An Australian Federal Court had imposed a penalty of AUS$8.9m (US$6.7m) on Australian Safeway Stores for misusing its market power and fixing the price of bread. Justice Alan Goldberg handed down the fine today (31 January) after the Federal Court ruled against the retailer on 30 June 2003.

In 1996, the Australian Competition and Consumer Commission (ACCC) took the chain to court, accusing Safeway of pursuing a policy of removing backers’ products from sale when they were being sold at promotional prices in local independent stores.

The court unanimously ruled that Safeway had misused its market power and engaged in price fixing activities at Melbourne’s Tip Top Bakery in Preston Market. A majority of the court agreed that Safeway had fixed prices in Frankston, Cheltenham, Vermont and Albury. Five other allegations were dismissed.

Concluding the long-running case, Justice Goldberg said that Safeway “deliberately calculated to restrict competitive conduct.”

In announcing the fine, Justice Goldberg added that “the penalties imposed on Safeway ought to be substantial and reflective of the need, in particular, for general deterrence”.

ACCC chairman Graeme Samuel welcomed the substantial penalties imposed on Safeway, suggesting that the fine serves to “make it clear that businesses which possess market power need to be careful about the way in which they go about their activities.”

“While this matter was vigorously contested by Safeway throughout the entire proceedings, the ACCC remained of the view that Safeway had engaged in conduct in breach of the Trade Practices Act. The ACCC’s decision to pursue the matter has been vindicated. This case demonstrates the ACCC’s resolve to pursue difficult, hard-fought litigation through to a conclusion,” Samuel said.