In its recent decision of Obeid v Australian Competition and Consumer Commission1 (Obeid), the Full Court of the Federal Court of Australia upheld the validity of compulsory examination notices (Notices) issued by the Australian Competition and Consumer Commission (ACCC) pursuant to section 155 of the Competition and Consumer Act 2010 (CCA).

The Notices were issued to Paul and Moses Obeid, sons of the former NSW government minister Eddie Obeid (the Obeids), as part of the ACCC's investigation into possible contraventions of the prohibition on anti-competitive arrangements in section 45 of the CCA and the civil and criminal prohibitions on "giving effect to" arrangements containing a "cartel provision" in section 44ZZRK and 44ZZRG of the CCA.

The ACCC's investigation came off the back of an enquiry by the Independent Commission against Corruption (ICAC) which found that Mr Eddie Obeid, his son Moses Obeid and the then state mining minister Ian McDonald, amongst others, had engaged in corrupt conduct in relation to the grant of a coal exploration licence.

IMPLICATIONS OF OBEID FOR THE ACCC AND COMMERCIAL ENTITIES

The Full Court unanimously dismissed the Obeid's appeal. The appeal focussed on whether the State's provision of mining leases was the provision of a "service" in "trade or commerce" (essential elements for the grounding of the Notices). The Full Court's decision in Obeid is only the second decision to consider and clarify the meaning of section 44ZZRD(3)(c) of the CCA since enacted in 2010. The other decision was the first instance decision of Gordon J in Norcast S.ár.L v Bradken Limited (No 2) (Norcast).2

The key take-aways from both of these decisions, insofar as interpreting the meaning of "services" in the context of cartel conduct and legitimately navigating requests for bids from the government or otherwise are as follows:

  1. A Minister's actions in exercising a statutory power may, in certain circumstances, take on a trading or commercial character such as to fall within the ambit of "services" that are contemplated by the CCA as being in "trade or commerce";
  2. The reference to a "request for bids" in section 44ZZRD(3)(c) does not need to be a request for bids that is directed to individual parties to an alleged CAU;3
  3. A 'request for bids' does not need to be made in Australia.4 The territorial coverage of section 44ZZRD(3)(c) is governed by section 5 of the CCA;
  4. There is no 'temporal element' to section 44ZZRD(3)(c) such that CAUs that are made, formed or entered into after a request for bids has been issued are excluded from the ambit of a 'cartel provision'. Section 44ZZRD(3)(c) applies to CAUs made, formed or entered into before and after a request for bids has been issued.
  5. The Court's analysis of the commercial activities contemplated by section 44ZZRD(3)(c) is not solely restricted to an analysis of the 'supply' of goods or services. To interpret section 44ZZRD(3)(c) in terms of an analysis of the relevant commercial activities of the provider of 'services' in isolation from the acquirer would be artificial, would undermine the object of the cartel provisions and would give it an interpretation that would be "perilously close to capricious".5

In this way, both Obeid and Norcast provide greater clarity to assist commercial entities from falling foul of the prohibitions on cartel conduct. Obeid in particular clarifies the ACCC's powers of investigation into governmental activities and dispositions of assets or licensing of rights and decisions by a Minister which have a trading or commercial character.

For a more in-depth analysis of the issues raised and the Court's deliberations at first instance and on appeal, please see an article reporting on the case located here.

Footnotes

1 [2014] FCAFC 155

2 [2013] FCA 235. This decision was the subject of an appeal to the Full Federal Court; see Bradken Limited v Norcast S.ar.L (2013) 219 FCR 101. The appeal proceedings were settled between the parties and declaratory orders were sought from the Full Court which, if the Full Court had made them, would have had the effect that the Full Court was satisfied of the existence of appealable error. The Full Court made clear that it was not satisfied of the existence of appealable error. Accordingly, the decision of the trial judge in relation to the interpretation of s 44ZZRD(3) is instructive and still represents good law.

3 Norcast S.ár.L v Bradken Limited (No 2) [2013] FCA 235 per Gordon J at [220] and [221]

4 Norcast S.ár.L v Bradken Limited (No 2) [2013] FCA 235 per Gordon J at [228]. Her Honour noted that there was nothing in the language of the provision to support a contention that the legislative intent was to impose a territorial limitation in relation to the "request for bids" condition.

5 [2014] FCAFC 155 at [56]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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