ACCC v Black & White Cabs Pty Ltd
 FCA 1399 (14 December 2010)
Black and White Cabs required a number of operators to acquire services from Cabcharge Australia Ltd (an unrelated company). B&W Cabs conceded that it had contravened s 47 and that the proposed relief was appropriate.
Black and White Cabs engaged in exclusive dealing as defined in s 47(6) and prohibited by s 47(1) by offering to supply and supplying taxi operators taxi network services and the right to use taxi service licences on condition that taxi operators acquire electronic payment services from Cabcharge.
Finkelstein J made a number of orders:
- restraining B&W Cabs from 'supplying or offering to supply, in any manner whatsoever taxi booking, dispatch or other services ... to accredited operators of taxi services on the condition that the accredited operators of taxi services will acquire other goods and/or services, including electronic payment services, from any third party unrelated to B&W Cabs, including Cabcharge, for a period of five years
- that B&W Cabs establish, maintain and administer a specified Trade Practices Compliance and Education/Training Program for a period of three years.
- that B&W Cabs deliver a letter to all accredited operators of taxi services who acquired specified services from B&W Cabs
- that B&W Cabs pay a pecuniary penalty of $110,000. Payment to be made in instalments.
- that B&W Cabs pay $10,000 toward ACCC costs.
Reasons (relevant extracts)
The contravening conduct
'... the ACCC’s case is that B&W Cabs engaged in third line forcing by requiring a number of operators to acquire services from Cabcharge Australia Ltd, an unrelated company.' [para 2]
'... it was a condition of the offers made by B&W Cabs to provide network services and taxi licence services that the operators acquire services supplied by Cabcharge. This conduct amounts to third line forcing.' [para 5]
In relation to the appropriate penalty (suggested by the parties), Finkelstein J noted:
'... It is impossible to calculate the total benefit obtained by B&W Cabs by reason of the contravention, although it is likely to be minimal. 10% of B&W Cabs’ turnover is around $1.3 million. Therefore the maximum penalty is $10 million.' [para 7]
'... when the parties are agreed on the quantum of the penalty the court’s role is to determine whether the agreed penalty is within the permissible range: NW Frozen Foods v Mobil Oil Australia Pty Ltd  FCAFC 72; (2004) ATPR 41-993.' [para 8]
[Note, this citation refers to Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd. The citation for NW Frozen Foods is  FCA 1134; (1996) 71 FCR 285. The Ministry for Industry case followed and explained the NW Frozen Foods case - either citation would be appropriate for this principle.]
'I will briefly outline the factors that, in this case, are the most important when assessing the appropriate level of penalty. I will start with the aggravating factors. First, the contravening conduct involved B&W Cabs’ managing director, Mr Webb. Second, there was no formal trade practices compliance procedure or policy in place.' [para 9; emphasis added]
'Next, I outline the mitigating factors. First, the conduct occurred over a relatively isolated time period (less than three months) and only affected 14 of B&W Cabs’ 400-odd operators and 24 of its 1000-odd taxis. Second, one operator requested a copy of the contract without cl 15.3 so that he could operate a second EFTPOS terminal and B&W Cabs obliged. This perhaps demonstrates that B&W Cabs either did not intend to engage in third line forcing or did not intend to aggressively enforce the clause. Third, immediately following the ACCC informing B&W Cabs that it was being investigated because of complaints that it had engaged in third line forcing, B&W Cabs took immediate action by (1) revising its standard contract; (2) informing all operators who had signed it that B&W Cabs did not intend to enforce cl 15.3; and (3) provided to each of the 14 relevant operators a revised form of the standard contract with cl 15.3 removed. Fourth, B&W Cabs has not previously been found to have contravened the Act. Fifth, B&W Cabs compromised the proceeding at a very early stage, before either party had filed any evidence. In fact, it was B&W Cabs which sought the mediation that led to the parties agreeing to compromise the proceeding.' [para 10; emphasis added]
His Honour also noted, in relation to the issue of parity, that there had been no penalties imposed for third line forcing under the post-1993 penalty regime, so previous cases provided little guidance.
Finkelstein J concluded that he was satisfied that $110,000 was an appropriate penalty [para 11]
In relation to the injunction imposing a 5 year restraint [see above], Finkelstein J noted that although the injunction sought was wider than the conduct complained of, there was 'no doubt that the court has power to make a wide order' and granted the injunction [para 12]
In relation to the compliance program, his Honour noted some 'reservations about the effectiveness of in-house compliance programs. ... I floated the idea that the ACCC might consider taking a more active role in compliance programs ... In-house compliance programs embody a risk that compliance trainers will lack rigour in their approach or will go easy on employees who do not show up to the training sessions. By contrast an ACCC-conducted training session or one in which its officers are involved is likely to be better attended and taken more seriously. Still, until this topic is given closer consideration I should approve the compliance program agreed by the parties.'