4. y oP" CATCHWORDS TRADE FRACTICES - application for interlocutory injunction by competitor - ilarade scale advertising campaign for television and rewspavers - consumer vroetecticn - misleading and ceceptive conduct - inducing a oreacn of contract between competitor ana corpetitor's treait tard nolders. Trade Practices Act 1974; s. 52 W.t.d. PRCERIEVTARY LIMITED (trading as AVIS AUSTRALIA) v. EVISET CERT PENT-A-CAR SYSTEM PTY. LIMITED No. Gzll of 1984 LOCKHART J SYDNEY 4 JULY 1934 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G2ll of i984 ) ) ) ) ) GENERAL DIViST3 AND: SULGET RENT-A-CAR S255=EM ETY. LIMITED Respondent JUDGE MAKING CRDER: LOCKHART J. WHERE MADE: SYDNEY DATE OF CROER: 4 JULY 1984 JPDER i, ORDER that until tne hearing and ceterrination of chese proceedings or until further order the PResecndsnt by itself its servants and aqgents be restrained from: (a) publishing, causing to be pubi:isned, vsutting t3 of the xind cescribed in sub-oaragrapn (bp) hereof; (b) ORTE. 2. publishing, causing to be published, putting to air or causing to be put to air or otnerwise advertising or causing to be advertised by any medium any offer to exchange a Zuaget Card for a credit card issued by any other car yental company in Australia on euscstantially siv1 those upon which a credit card; znducing holders of credit raras issued cy tne Applicant or by any cther car rental company in Australia to deliver possessiin custody or contrcl of such cards <9 the Respordent or 1ts that 2. wh Respondent be released tran che uncertaxinags given to the Court bv 1ts Counsei cn Tualy i334 and continued on 3 and 4 July 1924. 3. GRANT LIBERTY tO arsly aenerallvy cn iwo '2) cays notice. ai. RESERVE the costs of tne Rovolicaticn fcr interiscutery The portion of the 'and ov the way, if youn we Wil aive you $19 of sucth Ansett serving tne travel $10 and a credit card on cash and serving ac such desk, and Mr. tne Sudgect card in exchanges for daet's competitors. IN THE FEDERAL COUPT OF AUSTRALIA pear iy (a>) bes nd = is cm [al wn cl RS fizni H C1 KH ral tu a fa rs) 'rl Hes Fe 5) > ) ) ) No. G 211 oF 2 ) ) This 283 a cigputs between cwo maior motor vehicle rs companies. The apolicant is W.T.H. Pty. Limited trading as Australia (to whicn I shall refer Zor convenzrenc2 as Avis'?. a nt 1s Buaget Rent-A-Car System Fty. oirited (to which IT = oO a '8 ri n (Dp 1D ry ctl) fe] o wo pO) un w s tae Q wo ct reter for convenz Over about the last 'five vears Budget has subdstanti iv bo} Q Ley oO a i) gpct a) rt) r w ts 'D rp) Fy ctci) Hog Cc in) a ys ww bwbt e) ct u ad om Bb :Qo + wb s (Dp a ct w ran Hi jw ts . iD a Q . ao vy fay a ao fo Ly P. ul O) un wo im ctrh fu re] w re) < o ts at mn ' ro] q py Budget to increase further its snare cl That maraet. te be tw is) ua 1b tory invaunceichs to rastra Pot w Pct tb rs fay ) re) ' Avis i a tr nm a w Be ny < 1. wu oO oo] w fe re) io QD w 'S Ln w mM uw advertising, cn bau Rp PeQ u "Ss jan D nN 1p tS ats iD a ip© mn ct uuw & re) aq 1m a wpu ot re) b S tb constitute mislea Avis jb ct a 1D ts * . :" rrab [o) w ww ie p t vu contravene s. 52 of the Trade Practices Act 1974. Avis also seaks to restrain Suaget f ts om inducing credit card hoicers to breach their contracts with Avis. Many aifidavits nave bean vead by tne evidence was given. There 1s ne aisouts cn the facts at this stage of a wp m t) as2, alchaugh the correct infere evidence is net the suriect: oF agqreerent Tne major car scental cusinesses that operate tnroudhcut Austrailza auncluace avis, Eudgerc, mertz Fent-A-Car ("Hertz"), and petween car rental cperators wno conduct tnair businesses nationally che Airports Business Concessions Act tenders called by che "inister of Transrcrt, Pudaec wags granted sgne or "< vyvO nmatloral autaorit1es pursuant 72 The Act 1959 to conduct tne ousiness of kirira self-drive motor venicles on 1 July 1979, Budget by 1tself and iuts licensees estabiished rental desxs at 32 airport termirals, inciuding all tne major airports in Australia, pursuant to the authority granted by th oh p. Commonweaith and to ccntracts ent iD xv into with Local authorities tnat also cperate airports. The mumser of rental desxs at alrport terminalis has now yrown ta i20 There 18 eviaence That at tre orssent time Budzet holds about 55 ver cent of the national motor vericle Following a furthers change in Zommonwealth Government colicy. as from 1 July this vear tnere are 79 ce f5ur major car ental cserators authorised to orgerate from Cormonvealth a2zrports. 7.2 four operators are sudget, Avis, Hertz ana Thrifty. The chance on 1 Tully 1984 has be ft) m mucn publicised and advertised. "here 13 evidence that Buaget assumed that in che serisd leading up tol July 1994 the ctner car rental companies wouls navertise extensively and endeavour to take from Budget part of its share of the car rental marxet, so Buagect asserts that 1t decided tnat it needed <co ensure not only that it yretainea 125 marnet share but also tha at a rv fasip] nh fy) fp nu oO fu afu a uw'1 bic t') te wu 'S ju sm a rs) Lal) fa m yw ct 1Dfu (D fw "4 a) £ lay tw a fi 4a oO ow avs chat it was imperative for it 2 eroduce innovative anda a attractive margeting and advertising prcarammes. 4, Budget ainstructed its advertising agency to prepare an advertising campaign wnicn would give effect to its wishes. Budeet concluded that a flat jiaaly rental race for a large part of the Budget fleet of motor cars would be the best means of achieving ucts aims. thar the Gailiy vate of $35 is ovsarticular rann fe) a "9 ) a H fog I <t 1D w wu a z o equivalent rates are $49 for Avis, $48 for hertz and $43 ror Thrifty in yespect of a Holden Commodore cr aauivalent vehicle. There is evid H a n om from Budast that the acvertising campaign n 1s one planned for ths mentn cr Juiv 1994 crniy. Buaret says that recause of the critical -imoortanc of 1 duivy cto che car verncal date. Eudgvet says that ar it 15 yequirea by 'this Court nor c9 oublish the advertisements, "nich it Save are an integral part sf its campaign, it would be unable to cavise in the time availapie to 12 a campaign which could taxe advantage of the 1 July 1984 changeover in Alrdorte operations of tar rental overatcrs. There 1s evidencsa from Budget that its succ2ss has been dus zn larce vart to 1ts ability to adapt its advertising techniaues and marketing campataqns tO Changing circumstances in the market piace. Evidence has been given ov the General Manager of Budget by affidavit have to fall back on television advertisements which it had run for some time and which it now re fu ts fs} e) @ it) wi a w an o mnA Pw ae, we] feel HF a pb b Na o cr o at 1" @ circumstances of 1 fuly 1984. He says trat che harm caused Dy sucn an event at this tire could never be measured, and that <cnis 1s particularly s0 with tne introducticn of xccth Avis and th "s H m cr : rey Ww national operate — uw th "s obp ra} te a Q FE] a 12) xe Qo w be et He) » + ry WS a Lhd at ub t '3 rei ul woO Q 1D a fal ee ibrm >} nas sworn that the abiitty of Buaget's competitors to advertise the importance of 1 Juiv 1984 'to car rental operators Witn mo icroetiitive licersees and franchisees wno ara reliant uvon Sunaget to nest tne new competition at Commonweaith airperts. Cver 270 car cart oF Buazet s advertising exsenditure is on televisicn. Television 15 tne raicr lum for Budget marxeting. On Wednesday, 27 June last an advertisement appeared in a Melbourne television channel advertising Buaget and its naw vropnosais. The same advertiserent was screened on Channel 10 in Syaney or Thursday, 28 June. It runs for 70 secsnds. T nave seen it in court on more than one occasion. Avig asseris that the conduct of Eudget in outtirg tine advertisement t> arr constitutes misleading or dsceptive conizatc in chat:- (a) Tv represents shat tne Budget card aescribed ino ine advertisament is a credit card. whith it is not; tS) It represents to Avis caraholaers that cy surrendering their Avis caris to Budget representatives upon receipt or $19 in cash ard & Budget card they are nst in Dbreacn of 'heir contracts with Avis and are immoine frem surt from Avis; (c) It represents that Avis service desas are not manned az all. or 1f manned, are manned infrequently; and vd) it portrays the Avis service aesk as nanifestly interior in quality and size to the Budzet desx, cnus creating a faise impression about Avis ara its services. A further ground of complaint, passa cn The turisdiction cf this Court, 25 that tne conduct to which © nave briefly ceferred is said to constitute the cort of inducina n oOo] pay jo fa =] a u u 13) fu re) 1D pA uafasw no OQ a ci ts py a ct bo rt) atfit wo bo) we <¢ B n weA. BH ct mn1s ib Pp. i wt a w ts A. 7. holders which orovides that each Avis credit card remains the vcroperry of Avis and is not transferrable, it must be returned to Avis upon request and must pe Kept sate by tna cardholder. s complaints by asserting amorast 'a) che advertisment dses not represent that the Buiget card portrayed in the advertisements 15 a Budaet credit card. An Avis carhoider upon seeing the advertisment would, so it 1s said, realise that it taxes days or pernaps weeks for a company to process an application Isr a credit card, so that at would be uniikxely for that serson to think "nat what ae racelves across tne counter from 3.d Q ii) ct \r "7, re) ro u rs rt) ty uv a ct w ral BP Dd io} Q mh (bh) the advertisement does not ercouraze c=he Avis carchclier to tc) by surrendering the Avis cards to EZudyet revressnctatives, Avis cardholders are appointing Budget as their agent for tn purpose of returming the carcas to Avis and satequarding them oy a ie a w fa "i i) Le) ct I w i) FS] wD i] ct pa oO D uw fe]a ss w 'Ooib ui ft)Pa] ctra ct te <q ulft] i Mm w w ct manned. Further it is said by Budabt that this asoect of tne 1) pa] fam ir) FS] wo s ow 'D c Fh ay tQ . advertisem ve) any portrayal of the Avis desks in ths acvertisement as being anterior in auailty or size to tnat of Suczyet is mere surfing. Avis sougnt ana optained 'from anctner Judge of tnis Court on ast Fricay, 29 June, injunctions restraining Budget frcm engacirng in the iumeugnmed cenduct. These inrunctions containued until Mosniav, 2 uly. I commenced the hearing of this acplication for iunterlocsutciry relist on Monday afternoon, and the cas2 was part-heard at the a fa) a Qa ra) Cc sion of the court's business that aay. I accepted undertakings in rascect of 2 matter not csoverea by these undertakings, whicn in essence continued the injunctions yranted last rriiay until vesterdav. Io resumed tne nearing or the matter vesteriay afternoon and, at che conclusion of the hearing yesterday, substantzialiy the same orocedure was Tollcwed, thus hoiding the position until = As this is an application for interlocutory <incturcstive relist, Io amnot, cf course, deciding any of che issues ona final basis. My first inquiry 1s to astermine whather Avis has estaplisned a prima tracie casa in the sense sutiined in Esechan Groun Limited v. Brezstol Laboranjries Ftv. Limited -1958) 1123 C.4.2. 3518, ir, 23 cut 9. they a9 not matcer in this case as my conclusicns would be the same whichever test be avplied. The caliance of ccnveénience must te examined if I reacha c oO nelusion favourable to Avis on che first auestion, althougn it mu i wn ct net be forgotten tnat the balance cf fu Lj convenience 15 often interwoven with the earlier question s"hether cnere 13 a priva facie case fr wnether tnere 13 a 3$Yfl2us question to be cried. Avis and so far as one can tell one for Herct= - vcossibly a fourth desk ur in the Dackxground. Budget is the erominent desk which 'faces the Pr awer. A voice-over announces that "It is tne biggest arrival at alrports around Australia in five years". Mr, Robert Ansett walks in and stands behind tha Buaget desk. TO tne accompaniment of much flat rate promotion and places it usen the Buadet counter, Mr. Ansett <inen sars, 'Budeet is celenrating five wears at deoladen Commodore, camira cr Semini For Just $35 a day. we are only ceo nappv for you to omcare2 our orices witn our lcorpstitors whenever chey arrive. And by the way if you happen to rave cne of therry credit Degings to sarve nlm witn what is described in tne text of the 10. advertisement as a "trade-in"; that 1S, thea custcmer trades in tn oO rival rental company's credit card and receives $10 cash and a Budaet = lay iein wD ct a +4 un wl een holaing the si0 and the creiit card and the voice-over announces, "More than ever Buazyet crives vycecur dollar tw farther". Incressions sained by the viewer of a television advertisement such as tnis are mot only from <he spoken word spoken but from tne visual images in conjyunction with the spoken word; 1t is the overall impression that matters. In my cpinton, Avis has estaplisned a »yrima facie case that che advertisement suggests to a viewer (IT am content to assume for Ma resent purscses that he is an Avis card holier: that ne nav excnande nis Avis card Tor a Budaet card éntitiirg him to use the Zanget crecit facilities when seexing to rent a metor vehicle From Evazet. Tt is common ground that will receive from FEudget, on press Tacilities. Indeed, che Avis card holder must compiere a Budget arpiication form for a credit card and witnin a short time, after it ll. Although the evidence was not, in its earlier stages, at all free from ambiguity, it seemed to me that by the time it nad concluded 1t was plain that sgudgev's policy 15, at ieast now, to automatically 19) issue, within about five aays of the Form of aoplication being sianed, a Fudget credit card to a pverson wno surrenders a rival comrany's However, cwhere is no suagestion chat che Budget Corp card woicn the Avis card holder receives in return for his surrencaer of the AVIS card and receipt cf sid in cash 1s itseif a credit card. A prira facle case has been established that the advertisement offers the Avis card holder something which ne does not in fact receive upon surrender would think that. Y» we] a s Ls) Q Pe) uO o Q H ye] a oe o at wo rary wD < es [D) BP oO Jis) "3a Ley afe i" credit card entitizng him to the benefit of Budaget's creat facilities. in my cspinzon, a orima Farle case has been estaplrened tat this conduct of Sudzet 21s misleading or deceotive conauct sr ccorauct I should aid that che advertisement arclies not only to Avis caras but to the cards of any other motor venicle rental companizs in competition with Budget. Also, in my view a prima facie case has been made out tnat, by offering a Budget card ana $10 cash in return tor an Avis card, oe oO bt fv a ~ Oo -_ t i oa ye aq fm) 7) a tS ) fon P ow Qn @ nm Q io a ui i) rey mh He) D Ww wo va fan is a. a ct wD rn ce) u co ty fw ao a @ Avis card is not transferabl2, remains the rroperty of Avis, muse Ee returned to Avis upon request, and must 2 keot safe by tne care bkoider. A prima facie case ras been established that tnese conditisns are inconsistent with the act of thea card holder surrendering his cari to Budget representatives in the circumstances encourages by the "niles the vsoint is not free from argurent, I tnank tnat <tnis 13 An anreal analysis of the facts and not ore whicn ts i1szely to succeed at 13. After the hear:ng had progressed to a vooint where the avidence was well advanced, counsel for Budget informed the court that Budget was prepared to proffer the following undertaxings to the court: "2, Tt will net advertise: fa) on television nts offer to "trade-in" credit cards of its competitors without stating cleariv and prominently as part cf th semant at the time tne "trade-in" zs shown to occur the words "this will be a corporate ID card. Within seven days you will receive your Budget edit card"; (b) in the oress its orfer co "trade in" credit cards of 1ts competitors without statirg as part of the aavertisemrent: (i) that the vepiacement Budzet credit card will be issued within seven Says; and (ii) that 1t will return those cards to the company that issued tnenm. 2. Tt will unstruct its staff tt advise all persons nanding in the cards of one of its competitors in raturn for a Budget card that 1t will taxe up 'to seven cays before theiy veplacenent Budder Ccrpkatea credit cards are delivered to them. 3. Ite will deliver up to 1ts respective competitors all crenit carés wnicn were nssued Dy tUncose competitors ana sanded in to Budaet after recaipt of tunose caras at Budget's head office in Meibourne. +. Zh will issue to ach ccmpetitor s card nolaer a Sudaet CoroRate credit card witnin seven irays of receipt by Zuaset at .ts head office of an aoplitation signed by the card holder and setting cut his biiling name and address and no more." 14, There are in my view various difficulties with the undertakings which were referred <5 in argument, one being chat ndertaking l(a) could be complied with by words appearing upon the ser2en and not resulting from anv alteration or amendment to the film or tne sound-tracx. I have serious reservations about this metnod of informing the viewer cf the vealevant words especially as the adv rant lasts cniv f 'o reise ¥ 30 second and a iot nappens in tnat time. F Also, the initial written form of tne andertaxings nanded to the Court oy counsel for tne rescondent was changed on two later occasions during the course of argument. Ico mot say this critically, but it leads me to cause carefully in all tne circumstances of che case herore accepting the undertaxings. fT am strengthened in taking this view wnen it is rememcered that tne fact that undertaxing 11a) would be complied with cniy by words apeearing on the screen and ict py arenament to the fiim or sound-tra towards the ani of the rroceedings tefore me. that are proffered I ar not satisfied tnat the course suagested by Eudaget would overcome the difficulties with the advertisement to wnich r I have referred: carticuiarly tne inducement to Avis card nolcers to Breach their contracts with Avis. Tt is true that the centracts berween Avis and its card * 15. complaz:nts of the applicant. Even if they could provide an answer to the complaints of the applicant, they do not in my view infringe tne prima facie case that has been established and are more apprepriate to be dealt with at the final hearing. In my cxinion Avis has also established a orima facie case that che television advertisement represents to Avis card 'holders uw D> pw ow Dy surrendering their Avis cards to Budget representatives, upon receipt cf the $10 cash and a Budget card they are entitled in iaw to do so and will not ce in breach of their contractual commitments to ~ I snould emphasise that the television advertisment 1s noc Q 2) ntined to Avis, or Avis cardholders. It enccurages the cara holders of any motor vehicle rental company in competition with PBudaet to adopt the course suggested in the advertisemen ow advertisemenc - tnough not all of them. I turn 'tc the dDalance of convenience. Budget says that it will lese tne senefit cf its vsroposed aavercising <camcalgzn if is) umjunctions are awranted. It has spent a Great deal fF money on i125 campaign and, if enjoined, 1t says it will have to resort to, in effect, old advertisements which aré@ inarcpropriate to its proposed campaign. Budget says that it will net increase 1ts market share and yossibiy lase scme of the share already gained. TI have no doubt tnat t Tam not satisfied, however, that 'the dire consequences foresnadcwed benetit cf Avis' undertaking as to camages. There 1s evidercs trat Avis will suffer harm 1f interlocutcry injunctive relief 13 refused. = accept that Avis may lose some of its credit cardholders to Budget if Buaget's conduct continues unrestrained and that Avis vay sutler "n my criniocn, the sudlic BP i] at a 's ch) n fon oO cti)a ro '< cr p wo s t < ry ot (b interests of Avis and other motor vehi B. n be ao ns DcT fay Ke a ie) 'S o o rr o un . be] D s1 ha 1b 12) any inconveniences or damage to Sudzet chat ait may sufler tansequent upon the granting cf injunctive relisf. Alsa it must se ramendered chat it 1s Budget which is seeking to aisturp the status quo i 39 not think it right that Budget should reao advantage at cne =exeense if cs competitors by enazaging in what is prima facie misl a @ fn Pp 2s a3) wray Geceptive conduct and unfair competitive benaviour. There was 4 n petween counsel and the Bench -ineiner ul a $2 un mn i uo anv injunctions qranted, aichougn interlocutory, woulda nave a rinal eflect in practice. This 1s a not uncommoA occurrence in mazcers ar this «ind. It was common ground tnroughout the hearing that all the Court was hearing was an application for interlocutory, not final, 17. relief. However, I should say that I have formed the view chat Avis' case 1S on the stronger, not the weaker, side. I formed the impression that Budget has come a long way since i979 when it was granted ore cf two national authorities to conduct a ran the business of hiring <=elf-drive retor venicles at Commonwealth airoorts. Its market share apparently now stands, as I have said, at 55 per cent. it has achieved this spectacular result in the fact of competition and due to energy, force and imagination of these who control its affairs. Advertising has played a key role in 1ts success. With tre acvent of a new era crperative from last Sunday, Budget will de one cf four major car rental oserators authorised to cperate from Commcnwealth airports. it 1s natural that Budget wishes fo continue its forward march and 'further ennance 1lts business an increase its marcet share. But, as the marnet leader which 1t has bpecoms, in my view .t should cbserve, not ramore, orcper standards cf cenduct in its advertising and other commercial activities. Indeed, 1c could be playing a role in setting che orioer standards of behaviour in the relevant cart of the incustry. The higniy competitive rature of the motor veanicle rentai business may Dring those engaged in it close to the edge cf misleading oy deceptive conduct, cut tney should not 'cross the fine line chat divides such conauct fram fair competitive benavicur. 18. My remarks are in the context of the Trade Practices Act - in particular s. 52 - and are not intended to make judgments on matters of commercial morality unrelated to the issues in this case. it 1s not for the courts to do that. Whether inducerents to holders of one company s creait cards to "trade cnem in" ror a rival company's cards upon payment of a small sum of money for the purpose of gaining further business. 1s conduct acceprable to the Australian cov~munity today 1s for others to judge. ri A circular dated 22 June 1984 from Budget to its star eescribes the television aavertisement, the subject of this cas3, as something which "will deliver the final KO bicw zo Avis, Hertz and Thrifty". Budaet staff are encouraged to feat the hell ut of cthe ccmretitors". Notwithstanding the racy style of this document it is an uncteresting barometer of Sudset's attitude towards its new advertising campairqgn in which the televisicn auvertisement ciays a eritical role. Budget has, in my view, zone t39 far. Ioryspsse ts restrain it from doing so. However, I do not wish to see Bucaget Losing any benefic from 1ts proposed advert: wm ing campaign excest wnat 25 necessary c2 2xcise a i] cr che offending e2isn s. If Budset ceciaas to arend its camscaior, in particular its television and proposed newsraper advertisements, sur wishes to have the court's approval to these amendments racher thar yun the risk of contempt, I am prepared to consider che materzal as amended and determine whether 1t would infringe the Trade Practzzes Act or violate any of the rights of Avis or ats card noiders. 19. Accordingly, I will give leave to Budget to restore the matter to the list cn two days notice generally and in particular for this purpose. I do not propose at tne moment to maxe formal orders - I will stand the »atter down until iater to-day so that tne parties may brin in short minutes of order. ages EHTEL #13) 1 certfy that is3 2 precea.ag Pa5°5 a2 ata cozy of the Veena anath G mt Reasons for ¢. '277F 1 ocnoci is Roncur