The ACCC has sought to intervene in the appeal relating to the matter of Norcast v Bradken.
In the May edition of our Competition and Consumer News, we reported on the decision of Norcast v Bradken. This decision was the first case to apply new cartel laws, which extend the cartel provisions under the Competition and Consumer Act (Act) to conduct outside of a formal market.
The matter involved Bradken seeking to purchase a competitor’s (Norcast) subsidiary (NWS) via the US private equity firm Castle Harlan. Castle Harlan purchased NWS for US $190m. Within 24 hours Castle Harlan on-sold NWS to Bradken for US$212.4m. All entities, save for Bradken, are located outside of Australia.
Norcast sued Bradken for a breach of the new cartel laws as well as for misleading or deceptive conduct. Norcast was successful with respect to both aspects. The Federal Court determined that Bradken and Castle Harlan, in contravention of the new cartel laws, were in competition or likely to be in competition with each other, at least with respect to this transaction. Against Bradken’s submissions, the Federal Court also determined that conduct occurred in Australia, despite the fact that the tender process, the buyer and seller were not located in Australia.
The decision, as it currently stands, has a significant impact on tender processes, especially where undisclosed bidders are involved. That is, in some circumstances it could be found that a principal and agent are effectively competitors and thus acting in breach of the new cartel provisions. The Federal Court also gave a rather broad interpretation to the extraterritorial aspects of the relevant laws.
The ACCC has sought leave of the Full Federal Court to intervene in the appeal. Whilst the ACCC is seeking to make submissions on the interpretation of the new cartel laws, it is not entirely clear why the ACCC should intervene in this particular matter.
One aspect on which the ACCC seeks leave to make submissions relates to the extraterritorial application of cartel laws. To some extent, it may be in the ACCC’s interest to argue for a broad interpretation of these provisions consistent with the original Federal Court decision, such that the ACCC is able to justify its position in particular investigations where there is minimal connection to Australia.
It is apparent that the ACCC did not take action against Bradken. The ACCC may have determined that the matter did not warrant investigation or that on the merits no offence had been committed. However, it would be an interesting outcome if the ACCC did not investigate the matter because it had determined that it did not have jurisdiction with respect to the matter.
The ACCC suggests that the new cartel laws have yet to be examined by the higher courts and raise important issues justifying the ACCC’s intervention. Time will tell whether the ACCC will seek to intervene in any consumer guarantee or unfair standard form contract term matters litigated between private parties and which may be subject to an appeal.
Norcast and Bradken will no doubt receive appropriate representation, making submissions on the new cartel provisions and the extra-territorial aspects of the proceedings. Whilst it is noble of the ACCC to seek to assist the courts with respect to matters of interpretation, and the ACCC has developed a reputation as a successful, cooperative and progressive regulator, it nevertheless could be suggested that the ACCC’s resources be utilised elsewhere. That said, the ACCC could provide invaluable assistance to the parties and the court with respect to this matter. It remains to be seen though whether the ACCC develops a clear policy position as to when it will seek to intervene in private matters before the courts.