Australian Competition and Consumer Commission v Trevor Davis Investments Pty Ltd
[2001] FCA 952
•28 JUNE 2001
ACCC v Trevor Davis Investments Pty Ltd [2001] FCA 952
ACCC v Trevor Davis Investments Pty Ltd [2001] FCA 952
Competition Code of Victoria s 45(2)(a)(ii)
Trade Practices Act 1974 (Cth) ss 45, 76
Competition Policy Reform (Victoria) Act 1995 s 4
Trade Practices Commission v Caravella (1994) ATPR 41-293 applied
Australian Competition and Consumer Commission v George Weston Foods Ltd (2000) ATPR 41-763 applied
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v TREVOR DAVIS INVESTMENTS PTY LTD, MANS DAVIS HOLDINGS PTY LTD, TREVOR DOUGLAS STANLEY DAVIS and DANIEL LEE MANS
V 859 OF 2000
SUNDBERG J
28 JUNE 2001
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 859 OF 2000
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
AND: TREVOR DAVIS INVESTMENTS PTY LTD (ACN 093 461 717)
FIRST RESPONDENT
MANS DAVIS HOLDINGS PTY LTD (ACN 093 461 351)
SECOND RESPONDENT
TREVOR DOUGLAS STANLEY DAVIS
THIRD RESPONDENT
DANIEL LEE MANS
FOURTH RESPONDENT
JUDGE:
SUNDBERG J DATE OF ORDER: 28 JUNE 2001 WHERE MADE: MELBOURNE
THE COURT ORDERS THAT:
1. The third respondent, by attempting to make a contract or arrangement, or arrive at an understanding, with a competitor in October 2000 by writing and sending a letter dated 22 October 2000 to The Managers, Cyberpoint, 87 Swan Street, Richmond, 3121, that contained a provision which had the purpose of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of the price for casual internet access to be supplied by the third respondent and a competitor has attempted to contravene s 45(2)(a)(ii) of the Competition Code of Victoria ("the Code").
2. The third respondent, by attempting to induce a person to make a contract or arrangement, or to arrive at an understanding, by writing and sending a letter dated 22 October 2000 to The Managers, Cyberpoint, 87 Swan Street, Richmond, 3121, that contained a provision which had the purpose of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of the price for access to internet services to be supplied by the third respondent and a competitor, has attempted to contravene s 45(2)(a)(ii) of the Code.
3. The third respondent be restrained for a period of 3 years, whether by himself, his employees, agents or howsoever, from attempting to make, or making any contract or arrangement, or arriving at any understanding, with a competitor which contains a provision which has the purpose of preventing, restricting or limiting the supply of casual internet access services to particular persons or classes of persons by the third respondent and/or the competitor.
4. The third respondent be restrained for a period of 3 years, whether by himself, his employees, agents or howsoever, from attempting to induce, or inducing a person to make, any contract or arrangement, or arrive at any understanding, with a competitor which contains a provision which has the purpose of preventing, restricting or limiting the supply of casual internet access services to particular persons or classes of persons by the third respondent and/or the competitor.
5. The third respondent be restrained for a period of 3 years, whether by himself, his employees, agents or howsoever, from giving effect to a provision of any contract, arrangement or understanding, made or arrived at with a competitor, which has the purpose of preventing, restricting or limiting the supply of casual internet access services to particular persons or classes of persons by the third respondent and/or the competitor.
6. The third respondent pay a pecuniary penalty pursuant to s 76(1) of the Code in the sum of $5,000 by 11 September 2001.
7. The third respondent pay the applicant's costs of the proceeding.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 859 OF 2000
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
AND: TREVOR DAVIS INVESTMENTS PTY LTD (ACN 093 461 717)
FIRST RESPONDENT
MANS DAVIS HOLDINGS PTY LTD (ACN 093 461 351)
SECOND RESPONDENT
TREVOR DOUGLAS STANLEY DAVIS
THIRD RESPONDENT
DANIEL LEE MANS
FOURTH RESPONDENT
JUDGE: SUNDBERG J DATE: 28 JUNE 2001 PLACE: MELBOURNE
EX-TEMPORE REASONS FOR JUDGMENT
1 This case concerns the appropriate penalty to be imposed for a breach of s 45(2)(a)(ii) of the Competition Code of Victoria ("the Code"). The applicant ("the ACCC") is proceeding against the third respondent ("Davis") only. The proceedings against the second and fourth respondents were disposed of by consent on 9 March 2001.
2 The facts are agreed as follows. Between about September 2000 and about late October 2000 there was a demand in the Richmond area of Melbourne, Victoria ("the Richmond market") for the supply of casual internet access to members of the public at hourly rates ("the Service"). There were no other services substitutable for, or otherwise in competition with, the supply of the Service. During this period Davis was carrying on a business under the name Idle Gossip Internet Services ("Idle Gossip") which supplied the Service from premises at 128 Swan Street, Richmond. The Service was also provided during this period by Peter Darren Angel ("Angel") from premises at 87 Swan Street, Richmond under the name Cyberpoint Internet Café and Email Lounge ("Cyberpoint"). Accordingly, Davis and Angel were in close competition for the supply of the Service in the Richmond market.
3 In a letter on Idle Gossip letterhead dated 22 October 2000 and addressed to "The Managers, Cyberpoint" ("the letter"), Davis wrote:
"Daniel Mans, my partner and Director of Mans Davis Holdings Pty Ltd and I write to you to seek a meeting for an equal playing field policy between the two Swan Street Internet Businesses.We suggest a set minimum rate of $5.00 an hour for internet access as the level playing field.
...
If we cannot reach agreement and a harmonious working relationship then we will be quite happy to offer free internet access with a complimentary coffee as a day to day part of our business. It is absolutely no skin off our noses. 128 Swan Street is only a site for the main office of our two companies and seven businesses."
4 By writing the letter, Davis attempted to make an agreement, arrive at an arrangement and reach an understanding with Angel concerning prices for the supply of the Service by each of them ("the attempted price fixing agreement"). The terms of the attempted price fixing agreement were to the following effect:
• that Idle Gossip and Cyberpoint were not to compete on price for the provision of the Service; and
• that Idle Gossip and Cyberpoint would charge a set minimum rate of $5 per hour for the provision of the service. ($5 per hour is $1 per hour more than Cyberpoint was charging at the time of the letter.)
By engaging in this conduct, Davis both attempted to contravene and attempted to induce a contravention of s 45(2)(a)(ii) of the Code. By virtue of s 45A(1) of the Code, the attempted price fixing agreement had the purpose and would have had, or would have been likely to have had, the effect of substantially lessening competition in the Richmond market.
5 Section 76 of the Trade Practices Act 1974 (Cth) ("the TPA") relevantly provides that:
"(1) If the Court is satisfied that a person:(a) has contravened any of the following provisions:
(i) a provision of Part IV ...
(b) has attempted to contravene such a provision;
...
(d) has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene such a provision;
...
the Court may order the person to pay to the Commonwealth such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the Court determines to be appropriate having regard to all relevant matters including the nature and extent of the act or omission, the circumstances in which the act or omission took place and whether the person has previously been found by the Court in proceedings under this Part or Part XIB to have engaged in similar conduct.
...
(1B) The pecuniary penalty payable under sub-section (1) by a person other than a body corporate is not to exceed $500,000 for each act or omission to which this section applies.
...
(3) If conduct constitutes a contravention of two or more provisions of Part IV, a proceeding may be instituted under this Act against a person in relation to the contravention of any one of the provisions but a person is not liable to more than one pecuniary penalty under this section in respect of the same conduct."
6 The Code text, as defined in s 4 of the Competition Policy Reform (Victoria) Act 1995, includes the Schedule version of Part IV of the TPA and most of the remaining provisions of the TPA (including s 76) so far as they relate to the Schedule version. In the Code text s 45 of the TPA is modified so as to apply to individuals as well as corporations.
7 In addition to the factors specifically referred to in s 76(1) of the TPA, the Court should have regard to what in fact occurred at the time of the attempted contravention; what actual damage, if any, was suffered as a consequence; how long the conduct was carried on; and the personal circumstances of the wrongdoer (see Trade Practices Commission v Caravella (1994) ATPR 41-293 at 41,930).
8 The ACCC seeks the imposition of a penalty in respect of two attempts - the attempt to contravene and the attempt to induce a contravention. Since both arise out of the same act (the sending of the letter), Davis is not liable to more than one pecuniary penalty: s 76(3) of the TPA.
9 The ACCC submits that the appropriate penalty in all the circumstances is $20,000. The ACCC submits, correctly, that Davis' lack of success in not progressing to a contravention of the Act is not a factor which makes his conduct less serious (see Australian Competition and Consumer Commission v George Weston Foods Ltd (2000) ATPR 41-763 at 40,989). Furthermore, the ACCC notes that the second last paragraph of the letter contained a rather unpleasant threat. The inference is clearly that if Angel does not agree to the price fixing, then Idle Gossip will offer its services for nothing with the clear intention of harming the business of Cyberpoint. The letter makes the point that Idle Gossip is on the site of the "main office" of an organisation that has two companies and a total of seven businesses, and it is implicit that it would not suffer financially by creating a situation whereby Cyberpoint would have to deal with a competitor that offered its services free of charge. The fact that Davis was incapable of following through on this threat is of no relevance. I find this to be a deliberate and conscious effort to eliminate competition in the relevant market to the disadvantage of consumers. Such conduct would normally justify a significant penalty. However, I accept that in this particular case, notwithstanding the seriousness of the conduct engaged in, there are mitigating circumstances. These are:
• Davis was unaware that his conduct was unlawful;
• When the legal position was drawn to his attention, he accepted liability;
• He co-operated with the ACCC in these penalty proceedings, including agreeing the statement of facts;
• He consented to the declarations and injunctions sought by the ACCC;
• He is in poor health, and this has been exacerbated by the present proceeding;
• He has shown remorse for his conduct;
• No loss has been suffered as a result of the conduct; and
• Competition has not been affected.
I have attached limited weight as a mitigating factor to Mr Davis' claim to poverty. The material filed by him in support of that claim is incomplete. However, apart from any other assets, in July and August of this year he will receive nearly $300,000 from the sale of two properties in Richmond.
10 In all the circumstances, although his contravention is a serious one, I think the penalty proposed by ACCC would be unduly harsh. The case is sufficiently met by a penalty of $5,000. I am unable to accept the submission from Mr Davis that the ACCC should not have sought a penalty but should merely have extracted an undertaking pursuant to section 87B of the Act.
11 I will make the other orders and declarations contained in the ACCC's document headed "Proposed Orders". Those numbered 1 to 5 are made by consent.
I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg.
Associate:
Dated: 28 June 2001
#DATE 28:06:2001
Counsel for the Applicant: E Strong Solicitors for the Applicant: Phillips Fox Counsel for the Third Respondent: A McNab Solicitors for the Third Respondent: Collins & Stephens Date of Hearing: 28 June 2001 Date of Judgment: 28 June 2001
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