Television set top box supplier penalised $150,000 for resale price maintenance

Humax Pty Ltd has been penalised $150,000 by the Federal Court after the company admitted that it attempted to induce a number of small retailers not to sell Humax high-definition digital set top boxes* at a price less than $599.00.

In his reasons for judgment, Justice Merkel stated that but for the mitigating factors in this case, the penalties would have been "significantly" higher.

"Retailers should be free to sell their goods at the prices they think is appropriate, not the price at which an importer might think is best", Australian Competition and Consumer Commission, Acting Chair, Ms Louise Sylvan, said.

The ACCC instituted legal proceedings in the Federal Court against Humax and Mr Andrew Song, manager of Humax, on 14 February 2005. Humax admitted to four contraventions of the resale price maintenance provisions of the Trade Practices Act.

In determining the appropriate penalty to recommend to the court, the ACCC noted Humax's cooperation in resolving the case and avoiding the expenses and time of a full trial.

"Following the ACCC first raising the issue with Humax, the company offered to undertake trade practices training for its staff. The company also willingly agreed to court orders requiring the company to undertake compliance training", Ms Sylvan said. "The ACCC also recognises that the conduct occurred for a short duration of only four days".

"$150,000 represents a substantial penalty in the circumstances for contravening the resale price maintenance provisions of the Act for Humax. This penalty should send a message to directors and managers of companies that even engaging in anti-competitive conduct for a short period of time can result in significant consequences", Ms Sylvan said.

Humax, through its manager Mr Andrew Song, contacted three retailers in September 2004 by email, by telephone and by leaving a voice message. The retailers were small businesses, trading principally on the internet, located in Melbourne and Perth.

In addition to the penalty imposed on Humax, Justice Merkel ordered injunctions against Humax preventing it from engaging in similar conduct for a period of three years. He also ordered that Humax establish a trade practices compliance program for its staff. Mr Song, who admitted to being knowingly concerned in each contravention by Humax, was also ordered to pay a pecuniary penalty of $7,500.

Background

*A high definition digital set top box is a device that allows consumers to watch high-definition free-to-air digital television programs. Free-to-air digital television is predominantly broadcast in 'standard definition' format; the 'high-definition' format has a superior visual quality and often includes sound formats such as Dolby Digital.