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Australian Competition and Consumer Commission v Knight

Australian Competition and Consumer Commission v Knight

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FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Knight [2007] FCA 1011
TRADE PRACTICES – Competition Code of South Australia – Trade Practices Act 1974 (Cth) – whether penalty agreed by parties appropriate – where admission to contravention of ss 45(2)(a)(ii) and 45(2)(b)(ii) and to attempted contravention of s 45(2)(a)(ii)
Trade Practices Act 1974 (Cth)
Federal Court of Australia Act 1976 (Cth)
Competition Policy Reform (South Australia) Act 1996 (SA)
Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375 considered
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 considered
Trade Practices Commission v Allied Mills Industries Pty Ltd (No 4) (1981) 37 ALR 256 discussed
Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993 cited
Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 discussed
Trade Practices Commission v SantosLimited (1993) ATPR 41-221 cited
Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc(No 2) (1993) 41 FCR 89 cited
RAIA Insurance Brokers Limited v FAI General Insurance Co Limited (1993) 41 FCR 164 cited
Australian Competition & Consumer Commission v Target (2001) ATPR 41-840 cited
Ainsworth and Anor v Criminal Justice Commission (1992) 175 CLR 564 cited
Forster v Jododex Aust Pty Limited (1972) 127 CLR 421 cited
Australian Competition and Consumer Commission v Goldy Motors Pty Ltd (2001) ATPR 41-801 cited
Rural Press Limited v Australian Competition and Consumer Commission (2003) 216 CLR 53 cited
Trade Practices Commission v CSR Limited (1991) ATPR 41-076 considered
Australian Competition and Consumer Commission v J McPhee & Son (Australia) Pty Ltd (1998) ATPR 41-628 cited
Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40-091 cited
Trade Practices Commission v Mobil Oil Australia Ltd (1984) 4 FCR 296 cited
Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301 considered
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v JOHN LINCOLN KNIGHT AND IAIN KENNETH ROSS
SAD 22 OF 2007
MANSFIELD J
5 JULY 2007
ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

SAD 22 OF 2007

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant

AND:

JOHN LINCOLN KNIGHT
First Respondent

IAIN KENNETH ROSS
Second Respondent

JUDGE:

MANSFIELD J

DATE OF ORDER:

5 JULY 2007

WHERE MADE:

ADELAIDE

THE COURT DECLARES THAT:
1.The first respondent and the second respondent each contravened section 45(2)(a)(ii) of the Competition Code of South Australia (the Code) as defined in the Competition Policy Reform (South Australia) Act 1996 (SA) in that:
1.1as at 6 February 2001 the first respondent and the second respondent were cardiothoracic surgeons and competitors in the market for the supply of cardiothoracic surgical services to private patients living in and near South Australia (the market);
1.2on or about 6 February 2001, the first respondent and the second respondent made an arrangement, a provision of which was that…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] FCA 1011
Decision Date: 5 July 2007

CaseChat Overview and Summary

The Australian Competition and Consumer Commission (ACCC) filed a case against two cardiothoracic surgeons, Mr Knight and Mr Ross, alleging contraventions of the Australian Competition and Consumer Commission Act 2010 (Cth) and the Australian Competition and Consumer Commission Regulations 2010 (Cth). The matter was heard and determined in the Federal Court of Australia. The primary dispute involved allegations that Mr Knight and Mr Ross engaged in anti-competitive behaviour by hindering the professional development and practice of other cardiothoracic surgeons in the Adelaide metropolitan area.

The court had to decide whether the respondents had contravened Section 45 of the Competition and Consumer Act 2010, which prohibits anti-competitive agreements and concerted practices. The specific issue was whether Mr Knight and Mr Ross intentionally hindered the professional development and practice of two other cardiothoracic surgeons, Mr Jurisevic and Mr Edwards. The court examined the evidence and declarations provided by the ACCC and the respondents to assess the alleged anti-competitive behaviour.

The court found that Mr Knight and Mr Ross had indeed contravened Section 45 of the Competition and Consumer Act 2010 by engaging in concerted practices that hindered the professional development and practice of Mr Jurisevic and Mr Edwards. The court relied on the declarations and evidence presented, concluding that the respondents' actions were deliberate and anti-competitive. Consequently, the court ordered pecuniary penalties and compliance measures for both respondents. Mr Knight and Mr Ross were ordered to pay penalties of $55,000 each and to attend compliance seminars within three months of the court’s order. Additionally, each respondent was required to pay the ACCC's costs of $5,000.

Orders

Orders of the court

5. The first respondent pay to the Commonwealth of Australia, within 28 days of the date of this order, a pecuniary penalty in the amount of $55,000 in respect of his contraventions and attempted contravention of section 45 of the Code set out in declarations 1, 2 and 3; and

6. The second respondent pay to the Commonwealth of Australia, within 28 days of the date of this order, a pecuniary penalty in the amount of $55,000 in respect of his contraventions and attempted contravention of section 45 of the Code specified in declarations 1, 2 and 4.

THE COURT ORDERS BY CONSENT THAT:

7. Within 3 months of the date of this order, the first respondent attend, at his own expense, a compliance seminar that includes a presentation relating to the provisions of the Code or Part IV of the Trade Practices Act 1974 (Cth), such seminar to be conducted by an independent person with appropriate knowledge of the Code or Part IV of the Trade Practices Act 1974 (Cth), and further that the first respondent notify the applicant in writing within 7 days of attending this seminar of the title of the seminar, the name of the person or persons who conducted the seminar and the date of his attendance;

8. Within 3 months of the date of this order, the second respondent attend, at his own expense, a compliance seminar that includes a presentation relating to the provisions of the Code or Part IV of the Trade Practices Act 1974 (Cth), such seminar to be conducted by an independent person with appropriate knowledge of the Code or Part IV of the Trade Practices Act 1974 (Cth), and further that the second respondent notify the Applicant in writing within 7 days of attending this seminar of the title of the seminar, the name of the person or persons who conducted the seminar and the date of his attendance;

9. The first respondent pay the applicant’s costs of and incidental to these proceedings as against him in the agreed amount of $5,000 within 28 days of the date of this order;

10. The second respondent pay the applicant’s costs of and incidental to these proceedings as against him in the agreed amount of $5,000 within 28 days of the date of this order; and

11. The application otherwise be dismissed.

Background

Background to the litigation

The following explains why I have reached those conclusions.THE BACKGROUND FACTS(a) The respondents Mr Knight is and was at all material times, a cardiothoracic surgeon practising in the Adelaide metropolitan area in South Australia who offered predominantly, and almost exclusively, cardiac surgical services at the Flinders Medical Centre (the FMC), Ashford Hospital (Ashford) and Flinders Private Hospital (Flinders Private). He also is and was at all material times the head of the cardiac unit at the FMC, an Associate Professor of Surgery at Flinders University and was, from about November 2000 to about March 2003, a member of the Royal Australasian College of Surgeons’ (RACS) Board of Cardiothoracic Surgery. From 2002 to 2004, Mr Knight was Vice-President of the Australasian Society of Cardiac and Thoracic Surgeons and from 2004 to 2005 was its President. Mr Ross is and was at all material times, a cardiothoracic surgeon also practising in the Adelaide metropolitan area in South Australia who offered predominantly, and almost exclusively, cardiac surgical services at the FMC, Ashford and Flinders Private. Mr Ross was also at all material times a senior cardiac surgeon at the FMC and was, from June 2000, Clinical Advisor, Cardiothoracic Surgery at Adelaide Community Healthcare Alliance Inc (ACHA), which at all material times owned Ashford and Flinders Private. Mr Ross was also President of the Australasian Society of Cardiac and Thoracic Surgeons between 1999 and 2000. The conduct by Messrs Knight and Ross involving the contravention of the Code related to Mr Craig Jurisevic (Mr Jurisevic) and Mr James Edwards (Mr Edwards), cardiothoracic surgeons in the Adelaide metropolitan area in South Australia. By about 1 January 2001, Mr Jurisevic had obtained the necessary formal qualifications to be entitled to practise as a cardiothoracic surgeon in that he had been admitted as a Fellow with effect from 1 January 2001. Mr Jurisevic’s official supervisor during the final year of his RACS Advanced Surgical Training in cardiothoracic surgery (which is part of the training required to be a cardiothoracic surgeon) was Mr Knight. Mr Ross also supervised Mr Jurisevic’s surgery during that period. Mr Edwards was admitted as a Fellow in 1997 and since about July 2003, he has been the Director of the Cardiothoracic Surgical Unit of the Royal Adelaide Hospital (Royal Adelaide).(b) The market Cardiothoracic surgical services are vital for patients who need them. By reason of the matters referred to below, barriers to entry to the market for the supply of cardiothoracic surgical services are high. Demand for cardiac surgical services, including open heart surgery, comes from adult members of the public with an acquired or congenital disease or disorder of the heart. Of the 7 to 8 cardiothoracic surgeons practising in the Adelaide metropolitan area during the relevant period, only 1 to 2 of those surgeons predominantly provided thoracic surgical services. No services were or are substitutable for cardiothoracic surgical services. Patients requiring cardiothoracic surgical services would either be public patients (where facilities and the surgical services are provided by the State) or private patients (where facilities and the surgical services are usually paid for by the patient either directly or through their medical insurer).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

MANSFIELD J

Finally, I note that the proposed penalties are within the resources of Mr Knight and Mr Ross and that neither of them has previously been found to have contravened the TPA or the Code.CONCLUSION For those reasons, I propose to make the orders proposed jointly by the parties.

Ratio Decidendi

Legal Principle Established

Established by: MANSFIELD J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 22 OF 2007

JUDGE:	MANSFIELD J
DATE OF ORDER:	5 JULY 2007
WHERE MADE:	ADELAIDE