FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v

Australian Safeway Stores Pty Ltd & Others

VG 762 of 1996

GOLDBERG J

21 DECEMBER 2001

MELBOURNE

SUMMARY

1.                  This summary accompanying the reasons for judgment delivered today is intended to assist in understanding the outcome of this proceeding and is not a complete statement of the conclusions reached by the Court.  The only authoritative statement of the Court’s reasons is that contained in the published reasons for judgment which will be available on the internet at www.fedcourt.gov.au, together with this summary.

2.                  The Australian Competition and Consumer Commission (“the Commission”) brought this proceeding against Australian Safeway Stores Pty Ltd (“Safeway”) and two of its executive officers, Mr Bernie Brookes and Mr Mark Jones.  In the course of the trial, the Commission consented to an order that the proceeding, as against Mr Brookes, be dismissed.  The trial continued against Safeway and Mr Jones.

3.                  The Commission alleged that Safeway had contravened various provisions of Pt IV of the Trade Practices Act 1974 (Cth) by its conduct in relation to ten separate incidents which occurred in and between May 1994 and November 1995 and involved the removal, or threatened removal, of bread, supplied to it by bread manufacturers Tip Top, Sunicrust or Buttercup, from display and sale in particular Safeway supermarkets.

4.                  Central to the Commission’s allegations was the claim that Safeway had a policy that if bread products of a manufacturer were being specialled by another retailer, other than Coles or Franklins, in the vicinity of a Safeway store, at a price which was under the price being charged by Safeway at such store, then all that manufacturer’s bread products would be removed from display for sale from that Safeway store and other Safeway stores in the vicinity while that manufacturer’s bread products were being specialled by that other retailer.  The Commission alleged that the purpose of the policy was to punish the bread manufacturers, Tip Top, Sunicrust and Buttercup, for selling bread to independent stores at such a price as would enable the individual stores to sell their bread for a lesser price than Safeway was selling bread.

5.                  Safeway denied that it had such a policy and claimed that it had a policy which was pro‑competitive rather than punitive and involved Safeway asking the bread manufacturers for, what was called in the proceeding, a case deal (effectively an arrangement involving a discount).  Safeway said its policy was that where a store was faced with competition from another store selling bread at discounted prices to ask the manufacturer of that bread for the same cost price for the bread the manufacturer was supplying to Safeway as the manufacturer was giving to the competitive store.  If such a comparable cost price was not offered then Safeway would delete or remove the bread of that manufacturer from display and cease purchasing it.

6.                  The Commission put its case in the alternative and said that if Safeway did request a supply of bread at a comparable cost price, it did so knowing that the bread manufacturer would not agree because to sell the bread being supplied to Safeway at prices competitive with the bread being discounted by the competitive store would damage or destroy the goodwill or value attached to the brand name of the branded bread sold by Safeway.

7.                       The Commission alleged that contraventions of ss 45, 46, 47 and 48 of the Trade Practices Act 1974 (Cth) arose out of ten specific incidents.  Nine of the incidents involved competitors of Safeway selling bread at discounted prices.  One incident involved a stall operated by Tip Top at the Preston Market where it was alleged that an agreement as to the prices to be charged and the bread to be sold by Tip Top had been reached.  The Commission alleged that Safeway’s conduct amounted to entering into, or attempting to enter into, a contract, arrangement or understanding for the purpose of substantially lessening competition, attempting to induce the manufacturers to engage in the practice of resale price maintenance and engaging in the practice of exclusive dealing.  In addition, the Commission alleged that Safeway had taken advantage of its market power for a proscribed purpose in contravention of s 46 of the Trade Practices Act 1974 (Cth).

8.                       I have reached the conclusion that the policy Safeway had was in the terms claimed by Safeway and not in the terms alleged by the Commission.  I have also reached the conclusion that the purpose of the policy created by Safeway was to enable it to be competitive and was not to punish the plant bakers or deter them from engaging in competitive conduct with independent stores.

9.                       I have also reached the conclusion that the allegations of contraventions of ss 45, 46, 47 and 48 of the Trade Practices Act 1974 (Cth) in respect of the ten incidents have not been made out.

10.                   The result is that the application against Safeway and Mr Jones will be dismissed.  I publish my reasons for reaching this conclusion.