Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd - [2007] HCA 38

HIGH COURT OF AUSTRALIA
GLEESON CJ,
GUMMOW, KIRBY, HAYNE, CALLINAN, HEYDON AND CRENNAN JJ
AUSTRALIAN COMPETITION AND CONSUMER
COMMISSION APPELLANT
AND
BAXTER HEALTHCARE PTY LIMITED & ORS RESPONDENTS
Australian Competition and Consumer Commission v Baxter Healthcare Pty Limited
[2007] HCA 38
29 August 2007
S56/2007
ORDER
1.Appeal allowed.
2.Set aside the orders of the Full Court of the Federal Court of Australia made on 24 August 2006.
3.Remit the matter to the Full Court of the Federal Court of Australia for further consideration in accordance with the reasons of this Court.
4.Respondents to pay the appellant's costs of the appeal to this Court. The costs of the proceedings to date otherwise to be in the discretion of the Full Court of the Federal Court of Australia.

On appeal from the Federal Court of Australia
Representation
L G Foster SC with A I Tonking and J S Gleeson for the appellant (instructed by Australian Government Solicitor)
D M Yates SC with I S Wylie for the first respondent (instructed by Blake Dawson Waldron)
R J Meadows QC, Solicitor-General for the State of Western Australia with J C Pritchard for the second respondent (instructed by State Solicitor's Office (WA))
C J Kourakis QC, Solicitor-General for the State of South Australia with G F Cox and S A McDonald for the third respondent (instructed by Crown Solicitor's Office (SA))
M G Sexton SC, Solicitor-General for the State of New South Wales with S J Gageler SC and N L Sharp for the fourth respondent (instructed by Crown Solicitor for New South Wales)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS
Australian Competition and Consumer Commission v Baxter Healthcare Pty Limited
Statutes – Interpretation – Trade Practices Act 1974 (Cth) ("the Act") – First respondent negotiated with and formed contracts with State and Territory governments for the supply of medical products in circumstances where State and Territory governments were not carrying on a business – Trial judge found that, but for the application of derivative Crown immunity, the first respondent had contravened ss 46 and 47 of the Act in relation to pre-contractual conduct – Whether the provisions of ss 46 and 47 applied to the conduct of the first respondent – Nature and extent of available relief.
Statutes – Operation and effect of statutes – Crown immunity – Derivative immunity – Bradken Consolidated Ltd v Broken Hill Proprietary Co Ltd (1979) 145 CLR 107 – Whether the presumption of Crown immunity creates a presumption against legislation having an incidence in legal effect upon the Crown – Whether the presumption of Crown immunity creates a presumption against legislation affecting Crown "freedoms" or governmental, commercial or political "interests" – Whether the Commonwealth, States and Territories are manifestations of the Crown – Whether Crown immunities apply as such to the Commonwealth, States and Territories – Whether different notions of governmental immunity are suggested or required by the Australian Constitution.
Constitutional law (Cth) – Crown immunity – Whether Crown immunity is applicable without modification to the Commonwealth, States and Territories provided for in the Constitution.
Words and phrases – "bind", "derivative Crown immunity", "incidence in legal effect".
Constitution, ss 1, 61, 71, 73, 74, 75, 78, 79, 114.
Trade Practices Act 1974 (Cth), ss 2, 2A, 2B, 4L, 6, 46, 47, 51, 87, 87A.

GLEESON CJ, GUMMOW, HAYNE, HEYDON AND CRENNAN JJ. The issues in this appeal are whether, upon the true construction of the Trade Practices Act 1974 (Cth) ("the Act"), ss 46 and 47 of the Act apply to conduct of a trading corporation in, or in connection with, negotiations for, entry into, or performance of, a contract with a State or Territory government where the government's conduct is not in the course of carrying on a business, and, if so, what remedies are available in a case of contravention. Sections 46 and 47 bind the Crown in right of a State or Territory so far as the Crown carries on a business, either directly or by a government authority (s 2B). Yet it is argued that when a corporation, in the course of carrying on its business, negotiates for, enters into, or performs a contract with a State or Territory government which is not itself carrying on a business, ss 46 and 47 do not apply to the corporation. That is said to be a form of derivative immunity, recognised and applied by this Court in 1979 in Bradken Consolidated Ltd v Broken Hill Proprietary Co Ltd[1]. This argument was accepted by Allsop J at first instance in the Federal Court of Australia[2], and by the Full Court of the Federal Court[3] (Mansfield, Dowsett and Gyles JJ) on appeal. The appellant appeals against the decision of the Full Court. The Act has changed in significant respects since 1979. All parties accept that, ultimately, the question is one of construction of the Act. That is the way in which the case was conducted and decided at first instance, and in the Full Court, and it is the basis upon which the case was argued in this Court.
[1](1979) 145 CLR 107.
[2]Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (2005) ATPR ¶42-066.
[3]Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (2006) 153 FCR 574.
The Act contains certain provisions concerning its application to what the Act describes as the Crown in right of the Commonwealth, the Crown in right of a State, and the Crown in right of a Territory. As is often the case, the terms in which Parliament expressed its legislative intention reflected legal doctrine expounded in earlier judicial decisions, including decisions of this Court. There was no argument that the legislation, or a relevant part of it, is constitutionally invalid, or that the Constitution, for reasons outside the provisions of the Act, dictates an outcome in favour of one side or the other. Such an argument would have required notification under s 78B of the Judiciary Act 1903 (Cth), in order to give interested Attorneys-General the opportunity to appear and make submissions. The issue being one of statutory construction, the Court must give meaning and effect to the language of the Act.
Allsop J found that, but for the derivative immunity enjoyed by the first respondent, the conduct of the first respondent would have contravened s 46 in one respect and s 47 in a number of respects. He concluded, however, that the Act did not apply to, or operate in respect of, the conduct complained of and dismissed the application brought under the Act by the appellant. There was an appeal to the Full Court against the dismissal of the application. The appeal covered both the derivative immunity conclusion and Allsop J's refusal to find further contraventions. There was also a notice of contention by which the first respondent challenged the findings that its conduct fell within the terms of the prohibitions in ss 46 and 47. The Full Court did not find it necessary to deal with the notice of contention. Hence, if the appeal to this Court is allowed, it will be necessary to remit the matter to the Full Court to resolve that issue and to permit determination of the remainder of the appellant's appeal to that Court.
The conduct of the first respondent
The first respondent, Baxter Healthcare Pty Limited ("Baxter"), is the Australian operating subsidiary of Baxter International Inc, a global medical products and services company incorporated in the United States of America. Baxter and its parent company specialise in critical therapies for life-threatening conditions.
Baxter manufactures the majority of the products it supplies within Australia at a plant in Toongabbie, New South Wales. It manufactures and supplies several different types of sterile fluid commonly used in hospitals. These relevantly include: (1) large volume parenteral ("LVP") fluids, used for re-hydration, the administration of drugs, resuscitation, and fluid and electrolyte replacement; (2) irrigating solutions ("IS"), used for a number of purposes, including the washing or cleaning of wounds in surgery; and (3) parenteral nutrition ("PN") fluids, used for the provision of nutrition to patients. Baxter also manufactures peritoneal dialysis ("PD") products. PD is a form of treatment for chronic renal failure. Most PD treatments are self-administered by patients at home. The expression "PD products" refers to both PD fluids and apparatus used to perform PD, such as automated PD machines and lines for fluid connection.
In the judgments of the primary judge and the Full Court of the Federal Court, the term "sterile fluids" was defined to exclude PD fluids, although it was acknowledged that PD fluids are required to be sterile. This usage provides a convenient shorthand for contrasting LVP fluids, IS and PN fluids, as a class, with PD fluids and PD products generally.
Between 1998 and 2001 Baxter had the only manufacturing plant for LVP and PN fluids in Australia. Most LVP and PN fluids are bulky, water-based items. In general, transportation costs are relatively high, giving domestic producers a significant competitive advantage. Since early 1997, Baxter has supplied almost 100 per cent of LVP fluids at the wholesale level. Baxter was also the wholesale supplier of about 95 per cent of IS acquired in Australia between 1998 and 2001 inclusive.
PD became available to home-based patients in the early 1980s. Until 1990, Baxter was the only supplier of PD fluids in Australia. In 1990, Gambro Pty Ltd ("Gambro") commenced supplying PD products in Australia. Another supplier, Fresenius Medical Care ("Fresenius"), sought to enter the PD market in Australia in about 1995. Between 1998 and 2001 inclusive, Baxter sold about 90 per cent of PD products in Australia, with Gambro and Fresenius each enjoying a small market share. As PD products are more valuable for their size and weight than sterile fluids, the competitive advantage enjoyed by domestic manufacturers over importers is less significant.
Between 1998 and 2001, Baxter entered into five long-term contracts for the supply of sterile fluids and PD products to public hospitals. The contracts were entered into with the relevant purchasing authorities of the second to fourth respondents (the States of Western Australia, South Australia, and New South Wales, respectively), the State of Queensland, and the Australian Capital Territory. The purchasing authorities have been described generically in the proceedings as State Purchasing Authorities ("SPAs"). Each SPA is part of the executive arm of government of its corresponding State or Territory.
Each of the contracts was entered into after a process involving formal requests for tenders by the SPAs and a period of negotiation. (In the Australian Capital Territory there was no tender, but the SPA agreed with Baxter to adopt the terms on which Baxter had contracted to supply to New South Wales.) Each tender invitation included sterile fluids and PD fluids and products, and each permitted alternative tenders. Each tender also specifically allowed for the submission of bundled offers, that is, offers of several items together at a discount rate. Baxter's response to each tender invitation followed a consistent pattern. It made an offer to supply the tender items, on an item-by-item basis, at particular prices, and an offer to supply the same items, for substantially lower prices, on a sole supply basis.
The contracts with New South Wales, South Australia and Western Australia provided for the supply of the entire requirements of each State for certain sterile fluids and the supply of 90 per cent of the requirements of each State for PD fluids, for periods of five years or just under five years. The Australian Capital Territory contract was in similar terms, but the supply was for a period of just over four years. The contract with Queensland provided for Baxter to supply the State's entire requirements for certain sterile fluids (excluding PN fluids) and 92.5 per cent of its requirements for PD fluids, for a period of three years. None of the contracts is currently on foot.
There was background evidence as to previous contracts for the supply to State and Territory authorities of sterile fluids and PD products. In the 1980s there were four manufacturers of intravenous ("IV") solutions in Australia, but by 1993, Baxter was the only Australian manufacturer. In the mid-1980s there were exclusive supply agreements with certain SPAs for some IV products. From 1990, when Commonwealth/State funding arrangements changed, significant quantities of PD products were sold directly to the States.
The Full Court summarised Allsop J's findings about this part of the evidence as follows:
"Baxter had previously made bids to Queensland for tenders to supply IV, IS and PD solutions, including bids which were on the basis of item-by-item prices and bids which were at significantly lower prices for guaranteed sole supply for all items covered by the tender, both in 1987 (when the States had limited purchases of PD products), and in 1990 and 1993. It made bids on similar bases to South Australia and to Western Australia in 1991, and to New South Wales in 1992 and 1993. In March 1992, a consortium including Abbott [Australasia Pty Ltd, a competitor with Baxter in the supply of LVP fluids between 1985 and 1992] and Gambro and another company expressed concern to New South Wales about the way the tender processes were constructed. Their concern was that those processes were constructed to favour the supplier with the broadest range of product, and which encouraged bundling and 'a sole supplier situation'.
[Allsop J] observed:
'To this point this [the construction of the tender process] had not been dictated by Baxter but decided by the States. That remained the position up to and during the relevant period.'
In fact, New South Wales, in the period after the consortium's concern, made it clear that it wanted a long term contract and one in which there was an exclusive supply arrangement covering sterile fluids and PD products, and that Baxter was one of its potential suppliers, but in the longer term not the only one.
Baxter secured exclusive supply contracts with Queensland in 1990 (for three years) and again in 1993, excluding PN fluids at the insistence of Queensland (for three years), and in 1997 (again for three years); with South Australia in 1991 (for two years) and in 1995 (for three years); with Western Australia in 1991 (for two years, extended by one year) and again in 1995 (for five years); and with New South Wales in 1993 (for five years). His Honour found that each of those contracts was negotiated by the relevant SPAs which had a capacity to choose, to a degree, the terms on which they would deal with Baxter and for the costs savings the contracts produced as well as the range of products supplied."
The Full Court then set out the history of the negotiation of the contracts:
"The Request for Tenders for the 1998 NSW contract was released on 8 October 1997. It referred to LVP, PD and PN fluids and products and to IS. At the time, as his Honour found, Baxter was, of course, aware of B. Braun [Melsungen AG and its subsidiary, B. Braun Australia Pty Ltd] as a major worldwide sterile fluid producer and believed it was a competitive threat to Baxter winning the New South Wales tender, although it anticipated winning the sterile fluids contract. Apart from B Braun, tenders for the New South Wales contract were also received from Fresenius and Gambro, although not for the full range of products. Baxter understood also that, if its item-by-item prices were taken seriously, the financial pressure on New South Wales to take Baxter's PD fluids and products was very strong unless an importer such as B. Braun was to take the bulk of the sterile fluids market. New South Wales then further negotiated with Baxter, as a result of which Baxter made further concessions or revised offers. Ultimately, one of its revised offers was accepted. The evidence was that the acceptance of that offer was heavily influenced by the desire to avoid additional cost to the public health system in New South Wales.
On 30 April 1998, the existing contract between South Australia and Baxter was due to expire. There were direct negotiations with Baxter during 1998 for a new contract, during which Baxter made two bundled offers. They were not taken up. The existing contract therefore continued to roll over until the 2001 SA contract. South Australia invited tenders for pharmaceutical products including LVP, PD and PN fluids and IS. Tenders were invited for two year contracts, with one or two year optional extensions. Tenders were received from Baxter, Gambro and Fresenius. On 5 December 2000, South Australia requested a revised offer for a five year term (called Offer 1A), for sole and exclusive supply of sterile fluids, but excluding PD fluids and products. Baxter responded on 11 December 2000 with its Offer 1A. It offered no discount on the item-by-item prices in its Offer 1, although clearly the invitation to make Offer 1A was to seek a volume discount in exchange for sole and exclusive supply of sterile fluids. Baxter's Offer 1A indicated that it was not prepared to give a discount for exclusivity for sterile fluids if no exclusivity for PD fluids was given. Baxter's initial bundled offer for sterile fluids and PD fluids was cheaper than its item-by-item offer for sterile fluids alone, and that remained the position after Offer 1A. After further negotiation, however, its Offer 1 was accepted but allowing for 10 per cent of PD products to be purchased from other suppliers.
The 1999 ACT contract was, as the Australian Capital Territory understood it, based on the 1998 NSW contract, although the relevant officer in the Australian Capital Territory did not think the arrangement precluded the Australian Capital Territory from dealing with other suppliers. In fact in May 2001, Fresenius contracted with the Australian Capital Territory to supply dialysis products so that Baxter was no longer the exclusive supplier of PD fluids and products to Canberra Hospital. Baxter then claimed to be entitled to a higher price, but the Australian Capital Territory has continued to adhere to the prices in the 1998 NSW contract. At the time of the judgment, there was an ongoing dispute about that.
The 2001 QLD contract followed a tender request of 3 May 2000 for IV fluids and dialysis fluids, excluding PN fluids. Baxter, Fresenius and Gambro tendered. Both the Baxter and Gambro tenders included bundled bids. The unbundled bid of Baxter was that which was assessed, and Baxter was recommended. The impugned bundling, as his Honour found, had no effect on the awarding of the tender to Baxter. However, obviously for price reasons, its bundled bid was then accepted. His Honour also accepted the evidence that Queensland perceived its position as one embodying 'real bargaining power, deployed in its own interests'.
The 2001 WA contract followed a tender request of 26 May 2000. Tenders were received from Baxter, Gambro and Fresenius. The cost or 'price' of not taking a Baxter sole supply arrangement for all products, including PD products, was described by the primary judge as 'huge, unless sterile fluids could be sourced elsewhere'. Its bundled sole supply offer was accepted, after negotiation to allow 10 per cent of PD products to be acquired from other sources.
The learned primary judge also noted that the later agreement made jointly by New South Wales and Victoria and Baxter in 2003, after extensive negotiation, did not give Baxter any guaranteed exclusive supply agreement, although Baxter has provided more favourable pricing based upon volume discounts for total usage of sterile fluids and a minimum of 80 per cent of the PD fluids acquired. That agreement does not contain the 'cherry pick' item-by-item prices."
The Act

Section 2 of the Act declares that the object of the Act, relevantly, is to enhance the welfare of Australians through the promotion of competition and fair trading. It was inserted in 1995, but it is plain from the detailed language of the key provisions that the object of the Act was the same before 1995, and would have been the same after 1995 even if s 2 had not been inserted.
Sections 2A and 2B deal with the application of the Act to the Commonwealth, the States and the Territories. Section 2A, which was originally inserted in 1977, provides that the Act binds the Crown in right of the Commonwealth in so far as the Crown in right of the Commonwealth carries on a business, either directly or by an authority of the Commonwealth. However, the Crown in right of the Commonwealth is not liable to prosecution or to a pecuniary penalty (s 2A(3)). Section 2B, which was inserted in 1995, makes corresponding provision as to the Crown in right of a State or the Crown in right of a Territory in relation to certain parts of the Act, including those that are presently relevant. Section 2C, also inserted in 1995, provides that certain specified forms of government activity, or exercises of government powers, do not amount to carrying on a business for the purposes of ss 2A and 2B. That list is not exhaustive (s 2C(2)). In the present case, it was conceded by the appellant that the acquisition of the products in question by the SPAs was not in the course of carrying on a business.
Section 4L, inserted in 1977, provides that if the making of a contract contravenes the Act by reason of the inclusion of a particular provision in the contract, then, subject to any order made under s 87 or s 87A, nothing in the Act affects the validity or enforceability of the contract otherwise than in relation to that provision in so far as the provision is severable. That section was recently construed by this Court in SST Consulting Services Pty Ltd v Rieson[4] to mean, not that a contract is enforceable only if the common law rules about severance permit severance, but that s 4L requires rather than permits the severance of offending provisions and that the phrase "in so far as" marks the limit of invalidity of the offending provision. In that connection, it was pointed out that the Act contains its own detailed scheme dealing with the consequences of contravention.
[4](2006) 225 CLR 516 at 533 [52]-[53].
As appears from the pleadings in Bradken, the relevant events occurred in early 1978. At that time, ss 2, 2B and 2C were not in the Act. Section 4L was there, but it was not referred to in argument or in the reasons for judgment. The changes to the Act made in 1995 were part of a national programme of competition policy reform adopted by the Commonwealth, State and Territory legislatures. The Commonwealth Parliament enacted the Competition Policy Reform Act 1995 (Cth), which amended the Act in a number of ways, including the insertion of s 2 and s 2B, the New South Wales Parliament enacted the Competition Policy Reform (New South Wales) Act 1995 (NSW), and other States and Territories enacted similar legislation.
Part IV of the Act includes ss 46 and 47. Section 46 deals with misuse of market power. So far as presently material, it provides that a corporation that has a substantial degree of power in a market shall not take advantage of that power for the purpose of eliminating or substantially damaging a competitor in that or any other market or for the purpose of deterring or preventing a person from engaging in competitive conduct in that or any other market. Section 47 provides that a corporation shall not, in trade or commerce, engage in the practice of exclusive dealing, and then defines that concept. Exclusive dealing includes supplying goods on the condition that the customer will not, or will not except to a limited extent, acquire goods, or goods of a particular kind, from a competitor of the corporation. It also includes refusing to supply goods to a person for the reason that the person has not agreed not to acquire goods from a competitor of the supplier. The prohibition on exclusive dealing only applies where the engaging by the corporation in the conduct described has the purpose or effect of substantially lessening competition in a market (s 47(10)). Furthermore, the prohibition does not operate while there is a notification of exclusive dealing under s 93 in force (s 47(10A)). Section 46, in its terms, operates independently of any contract. Taking advantage of market power for the purpose of eliminating or damaging a competitor, or of deterring or preventing competitive conduct, may, or may not, manifest itself in the provisions of a contract made by the corporation but, if a contravention occurs, it is the purposeful conduct of the contravening corporation that attracts the operation of the Act. A contravention of s 47 may or may not involve making or giving effect to a contract. A supply on certain terms may involve a contract. A refusal to supply will not. An offer to supply on certain terms may not. In any such case an anti-competitive purpose or effect is a necessary element of a contravention. As will appear, in the present case the conduct found by Allsop J to have fallen within s 46 and s 47 was not making or giving effect to a contract. It occurred, and was complete, before any contract was entered into.
Although ss 46 and 47 apply only to conduct by corporations (a term defined in s 4 in such a way as to invoke the legislative power conferred by s 51(xx) and s 122 of the Constitution), s 6 of the Act gives Pt IV (and other provisions) an extended application designed to invoke other areas of Commonwealth legislative power. There was no argument in the present case as to the extent to which it may be necessary to rely on s 6 in order to give effect to s 2B in cases where it otherwise applies. Since no party contended that s 2B covered the present case, its operation where the relevant agency of an executive government is not a corporation as defined did not arise for consideration.
Part IV also includes s 51(1), which requires that, in deciding whether there has been a contravention of the Act, it is necessary to disregard anything done in a State or Territory if the thing is specified in, and specifically authorised by, an Act of the Parliament of the State or an enactment or Ordinance of the Territory, or by regulation. A form of s 51(1) was in force in 1978, but the emphatic double reference to specificity was introduced in 1995, as part of the competition policy reform legislation. In 1978, the exception related to an act or thing specifically authorised or approved. Now it relates to an act or thing that is specified in, and specifically authorised by, State or Territory legislation or delegated legislation.
Part VI of the Act deals with enforcement and remedies. It provides, among other things, for pecuniary penalties (s 76) and injunctions (s 80). If the court is satisfied that a person has engaged, or is proposing to engage, in a contravention of Pt IV, the court may grant an injunction in such terms as the court determines to be appropriate. Section 87, which qualifies s 4L, gives the court power to make other orders, as it thinks appropriate, against a person engaging in or involved in a contravention for the purpose of compensating a person who has suffered loss or damage by contravening conduct. The section also gives the court power to declare contracts void in certain circumstances or to vary contractual provisions or covenants that would be otherwise unenforceable. Section 87A, which also qualifies s 4L, empowers the court to prohibit payment or transfer of moneys or other property in certain circumstances.
In SST Consulting Services Pty Ltd v Rieson[5], the majority said:
"The Act does much more than proscribe ... certain forms of conduct. It contains detailed provisions, in Pt VI, dealing with the enforcement of the Act and providing remedies for past or proposed contraventions of the Act ...
[There is] a framework of legislation that makes elaborate provision not only for the creation of norms of conduct but also for the consequences that are to follow from the contravention of those norms."
[5](2006) 225 CLR 516 at 526-527 [29]-[30] (references omitted).
Section 87, in an earlier form, but not s 87A, was in the Act in 1978, but its provisions have become much more extensive since then.
The application to the Federal Court
The appellant's proceedings were originally brought against the first respondent only. The States of Western Australia, South Australia and New South Wales applied to be joined as parties on the basis that the relief claimed against the first respondent affected the States' contractual rights. At the time the proceedings were commenced, the impugned contracts, or at least some of them, were still on foot.
The application before Allsop J was an Amended Application said to be made under ss 46, 47, 76, 80 and 83 of the Act and s 21 of the Federal Court of Australia Act 1976 (Cth) (which empowers the making of declarations). It was alleged that the conduct of the first respondent, in negotiating and entering into certain agreements of the kind described earlier in these reasons, contravened s 46 of the Act. There were eight separate claims for declarations of contraventions by the first respondent of s 46, the differences between them largely relating to questions of market definition. It was further alleged that the first respondent, by its conduct in negotiating, entering into and supplying pursuant to each of the agreements, contravened s 47. There were 12 separate claims for declarations of such contraventions, again the differences being related to matters of market definition. The anti-competitive purpose alleged was that of substantially preventing, hindering, or lessening competition in an identified market. A pecuniary penalty against the first respondent was sought in respect of each instance of contravening conduct. Injunctions were sought against the first respondent. The claims for injunctive relief were as follows:
"21.     An injunction restraining the First Respondent, by itself its servants or agents, for a period of five (5) years, or for such lesser period as the First Respondent continues to have a substantial degree of power in any of the LVP Fluids Market, PN Fluids Market or the Irrigating Solutions Market from:
a)        making any offer to enter into;
b)        entering into; or
c)        giving effect to
any contract, agreement, arrangement or understanding with a State or Territory, containing provisions to the effect that:
a)require the State or Territory to purchase PD products, as part of a bundle together with one or more of the following products, LVP fluids, PN fluids and Irrigating Solutions; and/or
b)require the State or Territory to purchase one or more of the following products PD products, LVP fluids, PN fluids and Irrigating Solutions, exclusively from the [First] Respondent; and/or
c)require the State or Territory to purchase one or more of the following products, PD products, LVP fluids, PN fluids and Irrigating Solutions, exclusively from the [First] Respondent, in order to obtain a special price or discount in respect of those products when compared with the price at which the [First] Respondent is prepared to supply those products in the absence of the requirement.
22.      In the alternative to the injunction set out in paragraph 21, an injunction restraining the First Respondent, by itself its servants or agents, for a period of five (5) years, or for such lesser period as the First Respondent continues to have a substantial degree of power in the Sterile Fluids Market; from:
a)        making any offer to enter into;
b)        entering into; or
c)        giving effect to
any contract, agreement, arrangement or understanding with a State or Territory, containing provisions to the effect that:
a)require the State or Territory to purchase PD products, as part of a bundle together with one or more of the following products, LVP fluids, PN fluids and Irrigating Solutions; and/or
b)require the State or Territory to purchase one or more of the following products PD products, LVP fluids, PN fluids and Irrigating Solutions, exclusively from the [First] Respondent; and/or
c)require the State or Territory to purchase one or more of the following products, PD products, LVP fluids, PN fluids and Irrigating Solutions, exclusively from the [First] Respondent, in order to obtain a special price or discount in respect of those products when compared with the price at which the [First] Respondent is prepared to supply those products in the absence of the requirement.
22A.    Where an order has been made in terms of paragraph 21 or 22 ('the paragraph 21 or 22 order'), having the effect of restraining the First Respondent from, inter alia, giving effect to one or more of the following agreements:–
a)2001 SA Supply agreement between Baxter and the State of South Australia for the period 1 April 2001 to 30 March 2006;
b)2001 WA Supply agreement between Baxter and the State of Western Australia for the period 1 March 2001 to 28 February 2006; and
c)2001 Queensland Supply agreement between Baxter and the State of Queensland for the period 1 June 2001 to 31 May 2004,
or, if the term of any State Agreement has then expired or been terminated and the First Respondent is supplying (or continuing to supply) the relevant State Purchasing Authority pursuant to:
d)        the expired agreement; or
e)another agreement to which the paragraph 21 or 22 order applies ('Substitute Agreement'),
[a] further order requiring the First Respondent to supply each of LVP fluids, PN fluids (except in the case of Queensland), Irrigating Solutions and PD products:
1)on terms as to price and payment no less favourable to the State Purchasing Authority than the terms as to price and payment specified in the relevant State Agreement or Substitute Agreement or any continuation or extension thereof including any volume discount, but without any condition restricting the relevant State Purchasing Authority from acquiring any proportion of its requirements for those goods from a person other than the First Respondent;
2)alternatively to sub-paragraph 1), on such terms as to price and payment as the Court considers to be appropriate in all the circumstances,
and otherwise in accordance with the terms of the relevant State Agreement or Substitute Agreement, for the remainder of the term of the relevant State Agreement or Substitute Agreement or any continuation or extension thereof."
No injunctive relief having been granted, the occasion to consider in detail how orders in that form would have affected any vested legal rights of the second, third and fourth respondents under the impugned contracts or otherwise did not arise.
The findings of the primary judge on contravention
Although Allsop J accepted that ss 46 and 47 of the Act did not apply, or did not relevantly apply, to the conduct of the first respondent because such conduct related to dealings with State or Territory governments which were not themselves carrying on a business, he went on to deal with the arguments of the parties on the assumption that the first respondent's primary contention (of derivative immunity) was wrong.
On that basis, Allsop J concluded that there was one contravention of s 46. There were, he decided, two relevant markets: an Australia-wide sterile fluids market, and an Australia-wide PD fluids market. He found that the first respondent had a substantial degree of market power in the sterile fluids market. Save in one instance, however, he was not satisfied that the first respondent had taken advantage of its market power or that it had been shown to have a purpose proscribed by s 46(1)(a) or s 46(1)(c). The single instance concerned the first respondent's conduct in relation to what was referred to as Offer 1A in South Australia. In relation to the rest of the first respondent's conduct, Allsop J said:
"When one examines the history of the market, from the 1980s through to the exit of Abbott and the tendering processes, with the exception of Offer 1A to SA in 2000, one does not see any of the relevant offers being made over the opposition of the SPAs or the exclusive contracts somehow forcibly extracted from them. The relevant offers were not made in circumstances in which it can be seen that advantage was being extracted from the position of power by obtaining something from the SPAs which was resisted. Other than SA in Offer 1A, no SPA asked for a volume discount for sterile fluids on an exclusive basis, detached from PD."
The facts in relation to Offer 1A may be summarised as follows. (While this summary is adequate for the purposes of the present appeal, it is not intended to foreclose any issue that would arise if the case were remitted to the Full Court.) In July 2000, the Department of Human Services of South Australia issued a public request for tenders in relation to various pharmaceutical products, including LVP, PD and PN fluids and IS. The Department was advised by the Strategic Procurement Unit. Tenders were received from the first respondent, and from Gambro and Fresenius. Fresenius tendered for PD products, as did Gambro. Gambro made offers on a bundled and unbundled basis in relation to haemodialysis and haemofiltration products. The first respondent tendered for all products. Its Offer 1 was an item-by-item bid to supply all items for two years (with options for extensions). Its Offer 2 was a combined bid for all items on an exclusive basis for five years with volume discounts. The Department requested a revised offer (to be called Offer 1A), being for a five-year term for the products in the tender but excluding those renal products the subject of a supplementary tender. The request was for an offer for a sole and exclusive supply of sterile fluids, not including PD fluids. A volume discount was sought in exchange for sole and exclusive supply of sterile fluids. This was the first time any SPA had asked for a tender on an exclusive and long-term basis which excluded PD fluids. The first respondent, in Offer 1A, offered no discount from the item-by-item prices. Furthermore, Offers 1 and 1A (when PD fluids were added) would both cost $5,914,291, whereas the bundled Offer 2 would cost $4,501,053. The first respondent's bundled offer (Offer 2) for IV fluids and PD fluids was cheaper than its item-by-item offer for IV fluids alone. The Department protested, and raised concerns that the first respondent's conduct might be in breach of s 46 of the Act. Offer 1A was not accepted. Subsequently a different offer from the first respondent was accepted.
Allsop J found that the conduct of the first respondent in relation to Offer 1A was a taking advantage by the first respondent of its substantial degree of power in the sterile fluids market for the purpose of preventing competition in the PD market. He said:
"The purpose of the bid and its structure was to foreclose the likelihood or restrict the possibility of a competitor's bid having any realistic prospect of success. The stubbornness of [the first respondent's] attitude to the request for Offer 1A in SA in 2001 reflects the reality of the purpose of the structure of the bids. To give a genuine discount for volume would be to make Fresenius' and Gambro's PD bids ones that had realistic prospects of success. It was that that was to be prevented, thereby protecting the PD revenue stream."
The conduct which would have contravened s 46 but for the derivative immunity was conduct that was unilateral. South Australia was not a party to it. Indeed, South Australia protested that it was unlawful (although South Australia now supports the stand taken by the first respondent). Offer 1A was not accepted, and did not find ultimate expression in a contract between the first respondent and the State.

As to s 47, there was no dispute that, subject to the question of immunity, the first respondent's conduct fell within s 47(2) of the Act, "because of the bundling of its tenders". The question was whether s 47(10) was enlivened, and that depended upon whether the conduct had the purpose of substantially lessening competition. Allsop J regarded the tender system used by the States as the critical aspect of the process. He held that it was the first respondent's purpose to ensure so far as possible that the process of tendering would not bring about realistically competitive bids for PD products. He said:
"Each of the SPAs and the State governments which put in place a tender process intended that the operation of that process would produce real competition for the products the subject of the tender process. The purpose of Baxter was ... to structure the bids made by it in a way to prevent rival bidders for PD products from being able to put forward bids that were realistically competitive, by the existence of credible alternative high item-by-item pricing. The purpose was to ensure, as far as possible, that the competitive process of the tender process would not bring about realistically competitive bids for PD products by tying or bundling PD products to sterile fluids, and by providing a credible alternative which would make a choice of any likely rival PD product financially damaging to the State.
Is that a purpose of 'lessening competition'? In my view it is. The competitive process here was the tender system used by the States. Suppliers in the relevant field were asked to bid on an hypothesis that each would be competing in a process that would be conducted in such a way as would enable each, subject to price and quality considerations, to have a realistic prospect of success ... Here ... one may conclude that the rivals' bids are not competitive by reason of the realistic consequences that will occur to the buyer if the condition imposed by one rival on its offer to supply is not complied with. In those circumstances, it is the perceived consequences of not accepting the offer of bundled supply, that is, of not accepting the offer amounting to exclusive dealing within s 47(2), which hinders the effective operation of the tender process in relation to PD products. That plainly was the purpose of the bundled bids. That purpose, in my view, is one directed to hindering the competitive process of the tender bids and so hindering competition."
Here again, the finding of the primary judge related only to pre-contract conduct. There was no similar finding in relation to entering into the contracts, or to the supply of goods under them. Allsop J did not consider that the contracts themselves had any substantial effect on competition.
Events in the Full Court
In the Full Court, both the appellant and the first respondent challenged these conclusions: the appellant on the ground that there were other contraventions of ss 46 and 47 in addition to those found by Allsop J; the first respondent on the ground that (apart from the question of immunity) there was no contravening conduct. The Full Court did not deal with those issues. Consequently, the specific focus of the argument in this Court concerning the decisions of Allsop J, and the Full Court, concerned those aspects of the first respondent's conduct that Allsop J found would have contravened the Act but for the derivative immunity. That conduct was all pre-contract and, in the sense earlier explained, unilateral. Nevertheless, it is to be remembered that the appellant's claims of contravention covered the making and performance of the now-expired contracts.
The legal position of the second, third and fourth respondents
Sections 46 and 47 of the Act did not apply to the conduct of the second, third and fourth respondents, or any other State or Territory government involved in procuring sterile fluids or PD products from the first respondent.
That is because it was conceded that the procurement did not take place in the course of carrying on a business by what the Act describes as the Crown in right of a State or Territory. The appellant's application did not allege any contravention of the Act by any State or Territory or seek any order or relief against any State or Territory. Indeed, the application in its original form did not join any State or Territory as a party. The injunctive relief sought was expressed so as to preserve the contractual rights of the States.
The reasons why ss 46 and 47 did not apply to any conduct of the second, third and fourth respondents may be stated briefly. It was held by this Court in Bradken[6] that the Act, as it stood in 1978, did not bind the Crown in right of a State. The principle applied in Bradken was expressed by Gibbs ACJ as follows[7]:
"It is an established rule of construction that no statute binds the Crown unless the Crown is expressly named therein or unless there is a necessary implication that it was intended to be bound; there will be such a necessary implication if it is manifest from the very terms of the statute that it was the intention of the legislature that the Crown should be bound."
[6](1979) 145 CLR 107.
[7](1979) 145 CLR 107 at 116 (references omitted).
That principle of construction was reconsidered, and modified, by this Court in 1990 in Bropho v Western Australia[8]. After pointing out that, in this context, "the Crown" signifies not only the Sovereign but also the executive government, its employees and agents, Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ said[9]:
"For so long as 'the Crown' encompassed little more than the Sovereign, his or her direct representatives and the basic organs of government, there may well have been convincing reasons for an assumption that a legislative intent that general statutory provisions should bind the Crown and those who represent it would be either stated in express terms or made 'manifest from the very terms of the statute'. The basis of an assumption to that effect lay in a mixture of considerations: regard for the dignity and majesty of the Crown; concern to ensure that any proposed statutory derogation from the authority of the Crown was made plain in the legislative provisions submitted for the royal assent; and, the general proposition that, since laws are made by rulers for subjects, a general description of those bound by a statute is not to be read as including the Crown ...
Whatever force such considerations may continue to have in relation to legislative provisions which would deprive the Crown 'of any part of [the] ancient prerogative, or of those rights which are ... essential to [the] regal capacity' ... they would seem to have little relevance, at least in this country, to the question whether a legislative provision worded in general terms should be read down so that it is inapplicable to the activities of any of the employees of the myriad of governmental commercial and industrial instrumentalities covered by the shield of the Crown."
[8](1990) 171 CLR 1.
[9](1990) 171 CLR 1 at 18-19.
Their Honours emphasised that what was involved was a general principle of statutory construction, not some prerogative power of the Crown to override a statute, or dispense with compliance[10]. This is of some present importance, because some of the arguments for the respondents about derivative immunity had about them a flavour of assertion of executive prerogative.
[10](1990) 171 CLR 1 at 15.
The Court in Bropho concluded that the inflexible rule as formulated, for example, in Bradken, should give way to a more flexible approach to construction that took account of the nature of the statutory provisions in question and the activities of government to which they might apply. Making the Commonwealth or a State liable to prosecution might be one thing. Subjecting the employees of a governmental corporation to general requirements enacted for the public benefit might be another. The joint reasons said[11]:
"Implicit in that is acceptance of the propositions that, notwithstanding the absence of express words, an Act may, when construed in context, disclose a legislative intent that one of its provisions will bind the Crown while others do not and that a disclosed legislative intent to bind the Crown may be qualified in that it may, for example, not apply directly to the Sovereign herself or to a Crown instrumentality itself as distinct from employees or agents. Always, the ultimate questions must be whether the presumption against the Crown being bound has, in all the circumstances, been rebutted, and, if it has, the extent to which it was the legislative intent that the particular Act should bind the Crown and/or those covered by the prima facie immunity of the Crown." (emphasis added)
[11](1990) 171 CLR 1 at 23-24.
Brennan J agreed with the joint judgment, saying[12]:
"[T]he presumption cannot be put any higher than this: that the Crown is not bound by statute unless a contrary intention can be discerned from all the relevant circumstances. As the Court must determine whether the legislature intended (or would have intended had the question been addressed) that the statute should affect the activities of the Executive Government, the circumstances which properly relate to that question must be considered. Those circumstances include the terms of the statute, its subject matter, the nature of the mischief to be redressed, the general purpose and effect of the statute, and the nature of the activities of the Executive Government which would be affected if the Crown is bound."
[12](1990) 171 CLR 1 at 28.
At the time of Bradken, the Act contained s 2A. The express provision that the Act bound the Crown in right of the Commonwealth in so far as it was carrying on a business was treated by some members of the Court as a strong indication that it did not bind the Crown in right of a State[13]. When, in 1995, s 2B was added, providing that certain provisions of the Act bound the Crown in right of a State or Territory when carrying on a business, the conclusion reached in Bradken was reversed in so far as the Crown was carrying on a business, but reinforced in so far as the Crown was not carrying on a business[14].
[13](1979) 145 CLR 107 at 116, 136.
[14]See Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 348-349 [22].
Although the conduct in the present case found to fall within the terms of ss 46 and 47 was unilateral conduct of the first respondent, the terms of the Act cover (although they are not limited to) conduct that includes making or giving effect to contracts. Indeed, some of the contraventions alleged but not found against the first respondent were of that kind. There is nothing unusual about a circumstance in which making or giving effect to a contract involves an offence by one party to the contract but not by the other. The consequences of such illegality for the rights of the respective parties will not necessarily be the same[15]. Furthermore, there is nothing unusual about the Act applying to one party to a transaction, or proposed transaction, but not to the other. Leaving aside the extended application given by s 6, ss 46 and 47 according to their terms apply to conduct by corporations, not sole traders or partnerships. In a transaction between a corporation and an individual, the provisions may apply to the corporation but not to the individual. Differential application of legislation to parties to a contract is commonplace, although working out the legal consequences may be complex.
[15]Treitel, The Law of Contract, 11th ed (2003) at 480-490; Phoenix General Insurance Co of Greece SA v Halvanon Insurance Co Ltd [1988] QB 216 at 273; Australian Broadcasting Corporation v Redmore Pty Ltd (1989) 166 CLR 454 at 463-464.
In Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd[16], Mason J said:
"The principle that a contract the making of which is expressly or impliedly prohibited by statute is illegal and void is one of long standing but it has always been recognized that the principle is necessarily subject to any contrary intention manifested by the statute. It is perhaps more accurate to say that the question whether a contract prohibited by statute is void is, like the associated question whether the statute prohibits the contract, a question of statutory construction and that the principle to which I have referred does no more than enunciate the ordinary rule which will be applied when the statute itself is silent upon the question."
[16](1978) 139 CLR 410 at 423.
That passage was cited by Kerr LJ in Phoenix General Insurance Co of Greece SA v Halvanon Insurance Co Ltd[17], where his Lordship said that when a statute contains a unilateral prohibition on entry into a contract, it does not follow that the contract is void[18]. Whether or not the statute has this effect depends upon the mischief which the statute is designed to prevent, its language, scope and purpose, the consequences for the innocent party, and any other relevant considerations. Ultimately, the question is one of statutory construction. As was pointed out in SST Consulting Services Pty Ltd v Rieson[19], the Act is far from being silent upon the question of the consequences of illegality, but, rather, contains elaborate provisions. That is not to say that the express provisions of the Act answer all questions that may arise, but they answer many of them, and set the context in which others are to be resolved.
[17][1988] QB 216 at 270.
[18][1988] QB 216 at 273.
[19](2006) 225 CLR 516 at 527 [30].
It should also be remembered that, as Gibbs J said in McGraw-Hinds (Aust) Pty Ltd v Smith[20], the fact that an offence is one that may not be committed by the Crown is no reason for concluding that it may not be committed against the Crown. That was a case in which a Queensland statute, which did not bind the Crown, prohibited conduct involving an assertion of a right to payment for a directory entry. Such an assertion was made to the Queensland Government Tourist Bureau. The conduct in making the assertion was held to be covered by the prohibition. On its true construction, the Crown was intended to be protected by the prohibition, which therefore applied to conduct in relation to government agencies although it did not apply to conduct by government agencies.
[20](1979) 144 CLR 633 at 643-644.
Section 2 of the Act states the object as enhancing the welfare of Australians through the promotion of competition and fair trading. Identifying the operation of the Act as a benefit or a burden for government agencies, even in a particular instance, may not be straightforward. Plainly, in the case of procurement of supplies through the tender process, the anti-competitive practice of collusive tendering often would harm directly the interests of the procuring agency. That would be a form of conduct in relation to the Crown in right of a State, but it seems improbable in the extreme, at least since 1995, that the Act was not intended to apply to such conduct. It would appear to fall squarely within the authority of McGraw-Hinds (Aust) Pty Ltd v Smith. What, then, of the conduct found by Allsop J to have fallen within the scope of s 46 – that is, the conduct in relation to Offer 1A? Assuming Allsop J otherwise to have been correct, the direct harm caused by such conduct was to the first respondent's competitors in the market for PD products, but it is difficult to understand why anti-competitive behaviour in relation to that market would not have affected, at least indirectly, the interests of the procuring agency. It was not conduct which South Australia encouraged. It was conduct about which South Australia complained, at least then, although it does not do so now. Similarly, as to s 47, Allsop J found that the purpose of the conduct of the first respondent was to defeat the States' desire for a competitive tender process. Moving away from the particular facts of the present case, promotion of competition and fair trading is at least as likely to be for the benefit of government purchasing authorities as it is to be a potential invasion of government interests. To describe the conclusion for which the appellant contends as one that adversely affects State interests is at least an over-simplification. It may be added that, if State Parliaments see State interests to be threatened by competition law, they have the power of exemption given by s 51(1) of the Act, provided, of course, they are willing to accept the political responsibility of exercising that power with the necessary specificity.
There was no pleading, and no finding by Allsop J, as to whether any of the SPAs were corporations or as to any fact relevant to s 6 of the Act. In any event, once it was accepted that they were not in any relevant respect carrying on a business, the plain inference from s 2B is that ss 46 and 47 did not apply to the SPAs. It is necessary now to consider what, if anything, flows from that as to the application of ss 46 and 47 to the conduct of the first respondent in relation to its dealings or proposed dealings with them, and, in particular, to the conduct found by Allsop J to fall within the terms of those provisions. In the case of the conduct found to fall within s 47, it was entirely pre-contractual. In the case of the conduct found to fall within s 46, it did not result in any contract. However, the appellant also argues that the conduct of making and performing contracts involved, or could involve, contraventions of ss 46 and 47 by the first respondent, and that possibility means that there is a wider question to be considered.
The legal position of the first respondent
The starting point for this enquiry is the decision in Bradken. The headnote in the authorised report of that case simply states that it decided that the Act did not bind the Crown in right of a State. Section 2B later reversed that position so far as the Crown in right of a State (or Territory) carries on a business, but it is still the position otherwise. What matters for this appeal is the consequence. That question arose in Bradken against a somewhat confusing procedural background. During the course of argument in the present case, reference was made to the court record in Bradken. The case involved a claim for injunctive relief by manufacturers of rolling stock. The applicants were competitors of the first, third, fourth and fifth respondents. The second respondent, the Queensland Commissioner for Railways, a corporation, was a Queensland government authority which was a purchaser of rolling stock. In early 1978, the second respondent agreed to acquire rolling stock from the other respondents, not by the usual process of competitive tender, but in circumstances that allegedly contravened s 45 or s 47 of the Act. It was part of the agreement that the first and fifth respondents would provide finance to the second respondent for the construction of the railway on which the rolling stock was to be used. This was the result of negotiations that had extended over many years, since before the commencement of the Act. The merits of the claim that the conduct of the respondents, or any of them, fell within s 45 or s 47 are presently irrelevant and, indeed, were never decided. After the applicants commenced proceedings against all respondents, the case was removed into this Court to decide a defence raised by the second respondent. The defence was that the Act did not apply to him because he was not a trading corporation and was an instrumentality or agent of the Crown in right of the State of Queensland which was not bound by the Act. Another presently irrelevant defence also was raised. This Court, by majority, upheld the defence that the Commissioner was an instrumentality or agent of the Crown in right of the State of Queensland and was not bound by the Act. Furthermore, the Court held that the defence raised was a bar to the granting of the relief sought in the applicants' points of claim pars 34(1) and 34(2). Those paragraphs sought injunctions restraining the first, second and fifth respondents from giving effect to the contract arrangement or understanding complained of. It was also held to be a bar to the granting of the relief sought in pars 34(3) and 34(4), which sought general restraints against exclusive dealing, "in so far as that relief is sought upon the basis of the allegations presently made in the points of claim."[21] The matter was remitted to the Federal Court. As appears from the report of the argument[22], the primary stance of counsel for the applicants when the case reached this Court was to concede that no relief could be obtained against the Commissioner, but to seek to discontinue and proceed only against the other respondents. In that connection, he indicated that he would wish to amend, and base a claim for relief on pre-contract conduct. Gibbs ACJ said[23]:
"The applicants indicated that they wished to amend their points of claim in the Federal Court, to raise a new case that the respondent companies had, contrary to the Trade Practices Act, engaged in conduct (pre-contractual conduct it was called) in which the Commissioner played no part. Nothing that I have said is intended to indicate that the Commissioner would be a necessary party to the proceedings if that were the only case presented against the respondent companies – that question is not before us and I express no views upon it."
[21](1979) 145 CLR 107 at 141.
[22](1979) 145 CLR 107 at 110-111.
[23](1979) 145 CLR 107 at 113.

Thus, the decision in Bradken left unresolved any issue as to alleged contraventions of the Act in the pre-contractual conduct of the respondents, other than the Commissioner. What the Court decided, however, was that the relief sought in the existing points of claim, under s 80 of the Act, was barred by the defence that the Crown in right of the State of Queensland was not bound by the Act. That relief was an injunction restraining the relevant respondents, including the Commissioner, from giving effect to the provisions of the contract, arrangement or understanding contrary to s 45 or s 47 of the Act. Central to those provisions were the financing arrangements for the railway. The Court decided that ss 45, 47 and 80 did not empower a court to make orders restraining the parties from giving effect to those contracts.
The reasons given in Bradken for the conclusion that ss 45 and 47 of the Act did not apply to the conduct of the Queensland Commissioner for Railways must now be regarded, in the light of this Court's decision in Bropho, as too widely expressed. The appellant submits, correctly, that the same is true of the reasons given for the conclusion that ss 45, 47 and 80 did not empower a court to grant the relief sought in the points of claim, in their existing form. It is also important to note what was left undecided by Bradken. Bradken did not decide that the Act had no application to any conduct of the respondents other than the Commissioner in relation to their dealings with the Commissioner. It did not decide that a corporation dealing with the Crown in right of a State is unaffected by the Act. It did not decide, for example, that corporations are free to engage in collusive tendering when bidding for government contracts, even though it noted with approval the United Kingdom decision, concerning a different legislative scheme, in In re Telephone Apparatus Manufacturers' Application[24].
[24][1963] 1 WLR 463; [1963] 2 All ER 302; (1963) LR 3 RP 462.
Having concluded that ss 45 and 47 of the Act did not apply to the Queensland Commissioner for Railways, as an emanation of the Crown in right of the State of Queensland, Gibbs ACJ went on[25]:
"It of course follows that the applicants cannot obtain the relief which they seek against the Commissioner, but can they obtain the relief sought against the respondent companies? I have already pointed out that such relief, if granted, would invalidate transactions to which the Commissioner is a party. The first two claims are for injunctions to restrain the respondent companies concerned from giving effect to the provisions of contracts, arrangements or understandings to which the Commissioner was a party. An injunction restraining one of the parties to a contract from completing it affects not only the party against whom it is made; it equally affects the other party to the contract. The third and fourth claims are for injunctions restraining certain of the respondent companies from engaging in the practice of exclusive dealing, which, according to the points of claim, consists in providing, or agreeing to provide, finance and/or financial assistance to the Commissioner on certain conditions. Those injunctions, if granted, will affect the Commissioner as much as the respondent companies. In other words, if the remedies sought are granted against the respondent companies, the Commissioner will be prejudiced by the operation of the Trade Practices Act just as much as if its provisions had been directly enforced against him." (emphasis added)
[25](1979) 145 CLR 107 at 123.
The Acting Chief Justice then referred to a corollary of the proposition that the Act did not bind the Crown. He quoted Romer LJ who said, in Clark v Downes[26]: "The Acts not binding the Crown, it is the duty of the courts so to construe the Acts that the Crown and its property are in no way prejudicially affected by the Acts." After referring to other authorities Gibbs ACJ dealt with the corollary thus[27]: "It is not necessary to explore the limits of this principle." One reason it was unnecessary to explore the limits of the principle was that the case was to be remitted to the Federal Court to enable the applicants to re-frame their case against the respondents other than the Commissioner.
[26](1931) 145 LT 20 at 22.
[27](1979) 145 CLR 107 at 124.
Stephen J, having held that the Act did not bind the Crown, said[28]: "Once this be concluded it follows that the Act will not only not apply directly to the Commissioner but will also not apply so as to prejudice its interests when in contractual relationship with parties to whom the Act clearly applies or when otherwise interested in transactions affecting those parties (In re Telephone Apparatus Manufacturers' Application[29])." This, it is to be observed, treated the respondents other than the Commissioner as parties "to whom the Act clearly [applied]".
[28](1979) 145 CLR 107 at 129.
[29][1963] 1 WLR 463; [1963] 2 All ER 302; (1963) LR 3 RP 462.
Mason and Jacobs JJ said of the corollary that "the absence of [a legislative] intention to bind the Crown in right of Queensland will not only exonerate it from the direct application of the statutory provisions but will also exonerate from the application of those provisions the contracts arrangements or understandings made by that Crown and the other parties thereto as well."[30]
[30](1979) 145 CLR 107 at 138.
The other member of the Court, Murphy J, dissented. Both Stephen J and Murphy J said that the Court had not had the benefit of full argument on all issues[31]. However that may be, the Court, beyond making it plain (by remitting the issue of pre-contractual conduct to the Federal Court) that it was not finding that the Act did not apply to the other respondents, and that it was unnecessary to explore the limits of the principle involved, left unresolved a number of questions of present relevance.
[31](1979) 145 CLR 107 at 128, 141.
Two things are clear. First, the proposition applied in Bradken was regarded as a corollary of the principle about Crown immunity. Secondly, both the proposition about Crown immunity and its corollary are principles of statutory construction. The Court's statement in Bradken of the principle about Crown immunity no longer accurately represents the law. It has been overtaken by the decision in Bropho. Despite the statement in the joint judgment that the effect of its reasoning was not to overturn the settled construction of particular existing legislation, the fact that that reasoning was enunciated alone requires reconsideration of its statement of the corollary. Furthermore, in the application of the principle, it being one of statutory construction, it is necessary to consider changes to the Act since Bradken. It should also be noted that Bradken contained no discussion of a related and wider question of statutory construction: how does the Act operate in the (not uncommon) case of a contract between a corporation and a party who is not bound by the Act?
To begin with, for the purposes of this case it is necessary to be more precise about the proposition of construction that is the corollary of the principle that is now to be found in Bropho. In Wynyard Investments Pty Ltd v Commissioner for Railways (NSW)[32], Kitto J said (references omitted):
"The cases in which a statutory provision not binding on the Crown must be denied an incidence upon a subject of the Crown because that incidence would be in legal effect upon the Crown fall into a few broad classes. There is first the class of cases where a provision, if applied to a particular individual or corporation, would adversely affect the exercise of an authority which he or it possesses as a servant or agent of the Crown to perform some function so that in law it is performed by the Crown itself. Next there is the class of cases in which a provision, if applied to a particular individual or corporation, would adversely affect some proprietary right or interest of the Crown, legal equitable or statutory. And finally there is an anomalous class of cases where a provision creating a liability by reference to the ownership or occupation of property would, in its application in respect of certain kinds of property, impose a burden upon the performance of functions which, though not performed by servants or agents of the Crown, are looked upon by the law as performed for the Crown."
[32](1955) 93 CLR 376 at 393-394.
We are concerned with the second of these classes, bearing in mind that what is involved is the "incidence ... in legal effect" upon the Crown. General references to unspecified forms of prejudice to interests of the Crown in a context such as this are unhelpful. There were references in the argument for the respondents to the "right" of States to enter into contracts, where what was in contemplation would be described more accurately as a freedom. There is also a risk of confusing governmental, commercial, or even political interests with legal, equitable or statutory rights and interests. From one point of view, it may be in the interests of a government for it, and anyone who deals with it, to have complete freedom to contract, but in reality no one has such freedom. There are many laws, some of which apply to governments and some of which do not, that constrain freedom of contract. Some of those laws that do not apply to governments have an indirect effect upon governments, in their application to people dealing with governments. Some of those laws operate for the protection of governments. A law to promote competition and fair trading may, in some of its aspects, operate in that way. For reasons already given, whether and to what extent it is to the advantage of executive governments, Commonwealth or State, for corporations dealing with them to be unfettered by laws which promote competition, is a question to which there is no simple answer. Because of its power to make laws with respect to trading corporations, it is a question on which the language of the federal Parliament's legislation is decisive, subject to s 51(1).
In Wynyard Investments[33], Kitto J said:
"The object in view is to ascertain whether the Crown has such an interest in that which would be interfered with if the provision in question were held to bind the corporation that the interference would be, for a legal reason, an interference with some right, interest, power, authority, privilege, immunity or purpose belonging or appertaining to the Crown."
[33](1955) 93 CLR 376 at 396.
The need for concentration on legal consequences in this context has been stressed in recent times by this Court in NT Power Generation Pty Ltd v Power and Water Authority[34]. The principle of construction to be applied is that, since the Act does not bind the Crown in right of a State or Territory when it is not carrying on a business, then, save to the extent to which a contrary intention appears, the Act will not be read so as to divest the Crown of proprietary, contractual or other legal rights or interests. Consistently with Bropho, such a contrary intention may appear from the language of the Act, and its objects and subject matter as emerging from that language.
[34](2004) 219 CLR 90 at 152 [170].
The construction of the Act
For the reasons already given, and particularly because of the terms of s 2B, ss 46 and 47 of the Act, even when the Crown is acting through a corporation as defined, or in any extended application of the Act under s 6, do not apply to conduct of the Crown in right of a State or Territory so far as the Crown does not carry on a business. Sections 46 and 47 did not apply to any conduct of the second, third and fourth respondents in this case.
At the same time, it would be wrong to conclude that ss 46 and 47 had no application to any conduct of the first respondent in relation to its dealings with the second, third and fourth respondents. The first respondent was a trading corporation. A conclusion that, in carrying on dealings with a government in the course of its own business, it enjoyed a general immunity not available to the government when the government was carrying on business itself would be remarkable. Such a conclusion would be impossible to reconcile with the object of the Act as now declared in s 2. Furthermore, such a conclusion would go far beyond what is necessary to protect the legal rights of governments, or to prevent a divesting of proprietary, contractual and other legal rights and interests. As a result of changes to the Act since Bradken, State and Territory governments no longer enjoy any general immunity from the Act. Acting under s 51(1), State and Territory Parliaments may legislate to protect governmental interests, but the legislative emphasis on the specificity with which they must do that (increased since Bradken) draws attention to the importance attached to the pursuit of the object declared in s 2.
One example is sufficient to demonstrate the unacceptable consequences of a general proposition that s 47 of the Act did not apply to the first respondent in its dealings with the SPAs. Section 47(3) covers refusals to deal. Suppose the first respondent, over the protests of a SPA, had refused to supply sterile fluids unless the SPA agreed not to acquire PD products from anyone else. It is difficult to take seriously a suggestion that the Act was not intended to cover such conduct.
The real question is the extent to which the reach of ss 46 and 47 of the Act, and the provisions relating to remedies, in their potential application to the conduct of the first respondent, is modified by the operation of the principle of construction discussed above.
The argument for the respondents, accepted by Allsop J and the Full Court, was expressed by Allsop J as follows:
"The respondents submitted that all [the] relief [claimed] impermissibly applied the Act to the Crown by denying it the right, power and capacity that it had and has to enter a contract of such kind as it wishes. This was said to be an interference directly with its rights and not a mere adjectival interference with its commercial interests."
Underlying this argument is the idea that the Act operated so as not to enact any law that would circumscribe the freedom of the Crown in right of a State or Territory to make any kind of contract it wished, and, furthermore, that the Act preserved the Crown's freedom in that respect, by providing that corporations dealing or negotiating with the Crown should be free to propose and make any kind of contract, unfettered by any constraint under the Act. These ideas cannot be supported by reference to any established principle of statutory construction, and they are impossible to reconcile with the purpose and subject matter of the Act. It is one thing to read the Act so as not to divest the Crown of legal rights. It is another thing altogether to read the Act as giving an executive government (as distinct from a Parliament acting under s 51(1)), including all its servants and agents, a freedom not enjoyed when the government itself is carrying on business, from any impact of laws enacted for the promotion of competition and fair trading in the public interest. And it is even more unlikely that that freedom extends to all persons dealing with that executive government.
Allsop J accepted the following proposition:
"If a State or Territory has a contract with a non-government party, the Act is to be construed as not applying to that contract such that the State or Territory and non-government party [are] not bound by the terms of the Act in relation to the entry into and performance of that contract."
If the expression "is to be construed" suggests some inflexible rule of construction, the proposition is inconsistent with Bropho. Even if the expression is understood only as a prima facie approach to construction, it is too wide. In order to protect legal rights of the Crown, it is not necessary to deny that entering into or performing a contract could involve a contravention of s 46 or s 47 by a non-government party. As was pointed out earlier, many statutes, and the Act in particular, may produce the consequence that making or performing a contract is illegal for one party but not for the other. When that occurs, the result is not necessarily general unenforceability of the contract. In the case of the Act, that is reinforced by s 4L as explained in SST Consulting Services Pty Ltd v Rieson[35]. The outcome is determined by the application of the detailed legislative scheme concerning remedies. It is not dictated by a general conclusion that, in order to preserve the Crown's immunity, it is necessary also to extend a general immunity to any non-government party negotiating or contracting with the Crown.
[35](2006) 225 CLR 516.
Finally, Allsop J dealt with the problem that, on his findings, the only conduct of the first respondent that otherwise fell within s 46 or s 47 was pre-contract conduct and, in the case of s 46, was conduct that never led to a contract. He said:
"This leaves the issue of whether the principle [of derivative immunity] only prevents the application or operation of the Act to the entry into or giving effect to the impugned contracts once formed, as crystallised legal rights, or whether it extends to prevent the application or operation of the Act to the commercial negotiations leading up to the formation of the impugned contracts. If the former, then Baxter will have contravened s 46 of the Act by making Offer 1A in SA and s 47 of the Act by negotiating, and making the offers it made leading up to the formation of, the impugned agreements. Not only will this have the consequences that declarations to that effect will be made and that Baxter will be liable to the imposition of penalties, but also, Baxter can be restrained from the repetition of such conduct in the future. This would thereby prevent or foreclose the State or the ACT from making a contract with Baxter by preventing its negotiation, notwithstanding that if such a contract were to be formed the Act would not extend to either Baxter or the State or the ACT as to its formation and performance."
The premise that the Act would not apply to the first respondent in relation to the formation or performance of the contract is unwarranted. Even if it were correct, it would not follow that pre-contract conduct, or conduct that never resulted in a contract, would be beyond the reach of the Act. Allsop J dealt with that question by reference to the States' and Territories' freedom of contract, which he described as an aspect of the prerogative, or at least of the relevant polity's "legal situation". He referred to the initiation by governments of a tender process and said:
"Does, then, the Act operate to make it unlawful for non-government parties to respond to such tenders or invitations or to participate in negotiation if a specified norm of conduct is contravened? If the answer to that were yes, it would follow (at least insofar as the response was such as to be within the contemplation of the request or invitation) that the legal rights, interests or prerogatives of the polity in question were qualified or impaired. Thus, the answer must be, no."
This reasoning, also, seems to seek to apply some inflexible rule, but even as an expression of an approach to construction it goes beyond the established principle. The concept of responding to an invitation to tender is pregnant with uncertainty. Obviously the learned judge regarded Offer 1A as a response. This then was qualified by references to conduct "within the contemplation of the request or invitation". What is meant by that is unclear. The reaction of South Australia to Offer 1A hardly suggests that the conduct of the first respondent was within its contemplation. Even if it had been, the purpose of the Act is to promote competition, which is a process which operates for the public benefit, not to satisfy the expectations of parties. Whether it was open to the first respondent to argue, as it did, successfully, that the conduct of the SPAs was of factual relevance in considering whether its conduct had the necessary anti-competitive purpose or effect can be left to one side for present purposes. As a matter of construction of the Act, however, it is wrong to conclude that it operates to preserve unfettered the contractual capacities of the Crown, to the extent of withholding the application of the Act from conduct by non-government parties in response to an invitation to tender. To return to an example given earlier, suppose a response to an invitation to tender is a refusal to supply except on certain exclusive terms, and that refusal is made with the purpose of lessening competition. It is unsatisfactory to make the application of the Act depend on whether this is a response that was within the contemplation of the procuring authority. It is also at odds with the restrictions imposed by s 51(1) on the capacity of a Parliament to exempt anti-competitive behaviour from the Act. It seems to give the public officials of States and Territories a wider power to give dispensations from the operation of Commonwealth law than State or Territory legislatures.

In the United Kingdom, the doctrine of Crown immunity was formerly applied to the enacted competition law based on the decision in In re Telephone Apparatus Manufacturers' Application[102]. However, this position was altered by the Competition Act 1998 (UK). By s 73 of that Act, the provisions of the Act bind the Crown, save that it is not criminally liable or liable for a penalty, nor is the Queen liable in her private capacity. Thus, in the land of its origins, the analogous immunity is now governed by statute rather than by the common law of Crown immunities or by the royal prerogative.
[102][1963] 1 WLR 463 at 482-483 per Upjohn LJ; [1963] 2 All ER 302 at 313 (CA).
The application of Crown immunity to the Combines Investigation Act 1970 (Can) was upheld in R v Eldorado Nuclear Ltd[103]. However, this approach was criticised strenuously by two of the judges, in language relevant to the understanding of modern Australian governmental immunity. Thus, Dickson J observed[104]:
"Why that presumption [of Crown immunity] should be made is not clear. It seems to conflict with basic notions of equality before the law. The more active government becomes in activities that had once been considered the preserve of private persons, the less easy it is to understand why the Crown need be, or ought to be, in a position different from the subject."
[103][1983] 2 SCR 551.
[104][1983] 2 SCR 551 at 558.
Wilson J, who dissented in part from the majority, added[105]:
"We might ask in this case whether Parliament ever contemplated that the respondents would go about the implementation of their statutory purposes by means of an illegal conspiracy with others, counting on the protection of their Crown immunity and leaving their co-conspirators to the full rigours of the law."
[105][1983] 2 SCR 551 at 592.
In the United States of America, a rule of statutory construction is observed whereby "statutes which in general terms divest pre-existing rights or privileges will not be applied to the sovereign without express words to that effect"[106].
[106]United States v United Mine Workers of America 330 US 258 at 272 (1947).
A judicially declared "state action" doctrine immunises conduct by private parties dealing with States only if it passes a two-part test laid down in California Retail Liquor Dealers Assn v Midcal Aluminum Inc[107]:
(a)The challenged restraint must be "one clearly articulated and affirmatively expressed as state policy"; and
(b)"the policy must be 'actively supervised' by the State itself".
[107]445 US 97 at 105 (1980).
The equivalent to the principle of derivative governmental immunity has been explained in the United States by express reference to constitutional concepts. Thus, in Columbia v Omni Outdoor Advertising Inc[108], Scalia J observed:
"[I]n light of our national commitment to federalism, the general language of the Sherman Act should not be interpreted to prohibit anticompetitive actions by the States in their governmental capacities as sovereign regulators … [but] this immunity does not necessarily obtain where the State acts not in a regulatory capacity but as a commercial participant in a given market."
[108]499 US 365 at 374-375 (1991).
Examinations of such questions have frequently arisen, as a matter of legal principle, in United States courts. Unsurprisingly, the expression of the immunities found by the courts has not simply picked up and applied legal notions borrowed from ideas of the traditional Crown immunities and royal prerogatives in England. An early instance was the opinion of Story J in United States v Hoar[109], later cited in this Court in Roberts v Ahern[110]. That explanation of American governmental immunity was quoted by Gibbs ACJ in Bradken as a possible rationale for a measure of governmental immunity from the requirements of general legislation, which did not depend, as such, on the Crown's traditional immunities or upon prerogatives of the Crown[111]. Thus, Story J said[112]:
"Where the government is not expressly or by necessary implication included, it ought to be clear from the nature of the mischiefs to be redressed, or the language used, that the government itself was in contemplation of the legislature, before a court of law would be authorized to put such an interpretation upon any statute. In general, acts of the legislature are meant to regulate and direct the acts and rights of citizens; and in most cases the reasoning applicable to them applies with very different, and often contrary force to the government itself. It appears to me, therefore, to be a safe rule founded in the principles of the common law, that the general words of a statute ought not to include the government, or affect its rights, unless that construction be clear and indisputable upon the text of the act."
[109]26 F Cas 329 (1821) (Case No 15,373).
[110](1904) 1 CLR 406 at 418.
[111](1979) 145 CLR 107 at 122.
[112]26 F Cas 329 at 330 (1821).
Whether such a rule, expressed and applied in this way, at a time long before the growth of the modern regulatory state[113], remains apposite as a rule of statutory construction for contemporary Australian legislation affecting government and its agencies is a very large question which was not debated in this appeal. In the approach which the parties took, this was a simple case, although the outcome was contested. I have said enough, I hope, to indicate why I do not share this common assumption as to the applicability in Australia of the rule of statutory construction stated in the uncritical and unadapted terms of Crown immunity, which the courts below, and now the majority in this Court, have embraced.
[113]White v Director of Military Prosecutions (2007) 235 ALR 455 at 468-469 [48], 505 [189].
In NT Power Generation Pty Ltd v Power and Water Authority[114], the majority reasons in this Court expressed a preference for substituting "the Executive Government of the State" or more simply "the Government" for the previous language of "Crown" immunity. Such a change in nomenclature is less important than a basic reconsideration of the content of the immunity. However, the joint reasons in this appeal revert to the old language of "Crown immunity", with all of the consequences that that notion, with its long legal history, necessarily imports. They apply to the Australian polities, undiscerningly, the legal notions derived from the privileges and prerogatives of the Crown. This is a step that, respectfully, I would not willingly take.
[114](2004) 219 CLR 90 at 149-150 [163] per McHugh ACJ, Gummow, Callinan and Heydon JJ.
Resolving the appeal
Imposition of artificiality: I have now explained why I cannot concur in the joint reasons. I do not agree to equating the States and Territories of Australia and the Commonwealth itself, as such, with manifestations of the Crown. It follows that I do not agree with the assumption of the parties to this appeal that the Constitution is irrelevant to the resolution of the matter that the parties bring to this Court. I question (as Murphy J did in the facts of Bradken[115]) concessions made in the course of the proceedings. Most especially, I question the concession of the Commission that the States involved, and the State Purchasing Authorities (SPAs), acquired the products in question in this appeal otherwise than in the course of carrying on a business[116].
[115](1979) 145 CLR 107 at 139.
[116]Joint reasons at [17].
As Murphy J said of a concession made in Bradken[117]: "I have the gravest doubts that this concession is correct." Nevertheless, it was made. The litigation was conducted on that footing. There is no alternative in this Court but to accept the concession. To do otherwise would risk inflicting a serious procedural injustice on the parties.
[117](1979) 145 CLR 107 at 139; cf [2007] HCATrans 202 at 1760.
This conclusion requires me to "consider this case artificially", as Murphy J was also required to do in Bradken[118]. I may protest at that necessity. However, there is no way that I can avoid it. One day the error of the current approach of this Court to these questions will be understood. The starting point for the enlightenment will be a reading of the reasons of Walsh J in Byrne v Ireland[119].
[118](1979) 145 CLR 107 at 141.
[119][1972] IR 241 at 272-273.
Construction and constitutionalism: I accept, as the joint reasons suggest[120], that it is difficult for this Court to address a new foundation for governmental immunities in the Australian constitutional context where the parties fail to do so and persist with past reasoning. However, unless this important topic is forever to pass under the radar, it is ultimately necessary for this Court to raise the subject itself. Otherwise, we become complicit in erroneous or imperfect reasoning. We give no corrective stimulus to questioning the assumptions of the parties and of the courts below.
[120]At [2].
In this appeal, the issue was fully addressed in questions asked of the parties. Many of the constituent governments were before the Court. The defect in past reasoning offends the Constitution itself. It is beyond time that the defect should be recognised and addressed by this Court. No rule of statutory construction can exist in Australia which is disharmonious with the provisions of the Constitution.
Upholding the Act's purposes: Pending the enlightenment, and approaching this appeal within the constraints, assumptions and concessions accepted by the parties, I am brought ultimately to the same conclusions as are stated in the joint reasons. Those conclusions accord more closely with my own approach, in many cases, to questions (uncomplicated by issues of governmental immunity) concerning the ambit and application of the Act, so as to fulfil the large national objects declared in s 2[121]. The conclusions also conform more closely with the course of statutory amendments designed to strengthen the operation of the Act. Specifically, they are more consonant with my view of how any properly expressed rule of governmental immunity in Australia would operate in respect of those corporations which, in the course of their business, engage in dealings with an Australian State or Territory government[122].
[121]Joint reasons at [64].
[122]Joint reasons at [60].
In this appeal (unlike others in which I have disagreed with earlier majorities) there is in the joint reasons what I regard as appropriate attention to the large national, economic and protective purposes of the Act. As this purposive approach to the application of the Act has been a repeated theme of my minority reasons in earlier cases on the Act[123], I will encourage the new dawn. Now that it has at last emerged, I endorse it and hope that it will survive to future cases involving the Act.
[123]See SST Consulting Services Pty Ltd v Rieson (2006) 225 CLR 516 at 534-536 [57]-[64] citing Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 205 CLR 1 at 35-36 [90]; Boral Besser Masonry Ltd v Australian Competition and Consumer Commission (2003) 215 CLR 374 at 481-482 [323]; News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563 at 602-603 [120] and Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 1 at 19-20 [56].
By reference to the object of the Act, as inserted in 1995 to reflect inter-governmental agreements in Australia concerning competition policy and its importance for the whole nation[124], I accept the observations of Mr Wright[125]:
"The parliaments of the Commonwealth, states and territories have determined that promoting competition is in the interests of all Australians because it enhances their welfare. It is difficult, therefore, to conclude that the legislatures intended that non-government parties should be able to reach anti-competitive arrangements with the Crown (when not carrying on a business) or engage in anti-competitive conduct involving the Crown (when not carrying on a business) with impunity or that arrangements of this type should be enforceable. Such an approach could potentially frustrate the achievement of the object of the Act in all markets in which the government (when not carrying on a business) is a significant participant."
[124]See eg Competition Policy Reform Act 1995 (Cth); Australia, House of Representatives, Parliamentary Debates (Hansard), 30 June 1995 at 2798.
[125]Wright, "The future of derivative crown immunity – with a competition law perspective", (2007) 14 Competition & Consumer Law Journal 240 at 278. I would re-express and redefine the supposed "Crown" immunity as "governmental immunity".
Ultimate constitutional limits: Whilst I understand the dissenting opinion of Callinan J in this appeal, I cannot embrace it. Certainly, there would, in my view, be a point beyond which federal legislation, including the Act, could not apply to activities of the States. This would follow from the text, purpose and character of the Constitution. However, to identify that point it would be necessary for a State to mount an explicit constitutional challenge to the ambit of the federal law, based on an alleged interference with its essential governmental functions[126].
[126]Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 at 50, 60-62, 78-79; Queensland Electricity Commission v The Commonwealth (1985) 159 CLR 192 at 260; Austin v The Commonwealth (2003) 215 CLR 185 at 213 [19], 245 [111].
In this appeal, the States before the Court disclaimed any such argument[127]. As well, such an argument would face difficulties in a case such as the present given the incontestable constitutional power of the Federal Parliament to make laws governing the trading conduct of Baxter, a constitutional corporation[128]. Moreover, difficulties for a constitutional challenge by the States would appear to arise in any attempt to stretch the constitutional immunities of the States themselves to apply derivatively to a private corporation such as Baxter. As these questions were not in issue, or argued, in this appeal, I will say no more about them.
[127]See [2007] HCATrans 202 at 2835, 3230, 3243.
[128]Constitution, s 51(xx), particularly following the interpretation given to that paragraph in New South Wales v The Commonwealth ("the Workchoices Case") (2006) 81 ALJR 34; 231 ALR 1.
Conclusion and orders
The Federal Court erred in concluding that Bradken governed this case. Reluctantly confining myself to the unreformed doctrine[129], Bradken must now be viewed as qualified by later decisions of this Court. For a more satisfactory exposition of the applicable law of governmental (and derived governmental) immunity in Australia, fresh attention needs to be given to the text, purpose and character of the Constitution and of the governmental polities it creates, by the will of the Australian people.
[129]cf Favell v Queensland Newspapers Pty Ltd (2005) 79 ALJR 1716 at 1723 [26]; 221 ALR 186 at 194-195. See also joint reasons at [1]-[2].
It is on these grounds that I agree in the orders proposed in the joint reasons.
CALLINAN J. It is unnecessary to restate the facts. I am however of a different opinion from the majority.
It is not to be supposed that the promotion of competition, either within a State or the whole Commonwealth, is a higher end than the provision by a State of medical services and medications for the people of that State. A supposition either way cannot be decisive of this appeal, but the facts, that in seeing to the health of its residents, a State is undertaking one of its essential constitutional functions, and one incidentally which historically is regarded as charitable[130], that the Commonwealth's role in regard to health is entirely voluntary, and that the State is a democratic constitutional polity, at least suggest that a State should in no way be impeded in acquiring medical supplies and services for its residents. To the extent that its right to do so on its own terms might be affected by federal legislation, the legislation, assuming its constitutional validity, which was not in issue here, should, in case of any doubt, be construed as intending no, or the least intrusion reasonably open on its language.
[130]See Central Bayside General Practice Association Ltd v Commissioner of State Revenue (2006) 80 ALJR 1509; 229 ALR 1.
Health services are State services
Nowhere in the Constitution is it suggested that the provision of hospitals and related health services is other than the responsibility of and an essential role of the States. This has always been the position. From the earliest colonial times, administrations interested themselves in health and established public hospitals[131]. I have used the language of "essentiality" as that was the language used by Stephen J in Murphyores Incorporated Pty Ltd v The Commonwealth[132].
[131]For example, the Colonial Hospital at Parramatta, which was commissioned by Governor Macquarie and completed in 1818.
[132](1976) 136 CLR 1 at 9.
The role of the Commonwealth
Section 51 of the Constitution nowhere suggests that the Commonwealth has any particular role in the provision of hospitals or medical or health services. That the Commonwealth has chosen to do so, indeed has in recent times done so extensively[133], does not diminish the importance and essentiality of the States' role and primary function in this field.
[133]For example, the scheme considered in Central Bayside General Practice Association Ltd v Commissioner of State Revenue (2006) 80 ALJR 1509; 229 ALR 1.
The appellant's arguments
One of the principal submissions of the appellant in this Court is that this Court's preference in NT PowerGeneration Pty Ltd v Power and Water Authority[134] for the dissenting judgment of Kitto J in Wynyard Investments Pty Ltd v Commissioner for Railways (NSW)[135] to that of the majority (Williams, Webb and Taylor JJ) was determinative of this case in its favour, and that Bradken Consolidated Ltd v Broken Hill Proprietary Co Ltd[136], to the extent that it stated, or should currently be regarded as stating the relevant law, did not exclude pre-contractual offers and negotiations from the operation of Pt IV of the Trade Practices Act 1974 (Cth) ("the Act"), whatever the position might, or might not be in relation to concluded contracts giving rise to rights and obligations. As a matter of ordinary statutory construction, the former was contravening conduct proscribed by, and not immunized from operation or application by any other provisions of the Act. On any view, the respondent supplier was subject to it.
[134](2004) 219 CLR 90.
[135](1955) 93 CLR 376.
[136](1979) 145 CLR 107.
Emphasis was placed by the appellant on a passage from the dissenting judgment of Kitto J in Wynyard[137]:
"The cases in which a statutory provision not binding on the Crown must be denied an incidence upon a subject of the Crown because that incidence would be in legal effect upon the Crown fall into a few broad classes. There is first the class of cases where a provision, if applied to a particular individual or corporation, would adversely affect the exercise of an authority which he or it possesses as a servant or agent of the Crown to perform some function so that in law it is performed by the Crown itself[138]. Next there is the class of cases in which a provision, if applied to a particular individual or corporation, would adversely affect some proprietary right or interest of the Crown, legal equitable or statutory[139]. And finally there is an anomalous class of cases where a provision creating a liability by reference to the ownership or occupation of property would, in its application in respect of certain kinds of property, impose a burden upon the performance of functions which, though not performed by servants or agents of the Crown, are looked upon by the law as performed for the Crown. These are cases in which the property concerned is used exclusively for 'the purposes of the administration of the government of the country' (to use Lord Westbury's expression in Greig v University of Edinburgh[140]); the rationale of the doctrine being that such purposes are 'to be deemed part of the use and service of the Crown' because they are 'public purposes of that kind which, by the constitution of this country, fall within the province of government and are committed to the Sovereign'[141]."
[137](1955) 93 CLR 376 at 393-394.
[138]See for example Cooper v Hawkins [1904] 2 KB 164; R v McCann (1868) LR 3 QB 677; Public Works Commissioners v Pontypridd Masonic Hall Co [1920] 2 KB 233.
[139]See Wirral Estates Ltd v Shaw [1932] 2 KB 247.
[140](1868) LR 1 Sc & Div 348 at 354.
[141]Mersey Docks v Cameron (1865) 11 HLC 443 at 505, 465 [11 ER 1405 at 1429, 1413].

The appellant seeks to read that passage as if it were a conclusive exposition of State Crown immunity. The respondents must fail, the appellant submitted, if they were unable to bring the State's relevant conduct within one or other of the categories of immunity stated by his Honour. Even if this proposition were an accurate and complete statement of the law on the topic, for reasons which will appear, the purpose, conduct and rights of the States in question do fall within it.
Disposition of the appeal
I participated in the joint judgment in NT Power[142]. On further reflection, in McNamara v Consumer Trader and Tenancy Tribunal[143] which was directly concerned with a question of statutory construction, I expressed some reservations about the breadth of the language of Kitto J in Wynyard, and its application, as a dissenting judgment, to other cases. In particular, I referred[144] to the ambiguities in his Honour's expression "some right, interest, power, authority, privilege, immunity or purpose belonging or appertaining to the Crown"[145].
[142](2004) 219 CLR 90.
[143](2005) 221 CLR 646 at 676-677 [90]-[92].
[144](2005) 221 CLR 646 at 671 [76], 677 [92].
[145](1955) 93 CLR 376 at 396.
This case, as with McNamara, is not governed by NT Power. Neither provides a basis for the universal application of the language of Kitto J in Wynyard to cases of Crown, or a like immunity. I refer to a "like immunity" because others have taken issue with the equation of State immunity with Crown immunity[146]. Nothing turns in this case upon the resolution of that issue. Before federation the colonies were largely self-governing polities, and after it, polities recognized and protected by the Constitution and having their own vice-regal appointees. Self-evidently, the States, for the government of them, need to be possessed of rights, powers, purposes, authorities and immunities not always apt for natural and other legal personalities. How such an immunity should be definitively described is not a relevant question for the resolution of this case. So too, it is unnecessary to debate any question whether there is, or is not a division or duality of the Crown in this country, as to which I agree with the pragmatic approach of Gibbs ACJ in Bradken[147]:
"I would not wish to decide whether the wider rule of construction should be adopted in preference to the narrower rule by debating the merits of the doctrine of the indivisibility of the Crown, which seems more remote from practical realities than when the Engineers' Case[148] was decided, and which is of little practical assistance in many cases".
[146]Those who dispute the equation of State immunity with Crown immunities and prerogatives often refer to Blackstone, Commentaries on the Laws of England, (1765), Bk 1 at 232. In particular, the following is cited:
"It signifies, in it's etymology, (from prae and rogo) something that is required or demanded before, or in preference to, all others. And hence it follows, that it must be in it's nature singular and eccentrical; that it can only be applied to those rights and capacities which the king enjoys alone, in contradistinction to others, and not to those which he enjoys in common with any of his subjects: for if once any one prerogative of the crown could be held in common with the subject, it would cease to be prerogative any longer. And therefore Finch lays it down as a maxim, that the prerogative is that law in case of the king, which is law in no case of the subject." (footnote omitted)
[147](1979) 145 CLR 107 at 122.
[148](1920) 28 CLR 129.
There can be no doubt, in any event, that a right arising under a contract, that is a chose in action, such as the States acquired here under their contracts with the respondent supplier, is "property" of the States, within the language of Kitto J in Wynyard. It is also something acquired, just as the negotiations and contracts were, for a purpose, medical, of the States.
The Trade Practices Act 1974 (Cth)
No party in this case raised a constitutional question. It was accepted that if the Crown in right of a State or Territory was carrying on a business, either directly, or by one of its agencies then to that extent it would be amenable to the Act. It was also accepted that in dealing with the respondent supplier, the States were not carrying on a business. None of this means however that the Court may disregard the constitutional setting and the respective constitutional roles of the appellant and the States, in giving sense and effect to the Act. All of the matters to which I have referred, the respective constitutional roles of the Commonwealth and the States, the absence of any express conferral of power in relation to health upon the Commonwealth, and the charitable nature of the States' activities in providing medical services, strongly suggest that if there were ambiguity about the exemption of the States from the relevant operation of the Act here, a construction which gave the States a real and ample exemption is preferable. There are other factors relevant to, and tending in favour of such a construction. The appellant is an executive creature of the Commonwealth, although it has special powers and a degree of independence from the Executive. On the other hand, the State purchasing authorities are the States themselves under different names. In these circumstances it is an unlikely proposition that the Commonwealth Parliament would have wished to, and intended to subject the States to the operation of the Act when the States were doing what they did here. My reference to these matters as aids to construction should not be misunderstood. They are, I would reiterate, aids only. They reinforce, to the extent that any reinforcement might be necessary, the effect of the language of the Act itself.
What is decisive, however, is that, on its ordinary construction, s 2B plainly exempts the States from the operation of the Act unless they are carrying on business, which, by common consent here they are not.
The appellant is not assisted by s 2 of the Act which declares, relevantly, that its object is to enhance the welfare of Australians by the promotion of competition and fair trading. Although not clearly articulated, there could be detected in the arguments of the appellant a contention that it knew better than the States where their best interests lay: that in a competition between the promotion of competition itself and fair trading on the one hand, and the provision of medical supplies and services and the acquisition of the means of providing them on the other, the former should prevail: that it was really in the States' own enlightened self-interest, to have their procurement activities policed by the appellant, even if the States in consequence ended up paying more for, or suffered some uncertainty in respect of, the acquisition of necessary supplies and services. I would reject such a contention. It is entirely a matter for the States how they might choose to go about performing their functions, and there is no reason to believe, even if it were relevant, that the States misapprehended where their best interests lay.
Nothing turns upon the timing of the amendments made to the Act in 1995. Indeed the States were, in a broad sense, parties to their introduction, as participants in a national programme for the reform of competition policy, themselves enacting similar legislation for intra-State operation. It is hardly likely that they would have done so with a view to hobbling themselves in carrying out any of their essential non-business functions. The fact that the amendments gave exactly the same exemption to the States in respect of their non-business activities as the Commonwealth had previously enjoyed, emphasizes, rather than detracts from the importance of State immunity in the carrying out of ordinary State non-business activities. The making of the amendments in no way weakens the force of Bradken as a binding authority in a situation of the kind which is under consideration here.
Derivative immunity
The joint judgment draws a distinction between concluded contracts and everything that occurs up to the point of their conclusion. It discusses in some detail the negotiations and the like which took place with the respondent supplier before the States agreed to buy supplies from it. Little could be more important for polities than the prudent and economical expenditure of public money in the acquisition of goods and services by them for the carrying out of their ordinary functions. The price of a lessening of competition, or, of an insult to fair trading generally, may not be too high a price for a State, even South Australia on reflection[149], to pay in acquiring its medical necessities.
[149]South Australia originally baulked at the supplier's proposed terms of trade.
It is inescapable that any impediment placed in the way of the respondent supplier in dealing with the States is equally an impediment imposed upon the latter. This is so, even if it be accepted that "illegality" may not have the same consequences for all of the parties to a contract, or that ss 80, 87 and 87A of the Act confer very wide powers upon the courts to fashion remedies to suit the particular circumstances of the case and the parties before them. The notion that the Act might have a differential application to the respondent supplier and the States here could offer no comfort to the States. The questionability of suppliers' conduct would inevitably deter the States from dealing with them. There may in some circumstances be some room for differential treatment under the Act, for example, with respect to a refusal to supply. But that is not this case. In such a situation a State itself would probably be able to invoke the Act and have it applied to suppliers. But that would be a matter for a State. In doing it they would in no way be prejudiced: rather the contrary. Indeed, insistence by the appellant or the States upon the application of the Act in those circumstances would enhance, rather than prejudice the autonomy of the States in carrying out their functions. I cannot therefore accept, as a matter of reality and practicality, that to intercept and proscribe all, or any offers, invitations to tender, discussions and negotiations up to the point of the conclusion of a contract, would be to leave unimpaired, the immunity that s 2B of the Act says the States should have. To do so would not merely impair State immunity, it would effectively destroy it, and allow s 2B little or no useful operation.
In my opinion, Bradken remains as authority covering this case, despite the subsequent decision of this Court in Bropho v Western Australia[150]. The force of what Gibbs ACJ said in the former is largely unaffected by the latter[151]:
"It is an established rule of construction that no statute binds the Crown unless the Crown is expressly named therein or unless there is a necessary implication that it was intended to be bound; there will be such a necessary implication if it is manifest from the very terms of the statute that it was the intention of the legislature that the Crown should be bound".
[150](1990) 171 CLR 1.
[151](1979) 145 CLR 107 at 116.
In Bropho the Court was considering the question whether an Act should be read so as to exclude the Crown from its operation[152]. That is not to the point here. In terms, this Act directly and expressly immunizes the conduct of the States when they are not carrying on business.
[152](1990) 171 CLR 1 at 18-19 per Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ.
There is no ambiguity about the reasoning of the Court in Bradken, nor about the conclusion reached by it. I am unable to accept that their Honours there would not have been alive to the reality that a construction of the Act which invalidated pre-contractual dealings would necessarily defeat the immunity which the Act gave the States. Nothing said in Bropho could justify that. As Gibbs ACJ said in Bradken[153]:
"An injunction restraining one of the parties to a contract from completing it affects not only the party against whom it is made; it equally affects the other party to the contract … [I]f the remedies sought are granted against the respondent companies, the Commissioner [for Railways of Queensland] will be prejudiced by the operation of the Trade Practices Act just as much as if its provisions had been directly enforced against him."
[153](1979) 145 CLR 107 at 123.
Later, his Honour referred with apparent approval to a statement by Romer LJ in Clark v Downes[154] that it was a positive duty of the courts to construe an Act so as to ensure that the Crown and its property are in no way prejudicially affected[155].
[154](1931) 145 LT 20 at 22.
[155](1979) 145 CLR 107 at 123-124.
It is no answer here to say that the prejudice to the States flowing from the proscription of pre-contractual negotiations with them by the respondent supplier would, or might be offset, or in some way diminished or rendered irrelevant because competition and fair trading as defined by the Act are more important and loftier objects than the non-business activities of the States. It is the federal Parliament which has chosen to exclude from the operation of the Act, State non-business activities. Whether, which I would doubt, that involves any, or a very extensive qualification upon the objects of the Act is not to the point. Nor is it to the point that the Act seeks to deal differently with the States when they are carrying on business. The exclusion is as obviously deliberate as it is clear.
For the reasons that I have given, and the reasons of the primary judge and the Full Court of the Federal Court, I would dismiss the appeal with costs.