Australia: Antitrust Alert: Australia Court Broadens "Market" Definition In Australia

Companies doing business with Australia are cautioned that the reach of the Australian competition law has grown considerably in recent years, particularly in relation to price fixing cartels. In a split decision, the Full Federal Court has upheld an appeal brought by the Australian Competition Commission (ACCC), finding that Air New Zealand and Garuda engaged in price fixing conduct within a "market in Australia" even though the market was also in another country.

This latest decision is evidence of the ACCC's continuing aggressive enforcement of the law in a global context. This decision highlights that companies should consider very carefully whether their conduct might fall within the jurisdiction of the ACCC and that a detailed examination of the dimension of the relevant markets is necessary to undertake such an assessment. Market definition is a key element in many of the Australia's competition laws and an incorrect analysis may fail to inform a business of its exposures putting it a serious risk of an aggressive enforcement action by the ACCC.


As noted in our prior antitrust alert, the ACCC alleged that Air New Zealand and Garuda and other carriers fixed prices and fuel surcharges for air cargo services, in violation of the Trade Practices Act 1975 (Cth), now the Competition and Consumer Act 2010 (Cth). The ACCC already had settled with thirteen other airlines, who collectively paid approximately AUD$98 million in penalties for the imposition of air cargo surcharges on cargo sent to Australia from Hong Kong, Singapore, and Indonesia.

Before the introduction of the new cartel provisions in 2009, the competition law required that the conduct occur in a market "in Australia." The primary judge in the Federal Court of Australia found that there was no breach because the markets for airborne cargo out of Hong Kong, Singapore, and Indonesia were not markets "in Australia" within the meaning of the Act. The court held that the market in question was located at the point at which the passenger's choice of airline (a "switching decision") took effect, that is, the place where the surcharges were actually imposed and collected. That decision was not made in Australia, but overseas.

On appeal

The main issue for the appeal court was whether the alleged contravening conduct occurred in a market in Australia. The ACCC argued that the trial judge had erred by restricting his definition of the market to the geographic location where customers made the decision to switch between air cargo carriers, despite accepting evidence that significant components of the "suite of services" offered by the carriers occurred in Australia.

The majority of the appeal court rejected a narrow approach focused on one aspect of the market, in this case, the location of the supplier and likely substitutes. The majority instead considered that the proper approach to this question involves the evaluation of two related steps: (1) identification of the relevant market, which involves the consideration of likely substitutable goods or services; and (2) characterizing whether the identified relevant market is in Australia. The appeal court noted that it would be wrong to identify the geographic market focusing only on the physical location; other dimensions may be relevant.

The appeal court stressed that the reference to a market in the Act is an abstract concept that is not limited to a physical location. When defining the market, each of the "dimensions" is relevant: product, geographic, and functional. In characterizing whether the defined market is "in Australia," the majority considered that, in many cases, the geographical dimension will be sufficient. However, the question itself is not whether the geographic dimension of the market is in Australia, nor is it whether the effect of a switching decision is in Australia (as was found at first instance).

In concluding that the correct characterization of whether the Hong Kong-to-Australia port markets for the air cargo services were markets "in Australia," the majority reasoned:

  1. A market can be "in Australia" even if the market is also in another country, as was the case here.
  2. The relevant provisions do not preclude the consideration of factors such as the presence of customers in Australia to whom the services were marketed or the fact that the services involved performance in Australia.
  3. A significant and important part of the services being provided was in Australia: the cargo was transported to Australia, ground handling services were provided in Australia, and there were inquiry services in Australia (related to tracing shipments and delayed or damaged shipments).
  4. The suite of services provided by the airlines involved barriers to entry in Australia, including the availability of landing slots, licenses to operate, permission to use facilities, and permission to operate additional flights.
  5. The services were marketed in Australia to customers of the airlines, that is, the airlines competed for business in Australia.
  6. The legislative purpose of the Act is "enhancing the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection" supports the appeal court's conclusion.
  7. The conclusion that the market is "in Australia" is consistent with the approaches of New Zealand and Europe.

The dissenting judgment held that the finding that none of the relevant markets were located in Australia had been correct, basing this conclusion on the location of the "field of actual and potential transactions between buyers and sellers." The dissent emphasized distinction between the transactions, which occurred overseas, and the product itself, being the service which was provided in part in Australia.


This ruling demonstrates that a company's conduct offshore can still potentially open it to scrutiny by Australia authorities, where the conduct affects Australian importers and consumers, and even where the primary effect is offshore. Importantly, it shows that anticompetitive agreements may still be held to have occurred in a market "in Australia" even where the agreements themselves are entered into and given effect overseas, because the geographic element of an arrangement is not of itself determinative of the location of the market.

The court's decision would bring the Australian position closer to decisions in other jurisdictions, including the United States, New Zealand and Europe. But given the divergence in reasoning among the three judges and the uniqueness of the question (not to mention the significant penalty at stake for Air New Zealand and Garuda), this still may be appealed to the High Court. The conduct in this case is now caught by the new cartel laws (since 2011) under the Australian Competition Statute, which do not have the same requirement that the market be located "in Australia." Therefore the reasoning on appeal will have only indirect application to future cartel cases: numerous other provisions of the Australian Competition Law are assessed by reference to a market in Australia including those regulating agreements and also mergers. Companies should be cautious when engaged in conduct or transactions that may have a competitive effect in Australia or on Australian consumers, even if indirect and not immediate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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”

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.