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Payment Express Ltd v Paymark Ltd

Payment Express Ltd v Paymark Ltd

Case [2019] NZHC 2027 16 August 2019

Anti-competitive Practices

Market Power

Confidentiality in Discovery

Breach of Contract

Unconscionable Conduct

Competition Law

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2016-404-2872

[2019] NZHC 2027

BETWEEN
PAYMENT EXPRESS LIMITED

Plaintiff

AND

PAYMARK LIMITED

Defendant

Hearing: 5 July 2019

Appearances:

N Flanagan and J Carlyon for the Plaintiff

J Hodder QC and J Upson for the Defendant

Judgment:

16 August 2019

JUDGMENT OF GAULT J

This judgment was delivered by me on 16 August 2019 at 4:00 p.m. pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar

……………………………………

Solicitors / Counsel:
Mr N Flanagan and Ms J Carlyon, Meredith Connell, Auckland Mr J Hodder QC, Barrister, Wellington
Mr J Upson, Chapman Tripp, Auckland

PAYMENT EXPRESS LTD v PAYMARK LTD [2019] NZHC 2027 [16 August 2019]

[1] In this proceeding Payment Express Ltd (PE) alleges that Paymark Ltd has taken advantage of its substantial power in the EFTPOS bank switching market for an anti-competitive purpose in breach of s 36 of the Commerce Act 1986. The proceeding is hard fought – reflecting that the parties are vigorous competitors. The immediate issue concerns PE’s access to documents discovered by Paymark as confidential with inspection restricted to counsel and independent experts. PE applies to set aside those restrictions so that its CEO, Mr Cullen, can review the documents.

[2] A preliminary procedural issue was resolved at the outset of the hearing with a supplementary affidavit filed by each party being admitted by consent.

The proceeding

[3] PE provides electronic payment hardware and services, including EFTPOS machines. Paymark owns and operates the central transaction processing system (switch) for EFTPOS transactions in New Zealand, which routes transactions between banks. This allows simultaneous electronic transfer of funds between New Zealand bank accounts, begun by an EFTPOS machine sending a request to Paymark, which is switched to the banks for the buyer and seller.1

[4] EFTPOS machines also process other electronic transactions, such as credit card and smartphone payments. PE requires access to Paymark’s services in order to provide EFTPOS but does not require access for processing other types of payments. PE alleges that Paymark is using its power in the EFTPOS bank switching market to stymie PE’s ability to compete, by requiring customers to buy Paymark services where competition exists if they also want EFTPOS services – essentially a bundling allegation. PE relies on Paymark’s dealings with two large retailers in particular.

[5] Paymark denies the allegations against it. It denies PE’s market definition, and that it has substantial market power, referring to the Commerce Commission’s recent decision clearing an acquisition of Paymark, where the Commission did not consider

1 There is further discussion of electronic payments and switches in the recent Commerce Commission decision concerning Paymark: Ingenico Group SA and Paymark Limited [2018] NZCC 18.

that cost was likely to be a significant barrier to building a network.2 Paymark denies it has taken advantage of its market power,3 and denies a proscribed anti-competitive purpose. The issues in dispute are broad but I draw no adverse inference…

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 Payment Express Ltd v Paymark Ltd

Details

AGLC: Payment Express Ltd v Paymark Ltd [2019] NZHC 2027
Case: [2019] NZHC 2027
Decision Date: 16 August 2019

CaseChat Overview and Summary

Payment Express Limited (PE) brought proceedings against Paymark Limited (Paymark), alleging that Paymark had breached s 36 of the Commerce Act 1986 by taking advantage of its substantial power in the EFTPOS bank switching market for an anti-competitive purpose. PE sought to set aside restrictions on the inspection of confidential documents, which were limited to counsel and independent experts. The court was required to decide whether there was a real risk of prejudice to Paymark if the restrictions were set aside and whether any prejudice to Paymark was outweighed by prejudice to PE in relation to its CEO's role as a witness and the need for PE to give instructions to counsel. The court found that there was a real risk of prejudice to Paymark if confidential documents were disclosed to PE. However, the court concluded that Paymark's prejudice was not overborne by prejudice to PE relating to its CEO's role as a witness and the need for PE to give instructions to counsel. The application was adjourned, and leave was reserved to PE to apply to modify a specific confidentiality claim if counsel were unable to reach agreement in a particular case.

Orders