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Business news, business advice and information for Australian SMEs | SmartCompany

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    Energy drink company Red Bull has reached an expensive settlement in the United States after it was sued for false advertising.

    The plaintiffs in the class action claimed Red Bull’s famous slogan “Red Bull gives you wings” was misleading.

    Their gripe was not the failure to sprout wings but rather the plaintiffs claimed the drink did not improve performance as promised.

    Red Bull has agreed to pay US$13 million ($14.8 million) to settle the proposed class action lawsuit.

    The plaintiff representing the class, Benjamin Careathers, said he had been drinking Red Bull since 2002 as part of the lawsuit he filed on January 16, 2013 in U.S. District Court of the Southern District of New York.

    The class action claims Red Bull’s marketing and labelling misrepresent both the functionality and safety of Red Bull beverages.

    The suit argues Red Bull misleads consumers about the superiority of its products with its slogan “Red Bull gives you wings” and its claims of increased performance, concentration and reaction speed, to name a few.

    The class action claims Red Bull’s deception is proliferated through its advertising on television, the internet, social media and events, athlete endorsers, glossy print brochures, marketing campaigns and its slogan-promoting Red Bull Flugtag event series.

    Plaintiffs made claims against Red Bull for breach of express warranty, unjust enrichment, and violations of various states’ consumer protection statutes.

    The settlement could include millions of individuals who purchased at least one Red Bull can over the past 10 years, offering class members the option of a US$10 cash reimbursement or two free Red Bull products with an approximate retail value of US$15.

    If the proposed settlement is passed by the court, Red Bull would be required to pay US$6.5 million into a settlement fund within seven days.

    SmartCompany contacted Red Bull for comment but did not receive a response prior to publication.

    Red Bull has issued the following statement: “Red Bull denies any and all wrongdoing or liability and maintains that its marketing and labeling have always been entirely truthful and accurate.”

    Justine Munsie, partner at law firm Addisons, told SmartCompany the class action is “more likely a case of ‘only in America’”.

    But Munsie says the litigation does highlight how advertisers need to be careful about how seemingly amusing and very over the top unbelievable messages might be interpreted.

    She says a law firm in America managed to find enough plaintiffs in a class that were prepared to say: “When I saw these ads saying Red Bull gives you wings, I drew from that and the surrounding circumstances not a claim that I was going to grow wings but I thought it was giving me some sort of increased performance and reaction speed”.

    Munsie says the plaintiffs claim is based on their belief there was something in the drink doing something over and above the average energy drink.

    “Red Bull agreed to settle not for an outrageous sum but for a significant sum of money, no doubt to avoid having their advertising and formula picked apart,” she says.

    Munsie says in agreeing to settle for $14.8 million Red Bull has paid the price of confidentiality and clearly regards the class action as “something more than a mere try-on”.

    “In Australia I would like to think in our body of law something is not misleading and deceptive if one person draws from it a strange meaning,” Munsie says.

    “The law is clear that very foolish people are not the people protected by our legislation. It has to be the average person.”


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    A former MP and head of a collapsed Queensland retail body has been charged with 16 counts of fraud.

    TheABC reports Scott Driscoll, who headed up the Queensland Retail Traders and Shopkeepers Association and was also previously a member of the Queensland Parliament, was charged by the Queensland Crime and Corruption Commission on Tuesday with charges relating to fraud worth $725,000 between August 2011 and May 2013.

    Driscoll has also been charged with two attempts to solicit secret commissions from two organisations worth at least $400,000, although the commission says it will not allege Driscoll actually received the commissions.

    The commission said in a statement on Tuesday it had charged a 39-year-old Queensland man with two counts of solicitation of secret commission, five counts of fraud and nine counts of fraudulent falsification of records.

    The charges follow an investigation by the former Crime and Misconduct Commission and Queensland Police, which commenced in April 2013.

    The investigation was concluded in January and referred to the Queensland Office of the Director of Public Prosecutions, which provided advice to the Crime and Corruption Commission on October 1.

    Driscoll is scheduled to appear in court in the Brisbane Magistrates Court on October 23. His wife Emma Driscoll also appeared in court this year on related fraud and perjury charges.

    According to the ABC, the former politician resigned from parliament in November 2013 after the parliament’s Ethics Committee found him guilty of 49 counts of deliberately misleading parliament and hiding personal income and business dealings.

    The committee recommended Driscoll be fined $90,000 and be expelled from parliament.

    SmartCompany attempted to contact the Queensland Retail Traders and Shopkeepers Association but it appears the association is no longer operating.

    According to Appliance Retailer, the association applied to the Supreme Court in April 2013 to be wound-up “on grounds of insolvency”, with all members of the association’s interim executive council resigning their positions at the time.

    Retail Biz also reported on the collapse of the association in April 2013, which it said “left many small independents isolated”.

    According to a notice published by the Australian Securities and Investments Commission, the Bank of Queensland also applied to the Supreme Court for the association to be wound-up in October 2013.

    Brett Warfield, chief executive of Warfield & Associates and fraud specialist, told SmartCompany it is difficult to determine how the fraud was alleged to have been committed in the case as it is still before the courts,

    But Warfield says “not-for-profit bodies have fraud just like any other organisations”.

    Warfield said offences relating to secret commissions are often harder to prove as they are generally “harder to identify in the first place”.

    “They usually take place behind closed doors and they usually involve someone saying ‘if you do this, I will expect this’ in terms of a percentage or dollar value,” he says.


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    A New South Wales restaurant worker has been awarded $10,000 in compensation after the state’s Civil and Administrative Tribunal found she was sexually harassed at work and the harassment caused her stress and anxiety.

    The unnamed worker had been employed as a casual kitchen hand at a restaurant for more than two years when she was approached in a back room by her boss, also unnamed, on July 31, 2012.

    The worker told the tribunal she was washing table cloths when her boss stood behind her, telling her “you are doing that correctly”. She said he reached around her and grabbed hold of her breast, which prompted her to push him away and say “no”.

    The boss then allegedly attempted to put his arm inside the worker’s t-shirt and said the words “only one”. Again the worker pushed him away and said “no”.

    The kitchen hand told the tribunal her boss followed her out of the restaurant to her car, telling her he was sick, offering her $1000, and pleading with her not to tell her 17-year-old daughter who also worked at the restaurant.

    After the incident, the employee told her boss she no longer felt comfortable working with him and attempted to discuss with him how she could repay him for a $10,000 loan against her wages, which she borrowed when she first started working at the restaurant.

    She said he became “very angry” that she would not return to work and threatened to kill her if she made good on a threat to tell his daughter about what happened.

    “I was so frightened at this point and so I got an AVO from the police to protect myself from him,” she said.

    While the employer denied the incident occurred and told the tribunal he believed the complaint was motivated by the employee not wanting to pay the money she owed him, evidence was presented to the tribunal from a psychologist that supported the employee’s claims the incident prevented her from finding alternative work for a number of months.

    The psychologist’s report also said the incident caused conflict between the employee and her husband, led to the loss of friends and work, as well as ongoing “severe levels of psychological distress, depression, anxiety and general stress”.

    The tribunal accepted the employee’s account of the events and found both the employer and his company were liable for conduct that left the employee “offended, humiliated or intimidated”. Both the employer and the company were ordered to pay $5000 each.

    Andrew Douglas, partner at M+K Lawyers, told SmartCompany under all anti-discrimination legislation, organisations are held principally liable for the actions of their employees.

    However, the vicarious liability can be severed in instances where the organisation has acted to prevent discrimination and harassment, including by implementing policies and procedures, training staff members and remaining vigilant to ensure discrimination and harassment does not occur.

    “It’s clear none of those were present in this case,” he says.

    However, Douglas says the level of damages imposed against the restaurant and its owner does not necessarily reflect the potential damages in sexual harassment cases since the Oracle judgment in July.

    “The most current law was not considered, so the claim reflects the level of damages that would have previously been awarded,” he says.

    Douglas says it also appears the employee’s case was presented in a “relatively unsophisticated” manner, with no evidence presented beyond the initial distress and loss suffered. Because of this, the tribunal narrowed the possible level of damages to a once-off incident.

    Douglas says the employee could receive a high level of compensation if more substantial evidence was presented, including medical evidence, or if the employee had chosen to pursue an adverse action claim under the Fair Work Act.

    “It was the wrong jurisdiction,” he says.

    “If an adverse action claim had been presented that she was constructively dismissed because of the sexual harassment, it would have been quite a compelling argument.”


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    People looking to purchase an existing business need to ensure they double-check the rates their employees are paid and not assume they are being paid correctly, the Fair Work Ombudsman has warned.

    The warning comes after a Victorian couple purchased a business and mistakenly continued to pay a young employee the same rate she had received under the business’s previous owners.

    The error resulted in the pair having to back-pay the former employee almost $20,000 in outstanding wages.

    Rachel Drew, partner at TressCox, told SmartCompany from the moment a business changes hands the new owners are responsible for ensuring the correct workplace entitlements for their employees.

    “It is not a defence to a claim that the new owner continued to pay based on what the seller used to pay,” she says.

    “Increases in wages over time, changes in employee roles, different award arrangements can all affect the correct rate of wages and level of entitlements.”

    While the previous owners of The Sober Mule café in Mornington had paid the staff member correctly, subsequent increases in wage rates and a rise in the minimum national wage had not been passed on by the new operators.

    The employee in question worked as a part-time kitchen hand from October 2010 to February 2014 and for most of her employment was paid $11.50 an hour.

    Because the employee had a disability, the new business owners mistakenly assumed she was receiving a supported wage despite being covered by the Restaurant and Industry Award 2010, according to Fair Work.

     A supported wage is given to Australians who participate in the workforce without the full rates of pay because their disability significantly reduces their productivity in the workplace.

    The employee was entitled to pay increases on her 19th and 20th birthdays, as well a minimum national wage increase each July thereafter.

    A subsequent investigation by the employer watchdog found the young staff member had been underpaid a total of $19,622 over three-and-a-half years.

    Drew says whether a business’ new owner can be held liable for underpayments by a previous owner “depends on all the circumstances”.

    “Some business purchases arise from a sale of shares, meaning that the business ‘ownership’ does not actually change, only the share ownership,” she says.

    “In that case, the new owners are responsible for past underpayments. Business transfers between related parties are not effective to avoid liability for underpayments.”

    Drew says the key lesson to be learnt from this case is that employee obligations form a substantial part of most businesses.

    “Failing to obtain the right advice about terms and conditions of employment and in particular ‘carry-over’ responsibilities can make the difference between turning a profit in the new venture or ending up in a financial disaster,” she says.

    Warren and Lindy Inkster, the owners of The Sober Mule Café, cooperated fully with the Fair Work Ombudsman and have agreed to enter into an enforceable undertaking.

    The undertaking will require the company to back-pay all outstanding entitlements to the affected employee within six months, as well as apologise in writing for the conduct. The business will also have to undertake training on employer obligations under federal workplace laws and make a $1000 donation to Disability Advocacy Victoria.

    “We know workplace laws can be complicated for the uninitiated, and for those who are not industrial experts, but we ask small business to use the tools and resources that we provide for them and inform themselves,” Fair Work Ombudsman Natalie James said in a statement.

    “In return, you will be able to act with confidence. It means that if a problem arises down the track, you can demonstrate your intention to do the right thing.”

    SmartCompany contacted The Sober Mule café but did not receive a response prior to publication.


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    The operators of two Melbourne Muffin Break franchises have agreed to reimburse a Chinese student more than $19,000 as part of an enforceable undertaking with the Fair Work Ombudsman.

    While enforceable undertakings with the employment watchdog are often entered into by large businesses, in this case the ombudsman said the option was available because the franchisees “demonstrated a high degree of co-operation”.

    An investigation by the Fair Work Ombudsman found the Muffin Break franchise at Doncaster shopping centre, operated by franchisee Ausnutrie Pty Ltd, and the Muffin Break franchise at the Eastlands shopping centre in Ringwood, operated by franchisee Austrirocks Pty Ltd, employed the same 24-year-old Chinese student on a casual basis between January 2012 and September 2013.

    Austnutrie is joint owned by Jian Liu and Qi Wang, while Qi Wang is the sole director of Austrirocks.

    The student, who was on a 572 student visa and contacted Fair Work for help, was found to have been paid a flat hourly rate of as low as $10, which was below the Restaurant Industry Award.

    The worker was also not paid casual loadings and penalty rates for work on Saturdays, Sundays and public holidays.

    As a result, the employee was found to have been underpaid $18,579.76 while working at the Doncaster store, as well as $769.93 while working at the Ringwood store.

    The two franchises have agreed to repay those full amounts to the student, as well as provide a written apology.

    As part of the enforceable undertaking, they have also agreed to post a notice in the workplaces advising other employees of the contraventions, make a public commitment that the behaviour will not happen again, undertake workplace training and self-audit their employees’ wages for the next two years.

    Co-owner of Ausnutrie and owner of Austrirocks Qi Wang declined to comment when contacted by SmartCompany, but John Macphail, national brand manager for Muffin Break, told SmartCompany the company is "most concerned about this occurrence with one of our franchisees in Victoria". 

    "Muffin Break has strict guidelines and procedures in place regarding workplace relations and we pride ourselves on observing good work practice and being an employer of choice," Macpahil says. 

    "We have a regular follow-up process with all Muffin Break franchisees and their employee obligations and this incident is regrettable. We have taken measures to ensure all our franchisees are reminded of their obligations."

    Rachel Drew, employment, industrial relations and workplace safety partner at TressCox Lawyers, told SmartCompany enforceable undertakings can be accepted by the Fair Work Ombudsman from companies of any size and there are no restrictions that mean the option is only available for large companies or in cases where there is reputational concerns.

    However, Drew says enforceable undertakings usually require some form of acknowledgement from the company that a contravention has occurred, as well as a commitment to improve future behaviour.

    “The ombudsman also needs to consider a public interest test, whether it is in the public interest to prosecute the company through a court claim,” Drew says.

    “It will also consider the cost of running a court claim.”

    Drew says this case highlights the need for employers to understand the operation of penalty rates, as well as the ombudsman’s willingness to protect vulnerable workers, such as students on holiday visas.

    “The main issue in this case was an employer assuming a single, low rate of pay was acceptable for work at any time of the day and any day of the week,” she says.

    “Most employers would be aware that out of hours work and weekend work needs to be paid differently.”

    *This article was updated at 2.16pm on October 13 to include a response from Muffin Break. 

     


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    The Federal Circuit Court has rejected an adverse action claim from a former Melbourne human relations manager who claimed she was bullied as a result of her Italian background.

    But the court heard the HR manager was sacked from her job for misusing the company’s confidential documents for financial gain.

    Dora De Blasio filed an adverse action claim against her employer, Melba Support Services, claiming she was fired in November 2012 after making a bullying complaint against Melba Support Services chief executive Glenn Foard.

    De Blasio claimed Foard unfairly criticised her work and made derogatory comments about her Italian background. She sought reinstatement to her position on the grounds her employer acted adversely against her because she exercised her workplace rights when she made a bullying complaint and later took personal leave.

    But Judge Grant Riethmuller heard De Blasio’s complaints of bullying were unsubstantiated and found her to lack credibility as a witness.

    Instead, Riethmuller found Melba Support Services had a “genuine reason” to terminate De Blasio’s employment as email evidence presented to the court demonstrated she substantially reproduced Melba Support Services copyright-protected documents in the course of her work for another organisation.

    Riethmuller also found Melba Support Services had genuine grounds for terminating De Blasio’s employment because she was found to have shared confidential details of her bullying complaint with individuals employed by other disability service providers, who may have been relied upon as witnesses.

    “[De Blasio] well understood this was not appropriate and was employed in a position where she would have been expected to understand this,” said Riethmuller.

    “It was not the conduct of an employee unfamiliar with human resource issues.”

    Employment law specialist Peter Vitale told SmartCompany an adverse action claim arises when an employee alleges their employer has taken an action, whether it is termination or another form of disadvantaging them in their employment, for one of the reasons prohibited by the Fair Work Act.

    Vitale says the prohibited reasons are broad in scope and include employees making bullying complaints, exercising workplace rights to take leave, being a union delegate, as well as a general provision that allows employees to make any form of complaint or inquiry in relation to their employment.

    “In this case, the employee claimed that the adverse action was termination and the prohibited reasons were she had made a bullying complaint and taken sick leave,” Vitale says.

    “At this point, the Fair Work Act says it is then up to the employer to prove that they were not the reasons for the action… there is a reverse onus of proof on the employer to satisfy the court the reasons that were alleged were not the reasons for the action.”

    “That typically involves calling everyone involved in the decision-making as a witness to give their version of events. If the court is satisfied based on the evidence that the prohibited reasons were not the reasons for the action, the claim will fail.”

    But Vitale says, by implication, this means the employer must explain in practical terms what the actual reason for the action was.

    “In this case, based on the email evidence of misuse of the employer’s copyrighted material, the employer made a decision to terminate the employee and the court accepted that was the actual reason for termination,” he says.

    SmartCompany contacted Melba Support Services but did not receive a response prior to publication. SmartCompany was unable to contact De Blasio.


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    Converse is cracking down on competitors that make shoes similar to its famous Chuck Taylors, filing lawsuits against 31 companies including Walmart, Kmart and Skechers in a New York court this week.

    The shoemaker, which has been owned by Nike since 2003, says it has sold more than a billion pairs of the shoes, recognisable by their rubber-toe front and star design, but according to the New York Times, it has had enough of other shoemakers selling similar products.

    Converse is suing the companies for yet to be specified monetary damages, claiming they have infringed its trademark over elements of the shoe’s design, including one or two black stripes and the rubber cap above the toe.

    At the same time, Converse has also filed a complaint with the International Trade Commission to halt counterfeit copies of the shoes from entering the US.

    “Our decision to bring these lawsuits is grounded in the basic principle of fairness, our well-established right and responsibility to protect Converse's intellectual property, and our commitment to prevent consumer confusion in the marketplace” Converse chief executive Jim Calhoun said in a statement issued to SmartCompany

    “We welcome fair competition, but we do not believe companies have a right to copy the Chuck's trademarked look”

    Calhoun told the New York Times Converse has also sent out more than 160 cease-and-desist letters to companies it believes are infringed upon its trademarked design.

    SmartCompany contacted Kmart but did not receive a response prior to publication.

    John MacPhail, intellectual property, media and technology partner at Finlaysons, told SmartCompany it is unlikely Converse is motivated by money or necessarily interested in extracting royalties from the 31 companies.

    “I don’t think it is about money, it really is about them trying to keep their brand exclusivity and cache,” he says.

    MacPhail says it is likely a number of the defendants will choose to settle the case with Nike-backed Converse, especially smaller operators.

    But he believes Converse has “a pretty weak case”, which would be even harder to stand up in Australia, as a large number of retailers have been producing and selling similar shoes for a long period of time.

    “It’s pretty clear Converse has spent a lot of time in getting its trademarks right in the US but they haven’t really done the same in Australia,” he says.

    MacPhail says trademark protection for product design, or ‘get-up’, is also weaker in Australia.

    While MacPhail says Christian Louboutin has a “limited trademark” on red soles for its shoes in Australia, this only applies in cases where the red sole contrasts with the rest of the shoe. If another shoemaker wants to add a red sole to a completely red shoe, they are able to.

    Similarly, MacPhail says a bid by New Zealand winery Oyster Bay to trademark its label design failed after a group of larger wineries banded together to have its application for a trademark application of a whited-out Oyster Bay bottle rejected.

    “There is an innate reluctance in Australia to accept get-up as a distinctive and trademarkable concept unless you are really famous for it,” he says.

    *This article was updated at 3.37pm on Wednesday October 15 to include comments from Converse. 


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    An office administrator at the Baringa Childcare Centre in the Australian Capital Territory has yesterday pleaded guilty to the theft of $42,000 from the small business.

    Fairfax reports Tanya Diamond appeared at the ACT Magistrates Court on Tuesday, October 14, on the count of obtaining property by deception. She had originally faced 47 separate counts, but the prosecution rolled them into one all-encompassing charge.

    Diamond, who began working at the facility in 2001 as a casual employee before being promoted to office administrator in 2003, used her position to amend her work hours, resulting in the theft of $42,642.19 between August 2010 and July 2013.

    Diamond’s role in the childcare facility of collecting and collating time sheets, processing pay, enquiries, tax and leave, enabled her to edit her documented working hours, resulting in the fraudulent acquisition of business funds.

    Diamond was still attending board of directors meetings until September of 2013.

    Gary Gill, partner in charge at KPMG’s forensic accounting services and an expert on fraud protection, told SmartCompany “the owner needed to keep tabs on the numbers, as well as understanding outgoings and suspicious transactions to better ensure that this doesn’t occur in their business”.

    “The owner should always be sceptical of the payroll, not so much to not trusting the employees, but being sceptical and looking closely at the payroll every month,” Gill says.

    However, Gill believes not much can be done for small business due to their restricted employee numbers.

    “Small businesses don’t have the same staff available as a big business does, and it would cost too much for a small business to employ more people to oversee every task,” he says.

    Fraud in small business isn’t uncommon though, in 2013, Gill’s KPMG team found there has been a three-fold increase in major fraud during the past 15 years.

    KPMG has found 60% of fraud is internal, and this is due to the lack of segregations of duties in a small business, meaning there is more exposure to sensitive parts of the business to more employees.

    “Fraud happens to any business,” Gill says. “Wherever there is money there will be fraud.”

    SmartCompany attempted to contact Baringa Childcare Centre but did not receive a response prior to publication.


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    The Fair Work Commission has found Bunnings’ dismissal of an employee for unfitness to perform inherent work requirements was not unfair, harsh or unreasonable.

    Reynato Reodica complained he was exposed to wind and cold temperatures at the Bunnings store he worked at.

    Reodica’s duties included operating a forklift, lifting bags of sand and cement, and replenishing and recovering stock.

    But while helping a customer lift items he suffered an umbilical hernia.

    Returning to work after the hernia he complained of  “suffering and battling all body deep tissue muscular, deep to the root of the teeth and deep to the gums nagging aches, pains, sensitivity and numbness from cold weather, [wind] and rain”.

    During the total period of his employment, Reodica only worked for nine months due to his injuries and between October 2012 and January 2014 he only worked one day.

    Bunnings had a practice of mitigating the conditions in its large warehouses, where the temperature could not be regulated, by providing polo shirts, polar fleece vests, windcheaters, gloves, a beanie and scarf.

    As this had not been sufficient for Reodica in this case, Bunnings concluded it would be in breach of its occupational health and safety obligations if it allowed him to return to work.

    After several meetings between Bunnings and Reodica, Bunnings terminated his employment as it could not provide a suitable work environment, namely guarantee that it would not be windy in the store and that the temperature would not fall below 22 degrees.

    The Fair Work Commission found Bunnings had done everything it reasonably could to give Reodica time to see if his medical condition would improve and had valid reasons for terminating his employment.

    Judd Young, employee relations manager at Bunnings, told SmartCompany the hardware retailer has a long history of providing care and support for its employees.

    “While we regret the situation in which Mr Reodica finds himself, we believe the decision made by the Fair Work Commission was fair” he says.

    Andrew Douglas, partner with M&K Lawyers, says Bunnings’ actions were lawful discrimination.

    “The legislation says there are circumstances where such discrimination is lawful where you can make no reasonable adjustment,” he says.

    “It shows employers, particularly SMEs, need advice to do this properly.”

    Douglas says the key legal test is whether the employee can do the inherent task of their job, so a job description is crucial.

    “When employers are getting their medical evidence or referring to the employee’s doctor they must provide them with the inherent task requirements,” he says.

    SmartCompany was unable to contact Reynato Reodica for comment.


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    The competition watchdog commenced further legal proceedings against Coles today, alleging the supermarket giant engaged in unconscionable conduct against its suppliers.

    The Australian Competition and Consumer Commission claims Coles tried to broker deals with suppliers for “profit gaps” on a supplier’s goods, being the difference between the amount of profit Coles had wanted to make on those goods and the amount it had achieved.

    It also claims the supermarket tried to make suppliers pay Coles, both retrospectively and prospectively, for amounts it claimed as “waste” on a supplier’s goods which occurred after Coles had accepted the goods, and price reductions, or “markdowns” implemented by Coles to clear goods.

    The ACCC says Coles also imposed fines or penalties on suppliers for short or late deliveries even though the causes of profit gaps and waste and markdowns were usually outside the control of suppliers and the amount of the fines imposed were unrelated to Coles loss.

    The watchdog alleges Coles took advantage of its superior bargaining position by demanding agreements to pay money where it had no legitimate basis for doing so and failing to provide adequate information to suppliers.

    The legal action includes allegations that Coles applied undue pressure by “threatening measures” that were commercially detrimental to suppliers if they refused to agree to payments, pressing suppliers for urgent responses to agree to payments, making multiple demands of suppliers for payments and

    withholding money due to suppliers.

    ACCC chairman Rod Sims said the allegations against Coles are a matter of significant public interest as they involve a large national company in its dealings with small business suppliers in the highly concentrated supermarket industry.

    “The ACCC has commenced these proceedings because it considers the alleged conduct was contrary to the prevailing business and social values which underpin business standards that apply to dealings with suppliers,” Sims said in a statement.

    Sally Scott, partner at law firm Hall & Wilcox, told SmartCompany this is a much needed case in Australian consumer law and for this reason alone, it is not at all surprising to see the ACCC pursue this case.

    “The law of unconscionable conduct is largely undefined,” she says.

    “To a certain extent this is necessary as it is important not to close off the possible circumstances where the law would provide relief.”

    But Scott says more judicial guidance is needed.

    “Whether the court is willing to provide further guidance remains to be seen.”

    The matter is listed for a directions hearing in Melbourne at 10am on Friday 24 October 2014 before Justice Gordon.

    Coles says it rejects the claims of unconscionable conduct alleged by the ACCC.

    "The ACCC's allegations concern a limited number of dealings with five Coles suppliers three years ago," a spokesperson for Coles said in a statement.

    "For context, Coles has over 4,000 suppliers, and is in contact with many of them on a daily basis. It has millions of individual contacts with suppliers every year.  All five suppliers continue today to be valued suppliers to Coles." 

    *This story was updated to include Coles' response at 4pm on 16 October 2014


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    The High Court has held that a man who was fired after calling his co-workers "scabs" will not get his job back.

    BHP Coal fired Henk Doevendans from the Saraji coal mine in 2012 after he held a placard stating "No principals Scabs no guts" during a Construction, Forestry, Mining and Energy Union organised rally.

    BHP argued these signs were offensive towards other workers, and contrary to its workplace policies about treating other employees with courtesy, dignity and respect. 

    During an investigation, Doevendans expressed no contrition for his actions and was defensive about his behaviour.

    BHP took the view that Doevendans’ behaviour was inconsistent with the culture BHP was trying to establish, and terminated his employment.

    The CFMEU brought a general protections claim in the Federal Court on behalf of Doevendans, arguing that he was dismissed because he was a member of the CFMEU, and because he had engaged in lawful industrial activity.

    After a few legal twists, turns and appeals, a majority of the High Court upheld that Doevendans’ dismissal was not unlawful yesterday.

    The High Court was of the view that while the reasons for Doevendans’ dismissal were obviously connected to his participation in lawful industrial action, that industrial action was not a reason for the dismissal.

    Libby Pallot, workplace relations law specialist at Russell Kennedy Lawyers, says the decision is a good outcome for all employers.

    She says the High Court decision confirms an employee’s misconduct is not protected just because it happens while the employee is participating in industrial activity.

    “It is important for employers not to be afraid of taking action against employees who have engaged in inappropriate behaviour,” Pallot says. 

    “An employer has a strong defence if it can show that it would have taken the adverse action against the employee even if the workplace right had not been exercised, or industrial activity had not occurred”.

    Pallot says as always it remains essential that an employer tread carefully when proposing to take adverse action against an individual with workplace rights, or who is participating in lawful industrial activities.

    She says employers must be able to demonstrate that the reasons for taking the adverse action are divorced from the existence of the workplace rights or the taking of industrial activity.

    “It is still very important for employers to get legal advice before taking any adverse action against an employee who is taking industrial action, or is absent on leave or WorkCover.”


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    Coles has fought back against the Australian Competition and Consumer Commission’s allegations that it threatened suppliers.

    The ACCC launched proceedings in the Federal Court against Coles yesterday but the supermarket giant has rejected the competition watchdog’s claims of unconscionable conduct.

    A spokesperson for Coles said the ACCC's allegations concern a limited number of dealings with five Coles suppliers three years ago.

    “Coles has over 4000 suppliers, and is in contact with many of them on a daily basis. It has millions of individual contacts with suppliers every year,” the spokesperson said in a statement.

    “All five suppliers continue today to be valued suppliers to Coles.”

    Coles says its negotiations with suppliers were part of “ongoing commercial negotiations” involving a much broader, longer-term trading relationship with each supplier.

    “These are normal topics for business discussions between grocery suppliers and retailers in Australia and around the world,” the spokesperson says. “Commercial negotiations can be robust, regardless of the industry or sector.”

    Coles also defended its “Profit Day” which it describes as “an administrative day where discussions were held with suppliers in relation to outstanding claims and additional business opportunities”.

    Coles says discussions, including those concerning profit gaps, were aimed at improving the profitability of products which can limit the supermarket’s ability to deliver value to customers.

    The supermarket also defended its actions against suppliers in relation to product wastage.

    “Responsibility for waste may lie with the supplier, the retailer or it may be shared,” the spokesperson for Coles said.

    “Payments for waste are a common business practice in retail in Australia and around the world.”

    But Peter Strong, chief executive of the Council of Small Business of Australia, told SmartCompany while only five suppliers may have been named in the legal action there are “a lot more” who have been pressured by Coles.

    “People are very afraid to come out in public and say anything because they know that it is the end of their business,” he says.

    “If you complain, they are going to punish you pretty severely.”

    Strong says the five suppliers who have spoken out should be safe as the ACCC will be watching very closely. 

    Strong is calling for small businesses that have been stifled, or forced to give over their professionalism and innovation skills behind Coles and Woolworth labels, or just been bullied to contact COSBOA.

    “This issue has been going on for years and it’s good to have someone who finally gets it,” Strong says.

    “I really believe falling productivity in Australia is because people out there in the supply chain can’t innovate because they are under stress and under pressure.”  

    The latest proceedings come just five months after the ACCC accused Coles of forcing about 200 smaller suppliers to pay extra rebates.


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    A call centre banker has failed in his unfair dismissal claim before the Fair Work Commission.

    Brett Hutton was employed by Sykes Australia in July 2013 as a “banker” handling calls for clients including St George Bank. 

    Sykes claimed Hutton displayed bad-tempered and aggressive behavior during training sessions and once he started work he sent emails with unsolicited banking information to one of Sykes’ clients.

    After a series of performance management meetings, one of which Hutton refused to attend because he did not have a recording device on him, he was dismissed in January 2014. 

    Hutton applied to the FWC for an unfair dismissal remedy but Deputy President Asbury found his behavior had been inappropriate and dismissed the claim.

    The FWC found Hutton’s conduct in sending emails to Sykes’ client was contrary to directions from his manager and the information he had supplied had included critical comments about his employer.

    The commission found Hutton’s conduct alone, apart from any aggressive behaviour in the workplace, had amounted to a valid reason for his dismissal.

    “In progressing his claim Mr Hutton displayed much of the conduct which Sykes asserts provided a valid reason for his dismissal,” Asbury found.

    “Hutton was aggressive, focused on irrelevant details and had an immovable belief that he knows better than his managers and was justified in disregarding their instructions on the basis of their incompetence and his superior customer service skills.”

    Rachel Drew, partner at law firm TressCox, told SmartCompany if a new employee has difficulty communicating with colleagues and is aggressive they are unlikely to turn into a good long-term employee.

    “The sooner the employer responds, the less risk for the employer,” Drew says.

    She says employers should assess an employee’s conduct and capacity in the first six months of employment.

    “The employer has allowed this conduct to continue and hasn’t properly monitored it and when they decided to terminate they didn’t get the protection of the minimum employment period,” she says.

    Drew says if Sykes had moved to terminate Hutton before six months he would probably have been prevented from bringing in a claim.

    “It can be very difficult to deal with an employee who responds to criticism by behaving in an aggressive manner, but it is very important to address this behavior,” she says. 

    Although it was not an issue in this case, Drew also says employers should be alert to their obligations to ensure an aggressive employee is not bullying other employees.

    Sykes Australia declined to comment.


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    An employee in the United Kingdom has been found to be unfairly dismissed after “liking” a derogatory and threatening comment about his employer on Facebook.

    Former British Food Standards Authority employee Alan Blue was awarded £30,000 ($55,000) after he was dismissed for liking comments in a conversation on Facebook by two former colleagues who had recently been dismissed.

    One wrote about the manager being attacked, and Blue wrote: "Aye right, i wish."

    The other sacked employee then wrote that his boss was "lucky a never f***ed a chair aff his heed [sic]" and Blue 'liked' the comment.

    Blue defended his actions saying he thought he was having a private conversation with friends, like “banter at the pub”.

    The Scottish Herald reports the Food Standards Authority launched an investigation claiming the posts were a "breach of trust" and "not professional".

    The agency also claimed all of its employees had been issued with guidance on the use of social media.

    But a British employment tribunal found the dismissal was unfair and Blue’s employment contract had been breached.

    The tribunal found the Food Standards Authority’s social media was "primarily directed at use at work".

    The tribunal also took into account Blue’s otherwise exemplary employment record over 20 years and found there was no reason to believe his performance would change because of a single example of “foolish” participation in an online conversation. 

    Employment law expert Peter Vitale told SmartCompany it is likely an Australian tribunal would come to a similar conclusion.

    “It’s another example of the fact that employers are increasingly looking to hold employees accountable for material that is posted on social media whether it is inside working hours or not,” he says.   

    “In this case they were not able to establish that there was a genuine threat to the manager.”

    Vitale says the tribunal was also influenced by Blue’s 20 years of unblemished service, which would be a factor Australian courts and tribunals would also look at.

    He says increasing numbers of employment law cases are likely to involve social media use.

    “The starting point for employers is to have a very clear policy about the use of social media,” he says.

    This policy should make it clear that “liking” someone else’s post can also be a breach of the policy. 

    “If you are planning to take legal action the lesson is that you have to be able to draw a link between the social media content and some genuine form of concern relating to the workplace,” Vitale says.

    The UK case follows the recent move by the Australian Chamber of Commerce and Industry to stand down its chief economist following comments he made on Facebook.


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    The chairman of the corporate regulator warned Australia is a “paradise for white-collar criminals” in a speech yesterday for the Walkley Foundation.

    Greg Medcraft, chairman of the Australian Securities and Investments Commission, criticised the soft punishment of corporate offences.

    His comments come as white-collar crime has steadily increased over the past two years, with more than half of Australian businesses experiencing some sort of white-collar crime.

    Medcraft said the only realistic response to white-collar crimes in Australia is harsher jail terms and bigger penalties, according to a report in Fairfax.

    "The penalties, particularly civil penalties in Australia for white-collar offences, are basically not strong enough, not tough enough. All you're doing is giving them a slap on the wrist [and] that is not deterring people,” he said.

    For white-collar crimes, Medcraft says Australia "is a bit of a paradise.”

    Robert Cockerell, a fraud expert at KordaMentha, agrees with Medcraft’s sentiment.

    Cockerell, who prior to partnering with KordaMentha was the chief inspector in Victoria Police’s fraud group, told SmartCompany white-collar crimes and fraud in Australia’s financial division is “certainly growing”.

    “There’s more motive, there’s increased willingness to gamble. Times are getting tighter and tougher, businesses are getting smaller and this gives more motive to commit these crimes”, he says.

    Cockerell offers a way to combat, detect and reduce financial fraud, saying “organisations need to become more proactive, they need clever solutions and they need to engage with the workforce”.

    Cockerell says fraud awareness training, as well as whistleblowing within the industry can help to “harmonise” a business and increase protection to stop further fraud cases from occurring.

    Medcraft shares an alternative, yet equally critical solution on how to combat white-collar fraud in the financial sector.

    "You have to try to put more pressure on the people who are supposed to be monitoring the advisers, so [ASIC’s] strategy is going to be spending a lot more time putting pressure on their own misconduct and breach reporting," he says.

    ASIC’s 2014-15 strategic outlook looks to counter fraud and increase consumer trust in the financial system.

    “When investors and financial consumers are victims of wrongdoing, they lose trust and confidence in our financial system. It can also have a long-lasting impact on their financial wellbeing,” the report says. 

    The regulator wants to “promote investors and financial consumer trust and confidence” as well as “ensure fair, orderly and transparent markets”.


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    An employee of a Brisbane-based mining company is pushing forward with his unfair dismissal case after he was sacked by the company for using his work laptop and broadband internet dongle while on sick leave.

    Sasidhar Maturu was granted an appeal by a full bench of the Fair Work Commission after appealing against an earlier decision to throw out his unfair dismissal case against mining company Leica Geosystem.

    Maturu’s case involved the personal use of a laptop and broadband access provided to him by Leica.

    He brought the case against Leica earlier this year, but it was dismissed in May after Leica argued Maturu’s annual rate of earnings and other relevant amounts, including the sum of the broadband allowance, were above the income threshold allowing him to make an unfair dismissal claim.

    On September 29, the commission granted Maturu’s appeal in which he contended he was protected from unfair dismissal as his income, including the broadband bill he had notched up, did not exceed the high income threshold of $129,300.

    Employment lawyer Peter Vitale told SmartCompany there was no clear agreement in the contract of employment that Maturu would have the benefit of the private use of laptop and broadband access.

    As such, Deputy President Asbury found, “There is no evidence of any agreed monetary value in relation to the mobile broadband usage, it appears that such usage could not meet the definition of ‘non-monetary benefit’.”

    She found no additional sum should be calculated in relation to the mobile broadband service, thus leaving Maturu below the high income threshold.

    While the case has yet to make any clear ruling on the personal use of laptop and broadband access by employees, Vitale says there are several clear take-outs for employers.

    “Employers should have a clear policy that defines what is acceptable and what is not,” he says.

    “They should ensure that policy is communicated clearly. They should make records of the fact they made employees aware of the policy and they should enforce the policy consistently.”

    SmartCompany contacted Leica but the business was unable to respond prior to publication.


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    The Federal Court today ordered Reebok Australia to pay $350,000 for making false and misleading representations about its Reebok EasyTone shoes.

    In proceedings brought by the Australian Competition and Consumer Commission the court held representations on shoe boxes, swing tags, information cards and in store promotional material contravened the Australian Consumer Law. 

    The false and misleading claims were that if a person walked in a pair of Reebok EasyTone shoes, they would increase the strength and muscle tone of their calves, thighs and buttocks more than if they were wearing traditional walking shoes.

    The Federal Court ordered Reebok to provide a refund of $35 per pair to consumers who purchased a pair of the Easy Tone shoes from September 2011 to February 2013 and who believe they suffered loss or damage as a result of Reebok’s representations. 

    Reebok is required to establish a 1800 number by which consumers can contact Reebok, and to publish corrective notices with details of how consumers can seek redress.

    ACCC deputy chair Delia Rickard said businesses have a responsibility to ensure that claims about particular performance benefits are accurate and supported by credible evidence.

    “This is particularly important in cases such as this where it is difficult for consumers to independently verify the claims,” Rickard said in a statement.

    Karl Pohlman, brand manager of Pacific for Reebok Australia , told SmartCompany customers are Reebok’s number one priority.

    “We are happy to have resolved the ACCC’s inquiry over our historical EasyTone advertising so that we can return our focus to inspiring people everywhere to be their absolute best – physically, mentally and socially,” he says. 

    Melissa Monks, special counsel at King & Wood Mallesons says the case highlights how the ACCC clearly monitors enforcement action by overseas regulators, which can prompt domestic investigations.

    “Reebok was tempting fate here. It had already been investigated and had to provide compensation to customers in the US a number of years earlier for misleading claims about the performance characteristics of its product,” she says.

    “Both the ACCC and courts will take a dim view where a company is on clear notice in other jurisdictions that it's conduct is misleading but nevertheless continues to do the same thing in Australia - this disapproval is reflected in the quite large penalty Reebok has received.”

    Monks says the case also emphasises the importance of having reliable evidence to substantiate marketing claims, especially those about purported benefits of a product that consumers cannot independently verify.

    “If you put it out there you need to be able to back it up with scientific or other reliable evidence,” she says.

    “These types of health-related credence claims are a particular focus for the ACCC.”

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    A telecommunications provider has been slapped on the wrist by the Australian Communications and Media Authority after an investigation found it had breached 19 separate clauses of the Telecommunications Consumer Protections (TCP) Code.

    Sure Telecom has been issued with a direction to comply after it was found to have made unauthorised customer transfers from other providers in March this year, among other breaches.

    According to ACMA, Sure Telecom recently breached seven rules relating to changing suppliers. According to the TCP Code, transfers between suppliers should only take place after authorisation has occurred and with the customer’s informed consent.

    Of Sure Telecom’s 19 breaches, the majority related to telecommunications offers and sales practices. The industry code requires telcos to ensure their sales representatives promote their products accurately and fairly, as well as provide all relevant information to consumers before completing a sale.

    Manager of the ACMA’s consumer interests section, Alan Chalmers, told SmartCompany the rules relating to authorised customer transfers are very important.

    “Telcos are entitled to sell new services in a way that is clear, accurate and not misleading so that consumers can make informed choices and give informed consent to those choices,” he says.

    “When that breaks down, it is very important that consumers are alerted to the companies that are committing those breaches and that consumers take careful note of the compliance culture of particular companies.”

    Chalmers says irresponsible behaviour has been seen among a handful of offenders at the “quite small end” of the telecommunications industry.

    “I’m certainly not saying it is pervasive among small telcos – it’s isolated in terms of the companies. But there is a pattern of repeated behaviour among the proprietors.”

    Chalmers says if a business finds it has had its telco changed without the correct authorisation, it should make a complaint to that particular provider.

    “In most instances, these unauthorised transfers are reversed when the person complains. If the company that has made an unauthorised transfer doesn’t help, than a small business can go to the telecommunications industry ombudsman to make a complaint.”

    According to ACMA, Sure Telecom has been placed in external administration. The communications watchdog is investigating whether the telco’s customers have been properly transferred to other related providers.

    Sure Telecom was contacted for comment this morning but did not respond prior to publication.


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    A Melbourne hairdressing chain has been fined a total of $70,224 after the Federal Circuit court found operators had underpaid a young apprentice $8625.

    The litigation follows a crackdown on the hair and beauty industry by the Fair Work Ombudsman last year.

    Cuts Only The Original Barber, a hairdresser based in the Melbourne suburb of Endeavour Hills, received a fine of $50,160 from Judge Riley on Friday, while operators Paul Mark Salter and George Dimaris were each fined $10,032.

    The men admitted their company underpaid a 21-year-old apprentice at its GP Studio salon in the Chadstone shopping centre in 2012, but told the court the underpayments were the result of misinformation they received from TAFE, via the manager of the Chadstone store.

    The Fair Work Ombudsman found the company had decided to pay the employee based on her competency rather than years of service, despite being given advice by the watchdog that she was not enrolled in a competency based apprenticeship and was entitled to progress to a higher wage rate each year of the apprenticeship.

    The apprentice was not paid at her third year apprentice minimum hourly rate and was also underpaid overtime rates, annual leave entitlements and penalty rates for weekend and public holiday work.

    “I consider that the breaches were deliberate, as opposed to accidental or the result of a clerical error,” said Judge Riley.

    “… it is incumbent upon employers to accurately ascertain their employees’ entitlements. Moreover, the respondents’ submissions about misinformation do not have any impact on the failure to pay the employee her leave loading and accrued annual leave on termination.”

    It was found Salter and Dimaris were closely involved in the breaches.

    Judge Riley also noted Cuts Only, which operates 17 salons across Melbourne, and its associated companies had been the subject of 10 underpayment complaints between 2006 and 2012, each resolved by way of payment to employees.

    Andrew Douglas, principal at M+K Lawyers, told SmartCompany there are a number of small business industries, such as hairdressing, where it is common for employers to misunderstand complex industrial relations laws.

    “These are industries where employees are young and vulnerable,” says Douglas, who points out the Fair Work Ombudsman has been playing close attention to such industries.

    But Douglas says this case appears slightly different, as there seems to have been a clear understanding by the employer about their obligations.

    “That’s why the fine is so huge; because it appears they knew and took advantage.”

    “But for every person doing it deliberately, there will be 100 accidentally doing something because of complex industrial relations laws. Employers must make sure they know the rules before they start and apply them properly.”

    SmartCompany contacted Cuts Only The Original Barber for comment, but did not receive a response prior to publication.

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    Two gas companies and several senior executives have been hit with fines totalling more than $8.3 million for engaging in cartel conduct.

    It’s the second round of litigation against cartel conduct this year, with the Australian Competition and Consumer Commission taking action against the bearing industry in May over several Japanese executives who had conspired to fix prices in Australia.

    The Federal Court found Renegade Gas, which trades as Supagas NSW, and Speed-E-Gas, a subsidiary of Origin Energy, formed a “no-poaching” understanding from 2006 until 2011.

    The companies each agreed to not supply liquid petroleum gas cylinders for forklifts (forklift gas) to each other’s customers.

    It was found their behaviour included not approaching certain customers of the other, not offering to supply forklift gas to certain customers of the other, or offering to supply gas only at prices that they knew were unlikely to induce the customer to change suppliers; and communicating with each other for the purposes of implementing the understanding.

    Justice Gordon ordered Renegade Gas to pay a penalty of $4.8 million, and Speed-E-Gas a penalty of $3.1 million, with the ACCC attributing Speed-E-Gas’s lower penalty to its cooperation at the early stages of its investigation.

    The former managing director of Renegade Gas, Paul Berman, was also fined a pecuniary penalty of $250,000 and disqualified for three years from managing corporations, while a senior officer of Renegade Gas was ordered to pay a penalty of $100,000 and a former senior officer of Speed-E-Gas to pay a penalty of $50,000.

    SmartCompany understands the sums were the result of an agreed settlement.

    Justice Gordon found the conduct contravened the law “through a deliberate, largely covert, long standing understanding which had the potential to adversely affect a high proportion of manufacturing and distribution businesses across Sydney and which likely had an adverse effect on those businesses that were denied the opportunity of receiving a price competitive offer from either Renegade or Speed-E-Gas during the Relevant Period”.

    Dr Julie Clarke, Associate Professor at Deakin University’s School of Law, previously told SmartCompany the result over cartel conduct is generally over-priced goods, meaning the consumer pays more.

    Clarke said cases in Europe often saw guilty companies forking out billions in penalties and believed there was a feeling that if higher penalties weren’t brought in to Australia, there may not be a strong enough deterrent for business.

    “Cartel conduct happens covertly, it’s very difficult to detect, if the fines are too low people just think they can factor it into risk assessment of doing business, so it needs to be much higher to provide a deterrent,” said Clarke.

    She said Australian studies have estimated only 10% of cartel conduct in Australia is detected.

    An Origin spokesperson told SmartCompany the ACCC found Origin did not participate in the cartel conduct and acknowledged the company’s cooperation.

    “The case related to anti-competitive behaviour that commenced prior to Origin’s acquisition of Speed-E Gas in 2006,” said the spokesperson.

    “Origin was not aware of the unlawful behaviour -- it was not disclosed during the purchase process and was then concealed from Origin after the acquisition. The behaviour is completely unacceptable to Origin. As soon as we became aware of the allegations, Origin conducted a thorough investigation, co-operated fully with the ACCC and appointed new management to operate the business.

    The spokesperson also said Origin has not found evidence that Speed-E-Gas profited from the behaviour.

    Renegade Gas released the following statement:

    "Renegade Gas acknowledges the Federal Court’s decision that the company engaged in anti-competitive conduct with regard to the supply of LPG cylinders for forklifts in Sydney during the period 2006-2011. Renegade Gas also acknowledges the Court’s decision about two of its executives in relation to this matter. We sincerely regret that this conduct occurred and note that no such conduct occurred in any other market in which Renegade operates.

    "Since becoming aware of the issue in 2011, Renegade Gas has taken proactive steps to ensure the highest levels of compliance and integrity. The company undertook its own investigation into practices at the company. Following this investigation, Renegade Gas voluntarily implemented a competition and consumer law compliance program to ensure its future conduct would be in line with the Competition and Consumer Act. This program has been running for three years and is voluntarily reviewed by external consultants on an annual basis at Renegade Gas’s expense.

    "Utilising these proactive and corrective measures, Renegade Gas is ensuring ongoing compliance with competition and consumer law at every level within the company in every market in which it operates."

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