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Woolworths fined for breaching competition rules
The World Today - Friday, 22 December , 2006 12:42:00
Reporter: Brendan Trembath
ELEANOR HALL: A battle over bottle shops has been an expensive one for
one of Australia's biggest retailers.
The Federal Court has ordered Woolworths to pay a $7 million fine for
breaking competition rules by trying to force smaller rivals out of
business.
Australia's competition watchdog wanted an even bigger fine for
Woolworths but is still satisfied with the decision.
And the Federal Government is set to introduce much harsher penalties
for anti-competitive behaviour in the New Year.
Brendan Trembath has our report.
(Sound of bottles clinking)
BRENDAN TREMBATH: Australia's small bottle shops have had a rare win
against their big competitors Woolworths and Coles.
The Federal Court in Sydney has ordered Woolworths to pay a $7 million
fine for using unfair tactics as rivals applied for liquor licences.
Last year the Coles owned business Liquorland was fined almost $5 million.
The Chairman of the Australian Competition and Consumer Graeme Samuel is
pleased with the result.
GRAEME SAMUEL: What was happening was that licensees were applying for
licenses to open, for example, new liquor stores and liquor outlets.
Coles and Woolworths were opposing those in the licensing court, but
then agreed to withdraw their opposition subject to certain agreements
being entered into which heavily restricted the ability of these
licensees to conduct a liquor business.
Look, the restrictions were things like that they couldn't sell liquor
from the premises, they could only do it through the internet, they
couldn't display liquor on the premises. They were very restrictive indeed.
Coles settled the matter through its Liquorland division settled the
matter a year or so ago. Woolworths took the matter to court and
ultimately, it was determined that Woolworths had contravened the Trade
Practices Act and this morning the Federal Court has handed down a
penalty against Woolworths in the order of $7 million.
BRENDAN TREMBATH: Is $7 million an appropriate amount of money for this
sort of breach?
GRAEME SAMUEL: The Commission sought penalties significantly higher than
that. In fact in the order of $14 to $16 million, but this was the
determination of the Federal Court.
It is significantly greater than the penalties which were awarded
against Coles. They had an award of $4 to $5 million and so we do have a
greater level of penalty than occurred there.
But there will always be a debate about the level of penalties. The
Australian Government has actually recognised that the level of
penalties for anti-competitive behaviour is potentially too low and have
substantially increased those level of penalties and legislation had
passed through Parliament just before it rose a month ago.
So we can look forward, I think, in the New Year to substantially
increased financial penalties, potentially banning directors from being
involved in businesses for up to life and then ultimately, in cartel
situations we're looking forward early in the new year for legislation
to enable the ACCC to proceed to be able to put, shall we say,
misconducting directors, that is directors and managers who engage in
misconduct, into jail for up to five years.
BRENDAN TREMBATH: Woolworths suffered bad press when the claims were
first made public and the judge has weighed in on some of the media
coverage.
Justice Allsop says the conduct of Woolworths was described in the press
as bullying. He says it may or may not be appropriate to summarise it
this way. But Justice Allsop says Woolworths did engage in conduct which
substantially affected competition in a market.
ELEANOR HALL: Brendan Trembath reporting.
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