Civil penalties can come at a premium

• Published date: 20 May 2022
• Subject Matter: Consumer Protection, Litigation, Mediation & Arbitration, Consumer Law, Civil Law
• Law Firm: Corrs Chambers Westgarth
• Author: Mr Daniel Marquet and Isobel Fitzgibbon

The recent Federal Court decision in Australian Competition and Consumer Commission v Trivago NV (No 2) (ACCC v Trivago) has confirmed courts will not shy away from ordering large civil penalties, where appropriate.

The Court was required to consider whether an appropriate marker of 'benefit' - a well-established penalty factor in civil penalty proceedings - was revenue or profit. Noting that both are relevant, the Court confirmed that it is not limited to a consideration of profit. Instead, it is able to (and should) look to the (often much larger) measure of revenue.

A refresher - how are civil penalties calculated?

In addition to setting out a framework to establish the maximum penalty, legislation often refers to the imposition of a pecuniary penalty that the Court considers is 'appropriate'.¹ The primary driver of appropriateness is general and specific deterrence; and promoting the public interest in compliance.² Penalties must be of such a magnitude so as to deter a wrongdoer "from the cynical calculation involved in weighing up the risk of penalty against the profits to made from contravention".³

Against the backdrop of deterrence, there are several other factors that courts must consider: the nature and extent of the conduct, circumstances in which it occurred, resulting loss and harm, and benefits accruing to contravenors from the conduct, among other things.⁴

ACCC v Trivago

The decision in ACCV v Trivago only concerns relief. The liability decision was handed down in February 2020, which itself was the subject of an unsuccessful appeal by Trivago during 2021.

The Court awarded a total of $44.7 million in pecuniary penalties for Trivago's contraventions of sections 29(1)(i) and 34 of the Australian Consumer Law (ACL).⁵ This makes it one of the highest penalties awarded for breaches of the ACL and certainly one of the highest following a contested hearing on liability and on relief. It...