Word Count:2500
Deadline: 14 Oct 7 PM
Please create a case-note for ACCC v Jurlique International Pty
Ltd [2007] FCA 79. An example of how it should be set out is attached.
Country: Australia
Attachments area
Pip's outline of what we want in a case note:
I. Citation 2. Nature of the proceedings and in which court
3. Relevant legal principles 4. Issues and facts 5. Decision 6. Matters the
court took into consideration; including the reasons for any exercise of discretion
Solution
Case
Note
[Citation]
ACCC v Jurlique
International Pty Ltd [2007] FCA 79.
[Nature of the proceedings and in which
court]
The
case was between the Australian Competition and Consumer Commission Vs. Jurlique
International Pty Ltd, Jurlique Distribution Pty Ltd, J & J Franchising Pty
Ltd, Jurlique Spa Pty Ltd, and Jurgen Klein. The ACCC put an allegation on
Jurlique that Jurlique has involved in the resale price maintenance and
price-fixing. The case was filed in 2007
in the Federal court of Australia, and the registry was filed in Brisbane, the
capital state of Queensland. The judge's name was Justice Spender. The
applicant was ACCC, and there were five respondents from Jurlique International
Pty Ltd. who were to be prosecuted as per the appeal.
[Relevant legal principles]
The
relevant principles related to this case are:
·
Section
48 of the Trade practices Act 1974 prohibits the companies in involving in
resale price maintenance.
·
Section
96 (4) stated that RPM is also referred to as setting a specific price by
setting up formulae; the supplier sets a specific price.
·
The
specified price by the supplier is also prohibited under the law of RPM.
·
The
section 98 considers definite conduct to establish 'withholding' for
determinations of sub-sections,
containing failing to supply as demanded, rejecting to supply with the
exception of on inconvenient terms, supplying on less advantageous terms than
others to whom the supplier supplies or causing or obtaining a person to
withhold supply in any of the above-stated ways.
·
There
are different forms of RPM, which are prohibited by the Competition and
Consumer Act;
1.
Denying
to supply without agreeing on minimum resale price.
2.
Convincing
or an attempt to convince the 2nd person not to make the sale below
the price specified.
3.
Making
an agreement not to make the sale below the price specified.
4.
Withholding
the supply when the 2nd person is not ready to agree not to make any
sale below the specific price.
5.
Withholding
the supply when the 3rd person is not ready to agree not to make the
sale, or not sold, or will not sell below the specific price.
6.
The
supplier uses a statement of the price, which is to be understood for the price
below for which the goods are not to be sold.
·
The
ACCC prohibits all such type of acts that are illegal and that are done to
decrease the competition in the market and done for anti-competitive
determination.
·
The
Competition and Consumer Act prohibits the Cartel Conduct, which includes the
price-fixing, dividing the market, the bid-rigging, and the restrictions of the
output. The price fixation discourages the competition of the market, and thus
the ACCC prohibits the companies from adopting these types of activities.
[Issues and facts]
The
ACCC put an allegation on Jurlique International Pty Ltd that it has been
involved in Resale Price Maintenance and Price fixing, the first and second
respondent; The Jurlique International Pty Ltd and the Jurlique Distribution
Pty Ltd respectively, both had contravened the Subsection 45 and 48 of the
Trade practices Act 1974, the third and the fourth respondents; J&J
Franchising Pty Ltd and Jurlique Spa Pty Ltd respectively, both respondents had
been concerned in the contraventions knowingly. And the fifth respondent, the
Jurgen Klein, is an ancillary who had been involved in all the above
contraventions. These allegations were made directly.
The
issue was that the Jurlique International Pty Ltd was involved in Resale price
maintenance and Price fixing, which is against the law. The Managing Director
of Jurlique International Pty Ltd, Dr. Jurgen Klein, was involved in all these
misconducts made by the company. Therefore, the managing director was alleged,
and also the entire company’s illicit operations mentioned above were alleged.
These
contraventions of Trade practices Act and the Competition Consumer Act made by
the respondents had an effect on the retailers of Australia and on the International
retailers as well because they had a direct impact on the retailers, whether
local or international. The chairman of the ACCC, Mr. Samuel, stated that
this was a serious issue and involved very senior officers of the Jurlique
International Company and that the size of the penalties showed us that how
resale price maintenance is serious and an activity which does not promote
competition in the market. Therefore, ACCC immediately started the process of
prosecution, so the retailers and other affected parties may be saved from the
negative impacts.
The court had granted restrictions for five years
by giving the Jurlique International and companies and to Dr. Jurgen Klein a
warning to refrain from involving in any Resale Price Maintenance for the
products of Jurlique International and giving the warning to J&J
franchising from involving in the fixation of prices. The court ordered the
Jurlique International and other companies to pay $125000 for the costs. This
fine was imposed to cater dor the damages done.
Judge Justice Spender said that Dr. Klein had been
concerned in the Resale price maintenance and fixation of the price knowingly.
The judge ordered Dr. Klein to pay costs of $20000 and give the penalty of
$200,000.
The Jurlique International Pty Ltd had to pay
$1000, 000 to the Australian’s Common Wealth for contravention of the Acts,
within the twenty-one days of the order made by the court. The Jurlique
Distribution Pty Ltd had to pay $1400, 000 to the Australian’s Common Wealth
within the twenty-one days of the order made by the court. Both of these
companies were to pay their dues within time as specified by the court.
The J&J franchising had to pay $700, 000 to the
Common Wealth of Australia for the contravention of Acts. And the Jurlique spa
had to pay $100, 000 for the contravention of the Acts within the specified
time.
RPM eliminates the choice and capacity of
interested retailers to obtain discounts if they wish to compete on price or
support their business in this way. According to ACCC, as consumers, we all
influence the prices we see on the shelves. Therefore, all of us get affected
by this.
[Decision]
The
court gave the order in favor of ACCC because all the allegations proved to be
true, and the alleged Jurlique International Pty Ltd and companies and Dr.
Klein were proved to be the one involved in resale price maintenance and
price-fixing which is against the law. The Judge Justice Spender gave the order
that all the Jurlique companies; Jurlique International Pty Ltd, Jurlique
Distribution Pty Ltd, J&J franchising and Jurlique Spa and their directors,
employees, agents, and servants all are restrained from doing any activity
related to the supply of products and business for five years within Australia
and with the International Retailers. The Jurlique Companies were restrained from
doing the following activities for five years;
·
Convincing
or trying to convince anyone to make a sale or to make advertisements for any
of the products of the Jurlique companies. And trying to convince the person to
make the sale on a specified price.
·
Making
an agreement or trying to make an agreement that involves the sale of the
products of the Jurlique companies. And trying to make an agreement with a
person who can make the sale at a specified price.
·
Withholding
the supply of the products under the name of Jurlique companies if the other
person is not agreed to sell the product at the specified price.
·
The
Jurlique Franchising was restrained from making any agreements or contracts for
the expansion of the company and selling its products.
Dr.
Klein was given the order to pay the costs of $20000 to the applicant ACCC
within seven days of the order date. It was the cost which was incurred by the
ACCC for the proceedings of this case.
The
Jurlique companies and Dr. Klein saved the time of the court and proceedings
because they admitted the thing, and they also saved the investigation costs.
According to the judge, Justice Spender, the case was not clear, and he made
the declaration after the parties agreed, and the respondents accepted their
misconduct. Dr. Klein never denied the fact in all the way long proceeding.
The
first to fourth respondents, on October third, 2006, filed a defence and they
admitted that they had been in the contravention of the Acts. And the fifth
respondent filed the defence on 28 September 2006 that he had been in the
ancillary role for the contravention of the Acts by the Jurlique International
companies. The judge made the order after the agreement made by the applicant
and respondents.
[Matters the court took into consideration;
including the reasons for any exercise of discretion]
Many
Jurlique products are produced and sold by Jurlique companies. These products
include skincare, herbal, and cosmetic products by Jurlique international.
Products under the cosmetic category are cleansers, moisturizers, face wash,
hand wash, hand cream, oils, lipsticks, shampoo, conditioner, bubble bath,
shaving gel, and shower gel. There was a group of Jurlique companies operated
by Dr. Klein before November 2003. Restructures in the company during this
period Many Jurlique products are
produced and sold by Jurlique companies. These products include skincare,
herbal, and cosmetic products by Jurlique international. Products under the
cosmetic category are cleansers, moisturizers, face wash, hand wash, hand
cream, oils, lipsticks, shampoo, conditioner, bubble bath, shaving gel, and
shower gel. There was a group of Jurlique companies operated by Dr. Klein
before November 2003. Restructures in the company during this period caused
many changes in the roles within the company. The same person acting as an
owner of different companies functioning in the form of groups are the matters
that should be taken into consideration by the court.
A
holding company owned each entity of the Jurlique companies before 2002.
Jurlique international was also involved in the distribution and supply of
products after 2003. The products of Jurlique international were supplied to:
1.
Merchants
in other countries further sold to the public by merchants of that country.
2.
Merchants
in Australia to be sold to the public.
3.
J&J
franchises, to be sold at the outlets of the company.
4.
Branches
of Jurlique Company in Australia.
Dr. Klein
Dr. Klein was the owner of the Jurlique companies
before 2003. He was running all the companies under Jurlique international. He
started selling his shares in the Jurlique companies. He used to do all the
management of the companies on a daily basis. He used to handle the branches of
Jurlique Company, negotiate with new branches and, manage the accounts. He also
used to fix the strategies of the companies related to marketing and sales. He
used to directly do all the agreements and discussions with the different outlets
of the company.
Resale Price Maintenance Conduct
The
types of conduct involved are as follows:
1.
The
agreements made by the Jurlique companies with different outlets within and
outside Australia included a restriction on the price of products. The entirely
new and previous franchises had to follow the rules of Jurlique international.
They were restricted to sale the products on the price set by Jurlique
international and were not allowed to offer any discount on the products.
2.
These
rates were specified in the price list offered by the Jurlique companies.
Companies and franchises were restricted to follow the price list issued by the
Jurlique international.
3.
The
franchises and branches of the Jurlique Company were not allowed to do the
advertisements of the products at a price lower than the specified price.
4.
Company
agreements included that the company will stop the supply to the outlets that
will be involved in selling the products at a low price. The company will end
the agreement to the franchise that will be doing activities that are not
allowed by Jurlique International, such as setting the low price and selling
and advertising products at a low price.
5.
Price
lists that involved the low prices of the products were not allowed.
Following
are the agreements made by different franchises:
Whittington Franchisees agreements,
Melbourne
The agreement made by Dr. Klein with 5
different companies includes the following clauses:
1. The company would be supplied products only
by the Jurlique distribution Pty Ltd or other trusted suppliers of the Jurlique
international. The franchise will give the required stock to the supplier, and
that would be supplied at the given time.
2. This agreement will break if any franchise
starts selling products on the prices other than the price shown in the price
list of Jurlique International and tries to damage the reputation of the brand.
3. In this agreement, the J&J franchise is
shown by the Jurlique distribution.
Gillan's end of the supply
agreement, Melbourne
Dr.
Klein made an agreement in February 2001 with James and Maureen Gillan. They
were the owners of a franchise in Melbourne. This agreement involved the
restriction of the price that was fixed by the Jurlique international. This
agreement stated that the Jurlique international would stop supplying the
products to the franchise if it will reduce the prices of products.
Jin Hsing Companies, Gold Coast, Melbourne and Sydney
In 2001, the Jurlique
international ended the agreement with Jin Hsing companies and two other
companies because these companies sold the products of Jurlique international
at discounted prices. The clauses of this conduct were as follows:
1.
The Jurlique
international is a very well reputed company. It has spent many years to gain
value and reputation in the market. It is known as the best brand in the
market. So, it would not allow any franchise to damage its repute. Jurlique
international will end the agreement of supply at any moment if it observes the
franchise acting against the rules specified by the company.
2.
The time of this
agreement will be one year starting from 1st of January 1999 to 30th
of December 1999. This will proceed for a period of every 6 months unless the
case of ending the agreement before the specified time period because of not
following the rules.
Court Order
The judge passed the
order after reviewing all the activities of the Jurlique International that
Jurlique international, by all means, is restricted to supply products within
and outside Australia. This agreement was for 5 years. The restrictions were as
follows:
1.
The Jurlique
international cannot make any agreement to any company asking them to sell
products on the price specified by the Jurlique. Jurlique cannot end up the
agreement with any franchise just on the basis of the fact that they did not
sell the products according to the price list. Jurlique also cannot stop the
supply of products to the franchise for selling products at a low price. The
penalty of $100,000 was imposed for not following the Trade Practices Act 1974.
Jurlique distribution had to pay the amount to the common wealth Of Australia.
Other penalties were also imposed on the Jurlique distribution, J&J
franchising, and Jurlique Spa. The total penalty was &125, 000. Dr. Klein
individually also had a penalty of $200,000 for being involved in many
activities.
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