The Victoria Carpet Company Pty Ltd and Secretary, Department of Industry, Tourism and Resources

[2007] AATA 1424

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1424

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No.V 200601038

GENERAL ADMINISTRATIVE DIVISION		)
Re		THE VICTORIA CARPET COMPANY PTY LTD

Applicant

And SECRETARY, DEPARTMENT OF INDUSTRY, TOURISM AND RESOURCES

Respondent

DECISION

Tribunal G.D. Friedman, Senior Member

Date12 June 2007

PlaceMelbourne

Decision The Tribunal affirms the decision under review.

(sgd) G. D. Friedman

Senior Member

TEXTILE, CLOTHING AND FOOTWEAR - strategic investment program scheme - application for grant - carpet displays in retail stores - whether in-store promotions

Acts Interpretation Act 1901 s 15AA

Textile, Clothing and Footwear Strategic Investment Program Act 1999   s 37G(4)

Kimberley-Clark Australia Pty Ltd v Secretary to the Department of Industry, Tourism and Resources [2004] FCA 1438

Re Elderstone Nominees Pty Ltd and Australian Trade Commission [2007] AATA 1265

REASONS FOR DECISION

12 June 2007  G.D. Friedman, Senior Member

1.      The Victoria Carpet Company Pty Ltd manufactures carpets and as part of its activities provides samples to retail stores for display.  In 2006 the company applied for a grant for capital investment expenditure under a scheme to provide incentives to promote the Australian textile, clothing and footwear industry.  The respondent refused the application on the grounds that provision of the samples was a long-term product offering rather than an in-store promotion.  The company seeks review of the decision.

ISSUE

2.      The issue before the Tribunal is whether the displays of carpet samples in retail stores by the company constitute in-store promotions.

WHAT IS THE TEXTILE, CLOTHING AND FOOTWEAR POST-2005 STRATEGIC INVESTMENT PROGRAM SCHEME?

3.        The Post-2005 Scheme came into effect in April 2005 under the Textile, Clothing and Footwear Strategic Investment Program Act 1999 and replaced an earlier scheme that had been in operation since January 2000.  Section 37G(4) of the Act provides that grants are to be made in respect of expenditure that under the scheme, is taken to be brand support for TCF products expenditure.  The Post-2005 Scheme aims to provide a framework for fostering and developing a sustainable and internationally competitive textile, clothing and footwear manufacturing industry in Australia by providing incentives to promote investment and innovation.  Section 2.2(f) of the Scheme states that brand support expenditure for subsection 37G(4) of the Act consisting of trade showing and in-store promotions is an activity that is eligible for a Type 1 grant dealing with capital investment expenditure.

4.        Section 2.3 of the Scheme provides that trade showing and in-store promotions do not include participation by a retailer, and do not include media advertising, sponsorship, other media-related activities or expenditure on travel.

ARE THE DISPLAYS IN-STORE PROMOTIONS?

5.        Mr B. Poynter, Managing Director of the company, said in a witness statement dated 16 February 2007 (Exhibit A1) that in the application under review the activities were an in-store promotion designed to support the company’s brand, product and investment.  He explained that the company spent $1,045,063 on nine activities related to displaying carpet in samples books and in layers on stands (known as waterfall stands) in retail stores.  He said that the company competes with other manufacturers and informs customers of the attributes of the products with the aim of promoting them to potential purchasers.  Mr Poynter emphasised that customers attend retail stores only on an occasional and irregular basis, and any in-store brand support carried out by the company must maximise opportunities.  He said that the relevant activities were the most productive and economical way of doing so, and that specific, one-off event-type promotion in hundreds of retail stores would not be feasible.

6.        In oral evidence Mr Poynter stated that waterfall stands and sample books remain in a store for an average of 4-5 years, although this period varies considerably.  He said that the industry is highly competitive, and the company monitors its displays on a regular basis and changes the samples in response to changes in the market.  Under cross-examination he agreed that the purpose of the samples is to enable customers to see and feel the products, and, where appropriate, to take samples or sample books home with them.  Mr Poynter said that the methods of display in retail stores have not changed markedly over the past decade, although some changes to display stands and lighting have been introduced.

7.        Mr Poynter stated that in lodging its application for financial assistance for in-store promotion under the scheme, the company relied on guidelines and announcements published by the Government in 2003 and 2004 (Exhibit A3).  He noted that in 2004/2005 the company received a grant under the previous scheme for the same in-store activities, and maintained that there is no substantive difference between the Post-2005 Scheme and the previous scheme.

8.        In relation to brand support Mr Poynter referred to the Concise Oxford English Dictionary (10^th ed.) which defines brand as: 1. a type of product manufactured by a company under a particular name.  2. an identifying mark or characteristic common to the products of a particular company.  The Macquarie Dictionary defines brand as: 1. a trademark or trade name to identify a product, as that of a distributor, or a manufacturer or other producer.  2. kind, grade or make, as indicated by a brand, stamp, trademark or the like.  He said that on the basis of the definitions, industry practice and examples of branding by the Commonwealth, the company’s expenditure on providing carpet samples and waterfall displays in the marketplace is clearly an example of brand support through in-store promotion.  He pointed out that in the Post-2005 Scheme there is no requirement for any particular type of physical, intellectual, financial or administrative participation, and the Scheme does not require in-store promotions to be one-off, short-term events.

9.        There was no dispute that the features of the company’s relevant activities include the use of permanent waterfall stands; display of samples of current carpet products on the stands; the use of sample books or individual samples to display current products and colours; and that the samples are changed periodically.

10.      The Tribunal takes into account Mr Poynter’s emphasis on the definition of brand in relation to brand support expenditure as stated in s 2.2(f) of the Scheme.  However as in-store promotions are taken to be brand support under the Scheme, the Tribunal considers the appropriate focus is the meaning of in-store promotion. Under s 15AA of the Acts Interpretation Act 1901 the term is to be given its usual meaning, consistent with the objects of the legislation.  There is no dispute that the activities were carried out in-store.

11.      The Concise Oxford English Dictionary defines promotion as: 1. activity that supports or encourages.  2. the publicizing of a product or venture so as to increase sales or public awareness; a publicity campaign.  The Macquarie Dictionary defines promotion as: …5. activity, especially in advertising, designed to increase public awareness of, and hence the sales of a product.

12.      In Re Elderstone Nominees Pty Ltd and Australian Trade Commission [2007] AATA 1265 concerning an application for a grant under the Export Market Development Grants Scheme involving promotional stickers attached to frozen meat packs the Tribunal held at [37]:

Something that is produced for the purpose of affixing to a product for sale and which merely identifies the product, identifies it has [sic] having a particular origin, identifies it as having come from a particular manufacturer or supplier or identifies it has [sic] having a particular characteristic, cannot be properly described as “promotional” or “advertising”.

The Tribunal concluded that there was nothing about the stickers themselves that could properly be described as promotional or advertising.

13.     The Tribunal takes into account that the company received payments under the previous scheme, and has considered the material submitted by the company (Exhibit A3) concerning the previous scheme.  However these matters do not assist greatly because the focus of the material is on the previous scheme rather than the Post-2005 Scheme.  In Kimberley-Clark Australia Pty Ltd v Secretary to the Department of Industry, Tourism and Resources [2004] FCA 1438 Conti J concluded that the previous scheme did not involve beneficial legislation, and that the normal principles governing interpretation of subordinate legislation were applicable. The Post-2005 Scheme came in operation under new legislation and is separate and distinct from the earlier scheme.

14.      Taking into account the dictionary definitions of promotion and giving the term in-store promotion its ordinary meaning in the context of the Post-2005 Scheme, the Tribunal considers that the term refers to an investment activity carried out in a store involving the publicizing of one product over another through marketing or advertising initiatives beyond the provision of stock or samples.  Such an activity is different from normal offerings for sale or display of stock or samples at retail stores, and may include a specific marketing campaign in a particular location, or a time-limited activity designed to advance the sales of individual products.

15.     The company places waterfall stands and sample books permanently in retail stores, although changes are sometimes made to the samples when a new product is released.  The samples are provided for the information of potential customers as a guide to the range of carpet produced by the company.  There is no specific publicity, advertising or marketing campaign for a designated period.  There is no discrete activity such as a special offer or inducement that would encourage a customer to prefer the company’s carpet to a competitor’s.

16.     For these reasons the Tribunal finds that the company’s activities are normal offerings of their products for sale in retail stores and are not in-store promotions.

DECISION

17.      The Tribunal affirms the decision under review.

I certify that the seventeen [17] preceding paragraphs are a true copy of the reasons for the decision of:

G.D. Friedman, Senior Member

(sgd)        Lydia Zozula

Associate

Date of hearing:  28 May 2007
Date of decision:  12 June 2007

Solicitor for applicant:                  Mr L. Gross ,Gross & Becroft
Counsel for respondent:              Mr R. Niall
Solicitor for respondent:              Mallesons Stephen Jaques