FEDERAL COURT OF AUSTRALIA Kadkhudayan v W D & H O Wills (Australia) Limited (ACN 004 069 649) [2001] FCA 645 TRADE PRACTICES – whether respondent manufacturer's policy of refusal to offer promotional payments to retailer selling manufacturer's goods below stipulated price amounted to resale price maintenance – purpose of promotional policy in determining intention of manufacturer to engage in resale price maintenance. TRADE PRACTICES – misuse of market power – whether advantage taken by manufacturer of its power in the market by refusal to supply applicants – intention of manufacturer in implementing structural changes to distribution system – market share as opposed to market power. COSTS – discretion of court to order costs – unrepresented litigants – consequences of respondent's actions on financial resources of applicants – respondent's risk of order for costs – public interest litigation. Trade Practices Act 1974 (Cth) ss 45, 46, 46(1), 46(1)(c), 48, 82, 98(2) Mikasa (NSW) Pty Ltd v Festival Stores (1972) 127 CLR 617 referred to Trade Practices Commission v BP Australia Ltd (1985) 7 FCR 499 referred to Trade Practices Commission v Mobil Oil Australia Ltd (1984) 3 FCR 168 referred to Heating Centre Pty Ltd v Trade Practices Commission (1986) 9 FCR 153 referred to Commisioner of Trade Practices v Dalgety Australia Ltd (1973) 22 FLR 62 referred to Melway Publishing Pty Ltd v Robert Hicks Pty Ltd [2001] HCA 13 applied Eastern Express Pty Ltd v General Newspapers Pty Ltd (1992) 106 ALR 297 referred to Cachia v Hanes (1994) 179 CLR 403 referred to Oshlack v Richmond River Council (1998) 193 CLR 72 applied HASSAN KADKHUDAYAN AND KATAYOUN KADKHUDAYAN v W D & H O WILLS (AUSTRALIA) LIMITED (ACN 004 069 649) SG 127 OF 1998 LEE J PERTH (HEARD IN ADELAIDE) 31 MAY 2001 IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY SG 127 OF 1998 BETWEEN: HASSAN KADKHUDAYAN FIRST APPLICANT KATAYOUN KADKHUDAYAN SECOND APPLICANT AND: W D & H O WILLS (AUSTRALIA) LIMITED (ACN 004 069 649) RESPONDENT JUDGE: LEE J DATE OF ORDER: 31 MAY 2001 WHERE MADE: PERTH (HEARD IN ADELAIDE) THE COURT ORDERS THAT: 1. The application be dismissed. 2. There be no order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY SG 127 OF 1998 BETWEEN: HASSAN KADKHUDAYAN FIRST APPLICANT KATAYOUN KADKHUDAYAN SECOND APPLICANT AND: W D & H O WILLS (AUSTRALIA) LIMITED (ACN 004 069 649) RESPONDENT JUDGE: LEE J DATE: 31 MAY 2001 PLACE: PERTH (HEARD IN ADELAIDE) REASONS FOR JUDGMENT 1 The applicants, husband and wife, carried on a trading business in partnership in Adelaide between 1976 and 1998. The business of the applicants was conducted in two shop premises in a suburban shopping centre. The applicants operated one shop as a delicatessen, under the name "Bantam Chicken Shop", and in the course of that business sold cigarettes to retail customers. The other shop operated under the name "Bantam Tobacco Shop" where cigarettes were sold to wholesale and retail customers. 2 The respondent ("Wills") is a manufacturer and supplier of cigarettes and other tobacco products and at material times supplied cigarettes to the applicants as operators of a business which sold cigarettes on a wholesale and retail basis. 3 The applicants are immigrants from Iran who established the foregoing trading enterprise shortly after arrival in Australia. The male applicant (Mr Kadkhudayan) speaks and reads English but from time to time required the services of an interpreter to fully understand the proceedings and to assist him to present the case of the applicants, who were unrepresented litigants. 4 The applicants appear to have been successful in business until at least 1996. A substantial part of their business became directed to the wholesale and retail sale of cigarettes and in 1994 the Bantam Tobacco Shop was established to better serve that part of the business. By the end of 1996 the business of the applicants had a turnover of $3m to $5m (if "excise" duties are included) from the sale of cigarettes, principally from retail sales. Wholesale sales were estimated at about "12 per cent". It is not clear whether that was 12 per cent of volume or value. Wills products purchased by the applicants in that year cost approximately $1.8m. It appears that the proportion of Wills products in the applicants' sales was substantially higher than the proportion of the total cigarette sales in South Australia enjoyed by Wills, namely, about 28 per cent. 5 The applicants had earned a reputation in Adelaide for consistent cheap prices for convenience goods, in particular cigarettes, and were significant clients of Wills in South Australia. 6 The principal retailer of cigarettes in South Australia was a chain of 65 stores operating under the name "Smokemart". That enterprise was the major purchaser of cigarettes in South Australia from Wills and from other manufacturers of tobacco products. In the latter part of 1996, Mr Kadkhudayan came to believe that Smokemart was "applying pressure" to Wills, and other suppliers of tobacco products, to "push" the applicants out of business, by having those suppliers refuse to provide the applicants with promotion discounts on certain products. Promotion discounts, or promotion payments, consisted, for some time, of the provision of free stock and, thereafter, of price rebates or payments. 7 Mr Kadkhudayan believed that Smokemart, in concert with Wills and other manufactures, had provided the delicatessen adjacent to the Bantam Tobacco Shop, "Fourth Avenue Deli", with cigarettes at discounted prices, enabling it to sell brands of cigarettes sold by the applicants at less than the retail prices charged by the applicants. 8 In May 1996 promotion payments to the applicants from Wills ceased. When Mr Kadkhudayan challenged Wills' officers as to why that was so, he was informed that Wills had decided not to provide promotion payments to retail vendors who sold and promoted Wills products at less than "Wills' invoiced wholesale price" ("Wills' price"). In effect, the applicants were told they would have to increase the prices of promoted products if they wished to receive promotion payments. Wills' position was that it would not support retail sales made at a price below Wills' price. 9 The applicants believed that in order to compete with Smokemart and, in particular, the Fourth Avenue Deli, they had to sell some brands of cigarettes at a loss if those brands were not supported by promotion payments from Wills and other suppliers. 10 The applicants complained to Wills about the low prices charged by the Fourth Avenue Deli, which, the applicants contended, were supported by promotion payments given by Wills and other suppliers. Wills told Mr Kadkhudayan that it would arrange for the Fourth Avenue Deli to increase its prices on all cigarettes in October 1996 and the applicants were to do the same. Apparently steps were taken to implement that arrangement. The applicants, however, believed that the proprietor of the Fourth Avenue Deli did not keep his side of the bargainand the applicants did not increase their prices. In September and October 1996, the applicants were given promotion payments by Wills for a short period, apparently in anticipation of implementation of the arrangement referred to above. Some further promotion payments were made to the applicants between November 1996 and January 1997. 11 During the latter half of 1996, it would have become plain to the applicants that the sale of cigarettes at a loss had had an adverse effect upon their business. Indeed the applicants believed that Wills was manipulating circumstances to cause detriment to the applicants' business. For example, the applicants believed that several wholesale customers of the applicants had been directed by Wills to buy from the applicants the brands of cigarettes being sold by the applicants at a loss. The applicants believed that Wills supplied those customers with Wills brands at a discount, other than the brands sold by the applicants at a loss. 12 In September 1996, Mr Kadkhudayan attended on the Australian Competition and Consumer Commission ("the ACCC") and complained about the conduct of Wills in the manner of its trade with the applicants' business. The information provided by Mr Kadkhudayan in support of that complaint disclosed the arrangement in respect of cigarette prices made between the applicants, Wills and the Fourth Avenue Deli in September/October 1996. 13 The ACCC commenced an investigation. In March 1997 it informed Wills that an inquiry had been commenced and that statements would be required from Wills' officers. Later in 1997, the ACCC commenced a proceeding in this Court against Wills and the proprietor of the Fourth Avenue Deli seeking the imposition of penalties for an alleged contravention of s 45 of the Trade Practices Act 1974 (Cth) ("the Act") by an alleged arrangement or understanding made between those parties to lessen competition by fixing the price of cigarettes sold by the Fourth Avenue Deli and the applicants. 14 In February 1998, Wills formally admitted in that proceeding that it had attempted to contravene s 45 in the manner alleged and submitted to the imposition of a penalty of $250,000 in respect of that conduct. 15 In May 1997, Mr Kadkhudayan complained to the ACCC that Wills had engaged in unconscionable conduct designed to harm the business of the applicants. In particular, the applicants alleged that in March 1997 and April 1997, Wills had refused to appoint the applicants as a wholesaler/distributor of Wills products in South Australia and had engaged in diverting customers of the applicants' wholesale business away from that business. 16 In September 1997, the ACCC wrote to Wills in respect of a breach of the Act that would be constituted by such conduct. The matter appears to have been taken no further by the ACCC after consideration of a reply forwarded to the ACCC by Wills' solicitors. 17 By July 1998, it seems that the business of the applicants had collapsed and that the applicants had lost their assets and livelihood. 18 In October 1998, the applicants commenced these proceedings seeking damages from Wills under s 82 of the Act for loss suffered by reason of contravention of ss 46 and 48 of the Act. 19 I will deal first with the alleged contravention of s 48 and the claim of loss sustained by reason thereof. 20 The applicants conducted their business as wholesaler and retailer, but principally as retailer, and used promotion payments received as retailer both to reduce the retail price at which they sold cigarettes and to subsidise the price charged to wholesale customers. 21 The applicants plead that between August 1993 and December 1993 Wills did not make promotion payments to the applicants and had said in December 1993 that "any body who undercosts will not be given promotions". In its defence, Wills admitted that the applicants had been told by Wills that promotion payments would not be provided to a retailer who sold Wills cigarettes below Wills' price. Promotion payments were made to the applicants by Wills between December 1993 and November 1995. 22 The applicants plead that in November 1995 promotion payments ceased and that the applicants were told by Wills that "anybody who is under cost cannot have promotions." In its defence, Wills admitted that the applicants had been told by Wills in November 1995 that Wills "was not going to run Promotions with any retailers who were selling cigarettes under Wills' wholesale price" and that because the applicants' selling price was under Wills' price, Wills would not provide "the current Promotion" to the applicants. It appears that some promotion payments were made to the applicants by Wills between November 1995 and May 1996. 23 The applicants further plead that in August 1996 Wills told the applicants that they had not been receiving promotion payments from Wills because the applicants were selling cigarettes below Wills' price. In its defence, Wills admitted that fact. 24 The applicants allege that the foregoing course of conduct by Wills constituted an attempt by Wills to induce the applicants not to sell Wills cigarettes at a price lower than Wills' price and a contravention of s 48 of the Act by engagement in the practice of resale price maintenance. 25 Wills submitted that the "Promotions Policy" did not, "of itself", constitute resale price maintenance and that the "Promotions Policy" did not involve specification of a price. 26 So much may be accepted, but it is not the issue to be addressed. The "Promotions Policy" as expressed in the Wills "Retail Promotional Guidelines", differed in scope and application between "convenience outlets" and "price cutters" but required no prescribed conduct or expenditure on the part of either class of retailer to qualify for the promotion payment. In other words, if a product were selected for promotion, promotion payments would be available to retailers generally. The product was promoted not the retailer. 27 The "guidelines" did stipulate, in clear terms, that "NO PROMOTIONS ARE TO GO BELOW COST!" 28 The issue to be determined on the applicants' case is whether, by its conduct, Wills attempted to induce the applicants not to sell goods supplied to the applicants by Wills at a price less than a price specified by Wills. 29 Putting to one side the intention of Wills in carrying out the conduct it engaged in, it is clear on the admissions and the pleadings that Wills did specify a price, namely, Wills' price, below which cigarettes supplied by Wills were not to be sold if the applicants were to receive promotion payments in respect of brands of cigarettes promoted by Wills. 30 If Wills had tied to that specification of price a threat to refuse to supply goods to the applicants if the applicants sold those goods below the stipulated price in an attempt to induce compliant conduct from the applicants, subject to what is said below, the engagement by Wills in the practice of resale price maintenance would have been obvious. (See: Mikasa (NSW) Pty Ltd v Festival Stores Pty Ltd (1972) 127 CLR 617.) 31 The question in this case, however, is whether the statement by Wills that a price support scheme, generally available to retailers, would not be available to the applicants unless they sold Wills cigarettes at or above Wills' price, was intended to obtain compliant conduct from the applicants or was indifferent to what the applicants chose to do. 32 The threat by a supplier of goods to withdraw a price support benefit, albeit a benefit applied or given at the discretion of the supplier, may, in certain circumstances, amount to conduct by a supplier carried out with the intention of inducing a retailer to sell at not less than a price specified by the supplier. (See: Trade Practices Commission v BP Australia Ltd (1985) 7 FCR 499; Trade Practices Commission v Mobil Oil Australia Ltd (1984) 3 FCR 168.) 33 On the one hand, a supplier may be aware that the retailer does not depend upon price support payments provided by the supplier and may intend no more than the retailer take or refuse the promotion payment and run its business accordingly. (See: TPC v Mobil per Toohey J at 184.) On the other hand, the supplier may be aware that the retailer could not absorb the financial impact of withdrawal of such support and may be taken to have relied upon that knowledge in acting as it did and to have intended that the retailer alter its position so that it would sell at the price specified by the supplier and not continue to sell at the retailer's price. (See: TPC v BP; Heating Centre Pty Ltd v Trade Practices Commission (1986) 9 FCR 153 at 164 per Pincus J.) 34 In the instant case, the statement of claim is not specific as to when the attempt to induce the applicants occurred. It appears to be pleaded as a continuing attempt to induce the applicants between November 1995 and August 1996. During that period the applicants complained vigorously to Wills in respect of the withdrawal of promotion payments to the applicants. Wills would have been aware that the applicants were competing with retailers who appeared to be able to match the applicants' prices with price support payments those retailers received from suppliers. The joint submission presented to the Court by Wills and the ACCC as to the facts relevant to the penalty to be imposed for the contravention of the Act admitted by Wills, stated an awareness by Wills that the applicants were losing money in the period June to October 1996. The submissions also record that Wills was aware that the applicants operated their business on high turnover and low margins. 35 It may be concluded, therefore, that when Mr Sage, Wills' Convenience Area Manager, Adelaide, was asked by Mr Kadkhudayan in August 1996 "why haven't I been receiving promotions" and responded "because you have been selling under wholesale price", the intention of Wills was to attempt to induce the applicants to alter their sale price to a price not less than Wills' price. 36 That statement repeated Wills' longstanding position that it would not support a retailer selling Wills products at less than Wills' price. 37 Although that policy involved Wills stipulating to a retailer the minimum price at which Wills wanted the retailer to sell Wills products, it may be concluded that the purpose of the policy, and the intent of Wills in advising the applicants thereof, was to avoid devaluation of the image of its goods and detriment to Wills' trade with other retailers. 38 Indeed, s 98(2) of the Act provides that resale price maintenance will not arise where a supplier withholds supply of goods because the retailer has sold goods of the supplier at less than cost to, inter alia, promote the business of the retailer. In the instant case the applicants had sought to promote their business as a leading discounter of tobacco products and to make their profit from high turnover on low margins. Selling some brands below cost not only countered competition but promoted the business of the applicants. 39 It would seem to follow that if a supplier states that it will not provide allowances to a retailer that sells any of the supplier's products below cost, it would be difficult to show, in the absence of other cogent circumstances, that such a statement involved the practice of resale price maintenance. 40 In the present case, the evidence suggests that during 1996, and relevantly, as at August 1996, the applicant sold goods supplied by Wills at less than cost price. Perhaps in some instances, promoted goods were sold at a price that may have been above the net cost price but the weight of the evidence was to the effect that as a matter of practice certain brands were sold by the applicants at less than the cost of acquisition after taking into account allowances that reduced the cost price. In Commissioner of Trade Practices v Dalgety Australia Ltd (1973) 22 FLR 62, it was held that to establish the relevant cost of the goods supplied, and whether the retailer had re-sold goods at less than cost, it was necessary to take into account promotion and other allowances. 41 In all the circumstances I am not satisfied that the evidence adduced has established that between November 1995 and August 1996, Wills specified a price other than the cost of acquisition as the price below which the goods supplied by Wills to the applicants were not to be sold and I am not satisfied that Wills engaged in the practice of resale price maintenance by attempting to induce the applicants not to sell Wills goods at less than a price that exceeded the cost price of those goods. 42 Although in the light of the foregoing conclusion it is unnecessary to do so, for the sake of completeness I will make some short remarks on the assessment of any loss that may be said to have been suffered by the applicants by reason of Wills' conduct had it been found that such conduct constituted a contravention of s 48 of the Act. 43 In attempting to assess such a loss, I have accepted, in broad terms but not in its entirety, the analysis of relevant data prepared by Mr Potter, an expert accountant called by Wills whose evidence in large degree was unchallenged. I note that Mr Potter misunderstood the statement of claim of the applicants in that he did not appreciate that "promotions" as used in the statement of claim, did not include payments other than retail promotion payments. 44 It is by no means clear what would have occurred after November 1995 if the foregoing conduct had not been the course followed by Wills. Notwithstanding the statement by Wills in November 1995 that retail promotion payments would not be made if retail prices of Wills products were less than "Wills' prices", the applicants continued to receive some payments from Wills until May 1996. Having regard to the sum of such payments made in the five months between January 1996 and May 1996, it may be projected that payments for the whole of that financial year, if paid, would have been in the order of $30,000. 45 After May 1996, as confirmed by Wills' statement in August 1996, no promotion payments were paid to the applicants until they were resumed for short periods between September 1996 and January 1997. If it is assumed that in the 1997 financial year Wills would have paid to the applicants all promotion payments they may have expected to receive, it may be assumed that in that year the applicants would have received approximately $25,000 in addition to the sum of approximately $5,000 in promotion payments paid between September 1996 and January 1997. If it is further assumed that but for the contravening conduct of Wills the applicants could have expected to receive from Wills a further sum of $25,000 by 30 June 1997 and at least $30,000 in the year ended 30 June 1998 as promotion payments on purchases of Wills products made in those years, with no assumption being made as to any increase in purchases if such payments were available, it is likely that the applicants would have maintained a profitable business to 30 June 1998 and would have been able to make an orderly disposal of that business, or its assets, and repay borrowings without the lender taking action to take control of the applicants' business to enforce such securities as may have been held. 46 In the financial year ending 30 June 1996, the business earned a net profit of $50,000. In the years ending 30 June 1997 and 30 June 1998 net losses of $10,700 and $17,200 were recorded. If the expected payments of $25,000 and $30,000 are applied directly to the net results in those years, which in the circumstances appears to be appropriate, it may be said that as at 30 June 1998 the applicants lost the sum of $55,000 being profit that would otherwise have been earned by the business, avoiding further borrowings on overdraft to meet the losses in fact sustained. 47 I consider that the applicants, if they had been free of the distraction of conflict with Wills, would have realised by 30 June 1998 that their business had to be sold or re-structured particularly after Wills, in the course of 1997, changed its method of distribution of its products by appointing nominated wholesalers for that purpose. The value of stock and plant as at 30 June 1998, as estimated by Mr Potter, was $180,000. He attributed no value to goodwill but I consider that if the business had received promotion payments in the course of trading to 30 June 1998, an orderly sale of the business at that time would have included a component for goodwill. It may be assumed that the value of plant and stock, and of the business, not realised and applied to the benefit of the applicants before the business of the applicants collapsed was wholly lost when the business ceased to function as a going concern, and lenders acted pursuant to securities provided by the applicants for the loans advanced to them for the purpose of the business. 48 The exercise of assessment of loss involves consideration of numerous imponderables and due regard to be given to contingencies, but in my opinion, the loss suffered by the applicants by reason of the conduct of Wills described could have been assessed at $250,000. 49 I turn now to the further claim of the applicants, namely, that they suffered loss by reason of an alleged contravention by Wills of s 46 of the Act. In their statement of claim the applicants plead that Wills contravened s 46(1)(c) of the Act by taking advantage of the substantial degree of market power it possessed in the relevant market, for the purpose of "ceasing the supply of cigarettes" to the applicants, thereby preventing the applicants from engaging in competitive conduct "in the market". The relevant market was defined as that in which cigarettes were sold by manufacturers to wholesalers in South Australia or in the Adelaide metropolitan area, and near-country areas. Obviously, the market in which the applicants were engaged competitively was not the market defined by the sale of cigarettes by manufacturers to wholesalers. The pleading of the market in which the applicants competed must be taken to refer to, either a market defined by the sale of cigarettes by wholesalers to retailers, or by the sale of cigarettes by retailers to consumers, or by those activities in combination. 50 The extent to which the retail market, or that part of the market concerned with retail sales, was distorted or segmented by the characteristics of cigarette sales in a retail market was not an issue in the proceedings. That is to say, any attachment formed by consumers of cigarettes to a particular brand of cigarette, inspired in consumers by a nicotine addiction resulting from the consumption of cigarettes that may cause consumers to be unwilling to substitute the product of another manufacturer for a brand habitually acquired, was not relied upon to attempt to define the market in which Wills had power as that in which Wills sold cigarettes to wholesalers. 51 The degree of power exercisable by Wills in the market for the sale of cigarettes by manufacturers to wholesalers was particularised as follows in the statement of claim: "3.1 Wills is one of only three manufacturers of cigarettes who supply cigarettes to wholesalers in the market (except for manufacturers with a negligible proportion of the market). 3.2 As such, Wills has approximately 28% of the market. 3.3 Wills is the sole supplier in the market of Wills brand cigarettes." 52 According to the statement of claim, the manner of contravention of s 46(1)(c) of the Act by Wills involved the following. Wills established a new system for the distribution of Wills products to retailers by nominating wholesalers to carry out that function in place of Wills. The applicants were invited to apply for appointment as a nominated wholesaler and did apply. They were not appointed as a wholesaler and in July 1998 were informed by Wills that Wills would no longer supply the applicants with Wills products and that the applicants would have to purchase those products from a wholesaler nominated by Wills. 53 The decision by Wills to withdraw from direct distribution of its products to retailers and to appoint wholesalers to carry out such distribution meant that the opportunity for retailers to obtain discounts and rebates to support retail prices set on low profit margins was diminished substantially. For the applicants the decision had immense ramifications for the conduct of its business as a retailer of cigarette products and in effect meant the termination of that part of the business that was conducted as a wholesaler of Wills tobacco products. 54 The case put forward by the applicants was that Wills constructed this revised system of distribution to exclude the applicants as a wholesaler and to damage the business of the applicants. 55 The evidence adduced in the course of the hearing did not support that case. 56 The decision by Wills to withdraw from the distribution to retailers and competition with wholesalers was a decision of policy made by the senior management of Wills in respect of the supply of Wills products nationally. The decision was made to make more efficient use of Wills' management and Wills' resources. 57 The applicants contended that the new system of distribution had been devised by Wills to damage them because of the investigation of Wills' conduct instigated by the ACCC as a result of the complaint to the ACCC made by the applicants in late 1996. I am satisfied that the requirements of the new distribution system, which the applicants could not satisfy, was settled by senior management of Wills in late 1996 and well before Wills became aware of any investigation of their conduct by the ACCC in about March 1997. Although in March 1997 the applicants were invited to apply for appointment as a wholesaler by Wills and may have been encouraged to do so by Mr Sage, I am satisfied that Mr Sage overlooked the qualifying conditions set by his superiors and that no modification of the scheme was introduced to exclude the applicants. 58 For some months after the commencement of the operation of the new distribution scheme, Wills departed from policy by continuing to supply the applicants with Wills products directly, but by August 1998 that service had terminated and the applicants were directed to purchase Wills products from nominated wholesalers. 59 In deciding to implement a new system of distribution of its tobacco products by appointing nominated wholesalers, Wills ceased to supply its products to an existing wholesaler, namely, the applicants, but it did not follow that that act, in itself, although involving damage to the business of the applicants, displayed a purpose proscribed by s 46(1) of the Act. (See: Melway Publishing Pty Ltd v Robert Hicks Pty Ltd [2001] HCA 13 for Gleeson CJ, Gummow, Hayne and Callinan JJ at [17]–[19].) The evidence in this matter establishes that Wills acted as it did to further its commercial interests, but the advantage sought did not depend upon the attainment of a benefit or gain by preventing the applicants, or any other wholesaler or retailer, engaging in competitive conduct in either the wholesale or retail sale of cigarettes. 60 In Melway,where a supplier terminated the appointment of a wholesaler and ceased to supply goods to that party and was found to have so acted for the proscribed purpose of preventing that party from engaging in competitive conduct with other wholesalers selling the suppliers' goods to retailers, there was evidence of such a purpose other than the refusal of Melway to continue the appointment of that party as a wholesaler and to supply goods to it. (See: Melway per Gleeson CJ, Gummow, Hayne and Callinan JJ at [32]-[37].) 61 With regard to the requirement of s 46 that it be shown that a corporation has taken advantage of the substantial degree of power that it has in a market, again the act of a corporation in re-ordering the appointment of distributors of its products will not, in itself, satisfy that requirement. There must be evidence that the conduct is made possible by the power in the market possessed by the corporation. A corporation with little or no power in a market may appoint wholesalers or distributors, or terminate such appointments, as the commercial interests of the corporation require. (See: Melway per Gleeson CJ, Gummow, Hayne and Callinan JJ at [30]-[31].) 62 More must be demonstrated than the foregoing to show that the corporation has abused its position in the market. (See: Melway per Gleeson CJ, Gummow, Hayne and Callinan JJ at [68]-[69].) No evidence in the instant matter was directed to meeting that requirement and, therefore, if it had been demonstrated that Wills had acted for the proscribed purpose, the further requirement that it be shown that it had taken advantage of its market power in so acting could not be satisfied. 63 With regard to the degree of power possessed by Wills in the market as pleaded by the applicants, namely, that its share of the relevant market was 28 per cent of the sale of cigarettes by manufactures to wholesalers in South Australia, no evidence went to that point, but Wills admitted that it had approximately 28 per cent of the "retail cigarette market" in South Australia. Market share may translate to market power where that share approaches a monopoly or where the share is applied and is augmented by a duopolistic arrangement, but the essential requirement for demonstration of a substantial degree of market power is to be able to show that the corporation is able to behave independently of competition and of competitive forces in a relevant market. (See: Eastern Express Pty Ltd v General Newspapers Pty Ltd (1992) 106 ALR 297 per Lockhart and Gummow JJ at 314.) It may be postulated that the act said to constitute the taking advantage of market power must, at the same time, display some degree of commercial arrogance that is explicable by the degree of market power possessed. 64 The task of demonstrating the extent of market power possessed by Wills was not undertaken by the applicants who took the issue no further than the pleading of market share referred to above. It is not possible to make any finding on the evidence that Wills possessed a substantial degree of market power in the market defined by the applicants. 65 Whatever degree of power Wills exercised in the defined market, none of the foregoing can sustain a claim that Wills took advantage of that power for the purpose of ceasing to supply Wills cigarettes to the applicants to prevent the applicants from engaging in competitive conduct as retailers of Wills products in a retail market. 66 It follows that the applicants' claims must fail. It is unnecessary to consider whether any additional loss was sustained by the applicants over and above that already assessed, there being no loss of opportunity to operate a wholesale business as a wholesaler nominated by Wills. 67 As unrepresented litigants, the applicants were disadvantaged in material respects. There was a belief that the entitlement to relief turned upon showing that in a moral sense Wills had acted improperly and that, as unrepresented litigants, the applicants were relieved of the obligation of presenting a case as undertaken by a legal practitioner. I have no doubt that had circumstances remained as they were before Wills withdrew promotion payments to the applicants, that the applicants would have continued to succeed in their business at least until Wills ceased the direct supply of its products to the applicants. With the entrepreneurial drive Mr Kadkhudayan possessed, they may even have succeeded in expanding their wholesale sales if Wills had made an exception to its policy and appointed the applicants as a wholesaler under its new system of distribution. 68 I accept that the action of Wills between 1997 and 1998, in altering its trading terms, had a material effect on the applicants' business by reason of the level of commitments the enterprise had undertaken before those changes were implemented. 69 Mr Kadkhudayan regards the foregoing circumstances as unfair and, therefore, providing entitlement to an order for relief from the Court. The case of the applicants was presented accordingly. Mr Kadkhudayan did not appear to understand the issues raised by the statement of claim, apparently prepared by a legal practitioner, and, indeed, asserted that orders in his favour could be made by the Court if the applicant showed that Wills had "done something wrong". 70 It followed that the applicants did not establish that a case existed under s 46 or s 48 of the Act. However, with regard to the order to be made in respect of the costs of the proceedings, I am not satisfied that this is a case in which the discretion of the Court to award costs to the successful party should be exercised. 71 Although it may be anticipated that the respondent has incurred substantial expense in resisting the applicants' case, there are other aspects to be considered. First, as I have indicated, the applicants have suffered destruction of their financial position to which the commercial decision by Wills contributed. Although the applicants have not shown that claims against Wills are maintainable, the foregoing consequence, when considered with other matters discussed below, has relevance to the exercise of the discretion as to an order for costs. 72 Second, at all times, in the conduct of this litigation, the respondent was not at risk of an order for costs, the applicants, if they succeeded, being able to recover only out-of-pocket expenses. (See: Cachia v Hanes (1994) 179 CLR 403.) As against that, it may be said that Wills was not only defending a case at law but also a collateral attack on its commercial reputation. However, that aspect is offset by the matter of public interest referred to below. 73 Third, an application in respect of alleged contraventions of ss 46 and 48 of the Act involves a substantial degree of public interest. The Act, in setting out norms for the conduct of corporations in trade or commerce to protect the interest of the public as consumers, has entrusted the enforcement of those provisions to the pursuit of private rights by aggrieved parties, supplemented by proceedings that may be instituted by the ACCC. Notwithstanding that the applicants have failed in this matter, the statement of claim pleaded circumstances that warranted inquiry in the public interest. 74 I am satisfied that in all the circumstances there is good reason to direct that there be no order as to costs. (See: Oshlack v Richmond River Council (1998) 193 CLR 72 per Gaudron and Gummow JJ at [35].) I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice. Associate: Dated: 31 May 2001 The Applicants appeared in person. Counsel for the Respondent: Mr B C Oslington QC Dr R J Baxter Solicitor for the Respondent: Allen Allen & Hemsley Date of Hearing: 24-27 July 2000, 31 July 2000 – 1 August 2000 Date of Judgment: 31 May 2001