- oO —— -+ CATCHWORDS TRADE PRACTICES - responsibility of Minister to take proceedings for contraventions of Parts IV or V of the Trade Practices Act 1974. ADMINISTRATIVE LAW - 'judicial review - whether Minister abdicated responsibility to consider taking proceedings - exercise of Court's discretion not to make order. Trade Practices Act 1974 ss.29, 80(1) Administrative Decisions (Judicial Review) Act 1977 ss.5, 7, 16 VISY BOARD PTY. LTD. v THE HONOURABLE GARETH EVANS, THE ATTORNEY-GENERAL OF THE COMMONWEALTH OF AUSTRALIA and SCI OPERATIONS PTY. LTD. No. VG 232 of 1983 Woodward J. Melbourne 20 December 1983 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY ) No. VG 232 of 1983 ) ) GENERAL DIVISION BETWEEN: VISY BOARD PTY. LTD. and THE HONOURABLE GARETH EVANS, THE ATTORNEY-GENERAL OF THE COMMONWEALTH OF AUSTRALIA and SCI OPERATIONS PTY. LTD. ORDER JUDGE MAKING ORDER Woodward J. DATE OF ORDER 20 December 1983 WHERE MADE Melbourne THE COURT ORDERS THAT: The application be dismissed with costs. Applicant Respondents IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) No. VG 232 of 1983 ) ) GENERAL DIVISION BETWEEN: VISY BOARD PTY. LTD. Applicant - and THE HONOURABLE GARETH EVANS, THE ATTORNEY-GENERAL OF THE COMMONWEALTH OF AUSTRALIA and SCI OPERATIONS PTY. LTD. Respondents CORAM: Woodward J. DATE: 20 December 1983 WOODWARD J. REASONS FOR JUDGMENT In this case the applicant is seeking an order pursuant to the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act") quashing or setting aside a decision of the farst-named respondent, the Attorney-General of the Commonwealth of Australia, not to institute proceedings against the second-named respondent SCI Operations Pty. Ltd. ("SCI") under s.50 of the Trade Practices Act 1974 ("the TP Act"). On 25 October 1983 the applicant wrote to the Attorney-General in the following terms, "Dear Sir, Re: Proposed Acquisition of the Share Capital of Fibre Containers Limited ("FCL") by A.P.M. Investments Pty. Ltd. ("APM") or Smorgon Consolidated Industries ("SCI") The conversion of paper board into fibre containers is the major field of operation of Visy Board Pty. Ltd. ("Visy"). A major competitor in that activity is FCL. Unless relief is granted on the basis of a contravention of Section 50 of the Trade Practices Act 1974 ("the Act"), FCL will be acquired by either APM or SCI. It is the clearly held view of Visy that a takeover by either company will contravene Section 50 of the Act. Substantially all paper board used by Visy and other companies engaged in the manufacture of fibre containers in Australia is supplied by APM or SCI. Both APM and SCI are already associated with companies engaged in the conversion of paper board into fibre containers. The Trade Practices Commission ("the Commission") has recognised the dangers inherent in the proposed acquisition by APM of FCL and has proceeded accordingly under Section 50 of the Act in the Federal Court to restrain the takeover exercising its power to do so under Section 80 (1A). Identical proceedings- have not been instituted against SCI yet it appears to us that the consequences of a SCI takeover of FCL in both the paper board and fibre container markets will be no different to an APM takeover. The company which acquires FCL will thereby put itself in a position to control or dominate both the supply of paper board in Australia, and the manufacture and supply of fibre containers made from paper board. The acquirer will be in a position to control or dominate each market because 1t will be able to control prices and take its profit from which-ever activity (paper board manufacture or the manufacture of fibre containers) it chooses. It will also be able to dictate the prices in each market which will necessarily be followed by competitors. In either case Visy and all other converters which are reliant on SCI and APM for their supply will be at an extraordinary price disadvantage as the acquirer, whether it be APM or SCI, will have the capacity to control and dictate prices for the supply of paper board, and also for containers. That development will stifle real competition, not only to the detriment of competitors in the fibre containers market such as Visy, but also to the detriment of the public. Whether an economist would describe the likely outcome of the proposed FCL acquisition by APM or SCL as a duopoly or monopoly does not matter, because the acquisition would give the acquirer control or dominance of the relevant markets to an extent which will contravene Section 50 of the Act. Put simply, each and every reason that APM's acquisition of FCL would breach Section 50 of the Act applies with equal force to an acquisition of FCL by SCI. The Commission is a statutory body responsible for the administration and enforcement of the Act. Indeed that is its sole purpose. The Minister has both a supervisory and an independent enforcement function in relation to the administration and enforcement of the Act. Pursuant to Section 80 (1A) only the Minister or the Commission can obtain an injunction against APM and SCI to prevent them proceeding with the proposed acquisition of FCL; and likewise pursuant to Section 77 only the Minister or the Commission can institute penalty proceedings for a contravention of Section 50. In these circumstances, in each matter involving Section 50, the Commission and the Minister have a duty under the Act to make a decision as to whether Section 50 proceedings should be instituted and if so, against whom. The duties of the Commission and the Minister arise from the conferral of exclusive power upon them in relation to Section 50 proceedings which is to be exercised for the public benefit and for the purposes of enforcement of the Act. The duties must be performed according to law, bearing in mind the purpose for which the power was conferred and the reasons why it was entrusted to the Minister and the Commission and denied to private litigants. We therefore request and 'require that the Minister, in exercise of his statutory power, make a decision that he will or will not: (a) institute proceedings against SCI in relation to its proposed contravention of Section 50 of the Act; (b) apply under Section 80(1) and (1A) of the Act for an injunction restraining SCI from acquiring, directly or indirectly any shares in the capital, or any assets of FCL. This matter raises important and fundamental questions relating to the efficacy and enforcement of the Act. The matter is also one of urgency. There is a real risk that a takeover of FCL by SCI may occur if SCI and FCL are released from their respective undertakings which may occur by reason, inter alia, of there being no proceedings against SCI by the Minister or by the Commission. If this occurs, SCI will then be free to proceed to acquire FCL. We therefore request that a response by telex -or in writing advising us of the minister's Gecision be given, on or before 5.00 p.m. on Thursday, 27th October, 1983. If no response has been received by that time, the writer will endeavour to telephone the Secretary to the Attorney General at 10.00 a.m. on Friday morning, 28th October, 1983 to ascertain the Minister's decision in this matter. The Chairman of Visy, Mr Richard Pratt, has specifically requested and authorised the forwarding of this letter. We enclose a copy of the letter which we have this day sent to the Commission. We have instructed our Solicitors to forward copies of our letter to you and to the Commission, to the Solicitors acting for APM and SCI. - Yours faithfully, VISY BOARD PTY. LTD. M.W. NAPHTALI, Secretary" On 27 October the Attorney-General replied by telex as follows, "Re: Acquisition of the share capital of Fibre Containers Ltd. by APM Investments Pty. Ltd. or Smorgon Consolidated Industries I refer to your letter dated 25 October 1983 requesting me to institute proceedings against Smorgon alleging a contravention of Section 50 of the Trade Practices Act, and applying for an injunction restraining Smorgon from acquiring, directly or indirectly, any shares in the capital, or any assets of Fibre Containers. I note that you have sent a similar letter to the Trade Practices Commission. Whilst injunction proceedings alleging breaches of Section 50 of the Trade Practices Act can be taken by either the Attorney-General or the 'Trade Practices Commission, the prime responsibility for enforcement of the Act lies with the Commission. Although private Litigants may not seek injunctions to restrain acquisitions allegedly in breach of Section 50, divestiture applications pursuant to Section 81 of the Act may be made by any interested party. Accordingly, your company, if it felt it could establish a contravention of Section 50, could indicate to Smorgon that if Smorgon proceeded to acquire Fibre Containers, your company could institute proceedings pursuant to Section 81. I could not make any decision whether to institute proceedings against Smorgon as you request without having adequate opportunity to consider the very complex factors relating to such proceedings. It would certainly not be possible for me to reach such a conclusion within the strict time limits you have indicated. However, I understand that the Commission has very carefully considered the position of Smorgon in this matter, and has concluded that the acquisition by Smorgon of Fibre Containers, if it occurred, would not contravene Section 50. I understand the Commission's decision is based on advice from senior counsel. In the absence of compelling reasons to the contrary I would adopt the same view as that taken by the Commission. Accordingly, I do not propose to institute proceedings against Smorgon in respect of its possible acquisition of Fibre Containers. Since you have forwarded copies of your letter to the solicitors acting for APM and Smorgon I have Gone likewise with this reply. Gareth Evans Attorney-General" The complaint made by the applicant about this reply of the Attorney-General is that it represents an abdication of responsibility. It is said that the Minister relied entirely upon a decision made by a subordinate body, the Trade Practices Commission, -('the TPC'), and failed to address his own mind to the problem placed before him. It was readily conceded that the Attorney-General was entitled to give as much weight as he chose to any material or opinions advanced by the TPC or other subordinates, but it was urged that, once the matter was drawn to his attention, he was required by law to direct his mind to it and make his own decision upon it. This result was said to flow from the combined effects of the TP Act and the ADJR Act. The relevant parts of the TP Act provide: "29. (1) The Minister may -— (a) «see. (b) give directions to the Commission in connexion with- the performance of its functions or the exercise of its powers under this Act .... and the Commission shall comply with any directions so given. (2) Any darection given to the Commission under sub-section (1) shall be in writing and the Minister shall cause a copy of the direction to be published in the Gazette as soon as practicable after the direction is given. 80. (1) Subject to sub-section (1A), where, on the application of the Minister, the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute (a) a contravention of a provision of Part IV Or V wanes the Court may grant an injunction in such terms as the Court determines to be appropriate. (1A) A person other than the Minister or the Commission is not entitled to make an application under sub-section (1) for an injunction by reason that a person has contravened or attempted to contravene or is proposing to contravene, or has been or is proposing to be involved in a contravention of, section 50." ' So far as the ADJR Act is concerned, the applicant sought to rely on several parts of s.5, but none of the others added anything to the scope of paragraphs (1)(e) and (2)(a) and (b). These are in the following terms "5. (1) A person who is aggrieved by a decision to which this Act applies ..-.. may apply to the Court for an order of review in respect of the decision on any one or more of the following grounds: (e) that the making of the decision was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be made; (2) The reference in paragraph (1)(e) to an improper exercise of a power shall be construed as including a reference to (a) taking an irrelevant consideration into account in the exercise of a power; (b) failing to take a relevant consideration into account in the exercise of a power; Ry Section 16 of the ADJR Act is also relevant for present purposes. It provides, "16. (1) On an application for an order of review in respect of a decision, the Court may, in its discretion, make all or any of the following orders: (a) an order quashing or setting aside the decision .... ° (b) an order referring -the matter to which the decision relates to the person who made the decision for further consideration, subject to such directions as the Court thinks fit ...." Counsel for the applicant argued that the Attorney-General had made a decision not to take action under s.80(1) of the TP Act without addressing his mind to the matters in issue at ali. He had simply adopted the Gecision of the TPC without giving it any independent consideration. This, they said, was clearly an abdication of his function under the TP Act, and thus an improper exercise of the power conferred on him by s.80 of that Act in that he had failed to take into account all relevant considerations other than the TPC's decision. Counsel for the Attorney-General did not argue that the applicant was not an aggrieved person within the meaning of s.5 of the ADJR Act. Nor did they argue that the Attorney-General's telex of 27 October 1983 did not record a decision within the meaning of that section. What they did contend was that the decision contained in the telex, when properly understood, was a perfectly proper decision. Alternatively, they argued that if the decision was defective in any way, then the Court, in the exercise of its discretion under s.16 of the ADJR Act, should make no orders. The first question for the Court to consider is the true meaning to be attributed to the Attorney-General's telex. There are a number of passages in it which require attention, and I shall deal with them in the order in which they appear in the telex. Before doing so I would just make the general comment that the telex is a document prepared under pressure of time which the applicant had sought to impose. It should be construed liberally with that thought in mind. "eee the prime responsibility for enforcement of the Act lies with the Commission." In my view this means no more than that the primary, or day-to-day, administration of the Act is the responsibility of the TPC. It is not a denial that ultimate responsibility rests with the Minister. In my opinion it would, however, be entirely within the scheme and spirit of the Act for the Minister to say that he would only apply his mind to a particular case of enforcement after the TPC had investigated the matter and reached its own conclusion. He could go on to say that he would only interfere with the TPC's decision on such a matter (by giving directions under s.29 or taking proceedings under s.80(1) of the TP Act) if questions of government policy were involved or if he was satisfied that the TPC's decision was wrong. The Attorney-General may have had thoughts such as these in mind in making the statement quoted. ae your company could institute proceedings pursuant to section 81." Because of the position in the telex of the passage which concludes with these words, it seems likely that it constitutes merely a response to that part of the applicant's letter which asserts the exclusive rights of the Minister and the TPC to bring praceedings for injunctions or penalties for contravention of s.50 of the TP Act. Even if it were one of the reasons which led the Attorney-General to make the decision which he did, I would not regard it as an irrelevant matter. It seems to be a matter which would carry little weight if a clear case for action by the Minister was otherwise made out. But in other cases the availability of an alternative remedy to the person seeking relief would not be an irrelevant factor. "I could not make any decision whether to institute proceedings against Smorgon as you request without having adequate opportunity to consider the very complex factors relating to such proceedings. It would certainly not be possible for me to reach such a conclusion within the strict time limits you have indicated." -il- I believe that in this passage the Attorney-General was saying that to reach an affirmative decision to sue must necessarily involve complex considerations - for example, the desirability of such action at the present stage of developments, the precedent that such an action by the Attorney-General would create, the likelihood of success, the costs, the availability of staff and so on. The word "whether" in the first line was really ; . superfluous and should not be read as meaning "whether or not", because a decision by the Minister not to sue could well be reached without ever having to consider such complex matters. Such a construction of the passage is supported by the inclusion of the words "as you reguest" and the use of the phrases "relating to such proceedings" and "such a conclusion" rather than "involved" and "a conclusion" respectively. ",.. L understand that the Commission has very carefully considered the position of Smorgon in this matter, and has concluded that the acquisition by Smorgon of Fibre Containers, if 1t occurred, would not contravene section 50. I understand the Commission's decision 1s based on advice from Senior Counsel." It was argued by counsel for the applicant that the words "I understand" in these sentences carried with them the inference that the Attorney-General "was not aware of the basis of the decision other than that senior counsel had advised the Commission and the Commission was acting in accordance with that advice". I do not believe the passage should be given that restricted meaning. The words "I understand" in this context mean no more than "I am informed". They are neutral in any determination of the extent of the Minister's discussions, enquiries or knowledge about the issues involved or the reasons for the TPC's decision. by the Commission." On its proper construction, I think this sentence means that in his then state of knowledge of the matter the Attorney-General, having considered the matter for himself, saw no reason to disagree with the TPC''s view. The material put before him by the applicant did not compel him to a different view. On this construction the word "would" might be thought to be superfluous but the usage 1s not uncommon (e.g. "I would agree that ..." instead of simply "I agree that ...."). There may be a further anference in the sentence that 1f further cogent material were put before him he was prepared to reconsider the matter. This could be inferred from the use of the phrases "In the absence of" and "I would adopt" rather than more conclusive language which might have been chosen. Even if I am wrong in this construction of the sentence and the Attorney-General was in fact saying, "It is my practice to follow the decisions of the TPC unless I can find compelling reasons to differ from them", that would not, in my view, be an improper exercise of power. possible Sounds tion of Fibre Containers." This sentence contains the Minister's decision. It is claimed by the applicant that this cannot stand properly with the earlier statement "I could not make any decision whether to institute proceedings against Smorgon as you suggest .....", but I have already dealt with that passage. The Minister is saying in effect - 'You have asked for an urgent decision. I could not make a decision in your favour in the time you have given me and, in any event, the TPC has carefully considered your request and has ruled against you. I can see no reason in the material you have put before me, or in what I otherwise know of the matter, to lead me to a different conclusion. I therefore refuse your request'. < I believe that, on a fair reading of the Attorney-General's telex, that is the substance of his decision. I believe it was a proper decision and provided no grounds of review under s.5 of the ADJR Act. - 14 = Even if =I am wrong in that conclusion, and the Minister's telex meant just what was contended by the applicant, I would exercise my discretion against making any order in this case. That I have such a discretion to "refuse relief notwithstanding that the statutory preconditions to a grant of relief are satisfied", is clear from the decision of a Full Court of this Court in Lamb v Moss and Brown (unreported, 12 October * TS 1983). The applicant claims that the Attorney-General said in effect, 'I cannot consider this matter properly in the time you have stipulated. I will accordingly rely on the decision made by the TPC and refuse your request on that ground alone, without considering the matter for myself.' The applicant's complaint is that the Minister should have ignored the time limit which 1t itself had imposed and taken whatever time was necessary to deal with the matter properly. It -as possible to imagine cases in which such an argument should succeed and the authority responsible should be required to perform its duty in the matter. This is not such a case. There is, in my view, an. element of artificiality about the applicant's conduct in this matter. In August 1t sought and failed to persuade the TPC to take proceedings against SCI. It repeated that attempt on 25 October. Then on the same day it sought for the first time to involve the Attorney-General and, in effect, demanded a decision within 48 hours. It cannot seriously ~15- have expected a favourable response, over-ruling the TPC, within that time. It received a courteous, considered response, along entirely reasonable lines, which it must have fully anticipated. If the Minister had said simply 'I have considered your request and I reject it', that would not have been reviewable, since there was no obligation on the Minister to give reasons (ADJR Act Schedule 2 para (£)). I take that into account in the exercise of % my discretion. I also take into account the following factors, in descending order of importance, (a) the day-to-day administration of the relevant part of the TP Act, including questions of legal action to enforce its provisions, is and must be the responsibility of the TPC; (b) the TPC has considered the question which underlies the present action and has decided it against the applicant; that decision is the subject of challenge under the ADJR Act in an action parallel to this one; (c) ait ais conceded by the applicant that, in the circumstances of this case where the TPC has all the relevant information and the power to take proceedings, the Minister would be entitled to decide on very limited material not to interfere; (ad) the Court should be slow to interfere, on the application of a commercial entity, in any case where a statutory authority has determined not to institute legal proceedings against a business rival of the applicant; - 16 - (e) since the matter was before the Attorney-General, the applicant has instituted proceedings designed to achieve the same ultimate result (though by less direct and immediate means) as that which was urged on the Minister; in other words, the applicant has available to it a parallel remedy provided by the relevant legislation; and (£) the applicant has known of the SCI bid for FCL, and of the absence of any TPC challenge to it, for many months; yet it required a decision by the Attorney-General within 48 hours. + Having regard to the scope and purpose of the relevant sections of the TP Act, to the respective roles of the TPC and the Minister, to the alternative and more appropriate remedies open to the applicant and to its own behaviour in this matter, I would, if necessary, exercise my discretion against granting it any remedy. Because of the view which I have taken of the true meaning of the Attorney-General's telex, and because of the way in which T would exercise my discretion if I were wrong about that true meaning, it has not been necessary for me to consider at length the various authorities that were cited to me in argument. I should however make clear that I have accepted as accurate, for the purposes of my decision, the proposition that a decision by the Minister to institute or not to institute proceedings pursuant to s.50 of the TP Act is an administrative decision capable of review under the ADJR Act; cf. Lamb v Moss and Brown (above). On the other hand I should also make it clear that I have not found it necessary to decide whether, in a case covered by s.80(1) of the TP Act, the Minister 1s bound to make a decision whether or not to institute proceedings simply because an interested party, or perhaps an officious bystander, asks him to do so. Certainly he can delegate the task of looking into the matter and can base his decision entirely on a resulting report. I believe that he could, in an appropriate case, properly refuse even to investigate the matter, perhaps referring the person making the request to the TPC in the first instance, or not even doing that if the request seemed trivial or vexatious. The translation of his—undoupted power to decide into a duty to decide (attracting the jurisdiction of the Court under s.7 of the ADJR Act) may, for example, turn upon such considerations as the nature of the breach or threatened breach of the Act alleged, the apparent availability of alternative remedies, the identity of the person seeking a decision and, in particular, the apparent cogency of any supporting material supplied. In view of the concession made in this case that a decision had in fact been made, it is not necessary for me to express a final view on those matters. I do however accept that, -~18- if adequate material were placed before the Minister suggesting that the TPC had in some way failed in its duty under s.80(1) of the Act, he would be bound to give that material proper consideration. (Cf. Padfield v Minister for Agriculture, Fisheries and Food 1968 A.C. 997). For the reasons I have given above, this application e should be dismissed. I certify that this and the 17 preceding pages are a true and accurate copy of the Reasons for Judgment herein of The Hon. Mr. Justice Woodward -- S.A pestle Dated: 20 December 1983