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Penalties/remedies | Pecuniary penalties

 

Overview

The court may impose a pecuniary penalty if satisfied a person (including a corporation) has contravened, attempted to contravene, aided or induced contravention or in any other way been involved in a contravention of Part IV of the Act.

The maximum penalty varies depending on the contravention; for most forms of anti-competitive conduct the maximum penalty for a corporation is (s 76(1A)) 'the greater of $10 million or three times the gain from the contravention or, where gain cannot be readily ascertained, 10 per cent of the turnover of the body corporate and all of its interconnected bodies corporate' and for an individual is $500,000 per contravention

 

Circumstances in which penalty may be imposed

Section 76(1) provides that the Court may impose a pecuniary penalty if satisfied a person (including a corporation) has:

  • contravened a provision of Part IV;
  • attempted to contravene a provision of Part IV; or
  • 'aided, abetted, counselled or procured' a contravention of a provision of Part IV; or
  • induced or attempted to induce a contravention of a provision of Part IV; or
  • been 'in any way, directly or indirectly, knowingly concerned in, or party to, the contravention' by a person of a provision of Part IV; or
  • 'has conspired with others' to contravene a provision of Part IV.

 

Maximum penalty

The maximum penalty varies depending on the contravention; for most forms of anti-competitive conduct* the maximum penalty for a corporation is (s 76(1A)):

  1. $10 million; or
  2. if the Court can determine the value of benefits obtained and reasonably attributable to the conduct, three times that value; or
  3. if value of benefits cannot be determined, 10% of the annual turnover of the corporation during the period of 12 months ending at the end of the month in which the act/omission ocurred

For individuals, a contravention of Part IV attracts a maximum penalty of $500,000** (s 76(1B))

* For contraventions relating to certain secondary boycotts (ss 45D, 45DB, 45E and 45EA) the maximum penalty is $750,000 for corporations

 

Appropriate penalty

Subject to the maximum penalty, the Court may order payment of a pecuniary penalty as it determines:

'appropriate having regard to all relevant matters including the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission, the circumstances in which the act or omission took place and whether the person has previously been found by the Court in proceedings under this Part or Part XIB to have engaged in any similar conduct.' (s 76(1))

Factors to consider

Section 76(1) makes clear that the following key factors may be taken into account:

  • Nature and extent of the act or omission
  • Any loss or damage resulting from the act or omission
  • Circumstances in which act or omission has taken place
  • Previous contravensions

The list is not exclusive and judicial guidance is useful:

TPC v CSR [1990] FCA 762; (1991) ATPR 41-076

In TPC v CSR Justice French (as he then was) the Court set out a number of general principles relating to pecuniary penalties [my emphasis]. These continue to be cited with approval.

[para 38] The provisions of Pt. IV of the Trade Practices Act 1974 are directed to procuring and maintaining competition in trade and commerce ... They are of a regulatory rather than penal character. Proceedings for their enforcement by recovery of pecuniary penalties are not classed as criminal prosecutions. ... Unlike many kinds of criminal prosecution, therefore, it is not necessary to measure the contravening conduct against some general communal morality in which the law is embedded. Aspects of some commercial behaviour, such as ruthlessness and expansionary ambition, are not elements of the classes of conduct prohibited by Pt. IV nor even aggravating factors. For those same attributes may be found in vigorous and lawful competition.

[para 39] characterisation of contravening conduct in terms of a morality larger than that which is defined by the legislative purpose is misplaced. ...

[para 40] Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt. IV. Nor, if it be necessary to say so, is there any compensatory element in the penalty fixing process ... The principal, and I think probably the only, object of the penalties imposed by s.76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.

[para 41] There has been a significant number of decisions of the Court which have considered the operation of s.76 ... The primacy of the deterrent purpose in the imposition of penalty was identified at an early stage

[para 42] The assessment of a penalty of appropriate deterrent value will have regard to a number of factors which have been canvassed in the cases. These include the following:

1. The nature and extent of the contravening conduct.

2. The amount of loss or damage caused.

3. The circumstances in which the conduct took place.

4. The size of the contravening company.

5. The degree of power it has, as evidenced by its market share and ease of entry into the market.

6. The deliberateness of the contravention and the period over which it extended.

7. Whether the contravention arose out of the conduct of senior management or at a lower level.

8. Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.

9. Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention.

The first three factors are all expressly mentioned in s.76. They can be regarded as measures of the scope and impact of the conduct and it is conducive to deterrence that the greater the significance of these elements, the heavier the penalty should be. ... The need for commercial realism in fixing penalties has been mentioned in more than one decision of the Court. In Trade Practices Commission v. Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40-091, Smithers J. at 17,896 said:

"The penalty should constitute a real punishment proportionate to the deliberation with which the defendant contravened the provisions of the Act. It should be sufficiently high to have a deterrent quality, and it should be kept in mind that the Act operates in a commercial environment where deterrence of those minded to contravene its provisions is not likely to be achieved by penalties which are not realistic. It should reflect the will of Parliament that the commercial standards laid down in the Act must be observed, but not be so high as to be oppressive."

...

See also:

ACCC v Visa Inc [2015] FCA 1020 [admitted contravention of s 47; discussion of relevant principles relating to pecuniary penalties from para 80, including the following:]

[80] The starting point in considering the relevant principles in relation to the fixing of an appropriate pecuniary penalty for a contravention of s 47 of the Act is, not surprisingly, the terms of s 76. The amount of the pecuniary penalty that the Court should order the contravener to pay is the amount which the Court determines to be “appropriate” having regard to all relevant matters. Four particular considerations are then listed. These four considerations may be taken to be mandatory considerations. They are: first, the nature and extent of the act or omission which constitutes the relevant contravention; second, any loss or damage suffered as a result of the act or omission; third, the circumstances in which the act or omission took place; and fourth, whether the person has previously been found by the Court in proceedings under Parts VI and XIB to have engaged in similar conduct. This list is obviously not exhaustive.

[81] Since the decision of this Court in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 it has been customary for judges, when fixing the amount of a pecuniary penalty or penalties under s 76 of the Act, to refer to a checklist of matters that are usually relevant to the exercise of determining an appropriate pecuniary penalty. This list, which has been expanded and developed in later cases, largely overlaps with the four mandatory considerations referred to in s 76, or includes matters that are subsets of, or slightly more specific descriptions of factors that would otherwise fall within one or more of the four mandatory considerations.

[82] Lest it be thought that there has been some departure from custom here, the list of potentially relevant matters includes the following: the size and financial position of the contravening company; whether the contravention was intentional; the period over which the contravention extended; whether the contravening conduct was systematic, deliberate or covert; whether senior management were aware of or involved in the contravention; whether the contravening company had a corporate culture conducive to compliance with the Act; whether the company co-operated with the ACCC; whether the contravener has engaged in similar conduct in the past; and the effect on the functioning of the market and other economic effects of the conduct. Each of these matters is relevant, to a greater or lesser extent, to the fixing of the penalty in this case.

[83] This list is plainly not exhaustive. Nor should it be approached in a regimented or formulaic way. To do that would impermissibly constrain or formalise what is, at the end of the day, a broad evaluative judgment.

...

 

Where same conduct contravenes multiple provisions

Where conduct contrevenes two or more provisions (other than the criminal cartel provisions) action may be brought in relation to one or more provisions, but a person is not liable to more than one pecuniary penalty in respect of the same conduct (s 76(3)).

 

Compensation given priority over fines

Section 79B provides that if the Court considers it appropriate to order payment of a pecuniary penalty (under s 76) or a fine (under ss 44ZZRF or 44ZZRG) and that it is appropriate to to order the defendant to pay compensation to a person suffering loss or damage as a result of the contravention and that the defendant lacks the financial resources to pay both, priority must be given to an order for compensation.

 

Cooperation policy

The ACCC, Cooperation Policy for Enforcement Matters (July 2002) sets out the ACCC's position regarding immunity or leniency following cooperation in enforcement matters. The guidelines are expressed to be 'flexible and intended only as an indication of the factors the Commission will consider relevant when considering leniency'. Recognition of cooperation can take the form of complete or partial immunity, reduction in penalty or administrative settlement in lieu of litigation. It applies to all civil matters under the Act.

In relation to penalties, however, it is important to note that it is only the Court that can impose penalties and determine their appropriate measure. The ACCC can, and frequently does, agree with parties who have made admissions and/or cooperated in ways about the penalties to put to the Court. Doubt about whether or not the ACCC could continue to make submissions about proposed penalties was removed as a result of a High Court ruling in 2015; see 'agreed penalties', below.

 

Agreed Penalties

It is only the Court that can impose penalties and determine their appropriate measure. The ACCC can, and frequently does, agree with parties who have made admissions and/or cooperated in ways about the penalties to put to the Court.

In 2015 some doubt emerged about whether or not the ACCC could continue to make submissions about proposed penalties when the Full Federal Court ruled that joint submissions by parties in relation to pecuniary parties was not permitted. Although not a competition case, it would have equal application to such cases. This followed an earlier High Court decision (Barbaro) in which that Court held that the prosecution should not nominating a sentencing range in relation to criminal sentencing proceedings.

The matter was appealed to the High Court and the key issue on appeal to the High Court was whether or not the reasoning inBarbaroshould be applied to civil pecuniary penalties or whether parties could continue to make joint submissions with regulators in relation to an appropriate penalty or penalty range. The High Court unanimously held that the reasoning in Barbaro did not apply to civil pecuniary penalties and that, as a result, parties to civil proceedings can continue to submit agreed penalties to the court (which may or may not be accepted).

In their joint judgment, French CJ, Kiefel, Bell, Nettle and Gordon JJ concluded that 'decision in Barbaro does not apply to civil penalty proceedings and a court is not precluded from receiving and, if appropriate, accepting an agreed or other civil penalty submission.' (para 1). In separate (brief) reasons for judgment, Justice Gageler agreed with the conclusion in the majority reasons that Barbaro does not apply to civil penalty proceedings and joined in the proposed orders. In a separate reasons Justice Keane also agreed that the appeals should be allowed for the reasons given by the majority and made a few additional observations.

For more details see:

 

Cases

Most cases involve discussion of pecuniary penalties. They include:

 

Commentary

See the reading page.