Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd & Anor

[2004] HCATrans 344

[2004] HCATrans 344

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  Nos M228 and M255 of 2003

B e t w e e n -

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Applicant

and

AUSTRALIAN SAFEWAY STORES PTY LTD (ACN 004 319 939)

First Respondent

MARK JONES

Second Respondent

Office of the Registry
  Melbourne  No M230 of 2003

B e t w e e n -

AUSTRALIAN SAFEWAY STORES PTY LTD (ACN 004 319 939)

First Applicant

MARK JONES

Second Applicant

and

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Respondent

Applications for special leave to appeal

GUMMOW J
HAYNE J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 10 SEPTEMBER 2004, AT 9.30 AM

Copyright in the High Court of Australia

__________________

MR J.I. FAJGENBAUM, QC:   If the Court pleases, in each of these applications, which is in substance only two, I appear together with my learned friends, MR R.A. BRETT, QC and MR D.I. STAR, for the Commission.  (instructed by Australian Government Solicitor)

MR T.F. BATHURST, QC:   If the Court pleases, I appear with my learned friend, MR P.R. WHITFORD, for Australian Safeway Stores and Mr Jones.  (instructed by Clayton Utz)

GUMMOW J:   Now, the ACCC seems to have two applications which are duplicated, are they not?

MR FAJGENBAUM:   They are, in a sense, duplicated.  They arise out of the fact that judgment was originally given in this matter on 30 June and appealable orders were made and then further orders made ‑ ‑ ‑

GUMMOW J:   Yes.  You filed an application after judgment reasons but before orders.

MR FAJGENBAUM:   No, after orders were made.  On 30 June, orders were made.

GUMMOW J:   Yes.  You filed a second one, did you not?

MR FAJGENBAUM:   The second one after the second judgment or the second set of orders.  The first one is now subsumed into the second.

GUMMOW J:   That is what I thought, yes.  We will hear the ACCC in‑chief and Safeway in‑chief and then each in reply.

MR FAJGENBAUM:   If the Court pleases.  The ACCC has two applications.  The first is a very simple one in respect of the construction of section 46(1).  The simple point is this, whether a contravention of section 46(1)(c) when the target of the contravening conduct is a competitor is, by that very fact, conduct which also constitutes a contravention of 46(1)(a) as conduct the purpose of which is to substantially damage a competitor.

HAYNE J:   But what is the practical utility of resolving the point?

MR FAJGENBAUM:   Simply, with respect, a point of principle.  It is the same kind of ‑ ‑ ‑

HAYNE J:   I take that answer as none, Mr Fajgenbaum, so perhaps you had better look at the question again.  Is there any practical point in resolving the point?

MR FAJGENBAUM:   With respect, no.  It is a simply point of principle and I put it no higher than that.  All that we want to say about it is said in the written submissions.  It is the same kind of conundrum that arose, for example, in the Queensland Wire Case as to whether the contravening conduct of BHP had the purpose of contravening section 46(1)(c) and/or 46(1)(d).  As to the second point, it arises in relation to the five incidents in respect of which the Commission was unsuccessful.

It is apparent from the reading of the majority judgment in the Full Court that their Honours would have allowed the appeal in respect of the remaining five incidents but for a view that it had taken that once a case deal was sought, the court was bound, by virtue of the way the case was run below, to conclude that the request for a case deal was inconsistent with the purpose of punishing and deterring the plant baker in question continuing to supply cheap bread to the independent store.

Justice Goldberg held that the purpose of deletion was pro‑competitive in all those circumstances where a case deal was sought.  The Full Court found it difficult to agree with him, but it accepted the proposition advanced by Safeway that the case was fought on the basis that a request for a case deal was incompatible with any proscribed purpose.  That, with respect, was not so.

Safeway raised the defence of the case deal, as it has become known.  It was not pleaded.  It only emerged in the course of the cross‑examination of the Commission’s witnesses.  Safeway had argued that the request for a case deal was an integral part of its pro‑competitive policy of seeking to be competitive in particular brands of bread.  It wanted to profitably sell its premium brands at the same price as the independent rivals were selling their secondary and generic brands. 

Save that in five of the nine incidents a deletion was preceded by a request for a case deal, in none of them was this policy that Safeway had advanced been implemented.  Indeed, the majority in the Full Court doubted – indeed, the whole of the Full Court, to this extent, because Justice Emmett agreed with the majority – doubted very much that Safeway had the policy for which it contended.

HAYNE J:   Does not this analysis of the judgment of the Full Court reveal two things, first, the factual nature of the issues that were resolved, and, second, the effect on that resolution of the manner of conduct of the proceedings both in the way it was pleaded and in the way it was run?

MR FAJGENBAUM:   That is the view they have taken, yes, but we ‑ ‑ ‑

HAYNE J:   Can we go anywhere without first addressing those questions?

MR FAJGENBAUM:   With respect, it was not a matter of the way it was pleaded and it was not a matter of the way it was run.  It was Safeway that raised the defence, not having pleaded it, and, the matter of the case deals having been raised, it was incumbent upon the Commission to attack, so far as it was able to and consistently with our instructions, the proposition that case deals were never in fact sought and the proposition that if sought they were never expected to be given. 

We never conceded and it was never conducted on the basis that any request for a case deal was inconsistent with Safeway having a proscribed purpose.  At every point, in respect of every incident, we put it to all relevant Safeway witnesses that each deletion was for the purpose – the punitive purpose – of deterring the relevant plant baker continuing to supply the cheap secondary or generic branch to Safeway’s independent and local rival.

CALLINAN J:   But you failed on that before Justice Goldberg.

MR FAJGENBAUM:   We failed upon that, yes.  We failed on the whole ‑ ‑ ‑

CALLINAN J:   It was plainly an issue, then, because otherwise there would not have been examination or cross‑examination about it.

MR FAJGENBAUM:   Yes.

CALLINAN J:   So it did not matter whether it was pleaded or not.  It was plainly put in issue.  It would have all been irrelevant, otherwise.

MR FAJGENBAUM:   Of course, but I simply make the point about its not being pleaded to answer the proposition that we had conducted our case on that basis, that a request for a case deal was inconsistent with a proscribed purpose in the event of deletion after the refusal of the case deal.  So it goes no further than the question of injustice in this particular case that inconsistent attitudes were adopted by the Full Court to five incidents in respect of which we failed and the four in respect of which we succeeded on the appeal.

HAYNE J:   If it is the interests of justice in the particular case that is the principle that is engaged, what is the practical outcome if leave were granted and you were to succeed that thus is achieved?  What is the injustice that is avoided?

MR FAJGENBAUM:   Well, there are two issues.  The injustice is to correct the approach below.  The injustice that is avoided, if we succeed, is as we ought to have won, and the second matter that arises in this particular matter is how is purpose, contravening purpose, to be established when the purpose that is advanced by the alleged contravener of section 46 is an integral part of a policy that says a “pro‑competitive policy” which, in all other respects other than this request for a case deal, was never implemented?  So, at a more general level, it perhaps raises questions that arise under section 46(7) as to how a purpose is to be established.

HAYNE J:   In considering the interests of justice in the particular case, is it relevant to take account of the period that has elapsed since the conduct alleged to be contravening conduct occurred?  This is now a very old case.

MR FAJGENBAUM:   It is indeed a very old case.

HAYNE J:   Is it relevant to take that into account?

MR FAJGENBAUM:   We would submit no, because of the important principle that attends the issue as well.  For the rest, if the Court pleases, unless there are other matters that it wishes to raise, the relevant submissions are contained in our written submissions.  If the Court pleases.

GUMMOW J:   Thank you.  Yes, Mr Bathurst.

MR BATHURST: If the Court pleases. Can I deal firstly with the section 46 contraventions. Although Justice Emmett was in dissent, his judgment contains a convenient summary of the findings of fact made by the trial judge relevant to the issue. They appear in paragraph 504, which is at page 564 in volume 3 of the appeal book, or at page 444 in 129 FCR 339. At paragraph 504 it is recorded that the findings were:

(1)      Safeway was not able to obtain persistently better buying terms [than] independent supermarkets;

(2)      Safeway did not have the ability to force down the wholesale price of bread;

(3)      Safeway did not have sufficient market power to influence and could not affect the terms of trade throughout the whole of the Wholesale Market;

(4)      Safeway did not have the ability raise the costs of the supply of bread to its retail competitors;

(5)      Safeway did not have the ability to affect the terms of trade on which, or the price at which, Tip Top, Sunicrust or Buttercup supplied bread to Coles or to Franklins;

(6)      Safeway did not have the ability to raise bread prices generally above competitive levels in the retail market;

(7)      Safeway was able to affect its own terms of trade with a particular supplier;

(8)      Safeway’s terms of trade with the plant bakers included a term that Safeway bought at the best price being offered in the market place;

(9)      The existence of other wholesale acquirers of bread such as Coles, Franklins and other wholesale organisations associated with banner stores did not constitute a constraint on the conduct of Safeway at the wholesale level. 

Those findings, in our submission, and there was no dispute as to them, would tend to a conclusion that Safeway did not have substantial power in the wholesale market.  In particular, it was not able to force down the price generally or at all.  The majority reached a contrary conclusion, in effect, in reliance on three matters.  First, they found, and we do not dispute this, that Safeway was a substantial acquirer of bread.  It acquired 19 to 20 per cent of Tip Top’s production, 33 per cent of Sunicrust and 17 per cent of Buttercup.

The Full Court acknowledged that that would not, of itself, demonstrate market power, but they said it did in this case because of what they described as the “excess capacity” in the market, from which it followed that Safeway had the ability to reduce the quantity of bread sold by any particular baker.  Those findings appear in paragraphs 312 to 314 of the judgment of the majority at pages 505 to 506 in volume 3.

Now, the ability to reduce the amount of bread sold by any particular baker was a function, we say, of the alternative sources of supply available in a market where there was excess capacity.  That ability was available to any acquirer of bread.  It did not place Safeway in any position of competitive advantage in the wholesale market or give it substantial power in that market.  That must follow because of the finding that Safeway was not in a position to obtain better terms of trade than its competitors or to enforce terms and conditions which it would be able to enforce without market power.

The ability of Safeway to do what it did, we submit, was a function of the structure of the market, not the particular position of Safeway.  The fact that bakers could bake more bread if there was demand for it is, in our respectful submission, in that context, simply irrelevant. 

The majority relied on two other matters.  First, it said there were “barriers to entry”.  The barriers they erected related to the likelihood of “a participant of similar size” to Safeway entering the market.  That finding appears in paragraph 318 of the judgment.  We submit that there were no barriers for anyone competing for the acquirer’s bread.  One just had to set up a local store and one would be competing for that bread.  It is irrelevant to look at State‑wide barriers for entry, particularly in the context where all members of the Full Court found that Safeway could not effect State‑wide deletions. 

The only other matter relied on by the Full Court was that in three of the nine instances the subject of the proceeding, one baker, Tip Top, responded by ceasing to supply discounted bread to the retailers.  To the extent that that is relevant, it is more than offset, we submit, by the fact that in the other six instances that did not occur.  For those reasons, we submit that the majority of the Full Court was in error in holding that Safeway had market power in the market which it found was the relevant market for the purposes of the case. 

Can I now turn to the question of whether Safeway took advantage of the market power.  It must be remembered, in our submission, that the deletions complained of were isolated and confined to Safeway stores in close physical proximity to the store receiving the discounted bread.

HAYNE J:   They were deletions which immediately had an adverse effect on Safeway, did they not?  I have in mind what is said at paragraph 10 of the Full Court judgment, that bread is a so‑called “communicable” product. 

MR BATHURST:   They did not have an adverse effect on Safeway.  They only had a limited adverse effect, because Safeway was able to get in other bread. The fact of the matter was, there was always alternate sources of supply.  Safeway was able, we say, to effect the deletion not because of the market power, but simply for two reasons, firstly, the alternative sources of supply which I just referred to in answer to your Honour Justice Hayne, and, secondly, although the overall demand for bread was inelastic, demand between bread – the court’s finding – was elastic.  One could readily substitute different brands of bread and different quality bread.  There was no use of market power.

Indeed, we submit, we gave the Court a short piece of supplementary material, a statement by one of the witnesses of the ACCC, a Mr Carroll, who ran two corner stores.  Mr Carroll adopted the same policy, and, apparently, at least on one instance, it worked for him.  The Full Court dealt with this in paragraphs 328 to 331.  They said in paragraph 331 that the conduct was:

only rationally explicable as the use of leverage it had in the market to inflict pain on the plant baker –

That, with respect, is to confuse the issue of purpose with the question of whether use was made of market power.  It is an approach which has been cautioned against on at least two occasions by this Court, in Melway and in Rural Press.

GUMMOW J:   But they were certainly aware of that, were they not?

MR BATHURST:   They would not have been aware of Rural Press.

GUMMOW J:   No, but they were very well aware of Melway.

MR BATHURST:   They were certainly aware of Melway.

GUMMOW J:   Yes.

MR BATHURST:   They sought to overcome that by saying that a firm without market power would not pursue a policy of deletion because it would be compelled to stock a full range of products to satisfy consumer demand.  That finding, which seems the nub of the reason that the court held there was a taking advantage, appears at page 513, paragraph 333, reading from about line 38:

Its reason for doing so was to induce the plant baker to cease supplying discounted bread to an independent retailer in competition with a Safeway supermarket.  As we have explained ‑ ‑ ‑

HAYNE J:   Do I understand that as a conclusion that some short term pain for Safeway was worth it for the long term gain?  Is that the nub of the reasoning?

MR BATHURST:   That seems to be the essence of the conclusion.  What they said, as we have pointed out in our written submissions, was that Safeway was able to do this because if it did not have market power it would be compelled to stock a full range of products to satisfy consumer demand.  Now, that can only be based upon a conclusion that Safeway had power, not in the wholesale market, but in the retail market.  The retail market was expressly eschewed by the Commission.  It was never put and never argued that Safeway had power in the retail market, and that is the sole basis, in our respectful submission, that the court was able to find a taking advantage. 

Your Honours will recall that Justice Emmett in dissent said one of the real difficulties in this case was finding out whether Safeway had a market power to do what?  The only identification the majority gave was not to stock a full range of products, which is irrelevant, in our submission, to the wholesale market.

The questions, we submit, are important.  The decision gives rise to considerable uncertainty as to what, if any, limits the legislation places on what I will describe as – to use as a neural term – a large purchaser operating in a market where there is excess capacity.  The uncertainty is demonstrated by the fact that the issue of taking advantage at least divided equally the four members of the Federal Court who heard the case below.  That is all I want to say about section 46.

Can I go briefly, then, to the Preston Market issue.  The Full Court held that the price fix of which complaint was made was authorised by Mr Jones for Safeway and Mr Gunton for Tip Top and they had the necessary meeting of minds.  That appears in paragraph 443 at page 546 of the book.  Your Honours will see that it was stated:

An arrangement or understanding was made or reached between Mr Feldgen and Mr Lovett at the meetings of 27 and 28 April 1995.  The making or reaching of that arrangement or understanding was authorised by Mr Jones for Safeway and Mr Gunton for Tip Top.  Mr Feldgen and Mr Lovett had the necessary meeting of minds, as did Mr Jones and Mr Gunton.

That proposition was contrary to an express finding made by the learned trial judge, which appears at paragraph 801 of his judgment, that Mr Gunton and Mr Jones never reached any such agreement or understanding.  That appears in volume 2 of the book at page 246, line 15:

For the reasons to which I have referred, I am not satisfied that the evidence supported such an agreement, arrangement or understanding.  In particular, I am not satisfied that the evidence supported a finding that Mr Jones entered into any agreement or arrangement or reached an understanding with Mr Gunton.  Mr Gunton denied that he entered into any such agreement or arrangement or reached any such understanding with Mr Jones and I accept his denial.

HAYNE J:   There was an alternative inference case put against you, was there not?  Namely, that statements were made, conduct followed, therefore ‑ ‑ ‑

MR BATHURST:   But that was not the basis on which the Full Court found.

HAYNE J:   I understand that.

MR BATHURST:   The finding of the Full Court ‑ ‑ ‑

GUMMOW J:   No, but it would be on the table if it came here.

MR BATHURST:   It would be on the table if it came here and that would affect Safeway, but there is a real injustice done, in our respectful submission, to Mr Jones.  The matter has been sent back to the trial judge in relation to Mr Jones for him to deal with it, presumably, in the face of that finding.  It is a finding, with respect, that should not have been made, particularly in circumstances where the ACCC expressly stated, as is recorded in the judgment, that they accepted the findings of fact made by the trial judge in relation to Preston Market.  That appears in paragraph 370 at page 524 of volume 3 of the book.  Your Honours will see:

On the appeal, the Commission does not challenge the findings of primary fact adverse to its case.

So, notwithstanding that, the court made a finding which was directly contrary to what was found by the learned trial judge. 

The remaining point is a short one.  It is dealt with in paragraph 40 of our submissions, which are at page 648 of the book.  The point is this, that in relation to two of the matters where the judge was unable to find who it was who authorised the deletions and who had the relevant purpose – the judge said he could not be satisfied that the purpose was one of the proscribed purposes – the Full Court used section 46(7) effectively to infer that someone, without identifying who, had a proscribed purpose. 

We say, consistent with what this Court said, for example, in Eurolynx, whilst there can be more than one officer of a company who has a purpose, one has to attribute it to somebody, and it is said that that cannot be overcome simply by use of section 46(7) or the drawing of inferences.  They are our submissions in‑chief, if the Court pleases.

GUMMOW J:   Thank you, Mr Bathurst.

MR FAJGENBAUM:   If the Court pleases, if I can deal first with the section 46 issue.  The matter has to be put into context.  What we are examining is what was found to be the case by the Court of Appeal, by the Full Court, and also by Justice Goldberg, that in a number of these incidents, the four in question, Safeway had imposed a term of trade, a condition of all dealing between it and the plant bakers, a condition of all dealings between them across the whole of the Victorian wholesale market, that if the plant baker supplies cheap secondary or generic breads to an independent local rival of a particular Safeway store, Safeway would delete the whole range of that plant baker’s bread whilst the local independent continued to be supplied with the cheap bread by the plant baker in question.  The deletions were both an imposition and an enforcement of that term of trade. 

HAYNE J:   I am sorry, can you go back, Mr Fajgenbaum?  What is the finding you say that was made at both levels?

MR FAJGENBAUM:   That each of these deletions occurred for a punitive purpose, for the purpose of deterring a plant baker continuing to supply cheap bread to the independent store in question.  We say that was a condition – that the deletion itself was both an imposition and an enforcement and a condition of trade.  All dealings between Safeway and the plant bakers were subject to this, that if you, plant baker, supply any independent competitor of ours anywhere in the State of Victoria with cheap secondary or generic bread, we will refuse to stock your bread in the affected local Safeway store whilst the independent ‑ ‑ ‑

HAYNE J:   That is a very different proposition from the one you first put, I think, but it does not matter.

MR FAJGENBAUM:   I am sorry.  If I did, forgive me, I put it badly.  That we have characterised, as it were, as a condition of all dealings.  The bakers accepted this condition of trade because they could not refuse to deal with Safeway upon these terms, save upon this basis.  They were in thrall, as it were, to Safeway.  In the market circumstances in which they found themselves, the bakers could not refuse to deal with Safeway, because they had no alternative custom for the range of bread which Safeway acquired.  Safeway had leverage over the bakers, because Safeway was not relevantly constrained as a wholesale purchaser of bread – I have just seen the yellow light go on.  Have I been going for 20 minutes?

GUMMOW J:   Yes, please.

MR FAJGENBAUM:   By the relevant fact.  There were significant barriers to entry into the wholesale market and they were the Victorian wholesale market barriers to entry that were relevant here, because there was no other wholesale purchaser of bread that Safeway otherwise purchased.  It is irrelevant, with respect, that any particular deletion was local.  The relevant consideration was that the bakers knew that wherever at any part of the State they supplied cheap bread to an independent store near a Safeway, they would suffer a deletion.

The bakers were suffered this deterrence.  Safeway’s size was a source of its market power because a relevant new entrant had to approach the size of Safeway and its store coverage in order to impinge upon Safeway’s market power.  It must be remembered that Safeway dealt with the plant bakers on a State‑wide basis.  They were State‑wide terms of trade.  The dealings were arranged on a State‑wide basis.  So, in the context of the inelastic demand for bread and the excess capacity and Safeway’s size, we there see there was critical market power that gave Safeway leverage over the bakers.

Now, without this power, it is our contention Safeway could not have imposed the term which exposed them to this risk of deletion.  Each deletion caused the bakers harm and it was in the bakers’ interest to avoid it.  On the other hand, as your Honour Justice Hayne observed, each deletion caused harm to a particular Safeway during the period of the deletion.  The evidence was that it did, but, on the other hand, it was not harmful to Safeway’s State‑wide business and was beneficial to it, because it deterred plant bakers supplying cheap bread to independents anywhere in the State of Victoria and it assisted in maintaining, as Safeway’s ambition was, a bread market in which the price of the cheapest bread was the price of Safeway’s home brand bread.

That, with respect, was the use of the market power.  Safeway could afford to suffer the pain in particular stores and recover it through the long‑run benefit that it hoped to achieve.  It is, with respect, a bit like the recoupment in predatory pricing cases.  It is incorrect, in our respectful submission, to compare Safeway to the independent retailer like Mr Carroll.  Safeway, in the conduct with which we are concerned, was seeking to affect and determine its suppliers’ – its plant bakers’ – relationships with Safeway’s competitors.

Mr Carroll was simply haggling, trying to get the best deal for himself.  He was not concerned to affect the relationship between any bread supplier and any one of his competitors.  Indeed, if a single store outlet with no market power had behaved as Safeway did, the bakers would have laughed them off.  There is no imperative for a baker to deal with a single outlet.  It would have ignored it.  On the other hand, the single retailer, the local retailer, would have suffered the pain of any deletion, but there would have been no recoupment for it, there would have been no benefit for it that could be recovered elsewhere.

A retailer without market power could not seek to affect the plant bakers’ dealings with its competitors and could not possibly hope to achieve an object of discouraging the supply of cheap bread to its rivals.  The powerless retailer would lose sales and gain no benefit, unlike BHP, which is able to lose a sale to Queensland Wire but gain a long‑run benefit in maintaining its monopoly.

GUMMOW J:   What do you say about Mr Bathurst’s point concerning the finding against Mr Jones?  Is an answer the alternative way the case was put that appears at paragraph 371 on 524?

MR FAJGENBAUM:   Yes.  Would it be of assistance if my learned friend, Mr Brett, answered your Honour’s questions about that, because at the trial, on the appeal, we divided that responsibility?  I can deal with it, but it may be of greater assistance to the Court.

GUMMOW J:   Yes.

MR BRETT:   If the Court pleases.  The answer is really quite short.  Your Honours have to remember the relevant facts.  Your Honours will recall that the actual meeting at which the prices were set – there were two meetings.  Before the first one, it was found that Mr Jones instructed Mr Feldgen, on behalf of Safeway, to go to the meeting.  Mr Jones gave that instruction.  That is a finding that the Full Court made that the trial judge had not made, but they had a proper basis for doing so.

Mr Lovett, who was the Tip Top person, was instructed by Mr Gunton, his superior.  There is no doubt about either of those facts.  They met, they spoke about prices, they parted, and then both of them reported back to their respective superiors.  Crucially, the two respective superiors, Jones and Gunton, then spoke to each other on the telephone and then the next day Lovett and Feldgen met again.  That was when everything was seen to be satisfactory to both sides and Tip Top was allowed back into Safeway.

So when his Honour Justice Goldberg said that Mr Gunton denied making an agreement, that denial related to a point of time prior to all this.  Mr Gunton was, in effect, denying that he had at some stage said to Mr Jones, “Why don’t I do this, and, if I do that, will you let us back in?”.  That is what he denied doing.  Obviously, he had taken part in that discussion between the two meetings between him and Mr Jones, and that was what the Full Court found was the meeting of minds.  In our submission, clearly there was a meeting of minds at that point.  Justice Goldberg’s finding was directed, in effect, to a prior point than that.

GUMMOW J:   But you had a submission that it was not necessary to show a meeting of minds, did you not?

MR BRETT:   We did have that, your Honour, as well, that one simply looks at the conduct of Feldgen and Lovett.  Again, we know that Feldgen and Lovett were both authorised by their respective superiors to meet and do what they did, and that is all that we need to show, in our submission. 

GUMMOW J:   Thank you. 

MR BRETT:   If the Court pleases. 

GUMMOW J:   Is there anything else, Mr Fajgenbaum?

MR FAJGENBAUM:   The final point on the two smaller incidents where the court drew adverse inferences in respect of Cheltenham and Vermont, the evidence was clearly that Buttercup, the relevant baker, Mr Cooper, it is represented, was informed by either Mr Jones or his assistant that Safeway was going to delete Buttercup bread, and he gave evidence that whomever he spoke to did not ask for a case deal and no case deal was sought.  The bread was deleted.  Safeway gave no evidence that a case deal was sought.  Mr Jones said he could not remember.  His assistant, Ms Austin, could not remember.  So, in those circumstances, the court was entitled to draw an inference that no case deal was sought.

It is a matter, with respect, that any burden of proof that existed lay on Safeway, and it did not discharge that burden.  It was its defence, with respect, that a request for a case deal was inconsistent with an improper purpose.  If the circumstances disclose relevant misconduct, the court is entitled to draw the inference, but to the extent that my learned friend says you have to be able to identify someone within Safeway, the answer is twofold.  That someone is, on the state of the evidence, either Mr Cooper or Ms Austin, or, alternatively, all one can say is that the deletion was not unauthorised.

It was never suggested by Safeway that that which occurred should not have occurred, and in those circumstances one must assume that the deletion was authorised by Safeway, without any request for a case deal.  In those circumstances, the inference of a punitive purpose could be drawn, as it was drawn by the Court of Appeal.  Unless there are further submissions ‑ ‑ ‑

GUMMOW J:   Thank you.  Yes, Mr Bathurst.

MR BATHURST:   Just a few short matters.  Firstly, the policy or the terms of trade were not found, as my learned friend suggested.  There are two findings.  In volume 1 of the appeal book, paragraph 21 in the judgment of the trial judge at page 18, line 43, his Honour found that Safeway’s terms:

included a term that Safeway would always buy at the best price which the plant baker offered any customer as well as other terms relating to discounts and allowances –

Then, in relation to the policy, to the extent that that constituted a term, what his Honour accepted as what Mr Brookes said at page – as recorded at page 138 ‑ ‑ ‑

HAYNE J:   This pleading about the policy seems to have bedevilled the whole of the proceeding.  It diverted everybody’s attention from anything connected with the Act.

MR BATHURST:   We say the simple fact of the matter is ‑ ‑ ‑

GUMMOW J:   It is in the great tradition of Part IV litigation.

MR BATHURST:   We say if one steps aside from that tradition for a moment ‑ ‑ ‑

HAYNE J:   Heaven forfend. 

MR BATHURST:    ‑ ‑ ‑ whatever were the terms of trade, Safeway was simply unsuccessful in imposing it, because Sunicrust and Buttercup at least, on the evidence, ignored it.  There is no question of recoupment in this case.  This case is quite different to a predatory pricing case.  The only way the Full Court reached the conclusion was by saying, in effect, that there was power in the retail market.  What Mr Brett said may well be an answer to the claim in respect of Preston against Woolworths, but it provides no answer to the claim against Mr Jones.

There was no finding of fact made that Mr Jones and Mr Gunton reached an understanding which would be necessary for there to be any liability for Mr Jones.  In that case, the findings have, in our respectful submission, done a substantial injustice to Mr Jones.  They are our submissions, if your Honour pleases.

GUMMOW J:   Thank you.  We will take a short adjournment.

AT 10.11 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.18 AM:

GUMMOW J:   Insofar as the Commission and Safeway seek to challenge conclusions of fact reached in the Full Court no question is raised suitable for the grant of special leave. If questions of principle are raised by the application of either party, and it is not clear to us that indeed they are, this is not a suitable vehicle in which to consider those questions.

Moreover, the events in issue having occurred so long ago and the proceedings at first instance having been protracted as they were, it would now not be in the interests of justice to extend further what may have been an unduly protracted piece of litigation.

Accordingly, each application for special leave is refused with costs.

AT 10.19 AM THE MATTERS WERE CONCLUDED