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The Dominance and

Monopolies Review

Law Business Research

Editor

Maurits Dolmans

The Dominance and Monopolies Review

Reproduced with permission from Law Business Research Ltd.

This article was first published in The Dominance and Monopolies Review, 1st edition(published in June 2013 – editor Maurits Dolmans).

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The Dominance and

Monopolies Review

EditorMaurits Dolmans

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iii

Editor’s Preface ��viiMaurits Dolmans

Chapter 1 AUSTRALIA ��1Ayman Guirguis, Richard Flitcroft and Jackie Mortensen

Chapter 2 BeLgIUm ��21Damien M B Gerard

Chapter 3 BRAzIL ��39Ana Paula Martinez

Chapter 4 CAnAdA ��53Arlan Gates

Chapter 5 denmARk ��69Søren Zinck and Frederik André Bork

Chapter 6 eURopeAn UnIon ��80Thomas Graf and Henry Mostyn

Chapter 7 FRAnCe ��99Antoine Winckler, François Brunet and Frédéric de Bure

Chapter 8 geRmAny ��115Stephan Barthelmess and Tilman Kuhn

Chapter 9 ICeLAnd ��129Helga Melkorka Óttarsdóttir and Snorri Stefánsson

Chapter 10 IndIA ��139Anand S Pathak

contents

iv

Contents

Chapter 11 ITALy ��153Matteo Beretta and Gianluca Faella

Chapter 12 JApAn ��170Kozo Kawai, Ryutaro Nakayama, Madoka Shimada and Takahiro Azuma

Chapter 13 koReA ��185Youngjin Jung

Chapter 14 mALAySIA ��202Tay Beng Chai and Lynette Yee Eun Ping

Chapter 15 neTheRLAndS ��212Douwe Groenevelt and Erik Pijnacker Hordijk

Chapter 16 poLAnd ��229Jarosław Sroczyński and Łukasz Wieczorek

Chapter 17 poRTUgAL ��244Nuno Ruiz

Chapter 18 RomAnIA ��253Anca Buta Mușat

Chapter 19 SpAIn ��262Francisco Enrique González-Díaz and Ben Holles

Chapter 20 Sweden ��273Ulf Öberg, Andreas Reindl and Mattias Schain

Chapter 21 SwITzeRLAnd ��292Nicolas Birkhäuser and Andreas D Blattmann

Chapter 22 TURkey ��308Gönenç Gürkaynak

v

Contents

Chapter 23 UnITed kIngdom ��319Paul Gilbert

Chapter 24 UnITed STATeS ��333Kenneth S Reinker, Daniel Culley and Morgan L Mulvenon

Appendix 1 ABoUT The AUThoRS �� 347

Appendix 2 ConTRIBUTIng LAw FIRmS’ ConTACT deTAILS �� 365

vii

Editor’s PrEfacE

This publication is a testament to the proliferation of abuse of dominance legislation around the world. Its coverage considers legislative provisions that have, in the case of the United States, been in existence since 1890, to some, in jurisdictions such as China and India, that have been introduced in the past few years or, in Malaysia’s case, last year. This diversity of jurisdictions has led to a multiplicity of differing approaches and indicates, as underlined by the national and supra-national surveys contained in this book, the real need for greater legal certainty and clarity in both the future drafting and application of laws governing abuse of dominance.

The disparities in the approaches taken by different and even well-established jurisdictions can be significant. As an example, a contrast may be drawn between the law of the United States and the European Union.

In the United States, Section 2 of the Sherman Act1 is in certain respects being narrowly construed and applied by the courts, the Department of Justice (most notably through its Guidelines) and, to some extent, the Federal Trade Commission (‘FTC’). This may be attributed to a wish to reduce the burdens of US litigation, in light of the costs imposed by the discovery system and the risks created by trial by jury, awards of treble damages, as well as the litigation incentives inherent in contingency fees and class actions.

By contrast, the approach taken by the European Union in the application of Article 102 of the Treaty of the Functioning of the European Union (‘TFEU’) goes too far in the opposite direction. For much of the life of Article 102 TFEU and its predecessors, the European Commission and courts have embraced a form-based rather than effects-based approach. The high-water mark of this may be seen in the

1 15 USC Section 2.

Editor’s Preface

viii

Commission decisions and subsequent court judgments in British Airways2 and Tomra,3 where it was sufficient to show that the conduct in question was merely liable to affect competition, rather than having to prove actual effects and harm to consumers. This form-based application may stifle pro-competitive conduct, taking into account the essentially political decision-making in large cases, the risk of confirmation bias (where the investigator is the prosecutor, judge and executioner), the slow and therefore costly procedure, the risk of high fines and opportunistic follow-on damage claims, and the marginal judicial review of prohibition decisions by the General Court and the Court of Justice of the European Union. The combination of these factors is a powerful disincentive for a possibly dominant undertaking to engage in any competitive conduct that may be found to constitute abuse.

Given the influence of European Union abuse of dominance law, particularly on emerging jurisdictions such as India and China (where similar factors apply to an even larger extent), the use of a form-based analysis may have a negative impact on the development of the law far beyond Europe’s borders.

A happy medium or Mid-Atlantic point needs to be found between these divergent approaches. The law of abuse of dominance in Europe (and all jurisdictions that emulate Europe) needs to move away from the form-based approach that has characterised the analysis of abuse of dominance in favour of an effects-based analysis. The institutional groundwork for a turn towards the application of a more economic analysis may have been put in place by the creation of the office of the Chief Competition Economist in 2003 and the publication of the ‘Guidance on the Commission’s Enforcement Priorities’.4 Subsequently, in the decisions of the European Commission and judgments of the courts, there have been signs of an incipient analytic shift; both Microsoft5 and, more recently, Post Danmark6 show a growing acceptance of the need for a more effects-based consideration of the abuse of dominance. As the European Court of Justice commented in Post Danmark:

[…] not every exclusionary effect is necessarily detrimental to competition. Competition on the merits may, by definition, lead to the departure from the market or the marginalisation of competitors that are less efficient and so less attractive to consumers from the point of view of, among other things, price, choice, quality or innovation.7 […] in order to assess the existence of anti-competitive effects […] it is necessary to consider whether that pricing policy, without

2 Case C-95/04 P, British Airways plc v. Commission (‘British Airways’), judgment of 15 March 2007.

3 Case C-549/10P, Tomra, judgment of 19 April 2012.4 OJ, C45/7, 24 February 2009.5 Case T-201/04, Microsoft Corporation v. Commission (‘Microsoft’), judgment of 17 September,

2007.6 Case C-209/10 Post Danmark v. Konkurrencerådet (‘Post Danmark’), judgment of 27 March

2012. Note that this was the Grand Chamber of the Court.7 Ibid., paragraph 22.

Editor’s Preface

ix

objective justification, produces an actual or likely exclusionary effect, to the detriment of competition, and, thereby, of consumers’ interests.8

It is hoped that the change of tack signalled by Post Danmark will be continued in future abuse of dominance cases. The forthcoming decision of the court in Intel should act as a marker of the progress of this change, hopefully confirming the growing acceptance and, indeed, necessity of the adoption of an effects-based analysis in the enforcement of European abuse of dominance law. For those jurisdictions that have drawn heavily on the European legal framework in the creation of their own systems for the regulation of abuse of dominance, most notably India and China, further lessons concerning the need to abandon the per se approach and adopt an effects-based approach should be taken from the recent European experience.

On both sides of the Atlantic, the European and FTC Commissioners have, when dealing with the practicalities of abuse of dominance enforcement, in some cases shown a laudable willingness to find practical solutions in fast-moving markets. The growth, in particular, of the innovative use of consent decrees in the United States and commitment decisions within the European Union, is to be welcomed. These settlement tools create advantages for both competition authorities and market parties in reducing not only the regulatory and enforcement burden but in cutting the timelines for cases from up to 10 years (resulting in remedies that may be too late to keep pace with developments in the market) to periods of months or a few years. At the same time, we cannot ignore the fact that the use of such settlement procedures also brings some disadvantages for the development of the law; in an area where there are limited numbers of decisions, a lack of new precedents or guidance is of some concern.

As highlighted by the European Court of Justice in Alrosa,9 settlement procedures may afford competition authorities a wide degree of discretion in the resolution of abuse of dominance cases. Especially given the absence of any in-depth judicial analysis of commitments, this discretion must be exercised with care and responsibility. The factors mentioned above may drive the Commission into adopting adventurous and novel interpretations of the law, and compel companies to agree to settlements to refrain from energetic rivalry that could, in fact, harm the interest of consumers.

Despite the scope for a harmonisation of approaches, there will probably never be total convergence between the law and practice governing the regulation of abuse of dominance in the United States and the European Union or, more generally, on a worldwide basis. There are some important differences between the relevant provisions of US and EU law. As can be seen in the different analysis of the Rambus ‘patent trap’, the respective concepts of ‘monopolisation’ (which does not require a dominant position at the time the offensive conduct occurs) and ‘abuse’ (which requires a finding of dominance) can lead to very different assessments of the same conduct.10 The total lack of a concept of an exploitative abuse in US law is another fundamental difference. The purpose of

8 Ibid., paragraph 45.9 Case C-441/07P, Commission v. Alrosa Company Limited (‘Alrosa’), judgment of 29 June 2010.10 Rambus Inc v. FTC, 522 F.3d 456 (D.C. Cir 2008) and Case COMP/ 38.636 Rambus Inc.

Editor’s Preface

x

this book, as shown by the contributions it contains, is to allow for the beginning of an understanding of the differences and similarities, and their implications, between laws governing unilateral conduct in some of the major competition jurisdictions of the world.

In the coming year, there are likely to be further interesting case law developments, notably from the technology and energy sectors, areas that have been the subject of increased scrutiny by competition authorities. Of particular note will be the forthcoming decisions from the European General Court in Intel11 and of the European Commission in Samsung12 and Motorola.13 More generally, both patent trolling and privateering are likely to come under increased scrutiny from not only the US and EU competition authorities but, probably, the competition authorities in many of the jurisdictions analysed in this book. Watch this space.

I would like to thank all of the contributors for taking time away from their busy practices to prepare their insightful and informative contributions to the inaugural edition of The Dominance and Monopolies Review. I am personally grateful for the invaluable assistance of my colleague Max Kaufman of the Brussels office. I look forward to seeing what 2013 holds for future editions of this work.

Maurits DolmansCleary Gottlieb Steen & Hamilton LLPLondonJune 2013

11 T-286/09 Intel v. Commission.12 Case COMP/39.939 Samsung – Enforcement of UMTS standards essential patents.13 Case COMP/39.985 Motorola – Enforcement of GPRS standard essential patents.

1

Chapter 1

AustrAliA

Ayman Guirguis, Richard Flitcroft and Jackie Mortensen1

I INTRODUCTION

In Australia, abuse of dominance is the subject of Section 46 (titled ‘Misuse of market power’) of the Competition and Consumer Act 2010 (Cth) (‘CCA’),2 a national law.

The general prohibition is set out in Section 46(1), which prohibits a corporation with a substantial degree of market power from taking advantage of that market power for the purpose of:a eliminating or substantially damaging a competitor;b preventing entry into that market or any other market; orc deterring or preventing a person from engaging in competitive conduct in that

market or any other market.

Section 46(1AA) of the CCA also prohibits a corporation from engaging in predatory pricing. In addition, Section 47 of the CCA (titled ‘Exclusive dealing’) indirectly addresses abuse of dominance by prohibiting corporations from engaging in the practice of exclusive dealing.

These provisions apply to corporations, including foreign, trading or financial corporations. Furthermore, the CCA applies to governmental entities, but only to the extent that they are ‘carrying on a business’.

1 Ayman Guirguis and Richard Flitcroft are partners and Jackie Mortensen is a senior associate at Corrs Westgarth Chambers. The authors wish to thank Amelia Ho, Alistair Newton, James Cameron, Lisa Lusak, Kieran Donvan, James Wood, Marissa Dooris and Kerri Watson for their assistance in preparing this chapter.

2 Formerly known as the Trade Practices Act 1974 (Cth).

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2

In addition to the general prohibitions against abuse of dominance, special rules apply in the telecommunications,3 energy4 and shipping5 sectors.

II YEAR IN REVIEW

i Regulator’s approach to misuse of market power

The regulator, the Australian Competition and Consumer Commission (‘ACCC’), has continued to pursue a robust investigative and enforcement agenda in relation to misuse of market power. The ACCC has indicated that misuse of market power is a priority focus for 2013.6

In February 2013, the ACCC initiated enforcement proceedings in the Federal Court against Visa Inc (‘Visa’), and its related entities, for misusing its market power to prevent the use of dynamic currency conversion (‘DCC’) services by international cardholders,7 as well as Australian retailers and suppliers of DCC services.8 In addition to the proceedings against Visa, the ACCC is awaiting judgment in relation to proceedings commenced against Cement Australia Pty Ltd and Pozzolanic Enterprises Pty Ltd for alleged breaches of Section 46 of the CCA,9 and 10 in-depth investigations of potential

3 See CCA, Part XIB (in particular, Section 151AJ(2)) and Part XIC.4 See the National Gas Law and the National Electricity Law, which are regulated by the

Australian Energy Regulator.5 See CCA, Part X.6 Rod Sims, ‘The ACCC’s 2013 priorities’ (Speech delivered to the Committee for Economic

Development of Australia, Sydney, 21 February 2013), www.accc.gov.au/speech/opening-address-iba-competition-conference.

7 DCC services allow international debit and credit cardholders to choose an exchange rate at the time of making a payment at point of sale or making a withdrawal at an ATM.

8 ACCC v. Visa Inc & Ors (Federal Court of Australia, Sydney Registry, NSD164/2013, 4 February 2013); ‘ACCC commences Federal Court proceedings against Visa Inc’ (Media Release, NR014/13, 4 February 2013), www.accc.gov.au/media-release/accc-commences-federal-court-proceedings-against-visa-inc.

9 The ACCC commenced proceedings in 2008, in which it alleged two breaches of Section 46 of the CCA in relation to entering into and amending a contract to acquire fly ash from Millmerran Power Station in south-east Queensland (ACCC v. Cement Australia Pty Ltd & Ors (Federal Court of Australia, Queensland Registry, QUD295/2008, 12 September 2008); ‘ACCC institutes proceedings: Alleged misuse of market power by Cement Australia (Media Release, NR 262/08, 15 September 2008), www.accc.gov.au/media-release/accc-institutes-proceedings-alleged-misuse-of-market-power-by-cement-australia). The case was heard in 2011 and judgment has been reserved.

Australia

3

misuses of market power are currently in progress,10 including an investigation into major Australian supermarket operators, Coles and Woolworths.11

ii Recent enforcement actions

VisaThe ACCC in its enforcement proceedings against Visa, and its related entities, alleges that Visa did not permit:a its international cardholders to choose to use DCC services when making

payments at retail outlets or when withdrawing cash from ATMs in Australia using their Visa card;

b Australian retailers to offer DCC services for transactions on the Visa network; and

c the use of DCC services on transactions at Australian ATMs that accept Visa cards, effectively preventing competition from Australian suppliers of DCC services.

The ACCC’s proceedings against Visa will be of interest in Australia and internationally, given the nature of the proceedings and companies involved, as well as the fact that, historically, the ACCC has found it difficult to prosecute companies for an alleged misuse of market power.

Central to the proceedings will be how the Federal Court identifies the relevant market. To the extent that the Court identifies the relevant market as, for example, the international electronic payments processing market, even if the ACCC’s case is unsuccessful overall, it may be internationally persuasive for regulators and courts in other jurisdictions.12

ACCC investigations in relation to misuse of market power by supermarketsIn 2012, the ACCC invited suppliers to make confidential submissions about the procurement conduct of Coles and Woolworths, following growing concerns that Coles and Woolworths (who account for about 80 per cent of Australia’s grocery distribution) have misused their market power. Fifty suppliers came forward through this informal process. The ACCC identified five categories of conduct by the supermarkets that may

10 Rod Sims, ‘Opening Address’ (Speech delivered at the International Bar Association Competition Conference, Sydney, 21 March 2013), www.accc.gov.au/system/files/Speech%20-%20Sims%20-%20CEDA%20-%2021%20February%202013%20-%20Final%20%283%29.pdf.

11 Rod Sims, ‘The ACCC’s 2013 priorities’ (Speech delivered to the Committee for Economic Development of Australia, Sydney, 21 February 2013), www.accc.gov.au/speech/opening-address-iba-competition-conference.

12 Claire Stewart, ‘ACCC flexes muscles over Visa’, Australian Financial Review, 6 February 2013, p. 13.

Australia

4

amount to unconscionable conduct13 or a misuse of market power.14 On the basis of these informal submissions, the ACCC commenced formal investigations into Coles and Woolworths in late 2012.

The ACCC is now using its powers under Section 155 of the CCA to compel suppliers and Coles and Woolworths to disclose relevant information and documents.

The Chairman of the ACCC has stated publicly that once the investigation finishes, ‘litigation would be a strong option’ if the ACCC has sufficient evidence.15 The ACCC expects to finalise its investigations by mid-2013.16

III MARKET DEFINITION AND MARKET POWER

A corporation only breaches Section 46 of the CCA if the corporation, as a threshold, has a ‘substantial degree of power in a market’.

The court will generally define the relevant market as the first exercise, before considering the nature and degree of a corporation’s market power. As stated by Mason CJ and Wilson J of the High Court:

In identifying the relevant market […] the object is to discover the degree of the defendant’s market power. Defining the market and evaluating the degree of power in that market are part of the same process, and it is for the sake of simplicity of analysis that the two are separated […] it is necessary to describe accurately the parameters of the market in which the defendant’s product competes: too narrow a description of the market will create the appearance of more market power than in fact exists; to broad a description will create the appearance of less market power than there is.17

13 Part 2-2 of the Australian Consumer Law (‘ACL’) (which is Schedule 2 to the CCA) prohibits unconscionable conduct. While unconscionable conduct is not defined in the ACL, it generally refers to conduct that is unfair, unreasonable or without regard to good conscience. Section 22 of the ACL sets out those matters to which the court may have regard for the purposes of whether a supplier has engaged in unconscionable conduct. The ACCC often identifies the protections against unconscionable conduct and misuse of market power as intersecting protections under the CCA.

14 Evidence to Senate Estimates Committee, Parliament of Australia, Tabled Document No. 6, ‘Opening statement, received from Mr Rod Sims, Chairman, Australian Competition and Consumer Commission (ACCC)’, 13 February 2013, pp. 2–3, www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=economics_ctte/estimates/add_1213/index.htm.

15 Tony Boyd, ‘Suppliers shop Woolies, Coles’, Australian Financial Review, 15 February 2013, p. 40.16 Evidence to Senate Estimates Committee, Parliament of Australia, Tabled Document No.

6, ‘Opening statement, received from Mr Rod Sims, Chairman, Australian Competition and Consumer Commission (ACCC)’, 13 February 2013, p. 7, www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=economics_ctte/estimates/add_1213/index.htm.

17 Queensland Wire Industries Pty Ltd v. Broken Hill Pty Co Ltd [1989] HCA 6; (1989) 167 CLR 177.

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i Market definition

Section 4E of the CCA broadly defines a ‘market’ as one that includes a market for goods or services and their substitutes.

The case law defines a market as an area of demand-side and supply-side close competition and strong substitutability,18 as explained by McHugh J of the High Court:

[…] the market is the area of actual and potential, and not purely theoretical, interaction between producers and consumers where given the right incentive – a change in price or terms of sales – substitution will occur. That is to say, either producers will produce another similar product or consumers will purchase an alternative but similar product. Section 4E should be taken to require close substitutability because in one way most products are substitutes for one another, meaning that market power would always be understated […] 19

The courts have often used the small but significant non-transitory increase in price (‘SSNIP’) test to give effect to the principles of substitutability set out by Section 4E.20 The SSNIP test involves determining whether a hypothetical monopolist could raise prices by 5 to 10 per cent for a non-transient period (about one to two years) and remain profitable. If not, this would indicate that there are other sources of strong competition to constrain the monopolist.

A determination of the relevant market not only requires a consideration of the relevant product(s), but also requires a consideration of the geographic, temporal and functional dimensions of the market.21

ii Meaning of ‘substantial’

‘Substantial’ power as is contemplated by Section 46 is not equivalent to monopoly power, which was the case in previous incarnations of the provision.22

Further guidance as to the meaning of ‘substantial’ has been provided, with the courts considering it to mean ‘large or weighty’ or ‘considerable, solid or big’,23 or, alternatively, ‘real and of substance rather than trivial or minimal’.24

What is required for a corporation to have a ‘substantial degree’ of market power is less than what is required for ‘dominance’.


19 Boral Ltd v. ACCC [2003] HCA 5; (2003) 215 CLR 374.20 Australian Competition and Consumer Commission (ACCC) v. Australian Medical Association

Western Australia Branch Inc [2003] FCA 686; (2003) 199 ALR 423.21 Tooth & Co Ltd, In re; Tooheys Ltd, In re (1979) 39 FLR 1.22 ACCC v. Baxter Healthcare Pty Ltd (No 2) [2008] FCAFC 141; (2008) 170 FCR 16.23 Explanatory Memorandum to the Trade Practices Revision Bill 1986 (Cth); Dowling v. Dalgety

Australia Pty Ltd [1992] FCA 35; (1992) 34 FCR 109.24 Mark Lyons Pty Ltd v. Bursill Sportsgear Pty Ltd (1987) 75 ALR 581.

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6

iii Indicia of market power

The courts have considered that there are multiple indicia of market power:25

a ‘the ability of the firm to raise prices above the supply cost without rivals taking away customers in due time’;26

b the extent to which the corporation’s conduct in the market is constrained by that of competitors or potential competitors. This may be manifested by not only a corporation’s ability to influence market price, but also by practices directed at excluding competition, such as exclusive dealing, tying arrangements, predatory pricing or refusing to deal. Where a corporation is able to engage persistently in these practices, this may be indicative of market power;27

c market share of the corporation.28 However, the existence of a high market share does not, in itself, establish the existence of market power.29 Courts must consider a corporation’s market power alongside a consideration of the ease with which competitors may enter the market, as a high market share may be transient where there are low barriers to entry;30

d the existence of vertical integration. Again, this alone does not establish market power. However, vertical integration is considered a common means by which a corporation may capitalise on the market power it has in one market in other markets; and

e the barriers to entering the relevant market and the extent to which it is possible for new entrants to enter the market. This is a primary consideration (arguably, more important than the other indicia), when determining the existence of market power.31

The courts consider the following to be relevant matters in determining whether there are, and the extent of any, barriers to entry in the relevant market:a the existence of patents, trademarks of copyright that a new entrant may infringe;b levels of customer loyalty to particular established brands;

25 Dowling v. Dalgety Australia Ltd [1992] FCA 35; (1992) 34 FCR 109.26 Queensland Wire Industries Pty Ltd v. Broken Hill Pty Co Ltd [1989] HCA 6; (1989) 167 CLR

177.27 Queensland Wire Industries Pty Ltd v. Broken Hill Pty Co Ltd [1989] HCA 6; (1989) 167 CLR

177.28 For example, McHugh J in Boral Ltd v. ACCC [2003] HCA 5; (2003) 215 CLR 374 has

referred to a 30 per cent market share as an indicia of market power.29 However, as referred to in Section IV, infra, the existence of ‘substantial market share’, as

opposed to the existence of ‘substantial market power’, is an element that must be met when proving that a corporation has engaged in predatory pricing under Section 46(1AA) of the CCA.


31 Queensland Wire Industries Pty Ltd v. Broken Hill Pty Co Ltd [1989] HCA 6; (1989) 167 CLR 177; Dowling v. Dalgety Australia Ltd (1992) [1992] FCA 35; 34 FCR 109.

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c the availability of skilled labour, raw materials, plants and equipment;d the availability of suitable land on which to establish operations;e the level of capital investment required; andf the availability of commercial information.32

A corporation may have a substantial degree of market power even if it does not:a substantially control the market; orb have absolute freedom from constraint by the conduct of competitors, suppliers

or acquirers of goods or services in the relevant market.33

More than one corporation may have a substantial degree of market power within a particular market.34 A supplier or an acquirer can also have market power in a relevant market.35

iv Aggregation of market power

Under Section 46(2) of the CCA, the market power of related corporations may be combined for the purposes of determining whether one of those corporations has a substantial degree of market power.36

However, a corporation cannot be found liable under Section 46 of the CCA purely on the basis of shared market power with an unrelated corporation.37 While aggregation of market power between unrelated companies is impermissible, under Section 46(3A) of the CCA, the courts will consider the power that a corporation has by virtue of its contracts, arrangements or understandings with an unrelated corporation. As Lockhart J explained:

[…] a corporation may have power in a particular market gained through a variety of means and from a number of sources. Some of the power is held by the corporation through its own activities and some power is held because of its arrangements with others. Those arrangements must be taken into account when assessing the particular degree of power exercised by the individual corporation.38

32 ACCC v. Boral Ltd (1999) [1999] FCA 1318; 166 ALR 410.33 CCA, Section 46(3C).34 CCA, Section 46(3D).35 CCA, Section 46(4)(c).36 On 25 November 2011, the CCA was amended to block small acquisitions that may not

individually substantially lessen competition, but have the cumulative effect of substantially lessening competition in a market (Competition and Consumer Legislation Amendment Act 2011(Cth)). This indicates that when seeking to determine a corporation’s power in a market, the ACCC will consider the collective market power of each of the corporation’s related entities, no matter how insignificant each related entity’s power may be on its own.

37 Dowling v. Dalgety Australia Ltd (1992) [1992] FCA 35; 34 FCR 109.38 Dowling v. Dalgety Australia Ltd (1992) [1992] FCA 35; 34 FCR 109, p. 140.

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While the case law predating the enactment of Section 46(3A) of the CCA only considered circumstances involving agreements between competitors as being relevant in a consideration of market power, there is authority that supports the proposition that contracts, arrangements or understandings between non-competitors should be considered, for example, power derived from an upstream exclusive agreement.39

IV ABUSE

i Overview

Misuse of market powerSection 46(1) of the CCA prohibits corporations with a substantial degree of market power from taking advantage of that power in that or any other market for one of three proscribed purposes:a eliminating or substantially damaging a competitor;b preventing entry into that market or any other market; orc deterring or preventing a person from engaging in competitive conduct in that


Section 46(1) of the CCA applies to various conduct involving a misuse of market power including:a predatory or below-cost pricing;b refusal to supply;c tying and bundling;d refusal to provide access to an essential service; ande price discrimination.

Courts have often distinguished between anti-competitive behaviour and competition on the merits, and have cautioned against confusing aggressive competitive intent with anti-competitive behaviour.40

There are no specific defences in the CCA that a corporation can rely on where there is an allegation of misuse of market power.

Purpose-based testSection 46(1) of the CCA adopts a purpose-based test. A corporation with market power will only breach the provision if it takes advantage of that power for a proscribed purpose. ‘Purpose’ is simply an intention to achieve a result.41 It is not necessary to show that the

39 ACCC v. FILA Sport Oceania Pty Ltd (Administrators Appointed) [2004] FCA 376; (2004) ATPR 41-983.

40 Queensland Wire Industries Pty Ltd v. Broken Hill Pty Co Ltd (1989) [1989] HCA 6; 167 CLR 177; Boral Ltd v. ACCC (2003) [2003] HCA 5; 215 CLR 374.

41 Queensland Wire Industries Pty Ltd v. Broken Hill Pty Co Ltd [1989] HCA 6; (1989) 167 CLR 177; Melway Publishing Pty Ltd v. Robert Hicks Pty Ltd t/as Auto Fashions Australia [2001] HCA 13; (2001) 205 CLR 1.

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taking advantage of the market power is achieved or actually has any anti-competitive effect (real or potential).42

One exception to this is in respect of telecommunications carriers and carriage service providers, which are subject to special provisions in Part XIB of the CCA. These provisions operate in a different manner to Section 46(1) of the CCA because they deal with the likely effects on competition in a telecommunications market, rather than whether the conduct has the purpose of damaging or eliminating competitors.43

To prove a misuse of market power for a proscribed purpose, it is only necessary to show that the relevant taking advantage of that power is for one of three proscribed purposes. In practice, Australian courts look to subjective (through direct evidence of subjective purpose) and objective (from the conduct itself or the surrounding circumstances) factors to determine a corporation’s purpose under Section 46.44 Accordingly, courts have sought to address the limitations of the purpose test by considering a wide range of evidence and being prepared to infer purpose from the nature of arrangements, the circumstances of the conduct, and its likely effects.45 The requisite purpose need not be the sole or dominant purpose; it need only be a substantial one.46

Where the purpose of the conduct is eliminating or substantially damaging a competitor:47

a the competitor must be identified at the time when the taking advantage of the market power occurs;48 and

b the provision is only concerned with conduct that would damage efficient competitors.49

The purpose of preventing entry into that market or any other market is capable of extending to conduct that prevents entry into any market,50 regardless of whether it is a market in which the corporation or any of its related corporations presently compete.51

The purpose of deterring or preventing a person from engaging in competitive conduct in that market or any other market has an extremely wide reach,52 and the conduct deterred or prevented does not have to be directly competitive with the corporation that

42 ACCC v. Australian Safeway Stores Pty Limited [2003] FCAFC 149; (2003) 129 FCR 339.43 See CCA, Section 151AJ(2).44 General Newspapers Pty Limited v. Telstra Corporation (1993) 45 FCR 164.45 See, for example, Dowling v. Dalgety Australia Ltd [1992] FCA 35; (1992) 34 FCR 109.46 CCA, Section 4F(b).47 CCA, Section 46(1)(a).48 Victorian Egg Marketing Board v. Parkwood Eggs Pty Ltd (1978) 33 FLR 294.49 Queensland Wire Industries Pty Ltd v. Broken Hill Pty Co Ltd [1989] HCA 6; (1989) 167 CLR

177; Melway Publishing Pty Ltd v. Robert Hicks Pty Ltd t/as Auto Fashions Australia [2001] HCA 13; (2001) 205 CLR 1.

50 CCA, Section 46(1)(b).51 NT Power Generation Pty Ltd v. Power & Water Authority [2004] HCA 48; (2004) 219 CLR 90.52 CCA, Section 46(1)(c).

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has a substantial degree of market power or any of its related corporations. Furthermore, this provision also applies to prospective competitive conduct.53

Taking advantageThe term ‘take advantage’ does not involve anything more than the use of the market power involved; nor does it introduce any notion of predatory intent or morality.54

Section 46(6A) provides guidance to the courts when determining whether a corporation with market power has taken advantage of that power, including whether:a the conduct was materially facilitated by its market power;b the corporation engaged in the conduct relying on its market power;c it is likely that the corporation would have engaged in the conduct if it did not

have market power; andd the conduct was otherwise related to the corporation’s market power.

As such, it is clear that there must be a causal connection between the alleged conduct and the substantial market power.55

Misuse of market power in trans-Tasman marketsSection 46A of the CCA prohibits the misuse of market power by corporations with a substantial degree of market power in the trans-Tasman markets, including the Australian and New Zealand markets.

ii Exclusionary abuses

Predatory pricingThe CCA prohibits a corporation from engaging in predatory pricing. Section 46(1AA) of the CCA provides that companies with a substantial share of a market must not supply, or offer to supply, goods or services for a sustained period at a price that is less than their relevant cost for one of three proscribed purposes:a eliminating or substantially damaging a competitor;b preventing entry into that market or any other market; orc deterring or preventing a person from engaging in competitive conduct in that


This provision was inserted in the CCA in 2007, and to date the ACCC has not commenced proceedings for a breach of this provision. Section 46(1AA) of the CCA is subject to the same purpose-based test as discussed above.

53 Victorian Egg Marketing Board v. Parkwood Eggs Pty Ltd (1978) 33 FLR 294.54 Queensland Wire Industries Pty Ltd v. Broken Hill Pty Co Ltd [1989] HCA 6; (1989) 167 CLR

177.55 Natwest Australia Bank Ltd v. Boral Gerrard Strepping Systems Pty Ltd (1992) 111 ALR 631.

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Substantial share of a marketWhat constitutes a ‘substantial share of a market’ is not defined within the CCA. Australian courts have generally assessed each matter on a case-by-case basis.56 Although whether or not a corporation has a substantial share of a market is dependent on market factors, as a general rule, it is likely that a substantial market share will be a share greater than 15 to 20 per cent.

Relevant costAgain, the CCA does not define ‘relevant cost’ and the concept has not yet been judicially considered. However, in ACCC v. Boral Ltd,57 the Court held that the ‘avoidable cost’ was the sale of a product or service below the cost of production. Where a corporation prices below relevant cost for a sustained period, the corporation may be found to have engaged in predatory pricing even if the corporation cannot, and might never be able to, recoup any incurred losses.58

Competitive pricingPredatory pricing in contravention of Section 46(1AA) of the CCA may also amount to a misuse of market power by a corporation in breach of Section 46(1). However, not all reduced pricing is considered predatory or a misuse of market power. Australian courts seek to distinguish pricing that is competitive from that which is predatory by looking at the context in which the organisation decides to reduce prices.59

Exclusive dealingSection 47 of the CCA (‘Exclusive dealing’) indirectly addresses abuse of dominance by prohibiting corporations from engaging in the practice of exclusive dealing. Section 47 applies to all corporations regardless of market power.

A corporation engages in exclusive dealing where it:a supplies, or offers to supply, goods or services, at a particular price or at all, or

provides a discount, allowance, rebate or credit in relation to the supply of goods or services, on the condition that the acquirer will not, or will not except to a limited extent:60

• acquire goods or services from a competitor of the supplier;61

56 Boral Ltd v. ACCC [2003] HCA 5; (2003) 215 CLR 374. It is not clear, however, that the decision of the High Court supports the proposition that this test should apply in all predatory pricing cases.

57 [1999] FCA 1318; (1999) 166 ALR 410.58 CCA, Section 46(1AAA).59 Boral Ltd v. ACCC [2003] HCA 5; (2003) 215 CLR 374.60 The condition must have the attributes of compulsion and futurity (Re Ku-ring-gai Co-op

Building Society (No 12) Ltd (1978) 36 FLR 134).61 For the purposes of the CCA, it is not necessary that a particular competitor be identified

in order for a court to find that the corporation has engaged in exclusive dealing (ACCC v. Universal Music Australia Pty Ltd [2001] FCA 1800; (2001) 201 ALR 502).

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• resupply goods or services acquired from a competitor of the supplier; or• resupply those goods or services to particular persons or in particular places;62

b refuses to supply goods or services, at a particular price or at all, or provide a discount, allowance, rebate or credit in relation to the supply for the reason that the acquirer has:• acquired, or has not agreed not to acquire, goods or services from a competitor

of the supplier;• resupplied, or has not agreed not to resupply, goods or services acquired from

a competitor of the supplier; or• resupplied, or has not agreed not to resupply, those goods or services to

particular persons or in particular places;63

c acquires, or offers to acquire, goods or services, at a particular price or at all, on the condition that the supplier will not, or will not except to a limited extent, supply goods or services to any person, or to particular persons or in particular places;64 and

d refuses to acquire goods or services, at a particular price or at all, on condition that the supplier will not supply, or has not agreed not to supply, goods or services to particular persons or in particular places.65

Exclusive dealing as outlined above does not amount to a per se breach of the CCA and will only be prohibited where the exclusive dealing has the purpose, effect or likely effect of substantially lessening competition.66 If the market structure is such that a corporation has market power, and that corporation engages in conduct that amounts to exclusive dealing, the conduct may be a breach of Section 46 of the CCA and/or may have the effect or likely effect of substantially lessening competition.

62 CCA, Section 47(2).63 CCA, Section 47(3).64 CCA, Section 47(4).65 CCA, Section 47(5).66 Section 47 of the CCA also captures conduct that amounts to third line forcing, that is, where

a corporation: a supplies, or offers to supply, goods or services, at a particular price or at all, or provides

a discount, allowance, rebate or credit in relation to the supply of goods or services, on condition that the acquirer acquires goods or services from an unrelated third party (Section 47(6) of the CCA); or

b refuses to supply goods or services, at a particular price or at all, or provide a discount, allowance, rebate or credit in relation for the reason that the acquirer has not acquired, or has not agreed not to acquire, goods or services from an unrelated third party (Section 47(7) of the CCA)).

Engaging in third line forcing is a per se breach of the CCA.

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Leveraging, tying and bundlingLeveraging, tying and bundling may contravene Section 46 of the CCA where the conduct is engaged in by a corporation with substantial market power and subject to establishing the other elements of Section 46.67

Refusal to dealA refusal to deal is not prohibited under Section 46 of the CCA, unless it constitutes taking advantage of market power for a proscribed purpose.68

iii Discrimination

Although the CCA previously included a prohibition against price discrimination, which has since been repealed,69 in general, price discrimination is not of itself a misuse of market power unless it amounts to taking advantage of substantial market power for a proscribed purpose. Price discrimination typically falls within other conduct such as refusing to deal, bundling and predatory pricing, discussed above.

iv Exploitative abuses

Merely imposing exploitative terms of supply or charging excessively high prices is not a misuse of market power under Section 46 of the CCA, unless the elements of the offence are made out.

V REMEDIES AND SANCTIONS

i Sanctions

The ACCC may commence proceedings seeking pecuniary penalties for contraventions of Section 46 of the CCA under Section 76(1)(a) of the CCA. It may also seek penalties for attempted contraventions, aiding or abetting a contravention, inducing a contravention,

67 ACCC v. Baxter Healthcare Pty Ltd [2008] FCAFC 141; (2008) 170 FCR 16.68 See for example Melway Publishing Pty Ltd v. Robert Hicks Pty Ltd t/as Auto Fashions Australia

[2001] HCA 13; (2001) 205 CLR 1 and Re Pont Data Australia Pty Limited v. Asx Operations Pty Limited and Australian Stock Exchange Limited [1990] FCA 30; (1990) 21 FCR 385. The CCA contains other prohibitions under which a refusal to supply may amount to a breach. In particular, a refusal to supply will be prohibited where it amounts to:

a cartel conduct and/or an exclusionary provision (under Part IV, Division 1 of the CCA and Sections 45 and 4D of the CCA);

b exclusive dealing, which has the purpose, effect or likely effect of substantially lessening competition (Section 47 of the CCA); or

c resale price maintenance (Section 48 of the CCA).69 Section 49 of the CCA prohibited price discrimination in relation to the supply or acquisition

of goods of like grade and quality where the discrimination was likely to have an adverse effect on competition. The provision was repealed in 1995 by the Competition Policy Reform Act 1995 (Cth).

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being knowingly concerned in, or a party to, a contravention or conspiring to contravene Section 46.70

For corporations, the maximum penalty a court can impose is the greater of:a A$10 million;b three times the value of the illegal benefit obtained by the corporation, and its

related bodies corporate, where this value can be ascertained; orc 10 per cent of the annual turnover in the preceding 12 months, where the value

of the illegal benefit cannot be ascertained.71

The ACCC has recently ordered corporations to pay penalties of A$2.5 million, AU$4.9 million and A$14 million in proceedings involving a breach of Section 46.72

For individuals, the maximum penalty a court can impose is A$500,000.73

ii Behavioural remedies

The court has the discretion to remedy contraventions by ordering an injunction forcing a corporation to either refrain from particular conduct,74 or to engage in particular conduct.75 Section 80(2) of the CCA also confers the discretion to grant such an injunction on an interim basis.

iii Structural remedies

At present, the ACCC’s divestiture powers under the CCA are limited to competition reducing mergers or acquisitions.76

In 2003, the Trade Practices Act Review Committee noted that divestiture is a conceptually inappropriate remedy for breaches of Section 46 of the CCA, as the contravening conduct does not have any clear connection to the assets to be divested.77

70 See CCA, Sections 76(1)(b) to (f ).71 CCA, Section 76(1A)(b).72 The court has ordered the following penalties for a breach of Section 46 of the CCA: a A$2.5 million against Ticketek Pty Ltd in ACCC v. Ticketek Pty Ltd [2011] FCA 1489;

(2011) ATPR paragraph 42-385; b A$4.9 million against Baxter Healthcare Pty Ltd in ACCC v. Baxter Healthcare Pty Ltd [2010]

FCA 929; and c A$14 million against Cabcharge Australia Ltd in ACCC v. Cabcharge Australia Ltd (2010)

ATPR paragraph 42-331; [2010] FCA 1261.73 CCA, Section 86E. In relation to individuals, Section 77A of the CCA precludes a corporation

from indemnifying its officers for civil liability or legal costs arising from a contravention of Part IV of the CCA.

74 CCA, Section 80(4).75 CCA. Section 80(5).76 See CCA, Sections 50, 50A and 81.77 Trade Practices Act Review Committee, ‘Report on the competition provisions of the Trade

Practices Act 1974 and their administration’, Ch 10, pp. 162–163, http://tpareview.treasury.gov.au/content/report.asp.

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iv Other remedies

In addition to the orders listed above, the court may make:a a declaration in relation to a breach of Section 46 of the CCA;78

b ancillary orders, where it concludes that such an order will either compensate a party that has suffered or is likely to suffer loss or damage as a result of a contravention of Section 46 of the CCA, or prevent or reduce such loss or damage.79 An ancillary order may declare a contract or certain provisions void, vary the terms of a contract, refuse to enforce provisions of a contract and/or order a payment, refund, repair or supply;80

c an adverse publicity order, in circumstances where a pecuniary penalty is ordered, requiring the person to publish an advertisement in the terms ordered;81

d non-punitive orders,82 including orders for community service, probationary periods, disclosure of information, or the production of an advertisement in the terms ordered; and

e orders disqualifying a person from managing a corporation, where the person has contravened Section 46 of the CCA.83

Finally, a person may seek damages against a corporation for a contravention of Section 46 of the CCA, where the contravention has caused that person to suffer loss or damage.84

VI PROCEDURE

The ACCC is the regulator responsible for investigating and gathering evidence of contraventions of the CCA, including breaches of Section 46 of the CCA. The ACCC is also responsible for conducting civil proceedings and obtaining remedies against parties that have breached the CCA.

The CCA does not provide a mechanism by which a corporation can seek immunity (known as authorisation) for conduct that may breach Section 46 of the CCA. However, a corporation cannot be found to have breached Section 46 of the CCA for conduct that does not contravene another provision of the CCA, due to an authorisation being on foot.85

i Investigation and evidence gathering

The ACCC has a number of substantial powers that it can use to investigate and gather evidence in respect of suspected contraventions of the CCA.

78 CCA, Section 163A(1).79 CCA, Section 87(1).80 CCA, Section 87(2).81 CCA, Section 86D.82 CCA, Section 86C.83 CCA, Section 86E.84 CCA, Section 82.85 CCA, Section 46(6).

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Power to obtain information, documents and evidenceUnder Section 155(1) of the CCA, if the ACCC has reason to believe that a person is capable of doing so, the court may, by serving a notice on that person, compel that person to provide information, provide documents, or appear before the ACCC to give evidence relating to a matter that may constitute a contravention of the CCA.

A person cannot refuse to comply with a notice on the grounds that to do so would incriminate them or expose them to a penalty (although a person’s response to any question cannot generally be used against the person as evidence in criminal proceedings).86 In fact, the CCA provides that it is an offence to not comply with the notice.87

However, where applicable, a person (including a corporation) may claim legal professional privilege in respect of documents that would otherwise respond to the notice.88

Power to enter premises and seize documentsThe ACCC may enter premises either with the occupier’s consent (consent search)89 or with a search warrant (warrant search),90 where the ACCC has reasonable grounds for suspecting that evidential material may be on the premises.

Once the ACCC’s inspectors have entered the premises as part of a consent search, the ACCC may:a search the premises for evidence;b make copies of hard-copy and electronic evidence; andc where the occupier consents to it, remove evidence from the premises.91

ACCC’s responsibility to protect certain informationSubject to a limited number of exceptions, the ACCC must not disclose to third parties information obtained by the ACCC:a in response to issuing a notice;b in respect of which the person has made a claim of confidentiality; orc by way of a search and seizure raid.92

The ACCC, however, may disclose such information in certain limited circumstances, including to Australian and foreign governmental agencies, bodies or personnel

86 CCA, Section 155(7),87 CCA, Section 155(5).88 ACCC v. Daniels Corporation International Pty Ltd [2001] FCA 244; (2001) 108 FCR 123;

CCA, Section 155(7B). Unlike elsewhere, in Australia claims of privilege extend to documents prepared by in-house legal counsel.

89 CCA, Section 154D.90 CCA, Section 154G.91 CCA, Section 154E.92 CCA, Section 155AAA.

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(including overseas antitrust regulators) if disclosing it enables or assists in the exercise of governmental functions.93

ii Enforcing the CCA

In circumstances where the ACCC’s concerns about a corporation breaching Section 46 of the CCA are confirmed during the investigation phase, the ACCC will likely:a adopt an administrative resolution to the matter by accepting an undertaking

from the corporation pursuant to Section 87B of the CCA (‘undertaking’); orb commence proceedings against the corporation.

Whether the ACCC decides to adopt an administrative or litigious approach to resolution will depend on a number of factors, including:a the nature of the contravention;b whether the corporation has a history of complaints against it involving the same

type of conduct;c the cost implications of pursuing an administrative, as against a litigious,

resolution to the matter; andd whether the corporation has demonstrated a culture to comply with any

administrative resolution.

Resolution by way of undertakingsUndertakings are an administrative form of consent injunction. While they require the corporation to acknowledge the ACCC’s concerns, they do not require the corporation to admit to the ACCC’s allegations.

Breaches of undertakings are actionable in court by the ACCC, which is far less onerous on the ACCC than proving that the corporation breached Section 46 of the CCA. However, corporations may withdraw or vary their undertakings, with the ACCC’s consent.94

While negotiations between a corporation and the ACCC about an undertaking remain confidential, any undertaking accepted by the ACCC is placed on the ACCC’s public register.95

Instead of awaiting an approach by the ACCC, corporations that have been the subject of ACCC investigations may choose to proactively offer undertakings to the ACCC to expeditiously resolve a matter. Providing such undertakings (especially undertakings that include the kinds of relief that the ACCC would otherwise seek in court, apart from declarations and penalties) can assist the ACCC in deciding against seeking to resolve the matter by way of litigation.

93 CCA, Section 155AAA(12).94 CCA, Section 87B(2).95 See http://transition.accc.gov.au/content/index.phtml/itemId/6029.

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Court proceedingsVery few cases concerning breaches of Section 46 of the CCA proceed to court and even fewer are successful. Notwithstanding that, matters that involve wilful disregard of the law, great public detriment or those matters that involve high-profile corporations are likely to be prosecuted in court. This will especially be the case if the matter falls within the scope of a number of the ACCC’s compliance and enforcement priorities for the year.96

Following the commencement of proceedings, the parties can resolve the matter by way of negotiating and settling a statement of agreed facts and consent orders.97 The contravening corporation will typically be required to consent to a substantial number of orders for relief that were sought by the ACCC before it will agree to resolve the matter by consent. Where consent orders involve an agreed penalty figure, the court will be required to determine whether this figure is appropriate having regard to a range of factors.

The ACCC has stated in its Cooperation Policy that it will be more likely to negotiate with corporations that have shown a disposition to cooperate with the ACCC throughout the investigation and litigious process.98

VII PRIVATE ENFORCEMENT

i Standing and remedies

Any person who has suffered, or is likely to suffer, loss or damage arising from a contravention of the CCA – including in relation to a misuse of market power – may initiate proceedings in the Federal Court and seek the same remedies as the ACCC may seek (except for pecuniary penalties; see Section V, supra).99 Rights of action are therefore available to any party harmed (or likely to be harmed) by a breach, including suppliers, competitors and customers.

In a private enforcement context, the remedies most likely to be sought are:a an interim injunction to prohibit contravening conduct from continuing, or to

mandate positive action (for example, to force supply where it has been refused in breach of Section 46 of the CCA).100 Such an injunction will be granted where, under common law principles, there is a serious question to be tried and the balance of convenience favours the grant of relief; and

b monetary damages for the loss or damage caused by the contravention.101

96 The ACCC’s 2013 compliance and enforcement priorities can be found at http://transition.accc.gov.au/content/index.phtml/itemId/656347.

97 A recent example of a Section 46 proceeding being resolved by consent is Australian Competition and Consumer Commission v. Ticketek Pty Ltd [2011] FCA 1489.

98 See http://transition.accc.gov.au/content/item.phtml?itemId=459482&nodeId=e8e554f0fed6c4139e99fb67c9f75eae&fn=ACCC%20cooperation%20policy%20July%202002.pdf.

99 CCA, Sections 80 and 82.100 CCA, Section 80.101 CCA, Section 82.

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Structural remedies are not available to any party, including the ACCC, in relation to contraventions of Section 46 of the CCA.

Where final relief is sought, the private applicant bears the burden of proving, on the balance of probabilities, the existence of the breach and, where damages are sought, that actual loss or damage has been sustained.

ii Calculation of damages and limitation period

Private damages under the CCA are compensatory in nature rather than punitive or exemplary (i.e., they seek to place the applicant in the position they would have been in had the contravening conduct not occurred). A successful action for damages will therefore require that actual (and not merely potential) loss or damage has been suffered.

In assessing damages, a court is not bound by any process or principles expressly laid out in the CCA. In practice, courts have taken an expansive view of what constitutes loss or damage and have sought generally to compare the actual economic position of the applicant with the economic position that would have prevailed but for the contravening conduct.102 An award of damages in respect of a misuse of market power may, therefore, include allocations for consequential losses, lost profits on lost sales and damage to goodwill.

The limitation period in respect of private damages actions is six years from the date on which actual loss or damage was suffered (and not the date on which the contravention occurred).103

iii Class actions and litigation funding

Class actions (whether backed by a litigation funder or not) are available under the CCA and Federal Court Rules. A class action may be brought by seven or more persons who have similar claims for damages arising from a breach of Section 46.104

iv Interaction of public and private enforcement

Private parties do not have the benefit of the coercive investigative powers of the ACCC (see Section VI, supra) and therefore are likely to encounter difficulties in obtaining the evidence necessary to prove that the relevant conduct has one of the proscribed anti-competitive purposes required by Section 46 of the CCA. Further, where a party subject to an ACCC investigation has given an undertaking in order to reach an administrative resolution to the ACCC’s concerns, that undertaking need not involve an admission that the party has committed a breach. These realities present significant obstacles to the successful prosecution of private actions in relation to misuses of market power.

However, aggrieved parties may be in a position to benefit from Section 83 of the CCA, which provides that any findings of fact in successful ACCC proceedings are prima facie evidence of those facts in a private action and may be proved by producing

102 See, for example, the Full Federal Court’s decision in Pont Data Australia Pty Ltd v. ASX Operations Pty Ltd (1991) 27 FCR 460.

103 Wardley Aust Ltd v. Western Australia (1992) 175 CLR 514.104 Federal Court Act 1976 (Cth), Section 33C.

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the relevant document(s) under court seal. For that reason, private actions in relation to misuse of market power have significantly greater prospects of success if they are initiated in the aftermath of ACCC proceedings in which a contravention has been established.

VIII FUTURE DEVELOPMENTS

There is recognition that a ‘purpose test’ based Section 46 does not adequately achieve the objectives of the CCA to prevent and punish misuses of market power, as compared to an ‘effects test’.

The opposition Liberal Party has been calling for a ‘root and branch’ review of the CCA since before the last election in 2010. If the Liberal-National Coalition takes office after the federal election, scheduled for September 2013, and the review goes ahead, according to the Liberal Party, it would be the first wholesale examination of Australia’s competition laws in two decades. Recently, Shadow Minister for Small Business, Bruce Bilson reiterated the Coalition’s desire to make changes to the CCA, particularly to the misuse of market power provisions. Specifically, Mr Bilson said that he saw value in introducing an ‘effects test’ to Section 46, alongside the ‘purpose test’ currently in place.

Earlier this year, independent senator, Senator Nick Xenophon also announced his plans to introduce divestiture laws to allow the ACCC to apply to the Federal Court to break up companies that have engaged in anti-competitive conduct, including where companies have abused their market power.105 If passed, such legislation would add to the ACCC’s already substantial powers for enforcing the CCA.

Developments in Australian competition law can be expected over the next year. The ACCC’s current investigations provide an interesting context to reconsider the merits of an effects test. Indeed, the ACCC’s pursuit of Coles and Woolworth’s, combined with the Coalition’s proposal for a root and branch review, may build the momentum that is required for the government to make legislative changes to broaden Section 46 of the CCA in the near future.

105 Nick Xenophon, ‘Move to give courts power to break-up companies’ (Media Release, 26 January 2013), www.nickxenophon.com.au/article/media-release-move-to-give-courts-power-to-break-up-companies.

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Appendix 1

about the authors

AymAn GuirGuisCorrs Chambers WestgarthAyman Guirguis is the head of Corrs Chambers Westgarth’s competition and regulatory practice. He advises on all aspects of competition/antitrust law with a focus on advising on cartel and competitor collaboration issues as well as on merger control in the Australian context. He also advises on competition law implications of vertical and supply chain arrangements as well as Australian consumer law. Mr Guirguis was a former senior officer at Australia’s competition regulator, the Australian Competition and Consumer Commission, and prior to heading up Corrs’ competition practice was a partner at another leading national law firm. He has advised a number of major Australian and international corporations on cartel and merger issues, including advising ExxonMobil on Australia’s largest dawn raid alleging cartel conduct by petrol companies, and Visy Industries following the fibreboard cartel that resulted in Australia’s largest individual penalty, as well as corporations such as Hewlett-Packard, ANZ, Goodyear, De’Longhi, Leighton Contractors and Stockland. Mr Guirguis is recognised as a ‘Leading Individual – Antitrust-Competition’ by Chambers Global and in GCR’s International Who’s Who of Competition Lawyers and Economists.

richArd FlitcroFtCorrs Chambers WestgarthRichard Flitcroft is a competition partner at Corrs Chambers Westgarth. He advises on competition and consumer protection issues arising under the Australian Competition and Consumer Act. His practice focuses on joint ventures and competitor collaborations, and the structuring of supply arrangements. He has a particular expertise in competition litigation, dealing with abuse of dominance and cartels. He advises clients in both the public and private sector. He extensively advises the Australian regulator, the Australian Competition and Consumer Commission, on select complex litigation and (confidential) investigations, and applications for merger clearance.

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Mr Flitcroft is recognised as a ‘Leading Individual – Antitrust-Competition’ by Chambers Global, and is recognised in the APL500 for his pragmatic approach to issues.

JAckie mortensenCorrs Chambers WestgarthJackie Mortensen is a senior associate in the Corrs Chambers Westgarth competition and regulatory practice. Ms Mortensen advises clients on the restrictive trade practices provisions of the Australian competition/antitrust law, including in respect of cartel conduct, mergers, misuse of market power, and vertical and supply arrangements. She regularly assists clients in investigations, and proceedings commenced, by the Australian competition/antitrust regulator (the Australian Competition and Consumer Commission), prepares submissions to the regulator, and conducts trade practices compliance programmes. She also advises clients on the consumer protection provisions under Australian law. Ms Mortensen’s clients are from a wide variety of industries and sectors, including telecommunications and IT, media and entertainment, transportation, manufacturing, financial services/insurance, resources and pharmaceutical/medical.

corrs chAmbers WestGArthGovernor Phillip Tower1 Farrer PlaceSydney NSW 2000AustraliaTel: +61 2 9210 6500Fax: +61 2 9210 [email protected]@[email protected]

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