REASONS FOR JUDGMENT
Introduction
1 The applicant commenced a representative proceeding under Pt IVA of the Federal Court of Australia Act 1976 (Cth) ("the FCA") claiming relief in respect of an international price fixing and market sharing arrangement entered into during the 1990s between certain companies in the Hoffman-La Roche, Aventis and BASF groups of companies ("the cartel arrangement"). The cartel arrangement related to vitamin and other similar products manufactured and sold by those groups of companies primarily for human nutrition and health and animal nutrition and health. The vitamins are also used for cosmetics and in certain technical non-nutritional applications, such as antioxidants in foods.
2 The relief claimed by the applicant, on her own behalf and on behalf of the group members she was representing, included:
· a declaration pursuant to s 163A of the Trade Practices Act 1974 (Cth) ("the TPA") that each of the respondents have contravened s 45 of the TPA;
· injunctions pursuant to s 80(1) of the TPA restraining the respondents from making or arriving at, giving effect to or attempting to make, arrive at or give effect to, a further cartel arrangement of the kind that they made or gave effect to during the 1990s;
· damages pursuant to s 82(1) of the TPA;
· such further or other relief and orders as the Court considers appropriate pursuant to s 87(1) of the TPA.
3 Details of the proceeding, and the evidence relied upon by the applicant to establish that she has a prima facie case for the relief sought, were set out in my earlier interlocutory judgment ([2002] FCA 243), which is reported at (2002) 190 ALR 1 ("Bray"). It was common ground that I should treat the evidence upon which I relied in Bray, and the findings I made in relation to the making and implementation of the cartel arrangement, as part of the material before the Court on the present applications of the second and third respondents ("HLR Australia"), the seventh respondent ("AAN Australia") and the eleventh respondent ("BASF Australia"), which respondents I will refer to as "the Australian subsidiaries". It is therefore appropriate to treat the relevant findings that I made in Bray as part of my present reasons and to use the terms and definitions I used in those reasons.
4 Shortly after the delivery of my reasons for judgment in Bray, in which I dismissed notices of motion to set aside service of the proceeding on all of the foreign respondents save for BASF South East Asia, the applicant delivered a Third Amended Application ("the application") and a Third Amended Statement of Claim ("the statement of claim"). Some further amendments were made, without opposition by the Australian subsidiaries, to the application and the statement of claim during the course of the present hearing. The foreign respondents, who were unsuccessful in their motions to set aside service of the proceeding upon them, have applied to a Full Court for leave to appeal against the dismissal of those motions. However, the Australian subsidiaries have applied for orders striking out the application and the statement of claim in relation to the causes of action pleaded against them and also for orders that the proceeding no longer continue as a representative proceeding under Pt IVA of the FCA.
5 The Australian subsidiaries also claimed that Pt IVA of the FCA contravened Ch III of the Constitution but accepted that, as a single Judge of the Court, I was bound to follow the decision of the Full Court in Femcare Ltd v Bright (2000) 100 FCR 331 ("Femcare") to the effect that a representative proceeding, if properly constituted in accordance with Pt IVA of the FCA, does not fall outside the concept of a "matter" for the purposes of Ch III with the consequence that Pt IVA did not contravene Ch III. AAN Australia also applied for security for costs.
Part IVA
6 The main issue raised by the motions was whether the representative proceeding was properly constituted in accordance with Pt IVA of the FCA. The Australian subsidiaries contended that the proceeding was not constituted in accordance with the requirements of ss 33C and 33H of the FCA. Those sections provide:
"33C.
(1) Subject to this Part, where:
(a) 7 or more persons have claims against the same person; and
(b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and
(c) the claims of all those persons give rise to a substantial common issue of law or fact;
a proceeding may be commenced by one or more of those persons as representing some or all of them.
(2) A representative proceeding may be commenced:
(a) whether or not the relief sought:
(i) is, or includes, equitable relief; or
(ii) consists of, or includes, damages; or
(iii) includes claims for damages that would require individual assessment; or
(iv) is the same for each person represented; and
(b) whether or not the proceeding:
(i) is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or
(ii) involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.
…
33H.
(1) An application commencing a representative proceeding, or a document filed in support of such an application, must, in addition to any other matters required to be included:
(a) describe or otherwise identify the group members to whom the proceeding relates; and
(b) specify the nature of the claims made on behalf of the group members and the relief claimed; and
(c) specify the questions of law or fact common to the claims of the group members.
(2) In describing or otherwise identifying group members for the purposes of subsection (1), it is not necessary to name, or specify the number of, the group members."
7 In Phillip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487 ("Phillip Morris") at 514-515 Sackville J (with whom Spender J and Hill J agreed on this issue) explained the procedural requirements in ss 33C(1) and 33H(1):
"123. It follows from Part IVA of the Federal Court Act, when construed in context (including the LRC's report on Grouped Proceedings), that representative proceedings must satisfy a number of procedural requirements.
124. First, in order for representative proceedings to be properly constituted, the application (or a supporting document) must include the three categories of information specified in s 33H(1). If, for example, the application does not describe or otherwise identify the group members, as required by s 33H(1)(a), the application is liable to be struck out or the proceedings dismissed, pursuant to the Court's powers under the FCR specifically preserved by s 33ZG(b).
125. Secondly, a proceeding is not properly commenced unless it satisfies each of the three threshold requirements specified in s 33C(1). If the proceeding does not comply with these requirements, for example because seven or more persons do not have claims against the same person as required by s 33C(1)(a), the proceeding is liable to be dismissed or the applicants' pleading struck out. …
126. Thirdly, as the parties accepted, s 33C(1)(a) requires every applicant and represented party to have a claim against the one respondent or, if there is more than one, against all respondents. This conclusion follows from the language of s 33C(1)(a) itself and is consistent with the approach taken by the LRC in Grouped Proceedings. It is also consistent with the structure of the legislation. For example, s 33D(1)(a) (which provides that a person who has a sufficient interest to commence a proceeding on his or her own behalf against another person has a sufficient interest to commence a representative proceeding against that person on behalf of other persons referred to in s 33C(1)(a)) is clearly drafted on the assumption that all applicants and represented persons will have claims against the same person.
127. It follows that s 33C(1)(a) is not satisfied if some applicants and group members have claims against one respondent (or group of respondents) while other applicants and group members have claims against another respondent (or group of respondents). The requirement in s 33C(1)(b), that the claims of all group members are in respect of or arise out of the same, similar or related circumstances, is a necessary but not sufficient condition for the commencement of representative proceedings. Of course, if there are two sets of claims against two sets of respondents, it may well be that each can be the subject of representative proceedings. It may even be that directions can be made for them to be heard together: Ryan v Great Lakes Council (1997) 149 ALR 45 at 48, per Wilcox J. But they cannot both be the subject of the same representative proceedings.
128. Fourthly, in a representative proceeding commenced by application and statement of claim, the pleading must demonstrate that each of the conditions laid down in s 33C(1) has been satisfied. Since s 33C(1) is concerned with the commencement of proceedings, compliance with its terms can be assessed only by reference to the case pleaded by the applicants (or set out in affidavit form if pleadings are not used). This is consistent with the approach taken by the High Court in Wong v Silkfield. Thus, for example, the pleading must make claims on behalf of the applicant and each member of the represented class against the same respondent or, if more than one, against all respondents. It is not permissible in a representative proceeding to plead a claim on behalf of some group members against one respondent and a separate claim on behalf of other group members against another respondent.
129. Fifthly, Part IVA of the Federal Court Act does not abrogate the general pleading requirements applicable to proceedings in the Federal Court by virtue of FCR O 11. An inadequately pleaded representative proceeding is liable to be struck out or dismissed in the exercise of the Court's powers under FCR O 11, r 16 or O 20, r 2(1). So much follows from s 33ZG(b) of the Federal Court Act which, as has been seen, gives effect to recommendations of the LRC in Grouped Proceedings.
130. Unlike the threshold requirements for a representative proceeding specified in s 33C(1) of the Federal Court Act, inadequacies in the pleadings do not necessarily mean that the proceeding cannot continue as a representative action. Whether that is the consequence of pleaded deficiencies will depend on the nature of the deficiencies and whether they are curable by amendment. The Court has powers to manage representative proceedings which are no less extensive than its powers to manage other proceedings: FCR O 10, r 1; Federal Court Act s 33ZF(1) (empowering the Court to make any order in a representative proceeding that the Court thinks appropriate or necessary to ensure that justice is done)."
8 In Femcare the Full Court observed (at 355):
"…It must be remembered that the proceeding will not be properly constituted unless the threshold requirements specified in ss 33C and 33H have been satisfied. If they are satisfied, and if the claim is properly pleaded in accordance with the principles discussed by Sackville J in Philip Morris v Nixon, at … [123]-[137], the Court and the parties will be able to identify
· the subject matter for determination in the proceeding;
· what right, duty or liability is sought to be established; and
· the nature of the controversy between the parties."
9 In 'Class Actions against Multiple Respondents' (2002) Vol 30 No 2 Federal Law Review 295, Associate Professor Vince Morabito claimed that the requirement in Phillip Morris that each group member must have a claim against each respondent undermines the purpose of enhancing access to justice, which is the primary rationale for Pt IVA. While it is clear that s 33C(1)(a) requires that the applicant and each group member have a claim against the respondent it is not altogether clear that the same requirement was intended to apply where there were multiple respondents. As I later explain, the present case affords a good example of how the strict application of s 33C(1)(a), in a case involving more than one respondent, might give rise to requirements and limitations that have little to do with the purpose or efficacy of Pt IVA. However, as a single judge I am bound to apply the principles enunciated by the Full Court in Phillip Morris.
10 The Australian subsidiaries also relied upon, ss 33M, 33N(1)(c) and 33N(1)(d) of the FCA which provide:
"33M Where:
(a) the relief claimed in a representative proceeding is or includes payment of money to group members (otherwise than in respect of costs); and
(b) on application by the respondent, the Court concludes that it is likely that, if judgment were to be given in favour of the representative party, the cost to the respondent of identifying the group members and distributing to them the amounts ordered to be paid to them would be excessive having regard to the likely total of those amounts;
the Court may, by order:
(c) direct that the proceeding no longer continue under this Part; or
(d) stay the proceeding so far as it relates to relief of the kind mentioned in paragraph (a).
33N(1) The Court may, on application by the respondent or of its own motion, order that a proceeding no longer continue under this Part where it is satisfied that it is in the interests of justice to do so because:
(a) …
(b) …
(c) the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members; or
(d) it is otherwise inappropriate that the claims be pursued by means of a representative proceeding."
11 The Australian subsidiaries claim that the complexity of the proceeding and the criticisms they made of it for the purposes of ss 33C(1) and 33H(1) should lead the Court to conclude it is in the interests of justice that the proceeding no longer continue as a representative proceeding.
The claims of group members
12 The criticisms of the Australian subsidiaries centred, but did not exclusively rely, upon the definition of group members in the application and the statement of claim. The definition is as follows:
"The group members to whom this proceeding relates are persons, other than Federal or High Court judges, who between 5 March 1992 and 5 July 1999 purchased in Australia all or some of vitamins A, B1, B2, B5 (Pantothenic Acid), B6, B9 (folic acid), B12, C, E, Beta Carotene, Canthaxanthin, Astaxanthin (collectively referred to as the 'class vitamins'), either directly or indirectly by way of the purchase of foods, animals, stock feed, beverages, vitamin pills or capsules or other products which contained one or more class vitamins and whether or not the class vitamins remain chemically intact or have been changed or metabolised."
13 The Australian subsidiaries drew attention to the extraordinary width of the class of persons defined as group members. I had expressed my concern about that matter at previous hearings. Notwithstanding that concern during the course of the present applications the applicant broadened the class to extend it to all persons who directly or indirectly purchased class vitamins in Australia, even if the vitamin was not supplied by one or more of the respondents. The explanation given for the broadening of the class was that the cartel arrangement resulted in an absence of competition in the market for the sale and purchase of the class vitamins in Australia leading to prices for all class vitamins, irrespective of by whom they were supplied, being higher than would otherwise have been the case. As a result of the amendment the contentions of the Australian subsidiaries about the impossibility of tracing many of the direct or indirect purchases of the class vitamins back to group members loses much of its force and relevance for present purposes.
14 Thus, all direct and indirect purchasers of class vitamins or of pre-mixed products containing class vitamins for human or animal nutrition or health and for other purposes between 5 March 1992 and 5 July 1999, are group members. The "direct" purchasers are persons who purchased the class vitamins, or pre-mixes of those vitamins, for the purposes of resale, distribution or consumption. The "indirect" purchasers are persons who purchased human, animal or other products containing the vitamins for the purposes of resale, distribution or consumption. It is now common ground that in Australia the Aventis companies only supplied vitamins A and E for animal nutrition and health. However, the applicant contended that all consumers of food products derived from animals who were fed those vitamins will fall within the class of indirect purchasers of vitamins A and E or of a pre-mix of those vitamins.
15 The statement of claim was summarised by me in Bray at [19]-[24]:
"19. The applicant's claims under s 45(2)(a) of the Act are based upon an alleged market in Australia in which each of the respondents engaged in the conduct alleged against them in the course of the supply in Australia of the class action vitamins in competition with each other (paras 17, 18, 19 and 43 of the statement of claim). The statement of claim alleges that each of the foreign respondents engaged in the supply of the class action vitamins in Australia by itself, or by the Australian subsidiaries and the other foreign respondents in its group acting as its agent (paras 20(f), 23, 25, 26(b), 27, 30(d), 32, 34, 36, 39, 41 and 41B).
20. The supply by the foreign respondents of the class action vitamins in Australia and the control and direction they were alleged to have exercised over their Australian subsidiaries, were pleaded to have also had the consequence that the foreign respondents carried on business in Australia within the meaning of s 5(1) of the Act (para 42).
21. The contravention of s 45(2)(a) (in respect of which reliance was placed on s 45A) was alleged to have arisen by reason of the making of the cartel arrangement to fix prices and allocate market shares throughout the world, including Australia, by HLR Europe, A Europe and BASF Europe (paras 45, 46 and 47). The arrangement was alleged to contain an exclusionary provision (as defined in s 4D of the TPA) and other provisions that had the proscribed anti-competitive purpose and effect (paras 48, 49 and 50).
22. The contravention of s 45(2)(b) (in respect of which reliance was also placed on s 45A) was alleged to have arisen by reason of each of the respondents giving effect to the contravening provisions by fixing prices and market allocations in the Australian market (para 51).
23. The particulars given in respect of the communications forming part of the conduct relied on as constituting the making of, and giving effect to, the alleged contravening provisions of the cartel arrangement did not specify where the communications took place.
24. In summary, the applicant alleges breaches of s 45(2)(a) and (b) by each of the respondents (para 52), alternatively breaches of s 45(2)(b) by the Australian subsidiaries giving effect to the cartel arrangement on the instructions of HLR Europe, A Europe, and BASF Europe (para 53 and 54). An alternative cause of action pleaded against the Australian subsidiaries, in reliance on s 75B, is that they were involved in the contraventions of s 45(2) by HLR Europe, A Europe, and BASF Europe (paras 55, 56 and 57). A claim is also made, in reliance on s 75B, that HLR Europe, A Europe, and BASF Europe were involved in the contraventions of s 45 by the Australian subsidiaries (paras 59, 60 and 61)."
16 The statement of claim alleges the applicant and group members suffered loss and damage by reason of the respondents making, giving effect to and being involved in the cartel arrangement in Australia in contravention of s 45 of the TPA. The loss and damage was particularised in [58] of the statement of claim:
"The Applicant and the group members have paid higher prices for the class vitamins than they would have paid in a competitive market for the class vitamins, further or alternatively in the absence of the contraventions by the respondents, further or alternatively in the absence of the entry by the respondents into each contract, arrangements or understanding and their conduct in giving effect to it.
Further, those of the group members engaged in the resale of the class vitamins, either directly, or indirectly by way of sale of product which contained the vitamins, have suffered a loss of profits as a result of:
(i) paying higher prices for the class vitamins than they would have paid in a competitive market further or alternatively in the absence of the contraventions; and
(ii) having to charge artificially high prices for their products with a resulting reduction in demand for their products.
Further particulars will be provided after discovery."
17 In Bray I summarised the inferences I drew from the evidence to conclude that the applicant had a prima facie case for relief against the foreign respondents (other than BASF South East Asia) at [132]-[144]:
"132. … The evidence generally (but in particular the emphasised passages) establishes that the cartel arrangement referred to in the US plea agreements was arrived at:
'…to suppress and eliminate competition by fixing, increasing, and maintaining the price and allocating the volume of certain vitamins sold in the United States and elsewhere,…'
133. Pursuant to the cartel agreement made by the European parent companies, HLR Europe, BASF Europe and A Europe (or AAN Europe) were obliged:
· to agree on the market shares each was to hold worldwide and by region, which included Australia, or to set specific volumes of certain bulk vitamins that each company would supply for the world by region, which included Australia;
· to fix, increase or maintain prices and to coordinate price increases throughout the world, by region, which included Australia, at which each company would sell bulk vitamins to customers;
· to implement or procure implementation of the cartel arrangement through the 'respective affiliates or subsidiary companies in the relevant parts of the world' with each parent being responsible 'for supervising and co-ordinating or procuring the supervision and co-ordination of the operations of corporate members' of each group to ensure compliance with the cartel arrangement;
· in respect of each region, to ensure the regional group company responsible for implementation of the cartel arrangement in the region advised members of the group in the region of the prices, or the range of prices, at or within which such members would sell vitamins in order to achieve the revenue and sales budgeted, in accordance with the cartel arrangement, for the region and the individual countries in the region.
134. In order to implement the cartel arrangement, senior executives of the three groups met on a regular basis in Europe and, inter alia, in each of the regions (including the Asia Pacific) to fix regional wholesale prices and to allocate market shares or volume of sales for regions and the countries in each region, including Australia. Those meetings ensured that the worldwide arrangement agreed to by the European parents was implemented on the basis that responsibility for regional implementation devolved upon the regional parent in each group. The group subsidiaries in each region, including the Australian subsidiaries, were required to implement, and implemented, the arrangements made at the regional level in accordance with the direction and advice proffered by the regional parent. In some instances, prior to responsibility devolving on a regional parent, the European parent was directly involved in implementation by a subsidiary.
135. During the various regional meetings amongst senior executives of each group at the regional level, budgets were agreed to on the basis of sales information exchanged during lower level employee meetings. Implementation at the national level in Australia was described in the AAN Australian plea agreement as follows:
'16. Senior executives of AAN Australia, RVA and BAL implemented the Overseas Arrangements by engaging in telephone discussions and holding meetings at which they made arrangements and arrived at understandings as to:
(a) the prices at which each of AAN Australia, RVA and BAL would sell animal vitamins A and E;
(b) the volume of animal vitamins A and E to be sold by each of AAN Australia, RVA and BAL;
(c) the prices at which each of the participants would sell pre-mix containing animal vitamins A and E to certain major customers;
(d) the allocation amongst the participants of tenders for the supply of pre-mix containing animal vitamins A and E to certain major customers of such pre-mix.
…
18. AAN Australia, RVA and BAL gave effect to the Australian Arrangements by each of them supplying animal vitamins A and E and charging prices for the supply of pre-mix containing animal vitamins A and E in accordance with those Arrangements.'
136. Similar descriptions appeared in the other Australian plea agreements.
137. Although the Australian plea agreements were only concerned with certain products, the evidence, at this preliminary stage, does not suggest that the implementation of the cartel arrangement differed in any significant respect between products. Further, the evidence does not suggest that the method of implementation differed in any significant respect between the three groups.
138. Regional meetings were designed to ensure that the agreed market share was met in the region and within each zone within the region. Implementation, including supervision and monitoring, of the cartel arrangement in Australia required the distribution on an ongoing basis of price lists by the European or regional parent to the Australian subsidiary, as well as ongoing directives and advice to the subsidiary as to customers, volumes, and prices for the class vitamins.
139. Johnson stated:
'53. From 1993 onwards market intelligence at the regional level was so sophisticated, and the customer base so well known to the regional managers, that all sales were organised at the regional level and directions given from the regional level to personnel in Australia for implementation in Australia.'
140. Where there was a deviation from the agreed market share in any region or country, 'appropriate and necessary set-offs' would be made to restore or maintain the agreed outcomes. Those set-offs maintained the required 'equilibrium' either globally, regionally or nationally. Johnson explained the working of that aspect of the cartel arrangements as follows:
'58. Mr Hall told me that the respective market shares of vitamins sales in Australia by BASF Australia Ltd, Rhone-Poulenc Animal Nutrition Pty Ltd and Roche Products Pty Ltd were offset against market share in other countries. From time to time I was directed by Mr. Hall to take a larger share of the Australian market in a particular quarter. I would be given discretion to quote a lower price than normal. I was told by Mr. Hall that I was being given this unusually large discretion on price to increase Rhone-Poulenc Animal Nutrition Pty Ltd's market share and offset a decline in market share elsewhere in the Asia region.'
141. The supervision by the regional parent required its executives to communicate regularly with senior executives of its subsidiaries, by attendance at meetings, or by other forms of communication. The supervision also required the regional parent to discipline subsidiaries or call upon the other cartel members to discipline their subsidiaries in the event that the minimum price, volume, or customer allocation agreed to was breached.
142. I infer, from the facts established by the evidence, that the implementation of the cartel arrangement in Australia was controlled and directed, directly or indirectly, in all relevant aspects by European and regional parent companies in each of the three groups involved in making and implementing the cartel arrangement. The control and direction arose in part as a result of the power, directly or indirectly, of those parent companies (or their subsidiaries) to exercise legal control over the composition of the boards of the Australian subsidiaries. Some parent companies may not have had the requisite direct or indirect shareholding to enable them to exercise legal control but in such cases little turns on that distinction as the companies were all within the same corporate group acting in the same corporate interest. In that situation I infer that the corporate hierarchy, rather than shareholding as such, was sufficient to confer the requisite power of control and direction. However, the control and direction also arose more directly from the fact that the European or regional parent supplied, or controlled the supply of, the class vitamins within each of the respective groups and was therefore able to control the quantity and price of the class vitamins supplied in each area, including Australia. Johnson stated:
'84. I was directed by Mr Hall to vary Rhone-Poulenc Animal Nutrition Pty Ltd's prices for vitamins and vitamin pre-mix to accord with the agreement to fix prices and ensure that Rhone-Poulenc Animal Nutrition Pty Ltd maintained its allocated proportion of market share.
85. Mr Hall directed me as to the price to quote for sales of Rhone-Poulenc vitamins in Australia. Typically he did this by sending me a fax, from France and later Singapore, which contained vitamin prices. I played no part in the process by which the prices for vitamins to be supplied in Australia by Rhone-Poulenc Animal Nutrition SA were determined.'
143. The inherent nature of the cartel arrangement required that its implementation at the national level be substantially as Johnson described it. Importantly, for present purposes, I infer that the on-going implementation, including supervision and monitoring, of the cartel arrangement in Australia required officers of the regional parent (or in its absence, of the European parent) who were responsible for making or implementing the arrangement to regularly direct, instruct, and advise senior executive officers of the Australian subsidiary as to prices and volumes in respect of the purchase of the class vitamins and as to the prices, volumes, and customers in respect of the sale of the class vitamins.
144. I infer that, for the most part, the directions, instructions, and advice implementing the cartel arrangement in Australia were communicated at meetings both inside and outside of Australia and by facsimile, e-mail, letter, telephonic, telex or other communications by officers of the European or regional parent (as the case may be) to officers in Australia of the Australian subsidiary. I accept that in some instances meetings and communications occurred at the overseas headquarters of the European or regional parent. However, the nature, extent and detail of the implementation of the cartel arrangement in Australia was such that it is likely that, substantially, implementation on a regular basis required detailed communications on an ongoing basis by officers of the relevant overseas parent to officers in Australia regarding the matters agreed to or budgeted for at regional meetings held outside of Australia."
And at [148]-[149], [151], [153], [157]-[158]:
"148. Conduct of a European or regional parent company may also be said to be conduct that has taken place in Australia where the particular conduct is engaged in by the subsidiary, or by its officers, on behalf of the parent. In substance, the evidence indicates that the cartel arrangement was made between the European parents who were obliged to implement the arrangement. Primarily, the European parents implemented the arrangement through the regional parent which, in turn, implemented the arrangement through national subsidiaries. Although in one sense it is accurate to state, for the purposes of s 45, that the cartel arrangement was made on an ongoing basis at each of the worldwide, regional and national levels it is probably more accurate to state that it was made at the European level and then implemented respectively at the regional and national levels by the regional parent and the national subsidiary respectively. Thus, rather than view the Australian subsidiaries as making the cartel arrangement, which at the micro level they plainly admitted to doing, it may be more accurate to describe their conduct as implementing the cartel arrangement of the European parent as directed by the European and regional parent. In so doing the subsidiary, or more accurately its officers, was performing the obligations undertaken under the cartel agreement made by the European (or regional) parent, rather than carrying out a separate and independent obligation undertaken by it. Indeed, the evidence suggests that the Australian subsidiaries exercised little or no discretion in relation to the implementation of the cartel arrangement in Australia.
149. Put another way, when the subsidiary is determining volume, price, and customers for the class vitamins for the purposes of its purchase and sale of those vitamins, it is doing so in performance of the European parent's obligations under the cartel arrangement. The parent, in turn, agreed to and could only carry out its obligations by its servants and agents. The 'agents' for that purpose are its officers and the relevant officers of the regional parent, or of its subsidiaries at the national level. This analysis is supported by the U.S., Canadian and European plea agreements in which the European parents (HLR Europe, BASF Europe and A Europe) pleaded guilty to the offences with which they were charged. The factual basis for the U.S. and Canadian pleas appeared to include admissions that the corporations charged committed the anti-competitive offences with which they were charged in the United States and Canada respectively, and elsewhere. The evidence establishes that the 'elsewhere' included Australia. Indeed, for the reasons set out above, I regard it as probable that the European parents, acting through officers of the regional parent and the national subsidiary, were actively involved in implementing the cartel agreement in Australia.
…
151. In the circumstances, prima facie, the evidence justifies the inference that the cartel agreement was implemented by A Europe, AAN Europe, the AAN regional parent (AAN Asia Pacific) and AAN Australia by officers of each of those companies acting as agent for the company next up in the chain of companies (other than A Europe, which is at the top of the chain).
153. It is also open to infer from the evidence, with much the same outcome at the national level, that the cartel arrangement was also made at the regional level and implemented by officers of the regional parent and of the subsidiary at the national level (on the instruction and at the direction of the regional parent).
157. …In considering the cartel arrangement, in the context of s 45, as involving a division of function with different officers or agents of the European or regional parent companies responsible for its implementation, an inference is reasonably open that implementation by those servants and agents was in that capacity rather than in some independent capacity. Accordingly, when officers of the Australian subsidiaries were carrying out their functions in respect of the arrangement, vis-a-vis the other subsidiaries and their regional or European parent, they may be inferred as doing so in fulfilment of the relevant European or regional parent's obligations and therefore as an agent of the parent. Put another way, the relevant officers, when implementing the cartel arrangement, were authorised to do so and did so for and on behalf of the parent whose obligations they were performing. Thus, the implementation by the agent was implementation by the parent which, subject to the illegality, was bound by its agent's implementation cf Adams v Cape at 529. I am here referring to the internal corporate steps implementing the cartel arrangement (eg purchases within the group, budgets, sales plans, meetings with members of the other two groups etc), and not the external corporate steps (eg contracts of sale by the subsidiary to customers which were made by the subsidiary, rather than by the European or regional parent). In respect of the internal steps an inference is reasonably open on a prima facie case basis that the officers of the Australian subsidiaries, when engaging in conduct in Australia that implemented the cartel, were acting as agents of and therefore for and on behalf of the relevant parent, rather than independently as officers of the subsidiary. It may be added that that role derives in part from the role of the subsidiary in implementing the cartel arrangement as agent for and on behalf of the relevant parent. In reaching these conclusions I am not piercing the corporate veil; rather, I am seeking to 'grapple with the true facts', albeit at this stage on an interlocutory basis. Further, the absence of contradictory evidence from the foreign respondents enables me to more readily draw the inferences I have drawn and more readily discount any doubts as to alternative hypotheses that might have been open that supported the case of the foreign respondents.
158. The combination of the conduct constituting communications by the relevant parent to officers of the subsidiaries in Australia (ie directions, instruction etc) and internal implementation of the cartel arrangement by officers of the subsidiaries in Australia on a regular and ongoing basis over a significant period constitutes, in my view, conduct by way of implementation of the cartel arrangement in Australia that, for the purposes of s 45(2)(b), can be inferred to be conduct of the foreign parent in Australia."
18 My findings in relation to "giving effect" to the cartel arrangement and s 75B of the TPA were set out at [161] and [163]-[166]:
"161. The conduct which I have referred to as conduct in Australia implementing the cartel arrangement, is sufficient to constitute 'giv[ing] effect to' the arrangement in Australia within the meaning of that term as defined in s 4(1).
…
163. In my view the evidence justifies the inference of the requisite intent, in the Yorke v Lucas sense, in relation to the conduct of senior officers of the parent and subsidiary companies involved in the internal implementation of the cartel arrangement in Australia. Mr Johnson's evidence supports that conclusion. Further, the nature, detail and manner of the implementation of the cartel arrangement necessitated secrecy and confinement of relevant information to senior officers on a 'need to know' basis. The inference is reasonably open that in such circumstances the relevant officers appreciated and intended that secrecy was necessary as the arrangement involved anti-competitive collusion by the three corporate groups. Thus, the evidence justifies an inference that, to the extent that the conduct implementing the arrangement is not 'giving effect to' it, the conduct will amount to involvement under s 75B, at least on a prima facie case basis.
164. Finally, I turn to consider the role of each of the foreign respondents. I have already explained why I am satisfied that a prima facie case has been made out in respect of each of the European parent companies (including A Europe and AAN Europe) and each of the regional parents responsible for the implementation of the cartel arrangement in Australia. In the case of the HLR and Aventis groups the relevant regional parent was HLR Asia Pacific and A Asia Pacific. Accordingly, I am satisfied that a prima facie case of giving effect to, or involvement in, the cartel arrangement in Australia has been made out against HLR Europe, HLR Asia Pacific, A Europe, AAN Europe, AAN Asia Pacific and BASF Europe. The remaining issue is whether BASF South East Asia, BASF East Asia, or both companies, gave effect to or were involved in the cartel arrangement in Australia.
165. The BASF Australian plea agreement (at [15]) states:
'For each of vitamins A and E during the period from January 1990 to February 1999, senior executives and employees of BASF AG, including regional marketing personnel, engaged in conversations and attended meetings with other senior executives and employees of AAN and Roche.' [Emphasis added]
166. The BASF affidavits acknowledge that regional marketing for vitamins sold in Australia was the responsibility of BASF East Asia, which was based in Hong Kong. The NZ Commission report (at [98]-[100]) confirms the part played by BASF East Asia in implementing the cartel arrangement in the region. The details of the role of BASF East Asia set out in [122]-[124] and [127]-[134] of the report are based on information provided by Managers of BASF New Zealand to the Commission. The relevant information is admissible on the same basis as I have admitted other parts of the Report."
19 I concluded that a prima facie case had been made out against each of the foreign respondents including BASF East Asia but excluding BASF South East Asia, which is no longer a respondent. However, it was obvious from my reasons that the prima facie case that I found had been made out did not conform to the case pleaded: cf Bray at [28].
20 After the decision in Bray the applicant made a number of further amendments to the statement of claim. The amendments allege, inter alia, that the cartel arrangement also involved other groups of companies, and update the particulars (for example, by including details of the European plea agreements), which are still incomplete.
21 A number of criticisms were made of the statement of claim, particularly by BASF Australia. It was contended, inter alia, that the statement of claim failed to distinguish between the case of an "overarching cartel" arrangement and the case of discrete regional or Australian cartel arrangements made from time to time. It was also contended that the applicant's conclusionary allegations do not comply with the rules of pleading.
22 When the applicant commenced her proceeding the information about the cartel arrangement that was available to her was limited. Accordingly, it was understandable that her case was pleaded in general terms at that stage. However, substantially more information has become available to her and she accepts that the decision in Bray accurately outlined her prima facie case for relief. Further, it was clear from the written contentions of the Australian subsidiaries, particularly those of BASF Australia, that there was considerable uncertainty as to the case the applicant had pleaded. In those circumstances it was incumbent upon the applicant to ensure that her statement of claim properly pleaded her case.
23 The allegations made in the statement of claim may be summarised as follows:
· the Hoffman-La Roche, Aventis and BASF respondents are in competition with each other in relation to the manufacture and supply of vitamins in the Australian market: see [43];
· between 5 March 1992 and 5 July 1999 the European parent companies communicated with each other concerning the fixing of prices and volumes of sales for class vitamins throughout the world: see [44];
· during the communications the European parent companies made one or more contracts and arrangements or arrived at one or more understandings: see [45];
· the substance of each contract arrangement or understanding is that each of the Roche respondents, the Aventis respondents and the BASF respondents would fix prices and allocate the volume of class vitamins sold throughout the world, including in the Australian market: see [46];
· the contracts, arrangements or understandings contained a provision that the respondents would fix, control or maintain the prices of class vitamins in the Australian market at levels higher than that which would prevail in the absence of such a provision: see [47];
· the provision was an exclusionary provision within the meaning of s 4D of the TPA and had the purpose and was likely to have the effect of fixing, controlling or maintaining prices of class vitamins supplied by the respondents in competition with each other within the Australian market, within the meaning of s 45A of the TPA: see [48];
· the purpose of the respondents was a substantial purpose within the meaning of s 4F of the TPA: see [49];
· the provision is deemed for the purposes of s 45 of the TPA to be for the purpose, or to have or to be likely to have the effect, of substantially lessening competition in the Australian market: see [50];
· between 5 March 1992 and 5 July 1999 each of the Hoffman-La Roche respondents, the Aventis respondents and the BASF respondents gave effect to the provision at meetings at which, and through communications by which, they set prices and allocated market shares: see [51];
· the respondents and each of them have contravened s 45(2)(a)(i) and (ii), by making the contracts or arrangements or by arriving at the understandings, and contravened s 45(2)(b)(ii) of the TPA by giving effect to the provision: see [52];
· the European parent companies and the Australian subsidiaries, were involved in each other's contraventions of s 45: see [55]-[61].
24 The applicant relied upon observations by Sackville J in Phillip Morris at [132] to the effect that the rules of pleading permitted a level of generality and the pleading of conclusions in certain circumstances. The cases referred to by Sackville J, and other cases such as Sammy Russo Supplies Pty Ltd v Australian Safeway Stores Pty Ltd (1998) 20 ATPR 41-641 ("Sammy Russo"), accept that even in cases arising under Pt IV of the TPA a certain level of generality is permissible. However, as was observed by French J in Kernel Holdings Pty Ltd v Rothmans of Pall Mall Australia Pty Ltd (Unreported, Federal Court of Australia, French J, 3 September 1991) the level of generality should be not so great that the respondents cannot reasonably be expected to know, with any precision, the case they have to meet.
25 The applicant contends that the case that the respondents have to meet is the prima facie case I found had been made out in the decision in Bray. I am satisfied that the statement of claim does not properly plead that case. As explained in Bray the cartel arrangement operated at three levels; the European parents, the regional parents and the Australian subsidiaries. Further, the cartel arrangement contained specific obligations, which were considered by me at [133] in Bray. Plainly, the applicant has not pleaded that case and it is no answer to the failure to plead that case that the respondents know the cartel arrangements they entered into. Each of the respondents is entitled to know with the requisite degree of precision the applicant's case that each of them has made, given effect to or has been involved in the cartel arrangements that are relied upon by the applicant. As the statement of claim has failed to plead that case it ought to be struck out.
26 There are other problems with the case pleaded. The only case that the applicant seeks to plead against the Aventis companies in relation to the Australian market is a case that is based upon the supply in Australia by those companies, or some of them, of vitamins A and E (or a pre-mix of those vitamins) for animal nutrition and health. The pleading does not recognise that limitation or the consequences that may flow from its more limited case against the Aventis companies.
27 There are also problems in relation to the generality of the claim for loss and damage. It is clear that the claim for loss and damage for group members is put at a number of different levels. For example, it was said that in particular industries substantial losses are alleged to have been suffered, notwithstanding the ability to pass on to the consumer the costs of acquiring the class vitamins. The claims for loss and damage suffered by the direct or indirect purchasers raise difficult issues that have not been properly or adequately pleaded in the statement of claim. It is also clear that the causal link between the alleged contraventions and the damage allegedly suffered by many group class members will differ significantly. While that factor may be a common feature of class actions it is an issue that must nevertheless be dealt with by the applicant in her statement of claim: cf Sammy Russo at pp 41,096-41,097.
28 The applicant justified the generality of the damages claim by contending that liability could be determined separately from quantum. That may or may not be so but it does not excuse the applicant from properly pleading the damages claim. In any event, in a case as complex as the present case I doubt that liability can, or should, be considered independently of how the claim for damages is formulated. Sections 33Z(1)(e) and (f) raise the possibility of aggregate damages to members, groups or sub-groups. Surprisingly, little attention has been given to the formulation of such claims notwithstanding that the separate calculation of individual loss claims of all group members appears to be unmanageable. Further, a properly formulated claim for damages is a necessary pre-requisite for mediation, which will almost certainly be ordered if the matter proceeds as a representative proceeding.
29 The width of the definition of group members was quite correctly the subject of stringent criticism. While I deal with those criticisms elsewhere in these reasons one criticism which, as I later explain, is justified is that the definition does not sufficiently or adequately describe or identify the group members. The question was asked rhetorically - To whom is notice to be given under 33X? The applicant finally recognised some of the problems raised by the definition and agreed to amend the description by confining group members to persons or entities resident or ordinarily resident in Australia. Amendments to the application and the statement of claim should be made accordingly.
30 The above matters are indicative, but not exhaustive, of the problems with the present statement of claim. I need not take those matters further as I am satisfied that the defects in the statement of claim are such that it is appropriate to strike it out, rather than to only strike out particular paragraphs of it. However, the Australian subsidiaries contend that the statement of claim contains fundamental, rather than technical, defects that should lead me to not permit the proceeding to continue as a representative proceeding under Pt IVA. Accordingly, the Australian subsidiaries contend that the representative proceeding should be dismissed or stayed, rather than repleaded. I turn to consider that question.
Claims against all respondents
31 The claims of the applicant and of group members are described in [4] of the application as follows:
"On the grounds set out in the Third Amended Statement of Claim, the Applicant claims on her own behalf and on behalf of the group members against the respondents the following relief:
a) A declaration pursuant to s163A of the Trade Practices Act 1974 (Cth) ('the Act') that the respondents have contravened s45 of the Act.
b) Damages pursuant to s82(1) of the Act.
c) An order pursuant to s80(1) of the Act that the respondents (whether by their directors, employees, agents or otherwise) be restrained from:
(i) making or arriving at;
(ii) giving effect to; or
(iii) attempting to make, arrive at or give effect to -
any contract, arrangement or understanding between manufacturers or suppliers of vitamin A, B1, B2, B5, B6, B9, B12, C, E, H, Beta carotene, premix, Canthaxanthin and Astaxanthin whether for animal or human consumption or any other use ('class vitamins') that contains a provision that has:
(iv) the purpose, or has or is likely to have the effect, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of:
(a) the prices of tenders for class vitamins submitted by each manufacturers or suppliers in Australia; or
(b) the prices otherwise charged by such manufacturers or suppliers for class vitamins in Australia;
(v) the purpose of preventing, restricting or limiting the supply of class vitamins to particular purchasers or potential purchasers of such products in Australia, including by allocating to particular manufacturers or suppliers of such products the business, either wholly or in part, of supplying the products to particular purchasers of the products in Australia.
d) An order pursuant to s80(1) of the Act that the respondents (whether by their directors, servants, agents or otherwise) be restrained from organising, attending or otherwise participating in, any meeting of representatives of manufactures or suppliers of class vitamins (being competitors of the respondent or a related corporation of the respondent) or any meeting attended by such representatives, being a meeting held for the purpose, or for purposes that include the substantial purpose of:
(i) fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of:
(a) the prices of tenders for class vitamins submitted by such manufacturers or suppliers in Australia; or
(b) the prices otherwise charged by such suppliers for class vitamins in Australia;
(ii) allocating to particular manufacturers or suppliers of class vitamins whether used in the animal, human or any other industry, the business, whether wholly or in part, of supplying class vitamins to particular purchasers of the class vitamins in Australia.
e) Such further or other relief and orders as the Court considers appropriate pursuant to s 87(1) of the Act.
f) Costs.
g) Interest.
h) Such further relief and other orders as the Court considers appropriate."
32 Section 33C(1) requires that each group member must "have" a claim against each of the respondents. A person will have a claim against a respondent if that person has pleaded or established that the person has a reasonably arguable cause of action for the relief claimed against that respondent. The present case is unusual in that I have found that the applicant has established a prima facie case for the relief she is claiming against the foreign respondents, and therefore, by implication, against the Australian subsidiaries. Thus, notwithstanding the deficiencies in the manner in which the applicant has pleaded her claims I am nonetheless able to determine whether the threshold requirements in s 33C(1) have been or can be satisfied by a properly pleaded statement of claim: cf Phillip Morris at [3]. As Sackville J pointed out in Phillip Morris at [130], pleading deficiencies in a representative proceeding might be curable by amendment.
33 The Australian subsidiaries contend that all of the group members do not have claims against all of the respondents. A number of matters were put forward to establish that as a fact. Two of the respondents (BASF East Asia and AAN Asia Pacific) only commenced supplying class vitamins in 1995 with the consequence that group members who purchased class vitamins before, but not after, 1995 could not have any claim against those respondents. Group members included visitors to Australia so visitors to Australia prior to, but not after, 1995 also could not have a claim against all respondents.
34 A further contention was made on the basis that the Aventis companies were only engaged in the supply of vitamins A and E for animal nutrition and health and that they were not in competition with the other cartel companies in respect of the other class vitamins. Accordingly, it was said that there were many group members (such as companies which purchased vitamins A and E from the Aventis companies for commercial purposes) who may not have purchased class vitamins from the Hoffman-La Roche or BASF respondents for human consumption. More significantly, purchasers of the class vitamins for human consumption will include persons and entities who or which did not acquire vitamins A and E, or products containing a vitamin A and E mix, for animal nutrition and health. The applicant's response to that contention was that food, such as beef and chicken, was purchased by persons who had to pay a higher price for those products because of the higher vitamin A and E prices fixed by the cartel agreement. The applicant claimed that evidence is available from a similar class action in the United States that established that the prices for some meat products, which included the cost of vitamins fed to the animals, were significantly affected by the cartel arrangement. Of course, the group members include vegetarians. And so the argument went on.
35 The fact that all of the respondents were not in competition with each other in relation to some but not all of the class vitamins may be of some significance ultimately, but the failure to plead that matter is not a defect in the formulation of the claims, which are essentially based on the liability of the respondents for making, giving effect to or being involved in the cartel arrangements. Thus, liability is alleged to arise under the TPA by reason of the contravening conduct and not by reason of a respondent being a competitor or a supplier in respect of a particular vitamin.
36 On the present pleading it is possible that some group members may not have a claim for damages against all of the respondents. The applicant's senior counsel agreed that the issues raised by casual visitors to Australia, as well as of persons who no longer reside in or carry on business in Australia can give rise to problems, not only about whether those persons have claims against all of the respondents, but also about how such persons are to be notified of the proceedings, which is an issue that has not yet arisen. Thus, the applicant agreed to amend the definition of group members to confine group members to persons or entities resident or ordinarily resident in Australia.
37 The applicant also accepted that, if the other arguments of the Australian subsidiaries were accepted by the Court, it would require her to further narrow the class of group members. For example, the complaint that two respondents only commenced to supply class vitamins in 1995 could be dealt with by the class being confined to purchasers who purchased class vitamins directly or indirectly before and after 1995. Likewise, the vegetarian issue was said to be able to be dealt with by excluding from the class of group members vegetarians who did not purchase vitamins A and E for animal nutrition and health because such persons may not have a damages claim against the Aventis respondents.
38 However, the above issues, which are to some extent technical and may have little to do with the purpose or objects of Pt IVA, only arise in relation to the claims for damages by group members. The group members also claim declaratory relief pursuant to s 163A of the TPA and injunctions pursuant to s 80(1) of the TPA. In Bray at [14] I explained that there was a divergence of views in the Court as to whether it was within the power of the Court to make a declaration under 163A in a case such as the present. In King v GIO Australia (2000) 100 FCR 209 Moore J observed at 213-214 that, in light of the decision in the High Court in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 ("Truth About Motorways"), there is probably less scope for it to be argued that a person cannot apply for a declaration in a discrete proceeding under s 163A that certain conduct has contravened a particular provision of the TPA. Little turns on that issue in the present case because declaratory relief may also be sought under s 21 of the FCA, although that claim does not presently appear in the application.
39 The main claim for relief in the present case, other than damages, is the claim for injunctive relief under s 80(1) of the TPA. Under s 80(1)(a)(i) the Court may grant an injunction in such terms as the Court determines to be appropriate on the application of "any person" if the Court is satisfied that a person has engaged in conduct that contravenes, inter alia, s 45 of the TPA. It is now well established that s 80 gives to any "person" an entitlement to apply for an injunction, whether or not that person was injured or affected by the contravening conduct: see Truth About Motorways. Paragraphs 4(c) and (d) of the application claim injunctive relief against all of the respondents on behalf of the applicant and on behalf of each of the group members. Accordingly, the applicant contends that she and each of the group members have a claim against each of the respondents because the injunction sought to restrain a contravention of s 45 is claimed against all respondents.
40 The Australian subsidiaries contended that the claim which a group member is required to have against each respondent for the purposes of s 33C(1)(a) must be a claim which is suitable for a representative proceeding. Thus, it was argued that as the injunctive relief sought in the application can, and need only, be sought by the applicant there was no additional utility or purpose in such relief also being claimed by the group members. Put simply, it was contended that it was unnecessary for a group proceeding to be constituted for a claim for injunctive relief under s 80(1) of the TPA and that the important substantive requirement in s 33C(1)(a) that all group members must have claims against all respondents should not be subverted by the literal construction which the applicant was seeking to apply to the sub-section.
41 In my view there is no substance in the contentions of the Australian subsidiaries. There is nothing in Pt IVA of the FCA that suggests that claims for damages are more, or less, suitable for a representative proceeding than claims for injunctions. Indeed, ss 33C(2) and 33Z(1) specifically provide for representative proceedings in respect of non-pecuniary relief, including injunctive and other relief that does not include claims for damages.
42 Further, whether a particular claim may be the subject of a representative proceeding depends upon whether the claim meets each of the requirements in s 33C(1). Thus, there is no basis for reading into those requirements the additional requirement suggested by the Australian subsidiaries that the claim must be one which is appropriate or suitable for a representative proceeding. That subject is dealt with elsewhere in Pt IVA in sections such as ss 33M and 33N.
43 In my view the contention of the Australian subsidiaries seeks to read unwarranted words of limitation into the nature of the claim that a person must have under s 33C(1)(a). In any event, the contention is based upon an assumption that is not correct. The assumption is that no benefit can be obtained or no useful purpose served by the group members, as well as the applicant, claiming injunctive relief. A judgment given in a representative proceeding binds the group members affected by it who have not opted out of the proceeding (s 33ZB). The Court may, in determining a matter in a representative proceeding make such order as the Court thinks just (s 33Z(1)(g)). There seems to be no reason in principle why orders may not be made by the Court to provide for persons other than the applicant, on whose behalf injunctions are sought and obtained, to be able to enforce the injunctions obtained on their behalf if the need arises. It is also significant that by reason of s 80(4) of the TPA the power to grant an injunction under s 80(1) may be exercised whether or not it appears that the person against whom the injunction is ordered intends to engage again in conduct of the kind enjoined.
44 The public interest and deterrent purposes of injunctive relief under s 80 were considered by a Full Court in ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248. French J observed (at 268) that it is within the statutory framework and policy that underlies s 80 for an injunction to be granted that is not intended to restrain an apprehended repetition of contravening conduct but "to deter an offender from repeating the offence". His Honour added that the remedy is flexible and may be applied in service of a variety of functions to support the policy of the TPA. In my view, it is within the policy of the TPA for injunctive relief to be granted on behalf of group members, many of whom may have a special interest in ensuring that the injunctions are observed and who, under the terms of the injunctive relief, may be entitled to enforce that relief. Thus, it is not inappropriate or unsuitable for injunctive relief to be claimed on behalf of group members in a representative proceeding.
45 It was also submitted by the Australian subsidiaries that it was unlikely that a Court would grant injunctive relief on behalf of the group members in the terms claimed. For example, it was said that injunctive relief would be limited to the particular contravention established and, because some group members may not have claims for damages against all respondents, those group members will not have an entitlement to injunctive relief against all respondents. Another reason put forward was that injunctions have already been granted by the Court in the penalty proceeding before Lindgren J. In my view, the submissions should be rejected. First, the submissions are founded upon the likely outcome of the claim, rather than on the claim itself. As was pointed out by the Full Court in King v GIO Australia Holdings Ltd [2000] FCA 1543 at [7]:
"The fact that a person is ultimately adjudged to be entitled to succeed against only one respondent, does not mean the person makes a claim against only that respondent. There is a world of difference between a claim and success on the claim. …"
46 In considering whether the group members have a claim against each of the respondents the Court is not required to speculate on the success of the claim.
47 Second, the form in which injunctive relief might be granted will depend, inter alia, upon the Court's characterisation of the respondent's contravening conduct. There is nothing in s 80(1) that requires the Court to limit its injunctive relief in respect of any contravention by the Aventis companies to vitamins A and E, or to a pre-mix of those vitamins, for animal nutrition and health. Whether the injunctive relief that might be granted by a Court against the Aventis companies is to be confined to those products is a matter for the Court when relief is to be granted. There is no requirement in the TPA that the relief is to be restricted to the precise conduct that was the subject of the contravention found to have occurred. The Court's jurisdiction under s 80(1) is to grant "an injunction in such terms as the Court determines to be appropriate". In any event, the cartel arrangement was not limited to vitamins A and E. For example, in Europe it extended to vitamin D3 which was an Aventis product. Such matters may lead a Court to grant an injunction in relation to Australia in broad, rather than restricted, terms. The width of the Court's discretion as to whether injunctive relief is to be granted and, if so, as to the form of injunctive relief, is also an answer to the submission that an injunction has already been granted in the penalty proceeding. That injunction was made by consent, was limited in terms to animal vitamins and pre-mix and was for a period of four years. It will be a matter for the Court as to whether that injunction might preclude or limit any injunction that might be granted in the present representative proceeding.
48 For the above reasons I do not accept the Australian subsidiaries' contentions that the applicant and the group members do not have a claim against each of the respondents. It is therefore unnecessary for the applicant to reformulate the definition of group members in a manner that will ensure that all group members will have a claim for damages against all respondents.
Claims arising out of the same, similar or related circumstances
49 The Australian subsidiaries relied on Phillip Morris to contend that the Court should refuse to grant leave to replead substantially for the reasons leave was refused in that case. In Phillip Morris the applicant claimed that the three respondents, manufacturers or distributors of cigarettes, embarked on a course of conduct designed to create a false community perception about the risks associated with cigarette smoking. As was pointed out by Sackville J at [143] the statement of claim did not plead "a case of collective conduct on the part of all three respondents". Spender J at [4]-[6] arrived at a similar conclusion. The absence of claims that the three respondents in Phillip Morris engaged in the misleading and deceptive conduct alleged against them collectively or in concert was found by their Honours to be a fundamental flaw in the representative claims of the applicants and the group members.
50 The present case is founded entirely upon collective conduct, pursuant to which the respondent companies are alleged to have made and given effect to the cartel agreements, arrangements or understandings. The fact that the cartel arrangements allegedly commenced with an arrangement between the European parents, which was the implemented by cartel arrangements between the regional parents and then the Australian subsidiaries, serves to emphasise the extent to which the claims are founded upon collective conduct. All of the claims of the applicant and of the group members are in respect of or arise out of the cartel arrangements. The fact that the cartel arrangements required detailed communications concerning the fixing of prices and allocation of market shares on an ongoing basis does not have the consequence that the claims of the applicant and group members are in respect of discrete or separate arrangements and therefore are not in respect of, or do not arise out of, the same, similar or related circumstances. Rather, the same, similar or related circumstances to which the claims are related are numerous, but they are nonetheless circumstances in respect of and arising out of the collective conduct of the respondents. Accordingly, the requirement in s 33C(1)(b) has been satisfied.
Substantial common issue of law or fact
51 The questions of law or fact alleged to be common to the claims of the applicant and the group members were set out in the application:
"a) whether the respondents made one or more contracts or arrangements or arrived at one or more understandings in contravention of s45 of the Act, in that one or more provisions in any such contract, arrangement or understanding:
i) was an exclusionary provision within the meaning of section 4D of the Act;
ii) had the purpose or was likely to have the effect of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining, of the prices of class vitamins supplied by the respondents in competition with each other in the Australian market for class vitamins, within the meaning of s45A of the Act;
iii) had the purpose, or had, has or is likely to have the effect, of substantially lessening competition in the Australian market.
b) whether the respondents gave effect to a provision in one or more contracts, arrangements or understandings in contravention of s45 of the Act;
c) whether one or more respondents:
(i) aided, abetted, counselled or procured;
(ii) was directly or indirectly knowingly concerned in or party to;
(iii) conspired with any other respondents to effect,
a contravention of s45 of the Act by one or more other respondents;
d) whether the Applicant and the group members have suffered loss and damage;
e) whether the said loss and damage was caused by the conduct referred to in sub-paragraphs (a) to (c) above."
52 In Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at 267 the High Court held that the requirement that there be a "substantial" common issue of law or fact in s 33C(1)(c) did not require that the issue be one which is "large" or "of special significance" or would "have a major impact on the … litigation". Rather, the requirement was directed to issues which are "real or of substance".
53 The Australian subsidiaries criticised the applicant's formulation of questions of fact or law common to the claims of the applicant group members contending that, in effect, they required the Court to embark upon an inquiry akin to that of a Royal Commission. The criticism arises out of the terminology of "one or more" employed in the formulation of the questions. In substance, if not in form, it is clear that the applicant is contending that the common question is whether the cartel arrangements alleged against the respondents were made and given effect to by them. In any event, the question under s 33C(1)(c) is not whether the Court is required to embark on a wide ranging inquiry. Rather, it is whether the claims of the group members give rise to a common issue of law or fact which is "real or of substance".
54 In my view the statutory requirement in s 33C(1)(c) is plainly satisfied in the present case. The cartel arrangement alleged against the respondents involved agreements, arrangements and understandings for ongoing price fixing and market allocation in Australia between the three respondent groups of companies. Whether those agreements, arrangements or understandings gave rise to contraventions of s 45 of the TPA and, if so, the extent to which those contraventions resulted in the price of the class vitamins and of products which contained those vitamins being higher than they would otherwise have been are common issues of law and fact that arise out of the claims of all group members. Plainly, those issues are real and of substance and are common to the claims of all of the group members. In my view "the required degree of commonality" (see Phillip Morris at [174]-[175]) exists in the present case.
55 For the reasons set out above I am satisfied that the claims the applicant and the group members have against the respondents will satisfy the threshold requirements of s 33C(1). I am also satisfied that, notwithstanding the applicant's failure to properly plead those claims, the application and the documents she has filed in support of it satisfy the requirements of s 33H(1).
56 Although I have found certain deficiencies in the manner the applicant has pleaded her case, I am satisfied that she has specified the nature of the claims made on behalf of group members and the relief claimed. If her terminology of "one or more" is amended she will also have more appropriately specified the questions of law or fact common to the claims of group members.
57 As a result of the extraordinary width of the definition of group members there was substance in the contention of the Australian subsidiaries that the applicant has failed to "describe or otherwise identify" the group members to whom the proceeding relates. In my view s 33H(1)(a) is not satisfied by a description of group members that includes any person who directly or indirectly purchased a class vitamin or a product containing such a vitamin in Australia between 1992 and 1999. I need not pursue that matter further as the applicant, finally recognising the difficulties arising in respect of the width of her description of group members, has agreed to amend the class to persons or entities ordinarily resident in Australia. I am satisfied that, with that amendment, the description will be sufficiently describe group members for the purposes of s 33H(1)(a).
58 For the above reasons, I do not accept the submissions of the Australian subsidiaries that the Court ought not to grant leave to the applicant to replead her application and the claims she is bringing on her own behalf and on behalf of group members. The Australian subsidiaries also submitted that if leave is to be granted it ought to be leave to apply to the Court to deliver any amended pleadings, rather than leave to deliver amended pleadings. It was submitted that the applicant ought to apply for leave to amend and that she should furnish to the parties her proposed amendments prior to leave being granted. While there is much to be said in favour of that course being followed I have decided not to do so because I expect that the legal advisers acting on behalf of the applicant will remedy the pleading deficiencies identified in these reasons for judgment. I am also cognisant of the observations of Finkelstein J in Bright v Femcare Limited [2002] FCAFC 243 ("Bright") at [160] about the need of the Court to discourage a "disturbing trend that is emerging in representative proceedings" of numerous interlocutory applications.
59 In the circumstances it is appropriate to give general leave to amend the application and the statement of claim but such leave is to be without prejudice to the rights of any of the respondents to raise any issues that might arise as a result of the amendments.
Sections 33M and 33N
60 The Australian subsidiaries relied on their submissions in respect of s 33C(1) and 33H(1) to contend, in reliance on ss 33M and 33N, that the matter should not proceed any further as a representative proceeding. My reasons for rejecting the submissions of the Australian subsidiaries concerning ss 33C(1) and 33H(1) have led me to conclude that there is no substance in the contention that, at this stage, the Court should order that the proceeding should not continue as a representative proceeding under Pt IVA of the FCA.
61 The Australian subsidiaries have not satisfied me that the pre-conditions for the exercise of the power to discontinue the present proceeding as a representative proceeding under s 33M have been established. Indeed, having regard to the magnitude of the fines already imposed in respect of one aspect of the cartel arrangement in Australia, it is likely that the amount of damages that is being claimed will be considerable. In the circumstances the Australian subsidiaries have not established that the cost of distributing damages is likely to be excessive as required by s 33M. Even if I were wrong about that matter I am not satisfied that I should exercise my discretion under s 33M at this early stage.
62 The main argument of the Australian subsidiaries under s 33N is that the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members and that, having regard to the nature and complexity of the claims, it is inappropriate that they be pursued by means of the representative proceeding. In Bright at [74] Lindgren J observed:
"Subsection 33N(1) of the [FCA] empowers the Court to order a discontinuance only if it is satisfied that it is in the interests of justice to do so on one or more of the grounds specified in pars (a) to (d) of the subsection. Unless the Court is so satisfied, the representative proceeding is to continue. Those grounds raise practical questions which require that the Pt IVA proceeding be compared with other proceedings that are available to the applicant and group members as a means of resolving their claims. …"
63 Not surprisingly, the Australian subsidiaries were not able to point to any comparator proceeding that is available to the applicant and group members as a means of resolving the claims they have against the respondents. Plainly, those claims can only be efficiently and effectively resolved in a representative proceeding. However, from the outset of the present proceeding I have been concerned about the feasibility of resolving the individual claims for damages allegedly suffered by the group members.
64 It may be that a comparator proceeding for the purposes of s 33N can be a representative proceeding in which the claim made on behalf of the group members is pleaded in a manner that enables the Court to determine the damages claims by a more efficient and effective means than is proposed by the applicant in her proceeding. An example of such a proceeding might be where the claims are pleaded on an aggregate basis which satisfies the requirements of s 33Z(1)(f) and 33Z(3). I need not pursue that matter further because it is now a matter for the applicant to deliver an amended statement of claim which will, inter alia, plead the claims of group members in a manner that ensures that the Court can efficiently and effectively resolve those claims. If the claim continues to be one for individualised damages then it will be incumbent upon the applicant to demonstrate how that claim can be resolved efficiently and effectively.
65 The Australian subsidiaries also argued that there was an incompatibility or conflict between the interests of represented parties and on that basis alone it was inappropriate for the proceeding to continue as a representative proceeding: cf Bright at [18]. The conflict was said to arise out of the fact that commercial group members would claim that they were unable to pass on to consumers the full cost of the class vitamins thereby maximising their claims for damages and, correspondingly, reducing the claims for damages of the group members as consumers of the relevant products. Nothing has emerged in the pleadings or in the evidence that establishes any such incompatibility or conflict which, at this stage, is entirely hypothetical. If evidence emerges that there is incompatibility or conflict between the claims of group members then that matter can be considered in the light of that evidence.
66 For the above reasons I am not satisfied that the pre-conditions for the exercise of power under s 33N have been met or that there is any proper basis to exercise the discretion conferred on the Courts under that section at this stage.
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