Parmalat Australia Pty Ltd v VIP Plastic Packaging Pty Ltd

The application for interlocutory relief filed 12 February 2013 be dismissed with costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 76 of 2013

BETWEEN: PARMALAT AUSTRALIA PTY LTD (ACN 072 928 879)

AND: VIP PLASTIC PACKAGING PTY LTD (ACN 095 313 705)

JUDGE: COLLIER J DATE: 22 FEBRUARY 2013 PLACE: BRISBANE

REASONS FOR JUDGMENT 1 The applicants ("Parmalat") seek urgent interlocutory relief in the nature of mandatory interlocutory injunctions against the respondents pursuant to s 80(2) of the Competition and Consumer Act 2010 (Cth) ("the CC Act"). The reason for the urgency is that the respondents have refused to supply goods beyond 23 February 2013 to the applicants under expired agreements. Materially, Parmalat claims for the purposes of the current interlocutory application that there is a serious question to be tried that conduct of the respondents is in contravention of s 47(1) of the CC Act, which provides: Subject to this section, a corporation shall not, in trade or commerce, engage in the practice of exclusive dealing. 2 Specifically, the interlocutory claim currently before the Court is in the following terms: On the Applicants giving the usual undertaking as to damages: 6. Pursuant to section 80 (2) of the Competition and Consumer Act 2010 (Cth) and further or in the alternative pursuant to section 23 of the Federal Court of Australia Act 1976 (Cth), orders that: (a) Until further or other order the First Respondent supply to the First Applicant "Goods" pursuant to the Supply Agreement for Caps and Closures dated 17 June 2008; (b) Until further or other order the Second Respondent supply to the First Applicant (i) "Closures" pursuant to the Term Sheet for the Supply of closures dated 24 July 2009; (ii) "Materials" pursuant to the Agreement for the Supply of Materials dated 26 August 2009; (c) Until further or other order the Third Respondent supply to the First Applicant "Materials" pursuant to the Agreement for the Supply of Materials dated 26 August 2009; (d) Until further or other order the Second and Third Respondents supply to the Second Applicant "Closures" pursuant to the Term Sheet for the Supply of Closures - Brickwood dated 24 July 2009 7. Further or in the alternative to the interlocutory relief in paragraph 4 (a) [sic] above, pursuant to section 23 of the Federal Court of Australia Act 1976 (Cth), an order that until further or other order the First Respondent supply to the First Applicant caps and closures for the HDPE plastic bottles supplied under the Supply Agreement for HDPE Containers dated 6 February 2006. 8. Such further or other orders as the Court deems fit. 3 In my view the application for interlocutory relief should be dismissed, for the following reasons.

Background facts 4 The applicants supply milk and milk products in Queensland, New South Wales, Victoria, South Australia and the Northern Territory. There is evidence before the Court that Parmalat is a significant participant in the Australian dairy products market, purchasing approximately $400 million of milk from Australian dairy farms each year, with eight factories throughout the region and 1,400 employees. 5 The respondents are related companies, being wholly-owned subsidiaries of Pact Group Pty Ltd. They manufacture and supply packaging products to a range of industries. Those products include bottles, containers and plastic closures (lids and bottle caps) made from polyethylene terephthalate (PET), polypropylene, and High Density Polyethylene (HDPE), which are manufactured in various locations in Queensland, New South Wales, Victoria, Western Australia and New Zealand. 6 As is clear from the evidence of Mr Stephen Rowe, Parmalat's Chief Procurement Officer, Parmalat needs approximately 400 million bottles and 400 million closures each year, and while Parmalat makes some HDPE bottles itself it does not make any closures. 7 From time to time the parties have entered into various contracts for the supply of plastic packaging products, in particular HDPE bottles, caps and closures. On the material before the Court it appears that relevant contracts are as follows: a supply agreement for HDPE Containers dated 6 February 2006 ("Rowville HDPE Agreement") between the first applicant and the first respondent. It appears that this agreement is current; a supply agreement for Caps and Closures dated 17 June 2008 ("Rowville Closures Agreement") between the first applicant and the first respondent, which expired 30 October 2012; an agreement for the supply of materials (bottles and closures) dated 26 August 2009 ("Victorian Agreement") between the first applicant and the second and third respondents, which expired 31 December 2012 following an extension of the original agreement; an agreement for the supply of materials (bottles) dated 26 August 2009 ("Queensland Agreement") between the first applicant and the second and third respondents, which expired 31 December 2012 following an extension of the original agreement; a term sheet for the supply of closures - Brickwood, dated 24 July 2009 ("Closures Term Sheet for Lidcombe and Clarence Gardens") between the second applicant and the second and third respondents, which expired 27 July 2012; and three term sheets for the supply of bottles dated 24 July 2009 ("Bottles Term Sheets for Lidcombe and Clarence Gardens") between the second applicant and the second and third respondents. It appears that this arrangement is current. 8 I note at this point that the interlocutory application currently before me relates, fundamentally, to the agreements for the supply of caps and closures. 9 During 2012 Parmalat informed the respondents that it wished to restructure packaging supplies to its business. Relevant events and key subsequent correspondence included the following: On 30 May 2012 Ms Lorraine Longato, procurement manager with Parmalat, emailed the respondents informing them that Parmalat would be going out to market in 2012 for all contracts expiring 2012, including the respondents' closure supply contracts. On 1 June 2012 Ms Longato emailed the respondents documents including a confidentiality agreement and a "Request for Information for Closures" ("RFI"). A RFI for bottle supply was also subsequently issued. It appears that the RFI sought information about companies which were interested in entering into a business relationship with Parmalat. On 8 June 2012 Mr Jeff Luskie of the respondents emailed Ms Longato confirming the intent of the respondents to participate in the RFI process. On 13 July 2012 Ms Longato wrote to Mr Luskie advising that the respondents had been identified as potential suppliers of bottles to Parmalat, and enclosing a "Request for Proposal (Pricing)" ("RFP") to be completed by the respondents by 20 July 2012. The date for submission of responses to the RFP by potential suppliers (including the respondents) was subsequently extended to 23 July 2012. On 3 August 2012 Ms Longato emailed potential suppliers (including the respondents) enclosing a number of documents including "RFP for Closure Supply Nationally", pricing forms and various checklists and guidelines. The email required submissions to be lodged with Parmalat by 24 August 2012. At clause 3.2 of the RFP Parmalat reserved the right to grant portions of the business to suppliers, rather than enter into a sole supply arrangement. On 16 August 2012 Ms Longato emailed Mr Luskie in relation to a presentation by the respondents to Parmalat. On 23 October 2012 Mr Luskie emailed Ms Longato in the following terms: Further to our recent phone conversations and my subsequent message this morning I have rechecked and can confirm the closure supply agreement that we have between us expires on October 31st (just over 1 weeks time) I'm concerned that we don't have any arrangements in place beyond the expiry and would like to understand Parmalat's plans beyond October. Are you in a position to advise your plans and in particular the outcome of the RFP initiative? - if not how would you like to propose we address the supply situation in the meantime? Ms Longato replied by email the same day: Just roll it... can I call you? I'm concerned that HQ is not seeing the urgency that we are... i.e: the French seem to want different things… Are you free? Can I call you at 12pm - your 1pm?? I want to insure security of supply & they seem to think its not a major concern so I may ask you to help me here… On 23 October 2012 Mr Luskie received an email from a site manager of the respondents, Mr Vaughan Mitchell, who informed him that he had met with Ms Longato the previous day, and that she had said that Parmalat intended to "machine and tool up to make 1-3L bottles themselves at Rowville and Brisbane". It appears that Mr Luskie sought to organise a meeting with Ms Longato on 23 October 2012 to discuss the pending expiry of the closures supply agreement between the parties, but no meeting took place. On 25 October 2012 Ms Longato emailed Mr Luskie in the following terms: From our previous discussion, I would hope that you can appreciate the current position the Parmalat Australian business is currently in. Whilst we were moving towards a local strategy, our global business wish to align the strategies placing us in a holding pattern, pending a review, with our tender. We are aware that the contracts with Brickwoods are due to expire at the end of December 2012 but because of this global review, we are unable to consider entering into new contracts as we would not be able to fulfil commitments within them, as we do not know the outcome of the review at this stage nor would our global business allow us to enter into new contracts without the review being completed and a long term strategy agreed. Strategy alignment with M&As is challenging, as I am sure you are aware, therefore to enable continuity of both supply for Parmalat and of volume for Brickwoods, we feel it would be mutually beneficial to agree to roll over the existing contracts for 12 months to enable the review to be completed and a strategy agreed with our global colleagues, allowing us to put contracts in place that reflect our new long term strategy. Please confirm that Brickwoods will enact the roll over clauses in the contracts to allow us to complete this review process without concerns over continuity of supply in 2013 also allowing surety of volumes for Brickwoods. On 6 November 2012 Mr Stuart Hollindale of the applicants emailed persons at Visy, a competitor of the respondents. This email was in the following terms: I have had confirmation from Lorraine Longato and Steven Rowe that Parmalat would like to sign a heads of agreement around our national supply offer asap so that Visy can go forward and order machinery and moulds etc for the national supply contract. This project is called and will be referred to in all correspondence as "New Order". Firstly and most importantly, the people on this email list below are the only ones allowed to be discussing the contract as the key stake holders within Visy this is not to be broad cast outside this email group and as far as parmalat is concerned non negotiable. [email addresses at Visy] Parmalat have been adamant about this today with Craig Garven stressing that this is not to get out at all AT ALL!! VIP have decided to play hard ball and insist on a 3-5 year deal instead of a 1 year roll over period and have hinted and a non supply issue if not agreed to. Parmalat have taken the view that they are in a transition period and that VIP must supply while in that period also that while ever PAL and VIP are "in negotiations" that VIP still need to supply. They have also served notice on VIP thru there legal department that all negotiations from here on in will be witnessed by a representative of Parmalat Legal team. with that being said it is going to be a major task keeping this secure and confidential. so Matt I will need a confidentiality agreement signed by all stake holders on email and sent to you also any suppliers we contact will need to have this signed no questions asked before we negotiate order or discuss any supply of equipment. Also I need a draft Heads of agreement sent to me with the attachment on this email in it on volumes and supply quantities based on a 5+2 scenario any other info you need just let me know via email PAL would like a copy of this agreement and the signatories on it as well prior to sign off look forward to discussing this asap (Reproduced as in original.) On 12 November 2012 Mr Luskie responded to Ms Longato's email of 25 October 2012. In that email Mr Luskie referred to a more recent meeting between himself, Ms Longato and Mr Brendon Chandulal of the respondents, and said (materially) that: a proposal to enter into a 12 month supply arrangement was not acceptable to the respondents, nor, in reality, practical for the parties; a large-scale shift in Parmalat's bottle sourcing requirements would require the respondents to restructure their business; the respondents understood that Parmalat was currently developing future options; and the respondents proposed an extension of all supply agreements for 3 years. On 12 November 2012 Ms Longato responded to Mr Luskie's email of that date, stating (inter alia) that Parmalat was not in a position to enter a contract as proposed by Mr Luskie. On 4 December 2012 representatives of the applicants and respondents attended a meeting. On 19 December 2012 Mr Chandulal emailed Mr Stephen Rowe in the following terms: With the Christmas period almost here, and many of us heading away for a break, I thought I would table a written position regarding supply of Bottles and Closures following our meeting at Como on 4/12. The attached is consistent with our position at that time. We would be able to sign off on this prior to the expiry of the Bottle and Closure supply arrangements on 31/12/12 if acceptable. The attached correspondence was a letter headed "Extension of Parmalat Agreements" proposing, inter alia, an extension of the supply agreements (including bottles and closures) for a further 3 year period commencing on 1 January 2013 and ending on 31 December 2015, and six months notice of any proposal to further extend the contract. The letter also proposed an exception to these agreements to allow Parmalat to provide notice to the respondents during the 3 year extension of its intention to transition to in-house supply of bottles in Queensland. On 9 January 2013 Mr Vaughan Mitchell emailed Mr Brendon Chandulal of the respondents in the following terms: Just to recap…… Russell did say they have discussed the possibility of supply from Visy for bottles Brickwood make, both in full and part supply. He did say that discussions may still be going on at Stephen's level with Visy to enable supply at a later date, but he is not aware of discussions this month. He stated no supply contract in any form for full or part supply from Visy has been signed at this time to replace bottles Brickwood manufacture, and if one has been forwarded to Lactalis for review he is not aware. He said developing in-house manufacture is the main focus at this time and also Lactalis are still scouting for cap suppliers overseas. I believe he is telling me the truth in what he knows to date. On 21 January 2013 Mr Luskie emailed Mr Kevin Goos and Mr Rowe of Parmalat in the following terms: Thank you for taking the time to meet with us on Friday. Whilst I recall you will be circulating a summary of the meeting, there is one aspect I would like to take up in the interim. That is the topic of the closure review you have underway. Understanding you will be completing some very intense investigations in order to formulate and present your position on local vs imported closure supply, we would like to offer our assistance in helping you to complete your review. We believe we can offer genuine benefit to you regardless of the eventual outcome as there will be some significant technical, commercial and logistical considerations that will impact any potential changes to your bottle and closure combinations. This is especially true if you are considering a hybrid of imported and locally manufactured closures. Please feel free to discuss this with me in more detail… On 22 January 2013 Mr Rowe emailed Messrs Luskie, Chandulal and Goos of the respondents in the following terms: Following up on our discussions on the 18th January 2013 regarding the future business between our two organisations, I have summarise [sic] the discussions regarding our HDPE Bottles. Parmalat's HDPE bottle category has not changed since the award to VIP at Rowville over 6 years ago and did not change when VIP bought out Brickwoods creating a highly dominated market. Two factors have caused Parmalat to review its category strategy for the future, firstly, Parmalat has decided that onsite HDBE Blow Moulding is a core competency and are now driving more efficient use of its internal capacity, secondly, new competition has been brought to the HDPE Bottle marketplace in dairy and Parmalat has decided to dual source following the outcome of the tender run in 2012. The impact of this new category strategy to Brickwoods will be: ▪ On completion and signing of the supply contract with Visy, all external volume for Queensland will revert to Visy on 1st January 2014. ▪ Negotiations will be undertaken for a new supply agreement with Brickwoods for the external volumes for NSW, VIC, SA. We would hope that this revised outcome, whilst it does not reflect your proposal to us whereby you proposed to lock in all our external requirements for a further 3 years, would be an outcome in which we can continue to amicably conduct business allowing Brickwoods to retain a large portion of Parmalat's business. Parmalat would like to commence negotiations on the supply agreement for external HDPE bottle requirements in NSW, VIC and SA and work with you to develop a transition plan for Queensland allowing you to restructure your business prior to the handover in January 2014. Later on 22 January 2013 Mr Houlihan of Parmalat emailed Mr Raphael Geminder of the respondents, materially in the following terms: The email below was sent by Stephen to Brendon yesterday and was I believe fairly clear. Parmalat went to market in 2012 seeking bottle supply proposals for periods up to 3 years. Parmalat received proposals from Brickwoods which covered Qld, NSW, Vic and SA. Based on your call today and discussions between Brendon and Stephen, it appears your organisation is taking the view that the offer was an all or nothing proposal. In our view the tender was clear and each state was to be tendered on an individual or group basis but not solely on a [sic] all or nothing basis. In view of your market share following the Brickwoods acquisition, an all or nothing option would in our view present competition issues in seeking to unduly lock out future competitors. Parmalat did receive a supply offer from Visy which was materially more favourable in Qld. At the same time the group is looking to progress more in-house moulding options. To be clear if your offer is only based on an all or nothing, then Parmalat's answer is to decline the offer. Parmalat is willing to continue supply ex Brickwoods in Qld for 2013 i.e. a 1 year term and sign a contract to that effect. At the same time, parmalat is willing to award Brickwoods a 2-3 year supply agreement for external HDPE bottles in NSW, Vic and SA. Following the email below we are awaiting your response to our request for a revised offer. Cap supply was not part of the tender and we are in no position to do any award because of an international review being conducted by Lactalis on our cap supply. This cap review was discussed at the meeting with Brickwoods last Friday. However should any proposals for more attractively priced local supply be put forward they would be considered in that review process. … On 24 January 2013 Mr Geminder of the respondents wrote to Messrs Houlihan and Rowe of Parmalat in the following terms: I refer to your emails dated 22 January 2013. We are very disappointed at the approach Parmalat has taken and we do not agree with the statements you have made about the terms of the tender or our market position. Our offers have been consistent with the requirements you specified in your requests for tender. We take your emails as confirmation that Parmalat has rejected the offer set out in our letter dated 19 December 2012, and rejected the offer we had made in response to Parmalat's requests for tender. In those circumstances, and as the supply agreements identified in point 1 of our 19 December 2012 letter have otherwise expired (the Expired Agreements), we will cease to supply bottles, caps or closures to Parmalat pursuant to the Expired Agreements after 30 days from the date of this letter (i.e. 23 February 2013) and we will now commence arrangements to restructure our business and redeploy relevant operational capacity to other work. Pending that cessation, we will accept a firm offer for volumes consistent with Parmalat's current activity received not later than 29 January 2013 for all deliveries up to 23 February 2013 and otherwise on the terms of the Expired Agreements. Brickwoods otherwise reserves all of its rights concerning the tender conducted by Parmalat. 10 In summary, the position as of 24 January 2013 was that whereas the respondents had had long-standing agreements with the applicant to supply bottles and closures for the applicants' products, by this date the respondents had become aware that the applicants had reached an agreement with Visy for that corporation to supply bottles to the applicants in relation to the Queensland market from 1 January 2014. There is evidence that the Queensland market in relation to the applicant's products constituted approximately half of their total supply agreements of dairy products. The letter from Mr Geminder communicated the decision of the respondents to cease supply to the applicants of all material under already expired agreements. As was made clear at the hearing on Wednesday, this created particular problems for the applicants in relation to closures, because whereas they could manufacture containers from their own resources: they could not similarly manufacture closures; they were unable (in the short term) to obtain locally produced closures for their containers; they are importing closures from overseas (transported by chartered Boeing 747) at high cost; and the containers are useless without the closures. 11 It also became clear from oral evidence given at the hearing on Wednesday that the applicant could adequately deal with short-term supply problems in respect of bottles and closures if it had continuity of supply from the respondents to 30 April 2013. 12 On 12 February 2013 Parmalat filed an originating application in this Court, claiming interlocutory relief, as well as final relief for contraventions by the respondents of s 46(1) and s 47(1) of the CC Act, and further (or in the alternative) declarations and orders pursuant to the Federal Court of Australia Act 1976 (Cth). The final relief sought pursuant to the CC Act is, in summary, that the respondents be ordered to continue to supply goods - and in particular closures - to the applicants until 31 December 2013.

Principles relevant to mandatory interlocutory injunctions 13 Before turning to matters of substance in this proceeding it is important to address principles relevant to interlocutory injunctions mandating positive action by a respondent. At the hearing on Wednesday Mr Thompson SC for the respondents submitted that, practically, success of the applicants on an interlocutory basis will in effect determine the rights of the parties at final trial. No material issue was taken in respect of this submission by Mr Lilley SC for the applicants (transcript p 40 ll 13-22). 14 Circumstances in which a Court will entertain an application for an interlocutory injunction were explained by the High Court of Australia in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57. In summary, an applicant seeking interlocutory relief must demonstrate that (Gleeson CJ and Crennan J at [19]): 1. there is a serious question to be tried as to the applicant's entitlement to relief; and 2. the applicant is likely to suffer injury for which damages will not be an adequate remedy; and 3. the balance of convenience favours the granting of an interlocutory injunction. 15 As Gummow and Hayne JJ further observed in O'Neill, in order for an applicant for interlocutory relief to demonstrate that there is a "serious question to be tried": It is sufficient that the applicant show a sufficient likelihood of success to justify the preservation of the status quo pending the trial: at [65]. The applicant need not demonstrate more than a 50% chance of ultimate success: at [68]. In that light the issue may be understood as whether the applicant has made out a prima facie case for relief: at [65], [70]. Whether the applicant shows a sufficient likelihood of success depends on the: nature of the rights asserted; and practical consequences likely to flow from the interlocutory order sought. Particular considerations arise where the grant or refusal of an interlocutory injunction in effect would dispose of the action finally in favour of whichever party succeeded on that application: at [72]. 16 These principles have been applied in this Court (for example, CPSU, The Community and Public Sector Union v Commonwealth of Australia [2006] FCAFC 176; Samsung Electronics Co Ltd v Apple Inc (2011) 286 ALR 257 at [57]-[61]; Communications, Electrical, Electronic, Energy, Information, Postal and Allied Services Union of Australia v Dee Vee Pty Ltd [2012] FCA 988 at [18]; Australian Postal Corporation v Digital Post Australia Pty Ltd [2012] FCA 372 at [4]; Elco Food Co Pty Ltd v Oliana Foods Pty Ltd [2012] FCA 410 at [15]). 17 In this proceeding the exercise of the Court's discretion to grant interlocutory relief is informed by the fact that the applicant seeks a mandatory interlocutory injunction. Although the set of circumstances under which such relief is granted is a matter for judicial discretion in each case, as a general principle Courts approach such applications with some caution. In State of Queensland v Australian Telecommunications Commission (1985) 59 ALR 243 at 245 Gibbs CJ explained described the approach of the Court as requiring a "high degree of assurance" compared with interlocutory injunctions restraining conduct: Megarry J stated the principle in Shepherd Homes Ltd v Sandham [1971] 1 Ch 340 at 351, in the following words: "… on motion, as contrasted with the trial, the court is far more reluctant to grant a mandatory injunction than it would be to grant a comparable prohibitory injunction. In a normal case the court must, inter alia, feel a high degree of assurance that at the trial it will appear that the injunction was rightly granted; and this is a higher standard than is required for a prohibitory injunction." (Emphasis added.) 18 This approach has been adopted in numerous cases in this Court and elsewhere: Australian National Airlines Commission v Commonwealth of Australia (1986) 17 FCR 445 at 451-452; Midland Milk Pty Ltd v Victorian Dairy Industry Authority (1987) 82 ALR 279 at 291; Active Leisure (Sports) Pty Ltd v Sportsman's Australia Ltd [1991] 1 Qd R 301 per Shepherdson J at 304 and Cooper J at 314-315; Racecourse Totalizators Pty Ltd v Totalisator Administration Board of Queensland (1995) 58 FCR 119; Storm Financial Limited v Commonwealth Bank of Australia [2008] FCA 1991 at [5]; Ryan v Electricity Networks Corporation [2009] FCA 734. 19 A different view was, however, taken by Gummow J in Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 where his Honour distinguished Queensland v Australian Telecommunications Commission, and considered that the better approach in considering an application for mandatory interlocutory relief was to have regard to the particular circumstances of the case and the seriousness of the consequences of the order if made. His Honour at 502-503 referred at length to remarks of Hoffmann J in Films Rover International ltd v Cannon Film Sales Ltd [1986] 3 All ER 772 at 780-781, including the following: If it appears to the Court that, exceptionally, the case is one in which withholding a mandatory interlocutory injunction would in fact carry a greater risk of injustice than granting it even though the court does not feel a 'high degree of assurance' about the plaintiff's chances of establishing his right, there cannot be any rational basis for withholding the injunction. 20 This approach was considered by the Full Court of the Federal Court - without resolution of the conflict of authority - in Telstra Corporation Ltd v First Netcom Pty Ltd (1997) 78 FCR 132 at 137, and followed in Madafferi v Minister for Immigration and Multicultural Affairs [2001] FCA 788; Tymbook Pty Ltd v State of Victoria; Bradto Pty Ltd v State of Victoria (2006) 15 VR 65 (Court of Appeal of Victoria); Construction, Forestry, Mining and Energy Union v Caelli Constructions (Vic) Pty Ltd [2009] FCA 655; Conquo v Jackson [2009] FCA 45; Fegan v Jackson [2009] FCA 338 and N. A. Retail Solutions Pty Limited v St George Bank Limited [2010] FCA 259. 21 While there is merit in the proposition that the Court should not approach consideration of interlocutory injunctive relief differently depending on whether the relief sought is restraining or mandatory, on balance I am persuaded that the obligations imposed on a respondent following an order of the Court granting mandatory interlocutory relief do necessitate some higher degree of assurance to the Court that final relief will be granted. This is particularly so in circumstances where the mandatory orders lend themselves to a greater likelihood of ongoing Court supervision, and the practical effect of the orders is, in effect, to finally determine the rights of the parties. I am also not persuaded that there is either injustice or illogic associated with the proposition that a higher standard of assurance is appropriate where an applicant presses for mandatory relief rather than restraining orders. (Simply by way of analogy, I note the higher degree of persuasion required by the law in certain civil cases following the landmark decision of the High Court in Briginshaw v Briginshaw (1938) 60 CLR 336.)

Section 47 CC Act 22 As was clear from submissions of Counsel at the hearing, to a significant extent this interlocutory application turns upon the operation of s 47 of the CC Act. In order for the applicant to satisfy the Court that there is a serious question to be tried as to its entitlement to relief, the applicant needs to demonstrate that there is a prima facie case that the conduct of the respondents has constituted exclusive dealing in contravention of s 47(1). Before turning to this question, it is useful to summarise principles relevant to this legislation and the proceeding before me. 23 Relevantly in this case s 47(3) provides that: A corporation also engages in the practice of exclusive dealing if the corporation refuses: (a) to supply goods or services to a person; …. for the reason that the person or, if the person is a body corporate, a body corporate related to that body corporate: (d) has acquired, or has not agreed not to acquire, goods or services, or goods or services of a particular kind or description, directly or indirectly from a competitor of the corporation or from a competitor of a body corporate related to the corporation; … 24 Section 47(10) relevantly provides: Subsection (1) does not apply to the practice of exclusive dealing constituted by a corporation engaging in conduct of a kind referred to in subsection (2), (3), (4) or (5) or paragraph (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 likely or is likely to have the effect, of substantially lessening competition; or (b) … (I note that for the purposes of the interlocutory application currently before me, the claim of Parmalat is limited to the respondents having the alleged purpose of substantially lessening competition, rather than their conduct having (or being likely to have) that effect.) 25 Section 47(1) appears to have wide application, as is clear from s 47(13) which relevantly provides: 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 legal 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; (b) a reference to competition, in relation to conduct to which a provision of this section other than subsection (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 body 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 body corporate related to that body corporate; 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 … 26 Further, "purpose" in the CC Act has a broad meaning, defined by s 4F(1) as follows: (1) For the purposes of this Act: (a) a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, or a covenant or a proposed covenant, shall be deemed to have had, or to have, a particular purpose if: (i) the provision was included in the contract, arrangement or understanding or is to be included in the proposed contract, arrangement or understanding, or the covenant was required to be given or the proposed covenant is to be required to be given, as the case may be, for that purpose or for purposes that included or include that purpose; and (ii) that purpose was or is a substantial purpose; and (b) a person shall be deemed to have engaged or to engage in conduct for a particular purpose or a particular reason if: (i) the person engaged or engages in the conduct for purposes that included or include that purpose or for reasons that included or include that reason, as the case may be; and (ii) that purpose or reason was or is a substantial purpose or reason. 27 The leading authority in relation to the meaning of "purpose" in s 47 is the decision of the Full Federal Court in Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission (2003) 131 FCR 529. In that case two corporations with significant segments of the Australian wholesale music market devised strategies designed to deter music retailers from parallel importing compact discs containing musical recordings. Materially, those strategies included: refusal to supply retailers who parallel imported such compact discs; and an offer to supply compact discs in the future to retailers on the condition that the retailers did not acquire disks from a competitor of the wholesaler. 28 The Full Court found that the conduct of the wholesalers constituted exclusive dealing within the meaning of s 47 of the Trade Practices Act 1974 (Cth). Significantly for the purposes of the present proceeding, the Full Court made the following findings: "Purpose" within the meaning of s 47(1) is the actual subjective purpose of the respondents (at [255]). The purpose for which conduct is engaged in by a party should be ascertained by having regard to the direct and indirect evidence as to the actual intentions and purposes of the party. The Court should treat with caution evidence which is ex post facto and self-serving. In the absence of evidence being led by the respondents or from the relevant decision-makers, the finding of purpose is an inference to be drawn from all of the circumstances on the balance of probabilities (at [256]). The purpose must be a substantial lessening of competition in the market in question. In that case the market in question was the Australian wholesale market for recorded music (at [240]). "Substantial" within the meaning of s 47(10) has the meaning described by Smithers J in Dandy Power Equipment Pty Ltd v Mercury Marine Pty Ltd (1982) 64 FLR 238 at 260 (at [241]): Although the words "substantially lessened in a market" refer generally to a market, it is the degree to which competition has been lessened which is critical, not the proportion of that lessening to the whole of the competition which exists in the total market. Thus a lessening in a significant section of the market, if a substantial lessening of otherwise active competition may, according to circumstances, be a substantial lessening of competition in a market. In considering purpose, the fact that the relevant conduct actually does not have any real effect (nor was likely to have any real effect) on competition is not decisive in determining whether the conduct has been engaged in for a proscribed purpose within the meaning of the legislation. In Universal Music the Full Court observed that the conduct did not have the effect of substantially lessening competition, possibly because the conduct was "nipped in the bud" by the ACCC, or because the retailers exhibited more fortitude than the wholesalers expected (at [246]). As the Court observed at [249]: A person may have the purpose of securing a result which it is, in fact, impossible for that person to achieve. That no doubt explains the reference to purpose, in para (a) of s 47(10) of the Act, as an alternative to effect and likely effect. The paragraph is satisfied if the relevant corporation has the requisite purpose, regardless of whether or not that purpose has been, or was or is likely to be, achieved. It may conceivably be satisfied even in a case where the court finds the purpose could never in fact have been achieved, although that finding would be relevant in determining whether to infer the proscribed purpose.

Is there a serious question to be tried? 29 The applicants submit strongly that there is a serious question to be tried that the respondents have contravened the prohibition of exclusive dealing in s 47(1) of CC Act. The basis of their case can be summarised as follows: The circumstances strongly support an inference that the purpose of the respondents' refusal to supply the applicants with HDPE bottles or closures was to deter the applicants from entering into the proposed agreement with Visy and thereby to keep Visy from entering the Queensland market. The refusals are not consistent with normal competitive conduct in a market where the respondents supply, in different States, throw-away packaging, and Parmalat constitutes one of the respondents' largest customers. This is particularly the case with respect to the refusal of the respondents to supply closures, which are easily transportable goods and could reasonably be the subject of ongoing supply notwithstanding the respondents' proposal to relocate some of their manufacturing facilities. In this respect the economical transportability of closures can be contrasted with that of empty bottles/containers, which are difficult to pack and transport (and indeed described by Counsel during the hearing as "shipping air"). An inference can be drawn that the respondents refused to supply further goods to the applicants because they learned of the proposed agreement between the applicants and Visy on 18 January 2013. This is supported by the fact that the respondents had offered to continue to supply goods on specific terms on 19 December 2012, but then refused a counter offer on similar terms made by the applicants on 22 January 2013. The evidence of the respondents is curiously wanting in that (inter alia) no decision-makers are identified, no direct evidence from decision-makers is given, the actual purpose motivating the respondents is not identified, no contemporaneous documents in relation to the decision to refuse supply are provided, and no explanation is given in relation to the change in the respondents' position from 19 December 2012 to 24 January 2013. The relevant market is the Queensland market for manufacture and supply of HDPE bottles. There is a prima facie case that such a State-based market exists in light of conclusions drawn in the Australian Competition and Consumer Commission's documents "Statement of Issues - Pact Group Pty Limited - proposed acquisition of Viscount Plastics Pty Limited" dated 24 November 2011 and "Pact Group Pty Ltd - proposed acquisition of Brickwood Holdings Pty Ltd (Public Competition Assessment)" dated 21 May 2008. In particular the ACCC concluded at [59] of the 2008 document that there was very limited ability to supply HDPE bottles interstate due to the significant cost of transport relative to the bottle value, and that the relevant markets were separate State markets. The ACCC reviews in 2008 and 2011 identified competitive elements in the HDPE bottle markets in New South Wales, Queensland and Victoria, including alternative bottle suppliers, self-sourcing of containers by milk producers, and relatively low price of HDPE bottle machinery. To the extent that the applicants sought to use those competitive constraints to their own advantage, the respondents have sought to prevent this occurring. The fact that the respondents' refusal to supply the applicants did not deter the applicants from entering into an agreement with Visy is not decisive: Universal Music. The respondents had as a substantial purpose a desire to hinder or prevent substantial competition in the Queensland market for the manufacture and supply of HDPE bottles by deterring the applicants from entering into an agreement with Visy that would leverage Visy into that market as the sole external supplier of HDPE bottles to Parmalat, the largest or second largest customer in that market, from 1 January 2014. The respondents' purpose in refusing to supply the applicants unless they were given a two to three-year contract with the applicants meant that the applicants were placed under pressure to not obtain their supplies of HDPE bottles in Queensland from Visy. 30 In this case I am satisfied that the respondents have refused to supply goods, namely bottles and closures, to the applicants as contemplated by s 47(3). I am also satisfied that Visy is a competitor of the respondents, although the nature of the market is in dispute. However the applicants must demonstrate a serious question to be tried that: the respondents did so because the applicants had (in summary) agreed to acquire those goods in the future from Visy, a competitor of the respondents (s 47(3)(d)); and the purpose of the respondents in so doing was to substantially lessen competition in the relevant market (s 47(10)(a)). 31 I am not satisfied that, in this respect, the applicants have shown a sufficient likelihood of success to justify the preservation of the status quo pending the trial and an entitlement to the mandatory interlocutory relief they seek. I form this view for the following reasons. 32 First, I am not persuaded to a sufficient level of assurance that a mandatory interlocutory injunction should be imposed on the respondents to continue to comply with now-expired obligations, where those obligations were clearly intended by the terms of the relevant contracts to be of limited duration. Although the respondents were clearly agreeable until recently to extensions of existing contracts with the applicants, and transitional arrangements, this does not mean that they should be required to continue to be subject to such agreements without their consent, particularly in circumstances where there is some evidence before the Court that the respondents propose to restructure their own business affairs. The final relief sought by the applicants contemplates a continuation of existing contractual terms for the balance of 2013, without any option for renegotiation of terms (including pricing) on the part of the respondents. 33 Second, I am not persuaded that there is a prima facie case that either the respondents refused to supply goods to the applicants because of their proposed agreement with Visy, or that the purpose for which the respondents acted was to substantially lessen competition in the market. This is because: There is evidence to support an inference that the reason the respondents acted to refuse any further supply of bottles and closures to the applicants was because it became clear to the respondents on 18 January 2013 that, despite the expiry of relevant agreements between the parties, ongoing accommodation of the applicants' requirements by the respondents, and delays in decisions by the applicants, the applicants were only offering a contract for the supply of bottles rather than bottles and closures. The respondents made an offer to the applicants on 19 December 2012 to extend existing contracts in relation to both bottles and closures. To that extent, I do not accept the submission of the applicants that the position of Parmalat as at 22 January 2013 was the same as that of the respondents as at 19 December 2012 - they were markedly different. I do not accept the submission of the applicants that at all times they were clearly seeking expressions of interest in respect of contractual supply on a State basis only. The RFP for Closure Supply Nationally emailed by Ms Longato to potential suppliers on 3 August 2012 supports an inference that although the applicants reserved their position to deal with supply of goods on a State basis, the applicants also contemplated a national approach to supply of those goods. To that extent, the inference can be drawn that the respondents - reasonably - made their pricing proposals on a national basis, and the decision of the applicants to do otherwise than accept a national approach was a reason for the respondents to decline to continue to deal with the applicants. There is clear evidence before the Court that the respondents were aware from mid-2012 that the applicants intended to transition their operations so as to manufacture bottles in-house, and to that extent the respondents would cease to be a supplier of those goods. Nonetheless, it is also clear that the respondents were prepared to continue supplying goods to the respondents notwithstanding that this source of business would, in the relatively short term, cease. Further, there is also some evidence before the Court that the respondents were aware as early as 9 January 2013 that the applicants intended to engage Visy as a supplier of bottles in Queensland and that they were actively considering overseas suppliers of closures. Notwithstanding this knowledge, the respondents continued to engage with the applicants in relation to prospective supply of goods. 34 Third, although there is some evidence before the Court as to the nature and existence of the relevant market in this proceeding (that is, the manufacture of HDPE bottles in Queensland): evidence as to "the market" in this proceeding is weak; the existence and nature of the market is central to any claim pursuant to s 47 (cf K & S Freighters Pty Ltd v Linfox Transport (Aust) Pty Ltd [1999] FCA 1325 at [32]); and in any event, there is no real evidence of any kind that a substantial purpose of the respondents in this case was to substantially lessen competition in the relevant market. 35 The respondents were clearly disappointed that the applicants decided not to deal with them in respect of both bottles and closures (on an "all or nothing" basis), however this does not in my view equate to evidence that a purpose of the respondents, in their decision to terminate contractual relations with the applicants, was to keep Visy out of the market as claimed by the applicants. 36 Fourth, in any event, even if the conduct of the respondents was intended by them to lessen competition in the market (from Visy) in their dealings with Parmalat, for the purposes of this interlocutory application it is difficult to accept that the respondents had the requisite purpose when the potential for their conduct to substantially lessen competition in the market appears limited. Mr Rowe of the applicants conceded at the hearing that from 30 April 2013 the applicants would be in a position to obtain both bottles and closures without the need to rely on goods supplied by the respondents. Any lessening of competition would therefore clearly be of a temporary nature. As explained by the Full Court in Universal Music at [242]: Competition is a process and the effect upon competition is not to be equated with the effect upon competitors, although the latter may be relevant to the former. Competition is a means to the end of protecting the interests of consumers rather than competitors in the market (Queensland Wire per Mason CJ and Wilson J at 191). Competition is defined to include competition from imported goods (s 4). The Court has to make a qualitative judgment about the impact of the impugned conduct on the competitive process. For example, a short term effect readily corrected by market processes is unlikely to be substantial. The lessening of competition must be adjudged to be of such seriousness as to adversely affect competition in the market place, particularly with consumers in mind. It must be "meaningful or relevant to the competitive process": Stirling Harbour Services Pty Ltd v Bunbury Port Authority [2000] FCA 38; (2000) ATPR 41-752 at para 114. 37 Finally, the present interlocutory application has been brought on (and decided) urgently. It is not surprising that the evidence before the Court is limited, although the absence of evidence from actual decision makers in the respondents is curious and, in some respects, unsatisfactory. However there is, in my view, sufficient evidence produced by the respondents to refute the inferences the applicants have asked the Court to draw. In particular, I note that the evidence produced by the respondents was in the form of extensive contemporaneous emails and correspondence, which cannot be described as ex post facto or self-serving.

Damages and balance of convenience 38 In light of the lack of detailed evidence concerning the nature of the market in question, it is difficult to determine whether damages would be an adequate remedy. In the circumstances however, it is also difficult to conclude otherwise than that the current position in which the applicants find themselves is a result of their own lack of foresight and planning. In any event, there is evidence before the Court that damage to the applicants will be short-term, and to that extent could potentially be remedied by an award of damages. 39 The applicants submit that the balance of convenience strongly favours the grant of interlocutory injunctive relief because (in summary): The evidence demonstrates that the applicants have gone to extraordinary lengths to seek substitute supplies of HDPE bottles and closures (cf affidavit of Mr Nigel Ulrich sworn 19 February 2013). The adverse consequences if interlocutory relief is not given will be immense, including adverse effect on the applicants' profit and market share, adverse views taken of the applicants' products by major supermarket customers, and adverse effects on participants in the dairy supply chain including dairy operators and the public. 40 There may be substance to the applicants' claims concerning impacts on profit, market share and product identification, however these effects are at this point speculative. I note that the applicants have gone to some lengths to ensure that their product appearance is not compromised. However I am not persuaded that this inconvenience to the applicants is a compelling reason to order mandatory interlocutory relief against the respondents, where the nature of that relief will require the respondents to continue servicing the needs of the applicants. In my view the consideration payable by the applicants to the respondents for ongoing supply of goods is not an adequate recompense in circumstances where the respondents have chosen not to continue to supply goods pursuant to expired agreements.

Conclusion 41 The application for interlocutory relief should be dismissed with costs. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.