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NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission

[1996] FCA 1134; 71 FCR 285; 141 ALR 640; [1997] ATPR 41-546 (20 December 1996)

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NW Frozen Foods admitted price fixing contraventions and reached agreement with the ACCC about the amount of penalties to be jointly proposed.

The Court rejected (for the first time) the jointly proposed penalty of $900,000.00 and instead substituted a 'significantly severer penalty' of $1,200,000.00. The appellant appealed the penalty, claiming 'that the decision involved a number of errors of law and was not justified on the evidence'. [para 1]



Key statements

Burchett and Kiefell JJ

'... The Act places on the shoulders of the Court the responsibility to determine the "appropriate" penalty in each particular case, having regard to "all relevant matters" including the matters specified in the section. But effects upon the functioning of markets, and other economic effects, will generally be among the most significant matters to be considered as relevant, so that the Court is likely to be assisted greatly by views put forward by the Australian Competition and Consumer Commission, or by economists called on behalf of the parties. Since the decision in Trade Practices Commission v Allied Mills Industries Pty Ltd (No 4) (supra), it has been accepted that both the facts, and also views about their effect, may be presented to the Court in agreed statements, together with joint submissions by both the Commission and a respondent as to the appropriate level of penalty. Because the fixing of the quantum of a penalty cannot be an exact science, the Court, in such a case, does not ask whether it would without the aid of the parties have arrived at the precise figure they have proposed, but rather whether their proposal can be accepted as fixing an appropriate amount. [emphasis added]

There is an important public policy involved. When corporations acknowledge contraventions, very lengthy and complex litigation is frequently avoided, freeing the courts to deal with other matters, and investigating officers of the Australian Competition and Consumer Commission to turn to other areas of the economy that await their attention. At the same time, a negotiated resolution in the instant case may be expected to include measures designed to promote, for the future, vigorous competition in the particular market concerned. These beneficial consequences would be jeopardized if corporations were to conclude that proper settlements were clouded by unpredictable risks. A proper figure is one within the permissible range in all the circumstances. The Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case. [emphasis added]


It is well settled that, in the assessment of a penalty, a respondent withdrawing defences and acknowledging liability is entitled to special consideration of reduction of the amount that would otherwise be assessed. ... Some contraventions disclosed in the cases have been blatant, and knowledge of them must have been widespread in the large companies involved. Perhaps the situation in those cases arose out of the long years during which there was no effective enforcement of competition in the Australian marketplace. Given the function of penalties to secure compliance with the Act, and that they are not criminal sanctions, if the threat of their imposition can be translated, in the case of a particular corporation, into a firm programme aimed at eradicating ignorance and disregard of the national competition laws, and at instituting an open system in which the reach and purposes of the law are expounded and its observance inculcated, very much will have been achieved. This is, indeed, the advance Parliament sought to make by the legislation. Where the Commission established to administer the Act is satisfied that an appropriate programme has been undertaken, or the undertaking of it is proved to the Court, this is a most important matter to take into account on penalty.


... the fixing of the penalty in the present case was vitiated by error, and that it is necessary for us to give consideration to the appropriate penalty. ... there is no doubt that, when the Court considers this question, the view of the specialist Commission is a relevant matter. ... in discharging its responsibility, the Court gratefully accepts all proper help, and the views of the specialist body set up to protect the public interest in the maintenance of economically healthy competition are plainly relevant, for example, to the question whether a proposed penalty will be sufficient to deter anti-competitive behaviour in a particular market. On that issue, those views are likely to be persuasive; while "subjective" matters, calling perhaps for a degree of mercy, may fall less within the specialist sphere, and more within those broad concepts of justice to which the Court must always have regard.

The cases we have discussed earlier in these reasons unite in affirming the public interest in the promotion of settlements, especially in this area where litigation is likely to be very lengthy. We agree with the statement made in several of the cases cited that it is not actually useful to investigate whether, unaided by the agreement of the parties, we would have arrived at the very figure they propose. The question is not that; it is simply whether, in the performance of the Court's duty under section 76, this particular penalty, proposed with the consent of the corporation involved and of the Commission, is one that the Court should determine to be appropriate. In our opinion, it is appropriate.' [emphasis added]

Appeal allowed


Carr J

Agreed with the majority that the appeal should be allowed, but expressed one 'slight' reservation, relating to the sentence in the majority's reasons which read:

"But the penalties imposed by section 76 are, as we have said, not criminal sanctions, and their purpose, established now by a long line of cases is not punishment."

Carr J stated that:

"It is quite clear that the penalties imposed by s.76 are not criminal sanctions. However, in my view the cases decided to date on the question of the assessment of pecuniary penalties have not ruled out or excluded punishment as one of the purposes of s.76 of the Trade Practices Act (Cth).

I do not think that it is necessary to decide that issue for the purposes of disposing of this case. For that reason, I would prefer to have left the point open."


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