Australian Competition and Consumer Commission v Woolworths Limited

Australian Competition and Consumer Commission v Woolworths Limited - [2016] FCA 44 - FCA 2016 case summary — Zoe

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Between 4 June 2012 and 4 July 2012, by continuing to offer the Abode 3 Litre Stainless Steel Deep Fryer, Model DF30BW (the Deep Fryer) for retail sale after it became aware that the side handles of the Deep Fryer may detach when the Deep Fryer was lifted, leading to a consequential hazard comprising oil spills and possible burn injuries if the appliance was moved while containing hot oil, by its silence and by refraining from: (a) withdrawing the Deep Fryer from sale at its Big W stores; and (b) recalling the Deep Fryer from its Big W stores; once a reasonable period of time in which it could have identified, assessed and responded to this safety hazard had elapsed, Woolworths engaged in conduct (the Deep Fryer Silence Conduct) that was: (c) misleading or deceptive, or likely to mislead or deceive; and (d) liable to mislead the public as to the suitability of the Deep Fryer for its purpose, because: (e) the side handles of the Deep Fryer may (and did on one known occasion prior to 4 June 2012) detach when the Deep Fryer was lifted, leading to a consequential hazard comprising oil spills and possible burn injuries if the appliance was moved while containing hot oil; (f) Woolworths had knowledge of the matters stated in subparagraph (e) above; and by the Deep Fryer Silence Conduct, Woolworths: (g) engaged in conduct, in trade or commerce, which was misleading or deceptive, or likely to mislead or deceive, in contravention of section 18 of the ACL; and (h) engaged in conduct, in trade or commerce, that was liable to mislead the public as to the suitability of the Deep Fryer for its purpose, in contravention of section 33 of the ACL (the Deep Fryer Contravention).
Between in or about 25 August 2013 and in or about 20 March 2014, Woolworths, in offering the house brand consumer good Woolworths Select Drain Cleaner 1L (Select Drain Cleaner) for retail sale to consumers, with a cap that bore the text, "Close tightly while pushing down turn", accompanied by two arrows directing an anti-clockwise motion, expressly and impliedly represented that the Select Drain Cleaner could only, within the ordinary range of uses of the product, be opened by applying downward pressure to the cap while turning it (the Select Drain Cleaner Opening Representation), which representation was: (a) misleading and deceptive, or likely to mislead or deceive; and (b) a false or misleading representation that the Select Drain Cleaner was of a particular standard or quality and had certain performance characteristics; and (c) liable to mislead the public as to the suitability for its purpose of the Select Drain Cleaner, because the cap on the Select Drain Cleaner: (d) was ineffective, in that it did not lock securely on the bottle; and (e) could be opened or open without the application of downward pressure to the cap while turning it, and thereby, Woolworths: (f) engaged in conduct, in trade or commerce, which was misleading or deceptive, or likely to mislead or deceive, in contravention of section 18 of the ACL; and (g) made a false or misleading representation, in trade or commerce, in connection with the supply or possible supply of house brand home ware products, that the Select Drain Cleaner was of a particular standard or quality and had certain performance characteristics, in contravention of sections 29(1)(a) and 29(1)(g) of the ACL; and (h) engaged in conduct, in trade or commerce, that was liable to mislead the public as to the suitability for its purpose of the Select Drain Cleaner, in contravention of section 33 of the ACL (the First Select Drain Cleaner Contravention).
Between 24 February 2014 and 20 March 2014, by continuing to offer the Select Drain Cleaner for retail sale after it became aware that the Select Drain Cleaner was unsafe when deployed during ordinary or reasonably foreseeable uses of the product, because the cap on the Select Drain Cleaner was ineffective, in that it did not lock securely on the bottle and could be opened without applying downward pressure to the cap while turning it, by its silence and by refraining from: (a) withdrawing the Select Drain Cleaner from Woolworths, Safeway, Food For Less, and Flemings stores; and (b) recalling the Select Drain Cleaner from its Woolworths, Safeway, Food For Less, and Flemings stores, once a reasonable period of time in which it could have identified, assessed and responded to this safety hazard had elapsed, Woolworths engaged in conduct (the Select Drain Cleaner Silence Conduct) that was: (c) misleading or deceptive, or likely to mislead or deceive; and (d) liable to mislead the public as to the suitability of the Select Drain Cleaner for its purpose because: (e) when deployed during ordinary or reasonably foreseeable uses of the product, the cap on the Select Drain Cleaner: (i) was ineffective, in that it did not lock securely on the bottle; (ii) could be opened without applying downward pressure to the cap while turning it, which hazard in fact materialised; and (f) Woolworths had knowledge of the matters stated in subparagraphs 3(e) above, and by the Select Drain Cleaner Silence Conduct, Woolworths: (g) engaged in conduct, in trade or commerce, which was misleading or deceptive, or likely to mislead or deceive, in contravention of section 18 of the ACL; and (h) engaged in conduct, in trade or commerce, that was liable to mislead the public as to the suitability of the Select Drain Cleaner for its purpose, in contravention of section 33 of the ACL (the Second Select Drain Cleaner Contravention).
Between 6 June 2012 and 28 June 2012, by continuing to offer the house brand 10 x 45 Homebrand Safety Matches (the Safety Matches) for retail sale after it became aware that the Safety Matches were unsafe when deployed during ordinary or reasonably foreseeable uses of the product because the Safety Matches suffered the defect that, in some instances, the head of the match may break or give off sparks upon ignition, and if that defect occurred the product may fail resulting in possible injury or property damage, including by causing the box of matches to ignite, by its silence and by refraining from: (a) withdrawing the Safety Matches from Woolworths supermarket stores; once a reasonable period of time in which it could have identified, assessed and responded to this safety hazard had elapsed, Woolworths engaged in conduct (the Safety Matches Silence Conduct) that was: (b) misleading or deceptive, or likely to mislead or deceive; and (c) liable to mislead the public as to the suitability of the Safety Matches for their purpose; because: (d) the Safety Matches suffered the defect that, in some instances, the head of the match may break or give off sparks upon ignition; (e) if that defect occurred the product may fail resulting in possible injury or property damage, including by causing the box of matches to ignite, which defect and hazard in fact materialised; (f) Woolworths had knowledge of the matters stated in subparagraphs (d) and (e) above; and by engaging in the Safety Matches Silence Conduct, Woolworths: (g) engaged in conduct, in trade or commerce, which was misleading or deceptive, or likely to mislead or deceive, in contravention of section 18 of the ACL; and (h) engaged in conduct, in trade or commerce, that was liable to mislead the public as to the suitability of the Safety Matches for their purpose, in contravention of section 33 of the ACL (the Safety Matches Contravention).
Between in or about 1 May 2012 and 31 August 2012, Woolworths, in offering the Padded Flop Chair for retail sale to consumers, made an express representation that the Padded Flop Chair was capable of bearing weights up to 115 kg, which representation was: (a) misleading or deceptive, or likely to mislead or deceive; and (b) a false or misleading representation that the Padded Flop Chair was of a particular standard or quality and had certain performance characteristics; and (c) liable to mislead the public as to the suitability for its purpose of the Padded Flop Chair, because the Padded Flop Chair was not, in all cases, capable of bearing weights of up to 115 kg and, under testing, could reliably support no more than 92 kg, and thereby, Woolworths: (d) engaged in conduct, in trade or commerce, which was misleading or deceptive, or likely to mislead or deceive, in contravention of section 18 of the ACL; and (e) made a false or misleading representation, in trade or commerce, in connection with the supply or possible supply of house brand home ware products, that the Padded Flop Chair was of a particular standard or quality and had certain performance characteristics, in contravention of sections 29(1)(a) and 29(1)(g) of the ACL; and (f) engaged in conduct, in trade or commerce, that was liable to mislead the public as to the suitability for its purpose of the Padded Flop Chair, in contravention of section 33 of the ACL (the Padded Flop Chair Contravention).
Between 31 August 2012 and 22 July 2013, Woolworths, in offering the Folding Stool for retail sale to consumers, made an express representation that the Folding Stool was capable of bearing weights up to 100 kg, which representation was: (a) misleading or deceptive, or likely to mislead or deceive; and (b) a false or misleading representation that the Folding Stool was of a particular standard or quality and had certain performance characteristics; and (c) liable to mislead the public as to the suitability for its purpose of the Folding Stool, because the Folding Stool was not capable of bearing weights of up to 100 kg and, under testing, could reliably support no more than 90 kg, and thereby, Woolworths: (d) engaged in conduct, in trade or commerce, which was misleading or deceptive, or likely to mislead or deceive, in contravention of section 18 of the ACL; and (e) made a false or misleading representation, in trade or commerce, in connection with the supply or possible supply of house brand home ware products, that the Folding Stool was of a particular standard or quality and had certain performance characteristics, in contravention of sections 29(1)(a) and 29(1)(g) of the ACL; and (f) engaged in conduct, in trade or commerce, that was liable to mislead the public as to the suitability for its purpose of the Folding Stool, in contravention of section 33 of the ACL (the Folding Stool Contravention).

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THE COURT ORDERS THAT: 7. In respect of the misleading or deceptive conduct Woolworths pay to the Commonwealth of Australia within 30 days a pecuniary penalty of $3,000,000 based on the following courses of conduct: (a) the Deep Fryer contraventions $ 600,000 (b) the two Select Drain Cleaner courses of contraventions: $1,400,000 (c) the Safety Matches contraventions $ 400,000 (d) the Flop Chair contraventions $ 300,000 (e) the Folding Stool contraventions $ 300,000 8. In respect of the eight section 131 contraventions Woolworths pay to the Commonwealth of Australia within 30 days a pecuniary penalty of $57,000: (a) the Deep Fryer s 131 contravention $ 10,000 (b) the Select Drain cleaner s 131 contravention $ 5,000 (c) the other six s 131 contraventions $ 42,000 9. Woolworths within 30 days prominently publish on the Internet homepage of Woolworths supermarkets, Big W, Masters Home Improvement and Ezibuy a link to an internet page in the form and terms set out in Annexure A. 10. Woolworths within 30 days or otherwise agreed with the ACCC prominently publish on the Woolworths supermarket Smartphone Application: (a) details of products currently recalled by Woolworths and products recalled in the past 12 months; and (b) a link to the Recalls Australia website. 11. Woolworths: (a) implement the upgraded dedicated product safety compliance program in accordance with the requirements set out in Annexure B for the employees and other persons engaged in Woolworths' business, being a program designed to minimise its risk of future breaches of sections 18, 29 and 33 of the ACL in relation to the safety of its products and of section 131 of the ACL (the Program), which would be provided to the ACCC within 3 months of the Orders being made; (b) continue to develop and implement for a period of 3 years from the date of these orders the Program; and (c) provide, at its own expense, a copy of any documents requested by the ACCC evidencing Woolworth's implementation of the Program, including the documents referred to in clauses 4, 6, 12 of Annexure B. 12. Woolworths pay to the ACCC within 14 days of the date of this order the ACCC's costs of the proceeding in the sum of $50,000. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

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EDELMAN J: Introduction [1] Woolworths' quality review processes and their inadequacies [5] The Abode Deep Fryer incidents [20] The First Deep Fryer Incident [21] The Second Deep Fryer Incident [29] Withdrawal and recall of Deep Fryers [32] The Select Drain Cleaner incidents [36] The first Select Drain Cleaner incident [41] The second Select Drain Cleaner incident [43] The third Select Drain Cleaner incident [45] The fourth Select Drain Cleaner incident [47] Withdrawal of Select Drain Cleaner from sale [50] The fifth Select Drain Cleaner incident [54] ACCC inquiry and recall of Select Drain Cleaner [60] The Safety Matches incidents [62] The Safety Match incidents [64] Withdrawal of Safety Matches from sale [69] Further Safety Matches incidents [72] The ACCC inquiry and the second recall of Safety Matches [73] The Padded Flop Chair incidents [74] The Folding Stool incidents [80] Six additional failures to report incidents of serious injury or illness [86] The Multix Cling Wrap Premium Value 120m [87] The BBQ Chicken [88] The Homebrand Yellow Fruit Rings 400g [89] The Lamb, Herb, Garlic Cocktail K'Babs (10 Sticks pack) [90] The Arcosteel Coffee Plunger 6 Cup [91] Chicken Thigh Fillets [92] The contraventions [93] The category of contraventions concerning misleading or deceptive conduct and misrepresentations [94] 1. The Deep Fryer contraventions: [100] 2. The Select Drain Cleaner labelling contraventions [102] 3. The Select Drain Cleaner offer for sale contraventions [103] 4. The Safety Matches Contraventions [104] 5. The Padded Flop Chair Contraventions [105] 6. The Folding Stool Contravention [106] The category of contraventions concerning Woolworths' failures to report [107] Pecuniary Penalties [113] Legal principles [113] The course of conduct principle [113] The relevant factors and comparative cases [122] The cases referred to by the parties as comparators [138] Assessment of the relevant factors [143] The circumstances and effect of the contraventions (including nature and extent of the conduct and loss and damage) [143] The period over which the contraventions occurred [145] The unintentional nature of the contraventions and Management's knowledge [146] Woolworths' culture of compliance [150] Size of Woolworths, its financial position and the profits associated with its contraventions [155] Co-operation with the ACCC, admission of culpability, compensation and contrition [161] Previous contraventions and previous conduct [168] Conclusions and orders [178] Pecuniary Penalties [178] Non-pecuniary orders [185]

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Introduction 1 The applicant - the Australian Competition and Consumer Commission (ACCC) - brought proceedings alleging that Woolworths contravened the Australian Consumer Law. Woolworths admitted to engaging in misleading or deceptive conduct, making false or misleading representations, and failing to report, or inadequately reporting, incidents of serious injury or illness. It cooperated with the ACCC, and agreed many of the facts described in these reasons. 2 Woolworth's most significant contraventions of the Australian Consumer Law arose in relation to five different house brand products that Woolworths or its subsidiaries sold to consumers: a deep fryer, a drain cleaner, safety matches, a padded flop chair and a folding stool. In broad terms, Woolworths' contraventions involved: (1) a failure to withdraw and recall a Deep Fryer from sale when the side handles of the Deep Fryer could detach when it was lifted, potentially leading to burns from hot oil; (2) misrepresentations on the text and directions on the cap of the Select Drain Cleaner which did not lock securely on the bottle and failing to withdraw the Select Drain Cleaner from sale; (3) misrepresentations that Safety Matches were safe, and failing to withdraw them from the stores, when the head of the match could break or give off sparks upon ignition causing the box of matches to ignite; (4) misrepresentations that a Padded Flop Chair was capable of bearing weights up to 115 kg when it could not reliably support any more than 92 kg; and (5) misrepresentations that a Folding Stool was capable of bearing weights up to 100 kg when it could not reliably support any more than 90 kg. 3 During the periods of contravention many of these products were sold. The largest number of sales during a period involving a course of contraventions was 124,825 sales of Select Drain Cleaner during the first period of contraventions in relation to that product. The smallest number of sales was 1,840 sales of Folding Stools during the approximately eleven month period of contraventions. Some consumers suffered serious injury and illness as a result of using the products in question, particularly the Select Drain Cleaner. A man suffered permanent damage to his eyesight and could no longer work as a boilermaker. A baby girl suffered serious burns to her leg, requiring a skin graft and causing permanent scarring. 4 The parties agreed proposed non-pecuniary penalty orders and declarations. I consider those orders to be appropriate for the reasons explained in my conclusion to these reasons. The central issue in the proceeding was the amount of the pecuniary penalty to be imposed on Woolworths. For the reasons below, I consider the appropriate total penalty to be $3.057 million. This is comprised of $3 million for the six courses of conduct involving the products that I have described and $57,000 in relation to the contraventions concerning Woolworths' reporting obligations under s 131. A breakdown of those amounts is provided in the conclusion to these reasons.

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Woolworths' quality review processes and their inadequacies 5 Woolworths is a household name. It is a national retailer with over 3000 stores located in Australia and New Zealand. Woolworths supplies a spectrum of low priced consumer goods including food, liquor, petrol, general merchandise, hardware, home improvement and hotel accommodation. 6 Woolworths is the owner in Australia of 931 supermarkets trading under (i) the "Woolworths" brand, (ii) the "Safeway" brand in Victoria, (iii) the "Flemings" brand and (iv) the "Food For Less" brand. Woolworths also owns a national chain of 182 discount department stores trading under the "Big W" brand and a national chain of 49 hardware and home improvement stores trading under the name "Masters Home Improvement". 7 House brand goods are offered for sale at Woolworths supermarkets, Big W stores and Masters Home Improvement stores. Woolworths stocks more than 28,000 non-food house brand products across its trading divisions (i.e. supermarkets, Big W stores and Masters stores). Woolworths sources its house brand products globally from over 4500 factories. 8 At all relevant times Woolworths had a compliance system to ensure that officers and employees understood the obligations of the company and its officers and employees arising from the Competition and Consumer Act. That system included a Compliance Policy, a Code of Conduct and a compliance framework which identified compliance responsibilities throughout the Woolworths group. Woolworths also had, and has, a People Policy Committee which reports to the Board of Directors and covers the area of "Safety and Health" and an Audit, Risk Management and Compliance Committee which provides advice and assistance to the Woolworths Board with respect to the oversight of the management of risk and compliance, including areas such as health and safety, and Australian consumer law. 9 In 2010, Woolworths created a centralised Group Quality Assurance (QA) function. This was a change from the previously decentralised QA functions. That function was formed to monitor and ensure high standards of product quality at a reduced cost. The QA function was designed to ensure that all house brand goods sourced by Woolworths went through the QA evaluation process. During 2011 to 2014 all new house brand non-food goods (around 44,000 in total) went through Woolworths' QA processes before being offered for sale by Woolworths. However, in some instances some products did not go through all the relevant steps. 10 Woolworths had a regime to internally assess the consumer incidents reported to it by reference to a severity scale. The severity scale was graded 1 to 3, in which Severity 1 incidents were classified in accordance with the language used in s 131 of the Australian Consumer Law. Under this scale: (1) Severity 1 incidents were required to be escalated by a store feedback form, and included any complaint in regard to: actual or potential death; actual or potential serious injury or illness (i.e. requiring hospitalisation or medical attention by a doctor or nurse, or emergency dental work); any injury or illness involving a sensitive demographic (i.e. babies, children aged under 10, disabled, pregnant mothers, the elderly over 65); actual death to a pet; and any complaint that could cause national brand damage (i.e. talk back radio, national broadcast television, news etc.); (2) Severity 2 incidents were required to be escalated if they could not be resolved, and included any complaint in regard to: mild injury or illness (i.e. a customer feeling unwell but not requiring medical treatment); injury or illness to pets (i.e. requiring medical attention by a vet); any complaint that could cause localised brand damage (i.e. community newspaper, low media coverage and enquiries, personal posts on social media etc.); and (3) Severity 3 incidents were required to be escalated if they could not be resolved, and included any complaints that have no safety impact and would not lead to any brand/reputation damage. 11 During 2012 and 2013, the ACCC became aware of issues relating the safety of Woolworths' house brand goods. The incidents included a Dick Smith Electronics portable DVD player which caught on fire due to a faulty battery causing severe burns to a child. That incident was the subject of correspondence between the ACCC and Woolworths (which then owned Dick Smith Electronics) referred to later in these reasons. There was also (i) an increase in withdrawals and product recall announcements made by Woolworths in relation to its house brand goods, (ii) an increase in complaints received by Woolworths regarding its house brand goods and (iii) a large number of mandatory reports relating to its house brand goods lodged by Woolworths with the ACCC under s 131 of the Australian Consumer Law (i.e. in 2012 Woolworths lodged 16 reports and in 2013 it lodged 59 reports). 12 During mid-2012 Woolworths commenced a review of its product quality processes. From this time, Woolworths also responded to concerns from the ACCC about the safety of Woolworths' house brand goods and its QA processes. Woolworths maintained that it was continually striving to improve their quality management system and that it had made significant progress in the areas of product standards and supplier audits. Woolworths assured the ACCC that quality assurance process improvements were being planned. The planned improvements included a revised factory audit system, an improved customer complaints handling system, and improvements to the assessment of private label goods. 13 The outcome of the mid-2012 review by Woolworths was an internal, and confidential, Woolworths presentation titled "Creating daylight through Quality: Woolworths end-to-end quality management program". 14 In that presentation, Woolworths recognises that its quality performance "is not where we want it to be. Recent recall figures are higher than most comparable benchmarks…with consequences to our customers ranging from inconvenience to injuries. Recent recalls analysis shows some potential areas to focus." Indeed, Woolworths reported that withdrawals and recalls had increased in the period between 2010 to 2012. Woolworths reiterates six times in the presentation slides that its quality performance was not where it wanted it to be. Woolworths also identified that "Quality is not mentioned in Corporate Priorities", that there was a "lack of clear roles within the business to investigate and follow-up with customer complaints", and that "QA processes [were] by-passed on some occasions". Woolworths also acknowledged that in "some cases, product testing not sufficient to ensure quality product" and that the "QA team [was] under resourced"; that there were "Significant inconsistencies in the way product specifications are given" and that "Previous recall analysis shows that product testing specifications are not sufficient to ensure the appropriate level of quality". 15 Despite these observations, Woolworths said, in an isolated statement on one page, (which was accepted by senior counsel to be incorrect) that its "Risk and Assurance and Business Review structures provide good risk and safety management" and that it had "good recall and withdrawal processes". I do not accept that this single statement in a very lengthy collection of detailed slides can be read in isolation to suggest that Woolworths' management had no awareness of defects in its quality assurance processes that could bear upon its product representations and its withdrawal and recall procedures. This is particularly clear in light of Woolworths' response to the 2012 review and the "Creating daylight through Quality" presentation. 16 Following the 2012 review of its product quality systems and processes, and the "Creating daylight through Quality" presentation, Woolworths made changes during the course of 2013 and 2014 as follows: (1) in January 2013 Woolworths launched a Group Quality Program. This initiative was implemented by the leader of each business with the aim of improving product quality across the Woolworths Group; (2) during 2013 Woolworths introduced improvements to its handling of customer complaints, including: (a) in July 2013 Woolworths revised its Severity 1 Complaint Dashboard and established a Quality Excellence Steering Committee. This resulted in weekly reporting of significant Severity 1 incidents to the Head of Quality and Head of Commercial Teams for the relevant product; (b) in December 2013 Woolworths launched a Severity 1 Closed loop process. This focussed on investigating, reviewing and actioning of high risk Severity 1 complaints; (3) from late 2013 through 2014 Woolworths implemented a new "New Product Development" (NPD) program. That program was extremely costly and it involved the following: (a) in September 2013 Woolworths established a "New product brief" and "New business rules" to support the NPD processes being developed and put in place; (b) in November 2013 Woolworths signed off the NPD process; (c) in January 2014 Woolworths published the new NPD framework and established a "New Sourcing Leadership" team; (d) in July 2014 Woolworths' divisions each signed off on the implementation of the NPD process; (e) in August 2014 Woolworths implemented its NPD program framework and NPD tools which included a compliance requirement for product quality of house brand goods; (4) in April 2014 Woolworths introduced a New Quality Governance Policy; and (5) the implementation of the new QA function was completed in August 2014 which included an additional $12 million investment in QA resources to support the end to end NPD process across the business divisions. 17 In January 2013, Woolworths also produced a Supplier Manual which required all goods supplied to Woolworths to be inspected before shipping by an inspection company. The Manual required that goods should only be released for shipment once the pre-shipment report was approved by Woolworths Quality Assurance. 18 On 7 June 2013, the ACCC issued a notice under s 133D of the Competition and Consumer Act 2010 (Cth) to Woolworths seeking information about five private label consumer goods that had caused or had the potential to cause injury to consumers. Two of those goods were the house brand deep fryer and safety matches discussed below. 19 Although Woolworths had product quality processes and a compliance system in place, it failed to prevent product safety issues from occurring and continuing to occur during 2013 and 2014. In the period from January 2012 to November 2014, Woolworths issued 47 non-food product recalls for its house brand goods (i.e. 18 recalls in 2012, 8 recalls in 2013 and 20 recalls in 2014). Further, although Woolworths took steps in 2012 and 2013 to address shortcomings in its product quality processes, these steps were not fully implemented until August 2014. During the intervening period, the Select Drain Cleaner and Folding Stool contraventions occurred.

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The First Deep Fryer Incident 21 On 27 May 2012, Ms DW suffered serious burns when a side handle snapped off the Deep Fryer she had purchased from a Big W store in Lake Macquarie. At the time she was moving the deep fryer full of hot oil. The hot oil spilled onto her. She was treated at the John Hunter Hospital emergency department and subsequently by her general practitioner. She was absent from work for three days. 22 On 30 May 2012, Ms DW returned the Deep Fryer to Big W and notified Woolworths of the incident. Big W in Charlestown reported the incident internally: Customer has returned an abode deepfryer kc 8230828, purchased 23/5/12 as they feel it is not fit for purpose. The deepfryer was used on 27/5/12 and then when attempted to move back to prevent children from being able to reach it the handles on the side snapped off spilling hot oil over the customer of which medical treatment was required. Customer is concerned it may happen to others and would like the product checked out as screws holding handles in place are very small and short.... (emphasis added) 23 On 1 June 2012, Woolworths' Group Quality Assurance Department recorded concerns about the screws in internal emails: I think the two screws alone is not sufficient to secure especially if one screw is not tight, the other alone is not strong enough. Seems to be that initial design was with four screw but then the two on top of handle has been changed to be a guide for cost saving. 24 Woolworths' Group Quality Assurance Department inspected the Deep Fryer returned by Ms DW and concluded that it was defective and that a withdrawal from sales was "likely". The defects included problems with the handle where the pillar was too thin and the screws were too small. 25 On 4 June 2012, Woolworths completed an internal "Group Quality Assurance Product Incident Report", based on a check of six new units, including two units with the same data code as the unit purchased by Ms DW, which stated that: Checks of other new units from stock did not show any problem, and the handles are installed with the correct orientation. When filled to the maximum level with water, the handles did not come off when lifting the unit. Testing was also carried out with the handles installed the wrong way round. When secured properly, they still did not come off when lifting unit with water filled to maximum level. From the above checks and tests, the handles are secure when fitted correctly. However, if the screws are loose and the handle is fitted with the wrong orientation, it is possible for the handle to flex away from the unit causing the pillars to crack when the unit is lifted. No other unit has been found to have the handle installed incorrectly or loose, however it is recommended that the design be improved so that the handle cannot be incorrectly fitted. This could easily be achieved by changing the spacing so that the distance between the two screws is not the same as the distance between the two plastic pins. The number of screws on handle should also be increased... 26 On 5 June 2012, Woolworths informed Woolworths HK Procurement Ltd that the handle of the Deep Fryer needed to be modified and that the Deep Fryer should have a warning label on the front of the unit that contained the words: Do not move the unit during use. Allow unit and oil to completely cool down prior to moving unit. 27 On 27 July 2012, Woolworths settled Ms DW's claim for $8,000, including a payment of $110 for her medical expenses. 28 On or about 27 July 2012, Woolworths paid $110 to Whitebridge Medical Centre for Ms DW's medical expenses, and on or about 23 August 2012 Woolworths provided Ms DW and her partner with a $100 WISH gift card as a gesture of goodwill.

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The Select Drain Cleaner incidents 36 From approximately 25 August 2013 until 20 March 2014, Woolworths offered for sale a house brand Select Drain Cleaner. The house brand Select Drain Cleaner was supplied to Woolworths by Pascoes Pty Ltd under a contract with Woolworths which contained express terms (i) requiring the safety of the product and (ii) an ability to terminate, in Woolworths' absolute discretion, if an unacceptable number of complaints were received, or if Woolworths reasonably believed that there had been a breach of any term. Woolworths also had the ability to terminate, without cause, on one month's written notice. 37 The Select Drain Cleaner and its model details are pictured at Annexure 2 to these reasons. It was sold through Woolworths, Safeway, Food For Less, and Flemings stores in Australia. Woolworths sold 124,825 units of Select Drain Cleaner. 38 The Select Drain Cleaner was intended for use in a domestic or household environment to unblock drains. It contained sodium hydroxide, non-ionic surfactants and water and was classified by the relevant criteria as a hazardous substance (2X), a dangerous good, and a Schedule 6 poison. Section 25(1) the Poisons Standard 2013 required the Select Drain Cleaner to be sealed with a child resistant closure conforming to Australian Standard 1928-2007 Child resistant packaging requirements and testing procedures for reclosable packages. 39 The Select Drain Cleaner had the following risks: severe burns; serious damage to the eyes; health damage from ingestion; and cumulative adverse effects from exposure. The following safety measures were therefore required during its use: it must be kept locked up; gas, fumes, vapour and spray must not be inhaled or breathed; users must avoid contact with the skin; users must avoid contact with the eyes; users must wear suitable protective clothing; users must wear suitable protective gloves; and users must wear eye/face protection. 40 The Select Drain Cleaner was sold in bottles which appeared to have a child resistant cap. The top of the cap read "Close tightly while pushing down turn" and there were two arrows directing an anti-clockwise motion for opening the bottle and a clockwise motion for closing the bottle. Each side of the bottle had the word "POISON" on it and the bottle contained the following text: Warning: Corrosive. May produce severe burns. Attacks skin and eyes; Caution: Keep out of reach of children. Read safety directions before opening or using; Safety: Wear eye protection when mixing or using. Wear protective gloves when mixing or using. Do not mix with hot water; First Aid: For advice call Poisons Information Centre ...If swallowed, do not induce vomiting. If in eyes, hold eyelids apart and flush the eye continuously with running water. Continue flushing until advised to stop by the Poisons Information Centre or a doctor, or for at least 15 minutes. If skin or hair contact occurs, remove contaminated clothing and flush skin and hair with running water.

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The fifth Select Drain Cleaner incident 54 On 2 April 2014, a baby girl accessed a bottle of Select Drain Cleaner at a residential home and removed the cap. The contents of the Select Drain Cleaner spilled onto the girl's right leg and burned a hole in the girl's leg. The girl's mother took her immediately to hospital where the child was diagnosed with a serious chemical burn to her right knee. The girl had surgery involving a debridement and skin graft. The girl was required to keep her leg in a cast for 4 weeks following surgery and she had weekly visits to a burns clinic for 7 weeks. 55 On 3 June 2014, Woolworths was notified of the incident by a letter sent to Woolworths from the girl's mother dated 26 May 2014. 56 In response to the incident, on 10 June 2014 Woolworths sent a letter to the girl's mother expressing sympathies, and encouraging the mother to appoint a solicitor to protect her interests and to further her daughter's claim. Woolworths did not receive a response to this letter. On 26 November 2014, Woolworths sent a follow up letter noting that no response had been received and enclosing the original. In December, the Woolworths Customer Direct team attempted to conduct the mother via other means. On 4 December 2014, an officer from the Customer Direct team received a telephone call from the mother. The officer encouraged the mother to seek legal representation, and to let her know what the mother's out-of-pocket expenses were. 57 On 5 December 2014, Woolworths sent the mother a $500 gift card. After it was stolen, Woolworths arranged for a second $500 gift card to be sent, which was received. Woolworths subsequently paid an amount to the mother to refund her medical and associated expenses. 58 On 5 June 2014, Woolworths submitted a mandatory report form to the ACCC. Woolworths did not include: (i) information regarding when, and in what quantities, the Select Drain Cleaner was supplied in Australia; (ii) any detail regarding the nature of the injury suffered by the girl other than it was a "chemical burn"; or (iii) information regarding any action that Woolworths had taken or was intending to take in relation to the Select Drain Cleaner. 59 The failure by Woolworths to provide details of the injury meant that the ACCC was not aware of the seriousness of the girl's injury until Woolworths, at the ACCC's request, provided further information about the incident. Woolworths provided this further information by 12 June 2014.

[41]

The category of contraventions concerning misleading or deceptive conduct and misrepresentations 94 Woolworths admits to six courses of conduct giving rise to contraventions of the provisions of the Australian Consumer Law relating to misleading or deceptive conduct and false or misleading representations. The relevant provisions are ss 18, 29(1)(a), 29(1)(g) and 33. 95 Section 18 of the Australian Consumer Law provides: (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in Part 3‑1 (which is about unfair practices) limits by implication subsection (1). 96 Section 29 of the Australian Consumer Law relevantly provides: (1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services: (a) make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; or … (g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits… 97 In many cases, a breach of s 29 will also constitute a breach of s 18: Australian Competition and Consumer Commission v Bunavit Pty Ltd [2016] FCA 6 [20] (Dowsett J). A breach of s 29 may attract a civil penalty, but a breach of s 18 will not. 98 Section 33 of the Australian Consumer Law provides: A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods. 99 I accept Woolworths' admissions (made for the purposes of these proceedings) and, based on my findings above, I conclude that Woolworths committed the following contraventions.

[48]

The category of contraventions concerning Woolworths' failures to report 107 In 2010, the Australian Consumer Law introduced a new national product safety regime, which commenced in January 2011. This regime built upon the product safety regime that Australia has had for decades by introducing a requirement of mandatory reporting of consumer goods associated with death or serious injury or illness of any person. 108 Woolworths admits to eight instances of failing to report incidents of serious injury or illness caused by the use of its consumer goods. This contravenes s 131 of the Australian Consumer Law. Under this section, suppliers must notify the Minister within two days of becoming aware of the incident. Section 131 of the Australian Consumer Law provides: 131 Suppliers to report consumer goods associated with the death or serious injury or illness of any person (1) If: (a) a person (the supplier), in trade or commerce, supplies consumer goods; and (b) the supplier becomes aware of the death or serious injury or illness of any person and: (i) considers that the death or serious injury or illness was caused, or may have been caused, by the use or foreseeable misuse of the consumer goods; or (ii) becomes aware that a person other than the supplier considers that the death or serious injury or illness was caused, or may have been caused, by the use or foreseeable misuse of the consumer goods; the supplier must, within 2 days of becoming so aware, give the Commonwealth Minister a written notice that complies with subsection (5). 109 The Australian Consumer Law defines serious injury or illness in s 2 to mean an acute physical injury or illness that requires medical or surgical treatment by, or under the supervision of, a medical practitioner or a nurse. 110 Section 131(4) provides for ways in which the supplier can become aware of the circumstances requiring a report. These include receiving the information from a consumer. Section 131(5) also provides for the matters that must be contained in the notice including: identification of the goods; the circumstances in which the death or serious injury or illness occurred; the nature of any serious injury or illness suffered by any person; the circumstances of the incident; action that the supplier has taken or is intending to take; and information known about the quantities manufactured in, or imported into, or exported from, Australia. 111 There are exceptions where s 131(1) does not apply, contained in s 131(2). These include where (a) it is clear that the death or serious injury or illness was not caused by the use or foreseeable misuse of the consumer goods; or (b) it is very unlikely that the death or serious injury or illness was caused by the use or foreseeable misuse of the consumer goods. 112 Woolworths committed eight contraventions of s 131(1): (1) it failed to notify the ACCC within two days of becoming aware of the first Deep Fryer incident because notification did not occur until 1 June 2013; (2) it failed to notify the ACCC of all the details required by s 131(5) within two days of becoming aware of the Fifth Select Drain Cleaner incident; (3) it failed to notify the ACCC within two days of becoming aware of the Cling Wrap incident; (4) it failed to notify the ACCC within two days of becoming aware of the BBQ Chicken incident; (5) it failed to notify the ACCC within two days of becoming aware of the Fruit Rings incident; (6) it failed to notify the ACCC within two days of becoming aware of the Lamb K'Babs incident; (7) it failed to notify the ACCC within two days of becoming aware of the Coffee Plunger incident; and (8) it failed to notify the ACCC within two days of becoming aware of the Chicken Fillets incident.

[49]

The course of conduct principle 113 A pecuniary penalty may be imposed at the Court's discretion for any act or omission that contravenes ss 29, 33 or 131 of the Australian Consumer Law. 114 Section 224(3) of the Australian Consumer Law provides that the maximum civil pecuniary penalty for a body corporate: (1) for each contravention of ss 29 and 33 of the Australian Consumer Law is $1.1 million; and (2) for each contravention of s 131(1) of the Australian Consumer Law is $16,500. 115 Woolworths submitted that it engaged in six courses of conduct involving multiple contraventions. It submitted that the maximum possible penalty is $6.732 million ($1.1 million for each of the six courses of conduct and $16,500 for each of the eight s 131 contraventions). 116 There are two steps to assessing Woolworths' submission that the maximum possible penalty is necessarily fixed at $6.732 million. The first step is whether the conduct in each course of conduct is the "same" conduct which contravenes two or more provisions. Where the same conduct contravenes two or more provisions, a person is not liable to more than one pecuniary penalty in respect of the same conduct: s 224(4)(b) of the Australian Consumer Law. 117 Whether conduct is the "same" contravening conduct depends upon characterisation of the facts. That characterisation exercise focuses upon the level of generality at which the contravention is described. It is not a matter of how the contravention is pleaded. It is a matter of substance. If the conduct is characterised at a low, and particular, level of generality then the contravening conduct will often be different and multiple contraventions will not be the "same". But as the conduct is characterised at higher levels of generality it becomes easier to say that the conduct is the "same" so that the person is liable for only one penalty for multiple contraventions. 118 Professor Schauer makes the same point by giving the example of saying to his friend "I own a 1990 White Subaru Legacy Station Wagon". The friend might reply "I have the same car". In this ordinary use of language the facts are characterised at a higher level of generality than an examination of whether the two cars are materially identical in all respects other than the described characteristics. As Schauer explains in "Instrumental Commensurability" (1998) 146 U Pa L Rev 1215, 1217: The use of the word "same" often suggests not only that a number of relevant similarities exist even in the face of dissimilarities, but also that in the instant context these dissimilarities are immaterial. 119 It is unnecessary in this case to engage in the exercise of characterisation beyond saying that I am content to proceed upon the common assumption by counsel that the only conduct that was the same was where, within a course of conduct, the same facts were relied upon as establishing contraventions of multiple provisions. Senior counsel for Woolworths did not submit, for example, that the multiple infringements within a course of conduct were materially the "same" conduct. I am also prepared to proceed on that basis. Hence, it is not necessary to consider whether the maximum penalty is required to be limited to a total of $1.1 million for each course of conduct or a total of $16,500 for all the s 131 contraventions. 120 If conduct involving multiple contraventions, properly characterised, is not the "same" conduct then the next question is whether the conduct is so closely related that, as a matter of discretion, the maximum penalty for a single contravention should be treated as a guide, but not a limit, to the penalty to be imposed for all the related contraventions: Australian Competition and Consumer Commission v Reebok Australia Pty Ltd [2015] FCA 83 [160] (McKerracher J). In Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 269 ALR 1, 13 [41], Middleton and Gordon JJ explained that the course of conduct principle is based in an underlying concern to avoid double punishment: it "recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, the court must ensure that the offender is not punished twice for the same conduct" (emphasis in bold added). The assumption of counsel in this case was that the notion of the "same" conduct is used here by Middleton and Gordon JJ in a broader sense than in s 224(4)(b) of the Australian Consumer Law. The concern to avoid double punishment in this context might also be seen as an aspect of what is sometimes described as the first limb of the "totality" principle: the total penalty should reflect the overall culpability involved. 121 The exercise of characterising the contravening conduct, at the (assumed) less strict standard of applying the course of conduct principle involves an evaluative judgment. In my view, each of the six courses of conduct involved, at least, a high degree of interrelationship between the legal and factual elements of the contraventions involved so as to fall within that principle. For each of the six courses of conduct the "course of conduct" principle is relevant and the maximum penalty of $1.1 million for a single contravention is appropriately part of the exercise of evaluation (as one factor to consider) in determining the appropriate total penalty for each course of contraventions involved. I do not consider that the principle has the same force in relation to the eight s 131 contraventions which involved different and unrelated circumstances even though they might all be related by a failure by Woolworths to have a system which ensured notification. Nor, after careful consideration, do I consider that the principle has the same force in relation the two courses of contraventions involving the Select Drain Cleaner even though the conduct involved in those courses of contravention was related both in character and in time.

[50]

The relevant factors and comparative cases 122 Section 224(2) of the Australian Consumer Law provides that in determining the appropriate pecuniary penalty, the court must have regard to all relevant matters including: (a) 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 (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 this Part to have engaged in any similar conduct. 123 These mandatory considerations are only three of the matters to which the Court must have regard. Although other factors are commonly described as "discretionary factors" there is no real discretion involved. Once another factor is relevant, the Court is required to have regard to it. 124 Some of the commonly relevant matters other than those in (a) to (c) to which the Court must have regard if relevant were described by Perram J in Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (No 4) [2011] FCA 761; (2011) 282 ALR 246, 250-251 [11] (a list which was referred to without objection on appeal: Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249, 258 [37] (the Court)): (1) the size of the contravening company; (2) the deliberateness of the contravention and the period over which it extended; (3) whether the contravention arose out of the conduct of senior management of the contravener or at some lower level; (4) whether the contravener has a corporate culture conducive to compliance with the Act (or the new Australian Competition and Consumer Law) as evidenced by educational programmes and disciplinary or other corrective measures in response to an acknowledged contravention; (5) whether the contravener has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention; (6) whether the contravener has engaged in similar conduct in the past; (7) the financial position of the contravener; and (8) whether the contravening conduct was systematic, deliberate or covert. 125 Underlying many of these factors is what numerous authorities describe as the principal object of deterrence in the award of civil penalties. Deterrence can be "specific" to the particular person who committed the contravention and also "general" to persons in the same or similar circumstances to the person being subjected to the pecuniary penalty. 126 A consideration of deterrence, general and specific, also means that the following factors will also commonly be relevant: (9) the extent of contrition; (10) whether the contravening company made a profit from the contraventions; (11) the extent of the profit made by the contravening company; and (12) whether the contravening company engaged in the conduct with an intention to profit from it. 127 There was some dispute in this case about whether payments of compensation made by Woolworths is a relevant factor. As I explain later, I consider that this is a relevant factor to consider both directly and indirectly (as a matter which is relevant to contrition). 128 There are deep philosophical questions that underlie the process of reasoning to a conclusion by reference to multifarious factors and also by comparison with other cases. It is necessary to say something about these issues to explain why I do not accept a submission, powerfully pressed, by senior counsel for Woolworths. 129 Consistency and the rule of law require consideration of the penalties awarded in similar cases, particularly if it is possible to discern a range from those cases. But how can the penalties in similar cases be compared if the weight of the relevant factors differs and those factors are incommensurable? Professor Sunstein has argued that "[a]n especially large task for legal theory is to offer an adequate description of how, in legal contexts, choices should be made among incommensurable goods and among different possible kinds of valuation": Sunstein C "Incommensurability and Valuation in Law" (1993) 92 Mich Law Rev 779, 861. Can problems of incommensurability be resolved by the adoption of a common metric and, if so, what should that metric be? Can they be resolved by lexical ordering? If so, are formal notions of Right conceptually prior to utilitarian notions of Good as suggested by Chapman B "Law, Incommensurability, and Conceptually Sequenced Argument" (1998) 146 Uni Penn Law Rev 1487? 130 Courts have generally given short shrift to these concerns. In criminal law, the dominant approach to sentencing based on the triptych of purposes of punishment (retribution, rehabilitation, and deterrence) involves an "instinctive synthesis" of the factors relevant to those purposes. An already complicated process of sentencing should not be made more complicated by attempting to reduce sentencing to some formula or to make it overly technical: Weininger v The Queen [2003] HCA 14; (2003) 212 CLR 629, 645 [50] (Kirby J); Ryan v The Queen [2001] HCA 21; (2001) 206 CLR 267, 309-310 [144] (Hayne J). In Pearce v The Queen [1998] HCA 57; (1998) 194 CLR 610, 622-623 [39], McHugh, Hayne and Callinan JJ explained why, in criminal law, "excessive subtleties and refinements" must be avoided. Quoting from Sir John Barry their Honours said that criminal law: … has to employ methods which are, in important respects, rough and ready, and in the nature of things it cannot take fully into account mere individual limitations and the philosophical considerations involved in the theory of moral, as distinct from legal, responsibility. It must be operated within society as a going concern. To achieve even a minimal degree of effectiveness, it should avoid excessive subtleties and refinements. It must be administered publicly in such a fashion that its activities can be understood by ordinary citizens and regarded by them as conforming with the community's generally accepted standards of what is fair and just. Thus it is a fundamental requirement of a sound legal system that it should reflect and correspond with the sensible ideas about right and wrong of the society it controls, and this requirement has an important influence on the way in which the judges discharge the function of imposing punishments upon persons convicted of crime. 131 The same "instinctive synthesis" approach does not directly apply to civil proceedings (see Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 90 ALJR 113, 127 [56] (French CJ, Kiefel, Bell, Nettle and Gordon JJ)). But there is a common process of assessing the relevant factors and synthesising a conclusion as to penalty where the parties have not agreed an appropriate penalty and the central purpose of the penalty is deterrence. 132 These matters are important in this case because the submissions of the parties focused upon several significant cases involving pecuniary penalties as comparable cases. In oral submissions, both counsel properly accepted that these few cases of contravention did not establish a range. The circumstances in the cases cited were simply too different from this case and from each other. Indeed, Woolworths' attempt to consider the limited possible comparison between this case and the other different cases involved unarticulated assumptions about factors that might be thought to be incommensurable. A simple hypothetical example might be two cases of misrepresentation which are similar in all other respects except in one case the misrepresentation was intentional and cynical but with relatively minor consequences and in the other case the misrepresentation was careless but with very major consequences. How can those incommensurable factors be weighed? 133 In the course of making reference to cases which were said to be comparable, in oral and written submissions Woolworths referred to the "parity principle". That principle does not assist Woolworths. It does not suggest that incommensurable factors in the different circumstances of single cases can or should be compared. In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, 295, Burchett and Kiefel JJ said that a "hallmark of justice is equality before the law, and, other things being equal, corporations guilty of similar contraventions should incur similar penalties". But their Honours went on to say that different circumstances mean that "other things are rarely equal when contraventions of the Trade Practices Act are concerned". Further, as their Honours observed, cases are authorities for matters of principle. But a penalty decided on the basis of findings of fact in one case which differs from the circumstances of another case cannot dictate the penalty in that other case. 134 In summary, although the cases to which I refer below were discussed in some length by Woolworths, there are a number of reasons why these cases are, at best, of very limited utility in explaining the appropriate penalty. 135 The first reason is the lack of any range that emerges from those three or four cases. Even the notion of deriving a range from other cases is not acceptable in some circumstances: Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249, 264 [60] (the Court). Without a range, direct comparisons of cases involving different factual circumstances can be very misleading. An example is the submission by senior counsel that the penalty imposed in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (considered below) should be regarded as an "outlier" or the outer limit for the most extreme contraventions. But what does this mean? Is this outer limit the penalty imposed by the Full Court ($3.61 million)? Or is it the penalty imposed by the primary judge, based on findings of fact which were overturned but where the Full Court did not suggest that the penalty was otherwise manifestly excessive ($5.26 million)? Senior counsel seemed to assume that the former penalty was the outlier. Even if this were so, what does it mean for a case to be an "outlier" when compared with only two other cases which involve different circumstances? And, even on the facts found by the Full Court, why should the amount of $3.61 million be the outlying amount when the Full Court did not suggest that $3.61 million was the outer limit of the awards that might have been made? 136 The second reason is more fundamental. There is little utility in comparisons with the cases cited is the unarticulated, but intuitive, assumptions involved in the process of comparison between incommensurables. 137 The third reason becomes apparent upon consideration of the cases below. To reiterate the point from NW Frozen Foods Pty Ltd, the comparison is of very little use due to the considerable variety of the different circumstances involved in those cases.

[51]

The cases referred to by the parties as comparators 138 I do not consider any of the cases relied upon by the parties to be useful comparators. However, in light of the detailed focus on these cases in otherwise meticulous submissions I will explain briefly why the circumstances of those cases are so different that I do not find the cases of significant assistance. 139 The first case relied upon by Woolworths was Australian Competition and Consumer Commission v Apple Pty Ltd [2012] FCA 646. In that case Apple contravened s 33 of the Australian Consumer Law by four different courses of conduct involving representations about connectivity of its iPad device to the Telstra mobile date network. A total penalty of $2.25 million was imposed. Although Woolworths pointed to some similarities with this case, there were numerous differences, some more mitigating, some more aggravating. Those differences included the following. First, there was an absence of any evidence of loss or damage to consumers. Secondly, there was the deliberate nature of its conduct, which involved senior management in circumstances in which the risk of contravention of s 33 was described by the primary judge as "reasonably obvious". Thirdly, it was not possible for the primary judge to say whether Apple had a corporate culture conducive to compliance. Fourthly, the penalty in the Apple case was imposed by the Court as an appropriate penalty which had been agreed between the parties. Since the parties had agreed upon a suggested pecuniary penalty, the question before the Court was slightly different from the one before the Court now. An agreed penalty might be adopted if the Court considers it an amount as appropriate as any other even if the Court "might otherwise have been disposed to select some other figure": Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 [47] (French CJ, Kiefel, Bell, Nettle and Gordon JJ). 140 The second case relied upon by Woolworths was Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2015] FCA 330. That case involved four courses of contraventions by Coles in advertising bread products with phrases such as "Baked Fresh". This implied that the bread had been baked on the day that it was offered for sale when, in fact, only part of it had been baked that day. Again, there are numerous differences in the circumstances of that case and the present case. One of the most fundamental differences is again that the consequences of the contraventions in Coles did not endanger the health or safety of any consumer. A second difference is that Coles obtained an EBIT of $7.28 million from the bread products sold. A third difference is that Coles set out to achieve a purpose of bettering its position over its competitors. Further senior management was involved in the contraventions by approving the language of the advertisements when it ought to have been appreciated that they might contravene the Australian Consumer Law. A fourth difference is that there was no evidence of any corporate culture of compliance and there was no co-operation which entitled Coles to a discount in sentence. A fifth difference is that the offending conduct took place over 3 years compared with the intermittent periods in this case. However, in Coles, there was no evidence of consumer complaints. 141 The third case relied upon by Woolworths was Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249. The contraventions involved eleven courses of conduct. The primary judge imposed a penalty of $5.26 million. On appeal this was reduced to $3.61 million after factual findings were set aside (including that Optus did not take its obligations under the Australian Consumer Law seriously), with penalties of up to $600,000 imposed for each of the eleven course of conduct. Again, there were numerous differences with this case. One difference is that there was little or no loss to consumers as a result of the contraventions. The Full Court observed that "the absence of loss or damage to consumers is a circumstance which would usually attract a less severe penalty than if substantial harm had been inflicted on consumers" (at 264 [58]). A second difference is that there was no effect on the health or safety of any consumers. A third is the number of contraventions involved which was considerably more in Optus than the present case. A fourth is that the purpose of the contravening conduct was for Optus to increase its market share. A fifth is that Optus was not a first time offender, its conduct was contrary to an express undertaking that it had given, and there was an acute need for specific deterrence. A sixth difference is that Optus did not co-operate with the ACCC in the proceedings. 142 The ACCC referred to the decision in ACCC v Cotton On Kids Pty Ltd [2012] FCA 1428. In that case Cotton On Kids committed contraventions concerning two items of children's nightware. The misrepresentations by Cotton On Kids concerned the labelling of the nightware which infringed safety standards. A penalty of $1 million was imposed. However, as the ACCC itself submitted, the case involved numerous differences from this case. First, there was the difference (described above) that the penalty was agreed. Secondly, there was the difference that no consumer was actually injured. Thirdly, Cotton On Kids was a far smaller retailer than Woolworths. Fourthly, the number of contravening products sold by Woolworths, and the number of consumers exposed, was greater than Cotton on Kids (only 2,476).

[54]

The unintentional nature of the contraventions and Management's knowledge 146 Woolworths' contravening conduct was not deliberate or intentional. Woolworths' senior management was not involved in the contravening conduct in the sense of taking part in any aspect of it. However, the contraventions were the consequence of inadequate procedures which led to the misrepresentations and to the delays in withdrawing the Deep Fryer, Select Drain Cleaner, and Safety Matches and to the failures to report. The inadequacy of quality assurance procedures at the time of the Select Drain Cleaner incident were known to management as powerfully illustrated in the February 2013 'Creating daylight through Quality' presentation which I have described (which was given after the Deep Fryer, Safety Matches and Padded Flop Chair contraventions). 147 Management at Woolworths had also been made aware from at least September 2012 of the ACCC's concerns regarding Woolworths' product safety and its quality assurance processes. The extent of that awareness from that letter should, however, not be overstated. The concerns were expressed in a letter on 11 September 2012 (exhibit 3) which concerned a recall of a faulty DVD player. In the course of that single spaced, three page letter, the ACCC said: The ACCC also notes that in the last 2 months alone, besides the DSE portable DVD player, Woolworths has recalled a home-brand chair with a faulty locking pin that may cause the chair to collapse and cause injury … an all-in-one iPad accessory kit that does not comply with the applicable mandatory Australian electrical safety standard … a home-brand electric blanket that poses a fire hazard … and a home-brand electric deep fryer with handles that may detach, potentially spilling hot water on the user and bystanders … Needless to say, receiving such regular announcements of product safety recalls does little to instil confidence that the quality assurance processes at Woolworths are sufficient to provide consumers with adequate protection from harm. 148 Management were also aware of the particular quality assurance issues during the latter part of the period of the Select Drain Cleaner contraventions. For instance, the First Select Drain Cleaner incident occurred in late February 2014 and was classified as a 'Severity 1' incident. In accordance with the revised Severity 1 Complaint Dashboard implemented in July 2013, this incident was reported to Woolworths' Head of Quality and Head of Commercial Teams. Consequently, from late February 2014, these people were aware that there was a potential safety issue with the Select Drain Cleaner. 149 In summary, during the periods of contraventions, Woolworths' management was aware of inadequate procedures, with different degrees of specific awareness at different times. However, the effect of this awareness on specific deterrence is substantially reduced because management nevertheless did make significant efforts to improve the processes. Those efforts were, in some respects, inadequate or not made in time. It is to those efforts by Woolworths that I now turn.

[55]

Woolworths' culture of compliance 150 As I have explained, Woolworths maintained a compliance program designed to ensure officers and employees understood the company's legal obligations arising from the Competition and Consumer Act 2010 (Cth). However, the mere existence of such a program is meaningless, particularly where a company is dealing with large volumes of products which affect hundreds of thousands, or millions, of consumers. A compliance program might be entirely notional, or it might be wide reaching and large scale. It is essential to consider the effectiveness of any compliance programs: ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 258 (Lockhart J, French J agreeing at 268); ACCC v George Weston Foods Ltd [2000] FCA 690; (2000) ATPR 41-763 at [20]-[23], [44]-[53] (Goldberg J). In addition to the effectiveness of the compliance program it is also important, for the purposes of specific deterrence, to consider whether the program is adapted and developed in response to identified shortcomings. 151 There were serious defects in Woolworths' compliance programs, as it properly accepts. An obvious manifestation of those defects was the number of serious contraventions involved in this case and avoidable delays in recall and withdrawal processes. Other defects included Woolworths' repeated failures in eight instances of its reporting requirements under s 131 of the Australian Consumer Law. This is not to suggest that Woolworths should be subject to a penalty aimed at specific deterrence to achieve impossible perfection. It is, sadly, almost inevitable that a business dealing with thousands of products across hundreds of stores will have some defective products which involve misrepresentations. But the more serious the possible consequences, and the larger the enterprise, the more reasonable it is to expect a substantial and effective quality assurance program to eliminate, as far as possible, misrepresentations (particularly concerning product safety) and to make recall and withdrawal of products as efficient as possible. 152 Nevertheless, as I have described in some detail, Woolworths has been constantly striving to improve its compliance. It has also worked with the ACCC to improve its processes including by consenting to orders to ensure continued review of its substantial NPD program and the engagement of an external auditor. It has also centralised its reporting process to ensure that the s 131 notification function is performed centrally and without delay. 153 The ACCC says that specific deterrence is also required because of continuing failures by Woolworths and continued inadequacies in its quality assurance and compliance programs. The ACCC points to the period from 1 December 2014 to 21 August 2015, where Woolworths submitted 11 recall notifications to the Minister responsible for product safety on the grounds that they may be unsafe. Some of the safety defects were very serious. For instance, home brand bleach bottles were found to have small pin sized holes near the bottom of the bottle with the potential to cause a leak of the poisonous contents. However, I do not consider that these recalls are an aggravating factor. The recall notifications may emphasise increased detection mechanisms and an increasingly cautious approach to product safety based upon the developments to Woolworths' compliance program. 154 However, there remain matters of concern about Woolworths' processes which are needed to avoid further misrepresentations in the offer for sale of its products. One of the processes is adequate pre-shipment inspection. In relation to mugs that had been made in China and recalled, the ACCC emailed Woolworths on 11 August 2015 and asked if pre-shipment inspections were conducted by Woolworths or the supplier on the mugs. Woolworths responded that the mugs were not pre-shipment inspected. Senior counsel for Woolworths pointed to information that the mugs were sourced from overseas but provided by a local supplier. Nevertheless, Woolworths accepted the products despite the lack of pre-shipment inspection by the local supplier. As I have mentioned, it was an agreed fact that in January 2013, Woolworths had produced a Supplier Manual which required all goods supplied to Woolworths to be inspected before shipping by an inspection company. The Manual required that goods should only be released for shipment once the pre-shipment report was approved by Woolworths Quality Assurance. It would seem to defeat the purpose of such a compliance measure if the identical goods could be acquired by Woolworths without pre-shipment inspection if they had been first acquired by a local intermediary.

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158 The profits made from the sale of these products are a relevant consideration but in this case they do not have a significant effect on the penalty that I consider to be appropriate. The profits will be entirely eliminated, at least several times over, by the penalty which I would impose in any event. In other words, although profits are a relevant consideration, they are not a significant factor requiring an increase in the award, from that which I would otherwise impose, for reasons of deterrence. 159 The size of the penalty that I consider should be imposed, coupled with the other orders and publicity associated with them, also means that this is not a case which requires any further increase in penalty for the reasons explained by French CJ, Crennan, Bell and Keane JJ in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640, 659 [66], that a penalty "must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business. ... [T]hose 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" (quoting from Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249); see also Trade Practices Commission v CSR Ltd [1991] ATPR 41-076, 51, 152 (French J); NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285, 294-295 (Burchett and Kiefel JJ). 160 As to the significant size of Woolworths, its revenue and its EBIT, those matters are relevant considerations for reasons of specific deterrence as well as general deterrence for other similar sized corporations. As Allsop CJ said in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330 at [92]: Coles' financial resources… are clearly relevant to considering the size of the penalty required to achieve the end of specific deterrence and can be weighed against the need to impose a sum which will be recognised by the public as significant and proportionate to the seriousness of the contravention for the purposes of achieving general deterrence. See also Australian Competition and Consumer Commission v Apple Pty Ltd [2012] FCA 646.

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Co-operation with the ACCC, admission of culpability, compensation and contrition 161 Woolworths provided significant cooperation with the ACCC. This should be recognised and should provide a significant discount from the penalty that I would otherwise award. I do not accept the submission by the ACCC that Woolworths' failure to agree a penalty with the ACCC, or a delay in finalising an agreed statement of facts detracts in any real way in this case from the substantial discount to which Woolworths should be entitled to for cooperation. If Woolworths' suggested penalty had been less than $2 million then my conclusion might have been different. But there is a difference between cooperation and complete capitulation. 162 Woolworths' substantial cooperation included assistance with the ACCC investigation between 2013 and 2014 and undertaking to the ACCC that it would address its concerns. Its cooperation included engaging with the ACCC on Woolworths' new product quality framework and other new initiatives. Woolworths also cooperated by initiating settlement discussions and reaching agreement on contraventions with the ACCC including the appropriate relief (other than as to penalty) to be recommended to the Court. The agreement on contraventions meant that the parties and the Court were spared the substantial cost of a trial. Woolworths' actions of cooperation are also evidence of a desire to redress its failings. 163 Woolworths' cooperation is also evidence of contrition for its contraventions. Coupled with this cooperation there is some further evidence of contrition by Woolworths' offers of, and payments of, compensation and its apologies to affected consumers. Woolworths' offers of compensation were not cynical offers made on the eve of litigation. Compensation was paid to some consumers even before this litigation was commenced. All those who sought compensation were compensated. The compensation might not be able to be described as overly generous, especially in light of the size of Woolworths. As Spigelman CJ said in Thewlis v The Queen [2008] NSWCCA 176; (2008) 186 A Crim R 279, 280 [2], quoting from Hunt CJ at CL, "[w]here there has been a substantial degree of sacrifice involved in the repayment, that is a matter which may properly be taken into account by way of mitigation". But when the compensation was paid, it was at least the amounts to which the consumers were legally entitled and sometimes slightly more. Those who received compensation were invited to raise any concerns that they had. Other than where lawyers were involved (and communications were made through the lawyers), Woolworths invited consumers to suggest compensation, including in relation to breaches of s 131 where no consumer was entitled to any compensation. 164 The only respect in which I consider that Woolworths might have been more proactive in relation to compensation concerns the mother of the baby who was severely burned. Woolworths took many steps to contact her and to follow up on that contact including inviting her to raise issues concerning compensation. But in a year and a half after the incident, apart from paying some medical bills and expenses, Woolworths never actively proposed to the mother any amount of compensation for the serious injuries that her baby daughter had suffered. 165 The parties disputed whether compensation was relevant in any other way than to show contrition. Initially, the ACCC submitted that the payment of compensation was a relevant factor only indirectly as a show of contrition. I do not accept that the payment of compensation is only relevant in this manner. Counsel for the ACCC accepted that no authority had confined the relevance of compensation in this way (ts 30) and I do not doubt that her research in this area, as in all others, was comprehensive. 166 Apart from being evidence of contrition, compensation is relevant directly as an action which is associated with the contraventions which attempts to redress, in the limited manner in which money can do it, the consequences of the contraventions: see also Australian Competition and Consumer Commission v AGL Pty Ltd [2015] FCA 399; (2015) 146 ALD 385, 391 [35] (White J). Section 224(2)(a) of the Australian Consumer Law directs attention to the loss or damage suffered as a result of the act or omission. If that loss or damage is ameliorated in any way then that amelioration should also be relevant. An apology might go some way to ameliorating loss or damage which arises by hurt feelings. A payment of money will go some way to ameliorating loss or damage that involves a loss of income. And, as the common law concerning general damages recognises, the payment of money is awarded as "a substitute for that which is generally more important than money: it is the best that a court can do": McGregor H, McGregor on Damages (19th ed, Sweet & Maxwell, 2014) 13 [2-001]. Section 227 further emphasises the relevance of compensation to pecuniary penalties by creating a hierarchy between payments of compensation and pecuniary penalties requiring preference to be given to orders requiring payments of compensation to victims. 167 The extent to which payments of compensation will be a mitigating factor in this direct manner will vary. In cases where the loss and damage suffered is monetary then monetary compensation will be a stronger mitigating factor than cases of personal injury. The extent of compensation that is paid will also be relevant.

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Previous contraventions and previous conduct 168 The existence of previous contraventions and previous conduct is a matter which is relevant to the extent to which specific deterrence is required. The ACCC pointed to an example of a previous contravention and a circumstance of previous conduct which were relevant because they involved known contravening conduct or likely contravening conduct. 169 One example was that Woolworths was found to have violated s 52 of the Trade Practices Act in 2002 for an advertorial published in four country newspapers regarding the source of their beef: Australian Competition and Consumer Commission v Woolworths Ltd [2002] FCA 1001; (2002) ASAL 55-085. Justice Lindgren held that this was misleading or deceptive or likely to mislead or deceive. 170 A second example was in 2010 when Woolworths gave an undertaking under s 87B of the Competition and Consumer Act 2010 (Cth) to the Australian Competition and Consumer Commission in relation to the mandatory safety standard for the labelling of children's nightwear. Big W stores were selling children's nightwear that was incorrectly labelled "low fire danger". It should have been labelled "warning high fire danger keep away from fire". In its undertaking Woolworths acknowledged that "by offering these products for retail sale in circumstances where the garments carried the incorrect fire warning label, it was likely to have contravened section 52, 53(a), 53(c), and 65C of the [Trade Practices Act]". The undertaking required Woolworths to implement measures to improve its buying and quality assurance procedures for children's nightwear products. 171 I do not accept the submission by Woolworths that these previous matters are irrelevant. It is, however, important to note that these previous matters are relevant to be considered in a different manner from the consideration of cases for the purposes of an assessment of parity of penalty. A consideration of similar past offending is part of an overall matrix of assessment of the relevant facts and circumstances of the case. It is not undertaken for the purpose of some form of quantitative comparison in outcome. Hence, I do not accept the submissions by counsel that the same considerations are involved when (i) deciding whether a case involving a different party can be used for consideration of parity in penalty or (ii) deciding whether a case involving the same party is sufficiently similar to be one of "all relevant matters" (s 224(2)) used as part of the overall assessment of the facts and circumstances. 172 The previous contravention by Woolworths of s 52 in the advertorial was not a contravention of a pecuniary penalty provision. The ACCC submitted that it is sufficiently similar to be taken into account as a relevant matter under s 224(2)(c) ("the person has previously been found by a court in proceedings under Chapter 4 or this Part to have engaged in any similar conduct"). But neither the ACCC nor Woolworths made any submissions concerning whether the finding had been made by a court in proceedings under Chapter 4 (Offences). Section 52 was not a proceeding under the Offence section of the Trade Practices Act (the Competition and Consumer Act was then entitled). No express finding was made by Lindgren J about any offence provision. Although the ACCC in that case brought its action on the basis also of s 53(eb) ("false or misleading representations as to the origin of goods"), Lindgren J said at [8] that he would adopt the same approach as the parties' submissions in writing and orally which concentrated on the alleged contravention of s 52 of the Trade Practices Act and did not separately address subs 53(eb). 173 Nevertheless, I consider that the contravention by Woolworths, although potentially not falling within s 224(2)(c) was a "relevant matter" to which the Court can have regard because it involved a contravention which was sufficiently similar to the circumstances of this case. In particular it involved a contravention which arose as a result of a misrepresentation about one of Woolworths' products. 174 However, its weight as a relevant circumstance is extremely limited, even miniscule. It was a single advertorial contravention. It occurred approximately a decade before the contraventions in this case. The consequences were far less serious than those in this case. During the preceding decade Woolworths has offered for sale and described thousands, perhaps hundreds of thousands of other products. 175 I also consider that the undertaking given by Woolworths is a relevant matter to consider. It involved an acknowledgement by Woolworths that it was likely to have contravened provisions of the Trade Practices Act in respect of misrepresentations on labels on its products which concerned consumer safety. I do not accept the submission by Woolworths that an undertaking can only ever be a relevant matter if the conduct involved in the case concerned a breach of that undertaking. The passage that Woolworths relied upon for this assertion was from the decision in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640, 658-659 [64] (French CJ, Crennan, Bell and Keane JJ). In that passage their Honours explained why the Full Court of the Federal Court had erred in concluding that the undertaking was not a relevant matter because "the facts underlying the undertaking were never proved and no breach was ever alleged". Their Honours said: The Full Court erred in failing to appreciate the relevance of the undertaking in relation to the claims of personal deterrence upon the sentencing discretion. The fact that the undertaking had not been sufficient to secure TPG's adherence to the requirements of the TPA indicated that a more severe penalty was necessary to accomplish the task of securing that adherence. In Singtel Optus Pty Ltd v Australian Competition and Consumer Commission, it was rightly said by the Full Court of the Federal Court that the court, in fixing a penalty, must "make[] it clear to [the contravener], and to the market, that the cost of courting a risk of contravention ... cannot be regarded as [an] acceptable cost of doing business." 176 Their Honours were not suggesting in that passage that an undertaking could only ever be relevant to personal deterrence if it concerned exactly the same conduct as the contravention which was found by the court to have been committed. Such a narrow conclusion would involve the same error as that committed by the Full Court when their Honours failed to appreciate the relevance of the undertaking to personal deterrence. 177 Although I consider that the undertaking is relevant, its weight is also limited, although less so than in relation to the advertorial. It was more recent in time and it involved an acknowledgement of a likely contravention concerning a representation which related to consumer safety. But it was a single representation, there was no positive finding of any contravention, and the conduct in this case was not a breach of the undertaking.

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Pecuniary penalties 178 As Finkelstein J explained in Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) [2002] FCA 559; (2002) 190 ALR 169, 179-180 [38], there are different approaches which have been taken to the award of penalties. In some cases a separate penalty has been imposed for each contravention. In others a single global penalty has been imposed for all contraventions (eg Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2015] FCA 330 [85]). 179 The contraventions in this case involved different conduct and different events. But they overlapped in significant respects. In particular, the most serious contravening conduct by Woolworths stemmed from the same systemic conduct in a broad sense. As Woolworths described that conduct it involved misrepresentations about the characteristics of some of its products, refraining from withdrawing products within a reasonable time, and refraining from recalling unsafe products within a reasonable time. 180 In this case, following the acceptance in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 that parties to civil penalty cases can make submissions about the quantum of a penalty, Woolworths submitted that an appropriate total penalty would be $2.2 million. The ACCC submitted that an appropriate total penalty would be $4 million. 181 The $2.2 million proposed by Woolworths is insufficient. Even taking into account the significant mitigating factors which I have described, such a penalty is insufficient in the context of the seriousness of the contraventions, particularly when one takes into account the contraventions in relation to products such as the Select Drain Cleaner and Deep Fryer, where the misleading of the public about suitability for purpose and delays in withdrawing and recalling the products seriously endangered the health of consumers during the period of contraventions. Nevertheless, in the circumstances I have described, including the mitigating factors involved and the maximum statutory penalty for a single contravention of $1.1 million, a penalty of $4 million exceeds the amount that I consider should be awarded. 182 Overall, the appropriate penalties should be as follows. In imposing these penalties I have taken into account considerations of totality: (1) In respect of the misleading or deceptive conduct: $3,000,000 based on the following courses of conduct: (a) the Deep Fryer contraventions $ 600,000 (b) the two Select Drain Cleaner courses of contraventions: $1,400,000 (c) the Safety Matches contraventions $ 400,000 (d) the Flop Chair contraventions $ 300,000 (e) the Folding Stool contraventions $ 300,000 (2) In respect of the eight section 131 contraventions: $57,000 (a) the Deep Fryer s 131 contravention $ 10,000 (b) the Select Drain cleaner s 131 contravention $ 5,000 (c) the other six s 131 contraventions $ 42,000 183 Therefore, having regard to all the factors I have described, I consider that the appropriate total penalty is $3,057,000. There is a need for deterrence, particularly general deterrence of this conduct and conduct similar to that which was involved in these infringements. There is also a need for some specific deterrence. I accept, however, that the need for specific deterrence is not as marked in this case for a number of reasons that I have described particularly including (i) Woolworths' previously substantially clear compliance record despite the vast number of products in which it deals, (ii) the absence of any involvement in the contraventions by senior management, and (iii) because Woolworths has demonstrated contrition and a commitment to implementing, reviewing and updating processes and policies to ensure the safety of the goods it sells to consumers. Additionally, among the factors that reduce Woolworths' penalty, one of the most significant is also Woolworths' early admission of culpability and its co-operation with the ACCC. 184 The penalties I have imposed are designed, in broad terms, to achieve specific and general deterrence by requiring vigilance concerning quality management procedures to ensure the accuracy of representations and effective procedures for recall or withdrawal of products and the notification of the ACCC. This is particularly so where the products can affect consumer safety and the person deals in the sale of large volumes of consumer products.

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Non-pecuniary orders 185 The proposed orders agreed between the ACCC and Woolworths provide for declarations, various non-punitive orders and a contribution by Woolworths to the ACCC's costs agreed in the sum of $50,000. All of these orders are appropriate. 186 In relation to the proposed declarations under s 21 of the Federal Court of Australia Act 1976 (Cth), this case involved a real question in which the Commission had an interest, and as to which Woolworths was in the position of a proper contradictor: Forster v Jododex Aust Pty Ltd [1972] HCA 61; (1972) 127 CLR 421, 437-438 (Gibbs J). It is in the public interest that the declarations be made. The publicity of the contraventions serves the public interest by assisting to deter others and to inform consumers and also to record the Court's disapproval of the conduct and to provide the foundation for the consequential orders: ACCC v Cotton On Kids Pty Ltd [2012] FCA 1428 [29] (Tracey J). 187 The ACCC and Woolworths also propose non-punitive orders. These are orders for publication and an order that Woolworths upgrade its product safety compliance program. 188 The publication orders require Woolworths to publish a prominent link on its internet homepages (for Woolworths, Big W, Masters Home Improvement, and Ezibuy) in terms which broadly: (i) inform customers of Woolworths' obligations under the Australian Consumer Law; (ii) provide for how consumers can report a product safety incident including its hotline and online forms and how Woolworths will deal with the reports; (iii) describe Woolworths' policy for quality assurance and safety checks for its house brand products; and (iv) provide details of products recalled in the last 12 months. 189 The power to make the publication orders is contained in ss 246(2)(a) and (c) of the Australian Consumer Law. Respectively, those subsections empower the orders to be made (i) directing the person to perform a service that is specified in the order, and that relates to the conduct, for the benefit of the community or a section of the community; and (ii) "requiring the person to disclose, in the way and to the persons specified in the order, such information as is so specified, being information that the person has possession of or access to". 190 I am satisfied that the scope of the service ordered to be performed by Woolworths "relates" to the contravening conduct (Australian Competition & Consumer Commission v Econovite Pty Ltd [2003] FCA 964 [15] (French J)) and that providing this information to consumers will ensure they are better informed about Woolworths, its products and product safety obligations, and the processes for reporting defective goods. 191 I also make the orders sought, pursuant to s 246(2)(b) "for the purpose of ensuring that the person does not engage in the conduct, similar conduct, or related conduct, during the period of the order". Those orders require Woolworths to implement an upgraded product safety compliance program in accordance with the requirements agreed by the parties. The new program is directly related to the contraventions. It will ensure improvements to Woolworths' current NPD program, including employee education and reporting and handling of incidents, and "ensure a company-wide awareness of responsibilities and obligations in relation to the contravening conduct or similar or related conduct": Australian Competition and Consumer Commission v Sontax Australia (1988) Pty Ltd [2011] FCA 1202 [36] (Gordon J). 192 It is appropriate that I order, as the parties seek, that Woolworths pay the Commission's costs of this proceeding fixed in the sum of $50,000. 193 Finally, I should conclude with a remark about the conduct of this penalty hearing. The matter was undoubtedly of great importance to the parties but the volume of material provided, and the level of minute detail to which it descended (including an additional sixteen substantial documents provided the night before the hearing), was extraordinary even in these proceedings for millions of dollars in penalties. Nevertheless, the excess of documentary information and facts before the court was amply mitigated by the finest submissions, written and oral, from Dr Higgins and Mr Mee (for the ACCC), Mr Darke SC and Ms Mirzabegian (for Woolworths) and those instructing them, that I have seen in proceedings of this nature. I certify that the preceding one hundred and ninety-three (193) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edelman.

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