Deterrence
93 It has long been accepted that a principal object of a penalty under s 76 CCA is deterrence: Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd at 17,896 per Smithers J; Trade Practices Commission v CSR Limited at 52,152 per French J and the Full Court in NW Frozen Foods Pty Ltd v ACCC at 292-293. More recently, see Australian Competition and Consumer Commission v High Adventure Pty Ltd [2006] ATPR 42-091 at 44,564 per Heerey, Finkelstein and Allsop JJ.
94 The applicant submits that deterrence should also be the primary focus of a penalty under s 76E TPA/s 224(1) ACL, particularly where (as here) the applicant is bringing a civil penalty action.
95 Consistent with this, Jagot J in Australian Competition and Consumer Commission v Le Sands Restaurant [2011] FCA 105 at [9] which was a s 76E TPA penalty case - cited with approval the Full Court's observation in NW Frozen Foods Pty Ltd v ACCC that:
[t]he Court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think that contravention would pay...
96 Fundamentally, deterrence has two aspects: specific deterrence in respect of the actual contravener and general deterrence of others "who may be disposed to engage in prohibited conduct of a similar kind": Trade Practices Commission v Mobil Oil Australia Ltd (1984) 4 FCR 296 at 297-298 per Toohey J.
97 Considerable emphasis has been placed by the Court on general deterrence for contraventions of provisions of the TPA in previous matters involving consumer protection. These are equally applicable in respect of the consumer provisions of the CCA. As Justice Tracey stated in Australian Competition and Consumer Commission v Skippy Australia Pty Ltd [2006] FCA 1343 at [15]:
It has become accepted that the imposition of substantial penalties for breaches of provisions which are designed to protect consumers, will serve to alert members of the business community to the provisions of the Act and the serious consequences which may flow from their contravention.
98 The cases cited by Tracey J in Skippy at [15] in support were: Pugh v Clark Rubber Ltd (1993) ATPR 41-258 at 41, 473; Miller v Cunninghams Warehouse Sales Pty Ltd (1994) ATPR 41-321 at 42, 269; Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [1999] ATPR 41-716 at 43,247.
99 Justice Tracey also referred at [15] to the "significant monetary penalties, provided for in the Act, for contravention of consumer protection provisions" and the express object in s 2 CCA, which is "to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection."
100 Recent cases emphasise the imposition of penalties of a sufficient scale to deter businesses from weighing up the risk of a penalty being ordered as a strategic business cost, particularly in cases in which the contravening conduct has the potential for creating large profits: Australian Competition and Consumer Commission v McMahon Services Pty Ltd (2004) ATPR 42-031 at 49,228 per Selway J, which was a price fixing case.
101 Deterrence in this case is a significant factor, particularly given the involvement of promotion and sale of products over the internet. Internet trading more generally is a rapidly growing business both within and outside of Australia. Commonly, it is of a different character to traditional sales, sometime referred to as sales via 'bricks and mortar' stores, in that customers do not have the opportunity to handle and inspect goods or samples themselves and often have a less directly interactive opportunity to enquire about representations made about products, although internet sales can incorporate an opportunity for customers to email questions. In that environment there may be less, or at least less immediately familiar, opportunities for consumers to test or enquire about representations made about products on websites. Deterrence of the improper Use of Logo conduct is of particular importance in that environment.
102 Misrepresentations about goods being Australian Made not only harm the buyers of those goods, but also adversely impact on those traders that can properly make that claim and, over time, may adversely impact on the reliability and value of Made in Australia claims more generally.
103 The applicant submits that the penalty awarded against the respondent should be of a level that will not only specifically deter a repeat of the conduct by the respondent, but will serve as a general deterrent to others, who advertise that their products are made in Australia, when they are not.