East Australian Pipeline Pty Limited v Australian Competition and Consumer Commission & Anor

The High Court of Australia considered a dispute between East Australian Pipeline Pty Limited (EAPL) and the Australian Competition and Consumer Commission (ACCC) and another party. The core of the dispute concerned whether EAPL had engaged in conduct that contravened section 46 of the Trade Practices Act 1974 (Cth) (now the Competition and Consumer Act 2010 (Cth)), which prohibits misuse of market power. Specifically, the ACCC alleged that EAPL had taken advantage of its substantial market power in the supply of natural gas pipeline services to the Sydney metropolitan area to prevent or hinder a competitor from supplying gas to a major customer, thereby substantially lessening competition.

The High Court was required to determine whether EAPL had taken advantage of its substantial market power for the proscribed purpose. This involved an examination of the elements of section 46, particularly the requirement that the conduct must be engaged in by a corporation with a substantial degree of market power, and that the conduct must be engaged in for the purpose of eliminating or substantially damaging a competitor, preventing the entry of a competitor, or deterring or preventing a person from engaging in competitive conduct. The Court also had to consider the nature of the market and EAPL's position within it.

The Court's reasoning focused on the interpretation of "taking advantage of" in section 46. It held that this phrase requires a causal connection between the substantial market power and the conduct in question. The conduct must be attributable to the possession of that power, meaning that the corporation would not have engaged in the conduct, or would have engaged in it in a different way, but for its substantial market power. The Court found that EAPL's conduct, in refusing to supply gas to the customer on terms that would have enabled the competitor to compete, was indeed a consequence of its market power. The Court affirmed that the purpose element of section 46 is a subjective one, requiring an inquiry into the actual purpose of the corporation, which can be inferred from its conduct and surrounding circumstances.

Ultimately, the High Court dismissed EAPL's appeal, upholding the Full Federal Court's finding that EAPL had contravened section 46 of the Trade Practices Act. The Court concluded that EAPL had taken advantage of its substantial market power in the relevant market for the purpose of deterring or preventing a competitor from engaging in competitive conduct.