ACCC v Emma Sleep GmbH - $15M Penalty for Misleading Conduct

Original Word Document (330.1 KB) Federal Court of Australia

Australian Competition and Consumer Commission v Emma Sleep GmbH (Penalty) [2026] FCA 493

| File number(s): | NSD 1526 of 2023 |

| Judgment of: | HILL J |

| Date of judgment: | 24 April 2026 |

| Catchwords: | CONSUMER LAW – Second and Third Respondents liable for misleading and deceptive conduct in relation to sale of mattresses – appropriate pecuniary penalty – contravening conduct consists of two courses of conduct – whether contravening conduct involved deliberate courting of risk of contravention – determining the loss to consumers and benefit to the Respondents – financial position of Second and Third Respondent – whether financial position of the First Respondent (immediate parent company) is relevant – appropriate penalty is $15 million, apportioned equally between Second and Third Respondents |

| Legislation: | Competition and Consumer Act 2010 (Cth), s 139B(1), Sch 2 (Australian Consumer Law), ss 224, 246(2) |

| Cases cited: | Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 274 CLR 450

Australian Competition & Consumer Commission v Fila Sport Oceania Pty Ltd (Administrators Appointed) [2004] FCA 376

Australian Competition and Consumer Commission v Birubi Art Pty Ltd (in liq) (No 3) [2019] FCA 996; (2019) 374 ALR 776

Australian Competition and Consumer Commission v Bloomex Pty Ltd [2024] FCA 243

Australian Competition and Consumer Commission v Carrerabenz Diamond Industries Pty Ltd [2008] FCA 1103

Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2017] FCAFC 159; (2017) 258 FCR 312

Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2015] FCA 330; (2015) 327 ALR 540

Australian Competition and Consumer Commission v Dell Australia Pty Ltd (No 2) [2023] FCA 983

Australian Competition and Consumer Commission v Emma Sleep GmbH [2025] FCA 618

Australian Competition and Consumer Commission v Employsure Pty Ltd [2023] FCAFC 5; (2023) 407 ALR 302

A ustralian Competition and Consumer Commission v EnergyAustralia Pty Ltd [2014] FCA 336; (2014) 234 FCR 343

Australian Competition and Consumer Commission v Fewstone Pty Ltd (Penalty) [2025] FCA 1636

Australian Competition and Consumer Commission v High Adventure Pty Ltd [2005] FCAFC 247; (2006) ATPR 42-091

Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd (t/as Bet365) (No 2) [2016] FCA 698

Australian Competition and Consumer Commission v Master Wealth Control Pty Ltd (Penalty) [2024] FCA 795

Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) [2011] FCA 382; (2011) 279 ALR 609

Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd [2008] FCAFC 199

Australian Competition and Consumer Commission v Qteq Pty Ltd (Penalty) [2026] FCA 356

Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; (2016) 340 ALR 25

Australian Competition and Consumer Commission v Reebok Australia Pty Ltd [2015] FCA 83

Australian Competition and Consumer Commission v Samsung Electronics Australia Pty Ltd [2022] FCA 875

Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (No 4) [2011] FCA 761

Australian Competition and Consumer Commission v Terania Pty Ltd [2008] FCA 732

Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640

Australian Compet ition and Consumer Commission v Trivago NV (No 2) [2022] FCA 417; (2022) 159 ACSR 353

Australian Competition and Consumer Commission v Volkswagen Aktiengesellschaft [2019] FCA 2166

A ustralian Competition and Consumer Commission v Webjet Marketing Pty Ltd [2025] FCA 867

Australian Competition and Consumer Commission v Woolworths Limited [2016] FCA 44

Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; (2018) 262 FCR 243

Australian Energy Regulator v CAM Engineering and Construction Pty Ltd [2025] FCA 737

Australian Securities and Investments Commission v Ultiqa Lifestyle Promotions Ltd (In Liq) (No 2) [2022] FCA 1228

Australian Securities and Investments Commission v AMP Financial Planning Proprietary Ltd [2022] FCA 1115; (2022) 164 ACSR 64

Australian Securities and Investments Commission v BPS Financial Pty Ltd (Penalty) [2026] FCA 18

Australian Securities and Investments Commission v Commonwealth Bank of Australia [2020] FCA 790

Australian Securities and Investments Commission v HCF Life Insurance Company Pty Limited (Penalty) [2025] FCA 454

Australian Securities and Investments Commission v Westpac Banking Corporation (Omnibus) [2022] FCA 515; (2022) 407 ALR 1

Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v Crown Melbourne Limited [2023] FCA 782; (2023) 168 ACSR 421

NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285

R v Jacobs Group (Australia) Pty Ltd [2023] HCA 23; (2023) 280 CLR 170

Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission [2003] FCAFC 2; (2003) 127 FCR 170

Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249

TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 190; (2012) 210 FCR 277

Trade Practices Commission v CSR Ltd [1990] FCA 521; (1991) ATPR ¶41-076

Trade Practices Commission v Cue Design Pty Ltd [1996] FCA 192; (1996) 85 A Crim R 500

viagogo AG v Australian Competition and Consumer Commission [2022] FCAFC 87

Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission [2021] FCAFC 49; (2021) 284 FCR 24 |

| Division: | General Division |

| Registry: | New South Wales |

| National Practice Area: | Commercial and Corporations |

| Sub-area: | Regulator and Consumer Protection |

| Number of paragraphs: | 173 |

| Date of last submission/s: | 15 April 2026 |

| Date of hearing: | 1-2 April 2026 |

| Counsel for the Applicant: | Mr D Tynan SC and Ms T Epstein |

| Solicitor for the Applicant: | Corrs Chambers Westgarth |

| Counsel for the Respondents: | Mr N De Young KC and Ms A Poukchanski |

| Solicitor for the Respondents: | Allens |
ORDERS

| NSD 1526 of 2023 |

| BETWEEN: | AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Applicant | |
| AND: | EMMA SLEEP GMBH

First Respondent

EMMA SLEEP SOUTHEAST ASIA INC

Second Respondent

EMMA SLEEP PTY LTD

Third Respondent | |

| order made by: | HILL J |
| DATE OF ORDER: | 24 April 2026 |
THE COURT ORDERS THAT:

Pecuniary

1. Pursuant to s 224(1) of the Australian Consumer Law (ACL) at Schedule 2 to the Competition and Consumer Act 2010 (Cth) (CCA), the Second Respondent pay to the Commonwealth of Australia, within 30 days of this order, a total pecuniary penalty in the sum of $7,500,000 in respect of the contraventions of s 29(1)(i) of the ACL declared by the Court on 8 August 2025.

2. Pursuant to s 224(1) of the ACL, the Third Respondent pay to the Commonwealth of Australia, within 30 days of this order, a total pecuniary penalty in the sum of $7,500,000 in respect of the contraventions of s 29(1)(i) of the ACL declared by the Court on 8 August 2025.

3. No interest is payable on the penalties imposed by orders [1] and [2] from the date of these orders up to an including the date by which the Respondents are ordered to pay the penalties.

Injunction

1. The Second and Third Respondent be restrained, whether by themselves, their officers, employees, agents or however otherwise, in trade and commerce, for a period of three years from the date of this order from advertising mattresses, bed frames, pillows and accessories (Products) for sale on https://www.emma-sleep.com.au (Emma Sleep Website) and https://www.top5bestmattress.com.au (Top 5 Best Mattress Website), the Third Respondent’s online platforms including Facebook and Instagram, and television, radio, and other offline means including emails and text messages (Platforms):

(a) with a specified higher price that is displayed in strikethrough form (Strikethrough Price), advertising the Product as being subject to a percentage discount (for example, advertising a Product accompanied by the text ‘50% OFF’, ‘GET UP TO 55% OFF’, ‘55% SAVINGS’ and ‘-50%’ (Percentage Discount)) or a price saving (for example, advertising a Product accompanied by the text ‘Save as much as $3,531’ (Savings Discount)), if the Product has not been offered for sale or sold or has almost never been offered for sale or sold by the Second and/or Third Respondents at the Strikethrough Price or at a price equivalent to the price excluding the Percentage Discount or Savings Discount; and/or

(b) with a Sales Campaign for the Product featuring:

(i) a Countdown Timer which purports to indicate the number of days, hours, minutes and seconds remaining before the Sales Campaign is scheduled to end; and/or

(ii) text that represents the Sales Campaign is ending soon, for example, ‘Last chance to get up to 55% off’ or ‘Ending Soon! Until 3rd of July only’,

when the Sales Campaign is not limited in time, because:

(iii) prior to the conclusion of a Sales Campaign, the Countdown Timer reaches zero and resets to another period of days, hours, minutes and seconds; and/or

(iv) at the conclusion of a Sales Campaign and thereafter, the Products continue to be advertised for sale at the same or similar discount.

Compliance Program

1. Pursuant to s 246(2)(b) of the ACL, the Second and Third Respondents, at their own expense:

(a) within 90 days of this order, establish, implement and comply with an ACL compliance program, being a program designed to minimise their risk of future contraventions of Part 2-1 and Part 3-1 of the ACL, particularly ss 18 and 29 (which must include training to be undertaken by each of their employees or other persons in their business who deals or who may deal with consumers in Australia); and

(b) for a period of three years from the date of this order, maintain and continue to implement the ACL compliance program referred to in order 4(a) above.

Corrective Notice

1. Pursuant to s 246(2)(d) of the ACL, the Second and Third Respondents, at their own expense and within 90 days of the date of this order:

(a) publish on the Emma Sleep Website homepage, Top 5 Best Mattress Website homepage, Emma Sleep’s Australian Facebook page and Emma Sleep’s Australian Instagram page, a corrective notice in the terms and form set out in Annexure A (Notice);

(b) ensure the Notice on the Emma Sleep Website homepage and Top 5 Best Mattress Website homepage complies with the following:

(i) the Notice must be viewable by clicking a ‘click-through’ icon (Clickthrough Icon);

(ii) the Click-through Icon must:

A. be located in the top third of each page on which it appears, and must not be obscured, blocked or interfered with;

B. consist of a black bordered box at least 255 pixels wide by 60 pixels high;

C. contain the words “Corrective Notice ordered by the Federal Court of Australia - Breaches of the Australian Consumer Law. Learn More” in at least 18-point black, bold Arial font, on a white background and centred; and

D. operate as a one-click hyperlink to a page containing the Notice; and

(iii) the Notice must:

A. occupy the entire webpage that is accessible via the Clickthrough Icon;

B. not be displayed as a ‘pop up’ or ‘pop under’ window; and

C. be crawlable (i.e. its contents must be able to be indexed by a search engine).

(c) maintain the Notice on the websites and social media channels referred to in order 5(a) for at least a period of 90 days from the date on which the Notice is first published.

Other orders

1. The Second and Third Respondents serve on the Applicant an affidavit or affidavits verifying that they have carried out their obligations under orders 4 and 5 to be served within 90 days of the date of this order.

2. A copy of the reasons for judgment, with the seal of the Court thereon, be retained in the Court for the purposes of s 137H of the CCA.

3. The costs of and incidental to this proceeding on the question of liability and relief are reserved.

Annexure A

CORRECTIVE NOTICE ORDERED BY THE FEDERAL COURT OF AUSTRALIA – BREACHES OF THE AUSTRALIAN CONSUMER LAW

The Federal Court found that Emma Sleep Southeast Asia Inc and Emma Sleep Pty Ltd made false or misleading representations about the savings available on its mattresses, bed frames, pillows and accessories.

Following legal action by the Australian Competition and Consumer Commission, the Federal Court of Australia has imposed penalties totalling $ 15,000,000 on Emma Sleep Southeast Asia Inc and Emma Sleep Pty Ltd (together, Emma Sleep), declaring that they engaged in misleading or deceptive conduct and made false or misleading representations, in contravention of the Australian Consumer Law.

Between 15 June 2020 to 27 March 2023, Emma Sleep made savings representations to consumers by:

displaying a higher price in strikethrough form; and

advertising products as being subject to a percentage discount or a savings discount, when in fact the products had not been, or had almost never been, offered for sale at the higher price.

Emma Sleep also made representations that sale prices were only available for a limited time, using countdown timers and limited time statements, when in fact the countdown timer reset, or products continued to be on sale for the same or similar discount.

The Federal Court also ordered that Emma Sleep publish this corrective notice.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

HILL J:

A.    Introduction

1 This proceeding is to determine the penalty that should be imposed on the Second Respondent (Emma Sleep SE A) and Third Respondent (Emma Sleep AU) for contraventions of ss 18 and 29(1)(i) of the Australian Consumer Law (ACL). In outline, the contraventions were that, during the period between 15 June 2020 to 27 March 2023 (known as the “Relevant Period”), Emma Sleep SEA and Emma Sleep AU made certain representations (known as the “Savings Representations” and the “Limited Time Sale Representations”) in their advertisements to Australian consumers that were misleading or deceptive, and false and misleading.

2 Emma Sleep AU admitted the relevant contraventions. In the first stage of this proceeding, I determined that Emma Sleep SEA (then known as Bettzeit) also contravened the ACL in respect of the impugned representations, both as a principal contravener and through the operation of s 139B(2)(b) of the Competition and Consumer Act 2010 (Cth) (CCA): Australian Competition and Consumer Commission v Emma Sleep GmbH [2025] FCA 618 (Liability J udgment or Liabil i ty J).

3 The parties have submitted proposed orders on relief, including an agreed form of an injunction; a compliance program; and a corrective notice. The parties agree that the issue of costs should be deferred. The single issue to be determined by me in this proceeding is the amount of the pecuniary penalty that should be imposed.

The Applicant (ACCC) submits that penalties totalling $36 million should be imposed, with each Respondent paying $18 million each.

The Respondents (who I will refer to collectively as Emma Sleep) submit that a total penalty of $2 million is appropriate.

4 For the following reasons, a total penalty of $15 million is imposed, with Emma Sleep AU and Emma Sleep SEA liable to pay $7.5 million each.

B.    Agreed facts

5 The following background is taken from agreed statements of facts on liability and on relief made for the purposes of s 191 of the Evidence Act 1995 (Cth). The relevant statements are:

On liability, a statement dated 14 November 2024 (Liability SOAF), a supplementary statement dated 26 March 2025, and a second supplementary statement dated 15 May 2025 (Liability 2SSOAF).

On relief, a statement dated 28 November 2025 (Relief SOAF), and a supplementary statement dated 19 March 2026 (Relief SSOAF).

B.1    Respondents

6 The First Respondent (Emma Sleep GmbH) is a bedroom furniture supplier incorporated in Germany. Emma Sleep SEA and Emma Sleep AU are subsidiaries of Emma Sleep GmbH. Emma Sleep SEA is incorporated in the Philippines, and Emma Sleep AU is incorporated in Australia (Liability SOAF [2]).

7 Emma Sleep AU advertising platforms: Emma Sleep AU commenced operations in Australia in November 2019 and began to make regular sales to consumers in 2020. Emma Sleep AU advertises and supplies mattresses, bed frames, pillows and accessories to Australian consumers, primarily through its website (referred to as the “Emma Sleep Website”) (Liability SOAF [3]).

8 Emma Sleep AU also advertises its products to Australian consumers through online platforms, including Facebook, Instagram, and by email (Liability SOAF [4]). Emma Sleep AU also advertises its products on third-party retailer websites (including Woolworths Everyday Market), and advertises its products to Australian consumers on television, radio, and by other offline means including emails, text messages, and physical billboards (Liability SOAF [5]). The various media platforms on which Emma Sleep AU advertises its products to Australian consumers are referred to collectively as “the Platforms” (Liability SOAF [6]).

9 Emma Sleep AU’s products are also advertised on a product review website (referred to as “Top 5 Best Mattress Website”), which is registered to Emma Sleep AU. The website is operated by a different subsidiary of Emma Sleep GmbH (DIBMat GmbH), in conjunction with a group of staff known as “Country Team Australia” (Liability SOAF [4], as amended by Liability 2SSOAF [3]).

10 Country Team Australia: Country Team Australia is a division or business unit of Emma Sleep AU. It is responsible for:

(1) the operations of Emma Sleep AU in Australia, including business development, operations and retail/wholesale; and

(2) the management of content on online Platforms (namely the Emma Sleep Website, Facebook, Instagram, email and third-party retailer websites).

See Liability SOAF [8].

11 Country Team Australia was responsible for developing, approving and updating the advertising of Emma Sleep AU’s products on the Platforms on behalf of Emma Sleep AU (Liability SOAF [7]).

12 Relationship between Emma Sleep entities: The Liability SOAF explains the relationship between the different Emma Sleep entities during the Relevant Period as follows:

Employers for leadership roles: Country Team Australia was comprised by persons employed by Emma Sleep AU and Emma Sleep SEA (Liability SOAF 9). The persons occupying the position of “Team Lead” (who led Country Team Australia) were employed by Emma Sleep SEA and Emma Sleep AU (Liability SOAF 9). The persons occupying the positions of “Country Manager” or “Head of Australia” (which sat above Country Team Australia) were employed by Emma Sleep SEA, and were “responsible for steering the business operations of Emma Sleep AU” (Liability SOAF 9).

Share ownership: Emma Sleep GmbH held 99.40% of the issued share capital in Emma Sleep SEA (with the remaining 0.60% split evenly between Dr Schmoltzi, Mr Müller, and Mr Quiroga-Rivera) (Liability SOAF 9). Emma Sleep AU was a wholly-owned subsidiary of Emma Sleep GmbH (Liability SOAF 9).

Directorships: Dr Schmoltzi, Mr Müller, and Mr Quiroga-Rivera were directors of Emma Sleep SEA. Mr Quiroga-Rivera (the “Country Manager” or “Head of Australia”) held the position of Managing Director of Emma Sleep SEA (Liability SOAF 9). Dr Schmoltzi and Mr Müller were also directors of Emma Sleep GmbH, and directors of DIBMat GmbH (Liability SOAF 9 and (h)).

Management: Mr Müller, Dr Schmoltzi, and senior managers of Emma Sleep GmbH, “generally provided guidance at a strategy level to Country Team Australia and the persons occupying the positions of Team Lead, Country Manager and Head of Australia with respect to the operations of Emma Sleep AU” (Liability SOAF 9).

The directors of Emma Sleep AU “were appointed to fulfil statutory requirements for company registration, and were not involved in the day-to-day business of Emma Sleep AU” (Liability SOAF 9).

13 Emma Sleep managers and employees: Annexure A to the Relief SSOAF sets out the important managers and employees at Emma Sleep, and is reproduced at the end of these reasons.

14 Management and administrative service agreement: Emma Sleep GmbH, Emma Sleep SEA (then known as Bettzeit) and Emma Sleep AU were parties to a “management and administrative service agreement” dated 15 March 2021 (2021 Agreement), pursuant to which Emma Sleep GmbH was appointed to provide specified management services to Emma Sleep AU and Emma Sleep SEA. Those services included:

providing “advice and assistance in the marketing of business operations and direct services, including the identification of potential customers as well as administrati[ve] support and direct services for daily business operations in sales and any related sales activities (e.g. logistics services)” (cl 3.3.8);

causing Emma Sleep GmbH’s employees to perform as officers of Emma Sleep AU and Emma Sleep SEA or provide such general administrative services as may be required by them, including by providing advice and assistance in the general administration and management of Emma Sleep AU and Emma Sleep SEA, with all of the duties of officers of Emma Sleep AU and Emma Sleep SEA (as applicable) (cl 3.3.9); and

Emma Sleep GmbH was permitted at its discretion to sub-contract any services provided by it under the agreement to any other company in the Emma Sleep group (including Emma Sleep SEA and Emma Sleep AU) (cl 3.2).

See Liability SOAF [10].

15 The 2021 Agreement was terminated as between Emma Sleep GmbH, Emma Sleep SEA and Emma Sleep AU by an addendum to the agreement dated 28 December 2022, with a retroactive termination date of 1 January 2022 (Liability SOAF [11]).

16 Financial assistance: Emma Sleep GmbH provided financial assistance to Emma Sleep AU, by way of:

a loan agreement dated 24 September 2020 pursuant to which Emma Sleep GmbH provided a loan to Emma Sleep AU of $1,214,107.01, $1,183,964.27 of which pertained to supplier invoices paid by Emma Sleep GmbH on behalf of Emma Sleep AU; and

a “revolving credit facility agreement” dated 15 January 2022, pursuant to which Emma Sleep GmbH granted Emma Sleep AU a revolving credit line of $1,800,000, which was subsequently increased to $4,000,000 by an addendum to the revolving credit facility agreement dated 1 March 2022 (but which records that the agreement was made on 1 December 2021, and is effective from 1 March 2021).

See Liability SOAF [12].

17 Financial position of Respondents: The Relief SSOAF sets out in Annexure B the following financial information for the Respondents for the financial years ending 31 December 2020 (FY2020) to 31 December 2024 (FY2024).

18 For Emma Sleep GmbH:

its total assets increased from AUD $61.7 million (FY2020) to AUD $240 million (FY2023), falling back to AUD $159.3 million (FY2024);

its total sales revenue for FY 2020 was AUD $1.9 million; and its total revenue for FY2021 to FY2024 ranged between AUD $80.3 million (FY2024) and AUD $155.3 million (FY 2023);

its net profit ranged between a profit of between AUD $26.2 million and $40.5 million for FY2020 to FY2022, to losses of AUD $23.8 million and $52.9 million for FY2023 and FY2024;

its earnings before interest, taxes, depreciation, and amortisation (EBITDA) was AUD $38 million for FY2020, and AUD $48.7 million for FY2021.

19 For Emma Sleep SEA:

its total assets ranged from AUD $1.2 million (FY2021) to AUD $6.3 million (FY2024);

its total service revenue increased from AUD $1.7 million for FY2021 to between AUD $9 million and AUD $15 million for FY2022 to FY2024;

its gross profit increased from AUD $98,104 for FY2020 to between AUD $1.0 million and $1.3 million for FY2022 to FY2024;

its net profit increased from a loss of AUD $54,324 for FY2020 to a profit of AUD $633,518, $919,015 and $846,773 for FY2022, FY2023 and FY2024;

its EBITDA increased from negative AUD $58,855 for FY 2020 to between positive AUD $867,856 to $1.2 million for FY2022 to FY2024.

20 For Emma Sleep AU:

its total assets generally were between AUD $8.1 million (FY2020) and $10.9 million (FY2023), but were AUD $21.7 million for FY2022;

its total revenue increased from AUD $7 million for FY2020 to AUD $60.7 million for FY2022, then returned to AUD $53 million and 34.5 million for FY2023 and FY2024;

its gross profit increased from AUD $2.4 million for FY2020 to AUD $37.1 million for FY2023, then fell to AUD $21.9 million for FY2024;

its net profit was a profit of AUD $128,989 for FY2020, losses of between $1.2 million and $17 million for FY2021 to FY2023, and a profit of $1.3 million for FY2024;

its EBITDA was positive AUD $227,233 for FY2020, negative AUD $1.8 million and $15.3 million for FY2021 to FY2023, and positive AUD $1.8 million for FY2024; and

its advertising expenses were between AUD $1.1 million and $4.7 million for FY2020, FY2021 and FY2024, and were AUD $12.4 million and $15.7 million for FY2022 and FY2023.

21 Franz Haniel: The ACCC contends that it is also necessary to consider the position of Franz Haniel & Cie GmbH, which is a majority shareholder in Emma Sleep GmbH: see ], ] below.

B.2    Impugned representations

22 The impugned representations fall into two categories.

23 Savings Representations: The first category is representations that the advertised price for purchase was a discounted price (the “Savings Representations”) (Liability SOAF [27]).

24 Claimed discounts: Emma Sleep AU advertised all products for sale using one or more of the following claimed discounts (Liability SOAF [13]-[15]):

Emma Sleep AU advertised products for sale on the Emma Sleep Website and other Platforms by presenting a purchase price, and a higher price that was displayed in strikethrough form (S trikethrough P rice).

Emma Sleep AU also advertised products for sale on the Emma Sleep Website and other Platforms as being subject to a percentage discount (such as “50% OFF”), or a price saving (“Save as much as $3,531”).

25 58 products always advertised with discounts: During the Relevant Period, 58 Emma Sleep products were always advertised with one or more of the above discount statements. For those products, the discount statements were misleading, because during the Relevant Period:

(a) the products had not been previously offered for sale at the Strikethrough Price; and

(b) the products had not been previously offered for sale at a price equivalent to the price without the percentage discount, or the savings discount.

Liability SOAF [19], as varied by Relief SOAF [3]-[6], Annexure E.

26 That is, in respect of these 58 products, a consumer who purchased a product during the Relevant Period paid the purchase price and not the Strikethrough Price or the price without the percentage discount or savings discount applied (Liability SOAF [22], as varied by Relief SOAF).

27 The details of the sales of these 58 products are set out in Annexure D to the Relief SOAF. There was a total of 170,263 sales of these products during the Relevant Period, with a total value of sales estimated in Australian dollars at $74,133,217.

28 15 products sometimes advertised with out discounts: For 15 other Emma Sleep products, there were times during the Relevant Period during which the products were advertised with the discount statements mentioned above, but also times during which those products were advertised without any of those discounts (Liability SOAF [21]). The details of the sales of these products are set out in Annexure E to the Relief SOAF.

There was a total of 73,405 sales of these products during the Relevant Period, with a total value of sales in Australian dollars estimated at $ 60,371.102.

543 of those sales were without any discount statement, with a total value estimated in Australian dollars of $ 470,364.

29 Limited Time Sale Representations: The second category of impugned representation (the “Limited Time Sale Representations”) is representations that the products were only on sale for the advertised price for a limited period of time and/or consumers could only purchase the products at the advertised sale price during the period of the relevant sales campaigns (Liability SOAF [28]).

30 During the Relevant Period, Emma Sleep AU advertised sales campaigns on the Platforms, which were stated to be for limited periods of time in which the products were advertised with a purchase price and strikethrough price; or subject to a percentage discount or savings discount. The majority of advertisements for sales campaigns featured:

a countdown timer (purporting to indicate the days, hours etc before the sales campaign would end), and/or

text (such as “Last chance to get up to 55% off”).

See Liability SOAF [23]-[24].

31 However, contrary to the limited time statements set out above, the relevant sales campaigns during the Relevant Period were not limited in time, because:

(a) before the end of a sales campaign, the countdown timer reached zero and reset to another period of days, hours, minutes and seconds; and/or

(b) at the end of a sales campaign and afterwards, the products continued to be advertised for sale at the same or similar discount.

See Liability SOAF [26].

32 Contraventions of ACL: The Respondents admit that Savings Representations and Limited Time Sale Representations were false, misleading or deceptive or likely to mislead or deceive consumers (see Liability SOAF [29]).

33 The Respondents have also admitted that, on each occasion that a consumer viewed the Savings Representations or the Limited Time Sale Representations in the circumstances set out in the Liability SOAF, Emma Sleep AU contravened:

(a) s 18 of the ACL by engaging in conduct that was misleading or deceptive, or likely to mislead or deceive; and

(b) s 29(1)(i) of the ACL by making false or misleading representations with respect to the price of goods.

See Liability SOAF [30].

34 That admission must now extend to Emma Sleep SEA, in light of the conclusions in the Liability Judgment.

35 Reach of impugned representations: The Liability SSOAF sets out in Annexure C (as amended) the following information relevant to assessing the number of times the impugned representations may have been seen:

(a) Social media posts: With social media posts linking to the Emma Sleep Website, during the Relevant Period there were 75,040 landing page views, and 2,477 sales. With social media posts linking to the Top 5 Best Mattress Website, during the Relevant Period there were 50,657 landing page views, and 1,496 sales.

(b) Individual contacts: With emails sent to consumers, there were 4.4 million emails sent during the Relevant Period, which resulted in 117,728 “total clicks” (meaning the website was visited) and 12,135 “conversions” (meaning a product was purchased). With direct messages sent to consumers, there were 460,084 messages sent to consumers during the Relevant Period, which resulted in 20,378 total clicks and 1,320 conversions.

(c) Website visits: During the Relevant Period, there were over 4.9 million consumer visits to the Emma Sleep Website. Of these, 482,384 occurred between 15 June and 31 December 2020.

C.    Applicable law

C.1    ACL s 224 (pecuniary penalties)

36 Pecuniary penalties are imposed under s 224 of the ACL. By s 224(1), the Court may order that a person pay such pecuniary penalty as the Court determines to be appropriate if satisfied that the person has contravened (relevantly) a provision in Pt 3-1 (which includes s 29). A contravention of s 18 of the ACL, itself, does not attract a pecuniary penalty.

37 ACL s 224(2) (factors): By s 224(2), in determining the appropriate penalty, the Court “must have regard to all relevant matters”, including:

(a)    the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; and

(b)    the circumstances in which the act or omission took place; and

(c)    whether the person has previously been found by a court in proceedings under Chapter 4 [Offences] or [Pt 5-2 – remedies] to have engaged in any similar conduct.

38 ACL s 224(3)-(3A) (maximum penalty): When a body corporate has contravened s 29, the pecuniary penalty is not to exceed the greater of the amounts mentioned in s 224(3A) (s 224(3), item 1). The amounts in s 224A(3A) are:

(a)    [either $10 million (from the beginning of the Relevant Period until 10 November 2022) or $50 million (from 10 November 2022 until the end of the Relevant Period)];

(b)    if the court can determine the value of the benefit that the body corporate, and any body corporate related to the body corporate, have obtained directly or indirectly and that is reasonably attributable to the act or omission—3 times the value of that benefit;

(c)    if the court cannot determine the value of that benefit—30% of the body corporate’s adjusted turnover during the breach turnover period for the act or omission.

39 The maximum penalty set out in s 224(3A)(a) was increased to $50 million by the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Cth) (2022 Amending Act), Sch 1 item 104. That amendment applies in relation to acts or omissions that occurred on or after the commencement of Sch 1 (i.e. 10 November 2022): see 2022 Amending Act s 2(1) (commencement), Sch 1 item 108 (application provision).

40 The maximum penalty provides a yardstick that must ordinarily be applied, taken and balanced with all other relevant factors. Ordinarily there must be a reasonable relationship between the theoretical maximum and the penalty imposed: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 274 CLR 450 at [52]-55; Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; (2016) 340 ALR 25 at [155]-156.

C.2    Applicable principles

41 Purpose of civil penalties is deterrence: It is well established that civil penalties (such as penalties imposed under s 224) are imposed primarily, if not solely, for the purpose of deterrence, both specific and general. Notions of retribution or rehabilitation, which may be appropriate for sentencing in criminal law, are not relevant: Pattinson at [9], [15]; Australian Competition and Consumer Commission v Employsure Pty Ltd [2023] FCAFC 5; (2023) 407 ALR 302 at 49.

42 Two points follow from the centrality of deterrence in imposing civil penalties.

First, the ACCC emphasises that a pecuniary penalty must be sufficiently large to ensure that the penalty amount is not such as is seen by the contravener or others as “an acceptable cost of doing business”: Pattinson at [17]; Employsure at [69].

Conversely, Emma Sleep emphasises that a pecuniary penalty must not be so high as to be oppressive, and must strike a reasonable balance between deterrence and oppressive severity: Pattinson at [40]-[41]; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285 at 293 (Burchett and Kiefel JJ, with Carr J agreeing).

43 Analytical tools from criminal sentencing: Although there are differences between pecuniary penalties and criminal sentencing, analytical tools from criminal sentencing such as course of conduct, totality and parity may usefully be deployed in the enforcement of the civil penalty regime to assist in determining what is reasonably necessary to deter future contraventions of the law: Pattinson at [45]; viagogo AG v Australian Competition and Consumer Commission [2022] FCAFC 87 at 132.

44 Course of conduct: Ordinarily, separate contraventions of an Act resulting from separate acts would attract separate penalties for each contravention. However, when there is a sufficient interrelationship between the legal and factual elements of two or more contraventions, the Court may group these contraventions together into a course of conduct when imposing a penalty, to ensure that the contravener is not being penalised twice for what is essentially the same conduct: Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2017] FCAFC 159; (2017) 258 FCR 312 at [421]-422; Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; (2018) 262 FCR 243 at 234. However, this principle does not operate as a de facto limit on the penalties to be imposed for contraventions of the ACL, and the Court does not apply this approach if the resulting penalty does not reflect the seriousness of the contraventions: Yazaki Corporation at [231], [235].

45 In this case, the parties agree that it is appropriate that the impugned representations be grouped together into the Savings Representations, and the Limited Time Sale Representations: see ] below.

46 Totality: The second tool of analysis is totality, by which the Court conducts a final check to ensure that the aggregate penalty is just and appropriate (or not unjust or disproportionate) for the entire contravening conduct: A ustralian Competition and Consumer Commission v EnergyAustralia Pty Ltd [2014] FCA 336; (2014) 234 FCR 343 at 102; Employsure at [52]; Australian Competition and Consumer Commission v Fewstone Pty Ltd (Penalty) [2025] FCA 1636 at 78.

47 Parity: The third tool of analysis is parity. In principle, corporations guilty of similar contraventions should incur similar penalties, all things being equal: Australian Competition and Consumer Commission v Woolworths Limited [2016] FCA 44 at 133, adopting NW Frozen Foods at 295. However, things are rarely equal in ACL cases, and comparison may be difficult and of limited utility: Australian Competition and Consumer Commission v Volkswagen Aktiengesellschaft [2019] FCA 2166 at 217, referring to Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd (t/as Bet365) (No 2) [2016] FCA 698 at 28; Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 at 60.

48 Other relevant factors: As noted, s 224(2) requires the Court to have regard to “all relevant matters”, as well as the three matters mentioned. The Court often has regard to the factors identified by French J in Trade Practices Commission v CSR Ltd [1990] FCA 521; (1991) ATPR ¶41-076 at 52,152-52,153: see for example NW Frozen Foods at 292; TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 190; (2012) 210 FCR 277 at [140]-141, and the cases cited. That list has been refined in later cases.

49 As refined, the relevant factors in assessing penalty for false and misleading representations include the following:

(1) the size of the contravening company;

(2) the deliberateness of the contravention and the period over which it extended;

(3) whether the contravention arose out of the conduct of senior management of the contravener or at some lower level;

(4) whether the contravener has a corporate culture conducive to compliance with the ACL, as evidenced by educational programmes and disciplinary or other corrective measures in response to an acknowledged contravention;

(5) whether the contravener has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention;

(6) whether the contravener has engaged in similar conduct in the past;

(7) the financial position of the contravener;

(8) whether the contravening conduct was systematic, deliberate or covert.

See Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (No 4) [2011] FCA 761 at 11; Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2015] FCA 330; (2015) 327 ALR 540 at [8]-9; Australian Competition and Consumer Commission v Samsung Electronics Australia Pty Ltd [2022] FCA 875 at 37.

50 In Woolworths Limited at [126], Edelman J added the following factors:

(9) the extent of contrition;

(10) whether the contravening company made a profit from the contraventions;

(11) the extent of the profit made by the contravening company; and

(12) whether the contravening company engaged in the conduct with an intention to profit from it.

51 However, these factors do not provide a checklist of the matters to be considered. The Court’s task remains to determine what is an “appropriate” penalty in the circumstances of the particular case: Pattinson at [19]; viagogo at [150].

D.    Assessing the appropriate pecuniary penalty in this case

D.1    Overview

52 The task of the Court under s 224 of the ACL is to impose such pecuniary penalty as the Court determines is appropriate, having regard to all relevant matters, including those set out in s 224(2): viagogo at [129].

53 Summary of ACCC case: The ACCC contends that a total penalty of $36 million (imposed on the two Respondents) is necessary to achieve deterrence in this matter:

The extent to which the contravening conduct permeated all of Emma Sleep’s advertising in Australia, the number of contraventions and the substantial period of almost three years over which the contraventions occurred are aggravating factors.

Emma Sleep’s advertising strategies were deliberate and persistent and were undertaken as part of a launch strategy in Australia of aggressive pricing and continuous advertising of discounts that was driven by senior management for commercial gain.

The conduct took advantage of consumer purchasing behaviours and was effective in driving sales and increasing Emma Sleep AU’s revenue by creating a false impression that the consumer was getting a good deal, and a false sense of urgency in order to take up that deal.

Emma Sleep carefully tested the effectiveness of its discounting strategy early in the Relevant Period and determined that its units sold increased exponentially as the extent of the purported discount increased.

Emma Sleep was aware of the risks of engaging in the impugned conduct but persisted with it as it calculated that the benefits of engaging in the impugned conduct outweighed the risks of non-compliance with the ACL. A significant deterrent message is required to prevent any cynical benefit/risk calculus of this kind.

54 These arguments focus on the nature and extent of contravention, and the circumstances of the contravention (see ACL s 224(2)(a) and (b)).

55 Summary of Emma Sleep case: By contrast, Emma Sleep contends an appropriate penalty is approximately $2 million:

Emma Sleep AU and SEA are not large or profitable companies;

This is their first contravention;

The extent of any benefit and consumer harm from contravening conduct has not been established;

They did not intend to breach or flout the law;

They (particularly Emma Sleep AU) are entitled to a substantial co-operation discount; and

There are real issues with their capacity to pay a penalty beyond this amount.

56 As such, Emma Sleep contends that a penalty of $2 million strikes a reasonable balance between oppressive severity and the need for deterrence. It is a sufficient “financial disincentive” to create an “economically irrational choice” as regards future contraventions by Emma Sleep AU and Emma Sleep SEA and other would-be contraveners.

57 Apart from putting a different character on the conduct of Emma Sleep SEA and Emma Sleep AU (particularly whether it was deliberate in any relevant sense), Emma Sleep’s arguments place particular weight on the financial position of Emma Sleep AU and Emma Sleep SEA, and the capacity of these companies to pay more than $2 million. Emma Sleep rely on an expert report of Robert Hutson dated 27 October 2025 (Hutson Report) for these purposes.

58 Non-contentious matters: After the hearing, the parties provided the Court with a list of non-contentious and contentious matters. The non-contentious matters are as follows:

First, the parties agree (and I accept) that this is an appropriate case to apply the course of conduct approach. There is a very high number of individual contraventions, and each individual contravention arises out of substantially similar conduct: see ] above. As submitted by the parties, I will treat the Savings Representations as one course of conduct, and the Limited Time Sale Representations as another. This is similar to the approach adopted in Australian Competition and Consumer Commission v Dell Australia Pty Ltd (No 2) [2023] FCA 983 at 41. The parties also agree (and I accept) that the relevant measure for determining the maximum penalty is the figure set out in s 224(3A)(a); namely, $10 million (until 10 November 2022) and $50 million (from 10 November 2022).

Second, the contravening conduct took place over a lengthy period, from June 2020 to March 2023; almost 33 months.

Third, the impugned representations applied to all products sold by Emma Sleep in Australia, and applied to almost every sale in Australia (to all sales of 58 products, and to all but 543 sales (of 73,405) of the other 15 products): see ]- ] above.

59 It is also agreed that neither Emma Sleep AU nor Emma Sleep SEA has expressed contrition for the contravening conduct: cf Australian Competition and Consumer Commission v Trivago NV (No 2) [2022] FCA 417; (2022) 159 ACSR 353 at [48], 106. On the other hand, it is agreed that Emma Sleep AU should receive some discount, because it admitted liability. Emma Sleep also correctly points out that it is a mandatory factor in its favour that neither Emma Sleep SEA nor Emma Sleep AU has been found previously to have contravened the ACL (see s 224(2)(c)).

60 Major issues in dispute: The issues in dispute that have the most bearing on the assessment of penalty are as follows:

Whether the contravening conduct was a deliberate courting of risk (as the ACCC contends) (cf ACL s 224(2)(b));

Identifying the extent of commerce affected, and the loss to consumers caused, by the contravening conduct (cf ACL s 224(2)(a));

Quantifying the benefit to Emma Sleep of the contravening conduct (cf ACL s 224(2)(a));

The financial position of Emma Sleep SEA and Emma Sleep AU, and the relevance of capacity to pay to the size of the penalty; the weight to be given in this context to the financial position of the immediate parent company Emma Sleep GmbH; and the relevance and weight to be given to the financial position of the ultimate parent company Franz Haniel (cf factors (1) and (7) at [49] above).

61 The parties refer to two further issues in dispute:

The extent to which Emma Sleep had a culture of compliance during the Relevant Period, and the extent to which it has taken steps to improve its compliance culture since.

Whether Emma Sleep SEA is entitled to any discount for cooperating with the ACCC.

62 Another matter that arose in oral argument is the relevance, if any, of the pecuniary penalties imposed in other cases.

D.2    Whether Emma Sleep deliberately courted risk of contravention of the ACL

63 The first major issue is whether Emma Sleep deliberately courted the risk of contravention of the ACL. The ACCC summarises its arguments on this point in writing as follows:

Despite some awareness of Australian regulatory requirements, Emma Sleep weighed the risks of their conduct (“how big is the fine”) against the benefits of continuing with the false advertising, particularly the benefits of increasing their revenue and growing quickly.

Senior management demonstrated a willingness to persist with the conduct until “forc[ed]” to stop as the “opportunistic [sic] cost[s]” of ceasing the conduct were considered too high.

Emma Sleep engaged in the “cynical profit/risk calculus” that the case law states must be deterred by the imposition of appropriate pecuniary penalties.

64 As part of this discussion, it is also convenient to address an argument by the ACCC that the Strikethrough Price is entirely fictional, and does not bear any relation to the real cost of the Emma Sleep products: see ]- ] below.

65 Test of “deliberate” courting of risk: The ACCC’s argument depends on establishing a state of mind held by Emma Sleep AU and Emma Sleep SEA. By s 139B(1) of the CCA, it is sufficient to establish a state of mind of a body corporate in a proceeding under the ACL to show that (a) a director, employee or agent of the body corporate engaged in that conduct within the scope of the actual or apparent authority of the director, employee or agent; and (b) the director, employee or agent had that state of mind.

66 Reckitt Be n ckiser (FC): In R eckitt Be n ckiser, the Full Court made three points of principle about the contravener’s state of mind in assessing penalty that are relevant to this case.

(1) First, if a contravention does not involve any state of mind then it is for the party asserting any particular state of mind to establish it; in this case, for the ACCC to establish that the contravention was deliberate. If no state of mind is established, the Court determines the penalty on no more than the fact of the proscribed nature of the conduct: Reckitt Be n ckiser at [131].

(2) Second, if “any degree of awareness of the actual or potential unlawfulness of the conduct is proved then, all other things being equal, the contravention is necessarily more serious”. Such awareness may be able to be inferred from the very nature of the conduct or representations constituting the conduct: Reckitt Be n ckiser at [131]. The ACCC in this case places particular emphasis on this statement.

(3) Third, a judge must form his or her own view on whether and if so what state of mind existed on the evidence that is before the Court, provided that a party has been given an opportunity to be heard: Reckitt Be n ckiser at [132]. The deliberateness of conduct is always a relevant matter in a penalty proceeding for contravention of the ACL: Reckitt Be n ckiser at [121], [124]. In Reckitt Be n ckiser, the trial judge erred by accepting that conduct was “innocent” merely because the ACCC had not submitted that it was knowing or reckless: Reckitt Be n ckiser at [133].

67 On the facts, the Full Court in Reckitt Be n ckiser concluded that the respondent in that case did “court the risk” of contraventions, at least to the extent that concept included objective recklessness. That was because the respondent:

knew that others with an interest in or responsibility for consumer protection considered the marketing misleading (namely, the Therapeutic Goods Agency Complaints Resolution Panel, and the Secretary of the Department of Health);

knew exactly why those others had reached that view;

knew that facts the others had assumed for the purpose of reaching that view were true.

See Reckitt Be n ckiser at [136].

68 Two preliminary matters: It is convenient to begin with two preliminary points bearing on whether Emma Sleep AU and Emma Sleep SEA were aware of the risk of contravention.

69 First, I accept Emma Sleep’s submission that there is a difference between intentional conduct and a deliberate contravention of the law: see EnergyAustralia at [54]. The present question is whether directors or employees of Emma Sleep AU or Emma Sleep SEA, while acting within the scope of their authority, were aware during the Relevant Period that the impugned representations were or could be a contravention of the ACL.

70 Second, I accept the ACCC’s submission that internal emails between the different Emma Sleep entities reveal that Emma Sleep carefully tested the extent of discounts to be offered, and the form of timings representations, so as to maximise revenue and profits. For example:

An “Urgency Tactics Summary” from April 2020 had a section titled “Future Ideas”, which included a “Strike-Thru Price” (directly displaying the final discounted price with strike-thru price). Another new idea was a “Discount Banner Countdown”, which would show directly the end date of the discount (rather than a countdown through a day, hour, minute timer). (To be clear, the latter suggestion was not implemented: the Limited Time Sale Representations used a countdown with a timer.)

In February 2021, Shay Tan (Business Development Manager, Emma Sleep SEA) informed Mr Quiroga-Rivera (then head of Country Team Australia) that they were considering two options for Australia: increasing the price significantly and increasing the discount significantly (Option A), and increasing the price significantly and increasing the discount moderately (Option B). Importantly the discount was described as “always-on”. Mr Quiroga-Rivera stated that Emma Sleep should have test results ready in order to embark on the 2021 Easter Sales with “most optimal price/discounting structure”.

The evidence shows that this testing continued through March and November 2021. The “Big Lever Workshop” information from November 2021 is discussed below.

71 However, there is nothing inherently objectionable in a business engaging in conduct to increase its market share, revenue and profits. For that reason, I would place little weight on internal emails referring to Emma Sleep’s “aggressive discounts”, and “grabbing” its competitors’ customers. Instead, the question is whether Emma Sleep AU and Emma Sleep SEA had some awareness that its methods of increasing market share, revenue and profits could be contrary to the ACL.

72 Did Emma Sleep have awareness of the possible contravention? The ACCC relies on the following materials to establish that Emma Sleep AU and Emma Sleep SEA were aware that the impugned representations could be contrary to the ACL:

Internal communications within the Emma Sleep group;

Warnings from Koala (a rival mattress company), in October and December 2021, that the Savings Representations were contrary to the ACL;

Consumer complaints between November 2021 and December 2022; and

Warnings from ACCC in October 2022 and February 2023.

73 These materials are considered in turn.

74 Internal Emma Sleep communications: As is apparent from the summary in ] above, the ACCC places particular weight on internal statements about weighing “how big is the fine” against profits and the “opportunistic [sic] cost[s]” being too high, and later statements that Emma Sleep was being “forc[ed]” by the ACCC to stop permanent discounting.

75 The first of these statements arose in internal discussions in October 2021.

(a)    On 26 October 2021, Mr Chong (Business Development Manager, Emma Sleep SEA) stated for 2021 Emma Sleep “will still be maintaining our alternating discount strategy for all products [that is, changing the level of discounts for products] instead of just applying a constant discount rate”. The reason given was “offering only the optimum discount constantly is legally problematic in AU and we need to be careful how much attention we create at the moment”. Mr Chong stated that they had received a letter from Koala a few weeks back “which makes us understand that Koala is aware of our discounts”, and that they “want[ed] to chat with legal about it first to get a better perspective on it”.

(b)    In response, on 26 October 2021, Ms Grico (Jingsheng) Gao (Global Pricing Manager, Emma Sleep GmbH) wrote that she did not understand why an alternating discount “is causing less attention as we are still discounting”. She continued (emphasis added):

I think we should balance between risks and opportunities, i.e. if we can make more revenue and CM with more aggressive discount with calculated risks, we should go for it, that's how we boosted UK growth in the last 2 months. So what we need to understand here is 1) how big is the fine, 2) how likely competitors will attack us based on their size and their discount strategy, 3) how can we be creative to get around with the legal constraints (e.g. new customer discount). Before we get more attention, we should grow as faster as we can.

(c)    On 27 October 2021, Mr Baumgarten (then head of Country Team Australia) replied as follows (emphasis added):

Discount strategy:

One of our competitors (KOALA) is observing closely what we are doing on a daily basis, and indeed I think there is a reason why the discount calendar exists in the way we implemented it a few quarters back. We need to be careful and know what can be ahead if we just do 50% on our flagship products until the end of the year, this will def draw more attention to us based on what I've seen.

Action points to test/implement:

I've set up meetings with legal, peer reviews, Ben & included in the big lever update next week Monday.

Since we are running on max discounts this week+ next week, we won't lose out, and a clear update on this will help us calculate the risk.

Afterwards, we can look into increasing discounts in the coming weeks. Let's continue to balance this.

The ACCC draws attention to the words that have been bolded above, while Emma Sleep draws attention to the words that have been italicised.

76 The second statement (about the “opportunistic cost”) appears in updates to the Big Lever Workshop for Australia and New Zealand dated 1 November 2021 (referred to in Mr Baumgarten’s email above), sent on 8 November 2021 by Mr Baumgarten to Mr Quiroga-Rivera and a Mr Waninge from Emma Sleep. Mr Baumgarten’s comments on that document included the following (italics added):

Comments re legal check/Discount Calendar: We plan to run even more aggressive discounts moving forward, and we are the only player in the market applying aggressive discounts on a regular basis. While gaining visibility and traction in the market, we see that CR [conversion rate] is heavily driven by discounts, which helps us in our still early stage market position to gain traction against our more established competitors.

KOALA is monitoring us very closely, they did send us 2x letters so far through their legal department, 1x regarding our discounts strategy. So far, opportunistic cost would still be too high, but moving forward we can potentially end up in a hybrid discounts setup (similar to GER)[.]

77 The third statement (about being “forced” to stop permanent discounting) appears in the following email dated 2 June 2023 from Mr Baumgarten to persons including Dr Schmoltzi, Mr Müller and Mr Quiroga-Rivera, providing an update on the Australian business (italics added):

I would like to provide ACCC updates, which has been an additional complexity for us this year.

We have been putting in significant work into the legal management since March 2023, and the authorities are forcing us into zero promotion weeks since early April.

The outcome of the most recent conversations is:

2x weeks 0% discount 2x weeks one product group on discount (comfort premium, deluxe hybrid “ diamond premium ”)

2x weeks another product group on discount aka “ high season ” (comfort, diamond, gel grid)

78 In addition to these statements, the ACCC relies on an email by Mr Quiroga-Rivera on 17 April 2020. He instructs Emma Sleep AU to halt all sales for several weeks, after being informed on 16 April 2020 that Emma Sleep AU was low on supplies of certain mattresses. Mr Quiroga-Rivera continued:

We need to be mindful of constantly running sales (in case a competitor reports us to advertising authorities). So this is a good excuse.

79 Pausing here, the statements from Ms Gao set out in ](https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2026/b) above are exactly the sort of calculus that penalties must deter, and senior counsel for Emma Sleep quite properly did not seek to defend those statements. Emma Sleep submitted, however, that the actual decision-maker, Mr Baumgartner, did not support those statements, and instead stated that it was necessary to discuss the matter with legal: see ](https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2026/c) above.

80 This much can be accepted, but the apparent result of the meeting with lawyers (as set out in Mr Baumgarten’s comments on the November 2021 Big Lever folder in ] above) does not indicate any change in approach: Mr Baumgarten states that Emma Sleep AU “plan[s] to run even more aggressive discounts moving forward, and we are the only player in the market applying aggressive discounts on a regular basis”. And any meeting with lawyers in October-November 2021 did not cause any substantive change to the Savings Representations.

81 More generally, the above statements of Mr Chong explicitly (and Mr Quiroga-Rivera implicitly) reveal an awareness that constant discounting “is” legally problematic in Australia. Accordingly, it cannot be said that the contravening conduct was simple oversight, or caused by a system error. As discussed below, Emma Sleep initially stated to the ACCC that its conduct was not contrary to the ACL, but it quickly abandoned that position.

82 Warnings from Koala (Oct, Dec 2021): The second set of materials relied on by the ACCC (referred to in internal communications summarised above) is warnings received by Emma Sleep AU from Koala on 1 October 2021 and 1 December 2021.

The 1 October 2021 warning stated that the “Regular Price” (that is, the Strikethrough Price) “has, at no time since 25 April 2021, been the price at which the goods have been offered” and Koala had “no evidence that the products were ever offered at the ‘Regular Price’”. Koala stated that this conduct was in breach of s 18 of the ACL, and referred Emma Sleep to guidance about price display laws and penalties for contravention on the ACCC website. The letter asked Emma Sleep for confirmation that it would take action to address those issues as a matter of urgency.

The 1 December 2021 warning repeated Koala’s view that there was no evidence that goods had ever been offered since 25 April 2021 at the “Regular Price”, and that this conduct was in breach of s 18 of the ACL. Koala asked that Emma Sleep AU provided a written response to Koala by 9 December 2021outlining evidence to substantiate that products had been advertised at the “Regular Price” since 25 April 2021.

83 As discussed below, these statements by Koala about the Savings Representations being contrary to the ACL were entirely correct. And Emma Sleep AU has since admitted as much. But the impugned representations continued until March 2023, some 17 months after Koala’s first letter.

84 Consumer complaints (Nov 21-Dec 2022): The ACCC also relies on 22 consumer complaints received by Emma Sleep AU between November 2021 and December 2022 (although some complaints have been recorded with only a month and without a year). A significant number of these complaints state explicitly that the customer feels misled by the impugned representations, particularly when customers understood that a product would only be available at a certain price for a limited period, but that product was later advertised for an even lower price. Other customers stated they were misled about the extent of the discount.

85 Emma Sleep submits that the number of complaints is small, relative to the number of sales, and that not all complaints suggest that the customer bought the product because of the impugned representations. Even if that is so, these complaints add to the warnings from Koala in putting Emma Sleep AU and Emma Sleep SEA on notice from late 2021 that the impugned representations could be contrary to the ACL. The contravening conduct continued until March 2023.

86 Warnings from ACCC (Oct 2022, Feb 2023): Finally, the ACCC also relies on two warnings it sent to Emma Sleep on 25 October 2022 and 8 February 2023.

87 The 25 October 2022 warning stated that the ACCC had received complaints that Emma Sleep AU had made false or misleading representations, by advertising products with a percentage discount off a “regular price” when the products have never been offered at that price. The ACCC stated that the purpose of the letter was to inform Emma Sleep AU of the complaints received, and to encourage Emma Sleep AU “to review product price comparisons on its website to ensure they are clear and accurate”. The ACCC stated that it had decided to take no further action at that time, but that it would review the position if further complaints were received.

88 The 8 February 2023 warning stated that the ACCC had received “a further complaint” in relation to the percentage discount off the “Regular Price” for products advertised on the Emma Sleep website. The complaint was that the product had not been sold at the “Regular Price” for a significant period of time, and that the website uses a “countdown timer” which re-sets, instead of the sale ending and the prices returning to their “Regular Price”. The ACCC asked Emma Sleep AU to provide specified information about the savings off the “Regular Price”, and the countdown timer, to assist the ACCC’s assessment of the matter.

89 Emma Sleep responses (Feb, Mar 2023): On 22 February 2023, Emma Sleep GmbH replied to the second ACCC warning, providing information in response to the ACCC’s questions. Relevantly, this letter stated:

The discounted price is offered to new customers and newsletter subscribers. Emma Sleep stated that, “[a]s a new company mainly offering mattresses with a long life, Emma considered all sales as sales to new customers, with the Discounted Price applying to all transactions”.

Emma Sleep stated that, after receiving and reviewing the ACCC’s 25 October 2022 letter, Country Team Australia formed the view that Emma Sleep’s advertising practices were consistent with the ACL, on the basis that “granting a discount to a specific group of customers (ie, new customers) would be considered differently to a comparison between an old price and a new one”. Emma Sleep AU therefore had not made any changes to the advertising on its website.

Emma Sleep also stated that the countdown timers were used “as a way of encouraging consumers to remember to complete their purchases”.

90 On 8 March 2023, Emma Sleep GmbH provided a further response to the ACCC. Relevantly to this case:

(a)    Emma Sleep stated that the “Regular Price” (i.e. the Strikethrough Price) is determined:

on the basis of the costs of the product (COGS [costs of goods sold] and additional operational expenses), plus a target product margin. In new markets like Australia, the regular price has a higher discount margin included to allow better price adjustment to compete as the brand is established in the local market.

(b)    Emma Sleep stated that, as part of its review of its website, it proposed the following changes to its online advertising model:

• Regarding discounts, Emma Sleep AU’s three base mattress models would be on sale for no more than a third of the year. None of the products will be on sale for more than two weeks, and there will be a minimum period of 28 days between discount periods for each product.

• Regarding countdown timers, these timers would be linked to specific events, and it will be clear which event the countdown timer is referring to. The countdown timer will end at the same time as the advertising campaign.

91 These changes were implemented by 27 March 2023, which is the end of the Relevant Period.

92 The ACCC warnings occurred towards the end of the Relevant Period: the first ACCC warning was sent five months before March 2023. Accordingly, the significance of these warnings is not that they put Emma Sleep on notice that its conduct was potentially in breach of the ACL, because the warnings from Koala in October and December 2021 put Emma Sleep on notice much earlier than that. Instead, the significance of the ACCC warnings is that they caused Emma Sleep to change its conduct (unlike the warnings from Koala).

93 The responses by Emma Sleep to the ACCC about the Savings Representations and the Limited Time Sale Representations do not indicate that Emma Sleep had a carefully considered view on why those representations were lawful under Australian law.

Initially, Emma Sleep stated in its 22 February 2023 letter that the Savings Representations were consistent with the ACL, because these were discounts offered to new customers. Plainly the representations were not expressed in that way, and were not limited in terms to new customers. Further, by that time the Savings Representations had been in force for some years. And by 8 March 2023 (approximately two weeks later), Emma Sleep was proposing to change its discount policy substantially. There is no evidence that the initial stated position of Emma Sleep was supported by legal advice.

Emma Sleep initially stated on 22 February 2023 that the purpose of the countdown timer was to encourage customers to remember to complete their purchases. That stated purpose is not supported by the internal discussion of countdown timers. And, again, two weeks later Emma Sleep offered to change its discount timers substantially.

94 As noted, Mr Baumgarten stated in June 2023 that Emma Sleep AU had been “forced” by the ACCC to change its advertising: see ] above. The fact that Emma Sleep AU only changed its advertising in response to warnings from the ACCC rather suggests that it had been waiting to see whether the impugned representations would attract adverse attention, and not pro-actively ensuring that its advertising was lawful.

95 Did the Strikethrough Price have any connection to real cost? As part of its argument, the ACCC contends (and Emma Sleep disputes) that the Strikethrough Price is entirely fictional, and has no relationship to the real cost of Emma Sleep products. This issue does not affect liability: what makes the Savings Representations misleading is that the products were never sold at the Strikethrough Price, however that price was calculated. The apparent relevance of this issue to penalty is that the ACCC contends that the Savings Representations were especially misleading, because the Strikethrough Price was manipulated to achieve the greatest apparent discount.

96 The ACCC contends that Emma Sleep’s stated method of calculating the Strikethrough Price or “Regular Price” (set out in ](https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2026/a) above) is, in effect, so general as to be without content. Emma Sleep responds that this method is entirely unexceptional. At the hearing, the ACCC provided the Court with an “aide memoire”, which showed in table form the variation in Strikethrough Price, and discounts, for three Emma Sleep products (the Emma Diamond Medium Hybrid (Queen), Emma Original (Queen), and Emma Comfort (Queen)). This table shows that, during the Relevant Period, the Strikethrough Price for the Emma Diamond increased from $1,699 to $3,329; the Strikethrough Price for the Emma Original increased from $799 to $1,499; and the Strikethrough Price for the Emma Comfort increased from $1,099 to $1,599. Emma Sleep were given leave to file written submissions in response.

97 For the following reasons, I am not prepared to draw any conclusion that the Strikethrough Prices do not reflect the real cost of the Emma Sleep products.

I accept Emma Sleep’s submission that there is nothing objectionable, in itself, about the stated method of calculating the “Regular Price” set out in ](https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2026/a) above. The calculation of the real cost of the various Emma Sleep products is a matter on which the Respondents could have potentially led evidence, but they were not sufficiently put on notice that it would need to justify the method of setting the Strikethrough Price. For example, this matter does not come within any of the categories of discovery set out in orders made on 21 August 2025, which the Respondents could rightly think set the boundaries of the factual issues to be determined in this proceeding. Nor is this a matter that was entirely obvious (unlike, say, the deliberateness of the conduct: see ] above).

Further, I accept Emma Sleep’s submission that, without evidence as to underlying costs, the Court should not draw any inferences from the bare increase in the Strikethrough Prices. The increase in the Strikethrough Price, by itself, could have a number of different explanations, such increases in underlying costs, or that the initial Strikethrough Price was unduly low (neither of which would support the ACCC’s argument). Without more information, it is a matter of speculation.

98 Conclusions on deliberateness of conduct: In summary, the internal communications set out above, particularly those in October and November 2021 discussing the first warning from Koala, indicate that Emma Sleep AU and Emma Sleep SEA were aware that the Savings Representations could be contrary to the ACL. The risk of contravention should have been obvious. I accept the ACCC’s submission that it has been apparent at least from Trade Practices Commission v Cue Design Pty Ltd [1996] FCA 192; (1996) 85 A Crim R 500 at 505 (O’Loughlin J) that it is misleading to advertise products with a strikethrough price and a discount price, if the product has never been sold at that strikethrough price. A similar conclusion was reached in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd [2008] FCAFC 199 at [31]-36; Australian Competition and Consumer Commission v Terania Pty Ltd [2008] FCA 732 at 20; and Australian Competition and Consumer Commission v Carrerabenz Diamond Industries Pty Ltd [2008] FCA 1103 at [15]-18.

99 As noted, Emma Sleep AU only changed its conduct in response to warnings from the ACCC. Emma Sleep GmbH initially offered the explanation to the ACCC that the Savings Representations were consistent with the ACL, because this was a discount offered to new customers. However, that explanation was difficult to reconcile with the terms of the Savings Representations, and was abandoned in Emma Sleep GmbH’s response two weeks later. Of most concern is that the evidence before the Court does not show anyone within Emma Sleep (whether AU, SEA or GmbH) obtaining and acting on considered legal advice about the whether the impugned representations were consistent with the ACL. Instead, there is internal discussion about being cautious, because Koala was observing Emma Sleep’s pricing practices: see ] and (c), ] above.

100 It could perhaps be inferred that Mr Baumgarten obtained legal advice around the time of the November 2021 “Big Lever” workshop: see ]- ] above. But there is no direct evidence of who provided the legal advice, or what it said, and there was no change to the impugned representations. Although the ACCC bears the onus of establishing the state of mind of Emma Sleep AU and Emma Sleep SEA, any record of legal advice is a matter held wholly within the Emma Sleep companies. One of the categories of discovery in orders made on 21 August 2025 was documents recording any analysis undertaken in response to Ms Gao’s email dated 26 October 2021. In that context, the absence of documents recording any legal analysis is significant.

101 The position here has some similarities to the position in Reckitt Be n ckiser: see ] above. Mr Quiroga-Rivera had some awareness in April 2020 that constantly running sales could be problematic, and Mr Chong repeated that concern in October 2021. Koala warned Emma Sleep AU in October and December 2021 that the Savings Representations were misleading, and that warning reflected settled Australian law. Contrary to Emma Sleep’s submission, I am not bound to the particular “case” put by the ACCC, but am required to form my own view as to what the evidence establishes: Reckitt Be n ckiser at [132]. In my view, the evidence establishes at the very least that Emma Sleep “turned a blind eye” to whether its conduct was contrary to the ACL. This degree of awareness of potential unlawfulness means that the contravention is more serious: Reckitt Be n ckiser at [131].

102 It is significant that people in senior management (especially Mr Baumgarten and Mr Quiroga-Rivera) were involved in the contravening conduct (cf factor (3) in ] above).

D.3    Nature and extent of contravention, including loss or damage caused; and benefits to Emma Sleep

103 The second and third major issues are the nature and extent of the contravention, including any loss or damage caused; and the benefits to Emma Sleep AU and Emma Sleep SEA from the contraventions.

104 Nature and extent of contravention (ACL s 224(2) (a)): The following aspects of the nature and extent of the contravening conduct are established by the agreed facts:

(1) The contravening conduct was for a lengthy period: from 15 June 2020 to 27 March 2023, a period of just over 33 months.

(2) The Savings Representations applied to all Emma Sleep products, and applied to the very great majority of the sales of those products: see ], ] above. The Limited Time Sale Representations applied to the majority of advertisements for sales campaigns during the Relevant Period: Liability SOAF [24].

(3) Emma Sleep AU earned approximately $134.5 million in revenue from almost 244,000 sales of products to which the impugned representations applied (that is, $74.13m + $60.37m revenue from 170,263 + 73,405 sales): see ]- ] above.

105 The impugned representations therefore applied to a large volume of commerce. The disagreement arises in determining the volume of commerce that was affected by the impugned representations. That is the obverse of the next issue; the loss or damage caused by (suffered as a result of) the impugned representations.

106 Loss or damage caused (ACL s 224(2)(a)): The parties are agreed (and I accept) that it is not possible to quantify in monetary terms the loss or damage caused by the contravening conduct. Although it is clear that the impugned representations applied to the volume of sales set out above, it is not possible to identify exactly which of those sales were caused by the impugned representations; that is, which sales would not have occurred but for the misleading conduct.

107 Loss or damage is not limited to financial or economic harm: The ACCC submits (and I accept) that “loss or damage” in s 224(2)(a) of the ACL is not limited to financial or economic harm.

In Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission [2021] FCAFC 49; (2021) 284 FCR 24 (Volkswagen (FC)) at [190], the Full Court stated “[i]t is open and often appropriate for the Court to assess penalties for contraventions of the Consumer Law having regard to the need to deter conduct that results in non-economic forms of societal harm”. The harm in that case was that a large number of Volkswagen vehicles were “let loose on Australian roads at the behest of [Volkswagen] and for reasons of profit in circumstances where those vehicles would emit NOx in substantially higher quantities than was permitted under [Design Rule 79]”: Volkswagen (FC) at [190].

In Australian Competition and Consumer Commission v Birubi Art Pty Ltd (in liq) (No 3) [2019] FCA 996; (2019) 374 ALR 776, the respondent had made misleading representations about the provenance and authenticity of what appeared to be Australian Aboriginal art and artefacts. Justice Perry accepted the ACCC’s submission that the respondent’s conduct had caused economic, social and cultural harms, and that robust penalties were required to strongly discourage conduct of that kind: Birubi Art (No 3) at [90]-[91], [93].

108 Both Volkswagen (FC) and Birubi Art (No 3) concerned significant non-economic harms, in the form of environmental harms and cultural harms. The facts of this case are closer to Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2015] FCA 330; (2015) 327 ALR 540. In that case, Coles made representations (“Baked Today, Sold Today”, “Freshly Baked In-Store”, “Freshly Baked” and “Baked Fresh”) about products that were par-baked, rather than baked from scratch: Coles Supermarkets at [19], [24]. Allsop CJ held that the damage to consumers in that case was of a non-pecuniary nature, in that consumers “had lost the opportunity to make a different purchasing choice that they may have made had they been provided with accurate information about the goods they were purchasing”: Coles Supermarkets at [57]. Similarly, the Full Court in Recki t t Be n ckiser at [114] referred to a non-monetary effect of the contravening conduct being “the loss or at least distortion of genuine consumer choice”. The harm caused by the impugned representations in this case is of the same nature: as in Cue Design (at 508), the impugned representations here “preyed on the gullibility of the public”.

109 Is the absence of quantifiable loss a mitigating factor? Emma Sleep submits that the absence of a quantifiable economic loss is not just an absence of an aggravating factor, but a mitigating factor in its favour, citing Australian Competition and Consumer Commission v Bloomex Pty Ltd [2024] FCA 243 at 150 (Anderson J) and EnergyAustralia at [42]. Neither of those cases was purporting to lay down a general principle, but rather were dealing with the particular facts of the case. For example, in Energy Australia, Middleton J found that no consumers were in a worse financial position as a result of the misleading and deceptive conduct (only one consumer had entered into an agreement, but had terminated it during the cooling-off period): EnergyAustralia at [38]-[40].

110 I adopt the analysis of Allsop CJ in Coles Supermarkets on this topic.

If contravening conduct can be expected to cause harm to consumers but no evidence is led to suggest that it was, the respondent is entitled to be sentenced on the basis that the conduct has not caused harm, which will be a mitigating circumstance: Coles Supermarkets at [55], quoting Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) [2011] FCA 382; (2011) 279 ALR 609 at [79].

In Coles Supermarkets, Allsop CJ held that the MSY Technology approach was appropriate when the misleading conduct could clearly have a quantifiable and ascertainable pecuniary consequence for consumers. However, the loss to consumers in Coles Supermarkets was the lost opportunity to make a different purchasing decision, and Allsop CJ was not prepared to impose a penalty on the basis that no one was in fact misled by Coles’ conduct: Coles Supermarkets at [57].

111 The analysis in Coles Supermarkets applies equally here. The difficulty in quantifying the loss to consumers is not a mitigating factor in favour of Emma Sleep. Put another way, the inability to quantify financial loss caused to consumers by the contraventions does not mean that no loss or harm has been suffered: see Australian Competition and Consumer Commission v Reebok Australia Pty Ltd [2015] FCA 83 at 140.

112 At the same time, the harm caused by the contravening conduct in this case (distorting consumer choice) is not of the same magnitude as the serious non-economic harm caused by the contravening conduct in Volkswagen (FC) and Birubi Art (No 3), or the serious quantifiable economic harm caused by the contravening conduct in Reckitt Be n ckiser. Even in Coles Supermarkets, consumers were misled as to the quality of the products they were purchasing. In this case, consumers paid the price they thought they would pay for the product they thought they were getting. Emma Sleep emphasises that its products received favourable reviews from Choice Magazine, so consumers were not receiving a low-quality product either. Instead, consumers were being misled about whether they were receiving a bargain in buying an Emma Sleep product (or at least the extent of the bargain). That is not to deny the importance of preserving informed consumer choice, or to deny that a substantial penalty is required in this case. At the same time, the contravening conduct is far from the worst case in this respect, which is relevant when having regard to the maximum penalty as a yardstick: see ] above.

113 Were consumers in fact misled by the impugned representations? The discussion in Coles Supermarkets raises a further issue in dispute here: the extent to which consumers were in fact misled by the impugned representations (and to that extent suffered loss or damage).

The ACCC submits that the proper inference is that many consumers (or a significant number) purchased Emma Sleep products because of the impugned representations.

Emma Sleep, by contrast, concedes that it is possible that some consumers would have bought Emma Sleep products because of the impugned representations, but submits that the evidence does not establish that a substantial number of consumers were misled, or that it was probably or likely that consumers were misled.

114 A similar issue arose in Reckitt Be n ckiser. In that case, the respondent’s packaging suggested that different, more expensive types of pain-killing products were more effective at treating particular types of pain, when in fact there was no difference in the effectiveness of these products and regular pain-killers. The Full Court analysed the issue of causation (whether the misleading statements caused consumers to buy the more expensive product) as follows:

In principle, where a representation is apt to create a particular mental impression in the representee, and is intended to do so, it may properly be inferred that it has had that effect. That inference may be drawn more readily if the business of the representor is to make such representations and the representor’s business benefits from creating such an impression: Reckit t Be n ckiser at [77], quoting Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 at 55.

In Reckitt Be n ckiser, the contravening conduct was apt to create in a consumer the impression that the purported specific pain range product had been formulated to and did in fact treat the specific pain type nominated. The Full Court inferred that the respondent engaged in the contravening conduct for its commercial benefit, by encouraging consumers suffering from the nominated pain types to purchase one or more of the purported specific pain range products rather than a cheaper equivalent product. The Full Court therefore inferred that a consumer acted in accordance with the impression the contravening conduct was apt to create in a consumer’s mind: Reckitt Be n ckiser at [78].

The Full Court held that the obvious and expected consequence of the contravening conduct was to entice consumers to pay more for the products. Without compelling evidence to the contrary, there was no rational reason to speculate in favour of Reckitt Benckiser that consumers might have been willing to pay twice as much for the same product but for the contravening conduct: Reckitt Be n ckiser at [85].

115 The facts of this case are not quite as clear as Reckitt Be n ckiser at [85], where there was no rational reason for consumers to buy the product, but for the contravening conduct. However, the other statements of principle from that case can be applied to this case: the impugned representations here were intended to induce consumers to purchase Emma Sleep products, and testing done by Emma Sleep indicated that these representations were effective in doing so. Emma Sleep AU and Emma Sleep SEA engaged in the contravening conduct for their commercial benefit. In these circumstances, it can properly be inferred that a substantial number of consumers purchased Emma Sleep products because of the impugned representations.

116 Damage to competitors? The ACCC also contended that the contravening conduct placed rival businesses at a competitive disadvantage. However, there is no evidence of the effect on competitors, although in a very general sense Emma Sleep’s customers might have bought from another business, but for the impugned representations. However, in the absence of evidence, I am not able to give this factor any separate weight: see Hillside (No 2) at [37].

117 Benefit to Emma Sleep AU/SEA: The next matter in dispute is the benefit to Emma Sleep AU and Emma Sleep SEA from the contravening conduct: see ACL s 224(3A)(b); factors (10)-(11) in ] above.

118 Is there benefit to Emma Sleep SEA? As a preliminary point, Emma Sleep questions whether any benefit accrued to Emma Sleep SEA, as distinct from Emma Sleep AU, given that Emma Sleep SEA is only a service company. That takes too narrow a view of Emma Sleep SEA’s involvement in the contravening conduct: as set out in the Liability Judgment, persons within Emma Sleep SEA (particularly the “Country Manager” or “Head of Australia”) effectively ran the Australian business of Emma Sleep, and the impugned representations were made “on behalf of” Emma Sleep SEA, as well as Emma Sleep AU: see Liability Judgment at [98]-[101], [102]-[116].

119 Revenue, gross and net profit: As noted, Emma Sleep AU earned approximately $134.5 million revenue from sales to which the impugned representations applied: see ] above.

120 The gross profits for Emma Sleep AU for FY2020 to FY2023 set out in Relief SSOAF, Annexure B total $8 5.35 million. (The ACCC in its reply submissions clarifies that this agreed amount should be preferred over the slightly lower figure in the ACCC’s written submissions, filed before the Relief SSOAF was agreed.) The ACCC’s approach is to add the items “Revenue from contracts with customers – Sale of goods” and “Changes in inventories” and subtracting the item “Purchases” in the annual accounts. Emma Sleep contends with some force that any assessment of gross profit should also include necessary costs of freight and carriage, and warehousing. On the other hand, Emma Sleep properly accepts that the substantial advertising costs incurred by Emma Sleep AU should not be taken into account, given this was the means by which the impugned representations were disseminated.

Freight and carriage costs ranged between $1.58 million for FY2020 and $8.69 million for FY2023, a total of $22.63 million over this period. Warehousing costs ranged between $0.11 million for FY2020 and $3.67 million for FY2023, a total of $8.51 million over this period.

If those amounts are deducted from the agreed figure, Emma Sleep AU’s gross profits for FY2020 to FY2023 total $ 5 4.2 1 million.

121 As to net profit, the sum of the net profits for Emma Sleep AU recorded in the Relief SSOAF, Annexure B for FY2020 to FY2023 is negative, as those figures record a modest net profit for FY2020, and losses for FY2021 to FY2023 (including a net loss of $17 million for FY2023).

122 What is the relevant measure of “benefit”? The parties disagree on the relevant measure of benefit to Emma Sleep AU and Emma Sleep SEA. The ACCC submits that the appropriate measures are revenue and gross profit, because these measures better capture the effect of the impugned conduct on commerce. By contrast, Emma Sleep contends that the reality is that Emma Sleep AU has not been profitable over the Relevant Period, and that net profit better reflects its position as a small, new entrant in the market.

123 As a matter of statutory construction, the word “benefit” in s 224(3A)(b) of the ACL (which sets out one method of calculating the maximum penalty) means the amount received, irrespective of any costs or expenses: see R v Jacobs Group (Australia) Pty Ltd [2023] HCA 23; (2023) 280 CLR 170 at 44, construing a similar phrase in s 70.2(5)(b) of the Commonwealth Criminal Code. Revenue is therefore one relevant measure in assessing penalty. On the other hand, the factors cited by Edelman J in Woolworths Limited refer to profit: see ] above.

124 In Trivago (No 2), Moshinsky J held that both additional revenue obtained by contravening conduct, and profit of that conduct, were relevant measures in assessing penalty. His Honour held that, in circumstances where a large proportion of Trivago’s revenue (in the order of 75%) was spent on advertising, which attracted more consumers to its website, the additional revenue obtained by the contravening conduct, or at least a large part of it, was a benefit to Trivago: Trivago (No 2) at [103]. In this case, Emma Sleep AU incurred significant advertising expenses (albeit a much lower proportion of its overall revenues than in Trivago (No 2)), and the analysis of Moshinsky J is applicable. The contravening conduct applied to $134.5 million worth of sales, so here the whole of this revenue is the relevant amount. That approach also receives some support from viagogo at [165], which held that revenue is a measure of the size of the relevant corporation, and relevant to the size of pecuniary penalty required to achieve specific deterrence. Emma Sleep contends that it cannot be demonstrated that any, or any substantial number, of sales were caused by the contravening conduct, but I have already rejected that argument: see ]- ] above.

125 In any event, the ACCC correctly submits that there need not be any direct or linear relationship or correlation between the penalty and the profits derived from the contraventions: Volkswagen (FC) at [149].

126 Conclusions on nature of conduct, extent of loss and benefits: In summary, the contravening conduct in this case affected a large volume of commerce. This conduct took place over 33 months, and applied to around $134.5 million in revenue from almost 244,000 sales. In accordance with Reckitt Be n ckiser, I would infer that a substantial number of those sales were caused by the impugned representations. This is not an isolated or small contravention.

127 Applying Trivago (No 2) and viagogo, the total revenue of $134.5 million is a relevant measure of “benefit” to Emma Sleep AU and Emma Sleep SEA, although not the only measure. Gross profit is roughly $85.35 million over the Relevant Period, or more than $54 million (if freight and carriage costs, and warehousing costs, are deducted from the agreed figure). I would place less weight on net profit for these purposes (although net profit is relevant to the financial position of Emma Sleep AU and Emma Sleep SEA, considered next).

D.4    Size and financial position of Emma Sleep SEA and Emma Sleep AU, and related companies

128 The fourth major issue in dispute is the size and financial position of Emma Sleep AU and Emma Sleep SEA. An important sub-issue is the weight that can be given to the financial position of the immediate parent company, Emma Sleep GmbH. The ACCC submits further (and Emma Sleep disputes) that the financial resources of the ultimate parent company Franz Haniel can also be taken into account.

129 Size and financial position – general principles: The size and financial position of a contravening company is a relevant factor in assessing penalty: see factors (1) and (7) in ] above. As noted, the purpose of a civil penalty is deterrence. The size of a corporation is relevant in determining the size of the pecuniary penalty that would operate as an effective deterrent because, all other things being equal, the sum required to achieve that object will generally be larger where the company is well-resourced: Volkswagen (FC) at [154]; Pattinson at [60].

130 At the same time, the need to achieve deterrence (particularly general deterrence) means that sometimes the Court will impose a penalty that is beyond the particular contravener’s ability to pay. In Australian Competition and Consumer Commission v High Adventure Pty Ltd [2005] FCAFC 247; (2006) ATPR 42-091 at [11], the Full Court stated (emphasis added):

as deterrence (especially general deterrence) is the primary purpose lying behind the penalty regime, there inevitably will be cases where the penalty that must be imposed will be higher, perhaps even considerably higher, than the penalty that would otherwise be imposed on a particular offender if one were to have regard only to the circumstances of that offender. In some cases the penalty may be so high that the offender will become insolvent. That possibility must not prevent the Court from doing its duty for otherwise the important object of general deterrence will be undermined.

This reasoning remains good law, following Pattinson: see for example Australian Competition and Consumer Commission v Master Wealth Control Pty Ltd (Penalty) [2024] FCA 795 at 15; Australian Energy Regulator v CAM Engineering and Construction Pty Ltd [2025] FCA 737 at 87; Australian Securities and Investments Commission v BPS Financial Pty Ltd (Penalty) [2026] FCA 18 at 95.

131 Emma Sleep submits that an observer from the community of the outcome of a case would note that a small to medium company was subjected to a penalty appropriate to its size and circumstances, and would not assume that the penalty that might be imposed on a larger company in otherwise similar circumstances would be of the same order. In this way (it is said), the size and financial position of a contravener is not just relevant to specific deterrence, but also to general deterrence, citing Australian Competition and Consumer Commission v Qteq Pty Ltd (Penalty) [2026] FCA 356 at [110]-111. However, these statements in Qteq do not run counter to High Adventure, because his Honour also stated that a contravener’s limited capacity to pay must not prevent the Court from giving effect to the primary objective of general deterrence: Qteq at [127].

132 Hutson Report: As noted, Emma Sleep relies on Mr Hutson’s report to contend that Emma Sleep AU and Emma Sleep SEA have fairly limited financial resources available. Mr Hutson is a Chartered Accountant and has been a Registered Liquidator since 2001. He has over 35 years’ experience in restructuring and insolvency engagements.

133 Questions: Mr Hutson was asked to answer two questions in his report:

(a)    How much can each of Emma Sleep AU and Emma Sleep SEA pay as a one-time penalty? He was asked to assess this in terms of available liquid/current assets, current obligations and overall financial position on a standalone basis.

(b)    Would each of Emma Sleep AU and Emma Sleep SEA be able to pay a higher amount than the amount calculated in response to question (a) over a period of 36 months?

134 Assumptions: Mr Hutson was asked to make various assumptions, including the following:

Emma Sleep’s July 2025 management accounts are true and accurate and prepared on a going concern basis.

There will be no material change in the financial position of Emma Sleep AU and Emma Sleep SEA over the next 36 months.

An intercompany Services Agreement between Emma Sleep GmbH and Emma Sleep SEA has been in effect since 4 December 2020 and an intercompany Sales Support Services Agreement between Emma Matratzen GmbH and Emma Sleep Pty Ltd has been in effect since 1 January 2022. All costs incurred by Emma Sleep AU and Emma Sleep SEA are on arms-length terms and represent necessary costs to them to continue as standalone operations.

Emma Sleep AU has not paid any dividends to Emma Sleep GmbH since it was incorporated in 2019.

135 Summary of conclusions: Mr Hutson summarised his conclusions as follows:

(a)    Considering available liquid/current assets, current obligations and overall financial position on a standalone basis:

• Emma Sleep SEA has a capacity to pay a penalty of AUD $1,180,629 based on its financial position as at 31 July 2025;

• Emma Sleep AU does not have any capacity to pay a penalty based on its financial position as at 31 July 2025.

(b)    If the penalties were payable over 36 months:

• Emma Sleep SEA would have the financial capacity to pay a total of AUD $2,027,325, either structured as 36 equal monthly payments of approximately AUD $56,315 or an upfront payment of AUD $1,180,629 plus 36 monthly payments of AUD $23,519;

• Emma Sleep AU does not have any financial capacity to contribute to a penalty by way of instalments over the next three years from its expected business performance.

136 In cross-examination, the ACCC asked about the materials with which Mr Hutson was briefed; in particular, the facts that he was not provided with financial reports for the years FY2020 to FY2022 (but only for January 2025 to July 2025, which included information about FY2023), and had not been provided with any financial forecast for Emma Sleep AU or Emma Sleep SEA. Mr Hutson accepted that it would have been best practice for him to have been provided with a financial forecast, but he stated that he had been provided with sufficient information to assess the financial performance of Emma Sleep AU and Emma Sleep SEA.

137 Assumptions limit Mr Hutson’s opinion: There is no reason to doubt Mr Hutson’s opinion, as far as it goes. However, the assumptions he was asked to make limit his opinion in two ways.

First, Mr Hutson accepted that, in accordance with his instructions, he had prepared his report on the assumption that there would be no material change in the financial position of Emma Sleep AU and Emma Sleep SEA over the next 36 months. He also accepted that he could not comment on the accuracy of that assumption.

Second, Mr Hutson’s report was also limited to assessing the ability of Emma Sleep AU and Emma Sleep SEA to pay penalties on a standalone basis. As discussed next, a crucial matter in this case is whether the Court may also have regard to the financial resources available to Emma Sleep GmbH or Franz Haniel.

138 That said, Mr Hutson’s report is consistent with what appears from the net profit and EBITDA figures in Appendix B to the Relief SSOAF; namely, that Emma Sleep SEA has made modest profits, and Emma Sleep AU has not been profitable, across the period FY2020 to FY2024. Mr Hutson calculated that Emma Sleep AU had generated an aggregate profit of approximately $175,000 over its lifetime of five years. This is not a case like Volkswagen (FC) at 67 or Trivago (No 2) at [97]-[98], where it was plain that the contraveners had very large financial resources.

139 The ACCC contends that any consideration of financial resources should also take into account the financial position of related entities; specifically, Emma Sleep GmbH and Franz Haniel. That matter is considered next.

140 Financial position of related entities – general principles: The bare fact that a contravener has a parent company is not relevant to an assessment of penalty: see Australian Competition & Consumer Commission v Fila Sport Oceania Pty Ltd (Administrators Appointed) [2004] FCA 376 at 36. However, the size of a parent company may be of relevance when the parent bears some responsibility for the subsidiary’s conduct, or where it is relevant to the subsidiary’s capacity to meet a pecuniary penalty: Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission [2003] FCAFC 2; (2003) 127 FCR 170 at 49; Australian Securities and Investments Commission v Ultiqa Lifestyle Promotions Ltd (In Liq) (No 2) [2022] FCA 1228 at 45-(3) (Downes J); Samsung Electronics at [66].

141 If a contravener is part of a much larger, internally coordinated and wealthy corporate group, it is appropriate to take account of this corporate structure in assessing deterrence: Australian Securities and Investments Commission v Westpac Banking Corp oration (Omnibus) [2022] FCA 515; (2022) 407 ALR 1 at 128; Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v Crown Melbourne L imi t e d [2023] FCA 782; (2023) 168 ACSR 421 at 199; Australian Securities and Investments Commission v HCF Life Insurance Co mpany Pty L imi t e d (Penalty) [2025] FCA 454 at 94.

142 Is the f inancial position of Emma Sleep GmbH and Franz Haniel relevant? Applying those principles to this case, it is appropriate to take into account the financial position of Emma Sleep GmbH. The agreed facts summarised in ], ]- ] above include the following:

There are common directorships between Emma Sleep GmbH and Emma Sleep SEA of key personnel, including Dr Schmoltzi, Mr Müller, and Mr Quiroga-Rivera.

Mr Müller, Dr Schmoltzi, and senior managers of Emma Sleep GmbH “generally provided guidance at a strategy level to Country Team Australia and the persons occupying the positions of Team Lead, Country Manager and Head of Australia with respect to the operations of Emma Sleep AU”.

Emma Sleep GmbH provided specified management services to Emma Sleep AU and Emma Sleep SEA during part of the Relevant Period, under the 2021 Agreement.

143 That is, although the Liability Judgment found that Emma Sleep GmbH was not liable as a principal for the impugned representations, Emma Sleep GmbH was nonetheless “involved” in the contravening conduct, for the purposes of Schneider. This is a very different case from Fila Sport, on which Emma Sleep relies.

144 Emma Sleep GmbH has also provided financial assistance to Emma Sleep AU in the past: see ] above. There is evidence of a revolving credit facility between Emma Sleep GmbH and Emma Sleep SEA (last amended on 1 February 2024). Emma Sleep refers to the fact that more recent financial statements of Emma Sleep AU no longer state that Emma Sleep GmbH guarantees financial support to Emma Sleep AU in the FY2023 and FY2024 financial statements. I would accept that Emma Sleep GmbH is not under any legal obligation to assist Emma Sleep AU (or Emma Sleep SEA for that matter) to meet the amount of a pecuniary penalty. However, it remains the case that Emma Sleep GmbH is head of a larger, internally coordinated and wealthier corporate group, which includes Emma Sleep AU and Emma Sleep GmbH: see ] above.

145 Emma Sleep GmbH has much more substantial assets and revenue than either of Emma Sleep AU or Emma Sleep SEA: see ] above. It is true that Emma Sleep GmbH has not been uniformly profitable over the period FY2020 to FY2024; even so, Emma Sleep GmbH has much greater financial resources to call on than the other Respondents.

146 Position of Franz Haniel: The position with Franz Haniel is different. Franz Haniel is the sole shareholder of Emma Sleep GmbH, and is therefore the ultimate parent company of Emma Sleep AU and Emma Sleep SEA. There is evidence suggesting Franz Haniel has provided financial assistance to Emma Sleep AU directly; for example, a letter dated 23 September 2025 requested “confirmation of balances with related part[y] of Emma Sleep [AU]”, and refers to an outstanding balance payable by Emma Sleep at September 2025 of a little over AUD $1 million, and an outstanding balance payable by Emma Sleep at July 2025 of AUD $3,749.45. And a bank statement of Emma Sleep AU refers to payments being made to Franz Haniel on 16 and 25 July 2025 of a little over $2 million each time. It can be inferred that these payments reflect some type of loan arrangement between Franz Haniel and Emma Sleep AU. However, there is no evidence about the terms on which financial assistance was provided, and no evidence of Franz Haniel directors providing advice to Emma Sleep AU.

147 Conclusions on size and financial position of Emma Sleep AU/SEA: In summary, I would accept Emma Sleep’s submission that the evidence does not suggest that Emma Sleep AU and Emma Sleep SEA, either separately or together, have extensive financial resources with which to pay a pecuniary penalty. However, for the reasons set out above, it is appropriate to have regard to the much greater financial resources available to Emma Sleep GmbH. In any event, I accept the ACCC’s submission that a contravener’s limited capacity to pay must not prevent the Court from giving effect to the primary objective of general deterrence: see ]- ] above.

148 For these reasons, to the extent that Emma Sleep’s figure of $2 million depends on the financial position of Emma Sleep AU and Emma Sleep SEA, considered as standalone operations, I do not accept that this factor supports a penalty that low.

D.5    Remaining factors

149 Three remaining factors require some separate attention.

150 Culture of compliance: The first factor is whether there was a culture of compliance within Emma Sleep generally, including Emma Sleep SEA and Emma Sleep AU (cf factor (4) in ] above).

151 In section D.2 above, I found that senior management in Emma Sleep SEA and Emma Sleep AU at least “turned a blind eye” to the risk that the impugned representations could be contrary to the ACL. There is no evidence of anyone within Emma Sleep (whether AU, SEA or GmbH) obtaining and acting on considered legal advice, after receiving warnings from Koala that the impugned representations were contrary to the ACL. The evidence is that Emma Sleep AU only changed its conduct after receiving warnings from the ACCC, which suggests that Emma Sleep AU and Emma Sleep SEA were not proactively assessing whether the representations were consistent with Australian law. These matters do not suggest a corporate culture conducive to compliance with the ACL during the Relevant Period. Further, I accept the ACCC’s submission that the internal newsletters and publications (called “Emma Whizzz”) available during the Relevant Period were in very general terms. This is not a case where a contravention occurred inadvertently, or through some system error.

152 Emma Sleep contends, however, that it is important to consider the steps taken in response to an acknowledged contravention, relying on Australian Securities and Investments Commission v Commonwealth Bank of Australia [2020] FCA 790 at [108]-111.

Here, I would accept that Emma Sleep obtained legal training on ACL compliance from an Australian law firm in October 2024. This is a relevant step towards remediation (even if somewhat belated), and it is a factor in Emma Sleep’s favour.

However, I would not place much weight on an email from Dr Schmoltzi dated 21 September 2023, which in general terms urged the importance of complying with the law. While true, it might be said that this email was something in the nature of “motherhood statements”.

153 This case is very different from Commonwealth Bank, where the Bank identified the contravention itself (caused by a system error), pro-actively notified the regulator, and implemented its own program for remedying the problem. Overall, the weakness of the culture of compliance during the Relevant Period (and the involvement of senior management in the contravening conduct) are matters that weigh against Emma Sleep SEA and Emma Sleep AU.

154 C ooperation by Emma Sleep SEA? The second matter is whether Emma Sleep SEA should receive some acknowledgement for its cooperation with the ACCC. It is agreed that Emma Sleep AU should receive some discount for its admission of liability: Australian Securities and Investments Commission v AMP Financial Planning Proprietary Ltd [2022] FCA 1115; (2022) 164 ACSR 64 at 114, and the cases cited.

155 Emma Sleep SEA did not admit liability. The extent of its cooperation appears to be participating in the statements of agreed facts. This factor is only of minor importance.

156 Parity: The third matter is whether any relevant guidance can be obtained from other cases. As noted, in principle parity is a relevant matter when imposing a penalty, but in practice the factual differences between cases makes it difficult to obtain any sure guidance from the size of a penalty imposed in another case, particularly a pecuniary penalty (where the value of money changes over time): see ] above. Little assistance can be obtained from the figures imposed in cases dealing with very different maximum penalties (as in Reckitt Be n ckiser). At most, the penalty imposed in recent, comparable cases might operate at a high level as a “sense check”, in considering whether a figure would be either manifestly inadequate or, conversely, wholly disproportionate.

157 Here, Emma Sleep draws attention to four cases:

In Bloomex, the Court imposed a contested penalty of $1 million for misleading and deceptive statements (including the use of strikethrough prices) in an online floral business, between February 2019 and March 2023. The misleading statements were ubiquitous on the website, were a consequence of a strategy implemented by senior management, and continued for some time after Bloomex was on notice that the ACCC considered these representations to be misleading: Bloomex at [148], 155 and (c). Bloomex earned over $38 million through its website during the relevant period, and its total gross profits for that period were approximately $11.68 million: Bloomex at [14]-[15].

In Employsure, the Full Court on appeal imposed a penalty of $3 million for misleading and deceptive statements that Employsure was affiliated with various government bodies, between August 2016 and August 2018. The conduct was deliberate and had the purpose of generating business: Employsure at [63]-[64]. At the time of the contraventions, Employsure was a medium-sized business with an annual revenue of around $150 million and an annual profit of approximately $25 million: Employsure at [71].

In Australian Competition and Consumer Commission v Webjet Marketing Pty Ltd [2025] FCA 867, the Court imposed an agreed penalty of $9 million for misleading and deceptive statements that failed to disclose booking fees for bookings on the website, between November 2018 and November 2023: Webjet at [12]-[13], [91]. The respondent’s average annual revenue ranged between around $119.1 million (for July 2018 to June 2020), $59.5 million (for July 2020 to November 2022), and $129.3 million (for November 2022 to June 2024): Webjet at [53]. The penalty accounted for Webjet’s key role in the travel agent industry, the fact that the contraventions occurred over a long period of time (five years) and Webjet’s strong financial position, while also acknowledging Webjet’s cooperation with the ACCC, Webjet’s contrition and the fact that Webjet had already taken remedial steps to address the contravention: Webjet at [91].

In Dell (No 2), the Court imposed an agreed penalty of $10 million for false and misleading statements about price (including strikethrough prices that overstated the extent of the discount), between August 2019 and December 2021. During the relevant period, Dell had an annual revenue exceeding $300 million, annual gross profits exceeding $45 million, and annual net profits exceeding $30 million. Dell’s large size weighed in favour of a substantial penalty in order to achieve specific and general deterrence: Dell at [45].

158 It is of course necessary to consider the individual circumstances of each case. However, it is striking that each of the four cases above involved deliberate misrepresentations over an extended period, by profitable businesses, and the penalties imposed were very significantly less than the penalty sought by the ACCC in this case. There are of course important differences: the volume of commerce affected in Bloomex was much less than here; and both Webjet and Dell (No 2) concerned an agreed penalty (as to which, see Schneider at [61]). In Dell (No 2), the contravening conduct only applied to a subset of Dell products. And the contravening conduct in both Bloomex and Employsure occurred before the 2022 increase in maximum penalty. Even so, at a very high level these cases indicate that the appropriate figure for penalty in this case is somewhere between the figures proposed by the parties.

159 On the other hand, in Trivago (No 2), the Court imposed contested penalties totalling $44.7 million for misleading and deceptive conduct over the period December 2016 to September 2019. However, the contraventions in that case had caused a loss to Australian consumers of around $30 million, and Trivago was a large global internet business, with annual revenue of approximately 1 billion Euros: Trivago at [95], [97]. Neither of those factors is present here.

D.6    Synthesis of factors and total penalty

160 This section summarises and synthesises the mandatory factors in s 224(2) of the ACL and the discretionary factors listed in ]- ] above as follows.

161 Substantial volume of commerce (ACL s 224(2)(a)): The contravening conduct applied to a large volume of commerce, which favours imposing a substantial penalty. The contravening conduct occurred over a lengthy period (almost 33 months), and applied to a significant volume of commerce ($134.5 million of revenue from almost 244,000 sales), which was almost every product sold by Emma Sleep AU during the Relevant Period. Applying Reckitt Be n ckiser, it can properly be inferred that a substantial number of the sales were caused by the contravening conduct.

162 On the other hand, the contravening conduct did not cause a quantifiable harm to consumers, but rather caused non-monetary harm of depriving consumers of an informed choice. This is not a mitigating factor as such, but it does mean that the contravening conduct is far from the worst case: see ]- ] above.

163 A wareness that conduct could be contrary to ACL (ACL s 224(2)(b)): Senior management within Emma Sleep SEA and Emma Sleep AU had some awareness since October 2021 that the contravening conduct could be contrary to the ACL, but did not take any steps until February-March 2023 to remedy the situation. This factor also favours a substantial penalty.

The contravening conduct arose out of a deliberate marketing strategy. Senior management in Emma Sleep SEA and Emma Sleep AU turned a “blind eye” to whether the impugned representations were contrary to the ACL. The conduct was not inadvertent or caused by a system error.

A warning from Koala in October 2021 stated that the Savings Representations were contrary to the ACL, which reflected settled law. However, Emma Sleep AU only changed its conduct in response to a warning from the ACCC in February 2023.

164 No prior contravening conduct (ACL s 224(2)(c)): Neither Emma Sleep SEA nor Emma Sleep AU has been found by a court to have engaged in conduct contrary to Ch 4, or Pt 5-2 of the ACL. This is a factor in favour of the Respondents; however, this factor carries little weight, because the contravening conduct started in June 2020, within the first year of regular sales by Emma Sleep AU to customers in Australia: see ] above. I accept the ACCC’s submission that the bare fact that this is a first-time contravention does not require that there be a substantial discount, particularly when the contraventions are deliberate (in the sense set out above) and occurred over a lengthy period. In addition, this factor has less weight when (as here) general deterrence is a significant consideration: see Volkswagen (FC) at [142]-[144].

165 Size and financial position: Emma Sleep AU and Emma Sleep SEA, standing alone, do not have large financial resources available to pay a pecuniary penalty. However, it is appropriate to have regard to the much greater financial resources available to their immediate parent company Emma Sleep GmbH. Accordingly, the financial position of Emma Sleep AU and Emma Sleep SEA does not justify imposing a penalty of only $2 million, as sought by Emma Sleep.

166 Other factors: The evidence does not suggest a strong culture of compliance within Emma Sleep SEA or Emma Sleep AU during the Relevant Period. There have been some improvements in the level of awareness of ACL requirements since then. Emma Sleep AU is entitled to some discount for admitting liability, and for cooperating with the ACCC in the investigative stage. On the other hand, neither Emma Sleep SEA nor Emma Sleep AU has exhibited any contrition for the contravening conduct. I accept the ACCC’s submission that the lack of contrition is relevant to specific deterrence, and is consistent with my conclusions on the culture of compliance during the Relevant Period.

167 Appropriate penalty is $15 million: The objective of deterrence including general deterrence makes it necessary to impose a substantial penalty, much more than the $2 million proposed by Emma Sleep. The volume of commerce affected by the contravening conduct requires a substantial penalty. At the same time, a penalty of $36 million goes beyond what is necessary to achieve deterrence, particularly given the nature of the harm caused in this case (as discussed), and the financial resources of the contravening companies. This is not a case where a very large penalty is required to achieve specific deterrence of a large multinational company (as in Volkswagen (FC), Dell (No 2) and Trivago (No 2)).

168 Taking all of these matters together, and having regard to the principle of totality, the appropriate total amount of pecuniary penalty to achieve deterrence in this case is $15 million.

169 Apport ion ing penalty: It is necessary to apportion the penalty between Emma Sleep AU and Emma Sleep SEA: see Cement Australia at [391]. The ACCC submits that an equal penalty should be imposed on each company, while Emma Sleep submits that Emma Sleep AU should bear slightly more than half (1.25:0.75) of the penalty. The evidence discussed in detail in the Liability Judgment shows that there was no real separation between the activities of Emma Sleep AU and the persons employed in Emma Sleep SEA to run the Australian business during the Relevant Period. An equal apportionment is therefore appropriate.

170 Given the contravening conduct has been divided into two courses of conduct, it is also appropriate to determine the penalty for the Savings Representations, and for the Limited Time Sale Representations. I accept the ACCC’s submissions that the Savings Representations were the underlying driver of the harm to consumers, and should attract a greater penalty than the Limited Time Sale Representations. I would impose a $10 million penalty for the Savings Representations, and a $5 million penalty for the Limited Time Sale Representations.

171 In summary, a penalty of $7.5 million is imposed on each of Emma Sleep AU and Emma Sleep SEA. For each company, that amount consists of a penalty of $5 million for the Savings Representations, and a penalty of $2.5 million for the Limited Time Sale Representations.

E.    conclusion

172 For these reasons, a total penalty of $15 million is imposed, apportioned equally between Emma Sleep AU and Emma Sleep SEA.

173 I am satisfied that it is appropriate to make the other orders agreed between the parties; namely, an injunction (Order 3); a compliance program (Order 4); a corrective notice (Order 5); and other orders, including reserving the issue of costs (Orders 6 to 8).

| I certify that the preceding one hundred and seventy-three (173) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hill. |
Associate:

Dated: 24 April 2026

Relief Supplementary statement of Agreed facts