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Federal Court of Australia |
Last Updated: 17 January 2005
FEDERAL COURT OF AUSTRALIA
Benchmark Certification Pty Ltd v Standards Australia International Ltd
PRACTICE AND PROCEDURE –Preliminary discovery – O 15A
r 6 of Federal Court Rules – application in relation to possible
cause of action for misuse of market power – uncertainty as to essential
element
of cause of action arising from insufficient evidence of possible
relevant market – failure to satisfy O 15A r 6 (a)
TRADE
AND COMMERCE – Restrictive Trade Practices – Trade Practices Act
1974 (Cth) – Misuse of market power – allegation of statutory
monopoly for certification of plumbing standards market –
application for
preliminary discovery under O 15A r 6 - insufficient evidence to establish
relevant market
Federal Court Rules, O 15A r 6
Trade Practices
Act 1974 (Cth), ss 4E, 46(2)(a), 45, 45(2)(b)(ii), 45(8), 46, 46(1)(c),
46(2)(a), 46(7), 51(1)(b)(ii), 75B, 80, 82
Trade Marks Act 1995 (Cth),
Part 16, ss 170, 173
Sydney Water Act 1994 (NSW), regs 5,
15(2)
Sydney Water Regulation 2000 (NSW), reg 6(2)
Local Government
(Approvals) Regulation 1999 (NSW)
Plumbing Regulations 1998
(Vic)
Building Act 1993 (Vic)
Waterworks Regulations 1996
(SA)
Metropolitan Water Supply, Sewerage and Drainage By Laws 1981 (WA), reg
28.6.2(e)
Standard Plumbing and Drainage Regulation 2003 (QLD), reg
30(1)
Water and Sewerage Regulations 2001(ACT), reg 6(2), 18(2)
Water
and Sewerage Act 2000 (ACT), s 15(1B)
Report of the Committee of
Inquiry into Australia’s Standards and Conformance Infrastructure, March
1995
Alphapharm Pty Ltd v Ely Lilly Australia Pty Ltd [1996] FCA 391 applied
Glowatzki v Insultech Group Pty Ltd & Anor (1998)
39 IPR 215 cited
Mark Lyons Pty Ltd v Bursill Sports Gear Pty Ltd
(1987) 76 ALR 581 cited
Regents Pty Ltd v Subaru (Aust) Pty Ltd (1998)
84 FCR 218 cited
Re Queensland Cooperative Milling Association Ltd; Re
Defiance Holdings Limited (1976) 25 FLR 169 cited
Queensland Wire
Industries Pty Ltd v Broken Hill Proprietary Co Ltd [1989] HCA 6; (1989) 167 CLR 177
cited
Warman International v Envirotech Australia Pty Ltd (1986) 11
FCR 478 cited
Fencott v Muller [1983] HCA 12; (1983) 152 CLR 570 applied
Yorke
v Lucas [1985] HCA 65; (1985) 158 CLR 661 applied
BENCHMARK CERTIFICATION PTY
LIMITED v STANDARDS AUSTRALIA INTERNATIONAL LIMITED &
ANOR
N297 OF 2004
EMMETT
J
17 NOVEMBER 2004
SYDNEY
|
BENCHMARK CERTIFICATION PTY LIMITED
APPLICANT |
|
|
AND:
|
STANDARDS AUSTRALIA INTERNATIONAL LIMITED
FIRST RESPONDENT SAI GLOBAL LIMITED SECOND RESPONDENT |
|
DATE OF ORDER:
|
|
|
WHERE MADE:
|
THE COURT ORDERS
THAT:
1. The application be
dismissed.
2. The applicant pay the respondents’ costs of the
application.
Note: Settlement and entry of orders is dealt with
in Order 36 of the Federal Court Rules.
|
AND:
|
REASONS FOR JUDGMENT
1 In this proceeding, the applicant, Benchmark Certification Pty Limited (‘Benchmark’), seeks orders for preliminary discovery, pursuant to Order 15A of the Federal Court Rules, against Standards Australia International Limited (‘Standards Australia’) and SAI Global Limited (‘Global’). Benchmark seeks such discovery in order to determine whether it has a right to obtain relief in the Court from Standards Australia and Global by reason of contravention of s 46 or s 45 of the Trade Practices Act 1974 (Cth) (‘the Trade Practices Act’). Benchmark believes that Standards Australia and Global may have engaged in anti competitive conduct in relation to the certification of plumbing products.
PRINCIPLES TO BE APPLIED IN RELATION TO PART 15A
2 Order 15A Rule 6 provides as follows:
‘Where:
(a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained;
(b) after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and
(c) there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision;
the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).’
3 Rule 6 of Order 15A contemplates three prerequisites. In the present case, the first is that there is reasonable cause to believe that Benchmark may have the right to obtain relief in the Court against Standards Australia or Global. The second is that, after making all reasonable enquiries, Benchmark does not possess sufficient information to enable a decision to be made whether to commence a proceeding for such relief. The third is that there is reasonable cause to believe that Standards Australia or Global is likely to have documents relating to the question whether Benchmark has the right to obtain such relief.
4 The first prerequisite requires a consideration of the elements that are necessary to establish the putative causes of action relied upon to support the right to obtain relief. That will require the Court to conclude, at least, that there is reasonable cause to believe that each of the elements of such cause of action might be made out. The test for whether there is such reasonable cause for belief is an objective one. It is not necessary to prove that each of the elements exists. The rule contemplates only that there be reasonable cause to believe that that an applicant may have a right to obtain relief. On the other hand, mere speculation that the relevant elements might exist is not sufficient. There must be some positive basis for the belief. I shall deal with the elements of the putative causes of action relied on by Benchmark in due course.
5 The question of insufficiency that is raised by the second prerequisite has both subjective and objective aspects. Thus, if the evidence establishes that a particular applicant is able to decide whether to commence a proceeding by, for example, showing that that applicant has already decided to do so, it may be that the second prerequisite would not be satisfied even though, from an objective point of view, the information available was insufficient for such a decision to be made. On the other hand, the fact that a particular applicant genuinely feels unable, because of an insufficiency of information, to decide to commence a proceeding, is not sufficient of itself to satisfy the second prerequisite. An applicant must establish from an objective point of view, that that applicant lacks sufficient information. The question may be whether it is reasonable for the particular applicant to make a decision without having the information that might become available from inspection of the documents in respect of which discovery is sought: see Alphapharm Pty Ltd v Ely Lilly Australia Pty Ltd [1996] FCA 391.
6 The third prerequisite may be satisfied by the drawing of inferences as to the nature of documents that a particular entity may have in its possession. However, it must be possible to identify specific issues for which documents that a respondent may have in its possession are likely to be relevant. That is to say, the satisfaction of the third prerequisite will depend upon the identification of a matter in respect of which there is an insufficiency within the meaning of the second prerequisite.
7 Even so, the question of whether discovery should be ordered is a matter for the exercise of judicial discretion. The questions posed by O 15A r 6 must be considered in the context of the adversary system of forensic contest that underlies any proceeding in the Federal Court. Ordinarily, a proposed respondent is entitled to withhold its evidence until a claim is formulated against it. Order 15A is a significant erosion of that principle, but the principle must be borne in mind: see for example, Alphapharm Pty Ltd v Ely Lilly Australia Pty Ltd (supra). In the exercise of that discretion, it would be relevant to consider the extent of the uncertainty as to elements in the putative cause or causes of action. While uncertainty as to only one element of a cause of action might be compatible with the first prerequisite, that there be reasonable cause to believe that an applicant may have the right to obtain relief, uncertainty as to a number of such elements may be sufficient to undermine the reasonableness of the cause to believe that there may be a right to relief: Glowatzki v Insultech Group Pty Ltd & Anor (1998) 39 IPR 215 at 224.
8 Before considering the three prerequisites of an order for preliminary discovery under r 6 in the present context, it is necessary to say something about the parties and the industry in which they operate and the interrelationship of the activities of Standards Australia and Global with the activities of Benchmark.
THE CERTIFICATION INDUSTRY
9 The putative causes of action relied on by Benchmark to support its possible claim to relief in the Court involve allegations of the exercise of power in a market for certifying compliance of plumbing products. It is desirable, therefore, to say something about the certification industry in the context of plumbing and drainage. That will require examination of the National Certification of Plumbing and Drainage Products Scheme (‘the NCPDP Scheme’).
CERTIFICATION MARKS
10 Part 16 of the Trade Marks Act 1995 (Cth) (‘the Trade Marks Act’) deals with certification trade marks. Under s 169 of the Trade Marks Act, a certification trade mark in relation to goods, is, relevantly, a sign used to distinguish goods certified by the owner of the certification trade mark in relation to quality, accuracy or some other characteristic, including origin, material or mode of manufacture, from other goods not so certified. The goods certified may be those of any person, including the owner of the certification trade mark, or any person approved by the owner for the purpose of certifying goods.
11 Under s 170 of the Trade Marks Act, certain provisions of the Trade Marks Act relating to trade marks apply to certification trade marks as if a reference to a trade mark in those provisions included a reference to a certification trade mark. Under s 171 of the Trade Marks Act, the registered owner of a certification trade mark has the exclusive rights to use, and to allow other persons to use, the certification trade mark, in relation to the goods in respect of which the certification trade mark is registered. However, the registered owner may use the certification trade mark only in accordance with the rules governing the use of the certification trade mark.
12 Section 173(1) of the Trade Marks Act provides that a person who has filed an application for the registration of a certification trade mark must file a copy of the rules governing the use of the certification trade mark. Under s 173(2), the rules are to include, relevantly, provisions regarding the:
• persons who may be approved for the purpose of certifying goods;
• cases in which goods are to be certified;
• conditions under which an approved user is to be allowed to use the certification trade mark;
• use of the certification trade mark by the owner and any approved user.
Under s 179, rules governing the use of a registered certification trade mark must be available for inspection at the same time and in the same manner as the Register of Trade Marks.
THE PARTIES TO THIS PROCEEDING
13 Benchmark is engaged in the business of providing independent auditing and certification services. It certifies or audits, by reference to recognised standards, the products or the management systems of its clients. Global is also engaged in that business. This proceeding is concerned specifically with the product certification aspect of their businesses.
14 Joint Accreditation System of Australia and New Zealand (‘JAS-ANZ’) accredits certification and auditing bodies such as Benchmark and Global. Each of Global and Benchmark has been accredited by JAS-ANZ. Benchmark achieved accreditation by JAS-ANZ in February 1994. Each of Benchmark and Global is one of eleven bodies accredited in respect of product certification.
15 Benchmark commenced operations in 1993. It presently services 1600 clients, of which over 1200 have received certification. A further 300 have had their certification withdrawn or suspended. According to its promotional brochure, Benchmark achieved what it described as ‘a critical mass’ of clients, within four months of commencing operations.
16 Standards Australia had its genesis in 1922, as a committee of the Australian Commonwealth Engineering Standards Association. In 1950, when known as ‘Standards Association of Australia’, it was incorporated by royal charter to develop standards within the Commonwealth of Australia. In 1988 it changed its name to ‘Standards Australia’ and signed a memorandum of understanding with the Commonwealth. In 1999, the status of Standards Australia was changed to that of a company limited by guarantee and its name was changed to its present name.
17 In February 2003, Standards Australia signed a further memorandum of understanding with the Commonwealth (‘the Memorandum of Understanding’). The Memorandum of Understanding recited that the Commonwealth and Standards Australia desired to assist the community by strengthening Australia’s national standards system by recognising the many community benefits that flow from standardisation. It also recited that Standard Australia is a non-government, not-for-profit organisation with the following mission:
‘To excel at meeting national needs for contemporary, internationally aligned standards and related services, which enhance the nation’s economic efficiency and international competitiveness and fulfil the community’s demand for a safe and sustainable environment.’
18 By Article 4.1 of the Memorandum of Understanding, the Commonwealth recognised Standards Australia as ‘the peak non-government standards development body in Australia’. By Article 5.1, Standards Australia undertook to provide national leadership for establishing documentary Australian standards.
19 On 13 December 1990, Standards Australia established Global as a wholly owned subsidiary under the name ‘Standards Australia Quality Assurance Services Pty Limited’. That name was changed to ‘Quality Assurance Services Pty Limited’ in August 1995. In September 2002, the status of Global was changed from that of a proprietary company to that of a public company, with its present name.
THE WATERMARK
20 Standards Australia is the registered owner of a number of certification trade marks. For present purposes, it is relevant to know that the certification trade marks of Standards Australia include number 454762 in Class 6, number 591319 in Class 11 and number 591320 in Class 20. Each of those certification trade marks consists of the mark set out below (‘the WaterMark’):
21 As contemplated by ss 173 and 179 of the Trade Marks Act, rules have been filed by Standards Australia in respect of the WaterMark. The rules relevantly provide as follows:
‘1. ... the WaterMark Committee of [Standards Australia] is the sole authority by which Licences to use the Watermark may granted.
2.1 Licences shall be granted only to applicants who satisfy the Watermark Committee that:
(a) they are registered suppliers under the... supplier assessment scheme [of Standards Australia] in respect of the goods set out in the schedule to the licence and produce such goods under a supplier’s quality system considered appropriate by the Watermark Committee; and
(b) they have obtained the approval of the relevant government authority responsible for administering the supply of water, sewerage or drainage services for such goods to be used in connection therewith within its jurisdiction; and
(c) they will abide by any undertakings as may be required by the Watermark Committee.
2.2 The Watermark shall only be used in respect of the goods set out in the schedule to the licence.
2.3. The Watermark shall only be applied to goods which the manufacturer warrants, comply with the conditions and requirements of the Watermark Scheme.
...
6. A licensee shall –
(a) comply in all respects with the Watermark Scheme issued by [Standards Australia] as amended from time to time;
(b) give representatives of [Standards Australia] reasonable access during working hours to the premises in which goods the subject of the licence are manufactured or held...
7. The licensee shall only use the Watermark, or claim by implication that he is licensed to use the Watermark, in respect of the goods which are covered by the licence, and which comply with the conditions and requirements of the Watermark Scheme.
...’
There is no evidence before me as to the terms of Standards Australia’s ‘Suppliers Assessment Scheme’ or ‘Watermark Scheme’.
22 In 2003 an agreement described as ‘Certification Marks Agreement’ was entered into between Standards Australia and Global. The Certification Marks Agreement bears two dates, 27 May 2003 in printed form and 17 July 2003 in handwriting. It recites that:
• Standards Australia exclusively owns the right, title, interest and goodwill in, inter alia, the WaterMarks.
• Global is accredited to perform certification and as part of its business administers certification schemes under which organisations are granted licences to use the WaterMarks;
• Under previous agreements, Global was authorised to grant licences under its certification schemes, the most recent such agreement commencing on 1 January 2002 and expiring on 30 June 2003.
The Certification Marks Agreement states that it was to have effect from 1 July 2002 and to continue until 30 June 2005. In the light of the recital set out above, the intention was probably that it have effect from 1 July 2003.
23 The relevantly operative provisions of the Certification Marks Agreement are as follows:
‘4.1 ...[Standards Australia] hereby
(1) approves Global to administer the Certification Schemes; and
(2) ...authorises Global to grant Licences to Organisations to use the Marks in accordance with the Rules associated with each Mark.
4.2 Global may only grant an Organisation a licence to use a Mark:
(1) pursuant to a Certification Scheme (‘approved scheme’) approved by [Standards Australia] for licensing that Mark.
...
4.3 For each Mark detailed in columns 2 and 3 of Schedule 1 the apposing additional terms set out in column 4 of Schedule 1 shall be incorporated into this agreement as part of this clause 4.3.
...
6.1 Where Global offers to grant licences to use a Mark, Global shall administer a Certification Scheme that, in the opinion of [Standards Australia], meets the requirements of this clause 6.
6.2 Each Certification Scheme administered by Global shall:
(1) provide certification by Global that Products ... conform to requirements specified in one or more Acceptable Standards; ...’ [emphasis added]
24 In Clause 1 of the Certification Marks Agreement the following definitions appear:
‘Certification means a procedure by which a third party gives written assurance that a Product ... conforms to specified requirements.
Certification Scheme means a Certification service administered by Global and approved by [Standards Australia] for the purpose of licensing a Mark for use by Organisations.
...
Mark means any certification, trade mark or trade mark that is owned by [Standards Australia] and is identified in columns 2 and 3 of Schedule 1 to this Agreement.
Organisation means a Person that is granted a licence by Global in accordance with the terms of this Agreement.
...
Product means goods or services or a combination of goods and services provided or dealt with by a person in the course of trade.
...’
25 The WaterMarks are identified in columns 2 and 3 of Schedule 1 to the Certification Marks Agreement. Column 4 contains the following additional terms:
‘1. The Mark (‘WaterMark’) is only for use with a Certification Scheme whereby an organisation satisfies Global that it is able to manufacture a Product to conform consistently to the performance requirements specified in Standards Australia publication [MP52] or other similar Standards prescribed by water authorities in Australia from time to time.
2. The authorisation to grant licences for the use of the mark is NON-EXCLUSIVE to Global.
3. The Rules for the Mark are the rules governing the use of the Mark as approved by the [Commission referred to in Part 16 of the Trade Marks Act] from time to time to the extent that such approved rules can be applied to the use of the Mark.
4. A Licence to use the Mark must specify the reference number of the Relevant Product Standard and require that the Organisation display such reference number at every instance where the Mark is displayed.’
It is Global’s involvement with the WaterMark certification mark that has most relevance for present purposes.
MP52
26 Standards Australia has published a document entitled ‘Manual of Authorisation Procedures for Plumbing and Draining Products’, which is known as ‘MP52’. MP52 was published by Standards Australia on behalf of the Agriculture and Resources Management Council Australia and New Zealand Committee for Plumbing Product Authorisations. MP52 is significant because it has been adopted by regulatory authorities in various jurisdictions throughout Australia as part of the process governing the approval of plumbing products for use in those jurisdictions. It is therefore necessary to say something about MP52.
27 The ‘FOREWORD’ to MP52 contains the following:
‘This Manual provides detailed information on the authorization procedures for plumbing products based on the national StandardsMark, WaterMark and TypeTest Mark certification schemes administered by Standards Australia through its approved Certifying Body (CB) [a footnote states that currently the certifying body administering the National Certification Scheme is Global].
...
The introduction and operation of [the National Certification of Plumbing and Drainage Products Scheme (known as the NCPDP Scheme)] has enabled the regulators to withdraw form the evaluation, testing and stamping of plumbing and drainage products that are eligible for certification under the NCPDP Scheme in accordance with a published timetable for termination of existing product authorizations.
The NCPDP Scheme provides for three types of certification:
Type 1. The StandardsMarks Scheme requires manufacturers to have a quality assurance system in place for products to comply with the relevant Australian Standard...
...
Type 2. The WaterMark Scheme requires manufacturers to have a quality assurance scheme in place and for products to comply with the minimum requirements of the participating regulators as outlined in this Manual.
Type 3. The TypeTest Mark Scheme applies to appliances and other products that are TypeTested to nominated specification...
Owing to the special category of products that will require Interim Authorisation, the intention is to adopt "countertop specifications" drafted by the applicant (with guidance provided by CB) and endorsed by the Committee for Plumbing Products Authorisations (CPPA or its successor).
...’
28 The ‘INTRODUCTION’ to MP52 relevantly states as follows:
‘A voluntary arrangement exists between Standards Australia and the participating plumbing and drainage regulators in Australia known as the [NCPDP Scheme]. The main object of this arrangement is to enable a regulator to accept with confidence products certified by the Certifying Body (CB) (see Footnote...), without the need to duplicate evaluation of the product. For this concept to be completely successful, the entire process for verifying product compliance and reviewing the manufacturer’s quality assurance capabilities must follow uniform procedures and be evaluated against uniformly applied data. The products covered by the [NCPDP Scheme] are listed in Section 5.
...
Product certification requirements The product certification requirements for the Standards Mark and WaterMark are legally defined as the StandardsMark or WaterMark Quality Assurance Program, which becomes a legally binding contract between the Certifying Body and the licensee covering the use of the certification trade mark.
The basic requirement is that appropriate controls are in place to ensure all products bearing a certification mark fully complied with the Standard or specification....’
I shall describe the NCPDP Scheme below. It is important that, at present, Global is the only approved Certifying Body.
29 The ‘SCOPE’ of MP52 is stated to be as follows:
‘This Manual specifies uniform procedures for the certification of plumbing and drainage products that require statutory authorisation. Such products are generally intended for use on authorised plumbing and drainage work by authorised persons.’
30 Clause 3.2 of the MP52 provides as follows:
‘3.2 Marking of Products
All certified products under the NCPDP Scheme shall be marked with the appropriate certification mark to satisfy the installation requirements for connection to the water agencies reticulation systems. This, in many areas, is a requirement of law prescribed within areas controlled by the water agencies. Failure to display the certification mark on product may lead to the installation being rejected and possible legal action taken being [sic, scilicet being taken] against those responsible... The systems of marking products are as follows:
(a) StandardsMark
(b) WaterMark
(c) TypeTest Mark
(d) Interim Authorization (as per Items (a), (b) or (c) above).
The arrangement of these systems is given in Table 1.’
31 Table 1 of MP52 consists of four columns as set out below. The second line of Table 1 is as indicated below:
|
Type of evaluation
|
Quality assurance
|
Status
|
Participation by manufacturers or suppliers
|
|
2 Manual of authorization procedures
|
By the Certifying Body to the WaterMark Scheme (based on AS/NZS 9002
Quality Systems as applicable) (Product Compliance Program)
The WaterMark
Spec 002 Lic W999
Standards Australia
|
Authorized by all participating regulators unless otherwise stated in
Appendix B
|
Essential minimum type for WaterMark licence.
|
32 Table 2 of MP52 sets out procedures for authorisation of plumbing products under four columns. The column headings are for StandardsMark, WaterMark, TypeTest Mark and Interim Authorisation. Under the column relating to WaterMark the procedure is relevantly as follows:
‘1. Manufacturer or supplier reviews products to determine if they will comply with Manual
2. Manufacturer or supplier applies to CB for the WaterMark
3. ...
4. Manufacturer submits to CB a quality plan summary (QPS)
5. Manufacturer implements quality assurance system to Quality Assurance Plan 02 (QAP02)
6. CB conducts quality assurance system audit
7. CB selects sample(s) of the product(s) from the manufacturer and provides details for type tests
8. ...
9. CB assesses results of type tests
10. ...
11. CB and the manufacturer finalise any other outstanding matters relating to licensing...
12. CB grants a licence to the applicant to use the WaterMark
13. Manufacturer applies the Mark to the product upon granting of the licence
14. ...’
Thus, the Certifying Body, which is currently Global, is responsible for assessing compliance of a manufacturer’s or supplier’s products with a particular standard.
33 Section 5 of MP52 contains a ‘Schedule of Specifications’. The Schedule sets out a large number of products in one column. In another column, opposite that product and under the heading ‘WM’ (which refers to the WaterMark) a specification is set out. The details of each specification referred to in that column are then set out in Section 6 of MP52.
34 For example, one of the items under the Product column is a ‘basin’. Under the ‘WM’ column, reference is made to ‘Spec 029’. In Section 6, Specification 029 is set out. Specification 029 applies to fixtures that are intended to be connected to the sanitary plumbing, soil or waste piping, including basins. Specification 029 contains various cross-references to other standards. Appendix A to MP52 then sets out details of the standards to which cross-reference is made. Many, but not all, of the references are to standards published by Standards Australia.
35 Thus, MP52 is a detailed procedure whereby plumbing products are certified as complying with particular standards specified in MP52 in relation to those products. The intention is that a regulatory body can be confidant that a product certified in accordance with the procedures of MP52 as complying with a particular standard does in fact comply with that standard.
THE NCPDP SCHEME
36 MP52 refers to the ‘NCPDP Scheme’ in a number of places. That is significant in relation to the question of whether or not there is a relevant market for the purposes of the claims to relief foreshadowed by Benchmark. Accordingly, it is desirable to say something about the NCPDP Scheme.
37 The NCPDP Scheme appears to be an informal understanding or arrangement. It is not evidenced by a specific document or instrument. Standards Australia suggests that it is evidenced by MP52 itself. Benchmark, on the other hand, describes the NCPDP Scheme in language adapted from the terms of MP52, namely, a ‘voluntary arrangement between [Standards Australia] and the plumbing and drainage regulators’.
38 After completion of the hearing, and in response to the Court’s invitation, further written submissions were made by Benchmark and Standards Australia in relation to the NCPDP Scheme. Benchmark sought leave to reopen in order to have admitted into evidence two further documents. The first consists of a document entitled ‘National Certification of Plumbing and Drainage Product Scheme’, said to have been published by Standards Australia (‘the NCPDP Document’). The second document is entitled ‘Fact Sheet – Plumbing Product Certification’ (‘the Fact Sheet’) and appears to have been published by the Sydney Water Corporation (‘the Sydney Corporation’). Standards Australia objects to the granting of leave to Benchmark to rely on the two documents. It says that the documents are irrelevant but does not suggest any prejudice by reason of the late tender.
39 The NCPDP Document relevantly says:
‘A national scheme exists for the certification of plumbing and drainage products sold on the Australian market.
This Scheme... has the commitment of the major water supply and sewerage authorities in Australia and is being run in conjunction with Standards Australia... . The scheme’s main benefit is that all water authorities can accept, with confidence, products authorised under this scheme without the need to duplicate product testing and evaluation.
For the plumbing and contracting industry, there are some important aspects of the scheme which should be known.
A. A core document for the scheme has been prepared... and is published by Standards Australia. This document [MP52] provides detail on how the scheme works and also the types of products it covers as well as listing the relevant specifications for each product.
B. Over a scheduled period of time, plumbing and drainage products are progressively appearing for sale with one of three certification marks on them – the StandardsMark, WaterMark or TypeTest Mark. These marks are product certification trade marks of Standards Australia and are granted to manufacturers under licence from Standards Australia.
C. ... the WaterMark... will appear on prescribed products for which there is currently no Australian Standard or for which Water Authorities do not require full compliance with an Australian Standard but which meet certain specifications called up in [MP52]. These WaterMark specifications can be regarded as minimum requirements only and will not give any assurance that the product is fit for any other purpose than to protect authorities’ services and for minimum public health and safety protection.
For... WaterMark products, certification indicates that the manufacturer is capable of consistently meeting the relevant Specification or Standard by implementation [sic] a quality assurance program in the production process.
...’
40 The Fact Sheet asserts that State plumbing regulators participate in the NCPDP Scheme and that Standards Australia administers the NCPDP Scheme for the National Plumbing Regulators Forum, which has representatives from every Australian state and territory. It also states that the purpose of product certification is ‘to provide independent assurance of the claim by the manufacturer that products comply with the State standard’. The Fact Sheet also states that plumbing and drainage installations within the area of operation of the Sydney Corporation are required to be carried out in accordance with the second edition of the Code of Practice and that code of practice ‘requires plumbing or drainage products and materials to be certified and display the StandardsMark, WaterMark or TypeTest Mark... before they can be installed’. It says:
‘[Sydney Corporation] as a participant in the NCPDP Scheme, recognises Standards Australia "StandardsMark or WaterMark" as signifying compliance with the NCPDP Scheme. The StandardsMark or WaterMark must appear on the product at time of installation.
Currently the only recognised Certifying Body for plumbing products is [Global]. It is expected that other Certifying Bodies will be granted a licence to certify plumbing products following the publication of the Plumbing Code of Australia... The target publication date is the last quarter of 2003...’
41 While those documents may be irrelevant to the construction of MP52, they appear to me to have some relevance on the question of the existence of power on the part Global in any certification market that might exist for the purposes of s 45 or s 46 of the Trade Practices Act. Accordingly, I have admitted the two documents into evidence.
42 In pursuance of the NCPDP Scheme, various jurisdictions of Australia have adopted regulatory regimes that make reference to MP52. In some cases, certification in accordance with MP52 is mandatory. In other cases, it is not. It is desirable to deal with each jurisdiction separately.
New South Wales
43 Regulation 6(2) of Sydney Water Regulation 2000, made under the Sydney Water Act 1994 (NSW), relevantly provides that a person must not use, in the area covered by the Sydney Corporation, any fitting for plumbing or drainage work unless the fitting is approved. Under reg 5 ‘approved’ means approved by the Sydney Corporation. Regulation 15(2) provides that the Sydney Corporation must not approve a particular kind of fitting unless it is satisfied that it complies with the requirements of a version of MP52.
44 The effect of Clause 3.2 of MP52 is that, to satisfy the installation requirements for connection to the ‘water agencies’ reticulation systems’, all certified products under the NCPDP Scheme must be marked with the appropriate certification mark. Standards Australia asserts that clause 3.2 therefore operates in relation to all products listed in MP52.
45 Benchmark says that fittings for plumbing and drainage work in the Sydney Corporation area must comply with a version of MP52, and that fittings will only comply with MP52 if they bear one of the certification marks pursuant to clause 3.2 of MP52. That is to say, even if a fitting satisfied the specification stated opposite that fitting in Schedule 5, the fitting would not comply with the requirements of MP52 unless it was marked with, relevantly, the WaterMark. Of course, a fitting cannot be marked with the WaterMark without being certified as complying with the relevant specification by Global.
46 It is not entirely clear that compliance with MP52 necessarily requires that a product be marked with the appropriate certification mark. Clause 3.2 does not state that a product complies with MP52 only if it contains the WaterMark. The affixing of the relevant certification mark may be evidence of compliance with MP52 but affixing is not a prerequisite of compliance with MP52. Rather, compliance with MP52 would be achieved if, in relation to a particular fitting, product or material, it complied with the specification stated in relation to the description of that fitting, product or material in MP52.
47 What is clear, however, is that compliance with MP52 involves compliance with identified standards. Certification, by affixing the WaterMark, is simply evidence of the compliance with MP52. Sydney Water Regulation 2000 does not require that a fitting for a plumbing or drainage work be marked with the WaterMark specification mark or any other particular specification mark. It would be a matter of satisfying Sydney Corporation that a particular fitting complies with MP52. The best way of doing so, at present, may be to demonstrate that it has the WaterMark fixed. However, it may be that a certification mark owned by Benchmark could be affixed as evidence of compliance with MP52, if Benchmark were able to satisfy Sydney Corporation as to its competence to certify as to such matters.
48 Sydney Water Regulation 2000 does not regulate the use of fittings for plumbing or drainage work for the whole of New South Wales. For example, the Hunter Water (General) Regulation 2000 and the Water Management (Broken Hill Water Supply – Water Sewerage and Trade Waste) Regulation 1997 deal with other areas of New South Wales. However, those Regulations contains provisions cognate with those of Sydney Water Regulation 2000 described above.
49 In addition, the Local Government (Approvals) Regulation 1999 (NSW), which commenced on 1 September 1999, applies to such parts of the state of New South Wales as are constituted as areas for the purposes of the Local Government Act 1993. Clause 13 of the Local Government (Approvals) Regulation 1999 provides that a council must not approve an application for an approval allowing water supply, sewerage or stormwater drainage work to be carried out unless it is satisfied that the activity as proposed to be carried out will comply with an applicable standards set out or referred to in Schedule 2 and with any other applicable standards or requirements set out or referred to in the Regulation. Clause 1 of Schedule 2 requires that water supply work, sewerage work and stormwater drainage work must comply with ‘the Plumbing and Drainage Code of Practice’, except where otherwise provided in the Local Government Act, the Local Government (Approvals) Regulations 1999 or the Local Government (Water Services) Regulation 1999.
50 ‘The Plumbing and Drainage Code of Practice’ is defined as the New South Wales Plumbing and Drainage Code of Practice (‘the Code of Practice’) published in July 1992 by the Committee on Uniformity of Plumbing and Drainage in New South Wales. That code has since been replaced by a second edition published in July 1999. In the second edition of the Code of Practice, clause 2.1.12 contains the following provision which was not contained in the 1992 edition:
‘Materials shall display the StandardsMark, WaterMark, TypeTest Mark, or local authority Authorisation markings as required by [MP52].’
51 However, the precise status of the second edition of the Code of Practice has not been made clear by the parties’ submissions. While it is by no means clear, the effect of the provisions briefly described above appears to be that, from a practical point of view, to satisfy those regulatory regimes, plumbing products, or at least a significant number of plumbing products, must comply with a version of MP52 in order to satisfy the relevant regulatory regime in parts of New South Wales.
Victoria
52 Regulation 31 of the Plumbing Regulations 1998 of Victoria provides that any registered plumber, licensed plumber or other person authorised to carry out plumbing work under the Building Act 1993 (Vic) must comply with any code or specification (as applied by the Regulations) listed in the Schedule that relates to work of that kind. The Schedule includes a reference to MP52 as well as many other standards. Thus, there is no requirement for a certification mark. The only requirement is that the work comply with the relevant standard. There is no reason why Benchmark’s certification could not be accepted as evidence of compliance with the relevant standards.
South Australia
53 Regulation 12(1) of the Waterworks Regulations 1996 of South Australia provides that a person must not use a pipe, fitting, appliance or apparatus for connection to the waterworks unless either:
(i) Standards Australia or a person acting on its behalf has authorised the marking of the pipe fitting appliance or apparatus with a StandardsMark, a WaterMark or a TypeTest Mark and the Corporation has authorised the use of pipes, fittings, appliances, or apparatus of that type in South Australia; or
(ii) the Corporation has determined that the pipe, fitting, appliance or apparatus is suitable for connection to the waterworks.
Regulation 13 of the Sewerage Regulations 1996 contains a similar provision.
54 Thus, there is no requirement that a pipe, fitting or appliance or apparatus must have a WaterMark if the Corporation has otherwise determined that it is suitable for connection. There is no prohibition on the Corporation accepting Benchmark’s certification of compliance with appropriate standards, such as MP52.
Western Australia
55 By-law 28.6.2(a) of the Metropolitan Water Supply, Sewerage and Drainage By Laws 1981 of Western Australia provides that a material, fitting or fixture must not be connected to the works of the statutory corporation therein described unless:
‘(i) it is a product that –
(A) is manufactured or supplied under a StandardsMark, licence or a WaterMark licence granted by [Standards Australia] as a water or sanitary plumbing product intended for use in plumbing installations; and
(B) ...bears the Standards Mark or WaterMark, as appropriate, of [Standards Australia] ...
...
or
(iii) it is the same as a material, fitting or fixture that is currently authorised for such connection by the Corporation under paragraph (e)...’
56 Under by-law 28.6.2(e) the Coordinator (as defined) may ‘give or refuse to give authorisation to any material, fitting or fixture for connection to the works of the Corporation or may give such authorisation subject to such conditions as the Coordinator thinks fit’. Thus, if the Coordinator can be persuaded to accept certification by Benchmark, Benchmark would be in a position to compete with Global.
Queensland
57 Regulation 30(1) of the Standard Plumbing and Drainage Regulation 2003 of Queensland provides that a person must not install or use a plumbing or drainage item in plumbing or drainage if the item is not a certified item. In the dictionary for the Regulation, ‘Certified Item’ is defined as meaning a plumbing or drainage item ‘that has received MAP Certification or interim certification under MAP before installation or use’. ‘MAP Certification’ is defined as meaning, for a component, ‘Standards Mark, WaterMark or TypeTest Mark certification of the component under MAP’. ‘MAP’ is defined as meaning MP52.
58 Thus, only items that have received Standards Mark, WaterMark or TypeTest Mark certification may be installed or used in plumbing or draining. The consequence is that Global has a monopoly in relation to the certification of plumbing or drainage items to be used in Queensland because it is the only ‘Certifying Body’ approved by Standards Australia pursuant to MP52 to authorise the affixing of the WaterMark certification mark. To that extent, the position in Queensland is to be contrasted with the situation in Victoria, South Australia and Western Australia.
Australian Capital Territory
59 Regulation 6(2) of the Water and Sewerage Regulations 2001 of the Australian Capital Territory (‘ACT’) provides that a person must not use plumbing and drainage products in a sanitary plumbing system or sanitary drainage system that communicates with the sewerage system unless the work is done ‘in accordance with the requirements of MP52’. Similarly, under reg 18(2), a person must not use plumbing or drainage products on a water service or hot water system taking its water from a water network unless the work is done ‘in accordance with the requirements of MP52’. Those prohibitions do not require certification, so long as the relevant work involved in using plumbing and drainage products is done in accordance with MP52. There is no requirement for certification or for plumbing products to bear the WaterMark mark.
60 On the other hand, s 15(1B) of the Water and Sewerage Act 2000 (ACT), which commenced on 1 September 2004, provides that ‘a licensee commits an offence if the licensee does water supply plumbing work that includes the installation of a thing to which MP52 applies and the thing is not certified (under the MP52 procedure)’. That seems to require certification under MP52, which, by reason of the arrangements outlined above, can only be given by Global. To that extent, it is to be contrasted with the situation in Victoria, South Australia and Western Australia.
THE KEAN REPORT
61 In 1994, the Commonwealth Government appointed a committee (‘the Kean Committee’) to enquire into Australia’s standards and conformance infrastructure. A report was presented to the Minister for Small Business, Customs and Construction on 16 March 1995. The Report of the Committee of Inquiry into Australia’s Standards and Conformance Infrastructure March 1995 is referred to as ‘the Kean Report’ after its chairman, Mr Bruce Kean. The NCPDP Scheme is referred to in several parts of the Kean Report.
62 The Kean Committee gave consideration to the question of how the components of Australia’s standards and conformance infrastructure interact with each other. It noted that the infrastructure comprises three components, namely, measurement, standards and conformance and said:
‘Measurement provides the foundation without which our commercial and scientific activities would fail. A readily identifiable, strongly scientifically based, and comprehensive measurement system is the foundation of a high quality standards and conformance infrastructure. Standards provide the basis for efficiency in producing and trading goods suited to the needs of the community. Conformance provides confidence in performance and certainty that goods and services meet specifications and that regulatory needs are being met.’
63 Chapter 9 of the Kean Report deals with Standards Australia. Section 5 of that chapter is entitled ‘The Impact of Non Core Activities on Standards Australia’s Performance’. Publishing and certification were identified as two non-core activities that were the focus of comment in submissions to the Committee. Reference was made to the relationship between Standards Australia and Global in the following terms:
‘Standards Australia occupies a highly prestigious position on the market... Standards Australia considers that the relationship with [Global] is at arms length and that this should provide assurance to clients and competitors that it is competing for business in its own right and on its own merits. It has taken steps to mitigate the possibility of confusion by, for example, directing its staff when dealing with enquiries about what certification services are available, to inform enquirers that there are several commercial providers of certification services. Without doubting the effectiveness of intent of such actions, the Committee noted that the marketing by [Global] of its services and achievements frequently and prominently refers to Standards Australia. The effect, intended or not, associates [Global] with the authority and stature which Standards Australia enjoys and gives [Global] a significant advantage in the market.
The commercial advantage which [Global] derives in this way is of considerable concern given the special status accorded Standards Australia by the Commonwealth Government through the [Memorandum of Understanding].’
64 The Committee recommended that the Commonwealth Government request that Standards Australia and Global should immediately remove cross identification of each other, including use of common terminology in their names. It also recommended that the Commonwealth Government request that Standards Australia take steps to divest 51 per cent of Global at an early date to maintain the national interest of ensuring that Australia’s peak standards writing body retains standards writing as its core activity.
65 Chapter 16 of the Kean Report dealt with ‘Conformance in the Regulatory Sector’. That chapter began as follows:
‘Regulators normally require conformance to be demonstrated prior to products being placed on the market. Historically, regulators have undertaken their own conformity assessment. As a result they have accumulated considerable expertise.’
66 In a section headed ‘Current Practices’, the Kean Report stated that in some areas regulators have begun using third party certifiers. After referring to the certification of consumer electrical equipment, the Kean Report continued:
‘Some regulators have completely divested their conformance functions to a single commercial certification body. A series of monopolies has been passed to [Global] by State and Territory regulatory agencies. Standards Australia’s StandardsMark is frequently named as the necessary mark to show conformance. Examples include plumbing and drainage products... . At the moment [Global] is the only body licensed by Standards Australia to apply the StandardsMark. Thus, [Global] has been accorded a monopoly by the regulators in certification activities for many regulatory standards.
...
The National Certification Plumbing and Drainage Products Scheme
The NCPDPS is a certification scheme for compliance with the regulatory standards of Australian water supply authorities. It is administered by [Global] under the auspices of the major Water Authorities through the Committee of Plumbing Products Authorisations (CPPA).
Thus, [Global] alone provides certification to plumbing and drainage regulatory standards. A number of companies have complained that this monopoly operates without constraints and that application, royalty and renewal fees are excessive.’
67 Chapter 17 of the Kean Report deals with ‘CONFORMANCE MARKS’ and makes the following comments:
‘The second issue of concern to the Committee was the practice that has developed in some regulatory areas of a single proprietary Mark to demonstrate conformance. An example is the National Certification of Plumbing and Drainage Products Scheme. Standards Australia develops standards for plumbing products on behalf of the major water supply and sewerage regulatory authorities in Australia. Regulated products that are required to meet... standards are required to carry either a StandardsMark or a WaterMark, both of which are owned by Standards Australia. The WaterMark scheme requires that the quality system and nominated products comply with the specifications set out in a Manual of Authorization Procedures for Plumbing and Drainage Products (produced by Standards Australia for the use of quality assurance schemes administered by them). The StandardsMark scheme requires manufacturers to have a quality system in place and for products to comply with the relevant Australian Standard. The certification both of the products and quality systems is carried out exclusively by [Global], and enables the authorities to accept products which have been certified by [Global] without retesting themselves. [Global] is the only certifier licensed by Standards Australia to use these marks.
Where proprietary Marks are enshrined in regulation in this way, the potential is created for the particular conformance organisations to maximise their revenues through having monopolistic power in particular markets. This is discussed in Chapter 16.’
68 The Kean Report included the following recommendations:
‘47. The Commonwealth Government establish a new system of Marks for the voluntary sector based on the principles which the Committee has identified, and an expert Working Group comprising members with relevant expertise... be set up to plan and implement such a system.
48. Both the Commonwealth Government and Council of Australian Governments consider the introduction of a single Mark for use on regulated products.’
69 Those recommendations were made at the end of Chapter 17 in which the Committee’s concern was expressed concerning the monopolistic power that existed in relation to proprietary marks by reason of their being enshrined in regulation.
70 In July 1995, Standards Australia published a response to the Kean Report. In relation to recommendations 47 and 48 referred to above, a response recorded resolutions by the Council of Standards Australia as follows:
‘1. That it considers that a generic mark (StandardsMark) is the strongest national conformance mark for Australia and offers the best prospect of promoting goods and services nationally and regionally.
2. That Standards Australia will continue to issue, promote and operate its generic family of conformance marks, and reaffirms its willingness to offer these as national marks for use by other JAS-ANZ accredited certification bodies.
3. ...
4. That Standards Australia supports the concept of a Government regulatory mark and offers the StandardsMark.
5. That if the Australian government has no interest in the Standards Australia generic marks as a national asset these marks may be sold to [Global].’
EMANCIPATION OF GLOBAL
71 On 11 November 2003 Global issued a prospectus relating to an offer of shares in its capital (‘the Prospectus’). The Prospectus makes numerous references to Standards Australia, which gave its consent to be named in the Prospectus in the form and context in which it was named. The Prospectus stated that a total of 60 million new shares in Global was being offered to raise approximately $68 million. The proceeds of the offer were to be used to fund the acquisition of the commercial operations of Standards Australia and the buy back from Standards Australia of 10 million shares in Global. The remaining 40 per cent of the issued share capital of Global was to continue to be held by Standards Australia.
72 The Prospectus asserted that Global is the market leader in Australia in the publication and distribution of Australian standards and provides training and conformity assessment services relating to those standards. The activities of Global were described in the Prospectus as follows:
• publishing and distributing Australian standards and distributing international standards and standards developed by other standardisation bodies in hard copy and electronically;
• providing standards and business improvement related training and consulting services; and
• providing product and management system certification services, being the assessment of conformity of products and management systems with Australian standards, international standards and other codes of practice.
That last activity is the relevant one for present purposes.
73 The Prospectus described the certification of products and management systems activities of Global in the following terms:
‘Product certification assesses a manufacturer’s capability to manufacture a product consistently in accordance with a standard, while system certification assesses the organisation’s management processes against a relevant system or management standard.’ [emphasis added]
74 Global carries on its product and management systems certification activities under the name ‘Assurance Services’. The Prospectus described those activities in the following terms:
‘Assurance Services currently has more than 2,000 licences, covering a large number of products. These licences primarily relate to Type 5 Certification which involves a review of the product’s design, physical and performance testing, ongoing factory surveillance and monitoring of test reports for current production. Assurance Services Australian market share of Type 5 Certification services is more than 80 per cent. Products that receive Type 5 product certification are entitled to display the Certified Product StandardsMark, which provides assurance that the product conforms to a particular standard... Global receives royalties, based on revenue or volume, for the use of Standards marks... Global does not itself conduct product testing, and is not accredited to do so. Its certification decisions rely on test reports issued by appropriately accredited testing facilities. By relying on outsourced testing programs... Global manages its risk, maintains flexibility and eliminates the need for the high capital requirements of testing laboratories.
In the year ended 30 June 2003, revenue from product certification represented 20 per cent of the total revenue of Assurance Services.’
75 In a section of the Prospectus headed ‘Risks’, a subsection entitled ‘Competition’ contained the following statements:
‘The market for standards, organisational, consulting and assurance services is competitive. There are a number of established global organisations involved in the sale of standards and provision of certification services, some of which have offices in Australia and the Asia Pacific region. The barriers to entry for the provision of certification and consulting services are low.
The WaterMark is a certification trade mark that is owned by Standards Australia and is currently licensed to [Global]. As part of its product certification business, [Global] has historically been the sole provider of "WaterMark" certification, related to a limited range of plumbing products. [Global] has also provided Standards marks certification and type test certification to other types of plumbing products.
The States’ water regulators have developed a new national regulatory scheme for all types of plumbing, to be set out in the new Plumbing Code of Australia (PCA) which is expected to be released later this year or early in 2004. Under the new PCA, with Standards Australia’s agreement, the WaterMark Scheme will be expanded to cover all types of plumbing products eventually rendering Standards marks and type test certification in this area obsolete. The WaterMark will also be made available to other certification bodies, on terms to be determined. This is likely to lead to a decline in... Global’s market share of the plumbing certification market, and the revenue derived from it.’
76 The shares offered by the Prospectus have now been issued and the buy back contemplated by the Prospectus was completed in December 2003. The result is that Global is no longer related to Standards Australia, although Standards Australia continues to be a substantial shareholder of Global.
BENCHMARK’S REQUEST FOR APPROVAL AS A CERTIFYING BODY
77 On 17 February 2003, Benchmark wrote to Standards Australia enquiring as to the procedure for obtaining permission to use the WaterMark. On 18 February 2003, Standards Australia replied saying, relevantly:
‘The impending changes to the product certification schemes relating to plumbing products, of which you are no doubt aware, will have an effect on the current rules governing the use of the WaterMark, including the scope of its application and its availability under licence to other appropriately accredited certification bodies.
Once the National Plumbing Regulatory Forum has finalised how it wishes to reference the WaterMark in the proposed Plumbing Code of Australia under the new scheme, which I understand is expected early in the 2003/2004 financial year, and the administrative details have been sorted out, Standards Australia will welcome your application for a licence to issue the WaterMark. ...’
78 On 16 April 2003, Benchmark wrote again to Standards Australia relevantly saying:
‘We would be grateful if you could let us know the policies and protocols so that Clients Certified to MP52 (and others) can use the WaterMark which has been promoted by the Water Industry over the last decade.’
79 Standards Australia replied on 22 April 2003 saying:
‘...As I endeavoured to explain to you in my letter of 18 February 2003, the WaterMark is a registered certification trade mark owned by Standards Australia, and... only [Global] has a legal right to issue the WaterMark to its certified clients.
However, the terms of the licence agreement referred to above will be varied to coincide with the public release of the new Plumbing Code of Australia... and all appropriately accredited certifiers will be eligible to apply for a WaterMark licence from Standards Australia, subject, of course, to certain licence terms. The National Plumbing Regulators Forum is well aware of the current situation and the need for them to finalise the new code with some priority.’
80 Benchmark wrote again to Standards Australia on 14 May 2003 relevantly saying:
‘...a number of plumbing industry groups and individual plumbing manufacturers have expressed a degree of dissatisfaction with the certification services provided by [Global] and are seeking alternative certification arrangements.
...
We draw your attention to the [Standards Australia] Annual Report of 2001/2002, which indicated the Watermark would be made available to others in the last quarter of this financial year 2003. To date this statement has not been honoured and currently we are a JAS-ANZ accredited certification body with the capability to service this industry and are restricted in our ability to trade. As a trade practices issue, it is considered that this is clearly unacceptable and needs resolution for the benefit of all stakeholders.
Furthermore, some Australian Standards or Publications (e.g. MP52) refer to product certification marking requirements using only the StandardsMark or WaterMark which implies that such marks should be available to all who undertake relevant product certification.
...
It is our view that the current situation is a clear restriction of our ability to trade, removes the freedom of choice to industry and limits/obstructs competition...
It is on this basis that we seek to establish a transitional arrangement with [Standards Australia] regarding the use of the Watermark by Benchmark Certification clients...’
The letter went on to propose transitional arrangements pending the implementation of an agreed framework by regulators in the plumbing industry.
81 Standards Australia responded on 21 May 2003 relevantly saying:
‘1. The legal nature of the WaterMark... is that of a certification trademark, as defined in the Trade Marks Act, 1995 (C’th). Standards Australia, the owner of the WaterMark, has exclusively licensed its subsidiary [Global] to administer the relevant certification scheme in accordance with certain Rules and the terms of a legal enforceable licence agreement... . Even Standards Australia itself has no legal right to directly issue the WaterMark to end-users.
...
2. ...How a regulator, in seeking to undertake its regulatory functions, refers to or relies on a third party’s certification scheme and the certification marks used in such schemes, is a matter for that regulator. In the present case, the National Plumbing Regulator’s [sic] Forum was at all times, and still is, free to develop its own regulatory scheme and mark and rely on its own processes, but it has chosen not to do so.
3. The statement in our last Annual Report with respect to making the WaterMark available to others was clearly made in the context of the "..creation of a new regulatory Plumbing Code of Australia" and a "revised scheme" pursuant to which other certifying bodies may be able to issue the WaterMark in accordance with the revised Plumbing Code’s new technical requirements, and the new WaterMark Rules. No representation was made as to the completion of this process – which I understand may still be several months away from completion – only that "...it [was] envisaged that the revised scheme and the new documents will take effect by the end of the first quarter of 2003."... If you are concerned, or have any questions in relation to this process, I suggest you take it up with those responsible for the development of the new Code, the National Plumbing Regulators’ Forum.
...
5. ...As I have previously stated, Benchmark and any other appropriately accredited certifying body will be eligible to apply for a licence to issue the (new) WaterMark, subject to licence terms and conditions... when the new Plumbing Code of Australia is released. Whilst I have not seen the proposed new Code, I think it is worth emphasising that it will not involve Standards Australia itself issuing the WaterMark to a certifying body’s clients.’
82 The proposed Plumbing Code of Australia has not yet been promulgated, and no further request has been directed by Benchmark to Standards Australia in relation approval of Benchmark as a Certifying Body.
BENCHMARK’S RIGHT TO RELIEF
83 The first prerequisite of Order 15A Rule 6 involves being satisfied that there is reasonable cause to believe that Benchmark has a right to obtain relief in the Court. That requires a consideration of the elements of the causes of action to be relied upon in support of the possible right to relief. Benchmark originally propounded several miscellaneous causes of action that were subsequently abandoned as follows:
• participation by Standards Australia in a breach of an equitable duty of confidence;
• tortious interference by Standards Australia with contractual relations of Benchmark; and
• unconscionable conduct by Standards Australia in breach of the provisions of s 51AC of the Trade Practices Act.
Accordingly, it is not necessary for me to consider any claim for relief under Order 15A based on those causes of action.
84 The basis upon which Benchmark finally postulated its possible right to relief was the contravention of s 46 or alternatively, the contravention of s 45 of the Trade Practices Act. Even so, there was some lack of clarity in the way in which the prospective causes of action were formulated. Thus, it was only in the course of argument that Benchmark provided to the Court, for the first time, detailed references to the regulatory regimes in place in various parts of Australia. After oral submissions were completed, I invited further submissions as to the effect of certain of the New South Wales regulations, in the context of the NCPDP Scheme. Further written submissions were subsequently received from both parties. The additional material to which I have referred above was tendered by Benchmark at that stage. That process has occasioned some delay in the disposition of the proceeding.
85 As I have said, Benchmark relies on possible contravention of s 46 or s 45 of the Trade Practices Act. Those sections relevantly provide as follows:
‘46 (1) A corporation that has a substantial degree of power in a market shall not take advantage of that power for the purpose of:
...
(c) deterring or preventing a person from engaging in competitive conduct in that or any other market.
(2) If:
(a) a body corporate that is related to a corporation has,... a substantial degree of power in a market...
the corporation shall be taken for the purposes of this section to have a substantial degree of power in that market.’
(7) Without in any way limiting the manner in which the purpose of a person may be established for the purposes of any other provision of this Act, a corporation may be taken to have taken advantage of its power for a purpose referred to in subsection (1) notwithstanding that, after all the evidence has been considered, the existence of that purpose is ascertainable only by inference from the conduct of the corporation or of any other person or from other relevant circumstances.
45 (2) A corporation shall not:
...
(b) give effect to a provision of a contract, arrangement or understanding,... 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..., ‘competition’, in relation to a provision of a contract, arrangement or understanding..., means competition in any market in which a corporation that is a party to the contract, arrangement or understanding..., or any body corporate related to such corporation, supplies ..., or is likely to supply ...,... services ....
...
(8) This section does not apply to or in relation to a contract, arrangement or understanding..., the only parties to which are... bodies corporate that are related to each other.
...’
86 I shall deal separately with each possible cause of action.
MISUSE OF MARKET POWER
87 Benchmark’s possible complaint in relation to s 46 is that the failure by Standards Australia to approve Benchmark as a Certifying Body and to grant to Benchmark rights equivalent to those of Global under the Certification Marks Agreement is a taking of advantage of Standard’s Australia’s substantial degree of power in one or both of two markets for the purpose of preventing or deterring Benchmark from competing with Global in one of those markets. Benchmark asserts that Standards Australia has a substantial degree of power in the market in Australia for providing services, as a Certifying Body under MP52, consisting of the certification of compliance of plumbing products and materials with standards in accordance with MP52 (‘the Plumbing Certification Market’). Benchmark also asserts that Standards Australia has a substantial degree of power in the market for providing standards and administrative services in relation to the certification of compliance with such standards (‘the Standards Market’). Benchmark says that the relevant purpose is to prevent or deter Benchmark from competing in the Plumbing Certification Market.
88 It is incumbent upon an applicant under Order 15A in relation to a possible right to relief arising from contravention of s 46 of the Trade Practices Act to identify, with some precision, the elements that would go to make up the contravention. Thus, to establish a case based on possible contravention of s 46 in the present context, it would be necessary for Benchmark to establish a reasonable cause to believe that the following three propositions may be established:
• Standards Australia has a substantial degree of power in one or other of the Plumbing Certification Market or the Standards Market;
• Standards Australia has taken advantage of that power;
• Standards Australia did so for the purpose of preventing or deterring Benchmark from competing with Global in the Plumbing Certification Market.
89 I shall deal separately with each of the three elements involved in a contravention of s 46.
Market
90 Benchmark says that Global has a substantial degree of power in the Plumbing Certification Market. Until December 2003, Global was related to Standards Australia. Accordingly, pursuant to s 46(2)(a) of the Trade Practices Act, since Global had a substantial degree of power in the Plumbing Certification Market, Standards Australia would be taken, for the purposes of s 46, to have had a substantial degree of power in that market up to that time.
91 In the absence of some restraint, there would be nothing to prevent Benchmark setting up a certification scheme in relation to plumbing products, in competition with Standards Australia and Global. However, Benchmark points to the NCPDP Scheme and the requirements of the regulatory regimes of the States and Territories relating to the use of plumbing products as constituting such a restraint. Benchmark says that the effect of the NCPDP Scheme is that only products that have the WaterMark certification may be used in the respective areas to which the regimes relate. Plumbing products can be used in those areas only if they exhibit the WaterMark certification. Unless Benchmark is approved as a Certifying Body for the purposes of MP52, and is given the right to authorise the affixing of the WaterMark to plumbing products, it cannot compete with Global as a certifier in relation to plumbing products for use in the areas covered by those regimes. The effect, so Benchmark contends, is to create a monopoly in favour of Global in certifying plumbing products in the areas that are the subject of those regimes.
92 The failure by Standards Australia to approve Benchmark as a Certifying Body or to grant rights similar to the Certification Marks Agreement only has the effect of excluding Benchmark from certifying products in New South Wales, Queensland and ACT. Theoretically, Benchmark may be able to compete with Global in certifying compliance with MP52, in Victoria, South Australia and Western Australia.
93 However, Benchmark contends that the NCPDP Scheme is a national one and that Benchmark could not operate within such a scheme if it were excluded from certifying plumbing products in New south Wales, Queensland and ACT. It says that the Court should infer that manufacturers of plumbing products, or the importers of such products, would wish to market those fittings throughout Australia and would not be interested in having different certifiers for different parts of the country. Benchmark contends that the Court should infer that exclusion of Benchmark from some jurisdictions within Australia would result in exclusion from participation in the national scheme.
94 Thus, Benchmark says that there is a Plumbing Certification Market that is Australia wide and Global is in the position of a statutory monopolist. That was a matter of concern for the Kean Committee. That is to say, only Certifying Bodies that have been approved by Standards Australia can certify compliance with standards referred to in MP52 and authorise the affixing of the WaterMark certification trade mark. For the most part, because of the NCPDP Scheme, only products bearing that mark may be used in New South Wales and ACT. In practical terms, suppliers will not use a different certification process for different parts of Australia.
95 Benchmark relies on statements in the Prospectus, which Standards Australia must be taken to have endorsed, at least to some extent, by reason of its having consented to being named in the Prospectus. Thus, Benchmark says that the section of the Prospectus entitled ‘Competition’, at [75] above, is sufficient to constitute reasonable cause to believe that there may be a separate plumbing certification market, Global’s share in which may decline with the introduction of the proposed new Plumbing Code of Australia.
96 Even so, there is a question of whether there is a separate market for the provisions of services consisting of certifying in relation to plumbing products as distinct from certifying in relation to the myriad of other products that are the subject of standards applicable in Australia. There may be cases where a particular service is so distinctive that no other service would be seen as a possible substitute. In such a case a market may be constituted by the provision of that service: Mark Lyons Pty Ltd v Bursill Sports Gear Pty Ltd (1987) 75 ALR 581 at 589. However, whether a single brand market exists will require consideration of the supply side as well as the demand side of the market: Regents Pty Ltd v Subaru (Aust) Pty Ltd (1998) 84 FCR 218.
97 Under s 4E of the Trade Practices Act, when the term ‘market’ is used in relation to services, it includes a market for those services and other services that are substitutable for, or otherwise competitive with, the first mentioned services. A supplier can adjust its business plan by substituting one service for another in its output mix. Whether such substitution is feasible or likely will depend on such matters as customer attitudes, technology, cost and pricing incentives: Re Queensland Cooperative Milling Association Ltd; Re Defiance Holdings Limited (1976) 25 FLR 169 at 190 and Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd [1989] HCA 6; (1989) 167 CLR 177.
98 The Prospectus refers to the fact that, in relation to its product certification activities, Global has 2000 licences covering a large number of products. That represents 20 per cent of Global’s total revenue. That suggests that, from the supplier’s point of view, the market for the provision of product certification services covers many fields and there is no specific market in relation to plumbing products.
99 In its annual review for the year ended 30 June 2002 (Exhibit 2A page 138) Standards Australia asserted that the building sector was the largest single area of standardisation in Australia (page 143). However, there is no evidence before the Court as to how much of the building sector consists of plumbing products or whether there is a specific identifiable market relating to certification of plumbing products. Nor was the Court directed to any material that suggests that certification in relation to plumbing products is a significant aspect of the supply of product certification services generally.
100 The barriers to entry into the market for the provision of product certification services are not particularly significant. Indeed, the Prospectus says that ‘the barriers to entry for the provision of certification and consulting services are low’. In less than a year, Benchmark promoted its product certification services and increased its market share from having no presence in that activity to having approximately 40 clients. As I have indicated above, Benchmark claimed that it achieved what it described as a ‘critical mass’ of clients within four months of commencing operations. It appears that Benchmark is well able to compete with Global in providing product certification services other than certification of plumbing products.
101 The question of whether Standards Australia or Global has a substantial degree of power in a relevant market is a matter to be determined by objective evidence, which should be available to Benchmark on reasonable enquiry. If there is likely to be reasonable cause for believing that either Standards Australia or Global has a substantial degree of power in a relevant market, that would be capable of determination by reference to material that is in the public domain. However, on the material referred to above, there is not a strong case for believing that there may be a separate market consisting of the Plumbing Certification Market as defined above. If there is no such separate market, there is no basis for believing that Global has a substantial degree of power in the product certification market generally.
102 Benchmark also says that there is reasonable cause to believe that Standards Australia has a substantial degree of power in the Standards Market. That market is said to consist of the provision of standards and administrative services in relation to certification of compliance with such standards. While Standards Australia certainly provides standards, there is scant material before the Court as to any administrative services that might be provided by Standards Australia in relation to certification of compliance with such standards. Further, the Prospectus asserts that ‘the market for standards, organisational, consulting and assurance services is competitive’ and that there are a number of established global organisations in the sale of standards and provision of certification services. That does not suggest substantial power on the part of Standards Australia.
103 Standards Australia is of course in a favoured position by reason of the Memorandum of Understanding. It is recognised by the Commonwealth as ‘the peak non-government standards development body in Australia’. However, it is difficult to see how that leads to a conclusion that Standards Australia has a substantial degree of power in any market. It does not give Standards Australia a monopoly of any kind. Market share is not determinative of power and there is no evidence that Standards Australia can raise prices for its standards, or the other services that it provides, without losing business. In any event a more important question will be whether any failure by Standards Australia to approve Benchmark as a Certifying Body or to grant a licence in respect of the WaterMark Certification Mark could involve a taking advantage of any power in the Standards Market, as defined.
Taking Advantage
104 It is apparent, from the arrangements in place between Standards Australia and Global, that, at present, Global is the only Certifying Body approved by Standards Australia for the purposes of MP52 and is the only party authorised by Standards Australia to license the use of the WaterMark certification mark. Standards Australia has declined, at least for the present, to approve Benchmark as a Certifying Body or to grant it a licence in respect of the WaterMark. However, even if Standards Australia is to be taken, pursuant to s 46(2)(a) of the Trade Practices Act, to have a substantial degree of power in the Plumbing Certification Market, or has a substantial degree of power in the Standards Market, the refusal to grant rights in respect of the WaterMark or to approve Benchmark as a Certifying Body under MP52 is not necessarily conduct in the exercise of any power in a market.
105 Assuming Standards Australia has a relevant degree of power in a relevant market, the question is whether it can be said that, in refusing to approve Benchmark and to grant rights to Benchmark, Standards Australia is acting in a way different from the way in which a person would act who did not have that power. There has been no complaint that Standards Australia has taken advantage of its power by, for example, engaging in predatory conduct in relation to the provision of its services. The conduct of Standards Australia is conduct as the owner of the WaterMark certification mark. If the NCPDP Scheme did not have the effect of conferring a degree of exclusivity on a Certifying Body approved by Standards Australia, there is no reason to think that it would act differently, approving other bodies. Indeed, there would be no call for such approval, because a qualified certifier such as Benchmark would not want the grant of approval in order to compete with Global.
106 It is unlikely that the mere exercise in good faith of an extraneous legal right will constitute taking advantage of market power. Declining to grant a licence to another, without more, is unlikely to be regarded as taking advantage of market power; it is taking advantage of the legal right arising from the monopoly granted by the Trade Marks Act: see Warman International v Envirotech Australia Pty Ltd (1986) 11 FCR 478. There are real difficulties for Benchmark in showing that there is reasonable cause for believing that Standards Australia is taking advantage of a relevant power in a market.
Purpose
107 Benchmark asserts that Standards Australia has taken advantage of its alleged power for the purpose of deterring or preventing Benchmark from engaging in competitive conduct in the Plumbing Certification Market. Benchmark says that an inference should be drawn that the refusal of Standards Australia to approve Benchmark as a Certifying Body and to grant Benchmark rights equivalent to those of Global under the Certification Marks Agreement is for the purpose of preventing Benchmark from engaging in competition with Global in the postulated Plumbing Certification Market.
108 Benchmark refers to the Kean Report, which drew attention to the NCPDP Scheme as an issue of concern and made recommendations in that regard. While Global is no longer related to Standards Australia and the cross identification referred to in the Kean Report has ended, the vice identified by the Kean Report remains in that there is still only one Certifying body approved for the purposes of the NCPDP Scheme.
109 The annual report of Standards Australia for the 2001-2 year suggested that the WaterMark certification market would be available to other certifying bodies in the first quarter of 2003 in accordance with the proposed new Plumbing Code of Australia being developed by the National Plumbing Regulators Forum. The Prospectus also referred to proposals for the WaterMark to be made available to other Certifying Bodies in the last quarter of 2003, albeit on terms to be determined. Despite the suggestion made in the annual report and the Prospectus that the WaterMark would be made available to others, that has not yet come about.
110 Benchmark points to the correspondence with Standards Australia summarised above, in the course of which Standards Australia declined to approve Benchmark or grant rights in respect of the WaterMark certification mark to Benchmark. It may be possible to conjecture from the responses by Standards Australia to Benchmark’s enquiries that, until the new Plumbing Code of Australia is promulgated, Standards Australia does not intend to take any steps that would detract from the preferential position occupied by Global.
111 In the correspondence, Standards Australia indicated that it is awaiting the finalisation of the proposed new Plumbing Code of Australia before approving other Certifying Bodies in accordance with procedures to be settled by the National Plumbing Regulators’ Forum. There is no material before the Court as to the nature of the proposed Plumbing Code of Australia or as to the status of the National Plumbing Regulators’ Forum. There could well be good reason why no rights should be granted until such a code has been promulgated and all interested parties can be dealt with in accordance with it. It is conceivable, for example, that the proposed code might take the place of MP52. I do not consider that there is reasonable cause to believe that Standards Australia is taking the stance indicated in order to deter Benchmark, and other prospective Certifying Bodies, from competing with Global.
UNDERSTANDING OR ARRANGEMENT AFFECTING COMPETITION
112 Alternatively, Benchmark claims that there is reasonable cause to believe that, in contravention of s 45(2)(b)(ii) of the Trade Practices Act, Standards Australia and Global, after mid December 2003, have given effect to a provision of an arrangement or understanding between them that has the purpose, or has or is likely to have the effect, of substantially lessening competition in the Plumbing Certification Market. The provision in question is said to be that Standards Australia will not grant to Benchmark the right to license manufacturers of plumbing products to use the WaterMark and will not approve Benchmark as a Certifying Body for the purposes of MP52.
113 The Certification Marks Agreement is non-exclusive in relation to the WaterMark certification marks. However, Benchmark relies on an email exchange of 5 August 2003 (HM26/5) as giving rise to an inference that there was an arrangement or understanding between Standards Australia and Global that there will be exclusivity.
114 On 5 August 2003, Mr Ross Moloney, the National Product Manager of Plastic Plumbing and Irrigation Supplies, wrote to Mr Peter Walsh, the Executive General Manager, Standards of Standards Australia. Mr Moloney said:
‘I understand... that Standards Australia have appointed or are in the process of appointing companies in addition to [Global] as approved Certifying Bodies regarding the StandardsMark, WaterMark and TypeTest Mark for plumbing and drainage products. Could you please advise by return email of the status of new appointments and the contact details for these companies.’
Mr Walsh responded on the same day, saying:
‘Currently under the scheme described as MP52, [Global] is the only certification body contracted by Standards Australia to licence the use of the StandardsMark, WaterMark and TypeTest Mark for plumbing products. There is no intention of contracting the use of the certification trade marks to any other certification bodies under the existing scheme.
What is under active consideration by the National Plumbing Regulators Forum [MPRF] is a new scheme with the following features:
• The new Plumbing Code of Australia (PCA) will require certain classes of products to be certified with such certification demonstrated by the (new) WaterMark. • The WaterMark will be underpinned by different levels of certification... • The level of certification required and if it is required at all will be specified by the MPRF.
Standards Australia as the owner of the (new) WaterMark will contract the licensing of it to certification bodies accredited by JAS-ANZ and complying with contract condition.
Until the PCA is in place and the logistics and contracts worked out, that will be some months away, the current system will remain in place.’
115 Benchmark says that is a cause for believing that there was some understanding or arrangement between Standards Australia and Global that it will not contract the use of the WaterMark.
116 I do not consider that assertion of the absence of an intention to do something gives rise to an inference that there is an arrangement or understanding with another person that that something will not be done. Further, the statement in the letter was made at a time when Global and Standards Australia were related. Accordingly, because of s 45(8) of the Trade Practices Act, s 45 did not apply to any contract, arrangement or understanding between Standards Australia and Global at that time. Even if there were some inference to be drawn of an understanding or arrangement between two related bodies, there would be no reason to believe that any such understanding or arrangement would continue after they ceased to be related.
REASONABLE ENQUIRY
117 The question of whether Standards Australia or Global has a substantial degree of power in a relevant market is a matter to be determined by objective evidence, which should be available to Benchmark on reasonable enquiry. If there is likely to be reasonable cause for believing that either Standards Australia or Global has a substantial degree of power in a relevant market, that is capable of determination by reference to material that is in the public domain. I am not persuaded that Benchmark does not have access to sufficient information to enable a decision to be made as to whether such power exists. In any event, while Standards Australia and Global may have possession of documents that would be relevant to those matters, I am not persuaded that Benchmark has made all reasonable enquiries to obtain sufficient information to enable a decision to be made as to whether one or other of them has a substantial degree of power in a relevant market.
118 The conduct alleged to constitute taking advantage of power is the failure to approve Benchmark as a Certifying Body and the failure to grant rights similar to those granted by the Certification Marks Agreement. Benchmark has sufficient information to form a view as to whether it can establish that case.
119 The only area where it could be said that Benchmark might not have sufficient information is in relation to the purpose required to be established to satisfy s 46(1)(c) of the Trade Practices Act. While, under s 46(7), inferences may be drawn from the conduct of Standards Australia and Global concerning any purpose behind the failure to approve Benchmark as a Certifying Body or to grant it rights similar to those of Global, the question of purpose is inherently something internal to Global and Standards Australia. Benchmark contends that there are no enquiries that it could reasonably make, other than a direct request of Standards Australia for information as to its purpose in declining to approve Benchmark as a Certifying Body and to grant it rights equivalent to those of Global.
120 Standards Australia has consistently said that it is awaiting the promulgation of the Plumbing Code of Australia before considering the approval of other Certifying Bodies. On the other hand, Benchmark is not bound by the response that it has received from Standards Australia. If there were reasonable cause for believing that Standards Australia was refusing to approve Benchmark or grant rights to it for a relevant purpose, the denial of such a purpose by Standards Australia would not preclude the grant of appropriate relief under Order 15A.
121 Benchmark says that, having regard to the antagonistic nature of the correspondence between it and Standards Australia, which I have summarised above, any request for the provision of information would be futile. Nevertheless, there has been no formal request by Benchmark for information concerning the decision making process of Standards Australia in responding to its enquiries in the way that I have summarised above.
SCOPE OF DISCOVERY SOUGHT BY BENCHMARK
122 If any order is to be made against Standards Australia, it would be limited to discovery of documents relevant to its purpose in declining to approve Benchmark as a Certifying Body and declining to grant to it rights similar to those engaged by Global under the Certification Marks Agreement. In the course of the hearing, a further amended schedule of the documents sought to be the subject of discovery was marked, without objection, as an exhibit. The documents sought go beyond documents of relevance to purpose.
GLOBAL
123 Benchmark does not assert that Global has taken advantage of any power in a market. Rather, Benchmark asserts that Global has been involved in a contravention of s 46 by Standards Australia. Under s 82 of the Trade Practices Act, a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV may recover the amount of the loss or damage by action against any person involved in the contravention. Under s 75B, a reference to a person involved is to be read as a reference to a person who, relevantly, has been in any way directly or indirectly knowingly concerned in or a party to the contravention. Similarly, under s 80, where the Court is satisfied that a person has engaged or is proposing to engage in conduct that constitutes or would constitute being in any way directly or indirectly knowingly concerned or a party to contravention by a person of a provision of Part IV, the Court may grant an injunction in such terms as the Court determines to be appropriate. Those provisions refer to a close, rather than a remote, involvement in the contravention: Fencott v Muller [1983] HCA 12; (1983) 152 CLR 570 at 584. The provisions require that a party to a contravention be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention: Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 at 670.
124 Up until December 2003, Global was a wholly owned subsidiary of Standards Australia. The fact that it was granted rights under the Certification Marks Agreement and was approved as a Certifying Body pursuant to MP52 does not, without more, establish reasonable cause to believe that Global was knowingly involved in the failure by Standards Australia to approve Benchmark as a Certifying Body or grant similar rights to Benchmark for the purpose of deterring or preventing Benchmark from engaging in competitive conduct with Global. A fortiori, after Global ceased to be a subsidiary of Standards Australia, there is no basis for concluding that there is any cause to believe that Global had some knowledge of such a purpose on the part of Standards Australia in failing to approve Benchmark as a Certifying Body or grant it rights similar to those of Global.
125 I do not consider that there is reasonable cause to believe that Global has been involved in any conduct on the part of Standards Australia that may have contravened s 46 of the Trade Practices Act. Since there is no reasonable cause to believe that there has been a contravention of s 45, no order for discovery should be made against Global.
CONCLUSION
126 It may be that there is some basis for a belief that one of the relevant markets exists, although that question has not been demonstrated with any degree of certainty. It may also be arguable that, in declining to approve Benchmark as a Certifying Body or to grant it rights equivalent to those of Global, Standards Australia is taking advantage of a power in such a market. That is to say, it may be arguable that, in some circumstances, the failure to grant a licence to use intellectual property is a taking advantage of a power that is derived from the existence of that intellectual property.
127 It is the regulatory regimes promulgated pursuant to the NCPDP Scheme that create the advantage enjoyed by Global in the Plumbing Certification Market, assuming such a market exists. Even so, assuming that the failure to approve Benchmark or to grant rights to it is a taking of advantage of a power, there is a real question as to whether there is any basis for believing that the failure to do so was for a purpose prescribed by s 46(1)(c).
128 For the reasons I have indicated above, I consider that there is considerable uncertainty as to each of the elements necessary to establish the putative causes of action relied on by Benchmark as giving rise to a possible right to relief. There is no certainty as to any of the elements. In all the circumstances, I am not persuaded that there is reasonable cause to believe that Benchmark has a right to relief in the Court. Even if there were some basis for conjecturing as to the possibility of a right to relief, I do not consider, in the exercise of discretion, that it is appropriate to make an order for discovery having regard to the uncertainty as to all of the relevant elements on the material presently before the Court.
129 The application should be dismissed with costs.
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I certify that the preceding one hundred and twenty-nine (129) numbered
paragraphs are a true copy of the Reasons for Judgment herein
of the Honourable
Justice Emmett.
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Associate: |
Dated: 17 November 2004
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Counsel for the Applicant:
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Mr TEF Hughes QC, Mr MBJ Lee
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Solicitor for the Applicant:
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TressCox
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Counsel for the First Respondent:
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Mr CA Moore
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Solicitor for the First Respondent:
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Minter Ellison
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Counsel for the Second Respondent:
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A Bannon SC, AJ Payne
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Solicitor for the Second Respondent:
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Gilbert + Tobin
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Date of Hearing:
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7, 8, 9 June 2004
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Close of Final Submissions:
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3 September 2004
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Date of Judgment:
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17 November 2004
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/2004/1489.html
