Westminster Retail penalised $136,000 for resale price maintenance
Penalties totalling $136,000 have been imposed by the Federal Court on Westminster Retail Pty Ltd and its directors, Mr Kenneth Wade and Mrs Heather Wade, for engaging in resale price maintenance*.
The penalties were imposed by Justice Mansfield of the Federal Court, Adelaide, following action taken by the Australian Competition and Consumer Commission in relation to decorative goods supplied by the company and other suppliers to two franchisees in Sydney and Adelaide.
Between 1998 and 2000, Westminster Retail entered into franchise agreements with J & P Moiseiff Investments Pty Ltd in Adelaide and Baron Trial Pty Ltd in Sydney to operate specialty stores retailing lace products, giftware, figurines and other decorative goods. The franchise agreements each contained terms that the franchisees would not advertise and/or sell goods supplied by Westminster or other suppliers at prices less than the prices specified by Westminster.
Westminster also issued Stock Supply Procedures from time to time which specified the level of discount to be applied to goods the franchisees sold to consumers.
On 11 April 2005, with the consent of the parties, Justice Mansfield:
declared that Westminster's conduct breached the resale price maintenance provisions of the Trade Practices Act 1974
granted injunctions that prevent Westminster and Mr and Mrs Wade from inducing, or attempting to induce, any person not to advertise or sell decorative goods supplied by Westminster below a specified price, and
ordered that Westminster establish a trade practices corporate compliance program for employees and other persons involved in Westminster's business and that Mr and Mrs Wade each attend a trade practices compliance seminar.
There was no agreement between the parties on penalties and following submissions, Justice Mansfield ordered Westminster Retail to pay $100,000, Mr Kenneth Wade to pay $18,000 and Mrs Heather Wade to pay $18,000.
Referring to a number of recent resale price maintenance cases**, ACCC Chairman, Mr Graeme Samuel, said that the penalties being imposed by the Federal Court indicate that the courts regard resale price maintenance conduct as a very serious contravention of the Act.
"The penalties ordered against Westminster and its directors serve as a deterrent to this form of price control", Mr Samuel said.
*Section 48 of the Trade Practices Act 1974 prohibits 'resale price maintenance'. A company engages in resale price maintenance where, among other things, it specifies a price below which its goods should not be sold, tries to stop a reseller from discounting a product, or where it supplies a reseller on disadvantageous terms because the reseller had sold, or was likely to sell, the product below a specified price.
**See Chaste Corporation MR 217/05, 2 September 2005; Dermalogica MR 52/05, 10 March 2005; and RM Hall MR 83/05, 7 April 2005.
