James Farmer


Random Legal Thoughts While on a Post-Covid Lockdown European Trip

Monday, October 31, 2022

If nothing else, the last 3 years of a Covid-infected world have forced us to face new living and working conditions and severely inhibited our ability to travel abroad.  Enforced working from home during lockdowns and virtual Court hearings had their novelty value and there are some who would be happy never to go back to an office and (possibly) some Judges or Justice officials who would see the virtual hearing as a welcome step towards dispensing with oral hearings altogether with “Judgment on the papers” as an infinitely more efficient (and less costly) form of decision-making.

The retorts are obvious.   Zoom is no substitute for the intellectual and social stimulation of working with colleagues on a daily basis.  The interchange and debate and discussion between Judge and counsel and the cross-examination of witnesses in an open, public Courtroom illuminates the strengths and weaknesses of written submissions and written briefs and thus improves the quality of Judicial decision-making.

An important feature of the legal scene, which was severely thwarted by Covid, is the holding of Conferences at which attendees are exposed to the latest thinking in important areas of legal development presented by experts as well as social inter-action with other lawyers – in the case of international conferences lawyers from around the world.

The annual conferences held by the New Zealand Bar Association were a victim of Covid until this last September when a welcome return was made.  Unfortunately for me, its postponement from earlier in the year because of further Covid regulatory restrictions prevented my attendance as I had already committed to a trip to England and Continental Europe in September.  However, I was able to attend another legal gathering that I had enjoyed in the past and which was now resumed in Florence, namely the IBA Competition and Antitrust law Conference.  I did also receive second-hand reports of the NZ Bar Association conference.  

One reported presentation from the NZBA Conference and a separate issue that was much debated at the IBA Conference did encourage me to think again about the great issues of legal and constitutional significance that transcend the problems of legal practice that we grapple with daily for clients.  

Of further interest (and concern) to all lawyers, no matter what their area of legal practice, also has to be the Supreme Court Judgment in the Peter Ellis case ([2022] NZSC 115), revealing a serious miscarriage of Justice (accurately highlighted 20 years ago by Lynley Hood in her work “A City Obsessed”.  The Ellis Judgment followed closely on the heels of the agreed quashing by the Supreme Court of the conviction of Alan Hall who spent 19 years in jail because the prosecution had concealed evidence that could have exonerated him.  Taken together, they confirm my suspicions (as an admitted outsider to the criminal justice system) that the lamentable description of criminal justice in the United Kingdom in “The Secret Barrister” (published 2018) may well have parallels in New Zealand.

That is for another day.  Let me return to the NZBA and IBA Conferences.

It was reported to me that a Crown lawyer lamented the numerous legal challenges that were made to the restrictions imposed by Covid regulations – beginning with Andrew Borrowdale’s successful claim that the initial period of the first lockdown was unlawful and culminating in the successful challenge by Grounded Kiwis to the appalling lottery system by which applications by returning New Zealand residents were determined.  What was reportedly said was to the effect that lawyers, at a time of national crisis, should accept and trust that the Government is doing right.

It is a fair proposition that, in times of national crisis, the Courts should be astute to recognise the objects and purpose of regulatory measures that are introduced to deal with that crisis but that does not condone giving words a meaning that they do not ordinarily and naturally have in order to support legislation that overrides established rights and liberties.   The point was made by Pollock CB as long ago as 1850 in Bowditch v. Balchin, 5 Ex.378 and approved since by Lord Wright in the House of Lords ([1941] AC 378, 393), a war time case, and then by Lord Atkin, in a dissenting Judgment in another war time case, Liversidge v. Anderson [1942] AC 206, 244: “In a case in which the liberty of the subject is concerned, we cannot go beyond the natural construction of the statute”.  Lord Atkin then famously added: 

“In this country, amid the clash of arms, the laws are not silent.  They may be changed, but they speak the same language in war as in peace. It has always been one of the pillars of freedom, one of the principles of liberty on which the recent authority we are now fighting, that the judges are no respecters of persons and stand between the subject and any attempted encroachments on his liberty by the executive, alert to see that any coercive action is justified in law.  In this case I have listened to arguments which might have been addressed acceptably to the Court of King’s Bench in the time of Charles I.”

In my view, these are words that should continue to inspire lawyers, including future generations, and underlie their commitment to the Rule of Law.  Appeals to national unity are fine but those making the appeal are not surely entitled to demand blind and accepting trust that they will not assume exceptional powers in a manner that does not respect the traditional values and principles that our legal system is based on, as enshrined in particular in the Bill of Rights Act.

I turn next to the IBA Antitrust and Competition Law Conference in Florence.  Nice place for a conference obviously.  These conferences tend to be very European-centric, which is to say focused on regulatory edicts from the European Commission rather than on general principles of antitrust law which we have inherited from the United States in our current Commerce Act – that is, prohibitions on the use of market power for anti-competitive purposes and on contracts, arrangements and understandings that have anti-competitive purposes or effects.  Nevertheless, the underlying goals are similar.

The origins of modern US antitrust law are to be found in the Sherman Act 1890, which makes it unlawful to monopolise or attempt to monopolise or conspire to monopolise any part of trade or commerce.  It is said that the Act was the result of a concern at the aggregation of market power which by itself was thought to preclude competition.  However, the Act – certainly as interpreted by the Courts – draws a distinction between the mere possession of monopoly power that may be the result of a superior product, business acumen or innovation and monopoly power that is accompanied by anticompetitive conduct that excludes competition and enables the firm to raise prices (or reduce product quality) above those that it could charge in a competitive market.  That distinction also exists in New Zealand as a consequence of the decision of the High Court (affirmed by the Privy Council) in Telecom v. Clear Communications (1994) 6 TCLR 138, a decision that was in effect reversed by the legislature in the telecommunications industry by the Telecommunications Act 2001, Schedule 1, Part 1, 1-2.

The ultimate goals of antitrust law have remained controversial since the Sherman Act was enacted.  At different times, the protection of small business was seen as a legitimate goal but that was rejected in part by the influence of the Chicago School of Economics whose view was that, to reward efficiency and innovation and to ensure consumer welfare, market behaviour rather than market structure should be the focus of antitrust law.  In general, that view has prevailed in American Courts but in the last few years, there has arisen a school of thought – variously referred to as Hipster Antitrust or the New Brandeis movement -  that courts and regulatory agencies should reject the consumer welfare standard in favour of a much broader public interest test that would require consideration of a variety of social and political goals, including income inequality and unemployment.  Brandeis was a former US Supreme Court Judge who described high economic concentration as “the Curse of Bigness” and who believed monopolies were inherently harmful to welfare of workers and business innovation.  He famously said:  “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”

While criticized strongly by many, the attempts to change the philosophy of antitrust law cannot be ignored.  Three of its main proponents were recently appointed by President Biden to two senior antitrust positions – Lina Khan as Chair of the Federal Trade Commission, Jonathan Kanter as assistant Attorney General in the Department of Justice Antitrust Division and Tim Wu as Special Assistant to the President for Competition and Technology policy.   It was no surprise therefore that most of the speakers at the IBA conference that I attended should debate the pros and cons of the consumer welfare standard as the foundation of competition law and economics.  Most supported the maintenance of that standard.

In New Zealand too, bigness and wealth concentration have received much attention of late.  The supermarket duopoly has led to a Commerce Commission investigation and report with ad hoc measures intended to reduce their market domination – measures that few think are likely to be effective.  It is ironic that the Privy Council 20 years ago upheld the Commission’s clearance that allowed Progressive Enterprises (Countdown) to acquire the then third supermarket chain (Woolworths) (Foodstuffs v. Commerce Commission [2004] 1 NZLR 145).  Foodstuffs (for whom I acted in the litigation) successfully challenged that clearance in the High Court and Court of Appeal but the Privy Council allowed Progressive to argue a point previously abandoned in the High Court and then allowed the appeal.   As is said, what goes around, comes around.
Section 36 of the Commerce Act, which prohibits the use of market power for an anti-competitive purpose but which otherwise does not preclude firms with market power from profiting from that power, has been the subject of much comment to the effect that it is too narrowly based and should be expanded to prohibit the use of market power that has anti-competitive effects.  The Hipster/Brandeis movement, with its distaste for concentrated wealth, goes far beyond that by adopting an ill-defined public interest standard – a return to the approach taken in New Zealand by the earlier 1975 Commerce Act which provided in section 73 that “regard shall be had to any economic or other effects which any … monopoly, oligopoly, circumstances, aggregation proposal, merger, or takeover has or is likely to have on the well-being of the people of New Zealand”.  Hmm….
Jim Farmer 
31 October 2022

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