Hobie Cat Australasia Pty Ltd penalised $168,000 for resale price maintenance

The Federal Court of Australia has imposed a penalty of $168,000 on Hobie Cat Australasia Pty Ltd, a kayak and sailboat supplier, for engaging in resale price maintenance in contravention of section 48* of the Trade Practices Act 1974.

The Australian Competition and Consumer Commission instituted proceedings against Hobie in September 2007, alleging Hobie had engaged in resale price maintenance by including in its dealership agreements, terms which prohibited dealers from selling or advertising Hobie products below the recommended retail prices, or at prices no less than 10 per cent below the recommended retail prices.

After admissions by Hobie that it engaged in the conduct alleged, the ACCC and Hobie submitted agreed orders, including a proposed penalty figure, for consideration by the court.

Justice Finn imposed the penalty submitted and made consent orders, including:

• declarations that Hobie engaged in resale price maintenance conduct in contravention of section 48 of the Trade Practices Act
• injunctions restraining the same contravening conduct in future
• Hobie establish a trade practices compliance program, and maintain that program for a period of three years
• Hobie write to all of its dealers advising them that it had engaged in illegal conduct and that it cannot specify to retailers a minimum price below which goods are not to be sold, and
• Hobie pay the ACCC's costs.

Justice Finn noted that while Hobie's conduct was "intentional and purposive" it "involved no knowing (or deliberate) contravention of the Act."

He also noted that the penalty was substantial and significant for a company of Hobie's size and was proportionate to the seriousness of its contraventions.  

ACCC Chairman, Mr Graeme Samuel, said: "The outcome of this matter should drive home to businesses of all sizes that every care must be taken to ensure they are aware of their obligations under the Trade Practices Act. It also serves as a warning that the ACCC will vigorously pursue allegations of resale price maintenance in any industry to ensure there is fair play in the market place and lower prices for consumers."

Background

*Section 48 of the Trade Practices Act 1974 prohibits resale price maintenance. A company may engage in this conduct in a number of ways. For example, where it tries to stop a reseller from discounting a product or where it attempts to stop a reseller from selling or advertising products below a specified price.