Court:Elias CJ, Blanchard, Tipping, McGrath and Wilson JJ
Counsel:M N Dunning, T P Mullins and I T F Hikaka for Appellant

D Goddard QC, K L Clark QC and B Hamlin for First Respondent
M G Colson and R E Brown for Second Respondent

Judgment:26 August 2009

JUDGMENT OF THE COURT

A The appeal is allowed.
BIt is declared that the notice under s 98 of the Commerce Act 1986 given by the Commerce Commission on 31 October 2007 was ultra vires and invalid. It is ordered that the notice is quashed.

CThe Commerce Commission is ordered to pay the appellant costs in this Court of $15,000 together with reasonable disbursements as fixed by the Registrar. Costs in the Court of Appeal and the High Court should now be fixed respectively by those Courts in light of this Court’s judgment.

REASONS
(Given by Blanchard J)
Introduction
[1]       This appeal concerns the lawfulness of a notice served on AstraZeneca Ltd, a pharmaceutical supplier, by the Commerce Commission. The notice required AstraZeneca to provide the Commission with specified documents and information relating to certain of its pharmaceutical products and some dealings with the Crown’s drug funding agency, Pharmaceutical Management Agency (Pharmac). These included copies of correspondence relating to negotiations between AstraZeneca and Pharmac. The issue on the appeal is whether an exemption from Part 2 of the Commerce Act 1986 relating to pharmaceutical agreements to which Pharmac is a party has the consequence in the particular circumstances in which the notice was served on AstraZeneca that the Commerce Commission was exceeding its powers under the Commerce Act.
The statutory provisions
[2]       Part 2 of the Commerce Act prohibits various restrictive practices, namely practices substantially lessening competition,[1] price fixing,[2] taking advantage of market power[3] and resale price maintenance.[4] It also provides for certain exceptions and savings.[5]
[1]     Sections 27 – 29.
[2]     Sections 30 – 34.
[3]     Sections 36 – 36B.
[4]     Sections 37 – 42.
[5]     Sections 43 – 46.
[3]       The powers of the Commerce Commission are not conveniently set out in one place in the Act. Helpfully, however, they have been summarised by Cooke P in the following way in Commerce Commission v Telecom Corporation of New Zealand Ltd:[6]
[6] [1994] 2 NZLR 421 (CA) at p 428.
A survey of the Commerce Act brings out that the Commission’s functions and powers under it are threefold. It is to consider and determine applications for clearances or authorisations for restrictive trade practices and business acquisitions; it has reporting and recommendatory functions regarding the imposition of price control on particular goods and services, and where price control is in force jurisdiction to authorise prices and make other decisions (eg to obtain or accept an undertaking under s 72); and it has the function…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Astrazeneca Ltd v Commerce Commission

Details

AGLC: Astrazeneca Ltd v Commerce Commission [2009] NZSC 92
Case: [2009] NZSC 92
Decision Date: 26 August 2009

CaseChat Overview and Summary

The Supreme Court of New Zealand was asked to determine the validity of a notice issued by the Commerce Commission to AstraZeneca Ltd under section 98 of the Commerce Act 1986, which required AstraZeneca to provide specified documents and information relating to certain pharmaceutical products and negotiations with Pharmac, New Zealand’s drug funding agency. The appeal was about whether the exemption from Part 2 of the Commerce Act relating to pharmaceutical agreements to which Pharmac is a party had the consequence that the Commerce Commission exceeded its powers when it issued the notice to AstraZeneca.

The Supreme Court held that the notice was ultra vires and invalid because the Commission had no reasonable basis for suspecting that AstraZeneca may have engaged in conduct that could possibly constitute a contravention of Part 2 of the Commerce Act, as qualified by section 53 of the New Zealand Public Health and Disability Act 2000. The Court found that all the relevant actions taken by AstraZeneca were done for the purposes of obtaining an agreement with Pharmac, and therefore, the exemption applied to any anti-competitive behaviour on AstraZeneca's part directed to that end during the negotiating process. The Court concluded that there was no proper basis for the issuing of the notice and that the Commission exceeded its powers.

The Supreme Court allowed the appeal, declared the notice under section 98 of the Commerce Act 1986 given by the Commerce Commission on 31 October 2007 to be ultra vires and invalid, and ordered that the notice is quashed. The Court also ordered the Commerce Commission to pay AstraZeneca costs in the Supreme Court of $15,000 together with reasonable disbursements as fixed by the Registrar. Costs in the Court of Appeal and the High Court were to be fixed by those Courts in light of the Supreme Court's judgment.

Orders