Australian Competition and Consumer Commission v Metcash Trading Ltd
[2011] FCA 967
•25 August 2011
FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Metcash Trading Limited [2011] FCA 967
Citation: Australian Competition and Consumer Commission v Metcash Trading Limited [2011] FCA 967 Parties: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v METCASH TRADING LIMITED ACN 000 031 569 and PICK N PAY RETAILERS (PTY) LIMITED File number(s): NSD 1714 of 2010 Judge: EMMETT J Date of judgment: 25 August 2011 Catchwords: TRADE PRACTICES – whether share acquisition in the grocery industry would contravene s 50 of the Competition and Consumer Act 2010 – market definition – whether the market pleaded was a market for goods or a market for services – whether a market exists for the supply of packaged groceries by wholesale to independent supermarket retailers in NSW and the ACT – whether pressure exerted by major supermarket chains downstream at retail level relevantly constrains dedicated wholesaler for purposes of market definition – whether hypothetical monopolist test applies to price charged by wholesaler or margin earned by wholesaler – whether pleaded counterfactuals were required to be established on the balance of probabilities or on the ‘real chance’ test – whether factors in s 50(3) made a substantial lessening of competition in a market likely Legislation: Competition and Consumer Act 2010 (Cth) ss 4E, 46, 50, 76 Cases cited: Australian Gas Light Company v Australian Competition and Consumer Commission (No 3) (2003) 137 FCR 317
Boral Besser Masonry Limited v Australian Competition and Consumer Commission (2003) 215 CLR 374
Davids Holdings Pty Limited v Attorney-General (Cth) (1994) 49 FCR 211
In re Tooth & Co Limited; in re Tooheys Limited (1979) 39 FLR 1
Queensland Wire Industries Pty Limited v Broken Hill Proprietary Company Limited (1989) 167 CLR 177
Re Queensland Independent Wholesalers Limited (1995) 132 ALR 225
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
Seven Network Limited v News Limited (2009) 182 FCR 160
Singapore Airlines Limited v Taprobane Tours WA Pty Limited (1991) 33 FCR 158Date of hearing: 14, 15, 16, 17, 18, 21, 22, 23, 24, 25, 28, 29, 30, 31 March, 6, 7, 18, 19, 20, 27 April and 6 May 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 461 Counsel for the applicant: NJ O’Bryan SC, JA Halley SC, DP O’Donovan, CG Arnott, D Tynan, TM Glover Solicitor for the applicant: Australian Government Solicitor Counsel for the first respondent: JT Gleeson SC, PJ Brereton SC, D Roche Solicitor for the first respondent: Freehills Counsel for the second respondent: JE Griffiths SC, CA Moore, RA Yezerski Solicitor for the second respondent: Blake Dawson
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1714 of 2010
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
ApplicantAND: METCASH TRADING LIMITED ACN 000 031 569
First RespondentPICK N PAY RETAILERS (PTY) LIMITED
Second Respondent
JUDGE:
EMMETT J
DATE OF ORDER:
25 AUGUST 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The proceeding be dismissed.
2.The applicant pay the respondents’ costs of the proceeding.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1714 of 2010
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
ApplicantAND: METCASH TRADING LIMITED ACN 000 031 569
First RespondentPICK N PAY RETAILERS (PTY) LIMITED
Second Respondent
JUDGE:
EMMETT J
DATE:
25 AUGUST 2011
PLACE:
SYDNEY
REASONS FOR JUDGMENT
INTRODUCTION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... [1] SOME BACKGROUND........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [3] The Grocery Industry........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... [4] Franklins........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [13] Metcash........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [21] Private Brands........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [31] Services Provided by Metcash........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [35] The Price Charged by Metcash for Packaged Groceries........ ........ ........ ........ ........ ........ ...... [42] The Barons Strategy........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [47] Five Cents per Carton Increase in Service Fee........ ........ ........ ........ ........ ........ ........ ........ ..... [49] The PwC Report........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [66] Arrangements between Metcash and Franklins........ ........ ........ ........ ........ ........ ........ ........ ........ [72] Spar Australia Limited........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [75] Four Retailers........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [81] Koundouris........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [82] Karellas........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [93] Krnc........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [94] Lionis........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [102] THE COMMISSION’S PLEADED CASE........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [110] THE ISSUES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [127] RELEVANT ECONOMIC PRINCIPLES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [147] Object of Market Definition........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [150] Hypothetical Monopolist Test........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. [153] Market Dimensions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [156] Counterfactuals........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [166] MARKET DEFINITION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [174] Geographic Dimension........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [176] Product Dimension........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [181] The Relevant Product........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [184] The Relevant Price........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [188] Conclusion as to Product........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [203] Functional Dimension........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... [204] Perception of Competitive Constraints........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [209] Metcash’s Executive Management Committee Minutes........ ........ ........ ........ ........ ........ .. [216] The Jardim Analysis........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. [231] The Major Supermarket Chains as a Constraint........ ........ ........ ........ ........ ........ ........ ........ .... [239] Threat of Sale as a Constraint........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... [272] Threat of a Constraint by Woolworths as a Wholesaler........ ........ ........ ........ ........ ........ ....... [280] Franklins as a Constraint........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... [297] Project Energise........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [300] Ling Chi........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [326] Conclusion as to Constraints........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [329] Conclusion as to Market........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [337] THE COUNTERFACTUALS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [343] The Store Sale Process........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [352] The Consortium’s Offer........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [362] The Consortium’s Prospects........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [385] Conclusion as to the Counterfactuals........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... [424] EFFECT ON COMPETITION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [427] Section 50(3) Factors........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [432] Import Competition........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [433] Barriers to Entry........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [434] Level of Concentration........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [436] Countervailing Power........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [438] Ability to Increase Prices or Profit Margins........ ........ ........ ........ ........ ........ ........ ........ ........ . [441] Availability of Substitutes........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [448] Dynamic Characteristics of the Market........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [450] Removal of a Vigorous and Effective Competitor........ ........ ........ ........ ........ ........ ........ ....... [452] Vertical Integration........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... [454] Conclusion as to Effect of the Acquisition on Competition........ ........ ........ ........ ........ ........ .... [456] CONCLUSION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [461] INTRODUCTION
The question raised by this proceeding is whether the proposed acquisition by the first respondent, Metcash Trading Limited (Metcash), from the second respondent, Pick n Pay Retailers (Pty) Limited (Pick n Pay), of all of the shares in the capital of Interfrank Group Holdings Pty Limited (Franklins) would result in a contravention of s 50 of the Competition and Consumer Act 2010 (Cth) (the Competition Act). Section 50 provides, relevantly, that a corporation must not acquire shares in the capital of a body corporate if the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in a market. Under s 4E of the Competition Act, the meaning of the term market includes, when used in relation to any goods and services, 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. The applicant, the Australian Competition and Consumer Commission (the Commission), contends that the acquisition by Metcash of Franklins would be likely to have the effect of substantially lessening competition in a market for the wholesale supply of packaged groceries to independent supermarket retailers in New South Wales (NSW) and the Australian Capital Territory (the ACT).
On 1 July 2010, Metcash entered into an agreement with Pick n Pay to acquire all of the issued shares in the capital of Franklins for $215 million. The agreement was subject to certain conditions precedent. On 17 November 2010, the Commission informed Metcash that it opposed the proposed acquisition. On 26 November 2010, the Commission undertook to commence a proceeding seeking to restrain the proposed acquisition, and the parties undertook to take all reasonable steps for securing an urgent final hearing of the proceeding on an expedited basis. Metcash also undertook not to waive any condition precedent and not to acquire any interest in shares in Franklins without giving the Commission five clear business days’ notice. Metcash and Pick n Pay have agreed that their agreement will remain on foot pending resolution of this proceeding.
SOME BACKGROUND
It is desirable to say something about various aspects of the grocery industry and some of the participants in that industry, including Franklins and Metcash. There is no real dispute as to much of the factual background. However, there are significant disputes as to the inferences that should be drawn and the conclusions that should be reached in the light of that factual background.
The Grocery Industry
There are four main categories of participants in the grocery industry in Australia. First, there is the consuming public, members of which are the ultimate acquirers of grocery products that are supplied by retailers. Secondly, there are retailers of grocery products, who fall into two different groups. The first group of retailers consists of self-supplying supermarket chains, such as Woolworths, Coles, Aldi and Franklins, while the second group of retailers consists of independent retailers. The third category of participants in the grocery industry consists of wholesalers, such as Metcash, and numerous other specialist wholesalers. The wholesalers supply grocery products to independent retailers. Finally, there are manufacturers and primary suppliers, who supply grocery products to the self-supplying supermarket chains, to wholesalers and directly to independent retailers. There are two different groups of manufacturers and primary suppliers. One group consists of large national manufacturers and primary suppliers of numerous types of fast-moving consumer goods, such as Coca Cola Amatil, Nestlé, Unilever and Procter & Gamble. There are also smaller, state-based manufacturers and primary suppliers, such as Saxbys Soft Drinks, McDonnell’s Fruit Supply and fresh produce farms.
The self-supplying supermarket chains undertake several stages of the process of the supply of grocery products to consumers. Those stages range from negotiating with and acquiring products from manufacturers and primary suppliers, including fresh produce from farms, to delivering the products to their retail stores, pricing the products on the shelves of the retail stores and selling the products to the consuming public. On the other hand, independent retailers acquire their products from wholesalers, or, less often, directly from manufacturers and primary suppliers.
Wholesalers negotiate with, and acquire grocery products from, manufacturers and primary suppliers, including fresh produce from farms, and supply those products to independent retailers. Some independent retailers make their own arrangements for the delivery of grocery products from the wholesalers to their retail stores. Others rely on the wholesalers for their deliveries.
Independent retailers are generally responsible for pricing the products on the shelves in their retail stores and selling the products to the consuming public. However, when products are sold as part of a promotion, a ceiling price for the retail sale of products to the consuming public may be fixed by the wholesalers in consultation with the retailers.
Independent retailers whose stores are of a similar size and character and are supplied by the same wholesaler usually operate under a common banner. Each member of a banner group adopts a common public brand, which is represented in the painting of store fronts and interiors. A retail store’s banner affects its trading name, get-up and appearance. Members of a banner group are offered a range of retail services by their wholesaler, are encouraged to follow common stocking and discounting policies and have access to shared funds for promotions. Such an approach to grocery retailing simulates, to a degree, the pattern of business employed successfully by the self-supplying supermarket chains, while retaining some independence of action for the individual retailers, particularly in pricing policies.
Stores with a floor space in excess of 1,200 square metres are commonly described as supermarkets, although many self-service stores smaller than that are also sometimes referred to as supermarkets. Such smaller stores are necessarily restricted in the product range that they offer, and they are often described as top-up stores. Smaller retail stores, which do not offer a large or diverse product range, counter the large supermarkets by offering personal services directed to convenience. Stores that sell a narrow range of popular items in a trading area of less than 350 square metres are commonly described as convenience stores.
The existence of banner groups that are tied to a wholesaler, in the sense that the wholesaler controls the banner name and the group members have some obligation to conform to certain styles and standards, is central to a wholesaler’s commercial performance and prospects. Operating a successful banner group requires that retailers accept a degree of subordination of their own commercial independence to a larger commercial strategy. Under such a strategy, the wholesaler and banner groups of similar retailers present a common face to the consuming public and adopt similar stocking policies, similar pricing and common promotions. There will be a loss of competitiveness if banner discipline is poor.
There is considerable diversity in what is offered to consumers by retailers. Thus, each of the following may be of significance, and the subject of competition:
· location;
· range of merchandise;
· store layout and presentation;
· checkout facilities;
· hours of trading;
· personal service; and
· price.
The grocery industry in Australia is a highly competitive industry characterised by high volumes and low margins. The operators of self-supplying supermarket chains are extremely disciplined and endeavour to standardise their offerings at any one time. Nevertheless, those offerings are not static, but shift as the chain operators explore market opportunities and develop new strategies. On the other hand, the products offered by independent retailers exhibit greater diversity than those of the chains in areas such as, for instance, size and location. Independent retailers may choose, or be forced, to rely upon factors other than price to attract customers.
Franklins
Franklins operates a grocery business in NSW involving both wholesale and retail activities. The assets of that business (the Franklins assets) include:
· the brand and trademark Franklins;
· the brand and trademark No Frills;
·leasehold interests in respect of 79 retail premises in which Franklins operates stores;
·a management agreement in respect of one further retail store which Franklins operates;
· franchise agreements with the operators of ten retail stores;
·agreements with various information technology licensors, logistics providers, manufacturers and other suppliers, under which Franklins acquires groceries and supplies the groceries to the 90 stores referred to above; and
·various intangible assets owned or controlled by Franklins, including pricing systems and expertise in promotions and advice, which assist in acquiring groceries and supplying them to retail stores.
The 80 retail stores operated by Franklins (the Franklins Corporate Stores) and the ten retail supermarket stores operated under franchise (the Franklins Franchise Stores), to which I have referred above, all operate under the Franklins banner. All of those stores are located in NSW. Franklins supplies grocery products to all of the stores. The grocery products include packaged groceries, health, beauty and cosmetic products, general merchandise and fresh produce.
Franklins is a wholly owned subsidiary of Pick n Pay, which is incorporated in the Republic of South Africa. Pick n Pay is a wholly owned subsidiary of Pick n Pay Stores Limited (Pick n Pay Stores), a company which is incorporated in the Republic of South Africa and listed on the Johannesburg Stock Exchange. The business of Pick n Pay Stores and its subsidiaries (the Pick n Pay Group) consists of a network of 888 retail stores, which operate under various brands in South Africa, a number of other countries in southern Africa, and Australia. Most of the stores are owned by the Pick n Pay Group, although several are franchised. Although the franchised stores are independently owned, they have similar get-up to the stores corporately owned by the Pick n Pay Group, and are marketed and promoted together with the Pick n Pay Group’s own stores. The Pick n Pay Group employs over 49,000 people.
Mr Gareth Ackerman has been the chairman of Pick n Pay Stores since March 2010. He succeeded his father, Mr Raymond Ackerman. Mr Nick Badminton is the chief executive officer of the Pick n Pay Group.
Mr Aubrey Zelinsky was the managing director of Franklins from June 2001 to 30 June 2010. His responsibilities included reporting on the performance of the Franklins business by preparing and presenting reports to the supervisory board of Pick n Pay every six months. Those reports were largely drafted by Mr Ronald Perlov, but were ultimately approved by Mr Zelinsky. All of the members of the executive team of Franklins reported directly to Mr Zelinsky in his role as managing director.
Mr Perlov commenced employment with Franklins in July 2001. Since that time, he has held the following positions:
· general manager, finance and administration;
· company secretary; and
· finance director.
He has been the acting managing director of Franklins since 30 June 2010, when Mr Zelinsky announced his retirement. Mr Perlov is a director of Franklins. As acting managing director of Franklins, Mr Perlov is responsible for all operations of the Franklins business, in accordance with the authority delegated to him by the directors of Pick n Pay Stores and the chief executive officer of the Pick n Pay Group. In particular, Mr Perlov is responsible for the overall profitability, development and growth of the Franklins business, and for planning and directing, subject to approval by the directors of Pick n Pay Stores, all negotiations relating to mergers, the acquisition of new business, or the sale of major assets. In his capacity as finance director of Franklins, Mr Perlov is responsible for the management of financial aspects of the Franklins business, including managing the funding requirements of the business, reporting on the trading operations of the business, budgeting and business planning, and risk management functions.
Mr Dennis Cope is the chief financial officer of the Pick n Pay Group, and is a director of Pick n Pay and of Franklins. Mr Cope is responsible for the financial performance reporting and other internal financial reporting of the Pick n Pay Group to Mr Badminton and to the directors of Pick n Pay Stores. He is also responsible for the preparation and publication of the Pick n Pay Group’s financial accounts in accordance with its regulatory obligations. On a monthly basis, Mr Cope receives from Mr Perlov management accounts that detail the performance of the Franklins business over the relevant month and the cumulative performance of the business for the financial year.
In 2001, Pick n Pay made an initial investment in Australia of 567.9 million rand, equivalent to approximately $133.7 million. Since the initial investment, Pick n Pay has made a total investment of approximately $289.4 million. The Franklins business has made losses in seven of the ten years that it has been owned by Pick n Pay. Its accumulated losses from the original investment to 31 August 2010 are $105.1 million.
Metcash
Metcash operates several business units or divisions, including the IGA-Distribution division and the IGA-Fresh division. IGA-Distribution is Metcash’s largest division, and is Australia’s largest grocery wholesale distribution and marketing company, with seven distribution centres located in NSW. Through its business divisions, Metcash supplies, by wholesale, various grocery products to independent retailers of various sizes throughout Australia, ranging from convenience stores to large format supermarket stores. These retailers are independent of the self-supplying supermarket chains such as Coles, Woolworths, Aldi and Franklins. As well as supplying grocery products, Metcash provides branding and other support services to independent grocery retailers, who operate under the IGA banner, which is owned by Metcash. Not all independent retailers are supplied by Metcash, and some of the independent retailers supplied by Metcash do not obtain all of their grocery products from Metcash.
The IGA banner is Metcash’s public face. The terms IGA and Metcash are sometimes used interchangeably in relevant documents.
Metcash has an executive management committee chaired by Mr Andrew Reitzer, its chief executive officer. As at February 2010, the executive management committee included Mr Mick Jablonski, the Metcash merchandise director, Mr Edwin Jankelowitz, the chief financial officer of Metcash, and Mr John Randall, the company secretary, as well as others. The committee meets on a weekly basis to discuss all aspects of Metcash’s business. If Mr Reitzer is not available, the meeting does not take place.
Mr Joao Jardim, who is known as Lou Jardim or Lou Jardin, was the chief executive officer of the IGA-Distribution division of Metcash from 2000 until February 2010. In that role, Mr Jardim attended the Metcash executive management committee meetings. Reports were made at the meetings in relation to each division of Metcash, including the IGA-Distribution division.
During the 1990s, G & L Warehouse Pty Limited (G & L), located in Fyshwick, ACT, was a wholesale supplier. G & L was owned and operated by a group of independent supermarket operators in Canberra, most of whom traded under the banner Shop Rite. G & L set up a warehouse to supply groceries to retailers, effectively at cost price, so that profits could be earned at the retail level. The warehouse was originally operated as a cost centre, rather than as a profit centre, although retailers paid a service fee to G & L. G & L did not take any share of rebates offered by manufacturers or primary suppliers, which enabled independent retailers to compete directly on price with chains such as Coles and Woolworths. G & L also passed on to retailers a portion of the warehouse rebate it received from manufacturers and primary suppliers as a result of those suppliers not needing to deliver to individual stores.
In the late 1990s, G & L was acquired by Davids Limited (Davids). Metcash took over Davids in about 1998, when Davids was in significant financial trouble. Following the takeover, Metcash streamlined several independent store banners under a single banner, namely IGA, removing numerous independent banners that were then in the market.
In 2005, Metcash acquired a business known as Foodland Associated Limited (Foodland), as a result of which it was able to achieve synergies and economies of scale across all of its divisions, with cost savings and efficiency gains being delivered through the integration of personnel, systems and warehouse operations. Metcash benefited from volume gains of approximately $900 million. Following the Foodland acquisition, Metcash moved from its Loganlea warehouse in Queensland to a new warehouse location at Crestmead in Queensland, and was able to spread its fixed costs, overheads and expenses over increased volumes. Compared to the performance of the old Foodland warehouse, Metcash enjoyed a significant increase in productivity in terms of the cost of picking grocery products in fulfilment of retailers’ orders.
Metcash has three tiered store brands or channels under the IGA banner, namely Supa IGA, IGA and IGA X-press. Stores operating under those brands service different target groups. Supa IGA stores, which are supermarket stores and range in size from about 1,200 square metres upwards, account for about 40 per cent of sales by the IGA-Distribution division. IGA stores, which are top-up stores and range in size between about 350 square metres and about 1,200 square metres, account for around 30 per cent of sales. IGA X-press stores, which are convenience stores and range in size up to around 350 square metres, account for around 2 to 3 per cent of sales. Other independent stores supplied by Metcash account for the balance of sales by the IGA-Distribution division.
The IGA-Distribution division consults with retailers by means of its national board and state boards. Each state board consists of elected IGA retailers, representing each of the three tiered store brands from the relevant state. Those retailers are joined on the board by a number of state-based executives of the IGA-Distribution division, including the state general manager for IGA-Distribution. The precise composition of each state board otherwise varies from state to state. The national board consists of IGA retailers from the state boards, representing each of the three tiered store brands. Those retailers are joined by four appointed directors of the IGA-Distribution division and Metcash, who have the same voting rights as the retailers. The state boards meet approximately monthly, while the national board meets five or six times a year. The boards are advisory only.
As chief executive officer of the IGA-Distribution division, Mr Jardim attended all meetings of the national board. He occasionally attended meetings of state boards.
Private Brands
To compete with the broad range of private label products offered by the major supermarket chains, a term I shall use to refer to Coles and Woolworths, and, to a lesser extent, Aldi, Metcash supplies three tiers of private label products to IGA retailers. They are:
· Black & Gold – a range of low price private label products;
·IGA Signature – a range of premium private label products supplied only to IGA retailers; and
·IGA Pure Organics – a range of organically grown products supplied only to IGA retailers.
Black & Gold products are available to any independent retailer who wishes to purchase them. Metcash, through the IGA-Distribution division, supplies Black & Gold products for the same price and on the same terms to all independent retailers, regardless of the banner under which they operate. Metcash sources its Black & Gold products through Metfood Pty Limited (Metfood). Metfood was established in May 2006 and is jointly owned by Metcash and Foodstuffs (NZ) Limited (Foodstuffs), a New Zealand-based entity. Metfood was established to enable Metcash and Foodstuffs to improve their joint buying power in order to obtain private label products more cheaply and to provide those products to their retailers at lower prices.
Metfood conducts a tender process in relation to each private label product. There are around 900 to 1,000 products in the Black & Gold range. Through the tender process, Metfood is able to ensure that Metcash and Foodstuffs obtain the best possible price for their private label products. In turn, Metcash and Foodstuffs are then able to supply private label products to their retailers at lower wholesale prices. That has the consequence that Metcash’s independent retailers are able to compete with the major supermarket chains and with Aldi in relation to the supply of private label products to the consuming public. Since June 2009, Metcash has reduced the standard wholesale prices of approximately 300 Black & Gold products to assist IGA retailers to compete with the major supermarket chains.
The major supermarket chains also offer private brands. Woolworths’ private brand is known as Home Brand, while Coles’ private brand is Smart Buy.
Services Provided by Metcash
Independent retailers supplied by Metcash are free to set their own retail prices, and Metcash has no control over the prices that independent retailers charge consumers for grocery products, except in relation to promotions. However, because independent retailers must compete with Woolworths or Coles stores in their vicinities, Metcash encourages them to benchmark their standard shelf prices against Woolworths’ or Coles’ standard shelf prices. Of particular interest are items known as key value items, which are supermarket products whose prices are often known to consumers and used by them to assess the value on offer from a store. Milk and bread are examples of key value items. For many independent retailers, gathering and monitoring Woolworths’ and Coles’ standard shelf prices would be a practical impossibility. However, because competing with Woolworths and Coles at the retail level is essential for the success of the independent grocery network as a whole, Metcash has established a retail pricing service for independent retailers. In NSW, the retail pricing service is known as the Mix & Match Retail Pricing System (the Mix & Match System).
The Mix & Match System involves several steps. Metcash staff check standard shelf prices in Woolworths and Coles stores every week on a rotational basis. That entails prices for between 1,200 and 1,500 items being checked weekly, and prices for other products being checked on an eight-week rolling cycle. The prices are entered into the retail pricing service, which is usually divided into categories of grocery products, such as breakfast cereal, canned vegetables and baby products. Metcash uses the price check data to generate different pricing zones, which enable independent retailers to select how far above or below the standard Woolworths shelf price they price their grocery products. Pricing zones have nothing to do with geography. Woolworths has traditionally been the price leader in the grocery market, and therefore Woolworths’ prices generally provide the benchmark for independent grocery pricing. However, there are some signs that Coles is becoming a price leader, at least in relation to certain products. Accordingly, Metcash double-checks against Coles’ prices as well.
Of the pricing zones generated by Metcash, the zone corresponding with standard shelf prices at the relevant Coles or Woolworths store is regarded as a base zone. Independent retailers select different pricing zones for different categories of goods, and communicate their selections to Metcash. In the Mix & Match System, zone 60 is generally equivalent to Woolworths’ standard shelf prices, subject to minimum gross profit requirements. Therefore, if an independent retailer wants to charge the same as Woolworths for a particular category of products, it selects zone 60 for that category. If an independent retailer wants to set its prices above or below Woolworths for a particular category of products, it selects a zone other than zone 60. For example, zone 76 is equal to zone 60 plus one per cent, so a retailer using zone 76 pricing will achieve an additional one per cent gross profit compared to a retailer using zone 60. The retailer can choose pricing zones across its entire range of grocery products, or for a particular category of grocery products. Once the retailer’s price selections are communicated, Metcash generates a unique price file for the retailer, according to the retailer’s selection, and provides that price file to the retailer electronically each week. The price file can be entered directly into the retailer’s pricing system.
Of the various available pricing zones, there are five zones with gross profit percentage below zone 60 and seventeen zones with gross profit percentage above zone 60. Thus, there are altogether 23 zones from which to choose. Each individual retailer decides which zone or zones it will operate on, whether that be zone 60, a zone above or below zone 60, or some combination of zones. The zone chosen might depend upon the competition faced by the store, the banner under which the store operates, where the store sits in the marketplace, and the gross profit that the retailer seeks to achieve.
Metcash has published a distribution operations and standards manual (the Metcash Manual), which is designed to outline the services, procedures and standards for retailers operating under the IGA banner. The Metcash Manual is designed to explain to IGA retailers all the steps required so to operate, from opening an account and making necessary financial arrangements, to meeting branding, warehousing and operational requirements. It covers all services offered and supplied by Metcash through the IGA-Distribution division.
The Metcash Manual includes a catalogue of items for use in stores, such as check-out bags, cash register ribbons, carton cutters and blades, cutting boards, cleaners, clothing and the like. The Metcash Manual also describes Metcash’s centralised warehouse, which came into operation in July 2000 to supply general merchandise and slow moving products to all customers nationally. The Metcash Manual asserts that the warehouse enables more efficiency in the distribution of such products, which are, by their nature, normally “small order size”. The warehouse allows Metcash to maintain distribution of slow moving items, whose sales would not normally warrant inclusion in a state-wide distribution centre.
The Metcash Manual provides that all customers are to be on a pre-set ordering schedule. While orders can be transmitted at any time, they will not be processed except in accordance with that pre-set schedule. Orders can, however, be processed outside the pre-set time by contacting Metcash’s customer service team in advance. The Metcash Manual states that grocery orders of fewer than 100 cartons will only be processed by prior arrangement. It describes a grocery and general merchandise warehouse assembly system for orders, consisting of voice recognition technology, which is said to deliver an extremely high level of accuracy in assembly. Metcash, through IGA-Distribution, hires pallets on behalf of retailers so that deliveries can be made as efficiently as possible. The Metcash Manual describes procedures for the control of pallets, as well as procedures for dealing with such matters as hand loading, damaged stock, ordering errors, returns of goods, statements and payments, and the handling of perishable and seasonal products.
The Price Charged by Metcash for Packaged Groceries
The price that an independent retailer pays for packaged groceries supplied by Metcash is made up of the price shown on the Metcash invoice for the groceries, less any rebates or other discounts for which the retailer is eligible. Rebates or other discounts for which a retailer is eligible are not shown on the Metcash invoice. Such rebates and discounts are typically paid by direct credit to the retailer’s trading account. The price shown on the Metcash invoice is made up of:
· the supplier list price;
·minus the published discounts that Metcash obtains from the manufacturer or primary supplier;
· minus any promotional case deal discount;
· plus a service fee;
· plus a fee for any freight required by the retailer.
It is appropriate to say something further about each of those components.
The supplier list price is the starting point in determining the prices at which Metcash purchases grocery products from its manufacturers and primary suppliers. It is a standard wholesale list price that is the same for any purchaser. It is a non-promotional fixed price that is generally set on a national basis for the supply of the majority of products by manufacturers and primary suppliers. It tends to remain relatively consistent, although it is varied from time to time on the basis of changes in input costs and other market-driven factors, such as exchange rates. There is usually no negotiation between Metcash and the manufacturers and primary suppliers about supplier list prices.
Published discounts are discounts on the supplier list price offered by most manufacturers and primary suppliers to all customers that meet qualifying criteria. The published discounts are listed on the invoices received by Metcash from the manufacturer or primary supplier. Metcash pays to manufacturers and primary suppliers the supplier list price, reduced to the extent of any published discounts that it is able to obtain. The published discounts are:
·trade discounts given by manufacturers and primary suppliers to any purchaser;
·warehouse allowances, being discounts for any orders where grocery products are delivered to a warehouse, as distinct from being delivered direct to a retail store;
·quantity buy allowances, being volumetric discounts given for purchasing certain quantities of the manufacturer’s or primary supplier’s product; and
·settlement discounts, being discounts given in recognition of prompt payment of the account of the manufacturer or primary supplier.
Promotional case deal discounts are provided by manufacturers and primary suppliers on particular products that are on promotion. The discount attaches to cases or cartons of the product being promoted. Once the promotional price is set, retailers are required to sell the relevant product at no more than the promotional price. Metcash does not normally impose either a minimum or a maximum limitation on the volume or quantity of a product that a retailer can buy while the product is on promotion. Some retailers purchase volumes or quantities of a product on promotion that are in excess of what they expect to sell during the promotion period. Such purchases are said to be made by way of investment in that, while the retailers purchase the product at the promotional wholesale price, they may sell any excess after completion of the promotional period at the usual price, thereby increasing their margin on the product. This practice is known as investment buying.
The service fee charged to a retailer is calculated as a proportion of the total value of the grocery products purchased by the retailer from Metcash. The service fee proportion varies by volume and also varies from state to state.
The Barons Strategy
Metcash considers that two of the factors that inhibit growth in the independent grocery network are difficulties in opening new stores and the creeping acquisition of stores by the major supermarket chains. Thus, in the last ten years, Woolworths, and to a lesser degree Coles, have adopted a strategy of targeting particular independent retailers, including IGA bannered retailers, offering to buy their stores, often at a premium, and converting them into Woolworths or Coles branded stores.
Metcash perceived that practice as eroding the volume and value of its independent grocery network, and therefore implemented what it calls the Barons Strategy. Under the Barons Strategy, Metcash approaches large, successful independent retailers, who own multiple stores, and offers to buy 26 per cent of their business. When such offers are accepted, Metcash almost always acquires its interest by subscribing fresh capital for the businesses. Ritchies Stores Pty Limited (Ritchies) is one of the retailers in which Metcash has acquired such an interest.
Five Cents per Carton Increase in Service Fee
Notes from a meeting on 23 August 2006 that was attended by Mr Jardim record that Mr Jardim suggested, on that date, that an approach should be made to Mr Fred Harrison, the chief executive officer of Ritchies, and to the IGA-Distribution national board, about an increase of ten cents per carton in Metcash’s service fee. The proposed increase was discussed at the Metcash executive management committee meeting held on 25 August 2006, in the context of providing a fund for rental subsidies to enable IGA to access major shopping centres and provide what were described as “price into product” subsidies to meet competition. On 25 August 2006, Mr Jardim and Mr Reitzer received an email from Mr Mark Laidlaw, the general manager of the IGA-Distribution division in Victoria, concerning a discussion he had had with Mr Harrison. The email recorded that Mr Harrison understood Metcash’s predicament concerning rental subsidies and the burden that the matter placed upon Metcash’s cost of doing business. Mr Harrison had expressed the view that, if certain trading terms could be restructured, Ritchies would be prepared to support the increase. Mr Laidlaw said that, while the increase would create a huge amount of dissent amongst the retailers, the time may have been right to realign the imbalance in trading terms between Metcash and individual operators, on the one hand, and Metcash and multi-store operators, such as Ritchies, on the other hand. Following a further exchange, Mr Reitzer said in a later email to Mr Laidlaw on 25 August 2006 that he thought some of the increase was “for our profit”. He said that the ten cents was to fund the rental subsidies that Metcash was giving “everywhere” and to provide money for what was described as the “category killer strategy”.
At a meeting of the national board held on 29 August 2006 and attended by Mr Jardim, the national board retailers advised that they could not endorse the proposed increase. The meeting noted that Metcash would need to make a presentation to each state board and that the national board retailers would establish a working party to examine alternatives.
On 30 August 2006, Mr Jardim reported to Mr Reitzer by email that the proposed increase had been presented to the national board on 29 August 2006. He attached a draft letter that he proposed to send to all retailers. The draft letter began by referring to “relentless domination by Coles and Woolworths” of the grocery environment in Australia. The draft letter said that Metcash had borne the burden of this, and recognised the need to continue to take a leadership role by providing opportunities for all independent retailers to maintain successful and sustainable businesses. It also said that Metcash would be increasing service fees to allow for an investment in retailing and merchandising strategies, that this would benefit all independent retailers, regardless of size, and that opportunities would be created for everyone to grow and remain sustainable. The draft letter said that, with effect from 1 November 2006, the current service fee would be increased by ten cents per carton, and that information would be circulated regarding the investment of those funds and the plans being implemented that would allow independent retailers to compete.
At the Metcash executive management committee meeting held on 1 September 2006, at which Messrs Reitzer and Jardim were present, the proposed ten cents per carton cost increase was discussed. The draft letter from Mr Jardim to retailers appears to have been tabled.
On the same day, 1 September 2006, Mr Con Sciacca, general manager of the IGA-Distribution division in South Australia, sent an email to Mr Jardim concerning a meeting with Mr Roger Drake, a “baron” retailer operating under various banners in Queensland and South Australia. Mr Sciacca said that Mr Drake was not comfortable with “the concept” of the increase, as he and many other multi-store operators saw themselves as taking all the risk, with the small stores coming along for the ride. Mr Sciacca said that Mr Drake was extremely critical of the lack of detail, and had indicated that he wanted more information about how the funds raised by the service fee increase would be used. He had asked what would stop Metcash from simply applying another increase next time Metcash had a problem. Mr Sciacca reported that Mr Drake said that it was important to him that there be some certainty that Metcash would not seek to increase costs in such a manner in future.
On 5 September 2006, Mr Jardim sent an email to Mr Reitzer reporting that he had presented the proposed fee increases to the Victorian state board. He said that his assessment was that they had accepted a five cent increase, but that Metcash would need to fight hard for the other five cents.
On 8 September 2006, Mr Reitzer told Mr Jardim that he was concerned about managing any damage associated with the “ten cents exercise”. Mr Jardim responded that most of the heat would occur over the next few weeks and that, thereafter, the state general managers would be “facing the customer”.
On 11 September 2006, Mr Laidlaw sent Mr Jardim a proposed paper for a discussion with Mr Peter Noble, the chief executive officer of the operator of Foodworks stores, and Mr Leo Blake, a director of the operator of two chains of stores in Victoria. The paper stated that it was becoming increasingly difficult to absorb cost increases, and that some would need to be passed on.
On 15 September 2006, Mr Jardim told Mr Reitzer in an email that he would like to hold firm on the full ten cents “until we ride the storm”. He said that any concession he made would only make the retailers look for others, as they went further into the following week. On 18 September 2006, Mr Jardim reported to Mr Reitzer that the fee increase had been rejected at the Western Australia meeting “as expected”. He said that retailers were requesting transparency as to how the funds would be spent. Mr Jardim rejected the request for transparency on the basis of confidentiality issues.
On 24 September 2006, Mr Jardim sent an email to Mr Ian Ashcroft, a member of the IGA-Distribution national board, saying that he understood that Mr Ashcroft was looking for a total abandonment of the fee strategy, and that Mr Ashcroft would resign if the fees went ahead. Mr Jardim invited Mr Ashcroft to reconsider his approach. He said that the last 12 to 18 months had been extremely tough, that he had been trying to find an alternative to increasing fees, and that Metcash could not hold the increase back any further. He said that, originally, he had made the decision to lift the service fee by ten cents per carton, but that, after representation from the national board, he had agreed to implement only five cents from 1 November 2006, and to refer the other increase to the national board for further discussion. He said that the reason he needed the income was to shore up growth opportunities and recover cost increases.
On 26 September 2006, Mr Jardim reported to Mr Reitzer that a national board phone hook-up had not gone as expected. He said that he had thought he had convinced Mr Ashcroft to take a softer line, but that that must have changed. Mr Jardim said that there were, at that time, twelve members contemplating resignation and eight that wanted to work with Metcash. Mr Jardim said that the board members were maintaining their current position of taking action against Metcash, and would meet on the following Tuesday to formalise their position. He said that it appeared that Queensland and Victoria did not want to take action but that they were being overruled by NSW and South Australia, with Western Australia supporting resignation. Mr Jardim said that he thought Metcash could work through the situation in NSW and Western Australia, and that South Australia remained the issue.
On 28 September 2006, Mr Jardim sent to Mr Reitzer two draft letters to retailers concerning the proposed service fee increase. One version was for IGA retailers and the other was for non-IGA retailers. The draft letters notified their prospective receipients of a five cents per carton increase in service fees, effective from 1 November 2006, and said that that would be the first increase since 2001. The letters asserted that, over the last 18 months, Metcash had incurred significant cost increases and that, in the face of such continued increases in direct costs, it had been looking to find alternatives to increasing fees. The letters said that a fee increase could not be held back any further. The letters said that Metcash had considered various options and had elected to implement the increase across all products, representing an impost of approximately 0.1 per cent of the average turnover of an independent retail operation. The letters were sent to retailers on 29 September 2006.
On 29 September 2006, Mr Jardim sent to Mr Reitzer a copy of a speech that he proposed to deliver to the national board, seeking to justify the five cents per carton increase. In the speech, Mr Jardim justified the fee increase by reference to operational cost increases and the substantial costs directly related to ensuring that Metcash kept its independent retailers in business. Mr Reitzer responded that the proposed speech looked good to him. The speech was apparently delivered by Mr Jardim.
On 9 October 2006, Mr Jardim received a report concerning retailers’ reactions to notification of the fee increase. The report said that things were “smooth” in relation to NSW. Later on the same day, Mr Reitzer said in an email that the most important thing was to show the retailers ways to recover the 0.1 per cent impact through “lower costs” and “clever pricing”. A further report of 10 October 2006 concerning feedback indicated that “all the noise” was coming from Victoria, with some more expected from NSW and South Australia that day. Mr Reitzer responded that the only negative had come from the proprietor of the Supabarn stores in Canberra. I shall refer to Supabarn below.
On 11 October 2006, Mr Reitzer received a report that the mood at a meeting of the Victorian state board had been somewhat confrontational. The retailers had indicated that they were going to hold a meeting on the evening of 23 October 2006 to discuss the increase. The report said that retailers were very unhappy and would take every opportunity to destabilise the current relationship. On 18 October 2006, Mr Jardim and Mr Reitzer received a report concerning a Foodland board meeting, indicating that there had been no real aggression concerning the increase. Mr Drake referred to his disappointment concerning the increase.
On 26 October 2006, Messrs Jardim and Reitzer received an email from Mr Harrison concerning a meeting that he had had with representatives of another organisation. He said that he had been asked question after question, including questions about Ritchies’ relationship with Metcash, and about how the IGA network was performing across the country. He said that there was much talk about Woolworths and Coles, and that the question of the “ten cents per carton price increase” was raised. Mr Harrison said that he explained that it was a five cents per carton increase, representing 0.1 per cent of “our gross profits”, and that Ritchies was not going to lose the money, as it had already worked out how it would recoup the price increase from consumers without impact upon the prices of key lines. Mr Harrison explained, he reported, that there were hundreds of items on the shelves that were not stocked by the major supermarket chains and therefore could not be price checked against the chains. He said that those products, which were the slower 20 per cent of the product range, could easily “substantiate” a five cents per carton service fee increase.
Metcash implemented the five cents per carton fee increase on 1 November 2006. Having regard to the low margins typically earned by independent retailers, a price increase of 0.1 per cent of average turnover represented, in some cases, a substantial proportion of total profits.
The PwC Report
In 2007, Metcash engaged PricewaterhouseCoopers (PwC) to review the IGA network, to identify the value generated annually by the network, and to say whether or not the value generated by the network was equitably split between Metcash, on the one hand, and independent IGA retailers, on the other hand. PwC presented a report dated 26 November 2007 containing its findings and conclusions (the PwC Report) to a meeting of the IGA national board, senior management and senior executives of Metcash, which took place in Sydney.
The PwC Report determined that, in the 2007 financial year, the IGA network earned $450 million. The IGA-Distribution division accounted for 41 per cent of that figure, with earnings before interest and taxes (EBIT) of $185 million, and IGA retailers accounted for 59 per cent of the figure, with combined EBIT of $265 million. The EBIT of the IGA network, as a percentage of sales, was 5.81 per cent. That was higher than the EBIT of Coles for the same period, which was 3.9 per cent, and slightly lower than the EBIT of Woolworths in the same period, which was 5.9 per cent. The PwC Report stated that, of the three tiered IGA store brands, the IGA and IGA X-press stores generated significantly higher margins on EBIT than the Supa IGA stores. However, the Supa IGA stores generated the majority, some 63 per cent, of retailers’ sales volume.
The PwC Report also recommended that developing a succession plan for stores that did not currently have a “solid lock-in” with Metcash should be a key focus to prevent independent store owners from selling their businesses to the major chains or other competitors. It reported that for 598 stores no Metcash lock-in was in place, and that a further 41 stores were locked in only through the standard Metcash supply agreement. The stores with no or very limited lock-in represented 34.3 per cent of the total IGA sales revenue.
The Commission asserts that the pricing differentials inherent in Metcash’s wholesale pricing indicate that a decision by Metcash to implement price increases would not necessarily be noticed by a sufficient number of consumers to induce a strong response, if the independent retailers passed on the increase. The Commission further says that such price increases would not deter a sufficient number of marginal consumers, because they choose to shop at independent retailer stores based on non-price factors. Finally, the Commission says, Metcash would be able to implement price increases with respect to most independent retail customers, but compensate a select minority of independent retailers who face close price competition from the major supermarket chains, namely those retailers who operate stores that are considered to be in close proximity to the major supermarket chains. That, the Commission says, suggests that Metcash would have the incentive, ability and opportunity to impose a small but significant non-transitory increase in price on the wholesale supply of packaged groceries to independent retailers.
It is a matter of speculation as to whether, assuming the acquisition did not proceed, the consortium propounded by the Commission would ever be able to make an offer that would be accepted by Pick n Pay. Further, there is no evidence as to the extent to which Coles, Woolworths or Metcash would be prohibited from acquiring stores that might be disposed of by Franklins in a store by store sale process. On the other hand, I consider that it is quite likely that the acquisition of Franklins by Metcash will strengthen the capacity of independent retailers operating under the IGA banner to compete more vigorously with the major supermarket chains. In the light of those circumstances, and having regard to the factors specified in s 50(3) of the Competition Act, I am not persuaded that, if the proposed acquisition of Franklins by Metcash proceeds, there would be, or would be a real chance of, a substantial lessening of competition in the market propounded by the Commission.
CONCLUSION
It follows from the conclusions I have indicated in relation to the issues for determination in the proceeding that the acquisition of all of the issued shares in the capital of Franklins by Metcash would not contravene s 50(1) of the Competition Act. Accordingly, the proceeding should be dismissed. The Commission should pay the costs of Metcash and of Pick n Pay.
I certify that the preceding four hundred and sixty-one (461) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 25 August 2011
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