Australia: Resale Price Maintenance

Last Updated: 13 November 2008
Article by Murray Deakin

Originally Published 22nd July 2008

The Federal Court of Australia has ruled the kayak and sail boat company, Hobie Cat Australasia Pty Ltd (Hobie Cat), guilty of resale price maintenance, fining Hobie Cat $168,000.


Hobie Cat manufactures and imports kayaks, sailboats and related products. Hobie Cat entered into written agreements with its dealers requiring them to endeavour to sell Hobie Cat products at its recommended retail price and prohibiting them from advertising Hobie Cat products for an amount below 90% of this price. The terms stipulated that Hobie Cat would make alternative arrangements for any violations of its policies or if it felt this would be in the best interests of promoting its products.


Hobie Cat committed a clear contravention of section 48 of the TPA which provides that a corporation or other person shall not engage in the practice of resale price maintenance.

Resale price maintenance keeps prices high. It can occur when a supplier:

  • makes it known to another person that they will not supply goods to them unless they agree not to sell (or advertise) those goods at a price less than that specified
  • attempts to induce a person not to sell (or advertise) goods they supply to them (or supplied by a third party obtaining the goods from the supplier) at a price less than that specified
  • enters into an agreement for the supply of goods to a person that restricts that person from selling (or advertising) the goods at a price less than that specified or
  • uses a statement of price likely to be understood as the price below which the goods are not to be sold (or advertised).

Hobie Cat's response

In response to the ACCC's investigations, Hobie Cat ceased the contravening conduct, instructed its lawyers to redraft its documentation to conform with the TPA and notified the ACCC of its actions.

Court order

Hobie Cat was ordered to pay a pecuniary penalty of $168,000. This amount represented a 30% discount of the penalty that would otherwise have been sought, with the Court taking into consideration Hobie Cat's cooperation with the ACCC's investigations, its admission of liability and its willingness to correct it.

Further relevant matters the court listed were:

  • the nature and extent of the contravening conduct and the circumstances in which it took place
  • the loss or damage occasioned
  • whether Hobie Cat had prior contraventions
  • the size, resources and market power of Hobie Cat
  • whether the conduct was systematic, deliberate or covert
  • the period over which the conduct occurred
  • the involvement of senior management
  • Hobie Cat's corporate culture of compliance with the TPA, ie whether it had a trade practice compliance program or an understanding of the TPA
  • cooperation with the ACCC's investigations, its willingness to correct its behaviour and to resolve the proceedings by consent orders
  • the financial position of Hobie Cat and
  • the amount of pecuniary penalty decided in other proceedings.

Hobie Cat was restrained for 3 years from engaging in similar conduct relating to the future supply or potential supply of its products and was ordered to pay the ACCC's costs in relation to the proceedings. It was also ordered to establish a trade practices compliance program for its business and write to all dealers notifying them of the outcome of the proceedings.


The case reinforces the trade practices law which provides that whilst a corporation may recommend a resale price, it cannot make it an obligation. Corporations are allowed to stipulate a maximum resale price as long as they let the reseller know they are able to sell below this maximum price.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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