ACCC v viagogo Part II: The Penalties

What you need to know

• The Court has ordered that viagogo AG pay AU$7 million in pecuniary penalties following multiple contraventions of ss 18, 29, (34) and 48 of the Australian Consumer Law.
• Recent penalties awarded for breaches of the Australian Consumer Law have been substantial indicating that the Courts are ready and willing to take a hard line against companies that mislead consumers.
• When looking at a high number of contraventions that would mean pecuniary penalties could be effectively limitless, the Court will attempt to give a "meaningful maximum" considering the entirety of the contravening conduct and relevant factors of the case, especially in the absence of parity with other cases.

What you need to do

• Be aware that other factors such as deliberateness of conduct, role of senior management in contraventions, lack of contrition, lack of a corporate compliance program and lateness in corrective action following any preceding liability judgment may be relevant factors for a higher award of pecuniary penalties and / or a statutory injunction for contraventions of the Australian Consumer Law.

The penalties decision in the ACCC v viagogo dispute was handed down on 2 October 2020 (Penalty Decision).  We covered the liability judgment (Australian Competition and Consumer Commission v viagogo AG [2019] FCA 544) here which had established certain breaches of the Australian Consumer Law (being Schedule 2 to the Competition and Consumer Act 2010 (Cth) (the ACL) by viagogo AG (viagogo) for making certain claims in relation to its online ticket resale shopfront and in association with marketing the tickets listed for sale on its platform.

The Orders

Declarations and Pecuniary Penalties

The Penalty Decision opens with agreed declaratory orders which have the effect of confirming the below four contraventions in the form in which they were set out in the liability judgment.  The subsequent penalties awarded were, for the:

• Official Site Representation, which contravened ss 18, 29(1)(h) and 34 of the ACL, AU$2.5 million;
• Quantity Representation, which contravened ss 18 and 34 of the ACL, AU$2.5 million;
• Total Price Representation, which contravened ss 18 and 29(1)(i) of the ACL, AU$1.5 million; and
• Part Price Representation, which contravened s 48(1) of the ACL, AU$500,000.

The maximum amount that viagogo could be penalised for each contravention is AU$1.1 million (s 224(3) item 2 of the ACL).  But as each representation was made a large (but commercially sensitive) number of times, a straight multiplication by AU$1.1 million was not considered appropriate or feasible.

Justice Moshinsky reiterated that the principal purpose of such a penalty is deterrence for both the contravening corporate respondent, and any other potential contravener.  The penalty imposed must therefore be one that is large enough to not be a preferable alternative cost when compared to the gains earned from a contravention but also not so great as to give no meaningful maximum.

The Court reached the total penalty of AU$7 million by applying the:

• totality principle – which considers the entirety of the contravening conduct, including other relevant factors as set out in s 224(2) of the ACL and cases such as Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; 327 ALR 540 at [8]; and 
• course of conduct principle - which considers the overlaps between the legal and factual elements of the contraventions, so as to avoid "double punishment".

Noting that the ACCC sought a penalty of at least AU$12.1 million and viagogo contended it should pay only AU$3 million, his Honour discredited the application of the parity principle (the preferred principle contended by viagogo) which contemplates similar penalties awarded for similar cases as the proposed "like" cases contained very little factual relativity with the current case.

Injunction

Viagogo is restrained for five years from doing any of the behaviours which caused the above false and misleading representations to be made.  Although an injunction was not available "as a matter of course" to the ACCC, after the Court considered viagogo's deliberateness of conduct, role of senior management in the contraventions, lack of contrition, lack of corporate compliance program and lateness in corrective action following the liability judgment, the injunction was deemed appropriate and awarded.

Compliance Program

Viagogo must also establish and implement an Australian Consumer Law Compliance Program for three years for all employees or persons otherwise involved in its business who may deal with consumers.

Costs

Costs were also awarded against viagogo for the Penalty Decision proceedings.

Next?

viagogo filed an appeal against the decision on 29 October 2020 so there is more to come in this dispute.