The Federal Court has imposed a record penalty for misuse of market power, after the Respondent (Cabcharge) settled with the Applicant (ACCC) and was fined $14 million for contravening section 46 of the Trade Practices Act (TPA)
Cabcharge is an ASX listed company and provides a number of services, including non-cash payment processing systems for taxi fares, payment processing systems for taxis and taxi meters.
The ACCC contended that Cabcharge breached section 46 of the TPA (the abuse of market power provision) by refusing to deal with certain firms and by engaging in predatory pricing.
Cabcharge did not deny having engaged in a number of the alleged contraventions, which included:
- Refusal by Cabcharge to allow competing suppliers of electronic payment processing services for taxis to process Cabcharge branded non-cash payment products, and
- Below-cost supply of Cabcharge taxi meters and associated fare schedule updates for an anti-competitive purpose.
The ACCC sought declarations of the above contraventions, the imposition of pecuniary penalties, a probation order that would require Cabcharge to establish a compliance program and a contribution to its costs.
Justice Finkelstein made declarations for each of the admitted contraventions of section 46 and ordered Cabcharge pay a pecuniary penalty of $14 million, allocated as follows:
- $9 million for refusing to deal with Mpos Australia Pty Ltd
- $2 million for refusing to deal with Travel Tab Australia Pty Ltd
- $3 million for predatory pricing between 2004 and 2007.
The parties agreed that Cabcharge ought to pay $1 million of the ACCC’s costs of and incidental to the proceeding.
The Court also made an order requiring Cabcharge to implement a trade practices corporate compliance program at its own expense for 3 years.
What this means for you
This case clearly shows the ACCC’s determination to seek substantially higher penalties for breaches of the TPA.
The record penalty imposed in this case is likely to revive the ACCC’s desire to pursue section 46 claims arising out of unilateral conduct. Therefore, companies with significant market power should ensure that organisational structures are put into practice so as to minimise the risk of being found to have used its position for an anti-competitive purpose.