On 6 December 2019, the Australian Competition and Consumer Commission (ACCC) instituted Federal Court proceedings against Tasmanian Ports Corporation Pty Ltd (TasPorts) for misuse of market power in contravention of s46(1) of the Competition and Consumer Act 2010 (Cth) (CCA).
The alleged contravention is in relation to the attempted entry by a competitor, Engage Marine Tasmania Pty Ltd (Engage Marine) into markets historically dominated by TasPorts.
The proceedings are noteworthy because:
TasPorts, who own all but one of the ports in Tasmania, supply marine pilotage and towage services.
In 2017, Engage Marine won a contract for the supply of marine services to a then customer of Tas Ports, Grange Resources Limited (Grange) at Port Latta.
The ACCC alleges TasPorts sought to maintain its monopoly in towage and pilotage, by:
The ACCC further alleges that:
A date for legal proceedings in the matter has not been set.
The ACCC is responsible for investigating and enforcing the competition provisions of the CCA, including section 46, which prohibits a corporation with a substantial degree of power in a market from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition.
This includes the power to bring court proceedings seeking to prove that the CCA has been contravened.
Section 46 of the CCA was amended by the Commonwealth Parliament following the recommendation of Professor Ian Harper to introduce an “effects test” in section 46 to replace the earlier focus on anti-competitive purpose, or intent.
If the Federal Court accepts that TasPorts has contravened, attempted to contravene or been involved in a contravention of section 46, it may impose orders including, but not limited to:
Each breach alleged by the ACCC carries a fine in excess of $10 million. The maximum penalty payable by a corporation is the greater of:
First case considering revised section 46
Criticism of section 46 of the CCA prior to its amendment to introduce an “effects test” centred on the difficulty of satisfying the requirement to prove an anti-competitive purpose, or intent.
In essence, adoption of the “effects test” was intended to shift the focus of the prohibition from anti-competitive intent to anti-competitive outcomes, which would result – at least initially – in more successful enforcement action by the ACCC and – in the longer term – increased competition across the economy.
This is the first time that the ACCC has brought proceedings under section 46 since the provision was amended to introduce an effects test. As such, there is some likelihood that the case will give the Federal Court an opportunity to consider the new provision, particularly what the words ‘purpose, effect or likely effect of substantially lessening competition’ mean in the context of a provision designed to prevent misuse of market power.
Another point to note is that the proceedings concern the conduct of a state government owned corporation, which should highlight the fact that the ACCC is not concerned about avoiding battles with state government corporations or instrumentalities.
Despite successive governments exiting participation in essential services and related sectors, particularly on Australia’s east coast, many state government corporations and instrumentalities are still active in historically government-controlled sectors, such as ports, energy, water and rail.
Characteristics such as vertical integration and obligations to comply with state government policy or directives can make state government corporations and instrumentalities more vulnerable to claims of misuse of market power, whether by the ACCC from competitors or customers.
The ACCC’s decision to bring proceedings against TasPorts provides a timely reminder to firms and consumers alike that the ACCC continues to monitor the conduct of large firms and can be receptive to competitor concerns.
Lavan suggests that firms consider their conduct and the conduct of their competitors, suppliers and customers to identify and address instances where they, or their competitors, suppliers or customers, are at risk of having contravened or been involved in the contravention of section 46.
Where a risk of contravening section 46 arises: