FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Australian Safeway Stores Pty Ltd (No.2) [2003] FCAFC 163

TRADE PRACTICES – costs – partial success on appeal

Trade Practices Act 1974 (Cth) ss 46(1)(a), 46(1)(c), 47

Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (2003) 198 ALR 657 cited

Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 cited

Ruddock v Vadarlis (No 2) (2002)115 FCR 229 cited

AUSTRALIAN COMPETITION & CONSUMER COMMISSION v AUSTRALIAN SAFEWAY STORES PTY LTD AND MARK JONES

V95 OF 2002

HEEREY, SACKVILLE & EMMETT JJ

1 AUGUST 2003

MELBOURNE

THE COURT:

1.         Declares that the first respondent by ceasing to acquire, display and sell bread products of Quality Bakers Australia Pty Ltd trading as Buttercup Bakeries (“Buttercup”) at the first respondent’s two supermarkets in the Karingal Hub Shopping Centre in Frankston:

            (a)        from 16 May 1994 until 6 July 1994;

(b)               for the purpose of deterring Buttercup from selling Code C 680 gram plain wrap or generic bread branded “Quadara” to the Quadara store in Ashleigh Street, Frankston (“the Quadara store”) at a discounted price, 

has taken advantage of its substantial degree of market power in the market in Victoria for the supply, on a wholesale basis, of bread to food retailers (“the wholesale bread market in Victoria”) for the purpose of deterring or preventing Buttercup and the operator of the Quadara store from engaging in competitive conduct in the wholesale bread market in Victoria and the retail bread market in Frankston, respectively, in contravention of s 46(1)(c) of the Trade Practices Act 1974 (Cth) (“the Act”).

2.         Declares that the first respondent by ceasing to acquire, display and sell Buttercup’s bread products at the first respondent’s Cheltenham supermarket at Southland Westfield Shoppingtown:

            (a)        from 16 to 25 July 1994;

            (b)        for the purpose of deterring Buttercup from selling Code C 680 gram bread branded “Black & Gold” to Cheapa Food Barn at the Cheltenham Market at a discounted price,

            has taken advantage of its substantial degree of market power in the wholesale bread market in Victoria for the purpose of deterring or preventing Buttercup and the operator of the Cheltenham Cheapa Food Barn from engaging in competitive conduct in the wholesale bread market in Victoria and the retail bread market in Cheltenham, respectively, in contravention of s 46(1)(c) of the Act.

3.         Declares that the first respondent by ceasing to acquire, display and sell Buttercup’s bread products at the first respondent’s Vermont supermarket at Brentford Square shopping centre:

            (a)        from 16 July 1994 to 25 October 1994;

            (b)        for the purpose of deterring Buttercup from selling Code C 680 gram bread branded “Black & Gold” to Cheapa Food Barn at Brentford Square shopping centre at a discounted price –

            has taken advantage of its substantial degree of market power in the wholesale bread market in Victoria for the purpose of deterring or preventing Buttercup and the operator of the Vermont Cheapa Food Barn from engaging in competitive conduct in the wholesale bread market in Victoria and the retail bread market in Vermont, respectively, in contravention of s 46(1)(c) of the Act.

4.         Declares that the first respondent by ceasing to acquire, display and sell bread products of George Weston Foods Ltd trading as Tip Top Bakeries (“Tip Top”):

            (a)        from 10 to 14 May 1995 at the first respondent’s Albury and Lavington supermarkets and from 12 to 14 May 1995 at the first respondent’s Wodonga supermarket;

            (b)        for the purpose of deterring Tip Top from selling 750 gram bread branded “Mighty White” to Bob’s IGA Festival Supermarket in David Street, Albury (“Bob’s IGA”) at a discounted price –

            has taken advantage of its substantial degree of market power in the wholesale bread market in Victoria for the purpose of deterring or preventing Tip Top and the operator of Bob’s IGA from engaging in competitive conduct in the wholesale bread market in Victoria and the retail bread market in Albury, respectively, in contravention of s 46(1)(c) of the Act.

5.         Declares that the first respondent by its arrangement or understanding with Tip Top made or arrived at on 27 and 28 April 1995 whereby Tip Top would sell at its Preston market stall Code C plain wrap bread at $1.50 per loaf and Code D plain wrap bread at $1.90 per loaf made an arrangement or arrived at an understanding that contained a provision having the purpose, or being likely to have the effect, of substantially lessening competition in contravention of s 45(2)(a)(ii) of the Act.

6.         Orders that the orders of the trial judge made on 21 December 2001 and 22 October 2002 be set aside.

7.         Orders that the proceeding be remitted to the trial judge, for further hearing and determination, in relation to:

            (a)        the imposition of pecuniary penalties in respect of the contraventions so declared:

            (b)        injunctive relief sought by the appellant;

            (c)        the liability of the second respondent; and

            (d)        the costs of the trial –

            in accordance with the judgment of this Court.

8.         Orders that the respondents pay eighty per cent of the appellant’s costs of the appeal, including reserved costs.

9.         Orders that the appeal be otherwise dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     The Court delivered substantive reasons on 30 June 2003 (see Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (2003) 198 ALR 657) and directed the parties to file submissions as to appropriate orders. 

2                     This has now been done.  There are only two contentious issues. 

3                     The first is whether, as the Commission seeks, there should be declarations in relation to the four occasions where the Court has upheld the Commission’s appeal under s 46(1) which include a finding of a purpose proscribed by s 46(1)(a) as well as s 46(1)(c).

4                     We agree with Safeway that the Court’s findings would only support declarations as to a s 46(1)(c) purpose.  The majority judgment does not make any finding that Safeway had a purpose of substantially damaging an independent retailer; the purpose findings are expressed in terms of a s 46(1)(c) purpose, that is deterrence of others engaging in competitive conduct: see at 704 [246]-[247], 711 [276].

5                     The second issue is the costs of the appeal.  The Commission seeks an order for all its costs, or alternatively its costs with a de minimis reduction.  Safeway submits that each party should bear its own costs. 

6                     Costs always remain a matter of discretion.  Subject to that overriding consideration, the usual approach of courts has been that ordinarily costs follow the event and a successful litigant receives costs in the absence of special circumstances justifying some other order.  Where a litigant has succeeded only partially, circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed.  A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other parties costs of them:  see Hughes v Western Australian Cricket Association (Inc) (1986) ATPR ¶40-748 at 48,136, Ruddock v Vadarlis (No 2) (2002) 115 FCR 229 at 234 [11].

7                     In the present case the Commission was completely successful on the Preston Market charge and succeeded on four of the remaining nine charges.  But even on the charges where it was unsuccessful the Commission succeeded on some issues such as market definition, market power and taking advantage of market power which were common to all charges.  Safeway also sought to uphold the primary judgment by numerous arguments which were unsuccessful at trial and equally unsuccessful on appeal.

8                     The s 47 issue added very little to the overall cost. 

9                     All in all we think that the Commission was substantially successful and should receive its costs with a modest reduction, which we would fix at twenty per cent.  We will therefore order that the respondents pay eighty per cent of the Commission’s costs of the appeal, including reserved costs. 

10                  The orders will be accordingly as follows:

1.         Declare that the first respondent by ceasing to acquire, display and sell bread products of Quality Bakers Australia Pty Ltd trading as Buttercup Bakeries (“Buttercup”) at the first respondent’s two supermarkets in the Karingal Hub Shopping Centre in Frankston:

            (a)        from 16 May 1994 until 6 July 1994;

(c)               for the purpose of deterring Buttercup from selling Code C 680 gram plain wrap or generic bread branded “Quadara” to the Quadara store in Ashleigh Street, Frankston (“the Quadara store”) at a discounted price,

has taken advantage of its substantial degree of market power in the market in Victoria for the supply, on a wholesale basis, of bread to food retailers (“the wholesale bread market in Victoria”) for the purpose of deterring or preventing Buttercup and the operator of the Quadara store from engaging in competitive conduct in the wholesale bread market in Victoria and the retail bread market in Frankston, respectively, in contravention of s 46(1)(c) of the Trade Practices Act 1974 (Cth) (“the Act”).

2.         Declare that the first respondent by ceasing to acquire, display and sell Buttercup’s bread products at the first respondent’s Cheltenham supermarket at Southland Westfield Shoppingtown:

            (a)        from 16 to 25 July 1994;

            (b)        for the purpose of deterring Buttercup from selling Code C 680 gram bread branded “Black & Gold” to Cheapa Food Barn at the Cheltenham Market at a discounted price,

            has taken advantage of its substantial degree of market power in the wholesale bread market in Victoria for the purpose of deterring or preventing Buttercup and the operator of the Cheltenham Cheapa Food Barn from engaging in competitive conduct in the wholesale bread market in Victoria and the retail bread market in Cheltenham, respectively, in contravention of s 46(1)(c) of the Act.

3.         Declare that the first respondent by ceasing to acquire, display and sell Buttercup’s bread products at the first respondent’s Vermont supermarket at Brentford Square shopping centre:

            (a)        from 16 July 1994 to 25 October 1994;

            (b)        for the purpose of deterring Buttercup from selling Code C 680 gram bread branded “Black & Gold” to Cheapa Food Barn at Brentford Square shopping centre at a discounted price –

            has taken advantage of its substantial degree of market power in the wholesale bread market in Victoria for the purpose of deterring or preventing Buttercup and the operator of the Vermont Cheapa Food Barn from engaging in competitive conduct in the wholesale bread market in Victoria and the retail bread market in Vermont, respectively, in contravention of s 46(1)(c) of the Act.

4.         Declare that the first respondent by ceasing to acquire, display and sell bread products of George Weston Foods Ltd trading as Tip Top Bakeries (“Tip Top”):

            (a)        from 10 to 14 May 1995 at the first respondent’s Albury and Lavington supermarkets and from 12 to 14 May 1995 at the first respondent’s Wodonga supermarket;

            (b)        for the purpose of deterring Tip Top from selling 750 gram bread branded “Mighty White” to Bob’s IGA Festival Supermarket in David Street, Albury (“Bob’s IGA”) at a discounted price –

            has taken advantage of its substantial degree of market power in the wholesale bread market in Victoria for the purpose of deterring or preventing Tip Top and the operator of Bob’s IGA from engaging in competitive conduct in the wholesale bread market in Victoria and the retail bread market in Albury, respectively, in contravention of s 46(1)(c) of the Act.

5.         Declare that the first respondent by its arrangement or understanding with Tip Top made or arrived at on 27 and 28 April 1995 whereby Tip Top would sell at its Preston market stall Code C plain wrap bread at $1.50 per loaf and Code D plain wrap bread at $1.90 per loaf made an arrangement or arrived at an understanding that contained a provision having the purpose, or being likely to have the effect, of substantially lessening competition in contravention of s 45(2)(a)(ii) of the Act.

6.         The orders of the trial judge made on 21 December 2001 and 22 October 2002 be set aside.

7.         The proceeding be remitted to the trial judge, for further hearing and determination, in relation to:

            (a)        the imposition of pecuniary penalties in respect of the contraventions so declared:

            (b)        injunctive relief sought by the appellant;

            (c)        the liability of the second respondent; and

            (d)        the costs of the trial –

            in accordance with the judgment of this Court.

8.         The respondents pay eighty per cent of the appellant’s costs of the appeal, including reserved costs.

9.         The appeal be otherwise dismissed.

Associate:

Dated:              1 August 2003