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Client Update: Full Court dismisses Port of Newcastle access appeal

18 August 2017

In brief: The Full Federal Court has dismissed the Port of Newcastle's application for review of the Australian Competition Tribunal's decision to declare the Port's shipping channel service under the National Access Regime. The Full Court's decision confirms the interpretation of the current declaration criteria adopted by the Competition Tribunal and previously by the Full Court in its 2006 decision concerning Sydney Airport. Partner John Hedge (view CV) and Senior Associate David Mierendorff report on the decision and its implications, taking into account the Government's proposed changes to the declaration criteria currently before Parliament.

Context

In May 2015, Glencore applied to the National Competition Council (NCC) for a recommendation that the right to access and use the shipping channels at the Port of Newcastle (the shipping channel service) be declared under the National Access Regime in Part IIIA of the Competition and Consumer Act 2010 (Cth).

The NCC recommended that the shipping channel service not be declared, and, in January 2016, Acting Treasurer Mathias Cormann (as the relevant Minister) decided not to declare the shipping channel service. Glencore then applied to the Australian Competition Tribunal for review of the Minister's decision, and, in May 2016, the Tribunal set aside the Minister's decision and declared the service. 

In turn, the Port of Newcastle applied for judicial review of the Tribunal's decision before the Full Federal Court.

The Full Court's decision

The Port of Newcastle's application for review related to the correct interpretation of the current declaration criteria and the Full Court's consideration of those criteria in Sydney Airport Corporation v Australian Competition Tribunal.1

The Full Court did not find any error in the Tribunal's decision and dismissed the application. In doing so, it emphasised that the Full Court's function on application for judicial review is to ensure that the Tribunal's decision accords with the law, not to examine the merits of the Tribunal's decision.

As a result, the shipping channel service will remain declared until 7 July 2031 (the date set by the Tribunal), or until the declaration is revoked (assuming no appeal of the Full Court's decision). The effect of declaration is that, if a third party and the Port of Newcastle cannot agree one or more aspects of access to the shipping channel service, either party may refer the dispute to the ACCC for arbitration. Glencore notified the ACCC of an access dispute in relation to the shipping channel service in November 2016, such that the arbitration can now proceed.

Criterion A – Promotion of competition

In order to declare a service, the relevant Minister or Tribunal must be satisfied that access (or increased access) to the service would promote a material increase in competition in at least one market, other than the market for the service. This is known as criterion (a).

The Full Court found that the Tribunal's interpretation of criterion (a) was correct, and consistent with the Full Court's decision in Sydney Airport v Australian Competition Tribunal. In particular, the Full Court accepted that the term 'access' should be given its ordinary meaning, and does not mean 'access as a result of declaration'. Consequently, criterion (a) does not involve comparing the future state of competition with and without declaration, but instead involves comparing:

  • the future state of competition in the dependent market with a right or ability to use service; and
  • the future state of competition in the dependent market without any right or ability or with a restricted right or ability to use the service.

The Full Court confirmed that this assessment does not involve considering the current and likely future level of access – as such a consideration would 're-enter the territory' of comparing the future level of competition with and without declaration.

Criterion F – the public interest

To declare a service, the Minister or Tribunal must also be satisfied that access (or increased access) to the service would not be contrary to the public interest. This is known as criterion (f). 

The Port of Newcastle and the Commonwealth submitted that, if the existing and likely future usage or access to a service is not taken into account when considering criterion (a), it should instead be taken into account when considering criterion (f). The Full Court rejected this submission, finding no error in the Tribunal's decision that criterion (f) was satisfied.

Impact of the Full Court's decision

The Full Court's decision confirms the prevailing interpretation of the declaration criteria – as adopted by the Tribunal in its decision concerning the Port of Newcastle, and by the Full Court in Sydney Airport v Australian Competition Tribunal.

However, the impact of the Full Court's decision for new declaration applications may be limited, given that the Competition and Consumer Amendment (Competition Policy Review) Bill 2017, which is before Parliament, will change both of the declaration criteria considered in the decision. Specifically, the Bill proposes to:

  • amend criterion (a) to require that access (or increased access) to the service, on reasonable terms and conditions, as a result of a declaration will promote a material increase in competition in a dependent market; and
  • amend criterion (f) to require that access (or increased access) to the service, on reasonable terms and conditions, as a result of a declaration will promote the public interest.

The Government's proposed changes will raise the threshold for satisfying declaration criteria (a) and (f), meaning that access providers may be able to more readily resist declaration, particularly where they are not vertically integrated.

Footnotes
  1. (2006) 155 FCR 124.

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