Obeid v Australian Competition and Consumer Commission24 March 2015 Topics: Competition and consumer law, Government services
The Full Court of the Federal Court recently upheld the validity of compulsory examination notices issued by the ACCC to Paul and Moses Obeid, sons of former NSW government minister Edward Obeid.
Examination notices can require parties to appear at the ACCC offices, give evidence and produce documents in private examinations.
The ACCC issued the notices to the Obeid brothers after an Inquiry by the Independent Commission Against Corruption (ICAC) exposed corrupt and anti-competitive conduct.
In 2008, the NSW Department of Primary Industries (DPI) invited expressions of interest (EOIs) from a limited group of companies in respect of exploration licences over particular mining areas. The DPI did not pursue a public tender process (which was available to it), but did later allow other non-invited companies to take part in the process.
The ICAC investigation into the EOI process found that the Obeid brothers, their father and former state mining minister Ian McDonald had engaged in corrupt conduct in relation to the grant of the coal exploration licence.
The ACCC investigation was prompted by the ICAC findings and focused on contraventions of the Competition and Consumer Act 2010 (CCA) by the Obeid brothers. The conduct of the brothers allegedly breached both the civil and criminal prohibitions in the CCA against cartel arrangements. These sections prohibit entering into a contract, arrangement or understanding that contains exclusionary provisions, such as where the parties agree for one party not to proceed with a request for a bid until a later prescribed point of time, or withdraw its bid completely.
The brothers appealed a previous decision on this case and sought a narrow construction of the words ‘services’ in ‘trade or commerce’, as defined in the relevant provisions of the CCA (sections 45, 4D, 44ZZRG and 44ZZRK).
They argued that the exercise or potential exercise of statutory authority by a Minister in relation to the tender process is not something that can be characterised as in ‘trade or commerce’ so as to fall under the definition of ‘service’.
The Full Court of the Federal Court dismissed the appeal and its decision confirmed that the Minister in this circumstance had engaged on a commercial basis with the companies who had been given the right to participate in the EOI process.
This was not a situation of a mere application for a licence renewal or approval in a regulatory context without more. Only one criterion of the EOI process was thought to be ‘governmental’, with all other criteria being usual commercial criteria that any commercial owner of a potentially valuable mineral deposit would consider.
The most influential criterion was that the Additional Financial Contributions were of a commercial character and not merely a registration or licence fee.
The decision also confirmed that the cartel provisions in the CCA apply to the acquisition of services, not just to their supply. The Court found that where a contractual provision has the purpose, whether directly or indirectly, of ensuring that, in the event of a request for bids in relation to the supply or acquisition of services, certain things occur (such as one or more parties not bidding or proceeding with the bid), then the ‘purpose condition’ of the cartel provisions is satisfied.
For advice on the provisions of the CCA and its implications on business conduct, or for assistance in responding to examination notices, please contact a member of our team.