Sunday, 15 January 2012

Messcash: A Comedy of Errors


This article first appeared in the CCH Australian Competition & Consumer Law Reporter, Issue 636, 14 October 2011, pp. 1-6.

Introduction[1]
On 25 August 2011, Emmett J of the Federal Court in Australian Competition and Consumer Commission v Metcash Trading Limited (2011) ATPR  42-368; [2011] FCA 967 decided that Metcash’s proposed acquisition of Franklins would not substantially lessen competition in breach of section 50 of the Competition and Consumer Act 2010 (CCA) (formerly the Trade Practices Act 1974).[2]  Indeed, Emmett J found that the proposed acquisition was likely to enhance competition. 

Subsequently, many commentators in the media trumpeted Emmett J’s decision as a triumph of practical, commercial common-sense reasoning over the Australian Competition and Consumer Commission’s (ACCC) increasingly hypothetical and theoretical approach to merger analysis.[3] The commentary went so far as to suggest that the ACCC’s entire approach to merger analysis would have to change in the light of Emmett J’s judgment.

On 20 September 2011, Jacobsen J denied the ACCC’s application for an interim injunction to prevent the sale.[4]  The ACCC’s appeal will be considered by the Full Federal Court over three days, commencing on 24 October 2011.[5]

A Comedy of Errors
The reality is that Emmett J’s judgment in the Metcash case is deeply flawed and highly unlikely to survive an appeal. The court appears to have ignored binding precedent in relation to market definition and made a number of significant legal and analytical errors in applying the relevant legislation.

Unfortunately, the ACCC also made a number of significant errors in the way it ran its case. These errors ranged from pleading errors to major strategic errors such as selecting the wrong counterfactual prior to the trial and then having to switch to a new counterfactual during the trial.

Background to the case
In July 2010, Metcash entered an agreement to purchase the Franklins Supermarket business for $215m. 

The ACCC opposed the proposed acquisition because it believed it would substantially lessen competition. The ACCC subsequently commenced legal proceedings in the Federal Court to prevent the acquisition from proceeding.

Metcash is a specialist wholesaling company which supplies groceries, fresh produce and liquor products on a national basis.  Metcash supplies independent retailers with grocery products principally under the IGA brand and owns a number of private labels which it makes available to its retail customers.

Franklins operates as both a vertically integrated retailer and an independent wholesaler. Franklins is vertically integrated through its ownership of 80 supermarkets in NSW. It also operates as an independent wholesaler to 10 Franklins franchises in NSW.  Franklins owns the No Frills brand which it makes available to its company owned and franchise stores.

The ACCC’s case
The most significant error made by the ACCC in its case was its failure to amend its pleadings in relation to the relevant market prior to the trial commencing. 

The ACCC initially pleaded that the market was the market for the wholesale supply of packaged groceries to independent supermarkets in NSW and the ACT.  However, a problem arose when the expert for the ACCC, Dr Christopher Pleatsikas, appeared to define a different market to the ACCC’s pleaded market in his expert report. Dr Pleatsikas defined the market as the market for the supply of wholesale services for dry groceries (at {121}).

In order to understand the difference between the ACCC’s pleaded market and the market found by the ACCC’s expert, one has to understand the goods and services which Metcash supplies to its customers. 

Metcash effectively charges its customers for three different things:

·       dry groceries;
·       a service fee for providing a wholesaling service; and
·       a fee for freight. 

In other words, while Metcash charges its customers for the dry groceries (goods), it also charges its customers for two related services – ie wholesaling services and freight services.

The problem for the ACCC arose when Metcash’s lawyers wrote to the ACCC on 2 March 2011 pointing out the discrepancy between its pleaded market and the conclusions contained in its expert report (at {122}).  Metcash’s lawyers invited the ACCC to amend its pleadings at that stage to reflect the market described in the ACCC’s expert report, but the ACCC declined to do so.

Subsequently on the ninth day of the hearing, the ACCC sought leave from Emmett J to amend its pleading to make the same amendment which Metcash’s lawyers had suggested that it make three weeks previously.  Justice Emmett refused the ACCC’s application for leave to amend its pleadings (at {123}).

Justice Emmett’s decision not to grant leave to the ACCC to amend its pleading had profound consequences for the way in which the case was run.  Indeed, the court’s decision meant that the case was effectively fought by the parties on the wrong market definition – ie that the ACCC was concerned that following the acquisition, Metcash would be able to increase the wholesale prices of groceries to independent retailers by between 5-10%. However, the ACCC’s true concern was that following the acquisition, Metcash would be able to increase the price of wholesaling services to independent retailers by between 5-10%.

The practical difference between these two markets is significant. In the pleaded market, the ACCC would have had to prove that Metcash had the ability, following the acquisition, to increase its prices for dry grocery supplies by between 5-10%, which would have amounted to a doubling of its profit margin. However, under the alternative wholesale services market, the ACCC would only have been required to prove that Metcash could have increased its wholesale service fee from, for example, 3% of the value of the groceries supplied to its independent retailers to 3.15% to 3.3%. Obviously it would have been much easier for the ACCC to prove the latter.

Ultimately, the ACCC attempted to circumvent this pleading problem by arguing that the market it has pleaded was effectively the same as the wholesale services market. However, Emmett J did not accept this argument.

The other significant mistake made by the ACCC in the case related to the selection of its counterfactual.  The ACCC claimed prior to hearing, and for the first few days of the hearing, that SPAR was the likely counterfactual in the event the proposed acquisition by Metcash did not proceed. However, it should have been abundantly to the ACCC, based on even a cursory review of SPAR’s financial accounts, that it simply did not have the financial resources to purchase the Franklins business.  SPAR’s total wholesale sales of groceries in each of the 2009 and 2010 financial years was only $150 million (at {76}).[6]

On the other hand, the strength of the alternative consortium headed by Supabarn made it a much superior counterfactual to SPAR.

Not only did the Supabarn-led consortium have greater financial resources, but it had significant wholesale grocery volumes which it could have redirected to Franklin’s wholesale operations. The addition of this volume would have significantly enhanced the overall efficiency of Franklins’ wholesale operations and driven down the costs of providing wholesale services. 

Mr Perlov, the Managing Director of Franklins advised TMT, the advisers to the Supabarn-led consortium, that the Franklins wholesale operations were currently operating at only 60% capacity and that it needed another 20 good stores to achieve scale efficiency (at {373}).  The consortium itself could have added 13 quality stores to the Franklins wholesale operation overnight.

Unfortunately, the ACCC did not recognise that the Supabarn-led consortium was the most likely counterfactual until after the trial had commenced.  The ACCC had to change its position mid-way through the trial by abandoning SPAR and embracing the Supabarn-led consortium as its preferred counterfactual.  The ACCC’s decision to change counterfactuals in the middle of the case significantly undermined the credibility of its arguments in favour of the Supabarn-led counterfactual.

Federal Court Judgment
The first unfortunate decision made in the conduct of the trial was the refusal by Emmett J to allow the ACCC to amend its pleadings.  In deciding not to allow the ACCC to amend its pleadings, the court treated the ACCC as a private litigant to private proceedings, rather than a public interest litigant. The court appears to have taken the view that because the ACCC had not amended its pleadings when it had a chance to do so prior to the commencement of the trial, it had lost its opportunity to do so once the trial started.

Despite the ACCC not being permitted to amend its pleadings to include the wholesale services market, the ACCC still had every right to expect that they would be successful in establishing the market which they had pleaded – namely the market for the supply of wholesale groceries to independent grocers. This was because there was a clear binding precedent which should have determined the issue in the ACCC’s favour.

In 1996 the Full Federal Court handed down its judgment in Davids Holdings Pty Limited & Ors v Attorney-General of the Commonwealth (1994) ATPR 41-304 In this case, Davids was proposing to acquire another independent wholesaler, Queensland Independent Wholesalers.  Therefore, the market definition issues considered in the Davids case were identical, in product and functional terms, to the market definition issues raised in the Metcash case.

The Attorney-General[7] was successful in arguing both at first instance and before the Full Federal Court, that the relevant markets in the Davids case were:

·       the market in Queensland and northern NSW for wholesaling  groceries by independent wholesalers to independent retailers; and

·       the market for retailing groceries, including independent retailers and chain stores.

Not only did the court in Metcash define a different market to the market found by the Full Federal Court in the Davids case, but Emmett J did not discuss the Davids case in his judgment.  It is surprising that Emmett J did not at least try to distinguish the Davids decision as it related to market definition before defining a completely different market.

Unfortunately it is not a simple exercise to state with precision the market which Emmett J ultimately found in the Metcash case.  This is because his description of the relevant market is far from clear. However, it would appear that Emmett J defined the relevant market as follows:

·       the national market for the supply of packaged groceries, encompassing both the wholesale supply of groceries and the retail supply of groceries by independent grocers and vertically integrated chains.

The other significant mistake which the court made in the Metcash case relates to the appropriate counterfactual test to apply in merger cases.  In his judgment, Emmett J defined the counterfactual test as involving the following two-step process (at {146}):

·              “that it is more probable than not that one of the Commission’s counterfactuals will come to pass if the proposed acquisition does not proceed; and

·              that there is a real chance that, if the proposed acquisition does proceed, that would result in a substantial lessening of competition compared to the scenario in which one of those counterfactuals comes to pass.”

While Emmett J cited French J’s decision in the AGL case[8] as establishing the relevant test for assessing competing counterfactuals, a close reading of the two tests shows that Emmett J’s formulation is significantly different to the French test.

In AGL, French J explained the test for assessing the counterfactual as follows:

“The ACCC submits that AGL must satisfy the Court that its hypothesis against any likely substantial lessening of competition in any relevant market is more probable than the competing hypotheses which are advanced to suggest a real chance of competition being substantially lessened in any such market. I accept that formulation of the approach which should be taken in this case. I accept also the proposition advanced by the ACCC that AGL is not entitled to relief if:

(a) the Court is left in a position of uncertainty about the competing hypotheses; or

(b) the Court concludes that the hypotheses suggesting a real chance of competition being substantially lessened are more probable than the opposing hypotheses.[9]

The formulation established by French J in AGL is that the counterfactual has to be “more probable” than the competing hypothesis. This is clearly a relative test which looks at the likelihood of one of two competing hypothesis eventuating. 

However, Emmett J described the counterfactual test differently as requiring that the court be satisfied that the counterfactual be “more probable than not.”  This is an entirely different test to the test established in AGL.

The French test looks at how probable one counterfactual is when compared to another counterfactual.  This means that a counterfactual with say, a 30% chance of occurring would be selected as the counterfactual if the competing counterfactual only had a 20% chance of occurring.  However, under Emmett J’s formulation the only way that any counterfactual could succeed is if its probability of occurring was more than 51% - ie more probable than not.

The mistake of using this test was further compounded by Emmett J’s application of the test to the relevant facts. In his judgment, Emmett J set out an extensive range of factors which the ACCC’s counterfactual would have to meet in order for it to be considered as the likely counterfactual.  The actual application of the test to the facts raised the standard of proof significantly higher than even the balance of probabilities. Indeed the standard bears more resemblance to proof beyond reasonable doubt.

Furthermore, Emmett J did not apply his counterfactual test with the same rigour to the counterfactual put forward by Metcash and Franklins – namely, that there would be a store sale if the acquisition did not proceed.

Conclusions
The claims that Justice Emmett’s judgment represents a triumph of common sense over economic theory are entirely misplaced. Nothing could be further from the truth. 
It was the ACCC which argued a common-sense market definition. The ACCC asked the simple question – to whom will independent grocers turn if Metcash increases its wholesale grocery prices? The ACCC believed that these independent retailers would have nowhere to turn because Franklins was their only viable potential source of wholesale supply.  

In reality, it was the court in the Metcash case which defined the more economically theoretical and speculative market.  The court found that because competition at the wholesaling level is constrained by downstream competition at the retail level, that the functional dimension of the market should be broadened to include this downstream retail competition. Put another way, the court found that Metcash would not increase its prices to its independent retail customers because it would recognise that if it tried to increase its prices to these captive customers, this action would make these customers uncompetitive against Coles, Woolworths and Aldi stores at the retail level which would in time force these customers out of business.    

It is highly unlikely that the decision in the Metcash case will survive an appeal, despite Jacobsen J’s recent comments. The court has made too many fundamental legal and factual mistakes for the judgment to be allowed to stand. 

The remaining question is why has both the ACCC and the court made so many apparent errors.  The simple explanation is “time”.  It is not possible for the ACCC to prepare a merger case properly in the very short time frames imposed upon it by the court.  In both the AGL case and the Metcash case, the ACCC had only a couple of months to fully prepare its cases. It is no coincidence that the ACCC lost both of these cases quite comprehensively.   The court will also struggle to properly adjudicate on all the relevant (and irrelevant) issues raised during a merger case. 

Given the importance of merger analysis under section 50 of the CCA – namely to ensure the future competitiveness of Australian markets in the medium to long term – more time should be given to both the ACCC and the court to get the decision right.

Postscript
On 20 September 2011, the Full Federal Court handed down its decision in Australian Competition and Consumer Commission v Metcash Trading [2011] FCA 1079[10], rejecting the ACCC’s appeal against Emmett J’s judgment. Accordingly, my prediction that Emmett J’s judgment would not survive an appeal has proven to be incorrect. 

I will be discussing the Full Federal Court’s Metcash decision in an upcoming post, where I will be arguing that the Court’s decision should be characterised as Act 2 (and fortunately the Final Act) in the Messcash Comedy of Errors.  



[1] I acted for TMT, the financial adviser to the Supabarn led consortium, in the Metcash case.
[2] Australian Competition and Consumer Commission v Metcash Trading Limited [2011] FCA 967 (25 August 2011) -
http://www.austlii.edu.au/au/cases/cth/FCA/2011/967.html

[3] For example Bryan Firth, “Metcash black eye puts ACCC's new boss Rod Sims in a spot”, The Australian, http://www.theaustralian.com.au/business/opinion/metcash-black-eye-puts-acccs-new-boss-rod-sims-in-a-spot/story-e6frg9kx-1226122403750

[4] Australian Competition and Consumer Commission v Metcash Trading Ltd [2011] FCA 1079 (20 September 2011) -
http://www.austlii.edu.au/au/cases/cth/FCA/2011/1079.html

[5] See Postscript at end of article.
[6] I expressed the view to the ACCC’s lawyers prior to the Metcash trial commencing that they were arguing the wrong counterfactual and should change their focus from SPAR to the Supabarn-led consortium.
[7] The Davids proposed acquisition of QIW was challenged under section 50 of the Trade Practices Act 1974, by the Commonwealth Attorney General.
[8] Australian Gas Light Company v Australian Competition and Consumer Commission (No. 3) [2003] 137 FCR 317.
[9]  AGL at 356.

Thursday, 5 January 2012

The Untold Story: The ACCC’s role in the Waterfront Dispute


Part 13: The ACCC’s case in detail

ACCC’s case
As stated in the last instalment of the Untold Story, the ACCC’s case against the MUA was a large and sophisticated case. The ACCC alleged that the MUA had engaged in a significant number of contraventions of the TPA. In this instalment, I will describe the ACCC’s case in more detail.

International Solidarity Contract
The ACCC pleaded that on 10 June 1997, the MUA entered into an International Solidarity Contract with the ITF and other affiliated unions.

The ACCC claimed that by entering into this Contract, the MUA and other signatories had committed to supporting each other in the future in the event that:

  • any ITF affiliated dock workers’ union was confronted with the introduction of port reforms (including privatisation); 
  • an employer or employers tried to replace ITF affiliated dock workers with non-union labour; and 
  • employers or authorities attempted to undermine the strength of ITF affiliates. 
The MUA and affiliated ITF unions agreed to take all available practical means to achieve the above outcomes.

The fact that the Contract was to have practical application was made clear in a letter send by David Cockcroft, the General Secretary of the ITF, to Coombs which stated: 

May we recall the resolution aimed at stopping anti-trade union policies by authorities and employers as well as the International Solidarity Contract, both unanimously adopted by the world wide ITF Dockers Section Conference in June this year (1997). This resolution and this contract could be the basis of further international support for the MUA.
Please let us know if we should start to prepare a world wide campaign towards the cancellation of Government policies aimed at the destruction of the waterfront workers’ union. The ITF guarantees you all the support you need.[1]
There were further reports that the Contract was to have practical application. Mr Marges, the Secretary of the Dockers Section of the ITF was quoted as saying:
At our Miami docker's section conference, we unanimously adopted a resolution aimed at stopping the anti-trade union policies of employers.
We also adopted an International Solidarity Contract. Recent developments in Sri Lanka and Australia have given cause for the development of a campaign aimed at the practical implementation of the resolution and the contract.

According to the decision in Miami the steering committee should be consulted if a campaign needs to be developed, including a strategy for targeting ships bound for ports where anti trade union policies were to be taken extremely seriously (sic).

As you may recall MUA’s National Secretary, John Coombs, arrived late at the docker’s section conference in Miami as a result of union activities to stop the government’s interference in labour disputes in the Australian ports on 10 June.

As discussed in Miami we need to be prepared to select our targets and plan our action carefully and continue to organise all kinds of actions until we have won.

An action aimed at stopping all ships for one day will not be sufficient and we should look more to establishing a permanent threat to terminal operators and subsequently ship owners to disrupt their business as long as they make use of ports where unionised workers are being made victims of port reforms or attempts are carried out to destroy trade unions.[2]
The ACCC pleaded the International Solidarity Contract to lay the platform for arguing that the subsequent actions by the ITF and overseas affiliated unions in boycotting vessels during the Waterfront Dispute were in performance of this Contract.

Cairns and Dubai incidents
The ACCC also pleaded the Cairns and Dubai incidents as earlier examples of the MUA calling on the ITF and other overseas unions to support it in relation to domestic issues.

In relation to Cairns, the ACCC pleaded that Trevor Charles, the local ITF representative, and James Tannock, a National Organiser of the MUA, contacted Central Gulf Shipping, the time charterer of the Java Sea, to advise that it was the ITF’s intention to organise a world wide boycott of all ships owned by the owner of the Java Sea.

The ACCC based its pleading on various MUA and ITF documents then publicly available in which they openly bragged about how they have been able to organise a global boycott in relation to Cairns. For example, the ITF made the following statement on its website:

In a stunning demonstration or the effectiveness of international solidarity, the Maritime Union of Australia (MUA) and the ITF have joined forced to prevent a shipping company from introducing non-union labour.
The MUA organised a demonstration picket line and publicly called upon the ITF to support the sacked union members. 
The ITF also warned the company that world wide actions would be organised against ships calling at ports such as Cairns where de-unionisation had taken place.

Following this intervention the company instructed the captain of the Java Sea to anchor outside Cairns and await further instructions.

Intensive negotiations were then held between the MUA and the company which resulted in an agreement to rehire the unionised dockers.[3]
In relation to Dubai, the ACCC pleaded that Coombs had announced publicly that the MUA and ITF had acted together to take whatever steps were necessary to frustrate the training of the Australian workers in Dubai. This announcement was made after a meeting between Coombs and Charles with the ITF in London.

The ACCC also pleaded that Coombs and Cockcroft, the President of the ITF, had met with the UAE ambassador to the United Kingdom to advise him that ITF affiliates would boycott vessels using the Port of Dubai unless the trainees were expelled.

The ACCC’s argument was that given this history, it was highly likely that the MUA had again called on the ITF and affiliated unions to boycott vessels stevedored by Patrick’s non-union labour during the Waterfront Dispute.

Global boycott
The ACCC also pleaded that shortly after Patrick sacked its MUA workforce, the MUA resolved that it would take all available steps to ensure that Patrick had “no business, no ships and no cargo moving across its ports”. Coombs made this announcement to the media on 10 April 1998.

Coombs confirmed these threats during an interview with Mike Carlton on 2UE on 14 April 1998. During this interview, Coombs stated that the blockades would remain in place until the MUA members were re-employed by Patrick. He also made it clear that no cargo would move in or out of the Patrick’s facilities until the reinstatement of the MUA workers had been achieved.

Indeed, Coombs had made similar threats the day before during an interview with Graham Richardson on 2GB.

The ACCC pleaded that the MUA and ITF had acted in concert to organise and incite the various global boycotts of vessels stevedored by Patrick’s non-union labour.

The ACCC included a Schedule to its Statement of Claim listing the concerted actions of the MUA and the ITF.

In the Schedule, the ACCC drew attention to various statements made by the MUA before Patrick sacked its MUA workforce that it would not hesitate to call overseas affiliates to oppose the introduction of non-union labour to the Australian docks. For example, on 29 January 1998 Coombs told reporters that the MUA would oppose the introduction of non-union labour “with all the international force we can muster”.

Furthermore, comments were made by other senior MUA officials in January 1998 in response to the establishment of the PCS business at Webb Dock that international contacts would be called upon to assist.

The ACCC also pleaded that the MUA and the ACTU had held discussions with the ITF to devise a campaign to provide “full support to Australian unions”.

On 31 January 1998, Coombs was reported to have requested the ITF to black ban any ship loaded by PCS at Webb Dock and to pursue any such ships with global boycotts “forever”.

On 30 January 1998, Marges of the ITF stated the following during a radio interview in relation to the PCS business:

[The ITF is prepared to go] far enough to support the MUA in their struggle to get farmers out and the union in which means that any ship loaded by non-union labour will be prepared a warm welcome in any other port in the world. So the ship owners should know that if they allow one of their ships to be loaded by non-union labour that ship will be followed all over the world…We will be pleased to prove that we are more than a paper tiger and we will prove that.
And as I have said, any ship owner allowing a ship into the port where the farmers are involved in loading or unloading their ship can be assured that a ship is completely useless and is better to make it into scrap than using it any more.
In any port where we can stop that ship or delay cargo handling on that ship we will do that. We will follow that forever, all over the world, even if that ship has another name, we will find it and it will be followed everywhere. 
On 2 February 1998, Greg Combet, the then Assistant Secretary of the ACTU, told reporters that the ITF had pledged its full support for the MUA.

In early February 1998, the ITF started issuing circulars to its members to advise them of development in Australia and calling on them to be prepared to take action against any vessels loaded or unloaded by PCS.

On 13 February 1998, Coombs made a speech at Dallas Brooks Hall in which he reportedly made the following statements:

From Cairns through Dubai, to Webb Dock and we gave him (Peter Reith) a taste of what’s in store in Cairns and a slightly better example of what’s in store in Dubai.

This union has enormous international support as well.

And we ask for that support, as we asked for it internationally and which we got internationally. So that we can say that any ship which leaves this port with this cargo loaded by other than MUA members, the cargo will rot through the bottom of that ship before it ever breaks any union power.

And for that level of commitment we are thankful to the world organisations, the ITF who intervened in the Dubai exercise. You will never have to worry about the MUA’s support in any of your scuffles, in any of the battles, nationally or internationally, we will be there.
Towards the middle of February 1998, Coombs started becoming more cautious about making statement that the MUA were seeking the support of international union affiliates. 

For example, on 19 February 1998, in response to a question from a reporter whether the MUA had international union support, Coombs said, “I am not allowed to talk about that”. 

On 22 February 1998, Coombs stated:

Well, I’m not going to comment on what they might do out of London, given Mr Fels has threatened the Crimes Act on me: so we will just let London do what London does.
Prior to Patrick’s sacking its MUA workforce, there were many other examples of MUA officials bragging about the level of international support which the MUA enjoyed. The ACCC made sure that it pleaded every single statement made by any MUA officials along these lines.

The day after Patrick sacked its MUA workforce, Cockcroft and Marges of the ITF appeared on television and radio to make it clear that the ITF and its affiliates were now targeting Patrick.

MUA domestic conduct
The ACCC also pleaded that the MUA’s domestic conduct which consisted of refusals to provide services and the blockades, breached of the TPA.

The refusals to provide services included such conduct as MUA linesman failing to attend to release or attach the lines of vessels which had been loaded or unloaded by non-MUA workers. The most well known example of this conduct was the failure by the linesmen to attend to attach the lines for the Australian Endeavour when it arrived at Port Botany on Easter Saturday.

There were numerous other examples including:

  • Tasman Venture at Darling Harbour on 8 April 1998; 
  • Star Global Bridge at Newcastle on 1 3 April 1998; 
  • Direct Falcon at Darling Harbour on 15 April 1998; and 
  • Star Seabridge at Newcastle on 13 to 15 April 1998. 
We only pleaded examples where we had obtained evidence to prove the breach. There were many other examples of such conduct where the shipping company did not want to assist the ACCC by providing evidence.

The ACCC also pleaded instances where MUA had refused to provide towage services. Again, the most well known example was the refusal by the MUA towage employees to provide services to the Australian Endeavour on Easter Saturday. In this case, the refusals continued for over 7 hours before the MUA eventually agreed to provide the services.

The ACCC also pleaded that the MUA and its members had established and maintained blockades outside Patrick terminals at each of the following locations:

  • Melbourne – Webb Dock; 
  • Melbourne – East Swanson Dock; 
  • Sydney – Darling Harbour; 
  • Sydney – Port Botany; 
  • Newcastle; 
  • Brisbane – Maritime; 
  • Townsville; and 
  • Fremantle. 
Rather than plead a general blockade, the ACCC pleaded specific instances of trucks and trains, which had been contracted to pick up or unload cargo at Patrick’s terminals, being turned back by the picket lines. 

The ACCC pleaded incidents in which it could identify specific MUA members as being part of the blockades. For example, on 10 April 1998 a train containing 94 containers of goods from South Australia was due to deliver these containers to East Swanson dock. A picket line of approximately 200 persons gathered across the rail lines at the rail gate entrance and prevented the train from entering East Swanson dock. The ACCC alleged that amongst these 200 persons were four identifiable MUA members, who appeared to be in charge of the picket line.

The ACCC also pleaded the specific details of some of the blockades. For example, on 11 April 1998 a truck carrying cargo to be loaded on vessels at Patrick’s Townsville terminal was stopped by a picket line. The ACCC pleaded the following conduct then occurred: 

Members of the gathering then climbed up on the vehicle and began punching glass and doors whilst yelling abuse at the driver. Indicator and clearance lights were destroyed on the vehicle.
The ACCC alleged that in another incident at East Swanson on 13 April 1998, that Mick O’Leary, a National Organiser of the MUA, addressed the picket line in the following way:
Two trucks are expected to arrive at the dock shortly and attempt to enter. From day one our aim has been to make sure that nothing goes in or out of the gates and that is what we intend to do today.
Another example occurred in Fremantle on 20 April 1998, when a National Rail train was stopped by a picket line. The Regional Manager of National Rail was approached by an MUA official and told that the train could not pass because there was a safety issue. The MUA official then advised the National Rail Manager that he should go to the MUA headquarters to discuss the issue.

The National Rail Manager went to the MUA headquarters, as directed, and was told by senior MUA officials that the train could access Fremantle Wharf as long as no Patrick’s containers were loaded. The National Rail Manager agreed to this condition.

There were other very blatant examples of breaches of the boycott provisions of the TPA. My personal favourite was at Fisherman’s Island in Brisbane where the MUA members decided to place a sign at the level crossing where the National Rail Freight trains entered the terminal which stated:

MUA Picket Line, Stop.
As is apparent, the MUA were not making much of an effort to hide their involvement in the picket lines.

Specific contraventions
The ACCC alleged the following specific contraventions:

1. damage to Patrick Stevedores – section 45D;

2. damage to shipping corporations, road and rail transport corporations, importing corporations and exporting corporations – section 45D;

3. preventing or hindering Patrick Stevedores – section 45DB;

4. preventing or hindering shipping operators, importers and exporters – section 45DB;

5. preventing or hindering road and/or rail transport operations – section 45DB;

6. preventing or hindering non-union stevedores - section 45DB; and

7. preventing or hindering overseas shippers - section 45DB.

The ACCC was quite confident of winning its case due to the blatancy of the MUA’s conduct. In particular, we believed that our evidence concerning the global boycotts and the various refusals to provide services was very strong. The weaker part of our case related to the blockades, as we suspected that the MUA would argue that whilst their members were in attendance at the various blockade, they were not actually in charge.



[1] As reported on page 1 of the Daily Commercial News, 11 September 1997.
[2] Kes Marges quotes on page 3 of the Daily Commercial News on 23 September 1997.
[3] De-unionisation attempt blocked with ITF help – Victory for Australian Dockers, ITF website