Boral win challenge for trade practices

The landmark ruling overturned a unanimous decision by the full bench of the Federal Court two years ago and follows a long-running case instituted by the Australian Competition and Consumer Commission against Boral Masonry.

The High Court's decision was based on the finding that Boral did not have substantial market power in the relevant market.

ACCC chairman Professor Allan Fels said yesterday he was disappointed by the High Court's ruling. The ACCC said in a statement: ``This judgement raises concerns as to the ability of the misuse of market power provision of the Trade Practices Act 1974 to protect viable small businesses and efficient new entrants from anti-competitive targeting by larger and better resourced competitors, thereby undermining the benefits of competition."

Boral hailed the decision by the High Court in a six-to-one majority, saying it showed it did not breach the misuse of market power provisions of the act.

Boral managing director Rod Pearse said the decision ``recognises that Boral Masonry's conduct was a legitimate competitive response to highly competitive market conditions in Victoria in the mid-1990s.

``The High Court's decision is, in many ways, to be seen as a win for consumers as it establishes more clearly that businesses may properly engage in vigorous price competition, which in turn delivers lower prices for consumers," he said.

The case follows what the ACCC alleged were predatory pricing practices by Boral Masonry dating back to 1994.

Boral's concrete masonry unit was found guilty by the Federal Court in 2001 of engaging in uncompetitive pricing against C & M Bricks, which was attempting to set up business in Victoria.

Debate in legal circles now is expected to centre on the effectiveness of section 46 of the act, which deals with market power. The Trade Practices Act Review Committee, headed by Justice Dawson, has just completed its review of the effectiveness of the act, including section 46, and the results have been handed to Treasurer Peter Costello.

In the High Court judgement in the Boral case, one of the majority judges, Justice McHugh stated: ``... one of the difficulties in forcing a `predatory pricing' claim into the straightjacket of s46 is that its terms may fail to catch conduct that ultimately has anti-competitive consequences."

Shadow treasurer Bob McMullan said the Boral judgement ``strengthens the need for the immediate release of the Dawson report into the Trade Practices Act".

A spokeswoman for Mr Costello said Justice Dawson's review was due for release ``over the next few weeks". The Treasurer ``would review the [Boral] judgement in conjunction with the Dawson review and would make no further comment at the moment," she said.

The Australian Democrats said yesterday the High Court decision ``highlights the weaknesses inherent in the Trade Practices Act and the difficulty the ACCC has in legally regulating corporate conduct".