Australian Competition and Consumer Commission v Qantas Airways Limited

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judgment Date: 11 December 2008
• Neutral Citation: [2008] FCA 1976

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Qantas Airways Limited [2008] FCA 1976

TRADE PRACTICES – contravention of Pt IV of Trade Practices Act 1974 (Cth), s 45(2) – arriving at and giving effect to understanding having purpose or likely effect of substantially lessening competition – understanding between respondent (Qantas) and other international airlines as to surcharge to be imposed on international carriage of freight in consequence of increases in price of fuel – Fuel Surcharge Understanding – agreed statement of facts and joint submissions – penalty of $20 million and injunction for three years sought by both parties – consideration of relevant factors and of role of Court – relevant considerations – appropriateness of injunction of limited duration.

Held: pecuniary penalty and injunction in terms as agreed.

Trade Practices Act 1974 (Cth), ss 4E, 5, 45(2), 45A, 76, 80

Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd (2008) ATPR 42-256 cited

Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 4) (2006) ATPR 42-101 referred to

Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union (2007) ATPR 42-192 discussed

Australian Competition and Consumer Commission v George Weston Foods Ltd (2004) 210 ALR 486 discussed

Australian Competition and Consumer Commission v IPM Operation & Maintenance Loy Yang Pty Ltd (2006) 157 FCR 162 discussed

Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd (2002) ATPR 41-851 cited

Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 referred to

Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301 referred to

Australian Competition and Consumer Commission v Liquorland (Aust) Pty Ltd (2005) ATPR 42-070 discussed

Australian Competition and Consumer Commission v McMahon Services Pty Ltd (2004) ATPR 42-031 referred to

Australian Competition and Consumer Commission v McPhee & Son (Australia) Pty Ltd (1998) ATPR 41-628 referred to

Australian Competition and Consumer Commission v Roche Vitamins Australia Pty Ltd (2001) ATPR 41-809 referred to

Australian Competition and Consumer Commission v Signature Security Group Pty Ltd (2003) ATPR 41-942 discussed

ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR

J McPhee & Son (Aust) Pty Ltd v Australian Competition and Consumer Commission (2000) 172 ALR 532 referred to

Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993 discussed

NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 referred to

referred to

Riverstone Computer Services Pty Ltd v IBM Global Financing Australia Ltd [2002] FCA 1608 cited

Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 referred to

Trade Practices Commission v Stihl Chainsaws (Aust) Pty Ltd (1978) ATPR 40-091 cited

Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375 cited

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

v QANTAS AIRWAYS LIMITED (ACN 009 661 901)

NSD 1694 of 2008

LINDGREN J

11 DECEMBER 2008

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1694 of 2008

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
AND:	QANTAS AIRWAYS LIMITED (ACN 009 661 901) Respondent

JUDGE:	LINDGREN J
DATE OF ORDER:	4 November 2008
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Leave is granted to any person to inspect the affidavit of Paul Malcolm Taylor made on 23 October 2008, including its annexures.

2. Judgment is reserved.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1694 of 2008

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
AND:	QANTAS AIRWAYS LIMITED (ACN 009 661 901) Respondent

JUDGE:	LINDGREN J
DATE OF ORDER:	11 DECEMBER 2008
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The respondent pay the Commonwealth of Australia within 14 days of this order a pecuniary penalty in the sum of $20,000,000 in respect of the contraventions of section 45(2)(b)(ii) of the Trade Practices Act 1974 (“the Act”) referred to in 1.3 below, in that:

1.1 the respondent at some time in 2000, arrived at an understanding with certain of its competitors for the supply of services for the international carriage of air cargo containing a provision that they would each impose a fuel surcharge on the carriage of air cargo across their global networks pursuant to a methodology initially created and published by IATA and subsequently published by Lufthansa Cargo Aktiengesellschaft (a competitor of the respondent) or other methodology to substantially the same effect, except where conditions in a particular port or in a particular geographic area prevented the imposition, or full imposition, of the charge;

1.2 that provision had the purpose and effect of fixing, maintaining or controlling prices for the said services within the meaning of section 45A of the Act and is therefore deemed to substantially lessen competition with the meaning of section 45(2)(a)(ii) of the Act; and

1.3 the respondent gave effect to that provision of the understanding between 2002 and 2006 by:

1.3.1 increasing and decreasing on 21 occasions the amount of the fuel surcharge it imposed per kilogram of cargo in accordance with the said understanding;

1.3.2 imposing fuel surcharges in accordance with the said understanding on the carriage of international air cargo, including to and from Australia; and

1.3.3 in cases where local conditions prevented the imposition, or full imposition, of a fuel surcharge from a particular port or in a particular geographic area, including Australia, taking steps to impose the fuel surcharge to the extent possible.

THE COURT ORDERS BY CONSENT THAT:

2. The respondent be restrained, for a period of three years from the date of this order from making, arriving at, or giving effect to, any contract, arrangement or understanding with any of its competitors for the supply of the services of the carriage of international air cargo, containing provisions which have the effect of fixing, controlling or maintaining the price or any part of the price at which it or any of them will supply those services in competition with each other unless:

2.1 the said contract, arrangement or understanding does not involve or relate to the carriage of goods to or from Australia;

2.2 the said contract, arrangement or understanding is necessary for the purpose of interlining between two or more carriers in the course of supplying services of the carriage of international air cargo; or

2.3 the respondent is specifically authorised to do so under section 88 of the Act.

3. The respondent pay the applicant within 14 days of this order $200,000 as a contribution towards its costs of and incidental to these proceedings.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1694 of 2008

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
AND:	QANTAS AIRWAYS LIMITED (ACN 009 661 901) Respondent

JUDGE:	LINDGREN J
DATE:	23 DECEMBER 2008
PLACE:	SYDNEY

REASONS FOR JUDGMENT

Introduction

1 The applicant, Australian Competition and Consumer Commission (Commission), seeks against the respondent, Qantas Airways Limited (Qantas), imposition of a pecuniary penalty pursuant to s 76 of the Trade Practices Act 1974 (Cth) (the Act) and injunctive relief pursuant to s 80 of the Act. The application relates to Qantas’s conduct in arriving at and giving effect to a collusive understanding in respect of an element in the price for the carriage of international air cargo between early 2000 and February 2006 (the relevant period).

2 The Commission and Qantas are agreed on the orders that the Court is invited to make, including the level of pecuniary penalty - $20 million. The Commission and Qantas have provided the Court with a Statement of Agreed Facts and Admissions (see s 191 of the Evidence Act 1996 (Cth)), and Joint Submissions.

3 A single document entitled “Joint Submissions, Statement of Agreed Facts and Admissions pursuant to s 191 of the Evidence Act 1995” was annexed to an affidavit (I will refer separately in these reasons to the “Joint Submissions” and “Statement of Agreed Facts” that comprised that document). It should not have been. Apart from any other reason why it should not have been, being part of an affidavit, it could not be inspected without the leave of the Court or a Judge: see O 46 r 6(3)(a) of the Federal Court Rules. The rule applies even in respect of an affidavit that has been read, in whole or in part, on a hearing. Apparently the document was annexed to the affidavit due to an oversight. There was no opposition to my making an order at the beginning of the hearing that leave was granted to any person to inspect the affidavit.

4 The price to which I referred at [1] above was charged by many international air cargo carriers. Their understanding, which was implemented globally, was that a fuel surcharge would be imposed on most international carriage of cargo by air (the Fuel Surcharge Understanding).

5 For the purpose of this proceeding only, Qantas has admitted that its conduct contravened s 45 of the Act.

6 The Commission and Qantas acknowledge that it is for the Court to be satisfied that Qantas did contravene s 45 and...