Re: DESMOND WALTER DOWLING And: DALGETY AUSTRALIA LIMITED; ELDERS IXL LTD.; AUSTRALIAN MERCANTILE LAND AND FINANCE COMPANY LTD; AUSTEST COMPANY LTD. and PRIMAC ASSOCIATION LTD. No. G292 of 1988 FED No. 27 Trade Practices (1992) 14 ATPR 41-165 (1992) 106 ALR 75 (1992) 34 FCR 109
COURT
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION Lockhart J.(1)
CATCHWORDS
Trade Practices - Restrictive trade practices - stock agent's application to join livestock saleyards association refused - relevant product market the market for the provision of livestock selling services - s. 45 - whether agreement that saleyards were not to be let to agents outside the association contravenes s. 45 - "purpose"- meaning of "substantial" in "substantial lessening of competition" - whether substantial purpose - whether effect of substantially lessening competition - competition - s. 46 - whether substantial degree of power - barriers to entry importance - meaning of "substantial" in substantial degree of power - "related corporation" - whether power gained in agreements with other corporations is relevant when considering a corporation's individual market power - "purpose" - distinction between use of market power and conduct which is the exercise of contractual or property rights - s. 47(9)(c) - exclusive dealing.
Counsel for the Respondents: Ms S. Keifel QC, Mr G. Brandis
Solicitors for the Respondents: Messrs Flower and Hart
ORDER
The application be dismissed.
The applicant pay the costs of the respondents including any reserved costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
The applicant, Desmond Walter Dowling, is and has been at various times since about 1962 a licensed auctioneer, stock and station agent and real estate agent. He has been in the stock and station agency business for the past 33 years and during that time has worked in many parts of Australia and been employed by a number of pastoral houses.
On 14 January 1985 Mr Dowling commenced his own business in Goondiwindi under the name "D.W. Dowling and Co.". On 18 March 1985 Mr Dowling applied in writing to the first respondent, Dalgety Farmers Limited (formerly called Dalgety Australia Limited) ("Dalgetys"), the second respondent, Elders IXL Limited ("Elders") and the fifth respondent, Primac Association Limited ("Primac"), to become a member of the Goondiwindi Livestock Auction Sales Association ("the Association"). Dalgetys, Elders and Primac each owns a one-third interest as tenant in common in the freehold of the land on which the Goondiwindi saleyards ("the Goondiwindi Saleyards") are erected. The three pastoral houses are the only members of the Association.
Following Mr Dowling's application for membership of 18 March 1985 further correspondence ensued between him and the solicitors for the Association in which the solicitors sought further information from Mr Dowling about himself, his experience as an auctioneer and stock and station agent and his financial position.…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
Dowling, a stock agent, sought to join the Livestock Saleyards Association (the Association) in Australia but was refused. Dissatisfied, Dowling brought proceedings against Dalgety Australia Ltd, which operated the saleyards, arguing that the refusal to join the Association contravened provisions of the Trade Practices Act 1974 (Cth). The court had to decide whether the Association's agreement to not let saleyards to agents outside the Association was an anti-competitive practice under section 45 of the Act, and if it had the effect of substantially lessening competition. Furthermore, the court examined if the Association held a substantial degree of power in the relevant market, and if power gained through agreements with other corporations could be considered when assessing a corporation's market power. The court also needed to determine if the Association's conduct amounted to exclusive dealing under section 47(9)(c) of the Act.
The court found that the relevant product market was the market for the provision of livestock selling services. It concluded that the Association's agreement to not let saleyards to agents outside the Association did not contravene section 45 of the Act because it did not have the purpose or effect of substantially lessening competition. The court held that the concept of "substantial" in "substantial lessening of competition" required a significant reduction in competition. It also found that the degree of power held by the Association was not substantial, and that barriers to entry were important in assessing market power. The court ruled that power gained through agreements with other corporations could be relevant in considering a corporation's individual market power. Lastly, the court held that the Association's conduct did not amount to exclusive dealing under section 47(9)(c) of the Act.
Dowling's application was dismissed, and the applicant was ordered to pay the respondents' costs, including any reserved costs. The final orders were in accordance with Order 36 of the Federal Court Rules. This decision highlights the importance of demonstrating a substantial lessening of competition and substantial market power to successfully challenge anti-competitive practices under the Trade Practices Act.
Orders
Orders of the court
The application be dismissed.
The applicant pay the costs of the respondents including any reserved costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.