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www.corrs.com.auwww.corrs.com.au

Competition law for the public sector

September 2019

Corrs Chambers WestgarthCorrs Chambers Westgarth

1. When does the Competition and Consumer Act 2010 (CCA) apply to government?

3. Detailed case studies – NT Power, Baxter and Scott Russell Constructions cases

2. Examples from previous cases

Contents

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2


When does the CCA apply to government?

3

Corrs Chambers WestgarthCorrs Chambers Westgarth 4

Application of Part IV to government

• Historically, CCA did not apply to governments

• Section 2B commenced July 1996

• COAG National Competition Policy reforms

• Part IV (Restrictive trade practices) now applies to Crown “so far as [it] carries on a business”

• No pecuinary penalty or liability for offence

• Only Crown, not authorities

3

Other levels of government

5

• Section 2A

• Commonwealth Government

• Section 2BA

• Local governments

• Including through incorporated company

• Can be liable for pecuniary penalties and offences


What does “carrying on a business” mean?

Carrying on a business

6

• Broad definition

• Need not be for profit

• Wide and general definition

• Can be business even if no competition

• Repetition important, but not sufficient

• Specific governmental exclusions (section 2C)

• Relationship between conduct and business

• Act only applies “so far as” carries on business

4


Crown immunity

7

Derivative Crown immunity

Crown immunity

• Crown immunity ain’t what it used to be

• Only to the extent consistent with section 2B and 2BA

• Compare Competition Code

• No derivative Crown immunity

• Corporations cannot hide under Crown immunity, if it exists

• May affect responses to government tenders


Examples from previous cases

8

5


Australian Government Publishing Service

9

Power and Water Authority (NT)

Immigration detention centres

Examples from previous cases

• Commonwealth Government carrying on business through AGPS

• Not carrying on business in sale of AGPS

• Carrying on business in supplying electricity

• Not a business –governmental in nature


Public functions

10

Carrying on statutory duty

Valuation information

Further examples from previous cases

• Eradication of cattle disease

• Airport-related planning activities

• Carrying on a business regarding bulk data licenses

• Not carrying on business if required by statute

6


Detailed case studies

11


The players

NT Power Generation v PAWA

12

NT Power

• Private company

• Electricity generator

PAWA

• Body corporate under PAWA Act (NT)

• Subject to ministerial direction

• Generator and purchaser of electricity

• Transmission of electricity

• Distribution business to customers

• Owner of transmission and distribution infrastructure

7


NT Power

Access request

• NT Power sought access to PAWA’stransmission and distribution infrastructure

• After seeking Minister’s view, PAWArefused access

NT Power

14

PAWA’s arguments – carrying on a business • The relevant market was the market for

supply of electricity infrastructure services

• PAWA had never supplied or acquired goods or services in that market. It only used the assets to carry and supply its own electricity to customers

• Therefore PAWA said it was not carrying on a business

8

NT Power

15

PAWA’s other arguments • No ‘taking advantage’ of market power

• Licensing exception applied

• Refusal based on legitimate reason an access regime would be more pro-competitive

• PAWA was following a Ministerial Direction


NT Power – High Court findings

• Taking advantage in one market can affect competition in another market

• Lack of actual competition is not an answer if there could be competition

• Taking advantage of market power is enough even if you take advantage of other rights/powers

• Access regime irrelevant

• Ministerial direction irrelevant

9

ACCC v Baxter Healthcare

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• Involved allegedly anticompetitive supply of sterile fluids to States

• ACCC conceded for purposes of this proceeding only that States were not carrying on business

• Baxter has substantial market power in sterile fluids market

• Baxter took advantage to exclude competition in market

• No derivative crown immunity for Baxter


Scott Russell Constructions Pty Ltd v QBCC

Facts• QBCC attempted to collect debt from Scott Russell Constructions

• Various statements made by QBCC representative, Mr Phillip:

• “[Mr Russell should] know how this works because [his] father has been through the process”

• Mr Phillip would:

• “ruin” them

• “come after” Mr Russell’s wife

• force them through protracted and expensive litigation

• Mr Russell agreed to pay $130,000 to settle QCAT proceedings

10


Unconscionable conduct

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Harassment and coercion

Misfeasance in public office

Scott Russell Constructions – Allegations

• QBCC engaged in conduct in trade or commerce that was unconscionable(section 21 or section 22 of the ACL)

• QBCC and Mr Phillip in position of significant strength in bargaining position

• Unfair tactics and pressure to “force a settlement”

• Mr Russell (and therefore company) felt he had no alternative but to agree to settlement

• Denied opportunity for fair hearing before QCAT

• Total claim of $4,295,812

• QBCC’s and Mr Phillips’ conduct amounted to “harassment and coercion” in contravention of section 50 of the ACL

• Same particulars as unconscionable conduct claim

• Not focus of this presentation


When does the ACL apply to government?

20

Does QBCC carry on a business?

Did the conduct occur in the course of carrying on business?

Scott Russell Constructions – Decision

• ACL applies to State of Queensland so far as State carries on a business either directly or by an authority of State (Fair Trading Act 1989 (Qld))

• ACL will apply to State to extent that it carries on business

• Court accepted that QBCCcarrying on businesses in relation to the statutory insurance scheme

• Conduct did not occur in course of QBCC conducing insurance business

• Conduct occurred in course of regulatory functions of QBCC

• Different result if e.g. conduct consisted of representations about scope of cover

11


Questions?

21

SYDNEY8 Chifley8-12 Chifley SquareSydney NSW 2000Tel +61 2 9210 6500Fax +61 2 9210 6611

MELBOURNE567 Collins StreetMelbourne VIC 3000Tel +61 3 9672 3000Fax +61 3 9672 3010

BRISBANEONE ONE ONE Eagle Street 111 Eagle StreetBrisbane QLD 4000Tel +61 7 3228 9333Fax +61 7 3228 9444

PERTHBrookfield Place Tower 2123 St Georges Terrace Perth WA 6000Tel +61 8 9460 1666Fax +61 8 9460 1667

PORT MORESBYLevel 2, MRDC HausPort Moresby National Capital District 111Papua New GuineaTel +675 303 9800Fax +675 321 3780

SYDNEY8 Chifley8-12 Chifley SquareSydney NSW 2000Tel +61 2 9210 6500Fax +61 2 9210 6611

MELBOURNE567 Collins StreetMelbourne VIC 3000Tel +61 3 9672 3000Fax +61 3 9672 3010

BRISBANEONE ONE ONE Eagle Street 111 Eagle StreetBrisbane QLD 4000Tel +61 7 3228 9333Fax +61 7 3228 9444

PERTHBrookfield Place Tower 2123 St Georges Terrace Perth WA 6000Tel +61 8 9460 1666Fax +61 8 9460 1667

PORT MORESBYLevel 2, MRDC HausPort Moresby National Capital District 111Papua New GuineaTel +675 303 9800Fax +675 321 3780

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