Legal Research
Cases
Commerce Commission v First Gas Ltd

Commerce Commission v First Gas Ltd

Case [2019] NZHC 231 21 February 2019

Breach of Contract

Unconscionable Conduct

Restraint of Trade

Unjust Enrichment

Anticompetitive Conduct

Specific Performance

Compensatory Damages

Competition Law

No judgment structure available for this case.

Type to search within this case.

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV 2018-485-980

[2019] NZHC 231

UNDER Sections 27 and 47 of the Commerce Act 1986

BETWEEN

COMMERCE COMMISSION

Plaintiff

AND

FIRST GAS LIMITED

Defendant

Hearing: 19 February 2019

Appearances:

D A Laurenson and F J Cuncannon for Plaintiff T D Smith and B K Reddington for Defendant

Judgment:

21 February 2019

JUDGMENT OF MALLON J

Introduction

[1] First Gas Limited (First Gas) provides reticulated gas transmission and gas distribution services in North Island cities and towns. In December 2016 First Gas entered into an agreement with GasNet Limited (GasNet) to acquire GasNet’s gas distribution assets in the Papamoa area of the Bay of Plenty region (the Agreement). First Gas accepts:

(a)the acquisition had, or was likely to have, the effect of substantially lessening competition in a market in breach of s 47 of the Commerce Act 1986; and

COMMERCE COMMISSION v FIRST GAS LIMITED [2019] NZHC 231 [21 February 2019]

(b)a restraint of trade clause in the Agreement (the Restraint of Trade) had, or was likely to have, the effect of substantially lessening competition in a market in breach of s 27 of the Commerce Act.

[2]The Commerce Commission seeks that the Court impose a penalty of

$3.4 million on First Gas for these breaches, and that the Court issue an injunction to restrain First Gas from enforcing the Restraint of Trade.1 First Gas has agreed with the Commission to recommend that this penalty be imposed for its admitted breaches. It has assured the Commission that it will not enforce the Restraint of Trade but agrees the Court should make the formal injunction sought.

[3] The established approach in such circumstances is for the Court to impose the penalty that has been agreed between the parties so long as it falls within an appropriate range.2 This is because of the public interest and the interests of the parties in promoting a resolution, and thereby avoiding costly, time consuming and uncertain litigation.3

The facts

[4] The application before me proceeds on the basis of an Agreed Statement of Facts. The following is a summary of these facts.

Gas transmission and distribution

[5] Reticulated natural gas is distributed to residential dwellings and commercial premises in the North Island through a combination of high pressure gas transmission pipelines (transmission network) and lower pressure distribution pipelines (distribution networks). Distribution networks transport and distribute natural gas

1 The penalty is sought under ss 80 and 83 of the Commerce Act. They relate, respectively, to pecuniary penalties for infringing restrictive trade practices and business acquisitions. The injunction is sought under s 81.
2 See, for example: Commerce Commission v Alstom Holdings SA [2009] NZCCLR 22 (HC) at [18]; Commerce Commission v Geologistics International (Bermuda) Ltd HC Auckland CIV-2010-404- 5490, 22 December 2010 at [37]-[38]; Commerce Commissions v Air New Zealand Ltd [2013] NZHC 1414 at [27]; and Commerce Commission v New Zealand Diagnostic Group Ltd HC Auckland CIV-2008-404-4321,…

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.

Continue reading Commerce Commission v First Gas Ltd

Details

AGLC: Commerce Commission v First Gas Ltd [2019] NZHC 231
Case: [2019] NZHC 231
Decision Date: 21 February 2019

CaseChat Overview and Summary

The case before the Court was an application by the Commerce Commission to impose a penalty on First Gas Limited for breaches of sections 27 and 47 of the Commerce Act 1986. First Gas admitted it had breached section 47 by acquiring GasNet's gas distribution assets in the Papamoa area of the Bay of Plenty region, which had the effect or likely effect of substantially lessening competition. First Gas also admitted it had breached section 27 by including a restraint of trade clause in the acquisition agreement, which had the effect or likely effect of substantially lessening competition. The Commission sought a penalty of $3.4 million and an injunction to restrain First Gas from enforcing the restraint of trade clause.

The legal issues before the Court were whether the agreed penalty was appropriate and whether the injunction should be granted. The Court found that the agreed penalty of $3.4 million was appropriate because it achieved the objectives of general and specific deterrence, took into account the size and resources of First Gas, and avoided double counting aggravating features of the two breaches. The Court also found that the injunction was appropriate because it would prevent First Gas from enforcing the restraint of trade clause, which would otherwise remove potential future competition between First Gas and GasNet.

The Court made the following orders: (a) First Gas is to pay a pecuniary penalty of $3.4 million; (b) First Gas is restrained from enforcing the Restraint of Trade; (c) confidential versions of the statement of claim, the Agreed Statement of Facts and the Commission's written submissions are not to be disclosed, searched or inspected without leave of the Court; and (d) costs lie where they fall.

Orders