The Australian economy is already highly concentrated and increasingly we’re seeing more and more examples of the big boys in an industry getting together to squash a new entrant. However, there is hope yet, as Bill Eclairs explains.

It’s not quite in the class of ‘Man bites Dog”, nor is it sufficiently shocking as to renew one’s faith in the spirit of Christmas, but Westfield and the rest of the shopping mall oligopoly have lost an important case in the NSW Land and Environment court and they are not happy.

Basically Westfield, GPT, Centro and Stocklands (now there’s a quartet that just loves the competitive cut and thrust of the marketplace) have been told to go away by a judge of the NSW Court in their continuing attempt to control or shutdown the pesky factory outlet store operated in Sydney’s Homebush by Melbourne-based Direct Factory Outlet ( DFO).

That’s owned by a collection of well-known Melbourne business men and their families and includes ACCC chairman Graeme Samuel whose shares are held in a blind trust (http://www.dfo.com.au/). There other respondents, such as Sanity (part of the Brazin group), Colorado, another listed retailer, plus two smaller retailers.

Nor is it as flamboyant or dramatic a situation as the Orange Grove case in Sydney’s South west that’s now before the Independent Commission against Corruption in NSW.

But in its own way it is more important and could very well be quite a significant decision in the long run. Here’s the link to the judgement.

The case and the decision appeared in the press on Friday without much of an explanation. The AFR’s coverage was cursory, and perhaps the best report was in The Sydney Morning Herald.

The judge in the Homebush matter, Justice Nicola Pain, dismissed the entire case against DFO Homebush last week and in doing so quoted from an earlier judgement in another court to make the point that the action of the Big Four Mall Operators was an “unfair and oppressive use” of the judicial process.

“I do not think the applicants should be permitted to continue their litigation further,” the judge said.

Here are the relevant sections of her orders at the bottom of the above judgement:

“I agree with the Second Respondent’s submissions that, given the history of this matter, there can be no suggestion that the Applicants have had insufficient time to formulate their case. The Applicants are very large commercial entities with considerable financial resources, unlike all the Respondents, and have had the advice of several experienced counsel and an experienced solicitor. Despite this the new pleadings have disregarded my observations in my earlier judgment on the first strike out application. In my view, the Applicants conduct can be properly characterised as “giving rise to an unfair and oppressive use of the processes of the Court”: Dart v Norwich Union Life Australia Ltd [2002] FCAFC 34.

“52 Under Pt 13 r 5(1) of the Supreme Court Rules the Court has a discretion to either stay or summarily dismiss proceedings. I consider that, in the circumstances, I should summarily dismiss the proceedings. As set out above, the Applicants have failed to properly articulate their case despite being given numerous opportunities to do so. Given this, I do not think the Applicants should be permitted to continue this litigation further”

Now that’s as comprehensive a bagging of the strength of a legal case as any I have heard for a while. But to read the details of the various attempts by Westfield and its mates to change or replead the facts of their argument shows the increasingly desperate nature of their case. Trivial and non-trivial sales and prices, the definition of a shop. All Alice in Wonderland stuff really and a sign of just how far these giant shopping mall operators want to restrict all opposition to their businesses.

Readers should go here to will remember what Crikey has reported in the past about Westfield and Orange Grove and Westfield and DFO at Homebush.

The stuff about how Westfield was sending operatives into the DFO outlet at Homebush to check on prices and to make sure that it was being sold under normal retail prices, to check also that the goods being sold were surplus or seconds goods and not first quality retail stock. Quite amazing and quite mad if you think about it.

Westfield’s nearest centre is at Burwood. Centro has a large centre at Bankstown. GPT and Stocklands are not big in the inner west of Sydney. The principle seems to have been to bash a new threat whenever you can. The next big argument will no doubt be an appeal of this decision.

But there are few other rounds. Westfield is trying to stop not only a DFO at Brisbane airport, but also a big shopping mall being built at the airport (Come on Max More Wilton and Macquarie Bank, give us a Mega Mall at Sydney Airport and stop being a rapacious monopoly).

And there’s also the Stocklands attempt to takeover GPT. As a matter of course that should be knocked on the head, but the ACCC won’t intervene, so it is up to our gutless institutions to show some backbone and understand that competition means growth. Concentration in competition means slow, laggard growth rates and poor returns.

Finally, an observation from the judge which sums up the whole cynical attitude that the big mall operators and others in our oligopolistic economy.

“The Applicants are very large commercial entities with considerable financial resources, unlike all the Respondents, and have had the advice of several experienced counsel and an experienced solicitor.”

That means lots of costs and delays, frustrating or generally draining their less well-resourced opponents.

But DFO isn’t the sort of group to take what Westfield and its mates in the mall game dish out. The Age reported this story last year on a fightback by the feisty discounter.

Peter Fray

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