AUSTRALIAN COMPETITION TRIBUNAL
BHP Petroleum Pty Ltd [1999] ACompT 2
Gas Industry Act 1994 (Vic): s 62PA
Trade Practices Act 1974 (Cth): s 45, s 51(1)(b), s 51(1C)(f), s 88(8), s 101
Pt IV
Gas Industry Act Amendment Act 1998: s 19
Broken Hill Proprietary Company Ltd v Trade Practices Tribunal (1980) 47 FLR 384
Matter No 8 of 1998
RE: APPLICATION FOR A REVIEW OF THE DETERMINATION OF THE AUSTRALIAN COMPETITIONANDCONSUMERCOMMISSIONMADEON19 AUGUST1998GRANTINGAUTHORISATION IN RELATION TO APPLICATION Nos A90646, A90647 AND A90648 (MARKET AND SYSTEM OPERATIONS RULES) BY BHP PETROLEUM PTY LTD and BHP PETROLEUM (BASS STRAIT) PTY LTD
GOLDBERG J, DR M MESSENGER & MS M STARRS
28 MAY 1999
MELBOURNE
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IN THE AUSTRALIAN COMPETITION TRIBUNAL |
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THE TRIBUNAL: |
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DATE: |
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PLACE: |
RULING
1 The Tribunal is satisfied that there is before it a matter which ought to be the subject of a decision by the Tribunal. Notwithstanding the provisions of s 62PA of the Gas Industry Act 1994 (Vic) the Tribunal is satisfied it should proceed to hear the application by BHP Petroleum Pty Ltd and BHP Petroleum (Bass Strait) Pty Ltd to review the determination of the Australian Competition and Consumer Commission (“the Commission”) made on 19 August 1998, granting an authorisation in relation to the Market and System Operations Rules (“the Rules”) pursuant to applications lodged by Victorian Energy Network Corporation (“VENCorp”). The Rules were in fact made pursuant to s 48N of the Gas Industry Act on 2 February 1999 and set out procedures for wholesale spot sales of gas in Victoria.
2 The determination by the Commission granting the authorisation was made on 19 August 1998 in respect of three applications and comprised:
(a) an application for authorisation to make a contract or arrangement, or arrive at an understanding, where a provision of the proposed contract, arrangement or understanding would be, or might be, an exclusionary provision within the meaning of s 45 of the Trade Practices Act 1974 (Cth) (“the Act”) and to give effect to that provision (Form A);
(b) an application to make a contract or arrangement, or arrive at an understanding, a provision of which would have the purpose, or would have or might have the effect, of substantially lessening competition within the meaning of s 45 of the Act and to give effect to that provision (Form B);
(c) an application made under subs 88(8) of the Act an authorisation under that section to engage in conduct that constitutes or may constitute the practice of exclusive dealing (Form E).
3 The contract, arrangement or understanding described in Forms A and B was as follows:
“Any contract, arrangement or understanding constituted between VENCorp and Participants or between Participants under the Victorian Gas Industry Market and Systems Operations Rules.”
4 On 9 September 1998 the applicants filed with the Tribunal an application pursuant to s 101 of the Act for a review of that determination. At a directions hearing on 23 November 1998, the Deputy President was informed that an amendment to the Gas Industry Act had been passed (and royal assent was imminent) which would have the effect, speaking generally, of granting an authorisation for the purposes of Pt IV of the Act in respect of the making of the Rules and any conduct engaged in under the Rules. The Gas Industry Act Amendment Act 1998 was assented to on 24 November 1998 and s 19 of that Act came into operation on 1 December 1998. Section 19 introduced s 62PA into the Principal Act. Section 62PA was in the following terms:
“(1) For the purposes of Part IV of the Trade Practices Act and of the Competition Code, the following are specifically authorised –
(a) the making of rules under section 48N;
(b) the amendment of the MSO Rules, whether under those Rules, section 48N or otherwise;
(c) any thing done, or conduct engaged in, by VENCorp under or pursuant to, or by way of enforcement of, the MSO Rules;
(d) any thing done, or conduct engaged in, by a participant or market participant under or pursuant to the MSO Rules;
(e) the making of, or giving effect o, an agreement, arrangement or understanding made under or pursuant to the MSO Rules and made between VENCorp and a participant or market participant, between participants, between market participants or between participants and market participants.
(2) This section does not apply to anything done, or conduct engaged in, on or after 1 January 2003.
(3) In this section -
(a) ‘market participant’ and ‘participant’ have the same meanings as they have in the MSO Rules;
(b) a reference to engaging in conduct has the same meaning as in section 4(2)(a) of the Trade Practices Act.”
Section 62PA must be read and understood in the light of par 51(1)(b) of the Act which provides in deciding whether a person has contravened Pt IV, the following must be disregarded:
“anything done in a State, if the thing specified in, and specifically authorised by:
(i) an Act passed by the Parliament of that State; or
(ii) regulations made under such an Act;”
5 On 22 December 1998 the Deputy President raised with the parties whether there was any purpose in continuing with the review, having regard to the effect of s 62PA on the Rules and whether the authorisation granted by s 62PA effectively covered the same ground as the authorisation granted by the Commission. The parties were directed to file and serve statements of contentions of fact and law directed to the issues of whether there is a matter before the Tribunal which ought to be the subject of a decision of the Tribunal and whether the provisions of s 62PA of the Gas Industry Act are co‑extensive with the authorisation which is the subject of the application and vice versa.
6 Statements were filed by Energy Action Group, which is seeking leave to intervene, the applicants VENCorp and the Commission. Each party submitted that the Tribunal had jurisdiction to hear and determine the application for review and that there was a matter before the Tribunal and all parties, save for VENCorp, affirmatively submitted that the tribunal should continue with the hearing of the review. VENCorp did not make any submission as to whether the Tribunal should continue with the hearing and remained neutral on that issue. No party submitted that a review by the Tribunal would be futile and the parties identified reasons why the review in fact would not be futile but would have effect notwithstanding the provisions of s 62PA.
7 It should be noted that what is before the Tribunal is not so much the application for review of the Commission's determination, but rather the matter which was before the Commission. By virtue of subs 101(2) of the Act, the review is a rehearing of the matter and the Tribunal must consider the matter afresh: Broken Hill Proprietary Company Ltd v Trade Practices Tribunal (1980) 47 FLR 384 at 390. In that case Bowen CJ said at page 396:
“In view of the terms of s. 101(1), it must be doubted whether the Tribunal has any discretion to decide whether or not it will enter upon the hearing of a review. On the other hand, once it does enter upon a review, it has control of its own proceedings. It can decide to end a hearing upon the ground that it would be futile to continue; it can hear argument on a claim as a preliminary point that it should end a hearing on this basis or because the applicant lacks a ‘sufficient’ interest, as occurred in the present case.”
8 The Tribunal is satisfied that there is a matter or proceeding properly before it and it is also satisfied that there are substantial reasons why any hearing will not be futile. By reason of the terms of par 51(1)(b) of the Act and the range of activities and conduct which might arise under and by reference to the Rules, the Tribunal is satisfied that in the circumstances of this case the provisions of s 62PA are not co‑extensive with the authorisation granted by the Commission in respect of the three applications.
9 Although s 62PA provides that for the purposes of Pt IV of Act a number of matters are specifically authorised, such as the making of the Rules and anything done or conduct engaged in by VENCorp or a participant or market participant as defined in the Rules or pursuant to the Rules, s 62PA is governed by par 51(1)(b) of the Act, which only allows disregard of anything done in a State if the thing is specified in, and specifically authorised, by Acts passed by the Parliament of that State. The Tribunal emphasises the words “that State”. Thus anything done or conduct engaged in, for example, in New South Wales, although done or engaged in under the Rules, cannot be disregarded in determining whether a person has contravened Pt IV of the Act. Accordingly, the protection granted by the authorisation granted by the Commission is more extensive than the protection granted by s 62PA.
10 There is also the potential for the effect of s 62PA and the Commission’s authorisation to apply for different periods. Although the effect of both is presently continuing until 1 January 2003, s 62PA could be repealed and its effect could also be nullified by regulations made under the Act, as set out in par 51(1C)(f) of the Act. Also in its submission, the Commission invites the Tribunal to take into account that the exemption effected by s 62PA as a result of subs 51(1) of the Act is only effective for such time as no Commonwealth regulations have been passed to override s 62PA pursuant to subs 51(1C) of the Act. The Commission submits while no such regulations have been passed, the possibility of Commonwealth intervention should be taken into account by the Tribunal in assessing whether there is a real possibility at any time in the future of there being a matter which could be covered by an authorisation of the proposed conduct but not be covered by s 62PA.
11 It is not academic to say that there may be actions taken or conduct engaged in under the Rules outside the boundaries of Victoria. The operation and application of the Rules is not limited or restricted to things done in Victoria or conduct engaged in in Victoria. At this stage the Tribunal does not make any findings in relation to issues which will arise on the review, such as market definition and the nature of contractual arrangements entered into or to be entered into. However, the Tribunal notes that issues will probably arise in relation to market definition, which will involve a consideration of:
(a) the nature of the relevant geographic market. The commission referred in its determination to south‑east Australia, albeit with a caveat, and did not limit itself to Victoria;
(b) the nature of the functional market in relation to gas, which may involve a consideration of wholesaling of gas by producers to consumers of gas outside Victoria.
12 In this respect the Tribunal notes VENCorp’s submission in support of its application to the Commission:
“VENCorp does not propose to restrict the definition of ‘market,’ as it applies here, to ‘the gas market in Victoria’ and acknowledges that the market could extend to other States, (particularly New South Wales), to the supply or production of gas and to other energy sources (eg, electricity).”
13 The Tribunal also notes that the Rules provide for interstate contracting for the supply and acquisition of gas. The parties have also provided a number of examples of conduct likely to be engaged in outside Victoria which will rely on the Rules. For example, interstate participants may enter into access agreements with VENCorp; there may be the discharge of obligations under agreements interstate. An example is proffered of a Sydney‑based retailer who wants to purchase gas in Victoria who will have to enter into an access agreement with VENCorp under the Rules. It is submitted that the retailer may execute the agreement in Sydney and would most likely discharge most of its obligations in Sydney.
14 Another example is proffered by VENCorp which submits it is conceivable that there may be conduct or activity engaged in pursuant to the Rules outside Victoria by either a Victorian or an interstate market participant and it is said that it is conceivable that the relevant gas transmission system the subject of the Rules may embrace parts of interstate transmission pipe lines, that is the relevant portion of the New South Wales interconnect, which form part of the gas transmission system which may be regulated by the Rules.
15 As the Commission points out in its submissions, there is no requirement under the Victorian legislation that the persons to whom VENCorp will provide its access services, and who will thus become participants under the Rules, be situated in Victoria or that the supply of gas to which the access relates either originate or be completed in Victoria.
16 Accordingly, the Tribunal proposes that it now give directions for the hearing and determination of the application for review.
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I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Ruling herein of the Tribunal. |
Associate:
Dated: 28 May 1999
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Counsel for the Applicants: |
Mr C M Scerri QC |
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Solicitor for the Applicants: |
Mallesons Stephen Jacques |
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Counsel for VENCorp: |
Mr J B Beach |
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Solicitor for VENCorp: |
Freehill Hollingdale and Page |
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Counsel for ACCC |
Mr L Woodward |
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Solicitor for ACCC |
ACCC Legal Group |
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Date of Hearing: |
28 May 1999 |
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Date of Ruling: |
28 May 1999 |