#7178 - Sections 45 47 50 And 50 A - Competition Law

45. Contracts, arrangements or understandings that restrict dealings or affect competition

47. Exclusive dealing

50. Prohibition of acquisitions that would result in a substantial lessening of competition

50A. Acquisitions that occur outside Australia

• Sections 45 and 47 require the court to assess whether the provision or the conduct at issue: has the purpose or has the effect or is likely to have the effect of substantially lessening competition in a market.

• Sections 50 and 50A require the court to assess whether the acquisition of shares or assets: has the effect, or is likely to have the effect of substantially lessening competition in the market.

• The CCA is concerned with competition in the market rather than the ability of individual sellers to compete. The conduct must substantially lessen competition in the market as a whole.

Rural Press Limited v ACCC (2003):

• Substantial means meaningful or relevant to the competitive process.

Tillmanns Butcheries Pty Ltd v Australian Meat Industry Employees Union

• Substantial loss or damage means ‘real or of substance and not insubstantial or nominal.’

Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd:

• Substantial means considerably.

Eastern Express Pty Ltd v General Newspapers Pty Ltd:

• Rejected the view that an effect on competition that was more than insignificant was for that reason alone substantial.

• The defendant must have a subjective purpose of lessening competition. Yet for section 50 and 50A purpose is not relevant.

ACCC v Australian Medical Association Western Australia Branch Inc (2003) – page 192

• The reference in s 45(2) to the purpose provision of a contract, arrangement or understanding are to the subjective purpose of those engaging in the relevant conduct.

• The next step if subjective purpose is not proved or is not relevant.

• TEST: the future with and without test (Outboard Marine Australia Pty Ltd v Hecar Investments (No 6) (1982)):

  • This test requires the relevant body to consider how, in the future, market forces will work ‘with’ (factual) and ‘without’ (counterfactual) the conduct at issue. In many cases the ‘without’ will be the status quo but if there are other developments imminent they will be considered.

  • THIS IS NOT a ‘before’ and ‘after’ comparison.

  • It is always important to look at barriers to entry. This is the most important thing!

Stirling Harbour Services Pty Ltd v Bunbury Port Authority (2000) – page 196

• Stirling Harbour sought a declaration that the letting of the proposal tender would be contrary to ss 45 and 47 and of the competition code. Stirling argued that the effect of granting an exclusive licence for towage services prevented new entry or lessened potential competition.

• FCFCA: The test is not a before or after test but the existing state of competition in the market may throw some light on the likely future state of competition in the market absent the impugned conduct. Conduct has the effect of lessening competition in a market only if it involves a reduction in the level of competition which would otherwise have existed in that market but for the conduct in question. The mere fact that one can conceive of other less restrictive alternatives by which a commercial objective might be achieved is not sufficient of itself to lead to a conclusion that the conduct has the effect of lessening competition.

• A separate limb of the substantial lessening of competition test.

• In determining the likely effect regard must be had to the circumstances existing at the time the conduct was engaged in. Thus if in a case, the conduct did not in fact produce that result, it is still possible that it may have contravened the relevant section.

QMCA:

• ‘Likely’ refers to probable effects, rather than possible or speculative effects and that the probabilities are commercial or economic likelihoods which may not be susceptible of formal proof on the basis of evidence and argument.

Monroe Topple & Associates Pty Ltd v The Institute of Chartered Accountants (2002):

• ‘Likely’ does not mean ‘more likely than not.’ It is sufficient that there is a real chance or possibility that a substantial lessening of competition will occur.

• The court must reach its decision on the basis of information from the past that has some predictive power. The most helpful sources are expert economists and people with experience in the particular market. There may not be evidence in the traditional sense.

• In certain circumstances a provision in a contract may substantially lessen competition.

ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) – page 198

• Pont was forced by ASXO to sign a new agreement for the supply of signal C (form of electronic information) that imposed new restrictions to which Pont could put the information obtained as well as increasing its wholesale price. This agreement also obliged Pont to provide the names and addresses of its customers to JECNET.

• FCFCA: It was found on the whole that the contractual provisions which prohibit wholesaling are likely to have the effect of substantially lessening competition in the information...