ACCC v Jurlique International Pty Ltd

Federal Court of Australia
[2007] FCA 79; (2007) ATPR 42-146
Justice Spender

Keywords

TRADE PRACTICES – admitted contraventions of ss 45 and 48 of the Trade Practices Act 1974 (Cth) – franchisor conduct - resale price maintenance – price fixing - quantification of loss and damage resulting from resale price maintenance in premium skin care products – franchise agreements included clause that franchisee would not sell products at prices below recommended retail prices specified by franchisor and distributor

PRACTICE AND PROCEDURE – pecuniary penalty – claiming penalties for contraventions of Pt IV of the Trade Practices Act 1974 (Cth) – quantum – calculation of appropriate penalty for resale price maintenance and price fixing – public policy considerations - general deterrence – deliberate contraventions

Trade Practices Act 1974 (Cth) ss 4, 4F, 45, 48, 60, 75B, 76, 83 and 96

Overview

The ACCC alleged Jurlique had engaged in resale price maintenance. In particular, the ACCC alleged the first and second respondents had contravened ss 45 and 48 of the Act and the third and fourth respondents had been knowingly concerned in those contraventions. It was further alleged that the fifth respondent had ancillary involvement in those contraventions (ss 75B and 76 of the Act). The RPM conduct alleged included attempting to induce retailers not to sell Jurlique products at prices less than prices specified by Jurlique and withholding supply by reason that the retailer sold products below that price.

All respondents made admissions in relation to the conduct alleged and a joint submission as to final orders and penalties was submitted.

The argument for RPM centered around ‘prestige goods’, with Justice Spender stating that “the attraction of many products to consumers lies in the fact that they are expensive, and have an aura of exclusivity about them.“ Drawing on Chicago School ideology his Honour expressed some sympathy for the view that RPM should not be per se prohibited (at somewhat extraordinary length given the per se nature of the prohibition).

Ultimately his Honour noted, with some obvious reluctance, that RPM is prohibited per se prohibited in Australia and there was no available defence to Jurlique for the admitted conduct.

“In the present proceedings, the difficulty is that, notwithstanding the views outlined above, I am bound by the law“ (para 75)

 View ACCC media release.

Declaration

The court declared (among other things) that Jurlique International had engaged in resale price maintenance as defined in s 96(3)(b), s 96(3)(c), s 96(3)(d) and 96(3)(f) in contravention of s 48.

Jurlique Distribution also engaged in RPM.

J&J Franchising, by entering into and giving effect arrangements with franchisees with whom it competed, contravened s 45(2)(a)(ii) and 45(2)(b)(ii) in the form of price fixing (then assisted by the operation of s 45A). They also engaged in RPM conduct.

Jurlique Spa also engaged in RPM.

Dr Klein, as managing director and operator of Jurlique, was ‘directly or indirectly knowingly concerned in, and aided, abetted, counselled and procured’ resale price maintenance conduct and cartel conduct.

Orders

The Court ordered a number of restraints and imposed the following pecuniary penalties:

• $1m on Jurlique International

• $1.4m on Jurlique Distribution

• $100,000 on Jurlique Spa

• $200,000 on Dr Klein

Costs were also awarded against the respondents.