Re Desmond Walter Dowling v Dalgety Australia Limited; Elders Ixl Ltd; Australian Mercantile Land and Finance Company Ltd; Austest Company Ltd and Primac Association Ltd [1992] FCA 35;

Re Desmond Walter Dowling v Dalgety Australia Limited; Elders Ixl Ltd; Australian Mercantile Land and Finance Company Ltd; Austest Company Ltd and Primac Association Ltd [1992] FCA 35; - FCA 1992 case summary — Zoe

[22]

"45(1) If a provision of a contract made

before the commencement of the Trade Practices

Amendment Act 1977:

(a) is an exclusionary provision; or

(b) has the purpose, or has or is likely to

have the effect, of substantially

lessening competition;

that provision is unenforceable in so far as it

confers rights or benefits or imposes duties or

obligations on a corporation.

(2) A corporation shall not:

...

(b) give effect to a provision of a contract,

arrangement or understanding, whether the

contract or arrangement was made, or the

understanding was arrived at, before or

after the commencement of this section, if

that provision:

(i) ... ; or

(ii) has the purpose, or has or is likely

to have the effect, of substantially

lessening competition."

(3) For the purposes of this section and

section 45A, 'competition', in relation to a

provision of a contract, arrangement or

understanding or of a proposed contract,

arrangement or understanding, means competition

in any market in which a corporation that is a

party to the contract, arrangement or

understanding or would be a party to the

proposed contract, arrangement or understanding,

or any body corporate related to such a

corporation, supplies or acquires, or is likely

to supply or acquire, goods or services or

would, but for the provision, supply or acquire,

or be likely to supply or acquire, goods or services."

(4) For the purposes of the application of

this section in relation to a particular

corporation, a provision of a contract,

arrangement or understanding or of a proposed

contract, arrangement or understanding shall be

deemed to have or to be likely to have the

effect of substantially lessening competition if

that provision and any one or more of the

following provisions, namely -

(a) the other provisions of that

contract, arrangement or

understanding or proposed contract,

arrangement or understanding; and

(b) the provisions of any other

contract, arrangement or

understanding or proposed contract,

arrangement or understanding to

which the corporation or a body

corporate related to the corporation

is or would be a party;

together have or are likely to have that effect."

[23]

"46(1) A corporation that has a substantial

degree of power in a market shall not take

advantage of that power for the purpose of:

(a) eliminating or substantially damaging a

competitor of the corporation or of a body

corporate that is related to the

corporation in that or any other market;

(b) preventing the entry of a person into that

or any other market; or

(c) deterring or preventing a person from

engaging in competitive conduct in that or

any other market.

(2) If:

(a) a body corporate that is related to a

corporation has, or 2 or more bodies

corporate each of which is related to the

one corporation together have, a

substantial degree of power in a market; or

(b) a corporation and a body corporate that

is, or a corporation and 2 or more bodies

corporate each of which is, related to

that corporation, together have a

substantial degree of power in a market;

the corporation shall be taken for the purposes

of this section to have a substantial degree of

power in that market.

(3) In determining for the purposes of this

section the degree of power that a body

corporate or bodies corporate has or have in a

market, the Court shall have regard to the

extent to which the conduct of the body

corporate or of any of those bodies corporate in

that market is constrained by the conduct of -

(a) competitors, or potential competitors, of

the body corporate or of any of those

bodies corporate in that market; or

(b) persons to whom or from whom the body

corporate or any of those bodies corporate

supplies or acquires goods or services in

that market.

(4) In this section:

(a) a reference to power is a reference to

market power;

(b) a reference to a market is a reference to

a market for goods or services; and

(c) a reference to power in relation to, or to

conduct in, a market is a reference to

power, or to conduct, in that market

either as a supplier or as an acquirer of

goods or services in that market.

...

(7) Without in any way limiting the manner in

which the purpose of a person may be established

for the purposes of any other provision of this

Act, a corporation may be taken to have taken

advantage of its power for a purpose referred to

in sub-section (1) notwithstanding that, after

all the evidence has been considered, the

existence of that purpose is ascertainable only

by inference from the conduct of the corporation

or of any other person or from other relevant

circumstances."

[162]

138. There is a high level of competition in the relevant market in this case. As mentioned earlier, the existence of barriers to entry is a crucial factor when considering market power. It is only when for some reason it is not rational or possible for new entrants to participate in the market that a corporation can have market power. In the market for the provision for livestock selling services, potential entrants face an initial legal barrier, that is, if they wish to be able to auction stock on behalf of their clients, they must hold the relevant licence under the Auctioneers and Agents Act 1971 (Qld). Once this is obtained, in my view, there are no significant barriers to entry in the market for the provision of livestock selling services in the Goondiwindi district. No barriers to entry result from large economies of scale such as where the economies of scale in a market are such that the minimum size for an efficient firm is very large relative to the market and potential competitors will be dissuaded from entering the market by the apprehension that only one firm would survive. Indeed, the evidence shows that Mr Dowling is a member of and player in the market and he has himself attained his market share by attracting clients from the three respondents since his entry into the market in 1985. Mr Dowling seems to have done particularly well in sheep sales and, although it is not clear, it appears from questions put to Mr McCormack, the manager of Dalgetys' Goondiwindi branch, that he may match or even better the sheep sales of at least Dalgetys and Elders. Mr Dowling also gave evidence that he believed that many producers have a preference for an independent agent as distinct from the pastoral houses, so it seems that there is some advantage in the smaller size of his business and its more personal nature. The only possible barrier to entry to Mr Dowling is full access to the mechanism of selling livestock by auction at the Goondiwindi Saleyards. This is most significant with respect to the sale of store cattle in the Goondiwindi district as (and again the evidence is not clear) it seems that, approximately and on average over the last six years, 50% of all cattle sold in the district are store cattle sold at auction. The lack of full access to the Goondiwindi Saleyards is less significant in the sale of other livestock. Fat cattle are more commonly sold in private sales, but nevertheless are sold in significant numbers by auction at the Goondiwindi Saleyards. Sheep are sold by auction at the Goondiwindi Saleyards, but are more commonly sold in on-property auctions and private sales.

At a glance

Court

Decision date

Before

Source

Judgment (191 paragraphs)

Parties

Legislation Cited (7)

Cases Cited (22)

Re Desmond Walter Dowling v Dalgety Australia Limited; Elders Ixl Ltd; Australian Mercantile Land and Finance Company Ltd; Austest Company Ltd and Primac Association Ltd [1992] FCA 35; (1992) 14 Atpr 41-165 (1992) 106 Al (10 February 1992)