Case:

The case is about market power, and alleged illegal use of that power ¡V The ACCC alleged that Boral Masonry Ltd reduced prices of concrete masonry products below manufacturing costs to drive a new entrant out of the market and to deter other businesses from entering.

Key Words:

Trade practices, restrictive trade practices, misuse of market power, predatory pricing, market power, barriers to entry.

Reference:

Boral Besser Masonry Ltd (now Boral Masonry Ltd) v Australian Competition and Consumer (2003) ATPR 41-915

Industry:

Concrete masonry

Relevant Laws:

Section 46 of the Trade Practices Act 1974

Summary:

The respondent, the ACCC, took proceedings in the Federal Court of Australia against Boral and BBM. The proceedings were heard before Heerey J, who found in favour of both Boral and BBM, and dismissed the application. There was an appeal to the Full Court of the Federal Court, but ultimately the appeal was pressed only in relation to BBM. The Full Court (Beaumont, Merkel and Finkelstein JJ) allowed the appeal, found that BBM had contravened s 46, and ordered that the matter be remitted to the trial judge for further hearing on the question of relief. BBM now appeals to this Court against that decision.

The High Court of Australia handed down its first decision about below cost pricing and section 46 of the Trade Practices Act 1974. By a 6-1 majority, the High Court found that Boral Masonry Limited did not breach the misuse of market power provisions of the Act as alleged by the Australian Competition and Consumer Commission. This decision overturned a unanimous decision of the Full Court of the Federal Court.

The Court's decision was based on a finding that Boral Masonry did not have substantial market power.

While the High Court did not find that Boral Masonry had the necessary degree of market power to trigger the section, it did find that the relevant market was that alleged by the ACCC ¡V the market for concrete masonry products in Melbourne ¡V as opposed to a more widely defined market for walling and paving products generally.

This judgment raises concerns as to the ability of the misuse of market power provision of the Trade Practices Act 1974 to protect viable small businesses and efficient new entrants from anti-competitive targeting by larger and better resourced competitors, thereby undermining the benefits of competition.

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