Pty Limited operates two retail jewellery businesses throughout Australia, the other being under the name Mazzucchelli's. It has previously operated other retail jewellery businesses. As I have said, it operated somewhere between 93 and 101 Zamel's stores at the time of the May 2010 contravening conduct. 59 Mr Lachlan Gunn, Chief Financial Officer of The Jewellery Group Pty Limited, annexed to his affidavit filed 31 October 2012 a schedule setting out the sales for the two businesses and the earnings before income tax for Zamel's and for The Jewellery Group Pty Limited, which relevantly provides: Year Ended Total Number Zamels Plu's sold during year Total Sales for The Jewellery Group Total Zamels sales EBITDA for The Jewellery Group EBITDA for Zamels 30 June 2009 1,214,335 $138,880,398 $98,455,376 $5,332,460 $2,889,750 30 June 2010 1,093,581 $132,879,603 $92,957,240 $5,313,573 $2,136,400 30 June 2011 1,216,457 $139,178,139 $97,259,378 $3,158,158 $733,600 30 June 2012 969,938 $144,436,951 $93,793,521 $1,595,306 $(1,294,822)
60 The Jewellery Group Pty Limited makes significant sales in its two businesses. The total sales have increased by about $5.5 million over the last three financial years, but have decreased by about $5 million in Zamel's business. That would mean that Mazzuccheli's must have increased its sales by about $10 million. 61 The EBITDA for The Jewellery Group Pty Limited dropped by nearly $4 million over that period, which can be attributable to Zamel's business in which earnings have dropped by a little more than $4 million, resulting in a loss in the last financial year of $1,294,822. It would appear that the earnings for the stores of Mazzucchelli's have remained nearly constant, notwithstanding the increase in sales. 62 Nevertheless, The Jewellery Group Pty Limited is not an insignificant player in the retail jewellery industry. Its income exceeds its expenditure. 63 At the time of the contravening conduct, Zamel's did not have a compliance program in relation to its obligations under the consumer protection provisions of the TPA for the Zamel's stores. Although Zamel's did review items for promotion using the "was/now" and "strike through/sale" pricing in accordance with the dual price advertising policy approved by the Board, it gave no consideration to the actual price at which those items had been sold in the relevant sales period prior to the promotion. 64 Zamel's was entitled to, and did, deny that it had contravened the provisions of the TPA, and any pecuniary penalty to be imposed should not be increased because Zamel's exercised its legal rights. However, in assessing the appropriate penalty, the Court cannot have regard to any contrition or remorse on Zamel's part. 65 As I have said earlier, the main purpose for the imposition of pecuniary penalties is deterrence, both specific and general. 66 Consumers must be entitled to rely upon retailers not engaging in misleading or deceptive conduct in advertising their products. The purpose of the particular provisions of the TPA with which this proceeding is concerned is for the protection of people from misleading and deceptive conduct, or conduct that is likely to mislead or deceive. 67 Zamel's should be deterred from engaging in any further conduct of this kind. Moreover, the penalty must be sufficient to deter any like-minded retailer from engaging in the same conduct. 68 As I said earlier, the ACCC on the one hand seeks a penalty of $600,000 and Zamel's says the penalty should be no higher than $50,000. 69 I think having regard to the matters to which I have referred, an appropriate penalty would be $250,000 and I will order accordingly. 70 For those reasons, the Court makes the following declaration and orders that:
Australian Competition and Consumer Commission
Jewellery Group Pty Limited
(2004) 207 ALR 452
(2005) 228 CLR 357
(2003) 135 FCR 1
(1993) 41 FCR 164
(1993) 41 FCR 89