On 10 September 2013, the Federal Court made interim declarations in the matter of ACCC v Cement Australia Pty Ltd (Cement Australia) & Ors that the defendants engaged in conduct that had the purpose, effect or likely effect of substantial lessening of competition.  The Federal Court did not find, however, that Cement Australia engaged in conduct amounting to a misuse of market power.  No penalty orders were made.

The ACCC alleged that, between 2002 and 2006, the respondents entered into contracts with four power stations located in South East Queensland containing provisions requiring the power stations to supply a minimum amount of unprocessed flyash to Cement Australia.  The ACCC contended that Cement Australia had no use for the flyash, and that the provisions entitled Cement Australia to acquire all of the unprocessed cement grade flyash in the South East Queensland region thus making it less likely for the power stations to supply flyash to competitors of Cement Australia.  Essentially, the ACCC’s allegations of misuse of market power were that Cement Australia was engaging in predatory buying.

The case amounts to both a win and a loss for the ACCC.  A win in that it demonstrates the ACCC’s effectiveness in pursuing litigation where it considers that there is a “competition problem”.  This is a key plank of the ACCC, under Chair Rod Sims, pursuing what may be considered more higher risk cases.  However, it is a loss in that the ACCC has again failed to prove its case against an entity alleged to be misusing its market power – an area of significant focus of the ACCC and one of the ACCC’s drivers in its investigations into the conduct of the major supermarket chains vis-a-vis their suppliers. 

Query whether this setback in prosecuting misuse of market power will lead to a push to further change this provision in the Government’s upcoming root and branch review of the Competition and Consumer Act.

The full judgment is yet to be publicly released, to allow the parties an opportunity to review the 930 page judgment and make any claim for confidentiality.