O'Brien Glass Industries Ltd v Cool & Sons Pty Ltd trading as Wagga Windscreen Services [1983] FCA 191

Federal Court of Australia|1983-08-18|Before: Sheppard JJ, Keely J, Fox J

The appellant pay one half of the respondent's costs of the appeal.

On appeal from a single Judae of _ the Federal Court of Australia

COOL & SONS PTY. LIMITED trading as Wagga Windscreen Service

unjunctions issue against ths agpellant and, under 5.932 of that

Act, that damages be paid bY 1t. The case of the applicant, the

present respondent, was based om secns. 45 (restrictive dealings), 47 (exclusive dealing), 48 (resale price maintenance) and 49 (price daiscrimination) of the Act. Section 46 (monopolization) was originally relied upon, but the applicant said at the hearing that if successful under secns. 47 and 49 it did not. wish to pursue this part of its case. Its possible

application has not been the subject of debate in this appeal.

The proceedings were instituted on 27 September 1979, and relate to conduct in 1978 and 1579. The hearing took place in 1980 and 1981, the principal judaqment was deliverad on 13 July 1981, and the form of the injunctions settled on 24 December

The appellant (which I shall for convenience call "O'Brien") was at the -time of the hearing iunvolved in three stages of the business of providing replacement windscreens for motor vehicles. It was not concerned with the installation of windscreens in vehicles at the time of manufacture of the latter. It manufactured windscreens, it sold those it had manufactured, and also others, by wholesale. In the Wagga district (which is relevant for present purposes) it also had a

business of supplying and f1tting what - have - seen - salled A?

The respondent (which I shail call "Cool") had a retail

business in the Waqga district of supplying s:milar replacemenr

windscreens and fitting them to motor vehicles. In October 1978 Cool opened a business of supplying windscreens on a wholesale

basis in the district but these operations "died off" in March

Q'Brien had the largest share of the wholesale market in New South Wales (up to forty per cent) with its two nearest competitors having about 30-35 per cent and 15-20 per cent respectively. O''Brien's main wholesale competitor in New South Wales, Bradley Bros. Pty. Gimited (which I shall call "Bradley"), was also its main wholesale competitor in the Wagga district. O'Brien had a significantly larger share of the Wagga district

market than Bradley and the few other wholesale suppliers had

Cool was a major retail supplier in and around Wagda but there were a larqe number of competitors (over one hundred), of which O'Brien was one, Mostly the retailers were service station proprietors; some others were what have been called smash repairers. There- are about 1,000 different types, sizes and shapes of replacement windscreens in more or less common use.

They are either made of laminated or of "Zone toughened" qlass.

Cool's matter of complaint, at a practical Isevel, is

that O'Brien, as a wholesale supplier, did not allow ir che same

discount (fifty per cent off th retail list orice) that it

allowed to a number of other rerailers. ILecounts were aliowad

to all retailers, although credit arrangements may have differed. The discounts allowed by O'Brien were at the time of initiation of proceedings forty per cent, forty-five per cent and fifty per cent, and at that time Cool was receiving forty per cent. The wholesale cost of a new replacement windscreen was generally in the range of twenty-five dollars to seventy dollars, after discount, with some exotic types much dearer.

It is convenient to consider first the application of 5.47 of the Act. On this matter there was a major contest at the hearing hefore Keely J. as to the basis upon which O'Brien made its choice of the discount it would allow. His Honour made the

"On the whole of the evidence. to some of which I have referred, I find that the respondent had a general practice of giving and offering to qive to retailers discounts of 45 per cent or 50 per cent in relation to the supply of windscreens on the condition that each such retailer would purchase all or the substantial majority ef its purchases of windscreens from the respondent (cf. answer to interrogatory C.17(d))."

By clear implication, a discount of forty per cent was in general the maximum for those not aqreeing to the condition. His Honour had earlier said:

Goff offered to aive the applicant a discount of 50 per cent - the same as that viven by the

applicant's then supplier, Gundagar Windscrean Service Prwv. Ltd. - as well as betrar availapiiiey' of windscreens. The offer was

conditional upon the applicant buying its windscreens from the respondent rather than 'from his competitors' - a statement which [I find meant, and was understood as meaning, that the applicant was required to buy most of its windscreens from the respondent."

His Honour said that he had made the finding "without regard to the provisions of s.47(13)(a) of the Act", which is in the following terms: "(13) In this section - (a) a reference to a condition shall be read as a reference to any condition, whether direct or indirect and whether having leqal or equitable force or not, and includes a reference to a condition the existence or nature of which is ascertainable only by inference from the

conduct of persons or from other relevant circumstances;".

I take his Honour's observation to mean that he was raferring to "condition" in the conventional sense, without the further enlarged meaning given hy this paragraph. The learned Judge made anumber of findings dealing with the credibility of particular witnesses and made adverse comments about principal witnesses far O'Brten. The finding I have set out as to the criterion upon which a choice of discount was made, has not been challended by

For there to be'an exclusive dealing, 5.47(2) requires

that the supoly (or offer to supoly) or the giving of a arscount

(or offering of one) be "on the condition" that the offeree "will not, or will not, except to a limited extent", acquire goods from a competitor. I think his Honour's findings of fact in this case involve the conclusion that there was a "condition" in the sense

referred to in s.47(2) and that it was related toa future

inhibition (see S.W.B. Family Credit Union Ltd. v. Parramatta Tourist Services Pty. Ltd. (1980) 32 A.L.R. 365). In any event,

the evidence which he accepted seems to me plainly to involve that result. The terms of sale were agreed before delivery; the discount was agreed on the condition that "all or the substantial majority" of the windscreens would be acquired from O'Brien. There has not been any argument concerning the words "except to a limited extent" in s.47(2). Comment was made on behalf of Q'Brien on the imprecision of the criterion which his Honour enunciated but indefiniteness of that degree does not in my view defeat the operation of the section, and the restraint imposed did not permit outside acquisition beyond a "limited extent". Bradley gave' to Cool a discount of fifty-seven and one half per cent off list price, based in its. case on a requirement that at least forty windscreens per month were purchased from it. Other discounts granted by it went down to forty per cent, but were based on the quantity, or value, of purchases, and were not

associated with a condition such as his Honour found to exist in

The retail list prices seem to have been the same, or

almost the same, as between the two wholesalers I have mentioned. Mr. Scott, of Bradley, described the wholesale market as "pretty

Alone among suppliers in the wholesale market, O'Brien was regularly open for business for twenty four hours on seven days a week. It was therefore often necessary to go to it to meet the frequently urgent demands of motorists. Whether or not it habitually held a wider range of windscreens than Bradley is not clear, but certainly there were not infrequent occasions when retailers, and Cool in particular, had to go to it for a windscreen for a particular vehicle. No point is made as toa difference in quality between the windscreens supplied by O'Brien and those supplied by any other wholesaler, although there were

The practical result, as claimed by Cool, was that it lost sales. Its competitive position and reputation suffered, wher, being forced to go to O'Brien, it could only purchase a windscreen at a price (after discount) which put its retail price for supplying and fitting appreciably above that of its competitors. For the two years November 1977 to November 1979 Cool, according to its records, supplied and fitted 3,324 windscreens, In 1979 the figures varred from seventy-six in February to 261 in May. In circumstances mentioned by his Honour, Cool did for two veriods, from January to August 1978 and

from December 1978 to April 1979, receive a discount of fifty ver

The discount given by O'Brien was raised in December

1978 after Cool, at O'Brien's request. had painted out the word "discount" om its "windscreer discount" sign, ceased advertising

that it gave discounts and raised its retail prices close to

O'Brien's retail prices. The reason for the discount heing lewered im or from April 1979 was dealt with in a telephone conversation between Mr. Peter Cool and Mr. Duncan of O'Brien in

"I accept the evidence of Mr. Peter Cool that im the mid-April telephone conversation Mr. Duncan asked him:

'... were my brothers, Raymond James and Sydney Paul Cool acquiring windscreens from any other glass supplier. He specifically mentioned Bradley Bros. and Guardian Glass. I advised him I understood they were doing so when necessary. He said in that case O'Brien's were not the major supplier of glass to R.J. Cool and I said was that the only problem. He said yes. I asked him would the 50 per cent discount he restored if they did purchase from O'Brten's, if the windscreens were purchased exclusively from Q'Brien's, and he said yes. I told him that if O'Brien's were not able to supply a particular screen and that particular screen had to he purchased elsewhere, would that viclate any agreement made in regard to this 50 per cent discount. He said no, not if they checked with O''Briens first. If O'Briens indicated they were not able to supply the particular sceeen, in that case the screen could be purchased elsewhere without affecting any adreement.'"

The prohibition in s.47(1) against exclusive dealing does not apply in a case such as that under consideration unless "the engaging by the corporation in that conduct has the purpose, or has ar is likely to have the effect, of substantially

lessening: competition" (sub-section (10)). By reason of s.4G, lessening of competition includes preventing or hindering

competition. On this matter 'his Honour expressed the following

"T also accept the applicant's submission (p.20) that the respondent's practice of exclusive dealing had the purpose of substantially lessening competition by making it substantially more difficult for oather wholesalers of windscreens to sell windscreens to retailers with whom the respondent had reached agreement on the additional discount, i.e. 45 per cent or 50 per cent discount."

"In reaching the conclusion that the respondents practice of exclusive dealing had the- purpose of substantially lessening competition I have accepted the submission in the applicant's written final address."

"Tt should be explained that the parties put in extensive written submissions and to some extent his Honour's remarks have to be understood by reference to the written submissions of the present respondent, Cool. tts submission, commencing at p.2Z9o,

which was reterred to by his Honour, related, to nur it shortly,

to the auntrinsic nature of the condition, the fact thar iu:

applied over the whole range of windscreens supplied, the fact (as submitted) that it was a "tie" of retailers to a particular supplier (thereby Limiting competition between existing wholesalers and restricting potential new entrants, including one who might wish to market omly one type or range of windscreens)

and that it was not associated with legitimate considerations,

such as producing economies in production and distribution.

Before I discuss his Honour's conclusion it is necessary to identify the markets in the context of which competition was found to be substantially lessened. The product market was replacement windscreens generally. Section 47(13)(b) directs attention to any market in which O'Brien, or any person whose business dealings wers restricted, limited or otherwise circumscribed by O'Brien's conduct, supplied or acquired replacement windscreens. On this basis both a wholesale market and a retail market can be examined. It was aqreed by the parties. that the retail market for the windscreens could be taken

The area of the wholesale market was not so clearly defined. It was submitted. before us an "behalf of the appellant that this market was the whole of New South Wales. Before Keely J. the parties were content to argue the case substantially on the basis first suggested by the applicant Cool's answer toa

request for particulars, that there was a relevant wholesale

Market to be found in Waagqa and a vadius 9f about one hundred

Miles therefrom. A radial measurement is obviously crude and inevitably imprecise, but nothing turns on its more accurate

BK market is- usefully viewed as afield of rivalry or close competition between firms (see Re Queensland Co-operative

Milling Association Limited - Proposed Merger; Re Defiance

Holdings Limited ~- Proposed Mergers 1 and 2 (1976) 8 A.L.R. 481, at p.517). That both Bradley and O'Brien operated throughout New

South Wales (and heyond} does not imply that the State was the relevant market. Such a strict geographic definition ignores the view that the Wagga district was, in economic. terms, a particular area of close competition between wholesalers. The words of s.47(13)(b) do associate the market in which O'Brien operated with the market in which Cool operated (Cool being a corporation whose business dealings were restricted by O'Brien). The location of the retailers is relevant to the definition of the

wholesale market. The custom of those retailers was the target

for- the wholesalers. It seems to me, ama practical level, that the. Wagga district (taking a radius of one hundred miles) is

sufficiently integrated to be regarded as the relevant wholesale

In the present case the learned Judge found that there was a purpose within the meaning of sub-section (10); he also Tound that the conduct had the requisite likelv effect. It was

submitted that the interpretation he gave to "substantially" was

wrong. What he said was that the conduct "must be capable of heing fairly described as a lessening of competition that is real or of substance as distinct from a lessening that is insubstantial, insignificant or minimal, cp. Tillmann's Butcheries Pty. Ltd. v. Australian Meat Industry Employees' Union and Others (1979) 27 A.L.R. 367 at p.374-375 per Bowen C.d., and at p.38Z per Deane J." I do not think that his understanding of "substantially" was wrong, particularly when regard is had to his other observations on the case. It was argued that the word meant "large" or "of weight" but there is no justification for substituting these, or any other words. The legislature has chosen a word of intractably indefinite import, and much must be left to individual assessment. Consistently with what was said

on the subject in the joint judgment of Bowen C.J. and Fisher J.

in the recent decision of Outboard Marine (Australia) Pty. Limited v. Hecar Investments No. 6 Pty. Limited (1982) 44 A.L.R.

667, the tendency in the United States when considering the same word. in @ Closely similar context is to leave it undefined, and, commonly, to associate it with the subject-matter (see Néale and Goyder, The Antitrust Laws of the U.S.A. 3rd ed. (1980) at p.271; American Jurisprudence 2nd ed. Vol. 54 para. 116). Plainly, effects which are de minimis are excluded, but this would be the

position under the general law, without the necessity for the

considerations, which his Honour was in a much better positien to

assess than an appellate court. It is nevertheless necessary for us to be satisfied that his Honour had in mind the purpose to which the legislation is addressed; at least we have to he satisfied that his Honour was not in error in this regard. There being no express evidence of purpose it had to be implied, and in making the implication it is appropriate toa look at what was done and intended, and to see what the natural consequences were. The

His Honour was looking at the wholesale market, and it is accepted that this was correct, although reference to what was happening' in the retail market was not excluded (see s.47(13)(b)). He took the view that O'Brien's practice had the purpose of "lessening competition" in that market. The word "competition" is an indefinable abstraction. It relates to the "trading" position in a market. There is within that market what can be regarded as a state or condition of competition, a condition which is doubtless more dynamic than static. The legislation is mot directed at the position of particular competitors; what it looks to is the state or condition comstituting the market actually and. potentially. While it is not possible to define competition, it is possible, and necessary, to recognize features of 1t. This was done in general terms and from an economic viewpoint in Re ueensland

Co-onerative Milling Association Limited; Re Defiance Holdings

Limited (supra.). Subsequent decisions are referred to in

Qutboard Marine (Australia) Pty. Limited (supra.). The question

is whether the dynamic of competition, what might be called the competitive forces in the market, have been "substantially lessened". Although s.47(13)(b) does. not attempt a definition of competition, the reference there to "business dealings" being "yestricted limited or otherwise circumscribed" is helpful. The object is not to look for what is best for society or for the economy . The legislative assumption, presumably, is that competition is what is best, although, tronically success in competition by a trader may lessen it (see, for example, Corpus

His Honour, by reference largely to the written submissions of counsel, pointed to particular consequences of the conduct challenged. A great deal of evidence was given respecting the market, and operations within it. In my view there certainly was evidence to support his conclusion, and I see no reason for differing from it. ft is not possible to know in any detail what view his Honour took of particular pieces of evidence, and they might in his mind have heen affected by other evidence, but two passages, relevant to the present subject matter, caught my attention. Mr. Scott, of Bradley, was called by O'Brien, and his Honour thought him a witness of truth. He

Q. "And the more independent retailers that cease to be independent by virtue of some contract or arrangement or understanding made With wholesalers other than your company, the less opportunity you nave to trade?---That is correct, yes."

Counsel for the appellant submitted that what was done by his client was a manifestation of competitive behaviour, and was not anti-competitive. This is, I think, not quite the test, and it obscures the distinction between the notion of competition and that of the exercise of competitive power, which, as I have said, can tend against competition. It cannot be argued that because a trader is doing well in a competitive market that he is not or has not been guilty of conduct which lessens competition. Doubtless, he can, simply by trading, without being guilty of that conduct, arrive, alone, or with others, at a position of supremacy in that market. O'Brien was in a dominant position in the market, or the part of it which has been regarded as suffictent for the case. It not only sold more windscreens, it gave a better service, leading to the necessity for retailers to have recourse to it. The finding is that it required retailers who wanted the best price to purchase most of their supplies from 1t. There can be no doubt that there was a purpose in this

requirement. It was to coerce retailers into dealing witn it and

not, except to a limited extent, 1ts competitors. The tendency

was to lower the forces of competition in the market, by reducing . the capacity of retailers to choose between sources of supply, to weaken the trading position of competitors, and to inhibit the entry of other competitors. It is to give a false colour to the situation ta say that the purpose was simply to give preference to regular customers, as distinct from those who came to it only wher necessity drove. Similarly, it is incorrect to say that all that was done was in effect to favour retailers wao bought in

Ido not suggest that a distinction between a discount hased on percentage of total requirements and one based on quantity, or value, is necessarily critical. It all depends upon the circumstances. In the present case, O'Brien occupied in the market the position [I have described, and a requirement of the former nature has an effect relative to that position. In particular circumstances, another wholesaler who makes the same requirement might not offend. On the other hand, a discount related to value could offend, if, for example, the value did represent most of the likely purchases of a sufficient number of

In the language of some of the cases, substitution was to be, and was, restricted. It 1s not to the point to say, if it were the fact, that, as matters stood, O'Brien was providing a wide variety of the subject commodity, or seliing at low prices,

or providing good services. Tf ennancea dominance and a

resultant lessening of actual competition were to come about by reason of such considerations, it had to be by leaving

uninhibited the right of choice, or substitution, in the market.

It. follows from what IT have been saying that in my view

his Honour was not in error in his finding concerning "purpose".

For the reasons I have endeavoured to express, TI accept as correct his finding, also stated by reference to the written

submissions, that there was the requisite "likely effect".

It was submitted that in determining "effect" regard should be had te what has in fact happened as a result of the practice, rather than to more theoretical considerations. To this is added that there was a need for more evidence if Cool was to succeed, and particularly expert evidence to deal with economic considerations. I think each case must be looked at in its own circumstances. Certainly it is necessary to have a sufficient understanding of the market, and the operation of market forces. Evidence from economists can help jin this way, and. in indicating what effect particular forms of conduct can have om competition in the market. It is, however, plain from the cases that concepts of market and of competition, and of what may lessen competition, have been carried forward as a matter of legal knowledge. Some a4 priori reasoning is usually if not always involved, not least of all when it is a question of likely effect. Actual experience of what has so far nappened can be

misleading. In the United States che Clayton Act vorohibits

certain practices where the effect may be substantially to lessen competition. Black J. in Federal Trade Commission v. Morton Salt Co. (1948) 334 U.S. 37, at pp.46-47, found those words to involve

the prediction of effect if the practice were allowed to go on.

The evidence in this case, so far as concerns the market, and the various forces at work in it, was extensive. .The withdrawal of some wholesalers from the whdlesale market (including Cool itself) and the reasons therefore, -and the possible effect of particular activities on its future were dealt with at length. An economist was called by Cool, but he simply put in a schedule and some graphs, which were a summary of some of the evidence which had been given. One of the graphs invites attention, as illustrating the difficulty, if not impossibility,

The graph is based on information supplied by Mr. Scott of Bradley which was treated by the Court as confidential. It shows changes im the relationship between Bradley's sales and

O'Brien's sales for the period June 1978 to February 1980 which

are significant. I have also noted that in evidence Mr. Scott agreed that Bradley's sales in Wagga had been steadily declining since at least the middle of 1978. The figures, by themselves, lead to no relevant conclusion, but may, with other evidence, lead to inferences. In my view the nature of the restraint, as found, is clear and forms a sufficient basis for the conclusions

Although much of the evidence in the case dealt with the position of retailers, and the retail market, it is not necessary, or desirable, to consider this separately in relation

Iam of'the view that the appeal fails, so far as it

Following the sequence of the argument, I turn to 5.49. It is recagnised that there is between some of the sections of Part IV of the Act, a degree of overlapping, and the fact that a case is made out under s.47 does not mean that there may not'also be a breach of the section now under consideration. His Honour's

"On the evidence I find that the respondent had discriminated between purchasers of windscreens of like quality and grade in relation to discounts given or allowed in relation to the supply of those windscreens and that the discrimination has heen of such magnitude and of such a& recurring and systematic character that it has had and is likely to have the effect of substantially lessening competition in a market for windscreens, being a market im which the

purchasers (the resellers) supply those windscreens."

O'Brien did not plead as a defence either of the matters referred to in 5.49(2). Oniv one is relevant, that 1s para. (5): "the discrimination is constituted by the doing of an act in good

faith to meet a price or benefit offered by aA competitor of the

supplier". In relation to this his Honour said: "On all the evidence I am satisfied that the discrimination by the respondent was not "constituted by the doing of an act in good faith to meet a price or benefit offered by a competitor of the respondent". The onus. of establishing this matter lay upon the respondent in the proceedings, O'Brien, (sub-secn. (3)}) but the matter can be

Section 49 refers only to a market for goods, and the supply of goods and not, like 5.47, to goods or services. The word "goods" is. defined in s.4(1) to include, for example, ships, aircraft, gas and electricity. Section 4C(c) says that unless a contrary intention appears, "a reference to the supply or acquisition of goods includes a reference to the supply or acquisition of goods together with other property or services, or both". It is submitted that the section does not apply to services, simpliciter, and that what the retailers do is to provide services, i.e. ta fit windscreens. The operation is, it is submitted, essentially one of performing the service, to which the provision of the windscreen is incidental, and the analogy of the distinctiom drawn in Lee v. Griffin (1861) 1B. & S. 272 (see Robinson v. Graves (1935) 1 K.B. 579) was relied upon. I agree with the learned Judge that on the facts the submission cannot be maintained. I should explain that the arqument looked at what was done by the retailers, because Cool, in addition to relying upon the position in the wholesale market, relied upon that in

the retail market, and it could do the JLlatrer beacause of the

words "being a market in which the corporation supplies, or those

A key term used in s.49 is "discriminate". This can be taken, for present purposes at least, to mean "treat differently" those who are alike im a relevant sense. No conception of moral oblaquy or ill design is invoked by the word itself. The Supreme Court of the United States has defined the word "discriminate" in the way I have done, in the same context, in Federal Trade Commission v. Anheuser-Busch Inc. 363 U.S. 536, at p.549. Questions of course arise as to when those retailers concerned are the same, so that it is sensible to talk of discrimination between them, and when they are sufficiently different. No such question arises here. An argument, such as was submitted to us, that there is no discrimination if everyone in a class or category is treated the same, in the sense that a uniform rule that all fair-haired patrons are charged half the amount dark-haired patrons are charged is not discrimination, cannot

succeed. In this case the supplier plainly discriminated.

The remaining question under s.49(1) is whether the discrimination "is of such a recurring or systematic character that it has orais likely to have the effect of substantially lessening competition in aA market ...". In the circumstances of the present case, the orice discrimination was a matter of policy and was applied systematically. It seems clear enough that the

discrimination was likely to have the effect of lessening

competition in both the retail and the wholesale market.

In this case there is a considerable overlap between the analysis of how competition was effected by exclusive dealing and how it was. effected by price discrimination. The market power of O'Brien, and. the existence of the condition earlier referred to

Retailers who did not get the higher discount would be in a weaker position when it came to competing with other yetailers in the sale (and fitting) ef windscreens supplied by O'Brien. Those who got the higher discount would also be less free to compete. They were tied to O'Brien and would only be able to offer amore limited range of windscreens than would

otherwise be the case. Substitution was affected accordingly.

The likely end effect of the policy was to put retailers out of business (the business of supplying and fitting windscreens) if they did not obtain all, or nearly all, of their requirements from O'Brien. There is, in my view, no reason for disturbing his 'Honour's view that there was an infringement of s.49. His Honour did not deal with the wholesale market, but competition therein was lessened for reasons substantially the

Because of circumstances to wnicnh I will now refer, ic

is mot useful to consider also the application of 5.43 oar of

eee nee te ce PN A A ee a et Nt ee te ee Ae ee ne ee ee ey

5.45, After thé principal judgment had been delivered by his Honour but before debate took place as to the form of the injunctions, an affidavit was filed, the short effect of which was that Cool had sold its business in Wagga. So far as

appeared, it was not carrying om business there or in any other

part of the market area. The premises from which it had carried om business had been sold to a company called Rybit Pty. Limited, of wrich R.d. Cool was a director. That company had granted a licence to the purchaser of the business (one McIivray) to occupy the premises for five years, with an option for a further five years. There was a possibility that after five or ten years (the latter if the option was exercised by the purchaser) Cool might resume business under the business name it had been using - "Wagga Windscreen Service". In these circumstances, his Honour was asked by O'Brien not to grant any injunction. He pointed out that the sections of the Act against which O'Brien had offended were enacted in the public interest, and granted injunctions. [In a later affidavit which we allowed to be read 1t was deposed that Mcllvray had terminated his agreement, and Rybit had "recommencec" to trade as Wagga Windscreen Service. There was no suggestion that Cool would return, andno evidence as to the

continue. There are three reasons. So far as appears, Cool is

no longer in the market as a retailer, or in any other capacity.

There has been a double change in retailers of -yhich we know,

from Cool to McIlvray and then to Rybit. For this reason, and by reason of the lapse of time since evidence was given, the situation in the markets is now too wunmcertain. For those

There remains, hawever, the question of damages. -Cool remains entitled toa such damages as it can prove. It has succeeded in the cases based on secns. 47 and 49, and it would not add to the damages to bea awarded if it were also to succeed in reliance om 5.48. The Judge found that there was not a breach of s.45, but granted an injunction on the footing of an attempt to commit a breach of it. His finding that there was no breach

The damages awarded were for $4,670.00. It is submitted that this sum was excessive. Cool does not defend it as an accurate assessment. In its claim, as presented to the learned Judge, Cool said that it relied essentially on the fact that O'Brierr had engaged in exclusive dealing, and added that it relied alternatively on a contravention of secns. 49 and 46. The Measure of damages must be similar to that applied in cases of

tort, which involves, in general, a comparison between what the

position of the party was, or would have been, without the

contraventions, and what 1t was because of the contraventions. The claim is for loss of retail sales, loss of profits on sales of screens supplied by O'Brien and for general damages. The ioss of sales has been estimated ac two per week during the period in

question. Keely J. represented each lost sale asa fifteen dollar loss of profits. The loss of profits on actual sales of O'Brien screens was estimated at ten dollars per screen. The Claim, and the award, were based principally on two or three

"Mr. Masterman: It is common ground I think that from 13 April 1979 you have heen able to purchase windscreens from Windscreens 0'RBrien at only 40 percent off their recommended retail price?~--That is correct.

Can you indicate to the court in what way that has affected your business?---On the Windscreens that I have not got in stock or that I cannot _ purchase from Bradley Brothers that I must purchase from Q'Briens I am not

competitive with QO' Briens or the other opposition in the town in the pricing of windscreens on those particular makes and models that only O'Briens have at that particular time. On some of the windscreens that Ido buy from O'Briens and sell on the retail side at discounts I do lose sometimes $2 or $3 or only make $2 or $3 per windscreen after the windscreen is fitted and after hours deals and during the dat at times."

"Ts it your experience that when you give such a quote on a windscreen to be obtained from Windscreens O'Brien you do not hear any more from the customer?~--Yes.

Taking a conservative estimate, how often on average does that happen per week?---That happens om different. occasions. It may vary three or four windscreens one week, none the next, two the next, five the next. It is an up and down situation.

Roughly what would you estimate?---I would say about two a week on an average."

The loss is of course soeculative but tnat does not mean

that damages cannot be awarded, 1f there 1s some icss which

occurs as a result of the wrongful conduct. His Honour accepted that some loss did occur, and he attempted a fairly precise quantification of it. His calculations related to the periods September 1978 to January 1979 (inclusive) and May 1979 to February 19891. The latter was the last month of the hearing. An amourtt. ($150) was allowed for additional "opening fees" (at $5 each) which Cool had to pay to O'Brien for emergency (out of ordinary hours) supplies, above what others paid. While we

should I believe be slow tao alter an award in a case such as the present, I am of the view that for the damage indicated by the evidence, a mare suitable amount in-.the circumstances would be of

the order of $3,500, and that an award for that amount should be

; Iam therefore of the view that the appeal should be dismissed, but that the injunctions ordered should be dissolved and the award of damages reduced to $3,500. The appellant has had limited success on this appeal, and in my view the

appropriate order for costs is that it pay one half of the costs

I certify that this and the fwenhy-fAve preceding pages are a true copy or the Reasons for Judgment herean of his Honour

IN THE FEDERAL. COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G94 of 1981,

Or appeal from 2 single Juddqe of the Federal Court of Australia

BETWEEN: O'BRIEN GLASS INDUSTRIES LIMITED Appellant AND: COOL & SONS PITY. LIMITED trading as Wagga

This is an appeal by O'Brien Glass Industries Limited. ("O'Brien") froma judgment of a single Judge of this Court. Proceedings were brought by Coal and Sons Pty. Limited, ("Cool") trading as Wagga Windscreen Service, and injunctions were granted under s.80 of the Trade Practices Act 1974 ("the Act") in respect of conduct alleged to be contrary to s.47 (exclusive dealing), s.49 (price discrimination), s.48 (resale price maintenance), and s.45 (arrangement or understanding affecting competition). Those

sections have been placed in the order of the relative importance

which the parties placed upon them. Damages under s.82 of the

Act were also awarded to Cool. At the time of the institution of the proceedings O'Briern carried on the business, inter alia, of supplying windscreens for mator vehicles on a wholesale basis and of supplying: and fitting windscreens on a retail basis in various places, including Wagga. Cool carried on the business of

supplying and fitting windscreens on a retail basis in Wagga.

O'Brien also manufactured certain windscreens and appeared to manufacture about 17 per cent of the laminated windscreens made in Australia. Two other manufacturers had a larger share of the market. The only other significant wholesaler of windscreens in or around Wagga was Bradley Bros

Limited ("Bradley"). The learned trial Judge found that the major wholesalers of windscreens in New South Wales had approximately the following shares of the wholesale market: O'Brien 30(sic)-40 per cent, its two nearest competitors 30-35 per cent and 15-20 per cent respectively. It seems probable that O'Brien was the largest. wholesaler of windscreens situated in Wagga with Bradley the next largest and selling 5 to 15 per cent

I turn first to s.47 of the Act, the relevant parts of

which are 47(1),(2)(c)(d), (10)(a), (13)(a)(b), which I set out:

"47. {1) Subject to this section, a corporation shall not, in trade or commerce, engage in the practice of exclusive dealing.

(2) A corporation engages in the practice of exclusive dealing if the corporation -

. proposed supply of goods or services by the corporation,

on the condition that the person to whom the corporation supplies, or offers or proposes ts supply, the goods or services or, if that person is a body corporate, a body corporate related to that body corporate -

(d) will not, or will not except to a limited extent, acquire goods or services, or goods or services of a particular kind or description, directly or indirectly from a competitor of the corporation or froma competitor of a body corporate related to the corporation;

(10) Sub-section (1) does not apply to the practice of exclusive dealing constituted by a corporation engaging in conduct of a kind referred to in sub-sections (2), (3), (4) or (5) or paragraphs (8)(a) or (b) or (9) (a), (b) or (c) unless -

(a) the engaging by the corporation in that conduct has the purpose, or has or is likely to have the effect, of substantially lessening competition; or

{a} a reference to a condition shall be read as a reference to any condition, whether direct or indicect and whether having legal or equitable force or not, and includes a reference to a condition the existence or natuce ot which 1s ascertainable only by inference from the

conduct of persons or from other relevant circumstances;

(&) a reference to competition, in relation to conduct to which a provision of this section other than sub-sections (8) or (9) applies, shall be read as a reference to, competition in any market in which-

(i) the corporation engaging in the conduct or any hody corporate related to that corporation; or

(ii) any person whose business dealings are restricted, limited or otherwise circumscribed by the conduct or, if that person is a body corporate, any

supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the conduct, supply or

acquire, or be likely to supply or acquire, goods or services; and

A. Did O'Brien give or offer to give a discount in relation to

B. Was any discount given or offered ona "condition" referred

C. If a discount was given or offered ona "condition" was the condition one that Cool would "not except to a limited extent,

acquire" windscreens ""darectly or indirectly from a competitor"

D. If O'Brien did give or offer a discount on the condition that Cool would not, except to a limited extent, acquire windscreens from a competitor, did the engaging in this conduct have the purpose, or had it or was it likely to have the effect, of substantially lessening competition in any market in which O'Brien or Cool supplied or acquired or was likely to supply or

Questions A and C. Certainly so far as concerns the Wagga area O'Brien based its charges for windscreens to persons fitting windscreens by deducting either 50, 45 or 40 per cent from the

recommended retail price. Between January and August 1978 Cool received 50 per cent discount. In August 1978 the discount was reduced to 40 per cent, it was restored to 50 per cent in December 1978 and reduced to 40 per cent again in April 1979. Before the learned trial Judge it was contended that the choice of one or other of these percentage discounts depended upon the money value of windscreens purchased in a particular period. However, the learned. trial Judge, after considering the evidence

and rejecting the evidence of certain witnesses, held in relation

to the relevant area "... that the respondent (O'Brien) had a_

general practice of giving and offering to give to retailers discounts of 45 per cent or 50 per cent in relation to the supply of windscreens on the condition that each such retairler would

purchase all or the substantial maiority of its purchases of

windscreens from the respondent". He made it clear that this statement did not involve a finding that the discount was on a

"condition" which satisfied the meaning of that word in s.47.

At a glance

Court

Decision date

Before

Source

Judgment (413 paragraphs)