Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd & Ors

[2007] HCATrans 60

[2007] HCATrans 060

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S339 of 2006

B e t w e e n -

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Applicant

and

BAXTER HEALTHCARE PTY LIMITED

First Respondent

STATE OF WESTERN AUSTRALIA

Second Respondent

STATE OF SOUTH AUSTRALIA

Third Respondent

STATE OF NEW SOUTH WALES

Fourth Respondent

Application for special leave to appeal

GUMMOW J
HAYNE J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 9 FEBRUARY 2007, AT 9.32 AM

Copyright in the High Court of Australia

__________________

MR N.J. WILLIAMS, SC:   May it please the Court, I appear with MR A.I. TONKING and MS J.S. GLEESON for the applicant.  (instructed by Australian Government Solicitor)

MR D.M. YATES, SC:   May it please the Court, I appear with my learned friend, MR I.S. WYLIE for the first respondent.  (instructed by Blake Dawson Waldron)

GUMMOW J:   There are submitting appearances from the second, third and fourth respondents.  The Court would be assisted by hearing first from you, Mr Yates.

MR YATES:   Thank you, your Honours.  Your Honours, the conduct in question was the negotiating, entering into and giving effect to certain supply agreements that had been entered into between the first respondent and various State purchasing authorities as part of the executive arm of government of the States.  Your Honours, insofar as the impugned conduct concerned entering into and giving effect to the various agreements, the conduct or the matter, we say, was plainly covered by the decision in Bradken.  The correctness of Bradken has not been called into question by any succeeding court and, in particular, there is nothing in the analysis in the Northern Territory Power by the Court which suggests that Bradken was wrongly decided or should not be followed in that regard.

Insofar as the impugned conduct concerned the negotiating of the supply agreements, we submit that the act of negotiating the contract is so intimately related to its entering into as to be inseparable from it for the purposes of analysis.  The circumstances of the pleaded case in Bradken were limited to contraventions based on entering into and giving effect to contracts, arrangements or understandings should not be taken to be submitted as limiting the principle there discussed or the basis for it to those circumstances alone.  At the end of the day there must be an offer and acceptance for there to be a contract, that the making of the contract is simply the end point of the one process by which the parties achieve a consensus ad idem.

Now, your Honours, it was found by the primary judge that Baxter was responding to requests for tenders which were structured to permit and to encourage products across categories to be bundled and supplied to the State on an exclusive basis.  The important factual matters in that regard we have set out at page 255 of the application book in paragraphs 14 to 16, in particular, the State purchasing authorities dictated the way the tender processes were constructed.  The invitations to tender themselves bundled product groups together and were otherwise called on terms that the State purchasing authorities saw fit and Baxter’s tender bids were structured in a way that conformed with what was requested by the State purchasing authorities and, as the primary judge found, its bids were both permitted and, indeed, encouraged by the State purchasing authorities.

GUMMOW J:   What are the products we are talking about?  Sterile fluids?

MR YATES:   Yes, they comprised what were known as large volume parenteral fluids, irrigating solutions, parenteral nutrition fluids and dialysis products and all of those products are sterile fluids, but his Honour treated, for market definition purposes, the large volume parenterals, irrigating solutions and parenteral nutrition fluids as being comprised of one market. 

Now, your Honours, in the circumstances that I have outlined, we submit that for the Act to apply to the impugned conduct of negotiating with the States would be to impair the legal situation of the States.  In other words, in legal effect it would apply the Trade Practices Act to the States so as to interfere, we would submit, directly with the contractual and other legal rights and interests of the States, so that the impugned conduct of negotiating can in no wise be treated differently from the actual entering into the contract itself.

HAYNE J:   What, relevantly there is no distinction between offering to supply and supply?

MR YATES:   For the purposes of determining the principle or the application of the principle, your Honour.  They are so intimately connected that to strike down a contract which the State had entered into would not be permitted.  To prevent the State from entering into such a contract we say would equally not be permitted.  The Act would not apply to that circumstance.  So it is that intimate connection which raises the particular and special circumstances, we say, factual circumstances of this case, that the principle in Bradken would, in our respectful submission, inevitably apply.  Now, your Honours, the Commission in its submissions ‑ ‑ ‑

GUMMOW J:   Does Bradken rely to some degree upon the Telephone Case?

MR YATES:   It certainly, as your Honours may have sighted in the judgments, and would be supported by the narrow view or, indeed, certainly the narrow view of the Telephone Case that the Court said should be taken as being the correct ratio of the Telephone Case and the Northern Territory Power Case.

CRENNAN J:   I suppose, even accepting what you say, there is still a point, is there not, that it may be desirable to remove uncertainty in respect of Bradken?

MR YATES:   Your Honour, we would submit with great respect that there is certainly no uncertainty in Bradken so far as entering and giving effect and that there could be no real uncertainty as a matter of substance as the facts of this case would impact in relation to Bradken.  The Commission has raised matters of interest in its submissions dealing with factual circumstances that are far removed from this case, far removed from it, and so this case would not be a vehicle to determine those issues clearly or an appropriate vehicle for the Court, if need be, to further elucidate what was held in Bradken.  So in substance, your Honours, we would submit that this case falls really four square within Bradken and should be seen in that light and for that reason we submit that there is no special leave issue.

GUMMOW J:   What do you say about paragraph 21 on page 250 in your opponent’s submissions?  Things have moved in this country since 1979, you know.

MR YATES:   Indeed they have, your Honour, and clearly section 2B has been enacted, but section 2B, we submit, gives very clear indication that the Act was not to apply in the circumstances of this case where it was accepted that the States were not relevantly carrying on business and, hence, the Act did not apply.  Your Honour, the fact that the Court has developed the principles as to the rule of construction that is to apply really, we submit, does not impact on this case.  It may impact on other cases, but we submit that it does not impact on this case and now is not the occasion to revisit Bradken.

GUMMOW J:   Now, paragraph 43 of your submissions on page 260, can you just look at that for a minute.

MR YATES:   Yes, your Honour.

GUMMOW J:   Is that in the nature of a threat or a promise?

MR YATES:   No, it is certainly not in the nature of a threat, your Honour.

GUMMOW J:   Inducement.

MR YATES:   Your Honours, the gravamen of it really lies in our paragraph 40, that the proceeding has been on foot for a long time.  Baxter remains in a somewhat invidious position in being obliged to respond to what the States dictate or desire by way of tenders and yet, on the other hand, remain exposed to pecuniary penalties and it is perhaps with a desire for finality that we would have raised the matter in paragraph 43 of our submissions, your Honour.

GUMMOW J:   But there would be a possibility of the matter going back to the Federal Court, would there not, to the Full Court?

MR YATES:   Yes, I must concede that, your Honour.

GUMMOW J:   To deal with any unresolved issues there.

MR YATES:   That is so, your Honour, but our submission is that, having regard to the, as it were, at best, incremental circumstances that are thrown up by this case, there would be prolongation of the litigation and in the interests of justice we would respectfully submit that finality might lead your Honours to grant the leave we have sought in paragraph 43 if your Honours were minded to grant special leave.

GUMMOW J:   Thank you.  We do not need to call on you, Mr Williams.  There will be a grant of special leave in this matter.  It will be listed on the footing that it is to be a one‑day appeal and it may be listed sooner rather than later.

AT 9.44 AM THE MATTER WAS CONCLUDED