Virgin Blue Airlines Pty Ltd v Australian Competition & Consumer Commission

statutory background 4 The relevant sections of the TP Act include: "50 Prohibition of acquisitions that would result in a substantial lessening of competition (1) A corporation must not directly or indirectly: (a) acquire shares in the capital of a body corporate; or (b) acquire any assets of a person; if the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in a market. … 80 Injunctions (1) Subject to subsections (1A), (1AAA) and (1B), where, on the application of the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute: (a) a contravention of any of the following provisions: (i) a provision of Part IV, IVA, IVB or V; (ii) section 75AU or 75AYA; (b) attempting to contravene such a provision; (c) aiding, abetting, counselling or procuring a person to contravene such a provision; (d) inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision; (e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or (f) conspiring with others to contravene such a provision; the Court may grant an injunction in such terms as the Court determines to be appropriate. … (1A) A person other than the Commission is not entitled to make an application under subsection (1) for an injunction by reason that a person has contravened or attempted to contravene or is proposing to contravene, or has been or is proposing to be involved in a contravention of, section 50, 75AU or 75AYA. … 81 Divestiture (1) The Court may, on the application of the Commission or any other person, if it finds, or has in another proceeding instituted under this Part found, that a person has contravened section 50, by order, give directions for the purpose of securing the disposal by the person of all or any of the shares or assets acquired in contravention of that section. … 87B Enforcement of undertakings (1) The Commission may accept a written undertaking given by a person for the purposes of this section in connection with a matter in relation to which the Commission has a power or function under this Act (other than Part X). (2) The person may withdraw or vary the undertaking at any time, but only with the consent of the Commission. (3) If the Commission considers that the person who gave the undertaking has breached any of its terms, the Commission may apply to the Court for an order under subsection (4). (4) If the Court is satisfied that the person has breached a term of the undertaking, the Court may make all or any of the following orders: (a) an order directing the person to comply with that term of the undertaking; (b) an order directing the person to pay to the Commonwealth an amount up to the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach; (c) any order that the Court considers appropriate directing the person to compensate any other person who has suffered loss or damage as a result of the breach; (d) any other order that the Court considers appropriate. … 88 Power of Commission to grant authorisations (1) Subject to this Part, the Commission may, upon application by or on behalf of a corporation, grant an authorization to the corporation: (a) to make a contract or arrangement, or arrive at an understanding, where a provision of the proposed contract, arrangement or understanding would be, or might be, an exclusionary provision or would have the purpose, or would have or might have the effect, of substantially lessening competition within the meaning of section 45; or (b) to give effect to a provision of a contract, arrangement or understanding where the provision is, or may be, an exclusionary provision or has the purpose, or has or may have the effect, of substantially lessening competition within the meaning of section 45; and, while such an authorization remains in force: (c) in the case of an authorization to make a contract or arrangement or to arrive at an understanding - subsection 45(2) does not prevent the corporation from making the contract or arrangement or arriving at the understanding in accordance with the authorization and giving effect in accordance with the authorization to any provision of the contract or arrangement so made or of the understanding so arrived at; (d) in the case of an authorization to give effect to a provision of a contract: (i) the provision is not unenforceable by reason of subsection 45(1); and (ii) subsection 45(2) does not prevent the corporation from giving effect to the provision in accordance with the authorization; or (e) in the case of an authorization to give effect to a provision of an arrangement or understanding - subsection 45(2) does not prevent the corporation from giving effect to the provision in accordance with the authorization." 5 Sections 82, 87 and 163A of the TP Act provide remedies other than divestiture which might be available to a person seeking to challenge an acquisition as contravening s 50 of that Act. 6 Section 5 of the ADJR Act gives standing to a "a person who is aggrieved by a decision to which this Act applies" in relation to applying for an order of review. The relevant portions of s 13 of that Act are as follows: "13 Reasons for decision may be obtained (1) Where a person makes a decision to which this section applies, any person who is entitled to make an application to the Court under section 5 in relation to the decision may, by notice in writing given to the person who made the decision, request him or her to furnish a statement in writing setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision. … (11) In this section, decision to which this section applies means a decision that is a decision to which this Act applies, but does not include: … (c) a decision included in any of the classes of decision set out in Schedule 2." 7 Included amongst the classes of decision that are not decisions to which s 13 applies by virtue of inclusion in Schedule 2 is the following: "(f) decisions in connection with the institution or conduct of proceedings in a civil court, including decisions that relate to, or may result in, the bringing of such proceedings for the recovery of pecuniary penalties arising from contraventions of enactments, and, in particular: (i) decisions in connection with the investigation of persons for such contraventions; (ii) decisions in connection with the appointment of investigators or inspectors for the purposes of such investigations; (iii) decisions in connection with the issue of search warrants or seizure warrants issued under Division 1 of Part XII of the Customs Act 1901 under enactments; and (iv) decisions under enactments requiring the production of documents, the giving of information or the summoning of persons as witnesses …" 8 The parties also referred to the merger guidelines issued by the ACCC. Among the relevant provisions of the guidelines are the following: "2.16 Under s 87B the Commission may accept a written undertaking in connection with a matter in relation to which it has a power or function under the Act, except Part X. If the undertaking is breached the Commission may seek orders from the Court directing compliance with the undertaking, the giving up of any financial benefit gained from the breach, compensation for any other loss or damage as a result of the breach, or any other appropriate orders. … 4.16 If the Commission concludes that a proposed acquisition would, or would be likely to have, the effect of substantially lessening competition, the Commission will advise the parties of its view. The parties may then take the following action: · abandon the proposal; · modify the proposal to address any of the likely anti-competitive consequences, either informally or formally by way of undertakings pursuant to s 87B of the Act (s 87B is discussed in Section 7); · apply for authorisation if the acquirer considers it may be able to establish that the proposal would result in a net public benefit (see Section 6); · take their own risk and seek to complete the acquisition; or · seek a declaration that the proposed acquisition does not contravene the Act. … 7.1 As stated in paragraph 2.16, s 87B allows the Commission to accept written undertakings in connection with matters where it has a power or function under the Act (other than Part X). 7.2 Undertakings pursuant to s 87B are one of the tools available under the Act to further its goals of improved competition and efficiency in markets. Undertakings pursuant to s 87B are a flexible alternative to simply opposing an acquisition where the Commission believes that the acquisition is likely to substantially lessen competition. 7.3 To date the Commission has accepted undertakings pursuant to s 87B of the Act from parties to an acquisition for either of two purposes: · to ensure that an acquisition is not completed until the Commission has had the opportunity to conduct the appropriate market inquiries; or · to resolve matters where the proposed acquisition is, in the Commission's view, likely to contravene the Act. 7.4 Where, following its inquiries into a proposed acquisition, the Commission forms the view that it is likely to substantially lessen competition in breach of s 50, it will provide the parties with reasons for that view. If the parties consider that undertakings could be offered to reduce or eliminate the stated concerns, they may choose to offer to the Commission undertakings aimed at restructuring the proposal in such a way as to address the competition concerns. 7.5 In these circumstances the offer of such an undertaking designed to address the competition concerns is a matter for strategic decision by the parties to the acquisition, and presumably will be considered along with other options open to the parties, for example challenging the Commission in court, seeking authorisation, revising the proposal without undertakings, or even abandoning the proposal. It is not the policy or practice of the Commission to demand such undertakings. … 7.16 The scope of a s 87B undertaking is potentially wider and the terms more flexible than a court imposed remedy. For example, the court may be reluctant to make other orders requiring ongoing monitoring and supervision by the court, whereas the Commission does have the resources and functions of an administrative agency and may be prepared to accept undertakings with an ongoing obligation. 7.17 The scope of s 87B undertakings that the Commission is likely to accept in the mergers context will be determined by the Commission's assessment of the anti-competitive effects of the merger. The test will be whether the arrangements envisaged by the proposed undertakings will address the reduction in competition. The focus is not necessarily on the assets to be acquired and this may mean that the Commission may accept an undertaking which is not directly related to the assets to be acquired where that is considered necessary to address the reduction to competition. … 7.25 The Commission may also need to assess the impact of third party rights and interests. Any merger will achieve some measure of structural change in a market and, therefore, any merger will be likely to impact on firms and consumers not party to the transaction. In its simplest terms, if a merger is anti-competitive it will have a direct impact on those parties dealing with the merged firm, whether in terms of increased prices or reduced service or quality. If a merger reduces competition in a market it may benefit rivals through lower competitive pressure and higher prices. 7.26 Just as any anti-competitive merger will have an impact on third parties, so too will any undertaking designed to address the anti-competitive consequences. Where the merger is likely to be anti-competitive the provision of undertakings to address that is likely to favour customers, but may remove the benefits that rival firms may have anticipated through the reduction in competition. 7.27 An assessment of these 'third party' interests is in effect subsumed within the general assessment of the competition effects of a merger and the capacity of the proposed undertakings to address those effects. 7.28 However, there may be other more specialised third party interests which need to be considered by the Commission and the merger parties. For example, merger parties which are proposing s 87B undertakings will need to consider their own obligations to third parties, for example whether the undertakings are consistent with existing contractual obligations with another party or whether the performance of the undertakings may give rise to some claim against the merger parties. 7.29 Generally it would not be appropriate for the Commission to conduct this assessment of the rights and obligations as between the merger parties and other third parties. Generally that will be a matter for the merger parties. However, in some cases where the presence of third party rights may give rise to a challenge to the s 87B undertakings or the undertakings being rendered impossible to comply with, it may be necessary for the proposed s 87B undertakings to make specific provision for those rights, for example by way of indemnification of the affected third party. This is likely to arise only in rare cases."

facts 9 By 1 May 2001 there were four principal participants in the market for the provision of domestic air passenger transport service in the eastern states of Australia (and perhaps nationally) - Qantas by itself and its subsidiaries, Ansett Holdings Pty Limited ("Ansett") by itself and its subsidiaries, Impulse and Virgin. Impulse had commenced air passenger services throughout regional New South Wales in 1993 and expanded into trunk route services on the east coast of Australia in June 2000. Virgin, which is associated with the overseas Virgin Group, commenced its inaugural Sydney-Brisbane service on 31 August 2000. Melbourne-Brisbane, Adelaide and Townsville routes were added soon thereafter. Each of the new entrants, Impulse and Virgin, claimed to offer discount or cut-price fares compared with the long-standing incumbents, Qantas and Ansett. 10 On 1 May 2001 Impulse announced that it would withdraw from operating scheduled air passenger services under its own brand as of 14 May 2001 and intended to enter into the merger. The gist of the merger was described in a Qantas press release as follows: "- Impulse contracting to Qantas its eight Boeing 717 and 13 Beechcraft 1900D aircraft, complete with pilots and cabin crew; - Impulse operating Boeing 717 services for Qantas, under the Qantas brand and livery, to primarily leisure destinations, including Gold Coast, Maroochydore and Hamilton Island and also between Melbourne and Hobart; - Continuing the Impulse Beechcraft services to Canberra and Newcastle; - Impulse operating new services for Qantas to regional ports where Qantas does not currently operate; - Qantas loaning funds to allow Impulse to buy back its institutional shareholders' shares and provide working capital." 11 On 3 May 2001 the ACCC communicated with Virgin, reciting the merger as described in the Qantas press release and advising that the ACCC was conducting market inquiries as to whether the merger was likely to raise competition concerns under ss 45 or 50 of the TP Act. The ACCC also requested a meeting with the Chief Executive Officer of Virgin to discuss the matter and invited Virgin to provide written submissions "in relation to the proposed arrangements" by 7 May 2001. 12 On 4 May 2001 there was a meeting between Virgin's representatives and representatives of the ACCC. The position of Virgin's representatives was that the merger should not go ahead. Submissions were not made as to, and, indeed, Virgin's representatives were not asked about, any possible undertakings which Qantas might give to alleviate competition concerns. 13 On 8 May 2001 the solicitors for Virgin lodged a submission with the ACCC. On the same day a paper was prepared by staff of the ACCC ("the ACCC Staff Paper") providing what was called a "preliminary analysis of competition issues arising from the proposal". I shall return to that paper in due course. 14 On 9 May 2001 the Chief Executive Officer of Virgin requested a meeting with the Chairman of the ACCC. On that day, and without any such meeting, the ACCC decided that, subject to Qantas/Impulse entering into satisfactory undertakings, it would not oppose the proposed arrangement. 15 On or about 17 May 2001 the ACCC purported to accept an undertaking from Qantas pursuant to s 87B of the TP Act. Omitting definitions, the substance of the undertaking provided by Qantas was as follows: "2 BACKGROUND 2.1 Qantas and its Related Companies operate air passenger transport services throughout Australia and internationally. 2.2 Impulse Holdings operates air passenger transport services throughout Australia through its wholly owned subsidiary, Impulse Airlines. It operates on regional routes and domestic trunk routes, including routes to and from Sydney Airport. 2.3 Qantas, Impulse Holdings and Impulse Airlines are to enter into the Commercial Arrangements under which Qantas will: (a) provide funding to Impulse Holdings by way of loan; (b) subscribe for a 'Golden Share' in the capital of Impulse Holdings which will entitle Qantas (as holder) to: (i) exercise 25% of the votes that may be cast at general meetings of Impulse Holdings; and (ii) appoint one of the directors of Impulse Holdings; (c) obtain an exclusive wet-lease of the aircraft fleet operated by Impulse on specified terms; (d) be granted options to subscribe for ordinary shares in the capital of Impulse Holdings on specified terms; and (e) be granted call options and accept put options to acquire ordinary shares in the capital of Impulse Holdings from specified shareholders on specified terms. 2.4 The Commission has expressed concerns that the Commercial Arrangements may breach section 50(1) of the Act. In particular, the Commission is concerned that an effect of the Commercial Arrangements will, through control of the Impulse Slots, enable Qantas to hinder Virgin Blue and/or prevent the entry of a New Entrant. Qantas does not agree with the concerns expressed by the Commission, but has nevertheless agreed to provide the following undertakings to overcome the Commission's concerns. 3 UNDERTAKINGS 3.1 SLOTS Qantas is willing to offer an undertaking in relation to Slots to address any concerns held by the Commission as a result of the Commercial Arrangements. Qantas believes that, from a competition perspective, the only significant concern affects the use of Peak Hour Slots as a barrier to new entry on routes ex-Sydney, particularly the Sydney-Melbourne route. To address that concern: (a) Qantas will take no action inconsistent with these undertakings which would hinder or prevent the Impulse Slots being available for use by Virgin Blue or a New Entrant; (b) Should Virgin Blue apply at any time to the Slot Manager for Peak Hour Slots in order to provide Sydney-Melbourne services and be advised by the Slot Manager that insufficient Peak Hour Slots are available to meet Virgin Blue's application, then Qantas will promptly co-ordinate with Virgin Blue and the Slot Manager to effect the timely hand-back of Peak Hour Slots specified in Part 2 of the Confidential Schedule sufficient to meet Virgin Blue's requirements so that Virgin Blue obtains those slots for its use as soon as is reasonably possible (but within four months), provided that Qantas' obligation under this undertaking is limited to the hand-back of the twelve Peak Hour Slots specified in Part 2 of the Confidential Schedule; (c) Subject to the condition specified in Part 4 of the Confidential Schedule, if any New Entrant applies at any time to the Slot Manager for Peak Hour Slots in order to provide interstate domestic trunk services and is advised by the Slot Manager that insufficient Peak Hour Slots are available to meet the New Entrant's application, then Qantas will promptly coordinate with the New Entrant and the Slot Manager to effect the timely hand-back of Peak Hour Slots specified in Part 3 of the Confidential Schedule sufficient to meet the New Entrant's requirements so that the New Entrant obtains those slots for its use as soon as is reasonably possible (but within four months), provided that Qantas' obligation under this undertaking is limited to the hand-back of the sixteen Peak Hour Slots specified in Part 3 of the Confidential Schedule. This undertaking 3.1 will continue for a period of 3 years from the Financial Completion Date and is subject to the confidential conditions specified in Part 4 of the Confidential Schedule. 3.2 SERVICES For two years from the Financial Completion Date, Qantas will ensure that a Qantas service will continue to be provided on routes which, as at 1 May 2001, were serviced exclusively by both Qantas and Impulse. The service, having regard to both frequency and capacity, to be provided by Qantas on any such route will be equal to or better than the service being provided by either Qantas or Impulse (whichever provided the more frequent service) as at 1 May 2001. In the event that a competitor provides a service on a route referred to in this undertaking, the service being provided by Qantas can be reduced to the extent of the service being offered by the competitor (having regard to frequency and capacity). 3.3 PRICING For two years from the Financial Completion Date, Qantas will ensure that on any route currently operated only by Qantas and Impulse, the full economy fare and 14 day advance purchase discount fare will not increase by more than the Consumer Price Index (Transport Group). This undertaking ceases in respect of a specific route upon a competitor commencing services on that route. Notwithstanding the above, fares may be increased: (a) as part of a network wide increase implemented by Qantas; or (b) to pass on any increase in charges (including but not limited to landing charges) by an airport operator at a relevant airport for the use of those airports by Qantas or Impulse. 3.4 MUDT Qantas also understands that the Commission may be concerned that there is insufficient domestic terminal space at the MUDT to enable a New Entrant to provide services. Impulse currently has a lease over part of the MUDT at Sydney Airport. Qantas undertakes that, if a New Entrant requires domestic terminal space at the MUDT in order to commence and carry on domestic services and SACL is willing to lease that terminal space to the New Entrant, Qantas will (to the extent it or Impulse has any lease at the MUDT) co-operate with SACL to ensure that adequate terminal space is made available at the MUDT to that New Entrant for that purpose. This undertaking will continue for a period of 3 years from the Financial Completion Date. 4 ANCILLARY MATTERS 4.1 Amendment to Slot Management Scheme Qantas and the Commission will review these undertakings and negotiate in good faith the variation or revocation of all or any of the undertakings if the Sydney Airport Demand Management Act 1997 or the Slot Management Scheme are amended, or the sale of Sydney Airport is implemented, in such a way as to alter the impact or effect of these undertakings on Qantas or its related companies or the operations of Impulse during the term of these undertakings having regard to the need to maintain and promote competition in the market or markets in New South Wales and Australia for air passenger transport services. …" 16 The undertakings sufficiently describe the merger for present purposes. 17 Some parts of the ACCC Staff Paper were as follows: "Competition analysis: The proposed arrangements are likely to result in the increased operational flexibility of Qantas; access to a low cost operational structure; and achieving operational flexibility and a low cost structure substantially faster than organic growth would normally allow, making it difficult for competitors to respond. … Competition concerns: Staff are of the view that the proposed arrangements may result in a unilateral exercise of market power by Qantas or the coordinated exercise of market power by Qantas/Impulse and Ansett. Possible means of Qantas and market participants have raised the possibility of divesting peak slots at Sydney Airport to address any competition concerns. This would facilitate entry by Virgin Blue into the lucrative Melbourne-Sydney route. It may also be possible to seek divestiture of other key assets, such as some of Impulse's aircraft. addressing competition concerns:

Other issues: Other issues to be addressed include: the exit of Impulse from the industry and the distribution of its assets may enhance the competitive position of Virgin Blue and Ansett; … Conclusion: Staff are of the view that on the basis of the preliminary analysis, the proposed arrangement raises competition concerns. Further, the proposed arrangement appears to offer the least desirable outcome." 18 The contemporaneous submissions on behalf of Virgin to ACCC and the evidence of Mr Scott Swift (Head of Contracts and Projects of Virgin), some of which was admitted over the objection of counsel for the ACCC, expressed the opinion that the merger would lead to Qantas obtaining advantages vis-ŕ-vis Virgin in the market beyond the provision of slots. He also gave evidence regarding concern about slots which goes beyond the effect of the undertakings in question. A slot is an allocated time at which a take-off or landing from a runway may take place at a specified time on a specified day. 19 I am satisfied from the ACCC's Staff Paper and the evidence of Mr Swift which was not objected to, confirmed by the opinion evidence of Mr Swift which I admitted, that there are issues relating to the merger which have a possible adverse impact upon Virgin which are not dealt with by the undertakings which were accepted by the ACCC pursuant to s 87B of the TP Act. That is all that needs to be said for the purposes of the present preliminary questions. In saying this, I do not intend to express a view one way or the other as to whether, or to what extent, those issues would need to be addressed to avoid breach of s 50 (or s 45) of the TP Act.

Arguments of the parties 20 The gist of the comprehensive written and oral submissions of the parties can be sufficiently gleaned from the following summary.

Standing 21 Neither counsel suggested that there was any difference in substance between the test for standing pursuant to s 5 of the ADJR Act on the one hand and under s 39B of the Judiciary Act on the other. The first test contended for by counsel for the ACCC is that an applicant for review must be able to show that it is affected by the decision in such a way as to be worse off as a result of the decision or better off if the relief sought were granted and the decision was set aside. He submitted that it is necessary to focus upon the actual decision which is put in issue, which, in the present case, was the acceptance of an undertaking in the terms in which it was offered. The relevant decision of the ACCC was not its refraining from commencing proceedings pursuant to s 80 of the TP Act to restrain the arrangements between Qantas and Impulse. Neither was it a decision by the ACCC to refrain from obtaining undertakings more favourable to Virgin than those which were offered. It was submitted that, looked upon in this light, acceptance of the undertakings (presumably compared with doing nothing) was wholly favourable to Virgin as it obtained for it some concessions in relation to slot times which Virgin otherwise would not have received. Put another way, refusal to accept the undertakings would not have advantaged Virgin. Reference was made to Maritime Union of Australia v Anderson (2000) 100 FCR 58 (at 77-78) and Transurban City Link Ltd v Allan (1999) 95 FCR 553 (at 564-565). 22 Counsel for Virgin, whilst submitting that the test was wider than the test contended for on behalf of the ACCC, argued that, in any event, the test was met. It was submitted that if the ACCC had rejected the proffered undertakings then there are a number of things which Qantas and Impulse might have done, as is recognised in par 4.16 of the ACCC's merger guidelines. For instance, consistently with the contractual arrangements between Qantas and Impulse, in the absence of approval by the ACCC, the merger may have been abandoned, leaving Impulse to go to the wall, or the parties could have offered alternative undertakings having a more favourable impact upon Virgin than those which were proffered. Counsel also pointed to the evidence as to the effect the merger might have upon competition, including competitive effects going beyond the items dealt with by the proffered undertakings and, indeed, involving problems as to slots not dealt with by the undertakings which were proffered. The issue as to whether the ACCC would take proceedings pursuant to s 80 of the TP Act in the absence of the proffered undertakings was simply part of a much larger picture. In making the same point in relation to standing pursuant to s 39B of the Judiciary Act, counsel made reference to Australian Conservation Foundation Inc v Commonwealth (1980) 146 CLR 493 (at 511) ("Australian Conservation Foundation"), Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 (at 612) and Onus v Alcoa of Australia Ltd (1981) 149 CLR 27 (at 75-76). 23 The second contention of counsel for the ACCC was that the TP Act, when read as a whole, is inconsistent with the availability of judicial review in relation to acceptance of an undertaking pursuant to s 87B. Reference was made, in particular, to the judgment of Gummow J in Right to Life Association v Department of Human Services (1995) 56 FCR 50 (at 84-85), which incorporates a reference to Alphapharm Pty Ltd v SmithKline Beecham (Australia) Pty Ltd (1994) 49 FCR 250 ("Alphapharm") and Bateman's Bay Local Aboriginal Land Counsel v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 ("Bateman's Bay") (at 266). Counsel for the ACCC pointed in particular to two features of the legislative scheme. 24 The first feature is that Parliament has vested in the ACCC alone entitlement to make an application for an injunction in respect of a breach or prospective breach of s 50 of the TP Act. It is put that the legislative rationale for that limitation, according to the Second Reading Speech of the Trade Practices Legislation Amendment Bill 1992 (Cth) (Hansard, House of Representatives, 3 November 1992, AGPS, Canberra) ("the Second Reading Speech") (referred to by Heerey J in QIW Retailers Ltd v Davids Holdings Pty Ltd (No 1) (1992) 36 FCR 386 (at 388)) was that: "The availability of the injunctive remedy on the application of private persons and companies gave a powerful tool to opponents of the merger. It has been used as a device to defeat mergers, during the tactical battle between the parties, for reasons quite unrelated to competition." It is submitted that it is unlikely, in that context, that the Parliament would have intended that commercial competitors should have standing to unsettle merger arrangements by an attack upon administrative decisions of the ACCC. 25 The second feature of the scheme relied upon was that the open standing provisions of the TP Act manifest a legislative intention to provide commercial competitors with a full opportunity to obtain relief in relation to any breach of s 50, including divestiture. Acceptance of the undertakings does not inhibit the exercise by Virgin of all the rights it has pursuant to the TP Act. Counsel for the ACCC referred to the Second Reading Speech on the introduction of s 87B of the TP Act, but this adds little to the present debate because of the generality of the section. I should say that no question was raised as to the validity of s 87B. 26 Counsel for Virgin submits that the present statutory scheme is quite distinct from cases such as Alphapharm, and relies upon the decision of Lehane J in Boots Company (Australia) Pty Ltd v SmithKline Beecham Health Care Pty Ltd (1996) 65 FCR 282 (especially at 287 and 289) in which each of that decision and Big Country Developments Pty Ltd v Australian Community Pharmacy Authority (1995) 60 FCR 85 were explained by his Honour as involving a commercial interest of the applicant which was irrelevant to the scheme of the statutory provisions and to the statutory object or purpose. It is submitted that the statutory objective of the TP Act is to enhance the welfare of Australians through the promotion of competition and fair trading (s 2 of the TP Act) and in the present case the subject matter of the review is the decision by the ACCC to accept undertakings which purport to address competition concerns regarding the effect of the proposed merger. It is submitted that the argument based upon the exclusive reservation to the ACCC of the right to bring s 80 proceedings in relation to a breach of s 50 loses its force when it is appreciated that s 80 is not an exhaustive remedy. It is suggested that this supports, rather than detracts from, the view that the right of competitors to seek redress in relation to the contravention of s 50 is not limited in the way suggested on behalf of the ACCC. The power to seek divestiture under s 81 of the TP Act gives commercial competitors standing to "unsettle merger arrangements" in any event. 27 In addition to answering the arguments of the ACCC, counsel for Virgin stressed the width of the concept of standing by reference to authorities such as Tooheys Ltd v Minister for Business & Consumer Affairs (1981) 54 FLR 421 (at 437), Ricegrowers Co-operative Mills Ltd v Bannerman (1981) 56 FLR 443 ("Ricegrowers") (at 447) and the decision of the High Court in Bateman's Bay , particularly in the joint judgment of Gaudron, Gummow and Kirby JJ at 265-268. It was submitted that Virgin had an interest which was not a mere intellectual or emotional concern and was not merely the satisfaction of righting a wrong, upholding a principle or winning a contest (see Australian Conservation Foundation at 530). 28 Counsel submitted that the authority closest to the present case was the judgment Aickin J in Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249. In the earlier case of Ansett Transport Industries (Operations) Pty Ltd v Commonwealth (1977) 139 CLR 54 the plaintiff (Ansett) commenced proceedings against the Commonwealth of Australia and the Secretary to the Department of Transport for an injunction to restrain them and each of them from granting or causing or permitting to be granted Air Express Ltd a permission in writing under the Customs (Prohibited Imports) Regulations. Air Express Ltd was a competitor of Ansett. Ansett gave an undertaking as to damages in order to obtain ex parte and interlocutory injunctions. Ultimately, the Full Court of the High Court dismissed the action. The proceedings before Aickin J were for damages pursuant to the undertaking as to damages. One of the issues which arose for determination in those proceedings was whether there was, at a particular point in time, any person authorised under the Customs (Prohibited Imports) Regulations to issue the relevant written permission. At 256 his Honour said: "Before I deal with the merits of the point I must note an objection raised by counsel for Air Express that Ansett had no locus standi to challenge the authority of the defendant, Halton, to issue that written permission. In my opinion there is no substance in this objection. It appears to me to be clear that Ansett had sufficient interest in the proper performance of the duties of those responsible for the administration of the relevant regulations to support its claim in these proceedings. It was affected in its private rights and had a greater interest than other members of the public. The relevant principle has recently been re-stated by four members of this Court in Robinson v Western Australian Museum (1977) 148 CLR 283 and it is sufficient to refer to the following passages: per Barwick CJ at page 293, per Gibbs J at pages 301-303, per Stephen J at pages 324-325 and per Mason J at pages 327-328. If the formulation in Anderson v Commonwealth (1932) 47 CLR 50 is to be preferred it is clear that Ansett was "more particularly affected" than other people, and in a manner different from the public generally. Accordingly, I am satisfied that it does have locus standi in relation to this point."

Reasons 29 Counsel for the ACCC submits that the decision to accept the undertakings was made "in connection with the institution and conduct of proceedings in a civil court" within the general words of par (f) of Schedule 2 to the ADJR Act. It is put that the ACCC Staff Paper makes clear that acceptance of the undertakings was an alternative to intervention by the ACCC to oppose the proposed merger. The only intervention which could be contemplated was intervention by way of initiating proceedings under the Act. That conclusion is said to be reinforced by the terms of the ACCC's merger guidelines. The ACCC has no statutory power to prevent such commercial arrangements being made, otherwise than by initiating proceedings in this Court. It is pointed out that under the ADJR Act "decision" includes "doing or refusing to do any other act or thing" (s 3(2)(g)), which, as a matter of ordinary usage, includes refusing to institute proceedings in a civil court. It was argued that s 13(11)(c) and par (f) of Schedule 2 of the ADJR Act explicitly contemplate that the proceeding in question may not yet have been instituted at the time of the decision to which the paragraph relates, for the opening words of par (f) extend to "decisions in connection with the institution … of proceedings". The same point follows from the use of the words "or may result in, the bringing of such proceedings". The opening words, it is submitted, extend beyond decisions to institute proceedings as such to include a wide range of matters before any decision has been made whether or not to institute the proceedings. It was also argued that the decision was "in connection with the investigation of persons for … contraventions" of the provisions of Pt IV of the TP Act within par (f)(i) (referring to Ricegrowers, particularly at 448-449). In this connection, as with previous arguments, counsel for the ACCC submitted that the relevant power or function for the purposes of s 87B(1) of the TP Act was that to initiate proceedings. The acceptance of an undertaking by virtue of that section was not a power or function in itself. 30 Counsel for Virgin puts in issue here, as he did in relation to other aspects of the argument, the exclusive link between s 87B and s 80 of the TP Act as a matter of law or of fact. If commercial parties put a proposal before the ACCC for its consideration pursuant to the ACCC's merger guidelines, each of the alternatives identified in the guidelines is a possible result, with the commencement of proceedings only being one of those possible results. This is reinforced in the present case, where the merger was conditional upon approval of the ACCC. Reference was made to Murphy v KRM Holdings Pty Ltd (1985) 8 FCR 349 (particularly at 351 and 354), Department of Foreign Affairs & Trade v Boswell (1992) 36 FCR 367 (particularly at 370, 376-377 and 383), Hatfield v Health Insurance Commission (1987) 77 ALR 103 (particularly at 109) and Collins & Dunn v Minister for Immigration & Ethnic Affairs (No 3) (1982) 5 ALN N3a.

Standing 31 I do not accept the ACCC's first basis for denying standing. In my opinion, even if it were correct to focus only upon the decision to accept the undertaking proffered, refusal to accept that undertaking would have created a new and different situation which might well work to the advantage of Virgin. The merger might not have gone ahead at all, either because of the attitude of the parties to it or because it might have been prevented by injunction of this Court on the application of the ACCC. This may have led to the collapse of Impulse, to the advantage of Virgin. It may have led to Virgin acquiring Impulse or all or some of its assets. Other undertakings more favourable to Virgin might have been proffered by Qantas and accepted by the ACCC. The proper comparison is not between what was obtained (indirectly) by Virgin by virtue of the undertaking on the one hand and nothing on the other, but between what was obtained by Virgin by virtue of the undertaking on the one hand, and what might have been the result if the undertaking were refused by the ACCC on the other. Whether the new and different situation would, in truth, be to the ultimate advantage of Virgin is not to the point. That is a hypothetical question involving nice commercial judgments which a court is not well-placed to make and which are certainly not appropriate to be made in assessing standing. Acceptance or otherwise of the undertaking proffered cannot be viewed in isolation from the commercial arrangements which the undertaking reflects. Virgin is a participant in the market and its fears as to the prejudice it will suffer are entitled to consideration. There is no sensible basis for concluding that the undertaking deals with all possible prejudice to Virgin arising out of the merger. Indeed, I have found to the contrary. 32 In any event, there is force in the submission for Virgin that the authorities establish that the real question is whether the interests of Virgin are affected by the decision over and above those of an ordinary member of the public. It may be possible to imagine circumstances in which there is a decision so obviously entirely favourable to a person that it can be said that the interests of that person are not relevantly affected and the person is not aggrieved. In my opinion, there is little scope for that approach in a commercial setting, where there are rarely unmixed blessings, and there is no scope for it in the present case. 33 The second basis advanced on behalf of the ACCC for denying standing, to my mind, involves a more difficult issue. Is the TP Act as a whole inconsistent with there being a right of judicial review of decisions pursuant to s 87B? There is certainly a respectable argument that the TP Act contemplates that the interests of commercial competitors of parties involved in transactions alleged to breach Part IV of the TP Act will be vindicated by substantive action by the competitor in relation to which it has standing, rather than by judicial review of decisions of the ACCC such as that involved in this case. However, in order to properly consider that issue, it is necessary to form a view as to the scope and purpose of s 87B when considered in the light of the TP Act as a whole. This seems to me to be inextricably bound up with the substance of the application for review. The issues of natural justice and the ascertainment of relevant and irrelevant considerations which form the grounds for the substantive claims for relief in this proceeding if not interdependent with, are closely related to, the assessment of the place of a competitor in the market in relation to a decision pursuant to s 87B which is relevant to a decision as to the standing of a competitor for the purposes of judicial review. For this reason, it is not appropriate to resolve the separate questions in advance of the hearing, at least without another suitable separate question (or questions) also being isolated.

Reasons 34 This conclusion means that the issue as to whether or not the decision here falls within par (f) of Schedule 2 to the ADJR Act might be moot, as the application of s 13(1) of that Act depends upon Virgin being a person which is entitled to make an application to the Court under s 5 in relation to the decision. The issue is not easy of resolution, as there is substance in the submissions of each side. As there is no practical utility in answering this question prior to answering the other questions, I will not do so.

conclusion 35 The separate questions will stand over for determination at the hearing, which, obviously, should be expedited. Costs are reserved. I reach this conclusion with some regret as the arguments advanced may be very close to those which are most important at the final hearing. It is also unsatisfactory that, if it turns out that an applicant does not have standing, a respondent has to suffer effectively being exposed to litigation to which it should not have been exposed. It is also unsatisfactory that an applicant seeking to obtain reasons may have to effectively fight the substance of the case without reasons to establish the right to reasons. These are unfortunate consequences of the fact that, as in so many areas of law, there is uncertainty in application of the test of standing. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.

Counsel for the Applicant: A Robertson SC with ST White

Solicitor for the Applicant: Gilbert & Tobin

Counsel for the First Respondent: SJ Gageler SC with NJ Williams

Solicitor for the First Respondent: Australian Government Solicitor

Counsel for the Second Respondent: TF Bathurst QC with J Griffiths

Solicitor for the Second Respondent: Minter Ellison

Date of Hearing: 3 September 2001

Date of Judgment: 6 September 2001