You can find the full Statement of Claims and Originating Application for our case on our website.
JPB Liberty issued a press release this morning that accompanies this post.
What is the actual law in Australia which Facebook and Google broke?
This presentation of the Australian law has been edited to show only the sections which our case is based on. If you want to read all the other paragraphs and subsections, the links are embedded below.
There are two complimentary definitions you should hold in your head to make sense of this in relations to what the tech Goliaths did with online advertising:
A Supplier of online advertising services is a party which shows an advertisement to an audience;
An Acquirer of online advertising services is a party who has an advert they want shown to an audience, and contracts with a supplier to show that advert to the audience of the supplier.
It is important to understand that many parties are both acquirers and suppliers of online advertising. A simple blog might pay Facebook or Google to promote itself, acquiring online advertising: at the same time the blog is running Google Ads on its own page, acting as a supplier to Google of an audience for Google's online advertising.
By this means, Facebook and Google are competitors in the supply and acquisition of online advertising services with each other and most commercial users of their services.
Once they put a provision in their standard terms and conditions which restricted or limited the supply of online advertising to an entire industry, they breached the prohibitions on "cartel provisions" in Australia's Competition and Consumer Act 2010 ("Act").
Whilst this law has been on Australia's books for a long time (these "cartel provisions" were called "exclusionary provision" pre-2010), the application of it to these Internet companies is, we believe, a legal first in Australia.
COMPETITION AND CONSUMER ACT 2010
PART IV--RESTRICTIVE TRADE PRACTICES
DIVISION 1--CARTEL CONDUCT
Subdivision A--Introduction
Subdivision C--Civil penalty
45AK Giving effect to a cartel provision
45AD Cartel provisions
(1) For the purposes of this Act, a provision of a contract, arrangement or understanding is a cartel provision if:
(a) either of the following conditions is satisfied in relation to the provision:
(ii) the purpose condition set out in subsection (3); and
(b) the competition condition set out in subsection (4) is satisfied in relation to the provision.
(3) The purpose condition is satisfied if the provision has the purpose of directly or indirectly:
(a) preventing, restricting or limiting:
(iii) the supply, or likely supply, of goods or services to persons or classes of persons by any or all of the parties to the contract, arrangement or understanding; or
(iv) the acquisition, or likely acquisition, of goods or services from persons or classes of persons by any or all of the parties to the contract, arrangement or understanding; or
(4) The competition condition is satisfied if at least 2 of the parties to the contract, arrangement or understanding:
(a) are or are likely to be; or
(b) but for any contract, arrangement or understanding, would be or would be likely to be;
in competition with each other in relation to:
(h) if subparagraph (3)(a)(iii) applies in relation to preventing, restricting or limiting the supply, or likely supply, of goods or services--the supply of those goods or services in trade or commerce; or
(i) if subparagraph (3)(a)(iv) applies in relation to preventing, restricting or limiting the acquisition, or likely acquisition, of goods or services--the acquisition of those goods or services in trade or commerce; or
45AK Giving effect to a cartel provision
Giving effect to a cartel provision
(1) A corporation contravenes this section if:
(a) a contract, arrangement or understanding contains a cartel provision; and
(b) the corporation gives effect to the cartel provision.
45 Contracts, arrangements or understandings that restrict dealings or affect competition
(1) A corporation must not:
(a) make a contract or arrangement, or arrive at an understanding, if a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or
(b) give effect to a provision of a contract, arrangement or understanding, if that provision has the purpose, or has or is likely to have the effect, of substantially lessening competition; or
No adverse costs orders - Section 82 (3) - (7) of Act
This section is important for the way in which we are fighting this case.
Australia's legal system, rather differently to the USA, relies on the threat of "adverse costs" to deter frivolous law suits. If you bring a lawsuit in Australia and lose, you are likely to have to pay the legal costs of the other side.
For this reason, for a long time, we were working under the assumption we would have to raise many millions of dollars to both employ a high level legal firm in Australia and to put up a "security for costs" bond, which could itself run to many millions of dollars.
However, a little over 12 months ago, new provisions entitled "No adverse costs orders" were added to section 82 of the Act (which is the provision allowing civil claims damages for breaches of the Act).
Essentially what this means is for the specific part of the Act we're suing under, anti-competitive practices, we can ask the Court to order that we won't have to pay Facebook and Google's legal bills, even if we lose!
This is HUGE for us.
It means we won't need to find many millions of dollars for expensive external lawyers and a security for costs bond and won't have to risk bankruptcy to bring this important case.
We'll need to show a few things such as a prima facie case, that an issue in the case is significant to other people and that there is a "disparity between the financial position" of ourselves and the combined balance sheets of Facebook and Google, which, unless either of us lost $500bn down the back of the sofa, shouldn't be hard.
We are also breaking new legal ground with this application: in the short time this provision has been on the books, we're not aware that anyone has applied for such an order.
SECT 82 Actions for damages
Actions for damages
(1) A person who suffers loss or damage by conduct of another person that was done in contravention of:
(a) a provision of Part IV or IVB; or
may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
(2) An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.
No adverse costs orders
(3) A person who brings an action under subsection (1) in relation to a contravention of a provision of Part IV may at any time during proceedings on the matter seek an order under subsection (4) from the court hearing, or that will hear, the matter.
(4) The court may order that the applicant is not liable for the costs of any respondent to the proceedings, regardless of the outcome or likely outcome of the proceedings.
(5) The court may only make an order under subsection (4) if the court is satisfied that:
(a) the action raises a reasonable issue for trial; and
(b) the action raises an issue that is not only significant for the applicant, but may also be significant for other persons or groups of persons; and
(c) the disparity between the financial position of the applicant and the financial position of the respondent or respondents is such that the possibility of a costs order that does not favour the applicant might deter the applicant from pursuing the action.
(6) The court may satisfy itself of the matters in subsection (5) by having regard only to the documents filed with the court in the proceedings.
(7) A person who appeals a decision of the court under subsection (4) is liable for any costs in relation to the appeal.
SECT 88 Commission may grant authorisations
If you've made it all the way to here, well done. As a final treat I will link to Section 88, see if you can work out how these monopolists could, possibly, have avoided being sued by us if only they'd been a little more respectful of Australian law.
