Commerce Commission v Bunnings Ltd
| Jurisdiction | New Zealand |
| Judge | Kós P |
| Judgment Date | 27 July 2020 |
| Neutral Citation | [2020] NZCA 310 |
| Court | Court of Appeal |
| Docket Number | CA59/2020 CA62/2020 |
| Date | 27 July 2020 |
[2020] NZCA 310
Kós P, Gilbert and Courtney JJ
CA59/2020
CA61/2020
CA62/2020
IN THE COURT OF APPEAL OF NEW ZEALAND
I TE KŌTI PĪRA O AOTEAROA
Civil Evidence, Fair Trading — appeal against a decision of the High Court which ruled a statement was inadmissible hearsay and opinion evidence in the absence of disclosure of the underlying price comparison data — respondent facing charges of misleading advertising under the Fair Trading 1986 in claiming it offered the lowest prices — appellant had summonsed an employee of a competing store to provide evidence of their price comparison — whether the statement was inadmissible as hearsay evidence — Criminal Procedure Act 2011 — Evidence Act 2006
J C L Dixon QC, I M Brookie and C G Farquhar for Commerce Commission
A S Ross QC, T J A Lindsay and E C R Offner for Bunnings Limited
L C A Farmer for Mitre 10 (New Zealand) Limited
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A Leave to appeal is granted in CA59/2020 and CA62/2020.
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B The Commission's appeal in CA59/2020 is dismissed and Bunnings' appeal in CA62/2020 is allowed. The statement of Murray Snowden of 30 October 2017 is inadmissible.
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C Bunnings' appeal in CA61/2020 is dismissed. The summons issued by the District Court is valid.
(Given by Kós P)
This is a category 1 summary prosecution. Charges were laid in December 2016. They have not yet been heard. Trial is now scheduled for September of this year.
Bunnings Ltd is charged with misleading advertising in claiming it offers the “lowest prices”. 1 It pleaded not guilty in March 2017. The Commerce Commission has summoned a Mr Murray Snowden. He is the Business Efficiency Manager at Bunnings' main competitor, Mitre 10 (New Zealand) Ltd. It is proposed he give evidence of an automated price comparison survey undertaken by Mitre 10 between June 2015 and May 2016. He produced a formal statement of evidence in October 2017. Bunnings promptly opposed the giving of that evidence on the basis that it was “(i) not relevant evidence; (ii) not reliable (given the absence of any means to test reliability); (iii) lacks probative value; (iv) is hearsay; and (v) is otherwise inadmissible under the [Evidence Act 2006]”. The Commission immediately sought a pre-trial admissibility hearing under s 78 of the Criminal Procedure Act 2011. That hearing took place in the District Court in March 2018. The hearing also involved challenges to the validity of the summons. In a judgment delivered five months later,
in August 2018, the District Court Judge upheld the summons in more restricted terms and dismissed the challenge to the admissibility of Mr Snowden's evidence. 2Bunnings challenged those conclusions by appeal and judicial review in the High Court. The hearing took place in that forum in December 2018, and judgment was delivered, after numerous intervening submissions, a year later in December 2019. The High Court Judge dismissed Bunnings' challenges to the summons, and formally to the admissibility of Mr Snowden's statement. But she held that in the form tendered, Mr Snowden's statement would be inadmissible, as hearsay or inadmissible opinion, unless supported by evidence “either in electronic or hard copy form, from Mitre 10's electronic records that shows the items being compared, the dates on which they were for sale and the prices at which they were being sold”. 3
Now Bunnings and the Commission both seek to appeal to this Court. CA59/2020 is the Commission's appeal on the admissibility of Mr Snowden's statement. CA62/2020 is Bunnings' appeal on the relevance of that statement. CA61/2020 is Bunnings' appeal on the summons. Leave is required in the first two. Leave is not opposed by either party. We are satisfied the appeals raise a matter of general or public importance, concerning as they do the admissibility of automated electronic price comparison survey evidence. We grant leave.
The pre-trial admissibility application was made in November 2017 on the basis that it was more convenient the matter be dealt with prior to trial. It may well be thought, no doubt with the benefit of hindsight, that that was not the case after all. And that it might have been much better for all concerned, in this category 1 summary prosecution, launched in 2016 and still unheard, if the admissibility of Mr Snowden's evidence had simply been dealt with at trial.
Because trial is due to commence in September, and because of this Court's other commitments, we shall get straight to the nub of what really matters in this case. We shall combine to an extent the various issues tendered by counsel for decision.
We will start with what Mr Snowden says in his statement. What is of primary importance is the extent to which he was responsible for, and undertook, Mitre 10's automated price comparison survey between June 2015 and May 2016. 4 In para 7.9 of his statement Mr Snowden gives a summary of the results of that survey. But for para 7.9, he would not be called.
Mr Snowden's evidence is offered as by a general witness of fact. He is not presented by the Commission, or qualified, as an expert. He has been with Mitre 10 since February 2014. His role includes the “development of enhanced business processes, including processes for tracking and monitoring competitors' prices”.
He explains that the traditional method of price comparison between competitors is a manual survey. That is, employees or third party contractors identify competitors' prices by making phone inquiries, looking up individual prices on the internet, reviewing print advertisements or visiting the competitors' stores. In early 2015 Mitre 10 began to use a “more advanced technique” and began to “automatically collect publicly available website information to conduct price surveys. This automatic technique is sometimes referred to as ‘web data collection’ or ‘price scraping’”. Mr Snowden refers to “specific software” the companies can use to undertake data collection themselves, and there are also external IT providers who will perform this service on request.
The method allows an enormous amount of data to be obtained and reviewed. It enabled Mitre 10 to review prices for all products listed on Bunnings' publicly available website. It is, Mr Snowden says “a vastly more comprehensive data set than what would generally be obtained using manual price surveys”. He goes on to say:
Another advantage of this approach is its reliability. Data stored on the website is automatically downloaded, so there is little room for human error. We have tested the reliability of web data collection on numerous occasions in a variety of ways in our business and have found it to be reliable.
He says the testing process has included manual checks of website information as well as store visits. The reliability of the information is important to pricing decisions that Mitre 10 has to make.
Mitre 10 used an external IT provider to compile a database of its competitor Bunnings' product description and prices. That provider was PriceTech Ltd, and its CEO Andrew Pascoe, is also giving evidence. In his statement, which to an extent overlaps with Mr Snowden's, he says:
PriceTech used its resources and technology to collect product information from the Bunnings website on numerous occasions from 1 June 2015 to 30 May 2016.
We collect information (including via automated processes) from the Bunnings website based upon parameters provided by M10. Those parameters were mutually agreed to be confidential. The nature of the systems and processes used by PriceTech in collecting information are also confidential in nature.
We provided that data to Mitre 10 in an [excel spreadsheet]. The data provided contained a timestamp and metadata indicating the source and date of the data download.
Mr Snowden goes on to state that the number of products on the Bunnings website varied from time to time but was generally in the approximate region of 35,000. The information he said was downloaded into an Excel spreadsheet on a regular basis. So that is the Bunnings product and pricing database.
What about the Mitre 10 product and pricing database? Mr Snowden goes on to say:
On one day each month, Mitre 10 compared that product information with its own information about Mitre 10's products and recommended retail prices for the same day taken from Mitre 10's internal product database.
Mr Snowden also observes in his statement that because Mitre 10 has individual owner-operators, prices vary by location. But he says “[i]n the vast majority of cases where there is a variation, the store price will be lower than the RRP”. So those are the two databases that need to be compared.
What, then about the comparison (matching) process? Mr Snowden says (at para 7.6):
Although it would have been possible to compare products and prices manually, to assist in matching products, Mitre 10 spent considerable time and resources in developing and evolving a series of computer-based comparison algorithms or filters that essentially automated this process. This information included:
(a) Product description.
(b) Product codes.
(c) Price.
It follows from this that the comparison (matching) process between the two product/price databases was automated. The result of this methodology was a database of products that both Mitre 10 and Bunnings sold that he says were either exactly identical (at least 95 per cent of the products) or virtually identical (where there are...
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