MTAA Applauds Federal Court Decision in the case of ACCC and Woolworths

The Motor Trades Association of Australia (MTAA) has welcomed Justice Allsop’s decision in the Federal Court matter of the Australian Competition and Consumer Commission and Woolworths. “This decision is a win for Australian small businesses” said MTAA Executive Director Michael Delaney. “It (the judgement) demonstrates that big corporations are not above the obligations imposed by the Trade Practices Act 1974. I applaud Justice Allsop for looking beyond the duopoly that is dominating Australia’s marketplace and reminding us that small businesses are deserving of an opportunity to compete in a fair and equitable trading environment.”

In a summary of his Judgement handed down on Friday 30 June 2006 Justice Allsop found that Woolworths’ conduct towards four liquor licence applicants in NSW amounted to a breach of the primary boycott provisions of the Trade Practices Act 1974. It was alleged, and confirmed by Justice Allsop, that Woolworths used, or threatened to use, the right afforded to it under the NSW Liquor Act 1982 to oppose the applications for liquor licences of four applicants who intended to operate in the immediate vicinity of a Woolworths store. Woolworths then negotiated and entered into an agreement with each applicant under which the applicant agreed to certain restrictions being placed on the conditions of each licence. Woolworths subsequently withdrew its opposition to the liquor licence application.

Mr Delaney said that if big business wishes to be seen as leaders in our society then they must accept that behaviour such as Woolworths’ has engaged in here is quite unacceptable; both legally and morally. “It is not good enough for CEOs to ‘moralise’ in their speeches while their companies engage in this outrageous behaviour”.

Big business constantly proposes that it behaves competitively within the rules, and it therefore always opposes amendments to competition law in the Trade Practices Act. For example, Mr Corbett said in evidence to the Senate Economics References Committee in hearings on the Effectiveness of the Trade Practices Act 1974 in Protecting Small Business as recorded in Hansard of 30 October 2003; “We have in Woolworths I think a strong culture of compliance, of integrity and of fair trading and good citizenship.” What a contrast between the rhetoric and the reality as the Court has found. On that occasion Mr Corbett was opposing as unnecessary proposed changes to the Trade Practices Act sought by small business on account of the persistent abuse of market power by big business.

In that hearing, on the subject of sections 45 and 46, the collusion and misuse of market power provisions, of the Trade Practices Act, Mr Corbett said “Of course, I as a chief executive could not sustain for a moment a policy in our organisation that was contrary to the Trade Practices Act. It would be unsustainable, because what types of directions would I give through the open marketplace of big business like Woolworths?” He then went on to say “Our organisation has very clear rules that are clearly understood and a person would be fired for that, so it does not happen.”

In relation to this case, Mr Corbett said to the Senate Committee “We will defend ourselves in the court. The best of our advice is that we are not guilty. My own view is that it is a nonsense.”

In relation to the proposition that section 46 of the Trade Practices Act be amended to strengthen its application, Mr Corbett said; “A lot of the arguments that are put by some parties for section 46 to be modified are to do with dominance and behaviour which I just do not think are present in the marketplace.”

“Justice Allsop’s judgement in this matter clearly demonstrates that the dominance and behaviour to which Mr Corbett referred are in fact present in the marketplace and that those who engage in such conduct, no matter how big their enterprise may be, are not immune to the operations of the law,” Mr Delaney said. “MTAA will continue to lobby the Government for the amendments required to strengthen the Trade Practices Act, as recommended by the Senate Economics Reference Committee, to provide a fairer and more equitable trading environment for small business.”

Due to commercial confidentiality Justice Allsop’s entire Judgement has not been made public, however Justice Allsop is reviewing the validity of the confidential claim and, if it is released, MTAA looks forward to reading and commenting on the entire Judgement.

MTAA is the peak national representative organisation for the retail, service and repair sector of the Australian automotive industry. The Association represents the interests, at the national level, of over 115,000 retail motor trade businesses with a combined turnover of over $120 billion and which employ over 316,000 people.

For further information, please contact Michael Delaney, Executive Director of MTAA, on
(02) 6273 4333.