ACCC v Skins Compression Garments Pty Ltd
Federal Court of Australia
[2009] FCA 710
Justice Besanko
In brief
The ACCC alleged that Skins engaged in misleading conduct and resale price maintenance. In relation to RPM the Court made declaration, accepted undertakings given by Skins and made orders for a $120,000 pecuniary penalty against skins and a $14,000 penalty against the third respondent, Christopher Warhurst (representing the Sth Australian agent of Skins).
The RPM conduct related to Skins’ dealings with The Sports Locker Pty Ltd; in particular, the Court declared that Skins had:
induced Sports Locker not to advertise Skins at prices less than those specified by Skins by requesting Sports Locker remove an advertising board which advertised Skins at 20% off;
attempting to induce Sports Locker not to advertise Skins at prices less than those specified by Skins (by requesting removal of the advertising board in 2005); and
attempting to induce Sports Locker not to advertise Skins at prices less than those specified by Skins (by again requesting removal of the advertising board in 2006)
Catchwords (RPM)
TRADE PRACTICES – resale price maintenance – penalty – where first respondent admitted engaging in resale price maintenance – where third respondent admitted being directly or indirectly knowing concerned in or party to first respondent’s resale price maintenance – factors to be considered by Court in determining appropriate pecuniary penalties – where parties submitted draft consent orders, joint submissions and statement of agreed facts – whether figures for pecuniary penalties proposed by parties appropriate
Case number
SAD 136 of 2007
Parties
Applicant
Australian Competition and Consumer Commission
Respondents
Skins Compression Garments Pty Ltd (first respondent)
Jaimie Royston Fuller (second respondent)
Christopher Thomas Warhurst (third respondent)
ACCC Media Release
ACCC, ‘$120,000 penalty against sports gear maker’ (3 December 2008)
Skins Compression Garments Pty Ltd, the supplier of Skins brand sports compression garments, has been penalised $120,000 after being found to have engaged in resale price maintenance, in contravention of the Trade Practices Act 1974.
Skins was also found to have engaged in misleading or deceptive conduct in advertising and promoting its products.
The case was instituted by the Australian Competition and Consumer Commission.
Misleading or deceptive conduct
The Australian Competition and Consumer Commission had alleged that Skins had claimed in advertisements:
that it does not pay sports stars to wear or endorse Skins products and
that it does not provide sports stars with products without payment,
when it did pay sports stars to wear and endorse its products and/or provided its products to sports stars to wear under 29 sponsorship agreements.
The representations were made in television, radio and print advertisements and on Skins websites.
Skins paid sports stars including cricketer Brett Lee and the Western Bulldogs, St Kilda and Melbourne Football Clubs, the Wests Tigers rugby league club and NSW Rugby Union (Waratahs) clubs to wear and endorse Skins products.
It also provided substantial quantities of Skins products to sports stars including to players representing Cricket Australia, Hockey Australia and Basketball Australia as well as players from AFL clubs, rugby league and union teams. In total, Skins agreed to pay approximately $750,000 and to provide Skins products valued at over $800,000 under the agreements.
The court ordered Skins to publish a corrective notice on its website, publish a corrective notice in B & T Weekly and broadcast a corrective advertisement on SBS.
Skins and its former managing director, Mr Jaimie Fuller, gave undertakings to the court not to engage in similar conduct in the future.
Resale price maintenance
The court declared that Skins engaged in resale price maintenance, in that Mr Christopher Warhurst, a representative of its South Australian agent:
induced a retailer in Adelaide not to advertise Skins products at a discount on one occasion, and
on two other occasions, attempted to induce the same retailer not to advertise Skins products at a discount.
The court declared that Mr Warhurst was knowingly concerned in the contravening conduct.
It ordered that Skins pay a penalty of $120,000 for its resale price maintenance conduct and that Mr Warhurst pay a penalty of $14,000 for his involvement.
Skins must provide a letter to its current retailers, agents and distributors about its conduct and to pay the ACCC's costs of the proceedings.
Skins has undertaken to the court not to engage in similar conduct in the future.
Skins, Mr Fuller and Mr Warhurst also agreed to provide the ACCC with enforceable undertakings to implement a trade practices law compliance program and undertake trade practices compliance training.
All of the orders finalising the proceedings were made by the court with the consent of the parties.
"The ACCC is very pleased with the outcome of the proceedings," ACCC Chairman, Mr Graeme Samuel, said today. "It should serve as a warning to business that the ACCC will take action in the public interest against those who engage in misleading advertising or resale price maintenance."
…
Release number:
MR 343/08
Attribution
ACCC media release: ACCC, © Commonwealth of Australia. Licenced CC BY 3.0 AU