QIW Ltd (applicant) & re application for review of a determination of the Trade Practices Commission dated 29 May 1995 to grant an authorization to Davids Ltd in relation to the proposed acquisition of Composite...

COMMONWEALTH OF AUSTRALIA

TRADE PRACTICES ACT 1974

TRADE PRACTICES TRIBUNAL	No V1 of 1995
QIW LIMITED

Applicant

RE APPLICATION FOR REVIEW OF A DETERMINATION OF THE TRADE PRACTICES COMMISSION DATED 29 MAY 1995 TO GRANT AN AUTHORIZATION TO DAVIDS LIMITED IN RELATION TO THE PROPOSED ACQUISITION OF COMPOSITE BUYERS LIMITED

Lockhart J. (President), Dr M Brunt, Dr B Aldrich

17 October 1995

REASONS FOR DECISION

THE TRIBUNAL

CONTENTS

Page

1. THE MATTER BEFORE THE TRIBUNAL

1.1	Introduction and the Commission's

authorization 3

1.2	What was before the Commission
for authorization; what did the
Commission authorize and what
is before the Tribunal? 7

2. THE PROCEEDING BEFORE THE TRIBUNAL

2.1 Participants 9

2.2

Conduct of the proceeding

3. THE RELEVANT LAW

3.1

The statutory provisions generally

3.2 Undertakings 26

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4. COMPANIES

4.1 Davids 30 4.2 CBL 31 4.3 QIW 33

4.4	Recent developments 34

5. LIQUOR DISTRIBUTION 36

6. THE GROCERY DISTRIBUTION INDUSTRY

6.1	The Australian industry 38

6.2

A history of structural change

6.3

Diversity in store size and character

6.4	Market share trends 54

7. STRATEGIC RESPONSES OF INDEPENDENT WHOLESALERS

7.1 General 60

7.2	Strategies to improve sales volume	64
7.3	Strategies to secure retail sites	70

7.4	Financial strategies 73
7.5	Industry rationalization strategies 76

8. WHOLESALE - RETAILER RELATIONSHIPS 77

8.1 The banner groups 79 8.2 Pricing 81

8.3

Wholesaler services to retailers

8.4	Banner management 87

9. THE IDENTIFICATION OF RELEVANT MARKETS

9.1	The Tribunal's task 90

9.2 Market definition 92 10.1 Approach 101 10.2 Market structure 103

10. PRESENT COMPETITION AND MARKET POWER

10.3	Market behaviour and performance 115

11. LIKELY BENEFITS AND DETRIMENTS TO THE PUBLIC 11.1 Test to be applied 124

11.2 Alternatives to be considered 126 11.3 Detriments 131 11.4 Benefits 140

12. CONCLUSION 144

1. THE MATTER BEFORE THE TRIBUNAL

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1.1

Introduction and the Commission's authorization

This review concerns the proposed acquisition by Davids Limited ('Davids') of the issued shares and other securities of Composite Buyers Limited ('CBL').

The principal activities of Davids and CBL are the wholesale distribution of groceries, refrigerated foods, general merchandise and liquor.

Davids is the largest independent grocery wholesaler in Australia (i.e. independent of the large integrated retail chains). It conducts its business in New South Wales, the Australian Capital Territory, Victoria, Queensland, South Australia and the Northern Territory. CBL conducts its business in Victoria and to a more limited extent in New South Wales and

Tasmania. The other independent grocery wholesalers in Australia are Foodland Associated Limited ('FAL') which supplies independent retailers in Western Australia; Queensland Independent Wholesalers Limited ('QIW') which carries on business in Queensland; and Australian Independent Wholesalers Pty Limited ('AIW') which conducts its business in the Australian Capital Territory and some parts of New South Wales.

The parties to the proposed acquisition also have direct

interests in grocery retailing and in the sale by wholesale of

liquor including beer, spirits and wines.

The independent grocery wholesalers supply independent retailers, but not the national retail chains (Woolworths, Coles and Franklins), each of which operates its own vertically integrated grocery distribution business.

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Davids sought authorization from the Trade Practices Commission ('the Commission') for its proposed acquisition of all the issued shares and other securities of CBL. On 29 May 1995, the Commission, pursuant to s. 88(9) of the Trade Practices Act 1974 ('the Act'), granted authorization for the proposed acquisition by Davids for a period of 15 months, commencing on the day on which the authorization comes into force.

The Commission's determination stated that, if an application for review is made to the Tribunal, the determination will come into force:-

'(a) on the day on which the

Tribunal

makes

determination on the review and grants authorisation; or

(b)	where the application for review is withdrawn - on the day on which the application is withdrawn.'

An application for review of the Commission's determination was lodged by QIW with the Tribunal on 19 June 1995, within the time stipulated in reg. 20(1). It has not been withdrawn, so the Commission's determination has not yet come into force. The Tribunal is satisfied, pursuant to s. 101(1) of the Act, that QIW has a sufficient interest to entitle it to make the application.

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The Commission's authorization was subject to the following conditions (see the determination of the Commission, paragraph 8.1):

'8.1 For the reasons contained herein, the Commission grants authorisation to application A30165 made under section 88(9) of the Act. Authorisation is granted for a period of fifteen months, commencing on the day on which the authorisation granted by this determination comes into force, and is subject to conditions that:

(a)

Davids shall acquire any

additional

shares,

convertible

notes,

debentures

other

securities in CBL only by way of, in conjunction with or immediately followed by a takeover scheme, provided that this condition will not prevent the conversion in accordance with their terms

any

convertible

securities in CBL to which

Davids

presently

entitled; and

(b)

Davids will not acquire a share or shares issued by CBL which is not an ordinary share or ordinary shares unless by the acquisition Davids controls CBL within the meaning of that

expression

the

undertakings given by Davids to the Commission pursuant to s.87B of the Trade Practices Act, dated 29 May 1995; and

(c) any

takeover

scheme

announced by Davids is to

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contain a minimum acceptance condition to ensure that Davids will become entitled at the conclusion of the takeover scheme, or of any

period

compulsory

acquisition, to such number of shares in CBL as will entitle it to cast more than 50 per cent of the votes which may be cast at any general meeting of CBL. In calculating the number of votes which may be so cast, Davids shall treat all convertible notes and other convertible securities as if they had already been converted and Davids shall not waive its minimum acceptance condition unless it is or will become entitled to more than 50 per cent of the votes which may be cast at any general meeting of CBL.'

Certain written undertakings were given by Davids to the Commission, pursuant to s. 87B of the Act, in relation to the application for authorization, to which reference shall be made later.

1.2 What was before the Commission for authorization, what did the Commission authorize and what is before the Tribunal?

The application by Davids to the Commission for authorization describes the subject matter in these terms:

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'Application is hereby made under sub-s. 88(9) of the Trade Practices Act 1974 for an authorization under that sub- section to acquire shares in the capital, or to acquire assets, of the body corporate named in item 2 [Composite Buyers Limited].'

Paragraph 2(e) describes in sub-paragraph (e) under the

sub-heading:

'(e) Number of Shares or Description of Assets to be Acquired

All the issued shares and other securities in CBL (currently 16,045,998 ordinary shares, 692,000 converting preference shares and $20,000,000 of convertible notes) to which Davids has no entitlement.'

It will be remembered from our earlier recitation of the terms of the Commission's determination that they included condition (c) to the effect that any takeover scheme announced by Davids must contain a minimum acceptance condition to ensure

that Davids will become entitled to such number of shares in CBL as will entitle it to cast more than 50% of the votes which may be cast at any general meeting of CBL and that Davids shall not

waive its minimum acceptance condition unless it is or will become entitled to more than 50% of the votes which may be cast

at any general meeting of CBL.

authorization for it to acquire all the issued shares and other

securities in CBL other than those to which Davids had a present

entitlement (Davids owns 32.1% of the issued ordinary shares in

the capital of CBL). The Commission took the view that the

greater (all) included the less, but not fewer than the number

of shares in CBL as will entitle Davids to cast more than 50% of

the votes which may be cast at general meetings of CBL.

Thus, Davids' application to the Commission was for

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The case for Davids was conducted before the Tribunal on the basis that Davids sought from the Tribunal authorization of the same kind as that for which it had applied to the Commission and which was granted by the Commission, namely, authorization for Davids to acquire all the issued shares in CBL (other than those to which it has a present entitlement), but no fewer than the number of shares in CBL as will enable Davids to cast more than 50% of the votes which may be cast at general meetings of CBL. However, on the second last day of the hearing counsel for Davids said that authorization was sought for the acquisition by Davids of all or any of the issued shares and other securities in CBL to which Davids has no entitlement.

Counsel for QIW submitted that Davids should not be allowed authorization for the acquisition of any of the shares in CBL (i.e. Davids should not be authorized to acquire fewer shares

than the number required (together with the shares presently owned by it) to enable it to cast more than 50% of the votes at general meeting) unless QIW is allowed to adduce further evidence as to public benefit and to further cross-examine Mr Patten, the principal witness called by Davids.

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In our opinion Davids should be confined to the approach which it adopted before us until the closing stages of addresses. That accords with justice and the need to hear and determine merger cases of this kind expeditiously.

2. THE PROCEEDING BEFORE THE TRIBUNAL

2.1

Participants

QIW, Davids and the Commission participated in the review before the Tribunal: QIW as the applicant for review, pursuant to s. 101(1) of the Act, and Davids as the person to whom authorization was granted by the Commission (s. 109(1) of the Act). The Commission appeared. The Commission and all parties were represented by counsel and solicitors.

2.2

Conduct of the proceeding

The application by QIW for review of the Commission's

determination was lodged with the Tribunal on 19 June 1995.

Directions were given by the Tribunal on 4 July and 1 August 1995 to prepare the matter for hearing. The hearing commenced on 8 August 1995 and took ten hearing days to complete. The matter was conducted in the context of s. 102(1A) of the Act which provides that, where the review before the Tribunal is of a determination of the Commission relating to the grant of an authorization under s. 88(9), the Tribunal must make its determination on the review within 60 days after receiving the

application for review. Section 102(1B) provides that this 60 day time limit does not apply if the Tribunal considers that the

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matter cannot be dealt with properly within that period of 60 days, either because of its complexity or because of other

special circumstances. Section 102(1C) provides that if subsection (1B) applies, the Tribunal must notify the applicant for review before the end of the 60 day period that the matter

cannot be dealt with properly within that period.

The Tribunal considered before the end of the 60 day period in this matter that it could not be dealt with properly within

the period of 60 days both because of its complexity and other special circumstances. Accordingly, the Tribunal informed the parties before the end of that period that the matter could not be dealt with properly within that period. Nevertheless, this

determination of the Tribunal has been made expeditiously.

Many documents are in evidence. Statements and affidavits of witnesses were filed, and 20 witnesses were examined orally.

The statements of those who were not called to give oral evidence were by consent admitted into evidence by the Tribunal and accorded the same weight and evidentiary value as if the witnesses had been called and verified their written statements by oath or affirmation (s. 107 of the Act). A list of the persons who furnished statements and were called to give oral evidence and a list of persons who furnished written statements but were not called to give oral evidence is annexure 'A' to

these reasons. in a short time. This was due partly to the great deal of work

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that was done by all the parties, the Commission and their legal advisers in a co-operative fashion, and partly to the procedures adopted by the Tribunal which it is helpful to mention as a guide to participants before the Tribunal in future applications for review.

At the first directions hearing (4 July) the Tribunal arranged for the parties and the Commission to receive a list of the topics which the Tribunal then considered were central to the review. This list proved to be a helpful statement of the issues in the matter and basically shaped the conduct of the

hearing as the participants accepted those issues, subject to

certain additions.

The directions of the Tribunal included the following:

.	The Commission shall assemble and file by 14 July copies of the reports and other source documents referred to in the body of or footnotes to the Commission's determination,

suitably updated where possible, and shall serve on each party and the Tribunal by 14 July an index of those documents.

.	The Commission shall assemble and provide to the Tribunal and all parties by 14 July industry-wide facts and statistics readily available to it relating to five subject

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matters;

.	Davids and the Commission shall file and serve on all parties and the Commission by 14 July certain documents that will inform the Tribunal briefly of relevant background facts;
.	All parties and the Commission shall file and serve by 14 July a brief outline of their respective cases, containing a statement of any topics additional to those mentioned by the Tribunal, an outline of the principal submissions to be made, a list of witnesses to be called including experts, and a list of documents intended to be tendered or otherwise relied on at the hearing;
.	All parties shall file and serve by 24 July statements of all witnesses proposed to be called, including persons able to speak about strategic planning in the relevant corporations and copies of all documents proposed to be tendered at the hearing;
.	All parties shall file and serve by 1 August any amendments to their outlines, lists of witnesses, lists of documents and statements of witnesses;
.	Statements of experts shall be filed and served at the same time as the documents mentioned in the immediately preceding paragraph are filed and served unless any party

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wishes to do so earlier, in which case they may be filed

and served earlier;

.	The hearing of the matter shall commence on Tuesday, 8 August 1995.
.	If any party defaults in complying with any of the earlier directions it must not be assumed that the Tribunal will

permit that party to rely on the documents, including statements, the subject of the default. The Tribunal will allow the defaulting party to rely on such documents only if in all the circumstances the Tribunal is of the opinion

that it is in the interests of justice (taking into account amongst other things the interests of parties adversely affected by the default) that the default be excused.

Four expert witnesses in the field of economics furnished statements and were examined orally before the Tribunal at the hearing. The Tribunal adopted the following procedure with

respect to expert witnesses, for the purpose of obtaining the maximum benefit from their evidence and removing them from the adversary process so far as possible:-

.	At the conclusion of all the evidence (other than the evidence of the experts) and before the commencement of addresses, each expert was sworn immediately after the other and in turn gave an oral exposition of his or her expert opinion with respect to the relevant issues arising

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from the evidence.

Each expert then in turn expressed his or her opinion about the opinions expressed by the other experts.

Counsel then cross-examined the experts, being at liberty to cross-examine on the basis (a) that questions could be put to each expert in the customary fashion (i.e. one after the other, completing the cross-examination of one before proceeding to the next), or (b) that questions could be put to all or any of the experts, one after the other, in respect of a particular subject, then proceeding to the next subject. Re-examination was conducted on the same basis.

In the result we gained assistance from the evidence of the experts. Their oral expositions and examinations occupied only three and one-half hours.

The proceeding was conducted before us by counsel and solicitors, the parties and the Commission with considerable expedition and efficiency, and we wish to record our gratitude to them.

3. THE RELEVANT LAW

3.1

The statutory provisions generally

Section 50(1) prohibits, in the absence of authorization (s. 88(9)), the acquisition by a corporation of any shares in the capital of a body corporate or any assets of a person in circumstances where the acquisition would have the effect or be likely to have the effect of substantially lessening	- 15 -
competition.

Section 50(3) specifies certain matters which must be taken into account, for the purposes of s. 50(1), in determining whether the acquisition would have the effect or be likely to have the effect of substantially lessening competition.

Some observations about s. 50 are relevant. Until 21 January 1993, s. 50 prohibited mergers and acquisitions which were likely to result in dominance of a market. Mergers effected from that date are subject to the test of substantial lessening of competition in a market. In addition to the

application of a new merger test, s. 50(1) extends to acquisition of assets from natural persons as well as corporations.

Section 50(6) provides that in s. 50 the term 'market' means a substantial market for goods or services in Australia, in a State or in a Territory, a provision which in essence

restates the previous s. 50(3)(a).

The test of substantial lessening of competition in a market now adopted in Australia has moved us closer to the approach adopted in the United States and Canada where the test for regulating mergers is effect on competition. The prohibition against the acquisition of shares or assets imposed by s. 50(1) includes direct and indirect acquisitions. A direct acquisition is one in which the corporation makes the acquisition itself. An indirect acquisition is one in which the corporation makes the acquisition through an agent, nominee or trustee: Trade Practices Commission v Australian Iron and Steel

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Pty Limited (1990) 22 FCR 305; (1990) ATPR 41-991.

The phrase in s. 50(1) 'would have the effect, or be likely to have the effect,' involves two different concepts. The words 'would have the effect' suggest that the question must be tested against the evidence or established facts; whereas the words 'would ... be likely to have the effect' suggest that there are various shades of meaning including 'probable' in the sense of 'more probable than not,'. It may mean (though with respect to s. 45D of the Act), to use the words of Bowen CJ in Tillmanns

Butcheries Pty Limited v Australasian Meat Industry Employees'

Union (1979) 42 FLR 331 at 339:

' "Some possibility" - more than a remote or rare chance. Or, it may mean that the conduct engaged in is inherently of such a character that it would ordinarily cause the effect specified.'

Deane J. said in Tillmanns Butcheries at 346:

'The word "likely" can, in some context, mean "probably", in the sense in which that word is commonly used by lawyers and

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laymen, that is to say, more likely than not or more than a 50 per cent chance ... It can also, in an appropriate context, refer to a real or not remote chance or possibility regardless of whether it is less or more than fifty per cent. When used with the latter meaning in a phrase which is descriptive of conduct, the word is equivalent to "prone", "with a propensity" or "liable". When so used, it is sometimes equated with the concept of foreseeability in the law of negligence ...'

Northrop J. said in Trade Practices Commission v Ansett Transport Industries (Operations) Pty Limited (1978) 32 FLR 305; (1978) ATPR 40-071 that the words 'is likely to' meant that

something was more probable than not to happen in the future.

See also Trade Practices Commission v TNT Management Pty Limited (1985) 6 FCR 1; (1985) ATPR 40-412 per Franki J. at 50 and 46,117.

The use of the word 'substantially' in s. 50 with reference to the effect or likely effect of the relevant conduct on the lessening of competition in a market connotes an effect on

competition which is real or of substance, not necessarily one which must be large or weighty: see the explanatory memorandum to the Trade Practices Legislation (Amendment) Act 1992 (No 222 of 1992), which introduced the new merger test.

In Tillmanns Butcheries Bowen C.J. said at 338:

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'The word "substantial" would certainly seem to require loss or damage that is more than trivial or minimal. According to one meaning of the word the loss or damage would have to be considerable ... However, the word is quantitatively imprecise ... No doubt in the context in which it appears the word imports a notion of relativity.'

Deane J. said at 348:

'The word "substantial" is not only susceptible to ambiguity; it is a word calculated to conceal a lack of precision. In the phrase "substantial loss or damage", it can, in an appropriate context, mean real or of substance as distinct from ephemeral or nominal. It can also mean large, weighty or big. It can be used in a relative sense or can

indicate

absolute

significance, quantity or size.'

See also Re Queensland Co-Operative Milling Association Limited; Re Defiance Holdings Limited ('QCMA') (1976) 25 FLR 169; (1976) ATPR 40-012; Re Howard Smith Industries Pty Limited (1977) 28 FLR 385; (1977) ATPR 40-023; Dandy Power Equipment Pty

Limited v Mercury Marine Pty Limited (1982) 64 FLR 238 at 276; (1982) ATPR 40-315 at 43,898-9; Radio 2UE Sydney Pty Limited v

Stereo FM Pty Limited (1982) 62 FLR 437 at 444; (1982) ATPR 40- 318 at 43,918; Dowling v Dalgety Australia Limited (1992) 34 FCR

109; (1992) ATPR 41-165; Eastern Express Pty Limited v General

Newspapers Pty Limited (1991) 30 FCR 385; (1991) ATPR 41-128.

It should be noted also that the word 'lessening' in the context of lessening of competition is to be read as including references to preventing or hindering competition: s. 4G.

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With this background, we examine the role of the Commission and the Tribunal under ss. 88(9) and 90(9).

Section 102(1) of the Act provides, inter alia, that upon a review of a determination of the Commission, and, for the purposes of the review, the Tribunal may perform all the functions and exercise all the powers of the Commission. The

reasoning process of the Commission is not itself the subject of the inquiry: Re 7-Eleven Stores Pty Ltd (Victorian Newsagency) (1994) ATPR 41-357; and Re Media Council of Australia (No 2)

(1987) 88 FLR 1 at 11; (1987) ATPR 40-774 at 48,419.

It is also useful to note that s. 91(3) provides that an authorization may be expressed to be subject to such conditions as are specified in the authorization. Plainly, the Tribunal's powers on a review such as the present include the power to attach conditions to any authorization which the Tribunal might grant: see Re Rural Traders Co-Operative (WA) Limited (1979) 37

FLR 244 at 261.

Section 88(9) of the Act empowers the Commission, upon application by a person, to grant an authorization to the person to acquire shares in the capital of a body corporate or to acquire assets of a person.

Section 90(9) prohibits the Commission from granting

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authorization of that kind unless it is satisfied in all the circumstances that the proposed acquisition would result, or be likely to result, in such a benefit to the public that the

acquisition should be allowed to take place. This is the

critical test for the Commission and for the Tribunal.

Section 90(9) of the Act (like s. 90(8)), in contrast to s. 90(6) and (7), is silent on the question of public or any other detriment, including anti-competitive detriment. Nevertheless,

for the Tribunal to fulfil the statutory duty imposed on it by

s. 90(9), in order to grant authorization it must be satisfied 'in all the circumstances' that the proposed acquisition would result or be likely to result in such a benefit to the public that the acquisition should be allowed to take place. The examination of 'all the circumstances' must in our view involve the Tribunal in an examination of matters of detriment, including anti-competitive detriment, in order to conclude

whether in all the circumstances there is such a degree of benefit to the public that the acquisition should be allowed to

proceed: see QCMA; and Rural Traders.

Notwithstanding the absence of express reference to detriment in s. 90(9), the resulting benefit to the public to which s. 90(9) refers is the net or overall benefit to the public after any detriment to the public resulting or likely to result from the proposed acquisition has been taken into account: Rural Traders at 261.

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As was observed in QCMA at 184 and 17,243 (and we agree), given the policy of the Act and the nature of the application for authorization, under s. 88(9) the most important of potential detriments will normally be the anti-competitive effects or negative effects on competition.

It is apt to quote the words of the Tribunal in QCMA at 187

and 17,245:

'However, "competition" is such a very rich concept (containing within it numbers of ideas) that we should not wish to attempt any final definition which might, in some market settings, prove misleading or which might, in respect of some future

application,

unduly

restrictive. Instead we explore some of the connotations of the term.'

Competition may be valued for many reasons as serving economic, social and political goals. But in identifying the existence of

competition

particular

industries or markets, we must focus upon its economic role as a device for controlling the

disposition	of	society's
resources.'

And at 188 and 17,246:

'Competition expresses itself as

rivalrous market behaviour. ...

In our view effective competition requires both that prices should be flexible, reflecting the forces of demand and supply, and that there should be independent

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rivalry in all dimensions of the price-product-service packages offered to consumers and customers.

Competition is a process rather than a situation. Nevertheless, whether firms compete is very much a matter of the structure of the markets in which they operate. ...'

It is also important to remember that a merger may positively enhance the competitive process and thus give rise to a substantial benefit (QCMA at 185 and 17,244) and that a claimed benefit may in fact be judged to be a detriment when viewed in terms of its contribution to a socially useful competitive process (QCMA at 187 and 17,245).

It was pointed out by the Tribunal in Rural Traders at 262

that, for a benefit or detriment to be regarded as a benefit or

detriment to the public for the purposes of the assessment of

public benefit required by s. 90(9), it must be seen as a benefit or detriment to the community generally; but it does not

follow that private benefit or private detriment are necessarily

irrelevant. This is because benefit and detriment are to be

determined in accordance with the values of the community

generally: QCMA at 182-3 and 17,242; Rural Traders at 262 and

278; and Victorian Newsagency at 42,677.

The Tribunal observed in QCMA at 180 and 17,241, in the context of its consideration of the relationship between s. 50 and s. 88(7) that the task of the Tribunal is not first to inquire whether the acquisition is 'likely to have the effect of

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substantially lessening competition' (the language of s. 50) because the 'issues for determination by the Court in the event

of prosecution are different from those for determination by the

Tribunal when authorization is sought'.

The question before us is whether any net or overall public benefit which we find would result or be likely to result from

the proposed acquisition, warrants authorizing or allowing the acquisition to take place, notwithstanding that it is or may be within the class of acquisition to which the general prohibition imposed by s. 50(1) applies. This question can properly be answered in the affirmative if the net or overall benefit which we find would result from the proposed acquisition, or be likely to result from it, is seen by us to be of substance as distinct from ephemeral or illusory: Rural Traders at 262-3. Whether or

not the net benefits are 'of substance' must depend in large measure upon whether the positive benefits are of sufficient public importance to outweigh any detriments, including anti- competitive effects flowing from the merger taking place in the relevant markets: QCMA at 184 and 17,243. In some cases rationalization may be a public benefit: Re A C Hatrick Chemicals Pty Limited (No 2) (1978) 18 ALR 129; (1978) ATPR 40- 057.

In identifying relevant public benefit it is necessary to compare the position which would exist in the future if the proposed acquisition did not take place, with the position in the future that would arise if the acquisition did take place: Media Council (No. 2) at 11 and 48,419; QCMA at 186 and 17,244; G & M Stephens Cartage Contractors Pty Limited (Application on behalf of the Concrete Carters Association (Victoria)) (1977) 31 FLR 193 at 216; (1977) ATPR 40-042 at 17,459-60; Re John Dee (Export) Pty Limited (1989) 95 FLR 250 at 267; (1989) ATPR 40-

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938 at 50,206.

In determining what amounts to a public benefit for the purposes of s. 90(9) the Tribunal (as well as the Commission) must regard as benefits to the public, in addition to any other benefits to the public that may exist apart from s. 90(9A)(a), a significant increase in the real value of exports and a significant substitution of domestic products for imported goods (s. 90(9A)(a)).

It must be noted also that, in determining what amounts to a benefit for the purposes of s. 90(9), the Tribunal must take into account, without limiting the matters that may be taken

into account, all other relevant matters that relate to the

international competitiveness of any Australian industry (s.

90(9A)(b)).

Finally, we note the judgments of the Federal Court, both at first instance and on appeal, of QIW Retailers Limited v Davids Holdings Pty Limited (1993) 42 FCR 255; (1993) ATPR 41-226 - a case that turned on its own facts and issues, which are different from those in the present matter.

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3.2

Undertakings

We mentioned earlier that Davids gave written undertakings to the Commission pursuant to s. 87B of the Act. Those undertakings are dated 29 May 1995, the same date as the date of the determination of the Commission. The undertakings were drafted substantially by Davids and their legal advisers, and

obviously were proffered to the Commission for the purpose of obtaining the Commission's authorization to the proposed acquisition. The undertakings are extensive. They occupy 14 pages. It is unnecessary to recite them save to say that, under the heading 'Purpose of Undertakings' appearing on the first page of the undertakings, the following appears:

'If Davids controls CBL, (our emphasis) these undertakings are intended to ensure the following outcomes and are given for the following purposes and shall be interpreted accordingly:

...'

The status of the undertakings was the subject of argument before us. Counsel for the Commission contended that the

undertakings were unlimited in their operation; and that, once given by Davids and accepted by the Commission, they are in force and will remain in force independently of the findings and

orders made by the Tribunal, unless and until Davids seeks the Commission's consent to withdraw or vary them, which can be done only with the consent of the Commission (s. 87B(2)).

Section 87B reads as follows:

'87B(1) The Commission may accept a

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written undertaking given by a person for the purposes of this section in connection with a matter in relation to which the Commission has a power or function under this Act (other than Part X).

(2) The person may withdraw or vary the undertaking at any time, but only with the consent of the Commission.

(3) If the Commission considers that the person who gave the undertaking has breached any of its terms, the Commission may apply to the Court for an order under subsection (4).

(4) If the Court is satisfied that the person has breached a term of the undertaking, the Court may make all or any of the following orders:

(a) an order directing the person to comply with that term of the undertaking;

(b) an order directing the person to pay to the Commonwealth an amount up to the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach;

(c) any order that the Court considers appropriate directing the person to compensate any other person who has suffered loss or damage as a result of the breach;

(d) any other order that the Court

considers appropriate.'

The argument is unsound. Plainly the undertakings were given by Davids to the Commission in association with and as part of its application for authorization, notwithstanding that the determination of the Commission does not state in terms that the authorization was granted by the Commission on the basis of the undertakings having been given. There is a reference in paragraph 8.1 (p 81) of the determination to the undertakings, but that is an ambulatory reference for the purpose only of

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describing the undertakings, and not for the purpose of

incorporating them into the conditions imposed by the Commission

upon the grant of authorization.

Also, the form of the Commission's determination mentioned earlier is such that the determination has not yet come into force and will not do so until the Tribunal makes a

determination on the review (paragraph 8.3(a)). If the Tribunal makes a determination on the review granting authorization, that determination will supplant the Commission's determination and

the Tribunal's determination is then deemed, by the operation of

s. 102(2), to be a determination by the Commission.

The undertakings have no existence independently of the application to the Commission for authorization and of the authorization subsequently granted by the Commission.

If the Tribunal decides to affirm the Commission's

determination, it may say whether all or any of the undertakings

are henceforth appropriate. It is only those undertakings, if any, which the Tribunal regards as being appropriate that spring to life after the Tribunal's determination as part of the affirmation by the Tribunal of the Commission's determination. The undertakings not regarded by the Tribunal as appropriate would not have life because they would not be part of the subject matter of the Tribunal's affirmation of the Commission's determination.

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There was some argument before us directed to the question whether the Tribunal could exercise the powers conferred on the Commission under s. 87B to accept written undertakings as part of the powers of the Tribunal conferred by s. 102(1), namely, that it may perform all the functions and exercise all the powers of the Commission. It was argued that the powers conferred on the Commission by s. 87B are peculiar to the Commission. We do not find it necessary to consider this question; nor do we express any view on whether s. 87B is a valid exercise of the power of the Parliament.

4. COMPANIES

4.1 Davids

Davids Limited is a publicly listed company incorporated in New South Wales. Its principal activities are the wholesale distribution of groceries, refrigerated foods, liquor and

general merchandise.

Grocery wholesaling is conducted by the Davids group through Davids Distribution Pty Limited in respect of operations in New South Wales and Queensland, through Davids Distribution (Victoria) Pty Limited in Victoria, and in South Australia and

the Northern Territory through Davids (SA) Limited, formerly Independent Holdings Limited ('IHL'). IHL was acquired by Davids in September 1994, following Davids' conversion to a public company and listing on the Australian Stock Exchange earlier that year.

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Davids is the largest grocery wholesaler in Australia, and it distributes some 15% of the branded packaged groceries sold

in Australia according to the statistics compiled by the trade

journal 'Retail World' - the conventional measure of market

share in the grocery distribution industry. The latest trade statistics published by the market research company A C Nielsen show that the Davids wholesaling companies supply some 1750 stores trading under numerous 'banner groups', including Jewel, Rainbow, Festival IGA, Foodtown, Clancy's, and Welcome Mart, along with convenience stores such as 7 Eleven, Food Plus, Shell Select, Quix, Quick Stop and Road Pantry.

Also, a large number of small businesses which cannot meet the minimum order requirements for wholesale delivery are supplied by Davids through 42 cash-and-carry warehouses operated by the Davids' subsidiary, Campbell's Cash and Carry Pty

Limited. Davids purchased the cash-and-carry business of CBL in August 1994, closing three of the eight warehouses and integrating the other five into Campbell's operations.

Davids and FAL share a 50-50 joint venture in Australian Liquor Marketers Pty Limited ('ALM'), which operates in all States except South Australia and is the largest Australian distributor of wines and spirits. Since its acquisition of IHL

in 1994, Davids is also a substantial distributor of wines and

spirits in South Australia.

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4.2 CBL

CBL is an unlisted public company incorporated in Victoria, conducting a similar range of activities to Davids, except for the cash-and-carry warehouse, which CBL sold to Davids in 1994.

From two warehouses in Sydney and Melbourne, CBL supplies some 520 stores in Victoria, New South Wales and Tasmania, trading as a number of banner groups, including Tuckerbag, Goodfellows, Payless and Rite-way. CBL also distributes liquor in Victoria, New South Wales and Tasmania.

Because CBL was not a party before the Tribunal in this matter, evidence received regarding CBL has been limited, and on occasion dated, being in most part assembled by the Commission from material in the Commission's hands on the occasion of the

original determination of Davids' application, and from earlier Commission investigations bearing on grocery distribution to which CBL was a party. Much of the information concerning CBL submitted by the Commission was confidential.

CBL's share register reflects a complex recent history. In early 1991, IHL acquired shares and convertible notes in CBL to the value of $16 million. These securities with their attendant rights passed to Davids on their acquisition of IHL. In the upshot, Davids holds more than 30% of CBL's shares. More recently Coles Myer took up convertible notes in CBL to the value of $20 million, which on conversion in 1997 or earlier could give Coles Myer a holding of up to 30% of CBL's shares, depending on the conversion price. Coles also holds a special

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share that gives it 19.99% of the voting rights, pending conversion. Neither Davids nor Coles is represented on the Board of CBL. In June 1995, both QIW and Resources and Industries Limited (RAI) announced their separate intentions to seek to acquire CBL, and both hold some shares in CBL. RAI subsequently elected not to proceed with its offer. QIW lodged its Part A Statement in relation to CBL with the Australian

Securities Commission on 24 July 1995.

After reporting a loss of $32.2 million in 1993-94, CBL announced an operating profit in the six months to December 1994, which the Chief Executive Officer described as marking 'the beginning of a sustained period of profitability for the company'. It seems that CBL is expected to report a profit for the full 1994-95 year. However, the recent QIW Part A Statement notes that this result will include some major non-recurring items.

During 1994, CBL commissioned KPMG Peat Marwick to examine and report on CBL's wholesaling business in New South Wales. The executive summary of their report dated August 1994 includes the following:

'CBL does not have the financial resources or existing strategy to compete in the market to either maintain or increase its market share. ... There are a number of factors which ... combine to present a risk profile for the CBL NSW grocery operation

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which would be unacceptable to the Board and shareholders. ... In the circumstances our recommendation is that CBL attempt to sell the NSW grocery operation ...'

4.3 QIW

QIW is a publicly listed company incorporated in

Queensland. Davids holds about 23% of the shares in QIW, but

has no representative on the Board of the company.

The company distributes wholesale groceries and refrigerated items, tobacco, confectionery and general merchandise from its central warehouse in Brisbane, and also operates 12 cash-and-carry outlets, from Lismore New South Wales to Cairns. With some 14% of the market for branded packaged groceries distributed from Queensland warehouses, QIW is the larger of the two independent grocery wholesalers operating in

Queensland, Davids being the other.

Until very recently, QIW has owned and operated 16 retail outlets, comprising 14 supermarkets in Central Queensland operated by its subsidiary Denman Bros Ltd, and two Q Super Store supermarkets near Brisbane. Having decided to vacate retail operations, as part of the restructuring and redirection of the company, QIW has sold in 1995 four large supermarkets to Coles, and plans also to sell, franchise or license the remainder.

4.4 Recent developments

Concurrently with the hearing of this matter, QIW has

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proceeded with its offer to acquire all the ordinary shares of CBL, conditional on acceptance by 90% of CBL shareholders. Its intention to make the offer was announced on 15 June 1995.

During the hearing before the Tribunal, it filed a Part A Statement on 24 July 1995, and a revised Part A Statement dated 29 August 1995. The original QIW offer was varied in a notification to the Australian Securities Commission ('ASC') on 15 September 1995, with the effect of reducing the minimum acceptance condition to 50.1% of CBL shares. In the result, QIW holds some 7% of CBL shares, but the voting of this holding is

constrained by a deed of settlement that QIW has entered into with the ASC, after the ASC questioned the standing of the relevant shares.

A parallel offer for CBL shares by Resources and Industry Limited (RAI), which was associated with a proposal for RAI to enter the grocery distribution industry by merging with Jewel Food Stores Limited ('Jewels'), was withdrawn on 31 July 1995. RAI's activity in the stock market in conjunction with this aborted offer left RAI holding around 19% of CBL shares. Press reports at the time suggested that the standing of these shares was also questioned by the ASC, but the Tribunal has no evidence on the point.

On 8 September 1995 Davids and Jewels announced agreement for Davids to acquire Jewels. A subsequent announcement stated

that settlement of the acquisition had been set for 17 October response to the Part A Statement of QIW as varied, with CBL's directors unanimously recommending that CBL's shareholders

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1995.

accept the proposed amended QIW offer in the absence of a higher bid. They noted that the offer, unless extended, remained open

until 16 October 1995.

On 22 September 1995, Davids advised the Australian Stock Exchange of its intention to accept the QIW offer in respect of Davids' shares in CBL, noting that Davids holds 32.1% of CBL's issued share capital, and also approximately 23% of QIW.

5. LIQUOR DISTRIBUTION

Both CBL and Davids (SA) distribute beer, wine and spirits (which taken together we describe as liquor), and Davids owns

half of the shares in Australian Liquor Marketers Pty Limited

('ALM') - the largest Australian liquor distributor which

distributes beer, wine and spirits in all States and Territories

except South Australia. ALM's largest customer is Campbell's Cash & Carry Pty Limited, a subsidiary of Davids. The combined market shares of Davids and ALM are such that a merger between CBL and Davids might be considered to have the potential to affect competition detrimentally.

ALM and Davids

Combined Liquor Market Share %

Liquor Wine &

Spirits

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NSW 19 41 Victoria 31 67 Tasmania 33 83 Australia 24 57

In its determination, the Commission adopted the view that a merger of CBL and Davids would not significantly affect competition regarding liquor distribution, because of the structure of liquor distribution in Australia and the relatively low barriers to entry. Issues related to competition in liquor

markets were not in contention at the hearing, and QIW offered

no evidence or argument in relation to the topic.

ALM operates eleven distribution warehouses across Australia (except in South Australia), from which beer, wine and spirits are delivered to hotels, liquor stores, supermarkets, other retail outlets, and other licensed premises. Independent liquor retailers supplied by ALM include licensed supermarkets

supplied by Davids with groceries and operating under banners owned by Davids. Woolworths' Macs stores are also supplied by ALM. In New South Wales, Victoria and Western Australia, Coles has contracted with Brambles Limited, the transport company, for

liquor distribution to its Liquorland chain of stores.

Liquorland is Australia's largest liquor retailer.

The channels for liquor distribution include, in addition to the wholesalers, direct supply by national brewing companies, cash-and-carry warehouses, specialist distributors servicing specific markets such as restaurants, and contract distribution by transport companies and others. Almost all packaged beer

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produced by the national brewing companies is said to be distributed directly to the retail outlet, so that ALM and other

liquor wholesalers handle little of this business. About 30% of

wine and spirit supplies are delivered directly.

Evidence from Mr A A Thompson, Managing Director of ALM, was that consumers' purchasing behaviour regarding liquor is highly sensitive to price, presumably because the unit price of

liquor is relatively high compared with that of most other

edible and potable products. Liquor retailers are obliged to price keenly, and therefore seek the cheapest source for supplies, and change readily between suppliers. Wholesale liquor licences are relatively easy to obtain.

6. THE GROCERY DISTRIBUTION INDUSTRY

6.1 The Australian industry

The grocery distribution industry is taken to comprise those enterprises and operators that are concerned directly with the purchase, warehousing, sale and delivery of grocery and related products to relevant retail outlets, and their retail sale to final consumers. It includes two related industries defined under the official ANZSIC system, viz. ANZSIC 4719,

Grocery Wholesaling n.e.c, and ANZSIC 5110, Supermarket and

Grocery Stores.

tabulation demonstrates. The figures come from the latest

retail census by the Australian Bureau of Statistics.

The industry is a significant one, as the following

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Supermarkets and grocery stores

1991/92

Number of locations 9,476 Persons employed 179,619

Wages and salaries $ 2,065 million Retail sales $ 25,018 million

6.2 A history of structural change

In Australia, the history of grocery distribution as it emerged in evidence to the Tribunal exhibits a theme of constant

structural change over a long period. As late as the 1950s, the predominant grocery retailer was still the traditional corner store, each store a quite independent small business. Several competing grocery wholesalers were normally interposed between the grocery supplier (who might be an importer or a manufacturer) and the grocery retailer. The wholesaler purchased products in quantity from suppliers according to negotiated terms, received them into the warehouse, and offered them for sale to retailers. The retailer ordered smaller suitable quantities of a variety of products from a wholesaler, according to agreed terms of trade, accepted their delivery into the retail shop, and offered them for sale to consumers.

Only a few major grocery wholesalers remain in business today. The history of Davids typifies the growth strategies of the surviving wholesalers, involving the aggregation of smaller competitors. Having entered grocery wholesaling in Sydney as a family business in 1935, Davids organised two voluntary groups

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among its retailing customers in 1963, and provided them with some retail services. Davids acquired the liquor wholesaler Harbottle Brown & Co Pty Limited in 1968, and A.G.Campbell, the major New South Wales cash-and-carry wholesaler, in 1979. Around 1980, Davids introduced the Black & Gold brand of generic groceries, and expanded the support services offered to retailers. Three wholesale houses were acquired in Victoria in 1984/85. In 1986, Davids sought to acquire QIW; but failing to do so, it opened a warehouse in Brisbane in competition with

QIW. The Clancy's chain of supermarkets was acquired from

Woolworths in 1988, and the 100 Clancy's retail stores were on- sold to independent franchise operators. Victorian Grocery Distributors Pty Limited (VGD) was acquired in 1992, followed by rationalization of the retail banner groups supplied by Davids in Victoria, New South Wales, Australian Capital Territory and

Queensland. Davids became a listed public company in 1994, and

shortly thereafter moved to acquire 100% of IHL, a public company that had grown similarly from its original form as a grocery cooperative to become the only major grocery wholesaler operating in South Australia. Just previously, IHL had failed in an attempt to acquire FAL, the major Western Australian wholesaler. As a consequence of these acquisitions, Davids operates in New South Wales, Victoria, Queensland, South Australia and the Northern Territory.

In Victoria CBL grew, also largely by the aggregation of

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smaller competitors, to become the other major grocery wholesaler in that State. It also operates a warehouse in Sydney in competition with Davids, while CBL customers in Tasmania are supplied from CBL’s Melbourne warehouse.

In Queensland QIW was the only surviving independent grocery wholesaler until Davids opened its warehouse in Brisbane. FAL remains the only surviving independent grocery wholesaler operating in Western Australia. It has avoided competition with other Australian wholesalers and has expanded into New Zealand. In 1992 AIW was established by the Cannon

Food Barn Retail Group, with a warehouse in Canberra. This small regional wholesaler supplies retailers in the Australian Capital Territory and in neighbouring areas of New South Wales, and offers a third choice of wholesale supplier (after Davids and CBL) to retailers in its area of activity.

Australia/Asia Pacific Wholesalers Pty Limited (AAW) is owned jointly by the major independent wholesalers, Davids, CBL, FAL and QIW. The AAW structure allows them to pool their buying power in purchasing from grocery suppliers, where that is advantageous. AAW also holds the trademark for the ‘Black & Gold’ range of generic grocery products, and negotiates with various manufacturers to supply products packaged under the ‘Black & Gold’ brand. Davids, QIW and FAL have access to this range of products, sharing rebates negotiated with suppliers in proportion to the volume each sells, and sharing AAW’s operating costs. CBL separately offers the ‘Payless’ generic product range to its retail customers. Because generic grocery products (known also as 'house brand products') are purchased and sold at

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reduced prices, they are an important competitive device for

independent and chain retailers alike.

Each independent wholesaler, including Davids, CBL and QIW,

has instituted structures linking them with ‘banner groups’ of

independent retailers that adopt a common public face and some

uniformity in their marketing approach, and to whom the wholesaler supplies both goods and retail services. The aim of these affiliations is to improve the organisation of the independent distribution chain, and to achieve greater

competitive strength for both the wholesaler and the retailer.

The above changes in concentration and in structural associations within the independent sector have occurred primarily in response to the rise of an alternative commercial structure for grocery distribution, viz. the vertically integrated chain supermarket.

The Tribunal notes that these changes have in turn changed grocery industry usage as to the meaning of the word 'independent'. Today, to speak of 'independent' grocery wholesaling and retailing refers primarily to a shared independence from the competing integrated chains, rather than

to independence of wholesalers and retailers in the 'independent' sector from each other, as was once the case. The Tribunal did hear numerous references to the 'fierce independence' of the small grocery-shopkeeper, but plainly that

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sense of independence, where it exists, now obtains within a

much narrower ambit than before.

In the parallel system of grocery distribution that has emerged and come to dominate the Australian food retailing industry, a large number of stores are owned and operated by a

company as a chain of retail supermarkets. The scale of operations allows direct purchase from suppliers at good prices, and the operation of an integrated warehousing and delivery system to service the chain of retail stores. The major retail supermarket chains in Australia are national in the scope of their operations. They are Woolworths (trading in Victoria as Safeway), Coles and Franklins.

Major Grocery distributors in Australia

No of stores supplied *

Retail chains

Woolworths 490 Coles 500 Franklins 240

Wholesalers

Davids (inc IHL) 1,750

CBL 520

FAL 380

QIW 670

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* approx store numbers, bannered stores only

While the vertically integrated chain supermarket and the wholesaler/ banner group systems predominate, other grocery distribution arrangements also exist in Australia. These

include the hybrid system that applies in Tasmania, where

Woolworths has joined with local business interests to conduct a traditional wholesale distribution system, supplying grocery retailers (most of them associated in banner groups) who are otherwise independent of the chain stores.

Other chains of retail supermarkets have a common ownership, notably Jewels which operates 96 supermarkets in New South Wales, Victoria, the Australian Capital Territory and Queensland. It has not considered it economic to operate its

own integrated company warehouse. Jewels arranges its own purchasing, but has Davids perform the warehouse handling and delivery on its behalf for a fee. Cannon Food Barns adopted the

alternative course by setting up AIW in Canberra in 1992. AIW supplies the thirteen Cannon stores and about thirty other retailers in its district, but is much smaller than either Davids or CBL, having penetrated only 1.2% of the total New South Wales/Australian Capital Territory market for branded packaged groceries

Further to the conventional general wholesaling channels, other channels of distribution to retailers are available. In all States, some suppliers of high volume branded products (cigarettes, soft drinks, snack foods, bread, biscuits and milk

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are the most common) prefer, or are willing, to by-pass the warehouses' function and to deliver products to retail stores direct, subject to minimum purchasing requirements. This distribution channel is known in the industry as the 'route

trade'. For 'convenience stores' with a narrow product range comprised largely of popular items (typified by the stores associated with petrol outlets), a significant proportion of store stock may be delivered direct by product suppliers, with the less popular items being purchased through an independent wholesaler. Davids also supplies such stores through distinct warehouse arrangements pitched to their special requirements. Other small traders with a level of grocery purchases that falls short of minimum delivery requirements are encouraged to purchase their supplies from a cash-and-carry warehouse.

A retail buying group might also, as is not uncommon in liquor retailing, arrange for their joint purchases to be handled and delivered to the individual stores by a contractor.

The Tribunal heard evidence of current efforts to introduce

such a system in Queensland, and potentially in other States.

Overall, the Tribunal finds it to be characteristic of the grocery distribution industry in Australia that it has evolved structurally and continues to evolve, in response to competition among the companies and businesses that comprise it. The underlying imperative for this competition has been the need for retailers to respond to major shifts in Australian lifestyles and in the preferences of Australian consumers. The straightforward and traditional pattern of many decades ago has been largely supplanted. Where grocery wholesalers and counter-

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service grocery retailers once competed among themselves, and traded to supply the consumer with groceries through a system with two distinct functional levels, new ways to distribute groceries have developed and have come to operate in parallel to the wholesaler-grocery store channel.

The dominant model for grocery retailing is now the self- service store, increasingly a large supermarket with a widening range of goods on offer. Also, the integrated retail chain has appeared to exploit its opportunities. The successors to the traditional wholesale and retail members of the industry have sought and are seeking ways to counter this commercial challenge. Today, fully independent retail grocers who have no affiliation with a buying group or a particular wholesaler, and who do not belong to a 'banner group' of retailers, appear to transact less than 1% of retail sales of groceries.

6.3 Diversity in store size and character

Just as grocery distribution in Australia is conducted within a variety of changing business structures, so Australian grocery retail outlets, whether they are members of an integrated chain , or are independent stores purchasing through

wholesalers, exhibit wide and shifting variety in size, style,

product range and level of service.

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Chain-store groups brand their self-service supermarkets with the trading name of the chain, adopt a common appearance and style, and stock a similar product range, so that the stores can be seen by consumers to have a common, predictable and familiar character for consumers, pitched to suit their needs

and buying preferences comprehensively. The scale of operations of the chains allows them to buy well, to attract custom by offering ‘specials’ on popular items, and to advertise through the media across a district or region.

Among independent stores, similar distinctions in style and selling practice have emerged. These are reflected in the use of a common 'banner' (covering name and appearance) by stores of similar size and character which are supplied by the same wholesaler. All major independent wholesalers will supply a wide variety of independent retail outlets, and organise into a number of voluntary 'banner groups' those of its customer stores that wish to participate in such a group. Each banner group adopts a common public brand (its 'banner'), which is represented in the painting of store fronts and interiors. Members buy from their wholesale supplier according to common trading terms. They are offered a range of retail services by the wholesaler, are encouraged to follow common stocking and discounting policies, and have access to shared promotional

funds that can be applied to the pricing of 'specials' or

otherwise employed to common advantage. This approach to grocery retailing obviously follows and to a degree simulates the pattern of business employed successfully by the chain retailers, while retaining some independence of action for the retailer, notably in pricing policies. The major wholesalers also own and operate some stores on their own account, and often manage them as distinct banner groups. For example, FAL owns and operates the 'Action' chain of supermarkets in Western Australia.

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Other groups of retail stores are organised into 'banner groups' independently of the wholesaler from which they draw supplies, and may have common ownership. Other stores may be operated under a banner franchise from a common franchisor who seeks to exploit a defined market niche with a chain of similarly branded outlets. The small 24-hour convenience stores associated with petrol outlets are of this last type.

The wide differences in store size are illustrated in the following table assembled from evidence presented to the

Tribunal. The table lists the number of stores and the approximate average floor area in the stores of the three supermarket chains, and of four of Davids' banner groups.

Store trading areas

Chains and Davids Banner Groups

No. of stores Trading area m2

Average

Woolworths 495 1,980 Coles 500 1,800 Franklins 245 1,540 Davids:

Rainbow 4

4,480

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Festival 145 1,050 Foodtown 279 440 Welcome Mart 356 300

Stores of 1000 sq m or more are commonly characterized in the trade as supermarkets, and some supermarkets are very large indeed. The Rainbow supermarkets have been built to match in

size the largest of those operated by the chains. However, many self-service stores smaller than 1000 sq m call themselves supermarkets, although they are necessarily restricted in the product range they can offer. Trade parlance often characterizes such stores as 'top-up stores', on the basis of a reputed reliance on trade from consumers using them for supplementary purchases rather than for their full weekly shopping. The so-called convenience stores, which are usually located in association with a petrol retailer, sell a narrow

range of popular items on a trading area of less than 150 sq m.

The capacity of a supermarket or grocery store to sell a wide variety of items depends on its trading area. Grocery retailers of all sizes sell a range of dry groceries and some other foods (such as eggs and packaged milk), and increase and diversify their product range according to the size of the

store. It is now usual for the largest grocery supermarkets to supplement their shelves of dry groceries and their refrigerated chests of dairy products with displays of fresh fruit and vegetables, and counters for delicatessen items, fresh meat, chicken products, perhaps fresh fish, fresh bakery items and a variety of partly prepared foods. Stores of intermediate size stock only some of these supplementary products, most commonly produce and meat. This retailing formula, where a large supermarket offers a comprehensive range of 'fresh foods' around a core-product range of conventional dry groceries, is described as the 'food emporium' concept, and has proven very popular in recent years. The trend to this design of supermarket has been led by Woolworths Ltd., and is accepted in the industry as the

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likely future pattern of commercially successful food retailing.

Its effect has been to challenge the markets of traditional greengrocers, butchers and so on, as well as the traditional grocer, so that the full range of retail foods are potentially offered for sale in the one large retail outlet. The Franklins chain, which has grown hitherto by stressing a low-price, 'no- frills' image, has responded by introducing two new styles of

stores, 'Franklins Fresh' and 'Big Fresh', which reflect the

trend to extend product range to cover fresh meat and produce.

It is also common for the bigger supermarkets to offer a range of popular 'variety' items, such as hardware, stationery, toiletries, and simple items of clothing. Some also sell liquor. Smaller retail grocery stores that do not have the

space to offer a large or diverse product range have learnt that they must counter the large supermarkets by offering personal services directed to the convenience, and so greater satisfaction, of their customers, i.e. by offering a perception of distinctive 'value' against the attractions of one-stop shopping and low prices.

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Supermarkets and Grocery Stores

% Turnover by Commodity Group, 1881/92

Source: ABS statistics

Commodity Group %

Food groceries 42.7 Non-food groceries 12.6 Confectionery 6.6 Fresh meat and poultry 6.3 Fresh fruit and vegetables 6.2 Cigarettes and tobacco 4.9 Bread, cakes and pastries 4.2

Cosmetics, perfumes and

toiletries 2.9 Beer, wine and spirits 2.6 Takeaway food 2.5 Other goods 7.5

Total retail sales 99.0

Other revenue 1.0

Total turnover 100.0

The significance of the 'food emporium' concept for total trading volumes is apparent here, and evidence to the Tribunal indicated strongly that the trend has continued and accelerated

since these figures were collected, in the last retail census

that ABS conducted in 1992 The Tribunal notes further that

because the smaller grocery outlets do not have the trading

space to pursue this ‘food emporium’ model comprehensively, sales for commodity groups other than food groceries must be assumed to pass largely through the larger supermarkets, which in turn are predominantly operated by the chains.

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Another aspect of the changing patterns in the sale of food to the public emerges from the statistics which demonstrate that the public can now choose to buy food and prepare it at home, or to buy prepared food from a food service outlet, i.e. by eating at a restaurant or buying from a take-away outlet. A comparison between two sets of ABS retail census figures of 1968/69 and those of 1991/92 is useful in demonstrating market shifts of clear commercial significance to grocery distribution and retailing. The following table is drawn from a report by IBIS Business Information, submitted in evidence by Davids.

Food and Food Service Retailing

% of total sales by outlet type

1968/69 1991/92

Groceries and supermarket 57.2

60.9

Butchers 17.2 5.3

Fruit & vegetable stores 5.7

4.1

Liquor stores

1.8

4.6

Bread & cake stores	2.5	1.1
Confectionery & soft

drink stores

6.9

0.8

Sub-total retail 91.3 76.8

Food Service 8.7 23.2

Total 100.0 100.0

These figures illustrate movements in life-style in

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Australia over more than 20 years that in turn are reflected in changing patterns of consumer demand, in changing grocery distribution industry structures and in shifting retail

formats.

6.4 Market share trends

The market shares of organisations engaged in the Australian grocery distribution industry are conventionally described and compared in terms of the sales of branded

groceries (excluding generic products, house brands and fresh foods), as collated and reported by the trade journal 'Retail World'. 'Retail World' market share figures are accepted in the industry as meeting their practical needs for information on

relative market strength and on market share trends, and as a

sound basis for consideration of strategic directions.

The 'Retail World' methodology necessarily adopts some simplifications in order to collect useful statistics for such an intricate trading network. Notably, the statistics that purport to quantify retail sales are in practice collected at the wholesale level, on the basis of deliveries into warehouse from grocery suppliers of a limited sample of the thousands of

grocery products sold. Each grocery supplier is asked to represent sales in each State at 'approximate retail prices' based on their knowledge of the allowances and margins that

apply. Further, the ownership and location by State of the warehouse into which each product its delivered is assumed to identify sufficiently the location by State of its final retail sale. For the Tribunal, this last assumption of the methodology introduced some difficulty to interpreting evidence of the

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market shares of chain supermarkets and banner groups in particular States, because warehouses quite commonly supply retailers outside the State where they are located. For example QIW's Brisbane warehouse routinely delivers deep into northern

New South Wales, and the Melbourne grocery warehouses supply stores in the Riverina. The Tribunal has also noted that the expression of industry market shares on the basis of shares of the market for branded packaged groceries will, to an unknown extent, understate the share of total industry sales that passes through the supermarket chains, because of their disproportionate share of sales through grocery stores of some

other food commodity groups, notably the ‘fresh food’ categories. Despite these difficulties, the Tribunal has with appropriate caution accepted the 'Retail World' statistics as providing an adequate indication of the realities and the trends in market shares of the independent wholesalers and the

independent chains, for the purposes of this determination.

The latest complete figures that are available pertain to the year 1993/94. The Tribunal also has been given later figures that are broadly consistent with them.

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Market shares (%), 1993/4

Source: 'Retail World'

NSW

Vic

Qld

Tas

Aust

Woolworths 30.5

34.2

34.1

25.3

24.0 53.0

31.5

Coles

19.3

25.9

27.0

31.0

22.5 23.3

24.1

Franklins 27.0

8.5

16.0

5.2

14.2

Total	76.8	68.6	77.1	61.5	46.5	76.3	69.8
Chains

Davids/IHL 18.0

16.7

8.3

38.5

15.4

CBL

4.0

14.7

4.9

QIW

14.6

2.9

FAL

53.5

5.9

Other

1.2

23.7

1.1

Total	23.2	31.4	22.9	38.5	53.5 23.7	30.2
Independent

Notes: NSW includes ACT, and SA includes NT; Woolworths trades as Safeway in Victoria; in Tasmania, Woolworths and the independents share warehouse facilities.

The annual 'Retail World' statistics for the past twenty years, as consolidated in evidence to the Tribunal, show a steady and continuing shift in the structure of the market, leading to the present situation where the three major supermarket chains - Woolworths, Coles and Franklins - together account for about 70% of national sales of branded groceries. The following table, drawn from this evidence, summarises the trend.

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The table also serves to demonstrate the concentration of ownership that occurred among independent wholesalers during the period.

Market shares (%)

National trends 1975-1994 (YE June)

1975 1980 1985 1990 1994

Woolworths 17.7

21.0

29.0

28.5

31.5

Coles

17.5

19.7

23.1

21.7

24.1

Franklins

4.8

4.7

9.6

14.4

14.2

Total	40.0	45.4	61.7	64.6	69.8
chains

Davids

6.3

6.0

14.7

12.5

15.4

CBL	3.3	3.2	3.7	5.9	4.9
FAL	1.7	3.8	3.8	5.5	5.9
IHL	4.1	5.2	5.0	4.9
QIW	5.6	6.3	3.7	2.8	2.9

Other

39.0

30.1

7.4

3.8

1.1

Total	60.0	54.6	38.3	35.4	30.2
independents

The growth in the market share of the integrated retail chains has not been without some fluctuation over short periods:

Woolworths lost share for a time in the years after 1985; and Coles' supermarket sales fell away from 1991 to 1993. However, the clear long-term trend is for a decline in the market share of stores supplied by the independent wholesalers, and a rise in the market share of the vertically integrated retail chains. Submissions to the Tribunal were consistent in forecasting that the trend is likely to continue, in the absence of a more effective defence by the independent wholesale and retail sector of their diminishing market.

- 55 -

Apart from 'Retail World' statistics, market share

information that is more recent than the 1991/92 ABS figures is

limited. However, Woolworths Limited appears confident that its

market share growth will continue. Its news release of 23 August 1995, associated with the announcement to the Stock Exchange of its 1994/95 annual results, claimed a ‘Retail World’ market share of 32.1%, and forecast continuing sales growth to achieve a market share of 35% in five years. The same Woolworths statement also displayed statistics that support other evidence of recent market growth of the integrated chains

at the expense of other groups in the grocery distribution market. It stated that in the three years from 1992 to 1995, annual sales of the Woolworths' Supermarkets Group rose from $7.81 billion to $10.96 billion, an increase of 40%. According

to a commissioned report by IBIS Business Information Ltd that was submitted in evidence, growth in turnover for the whole of the national grocery store and supermarket industry over the same period is estimated at 17%, from $26.1 billion to $30.5 billion.

Trends in the total market shares of independent

- 56 -

wholesalers differ markedly between the States (i.e. according to the State where the warehouses are located), as shown in the following table, assembled from 'Retail World' statistics

submitted in evidence:

All independent wholesalers

Market share (%) by State, 1975-1994

1975 1980 1985 1990 1994

Queensland

60.0 42.7 27.0 25.0 22.9

NSW/ACT 50.0 43.6 33.5 31.0 23.2 Victoria 53.5 50.7 43.0 38.5 31.4

South Aust

64.0 61.6 58.0 57.5 38.5

Western Aust 67.0 53.3 47.0 53.6 53.5

Three observations can be made on this table, taken together with other evidence to the Tribunal: first, that the three States where independent wholesalers compete with each other (Queensland, New South Wales and Victoria) are the States where

loss of market share by independent wholesalers has been the

most severe; secondly, that the loss of market share in South Australia has occurred particularly since 1990, coincident with the emergence there of fierce competition between the chains following the entry of Franklins into the South Australian

market; and thirdly, that FAL as the sole Western Australian wholesaler has succeeded in holding its market share at the levels of 1980.

7. STRATEGIC RESPONSES OF INDEPENDENT WHOLESALERS

7.1 General

The steady decline in the national market share of independent

wholesalers and their associated retailers, the particular decline in New South Wales and Victoria, and the prospect that the trends could continue have placed businesses operating in the independent grocery distribution sector in something of a strategic predicament. As IBIS Business Information summed up the strategic problem in its advice to Davids:

- 57 -

'Over the past two decades, the supermarket and grocery store industry has grown at a faster rate than the retail sector by winning market share from speciality retailers. However with 80% of all food retail sales now in the hands of the supermarket and grocery store industry, growth by additional market share gains will become increasingly difficult. At the same time the food retailing industries are facing increased competition for the household food dollar from food service outlets. ...The battle for market share will therefore intensify in the second half of the nineties.

The independents have been unable to hold their market share in a growing industry. In a no growth environment competition from the chains will intensify. If the independents do not . . . respond to the chains, the decline in their market position is forecast to accelerate.'

Written submissions and oral evidence from witnesses for Davids make it plain that this assessment is accepted as valid within that company, and demands urgent attention so that suitable strategic responses are identified and implemented. For Davids, the problem is compounded by a further perception that, despite their position as the largest independent wholesaler, they can exercise little influence on their commercial environment. Davids see the thrust for change relevant to their market as being led by the vertically integrated retail chains with which they consider they compete.

As the Managing Director of Davids' operations in Victoria put

it in his submission:

'..the independent retailers compete in a market where

- 58 -

the parameters are set by the chains. It is the advertising of the chains that sets the general price expectations in the market place, and the standards that consumers expect in things like fresh foods.'

The Tribunal is satisfied on the QIW and FAL evidence, and

from documents submitted by the Commission in respect of CBL,

that the same broad propositions are also perceived and accepted by the other major wholesalers and have led all of them to consider and adopt a variety of business strategies directed to defending their market, and to improving their competitiveness,

commercial viability, and future prospects. In late 1994, the Chairman of QIW, at the company’s Annual General Meeting, said that a large decline in final profit was explained:

'..perhaps most importantly, [by] greatly increased competition from chain operators, including new store openings and resulting major price wars, impacting on our customers' businesses. This level of competition is rapidly changing the whole competitive dynamics of our industry. Your Board has the situation constantly under review to assess the likely impact ...and to develop strategies for protecting shareholder returns through time.'

Predictably, all the major wholesalers appear to have pursued strategies directed to improving internal efficiencies: for example, by seeking to reduce overheads and finance costs, and to raise productivity in all aspects of operations and administration. Indeed, at the meeting of shareholders already mentioned, QIW's Chairman spoke of 'a radical overhaul of our operations'.

Other strategies have been directed to defending or increasing

- 59 -

corporate size and commercial strength - strategies for acquisition or merger, strategies to improve the wholesaler's capital base, and strategies to expand operating volume in order to achieve the consequent warehouse efficiency and improved purchasing strength.

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to
ed
nt

to	s	to	la	tio	e
fit	ng	n	e	th
vi	tio	b	op
ne	ld	m
sa	bu	fro
be	ou	e
tri	th
d	e
e	te	on	w	e	lin
th	la	ey	rg
d
ise	re	c
a	th	la
en
ip
sc
e	re	re	di
ra	um	a	he	s,
pp	ol	us	es	e
iv
a	v	th	w	oc	tit
ve	nd	nd	n
io	pr	pe
ha	; a	a	sit	e	m
e	es	es	ui	iv
tit	co
iti	rc	cq
W
.	iv	ou	a	pe	o
t t
ht	ct	es	IW	m	ec
ug	a	l r	co	bj
so	of	ea	Q	e	su
is	n	f r	e
th	th	e

n	s.	tio	o	or	en	ar
io	na	ng	th	ts
at	nd	bi	vi	e
bl	ng	ke
riz	ki	m	sa	la
ai	tre	ar
ho
ut
a
o
w
f t
o
co
d
an
a
nt
se
av
un
s
ld
ou
m
b-
su
ch	re	re	e	g
hi	) a	n
io	ep	b	w
it	lin
at	ld	sa

38	r w	0%	liz	s r	ou	n,	le
- 1	fo	r 5	na	ng
vi	s w	io
ct	ho
n
io	ve	tio	sa	ng	Se	w
nt
sit	r o	ra	ts	vi	st	va
ui	o	e	os	sa	la
th	le
cq	%	c	sts	e	re
a	00	s:	se	th
co	he
he	1	ad	he	in
t t	er	he	T	e
es	ed	T
t.
ou
ith
th
he	o
tw
t.
gh	th
re	iz
as	en
ei	rim

th	n.	n	se	tis	e	fo	l b	tit
of	io	tio	he	er	b	th	al	pe
sit	isi	ld	ur
e	T	dv	ou	sm	om
ap	ui	qu	s.	, a	'fo
sh	cq	ac	ng	se	w	e	e
ot	i-c
y
el	a
ed	e
th	vi
sa	di
an
n
tio
isi
th
e	m
ro
nt
a
lik	os	b	p	no
m	ts	ch	qu	ld
e	op	fro	os	er	ac	ou	lso	e
av
th	pr	lt	c	r m	s'	a	h
ed	e	su	re	id	w
it	ld	ld
er	th	re	a	fo	av	ef	ou	ou
sid	om	to	nd
ki	y
pl	D	en	w
It	r w
on	fr	ly	st	up	e
th
b
of	.	ge
c	ic	ke	fir	f s	re	er
as	bl	li	s o	to	d	fa
h	pu	its	e	e	in	el	m
al	th	iv	k	ed
un	e
th	ef	of	m
er	at	nd	w
er	os
en	r t	rn
ib
Tr	o
t t	b
ic
s
fit	tte	te
al	co
se	um
ns
op
pr
en	bl	ne	be
e	e	e	co	e
Th	m
tri	Pu	Be	g	Th	Th	Th

b	iv	s	id	te
ld	s g	er	av	ra
ou	th	D	pe
w
ne
es
oc
o
nd	e
bl	o
to
pr	na
a	ce
o
to	e
iv
tit
es
ar
e
ill	en
o	sh	w	m
tw	pe	d	as	om
m	m
co	ue
iss	d
ite
c
ot
ro	l n
f	e
th	e	im	al
ria	th	L
ch	sh

N	ou	L	D	se	be	99
in	A	g	er	n	1
rs	w
it	N
U	in
riz	th	io
at	ay
le
sa	as	IB	ho	o
nd	riz	M
le	e
iv	TR	ut	s a	ho	9
2
ho
w	tit
pe
E
TH
a
by	re
ha
ut
a	on
n

Th	er	te	tic	nt	tin	s L
th	ep	ac	e	ee	id
n.	o	S	Pr	ly	av
or	29	nt	m
io	e	al
ut	e	n	ad	se	er	D
rib	iv
tit	o	Tr	re	en
y
b
ist	on	s p	en
pe	isi	e	g
d	th	s i	at	iv
ry	om	ec	of	id	st	s g
ce	i-c	d	av	ca	ng
nt	its	n
ro	io	D	e	ki
g
or
a
no
e
av
g
at
in	ch
hi
b
ay	rta
de
t f	e	al	rm	m
av	w	un
te	ch
ke	un	to
h	de	hi	e
ar	ld	rib	e
os	th
m	ou	T	e
th	th
w
es	at
e	w	he	s	ot	th
id	s t	ie	an	es
-w	d
an	ar	th	v	ot
on	he
lia
tra	e
lin	as	v
al	er
th	f t	n
al
re	un	t o	un
us	ip	(o
sc	se	ib	en	ib
A	di	he	Tr	d
ite	c	Tr
e	r t	er
th	e
iv	Fo	e
Th	im	p	e
Th
is	tit	L	fty
pe	rs	fi
ch	ye
hi	an
m	Bu
co	th
w

C	c	pe
in	to	o
es	d	to
iti	ite
ur	ce
im	en
ec	s L
s	m
er	id	om
th	av	c
ot
o	D
nd	e	l n
bl	al
a	na
es	sh
ar	e
ill	d
sh	w	an
d	as	d
ue	ce
iss	d	en
ite	m
e	im
th	L	om
ll	c
a	rs

CBL	3.3	3.2	3.7	5.9	4.9
FAL	1.7	3.8	3.8	5.5	5.9
IHL	4.1	5.2	5.0	4.9
QIW	5.6	6.3	3.7	2.8	2.9

t c	su	ac	re	e,	n	se	ou	en	er	en
ke	.4	e	ld	nc	tio	es	eh	m	nd
ar	7	th	ou	re	ra	str	ar	m
ve	su	pe
m
s'
id
av
nd
a
.3
7
ns
n
io
in
op
is
r w
ge
er
ffe
di
a
e
ak
io
er
et
d
er
e
H
.
ns
ai
w
ed
at
lic
ie
ch
a
its
on
c
to
e
bl
de
in
he
, t
D
g
rin
pa
io
ct
Se
h
in
at
th
m
he
, t
nd
m
ld
ou
rth
'fu
a
ch
e
th
e.
up
d
of
n
h
ug
ho
s t
ila
va
a
ns
er
rli
ea
m
co
.
gy
lo
d
fie	co
se	r w
ge
n
po
t u
i.
s',
io
at
in
a
al	tio
op
d
te
en
l,
ita
ap
c
to
s
es
cc
no
ch
te
n
io
at
rm
fo
sti
te
d,
Lt
t.
us
A
es
d
an
';
ow
fl
to
its
ef
er
l m
tia
ar
p
a
er
th
ai
w
y
pl
im
t s
no
or
tit
pe
om
c
ur
o
to
im
el
e
th
ow
, h
oo
un
ib
Tr
e
th
to
ed
nt

to	s	to	la	tio	e
fit	ng	n	e	th
vi	tio	b	op
ne	ld	m
sa	bu	fro
be	ou	e
tri	th
d	e
e	te	on	w	e	lin
th	la	ey	rg
d
ise	re	c
a	th	la
en
ip
sc
e	re	re	di
ra	um	a	he	s,
pp	ol	us	es	e
iv
a	v	th	w	oc	tit
ve	nd	nd	n
io	pr	pe
ha	; a	a	sit	e	m
e	es	es	ui	iv
tit	co
iti	rc	cq
W
.	iv	ou	a	pe	o
t t
ht	ct	es	IW	m	ec
ug	a	l r	co	bj
so	of	ea	Q	e	su
is	n	f r	e
th	th	e

n	s.	tio	o	or	en	ar
io	na	ng	th	ts
at	nd	bi	vi	e
bl	ng	ke
riz	ki	m	sa	la
ai	tre	ar
ho
ut
a
o
w
f t
o
co
d
an
a
nt
se
av
un
s
ld
ou
m
b-
su
ch	re	re	e	g
hi	) a	n
io	ep	b	w
it	lin
at	ld	sa

38	r w	0%	liz	s r	ou	n,	le
- 1	fo	r 5	na	ng
vi	s w	io
ct	ho
n
io	ve	tio	sa	ng	Se	w
nt
sit	r o	ra	ts	vi	st	va
ui	o	e	os	sa	la
th	le
cq	%	c	sts	e	re
a	00	s:	se	th
co	he
he	1	ad	he	in
t t	er	he	T	e
es	ed	T
t.
ou
ith
th
he	o
tw
t.
gh	th
re	iz
as	en
ei	rim

th	n.	n	se	tis	e	fo	l b	tit
of	io	tio	he	er	b	th	al	pe
sit	isi	ld	ur
e	T	dv	ou	sm	om
ap	ui	qu	s.	, a	'fo
sh	cq	ac	ng	se	w	e	e
ot	i-c
y
el	a
ed	e
th	vi
sa	di
an
n
tio
isi
th
e	m
ro
nt
a
lik	os	b	p	no
m	ts	ch	qu	ld
e	op	fro	os	er	ac	ou	lso	e
av
th	pr	lt	c	r m	s'	a	h
ed	e	su	re	id	w
it	ld	ld
er	th	re	a	fo	av	ef	ou	ou
sid	om	to	nd
ki	y
pl	D	en	w
It	r w
on	fr	ly	st	up	e
th
b
of	.	ge
c	ic	ke	fir	f s	re	er
as	bl	li	s o	to	d	fa
h	pu	its	e	e	in	el	m
al	th	iv	k	ed
un	e
th	ef	of	m
er	at	nd	w
er	os
en	r t	rn
ib
Tr	o
t t	b
ic
s
fit	tte	te
al	co
se	um
ns
op
pr
en	bl	ne	be
e	e	e	co	e
Th	m
tri	Pu	Be	g	Th	Th	Th

b	iv	s	id	te
ld	s g	er	av	ra
ou	th	D	pe
w
ne
es
oc
o
nd	e
bl	o
to
pr	na
a	ce
o
to	e
iv
tit
es
ar
e
ill	en
o	sh	w	m
tw	pe	d	as	om
m	m
co	ue
iss	d
ite
c
ot
ro	l n
f	e
th	e	im	al
ria	th	L
ch	sh

N	ou	L	D	se	be	99
in	A	g	er	n	1
rs	w
it	N
U	in
riz	th	io
at	ay
le
sa	as	IB	ho	o
nd	riz	M
le	e
iv	TR	ut	s a	ho	9
2
ho
w	tit
pe
E
TH
a
by	re
ha
ut
a	on
n

Th	er	te	tic	nt	tin	s L
th	ep	ac	e	ee	id
n.	o	S	Pr	ly	av
or	29	nt	m
io	e	al
ut	e	n	ad	se	er	D
rib	iv
tit	o	Tr	re	en
y
b
ist	on	s p	en
pe	isi	e	g
d	th	s i	at	iv
ry	om	ec	of	id	st	s g
ce	i-c	d	av	ca	ng
nt	its	n
ro	io	D	e	ki
g
or
a
no
e
av
g
at
in	ch
hi
b
ay	rta
de
t f	e	al	rm	m
av	w	un
te	ch
ke	un	to
h	de	hi	e
ar	ld	rib	e
os	th
m	ou	T	e
th	th
w
es	at
e	w	he	s	ot	th
id	s t	ie	an	es
-w	d
an	ar	th	v	ot
on	he
lia
tra	e
lin	as	v
al	er
th	f t	n
al
re	un	t o	un
us	ip	(o
sc	se	ib	en	ib
A	di	he	Tr	d
ite	c	Tr
e	r t	er
th	e
iv	Fo	e
Th	im	p	e
Th
is	tit	L	fty
pe	rs	fi
ch	ye
hi	an
m	Bu
co	th
w

C	c	pe
in	to	o
es	d	to
iti	ite
ur	ce
im	en
ec	s L
s	m
er	id	om
th	av	c
ot
o	D
nd	e	l n
bl	al
a	na
es	sh
ar	e
ill	d
sh	w	an
d	as	d
ue	ce
iss	d	en
ite	m
e	im
th	L	om
ll	c
a	rs

[1995] ATPT 2

17 Oct 1995

CBL	3.3	3.2	3.7	5.9	4.9
FAL	1.7	3.8	3.8	5.5	5.9
IHL	4.1	5.2	5.0	4.9
QIW	5.6	6.3	3.7	2.8	2.9

t c	su	ac	re	e,	n	se	ou	en	er	en
ke	.4	e	ld	nc	tio	es	eh	m	nd
ar	7	th	ou	re	ra	str	ar	m
ve	su	pe
m
s'
id
av
nd
a
.3
7
ns
n
io
in
op
is
r w
ge
er
ffe
di
a
e
ak
io
er
et
d
er
e
H
.
ns
ai
w
ed
at
lic
ie
ch
a
its
on
c
to
e
bl
de
in
he
, t
D
g
rin
pa
io
ct
Se
h
in
at
th
m
he
, t
nd
m
ld
ou
rth
'fu
a
ch
e
th
e.
up
d
of
n
h
ug
ho
s t
ila
va
a
ns
er
rli
ea
m
co
.
gy
lo
d
fie	co
se	r w
ge
n
po
t u
i.
s',
io
at
in
a
al	tio
op
d
te
en
l,
ita
ap
c
to
s
es
cc
no
ch
te
n
io
at
rm
fo
sti
te
d,
Lt
t.
us
A
es
d
an
';
ow
fl
to
its
ef
er
l m
tia
ar
p
a
er
th
ai
w
y
pl
im
t s
no
or
tit
pe
om
c
ur
o
to
im
el
e
th
ow
, h
oo
un
ib
Tr
e
th
to
ed
nt

to	s	to	la	tio	e
fit	ng	n	e	th
vi	tio	b	op
ne	ld	m
sa	bu	fro
be	ou	e
tri	th
d	e
e	te	on	w	e	lin
th	la	ey	rg
d
ise	re	c
a	th	la
en
ip
sc
e	re	re	di
ra	um	a	he	s,
pp	ol	us	es	e
iv
a	v	th	w	oc	tit
ve	nd	nd	n
io	pr	pe
ha	; a	a	sit	e	m
e	es	es	ui	iv
tit	co
iti	rc	cq
W
.	iv	ou	a	pe	o
t t
ht	ct	es	IW	m	ec
ug	a	l r	co	bj
so	of	ea	Q	e	su
is	n	f r	e
th	th	e

n	s.	tio	o	or	en	ar
io	na	ng	th	ts
at	nd	bi	vi	e
bl	ng	ke
riz	ki	m	sa	la
ai	tre	ar
ho
ut
a
o
w
f t
o
co
d
an
a
nt
se
av
un
s
ld
ou
m
b-
su
ch	re	re	e	g
hi	) a	n
io	ep	b	w
it	lin
at	ld	sa

38	r w	0%	liz	s r	ou	n,	le
- 1	fo	r 5	na	ng
vi	s w	io
ct	ho
n
io	ve	tio	sa	ng	Se	w
nt
sit	r o	ra	ts	vi	st	va
ui	o	e	os	sa	la
th	le
cq	%	c	sts	e	re
a	00	s:	se	th
co	he
he	1	ad	he	in
t t	er	he	T	e
es	ed	T
t.
ou
ith
th
he	o
tw
t.
gh	th
re	iz
as	en
ei	rim

th	n.	n	se	tis	e	fo	l b	tit
of	io	tio	he	er	b	th	al	pe
sit	isi	ld	ur
e	T	dv	ou	sm	om
ap	ui	qu	s.	, a	'fo
sh	cq	ac	ng	se	w	e	e
ot	i-c
y
el	a
ed	e
th	vi
sa	di
an
n
tio
isi
th
e	m
ro
nt
a
lik	os	b	p	no
m	ts	ch	qu	ld
e	op	fro	os	er	ac	ou	lso	e
av
th	pr	lt	c	r m	s'	a	h
ed	e	su	re	id	w
it	ld	ld
er	th	re	a	fo	av	ef	ou	ou
sid	om	to	nd
ki	y
pl	D	en	w
It	r w
on	fr	ly	st	up	e
th
b
of	.	ge
c	ic	ke	fir	f s	re	er
as	bl	li	s o	to	d	fa
h	pu	its	e	e	in	el	m
al	th	iv	k	ed
un	e
th	ef	of	m
er	at	nd	w
er	os
en	r t	rn
ib
Tr	o
t t	b
ic
s
fit	tte	te
al	co
se	um
ns
op
pr
en	bl	ne	be
e	e	e	co	e
Th	m
tri	Pu	Be	g	Th	Th	Th

b	iv	s	id	te
ld	s g	er	av	ra
ou	th	D	pe
w
ne
es
oc
o
nd	e
bl	o
to
pr	na
a	ce
o
to	e
iv
tit
es
ar
e
ill	en
o	sh	w	m
tw	pe	d	as	om
m	m
co	ue
iss	d
ite
c
ot
ro	l n
f	e
th	e	im	al
ria	th	L
ch	sh

N	ou	L	D	se	be	99
in	A	g	er	n	1
rs	w
it	N
U	in
riz	th	io
at	ay
le
sa	as	IB	ho	o
nd	riz	M
le	e
iv	TR	ut	s a	ho	9
2
ho
w	tit
pe
E
TH
a
by	re
ha
ut
a	on
n

Th	er	te	tic	nt	tin	s L
th	ep	ac	e	ee	id
n.	o	S	Pr	ly	av
or	29	nt	m
io	e	al
ut	e	n	ad	se	er	D
rib	iv
tit	o	Tr	re	en
y
b
ist	on	s p	en
pe	isi	e	g
d	th	s i	at	iv
ry	om	ec	of	id	st	s g
ce	i-c	d	av	ca	ng
nt	its	n
ro	io	D	e	ki
g
or
a
no
e
av
g
at
in	ch
hi
b
ay	rta
de
t f	e	al	rm	m
av	w	un
te	ch
ke	un	to
h	de	hi	e
ar	ld	rib	e
os	th
m	ou	T	e
th	th
w
es	at
e	w	he	s	ot	th
id	s t	ie	an	es
-w	d
an	ar	th	v	ot
on	he
lia
tra	e
lin	as	v
al	er
th	f t	n
al
re	un	t o	un
us	ip	(o
sc	se	ib	en	ib
A	di	he	Tr	d
ite	c	Tr
e	r t	er
th	e
iv	Fo	e
Th	im	p	e
Th
is	tit	L	fty
pe	rs	fi
ch	ye
hi	an
m	Bu
co	th
w

C	c	pe
in	to	o
es	d	to
iti	ite
ur	ce
im	en
ec	s L
s	m
er	id	om
th	av	c
ot
o	D
nd	e	l n
bl	al
a	na
es	sh
ar	e
ill	d
sh	w	an
d	as	d
ue	ce
iss	d	en
ite	m
e	im
th	L	om
ll	c
a	rs