TRADE PRACTICES COMMISSION v FRANK THOMAS CULLEY

OPDER JUDGE Morling J. DATE OF ORDER : 11 October 1983 WHERE MADE : Perth

The respondents each pay to the Commonwealth of Australia a pecuniary penalty of s500 in respect

The respondents each pay to the applicant one half of its costs of the application, to be taxed

WESTERN AMSTFALTA DISTPICT PEGISTPY WA Ico. G19 of 1983

BETNEEN : TPADE FRACTICES COMMISSION Applicant AND : FRANK THOMAS CULLEY

In these proceedings the Trade Practices Commission seeks the imposition upon the respondent of pecuniary penalties in respect of alleged breaches of ».45(2)(a)(ii) of the Trade Fractices Act 1974 ("the Act"). The respondents do not deny that they infringed the relevant provisions of the Act in the respects alleged by the Commission and the only question which arises in the proceedings is the amount of the pecuniary penalties which should be imposed by the Court pursuant to

As will appear from the facts to which I shall briefly refer this 15 not a case which calls for the imposition of

substantial penalties. Indeed, counsel for the Commission very

faarly submitted to the Court that cubstantial penalties vere

The facts 11¢ within a small compass. The respondents are the proprietors of service stations trading within the Perth metropolitan aréa. The selling of petrol is a major part of their businesses In November 1982 the price of petrol S014 by service stations in the Ferth metropolitan area was being severely discounted. The stage had been reached where petrol vas being sold by retail at prices roughly equivalent to Che approved whelesale price. [In vonsequence it was rapidly becoming uneconomic for service station proprietors to continue selling petrol at the discounted prices. The respondents and A mumber of other service station proprietors held meetings to

consider whether anything could be done about this situation.

There are over 500 service stations in the Perth metropolitan area, but only about 15 persons appear to have attended the meetings. An informal decision was taken at one of the meetings that an attempt should be made to persuade service station proprietors to reduce the level of discounting

and to sell at a price not less than 2 cents a litre above the

Another, and perhaps the major, reason for the calling of the meetings was to discuss the possibility of forming some

type of association which could represent service station

Eaton. They suggested to him that he would make more profit from his petrol sales if he raised the retail price to 42.9 eents per litre. He replied that turnover was more important fo ham than profit. Mr Culley said to him: "Give it a try for a couple of days and let us know 1f it is not working." Mr Eaton said he would think about it and Culley and Greensvell then left his store. Neither man approached Mr Eaton again. There 15 some evidence in an affidavit sworn by Mr Eaton that the respondents suggested that if he did not increase his prices he could suffer some unpleasant consequences. This allegation is not made out. It was denied on oath by both respondents. They impressed me as frank and truthful witnesses and I accept entirely that they made no threat of any

kind to Mr Eaton. Mr Eaton was not called in evidence.

In the events that happened nothing came of the proposals discussed at the meetings which the respondents attended. Discounting of retail petrol prices continued throughout the Perth metropolitan area. Mr Eaton did not increase his prices as a result of the visit paid to him by the respondents. There is no evidence that any retailer other than Mr Eaton was approached with the suggestion that he should

Both respondents offered unqualified undertakings to the Court that they would not embark upon conduct of a similar

kind in the future. Counsel for the Trade Practices Commission

Commission untermed the Court that in the light of the undertakinys Ele Commission did net press its claim for injunetive cealief. He submitted thal, whilst the case was not one which called fur the imposition of substantial pecunlary penalties, the Court should impose modest penalties upon the

respondents to mark the Court's disapproval of their conduct.

I agree that this is the proper approach to take. I am satisfied the respondents' conduct was motivated by an understandable desire on their part to achieve a reasonable level of profitability in their businesses without causing harm fo the public. They believed that there was nothing wreng in what they were doing, but they were mistaken in that belief. Whilst their conduct was clearly in breach of the Act, 1t is difficult not to have some sympathy with retailers who seek to do no more than sell by retail at prices marginally above government-approved wholesale prices. It is a real question whether cut-throat price competition which makes it impossible for retailers to trade economically is in the public interest

in the long term, even if there are short term price advantages

In all the circumstances I think a pecuniary penalty of Five hundred dollars ($500) should be imposed upon each of the respondents in respect of the matters alleged against them

in paragraph 8 of the Statement of Claim. These penalties are

sufficient to mark the Court's disapproval of the respondents'

-onduck ind fo make @lain ro the commercial community that Vifficuir and unpreficable treading conditions do not iustify infringemencs of the Act. In islermining the penalties I have Caken ante accounk the celakively modest financial circum- skanoes of the respondenrs, cheily family commitments, and the facr that ro harm or damage was caused to the public by their wonducl, Each respondent must pay to the applicant one half of

its costs of the application, ta be taxed as one set of costs.

preced_ng pages are a true copy of the Reasons for judgment herein of his Honour

woe ' 2 ' s ran - ' ~2 beat ot . \ woe oD rt te yt nytede oe ant eee PT Ee " whe a ve sree ' tes Bs srenieat gh e Nady 6 a an ING a Boe US ve . ?

vonducf and !a make plain to the commercial community that difficult and unprofitable reading vonastions do not justify inffinsemenc. -£ the Aer. In ielermining the penalties I have Faken irityu accqunt Fhe eelativels modest financial circum- stanoes of the respondents, thery family commitments, and the fact tnat no narm or damaye was caused to the public by their wonducl., Each tespondent must pay to the applicant one half of

its costs of the application, to be taxed as one set of costs.

I certify that this and the FIVE is) preceding Lages are a true copy of the Reasous for Judgment herein of his Honour Mr. Justice Moriing.