$25,000 penalty for manager's involvement in Chaste weight-loss product

The Federal Court has ordered a former General Manager of Chaste Corporation to pay a personal penalty of $25,000 for his involvement in resale price maintenance in the promotion and selling of the TRIMit weight-loss product.

Mr Xenoudakis admitted that he recruited area managers to enter into agreements with Chaste stating that Chaste would be responsible for setting the price at which area managers sold TRIMit to retailers and that there would be no discounting or price cutting, in breach of the resale price maintenance provisions of the Trade Practices Act 1974.

Mr Xenoudakis further admitted that he represented to potential area managers that Chaste was a good business opportunity, while deliberately concealing the involvement of Mr Peter Foster in the company.

The court has made injunctions restraining Mr Xenoudakis from repeating this conduct for a period of three years, and ordered that he also pay costs of $8000. Should he engage in future weight-loss or health industry ventures involving Mr Foster, Mr Xenoudakis has also been ordered to disclose the fact of Mr Foster's involvement to prospective customers or franchisees. 

Mr Xenoudakis agreed to the orders and made joint recommendations with the Australian Competition and Consumer to the court as to the appropriate penalty. He has cooperated with the ACCC since the institution of proceedings.

"Resale price maintenance is price-fixing by suppliers - it stops competitive pricing and causes consumers to pay more than they should", ACCC Chairman, Mr Graeme Samuel, said today. "That is why it is illegal".

"This judgment sends a clear message to individuals that they will be held to account for their involvement in contraventions of the Trade Practices Act. This is a significant personal penalty, particularly given that it represents a 50 per cent reduction on the penalty that the ACCC would have sought from the court had Mr Xenoudakis not cooperated with the ACCC. This clearly indicates the seriousness with which the court views conduct of this type".

The ACCC's case against Chaste (in liquidation), Mr Peter Foster and six other respondents continues.

Full copies of the orders made and the judgment can be obtained via the Federal Court's website at www.federalcourt.gov.au.