Two recent decisions provide guidance on provisions concerning contracts, arrangements and understandings (CAUs) in Pt IV of the Competition and Consumer Act 2010 (Cth).
High Court provides guidance on whether a threat can amount to an “understanding”
On 2 April 2025, the High Court of Australia dismissed the ACCC’s appeal in ACCC v J Hutchinson Pty Ltd [2025] HCA 10. The case concerns the nature of an ‘understanding’ under ss 45E(3) and 45EA, which prohibit CAUs between a person and an organisation of employees affecting the person’s ability to acquire goods or services. The facts of Hutchinson are addressed in the CLL Roundup for 2024/2025, Q1.
Gageler CJ and Gleeson and Beech-Jones JJ held that:
- arriving at an understanding under s 45E(3) involves one party communicating a commitment to the other (expressly or tacitly) to act (or refrain from acting) in a particular way, resulting in ‘consensus’ or a ‘meeting of the minds’: [20];
- deciding unilaterally to succumb to a threat may be a rational commercial response to the threat and does not, without more, establish an ‘understanding’: [22]–[23]; and
- in the absence of any proof of communication between Hutchinson and the CFMEU, there was no understanding by which they reached a common mind: [26].
Edelman J (agreeing in the result) held that a CAU requires ‘reciprocity’ and could arise if the party making a unilateral undertaking dispensed (expressly or impliedly) with the requirement to communicate assent: [31], [56]. However, the ACCC conceded it had not run any such case: [32].
Steward J (in dissent) held that the requirement of a ‘meeting of the minds’ or ‘consensus’ was not required to establish an ‘understanding’ under s 45E: [85]. Given that the purpose of s 45E is to prevent corporations from succumbing to threats of industrial action, the making of a threat followed by a change of course in response was sufficient: [92].
Federal Court finds against Qteq for attempts to collude with competitors
On 17 April 2025, the Federal Court of Australia found for the ACCC in civil penalty cartel proceedings commenced against Qteq Pty Ltd (ACCC v Qteq Pty Ltd [2025] FCA 371). The case concerned the supply of goods and services to well operators in the coal seam gas (CSG) industry. The ACCC’s case involved s 44ZZRJ/45AJ (as in force at the relevant time) which prohibits CAUs containing a cartel provision, together with the ‘attempted contravention’ provisions in s 76(1)(b) and (d).
Qteq was the incumbent service provider of gauge works for CSG wells to QGC Pty Ltd and faced a tender process for the replacement contract. The ACCC alleged that Qteq and Mr Ashton (its CEO and later Executive Chairman) attempted to collude with current or prospective competitors to neutralise competitive threats posed by the tender process by attempting to enter into, or induce a competitor or likely competitor to enter into, CAUs containing cartel provisions: [9].
Attempts 1–3 involved Pro-Test Pty Ltd, a competitor in the supply of gauge works, well completions work and drill stem testing (DST). The Court held that:
- Attempt 1: Qteq attempted to arrive at, or induce Pro-Test to arrive at, an understanding that Pro-Test would not compete for the supply of gauge works to QGC, and Qteq would not compete for the supply of goods or services that Pro-Test supplied to Santos Ltd, Pro-Test’s customer: [186]–[190].
- Attempt 2: Qteq attempted to, or attempted to induce Pro-Test to, make an arrangement or arrive at an understanding that Pro-Test would structure its bid for the tender so as to win only about 15% of the work and not try to win the contract outright; and Qteq would not compete with Pro-Test for the supply of goods or services to Santos: [249]–[253].
- Attempt 3: Qteq attempted to arrive at, or induce Pro-Test to arrive at, an understanding that Pro-Test would not supply gauge works and Qteq would not supply DST or well completions work: [266]–[271].
The Court held that Mr Ashton was directly liable in all three attempts: [303].
Attempts 4 and 5 involved Eastern Well No 2. The Court held that Qteq attempted to make, and that Qteq and Mr Ashton in his own capacity ([487]–[488]) attempted to induce, a contract with Eastern Well No 2 that:
- prevented Eastern Well No 2 from supplying gauge installation services to QGC or any other CSG operators, otherwise than in concert with Qteq: [415]–[416]; and
- restricted or limited Eastern Well No 2’s supply or likely supply of gauge installation services to QGC; or prevented, restricted or limited its supply or likely supply of gauge installation services to other CSG operators: [483].
The Court rejected the argument that the exclusive dealing exception in s 45AR(1) applied to Attempts 4 and 5. That provision creates an exception to s 45AJ for CAUs that would otherwise constitute a contravention of s 47: [398]. Its purpose is to prevent overlapping proscriptions (Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 1, 10–13 [22]–[35]). The Court held (at [409]–[413], [481]–[482]) that:
- Qteq’s supply was not ‘conditional’ within the meaning of s 47(2);
- the cartel conduct went beyond limiting Eastern Well No 2’s freedom to acquire goods or services from Qteq’s competitors, or from resupplying services provided to Eastern Well No 2 by Qteq, so s 47(2)(d) and (f) did not apply; and
- no restriction or condition was placed on Qteq, so s 47(4) did not apply.
Attempt 6 was an alleged understanding that Firetail would not supply gauge works in competition with Qteq in circumstances in which Firetail and Qteq were likely to be in competition: [553]–[556]. The Court held that, although Firetail would have ‘liked’ to be in that position, the competition condition was not proven because the evidence did not establish that Firetail had reached the position of being able to be the ‘second gauge installation company’: [638]. Attempt 6 was not established: [639].
The matter is listed for a penalty hearing on 30 September 2025.