Australian Competition and Consumer Commission v Terania Pty Ltd

(b) within one week of attending the seminar, notify the applicant of his attendance.

1. The respondents, whether by themselves, their servants, agents or otherwise in connection with the sale and promotion of the sale of rugs or manchester products to the public be restrained from making representations that: 1.1 they intend to end a sale on a particular date and/or time; 1.2 a sale will end on a particular date and/or time; or 1.3 they will sell or otherwise dispose of their entire stock by a particular date and/or time; unless at the time of making those representations they: 1.4 with respect to the representation referred to in paragraph 1.1 above, have such an intention or expectation; or 1.5 with respect to the representation referred to in paragraphs 1.2 and 1.3 above, have reasonable grounds for making such representations. 2. The respondents, whether by themselves, their servants, agents or otherwise be restrained from offering for sale or promotion to the public rugs or manchester products, having marked those products with one ticket at which the goods are to be offered for sale (the sale price) and another ticket stating a higher price (the was price) unless those products have previously been offered for sale by the respondents or another retailer at the was price. 3. Leave be granted to the respondents to withdraw the Defence filed by them in these proceedings. 4. The respondents and each of them, in the event they engage in trading activities in Australia in the three years from the date of these orders, shall: 4.1 implement a Trade Practices Compliance Program in the manner and form described in Annexure A to these orders within three months of commencing trading activities; and 4.2 maintain and continue to implement the said program for a period of three years from the date of commencing trading activities. 5. The respondents pay to the applicant its costs of and incidental to these proceedings, including any costs previously ordered or reserved, fixed in the sum of $50,000.00.

ANNEXURE A TRADE PRACTICES COMPLIANCE PROGRAMME 1. Terania Pty Ltd (ACN 054 575 692) ("Terania") and Australian Rug Expos Pty Ltd (ACN 111 808 952) ("ARE") will establish a Trade Practices Compliance Programme ("the Compliance Programme"). 2. Terania and ARE will use their best endeavours to ensure that the Compliance Programme is designed and implemented so as to comply with each of the following requirements: 2.1 the Compliance Programme is to cover all officers, employees, representatives and agents of Terania and ARE who perform duties in Australia; 2.2 the Compliance Programme is to inform the officers, employees, representatives and agents of Terania and ARE who perform duties in Australia of the application of Division 1 of Part V ("the relevant provisions of the Act") of the Trade Practices Act ("TPA") to the business of Terania and ARE; 2.3 the Compliance Programme must require the appointment of a senior officer ("the Compliance Officer"), within 3 months of commencing trading activities, whose responsibilities are to include the maintenance and continuing implementation of the Compliance Programme and who reports directly to the company board or governing body; 2.4 Terania and ARE shall appoint a qualified, internal or external compliance professional with expertise in trade practices issues ("the Compliance Advisor") within 3 months of commencing trading activities for the purpose as set out in paragraph 2.5; 2.5 Terania and ARE shall instruct the Compliance Advisor to conduct a TPA risk assessment ("the risk assessment") in accordance with the following: 2.5.1 identify the areas where Terania and ARE are at risk of breaching Division 1 of Part V of the TPA; 2.5.2 assess the likelihood of these risks occurring and the consequences of the risks to the business operations of Terania and ARE, should they occur; 2.5.3 identify where there may be gaps in Terania's and ARE's existing procedures for managing these risks; and 2.5.4 provide recommendations for action having regard to the assessment; 2.6 the Compliance Programme is to require officers, employees, representatives and agents of Terania and ARE to confidentially notify the Compliance Officer of potential breaches of the relevant provisions of the TPA and the Compliance Programme by Terania and ARE; 2.7 the Compliance Programme is to include a complaints handling system that is consistent with Australian Standard AS4269-1995; 2.8 the Compliance Programme must require the Compliance Officer to keep and maintain a register of potential breaches and/or complaints related to the relevant provisions of the TPA; 2.9 the Compliance Programme must require the development of a disciplinary policy or code for those employees and agents who do not comply with the Compliance Programme or the relevant provisions of the TPA; 2.10 the Compliance Programme must require that compliance with the Compliance Programme and the relevant provisions of the TPA is a key performance indicator for all employees; 2.11 the Compliance Programme is to provide for the conducting of regular trade practices training (at least once a year) by an internal designated compliance trainer (who has been trained by a solicitor or compliance professional with expertise in trade practices law) and/or a solicitor or compliance professional with expertise in trade practices law for all officers, employees, representatives and agents of Terania and ARE; and 2.12 the Compliance Programme is to provide for an induction programme on trade practices compliance issues to be undertaken by all new officers, employees, representatives and agents of Terania and ARE within 3 months of his or her engagement. 3. Terania and ARE shall, at their own expense, within 4 months of commencing trading activities, cause to be produced and provided to the ACCC copies of each of the documents constituting the Compliance Programme, together with a letter confirming that the Compliance Programme has been implemented in accordance with the requirements of the order in paragraph 4. 4. Terania and ARE shall, at their own expense and for the purpose of ensuring that Terania and ARE maintain and continue to implement the Compliance Programme, cause a review of the Compliance Programme ("the review") to be carried out in accordance with each of the following requirements: 4.1 Terania and ARE shall ensure that the review is carried out by an independent compliance professional with expertise in trade practices law ("the reviewer"). The reviewer will qualify as independent on the basis that he or she: 4.1.1 is not a present or past staff member or director of Terania and/or ARE: 4.1.2 has not acted or does not act for Terania and/or ARE other than reviewing the Compliance Programme of Terania and/or ARE; 4.1.3 is not retained by Terania and/or ARE in any other capacity, either currently or in the past other than in the capacity of being engaged to review the Compliance Programme of Terania and/or ARE; 4.1.4 has not and does not provide consultancy or other services for Terania and/or ARE other than reviewing the Compliance Programme of Terania and/or ARE; 4.1.5 has no shareholding or other interests in Terania and/or ARE; and 4.1.6 is not the Compliance Advisor appointed pursuant to paragraph 2.4; 4.2 Terania and ARE shall use its best endeavours to ensure that the reviewer: 4.2.1 conducts a critical review as to whether the Compliance Programme has been implemented in compliance with each of the requirements of the order in paragraph 4; and 4.2.2 makes such recommendations as he/she considers necessary to ensure that the Compliance Programme complies with each of the requirements of the order in paragraph 4; 4.3 Terania and ARE shall ensure that the review is able to be conducted by the reviewer on the basis of any relevant information in Terania and/or ARE's possession or control, including without limitation any of the following sources of information: 4.3.1 investigations of any officer, employees, representatives and agents of Terania and/or ARE to find out how compliance processes are implemented and understood; 4.3.2 enquiries of customers about their experience of Terania and/or ARE and its products/services; 4.3.3 Terania's and/or ARE's records, including its complaints register and any documents relevant to its training or induction programme; and 4.3.4 documents created by Terania's and/or ARE's consultants and solicitors for use in Terania's and/or ARE's Compliance Programme; 4.4 Terania and ARE shall use their best endeavours to ensure that a review is completed one year after the Compliance Programme is established, and at the conclusion of each period of 12 months during which the Compliance Programme is being maintained and implemented; 4.5 Terania and ARE shall use their best endeavours to ensure that the reviewer sets out the findings of the review in a written report ("the review report") and provided to Terania and ARE within 14 days of the completion of the review. The review report is to include a record of any potential contraventions of relevant provisions of the TPA and the Compliance Programme that were identified during the review and the action taken to address the potential contravention. 5. Terania and ARE shall implement promptly and with due diligence the recommendations which the reviewer may make that are reasonably necessary to ensure that Terania and/or ARE maintains and continues to implement the Compliance Programme in accordance with the requirements of the order in paragraph 4. 6. Terania and ARE shall use their best endeavours to ensure that the reviewer sets out details of the implementation and administration of the Compliance Programme in a written report ("Commission Compliance Program Review Report") to be provided to the ACCC within 14 days of the completion of each review. 7. Terania and ARE, shall at their own expense, if requested by the ACCC, provide copies of documents and information in respect of matters which are the subject of the Compliance Programme. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

NORTHERN TERRITORY DISTRICT REGISTRY NTD 7 of 2007

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

REASONS FOR JUDGMENT 1 Terania Pty Ltd (Terania) and Australian Rug Expos Pty Ltd (ARE) were at all material times trading corporations within the meaning of the Trade Practices Act 1974 (Cth) (the Act). They are related entities. Terania has one director, Barry Solomon and has two issued shares, one to Mr Solomon and other held by Dianne Solomon. ARE has 100 issued shares of which one is held by Mr Solomon and the remaining 99 by Terania, so it is controlled by Terania. 2 The Australian Competition and Consumer Commission brought these proceedings for injunctive orders under s 80 and other relief under s 86C of the Act against Terania and ARE for contraventions by each of them of s 52 of the Act, and for costs. The Court may make such orders only if the alleged contraventions are made out: Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150. 3 The parties are agreed upon the orders which are sought, and upon the facts upon which those orders are sought. They have presented a statement of agreed facts, and proposed orders. The statement of agreed facts includes reference to allegations in the application which are admitted, and to specified paragraphs of the amended statement of claim which are also admitted. Indeed, Terania and ARE by the proposed agreed orders seek to withdraw their defence. 4 I am prepared to make findings on the foundation of that material. The following represents my findings of fact. 5 The business of ARE involved conducting sales for a short period at a hired venue such as a showground or pavilion. Between February 2005 and March 2007, ARE conducted six sales of rugs and manchester products, five in Darwin and one in Canberra. Despite the relationship of Terania to ARE, both Terania and ARE have admitted that those sales, and the conduct of which the ACCC complains in relation to them, were conducted jointly by Terania and ARE and is conduct for which they are jointly responsible. Consequently, my findings are made against each of them. 6 The agreed facts acknowledge that there were six sales at which conduct in contravention of s 52 of the Act was engaged in by Terania and ARE. The sales in Darwin occurred in the periods February-March 2005; October 2005; February-March 2006; August-September 2006; and March 2007. The sale in Canberra, which was confined to manchester products (at least so far as the alleged contravening conduct is concerned) took place in July 2005. 7 Terania and ARE conducted the sales in Darwin, involving both rugs and manchester products, by promoting them in a series of television advertisements which comprised one or more of three groups of representations. The representations were that: (a) Terania and ARE intended to end the sales at particular dates and times, and that a sale would end on a particular date and time; (b) Terania and ARE intended to end the sale at particular dates and times, and that the sale would end on a particular date and time, and further that by the completion of the sale they would sell or otherwise dispose of their entire stock of rugs; and (c) Terania and ARE would sell or otherwise dispose of their entire stock of rugs at the completion or upon the completion of the sale. 8 In respect of the sale in Darwin in the period February-March 2005, the first set of representations were made by extensive television advertising firstly on 3 and 4 March (12 advertisements), then on 5 and 6 March (19 advertisements) and on 5 March (seven advertisements) of three different formats. There were 38 advertisements making those representations involved three slightly different forms of advertisement. The sale did not end at 6 pm on 6 March 2005 as each of those advertisements asserted. There were further advertisements relating to that sale published on television on 6 March 2005 (five advertisements) and on 9 March 2005 (nine advertisements) - there were two different forms of advertisement - which asserted by the first block of five that the sale would end by 6 pm on Wednesday, 9 March 2005 and that Terania and ARE would sell or otherwise dispose of their entire stock of rugs by that time, and by the second block of nine that the sale would end by 6 pm on Friday, 11 March 2005 and that Terania and ARE would sell or otherwise dispose of their entire stock of carpets by that time. That sale continued, as the material indicates, beyond those dates. By further advertisements on 10 and 11 March 2005 (eight advertisements), 11 and 12 March 2005 (13 advertisements) and 12 and 13 March 2005 (12 advertisements) Terania and ARE represented by three different forms of advertisement that they would sell or otherwise dispose of their entire stock of carpets by the completion of the sale by 6 pm on Sunday, 13 March 2005. In all, there were 85 advertisements by which representations in the three groups of representations were made in relation to the February-March 2005 sale in Darwin. 9 In the mutual submissions in support of the proposed orders to which the parties wished to submit, those representations are called the duration and clearance representations. I shall adopt that description. 10 At the time those representations were made, they were of course in respect of a future event. Terania and ARE acknowledge that, at the time they made the duration and clearance representations and each of them, they did not have reasonable grounds for making those representations. I so find. Consequently, they thereby engaged in misleading or deceptive conduct in contravention of s 52 of the Act. 11 Similar conduct was engaged in in respect of a further sale conducted in Darwin by Terania and ARE in October 2005. By three separate forms of advertisement published on 20 and 21 October 2005 (12 advertisements), 21 and 22 October 2005 (five advertisements) and 21, 22 and 23 October 2005 (33 advertisements) Terania and ARE asserted that they intended to end the sale at 6 pm on Sunday, 23 October 2005 and that the sale would end at that time. They accept that the sale did not end at that time and that they did not have reasonable grounds for making the representation that it would do so when they made those representations. In addition, by seven different forms of advertisement published during that sale, on 14 and 15 October 2005 (five advertisements) they represented that the sale would end at 6 pm on Sunday, 16 October 2005 and that they would sell or otherwise dispose of their entire stock of rugs by the end of that sale; and on 26 October 2005 (five advertisements), 27 and 28 October 2005 (10 advertisements), 27 October 2005 (one advertisement), 28 October 2005 (three advertisements), 29 October 2005 (three advertisements) and 29 October 2005 (five advertisements) they represented that they would sell or otherwise dispose of their entire stock of rugs at or by the completion of that sale. 12 Terania and ARE accept that they did not have reasonable grounds for making each of those representations at the time they were made. Consequently, in respect of those extensive representations also, I find that they engaged in misleading or deceptive conduct in contravention of s 52 of the Act by making each of the 76 duration and clearance representations in relation to the October 2005 sale in Darwin. 13 A further sale was conducted in Darwin by Terania and ARE in February-March 2006. Similar conduct was engaged in. In that case, there was a running series of nine advertisements on various dates between 24 February 2005 and 7 March 2005, totalling in all 75 advertisements, by which Terania and ARE asserted that they intended to end that sale at particular dates and times, and that the sale would end on a particular date and time. The dates moved progressively from 6 pm on Sunday, 26 February 2006, to 6 pm on Tuesday, 28 February 2006, to 6 pm on Sunday, 5 March 2006, and to 6 pm on Tuesday, 7 March 2006. Terania and ARE accept that those representations were each made without reasonable grounds for making them, and that they thereby engaged in misleading or deceptive conduct in contravention of s 52 of the Act. I so find. During that sale, on 27 and 28 February 2006, they also caused to be published a television advertisement which asserted that the sale would end by 6 pm on Friday, 11 March 2006 and that they would sell or otherwise dispose of their entire stock of rugs at or by the completion of that sale. They accept that they did not have reasonable grounds for making it and that they thereby engaged in misleading or deceptive conduct in contravention of s 52 of the Act. I so find. There were 76 duration and clearance representations in relation to the February-March 2006 sale in Darwin. 14 A further sale took place in Darwin in August and September 2006 in respect of which Terania and ARE caused to be published television advertisements on 16 and 17 September 2006 asserting that the sale, which was to end at 6 pm on Sunday, 17 September 2006, would be completed with them selling or otherwise disposing of their entire stock of carpets. Again, they accept, and I find, that they did not have reasonable grounds for making those representations and that they thereby engaged in misleading or deceptive conduct in contravention of s 52 of the Act. 15 Apart from the duration and clearance representations, Terania and ARE accept that they engaged in misleading and deceptive conduct at certain of those sales by other conduct. That other conduct also was engaged in in respect of the sale which took place in Canberra in July 2005. 16 I find that each of Terania and ARE at each of those four sales in Darwin and the July 2005 sale in Canberra, offered for sale certain manchester products with two distinct stickers, one of which stated the price at which the labelled goods were to be offered for sale (the sale price) and the other which stated a higher price (the was price). They also accept that the manchester labelled with the was price had not previously been offered for sale at the was price by them or by any other retailer from which they had acquired those manchester products, and that the was price had not been affixed by a previous retailer but was affixed by them at the same time as the sale price sticker was affixed to the various manchester products, that is shortly prior to each of the sales. They also accept that the sale price represented the actual price at which the labelled goods were to be offered for sale. As an indication, based on the facts alleged in the statement of claim which are acknowledged to be accurate by Terania and ARE, at the February-March 2005 sale in Darwin certain double bed polar fleece throw rugs were marked with a was price of $109 and a sale price of $26, and a king size Merino wool blanket with a was price of $209 and a sale price of $69. Also, at the July 2005 Canberra sale, quilt bed covers were offered with a was price of $89 and a sale price of $69 and queen size duvet cover sets with a was price of $89 and a sale price of $64. There are a range of other products asserted in the statement of claim with similar discrepancies, where the was price appears to be some two to three times the sale price. There are similar allegations in respect of a range of products in respect of the October 2005 Darwin sale, the February-March 2006 Darwin sale and a sale in March 2007 at Darwin. 17 There is only one aspect of the agreed facts upon which I have not acted. It is agreed that the sales in Darwin referred to in paragraph 10 of the application included occasions when there were television advertisements as to the clearance and duration representations. Paragraph 10 of the application, as I read it, relates only to representations about the sale price and the was price at the Canberra sale during July 2005. I have not therefore accepted that the clearance and duration representations were made in respect of the Canberra sale in July 2005. I suspect the reference to paragraph 10 of the application was in error, particularly as it is in part of the statement of agreed facts which refers only to sales in Darwin. That is a minor matter. 18 Clearly, by the admission of facts contained in the agreed statement of facts (including by reference to allegations in the statement of claim which are admitted), it is within power for the Court to make the orders which are sought: Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 164. In my view, having regard to the nature and the present status of Terania and ARE, and the fact that the parties have agreed upon the nature of the conduct engaged in, and its contravention of the Act, it is also appropriate for the Court in the public interest and to encourage agreed resolution of enforcement proceedings to make the orders which are sought: see Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79. 19 At October 2007, Terania had 61 employees, including both permanent and casual employees. There were 15 permanent employees, of whom three worked "in the events side of the business" and 46 casual employees of whom 27 were employed "on the events". Its permanent employees include a management team which includes two "event managers". ARE at the time had no employees, and if its activities required staff to conduct its sale business, those services were supplied by employees of Terania. In the financial year ended 30 June 2007, Terania had a turnover of approximately $7 million and ARE a turnover of approximately $6 million. 20 I have had regard to the types of conduct which have been admitted and to the findings which I have made as to its character. It is appropriate in a matter such as this to have regard to all the conduct which has been alleged and acknowledged. Clearly, misleading representations as to price are highly likely to mislead consumers and constitute a significant contravention of s 52 of the Act. It is acknowledged that the was price was simply created by the respondents and had no proper foundation. Consumers were likely to have been mislead into believing that the goods in question had previously been offered for sale at the was price, so that the sale price represented a significant reduction from the normal retail price. That may induce consumers to buy those products when they would not otherwise do so. As O'Loughlin J said in Trade Practices Commission v Cue Design Pty Ltd (1996) ATPR 41-475, where a clothing retailer was using dual-priced tags: [T]he natural and probable consequence of a dual-priced swing tag is that members of the buying public would assume that the garment had previously been offered for sale at the higher of the two prices and was now available at the lower price. … It was conduct that preyed on the gullibility of the public. Indeed, such conduct may do more than prey on the gullibility of the public. Members of the public do not routinely know the normal retail price of particular goods. And retail price may depend on the quality of the particular goods. The quality of particular goods may also not be readily apparent to some members of the public. It is not merely the gullible who may regard a was price as a real indication of the normal retail price of particular products, at least as offered by and sold by that retailer. 21 I am a little more troubled about the duration representations. However, in my view, their combination with the pricing tags was likely to mislead the public. It was likely to mislead the public, or at least some members of the public, into the belief that sale prices at which they may be able to procure the particular goods will end at a specific time and so induce purchasing at or by that specific time rather than making a purchasing decision after reflection. It may induce purchases within or by the specified time because the "sale" also misleadingly presented particular goods as being available at a price significantly reduced from that at which they were normally on offer so that they would not be on offer at that "sale" price after the imminent end of the sale. 22 The clearance representations do not present so obvious a contravention of s 52 of the Act, even when taken together with the duration representations and the was price/sale price representations. 23 In Australian Competition and Consumer Commission v Telstra Corporation Ltd (2004) 208 ALR 459, Gyles J said at 467: Reading the numerous cases in this field makes it perfectly apparent that individual judges vary considerably in their assessments of the effect of advertising. Some take a robust view and credit consumers with a fair amount of cynicism about advertisements and a fair amount of ability to make their own judgments. Others are convinced of the power of advertisements and are protective of the consumer. Neither side is right or wrong - it is a matter of opinion. Those comments recognise that what is called "puffery" or exaggeration in advertising is not unexpected. There have been cases where advertising overstatement has not involved a contravention of s 52: see e.g. Petty v Penfold Wines Pty Ltd (1994) 49 FCR 282. In that case, the decision turned upon the applicant failing to prove he had in fact relied on the representation. But each case must be decided on its own facts and in the context of the words used: Telstra Corporation Ltd v Optus Communications Pty Ltd (1997) ATPR 41-541. 24 In my view, however superficially a member of the public perceived the clearance representations, without context they would not reasonably be taken by any member of the public in their terms. No reasonable member of the public would expect that valuable items would, in effect, be given away at the close of the sale. However, the relevant context includes the extensive associated television advertising: the imminent deadline of the asserted sale, and the implicit message that prices would be reduced and perhaps greatly reduced towards its conclusion. At least in the case of many manchester items, any price reduction from the sale price could reasonably be perceived as reduced well below the was price (or normal price offered by the vendor) and so representing a much greater saving than was really the case. The lure of below "sale" prices which the clearance representations offered was to get attendance at the "sale" for the opportunity of effecting further sales of products. I therefore reached the conclusion on the particular facts that the clearance representations extended beyond mere puffery. 25 The ACCC has not made allegations, nor sought remedies, under Pt 5C of the Act. Consequently, this is not a matter in which I am asked to consider the imposition of any criminal penalties. That is a matter for the ACCC. 26 It is clear that I have power to make the injunctive orders sought if I consider it in the public interest to do so: Australian Consumer and Competition Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491 at [212] and [216]. I have considered the proposed injunctions. They are clear, they relate to the conduct which I have found to have been engaged in in contravention of s 52 of the Act; and there is no feature of them which, in my view, makes it inappropriate to make those orders. 27 Similarly, I have considered the proposed compliance program. I had previously raised some issues about its terms, but they have been addressed. 28 I am therefore prepared to make the proposed consent orders. The proposed orders are in the nature of injunctive relief, restraining the respondents from engaging in conduct of the nature which they have admitted they have engaged in in the past and which has contravened s 52 of the Act, and for costs. I have been informed by the parties that since the hearing of submissions, both Terania and ARE have ceased trading and the assets of Terania have been sold, including the sale of the business name "Gouger Rugs" and "Barry Solomon's Gouger Rugs", its stock and various fittings and fixtures. Bookings of venues for scheduled sale events to be conducted by Terania and ARE have been cancelled. Consequently, although it is not now appropriate for Terania and ARE to undertake a trade practices compliance program, the proposed orders contemplate that in the event that they resume similar trading activities in the future, they should undertake a trade practices compliance program. I think that is appropriate. It is also intended that Mr Solomon will give an undertaking that he will in any event undertake a Trade Practices Compliance Program seminar relating to the provisions of Pt 5 of the Act. He is prepared to do so and the ACCC is prepared to accept that undertaking. I will note his undertaking. 29 I therefore order that: 1. Terania and ARE, whether by themselves, their servants, agents or otherwise in connection with the sale and promotion of the sale of rugs or manchester products to the public be restrained from making representations that: 1.1 they intend to end a sale on a particular date and/or time; 1.2 a sale will end on a particular date and/or time; or 1.3 they will sell or otherwise dispose of their entire stock by a particular date and/or time; unless at the time of making those representations they: 1.4 with respect to the representation referred to in paragraph 1.1 above, have such an intention or expectation; or 1.5 with respect to the representation referred to in paragraphs 1.2 and 1.3 above, have reasonable grounds for making such representations. 2. Terania and ARE, whether by themselves, their servants, agents or otherwise be restrained from offering for sale or promotion to the public rugs or manchester products, having marked those products with one ticket at which the goods are to be offered for sale (the sale price) and another ticket stating a higher price (the was price) unless those products have previously been offered for sale by the respondents or another retailer at the was price. 3. Leave be granted to Terania and ARE to withdraw the Defence filed by them in these proceedings. 4. Terania and ARE and each of them, in the event they engage in trading activities in Australia in the three years from the date of these orders, shall: 4.1 implement a Trade Practices Compliance Program in the manner and form described in Annexure A to these orders within three months of commencing trading activities; and 4.2 maintain and continue to implement the said program for a period of three years from the date of commencing trading activities. 5. Terania and ARE pay to the Australian Competition and Consumer Commission its costs of and incidental to these proceedings, including any costs previously ordered or reserved, fixed in the sum of $50,000.00. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Associate: Dated: 22 May 2008 Counsel for the Applicant: Mr W Keane

Solicitor for the Applicant: Corrs Chambers Westgarth

Counsel for the First and Second Respondents: Mr L Walsh

Solicitor for the First and Second Respondents: DMAW Lawyers

ANNEXURE A TRADE PRACTICES COMPLIANCE PROGRAMME 1. Terania Pty Ltd (ACN 054 575 692) ("Terania") and Australian Rug Expos Pty Ltd (ACN 111 808 952) ("ARE") will establish a Trade Practices Compliance Programme ("the Compliance Programme"). 2. Terania and ARE will use their best endeavours to ensure that the Compliance Programme is designed and implemented so as to comply with each of the following requirements: 2.1 the Compliance Programme is to cover all officers, employees, representatives and agents of Terania and ARE who perform duties in Australia; 2.2 the Compliance Programme is to inform the officers, employees, representatives and agents of Terania and ARE who perform duties in Australia of the application of Division 1 of Part V ("the relevant provisions of the Act") of the Trade Practices Act ("TPA") to the business of Terania and ARE; 2.3 the Compliance Programme must require the appointment of a senior officer ("the Compliance Officer"), within 3 months of commencing trading activities, whose responsibilities are to include the maintenance and continuing implementation of the Compliance Programme and who reports directly to the company board or governing body; 2.4 Terania and ARE shall appoint a qualified, internal or external compliance professional with expertise in trade practices issues ("the Compliance Advisor") within 3 months of commencing trading activities for the purpose as set out in paragraph 2.5; 2.5 Terania and ARE shall instruct the Compliance Advisor to conduct a TPA risk assessment ("the risk assessment") in accordance with the following: 2.5.1 identify the areas where Terania and ARE are at risk of breaching Division 1 of Part V of the TPA; 2.5.2 assess the likelihood of these risks occurring and the consequences of the risks to the business operations of Terania and ARE, should they occur; 2.5.3 identify where there may be gaps in Terania's and ARE's existing procedures for managing these risks; and 2.5.4 provide recommendations for action having regard to the assessment; 2.6 the Compliance Programme is to require officers, employees, representatives and agents of Terania and ARE to confidentially notify the Compliance Officer of potential breaches of the relevant provisions of the TPA and the Compliance Programme by Terania and ARE; 2.7 the Compliance Programme is to include a complaints handling system that is consistent with Australian Standard AS4269-1995; 2.8 the Compliance Programme must require the Compliance Officer to keep and maintain a register of potential breaches and/or complaints related to the relevant provisions of the TPA; 2.9 the Compliance Programme must require the development of a disciplinary policy or code for those employees and agents who do not comply with the Compliance Programme or the relevant provisions of the TPA; 2.10 the Compliance Programme must require that compliance with the Compliance Programme and the relevant provisions of the TPA is a key performance indicator for all employees; 2.11 the Compliance Programme is to provide for the conducting of regular trade practices training (at least once a year) by an internal designated compliance trainer (who has been trained by a solicitor or compliance professional with expertise in trade practices law) and/or a solicitor or compliance professional with expertise in trade practices law for all officers, employees, representatives and agents of Terania and ARE; and 2.12 the Compliance Programme is to provide for an induction programme on trade practices compliance issues to be undertaken by all new officers, employees, representatives and agents of Terania and ARE within 3 months of his or her engagement. 3. Terania and ARE shall, at their own expense, within 4 months of commencing trading activities, cause to be produced and provided to the ACCC copies of each of the documents constituting the Compliance Programme, together with a letter confirming that the Compliance Programme has been implemented in accordance with the requirements of the order in paragraph 4. 4. Terania and ARE shall, at their own expense and for the purpose of ensuring that Terania and ARE maintain and continue to implement the Compliance Programme, cause a review of the Compliance Programme ("the review") to be carried out in accordance with each of the following requirements: 4.1 Terania and ARE shall ensure that the review is carried out by an independent compliance professional with expertise in trade practices law ("the reviewer"). The reviewer will qualify as independent on the basis that he or she: 4.1.1 is not a present or past staff member or director of Terania and/or ARE: 4.1.2 has not acted or does not act for Terania and/or ARE other than reviewing the Compliance Programme of Terania and/or ARE; 4.1.3 is not retained by Terania and/or ARE in any other capacity, either currently or in the past other than in the capacity of being engaged to review the Compliance Programme of Terania and/or ARE; 4.1.4 has not and does not provide consultancy or other services for Terania and/or ARE other than reviewing the Compliance Programme of Terania and/or ARE; 4.1.5 has no shareholding or other interests in Terania and/or ARE; and 4.1.6 is not the Compliance Advisor appointed pursuant to paragraph 2.4; 4.2 Terania and ARE shall use its best endeavours to ensure that the reviewer: 4.2.1 conducts a critical review as to whether the Compliance Programme has been implemented in compliance with each of the requirements of the order in paragraph 4; and 4.2.2 makes such recommendations as he/she considers necessary to ensure that the Compliance Programme complies with each of the requirements of the order in paragraph 4; 4.3 Terania and ARE shall ensure that the review is able to be conducted by the reviewer on the basis of any relevant information in Terania and/or ARE's possession or control, including without limitation any of the following sources of information: 4.3.1 investigations of any officer, employees, representatives and agents of Terania and/or ARE to find out how compliance processes are implemented and understood; 4.3.2 enquiries of customers about their experience of Terania and/or ARE and its products/services; 4.3.3 Terania's and/or ARE's records, including its complaints register and any documents relevant to its training or induction programme; and 4.3.4 documents created by Terania's and/or ARE's consultants and solicitors for use in Terania's and/or ARE's Compliance Programme; 4.4 Terania and ARE shall use their best endeavours to ensure that a review is completed one year after the Compliance Programme is established, and at the conclusion of each period of 12 months during which the Compliance Programme is being maintained and implemented; 4.5 Terania and ARE shall use their best endeavours to ensure that the reviewer sets out the findings of the review in a written report ("the review report") and provided to Terania and ARE within 14 days of the completion of the review. The review report is to include a record of any potential contraventions of relevant provisions of the TPA and the Compliance Programme that were identified during the review and the action taken to address the potential contravention. 5. Terania and ARE shall implement promptly and with due diligence the recommendations which the reviewer may make that are reasonably necessary to ensure that Terania and/or ARE maintains and continues to implement the Compliance Programme in accordance with the requirements of the order in paragraph 4. 6. Terania and ARE shall use their best endeavours to ensure that the reviewer sets out details of the implementation and administration of the Compliance Programme in a written report ("Commission Compliance Program Review Report") to be provided to the ACCC within 14 days of the completion of each review. 7. Terania and ARE, shall at their own expense, if requested by the ACCC, provide copies of documents and information in respect of matters which are the subject of the Compliance Programme.