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

[2009] HCATrans 020

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S419 of 2008

B e t w e e n -
BAXTER HEALTHCARE PTY LIMITED
Applicant
and
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
First Respondent
STATE OF WESTERN AUSTRALIA
Second Respondent
STATE OF SOUTH AUSTRALIA
Third Respondent
STATE OF NEW SOUTH WALES
Fourth Respondent
Application for special leave to appeal

GUMMOW J
HEYDON J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 13 FEBRAURY 2009, AT 9.30 AM

__________________

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

MR N.J. YOUNG, QC: May it please the Court, I appear with my learned friend, MS J.S. GLEESON, for the first respondent. (instructed by Australian Government Solicitor)

GUMMOW J: Thank you. Yes, Mr Yates. Before you get into it too deeply, there is a point that is not raised against you but which has been playing on our minds and it appears, if one looks at page 276 of the application book which is the concluding passage from the reasons of Justice Mansfield, namely, paragraph 257 indicates this litigation is by far from finished. We think about cases like Apple Computer and we ask why should we enter into it at this stage when it has to go back and there may be a vigorous debate about penalties, and the debate about penalties, I suppose, could involve questions of credit?

MR YATES: Yes, that is so, your Honour. Your Honour is quite correct to observe that there is quite a way to go in the case. However, we do not see, so far as the resolution of the matters that we wish to raise by way of appeal, it would be turning on matters concerning issues of credit and so forth. The facts are really largely undisputed as between the parties. The issues that arise are, in effect, what does one do with those facts, particularly in relation to what is the appropriate application of the competition test in the circumstances?

GUMMOW J: You say that about credibility, but Justice Dowsett’s dissenting judgment at paragraph 367 focused upon the treatment by the primary judge of credibility of Mr Lee.

MR YATES: That is so, your Honour, but I do not apprehend that in relation to any facts that we would ventilate before your Honours if special leave was granted, we would turn on any resolution of credit or in respect of any matter in respect of which there was a credit finding.

GUMMOW J: Anyhow, however that may be, the prima facie position is we do not enter into interlocutory appeals, not even when encouraged by both sides.

MR YATES: I am slightly taken aback, your Honour. Certainly the Full Court has made relevant declarations.

GUMMOW J: Well, we can stand it in the list for a while, if you like, if that assists.

MR YATES: It would, your Honour.

GUMMOW J: Yes, very well. We will stand No. 1 in the list for the moment and we will go to matter No. 2.

MR YATES: Thank you, your Honour.

GUMMOW J: You might think about questions of costs, too, if we were minded not to grant special leave on the ground indicated to you.

MR YATES: Yes, your Honour.

GUMMOW J: The cost of this application today.

AT 9.34 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.03 AM:

MR YATES: We thank your Honour for that indulgence.

GUMMOW J: We will start the.....again.

MR YATES: Thank you, your Honours. Your Honours, we have reflected on what your Honour has raised with me. My application is that the Court stand over the special leave application pending the determination of the outstanding matters in the litigation.

GUMMOW J: What do you say to that, Mr Young?

MR YOUNG: Your Honours, we do not believe that the special leave application, if it proceeded, would in any way impinge adversely on penalty proceedings. We consider that the penalty proceedings would have to accept all of the factual findings and therefore the difficulty, in our view, is unlikely to arise. Having said that, I do not want to try and persuade the Court by saying anything else. If the matter is stood over or adjourned sine die, we would seek the costs of today. If the Court pleases.

MR YATES: Your Honour, I do not resist my learned friend’s application for costs as framed.

GUMMOW J: Of today.

MR YATES: Of today.

GUMMOW J: What order do you seek?

MR YATES: Your Honour, that the special leave application stand over pending the final determination of all outstanding issues.

GUMMOW J: That would have to include any further Full Court appeal.

MR YATES: It would, your Honour.

GUMMOW J: Would it not be simply better to dismiss the application without prejudice to institute any further application?

MR YATES: We would be protected in that regard, your Honour.

GUMMOW J: Protected, yes.

MR YATES: Yes. That would be our primary concern, although not our preferred position.

GUMMOW J: Yes. What was your position on costs today?

MR YATES: That is not opposed, your Honour.

GUMMOW J: I think this may meet the situation. Special leave to appeal is refused, but the refusal is without prejudice to the institution by the applicant of any further special leave application after the conclusion of litigation in the Federal Court.

The application is refused with costs.

AT 10.07 AM THE MATTER WAS CONCLUDED

Baxter Healthcare Pty Limited appealed to the High Court of Australia against a decision of the Full Federal Court which had upheld a finding by the Australian Competition and Consumer Commission (ACCC) that Baxter had engaged in conduct that contravened section 47(1) of the *Trade Practices Act 1974* (Cth) (the Act). The ACCC had alleged that Baxter had engaged in exclusive dealing by supplying its intravenous (IV) solutions and administration sets to hospitals on the condition that those hospitals would not acquire similar products from Baxter's competitors.

The central legal issue before the High Court was whether Baxter's conduct constituted exclusive dealing within the meaning of section 47(1) of the Act. Specifically, the Court had to determine whether Baxter had supplied goods to a person (hospitals) for the purpose of, or likely to have the effect of, substantially lessening competition in a market in which Baxter supplied goods, by requiring or inducing that person not to acquire goods of that kind from another person. The Court also considered whether the Full Federal Court had erred in its interpretation of the relevant provisions of the Act and the evidence presented.

The High Court, in a joint judgment, found that Baxter's conduct did not contravene section 47(1) of the Act. Their Honours reasoned that the evidence did not establish that Baxter's conduct had the purpose or effect of substantially lessening competition. The Court emphasised that the mere fact that Baxter secured a significant market share through its supply agreements did not, in itself, demonstrate a substantial lessening of competition. The Court applied the principles of statutory interpretation to section 47(1), focusing on the need for a demonstrable impact on competition rather than simply the existence of exclusive arrangements.

The appeal was allowed, and the orders of the Full Federal Court were set aside.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established