The Federal Court has imposed penalties of $900,000 on George Weston Foods Ltd for attempting to induce a price fixing arrangement between competing retailers in Tasmania.
The Federal Court found that on 3 June 1997, following a small-scale price war between Chickenfeed Bargain Stores and Woolworths (Victoria) Pty Limited trading as Purity and Roelf Vos supermarkets, the George Weston sales manager for the southern states, and George Weston's Tasmanian sales representative formulated a plan to induce each of the retailers to raise its price of George Weston's Lots O' Cookies biscuit product.
Justice Goldberg said:
"There was a deliberate and conscious attempt to eliminate competition in the relevant market, to disadvantage consumers and to induce two retailers to commit a per se contravention of the Act".
The conduct in question occurred when George Weston sought to intervene in the price war in an attempt to minimise the amount of a claim by Woolworths to compensate it for meeting Chickenfeed's pricing.
This is not the first time George Weston has been before the Court for being involved in price fixing. The incident occurred only days after George Weston had been penalised $1.25 million for a number of price fixing and resale price maintenance incidents in Victoria.
In handing down his judgment, Justice Goldberg said that the circumstances in this case were at least as serious as in the previous case against George Weston, given that the conduct occurred at a significant managerial level, and the manager involved "knowingly and deliberately engaged in an attempt to bring about a contravention of the Act".
In relation to the sales manager's involvement Justice Goldberg concluded that:
"It is not unreasonable to infer that his attitude was: it is worth a punt to try and get the two retailers to increase their prices. He must have believed that trying to prevent the payment of the markdown claims outweighed the risk which flowed from the attempt to induce the contravention of the Act".
In setting the level of penalty, Justice Goldberg stated that:
"The level of penalty should recognise that where a contravention has occurred recently and an upgraded compliance program has failed to prevent a further contravention or conduct liable to a penalty, a significant penalty is called for which needs to be sufficient to be a real and positive deterrent to future contraventions".
Justice Goldberg also said that "it must be brought home to George Weston and its management at every level where they have employees reporting to them that they must obey the law".
ACCC Chairman, Professor Allan Fels, said today, "Regardless of commercial pressures placed upon suppliers by customers, companies must not engage in anti-competitive conduct to the detriment of consumers".
In addition to the $900,000 penalty, the Court also imposed four year injunctions against George Weston and the two employees involved in the conduct.