International Comparative Analysis of Private Rights of Access
A STUDY COMMISSIONED BY
INDUSTRY CANADA
COMPETITION BUREAU
(PDF: 501 KB)
R. Jack Roberts
Professor Emeritus
Faculty of Law
University of Western Ontario
R. J. Roberts & Associates
3044 Bloor Street West, Box 177
Toronto, Canada
M8X 2Y8
RESEARCH ASSISTANTS:
Andrew Chan
Christopher Cates
Patrick Smith
Osgoode Hall Law School
Toronto, Canada
Introduction
Executive Summary
AUSTRALIA
Introduction
I. Private Actions: Overview
1(a) Conduct Actionable by Private Parties
1(b) In Practice, the Kinds of Actions Private Parties Tend to Bring
1(c ) Where Private Actions are Commenced
1(d) Relative Number of Private to ACCC Actions
1(e) Length of Time Private Action in Place
II. Standing to Sue
2(a) Standing to Initiate a Private Action
2(b) Criteria Applied to Determine Standing
III. Remedies
3(a) Remedies Available to Private Litigants
(1) Injunctions
(2) Divestiture Orders
(3) Damages
(4) Representative, or Class, Actions
(5) Declarations
3(b) Remedies Available to the ACCC
(1) & (2) Civil Injunctions & Divestiture Orders
(3) & (4) Damages and Representative Actions
(5) Pecuniary Penalties
(6) Orders Prohibiting Managing Corporations
(7) Administrative Enforcement
3(c) Interim Remedies
3(d) Are Damages Awarded
3(e) Cost Awards in Private Actions
3(f) Comparison With Cost Awards in Public Actions
IV. The Role of the ACCC in Private Actions
4(a) Power to Bring Representative Actions
4(b) Right of Intervention in Private Actions
4(c) Takeover of Private Actions
4(d) Power to Confer Immunity - Exclusive Dealing Notifications
4(e) Power to Confer Immunity - Authorizations
4(f) Policy of ACCC Re Leaving Cases to Private Action
4(g) Availability of ACCC-Collected Information to Private Parties
V. Case Management and Efficiency of Proceedings
5(a) Caseflow Management
5(b) Alternative Dispute Resolution (ADR)
5(c) Consent Orders
5(d) Summary Judgment
5(e) Efficiency vs. Quality of Justice
5(f) Experience of the Federal Court with Private Actions
5(g) Contribution of Private Actions to Competition Jurisprudence
NEW ZEALAND
Introduction
I. Private Actions: Overview
1(a) Conduct Actionable by Private Parties
1(b) In Practice, the Kinds of Actions Private Parties Tend to Bring
1(c) Where Private Actions Are Commenced
1(d) Relative Number of Private to Commerce Commission Actions
1(e) Length of Time Private Action in Place
II. Standing to Sue
2(a) Standing to Initiate a Private Action
2(b) Criteria Applied to Determine Standing
III. Remedies
3(a) Remedies Available to Private Litigants
(1) Injunctions
(a) General
(b) Interim Injunctions
(c) Permanent Injunctions
(2) Divestiture Orders
(3) Damages
(4) Class Actions
(5) Declarations
(6) Other Orders
3(b) Remedies Available to the Commerce Commission
(1) Interim, Permanent and Mandatory Injunctions
(2) Cease and Desist Orders
(3) Pecuniary Penalties
(4) Orders Prohibiting Managing Corporations
(5) Divestiture Orders
(6) Administrative Enforcement
3(c) Are Damages Awarded
3(d) Cost Awards in Private Actions
3(e) Comparison with Costs Awarded in Public Actions
IV. The Role of the Commerce Commission in Private Actions
4(a) Power to Bring Representative Actions
4(b) Right of Intervention in Private Actions
4(c) Takeover of Private Actions
4(d) Power to Confer Immunity - Authorizations and Clearances
4(e) Policy Re Leaving Cases to Private Action
4(f) Availability of Commerce Commission Information to Private Parties
V. Case Management and Efficiency of Proceedings
5(a) Caseflow Management vs. Quality of Justice
5(b) Experience in High Court with Private Actions
5(c) Contribution of Private Actions to Competition Jurisprudence
UNITED KINGDOM
Introduction
I. Private Actions: Overview
II. The Role of the Office of Fair Trading in Private Actions
III. Case Management and Efficiency of Proceedings
IRELAND
Introduction
I. Private Actions: Overview
II. Standing to Sue & Remedies
2(a) Standing to Sue
2(b) Remedies
III. The Role of the Competition Authority in Private Actions
3(a) Power to Intervene, Etc., Representative Actions
3(b) Power to Confer Immunity for Legal Proceedings
3(c) Policy Re Leaving Cases to Private Action
3(d) Availability of Competition Authority Information to Private Parties
IV. Case Management and Efficiency of Proceedings
UNITED STATES
Introduction
I. Private Actions: Overview
1(a) Conduct Actionable by Private Parties
1(b) In Practice, the Kinds of Actions Private Parties Tend to Bring
(1) Generally
(2) Elapsed Time Between Initiation and Resolution
(3) Proportion Resulting in Consent Orders, Settlements, Etc.
(a) General Settlement Rates
(b) Specific to Tied Selling & Refusal to Supply
1(c) Where Private Actions Are Commenced
1(d) Relative Number of Private to Public Actions
1(e) Length of Time Private Action in Place
II. Standing to Sue
III. Remedies
3(a) Remedies Available to Private Litigants
(1) Treble Damages
(2) Interim and Permanent Injunctions
(3) Class Actions
3(b) Remedies Available to the United States
(1) Criminal Prosecution
(2) Damages
(3) Injunctions & Divestiture Orders
(4) Consent Decrees
(5) Cease and Desist Orders
(6) Civil Penalty for Violating Cease and Desist Orders
(7) FTC Temporary Restraining Orders, Etc.
(8) Administrative Enforcement
(a) Justice Department
(1) Corporate Leniency Policy
(2) Individual Leniency Policy
(3) Business Review Letters
(b) Federal Trade Commission
(1) Administrative Consent Orders
(2) Advisory Opinions
(3) Trade Regulation Rules or Guidelines
(c) Coordination Between FTC and Antitrust Division
3(c) Damage Awards
3(d) Cost Awards
3(e) Comparison with Costs Awarded in Public Actions
IV. The Role of the United States in Private Actions
4(a) Power to Bring Representative Actions
4(b) Right of Intervention in Private Actions
4(c) Power to Confer Immunity from Legal Proceedings
4(d) Policy of the United States Re Leaving Cases to Private Action
4(e) Assistance to Private Parties
V. Case Management and Efficiency of Proceedings
5(a) Caseflow Management and Alternative Dispute Resolution
5(b) Amendments to Discovery Rules
5(c) Summary Judgment, Groundless Litigation, & Offers of Settlement
5(d) Experience in the Courts with Private Antitrust Actions
5(e) Contribution of Private Actions to Antitrust Jurisprudence
COMPARATIVE ANALYSIS
Introduction
I. Enforcement Philosophy
II. Extent of Cooperative Enforcement
(1) Information Sharing
(2) Other Forms of Cooperation
III. The Distribution of Enforcement Power Between the Public and Private Sectors
IV. Prohibitions Most Suitable to Private Enforcement
V. Focus of Public Enforcement Activity
VI. Cost Reduction in Private Enforcement
(1) In General
(2) Antitrust -Specific Cost Reduction
VII. Governmental Oversight of Private Actions
(1) Intervention
(2) Immunization from Legal Proceedings
VIII. Preventing Strategic Use of Private Actions for Anticompetitive, Etc., Purposes
IX. Design Guidance: Effectiveness of Private Enforcement
(1) Detection
(2) Deterrence
(3) Compliance
(4) Compensation
(5) Guidance to the Business Community
The Competition Bureau requested me to provide the Commissioner of Competition with a written study comparing international practices and experience in the private enforcement of competition legislation. I was advised that the purpose of the study was to provide a guide for the appropriate design of a private right of access to the Competition Tribunal.
Five jurisdictions were selected to be studied: Australia, New Zealand, the United Kingdom, Ireland, and the United States. It was contemplated that the experiences with private actions in these jurisdictions would not only yield valuable insights into the types of anticompetitive conduct best suited to enforcement through the private sector, but also the causes of action and remedies that seemed most appropriate for private actions. In addition, it was anticipated that these jurisdictions' experiences would provide insights into safeguards, incentives and procedures needed to avoid frivolous or strategic litigation and resolve cases quickly and efficiently.
As envisioned by the Bureau, the study was to be structured as follows: It would have six chapters -- one for each of the five jurisdictions, and a final chapter making a comparative analysis of their laws, practices and experience relating to private enforcement. It was thought, with some justification as it turns out, that from the comparative analysis there would emerge a number of lessons to be learned to assist in the design of an efficient and effective private right of access to the Competition Tribunal.
The study herein not only honours the structure suggested by the Bureau, but also attempts in each of the chapters for the five jurisdictions to answer as completely as possible several specific questions posed by the Bureau. The questions called, inter alia, for information upon: the types of conduct actionable by the public and private sectors; kinds of actions actually filed; numbers of actions initiated by each sector; standing to sue; duration and cost of private actions; range of remedies available to the public and private sectors; availability of damage awards; practices re cost awards; relative success of private actions; means for public sector control of private litigation; governmental policies re leaving cases to private action; availability to private parties of investigation information; availability of case management procedures; use of other mechanisms to control strategic or frivolous litigation; and, the contribution of private actions to the development of competition law. Unless otherwise indicated, the study is current to June 1999.
The chapters on the five jurisdictions were structured to provide information in response to these questions as efficiently as possible. The Comparative Analysis chapter and the Executive Summary, however, follow a structure better suited to accommodate the flow of the analysis.
Table of Contents
The comparative analysis in the study has yielded the following results, which may be of considerable use in the design of a private right of access to the Competition Tribunal:
(1) Enforcement Philosophy:
While all of the jurisdictions in the study, except the United Kingdom, regard private actions as a desirable supplement to public enforcement, Australia and New Zealand have moved toward adopting a philosophy of cooperative enforcement in which the private sector is granted a larger role in protecting the public interest.
(2) Extent of Cooperative Enforcement:
Even in New Zealand, however, which has gone the farthest in this direction, cooperative enforcement has not advanced much beyond granting open standing to sue for injunctive relief and proposing to require the courts to give weight to the interests of all consumers in private interim injunction applications. There has been little cooperation in any of the jurisdictions in providing private access to information gathered in public investigations.
Most of the jurisdictions in the study provide some assistance to private parties who wish to file follow-on actions after the successful completion of a public sector case. The assistance usually takes the form of giving prima facie effect to the evidence or judgment of the court in the public sector action.
3) The Distribution of Enforcement Power Between the Public and Private Sectors:
The distribution of enforcement power is heavily weighted toward the public sector, primarily in its more formidable and far-reaching remedies and extensive administrative authority. In all jurisdictions, the public sector is empowered to recover formidable criminal or civil pecuniary penalties from violators. In every jurisdiction but Australia, which has a minor exception with respect to mergers, the same holds true for the power to obtain orders directing steps to be taken to restore competition, up to and including dissolution and divestiture. Finally, only the public sector has an established array of administrative powers. The United States and the United Kingdom include among these the power to issue cease and desist orders. New Zealand is proposing to do the same. The United Kingdom has even gone farther, granting the Director of the Office of Fair Trading the power to impose pecuniary penalties.
(4) Prohibitions Most Suitable to Private Enforcement:
Private actions have been found to be most useful in addressing anticompetitive conduct that:
- Has an impact upon market participants that they can readily detect; and,
- May be satisfactorily dealt with by obtaining interim or permanent injunctive relief.
This includes conduct which aims to exclude current or potential competitors and has an obvious economic impact upon them. Tied selling , exclusive dealing and refusal to deal would appear to be among the types of conduct that fit within these criteria. From the available data, they make up at least 40-50% of the private actions that are filed.
(5) Focus of Public Enforcement Activity:
In Australia, New Zealand, and the United States, public enforcement has become increasingly focused upon hard-core cartel activity, which includes price fixing, bid rigging, output limitation agreements and horizontal market division. These types of anticompetitive conduct are usually attended by a great deal of secrecy and are more successfully detected and remedied through public action. In the United States, detection rates have increased substantially as a result of its amnesty program. New Zealand is considering following suit.
Enforcement criteria published by some jurisdictions, such as Australia, New Zealand and Ireland, indicate that consideration of several additional factors might prompt public action in other areas. These factors include impact upon competition; deliberateness of the violation; potential precedential value of a decision; and, the absence of a private party with sufficient resources to address the conduct in a private action.
(6) Cost Reduction in Private Enforcement:
In most jurisdictions, efforts to reduce the duration and cost of litigation have taken place within the broader context of all complex civil litigation. Competition cases have been recognized as among the most complex in the judicial system. The courts in Australia, New Zealand, United Kingdom and the United States have taken or are taking several steps to help resolve the problems of duration and cost. These steps primarily involve the adoption of stringent caseflow management systems, including references to alternative dispute resolution, and streamlined discovery rules. The costs indemnity rule, which applies in all jurisdictions in the study but the United States, remains unchanged.
The only jurisdictions to propose specific cost-reduction measures for antitrust cases were Australia and New Zealand. The Australian Law Reform Commission proposed legislative changes to ensure that the Australian Competition and Consumer Commission was empowered to bring representative, or class, actions on behalf of small businesses and consumers. It also proposed to ensure that representative actions were available to permit consumer and business organizations to sue on behalf of their memberships. New Zealand proposed to alleviate the disincentives to public and private interim injunction actions by empowering the Commerce Commission to issue cease and desist orders.
(7) Governmental Oversight of Private Actions:
Of all of the jurisdictions in the study, only Australia expressly empowered its competition authority, the Australian Competition and Consumer Commission, to intervene in and even take over private actions. These powers have seldom, if ever, been used. The United States grants the public sector the right to intervene as amicus curiae, or "friend of the court" in appeals of private antitrust decisions. It only does so when there is a clear legal issue upon which the government wishes to be heard.
Every jurisdiction in the study except the United States empowers their competition authorities to immunize anticompetitive conduct from legal proceedings, so long as the conduct provides public benefits that outweigh its anticompetitive effects. These powers, however, have been little used to deprive potential private plaintiffs of their causes of action.
(8) Preventing Strategic Use of Private Actions for Anticompetitive, Unmeritorious or Frivolous Purposes:
Virtually every jurisdiction in the study recognizes that measures to improve antitrust enforcement through private actions must not, at the same time, permit the private sector to use the actions strategically for anticompetitive or unmeritorious purposes. This is the reason why Australia eliminated the private right of action for injunctive relief in merger cases. For this reason, too, New Zealand rejected the idea of turning to treble damage actions.
As it now stands, however, the courts of the various jurisdiction appear to be well equipped to deal with frivolous, unmeritorious or strategic litigation. They have at their disposal a wide variety of mechanisms to be used in filtering out such claims. The mechanisms range from mild procedural devices, like summary judgment, to harsh disciplinary responses, such as punitive cost orders.
(9) Design Guidance: Effectiveness of Private Enforcement:
Of the five key areas of enforcement -- detection, deterrence, compliance, compensation and business guidance -- private actions have been found to be most useful in the areas of detection, compliance and business guidance. They are particularly useful in the detection of anticompetitive conduct having an immediate impact upon market participants, such as tied selling, exclusive dealing and refusal to deal. Provided that interim injunctive relief or cease and desist orders can be made available on a relatively cheap, expedited basis, private actions can be effective in achieving compliance with competition law in these areas. Finally, despite their shortcomings in the areas of deterrence and compensation, private actions have provided valuable guidance to the business
community by helping to develop fundamental aspects of competition law in Australia, New Zealand, and the United States.
Table of Contents
AUSTRALIA
The general competition law of Australia is found in the restrictive trade practices provisions of Part IV of the Trade Practices Act (the Act).1Under the Act, private parties are entitled to sue for contraventions of these provisions in the Federal Court of Australia. Over the past twenty five years, private actions have made a substantial contribution to the development of Australian competition law.
The Act does not provide private parties with the same incentive to sue as the antitrust laws of the United States. As in most Commonwealth countries, private litigants are liable to pay the costs of the prevailing party. U.S.-style treble damages are not available. Private parties are limited to seeking single damages, declarations or injunctive relief. In merger cases, divestiture orders are available; however, injunctive relief is not. The preferred remedy of most private parties in Australia appears to be injunctive relief.
Class actions are also available to private parties. The representative action provisions of the Federal Court Act permit private parties to file class actions for, inter alia, trade practice contraventions, so long as seven or more persons have claims raising a substantial common issue of law or fact.
The activities of private parties in enforcing the trade practices provisions of the Act are complemented by those of the Australian Competition and Consumer Commission (ACCC). In 1995, the ACCC absorbed the Trade Practices Commission (TPC), which until then had enforced the trade practices provisions of the Act. The ACCC has a number of enforcement tools available to it, which include seeking court-enforceable undertakings, pecuniary penalties, civil injunctions, and divestiture orders. The ACCC also might arguably have the power to file representative, or class, actions seeking damages on behalf of small businesses or consumers.
The ACCC has a statutory right to intervene in most private actions, but this right seldom has been used. It also has the power to confer immunity from legal proceedings, including private actions, by means of devices called notifications or authorizations. Defendants in private actions, however, have not resorted to using these devices to escape their potential liability.
In deciding whether to pursue a particular matter or leave it to private action, the ACCC is influenced by several factors, including the potential for the action to become a significant deterrent; the promotion of compliance with the Act; and, the potential for achieving redress for those adversely affected by the conduct in question. The ACCC, however, does not readily share with private parties the information it may have collected in its investigations. Private parties must pursue the information using freedom of information requests or subpoenas.
The Federal Court of Australia has adopted several caseflow management procedures to minimize delays in litigation and provide parties with early hearing dates. It also has several specialist panels, including a specialist Competition Law Panel, to help speed the processing of competition cases. The goal of the Federal Court is to dispose of 98% of its cases within 18 months of commencement of proceedings. It seems to be recognized, however, that because competition cases are among the most complex proceedings to be dealt with by the court, the goal may not be achievable in this area.
Table of Contents
Under the Act, private actions are available for breaches of Parts IV (Restrictive Trade Practices), IVB (Industry Codes) and V (Consumer Protection) of the Act.2 Part IV, which contains the competition provisions of the Act, prohibits the following restrictive trade practices:
| Practice |
Section(s) |
Per se Illegal?3 |
|
1. Agreements substantially lessening competition |
45, 45B |
No |
| 2. Agreements with exclusionary covenants (Group Boycotts) |
45, 45D |
Yes |
| 3.(I) Horizontal Price Fixing Agreements Re Goods or Services |
45, 45A |
Yes |
| (ii)Exceptions from per se illegality: |
| (1) Joint Venture Pricing |
45, 45A(2) |
No |
| (2) Price Recommendations |
45A(3) |
No |
| (3) Buying Groups |
45A(4) |
No |
| 4. Secondary Boycotts by Trade Unions |
45D & E |
No |
| 5. Misuse of Market Power (Abuse of Dominance) |
46, 46A |
No |
| 6. Exclusive Dealing |
47 |
No |
| 7. Third Line Forcing (Tied Selling) |
47(7) - (9) |
Yes |
| 8. Resale Price Maintenance Re Goods |
48, Part VIII |
Yes |
| 9. Price Discrimination Re Goods |
49 |
No |
| 10.Mergers |
50, 50A |
No |
The bulk of these restrictive trade practices roughly correspond to those covered in the competition provisions of the Canadian Competition Act.4
Generally, the Act grants private parties the right to sue for injunctive relief and/or damages for contraventions of the above provisions.5 A private party may sue for injunctive relief in all but merger cases falling under § 50 of the Act. The exclusion for merger cases was enacted in the 1977 revisions to the Act.6
Private actions for damages are governed by § 82 of the Act. To be entitled to sue for damages, a private party must have suffered loss or damage as a result of the contravention. Only single damages are recoverable. A three-year statute of limitations in s§ 82(2) prevents recovery of damages incurred more than three years before commencement of the action.
At present, the published literature contains very little information about the kinds of actions that private parties currently tend to bring. The most recent study in this area, the Brunt study,7was published in 1990 and analyzed data from the year after proclamation of the Act, 1975, to 1989. It contained the following table showing the number and nature of the causes of action brought by the then Trade Practices Commission (TPC) and private parties from 1975 to 1980:8
Table 2 Causes of Action Reported by the TPC 1975-1980
|
No. of Cases Relying Upon Designated Cause |
|
|
Of Action |
|
|
Instituted |
Concluded |
| Causes of Actions |
TPC |
Private Party |
TPC |
Private Party |
| § 45 Price Fixing |
7 |
2 |
4 |
1 |
| § 45 Other Agreements |
4 |
42 |
3 |
7 |
| §§ 45D, 45E Secondary (and related) Boycotts |
1 |
37 |
1 |
11 |
| § 46 Monopolization |
2 |
20 |
1 |
4 |
| § 47 exclusive Dealing |
4 |
20 |
1 |
4 |
| § 48 R.P.M. |
13 |
5 |
11 |
3 |
| § 49 Price Discrimination |
0 |
11 |
0 |
1 |
| § 50 Merger |
1 |
2 |
1 |
0 |
| Other (unclassified or shot-gun) |
0 |
3 |
0 |
0 |
| All Causes |
32 |
142 |
23 |
31 |
The table shows that in the earlier years of the Act, private parties most often tended to bring actions alleging agreements substantially lessening competition, unlawful secondary boycotts9, monopolization, exclusive dealing, or price discrimination. While the vast majority of these actions were either settled or discontinued, most of the actions that were concluded by decision tended to involve the same practices.
The following table, derived from a brief survey of the Scaleplus website of the Australian Government10, indicates that anti-competitive agreements and exclusive dealing (including third line forcing, i.e., tied selling) now form the subject matter of most decisions in private actions11:
Calendar Year
| Practice |
90 |
91 |
92 |
93 |
94 |
95 |
96 |
97 |
98 |
99 |
Total: |
| Price fixing |
0 |
1 |
2 |
1 |
0 |
1 |
0 |
1 |
1 |
0 |
7 |
| Agreements substantially lessening competition |
5 |
7 |
5 |
5 |
3 |
3 |
5 |
5 |
11 |
0 |
49 |
| Misuse of market power |
0 |
0 |
1 |
2 |
0 |
0 |
1 |
0 |
0 |
0 |
4 |
| Exclusive dealing |
5 |
5 |
6 |
2 |
6 |
1 |
4 |
3 |
1 |
0 |
33 |
| Third line forcing (a subcategory of ex.deal'g) |
1 |
0 |
1 |
0 |
2 |
0 |
1 |
1 |
0 |
0 |
6 |
| Resale price maintenance |
0 |
1 |
1 |
0 |
1 |
0 |
1 |
1 |
3 |
0 |
8 |
| Price discrimination |
4 |
0 |
0 |
1 |
2 |
1 |
0 |
3 |
1 |
0 |
12 |
| Total Decisions: |
119 |
It must be borne in mind that the above table is based upon crude information. It merely reflects the number of interim and final decisions issued by the Federal Court involving causes of action based upon the above practices.12 It does not include the number of actions that were commenced and later settled, and hence may not be a reliable indicator of all of the practices that private plaintiffs might currently be targeting. The Australian Competition and Consumer Commission (ACCC) and the Australian Law Reform Commission (ALRC) have said, however, that more accurate information may soon become available. Commissioner Sitesh Bhojani of the ACCC recently indicated that a study of the judicial enforcement of Australian competition law was being prepared for the ACCC and likely would be published in March or April, 1999.13 The ALRC indicated that later in 1999, it would publish a comprehensive study of the adversarial system in Australia that would, inter alia, analyse the progress through the system of a number of private actions under Part IV of the Act.14
Civil actions under the Act, whether by private parties or the ACCC, are commenced in the Federal Court of Australia. Section 86 of the Act provides, in pertinent part, as follows:
86(1) Jurisdiction is conferred on the Federal Court in any matter arising under this Act in respect of which a civil proceeding has, whether before or after the commencement of this section, been instituted under this Part. ...
The jurisdiction of the Federal Court is exclusive of the jurisdiction of any other court, except for that of the High Court under § 75 of the Australian Constitution.15
The table that was reproduced from the Brunt study in § 1(b) of this paper, supra, shows that in the period 1975 - 1980, private parties instituted from three to four times as many causes of action as the then Trade Practices Commission (TPC).16 The number of causes of action that were actually concluded by private parties, however, came close to the number concluded by the TPC. The primary focus of the TPC was upon resale price maintenance and price fixing while the private actions focussed upon agreements substantially lessening competition, exclusive dealing and monopolization (misuse of market power).
No similar statistics are available for any more recent period. Our own brief survey of the Scaleplus website, however, may provide a crude indication of the litigation activity of the ACCC relative to that of private parties. The survey shows that in the period 1990-99, the following numbers of decisions were issued in causes of action instituted by the ACCC.
Calendar Year
| Practice |
90 |
91 |
92 |
93 |
94 |
95 |
96 |
97 |
98 |
99 |
Total |
| Price fixing |
0 |
3 |
0 |
1 |
3 |
2 |
3 |
4 |
6 |
1 |
23 |
| Agreements substantially lessening competition |
0 |
3 |
1 |
5 |
4 |
4 |
4 |
5 |
1 |
1 |
28 |
| Misuse of market power |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
| Exclusive dealing |
0 |
0 |
1 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
1 |
| Third line forcing (a subcategory of ex.deal'g) |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
| Resale price maintenance |
5 |
3 |
2 |
2 |
4 |
1 |
1 |
3 |
4 |
0 |
25 |
| Price discrimination |
0 |
0 |
1 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
1 |
| Merger |
4 |
0 |
4 |
2 |
3 |
0 |
0 |
3 |
0 |
0 |
16 |
| Total Decisions: |
94 |
The table shows that in the period 1990-99, a total of 94 interim and final decisions were issued in causes of action initiated by the ACCC or its predecessor, the TPC.17 This compares with a total of 135 interim and final decisions in private actions for the same period.18 Most decisions in ACCC-initiated cases involved causes of action alleging price fixing, agreements substantially lessening competition, and resale price maintenance.
This mix of decisions does not correspond well with the published enforcement priorities of the ACCC under the restrictive trade practices provisions of Part IV of the Act. These priorities are to focus upon third line forcing, abuse of market power and resale price maintenance.19 The divergence between our results and the ACCC's published priorities may have resulted from the crude methodology that was employed in the survey of the Scaleplus website. Counting the number of decisions issued in a particular area ignores legal proceedings or administrative enforcement initiatives that were concluded before the issuance of any decision.20ACCC media releases for calendar year 1998 tend to confirm, however, that price fixing and agreements substantially lessening competition remain a leading concern of the ACCC.21What seems most noteworthy in light of the published enforcement priorities of the ACCC is that the litigation of exclusive dealing cases, including third line forcing, seems virtually to have become the province of the private sector. The private sector recorded 33 interim and final decisions involving exclusive dealing as compared to the ACCC?s one decision for the same period.
Private actions have been in place in Australia since the Act came into effect in 1974. In fact, the Brunt study noted that:
The first reported decision under Part IV - Restrictive Trade Practices of the Trade Practices Act 1974 (Cth) ('the Act') was a private action, Top Performance Motors v. Ira Berk (1975). The first reported High Court decision was a private action, Quadramain v. Sevastapol (1976). The most important judgment to date was yet another private action, Queensland Wire Industries v. B.H.P. (1989). In this case the Australian High Court handed down a judgment on 'misuse of market power' (§ 46 of the Act) universally hailed as a landmark decision. ...22
Since their inception in 1974, private actions have played a significant role in the development of jurisprudence under the restrictive trade practices provisions of the Act.
Table of Contents
2(a) Standing to Initiate a Private Action:
The Act contains two statutory provisions relating to standing to sue. For injunctive relief, § 80(1) of the Act provides for open standing. It "confers power to seek injunctions in all cases other than domestic mergers upon the Attorney General, the ... (ACCC) and 'any other person' -- and the courts have held upon more than one occasion that the phrase means just that."23
The Act is more restrictive when it comes to suit for damages. Section 82(1) of the Act restricts standing to sue "to a 'person who has suffered loss or damage by conduct ... in contravention', and the cases ... (require) some causal connection between the conduct constituting the contravention and the loss or damage suffered."24
This restriction, however, has been seen to be of minor importance in light of the open standing provision for injunctive relief. It has been noted that injunctive relief is the preferred remedy in private actions under the Act. One Australian authority commented upon this as follows:
It may be that our courts will achieve a similar result to the (American) 'antitrust injury' rule via some doctrine of remoteness. But at the present time, with expected costs and returns falling as they do, the issue is of little importance....(I)n Australia most private applicants are satisfied if they achieve the award of an injunction. The implication is that in these cases the expected dollar value of injunctive relief (unlike a damages award) will outweigh the high cost of litigation....25
The prospect of obtaining an award of damages does not appear to be regarded as a significant factor motivating private plaintiffs to bring suit under the Act.
As indicated above, § 80(1) provides for open standing to obtain injunctive relief under, inter alia, the restrictive trade practices provisions of the Act. This is far broader than the tests for standing usually applied in private actions for public remedies under the general law and many other Australian statutes, several of which require private parties to show that they have "capacity to represent the public interest" and a "special interest" in the subject matter of the action.
In a 1996 report, the Australian Law Reform Commission (ALRC)26 sought to refute arguments against liberalizing the law of standing to sue for public remedies by alluding to past experience under, inter alia, § 80(1) of the Act. Referring to submissions that liberalization would open the floodgates to litigation, the ALRC said, "(T)here is no evidence that the open standing provision in the Trade Practices Act 1974 (Cth) has led to a high level of litigation."27
The ALRC recommended that all tests for standing to commence and maintain public law proceedings in the general law and almost all statutes should be replaced by a single, more liberal test, which would provide as follows:
Any person should be able to commence and maintain public law proceedings unless
- The relevant legislation clearly indicates an intention that the decision or conduct sought to be litigated should not be the subject of challenge by a person such as the applicant; or,
- In all the circumstances it would not be in the public interest to proceed because to do so would unreasonably interfere with the ability of a person having a private interest in the matter to deal with it differently or not at all....28
The ALRC also recommended that "standing should be presumed ..., (placing) the onus ... on those seeking to challenge a party's standing to show that one of the disqualifying factors is present."29
This new test of standing would not, however, replace the tests of standing that currently exist in the Act. The ALRC confirmed its recommendation in a previous 1985 report on standing(30) that there should be no changes, inter alia, to "standing specifically conferred by statute on government plaintiffs or private persons to commence and maintain a proceeding or to apply for particular relief."31
Table of Contents
As already indicated in s§ 1(a) & 2(a) of the study, above, under s§ 80(1) and 82(1) of the Act, private litigants are entitled to sue for injunctive relief and/or single damages, although the prospect of obtaining an award of damages does not seem to be regarded as a significant factor motivating private litigants to bring suit. Since 1977, private litigants have been precluded from obtaining injunctive relief regarding mergers. Private parties are, however, entitled to obtain divestiture orders in merger cases. They are also entitled to bring class, or in Australian terms, representative, actions in Federal Court for contraventions of the Act as well as actions for declarations.
Section 80(1) of the Act provides as follows:
(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 a provision of Part IV, IVA, IVB or V;
(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.
Just like the ACCC, private parties may obtain injunctive relief against contraventions or attempted contraventions of, inter alia, the restrictive trade practices provisions of Part IV of the Act. They may also obtain injunctive relief against those who aid in or induce a contravention, or are party to or co- conspirators in a contravention.
The ACCC, however, is the only entity that is entitled to obtain such injunctive relief against contraventions, etc., of the merger provisions of § 50 of the Act. Section 80(1A) of the Act provides:
(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.
This restriction was placed in the Act in 1977 in response to apparent misuse by private parties of injunctive relief in merger cases.32
The remaining provisions of § 80 of the Act make it clear that the court is granted a broad jurisdiction to fashion any appropriate injunctive relief. Under § 80(2), the court may grant an interim injunction pending determination of an application for injunction under § 80(1). Under
§ 80(1AA), the parties may be granted an injunction upon consent "whether or not the Court is satisfied that a person has engaged, or is proposing to engage, in" a contravention of the Act. Under § 80(4), an injunction restraining the performance of an act may be issued regardless of whether it appears to the court that the person to be restrained intended to do the act; previously did the act; or, there is imminent danger of substantial damage to another if the person does the act. Under § 80(5), a mandatory injunction requiring the performance of an act may be issued in analogous circumstances. Finally, under § 80(3), the court may rescind or vary any injunction that it previously issued.
Under § 87 of the Act, the court is also empowered to grant any orders it thinks appropriate to remedy actual or likely loss or damage suffered by parties to the proceeding as a result of contraventions of Parts IV, IVA, IVB or V of the Act. These orders may void contracts, vary contracts, refuse enforcement of contracts, direct refunds or returns of property, direct payment of the amount of loss or damage, direct repair or supply of parts, direct the provision of services, or order the execution of instruments varying or terminating interests in land.33
Normally, the Federal Court requires an applicant for interim injunctive relief to lodge security with the court for damages or costs. In a 1996 report on compliance with the Trade Practices Act,34 the ALRC said that small businesses regarded this as a barrier to seeking remedies under the restrictive trade practices provisions of the Act. The ALRC also noted that small business found that other rules of the court, such as its requirement that corporations be legally represented, similarly acted as barriers to seeking remedies under the Act. In light of these concerns, the ALRC recommended improvements to the ability of the then Trade Practices Commission to bring representative actions on behalf of those suffering loss or damage from a contravention of the Act.35
Continue | Table of Contents
