Penalties
55 Civil penalties may be imposed for some, but not all, contraventions of the ACL. Section 224(1) relevantly provides that the court may order a person to pay to the Commonwealth "such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the court determines to be appropriate". The section applies to contraventions of a provision of Pt 3-1, which includes ss 29 and 33. But not to contraventions of s 18.
56 Section 224(2) provides that in determining the appropriate pecuniary penalty, the court must have regard to all relevant circumstances including:
(a) the nature and extent of the act or omission and of any consequential loss or damage;
(b) the circumstances in which the act or omission took place; and
(c) whether the person has previously been found by a court in proceedings under Chapter 4 or Pt 5-2 to have engaged in any similar conduct.
57 Careful attention is "almost always" required to be paid to the maximum penalty for a contravention, not least because the Parliament has legislated a maximum and this invites comparison between the worst possible case and the case at hand so that, balanced with other factors, it is "a yardstick": Markarian v The Queen (2005) 228 CLR 357 at [31]; Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 at [154]-[155].
58 In the case of a body corporate, before 1 September 2018 the maximum penalty for each act or omission to which s 224 applied was $1.1 million: s 224(3). Thereafter, the maximum jumped to the greater of the following amounts:
(a) $10 million;
(b) if the court can determine the value of the benefit obtained from the contravention, three times the value of the benefit; or
(c) if the court cannot determine the value of the benefit, 10% of the body corporate's annual turnover during the 12-month period ending at the end of the month in which the act or omission occurred or started to occur.
See s 224(3A).
59 So what are the contraventions?
60 Schedules 1 and 2 to these reasons set out the relevant conduct in tabular form. Each time they were read and for the duration of the period the statements and representations were visible, there was a contravention of ss 29(1)(h) and/or 33: Reckitt at [145]. In this case, that means that there were millions of contraventions. It also means that it is difficult to determine the theoretical maximums. In Reckitt, where a similar difficulty arose, the Full Court considered that there was "no meaningful overall maximum penalty" (at [157]) so that the best way to assess penalty was by reference to other factors.
61 Where conduct constitutes a contravention of two or more provisions of the ACL, the contravener is not liable to pay more than one penalty "in respect of the same conduct": ACL, s 224(4). The parties agree that the contraventions of ss 29(1)(h) and 33 arise from wholly distinct conduct, namely the Rose Charities Representations on the one hand and the Pair for a Pair Conduct on the other. Nevertheless, separate acts giving rise to separate contraventions may be so inextricably interrelated that they may properly be regarded as part of the one course of conduct: Australian Competition and Consumer Commission v Yazaki Corporation (2018) 262 FCR 243 at [234]. The Full Court explained in Australian Competition and Consumer Commission v Cement Australia Pty Ltd (2017) 258 FCR 312 at [424] that "the course of conduct principle can be conceived of as a recognition by the courts that the deterrent effect in respect of a civil penalty (at both a specific and general level) is measured by reference to the nature of the conduct for which it is imposed". The principle of sentencing which has been applied to civil penalties is that "[w]here there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality": Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; 269 ALR 1; 194 IR 461 at [39] (Middleton and Gordon JJ). As Beach J explained in Australian Energy Regulator v Snowy Hydro Limited (No 2) [2015] FCA 58 at [119], this approach does not convert the maximum penalty for a single contravention into the maximum penalty for a course of conduct; rather, it means that the statutory maximum for a single contravention operates as a guide to Parliament's assessment of the gravity of this kind of wrongdoing.
62 I accept the parties' submission that it is appropriate to group the many contraventions arising from the Pair for a Pair Conduct into four courses of conduct, one for each type of media through which Oscar Wylee separately gave effect to the conduct: the Oscar Wylee website; Oscar Wylee's social media network (Facebook and Instagram); Oscar Wylee's direct emails to consumers (newsletters and order confirmations); and Oscar Wylee's promotional merchandise (business cards and in-store booklets). Likewise, I accept that it is appropriate to group the many contraventions arising from the Rose Charities Representations into three courses of conduct on the same bases. In this instance, Oscar Wylee's website; Oscar Wylee's social media network (Facebook, YouTube, and Vimeo); and Oscar Wylee's in-store signage.
63 The approach to be taken to fixing a civil penalty was described by Allsop CJ in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; 327 ALR 540; ATPR ¶42-494 at [6]-[10].
64 The High Court confirmed in Commonwealth v Director that the principal object of civil penalties is deterrence, both general and specific. That is to say, the penalty should be fixed with the object of deterring the contravener from reoffending and others from following suit. As the Full Court put it in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; 287 ALR 249; ATPR ¶42-387 at [68], in fixing a penalty the Court must make it clear to both the contravener and the market "that the cost of courting a risk of contravention … cannot be regarded as [an] acceptable cost of doing business" and earlier, at [63], "those engaged in trade and commerce must be deterred from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention". These remarks were approved by the High Court in Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [64], [66] (French CJ, Crennan, Bell and Keane JJ).
65 On the question of general deterrence, I accept and endorse the parties' submissions:
76. First, a strong deterrent penalty is required to ensure that consumers are not misled. Advertising campaigns centred around charitable giving are not uncommon throughout the retail sector and have the potential to provide a point of difference and increase sales in an often crowded market. It is axiomatic that the maintenance of a fair, reliable and efficient market depends upon consumers having confidence that they are being given reliable, truthful and accurate information. It is therefore important that businesses recognise this in how they choose to present their goods or services. If misrepresentations in the industry are not seen to attract appropriate penalties, the necessary consumer confidence will be undermined: see ACCC v Coles Supermarkets Australia Pty Ltd (2015) 327 ALR 540, [95].
77. Second, a strong deterrent penalty is required to ensure that consumer choices are not distorted. The conduct exploited consumers' desire to support charitable causes and sought to enhance the perceived value of Oscar Wylee's goods and services via association with altruistic purposes. This type of conduct is particularly harmful as the representations could not be easily checked or monitored by consumers. There should be no room for the impression that it is worth courting the risk of such contravention (because it may not be detected or because the penalties could be treated as a mere cost of doing business). A strong penalty will prevent any such cynical profit/risk calculus: see Commonwealth v Director, [110]; TPG Internet, [66]; Singtel Optus, [61]- [64]; Reckitt, [149]-[153].
78. Third, retailers should be left in no doubt as to the costs of non-compliance with the ACL. The imposition of strong penalties in the present case will encourage compliance. It will also send a warning to other businesses that they cannot, by non-compliance, gain a competitive advantage over those [who] do comply: Reckitt, [149]-[152].
66 It is common ground that there is also a need for specific deterrence as the commercial drivers for the contravening conduct are still present, the conduct was part of a deliberate marketing campaign over a five year period and senior management were directly involved throughout. The fact that the conduct only came to an end after the intervention of the ACCC underscores its importance.
67 The parties jointly submitted that the following penalties would have the appropriate deterrent effect:
Course of conduct Contraventions Penalty
Pair for a Pair Conduct
Oscar Wylee website s 33 $1.4 million
Social media network s 33 $300,000.00
Direct emails to consumers s 33 $350,000.00
Promotional merchandise s 33 $ 50,000.00
TOTAL $2.1 million
Rose Charities Representations
Oscar Wylee website s 29(1)(h) $700,000.00
Social media network s 29(1)(h) $450,000.00
In-Store signage s 29(1)(h) $250,000.00
TOTAL $1.4 million