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Carmichael, John --- "Tip Top Result Goes Stale: ACCC v Australian Safeway Stores Pty Ltd (No 2)" [2002] DeakinLawRw 19; (2002) 7(2) Deakin Law Review 387


Tip Top Result Goes Stale: ACCC v Australian Safeway Stores Pty Ltd (No 2)

John Carmichael[*]

I INTRODUCTION

Bread, its constituents, its methods of manufacture and its price and availability to consumers can claim to be the leitmotiv of competition law, both ancient and modern. The inelasticity of demand for such a staple food explains laws against monopolies being included in the eighteenth century BC Code of Hammurabi, why corn laws exercised the minds of the Gracchi brothers in second century B.C. Rome, and why ineffective regulation of the price of bread was seen as an important precipitator of revolutions in Europe in the eighteenth and nineteenth centuries.[1] In the common law the early restraint of trade case, Mitchell v Reynolds[2] saw a parish wide five year non-competition clause in a contract for the sale of a bakery upheld as reasonable. In the post-Sherman Anti-Trust Act (1890) United States, attempts by manufacturers of macaroni to change its constituents because of the prevailing high price of durum wheat were held in National Macaroni Manufacturers Association v FCT [3] to constitute price-fixing, an offence illegal per se under American anti-trust law.[4]

Given this background, it is not surprising that the interest of competition regulators was attracted when The Age newspaper reported in November 1995 that Safeway, a major supermarket chain in Victoria[5] with some 130 stores throughout the state at the time, had pressured the major bakers of bread to stem the tide of cheap secondary brand and plain wrapper generic bread being discounted by independent supermarkets, food barns and large fruit and vegetable stores. The Age report was prompted by an accusation in the Victorian Parliament the previous day by Mr Hurtle Lupton, the Liberal member for the seat of Knox, that Safeway had engaged in “thuggery of the worst kind” to ensure that Coolstore, a fruit and vegetable store close to Safeway’s Ferntree Gully store in Melbourne’s outer-eastern suburbs, could not acquire bread cheaply enough to under-cut Safeway. Coolstore had been selling plain wrapped Tip Top bread for $1.15 for nearly two weeks. Under pressure from its supplier, George Weston, Coolstore increased its price to $1.29 a loaf but refused to further increase it to the $1.39 price requested by a Tip Top representative. After Coolstore’s refusal, supplies of Tip Top bread to the store ceased. The Age report cited an unidentified spokesperson for the ACCC to the effect that although there were no specific restrictions on the price of bread “pricing pressures are the domain of the Commission and could be a breach of the Trades Practices Act.” As for Coolstore, this was apparently a case of déjà vu, as some fifteen months earlier they had been denied supplies of Buttercup plain wrapped bread after supermarkets complained about its deep discounting of retail bread prices.

The ACCC investigation foreshadowed in this press report met with some initial success. One of the three major plant bakers in Victoria, George Westons, who manufactured Tip Top Bread (‘Tip Top’), pleaded guilty to engaging in horizontal price fixing (contrary to s 45 of the Trade Practices Act 1974 (Cth) (‘the Act’) and retail price maintenance (contrary to s 48). Notwithstanding that the case involved an admission by Tip Top of its conduct, the submission of an agreed statement of facts, and evidence of a company compliance program, the Federal Court awarded penalties of $1.25 million, a hefty amount if somewhat short of the $2 million that had been sought by the ACCC. It was the disagreement as to penalty that precipitated the first litigation in this matter, reported as ACCC v Australian Safeway Stores Pty Ltd.[6] Neither Safeway nor the other two plant bakers, Quality Bakers Australia Limited trading as Buttercup Bakeries (‘Buttercup’) or Sunicrust Bakeries Pty Ltd (‘Sunicrust’) however, admitted any wrong doing. This article deals with the unresolved issues arising from the ACCC allegation that in evolving what might be termed a most favoured customer bread policy (‘the policy’) and in seeking to implement that policy in ten separate incidents over 1994 and 1995, Safeway breached sections 45, 46, 47 and 48 of the Act. With section 49, concerning price discrimination, having been deleted in 1995[7], it only needed allegations of breach of the merger provisions (section 50) of Part IV of the Act for a litigious equivalent to a “full house” in poker.[8]

It is not only the number of allegations that are of interest in this case. His Honour’s frequent resort to the so-called Briginshaw principle[9] to resolve the allegations in this case may cause many to doubt the ability of courts to find breaches of complex commercial statutes in cases other than where the evidence is unequivocal. Students of marketing law may also find this case of interest, for the detailed evidence considered by Goldberg J in a long judgment of some 1157 paragraphs lays bare a raft of commercial practices and contains lessons as to forming, implementing and communicating policy in large commercial organizations. Although Safeway succeeded at first instance the ACCC has indicated it will appeal the decision. It may well still be that some laxity in implementing a policy that on its face did not contravene Part IV of the TPA may yet cause Safeway difficulty as to the correct inferences to be drawn as to its motivation for pressuring the major suppliers of bread at the wholesale level to cease enabling independent retailers to retail generic and plain wrapper bread at prices below those prevailing in the major supermarkets.

II BACKGROUND POLICY DEVELOPMENTS

By the late 1980s and early 1990s Safeway management started to become concerned at some erosion of Safeway ’s competitive position, both in general terms and especially in relation to such staple products as bread. Retailers saw bread as a “communicable product” meaning consumers would often judge a store’s overall competitiveness by its prices on such staples.[10] Some confusion arose in evidence as to whether the concern was that the three major plant bakers were supplying at cheap prices to independent retailers apparently their secondary brands of bread that were scarcely distinguishable from the proprietary premium brands sold to major supermarkets and other large retail outlets, or whether the concern was that the plant bakers were supplying independents with cheap generic bread, often wrapped in the retailer’s own banner. During the case itself it emerged that Safeway’s primary concern was with the ability of large independent retailers[11] in the vicinity of particular Safeway stores to offer cheap bread, especially the 680 gram plain, sandwich loaf which was the most common type of consumer purchase.[12] In addition to bread’s communicability, it was a product with effectively no substitutes but with high inter-brand and inter-quality elasticity. In other words, it was a product in high and frequent demand and highly susceptible to consumer choice being dictated by price. This was especially the case when prices were significantly reduced by major discounts. In addition to the importance of bread sales in themselves, other purchases would often be made at the location where bread was purchased. Indeed, this was a major reason why a number of the independent outlets had commenced permanent discounting of bread, accepting the low unit margins because of both the publicity and “word of mouth” advertising flow-on effects from their cheap prices for bread[13].

It should be explained that the independent retailers were only able to obtain discounts from the major plant bakers because there was considerable under-utilisation of resources amongst the major plant bakers. In 1994 and 1995 Buttercup alone had an over-capacity of some 20-40%.[14] It was also in the context of the significantly under-utilised resources of the three major plant bakers that by 1994 Safeway evolved a policy to respond to the challenge of cheap bread retailed near its stores. In part the bread policy was part of a wider policy to ensure that Safeway was competitive on all items, subject to minor variations and the inevitable differences at times of various product promotions. In relation to bread, the Safeway policy developed by its state merchandise manager, Mr Bernie Brookes, was based on a premise that Safeway would insist on what was effectively a “most favoured customer status”[15] with the big three major plant bakers that provided the majority of the bread products sold by Safeway[16]. At the local level this meant that where a plant baker provided cheap bread to nominated competitors of particular Safeway store, they would be approached by Mark Jones, Safeway’s category manager, and asked for an equivalent price for their premium brand or brands equivalent to the secondary brands that were being discounted. In the event that the particular plant baker would not provide this matching “case deal”[17] it was to be informed that its products were to be deleted forthwith until further notice from the relevant Safeway store in the vicinity of the discounter. By a further development, the displaced premium branded bread was to be replaced by a price-fighting secondary brand that two of the plant bakers had agreed to provide to Safeway on a 24 hours notice basis.

A Claims, responses and evidentiary issues before the Federal Court

The ACCC’s fundamental claim was that the Safeway bread policy towards the plant bakers, as evolved, had the prime purpose of punishing them for, or deterring them from, supplying the independent outlets at wholesale prices that made it possible for them to engage in the permanent discounting of bread. The ACCC alleged that in ten separate incidents:

1.Safeway’s conduct amounted to entering into or attempting to enter into a contract, arrangement or understanding [18] with the major plant bakers with the purpose of substantially lessening competition (contrary to section 45 of the Act);
2.Safeway had attempted to induce the plant bakers to engage in resale price maintenance contrary to section 48 of the Act;
3.Safeway had engaged in exclusive dealing contrary to section 47; and
4.Safeway had taken advantage of its market power for purposes proscribed in section 46 of the Act.[19]

In contrast with Tip Top, Safeway resolved to defend the proceedings, claiming that the purpose of its policy of not being undersold by independents on bread was to respond competitively to the challenges presented by the retailing of cheap bread at independent retail outlets.

One of the difficulties facing the court in determining the multiple allegations made by the ACCC in relation to each of the ten incidents was that the factual matrix was complex, and that contemporaneously produced written evidence was quite meagre. This made the role of oral conversations, both face to face and by telephone, quite critical. Frequently these conversations took place “on the run” and the participants only attributed temporary significance to them. By the time of the trial witnesses were being asked to recall conversations made some three to five years ago to which they had attributed little enduring significance. Not surprisingly, Goldberg J found that much of this evidence smacked of reconstruction rather than recollection, with separate conversations being conflated into one, inaccuracy in the chronology of conversations, contradictions as to whether or not particular conversations actually took place at all, and with recourse to accounts based on customary practice rather than what may have happened in a particular incident. For example, a crucial matter in relation to each of the ten incidents was whether or not a case deal had been sought and refused before a particular deletion of the relevant plant baker’s products from the relevant Safeway store was ordered. There was also ambiguity as to whether the policy as originally conceived required a rival plant baker’s bread to be stocked to combat the discounted bread (from which a punishment motive might be inferred) or whether the secondary brand of the deleted baker could be used as the competitive response to a given Safeway store’s problem of cheap bread being retailed by a nearby independent outlet.

It should be understood that whilst proceedings under Part IV are civil proceedings requiring the court to be satisfied on the balance of probabilities, the pecuniary penalty payable by a corporation ranges up to a maximum of $10million,[20] not to mention questions of good repute. Given these serious consequences, Goldberg J understandably applied a cautionary approach, namely, the “Briginshaw principle” enunciated by Dixon J in Briginshaw v Briginshaw.[21] This “benefit of the doubt” method of reasoning echoes throughout his Honour’s careful examination of the evidence in regard to the ten incidents and may well have assisted Safeway in some of the “closer calls ” amongst these incidents.

III SAFEWAY’S POLICY IN ACTION – THE FRANKSTON INCIDENT

Although space limitations preclude an examination of each of the ten incidents in detail, what emerges in general from those incidents is that Safeway’s allegedly pro-competitive policy was not adhered to in all cases and was often poorly communicated down the line. The policy, as originally conceived, called only for the replacement of the baker’s premium brands that were being directly undercut by the deep discounting of the adjacent independent retailer. A common response by the effected Safeway stores, however, was over-deletion of virtually the plant baker’s entire product range rather than the direct equivalent to the cheap bread at the relevant independent retailer. In view of his reiteration of the applicability of the Briginshaw principle, the poor communication of the policy down the organisational chain may also have persuaded Goldberg J to find Safeway had not contravened the Act. Key officers, especially the Category Manager’s Assistant (CMA), were unclear as to the policy. In one incident the CMA requested one of the plant bakers to “fix” the problem of cheap bread at one of the independents they supplied. This was apparently a reference to her expectation that the relevant plant baker should stop the retailer from being in a position to aggressively discount the price of bread.[22]

It is not surprising that the ACCC pinned its hopes so prominently on the Frankston Incident. In that case, both the architect of the policy, Bernie Brookes, and the Category Manager, Mark Jones, were directly involved[23]and the way the incident unfolded was in some ways a prototype for the later incidents. Quadara Fruit Stores had run a permanent discount on 680g loaves since its stores opened in the Frankston region in 1987. Although the bread carried the Quadara label, information on the wrapper indicated it was baked by Buttercup and Quadara himself made no secret of this fact to any customers who asked. On 13 May 1994, following complaints from the Safeway store manager about the impact of the discounted bread on his turnover, Brookes and Jones visited the store effected by Quadara’s discounting. After the visit they ordered the deletion of all Buttercup product from that store, apart from its Atlantic bread and a rye bread. The deletion was confirmed in a memo that Jones sent to the Store Manger and cc’d to Brookes.[24] Goldberg J did not accept Jones’ testimony that it was implied or understood that the deletion was to be limited to the equivalent premium brands to those generic brands being discounted at Quadara Fruit Stores.[25] He also did not accept that a case deal to allow Safeway to respond competitively had been sought “at least before the deletion.”[26] In a further deviation from the policy, Sunicrust (not Buttercup’s secondary brand), was introduced as that store’s price-fighting bread. The deletion of Buttercup in the Safeway store continued until Buttercup ceased to supply Quadara for reasons unrelated to its deletion by Safeway.[27]

All Brookes could do at trial was admit that he had “mismanaged the incident.”[28] The “mismanagement” caused Goldberg J to draw the inference that Safeway’s purpose had been to punish Buttercup. With such senior executives involved there was no difficulty in attributing their actions and orders to the company as they acted within the scope of their actual and apparent authority. Goldberg J indicated, however, that there had been no contravention of part IV of the TPA, except possibly section 46, which could only be resolved by a general analysis of Safeway’s market power that transcended any of the particular incidents. His Honour’s reasons for rejecting the ACCC’s claim that sections 45, 47 and 48 of the Act had been infringed are substantially similar to the collective reasons he gave after examining all ten incidents. Before examining that incident, one other incident that also had special features requires examination.

IV THE PRESTON MARKET INCIDENT

The Preston market incident had a number of unusual features. For some years, Tip Top had had a stall at the Preston market where it sold a range of its bread products, including its premium brands, direct to the public. In other words, in regards to this outlet, Tip Top was vertically integrated. Both the range of products sold and the prices charged, especially for its premium brands, attracted the attention of the respective store managers once Brookes’ policy in regard to bread had been adopted. Central to the ACCC’s allegations in this incident was the role played by three of Safeway’s employees; Brookes, Safeway’s Merchandising Manager for Victoria; Jones, the Category Manager; and the then new manager of Safeway Preston, Feldgen.

As with the Frankston incident, Brookes, the policy’s architect, had a direct involvement in making it clear to Tip Top management that Safeway regarded it as “inappropriate” that Tip Top competed against the Safeway Preston store at the retail level. The ACCC alleged that Brookes had in fact been party to a CAU between Safeway and Tip Top to raise the price of the bread at the stall and to terminate the sale of Tip Top’s proprietary bread from that outlet. Goldberg J found the evidence on that matter was equivocal. Evidence by the Tip Top representative as to a meeting between himself and Brookes had clearly been wrong as to its date and location and on 17 March 1999 the ACCC had consented to Brookes being deleted as a respondent to the action. In essence, Brookes was found not to have been involved in any attempted CAU to determine the pricing and product range of Tip Top’s products at the Preston market.

Jones, as Category Manager for bread, acted quickly when informed by Feldgen’s predecessor that Tip Top was selling cheap bread at its store. Goldberg J found, though, that Jones had acted in accordance with the policy, namely requesting a case deal from Tip Top and only implementing the deletion of Tip Top from Safeway’s Preston store after this had been refused. His Honour found that Jones was also aware that the Preston store manager, Feldgen, had met with a Tip Top sales manager at Tip Top’s stall. Jones had received reports from Feldgen after his visits and between the first and second of these visits had communicated with Tip Top’s senior management.

One important issue in Jones’ evidence with regard to this incident is that Feldgen gave evidence that he had been told by “someone” at Safeway that an agreement had been reached between Safeway and Tip Top that Tip Top would, apart from some speciality bread products of no concern to Safeway, only sell plain wrap bread at its store at a particular price acceptable to Safeway. Feldgen was instructed by this unidentified party to meet with Tip Top’s regional sales manager and to inspect the Tip Top stall to ensure the agreement was being implemented. Whilst finding some aspects of Jones’ evidence unreliable in regard to this incident, Goldberg J was not prepared to find that Jones was the person who had so informed Feldgen even though he would be the most appropriate officer to have done so.[29]

It was unusual for the store manager, Feldgen, to have had such a central role, as under Brookes’ policy, once store managers had reported the local bread discounting problem to the category manager, any further action was out of their hands. Following his instructions from “someone” at Safeway’s head office, however, Feldgen met the relevant Tip Top officer and they visited the stall on two occasions. The second visit was necessary because at the first visit Feldgen observed that contrary to the arrangement premium bread was still being advertised and sold at the stall. This bread had been removed by the time of the follow up inspection the next day following a call after the first visit from Feldgen to Jones. Jones had then complained to Tip Top’s Victorian state manager who in turn contacted the relevant regional Sales Manager. Following this outcome and assurances from Tip Top that their retail outlet at the Preston market would be re-positioned as a “pseudo Hot Bread shop”,[30] the Tip Top range was re-introduced to Safeway Preston a few days later.[31]

Goldberg J accepted that Feldgen was a reliable witness, despite submissions from counsel for Safeway to the contrary. This finding was potentially damaging for Safeway, especially as his Honour was not prepared to find that either Brookes or Jones had attempted to affect a CAU with Tip Top. Goldberg J, however, deferred once again to the policy as formulated by Brookes and concluded that Feldgen consequently had no authority to effect any agreement on a matter that was exclusively the province of the category manager and his superiors. In coming to this conclusion his Honour relied heavily on the case of Tesco Supermarkets Ltd v Nattras,[32] which held that a company will only be bound where an employee functions as the directing mind and will of the company. Given their respective responsibilities under the policy, Goldberg J concluded that Feldgen was not the directing mind of the company.

It is submitted that this conclusion is curious and fails to give due regard to the modification of the common law by s 84(2) of the Act. That section deems conduct by a director, servant or agent of the body corporate within the scope of their actual or apparent authority, or the conduct of any other person they have directed to so act within the scope of their actual or apparent authority shall be conduct engaged in or on behalf of the body corporate concerned. Goldberg J took the view that s 84(2) supplements the common law.[33] With respect, it would seem that the view of the learned commentator in Butterworths Annotated Trade Practices Act[34] that s 84(2) extends the common law is to be preferred. It would appear that on this occasion, Goldberg J has been too deferential to the details of the policy rather than assessing Feldenberg’s apparent authority from the point of view of Tip Top’s management. That management knew that at least the relevant Safeway category manager, if not the merchandising manager, knew that their store manager was meeting on site and reported back on the outcome of these meetings. Safeway only sought to retrospectively revoke Feldgen’s apparent authority to negotiate pricing and brand of bread issues with Tip Top’s Preston market stall once litigation had commenced. In his judgement, Goldberg J failed to discuss the nature of apparent authority and its essential “what is reasonable in the eye of the beholder” attributes [35] but concluded that because the policy centralised responsibility for bread in the hands of the relevant category manager, no case of apparent authority in relation to Feldgen’s actions arose.[36] Case authority would suggest that even where a senior employee acts contrary to express instructions, his or her actions may still be found to be actions “on behalf of” the company so that any liability is direct rather than vicarious.[37] The ACCC attributed special significance to the activities of the Preston store manager[38] and so it seems certain to this writer that the ACCC will appeal Goldberg J’s arguably restrictive view that s 84(2) supplements rather than extends the general law position in regard to the apparent authority of employees acting on behalf of the corporation. This leads him to conclude that the intentions of Safeway could not, applying the Briginshaw cautionary criteria, be attributed to only one of the Safeway participants.[39]

V ALLEGATIONS OF BREACH OF THE SPECIFIC SECTIONS OF PART IV OF THE TPA OTHER THAN SECTION 46

In the context of his long judgement, Goldberg J dealt comparatively briefly with the ACCC’s specific allegations that Safeway had contravened ss 45, 47 and 48 of the Act.[40] On the s 45 issue, his Honour held that Safeway’s attempts to unilaterally impose its bread policies and trading terms generally on the plant bakers left no basis for a finding that there had been the necessary meeting of minds between two or more competitors required to find that there had been a CAU, let alone that any such CAU had the proscribed purpose of substantially lessening competition in the relevant market.[41] As to the exclusive dealing provisions of s 47, Goldberg J held that they refer only to a conditional willingness to supply/acquire from a customer/supplier if, amongst other reasons, that other party agrees to not acquire from or supply, except to a limited extend, a third party. No reference is made in s 47 to price. It is unwillingness to supply/acquire simpliciter that, in Goldberg J’s view, is required to contravene this section. The reference in s 47 to not supplying or acquiring from “except to a limited extent” is a reference to volume, not prices. Making an agreement to acquire conditional on the prices a supplier agreed to charge a third party in order to impede that third party’s ability to discount prices would fall for consideration under s 48 of the Act, not s 47.

Following this analysis, it is clear that the issue of offending s 48 and the implementation provisions in s 96 regarding the circumstances or conduct that contravenes the per se prohibition on resale price maintenance in the Act was arguably the ACCC’s second strongest allegation, the strongest contention being that Safeway had contravened s 46 of the Act. Accordingly Goldberg J covered it in somewhat more detail. His Honour concluded, however, that nowhere in the complex factual matrix was there a reference by the Safeway executives to a cost price, or a specified formula or range, which the plant bakers should impose on the independent retailers. In this respect the circumstances were distinguishable, if one follows Goldberg J’s analysis, from cases such as TPC v Bata Shoe Co of Australia Pty Ltd[42] where the hapless acquirer, (in that case Woolworths!), was told to get its prices for Bata footwear “...up to around those charged by Gowings.” That reference was interpreted to mean to bring its prices into line with those charged by major CBD retailers. Neither the maker nor the recipient of the statement was then aware of the prices charged by Gowings, a major Sydney retailer. Because of the threat to withhold supply if the prices were not brought within the stipulated range, however, that reference to a pricing structure or standard was sufficiently specific and ascertainable as to allow the court to make a finding that there had been an attempt to induce retail price maintenance.

In spite of this, in the case at hand, his Honour found there was no such sufficiently specific indication of a price or price range. It is submitted that his Honour is correct in this finding. To constitute resale price maintenance in the case of a price sensitive, non-differentiated product such as bread where brand loyalties are not high, a high degree of price specificity would seem to be required. In this respect bread resembles petrol, where although there is a high degree of inelastic demand, there is corresponding price sensitivity and minimal brand loyalty. This led Lockhart J in TPC v Service Station Association Ltd[43] to find that anything short of an agreement to charge identical prices might not be sufficiently specific to constitute price-fixing. Whilst his Honour was referring to s 45 of the Act, there seems in principle no reason why such exactitude in the specification of prices should not be equally necessary in a section 48 resale price maintenance claim.

VI THE S 46 MARKET POWER ISSUES

Although the ACCC’s more specific allegations had come to nought, Safeway still faced the possibility that their huge supermarket presence would lead to a finding that they both had market power and had taken advantage of it for one of the purposes proscribed in s 46(1). This probability increased once the Court accepted the ACCC’s submission that the market in contention was that for bread products at the wholesale level.[44] Safeway, noting the impact of hot bread Shops and in-store bakeries on the general bread industry and the fierce competition for bread products at the retail level, claimed this pressure interacted to constrain margins at the wholesale level and that the two levels therefore formed one integrated market.[45] Goldberg J rejected this submission because he found that the central issue in defining the market was the ability of Safeway to determine the terms of trade on which it would do business with the three major plant bakers. His Honour therefore felt a functional approach was decisive in defining the market here.[46] It thus followed that Safeway had a substantial degree of power in the relevant market.[47]

In coming to this conclusion Goldberg J was mindful that market share is only one determinant of finding that a party has market power and that barriers to entry are really the critical issue. In TPC v Ansett Transport Industries (Operations Pty Ltd)[48]for example, Avis was the dominant firm in the self-drive car rental market with a 42% market share. Low barriers to entry, however, such as the ability of new or current entrants to lease a rental fleet, no licence restrictions, etc meant Avis’ pricing structure was constrained by the possibility of current firms expanding their operations and new firms entering the industry. In the case at hand, however, the reality facing the three major plant bakers was that there was no substitute for an order the size of Safeway’s and no likelihood of such a substitute emerging within a reasonable time frame. Neither was Safeway constrained by the existing rival chains, Coles and Franklins. It was not Safeway’s size in the relevant market (about 16%) that enabled Safeway to impose such exigent terms of trade on the plant bakers, including “upgrades” to match any special concessions provided to Coles and Franklins for any promotions they were running.[49] Rather, it was the vulnerability of the plant bakers due to their significant under-utilised production capacities that made them reluctant to forgo an order to supply Safeway. Neither an increase in demand from the independent retailers nor the route-trade (milk bars and other small outlets) could substitute for the importance of the Safeway order in maintaining at least the marginal viability of the three plant bakers. Indeed, at Safeway’s insistence the plant bakers even acquiesced to such terms of trade as multiple deliveries a day to reduce out of stock and surplus stock mark down problems, as well as having their delivery teams pack Safeway’s bread shelves.

The evidence of expert economists as to what significance should be attached to Safeway’s ability to extract such favourable terms of trade from the plant bakers and whether or not this indicated Safeway had a substantial degree of market power was critical.[50] Most definitions of market power tend to emphasize the ability to charge supra-competitive prices. The court accepted, however, that “price” should be understood as a shorthand term that includes such matters as terms of trade. The court accepted the evidence of the ACCC’s expert, Professor Williams, that monopsony is “...a buyer’s ability to extract terms more favourable to itself than it could extract in a competitive market.”[51] Following this evidence, Goldberg J found that Safeway’s ability to extract most favoured customer terms from the plant bakers indicated it had a substantial degree of market power.

VII DID SAFEWAY TAKE ADVANTAGE OF ITS MARKET POWER?

The High Court in Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Company[52] held that “take advantage” does not necessarily have predatory or moral connotations but essentially means “use.”[53] The difficulty of the Court’s liberation of this term from some of its more colloquial innuendos implying moral delinquency is that it might well restrict any firm with a substantial degree of market power from either continuing with existing business practices that might now be attributed to its market power or from adopting new policies. Melway Publishing Pty Ltd v Robert Hicks Pty Ltd was an example of the first case and received careful attention from Goldberg J in exploring what ”using” one’s substantial market power means. In that case, Melway had terminated an arrangement with a former distributor of its Melbourne street directory and refused to fill an order for some 30,000 - 50,000 copies of the directory. The former distributor alleged such a refusal was only possible because of the substantial degree of market power Melway had in the relevant market - that for street directories of Melbourne. The majority in the High Court, however, took the view that the “real question” in Melway was whether it was likely that Melway would and could have maintained their preferred distributorship system in the absence of having a substantial degree of power in the relevant market.[54]

In Melway, that question was easily answered. Since it commenced publication, Melway had always (apart from a brief period when it allocated sole distribution rights), adhered to a system of exclusive distributorships in different segments of the retail market.[55] The system of exclusive distributorships had been developed well before Melway arrived at a position of substantial market power and in Melway’s view had contributed to its commercial success. Essentially, the majority view was that in continuing their established policy, Melway could hardly be said to be using their substantial market power in the sense of that market power being the sine qua non for its practice of exclusive distributorships.

The difficulty for Safeway was that its new policy in relation to discounted bread was formulated and implemented only after it had acquired its substantial degree of market power, so no argument of mere continuity of long established practices was available to it. Nevertheless, following Melway, Goldberg J said the question to ask in the instant case was whether or not Safeway could still have sought to extract the favourable terms of trade they had from the plant bakers if they did not have a substantial degree of market power. His Honour concluded that the answer to that question was yes. The reason lies in the over capacity of the plant bakers which meant that Safeway would still have alternative sources of supply if it decided to delete a particular plant baker because they were supplying an independent retailer with cheap bread. With its 130 or so stores, Safeway, with or without a finding that it had a substantial degree of market power, would still have been a significant customer of the plant bakers and said Goldberg J, ‘... there is no reason to assume that it would not receive the same tenders [to supply a cheap generic price-fighting bread at short notice] as it did from Sunicrust and Buttercup.’[56] In short, it was the vulnerability of the plant bakers due to the under-utilisation of their plant, rather than Safeway’s substantial degree of market power, that explains Safeway’s ability to extract its most favoured customer terms and the willingness of Sunicrust and Buttercup to provide the price-fighting bread to them at short notice. This explanation means Safeway did not “use” its substantial degree of market power in any causally relevant sense to obtain its favourable trading terms from the bakers. As with Melway, any substantial market power was in the relevant sense coincidental rather than causal.

A Did Safeway have any of the purposes prescribed in s 46(1)?

Strictly speaking, Goldberg J’s finding that Safeway had not taken advantage of its substantial market power disposed of the ACCC’s allegation of a breach of s 46. Nevertheless, his Honour decided that he should rule on the issue of proscribed purpose. Being surplus to the reasons for his decision, these observations are of course obiter dicta and may invoke the wrath of any legal purist that they exceed the historic role of the courts to decide only what is necessary to resolve the dispute before them. In following this course of action Goldberg J is, however, in high judicial company. For example, Lord Denning MR in Hedley Byrne & Co v Heller And Partners,[57] having found a disclaimer effective to avoid any liability, nevertheless went on to state views that although obiter dicta are now central to the modern law of negligent advice. Closer to home and in the specific field of competition law, Goldberg J’s brother judge, Burchett J, having ruled in News Ltd v Australian Rugby League[58] that there was no CAU between rival rugby clubs that could form the basis of an exclusionary provision defined in s 4D of the Act and made a per se offence in s 45C, went on (at 482) to determine the relevant market, even though this was not strictly necessary to resolve the dispute before him. Although his Honour was overruled on the substantial issue of the existence of an exclusionary provision,[59] on appeal[60] his obiter dicta on the market issue were not challenged. The expense and length of commercial litigation and modern case flow principles suggest that this practice of resolving any reasonably proximate issues is to be commended and in that spirit Goldberg J’s obiter dicta on the purpose element are briefly noted here.

The ACCC’s claims included the contention that Safeway has sought to deter or punish the plant bakers from/for competing in the wholesale market for bread and had the same purposes vis-à-vis the independent retailers competing in the retail market for bread. Both claims if proven would have meant that Safeway had contravened s 46(1)(c) of the Act. The ACC further alleged that the purpose of Safeway’s bread policy was to damage the independent retailers contrary to s 46(1)(a).

In the case of the Frankston incident Goldberg J, (drawing inferences from the relevant conduct[61] that we have seen, failed to include a request for a case deal prior to deletion, involved an over-deletion and procurement of price-fighting bread produced by a rival baker (see supra)), concluded that the ACCC’s case of proscribed purposes had been established, that purpose being to deter/punish Buttercup from/for supplying cheap bread to Quadara. This finding did not avail the ACCC however, for his Honour held that Safeway had not taken advantage of its market power. One missing element in the trinity of having (1) a substantial degree of market power; (2) taking advantage of that power; and (3) that taking advantage being for a proscribed purpose, was sufficient to absolve Safeway from a breach of s 46 of the Act.

As for the other nine incidents, the evidence was either inconclusive as to matters such as whether or not a case deal was requested prior to any deletion or else the essentially pro-competitive purposes of the policy as formulated by Brookes were generally correctly implemented. In one case it appears that Jones’ assistant went close to the line in directing a plant baker, with reference to “cheap bread” in one of a Safeway store’s nominated competitors, to “fix the problem.” Her evidence was equivocal and left the impression she was referring to getting their prices up to about those charged by Safeway. Whilst the witness managed to retrieve the situation somewhat and it seemed that this instruction exceeded both her actual, apparent authority and delegated authority so that her conduct could not be attributed to Safeway, this must have been a near thing. The senior executives, Brookes and Jones, had received sound Trade Practices compliance training and scrupulously avoided discussing pricing strategies with the plant bakers. They maintained that their suppliers had other options, such as suffering the deletions, which in some cases were of quite short duration. Nevertheless, this incident shows once again the importance of targeting compliance work at all levels before the existence of a firm’s compliance program will have mitigatory significance.[62]

VIII CONCLUSION

The significance of this careful and lengthy first instance judgement remains to be evaluated over an appropriate time. It may be that the identities of the participants and the product involved – bread – have given it a salience that is undeserved in terms of a strictly legal assessment. The case also allows insights into the ways and language of commerce that will be of benefit to many students pursuing double degrees or specialising in commercial law. Competition law students will benefit from the multiplicity of the allegations raised and dealt with in the case because it affords them a convenient and not inappropriate one stop shopping experience. More substantially, the case represents a very early application of the High Court’s decision in Melway and will help to consolidate that case as occupying something of a Hick’s hiker’s (sic) guide to the s 46 galaxy.

Goldberg J’s findings also represent a challenge to the conventional practice of bringing all possible causes of action, couched in the language beloved of student mooters as “in the alternative” or, more poetically, “for more abundant caution”. His Honour seemed to fortify his finding that Safeway had not breached s 46 of the Act by his ability to readily find that there had been no breaches of the other sections alleged by the ACCC. The dismissal of these grounds seemed to encourage his Honour in his view that Safeway had not flexed, as it were, its market power muscle in impermissible ways. This may be a hint that in the era of case flow management, law students at least may be encouraged to make more targeted submissions.

That said, at the time of writing it was understood that the ACCC would appeal the decision.[63] The case has far reaching implications in just how far major retailers can go in influencing independent firms such as the plant bakers from making their own supplying and pricing decisions. As indicated in this analysis, the resale price maintenance and market power issues might be over-turned on appeal. On appeal Goldberg J’s emphasis on the Melway case might not command the support of the Full Federal Court, because the evidence of Melway’s long standing distribution practices before acquiring market power arguably makes that case distinguishable from the instant case. As a precautionary measure, Safeway may well cross-appeal the finding that it had a substantial degree of market power.

The Full Court might well feel that Goldberg J has been too credulous in his willingness to give Safeway the repeated benefit of the doubt. The decision does seem to unduly reward sloppy business practices, including poor communication down the line; failure to keep adequate written records; failure to detect and correct deviations from approved policies; and a readiness to allow both the category manager’s assistant and the store manager in the Preston incident to exceed their authority and then disclaim that their actions bound the company. If Goldberg J is correct in that finding it would seem that the provisions of s 84(2) of the Act that establish when actions of employees bind the company at best codifies rather than extends the general law position stated in Tesco. Both the plain language of s 84(2) and the remedial purposes of the Act would lead this writer to respectfully submit that his Honour is in error in this matter and that the Full Court, in addition to the breaches of policy found in the Frankston incident, may well conclude the policy was breached on other occasions. How much credence should then be given to a policy and its allegedly non-contravening, pro-competitive purposes, when that policy is so tainted with irregularities, will be an interesting question.

For the moment though, given the importance of bread as an item of family purchase, some may find the result of this case as it stands as unpalatable as learning, thanks to the labours of some spoilsport revisionist theologian, that Goliath, not David, won their epic contest. The picture of the small independent retailer taking on the supermarket chain colossus is no doubt for many an attractive one. Indeed, Safeway’s ability to gouge most favoured customer (or acquirer) conditions from its suppliers might appear as pernicious as the diplomatic equivalent of “most favoured nation status” that deprived China of effective autonomy between 1842 and 1949.

On the other hand, however, might it not be said that the independent retailers, aided by the plant bakers desperate to generate custom from any source, were engaging in the practice of cherry picking, turning their lesser overheads into an advantage and retailing a high demand product at low unit margins but with high volume sales that might inhibit the ability of the supermarket chains to subsidise the prices charged for other items in their stores? These are complex issues that go to the heart of what should and can be the policy aims of competition law and to what statutory form these policies should be reduced to. Whilst competition law has made much progress in combating collusive and monopolistic practices rampant before such statutory intervention, at the end of the day, determining what is fair and what is unfair competition can still seem as elusive as it did to Lord Morris in Mogul Steamship Co v McGregor Gow and Co when he said:

In these days of instant communication with almost all parts of the world competition is the life of trade, and I am not aware of any stage of competition called ‘fair’ intermediate between lawful and unlawful. The question of ‘fairness’ would be relegated to the idiosyncrasies of individual judges. I can see no limit to competition, except that you shall not invade the rights of another.[64]

APPENDIX-PART IV OF THE TRADE PRACTICES ACT 1974 (CTH)

Part IV prohibits certain restrictive trade practices, including:

Section 45 - Anti-competitive collusion between competitors to induce or enter into contracts, agreements or understandings to fix prices, boycott third parties or otherwise collude to substantially lessen competition in a market.

Section 46 - prevents a corporation taking advantage of any substantial power it has in a market for the purpose of eliminating or significantly damaging a competitor, or preventing entry of a person into the market in question or any other market or deterring or preventing other persons engaging in competitive conduct in that or any other market.

Section 47 - prohibits exclusive dealing arrangements that substantially lessen competition. Such agreements include exclusive territory arrangements for product distribution, stocking a particular product range exclusively and tying arrangements that make supply or acquisition of products conditional on a willingness to acquire the tied product as well.

Section 48 prohibits the practice of resale maintenance which in its most common form occurs when distributors will make supply to retailers contingent upon their adherence to charging the distributor’s specified retail price.

Section 50 deals with anti-competitive mergers and is not relevant for the purposes of this article.

It may also be helpful to explain a distinction between per se offences and those practices that only offend the Act if there is a substantial lessening of competition in the relevant market.

The practices of price fixing, boycotts, one type of tying arrangement called third-line forcing* and the practice of resale price maintenance are regarded as almost always harmful to a competitive market. For this reason they are made by the Act offences per se (in themselves) to spare the court the need to make detailed enquiries as to whether or not they lead to a substantial lessening of competition. Other practices, on the other hand, may or may not have harmful competitive effects and in some cases may even be good for competition. For such practices it is only if the court is convinced they will substantially lessen competition in the relevant market that Part IV of the Act will have been infringed. In the case of section 46, if a court concludes that a party has a substantial degree of relevant power, then any taking advantage of it for the proscribed purposes will contravene that section.

* Third-line forcing occurs when supply of a desired product or service is made conditional on acquiring another product or service from a third party (i.e. someone else).


[*] Senior Lecturer in Law, Deakin University.

[1] For more detail see Letwin, ‘The English Common Law Concerning Monopolies’ (1954) 21 University of Chicago Law Review 355.Bread has been the principal food of most civilised peoples for several thousand years and played a vital role in economic, social and religious history. See G W Hewes, ‘Bread’ in Encyclopaedia Americana (1992) vol 4, Grollier, 480-484. On the Gracchi brothers - Tiberius Sempromlus and Gaius Semponius - Tribunes of Rome in 133 and 121 BC respectively, see The New Encyclopaedia Britannica-Micropaedia (1992) vol 5, 400-401.On bread prices as a precipitator of modern revolutions, see G Rude, Europe in the Eighteenth Century Aristocracy and the Bourgeois Challenge (1972) 200-203. G Rude cites research that in eighteenth France even in good times the price of basic bread could amount to half of an average earner’s wages.

[2] [1711] EngR 38; (1711) 24 ER 347.

[3] [1965] USCA7 143; 345 F 2d 421 (1965).

[4] The court cited and adopted the ratio in United States v Socony-Vacuum Oil Co [1940] USSC 110; 310 US 150 (1940) where, in the context of another price stabilisation scheme, Douglas J at 223 ruled that “under the Sherman Act a combination formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilising the price of a commodity in interstate or foreign commerce is illegal per se.”

[5] Safeway is a wholly owned subsidiary of Woolworths (Aust). In other states, stores trade under the Woolworths name. At the time there were two other major chains, Coles and Franklins. Since that time Franklins have downsized considerably. There were also a number of large independent supermarkets as well as smaller convenience stores and many other retail outlets for bread products.

[6] [1997] FCA 450; (1997) ATPR 41-562.

[7] Section 49 was repealed by Act No. 88 of 1995, s 14, effective 17 August 1995.

[8] To assist any general readers of this article, such as marketing students, an outline of Part IV of the Trade Practices Act is included as an appendix to this article.

[9] In Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 Dixon J referred to the fact that before deciding that an allegation was more probably true than not a tribunal needed to take certain considerations into account:

...the seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences.

Goldberg J refers to the Briginshaw principle throughout his judgement to establish that he should have particular regard to that principle (para 70), uses it to hold that the category manager’s assistant had not attempted to induce the plant bakers to engage in resale price maintenance contrary to section 48 of the Act (see para 314), and then to resolve what appear to have been a number of “close calls” in favour of Safeway (see para 428 - the Cheltenham incident, para 471 - the Vermont incident and para 763 - the Preston incident). In fairness to his Honour, lest this appear to be a mere judicial equivalent to giving the batsman the benefit of the doubt, it should be explained that the Briginshaw principle was invoked in conjunction with explanations from senior company executives that provided plausible alternatives to an anti-competitive purpose or effect. Those circumstances resemble the parallel pricing explanation proffered by senior executives of two companies as an alternative explanation to collusion in TPC v Email [1980] FCA 86; (1980) 43 FLR 383 and accepted by the court, compared to the adverse inferences drawn by Fisher J in TPC v David Jones (Australia) Pty Ltd (1986) 13 FCR 446, where competitors had the motive and opportunity to agree on prices for a range of bed-linen and only junior employees gave evidence that the sudden cessation of a discounting war after the meeting in question could not have been due to collusion because that sort of conduct was against company policy!

[10] At para 47 of the judgment Goldberg J explains that a communicable product is a product that has a significant profile with consumers and in a consumer's mind is indicative of a retailer's general price competitiveness. Communicable products are products such as bread, tea, eggs, margarine, sugar, coffee, bacon, dog food and milk. They are products that are purchased frequently and in high volume. The significance of communicable products is that consumers tend to remember their prices and use the products to evaluate the comparative prices of different retailers.

[11] In this article independent retailer is used in the sense of independent of the big three supermarket chains but unless the context indicates a contrary intention conveys no implication of any form of the entity, ownership or allegiances of a particular independent retail outlet.

[12] See Judgment, ACCC v Australian Safeway Stores Pty Ltd (No 2) [2001] FCA 1861, 49 –where it was explained that this loaf was referred to as Code C in the industry.

[13] ACCC v Australian Safeway Stores Pty Ltd (No 2) [2001] FCA 1861, 338.

[14] Ibid 14.

[15] I have coined this term as an analogy with the “most favoured nation” term familiar in international law. As will emerge in the text the term is apposite to signify Safeway’s insistence on the benefits of any deal provided by suppliers to a rival (either state wide in the case of Coles and Franklins or locally in the case of the independents), being passed on to it in addition to the various rebates it already enjoyed.

[16] See Judgment, above n 10, 18. Tip Top, Sunicrust and Buttercup baked approximately 75%-80% of the proprietary bread products baked in Victoria. Safeway acquired approximately 21.5% of the aggregate of the bread production of Tip Top, Sunicrust and Buttercup and was their largest retail customer.

[17] As explained in para 43 of the Judgment, a case deal was a synonym for a discount, evolved from those products that unlike bread were sold by the case. The judgment is a treasure trove for students of marketing –see for example the contextual reference to gondolas and their treasured display qualities in supermarkets at para 102(b).

[18] Hereafter referred to as a CAU.

[19] See Judgment, above n 12, 950-1123.

[20] Section 76 of the Act.

[21] See above n 9.

[22] See Judgment, above n 12, 303.

[23] Goldberg J refers to this as being the ACCC’s strongest case at para 331.

[24] Judgment, above n 12, 355.

[25] Ibid 365.

[26] Ibid 379.

[27] Ibid 337. Quadara had filed for bankruptcy, owing Buttercup inter alia $20,000.

[28] Judgment, above n 12, 396.

[29] See Judgment, above n 12, 742-746.

[30] Meaning essentially re-heating products substantially baked off-site.

[31] See Judgment, above n 12 758-792.

[32] [1971] UKHL 1; [1972] AC 153.

[33] See Judgment, above n 12 817.

[34] R Steinwall, Annotated Trade Practices Act (2001) 72,675.20.

[35] In NSW Mutual Real Estate Fund Ltd v Brookhouse (1979) ATPR 40-104 Franki J stated that it would be difficult for s 84(2) to apply to a wholly unauthorised statement made by a bystander with the implied consent of a servant of a corporation conducting retail stores who was employed by the corporation as a truck driver. Neither, it seems, will s 84(2) have any application where the representee must be taken to have known that the representor was really acting in his own interests and not on behalf of the impugned corporation. Combulk Pty Ltd v TNT Management Pty Ltd [1993] FCA 89; (1993) 41 FCR 59.

[36] See Judgment, above n 12, 818.

[37] See Wheeler Grace Pierucci Pty Ltd v Wright [1989] FCA 162; (1989) ATPR 40-940 at 50,256 and, in the context of the Restrictive Trade Practices Act in the UK, Director General of Fair Trading v Pioneer Concrete (UK) Ltd [1995] 1 AC 458. Goldberg J sought to distinguish this latter case because in that case it was within the scope of the employee’s employment to enter into agreements of the type under consideration whereas this was not the case given Safeway’s bread policy. With respect, this is to again defer to the policy rather than what authority a store manager might appear to have to other parties, especially when his superiors had condoned his site visits to the Tip Top stall.

[38] See Judgment, above n 12, 4.

[39] Ibid 803.

[40] His findings on these issues are discussed from paras 950 to 1010 of the Judgement.

[41] This contrasts, for example, to the loyalty agreements between the Australian Rugby League and the clubs in its league where the involvement of the two key officials in the negotiations with the clubs and the compressed time span caused the court to conclude there had been such a CAU between two or more of the clubs for the purpose of excluding the services of News as a competition organiser. News Ltd v Australian Rules Rugby Football League Ltd [1996] FCA 870; (1996) 64 FCR 410 (Full Court).

[42] (1980) ATPR 40-161.

[43] [1993] FCA 405; (1993) 44 FCR 206,228.

[44] See Judgment, above n 12, 1005.

[45] Ibid 1038.

[46] Brunt indicates that in any given case a market may be determined by one or more of product, space, function and time dimensions. See Maureen Brunt, ‘“Market Definition” Issues in Australian and New Zealand Trade Practices Litigation’ (1990) 18 Australian Business Law Review 86.

[47] Prior to the 1986 amendments to s 46 of the TPA the higher threshold of a firm being in a position to substantially control a market applied. In the words of the Attorney General in his second reading speech the 1986 amendment ensured that the section would apply to all major participants in an oligopolistic market (see House of Representatives, vol 147, 1626 (19 March 1986)).

[48] (1978) ATPR 40-071.

[49] See Judgment, above n 12, 1100-1101.

[50] The evidence of expert economists has not always been so decisive in trade practices cases. In TPC v Australian Meat Holdings Pty Ltd (1988) ATPR 40-876 for example, the court manifested a decided preference for the evidence of experienced industry participants and their strong inclination not to take fat cattle past the first set of weighing scales. That evidence was decisive in leading the court to hold that the market for fat cattle was primarily determined by geographical criteria and that more distant markets to that in North Queensland were not substitutable. See also TPC v Nicholas Enterprises Pty Ltd (no 2) [1979] FCA 51; (1979) 40 FLR 83 at 112 where industry experts were used by the court to determine whether or not two hotels some 12 kilometres apart were competitors in the same market as a prelude to determining whether their conduct had contravened the anti-collusion provisions of section 45 of the Act.

[51] Judgment, above n 10, 1025.

[52] [1989] HCA 6; (1989) 167 CLR 177.

[53] -See [1989] HCA 6; (1989) 167 CLR 177, 192 (Mason CJ and Wilson J), 195 (Deane J), 202 (Dawson J) and 215 (Toohey J).

[54] See Melway Publishing Pty Ltd v Robert Hicks (2002) 205 CLR 1.

[55] At the time of trial Melway distributed its directory in five different market segments, including for example, petrol stations, automotive accessory dealers, newsagents, supermarkets, etc.

[56] Judgment, above n 12, 1048.

[57] [1963] UKHL 4; [1964] AC 465.

[58] [1996] FCA 1256; (1995) 58 FCR 447.

[59] That is, a boycott in colloquial terminology.

[60] See News Ltd v Australian Rugby League [1996] FCA 870; (1996) 64 FCR 410.

[61] The question as to whether the purpose of particular conduct should be assessed subjectively has occasioned some difficulty. The better view is that for section 46 the relevant purpose is the subjective purpose of those responsible for the implementation of the conduct in question: ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (1991) ATPR 41-069, 52,222, but that deciding on the subjective purpose should itself be determined objectively: General Newspapers Pty Ltd v Telstra Corporation [1993] FCA 473; (1993) ATPR 41-274, 41,699. It will not often be the case that applicants can establish direct evidence of a respondent¹s purpose but s 47(7) permits the existence of the relevant purpose to be inferred from the conduct of the corporation or any other person or from other relevant circumstances. There will often be multiple purposes for particular policies or conduct but if any proscribed purpose is a substantial purpose that will be sufficient provided the other elements of a s 46 offence are established: Mark Lyons Pty Ltd v Bursill Sportsgear Pty Ltd (1987) 75 ALR 581. On the issue of multiple purposes see also the discussion in Clarke and Corones, Competition Law and Policy Cases and Materials (1999) 348-9.

[62] See ACCC v Nissan Motor Company (Australia) Pty Ltd (1998) ATPR 41-660 where a company’s otherwise excellent compliance program had either not been communicated to or effectively implemented by the quasi-autonomous Adelaide office. That and the fact that Nissan had been convicted of a previous Trade Practices offence some twenty years earlier caused von Doussa J to be disinclined to be lenient despite extenuating circumstances such as an attempt by the manager to check and correct the offending conduct on his way home from a hospital procedure!

[63] ACCC, ‘Media Release 28/02’, 19 February 2002.

[64] [1892] AC 49, 51.


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