ACCC v Flight Centre Alice Muhlebach 8 March 2017 1 Overview The - - PowerPoint PPT Presentation
Market definition in ACCC v Flight Centre Alice Muhlebach 8 March 2017 1 Overview The role of market definition in this case key statutory provisions The market definitions adopted at first instance, by the Full Court, and by the
Alice Muhlebach 8 March 2017
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Overview
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The role of market definition in this case - key statutory provisions Section 45 - Contracts, arrangements or understandings that restrict dealings or affect competition ... (2) A corporation shall not: (a) make a contract or arrangement, or arrive at an understanding, if: … (ii) a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or (b) give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision: … (ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition. (3) For the purposes of this section and section 45A, competition, in relation to a provision of a contract, arrangement
a corporation that is a party to the contract, arrangement or understanding or would be a party to the proposed contract, arrangement or understanding, or any body corporate related to such a corporation, supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the provision, supply or acquire, or be likely to supply or acquire, goods or services.
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The role of market definition in this case - key statutory provisions Section 45A – Contracts, arrangements or understandings in relation to prices (1) Without limiting the generality of section 45, a provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be deemed for the purposes of that section to have the purpose, or to have or to be likely to have the effect, of substantially lessening competition if the provision has the purpose, or has or is likely to have the effect, as the case may be, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price for, or a discount, allowance, rebate or credit in relation to, goods or services supplied or acquired or to be supplied or acquired by the parties to the contract, arrangement or understanding or the proposed parties to the proposed contract, arrangement or understanding, or by any of them, or by any bodies corporate that are related to any of them, in competition with each other. Section 4E – Market For the purposes of this Act, unless the contrary intention appears, market means a market in Australia and, when used in relation to any goods or services, includes a market for those goods or services and other goods or services that are substitutable for, or otherwise competitive with, the first-mentioned goods or services.
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Airlines Activities included
and selling tickets directly Customers purchasing airline tickets
ACCC v Flight Centre Travel Group Ltd [2016] HCA 49
Flight Centre Agent for the airlines in selling tickets (including making availability of tickets known to customers)
services to the airlines? Were the airlines supplying those services to themselves?
supplying “booking services” to customers?
services supplied in a market(s) other than the market in which the ticket was sold?
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Agency agreement
Supply of distribution services? Supply of booking services?
The market definitions adopted at first instance, by the Full Court, and by the High Court
Markets identified by parties Decision at first instance Decision on appeal (Full Court) High Court Booking and distribution services ACCC (primary case) Two separate markets for booking and distribution services (Dr Vince FitzGerald: single downstream market in which booking and distribution services are supplied.) Single market for distribution and booking services in respect of available international air travel No separate booking and distribution market No separate booking and distribution market (Kiefel and Gageler JJ (French CJ, Nettle and Gordon JJ agreeing)) Supply of international air travel services Flight Centre
ACCC (alternative case)
services (also identified separate alternative “wholesale” market for supply of international passenger air travel services, sitting above a “retail” market for supply of those services to consumers). Flight Centre does not supply services, or compete with the airlines, in relation to the supply of international passenger air travel services Market for the supply of international passenger air travel services Single market for the supply of contractual rights to international air carriage (ie, tickets), in which airlines and travel agents compete to supply tickets to customers (Kiefel and Gageler JJ (Nettle and Gordon JJ agreeing)) Single market in which international airlines compete for the sale of air travel services, and in which Flight Centre participates as an agent (and not a competitor) of the airlines (French CJ)
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Some observations
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BHP Billiton, Rio Tinto Integrated mining, rail and port facilities for production of iron
Fortescue As for BHP Billiton, Rio Tinto, but also potentially a supplier of third party haulage services on BHP Billiton’s and Rio Tinto’s railways Customers purchasing iron ore
In the matter of Fortescue Metals Group Limited [2010] ACompT 2
Other miners May purchase rail haulage from Fortescue, possibly BHP Billiton/ Rio Tinto
haulage, separate from the markets for supply of iron ore, and the supply of rail track services
relevant railway line
separability, negotiations, demand, power to withhold, feasible transaction costs
business units not addressed
arise re single supplier/brand product market?
?
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Major supermarket chains (solely self- suppliers) Purchased groceries from suppliers, wholesaled them to company owned retail stores, and sold groceries to customers from those stores Franklins As at left, but also provided wholesale supply to third party owned retail stores Retail customers
ACCC v Metcash [2011] FCAFC 151
Metcash and SPAR Purchased groceries from suppliers, wholesaled them to third party stores Third party retailers Sold groceries to customers from retail stores
wholesale grocery services to independent supermarkets; this competition occurred in a market which was held to include both wholesale supply and the supply of groceries to retail customers by integrated, self-supplying supermarket chains
posed by the retail activities of self- supplying supermarket chains was key to this functional market definition
Flight Centre, but would a constraints analysis have reached the same outcome in Flight Centre?
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ANZ Supplied loans and certain associated services (advice, assistance etc) re ANZ loans to retail customers BROKERS Supplied loan arrangement services for a range of banks’ products, including comparison, advice, assistance etc; paid commission by banks Retail customers
ACCC v ANZ [2015] FCAFC 103
market for the supply of “loan arrangement services”, because ANZ did not supply “loan arrangement services” (although it did engage in a subset of those activities as part of its supply of loans)
existence of separate business units
market had been considered?
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Supply of loan arrangement services?