Case: NT Power Generation Pty Ltd v Power and Water Authority [2004] HCA 48 ; (2004) 219 CLR 90
Outcome: applied
The extent to which the respondent is subject to s 46 TPA is a threshold issue in these proceedings. As was explained by McHugh ACJ, Gummow, Callinan and Heydon JJ in NT Power Generation Pty Ltd v Power and Water Authority [2004] HCA 48 ; (2004) 219 CLR 90 at 116-117: &#8226; while the conduct proscribed by the TPA, if it is to fall within s 2B, must be engaged in in the course of the entity carrying on a business, the conduct need not itself be the actual business engaged in &#8226; had s 2B not been enacted, the impugned conduct would not be examinable in circumstances where the entity is the Crown in right of a State or Territory &#8226; rather than examining specific conduct and then examining whether that contravention can be described as carrying on a business (as was unsuccessfully argued in NT Power [2004] HCA 48 ; 219 CLR 90), the correct approach is to first ascertain whether the entity "carries on a business". As the majority explained in NT Power [2004] HCA 48 ; 219 CLR 90, it is necessary to do this because: "this removes the governmental obstacle to curial examination of its conduct in order to see whether section 46 has been contravened." (at 117) 49 As was also observed by the majority in NT Power [2004] HCA 48 ; 219 CLR 90, it is also important not to substitute the question of defining markets for the question of whether a business is being carried on (at 117). Their Honours pointed out: "However, the words 'market' and 'business' have distinct meanings. Nothing in the Act limits the meaning of 'business' by reference to the criteria for market definition. Businesses often operate across the boundaries of separate markets... All these considerations militate against any approach to the question of 'carrying on a business' by reference to competition in a market... The only question is: what business was [the entity] carrying on? So far as it was carrying on a business, s 46 applied to it." (219 CLR at 118) 50 Prima facie , s 46 applies only to corporations, defined by s 4 TPA to mean bodies corporate that are: (a) foreign corporations (b) trading corporations formed within the limits of Australia or are financial corporations so formed (c) incorporated in a Territory or (d) are holding companies of bodies corporate of a kind referred to in paras (a), (b) or (c). 51 Clearly the respondent is not a corporation. However Pt 1 TPA makes provision for the extended application of certain parts of the Act. Of particular relevance in these proceedings is s 2B TPA. This section provides: (1) The following provisions of this Act bind the Crown in right of each of the States, of the Northern Territory and of the Australian Capital Territory, so far as the Crown carries on a business, either directly or by an authority of the State or Territory: (a) Part IV (aa) Part VB (b) Part XIB (c) the other provisions of this Act so far as they relate to the above provisions. (2) Nothing in this Act renders the Crown in right of a State or Territory liable to a pecuniary penalty or to be prosecuted for an offence. (3) The protection in subsection (2) does not apply to an authority of a State or Territory. 52 Section 46 is found in Pt IV TPA. However the extended application only operates if the Crown in right of the relevant State or Territory is carrying on a business, either directly or by an authority of the State of Territory. As is clear from such cases as NT Power 219 CLR (particularly at 116) and Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (2007) 237 ALR 512 (particularly at 526-527), this condition is strictly applied. 55 Although the phrase "carries on a business" appears in a number of provisions of the TPA including s 2B, it is not defined in the Act. However it has received consideration by Courts to the extent that a number of principles have emerged which are of relevance in this case. They are as follows: 1. "Business" in the context of s 2B is normally a "wide and general" word: Gibbs CJ in Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd [1982] HCA 23 ; (1982) 150 CLR 169 at 184, McHugh ACJ, Gummow, Callinan and Heydon JJ in NT Power 219 CLR at 116. Its meaning in the TPA is widened by s 4(1), since "business" includes "a business not carried on for profit": NT Power 219 CLR at 116. 2. The phrase "carries on a business" should be interpreted in light of the purpose of Parliament in introducing s 2B and related legislation, which was to ensure that "with state and territory application legislation, the prohibitions against anti-competitive conduct can be applied to all businesses in Australia." (Australia, House of Representatives, Parliamentary Debates (Hansard) 30 June 1995, p 2794). 3. Subject to a statutory qualification as to not for profit businesses, in the context of the TPA, "carrying on a business" is intended to refer to activities undertaken in a commercial enterprise or as a going concern: GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 ; (2003) 128 FCR 1 at 303, Corrections Corporation of Australia Pty Ltd v Commonwealth [2000] FCA 1280 ; (2000) 104 FCR 448 at 451. 4. An act of government, whether directly or through an authority, which is merely the carrying out of the functions of government in the performance of its statutory duty, is unlikely to be characterised as "carrying on a business": Village Building Company Limited v Canberra International Airport Pty Limited (No 2) [2004] FCA 133 at [90] . So, for example, the issue of certificates by a municipal council with respect to a real property pursuant to the Environmental Planning and Assessment Act 1979 (NSW) was not "carrying on a business" ( Mid Density Development Pty Ltd v Rockdale Municipal Council (1992) 39 FCR 579), nor was operating a detention centre ( Corrections Corporation of Australia [2000] FCA 1280 ; 104 FCR 448), nor were the activities of the New South Wales Department of Agriculture in acquiring cattle in endeavours to eradicate Bovine Johne's Disease, providing compensation to farmers for cattle slaughter, and reselling the carcases to recoup some of the funds: State of New South Wales v RT &amp; YE Falls Investments Pty Ltd [2003] NSWCA 54 ; (2003) 57 NSWLR 1. However, activities for reward which are those which could be performed by any citizen or private trader potentially constitutes "carrying on a business". Examples of this are Paramedical Services Pty Ltd v The Ambulance Service of New South Wales [1999] FCA 548 where the Ambulance Service of New South Wales supplied, for reward, ambulance services at sporting events and first aid training, and JS McMillan v Commonwealth (1997) 77 FCR 337 where the Commonwealth in its guise as AGPS provided general printing services, dispatch and distribution services, graphic design services and editorial services. 5. Mere repetitiveness is not sufficient to constitute carrying on of a business; further, although system and regularity are involved in the carrying on of the business it does not necessarily follow that one who has transactions of the same kind systematically or regularly is carrying on a business in those transactions: JS McMillan 77 FCR at 354, GEC Marconi Systems 128 FCR at 303, Sirway Asia Pacific Pty Ltd v Commonwealth of Australia [2002] FCA 1152 at [53] . 120 The role of the port authority in Stirling Harbour [2007] FCA 1381and the Federal Airports Corporation in Plume [1997] 1019 FCA can be contrasted with the role of the respondent in its supply of Collected Data to the applicant and the other licensees, namely that of a wholesaler of information on commercial terms dictated by the respondent, in an environment where the respondent was also a supplier of data in the Retail Market. While the regulatory power of the respondent to collect data and enter licence agreements clearly assisted its commercial position in entering such agreements (cf comments of the majority in NT Power 219 CLR at 142) the conduct of the respondent in withdrawing the Excluded Data but continuing to supply other data on commercial terms was a market, rather than a regulatory, issue. 133 Section 46(1)(a) contemplates circumstances where an entity, through its substantial degree of market power in a market, takes advantage of that power for the purpose of eliminating or substantially damaging another entity which is its competitor in another market. This is plain from the terms of the section itself, and follows, for example, from observations of McHugh ACJ, Gummow, Callinan and Heydon JJ in NT Power at 219 CLR at 114-115, 145. Accordingly, the respondent would have acted in breach of s 46(1)(a) TPA if it took advantage of its power in the Wholesale Market for the purpose of eliminating or substantially damaging the applicant in the Retail Market, if the applicant was a competitor of the respondent in that Retail Market. 134 The applicant conceded that there was no direct evidence that the respondent's purpose was to substantially damage the applicant in the Retail Market. The applicant invited the court to draw the inference that this was the purpose of the respondent, and referred in particular to the change in the products to be offered by removal of the Excluded Data, and the simultaneous change in pricing under the proposed fees structure. In summary, the applicant contended: &#8226; The applicant has substantial market share in the Retail Market. &#8226; The respondent is a competitor of the applicant in the Retail Market. &#8226; The removal of the Excluded Data will make the applicant's products less attractive to its existing customers in comparison to the existing offerings of the applicant. &#8226; The result of a proposed licence fee incorporating a royalty would result in a licence fee payable by the applicant to the respondent in excess of $1 million in contrast with the current flat fee, which proposal has not been adequately explained. The respondent did not produce one document evidencing the way in which the pricing for either the access fee or the royalty fee was worked up for these particular products. &#8226; The removal of the Excluded Data was allegedly precipitated by complaints concerning direct marketing activities by real estate agents, but this does not explain the basis of the particular pricing provisions. &#8226; In any event, the respondent's witnesses exaggerated the number and account of complaints concerning direct marketing activities by real estate agents, and in fact the number of complaints received was minor (a total of 139 written complaints discovered between 1997 and 2006), which would not justify substantial overhaul to contractual arrangements in place since 1992. 135 In summary the respondent submitted: &#8226; The evidence is overwhelming that the only purpose of the respondent in implementing its proposals concerning the Excluded Data and the pricing structure was to prevent the misuse of the Excluded Data for direct marketing. &#8226; There is no evidence that the respondent had the purpose of substantially damaging the applicant in the Retail Market. &#8226; For s 46(1)(a) TPA to apply the applicant and the respondent must be competitors in a market, and the only market in which the applicant alleges it competes with the respondent is the Retail Market: para 6 of the amended statement of claim. &#8226; The applicant and the respondent are not competitors in the Retail Market. There are substantial differences between the data offerings to end users made by the applicant and the respondent, namely: o the respondent offers three products to end users based on the Collected Data: Fry affidavit para 4(a) and annexure WBF-1 o the applicant offers a much greater range of products: Matthews affidavit, RP Data's Information Memorandum pp 23-32, and Williams expert report at paras 83, 85 and Figure 1 o the applicant does not see the respondent as a competitor: RP Data's Information Memorandum pp 14, 15 and 17, and comments of Mr Catelan (TS p 57 ll 40) o evidence of Mr Rush indicates that the respondent has no plans to offer integrated data services of the kind offered by the applicant (TS pp 304-305, p 306 ll 12-2-, p 310 ll 25-35 and 40 and p 312 ll 15-20). &#8226; There is no evidence that the proposal is part of some grand conspiracy by the respondent to "get back" at the applicant. &#8226; In 1997 the respondent was encouraging more licensees to come into the Retail Market and reduced its fees to allow that to occur. The unchallenged evidence is that all licensees were treated equally. &#8226; Mr Fry deposed that he had told the applicant that if it did not agree to the new licence conditions and refused to enter into a licence agreement, it would not be able to receive licensed data after 30 June 2005, and deposed further that this would also apply to the other seven licensees. Was the respondent a "competitor" of the applicant in the Retail Market?