Dowling v Dalgety Australia Ltd

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.

Trade Practices Act 1974: s. 4A(5), s. 4E, s. 4F. s. 45, s. 46, s. 47(9)(c)

HEARING

SYDNEY

#DATE 10:2:1992

Applicant appearing in person.

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. Mr Dowling furnished some of the information sought, but not other information on the ground that it was irrelevant to his application. On 23 September 1985 the solicitors for the Association informed Mr Dowling that his application was refused.
On 23 March 1987 Mr Dowling made a further application to the Association for membership of it, and on 27 March 1987 he was informed by the solicitors for the Association that this second application was refused.
The evidence establishes (and there is no dispute about it) that the reason for the refusal was that the three pastoral houses did not propose to allow any agent to conduct auction sales of livestock at the Goondiwindi saleyards, except themselves, because those saleyards were (and still are) owned by them, and since it is their property they did not intend to allow others, who have no proprietary interest in the saleyards, to auction livestock there, and compete with them. Whether this attitude and conduct contravenes the Trade Practices Act 1974 ("the Act") is the central issue in the case.
Mr Dowling commenced this proceeding on 18 July 1988. He alleges in his application and statement of claim (as amended from time to time) contraventions by the respondents of ss. 45, 46 and 47 of the Act.
As to s. 45 of the Act, Mr Dowling alleges that the respondents agreed, before the commencement of the Trade Practices Amendment Act 1977 (1 July 1977), that they and only they as members of the Association could auction livestock at the Goondiwindi Saleyards and that this constituted a provision of a contract between the respondents which had the purpose or which had or was likely to have the effect of substantially lessening competition in the business of auctioning livestock in Goondiwindi, and thus was rendered unenforceable by s. 45(1). He also seeks to restrain the respondents from giving effect to that provision pursuant to s. 45(2)(b)(ii). He seeks an order that the respondents permit him to auction livestock at the Goondiwindi saleyards upon such terms and conditions as may be reasonably necessary to enable those saleyards to be used by him.
Mr Dowling alleges a contravention of s. 46 of the Act by the respondents. He asserts that the respondents have a substantial degree of power in the relevant market; and that, by refusing his application for membership of the Association, they took advantage of that power for the purpose of (a) eliminating or substantially damaging him as their competitor in the market, (b) preventing his entry into the market or (c) deterring or preventing him from engaging in competitive conduct as a livestock auctioneer in the market. He seeks an order that the respondents be restrained from carrying on or engaging in business in breach of s. 46.
Mr Dowling alleges that the respondents have contravened s. 47 of the Act by their refusal to grant or exercise their power to grant a licence to him to auction cattle at the Goondiwindi saleyards. He seeks an order that the respondents be restrained from engaging in and continuing to engage in the practice of exclusive dealing which is prohibited by s. 47.
Mr Dowling seeks damages pursuant to s. 82 of the Act and relief under s. 87 of the Act.
The respondents deny each of the material allegations made against them by Mr Dowling.
The evidence was given both by affidavit and orally, the oral evidence being mainly cross-examination of the deponents. Much of the evidence is not in dispute. There is, however, dispute as to the existence of the relevant purposes of the respondents for the purposes of s. 46 of the Act and as to whether there was a relevant agreement, arrangement or understanding within s. 45. There are also conflicting views between the parties with respect to proper inferences to be drawn from certain of the evidence, and they differ in some respects about the definition of the relevant market or markets.
Mr Dowling was represented by solicitors and counsel until the commencement of the hearing; but his solicitors ceased to act by arrangement with Mr Dowling just before the commencement of the hearing, so Mr Dowling represented himself. He is not a lawyer. He is, as mentioned earlier, and has been for most of his working life, engaged in business as a stock and station agent. I endeavoured to assist Mr Dowling in relation to the presentation of evidence and addresses so far as it is permissible for the Bench to do this for a party in person. I also made available to him during the hearing the Court's copy of the transcript of evidence. Mr Dowling seemed grateful for the assistance, and I was not under the impression that he was at a serious disadvantage through not having legal representation; although, of course, it would have been beneficial to his case if he had been so represented. The preparatory work had, however, been done at a time when Mr Dowling was represented by solicitors and counsel. Mr Dowling had a fine grasp of the relevant facts of the case which is not surprising as he has lived with them for some years. He also displayed a perception of relevance and conducted his case with a degree of objectivity which was commendable. I should add that counsel for the respondents, though conducting the case for the respondents with all proper vigour, did not attempt to take advantage of the fact that Mr Dowling was unrepresented. In short, although obviously Mr Dowling's case would have been better presented had he been represented at the hearing by counsel and solicitors, I do not think that he suffered injustice or serious disadvantage without them.
Mr Dowling was the principal witness for himself and I accept him as a truthful and reliable witness. Mr Dowling called two farmers from the Goondiwindi area in support of his case: Mr T.J. Dillon and Mr R.L. Ladner. Mr Dillon is a farmer and grazier on a family property, "Boonara", near Goondiwindi. Mr Ladner is a farmer and grazier and his property is "Gooralie", also near Goondiwindi. Both Mr Dillon and Mr Ladner gave evidence about various matters, but principally they emphasised the value to them of the personal service that Mr Dowling provided. They complained that because of the inaccessibility to Mr Dowling of the Goondiwindi Saleyards, he was not able to auction their cattle. Nevertheless, each agreed that substantially all of the services that a stock agent might otherwise provide were provided by him to them. Mr Dowling also called an expert witness, Mr R.J. Turvey, an agricultural consultant from Armidale in New South Wales.
The respondents called the following witnesses:-
. Mr M.C. Capp, the Queensland General Manager of Dalgetys.
. Mr R.J. Hughes, the Assistant Manager for Queensland of Dalgetys.
. Mr P.D. McCormack, the Manager of Dalgetys' Goondiwindi Branch.
. Mr R.D. Chomley, the State Manager for Queensland of Elders in 1985.
. Mr G.G. Roberts, the Manager Finance and Administration of Elders

Pastoral Division in 1985, and the State Manager for Queensland of Elders Pastoral Division from mid 1986 to 1990.

. Mr B.J. McGregor, the Manager of Elders, Goondiwindi Branch.

. Mr D.B. Sneddon, the Company Secretary of Primac in 1985 and since

August 1988 the Chief Executive of Primac.

. Mr D.M. Swan, the Chief Executive of Primac in 1985.

. Mr L.W. Dunstan, the Assistant Chief Executive of Primac.

. Mr D.A. Hoban, the Manager of Primac's Goondiwindi Branch from

October 1987 to at least early 1990.

. Dr P.D. Chudleigh, an agricultural and economics consultant from

Brisbane.

I shall not discuss the evidence of each witness in detail, but shall make findings of fact which reflect my impressions of witnesses. This is not a case which turns on the credit of witnesses, though I found some witnesses more reliable than others.
Before turning to the facts I shall set out the relevant statutory provisions, namely, ss. 45, 46 and 47. Section 45, so far as relevant, provides:
"45(1) If a provision of a contract made

before the commencement of the Trade Practices Amendment Act 1977:

(a) is an exclusionary provision; or

(b) has the purpose, or has or is likely to have the effect, of substantially lessening competition; that provision is unenforceable in so far as it confers rights or benefits or imposes duties or obligations on a corporation.

(2) A corporation shall not: ...

(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) ... ; or

(ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition."

(3) 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."

(4) For the purposes of the application of this section in relation to a particular corporation, a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding shall be deemed to have or to be likely to have the effect of substantially lessening competition if that provision and any one or more of the following provisions, namely -

(a) the other provisions of that contract, arrangement or understanding or proposed contract, arrangement or understanding; and

(b) the provisions of any other contract, arrangement or understanding or proposed contract, arrangement or understanding to which the corporation or a body corporate related to the corporation is or would be a party; together have or are likely to have that effect."

Section 46, so far as relevant, provides:
"46(1) A corporation that has a substantial

degree of power in a market shall not take advantage of that power for the purpose of:

(a) eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market;

(b) preventing the entry of a person into that or any other market; or

(c) deterring or preventing a person from engaging in competitive conduct in that or any other market.

(2) If:

(a) a body corporate that is related to a corporation has, or 2 or more bodies corporate each of which is related to the one corporation together have, a substantial degree of power in a market; or

(b) a corporation and a body corporate that is, or a corporation and 2 or more bodies corporate each of which is, related to that corporation, together have a substantial degree of power in a market; the corporation shall be taken for the purposes of this section to have a substantial degree of power in that market.

(3) In determining for the purposes of this section the degree of power that a body corporate or bodies corporate has or have in a market, the Court shall have regard to the extent to which the conduct of the body corporate or of any of those bodies corporate in that market is constrained by the conduct of -

(a) competitors, or potential competitors, of the body corporate or of any of those bodies corporate in that market; or

(b) persons to whom or from whom the body corporate or any of those bodies corporate supplies or acquires goods or services in that market.

(4) In this section:

(a) a reference to power is a reference to market power;

(b) a reference to a market is a reference to a market for goods or services; and

(c) a reference to power in relation to, or to conduct in, a market is a reference to power, or to conduct, in that market either as a supplier or as an acquirer of goods or services in that market. ...

(7) Without in any way limiting the manner in which the purpose of a person may be established for the purposes of any other provision of this Act, a corporation may be taken to have taken advantage of its power for a purpose referred to in sub-section (1) notwithstanding that, after all the evidence has been considered, the existence of that purpose is ascertainable only by inference from the conduct of the corporation or of any other person or from other relevant circumstances."

Section 47, so far as relevant, provides:
"47(1) Subject to this section, a

corporation shall not, in trade or commerce, engage in the practice of exclusive dealing. ...

(9) A corporation also engages in the practice of exclusive dealing if the corporation refuses to grant or renew, or exercises a power or right to terminate, a lease of, or a licence in respect of, land or a building or part of a building for the reason that another party to the lease or licence or, if that other party is a body corporate, a body corporate related to that body corporate:

...

(c) has supplied goods or services, or goods or services of a particular kind or description:

(i) to particular persons or classes of persons or to persons other than particular persons or classes of persons; or

(ii) in particular places or classes of places or in places other than particular places or classes of places; ..."

Stock agents

There are two classes of stock agents operating in Queensland and northern New South Wales. First, there are the three largest agents who are the pastoral houses: Dalgetys, Elders and Primac. They have many branches located in a large number of centres throughout several States including Queensland. The pastoral houses offer a wide range of services to their clients including agency services for the sale and purchase of livestock, real estate and wool; the provision of credit, insurance services and other financial services.
All three pastoral houses are publicly-owned companies; but in the case of Primac it is still to a large extent owned by individual primary producers who were members of the co-operatives which merged to form Primac. In recent years there has been a considerable rationalisation of the pastoral houses, and over the last twenty years or so the number operating in Queensland has been reduced to three, namely, Dalgetys, Elders and Primac.
Pastoral houses are required to hold a pastoral house corporation licence under the Auctioneers and Agents' Act 1971 (Qld). The person in charge of each pastoral house branch must hold a pastoral house manager's licence, and any auctioneer employed by a pastoral house must have a pastoral house auctioneer's licence.
The three pastoral houses are members of various saleyards associations in Queensland which have existed for many years.

The second category of agent is the private or independent agent. Generally independent agents are small operations employing only a few people. The agents employ permanent and casual staff to perform tasks associated with the auctions and the provision of other services. The majority of independent agents operate from one location and their activities are confined largely to the area surrounding the town or city in which they are located. In major centres there will often be more than one independent agent who compete with each other as well as with the pastoral houses located in that centre. In smaller centres there may be only one independent agent competing with the pastoral houses located there. Independent agents usually hold licences as auctioneers and real estate agents under the Auctioneers and Agents' Act 1971 (Qld).
Recently there has been an increase in the number of new independent agents carrying on business in Queensland. This has to some extent been the result of the reduction in number of pastoral houses operating throughout Australia by reason of mergers and takeovers. Many of the independent agents are former employees of pastoral houses who for one reason or another have left the pastoral houses and gone into business on their own account. In many cases primary producers tend to prefer to deal with an independent agent who is a local identity of long standing and experience in the town. Some producers also employ more than one agent each of whom is perceived to have different expertise or business connections.
Independent livestock agents in Queensland have operated in the past mainly from towns and cities in the coastal regions rather than in the mid and far west. The three pastoral houses are all represented in towns such as Cloncurry, Longreach and Charleville, but there are no or only one or two private agents in those towns. This contrasts with towns such as Warwick, Dalby, Charters Towers, Rockhampton and Townsville where there may be up to half a dozen private livestock agents with a significant share of the business. Seasonal fluctuations and the resultant uncertainty of business explains partly why independent agents are not found in the mid-western and western areas. Also centres selling fat cattle are less likely to be affected by seasonal conditions than centres selling store cattle.
Agents selling livestock (both pastoral houses and independent agents) compete among themselves for primary producer clients. They also compete with meat processors who frequently buy their stock directly from primary producers. Competition between livestock agents exists in respect of commission rates charged and services offered.
It is frequently the case that reduced rates of commission are negotiated with particular agents by particular clients. For example, at Toowoomba where the auction sale segment of the livestock market is shared by the three pastoral houses, Dalgetys occasionally negotiates with clients for a lower rate of commission than its usual five percent. This is much more likely to happen with fat cattle than store cattle because fat cattle sell for higher prices per head than stores and, secondly, fat cattle sales are far less likely to involve payment by Dalgetys of a commission rebate to another agent referring the vendor to a sale or to a buying agent because the stock are usually sold directly to the meat processor. The lower rate may sometimes be agreed to meet a competitor's rate or where large mobs of stock are involved.
Independent agents usually operate in one regional centre where they rely to a substantial extent on their local identity to attract custom. They sometimes offer lower rates of commission than the pastoral houses and their own costs structures are generally much lower.
The Goondiwindi Saleyards and the Goondiwindi Saleyards Association
Goondiwindi is immediately to the north of the border of Queensland and New South Wales. The only agents that provide livestock agency services at Goondiwindi are the three pastoral houses and Mr Dowling's firm, Messrs D W Dowling and Co. There is also a real estate firm in Goondiwindi that sells town real estate and some rural property. Another licensed agent in Goondiwindi buys and sells cattle, principally as a dealer, using the services of Dalgetys, but acts also for clients buying sheep and cattle. There is another agent in Goondiwindi who sells merchandise and provides rural property and town real estate agency services but not livestock agency services. Mr Dowling's activities are confined to purchase and sale of livestock and rural property agency services with some town real estate sales. He also sells some wool for his clients using the services of Goodard Wool Marketing.
Goondiwindi is a strong store cattle centre and the cattle sold through the Goondiwindi Saleyards are predominantly store cattle, although the percentage of stores to fats varies sometimes considerably from year to year.
The saleyards at Goondiwindi are situated in New South Wales and are known as the Goondiwindi Saleyards or the MacIntyre Saleyards. As I mentioned earlier I shall refer to them as the "Goondiwindi Saleyards". They were originally constructed in the mid 1950's by Winchcombe Carson Limited and New Zealand Loan and Mercantile Agency Company Limited on Crown leasehold land leased by those companies. In 1959 Dalgety and Company Limited purchased an interest in the saleyards and entered into an agreement with the other owners for the purpose of managing the saleyards. The agreement was dated 7 August 1959 and was between Dalgety and Company Limited, New Zealand Loan and Mercantile Agency Company Limited and Winchcombe Carson Limited (later taken over by Dalgetys). The agreement recited that the three companies are the lessees or entitled to be the lessees of the land on which were to be built the Goondiwindi Saleyards and that the parties were desirous of constituting themselves as a "Syndicate" under the name of "Goondiwindi Sale Yards Association" to manage the yards. They agreed to erect yards on the leasehold land (clause 3) and that the three members were to be entitled to the assets of the Association in equal shares and also entitled to the income thereof and bear the liabilities thereof in the same proportions (clause 5). A "committee of control" was established consisting of nominees or representatives of the members of the Association, one nominee for each member (clause 6). The Second Schedule to that agreement contained "Rules and Regulations for The Goondiwindi Saleyards Association", rule (v) of which provided that "yards shall not be let to outside agents". The agreement provided for other matters which are not material for present purposes.
Until 1965 other pastoral companies conducted auction sales from saleyards known as the "Rosewood Saleyards" which were located about four kilometres north of the Goondiwindi Saleyards and were leased from the private owners of the property on which those yards were located. In about 1965 the pastoral houses then using the Goondiwindi Saleyards and the Rosewood Saleyards decided to build new yards on the site of the Goondiwindi Saleyards. Subsequently an agreement was entered into between the respondents or their predecessors in title, namely, The Australian Estates Company Limited, Australian Mercantile Land and Finance Company Limited, Dalgety and New Zealand Loan Limited, Elder Smith Goldsbrough Mort Limited, Queensland Primary Producers' Co-Operative Association Limited and Winchcombe Carson Limited for the purpose of establishing a "Syndicate" under the name of "Goondiwindi Saleyards Association" to manage the yard. The agreement was dated 13 July 1967 and it described the objects of the Association as:

"(a) To purchase, acquire and hold property whether leasehold or freehold or personal property for the purposes of the Association in the town of Goondiwindi or within five (5) miles thereof or elsewhere as all members may agree.

(b) On such property to manage and conduct Yards for the sale of livestock."

The commencement of the operations of the Association was deemed to be 1 October 1966. The members were entitled to the assets of the Association in equal shares and entitled to income and to bear liabilities in the same proportion (clause 5). A committee of control was established consisting of nominees or representatives of the members of the Association (clause 6). The by-laws and regulations set out in the Second Schedule to the agreement could be cancelled, varied or modified with the unanimous consent of all members of the committee (clause 9). A member of the Association was prohibited from withdrawing or resigning or assigning his interest in the Association except with the consent of a resolution of the committee in favour of that course of conduct (clause 15). On retirement or resignation of a member from the Association or the assignment of its interest the remaining members of the Association shall succeed as tenants in common in equal shares to that share and interest (clause 16). Clause 18 requires each member to "do all in its power to promote Cattle and Sheep Sales through the yards of the Association for the benefit of the Association and also undertake not to use other yards for Cattle or Sheep Sale purposes within a radius of five (5) miles from the Association's yards unless with the unanimous consent of all members of the Committee". In the Second Schedule to the agreement are the rules and regulations for the Association which include provisions for the conduct of auction sales and a provision that "Yards shall not be let to outside Agents" (rule (v)) and a provision for commission. The agreement made provision for other matters to which it is not necessary to refer. The agreement was amended on 23 August 1967 and 8 November 1967 in relation to yard dues, special sales, frivolous complaints, breach of rules and fines.
New saleyards were constructed on what was still then Crown leasehold land; and between 1965 and today substantial improvements were made to the yards.
Since 1967 numerous changes have taken place in the pastoral industry with respect to pastoral houses following mergers and takeovers, with the result that the members of the Association since at least March 1985 have been: Dalgetys, Elders and Primac. Dalgety Farmers Limited was formerly known as Dalgety Australia Limited. Elders IXL Limited was formerly known as Elder Smith Goldsbrough Mort Limited. Primac Association Limited is a company formed following the merger of Queensland Primary Producers Co-Operative Association Limited and MacTaggarts Co-Operative Association Limited. Dalgetys now carries on the business formerly carried on by Dalgety and New Zealand Loan Limited and Winchcombe Carson Limited. The third respondent, Australian Mercantile Land and Finance Company Limited, is now a subsidiary of Elders and its business is conducted by Elders under the business name of Elders Pastoral. The fourth respondent, Austest Company Limited, formerly known as The Australian Estates Company Limited, has been wound up and its business has been acquired by Elders.
The land upon which the Goondiwindi Saleyards is now constructed has become freehold land and transfers have been executed by the various parties to reflect the present ownership of the land in the names of Dalgetys, Elders and Primac in equal shares as tenants in common. The transfers are still in the process of registration in New South Wales.
The assets of the Association were held by the original members in equal shares, and, following changes in membership of the Association over the years, sales of the assets have taken place at agreed values so that in the result the three present members of the Association, being the three pastoral houses, hold their interests in equal shares.
In 1974, following the introduction of the Act, the pastoral houses who were members of livestock selling associations decided to amend the constitutions of the associations to remove price fixing agreements. A standard form of constitution, rules and regulations was prepared to replace the then constitutions. There is in evidence a document described as the minutes of a special meeting of the Association held on 30 September 1974. It records the following resolution as a unanimous resolution:

"That in view of the current constitution of The Goondiwindi Saleyards Association being illegal and unenforceable as from 1st October, 1974, it is hereby declared null and void and that the new Constitution dated 1st October 1974 be odopted (sic)."

No signatures appear on this document and there is nothing on its face to suggest that the Chairman of the meeting signed the minutes. The evidence is unclear as to what the Association intended to be the "new Constitution dated 1st October 1974"; but it may be the document which is exhibit number RJH4 to the affidavit of Mr Richard James Hughes sworn on 1 February 1990 (Mr Hughes being the Assistant Manager for Queensland of Dalgetys). That document does not have a rule similar in terms or effect to rule (v) in the 1967 agreement.
On 6 January 1986 the members of the Association met and passed resolutions making certain amendments to the agreement of 13 July 1967 relating to commission rates and certain other matters. Mr Hughes said in evidence that at that stage the members of the Association had not been able to locate any record of the adoption of a new constitution in 1974. Rule (v) in the Second Schedule (providing that the "Yards shall not be let to outside Agents") was not the subject of any resolution on 6 January 1986. The document purporting to be the minutes of the meeting of 6 January 1986 is not signed by any person and it records the following:

"PARTNERSHIP AGREEMENT: It was unanimously agreed by Members that the Partnership Agreement dated 13/7/67 should be amended immediately as follows:

(a) To record that the present members of the partnership, following various mergers and takeovers in recent years are:- Dalgety Farmers Ltd, trading as Dalgety Winchcombe FGC Elders IXL Ltd., trading as Elders Pastoral Primac Association Ltd.

(b) Delete Clause (vi) of the Second Schedule relating to Commission Rates.

(c) Delete Clause (viii) of the Second Schedule relating to a common disbursement day.

(d) Delete Clause (xi) of the Second Schedule relating to Schedule G of the Queensland Livestock, Property and Produce Brokers' Association. The deletions referred to in paragraphs (a), (b) and (c) recognise the situation which has in any event applied for many years."

It was submitted by counsel for the respondents that the intention of the respondents when the Act became law was to remove everything from the relevant agreements between the members of the Association that might contravene that Act, including rule (v) in the Second Schedule to the agreement of 13 July 1967, and that this is evidenced in the resolution of 30 September 1974 and in exhibit RJH4. This argument has difficulties. Although the documentary evidence of the meetings of the Association is inadequate, I am satisfied that the meetings of 30 September 1974 and 6 January 1986 were held. However, the resolution of 6 January 1986 was clearly specifically directed to the agreement of 13 July 1967 in unequivocal terms indicating that it was then on foot and, indeed, was to remain on foot, save for the amendments made to it at that meeting by the members of the Association. Also, the minutes of the meeting of 30 September 1974 are not inconsistent with rule (v). Whatever may have happened at the meeting on 30 September 1974, the minutes of the meeting on 6 January 1986 satisfy me that the provision in rule (v) of the Second Schedule to the agreement of 13 July 1967 (that the yards shall not be let to outside agents) was operative at all times relevant to this case.
Fat cattle sales are held at the Goondiwindi Saleyards every Tuesday and store cattle sales are held every second Friday (excluding public holidays) subject to sufficient numbers of cattle being available. Sheep sales are held at intervals of approximately one month to six weeks depending on supply. The average fat cattle sale consists of about 800 head, the average store cattle sale of approximately 2,000 head and the average sheep sale of approximately 8,000 to 10,000 head.
Until recently the Association employed a person to arrange advertising in the Queensland Country Life, the Goondiwindi Argus and other newspapers and on various country radio stations shortly before each sale at the Goondiwindi Saleyards, the purpose of the advertising being to attract buyers. The cost of the advertising was paid by the Association from revenue received by it from yard dues. The advertising is now done on a different basis. Each member of the Association in rotation throughout the year, each for a four monthly period, arranges for the necessary advertising of sales and pays for it out of its own funds. Hence the cost of advertising is now borne by the pastoral houses themselves and not by the Association.
Each member of the Association may also arrange its own advertising of forthcoming auction sales and this is done from time to time. Sellers and buyers of sheep and cattle are also made aware of the sales through personal contact with the pastoral houses and other agents who may refer cattle to the sale.
The President of the Association usually attends to the day to day running of the Association. The President is appointed from each member on a rotation basis. The day to day costs of running and maintaining the Goondiwindi Saleyards are financed from the yard dues and weighing charges which the selling agents collect from vendors as part of the costs of the auction. The running expenses of the Goondiwindi Saleyards, in addition to advertising, include rates, repairs and maintenance, labour and yard cleaning.
On no occasions have the Goondiwindi Saleyards been hired to or used by any person or corporation other than Dalgetys, Elders or Primac for the purpose of auctioning livestock; nor have those saleyards been offered to any person for that purpose by the Association.
The historical cost of the Goondiwindi Saleyards, including improvements and land as shown in the accounts of the Association, is in excess of $500,000. This cost has been incurred over the period from 1965 to the present time. There is evidence that the replacement cost of the saleyards is approximately $2m.
Selling centres and saleyards
Saleyards were historically constructed throughout Queensland either by agents or by public authorities such as shire or town councils, or, in the case of Cannon Hill and Townsville saleyards, by the Metropolitan Saleyards' Boards. The last mentioned yards are now under the control of the Livestock and Meat Authority of Queensland.
Where saleyards are owned privately by an agent (a pastoral house or independent agent) or more than one agent jointly, generally the owners of the saleyards are the only persons who conduct auction sales at those yards. If another agent introduces a vendor having livestock for sale at those saleyards, it is the customary practice that the agent owning the saleyards conducts the sale and is paid commission by the vendor on the sale; but in return the auctioneering agent pays a rebate commission to the agent who introduces the livestock to the sale. Where saleyards are owned privately, in addition to the commission on the sale, which is usually in the vicinity of 4% to 5%, the vendors are customarily charged yard dues at a per head rate and a further charge for weighing per head if the yard has those facilities.

Where saleyards are municipally owned, saleyards associations exist. All agents who wish to use the saleyards invariably join the association. The association carries out much the same activities as the Goondiwindi Saleyards Association does, but it is not involved in the ownership or maintenance of the saleyards. The association arranges the advertising of the sales and sale dates and requests the owner of the yards to make improvements or to maintain the yard. Any agent wishing to use the saleyards pays an annual fee to the local authority. In addition, the vendor is required to pay a further fee for the use of the yards which is in the nature of yard dues. Some of the municipal authorities, for example the Roma Shire Council, run their saleyards at commercial rates, charging an annual fee of $2,500 to an agent for the use of the yards plus yard dues based on so many cents per head of sheep or cattle (cattle 30 cents a head, sheep 10 cents a head) and a levy of 0.5% of gross proceeds, an operating fee of 25 cents per head and a weighing fee of 75 cents per head. The yard dues, levies and weighing fees are usually passed on to the vendor in addition to commission charged.
At the saleyards stock are drafted and penned and then auctioned and sold to the highest bidder subject to reserve prices, if any. They are sold on a price per kilo live-weight basis in the case of fat cattle and on a per head basis for store cattle or sheep. Occasionally fat cattle are also sold on a per head basis. After sale fat cattle are weighed. The stock are then delivered to the buyer at a delivery yard at the saleyard set aside for the buyer. In the case of fat cattle the buyer is supplied with a computer printout detailing the weight, price per kilo, price per head and identifying the cattle purchased. In the case of public or jointly owned saleyards where there may be more than one agent selling, a duty agent is usually appointed to arrange delivery.
Commission in respect of auction sales of cattle and sheep in Queensland is limited by the Auctioneers and Agents Act 1971 (see Schedule 3 to the Auctioneers and Agents Regulations 1986) to 5% of the gross proceeds and in the case of private sales of cattle or sheep in the paddock to $20 plus 2.5% of such part of the gross proceeds as exceeds $400. In addition an agent is entitled to charge further amounts for advertising and yard dues that are actually expended by the agent and authorised by the client. In New South Wales there is no limitation on the commission payable.
Some saleyards are owned by independent agents. There are several current examples of this such as Noel Anderson and Co. at Biggenden, Tom Knox and Co. at Jandowae, Boxsell and Co. at Maleny, Brian Schimke at Monto and Shepherdson and Boyd at Toogoolawah. Each of those agents has, however, been there for a long time. In each of these towns except Monto the private agent has the advantage that the pastoral houses are not represented or do not sell cattle by auction there. At Toowoomba, Primac's yards were previously owned by a private agent, Eric Caton and Co., who operated those yards successfully in competition with other yards owned by the pastoral houses until Primac bought the business and saleyards of that agent in about 1984.
It would not be easy for an independent agent to establish new saleyards, especially if one of the pastoral houses has a branch in the centre in question. The difficulty is considerably increased if all three pastoral houses have branches there. Essentially though, the decision to build saleyards in any centre is one of judging whether the market share likely to be gained will justify the capital expenditure and risk involved.
There are nine saleyards other than the Goondiwindi Saleyards which are reasonably accessible from the Goondiwindi district. They range in distance from Goondiwindi from 100 kilometres in the case of Inglewood to 240 kilometres in the case of Toowoomba. Six of those nine saleyards are owned by municipal authorities. At Toowoomba, Elders, Dalgetys and Primac each has its own saleyard.
Toowoomba is the largest fat cattle selling centre in Australia. Clients located north and east of Goondiwindi often prefer to sell their cattle by auction at Toowoomba instead of Goondiwindi. Toowoomba is closer to the abattoirs and consequently there is a freight advantage for cattle sold at Toowoomba; but this is more so in the case of fat cattle than store cattle. No sheep are sold at Toowoomba. Because Toowoomba is such a strong market for fat cattle and sells such large numbers of fat cattle, some Goondiwindi clients of pastoral houses, wherever they are located, choose to sell their fat cattle at Toowoomba because of the better market, but sell their store cattle through the Goondiwindi saleyards, which is a strong store cattle centre. Vendors with properties towards Warwick often choose to send their fat cattle for sale to Warwick where there is an abattoir. Most fat sheep and lambs that are sent to Warwick are for sale by auction. Vendors with properties nearer Moree often choose to send their store cattle there for sale. There are no marked differences between the yard dues and weighing charges at the Goondiwindi saleyards from those at other saleyards, although the Goondiwindi saleyards may be slightly cheaper than some of the others mentioned earlier.
Clients of the Goondiwindi branch of one of the pastoral houses who wish to sell at saleyards other than the Goondiwindi saleyards usually do so using the services of that pastoral house's Goondiwindi branch. That branch then refers the sale to its branch in the town of the saleyards which has been chosen and organises the transport of the stock to the saleyards. On some occasions the stock of the clients of a pastoral house may be sold at an auction sale in another centre conducted by another agent. In those cases a rebate commission is paid by the selling agent to the pastoral house at Goondiwindi for introducing the stock.
Alternative saleyards at Goondiwindi
There is evidence of alternative saleyards at Goondiwindi. The Goondiwindi Showground has saleyards and they are available for hire. The cost in October 1991 was $300 for a stud or cattle sale. The showground has 82 pens with a selling ring, a loading ramp and watering facilities. Stud sheep and stud cattle sales are held in those yards by Elders and Dalgetys two or three times a year. The facilities are not as useful as at the Goondiwindi saleyards for a number of reasons:
(a) there is only one single deck loading ramp; (b) there are no liveweight scales; (c) not every pen has water facilities and the water facilities that

are there are in the centre of the saleyards only;

(d) there is a problem with the rails in that the top rails in

approximately 16 pens are not sufficiently high to stop cattle jumping out of the pens and the lower rails in all of the pens are too high off the ground to pen calves in; and

(e) the yards are not suitable for store sheep sales.

In my view, the Goondiwindi Showground saleyards are not a satisfactory alternative venue for the sale of store cattle by auction.
Portable yards exist. For example there is a private agent in Texas who holds about six store cattle sales in Texas annually using portable yards on his own property. There is no doubt that this is a facility which Mr Dowling could avail himself of for selling cattle by auction on land close to Goondiwindi, but it would not be entirely satisfactory.
It is possible for an agent to buy land (about five acres would be needed) adjacent to a highway suitable for a saleyard within about ten kilometres of Goondiwindi. The cost of acquiring the land would be about $50,000, though the consents of the relevant authorities, including the local council, would be needed and there is no guarantee that such consents would be forthcoming. It would also be necessary in New South Wales to comply with the requirements of the New South Wales Meat Industry Authority. The establishment costs of yards would be high; indeed too high to be a feasible proposition for an independent agent without recourse to substantial funds.
Municipal yards at Moree or Warwick would be available to Mr Dowling, but this would involve considerable cost and the inconvenience of travelling to and from the yards each sale day. Further, with respect to the Moree saleyards, Mr Dowling would only be able to auction at those saleyards on a different day to the other agents at Moree and only if it did not hinder the local association there in any way.
In the middle of 1985 Mr Dowling conducted an auction of cattle at the Meandarra Municipal Saleyards. He has not conducted any auction of livestock anywhere since then, notwithstanding that more than half of the auctions which he has arranged on behalf of clients have been conducted at saleyards other than the Goondiwindi Saleyards and he does not allege that he is prevented from carrying out auctions there. However, he does have a current auctioneer's licence and there is some evidence that in the past he has been regarded as a good auctioneer.
Mr Dowling gave evidence that there are no alternative saleyards in the immediate Goondiwindi district at which he could auction livestock for producers in that district. The nearest suitable saleyards to which he has access to auction livestock is Moree, which is about 120 kilometres from Goondiwindi and subject to the conditions mentioned earlier, or alternatively, at Warwick about 220 kilometres from Goondiwindi. Although both of the yards are operated there by municipal councils he says that it is not feasible for him to carry on business in Goondiwindi as an auctioneer of livestock if he has to carry out auctions of livestock in the other districts. He also says he does not have sufficient funds available to him to afford to purchase a sufficient area of land and to meet the necessary capital requirements to construct alternative saleyards even if the zoning is appropriate.
Methods of marketing cattle at or near Goondiwindi
The methods of marketing cattle at or near Goondiwindi are by:
(a) physical auction sales conducted by the pastoral houses at the

Goondiwindi Saleyards or auctions on private properties;

(b) paddock sales or private sales, namely, sales not at auction and

with or without the intervention of an agent. Where paddock sales are made without an agent they are referred to as direct sales;

(c) a system of electronic auction by description known as CALM

(computer aided livestock marketing system); and

(d) an electronic auction by video known as "video sales" which

appears to be limited to specialist herds or specimens and which is not used extensively at this stage.

An advantage of the auction system (whether conducted at local saleyards or on private properties) is that it brings together in the one place, at the one time, all potential buyers for the particular product being offered, by contrast with direct sale where potential buyers are played off one against the other by the seller, thereby generating more competition among buyers. This enables producers, who by the nature of their activity are numerous and widespread, to obtain competitive market prices for their livestock. Another advantage of auction sale in local saleyards is that the agent can assemble small numbers of cattle from small producers into homogeneous lots for auction. A third advantage of sale by auction for a meat processor purchasing from a saleyard close to the abattoir is that he can inspect the condition of the cattle from distant sources of supply.
Many producers prefer to sell fat cattle by direct sale rather than at auction because they perceive direct selling as having a number of advantages, including the avoidance of unnecessary bruising of cattle and loss of condition which occurs at auction in saleyards; agents do not have to be employed in direct sales; direct sales do not require the payment of commission and other additional costs incurred at auction, for example, saleyard dues; and transport costs are frequently less where there are direct sales. Some larger producers particularly tend to sell directly to meat processors rather than use the services of agents.
One of the advantages of selling cows and calves in the paddock is that problems with the mothering of cows and calves (i.e. the separation of the cow and the calf) are avoided. Also avoided is the cost and delay involved in tuberculosis testing and the risk that some of the stock will show a positive reaction and have to be destroyed. The TB test was required for all stock sold at the Goondiwindi sale yards until the end of 1989. Costs of selling in the paddock are cheaper partly because the commission is less. Transport costs are reduced and there are no yard dues. Also the vendor can decide whether to sell at the nominated price or not. Usually stock sold at auction are sold without any reserve price. The risk of bruising to stock during transport or loss prior to sale is also removed in a private sale. Private sales are organized by the agent telephoning other agents and enquiring whether they have any interested customers. Meatworks buyers may also be telephoned. Prospective buyers are usually shown the stock before they buy. Private sales often require more labour and time by the agent even though the commission earned is lower than commissions at auction. In the case of cattle, private sales are more suited to larger numbers. Smaller volumes are more likely to be sold by auction.
CALM is a computerised electronic auction sale. CALM employs field officers or accredits persons as assessors for the purpose of inspecting stock on the vendor's property. The assessors make assessments of the various livestock available for sale and the assessments are sent by CALM to the prospective buyers in catalogue form the day before the sale. The auction is conducted electronically with buyers and agents using computer terminals to bid. The vendor has the option of selling either on a per head basis, live weight or weight and grade method. With a CALM sale the agent assumes the del credere risk because the sale takes the form of an auction by the agent. In those circumstances the agent pays to CALM a fee and uses its own livestock assessors or employs independent assessors. CALM offers an alternative to private treaty selling rather than auction sales because the stock remain in the paddock and the vendor does not have to sell if his reserve price is not met. It also suits vendors with large numbers of livestock. The vendor with a few head is more likely to send the stock to auction. Any producer or agent is free to gain access to CALM subject to the payment of CALM's fees. All that is required is a computer terminal. Sales through CALM for Goondiwindi clients of the pastoral houses are few in number, but the volume of stock being sold through CALM is increasing.
Services offered by the pastoral houses
- Dalgetys
The Goondiwindi branch of Dalgetys provides many services to its clients including:
. livestock agency services for selling and buying sheep and cattle;
. sale of wool agency services;
. rural property and town real estate sales agency services;
. supply of financial services including credit and maintaining

trading accounts for clients;

. fixed term loans and short term loans for the purchase of

livestock and properties and for working expenses;

. insurance services;

. the advice of a qualified economist;

. contracting of shearing services through Grazcos Co-operative;

. supply of rural merchandise including seed, agricultural

chemicals, animal health products, farm machinery and general requisites.

The clients of Dalgety's Goondiwindi branch consist mainly of cattle producers running 400 to 500 head, sheep producers running 3,000 to 4,000 head, mixed sheep and cattle producers of about the same size and mixed grazing and farming (grain and cotton) operators. There are also producers who fatten cattle on crops such as oats. In the main the producers are individual and family operators of medium size rather than public companies or large operators.
Most of the clients serviced by Dalgetys' Goondiwindi branch are located within an area west to Weengallon which is 150 kilometres west of Goondiwindi by road, north to Moonie which is approximately 100 kilometres north of Goondiwindi by road, east to Whetstone which is about 80 kilometres east of Goondiwindi by road and south of Goondiwindi about 80 kilometres.
Pastoralists and farmers outside that area are more likely to use the services of an agent in another town or another branch of Dalgetys because of distance. Producers within the Goondiwindi district may also use an agent in another centre because they have previously dealt with that agent for some reason or because they prefer to visit that other centre.
Cattle traders or dealers also provide a large proportion of Dalgetys' livestock business at Goondiwindi. They make a profit by buying in one centre and selling in another centre at a later time to take advantage of seasonal conditions and market variations.
Included in the livestock selling business of Dalgetys' Goondiwindi branch is the selling of stud stock by auction sales which are usually held on the stud property. Some sales of stud stock are held at the Goondiwindi Showground. The volume of those sales of stud stock (on stud farms and at the Showground) for the year ended 30 June 1988 was 298 head at a total sale price of $417,000.
At Goondiwindi, Dalgetys usually charges a fixed rate of commission to all sellers at auction of 5%. Because it is a store cattle market Dalgetys is less likely to negotiate a reduced rate. At most other major auction selling venues in Queensland, whether they are privately owned or municipally owned, Dalgetys' usual rate of commission charged is 5%. In some smaller venues the rate charged is 4.5%. The only major exception is Rockhampton where the rate charged is 3% plus $3 per head.
- Primac
Primac's Goondiwindi branch provides similar services to those provided by Dalgetys. Livestock agency services are a major part of Primac's Goondiwindi branch business. The type of client of Primac is much the same as Dalgetys' typical client and a high percentage of clients are long standing clients of Primac and the two co-operatives which merged to form Primac. The clients serviced by the Goondiwindi branch of Primac are located within a radius of approximately 160 kilometres of Goondiwindi. Again, the range of services supplied by Primac encourages clients to use Primac for all services supplied.
Primac charges commission of 4.5 percent for auction sales at the Goondiwindi saleyards.
- Elders
The Goondiwindi branch of Elders provides much the same services as those provided by the other pastoral houses; and again livestock agency services form a large proportion of the business of Elders' Goondiwindi branch. The clients of Elders' Goondiwindi branch consist principally of graziers and farmers within an area of approximately 150 kilometres west and north-west of Goondiwindi, approximately 100 kilometres north to Moonie, approximately 50 kilometres east to Yalarbin and approximately 50 kilometres south towards Moree. The Goondiwindi branch has a large number of long-standing clients who essentially do all their pastoral business with Elders. As a general rule Elders at Goondiwindi does not sell a lot of cattle by private treaty. Sheep are sold by Elders to a large extent by private treaty or by "on property" auction because graziers like to buy the same line of sheep each year to keep the same type of wool.
Elders' Goondiwindi livestock business differs from the business of Dalgetys and Primac in that Elders does not act for as many dealer clients. Elders' Goondiwindi branch also sells stock for a large number of producers located outside the Goondiwindi district. Goondiwindi is essentially a store cattle sale centre, and in recent years Elders' other branches have become accustomed to sending the stock of their clients to Goondiwindi for auction sales. Good seasons down south and poor seasons up north and out west encourage producers to sell south through Goondiwindi.

Elders charges 4.5% commission for auction sales at the Goondiwindi Saleyards.
- General
If a client asks one of the pastoral houses to buy stock for him then the services supplied by the pastoral house include (a) advising the client on price and place of purchase; (b) inspecting the stock prior to purchase; (c) bidding at auction or negotiating on a private sale; (d) organising transport, livestock travelling permits, border crossing papers; and (e) settling the account on behalf of the client. The moneys are obtained from the client either before or after the pastoral house pays the vendor.
Competition between the pastoral houses and private agents in Goondiwindi and neighbouring towns takes place in various ways. Different commission rates are charged on livestock sales. Strong competition exists in personal service to clients. Separate advertising takes place of some livestock auction sales. Merchandise advertising takes place in local papers and country newspapers. Strong competition exists in respect of rural property sales in competing for sales on behalf of vendors and finding a buyer. Very little competition in commission rates occurs in respect of rural property sales. Essentially the competition is in making the sale. In respect of livestock sales the auctioneers themselves attract business. A good auctioneer increases the business of the agents by getting better prices for his clients. Personal service, experience and a knowledge of the industry is a large factor in attracting business sales.
At the Goondiwindi Saleyards the three pastoral houses conduct their auction sales of fat cattle on almost every Tuesday excepting public holidays. On every second Friday, except for public holidays, they conduct auctions of store cattle. On occasions these are auctions of sheep. They operate the Goondiwindi saleyards on a roster system, taking turns to be the first to present stock at auction on sale days.
The members of the Goondiwindi Saleyards Association are the only agents which conduct auction sales at the saleyards. However, each of the pastoral houses conducts auction sales on behalf of other agents (including Mr Dowling) on the basis of a split commission. When stock are sold in this manner, the client pays the same aggregate commission as he would have done had the stock been placed directly in the hands of the pastoral house. The rebate commission paid by Primac to agents who introduce stock for sale at auction is one-half of the net commission payable to Primac after deducting any rebate paid to an agent for the buyer. The rebate commission paid by Elders is 2% on fat stock and 50% of the nett commission on store stock. When Dalgetys accepts stock for sale through its privately owned yards from another agent, the stock are sold on the following basis:
(a) Dalgetys undertakes the auction sale and accepts the del credere

risk involved;

(b) a rebate commission of 2% is paid to the agent who introduces the

livestock to the sale;

(c) Dalgetys accounts to the introducing agent or his client for the

proceeds and invoices the purchaser; and

(d) Dalgetys carries out all the auction functions including drafting

of stock, auctioning, weighing, accounting and delivery of stock, arranging health certificates and travel permits.

There is evidence that there has not been any agreement between the pastoral houses as to the commission rate charged by the members of the Association, at least at any time material to the present case, and I accept that evidence.
The pastoral houses sold 420,126 head of cattle through the Goondiwindi Saleyards between 1 July 1985 and 30 June 1991, 35.49% of which were fat cattle and 64.51% store cattle. However the percentage of fats to stores varied between years, with the fat cattle range being a high of 51.4% and a low of 27% and the store cattle range being a high of 73% and a low of 48.6%. Of the cattle sold by the pastoral houses during that six year period through the Goondiwindi Saleyards, Dalgetys sold 50.88%, Elders 32.51% and Primac 16.61%. However the ranges varied: Dalgetys in the 1987/1988 year sold 54.38% of the cattle through the Goondiwindi Saleyards and in the 1990/1991 year sold 46.29%; Elders in the 1990/1991 year sold 36.01% and in the 1986/1987 year sold 30.93%; and Primac in the 1987/1988 year sold 14.35% and in the 1986/1987 year sold 18.19%.
Set out below are two tables tendered in evidence which relate to the cattle sold by the pastoral houses by auction at the Goondiwindi Saleyards.

MACINTYRE SALEYARDS TABLE (OMITTED) (From 1985 to 1991)

There is also evidence from each of the pastoral houses which provides some basis for comparison between the level of auction sales and private sales. In the six year period from 1.7.85 to 30.6.91, Dalgetys sold 41.4% of its client's sheep by auction and the rest by private sales. The range of sheep sold at auction was from 26.42% to 49.46%. However, while the evidence is unclear, it seems as though a large percentage of the sheep sold by auction are sold by on-property auction rather than at the Goondiwindi Saleyards. In the same six year period, Dalgetys sold 84.2% of its client's cattle by auction and the rest by private sales. The range of cattle sold at auction was from 76.27% to 93.14%. In the four year period from 1.7.85 to 30.6.89, Elders sold 70.1% of its client's sheep by auction (includes auctions other than at the Goondiwindi Saleyards) and the rest privately. The range of sheep sold at auction was from 57.5% to 81.43%. In the same four year period, Elders sold 89.1% of its client's cattle by auction (includes auctions other than at the Goondiwindi Saleyards) and the rest privately. The range of cattle sold at auction was from 82.9% to 92.93%. The evidence in relation to Primac in that same four year period is in the form of commissions earned, not numbers of cattle or sheep sold. Primac earned between 7.3% and 34.1% of its total commissions from private sales of sheep and cattle and earned the rest of its commissions from auctioning sheep and cattle, both for introduced clients under a rebate system and its own clients.
It seems clear that the majority of sheep are sold by private treaty or by private auctions. A large proportion of fat cattle are sold by private treaty. The one area where it would be difficult to compete without access to saleyards is in respect of the sale of store cattle.
Markets
One of the most helpful explanations of a market is from the following passages in the reasons for decision of the Trade Practices Tribunal in Re Queensland Co-Operative Milling Association Limited ("the QCMA Case") (1976) 25 FLR 169 at 190-191:

"We take the concept of a market to be basically a very simple idea. A market is the area of close competition between firms or, putting it a little differently, the field of rivalry between them ... . Within the bounds of a market there is substitution - substitution between one product and another, and between one source of supply and another, in response to changing prices. So a market is the field of actual and potential transactions between buyers and sellers amongst whom there can be strong substitution, at least in the long run, if given a sufficient price incentive. Let us suppose that the price of one supplier goes up. Then on the demand side buyers may switch their patronage from this firm's product to another, or from this geographic source of supply to another. As well, on the supply side, sellers can adjust their production plans, substituting one product for another in their output mix, or substituting one geographic source of supply for another. Whether such substitution is feasible or likely depends ultimately on customer attitudes, technology, distance, and cost and price incentives.

It is the possibilities of such substitution which set the limits upon a firm's ability to 'give less and charge more'. Accordingly, in determining the outer boundaries of the market we ask a quite simple but fundamental question: If the firm were 'to give less and charge more' would there be, to put the matter colloquially, much of a reaction? And if so, from whom? In the language of economics the question is this: From which products and which activities could we expect a relatively high demand or supply response to price change, i.e. a relatively high cross elasticity of demand or cross elasticity of supply?"

See also Arnotts Limited v Trade Practices Commission (1990) 24 FCR 313 at 328-329 and 331-332.

The existence of substitutability is an important aspect, sometimes definitive, of the product market: see s. 4E of the Act; Queensland Wire Industries Pty Limited v The Broken Hill Proprietary Company Limited (1989) 167 CLR 177 at 188, 199-200 ("Queensland Wire"); the QCMA Case at 190-191; Trade Practices Commission v TNT Management Pty Limited (1985) ATPR 40-512 at 46,137 and Arnotts Limited v Trade Practices Commission at 329 and 331-332.
There is no substantial disagreement between the parties as to the definition of the geographic market. Mr Dowling would have the market as being an area with a radius of approximately 100 kilometres from Goondiwindi. The respondents did not argue for a geographic market substantially different from this. In my opinion, the geographic market is the market within the area of approximately 150 kilometres west of Goondiwindi to Weengallon, approximately 100 kilometres north to Moonie, approximately 80 kilometres east to Whetstone and approximately 80 kilometres south of Goondiwindi.
Mr Dowling argued that the product market is the market for the provision of livestock auctioneering services, whereas the respondents argued that the relevant product market is the broader market for the provision of livestock selling services.
Dr Chuddleigh, the expert called by the respondents, defined the product market as the market for livestock selling services, not the market for the provision of livestock auctioneering services. Mr Turvey, the expert called by Mr Dowling, did not analyse the product market in his report, but he assumed in it that the relevant market was the market "for auctioning livestock". However, in his second affidavit and in cross examination he agreed that the product market should be defined as the market for livestock selling services.
It is not possible to separate livestock auctioneering services from the full range of alternative methods of sale and services provided by a livestock agent carrying on business in Goondiwindi. A number of forms of livestock selling services are substitutable, principally auctioneering services, private sales of various kinds and sales by CALM (I do not take into account any video sales because they are negligible).
Although the pastoral houses and independent agents at Goondiwindi have various segments to their businesses, the livestock agency aspect of the business is regarded as a distinct segment by itself. The pastoral houses do not regard themselves as servicing an auction selling market for some vendors, a private treaty market for others and a CALM selling market for others. All services are closely related and substitutable though the most popular method of disposition of store cattle in Goondiwindi is by auction at the Goondiwindi Saleyards. One client may have some stock which he prefers to sell by private treaty to an abattoir, for example, prime fat cattle; and at the same time he may prefer to sell other stock by auction at the Goondiwindi Saleyards, for example, store cattle. The same client may sometimes prefer to sell his cattle at the Toowoomba Saleyards and his sheep by auction at Warwick; he may also require his agent to buy store cattle for him from outside the Goondiwindi area. Some Goondiwindi clients use the services of livestock agents, but they may deal only in sheep and buy and sell privately.
In my opinion, it is against the weight of the evidence to regard the market for the provision of livestock auctioneering services as a separate submarket from the market for the provision of livestock selling services. This is an unreal and excessively narrow approach: see Donald and Heydon, Trade Practices Law, 92-111; Corones, Competition Law and Policy in Australia, 45-46, 56-57; Taprobane Tours W.A. Pty Limited v Singapore Airlines Limited (1990) ATPR 41-054 at 51,705.
As is often said, "market" is an instrumental concept, designed to assist in the analysis of processes of competition and sources of market power. In this case, it is the identification of a market that best enables the Court to evaluate the issues. As to the product market, a critical consideration is the whole range of services supplied by stock and station agents: agents compete by supplying packages of related services in the sale both of store and fat cattle. Agents, whether pastoral houses or independent, are both in law and economic reality agents of the producers. They act for the producers only so long as their package of services is sufficiently attractive to dissuade producers for acting for themselves as they do with direct sales, or from seeking alternative specialised suppliers of particular elements of the agency packages such as finance from specialised financial institutions or insurance. This is a plain indication that there should be included within the one market the various services offered by agents. See Re John Dee (Export) Pty Limited, Trade Practices Tribunal, (1989) 87 ALR 321 at 355-357.)
In my opinion the relevant product market is the market for the provision of livestock selling services with its various components that include the provision of livestock auctioneering services.
Section 45
The terms of s. 45 so far as relevant have been set out earlier. The two relevant effects of s. 45 are first, that a provision of a contract made before 1 July 1977 which has the purpose or has or is likely to have the effect of substantially lessening competition is unenforceable so far as it confers rights or benefits or imposes duties on a corporation, and second, that the corporation is prohibited from giving effect to such provision.
I have already found that the provision in rule (v) in the Second Schedule to the agreement of 13 July 1967 (providing that the Goondiwindi Saleyards shall not be let to outside agents) was operative at all times relevant to this case. It is that provision which Mr Dowling asserts is a provision of a contract, arrangement or understanding of the kind rendered unenforceable by s. 45(1) to which the respondents have given effect. The provision in rule (v) was an express term of the 1967 agreement which continued thereafter to bind the respondents and their predecessors in title. Indeed it was expressly recognised and confirmed when the resolution of 6 January 1986, to which reference was made earlier, was passed. This is not a case of parallel conduct (as the respondents contended it was). It is a case of clear agreement between the parties or their predecessors in title. When Mr Dowling's application for membership of the Association was refused it was plainly the action of the respondents in giving effect to the earlier agreement that the Goondiwindi Saleyards should not be let to agents other than the three members of the Association. No distinction was drawn by the respondents between themselves or their respective predecessors in title, so nothing turns on the identity of the original parties to the 1967 agreement.
The crucial question with respect to the possible application of s. 45 of the Act is whether such provision answers the description of a provision that has the purpose or has or is likely to have the effect of substantially lessening competition.
Each of the respondents decided that Mr Dowling's application for membership must be refused, and it matters not whether each of them made that decision independently of the others or in concert. The agreement that the Goondiwindi Saleyards would not be let to outside agents, which was in force at all material times, is the alleged offending provision. By refusing Mr Dowling's application, the respondents, being the members of the Association, gave effect to the earlier agreement. The respondents contended that they acted independently of each other in deciding to refuse the application. I am satisfied, however, that they did act together. The respondents or their predecessors in title had formed the Association for the purpose of operating the saleyards which they owned. When Mr Dowling's application was received, it was received by the Association and the members of the Association, being the respondents, met and considered it. The minutes of their meeting on 30 May 1985 make this plain. It is not to the point, in my view, whether each of them said to the other that the application must be refused or simply made a unilateral decision to refuse. By meeting and considering Mr Dowling's application, referring the matter to solicitors and by instructing those solicitors to refuse it on their behalf (all of this being done through the mechanism of the Association which must act through its members), the conclusion is inescapable that the decision to refuse Mr Dowling's application for membership was the decision of all three respondents acting together. But even if it was not a decision in concert, then the decision made independently by each respondent to refuse his application would be sufficient to constitute giving effect to the alleged offending provision if in fact it is a provision of the kind rendered unenforceable by s. 45(1) or prohibited by s. 45(2)(b)(ii). It is to this question that I now turn.
"Purpose" is concerned with motivation and the reasons of the parties for introducing the provision. "Purpose" is used in most of the provisions in Part IV of the Act, and it must be read in conjunction with s. 4F (a provision is deemed to have had a particular purpose if it was included for purposes that include that purpose and it was a substantial purpose: s. 4F(a)). "Purpose" has been held to involve subjective considerations in s. 45D (Tillmans Butcheries Pty Limited v Australasian Meat Industry Employees' Union (1979) 42 FLR 331 at 343-349 per Deane J.), in s. 46 (Queensland Wire per Toohey J. at 214), in s. 47 (O'Brien Glass Industries Limited v Cool and Sons Pty Limited (1983) 48 ALR 625 at 631), and in s. 45 (Hughes v Western Australian Cricket Association (Inc.) (1986) 19 FCR 10 at 38; approved by the Full Federal Court in ASX Operations Pty Limited v Pont Data Australia Pty Limited (No. 1) (1990) 27 FCR 460 at 476-477.
The effect of a contract is a relatively simple concept requiring examination of the results, but proof of purpose is more difficult. It will generally be inferred from the nature of the contract, the circumstances in which it was made and its likely effect. The inquiry as to purpose in this case with respect to s. 45(1) and s. 45(2)(b)(ii) must relate to the purpose of the parties to the 1967 agreement when it was made. There is little, if any, evidence that touches the events of the 1960's and it could not support a finding of the proscribed purpose. If events subsequent to 1967 are relevant in determining purpose on the basis that the respondents have adopted or affirmed the 1967 agreement, so far as relevant, then the determination of purpose leads to an examination of the evidence of contemporaneous events. Indeed, the case was conducted by all parties on the basis of the state of affairs at and about the time of the application by Mr Dowling for membership of the Association in 1985 and its refusal some six months later. In short, if the relevant purpose under s. 45 was the purpose of the parties to the 1967 agreement then no case has been established by Mr Dowling. If the purpose is a continuing purpose, based on the continuing subsistence of the relevant provision of the 1967 agreement so as to bind the respondents, then the events of 1985 are relevant in ascertaining purpose.

Mr S.G. Corones in the CCH Trade Practices Reporter says at 3574:

"It should be made clear that the corporation charged with a contravention of s. 46 must itself have a substantial degree of power in the relevant market. A corporation could not be liable under s. 46 on the basis of a shared position of substantial market power with another unrelated corporation. The only circumstances in which a single position of substantial market power may be shared by two or more corporations is here a corporation occupies that position acting through, or together with, its related corporations as described in s. 46(2) and s. 4A of the Act."

Although I agree that it is the market power held by a particular corporation that is the relevant consideration under s. 46, I respectfully disagree with the view (if it be the view held by the learned author and I am not sure that it is) that power gained through acting in concert cannot be considered when assessing a corporation's individual market power.
In short, a corporation may have power in a particular market gained through a variety of means and from a number of sources. Some of the power is held by the corporation through its own activities and some power is held because of its arrangements with others. Those arrangements must be taken into account when assessing the particular degree of power exercised by the individual corporation.
On the facts of the present case, to determine whether any of the respondents has the requisite degree of substantial market power in the provision of livestock selling services in the Goondiwindi district, regard must be had not only to the market power held by each of the individual respondents but also to the existence of the Association and the agreement between its members (the respondents) that no other agents may use the Goondiwindi Saleyards. One must look at each of the respondents and take into account the power which it has individually together with the further power it acquires by acting in concert with the other respondents so as to exclude other agents from auctioning livestock at the Goondiwindi Saleyards.
The only alternatives are to either treat the matter as one of aggregation of power, which I do not think is correct for the reasons previously given, or to ignore the Association and the agreement between its members, and this cannot be correct.
There is a high level of competition in the relevant market in this case. As mentioned earlier, the existence of barriers to entry is a crucial factor when considering market power. It is only when for some reason it is not rational or possible for new entrants to participate in the market that a corporation can have market power. In the market for the provision for livestock selling services, potential entrants face an initial legal barrier, that is, if they wish to be able to auction stock on behalf of their clients, they must hold the relevant licence under the Auctioneers and Agents Act 1971 (Qld). Once this is obtained, in my view, there are no significant barriers to entry in the market for the provision of livestock selling services in the Goondiwindi district. No barriers to entry result from large economies of scale such as where the economies of scale in a market are such that the minimum size for an efficient firm is very large relative to the market and potential competitors will be dissuaded from entering the market by the apprehension that only one firm would survive. Indeed, the evidence shows that Mr Dowling is a member of and player in the market and he has himself attained his market share by attracting clients from the three respondents since his entry into the market in 1985. Mr Dowling seems to have done particularly well in sheep sales and, although it is not clear, it appears from questions put to Mr McCormack, the manager of Dalgetys' Goondiwindi branch, that he may match or even better the sheep sales of at least Dalgetys and Elders. Mr Dowling also gave evidence that he believed that many producers have a preference for an independent agent as distinct from the pastoral houses, so it seems that there is some advantage in the smaller size of his business and its more personal nature. The only possible barrier to entry to Mr Dowling is full access to the mechanism of selling livestock by auction at the Goondiwindi Saleyards. This is most significant with respect to the sale of store cattle in the Goondiwindi district as (and again the evidence is not clear) it seems that, approximately and on average over the last six years, 50% of all cattle sold in the district are store cattle sold at auction. The lack of full access to the Goondiwindi Saleyards is less significant in the sale of other livestock. Fat cattle are more commonly sold in private sales, but nevertheless are sold in significant numbers by auction at the Goondiwindi Saleyards. Sheep are sold by auction at the Goondiwindi Saleyards, but are more commonly sold in on-property auctions and private sales.
Mr Dowling could establish rival saleyards in the Goondiwindi district if he had sufficient capital; but his means do not allow him to do so as the capital cost involved is considerable (see Arnotts Limited v Trade Practices Commission at 338). But this would not be a barrier to an agent with more substantial funds than Mr Dowling has. Mr Dowling can sell his client's cattle and sheep at the Goondiwindi Saleyards using the services of one of the pastoral houses and receive a rebate commission. There was some evidence that at least two of the pastoral houses treated him well when they auctioned livestock introduced by him. The other methods of selling cattle in the Goondiwindi district, in particular by private sale of more than one kind, are available to Mr Dowling; and it is the market for the provision of livestock services generally in the Goondiwindi district that must be considered, not merely the auction market for cattle through the Goondiwindi Saleyards.
The market is a competitive market. None of the respondents is able to raise prices, that is commission charges, without running the risk of rivals taking away custom from them. As mentioned earlier, Dalgetys generally charges 5% commission and Elders and Primac charge 4.5% commission. The yard dues and weighing charges are the same for each as they are set by the Association. The regulations to the Auctioneer and Agents Act 1971 (Qld) set a 5% ceiling on commission rates. In this market, however, the level of service is probably a more important factor than the level of commission. The pastoral houses and Mr Dowling compete strongly in the services that they provide with new innovations such as CALM being used and video auctioning being looked into, all with the aim in mind of providing better services for the customer. It is clear, in my view, that the conduct of each of the respondents is constrained by the conduct of the other respondents and Mr Dowling. Further, the conduct of each of the respondents is constrained by the conduct of its customers, in particular the livestock owners.
Vertical integration is referred to in Queensland Wire as a relevant consideration in determining the degree of market power. This does not apply here as this is not a vertically integrated market.
Market share is, of course, an important consideration, though its importance must not be overstated as appears clearly from the judgments in Queensland Wire. The market share of each of the respondents differs, Dalgetys having the largest market share so far as the auction of cattle through the Goondiwindi Saleyards is concerned. Over the six years from 1 July 1985 to 30 June 1991 the average market share of each of the respondents with respect to the number of cattle sold through the Goondiwindi Saleyards is Dalgetys 50.88%, Elders 32.51% and Primac 16.61%.
In all the circumstances, I am not satisfied that any of the respondents has a substantial degree of power in the relevant market. The greatest degree of market power is probably held by Dalgetys, but even its market power (including that which it derives from its being a member of the Association and a party to the agreement that prevents any person other than a member from auctioning cattle through the Goondiwindi Saleyards) does not justify the conclusion that it holds a substantial degree of market power. Importantly, for the reasons I have given, there are no significant barriers to entry to the market and each of the respondents' conduct is restrained by its competitors and its customers. It could not be said that any of the three respondents has a substantial degree of market power.
That in itself is sufficient to dispose of the case based on s. 46. But, on the assumption (contrary to my view) that one or more than one of the respondents does have substantial degree of power in the relevant market, I propose to consider whether any of the respondents has taken advantage of its market power for one or other of the purposes proscribed by s. 46(1)(a) to (c). This question was a live issue in the case, so I shall deal with it.
It is permissible to infer the relevant purpose under s. 46 (s. 46(7)); and a corporation shall be deemed to have engaged in conduct for a particular purpose if it engaged in the conduct for purposes that included that purpose and that purpose is a substantial purpose (s. 4F(b)).
The determination of purpose for the purposes of s. 46 is to be ascertained subjectively, in the sense of ascertaining the intent of the corporation in engaging in the relevant conduct: see Hughes v Western Australian Cricket Association per Toohey J. at 37-38; Queensland Wire per Toohey J. at 214; ASX Operations at 474-475; Tillmann Butcheries Pty Ltd at 349 and Taprobane Tours W.A. Pty Ltd v Singapore Airlines Limited at 51,707. "Purpose" in s. 46 is not concerned directly with the effect of conduct, but with purpose in the sense of motivation and reason, though, as mentioned earlier, purpose may be inferred from conduct: see Hughes v Western Australian Cricket Association per Toohey J. at 37-38.
It is plain, as found earlier, that the purpose of each respondent in refusing Mr Dowling's application for membership of the Association was:
(a) not to share an asset, being the land on which the Goondiwindi

Saleyards were built and the saleyards themselves, including goodwill that may attach thereto, with persons who had no proprietary interest in that asset; and

(b) not to allow competition in the saleyards additional to the

competition between the three respondents themselves.

I am satisfied that the dominant intent of each respondent was to use their valuable asset as they thought fit and not to share it with persons who had no proprietary interest in it. This was the theme of the evidence of the witnesses called by the respondents and I accept it. The witnesses varied to some extent from each other in the degree of attribution of element (b) to the overall intent of each respondent; but at the end of the day I am satisfied that (b) was a subsidiary element in the overall purpose of each of them. For Mr Dowling to succeed he must establish that the purpose of not allowing additional competition in the saleyards was a substantial purpose and that that purpose amounts to a purpose of deterring or preventing him from engaging in competitive conduct in the provision of livestock selling services market (s. 46(1)(c)). There is no evidence in this case of the purposes stated in s. 46(1)(a) and (b). The purpose of not allowing additional competition would amount to a purpose of deterring a person from engaging in competitive conduct in the market for livestock selling services but, for the reasons that I gave earlier in relation to s. 45, in my view, Mr Dowling has not established that this purpose was a substantial purpose.
This would again be sufficient to dispose of the case based on s. 46, but I propose to consider whether any of the respondents has taken advantage of its market power (which for this purpose I assume to be substantial) for the purpose of deterring or preventing Mr Dowling from engaging in competitive conduct in the relevant market.
The respondents argued that they did not take advantage of any market power which they have and that any advantage which they took was that derived from a right of ownership of the saleyards. They stressed that no market exists that arises from the right of ownership of the Goondiwindi Saleyards as it might, for example, where a proprietor was in the business of granting licences to use the saleyards and refused to do so. The respondents contended that they declined to make available valuable land and plant, together with the goodwill built up, to advantage a competitor. Without a market existing with respect to those assets, the situation is no different from that which would exist where each of the three respondents owned separate auction yards. Section 46 would not, so it was contended, in those circumstances, oblige the grant of rights in the nature of property rights or oblige the respondents to share their goodwill. The respondents relied on a number of authorities to establish the proposition that there is, in this area of the law, a relevant distinction between the use of market power and conduct which is the exercise of contractual or proprietary rights, and that nothing in Queensland Wire is to the contrary.
If a corporation has market power which causes it to exercise rights which it would not exercise under competitive conditions then the exercise of those rights is the exercise of market power, and it is this consideration which runs through the judgments in Queensland Wire (see Mason C.J. and Wilson J. at 192, Deane J. at 198, Dawson J. at 202 and Toohey J. at 214). The central determinative question to ask is: has the corporation exercised a right that it would be highly unlikely to exercise or could not afford for commercial reasons to exercise if the corporation was operating in a competitive market? For example, in Queensland Wire, Mason C.J. and Wilson J. explained at 192:

"It is only by virtue of its control of the market and the absence of other suppliers that BHP can afford, in a commercial sense, to withhold Y-bar from the appellant. If BHP lacked that market power - in other words, if it were operating in a competitive market - it is highly unlikely that it would stand by, without any effort to compete, and allow the appellant to secure its supply of Y-bar from a competitor."

However, there is a distinction between the exercise of rights of the kind that are exercisable only in non-competitive conditions and the exercise of rights which come into existence and would be exercisable in competitive conditions but which may establish a framework or base that may lead to the establishment of a substantial degree of power in a market. For example, the right to bring proceedings against a competitor for breach of copyright and breach of confidence in relation to manuals and drawings of parts of slurry pumps is clearly a right that would be exercised in competitive conditions: see Warman International Limited v Envirotech Australia Pty Limited (1986) 67 ALR 253. Competition by its very nature is deliberate and ruthless and s. 46 encourages this. What it discourages is conduct which would not be possible in a competitive market, thereby promoting competitive conduct.

The point was put thus in Trade Practices Law Service by Mr J.D. Heydon at 2594:

"The intention seems to be that the corporation's 'taking advantage' behaviour must be related to its market power rather than to some extraneous power it has. ... In short, there must be some relation between the success of the monopoliser, if any, and its market power. Such a view would make s. 46 strongly conduct-oriented rather than structure-oriented. But legislation which directly attacks structure is rare, and would require clear words. Parliaments usually shy away from attempting to control the consequences of structure, preferring to condemn conduct and performance."

In Top Performance Motors Pty Limited v Ira Berk (Queensland) Pty Limited (1975) 24 FLR 286 the respondent, a wholesale distributor of Datsun motor cars, terminated the Datsun franchise held by the applicant in the city of the Gold Coast and Southport. Joske J. and Smithers J. gave separate judgments and Evatt J. agreed with both judgments. The case is authority for the proposition that to terminate a franchise pursuant to a contractual right to do so does not necessarily constitute the taking of advantage of market power for the purposes of s. 46. Top Performance was followed in Ah Toy J. Pty Limited v Thiess Toyota Pty Limited (1980) 30 ALR 271 and in Tavernstock Pty Limited v John Walker and Sons Limited (1980) 48 FLR 423. Wilcox J. followed the statement of principle by Joske J. in Top Performance in Warman International Limited v Envirotech Australia Pty Limited when saying at 278:

"To exercise in good faith an extraneous legal right, though the effect may be to lessen, or even eliminate, competition, is to take advantage of that right, not of market power." (my emphasis)

A similar line of reasoning was adopted in Williams v Papersave Pty Limited (1987) 16 FCR 69 (Sheppard J.), affirmed on appeal to the Full Court of this Court (1987) 16 FCR 80. The judgment of the Full Court in Papersave was approved by the Full Court of this Court differently constituted in Queensland Wire (1987) 17 FCR 211 at 219.

It has been suggested (see (1989) ATPR 40-925 at 50,004-5) that these cases "would have been differently decided" had Queensland Wire been decided before them. The basis of this statement is said to lie in the following passage from the judgment of Dawson J. in Queensland Wire at 202:

"Nor is it helpful to categorise conduct, as has been done, by determining whether it is the exercise of some contractual or other right ... The fact that action is taken pursuant to the terms of a contract has no necessary bearing upon whether it is the exercise of market power in contravention of s. 46."

In my opinion, as at present advised, this passage does not support the view that the cases to which I have referred are wrongly decided. Dawson J. found that the taking of action pursuant to a contractual right has no necessary bearing upon whether market power is exercised in contravention of s. 46. Dawson J. found that BHP took advantage of its market power because it used a power in a manner made possible only by the absence of competitive conditions. That approach seems to be reconcilable with the cases to which I have referred.
In my opinion the ownership of the land upon which the Goondiwindi Saleyards are erected and the rights which flow from that ownership and from membership of the Association are rights which may themselves give rise to or cause a degree of market power to come into existence. But the conduct of the respondents in choosing to exercise their rights the way they did could not be said to be conduct that they would be unlikely to engage in or could not afford for commercial reasons to engage in, if they were operating in a competitive market (I have assumed for this purpose that they are not). The respondents have not used or taken advantage of market power. The respondents are not in the business of granting licences or leases of saleyards. They are in the business of providing livestock selling services. They own as equal shares as tenants in common a valuable asset being the Goondiwindi Saleyards and they have exercised rights that flow from their ownership of the yards and from the agreement with respect to membership of the Association. They have declined to make available to Mr Dowling a valuable asset of theirs to advantage him as a competitor. In my opinion, they have not taken advantage of their market power for a substantial purpose of deterring or preventing Mr Dowling from engaging in competitive conduct in the relevant market.

There is, of course, a distinction between rights of the respondents arising from their ownership of the Goondiwindi Saleyards and rights arising from their membership of the Association, though the two are closely intertwined. The distinction is illustrated by the hypothesis that the respondents may decide to vary their agreement governing the terms of membership of the Association by admitting agents to membership of the Association who have no proprietary interest in the Goondiwindi Saleyards themselves but who may be permitted to use them to conduct auction sales there. The position would thus be analogous to the use of yards owned by local government authorities and let or licensed by them to agents for reward. In such case the distinction is apparent between rights of ownership of land and fixtures on the one hand and rights governing their use on the other hand. Even with this distinction in mind, in the present case the rights of the respondents arising from ownership of the Goondiwindi Saleyards and the rights flowing from membership of the Association are all rights which have been exercised in a way that cannot be said to have taken advantage of the market power of the respondents under challenge in this case.
In my opinion Mr Dowling has failed to establish his case based on alleged contravention of s. 46.
Section 47
Section 47(1) proscribes the practice of "exclusive dealing" which is defined in the succeeding sub-sections of the section by reference to specific practices of various kinds, all or almost all of which are vertical restraint practices. This poses an initial difficulty in the present case to Mr Dowling because this is not a case of vertical restraint practices. Subsection (9) of s. 47 (which is the subsection on which Mr Dowling rests his case) is directed to the case where the action by a party relates to the grant or renewal or termination of a lease or licence of land or a building in the circumstances set out in one or more of the paragraphs of the subsection. When one turns to the language of subsection (9) itself, which is the only subsection relied on by Mr Dowling, it is plain that it cannot possibly have any possible application to this case. The only paragraph of sub-section (9) on which reliance is placed is paragraph (c) the terms of which have been set out earlier. Plainly, the respondents have refused to grant Mr Dowling membership of the Association (assuming for the purposes of discussion that this refusal answers the description of a refusal to grant a licence in respect of the land on which the Goondiwindi Saleyards are built within the meaning of subsection (9)). But the terms of paragraph (c) have no application on the facts of this case, no matter how benevolent a construction of those facts is adopted by the Court. This is not a case to which s. 47 can apply.
The application is dismissed with costs, including any reserved costs.

[1992] FCA 27

10 FEBRUARY 1992