Re Trade Practices Commission v Kensington Hiring Co Pty Limited Formerly Westco Motors (Distributors) Pty Limited Trading As Westco Motors NSW
Federal Court of Australia
[1981] FCA 206
Justice Sheppard
(resale price maintenance)
Issue
Resale price maintenance.
Case number
G 34 of 1979 (NSW registry)
Catchwords
Trade Practices - resale price maintenance - distributor of motor vehicles attempting to induce dealer not to advertise discounts of prices of motor vehicles - withdrawal of defence - matters relevant to be taken into account on assessment of penalties - no question of principle
Order
The Respondent was found liable to pay penalties for five breaches of the RPM provisions of the Act totalling $70,000.
By the time the hearing commenced the parties had reached agreement on most facts and the respondent subsequently withdrew its defence to the proceedings, but did call evidence on the question of penalty. After setting out the contraventions his Honour continued:
A starting point for the consideration of what penalties it is proper to impose is to determine the question whether it is more appropriate to look at the matter as if it were a connected series of events really involving one transaction or whether the offences should be treated as if they related to a series of five isolated, separate and distinct occurrences. Having reflected upon the matter, I have reached the conclusion that the former is the correct approach. That was agreed to be the case in the submissions of both counsel. In my opinion the proper way of looking at the matter is that the evidence discloses a course of conduct during most of the year 1977 which culminated eventually in the Hodgson companies being persuaded not to advertise discounts of the prices of the cars. The consequence was that no discount was in fact advertised for a period of more than 16 months. The conduct which led to that result was undertaken deliberately and, in the knowledge of the managing director of the respondent, unlawfully.
Notwithstanding the view I have taken, it will be necessary for me to impose a penalty in respect of each breach of the Act. Theoretically the maximum which could be imposed is $1,250,000 ($250,000 in respect of each breach). But because of my view that the matter should be looked at as one transaction such an approach would be unreal. I think justice will be done if the penalties to be imposed in respect of the first four breaches are substantially less than that imposed in respect of the last which, as I say, represented the culmination of the course of conduct which had been embarked upon from the beginning of the year. Furthermore, I think, in the light of what the evidence reveals, the penalties to be imposed in respect of the first two breaches should be less than those imposed in respect of the third and fourth.
The breaches should be viewed seriously but there are matters of mitigation I am asked to take into account in the respondent's favour. In summary these, and my comments thereon, are as follows:
1. The breaches of the Act which occurred were not such as to involve an inducement to the Hodgson companies not to give discounts at all. The attempted inducement was to persuade it or prevent it from advertising that cars would be sold at discounted prices. Of course, the fact that the companies could not advertise the discount may have meant less customers coming to their premises because fewer persons, presumably, would have known of the Hodgson selling policy.
2. The respondent's attempted inducements were all ineffective except the last. That did however lead to a period of over 16 months during which no discounts were advertised. On the other hand there is evidence that the Hodgson companies engaged in direct mail advertising during this period, and that discounts were offered in letters written direct to customers or potential customers.
3. There was nothing hidden or secretive about the respondent's breaches of the law. Some may say that for that reason its conduct was all the worse because of its blatancy. But the evidence would suggest, although neither Mr. Anderson nor Mr. Blair was called in these proceedings, that in their eyes the advertising campaign conducted or attempted to be conducted by the Hodgson companies was undesirable. It cheapened what they genuinely believed was a high quality product and it created an unevenness of competition amongst dealers. Understandable as those reasons may be to many people, they are not appropriate to be taken into account when one considers the policy of the Act and the particular provisions of it which are in question. Resale price maintenance is outlawed. The vendor of goods to retailers cannot be concerned with the prices at which those retailers sell, nor the basis upon which they compete with each other. Those are matters which the Act indicates are its clear policy. One of its objects is to foster and encourage freedom of competition amongst retailers, of whom the Hodgson companies were one in the interest of keeping prices of goods to the public down. Notwithstanding those considerations, I think it not inappropriate to have some regard to the motives and purposes of the respondent as undertaken on its behalf by its then managing director. Those purposes and objects could not have been undertaken for gain because the prices at which the Mazda vehicles were sold to the various dealers were not, so far as the evidence discloses, affected by what was done. The purposes and objects may have been unlawful but the respondent in implementing them was in its eyes acting for the general good of its dealership without any intention of gaining any financial advantage.
4. The conduct is unlikely to be repeated. The respondent itself is no more than a shell. Its name has been changed to Kensington Hiring Co. Pty. Limited. It is no longer owned and controlled by Westco interests and is in fact now a shell waiting to be dissolved. The principal company in the Westco group is apparently now Westco Australia Pty. Limited. It was also a respondent in the proceedings before Franki J. The injunctions which he granted are perpetual and affect it as well as the respondent. Mr. Anderson is no longer connected with the Westco group. He has retired to pastoral activities in Queensland. Mr. Blair remains employed but is not in control of the affairs of any of the Westco companies. The Hodgson companies remain a licensed dealer for Mazda motor cars and continue to sell them.
5. Finally, there is no suggestion that just because the respondent is now a shell the penalties will not be paid either by it or by one of the Westco companies on its behalf.
I confess that I have not found the question of the appropriate penalties to be imposed easy. I do not suppose that the question is ever without its complications. Having given the matter due consideration I have reached the conclusion that in respect of each of the first two breaches there should be imposed a penalty of $5,000. As regards each of the third and fourth breaches the penalty will be $10,000. In respect of the last it will be the sum of $40,000.
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