david jones i117815.pdfon 17 december 2003 for a period of five years (original authorisation). ......

20 November 2008

Dr Richard Chadwick General Manager - Adjudication Branch Aushalian Competition and Consumer Commission GPO Box 3131 Canberra ACT 2601

Attention: Shane Chisholm

Dear Dr Chadwick,

Re: David Jones Limited Authorisation A30230

We refer to your letter dated 18 August 2008.

We refer to Authorisation A30230 which was granted to David Jones Limited (David Jones) on 17 December 2003 for a period of five years (Original Authorisation).

Please find enclosed our application for revocation and substitution of the Original Authorisation and substitution of new authorisation (Application) which consists of the . . following documents:

1. A completed form FC; 2. A cheque for the Application in the amount of $2,500; and 3. Attachments A to D: submission in support of the Application for authorisation

Please do not hesitate to contact me if you have any queries in relation to the Application.

Yours faithfully,

Caroline Waldron General Counsel and Company Secretaty

" h - DAVID JONES ' ,'I' , . . !

. . -1 e cb..,i:. ,! . , , ' , , ,,,. ~. ~ . : .,:,.Jb!

I Drvid Jones Limited A.C.N. 000 074 573 i

Mr Gavin Jones Australian Competition and Consumer Comm~rsion Level 35, The Tower 360 Elizabeth Street Melbourne Central Melbourne Vic 3000

Dear Mr Jones,

fgB: f i & d Joaes Limited - Intehm authorisation

We refer to Authorisation A30230 mted to David Jones Limited (David Jones) on 17 December 2LvG LuL F,Lud of five years (Original Application) and our recent apy cation of the Original Application and substitution of I bn dated 20 November 2008 (Application).

ilication lew autl

for rev0 iorisatic

David Jones wishes to seek interim autk n with respect to the Application, in order to allow current arrangements to continue while the Commission is assessing the Application.

We look forward to hearing from you ahody.

Yours faithfully,

Caroline Waldron General Counsel and Company Secretary

Ph: (02) 9266 5130 Fax: (02) 9261 5717 E: cwal~ro~vidiones.corn.au

DAWD JONES David Jmrw Idmiled A.C N. 000 (n4 573

A.B N 75 000 074 573

Form FC Commonwealth of Australia

Trade Practices Act 1974 -subsection 91C ( I )

APPLICATION FOR REVOCATION OF A NON-MERGER AUTHORISATION AND SUBSTITUTION OF A NEW

AUTHORISATION To the Australian Competition and Consumer Commission:

Application is hereby made under subsection 91C (1) of the Trade Practices Act 1974 for the revocation of an authorisation and the substitution of a new authorisation for the one revoked.

PLEASE FOLLOW DRECTIONS ON BACK OF THIS FORM

1. Applicant

(a) Name of applicant: (Refer to direction 2)

David Jones Limited

(b) Description of business canied on by applicant: (Refer to direction 3)

The Applicant conducts an Australia-wide retailing business.

(c) Address in Australia for service of documents on the applicant:

General Counsel

Level 7M

86 - 108 Castlereagh Street

Sydney NSWZOOO

2. Revocation of authorisation

(a) Description of the authorisation, for which revocation is sought, including but not limited to the registration number assigned to that authorisation:

Authorisation A30230 in respect of conduct which may contravene section

45(2)(a)(ii) and (b)(ii) of the Trade Practices Act, due to expire on 8 January 2009

(b) Provide details of the basis upon which revocation is sought:

As Authorisation A30230 is due to expire on 8 January 2009, David Jones seeks to

revoke that authorisation and substitute it with this current application.

Page 1 of 6

3. Substitution of authorisation

(a) Provide a description of the contract, arrangement, understanding or conduct whether proposed or actual, for which substitution of authorisation is sought: (Refer to direction 4)

David Jones wishes to be able to invite Retail Brand Management Businesses

operating within its stores to participate in certain promotions. Please see

Attachment A for further details.

(b) Description of the goods or services to which the contract, arrangement, understanding or conduct (whether proposed or actual) relate:

David Jones and Retail Brand Managemenl Businesses may be viewed as

competitors (although David Jones does not agree with this view) for the purposes

of the Act and any agreement relating to price may breach s45(2)(a)(ii) and (b)(ii)

as a resuN of s45A(I). Please see Attachment A for further details.

(c) The term for which substitute authorisation of the contract, arrangement or understanding (whether proposed or actual), or conduct, is being sought and grounds supporting this period of authorisation:

5 years

4. Parties to the contract, arrangement or understanding (whether proposed or actual), or relevant conduct, for which substitution of authorisation is sought

(a) Names, addresses and description of business camed on by those other parties to the contract, arrangement or understanding (whether proposed or actual), or the relevant conduct:

Please see Attachment B.

(b) Names, addresses and descriptions of business canied on by parties and other persons on whose behalf this application is made: (Refer to direction 5)


Page 2 of 6

(c) Where those parties on whose behalf the application is made are not known - description of the class of business camed on by those possible parties to the contract or proposed contract, arrangement or understanding:

General merchandise retailing within David Jones stores

5. Public benefit claims

(a) Arguments in support of application for substitution of authorisation:

Please see Attachment A.

(See Direction 6 of this Form)

(b) Facts and evidence relied upon in support of these claims:


6. Market definition

Provide a description of the market(s) in which the goods or services described at 3 (b) are supplied or acquired and other affected markets including: significant suppliers and acquirers; substitutes available for the relevant goods or services; any restriction on the supply or acquisition of the relevant goods or services (for example geographic or legal restrictions):



7. Public detriments

(a) Detriments to the public resulting or likely to result from the substitute authorisation, in particular the likely effect of the conduct on the prices of the goods or services described at 3 (b) above and the prices of goods or services in other affected markets:



@) Facts and evidence relevant to these detriments:


Page 3 of 6

8. Contracts, arrangements or understandings in similar terms

This application for substitute authorisation may also be expressed to be made in relation to other contracts, arrangements or understandings (whether proposed or actual) that are, or will be, in similar terms to the abovementioned contract, arrangement or understanding

(a) Is this application to be so expressed?

Yes

(b) If so, the following information is to be furnished:

(i) description of any variations between the contract, arrangement or understanding for which substitute authorisation has been sought and those contracts, arrangements or understandings that are stated to be in similar terms:

Please see Attachments A and B.


(ii) Where the parties to the similar term contract, arrangement or understanding(s) are known - names, addresses and description of business carried on by those other parties:


......................... ....... ............................................ . ...... ... .................................... (See Direction 5 of this Form)

(iii) Where the parties to the similar term contract, arrangement or understanding(s) are not known- description of the class of business carried on by those possible parties:

General merchandise retailing within David Jones stores

9. Joint Ventures

(a) Does this application deal with a matter relating to a joint venture (See section 4J of the Trade Practices Act 1974)?

(b) If so, are any other applications being made simultaneously with this application in relation to that joint venture?

N/A

Page 4 of 6

(c) If so, by whom or on whose behalf are those other applications being made?

N/A

10. Further information

(a) Name, postal address and telephone contact details of the person authorised by the parties seeking revocation of authorisation and substitution of a replacement authorisation to provide additional information in relation to this application:

Theperson named in item l(c) of this application.

2 0 NOUGM&W l o o g . Dated ...................................................................

(Signature) ~ K O L ) N E DKOW

(Full Name) DPNIb W E 3 L I M l r E b - .............................................................................

(Organisation)

& I \ ~ ~ P A ~ G o U d ~ a & ~w--hv-- f S e C N t i 7 A 3 e ~ ............................................................................. (Position in Organisation)

Page 5 of 6

DAVID JONES

APPLICATION FOR AUTHORISATION

ATTACHMENT A

November 2008

1. INTRODUCTION

1.1 Application for Authorisation

David Jones Limited (David Jones) has previously been granted authorisation by the Australian

Competition and Consumer Commission under section 88(1) of the Trade Practices Act 1974

(Act) in respect of conduct which may contravene section 45(2)(a)(ii) and (b)(ii) of the Act by

reason of the operation of section 45A(1) (authorisation A30230). As this authorisation is due to

expire on 8 January 2009, David Jones now seeks authorisation for a further period of five years

from 9 January 2009 to 8 January 2014.

The basis of David Jones's request is set out below.

1.2 Proposed Conduct

The proposed conduct concerns David Jones inviting Retail Brand Management Businesses

(as defined in paragraph 2.2 below) within its stores to take part in David Jones Promotions

(as defined in paragraph 3.1 below), such as storewide and departmentwide discounts (Proposed

Conduct). Participation by Retail Brand Management Businesses would be voluntary and

decided by each Retail Brand Management Business on a promotion by promotion basis.

2. BACKGROUND

2.1 The David Jones Business

David Jones operates 36 department stores throughout Australia. These stores are located as

follows: 15 stores in NSW, 5 stores in Victoria, 2 stores in the ACT, 7 stores in Queensland, 3

stores in South Australia and 4 stores in Western Australia. Additionally David Jones has two

clearance outlets, one located in NSW and the other in Queensland. David Jones can be

described as a "full line" retailer, which means that it sells a wide variety of products including

women's, men's and children's clothing, accessories, homewares, furniture, food, electrical

appliances and other general merchandise. David Jones also provides services including hair and

beauty salons, pharmacy, restaurants, tailors and home decoration.

2.2 Retail Brand Businesses

A number of merchandise suppliers operate separate businesses within David Jones stores (Retail

Brand Management Businesses). These merchandise suppliers operate under Retail Brand

Management Agreements or licences. Such businesses are also commonly known as

'concessions'. Retail Brand Management Businesses are effectively 'shops within a shop'. They maintain separate inventory from David Jones, employ their own staff and set their own prices,

although they are located physically within the David Jones stores. Retail Brand Management

Businesses are often run by 'prestige' brands, which want to accentuate their brand by using

special displays.

This application for authorisation is for all Retail Brand Management Businesses that operate

within David Jones stores, whether they operate under the old licence agreements or the Retail

Brand Management Agreements. A list of the current Retail Brand Management Businesses

operating within David Jones stores is attached as Attachment B. As discussed further in section

3.4 below, authorisation is sought for existing as well as future Retail Brand Management

Businesses.

2.3 Reasons for Application

David Jones runs a number of promotions each year in which David Jones offers significant

discounts off a wide range of merchandise or offers additional benefits to purchasers of a wide

range of merchandise. An authorisation allowing David Jones to invite Retail Brand

Management Businesses to join such promotions would be beneficial for a number of reasons,

including reducing the need for exclusions in relation to promotions which are advertised as

'storewide', 'departmentwide', or 'category wide', thereby simplifying promotions and making

them more attractive to consumers.

3. THE PROPOSED CONDUCT

3.1 Invitation to Retail Brand Businesses to participate in David Jones promotions

The types of promotions in which David Jones would invite Retail Brand Businesses to

participate (David Jones Promotions) include (relevantly):

. "percentage off' sales, during which a certain percentage discount is offered off a

particular type of merchandise, or across a particular department or the whole store;

interest free purchase offers;

free gift with purchase promotions. An example would be a Mother's Day promotion

where customers were offered a bonus pashminetta if they spent $100 of more on any

full-priced women's clothing, footwear or accessories;

free voucher with purchase promotions;

promotions which offer incentives to buy more than one item. An example would be

where customers were offered a 20% discount off the purchase price if they bought 2 or

more of a particular type of merchandise; and

promotions in which customers are offered extra Instant Rewards offers under David

Jones' loyalty program for holders of its store card or David Jones American Express

Credit Card.

The participation of Retail Brand Management Businesses in such promotions would not be

mandatory. That is, involvement would be voluntary, and at the discretion of each Retail Brand

Management Business on a promotion by promotion basis. Retail Brand Management Businesses

will remain free to choose not to participate in David Jones Promotions if they do not wish to run

a promotion or if they wish to nm their own promotion, including one offering a different

discount or benefit.

3.2 Relevant Provisions in Agreements with David Jones

It is proposed to amend existing licences with Retail Brand Management Businesses by sending

each Retail Brand Management Business a letter in the form attached as Attachment C. In terms

of dealing with participation by Retail Brand Management Businesses in relevant David Jones

Promotions, all licence agreements with Retail Brand Management Businesses currently contain

and will contain the provision as set out in Attachment D.

3.3 Period of Authorisation

David Jones seeks authorisation for a period of five years commencing on 9 January 2009.

3.4 Extension to Future Retail Brand Businesses

David Jones requests that any authorisation be granted in respect of current and future Retail

Brand Management Businesses, as the identity and number of Retail Brand Management

Businesses changes fkom time to time. David Jones proposes to notify the Commission of

changes to the list of Retail Brand Management Businesses operating within David Jones stores

at the end of each twelve-month period from the date of authorisation.

4. COMPETITION AND NET PUBLIC BENEFIT ANALYSIS

4.1 Potential Contravention of the Act

There is an argument, with which David Jones does not necessarily agree, that David Jones and

the Retail Brand Management Businesses may be viewed as competitors for the purposes of the

Act, and any agreement between them relating to prices or discounts for merchandise might

therefore be characterised as a contravention of section 45(2)(a)(ii) and (b)(ii) of the Act as a

result of the operation of section 45A(1).

4.2 Authorisation Test

In determining whether to grant an authorisation under section 88 of the Act, the Commission is

required to consider the test set out in section 90 of the Act. This test requires the Commission to

grant authorisation for conduct which would othenvise be in breach of the Act if the public

benefit arising from the conduct outweighs any resultant detriment constituted by any lessening

of competition in the relevant market.

4.3 The Relevant Market

David Jones is a department store and stocks a wide variety of goods in categories such as:

men's, women's and children's clothing and accessories, including footwear, bags,

jewellery and cosmetics;

furniture, homewares, bedding, manchester, floor coverings and major electrical,

including televisions, refigerators and other large appliances and small electrical

appliances;

general merchandise, including books, music, videos, stationary, printed material, toys,

food, and photographic equipment; and

services including hairdressing, clothing alterations and beauty salons.

David Jones faces strong competition from other outlets operating in a number of different

formats. David Jones competes against:

other department stores, including haditional format department stores such as Myer and

discount department stores such as Big W, Kmart, Hams Scarfe, Best & Less and Target;

'category kille~s', being retailers which specialise in a particular category (such as Toys R Us, Barbeques Galore, Captain Snooze, or Oficeworks);

large format, high volume retailers (such as Harvey Norman);

other general merchandise retailers; and

specialist and boutique stores offering ranges of products such as women'slmen's fashion,

homewares, books, gifts and sporting goods.

4.4 Public Benefit and Detriment

David Jones submits that giving Retail Brand Management Businesses the opportunity to

participate in David Jones Promotions will increase competition. The ability to participate will

encourage Retail Brand Management Businesses to make more attractive offers to consumers in

terms of price and other benefits.

Where Retail Brand Management Businesses participate in David Jones Promotions, this will also

encourage competitors to discount in order to compete more vigorously against David Jones and

its Retail Brand Management Businesses.

If Retail Brand Management Businesses can participate in David Jones Promotions, customers

are likely to be offered lower prices by Retail Brand Management Businesses, and have the

convenience of shopping at David Jones during a David Jones Promotion and having available to

them a broader range of discounted products than would otherwise be the case.

David Jones submits that the Proposed Conduct would not result in any detriment to the public.

None of the conduct would involve David Jones agreeing with any Retail Brand Management

Business on the price for any good or service, only on a level of discount or other benefit as set

out in section 3.1 above. The conduct would rather enhance competition and provide public

benefits in the form of increased discounts and simplified promotions. In light of this, David

Jones submits that the benefit to the public outweighs any detriment and therefore submits that

the Proposed Conduct should be authorised.

DAVID JONES


ATTACHMENT B

RETAIL BRAND MANAGEMENT BUSINESSES OPERATING IN DAVID JONES STORE AS AT JUNE 2003

The following list sets out the Retail Brand Management Business operating within David Jones Stores as at November 2008.

MAX BRENNER AUSTRALIA EUREST (AUST) CATERING & SERVICES PTY LTD TOP FRUIT & VEGETABLES PTY LTD 3FS PTY LTD C COST1 HOLDINGS PTY LTD COOKIE MAN PTY LTD PRIME QUALITY MEATS PTY LTD YS PTY LTD H&S ZOUROUDIS PTY LTD ATF RODINI CAFE SANTOS TEA & COFFEE SHOPS PTY LTD B&RD WILLIAMS CELLARMASTER WINES PTY LTD CASEY'S FRUIT & VEG PETER G BOUCHIER PTY LTD (BOUCHIER'S BUTCHERS) REESAPTYLTD BONBONS AT THE GLEN PTY LTD SAMMAS HOLDINGS PTY LTD RICHARD GUNNER'S FINE MEATS PTY LTD LORBEND PTY LTD (CHRIS JARMER & AIR) BRUGGE ENTERPRISES PTY LTD ATF THE BRUGGE COUNTRY TRUST

WOMENSWEAR

ALANNAH HILL ANTHEA CRAWFORD APPAREL GROUP (SPORTSCRAFT & SABA) CARLA ZAMPATTI COLLETTE DTNNIGAN COUNTRY ROAD CUE & CO (VERONIKA MAINE) FC AUSTRALIA (FRENCH CONNECTION) GEORGE GROSS & H WHO DESIGN CO M WEBSTER HOLDINGS (DAVID LAWRENCE, JIGSAW, MORRISSEY & MARCS) MAX MARA PERRl CUTTEN PETER ALEXANDER (JUST GROUP) SCANLAN & THEODORE SIMONA DISTRIBUTING TABLE EIGHT (A DIV OF PRETTY GIRL) TINNINE GROUP (MARIA FINLAY) WITCHERY FASHIONS

MENSWEAR

ANTHONY SQUIRES GENTLEMEN'S APPAREL GROUP (SPORTSCRAFT & SABA)

CALIBRE COUNTRY ROAD FCUK M WEBSTER HOLDINGS (MARCS & MORRISSEY) POLO RALPH LAUREN AUSTRALIA

SHOES & ACCESSORIES

CHRISTIAN DIOR FEND1 FERRAGAMO JAN LOGAN MIDAS MORAY HATS PRAD A

COSMETICS

BELLA VITAL SPA DERMALOGICA HALLAS TRADING (ELLA BACHE) MARCHANT INTERNATIONAL (NAIL SPA) JURLIQUE INTERNATIONAL LA PRAIRIE GROUP

HOMEWARES

BANG & OLUFSEN DECORATOR SERVICES DESIGN MODE INTERNATIONAL PTY LTD HALI RETAIL STORES (HALI RUGS) GEORG JENSEN PTY LTD LLADRO AUSTRALIA PTY LTD ROYAL DOULTON AUSTRALIA PTY LIMITED SHERIDAN VILLEROY & BOCH AUST PTY LTD WATERFORD WEDGWOOD AUSTRALIA LIMITED WHITEHILL & CO PTY LTD (WHITEHILL SILVER)

SERVICES

COMPASS CATERING SERVICES MEN'S HAIR SALON SARANNA INVESTMENTS (MAGIC CAVE)

DAVID JONES


ATTACHMENT C

Day Month Year

Name of Concessionaire Address 1 Address 2 ADDRESS 3

Dear Sirmadam

PROMOTIONS

David Jones wishes to vary your current licence agreement to reflect the existing practice with respect to storewide promotions. Your participation in these promotions is voluntary and this clause reinforces that fact. The clause does impose any additional liability on you. The proposed amendment will be inserted at the end of the existing clause [*I.

1.1 Where Licensor wishes to condirct a Promotion in all or any of its stores including the Premises.

1.1.1 Licensor may in its discretion advise the Licensee of its proposal and extend to the Licensee the opportunity to participate in the Promotion;

1.1.2 f the Licensee wishes to accept this opportunity lo participate in the Promotion then it must advise Licensor in writing within the time nominated by Licensor;

1.1.3 f the Licensee elects to participate then it will comply with aN applicable terms ofthe Promotion as advised by Licensor to it;

1.1.4 Licensor acknowledges that the Licensee is under no obligation to participate in the Promotion or to make any other similarpromotional offer.

1.1.5 Promotion means apromotional event whereby offers are made to customers for thesale o f merchandise.

This amendment will have effect 30 days after the date of this letter. Should you wish this amendment not to apply, would you please let me know in writing during this period.

Yours sincerely

David Jones representative

DAVID JONES


ATTACHMENT D

Relevant Provision from Proposed Retail Brand Management Agreement

9.7 Where David Jones wishes to conduct a Promotion in all or any of its stores including the

Premises:

9.7.1 Subject to the provisions of the Trade Practices Act, David Jones may in its

discretion advise the Retail Manager of its proposal and extend to the Retail

Manager the opportunity to participate in the Promotion;

9.7.2 if the Retail Manager wishes to accept this opportunity to participate in the

Promotion then it must advise David Jones in writing within the time nominated

by David Jones;

9.7.3 if the Retail Manager elects to participate then it will comply with all applicable

terns of the Promotion as advised by David Jones to it;

9.7.4 David Jones acknowledges that the Retail Manager is under no obligation to

participate in the Promotion or to make any other similar promotional offer.

9.7.5 For the avoidance of doubt, clause 9.2 above will apply to any participation by the Retail Manager in a David Jones Promotion pursuant to this clause 9.7.

Note:

Promotion is defined as a promotional event whereby offers are made to customers for the sale

of merchandise.

Retail Manager is defined as the Retail Brand Management Business.

david jones i117815.pdfon 17 december 2003 for a period of five years (original authorisation). ......

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