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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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When does the CCA apply to government?
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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
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Other levels of government
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• Section 2A
• Commonwealth Government
• Section 2BA
• Local governments
• Including through incorporated company
• Can be liable for pecuniary penalties and offences
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What does “carrying on a business” mean?
Carrying on a business
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• 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
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Crown immunity
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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
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Examples from previous cases
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Australian Government Publishing Service
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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
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Public functions
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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
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Detailed case studies
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The players
NT Power Generation v PAWA
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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
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NT Power
Access request
• NT Power sought access to PAWA’stransmission and distribution infrastructure
• After seeking Minister’s view, PAWArefused access
NT Power
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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
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NT Power
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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
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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
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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
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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
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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
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When does the ACL apply to government?
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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
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Questions?
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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