Arnotts Ltd v Trade Practices Commission (appeal)

Federal Court of Australia
[1990] FCA 473 (29 November 1990)
Justices Lockhart, Wilcox and Gummow

See also trial: [1990] FCA 12

Keywords

mergers - market definition - definition of competition

Legislation

Trade Practices Act 1974 - s 50 - s 4 - s 4E

Facts

On 24 November 1988 Arnotts and Fledspac entered into an agreement whereby Fledspac granted Arnotts an option to purchase Fledspac's shares in Dickens (wholly owned subsidiary of Fledspac; Dickens owned all shares in Cereal Foods Ltd (formally Nabisco)) and Arnotts granted Fledspac an option to require Arnotts to purchase those shares.

The TPC brought a proceeding to restrain the share acquisition, claiming it would contravene s 50.

Decision

The trial judge held that (by virtue of s 4(4)(a)), the grant of an option to acquire shares amounted to an acquisition and that acquisition contravened s 50. In reaching this decision his Honour held that the the relevant market was the Australian biscuit market, that Arnotts was dominant in that market and that the effect of the acquisition would be substantially to strengthen its market power.

The Full Court agreed and dismissed the appeal.