Competition and Consumer Act 2010 (Cth)
Divestiture where merger contravenes section 50 or 50A
(1) The Court may, on the application of the Commission or any other person, if it finds, or has in another proceeding instituted under this Part found, that a person has contravened section 50, by order, give directions for the purpose of securing the disposal by the person of all or any of the shares or assets acquired in contravention of that section.
(a) the Court finds, in a proceeding instituted under this Part, that a person (in this subsection referred to as the acquirer) has acquired shares in the capital of a body corporate or any assets of a person in contravention of section 50;
(b) the Court finds, whether in that proceeding or any other proceeding instituted under this Part, that the person (in this section referred to as the vendor) from whom the acquirer acquired those shares or those assets, as the case may be, was involved in the contravention; and
(c) at the time when the finding referred to in paragraph (b) is made, any of those shares or those assets, as the case may be, are vested in the acquirer or, if the acquirer is a body corporate, in any body corporate that is related to the acquirer;
the Court may, on the application of the Commission, declare that the acquisition, in so far as it relates to the shares or assets referred to in paragraph (c), is void as from the day on which it took place and, where the Court makes such a declaration:
(d) the shares or the assets to which the declaration relates shall be deemed not to have been disposed of by the vendor; and
(e) the vendor shall refund to the acquirer any amount paid to the vendor in respect of the acquisition of the shares or assets to which the declaration relates.
(1B) Where a declaration has been made under subsection 50A(1) in relation to the obtaining of a controlling interest in a corporation, or in each of 2 or more corporations, the Court may, on the application of the Minister or the Commission, if it finds, or has in a proceeding instituted under section 80 found, that that corporation, or any of those corporations, as the case may be (in this subsection referred to as the relevant corporation), has contravened subsection 50A(6), by order, for the purpose of ensuring that the obtaining of that controlling interest ceases to have the result referred to in paragraph 50A(1)(a), direct the relevant corporation to dispose of such of its assets as are specified in the order within such period as is so specified.
(1C) Where an application is made to the Court for an order under subsection (1) or a declaration under subsection (1A), the Court may, instead of making an order under subsection (1) for the purpose of securing the disposal by a person of shares or assets or an order under subsection (1A) that the acquisition by a person of shares or assets is void, accept, upon such conditions (if any) as the Court thinks fit, an undertaking by the person to dispose of other shares or assets owned by the person.
(2) An application under subsection (1), (1A) or (1B) may be made at any time within 3 years after the date on which the contravention occurred.
(3) Where an application for directions under subsection (1) or for a declaration under subsection (1A) has been made, whether before or after the commencement of this subsection, the Court may, if the Court determines it to be appropriate, give directions or make a declaration by consent of all the parties to the proceedings, whether or not the Court has made the findings referred to in subsections (1) and (1A).
In WSGAL Pty Limited v Trade Practices Commission, the Gillette Company, Wilkinson Sword Limited and Registrar of Trade Marks  FCA 1079; (1994) 122 ALR 673 (11 May 1994) WSGAL P/L argued that s 81 was invalid as purporting to authorise the acquisition of property otherwise than on just terms contrary to s 51(xxxi) of the Constitution). The Full Federal Court (Justices Lockhart, Beaumont and Hill) disagreed, finding that the provisions were constitutionally valid. In particular:
- Sections 81(1) and 81(1A) 'cannot be characterized as laws with respect to the acquisition of property within the meaning of s. 51(xxxi)' (Justice Lockhart at para 36)
- Section 81(1A) was not invalid as conferring upon a court powers which were not of a judicial character.
Conduct outside Australia
TPC v Australia Meat Holdings Pty Ltd (1988) 83 ALR 299 (Justice Wilcox)
[para 188] The finding that, in acquiring the whole of the issued capital in Borthwick from Pacific Holdings and UK, AMH contravened s.50 of the Trade Practices Act raises the question of relief under s.81 of that Act. As earlier indicated, that section provides two broad alternatives: an order for divestiture under sub-s.(1) or a declaration, under sub-s.(1A), that the acquisition is void. Alternatively, the matter may be disposed of by acceptance of an undertaking under sub-s.(1C).
[para 189] ...counsel for the Borthwick respondents conceded that s.50 was sufficiently wide to cover the case of an acquisition of shares in a foreign company trading in Australia. That concession was never retracted. In my view it was correctly made. The prohibition of the section is upon the acquisition by a corporation of any shares in, or assets of, a body corporate if that acquisition is likely to have specified consequences, in terms of market dominance. The word "market" is defined in s.4E of the Act so as to mean "a market in Australia". Thus s.50 is concerned with acquisitions which are likely to affect dominance in an Australian market. Although there is a presumption that "a statute is to be construed as limited in its operation to the territory or the nationals of the state which enacts it" ... the question of extra-territoriality is always one of interpretation. As Windeyer J went on to note, in relation to the case then under consideration, the question is "whether the prima facie presumption, that the Act does not extend to penalize acts done outside Australia, by foreigners, has been displaced". .... In the present case the legislative intent to regulate certain extra-territorial conduct is made express. Section 5(1) of the Act provides that "Parts IV and V extend to the engaging in conduct outside Australia by bodies corporate incorporated or carrying on business within Australia or by Australian citizens or persons ordinarily resident within Australia".
[para 190] Whether or not s.50 would otherwise be interpreted as extending to the conduct in this case of AMH, s.5(1) puts that question beyond doubt. Section 50 is contained within Part IV of the Act and AMH is a company which is incorporated, and which carries on business, within Australia. Consequently, so far as AMH is concerned, it is immaterial that the relevant conduct took place in the United Kingdom and that it involved the acquisition of shares in a United Kingdom company.
Appropriateness of orders under s 81
TPC v Australia Meat Holidngs Pty Ltd (1988) 83 ALR 299 (Justice Wilcox)