¢ "194 CATCHWORDS Trade Practices - Resale price maintenance - Whether supplier of fuel used a statement of a price likely to be understood as the price below which the goods were not to be sold for the purposes of para. 96(3)(f) Trade Practices Act 1974 - Relation between resale price maintenance provisions of Trade Practices Act and Petroleum Retail Marketing Franchise Act 1980. Trade Practices Act 1974: s. 48, para. 96(3)(f). Petroleum Retail Marketing Franchise Act 1980: s. 20. Goodwin v. Phillips (1908) 7 C.L.R. l. Mikasa (N.S.W.) Pty. Limited v. Festival Stores (1972) 127 C.L.R. 617. gd. & M. O'Brien Enterprises Pty. Limited v. Shell Co. of Australia (1982) 45 A.L.R. 81. Chronopoulos v. Caltex Oil (Australia) Pty. Limited (1982) 45 A.L.R. 481. BP_AUSTRALIA LIMITED v. TRADE PRACTICES COMMISSION G331 of 1985 WOODWARD, LOCKHART and NEAVES JJ. 16 MAY 1988 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISTON No. G 331 of 1985 ON_APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN : BP AUSTRALIA LIMITED Appellant AND: TRADE PRACTICES COMMISSTON Respondent JUDGES MAKING ORDER: WOODWARD, LOCKHART and NEAVES JJ. DATE OF ORDER: 16 MAY 1986 WHERE ORDER MADE: SYDNEY MINUTE OF ORDER THE COURT ORDERS THAT: 2. The appeal be dismissed. The cross-appeal be dismissed. The appellant, BP Australia Limited, pay two-thirds of the costs of the respondent, Trade Practices Commission, of the appeal and cross-appeal. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. ' IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G 331 of 1985 ) GENERAL DIVISION ) ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN : BP_AUSTRALIA LIMITED Appellant and TRADE PRACTICES COMMISSION Respondent COURT: Woodward, Lockhart and Neaves Jd. = ATE: 16 May 1986 LACE: Sydney ln) REASONS FOR JUDGMENT WOODWARD J. In this matter I have had the advantage of reading the draft judgment of Lockhart J. I agree with him that the appeal and cross-appeal should be dismissed, with the order for costs which he proposes, and I concur in his reasons for judgment. I merely wish to adda little on the subject of the inter-relationship between s.20 of the Petroleum Retail Marketing Franchise Act 1980 ('the Franchise Act') and the Trade Practices Act 1974. I had at first some doubts whether it was possible for a company such as the appellant to take advantage of s.20(2)(b)(ii) of the Franchise Act, enabling it "... in good faith .... to assist a franchisee to meet a price or benefit offered by a competitor ..." without appearing to breach the resale price maintenance provisions of the Trade Practices Act. I had this concern because I took "to meet a price" as meaning "to match a price" or " to follow in fixing a price". Thus, in the terms of the Franchise Act, a rebate to assist the matching of a competitor's price would be legitimate; but one designed to undercut that price would not be, because it would give an advantage to that franchisee over other franchisees which went beyond meeting competition. However I have decided that there are several factors which remove any possible conflict between the two pieces of legislation. In the first place, I think, on reflection, that "to meet a price or benefit", the response need not be precisely equivalent, or even take the same form. I think it could fairly be said that price competition was 'met' when the difference in price was such that, in the particular circumstances of the case, it was not significant. Secondly, a somewhat lower price could, in my view, be 'met' by an offer of more efficient driveway service, a free car-wash to accompany larger sales, or some other benefit. Or the opposite could apply - a franchisee might have to offer lower prices to 'meet' some other benefit offered by a competitor. It is significant that the competition contemplated by sub-para(b)(ii) (above) is not restricted to price competition, but expressly includes meeting a "benefit" offered by a competitor. I can see no good reason why a price should have to be met by the same price or a benefit by an identical benefit to attract the protection of the sub-paragraph. Further, the Franchise Act excuses the company which "in good faith" does an act (such as offering a rebate) to assist a franchisee to meet competition. It does not require any oversight by the company of the result. As long as its intention was genuinely to assist in bringing that result about, the act is excused. Thus a company commits no breach of the Franchise Act (or of the Trade Practices Act) if it says to its franchisee, "We note that your chief competitor is charging x cents at the pump. We calculate that to assist you to meet that competition we will need to give you a rebate of y cents. We are prepared to offer that rebate as Iong as your competitor's price remains the same and we are satisfied that you are genuinely trying to meet that competition." Having, in good faith, worked out what ought to be required in all the circumstances, it should be of no concern to the oil company if the franchisee decides to cut his margin and go below his competitor. Although the oil company has the discretion whether to grant a rebate or not and, subject to s.20, as to the extent of that rebate, under sub-para(2)(b)(ii) it is the franchisee which is to meet the price or benefit offered by the competitor. The precise method of doing that, if it comes to minimum prices, can and must be left to the franchisee; but if an oil company grants a rebate toa particular franchisee, and it becomes obvious that the franchisee is not using the rebate to meet the price or benefit of the competitor, the oil company is entitled to withdraw its support. Those are the principles upon which the Trade Practices Act and the Franchise Act can be reconciled. In these ways it appears to me that the Franchise Act can be complied with, without breaching the letter or the spirit of the Trade Practices Act; and some margin, though admittedly limited, is left in this highly regulated industry, for the franchisee to fix prices for himseif. I certify that this and the three (3) preceding pages are a true and accurate copy of the Reasons for Judgment herein of The Hon Mr Justice Woodward Sandow ov Associate Dated: 16 May 1986 =N_THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G 331 of 1985 wwe ww GENERAL DIVISTON ON APPRAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN : BP_ AUSTRALIA LIMITED Appellant AND: TRADE PRACTICES COMMISSION Respondent CORAM: Woodward, Lockhart and Neaves Jd. DATE: 16 May 1986 REASONS FOR JUDGMENT: LOCKHAPT o. The question in this appeal and cross-appeal is whether certain conduct of the appellant, BP Australia Limited, contravenes the resale price maintenance provisions of the Trade Practices Act 1974 ("the Act"). There are some problems about the competency of the appeal and certain procedural difficulties which should be mentioned at the outset. The appeal is from Beaumont J.'s judgment of 22 October 1985 where his Honour declared that the appellant engaged in the practice of resale price maintenance in contravention of s. 48 of the Act, ordered the appellant to pay the costs of thé proceedings of the ee re rr eet ae repr inn pie cen rere Men te apiece - - tee 2. respondent, the Trade Practices Commission, and then adjourned the proceedings to a date to be fixed for the purpose of dealing with pecuniary penalties and other relief. Later his Honour heard evidence and argument on the question of penalty and on 1l December 1985 ordered the appellant to pay to the Commonwealth a pecuniary penalty of $20,000 and entered judgment pursuant tos. 76 of the Act. His Honour also ordered the appellant to pay the Commission's costs of the hearing on penalty. No appeal has been brought from this latter judgment. Whether, in proceedines for the recovery of a pecuniary penalty, an appeal can lie at all from a declaration that there has been a contravention of s. 48 of the Act or, if it can, whether the judgment is interlocutory, thus requiring this Court's leave to appeal (leave which has not been sought) and whether an appeal lies only from the order imposing the penalty are matters of some difficulty. If we were to allow the appeal and set aside the declaration and order for costs made by Beaumont J., the order imposing the penalty may still stand, yet the time for appeal from that order has expired. I say nothing about the attitude the Court would take to an application for leave to appeal out of time. However, as the Court has concluded that the appeal should be dismissed these problems donot affect the result; but I mention them because they may have presented real problems in this appeal and so that future appeals in similar matters will be properly brought. The appellant is a wholesaler of petroleum products including motor spirit. The sale of motor spirit in Australia is very competitive. The appellant owns service stations in Australia and = wee ee ee (dana eehaelt ll atl anced Toei tate ah come ate eeaein ir cate oat cee anata inaateetcmmnenee Casmmiiaatente odie - .- - 3. leases them to retailers, one of whom at the relevant time was Punic Investments Pty. Limited ("Punic"), the directors of which are Robert Khoury and his brother Fayez Khoury. Punic operated a petrol station at 494 Forest Road, Penshurst, New South Wales. In 1983 the appellant operated a scheme whereby it discounted its wholesale price of motor spirit to retailers. This discount was provided in the form of a credit granted against that price by way of rebate. This enabled retailers to meet prices charged by competitors (eg. Shell or Mobil service stations) because it subsidised the most important part of their operating costs, and enabled them to retain their profit margins. It also allowed the appellant to retain its market share. For example, if the BP price at the pump was 48 cents per litre {c.p.1.) and the nearby Shell station moved to 45 c.p.1l., the retailer would have sought a rebate from the appellant of 3 c.p.1. to enable him to move down to 45 c.p.1. also. The appellant's practice was to send letters in a standard form to retailers who sought and were granted price support. Punic received at least one such letter during 1983. The usual form of letter read as follows: "Dear Sir/Madam, This letter confirms that with effect on the day immediately prior to the commencement date mentioned herein, we withdraw the temporary support presently being allowed to you for the purpose of assisting you to meet a retail price or prices offered to the public by one or more of your competitors. eee so. — ae ee ee eee a ee 4. We acknowledge, however, your renewed request to our Territory Manager for the continuation of some level of support to assist you to meet the retail price or prices mentioned in the Schedule and we confirm that, commencing on the date mentioned in the Schedule and until further notice we will allow you the temporary support mentioned in the Schedule. In this connection we emphasize that the allowance of temporary support in respect of any product is for the sole purpose of assisting you to meet a price for that product offered by one or more of your competitors. The letter should not be taken as an attempt on our part to induce you to sell either grade of motor spirit or any other motor fuel at a particular price. The fixing of levels of retail prices at which you sell any petroleum or other product is entirely a matter for your own judgment." The letter thus suggested that price assistance was to be only temporary to enable the retailer to meet prices charged by competitors and that the retailer could react to price reductions implemented by others rather than itself initiate price reductions. The letter was accompanied by a form headed "Request for Invoice/Credit Note" towards the foot of which appeared an acknowledgment in these terms to be signed by the retailer: "I acknowledge the condition on which you have agreed to assist me and undertake to immediately inform you if I shall decide to cease to meet those motor spirit prices charged by one or more of my competitors as mentioned in the Schedule herein. I also agree to accept relevant debit/credit for price adjustment of stock on hand as above and for all adjustments at subsequent assistance changes. (Subject to State office ratification)." The Schedule referred to in the letter and the form urdentified the competing service station and its price. fe ree ere eee ee er ee ee - ome 5. Beaumont J. observed "it would seem that this documentation was inspired by the provisions of s. 20 of the Petroleum Retail Marketing Franchise Act 1980". The appellant employed Territory Managers whose functions included leasing and promoting the appellant's service stations and determining questions of policy in relation to the sale of the appellant's fuel to retailers. They also carried out surveillance of the prices charged by other retailers in their area. A ii... Brennan was the Territory Manager responsible for the Penshurst site operated by Punic. The appellant had a "pricing profile system" whereby retail outlets were monitored regularly, usually on a Tuesday but sometimes more frequently depending on the state of the market and level of competition. The Penshurst site was near a zone described in the evidence as "the price sink" of Sydney, i.e. a zone where the petrol prices were the cheapest and competition was particularly keen. On 3 November 1983 Mr. Brennan telephoned Mr. Robert Khoury and said that Shell had moved up their posted retail price for super motor spirit to 43.4 c.p.l.. Mr. Khoury was informed that Punic would be given "fresh support to match that price ... your new buying price Cwilld be 40.9 to retail at 43.4". Mr. Khoury indicated his agreement to this course. The reference to the new buying price was, of course, to the wholesale price. a wer ere eee pie ns mene ene en men nee eee ~- 3 - 6. On 4 November Punic posted a retail price of 41.8 c.p.1., not 43.4 c.p.l., for super motor spirit. It maintained that price until 8 November. On that day Mr. Brennan came to Punic's site at Penshurst and had a discussion with Mr. Robert Khoury which is central to this case and which, according to Mr. Khoury's evidence (a version which was accepted by his Honour) proceeded as follows: ""CMr. Brennan] said 'Rob, almost all service stations in the area have gone up in price. Are you prepared to go up?' I said, No. He said 'I have been instructed by BP to inform you unless you increase your price, your retail price, to 43.4 c.p.1., your price support will be withdrawn and your tanks, and your next tanker delivery will be at full wholesale price." Mr. Brennan also gave evidence of that conversation. Indeed, both Mr. Robert Khoury and Mr. Brennan gave evidence of more than one conversation. Their evidence on some critical matters conflicted and his Honour found that where the two versions conflicted he preferred to accept the evidence of Mr. Khoury. His Honour held that it was plain that the question of Punic's retail pricing at that time was not only topical but also a matter of real concern to Mr. Brennan and Mr. Jowett, the appellant's Metropolitan Retail Sales Manager; 1t was a question to the forefront of their considerations. A document entitled "Policy Message for Territory Managers" and dated 9 November 1983 was issued by the appellant to Territory Managers with the authority of Mr. Jowett. It stated under the heading "Pricing":- - oe ee ee - . te ee ee re eee we ree ween wm ---- "Following your price snapshot on Tuesday, we are uncompetitive in a number of areas. Authority is passed to you to follow strategy guidelines however (i) we do not wish to trade below Shelli's price; (ii) should a site's strategy not include a Shell site refer by request to me." As from 8 November Punic's price support was withdrawn by the appellant in respect of deliveries subsequent to that date and, subject to volume rebates of no relevance to this case, the appellant as from 9 Noveuber invoiced Punic for the full wholesale price of 45.06 c.p.1.. Soon thereafter the parties reached an impasse in their dealings and in due course this proceeding was commenced by the Commission. The Commission alleged that the conversation between Mr. Brennan and Mr. Robert Khoury on 8 November 1983 constituted a contravention of s. 48 of the Act. The Commission contended before the trial Judge that the conduct of the appellant fell within paras. 96(3)(£) and 96(3)(d)(il) of the Act. His Honour decided the case on what he thought was the clearer ground of para. 96(3)(f) and dia not find it necessary to deal with the other question. The trial Judge found that upon its proper analysis the conduct of the appellant on 8 November 1983 was an indication to Punic that, although there was no legal obligation imposed on Punic to sell at the proposed pump price, the failure to do so could, to use the language of Barwick C.J., in Mikasa (N.S5S.W) Pty. Limited v. F2stival Stores (1972) 127 C.L.R. 617 at 636 "be visited with other et nr ne en ae erent ee ee ee ene mee gen pee et re oe wee env 8. consequences". His Honour said that those consequences would be the imposition upon Punic of a wholesale price that would be not only higher than would be the case if the pump price proposed by the appellant were charged, but would in the circumstances then known to it, in particular the fact that at least one competitor was retailing at less than the appellant's wholesale price, make it uneconomic for Punic to trade. He held that this conduct fell within para. 96(3)(f) ef the Act and thus contravened s. 48. His Honour rejected an argument on behalf of the appellant that, even if one were to accept Mr. Khoury's version of the events, when properly analysed they should be seen as no more than the exercise of a voluntary election by Punic to stay outside the price support scheme notwithstanding that it carried the consequence of a higher wholesale price. His Honour said that although Punic was under no legal obligation to subscribe to that scheme the economic pressures to do so were overwhelming. The appellant was proposing a wholesale price of 45.06 c.p.1. whereas at least one of Punic's competitors was offering a retail price of 43.4 c.p.l.. His Honour said: "In short, Punic faced the unpalatable alternatives of paying an uneconomic wholesale price or subscribing to the scheme on the respondent's terms. Although there was no contractual obligation to join the system, the practical constraints were, I think, such as to constitute a restraint of trade... In practical terms, therefore, Punic was forced to subscribe to the conditions of the price support system including the respondent's firm policy that the pump price match exactly the retail price of a nominated competitor. In the result, Punic was practically, if not legally, compelled to comply with the respondent's wishes in this respect." His Honour rejected an argument that there was conflict between the provisions of the Act and the Petroleum Retail Marketing Franchise Act 1980 ("the Franchise Act") and that to the extent of the conflict the Franchise Act prevailed and the operation of the Act was excluded. His Honour said that both statutes were intended to operate in parallel and that it was plain: "that each Act was intended to cover different fields and to promote and give effect to different objects. Specifically, s. 20 of the Franchise Act is concerned to ensure that, subject to the exigencies of the market place, a franchisor should not prefer, in terms of wholesale price, one franchisee over another. On the other hand, the resale price maintenance provisions of the Trade Practices Act are concerned with the supplier's attempts to control retail prices. Thus, there is no inconsistency or overlap between the two sets of legislation. It follows that the respondent is bound to observe both Acts. Specifically, s. 20 of the Franchise Act can afford the respondent no answer to the Commission's clain." The appellant appealed to this Full Court from his Honour's judgment. Although the Commission succeeded before his Honour on para. 96(3)(f) it cross-appealed against what the notice of cross-appeal describes as his Honour's omission to make orders in relation to the conduct which was said to fall within sub-para. 96(3)(d) (il). It is convenient to turn first to the case relating to para. 96(3)(f). — = or a ee we en er ee ee ee ee + seer ee ee 10. Counsel for the appellant contended that upon the proper characterisation of the evidence the trial Judge erred in treating Mr. Brennan's remarks to Mr. Khoury on 8 November as the statement of a price that was likely to be understood by Mr. Khoury as the price below which motor spirit was not to be sold. Counsel submitted that his Honour paid insufficient regard to the context in which the conversation took place. Counsel argued that in interpreting para. 96(3)(f) the question must be asked objectively whether the second person, that is Punic, was likely to have understood the words of Mr. Brennan as stating a price below which the motor spirit was not to be sold. It was further submitted that his Honour erred by placing undue emphasis upon the intentions of the appellant as the supplier of the goods. It was said that those intentions were irrelevent except to the extent that they were communicated to the second person, i.e. Punic, 30 as to reflect upon the understanding of that person. Counsel for the appellant also contended that in the circumstances of this case a conflict arose in the application of the resale price maintenance provisions of the Act and of the Franchise Act and those provisions of the Act had no operation in relation to the acts and circumstances falling within the provisions of the Franchise Act especially s. 20. Counsel submitted that although his Honour made reference to the judgment of the High Court in Goodwin v. Phillips (1908) 7 C.L.R. 1 especially at p. 7, which concerned this question of conflict between two statutes, he in fact misunderstood the width of the principles there laid down and took an unduly narrow view of what was decided in that case. ll. Section 48 of the Act imposes a general prohibition on the practice of resale price maintenance. Section 96 specifies the acts which constitute that practice. Section 96, so far as presently relevant, provides: "96(1) Subject to this Part, a corporation (ain this section called 'the supplier') engages in the practice of resale price maintenance if that corporation does an act referred to in any of the Paragraphs of sub-section (3). (3) The acts referred to in sub-sections (1) and (2) are the following: (f) the supplier using, in relation to any goods supplied, or that may be supplied, by the supplier to a second person, a statement of a price that is likely to be understood by that person as the price below which the goods are not to be sold." The resale price maintenance provisions of the Act are designed to promote competitive pricing at the point of resale and it seeks to achieve this objective by imposing a prohibition on attempts in various forms by suppliers to control directly or indirectly the prices, whether wholesale or retail, for the subsequent resale of goods. Paragraph (f) is a provision of wide operation. The phrase "likely to be understood" requires an objective test. The test does not look to the intention of the supplier in making the statement but is measured by its likely effect on "the second person". Where the meme - eee —" — perenne ere ee eee; 12. supplier communicates his intention to the second person the statements made are relevant, not as indicating the supplier's intention but as evidence of the contents of the statement made which will bear upon the second person's understanding of the statement. In determining whether the statement of a price is likely to be understood in the sense stipulated in the paragraph the text of the statement and all the relevant circumstances surrounding the making of 1t are to be considered. The words "are not to be sold" do not import a contractual obligation but look rather to the likely reaction of the second pergon in a practical way to determine whether he would be likely to think that his failure to observe the statement about price "could be visited with other consequences": Mikasa (NSW) Pty. Limited v. Festival Stores (supra) per Barwick C.J. at 636. The Commission did not assert that the price support scheme itself constituted resale price maintenance, although counsel for the Commission said that the Commission did not concede that it did not. The Commission's case was that the statements made by Mr. Brennan to Mr. Robert Khoury on 8 November 1983, although in the context of the price support scheme, travelled beyond its boundaries and entered the prohibited domain of offering a lower than normal wholesale price of super motor spirit to Punic but only if it agreed to charge a specified minimum retail price. ee nee ten ee om ear Gye OP ra ek ~ me " ~ wo meee ee 13. I am content to assume for the purposes of this appeal that the scheme is not concerned with the fixing of minimum fuel prices but with the relationship between prices charged by the retailers of BP motor spirit and the financial assistance offered to those retailers by the appellant. I accept that the statements made by Mr. Brennan to Mr. Khoury on 8 November were in connection with the scheme but they went beyond i1t and introduced a réquirement different from and inconsistent with it. The conversation was initiated by Mr. Brennan, not by Mr. Khoury. Mr. Brennan observed that Punic was selling -uper motor spirit at 41.8 c.p.l. against the price of a competitor of 43.4 c.p.l.. Punic was not at that stage seeking further assistance from the appellant under the scheme. It puts too limited a construction upon the conversation to say that all Mr. Brennan was saying was that Punic could not have price support and sell at the lower price of 41,8. c.p.l.. In truth, the understanding that Mr. Khoury would be likely to have was that Punic would receive price support but only if it agreed to charge the specified minimum retail price of 43.4 c.p.1.. ' The evidence of Mr. Jowett supports this conclusion. It is clear from his evidence that it was the appellant's intention to withdraw price support from Punic if it charged other than the proposed pump price of 43.4 c.p.1.; that it was the appellant's strategy on 3 November 1983 that retail pump prices for BP super motor spirit should be the same as the Shell pump prices, that the retailer who got the benefit of assistance under the price support scheme would charge 43.4 c.p.1. at the pump and that the appellant was not going to undercut Shell at the pumps. Mr. Jowett said it was obvious that the oe er nr RN TI Eo, fin a EET pS oe ee a ater 14. appellant could effect arise in the price of fuel at the pump by withdrawing or lowering the level of assistance given to the retailer; that he did not regard price assistance as an instrument for controlling pump prices but in most cases it had that effect. The impression clearly conveyed by the conversation in the light of the circumstances that surrounded it was that the price support would be withdrawn from Punic if it was not prepared to put its pump price up to 43.4 c.p.1. and that *'e price to be charged at the pump by Punic was central to the conversation. | Obviously a decision by the appellant to withdraw price support at that stage ina volatile and highly competitive market would undermine Punic's viability by its having to pay a wholesale price to the appellant higher than the retail price which at least one of its competitors was charging at the time. The trial Judge correctly concluded that the conduct of the appellant fell within para. 96(3)(f) of the Act and thus constituted a contravention of s. 48. I turn to the Franchise Act. It is described in its long title as "an Act relating to franchise agreements concerning the retail marketing of motor fuel". As Fox J. observed in J. & M. O'Brien Enterprises Pty. Limited v. Shell Co of Australia (1982) 45 A.L.R. 81 at 82: "The broad intention of the principal provisions of this Act is to give greater security of tenure to companies and individuals marketing motor fuel by retail." — es women eee ee ee eee ee 15. See also Richards v. Golden Fleece Petroleum Pty. Limited (1983) 49 A.L.R. 337 at 338 and Chronopoulos v. Caltex O11 (Australia) Pty. Limited (1982) 45 A.L.R. 481 at 484 where Fox J. said: "The principal purposes of the Franchise Act are to give security of tenure to retail operators of service stations, anda protection against price discrimination by corporations supplying motor fuel to them." See also Mobil Oi] AUstralia Limited v. Brindle (1985) 62 A.L.R. 89 per Burchett J. at 96. Part III of the Franchise Act is entitled "Price Discrimination in Sales of Motor Fuel to Franchisees". At the relevant time s. 20 provided: "20.(1) A franchisor shall not, in relation to motor fuel supplied or to be supplied by it, discriminate between its franchisees in relation to (a) the amounts payable by the franchisees in respect of the fuel; or (b) any discounts, allowances, rebates or credits given or allowed to the franchisees in respect of the fuel. (2) Sub-section (1) does not apply in relation to a discrimination if - (a) the discrimination makes only reasonable allowance for differences in the cost or likely cost of raw materials, refining, distribution, sale or delivery resulting from the differing places to which, methods by which or quantities in which the motor fuel is supplied to the franchisees; (b) the discrimination is constituted by the doing of an act in good faith - eee re En TEES oe enn rr ps wo ee ee + - or 16. (1) to meet a price or benefit offered by a competitor of the franchisor; or (ii) to assist a franchisee to meet a price or benefit offered by a competitor of the franchisee; or (c) the discrimination results only from compliance with a law of a State or Territory fixing the wholesale price, or the maximum wholesale price, of motor fuel. (3) In any proceedings, the onus of establishing that sub-section (1) does not apply in relation to a discrimination by reason of sub-section (2) is on the person asserting that fact. (4) This section does not apply in relation to the supply or proposed supply of motor fuel to franchisees for retail sale in bulk." The purpose of s. 20 1s to ensure that a franchisor does not discriminate between its franchisees in relation to the price payable by franchisees in respect of fuel; but the provisions of sub-s. 20(2) are designed to ensure that the prohibition is subject to the interplay of market forces. The objectives and purposes of the two Acts in general and of s. 48 of the Act and of s. 20 of the Franchise Act in particular are not inconsistent with each other. They do not conflict. Nor are they inconsistent in their application to the circumstances of this case: Goodwin v. Phillips (1908) 7 C.L.R. 1 at p. 7 per Griffith C.Jd.. 17. Section 20 of the Franchise Act does not prohibit a supplier in good faith from assisting a franchisee to meet a price or benefit offered by a competitor of the franchisee. Paragraph 96(3)(f) is directed to an essentially different subject, namely, making statements likely to be understood as statements of the minimum price at which goods may be sold. The two provisions are not in mutual conflict. They give effect to different objectives. Nor is there any inconsistency in the application of the two provisions to the circumstances of this case. The vice in the conduct of the appellant which falls within para. 96(3)(f) is that Punic would be likely to understand Mr. Brennan's statement as saying that the appellant will continue to grant rebates only if Punic agrees to charge a specified minimum price. If it was a statement merely offering assistance to Punic to meet a price offered by a competitor then some support would be given to the argument of the appellant; but the statement was essentially different from that for the reasons already given by me and it is that difference that lies at the heart of para. 96(3)(f) of the Act in its application to the facts of the case. I said earlier that the trial Judge did not find it necessary to consider whether there was any contravention of sub-para. 96(3)(d)(ii). Counsel for the Commission informed us that his case at first instance was not put in the alternative, but that he relied upon sub-para. 96(3)(d)(iL) in addition to para. 96(3)(f). He invited this Court to deal with sub-para. 96(3)(d)(ii) in the cross-appeal. There re ete ret te ent ere cee crt et er erent - " 18. are in my opinion sound reasons against the Court taking this course. In the first place we do not have the benefit of any findings by the trial Judge on the various questions of fact and law that arise froma consideration of sub-para. 96(3)(d)(il). Second, having upheld his Honour's finding that the appellant's conduct fell within para. 96(3)(f) thus resulting in a contravention of 3. 48 it is unnecessary to go further and consider the other paragraph. There may be a real question whether, on the assumption that the relevant conduct falls within both para. 96(3)(f) and sub-para. 96/75(d)(ii), no more than one pecuniary penalty may be imposed: sub-s. 76(3) of the Act. But counsel for the Commission disavowed any challenge to the imposition of the penalty of $20,000 in respect of the conduct falling within para. 96(3)(f) and told us that if we did find that the appellant's conduct also fell within sub-para. 96(3)(d)(ii) then the Commission would not assert in these proceedings or elsewhere that there should be any change to the existing penalty or the addition of a further penalty. Hence it would in my view be a hypothetical exercise to embark upon a consideration of sub-para. 96(3)(d)(ii). The appeal and cross-appeal should be dismissed. As to costs, the argument before- us primarily concerned the appeal and the essential facts are common to both the appeal and cross-appeal. The cross-appeal was, however, given more than nominal attention in argument. In my opinion the appeal and cross-appeal should be considered as a whole for the purposes of costs and the appropriate < eer ee nee en renner ree ne cere eee ee tee eee — as Sot Tedesco aed fe mare oa ath ae 19. order is that the appellant pay two-thirds of the Commission's costs of the appeal and cross-appeal. i certify that this and the e heen (is preceding pacrcs ava a trus tory cf the g Reasers for 22 c7tert rcre.a cf his Honour b., Darke Associate Dated: 4A May (996 Mr. Jusiice Loew a He cat at . = ~ ef ® ease ect cTint a fal Enna Sans Le laa a SS rae F tl Sacra naint ate ie AE aed chee tec ee IN THE FEDERAL COURT OF AUSTRALIA } ) NEW SOUTH WALES DISTRICT REGISTRY } No. G 331 of 1985 } GENERAL DIVISION ) ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALTA BETWEEN : BP AUSTRALIA LIMITED Appellant AND: TRADE PRACTICES COMMISSION Respondent CORAM: Woodward, Lockhart and Neaves JJ. DA 16 May 1986 REASONS FOR JUDGMENT NEAVES J I have had the benefit of reading the reasons for judgment of Lockhart J. I agree with his Honour's conclusions Po and with the reasons for those conclusions. I also acree with the orders which his Honour provoses. I certifv that this page is a true copy of the Reasons for Judament herein of the Honourable Mr 1, LOA Neaves. Ely het Dated: 16 May 1936