O'Brien Glass Industries Ltd v Cool and Sons Pty Ltd trading as Wagga Windscreen Services

[1983] FCA 191

Re: O'BRIEN GLASS INDUSTRIES LIMITED
And: COOL & SONS PTY. LIMITED trading as WAGGA WINDSCREEN SERVICE
77 FLR 441
No. G94 of 1981
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Fox(1), Franki(2) and Sheppard(3) JJ.

CATCHWORDS

Trade Practices - Exclusive Dealing - Price Discrimination - Discount conditional on acquisition of all or substantial majority of goods from supplier - Whether competition substantially lessened - Identification of Markets - Meaning of "competition", "discriminate", "market" and "substantially" - Resale Price Maintenance - Arrangement affecting competition.

Trade Practices Act 1974 - secns. 4, 4C, 4G, 45, 47, 48, 49, 80, 82.

Trade Practices - Exclusive dealing - Supplying goods - Discount conditional on acquiring substantial quantity of goods from supplier - Whether in relevant market conduct had purpose or effect of substantially lessening competition - Identification of market - Meaning of "substantially lessening competition" - Purpose and effect - Trade Practices Act 1974 (Cth), s 47.

Trade Practices - Price discrimination - Discriminate between purchasers of goods of like grade and quality - Whether prohibition applies to sale at lower unit price for minimum purchase - Trade Practices Act 1974, s 49.

HEADNOTE

The appellant carried on a wholesale and retail business in the Wagga district, supplying replacement windscreens. The respondent had a retail business within the same district. In order to get a 45 per cent to 50 per cent discount on goods supplied by the appellant a retailer had to purchase all or a substantial majority of windscreens from the appellant. The appellant appealed against, inter alia, findings of breaches of the Trade Practices Act 1974 (Cth), ss 47 and 49.

EXCLUSIVE DEALING

Held: (1) For there to be an exclusive dealing s 47(2) of the Trade Practices Act 1974 (Cth) requires that the supply (or offer to supply) or the giving of a discount (or offering of one) be "on the condition" that the offeree "will not, or will not, except to a limited extent", acquire goods from a competitor. The word "will" introduces an element of futurity in that the condition must be related to the future acquisition of goods.

SWB Family Credit Union Ltd v Parramatta Tourist Services Pty Ltd (1980) 48 FLR 445, applied.

(2) A critical question in relation to s 47 is the ascertainment of the relevent market. A market is usefully viewed as a field of rivalry or close competition between firms. It ought to be defined in economic terms and in this instance included a wholesale and retail market within Wagga and a radius thereof.

Re Queensland Co-operative Milling Association Ltd; Re Defiance Holdings Ltd (1976) 25 FLR 169, followed.

(3) The word "substantially" in s 47 was correctly interpreted by the trial judge to mean that the conduct "must be capable of being fairly described as a lessening of competition that is real or of substance as distinct from a lessening that is insubstantial, insignificant or minimal". The word is of intractably indefinite import and much must be left to individual assessment.

Outboard Marine (Aust) Pty Ltd v Hecar Investments (No 6) Pty Ltd (1982) 66 FLR 120, affirmed.

(4) Per Fox J, Sheppard J concurring - Findings about "purpose" involve subjective considerations and where there is no evidence purpose has to be implied and it is appropriate to look at what was done and intended and to see what the natural consequences were.

(5) When s 47 speaks of "lessening competition" it is not directed at the position of the particular competitors; what it looks to is the state or condition constituting the market actually and potentially. The question is whether the dynamic of competition, what might be called competitive forces in the market, have been "substantially lessened".

(6) In determining "likely effect" it is necessary to have a sufficient understanding of the market, and the operation of market forces. Evidence from economists can help but it is clear that concepts of market and competition, and of what may lessen competition, have been carried forward as a matter of legal knowledge. Actual experience of what has so far happened can be misleading.

(7) (Franki J dissenting) The appellant was in a dominant position in the market, it sold more windscreens, it gave a better service, leading to the necessity for retailers to have recourse to it. It required retailers who wanted the best price to purchase most of their supplies from it. The tendency was to lower the forces of competition in the market, by reducing the capacity of retailers to choose between sources of supply, to weaken the trading position of competitors, and to inhibit the entry of other competitors and it was therefore acting in breach of s 47 of the Act.

PRICE DISCRIMINATION

Held: (1) A key term used in s 49 of the Act is "discriminate" which must be taken to mean "treat differently" those who are alike in a relevant sense.

Federal Trade Commission v Anheuser-Busch Inc 363 US 536, applied.

(2) Subject to the need for a person alleging a breach of the section to establish the anti-competitive effects for which it provides, and to a person against whom a breach is alleged being able to rely upon the defences provided for in s 49(2), a breach of s 49 is committed merely by the sale of goods at lower unit prices where minimum quantities are taken or by the giving of discounts for the taking of such quantities.

HEARING

Sydney, 1982, July 12, 13, 19, 20; 1983, August 18. #DATE 18:8:1983

APPEAL

Appeal from the decision of Keely J.

A M Gleeson QC and J D Heydon, for the appellant.

M H McHugh QC, D Bennett QC and J Adams, for the respondent.

Cur adv vult

Solicitors for the appellant: Freehill, Hollingdale & Page.

Solicitors for the respondent: Denniston & Day.

BAG

ORDER

1. The orders made by Keely J. on 13 July 1981 and 24 December 1981 be varied as follows:

(a) The injunctions be dissolved;

(b) The award of damages be reduced to $3,500.

1. Otherwise the appeal be dismissed.

1. The appellant pay one half of the respondent's costs of the appeal.

Orders accordingly

JUDGE1

This is an appeal from a judgment of a Judge of this Court (Keely J.) in which he ordered under s. 80 of the Trade Practices Act, 1974 (hereinafter referred to as "the Act") that injunctions issue against the appellant and, under s. 82 of that Act, that damages be paid by it. The case of the applicant, the present respondent, was based on secns. 45 (restrictive dealings), 47 (exclusive dealing), 48 (resale price maintenance) and 49 (price discrimination) of the Act. Section 46 (monopolization) was originally relied upon, but the applicant said at the hearing that if successful under secns. 47 and 49 it did not wish to pursue this part of its case. Its possible application has not been the subject of debate in this appeal.

The proceedings were instituted on 27 September 1979, and relate to conduct in 1978 and 1979. The hearing took place in 1980 and 1981, the principal judgment was delivered on 13 July 1981, and the form of the injunctions settled on 24 December 1981.

The appellant (which I shall for convenience call "O'Brien") was at the time of the hearing involved in three stages of the business of providing replacement windscreens for motor vehicles. It was not concerned with the installation of windscreens in vehicles at the time of manufacture of the latter. It manufactured windscreens, it sold those it had manufactured, and also others, by wholesale. In the Wagga district (which is relevant for present purposes) it also had a business of supplying and fitting replacement windscreens.

The respondent (which I shall call "Cool") had a retail business in the Wagga district of supplying similar replacement windscreens and fitting them to motor vehicles. In October 1978 Cool opened a business of supplying windscreens on a wholesale basis in the district but these operations "died off" in March 1979.

O'Brien had the largest share of the wholesale market in New South Wales (up to forty per cent) with its two nearest competitors having about 30-35 per cent and 15-20 per cent respectively. O'Brien's main wholesale competitor in New South Wales, Bradley Bros. Pty. Limited (which I shall call "Bradley"), was also its main wholesale competitor in the Wagga district. O'Brien had a significantly larger share of the Wagga district market than Bradley and the few other wholesale suppliers had between them only a small share of it.

Cool was a major retail supplier in and around Wagga but there were a large number of competitors (over one hundred), of which O'Brien was one. Mostly the retailers were service station proprietors; some others were what have been called smash repairers. There are about 1,000 different types, sizes and shapes of replacement windscreens in more or less common use. They are either made of laminated or of "zone toughened" glass.

Cool's matter of complaint, at a practical level, is that O'Brien, as a wholesale supplier, did not allow it the same discount (fifty per cent off the retail list price) that it allowed to a number of other retailers. Discounts were allowed to all retailers, although credit arrangements may have differed. The discounts allowed by O'Brien were at the time of initiation of proceedings forty per cent, forty-five per cent and fifty per cent, and at that time Cool was receiving forty per cent. The wholesale cost of a new replacement windscreen was generally in the range of twenty-five dollars to seventy dollars, after discount, with some exotic types much dearer.

It is convenient to consider first the application of s. 47 of the Act. On this matter there was a major contest at the hearing before Keely J. as to the basis upon which O'Brien made its choice of the discount it would allow. His Honour made the following finding:

"On the whole of the evidence, to some of which I have referred, I find that the respondent had a general practice of giving and offering to give to retailers discounts of 45 per cent or 50 per cent in relation to the supply of windscreens on the condition that each such retailer would purchase all or the substantial majority of its purchases of windscreens from the respondent (cf. answer to interrogatory C. 17(d))."

By clear implication, a discount of forty per cent was in general the maximum for those not agreeing to the condition. His Honour had earlier said:

"I accept Mr. Raymond Cool's evidence that Mr. Goff offered to give the applicant a discount of 50 per cent - the same as that given by the applicant's then supplier, Gundagai Windscreen Service Pty. Ltd. - as well as better availability of windscreens. The offer was conditional upon the applicant buying its windscreens from the respondent rather than 'from his competitors' - a statement which I find meant, and was understood as meaning, that the applicant was required to buy most of its windscreens from the respondent."

His Honour said that he had made the finding "without regard to the provisions of s. 47(13)(a) of the Act", which is in the following terms:

"(13) In this section -

(a) a reference to a condition shall be read as a reference to any condition, whether direct or indirect and whether having legal or equitable force or not, and includes a reference to a condition the existence or nature of which is ascertainable only by inference from the conduct of persons or from other relevant circumstances;".

I take his Honour's observation to mean that he was referring to "condition" in the conventional sense, without the further enlarged meaning given by this paragraph. The learned Judge made a number of findings dealing with the credibility of particular witnesses and made adverse comments about principal witnesses for O'Brien. The finding I have set out as to the criterion upon which a choice of discount was made, has not been challenged by the appellant.

For there to be an exclusive dealing, s. 47(2) requires that the supply (or offer to supply) or the giving of a discount (or offering of one) be "on the condition" that the offeree "will not, or will not, except to a limited extent", acquire goods from a competitor. I think his Honour's findings of fact in this case involve the conclusion that there was a "condition" in the sense referred to in s. 47(2) and that it was related to a future inhibition (see S.W.B. Family Credit Union Ltd. v. Parramatta Tourist Services Pty. Ltd. (1980) 32 A.L.R. 365). In any event, the evidence which he accepted seems to me plainly to involve that result. The terms of sale were agreed before delivery; the discount was agreed on the condition that "all or the substantial majority" of the windscreens would be acquired from O'Brien. There has not been any argument concerning the words "except to a limited extent" in s. 47(2). Comment was made on behalf of O'Brien on the imprecision of the criterion which his Honour enunciated but indefiniteness of that degree does not in my view defeat the operation of the section, and the restraint imposed did not permit outside acquisition beyond a "limited extent".

Bradley gave to Cool a discount of fifty-seven and one half per cent off list price, based in its case on a requirement that at least forty windscreens per month were purchased from it. Other discounts granted by it went down to forty per cent, but were based on the quantity, or value, of purchases, and were not associated with a condition such as his Honour found to exist in relation to O'Brien's sales.

The retail list prices seem to have been the same, or almost the same, as between the two wholesalers I have mentioned. Mr. Scott, of Bradley, described the wholesale market as "pretty competitive".

Alone among suppliers in the wholesale market, O'Brien was regularly open for business for twenty four hours on seven days a week. It was therefore often necessary to go to it to meet the frequently urgent demands of motorists. Whether or not it habitually held a wider range of windscreens than Bradley is not clear, but certainly there were not infrequent occasions when retailers, and Cool in particular, had to go to it for a windscreen for a particular vehicle. No point is made as to a difference in quality between the windscreens supplied by O'Brien and those supplied by any other wholesaler, although there were different sources and different brand names.

The practical result, as claimed by Cool, was that it lost sales. Its competitive position and reputation suffered, when, being forced to go to O'Brien, it could only purchase a windscreen at a price (after discount) which put its retail price for supplying and fitting appreciably above that of its competitors. For the two years November 1977 to November 1979 Cool, according to its records, supplied and fitted 3,324 windscreens. In 1979 the figures varied from seventy-six in February to 261 in May. In circumstances mentioned by his Honour, Cool did for two periods, from January to August 1978 and from December 1978 to April 1979, receive a discount of fifty per cent from O'Brien.

The discount given by O'Brien was raised in December 1978 after Cool, at O'Brien's request, had painted out the word "discount" on its "windscreen discount" sign, ceased advertising that it gave discounts and raised its retail prices close to O'Brien's retail prices. The reason for the discount being lowered in or from April 1979 was dealt with in a telephone conversation between Mr. Peter Cool and Mr. Duncan of O'Brien in April 1979, about which his Honour said:

"I accept the evidence of Mr. Peter Cool that in the mid-April telephone conversation Mr. Duncan asked him:

'. . . were my brothers, Raymond James and Sydney Paul Cool acquiring windscreens from any other glass supplier. He specifically mentioned Bradley Bros. and Guardian Glass. I advised him I understood they were doing so when necessary. He said in that case O'Brien's were not the major supplier of glass to R.J. Cool and I said was that the only problem. He said yes. I asked him would the 50 per cent discount be restored if they did purchase from O'Brien's, if the windscreens were purchased exclusively from O'Brien's, and he said yes. I told him that if O'Brien's were not able to supply a particular screen and that particular screen had to be purchased elsewhere, would that violate any agreement made in regard to this 50 per cent discount. He said no, not if they checked with O'Briens first. If O'Briens indicated they were not able to supply the particular screen, in that case the screen could be purchased elsewhere without affecting any agreement.'"

The prohibition in s. 47(1) against exclusive dealing does not apply in a case such as that under consideration unless "the engaging by the corporation in that conduct has the purpose, or has or is likely to have the effect, of substantially lessening competition" (sub-section (10)). By reason of s. 4G, lessening of competition includes preventing or hindering competition. On this matter his Honour expressed the following conclusion:

"I also accept the applicant's submission (p.20) that the respondent's practice of exclusive dealing had the purpose of substantially lessening competition by making it substantially more difficult for other wholesalers of windscreens to sell windscreens to retailers with whom the respondent had reached agreement on the additional discount, i.e. 45 per cent or 50 per cent discount."

He said later:

"In reaching the conclusion that the respondent's practice of exclusive dealing had the purpose of substantially lessening competition I have accepted the submission in the applicant's written final address."

It should be explained that the parties put in extensive written submissions and to some extent his Honour's remarks have to be understood by reference to the written submissions of the present respondent, Cool. Its submission, commencing at p. 20, which was referred to by his Honour, related, to put it shortly, to the intrinsic nature of the condition, the fact that it applied over the whole range of windscreens supplied, the fact (as submitted) that it was a "tie" of retailers to a particular supplier (thereby limiting competition between existing wholesalers and restricting potential new entrants, including one who might wish to market only one type or range of windscreens) and that it was not associated with legitimate considerations, such as producing economies in production and distribution.

Before I discuss his Honour's conclusion it is necessary to identify the markets in the context of which competition was found to be substantially lessened. The product market was replacement windscreens generally. Section 47(13)(b) directs attention to any market in which O'Brien, or any person whose business dealings were restricted, limited or otherwise circumscribed by O'Brien's conduct, supplied or acquired replacement windscreens. On this basis both a wholesale market and a retail market can be examined. It was agreed by the parties that the retail market for the windscreens could be taken as Wagga and a radius of fifty miles therefrom.

The area of the wholesale market was not so clearly defined. It was submitted before us on behalf of the appellant that this market was the whole of New South Wales. Before Keely J. the parties were content to argue the case substantially on the basis first suggested by the applicant Cool's answer to a request for particulars, that there was a relevant wholesale market to be found in Wagga and a radius of about one hundred miles therefrom. A radial measurement is obviously crude and inevitably imprecise, but nothing turns on its more accurate definition.

A market is usefully viewed as a field of rivalry or close competition between firms (see Re Queensland Co-operative Milling Association Limited - Proposed Merger; Re Defiance Holdings Limited - Proposed Mergers 1 and 2 (1976) 8 A.L.R. 481, at p. 517). That both Bradley and O'Brien operated throughout New South Wales (and beyond) does not imply that the State was the relevant market. Such a strict geographic definition ignores the view that the Wagga district was, in economic terms, a particular area of close competition between wholesalers. The words of s. 47(13)(b) do associate the market in which O'Brien operated with the market in which Cool operated (Cool being a corporation whose business dealings were restricted by O'Brien). The location of the retailers is relevant to the definition of the wholesale market. The custom of those retailers was the target for the wholesalers. It seems to me, on a practical level, that the Wagga district (taking a radius of one hundred miles) is sufficiently integrated to be regarded as the relevant wholesale market.

In the present case the learned Judge found that there was a purpose within the meaning of sub-section (10); he also found that the conduct had the requisite likely effect. It was submitted that the interpretation he gave to "substantially" was wrong. What he said was that the conduct "must be capable of being fairly described as a lessening of competition that is real or of substance as distinct from a lessening that is insubstantial, insignificant or minimal, cp. Tillmann's Butcheries Pty. Ltd. v. Australian Meat Industry Employees' Union and Others (1979) 27 A.L.R. 367 at p. 374-375 per Bowen C.J., and at p. 382 per Deane J." I do not think that his understanding of "substantially" was wrong, particularly when regard is had to his other observations on the case. It was argued that the word meant "large" or "of weight" but there is no justification for substituting these, or any other words. The legislature has chosen a word of intractably indefinite import, and much must be left to individual assessment. Consistently with what was said on the subject in the joint judgment of Bowen C.J. and Fisher J. in the recent decision of Outboard Marine (Australia) Pty. Limited v. Hecar Investments No. 6 Pty. Limited (1982) 44 A.L.R. 667, the tendency in the United States when considering the same word in a closely similar context is to leave it undefined, and, commonly, to associate it with the subject-matter (see Neale and Goyder, The Antitrust Laws of the U.S.A. 3rd ed. (1980) at p. 271; American Jurisprudence 2nd ed. Vol. 54 para. 116). Plainly, effects which are de minimis are excluded, but this would be the position under the general law, without the necessity for the introduction of the word "substantially".

The findings about purpose involve subjective considerations, which his Honour was in a much better position to assess than an appellate court. It is nevertheless necessary for us to be satisfied that his Honour had in mind the purpose to which the legislation is addressed; at least we have to be satisfied that his Honour was not in error in this regard. There being no express evidence of purpose it had to be implied, and in making the implication it is appropriate to look at what was done and intended, and to see what the natural consequences were. The question of "effect" becomes involved.

His Honour was looking at the wholesale market, and it is accepted that this was correct, although reference to what was happening in the retail market was not excluded (see s. 47(13)(b)). He took the view that O'Brien's practice had the purpose of "lessening competition" in that market. The word "competition" is an indefinable abstraction. It relates to the "trading" position in a market. There is within that market what can be regarded as a state or condition of competition, a condition which is doubtless more dynamic than static. The legislation is not directed at the position of particular competitors; what it looks to is the state or condition constituting the market actually and potentially. While it is not possible to define competition, it is possible, and necessary, to recognize features of it. This was done in general terms and from an economic viewpoint in Re Queensland Co-operative Milling Association Limited; Re Defiance Holdings Limited (supra.). Subsequent decisions are referred to in Outboard Marine (Australia) Pty. Limited (supra.). The question is whether the dynamic of competition, what might be called the competitive forces in the market, have been "substantially lessened". Although s. 47(13)(b) does not attempt a definition of competition, the reference there to "business dealings" being "restricted limited or otherwise circumscribed" is helpful. The object is not to look for what is best for society or for the economy. The legislative assumption, presumably, is that competition is what is best, although, ironically success in competition by a trader may lessen it (see, for example, Corpus Juris Secundum, Vol. 15A p. 114 n. 36).

His Honour, by reference largely to the written submissions of counsel, pointed to particular consequences of the conduct challenged. A great deal of evidence was given respecting the market, and operations within it. In my view there certainly was evidence to support his conclusion, and I see no reason for differing from it. It is not possible to know in any detail what view his Honour took of particular pieces of evidence, and they might in his mind have been affected by other evidence, but two passages, relevant to the present subject matter, caught my attention. Mr. Scott, of Bradley, was called by O'Brien, and his Honour thought him a witness of truth. He gave the following answers:

Q. "And the more independent retailers that cease to be independent by virtue of some contract or arrangement or understanding made with wholesalers other than your company, the less opportunity you have to trade? --- That is correct, yes."

Later, -

"So, in that context it would be true to say - and I am concentrating on that - that you think O'Briens are deliberately eliminating retailers to secure the wholesale market from Bradley Brothers? --- That would be correct again when you put it that way, yes sir."

Counsel for the appellant submitted that what was done by his client was a manifestation of competitive behaviour, and was not anti-competitive. This is, I think, not quite the test, and it obscures the distinction between the notion of competition and that of the exercise of competitive power, which, as I have said, can tend against competition. It cannot be argued that because a trader is doing well in a competitive market that he is not or has not been guilty of conduct which lessens competition. Doubtless, he can, simply by trading, without being guilty of that conduct, arrive, alone, or with others, at a position of supremacy in that market. O'Brien was in a dominant position in the market, or the part of it which has been regarded as sufficient for the case. It not only sold more windscreens, it gave a better service, leading to the necessity for retailers to have recourse to it. The finding is that it required retailers who wanted the best price to purchase most of their supplies from it. There can be no doubt that there was a purpose in this requirement. It was to coerce retailers into dealing with it and not, except to a limited extent, its competitors. The tendency was to lower the forces of competition in the market, by reducing the capacity of retailers to choose between sources of supply, to weaken the trading position of competitors, and to inhibit the entry of other competitors. It is to give a false colour to the situation to say that the purpose was simply to give preference to regular customers, as distinct from those who came to it only when necessity drove. Similarly, it is incorrect to say that all that was done was in effect to favour retailers who bought in quantity. The finding plainly negatives this view.

I do not suggest that a distinction between a discount based on percentage of total requirements and one based on quantity, or value, is necessarily critical. It all depends upon the circumstances. In the present case, O'Brien occupied in the market the position I have described, and a requirement of the former nature has an effect relative to that position. In particular circumstances, another wholesaler who makes the same requirement might not offend. On the other hand, a discount related to value could offend, if, for example, the value did represent most of the likely purchases of a sufficient number of retailers.

In the language of some of the cases, substitution was to be, and was, restricted. It is not to the point to say, if it were the fact, that, as matters stood, O'Brien was providing a wide variety of the subject commodity, or selling at low prices, or providing good services. If enhanced dominance and a resultant lessening of actual competition were to come about by reason of such considerations, it had to be by leaving uninhibited the right of choice, or substitution, in the market.

It follows from what I have been saying that in my view his Honour was not in error in his finding concerning "purpose". For the reasons I have endeavoured to express, I accept as correct his finding, also stated by reference to the written submissions, that there was the requisite "likely effect".

It was submitted that in determining "effect" regard should be had to what has in fact happened as a result of the practice, rather than to more theoretical considerations. To this is added that there was a need for more evidence if Cool was to succeed, and particularly expert evidence to deal with economic considerations. I think each case must be looked at in its own circumstances. Certainly it is necessary to have a sufficient understanding of the market, and the operation of market forces. Evidence from economists can help in this way, and in indicating what effect particular forms of conduct can have on competition in the market. It is, however, plain from the cases that concepts of market and of competition, and of what may lessen competition, have been carried forward as a matter of legal knowledge. Some a priori reasoning is usually if not always involved, not least of all when it is a question of likely effect. Actual experience of what has so far happened can be misleading. In the United States the Clayton Act prohibits certain practices where the effect may be substantially to lessen competition. Black J. in Federal Trade Commission v. Morton Salt Co. (1948) 334 U.S. 37, at pp. 46-47, found those words to involve the prediction of effect if the practice were allowed to go on.

The evidence in this case, so far as concerns the market, and the various forces at work in it, was extensive. The withdrawal of some wholesalers from the wholesale market (including Cool itself) and the reasons therefore, and the possible effect of particular activities on its future were dealt with at length. An economist was called by Cool, but he simply put in a schedule and some graphs, which were a summary of some of the evidence which had been given. One of the graphs invites attention, as illustrating the difficulty, if not impossibility, of getting clear-cut indicia in these cases.

The graph is based on information supplied by Mr. Scott of Bradley which was treated by the Court as confidential. It shows changes in the relationship between Bradley's sales and O'Brien's sales for the period June 1978 to February 1980 which are significant. I have also noted that in evidence Mr. Scott agreed that Bradley's sales in Wagga had been steadily declining since at least the middle of 1978. The figures, by themselves, lead to inferences. In my view the nature of the restraint, as lead to inferences. In my view the nature of the restraint, as found, is clear and forms a sufficient basis for the conclusions reached.

Although much of the evidence in the case dealt with the position of retailers, and the retail market, it is not necessary, or desirable, to consider this separately in relation to this part of the case.

I am of the view that the appeal fails, so far as it relates to the findings under s. 47.

Following the sequence of the argument, I turn to s. 49. It is recognised that there is between some of the sections of Part IV of the Act, a degree of overlapping, and the fact that a case is made out under s. 47 does not mean that there may not also be a breach of the section now under consideration. His Honour's finding on this part of the case was as follows:

"On the evidence I find that the respondent had discriminated between purchasers of windscreens of like quality and grade in relation to discounts given or allowed in relation to the supply of those windscreens and that the discrimination has been of such magnitude and of such a recurring and systematic character that it has had and is likely to have the effect of substantially lessening competition in a market for windscreens, being a market in which the purchasers (the resellers) supply those windscreens."

O'Brien did not plead as a defence either of the matters referred to in s. 49(2). Only one is relevant, that is para. (b): "the discrimination is constituted by the doing of an act in good faith to meet a price or benefit offered by a competitor of the supplier". In relation to this his Honour said: "On all the evidence I am satisfied that the discrimination by the respondent was not "constituted by the doing of an act in good faith to meet a price or benefit offered by a competitor of the respondent". The onus of establishing this matter lay upon the respondent in the proceedings, O'Brien, (sub-secn. (3)) but the matter can be dealt with independently of a question of onus.

Section 49 refers only to a market for goods, and the supply of goods and not, like s. 47, to goods or services. The word "goods" is defined in s. 4(1) to include, for example, ships, aircraft, gas and electricity. Section 4C(c) says that unless a contrary intention appears, "a reference to the supply or acquisition of goods includes a reference to the supply or acquisition of goods together with other property or services, or both". It is submitted that the section does not apply to services, simpliciter, and that what the retailers do is to provide services, i.e. to fit windscreens. The operation is, it is submitted, essentially one of performing the service, to which the provision of the windscreen is incidental, and the analogy of the distinction drawn in Lee v. Griffin (1861) 1 B. & S. 272 (see Robinson v. Graves (1935) 1 K.B. 579) was relied upon. I agree with the learned Judge that on the facts the submission cannot be maintained. I should explain that the argument looked at what was done by the retailers, because Cool, in addition to relying upon the position in the wholesale market, relied upon that in the retail market, and it could do the latter because of the words "being a market in which the corporation supplies, or those persons supply, goods". (The emphasis is mine.)

A key term used in s. 49 is "discriminate". This can be taken, for present purposes at least, to mean "treat differently" those who are alike in a relevant sense. No conception of moral obloquy or ill design is invoked by the word itself. The Supreme Court of the United States has defined the word "discriminate" in the way I have done, in the same context, in Federal Trade Commission v. Anheuser-Busch Inc. 363 U.S. 536, at p. 549. Questions of course arise as to when those retailers concerned are the same, so that it is sensible to talk of discrimination between them, and when they are sufficiently different. No such question arises here. An argument, such as was submitted to us, that there is no discrimination if everyone in a class or category is treated the same, in the sense that a uniform rule that all fair-haired patrons are charged half the amount dark-haired patrons are charged is not discrimination, cannot succeed. In this case the supplier plainly discriminated.

The remaining question under s. 49(1) is whether the discrimination "is of such a recurring or systematic character that it has or is likely to have the effect of substantially lessening competition in a market . . . ". In the circumstances of the present case, the price discrimination was a matter of policy and was applied systematically. It seems clear enough that the discrimination was likely to have the effect of lessening competition in both the retail and the wholesale market.

In this case there is a considerable overlap between the analysis of how competition was effected by exclusive dealing and how it was effected by price discrimination. The market power of O'Brien, and the existence of the condition earlier referred to are again relevant.

Retailers who did not get the higher discount would be in a weaker position when it came to competing with other retailers in the sale (and fitting) of windscreens supplied by O'Brien. Those who got the higher discount would also be less free to compete. They were tied to O'Brien and would only be able to offer a more limited range of windscreens than would otherwise be the case. Substitution was affected accordingly.

The likely end effect of the policy was to put retailers out of business (the business of supplying and fitting windscreens) if they did not obtain all, or nearly all, of their requirements from O'Brien. There is, in my view, no reason for disturbing his Honour's view that there was an infringement of s. 49. His Honour did not deal with the wholesale market, but competition therein was lessened for reasons substantially the same as those discussed in connection with s. 47.

Because of circumstances to which I will now refer, it is not useful to consider also the application of s. 48 or of s. 45. After the principal judgment had been delivered by his Honour but before debate took place as to the form of the injunctions, an affidavit was filed, the short effect of which was that Cool had sold its business in Wagga. So far as appeared, it was not carrying on business there or in any other part of the market area. The premises from which it had carried on business had been sold to a company called Rybit Pty. Limited, of which R.J. Cool was a director. That company had granted a licence to the purchaser of the business (one McIlvray) to occupy the premises for five years, with an option for a further five years. There was a possibility that after five or ten years (the latter if the option was exercised by the purchaser) Cool might resume business under the business name it had been using - "Wagga Windscreen Service". In these circumstances, his Honour was asked by O'Brien not to grant any injunction. He pointed out that the sections of the Act against which O'Brien had offended were enacted in the public interest, and granted injunctions. In a later affidavit which we allowed to be read it was deposed that McIlvray had terminated his agreement, and Rybit had "recommenced" to trade as Wagga Windscreen Service. There was no suggestion that Cool would return, and no evidence as to the current position in the market.

I am of the view that the injunctions should not continue. There are three reasons. So far as appears, Cool is no longer in the market as a retailer, or in any other capacity. There has been a double change in retailers of which we know, from Cool to McIlvray and then to Rybit. For this reason, and by reason of the lapse of time since evidence was given, the situation in the markets is now too uncertain. For those reasons, also, declarations should not be made.

There remains, however, the question of damages. Cool remains entitled to such damages as it can prove. It has succeeded in the cases based on secns. 47 and 49, and it would not add to the damages to be awarded if it were also to succeed in reliance on s. 48. The Judge found that there was not a breach of s. 45, but granted an injunction on the footing of an attempt to commit a breach of it. His finding that there was no breach is not challenged.

The damages awarded were for $4,670.00. It is submitted that this sum was excessive. Cool does not defend it as an accurate assessment. In its claim, as presented to the learned Judge, Cool said that it relied essentially on the fact that O'Brien had engaged in exclusive dealing, and added that it relied alternatively on a contravention of secns. 49 and 46. The measure of damages must be similar to that applied in cases of tort, which involves, in general, a comparison between what the position of the party was, or would have been, without the contraventions, and what it was because of the contraventions. The claim is for loss of retail sales, loss of profits on sales of screens supplied by O'Brien and for general damages. The loss of sales has been estimated at two per week during the period in question. Keely J. represented each lost sale as a fifteen dollar loss of profits. The loss of profits on actual sales of O'Brien screens was estimated at ten dollars per screen. The claim, and the award, were based principally on two or three passages in the evidence:

"Mr. Masterman: It is common ground I think that from 13 April 1979 you have been able to purchase windscreens from Windscreens O'Brien at only 40 percent off their recommended retail price?---That is correct.

Can you indicate to the court in what way that has affected your business?---On the windscreens that I have not got in stock or that I cannot purchase from Bradley Brothers that I must purchase from O'Briens I am not competitive with O'Briens or the other opposition in the town in the pricing of windscreens on those particular makes and models that only O'Briens have at that particular time. On some of the windscreens that I do buy from O'Briens and sell on the retail side at discounts I do lose sometimes $2 or $3 or only make $2 or $3 per windscreen after the windscreen is fitted and after hours deals and during the day at times."

"Is it your experience that when you give such a quote on a windscreen to be obtained from Windscreens O'Brien you do not hear any more from the customer?---Yes.

Taking a conservative estimate, how often on average does that happen per week?---That happens on different occasions. It may vary three or four windscreens one week, none the next, two the next, five the next. It is an up and down situation.

Roughly what would you estimate?---I would say about two a week on an average."

The loss is of course speculative but that does not mean that damages cannot be awarded, if there is some loss which occurs as a result of the wrongful conduct. His Honour accepted that some loss did occur, and he attempted a fairly precise quantification of it. His calculations related to the periods September 1978 to January 1979 (inclusive) and May 1979 to February 1981. The latter was the last month of the hearing. An amount ($150) was allowed for additional "opening fees" (at $5 each) which Cool had to pay to O'Brien for emergency (out of ordinary hours) supplies, above what others paid. While we should I believe be slow to alter an award in a case such as the present, I am of the view that for the damage indicated by the evidence, a more suitable amount in the circumstances would be of the order of $3,500, and that an award for that amount should be substituted.

I am therefore of the view that the appeal should be dismissed, but that the injunctions ordered should be dissolved and the award of damages reduced to $3,500. The appellant has had limited success on this appeal, and in my view the appropriate order for costs is that it pay one half of the costs of the respondent of the appeal.

JUDGE2

This is an appeal by O'Brien Glass Industries Limited ("O'Brien") from a judgment of a single Judge of this Court. Proceedings were brought by Cool and Sons Pty. Limited. ("Cool") trading as Wagga Windscreen Service, and injunctions were granted under s. 80 of the Trade Practices Act 1974 ("the Act") in respect of conduct alleged to be contrary to s. 47 (exclusive dealing), s. 49 (price discrimination), s. 48 (resale price maintenance), and s. 45 (arrangement or understanding affecting competition). Those sections have been placed in the order of the relative importance which the parties placed upon them. Damages under s. 82 of the Act were also awarded to Cool. At the time of the institution of the proceedings O'Brien carried on the business, inter alia, of supplying windscreens for motor vehicles on a wholesale basis and of supplying and fitting windscreens on a retail basis in various places, including Wagga. Cool carried on the business of supplying and fitting windscreens on a retail basis in Wagga.

O'Brien also manufactured certain windscreens and appeared to manufacture about 17 per cent of the laminated windscreens made in Australia. Two other manufacturers had a larger share of the market. The only other significant wholesaler of windscreens in or around Wagga was Bradley Bros Limited ("Bradley"). The learned trial Judge found that the major wholesalers of windscreens in New South Wales had approximately the following shares of the wholesale market: O'Brien 30(sic)-40 per cent, its two nearest competitors 30-35 per cent and 15-20 per cent respectively. It seems probable that O'Brien was the largest wholesaler of windscreens situated in Wagga with Bradley the next largest and selling 5 to 15 per cent less.

Section 47 - Exclusive dealing

I turn first to s. 47 of the Act, the relevant parts of which are 47(1), (2)(c)(d), (10)(a), (13)(a)(b), which I set out:

"47. (1) Subject to this section, a corporation shall not, in trade or commerce, engage in the practice of exclusive dealing.

(2) A corporation engages in the practice of exclusive dealing if the corporation -

. . .

(c) gives or allows, or offers to give or allow, a discount, allowance, rebate or credit in relation to the supply or proposed supply of goods or services by the corporation,

on the condition that the person to whom the corporation supplies, or offers or proposes to supply, the goods or services or, if that person is a body corporate, a body corporate related to that body corporate -

(d) will not, or will not except to a limited extent, acquire goods or services, or goods or services of a particular kind or description, directly or indirectly from a competitor of the corporation or from a competitor of a body corporate related to the corporation;

. . .

(10) Sub-section (1) does not apply to the practice of exclusive dealing constituted by a corporation engaging in conduct of a kind referred to in sub-sections (2), (3), (4) or (5) or paragraphs (8)(a) or (b) or (9)(a), (b) or (c) unless -

(a) the engaging by the corporation in that conduct has the purpose, or has or is likely to have the effect, of substantially lessening competition; or

. . .

(13) In this section -

(a) a reference to a condition shall be read as a reference to any condition, whether direct or indirect and whether having legal or equitable force or not, and includes a reference to a condition the existence or nature of which is ascertainable only by inference from the conduct of persons or from other relevant circumstances;

(b) a reference to competition, in relation to conduct to which a provision of this section other than sub-sections (8) or (9) applies, shall be read as a reference to competition in any market in which -

(i) the corporation engaging in the conduct or any body corporate related to that corporation; or

(ii) any person whose business dealings are restricted, limited or otherwise circumscribed by the conduct or, if that person is a body corporate, any body corporate related to that body corporate,

supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the conduct, supply or acquire, or be likely to supply or acquire, goods or services; and

. . ."

The following questions arise for consideration in relation to s. 47.

A. Did O'Brien give or offer to give a discount in relation to the supply of windscreens?

B. Was any discount given or offered on a "condition" referred to in s. 47(2) and (13)(a)?

C. If a discount was given or offered on a "condition" was the condition one that Cool would "not except to a limited extent, acquire" windscreens "directly or indirectly from a competitor" of O'Brien?

D. If O'Brien did give or offer a discount on the condition that Cool would not, except to a limited extent, acquire windscreens from a competitor, did the engaging in this conduct have the purpose, or had it or was it likely to have the effect, of substantially lessening competition in any market in which O'Brien or Cool supplied or acquired or was likely to supply or acquire goods or services?

Questions A and C. Certainly so far as concerns the Wagga area O'Brien based its charges for windscreens to persons fitting windscreens by deducting either 50, 45 or 40 per cent from the recommended retail price. Between January and August 1978 Cool received 50 per cent discount. In August 1978 the discount was reduced to 40 per cent, it was restored to 50 per cent in December 1978 and reduced to 40 per cent again in April 1979. Before the learned trial Judge it was contended that the choice of one or other of these percentage discounts depended upon the money value of windscreens purchased in a particular period. However, the learned trial Judge, after considering the evidence and rejecting the evidence of certain witnesses, held in relation to the relevant area ". . . that the respondent (O'Brien) had a general practice of giving and offering to give to retailers discounts of 45 per cent or 50 per cent in relation to the supply of windscreens on the condition that each such retailer would purchase all or the substantial majority of its purchases of windscreens from the respondent". He made it clear that this statement did not involve a finding that the discount was on a "condition" which satisfied the meaning of that word in s. 47.

Before us senior counsel for O'Brien did not seek to disturb this finding so I proceed upon the basis that, in the relevant area, in order to get a discount of 45 or 50 per cent a retailer had to purchase all or the substantial majority of his windscreens from O'Brien.

Bradley allowed a discount of up to 57 and a half per cent of its recommended retail price for windscreens supplied by it. The entitlement to this discount depended not on whether a retailer purchased all, or substantial majority, of its requirements of windscreens from Bradley but whether it purchased in excess of a certain money value of windscreens in a relevant period. Senior counsel for Cool did not argue that this conduct of Bradley contravened s. 47 of the Act because the determining factor, he submitted, was related to a money value and not to a percentage of the requirements of the purchaser.

Question B. It is necessary to consider whether the word "will" in s. 47(2)(d) introduced an element of futurity in that the condition must be one related to the future acquisition of goods. This was the interpretation given to similar words in s. 47(6) in S.W.B. Family Credit Union Ltd. v. Parramatta Tourist Services Pty. Ltd. (1980) 32 A.L.R. 365. In that case Smithers and Northrop JJ. (Sheppard J. dissenting) held that there was a distinction between offering something on condition that the offeree would acquire services from a third person and merely promising a benefit if the offeree did acquire such services.

Senior counsel for O'Brien argued that in the subject case there was no element of any future arrangement or understanding which committed the customer to continue to be a regular customer of O'Brien.

I do not think the trial Judge made any precise finding on this question although he did say that Mr. Goff, a supervisor of O'Brien, had conceded in relation to 50 percent discount: "Yes, customers agreed to buy all the windscreens from us".

Counsel for both parties provided us with a schedule showing the evidence concerning this question and I have studied this evidence carefully.

In my opinion this Court should not depart from the view expressed by the majority in S.W.B. Family Credit Union Ltd. v. Parramatta Tourist Services Pty. Ltd. (supra). The answer to the question therefore requires the Court to consider the evidence of the various witnesses having in mind the conclusions of the learned trial Judge as to veracity and reliability of each witness.

Upon the basis that the words "will not" in s. 47(2) have the meaning attributed to them in S.W.B. Family Credit Union Ltd. v. Parramatta Tourist Services Pty. Ltd., supra, I am satisfied that it was the practice, at least with many customers, for the manager of O'Brien in Wagga to come to an arrangement, which fell within s. 47(13)(a), that O'Brien would allow a discount in relation to the future supply of windscreens to a customer if that customer would acquire all, or a substantial part, of its requirements of windscreens from O'Brien.

Question D. This is the critical question in relation to s. 47. This question raises an issue of what is the relevant market or markets and a further issue of whether in any relevant market the conduct of which complaint is made had had either the purpose or has had or is likely to have the effect of substantially lessening competition. Before the trial Judge, the parties agreed that the relevant retail market was Wagga and the area within 50 miles around Wagga. However, the learned trial Judge did not base his decision upon the retail market although Cool has filed a Notice of Contention in this appeal that the injunction under s. 47 can be supported by a consideration of the retail market. The learned trial Judge based his decision upon the wholesale market, the extent of which was not the subject of any agreement. O'Brien argued that the whole of New South Wales constituted the most relevant wholesale market. Cool argued that there were in fact three markets. The first of these markets was the wholesale market to which the learned trial Judge has referred. This was apparently the area within 100 miles of Wagga, the area to which his Honour's first order extended. Secondly, the wholesale market looked at from the point of view of the retailer acquiring goods and, thirdly, the retail market. It seems to me that the first two markets referred to by senior counsel for Cool are the same wholesale market looked at from two different aspects. In my opinion it is only necessary to consider two markets in this case. Firstly the wholesale market chosen by the trial Judge being the area included in the first order, and secondly the retail market, being the market in which retailers in the Wagga District, agreed by the parties to be Wagga and 50 miles around, supplied windscreens to persons wishing to either purchase a windscreen retail or to have a replacement windscreen fitted to a motor vehicle.

The evidence was that the charges for replacing a windscreen by retailers varied considerably, in particular for replacements performed outside ordinary working hours. An invoice of Cool for fitting a windscreen in July 1979 was in evidence and it showed that the charge for fitting this windscreen to a Falcon Stationwagon was $95.65 made up of $45.15 for the glass windscreen, $32.00 for fitting, $3.50 for freight and insurance and a charge of $15 because the work was performed outside normal working hours.

The discount involved was 10 per cent of $45.15, or about 5 per cent of the total fitting charge if the work was performed after hours. A question then arises whether the difference in the price charged to the retailer was such as had the purpose, or has or is likely to have the effect, of substantially lessening competition in the wholesale market or retail market. Bradley apparently offered a greater discount if the windscreens purchased from it in a given period amounted to a certain value and no complaint was made of this. Section 47 does not prohibit discounts being offered or allowed; it is only concerned with discounts being offered or allowed on a condition relating to the extent to which the purchaser will not acquire goods from a competitor.

I regard the distinction sought to be drawn between a limitation upon a percentage basis and a limitation on the basis of an amount as not being a satisfactory distinction in the circumstances of the case under consideration. I agree with the argument presented for O'Brien that where one has a course of conduct operating for some time it is appropriate first of all to test whether that conduct has had the effect of substantially reducing the competition rather than to argue from theoretical grounds whether it is likely to have the effect.

There was some evidence that a wholesaler called Gundagai Windscreens had gone out of business in a relevant period but there is no convincing evidence about the reason for this. The learned trial Judge did not deal with the "effect" of O'Brien's conduct of which complaint was made except to say that he accepted Cool's submissions on this question.

There is no evidence that windscreens supplied by one wholesaler are of better quality or more desirable than those supplied by another wholesaler. There is evidence that O'Brien's carried a wider range of windscreens than other wholesalers in Wagga and that it provided a very useful 24 hour service. These factors must have improved its ability to compete.

The learned trial Judge held that O'Brien's conduct had the purpose of substantially lessening competition by making it substantially more difficult for other wholesalers of windscreens to sell windscreens to retailers with whom the respondent had reached an agreement on a discount of 45-50 per cent. The precise finding on that point did not specifically identify the area of the market except in so far as this can be ascertained from the first order.

In my opinion in the circumstances of this case, O'Brien was seeking to give favourable treatment to retailers who were good customers. As I have said, no attack is made upon the conduct of Bradley and, indeed, if O'Brien chose to allow 50 percent discount only to customers who bought more than a certain value of windscreens in a period no complaint would be made by Cool. In my opinion each case must be looked at in the light of its own particular facts.

We have the advantage of a judgment of the Full Court of this Court delivered since the judgment of the trial Judge was given. In that case, Outboard Marine Australia Pty. Ltd. v. Hecar Investments (No. 6) Pty. Ltd. (1983) A.T.P.R. 40-327, Bowen C.J. and Fisher J. in a joint judgment said at p. 43,983:

"It would seem that 'competition' for the purposes of sec. 47(10) must be read as referring to a process or state of affairs in the market. In considering the state of competition a detailed evaluation of the market structure seems to be required."

At p. 43,984 their Honours considered what was called "farming", a method by which articles which were being denied to Hecar by Outboard Marine could be obtained by Hecar from a dealer supplied by Outboard Marine but at less advantageous prices. In the circumstances of that case this was held not to be sufficient to entitle the applicant to succeed although it was acknowledged that its competitive position as an individual retailer might be affected. The view was taken that this was not sufficient in the circumstances to satisfy the test of "substantially lessening competition".

Fitzgerald J. at p. 43,989 noted that the applicant could only obtain the goods it required in a way which was less satisfactory to it commercially than obtaining its supplies on a wholesale basis directly from the respondent. The determination of whether conduct has the purpose or effect of substantially lessening competition in a relevant market is a matter of great difficulty. Indeed I respectfully adopt the following view expressed by Fitzgerald J. at p. 43,990:

"Indeed, in the end, the answer in this case really depends on little more than one's own instinctive impressions formed by weighing the various considerations in this particular market which favour one view or another."

It is also to be noted that, although the standard of proof is the civil one, it is necessary to bear in mind that the sanctions which may be imposed for breach of sec. 47(1) may be severe. The standard of proof has been dealt with in a number of cases in this Court and it was dealt with in the joint judgment of Bowen C.J. and Fisher J. to which I have referred, at p. 43,984.

In the Full Court Bowen C.J. and Fisher J. at p. 43,984 accepted that the conduct of Outboard Marine resulted in Hecar only being able to obtain articles at "less advantageous prices" than persons who had been appointed dealers. It was held that the effect on Hecar was unlikely to "have such a dramatic effect as to substantially lessen competition in the retail market" there under consideration.

In the case before us the learned trial Judge's order extended to sales by O'Brien to retailers within 100 miles of Wagga. In Outboard Marine Australia Bowen C.J. and Fisher J. said that:

The question to which I wish to address myself is whether a corporation will "discriminate between purchasers of goods of like grade and quality" simply because such goods are sold for a lower unit price to a purchaser who buys a minimum quantity than is the case where a purchaser does not. The relevance of the question is of course that the essential basis upon which O'Brien was prepared to deal, and did deal, was that it would give a higher discount if a purchaser acquired from it all, or substantially all, his requirements of windscreens. Thus a purchaser such as Cool who did not agree to such terms was charged more. In substance he was charged a higher unit price; in form that came about because he received a lower discount.

Section 49 of the Act undoubtedly derives from s. 2 of the Robinson-Patman Act passed by the United States Congress in 1936 (49 Stat.1526). The section was an amendment of s. 2 of the Clayton Act passed in 1914 (38 Stat.730). Its principal purpose appears to have been to protect individual businesses from what were perceived to be the evils of large chain stores. Commentators upon the legislation are not neutral and there are no doubt many points of view. But it is not unhelpful to quote the following passage from Trade Practices Law (1978), Donald and Heydon, Volume 1, pp. 429-430:

"Section 2 of the Clayton Act was enacted in 1914 in response to geographic price cutting by major sellers directed against their smaller competitors. Thus in terms of the preceding analysis it was concerned principally with seller level injury. The exemptions for quantity discounts left it impotent to deal with the problem arising soon after its enactment, namely the greater power of the buyer. We have seen how in the United States the courts have required virtually predatory behaviour at the seller level before there can be a violation of s. 2, and so in that respect it could not be said to impede competitive behaviour in a dramatic way.
In 1936 the mood was quite different. There was a Populist movement against the evils of large corporations, particularly the developing chains of retail food stores which were making life difficult for the 'Mom and Pop' grocery stores - our 'corner shop'. Consistent with traditional Jeffersonian concepts of individual business as a bulwark of democracy, the Populist movement was able to generate substantial commercial, social and political support against mass distribution techniques and particularly the chain stores. The polemic of the movement drew upon all the traditional "biases and prejudices against business methods which were simply more efficient. The invective and confusion and the ultimate compromise amendment to s. 2 are well recorded by Rowe (1962, ch. 1). The record makes one thing certain; the 1936 amendments to s. 2 which became known as the Robinson-Patman Act were neither dispassionately developed nor justified in economic terms."

The reference to Rowe is a reference to a work, Price Discrimination under the Robinson-Patman Act (1962) by Frederick M. Rowe. Views pro and con the legislation are expounded in two consecutive writings published in The Antitrust Bulletin, Vol. XXI (1976), the first entitled Reform of the Robinson-Patman Act: A Second Look by E. W. Kintner and ors. (p. 203 et seq.) and the second, Reform or Repeal of the RobinsonPatman Act - Another View by Edward Wolfe (p. 237).

The Bill which led to the Australian Act was introduced into the Senate on 27 September, 1973, (Hansard p. 1013) and into the House of Representatives on 25 October, 1973, (Hansard p. 2733). Nothing of assistance is to be found in the second reading speeches except a clear intention to have enacted a number of provisions, including s. 49, which derive from the American antitrust laws.

In its report to the Minister for Business and Consumer Affairs made in August 1976, the Trade Practices Act Review Committee (the Swanson Committee) recommended the repeal of the section. Its views appear in Chapter 7 (pp. 43-46). The concluding paragraphs of the chapter were (pp. 45- 46):

"The Committee considers that in the Australian context the conduct of a large buyer who is endeavouring to secure price cutting in his favour, whether it be discriminatory or not, may be more procompetitive than anti-competitive. Indeed such price cuts as a large buyer is able to obtain can trigger off competition from rival suppliers or can trigger off competition in a market where other forces are unlikely to produce active competition.
As discussed above, the prohibition on price discrimination in section 49 has, in our view, operated substantially to limit price flexibility. The Committee believes that in the Australian context, section 49 has produced such price inflexibility that the detriment to the economy as a whole from the operation of the section outweighs assistance which small business may have derived from it. It is price flexibility which is at the very heart of competitive behaviour. The Committee thus recommends that section 49 should be repealed."

Substantial amendments were made to the Act in 1977 (Act No. 81 of 1977). These included minor amendments of s. 49. The amendments were introduced into the Senate on 31 May, 1977 (Hansard p. 1708). Amongst other things the Minister in charge of the Bill (Senator Durack) said (p. 1710):

"The Bill does not accept the recommendation of the Swanson Committee that section 49 - the section which prohibits anti-competitive price discrimination - should be abolished. The Government has decided that section 49 should be retained - in the interests of assisting the competitive position of small businesses. The Government recognises, however, that difficulties with the interpretation of section 49 will remain. Accordingly, over the next few months, the Government will be looking at the operation of the section to determine whether there is any way in which those difficulties can be removed while still preserving the benefits of the section."

As the Minister's second reading speech implied, there are difficulties about the interpretation of the section. The fact that there are may provide the reason why it has taken some seven years for a case to arise in which the section must be construed and why the Trade Practices Commission has not, so far as I can ascertain, instituted proceedings against any corporation for a breach of it.

Not the least of the difficulties in construction is the determination of what is meant by the phrase, "discriminate between purchasers of goods" in subsec. 49(1). Whatever the difficulties in interpretation of the American provision have been, that was one which was put to rest many years ago by the Supreme Court of the United States in its unanimous decision in Federal Trade Commission v. Anheuser-Busch, Inc. (1960) 363 U.S. 536. In that case one of the unsuccessful respondents' submissions was that more was involved in price discrimination than a price difference. In rejecting this submission the Court said (pp. 547 and 549):

"Respondent asserts that its view is supported by legislative history, court decisions, and reason. Respondent relies heavily, as did the Court of Appeals, upon a statement made during Congress' consideration of the Robinson-Patman legislation by Representative Utterback, a manager of the conference bill which became s. 2(a). In this rather widely quoted exegesis of the section, Representative Utterback declared that 'a discrimination is more than a mere difference,' and exists only when there is 'some relationship . . . . between the parties to the discrimination which entitles them to equal treatment.' Such a relationship would prevail among competing purchasers, according to the Congressman, and also 'where . . . . the price to one is so low as to involve a sacrifice of some part of the seller's necessary costs and profit,' so that 'it leaves that deficit inevitably to be made up in higher prices to his other customers.' 80 Cong. Rec. 9416. Respondent also cites expressions in the legislative history of the Clayton Act which reflect Congress' concern over classic examples of predatory business practices.
"The trouble with respondent's arguments is not that they are necessarily irrelevant in a s. 2(a) proceeding, but that they are misdirected when the issue under consideration is solely whether there has been a price discrimination. We are convinced that whatever may be said with respect to the rest of ss. 2(a) and 2(b) - and we say nothing here - there are no overtones of business buccaneering in the s. 2(a) phrase 'discriminate in price.' Rather, a price discrimination within the meaning of that provision is merely a price difference."

Later the Court said (pp. 550-551):

"These assumptions (assumptions made in certain authorities referred to in the judgment), we now conclude, were firmly rooted in the structure of the statute, for it is only by equating price discrimination with price differentiation that s. 2(a) can be administered as Congress intended. As we read that provision, it proscribes price differences, subject to certain defined defenses, where the effect of the differences 'may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit' of the price differential, 'or with customers of either of them.' See Federal Trade Commission v. Morton Salt Co. 334 U.S. 37, 45-47. In other words, the statute itself spells out the conditions which make a price difference illegal or legal, and we would derange this integrated statutory scheme were we to read other conditions into the law by means of the nondirective phrase, 'discriminate in price.' Not only would such action be contrary to what we conceive to be the meaning of the statute, but, perhaps because of this, it would be thoroughly undesirable. As one commentator has succinctly put it, " 'Inevitably every legal controversy over any price difference would shift from the detailed governing provisions - 'injury,' cost justification, 'meeting competition,' etc. - over into the 'discrimination' concept for ad hoc resolution divorced from specifically pertinent statutory text.' Rowe, Price Differentials and Product Differentiation: The Issues Under the Robinson-Patman Act, 66 Yale L.J. I, 38."

The Anheuser-Busch decision stood as the law on the subject in the United States when the Australian Act was passed in 1974. The fact that it did does not itself warrant the conclusion that the similar words in the Australian section should be given the same meaning as they have been given in the United States. But the obvious resort by the legislature to the American model provides a persuasive reason why they should. On the other hand, one must bear very much in mind that the Australian Act was introduced to cope with Australian conditions and to prohibit what the legislature saw as undesirable restrictive trade practices operating in this country, not somewhere else.

For much longer than trade practices legislation has been in force in Australia the practice of offering lower prices or discounts for quantity has been well recognised and understood by those engaged in dealing with each other in many markets. In retail areas it has existed in grocers' shops - more recently in supermarkets and half case stores. In commercial dealings it applies in many fields - fleet owners' discounts for the purchase of particular quantities of motor vehicles provide an example. In the wholesale grocery area and also those of clothing and textiles, manufacturers will accept lower prices or give greater discounts to those retailers who buy in quantity. Indeed it is not unusually the case that the very size of the purchaser and the share it has of a retail or other market gives it the buying power to compel the lower price or higher discount. Often it will be the dominant party in the transaction. Not infrequently it will be a government or a statutory authority which may also be a financial or trading corporation. I do not gainsay that these practices have not become more highly developed in the last decade or so since the Act has been in force. But they were well known at the time the Act was passed.

There would be a variety of views as to the desirability of these provisions from the public point of view. But undoubtedly they must, over the years, have had the effect of keeping prices for many goods at a lower level than would otherwise have been the case.

The question is whether it was the intention of the legislature to affect these practices in every case where it was shown that the discrimination (using that word to mean no more than a price difference) was of such magnitude or of such a recurring or systematic character that it had or was likely to have the effect of substantially lessening competition in a relevant market. The market is a market in which the discriminator corporation supplies goods or a market in which purchasers from it supply them.

If, as in the present case, a wholesaler corporation supplies goods at a lower unit price, if a minimum quantity is purchased, it will enable a purchaser whose requirements are large, e.g. a grocery chain, to compete more advantageously with a purchaser whose requirements are small, e.g. a corner grocery store. If there is a price discrimination within the section only because lower unit prices are charged for greater quantities, there will almost always be a substantial lessening of competition in a relevant market, i.e. the market in which the two purchasers themselves supply goods. That is so subject to such application as sub-sec. 49(2) may have in a given case. But that aside, the section will, in the circumstances I have postulated, be infringed notwithstanding that the public generally will benefit because of the lower retail price the purchaser with the larger requirements (the chain store) will be able to offer its customers.

Notwithstanding that consideration, I have reached the conclusion that the section was intended to apply in such a case for the following reasons:

(a) There are clear indications in the legislation itself and in the second reading speeches that Parliament did intend to pick up the American legislation. That included the interpretation of it by the United States Supreme Court in the Anheuser-Busch case.

(b) As a matter of ordinary use of language, the relevant words are well capable of denoting no more than a price difference; cf. Melbourne Corporation v. The Commonwealth (1947) 74 C.L.R. 31 per Latham C.J. at p. 60.

(c) The legislature may well have thought that the section would operate so as to bring the prices of a wholesaler to all customers down to the same level so that the corner store could purchase for the same price as the chain. The fact that some may take the view that the price to all will go up rather than down or that the section may tend to rigidify pricing is not to the point. It is what the legislature may be thought to have intended that is important.

(d) Colour to the view that it thought the effect of the section would be to compel wholesalers to make lower unit prices available to all purchasers is added by a consideration of subsec. 49(4). That sub-section prohibits a person knowingly inducing or attempting to induce a corporation "to discriminate in a manner prohibited by sub-section (1)" or entering into a transaction that to his knowledge would result in his receiving the benefit of a prohibited discrimination. The sub-section was obviously intended to counter the buying power of large undertakings such as the chain stores. It has its counterpart in s. 2(f) of the Robinson-Patman Act.

Notwithstanding a number of misgivings, I have thus reached the conclusion that, subject to the need for a person alleging a breach of the section to establish the anti-competitive effects for which it provides and to a person against whom a breach is alleged being able to rely upon the defences provided for in sub-sec. 49(2), a breach of the section is committed merely by the sale of goods at lower unit prices where minimum quantities are taken or by the giving of discounts for the taking of such quantities.

I have nothing further to add. As earlier mentioned I agree in the judgment of Fox J. I also agree with the orders he proposes.