No CrossRef data available.
We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
Published online by Cambridge University Press: 24 January 2025
Although some concept of a “market” is inherent in all systems of competition law, the Trade Practices Act 1974 (Cth) is striking in that it expressly makes liability under most of its substantive sections (sections 45, 46, 47, 49 and 50, but not section 48) depend in one way or another on the identification of a market or markets in which competition has been injured by the impugned conduct. This is because at the time when the Trade Practices Act 1974 came to be drafted, the concepts of market definition and market control had evolved to a high level in other jurisdictions, particularly in the United States.
Now, however, after five years’ experience with market definition under the 1974 Act, the Australian doctrine should have its own contribution to make. It should be rewarding, therefore, to attempt to state the principles that have so far emerged, in light also of cases and writings in the major overseas antitrust systems, those of the European Common Market and the United States. Since market definition often determines the outcome of suits or applications under the Trade Practices Act, these principles have practical as well as conceptual importance.
The author acknowledges his indebtedness to Dr Philip Williams, Department of Economics, University of Melbourne, for his helpful suggestions and comments, while reserving to himself responsibility for the article's shortcomings.
page 387 note 1 Marshall, , Principles of Economics (8th ed. 1920) 324-325CrossRefGoogle Scholar, quoting Cournot and Jevons.
2 See generally Friedman and Friedman, Free To Choose (1980) 15-18.
3 See re Tooth & Co. Ltd; re Tooheys Ltd (1979) 2 A.T.P.R. 18174, 18197.
4 Mason, , “Price and Production Policies of Large-Scale Enterprise” (1939) 29 American Economic Review 61, 69Google Scholar.
5 See Walker, , “Structure, Conduct and the Test of Competition in Australia” (1976) 21 Antitrust Bulletin 657CrossRefGoogle Scholar.
6 R. v. Wallwork; ex parte Cockburn Cement Pty Ltd (1957) 59 W.A.L.R. 49.
7 (1975) 24 F.L.R. 286, 1 A.T.P.R. 17113. The ruling appears in the transcript, not the judgment: see “Recent Cases” (1976) 50 A.L.J. 89, 91.
8 E.g. Rowan v. Carlton & United Breweries Ltd [1967] I.A.R. (N.S.W.) 144; Report of the Industrial Commission of New South Wales in Respect to the Prices of Bricks ... [1938-40] N.S.W. Parliamentary Papers Vol. 8, 547.
9 Breyer, “Five Questions about Australian Antitrust Law” (1977) 51 A.L.J. 28, 34-35. Contrast SchrÖter, “Le Concept de 'Marche en Cause' dans l'Application des Articles 66, Paragraphe 7, du Traite CECA et 86 du Traite CEE” in Regulating the Behaviour of Monopolies and Dominant Undertakings in Community Law,College of Europe Bruges Week 1977 (hereinafter called Bruges Week) 460, 466-469.
10 (1964) 378 U.S. 441.
11 [1980] A.T.P.R. 42216.
12 The question usually arises in the context of the product market; supplies of most commodities can be brought in from other geographic areas relatively quickly, whereas developing substitutes or expanding competitive productive capacity normally takes much longer.
13 (1979) 2 A.T.P.R. 18174, 18196. The Common Market doctrine makes use of the time factor, but so far not explicitly for market definition. See SchrÖter, op. cit. 520-522.
14 United States v. E.I. DuPont de Nemours & Co. (The Cellophane Case) (1956) 351 U.S. 377, 394.
15 [1974] 1 C.M.L.R. 309.
16 [1976] A.T.P.R. 16156. The European Court seems to attach somewhat less importance to price relationships: Europemballage Corp. and Continental Can Co. Inc. v. E.C. Commission [1973] C.M.L.R. 199, 225-228; Kali & Salz A.G. v. E.C. Commission [1974] 1 C.M.L.R. Dl (E.C. Commission); [1975] 2 C.M.L.R. 154,171 (E.C.J.); SchrÖter, op. cit. 500-502.
17 Areeda and Turner, Antitrust Law (1978) ii, 354.
18 [1977] A.T.P.R. 16101.
19 Contrast St Regis-ACI Pty Ltd [1976] A.T.P.R. 16156 and RSR Corporation v. F.T.C. [1979] 2 Trade Cases 78433, the latter case having a particularly methodical and clear discussion and application of market definition.
20 Re Queensland Co-operative Milling Association Ltd (1976) 25 F.L.R. 169,1 A.T.P.R. 17223.
21 Op. cit. 351.
22 Id 429-431.
23 It was partly for this reason that the Swanson Committee's recommendation that the Act should define “market'' in terms of strict cross-elasticity of demand was rejected. See Trade Practices Act Review Committee Report (1976) para. 4. 22.
24 (1978) 18 A.L.R. 129, 1 A.T.P.R. 17578.
25 (1977) 28 F.L.R. 385, 1 A.T.P.R. 17324.
26 [1978] A.T.P.R. 17304.
27 United States v. Pullman Co. (1943) 50 F. Supp. 123; United States v.American Can Co. (1916) 230 F. 859; Whitney, Antitrust Policies (1958) ii,197-199.
28 United States v. Aluminum Co. of America (1945) 148 F. 2d 416.
29 Cf. Scherer, Industrial Market Structure and Economic Performance (1970) 459; SchrÖter, op. cit. 506.
30 [1975] A.T.P.R. 8845-8.
31 [1978] A.T.P.R. 17304.
32 (1945) 148 F. 2d 416.
33 Scherer, loc. cit.; Sullivan, op. cit. 46; Singer, Antitrust Economics (1968) 46.
34 RSR Corporation v. F.T.C. [1979] 2 Trade Cases 78433.
35 [1979] A.T.P.R. 16796.
36 Re Frozen Vegetables (1971) 18 F.L.R. 196. The relevant passage appears in the transcript of evidence, 173.
37 Shell Co. of Australia Ltd [1975] A.T.P.R. 16701.
38 Canada Dry Corporation [1915] A.T.P.R. 16105.
39 (1971) 18 F.L.R. 196.
40 [1975] A.T.P.R. 16701.
41 [1975] A.T.P.R. 16105.
42 T.P.C. v. Ansett Transport Industries (Operations) Pty Ltd (1978) 32 F.L.R.305,338.
43 An example of undue weight being attached to a non-functional differentiation may be found in the decision of the English Restrictive Practices Court in re Net Book Agreement [1962] LR. 2 R.P. 246, 308. There the Court took the view that “net books” (books which were subject to resale price maintenance) were in a separate part of commerce from ordinary books, simply because the publishers had designated them as net books, which meant that they had to be dealt with differently in trade: “they are an identifiable and distinct kind of commodity”.The Court's finding was not made precisely in the context of market definition but for a closely analogous purpose.
44 [1975] A.T.P.R. 8904; also Diverse Products Ltd [1975] A.T.P.R. 8845-27.
45 [1975] A.T.P.R. 16105.
46 [1978] A.T.P.R. 17329.
47 [1980] A.T.P.R. 17094. It can be argued that these decisions might not be contradictory if the different results stemmed from defining the market with reference to the individual firm or firms in question (see Mason, op. cit. 69). But nothing in the Commission's published reasons points to this.
48 Chamberlin, The Theory of Monopolistic Competition (6th ed. 1950) 65.
49 (1956) 351 U.S. 377. See re Tooth & Co. Ltd; re Tooheys Ltd (1979) 2 A.T.P.R. 18174, 18196; re Howard Smith Industries (1977) 1 A.T.P.R. 17324,17336; Q.M.C.A. (1976) 1 A.T.P.R. 17223, 17247. Close substitution was also the formulation preferred by Bain, Price Theory (1952) 25.
50 Re Tooth & Co. Ltd (1979) 2 A.T.P.R. 18174, 18196; re Howard Smith (1977) 1 A.T.P.R. 17324, 17336.
51 Re Tooth & Co. Ltd (1979) 2 A.T.P.R. 18174, 18197; Posner, Antitrust Law (1976) 126.
52 Cf. re Tooth & Co. Ltd (1979) 2 A.T.P.R. 18174, 18196. Australian Standard Industry Classification (ASIC) categories compiled by the census authorities are of little value in delineating the market, partly because they exclude substitutes entirely: Walker, op. cit. 663-665; de Jong, “The Relevant Market” in Bruges Week 524, 529-530.
53 [1978] 3 C.M.L.R. 174.
54 Id. 185-186.
55 (1975) 24 F.L.R. 286, 1 A.T.P.R. 17113.
56 [1974] 1 C.M.L.R. 309, 339 (supra p. 392).
57 Broken Hill Proprietary Co. Ltd [1980] A.T.P.R. 16751, 16756.
58 United States v. Empire Gas Corp. (1976) 537 F. 2d 296.
59 (1979) 2 A.T.P.R. 18174, 18196.
60 Id. 18198.
61 United Brands Co. v. E.C. Commission [1978] 1 C.M.L.R. 429,482.
62 United States: American Football League v. National Football League (1962) 205 F. Supp. 60, (1963) 323 F. 2d 124 (major league professional football); International Boxing Club of New York Inc. v. United States (1957) 150 F. Supp. 397, (1959) 358 U.S. 242 (championship boxing); Philadelphia World Hockey Club v. Philadelphia Hockey Club (1972) 351 F. Supp. 462 (major league professional ice hockey); Robertson v. National Basketball Association S.D.N.Y. 1970, unreported (major league professional basketball); Twin City Sportservice v. Charles 0. Finley Inc. (1975) 512 F. 2d 1264 (major league baseball concessions); Affiliated Music Enterprises v. Sesac (1959) 268 F. 2d 13 (Gospel music); United States v. Paramount Pictures (1947) 334 U.S. 131 (first-run movie exhibiting). Australia: Bankcard Scheme: Interbank Agreement [1980] A.T.P.R. 52169 (credit cards); perhaps Darwin Cinemas Pty Ltd [1976] A.T.P.R. 16127 (movie theatres). E.E.C.: re WEA-Filipacchi Music S.A. [1973] C.M.L.R. D43 ('pop” music, and perhaps the performances of particular tied artists, are a separate market); Community v. Miller International Schallplatten GmbH [1977] 1 C.M.L.R. D61 (light music a separate market, not interchangeable with serious music).
A single-judge Federal Court decision has held that no market exists among the constituent clubs of a football league: Adamson v. West Perth Football Club (Inc.) (1979) 39 F.L.R. 199, 2 A.T.P.R. 18445. The relevant market, therefore, would presumably be between leagues, where there were more than one. Contrast Los Angeles Memorial Coliseum Commission v. National Football League [1980] 2 Trade Cases 63523.
63 Schwartzman, “The Cross-Elasticity of Demand and Industry Boundaries: Coal, Oil, Gas and Uranium” (1973) 18 Antitrust Bulletin 483; Bain, op. cit. 26. Distinguish the different symmetry concept discussed in Stocking and Mueller, “The Cellophane Case and the New Competition” (1955) 45 American Economic Review 29, 45, which describes the effect of price changes in a monopolistically competitive market.
64 Williams argues that this result will be avoided if one defines the market by reference to a firm, in which case a product is a substitute if buyers are prepared to switch from the product in question to another product.
65 Areeda and Turner, op. cit. 371-372.
66 Posner, op. cit. 128-129; Turner, “Antitrust Policy and the Cellophane Case” (1956) 70 Harvard Law Review 281, 308-309.
67 Turner, id. 310.
68 S.4E. See n. 23 supra.
69 Cf. ARC Industries Ltd [1975] A.T.P.R.8845-9.1
70 Areeda and Turner, op. cit. 374-375, would apparently not insist on this in all cases.
71 Supra nn. 30, 31.
72 Authorization determination [1976] A.T.P.R. 16156.
73 (1979) 2 A.T.P.R. 18174, 18198.
74 Q.C.M.A. (1976) 1 A.T.P.R. 17223, 17247.
75 (1948) 334 U.S. 495.
76 (1958) 168 F. Supp. 576. The Court concluded that products must be substitutable from the buyer's point of view in any event, if they were to come within the relevant market: 592-593.
77 Brown Shoe Co. v. United States (1962) 370 U.S. 294.
78 United States v. Aluminum Co. of America (1964) 377 U.S. 271.
79 (1975) 510 F. 2d 894; District Court: (1973) 367 F. Supp. 258. See Rodgers, “Telex v. IBM: Defining the Relevant Market” (1975) 61 Iowa Law Review 184.
80 (1958) 168 F. Supp. 576.
81 Calnetics Corporation v. Volkswagen of America (1972) 348 F. Supp. 606;RSR Corporation v. F.T.C. [1979] 2 Trade cases 78433.
82 [1973] C.M.L.R. 199.
83 Id. 227.
84 (1975) 510 F. 2d 894; Korab, “Interpretation and Application of Article 86 of the Treaty of Rome: Abuse of a Dominant Position within the Common Market” (1978) 53 Notre Dame Lawyer 768, 778, quoting J. Van Damme.
85 [1973] C.M.L.R. 199.
86 [1979] 3 C.M.L.R. 211.
87 Id. 225-226, 270-273; Commission decision [1976] 2 C.M.L.R. D25, D27.
88 (1953) 110 F. Supp. 295.
89 (1963) 374 U.S. 321.
90 Id. 357, n. 34; see also United States v. Phillipsburg National Bank (1970) 399 U.S. 350, 360. The decision in United States v. Grinnell Corp. (1966) 384 U.S. 563, has been attacked for grouping central station alarm system suppliers offering protection only against fire with those offering protection only against burglary. But most firms offered both sets of services; and analysing competition in relation to each service separately would have been difficult because of joint cost problems. (This was a monopolisation case in which anti-competitive pricing practices were alleged.)
91 United States v. Connecticut National Bank (1974) 418 U.S. 656, 668-669.
92 Sullivan, op. cit. 60, footnotes omitted.
93 Thus, the cluster of services provided by a daily newspaper-news, legal notices, stock market reports, weather forecasts--could validly be grouped in one package: United States v. Times Mirror Co. (1967) 274 F. Supp. 606, 617, aff'd 390 U.S. 712. Accord, Marnell v. United Parcel Service [1971] Trade Cases 73761.
94 (1963) 374 U.S. 321.
95 Areeda and Turner, op. cit. 425-426, footnotes omitted.
96 T.P.C. v. C.S.B.P. and Farmers Ltd [1980] A.T.P.R. 42154.
97 See ARC Industries Ltd [1975] A.T.P.R. 8845-9.
98 [1975] A.T.P.R. 8621.
99 Harman, “The Competitive Impact of Exclusive Dealings in Australian Motor Spirit Markets” (1979) 7 Australian Business Law Review 3, 9.
page 410 note1 There are, apparently, some crude oils that come out of the ground as pure furnace oil and are of limited use for anything else, such as that from the Cyrus field in Iran. However, to increase imports of this crude, even if available, would require some investment in storage and perhaps shipping.
2 E.g. Q.C.M.A. (1976) 1 A.T.P.R. 17223, 17248; re Tooth & Co. Ltd (1979) 2 A.T.P.R. 18174, 18198.
3 (1977) 1 A.T.P.R. 17486, 17493.
4 (1978) 2 A.T.P.R. 18111, 18119-18121.
5 Re Tooth & Co. Ltd (1979) 2 A.T.P.R. 18174, 18194.
6 Herald & Weekly Times Ltd (1978) 17 A.L.R. 281, 2 A.T.P.R. 17591.
7 Hotham Permanent Building Society [1975] A.T.P.R. 8822.
8 Farmers' Cooperative Executors & Trustees Ltd/Bagot's Executor & Trustee Co. Ltd [1975] A.T.P.R. 8816.
9 [1975] A.T.P.R. 8841.
10 [1978] A.T.P.R. 16101.
11 [1978] A.T.P.R. 17304.
12 [1978] 1 C.M.L.R. D19.
13 Comment (1978) 3 European Law Review 1.
14 Korah, op. cit. 781n.
15 [1978] 1 C.M.L.R. D19, D24. See also General Motors Continental NV v.E.C. Commission [1976] 1 C.M.L.R. 95, 100, 109.
16 Ford Motor Company of Australia Ltd (1977) 1 A.T.P.R. 17486, 17493-17495.
17 Mazda Motors Pty Ltd [1975] A.T.P.R. 15905.
18 Nashua Australia Pty Ltd [1975] A.T.P.R. 8720.
19 (1975) 510 F. 2d 894.
20 [1975] A.T.P.R. 15905.
21 [1975] A.T.P.R. 8720.
22 [1978] 1 C.M.L.R. D19.
23 Subject to s. 50(3) in the case of mergers.
24 (1975) 510 F. 2d 894.
35 Sullivan, op. cit. 66.
26 (1976) 1 A.T.P.R. 17223, 17247, emphasis added.
27 (1979) 2 A.T.P.R. 18174, 18198.
28 Re Obadiah Pty Ltd (The Locksmiths' Case) [19801 A.T.P.R. 42421, 42435.
29 (1958) 168 F. Supp. 576.
30 (1962) 370 U.S. 294, 325.
31 United States v. Continental Can Co. (1964) 378 U.S. 441.
32 Areeda and Turner, op. cit. 411.
33 Posner, op. cit. 129.
34 (1979) 2 A.T.P.R. 18174.
35 [1980] A.T.P.R. 42421.
36 (1976) 1 A.T.P.R. 17223.
37 (1977) 1 A.T.P.R. 17486.
38 [1978] A.T.P.R. 16802.
39 (1978) 32 F.L.R. 305.
40 (1975) 24 F.L.R. 286, 1 A.T.P.R. 17113.
41 (1978) 32 F.L.R. 305.
42 [1980] A.T.P.R. 42216.
43 (1978) 32 F.L.R. 305, 312.
44 Op. cit. 480.
45 (1978) 32 F.L.R. 305, 315.
46 (1979) 2 A.T.P.R. 18333.
47 Id. 18356-18357. There was evidence that one retailer drove to a number of larger discount outlets to see what prices they were charging but it was not argued that this evidence had any bearing on market definition.
48 McDonald's System of Australia Pty Ltd v. McWilliam's Wines Pty Ltd (1979) 2 A.T.P.R. 18481, 18512.
49 (1979) 2 A.T.P.R. 18333.
50 (1978) 32 F.L.R. 305.
51 On the ground,inter alia, that it is quite common and proper for expert witnesses to express opinions on the ultimate issue provided that they make their assumptions clear: Sir Richard Eggleston, Seminar, Australian National University Law School, 29 September 1979.
52 Not invariably, however. In the case of conglomerate mergers or other conduct that crosses industry boundaries, the contrary will be true: see United States v. Continental Can Co. (1964) 378 U.S. 441; Dun & Bradstreet Pty Ltd [1976] A.T.P.R. 16142.
53 This is a qualification which must be made to Donald and Heydon's proposition that the law should never be allowed to determine what the market is: Trade Practices Law (1978) i, 94. See Elzinga and Hogarty, “The Problem of Geographic Market Delineation in Antimerger Suits” (1972) 18 Antitrust Bulletin 45, 70-71.
54 (1978) 32 F.L.R. 305.
55 (1956) 351 U.S. 377.
56 Turner, op. cit. 309.
57 Id. 310.
58 Massei, Competition and Monopoly (1964) 288. I have been unable to locate the original source of this quotation, but Chamberlin made the same point elsewhere: op. cit. 202n.
59 Op. cit. 780.
60 Handler, Blake, Pitofsky and Goldschmid, Trade Regulation: Cases and Materials (1975) 286.
61 Posner, op. cit. 128.
62 E.g. International Shoe Co. v. F.T.C. (1929) 280 U.S. 291, 296-297; re National Federation of Retail Newsagents' and Stationers' Agreement (1965) L.R. 5 R.P. 236; see Schwartz, Free Enterprise and Economic Organization (4th ed. 1972) 139; Walker, Australian Monopoly Law: Issues of Law, Fact and Policy (1967) 127-129.
63 E.g. International Air Transport Association [1980] A.T.P.R. 52152; Banana Growers Federation Co-operative Ltd [1978] A.T.P.R. 17035. In some other cases the T.P.C. has dealt with market definition by implication, presumably because the point is thought to be obvious on the particular facts. Thus, the determination in Victorian Guild of Furniture Manufacturers [1978] A.T.P.R. 17050, an unsuccessful application dealing with design copying rules, seemed to assume that the competitive context was furniture manufacture in Victoria. It might have been relevant to know whether, and to what extent, second-hand furniture competed with the new product, but perhaps the Commission did not consider that the answer to that question would make any difference since the members of the association accounted for 90 percent of new furniture output in Victoria.
It is even more disturbing that the Commission in the important case John Lysaght (Australia) Ltd [1978] A.T.P.R. 17304 inexplicably made almost every possible error when defining the markets for various classes of sheet steel products.
64 See e.g. Defris and McDonnell, “Recent Developments in the Australian Field of Psychological Economics”, paper at 48th ANZAAS Conference, Melbourne 1977.