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(3) International Comparative Analysis of Private Rights of Access

V. Case Management and Efficiency of Proceedings:

5(a) Caseflow Management:

When it was established In 1977, the Federal Court was one of the first in Australia to adopt caseflow management procedures to minimize delays in litigation and provide parties with early hearing dates. The power of the court to adopt these procedures was founded upon § 59 of the Federal Court Act, which granted the judges of the court broad authority to make rules to be followed in the court, its registries and all incidental matters.

The caseflow management system of the Federal Court has been described in detail as follows:

General

Directions hearings are the core element of the Court's caseflow management system. The Court has wide powers to give directions and these are used to provide judicial supervision of the progress of matters from commencement to hearing. The caseflow management process is described by the Federal Court as follows:

When an initiating document is filed, matters ... are given a return date for directions before a single judge. At directions hearings the judge gives whatever directions are necessary to assist the parties to identify the relevant issues. The judge also makes the necessary orders for the progress of a case to trial, such as orders for particulars and discovery. A case is adjourned to a fixed date by which parties are expected to have completed any interlocutory steps which have been ordered. When a judge is satisfied the case is ready for trial, a trial date is fixed according to the availability of parties, counsel and witnesses. ...

Directions hearings

Order 10 of the Federal Court Rules provides the framework for making orders on a directions hearing. Order 10 r 1(1) provides that on a directions hearing the Court shall give such directions with respect to the conduct of the proceedings as it thinks proper. Rule 1(2) provides a lengthy but non-exhaustive list of the matters with respect to which orders may be made. Among its specific powers, the Court may give directions as to the manner in which evidence of particular facts should be given and the form in which expert evidence should be received. For example, the Federal Court sometimes conducts a procedure, akin to a 'mini trial', where the applicant and respondent are both required to present their principal witnesses for cross- examination.

Listing Conferences

Another case management event in the Federal Court case management regime is referred to as a 'listing conference' or 'pre-trial settlement conference'. The Court orders the parties to attend a listing conference before a Registrar pursuant to O 10 r 1(2)(h) of the Rules.

The conference is held with a view to satisfying the Registrar that all reasonable steps to achieve a negotiated outcome ... have been taken, or otherwise clarifying the real issues in dispute so that appropriate orders may be made, or otherwise to shorten the time taken for preparation for and at trial.

Case Management Conferences

The Court may also order that the parties attend a 'case management conference' with a Judge or a Registrar pursuant to O 10 r 1(2)(I) of the Rules.

The purpose of this form of conference is (to) consider the most economical and efficient means of bringing proceedings to trial and of conducting the trial. At the conference the judge or the registrar may give further directions ....109

Directions hearings, listings conferences and case management conferences are used to limit the issues proceeding to trial and encourage the early settlement of disputes.

The ALRC noted that the Federal Court is contemplating a number of changes to its caseflow management system "aimed at disposing of 98% of cases within 18 months or less of commencement. It said:

The main case management events under the proposals being considered by the Federal Court are:

  • directions hearings (held not more than 2 months after commencement) aimed at early filtering of cases by removal, referral to ADR and settlement or disposal if possible. ...
  • case management conferences (held not more than 4 months after commencement ) to encourage settlement, referral to assisted dispute resolution or disposal, if possible. ...
  • evaluation conferences (held not more than 10 months after commencement) (to) focus on the disposition of the case without trial and evaluate preparation for the trial.
  • trial management conferences (held not more than 13 months after commencement) ... held, only where necessary, to establish ground rules for the conduct of the trial. ...110

It is anticipated that adding evaluation conferences and trial management conferences to the court's arsenal will result in the resolution of most cases within 18 months of commencement.111

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5(b) Alternative (or Assisted) Dispute Resolution (ADR):

At a directions hearing or listing conference, the court may order that all or part of the proceedings be referred to ADR. According to the ALRC:

The Federal Court established an 'Assisted Dispute Resolution' program in 1987. Section 53A of the Federal Court Act provides that the Court may, with the consent of the parties, refer proceedings to a mediator or arbitrator in accordance with the Rules.

Under these Rules, orders made at a Federal Court directions hearing may stream disputes into court-annexed mediation or arbitration processes. ....

The Court's procedures for mediation and arbitration are set out in O 72 of the Rules. The program is based primarily on mediation of disputes by Registrars of the Court with the consent of the parties. Listing conferences under O 10 r 1(2)(h) ... may also explore the possibility of a mediated settlement.

Federal Court Practice Note No. 8 provides that parties do not lose their priority in the hearing list should a mediation or listing conference be conducted.

Parties to proceedings on the Western Australia District Registry of the Federal Court may also utilize court-annexed early neutral evaluation (ENE) under a pilot program operated by the court with the participation of Senior Counsel at the Western Australian Bar. ...112

The potential for referral to ADR appears to have become an entrenched part of the pre-trial process of the Court.

5( c) Consent Orders:

Under Order 35, Rule 10 of the Federal Court Rules, the terms of a settlement agreement may, upon the written consent of the parties, be issued as an order of the court "with the same force and validity as if it had been made after a hearing by the Judge."113All that need be done is to file an application for a consent order with the Registry of the court. The Registrar will bring the matter before a judge "who may, without any other application being made to the Judge, direct the Registrar to draw up, sign and seal an order in accordance with the terms of the consent."114

5(d) Summary Judgment:

Under Order 20, Rule 2 of the Federal Court Rules, a motion for summary judgment may be made for the stay or dismissal of frivolous or vexatious claims,115 proceedings that constitute an abuse of process, or claims that disclose no reasonable cause of action. Under subsection (2) of Rule 2, the court may hold a hearing on the motion at which evidence may be received. As indicated above, it is anticipated that motions for summary judgment aimed at filtering out such claims will be made as early as the directions hearing.116

Under Order 52, Rule 10, leave to appeal an interlocutory ruling, inter alia, on a motion for summary judgment may be orally requested at the time the judgment is pronounced. Order 52, Rule 17, however, ensures that the appeal will not operate as a stay of the proceedings in the trial court.

The power of the trial court to dismiss or stay vexatious, etc., claims is regarded as the primary deterrent to their pursuit; however, the court's cost allocation rules may also help deter them by imposing financial sanctions upon those who file them.117Under Order 62 of the Federal Court Rules, Rule 3(1), the court has the power to award costs, including disciplinary costs, at any stage of the proceedings. Under Order 22, Rule 3, any party who discontinues its action before or after the directions hearing is liable to pay the costs occasioned by the proceeding to the other party or parties. Moreover, under Rule 9, the solicitor for a party may be ordered to pay or forego costs incurred by undue delay, misconduct or default for which he or she is responsible.

The ALRC has recommended that disciplinary costs orders should be available in the following circumstances:

At any stage of proceedings a court or tribunal should be able to make a disciplinary costs order against a party, his or her legal representative or any other person involved in the litigation who, in the opinion of the court or tribunal,

  • does not comply with a procedural rule or order of the court or tribunal
  • causes unnecessary delays
  • significantly increases the costs of the matter by unreasonably pursuing one or more issues on which he or she fails
  • causes the other party to incur costs that were not necessary for the economic and efficient conduct of the proceedings, including costs incurred as a result of seeking leave to amend his or her pleadings or particulars or seeking an extension of time
  • engages in conduct that, in the opinion of the court or tribunal, hinders the efficient and just determination of the issues in dispute
  • has unreasonably refused to negotiate a settlement or participate in alternative dispute resolution
  • otherwise abuses the processes of the court118

For the most part, these recommendations appear to be in line with what already exists in the Federal Court.

5(e) Efficiency vs. Quality of Justice:

It has been recognized by the ALRC119 and legal commentators120 in Australia that "(t)here can be a tension between the ideals of justice and the application of modern principles of management to increase the efficiency of the justice process."121 According to the ALRC:

The concern is that judicial management and case management may result in the existing system of justice being replaced with a lower quality system of justice, albeit one that may be cheaper and quicker at disposing of disputes. Judicial management may result in case processing becoming an end in itself, rather than the means of achieving justice.

Such concerns about the quality of justice affect how courts approach case management compliance. For example courts tend to prefer monetary rather than preclusionary sanctions, which would prevent a party from taking or supporting a particular position in litigation, because they are reluctant to prevent litigation of claims on the merits. ...122

In the interests of preserving the quality of justice, many judges tend to compromise the goal of efficiency, preferring the imposition of monetary sanctions over striking dubious claims on the merits.

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5(f) Experience in the Federal Court With Private Actions Under the Act:

In 1995 the ALRC was asked to review the adversarial system of conducting civil, administrative review and family law proceedings before courts and tribunals exercising federal jurisdiction. As part of its inquiry, the ALRC undertook empirical work on the 700 cases finalized in the Federal Court during the period February to April, 1998. It released its preliminary findings in Discussion Paper 62: Review of the federal civil justice system in August 1999123. (The chapter relevant to this study is Chapter 10, Case and hearing management in the Federal Court of Australia.) The Commissioner in charge of the inquiry, Dr.ˇKathryn Cronin, summarized the findings on trade practices cases in the Federal Court, based on the ALRC?s empirical data, consultations, and correspondence with the Federal Court124, as follows:

  • The most common trade practices cases in the Federal Court are competition cases and ?misleading and deceptive? cases. Unfortunately, when the ALRC collected the data for its empirical work, it did not distinguish between the different types of trade practices cases. Therefore, statistics which relate solely to competition cases cannot be isolated from the ALRC?s empirical data.
  • Trade practices cases made up approximately 8% of the Federal Court?s total caseload in 1998-99
  • Competition cases (Part IV Trade Practices Act cases) are dealt with by a panel of specialist judges in the Sydney and Melbourne registries, allowing cases to be assigned to a judge who has particular expertise or interest in the area. In the other smaller registries where there are between three and five judges, no panel system is in operation.
  • The median duration for cases in the ALRC?s Federal Court sample was seven months for all cases and 14 months for trade practices cases. The trade practices sample cases included a few cases which took over three years to finalize. The Federal Court and practitioners in the area have informed the ALRC that these cases are not representative and have therefore skewed the duration figures. The Federal Court has since supplied the ALRC with statistical data on the 100 competition cases filed since 1 July 1996. These data reveal the following:
    • 69 cases out of the total 100 have been finalized.
    • Of the 69 finalized cases, 66% were discontinued or settled (22% were discontinued, 44% settled or had consent orders made), 30% went to a hearing and 4% were transferred to another jurisdiction.
    • Of these 69 cases the average duration was 38 weeks (9 months) with a range from one day to 2 years 34 weeks.
    • Of the cases that went to a hearing the average duration was 44 weeks (10 months) and the median duration was 38 weeks (9 months) with a range from one day to 2 years 8 weeks.
  • Trade practices cases have more interlocutory applications than other case types with a median of 2 per case and a range of 1-19 per case compared with intellectual property cases which had a median of 1 and a range of 1-18.
  • 35% of all cases in the ALRC?s Federal Court sample proceeded to a final hearing and judgment and 57% were settled early in the process. 72% of trade practices cases were settled early in the process and only 19% proceeded to a final hearing and judgment. Trade practices cases had the highest settlement rate ?at the door of the court? or after a case has been listed for a hearing with 8% of trade practices cases compared with 4% of cases overall settling ?at the door?

As part of the review, a federal civil litigation working group was formed in September, 1996, to help the ALRC to describe the types of cases that come before the Federal Court as well as analyse and highlight the problems that arise at the various stages of the litigation. The working group produced a flowchart showing a profile of a typical restrictive trade practices case as it passed through the court. In comments to this flowchart, the working group noted, inter alia:

Part IV cases are characterized by a lengthy, hard fought contest to determine a complex raft of facts. The extent and nature of judicial control can impact greatly upon the length of hearing. Questions of relevance may be difficult to resolve at early stages. ... Many cases (probably more than 50%) are taken on appeal. Appeal processes may take two years or more to be completed. The costs of appeal may be relatively small compared to the cost of the main hearing as appeals will ordinarily be concluded within two hearing days. ...125

The hard-fought nature of Part IV cases and the prospect of more than 50% being appealed indicates that many Part IV cases take substantially longer than 18 months to reach final resolution. The flowchart and comments are appended to this chapter as Appendices A and B.

5(g) Contribution of Private Actions to Competition Jurisprudence:

There seems to be little doubt that private actions have made a substantial contribution to the development of competition jurisprudence in Australia. As was said in the Brunt study:126

The first reported decision under Part IV - Restrictive Trade Practices of the Trade Practices Act 1974 (Cth) (?the Act?) was a private action, Top Performance Motors v. Ira Berk (1975). The first reported High Court decision was a private action, Quadramain v. Sevastapol (1976). The most important judgment to date was yet another private action, Queensland Wire Industries v. B.H.P. (1989). In this case the Australian High Court handed down a judgment on ?misuse of market power? (§46 of the Act), universally hailed as a landmark decision. And over the last decade and a half, there has come a stream of significant decisions on the interpretation of various sections in Part IV of the Act arising from litigation initiated by private parties. To the three cases just cited we can add:

Adamson v. West Perth Football Club, (1979);
Tillmans Butcheries v. A?sian Meat Industry Employee?s Union (1979);
Ron Hodgson v. Westco (1980);
Actors and Announcers Equity v. Fontana (1980, 1982);
Cool v. O?Brien, (1981, 1983);
Radio 2UE v. Stereo FM, (1980, 1982);
Outboard Marine v. Hecar (1982);
Dandy Power Equipment v. Mercury Marine (1982);
Williams & Hodgson v. Castlemaine Tooheys (1985, 1986);
Warman v. Evirotech (1986);
Hughes v. Western Australian Cricket Association (1986);
Mark Lyons v. Bursill Sportsgear (1987);
McCarthy v. Australian Rough Riders (1989, 1990);
Jewel Food Stores v. Amalgamation Milk Vendors Association (1989, 1990);
Paul Dainty v. National Tennis Centre Trust (1989, 1990);
Pont Data Australia v. ASX Operations (1990).

Even some of the decisions on the grant of interlocutory injunctions, by their nature of limited authority, have generated an interest extending beyond resolution of the immediate dispute, for example:

Victorian Egg Marketing Board v. Parkwood Eggs (1978);
Williams v. Papersave (1987);
Midland Milk v. Victorian Dairy Industry Authority (1988).

Finally, we should note instances of enforcement action undertaken, in effect, jointly by private parties and the Trade Practices Commission - of private actions running on the ?coat-tails? of successful Commission prosecution, as in the damages suits:

Hubbards v. Simpson (1982);
Parrys Department Store v. Simpson (1983).

Many more actions are instituted by private parties than are instituted by the Trade Practices Commission (?the T.P.C.?). While most of these private actions are settled or discontinued, on has the impression that more significant judgments on the merits stem from private than from public (i.e. Commission) actions.

These sentiments were echoed by Commissioner Bhojani of the ACCC, who added to the list of important decisions, Re Eastern Express Pty Ltd. and General Newspapers Pty Ltd127., which contributed to the law regarding market definition, predatory pricing and misuse of market power; Dowling v. Dalgety Australia Ltd.128, which contributed to the development of the law relating to substantial lessening of competition under s. 45 of the Act; and, News Ltd. v. Australian Rugby Football League129, which dealt at length with the law relating to concerted refusals to deal, i.e., group boycotts.

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APPENDIX A

FEDERAL COURT PART PRACTICES ACT CASE

Flowchart (PDF: 17 KB)

APPENDIX B

FEDERAL COURT PART IV CASE

Other comments

  1. The profile presents an illustrative Part IV Trade Practices Act case. Note that such cases may also involve numerous other legal claims and interests which complicate the profile. The case may start with a contract dispute and escalate to involve numerous parties and allegations that relate to other forms of statutory and general law remedies.
  2. Part IV cases will typically involve extensive discovery processes and the filing of numerous affidavits. There will usually be a factual dispute as well as a technical dispute.
  3. Expert evidence will usually be required to determine the nature and extent of impact upon the market. Views in relation to competition will need to be determined so that a market analysis can take place. The Trade Practices Tribunal was devised (to some extent) to assist in assessing expert evidence. The multifaceted nature of many Part IV disputes leads to many disputes being resolved in the court rather than the tribunal system.
  4. Part IV cases are characterised by a lengthy, hard fought contest to determine a complex raft of facts. The extent and nature of judicial control can impact greatly upon the length of hearing. Questions of relevance may be difficult to resolve at early stages.
  5. Court appointed experts could be used to reduce costs to some extent. Experts would be required to comment upon both the market and the competition. The greatest legal and other costs incurred by parties relate to expert evidence and discovery costs. Significant costs are also incurred in the subpoena process. Subpoenas may be directed at numerous competitors and this may result in increased numbers of interlocutory applications (and third party litigation).
  6. Many cases (probably more than 50%) are taken on appeal. Appeal processes may take two years or more to be completed. The costs of appeal may be relatively small compared to the cost of the main hearing as appeals will ordinarily be concluded within two hearing days.
  7. The role of the duty judge in dealing with complex and highly technical issues throughout the interlocutory stages is critical and may be one reason for maintaining Part IV specialists among the judiciary. Issues can be limited in preliminary stages. There may be a greater role for court appointed experts. Interrogatories may play a role in Part IV cases.
  8. Settlement prospects and discussions will be affected in part by the nature and extent of ACCC involvement.
  9. A Part IV case may form part of a takeover case.
  10. The hearing is important for cross examination of witnesses. A hearing will inevitably involve complex mixed questions of fact and law if it gets that far.

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NEW ZEALAND

Introduction:

Modern competition law may be said to have had its beginnings in New Zealand in 1986, when the government enacted a revolutionary version of its Commerce Act (the Act).130 The Act was intended to be a strong competition law to ensure that the economic liberalization and deregulation that New Zealand was instituting at the time, did not result in private regulation through cartel activity.131

Because the Australia-New Zealand Closer Economic Relations Trade Agreement132 required member states to harmonize certain aspects of their antitrust legislation, the Act essentially copied many of the provisions of the Australian Trade Practices Act. The Australian Act was also regarded as the most desirable model to follow "because it appealed as a robust antitrust regime."133 As a result, there was a substantial overlap between the two statutes in matters such as conduct actionable by private parties, standing to sue, remedies and penalties.

On June 29, 1990, the Act was amended. The amendment streamlined the merger regime, extended in some respects the power of the Commerce Commission to issue authorizations, extended the extraterritorial operation of the Act, and increased pecuniary penalties.134

At present, the Act is once again in the process of being reviewed and amended. The statutory review process was initiated in January, 1998, when Cabinet released a discussion document from the Ministry of Commerce entitled, "Penalties, remedies and court processes under the Commerce Act, 1986",135 and invited submissions in response to it. In December, 1998, the Cabinet Economic Committee produced five papers in which it reviewed the discussion document and responses, and made recommendations to Cabinet.136 Cabinet adopted the recommendations, and a proposed Commerce Act Amendment Bill was placed on the Order Paper in mid-1999. On July 29, 1999, further proposed amendments were placed on a Supplementary Order Paper. It appears that no action will be taken upon these proposed amendments until some time after the New Zealand parliamentary elections, which are scheduled for November 20, 1999. 137

A review of these documents indicates that the proposed Commerce Act Amendment Bill will make a number of changes to the enforcement of the Act through both public and private action. These changes are said to be necessary to ensure that "(p)enalties and remedies under the Commerce Act ... support the goals of the Act by deterring anti-competitive conduct."138They include, inter alia:

(1) Authorizing the Commission to seek pecuniary penalties of three times the value of the illegal gain, or, if the gain cannot be calculated, 10% of the annual turnover of the corporation;

(2) Clarifying the Act to signal to the courts that private parties are entitled to exemplary damages;

(3) Empowering the Commission to issue cease and desist orders;

(4) Making hard core cartel conduct, such as output limitation agreements or market allocation agreements, per se illegal;

(5) Prohibiting corporations from indemnifying their agents for penalties;

(6) Granting discretion to the courts to prohibit offenders from directing or managing corporations for up to five years; and,

(7) Possibly establishing a transparent amnesty program for individuals and corporations.

The potential impact of these proposed amendments will be noted wherever applicable in the following discussion.

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I. Private Actions: Overview:

1(a) Conduct Actionable by Private Parties:

Private actions are available for contraventions of Part II of the Act (Restrictive Trade Practices), and, since the 1990 amendments, Part III of the Act (Merger). Parts II & III prohibit the following practices:

Practice Sections Per Se Illegal?139
1. Arrangements substantially lessening competition 27, 28 No
2. Arrangements with exclusionary provisions (Group boycotts) 29 Yes
3. Price fixing (Goods or services) Exemptions: 30, 34 Yes140
  (1) Joint venture pricing 31  
  (2) Price recommendations 32  
  (3) Buying groups 33  
4. Abuse of Dominant Position 36, 36A(since 1990) No
5. Resale price maintenance (Goods only) 37 - 42 Yes
6. Mergers 47, 48 No

While the above prohibitions are similar to their counterparts in the Australian Act, the New Zealand Act does not contain any counterparts to the Australian prohibitions of exclusive dealing, third line forcing (tied selling), price discrimination or secondary boycotts. Exclusive dealing and tied selling are thought to be covered by §§ 27 and 36 of the Act, which prohibit, respectively, arrangements substantially lessening competition and abuse of dominance.141 Price discrimination, in the per se sense, and secondary boycotts do not appear to be covered.

As in Australia, the Act grants private parties the right to sue for injunctive relief and/or damages for contravention of the above provisions.142 The right to sue for damages for contravention of the merger provisions of the Act was granted in the 1990 amendments to the Act.143 Unlike Australia, New Zealand did not take away the right of private parties to sue for injunctive relief in merger cases.144

1(b) In Practice, the Kinds of Actions that Private Parties Tend to Bring:

It appears from the discussion document released by Cabinet at the commencement of the statutory review,145 that the majority of key decisions in private actions have dealt primarily with allegations of abuse of dominant position in contravention of § 36 of the Act.146 An examination of these decisions reveals that most involved attempts to invalidate exclusive dealing or tying arrangements,147 or gain access to products or facilities that the defendant refused to supply.148At least two key decisions involved other types of attempts to restrict entry into a market.149 One decision involved imposition upon a discounter of a form of resale price maintenance.150

It seems highly likely that many more private actions were filed than those that went to decision. Unfortunately, no reliable information is available as to the types of competitive misconduct alleged in these suits. From the Australian results in this area,151 which are somewhat more complete, it would seem that the range of misconduct alleged in all private actions that were filed would likely be similar to that observed in the actions that were concluded by decision.

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1(c) Where Private Actions are Commenced:

Under § 75 of the Act, the High Court of New Zealand is granted exclusive jurisdiction over, inter alia, applications for injunctions and actions for damages for contraventions of Parts II and III of the Act. Section 75 provides, in pertinent part, as follows:

SECTION 75 JURISDICTION OF THE HIGH COURT

75(1) In accordance with this part of the Act, the High Court shall hear and determine the following matters:

( a) In the case of contraventions of Part II of this Act, -- ....

(ii) Applications for injunction under section 81 of this Act:
(iii) Actions for damages under section 82 of this Act:

( b) In the case of contraventions of Part III of this Act, -- ....

( ii) Applications for injunctions under section 84 of this Act:
( iia) Actions for damages under section 84a of this Act:
( iii) Proceedings under section 85 of this Act: ....

Note that for mergers, the High Court also has exclusive jurisdiction over § 85 requests for orders directing the disposal of assets or shares of a defendant.

1(d) Relative Number of Private to Commerce Commission Actions:

The discussion document issued by the Ministry of Commerce in 1998152 indicated that, compared to private actions, Commerce Commission actions were few in number. It said:

As is to be expected, the number of Commerce Act cases in which pecuniary penalties have been imposed is small. There have been thirteen since 1990 (although there have been many more private actions in the same period that have provided higher levels of certainty about what is or is not lawful conduct). This is low in comparison to cases brought under the Fair Trading Act (re misleading advertising, etc.) and the Health and Safety in Employment Act. The Commerce Commission took 31 cases to court under the Fair Trading Act in the 1995/96 year alone, and the Occupational Safety and Health Service had 169 successful cases in the same period.

However, we consider that the low number of cases can be attributable to the difficulty in detecting Commerce Act breaches and the costs associated with taking cases rather than evidence that there is no problem with deterrence.

The relatively low number of Commerce Commission actions was attributable to the difficulty in detecting contraventions of the Act and the high cost of litigation. As to this, it was noted that "(t)he difficulty in detecting Commerce Act offences, in addition to the fact that the Commission has limited resources and therefore prefers to settle, means that judges are largely unfamiliar with making penalty orders under the Act."153

It also was concluded in the discussion document that due to high litigation costs and other litigation disincentives, the private actions that were being filed were too few in number and, in any event, ultimately ineffective in deterring anti-competitive conduct. The other litigation disincentives that the document noted included: (1) the availability to private litigants of merely compensatory damages; (2) the difficulty in proving a causal connection between anti-competitive conduct and the damages alleged by the complainant; (3) the requirement to give undertakings as to damages in interim injunction proceedings; (4) the tendency of the courts not to consider the broader interests of consumers in deciding whether to issue interim injunctions in private actions; and, (5) the reluctance of courts to issue mandatory injunctions calling for on-going supervision.

1(e) Length of Time Private Action in Place:

In New Zealand, the private right of action has been in place since the enactment of the new Commerce Act on April 28, 1986. Prior to the enactment, which was regarded as a "momentous change in economic thinking in New Zealand,"154 the enforcement of New Zealand competition law was philosophically constrained by an amorphous "public interest standard" modelled on the then U.K. Restrictive Trade Practices Act. Enforcement was left in the hands of a sometimes cumbersome bureaucracy.155

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II. Standing to Sue:

2(a) Standing to Initiate a Private Action:

As in Australia, the Act provides for open standing to sue for injunctive relief. Section 81 of the Act, which relates to Part II restrictive trade practices, provides that "(t)he Court may, on the application of the Commission or any other person, grant an injunction." Section 84 of the Act similarly provides for open standing to sue for injunctive relief in merger cases.

Actions for damages, however, may only be brought by those whose loss or damage was caused by the alleged contravention of the Act.156 For Part II offences, this restriction appears in § 82(1) of the Act. The same restriction appears in § 84A of the Act, which provides an action for damages for contravention of the merger provisions of the Act.157

2(b) Criteria Applied to Determine Standing:

There does not appear to be any meaningful jurisprudence in New Zealand upon standing to sue. Given that §§ 81 and 84 of the Act grant open standing to sue for injunctive relief, this does not appear to be remarkable. As for private actions claiming damages, the main stumbling block to making a successful claim appears to be the causation requirement in §§ 82(1) and 84A of the Act.158There have been few cases in which damages have been sought and none in which damages were awarded.159

III. Remedies:

3(a) Remedies Available to Private Litigants:

(1) Injunctions:
(a) General:

As has already been indicated, New Zealand, like Australia, grants private parties the right to obtain broad injunctive relief. The basic injunctive provisions are §§ 81 and 84 of the Act, which grant to "the Commission or any other person" the right to obtain an injunction restraining, inter alia, contraventions, attempted contraventions, or conspiracies to contravene the provisions of Parts II and III of the Act. Under § 88(2)(b) of the Act, the court may also grant interim injunctions "(i)f in the opinion of the (c)ourt it is desirable to do so" and regardless of whether it appears to the court that the target of the interim injunction "intends to engage again, or to continue to engage" in the alleged misconduct.

Apart from granting the power to issue interim and permanent injunctions, the Act, in § 89(1), empowers the court in, inter alia, actions for injunctive relief, to "make such order or orders as it thinks appropriate" against parties to the proceeding. If a contract is involved in the alleged contravention, the court is granted jurisdiction under § 89(2) to vary the contract as it thinks fit; cancel the contract; or, require a party to the contract to make restitution or pay compensation to another party thereto. Under § 89(3), the court is granted the same powers with respect to covenants which contravene or, if enforced, would contravene, the Act.

(b) Interim Injunctions:

The discussion document released by Cabinet 160expressed considerable disappointment with the treatment by the courts of applications for interim injunctions under the Act. It defined the difference between permanent and interim injunctions as follows:

Permanent injunctions are orders that restrain persons from engaging in conduct that contravenes the law. Under competition law interim injunctions protect plaintiffs and other individuals not party to the case (predominantly consumers) from damage that could not be recovered should the conduct be found to have contravened the law at full hearing. Both types of injunctions can order a person to either desist from or require conduct (a mandatory injunction).

Interim injunctions were regarded as protecting both private plaintiffs and consumers from sustaining non-recoverable injuries as a result of continuation of the impugned misconduct pending final decision on the merits.

In deciding applications for interim injunction under the Act, however, the courts seldom took into account the broader interests of consumers. The courts generally applied the criteria set forth by the House of Lords in American Cyanamid Co. v. Ethicon Ltd.,161 which essentially required consideration of whether the plaintiff had established a prima facie case, and if so, the balance of convenience between the parties.162

Failing to consider the broader public interest -- and in particular the interests of consumers -- in applications for interim relief in competition cases, the discussion document said, might have contributed to interim relief rarely being granted.163The discussion document observed:

There is a significant difference between the standard role for interim injunctions and interim injunctions under competition law. When considering where the balance of convenience lies the courts also need to consider the broader public interest. The reason for this is that regardless of whether the plaintiff's relationship to the defendant is competitor, supplier or customer, if the defendant's conduct is anti- competitive the plaintiff is unlikely to be the only person harmed.

Society as a whole will be harmed, particularly consumers. This harm can take the form of higher prices, reduced output, productive inefficiencies and delayed innovation. However, there is no real prospect of consumers generally being able to recover the damage at full hearing because, while the total detriment may be significant, in most cases there will be large numbers of consumers who each suffer small amounts of harm who will not be a party to the case.....

Should the court decide at the full hearing that the conduct is anti- competitive, it will, by then, be too late for the court to impose any remedy that will compensate the bulk of consumers for any damage they have already suffered. The only way that other consumers can be protected from this detriment is for the courts to consider their interests when deciding whether or not to issue interim injunctions. ....164

Declining to give sufficient emphasis to the interests of consumers in weighing the balance of convenience , the document suggested, might have led to denial of critical interim relief, thereby permitting defendants to continue to subject consumers to non- recoverable damages by persisting in imposing higher prices, reduced output, productive inefficiencies and delayed innovation pending trial.165

The need to protect consumers through the liberal granting of interim injunctions was said to be acute in cases of refusal to supply and denial of access to essential facilities. The document said:

These are important considerations when it comes to cases involving refusals to supply, including constructive refusals to supply. They are particularly important in cases involving the alleged denial of access to essential facilities. The reason for this is that in most cases the allegedly illegal conduct may continue during the course of the proceedings. The total detriment to consumers can be very large over the time it takes for the High Court to make its final decision (plus any subsequent decisions by higher courts on appeal). The incumbent monopolist will have strong incentives to delay granting access by delaying the legal process as much as possible if the court's orders in previous decisions, including any hearing seeking interim relief in the same set of proceedings, were not deterrents-focussed. ....166

The strong incentive for a defendant to continue refusing to supply or denying access pending an often-distant final decision was seen as an major reason for favouring the liberal granting of interim injunctions in such cases.

In response to these concerns, the Cabinet Economic Committee made the following comments and recommendation:

In considering applications for interim injunctions, the Act permits the courts to take into account not only the interests of the litigating parties, but also broader economic interests, such as the interests of consumers..... However, at present the act is silent about the extent to which broader interests should be considered in interim injunction hearings. Officials have reviewed most of the decisions to date and have concluded that the weighting given to the interests of consumers has been inconsistent over time. To provide consistency and thus increase certainty, it is proposed that the criteria for the consideration of interim injunction applications be made more explicit, by specifying that the interests of consumers be considered and that an appropriate weighting be given to those interests. ....167

The Cabinet Economic Committee recommended that the Act be amended to specify that the courts must consider the interests of consumers and give them appropriate weight in deciding applications for interim injunctions under the Act. It added that, while caution was still necessary in issuing injunctions, this step would make it "more likely that injunctions to stop inefficient conduct will be granted."168 Cabinet adopted this recommendation, and a provision to this effect was included in the Commerce Act Amendment Bill.169

( c) Permanent Injunctions:

Because the Act seemed to fail "to consistently deter would-be offenders partly because its associated court processes ... (were) costly and subject to delay",170 the Cabinet Economic Committee recommended in principle that the Commerce Commission be empowered to issue cease and desist orders against restrictive trade practices. At the moment, it appears that the Commission will be restricted to issuing cease and desist orders in Commission-initiated proceedings. It seems likely, however, that if the power is limited to Commission-initiated proceedings, private parties will attempt to minimize cost and delay by seeking to induce the Commission to commence proceedings for cease and desist orders before making application for injunctive relief in court.171

The discussion document also noted that there had been a low success rate with mandatory injunction applications. It stated that the main reason for this "has been a concern that the Court may have to become involved in on-going supervision or may have to hear another case on the same or similar conduct some time in the future."172 While the low success rate was regarded as providing "comfort to firms that control essential facilities",173 the discussion paper did not reach any conclusions regarding the desirability of liberalizing the consideration of applications for mandatory injunction.174 There were no recommendations upon this subject from the Cabinet Economic Committee and the Commerce Act Amendment Bill did propose any changes in this respect.

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Date Modified: 2008-03-12

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