Re Duke Eastern Gas Pipeline Pty Ltd - [2001] ACompT 2

AUSTRALIAN COMPETITION TRIBUNAL
Duke Eastern Gas Pipeline Pty Ltd [2001] ACompT 2
TRADE PRACTICES – access to pipelines – application for review of the decision of the Minister for Industry, Science and Resources to cover the Eastern Gas Pipeline – pipeline must be covered if Tribunal satisfied of criteria (a), (b), (c) and (d) of s 1.9 of the National Third Party Access Code for Natural Gas Pipeline Systems – whether access or increased access to services provided by means of the pipeline would promote competition in at least one market other than the market for the services provided by means of the pipeline under criterion (a) – construction of “access” – construction of “services provided by means of the pipeline” – construction of “promote competition” – definition of market – whether coverage of the pipeline would promote competition in upstream or downstream markets to a greater extent than existing voluntary access – existence of spare capacity in pipelines – whether long term contracts will restrict competition – existence of market power.
Whether it would be economic for anyone to develop another pipeline to provide the services provided by means of the pipeline under criterion (b) – whether existing pipelines should be considered in determining whether criterion (b) is satisfied – construction of “uneconomic” – whether for a likely range of demand for the services provided by means of the pipeline it would be more efficient, in terms of costs and benefits to the community as a whole, for one pipeline to provide those services rather than more than one – unnecessary for the Tribunal to give independent consideration to criterion (d)
WORDS AND PHRASES – “to develop another pipeline” – “uneconomic” – “services provided by means of the pipeline” – “access” – “promote competition”
Trade Practices Act (1974) (Cth) Part IIIA
Gas Pipelines Access (Victoria) Act 1998 (Vic)
Gas Pipelines Access (NSW) Act 1998 (NSW)
Gas Pipelines Access (South Australia) Act 1997 (SA), Sch1
Sherman Anti-Trust Act 1890 (USA) s 2
Competition Policy Reform Act 1995 (Cth)
Moomba to Sydney Pipeline System Sale Act 1994 (Cth)
Gas Pipelines Access Law, s 38(1) 38(9), (12), s 39
National Third Party Access Code for Natural Gas Pipeline Systems, ss 1.1, 1.13, 1.24, 1.3, 1.6, 1.9 (a), (b), (c), (d)
Gas Pipelines Access (South Australia) Bill, Second Reading Speech, 2 December 1997
Competition Policy Reform Bill, Second Reading Speech, 30 June 1995
Hilmer Committee, Report by the Independent Committee of Inquiry, “National Competition Policy” (August 1993)
National Competition Council, Draft Recommendation on Application for Coverage of Eastern Gas Pipeline (May 2000)
National Competition Council, Final Recommendation on Application for Coverage of Eastern Gas Pipeline (June 2000)
National Competition Council, The National Access Regime: A Draft Guide to Part IIIA of the Trade Practices Act (August 1996)
Posner, Natural Monopoly and its Regulation (3rd edition, 1999)
Re: Review of Freight Handling Services at Sydney International Airport (2000) ATPR¶41-754 considered
AGL Cooper Basin Natural Gas Supply Arrangements (1997) ATPR¶41-593…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] ACompT 2
Decision Date: 4 MAY 2001

CaseChat Overview and Summary

- Parties:
The applicants in this matter are Duke Eastern Gas Pipeline Pty Ltd, DEI Eastern Gas Pipeline Pty Ltd and Duke Australia Operations Pty Ltd, collectively referred to as “Duke” or “the applicants”. The Minister for Industry, Science and Resources is the respondent. The National Competition Council (“NCC”) and Australian Gas Light Company (“AGL”) appeared as contradictors.

- Nature of the dispute:
This case concerns the decision of the Minister for Industry, Science and Resources to cover the Eastern Gas Pipeline (“EGP”) in terms of the National Third Party Access Code for Natural Gas Pipeline Systems (“the Code”) and the Gas Pipelines Access Law (“the Law”). The applicants sought a review of the Minister’s decision by the Australian Competition Tribunal (“the Tribunal”).

- Court:
The Australian Competition Tribunal

- Legal issues:
The legal issues before the Tribunal were whether the Minister’s decision to cover the EGP was correct. The relevant criteria to be applied were set out in s 1.9 of the Code. The Tribunal was required to determine whether the Minister was satisfied of all four of the criteria, and if so, whether the Tribunal should set aside the Minister’s decision.

- Court's reasoning and outcome:
The Tribunal held that the Minister’s decision to cover the EGP was incorrect, and set it aside. The Tribunal found that the Minister was not satisfied of all four of the criteria set out in s 1.9 of the Code. The Tribunal concluded that coverage of the EGP would not promote competition in at least one market, other than the market for the services provided by means of the pipeline, as required by criterion (a) of s 1.9 of the Code. The Tribunal also found that it would not be uneconomic for anyone to develop another pipeline to provide the services provided by means of the EGP, as required by criterion (b) of s 1.9 of the Code. The Tribunal did not consider it necessary to give independent consideration to criterion (d) of s 1.9 of the Code.

- Final orders:
The Tribunal ordered that the decision of the Minister made on 16 October 2000 that the EGP should be a covered pipeline be set aside. In lieu of that decision, the Tribunal decided that the Pipeline is not covered. The Tribunal reserved to any party liberty to apply by motion filed prior to 10am on Tuesday 8 May for an order as to costs, in case the failure to put any submission on the question of costs was due to inadvertence.

Orders