Australian Competition and Consumer Commission v Australian Communications Network Pty Ltd [2005] FCA 276

Australian Competition and Consumer Commission v Australian Communications Network Pty Ltd [2005] FCA 276

ACN's scheme required participation payments which did not bear a reasonable relationship to the value of services provided, and these payments were predominantly induced by the prospect of recruitment payments. Therefore, the scheme constituted a pyramid selling scheme in contravention of s 65AAC of the Trade Practices Act 1974 (Cth). Paech was knowingly concerned and aided and abetted ACN's contravention.

Parties
Applicant: Australian Competition and Consumer Commission; First Respondent: Australian Communications Network Pty Ltd; Second Respondent: Martin Paech; Third Respondent: Robert Stevanovski; Fourth Respondent: Gibbschade Pty Ltd; Fifth Respondent: Jonathan Gibbs; Sixth Respondent: Christine Schade; Seventh Respondent: Keith Janke
Jurisdiction
Australia
Judgment Date
23 March 2005
Procedural Posture
Civil / Post Liability Judgment, Pending Orders
Outcome
Scheme found to contravene s 65AAC; orders pending further submissions.
Legal Topics
Pyramid Selling Schemes, Multi Level Marketing, Inducement, Objective Test of Causation, Commercial Reasonableness
Competition Law Consumer Law Pyramid Selling Schemes Multi Level Marketing Inducement Objective Test of Causation Commercial Reasonableness

Case Brief

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Parties

Australian Competition and Consumer Commission

Applicant

Australian Communications Network Pty Ltd

First Respondent

Martin Paech

Second Respondent

Robert Stevanovski

Third Respondent

Gibbschade Pty Ltd

Fourth Respondent

Jonathan Gibbs

Fifth Respondent

Christine Schade

Sixth Respondent

Keith Janke

Seventh Respondent

Procedural Posture

Civil / Post Liability Judgment, Pending Orders

Legal Issues

  1. 1 Whether ACN's multi-level marketing scheme constituted a pyramid selling scheme contrary to s 65AAC of the Trade Practices Act 1974 (Cth)
  2. 2 Whether participation payments were predominantly induced by recruitment payments
  3. 3 Whether director and agents aided, abetted, or were knowingly concerned in contravention

Ratio Decidendi

ACN's scheme required participation payments which did not bear a reasonable relationship to the value of services provided, and these payments were predominantly induced by the prospect of recruitment payments. Therefore, the scheme constituted a pyramid selling scheme in contravention of s 65AAC of the Trade Practices Act 1974 (Cth). Paech was knowingly concerned and aided and abetted ACN's contravention.

Court Disposition

Scheme found to contravene s 65AAC; orders pending further submissions.

Orders

  • Hearing adjourned to a date to be advised for further submissions as to what orders should be made.
  • Costs reserved.