Case: Re Queensland Co-operative Milling Association Ltd; Re Defiance Holdings Limited [1976] 25 FLR 169
Outcome: cited
The pleading of material facts which establish the integers of s 45A give rise to a conclusion, for the purposes of the pleading, drawn from those facts of a contravention of s 45. Pleading material facts which establish the purpose, effect or likely effect of a provision of a contract, arrangement or understanding of the kind described in s 45A makes it unnecessary to plead facts going to purpose or effect or likely effect of substantially lessening competition. Section 45A , if established, effects a deemed contravention of s 45 as the parliament regards arrangements between competitors in relation to prices (of the kind described by s 45A) as perverse to competition as a process, a threat to consumers and inconsistent with the object of the Act (s 2). However, an essential integer of s 45A is whether the parties (or perhaps some of them) to the contract, arrangement or understanding are in competition with each other in the supply or acquisition or proposed supply or acquisition of the identified services. Competition is a "rich" and "dynamic" process which expresses itself as "rivalrous market behaviour". Whether firms compete "is very much a matter of the structure of the market in which they operate" ( Re Queensland Co-operative Milling Association Ltd; Re Defiance Holdings Limited [1976] 25 FLR 169 at 187, 188 and 189). 10 Section 45(3) provides that "competition" for the purposes of s 45A in relation to a provision of a contract, arrangement or understanding means "competition in any market in which a corporation that is a party to the contract, arrangement or understanding ... supplies or acquires ... services". 11 Thus, it is necessary to plead material facts which establish that the participants to the contract, arrangement or understanding embodying the s 45A provision are engaged in the supply or acquisition of the identified services in any market in Australia and secondly, that the participants are engaged in rivalry with each other in that market in those services. Rivalry however takes place within a field of transactions between buyers and sellers and the boundaries of the field of rivalry are to be determined by not only the services supplied or acquired by a participant to the contract, arrangement or understanding but also having regard to services that are substitutable for or otherwise competitive with those services (s 4E of the Act ). Section 4E of the Act simply recognises the economic orthodoxy of close competition determined by strong substitution (over the long run two years not simply transient demand or supply responses, given a sufficient price incentive) within a field of actual and potential transactions between buyers and sellers, as the determinant of the boundaries of a market. It is not necessary to repeat the well understood passage from Re Queensland Co-operative Milling Association Ltd (supra) at p 190 adopted with approval by many authorities including Queensland Wire Industries Pty Ltd v The Broken Hill Proprietary Company Ltd [1989] HCA 6 ; (1989) 167 CLR 177 and Boral Besser Masonry Limited v Australian Competition and Consumer Commission [2003] HCA 5 ; (2003) 215 CLR 374. 52 It seems to me that the pleading as presently formulated fails to clearly plead material facts which establish the market and other elements discussed in these reasons. The failure to plead those material facts can not be cured by an order for particulars ( Bruce v Odhams Press Limited (supra) [3]). Accordingly, it seems to me that the proper course is to strike out the statement of claim and give leave to deliver an amended statement of claim. That is not to say that the contentions advanced by the ACCC are inherently unsound. The contentions however must be framed by material facts going to each of the integers of the cause of action as the foundation on which the claims are to be made good. As to close competition, the Tribunal in Re Queensland Co-operative Milling Association Ltd (supra) said at p 190: 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 would we expect a relatively high demand or supply response to price change, i.e. a relatively cross-elasticity of demand or cross-elasticity of supply? By this pleading, the ACCC contends that MRPL supplied certain services to customers (as defined) and ANZ supplied particular services to the same customers. The pass-through by MRPL to customers of a proportion of a commission fee it received from ANZ so as to reduce the price of activities undertaken by MRPL in connection with an approved ANZ residential home loan below the establishment fee charged by ANZ (whether as part of a loan service or, as contended, a price for separate services) seemed, as pleaded, to produce put colloquially "a bit of a reaction". The reaction, as pleaded, was the withdrawal of accreditation and re-accreditation on terms which involved the price of a service provided by MRPL. Whether MRPL and ANZ are in the same market needs however to be properly pleaded. 53 I do not propose to deal in any detail with the second limb of ANZ's motion seeking, in the alternative, an order that the applicant provide further and better particulars of the statement of claim in response to a request made by ANZ's solicitors. The pleading of material facts by an amended statement of claim ought to deal with many of those matters. However, it may be helpful to say something about the general area of earlier disagreement on those matters which may or may not remain relevant having regard to a re-formulated pleading. 54 First, ANZ sought a statement of the services comprising "loan arrangement services" since the definition was inclusive rather than exhaustive. The ACCC confirmed that the scope of the services was said to be inclusive and as to any other services, the request was not a proper request for particulars. It seems to me, as I have said, that the applicant ought to identify the services comprising of the markets alleged, the services provided by MRPL and those provided by ANZ.