Australia: When Is A Global Market A ‘Market In Australia’ For The Purposes Of The Trade Practices Act?

Last Updated: 6 October 2009
Article by Kathryn Edghill and Graham Maher

A recent decision of the Full Court of the Australian Federal Court, Singapore Airlines Ltd v Australian Competition and Consumer Commission [2009] FCAFC 136, is likely to have ramifications for overseas entities conducting business in global markets which include Australia. While technological advances mean that, more than ever before, trade and commerce takes place in global markets, the law frequently struggles to keep pace with such advances. This is nowhere more apparent that when it comes to regulating competition and the behaviour of competitors. Conduct, such as the making and giving effect to price fixing arrangements, when it occurs in Australia, in Australian domestic markets will be a breach of the Trade Practices Act 1974 (Cth) (TPA), but where such conduct occurs overseas in the context of a global market the question of whether it may constitute a breach of the TPA has been less than certain - until the decision in the Singapore Airlines case.

The Singapore Airlines case

As is the case in a number of countries, a number of international airlines are being sued in Australia by the competition regulator, the Australian Competition and Consumer Commission (ACCC), for alleged participation in a cartel in the international air cargo industry, in breach of the TPA.

Preparatory to commencement of proceedings against Singapore Airlines, in 2007 and 2008 the ACCC used its powers under section 155 of the TPA to require the airline to produce documents and information to it relating to the matters then under investigation. Singapore Airlines challenged the validity of the notices, including on the grounds that the notices were "defined so widely as to be incapable of amounting to a contravention" of the TPA. The basis of that challenge was that the use of the phrase "including on routes to and/or from Australia", when used in the notices in the context of a suspected contravention of the TPA arising from an alleged agreement containing a price fixing provision in respect of the supply of international air cargo services, extended the notices to price fixing on any route throughout the world without any connection to Australia. In order for there to be a breach of the TPA, sections 45(3) and 4E of the TPA require that the conduct concerned must relate to competition in a market in Australia. Singapore Airlines' challenge was defeated at first instance, with the primary judge construing the notices as referring to international air cargo services "only to the extent that they are outbound and inbound services, supplied in a market in Australia". The judge also rejected Singapore Airlines' proposition that the place of contracting (which, in the case of the carriage of air cargo into Australia at least, is frequently overseas) is determinative of the geographic location of the market.

On appeal, the Full Federal Court took the opportunity to recap the law on construction of section 155 notices and accepted the ACCC's construction that the use of the phrase "including on routes to and/or from Australia" limited the notices to the provisions of any price fixing arrangement which had the purpose or effect of fixing prices on routes which included routes to and/or from Australia. As such, the Court held that "the market for the services comprised in the matters is capable of amounting to a market in Australia". In doing so, the Court noted that "it is not idle speculation or an improbable circumstance that facts will come to light which show that the relevant competition occurred in a market in Australia, or at least as part of such a market" and that "prices fixed for legs of a journey which take place wholly outside of Australia may ultimately affect competition in a market in Australia".


It does not require too much imagination to identify situations in which conduct occurs outside Australia in the context of a global market but which affects a market in Australia. The airline and tourism industries are obvious ones. Sale and leasing of specialist equipment, such as planes and ships, may be others. With the proliferation of internet based businesses there are no doubt many more.

While the individual facts and circumstances of each situation need to be considered, including whether an enterprise is conducting business in Australia for the purposes of the TPA, whatever the business concerned, the Singapore Airlines case means that global markets cannot necessarily be regarded as markets which exist wholly outside Australia and that conduct in respect of the same, where it affects an Australian market, is likely to be subject to the TPA. Where that conduct relates to pricing, the decision raises the stakes even higher by recognising that price fixing in one area of a global market outside Australia may ultimately affect competition in a market in Australia. Global enterprises doing business in Australia should be aware that such conduct in one jurisdiction, whether illegal or not in that jurisdiction, could lead to a breach of the TPA in Australia. The need for caution becomes all the more important given the exchange of information between the competition (antitrust) regulators of various countries and the fact that price fixing is now a criminal offence in Australia rendering those involved subject to the prospect of lengthy jail sentences.

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.

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