Felkro Nominees Pty Ltd v Austissue Pty Ltd - [1993] FCA 455

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JUDGMENT NO. ........ ..,..,.... .....,.,.,~~

IN THE FEDERAL COURT OF AUSTRALIA ) No. QG 106 of 1993

QUEENSIAND DISTRICT REGISTRY )
GENERAL DIVISION 1

BETWEEN: TRADE PRACTICES COMMISSION
Applicant

AND : Q.U.F. INDUSTRIES LTD.
Respondent

MINUTES OF ORDERS 12 J U L 1993

FEDERAL COURT OF
AUSTRALIA

JUDGE MAKING ORDER: Drummond J PRINCIPAL REGISTRY
DATE OF ORDER: 6 July, 1993
WHERE MADE: Brisbane
THE COURT ORDERS THAT:

The application for interlocutory relief is dismissed.

2. The applicant pay the respondent's taxed costs of and incidental to the application for interlocutory relief.

NOTE: Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) No. QG 106 of 1993

QUEENSLAND DISTRICT REGISTRY 1
GENERAL DIVISION 1

BETWEEN: TRADE PRACTICES COMMISSION
Applicant

AND: Q.U.F. INDUSTRIES LTD.
Respondent

Corm: Drummond J

Place: Brisbane

Date: 6 July, 1993

EX TEMPORE REASONS FOR JTJDGMENT

By amended application, the Trade Practices Commission sought interlocutory relief against Q.U.F. Industries Ltd. ("QUF") in relation to an auction of milk distribution leases to be held tomorrow morning by the Queensland Dairy Industry Authority ( "QDIA" ) in Brisbane. The form of relief sought was substantially narrowed in argument.

QUF forthwith deliver, to about 39 persons, a letter in terms The Trade Practices Commission now seeks only an order that of the draft exhibited to the affidavit of . Jolly, the
solicitor for QUF.

The auction is one of a series held in Queensland by the QDIA as part of the on-going restructuring of the dairy industry. The application relates only to tomorrow's auction of the category "B" milk distribution leases for the Brisbane area. There appear to be 58 such leases. They give each holder, as I understand the evidence, the exclusive right to supply milk to retail outlets, other than supermarkets, in the area of the lease. Persons intending to bid for these leases are required to register as bidders. Although the evidence is not entirely clear, it seems that there have been about 120 registrations for tomorrow's auction, including some major organisations like Norco, Australian Co-operative Foods and QUF itself.

QUF is a major processor and distributor of milk in the Brisbane area. Although the Trade Practices Commission only very recently learned of it, some time ago QUF entered into an arrangement with about 39 persons which has provoked the present application. This arrangement is contained in a letter sent by QUF to each of the 39 or so persons, a copy of which is exhibit "JAL-2". It relevantly provides:

"As you are already aware, QUF intends to bid for

District at the auction to be conducted bv the leases of Category B milk runs in the Brisbane Milk

Queensland Dairy Industry Authority, on wedne;day 7
July, 1993.

In the event that QUF is a successful bidder, it is intended that Distribution Agreements in terms of the draft annexed hereto will be offered to existing vendors for the operation of the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1993] FCA 455
Decision Date: 6 Jul 1993

CaseChat Overview and Summary

The Federal Court of Australia, in the case of Trade Practices Commission v Q.U.F. Industries Ltd, addressed an application for interlocutory relief brought by the Trade Practices Commission against Q.U.F. Industries Ltd. The application related to an auction of milk distribution leases in Brisbane organised by the Queensland Dairy Industry Authority. The primary legal issues concerned whether Q.U.F.'s arrangements with certain vendors for priority rights to enter distribution agreements if Q.U.F. acquired the leases violated sections 45(2)(a)(i) and 45(2)(a)(ii) of the Trade Practices Act 1974. Specifically, the Commission argued that these arrangements were likely to reduce the number of bidders at the auction and lessen competition in the market for category "B" milk distribution leases.

The court considered the nature of the agreements between Q.U.F. and the vendors. The agreements allowed the vendors to retain their right to bid for the leases but granted them priority rights to enter distribution agreements with Q.U.F. if Q.U.F. won the bids. Drummond J concluded that the arrangements did not constitute an agreement or inducement not to bid and there was no evidence suggesting that the arrangements would reduce the number of bidders or lessen competition at the auction. The court also noted that some vendors who entered into the agreements still intended to bid, indicating that the arrangements did not hinder their bidding intentions.

Based on the evidence, the court found that the Trade Practices Commission had not demonstrated a serious question to be tried regarding the alleged breaches of the Trade Practices Act. Drummond J dismissed the application for interlocutory relief and ordered that the Trade Practices Commission pay Q.U.F.'s costs of the application. The court did not see a likelihood that the arrangements would substantially lessen competition or affect the auction's outcome adversely.

Orders