Thursday, 29 July 2021

ACCC appeals in NSW Ports competition case

 The ACCC has appealed Jagot J's decision in the NSW Ports matter. I like their chances on the purpose of the agreements.

“We will argue that the Court made an error in finding that the Port Commitment Deeds didn’t have an anti-competitive purpose, even though the Court found that the purpose of the Deeds was to secure a higher sale price for the State from selling the existing monopoly of Port Botany, and ensure that NSW Ports would retain the full value of that monopoly,” Mr Sims said.

I think it was very clear that the agreements had an anti-competitive purpose.

And going out on a limb here, my prediction for the composition of the Full Court would be Allsop CJ, Yates and O'Brien JJ.

Australian Competition and Consumer Commission v NSW Ports Operations Hold Co Pty Ltd [2021] FCA 720

 I had a quick look at Justice Jagot's decision in the ports case. I am not too sure the judge came to the right decision. While her effects analysis looks sound, her discussion of the purpose of the provisions looks weak and unconvincing.

Jagot J's analysis of the counterfactual led her to conclude (1) that the chance of the State permitting or supporting the development of a container terminal at the Port of Newcastle before Port Botany reached its capacity was "fanciful, far-fetched, infinitesimal or trivial and not a real chance or real possibility" and (2) there was no real chance of Port of Newcastle, its board and shareholders and financiers being able to satisfy themselves that a container terminal at the Port of Newcastle would be viable while Port Botany had capacity. 
Therefore, the Port Commitment Deeds which obliged the State of NSW to compensate the operators of Port Botany and Port Kembla if container traffic at the Port of Newcastle rose above a minimal specified cap had no practical effect as there was never any chance of the Port of Newcastle developing a container terminal.
However, it seems to me that Jagot J has not adequately dealt with the purpose case. I was reminded of Allsop J's observations in the Liquorland case where we were not able to establish an effects case. First, Allsop J observed that sophisticated business-people rarely enter into commercial agreements which have no commercial purpose. He then concluded that the anti-competitive purposes of the agreements were clear:
"..this purpose can be seen plainly to be relevant to the competitive process in that market. It was directed to denying any new potential entrant to the local market this vehicle (being a “potent item”) for entry to the market. This did not deny the potential new entrant the ability to enter the market by applying for its own licence. However, the purpose was to make sure, as far as was possible, that this licence could not be used for facilitating any unrestricted market entry, now, or in the future" (883).