Adelaide Brighton Ltd [1999] ACompT 1

AUSTRALIAN COMPETITION TRIBUNAL Adelaide Brighton Limited [1999] ACompT 1 Matter No. 8 of 1999 RE: AN APPLICATION BY ADELAIDE BRIGHTON LIMITED PURSUANT TO SECTION 101(1B) OF THE TRADE PRACTICES ACT 1974 Trade Practices Act 1974 (Cth), s 101(1B) The Broken Hill Proprietary Company Ltd v The Trade Practices Tribunal & Others (1980) ATPR 40-173 referred to Jess v Scott (1986) 12 FCR 187 cited Hannpost Pty Ltd v MITA Copiers Australia Pty Ltd (1996) 67 FCR 416 cited Jackamarra v Krakouer (1998) 153 ALR 276 cited VON DOUSSA J 5 MAY 1999 ADELAIDE

IN THE AUSTRALIAN

COMPETITION TRIBUNAL

NO. 8 OF 1999

RE: AN APPLICATION BY ADELAIDE BRIGHTON LIMITED PURSUANT TO SECTION 101(1B) OF THE TRADE PRACTICES ACT 1974

JUDGE: VON DOUSSA

DATE: 5 MAY 1999

PLACE: ADELAIDE

REASONS FOR DECISION 1 This is the first application made under s 101(1B) of the Trade Practices Act 1974 (Cth) (the Act), which provides: "(1B) A presidential member may, on the application of a person concerned: (a) in an application for an authorization under subsection 88(9); or (b) in an application for a minor variation or a revocation of such an authorization; or (c) in an application for the revocation of such an authorization and the substitution of another authorization; shorten the time allowed by or under the regulations within which an application under subsection (1) may be made for a review of the determination by the Commission of the application referred to in paragraph (a), (b) or (c) if the member is satisfied that special circumstances exist and that, in all the circumstances, it would not be unfair to do so." 2 These reasons deal only with procedural issues that arose in the course of considering the application, which was made by Adelaide Brighton Limited (ABL) as a person concerned in an application under s 88(9) of the Act. 3 The circumstances that gave rise to the application are as follows: on 30 March 1999 ABL lodged with the Australian Competition & Consumer Commission (ACCC) an application for authorisation of two acquisitions under s 88(9) of the Act. The authorisation applications concern two transactions; (a) the merger of ABL with Cockburn Cement Limited, a wholly owned subsidiary of the Rugby Group (UK), effected by ABL acquiring all the issued capital of Cockburn for a consideration of $230 million satisfied by the issue of 200 million ABL shares to Rugby at a price of $1.15 per share; and (b) the acquisition of Australian Cement Holdings Pty Ltd's 49% shareholding in Adelaide Brighton Cement Ltd, to be effected by a capital reduction funded by a capital raising by ABL of $81.2 million as follows: $39.2 million to be raised by a three for ten fully underwritten renounceable rights issue of ordinary shares in ABL and $42 million by a placement of ordinary shares in ABL to Rugby. These transactions form part of a proposed restructuring of ABL and the Rugby Group. 4 For present purposes it is not necessary to explore the reasons why ABL considered it necessary to seek authorisation. Section 90(11) required the ACCC to determine the applications under s 88(9) within thirty days, provided that the ACCC might declare the matter to be a complex one requiring forty-five days to determine: s 90(11A). A determination granting authorisation would not come into effect until the period within which application could be made by a dissatisfied person to the Australian Competition Tribunal under s 101(1) of the Act for review expired: s 91(1A). Such an application can be made within twenty-one days of the making of the determination (reg 20(1)(b)), unless that time is shortened under s 101(1B). 5 ABL contended that to meet a number of critical time limits imposed by parties to the transactions, by underwriting arrangements, and by the Australian Stock Exchange Listing Rules, certainty that authorisation had been granted was necessary before 14 May 1999. On that day ABL and Rugby Group PLC proposed to call extraordinary general meetings of members to approve the proposed restructure. 6 To be sure of obtaining that certainty, ABL sought in advance of the ACCC's determination to have the time within which to seek review under s 101(1) shortened to seven days. 7 At the outset a question arose as to the manner in which the application should be commenced. In the first instance ABL by letter applied to the Acting President of the Tribunal to have time shortened. The Tribunal, through the Registrar, advised that an application should formally be made to the Tribunal in the manner contemplated by reg 18 of the Trade Practices Regulations. This was done on 9 April 1999. As no particular form is prescribed, the standard Form 5 from the Federal Court Rules was adapted. In my opinion this was the proper procedure to follow. Even though s 101(1B) says that a presidential member may on application of a person concerned shorten time, the power to do so is nevertheless a power given to the Tribunal. Section 101(1B) prescribes who it is that may exercise that power on the Tribunal's behalf. Moreover, s 106 of the Act requires that the Tribunal conduct its hearings in public insofar as is possible. An application of the type envisaged by s 101(1B) should be considered at a hearing that is public, and not by way of an informal and in camera approach to a presidential member. 8 When the application was made, it was given a first hearing on 14 April 1999. Section 101(1B) does not by its terms require that the application be made on notice to any other person. However, the application had been served on the ACCC, which appeared at the hearing by counsel. In my opinion the ACCC should be served as a matter of course, as the ACCC is likely to be able to offer assistance to the Tribunal on the matters that will arise for consideration in dealing with the application. The ACCC is also likely to be best placed to know the identity of other persons who might be affected by the order sought. In the present case the role played by the ACCC in the course of the hearing was particularly helpful in ensuring that notice of the application, and of the order finally made, was given to all persons likely to have an interest. 9 Counsel for ABL contended that there is nothing to prevent an application under s 101(1B) being made before the outcome of the application to the ACCC for authorisation is known. I agree with this interpretation of the power given to the Tribunal. I think that the history of s 101(1B) supports this view. The subsection was inserted in its original form in 1986 following the decision of the Federal Court in The Broken Hill Proprietary Company Ltd v The Trade Practices Tribunal & Others (1980) ATPR 40-173. At the same time s 90(11) took its present form, and s 91(1A) was inserted. It is clear that parliament was concerned to ensure that adverse effects of delay in merger situations would be alleviated as far as possible. The explanatory memorandum to the Trade Practices Revision Bill 1986 said that this was the purpose of s101(1B). 10 There are compelling reasons why an application under s 101(1B) should be commenced before the determination of the ACCC is made. The practical reality is that it will usually take some days for an application to be issued, served on the ACCC and any other party who may have an obvious interest, and for a hearing to be arranged. Unless the application is under way before the determination is made, the time taken for these steps could render the application largely nugatory. Further, if time is to be shortened, the sooner that decision is made, and notice of the decision made known, the less will be the likelihood that a dissatisfied party wishing to seek a review will be prejudiced by the shortening of time. 11 These considerations provide good reason for holding that an application may be lodged by the party seeking authorisation under s 88(9) with the Tribunal under s 101(1B) before the ACCC makes its determination. However, they do not compel the conclusion that the application should be finally decided before the ACCC's determination is made. Whether that can or should be done requires consideration of the conditions that must be satisfied by the applicant for the exercise of the power. 12 The exercise of the power to shorten time under s 101(1B) is conditioned on the presidential member being satisfied as to two matters, first, that "special circumstances exist", and secondly, that " in all the circumstances, it would not be unfair to…" shorten time. 13 The requirement of "special circumstances" is one that has been considered by the courts on many occasions. It is sufficient for present purposes to refer to the observations of the Full Court of the Federal Court (Lockhart, Sheppard and Burchett JJ) in Jess v Scott (1986) 12 FCR 187 at 195 that it is: "an expression describing a flexible discretionary power, but one requiring a case to be made upon grounds sufficient to justify a departure, in the particular circumstances, from the ordinary rule prescribing a period within which an appeal must be filed and served." 14 This passage was followed in Hannpost Pty Ltd v MITA Copiers Australia Pty Ltd (1996) 67 FCR 416 at 427 and by Kirby J in Jackamarra v Krakouer (1998) 153 ALR 276 at 294. 15 In the context of an application under s101(1B) by an applicant for authorisation under s 88(9), it can be expected that the special circumstances relied on to enliven the power will be special circumstances peculiar to the applicant. It is not unlikely that the circumstances, or at least some of them, as well as evidence on which the applicant wishes to rely to establish them, will be both confidential and market sensitive, as they were in this case. The requirement of special circumstances could reasonably be determined on information given by the applicant without hearing any other person who may have an interest in the outcome. 16 Whilst on the one hand the requirement of special circumstances seems to be directed to matters peculiar to the applicant, on the other hand the condition relating to unfairness is, in my opinion, directed mainly to matters concerning the situations of other persons whose interests could be affected by an order shortening time. Not only is there a likelihood that the applicant would not know if and how such an order might affect another person, the applicant might not even know the identity of all the other persons who have an interest, and who may be adversely affected by an order. For this reason alone I do not consider that a final order should be made on an application under s 101(1B) until after the ACCC's determination is available and the Tribunal is in a position to know which other persons may have an interest upon which they should be heard. Further, if the ACCC's determination is unfavourable to the applicant, the applicant may not wish to proceed further under s 101(1B). 17 In the present case on the occasion of the first hearing, for the above reasons, I ruled that the application had been made in the proper form and was not premature. However, I refused to make an order at that time shortening the twenty-one day period. The hearing was then adjourned with directions intended to bring the application to the notice of all those likely to be affected by the order sought. The next hearing was fixed for 30 April 1999, being the next day following the thirty day period within which the ACCC was to make its determination. Although the possibility existed that the ACCC could extend time beyond the thirty day period, it was thought that if that happened, by 30 April 1999 the ACCC would be in a position to indicate when the determination would be made. 18 At the first hearing, counsel for the ACCC informed the Tribunal that the ACCC was not in a position then to know if everyone who might have an interest in opposing the authorisations had been identified. People who had, to that time, made submissions to the ACCC which were not confidential could be identified by searching the public register, but the ACCC considered it should not disclose the identity of people who had approached the ACCC in confidence. This difficulty was overcome by the cooperation of the ACCC, evident from the directions that were given. 19 The directions, made with the consent of the ACCC, were as follows: "… 2. The application stand over to 11:00 am on Friday 30 April 1999 for consideration of whether in all the circumstances it would be unfair to make the order sought by the applicant. 3. The applicant arrange at its own expense for the publication in newspapers circulating in Australia including but not limited to the Australian Financial Review, the Adelaide Advertiser and the West Australian of advertisements in a form to be agreed with the ACCC notifying readers of the hearing on Friday 30 April 1999 and advising that interested parties who consider the making of the order sought would be unfair may either appear and make submissions to the Tribunal at that time (having first advised the Registrar of their intention to do so) or may make written submissions which should be directed to the Registrar to arrive before 9:30 am EST on 30 April 1999. 4. The ACCC use its best endeavours to notify by facsimile before close of business in the recipients time zone on Friday 23 April 1999 the persons identified by it as being interested parties and those persons who have made submissions to it in relation to the applicant's applications for authorisation number A90682 and A90683 in terms of the advertisement referred to in Order 3 above. 5. Any person intending to appear on the hearing of the application must first file an address for service in the manner required by regulation 21 of the Trade Practices Regulations 1974." 20 On the adjourned hearing on 30 April 1999 the Tribunal was informed that the directions had been carried out. No person appeared seeking to be heard on the application, and the Registry had not received any written submissions. The Tribunal was informed that the ACCC had extended time for making the determination, but anticipated making and publishing the determination that morning. The hearing was adjourned briefly for that to happen. 21 The determination issued granted the authorisations. When the hearing resumed, the ACCC informed the Tribunal that it did not oppose a shortening of time. The ACCC offered that if such an order were made, it would inform all persons who had made submissions, and include a statement that time had been shortened in its press release about the determination. 22 The Tribunal was satisfied that special circumstances had been made out by ABL, and that adequate notice had been given to afford opportunity to any person who wished to oppose a shortening of time to appear and be heard. There being no opponent to the order, I was satisfied that in all the circumstances it would not be unfair to shorten time. The overwhelming likelihood was that all persons with an interest in the matter had been made aware of the application, and of the possibility that time would be shortened, by not later than 24 April 1999. Accordingly the following substantive orders were made on 30 April 1999: "1. The period within which an application under section 101(1) of the Trade Practices Act 1974 may be made for a review of any determination by the Australian Competition and Consumer Commission of the applicant's application for authorisation number A90682 and A90683 where such determination grants authorisation (whether subject to conditions or otherwise) be shortened to 11 May 1999. 2. The applicant before 4 May 1999 advertise the making of order 1 in the Australian Financial Review, the West Australian, the Adelaide Advertiser, and the Sydney Morning Herald." 23 These reasons are published as a procedural guide to future applications under s 101(1B). I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Decision herein of the Honourable Justice von Doussa. Associate: Dated: 5 May 1999 Counsel for the applicant : Mr A I Tonking Solicitor for the applicant : Minter Ellison Counsel for the ACCC : Ms M Painter Solicitor for the ACCC : Australian Government Solicitor Date of hearing : 14, 15 & 30 April 1999 Date of decision : 5 May 1999