Australia: High Court Examination Of A Non-Competition Agreement With A Supplier Who Is Also A Competitor: Visy Paper V ACCC

Last Updated: 10 November 2003
Article by Chris Jose
On 8 October 2003 the High Court upheld1 the Full Federal Court's decision2 that Visy Paper (Visy) contravened the Trade Practices Act 1974 (TPA) when it sought to make an agreement containing a non-competition clause with one of its suppliers of waste paper, Northern Pacific Paper (NPP), who was also a competitor of Visy in the collection of waste paper from third parties.

The case highlights the need for businesses to carefully consider the legality of any restraint they attempt to agree with a supplier or a customer who may also be regarded as one of their competitors. In this case Visy contravened the TPA even though no agreement was finalised, and in circumstances where the Australian Competition and Consumer Commission (ACCC) conceded there was no purpose or likely effect of substantially lessening competition.

A 5:1 majority of the High Court (Justice Callinan dissenting) found the proposed supply agreement, which included a clause that would prevent NPP from collecting waste paper from customers of Visy, included an exclusionary provision,3 prohibited by section 45 of the TPA irrespective of its effect upon competition.

In making its decision the Court clarified the interaction between section 47 of the TPA, which prohibits anti-competitive exclusive supply or acquisition arrangements, and section 45, which contains a prohibition upon anti-competitive agreements, price-fixing and exclusionary provisions.

The Federal Court will now go on to assess matters such as the pecuniary penalties that might be awarded against Visy and its two employees who were involved in the conduct.

Summary of the facts

Visy conducted a vertically integrated business involving the collection and recycling of waste paper and cardboard. NPP, on the other hand, conducted a business of collecting waste paper and selling it to recycling companies such as Visy. The collection of waste paper by Visy and NPP on some occasions involved:

  • the acquisition of waste paper from particular persons, ie where the waste paper was purchased, and
  • the supply of waste paper collection services to particular persons, ie where Visy or NPP were paid to collect the waste paper.

Visy sought to make an agreement with NPP whereby NPP would supply the waste paper it collected to Visy and would not collect waste paper from Visy's other existing, and certain prospective, suppliers. Several draft documents containing non-competition clauses were provided to NPP by Visy but no agreement was ultimately concluded.

Visy in the Federal Court

The proceedings arose out of an investigation conducted by the ACCC. In January 2000 the primary judge (Justice Sackville) dismissed the proceedings,4 finding that the attempted arrangement should not be considered under section 45 of the TPA by reason of section 45(6). However, on appeal, a majority of the Full Court of the Federal Court (Justices Hill and North) ruled in favour of the ACCC and found that the conduct of Visy did contravene section 45 of the TPA.

Exclusive dealing or an exclusionary provision?

The central issue debated before the High Court was whether the conduct of Visy should be examined under section 45 or section 47 of the TPA. This debate was technical in nature and the Court was asked to interpret both the legislation and the non-competition clause itself.

On the facts of this case the non-competition clause proposed by Visy could potentially be examined under the TPA in either of the following ways:

  • as an exclusionary provision of an arrangement between two competitors, which had the purpose of preventing, restricting or limiting the supply of waste paper collection services to, or the acquisition of waste paper from, customers of Visy by NPP. In this circumstance the conduct of Visy would be prohibited by section 45 of the TPA as alleged by the ACCC, or
  • as exclusive dealing of the type described in section 47(4) of the TPA, in so far as it dealt with the acquisition of waste paper from NPP on condition that NPP would not supply waste paper collection services to customers of Visy. In this circumstance the conduct of Visy would not contravene the TPA, because the ACCC conceded that it did not have the purpose or likely effect of substantially lessening competition as required by section 47(10).

The key to resolving this conflict is found in section 45(6) of the TPA, which is designed to prevent this type of overlap between sections 45 and 47. Section 45(6) effectively states that exclusionary provisions, which also amount to the practice of exclusive dealing, should only be considered under section 47 and not section 45.

In their joint judgment, Chief Justice Gleeson and Justices McHugh, Gummow and Hayne firstly examined the non-competition clause. They expressed the view that the interpretation of the proposed agreement was not to be dictated by the particular drafting used by Visy. Rather, the substance and content of the proposed agreement had to be considered.5 The substance of the non-competition clause in this case had a dual function—it restricted NPP's freedom to supply services and also its freedom to acquire goods.6 The non-competition clause thus contained two separate provisions. The provision that restricted the supply of services triggered the anti-overlap provision in section 45(6) because it was also exclusive dealing and could not contravene section 45 of the TPA. However, the provision that restricted NPP's acquisition of goods was not exclusive dealing as defined in section 47 of the TPA. Accordingly, this second provision did not invoke the anti-overlap provision and was an exclusionary provision prohibited by the TPA.

Justice Kirby agreed that Visy's appeal must be dismissed but separately expressed the view that the drafting used in the TPA should be interpreted in a manner that allows the different sections to work together in a way that gives effect to the policy behind the legislation.7 In this context, Justice Kirby expressed the view that the overlap provision section 45(6) was intended to ensure that non-price restrictions which are part of vertical supplier–purchaser relationships are only considered under section 47. However, in Justice Kirby's view, section 45(6) was clearly not intended to remove the absolute prohibition upon exclusionary restraints that are a part of the horizontal relationship between competitors, and which are designed to restrict supply or eliminate price competition.8 Justice Kirby found that the non-competition clauses were primarily referable to the horizontal competitive relationship between NPP and Visy, rather than to their vertical supplier–purchaser relationship, and did not trigger section 45(6) of the TPA.

What does it mean?

This decision makes it clear that businesses must carefully examine the legality of any restraints they are considering including in supply or acquisition agreements with another party who may also be their competitor. If part of the substance of such a restraint is exclusionary in nature and does not fall within the technical definition of exclusive dealing, however it may be drafted, there is a risk that it could contravene the TPA as an exclusionary provision irrespective of its effect upon competition.

The law relating to exclusionary provisions has rapidly developed in recent times. Earlier this year the High Court made an important decision in this area relating to the South Sydney District Rugby League Football Club.9 The High Court is likely to make further clarifications in a case involving the ACCC and Rural Press, where it has reserved its judgment. The Dawson Committee in its review of the competition provisions of the TPA has also recommended significant changes to the legislation relating to exclusionary provisions. It is anticipated that draft legislation dealing with these recommendations will be considered by Parliament later this year.

In light of this rapidly changing legal environment, care must be taken when contemplating any restrictive arrangement involving an actual or potential competitor, even in the context of ordinary supply or acquisition arrangements.

1 Visy Paper Pty Ltd v Australian Competition and Consumer Commission [2003] HCA 59.

2 Australian Competition and Consumer Commission v Visy Paper Pty Ltd (2001) ATPR 41-835.

3 'Exclusionary provision' is defined in section 4D of the TPA. Section 4D applies to provisions of a contract, arrangement or understanding, and contains two primary elements: (1) there must exist a state of competition in relation to the supply or acquisition of the relevant goods or services between two or more parties to the contract, arrangement or understanding; (2) there must be the purpose of preventing, restricting or limiting the supply to, or the acquisition from, particular persons or classes of persons.

4 Australian Competition and Consumer Commission v Visy Paper Pty Ltd (2001) ATPR 41-799.

5 Chief Justice Gleeson and Justices McHugh, Gummow and Hayne at paragraph 32.

6 Chief Justice Gleeson and Justices McHugh, Gummow and Hayne at paragraph 34.

7Justice Kirby at paragraph 56.

8 Justice Kirby at paragraph 63.

9 News Limited & Ors v South Sydney District Rugby League Football Club Limited & Ors [2003] HCA 45. For a summary of this case, please refer to our earlier article titled titled 'The High Court clarifies exclusionary provisions: News Limited v South Sydney' (27 August 2003).

For more further information please contact: Chris Jose, telephone: 03 9288 1416 or email:

This article provides a summary only of the subject matter covered, without the assumption of a duty of care by Freehills. The summary is not intended to be nor should it be relied upon as a substitute for legal or other professional advice.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.