The Federal Court today decided that Boral Limited and Boral Besser Masonry Limited did not breach section 46 of the Trade Practices Act 1974.
"The Australian Competition and Consumer Commission is disappointed that the Court did not accept that Boral had 'a substantial degree of market power' under section 46 of the Act," ACCC Chairman, Professor Allan Fels, said today.
In March 1998 the ACCC instituted proceedings against Boral Limited and its subsidiary Boral Besser Masonry Limited alleging misuse of market power. The ACCC alleged that Boral Besser Masonry Limited misused its market power by reducing the prices at which it offered to supply concrete masonry products in Melbourne below their manufacturing costs in order to drive out an efficient new independent operator, C&M Bricks Pty Ltd. C&M Bricks, a small rural Victorian business, started up in Melbourne in 1994 with highly efficient, 'state of the art' technology.
The ACCC alleged that Boral Besser Masonry Ltd's purpose in engaging in this conduct was, amongst other things, to unlawfully damage competition in the manufacturing and supply of concrete masonry products, in particular C&M Bricks Pty Ltd.
The Court found that Boral Besser Masonry Ltd did engage in below cost pricing for the purpose of deterring new entrants and driving competitors out of the market. However the ACCC did not satisfy the Court that Boral Besser Masonry Ltd had 'a substantial degree of power' in the Melbourne concrete masonry market which is an essential element for establishing a contravention of section 46. The Court found that the relevant market was the Melbourne metropolitan market for wall and paving material.
The ACCC took these proceedings not only to ensure a competitive concrete market where new efficient entrants could compete but also to obtain judicial clarification in the area of predatory pricing.
The decision raises a number of questions about the application of section 46 to predatory conduct on the context of market power. The ACCC is considering its response to these matters. That may include an appeal.
The ACCC welcomes the efficient and expeditious manner in which the trial was conducted and the speed with which Justice Heerey handed down his judgment.
"The Australian Competition and Consumer Commission is disappointed that the Court did not accept that Boral had 'a substantial degree of market power' under section 46 of the Act," ACCC Chairman, Professor Allan Fels, said today.
In March 1998 the ACCC instituted proceedings against Boral Limited and its subsidiary Boral Besser Masonry Limited alleging misuse of market power. The ACCC alleged that Boral Besser Masonry Limited misused its market power by reducing the prices at which it offered to supply concrete masonry products in Melbourne below their manufacturing costs in order to drive out an efficient new independent operator, C&M Bricks Pty Ltd. C&M Bricks, a small rural Victorian business, started up in Melbourne in 1994 with highly efficient, 'state of the art' technology.
The ACCC alleged that Boral Besser Masonry Ltd's purpose in engaging in this conduct was, amongst other things, to unlawfully damage competition in the manufacturing and supply of concrete masonry products, in particular C&M Bricks Pty Ltd.
The Court found that Boral Besser Masonry Ltd did engage in below cost pricing for the purpose of deterring new entrants and driving competitors out of the market. However the ACCC did not satisfy the Court that Boral Besser Masonry Ltd had 'a substantial degree of power' in the Melbourne concrete masonry market which is an essential element for establishing a contravention of section 46. The Court found that the relevant market was the Melbourne metropolitan market for wall and paving material.
The ACCC took these proceedings not only to ensure a competitive concrete market where new efficient entrants could compete but also to obtain judicial clarification in the area of predatory pricing.
The decision raises a number of questions about the application of section 46 to predatory conduct on the context of market power. The ACCC is considering its response to these matters. That may include an appeal.
The ACCC welcomes the efficient and expeditious manner in which the trial was conducted and the speed with which Justice Heerey handed down his judgment.