Multigroup Distribution Services Pty Limited v Tnt Australia Pty Limited, Ansett Transport Industries, Mayne Nickless Limited and J Mcphee and Son

Multigroup Distribution Services Pty Limited v Tnt Australia Pty Limited, Ansett Transport Industries, Mayne Nickless Limited and J Mcphee and Son - [1996] FCA 1758 - FCA 1996 case summary — Zoe

[35]

"10. From a date or dates currently unknown to the Plaintiff,

but since 1987 and at least within three years from 25 July 1994,

the Defendants or two or more of them, were, and thereafter

continue to be, parties to an arrangement or, alternatively, an

understanding, made on a date or dates presently unknown to the

Plaintiff, containing provisions to the effect that:

10.1 each of the parties to the arrangement or understanding

would take steps, including refraining from competing on prices

or rates, to ensure that the custom of customers of any of the

parties to the arrangement or understanding would not be

solicited or attracted away from that party by any other party to

the arrangement or understanding but that such parties should

solicit the custom of customers who were customers of providers

of express freight transportation services which were not parties

to the arrangement or understanding ('independents' customers');

10.2 where a party to the arrangement or understanding ('the

first party') was required to quote for the custom of a customer

of another of the parties for services, the first party would

either refrain from quoting for the custom of that customer or

submit a quotation at a price or rate higher than the price or

rate then being charged by the party supplying that customer and

would quote competitive rates only to independents' customers;

10.3 when a party to the arrangement or understanding ('the

first party') sought to increase its prices or rates for services

to one or more of its customers the other parties would assist

the first party to implement such increase by, if requested to

quote for the custom of a customer of the first party, either

refraining from quoting or submitting a quotation at a price or

rate higher than the price or rate to which the first party

proposed to increase its prices or rates and would quote

competitive rates only to independents' customers;

10.4 in the event that one party to the arrangement or

understanding ('the first party') obtained the custom of a

customer of another party to the arrangement or understanding

('the second party'), steps would be taken by the first party, by

increasing prices or rates or by other means, to induce the

customer to return to the second party and, in the event that the

customer did not return, steps would be taken by the first party

to compensate the second party;

10.5 each party to the arrangement or understanding would use

its best endeavours to ensure that customers of each party to the

arrangement or understanding were retained by that party free of

competitive pressure and that by that means, the market shares of

each of the parties would be protected and entrenched and that

rivalrous conduct would be directed only to independents'

customers.

PARTICULARS

The Plaintiff will provide full particulars following

discovery and interrogatories in these proceedings. Further, the

Plaintiff will rely on section 83 of the Act in respect of the

findings of fact made by His Honour Justice Burchett in His

Honour's Reasons for Judgment dated 31 January 1995 in Trade

Practices Commission -v- TNT Australia Pty Limited and Ors (1995)

ATPR 41-375, being proceedings G807 of 1992 in the Federal Court

of Australia, Sydney Registry."

[37]

"I turn to the facts of the case. What was alleged,

supported by voluminous evidence, and is now admitted, is that at

five primary meetings attended by representatives of the three

companies, which took place between 1987 and 1990, a series of

agreements were reached, as follows:

1. That the companies would not 'poach' each other's

customers, by which the admissions of Mayne Nickless Limited

specified, and I understand the other respondents to have meant,

that if one was requested to quote by a customer of another, it

would either fail to do so or would submit a quotation above the

price charged by the other company, the existing supplier, a

practice described as 'giving cover';

2. That if one received the custom of customers of another,

compensation would be made by returning customers of the same

value by the process of up-rating them or driving them away by

the provision of poor service;

3. That there would be a balancing of accounts of customers

lost and gained and payment of compensation;

4. That no quotes would be given to customers of another firm

over the telephone; and

5. That uniform prices would be charged for what were

referred to as 'air satchels'.

Effect was given to these agreements by each of the companies

on many occasions. A great number of instances was specified in

documents filed in the proceedings.

As a result, between 1987 and mid 1991, the market shares of

the companies were systematically protected from the effects of

competition, and in particular their ability to set prices in the

relevant market, the express freight market, was freed from the

constraints of competition. Not only were the arrangements and

their objects and consequences in flagrant breach of the

obligations imposed on the companies, in the public interest, by

law; the means for effecting the intended illegal results were

themselves damaging to the pubic interest in a healthy economy,

and were in direct conflict with the fundamental purposes of the

Trade Practices Act. From the point of view of those purposes,

an arrangement to maintain a cartel by deliberately providing

poor service in order to compel customers to turn or to return to

a supplier with whom they might be dissatisfied, must be

particularly pernicious."

[51]

18. I must now retrace my steps to that part of the Statement of Claim which raises causes of action in reliance upon s.45, either according to its own terms or in combination with s.4D or s.45A. As originally drafted, this part of the pleading was plainly deficient, since it alleged neither any damage, nor any material facts to show the required causal link between any alleged contravention of the Act and any damage to the Applicant: cf. Bond Corporation Pty Ltd v. Thiess Contractors Pty Ltd (ubi cit. supra). The absence of anything to show a causal link is highlighted by the extremely general way in which the Applicant pleaded (by paras.18 and 19) that effect had been given to the alleged arrangements. The nearest this comes to an allegation that the Applicant was affected is in the expression in para. 19, "by providing competitive quotes to independents' customers". But is not this the ordinary stuff of competition? The pleader seems to assume a case could be made out upon a conjecture that anti-competitive conduct between the Respondents would have strengthened (but to a completely unspecified extent, and with precise effects that are also unspecified) the competitive capacity of each of them against the Applicant. This cannot simply be assumed. Whilst it might conceivably be true in a particular case, as a generalization it would run counter to the economic theory on which the Act is based - that only the rigours of realistic competition will keep down a company's costs and the prices it charges. In theory, the Applicant should have been well able to combat the "competitive quotes" of the Respondents, softened, as the Respondents should have been, by the shelter from the hardening storms of competition under which they did the bulk of their business. This is not to say I draw any conclusion. But where the facts do not inevitably support the pleader, and various interpretations are possible, the onus is on him to define the path he wishes to take to his goal, so that his opponent will know where to meet him, and the Court just what it must decide.

At a glance

Court

Decision date

Before

Source

Judgment (57 paragraphs)

Multigroup Distribution Services Pty Limited v Tnt Australia Pty Limited, Ansett Transport Industries, Mayne Nickless Limited and J Mcphee and Son (Australia) Pty Limited NoNg 786 of 1995 Fed [1996] FCA 1758 (4 September 1996)

Parties

Legislation Cited (2)

Cases Cited (13)