TRADE PRACTICES COMMISSION v ORLANE AUSTRALIA PTY. LIMITED

Federal Court of Australia|1984-02-03|Before: Beaumont JJ, Northrop J

Trade Practices - resale price maintenance - 'loss leader'

defence - definition of 'cost' in s.98(2) - penalty

Trade Practices Act 1974 (Cth), ss.4(1), 48, 76, 77, 96(3), 96(3) (d), 98(1), 98(2)

BETWEEN 3 TRADE PRACTICES COMMISSION Appellant AND 3 ORLANE AUSTRALIA PTY. LIMITED Respondent ORDER

JUDGES MAKING ORDER Smithers, Morling and Beaumont JJ.

Declarations 4 and 5 made by Northrop J. on 14 July

It 1s declared that by the conduct referred to in para. 3 of the orders made by Northrop J. on 14 July 1983 the respondent engaged in the practice of resale price maintenance contrary to s.48 of the

Practices Act referred to in para. 3 hereof the respondent do pay to the Commonwealth a pecuniary

$18,500. The order for costs made by Northrop J. in para. 8 of the said orders be set aside and in lieu thereof

CORAM: SMITHERS, MORLING and BEAUMONT JJ. DATED: 3 February, 1984.

THE COURT: This 18 an appeal from a decision of a judge of the Court in proceedings brought by the Trade Practices Commission ("the Commission") against Orlane Australia Pty. Lamited ("Orlane") which ais the Australian aistributor of a range of cosmetic products. The Commission brought the proceedings pursuant to ss. 76 and 77 of the Trade Practices Act 1974 ("the Act") seeking the imposition upon Orlane of pecuniary penalties in respect of alleged breaches of 3.48 of the Act, which prohibits the practice of resale price

unduced Richard Lesile Hutchison, the proprietor of a

pharmacy in Saunceston, not to sell cosmetic products

suppiled to him by Orlane at prices less than prices which Orlane had specified. He further found that Orlane's

conduct constituted engagement in the practice of resale

The trial judge also found that in November 1980 Orlane withheld the supply of cosmetic products to Mr Hutchison for the reason that he had sold or was likely to sell cosmetic products supplied to him by Orlane at prices below which the products were not to be sold. A finding was made that this conduct would have constituted engagement by the respondent in the practice of resale price maintenance contrary to s.48 of the Act were 1t not for the defence in sub-s.98(2) thereof. It was further found that paragraph 96(3)(d) of the Act did not apply in relation to the conduct which occurred in November 1980 because Mr Hutchison was a person who, within the preceding year, had sold cosmetic products obtained from Orlane at less than their cost to him for the purpose of attracting to his pharmacy persons likely to purchase other goods and otherwise for the purpose of promoting his business. Appropriate declarations were made giving effect to these

The Commission has appealed against the finding shat paragraph 96(3)(d) of the Act did not apply in relation to the conduct which occurred in November 1980 and seeks the imposition of a penalty upon Orlane in respect of that conduct. It does not press its claim for injunctive relief. Orlane has cross-appealed seeking a variation of the order for costs made against it. Counsel for Orlane submitted that if the Court came to the view that the appeal should be allowed, the Court itself should determine the guestion of further penalty, instead of remitting the matter to the trial judge ror that purpose. We shall return to this

Before referring to the facts which gave rise to the proceedings 1t is convenient to set out the relevant provisions of the Act. Sub-section 4(1) provides, inter alia, that unless the contrary intention appears, the practice of resale price maintenance means the practice of retail price maintenance reterred to in Part VIII of the

"48. A corporation or other person shall not engage in the practice of resaie price maintenance."

Sections 76 and 77 make provision for pecuniary penalties tor contraventions of a provision of Part IV and for the institution by the Minister or the Commission of

proceedings in the court for the recovery of such penalties.

Maintenance are contained in Part VIII of the Act. Section 96(1) provides that, subject to Part VIII, a corporation (in the section called "the supplier") engages in the practice of resale price maintenance if it does an act referred to in any of the paragraphs of sub-s.36(3). Sub-section 96(2) deals with acts of persons {net being corperations)

"96, (3) The acts referred to in sub-sections (1) ana (2} are the tollowing:

(db) the supplier inducing, or attempting to induce, a second person net te sell, ata price less than a price specified by the supplier, qdoods supplied to the second person by the suppiler or by a third person who, directiy or undirectly, has obtained the goods trom the supplier;

(d) the supplier withholding the supply of goods to a second person for the reason that the second person -

(ii) has sold, or is likely "os sell, goods supplied to him by

the supplier, or goods supplied to him by a third person who, directly or

indirectly, has obtained the goods from the supplier, ata price less than a4 price specifiea by the supplier as the price below whic the goods are not to be sold;"

"98. (1) For the purposes of paragraph 96(3)(d) or (e), the supplier shall be deemed to withhold the supply ot goods to another person 1£ -

(a) the supplier refuses or fails to supply those goods to, or as requested by, the other person;

(b) the supplier refuses to supply those goods except on terms that are disadvantageous to the other person;

(c) in supplying goods to the other person, the supplier treats that person less favourably, whether in respect of time, method or place of delivery or otherwise, than the supplier treats other persons to whom the supplier supplies the same or similar goods; or

(d) the supplier causes or procures a person to withhold the supply of goods to the other person as mentioned in paragraph (a), (b) or (c) of this sub-section.

(2) Paragraph 96(3)(d) does not apply in relation to the withholding by the supplier of the supply of goods to another person who, within the preceding year, has sold goods obtained, directly or indirectly, from the supplier at_less than

(a) for the purpose of attracting to the establishment at which the

goods were sold persons likely to purchase other goods; or

(b) otherwise for the purpose of promoting the business of that other person.

(3) For the purposes of sub-section (2), there shall be disregarded -

(a) a genu1rne seasonal or clearances sale of goods that were not acquired for the purpose of being sold at that sale; or

(b) a sale of goods that took place with the consent of the supplier."

The follow1zng account of the facts is taken substantially from the judgment under appeal. At all material times Mr Hutchison was the proprietor of Kent's Centre Pharmacy (""Kent's") in Launceston. From dune 1977 Kent's purchased products from Orlane for sale by retail. In November 1980 Orlane ceased supplying its products to Kent's. In the early part of 1980 Orlane products were sold by retail in Launceston through two outlets, being Kent's and another retail establishment called McKinlays. To assist in the sale of its products, Orlane from time to time assisted 1n promotions at retail stores. It was usual for a promotion to extend over a period of a week. Orlane and the retailer shared the cost of advertising and Orlane provided a beauty consultant to attend at the store to advise and assist customers on beauty needs and skin care and on the range and use of Orlane products. In addition, a lamited range of products was advertised for sale at discount prices and complimentary products were given to customers. Other assistance was given by Orlane to

retailers in the way of aids to the sale of Orlane products.

In 1980 Orlane appointed Mrs Hassett to be its representative for the distribution of its products in Victoria and Tasmania. Differences had by this time arisen between Kent's and Orlane. Kent's had returned a number of products to Orlane and had complained that Orlane's representatives had not been fulfilling their obligations. A complaint was further made that promotions at Kent's had tended to follow closely after promotions at McKinlays, thereby limiting the benefits to Kent's which would otherwise have flowed from promotions. At the same time, Kent's account with Orlane had fallen into arrears. Orlane had become concerned that, on occaSions other than during promotions, Kent's had been advertising the sale of Orlane products at discounts up to 25% off the normal retail prices. The proprietor of McKinlays'' store had complained to Orlane about these discounts. Orlane had refused to accept the products returned by Kent's but had written to Kent's suggesting another promotion of its products. Orlane advised that Mrs Hassett would be contacting Kent's to

organise a promotion and that she would be instructed to

In June 1980 Mrs Hassett visited Launceston and met with Mr Hutchison. As a result of the meeting an arrangement was come to that Kent's would continue to sell Orlane products and that future promotions at Kent's would not be

timed to conflict with promotions at other stores in

Launceston. Other matters were agreed upon, including that, except during promotions, Kent's would not sell Orlane

Orlane and Kent's adhered to the arrangements made at the June meeting for some months thereafter. Sometime after June 1980 Orlane commenced to supply cosmetic products to Myer ,Launceston for sale by retail. Arrangements were made between Orlane and Kent's for a promotion at Kent's during the week commencing 24 November 1980. An advertisement for the promotion was arranged to be inserted an a newspaper circulating in the Launceston area. The cost of the advertisement was shared between Orlane and Kent's. The advertisement offered some Orlane products at discount

During the week commencing 17 November 1980 Orlane was conducting a promotion at Myer Launceston, even thouch the promotion had been planned at Kent's. Kent's got in touch with Mrs Hassett who gave iunstructions for the newspaper advertisement to be varied so as to offer a 25% discount off the whole range of Orlane preducts when purchased from Kent's. It appears that McKinlays and Myers complained about the altered advertisement. They spoke to the general manager of Orlane, Mr Coburn. In due course he spoke to Mrs Hassett and told her to close Kent's account.

He also told her Kent's account was out of order, although

this was not the fact. Mrs Hassett rang Kent's and informed them that tne promotion planned for the week commencing 24 November was cancelled and that Kent's account was closed. Mrs Hassett said that this action had been taken because of

discounting by Kent's and because their account was out of

and 1umposed the penalty to which we have already referred.

The question which arises in the appeal is one of the construction of sub-s.98(2) and, 1n particular, of the meaning to be attributed to the word "cost" where used in that provision. It 1s common ground that, whilst paras.(a) and (b) of sub-s.98(2) refer to the purposes therein described, the reference, in the sub-section, to "cost" isa reference to an historical fact which 1s not purposive (cf. s.13(2) of the Resale Prices Act, 1976 (U.K.)). The question for decision 1s one of definition of the term "cost" in its context, which is a sale by a reseller of goods obtained from a supplier "at less than their cost to

It 1s submitted on behalf of the Commission that "cost", where used in sub-s.98(2), means the net acquisition cost of the goods. The reference to "net" cost is intended to pick up, for example, a rebate allowed to a reseller on

the purchase price of goods. In this wav, a dastinction

between the cost of goods to a reseller and their price to him is recognised (see Commissioner of Trade Practices v. Dalgety Australia Ltd. (1973) 22 F.L.R. 62). On this argument, "net acquisition cost" is intended to refer to "landed" or "delivered" cost and comprises the price of goods together with freight and insurance in transit, if any. In this way also, the Commission contends, effect can be given to the reference, in sub-s.98(2), to the notion of cost to the reseller. What the provision is intending to Pick up 1s the cost of the goods in each individual case: hence, the description "landed" or "delivered" cost which permits differences in freight and insurance in transit, if

On the other hand, Orlane argues that "cost", where

used in the provision, means the "marginal" cost of trading in the goods and thus embraces not only the net acquisition cost but also, as part of the reseller's trading operations, the costs of holding and reselling the goods. Examples of these costs were said to be Bankcard charges, interest and

In our opinion, the construction of the provision contended for by the Commission is correct. When sub-s.98(2) speaks of "their cost" in relation to goods, 1t 1s referring to the cost of the goods in the context of

obtaining them from a supplier. In our opinion, that

context suggests that the cost referred to 1s the cost of obtaining or landing the goods: that is, "landed" or

"delivered" cost or, as it 1s put, net acquisition cost.

reasoning of the majority 1n Bendixen v. Coleman, Scott &

Croft (1943) 68 C.L.R. 401 in rejecting an argument that a prices regulation was void for uncertainty for the reason, so the argument ran, that it fixed the maximum price at which certain liguors could be sold by retail at "the cost

... thereof plus 25 per cent of that cost". Latham, C.J.

"In the present case the term 'cost' must be read in relation to the subject matter to which it 1s applied. The terms of clause 4 show that the order is dealing with sales of liquor by retail. It provides that the price is to be the cost of the liquor plus twenty-five per cent of that cost. Is there any difficulty in ascertaining the cost of liquor to a retailer? In my opinion there is no difficulty. The only thing that has to be ascertained is what he has paid, or 1s liable to pay, for the

liquor to the person from whom he buys it. When he becomes the owner of the liquor he may transport it to a hotel in one place or to a hotel in another place. But the expenses of transport are not, in my Opinion, part of the cost of the ligquor--they are costs incurred after he has acquired the liquor and for the purpose of carrying ona business. The costs of Carrying on the business, of handling the liquor, selling it, and providing premises in which to sell it, are not part of the

Accordingly, in my ocpinion, there 1s no ambiguity in the word 'cost' where it is

used in this order. It simply means what the retailer pays for the liquor to the

person from whom he buys it. He may buy 1t delivered into his premises or at some

other place. In either case what he pays for the liquor as the price of the liquor, whatever elements that price contains, 15 the cost of the liquor within the meaning of the order." (Emphasis supplied)

"The main contention on the part of the defendants was that 'cost' in clause 4 of the order under review was too uncertain to allow of a price being fixed and declared. And reliance was placed on Vardon v. The Commonwealth. But 'cost' in that case was

used with reference to the manufacture of clothes and other articles for which materials had to be supplied and services rendered which made a complicated account necessary before a definite conclusion could be reached. In the present case 'cost' 1s used in relation to the sale of liquor by. publicans. And in this

connection it means the cost of the liquor to the retailer as received by him at the

place where he sells it--including price, insurance and all freights." (Emphasis

"The contention was also made that the fourth paragraph of the Prices Regulation Order 1s uncertain because 1t does not state what is meant by cost. Reliance 15s placed on Vardon's Case to support this contention. The meaning of the word 'cost' may vary with the subject matter to which

1t relates. The question 15 what does the word mean in this context. In my opinion

it means the sum (including of course the price) which it costs the hotelkeeper to

he may use as the ingredients of a drink, into his hotel. That sum is _a definite and

an ascertainable amount. The case 15 therefore different from Vardon's Case. This part of the Prices Regulation Order is free from the vice which destroyed the order in that case." (Emphasis supplied)

"I am of the opinion that Prices Regulation Order No. 896, so far as it is material to pronounce upon its validity for the purpose of disposing of any of the prosecution, 15 valid. It is unfortunate that 'landed cost' was not specified, as this cost is defined in the National Security (Prices) Regulations, but it is clear, to my mind, that 'cost' in the order means landed cost,

that 1s, the cost to the publican, or in other words the wholesale price of the

liguor plus the additional out-of-pocket expenses, 1f any, incurred in causing 1t to

be transported to the licensed premises." (Emphasis supplied)

In our opinion, this reasoning is squarely in point in the present case which also arises in a resale, rather than a manufacturing, context. It may be accepted that, in other areas, views may differ as what 1s properly to be taken unto account in determining the cost of an item. Thus, in Vardon v. The Commonwealth (1943) 67 C.L.R. 434, a case concerned with the "cost" of manufactured goods, Rich,

"'Cost,' not being defined is an ambiguous and uncertain term. 'The general idea of cost covers a number of different meanings' (p.35, Incidence ot Overhead Costs, Professor Maurice Clark). One finds in Carter's Advanced Accounts such expressions as flat cost, prime cost and total cost. And Professor Van Sickle, Cost Accounting, p.4, says that 'while cost accounting can be defined, 1t is quite another thing to endeavour to define cost.' These books on accountancy illustrate the differing opinions of accountants as to the proper items of expense to ainclude under the heading of cost and the proper method of allocating them to particular articles. In Dawson's Accountant's Compendium it is stated that 'the cost of the materials and directly productive wages form the prime cost of the commodity or work, and the other expenditure, being indirect, is called the on-cost, the two together making the total cost of production.' In the present case does 'cost' mean merely the cost of the material used plus the amount paid to the make-up tailor? Or does it include an allowance for the time of the plaintiff or his employees in showing the customer the range of materials, measuring him and sending the materials and instructions to the make-up tailor? What overhead costs does it include?"

Although Rich, J. there recognises the difficulties in establishing the cost of a manufactured article, that problem does not arise in the application of a provision such as sub-s.98(2) of the Act which is concerned only with the case. of a reseller of goods. In the former type or case, marginal items may well be relevant. But in the latter type of case, we think that "cost" where employed in sub-s.98(2), should bear its ordinary and natural meaning in a resale context, that 1s, the net "landed" or "delivered"

cost or, as 1t has been put, net acquisition cost. Further,

the references 1n Bendixen which we have emphasised show that the reference, in sub-s.98(2) to the "cost" to the reseller confirms that the legislature was indicating no more than the cost to the reseller of getting the goods into

In our opinion, additional support for this construction may be found in the employment of the singular "cost" in sub-s.98(2) rather than the plural "costs" which may well more appropriately be used to describe the several items which need to be taken into account if a "marginal" approach is adopted. In this connection, the fact that a plurality of items is involved makes 1t more accurate to use

the description "costs" rather than "cost" (cf. Acts

Interpretation Act, 1901, s.23(b)). It as true that, in cases where expenses of the reseller in acquiring the costs such as freight or insurance in transit are involved, "landed" or "delivered" cost wiil include more than one item. Nonetheless, it is, we think, appropriate to speak of the "landed" or "delivered" cost in the singular because 1t may be said to represent the expense incurred in carrying out a single act or operation in the eyes of the law, namely the acquisition of the goods. On the other hand, if the Act were intended to refer to the expenses actually or notionally incurred in a "marginal" sense, the employment of

the plural "costs" would have been more appropriate to

describe the trading operations concerned, involving, as

they do, the three distinct steps of acquiring, holding and reselling the goods. We would add that the form of the provision in question in which, as a matter of ccnstruction the expression "thelr costs" may properly be expanded to "the costs of obtaining those goods", 15 such as to justify comment similar to that of Latham, C.J. in Bendixen v.

Coleman Scott & Croft (supra) which 1s set out above.

Reference was made during argument to the history ef the legislation. In the second reading of the Trade Practices Bill 1971, (the 1971 Act was the precursor of this part of the 1974 Act » the Attorney-General said (Australia, Parliamentary Debates, House of Representatives 29 April, 1971 at p.2248) that in concluding that the Bill should be introduced, the Government had taken into account the experience of other countries with resalé price maintenance. He mentioned that the United Kingdom had enacted legislation for this purpose in 1964 and that Canada, Japan, South Africa, France, the Netherlands, Denmark. Sweden, Spain, Norway and Finland had also enacted legislation with respect to the practice in the previous ten to fifteen years; and that the United States of America had had such legislation

"A reseller engages in loss leadering if he sells particular goods at a loss to attract custom or to promote his business in some way. The result of his so doing may well be to give the public an impression that the goods in question are of inferior quality, and this could be detrimental to the marketing prospects of the supplier. It is only fair that a supplier whose goods are being sold in this manner should be able to defend himself by withholding supplies from the reseller in question, and the provisions to which I have referred make it clear that the supplier has this right." (emphasis added)

legislation, the Canadian Restrictive Trade Practices

Commission issued a Report on an Inquiry into Loss-Leader Selling (Department of Justice, Ottowa, 1955). In its comments on the definition of the term ""loss-leader", the

"In seeking to understand the nature and extent of loss-leaders the Commission has faced one of its most difficult tasks in trying to find a basis for deciding what meaning should be given to the term 'loss' in the context of loss-leader selling. The

simplest and most obvious meaning of that expression 1s a selling price that 1s below

the delivered cost to the seller. Any sale on such a basis is clearly a sale at a

loss. But, in most of the suggested definitions of loss-leaders that were proposed to the Commission, such a meaning was regarded as being too narrow. No dealer can operate without expense. It costs him something to handle and sell even the smallest article. Consequently a retail price which merely returns to the dealer the amount that he paid for the article necessarily results in some loss to him. The difficulty is to find any

reliable rule for determining in any particular case how much the dealer requires above the delivered cost to him in order to avoid an actual loss on the sale."

The Commission then described various rules which had been suggested to 1t for determining the price (above delivered dealer cost) below which a sale should be regarded as being at a loss. These included (amongst others) a sale below "the established price" for the product; and a price that was less than delivered cost plus (a) a fixed percentage markup; (b) the average cost of doing business in the particular trade; (c) the particular dealer's average cost of doing business; (e) a full normal markup. But in the end, the Commission reached the conclusion "that there are so many variables and qualifications expressed or implied in all the descriptions of loss-leaders which have been submitted in the inquiry that no one description could be abstracted which would be valid, even in theory, and that in any event such a definition would prove impractical if

Difficulties of defanition of the term "loss-leadering" in terms of marginal cost have also been

encountered in the United States of America (see Janich Bros

Inc. v. The American Distilling Co. 570 F2d. 848 at ».858

(1977); William Inglis & Sons Baking Co. v. ITT Continental Baking Company Inc. 461 F. Supp. 410 (1978)) as well as in

the Canadian courts (see Regina v. William E. Coutts Co.

Ltd. (1968) 67 D.L.R. (2d.) 87; Regina v. Consumers Glass

Company Ltd. and Portion Packaging (1981) 60 C.C.C. (2d.) 481 at pp.500-2). Indeed, the United States experience is instructive for present purposes. In that country, "marginal cost", judicially defined as "the increment to total cost that results from producing an additional increment of output", (a definition formulated by Professors Areeda and Turner), has proved impractical of application because a firm's marginal costs cannot be ascertained from conventional accounting records. In the result, the prophecy of the Canadian Commission of the impracticality of application of such atest has been fulfilled and the American courts have been forced to resort to a different test of "average variable cost" as evidence of "marginal cost" (see, @e.g., Janich Bros, supra, at pp.847-8; Regina v.

Consumers Glass Co. Ltd., supra, at pp.500 et seq.).

The comparative experience in this area in other countries only reinforces the wisdom of the observations made by the Canadian Commission in 1960. We agree with the Commission that, 1n the context of loss-leader selling, the "simplest and most obvious meaning" of the expression "loss" is a selling price that 1s below the delivered cost to the seller. We also agree with the Commission's remark that any

departure from the acquisition cost test is fraught with

diffaculties of application. So far, therefore, as regard

may be had to the second reading speech for the purpose of interpreting the statute (see TCN Channel Nine Pty. Ltd. v. Australian Mutual Provident Socisty (1982) 42 A.L.R. 496), there is every reason to think that the Attorney-General shared the Commission's views first, that the simplest and most obvious method of defining when a "loss" occurred in loss-leadering was by reference to a sale below "delivered" cost to the seller; and secondly, that the alternative methods of definition, involving as they did, so many variables and qualifications, should be rejected as impractical of application ina statutory context, penal as 1t 1s, where there 1s every reason to suppose that the legislature intended that a measure of certainty be achieved in the meaning and application of the concept of

In the result, if anything, the history of the legislation and the comparative experience elsewhere only serve to reinforce the conclusion at which we had arrived independently of such material, that, as a matter of construction of the term in its statutory context, "cost"

It follows in our view, that the respondent has failed to establish the defence of loss-leadering as defined by sub-s.98(2). The appeal should be allowed. The orders

and declarations of the learned Judge made in paragraphs 4

and 5 of the orders and declarations appealed from, namely that by the conduct referred to in paragraph 3 of the said orders and declarations, the respondent would have engaged in the practice of resale price maintenance contrary to s.48 of the Act were it not for the defence of sub-s.98(2)

thereot and that para.96(3)(d) of the Act did not apply in

relation to the said conduct because Richard Leslie

Hutchison was a person who, within the preceding year, had sold cosmetic products obtained from the respondent at less

(a) for the purpose of attracting to the establishment at which the products were sold persons likely to purchase

(b) otherwise for the purpose of promoting his business

In lieu thereof, 1% should be declared that, by the conduct referred to in paragraph 3 of the said orders and declarations, the respondent engaged in the practice of resale price maintenance contrary to s.48 of the Act. The

order for costs made by the learned Judge in paragraph 8 of

the said orders and declarations should also be set aside

and in lieu thereof 1t should be ordered that the respondent pay the appellant's costs of the proceedings. The respondent must also pay the costs of the appeal but should have a certificate under the Federal Proceedings (Costs) Act, 1981. The respondent cross-appealed against the order for costs made by the learned Judge and sought an order that the appellant pay one-quarter of the respondent's costs. It follows from what we have already said that the cross-appeal

We turn now to the question of the penalty to be imposed in respect of the contravention now found against

appeal were allowed this Court should itself determine whether any and what penalty should be imposed. But the appellant contended that the question of penalty, if it

The conduct of the respondent which, by virtue of the decision of the trial Judge and of this Court, has been found to contravene the provisions of the Act comprised an episode in June 1980 and an episode in November 1980. The relationship between the two episodes is of importance. The first arose out of the respondent's concern that the

retailer, Kent, was selling in Launceston goods supplied by

1t at prices less than prices specified by it. Apart from other considerations, this practice was causing concern to another substantial retailer of the respondent's goods who

It can be perceived from the facts, as stated earlier in these reasons, that the episode of June involved action by the respondent whereby 1t stipulated and the retailer, Kent, was induced to undertake, that it would refrain from selling the respondent's goods at prices below those specified by it. This undertaking was given as part of an arrangement between Kent and Orlane in which various other issues causing unrest between the parties were adjusted. But the inference 1s that discount selling by

The provisions of the arrangement provided a modus vivendi between the respondent and Kent in which observance by Kent of his undertaking not to trade at discount prices un future was regarded by the respondent as critical. When, therefore, in November 1980 Kent advertised goods supplied by the respondent for sale by him at a discount and the respondent brought their trading relationships to an end, that action was in a real sense a re-assertion of the improper trading requirement which it had specified in June. The action 1t took then was the final implementation of the

policy instituted 1n June. The gravamen of the respondent's

misconduct, from its unception, was its assertion, as between itself and Kent, that continuance of trading between them was conditional on Kent continuing to trade at the

It is reasonable, therefore, to regard the first assertion, namely that of June 1980 as the primary and essential guilty act of the respondent, and that in November as consequential to the attitude then adopted. For the purposes of assessing a penalty Tor the second

manifestation of this attitude, that misconduct may properly

be treated as arising from the same course of conduct.

The respondent was subjected by the learned Judge to a substantial penalty reflecting the essential impropriety of the contravention of June 1980. Having regard to the foregoing 1t is, we think, unnecessary to reassert by way of penalty for the misconduct in November,

In all the circumstances, therefore, we have concluded that it 15 appropriate that we should deal with the question of penalty and that the penalty snould be

Trade Practices Act 1974(Cth)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (147 paragraphs)

Parties

Legislation Cited (2)