Penalties totalling $515,000 have been imposed by the Federal Court today on Hugo Boss Australia Pty Ltd for engaging in resale price maintenance. Hugo Boss is a manufacturer, importer and wholesaler of prestige mens clothing.

A penalty of $75,000 was also imposed on Mr Aaron Kanat, Hugo Boss managing director.

Hugo Boss, Mr Aaron Kanat, and several other senior executive staff also consented to the Federal Court imposing injunctions permanently restraining them from engaging in resale price maintenance.

Hugo Boss admitted to the Court that it had specified minimum prices below which certain lines of suits could not be resold or advertised for sale.

ACCC Chairman, Professor Allan Fels, said today that the Commission regarded the breaches as serious. As well as artificially maintaining higher prices for consumers, resale price maintenance adversely affects retailers, who are often small businesses, from carrying on their businesses as they see fit.

The size of this penalty is indicative of the seriousness with which resale price maintenance is viewed by the Federal Court and the ACCC. The Act provides for monetary penalties of up to $10,000,000 for companies and up to $500,000 for individuals, he said.

These were not isolated acts but rather a systematic pattern of instructions to some of its retailers about the maximum discounts they should offer on some lines of Hugo Boss suits, in order to niche the product.

"The ACCC is aware that suppliers try to maintain a prestige image for their products by stopping retailers discounting. They should realise that this is unlawful. It provides no excuse for the breach.

Suppliers, must understand that if they attempt to stop discounting of their products by resellers, they run a significant risk of breaching the Trade Practices Act, and that the ACCC will be quick to take action.

Once Hugo Boss recognised the seriousness of the issues being investigated, it assisted the Commission by admitting the conduct took place. In so doing Hugo Boss has saved the Court and taxpayers considerable time and money.

Hugo Boss has also provided a Court enforceable undertaking to develop a trade practices compliance program aimed at enabling itself to appropriately market its product without breaching the Trade Practices Act. The ACCC recommends that all companies, no matter what their size, should look seriously at developing similar programs to minimise their risk of breaching the Act.