Australian Competition and Consumer Commission v Harris Scarfe Australia Pty Ltd (Corrigendum dated 5 February 2009) [2009] FCA 54 (5 February 2009)

Last Updated: 5 February 2009

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Harris Scarfe Australia Pty Ltd [2009] FCA 54

CORRIGENDUM

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v HARRIS SCARFE AUSTRALIA PTY LTD (ACN 095 018 803)

SAD 155 of 2007

MANSFIELD J
5 FEBRUARY 2009 (CORRIGENDUM 5 FEBRUARY 2009)
ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 155 of 2007

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
AND:	HARRIS SCARFE AUSTRALIA PTY LTD (ACN 095 018 803) Respondent

JUDGE:	MANSFIELD J
DATE OF ORDER:	5 FEBRUARY 2009 (CORRIGENDUM 5 FEBRUARY 2009)
WHERE MADE:	ADELAIDE

CORRIGENDUM

1. The following words to be added to Order 2 line 1, after the word ‘restrained’:

“...for a period of three years from the date of this order ...”

I certify that the preceding paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Mansfield.

Associate:

Dated: 5 February 2009

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Harris Scarfe Australia Pty Ltd [2009] FCA 54

TRADE PRACTICES – misleading and deceptive conduct – where representation made in television commercial, sales catalogue and in-store promotions for “20%-60% Off Storewide” – express exclusion of certain goods in smaller print – whether statement misleadingly suggested that every item in store was for sale at least 20% less than the regular price – whether various banner headings in sales catalogue advertising different percentage savings for specific types of goods depicted in proximity to particular goods not within specific type of goods misleadingly suggested that the depicted goods were for sale at the specified savings in terms of percentage – whether asterisks in banner headings and footnotes sufficiently drew viewers’ and readers’ attention to exclusions and limitations of advertised sale

TRADE PRACTICES – misleading and deceptive conduct – where compliance program with external audit obligations already imposed under s 87B undertaking – appropriate terms of declaratory orders – whether order for corrective advertising should be made – whether corrective advertising serves an appropriate preventative purpose in the circumstances – whether injunctive orders preventing specific conduct and methods of advertising appropriate in the circumstances

Trade Practices Act 1974 (Cth)

Ryan v ETSA (No 1) (1987) 47 SASR 220 referred to
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 discussed
Taco Company of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177 discussed
Global Sportsman Pty Ltd v Mirror Newspapers Ltd [1984] FCA 180; (1984) 2 FCR 82 referred to
Trade Practices Commission v Optus Communications Pty Ltd & Optus Mobile Pty Ltd (1996) 64 FCR 326 discussed
Australian Competition and Consumer Commission v Thorn Australia Pty Ltd [2004] FCA 157 referred to
Australian Competition and Consumer Commission v Signature Security Group Pty Ltd [2003] FCA 3 referred to
Chief Executive Officer, Australian Competition and Consumer Commission v Medical Benefits Fund of Australia Ltd (No 2) [2002] FCA 1097 referred to
Trade Practices Commission v QDSV Holdings Pty Ltd (t/as Bush Friends Australia) [1994] FCA 1562; (1995) 128 ALR 551 discussed cited
Medical Benefits Fund of Australia Ltd v Cassidy (2003) 205 ALR 402 referred to
Australian Competition and Consumer Commission v Nationwide News Pty Ltd (1996) 36 IPR 75 referred to
Federal Trade Commission v Standard Education Society [1937] USSC 142; 302 US 112 (1937) cited
Trade Practices Commission v Cue Design Pty Ltd (1996) 85 A Crim R 500 referred to
Australian Competition and Consumer Commission v Monza Imports Pty Ltd [2001] FCA 1455 referred to
BMW Australia Ltd v Australian Competition and Consumer Commission [2004] FCAFC 167 referred to
ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248
Australian Competition and Consumer Commission v Wizard Mortgage Corporation Ltd [2002] FCA 1317 referred to
Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd [2004] FCA 693; (2004) 207 ALR 329 referred to
Hospitals Contribution Fund of Australia Ltd v Switzerland Australia Health Fund Pty Ltd (1987) 78 ALR 483 cited
St Lukes Health Insurance v Medical Benefits Funds of Australia [1995] FCA 1314 cited
Australian Competition and Consumer Commission v Telstra Corporation Limited [2004] FCA 1132 referred to
Australian Competition and Consumer Commission v Telstra Corporation Limited (ACN 051 775 556) [2007] FCA 2058 referred to
Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd (No 2) [2008] FCA 476 cited
Australian Competition and Consumer Commission v Target Australia Pty Ltd [2001] FCA 1326 cited

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v HARRIS SCARFE AUSTRALIA PTY LTD (ACN 095 018 803)

SAD 155 of 2007

MANSFIELD J
5 FEBRUARY 2009
ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 155 of 2007

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
AND:	HARRIS SCARFE AUSTRALIA PTY LTD (ACN 095 018 803) Respondent

JUDGE:	MANSFIELD J
DATE OF ORDER:	5 FEBRUARY 2009
WHERE MADE:	ADELAIDE

THE COURT DECLARES THAT:

2. Harris Scarfe Australia Pty Ltd has in trade or commerce:
   • 2.1 engaged in conduct that is misleading or deceptive, or likely to mislead or deceive, in contravention of s 52 of the Trade Practices Act 1974 (Cth); and
   • 2.2 in connection with the supply or possible supply of goods or in connection with the promotion of the supply of such goods, made false or misleading representations with respect to the price of such goods, in contravention of s 53(e) of the Trade Practices Act 1974 (Cth);

by publishing and distributing a Sale catalogue in October 2006 in South Australia, Victoria and Tasmania containing representations that, for the duration of the sale, the respondent was offering for sale the goods set out in the table below at the specified percentage discounts off the regular prices when, contrary to such representations, those goods were not discounted at all or not discounted by the specified percentage.

Table

Good	Specified percentage in the Banner under which the Good appears
Panasonic Standard Definition Viera 42” (106cm) Widescreen Plasma Television	15%
Panasonic High Definition Viera 42” (106cm) Widescreen Plasma Television	15%
Samsung Z5 Music & Photo 2GB MP3 Player	15%
JVC GR-D350 Mini DV Camcorder	15%
JVC GZ–MG37 30GB Everio Hard Disk Camcorder	15%
Panasonic NV-GS180 3CCD Camcorder	15%
Pentax M10 6MP Digital Camera	15%
Sony DSCH2 6MP Digital Camera	15%
Doro 610 Single DECT Cordless Phone	20%
Panasonic KX-TG1811 DECT Cordless Phone	20%
Uniden 2315+1 2.4GHz Twin DECT Cordless Phone	20%
Telstra 5000+ACR Twin DECT Phone	20%
Panasonic KX-TG2632 2.4GHz Twin Pack DECT Cordless Phone	20%
Breville Hair Dryer	20%-25%
Remington Smooth Styles Ionic Pro Pack	20%-25%
Wahl 17pc Hair Clipper Kit	20%-25%
Remington Precision Men’s Grooming Kit	20%-25%
Homedics Shiatsu Seat Massager	20%-25%
Sunbeam Can Opener	20%-50%

THE COURT ORDERS THAT:

2. Harris Scarfe Australia Pty Ltd be restrained, in any advertisement representing that it will supply goods in its stores at a specified discount, from including immediately beside, under or near the statement of the specified discount:

2.1 pictures or descriptions of goods to which that specified discount does not apply;

2.2 pictures or descriptions of goods which are not discounted at all.

3. Harris Scarfe Australia Pty Ltd at its own expense maintain for a period of three years from the date of this order the trade practices compliance program which it presently conducts, as modified as it considers appropriate from time to time.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 155 of 2007

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
AND:	HARRIS SCARFE AUSTRALIA PTY LTD (ACN 095 018 803) Respondent

JUDGE:	MANSFIELD J
DATE:	5 FEBRUARY 2009
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

THE APPLICANT’S CLAIM

1. The Australian Competition and Consumer Commission (the ACCC) seeks declaratory and other orders under the Trade Practices Act 1974 (Cth) (the TP Act) in relation to conduct of Harris Scarfe Australia Pty Ltd (Harris Scarfe) which took place in October 2006.
2. The ACCC alleges that Harris Scarfe engaged in misleading or deceptive conduct, contrary to s 52 of the TP Act, and made false or misleading representations with respect to the prices of goods in connection with their possible supply contrary to s 53(e) of the TP Act, by publishing a sale catalogue in October 2006 and a television commercial.
3. The television commercial related to a sale at Harris Scarfe stores in October 2006. It was played on the three Melbourne commercial television channels and the two rural Victorian commercial television channels on 11 occasions between 5 pm and 11:30 pm on 11 October 2006 relating to a sale at Harris Scarfe stores.
4. The sale catalogue was published and distributed in South Australia, Victoria and Tasmania relating to the same sale. There were about 1,159,000 copies of the sale catalogue distributed through inserts in newspapers, letterbox drops, and direct mailing as well as being available in Harris Scarfe stores, and on Harris Scarfe’s website. In South Australia, about 437,000 of them were distributed on 7 and 8 October 2006. In Tasmania, about 169,000 of them distributed on 7, 8 and 10 October 2006, and in Victoria, about 553,000 of them distributed on 10 and 11 October 2006.

BACKGROUND AND ISSUES

5. There was little dispute about the primary facts.
6. Harris Scarfe conducts a retail business through approximately 20 department stores in South Australia, Tasmania and Victoria.
7. In October 2006, Harris Scarfe conducted a mid-season clearance sale through those stores. The sale was conducted in South Australia between 9 and 15 October 2006, in Tasmania between 11 and 17 October 2006, and in Victoria between 12 and 18 October 2006. Harris Scarfe routinely promotes its advertised sales by television commercials, by publishing and distributing sale catalogues, and by publishing promotional material on its internet site or website and by in store and window displays through its stores.

THE TELEVISION COMMERCIAL

8. The television commercial contained large bold text stating “20% - 60% OFF STOREWIDE” with a voice-over stating on two occasions “twenty to sixty per cent off storewide”. The ACCC describes the text and voice-over statements together as “the 20% to 60% Off Storewide Statements”. I shall adopt that description.
9. What is in dispute in respect of the television commercial is the significance of the 20% to 60% Off Storewide Statements. The ACCC asserts, and Harris Scarfe disputes, that by making those statements Harris Scarfe represented that it was offering a discount on all goods in its stores for the duration of the sale (a representation conveniently described as “the Storewide Discount Representation”). The ACCC says that that is the natural inference to be drawn from the 20% to 60% Off Storewide Statements, in the context of the entire television commercial. Harris Scarfe disputes that. It accepts that it was not offering a discount on all goods in its stores for the duration of the sale. It draws attention to the television commercial, which also contained the following text statement shown for approximately six seconds: “Discounts off regular prices. Excludes television, sound, digital cameras & toys”.
10. The statement of claim identifies three items which were offered for sale during the sale in respect of which Harris Scarfe’s television commercial was said to be misleading. Harris Scarfe did not offer two particular specified televisions at 20 to 60% off the regular price. One was a Panasonic Standard Definition Viera 42” (106 cm) Widescreen Plasma. It was offered during the sale at a price which was the same as the regular price. The other was a Panasonic High Definition Viera 42” (106 cm) Widescreen Plasma which was offered during the sale at a price 10% less than the regular price. In addition, a Sony DSCH2 6MP Digital Camera had a price during the sale which was the same as the regular price. The statement of claim also says that some televisions, sound and digital cameras were not discounted at all, and some toys were not discounted at all. Those final allegations are put in issue in the defence.
11. There is a further representation, which the ACCC alleges, was made by the television commercial, namely that all goods in Harris Scarfe stores were being offered for sale at a minimum of 20% off the regular prices for the duration of the sale, what it calls the 20% Off Storewide Representation. It says that is a natural inference to be drawn from the 20% to 60% Off Storewide Statements in the context of the entire television commercial. Harris Scarfe acknowledges that it was not offering a minimum of 20% off the regular prices of all goods in its stores for the duration of the sale, but by reason of the text statement referred to in [9], Harris Scarfe disputes that it engaged in misleading or deceptive conduct or made misleading representations contrary to ss 52 and 53(e) of the TP Act by that conduct.
12. There are also a number of products offered for sale which are pleaded as having been offered, contrary to the 20% Off Storewide Representation, at less than 20% off the regular price. They are also items depicted in the catalogue about which the ACCC makes allegations. I shall refer to them when considering whether those alleged contraventions are made out.

THE CATALOGUE

13. As one would expect, there is no dispute about the contents of the sale catalogue. It comprises 20 pages. It is brightly coloured. The front page after the introductory Harris Scarfe logo has in very big print “MID SEASON CLEARANCE” and immediately below in slightly lesser sized print and in a different colour print appear the words “20%-60% OFF* STOREWIDE”.
14. The ACCC alleges that as a result, Harris Scarfe made the Storewide Discount Representation. It says that is the natural inference to be drawn from the statement in its context in the sale catalogue. Harris Scarfe points out that, almost at the bottom of the front page, albeit in a much smaller print than that of the opening words of the catalogue, is stated the following: “*Discounts off regular prices. No further discounts apply to catalogue lines. Excludes television, sound, digital cameras & toys”. On the bottom of each subsequent page of the catalogue the same entry appears, save that the words “Excludes television, sound, digital cameras & toys” do not appear. By reason of that footnote and in the context of the catalogue as a whole, Harris Scarfe denies that the Storewide Discount Representation was made at all.
15. The ACCC also claims that by the same statement on the front page of the catalogue, Harris Scarfe made the 20% Off Storewide Representation, that also being the natural inference to be drawn from the statement at the commencement of the catalogue and in its context in the sale catalogue. Harris Scarfe says that, in context and because by reference to the asterisk the entry at the bottom of the front page in smaller print is also referred to, it did not make the 20% Off Storewide Representation. It accepts that it did not offer a 20% discount on all goods in its stores for the duration of the sale.
16. There are a series of “banners” or headlines on succeeding pages of the catalogue. Harris Scarfe points to them as part of the relevant context. Page 2 of the catalogue provides an illustration. There is a banner advertising: “15% OFF* ALL LCDs, VCRs and Digital Set Top Boxes”. The top half of the page apparently depicts and describes several such products. Page 2 of the catalogue, in the right-hand third of the bottom half, also has another banner prominently displayed: “15% OFF* ALL Audio & MP3 Players”. And page 3 of the catalogue, in the top two-thirds, has a banner in large print “15% OFF* ALL 5MP Digital Cameras & Mini DV Camcorders”. It depicts nine particular camera products. The remaining pages of the catalogue also have various banners dealing with different product types, none of which has a heading suggesting a discount of less than 20 to 60% off, but with varying percentage discounts either at or greater than 20%. In each instance, the banner is asterisked to direct attention to the footnote.
17. The banners themselves, in a number of instances, are said to give rise to specific representations.
18. I have referred to page 2 of the sale catalogue with the banner at its top “15% OFF* ALL LCDs, VCRs and Digital Set Top Boxes”. Beneath it appear images of two television sets, a DVD player, a DVD/video cassette recorder combination player, and two digital set top boxes each with a statement of its price, and in five of the six instances with a savings amount also specified. The ACCC alleges that that conduct involved representations that all of the items depicted were being offered for sale at 15% off the regular prices for the duration of the sale – the 15% Off Home Entertainment Representation – that being the natural inference from the banner, the images and the statement of the sale prices in their context in the sale catalogue. Harris Scarfe say that it did not make the 15% Off Home Entertainment Representation, because page 2 of the catalogue at its bottom, with an asterisk has the footnote entry, “Discounts off regular prices. No further discounts apply to catalogue lines ...”. However, it acknowledges that it was not offering the two television sets depicted on page 2 of the catalogue at 15% off the regular price. In addition, it says that the two television sets depicted were plasma televisions (as they are described), and therefore did not fall within the banner description “15% OFF* ALL LCDs, VCRs and Digital Set Top Boxes”. It also points out that in respect of one of the televisions, the price offered is said to give a saving of $300 with a price of $2,699, and an “R.R.P.” (that is, a recommended retail price) of $2,999, so that it is self-evident that the discount was 10%. The other television is advertised at a price of $1,999, which is the regular price. In that instance there is no comparison price or specified saving.
19. I have also referred to page 2 of the catalogue under a banner (in its bottom right third) “15% OFF* ALL Audio & MP3 Players”. Below it are the images of two MP3 players, a radio and a clock radio. That has been called the 15% Off Audio Representation. Each product depicted has a statement of its price, and a specified saving and a “Reg.” (that is, regular) price. The ACCC alleges that by the 15% Off Audio Representation, each of those items was represented as being offered for sale at 15% off their regular price for the duration of the sale, that being the natural inference to be drawn from the banner, the images and the statement of the sale prices in their context in the sale catalogue. The ACCC alleges that the item, namely a Samsung Z5 Music & Photo 2GB MP3 Player, is offered at a price of $289, a saving of $30 and a regular price of $319, and therefore with a discount of 9.4% only. Harris Scarfe says that there was no 15% Off Audio Representation in relation to the items depicted because of the footnote comment at the bottom of the page. It also says that the actual discount in respect of the one item particularised by the ACCC was stated as $30 adjacent to the image of that item, as was the regular price of $319, so that simple arithmetic would indicate that the saving was a little less than 10%.
20. Page 3 of the catalogue has the heading in the banner “15% OFF* ALL 5MP Digital Cameras & Mini DV Camcorders” under which are images of several digital cameras and camcorders. The ACCC asserts that Harris Scarfe has thereby represented that all of the items depicted were being offered for sale at 15% off the regular prices for the duration of the sale – the 15% Off Cameras Representation – because that is the natural inference to be drawn from the banner, the images and the statement of the sale price in their context in the sale catalogue. It is plain enough that five of the six items depicted were not offered at 15% off the regular prices, because each has a highlighted price, a saving amount, and in smaller print a regular price. They are as follows:

	Camera Item (Catalogue Description)	Regular Price (if stated)	Sale Price	Saving (if stated)	Discount (Calculated)
(a)	JVC GR-D350 Mini DV Camcorder	$549	$494	$55	10%
(b)	JVC GZ - MG37 30GB Everio Hard Disk Camcorder	$1099	$999	$100	9.1%
(c)	Panasonic NV-GS180 3CCD Camcorder	$999	$894	$105	10.5%
(d)	Pentax M10 6MP Digital Camera	-	$299		-
(e)	Sony DSCH2 6MP Digital Camera	-	$694

Items (d) and (e) in fact had regular prices of $319 and $694 respectively, representing savings of 6.3% and 0%, but the regular prices do not appear in the catalogue under that banner.

21. Harris Scarfe admits that it did not offer all of the digital cameras and camcorders depicted at 15% off the regular prices. It notes that the footnote on page 3 of the sale catalogue contains the statement: “*Discounts off regular prices. No further discounts apply to catalogue lines”. It further says that the items in the table immediately above, other than item (a), were not 5MP Digital Cameras or Mini DV Camcorders as referred to in the banner. Items (b) and (c) are Camcorders and not Mini DV Camcorders and items (d) and (e) are not described as 5MP Digital Cameras and by their description are 6MP Digital Cameras. It also points out that, in respect of the first three of those items, the regular price and the savings were stated so the percentage discount could readily be calculated. Hence, Harris Scarfe denies making the 15% Off Cameras Representation, and it denies misleading or deceptive conduct or making false or misleading representations with respect to the price of those goods.
22. The bottom quarter of page 3 of the catalogue has a banner “20% OFF*ALL Cordless Phones”. Under the banner are five cordless phones each with a statement of the sale price. The ACCC alleges that that conduct involved representations that each of the items depicted was being offered for sale at 20% off the regular prices for the duration of the sale – the 20% Off Cordless Phones Representation – as the natural inference to be drawn from the banner, the images and the statement of the sale prices in their context in the catalogue, and that in respect of each of the five cordless phones depicted that representation was not accurate.
23. There is no dispute as to the terms of the advertisement, but a dispute that the 20% Off Cordless Phones Representation was made. Harris Scarfe admits that it did not offer all of the cordless phones depicted at 20% off regular prices. It again draws attention to the asterisked footnote at the bottom of that page, and further says that each of the items referred to in items (b) to (e) of the table set out below (taken from the sale catalogue) stated the actual discount and so did not contravene ss 52 or 53(e) of the TP Act. The particulars of the advertisement said to amount to misleading or deceptive conduct, or false or misleading representations with respect to the price of the goods are as follows:

	Cordless Phone	Regular Price (if stated)	Sale Price	Saving (if stated)	Discount (Calculated)
(a)	Doro 610 Single DECT	-	$39.95	-	-
(b)	Panasonic KX-TG1811 DECT	$69	$59	$10	14.5%
(c)	Uniden 2315+1 2.4GHz Twin DECT	$139	$129	$10	7.2%
(d)	Telstra 5000+ACR Twin DECT	$129.95	$109	$20	16.1%
(e)	Panasonic KX-TG2632 2.4GHz Twin Pack DECT	$199	$179	$20	10%

It is accepted that item (a) had a regular price of $44.95, and so represented a saving of 11.1%.

24. The bottom half of p 4 of the sale catalogue has a banner headline “20%-25% OFF*ALL Personal Care Appliances”. Underneath are images of three shavers, a massager, two hairdryers, an electric toothbrush, two grooming kits and a foot spa each with a statement of its sale price, and in each instance with a description of the regular price and the amount of the saving. The ACCC alleges that by that conduct Harris Scarfe represented that all of the items depicted were being offered for sale at 20% to 25% off the regular prices for the duration of the sale – the 20%-25% Off Personal Care Representation – that being the natural inference to be drawn from the banner, the images and the statement of the sale prices in their context in the sale catalogue.
25. Harris Scarfe denies that it made the 20%-25% Off Personal Care Representation. It admits that it was not offering all of the items depicted in that part of the catalogue at 20% to 25% off regular prices. Again, it draws attention to the footnote at the bottom of page 4 of the catalogue “*Discounts off regular prices. No further discounts apply to catalogue lines”. It also notes that, in respect of each of the items referred to, the saving was stated in respect of each of the items of which the ACCC complains. Reduced to tabular form, the sale catalogue provided (with the percentage discount calculated):
    

	Personal Care Item	Regular Price	Sale Price	Saving	Discount (Calculated)
(a)	Breville Hair Dryer	$29.95	$24.95	$5	16.7%
(b)	Remington Smooth Styles Ionic Pro Pack	$53.95	$47.95	$6	11.1%
(c)	Wahl 17pc Hair Clipper Kit	$74.95	$64.95	$10	13.3%
(d)	Remington Precision Men’s Grooming Kit	$33.95	$27.95	$6	17.7%
(e)	Homedics Shiatsu Seat Massager	$299.95	$279.95	$20	6.7%

Hence, there is also a dispute as to whether Harris Scarfe engaged in misleading or deceptive conduct, or made a false or misleading representation with respect to the price of the goods as depicted in any event because, it says, the actual saving was disclosed so the rate of discount was readily apparent.

26. Page 5 of the catalogue has the banner: “20%-50% OFF* ALL Kitchen Appliances”. There are 19 items depicted on that page, including a Sunbeam Can Opener. The ACCC alleges, and Harris Scarfe disputes, that by that conduct it represented that each of the items depicted was being offered for sale at 20% to 50% off the regular prices for the duration of the sale – the 20%-50% Off Kitchen Appliances Representation – because that is the natural inference to be drawn from the banner, the images and the statement of the sale prices in their context in the sale catalogue. The ACCC further alleges that the can opener was not offered for sale at a saving of 20% to 50% off its regular price. It was advertised at $29.95, and its regular price as stated in the catalogue was $34.95 representing a specified saving of $5. That meant the discount was 14.3%.
27. Harris Scarfe admits that the can opener depicted was not offered at 20% to 50% off its regular price, but it draws attention to the asterisked footnote to page 5 of the catalogue: “*Discounts off regular prices. No further discounts apply to catalogue lines”. Again it points out that the actual cash saving on the can opener was stated so that the percentage discount was readily calculated. It thus denies making the representation, or that it acted in a misleading or deceptive way, or in a way which involved making a false or misleading representation with respect to the price of the can opener.

THE FURTHER EVIDENCE

28. The additional evidence adduced by the ACCC was not put in issue. It appears that the ACCC received a complaint about the television advertisement and about the catalogue on 12 October 2006 and undertook an investigation. That included access to the website of Harris Scarfe, and a visit to the Harris Scarfe retail store at 81 Rundle Mall, Adelaide on 13 October 2006. As the statement of claim makes no specific allegation about the terms of in-store promotions, beyond the availability of the catalogue, it is not necessary to refer to the detail of the in-store promotions. Subsequently, a copy of the television advertisement was procured and examined.
29. There was then an extensive period of correspondence between the ACCC and Harris Scarfe respectively seeking and providing information and comment on various matters arising from the investigation. It extended over the period from 13 November 2006 to 13 March 2007, following which these proceedings were commenced on 10 October 2007. Harris Scarfe provided information as requested by the ACCC.
30. It was part of Harris Scarfe’s submission that the various alleged representations (if made) were not misleading or deceptive, because of certain surrounding circumstances. They are set out in the immediately following paragraphs.
31. Harris Scarfe referred to an undertaking given on 3 November 2004 (the 2004 undertaking) to the ACCC under s 87B of the TP Act by which it implemented a Trade Practices Compliance program (TPC program). The 2004 undertaking under s 87B followed an investigation commenced in December 2003 by the ACCC in relation to concerns that Harris Scarfe, during the promotion of sales at the end of 2003, had made representations in relations to savings that contravened ss 52 and 53(e) of the TP Act.
32. By cl 19 of the 2004 undertaking, Harris Scarfe undertook to implement a TPC program in a manner and form described in the undertaking within three months of that undertaking coming into effect, and to maintain and continue to implement the TPC program for a period of three years from its date. Subsequently, the ACCC monitored the compliance of Harris Scarfe with the TPC program obligations under the 2004 undertaking.
33. Harris Scarfe then engaged Watchdog Compliance Pty Ltd (Watchdog Compliance) as a compliance adviser to Harris Scarfe. Its Managing Director David Johnson then had regular dealings with Harris Scarfe’s Compliance Office.
34. In about May 2005, the ACCC commenced a further investigation in relation to concerns that Harris Scarfe had contravened s 65C of the TP Act in relation to the supply of certain children’s nightwear.
35. On 2 September 2005, through Watchdog Compliance, Harris Scarfe sent a copy of its trade practices compliance manual (the compliance manual) to the ACCC. There was subsequent correspondence between the ACCC and Watchdog Compliance in relation to Harris Scarfe’s obligations under cl 19 of the 2004 undertaking. That was followed on 23 November 2005 by the ACCC accepting a written undertaking given by Harris Scarfe for the purpose of s 87B of the TP Act (the 2005 undertaking) in relation to the investigation concerning the supply of certain children’s nightwear. Clause 14 of the 2005 undertaking required Harris Scarfe (inter alia) to extend its TPC program to the application of Pt V (consumer protection) and in particular Pt V Div 1A (product safety and product information) of the TP Act for a period of three years from its commencement. The ACCC again monitored Harris Scarfe’s compliance with those obligations.
36. In February 2006, the ACCC commenced a further investigation in relation to concerns that Harris Scarfe between about January 2004 and February 2006 had made representations in relation to the contents of certain quilts which, it was concerned, may have been false and likely to mislead consumers. There was correspondence between the ACCC and Harris Scarfe through its solicitors, Cooper Grace Ward Lawyers, including a letter of 10 May 2006 enclosing a document entitled “Report to the Australian Competition and Consumer Commission on review of the Trade Practices Compliance Program of Harris Scarfe Australia Pty Ltd (Harris Scarfe) 26 April 2006” (the Cooper Grace Ward Report). That was followed by further communications between Harris Scarfe or its representatives and the ACCC.
37. On 4 September 2006, the ACCC accepted a further written undertaking from Harris Scarfe for the purposes of s 87B of the Act (the 2006 undertaking) in relation to the investigation concerning the quilts. Clause 19 of the 2006 undertaking required Harris Scarfe to amend its TPC program to the extent necessary to ensure awareness of its responsibilities in relation to ss 52, 53(e) and 55 of the TP Act, and to minimise risk of future breaches of those provisions. Clause 20 of the 2006 undertaking required it, to the extent necessary, to amend its TPC program to provide for two independent audits on the effectiveness of its TPC program, the first to be undertaken within 18 months, and the second within three years of the commencement of that undertaking. Clause 21 of the 2006 undertaking required Harris Scarfe to maintain and continue to implement its TPC program for a further period of three years from the date of its commencement.
38. That history, together with one additional matter, largely comprises what Harris Scarfe called the surrounding circumstances.
39. The additional matter is that there is no evidence that any person within the class to whom the television commercial was broadcast or the sale catalogue was published has actually been misled. That is correct. Of course, the absence of such evidence is not conclusive of the fact that the various representations, if made, were not themselves misleading or deceptive. Nevertheless, it is a relevant piece of information. Harris Scarfe contends that it is the more relevant in the present circumstances because Harris Scarfe customers are a particular subclass of consumers who are educated and well-versed in Harris Scarfe advertisements.

THE CONTENTIONS OF HARRIS SCARFE ON THE FURTHER EVIDENCE

40. The earlier dealings with the ACCC are sought to be used in the following way. Following the November 2004 undertaking, Harris Scarfe implemented a TPC program. It provided a report to the ACCC through Watchdog Compliance about that TPC program on 2 September 2005. Watchdog Compliance is shown to be a reputable organisation established specifically for the purpose of advising clients on trade practices compliance in Australia and New Zealand. Mr Johnson of Watchdog Compliance liaised on a regular basis with Harris Scarfe, and Watchdog Compliance has been consistently retained since January 2005. The audit of its TPC program conducted in March and April 2006 by Cooper Grace Ward Lawyers was for, or included, the purpose of being able to “identify potential contraventions of the TP Act or weaknesses in the compliance program and to advise on how to rectify them”. That led to the Cooper Grace Ward Report which concluded, inter alia, that “there has not been any misrepresentation of the sales price of goods within a random selection of catalogues over the past 12 months”. That information was provided to the Board of Harris Scarfe in May 2006. And, Harris Scarfe points out that it continually reviewed its TPC program. In May 2006, it requested its internal compliance officer to develop a proactive plan for the development of the TPC program for the next 12 months. She did that in conjunction with Watchdog Compliance. An action plan was prepared and focus areas were reviewed every three or four months according to a list prepared by Mr Johnson. During the 12 month developmental process from May 2006, which extended to the period of the subject conduct in October 2006, no difficulty with promotional material that was being produced was identified by Watchdog Compliance. In fact, Mr Johnson of Watchdog Compliance gave evidence of his significant oversight of Harris Scarfe’s processes over that period and his liaison with the compliance manager of Harris Scarfe about its TPC program and other trade practices related matters. Watchdog Compliance specifically considered from time to time price comparison advertising, prescribed consumer product standards, promotional material, product plans, the availability of stock, warranties and refunds, the complaint handling system, store visits and Board reporting.
41. Harris Scarfe accepts that such evidence does not show conclusively that it did not contravene ss 52 and 53(e) of the TP Act as alleged. However, it says that those matters are powerful evidence on the question of whether any of the pleaded representations was misleading or deceptive, or likely to mislead or deceive within the meaning of s 52, or was false or misleading within the meaning of s 53(e). That is because the external organisation engaged to review and develop Harris Scarfe’s TPC program did not identify any difficulty with its promotional practices at the time, particularly as it specifically considered Harris Scarfe’s promotional material and other matters which cross into the subject of the present proceedings, such as store visits and price comparison advertising.
42. Finally, Harris Scarfe contends on the basis of the further evidence that, in the event that a contravention or contraventions of ss 52 or 53(e) is established as alleged, the relief sought by the ACCC beyond declaratory relief should be refused as being substantially without utility.
43. It presents a number of reasons for that contention. First, Harris Scarfe says that it did not undertake the impugned conduct in the belief that it was breaching the TP Act or that it considered that there was any reason for it possibly breaching the TP Act. Secondly, Harris Scarfe has developed, since the commencement of these proceedings, an “Advertising Rule Book” which is designed to complement, with greater detail, the compliance procedures contained in attachment 10 to its Compliance Manual. Attachment 10 to its Compliance Manual itself has some inbuilt processes in an endeavour to prevent Harris Scarfe from engaging in conduct in breach of the TP Act. The Advertising Rule Book also has such material. The Advertising Rule Book is directed, in part, specifically to the matters of which the ACCC complains in this proceeding.
44. Clearly, Harris Scarfe did not (and subject to the outcome of these proceedings, does not) consider that either the television commercial or the catalogue breached ss 52 or 53(e) of the TP Act. Consequently, neither the development of the Advertising Rule Book, nor its contents can be taken as an admission. It is a sensible process to undertake, after an occurrence about which the ACCC is concerned, and to adapt to its concerns: see eg Ryan v ETSA (No 1) (1987) 47 SASR 220. Nevertheless, it is significant in my view, on the issue of the appropriateness of any orders, if a contravention or contraventions are established, that Harris Scarfe has sought to reinforce the processes which it had in place, and which it had reason to think would protect it from contravention of the TP Act, by the introduction of the Advertising Rule Book and the training associated with it. There is evidence of that training having now been undertaken.
45. Harris Scarfe has also offered, on an open basis, to enter into yet a further s 87B undertaking in a form proposed. That form is responsive to the nature of the contraventions currently asserted in these proceedings. Further, Harris Scarfe has adopted a cooperative approach to the ACCC’s inquiries at all times and endeavoured to address those concerns without the need for litigation.

THE APPLICABLE LAW

46. This proceeding does not attempt to break new ground in the application of ss 52 and 53(e) of the TP Act. The applicable principles are now well established: see eg Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 (Parkdale); Taco Company of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177 (Taco Bell).
47. Conduct is misleading or deceptive if it induces or is capable of inducing error (to adopt the expression in Harris Scarfe’s written submissions). That must of course be understood as applying not in an absolute sense, but in relation to consumers or to a relevant class of consumers. Evidence of members of the public having been misled is not conclusive: Parkdale at 198-9. Of course, the converse is also not necessarily correct. That is, the absence of evidence that members of the public have been misled does not necessarily negate the fact of a contravention having occurred. It has also been held that the words “likely to mislead or deceive” do not add much to the section: Parkdale at 198. In the submissions, nothing was made of those particular words. It is sufficient if there is a real chance that the conduct will mislead or deceive: Global Sportsman Pty Ltd v Mirror Newspapers Ltd [1984] FCA 180; (1984) 2 FCR 82 at 87.
48. Importantly, whether conduct is misleading or deceptive or is likely to mislead or deceive must be determined in context. In Parkdale it was said at 199:

It seems clear enough that consideration must be given to the class of consumers likely to be affected by the conduct. Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, the section must in my opinion by (sic) regarded as contemplating the effect of the conduct on reasonable members of the class. The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests. What is reasonable will or (sic) course depend on all the circumstances.

49. The test is an objective one for the Court upon the whole of the evidence. Not every member of the public needs to have been misled or capable of having been misled for the conduct to be misleading or deceptive. The test is applied to the public, or a relevant section of the public, to whom the representation is made or in relation to whom the conduct is engaged in, including

the astute and the gullible, the intelligent and the not so intelligent, the well educated as well as the poorly educated, men and women of various ages pursuing a variety of vocations.

See Taco Bell at 202. That passage was referred to with approval in Parkdale at 199 but, as the passage from Parkdale quoted above shows, it is to be measured against reasonable members of the class.

50. In the submissions, no difference was identified between the application of s 52 and s 53(e) to the relevant conduct. The applicability of s 53(e) is similarly a question of fact to be assessed objectively in the context of the conduct and the surrounding circumstances: Taco Bell at 202.
51. Those considerations apply equally to representations by advertising as to other forms of conduct. Whether a representation has been made in advertising material must be assessed not by a particular statement taken in isolation, but by the statement in its context and, where appropriate, in the surrounding circumstances: Trade Practices Commission v Optus Communications Pty Ltd & Optus Mobile Pty Ltd (1996) 64 FCR 326 (Optus) at 336-8; Australian Competition and Consumer Commission v Thorn Australia Pty Ltd [2004] FCA 157 at [13]- [14]; Australian Competition and Consumer Commission v Signature Security Group Pty Ltd [2003] FCA 3 (Signature) at [25]-[28].
52. In the case of television advertising, necessarily the message is conveyed visually – with images and in this case printed text – and generally with oral text. It is relatively fleeting (although the fleeting impression is often sought to be reinforced by iteration or abridged iteration, sometimes in successive advertisements). Nevertheless, it is still necessary to determine the overall impression of what is conveyed from consideration of all parts of the television presentation to ensure the message is taken in context: Chief Executive Officer, Australian Competition and Consumer Commission v Medical Benefits Fund of Australia Ltd (No 2) [2002] FCA 1097 (MBF No 2) at [45].
53. Where printed advertising is under consideration, it is appropriate to consider not simply the words or images depicted but also their relative emphasis (whether by print size, location, colour or other manner of presentation) to determine whether the asserted representation has been made in its overall context. So, where, as here, particular words or figures are accompanied by an asterisk and the asterisk apparently directs attention to a footnote, it is necessary to do more than treat the whole of the communication as one piece of text. It is necessary to look to the way the asterisk is placed, the size of the footnote relative to the text in the body of the advertisement, and the terms of the footnote: see per Davies J in Trade Practices Commission v QDSV Holdings Pty Ltd (t/as Bush Friends Australia) [1994] FCA 1562; (1995) 128 ALR 551 at 559. Whilst, as his Honour says, the ideal is that qualifying words should be in the same sized print as the print which catches the eye, it is not necessary for qualifying print to be in that size to avoid the large print which first catches the eye from conveying a representation without regard to the qualification. See the discussion in Optus at 339-41; Medical Benefits Fund of Australia Ltd v Cassidy (2003) 205 ALR 402 at [35]-[41].

CONSIDERATION: THE CATALOGUE

54. In my view, neither the Storewide Discount Representation nor the 20% Off Storewide Representation were made by the first page of the catalogue in the terms asserted by the ACCC.
55. I have taken into account the asterisk where it appears, and the footnote text. In that regard, I note what Stone J said in Signature [2003] FCA 3 at [26] in the following terms:

I agree with the respondent’s submission that George Weston Foods Pty Ltd v Goodman Fielder Ltd (2001) 49 IPR 553 (‘the Wonder White case’) is authority for the fact that an asterisk can be sufficient to draw the attention of a consumer to a qualification of a representation. That case concerned, inter alia, the packaging of the respondent’s bread which declared in large typeface ‘Now Twice the Fibre*’. Moore J observed that:

“the asterisk is prominent and would be taken to signify some qualification or explanation of the words used. One could expect a consumer interested in the fibre content to seek out the qualification or explanation. Not only is the explanation within 2 cm of the words used on the package (albeit in much smaller type) but it is repeated elsewhere on the packaging.”

56. In my view, the asterisk is quite prominent and is sufficient to direct attention to the asterisk at the bottom of each page. The footnote disclaimer accompanied by the asterisk is not hard to find and is not hidden. But the context is clear, by the relative size of the headline and the footnote: the footnote is not to contradict the headline, but to explain or qualify or limit it. If it were simply to contradict the headline, one would expect the footnote to be much more prominent.
57. In my view, the footnote on each page was of limited effect. It said two things:
    • that discounts were off “regular prices”; and
    • that no further discounts apply to catalogue lines.

As noted above, the footnote on page 1 of the sale catalogue added that the banner content excluded television, sound, digital cameras and toys (on page 1 only).

58. The first part of the footnote, by itself, has no apparent special significance in this matter. It may serve to avoid any suggestion that the price markdown was from a price other than the regular price. Its significance may be tied to the second of those comments. That is because Harris Scarfe says that either the second of the two messages (or both together) amount to the footnote (or, as Harris Scarfe calls it, the catalogue disclaimer) meaning that the stated discounts “do not necessarily apply to those lines which appear in the catalogue”.
59. In my judgment, that is an obscure reading of the “catalogue disclaimer”. The meaning suggested is that the catalogue items do not, or do not necessarily, offer prices reduced by 20% to 60% from the regular price but are either not discounted from regular prices or have some other (and presumably lesser) reduction from regular prices. If that was what was intended to be conveyed to consumers, I think the appropriate disclaimer should have been that the catalogue items were excluded from the price deduction covered by the banner “20%-60% OFF* STOREWIDE”. And, so dramatically different from the apparently intended message of the banner would be the disclaimer – in effect 20% to 60% off regular prices storewide except for the items depicted in the sale catalogue – that its relative size and position would have to have been more prominent.
60. I do not have to go so far. It is sufficient to find, as I do, that a significant class of reasonable consumers would have understood that the items depicted in the catalogue were items reduced in price by between 20% and 60% from the regular price (other than television, sound, digital cameras and toys). I also find that a significant class of reasonable consumers, upon reading the footnote, would not regard that message as qualified in the way Harris Scarfe contends. The particular words “no further discounts apply to catalogue lines” are capable of conveying, and to a significant class of reasonable consumers would have conveyed, a composite message. First, that the price of catalogue lines as depicted had been reduced from the regular price by 20% to 60%, and secondly, that no further discounts could be expected. What further discounts might have been available is not explored in the evidence: it may have been understood as referring to some form of loyalty or card holder discount otherwise available, or simply to negotiated discounts, or to something else. But the use of the word “further” in relation to the “discounts” suggests, or at least would suggest to a significant class of reasonable consumers, that it refers to discounts from regular prices beyond those presented by the catalogue itself.
61. The catalogue, on subsequent pages, under certain banners says that the percentage price reduction is less than that range: 15% in the case of “ALL LCDs, VCRs and Digital Set Top Boxes”; and in the case of “ALL Audio & MP3 Players” (both on the second page); and in the case of “ALL 5MP Digital Cameras & Mini DV Camcorders” (the third page). On the remaining pages the banners refer to a percentage range of price reductions within the wider range of 20% to 60% except on the eighth page where the percentage reduction range in the banner is 40% to 70% off all “Essence, Living Art & Stanley Rogers Dinnerware”. The three percentage reductions lower than the 20% to 60% Off Storewide Statements relate to products which fall within the exception signified by the third element of the footnote on the first page.
62. In my view, the third part of the footnote on the first page, excluding television, sound, digital cameras and toys, in conjunction with the banners on pages 2 and 3 of the catalogue to which I have referred, was sufficient to indicate to consumers that that range of products was not encompassed within the discount range conveyed by the banner on the first page. It is not necessary to determine whether the size and the terms of the footnote, taken alone, would have been sufficient to avoid such a representation to consumers or a class of consumers. The asterisk on the banner was prominent. It directed attention to the footnote. The footnote – in that regard – was clear and explicit, albeit in very much smaller print than the banner. But a consumer interested in purchasing such products would also have gone to the pages of the catalogue at which they were depicted. The banners on the second and third pages to which I have referred indicate clearly enough by their position and size that in respect of the products described or depicted (which are part of the more generic groups of television, sound and cameras in the footnote), the reduction from the regular price for those categories of products was not 20% to 60%.
63. The ACCC has not sought to make out a case that the Storewide Discount Representation or the 20% Off Storewide Representation were other than unqualified. I consider that they were. That is, in my view, the sale catalogue in context for the reasons given did not represent that all goods in Harris Scarfe stores were being offered at a discount, or offered for sale at a minimum of 20% off the regular prices for the duration of the sale. It did make those representations in respect of all products in its stores other than television, sound and camera products and toy products, but that is not the case sought to be made by the ACCC.
64. The 15% Off Home Entertainment Representation was, in my view, made by Harris Scarfe. Other than the content of the second page of the sale catalogue, including the footnote, it was not suggested there was other relevant content.
65. I have already explained why I reject the contention that the footnote by itself excluded all products depicted under the banner (or in the sale catalogue) from the assertion that there was 15% off all LCDs, VCRs and Digital Set Top Boxes, so that no representation of any reduction in price in relation to the products depicted under the banner was made.
66. The banner is on a yellow background, constituting about one quarter of the top half of the page. (There are different banners for the bottom half of the page). Apart from the text already referred to, it has five brand names (apparently in their individualised font style) including Panasonic.
67. There are then depicted only two television sets, each occupying vertically about one half of the top half of the page and laterally about one third of the page. The left-hand depiction has the words “24 Months Interest Free” highlighted in large print in the screen. It also has above it the stylised Panasonic name and on a smaller red rectangular background in white print the word “Plasma”. In the same format immediately below the screen are the words “Giant 106cm Widescreen”. Below the depicted screen in large highlighted print is the price and adjacent to it in standard (that is, black print on white background) and in considerably smaller print are the words:
    1. Panasonic Standard Definition

Viera 42” (106cm) Widescreen
Plasma Integrated tuner & speakers,
progressive scan & 3D colour
management.

68. The other television set depicted is in the middle of the top half of the page (to the right are depicted two DVD Players and one Digital Set Top Boxes and immediately below is one Set Top Box). Its presentation is roughly of the same dimensions, and style, including the word “Plasma” as described. The screen contains, in larger print, “High Definition Widescreen. Crisp Images with Superb Depth”. The highlighted price of $2699 also has above it “Save $300”. The text below it is as follows:
    2. Panasonic High Definition Viera 42” (106cm) Widescreen

Plasma 1024x768 resolution, 10,000:1 contrast ratio, PC
connection & twin HDMI input, 28.9 billion colours. R.R.P. $2999

69. As noted above, Harris Scarfe points out that in the manner described, each television depicted is said to be a “plasma”, that is, each has a plasma, rather than an LCD, screen and the second television depicted also had a saving of $300 specified, together with its “R.R.P.” so that the percentage saving could be readily calculated.
70. I do not consider that either the fact that the two televisions depicted were plasma screens rather than LCD screens, or the fact that the centrally depicted television disclosed the “R.R.P” – which I take to mean the regular price, as was assumed in submissions – and the sale price and the saving so that the percentage price reduction could be calculated (namely 10%) means that the 15% Off Home Entertainment Representation was not made in respect of the depicted items. The two points made by Harris Scarfe may apply made in the case of a cautious consumer. But not every consumer is as cautious as would be necessary to discern the refinements of the presentation and the small print. Nor, necessarily, is every reasonable consumer or class of consumer informed as to there being a difference between an “LCD” and a “plasma” television. The dominant message from the banner, and one which I find would readily have been taken by a reasonable class of consumers, was that the two televisions depicted were offered at a sale price 15% less than the regular price. Rhetorically, one might ask: to what other televisions was the banner directed, if not at least to those depicted? The banner was in the largest print, clearly highlighted by the colour print on a black background. A reasonable class of consumers, in my mind, would understand that the two televisions depicted immediately under the banner were those to which the banner related. The Harris Scarfe contention requires first an awareness of there being a difference between “LCD” and “plasma” and a sufficient attention to the detailed presentation under the banner to become aware that the only two televisions depicted were not encompassed within the message of the banner. Banners are obviously to draw attention to the opportunity to purchase certain products at a reduced price. The products are depicted. The fine print is not sufficient to exclude all reasonable groups of consumers from understanding that the message which – in my view – the banner conveys does not apply to the items depicted under it. Insufficient focus was drawn to the fact that the two televisions were plasma, as opposed to LCD, screens. I am satisfied that a reasonable class of consumers would have understood the banner as conveying the 15% Off Home Entertainment Representation, at least so far as it applied to the two depicted televisions, notwithstanding the word “Plasma” appearing in its size and form and colour in the depictions under the banner.
71. I have reached the same conclusion in relation to the second point made by Harris Scarfe concerning the television depicted in the middle of the top half of that page. The saving is identified as $300, and the larger printed price is $2,699. The “R.R.P.” of $2,999 is in much smaller print and is not highlighted. Not every consumer attends to every aspect of advertising with fine attention to the detail. The “R.R.P.” appears at the end of the fine printed text, apparently with other technical details. I do not consider it was sufficiently apparent as to expect all reasonable classes of consumers to have read it. More accurately, in the light of the banner and the overall presentation, I consider that there would have been a reasonable class of consumers who would not have realised that the regular price of that television was $2,999. I also consider that such an awareness was necessary, because it is no straightforward arithmetical task to calculate from the saving of $300 and the price of $2,699 that the saving was less than 15%. It is necessary to properly understand that the calculation requires the addition of the saving and the sale price, and then the calculation of the percentage that the saving represents of that total. I am satisfied that a reasonable class of consumers would not have made that calculation. The overall presentation gave them no especial reason to do so. And, in any event, I am satisfied that there would have been a reasonable class of consumers who would simply have associated the banner with the televisions depicted under it, and would have assumed that the saving of $300 represented 15% of the regular price.
72. My conclusions reflect the passage quoted with evident approval by Heerey J in Australian Competition and Consumer Commission v Nationwide News Pty Ltd (1996) 36 IPR 75 at 85 from the decision of the United States Supreme Court delivered by Hugo Black J in Federal Trade Commission v Standard Education Society [1937] USSC 142; 302 US 112 (1937) at 115:

The fact that a false statement may be obviously false to those who are trained and experienced does not change its character, nor take away its power to deceive others less experienced. There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting as well as the suspicious. The best element of business has long since decided that honesty should govern competitive enterprises, and that the rule of caveat emptor should not be relied upon to reward fraud and deception.

73. In referring to that passage, I am not to be taken as suggesting that Harris Scarfe was in fact deliberately dishonest or intentionally deceptive in the way it presented the sale catalogue. That is a matter to be addressed when I consider the appropriate relief.
74. There is no dispute that the television depicted on the left was not reduced in price from its regular price, and that the other was reduced by only 10%. I therefore conclude that, at least in respect of those two televisions as depicted, that the sale catalogue made the 15% Off Home Entertainment Representation, and that it contravened both s 52 and s 53(e) of the TP Act.
75. It is not necessary to consider whether the 15% Off Home Entertainment Representation was made in respect of all other televisions which Harris Scarfe offered for sale during the period of the sale.
76. Essentially for the same reasons, I find that the 15% Off Audio Representation was made by Harris Scarfe. I have rejected the contention that the footnote to which attention may have been directed by the asterisk conveyed, or would have conveyed to all reasonable groups of consumers, that no representation about the percentage price reduction from the regular price was made in relation to the items depicted under the relevant banner.
77. One of the four items depicted under the relevant banner was a Samsung Z5 Music & Photo 2GB MP3 Player. It was not offered at a price reduced by 15% from its regular price. It was in fact offered at a price that was about 9.4% less than the regular price. That the discounted percentage could have been calculated on information contained in the text under the banner, upon a careful reading of that part of the sale catalogue does not mean that, to a reasonable class of consumers, that representation was not made or that it was not made in contravention of ss 52 and 53(e) of the TP Act. I have had regard to the size and appearance of the printed “Reg.” price of that item relative to the advertised price and to the saving, and to the banner itself which prominently highlighted 15% off all MP3 players (as that item is described, in somewhat larger and highlighted print than the regular price), and the depiction of only two MP3 players under the banner. My conclusion is that a reasonable class of consumers would have taken the 15% Off Audio Representation as having been made and as applying to that depicted item. It was not accurate.
78. I also find that the 15% Off Cameras Representation was made by Harris Scarfe in respect of each of the items depicted on the third page of the sale catalogue. I further find that, in respect of the five items listed in [20] above, that representation was misleading and deceptive contrary to s 52 of the TP Act and was false and misleading as to the price of those items contrary to s 53(e) of the TP Act.
79. In respect of that banner and those items, Harris Scarfe relied on three matters to contend that no such contraventions were established: the terms of the footnote, to which the asterisk drew attention; secondly that two of the items are not “Mini DV Camcorders” but Camcorders and that two of the items are not “5MP Digital Cameras” but 6MP Digital Cameras; and thirdly that the first three items are presented with a disclosed regular price and a saving amount, so that the actual amount of the saving is apparent and the percentage price reduction from the regular price is calculable.
80. For the reasons already given, I reject the first contention.
81. I reject the second contention based upon the whole of the relevant part of the third page of the sale catalogue. The terms of the banner are set out in [20] above. It relates to the top two-thirds of that page. Under the banner, in the top half of the page, there are two separately delineated sections. The left third is under a sub-banner with particular savings on two specified and depicted camcorders. It is not necessary to refer to it. The right hand two-thirds depicts four camcorders, three of which are items (a)-(c) in the table in [20] above. They are all depicted as being about the same size. Underneath those two sections are depicted three cameras, running across the page and just below its centre line. Each camcorder is depicted, and has a large highlighted price and immediately above the price, also obvious but in a smaller print the saving (the camcorder not referred to in the table has a “lowest price” rather than a “saving” – I do not need to refer to it further). Each has a stylised brand name adjacent to its image, and in two instances (items (b) and (c) in the table) there is also a smaller highlighted technical feature. Each of those two camcorders then has a printed description in considerably smaller print containing a product description and the technical details, with at the end a “Reg.” price. The product description is slightly bolder print than the technical details. In each of those two cases the description is “JVC GZ-MG37 30 GB Everio Hard Disk Camcorder” and “Panasonic NV-GS180 3CCD Camcorder”. The item in (a) of the table is similarly presented. It is described as “JVC GR-D350 Mini DV Camcorder”.
82. In my view, the fact that items (b) and (c) in the table are depicted under the banner, and the overall presentation, would have lead a reasonable class of consumers to the view that those items were for sale at prices which represented 15% off the regular prices. That is not to say that some consumers would not have appreciated, by reading the advertisement carefully, that items (b) and (c) were not Mini DV Camcorders but some other size of camcorder. Indeed, whether there is in the minds of all reasonable classes of consumers an awareness that a camcorder is not a mini camcorder – especially where they are depicted as about the same size – was not addressed in evidence. Nor did the evidence suggest that because a depicted item is a “Hard Disk” or a “3CCD” camcorder, it may not be in the minds of all reasonable classes of consumers a mini camcorder. Those observations reinforce the conclusions I have reached at the start of this paragraph.
83. For reasons similar to those expressed in relation to the 15% Off Home Entertainment Representation, I am also satisfied that a reasonable class of consumers would have understood the 15% Off Cameras Representation as applying to items (a)-(c) in the table, notwithstanding that a saving and a regular price was set out and, by calculation, a percentage saving revealed. That is not to say that a careful consumer might not have discerned in relation to those items and item (a) that the saving as specified did not represent 15% off the regular price. But I am satisfied that a reasonable class of consumers would not have been so discriminating.
84. A reasonable class of consumers would have connected the depicted items to the banner and there was in the presentation then insufficient focus on the matters to which Harris Scarfe refers to correct that message in relation to those items.
85. The two cameras referred to in items (d) and (e) of the table are presented in a slightly different way. There are only three digital cameras depicted under the banner. None is in fact (as presented) a 5MP Digital Camera. Each is described as a 6MP Digital camera, first by a small but highlighted box entry above its image reading “6MP Digital” and secondly, by the detailed printed description. The box highlighting is in the same style and colouring as the banner: black on yellow, except in the banner the words “15% OFF*” are further highlighted by a yellow on black boxed area. But for the small but highlighted box entry, I could have been satisfied that the 15% Off Cameras Representation was made in respect of those cameras, for reasons like those already given. It is a matter of impression. A reasonable class of consumers would be entitled to assume that the depicted cameras were, or included, those to which the banner was intended to apply. There is no particular reason why a significant contrast between the cameras referred to in the banner and as depicted should be drawn. Why, again rhetorically, would those cameras have been depicted if they were not, or were not illustrative of, cameras to which the 15% Off Cameras Representation applied? It is not simply a matter of noticing that 6MP Digital cameras were depicted, as distinct from 5 MP Digital cameras, but then of drawing the necessary disconnection between them and the banner because the banner referred only to “5MP Digital Cameras”. I have come to the view that a reasonable class of consumers would have regarded the 15% Off Cameras Representation as applying to the cameras depicted, so the contravention of ss 52 and 53(e) of the TP Act is also made out in that respect.
86. I further find that the 20% Off Cordless Phones Representation was made, and that in respect of each of the items listed in the table in [23] above, that representation was misleading and deceptive contrary to s 52 of the TP Act and was false and misleading with respect to the price of those items contrary to s 53(e) of the TP Act.
87. For the reasons given earlier, I do accept that the footnote to which the asterisk in the banner directed attention conveyed that the price of the depicted items was not reduced by 20% from the regular price. Nor, for reasons similar to those expressed earlier, do I consider that the fact that in respect of items (b) – (e) in the table in [23] above, the saving and the regular price was set out so that, by calculation from that information or from the highlighted price and the regular price, the percentage price reduction could have been calculated, means that the representation was not made or that it was not misleading.
88. The banner relating to Cordless Phones runs across the third page of the sale catalogue about two thirds down that page. It is smaller than the other banners on that page. There are only five types of cordless phones depicted under it. Each has a highlighted price, and in smaller print and in a smaller and lesser highlighted box immediately above a saving amount. It is, in my view, clear that a reasonable group of consumers – if not the majority of consumers – would not readily calculate from that information the percentage saving from the regular price or conclude that the dollar saving was less than 20% off asserted in the banner. Each also has a detailed printed product description, with some additional features and, in four of the five cases, at the end of that relatively smaller and less featured text a “Reg.” price. The departure from the banner’s asserted reduction which Harris Scarfe seeks to justify by calculation from that extra data is not, in the light of the overall presentation, warranted. In each of those four cases, the calculation (if made) would directly contradict the banner. In my view, in such circumstances, much more prominence should have been given to that data, or the banner should have been qualified. No doubt some consumers, upon seeing the highlighted price and the saving sum expected no more than that saving. No doubt some cautious consumers calculated the percentage price reduction. But, as I have found in respect of similar instances in the catalogue, I consider that a significant group of reasonable consumers would have been misled by the representation into thinking that the price, and/or the saving, reflected a price reduction of 20% off the regular price.
89. I further find that the 20% - 25% Off Personal Care Representation was made, and that a significant class of reasonable consumers would have been misled by the representation into thinking that the price reflected a price reduction of 20% off the regular price.
90. The lower half of the fourth page of the sale catalogue contained the relevant banner. There were 10 items depicted under it, including the five items in the table in [25] above. Each of the depicted items had adjacent to it a highlighted boxed price, and immediately above it a smaller boxing saving in dollars. Each also had a detailed printed product description, in smaller and unhighlighted print with, at the end of that text, a “Reg.” price.
91. I do not accept for the reasons already given that the asterisk on the banner and the footnote to which it drew attention meant that the prices set out in this part of the sale catalogue did not represent savings off regular prices. Also, for the same reasons as previously given, I find that a significant class of reasonable consumers would have concluded that the specified price in respect of each of the five items in that table represented a saving of not less than 20% off the regular price of those items. I shall not repeat those reasons. The evidence also shows that the price of those five items did not represent such a saving.
92. Consequently, I find that the 20%-25% Off Personal Care Appliances Representation was made in respect of the items depicted under the banner, and that Harris Scarfe contravened ss 52 and 53(e) of the TP Act by doing so.
93. Finally, in this part of my reasons, I find that the 20-50% Off Kitchen Appliances Representation was made and that in respect of the Sunbeam Can Opener depicted under that banner the representation was misleading and deceptive contrary to s 52 of the TP Act and was false and misleading as to the price of that item contrary to s 53(e) of the TP Act.
94. Again, I do not accept that the sale catalogue had prices which did not represent savings from regular prices for the reasons already given.
95. The banner runs prominently across the top of the fifth page of the sale catalogue. There are 19 kitchen appliances depicted, all with significant savings specified relative to the sale catalogue price. They give no indication that the banner representation of 20% - 50% off did not apply to them, and that representation is reinforced in two instances where the percentage price reduction is highlighted. That overall picture provides further support for the conclusion I have drawn. The Sunbeam Can Opener is depicted in the bottom left hand corner of that page. As in other instances, it has a highlighted price and immediately above it a saving sum, and a more detailed product description in smaller and unhighlighted print ending with a “Reg.” price. For reasons similar to those already given, together with the overall picture which that page of the catalogue presents, I am satisfied notwithstanding that data being set out in that way, that a reasonable class of consumers would have regarded the 20%-50% Off Kitchen Appliances Representation as applying to that item. It was not correct.

The television commercial

96. The television commercial must also be addressed objectively. It is a communication by visual and audio means, so the assessment of its message must be made in that context. The audience does not have the opportunity to read and absorb in the same way as the printed word or the depictions in the sale catalogue.
97. The television commercial ran for only a brief time. It had a red background with the stylised Harris Scarfe name. It opened with the large printed words in white, “MID SEASON SALE” for several seconds. The background screen image, including the Harris Scarfe name, remained the same. There were then a series of printed images, all of which were on the screen only for a few seconds. The first and last had the large printed words in white “20%-60% OFF STOREWIDE”. In between were three screen images with the large printed words “20%-60% OFF” and the additional words “ALL MANCHESTER”, “ALL HOMEWARES”, “ALL CLOTHING AND MUCH MUCH MORE” in three sequential screen images. Each of those three screen images had in much smaller print under that printing the words: “Discounts off regular prices. Excludes televisions, sound, digital cameras and toys”. There is a voice commentary which, in effect, repeats the printed screen words except for the words: “Discounts off regular prices. Excludes television, sound, digital cameras and toys”. It points out the sale commences the following day.
98. The primary issue between the ACCC and Harris Scarfe is whether the television commercial thereby made the Storewide Discount Representation and the 20% Off Storewide Representation. Harris Scarfe says that, for two reasons, it did not do so. Firstly, it relies on the fact that examples are given of the type of products that were included (Manchester, homewares and clothing) together with the words “and much much more” to indicate that not all products were so discounted. Secondly, it points to the disclaimer which expressly excluded certain products.
99. I do not accept that, by giving examples of the type of products included in the discounted range, the unqualified terms of the words “20%-60% Off Storewide” were somehow qualified. The clear impression from the television commercial, viewed as a brief audio-visual communication is that all items in the Harris Scarfe stores were reduced. The word used is “storewide”, used at the beginning and at the end of the television commercial. The examples, or the additional words “and much much more” do not diminish that impression. I think they enhance it.
100. The disclaimer, in printed terms, excluded certain types of items from the discounts being storewide. The opportunity during the hearing of viewing the television commercial was not ideal. However, notwithstanding that the voice-over did not refer to the disclaimer, the printed text running for six seconds or so only was, in my view, sufficiently prominent and prolonged to draw to the observer’s attention to the fact that there is some form of exemption or exclusion from the application of the discounts storewide. An observer would have found it hard to absorb the detail of the exemption, particularly as it was accompanied by the three or four brief images concerning the included items and the accompanying voice-over. Whether, as an advertising technique, that was intended, does not matter. I have formed the opinion that the television commercial, in a very general way, gave the impression that there were some exclusions from the storewide application of the discounts.
101. It follows that I am not satisfied that, by the television commercial, Harris Scarfe made the Storewide Discount Representation or the 20% Off Storewide Representation as alleged by the ACCC.

CONCLUSIONS ON LIABILITY

102. For those reasons, I conclude that Harris Scarfe contravened ss 52 and 53(e) of the TP Act by making each of:
     • the 15% Off Home Entertainment Representation;
     • the 15% Off Audio Representation;
     • the 15% Off Cameras Representation;
     • the 20% Off Cordless Phones Representation;
     • the 20%-25% Off Personal Care Representation; and
     • the 20%-50% Off Kitchen Appliances Representation.

in the sale catalogue. It did so in relation to the items about which those representations were made and about which I have found in the foregoing reasons to have contravened those provisions.

103. I conclude that Harris Scarfe did not make the Storewide Discount Representation or the 20% Off Storewide Representation either by publishing the sale catalogue or by publishing the television commercial.
104. It is apparent from my reasons thus far that, in reaching those views, I have not regarded the “Further Evidence” discussed above to have been of any particular significance. The task of determining whether those representations were made was to make an objective determination in the light of all the relevant circumstances. The steps taken by Harris Scarfe or by others on its behalf to avoid such contraventions were not, in my view, capable of informing that decision. Nor were the views of officers of Harris Scarfe, or of those advising it, relevant to that question. That evidence was not sought to be adduced or relied upon as expert evidence on the objective factual determination which was required.
105. Harris Scarfe said that the further evidence was “relevant and powerful” evidence as to whether any of the pleaded representations was misleading or deceptive or was likely to mislead or deceive, especially in the absence of evidence of any consumer actually being misled or deceived. The further evidence did show that Harris Scarfe endeavoured, in the manner that the evidence discloses, to avoid contravening the TP Act including ss 52 and 53(e). Its efforts were extensive. But, as I noted, it was not put forward as expert evidence. Nor did it show that each of the particular entries in the sale catalogue about which I have made adverse findings was considered by its external legal or compliance consultants, or indeed that the sale catalogue itself was carefully perused in its entirety by those external consultants. Accordingly, even if I accept (as I do) that Harris Scarfe had systems in place to try to avoid contravening the TP Act, and even if I assume (contrary to my approach in the preceding paragraph of these reasons) that its systems and the fact that they did not give warning signs in relation to the particular content of the sale catalogue which has given rise to the contraventions, I would nevertheless have reached the same conclusions as to the contraventions of the TP Act.
106. That further evidence is obviously relevant to the nature of the relief which should be granted in the light of those conclusions.

RELIEF

107. In addition to declaratory relief, the ACCC seeks injunctive orders against Harris Scarfe. It also seeks corrective advertising both in its stores and in a subsequent Harris Scarfe sale catalogue, on the internet and once in a weekend edition of newspapers circulating in South Australia, Victoria and Tasmania. It further seeks orders under s 86C(2)(b) of the TP Act requiring Harris Scarfe to refine its trade practices compliance program. And the ACCC seeks the right to apply, in this proceeding to extend the “probation period” beyond three years if Harris Scarfe further contravenes ss 52 or 53 within the next three years. Finally, it seeks the costs of these proceedings.
108. Harris Scarfe opposes the grant of any relief other than declaratory relief. It points to its offer to provide yet a further undertaking pursuant to s 87B of the TP Act as being a sufficient response to the contraventions of the TP Act which have been established.
109. In my view, it is appropriate to make a declaratory order in respect of the contraventions I have found to be established. It will be in the form proposed by the ACCC. The facts that the contraventions occurred notwithstanding Harris Scarfe’s efforts to comply with the TP Act over quite some time, and that they occurred notwithstanding in particular the 2004 undertaking and the 2006 undertaking, indicate to my mind that it is appropriate to make the declaratory order sought, as relevant to the contraventions, rather than permit Harris Scarfe to provide yet another undertaking to the ACCC. Moreover, and perhaps more importantly, the acceptance of a s 87B undertaking is within the discretion of the ACCC. It does not appear that the Court has power to oblige the ACCC to accept such an undertaking: Trade Practices Commission v Cue Design Pty Ltd (1996) 85 A Crim R 500; Australian Competition and Consumer Commission v Monza Imports Pty Ltd [2001] FCA 1455. The ACCC is not prepared to do so in respect of these contraventions. Even if it could be obliged to do so, contrary to the decisions referred to, I would not impose upon the ACCC the acceptance of yet a further s 87B undertaking. Then, rather than there be no formal recording of the contraventions, I would make the relevant declaratory order sought.
110. There will be a declaration that Harris Scarfe has in trade or commerce:
     1. engaged in conduct that is misleading or deceptive, or likely to mislead or deceive, in contravention of s 52 of the TP Act, and
     2. in connection with the supply or possible supply of goods or in connection with the promotion of the supply of such goods, made false or misleading representations with respect to the price of such goods, in contravention of s 53(e) of the TP Act,

by publishing and distributing the sale catalogue in October 2006 in South Australia, Victoria and Tasmania containing representations that, for the duration of the sale, Harris Scarfe was offering for sale the goods set out in the table immediately following (photographic images of which appeared in the sale catalogue) at the specified percentage discounts off the regular prices when, contrary to such representations, those goods were not discounted at all or not discounted by the specified percentage.

Table

Good	Specified percentage in the Banner under which the Good appears
Panasonic Standard Definition Viera 42” (106cm) Widescreen Plasma Television	15%
Panasonic High Definition Viera 42” (106cm) Widescreen Plasma Television	15%
Samsung Z5 Music & Photo 2GB MP3 Player	15%
JVC GR-D350 Mini DV Camcorder	15%
JVC GZ–MG37 30GB Everio Hard Disk Camcorder	15%
Panasonic NV-GS180 3CCD Camcorder	15%
Pentax M10 6MP Digital Camera	15%
Sony DSCH2 6MP Digital Camera	15%
Doro 610 Single DECT Cordless Phone	20%
Panasonic KX-TG1811 DECT Cordless Phone	20%
Uniden 2315+1 2.4GHz Twin DECT Cordless Phone	20%
Telstra 5000+ACR Twin DECT Phone	20%
Panasonic KX-TG2632 2.4GHz Twin Pack DECT Cordless Phone	20%
Breville Hair Dryer	20%-25%
Remington Smooth Styles Ionic Pro Pack	20%-25%
Wahl 17pc Hair Clipper Kit	20%-25%
Remington Precision Men’s Grooming Kit	20%-25%
Homedics Shiatsu Seat Massager	20%-25%
Sunbeam Can Opener	20%-50%

111. The relevant form of injunction proposed by the ACCC is one restraining Harris Scarfe in any advertisement representing that it will supply goods in its stores at a specified discount, from including immediately beside, under or near the statement of the specified discount:
     1. pictures or descriptions of goods to which that specified discount does not apply;
     2. pictures or descriptions of goods which are not discounted at all.
112. That form of injunctive order is quite specific. It is not generic, in the sense that it simply prohibits conduct which the TP Act prohibits: see BMW Australia Ltd v Australian Competition and Consumer Commission [2004] FCAFC 167. It captures the form of advertising in the sale catalogue which has led to the contravention. Such conduct occurred notwithstanding Harris Scarfe’s compliance program, and the considerable effort and expense which Harris Scarfe had in the past put into trying to avoid conduct in contravention of ss 52 and 53 of the TP Act. An injunction in those terms should therefore deter Harris Scarfe from engaging in such conduct during the period of its currency: ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 268.
113. Harris Scarfe, since the conduct giving rise to the contraventions, has introduced and developed its Advertising Rule Book. It appears to address the circumstances giving rise to the present contraventions. However, as in any substantial retail organisation with an extensive product range, there may be scope for different views about the way such a document should be construed or applied. So too is there such scope, notwithstanding a compliance program and its Compliance Manual and its Advertising Rule Book and ongoing training, for oversight or error. The fact that Harris Scarfe committed the contraventions despite the extensive external and internal structures and resources it utilised to avoid contravening the TP Act provides reason to specifically prohibit the offending advertising style. The steps taken by Harris Scarfe to avoid such contraventions in the future may provide a reason not to make any injunctive order (cf Australian Competition and Consumer Commission v Wizard Mortgage Corporation Ltd [2002] FCA 1317 (Wizard Mortgage) per Merkel J at [22]). However, having regard to the past history including the 2004 undertaking, and the 2006 undertaking, my conclusion on balance is that it is appropriate to make the injunctive order in the terms sought.
114. The purpose is not to add to Harris Scarfe the possible exposure to contempt of court if it commits a further contravention such as those which have been established. It is to add the additional incentive, or deterrence, of quite specific injunctive orders to prevent the re-occurrence of the offending conduct, albeit in the context of voluntary action already taken by Harris Scarfe which makes the risk of such re-occurrence quite small. It will, however, be limited in time to a period of three years: Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd [2004] FCA 693; (2004) 207 ALR 329 at [45].
115. I have not overlooked that, in Australian Competition and Consumer Commission v Telstra Corporation Limited [2004] FCA 1132, Gyles J granted an injunctive order for five years. His Honour discussed that question at [5]. In my view, however, the period of three years, acting as a reinforcement in the manner I have described, is appropriate to enable the advertising practices of Harris Scarfe to have been cemented so as to thereafter carry little or no risk of like contravening conduct. The orders for corrective advertising and refinement of Harris Scarfe’s compliance program are founded upon s 86C of the TP Act. It relevantly provides:

(1) The Court may, on application by the Commission, make one or more of the orders mentioned in subsection (2) in relation to a person who has engaged in contravening conduct.

(2) The orders that the Court may make in relation to the person are:

(a) ...
(b) a probation order for a period of no longer than 3 years; and
(c) ...
(d) an order requiring the person to publish, at the person’s expense and in the way specified in the order, an advertisement in the terms specified in, or determined in accordance with, the order.
(3) ...

(4) In this section:

“Probation order”, in relation to a person who has engaged in contravening conduct, means an order that is made by the Court for the purpose of ensuring that the person does not engage in the contravening conduct, similar conduct or related conduct during the period of the order, and includes:

(a) an order directing the person to establish a compliance program for employees or other persons involved in the person’s business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to the contravening, similar conduct or related conduct; and
(b) an order directing the person to establish an education and training program for employees or other persons involved in the person’s business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to the contravening conduct, similar conduct or related conduct; and
(c) an order directing the person to revise the internal operations of the person’s business which lead to the person engaging in the contravening conduct.

116. The corrective advertising sought by the ACCC is said to match the placement of the advertising in the sale catalogue giving rise to the contraventions. In my view, there is no real purpose in making such an order in the present circumstances. The injunctive order will prevent the form of advertising which gave rise to the contraventions. There is no evidence of any consumer having suffered loss as a result of the contravening conduct. There was a significant period after the sale catalogue was published before these proceedings were instituted, and a further period has since elapsed. In those circumstances, it is difficult to see how the proposed corrective advertising would serve any useful purpose: see Hospitals Contribution Fund of Australia Ltd v Switzerland Australia Health Fund Pty Ltd (1987) 78 ALR 483; St Lukes Health Insurance v Medical Benefits Funds of Australia [1995] FCA 1314 per Northrop J at [34]; Wizard Mortgage per Merkel J at [27]; Signature [2002] FCA 3.
117. In Australian Competition and Consumer Commission v Telstra Corporation Limited (ACN 051 775 556) [2007] FCA 2058, Gordon J summarised the principles concerning the issue of whether corrective advertising should be made. Her Honour said at [4]:

Section 86C of [the TP Act] confers power on the Court to make an order for corrective advertising. Corrective advertising may have a number of purposes:

(1) to protect the public interest by dispelling an incorrect or false impression that has been created as a result of misleading or deceptive conduct (Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289; (2003) 135 FCR 1 at [49] (Full Court) and ACCC v Wizard Mortgage Corporation Ltd (2002) ATPR 41-903 at [27]) especially where all of the misleading or deceptive conduct arose out of advertisements and other public statements and promotions;

(2) to alert consumers to the fact of the misleading or deceptive conduct and inform them that they might have some remedy if they relied upon any of the misleading or deceptive conduct: Medical Benefits Fund [2003] FCAFC 289; (2003) 135 FCR 1 at [54];

(3) as an “aid in the enforcement of the primary orders and the prevention of repetition of the contravening conduct”: ACCC v Real Estate Institute (WA) Inc (1999) 95 FCR 114 at 133 per French J, cited with approval in Medical Benefits Fund [2003] FCAFC 289; (2003) 135 FCR 1 at [51].

118. Those principles were applied by Moore J in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd (No 2) [2008] FCA 476. In the light of the injunctive order proposed to be made, and in the particular circumstances, I do not think any of those three purposes would usefully be served now by corrective advertising. The public interest is adequately protected by the injunctive order, in effect reinforcing the voluntary action taken by Harris Scarfe. The absence of any identified consumer who suffered loss as a result of the contravening conduct makes it quite unlikely now that corrective advertising would alert any particular consumer to the possibility of a remedy. And I have already indicated the injunctive order itself is to aid in preventing a repetition of the contravening conduct.
119. Corrective advertising may, of course, raise public awareness as to the type of conduct that may contravene the TP Act, as well as the outcome of the particular case: see per Lee J in Australian Competition and Consumer Commission v Target Australia Pty Ltd [2001] FCA 1326 at [21]. That case involved orders, including corrective advertising, proposed to be made by consent. In the particular circumstances, I do not consider that factor in the overall balance warrants the making of orders for corrective advertising. Consumers are unlikely to be further exposed to such contravening conduct on the part of Harris Scarfe for the reasons already given. Competitors will no doubt become aware of the outcome of this case, and take account of its reasons in their further advertising. Hence, consumers more generally are also not likely to benefit from corrective advertising specific to Harris Scarfe’s contravening conduct unless, first, a competitor engaged in similar conduct and the connection between that advertising and the corrective advertising specific to Harris Scarfe was made.
120. I therefore decline to order corrective advertising.
121. The final package of orders sought by the ACCC under s 86C involve Harris Scarfe being required to revise and review its internal operations in relation to its compliance with the TP Act. Specifically, the package of orders would require:
     • (1) Harris Scarfe to appoint a senior employee as its “Internal Review Manager”;
     • (2) Harris Scarfe, on the recommendation of its Internal Review Manager, to retain an appropriately qualified and experienced Independent Reviewer (a person not previously involved in the design or implementation of the compliance program);
     • (3) the Independent Reviewer to review the compliance program and the process of producing the sale catalogue to determine why the contraventions occurred, and to recommend steps to be taken, including revision of the compliance program, to ensure similar or related conduct does not occur in the future;
     • (4) Harris Scarfe to provide a copy of the Independent Reviewer’s report to the ACCC;
     • (5) Harris Scarfe to implement the Independent Reviewer’s recommendations as it “considers reasonably necessary” to ensure it does not engage in the contravening conduct or any similar or related conduct in the future;
     • (6) Harris Scarfe to report to the ACCC of the steps it has taken pursuant to (5) or to report that it has decided not to implement any of those recommendations.

Then, if the ACCC did not agree with Harris Scarfe’s actions, the ACCC is to be given the right to apply to the Court “regarding the adequacy of any step taken by Harris Scarfe to review its internal operations”. Presumably, the expectation is that the Court would then be asked to determine whether some further orders in relation to Harris Scarfe’s internal systems should be directed by the Court.

122. Part of the ACCC’s proposal is the requirement that Harris Scarfe maintain its compliance program (as modified) for a further period of three years.
123. It also seeks the right, if Harris Scarfe contravenes ss 52 or 53 of the TP Act by the contravening conduct or similar or related conduct within three years, to apply for:

(a) a further “probation order” for a further three years; and

(b) any other order that the Court considers appropriate to ensure Harris Scarfe does not engage in such conduct during the period of the further order.

124. It is clear that s 86C permits the imposition of a compliance program, and an order directed to modification or review of an existing compliance program. However, I doubt that it is appropriate that the Court should entitle the ACCC to apply for a further probation order or other order as sought in [123] above.
125. The proposed order is carefully drawn so as to enliven that entitlement only in the event of a further similar contravention of the TP Act. The proposed order is premised upon a future contravention, because otherwise the probation order can only extend for three years: s 86C(2)(b), otherwise power would exist to extend the probation order. Such a contravention, if established, would then enable the Court to exercise the powers available under s 86C afresh. But, in the event of such a contravention (whether proved or admitted), the ACCC would have the entitlement which it seeks to have recognised in any event. I therefore do not see much utility in that suggested order. In the event that such a contravention occurred, it may be that the ACCC would seek relief – whether declaratory, injunctive or other relief – and such relief would not properly be brought in this action. There is thus a potential, if that order is made, to invite or condone the splitting of remedies for a future contravention.
126. I have come to the view, more generally, that it is not appropriate to make the orders sought by the ACCC in relation to Harris Scarfe undertaking a revision of, and supervised implementation of, its compliance program. That is because, in essence, I do not consider that there is sufficient utility in the circumstances in doing so. Harris Scarfe, as the further evidence shows, had actively and at its own expense, developed and implemented a compliance program, albeit under the umbrella of the 2004 undertaking and the subsequent undertakings. That process included the extensive involvement of three external professional consultants: Watchdog Compliance, Cooper Grace Ward, and Compliance and Complaints Advisory Services Pty Ltd (CCAS) (which independently audited the compliance program in accordance with the 2006 undertaking). Since the contraventions, it has revised that program with particular focus on the particular contraventions, including the introduction of its Advertising Rule Book. Both Watchdog Compliance and CCAS have subsequently been involved in the assessment of the adequacy of the Advertising Rule Book. Its Chief Financial Officer, an executive director, has been its Trade Practices Compliance Officer since 4 April 2008, and Harris Scarfe also has a Compliance Manager responsible for the day to day maintenance and implementation of the compliance program. Its staff training program, in particular for its marketing team, in relation to compliance with the TP Act is ongoing, and it has an induction program for all new staff which includes compliance training. The level of management at which compliance issues are being addressed indicates how seriously Harris Scarfe regards the obligations imposed on it (and other retailers) under the TP Act. Put shortly, I have difficulty in seeing what value the Court could usefully add to that process, in the sense contemplated by s 86C(2)(b), by the orders sought. I do not consider they would ensure that Harris Scarfe does not engage in the contravening conduct or similar or related conduct over the next three years in any real way, and in the light of the injunctive order.
127. However, there is utility in ensuring that the compliance program as modified by Harris Scarfe continues for a further period of three years. I accordingly propose to order that Harris Scarfe, at its own expense, maintain for a period of three years its compliance program, as modified by it from time to time. I note that it has provided to the ACCC its Trade Practices Compliance Manual and its Advertising Rule Book. I have no reason to expect that it would not provide to the ACCC its current versions of those documents in the event that they are further modified.
128. I will hear the parties as to the costs of the proceeding.
     

I certify that the preceding one hundred and twenty-eight (128) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Associate:

Dated: 5 February 2009

Counsel for the Applicant:	PV Slattery QC and T Cox
Solicitor for the Applicant:	Thomson Playford
Counsel for the Respondent:	RJ Whitington QC and C Bleby
Solicitor for the Respondent:	DMAW Lawyers

Date of Hearing:	2 and 3 June 2008
Date of Judgment:	5 February 2009