Crypto Class Action Update - Submissions for Hearing on Leave to Serve - Part 2

My Crypto Class Action submissions continued from previous post.


Please vote for my Hive witness. (KeyChain or HiveSigner)

Witness Vote using direct Hivesigner



Section 45(1)(b) Claim

  1. Section 45(1)(b) of the Act states that "[a] corporation must not
    give effect to a provision of a contract ... if that provision has
    the purpose, or would likely have the effect, of substantially
    lessening competition
    ".

  2. Section 45(3) of the Act provides that "competition" means
    competition in any market which a party to the contract (or their
    related body corporate) supplies or acquires goods or services (or
    would be likely to).

  3. Section 45(4) of the Act provides that the other provisions of the
    contract and the provisions of any other contract to which a
    corporation and its related bodies corporate are a party are to be
    considered together with the primary provision to determine an
    effect of substantially lessening competition.

  4. Section 4 of the Act provides that "competition" includes
    competition from imported goods and from services that are
    "rendered or are capable of being rendered in Australia by persons
    not resident or not carrying on business in Australia
    ."

  5. Section 4E of the Act provides that "market" means a market in
    Australia and includes a market for goods and services which are
    substitutable or otherwise competitive with each other.

  6. Section 4G of the Act provides that "lessening of competition"
    includes "preventing or hindering competition."

Markets

  1. While there are many cryptocurrency related markets, for the
    purposes of this interlocutory application, the Applicant focusses
    on the market(s) in Australia for buying and selling
    cryptocurrencies themselves.

  2. "The authorities confirm that a market, within the meaning of the
    [Act], is a notional facility which accommodates rivalrous
    behavior involving sellers and buyers
    " and should "be understood
    in the sense of an area of potential close competition in particular
    goods and/or services and their substitutes.
    "[1]

  3. "[T]he market is the area of actual and potential, and not purely
    theoretical, interaction between producers and consumers where given
    the right incentive ... substitution will occur. That is to say,
    either producers will produce another similar product or consumers
    will purchase an alternative but similar product."
    [2]

  4. The actual electronic trading market established by each
    Cryptocurrency Exchange [SoC 342] for the buying and selling of
    cryptocurrencies such as BTC and ETH is clearly a market within the
    above definition. In particular the electronic trading market for
    cryptocurrencies run by BTC Markets [SoC 272], an Australian
    Cryptocurrency Exchange used by the Applicant, is such a market.
    (CCB pp 117-118).

  5. Substitutability of both demand and supply is the touchstone when
    establishing market boundaries. Consideration of the particular
    characteristics of the product in question is essential in
    establishing whether there is sufficient substitutability for
    products to be considered in close competition.[3]

  6. Case law has recognised narrow single-product markets where products
    have unique characteristics which mean that few consumers or
    producers of that product will change to an alternative product in
    response to a small price change.[4]

  7. Cryptocurrencies and their consumption and production are completely
    unique and distinct from any other product.

  8. The production mechanisms for cryptocurrencies are completely
    different from other assets. For BTC, ETH and other Proof of Work
    (PoW) cryptocurrencies, production involves large capital
    investments in specialized computer equipment and expenditure on
    electricity (CCB pp 116-117, 217-218). No other type of asset is
    produced in this way.

  9. From a consumer perspective cryptocurrency has a number of unique
    attributes including:

    1. being native electronic money which gives you the ability to be
      your own bank - you can hold, manage and transfer the asset
      yourself with no need for intermediaries (the need to trust a
      third party and accept counter-party risk are eliminated) (CCB
      p215)
      ;

    2. much faster, and generally much cheaper, global transferability
      than any other asset type - see 12 July Affidavit [14] (CCB
      pp271 - 272)
      ;

    3. supply increases in a fixed, predictable, manner which is
      integral to the blockchain software code - supply increases for
      other asset classes are much less predictable (CCB
      pp221-222)
      ;

    4. the ability of anyone with some technical skills to create their
      own programmable money (eg Ethereum smart contracts) (CCB
      pp209-213, 226)
      .

  10. For the above reasons cryptocurrencies are not substitutable in
    close competition with traditional asset or money forms and thus
    form a distinct market from other assets types.

  11. It may also be the case that certain individual cryptocurrencies
    such as BTC and ETH may be single product markets like those for
    bananas and each major sport.

  12. BTC, as by far the most well established and highest market
    capitalization cryptocurrency occupies a unique position. ETH, being
    the most well established and highest market capitalization
    cryptocurrency that provides a smart contracts platform also
    occupies a unique position. See 12 July Affidavit (Annex G) (CCB
    p309)
    .

  13. For the purposes of the s45 Claims the Applicant submits that it has
    established, on a prima facie basis, that there are markets in
    Australia for each of BTC and ETH and for cryptocurrencies generally
    and that these markets also extend outside Australia.

A party supplies or acquires in relevant market

  1. Section 45(3) of the Act provides that competition means competition
    in any market in which a corporation that is a party to the contract
    or a related body corporate supplies or acquires goods or services
    (or is likely to).

  2. The Ad Ban Provisions are in each of the Respondents' Standard
    Contracts with all of their advertising customers.

  3. The following evidence allows inferences to be drawn that many
    corporate holders of cryptocurrencies, especially those with
    cryptocurrency related projects which they wished to advertise to
    potential customers and/or investors, had advertised on the
    Respondents' platforms prior to the Ad Ban and thus were party to
    the Respondents' Standard Contracts:

    1. the fact that 71% of all online advertising spend in Australia
      goes to the Respondents (CCB p173) means that any online
      project wanting to advertise, including those in the
      cryptocurrency space, are likely advertise with the Respondents
      at some point;

    2. the Banfield Campaign of advertising Steem on the Respondents'
      platforms (CCB pp121-122);

    3. Facebook's announcement of its Ad Ban implies that
      cryptocurrencies were being advertised on the Respondents'
      platforms, indeed Facebook included, in its examples of banned
      advertisements, an ad for BTC (CCB p60);

    4. the examples of cryptocurrency related advertising being blocked
      (at CCB pp202-203).

  4. By definition a corporation who holds BTC, ETH or another
    cryptocurrency has acquired it in a relevant market (on a
    Cryptocurrency Exchange, by private transfer or by mining it) and
    is likely, at some point, to sell some part of the holding in a
    relevant market.

  5. Equally, cryptocurrency projects, by their very nature, involve at
    least some supply or acquisition of cryptocurrency, especially BTC
    and ETH. In particular, many cryptocurrency projects conducted
    Initial Coin Offerings (ICO) using the Ethereum blockchain and
    received investment in ETH. See (CCB pp209 - 213).

  6. Thus large numbers of corporations who were party to the
    Respondents' Standard Contracts supplied or acquired cryptocurrency
    in relevant markets or were likely to.

  7. Equally inferences can be drawn from the following evidence that
    Facebook supplied or acquired Listed cryptocurrencies in relevant
    markets or was likely to:

    1. Facebook's Libra project:

      1. will have involved Facebook acquiring cryptocurrencies in
        order to gain the necessary experience to create their own
        cryptocurrency; and

      2. means it is likely that Facebook would both supply its own
        cryptocurrency (Libra) as well as needing to convert Libra
        into BTC, ETH and other cryptocurrencies as part of its
        consumer offering. (CCB pp295 - 306).

    2. Mark Zuckerberg's statement regarding cryptocurrency in January
      2018 demonstrated a substantial understanding of cryptocurrency
      that is unlikely to have been gained without any practical
      experience of holding it. (CCB p294).

  8. Inferences can be drawn from the evidence that Google's position in
    the technology industry is so preeminent and its number of
    interests and related bodies corporate so numerous and involved in
    so many aspects of technology (CCB pp6 - 7, 155-156) that it is
    likely that it or a related body corporate has acquired at least
    some small amounts of cryptocurrency (particularly BTC & ETH).

  9. Furthermore, two major recent developments make it likely that both
    the Respondents themselves and many more corporations which are
    their advertising customers will be acquiring BTC and ETH in
    relevant markets in the near future:

    1. the trend of major corporations such as Tesla and MicroStrategy
      acquiring BTC and ETH as part of their corporate treasury
      reserves (CCB pp310 - 312).

    2. the recent passing of El Salvador's Bitcoin Law, which makes
      BTC legal tender and states that "every economic agent must
      accept bitcoin as payment when offered to him by whoever
      acquires a good or service.
      " - this means that Facebook,
      Google and other corporations which are their advertising
      customers will have to accept (and thus acquire) BTC if they
      wish to do business in that country (CCB pp313 - 316).

Likely effect of substantial lessening of competition

  1. For the purposes of this interlocutory application, the Applicant
    relies on two matters already in evidence to establish a prima
    facie
    case that the Respondents' giving effect to the Ad Ban
    Provisions likely had the effect of substantial lessening of
    competition in markets for cryptocurrencies:

    1. the direct impact on rivalry between firms of preventing
      cryptocurrency related advertising on the Respondents'
      platforms; and

    2. the dramatic falls in trading volumes on Cryptocurrency
      Exchanges after the Respondents gave effect to their Ad Ban
      Provisions.

Advertising - a crucial part of the competitive process

  1. Advertising is an important dimension of the rivalry between
    firms.[5]

  2. Competition is a process[6] and advertising is a crucial part of
    that process.

  3. "But in identifying the existence of competition in particular
    industries or markets, we must focus upon its economic role as a
    device for controlling the disposition of society's
    resources. Thus we think of competition as a mechanism for
    discovery of market information and for enforcement of business
    decisions in the light of this information
    .
    "[7]

  4. Discovery of market information is at the heart of the competitive
    process and advertising by market participants is a crucial means
    by which that market information is conveyed from supplier to
    potential purchaser.

  5. Indeed, it is via the mechanism of advertising that much of the
    real world competition between firms plays out. Whether firms
    compete on price or features or both, the primary method by which
    the competitive features of a firm's product are communicated to
    potential purchasers is through advertising. This is especially
    true in the online world.

  6. A bricks and mortar store may convey its price and feature
    offerings without the need for third party advertising by
    passers-by seeing the store's offerings and signage and asking
    questions of the store staff. A factory may have sales people that
    visit potential customers premises to convey information on the
    price and features of the factory's products.

  7. But in the online world, all of these market information discovery
    mechanisms occur primarily via the Respondents' platforms. Whether
    paid advertising, organic advertising, or even attempts by a
    potential customer to conduct their own online research, the
    Respondents' platforms provide the gateway for the discovery of
    market information.

  8. When this gateway is substantially blocked for most of the firms in
    a market the likely, indeed inevitable, effect is that the process
    of competition is hindered. Substantially hindering the process of
    competition is, by the definition in s4G of the Act, a substantial
    lessening of competition.

  9. Section 45(4) has the effect of aggregating together all of the Ad
    Ban Provisions in all of the Respondents' Standard
    Contracts (as well as the contracts of the Other Cartel Members
    [SoC 314]) for the purposes of determining their effect on
    competition.

  10. As the Respondents' platforms represented such a large share of the
    total advertising opportunities available to firms wishing to
    advertise cryptocurrency and related products, the effect of the
    elimination of those advertising opportunities was a substantial
    lessening of competition in markets for cryptocurrencies.

  11. According to the ACCC Report:

    1. almost 50% of all time spent online by Australians was on the
      Respondents' platforms. (CCB p153);

    2. 67% of the Australian unique audience for online advertising in
      February 2019 was on the Respondents platforms (CCB p165);

    3. 71% of spending on online advertising in Australia goes to the
      Respondents; (CCB p173);

    4. Respondents have captured 80% of all growth in online
      advertising over the 2016 - 2019 period. (CCB p173).

  12. The following hypothetical examples are illustrative of the
    hindering of the discovery of market information effected by the Ad
    Ban Provisions:

    1. If an Australian person or company was considering acquiring
      cryptocurrency, they would not be exposed, on the online
      platforms they most often frequented, to:

      1. advertisements for Cryptocurrency Exchanges, specialised
        cryptocurrency mining equipment or blockchain social
        networks like Hive (where it can be earned) in order to
        acquire cryptocurrency;

      2. advertisements for software or hardware wallets to hold
        that cryptocurrency once they had acquired it[8];

      3. advertisements for cryptocurrency events and educational
        material regarding cryptocurrencies to enable them to
        understand them[9];

      4. advertisements for legal and accounting advice to enable
        them to comply with the law in relation to
        cryptocurrency[10].

  13. The magnitude of the Respondents' position in online advertising
    means that the Respondents giving effect to to their Ad Ban
    Provisions (which has already been established) had the likely
    (indeed inevitable) effect substantial lessening of competition
    because it hindered the process of competition across entire
    cryptocurrency markets.

Trading Volume Declines

  1. The trading volume for a cryptocurrency represents the aggregate of
    very large numbers of transactions by traders - competitors buying
    and selling that cryptocurrency - on that Cryptocurrency Exchange.

  2. Trading volumes shown in the charts at Annexes J & K of the 12 July
    Affidavit (CCB pp317 - 320) are measured in the cryptocurrency
    concerned (ie BTC, ETH) not in AUD or USD terms and thus exclude
    price variation.

  3. For BTC traded on BTC Markets, weekly volume dropped from:

    1. 6666 BTC for the week ending 28 Jan 2018, before Facebook's Ad
      Ban to;

    2. 3193 BTC for the week ending 25 Feb 2018, 4 weeks later;

    3. 2276 BTC for the week ending 8 April 2018, 10 weeks later; and

    4. 1176 BTC for the week ending 29 July 2018 after Google had
      implemented their Ad Ban.

    5. and continued at these levels of less than 25% of pre-ban
      volume until early November 2018.

  4. For ETH traded on BTC Markets, weekly volume dropped from:

    1. 62,580 ETH for the week ending 28 Jan 2018, before Facebook's
      Ad Ban to;

    2. 9,122 ETH for the week ending 25 Feb 2018, 4 weeks later;

    3. 17,788 ETH for the week ending 8 April 2018, 10 weeks later;
      and

    4. 7962 ETH for the week ending 29 July 2018 after Google had
      implemented their Ad Ban.

    5. and continued at these levels of less than 25% of pre-ban
      volume until early November 2018.

  5. Thus in a very direct sense, these dramatic drops in the volume of
    trades in these markets represent a substantial lessening of
    competition in these markets, the essence of competition being
    rivalrous market behavior. Fewer trades means less rivalry and when
    that reduction is of the magnitude demonstrated by the evidence it
    is a substantial lessening of competition.

Section 45(1)(c) Claim

  1. Section 45(1)(c) of the Act states that "[a] corporation must
    not engage with one or more persons in a concerted practice that
    has the purpose, or would likely have the effect, of substantially
    lessening competition
    ".

  2. A concerted practice is: "any form of cooperation between two or
    more firms (or people) or conduct that would be likely to establish
    such cooperation, where this conduct substitutes, or would be
    likely to substitute, cooperation in place of the uncertainty of
    competition
    ."[11]

  3. The conduct of Facebook and Google in announcing their Ad Bans, in
    similar terms, within weeks of each other and then adjusting the
    terms of their bans in similar ways over an extended period is a
    concerted practice.

  4. Not only did Facebook publicly communicate its ban to Google who
    followed it, but Mark Zuckerberg, the CEO and controlling
    shareholder of Facebook, has publicly admitted, under oath before
    the US Senate, that Facebook and Google employees communicate with
    each other about who to ban from their platforms. It also appears
    that there are specialized systems within Facebook for enabling
    such communications. See Annex P to 10 Dec Affidavit (video file).

  5. By incorporating the Ad Ban in their policies which formed part of
    their Standard Contracts, including with each other, each
    Respondent created reciprocal commitments to the concerted
    practice.

  6. Cooperating with a competitor regarding decisions as to whom the
    business does and does not sell its products is a type of
    anti-competitive concerted practice listed by the ACCC in their
    Guidelines on Concerted Practices[12].

  7. That the Respondent's conduct, in this case their concerted
    practice of Ad Bans, had the effect of substantially lessening
    completion in relevant markets has been established above.

Grounds for Relief

  1. The Applicant relies on three grounds for relief for the purpose of
    establishing prima facie contraventions of the Act:

    1. Damages under s82;

    2. Injunction under s80; and

    3. Declaration under s163A.

Causation and Damages

  1. Facebook and Google advertising works - it creates substantial
    economic benefit for advertisers that exceeds its cost. The
    Respondents would not have trillion dollar businesses (almost
    entirely dependent on advertising revenue) if it did not. Preventing
    an entire industry from advertising removes that substantial
    economic benefit and thus necessarily causes damage in a variety of
    different ways.

  2. Damage to the Applicant and Group Members occurred by the
    Respondents' contravening conduct via legal causation mechanisms
    including:

    1. loss of business profits and earnings;

    2. wasted expenses and capital investments becoming worthless;

    3. loss of business opportunity[13];

    4. losses due to depressed cryptocurrency prices (ie market based
      causation[14]);

    5. loss of amenity for users of blockchain based social media
      platforms.

  3. "Section 82 is the vehicle for the recovery of loss or damage for
    multifarious forms of contravention of the provisions of Pts IV and
    V of the Act. It is important that rules laid down by the courts to
    govern entitlement to damages under s 82 are not unduly rigid, since
    the ambit of activities that may cause contraventions of the diverse
    provisions of Pts IV and V is large and the circumstances in which
    damage therefrom may arise will vary considerably from case to
    case.
    "[15]

  4. The Applicant's personal claim can be a vehicle for determining some
    common questions regarding causation and damages, but other such
    questions common to sub-groups will require directions under s 33Q
    of the FCA at an appropriate time.

  5. Aggravated damages, being compensatory in nature, are available
    under s 82 of the Act while exemplary damages are available in
    tort[16], including the tort of deceit.[17]

  6. Advertising on the Respondents' platforms is highly effective and
    creates economic benefit for advertisers that exceeds its cost.
    See:

    1. FB Report pages 30 - 31 (CCB pp14 - 15): "marketers will
      not continue to do business with us ... if we do not deliver
      ads ... [that] generate a competitive return in relation to
      other alternatives
      ";

    2. FB Report page 63 (CCB p19): "millions of business
      []rely on our services to grow and create jobs
      ";

    3. GG Report page 135 (CCB p32): "Our advertising solutions
      help millions of companies grow their businesses ...
      ";

    4. GG Report page 138 (CCB p35): "These partners may not
      continue to do business with us if we do not create more value
      (such as increased numbers of users or customers, new sales
      leads, increased brand awareness, or more effective
      monetization) than available alternatives
      ."

  7. Conversely, loss of the ability to advertise causes economic loss
    in a variety of ways.

  8. The Applicant suffered damages by the Respondents' contravening
    conduct by a number of causation mechanisms including:

    1. via market based causation, by losses on the sale of ETH;

    2. via loss of business opportunity, by being unable to advertise
      his cryptocurrency advisory business;

    3. via loss of amenity and income, by the Steem / Hive social &
      content blockchains ceasing to grow in number of users and
      levels of activity at the rapid pace they had before the Ad
      Bans.

Market Based Causation

  1. Advertising creates economic benefit by stimulating demand. Indeed,
    as discussed earlier, its function is to convey market information
    to potential purchasers and thus increase the likelihood that
    purchaser will chose the product of the firm conducting the
    advertising.

  2. Cryptocurrency prices respond to supply and demand according to
    basic economic principles: lower demand leads to lower prices given
    unchanged supply. See 1 Mar Affidavit [43 - [51] (CCB pp211 -
    212)
    .

  3. Facebook, Google and Twitter's announcements of their Ad Bans and
    Facebook's substantial relaxation of its Ad Ban in May 2019 are
    each temporally correlated to large statistically significant
    changes in the price of cryptocurrencies including ETH. See 1 Mar
    Affidavit [7 -23] (CCB pp206 - 207) and Annex C charts
    (pages 55 -57) (CCB p228 - 230).

  4. Prices and volumes of ETH traded on BTC Markets dropped very
    substantially from the pre-contravention period to the period after
    full implementation of the Ad Bans.

  5. ICOs were a very substantial source of fundamental demand for ETH;
    and of reduction of supply of ETH on Cryptocurrency Exchanges in
    the pre-contravention period.

  6. The ETH price is strongly correlated to the value of Ethereum smart
    contracts locking up large amounts of ETH, as occurred in the
    pre-contravention period due to ICO activity and in the last 12
    months due to DeFi activity.

  7. The ban on ICO advertising severely hindered the ability of
    cryptocurrency projects to raise funds, which in turn led to large
    drops in the price of ETH. See 1 Mar Affidavit [24 - 65] (CCB
    pp208 - 213)
    and Annexes H and K charts (pages 125-127 & 136)
    (CCB pp235 - 237 & 246).

  8. The evidence of the Applicant's losses from selling ETH at prices
    which were substantially lower than they would have been but for
    the Respondents' contraventions is set out in the 10 Dec Affidavit
    [5 - 23] (CCB pp117 - 119) and 19-22 (Annexes D - F)
    (CCB pp134 - 137).

Loss of Business Opportunity

  1. The Applicant commenced a cryptocurrency consulting business named
    "Grant Hamilton Crypto Advisory" (GHCA) focusing on legal,
    technical and accounting advice regarding cryptocurrencies in early
    March 2018.

  2. The Applicant was unable to advertise to potential clients using
    the Respondent's platforms due to their Ad Bans. See 10 Dec
    Affidavit [29]- [34] (CCB p119) and Annex G (CCB
    pp138 - 143)
    .

  3. As a result of this, the Applicant was unable to obtain paying
    clients and lost the opportunity to create a lucrative consulting
    business.

Loss of amenity and income

  1. Partly as a result of the Banfield Campaign [SoC 141] of
    advertising for new users on the Respondent platforms, social media
    / blogging applications based on the Steem / Hive blockchain were
    growing very rapidly in number and activity of users and the amount
    of content posted prior to the Ad Bans (CCB pp119 - 122, 323).

  2. These metrics of new users, new posts and comments and monthly
    active users "Metrics") are important measures of the success
    and attractiveness of any social media or blogging application as
    evidenced by the focus on these and related metrics in Facebook's
    Annual Report (CCB pp20 - 22).

  3. After the Ad Bans, all these Metrics went into steep decline
    causing loss of amenity and income to the Applicant in the
    following ways:

    1. Fewer new users each week decreased the likelihood that the
      Applicant's existing social and professional contacts would
      join and interact with the Applicant on his preferred social
      network and that he would be able to reward them with
      financially valuable upvotes and be in turn rewarded
      financially by them for his posts and comments.

    2. Fewer new posts meant that the Applicant had less content
      (including news) to peruse, vote and comment on and thus had to
      also rely on other platforms that did not reward him
      financially for his participation.

    3. An overall smaller community provided for less of the
      Applicant's online needs for community than would have been the
      case if growth had not been halted by the Ad Bans.

  4. As of 10 Dec 2020, the Applicant had earned 3669 Hive Power (HP) as
    author rewards and 849 HP as curation rewards from his activities on
    his @apshamilton account on the Steem/Hive blockchain (CCB
    p322)
    .

  5. While this is a relatively small amount of income at current Hive
    prices (US$0.20 - $0.40), if the Metrics had continued to increase
    at the rate they had before the Ad Bans it is likely that the price
    would have also continued to rise from the $5+ it was before the Ad
    Bans to even higher levels (CCB p323).

  6. Thus the Applicant has lost both amenity and potentially quite
    substantial income from the Respondents' contravening conduct.

Injunction and Declaration

  1. Alternatively, in the event that the Court does not find a prima
    facie
    case on the Applicant's personal damages claim, the
    Applicant submits that a representative party whose only interest
    is the public interest (seeking a s80 injunction or s163A
    declaration under the Act) may commence representative proceedings
    on behalf of group members who have damages claims against all
    Respondents.

  2. It has been established for more than 40 years that an Applicant
    seeking an injunction under s80 of the Act can be "any person" and
    does not need to show damages or any special interest in the
    subject matter of the dispute[18]. "It is established that any
    person has standing to bring such an application"[19].

  3. Even when an applicant is personally affected by infringing
    conduct their entitlement to bring a claim under s80 (or s163A)
    does not arise from that private interest but "springs from the
    fact that proceedings under s 80 involve the public interest".[20]

  4. It is well established that a "claim" for the purposes of s 33C of
    the Federal Court of Australia Act 1976 ("FCA Act") includes
    claims for an injunction under s 80 and a declaration under s 163A
    of the Act.[21]

  5. In both ACCC v Golden Sphere[22] and ACCC v Chats House[23]
    the ACCC, with only a public interest claim, successfully commenced
    representative proceedings on behalf of group members with damages
    claims.

  6. The members of the Full Court in Bray Appeal had different
    approaches as to the interpretation of s33C, but all accepted this
    proposition. Carr and Finklestein JJ ruled that "claim" should be
    construed broadly to include a cause of action under ss80 or
    163A. Branson J ruled that a claim under ss80 or 163A was a single
    claim, whether made by a representative applicant only, or it and
    all group members.

  7. Thus it is entirely open under s33C of the FCA for an Applicant
    seeking an injunction and / or declaration, with no personal
    damages claim or special interest, to commence proceedings
    representing Group Members all of whom have damages claims against
    the same Respondents, where there are substantial common issues of
    fact or law.

  8. Section 33D(1) of the FCA Act provides that a person who has
    sufficient interest to commence proceedings on their own behalf has
    sufficient interest to commence representative proceedings. This
    interest may be a public interest as well as a private interest.

  9. Section 33D(2) of the FCA Act provides that even where the
    representative applicant ceases to have any claim against the
    respondent, it may continue to prosecute the proceedings as
    representative applicant. Thus the group members' damages do not
    have to be proven via the representative applicant's personal
    damages.

  10. The judgement of Branson J in Bray Appeal supports the above
    proposition and her previous decision in Chats House.

  11. Conversely, she rules against the related but separate proposition
    that a public interest claim by group members can support a
    representative action where those group members do not all have
    damages claims against all the Respondents.

  12. She distinguishes[24] between the situation in both Golden
    Sphere
    and Chats House, and the situation in Bray Appeal,
    where the representative party did have a damages claim, but not
    all group members had damages claims against all respondents and
    thus sought to rely on public interest claims to unite them in a
    single representative proceeding.

  13. Branson J specifically states that it is not necessary to give
    consideration to cases where all group members have a damages claim
    against all respondents or where a representative party, such as
    the ACCC, only has a public interest[25].

  14. It is in light of the above that the ratio of Branson J's
    decision on this issue must be read.

  15. She finds that a public interest claim is a single claim and does
    not result in "persons who have claims" but instead is "persons
    who all make the same claim
    "[26]. She does not rule that a public
    interest claim is not a claim for the purposes of s33C(1) of the
    FCA Act, only that it is a single claim, irrespective of the number
    of people bringing it.

  16. This is a finding consistent with a representative party using a
    public interest claim as its claim for the purposes of s33C(1) of
    the FCA Act so long as all the group members have their own claims
    for damages against all the respondents.

  17. Carr J ruled that a public interest claim was a claim for the
    purposes of s33C(1) of the FCA Act for both a representative party
    and for each group member. He took a broad view of the meaning of
    "claim" and said it included a cause of action such as an
    injunction[27].

  18. Finklestein J took a similar broad view to Carr J of the meaning of
    "claim" and did not make any ruling contrary to the proposition
    that a representative party whose only interest is the public
    interest may commence representative proceedings on behalf of group
    members who have damages claims[28].

  19. Thus the opinions of all three Justices in Bray Appeal, as well
    as the opinion of the trial Judge in Bray No. 2 and the decisions
    in Golden Sphere and Chats House all support the Applicant's
    position on this issue.

Other potential issue regarding prima facie case

  1. In Epic Games and Dialogue Consulting v Instagram[29] the US
    based Big Tech respondents attempted to use exclusive jurisdiction
    and arbitration clauses in their click-wrap contract with each
    applicant to have proceedings before this Court stayed.

  2. No such issues arise in these proceedings for a range of reasons.

  3. Firstly, this case relates to cartel and anti-competitive conduct
    arising from provisions in the Respondents' Standard Contracts with
    acquirers of online advertising services.

  4. The Applicant is not and has never been a party to a contract with
    either Respondent for the supply of online advertising services
    (CCB p272).

  5. As is typical in a cartel case, the Applicant is claiming damages
    from the effect of a cartel formed between other persons. This case
    relates to other people's contracts, not any contract
    of the Applicant.

  6. Secondly, the Applicant has never had contractual relations with
    the First Respondent (CCB pp272 - 273).

  7. The Applicant terminated his user contract with Facebook Ireland,
    in March 2018, prior to the First Respondent becoming party to user
    contracts with persons residing outside North America (from 19
    April 2018) (CCB p273).

  8. The exclusive jurisdiction clause in the Facebook Ireland Statement
    of Rights and Responsibilities (clause 15 (CCB p50)) only
    applies to disputes with Facebook Ireland ("us" is defined as
    Facebook Ireland in clause 18 (CCB p51)), not with the First
    Respondent.

  9. This clause does not, on its terms, encompass the claims in these
    proceedings and should be read narrowly against the drafter.

  10. The Applicant's contractual relations with the Second Respondent is
    limited to the general consumer Google Terms of Service (CCB pp96
    & 110)
    . The Applicant is not and has never been party to Google's
    Adwords Advertising Program Terms (CCB p77) which contain the
    polices which the Applicant alleges are cartel provisions and are
    anti-competitive (CCB p273).

  11. The exclusive jurisdiction clause of Google's Terms of Service is
    limited to "disputes arising out of or relating to these terms,
    service-specific additional terms, or any related services
    ."
    (CCB p106)

  12. This clause does not, on its terms, encompass the claims in these
    proceedings and should be read narrowly against the drafter.

  13. Finally, as examined in detail above, where a person brings a claim
    for an injunction under s80 of the Act or for a declaration under
    s163A of the Act, that claim is a public interest claim.[30]

  14. For the reasons set out in Epic Appeal, many of which are
    directly applicable to these proceedings[31], there would be
    strong reasons to refuse any stay application even if the Applicant
    were bound by relevant jurisdiction or arbitration clauses.

  15. A person bringing such a claim is effectively exercising a
    delegated power of the Sovereign to enforce its own law. As such,
    just as the Sovereign cannot be forced into a foreign court to
    enforce its own law, nor can any person bringing a claim under s80
    or 163A of the Act.

  16. Furthermore, ss 45AF and 45AG set out criminal offenses in relation
    to the same cartel conduct which the Applicant is bringing public
    interest claims under ss80 and 163A. The declaratory relief sought
    by the Applicant is thus part of the enforcement of the criminal
    law of Australia and must be heard in Australian Courts.

Substituted Service

  1. The relevant principles for substituted service in circumstances
    very similar to those of these proceedings are set out in AIC No
    1
    [32].

  2. The Court may take judicial notice under s 144(1)(a) of the
    Evidence Act 1995 that COVID-19 remains a global pandemic that is
    directly affecting the USA.

  3. Both Respondents are currently engaged in proceedings before this
    Court: Australian Information Commissioner v Facebook Inc & Anor
    NSD246/2020; and Australian Competition and Consumer Commission v
    Google LLC
    NSD816/2020.

  4. Both Respondents have filed Notices of Address for Service and
    appointed large local law firms to represent them in those
    proceedings.

  5. Even if it is possible at the present moment to serve the
    Respondents via the Hague Convention mechanism and using the
    services of ABC Legal to effect service, as Thawley J stated in
    Australian Information Commission at [75] because of "the
    rapidly changing and evolving environment caused by the current
    pandemic; the present situation may have changed by the time
    service in the relevant way would be sought to be effected.
    "

  6. In light of the above it is impractical to serve the Respondents in
    accordance with the Hague Convention and highly practical to serve
    them at the email addresses of the major local law firms they have
    appointed to represent them in concurrent proceedings before this
    Court. This email can be followed up with a phone call to the
    relevant law firm to ensure the email has been received.

  7. The proposed method of substituted service is plainly likely to
    bring the proceedings to the attention of the Respondents and will
    do so more reliably, efficiently, quickly and inexpensively than
    service in accordance with the Hague Convention.

  8. For the above reasons, the proposed method of substituted service
    is consistent with the overarching purpose of the civil practice
    and procedure provisions as set out in section 37M of the FCA Act.

  9. In the event the Court is not satisfied of the impracticality of
    serving the Respondents in accordance with the Hague Convention,
    the Court may exercise its powers to dispense with the
    impracticability requirement of FCR r 10.24 using its powers under
    FCR r 1.34.

__________________________________

Signed by the Applicant, Andrew Hamilton, Solicitor (NSW) on 15 July
2021


  1. Air New Zealand Ltd v Australian Competition and Consumer
    Commission; PT Garuda Indonesia Ltd v Australian Competition and
    Consumer Commission
    [2017] HCA 21per Kiefel CJ, Bell and Keane JJ
    at [12].

  2. Boral Besser Masonry Ltd v Australian Competition and Consumer
    Commission
    [2003] HCA 5; (2003) 215 CLR 374 per McHugh J at
    455-456 [252].

  3. Seven Network Limited v News Limited [2009] FCAFC 166 at
    [611] - [623] per Dowsett and Lander JJ.

  4. This includes separate markets for each major sport (Seven
    Network
    at [621] and the long line of US case law cited at
    [618]), for bananas vs fresh fruit generally (United Brands
    Company and United Brands Continentaal BV v Commission of the
    European Communities. Chiquita Bananas
    . Case 27/76. European Court
    Reports 1978 -00207), for tea vs coffee (Arnotts Ltd v Trade
    Practices Commission
    (1990) 24 FCR 313 at 332; 97 ALR 555 at
    576-7).

  5. The term "firm" is used here in its economic sense to mean a
    supplier of goods or services and encompasses individuals and
    decentralized blockchains as well as traditional corporations,
    partnerships, cooperatives etc.

  6. QCMA at ALR 515[40]; ATPR, [17,246]; AGL v ACCC at
    [349].

  7. QCMA at ALR 515[40]; ATPR, [17,245] Emphasis added.

  8. Only permitted with special approval (and thus still restricted)
    by Facebook after 8 May 2019 (CCB pp73-76) and still
    specifically prohibited by Google, as at 3 Sept 2020 (CCB p94).

  9. Only permitted by Facebook after 8 May 2019 (CCB pp73-76) and
    still prohibited, as at 3 Sept 2020, by Google's prohibition on
    "otherwise promoting the purchase, sale or trade of
    cryptocurrencies or related products
    " (CCB p94).

  10. ibid.

  11. The Explanatory Memorandum to the Bill which amended the Act to
    introduce the concept of concerted practices to section 45.

  12. ACCC Guidelines on concerted practices, August 2018, at
    [5.1(c)].

  13. Berry v CCL Secure Pty Ltd [2020] HCA 27 at [32-36];
    Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR
    332; (1994) 120 ALR 16; (1994) 68 ALJR 313; (1994) ATPR 41-30 at
    [38 - 40] as per Mason CJ and Dawson, Toohey and Gaudron JJ.

  14. TPT Patrol Pty Ltd as trustee for Amies Superannuation Fund v
    Myer Holdings Limited
    [2019] FCA 1747 at [1500 - 1671] "the
    price paid upon acquisition and the market price that would have
    prevailed absent the alleged contraventions" at [1503]. In the
    case of contraventions lowering the price this can be rephrased as
    "the price received upon disposal and the market price that would
    have prevailed absent the contraventions."

  15. Re Janssen-Cilag Pty Limited v Pfizer Pty Limited [1992] FCA
    437; (1992) 14 Atpr 41-186 (1992) 37 FCR 526 (8 September 1992)
    at
    529 [15] cited with approval in TPT Patrol at [1567].

  16. Lamb v Cotogno [1987] HCA 47; (1987) 164 CLR 1 at [10-11]

  17. *Musca v Astle Corporation Pty Ltd *[1988] FCA 4; (1988) 80 ALR
    251 at [102]

  18. Truth About Motorways Pty Limited v Macquarie Infrastructure
    Investment Management Limited
    [2000] HCA 11 at [9, 13, 20] per
    Gleeson CJ & McHugh J [26, 30] per Gaudron J [71, 73] per Gummow
    J; Phelps v Western Mining Corporation Ltd (1978) 20 ALR 183 at
    [189]; Epic Games, Inc v Apple Inc [2021] FCAFC 122 ("Epic
    Appeal
    ") at [23 - 24].

  19. Epic Games, Inc v Apple Inc (Stay Application) [2021] FCA 338
    at [56]; Epic Appeal at [53].

  20. ibid.

  21. Bray v F Hoffmann-La Roche Ltd [2002] FCA 1405
    ("Bray No 2") at [39 - 48]; Bray Appeal at
    [113 - 121] per Carr J, at [210] per Branson J at [243 - 245]
    per Finklestein J.

  22. Australian Competition and Consumer Commission v Golden Sphere
    International Inc
    (1998) 83 FCR 424.

  23. Australian Competition and Consumer Commission v Chats House
    Investments Pty Limited
    (1996) 71 FCR 250.

  24. Bray Appeal at [197 and [207].

  25. id. at [208].

  26. id. at [210].

  27. id. at [121] and [113].

  28. id. at [245]

  29. Dialogue Consulting Pty Ltd v Instagram, Inc [2020] FCA 1846.

  30. See previous section entitled "Injunction and Declaration".

  31. Epic Appeal, particularly at [97 - 110].

  32. at [62] to [75].