The Full Federal Court today upheld an appeal by the Australian Competition and Consumer Commission regarding the pecuniary penalty imposed on a paragliding company, High Adventure Pty Limited, for engaging in resale price maintenance*.
"The ACCC welcomes this judgement and its support for our view that the original penalties imposed by the trial judge were manifestly inadequate given the seriousness of the conduct", ACCC Chairman, Mr Graeme Samuel said. "I also welcome the impact this decision will undoubtedly have in providing stronger deterrence to those who feel they can take advantage of consumers for their own gain".
In allowing the ACCC's appeal, the Full Federal Court comprising Justices Heerey, Finkelstein and Allsop expressed the view that the appropriate penalty was between $30,000 and $40,000, but noted that there were reasons for imposing a lower penalty of $20,000 in this case.
Mr Samuel said "the Full Court decision contrasts markedly with the June 2005 decision of the trial judge to impose a pecuniary penalty of $3,000 on High Adventure Pty Limited and $2,000 on Mr Lee Scott". Mr Samuel said "the revised penalty better reflects the seriousness of resale price maintenance breaches of the Trade Practices Act 1974".
One of the main reasons the trial judge imposed a low penalty was his concern that the penalty sought by the ACCC would ruin the respondent. The Full Court found that the trial judges "statement that the Commission was motivated by a desire to ruin the respondents was with great respect unwarranted".
Mr Samuel said "It was never our desire to financially ruin either Mr Scott or his company, as stated by the trial judge. Our aim in this case as with all litigation was to protect consumers and honest businesses and to ensure that parties are sufficiently penalised so that they and, importantly, others will think twice before contravening the Act".
In addition, the Full Court said "by focusing on the detriment to the respondents the [trial] judge ignored both the seriousness of the contravention as well as the need to fix upon an appropriate penalty by reference to the need to deter future contraventions".
Mr Samuel said "pecuniary penalties must be imposed on an offending party at a sufficient level and the financial circumstances of the offender must not outweigh other factors considered by courts, including deterrent effect, when determining appropriate penalties.
"Giving undue weight to financial circumstances fails to recognise the primary objective of deterrence. The ACCC would not be properly discharging its function if it did not press for what it considered to be appropriate penalties.
As the Full Court stated "…the Commission was doing no more in this case than fulfilling its statutory function as well as its duty to the court. Deterrence (especially general deterrence) is the primary purpose lying behind the penalty regime…in some cases the penalty may be so high that the offender will become insolvent. That possibility must not prevent the Court from doing its duty for otherwise the important object of general deterrence will be undermined".