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
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
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
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
the financial position of Hobie Cat and
the amount of pecuniary penalty decided in other
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.
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