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Published online by Cambridge University Press: 24 January 2025
One of the most crucial and yet challenging problems which faces Australian competition lawyers is the definition of the scope of the terms “contract”, “arrangement” and “understanding” in ss 45 and 45A of the Trade Practices Act 1974. Section 45 proscribes contracts, arrangements or understandings which have the purpose or effect of substantially lessening competition in a market. Section 45A then expands on s 45 by providing that contracts, arrangements and understandings which “fix” prices are deemed, for the purposes of s 45, to have the purpose or effect of substantially lessening competition in a market.
The terms “contract”, “arrangement”, and “understanding” are not defined in the TPA and thus the legislature has left the matter of interpretation “at large”. Determining the boundaries of concepts such as “arrangements” and “understandings” is no easy task, especially when the focus of the enquiry is on the parallel behaviour of participants in concentrated markets.
1 Henceforth referred to as “the TPA”.
2 The term “oligopoly” will be used here, at times, to refer to markets with few buyers. Strictly speaking, however, “oligopoly” refers to fewness of sellers. A market with few buyers is an oligopsony.
3 Non-price competition does not affect the analysis here. Non-price competition can be characterised either as product differentiation (ie creation of “sub-markets”) or as disguised price competition.
4 This is known as “barometric” price leadership as competitors in a market choose to follow the lead given by a particular firm because they believe that that firm is a good barometer of market conditions. There are other forms of price leadership such as dominant firm price leadership where one firm is much larger than its competitors and low-cost price leadership as in Trade Practices Commission v Email Ltd and Anor (1980) ATPR 40-172, where one firm can dictate prices in its market by having a lower cost structure than its rivals: see pp 42371-42373.
5 Of course, parallel pricing by oligopolists may be the result of collusion, however defined.
6 One solution to the conscious parallelism dilemma is to adopt an economic concept of collusion. This concept of collusion “is one simply of establishing policies that are in the firms' joint interests - a collusive result, irrespective of what might be the mechanism by which it is achieved”. Baxt, R and Brunt, M, “The Murphy Trade Practices Bill: Admirable Objectives, Inadequate Means” (1974) 2 A Bus L Rev 3, 18Google Scholar. Australian judges have shown little inclination to follow this path. See the discussion of the Email case below p 87.
7 Top Performance Motors Pty Ltd v Ira Berk (Queensland) Pty Limited (1975) ATPR 40-004; TPC v Nicholas Enterprises Pty Ltd and Ors (1979) ATPR 40-126; Morphett Arms Hotel Pty Ltd v TPC (1980) ATPR 40-157; TPC v Email Ltd and Anor (1980) ATPR 40-172; and TPC v Allied Mills Industries Pty Ltd and Ors (1980) ATPR 40-178: Succeeding parts of the latter case are reported in (1981) ATPR 40-204; (1981) ATPR 40-237; (1981) ATPR 40-241; (1981) ATPR 40-252.
8 See Top Performance Motors Pty Ltd v Ira Berk (Queensland) Pty Limited (1975) ATPR 40-004, where reliance was placed on Newton v FCT (1958) 98 CLR 1. Newton's case turned on the words “contract, agreement or arrangement” in s 260 Income Tax and Social Services Contribution Assessment Act 1936-1950 (Cth). Similarly TPC v Nicholas Enterprises Pty Ltd and Ors (1979) ATPR 40-126 at 18341-18342 shows heavy reliance on another “taxation” case: FCT v Lutovi Investments Pty Ltd [1978] ATC 4708.
9 (1980) ATPR 40-172, hereinafter referred to as “the Email case”.
10 Warburton Franki could not charge more than Email because the two companies' products were almost identical. Warburton Franki also could not undercut Email's prices because it could not even make a profit at the price which Email was charging and in any case Warburton Franki thought that it would not survive a price war.
11 (1980) ATPR 40-172 at p 42371.
12 Ibid 42377. This finding of fact is confirmed at 42379.
13 Compare however the obiter dictum of Fisher J in TPC v Nicholas Enterprises Pty Ltd and Ors (1979) ATPR 40-126 on the significance of evidence of price leadership by price signallers in markets where the competitors are interdependent: p 18339, and on the possibility of an arrangement being formed without an offeror receiving a communication of acceptance where there is price leadership and interdependence amongst the members of the market concerned: 18347.
14 15 USC s 1.
15 Cases which turn on s 2 of the Sherman Act can also be of assistance in this area. Section 2 of the Sherman Act deals with “monopolization” and refers, inter alia, to persons who “combine or conspire” to monopolise.
16 See pp 77-80.
17 See below pp 80-90.
18 15 USC s 45.
19 See below pp 90-93.
20 See below pp 93-98.
21 Turner, D F, “The Definition of Agreement Under the Sherman Act: Conscious Parallelism and Refusals to Deal” (1962) 75 Harv L Rev 655CrossRefGoogle Scholar.
22 Ibid 663.
23 Ibid.
24 Ibid. 666. Turner did not say that conscious parallelism could not be considered as a form of agreement. Turner simply argued that such behaviour should not be considered unlawful. In Turner's view there was not much point in labelling conscious parallelism as a form of agreement because “[o]nce one goes beyond the boundaries of explicit, verbally communicated assent to a common course of action ... it is extraordinarily difficult if not impossible to define clearly a plausible limit short of interdependence”. Ibid 683. In Turner's view if a line could be drawn “it would seemingly be too thin to be a workable principle of law, and [would] be only productive of confusion”. Ibid 683.
25 Ibid 663.
26 Turner made it clear that he was only “exonerating” oligopolistic pricing breaching the “conspiracy” provisions of the Sherman Act: ibid 671. See above p 76 for the relevant provisions of the Sherman Act.
27 Ibid 665.
28 Ibid 669. Turner noted that an injunction which did not bar interdependent behaviour but simply barred the subject “from further conspiring to fix prices” would be “hopelessly vague”: 669. The problem of injunctions of vague import was discussed hy Murphy J in a dissenting judgment in Thomson Australian Holdings Pty Ltd v TPC and Ors (1981) ATPR 40-234, at p 43 I 32. The amendment of s 80(1) of the TP A by Act No 39 of I 983 to allow a court to grant an injunction in such terms as it “determines to be appropriate” has alleviated the problem by removing the pressure for courts to word injunctions in terms closely similar to the legislation in question.
29 RA, Posner, Antitrust Law: An Economic Perspective (1976)Google Scholar (cited hereinafter as “Posner, Antitrust Law”); Posner, R A, “Oligopoly and the Antitrust Laws: A Suggested Approach” (1969) 21. Stanford L Rev 1562CrossRefGoogle Scholar.
30 Posner, Antitrust Law 40.
31 Ibid 44.
32 Ibid 44-47.
33 Stigler, G J, “A Theory of Oligopoly” in his book The Organization of Industry (1968), 39Google Scholar.
34 This is the “perfect” competition level of production.
35 Posner, Antitrust Law 47.
36 Ibid 55. At 55-62 Posner suggests that following factors can be used to identify markets in which collusion is likely: (l) Market concentrated on the selling side (2) No fringe of small sellers (3) Inelastic demand at competitive price (4) Entry takes a long time (5) Many customers (6) Standard product (7) The principal firms sell at the same level in the chain of distribution (8) Price competition more important than other forms of competition (9) High ratio of fixed to variable costs (10) Demand static or declining over time (11) Sealed bidding (12) The industry's antitrust “record”. Posner suggests at 62-71 the following criteria for inferring actual collusion: (I) Fixed relative market shares (2) Price discrimination (3) Exchange of price information (4) Regional price variations (5) Identical bids (6) Price, output and capacity changes at the formation of the cartel (7) Industry-wide resale price maintenance (8) Declining market shares of leaders (9) Amplitude and fluctuation of market prices (10) Demand elasticity at market price (I I) Level and pattern of profits (12) Basing-point pricing.
37 Posner, Antitrust Law 71.
38 Ibid 71-72. The last sentence of this passage appears to considerably tone down Posner's “tacit collusion” argument. In the succeeding paragraph Posner allowed that the approach which he had suggested could be taken too far. Posner conceded that oligopolists who in reacting to an external, market shock took account of the probable reactions of competitors could be said to have acted with elements of tacit collusion. Posner would not hold such conduct illegal, however, as he is only concerned with tadt collusion to limit output and to increase prices.
39 Posner, Antitrust Law 74.
40 (1938) 306 US 208. Interstate was not the first US case on “conscious parallelism”. This “honour” seems to be held by Eastern States Retail Lumber Dealers' Association v US (1913) 234 us 600.
41 Ibid 217.
42 Ibid 215 Interstate had a monopoly in a number of cities.
43 Ibid 218.
44 Ibid 220 For tht'” cast'” in the Court below, see 20 F Supp 868 (1937).
45 Ibid 223.
46 Ibid 226-227.
47 (1979) ATPR 40-126.
48 (1942) 316 US 265.
49 Ibid 275.
50 (1946) 328 US 781.
51 See above p 76.
52 Conviction at first instance in USDC (E D Ky), unreported but “noted” by the Supreme Court (1946) at 328 US 7R I, 783. Note that no penalty was imposed under the third count as the Court held that the third count merged into the second count.
53 (1944) 147 F 2d 93. (Circuit Court of Appeals 6th Circuit.)
54 Cert granted (1945) 324 US 836. The “monopolisation” issue, of course, depended upon the respondents having combined or conspired, supra n I 5.
55 (1946) 328 US 781, 797: statistics at 796.
56 Ibid 796.
57 Ibid 804.
58 Ibid 784. See above n 54.
59 Ibid 809-810.
60 Delaware Valley Marine Supply Co v American Tobacco Co (1961) 29” F 2d 199, 200; Independent Iron Works, Inc v United States Steel Corp (1965) 322 F 2d 656, cert denied (1963) 375 US 922; Cackling Acres Inc et al v Olson Farms Inc (1976) 541 F 2d 242, cert denied (1977) 429 US 1122; US v General Motors Corp and Ford Motor Co [1974-2] Trade Cases para 75 253 at p 97 669; DA Washburn, “Price Leadership” (1978) 64 Va LR 691, 728-729 and cases at 729, n 197.
61 See text accompanying n 59 supra.
62 See above pp 77-80.
63 Turner, D F, “The Definition of Agreement Under the Sherman Act: Conscious Parallelism and Refusals to Deal” (1962) 75 Harv L Rev 655, 671CrossRefGoogle Scholar.
64 RA, Posner, Antitrust Law: An Economic E-erspective (1976) 72-73Google Scholar.
65 (1954) 346 US 537.
66 The US Government gave a lead even thongh it asserted conscious parallelism in only two suits; namely, Triangle Conduit & Cable Co Inc et al v FTC 168 F 2d 175 (7th Cir 1948), affirmed by an equally divided court sub nom Clayton Mark & Co v Federal Trade Commission (1949) 336 US 902 and United States v Armour and Co No 48-1351 (ND Ill, filed Sept 15, 1948). In both of these cases, the first count alleged by the US government was based on traditional conspiracy grounds whilst the second count relied on conscious parallelism. In the Armour case, the US government ultimately filed a stipulation dismissing the case without prejudice. In Triangle Conduit however, the 7th Cir upheld the conscious parallelism count. It must be noted however that in Triangle Conduit conscious parallelism was only asserted and sustained under s 5 Federal Trade Commission Act. [s 5 of the Federal Trade Commission Act, 15 USC s 45 does not deal directly with conspiracies to restrain trade, however described, but deals inter alia with “unfair methods of competition”: See below p 90.] A number of civil cases followed this lead: Milgram et al v Leow's Inc et al (1951) 192 F 2d 579 cert denied, (1952) 343 US 929; Ball v Paramount Pictures Inc (1945) 169 F 2d 317. See also Bordonaro Bros Theatres Inc v Paramount Pictures, Inc(1949) 176 F 2d 594 reversed on other grounds (1946) 327 US 251. For this note I am indebted to M D Blechman, “Conscious Parallelism, Signalling and Facilitating Devices: The Problem of Tacit Collusion Under the Antitrust Laws” (1978-9) 24 NYLS Rev 881, 883.
67 (1954) 346 US 537, 539-540.
68 Ibid.
69 Ibid 540-541.
70 Turner, supra n 2 I, 658-659.
71 DA, Washburn, “Price Leadership” (1978) 64 Va L Rev 691, 708Google Scholar.
72 SA, Nye, “Can Conduct Oriented Enforcement Inhibit Conscious Parallelism?” (1975) 44 Antitrust LJ 206, 207Google Scholar. Note that Nye was speaking as Commissioner of the FTC; Simonetti, D J, “Conscious Parallelism and the Sherman Act: An Analysis and a Proposal” (1977) 30 Vanderbilt L Rev 1227, 1230Google Scholar.
73 Posner, Antitrust Law 73.
74 Blechman, M D, “Conscious Parallelism, Signalling and Facilitating Devices: The Problem of Tacit Collusion Under the Antitrust Law” (1978-9) NYLS Rev 881, 885Google Scholar.
75 Blechman, ibid, says that the term “plus factor” was first used in C-O-Two Fire Equipment Co v United States (1952) 197 F 2d 489, 493 cert denied, (1952) 344 US 892. There the court found conspiracy on the basis of parallel conduct and six “plus factors”.
76 Blechman supra n 74, 885 and cased cited there. Some of the more recent cases are: Pan-Islamic Trade Corp v Exxon Corp et al (1980) 632 F 2d 539, 559; Worldwide Marine Trading Corp et al v Marine Transport Services (1982) 545 F Supp 156, 163; State of Montana v Super–America (1983) 559 F Supp 298, 302-303; Proctor v State Farm Mutual Automobile Insurance Company et al (1982) 675 F 2d 308, 327.
77 Blechman 885-886.
78 Ibid 886-887.
79 Some of the more recent cases are: Gainesville Utilities Department v Florida Power and Light Co (1978) 573 F 2d 292; Richard Schoenkopf d/b/a Vend-Mark v Brown & Williamson Tobacco Corp et al (1980) 483 F Supp 1185 and the cases in n 76 supra.
80 (1980) 495 F Supp 649.
81 Ibid 674. The case which is referred to as an exception is Bogosian v Gulf Oil Corp (1977) 561 F 2d 434, cert denied 434 US 1086. It is submitted with respect, however, that Bogosian's case supports the “plus factors” hypothesis: Bogosian at p 446 and the citation of this case in AB fro v Otex Inc (1923) 566 F Sup 419, 471. The passages in Bogosian 447 to which Duffy J in Joel Levitch et al v Columbia Broadcasting System Inc et al (1980) 495 F Supp 649, 674-675 only deal with the issue of whether a complaint can sufficiently state a claim with respect to s 1, Sherman Act, if no specific reference is made to a “combination”. The majority declined to rule on this issue. This was possible as the majority had already found that the complaint did allege a “combination”: Bogosian 445.
82 Posner, Antitrust Law 136.
83 (1969) 393 US 333.
84 Fortas J delivered a concurring judgment. Marshall J with whom Harlan and Stewart JJ agreed, dissented.
85 (1969) 393 US 333, 335 (Italics added).
86 Fortas J accepted the existence of an agreement, by implication as His Honour only says that the judgment of Douglas J should not be taken as indicating that price information swapping is per se illegal. Marshall J, with whom Harlan and Stewart JJ agreed, dissented on the result of the case but held that there was an agreement: (1969) 383 US 333, 340.
87 (1980) ATPR 40-172.
88 Although Container Corp is perhaps the most famous case to enunciate this approach, a similar approach was set out in Morton Salt Co et al v US 235 F 2d 573, 577. See also US v United States Gypsum Company (1977) 438 US 422, 457-458.
89 Lockhart J stated that “It is important to bear in mind that there is a fundamental distinction between a hope or prediction of future behaviour on the one hand and the expectation of certain behaviour on the other; that is behaviour which, as a result of communication between the parties, the party restricted is at least morally bound to adopt” (1980) ATPR 40-172, at p 42377. It is unfortunate that His Honour did not indicate how to distinguish between circumstances in which “expectations” arise and circumstances in which mere “hopes” or “predictions” are generated.
90 [1974-2] Trade Cases para 75-253, 97, 656 (USDC ED Mich Sth'n Div).
91 Ibid 97, 657.
92 Ibid.
93 Ibid.
94 (1963) 316 F 2d 884.
95 [1974-2] Trade Cases para 75-253 at p 97, 670.
96 (1963) 316 F 2d 884, 890. The emphasis was added by Feikens DJ. The requirement of conscious commitment to a common scheme has been alluded to in many cases eg Edward T Sweeney & Sons Inc v Texaco Inc (1980) 637 F 2d 105 Cert denied 451 US 911; Health Care Plan of New Jersey v West Jersey Hospital [1982-83] Trade Cases para 65067, 70, 977 at 70979; White and White Inc v American Hospital Supply Corp (1982) 540 F Supp 951, 1015; Jonnet Development Corp v Caliguiri (1983) 558 F Supp 962, 964; Monsanto Company v Spray Rite Service Corp'n US Sup Ct 20th March, 1984 No 82-914.
97 First, that there was no evidence that either of the defendants had reached agreement with anyone; secondly that the defendants had acted consistently with rational business behaviour and prevailing economic conditions; thirdly that the relevant “decision makers” had given evidence and provided plausible explanations for the impugned conduct and fourthly that the defendants had not really acted in parallel, though even if they had, mere conscious parallelism would not have sufficed to show agreement.
98 [1974-2] Trade Cases para 75-253, 97 656 at 97 671. In support of these contentions Feikens DJ quoted from Standard Oil 316 F 2d 884, 896.
99 It will be recalled that Lockhart J distinguished between a hope or prediction and an expectation: see supra n 89. Feikens DJ drew a similar distinction. His Honour noted that there was considerable uncertainty in the signalling process and hence uncertainty by interdependent oligopolists as to the future conduct of their rivals. This uncertainty, said Feikens DJ, “is the antithesis of the types of assurances needed to constitute a price fixing agreement”: ibid 97, 667.
100 United States v General Electric Co and Westinghouse Electric Corp [1977-2) Trade Cases para 61-659, 72 715 (Civ Action No 28 228, Case No 1549 Antit Div Dept Justice); US v General Electric Co [1977-2] Trade Cases para 61-660, 72 717; US v Westinghouse Electric Corp [1977-2) Trade Cases para 61-661, 72 721.
101 [1962] Trade Cases para 70-488 and para 70-503.
102 USDC ED Penn.
103 [1977-2] Trade Cases para 61-659, 72 715, 72 716.
104 [1977-2] Trade Cases para 61-660, 72 717, 72 718, 72 720.
105 Consent decrees are discussed below at pp 96-7.
106 15 USC s 45; (hereafter “FTC Act”).
107 S 5a(l) FTC Act.
108 (1954) 346 US 537.
109 (1948) 333 US 683.
110 (1948) 168 F 2d 175. Confirmed by an equally divided Supreme Court, sub nom Clayton Mark and Co et al v FTC (1949) 336 US 956.
111 In Cement Institute, the US Supreme Ct held that the parallel adoption by members of the Cement Institute of a pricing formula using basing points, evidenced the use of an unfair method of competition in breach of s 5. Black J, who delivered the opinion of the court, indicated thats 5 could be applied to conduct which might “then be short of a Sherman Act violation”. (1948) 333 US 683, 708. In Triangle Conduit, confirmed by an equally divided Supreme Ct (see supra n 10) a Circuit Ct again struck down a base-point pricing “scheme”. The FTC had relied on two counts under s 5 FTC Act. The first count had relied on an unlawful conspiracy to suppress competition: (1948) 168 F 2d 175, 176. The second count had relied on a type of conscious parallelism argument: (1948) 168 F 2d 175, 176. In upholding the complaint by the FTC, the Court did not make it clear whether it relied on count one or count two of the complaint. As a result, the scope of Triangle Conduit has been the subject of much debate. Turner, for example, thought that the Triangle Conduit decision would have been upheld under the Sherman Act. Turner, D F, “The Definition of Agreement Under the Sherman Act: Conscious Parallelism and Refusals to Deal” (1962) 75 Harv L Rev 655, 677CrossRefGoogle Scholar.
112 Boise Cascade Corp et al v FTC (1980-2) Trade Cases para 63-323, 75 662 at 75 665 per Wallace Cir J, especially the journal articles criticising Cement Institute and Triangle Conduit to which His Honour refers.
113 Wallace Cir J in Boise Cascade, ibid, refers to comments by FTC Commissioners that s 5, FTC Act does not apply to conscious parallelism.
114 (1972) 405 US 233.
115 Ibid 239. But see Boise Cascade Corp et al v FTC (1980-2) Trade Cases para 633-323, 75 662 at 75 670 per Wallace Cir J.
116 Dkt No 8883 (1970-73 Trans Bind) Trade Regulation Reporter (US) (CCH) para 19-898, 21915 (1972); (1979-83 Trans Bind) TRR (CCH) para 22003, 22526 (1983).
117 Dkt No 8934 (1973-76 Trans Bind) TRR (CCH) para 20-388, 20269 (1979); [1979-83 Trans Bind] TRR (CCH) para 21-866, 22120.
118 Dkt No 9128 (1976-79 Trans Bind] TRR (CCH) para 21-579, 21698 (1979); [1979-83 Trans Bind] TRR (CCH) para 22003, 22526.
119 In the Cereals case, the respondents were the four largest producers of ready-to-eat cereals. These companies accounted for 910/o of the market. [1970-73 Trans. Bind] TRR (CCH) para 19-898, 21915. In the Exxon Corp case, the respondents were the eight largest US petroleum companies. These companies controlled between 510/o and 590Jo of various facets of the oil industry: GA Fraas, “Structural Shared Monopoly Under FTC 5: The Implications of the Exxon Complaint” (1975-6) 26 Case W L Rev 615, 649.
120 Cereals [1979-83 Trans Bind] TRR (CCH) para 22003, 22625 (1983); Exxon Corp [1979-83 Trans Bind] TRR (CCH) para 21-866, 22120. Exxon foundered on administrative problems. In Cereals, the problem seems to have been, to a large extent, that the FTC could not frame a suitable remedy. Divestiture was too harsh and orders to restrain particular types of conduct may not have been effective.
121 [1976-79, Trans Bind] TRR (CCH) para 21-579, 21698, 21699.
122 The FTC later claimed that it also wanted to rely on conspiracy. This issue is covered in the report at [1979-83 Trans Bind] TRR (CCH) para 22003, 22526.
123 This description of the Federal Trade Commission's complaint is based on the dictum of Latchum ChJ in EI du Pont de Nemours and Co v FTC [1980-82) Trade Cases para 63-340, 75733 at 75734: Compare Ethyl Corp with US v General Motors Corp and Ford Motor Corp [1974-2) Trade Cases Para 75-253, 97656 and with the “GE-Westinghouse” cases: US v General Electric Co and Westinghouse Corp [1977-2] Trade Cases para 61-659, 72715; US v General Electric Co [1977-2) Trade Cases para 61-660, 72717 and US v Westinghouse Electric Corp [1977-2] Trade Cases para 61-661, 72721.
124 See n 122. 12s (1984) 729 F 2d 128.
126 USCA 2nd Cir.
127 729 F 2d 128, 141.
128 Ibid 142.
129 Ibid 139.
130 Ibid.
131 Ibid 140.
132 Ibid.
133 Ibid.
134 Lumbard Circ J said as much in the course of dissenting from Mansfield Circ J's views as to the scope of s 5 FTC Act 729 F 2d 128, 143.
135 The sanctions are set out in ss I and 2 themselves.
136 The corresponding maxima under the TPA are $250,000 for bodies corporate and $50,000 for other persons. See TPA s 76.
137 There is no provision in the TPA for the imposition of terms of imprisonment.
138 Trade Regulation Reporter (CCH) para 8750, 14301. In Australia, s 78 of the TPA provides that criminal proceedings shall not be brought for offences involving Part IV of the Act. This is the part of the Act in which ss 45 and 45A are situated. Nonetheless, given the size of the penalties which can be imposed, it is appropriate to describe proceedings for breaches of Pt IV of the TPA as being “quasi-criminal” in nature. This has been recognised by the courts. In TPC v Allied Mills Industries Pty Ltd and Ors (1981) ATPR 40-237, for example, Sheppard J described the relevant standard of proof as being “upon a balance of probabilities but taking into account very much the seriousness and gravity of the allegations which are made”. (1981) ATPR 40-237, 43143, 43155. His Honour relied on Briginshaw v Briginshaw (1938) 60 CLR 336, 361-362 per Dixon J.
139 The term “anti-trust laws” is defined in s I of the Clayton Act and its scope includes the Sherman Act.
140 The FTC Act does not provide for sanctions for the types of practices which we are considering here. The Federal Trade Commission can issue “cease and desist” orders but “these orders carry no criminal or civil penalties for past conduct ... “ Areeda, P and Turner, D F, Antitrust Law Vol II (1978) para 305e, 15Google Scholar. Additionally, penalties cannot be imposed on the directors, officers or agents of a corporation under s 14 of the Clayton Act as the definition of “antitrust laws” in s 1 of that Act does not include the Federal Trade Commission Act.
141 As noted in supra n 139, the definition of “antitrust laws” in s 1 of the Clayton Act includes the Sherman Act. The FTC Act, however, is not included in the definition. Accordingly, “private suits based upon a violation of this law are not authorised”. 2 Trade Regulation Reporter (CCH) para 9022, 15022.
142 Section 82 of the TPA allows private actions for damages resulting from breaches of the TPA. Only actual damages, however, can be recovered.
143 The FTC is empowered by s 5 of the FTC Act to issue “cease and desist” orders. These orders are very similar to judicial injunctions and like judicial injunctions can extend well beyond “a mere negative injunction against repetition of the challenged practice” Areeda, P and Turner, D F, Antitrust Law Vol II (1978) para 305e, 16Google Scholar.
144 In United States v Glaxo Group Ltd and Imperial Chemical Industries Ltd (1974-1) Trade Cases para 74883, p 95978 and para 74884, 95982 the order which was made mandated compulsory patent licensing for five years on reasonable terms. See also the cases digested in 2 Trade Regulation Reporter (CCH) para 8822.
145 Henceforth all three of these variants of structural relief will be referred to collectively as “divestiture”. In US v Clovis Retail Liquor Dealers Trade Association (1978-1) Trade Cases para 62-022, 74400 an order was made to dissolve the trade association in question. Extensive prohibitions on exchanging price information were also decreed. In United States v Western Electric Co Inc and American Telephone & Telegraph Co (1982-2) Trade Cases para 64900, 72555 American Telegraph and Telephone Co was ordered to divest itself of its operating companies. See also the cases digested in 2 Trade Regulation Reporter (CCH) para 5824.
146 As noted in supra n 139, the Sherman Act comes within the definition of “antitrust laws” ins I of the Clayton Act. As noted supra n 141, however, the Federal Trade Commission Act does not come within the definition.
147 There has been some doubt on this point. In Mr Frank Inc v Waste Management Inc (1984-1) Trade Cases para 66024, 68535 (CUSDC N Dist Ill ED) it was stateq that divestitute has never been allowed on a private suit and that “injunctive relief' in s 16 of the Clayton Act does not include divestiture: see pp 68538-68539. Divestiture may be available to private litigants in anti-merger cases: see 2 Trade Regulation Reporter (CCH) para 9020, 15201 and Areed, P and turner, D F, Antitrust Law Vol II (1978) 328b, 136Google Scholar. In Australia, s 81 of the Trade Practices Act provides that compulsory disposal of shares may be ordered where there has been a merger or acquisition in breach of s 50 of the Act. Application under s 81 can be made by the Minister, the Trade Practices Commission or “any other person”. Serious doubts have been raised as to the constitutionality of s 81: see (1985) I Trade Practices Reporter (1985) (CCH, Australia) para 18265, 13233-13234.
148 The problem is greatly obviated with respect to actions brought under the FTC Act by cases such as Federal Trade Commission v Sperry and Hutchinson Co (1972) 405 US 233. In this case it was recognised that the scope of s 5 of the FTC Act extends beyond either the letter or the spirit of the antitrust laws. See p 91 above.
149 54 Am Jur 2d para 380, 876.
150 (1948) 334 US 131.
151 Ibid 148.
152 See for example National Society of Professional Engineers v United States 435 US 679, 696-699; Levendusky, D B, “Propriety and Scope of Injunctive Relief in Federal Antitrust Cases- Supreme Court Cases” (1977) 55 L Ed 2d 892 especially paras 14 and 15, 910-913Google Scholar.
153 In Australia, the power of the Court to grant injunctions under the TPA derives from s 80 of that Act. An injunction may be granted “in such terms as the Court determines to be appropriate” s 80(1) and this includes mandatory injunctions - s 80(5). It would seem, therefore, that the Court has a free hand to enjoin legal as well as illegal behaviour. This is not entirely correct, however, as the Court can only make orders under s 80 where it “is satisfied that a person has engaged or is proposing to engage in conduct that constitutes or would constitute” a contravention of Pt IV or Pt V of the TPA, or else constitutes or would constitute a related contravention (see s 80(1)). This restriction raises special problems with respect to consent orders. See infra n 155.
154 See Branfman, E J, “Antitrust Consent Decrees - A Review and Evaluation of the First Seven Years under the Antitrust Procedures and Penalties Act” (1982) 27 Antitrust Bulletin 303CrossRefGoogle Scholar; Glenn, J A, “Supreme Courts Views Regarding Consent Judgments, Decrees, or Orders in Proceedings Under the Federal Antitrust Laws or Federal Trade Commission Act” 43 L Ed 2d 807, paras 3 and 4, 813-815Google Scholar.
In Australia, the power of a court to make a consent order under the TPA is hampered by the provision ins 80(1) (the injunctions section) that a court may only make an order under the section if it “is satisfied that a person has engaged, or is proposing to engage” in conduct that would constitute one of the contraventions referred to in the section. In Visy Board Pty Ltd v Trade Practices Commission (1984) ATPR para 40-435, 45006 Woodward J, by way of obiter, indicted that discontinuance of proceedings had been sought rather than a consent order under s 80(1) because that provision “did not permit a consent judgment unless the Court could be satisfied that the facts justifying it had been established - and this was not possible without an extensive hearing”: (1984) ATPR para 40-455, 45008. Although His Honour was referring to an illegal mergers case, his comments regarding the need for an exensive hearing would seem to apply to most if not all of the contraventions of the TP A for which relief under s 80(1) might be sought.
155 The procedures are set out in s 5(b)-(h) of the Clayton Act. The procedures apply to consent decrees in government actions brought for violations of the “antitrust laws”. This does not cover proceedings under the FTC Act. The consent procedures for the FTC Act cases are contained in 16 CFR s 2.34. These procedures are roughly similar to those which apply to consent orders in antitrust cases. See 3 Trade Regulation Reporter (CCH) para 9595, 17096-17097.
156 Thompson Australian Holdings Pty Limited v The TPC and Ors (1981) ATPR 40-234 illustrates some of the problems which can be incurred in Australia as a result of not having a consent-order review procedure along the lines of the US model.
157 Legislation could be passed, for example, to ban various unilateral acts by competitors which are conducive to collusion or which are inherently anticompetitive.
158 See, for example, the “Concentrated Industries Act” which was proposed by US Senate Bill 2614, introduced in 1971 92nd Congress 1st Sess (Sept 30, 1971 s 15442-15449). This act was recommended by the White House Task Force on Antitrust Policy. The Act is reprinted in (1971) 4 (4) Antitrust Land Econ Rev 40-46.