Industries Pty Ltd

Case [2006] FCA 1027

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Cambur

Industries Pty Ltd [2006] FCA 1027

TRADE PRACTICES – application for orders under Trade Practices Act 1974 (Cth) – where respondents admitted engaging in the practice of resale – principles relevant to fixing of pecuniary penalty – price maintenance in contravention of the Act – declarations – whether injunctive relief appropriate – power of Court to accept undertaking.

Held: pecuniary penalties fixed – declarations made – injunctive relief not appropriate in circumstances – further submissions required before undertaking as to compliance programme accepted in proffered terms.

Trade Practices Act 1974 (Cth) ss 4, 4F, 48, 75B, 76, 83, 96
Federal Court Act 1976 (Cth)

Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (ACN 008 799 040) (2001) ATPR 41-802 referred to
Australian Competition and Consumer Commission v Dermalogica Pty Ltd (2005) 215 ALR 482 referred to
Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 referred to
Australian Competition and Consumer Commission v Westminster Retail Pty Ltd (2005) ATPR 42-084 referred to
Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 referred to
Foster v Australian Competition and Consumer Commission (ABN 83 975 695 966) (2006) 149 FCR 135 referred to
ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 referred to
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 referred to
Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 referred to
Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 referred to

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v CAMBUR INDUSTRIES PTY LTD & ANOR
SAD 230 OF 2005

BESANKO J
11 AUGUST 2006
ADELAIDE


IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

SAD 230 OF 2005

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
APPLICANT

AND:

CAMBUR INDUSTRIES PTY LTD
FIRST RESPONDENT

JOHN JAMES CAULFIELD
SECOND RESPONDENT

JUDGE:

BESANKO J

DATE OF ORDER:

11 AUGUST 2006

WHERE MADE:

ADELAIDE

THE COURT DECLARES THAT:

1.Cambur Industries Pty Limited (‘Cambur’) engaged in the practice of resale price maintenance in contravention of s 48 of the Trade Practices Act 1974 (Cth) (‘the Act’) in its dealings with Pete N Peppa Pty Ltd (‘Pete N Peppa’) in that Cambur:

1.1attempted to induce Pete N Peppa not to sell and advertise Cambur Products (being Bamix branded kitchen products and Magimix branded kitchen products, including the dual branded Nespresso/Magimix coffee making machines (‘Nespresso Machines’)) at prices less than prices specified by Cambur, by reason of:

1.1.1in about May 2003 John James Caulfield (‘Caulfield’) telling Pete N Peppa that Pete N Peppa would not need to discount Cambur Products and Cambur did not like discounting;

1.1.2on about 6 June 2003 Caulfield delivering to Pete N Peppa price lists and indicating that Pete N Peppa could not set a price for Cambur Products between the listed wholesale and the listed…

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AGLC
Industries Pty Ltd [2006] FCA 1027
Case
[2006] FCA 1027
Decision Date

CaseChat Overview and Summary

In the matter of the Australian Competition and Consumer Commission v Cambur Industries Pty Ltd, the court was presented with a case concerning allegations of resale price maintenance by Cambur Industries, an importer and wholesale supplier of various products including kitchen goods. The Australian Competition and Consumer Commission (ACCC) brought the action against Cambur Industries and one of its employees, Mr Caulfield, alleging contraventions of section 48 of the Trade Practices Act 1974 (Cth) in relation to the company's dealings with two businesses, Pete N Peppa and Tabletop & Kitchen. The primary legal issue before the court was whether Cambur Industries had indeed engaged in practices of resale price maintenance, and if so, whether the conduct was knowingly and directly participated in by Mr Caulfield. The court had to determine whether the conduct detailed by the ACCC constituted a contravention of section 48 and, if so, the extent of the contraventions.

The court, after reviewing the evidence and submissions, found that Cambur Industries had engaged in resale price maintenance in its dealings with both Pete N Peppa and Tabletop & Kitchen. The findings included specific instances where Cambur attempted to enforce minimum resale prices and threatened to withhold supply if these prices were not maintained. The court also concluded that Mr Caulfield, as the sales and marketing manager, was directly and knowingly involved in these practices. The court detailed multiple acts of contravention, specifying the conduct that constituted each act. The court determined that the declarations and injunctions proposed by the ACCC were appropriate remedies, given the nature and extent of the contraventions. The court granted declarations identifying the contravening conduct and ordered injunctions to prevent future breaches of the Act.

In conclusion, the court made several declarations identifying the specific acts of resale price maintenance by Cambur Industries and Mr Caulfield, and ordered injunctions to prevent any future contraventions of section 48 of the Trade Practices Act. The declarations were crafted to ensure clarity and precision, identifying the nature of the contraventions and the specific conduct that constituted each contravention. The injunctions sought by the ACCC were deemed appropriate by the court, providing an additional remedy to those already available under the Act.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The Commission asked me to incorporate in the orders the findings of fact made for the purpose of determining the appropriate penalties and other remedies. I do not think that it is appropriate to do that for a number of reasons. First, it would make the orders of the court unnecessarily lengthy and it would raise the question of what findings should or should not be included. Secondly, such a course would create a risk of inconsistency between the findings in the orders and the findings in the reasons for judgment: Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (ACN 008 799 040) (2001) ATPR 41-802. Reference was made by the Commission to s 83 of the Act, but that section does not suggest that such a course is necessary or appropriate. The findings of fact in the reasons for judgment can be proved in the manner contemplated by the section. Facts – background Cambur Industries was incorporated in 1962 and it carries on business as an importer and wholesale supplier of electrical goods, homeware products and tableware products. The company’s business is divided into three divisions, which correspond to those different types of goods. The evidence is that for the most part the divisions operate separately. The electrical goods supplied by Cambur Industries include kitchen products manufactured under two well-known brand names, Bamix and Magimix, such as stick mixers, juicers, food processors and coffee machines. The coffee machines are referred to as ‘dual branded’ Nespresso/Magimix. The contraventions in this case relate to the supply of the Bamix and Magimix products and the Nespresso/Magimix coffee machines. I will refer to these products as ‘the Cambur products’, except where it is necessary to distinguish between them. The head office of Cambur Industries is in Victoria and the company has a regional office in New South Wales. The company has salespeople in Victoria, New South Wales and Adelaide. In the other States and Territories it operates through commission agents. Cambur Industries has about 35 employees, of whom approximately 60 per cent are full-time employees and 40 per cent are part-time employees. The electrical goods division of Cambur Industries has four employees, one of whom is Mr Caulfield, who is the sales and marketing manager. The other three staff members report to him and he in turn reports to the managing director. Mr Caulfield is 57 years old and has worked as a salesperson for a number of years. Mr Caulfield and his wife have a small shareholding in Cambur Industries. Mr Caulfield is effectively the product manager for the Bamix and Magimix products, including the Nespresso/Magimix coffee machines. At the time of the conduct that contravened the Act, he was the one who made the decisions on behalf of Cambur Industries about the marketing and distribution of the Cambur products. At the time of the contravening conduct, Mr Caulfield was working in South Australia. Mr Leigh Spencer Jeffs is the managing director and major shareholder of Cambur Industries. At the time of the contravening conduct, Mr Jeffs was working in Victoria.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

BESANKO J
Mr Dee’s programme makes reference to, among other things, a training programme as to the consumer protection provisions as they apply to promotional material. In view of the authorities to which I have referred and the terms of s 86C of the Act, I would wish to hear further from the parties before accepting the undertaking in the terms in which it is proffered. I will give the parties leave to make further submissions as to the terms of the undertaking by Cambur Industries to maintain a compliance programme.Conclusion For these reasons I will make the following declarations and orders. The Court declares that:1.Cambur Industries Pty Limited (‘Cambur’) engaged in the practice of resale price maintenance in contravention of s 48 of the Trade Practices Act 1974 (Cth) (‘the Act’) in its dealings with Pete N Peppa Pty Ltd (‘Pete N Peppa’) in that Cambur:1.1attempted to induce Pete N Peppa not to sell and advertise Cambur Products (being Bamix branded kitchen products and Magimix branded kitchen products, including the dual branded Nespresso/Magimix coffee making machines (‘Nespresso Machines’)) at prices less than prices specified by Cambur, by reason of:1.1.1in about May 2003 John James Caulfield (‘Caulfield’) telling Pete N Peppa that Pete N Peppa would not need to discount Cambur Products and Cambur did not like discounting;1.1.2on about 6 June 2003 Caulfield delivering to Pete N Peppa price lists and indicating that Pete N Peppa could not set a price for Cambur Products between the listed wholesale and the listed retail prices;1.1.3on about 6 June 2003 Caulfield delivering to Pete N Peppa a newsletter dated July 2003, which stated that the Bamix Cassette Swissline (Model 7BA00240D) would retail at $349.00;1.1.4between about October 2003 and January 2004 Caulfield telling Pete N Peppa that Pete N Peppa could not discount various Cambur Products on three separate occasions.1.2made it known to Pete N Peppa that it would not continue to supply Cambur Products to Pete N Peppa unless Pete N Peppa agreed not to sell and advertise Cambur Products at prices less than the prices specified by Cambur, and attempted to induce Pete N Peppa not to sell and advertise Cambur Products at prices less than prices specified by Cambur, by reason of:1.2.1in about early August 2003 Caulfield telling Pete N Peppa that if any Cambur Products were discounted, Cambur would come into Pete N Peppa’s premises and take the Cambur Products off the shelf and that Cambur would provide no warnings to Pete N Peppa;1.2.2in about mid-November 2003 Caulfield, after learning that Pete N Peppa was discounting the Nespresso Machines, telling Pete N Peppa that Pete N Peppa was to take the discount sign off the Nespresso Machines straight away and if Pete N Peppa discounted, Caulfield would remove all Cambur Products form Pete N Peppa’s premises;1.2.3on about 10 May 2004 Caulfield, after learning that Pete N Peppa was discounting the Nespresso Machines, telling Pete N Peppa, in response to Pete N Peppa’s explanation that it had no option but to discount the Nespresso Machines because it could not sell them, that he would take the Nespresso Machines back and provide Pete N Peppa with a credit;1.3withheld supply of all Cambur Products to Pete N Peppa for the substantial reason that Pete N Peppa had sold and was likely to sell and had advertised and was likely to advertise Cambur Products at prices less than prices specified by Cambur, by reason of:1.3.1on about 28 June 2004, after learning that Pete N Peppa was again discounting Cambur Products, Caulfield telling Pete N Peppa that Cambur was not going to do business with Pete N Peppa anymore; and1.3.2on about 10 September 2004, Caulfield telling Pete N Peppa that Cambur was not going to supply Pete N Peppa with the goods it had ordered.2.Cambur engaged in the practice of resale price maintenance in contravention of s 48 of the Act in its dealings with Tabletop & Kitchen Pty Ltd (‘Tabletop & Kitchen’) in that Cambur:2.1induced Tabletop & Kitchen not to sell and advertise Cambur Products at prices less than prices specified by Cambur, by reason of:2.1.1on about 29 December 2001 Caulfield telling Tabletop & Kitchen that Tabletop & Kitchen had done the wrong thing by advertising a sale that provided a discount on Cambur Products and that Tabletop & Kitchen was to remove Cambur Products from its shelves during that sale;2.1.2in about December 2002 Caulfield telling Tabletop & Kitchen that it had to remove Cambur Products from its shop floor for the duration of the sale that began on about 26 December 2002;2.1.3in about late June 2004 to early June 2004 Caulfield telling Tabletop & Kitchen that he would take immediate action to deal with Pete N Peppa discounting Cambur Products.2.2made it known to Tabletop & Kitchen that it would not continue to supply Cambur Products to Tabletop & Kitchen unless Tabletop & Kitchen agreed not to sell and advertise Cambur Products at prices less than the prices specified by Cambur, and induced Tabletop & Kitchen not to sell and advertise Cambur Products at prices less than prices specified by Cambur by reason of, in about May or June 2002, Caulfield telling Tabletop & Kitchen that Cookaholic’s advertising Bamix at $10 off the price specified by Cambur was not on and that if Cookaholic’s made that offer again, its stock would be taken away.3.Caulfield by reason of him engaging in the conduct referred to in paragraphs 1 and 2 and with the knowledge of the constituents of those matters, was directly and knowingly concerned in, and party to each and every contravention by Cambur of section 48 of the Act as referred to in those paragraphs.

Ratio Decidendi

Legal Principle Established

Established by: BESANKO J

I will give the parties leave to make further submissions as to the time within which the respondents and each of them are to pay the pecuniary penalties which I have imposed.Declarations It is common ground that it is appropriate to make declarations and the only question is the form of those declarations. A declaration under the Act and s 21 of the Federal Court Act 1976 (Cth) must identify the contravening conduct. It must be precise in its terms, such that a person reading the declaration understands the nature of the contravention and, in broad terms, the conduct constituting the contravention. On the one hand, it is not necessary to put all the relevant findings of fact in the declaration, but, on the other, the gist of the conduct (as found) should be identified: Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at 91 [89]-[90] per Gummow, Hayne and Heydon JJ. The declarations I am prepared to make are set out at the end of these reasons. They are similar to the declarations put forward by the Commission, with the qualification that I have identified eight acts of resale price maintenance in relation to Pete N Peppa and four acts of resale price maintenance in the case of Tabletop and Kitchen. I do not think it offends any principle to declare that some acts referred to in the declarations fall within more than one paragraph of s 96(3) of the Act and I have framed the declarations accordingly.Injunctions The Commission seeks a series of injunctions against the respondents. The injunctions it seeks against Cambur Industries would restrain it from engaging in conduct in breach of s 48 of the Act by virtue of engaging in conduct which falls within the terms of s 96(3)(a), (b), (d) and (f) of the Act for a period of three years. Similar injunctions are sought in relation to Mr Caulfield, the first restraining him from being involved in contravening conduct by a corporation and the second restraining him from being involved in conduct where the recipient of the goods is a corporation (see s 96(2)). Under s 80 of the Act, the court may grant an injunction in such terms as the court determines to be appropriate. The section provides that the court may grant an injunction whether or not the person intends to engage in the relevant conduct again, whether or not the person has previously engaged in the relevant conduct and whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in the relevant conduct: s 80(4) of the Act. These matters, which are often highly relevant to whether a court exercising equitable jurisdiction grants an injunction in an action between private parties, are of much less relevance when a court is considering the power to grant an injunction under s 80. However, they are not irrelevant to the exercise of that power: ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 253-257 per Lockhart J. The Commission in this case only seeks injunctions to restrain conduct which would constitute a contravention of the Act and does not seek to restrain conduct which would not or may not constitute a contravention of the Act. In an appropriate case it seems the court has the power to make such orders: Foster v Australian Competition and Consumer Commission (2006) 149 FCR 135. In this case, the granting of injunctions would add only one remedy, ie, a remedy for contempt of court, to those provided by the Act.