Case: Re Queensland Co-operative Milling Association Ltd; Re Defiance Holdings Ltd (1976) 25 FLR 169
Outcome: discussed
this process of identifying the correct analytical tool or instrumental concept of market definition by which to assess Woolworths' conduct and purposes in this case, there is significant assistance in recalling the seminal expression of view of the Tribunal (of which Professor Brunt was a member) in Re Queensland Co-operative Milling Association Ltd; Re Defiance Holdings Ltd (1976) 25 FLR 169 ("QCMA") at 190 (a passage approved by the High Court in Boral at [133] per Gleeson CJ and Callinan J, in this respect agreed with by Gaudron J, Gummow J and Hayne J) : We take the concept of a market to be basically a very simple idea. A market is the area of close competition between firms or, putting it a little differently, the field of rivalry between them. (If there is no close competition there is of course a monopolistic market.) Within the bounds of a market there is substitution--substitution between one product and another, and between one source of supply and another, in response to changing prices. So a market is the field of actual and potential transactions between buyers and sellers amongst whom there can be strong substitution, at least in the long run, if given a sufficient price incentive. Let us suppose that the price of one supplier goes up. Then on the demand side buyers may switch their patronage from this firm's product to another, or from this geographic source of supply to another. As well, on the supply side, sellers can adjust their production plans, substituting one product for another in their output mix, or substituting one geographic source of supply for another. Whether such substitution is feasible or likely depends ultimately on customer attitudes, technology, distance, and cost and price incentives. It is the possibilities of such substitution which set the limits upon a firm's ability to "give less and charge more". Accordingly, in determining the outer boundaries of the market we ask a quite simple but fundamental question: If the firm were to "give less and charge more" would there be, to put the matter colloquially, much of a reaction? And if so, from whom? In the language of economics the question is this: From which products and which activities could we expect a relatively high demand or supply response to price change, i.e. a relatively high cross-elasticity of demand or cross-elasticity of supply? At least two elements of this passage are to be steadily borne in mind in identifying the markets here. First, it is the area of close competition. The relative and evaluative judgment as to the degree of closeness of competition relevant to the assessment of the conduct is important. Here, the question is the assessment of the purpose of Woolworths and Liquorland in undertaking conduct directed at local competitors. The degree of closeness of competition in the local area may be seen to be different from, or more important than, the degree of closeness of competition from a broader geographic perspective. In other words, merely because there is what can be said to be close competition on price across the Sydney conurbation for retail liquor, does not gainsay a local market, being a field or area of even closer competition between sellers in suburban areas. Secondly, the notion of giving less and charging more and thus constraint on activity is central to the analysis. This, as with the notion of close competition, can occur at different levels of commercial behaviour and organisation.