(c) Other considerations
74 The non-exhaustive mandatory considerations that the Court must have regard to in s 76(1) of the Act in determining the appropriate level of pecuniary penalty are as follows:
1. The nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission;
2. The circumstances in which the act or omission took place; and
3. Whether the person has previously been found by the Court in proceedings under [Pt VI] or Pt XIB of the Act to have engaged in any similar conduct.
75 In Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152-3, French J identified the following additional considerations that may be relevant to the assessment of a pecuniary penalty under s 76 of the Act:
1. The size of the contravening company;
2. The degree of power the contravening company has, as evidenced by its market share and ease of entry into the market;
3. The deliberateness of the contravention and the period over which it extended;
4. Whether the contravention arose out of the conduct of senior management or at a lower level;
5. Whether the company has a corporate culture conducive to compliance with the Trade Practices Act 1974 (Cth) (TP Act) as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention; and
6. Whether the company has shown a disposition to cooperate with the authorities responsible for the enforcement of the TP Act in relation to the contravention.
Of course, in the case of natural persons, these considerations may not be relevant or may require modification.
76 Those considerations were approved and expanded upon by the Full Court of the Federal Court in NW Frozen Foods Pty Ltd v Australian Competition & Consumer Commission (1996) 71 FCR 285 and J McPhee & Son (Australia) Pty Ltd v Australian Competition & Consumer Commission (2000) 172 ALR 532 as follows:
1. The respondent's financial position: NW Frozen Foods at 297A-B; and
2. Whether the conduct was systematic, deliberate or covert.
A careful reader will notice that is overlap between the various matters identified by the Act and the authorities as relevant to the imposition of a pecuniary penalty.
77 NW Frozen Foods also emphasised (at 298) that cooperation should be given full credit, "particularly in the case of a proceeding under s 76, where the object is to secure compliance with the Act by deterring contravention, a corporation which gives a court reason to believe that this object has been achieved, so far as it is concerned, by its co-operation with the Commission…".
78 Next, the object of s 76 of the Act. A principal object of a penalty under s 76 is deterrence, both general and specific. The penalty for contravention of the Act:
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.
Singtel Optus Pty Ltd v Australian Competition & Consumer Commission [2012] FCAFC 20 at [62]-[63]. See also Australian Competition & Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54 at [65]-[66]; Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd [1978] ATPR 40-091 at 17,896 and CSR Ltd at 52,153.
79 However, a penalty must not be so high as to be oppressive: Stihl Chain Saws at 17,896; NW Frozen Foods at 293; Australian Competition & Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 at [9].
80 The process to be applied in arriving at a particular penalty under s 76 of the Act may be summarised as follows:
1. The Court's assessment of the appropriate penalty is a discretionary judgment based on all relevant factors;
2. Careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the Court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick;
3. It will rarely be appropriate for a Court to start with the maximum penalty and proceed by making a proportional deduction from that maximum;
4. The Court should not adopt a mathematical approach of increments or decrements from a pre-determined range, or assign specific numerical or proportionate value to the various relevant factors;
5. It is not appropriate to determine an "objective" sentence and then adjust it by some mathematical value given to one or more factors such as a plea of guilty or assistance to authorities;
6. The Court may not add and subtract item by item from some apparently subliminally derived figure to determine the penalty to be imposed; and
7. Since the law strongly favours transparency, accessible reasoning is necessary in the interests of all, and, while there may be occasions where some indulgence in an arithmetical process will better serve the end, it does not apply where there are numerous and complex considerations that must be weighed.
See TPG Internet v Australian Competition & Consumer Commission (2012) 210 FCR 277 at [146].
81 As noted earlier, the parties have filed statements of agreed facts, joint submissions and have agreed penalties. An approach to penalties sought by agreement of the parties was described by the Full Court in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [53] as follows (and see further [53]-[60]):
(i) It is the responsibility of the Court to determine the appropriate penalty to be imposed under s 76 of the TP Act in respect of a contravention of the TP Act.
(ii) Determining the quantum of a penalty is not an exact science. Within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another.
(iii) There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy. Accordingly, when the regulator and contravenor have reached agreement, they may present to the Court a statement of facts and opinions as to the effect of those facts, together with joint submissions as to the appropriate penalty to be imposed.
(iv) The view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty. In particular, the views of the regulator on matters within its expertise (such as the ACCC's views as to the deterrent effect of a proposed penalty in a given market) will usually be given greater weight than its views on more "subjective" matters.
(v) In determining whether the proposed penalty is appropriate, the Court examines all the circumstances of the case. Where the parties have put forward an agreed statement of facts, the Court may act on that statement if it is appropriate to do so.
(vi) Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court's view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range.
Those principles were described as emerging from the reasoning in NW Frozen Foods. The views in Mobil Oil and NW Frozen Foods have been adopted in later decisions including Fair Work Ombudsman v A Dalley Holdings Pty Ltd [2013] FCA 509; Tax Practitioners Board v Shanahan [2013] FCA 764; Australian Competition & Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030; Australian Competition & Consumer Commission v Hewlett-Packard Australia Pty Ltd [2013] FCA 653 and Australian Competition & Consumer Commission v Energy Australia Pty Ltd [2014] FCA 336. (Cf Australian Securities & Investments Commission v Ingleby (2013) 93 ACSR 274 where the Court of Appeal of the Supreme Court of Victoria recently criticised as incorrect the approach applied by the Full Federal Court in Mobil Oil and NW Frozen Foods in considering whether to make orders for pecuniary penalties sought by agreement of the parties).
82 The issue of the principles that might be applied in the imposition of penalties when they have been agreed between a regulator and respondent were also addressed in Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCA 1014 at [8]-[9] and [32]-[33] where I stated:
[8] It is not unusual in modern litigation for proceedings commenced by a regulator against a defendant to be resolved and for the parties to jointly approach the Court with an agreed statement of facts. The beneficial consequences of such a resolution are well known: see, by way of example, NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, 290-291. It has been suggested that cases which involve serious contraventions of the law cannot be "settled" by agreed facts that do not present a fair and accurate picture of the relevant offending to the Court: cf Australian Securities and Investments Commission v Ingleby [2013] VSCA 49 at [31]. So much may be accepted. When this proceeding was settled, the only documents filed with the Court were the originating application and a statement of claim. As a result, in assessing whether the agreed facts and admissions present a fair and accurate picture of the offending conduct, the Court, in the exercise of its judicial power, must satisfy itself that it has sufficient facts and matters to enable it to assess and impose an appropriate penalty: cf Ingleby at [33] citing with approval Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [79]. If the Court forms the view that it does not have sufficient facts and matters, it can and should request the parties to provide additional evidence or information: Mobil Oil at [79].
[9] Consistent with the exercise of judicial power, the first question to be asked is whether the Court does have sufficient facts and matters to enable it to assess and impose a penalty in the proper exercise of that judicial power? ….
...
[32] The parties have agreed the penalties. The Court's approach to agreed penalties has been the subject of considerable judicial ink: see, by way of example, Mobil Oil at [47]-[60]; Australian Securities and Investments Commission v Vizard (2005) 145 FCR 57 at [45]; and Ingleby.
[33] In the end, the principles to be applied may be simply stated. First, the question of an appropriate penalty for a proven contempt or an established breach of a statutory prohibition is a matter for, and function of, the Courts in the exercise of judicial power. Secondly, contrary to statements in some cases, the role of the Court in addressing an agreed penalty is not to exercise an "appellate" role: Ingleby at [29] and [99]. The role of the trial judge is to give such weight to an agreed penalty as is appropriate and to treat the joint submission as it is - a joint submission - to be considered as a factor, an important factor, in the exercise of judicial power of fixing the appropriate penalty in the circumstances of the particular case. These principles are consistent with the observations of Lockhart J in Australian Competition and Consumer Commission v Pioneer Concrete (Qld) Pty Ltd (1996) ATPR 41-457 at 41,581-41,582. The role of the Court is to assess what it would do itself based on the facts. Whether the Court assesses for itself what is the appropriate penalty and then tests that against the agreed penalty, or the Court asks itself whether the agreed penalty is broadly in accord with what the Court would have done acknowledging that the fixing of quantum - the task is not an exact science. The role of the Court is the same - to impose a penalty that is proportionate to the gravity of the contravening conduct. Much of the current debate about the appropriate approach has descended into a debate about which goes first - the Court assessing the penalty having regard to the agreed penalty or assessing whether the agreed penalty is within the appropriate range. For my part, that debate is distracting. It is distracting because it ignores the important role of the fundamental principles of sentencing that must be considered by a trial judge.
83 I remain of the view there expressed - that the role of the Court is to assess what it would do itself based on the facts. What penalty would the Court impose that is proportionate to the gravity of the contravening conduct? There is no prescribed method. The method will inevitably vary depending on the facts. It is against that background that the question of the imposition of a penalty on each respondent will be addressed in Sections D-I below.