Australian Competition & Consumer Commission v Boral Ltd

Federal Court of Australia|2004-08-16|Before: Heerey J

1 On 16 December 2003 Boral Limited announced a takeover bid for Adelaide Brighton Ltd (ABL). ABL owns 50 per cent of the share capital of Independent Cement and Lime Pty Ltd (ICL). The Australian Competition and Consumer Commission takes the view that implementation of the Boral bid would contravene s 50 of the Trade Practices Act 1974 (Cth).

2 On 4 June 2004 the Commission commenced proceeding V699 of 2004 seeking injunctions and other relief directed towards prevention of the takeover. Boral in its defence denies that the takeover would contravene s 50. In the alternative, it proffers detailed undertakings which it submits the Court should accept as a condition of allowing the bid to proceed.

4 Also last Friday ICL filed notices of motions which seek the following relief. First, an order pursuant to O 29 r 5 of the Federal Court Rules that the two proceedings be consolidated or heard together. Secondly, in the alternative, an order that ICL be added as an applicant to the Commission's proceeding pursuant to O 6 r 8. Thirdly, leave to intervene in that proceeding pursuant to O 6 r 17.

5 Boral opposes the orders sought. The Commission is neutral.

6 The Commission's proceeding has already been set down for a trial commencing on 30 August 2004. A period of five weeks has been allotted. Due to pre-existing Court commitments, that period will be truncated and the trial will have to conclude at the end of October. It has been made clear in earlier directions hearings that this time is necessarily very constrained and that it may be necessary to impose time limits on the existing parties, that is to say, the Commission and Boral.

7 Broadly in support of its various applications ICL says, and I accept, that implementation of the takeover would have the most serious adverse commercial consequences for it. To take one major example, ABL has granted ICL an exclusive right of distributorship of cement and associated products for New South Wales, Victoria and the Australian Capital Territory until 2012. In those markets ICL is a competitor of Boral. (The definition of what are the relevant markets for the purposes of s 50 is a disputed issue and the present ruling is obviously not a pre-judgment on that question.) Currently supplies by ABL to ICL amount to some 850,000 tonnes per year. But, by an exception to the exclusive distribution agreement, ABL has retained the right to supply itself and also Boral and its subsidiaries. Once ABL is controlled by Boral, ICL's source of supply will be a competitor. The proffered undertakings would only oblige a Boral-controlled ABL to supply ICL 500,000 tonnes per year.

8 To date, ICL has closely co-operated with the Commission in the preparation of evidence. However, it submits that the Commission and its solicitors and counsel will inevitably be less astute to represent ICL's legal and commercial interests than would ICL and its own lawyers. It is also said that ICL has a unique knowledge of its own business and in particular its business within the markets the subject of the two proceedings and the effect on ICL of the alleged contravention. ICL is especially concerned with the practical effect of the proposed undertakings which, as far as can be seen at the moment, are likely to loom large in the trial.

9 ICL says that it can minimise disruption to the conclusion of the trial within the allotted time by limiting its role. It proposes that it would not call any expert evidence, it would not call any lay evidence without leave and it would not cross-examine any witness called by the Commission without leave. At a late stage of the argument, senior counsel for ICL even said that it would not cross-examine Boral witnesses, although implicitly, I take it, that undertaking would also be subject to leave being reserved. Perhaps the practical point can be made that the more limited the proposed role of ICL in a joint hearing, the less the contribution it might be able to make.

10 Although senior counsel for ICL boldly submitted that delay was not a relevant factor at all, I think it is highly relevant. This bid - which has been recommended by the directors of ABL - has been public knowledge since December last year. On its own affidavit material, ICL has been in intense discussions with Boral since January of this year. The commencement of this proceeding received substantial publicity. ICL obviously would have been aware of it, and also of the fact that there will be an early trial. But in circumstances where the hearing time will be substantially restricted, I think overall considerations of fairness, which must affect the exercise of any judicial discretion, must be strongly affected by ICL's substantial delay which, I might add, is completely unexplained.

11 As noted, I accept that if this takeover is completed there are likely to be adverse commercial consequences for ABL. However, that is not a unique situation. It often happens that outsiders to litigation will be substantially affected by the result. But that of itself does not necessarily mean that the Court will grant leave to intervene, with an inevitable lengthening of proceedings. Senior counsel for both sides referred to the judgment of Woodward J in SCI Operations Pty Ltd v Australian Paper Manufacturers Ltd (1983) ATPR 40-381, where his Honour rejected a similar joinder application in the context of litigation under s 50. True it is, as senior counsel for ICL pointed out, the party seeking joinder was simply a rival bidder for the target company, and hence might be said to have had only a commercial interest in the outcome. But it seems to me in the present case essentially the same thing can be said, even though the commercial interest is of a different character.

12 I also place reliance on what was said by Woodward J about the effect of s 80(1A), which provides in effect that only the Commission can apply for an injunction to restrain a contravention of s 50. His Honour said (at 44,510):

"However I think it will be contrary to the spirit and scheme of the legislation if parties were able, by indirect means, to gain perceived advantages which they were prohibited from obtaining by direct means." 13 I raised with counsel the possibility of some very limited form of intervention which might take two forms. First, that ICL should be able to retain counsel to appear for the purpose of raising any claims on behalf of Commission witnesses, who are ICL officers, as to confidentiality and like subjects. Secondly, counsel might be given leave to make final submissions, limited to the question of undertakings. Senior counsel for Boral did not oppose such leave, but said it should be conditional on ICL discontinuing its own proceeding, and he referred in this context to the mandate of s 80(1A). Senior counsel for ICL submitted that such limited leave would be of little value unless its counsel could have access to discovered documents so that any submissions would be properly informed. That in turn of course raises the question of the very complex confidentiality regime already in force and how it would apply to ICL. 14 In the end, bearing in mind that no doubt ICL will, quite legitimately, be co-operating closely with the Commission in the bringing of its case, I think that the proposed limited form of intervention I have raised is probably not worth the further practical problems it creates.

15 For those reasons the motions are dismissed with costs.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.

Counsel for the ACCC: Ms S Pryde

Solicitor for the ACCC: Australian Government Solicitor

Counsel for Independent Cement & Lime Pty Ltd : Mr KWS Hargrave QC with Mr B F Quinn

Solicitor for Independent Cement & Lime Pty Ltd: Corrs Chambers Westgarth

Counsel for Respondent: Mr A J L Bannon SC with Mr I B Stewart

Solicitor for Respondent: Blake Dawson Waldron

Date of Hearing: 16 August 2004

Date of Judgment: 16 August 2004

Trade Practices Act 1974(Cth)

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