Commerce Commission v Prices Pharmacy 2011 Ltd - [2020] NZHC 1176

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2018-442-26

[2020] NZHC 1176

BETWEEN
COMMERCE COMMISSION

Plaintiff

AND

PRICES PHARMACY 2011 LIMITED

First Defendant

RICHARD STUART GRANT HEBBERD

Second Defendant

On papers

Judgment:

29 May 2020

JUDGMENT OF DOBSON J

[1] The plaintiff (the Commission) commenced these proceedings in 2018 alleging anti-competitive conduct by the defendants in breach of s 27, via s 30, of the Commerce Act 1986 (the Act).

[2] By December 2019, the defendants had admitted the relevant breaches. The parties negotiated an agreed statement of facts, and the defendants had agreed to a level of pecuniary penalties that were acceptable to the Commission.

[3] Settlement of such proceedings requires the approval of the Court and that was sought jointly by the parties. A scheduled hearing on the application for approval of the agreed settlement was frustrated by the restrictions imposed in dealing with the COVID-19 pandemic. The parties requested the Court to deal with the approval application on the papers.

COMMERCE COMMISSION v PRICES PHARMACY 2011 LTD [2020] NZHC 1176 [29 May 2020]

[4] After considering the written submissions, agreed statement of facts and other relevant materials provided, I came to the view that I was not able to approve the settlement on the quantum of penalties agreed between the parties. I came to that conclusion, acknowledging that it is not for the Court to determine for itself what the appropriate penalties should be, but rather to consider whether approval should be given to the agreed sum as falling within the appropriate range. I also acknowledged that the Court should approach the prospect of declining its approval cautiously.

[5] I issued an interim judgment setting out my conclusions on 8 April 2020. It was distributed only to counsel and the parties. The interim judgment acknowledged that I had tested all the circumstances relevant to what should be accepted as appropriate levels of penalty without the benefit of interchanges with counsel that would have occurred at a hearing. Because of that, I offered the parties a period of 10 working days each in which to invite me to reconsider my conclusions in light of any misapprehensions suggested in my interim judgment, or other matters that the parties considered to be relevant to determining appropriate penalties.

[6] My interim judgment observed that the timing of the parties’ agreement on the level of penalties had been concluded prior to the economic consequences of the COVID-19 pandemic becoming apparent. I took the view that, whatever the nature of Mr Hebberd’s retirement nest egg, it was likely to have been substantially reduced by the dramatic loss in value of all types of investments that has been caused by the pandemic.1 That new development since the agreement had been reached between the parties on penalties was among the reasons I cited for declining approval of the agreed settlement.

[7] The Commission’s initial response to my invitation for further submissions was to seek clarification of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Commerce Commission v Prices Pharmacy 2011 Ltd

Details

AGLC: Commerce Commission v Prices Pharmacy 2011 Ltd [2020] NZHC 1176
Case: [2020] NZHC 1176
Decision Date: 29 May 2020

CaseChat Overview and Summary

The case before the Court involved the Commerce Commission, which alleged that Prices Pharmacy 2011 Limited and Richard Stuart Grant Hebberd breached sections 27 and 30 of the Commerce Act 1986. The defendants admitted to the breaches, and the parties negotiated an agreed statement of facts and a level of pecuniary penalties. The Court was required to approve the settlement, a process that was complicated by the COVID-19 pandemic. The central legal issues included the appropriateness of the penalties, the respective roles of the defendants in the breaches, and the motivation behind the conduct.

The Court considered the agreed statement of facts, the written submissions, and the relevant materials provided by the parties. It was noted that the Court's role was not to determine the appropriate penalties but to assess whether the agreed sum fell within an appropriate range. The Court took into account the economic consequences of the COVID-19 pandemic, which had occurred after the agreement on penalties was reached. The Court also examined the respective roles of Messrs Hebberd and Wright in the breaches and the motivation behind the conduct. The Court ultimately concluded that the motivation for the breaches was different from typical anti-competitive conduct, as it was primarily driven by a desire to pressure the Nelson and Marlborough District Health Board for more generous terms. The Court also considered the financial capacity of Mr Hebberd to pay the penalties.

After reviewing the supplementary submissions, the Court decided to approve the penalty against Mr Hebberd at the top of the proposed range, namely $50,000. However, the Court declined to approve the penalty imposed on Prices Pharmacy, adhering to the level of $344,000 as explained in the interim judgment. This decision was based on the Court's assessment of the appropriate range for the company's penalty, which remained valid despite the further submissions received.

Orders