ACCC and Boral

The High Court today granted leave to Boral Masonry Ltd* to appeal the decision of the Full Court of the Federal Court which held that Boral Masonry's pricing below manufacturing costs contravened section 46 of the Trade Practices Act 1974.

In March 1998 the Australian Competition and Consumer Commission instituted proceedings against Boral Masonry alleging misuse of market power. The ACCC alleged that Boral Masonry reduced its prices for concrete masonry products below manufacturing costs in order to drive out an efficient new independent operator, C&M Bricks. C&M, had been a smaller rural Victorian business, until it began operations near Melbourne in 1994 using highly efficient, 'state of the art' technology.

The ACCC alleged that Boral Masonry's purpose was to unlawfully damage competition in the manufacturing and supply of concrete masonry products, in particular C&M. At trial, the Federal Court found that Boral Masonry had priced below manufacturing costs with the purpose of deterring new entrants and driving competitors out of the market.

The court found that the relevant market was the Melbourne metropolitan market for wall and paving material. It also found that Boral Masonry did not have a substantial degree of market power, which is an essential element for establishing a contravention of section 46.

On appeal, the Full Court of the Federal Court held that the relevant market was the Melbourne market for concrete masonry products and that Boral Masonry had the requisite substantial degree of power in this market. The matter will continue before the courts, and further clarify the law, as leave has now been granted for the case to be resolved by the High Court.

*Boral Masonry Ltd is part of the Boral group of companies and was formerly

named Boral Besser Masonry Ltd