Australian Competition and Consumer Commission v Baxter Healthcare Pty Limited

Australian Competition and Consumer Commission v Baxter Healthcare Pty Limited - [2007] HCA 38 - HCA 2007 case summary — Zoe

[19]

GLEESON CJ, GUMMOW, HAYNE, HEYDON AND CRENNAN JJ. The issues in this appeal are whether, upon the true construction of the Trade Practices Act 1974 (Cth) ("the Act"), ss 46 and 47 of the Act apply to conduct of a trading corporation in, or in connection with, negotiations for, entry into, or performance of, a contract with a State or Territory government where the government's conduct is not in the course of carrying on a business, and, if so, what remedies are available in a case of contravention. Sections 46 and 47 bind the Crown in right of a State or Territory so far as the Crown carries on a business, either directly or by a government authority (s 2B). Yet it is argued that when a corporation, in the course of carrying on its business, negotiates for, enters into, or performs a contract with a State or Territory government which is not itself carrying on a business, ss 46 and 47 do not apply to the corporation. That is said to be a form of derivative immunity, recognised and applied by this Court in 1979 in Bradken Consolidated Ltd v Broken Hill Proprietary Co Ltd[1]. This argument was accepted by Allsop J at first instance in the Federal Court of Australia[2], and by the Full Court of the Federal Court[3] (Mansfield, Dowsett and Gyles JJ) on appeal. The appellant appeals against the decision of the Full Court. The Act has changed in significant respects since 1979. All parties accept that, ultimately, the question is one of construction of the Act. That is the way in which the case was conducted and decided at first instance, and in the Full Court, and it is the basis upon which the case was argued in this Court.
The Act contains certain provisions concerning its application to what the Act describes as the Crown in right of the Commonwealth, the Crown in right of a State, and the Crown in right of a Territory. As is often the case, the terms in which Parliament expressed its legislative intention reflected legal doctrine expounded in earlier judicial decisions, including decisions of this Court. There was no argument that the legislation, or a relevant part of it, is constitutionally invalid, or that the Constitution, for reasons outside the provisions of the Act, dictates an outcome in favour of one side or the other. Such an argument would have required notification under s 78B of the Judiciary Act 1903 (Cth), in order to give interested Attorneys-General the opportunity to appear and make submissions. The issue being one of statutory construction, the Court must give meaning and effect to the language of the Act.
Allsop J found that, but for the derivative immunity enjoyed by the first respondent, the conduct of the first respondent would have contravened s 46 in one respect and s 47 in a number of respects. He concluded, however, that the Act did not apply to, or operate in respect of, the conduct complained of and dismissed the application brought under the Act by the appellant. There was an appeal to the Full Court against the dismissal of the application. The appeal covered both the derivative immunity conclusion and Allsop J's refusal to find further contraventions. There was also a notice of contention by which the first respondent challenged the findings that its conduct fell within the terms of the prohibitions in ss 46 and 47. The Full Court did not find it necessary to deal with the notice of contention. Hence, if the appeal to this Court is allowed, it will be necessary to remit the matter to the Full Court to resolve that issue and to permit determination of the remainder of the appellant's appeal to that Court.

[20]

The first respondent, Baxter Healthcare Pty Limited ("Baxter"), is the Australian operating subsidiary of Baxter International Inc, a global medical products and services company incorporated in the United States of America. Baxter and its parent company specialise in critical therapies for life-threatening conditions.
Baxter manufactures the majority of the products it supplies within Australia at a plant in Toongabbie, New South Wales. It manufactures and supplies several different types of sterile fluid commonly used in hospitals. These relevantly include: (1) large volume parenteral ("LVP") fluids, used for re-hydration, the administration of drugs, resuscitation, and fluid and electrolyte replacement; (2) irrigating solutions ("IS"), used for a number of purposes, including the washing or cleaning of wounds in surgery; and (3) parenteral nutrition ("PN") fluids, used for the provision of nutrition to patients. Baxter also manufactures peritoneal dialysis ("PD") products. PD is a form of treatment for chronic renal failure. Most PD treatments are self-administered by patients at home. The expression "PD products" refers to both PD fluids and apparatus used to perform PD, such as automated PD machines and lines for fluid connection.
In the judgments of the primary judge and the Full Court of the Federal Court, the term "sterile fluids" was defined to exclude PD fluids, although it was acknowledged that PD fluids are required to be sterile. This usage provides a convenient shorthand for contrasting LVP fluids, IS and PN fluids, as a class, with PD fluids and PD products generally.
Between 1998 and 2001 Baxter had the only manufacturing plant for LVP and PN fluids in Australia. Most LVP and PN fluids are bulky, water-based items. In general, transportation costs are relatively high, giving domestic producers a significant competitive advantage. Since early 1997, Baxter has supplied almost 100 per cent of LVP fluids at the wholesale level. Baxter was also the wholesale supplier of about 95 per cent of IS acquired in Australia between 1998 and 2001 inclusive.
PD became available to home-based patients in the early 1980s. Until 1990, Baxter was the only supplier of PD fluids in Australia. In 1990, Gambro Pty Ltd ("Gambro") commenced supplying PD products in Australia. Another supplier, Fresenius Medical Care ("Fresenius"), sought to enter the PD market in Australia in about 1995. Between 1998 and 2001 inclusive, Baxter sold about 90 per cent of PD products in Australia, with Gambro and Fresenius each enjoying a small market share. As PD products are more valuable for their size and weight than sterile fluids, the competitive advantage enjoyed by domestic manufacturers over importers is less significant.
Between 1998 and 2001, Baxter entered into five long-term contracts for the supply of sterile fluids and PD products to public hospitals. The contracts were entered into with the relevant purchasing authorities of the second to fourth respondents (the States of Western Australia, South Australia, and New South Wales, respectively), the State of Queensland, and the Australian Capital Territory. The purchasing authorities have been described generically in the proceedings as State Purchasing Authorities ("SPAs"). Each SPA is part of the executive arm of government of its corresponding State or Territory.
Each of the contracts was entered into after a process involving formal requests for tenders by the SPAs and a period of negotiation. (In the Australian Capital Territory there was no tender, but the SPA agreed with Baxter to adopt the terms on which Baxter had contracted to supply to New South Wales.) Each tender invitation included sterile fluids and PD fluids and products, and each permitted alternative tenders. Each tender also specifically allowed for the submission of bundled offers, that is, offers of several items together at a discount rate. Baxter's response to each tender invitation followed a consistent pattern. It made an offer to supply the tender items, on an item-by-item basis, at particular prices, and an offer to supply the same items, for substantially lower prices, on a sole supply basis.
The contracts with New South Wales, South Australia and Western Australia provided for the supply of the entire requirements of each State for certain sterile fluids and the supply of 90 per cent of the requirements of each State for PD fluids, for periods of five years or just under five years. The Australian Capital Territory contract was in similar terms, but the supply was for a period of just over four years. The contract with Queensland provided for Baxter to supply the State's entire requirements for certain sterile fluids (excluding PN fluids) and 92.5 per cent of its requirements for PD fluids, for a period of three years. None of the contracts is currently on foot.
There was background evidence as to previous contracts for the supply to State and Territory authorities of sterile fluids and PD products. In the 1980s there were four manufacturers of intravenous ("IV") solutions in Australia, but by 1993, Baxter was the only Australian manufacturer. In the mid-1980s there were exclusive supply agreements with certain SPAs for some IV products. From 1990, when Commonwealth/State funding arrangements changed, significant quantities of PD products were sold directly to the States.
The Full Court summarised Allsop J's findings about this part of the evidence as follows:

[32]

Section 2 of the Act declares that the object of the Act, relevantly, is to enhance the welfare of Australians through the promotion of competition and fair trading. It was inserted in 1995, but it is plain from the detailed language of the key provisions that the object of the Act was the same before 1995, and would have been the same after 1995 even if s 2 had not been inserted.
Sections 2A and 2B deal with the application of the Act to the Commonwealth, the States and the Territories. Section 2A, which was originally inserted in 1977, provides that the Act binds the Crown in right of the Commonwealth in so far as the Crown in right of the Commonwealth carries on a business, either directly or by an authority of the Commonwealth. However, the Crown in right of the Commonwealth is not liable to prosecution or to a pecuniary penalty (s 2A(3)). Section 2B, which was inserted in 1995, makes corresponding provision as to the Crown in right of a State or the Crown in right of a Territory in relation to certain parts of the Act, including those that are presently relevant. Section 2C, also inserted in 1995, provides that certain specified forms of government activity, or exercises of government powers, do not amount to carrying on a business for the purposes of ss 2A and 2B. That list is not exhaustive (s 2C(2)). In the present case, it was conceded by the appellant that the acquisition of the products in question by the SPAs was not in the course of carrying on a business.
Section 4L, inserted in 1977, provides that if the making of a contract contravenes the Act by reason of the inclusion of a particular provision in the contract, then, subject to any order made under s 87 or s 87A, nothing in the Act affects the validity or enforceability of the contract otherwise than in relation to that provision in so far as the provision is severable. That section was recently construed by this Court in SST Consulting Services Pty Ltd v Rieson[4] to mean, not that a contract is enforceable only if the common law rules about severance permit severance, but that s 4L requires rather than permits the severance of offending provisions and that the phrase "in so far as" marks the limit of invalidity of the offending provision. In that connection, it was pointed out that the Act contains its own detailed scheme dealing with the consequences of contravention.
As appears from the pleadings in Bradken, the relevant events occurred in early 1978. At that time, ss 2, 2B and 2C were not in the Act. Section 4L was there, but it was not referred to in argument or in the reasons for judgment. The changes to the Act made in 1995 were part of a national programme of competition policy reform adopted by the Commonwealth, State and Territory legislatures. The Commonwealth Parliament enacted the Competition Policy Reform Act 1995 (Cth), which amended the Act in a number of ways, including the insertion of s 2 and s 2B, the New South Wales Parliament enacted the Competition Policy Reform (New South Wales) Act 1995 (NSW), and other States and Territories enacted similar legislation.
Part IV of the Act includes ss 46 and 47. Section 46 deals with misuse of market power. So far as presently material, it provides that a corporation that has a substantial degree of power in a market shall not take advantage of that power for the purpose of eliminating or substantially damaging a competitor in that or any other market or for the purpose of deterring or preventing a person from engaging in competitive conduct in that or any other market. Section 47 provides that a corporation shall not, in trade or commerce, engage in the practice of exclusive dealing, and then defines that concept. Exclusive dealing includes supplying goods on the condition that the customer will not, or will not except to a limited extent, acquire goods, or goods of a particular kind, from a competitor of the corporation. It also includes refusing to supply goods to a person for the reason that the person has not agreed not to acquire goods from a competitor of the supplier. The prohibition on exclusive dealing only applies where the engaging by the corporation in the conduct described has the purpose or effect of substantially lessening competition in a market (s 47(10)). Furthermore, the prohibition does not operate while there is a notification of exclusive dealing under s 93 in force (s 47(10A)). Section 46, in its terms, operates independently of any contract. Taking advantage of market power for the purpose of eliminating or damaging a competitor, or of deterring or preventing competitive conduct, may, or may not, manifest itself in the provisions of a contract made by the corporation but, if a contravention occurs, it is the purposeful conduct of the contravening corporation that attracts the operation of the Act. A contravention of s 47 may or may not involve making or giving effect to a contract. A supply on certain terms may involve a contract. A refusal to supply will not. An offer to supply on certain terms may not. In any such case an anti-competitive purpose or effect is a necessary element of a contravention. As will appear, in the present case the conduct found by Allsop J to have fallen within s 46 and s 47 was not making or giving effect to a contract. It occurred, and was complete, before any contract was entered into.
Although ss 46 and 47 apply only to conduct by corporations (a term defined in s 4 in such a way as to invoke the legislative power conferred by s 51(xx) and s 122 of the Constitution), s 6 of the Act gives Pt IV (and other provisions) an extended application designed to invoke other areas of Commonwealth legislative power. There was no argument in the present case as to the extent to which it may be necessary to rely on s 6 in order to give effect to s 2B in cases where it otherwise applies. Since no party contended that s 2B covered the present case, its operation where the relevant agency of an executive government is not a corporation as defined did not arise for consideration.
Part IV also includes s 51(1), which requires that, in deciding whether there has been a contravention of the Act, it is necessary to disregard anything done in a State or Territory if the thing is specified in, and specifically authorised by, an Act of the Parliament of the State or an enactment or Ordinance of the Territory, or by regulation. A form of s 51(1) was in force in 1978, but the emphatic double reference to specificity was introduced in 1995, as part of the competition policy reform legislation. In 1978, the exception related to an act or thing specifically authorised or approved. Now it relates to an act or thing that is specified in, and specifically authorised by, State or Territory legislation or delegated legislation.
Part VI of the Act deals with enforcement and remedies. It provides, among other things, for pecuniary penalties (s 76) and injunctions (s 80). If the court is satisfied that a person has engaged, or is proposing to engage, in a contravention of Pt IV, the court may grant an injunction in such terms as the court determines to be appropriate. Section 87, which qualifies s 4L, gives the court power to make other orders, as it thinks appropriate, against a person engaging in or involved in a contravention for the purpose of compensating a person who has suffered loss or damage by contravening conduct. The section also gives the court power to declare contracts void in certain circumstances or to vary contractual provisions or covenants that would be otherwise unenforceable. Section 87A, which also qualifies s 4L, empowers the court to prohibit payment or transfer of moneys or other property in certain circumstances.
In SST Consulting Services Pty Ltd v Rieson[5], the majority said:

[60]

The facts in relation to Offer 1A may be summarised as follows. (While this summary is adequate for the purposes of the present appeal, it is not intended to foreclose any issue that would arise if the case were remitted to the Full Court.) In July 2000, the Department of Human Services of South Australia issued a public request for tenders in relation to various pharmaceutical products, including LVP, PD and PN fluids and IS. The Department was advised by the Strategic Procurement Unit. Tenders were received from the first respondent, and from Gambro and Fresenius. Fresenius tendered for PD products, as did Gambro. Gambro made offers on a bundled and unbundled basis in relation to haemodialysis and haemofiltration products. The first respondent tendered for all products. Its Offer 1 was an item-by-item bid to supply all items for two years (with options for extensions). Its Offer 2 was a combined bid for all items on an exclusive basis for five years with volume discounts. The Department requested a revised offer (to be called Offer 1A), being for a five-year term for the products in the tender but excluding those renal products the subject of a supplementary tender. The request was for an offer for a sole and exclusive supply of sterile fluids, not including PD fluids. A volume discount was sought in exchange for sole and exclusive supply of sterile fluids. This was the first time any SPA had asked for a tender on an exclusive and long-term basis which excluded PD fluids. The first respondent, in Offer 1A, offered no discount from the item-by-item prices. Furthermore, Offers 1 and 1A (when PD fluids were added) would both cost $5,914,291, whereas the bundled Offer 2 would cost $4,501,053. The first respondent's bundled offer (Offer 2) for IV fluids and PD fluids was cheaper than its item-by-item offer for IV fluids alone. The Department protested, and raised concerns that the first respondent's conduct might be in breach of s 46 of the Act. Offer 1A was not accepted. Subsequently a different offer from the first respondent was accepted.
Allsop J found that the conduct of the first respondent in relation to Offer 1A was a taking advantage by the first respondent of its substantial degree of power in the sterile fluids market for the purpose of preventing competition in the PD market. He said:

[79]

That passage was cited by Kerr LJ in Phoenix General Insurance Co of Greece SA v Halvanon Insurance Co Ltd[17], where his Lordship said that when a statute contains a unilateral prohibition on entry into a contract, it does not follow that the contract is void[18]. Whether or not the statute has this effect depends upon the mischief which the statute is designed to prevent, its language, scope and purpose, the consequences for the innocent party, and any other relevant considerations. Ultimately, the question is one of statutory construction. As was pointed out in SST Consulting Services Pty Ltd v Rieson[19], the Act is far from being silent upon the question of the consequences of illegality, but, rather, contains elaborate provisions. That is not to say that the express provisions of the Act answer all questions that may arise, but they answer many of them, and set the context in which others are to be resolved.
It should also be remembered that, as Gibbs J said in McGraw-Hinds (Aust) Pty Ltd v Smith[20], the fact that an offence is one that may not be committed by the Crown is no reason for concluding that it may not be committed against the Crown. That was a case in which a Queensland statute, which did not bind the Crown, prohibited conduct involving an assertion of a right to payment for a directory entry. Such an assertion was made to the Queensland Government Tourist Bureau. The conduct in making the assertion was held to be covered by the prohibition. On its true construction, the Crown was intended to be protected by the prohibition, which therefore applied to conduct in relation to government agencies although it did not apply to conduct by government agencies.
Section 2 of the Act states the object as enhancing the welfare of Australians through the promotion of competition and fair trading. Identifying the operation of the Act as a benefit or a burden for government agencies, even in a particular instance, may not be straightforward. Plainly, in the case of procurement of supplies through the tender process, the anti-competitive practice of collusive tendering often would harm directly the interests of the procuring agency. That would be a form of conduct in relation to the Crown in right of a State, but it seems improbable in the extreme, at least since 1995, that the Act was not intended to apply to such conduct. It would appear to fall squarely within the authority of McGraw-Hinds (Aust) Pty Ltd v Smith. What, then, of the conduct found by Allsop J to have fallen within the scope of s 46 - that is, the conduct in relation to Offer 1A? Assuming Allsop J otherwise to have been correct, the direct harm caused by such conduct was to the first respondent's competitors in the market for PD products, but it is difficult to understand why anti-competitive behaviour in relation to that market would not have affected, at least indirectly, the interests of the procuring agency. It was not conduct which South Australia encouraged. It was conduct about which South Australia complained, at least then, although it does not do so now. Similarly, as to s 47, Allsop J found that the purpose of the conduct of the first respondent was to defeat the States' desire for a competitive tender process. Moving away from the particular facts of the present case, promotion of competition and fair trading is at least as likely to be for the benefit of government purchasing authorities as it is to be a potential invasion of government interests. To describe the conclusion for which the appellant contends as one that adversely affects State interests is at least an over-simplification. It may be added that, if State Parliaments see State interests to be threatened by competition law, they have the power of exemption given by s 51(1) of the Act, provided, of course, they are willing to accept the political responsibility of exercising that power with the necessary specificity.
There was no pleading, and no finding by Allsop J, as to whether any of the SPAs were corporations or as to any fact relevant to s 6 of the Act. In any event, once it was accepted that they were not in any relevant respect carrying on a business, the plain inference from s 2B is that ss 46 and 47 did not apply to the SPAs. It is necessary now to consider what, if anything, flows from that as to the application of ss 46 and 47 to the conduct of the first respondent in relation to its dealings or proposed dealings with them, and, in particular, to the conduct found by Allsop J to fall within the terms of those provisions. In the case of the conduct found to fall within s 47, it was entirely pre-contractual. In the case of the conduct found to fall within s 46, it did not result in any contract. However, the appellant also argues that the conduct of making and performing contracts involved, or could involve, contraventions of ss 46 and 47 by the first respondent, and that possibility means that there is a wider question to be considered.

[80]

The starting point for this enquiry is the decision in Bradken. The headnote in the authorised report of that case simply states that it decided that the Act did not bind the Crown in right of a State. Section 2B later reversed that position so far as the Crown in right of a State (or Territory) carries on a business, but it is still the position otherwise. What matters for this appeal is the consequence. That question arose in Bradken against a somewhat confusing procedural background. During the course of argument in the present case, reference was made to the court record in Bradken. The case involved a claim for injunctive relief by manufacturers of rolling stock. The applicants were competitors of the first, third, fourth and fifth respondents. The second respondent, the Queensland Commissioner for Railways, a corporation, was a Queensland government authority which was a purchaser of rolling stock. In early 1978, the second respondent agreed to acquire rolling stock from the other respondents, not by the usual process of competitive tender, but in circumstances that allegedly contravened s 45 or s 47 of the Act. It was part of the agreement that the first and fifth respondents would provide finance to the second respondent for the construction of the railway on which the rolling stock was to be used. This was the result of negotiations that had extended over many years, since before the commencement of the Act. The merits of the claim that the conduct of the respondents, or any of them, fell within s 45 or s 47 are presently irrelevant and, indeed, were never decided. After the applicants commenced proceedings against all respondents, the case was removed into this Court to decide a defence raised by the second respondent. The defence was that the Act did not apply to him because he was not a trading corporation and was an instrumentality or agent of the Crown in right of the State of Queensland which was not bound by the Act. Another presently irrelevant defence also was raised. This Court, by majority, upheld the defence that the Commissioner was an instrumentality or agent of the Crown in right of the State of Queensland and was not bound by the Act. Furthermore, the Court held that the defence raised was a bar to the granting of the relief sought in the applicants' points of claim pars 34(1) and 34(2). Those paragraphs sought injunctions restraining the first, second and fifth respondents from giving effect to the contract arrangement or understanding complained of. It was also held to be a bar to the granting of the relief sought in pars 34(3) and 34(4), which sought general restraints against exclusive dealing, "in so far as that relief is sought upon the basis of the allegations presently made in the points of claim."[21] The matter was remitted to the Federal Court. As appears from the report of the argument[22], the primary stance of counsel for the applicants when the case reached this Court was to concede that no relief could be obtained against the Commissioner, but to seek to discontinue and proceed only against the other respondents. In that connection, he indicated that he would wish to amend, and base a claim for relief on pre-contract conduct. Gibbs ACJ said[23]:

[82]

Thus, the decision in Bradken left unresolved any issue as to alleged contraventions of the Act in the pre-contractual conduct of the respondents, other than the Commissioner. What the Court decided, however, was that the relief sought in the existing points of claim, under s 80 of the Act, was barred by the defence that the Crown in right of the State of Queensland was not bound by the Act. That relief was an injunction restraining the relevant respondents, including the Commissioner, from giving effect to the provisions of the contract, arrangement or understanding contrary to s 45 or s 47 of the Act. Central to those provisions were the financing arrangements for the railway. The Court decided that ss 45, 47 and 80 did not empower a court to make orders restraining the parties from giving effect to those contracts.
The reasons given in Bradken for the conclusion that ss 45 and 47 of the Act did not apply to the conduct of the Queensland Commissioner for Railways must now be regarded, in the light of this Court's decision in Bropho, as too widely expressed. The appellant submits, correctly, that the same is true of the reasons given for the conclusion that ss 45, 47 and 80 did not empower a court to grant the relief sought in the points of claim, in their existing form. It is also important to note what was left undecided by Bradken. Bradken did not decide that the Act had no application to any conduct of the respondents other than the Commissioner in relation to their dealings with the Commissioner. It did not decide that a corporation dealing with the Crown in right of a State is unaffected by the Act. It did not decide, for example, that corporations are free to engage in collusive tendering when bidding for government contracts, even though it noted with approval the United Kingdom decision, concerning a different legislative scheme, in In re Telephone Apparatus Manufacturers' Application[24].
Having concluded that ss 45 and 47 of the Act did not apply to the Queensland Commissioner for Railways, as an emanation of the Crown in right of the State of Queensland, Gibbs ACJ went on[25]:

[84]

The Acting Chief Justice then referred to a corollary of the proposition that the Act did not bind the Crown. He quoted Romer LJ who said, in Clark v Downes[26]: "The Acts not binding the Crown, it is the duty of the courts so to construe the Acts that the Crown and its property are in no way prejudicially affected by the Acts." After referring to other authorities Gibbs ACJ dealt with the corollary thus[27]: "It is not necessary to explore the limits of this principle." One reason it was unnecessary to explore the limits of the principle was that the case was to be remitted to the Federal Court to enable the applicants to re-frame their case against the respondents other than the Commissioner.
Stephen J, having held that the Act did not bind the Crown, said[28]: "Once this be concluded it follows that the Act will not only not apply directly to the Commissioner but will also not apply so as to prejudice its interests when in contractual relationship with parties to whom the Act clearly applies or when otherwise interested in transactions affecting those parties (In re Telephone Apparatus Manufacturers' Application[29])." This, it is to be observed, treated the respondents other than the Commissioner as parties "to whom the Act clearly [applied]".
Mason and Jacobs JJ said of the corollary that "the absence of [a legislative] intention to bind the Crown in right of Queensland will not only exonerate it from the direct application of the statutory provisions but will also exonerate from the application of those provisions the contracts arrangements or understandings made by that Crown and the other parties thereto as well."[30]
The other member of the Court, Murphy J, dissented. Both Stephen J and Murphy J said that the Court had not had the benefit of full argument on all issues[31]. However that may be, the Court, beyond making it plain (by remitting the issue of pre-contractual conduct to the Federal Court) that it was not finding that the Act did not apply to the other respondents, and that it was unnecessary to explore the limits of the principle involved, left unresolved a number of questions of present relevance.
Two things are clear. First, the proposition applied in Bradken was regarded as a corollary of the principle about Crown immunity. Secondly, both the proposition about Crown immunity and its corollary are principles of statutory construction. The Court's statement in Bradken of the principle about Crown immunity no longer accurately represents the law. It has been overtaken by the decision in Bropho. Despite the statement in the joint judgment that the effect of its reasoning was not to overturn the settled construction of particular existing legislation, the fact that that reasoning was enunciated alone requires reconsideration of its statement of the corollary. Furthermore, in the application of the principle, it being one of statutory construction, it is necessary to consider changes to the Act since Bradken. It should also be noted that Bradken contained no discussion of a related and wider question of statutory construction: how does the Act operate in the (not uncommon) case of a contract between a corporation and a party who is not bound by the Act?
To begin with, for the purposes of this case it is necessary to be more precise about the proposition of construction that is the corollary of the principle that is now to be found in Bropho. In Wynyard Investments Pty Ltd v Commissioner for Railways (NSW)[32], Kitto J said (references omitted):

[89]

For the reasons already given, and particularly because of the terms of s 2B, ss 46 and 47 of the Act, even when the Crown is acting through a corporation as defined, or in any extended application of the Act under s 6, do not apply to conduct of the Crown in right of a State or Territory so far as the Crown does not carry on a business. Sections 46 and 47 did not apply to any conduct of the second, third and fourth respondents in this case.
At the same time, it would be wrong to conclude that ss 46 and 47 had no application to any conduct of the first respondent in relation to its dealings with the second, third and fourth respondents. The first respondent was a trading corporation. A conclusion that, in carrying on dealings with a government in the course of its own business, it enjoyed a general immunity not available to the government when the government was carrying on business itself would be remarkable. Such a conclusion would be impossible to reconcile with the object of the Act as now declared in s 2. Furthermore, such a conclusion would go far beyond what is necessary to protect the legal rights of governments, or to prevent a divesting of proprietary, contractual and other legal rights and interests. As a result of changes to the Act since Bradken, State and Territory governments no longer enjoy any general immunity from the Act. Acting under s 51(1), State and Territory Parliaments may legislate to protect governmental interests, but the legislative emphasis on the specificity with which they must do that (increased since Bradken) draws attention to the importance attached to the pursuit of the object declared in s 2.
One example is sufficient to demonstrate the unacceptable consequences of a general proposition that s 47 of the Act did not apply to the first respondent in its dealings with the SPAs. Section 47(3) covers refusals to deal. Suppose the first respondent, over the protests of a SPA, had refused to supply sterile fluids unless the SPA agreed not to acquire PD products from anyone else. It is difficult to take seriously a suggestion that the Act was not intended to cover such conduct.
The real question is the extent to which the reach of ss 46 and 47 of the Act, and the provisions relating to remedies, in their potential application to the conduct of the first respondent, is modified by the operation of the principle of construction discussed above.
The argument for the respondents, accepted by Allsop J and the Full Court, was expressed by Allsop J as follows:

[97]

This reasoning, also, seems to seek to apply some inflexible rule, but even as an expression of an approach to construction it goes beyond the established principle. The concept of responding to an invitation to tender is pregnant with uncertainty. Obviously the learned judge regarded Offer 1A as a response. This then was qualified by references to conduct "within the contemplation of the request or invitation". What is meant by that is unclear. The reaction of South Australia to Offer 1A hardly suggests that the conduct of the first respondent was within its contemplation. Even if it had been, the purpose of the Act is to promote competition, which is a process which operates for the public benefit, not to satisfy the expectations of parties. Whether it was open to the first respondent to argue, as it did, successfully, that the conduct of the SPAs was of factual relevance in considering whether its conduct had the necessary anti-competitive purpose or effect can be left to one side for present purposes. As a matter of construction of the Act, however, it is wrong to conclude that it operates to preserve unfettered the contractual capacities of the Crown, to the extent of withholding the application of the Act from conduct by non-government parties in response to an invitation to tender. To return to an example given earlier, suppose a response to an invitation to tender is a refusal to supply except on certain exclusive terms, and that refusal is made with the purpose of lessening competition. It is unsatisfactory to make the application of the Act depend on whether this is a response that was within the contemplation of the procuring authority. It is also at odds with the restrictions imposed by s 51(1) on the capacity of a Parliament to exempt anti-competitive behaviour from the Act. It seems to give the public officials of States and Territories a wider power to give dispensations from the operation of Commonwealth law than State or Territory legislatures.
The construction urged by the respondents imposes a very extensive qualification upon the Act's object of promoting competition and fair trading in the public interest, in the name of the protecting of the capacities of the Crown, a qualification strikingly at odds with the way the Act deals with governments when they themselves carry on a business. As the Full Court (which felt bound by Bradken to uphold the decision of the primary judge) rightly said:

[100]

It should be concluded that, in its dealings with the SPAs, the first respondent was bound by ss 46 and 47. As to those aspects of that conduct found by Allsop J to have fallen within the prohibitions in ss 46 and 47, there is no sufficient reason to deny the availability of the remedies, including pecuniary penalties, sought by the appellant. The proposition that the Act does not bind SPAs does not require, as a corollary, that it does not bind corporations dealing with SPAs.
It follows that the matter must be remitted to the Full Court for determination of those parts of the appellant's notice of appeal which have not been dealt with, and of the notice of contention. It is not desirable to say anything about the question whether, if the Full Court concludes, contrary to Allsop J, that the conduct of the first respondent in making and giving effect to the impugned contracts fell within the prohibitions in s 46 or s 47, those contracts were enforceable. Whether, and to what extent, the question would arise at all, having regard to the expiry of the contracts, is another matter. The nature and form of any injunctive or declaratory relief that might be appropriate would be a matter for consideration. These issues were either not fully argued in the present appeal or not argued at all.
The appeal should be allowed. The orders of the Full Court of the Federal Court of Australia made on 24 August 2006 should be set aside. The matter should be remitted to the Full Court for further consideration consistently with the reasons of this Court. The respondents should pay the appellant's costs of the appeal. The costs of the proceedings to date should otherwise be in the discretion of the Full Court.
KIRBY J. This appeal was propounded as an opportunity for this Court to reconsider, and re-express, its holding in Bradken Consolidated Ltd v Broken Hill Proprietary Co Ltd[36]. In Bass v Permanent Trustee Co Ltd[37], I suggested that Bradken might be in need of reconsideration.
In the Federal Court of Australia, the judges who decided these proceedings, both at trial[38] and on appeal to the Full Court[39], held that they were bound by the reasoning of this Court in Bradken to dismiss the claim brought by the appellant, the Australian Competition and Consumer Commission ("the Commission"), against the first respondent, Baxter Healthcare Pty Limited ("Baxter"). They held that this was necessary because Baxter was relevantly protected from liability for any alleged contraventions of ss 46 and 47 of the Trade Practices Act 1974 (Cth) ("the Act") by a "derivative immunity"[40]. That "derivative immunity", relevantly, arose (so it was held) because, to decide otherwise, would be to extend the application of the Act in a way that would undermine the legal immunity enjoyed under the general law (and referred to in the Act) by "the Crown in right of [the relevant] States … and of the Australian Capital Territory"[41].
Sections 46 and 47 of the Act, which Baxter was alleged to have contravened, relate to the misuse of market power by defined corporations having a substantial degree of power in the market. By s 2B of the Act, the Federal Parliament provided, relevantly, that Pt IV of the Act (in which ss 46 and 47 appear) bound "the Crown in right of each of the States, of the Northern Territory and of the Australian Capital Territory, so far as the Crown carries on a business, either directly or by an authority of the State or Territory".
In approaching the issues now presented, I share misgivings expressed in Bradken by Murphy J[42]. His Honour "[found] the resolution of [that] case extremely difficult because of the way it was presented by the applicants". The Commission made concessions, and conducted its case against Baxter, on the footing that the relevant State and Territory governmental interests were to be treated as those of a manifestation of the Crown "in right of" the State or Territory concerned. For reasons ultimately derived from the constitutional character of the polities established by, or envisaged in, the Australian Constitution, this approach is erroneous.
The error in the parties' approach illustrates an inclination of the legal mind, when a new legal text intervenes, to go on reasoning as if the text did not exist; to fail to adjust past legal notions to the language of the text; and to apply preceding common law principles without regard to the fundamental impact on them of the intervening provisions of the new written law which enjoys higher legal authority.
For a number of years, this Court, with substantial unanimity, has been drawing attention to this serious weakness of approach as it has manifested itself in many cases, large and small[43]. The present is a case where the supervening text is the Constitution itself. The erroneous approach is just as clear (but has more serious consequences) where the text is the Constitution as where it comprises an intervening statutory provision or some humbler subordinate law or rule. For some time, in circumstances analogous to the present case, I[44], and others[45], have been calling this error to notice. So far, in this country, the admonitions have fallen on deaf ears. Yet they cannot be ignored, because they concern a characteristic of the constitutional arrangements of the Commonwealth.

[101]

How the issue arises: As appears from the reasons of Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ ("the joint reasons")[46], the parties to this appeal did not rely on, or argue, an implied constitutional immunity or rule to confer protection from the operation of a federal law, such as the Act, on a State or Territory of the Commonwealth as such (or, by derivation, to render a corporation such as Baxter dealing by contract with such a polity equally immune)[47]. Had any party raised such an argument, either in this Court or in the Federal Court, it would have to have complied with procedural requirements for notice of a constitutional question to the nation's law officers[48]. The argument of the appeal, and of the proceedings below, would have taken a different course.
Instead, the arguments of the parties were addressed, almost exclusively, to questions of "Crown immunity" that were said to arise from the language of the Act. This took the appeal into a consideration of the "established rule of construction that no statute binds the Crown unless the Crown is expressly named therein or unless there is a necessary implication that it was intended to be bound"[49]. The arguments for the derivative immunity claimed by Baxter appear also to rely on legal notions traced ultimately to the prerogatives of the Crown[50]. Absent very clear legislation to which the Crown itself has given its royal assent, those prerogatives traditionally limit the amenability of the Crown, in its various manifestations, to answerability at law to an action prosecuted before one of the Crown's own courts.
These premises make it clear that the assumption of treating the States and Territories of the Commonwealth as "manifestations of the Crown" was crucial for the arguments of Baxter, and of the States supporting it. This was so whether those arguments were founded on the foregoing rule of statutory construction at common law, or on expanded notions of the Crown's modern prerogatives. At the heart of the arguments, as finally expressed, was the assumption that a State or Territory of the Commonwealth is, as such, a manifestation of the Crown and, for that reason, entitled to a relevant immunity from the operation of insufficiently specific provisions of a federal law, such as the Act. This is why, throughout the joint reasons, there are repeated references to the affected States and the Australian Capital Territory as manifestations of the Crown "in right" of the polity concerned.
In Australia, however blind we were to this perception in earlier times, the assumption inherent in the foregoing submission can now be seen as inconsistent with the text, purpose and character of the Australian Constitution and of its constituent polities. If that conclusion is correct, it knocks away (or at least undermines) the importation into the present discourse of notions of Crown immunity or Crown prerogatives as such. To attract any immunity or prerogative, so as to afford a foundation for the type of immunity claimed by Baxter, a different (perhaps analogous) legal theory of immunity would need to be propounded. Necessarily, any such new immunity would have to be expressed in different, non-Crown terms. It would have to be explained in language compatible with the text, structure and character of the Australian Constitution[51]. No party to the proceedings before this Court (or in the Federal Court) ventured upon such an endeavour.
Excusing the parties: I do not criticise the parties too much for failing to approach the problem now presented in the way that I consider to be constitutionally mandated:

[109]

The constitutional text: As I attempted to make clear during argument of the appeal[62], there is a fundamental difficulty involved in an analysis of the issues in this appeal in treating the Australian Commonwealth, States and Territories as manifestations of the Crown for the purpose of attracting to them, unrevised and unadjusted to local circumstances, all of the immunities, privileges and prerogatives of the Crown, as traditionally enjoyed in ancient times and as expressed in previous common law doctrine. Such an approach is, in my view, incompatible with the text, structure and character of the Australian Constitution.
The Australian constitutional text makes it clear that certain new constitutional entities are thereby created. They are "the Commonwealth" which is thereby "established"[63]; the "States" (being the former named "colonies" of the Crown such as are admitted into or established by the Commonwealth as States[64]) and the Territories of the Commonwealth[65].
It is plain from the constitutional text, purpose and history that the new polities are not merely a continuation of pre-existing colonies under a different appellation. This would be an impossible notion in the case of the Commonwealth and the Territories of the Commonwealth, which had no earlier existence, as such. But it is equally impossible in the case of the States for, after federation, they existed as new governmental entities deriving their legal character and status from the Constitution itself, not from the pre-federation colonies which were thereby terminated.
Under the Constitution, the polities created were related to each other as integral parts of a new Commonwealth, a distinct and "indissoluble" federal entity[66]. Moreover, they constituted a new nation in the community of nations. This new nation was brought into existence by the will of the people in the several colonies named and those of any other identified Australasian colonies that might thereafter be admitted into the Commonwealth[67].
Although in colonial times in Australia, it was understandable that the colonial governments should have been treated for legal purposes as "manifestations of the Crown", with governmental "powers and functions … vested in the Governor of a Colony" representing the Crown, or in "the Governor of a Colony with the advice of his Executive Council, or in any authority of a Colony"[68], once the Commonwealth was established the new political entities then created were not properly so described or characterised. They derived their existence from the Constitution itself. They were thus constitutional entities and not a manifestation of anything else.
In effect, the Commonwealth, the States and the Territories therefore stand apart from the pre-existing governments in Australia, although they relate to each other. They are not, as such, manifestations of the Crown. It is a misdescription to so designate them or to equate them as such.
In the early years of Australian federation, as the notion of the indivisibility of the Crown throughout the British Empire persisted for some time, it was understandable that the Commonwealth, States and Territories should continue to be described as manifestations of the Crown. However, in terms of the constitutional text and basic legal principle, this description was erroneous. Persisting with it into the twenty-first century is unacceptable. It is past time that it should be replaced with a new governmental characterisation of the Australian governmental polities - one appropriate to the Constitution and the independent nation and component polities that the Constitution brought into existence.
Specific textual references: The fact that the Commonwealth and the Territories, at least, are plainly not subsumed in the Crown may be demonstrated by the distinction drawn in the Constitution between those polities, as such, and the various specific ways in which the Crown and the Queen are involved in Australia's post-federation constitutional arrangements.
Thus, the Queen is part of the Federal Parliament created by the Constitution as the Parliament of the Commonwealth[69]. The executive power of the Commonwealth is vested in the Queen[70]. Yet neither the Parliament nor the Executive of the Commonwealth is the Commonwealth itself. The constitutional polity is distinct and separate from the constituent parts that the Queen and the Crown play in its affairs.
This is even more clear in the case of the Judicature created by Ch III[71]. In The Commonwealth v Mewett[72], Gummow J and I endorsed the observation of Murphy J in Johnstone v The Commonwealth[73]:

[113]

Thus, the specificities and juxtapositions in the Australian Constitution concerning the part played in its governmental institutions by the Queen and the Crown, and particularly the provisions made (necessary to a federation) for the integrated Judicature, rendered it inapposite to import into our constitutional institutions, without significant adjustment, notions of governmental immunities and prerogatives that earlier existed in the United Kingdom. It is a basic legal mistake to consider that common law Crown immunities and prerogatives can be picked up holus-bolus and transferred to our antipodean constitutional setting without serious reconsideration, and adjustment, appropriate to the Australian constitutional text.
The democratic element: A particular consideration reinforces this conclusion. It is one to which reference has been made, and the point reserved, in more recent decisions of this Court[77]. It provides a reason of basic constitutional principle for abandoning descriptions of the Commonwealth, the States and the Territories of Australia as manifestations of the Crown or of the Crown in a particular "right".
The point was made earlier in the Supreme Court of Ireland in Byrne v Ireland[78] by Walsh J and his colleagues. Writing in Byrne of the Constitution of the Irish Free State 1922, in respect of a time before the republican constitution and when Ireland was still a constitutional monarchy under the Crown, Walsh J indicated the error of treating the new Irish polity as a manifestation of the Crown, entitled for that reason to all of the immunities and prerogative limitations that the Crown in the United Kingdom had previously enjoyed in Ireland under the common law and by reason of its royal prerogatives.
By reference to history, Walsh J explained that such immunities and prerogatives had traditionally derived from "the fact that the basis of the Crown prerogatives in English law was that the King was the personification of the state"[79]. With the establishment of a new and distinct State in Ireland, under a written constitution securing its authority ultimately from the people of Ireland whose will gave it birth, it was a basic error of legal principle to treat as applicable to the new State all of the pre-existing Crown immunities and prerogatives.
Views similar to those of Walsh J were expressed in Byrne by Budd J[80]. A contrary opinion was expressed by FitzGerald J[81]. The trial judge (Murnaghan J[82]) had found the arguments for a new legal perception of the character of the new constitutional State "unconvincing"[83] and difficult to take seriously. However, the perception of Walsh J and his colleagues in the majority has long since prevailed in Ireland[84]. In my opinion it is manifestly correct.
The same conclusion is applicable to the Australian Constitution, and essentially for the same reasons. Our Constitution, like that of Ireland after 1922, was a new, written instrument of government, approved at referendums by a vote of the Australian people then entitled to vote. Its ultimate foundation lies in its grant, and continued acceptance, by the Australian people. They alone may approve formal changes to the text[85].
The point of this discourse is not a merely formal one. It is a basic mistake of constitutional doctrine in Australia to treat the Commonwealth, the States and the Territories as manifestations of the Crown. It follows that it is an equal mistake to derive uncritically the applicable law of the governmental immunities of those polities from notions of the English common law or the royal prerogatives. This is because the new polities take their character from their creation and acceptance by the Australian people. Without argument, analysis and modification, it should not be assumed that this change in the source, origin, and character of the Australian constituent polities did not affect the ambit and content of such immunities. It was thus an error to import into the new constitutional arrangements for Australia, without modification, all of the law on Crown immunities and Crown prerogatives apt to a different country, in different times, reflecting different constitutional purposes and values.
A relevant stream of authority: In addition to the cases in this Court where the possible need to reconsider governmental immunity in Australia apart from notions of Crown immunity has been raised, there is a stream of authority that lends support to that notion. In Bank of NSW v The Commonwealth ("the Banking Case")[86], Dixon J specifically addressed the character of the Australian polities, viewed from the Australian constitutional perspective. He said[87]:

[115]

Dixon J's comments in that case were noted with approval in this Court in Crouch v Commissioner for Railways (Q)[88], both by Gibbs CJ[89] and in the joint reasons of Mason, Wilson, Brennan, Deane and Dawson JJ[90]. The latter reasons, in particular, endorsed Dixon J's idea that reconsideration of the identity of governmental polities with the Sovereign (the Crown or the Queen) was made essential by a federal system of constitutional government.
Later still, in Deputy Commissioner of Taxation v State Bank (NSW)[91], the entire Court[92] drew attention, in the context of s 114 of the Constitution, to the explicit immunity from federal taxation there provided to property of any kind belonging to a State, so described. The Court said that, although Dixon J's comments in the Banking Case had been made in the context of elucidating s 75(iii) and (iv) of the Constitution, they applied with equal force to s 114. This conclusion was then deployed to reject the argument of the State Bank that it was "the Crown 'in right of' the State" and so entitled to the constitutional immunity as such. That notion was held to be incompatible with "the constitutional conception of 'a State'"[93]. So far as the State Bank's alternative submission that it was entitled to "the privileges and immunities of the Crown"[94] was concerned, this proposition too was rejected[95], by reference to "the meaning and operation of an unalterable constitutional provision which the intention of the legislature cannot affect"[96].
Given the centrality of that constitutional notion, recognised in the foregoing cases, it seems scarcely persuasive, or legally coherent, to apply it to cases arising under provisions of the Constitution that explicitly describe the Australian governmental polities but to ignore it in other cases of legislation made under (and subject to) the constitutional grant of legislative powers.
This area of the law in Australia has been characterised as complex[97]. Doubtless this is so because it is dealing with bedrock notions of the "politically organized bodies" created in, or envisaged by, the Australian Constitution. It is further complicated by the historical evolution of the Commonwealth and its constituent parts and indeed of the Crown itself, originally in the British Empire and later in the Commonwealth of Nations and the world more generally.
Because of the terms in which Ch III of the Constitution is expressed, the States and the Commonwealth, and also the Territories, are commonly parties to proceedings in this and other courts, by their own constitutional names. So indeed they are in these proceedings. They were not named, and did not appear as, the Crown or the Queen. It would have been erroneous for them to do so. The States and Territories might not be "juristic persons" or corporations in the normal sense of those notions. But they are constitutionally created governmental organisations or institutions "possessing distinct individualities". And those "individualities" are derived from the Constitution, not from historically pre-existing notions of the Crown or its manifestations.
Questioning the assumptions: Yet what of the suggestion that, because the Parliament, in the Act, has specifically used the expression "the Crown in right of each of the States … and of the Australian Capital Territory", this Court should treat that formulation as a parliamentary endorsement or ratification of the traditional language (or, at least, as an indication that such language is no more than a harmless formula to be taken as equivalent to a reference to the State or Territory concerned)? Should the reference to a State or Territory as a manifestation of the Crown be treated as a kind of legislative fiction or historical surplusage?
There are difficulties in this approach. Any such fiction would not necessarily justify importing to the State or Territory concerned, without adjustment, all of the earlier notions of Crown immunity and royal prerogatives. The English prerogative principle, so far as it limits the answerability of the Crown and its manifestations before the Crown's own courts, without clear and express provisions, could have no direct application in the Australian constitutional context. That is so for the reasons explained by Gummow J and myself in Mewett[98].
Moreover, if ultimately (as seems to be the case) the reason why the Commonwealth, the States and the Territories cannot be conceived of as manifestations of the Crown derives from the Constitution itself, no fiction, however it is expressed by the Parliament, could override the requirements deriving from the constitutional text. On this footing, the references in ss 2A, 2B and 2C of the Act to the various polities of the Commonwealth as manifestations of the Crown in various "rights" would be disclosed for what they are: an unthinking endorsement of old judicial reasoning that has been erroneously applied to the new context created in Australia by the Constitution.
To this extent, I agree with one observation made by Callinan J in this appeal. Although the parties did not argue any question of constitutional invalidity or raise any constitutional questions[99], the Court may not "disregard the constitutional setting and the respective constitutional roles of the appellant and the States, in giving sense and effect to the Act"[100].
Whilst I ultimately draw a conclusion different from that derived by Callinan J, I agree with his Honour's approach in this respect. Neither the way that parties frame their arguments nor any procedural rule, enacted or adopted, can authorise this Court, when it is essential to the resolution of the matter before it, to ignore a requirement derived from the Constitution from which the Court itself secures its authority. At least, it cannot do so where the point has been adequately raised by a party or signalled by the Court during argument.
In many questions addressed to the present parties I made plain my challenge to their congenial assumption that the present appeal could be decided on the footing that the States in question were manifestations of the Crown, entitled as such to the traditional immunities (and prerogatives) of the Crown. I contested their assumption that the constitutional equivalence of the States and the Crown yielded a principle dictated by that assumption for the supposed derivative immunity of Baxter, stated in terms of the traditional rules governing the subjection of the Crown to general or insufficiently specific legislation affecting itself or its instrumentalities[101].
Alternative approaches: It follows that, in default of any valid and explicit legislation concerning governmental immunities in Australia, the proper approach to the present appeal involves the derivation of a new and different rule for governmental immunity in this country. As one aspect of such a rule, it might also be necessary to evolve a subordinate principle, protective of any governmental immunity, extending the immunity in particular cases to private individuals and corporations with which government has contractual or other dealings. Such a subordinate rule might be required because, otherwise, by imposing burdens on such individuals or corporations, a legislature could undermine, or destroy, the governmental immunity so established.
In deriving such principles for contemporary Australia, the starting point would necessarily be the terms and assumptions of the Constitution itself. Doubtless past learning on governmental immunity, expressed in the language of "Crown immunity", would be relevant. But it would not exclude examination of the development of governmental immunity in other common law jurisdictions which have severed, or modified, their relationship with the Crown and established their constitutional order upon the basis of the will of the people, as Australia has.
In the United Kingdom, the doctrine of Crown immunity was formerly applied to the enacted competition law based on the decision in In re Telephone Apparatus Manufacturers' Application[102]. However, this position was altered by the Competition Act 1998 (UK). By s 73 of that Act, the provisions of the Act bind the Crown, save that it is not criminally liable or liable for a penalty, nor is the Queen liable in her private capacity. Thus, in the land of its origins, the analogous immunity is now governed by statute rather than by the common law of Crown immunities or by the royal prerogative.
The application of Crown immunity to the Combines Investigation Act 1970 (Can) was upheld in R v Eldorado Nuclear Ltd[103]. However, this approach was criticised strenuously by two of the judges, in language relevant to the understanding of modern Australian governmental immunity. Thus, Dickson J observed[104]:

[127]

Imposition of artificiality: I have now explained why I cannot concur in the joint reasons. I do not agree to equating the States and Territories of Australia and the Commonwealth itself, as such, with manifestations of the Crown. It follows that I do not agree with the assumption of the parties to this appeal that the Constitution is irrelevant to the resolution of the matter that the parties bring to this Court. I question (as Murphy J did in the facts of Bradken[115]) concessions made in the course of the proceedings. Most especially, I question the concession of the Commission that the States involved, and the State Purchasing Authorities (SPAs), acquired the products in question in this appeal otherwise than in the course of carrying on a business[116].
As Murphy J said of a concession made in Bradken[117]: "I have the gravest doubts that this concession is correct." Nevertheless, it was made. The litigation was conducted on that footing. There is no alternative in this Court but to accept the concession. To do otherwise would risk inflicting a serious procedural injustice on the parties.
This conclusion requires me to "consider this case artificially", as Murphy J was also required to do in Bradken[118]. I may protest at that necessity. However, there is no way that I can avoid it. One day the error of the current approach of this Court to these questions will be understood. The starting point for the enlightenment will be a reading of the reasons of Walsh J in Byrne v Ireland[119].
Construction and constitutionalism: I accept, as the joint reasons suggest[120], that it is difficult for this Court to address a new foundation for governmental immunities in the Australian constitutional context where the parties fail to do so and persist with past reasoning. However, unless this important topic is forever to pass under the radar, it is ultimately necessary for this Court to raise the subject itself. Otherwise, we become complicit in erroneous or imperfect reasoning. We give no corrective stimulus to questioning the assumptions of the parties and of the courts below.
In this appeal, the issue was fully addressed in questions asked of the parties. Many of the constituent governments were before the Court. The defect in past reasoning offends the Constitution itself. It is beyond time that the defect should be recognised and addressed by this Court. No rule of statutory construction can exist in Australia which is disharmonious with the provisions of the Constitution.
Upholding the Act's purposes: Pending the enlightenment, and approaching this appeal within the constraints, assumptions and concessions accepted by the parties, I am brought ultimately to the same conclusions as are stated in the joint reasons. Those conclusions accord more closely with my own approach, in many cases, to questions (uncomplicated by issues of governmental immunity) concerning the ambit and application of the Act, so as to fulfil the large national objects declared in s 2[121]. The conclusions also conform more closely with the course of statutory amendments designed to strengthen the operation of the Act. Specifically, they are more consonant with my view of how any properly expressed rule of governmental immunity in Australia would operate in respect of those corporations which, in the course of their business, engage in dealings with an Australian State or Territory government[122].
In this appeal (unlike others in which I have disagreed with earlier majorities) there is in the joint reasons what I regard as appropriate attention to the large national, economic and protective purposes of the Act. As this purposive approach to the application of the Act has been a repeated theme of my minority reasons in earlier cases on the Act[123], I will encourage the new dawn. Now that it has at last emerged, I endorse it and hope that it will survive to future cases involving the Act.
By reference to the object of the Act, as inserted in 1995 to reflect inter-governmental agreements in Australia concerning competition policy and its importance for the whole nation[124], I accept the observations of Mr Wright[125]:

[139]

No party in this case raised a constitutional question. It was accepted that if the Crown in right of a State or Territory was carrying on a business, either directly, or by one of its agencies then to that extent it would be amenable to the Act. It was also accepted that in dealing with the respondent supplier, the States were not carrying on a business. None of this means however that the Court may disregard the constitutional setting and the respective constitutional roles of the appellant and the States, in giving sense and effect to the Act. All of the matters to which I have referred, the respective constitutional roles of the Commonwealth and the States, the absence of any express conferral of power in relation to health upon the Commonwealth, and the charitable nature of the States' activities in providing medical services, strongly suggest that if there were ambiguity about the exemption of the States from the relevant operation of the Act here, a construction which gave the States a real and ample exemption is preferable. There are other factors relevant to, and tending in favour of such a construction. The appellant is an executive creature of the Commonwealth, although it has special powers and a degree of independence from the Executive. On the other hand, the State purchasing authorities are the States themselves under different names. In these circumstances it is an unlikely proposition that the Commonwealth Parliament would have wished to, and intended to subject the States to the operation of the Act when the States were doing what they did here. My reference to these matters as aids to construction should not be misunderstood. They are, I would reiterate, aids only. They reinforce, to the extent that any reinforcement might be necessary, the effect of the language of the Act itself.
What is decisive, however, is that, on its ordinary construction, s 2B plainly exempts the States from the operation of the Act unless they are carrying on business, which, by common consent here they are not.
The appellant is not assisted by s 2 of the Act which declares, relevantly, that its object is to enhance the welfare of Australians by the promotion of competition and fair trading. Although not clearly articulated, there could be detected in the arguments of the appellant a contention that it knew better than the States where their best interests lay: that in a competition between the promotion of competition itself and fair trading on the one hand, and the provision of medical supplies and services and the acquisition of the means of providing them on the other, the former should prevail: that it was really in the States' own enlightened self-interest, to have their procurement activities policed by the appellant, even if the States in consequence ended up paying more for, or suffered some uncertainty in respect of, the acquisition of necessary supplies and services. I would reject such a contention. It is entirely a matter for the States how they might choose to go about performing their functions, and there is no reason to believe, even if it were relevant, that the States misapprehended where their best interests lay.
Nothing turns upon the timing of the amendments made to the Act in 1995. Indeed the States were, in a broad sense, parties to their introduction, as participants in a national programme for the reform of competition policy, themselves enacting similar legislation for intra-State operation. It is hardly likely that they would have done so with a view to hobbling themselves in carrying out any of their essential non-business functions. The fact that the amendments gave exactly the same exemption to the States in respect of their non-business activities as the Commonwealth had previously enjoyed, emphasizes, rather than detracts from the importance of State immunity in the carrying out of ordinary State non-business activities. The making of the amendments in no way weakens the force of Bradken as a binding authority in a situation of the kind which is under consideration here.

[140]

The joint judgment draws a distinction between concluded contracts and everything that occurs up to the point of their conclusion. It discusses in some detail the negotiations and the like which took place with the respondent supplier before the States agreed to buy supplies from it. Little could be more important for polities than the prudent and economical expenditure of public money in the acquisition of goods and services by them for the carrying out of their ordinary functions. The price of a lessening of competition, or, of an insult to fair trading generally, may not be too high a price for a State, even South Australia on reflection[149], to pay in acquiring its medical necessities.
It is inescapable that any impediment placed in the way of the respondent supplier in dealing with the States is equally an impediment imposed upon the latter. This is so, even if it be accepted that "illegality" may not have the same consequences for all of the parties to a contract, or that ss 80, 87 and 87A of the Act confer very wide powers upon the courts to fashion remedies to suit the particular circumstances of the case and the parties before them. The notion that the Act might have a differential application to the respondent supplier and the States here could offer no comfort to the States. The questionability of suppliers' conduct would inevitably deter the States from dealing with them. There may in some circumstances be some room for differential treatment under the Act, for example, with respect to a refusal to supply. But that is not this case. In such a situation a State itself would probably be able to invoke the Act and have it applied to suppliers. But that would be a matter for a State. In doing it they would in no way be prejudiced: rather the contrary. Indeed, insistence by the appellant or the States upon the application of the Act in those circumstances would enhance, rather than prejudice the autonomy of the States in carrying out their functions. I cannot therefore accept, as a matter of reality and practicality, that to intercept and proscribe all, or any offers, invitations to tender, discussions and negotiations up to the point of the conclusion of a contract, would be to leave unimpaired, the immunity that s 2B of the Act says the States should have. To do so would not merely impair State immunity, it would effectively destroy it, and allow s 2B little or no useful operation.
In my opinion, Bradken remains as authority covering this case, despite the subsequent decision of this Court in Bropho v Western Australia[150]. The force of what Gibbs ACJ said in the former is largely unaffected by the latter[151]:

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