Trade Practices Commission v Simpson Pope Ltd

[1980] FCA 102

Re: TRADE PRACTICES COMMISSION
And: SIMPSON POPE LIMITED
No. G10 of 1979
Trade Practices
30 ALR 544

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Franki J.

CATCHWORDS

Trade Practices - resale price maintenance - manufacturer attempting to induce retailer not to sell or advertise goods below specified prices - manufacturer using statement of price in relation to goods supplied - manufacturer refusing supply where retailer has sold or advertised or is likely to sell or advertise goods below specified prices - refusal for a number of reasons - pecuniary penalty - a single act which contravenes s.48 and which falls within a number of categories in s.96 regarded as a single contravention for purpose of fixation of penalty - factors relevant to grant of injunction.

Trade Practices Act, 1974 (Cth.) ss.4F, 48, 76(1) and (3), 96(1)(3)(6) and (7).

HEARING

SYDNEY

#DATE 18:7:1980

ORDER

1. The respondent pay to the Commonwealth of Australia by way of penalty in respect of the contraventions of s.48 of the Trade Practices Act 1974 alleged in the statement of claim herein the following pecuniary penalties:

(a) Thirty thousand dollars ($30,000) in respect of the contraventions alleged in paragraphs 11 to 16 inclusive of the statement of claim;

(b) Thirty thousand dollars ($30,000) in respect of the contraventions alleged in paragraphs 18 to 24 inclusive of the statement of claim; and

(c) Five thousand dollars ($5,000) in respect of the contraventions alleged in paragraphs 26 to 29 inclusive of the statement of claim.

2. Pursuant to s.77 of the Trade Practices Act 1974 judgment be entered for the Trade Practices Commission on behalf of the Commonwealth of Australia for the sum of sixty-five thousand dollars ($65,000);

3. The respondent pay to the applicant the applicant's costs including any reserved costs.

JUDGE1

The Trade Practices Commission ("the Commission") seeks pecuniary penalties under ss. 76 and 77 of the Trade Practices Act 1974 ("the Act"), and an injunction under s.80 of the Act against Simpson Pope Ltd. ("Simpson"). The proceedings are based upon alleged contraventions of s.48 of the Act which provides:

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

Sections 96 to 100 of the Act deal with various matters concerning resale price maintenance.

Section 96(3) sets out the acts which constitute resale price maintenance.

Section 96(3)(a),(b),(d) and (f) provides:

"(3) The acts referred to in sub-sections (1) and (2) are the following: -

(a) the supplier making it known to a second person that the supplier will not supply goods to the second person unless the second person agrees not to sell those goods at a price less than a price specified by the supplier;

(b) the supplier inducing, or attempting to induce, a second person not to sell, at a price less than a price specified by the supplier, goods supplied to the second person by the supplier or by a third person who, directly or indirectly, has obtained the goods from the supplier;

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

(i) has not agreed as mentioned in paragraph (a); or

(ii) has sold, or is likely to 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, at a price less than a price specified by the supplier as the price below which the goods are not to be sold;

(f) the supplier using, in relation to any goods supplied, or that may be supplied, by the supplier to a second person, a statement of a price that is likely to be understood by that person as the price below which the goods are not to be sold."

Section 96(6) provides:

"(6) For the purpose of sub-section (3), anything done by a person acting on behalf of; or by arrangement with, the supplier shall be deemed to have been done by the supplier."

Section 96(7) provides:

"(7) A reference in any of paragraphs (3)(a) to (e), inclusive, including a reference in negative form, to the selling of goods at a price less than a price specified by the supplier shall be construed as including references to -

(a) the advertising of goods for sale at a price less than a price specified by the supplier as the price below which the goods are not to be advertised for sale;

(b) . . .

(c) . . .

and a reference in paragraph (3)(d),(e) or (f) to a price below which the goods are not to be sold shall be construed as including a reference to the price below which the goods are not to be advertised for sale, to the price below which the goods are not to be displayed for sale and to the price below which the goods are not to be offered for sale."

Section 4F(b) provides:

"4F. For the purposes of this Act -

(a) . . .

(b) a person shall be deemed to have engaged or to engage in conduct for a particular purpose or a particular reason if -

(i) the person engaged or engages in the conduct for purposes that included or include that purpose or for reasons that included or include that reason, as the case may be; and

(ii) that purpose or reason was or is a substantial purpose or reason."

Simpson is, and has been at all relevant times, a large supplier to distributors and retailers, in various states of Australia, of washing machines and dryers and other goods, which are known in the trade as "white goods".

The Commission alleges that Simpson has engaged in resale price maintenance by doing certain acts in relation to three corporations, namely Parrys Department Store (W.A.) Pty. Ltd. ("Parrys"), Hubbards Pty. Ltd. ("Hubbards") and John Finns Discount Stores Pty. Ltd. ("Finns").

Parrys, inter alia, conducts several retail stores in Western Australia where washing machines, stoves, refrigerators and dryers, amongst other goods, are sold by retail. Parrys had commenced to sell Simpson products at least by 1966. Hubbards conducts six retail stores in South Australia and commenced to trade with Simpson on a continuous basis in 1952. Finns conducts a retail store at Strathfield in New South Wales and has traded with Simpson continuously since 1969.

I will be referring to the following persons who, at various relevant times, occupied positions with Simpson. Mr Uhrig joined Simpson in 1974 and has been Managing Director since June 1975. Mr Maddigan became General Manager of the appliance division, apparently for the whole of Australia, some time before November 1978 and he had previously been in another position with Simpson. Mr Marshall, at the relevant time, was General Manager of the marketing side of that part of Simpson's business which dealt with appliances and as such he was the man in charge of the marketing of electrical appliances. Mr Marshall left Simpson in about November 1978. Mr Acton appears to have been, at one time, the National Sales Manager under Mr. Marshall and in November 1978 he was the Branch Manager for South Australia and apparently also for Western Australia. Mr Wheatley was immediately responsible to Mr Acton in relation to the state of Western Australia only. He held the position of Sales Manager of the appliance division for that state. He was dismissed by Simpson. Mr Wiles, who is now retired, was Sales Manager for South Australia. Mr Wright was an officer involved in product management and at one time was manager in Sydney. Mr Hemmer was a representative of Simpson in New South Wales. Mr Rayner was an officer of the company who was said to be responsible, inter alia, for advising the sales staff about the Act.

The statement of claim alleged that certain specified acts of Simpson contravened s. 48 of the Act.

In relation to Parrys an act by Wheatley in or about March 1977, is alleged in par. 11, acts by Acton on or about 1 February 1978 are alleged in pars. 12,13 and 14 and the withholding of the supply of Simpson products from about February 1978 is alleged in pars. 15 and 16, and all are alleged to be in contravention of the Act.

In relation to Hubbards, acts by Wiles and Marshall in and between the months of December 1977 and March 1978 are alleged in par. 18, acts on or about 27 February 1978 by Acton and Wiles are alleged in pars. 19 and 20 and acts on or about 6 March 1978 by Acton and Wiles are alleged in pars. 21 and 22 and the withholding of the supply of Simpson products from on or about 1 December 1978 is alleged in pars. 23 and 24 and all are alleged to be in contravention of the Act.

In relation to Finns, acts by Hemmer in and between December 1977 and March 1978 are alleged in pars.26 and 27 and acts in or about March 1978 are alleged in pars. 28 and 29 and all are alleged to be in contravention of the Act.

It was common ground that, at least at some time in the past, a policy known as the "minimum advertised price" policy ("M.A.P.") prevailed in certain sections of the trade in relation to white goods. This policy was one whereby efforts were made to ensure that retailers did not advertise goods below a specified price. I am satisfied that this policy was one adhered to by many of the senior executives of Simpson for a considerable period. For example, in an inter-office memorandum dated 27 January 1977, from Mr Wright to all area managers a complaint was made about the advertising of a retailer and the memorandum dealt with the subject "Price Point Advertising Policy" and read:

"The first customer to break our price point policy was Norman Ross Discounts (see attached ad, - Sunday Telegraph January 23rd.). As a consequence we have withdrawn our advertising support and strategic allowances for February as we promised all key customers, and we should take advantage of this by informing all key customers of the action we have taken; at the same time re-inforcing our story and our determination to succeed in achieving higher retail prices and higher retail margins on our products. Please ensure that you carry out this informing process as promptly as possible."

It appears that there were about twenty to twenty-five Area Managers.

On 2 September 1977, another inter-office memorandum was issued by Mr Acton to Area Managers. It set out certain recommended prices which were said to be "the lowest acceptable retailer advertised prices". The memorandum included the following: "I would like you to be fully aware that if any retailer advertises under the following prices, then he automatically does not get advertising subsidy or any special benefits he may be entitled to . . . Would you all ensure that your retailers are aware of these prices and exert any influence you can without compromising yourself, or the company, to ensuring these types of prices so that we can put profitability into the Simpson Brand."

On 17 October 1977 Mr Acton again issued a circular to the State Sales Managers referring to recommended advertised prices for retailers which followed discussions with the Executive of N.A.R.T.A. , an organisation of certain buyers. It included the following:

"Would you keep me informed on any disruptive activity and action taken so that I am able to keep the Executive fully informed".

Mr Uhrig in evidence accepted that it was inconceivable that Mr Marshall did not know about M.A.P. at around this time.

I will first deal with the allegations in relation to Parrys.

The first is that in par. 11 of the statement of claim where it is alleged that in or about March 1977 Mr Wheatley had attempted to induce Parrys not to advertise Simpson products at less than the prices specified by Simpson. The only evidence of this was given by Mr Finucane, the General Manager of Parrys, who said that during March 1977 Mr Wheatley had told him that the intention was to put profitability into the retail area and perhaps retailers who did not go along with the M.A.P. policy could lose some of the advertising allowances which were made to key customers. Mr Finucane said that after this Parrys had restricted somewhat their advertising of Simpson products. As happened with regard to all other alleged conversations with retailers, no employee of Simpson with whom those conversations were alleged was called to give evidence and thus I am left without the benefit of any evidence on any such relevant conversations from any Simpson employee. I am satisfied that the conversation alleged in par. 11 took place and that it was an attempt to induce Parrys not to advertise goods supplied by Simpson at prices lower than those specified by Simpson and was within s. 96(3)(b) as extended by s.96(7). Indeed, no argument was presented to the contrary.

Paragraphs 12 and 13 of the statement of claim are based on conversations between Mr Finucane and a Mr Rummer, the Merchandise Manager of Parrys, and Mr Acton and Mr Wheatley at a hotel called the Riverside Hotel in Perth on 1 February 1978, and thereafter a conversation on the same day between Mr Finucane, Mr Rummer and Mr Acton in a bar called the "Mayfair Tavern". Again, whilst there was some slight difference in the evidence given by Mr Finucane and that given by Mr Rummer, I consider that they were both basically truthful witnesses.

At the Riverside Hotel Mr Acton discussed the turnover achieved by Parrys and Mr Finucane said that the advertising policies of Simpson did not allow Parrys to advertise Simpson products as Parrys would like. Mr Acton said that he wanted to keep orderly marketing. A little later there was some discussion about certain dryers. Mr Acton asked whether Parrys intended to sell them for $99 at its May sale. Mr Finucane said it was none of Mr Acton's business and Mr Acton said "You will crucify my market place." Mr Acton also said that he wanted Parrys to advertise the dryers in the May sale at $129.

I am satisfied that at the Riverside Hotel, Mr Acton endeavoured to persuade Parrys not to advertise certain dryers which it had purchased from Simpson below a certain price. I am satisfied that, as alleged in par. 12, conduct within s.96(3)(b) as extended by s.96(7) was involved in what was said during the conversation at the Riverside Hotel. Again no argument to the contrary was offered. I am also satisfied that as alleged in par. 13, conduct within s.96(3)(f) as extended by s.96(7), was involved in what was said during this conversation.

In par. 14 of the statement of claim the applicant alleges a threat not to supply Simpson products.

I am satisfied that, in the Mayfair Tavern, Mr Acton said to Mr Finucane and Mr Rummer that he had been working very hard to put profit into the cash registers of retailers. Mr Finucane said that he did not believe that a manufacturer should worry about a retailer's profitability by fixing prices. Mr Acton asked could not Parrys and Simpson get together. Mr Finucane said that there was "no way we will come to any arrangement" and he asked Mr Acton "What are you going to do if we do not go along with what you want us to do? Are you going to cut us off or something." Mr Acton said "Yes" and Mr Finucane said that in that case he would have to go to "Trade Practices". Mr Acton said he did not care and that he "would be the Robin Hood of the industry".

In my opinion the applicant has made out the breach alleged in par.14. It is clear that Mr Acton was making it known to Mr Finucane that Simpson would not supply Parrys with goods unless it agreed not to sell those goods at prices less than those specified by Simpson.

In pars. 15 and 16 the withholding of the supply of Simpson products for a reason within the provisions of s.96(3)(d)(i) and (ii) as extended by s.96(7) is alleged.

In a letter dated 17 March 1978 from Mr Wheatley, as State Sales Manager, Parrys was advised as follows: "When trying to collect payment for appliances delivered in December and prior, our Credit Officer was advised that you were no longer buying from us and we would have to wait for payment while the account was reconciled. In view of your actions and our own customer rationalisation programme to reduce distribution costs, we have closed your account. Please pay the overdue accounts immediately, and the balance when it falls due."

The main argument presented by Simpson was that it was engaged in a rationalisation programme in which it reduced the total number of accounts which existed towards the end of 1976 from over four thousand to a figure of about 150. It was also established in relation to Parrys that a Mr Cruskall, the Creditors Manager of Parrys, had said to a Mr Taylor, an officer of Simpson, when he had been asked for payment of Simpson's account "Don't be like that Bob or I will have to close your account". It was also established that what was called the December account, for which it appeared a cheque had been drawn on 31 January 1978, was not paid until about the third week in March 1978. It was also established that Parrys' purchases of Simpson products in the first quarter of 1978 had been trifling and that some problem had arisen due to Simpson no longer providing staff to demonstrate its products at Parrys. Because of s.4F(b) of the Act, s.96(3)(d) extends to a case where the supply of goods is withheld for more than one reason provided that the reasons for withholding the goods include as a substantial reason, that the person from whom the goods are withheld has sold, or is likely to sell, or has advertised or is likely to advertise, goods at a price less than that specified by the supplier as the price below which the goods are not to be sold or advertised. It is therefore only necessary for the Commission to establish that a substantial reason for the withholding of supply fell within those included in s.96(3)(d) as extended by s.96(7). It is only necessary that this should be established on the balance of probabilities although the gravity of the matters in issue must be borne in mind, (See generally T.P.C. v. Nicholas Enterprises Pty. Ltd. (1979) 2 A.T.P.R. 40-126 at pp.18,352-18,353). The main argument of Simpson was that the actual decision to withhold supply was made by Mr Uhrig and that his reasons for making that decision did not include any reason which contravened the Act. It was common ground that no supply of Simpson white goods had been made to Parrys since about March 1978.

Mr Uhrig said in evidence that Mr Marshall approached him before the letter of 17 March 1978 was sent to Parrys and after some discussion, Mr Marshall asked Mr Uhrig to approve closure of Parrys' account. He also said that Mr Marshall informed him that he feared that Parrys might complain to the Commission. Mr Uhrig said that he asked Mr Marshall whether the account was being closed for resale price maintenance reasons but he asked no further questions when told by Mr Marshall that this was not the case. The argument advanced on behalf of Simpson was that, whatever may have been the reason of Mr Marshall or Mr Wheatley or any other officer of Simpson, the actual decision to withhold supply was made by Mr Uhrig on grounds other than any relating to resale price maintenance and therefore it could not be said that the Company was withholding supply for reasons connected with resale price maintenance.

In order to fully appreciate the circumstances in which the termination of Parrys' account took place it is necessary to consider what happened thereafter. After some complaints were made by Parrys to Simpson, Mr Parry, the Managing Director of Parrys, met Mr Acton at a hotel and later at a night club in Sydney on 13 April 1978. In the course of his conversations with Mr Acton at the hotel and night club Mr Parry asked why his company's account had been terminated by Simpson. After further discussion Mr Acton said that he was quite happy about the situation that Simpson had cut off Parrys' supply. Mr Acton also said "You are going to be the shining example and there is only you and me here, nobody can hear us". However, Mr Acton did say later that he would talk to Mr Finucane to see if supplies could be started again. Mr Parry also said that Mr Acton made it clear that if Parrys did not "toe the line" it was not going to get supplies. Mr Parry told Mr Acton that Parrys would not toe the line on price maintenance. Mr Parry also said he telephoned Mr Uhrig on 19 April 1980 seeking a resumption of supplies. Mr Uhrig told him to approach Mr Marshall. Mr Parry wrote to Mr Marshall on 20 April 1978 and received a reply dated 2 May 1978 refusing to resume supply.

Although the conversations of 13 April 1978 are not the subject of any particular allegation in the statement of claim, I am satisfied that Mr Acton, as the National Sales Manager, was acting on behalf of Simpson in dealing with a request that supplies be resumed to Parrys and that the conversations of that day are admissible in evidence, if not under the general law, certainly pursuant to s.96(6) of the Act. On this question, see generally T.P.C. V. Bata Shoe Co. of Australia Pty. Ltd. (1980) A.T.P.R. 40-161 at p.42,265. Again it is relevant to remember that Mr Acton was not called to give evidence.

I did not find it necessary to decide whether s.96(6) embraces not only the act done by a person but also the reason for which the act is done. In my opinion, the withholding of supply by Simpson was either the result of a decision by Mr Marshall or, alternatively, the result of a recommendation by Mr Marshall, and the approval of that recommendation by Mr Uhrig. If it be the first of these alternatives I have no doubt that Mr Marshall's reasons included as a substantial reason, a reason within s.96(3)(d) as extended by s.96(7). Senior counsel for Simpson submitted that the onus of proof lay on the Commission, that Marshall had the authority to withhold supply, but that he did not choose to exercise it. He also submitted "that the act of withholding supply . . . is . . . the net result of a decision-making process which produced the consequence that orders submitted to Simpson by Parrys will not be answered".

Whatever view of the evidence is taken the decision to withhold supply was that of Mr Uhrig in the sense that it would not have been made without his approval. Whether one accepts Mr Uhrig's evidence in relation to the closure of Parrys' account or not, the decision to withhold supply was the direct result of a recommendation by Mr Marshall. I am satisfied that, although the late payment of the December account may have been a factor, it provided a convenient excuse to cease to supply Parrys and, as Mr Acton had said, to make it "the shining example". I am satisfied that the withholding of supply by Simpson was for reasons, which included as a substantial reason, that Parrys was likely to advertise and sell Simpson products at prices less than prices specified by Simpson and also that Parrys had not agreed not to advertise and sell Simpson products at prices less than the prices specified by Simpson. I am therefore satisfied that pars. 15 and 16 of the statement of claim have been made out.

I pass now to consider the allegations in relation to Hubbards. Just before Christmas in 1977 Mr Wiles said to Mr Reid, the General Manager of Hubbards," . . . we are about to walk away from you. It is just not good enough. What are you going to do about your prices? They are too low". I am satisfied that in its context this conversation was within s.96(3)(a) as extended by s.96(7) as alleged in par.18.

On 27 February 1978, Mr Wiles said to Mr Hubbard and Mr Reid in the presence of Mr Acton, "Your prices are too low. We want you to lift them to the going price in the market place". Mr Wiles then specified a particular price which he wanted Hubbards to charge for a particular model. Mr Acton mentioned that Simpson was rationalising its distribution system in accordance with certain criteria and when Mr Hubbard said that he hoped Hubbards satisfied that criteria Mr Acton said "Hubbards fit the profile". Again Mr Wiles was not called. I am satisfied that this conversation was within s.96(3)(b) as alleged in par.19 of the statement of claim because it was an attempt to induce Hubbards not to sell certain machines at a price less than that specified by Simpson. I am also satisfied that this statement was within s.96(3)(f), as alleged in par.20 of the statement of claim.

On 6 March 1978 Mr Acton, in the presence of Mr Wiles, made a request to Mr Hubbard and Mr Reid that Hubbards lift their prices to those which he alleged were operating in the market place at that particular time. He asked that the advertised price for dryers be raised to a price specified by Simpson. I am satisfied that this was an attempt to induce Hubbards not to advertise or sell Simpson products at prices less than those specified by Simpson as alleged in par.21 of the statement of claim and that it was within s.96(3)(b) as extended by s.96(7).

I am also of the opinion that this request was within s.96(3)(f) as extended by s.96(7) as alleged in par. 22.

On 10 March 1978 Mr Marshall met Mr Hubbard and Mr Marshall said that he should warn Mr Hubbard that Simpson was about ready to walk away from it and that it had been causing Simpson a lot of concern in the market place, and that they were getting a bit tired of Hubbards not listening to them regarding price. Mr Marshall also said that he had heard that, at a "manufacturer's product night", Mr Reid had made statements that Hubbards would sell at whatever price Hubbards liked. Mr Marshall said that ". . . if that report was true then these were pretty ill advised and dangerous statements to make in view of the current strained relationship between Hubbards and Simpson".

In August 1978 the Commission served a notice under s.155 of the Act upon Simpson. On 28 November 1978 Mr Acton, as Branch Manager for South Australia, on behalf of Simpson, sent a letter to Hubbards saying, inter alia, "We advise that as from 1 December 1978 we will no longer have an Appliance Trading Account for your Company". It was also said that this was part of a programme of "national distribution rationalisation . . . in order to bring about economies in our selling and distribution expenses". The letter also stated that Simpson appliances could be obtained through a named wholesale distributor. In response to this letter Mr Hubbard wrote to Mr Uhrig, and also to the Chairman of Simpson. In the letter to the Chairman Mr Hubbard said "It is obvious that we will be disadvantaged and may have a prima facie case under the resale price maintenance section of the Trade Practices Act". No satisfactory reply was received to either letter. The letter of 29 November 1978 from Mr Hubbard to Mr Uhrig contained a paragraph "In view of our two companies long association I feel that a better explanation should be forthcoming or I shall be forced to the conclusion that your company's objective is control of the market place and the level of selling price on your products."

It was said by Mr Uhrig in evidence that the letter of 28 November 1978 implemented a decision which he made upon the recommendation of a committee headed by Mr Maddigan. As with Parrys, the argument was advanced that the decision was made by Mr Uhrig and was not based upon any consideration of resale price maintenance. Hubbards, at the relevant time, was a large retailer and again I am satisfied that the withholding of supply was the result of a decision either by Mr Maddigan or, if Mr Uhrig's evidence is accepted, of a decision by Mr Uhrig, based on a recommendation by Mr Maddigan. However, I find it impossible to accept the evidence of Mr Uhrig, whom I do not regard as an entirely satisfactory witness, in relation to this matter which took place some months after the notice which had been received from the Trade Practices Commission had come to his attention. Mr Uhrig said that Mr Rayner had the responsibility for preparing material in answer to the notice under s.155. Mr Uhrig's evidence did not disclose when he first knew that resale price maintenance existed in the Company. However, it appears from his evidence that prior to December 1978 Mr Rayner had told him that he was "concerned about what he was finding and . . . there appeared to have been statements made to retailers verbal and in writing, that were counter to our policy". Mr Uhrig said that he was not certain but he thought it probable that he knew of Mr Rayner's concern before 28 November 1978. Prior to that date, Mr Maddigan had, Mr Uhrig said, asked for approval for the termination of the account and told him that a complaint to the Commission could be expected. Notwithstanding this, Mr Uhrig made only a cursory enquiry of Mr Maddigan whether any question of resale price maintenance was in fact involved and, upon receiving the answer that it was not, took no further steps to ascertain the position, notwithstanding the statement by Mr Hubbard in his letter of 29 November 1978.

It is also remarkable that Mr Uhrig said that he had not made any specific complaint to either Mr Marshall or Mr Acton when he ascertained the true state of affairs that existed in relation to resale price maintenance other than anything said by him in any general discussions which took place with officers of the Company. I am satisfied that the withholding of supply to Hubbards was for a reason which included as a substantial reason that Hubbards was likely to advertise and sell Simpson products at prices less than those specified by Simpson as alleged in par.24 of the statement of claim and that Mr Uhrig was aware of this when he was a party to Hubbards' account being closed. I am also satisfied that par. 23 of the statement of claim has been made out.

I pass now to consider the allegations in relation to Finns. The evidence was that Finns was still receiving supplies of Simpson goods at the date of the hearing. The allegations made were that between December 1977 and March 1978 certain conversations between Mr Hemmer and Mr Finn constituted contraventions of the Act. I am satisfied that Mr Hemmer handed a price list to Mr Finn in December 1977 and said, "This is a policy approved by Simpson and we would like you to maintain these prices at advertising level". Mr Hemmer explained that this was because profitability was to be built back into retailers, discounters and anybody else involved. Mr Hemmer continued" . . . we are going to visit other people and tell the policy to each of our dealers".

Mr Hemmer also said that, unless recommended retail prices suggested by Simpson were adhered to, there would be no payment or subsidy of advertising costs. Mr Finn said he adhered to the recommended prices for a period but not for long. I am satisfied that this conversation was within s.96(3)(b) as extended by s.96(7) as alleged in par. 26 of the statement of claim. I am satisfied that the conversation, together with the handing over of the price list was also within s.96(3)(f) as extended by s.96(7) as alleged in par. 27 of the statement of claim.

Early in March 1978 Mr Hemmer and two other Simpson representatives visited Mr Finn. Mr Hemmer produced some advertisements of Finns and said that Finns had not complied with Simpson's policy because some prices in the advertisements were below the prices Simpson had recommended. He said, "You did not stick to our policy as I asked". Mr Finn said he would run his own business and be competitive in the field of electrical retailing, and Mr Hemmer replied, "Profitability is still the name of the game. We are still approaching retailers . . . we want to clean up the trade".

The evidence was that Simpson took no further action against Finns and the supply of Simpson products was maintained. I am satisfied that the conversation in March 1978 was within s.96(3)(b) as extended by s.96(7) as alleged in par.28 of the statement of claim. I am also satisfied that par. 29 has been made out.

I come next to the question of penalty. Section 76 provides for a penalty not exceeding $250,000 in the case of a body corporate "in respect of each act or omission . . . to which this section applies". The section applies to a contravention of Part IV of the Act.

The particular provision of the Act which has been contravened in this case is s.48 which uses the words "engage in the practice of resale price maintenance". Section 96(1) provides that, "Subject to this part, a corporation . . . engages in the practice of resale price maintenance if that corporation does an act referred to in any of the paragraphs of sub-section (3)". Section 96(3), which I have set out previously, specifies the acts referred to in s.96(1).

It will be seen that the same act may be within more than one category of acts in s.96(3), e.g. within s.96(3)((a) and s.96(3)(f).

Section 76 refers to a number of factors to which the Court is to have regard in fixing any penalty. These are described as "all relevant matters" which include, (a) the nature and extent of the act or omission, (b) any loss or damage suffered as a result of the act or omission, (c) the circumstances in which the act or omission took place and (d) whether the person has previously been found by the Court in proceedings under Part VI to have engaged in any similar conduct.

Senior Counsel for the Commission submitted that it would be inappropriate to take together all established contraventions and impose one penalty in respect of all and also inappropriate to impose separate penalties in respect of the contravention alleged in each paragraph of the statement of claim and proved in the proceedings. He submitted that it would be appropriate to fix three penalties, one in respect of contraventions arising out of dealings with Parrys, one in respect of contraventions arising out of dealings with Hubbards and a third in respect of contraventions arising out of dealings with Finns. Senior Counsel for Simpson did not oppose this approach and I propose to adopt it.

An amendment made in 1978 added s.76(3) to the Act. It reads:

"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 or more of the provisions but a person is not liable to more than one pecuniary penalty under this section in respect of the same conduct."

The difficulty with this section lies in deciding what is embraced by the words "two or more provisions of Part IV". In the case before me the only relevant provision in Part IV is s.48. Section 96 is in Part VIII.

It is not entirely clear whether a single act, which contravenes s.48 because it is conduct which falls within more than one category in s.96(3), e.g. s.96(3)(a) and s.96(3)(f), constitutes more than one contravention of s.48 but in any event I would regard such an act as being appropriately treated as a single contravention of s.48 for the purpose of the fixation of a penalty.

I proceed upon the basis that different acts of a supplier, each of which is in contravention of s.48 because it falls within one or more of the categories of acts set out in s.96(3), which take place at different times and in relation to three different customers, are not to be regarded as "the same conduct" within s.76(3).

The words "the same conduct" in s.76(3) must be more limited in scope than the words "any similar conduct" which appear at the end of s.76(1).

It is likely that some loss or damage was suffered by Parrys and Hubbards as a result of the acts of Simpson. So far no proceedings have been instituted by either of these companies under s.82 of the Act for damages or under s.80 seeking an injunction. It is also probable that some members of the public paid more for certain of Simpson's products because of the act of that company than they otherwise would have done, and it is probable that the public has suffered some monetary loss. There is no suggestion that any proceedings under Part VI have been taken previously against Simpson. I have had regard to the nature and extent of those acts alleged in the statement of claim which I have found to have been established and to all relevant matters.

I propose to impose a penalty for the acts alleged in pars. 11 to 16 inclusive in relation to Parrys of $30,000, a penalty in respect of the acts alleged in pars. 18 to 24 inclusive in relation to Hubbards of $30,000, and a penalty in relation to the acts alleged in pars 26 to 29 inclusive in relation to Finns of $5,000.

I consider that at all relevant times resale price maintenance was a well established policy of many of the executive staff of Simpson. I consider the breaches of s.48 serious breaches which were not of an isolated nature. The withholding of supply to Parrys and Hubbards were very serious contraventions of the Act and I have had particular regard to this in the penalties which I have fixed.

I pass now to consider whether I should grant any injunction. The statement of claim sought an injunction restraining Simpson from engaging in the practice of resale price maintenance in relation to its domestic electrical appliances. Senior Counsel for the Commission pressed for an injunction but he did not attempt to formulate any injunction in more precise terms than that sought in the statement of claim. Senior Counsel for Simpson opposed the grant of an injunction on various grounds. He submitted, inter alia, that, (a) an injunction should not be granted as a form of punishment, (b) it was difficult to formulate any injunction which would be appropriate, (c) neither Parrys nor Hubbards were parties to the proceedings and (d) it was not clear whether Parrys or Hubbards still wished to receive supplies from Simpson. Senior Counsel also pointed to problems which might arise where an injunction in relation to resale price maintenance existed and a particular retailer declined to pay his accounts on time or was otherwise engaged in conduct which was not reasonable commercial conduct.

I have given serious thought to whether I should grant an injunction limited to restraining Simpson from withholding the supply of domestic appliances to either or both Parrys and Hubbards for the reason specified in s.96(3)(d) as extended by s.96(7).

Hubbards is at present obtaining supplies of Simpson goods pursuant to an arrangement which it has with another retailer in Adelaide and there is no evidence that this is unsatisfactory. Although supplies to Parrys were discontinued in March 1978 and have not resumed since, I am left in doubt about the present wish of Parrys in relation to acquisition of goods from Simpson.

Mr Uhrig said that he had now taken steps to impress upon relevant employees of Simpson that the Trade Practices Act was to be carefully observed. He said that in early 1979 he had started to address groups of staff all around Australia and there is evidence of some documentation of instructions to staff. I am prepared to accept that the need to comply with the Trade Practices Act has been appreciated by Simpson and I consider that it is unlikely that any further breach will occur. In these circumstances, and bearing in mind the other considerations to which I have referred, I do not think an injunction would be appropriate. I consider that Simpson will appreciate that if any further breach should occur it would be liable to penalties much more severe than those now imposed.

I make the following orders:

1. That Simpson Pope Limited pay to the Commonwealth of Australia by way of penalty in respect of the contraventions of s.48 of the Trade Practices Act alleged in the statement of claim herein the following pecuniary penalties: a Thirty thousand dollars ($30,000) in respect of the contraventions alleged in paragraphs 11 to 16 inclusive of the statement of claim. b Thirty thousand dollars ($30,000) in respect of the contraventions alleged in paragraphs 18 to 24 inclusive of the statement of claim. c Five thousand dollars ($5,000) in respect of the contraventions alleged in paragraphs 26 to 29 inclusive of the statement of claim.

2. Pursuant to s.77 of the Trade Practices Act 1974, that judgment be entered for the Trade Practices Commission on behalf of the Commonwealth of Australia for the sum of Sixty five thousand dollars ($65,000).

3. That the respondent pay the applicant's costs, including any reserved costs.