Section 4. Australia.

Several laws have been passed by the Commonwealth of Australia either aimed especially at combinations or containing important provisions with respect to them, and also an act for an interstate commission with strong powers over both transportation and industry.

Prior to the enactment of these laws, two cases affecting combinations were decided under the common law. In each of them members of a trade association, which fixed the prices of the commodity they dealt in, prevented a nonmember from getting supplies of goods because he sold at lower prices. In one case 1 it was held that no legal right of the plaintiff had been infringed, while in the other 2 it was held that an action for conspiracy would lie against the members of the association.

1

AUSTRALIAN INDUSTRIES PRESERVATION ACT, 1906-1910.-The Australian Industries Preservation Act is by far the most important law relating to combinations. It was first enacted in 1906 and amended several times. It aims especially at the "repression of monopolies" and, as germane thereto, it also aims at the "prevention of dumping." The principal provisions of the law as amended, which is long and complicated, are briefly summarized in the following paragraphs:

Any person who enters into any contract or engages in any combination in relation to commerce with other countries or among the States (a) in restraint. of or with the intent to restrain commerce, or (b) to the injury of or with the intent to injure by means of unfair competition any Australian industry advantageous to the Commonwealth, is guilty of an offense, and any contract in contravention of this prohibition is void.

A person proceeded against under the above provision, however, can defend the act complained of by showing (a) that the restraint was "not to the detriment of the public," and (b) that the restraint in question was "not unreasonable." Unfair competition is to be interpreted with respect to the circumstances and the following acts are deemed unfair unless proved not so: (a) If the defendant is a "commercial trust" (i. e., a combination of persons or corporations by means of a trust deed, an agreement, a board of management, or like means); (b) if the competition would result in inadequate remuneration for labor in the Australian industry; (c) or disorganize the same; (d) or if the defendant gives rebates, etc., on condition of exclusive patronage. Furthermore, in considering whether the com

1 Rea v. Buckland, 11 Western Australian Law Rept. 2 (1908).

Taffs v. Beesley, 16 Australian Law Times, 59 (1894).

* The text of this law is given in Exhibit B of this report. See p. 746.

petition is unfair, regard shall be had to the question whether the Australian industry is managed with reasonable efficiency.

Any person who monopolizes or attempts or conspires to monopolize commerce with other countries or among the States is guilty of an indictable offense, and every contract made in contravention of this provision is void. Instead of proceeding by indictment, the attorney general may bring a civil action for recovery of the fines imposed, without jury trial.

The giving of rebates, etc., on condition of various specified forms of exclusive dealing, is also made an offense, and any contract made in contravention of this provision is void. A person proceeded against under this rule may defend the act complained of by showing that it was "not to the detriment of the public," not unfair competition, or not injurious to any Australian industry.

The refusal to deal with a person except under disadvantageous conditions because such person deals with some other person or with persons not belonging to a commercial trust, is made an offense in certain cases.

Any person injured by any of the foregoing forbidden acts may sue without jury trial for treble damages for injury incurred.

Persons questioned in proceedings under this law can not refuse to answer because it would incriminate them, but are given certain immunities from prosecution in connection with such matters, except in case of perjury.

Declaration to attorney general absolving criminal intent.-Any person who is a party to a contract, combination, etc., may declare the facts and purposes to the attorney general, and publish the same in the Gazette. The attorney general may at any time send a notice to the declarant that he regards such contract or combination in restraint of trade, etc. If before the declarant receives such notice a proceeding is brought against him, his prior declaration absolves him of unlawful intent, provided it is a true and complete statement. This provision, however, has not yet been availed of.

In proceedings for restraint of trade, attempt to monopolize, exclusive dealing, refusal to deal, etc., described above, the averments of the prosecution are presumed to be proved in absence of proof to the contrary, except (a) with respect to intent and (b) in proceedings by indictment.

The third part of this act, which deals with the prevention of dumping, is of present interest in connection with unfair competition and this part of the law, as well as other parts which have reference to unfair competition, are considered in some detail in Chapter X. (See p. 551.) It is worthy of particular note that the prevention of dumping is sought here through the antimonopoly statutes rather than through the laws relating to customs duties.

So far as known, this act was made the basis for the prosecution of a trust only in the coal vend case, which is discussed below. The lower court held that the combination had struck down competition and that it was obnoxious to the prohibition against monopoly. A fine of several hundred thousand dollars was imposed. This judgment was appealed to the High Court, where it was reversed and finally went to the judicial committee of the Privy Council, the supreme court of the British Empire, where the judgment of the High Court was affirmed in 1913.

COAL VEND CASE.'-This was an action to recover pecuniary damages from certain colliery and shipping companies and others under the Australian Industries' Preservation Act for alleged breaches thereof 2 and for an injunction against further violation of the law. The basis of the proceedings was an agreement between the colliery companies and the shipping companies of the following general character: The colliery companies agreed to sell to the shipping companies all the coal the latter required in interstate trade, at prices to be fixed annually by the colliery companies. The vendors agreed to sell coal for interstate trade to no other parties while the purchasers agreed to buy such coal only from the said vendors. The shipping companies bound themselves not to sell the coal at higher prices than those specified. It was also shown in evidence that the colliery companies had an agreement among themselves whereby the output of each colliery was apportioned and the selling price fixed by a governing board. Sales in excess of allotments obliged the party making them to pay certain fines to a common fund. The colliery companies also had an agreement with the coal miners whereby the wages of miners for each year varied with the increase or decrease in the "declared" or probable price of coal, according to a fixed scale; the "declared" price was jointly determined in advance, and might not be actually realized. The Crown contended that an unenforceable contract in restraint of trade was necessarily to the detriment of the public, within the meaning of sections 4 and 7 of the act. The court (Privy Council) denied this claim, and said in part (p. 800):

It was strongly urged by counsel for the Crown that all contracts in restraint of trade or commerce which are unenforceable at common law, and all combinations in restraint of trade or commerce which if embodied in a contract would be unenforceable at common law, must be detrimental to the public within the meaning of the Act, and that those concerned in such contracts or combinations must be taken to have intended this detriment. Their Lordships cannot accept this proposition. It is one thing to hold that a particular contract cannot be enforced because it belongs to a class of contracts the enforcement of which is not considered to be in accordance with public policy, and quite a different thing to infer as a fact that the parties to such

1Attorney General of the Commonwealth of Australia v. Adelaide Steamship Co. (Ltd.) et al. (Privy Council), Law Reports, Appeal Cases, 1913, p. 781.

2 Sec. 4, subsec. 1 (a), sec. 7, subsec. 1, and sec. 9.

contract had an intention to injure the public. It is quite common in a contract of service to find a clause restricting the area in which the employee may carry on a business similar to that of his employer after the termination of the service, and such area is often held too wide for the restraint to be enforceable. In such cases both parties have as a rule bargained with a single view to their own interests, though in the opinion of the Court they have been mistaken as to the area of the restraint required in their own interest, but it would be wrong to infer from this that they had any intention of injuring the public. It would be equally wrong to infer that such a sinister intention must have existed in cases of trade combinations, such as that which was the subject of the decision in Hilton v. Eckersley.1

The court held, nevertheless, that all these agreements were in restraint of trade, without stating whether they were enforceable or not at the common law.

The word "public" in the phrase "detriment to the public" was also defined to include all classes-producers and distributers, as well

as consumers.

The court declared that in order to make out a case the Government must show either an intent to do a prohibited act, or that the acts done were of such a character as to leave no doubt of the intent.

The court denied that the nature of the agreement, the facts as to prices obtained, or the competitive methods used, gave evidence of an intent to restrain or monopolize trade to the detriment of the public within the meaning of the law. While prices in 1906 had been as low as 7s. 6d. f. o. b. Newcastle, and had subsequently been raised to 11s. and maintained there, the court thought that the prices in 1906 had been shown to be unduly low on account of "cut-throat" competition, and that the increase was not unreasonable, taking into consideration the increase in wages paid and reasonable rates of profit on investment. The court also called attention to the fact that the prohibitions in question were expressly directed to acts destructive of Australian industries. In this connection it noted also that the prices of coal exported which met international competition were not lower than for interstate trade. The agreement for exclusive mutual dealing between the colliery and shipping companies was also held by the court to afford no basis for action.

THE PATENTS ACT, 1903. The features of the Patents Act of 1903, as amended in 1906 and 1909, which are of interest are the provisions for compulsory license and the restrictions placed on contracts made by patentees with respect to the obligation to use or not to use nonpatented articles.

On petition to the Commissioner of Patents by an interested party declaring that the reasonable requirements of the public with respect to a patented article are not satisfied, the question may be submitted to the courts, which may grant compulsory licenses or revoke the patent under certain conditions. The term "reasonable

16 E. & B., 47.

requirements" is particularly defined in the law. Among other things, the patentee is held to be at fault if he has failed to grant licenses on reasonable terms, with the result that any existing trade or industry or the establishment of any new trade or industry in Australia is unfairly prejudiced, or the demand for the patented article is not reasonably met.

Patentees are prohibited from inserting conditions in contracts of sale, lease, or license, which would prevent the purchaser, lessee, or licensee from using another article, whether patented or not, supplied by another person, or to require said purchaser, etc., to acquire from the patentee any articles not protected by patent, and any such conditions are made null and void. This prohibition does not apply, however, if it is proved that the purchaser, etc., had the option of purchasing or acquiring the patented article on reasonable terms without such conditions, or if the purchaser, etc., had the right to abrogate the conditions in the contract after three months notice on payment of such sum as may be fixed by an arbitrator named by the Government.

INTERSTATE COMMISSION ACT, 1912.-A law was enacted on December 24, 1912, providing for an Interstate Commission. cipal provisions of this law are substantially as follows:

The prin

The Interstate Commission consists of three members, one of whom is called the Chief Commissioner, appointed by the governor general for terms of seven years each. It is constituted a body corporate with perpetual succession, and may sue or be sued. Two commissioners constitute a quorum, and a majority of the commission shall make the decisions.

The general investigating powers of the commission are stated as follows:

The Commission shall be charged with the duty of investigating, from time to time, all matters which in the opinion of the Commission ought in the public interest to be investigated affecting (a) the production of and trade in commodities; (b) the encouragement, improvement, and extension of Australian industries and manufactures; (c) markets outside Australia, and the opening up of external trade generally; (d) the effect and operation of any Tariff Act or other legislation of the Commonwealth in regard to revenue, Australian manufactures, and industry and trade generally; (e) prices of commodities; (f) profits of trade and manufacture; (g) wages and social and industrial conditions; (h) labour, employment, and unemployment; (i) bounties paid by foreign countries to encourage shipping or export trade; (j) population; (k) immigration; and (1) other matters referred to the Commission by either House of the Parliament, by resolution, for investigation.

More detailed description is given of the matters the commission may investigate respecting waterways and the use of water for irrigation, etc.

1 The text of this law is given in Exhibit C of this report. See p. 756.