Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd

FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2006] FCA 826
FULL JUDGMENT– REPLACES REDACTED VERSION
SEE ORDERS 26 JULY 2006
TRADE PRACTICES – COMPETITION – whether deeds settling objections or threatened objections to applications by third parties for licences under the Liquor Act 1982 (NSW) contained provisions which were exclusionary provisions and which had the purpose of substantially lessening competition.
HELD: the second respondent, Woolworths Limited, had contravened s 45(2) of the Trade Practices Act 1974 in respect of two unrelated episodes at Campbelltown and Tweed Heads in that provisions of the deeds in those episodes were exclusionary provisions; and Woolworths Limited had contravened s 45(2) of the Trade Practices Act 1974 in respect of four unrelated episodes at Campbelltown, Rockdale/Arncliffe and Tweed Heads in that provisions of the deeds in those episodes had the purpose of substantially lessening competition.
Trade Practices Act 1974 (Cth) ss 4D, 4F, 4G, 45(2), 45(3)
ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No1) (1990) 27 FCR 460 discussed and applied
Dowling v Dalgety Australia Ltd (1992) 34 FCR 109 referred to
Eastern Express Ltd v General Newspapers (1992) 35 FCR 43 referred to and applied
Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in Australia (2002) 122 FCR 110 applied
News Ltd v Australian Rugby Football league Ltd (1996) 64 FCR 410 referred to
News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563 discussed
Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1987) 17 FCR 211 discussed
Queensland Wire Industries Pty Ltd v The Broken Hill Proprietary Company Ltd (1988) 167 CLR 177 discussed
Re Queensland Co-operative Milling Association Ltd; Re Defiance Holdings Ltd (1976) 25 FLR 169 discussed
Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 discussed
Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 discussed and applied
Sampi v State of Western Australia [2005] FCA 777 referred to
Singapore Airlines Ltd v Taprobane Tours WA Pty Ltd (1991) 33 FCR 158 discussed and applied
Stirling Harbour Services Pty Ltd v Bunbury Port Authority (2000) ATPR 41-752 discussed
Taylor v Toohey (No 2) unreported, New South Wales Court of Appeal, 29 August 1986
Tillmans Butcheries Pty Ltd v Australian Meat Industry Employees Union (1979) 42 FLR 331 referred to
Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission (2003) 131 FCR 529 discussed
Breyer S, “Five Questions about Australian Anti-Trust Law” (1977) 51 ALJ 28 at 33-4
Brunt M, Economic Essays on Australian and New Zealand Competition Law, Ch 5 “Market Definition Issues in Australian and New Zealand Trade Practices Litigation (1991)”
Corones SG Competition Law in Australia (3^rd Ed)
Neale The Antitrust Laws of the United States of America (2^nd Ed, 1970)
Norman and Williams “The Analysis of Market and Competition and the Trade Practices Act: Towards the Resolution of Some Hitherto Unresolved Issues” (1983) 11 Australian Business Law Review 390 at 400-401
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v LIQUORLAND (AUSTRALIA) PTY LTD AND ANOR
NSD 769 of 2003
ALLSOP J
30 JUNE 2006
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 769 of 2003

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
APPLICANT

AND:

LIQUORLAND (AUSTRALIA) PTY LTD
FIRST RESPONDENT

WOOLWORTHS LTD
SECOND RESPONDENT

JUDGE:

ALLSOP J

DATE OF ORDER:

26 JULY 2006

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1. The whole of the reasons for judgment delivered on 30 June 2006 be published without restriction upon the distribution of any of the paragraphs mentioned in orders 5-7 made on 30 June 2006, noting that there is no objection by any party or persons to this course.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 769 of 2003

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
APPLICANT

AND:

LIQUORLAND (AUSTRALIA) PTY LTD
FIRST RESPONDENT

WOOLWORTHS LTD
SECOND RESPONDENT

JUDGE:

ALLSOP J

DATE OF ORDER:

30 JUNE 2006

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The parts of Administrative Exhibit A13 set out at [765] of the reasons herein be rejected.
2.The template sent to the Court by the Applicant under cover of letter of 1 August 2005, with the parts identified in [765] of the reasons herein as rejected, be admitted into evidence and marked Administrative Exhibit A14.
3.The folder entitled “Status of Exhibits AA1 and AA2” provided to the Court in May 2006 together with letter dated 25 May 2006 from the Australian Government Solicitor to Ms Kathryn Wilson together with its enclosure be marked Exhibit AA4.
4.Until further order, these reasons for judgment in an unredacted version not be published or made available to anyone other than the Applicant, and counsel and solicitors for the second respondent (“Woolworths”).
5.Subject to order 12 below and until further order, [455] to [487], [499] to [505], [507] and [714] to [716] of the reasons herein not be published or made available to anyone other than the Applicant and Woolworths.
6.Subject to order 12 below and until further order, [488] to [498], [506], [508] to [509] and the fifth sentence of [796] of the reasons herein not be published or made available to anyone other than the Applicant, counsel and solicitors for Woolworths and the first respondent “Liquorland”).
7.Subject to order 12 below, and until further order, [728] of the reasons herein not be published or made available to anyone other than the Applicant, Woolworths and Liquorland.
8.Subject to order 12 below, as soon as practicable, and in any event on or before 7 July 2006, the Applicant provide to Liquorland a copy of the reasons for judgment herein (other than the paragraphs referred to in order 5 above) and these orders and inform Liquorland that if it wishes to prevent publication of any of the paragraphs referred to in orders 6 and 7 above or any part of those paragraphs it must make application, on notice to the Applicant supported by evidence; and that if such an application is to be made it must be notified to the Applicant, the Court and Woolworths no later than 21 July 2006, in which case a directions hearing will be held for the hearing of such application on 9 August 2006.
9.On or before 21 July 2006, Woolworths notify the Applicant and the Court whether it proposes to move the Court to prevent publication of any of paragraph of the reasons herein.
10.On or before 14 July 2006, the Applicant serve on Woolworths a draft of declarations and orders that it proposes.
11.On or before 28 July 2006, Woolworths provide to the Applicant its objections, and any reasons therefor, to any such proposed declarations and orders, and any suggested version reflecting the reasons herein.
12.On or before 3 July 2006, the Applicant and Woolworths bring to the attention of the Court any further paragraph that should, prima facie, be restricted. Such assessment is not to be made by giving Woolworths (other than through its counsel and solicitors) access to the paragraphs referred to in orders 6 and 7 above. Thus, until further order to allow the Applicant and Woolworths to have this opportunity to assess the question of confidentiality, no redacted version of the judgment shall be made available either to the public or to Liquorland.
13.The proceedings be stood over for any argument as to orders, the making of orders and directions to 9.30 am on 9 August 2006.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 769 of 2003

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
APPLICANT

AND:

LIQUORLAND (AUSTRALIA) PTY LTD
FIRST RESPONDENT

WOOLWORTHS LTD
SECOND RESPONDENT

JUDGE:

ALLSOP J

DATE:

30 JUNE 2006

PLACE:

SYDNEY

REASONS FOR JUDGMENT
iNDEX
Introduction  [1]
The Liquor Act 1982 [6]
A summary outline of the parties’ cases  [35]
The relevant statutory provisions  [43]
Ettamogah – the underlying facts  [93]
Ettamogah – the purposes of Mr Smith and Woolworths  [165]
Jin Ro – the underlying facts  [219]
Jin Ro – the purposes of Mr Smith and Woolworths  [246]
Palms Village – the underlying facts  [271]
Palms Village – the purposes of Mr Meagher and Woolworths  [297]
Global Beer – the underlying facts  [330]
Global Beer – the purposes of Mr Meagher and Woolworths  [402]
Market definition  [420]
The resolution of the contested issues of statutory construction
and conclusions as to purposes and contraventions  [808]
Miscellaneous  [836]
Relief  [843]
Introduction

The applicant, the Australian Competition and Consumer Commission (the “Commission”), brought proceedings against two respondents, Liquorland (Australia) Pty Ltd (“Liquorland”) and Woolworths Ltd (“Woolworths”) alleging contraventions of s 45 of the Trade Practices Act 1974 (Cth) (the “Act”) during the period 1997 to 2000.
The Commission and Liquorland reached an agreement to settle the proceedings. In that agreement, those parties agreed upon orders as to mutually acceptable penalties and orders for costs. Another Judge of the Court undertook the consideration of, and dealing with, the proceeding against Liquorland in the context of that agreement. That left the proceeding against the second respondent, Woolworths. Although Liquorland settled and the proceeding against it has been disposed of, Liquorland’s part in the events is relevant because the Commission relies on Liquorland’s conduct and purpose in seeking to prove its case against Woolworths.
The impugned conduct concerns four different episodes in Campbelltown, Arncliffe and Tweed Heads. (There were two episodes in Tweed Heads.) Whilst each episode must be examined in some detail, there were elements common to each. In each, a party unrelated, and hitherto unknown, to Woolworths and Liquorland applied for a liquor licence under the relevant New South Wales statute. Woolworths and Liquorland had, or proposed to have, a takeaway liquor store in the immediate vicinity (within no more than five kilometres) of the business proposed by each such party. In each case, Woolworths and Liquorland availed themselves, or threatened to avail themselves, of a right that the relevant State statute gave to persons in their position to object to the grant of the licence that had been applied for. In each case, after negotiation with the applicant for the licence, the objection, or threatened objection, was withdrawn. In each case, this withdrawal came at a price, though not one easily measured in money. The price was embodied in the deeds at the centre of these proceedings. In the deeds, the third parties agreed to restrictions being placed on the respective liquor licences anticipated to be granted and so on the operation of the respective businesses under the licences. Woolworths and Liquorland were satisfied with these restrictions and withdrew their objections or threats of such.
It is those deeds and those restrictions that are said to amount to the contracts, arrangements or understandings which are said to contravene s 45(2)(a) and (b) of the Act.
None of the conduct can be understood without an appreciation of legislative background, in particular, aspects of the Liquor Act 1982 (NSW) and its practical operation in the Licensing Court of New South Wales, a court of record existing under the Liquor Act.
The Liquor Act 1982
The New South Wales statutory regime hereafter described was that applicable in the relevant period, 1997-2000. There have since been amendments to that regime which it is not necessary to discuss beyond saying, at this point, that some of what might be called the uncompetitive economic aspects of the licensing system have been removed.
A primary aim of the Liquor Act was the minimisation of harm associated with misuse and abuse of liquor: s 2A of the Liquor Act. (It should be noted at the outset that although there was debate about the purposes of Liquorland and Woolworths in the conduct the subject of the proceedings, and although expressions such as “satisfying the needs of the neighbourhood” were used by some witnesses, no suggestion was made by any witness that the purpose, or one purpose, of any of the objections or of any of the impugned conduct, or of any of the relevant restrictions in the deeds, was to protect the public from any harmful consequences of a surfeit of liquor outlets in the relevant areas.)
It was a criminal offence to sell liquor without a licence authorising the sale: s 122. Licences were granted by the Licensing Court of New South Wales (“Licensing Court”) upon application: s 18. Proceedings before the Licensing Court were regulated in the same manner as summary proceedings in a Local Court. There were various types of licences, as set out in s 18(2)(a)-(f) of the Liquor Act. Two are relevant to these proceedings: an hotelier’s licence (s 18(2)(a)) and an off-licence: s 18(2)(b). An off-licence, authorising the sale of liquor on the premises, but only for consumption off the licensed premises, could be, relevantly, an off-licence for retail sale (s 18(3)(a)) or for wholesale sale: s 18(3)(c). An hotelier’s licence, subject to its conditions, also allowed for the sale of liquor on the premises for consumption off the premises.
Conditions (beyond those prescribed by the Liquor Act and Liquor Regulations 1996) could be imposed on a licence by the Licensing Court under s 20(1) of the Liquor Act which was relevantly in the following terms:
The court may:
(a)on the hearing of an application for the grant of a licence or of any matter relating to a licence—of its own motion or on the application of a party to the hearing or the Director or the Commissioner of Police, or
(b) at any other time—on the application of the Director or the Commissioner of Police made in relation to a licence,
impose conditions not inconsistent with this Act without prior compliance with which the grant does not take effect or to which the licence is to be subject.
By s 20(2)(b) of the Liquor Act, a licence was subject to any conditions imposed under s 20(1).
The procedure and requirements for making an application (including advertising of the application) were set out in Part 3, Division 4 of the Liquor Act and in the Liquor Regulations. Part 3, Division 5 of the Liquor Act dealt with objections. Under s 44, locus standi was given to various people to object to the grant of an application. Those persons included a person who satisfied the court that his or her interests, financial or other, were likely to be adversely affected by the grant of the application: s 44(1)(f). Such an objector was required to file an affidavit accompanying the objection specifying his or her pecuniary interest in the refusal of the application. There was a variety of grounds of objection which included the so-called “needs objection” found in s 45(2), as follows:
Subject to section 57, objection to the grant of an application for, or for the removal of, a hotelier’s licence or an off-licence to sell liquor by retail may be taken (whether or not an objection is also taken on a ground specified in subsection (1), (2AA), or (3)) on the ground that the needs of the public in the neighbourhood of the premises to which the application relates can be met by facilities for the supply of liquor existing in, and outside, the neighbourhood.
[Emphasis added]
Another objection available was that a grant of the application would not be, for reasons otherwise than the needs of the neighbourhood, in the public interest: s 45(1)(c).
Section 57(4) of the Liquor Act, however, provided that s 45(2) (and so the ability to object on the needs basis) did not apply to the removal of a licence from and to premises in the same neighbourhood: see generally Smith v Hardy (2000) 50 NSWLR 478. The meaning of the word “neighbourhood” in the Liquor Act was discussed by the New South Wales Court of Appeal in Armstrong v Edgecock [1984] 2 NSWLR 536. The notion involved (contrary to a view that had been adopted in litigation in the Licensing Court hitherto) was geographic, not one of trading area. Relevant considerations were geographical features, transport facilities, communal facilities and residential aggregations.
Once a needs objection was taken, the onus was on the applicant to satisfy the Licensing Court of the matters found in s 45(4)(c):
that the needs of the public in the neighbourhood of the premises to which the application relates cannot be met by facilities for the supply of liquor existing in, and outside, the neighbourhood
It may be accepted as uncontroversial that the legislative aim and purpose of the needs objection regime was an aspect of minimisation of harm and the control of the consumption of liquor. Nevertheless, as is apparent even from the sparse facts thus recounted, the ramifications of this procedure from the commercial and competition perspectives of those parties with existing liquor outlets, were obvious. The regime provided a ready weapon to impede or prevent a rival or potential rival establishing a place of business in the neighbourhood. The process, like any legal proceeding, would require the investment of both time and money by the applicant. If the applicant were unsuccessful in demonstrating the relevant needs, subject to s 47(1), the costs of the hearing in time and money could be wasted, or, at least, could be immediately unproductive.
In the absence of an objection under s 45(2) there was no requirement under the Liquor Act or Liquor Regulations for the Licensing Court to consider the “needs” of the neighbourhood. The evidence was that if a needs objection was not raised by an objector, the Licensing Court would not concern itself with that issue.
Even if the applicant could not discharge the relevant onus and overcome the needs objection based on s 45(2), the Licensing Court had a discretion under s 47(1) to grant the application.
If an application failed because of a needs objection, another application could not be made for two years: s 36(6).
Under s 20(5), the Licensing Court could vary or revoke conditions imposed by it. The needs objection could not be taken in such an application: see ss 20(5) and 45(2). The evidence was that in such circumstances the Licensing Court considered the test of public interest if objection were taken to the varying or removing of a condition. This lack of relevance of the needs objection to an application to vary or revoke conditions is of some importance to this proceeding for reasons that will appear in due course.
The evidence of Mr Anthony Smith, an officer of Woolworths who was experienced in the liquor field, was that if no objection at all were made to an application then the Licensing Court would grant the application “as long as the applicant has their necessary council consents, et cetera, in place”.
Upon the grant of an application a fee was payable: ss 55 and 56.
Costs could be awarded by the Licensing Court: s 16.
Woolworths laid emphasis on a number of propositions and evidential considerations about the Liquor Act and about practice in the jurisdiction of the Licensing Court. There was no contest about these matters. No issue about them was enunciated in submission. The grant of a licence is not automatic should there be no objection. The applicant was required to satisfy the Licensing Court of various matters, including good character. Most such matters were not in dispute in relation to the people with whom this litigation was concerned. Some requirements were, however, of importance. The Licensing Court would not grant an application unless there was relevant local government consent permitting the sale of liquor under the licence. This was of particular importance to two of the four episodes: Jin Ro and Global Beer, being respectively the Arncliffe and one of the Tweed Heads episodes.

The notion of the “needs” of the neighbourhood for the purposes of s 45(2) has been discussed in a number of cases in the courts. The needs, in the sense of the demands and expectations, of a section of the public are not decisive. They must be balanced against the demands and expectations of the rest of the public in the neighbourhood. The whole of these reasonable demands and expectations must be measured against the capacity of the existing facilities to satisfy them. There must be a demonstration of a lack of, or substantial deficiency in, the number, quality or type of facilities for the supply of liquor, such that in the view of the Licensing Court it was desirable that a further facility be granted: see generally Taylor v Toohey (No 2) (unreported, New South Wales Court of Appeal, 29 August 1986); Silkman v Kendall [1982] 1 NSWLR 133; Travis v Jackson [1986] 10 NSWLR 601; and Buttery v Muirhead [1970] SASR 334.
Mr Tony Schwartz, an experienced solicitor in the field who acted for Woolworths in respect of all four episodes, gave evidence of usual practice in relation to objection. Sometimes an objector may make an objection in order to get access to the court file in order to understand, from the applicant’s affidavits on the file, what the applicant’s intentions (including, of course, commercial intentions) were, in particular by reference to plans and development applications. This was a procedure followed by Woolworths. This kind of information from the court file then assisted in the formation of a view as to whether to press the objection. I accept this evidence.
Mr Schwartz identified another reason for taking an objection. If a licence were granted subject to conditions and if, later, those conditions were sought to be amended or revoked by application to the Licensing Court, the previous objector would be seen by the Court to have “better standing” in relation to the public interest considerations attending the application. In such a case (where there was no needs objection available) Mr Schwartz said that the Licensing Court would look to the history of the attachment of conditions in settlement of an earlier needs-based objection. Mr Schwartz gave evidence of a licensing magistrate saying the following in one application in 1992 concerning a request to revoke a condition previously agreed to in settlement of a case in which there was a needs objection:
[T]he needs test does not apply to this application. Whether that is the intention of the legislature or not I am not to know, but bearing in mind the odd circumstances in which this situation has arisen, I suspect it might be more that the situation was never envisaged by the draftsman. It is certainly my view that in the public interest the Court should not only give effect to the letter of the law but in cases where it is exercising a discretion, the spirit and intention of the legislation as well. In this particular case, the original applicant obtained this licence by way of conditions imposed by agreement between himself and the objectors. If the Court were to grant this application now, he is in effect, obtaining an unrestricted licence through the back door if I can use that term, without those objectors ever having the opportunity of pressing the ground of objection on the needs basis which they originally sought to press. It would seem to me that that would be an injustice to the objectors.
A number of examples were given by Mr Schwartz of the Full Bench of the Licensing Court making it clear that persons who had objected to original applications and whose objections were withdrawn on the basis of conditions agreed to by the applicant had a stronger position in any later application to revoke or vary those conditions than a party who had not objected. Indeed, in one case, one magistrate indicated that the Court would look for the presence of exceptional or extraordinary circumstances for an application for revocation of a condition to succeed in circumstances where the condition was placed upon the licence as the consideration for the withdrawal of an objection by an objector at the stage of the original application. I accept this evidence as to the practice of the Licensing Court.
I am prepared to accept that this was the view of those on the Licensing Court during the relevant period. I also accept, and I find, that this was well known by experienced practitioners and participants in the field such as Mr Schwartz, Mr Anthony Smith and Mr Robert Meagher, both senior managers in Woolworths’ liquor division at the relevant time and whose evidence is central to the disposition of this matter.
This relevance of a covenant in a deed of settlement to the question of possible future objection based on the public interest to an application to revoke or vary a condition is of some importance to these proceedings.
The evidence was that the Licensing Court encouraged settlement of contested litigation and that the Licensing Court required the parties to make genuine efforts to settle disputes. This can be readily accepted.
Finally, there was an issue as to whether it was competent under the Liquor Act for objection to be made for “undue competition and economic waste”. Mr Schwartz gave evidence that he thought this was an aspect of a lack of public interest objection until a Full Bench of the Licensing Court said to the contrary in 2001. Mr Schwartz said in his statement that he had prepared a standard form Notice of Grounds of Objection for his clients and that this was used by Woolworths. That standard form, until 2001, included a paragraph, which is contained in the relevant Woolworths’ objections, that it was not in the public interest to grant the relevant application for reasons which included the following:
The granting of the application would result in undue competition and economic waste.
Whether or not this was a standard form application (and I accept that it was), it was made by Woolworths in these cases. It is irrelevant that, as it turned out in 2001, this was not a valid ground of objection under the public interest ground. The fact that that document arose as a standard form does not detract from the importance of the fact that Woolworths identified this ground in the Notice of Objection. No suggestion was put forward that anyone at Woolworths thought the proposition (from Woolworths’ perspective) to be wrong. Likewise, the affidavits in support of the objections sworn by the relevant officers of Woolworths, Messrs Meagher and Smith, stated that Woolworths had a direct and indirect pecuniary interest in the refusal of the application by reference to its ownership and operation of relevant neighbourhood liquor stores. It may be that these paragraphs were “standard”. However they were a part of affidavits prepared for, or filed in, the relevant Licensing Court proceedings. They can be taken as statements of the views of Woolworths’ and Messrs Smith and Meagher.
Mr Schwartz said in his statement that he first became aware of the use of deeds to record agreements to withdraw objections in about May or June 1996. Since then he had seen this mechanism used on a number of occasions by a number of well-known and reputable Licensing Court practitioners. I accept this evidence. Mr Schwartz had the view that the use of deeds in these circumstances was desirable. It gave the objector a provision for fair notice of any proposal to vary the conditions. It gave the objector standing to object to a variation or revocation application. It also gave the objector a negative covenant which could be a subject of an application in the Supreme Court for an order restraining conduct in breach of a relevant covenant.
I infer that Mr Schwartz has from time to time advised Woolworths of the appropriateness of entering deeds of this character and that he did so on these occasions. Mr Schwartz deposed that at no time did he consider that the deeds would contravene the Act. At no stage did any counsel suggest to him that there could be an issue under the Act. I accept this evidence.
A summary outline of the parties’ cases
The case of the Commission
The contractual promises amounting to the relevant contracts, arrangements or understandings restricted the type or quantity of takeaway liquor that could be sold from, or stocked at, the relevant premises; restricted the location and configuration of the premises; and restricted the means by which sales could be made at, and delivery effected from, the premises. The restrictions were intended to attach to a third party assignee of the licence. These restrictions were said to undermine the competitive process by restricting the freedom of the licence applicant to act competitively against Woolworths or Liquorland.
The purpose of Woolworths was said to be to protect sales from its outlet or outlets in the relevant area. The arrangements restricted competitive conduct then and in the future and it was said, could be seen as sterilising competition from a prospective rival licence, whether from this applicant or a more capable rival who might buy the licence from the applicant.
The applicants for the licences, as new entrants into the market, were denied the freedom to expand or reconfigure their businesses better to meet market requirements and competitive offerings or to sell the unrestricted licence to someone better placed to exploit it. Either would have seen the process of competition work rather than be stifled. Thus, it was said that competition was “nipped in the bud”: Trade Practices Commission v CSR Ltd (1991) 13 ATPR 41-076 at p 52, 155; and Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 at [129].
The case of Woolworths
The case of Woolworths directed attention to the precise terms of the case pleaded against it and the precise effect of the construction it placed on s 4D of the Act. A full discussion of those issues is better left to a point at which the facts of each episode are fully explored. Briefly, however, it was contended that the case of the Commission rested on a number of flaws. First, it gave inadequate weight to the context of the practical operation, and day-to-day practice under the regime of the Liquor Act. The particular aspect of this inadequacy was said to be the failure to appreciate that objection on the needs ground was commonly taken by licence holders of all descriptions against all new applications. It was said to be a commonplace event that applicants would seek the grant of an off-licence retail, subject to conditions which reflected the business sought to be carried on, and no wider.
Secondly, the Commission’s case confused or conflated the purposes of Woolworths in making the objection and in entering the deeds. The two, it was said, were distinct – only the latter being the pleaded purpose. This distinction was said to be important and one based on the evidence of Messrs Meagher and Smith, the two relevant officers of Woolworths. They gave evidence that had there been no deeds agreed, the applications would have been fought, and, they believed, won. Thus, it was submitted that whilst the purpose of making the objection might be said to be “anti-competitive” (being directed to preventing a new, competitive, or potentially competitive, licence), the purpose of the impugned deed was to record the terms of the settlement of litigation which they believed would be won, if fought. Their purposes should be seen in that light; and if that is done, their purposes must be seen as other than found in ss 45(2) and 4D.
Thirdly, the Commission’s case failed to recognise another aspect of the distinction between the objection and the deeds. By the time each deed was executed, each applicant was seeking the licence limited by the conditions expressed in the draft deed ready for execution. Thus the deeds prevented nothing, they merely reflected the previously agreed compromise.
Fourthly, the Commission’s case ignored the importance of the Liquor Act in one particular respect. The deeds, contrary to the Commission’s case, did not impose any relevant trading restriction. The applicants had no freedom to sell liquor that was restricted by the deed. Their respective freedoms to do so arose from the licences they were granted, with the attached conditions.
Other aspects of the case of Woolworths will become clearer in the context of a discussion of the relevant provisions of the Act (there being some important differences between the parties as to aspects of the meaning and reach of s 4D of the Act) and in the context of the precise facts of the episodes in question.
The relevant statutory provisions
The primary relevant provisions of the Act are ss 4D and s 45(2). The case can be divided into two: the exclusionary provision case based on ss 4D and 45(2)(a)(i) and (b)(i), and the purpose of substantially lessening competition case based on s 45(2)(a)(ii) and (b)(ii).
the approach to statutory interpretation
The parties were not agreed upon the meaning and content of s 4D of the Act. It is therefore necessary to set out the principles by reference to which I construe and interpret the relevant provisions of the Act.
Section 45 is penal in character. The same can be said of s 4D as a definition section feeding s 45. They are to be approached, for the ascertainment of their meaning, using the ordinary rules of statutory construction and interpretation, but recognising that if as a matter of last resort, after those rules are applied, the language of the statute remains ambiguous or doubtful such ambiguity or doubt may be resolved in favour of the subject: Beckwith v The Queen (1976) 135 CLR 569 at 576 per Gibbs J; Deming No 456 Pty Ltd v Brisbane Unit Development Corporation Pty Ltd (1983) 155 CLR 129 at 145 per Mason, Deane and Dawson JJ; Waugh v Kippen (1986) 160 CLR 156 at 164-65 per Gibbs CJ, Mason, Wilson and Dawson JJ; Trade Practices Commission v Legion Cabs (Trading) Co-operated Society Ltd (1978) 35 FLR 372 at 382 per Franki J; Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 at 48 per Franki J; and Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 2) (2001) 119 FCR 1 at 226 per Goldberg J.
The ordinary rules of the Australian common law of statutory interpretation provide for an approach:
by which the relevant words of a statute, by reference to the language of the statute viewed as a whole, are considered in their legal and historical context having regard to the evident aim and purpose of the legislation, to any established canons of legal construction and to any inconvenience or improbability of result of any given construction. Inconvenience or improbability of result may assist the court to reach an available alternative construction reasonably open and more clearly conforming with the legislative intent otherwise discerned. Fundamental to the task, however, is the giving of close attention to the text and structure of the relevant provisions as the words used by Parliament.
See BraverusMaritime Inc v Port Kembla Coal Terminal Ltd (2005)148 FCR 68 at [36] and the cases there cited.
Thus, what is to be rejected is an approach which, because the provision is penal, employs a literal analysis with an eye to the discernment of textual ambiguity through finely spun distinctions. As Professor Pearce said in Statutory Interpretation in Australia, 5^th Edn Butterworths, Sydney, 2001 at 232, [9.8], speaking of such a literalist or textual approach:
This somewhat naïve approach leads to the situation where counsel and judges worry away at individual words of Acts, seeking to squeeze out a possible interpretation that will enable a defendant to be acquitted. The intention of the legislature becomes lost in a semantic tournament. This in turn results in the courts being denigrated for not looking to the purpose of an Act, for being too ‘legalistic’.
One consideration, which can be seen as an aspect of the application of the correct approach referred to above, is that provisions of the Act, which are intended to govern and affect business decisions and commercial behaviour should, if such a construction is fairly open, be construed in such a way as to enable the business person, before he or she acts, to know with some certainty whether or not the act contemplated is lawful: Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 205 CLR 1 at 10-11 [8]. Nevertheless, the object of the Act as set out in s 2 of the Act “to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection” should be steadily borne in mind: cfDevenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32 at 43-44 per Mason CJ.
the exclusionary provision case
Section 45(2) relevantly provides as follows:
A corporation shall not:
(a) make a contract or arrangement, or arrive at an understanding, if:
(i) the proposed contract, arrangement or understanding contains an exclusionary provision; …
…
(b)give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision:
(i) is an exclusionary provision; …
…
Section 4D of the Act is in the following terms, as follows:
(1)A provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if:
(a) the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and
(b) the provision has the purpose of preventing, restricting or limiting:
(i)the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons; or
(ii)the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions;
by all or any of the parties to the contract, arrangement or understanding or of the proposed parties to the proposed contract, arrangement or understanding or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate.
(2) A person shall be deemed to be competitive with another person for the purposes of subsection (1) if, and only if, the first-mentioned person or a body corporate that is related to that person is, or is likely to be, or, but for the provision of any contract, arrangement or understanding or of any proposed contract, arrangement or understanding, would be, or would be likely to be, in competition with the other person, or with a body corporate that is related to the other person, in relation to the supply or acquisition of all or any of the goods or services to which the relevant provision of the contract, arrangement or understanding or of the proposed contract, arrangement or understanding relates.
Section 4F qualifies s 4D. The purpose of the impugned provision need only be one of its purposes as long as it is a substantial purpose.
Before turning to the contentions of the parties as to the construction of s 4D a number of considerations concerning s 4D expressed by the High Court and the Full Court of this Court should be noted. In Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 (“Rural Press (HC)”) Gleeson CJ and Callinan J emphasised the need for the requisite degree of particularity of the object or objects of the provision, saying at [6]:
If attention were not paid to the compound nature of an exclusionary provision, and the requirement of particularity of its object or objects, there is a danger that s 4D would be given an operation that would greatly reduce the statutory significance of lessening competition, in relation to agreements between competitors generally. Contracts, arrangements or understandings between competitors commonly involve some form of prevention, restriction or limitation of supply or acquisition of goods or services. If two hairdressers in a suburban main street were to have an understanding that one would provide services to men, and one would provide services to women, it may be unlikely that their understanding would involve a substantial lessening of competition in a market. It would be surprising if it were held, nevertheless, to contravene the Act. To the extent to which it had an anti-competitive purpose, that purpose would not be "directed toward" particular persons or classes of persons.
[Footnotes omitted]

Whilst Gleeson CJ and Callinan J agreed with Gummow, Hayne and Heydon JJ that there was sufficient particularity in that case, their Honours said the following at [7] and [8] about the purpose of preventing , restricting or limiting supply or acquisition:
We agree with Gummow, Hayne and Heydon JJ that there was sufficient particularity in the present case, but we can think of other cases in which it would be absent, notwithstanding the existence of a purpose of preventing, restricting, or limiting supply or acquisition. If it were not so, the references to particular persons or classes of persons would be redundant.
… In its original form, the proscribed purpose was of preventing, restricting or limiting supply to or acquisition from particular persons. The words "or classes of persons" were added in 1986, following some decisions that were thought to reveal an undue narrowness in the legislation in its original form. Those words were clearly intended to widen the provision, but not to change its entire character. The proscribed purpose must still be one that is directed toward particular persons or classes of persons. Parliament did not delete the word "particular" and substitute the word "any". Nor did it remove all reference to persons as objects of the proscribed purpose. The legislative history, as well as the text, tends strongly against a reading of the section which requires only that a provision of a contract, arrangement or understanding has the purpose of preventing, restricting or limiting, in any way, supply or acquisition. Supply or acquisition will always be to or from persons. Ordinary principles of construction require that the references to particular persons or classes of persons be given work to do; they are not mere drafting verbosity. A court construing a provision in an Act "must strive to give meaning to every word of the provision". A court will seek to avoid a construction of a statute that renders some of its language otiose. Here, that consideration is powerfully reinforced by the legislative history, which shows that the reference to particular persons was originally an essential feature of s 4D, and that the addition of the reference to classes was intended to expand it, not to make it superfluous.
[footnotes omitted]
The relevant facts of Rural Press were that senior officers of two companies publishing country newspapers agreed that one company, which had extended its circulation and advertising into the other’s traditional catchment area, would withdraw from that area in exchange for the second company not, itself, extending its coverage into the first company’s traditional area. There was found to be sufficient particularity of purpose for the engagement of s 4D. The persons who were deprived of the opportunity of acquisition of services from the first company were readers and advertisers in the Mannum area of South Australia. What follows should be read with the recognition that there was a tolerably clear geographical boundary within which one found the readers and advertisers in question. Gummow J, Hayne J and Heydon J said at [67]:
The Full Federal Court's reasoning concentrates too narrowly on the purpose of preventing Waikerie Printing selling papers to readers and space to advertisers, and not enough on the correlative -- the purpose of preventing readers buying papers and advertisers buying space from Waikerie Printing. The relationship between a buyer and a seller is not merely symbiotic. The link is inextricable. A supply by sale is an acquisition by purchase. There cannot be a seller without a buyer. There cannot be a supplier without an acquirer. There cannot be supply without acquisition. If one's purpose is to prevent the supply of services, an inevitable part of that purpose is to prevent the acquisition of those services by the person or persons to be supplied. Thus when the Full Federal Court accepted the trial judge's finding that the purpose of Rural Press and Bridge was to maintain their market power in Murray Bridge by preserving absence of competition in that market, it was accepting that their purpose was to maintain their market power in Murray Bridge by ensuring that the Standard would be the only paper and that readers and advertisers would not enjoy the services of the River News. The purpose of maintaining market power was indistinguishable from the purpose of preventing supply of certain services to, and acquisition of those services by, readers and advertisers. Acquisition of those services by readers and advertisers from the River News was inconsistent with the prevention of supply by the River News. It was not possible for the Rural Press parties consistently to say both that they had a purpose of preventing the River News from supplying services to readers and advertisers and also that they did not have a purpose of preventing readers and advertisers from acquiring services from the River News. "You could not have one without the other, however much you protested that you did not really want the other."
Gummow J, Hayne J and Heydon J also emphasised that there is no requirement of “aiming at” or “targeting” anyone, to the extent that it might be seen as carrying notions of animus or intended harm: Rural Press (HC) at [70] citing Gummow J in News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563 (“Souths”) at [76]-[79]. Dealing with the facts before them, Gummow J, Hayne J and Heydon J said the following at [71]:
The purpose of the provision in this case was "directed towards" the readers and advertisers in the Mannum area because it was a purpose of maintaining the market power of the Rural Press parties in that area by limiting the supply of services to the readers and advertisers through causing the circulation of the River News to their advantage to cease. The readers and advertisers were objects, "on, or about whom" that purpose operated.
The particularity of purpose in Rural Press as found by the trial judge was as follows (set out at 216 CLR at [57]):
preventing or restricting or limiting the supply of services to the particular class or classes of persons, being those in the Mannum area (or in that area and extending to a [line] about 40 km north of Mannum) who could otherwise receive the information and news in the River News or who could otherwise advertise in the River News or take advantage of advertising in the River News.
Gummow J, Hayne J and Heydon J said the following at [87] and [88] as to the adequacy of this particularity:
The purpose found by the trial judge is entirely consistent with the evidence, particularly the internal records of and the conduct of the Rural Press parties. In the circumstances it is sufficient to say that the trial judge adequately defined a class: even though the identity of all of its members at any one time might not be readily ascertainable, s 4D does not require that. Even if s 4D does require that, it would be possible to draw up a list of advertisers who had used the River News, and that would be a sufficient class to render the provision an exclusionary provision. It would also be possible to draw up a list, though perhaps an incomplete list, of readers of the River News. The Commission's contentions cannot be dismissed by reason of issues on which such limited argument was offered.
The same is true of the question, which had a faint presence in argument, of whether it is erroneous to define a particular class by the fact of its exclusion from supply or acquisition. In ASX Operations Pty Ltd v Pont Data Australia Pty Ltd [No 1] there is a passage which some have alleged to rest on an error of this kind. In this case no argument was directed in this Court to the question; the Full Federal Court came to no view about it; and News Ltd v South Sydney District Rugby League Football Club Ltddid not overrule the case in that respect and only one member of this Court criticised it. In any event, to define a particular class by reference to its geographical location is not to define it by the fact of its exclusion from supply or acquisition, because it is identified at the time of the arrangement and indeed identifiable before that time.
[footnotes omitted]
The passage in ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No1) (1990) 27 FCR 460 (“Pont Data”) at 488 referred to by Gummow J, Hayne J and Heydon J was as follows:
[The persons or classes excluded] … are identified … by the characteristic that they may not be supplied with the information in question, unless they accept and become bound by the restraint imposed by the [relevant] agreement] … What distinguishes the class and makes it particular is that its members are objects of an anti-competitive purpose, with which s 4D is concerned.
This can be said to permit the identification of the particular persons or classes of person by reference to the operation of the provision. As Gummow J, Hayne J and Heydon J show in footnote 132 in Rural Press (HC), whilst Callinan J in Souths expressed opposition to such an operation of s 4D, Gummow J, with whom McHugh J agreed, did not, and, indeed cited this passage in Souths. Neither Gleeson CJ nor Kirby J in Souths referred to the passage in question from Pont Data.
It can be seen from the judgment of Gummow J, Hayne J and Heydon J as well as that of Gleeson CJ and Callinan J that there was a sufficient degree of particularity in Rural Press (HC) for the operation of s 4D. It was not a particularity derived from an a priori process of reasoning or definition. It was founded on a distinct geographical area and, to some degree, the ability to identify people within that locality who fitted the description of readers of, or advertisers in, a newspaper that had been, and was otherwise intended to be, sold in that locality.
It is now clear from the High Court’s decision in Souths that the purpose referred to in s 4D (notwithstanding that it is the purpose of the provision) is a subjective purpose requiring an examination of the subjective purposes of the parties to the relevant contract, arrangement or understanding.
In Pont Data the Full Court said at 476 and 477 about s 4F:
s 4F uses the words ‘the provision was included in the contract … for that purpose or for purposes that included or include that purpose’. This indicates that s 4F, in this operation, requires one to look to the purposes of the individuals by whom the provision was included …
…
…it is therefore appropriate to look at the purposes of the party as a result of whose efforts they were included
In Souths, Gleeson CJ said at [18] that it was the subjective purpose of “News and ARL in including the fourteen team … that is to be determined.” His Honour referred with approval to Pont Data at 474-77 as to this point. McHugh J at [41] concurred with the view that it was the subjective purpose of the makers of the provision. In so doing he gave weight to the body of Full Federal Court authority, including implicitly, Pont Data. Gummow J at [62] specifically cited Pont Data at 476 and said that s 4F required examination of the purposes of the individuals by whom the provision was included and noted that the “substantial purpose” test avoids difficulties in discerning the relevant purpose of multiple parties to a contract, arrangement or understanding. Callinan J at [212] referred to the parties’ subjective reason for the inclusion of the provision in the contract, arrangement or understanding and in so stating referred specifically to, amongst other cases, Pont Data at 474-77.
The Commission’s case was that in each case Woolworths and Liquorland were parties to the contract, arrangement or understanding. Each was competitive with the other in relation to the supply of take-away packaged liquor. This satisfied s 4D(1)(a) of the Act. It was also said that each licence applicant was likely to be competitive with Woolworths and Liquorland in the supply of takeaway packaged liquor, but for the provisions in question, for the purposes of s 4D(2) and thereby s 4D(1)(a).
The Commission also asserted that the purpose of the provisions in the deeds was to prevent, restrict or limit the supply of takeaway packaged liquor by the licence applicants to one or more of the following classes of persons: (a) customers and potential customers of the licence applicants and (b) customers and potential customers of each Woolworths and Liquorland bottle shop in the vicinity. It was unnecessary to be able to identify the individual members of the class. It was capable of being a “future” class, which was identifiable at the time of the making of the contract, arrangement or understanding. The legitimacy of this element of possible futurity was assisted, it was said, by the terms of s 4D(2) which identifies a future or contingent state of affairs. Section 4D(1) should, it was said, be given a construction conformable with the future, contingent aspects of the section’s possible operation in relation to contracts, arrangements or understandings.
The subjective purpose of the provisions was that of the parties (Woolworths and Liquorland) who had required them. Their purpose, it was said, was the prescribed purpose in s 4D.
Importantly, also, the Commission submitted that while the purpose contemplated by s 4D is the preventing, restricting or limiting of supply or acquisition of goods or services, that did not mean that the provision in question must, in terms, deal with preventing, restricting or limiting supply or acquisition. The section does not, it was said, prescribe any way that the purpose may be manifested.
Whilst Woolworths conceded that it and Liquorland were competitive with each other in the supply of takeaway packaged liquor, it denied that each licence applicant was likely to be competitive with Woolworths or Liquorland at the time of the entry into the deed. It is not clear what significance this dispute has, given the concession first referred to. It is unnecessary to set this submission out in full here. One element of it is, however, important to note: the necessity for temporal precision in assessing likely competition. It must be asked, it was said, at the time of entry into the deed (that is after the negotiation concerning the deed) whether, but for the deed and entry into the deed, the applicant would have obtained an unrestricted licence. This does not permit, it was said, the analysis to slide into one posed by a different and inappropriate question – whether, but for the objection, each applicant would have obtained an unrestricted licence.
Related to the question whether, but for the relevant provision of the deed, the applicant would have obtained an unrestricted licence, were other factual questions about the capacity of the licence applicants to compete with Woolworths or Liquorland, and the intentions and wherewithal of the applicants.
It was submitted that the ascertainment of purpose required a two-step process which was described as follows in written submissions:
(a)identification of the purpose or purposes of each of the parties to the contract;
(b)determining which of those purposes constitutes the substantial purpose.
Importantly, it was submitted that unless the Commission proved the purpose of each of the parties to the deeds it must lose this part of the case. That is so, it was said, because without it the second stage in (b) cannot be undertaken. Pont Data was said to be irrelevant to this case because no party entered the deed under protest or complaint. That being so, it was said, it was necessary to consider the purposes of all the parties to the deed.
Turning to the purposes of the parties in including the provision, Woolworths submitted that the Commission confused the purpose of the provision with the purpose of lodging the objection and failed to understand the effect of the Liquor Act on unlicensed persons. At the time of the execution of the deed, the purpose of Woolworths was not to prevent the issue of an unconditional licence, because by that time, to Woolworths’ knowledge, each applicant was not seeking an unconditional licence.
Further, it was submitted that even if Woolworths’ purpose in entering the contract was to prevent the issue of an unconditional licence that was not a purpose of limiting supply to particular persons or classes of persons. This was so because at the time of execution of the deeds the licence applicants had no lawful entitlement to supply the goods to which the provision related. Such an existing, lawful entitlement was, it was said, a necessary precondition for the engagement of s 4D. At the time of the entry into the deeds, the licence applicants were prohibited by the Liquor Act from selling takeaway packaged liquor. Also, as to Palms Village, the provision did not prevent, restrict or limit the supply of any takeaway liquor, because the restrictions were as to stocking, site and configuration of the shop. There was, it was said, no relevant prevention, limitation or restriction on sale to any particular person or class of person.
Next, it was said that there was an inadequacy in the particularity of the object of the provision – the particular persons or classes of persons. It was said that the class must be capable of being determined at the time the contract is entered into, even if at any one time the identity of all those in the class is not readily ascertainable. Here, it was said, there was, at most, the purpose of excluding supply of goods to some unidentified potential group of customers. There was, no characteristic by reference to which the customers could be described as “particular” objects of any purpose at all (to paraphrase Gleeson CJ in Souths at [23]). The dictum of Callinan J in Souths at [217] that the class must bear a characteristic beyond that of exclusion itself was to be borne in mind.
The inability of the licence applicant to supply liquor at the time of the execution of the deed was also said to go to the conclusion that there could be no class. The past and future customers of Woolworths, and Liquorland and the future customers of the licence applicant was said to lack the requisite particularity.
Woolworths also submitted that to the extent that it be found that a relevant purpose of the provision was to prevent the licence applicant changing his or her business in the future by amending the conditions attached to the licence, s 4D was not engaged for a number of reasons: (a) because Woolworths, Liquorland and the licence applicant were not competitive in the acquisition or supply of licences; (b) because the provision related not to the supply or acquisition of goods, but to applications to the Licensing Court; (c) because such a purpose was not directed to particular persons or classes of persons; (d) to the extent that such a future changed business under different licence conditions was to be conducted by an assignee of the licence, s 4D(1)(b) would not be engaged because the purpose of the provision must be the relevant restriction in relation to a person or persons who is or are a party or parties to the agreement, arrangement or understanding.
Point (d) above was conceded by the Commission, although it asserted that it had not pleaded this point. As to (c), it was further submitted by Woolworths that a purpose of restricting a future unidentified business conducted by the licence applicant from the original premises or from different premises was not a purpose of preventing, limiting or restricting supply to particular persons or classes of persons because there was no intended class able to be identified. No factual basis could be posited for any change, no business plans existed, and there was no sufficient particularity to satisfy the section.
I do not propose, at this stage, to resolve the various aspects of these submissions which are in dispute. This is best approached in the context of concrete factual findings.
the purpose of substantially lessening competition case

Section 45(2)(a) of the Act is, relevantly, in the following terms:
A corporation shall not:
(a)make a contract or arrangement, or arrive at an understanding, if:
…
(ii) a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or
(b) give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision:
…
(ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition.
No case was put based on the effect of the conduct. The only case was that Woolworths had the purpose of substantially lessening competition.
Section 45(3) of the Act contains the relevant definition of competition in this context. It is in the following terms:
For the purposes of this section and section 45A, competition, in relation to a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, means competition in any market in which a corporation that is a party to the contract, arrangement or understanding or would be a party to the proposed contract, arrangement or understanding, or any body corporate related to such a corporation, supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the provision, supply or acquire, or be likely to supply or acquire, goods or services.
Section 4E of the Act also assists in the elucidation of the relevant concepts of the market. It is in the following terms:
For the purposes of this Act, unless the contrary intention appears, market means a market in Australia and, when used in relation to any goods or services, includes a market for those goods or services and other goods or services that are substitutable for, or otherwise competitive with, the first-mentioned goods or services.
Of course, regard is to be paid to s 4F of the Act in this context also.
I will deal with the detailed and extensive debate on the extent of the market in due course. It is only necessary to say at this point that the analysis of what is to be concluded as the relevant market is to be assessed by reference to the context in which that question arises – the asserted purpose of Woolworths of substantially lessening competition. Reading s 45(2) and (3) relevantly together, the Act provides that:
A corporation shall not make a contract if a provision of the proposed contract has the purpose of substantially lessening competition in any market in which a corporation that is a party to the contract or would be a party to the proposed contract (or any body corporate related to such a corporation) supplies or acquires or is likely to supply or acquire goods or services, or would, but for the provision supply or acquire or be likely to supply or acquire goods or services.
Thus, the prohibition involves a subjective purpose concerning the basal economic concept around which this part of the Act works – the market. Thus, if it were the case that a party included a provision in a contract for the avowed purpose of substantially lessening, indeed stifling entirely, competition (using that word in its general English meaning, not by reference to s 45(3)) in a location or area which could not be said to be a market for the goods in question ascertained by relevant analysis, but with no other wider purpose, there may be no contravention of the Act. I will consider this in due course in examining the relationship between what Woolworths was seeking to achieve (its purpose) and how this relates to the ascertainment of the relevant market.
The notion of “substantial” or “substantially” has the sense of being meaningful or relevant to the competitive process: Rural Press (HC) at [41], which should be read in the context of what follows in Rural Press at [43] to [45]. In particular, one should pay regard to the views and practices of those in the industry, including those engaged in the impugned conduct. Understanding why they were acting, and, through that, what they were seeking to achieve, may well illuminate the relevance to the operation of the competitive process. Gummow J, Hayne J and Heydon J described the following as a “fundamental” question in Rural Press (HC) at [45]:
If [the Rural Press parties] had not seen the competitive impact of the River News as actually or potentially substantial, why did they fear it?
Of course, the notion of “lessening” is affected by s 4G of the Act which provides as follows:
For the purposes of this Act, references to the lessening of competition shall be read as including references to preventing or hindering competition.
In Australian Wool Innovation Ltd v Newkirk (2005) ATPR 42-053 at [34] Hely J said:
‘Prevents’ suggests a total cessation of dealings between the third person and the target; ‘hinders’ suggests that they have been made more difficult: J D Heydon, Trade Practices Law, Lawbook Co, Sydney, 2001 at [10.130]. ‘Hinder’, in the context of s 45D has received a broad construction, as in any way affecting to an appreciable extent the ease of the usual way of supplying or acquiring goods or services: Devenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32 at 45-46 (Mason CJ); Australian Builders’ Labourers’ Federated Union of Workers – Western Australian Branch v J-Corp Pty Ltd (1993) 42 FCR 452 at 460.
Synthesising the above, the Commission submitted that what must be established is the subjective purpose for including the relevant provision of substantially lessening, preventing or hindering competition in the relevant market in the sense of seeking to achieve an effect of lessening or hindering or preventing the process of competition that was meaningful or relevant. (To the extent that a difference might be seen in the formulations of a more or less demanding test of “substantial” by reference to the cases discussed by Gummow J, Hayne J and Heydon J in Rural Press (HC) at [41] at footnote 67 and to the arguments of counsel in Rural Press (HC) at 57 and 59-60, respectively, that is better dealt with in the context of the facts as found.)
The Commission stressed the difference between purpose and effect and submitted that a person may have the relevant purpose even if the effect cannot be achieved: Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission (2003) 131 FCR 529 at [249]. Here, it was said that the direct evidence of the Woolworths witnesses, Mr Meagher and Mr Smith, make out this part of the case (together with the relevant market analysis). Part of that submission, as will be clear when I deal with the evidence, was the submission that the purpose of filing the objection cannot be divorced from the purpose of the relevant provisions in the contracts.
Woolworths emphasised the substantive nature of the required purpose – substantially to lessen competition, and distinguished this from intentional harm to competitors or protection of its own business: cf Boral Besser Masonry Ltd v Australian Competition and Consumer Commission (2003) 215 CLR 374 and Universal Music at 591.
Leaving aside the submissions on the market, to which I will come, Woolworths submitted that there had been an inadequate foundation in cross-examination of Messrs Meagher and Smith and that it was not open to conclude on the evidence that either had the relevant purpose in respect of the relevant provisions or in respect of the giving effect to the relevant provisions. It was submitted that the cross-examiner did not squarely put relevant issues to Mr Smith and Mr Meagher, in particular the purposes of any provision in the deeds to prevent, limit or restrict supply of the sale of liquor to any persons, whether they be actual or potential customers of Woolworths or of any other liquor seller and to substantially lessen competition in the relevant market. I disagree. Mr Yates cross-examined Mr Smith and Mr Meagher fairly about what their intentions and purposes were in the transactions. Cross-examination took place in the language of human discourse. It was not necessary, although it could have been done, to put the exact words of the Act. It is for the Court to characterise the purpose from the evidence given. See generally Rural Press (HC) at [48] and Rural Press (FC) at [163].
Ettamogah – the underlying facts
The Ettamogah group of companies operated what were referred to as “themed” hotels and restaurants using the work of a cartoonist and artist, Mr Ken Maynard. The group had a number of licensed premises in Western Australia, New South Wales and Queensland. Mr Leigh O’Brien was the controller of the group and of the relevant company concerned with the relevant events (Ettamogah Pub (Campbelltown) Pty Ltd). He was an experienced and competent businessman, who had undertaken objections under the Liquor Act to the licence applications of others in connection with one or more of the group’s licensed establishments.
Before setting out my findings in relation to this episode, I must begin by saying that Mr O’Brien was a less than impressive witness. His evidence was, in important respects, confused and contradictory. At times, I gained the impression that he was unconcerned with any attention to the accuracy of what he was saying. It was difficult to identify at times whether he was being deliberately untruthful. It is sufficient to say that I approach his evidence, including his prepared statements, with considerable caution.
It is necessary to understand what the evidence reveals about the actions and purposes of Woolworths. Mr Tony Schwartz was the retained solicitor for Woolworths. Mr Anthony Smith was the officer of Woolworths who made all relevant decisions. He occupied the position of Licensing and Development Manager at the time. There was no issue in the proceedings that he was the relevant mind of Woolworths in assessing “purpose” under s 45 in respect of this episode. Mr Smith joined Woolworths in 1989 and had occupied various positions in connection with the liquor business of Woolworths. Mr Smith had worked in the liquor industry since 1979.
In early 1998, Mr O’Brien identified the possibility of opening an Ettamogah-themed restaurant and pub at Campbelltown and, in particular, within Macarthur Square Shopping Centre in Campbelltown. Mr O’Brien considered the proposal to be a good business opportunity because of the growth of the area and the location of the Macarthur Square Shopping Centre. He commenced discussions with the manager of the shopping centre (Lend Lease) and negotiated a 10-year lease commencing on 1 March 1999. The lease was entered into on 20 July 1998.
Mr O’Brien’s intentions in relation to the Campbelltown establishment are important. He intended that the Ettamogah establishment at Campbelltown (to which I will refer as “Ettamogah” or the “Ettamogah Pub”) would operate as a themed bar and restaurant and would also sell takeaway liquor to customers upon request. In his statement (Exhibit B) he said that sales of takeaway liquor would not only be of “themed” liquor but also other packaged liquor; he also said that he intended establishing a bottle shop, though not immediately. He was cross-examined at some length about these intentions. Looking at all of the evidence, I conclude that Mr O’Brien desired maximum flexibility of action and that he intended to be able to sell not only themed liquor over the counter, but also other liquor, should the demand for it exist. He also had the intention, as a possibility, depending upon the development and success of the business, to put a bottle shop on the premises. To the extent he gave instructions to his solicitors to the contrary, I find that he was attempting to mislead Woolworths and Liquorland into believing that his intentions were different from what they in fact were in order that Woolworths’ and Liquorland’s opposition might lessen. I am prepared to accept that Mr O’Brien wished to develop the establishment and its goodwill before considering the placement of a bottle shop. The other Ettamogah establishments had facilities for selling takeaway liquor.
Mr O’Brien’s aim was to seek an unrestricted hotelier’s licence rather than a restaurant licence, because an hotelier’s licence was more closely aligned with the type of business he intended to run. His understanding was that an unrestricted hotelier’s licence would allow the sale of takeaway liquor from the premises. I accept that some planning and consideration was given to a possible bottle shop. I find that Mr O’Brien was alive to the need not to appear threatening to other liquor outlets in the area (such as Woolworths and Liquorland). Though it is unnecessary to conclude, it is likely that such consideration affected a decision which was made not to include the bottle shop in his original plans for approval by Council.
After negotiations commencing in February 1998, on 20 July 1998, Ettamogah Pub (Campbelltown) Pty Ltd executed a 10 year lease with Australian Prime Property Fund Custodian Pty Limited and MLC Properties Pty Limited from 1 March 1999. The use of the Campbelltown premises was described in the lease as a “theme bar and restaurant and retail sale of theme merchandise.” On its face, this might be seen as wide enough to sell liquor (themed or not) over the counter in the running of a “theme bar”. In cross-examination, Mr O’Brien accepted, however, that he had no consent of the landlord to sell non-themed liquor over the bar. In any event, an amendment or express permission may have been required to operate a bottle shop. The development consent obtained from Campbelltown City Council was based on drawings which did not include a bottle shop. Further development consent was required before any bottle shop could operate. The development consent initially obtained limited the hours of operation from 10 am to 12 midnight, Monday to Sunday. These hours were later extended to permit the running of a night club after midnight.
It appears clear that Mr O’Brien had not asked the landlord for permission to sell non-themed takeaway liquor from the premises. I am unpersuaded, however, that that undermines Mr O’Brien’s evidence that he always intended to sell such non-themed takeaway liquor. Running a “theme bar” with an hotelier’s licence could reasonably be expected to encompass bar sales over the counter. That Mr O’Brien did intend to sell non-themed takeaway liquor, though perhaps only to avoid confrontation with customers, can be seen in his letter to Lend Lease in November 1998.
Also, I am not prepared to conclude that Lend Lease had refused permission for a bottle shop in those early discussions.
Woolworths submitted that I should find that Mr O’Brien had no firm intention of selling liquor, other than Ettamogah-themed liquor, over the bar at the premises before the deed was executed. I do not do so. He did have that intention; although the extent of what that sale would be was not clear. He appears to have told his solicitor in about May 1998 that it was his intention to sell a limited amount of packaged liquor only. Plainly bar sales would not occur during hours of operation of the nightclub. However, there was good commercial reason to think that takeaway sales over the counter would be a useful adjunct to the sale of themed liquor, even though its margin would be less.
Mr O’Brien also intended, at least as a possibility, that a bottle shop would be established. No relevant approvals had been sought; but I accept that it was an alternative that Mr O’Brien contemplated for the future.
Meanwhile, the liquor licence was being attended to. Shortly prior to 9 March 1998, Mr O’Brien approached T E Rummery & Partners for advice on the obtaining of an hotelier’s licence. The firm specialised in liquor licensing. On 15 April 1998, an application was made for such a licence for the premises by an employee of a company in the Ettamogah group.
Mr O’Brien said that at the time of the application he did not anticipate any objections. I have difficulty with this evidence. He was a businessman experienced in running liquor outlets. He had objected to the applications of others in the past. The advice of Mr Gallagher from T E Rummery & Partners referred to the objection process. I doubt that the objections that were made to the application came entirely as a surprise to him. However, I am prepared to accept that Mr O’Brien underestimated the resolution that was shown by Woolworths and Liquorland, or that he overestimated his capacity to deal with any objections.
In late May 1998, Mr O’Brien became aware of objections. On 25 May 1998, Mr Schwartz spoke to Mr Sean Gallagher of T E Rummery & Partners at the Licensing Court, which conversation Mr Schwartz relayed to Mr Smith at Woolworths by letter on the following day, in the following terms:
[The solicitor for the applicant] advised it was not their intention to sell packaged liquor for consumption off the premises, other than a particular brand of liquor which is sold in bottles as part of the marketing of the premises and is currently being sold at their Darling Harbour premises.
Mr Smith said in his statement (Exh 10) that from this letter he understood that the Ettamogah applicant wished to operate an hotelier’s licence primarily to carry on an Ettamogah-themed establishment and to concentrate on providing meals, entertainment, gaming, dining, on-premises liquor consumption and sale of themed takeaway liquor. I accept that evidence. Mr Smith began his consideration of the application with this understanding. On 1 June 1998, shortly after receiving this letter from Mr Schwartz, Mr Smith visited the site. He noticed that it was “very close” to Woolworths’ liquor store in the Macarthur Square Shopping Centre and also proximate to Woolworths’ “Mac’s Liquor Store” nearby. The geographic proximity “was of concern to” Mr Smith. However, at this time, with the belief he had about the nature and extent of the intended business by the Ettamogah applicant, he saw “no threat to the value of Woolworths’ licences [being the two Woolworths liquor outlets immediately proximate to the Ettamogah site]”.
On 26 May 1998, Mr Schwartz sent Mr Gallagher a letter in the following terms:
I refer to … to our recent discussions at the Licensing Court and confirm that I act on behalf of Woolworths Limited the owner and operator of two off-licences (retail) at Campbelltown.
I note that it is your client’s intention to only sell a limited product of packaged liquor for consumption off the premises and accordingly I would appreciate receipt of a copy of your Application and support Affidavits so that I can obtain some instructions from my client as to their involvement in these proceedings or otherwise.
No doubt Mr Gallagher understood from his instructions what he told Mr Schwartz as recounted in Mr Schwartz’s letter. By way of likely clarification, on 9 June, Mr Gallagher wrote to Mr O’Brien saying the following:
Please advise us whether it is your intention to limit take away sales to the gift/novelty lines which are currently sold from Darling Harbour, we shall then contract Macs’ solicitors. [sic]
Mr O’Brien gave evidence that he told Mr Gallagher, in answer to this letter, that it was not his intention to sell takeaway liquor at the premises other than themed liquor. Early during his oral evidence Mr O’Brien said in an answer to me that this was not a true statement of his intention. After some cross-examination on this in which Mr O’Brien appeared to feign confusion, he withdrew this evidence and then reinstated it. I think the truth was reflected by some of his evidence late in this part of the cross-examination: he was seeking to tell Woolworths what “they wanted to hear, hoping they would go away”. Through Mr Gallagher (on his part, no doubt, unwittingly) Mr O’Brien was telling a lie to Woolworths, or, as he put it, “bending the truth”. This conduct, whilst meriting criticism, was consistent with Mr O’Brien seeking to obtain an unconditional licence which would permit him maximum flexibility in the business as it developed. As I said, I do not accept that the objections came as a surprise to him. One way of attempting to deal with the objectors was to lie to them by giving his solicitor incorrect instructions, hoping that they would “go away” or be less thorough or determined in their objections than they otherwise might have been.

From this material, it was submitted that the purpose of the prevention of one more entrant into an already competitive market with a given volume of sales might rationally be not to affect competition but to protect sales from being shared with one more supplier. It was submitted that Dr Smith’s evidence supported the proposition that an anti-competitive purpose would only arise where the purpose was to protect the business from harm through a reduction in competition. The Commission submitted that a gloss was being put on Dr Smith’s evidence. I am not sure about that. As I read Dr Smith’s evidence one would need to discern, in any case about the purpose of substantially lessening competition, a relevant aspect of the purpose to be to affect the competitive process. That would not be satisfied merely, so it was said, by discerning a purpose to prevent the entry into the market of a competitor or, more relevantly here, of a platform for competition which, if deployed effectively, might damage the firm in question by reducing the revenue and profitability of the firm, if the market was otherwise competitive.
There is a danger in disembodying the debate about purpose from the evidence that is available. Even if a market is workably competitive or highly competitive, the appearance of a new entrant actively engaging in the winning of market share and recognition is the working of the competitive process. The effect of a new entrant may have a detrimental effect on the business and turnover of incumbents. That, of itself, will create competitive pressures and close competition to defeat the new entrant’s attempt to gain market share and a place in the market. There may be cases where a firm acting to prevent a new entrant can explain that by a desire divorced from competition and the competitive process. If a firm has a purpose to impede or prevent the entry of a new competitor into a market lest that new entrant conduct itself competitively to wrest business from the incumbent and so damage its business, that purpose involves the process of competition. It involves preventing entry into the market and preventing a state of affairs of lost sales through additional competitive activity. Such lost sales and damage to business will, in the ordinary course call for steps, if available, in response to meet the challenge of any new entrant. The available steps may be marginal if the market is already highly competitive. To say as much, however, is only to posit even closer, or more fierce, competition. If a purpose is to prevent or impede market entry and so to prevent competitive activity, that is sufficient it seems to me to amount to a purpose directed to the competitive process. One does not need to superadd a further purpose that the success of that purpose is to affect the degree of competitive activity as opposed merely to preventing the firm’s share of revenue in a mercantilist sense. The entry of competitors is an essential attribute of the competitive process. It is the means of access for competitive trading and for pressure on incumbent firms, through their revenue and profitability, to offer more or charge less in order to retain their places in the competitive (on this hypothesis increasingly competitive) market. If the grant of new licences were seen as a competitive threat they were so seen because they were a threat to business through competitive activity. A purpose to prevent or impede such competitive activity is a purpose concerned with the process and conduct of competition.
The resolution of the contested issues of statutory construction and conclusions as to construction
sections 4D and 4F and 45(2)(a)(i) and (b)(i)
I have already dealt with some of these issues along the way, see in particular [44]-[92] above. The first group of contested issues of construction is strictly unnecessary to answer. They concern whether it can be said that Woolworths was competitive with each of the applicants. It is admitted in each case that Woolworths was competitive with Liquorland, and, also, in relation to Palms Village, with Mr Haslam’s company. I have dealt with this issue already in respect of each episode: see [207] to [215], [259] to [260], [321] to [323] and [411] to [412] above.
I have also dealt with the purpose of each of the parties to the deeds. In each case, Woolworths, on the evidence, was one of the parties as a result of whose efforts the relevant provisions were included. I reject the submission of Woolworths that Pont Data is irrelevant because that case only has relevance where a provision or deed is entered into or undertaken under protest. In each case, the provisions were included as a result of the efforts of Woolworths and Liquorland. In any event, the purposes of the other parties can be inferred as I have.
Section 4F does not require that there be one substantial purpose or the substantial purpose, the relevant purpose need only be a substantial purpose.
I reject the submission of Woolworths that s 4D can have no application on the facts here because at the time of entry into the deeds all the applicants who were subject to the relevant restriction had no legal right to sell the product (takeaway liquor) in question. There is no reason, it seems to me, to conclude that a purpose is not to prevent sales to particular persons (or classes of person) merely because the purpose is to prevent the sale in the future of goods to a particular class formed in the future. I do not see anything said in Rural Press (HC) or Australian Competition and Consumer Commission v Visy Paper Pty Ltd (2001) ATPR 41-799 at [156] as providing for such a restriction to be read into the provision. The question is: What was the purpose of the provision? In this case: What was the subjective purpose of Woolworths as to the provision? Was it, relevantly, to prevent, restrict or limit supply or acquisition of goods to or from particular persons or classes of persons. If the restriction is to operate through a party not yet able to supply, that does not gainsay the purpose which is one which is to operate in the future. The future operation of a relevant restriction is contemplated by s 4D(2). I see no reasons to constrain s 4D(1) by the implication of a need for a present legal right or capacity to supply, if a purpose otherwise satisfying s 4D is found, though only to operate at some future time or in some future circumstance.
For the same reasons, I reject the submissions of Woolworths that the s 4D case fails because of the futurity of the class. The task is not an over-elaborate one. It is to ascertain the relevant purpose of the provision, here, by ascertaining the purpose of the party, Woolworths, by whose efforts the clauses were included in the deeds. If, taking into account any element of futurity, the class has the requisite particularity, the provision will be satisfied.
Woolworths submitted that the particularity of the persons or class must arise entirely otherwise than by the characteristic of being excluded from supply. Reliance was placed on what Callinan J said in Souths at [189]. However, as I sought to show earlier, the passage from Pont Data (set out at [58] above) which was criticised by Woolworths has not been disapproved. In my view, the passage referred to at [58] above is an expression of view by a Full Court of this Court (Lockhart, Gummow and von Doussa JJ) in a joint judgment which I should follow. Thus, relevant to the particularity of the class, is the fact that its members are the objects of the purpose in question.
It was submitted by Woolworths that the class cannot be “some unidentified potential group of customers”. The relevant question is not an isolated proposition capable of independent analysis; rather, the relevant question is whether, on the facts as they present themselves here, a purpose of each relevant provision was to prevent, restrict or limit the supply of goods to particular persons or class of person. The degree of definition and the common characteristics that lead one to the conclusion that a class is “particular” is not capable of being expressed otherwise than by application of the language chosen by Parliament to the facts and purpose in question. To seek to do so is to embark on a process of deconstructing, or glossing, of Parliament’s words with the almost inevitable (and certainly impermissible) substitution of a different word or phrase for that chosen by Parliament. That one person’s view that the definition of a class to which the purpose in question was directed is sufficiently “particular” to fall within the section is open to debate is an inevitable consequence of the indeterminate frame of reference contained within the adjective “particular”.
It is necessary to turn to the episodes here and assess whether s 4D (and so, s 45(2)(a)(i) and (b)(i)) is satisfied.
Ettamogah
Woolworths’ purposes included, relevantly, the purpose of preventing the supply of takeaway packaged liquor (other than themed liquor) to all future customers of the Ettamogah Pub. The commercial aim of Woolworths was to protect the existing business of Woolworths in the local area from losing custom to the Ettamogah Pub. The purpose therefore can also, and separately, be expressed to be preventing the supply of takeaway packaged liquor (other than themed liquor) to future customers of the Ettamogah Pub who might otherwise buy such liquor from the Woolworths’ stores in the area. I do not think that one can define the group any more closely. Though the evidence tells one that there is likely to be a geographical catchment for people who will shop at the Ettamogah Pub or the Woolworths’ stores at Campbelltown, that does not really assist in the delineation of the class. This can, perhaps, be contrasted with the class defined by the trial judge in Rural Press (HC) (see [56] above). Nevertheless the class can be defined in one of two ways. It has a degree of particularity in both forms. This is sufficient, it seems to me, for the class to be called a particular class. The purpose of Woolworths was directed towards restricting supply to that identifiable (and particular) class. I therefore conclude that the purpose of the provisions of the Ettamogah Deed, in particular clause 1.2, was to prevent or restrict or limit the supply of takeaway packaged liquor to the above particular classes of persons. I conclude that Woolworths thereby contravened s 45(2)(a)(i) and (b)(i) in that respect.
Jin Ro
Mr Smith’s purposes did not include any purpose to prevent Jin Ro doing anything. He believed that the restrictions in the Jin Ro Deed reflected the parameters of Jin Ro’s commercial intentions or that it did not prevent Jin Ro from doing anything that it desired to do. Mr Smith’s purpose was to ensure that this licence was not able to be used by any person (Jin Ro or a transferee) as a platform for competition with the soon to be opened Woolworths’ store. That is, his purpose was to prevent this licence being or becoming a competitive threat in the future in the Rockdale area by disabling it from being used by a future market entrant. Thus understood, there was no purpose of preventing, restricting or limiting the supply of takeaway liquor to any particular person or class of persons. The purpose was to neutralise this licence for the future and to eliminate any potential for it being available to be used as a competitive threat to the Woolworths’ store soon to be opened.
The essential difference between this episode and the Ettamogah episode is that in the latter the purpose was directed to the prevention of supply of takeaway liquor to a class, whereas here the purpose was not directed in the same way.
I conclude that there was no contravention of s 45(2)(a)(i) and (b)(i) by Woolworths in relation to Jin Ro.
Palms Village
As discussed earlier, the purpose of Woolworths in the restrictions required was to ensure that the business carried on under the licence was not able to expand in any way at this site or any other site. The purpose was not directed to particular persons or classes of persons. As I have found, Mr Meagher did intend that the restrictions conform to what he understood the applicant wanted to do with the licence. Thus his (and Woolworths’) purposes did not include a purpose to prevent customers at the Dry Dock bottle shop being sold any particular liquor. Limits were placed on the licence, but the purpose in this was not one directed to preventing, restricting or limiting the supply of liquor to particular persons or classes of person, but to ensure, as far as possible, that the licence could not be redefined or relocated to be used in a way which might facilitate the entry of a competitive threat to Woolworths’ Tweed Heads liquor stores.
I conclude that there was no contravention of s 45(2)(a)(i) and (b)(i) by Woolworths in relation to Palms Village.
Global Beer
Whilst Mr Meagher and Woolworths did not view Mr Dixon’s application as a serious threat in itself, they were determined to include in the deed being negotiated and they did include in the Global Beer Deed a provision directed to preventing, restricting and limiting the supply of certain types of takeaway liquor by Mr Dixon to his future customers. The purpose of clause 1 was to prevent Mr Dixon selling to his future customers takeaway beer that was other than there defined. This provision was directed to preventing Mr Dixon selling beer which during negotiation it had become evident he wanted to sell – boutique or imported beer which might be generally sold from Woolworths’ stores at Tweed Heads.
Thus, though Mr Meagher’s purpose was principally to ensure as far as he could, or as far as he thought was necessary, that the licence could not be used by any potential competitor in the area to the detriment of Woolworths’ stores in the Tweed Heads area, a real and, in my view, substantial, purpose was to prevent the sales of certain competitive lines of beer by Mr Dixon to his customers. As with the Ettamogah episode, the purposes of Mr Meagher and Woolworths included, relevantly, the purpose of preventing the supply of takeaway packaged liquor (other than such of a kind described in clause 1) to all future customers of Mr Dixon. The commercial aim of Woolworths in this respect was to protect the existing business of Woolworths in the local area from losing custom to Mr Dixon (even if the fear was less than acute). The purpose therefore can also, and separately, be expressed to be preventing the supply of takeaway packaged liquor (other than that described in clause 1) to future customers of Mr Dixon who might otherwise buy such liquor from the Woolworths’ stores in the area.
I conclude that the purpose of the provisions of the Global Beer Deed, in particular clause 1, was to prevent or restrict or limit the supply of takeaway packaged liquor to the above particular classes of persons. I conclude that Woolworths thereby contravened s 45(2)(a)(i) and (b)(i) in that respect.
s 45(2)(a)(ii) and (b)(ii) – substantially lessening competition
I have earlier dealt with the submission of Woolworths that its purpose is irrelevant to the question of market definition.
Woolworths submitted that the Commission must establish that Woolworths had the purpose of harming the competitive process or state of competition in the relevant markets alleged by it so as to substantially lessen competition in those markets; that it was insufficient to demonstrate that Woolworths had the purpose of harming any of the licence applicants in question; and that it was insufficient to establish that Woolworths had the purpose of protecting its own business.
At one level these propositions can be readily accepted. However, the notion of purpose in the context of s 45(2)(a)(ii) and (b)(ii) must be understood in the real world. People are unlikely ever to direct themselves to a consideration of market definition, the choice of a market, the notion of the competitive process (as opposed to competitors), the elements of the operation of the competitive process and the substantial (in the sense discussed below) lessening, preventing or hindering of competition. No cross-examination was directed to Mr Smith or Mr Meagher in these terms, that is, using this terminology. I have little doubt that they did not converse or think in these terms. What they did was to formulate their approach, purposes and, no doubt, discourse in everyday terms, in which terms they were cross-examined. What is necessary is to understand what the purposes of Mr Smith and Mr Meagher were and to assess whether in the language and the content of the Act those purposes included as a substantial purpose (for s 4F) a purpose of substantially lessening, preventing or hindering competition, competition being, of course, the competitive process.
Debate took place on the meaning of the word “substantially”. Great care needs to be taken in debate about the content of such words. In s 46 “substantial” means “a considerable or large degree of such power”, when qualifying market power: Eastern Express Ltd v General Newspapers (1992) 35 FCR 43 at 63; and Universal Music at [131]-[132]. In relation to the word “substantial” in s 4F(a)(ii) and (b)(ii) Heerey J said the following in Monroe Topple at [97]:
Did the proscribed purpose, if it existed, loom large among the objects the corporation sought to achieve?”
The content of the word “substantially” in s 45(2)(a)(ii) and (b)(ii) has been discussed in a number of cases, to some of which I referred at [86]-[89] above. It is clear that “substantially” is used in the sense of meaningful or relevant to the competitive process, and that it is necessary that the purpose be to achieve an effect of that kind. The discussion in Rural Press (HC) at [41] footnote 67 may indicate that there is a layer of meaning of “considerable” to be added to the notion of being meaningful or relevant to the competitive process. However, it is difficult to understand what purpose of the Act would be advanced by a conclusion that the purpose or effect of a provision was to lessen, prevent or hinder the competitive process, in a way which was meaningful and relevant to the competitive process, but was not sufficiently “considerable” to warrant relief. Once one recognises that the purpose must be to do something meaningful or relevant to the competitive process, adjectives, adverbs or like phrases connoting quantity, such as “considerable”, “more than nominal”, “more than insignificant”, can be seen to be subsumed in the evaluative and functional analysis in deciding whether a purpose or conduct was of a character deserving of the intervention of the Court, in the light of the purposes of the Act, as being meaningful or relevant to the competitive process. I am not able, with respect, to express the matter more clearly than French J did in Stirling Harbour Services Pty Ltd v Bunbury Port Authority (2000) ATPR 41-752 at [114]:
The concept of “substantially lessening” competition is evaluative. There is only limited assistance to be derived from replacing the words with other phrases. The term is not defined in the Act and has not received extensive judicial exposition – Eastern Express Pty Ltd v General Newspapers Pty Ltd (1991) ATPR 41-128 at 52,905 (Wilcox J); Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1982) 44 ALR 557 at 564 (Lockhart J); Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees’ Union (1979) 42 FLR 331 at 348, the latter on the meaning of “substantial” in the collocation “substantial loss or damage” under the old s 45D. In my opinion the phrase sets a standard for judicial intervention in respect of the classes of anti competitive conduct to which it applies. It requires, before that intervention can be invoked, that there be a purpose, effect or likely effect of the impugned conduct on competition which is substantial in the sense of meaningful or relevant to the competitive process. There is, of course, a certain circularity in these attempts at exposition. It could be said that a substantial lessening of competition describes a purpose or outcome of conduct which is deserving of the intervention of the Court in the protection of the competitive process according to law. So to say, is to identify the functional character of the statutory standard.

The evidence of Mr Smith and Mr Meagher enables conclusions about their purposes to be drawn about all the episodes. Both men were very experienced in the industry. Both understood that an unrestricted off-licence was a scarce article and a potent item providing the foundation for the entry of potentially significant competition in the local area in which it was deployed.
A substantial purpose of the objections and of the provisions was to prevent the licence being or becoming the platform or vehicle for a market entrant without restriction on its licence. This purpose was distinct from dealing with such aspects of any competitive threats of the applicants in question here, in the businesses that they wanted to pursue. It was a purpose to ensure, as far as was possible by the provisions, that the licence to be granted could not in the future be available as a scarce and potent item to be used by an entrant to the business of selling takeaway liquor in the local area where Woolworths had, or would shortly have, a liquor outlet.
This purpose flows easily from their evidence and from appreciating that they were intelligent men, experienced in the operation and working of the liquor industry and of the Licensing Court. It is unnecessary for a decision in this case to draw conclusions in this respect about the purpose of Liquorland. I have not heard evidence from its employees. To the extent that it is necessary, however, I do conclude that the evidence before me is sufficient to allow me to draw the conclusions that I have about the purposes of the relevant provisions for s 45(2)(a)(ii) and (b)(ii), principally from the purposes of Woolworths.
Once one accepts that the market was, as I have found, a local one, this purpose can be seen plainly to be relevant to the competitive process in that market. It was directed to denying any new potential entrant to the local market this vehicle (being a “potent item”) for entry to the market. This did not deny the potential new entrant the ability to enter the market by applying for its own licence. However, the purpose was to make sure, as far as was possible, that this licence could not be used for facilitating any unrestricted market entry, now, or in the future.
The fact that this purpose may have been legitimately pursued simply by enforcing rights given by State law in a State court is not to the point. Nor is it to the point that Woolworths may have won these cases or that some restrictions may have been placed on the licence by the Licensing Court. The purposes of the deeds and their provisions included a purpose, as a substantial purpose, as I have described. That purpose was directed to the competitive process in a meaningful way.
Therefore, I conclude that the provisions of each of the Ettamogah Deed, the Jin Ro Deed, the Palms Village Deed and the Global Beer Deed had the purpose of substantially lessening competition and that Woolworths thereby contravened s 45(2)(a)(ii) and (b)(ii) in those respects.
Miscellaneous
In the cross-examination of Dr Walker a direct and sustained attack was made on her credit. It is unnecessary to descend into the detail of this attack. I considered carefully the terms of the cross-examination at the time that it was undertaken and have carefully considered the transcript and her reports. I was and am clear in my mind that Dr Walker did not, as was suggested, set out in a selective and intellectually dishonest way to place before the Court the results of biased advocacy. There were some aspects of her evidence that were less than compelling, as can be seen from my reasons. However the same can be said of some aspects of Dr Smiths’ evidence. That is not said by way of personal or professional criticism of either. Far from it. I found the views of both and the discourse each provided in writing and orally helpful, indeed, essential, in making the evaluative judgments required of me. As the length of these reasons help to demonstrate, the task of condensing a view for the assistance of the Court in a case such as this to a manageable size is not easy.
In this context, it is appropriate to say something of the place and role of expert witnesses in cases such as this. In giving reasons for rulings on some of the expert evidence ([2005] FCA 630) I identified some aspects of the presentation of expert evidence in competition cases. If I may repeat, by way of paraphrase, part of what I there said in the context of ruling on evidence in the following.
In cases such as this dealing with a social science, the views of Professor Brunt expressed, if I may respectfully say so, with her customary clarity in chapter 8 of the helpful compendium of her work Economic Essays on Australian and New Zealand Competition Law, illuminate one aspect of the helpful, indeed essential, role for expert evidence in this field. In that chapter, Professor Brunt quoted Keynes at page 358, where that learned economist said:
The Theory of Economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique of thinking, which helps its possessor draw correct conclusions.
The “economic” questions here involved the assessment of the purposes of humans working in a commercial environment and the appropriate economic framework in which to discuss them.
With the taxonomy of expert evidence of fact, assumptions, reasoning process and opinions as an accepted (indeed necessary) framework, one then comes to the role of the economist in a case such as this. Because it is a social science, and because it is a way of approaching matters and a way of thinking about matters, there is a role, for the economist to assist the court by expressing, in his or her own words, what the human underlying facts reveal to him or her as an economist and what it reflects to him or her about underlying economic theory and its application.
For instance, if in this case there had been tendered a mass of industry data about consumer behaviour, about catchment areas for shops and about activities of shopkeepers, and senior counsel for the Commission closed his case and addressed me on that question, I could well understand and expect one submission from the respondent to be that there was a startling and illuminating absence of evidence in this case - the lack of assistance that I was given from an economist putting together, sorting and ordering, within the confines of economic theory, the human behaviour reflected by that raw data. It might be said that a Jones v Dunkel inference or conclusion could be drawn if the Commission could not find an economist to assist me with the interpretation, from an economic standpoint, of that raw data. That, I think, throws up the problem in some of the objections to admissibility that were made, in some respects in relation to the form of the evidence, and in some respects in relation to the problem about the attacks on the witnesses, in particular, Dr Walker, in cross-examination.
The recognition of the place of expert economic assistance in the manner described by Professor Brunt means that often the point of the expert opinion is to give a form or construct to the facts. It may appear to be an argument put by the witness. So it is. The discourse is not connected with the ascertainment of an identifiable truth in which task the Court is to be helped by the views of the expert in a specialised field. It is not, for example, the process of ascertaining the nature of a chemical reaction or the existence of conditions suitable for combustion. The view or argument as to the proper way to analyse facts in the world from the perspective of a social science is essentially argumentative. That does not mean intellectual rigour, honesty and a willingness to engage in discourse are not required. But it does mean that it may be an empty or meaningless statement to say that an expert should be criticised in this field for “putting an argument” as opposed to “giving an opinion”. In this respect, regard should be had to the comments of French J in Sampi v State of Western Australia [2005] FCA 777 at [792]-[793] where his Honour said in dealing with the anthropological evidence in native title cases:
Aspects of the reports offered what might properly be called argumentative or taxonomical conclusions or inferences relevant to the claimed determination of native title. To call them such is not necessarily to denigrate them. The judgment of the Court in determining the application is in part evaluative. The Federal Court Rules recognise that there are aspects of so called expert testimony which are argumentative and can be treated as submission. Order 10 r 1(2)(j) provides:
‘Without prejudice to the generality of sub-rule (1) or (1A) the Court may –
...
(j) in proceedings in which a party seeks to rely on the opinion of a person involving a subject in which the person has specialist qualifications, direct that all or part of such opinion be received by way of submission in such manner and form as the Court may think fit, whether or not the opinion would be admissible as evidence.’
The rule of court was developed in part to respond to concerns about the way in which rules of evidence might lead to the exclusion of helpful economic testimony in competition law cases. Economic experts typically offer opinions about questions such as market definition relevant to the application of particular provisions of the Trade Practices Act 1974 (Cth). Such opinion is by way of characterisation of primary evidence and is essentially argumentative in character albeit the characterisation is informed by relevant expertise. An anthropologist, as in the present case, may offer an opinion on whether a particular group of people constitute a distinct or discrete society of persons. The nature of the taxonomical exercise is conceptually similar to that undertaken by the economist.
There is potentially some tension between the recognition that expert testimony may have the character of submission and the Practice Direction relating to expert witnesses which contemplates acceptance by the expert of a duty to the court in providing opinion evidence and which rejects the proposition that the expert is simply a ‘hired gun’ for the party who calls him or her. That tension and associated difficulty in the way of accepting expert testimony as evidence can arise where the opinion offered becomes advocacy for a particular outcome.
Relief
For the above reasons, I conclude that the Commission is entitled to relief arising from contraventions of the Act by Woolworths of s 45(2)(a)(i) and (b)(i) in respect of the Ettamogah and Global Beer episodes and of s 45(2)(a)(ii) and (b)(ii) in respect of all four episodes. It is appropriate to require the Commission to formulate the orders it seeks to reflect my reasons. Prima facie, it would appear to me that the Commission is entitled to declarations of contravention. Whether injunctive relief is appropriate, in the light of the changes to the Liquor Act, may be debatable. The question of penalty also arises. The parties will need to give some attention to a regime for any further evidence (and whether that is appropriate) and a hearing on that issue. An appropriately framed order under Order 29 of the Federal Court Rules should be considered. The question of the timing of the penalty hearing should be addressed by the parties. Subject to argument, I would not be in favour of delaying that until the outcome of any appeal.
I will leave these orders to be addressed by the parties and the matter can be discussed on a later occasion. Some orders, do however, need to be made now. I will mark Exhibit AA4 and Administrative Exhibit A14 and make the rulings in relation to Administrative Exhibits A13 and A14 that I have indicated. Also, a significant body of evidence, mainly documentary evidence, was admitted subject to an order under s 50 of the Federal Court of Australia Act 1976 based on commercial confidentiality. I do not propose to vary those orders unless requested to do so. However, if any person, whether Woolworths or Liquorland, or anyone else, seeks to have any part of my reasons not made available to the public, that person will have to persuade me, with evidence, that the administration of justice requires that course, in circumstances where the relevant evidence remains the subject of a s 50 order. To preserve the positions, I will limit, until further order, the publication of some of my reasons on market definition. One paragraph [728] will be distilled from Woolworths and Liquorland material. I will make it confidential to both parties. It appears to be benign, but if I should further disaggregate it, I should be told by Woolworths and Liquorland.
Therefore, the orders that I will make today are as follows:
1.The parts of Administrative Exhibit A13 set out at [765] of the reasons herein be rejected.
2.The template sent to the Court by the Applicant under cover of letter of 1 August 2005, with the parts identified in [765] of the reasons herein as rejected, be admitted into evidence and marked Administrative Exhibit A14.
3.The folder entitled “Status of Exhibits AA1 and AA2” provided to the Court in May 2006 together with letter dated 25 May 2006 from the Australian Government Solicitor to Ms Kathryn Wilson together with its enclosure be marked Exhibit AA4.
4.Until further order, these reasons for judgment in an unredacted version not be published or made available to anyone other than the Applicant, and counsel and solicitors for the second respondent (“Woolworths”).
5.Subject to order 12 below and until further order, [455] to [487], [499] to [505], [507] and [714] to [716] of the reasons not be published or made available to anyone other than the Applicant and Woolworths.
6.Subject to order 12 below and until further order, [488] to [498], [506], [508] to [509] and the fifth sentence of [796] of these reasons not be published or made available to anyone other than the Applicant, counsel and solicitors for Woolworths, and the first respondent (“Liquorland”).
7.Subject to order 12 below and until further order, [728] of these reasons not be published or made available to anyone other than the Applicant, Woolworths and Liquorland.
8.Subject to order 12 below, as soon as practicable, and in any event on or before 7 July 2006, the Applicant provide to Liquorland a copy of these reasons for judgment (other than the paragraphs referred to in order 5 above) and these orders and inform Liquorland that if it wishes to prevent publication of any of the paragraphs referred to in orders 6 and 7 above or any part of those paragraphs it must make application, on notice to the Applicant supported by evidence; and that if such an application is to be made it must be notified to the Applicant, the Court and Woolworths no later than 21 July 2006, in which case a directions hearing will be held for the hearing of such application on 9 August 2006.
9.On or before 21 July 2006, Woolworths notify the Applicant and the Court whether it proposes to move the Court to prevent publication of any of paragraph of the reasons herein.
10.On or before 14 July 2006, the Applicant serve on Woolworths a draft of declarations and orders that it proposes.
11.On or before 28 July 2006, Woolworths provide to the Applicant its objections, and any reasons therefor, to any such proposed declarations and orders, and any suggested version reflecting the reasons.
12.On or before 3 July 2006, the Applicant and Woolworths bring to the attention of the Court any further paragraph that should, prima facie, be restricted. Such assessment is not to be made by giving Woolworths (other than through its counsel and solicitors) access to the paragraphs referred to in orders 6 and 7 above. Thus, until further order to allow the Applicant and Woolworths to have this opportunity to assess the question of confidentiality, no redacted version of the judgment shall be made available either to the public or to Liquorland.
13.The proceedings be stood over for any argument as to orders, the making of orders and directions to 9.30 am on 9 August 2006.
Thus, there will be, until further order, four versions of my reasons: a complete version limited to (at the moment) the Commission and counsel and solicitors for Woolworths; a redacted version for Woolworths with reference to Liquorland’s documents removed; a redacted version for Liquorland with references to Woolworths’ documents removed; and a redacted version for the general public with references to Woolworths’ and Liquorland’s documents removed.
If any party is of the view that I have overlooked a matter in my reasons, which, conformably with my reasons, should be addressed, it should raise that matter on or before 9 August 2006 with the other party and on 9 August 2006 with the Court. This is not, however, an invitation for reargument.
It remains only to express my considerable thanks and gratitude to the solicitors and counsel for both parties for their skilled and careful assistance. By reason of pressures of other commitments, the reasons for judgment have taken longer to finalise than I originally anticipated would be the case. The parties may take it, however, that to the extent I have made comments on witnesses, their reliability and truthfulness, those views were reached, after careful consideration, at and close to the time of hearing of the proceedings.

I certify that the preceding eight hundred and forty eight (848) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.

Associate:
Dated: 30 June 2006

Counsel for the Applicant: Mr D M Yates SC, Mr P Renehan and Mr D H Godwin

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the Second Respondent: Mr R M Smith SC and Mr M A Jones

Solicitor for the Second Respondent: Clayton Utz

Dates of Hearing: 22, 26, 27, 28 and 29 April, 9, 10, 11, 12, 13, 16, 17, 18, 19, 20, 23, 25, 26, 27, 30 and 31 May, 1, 2, 3, 14, 15, 16, 17, 20, 21, and 24 June, 19 and 20 July 2005

Last Submissions Received: 12 September 2005

Date of Judgment: 30 June 2006
A
(The “Ettamogah Deed”)
A1
(“Mr Dimasi’s Map 3.1”)
A2
(“Mr Dimasi’s Map 3.2”)
A3
(“Mr Dimasi’s Map prepared in 2003”)
A4
(“Mr Dimasi’s Map 3.3”)
B
(The “Jin Ro Deed”)
B1
(“Mr Dimasi’s Map 2.1”)
B2
(“Mr Dimasi’s Map 2.3”)
B3
(“Mr Dimasi’s Map 2.4”)
C
(The “Palms Village Deed”)
C1
(“Mr Dimasi’s Map 4.1”)
C2
(“Mr Dimasi’s Map 4.3”)
C3
(“Mr Dimasi’s Map 4.4”)
C4
(“Mr Dimasi’s Map 4.7”)
D
(The “Global Beer Deed”)
D1
(“Mr Dimasi’s Map 4.5”)

[2006] FCA 826

26 JULY 2006

Key Legal Topics

Areas of Law

Competition Law

Legal Concepts

Market Entry

Competitive Practices

Unconscionable Conduct

Breach of Contract

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 769 of 2003

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
AND:	LIQUORLAND (AUSTRALIA) PTY LTD FIRST RESPONDENT WOOLWORTHS LTD SECOND RESPONDENT
JUDGE:	ALLSOP J
DATE OF ORDER:	26 JULY 2006
WHERE MADE:	SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 769 of 2003

JUDGE:	ALLSOP J
DATE:	30 JUNE 2006
PLACE:	SYDNEY

Counsel for the Applicant:	Mr D M Yates SC, Mr P Renehan and Mr D H Godwin
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Second Respondent:	Mr R M Smith SC and Mr M A Jones
Solicitor for the Second Respondent:	Clayton Utz
Dates of Hearing:	22, 26, 27, 28 and 29 April, 9, 10, 11, 12, 13, 16, 17, 18, 19, 20, 23, 25, 26, 27, 30 and 31 May, 1, 2, 3, 14, 15, 16, 17, 20, 21, and 24 June, 19 and 20 July 2005
Last Submissions Received:	12 September 2005
Date of Judgment:	30 June 2006