Melway Publishing Pty Ltd v Robert Hicks Pty Ltd [2001] HCA 13

HIGH COURT OF AUSTRALIA

GLEESON CJ,

GUMMOW, KIRBY, HAYNE AND CALLINAN JJ

MELWAY PUBLISHING PTY LTD APPELLANT

AND

ROBERT HICKS PTY LTD (TRADING AS

AUTO FASHIONS AUSTRALIA) RESPONDENT

Melway Publishing Pty Ltd v Robert Hicks Pty Ltd [2001] HCA 13

15 March 2001

M1/2000

ORDER

1. Appeal allowed with costs.

2. Set aside the orders of the Full Court of the Federal Court of Australia made on 20 May 1999.

3. In place thereof, order that the appeal to the Full Court of the Federal Court of Australia be allowed, the orders made by Merkel J on 30 October 1998 be set aside and the respondent's application be dismissed.

4. Respondent to pay the appellant's costs at first instance and in the Full Court of the Federal Court of Australia.

On appeal from the Federal Court of Australia

Representation:

D K Catterns QC with C D Golvan for the appellant (instructed by Marshalls & Dent)

G A A Nettle QC with S L Hinchey and P Zappia for the respondent (instructed by Freehills)

Intervener:

J W K Burnside QC with M J Crennan intervening on behalf of the Australian Competition and Consumer Commission (instructed by Australian Government Solicitor)

Notice: This copy of the Court's Reasons for Judgment is

subject to formal revision prior to publication in the

Commonwealth Law Reports.

CATCHWORDS

Melway Publishing Pty Ltd v Robert Hicks Pty Ltd

Trade practices – Restrictive trade practices – Misuse of market power – Wholesale distribution systems – Manufacturer appoints exclusive distributor to a sector of retail market and refuses to supply another potential distributor – Whether manufacturer took advantage of market power for purpose of deterring or preventing person from engaging in competitive conduct.

Words and phrases – "take advantage of" – "market power".

Trade Practices Act 1974 (Cth), s 46.

1. GLEESON CJ, GUMMOW, HAYNE AND CALLINAN JJ. The appellant ("Melway") is the publisher of a street directory for Melbourne and its metropolitan area. The respondent, a wholesaler of motor vehicle parts and accessories, sought unsuccessfully to obtain supplies of directories from Melway. The respondent alleged that Melway's conduct was in contravention of s 46 of the Trade Practices Act 1974 (Cth) ("the Act") in that, having a substantial degree of power in a market, it took advantage of that power for the purpose of preventing the respondent from engaging in competitive conduct in that market. 2. The respondent commenced proceedings against the appellant in the Federal Court of Australia. The proceedings were successful before Merkel J at first instance[1]. By majority, an appeal to the Full Court of the Federal Court was dismissed[2]. 3. In this Court, it was not in dispute that Merkel J correctly identified the relevant functional market as the wholesale and retail market for street directories in Melbourne[3]. He found that wholesale and retail activities in that market were closely linked. Merkel J's conclusion that the appellant had a substantial degree of power in that market was not challenged[4]. The question was whether what was treated as a refusal to supply involved taking advantage of that power for the proscribed purpose of preventing the respondent from engaging in competitive conduct in the market for Melbourne street directories, and thus a contravention of s 46(1)(c) of the Act. That question was answered in the affirmative. 4. A claim that there had been a taking advantage of power for the purpose of preventing entry into a market, and thus a contravention of s 46(1)(b), was abandoned below. No attempt was made to pursue it in this Court. Counsel for the appellant in this Court identified the contention against his client as having been that it had sought to deter or prevent competitive conduct between wholesale distributors of Melbourne street directories that would have occurred if the respondent had been able to win sales from other distributors of the appellant's product. Although he submitted that the relevant market in which competitive conduct was allegedly deterred or prevented was a market (being the market in which distributors sold to retailers) more narrowly defined than the market in which the appellant had a substantial degree of market power (the wholesale and retail market for street directories in Melbourne) nothing was said to turn on whether these were distinct markets. (Even if they were, s 46 would have applied because it refers to "that or any other market".) 5. On appeal, all the members of the Full Court of the Federal Court agreed that the refusal of supply was for the proscribed purpose, but there was disagreement as to whether the appellant had taken advantage of its market power.