Penalties totalling $1,290,000.00 and costs of $140,000 have been ordered by Justice John Mansfield against Alice Car & Truck Rental Pty Limited (trading as Territory Rent-A-Car); N.T. Outback Adventure Rentals Pty Ltd (trading as Hertz Northern Territory); Stafftoy Pty Limited (trading as Thrifty Car Rental); Mr Brian Measey, managing director of Territory Rent A Car; Mr David Bennett, managing director of Hertz Northern Territory and Ms Nathalie Keller, former manager of the Alice Springs office of Thrifty NT for price fixing in the Alice Springs car rental market.
Justice Mansfield's declaration in the Federal Court Darwin follows Australian Competition and Consumer Commission action. The court also granted injunctions restraining each from engaging in or being involved in price fixing of car rentals.
In addition to the penalties of $1,290,000 and costs of $140,000, an undertaking of compensation to their customers by Territory Rent a Car , Hertz Northern Territory and Thrifty NT was noted by the court. The possible compensation payout may be in the order of $70,000.
Territory Rent A Car and Thrifty NT are part of the Measey group of companies in the Northern Territory.
By withdrawing their defences, cooperating with the ACCC and agreeing to joint submissions to put to the court, Territory Rent A Car, Hertz Northern Territory, Thrifty NT, Mr Measey, Mr Bennett and Ms Keller saved considerable court time and costs to all concerned of a lengthy trial. The benefits of that cooperation were considered by the court in making its final orders.
Justice Mansfield said that Mr Measey was the prime mover of the price fixing conduct. He was ordered to pay a personal penalty of $150,000 for his role in instigating the price-fix. This is a record for a personal penalty under the Trade Practices Act 1974.
Mr Bennett was ordered to pay a personal penalty of $80,000.
"Mr Measey is the managing director and part-owner of Territory Rent A Car. He stood to receive direct financial benefits as a result of the price fixing conduct. Mr Bennett was managing director of Hertz Northern Territory," ACCC Chairman, Professor Allan Fels, said today. "This case shows that the courts take very seriously any involvement in breaches of the Trade Practices Act by senior executives of a company. The Federal Court's orders suggest that senior executives can expect stiff financial penalties if they are involved in breaches of the Act.
"All business people in every part of Australia need to familiarise themselves with, and abide by, the provisions of the Trade Practices Act," Professor Fels said. "Business people who stay ignorant of the requirements of the legislation do so at their own peril."
The ACCC had filed proceedings alleging that a number of Northern Territory car rental companies, including Territory Rent A Car, Hertz Northern Territory and Thrifty NT, had fixed car rental prices in Alice Springs in contravention of section 45 of the Trade Practices Act.
In his reasons Justice Mansfield expressed surprise that the companies did not have in place any program for compliance with the Trade Practices Act.
The court found that from late 1994 until around April 1995, the Alice Springs offices of the companies stopped offering tourists travelling in the Central Australian region a car rental discount called an 'Ayers Rock Special' after the companies had reached an understanding with their competitors that they would also stop offering these specials. Measey was the managing director of Territory Rent A Car, Bennett was the managing director of Hertz Northern Territory and Keller was the Alice Springs manager of Thrifty NT, at the time of the breaches. The court found Measey, Bennett and Keller were knowingly concerned in the price fix.
Mr Robert Hunter, former manager of the Alice Springs office of Territory Rent A Car was also found to have been knowingly concerned in the price fix. The court granted injunctions restraining Mr Hunter from being involved in price fixing of car rentals.
Professor Fels said; "The ACCC did not pursue penalties against Mr Hunter because:
- his ultimate cooperation with and assistance to the Commission enabled the Commission to join Mr Measey, a more senior executive of Territory Rent A Car, and also Mr Bennett, the managing director of Hertz Northern Territory.
- in the Commissions view his cooperation was a major factor in the decision by the other respondents to withdraw their defences to the action and resolve the proceedings without the need for an expensive and lengthy trial."
Ayers Rock Specials were offered to many tourists in the off tourist season in Alice Springs whereby they received an allowance of up to 600 free kilometres per day as part of the rental of a vehicle. After the price fixing arrangement was implemented most car rental consumers received only 100 free kilometres per day, paying 25 cents per kilometre for every kilometre travelled in excess of the daily allowance. This resulted in some consumers paying many hundreds of dollars more for their rental.
"Tourism is a vital industry for the Australian and Northern Territory economies especially with the 2000 Olympics approaching," Professor Fels said. "It is essential that the industry not be damaged by price fixing. A competitive Australian tourism industry will send a message to all tourists that touring Australia is value for money.
"This case demonstrates that the ACCC will enforce the Trade Practices Act in outback Australia as well as in the capital cities," Professor Fels said. "The Act has been in existence for 23 years. Implementation of the National Competition Policy Reforms in 1996 led the Commonwealth State and Territory Governments to enact legislation applying the Trade Practices Act to everyone in business throughout Australia from 21 July 1996. It is clear that all businesses around Australia are now covered by the Act."
In this case it was necessary for the Commission to conduct a thorough investigation of the matter. That required interviewing or examining many witnesses, and analysing over 40,000 documents. "Where there is evidence to suggest that a major breach of the Act may have occurred the Commission will not hesitate to comprehensively investigate the matter," said Professor Fels.
Note for media: ACCC Commissioner, Mr Sitesh Bhojani, will be in Darwin and available for interviews on Tuesday 12 August until midday. He can be contacted through Derek Farrell on 08 8943 1499, or 017 97 0051.
Summary of penalties imposed Territory Rent A Car$500,000Hertz Northern Territory$325,000Thrifty NT$200,000Brian Measey$150,000David Bennett$80,000Nathalie Keller$35,000Plus costs of $140,000. Total compensation payouts to customers in the order or $70,000 are possible.
Further information Professor Allan Fels, Chairman, (03) 9290 1812 or pager (016) 373 536 Ms Lin Enright, Director, Public Relations, (06) 264 2808