Yesterday, 10 September 2013, the Federal Court handed down judgment in Australian Competition and Consumer Commission v Cement Australia Pty Ltd & Ors [ 2013 ] (the proceedings) making interim declarations that the defendants, including Cement Australia Pty Ltd, had not engaged in contraventions of section 46 of the Trade Practices Act 1974 (Cth) (the Act) (now known as the Competition and Consumer Act 2010 (Cth)). The Cement Australia decision is yet another case where the Court has failed to find that a section 46 contravention has occurred. Despite this, other section 45 contraventions were made out.
The ACCC had alleged that Cement Australia had a substantial degree of market power in the market for concrete grade fly ash in South East Queensland and had taken advantage of that market power for the purpose of locking out competitors. Fly ash is a by-product of coal-fired power generation. Certain grades of fly ash can be used as a partial replacement for cement in the manufacture of concrete. The ACCC’s section 46 case was essentially a predatory bidding case. It alleged that Cement Australia used its market power during a fly ash tender process in order to win exclusive supply of a product and foreclose competitors.
The ACCC were successful on various section 45 allegations made against the relevant companies. The ACCC had also alleged that the conduct of Cement Australia involved entering into contracts, arrangements or understandings with power stations in South East Queensland for the supply of fly ash which had the purpose, effect or likely effect of substantially lessening competition in contravention of the Act. The ACCC also made various corresponding allegations in relation to the “giving effect” to of these contracts under section 45. The Court made interim declarations that some of the pleaded conduct constituted a contravention of sections 45(2)(a)(ii) and 45(2)(b)(ii) of the Act.
The ACCC had also pursued two individuals in the case against Cement Australia, one of them being an executive for part of the relevant period. Justice Greenwood made interim declarations that the executive had not been knowingly concerned in any of the contraventions alleged against him. Another individual was however found to have been knowingly concerned in one of the contraventions.
The proceedings were commenced in 2008 and the case was heard across 2010-11. The decision by Justice Greenwood has long been anticipated as the case against Cement Australia has been a key platform in the ACCC’s campaign to increase higher risk litigation in misuse of market power cases. The reasons of Justice Greenwood are still the subject of a confidentiality review and are not yet available to the public, as such, the bases of the failings of the ACCC’s section 46 case are not yet known. Further analysis of the decision will be provided when His Honour’s reasons are made public.
Relatedly, it is anticipated that the competition provisions of the Act, and in particular, the misuse of market power provisions, will come under close scrutiny in the upcoming in-depth “root-and-branch” review of competition policy promised by the incoming Coalition Government. The Coalition’s review, set out most recently as part of its Policy for Small Business announced in August 2013, is intended to be a comprehensive and evidence based review of Australia’s competition framework to ensure “that all businesses, big and small, have a level playing field”. It will be the first comprehensive competition policy review to take place since the Dawson Review in 2002-2003.
Exactly what the Coalition’s review will mean for section 46 reform is unclear, however, irrespective of the reasons given by Justice Greenwood, there is little doubt that the outcome of the Cement Australia case will be considered closely in that review.