Trade Practices Commission v the Gillette Company; Wilkinson Sword Limited; Wsgal Pty Limited

Trade Practices Commission v the Gillette Company; Wilkinson Sword Limited; Wsgal Pty Limited - [1993] FCA 496 - FCA 1993 case summary — Zoe

[59]

11. Where paras. (a) and (b) of Order 8 rule 2(2) are satisfied (and I do not understand the contrary to have been argued here), the question on which everything must turn is whether "the applicant has a prima facie case for the relief which he seeks" within para. (c). In Amust Computer Corporation Pty Ltd v. Australia Entre Business Centres Pty Ltd (No. 2) (1987) 9 ATPR 48,945 at 48,949, Jenkinson J drew attention to the use in the paragraph of the expression "a prima facie case", without expressing a firm view as to its effect. In my opinion the requirement of a prima facie case is critically important. Under a rule in somewhat less precise terms, requiring that "it shall be made sufficiently to appear to the court or judge that the case is a proper one for service out of the jurisdiction under this Order", the House of Lords in Vitkovice Horni a Hutni Tezirstvo v. Korner (1951) AC 869 found some difficulty, as Lord Simonds confessed (at 879), in stating "precisely what test must be passed". Their Lordships discussed whether a prima facie case would be sufficient, and Lord Simonds (at 880) appeared to accept the expression "a good arguable case" as appropriate, while Lord Radcliffe (at 883) asked whether "on consideration of all admissible material there remains a strong argument for the opinion that the qualifying conditions are indeed satisfied". Whatever the precise test, there can be no doubt that a judge must bear in mind the considerable consequences of an assertion of jurisdiction in such a case, when deciding whether the test has been satisfied. But the well known discussion in Korner makes it very probable that the adoption of the rule referring to a "prima facie case" followed careful deliberation about the matter, and that test should be faithfully applied. At the same time, I agree with Heerey J in Merpro Montassa Limited v. Conoco Specialty Products Inc [1991] FCA 70; (1991) 28 FCR 387 and French J in State of Western Australia v. Vetter Trittler Pty Ltd (In liq) (Receiver and Manager Appointed) (1991) 30 FCR 102 at 109-110 that para. (c) does not envisage "the kind of scrutiny that would occur in a submission of no case to answer following the closure of an applicant's case at trial". As French J put it, "a prima facie case is made out if, on the material before the court, inferences are open which if translated into findings of fact, would support the relief claimed." This approach follows, I think, from the fact that para. (c) is concerned with "a prima facie case for the relief" sought, and with the grant of "leave to serve originating process", not with the terms of the statement of claim. Having regard to Order 4 rule 1, the originating process must mean, at least primarily, the application; it is not an apt expression to refer to a statement of claim.

[85]

"Moreover, s. 45D(1) falls within Pt IV of the Act, the

general purpose and scope of which have been described by

Deane J as containing 'provisions which proscribe and

regulate agreements and conduct and which are aimed at

procuring and maintaining competition in trade and commerce':

Refrigerated Express Lines (A/asia) Pty. Ltd. v. Australian

Meat and Live-stock Corporation (No. 2) [1980] FCA 38; (1980) 44 FLR 455,

at p 460; [1980] FCA 38; 29 ALR 333, at p 340. The evident purpose and

policy underlying this Part of the Act recommends a broad

construction of its constituent sections. In a similar

context, the United States Supreme Court has stated:

'It has been said, of course, that the antitrust laws,

and Robinson-Patman in particular, are to be

construed liberally, and that the exceptions from

their application are to be construed strictly. ...

Because the (Robinson-Patman) Act is remedial, it is

to be construed broadly to effectuate its purposes':

Abbott Laboratories v. Portland Retail Druggists

Assn., Inc. [1976] USSC 43; (1976) 425 US 1, at pp 11-12.

(See also United States v. McKesson & Robbins (1956) 351

US 305, at p 316; Perkins v. Standard Oil Co. (1969) 395

US 642, at p 647.) Section 45D(1) may similarly be

described as being of remedial legislative character and

accordingly 'should be construed so as to give the fullest

relief which the fair meaning of its language will allow':

Bull v. Attorney-General (N.S.W.) [1913] HCA 60; (1913) 17 CLR 370, at

p 384, per Isaacs J. See also Samuel v. Newbold (1906)

AC 461, at p 467; Wilson v. Moss [1909] HCA 7; (1909) 8 CLR 146, at

p 165; Holmes v. Permanent Trustee Co. of New South Wales

Ltd. [1932] HCA 1; (1932) 47 CLR 113, at p 119; Waugh v. Kippen

[1986] HCA 12; (1986) 160 CLR 156, at p 164. My comments in another

context are equally applicable to this case:

'It is reasonable to impute to Parliament an intention

that the provision, which is a protective provision,

be given "the widest possible scope"': Day & Dent

Constructions Pty. Ltd. v. North Australian

Properties Pty. Ltd. [1982] HCA 20; (1982) 150 CLR 85, at p 108.

This is so even though a person or a body corporate

contravening the section will be liable for pecuniary

penalties of $50,000 and $250,000 respectively (s. 76): cf.

Waugh v. Kippen (1986) 160 CLR, at pp 164-165."

[91]

25. In the European Economic Community, the more recent of the two "leading cases for the control of mergers under ARTICLES 85 and 86 of the EEC Treaty" (Rowley and Baker, International Mergers The Antitrust Process (1991) 14) is British American Tobacco Company Ltd v. Commission of the European Communities (1987) ECR 4,487; (1988) 4 CMLR 24. In the report of that case, the distinction is repeatedly made between the acquisition of a direct investment in another undertaking and the acquisition of an indirect investment in another undertaking. (Of course, it must be recognized that the E.E.C. Merger Control Regulation is concerned, inter alia, as Article 3 makes clear, with the acquisition of "direct or indirect control" of an undertaking, whether by purchase of securities or assets or by other means, being thus somewhat further removed from s. 50 than is s. 7 of the Clayton Act.) The case concerned two different agreements, by the former of which (made in 1981) Philip Morris Incorporated acquired a substantial interest in a company having a majority holding in Rothmans International (also referred to as Rothmans). By the second agreement (made in 1984) Philip Morris agreed to transfer back the shares acquired under the earlier, and acquired instead a significant shareholding in Rothmans International. Referring to the agreement of 1981, the opinion of the Advocate General, Mr Mancini (at 4556), described it as involving a transfer to Philip Morris "indirectly (of) a 21.9% share of the profits of its competitor, Rothmans". The judgment of the Court of Justice of the European Communities (at 4,568) expressed the same view of the matter. It went on (at 4,569) to use the expression "indirect shareholdings in Rothmans International", and described the 1984 agreement as having the effect that "Philip Morris abandoned its shareholding in (the holding company) in exchange for a direct shareholding in Rothmans International". (See also Downes and Ellison, The Legal Control of Mergers in the European Communities (1991), pp 46-47.)

[99]

"The First Acquisition

8. On or about 20 December 1989 or some time thereafter

Gillette acquired, or alternatively secured a

conditional right to acquire, directly, or

alternatively indirectly, an interest in the business

and thereby acquired directly an equitable interest

in the assets of the business including the trade

marks, patent rights distribution rights and goodwill

relating thereto.

9. The acquisition referred to in paragraph 8 ('the

First Acquisition') was effected by, inter alia:-

(a) a conditional purchase and sale agreement made

on 20 December 1989 whereby Stora Kopparbergs

Vergslage AG ('Stora'), a body corporate

incorporated in Sweden, agreed to sell to

Eemland Management Services BV ('Eemland'), a

body corporate incorporated in the Netherlands,

certain assets of its subsidiaries, Swedish

Match BV or Swedish Match NV or Swedish Match

AB or one or more of them, including the world

wide business of Wilkinson Sword, which assets

included the business and the assets of the

business;

(b) a further agreement made on 20 December 1989

whereby Eemland agreed immediately on the

completion of the acquisition from Stora to

sell to Gillette assets of various shaving

businesses situated outside the European

Community, including the business ('the non-EC

Sale Agreement');

(c) an intellectual property, manufacturing and

distribution agreement made on 2 January 1990,

between, inter alia, Eemland, Wilkinson Sword

and Gillette;

(d) the satisfaction of the conditions referred to

in (a) above.

10. The First Acquisition occurred either:-

(a) on the execution on or about 20 December 1989

of the agreements referred to in paragraph 9(a)

and (b) above; or

(b) at a later time, not presently known to the

Applicant, but possibly in 1990, upon the

satisfaction of the conditions to which the

said agreements referred.

11. The First Acquisition included the acquisition of an

interest in the business and in the trade marks,

patent rights, distribution rights and goodwill of

the business which occurred in Australia by reason of

the situs of the trade marks, patent rights,

distribution rights and goodwill being Australia.

The Second Acquisition

12. At all material times prior to 8 October 1990 or

alternatively prior to 20 December 1990 Eemland was

the ultimate holding company of Wilkinson Sword and

WSGAL.

13. On 20 December 1990 WSGAL and its then holding

company, Platinumfire Pty Limited, a company

incorporated in Australia, entered into one or more

agreements whereby they or one of them agreed that on

completion (which took place on 29 January 1991 or

some time prior thereto) WSGAL's beneficial ownership

in the business was thereafter held for the benefit

of Gillette or a nominee of Gillette, and agreed to

transfer the business to such nominee as it might be

directed by Gillette upon satisfaction of certain

conditions.

14. By reason of the matters alleged in paragraphs 12 and

13 Gillette acquired directly or indirectly an

equitable interest in the business and each of the

assets of the business including the trade marks,

patent rights, distribution rights and goodwill of

the business ('the Second Acquisition').

15. The Second Acquisition occurred in Australia by

reason:-

(a) of WSGAL agreeing in Australia to hold its

beneficial ownership in the business for

Gillette or its nominee; or alternatively

(b) by reason of WSGAL transferring in Australia

the beneficial ownership in the business to

Platinumfire and Platinumfire thereafter

agreeing to hold that beneficial ownership in

the business for Gillette or its nominee; or

alternatively

(c) by reason of the situs of the business and its

said assets being in Australia; or

alternatively

(d) by reason of any combination of (a), (b) or (c)

above.

The Third Acquisition

16. By a deed of assignment dated 7 January 1991

Wilkinson Sword assigned to Gillette all trade marks

registered, applied for or used in Australia relating

to the business together with the goodwill of the

business concerned in the goods for which the trade

marks were registered and consented to Gillette being

entered on the Register of Trade Marks as the

subsequent proprietor of the said trade marks.

17. Thereafter Gillette applied to the Registrar of Trade

Marks for, and obtained registration of, its title to

the trade marks and cancellation of the registration

of WSGAL as registered user of the trade marks.

18. By reason of the matters alleged in paragraphs 16 and

17 Gillette acquired legal title to the trade marks

which acquisition occurred in Australia by reason of

the situs of the trade marks and, or alternatively,

the situs of the Register of Trade Marks, being in

Australia ('the Third Acquisition')."

[106]

39. Insofar as the applicant relies on evidence that, in various ways, Gillette has acknowledged the conduct of business in Australia by Gillette Australia and Gillette Management as its own conduct of business through them or either of them as its agents or instruments, a specific attack was mounted by counsel on the legal basis for such a view. He referred to Salomon v. A. Salomon and Company, Limited (1897) AC 22; Industrial Equity Limited v. Blackburn [1977] HCA 59; (1977) 137 CLR 567 at 577; Briggs v. James Hardie & Co Pty Ltd (1989) 16 NSWLR 549 at 576-577; Adams v. Cape Industries Plc. (1990) 1 Ch 433; and J.H. Rayner (Mincing Lane) Ltd v. Department of Trade and Industry (1989) 1 Ch 72 at 190 (though see also the last case at 251-252) as authorities against regarding the actions of a wholly owned subsidiary as the actions of its holding company. He submitted that the statements made on behalf of Gillette which were in evidence were attributable to loose colloquial usage, and should not be understood literally. However, the statements do not stand alone. They are supported by much evidence of the practical reality of Gillette's activities overseas, including in Australia. A large United States corporation would be expected to have in-house legal advisers knowledgeable in the law. The statements in question may have had their origin, not at all in loose colloquialism, but rather in a correct appreciation of the true legal position according to United States law, which is not significantly different in this respect from ours: Bulova Watch Company, Inc. v. K. Hattori & Co., Ltd. 508 F Supp 1322 (1981) at 1,333-1,334, per Weinstein CJ. (See also Amalgamated Wireless (Australasia) Ltd v. McDonnell Douglas Corporation (1987) 77 ALR 537 at 539-540; Spreag v. Paeson Pty Ltd (1990) 94 ALR 679 at 710-712; Ascot Investments Proprietary Limited v. Harper [1981] HCA 1; (1981) 148 CLR 337 at 354-355; Smith, Stone and Knight, Ltd. v. Lord Mayor, Aldermen and Citizens of the City of Birmingham (1939) 4 All ER 116; and Merchandise Transport Ltd. v. British Transport Commission (1962) 2 QB 173 at 202, per Devlin LJ.) It is a question of fact. For present purposes, what is important is that a prima facie case is raised, against which there has been neither qualifying or contradictory evidence, nor even argument in any detail upon the effect of the material before the Court.

[107]

40. Another specific matter put by Mr Campbell relates to that part of the amended statement of claim which pleads, as one basis on which Gillette is alleged to have carried on business in Australia, that Gillette's business has included the acquisition of other businesses throughout the world, including in Australia. Mr Campbell says this is no basis on which an allegation of contravention of s. 50 can be asserted. For s. 4(4)(b) excludes from the definition of acquisition, in relation to assets, "an acquisition in the ordinary course of business". If Gillette's business includes acquiring other businesses, says counsel, its acquisition of the business of the supply of "Wilkinson Sword" razors within Australia must have been in the ordinary course of its business. But the exclusion does not refer to the ordinary course of the acquirer's, or anyone else's, particular business - it refers to "the ordinary course of business". Cf. Taylor v. White [1964] HCA 11; (1964) 110 CLR 129 at 136. The origin of the exclusion, and the reason for it, are both made plain in Areeda and Turner, Antitrust Law (1980) vol. V pp 302 et seq., where it is stated that s. 7 of the Clayton Act was interpreted as not covering a purchase of an item "sold and purchased in the ordinary course of business", as, for example, a typewriter sold by IBM to General Motors. If the Trade Practices Act were interpreted in accordance with Gillette's argument, it would, as Mr Hilton pointed out, attack the amateur acquirer as a monopolist, while letting the professional and systematic acquisition of competing businesses strictly alone. This is hardly likely to have been the legislative intention. Significantly, s. 4(4)(a) of the Trade Practices Act does not except, from an acquisition of shares in the capital of a body corporate, an acquisition in the ordinary course of business. This omission underlines the conclusion that the United States learning on s. 7 of the Clayton Act was the source of the exception from s. 4(4)(b).

At a glance

Court

Decision date

Before

Source

Judgment (111 paragraphs)

Trade Practices Commission v the Gillette Company; Wilkinson Sword Limited; Wsgal Pty Limited (Formerly Wilkinson Sword Group Australia Limited); Registrar of Trade Marks [1993] FCA 496 (8 October 1993)

Parties

Legislation Cited (5)

Cases Cited (25)