Castlemaine Tooheys Ltd v South Australia

(a) Section 5 of the Beverage Container Act Amendment Act 1986 is invalid to the extent that it purports to insert s. 5b in the Beverage Container Act 1975. The section is otherwise valid. Sections 4 and 6 of the Beverage Container Act Amendment Act 1986 are valid.

(b) Sections 4, 5, 6 and 7 of the Beverage Container Act 1975, as amended, are valid. The notice published under s. 5b of that Act is invalid. Regulation 7(d) of the Beverage Container Regulations 1976 is invalid.

The defendant to pay the plaintiffs' costs of the special case.

1990, Feb. 7 Mason C.J., Brennan, Deane, Dawson and Toohey JJ.

The first three plaintiffs (the Bond brewing companies) are companies comprising the Bond Brewing Group, the parent company of the Group being Bond Corporation Holdings Ltd. They brew beer in Queensland, New South Wales and Western Australia respectively for sale throughout Australia. They do not brew beer in South Australia. The fourth plaintiff is the agent of the first three plaintiffs in respect of sales of their beer to retailers in South Australia. The remaining plaintiffs are retailers of beer in South Australia who sell the first three plaintiffs' beer. The plaintiffs' case is that the practical effect of certain provisions of the Beverage Container Act 1975 S.A. ("the 1975 Act"), in particular as amended by the Beverage Container Act Amendment Act 1986 S.A. ("the 1986 Act"), and of the regulations made under the 1975 Act is to discriminate against the Bond brewing companies' interstate beer in favour of the beer produced in South Australia by their competitors and thereby to contravene s. 92 of the Constitution. The plaintiffs claim that the 1986 Act results in discrimination because it introduces stricter requirements in relation to the sale of beer in South Australia in non-refillable bottles (in which the bulk of the Bond brewing companies' packaged beer is sold in that State) than in relation to refillable bottles (in which the bulk of the packaged beer brewed by competitors of the Bond brewing companies is sold in South Australia).

In order to explain how the plaintiffs seek to make out their case, it is necessary to refer to the 1975 Act and to developments which occurred in the market for beer in South Australia before the 1986 Act came into operation. An important element in the plaintiffs' case is that between 1985 and the middle of 1986 the Bond brewing companies substantially increased their market share in packaged beer in South Australia. According to the plaintiffs, the 1986 Act was introduced as a consequence of that increase in market share and it had the effect of protecting brewers who brewed beer in South Australia.

The 1975 Act, which came into operation on 1 January 1977, introduced a mandatory scheme regulating the use and sale of beverage containers in South Australia. The scheme had three principal elements. The first was a mandatory deposit which was refundable on the return of beverage containers. In the case of glass containers, the deposit was refundable by a retailer who sold containers of that particular description, upon delivery of the container to the retailer (s. 7), and, in the case of a non-glass container, the deposit was refundable by a collection depot upon delivery of the container to the depot (s. 12). The second element was the establishment of collection depots for non-glass containers of particular descriptions, each with a delineated collection area (s. 9). Thirdly, there was a prohibition on the sale of beverages in ring-pull containers (s. 13). A "refund amount" in relation to a container of a class, kind or description was defined to mean an amount not exceeding 5 cents prescribed in relation to containers of that class, kind or description (s. 4). The regulations prescribed a refund amount of 5 cents in relation to any container. Regulation 5(1) declared glass containers being refillable beer bottles to be exempt containers to which the 1975 Act did not apply. The effect of the exemption was that no deposit was payable in relation to refillable beer bottles in use by competitors of the Bond brewing companies. The competitors of the companies are Carlton and United Breweries Ltd. ("C.U.B."), The South Australian Brewery Co. Ltd. ("S.A.B.") and Cooper and Sons Ltd. ("Coopers"). The beer sold by C.U.B. in South Australia is brewed and packaged in Victoria and transported to South Australia. It is sold in refillable bottles. The refillable bottles are returned to Victoria for cleaning and washing. S.A.B. and Coopers, which brew beer in South Australia, predominantly use refillable bottles. To this extent the Bond brewing companies were at a disadvantage because the mandatory deposit of 5 cents applied to its non-refillable bottles. However, there were other advantages flowing from the use of non-refillable bottles and the exemption did not therefore place the plaintiffs at a discernible competitive disadvantage so long as the amount of the deposit differential did not exceed 5 cents.

Since the 1970s in Australia the sale of beer in cans has increased at the expense of beer sold in glass bottles. But in South Australia beer sold in glass bottles holds 97 per cent of the market as against 3 per cent of the market held by beer sold in cans. All the brewing groups in the South Australian market sell beer in cans.

Likewise, since the 1970s in Australia the use of non-refillable glass bottles for the sale of beer has increased at the expense of refillable bottles. However, in South Australia beer sold in refillable glass bottles constitutes 98.8 per cent of the market as against 1.2 per cent for non-refillable glass bottles. There are economic advantages to producers in using non-refillable containers. They include lower initial purchase price, lower cost of plant and equipment and lower transport costs. All bottled beer sold by the Bond brewing companies in South Australia is sold in non-refillable bottles. They sell only a small proportion of their products in large refillable bottles (750 ml.) and those sales are confined to Queensland and Western Australia. These companies intend to discontinue the use of refillable bottles within two years. None of the Bond brewing companies has ever used a 375 ml. or a 345 ml. refillable bottle and none has the equipment to produce packaged beer in such bottles.

In January 1986 the first four plaintiffs commenced a campaign to increase their share of the South Australian market for packaged beer. They established a distribution system and spent approximately $600,000 between January and July 1986 on an advertising campaign. As a result of that campaign, they increased their share of the market for packaged beer from less than 0.1 per cent to 4 per cent in less than two months. This increase was at the expense of S.A.B., the principal South Australian brewer, whose market share fell from 77.4 per cent to 73.5 per cent. The Bond brewing companies and the fourth plaintiff had intended to continue their advertising campaign and planned to obtain 10 per cent of the market for packaged beer in South Australia within one year. The special case states that in the market conditions existing in October 1986, and without any external factors, this could have been achieved. Up to October 1986, retailers in South Australia (including the last four plaintiffs) placed orders with the fourth plaintiff for the sale and supply of beer by the Bond brewing companies in bottles or cans. In response to those orders the fourth plaintiff procured the supply and transportation of beer in bottles or cans from the States of origin of the beer to the premises of retailers in South Australia. The Bond brewing companies sold and supplied beer in bottles and cans to such retailers. At that time, the rate at which bottles were being supplied by the Bond brewing companies for sale in South Australia was somewhere between 5 and 9 million bottles per annum. When ss. 3-15 of the 1986 Act came into operation on 1 October 1986 the Bond brewing companies discontinued this system of supplying packaged beer into South Australia. Nonetheless, they would introduce a similar system of supply if they were to succeed in these proceedings.

The 1986 Act made substantial amendments to the 1975 Act. The definitions in s. 4 of the 1975 Act were amended so as to provide, inter alia, for the following definitions:

"container" means a container of any kind made for the purpose of containing a beverage, being a container which when filled with the beverage is sealed for the purposes of storage, transport and handling prior to its sale or delivery for the use or consumption of its contents:

"refund amount" in relation to a container of a particular description means an amount prescribed as the refund amount in relation to containers of that description.

Sections 5 and 6 were repealed and the following new sections substituted:

5. This Act does not apply to glass containers made for the purpose of containing wine or spirituous liquor other than glass containers made for the purpose of containing a low alcohol wine-based beverage.

(1) The Governor may, by regulation, exempt containers of a specified description from the application of this Act or specified provisions of this Act either unconditionally or subject to conditions specified in the regulations.

(2) This section does not apply to containers to which section 5b applies.

(a) glass containers made after the commencement of this section for the purpose of containing beer ; or

(b) glass containers of a description prescribed for the purposes of this section.

(2) The Minister may, by notice published in the Gazette , exempt glass containers of a specified description from the application of section 7 if the Minister is satisfied -

(a) that the containers are made so as to be refilled not less than 4 times;

(b) that the containers are marked in a manner and form approved by the Minister with statements indicating that they are refillable; and

(c) that proper arrangements have been made for the reuse of the containers when returned to collection depots by refilling as referred to in paragraph (a) and by re-use of the glass of which they are made.

6.(1) A retailer shall not sell a beverage in a container, or cause, suffer or permit a beverage to be sold in a container, unless the container -

(a) is marked in a manner and form approved by the Minister with a statement indicating the refund amount applicable to that container; and

(b) if the Minister so requires, has some other mark or feature approved by the Minister to indicate that a refund amount is applicable to that container.

Section 7, as amended, now appears under the heading "PART III RETURN OF CONTAINERS". The amended section provided:

(1) Except as provided in this section, a retailer who sells or causes, suffers or permits to be sold a beverage in a glass container of a particular description shall not refuse or fail or suffer or permit a person apparently acting on his behalf to refuse or fail -

(a) to accept delivery of empty glass containers of that description being such containers that are marked in the manner referred to in subsection (1) of section 6 of this Act; and

(b) in respect of each such container, to pay to the person delivering that container the refund amount applicable to that container.

(1) A retailer shall not sell or cause, suffer or permit to be sold a beverage for consumption off the premises of the retailer in a container of a particular description unless the place or premises from which that sale takes place is situated within a collection area delineated in relation to a collection depot that will accept delivery of containers of that description.

(1a) This section does not apply to containers to which section 7 applies.

By notice dated 30 September 1986 the Minister pursuant to s. 5b(2) exempted a number of glass containers from the provisions of s. 7. In particular, the Minister exempted the 750 ml., 375 ml. and 355 ml. refillable bottles used by S.A.B. and Coopers, the 750 ml. and 350 ml. refillable bottles used by C.U.B. and the 375 ml. and 250 ml. refillable bottles used by wine cooler producers.

New regulations made on 26 September 1986 varied the regulations by striking out the existing definition of "refund amount" and inserting reg. 7 which prescribed the following refund amounts:

(a) in relation to a container made for the purpose of containing a carbonated soft drink, water or mineral water and which is not designed to be refilled 5 cents per container (b) in relation to a container made for the purpose of containing a low alcohol wine-based beverage and which is not designed to be refilled 15 cents per container (c) in relation to a container in respect of which a notice has been published under section 5b of the Act 4 cents per container or 48 cents per one dozen containers (d) in relation to a container made for the purpose of containing beer not being a container in respect of which a notice has been published under section 5b of the Act 15 cents per container.

The new regulations therefore effectively prescribed a refund amount of 4 cents per container for refillable beer bottles (those used by the South Australian brewers and C.U.B.) and 15 cents per container for non-refillable containers (used by the Bond brewing companies).

The 1986 Act and the new regulations disadvantaged the Bond brewing companies in two respects. First, their non-refillable bottles became subject to a refund amount of 15 cents whereas the refillable bottles of their competitors, C.U.B. and the South Australian brewers, were subject to a refund amount of 4 cents only. According to the defendant, a refund of 6 cents per non-refillable bottle for twelve months and thereafter a refund of 4 cents per non-refillable bottle would have been sufficient to ensure the return of non-refillable bottles at the same rate as refillable bottles. This concession may have been prompted by the circumstance that regulations providing for refunds of that order were tabled in the South Australian Parliament in November 1986. These regulations were disallowed in the Legislative Council but their introduction was in apparent recognition of the fact that the existing regulations providing for refunds of 15 cents and 4 cents for non-refillable and refillable bottles respectively invited challenge in this Court. The plaintiffs believe that a 4 cent deposit would be immediately effective to ensure the return of non-refillable bottles at the same rate as refillable bottles with a 4 cent deposit. According to the special case, a 4 cent deposit is now sufficient to ensure a reasonable and adequate rate of return of refillable bottles. The difference between the prescribed amounts of 15 cents and 4 cents resulted in a price differential which made the Bond brewing companies' product non-competitive. Before the commencement of the 1986 Act, the "bottle cost" (excluding transport costs but including deposit and costs of return or disposal system) of the products of the Bond brewing companies was 16 cents per bottle. The "bottle cost" in the case of S.A.B. was 16.65 cents per bottle. Following the introduction of the 1986 Act and the regulation imposing a 15 cent deposit on non-refillable bottles, the "bottle cost" of the products of the Bond brewing companies was 26 cents per bottle. The "bottle cost" in the case of S.A.B. remained at 16.65 cents per bottle.

Secondly, the Bond brewing companies' non-refillable bottles were not eligible to be exempted from the application of s. 7 whereas the refillable bottles of the South Australian brewers were eligible for such exemption and were so exempted. Those retailers selling the Bond brewing companies' beer in non-refillable bottles were obliged to comply with s. 7, accept delivery of such bottles and pay the refund amount of 15 cents per bottle. On the other hand, retailers selling South Australian brewed beer in refillable bottles, not being obliged to comply with s. 7 in relation to such bottles, were not bound to accept delivery of them or to pay the refund of 4 cents per bottle. A customer seeking to obtain a refund for such a bottle could return it to a collection depot and obtain a refund from the depot. The natural result of the requirement that retailers pay the refund amount was that they were inclined not to stock a beer when the volume of sales of a particular brand was not high. There was no limit to the number of empty bottles of a particular brand sold by a retailer which he would be bound to accept by way of return and for which he would be liable to pay the refund amount. The fact that the customer returning the bottle may have bought the bottle elsewhere was irrelevant to the retailer's liability.

The Bond brewing companies could alleviate but not eliminate the burden imposed upon the retailers who were willing to stock their beer by establishing their own collection depots. The establishment of such depots would not have altered the retailers' obligations under s. 7. Moreover, the establishment of such depots would have increased the "bottle cost" in the case of the Bond brewing companies by about 5 cents per bottle, making a total of 31 cents per bottle as against the "bottle cost" in the case of S.A.B. of 16.65 cents per bottle.

The practical effect of the 1986 Act and regulations and the notice under s. 5b was to prevent the Bond brewing companies obtaining a market share in packaged beer in South Australia in excess of 1 per cent whilst their competitors used refillable beer bottles. It is uneconomic for the Bond brewing companies to convert their existing interstate plants to use refillable bottles.

It is common ground between the parties that the object and effect of the 1986 Act was to make the sale of beer in non-refillable bottles commercially disadvantageous. The plaintiffs go further and assert that the effect of the 1986 Act, the regulations and the notice under s. 5b was to discriminate against the sale in South Australia of packaged beer brewed interstate and to protect the beer brewed in South Australia from interstate competition.

On the other hand the defendant claims that the 1986 Act and regulations promoted litter control and conserved energy and resources. According to the defendant, this effect was achieved by the imposition of a deposit on non-refillable containers in an amount judged sufficient to ensure their return and discourage their use and by providing a refund point - in practice any place of sale - to encourage return and to discourage manufacturers from using such containers. Thus the defendant contends that the objects of the legislation were: (1) to promote litter control by forcing non-glass containers and non-refillable bottles into a return system by encouraging return; and (2) to promote energy and resource conservation by discouraging the use of non-refillable containers by imposing a higher deposit and by requiring acceptance of returns at the point of sale (thus discouraging retailers from handling them). The special case mentions that the use, return and refilling of refillable bottles generally results in a proportionate reduction in the release into the atmosphere of carbon dioxide from the burning of natural gas in the production of glass containers. However, the defendant does not claim that this is an independent object of the legislation.

The defendant contends that a return system, based on deposits on beverage containers, is a means of controlling litter. Although it is not the only means, the results in New South Wales and South Australia indicate that it is at least as good as other means. And it is a system which was well known in South Australia in relation to beer and soft drink containers prior to the introduction of the 1975 Act.

The defendant's case, so far as it rests on conservation of resources, turns on certain statements in the special case relating to the use of refillable bottles as against non-refillable bottles. Moreover, the use, return and refilling of the former result not only in conservation of energy and resources but also in a proportionate reduction in the release of carbon dioxide from the burning of natural gas used in glass production, transport and distribution, as long as they are filled and re-used on at least three occasions. Natural gas in South Australia is a finite resource. As at October 1986 the Executive Government of South Australia estimated that the then gas reserves in the State were only sufficient to supply the State (at then current consumption levels) until mid-1991. As at March 1989 the Executive Government estimated that current gas reserves in South Australia were only sufficient to supply the State (at then current consumption levels) until the end of 1994.

The Executive Government believed that, because wine and spirits tend to be consumed more indoors than outdoors, they are less likely to form part of litter and accordingly should not be the subject of a deposit. The Executive Government believed that, because of the small quantities sold of drinks like cider, it was not necessary to impose a deposit on such beverages. A system of deposits already existed in respect of soft drinks. The Executive Government believed that wine coolers tend to be consumed more outdoors than indoors and accordingly should be the subject of a deposit.

Upon these facts the special case states the following question of law:

Are any of the following provisions invalid and void in their application to the trade or commerce of the plaintiffs (or any of the plaintiffs) in that they are contrary to s. 92 of the Constitution:

(a) Sections 4, 5 and 6 of the Beverage Container Act Amendment Act 1986, the notice under s. 5b(2) and/or the Regulation prescribing the refund amounts thereunder; or

(b) Sections 4, 5, 6 and 7 of the Beverage Container Act 1975, as amended, the notice under s. 5b(2) and/or the Regulation prescribing the refund amounts thereunder.

In Cole v. Whitfield [42] , this Court unanimously held that s. 92 of the Constitution requires that interstate trade and commerce shall be immune only from discriminatory burdens of a protectionist kind. The Court said [1] :

The history of s. 92 points to the elimination of protection as the object of s. 92 in its application to trade and commerce. The means by which that object is achieved is the prohibition of measures which burden interstate trade and commerce and which also have the effect of conferring protection on intrastate trade and commerce of the same kind. The general hallmark of measures which contravene s. 92 in this way is their effect as discriminatory against interstate trade and commerce in that protectionist sense. There can be no doubt that s. 92 guarantees absolute freedom of interstate trade and commerce from all interstate border duties and other discriminatory fiscal charges levied on transactions of interstate trade and commerce. Indeed, the reference in each paragraph of the section to uniform duties of customs creates the impression that the provision is directed to fiscal charges and burdens. This impression is reinforced by the context provided by the surrounding provisions, ss. 89-91 and ss. 93-95. All these provisions deal with fiscal charges and burdens, appearing, as they do, in Ch. IV of the Constitution which is headed "Finance and Trade". But the section cannot be easily confined to such matters because protection against interstate trade and commerce can be secured by non-fiscal measures.

In relation to both fiscal and non-fiscal measures, history and context alike favour the approach that the freedom guaranteed to interstate trade and commerce under s. 92 is freedom from discriminatory burdens in the protectionist sense already mentioned.

The Court recognized [2] that: [t]he history of the movement for abolition of colonial protection and for the achievement of intercolonial free trade does not indicate that it was intended to prohibit genuine non-protective regulation of intercolonial or interstate trade. The Court went on to deal with cases in which, although no impermissible purpose appears on the face of the impugned law, the effect is discriminatory in the sense explained. 1. (1988) 165 C.L.R. 360. 2. (1988) 165 C.L.R., at pp. 394-395. 3. (1988) 165 C.L.R., at p. 403.

Speaking with reference to a State law, the Court observed [3] :

In the case of a State law, the resolution of the case must start with a consideration of the nature of the law impugned. If it applies to all trade and commerce, interstate and intrastate alike, it is less likely to be protectionist than if there is discrimination appearing on the face of the law. But where the law in effect, if not in form, discriminates in favour of intrastate trade, it will nevertheless offend against s. 92 if the discrimination is of a protectionist character. A law which has as its real object the prescription of a standard for a product or a service or a norm of commercial conduct will not ordinarily be grounded in protectionism and will not be prohibited by s. 92. But if a law, which may be otherwise justified by reference to an object which is not protectionist, discriminates against interstate trade or commerce in pursuit of that object in a way or to an extent which warrants characterization of the law as protectionist, a court will be justified in concluding that it nonetheless offends s. 92. 1. (1988) 165 C.L.R., at p. 408.

So it was in Cole v. Whitfield that the limitation on the size of crayfish that might be sold or possessed in Tasmania, acknowledged to be a burden on the interstate trade and commerce in crayfish caught in South Australian waters and sold in Tasmania, was not a discriminatory burden of a protectionist kind. As the prohibition applied alike to crayfish caught in Tasmanian waters and those that were imported, no discriminatory purpose appeared on the face of the law. Nor did it appear that the object or effect of the law was relevantly discriminatory. The object of the prohibitions was to assist in the protection and conservation of the stock of Tasmanian crayfish, an important and valuable resource. Although the legislation operated in this way to protect the Tasmanian crayfish industry by conserving the natural resource, it was not a form of protection that gave the Tasmanian industry a competitive or market advantage over imported crayfish. In a significant statement, the Court went on to say [4] :

And, even if the legislation were to give an advantage to the local trade by improving the competitive qualities of mature Tasmanian crayfish by eliminating undersized imported crayfish from the local market, the agreed facts make it clear that the extension of the prohibitions against sale and possession to imported crayfish is a necessary means of enforcing the prohibition against the catching of undersized crayfish in Tasmanian waters. 1. (1988) 165 C.L.R., at p. 409.

Cole v. Whitfield established that a law which imposes a burden on interstate trade and commerce but does not give the domestic product or the intrastate trade in that product a competitive or market advantage over the imported product or the interstate trade in that product, is not a law which discriminates against interstate trade and commerce on protectionist grounds. The present case stands on a different footing because the facts recited in the special case show that the Bond brewing companies were disadvantaged in the two respects already mentioned which gave the South Australian brewers a competitive or market advantage.

The passage [4] that we have quoted did not assert that, in order to enable a law which protects intrastate trade by subjecting interstate trade to a competitive or market disadvantage to be characterized as relevantly non-discriminatory, it must appear that the burdens imposed by the law on interstate trade are a necessary means for achieving the conservation of the natural resource or other public object which the legislation seeks to protect or promote. There was no occasion to decide that question. According to the statement of facts recited, the prohibitions were in fact necessary for the protection of the resources. So the Court had no need to consider whether, as a matter of law, the prohibitions could be upheld only if they were necessary in that sense.

The Court's later decision in Bath v. Alston Holdings Pty. Ltd. [5] demonstrated that the imposition of an equalization tax by a State upon retailers in respect of products from another State so that the interstate goods lose a competitive advantage that they would otherwise enjoy because that other State levies a tax upon the goods at a lower rate than does the legislating State upon the domestic product is a contravention of s. 92 [6] . The difference between the majority and the minority judgments in that case flowed more from disagreement about the appropriate perspective from which the particular legislative provisions should be viewed than from any disagreement about principle. Bath is an example of one form of discriminatory protectionism. But it does not touch the issues which arise for decision in this case.

1. (1988) 165 C.L.R. 411. 2. (1988) 165 C.L.R., at pp. 424 et seq.

The plaintiffs contend that a long line of decisions of the Supreme Court of the United States on "the negative commerce clause doctrine" provides support for their case. According to that doctrine, legislative provisions whose practical effect is to interfere with the national economic union brought into existence by the Constitution or the free market forces in that union so as to protect the domestic producer or trader against the out-of-State producer or trader are invalid. Yet the Supreme Court has recognized that, in a variety of circumstances, legislation may be valid, notwithstanding that it subjects the out-of-State product to greater disadvantages than the domestic product, so long as it is directed to the protection of legitimate local interests.

So, in Dean Milk Co. v. Madison [7] , the City of Madison made a regulation forbidding the sale of pasteurized milk unless it had been pasteurized at an authorized plant within five miles of the city. The out-of-State appellant was denied a licence to sell because its plants both in and out of the State were more than five miles away. The Court held that the regulation was invalid. The Court acknowledged [8] that there could be no objection to the avowed purpose of the law if it appeared, upon a consideration of all the relevant facts and circumstances, that the matter was one appropriate for regulation "in the interest of the safety, health and well-being of local communities". However, the effect of the legislation was to exclude wholesome milk pasteurized out of the State. The Court observed [9] :

In thus erecting an economic barrier protecting a major local industry against competition from without the State, Madison plainly discriminates against interstate commerce. This it cannot do, even in the exercise of its unquestioned power to protect the health and safety of its people, if reasonable nondiscriminatory alternatives, adequate to conserve legitimate local interests, are available. Our issue then is whether the discrimination inherent in the Madison ordinance can be justified in view of the character of the local interests and the available methods of protecting them. The majority went on to hold that reasonable and adequate alternatives were available, one such alternative being the inspection by Madison officials of distant milk sources on the footing that it charged the actual and reasonable cost of such inspections to the importing producers and processors. Likewise, the existence of non-discriminatory alternatives was a critical factor leading to the invalidation of another State law in Hunt v. Washington Apple Advertising Commission [10] . 1. (1951) 340 U.S. 349. 2. (1951) 340 U.S., at p. 353. 3. (1951) 340 U.S., at p. 354. 4. (1977) 432 U.S. 333, at p. 354.

On the other hand the Supreme Court reached a different conclusion in Minnesota v. Clover Leaf Creamery Co. [11] where, with the object of promoting resource conservation, easing solid waste disposal problems and conserving energy, Minnesota enacted a statute banning the retail sale of milk in plastic non-refillable containers but permitting such sale in other non-refillable containers such as paperboard cartons. The Court held that the statute regulated interstate and intrastate trade evenhandedly by imposing a prohibition which took effect without regard to whether the milk, the containers or the sellers were from outside the State. The Court acknowledged that an incidental burden was imposed on out-of-State producers but held that this incidental burden was slight in relation to the putative local benefits generated by the statutory prohibition. The incidental burden was therefore not excessive.

References to economic barriers were also made in earlier cases such as Baldwin v. G.A.F. Seelig [12] , and Toomer v. Witsell [13] . In a similar vein, the Supreme Court spoke of the suppression of interstate competition and the existence of a national economic unit in Hood & Sons v. Du Mond [14] . When the Supreme Court focuses upon these concepts, rather than upon broader notions of free trade, its observations are pertinent to a consideration of s. 92 as it was explained in Cole v. Whitfield. To this extent the American decisions may provide assistance as to the manner in which this Court should approach its task of characterization of laws challenged for alleged contravention of s. 92.

1. (1935) 294 U.S. 511, at p. 527. 2. (1948) 334 U.S. 385, at p. 406. 3. (1949) 336 U.S. 525, at pp. 537-538.

It was recently noted by the Supreme Court that it has adopted at different times "a variety of tests" in relation to the negative commerce clause doctrine: C.T.S. Corporation v. Dynamics Corporation of America [15] . The relevance of the existence of a reasonable non-discriminatory alternative, as discussed in Dean Milk, has already been noted. In a case decided five weeks before Dean Milk, the Court had focused upon whether or not there existed an obvious State interest which outweighed whatever national interest there might be in the prevention of State restrictions: Cities Service Co. v. Peerless Co. [16] ; see also Minnesota v. Clover Leaf Creamery Co.

1. (1987) 481 U.S. 69, at pp. 87-89. 2. (1950) 340 U.S. 179, at pp. 186-187.

These two approaches were synthesized into one general rule in Pike v. Bruce Church Inc. [17] :

Where the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. If a legitimate local purpose is found, then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities. The Court noted that it had more frequently spoken in terms of "direct" and "indirect" effects and burdens than in terms of a balancing process. However, since Pike , the cases have more often been concerned with the balancing test: Hunt v. Washington Apple Advertising Commission; Raymond Motor Transportation Inc. v. Rice [18] ; Philadelphia v. New Jersey [19] . 1. (1970) 397 U.S. 137, at p. 142. 2. (1978) 434 U.S. 429, at pp. 441-442. 3. (1978) 437 U.S. 617, at p. 624.

Hence conflict with the commerce clause can be demonstrated either directly, by reference to a discriminatory purpose or discriminatory effect (Bacchus Imports Ltd. v. Dias [20] ), or indirectly, by examination of the practical operation of the statute in order to determine whether the extent of the burden imposed upon interstate commerce is such, in the circumstances, as to warrant an inference that the law is protectionist. Viewed in that light, a law directed to legitimate local concerns, with effects upon interstate commerce which are only incidental, should not be characterized as protectionist: Philadelphia v. New Jersey [21] .

1. (1984) 468 U.S. 263, at p. 270. 2. (1978) 437 U.S., at p. 624.

It is evident that the American approach differs from that laid down by this Court in Cole v. Whitfield. First, the American approach may well involve the adoption of a rule that legislation which imposes a burden on interstate commerce is invalid unless it serves a legitimate State interest. According to Cole v. Whitfield [22] , only legislation which imposes a burden in the protectionist sense interferes with the freedom guaranteed by s. 92. Secondly, the American balancing process is carried out only after a law has been found to be directed towards a non-discriminatory purpose so that the burden on interstate commerce is "incidental" to that legitimate purpose. In contrast, we are concerned only with the proper characterization of the law as protectionist or not, in the sense described in Cole v. Whitfield. Hence there is no place for a secondary test to invalidate laws which have been found to lack a protectionist purpose or effect. Rather, the two tests are combined as one inquiry into the characterization of the law as protectionist or otherwise.

Although the American cases cannot be treated as an accurate guide to the interpretation of s. 92, they identify in a useful way considerations which may be relevant in the process of characterization which an Australian court is called upon to undertake. So, the fact that a law regulates interstate and intrastate trade evenhandedly by imposing a prohibition or requirement which takes effect without regard to considerations of whether the trade affected is interstate or intrastate suggests that the law is not protectionist. Likewise, the fact that a law, whose effects include the burdening of the trade of a particular interstate trader, does not necessarily benefit local traders, as distinct from other interstate traders, suggests that the purposes of the law are not protectionist. On the other hand, where a law on its face is apt to secure a legitimate object but its effect is to impose a discriminatory burden upon interstate trade as against intrastate trade, the existence of reasonable non-discriminatory alternative means of securing that legitimate object suggests that the purpose of the law is not to achieve that legitimate object but rather to effect a form of prohibited discrimination. There is also some room for a comparison, if not a balancing, of means and objects in the context of s. 92. The fact that a law imposes a burden upon interstate trade and commerce that is not incidental or that is disproportionate to the attainment of the legitimate object of the law may show that the true purpose of the law is not to attain that object but to impose the impermissible burden.

The particular question in the present case is: how should the Court approach the determination of the validity of State legislation which attempts on its face to solve pressing social problems by imposing a solution which disadvantages the trade in beer brewed outside the State as against the trade in beer brewed within the State? The central problems addressed by the legislation are the litter problem and the need to conserve energy resources. If the South Australian legislation were not attempting to provide a solution to these problems, the burden on interstate trade would be discriminatory in a protectionist sense because its operation would be discriminatory and protectionist in effect, even though the legislation on its face would treat interstate and intrastate trade evenhandedly. What difference then does it make that the burden is imposed by legislation which on its face appears to be directed to the solution of social and economic problems, not being the uncompetitive quality or character of domestic trade or industry? Is the burden non-discriminatory in the relevant sense on that account? If so, how is that conclusion to be justified?

In determining what is relevantly discriminatory in the context of s. 92, we must take account of the fundamental consideration that, subject to the Constitution, the legislature of a State has power to enact legislation for the well-being of the people of that State. In that context, the freedom from discriminatory burdens of a protectionist kind postulated by s. 92 does not deny to the legislature of a State power to enact legislation for the well-being of the people of that State unless the legislation is relevantly discriminatory. Accordingly, interstate trade, as well as intrastate trade, must submit to such regulation as may be necessary or appropriate and adapted either to the protection of the community from a real danger or threat to its welfare or to the enhancement of its welfare.

It would extend the immunity conferred by s. 92 beyond all reason if the Court were to hold that the section invalidated any burden on interstate trade which disadvantaged that trade in competition with intrastate trade, notwithstanding that the imposition of the burden was necessary or appropriate and adapted to the protection of the people of the State from a real danger or threat to its well-being. And it would place the Court in an invidious position if the Court were to hold that only such regulation of interstate trade as is in fact necessary for the protection of the community is consistent with the freedom ordained by s. 92. The question whether a particular legislative enactment is a necessary or even a desirable solution to a particular problem is in large measure a political question best left for resolution to the political process. The resolution of that problem by the Court would require it to sit in judgment on the legislative decision, without having access to all the political considerations that played a part in the making of that decision, thereby giving a new and unacceptable dimension to the relationship between the Court and the legislature of the State. An analogous field is the legislative implementation of treaty obligations under s. 51(xxix) of the Constitution. The true object of the law in such a case is critical to its validity. The Court has upheld the validity of legislative provisions if they are appropriate and adapted to the implementation of the provisions of the treaty: The Commonwealth v. Tasmania (the Tasmanian Dam Case) [23] ; Richardson v. Forestry Commission [24] . See also Herald and Weekly Times Ltd. v. The Commonwealth [25] . But if the means which the law adopts are disproportionate to the object to be achieved, the law has not been considered to be appropriate to the achievement of the object: the Tasmanian Dam Case [26] ; South Australia v. Tanner [27] . There is a compelling case for taking a similar approach to the problem now under consideration.

1. (1983) 158 C.L.R. 1, at pp. 130-131, 172, 232-233, 259-261. 2. (1988) 164 C.L.R. 261, at pp. 292, 295-296, 303, 311-312, 326, 336, 344-346. 3. (1966) 115 C.L.R. 418, at p. 437. 4. (1983) 158 C.L.R., at p. 278. 5. (1989) 166 C.L.R. 161, at pp. 165, 178.

If we accept, as we must, that the legislature had rational and legitimate grounds for apprehending that the sale of beer in non-refillable bottles generates or contributes to the litter problem and decreases the State's finite energy resources, legislative measures which are appropriate and adapted to the resolution of those problems would be consistent with s. 92 so long as any burden imposed on interstate trade was incidental and not disproportionate to their achievement. Accordingly, the validity of the 1986 legislation rests on the proposition that the legislative regime is appropriate and adapted to the protection of the environment in South Australia from the litter problem and to the conservation of the State's finite energy resources and that its impact on interstate trade is incidental and not disproportionate to the achievement of those objects.

The first objection to this proposition is that the discrepancy between the 15 cents refund amount prescribed by reg. 7(d) for non-refillable beer bottles and the 4 cents refund amount prescribed by reg. 7(c) for refillable bottles goes beyond what is necessary to ensure the return of non-refillable bottles at the same rate as refillable bottles. The discrepancy means that the "bottle cost" of the Bond brewing companies' product is 26 cents per bottle as against a "bottle cost" of 16.65 cents for the S.A.B. product. The defendant's acknowledgment that a refund amount of 6 cents per non-refillable bottle for the first twelve months, reducing to 4 cents thereafter, would have been sufficient to achieve that purpose is significant. The magnitude of the discrepancy indicates that the object of fixing the 15 cents refund amount went further than ensuring the same rate of return of non-refillable and refillable bottles and that the object was to disadvantage the sale of beer in non-refillable bottles as against the sale of beer in refillable bottles.

If, in order to protect the environment from the litter problem presented by the sale of beer in non-refillable bottles, the legislature had enacted a law whose object and effect was simply to discourage the sale of beer in such bottles, the fact that the law had a more adverse impact on interstate brewers than domestic brewers because interstate brewers sell beer in such bottles would not make the law a discriminatory or protectionist law, if that impact was incidental and not disproportionate to the resolution of the litter problem. In such a case the competitive disadvantage sustained by the interstate brewer would be merely incidental to and consequential upon a regulatory measure whose object and effect was not discriminatory in a protectionist sense.

However, this is not a case in which it is possible to characterize the legislative regime simply and comprehensively as one designed to discourage the sale of beer in non-refillable bottles. The legislative regime is one which has as its immediate purpose the return and collection of containers generally, including refillable and non-refillable bottles. The solution to the litter problem sought to be achieved by the legislature lies in the successful operation of the scheme for the return and collection of containers and it is by reference to that scheme that the validity of the law must be determined. And that is how the defendant has presented its case.

In this context, the plaintiffs assert that, in the light of the difference in the refund amount, the purpose in disadvantaging the sale of beer in non-refillable bottles was to discriminate against the Bond brewing companies as interstate brewers in favour of the domestic brewers in South Australia. The defendant resists this conclusion for three reasons: first, that 15 cents is also fixed by reg. 7(b) as the refund amount for a non-refillable container for a low alcohol wine-based beverage; secondly, that the fixing of the refund amount at 15 cents advantaged C.U.B. as much as the domestic brewers so long as C.U.B. supplied beer in refillable bottles; and, thirdly, that the need to conserve energy resources requires or justifies more severe burdens on the sale of beer in non-refillable bottles. The first reason given by the defendant is not persuasive. If the refund amount fixed for non-refillable beer bottles far exceeded what was thought necessary to ensure the success of the scheme for the return and collection of containers, the relevant provision was not appropriate and adapted to that end; the fact that a like refund amount is fixed for non-refillable containers for low alcohol wine-based beverages cannot affect that conclusion. As for the second reason, the impact of the provision on C.U.B. might tend to suggest that the intended legislative object was not to discriminate against interstate brewers. However, it is not a conclusive consideration. It does not negate the purpose of discriminating against interstate trade consisting, in the main, of the trade of the Bond brewing companies (cf. Exxon Corporation v. Governor of Maryland [28] ). After all, it was the growing market share of those companies, not C.U.B., that threatened the market share of the domestic brewers. Discrimination in the relevant sense against interstate trade is inconsistent with s. 92, regardless of whether the discrimination is directed at, or sustained by, all, some or only one of the relevant interstate traders.

Before considering the third answer given by the defendant to the plaintiffs' objections based on the difference in the refund amounts, it is convenient to consider the second objection to the 1986 legislation, which relates to s. 5b(2). That provision enables the Minister to exempt by notice refillable bottles from the operation of the retail return scheme provided for by s. 7, without enabling the Minister to make a corresponding exemption for non-refillable bottles. Such an exemption disadvantages the interstate supplier of beer in refillable bottles by requiring it to make arrangements to transport its bottles back to its brewery for refilling as a condition of being eligible for an exemption from s. 7. As it happens, this disadvantages C.U.B., without affecting the Bond brewing companies as they do not sell beer in refillable bottles. What is relevant is that the Minister exempted the refillable bottles (used by the South Australian brewers and by C.U.B.) by notice given under s. 5b(2) so that retailers were relieved of the obligation to accept delivery of their bottles and refund the prescribed amount in respect of such containers. On the other hand, retailers remained under the obligation imposed by s. 7 with respect to the non-refillable bottles of the Bond brewing companies. The natural effect of this discrimination was to discourage retailers from stocking the Bond brewing companies' beer in non-refillable bottles. It was a discrimination which effectively protected the domestic brewers and their intrastate trade at the expense of the Bond brewing companies because the retailers were under no similar obligation in relation to the refillable bottles of the domestic brewers.

The effect of the differential treatment resulting from the giving of the notice under s. 5b(2) was that the refund amount was obtainable only from collection depots in respect of the refillable beer bottles of the domestic brewers. Yet no justification for this difference appears. If the collection depot system yielded inadequate returns, then there was no reason for exempting the bottles of the domestic producers from the operation of s. 7. If the collection system generated adequate returns, then there was no reason for not exempting the non-refillable bottles of the Bond brewing companies, along with the refillable bottles of the domestic producers.

The defendant seeks to overcome this difficulty by relying on the history of the collection depot system in South Australia and pointing to its success in promoting the return of containers. Granted that this is so, neither the history of that system nor its success explains why it was necessary to subject the Bond brewing companies' products to the regime of retail return under s. 7 when it was not necessary to take similar action in relation to the bottles of the domestic brewers. That regime is therefore not capable of justification as a means of achieving litter control.

It remains for us to consider the defendant's argument that any disadvantage sustained by the Bond brewing companies is merely incidental to the implementation of a legislative regime which has as its object the conservation of finite energy resources. The facts recited in the special case, so far as they relate to this issue, are extremely meagre and do little to substantiate the defendant's argument. If all beer bottles manufactured in South Australia were non-refillable bottles, the extra energy consumption in the State would be between 0.06 per cent and 0.12 per cent of the total energy consumption in the State. If all beer bottles manufactured in South Australia were non-refillable bottles, then natural gas consumption in the State would increase by about 0.24 per cent. However, as the Bond brewing companies use bottles manufactured outside the State, any increase in their market share in South Australia would reduce the use of the State's resources, including natural gas, in the manufacture of bottles.

If, in the light of these facts, the legislature reasonably apprehended that the sale of beer in refillable bottles manufactured in South Australia constituted a threat to the State's reserves of natural gas, one might have expected the legislature to introduce legislation prohibiting the sale in the State of beer in non-refillable bottles produced in the State. Alternatively, and more directly, the legislature might have legislated to prohibit the manufacture in South Australia of such bottles with the use of natural gas, or at all. But none of these means was adopted. Instead a regime was introduced which subjected the Bond brewing companies' interstate trade to serious competitive disadvantages by reason of their selling beer in non-refillable bottles, even though those bottles are manufactured outside the State and do not, as far as we know, involve the use of South Australian natural gas. It may be that the result is that local trade and commerce may need to be harmed if State gas reserves are to be protected. But if that is the case, it should not be surprising, because local businesses are likely to be significant users of those reserves.

It follows that neither the need to protect the environment from the litter problem nor the need to conserve energy resources offers an acceptable explanation or justification for the differential treatment given to the products of the Bond brewing companies. Accordingly, in our view, that treatment amounted to discrimination in a protectionist sense in relation to their interstate trade.

In the result, s. 5b is invalid and the regulation prescribing the refund amount of 15 cents in relation to non-refillable bottles is invalid. So too is the notice published under s. 5b. That is not to say that the deposit and return system itself is invalid; ss. 6 and 7 and the definitions in s. 4 which were enacted by the 1986 Act are capable of standing apart from the invalid regulation. Similarly, ss. 5 and 5a make provision for exemption from the Act without reference to discriminatory criteria, and are not invalid.

We would answer the question asked in the special case as follows:

(a) Section 5 of the Beverage Container Act Amendment Act 1986 is invalid to the extent that it purports to insert s. 5b in the Beverage Container Act 1975. The section is otherwise valid. Sections 4 and 6 of the Beverage Container Act Amendment Act 1986 are valid.

(b) Sections 4, 5, 6 and 7 of the Beverage Container Act 1975, as amended, are valid. The notice published under s. 5b of that Act is invalid. Regulation 7(d) of the Beverage Container Regulations 1976 is invalid.

The defendant should pay the plaintiffs' costs of the special case.

The facts and relevant legislative provisions are set out in the joint judgment of Mason C.J., Brennan, Deane, Dawson and Toohey JJ. It is clear from that judgment that the practical effect of the Beverage Container Act 1975 S.A., the Beverage Container Act Amendment Act 1986 S.A., the Beverage Container Regulations 1976 S.A. and the notice under s. 5b(2) of the Beverage Container Act 1975 as amended (together referred to as "the legislative regime for beverage containers") is to confer a significant competitive advantage in the South Australian market upon beer produced in that State over beer brewed by the first three plaintiffs interstate. The regime is therefore protectionist and, if also discriminatory, it infringes s. 92 of the Constitution: Cole v. Whitfield [29] .

In Street v. Queensland Bar Association [30] , Gaudron J. made reference to the general considerations which, statute aside, result in particular treatment being identified as discriminatory. By reference to those considerations it is possible to identify the general features of a discriminatory law. A law is discriminatory if it operates by reference to a distinction which some overriding law decrees to be irrelevant or by reference to a distinction which is in fact irrelevant to the object to be attained; a law is discriminatory if, although it operates by reference to a relevant distinction, the different treatment thereby assigned is not appropriate and adapted to the difference or differences which support that distinction. A law is also discriminatory if, although there is a relevant difference, it proceeds as though there is no such difference, or, in other words, if it treats equally things that are unequal - unless, perhaps, there is no practical basis for differentiation.

So far as concerns the present case, the legislative regime for beverage containers operates by reference to a distinction between refillable and non-refillable beer bottles. Although the arguments of the parties were structured somewhat differently from the way in which we have expressed the considerations which indicate that a law is discriminatory, in substance the defendant sought to justify that distinction as relevant to two objectives, namely, the conservation of energy resources and the amelioration of litter problems.

To justify a distinction as relevant to an objective it is necessary to show that the distinction made is a real distinction. That involves the identification of a difference or differences explaining the distinction. It also involves showing a connexion between the distinction and the objective such that the object is reasonably capable of being seen as likely to be achieved - other than to an extent that is trifling or insignificant - by different treatment based on that distinction.

The first step in establishing that the distinction between refillable and non-refillable beer bottles is a relevant distinction supported by the objectives of conserving energy and of ameliorating litter problems is to show, in the case of each objective, that the problems referable to non-refillable beer bottles are greater than those referable to refillable beer bottles.

In their judgment Mason C.J., Brennan, Deane, Dawson and Toohey JJ. point out that the facts relevant to energy conservation are not only meagre, but such as to suggest that increased sales of the first three plaintiffs' beer in South Australia might actually assist the conservation of South Australia's energy resources. Even if the facts, meagre though they be, are accepted as establishing that non-refillable beer bottles, in some way that is different from refillable beer bottles, add to the general problem of energy conservation in the State of South Australia, the conclusion is inevitable that the different treatment of refillable and non-refillable containers in a law which deals only with beverage containers and which is not part of a general legislative scheme directed to the conservation of the State's energy resources is unlikely to result in an amelioration of that general problem other than to a trifling extent. If, on the other hand, it be suggested that the focus of consideration is the general problem of energy conservation viewed from a national or a global perspective, the legislative regime for beverage containers must be viewed as likely to have an even less significant impact.

The facts as to the litter problems referable to non-refillable beer bottles are also meagre. The special case reveals that "[l]itter surveys in South Australia do not distinguish between refillable and non-refillable beer bottles" and that "[t]he only possibly relevant differences between a refillable and non-refillable bottle [are] that the latter are marked "non-refillable" and that such bottles are not usual in the South Australian market." The special case further acknowledges that there is no evidence that these differences "would have any effect on the return rate for non-refillable bottles" if the deposit for such bottles were to be set at the same rate as that for refillable bottles. Against that background the defendant says that the stated differences "may have an effect in the short term", but agrees that the "period of any such effect would be less than 1 year". On the other hand, the plaintiffs assert their belief that a 4 cent deposit (that being the deposit fixed for refillable bottles) would be "immediately effective to ensure the return of non-refillable bottles at the same rate as refillable bottles". The facts, such as they are, fall short of establishing that the litter problems referable to non-refillable bottles differ from those referable to refillable bottles. Accordingly, there is no basis upon which it can be held that the distinction is relevant to the objective of litter control.

The questions posed in the joint judgment of Mason C.J., Brennan, Deane, Dawson and Toohey JJ., namely, whether a law is appropriate and adapted to an objective and whether any burden imposed on interstate trade is incidental and not disproportionate to the achievement of that objective, will often sufficiently reveal that the law is discriminatory in a protectionist sense. However, the essence of the legal notion of discrimination lies in the unequal treatment of equals, and, conversely, in the equal treatment of unequals. Thus, if there is no inequality or relevant difference between the subject matter of interstate trade and the subject matter of intrastate trade, a law which is appropriate and adapted to an objective and burdens interstate trade only incidentally and not disproportionately to that objective will, in our view, offend against s. 92 if its practical effect is protectionist - particularly if there exist alternative means involving no or a lesser burden on interstate trade.

In the present case the questions posed in the joint judgment of Mason C.J., Brennan, Deane, Dawson and Toohey JJ. reveal, for the reasons given by their Honours, that neither the objective of litter control nor the objective of energy conservation provides an acceptable explanation or justification for the different treatment assigned in the legislative regime for beverage containers. Accordingly, the question in the special case should be answered in the manner proposed by their Honours.