In December 2009, the Federal Court struck out Auskay International Manufacturing & Trade Pty Ltd’s statement of claim in representative proceedings brought on behalf of persons who had paid for freight services provided by Qantas and other air freight carriers (the respondents).3 There have been numerous other proceedings brought by the ACCC in relation to the ‘air cargo cartel’, including proceedings against Qantas which led to a $20 million settlement in 2008 (see Freehills’ March and November 2009 Competition and Market Regulation Updates for more information).4
The proceedings allege that the respondents were members of a cartel which agreed to fix, did fix, and concealed the fixing of, charges for international air freight moving into and out of Australia in contravention of sections 45(2)(a)(ii) and (b)(ii) of the TPA.
Qantas and the other respondents sought orders that Auskay’s pleading be struck out on the basis that it disclosed no reasonable cause of action or had a tendency to cause embarrassment or delay. Specifically, the respondents contended that Auskay had failed to allege material facts identifying the relevant Australian markets, and that this caused further deficiencies in its pleading. The respondents also argued that the pleaded definition of the group on whose behalf the proceedings were brought was inadequate.
Justice Tracey granted the orders sought by the respondents and stated that the deficiencies in the pleadings were so fundamental that it was not possible to selectively strike out parts of the document and leave a coherent pleading. In particular:
- On market definition, his Honour stated that the respondents were entitled to know in which Australian market(s), and with whom, they were alleged to have engaged in anti-competitive conduct contrary to the TPA. The statement of claim did not provide this information.
- On group definition, his Honour stated that a party which commences representative proceedings must clearly identify the group members to whom the proceedings relate so that persons falling within the group who do not wish to be bound by the outcome of the proceedings have the opportunity to opt out.
This decision demonstrates the importance of adequately identifying both a ‘market’ in which anti-competitive conduct has taken place for the purposes of alleging price-fixing and the relevant group members to whom proceedings relate.
The decision follows Justice Tracey’s previous decision in Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd5 where Auskay’s second amended statement of claim was struck out on similar grounds (see Freehills’ March 2007 Competition and Market Regulation Update).6