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Sharon Henrick  
Partner
T +61 2 9296 2294

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Sydney
Vishal Ahuja  
Comply with the Trade Practices Act in all of your business dealings. Sharon Henrick  
Comply with the Trade Practices Act in all of your business dealings.

Melbourne
Amanda Bodger  
Comply with the Trade Practices Act in all of your business dealings. Caroline Coops  
Comply with the Trade Practices Act in all of your business dealings. Renae Lattey  
Comply with the Trade Practices Act in all of your business dealings. Andrew Monotti  
Comply with the Trade Practices Act in all of your business dealings. Roger Featherston   Comply with the Trade Practices Act in all of your business dealings.

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Navigating RPM penalised

The Federal Court has ordered Navman Australia to pay $1.25 million in penalties for resale price maintenance. In addition, a penalty of $80,000 was imposed on a former director of Navman and $30,000 on a former Australasian sales manager for involvement in the contravention.

Navman admitted to encouraging dealers to refrain from discounting its navigational products, and threatening to terminate, and actually terminating, dealerships for discounting. The Court found that Navman had committed 35 individual acts of retail price maintenance between 2001 and 2004. According to Justice Jacobson, “the details of the contraventions show that Navman’s conduct was not merely deliberate”, but rather “was pursued in an aggressive and high-handed way by the company’s most senior managers”.

Although the ACCC and Navman agreed upon penalties, the Court reiterated that it bears the ultimate responsibility for determining a reasonable penalty. Nevertheless, Justice Jacobson did accept the agreed penalties as falling within the permissible range of reasonable penalties.

Alinta shown the power of an undertaking

The Federal Court has made orders by consent declaring that Alinta breached section 87B undertakings and requiring Alinta to pay the ACCC’s court costs. The undertakings had been required in connection with the acquisition of the Dampier to Bunbury Gas Pipeline by a consortium consisting of Alinta, DUET and Alcoa in 2004. The ACCC was concerned that Alinta, as one of the predominant users of the pipeline, would use its position as part owner and manager to disadvantage other gas shippers using the pipeline.

In particular, the undertakings restricted employees of Alinta, or any related bodies corporate, from negotiating with the operator of the pipeline, or other shippers. The ACCC alleged that an Alinta employee had been involved in negotiations whilst on secondment at the pipeline.

The Court made declarations that Alinta had breached the section 87B undertakings by placing a member of its staff in a position in which they were involved in commercial negotiations with gas shippers, and for permitting them to remain despite having knowledge that these negotiations were taking place. The Commission has used the opportunity to reiterate that it will take any breach of a s87B undertaking seriously and is prepared to institute legal proceedings to enforce them.

Inquiry into grocery prices

On 22 January 2008, the Rudd Government requested the ACCC to commence an inquiry into grocery prices. The Honorable Chris Bowen MP, assistant Treasurer and Minister for Competition Policy & Consumer Affairs, instigated the inquiry based on particular concerns over recent inflation in food prices, and the increasing influence of Coles and Woolworths.

In particular, the ACCC has been directed to consider the following matters at all aspects of the supply chain - ‘from the farm gate to the check out counter’:

• the current structure of the grocery industry including mergers and acquisitions by the national retailers
• the nature of competition
• the competitive position of small and independent retailers
• the pricing practices of national grocery retailers and the representation of grocery prices to consumers
• factors influencing the pricing of inputs for standard grocery items
• any impediments to efficient pricing of inputs, and
• the effectiveness of the Horticulture Code of Conduct, and whether the involvement of major buyers such as retailers would improve the effectiveness of the code.

A similar inquiry has been undertaken in the UK by the Competition Commission. Recently, the Competition Commission concluded that “whilst UK grocery retailers are in general delivering a good deal for consumers, action was needed to improve competition in local markets and to address relationships between retailers and their suppliers”.

The Commission recommended that:

• a ‘competition test’ be included in planning decisions on grocery stores,
• certain measures be adopted to prevent exclusivity arrangements and restrictive covenants on the use of land, and
• the adoption of a strengthened and extended grocery industry code with an independent ombudsman to oversee and enforce.

The ACCC will report its findings to the Minister by 31 July 2008. The ACCC has released an Issues Paper and is seeking submissions from the public by 11 March 2008. The ACCC plans to hold public hearings on the issues.

Productivity Commission inquiry into consumer policy framework

On 18 February 2008 the Productivity Commission handed down a draft report into Australia’s consumer policy framework.

The Productivity Commission has found that although “Australia’s consumer policy framework has considerable strengths,…parts of it require an overhaul”. In particular, the Commission has made the following preliminary recommendations:

• more responsibility should reside in the national Government to reflect the increasingly national nature of consumer markets and to overcome regulatory burdens and inconsistencies arising from disconnects between State and Federal laws
• the ACCC should be solely responsible for enforcing product safety provisions nationally
• the case for granting sole responsibility for the new generic law to the ACCC should be explored further, but in the meanwhile all States and Territories should be granted the option of referring such power
• a COAG review and reform program should be instituted to identify inefficiencies in consumer regulation across industries and jurisdiction and to determine how these costs should be reduced
• responsibility for consumer credit provision and consumer aspects of energy services should be transferred to the national Government, and certain improvements should made to regulatory requirements for consumer credit, utility services and home building
• a national regime for voiding ‘unfair’ contractual terms causing consumer detriment should be established, though with care to avoid regulatory overreach
• improvements should be made to enforcement measures and remedies, including the introduction of civil penalties, banning orders, and substantiation notices, and the improvement of the complaint referral system
• improvements in mandatory disclosure requirements with a focus on increased comprehension and relevance of information provided to consumers, including more information ‘layering’ in disclosures and greater product testing prior to introduction.

The final report from the Productivity Commission is due on 30 April 2008.

Franchising Code amendments - indecent disclosure?

Recent amendments to the Franchising Code of Conduct will take effect from 1 March 2008, and impose greater obligations on franchisors. Broadly, the amendments will affect disclosure document content, the disclosure process, compliance obligations and franchise agreement provisions.

The key changes include:

• expansion of the definition of a serious offence to include any contravention of the Corporations Act, so that franchisors will now have to disclose any conviction, even for ‘minor’ offences, under the Corporations Act;
• removal of the exemption for foreign franchisors so that the Code will now apply to foreign franchisors granting or renewing franchises or master franchises in Australia;
• further disclosure obligations including: