Liquorland (Australia) Pty Ltd has been penalised $4.75 million by the Federal Court after the company admitted that it entered into illegal agreements with a number of applicants for liquor licences in New South Wales.
"This is a significant penalty for a contravention of Part IV of the Trade Practices Act which should serve as a warning to other companies which may try to prevent new entrants to markets from being able to compete effectively", Australian Competition and Consumer Commission Chairman, Mr Graeme Samuel, said today.
The ACCC instituted legal proceedings in the Federal Court against Liquorland and Woolworths Limited on 30 June 2000. The case against the second respondent Woolworths is continuing before Justice Allsop.
Liquorland, a subsidiary of Coles Myer Ltd, admitted to five contraventions of the exclusionary (primary boycott) provisions of the Act. In determining the appropriate penalty to recommend to the court, the ACCC welcomed Liquorland's cooperation in resolving the case prior to the commencement of a lengthy and expensive trial.
"Following the ACCC first raising the issue with Coles Myer the company ceased entering into similar agreements", Mr Samuel noted. "The ACCC also recognises that Coles Myer has in recent years made a substantial investment in trade practices law compliance training and strategies throughout the company".
Liquorland has conceded that it had entered into five agreements with liquor licence applicants for the substantial purpose of restricting and preventing those businesses from competing with its own Liquorland stores in the supply of takeaway liquor.
The ACCC had alleged that the conduct arose in circumstances where Liquorland objected to certain liquor licence applications and then proposed restrictive agreements in return for withdrawing their objections. The restrictive agreements contained one or more conditions to the following effect:
- preventing liquor licence applicants from selling packaged takeaway liquor from their premises
- preventing liquor licence applicants opening a dedicated bottleshop
- restricting and preventing liquor licence applicants from establishing a separate drive-through bottleshop
- restricting and preventing liquor licence applicants from advertising or conducting promotions for the sale of packaged takeaway liquor over the counter to consumers
- preventing liquor licence applicants from being able to offer home delivery services for packaged takeaway liquor to consumers
- preventing liquor licence applicants from expanding the size of their licensed premises to meet potential increased consumer demand
- limiting the amount of packaged takeaway liquor which liquor licence applicants can keep on their premises in order to meet consumer demand.
The ACCC agreed to discontinue a number of its claims against Liquorland in order to settle the matter.
Justice Gyles today ordered Liquorland pay pecuniary penalties of $950,000 for each of the contraventions ($4.75 million in total) as follows:
- Ettamogah Bar & Restaurant, Campbelltown;
- Dry Dock Bottleshop, Tweed Heads;
- Global Beer Importers, Tweed Heads;
- Jin Ro Australia, Arncliffe;
- Henry Kendall Family Bistro and Tavern, West Gosford.
When imposing the penalty of $4.75 million against Liquorland, Justice Gyles noted that: "each of the deeds in question constituted a significant restriction upon the business of the third party compared with the position that would have pertained had the party obtained an unrestricted licence…. It is also obvious that consumers lost the choice and competition between outlets that otherwise would have been available in the event a third party did obtain an unrestricted licence.
"It follows that there would have been significant loss or damage to those parties and a significant gain to Liquorland by reason of the contravening conduct".
In addition Justice Gyles ordered injunctions against Liquorland preventing it for a period of three years from engaging in similar conduct in the future or giving effect to any existing deeds which had legal effect independently of proceedings in the Licensing Court in respect of a liquor licence application and which was made for the purpose of preventing, restricting or limiting the supply of takeaway liquor. He also ordered that Liquorland make a contribution to the ACCC's costs of $250,000.
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