Prohibition on secondary boycotts clarified: High Court rules against the ACCC in appeal regarding the nature of an anti-competitive understanding

Overview

Sections 45E and 45EA of the Competition and Consumer Act 2010 (Cth) (CCA) prohibit contracts, arrangements or understandings that contain a provision included for the purpose of preventing or hindering the acquisition of goods or services from a supplier, also referred to as a secondary boycott.

On 2 April 2025, the High Court dismissed an appeal by the ACCC from a decision of the Full Federal Court.[1] In this judgment, the High Court clarified that, for the purposes of section 45E (and section 45EA) of the CCA, a party that succumbs to a threat of industrial action by doing what is demanded under sanction of the threat, without express or tacit communication of a commitment to do so, does not arrive at an understanding with the party that makes the threat.

Background

J Hutchinson Pty Ltd (Hutchinson) was the head contractor for a construction project.

Hutchinson had entered into an enterprise bargaining agreement with the Construction, Forestry and Maritime Employees Union (CFMEU), under which it was obliged to consult with the CFMEU when appointing subcontractors in particular circumstances.

Without any prior consultation with the CFMEU, Hutchinson entered into a subcontract for the performance waterproofing works at the project site. The subcontractor did not have an enterprise agreement with the CFMEU.

The CFMEU objected to this engagement and threatened to undertake industrial action if the subcontractor was permitted to return to the project site.

Hutchinson reacted to the CFMEU’s threat of industrial action by excluding the subcontractor from the project site and terminating the subcontract. Significantly, Hutchinson did not give the CFMEU any verbal or written assent that it would terminate the subcontract or cease to acquire services from the subcontractor at any stage.

The ACCC subsequently commenced civil penalty proceedings against Hutchinson and the CFMEU, alleging a breach of sections 45E and 45EA of the CCA. On 14 February 2022, the Federal Court found at first instance that Hutchinson had breached the provisions and the CFMEU had been knowingly concerned in, or party to, the contraventions by Hutchinson.[2] On 29 February 2024, the Full Federal Court upheld appeals by Hutchinson and the CFMEU from the decision at first instance, finding that there was no relevant understanding between Hutchinson and the CFMEU.[3]

ACCC’s appeal to the High Court

The ACCC appealed to the High Court on the basis that an understanding has arisen between two parties for the purposes of section 45E (and section 45EA) of the CCA if one party makes a threat and demand to another party, and the other party capitulates to that threat and acts as demanded.

Accordingly, the ACCC contended that an inference that Hutchinson terminated the subcontract for no other reason than to avoid industrial action by the CFMEU was sufficient to establish that Hutchinson had arrived at an understanding with the CFMEU.

Nature of an ‘understanding’ for the purposes of Part IV of the CCA

Reciprocity: proof of express or tacit communication of a commitment

Gageler CJ, Gleeson and Beech-Jones JJ in a joint judgment, with Edelman J separately agreeing, rejected the ACCC’s contention. There was no challenge to the finding that Hutchinson terminated the subcontract for no other reason than to avoid industrial action by the CFMEU; however, the Court was not satisfied that Hutchinson’s conduct was sufficient to demonstrate the existence of an understanding with the CFMEU.

The Court held that, although an understanding requires less than a legally binding contract, a consensus or a ‘meeting of the minds’ (that is, some form of reciprocity) between the parties must still be established. Accordingly, an understanding necessarily involves interaction between the parties ‘…by which one expressly or tacitly communicates by words or conduct to the other a commitment to act or refrain from acting in a particular way’. Given this, a relevant understanding cannot be inferred from mere conduct alone.

Steward J’s dissent: statutory context of section 45E of the CCA

Steward J rejected the majority’s view, noting some issues with the approach. His Honour considered that the specific statutory context of section 45E of the CCA did not require a meeting of the minds.

Interestingly, his Honour drew a distinction between:

• section 45 of the CCA, which contemplates the presence of a ‘common mind’ between parties to engage in prohibited conduct, where the outcome of the contravening conduct is one that both parties actively seek to achieve; and
• section 45E of the CCA, which contemplates one party succumbing to the threat of another, where the outcome of the contravening conduct is one that is ‘invariably not what one counterparty wants’.

Steward J further noted that the manifest purpose of section 45E of the CCA is to prevent corporations from succumbing to threats of industrial action which disturb obligations or arrangements for the supply or acquisition of goods or services. His Honour followed that, in such circumstances, it would be unrealistic to expect that the parties would ‘verbalise, record or evidence their illegal conduct’.

His Honour considered that, had the CFMEU not made the relevant threat, Hutchinson would have continued to engage its preferred subcontractor. Accordingly, his Honour found that Hutchinson’s conduct was an act of compliance with a union threat sufficient to trigger the application of section 45E of the CCA.

Key takeaways for corporations

Nonetheless, the High Court’s decision provides clarity that arrival at an understanding for the purposes of Part IV of the CCA requires proof of express or tacit communication between the parties of a commitment of one party to do that which the other party has demanded of it. The act of a party succumbing to a threat does not, without more, constitute an arrival at an understanding to do what is demanded.

Notwithstanding this, corporations that receive such threats should still act with caution, given that tacit communication may be sufficient to demonstrate an understanding that is unlawful for the purposes of section 45E (and section 45EA) of the CCA.

Following the judgment, the ACCC has confirmed that it remains committed to enforcing anti-competition laws and holding those who engage in anti-competitive conduct accountable.

If you wish to discuss any of the matters contained in this article, please contact David Grace or a member of our corporate advisory team.

[1] Australian Competition and Consumer Commission v J Hutchinson Pty Ltd; Australian Competition and Consumer Commission v Construction, Forestry and Maritime Employees Union [2025] HCA 10.

[2] Australian Competition and Consumer Commission v J Hutchinson Pty Ltd (2022) 404 ALR 553.

[3] Hutchinson Pty Ltd v Australian Competition and Consumer Commission (2024) 420 ALR 221.