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Unison Networks Ltd v Commerce Commission

Unison Networks Ltd v Commerce Commission

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IN THE SUPREME COURT OF NEW ZEALAND

SC 12/2007 [2007] NZSC 74

BETWEENUNISON NETWORKS LIMITED Appellant

ANDCOMMERCE COMMISSION Respondent

Hearing:         19 and 20 June 2007
Court:            Blanchard, Tipping, McGrath, Anderson and Gault JJ Counsel:         D J Goddard QC and L Theron for Appellant
R A Dobson QC and J S McHerron for Respondent
A R Galbraith QC, M Chen and N J Russell for Vector Limited
(Intervenor in relation to relief) Judgment:      10 September 2007
JUDGMENT OF THE COURT

A The appeal is dismissed.

BUnison is ordered to pay the Commission costs of $25,000 plus reasonable disbursements to be fixed if necessary by the Registrar.

CCosts in the Court of Appeal and High Court are to be determined by those Courts in light of this judgment.

REASONS

(Given by McGrath J)

UNISON NETWORKS LTD v COMMERCE COMMISSION SC 12/2007 [10 September 2007]

Table of Contents Para No

Introduction  [1] The issue in the appeal  [5] Part 4A of the Commerce Act 1986  [6] Decision-making process
(i) Initial threshold  [15] (ii) Revised threshold  [28] Unison’s position during the process  [35] High Court and Court of Appeal judgments  [40]
Were the thresholds set lawfully?
(i) The question for the Court  [49] (ii) The limits of public power  [50] (iii) Were the limits exceeded?  [56]
Conclusion  [79]

Introduction

[1] In 2001 Parliament enacted a new scheme for regulating prices charged by large electricity lines businesses in New Zealand. There are 29 such businesses, each of which operates as a regional monopoly. Under the 2001 legislation the Commerce Commission became the regulator of the electricity distribution industry and was required to put in place, as soon as practicable, a new regime for its regulation.1 A feature of the regime is that it is designed to impose price control only on those businesses which require control. The Commission is required to set
thresholds which, if breached by lines businesses, may lead to a declaration of control by the Commission, but only following a process in which both the lines business concerned and interested parties may make submissions.

[2] On 31 March 2003 the Commission announced its decision to set an initial price path threshold covering a period that was backdated to commence on 8 August
2001 and run to 31 March 2004. On 23 December 2003 it announced a revised threshold which would take effect from 1 April 2004. Each decision was later formally implemented by Gazette Notice.

1 The scheme, which is set out in Part 4A of the Commerce Act 1986, was introduced by the
Commerce Amendment Act (No 2) 2001 which came into effect on 8 August 2001.

[3] The appellant, Unison Networks Limited, is the owner of large electricity lines businesses and had made submissions to the Commission outlining its position during the threshold setting process. Unison was dissatisfied with the decisions and increased its prices, thereby putting itself in breach of both thresholds. It brought a judicial review proceeding…

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: [2007] NZSC 74
Decision Date: 10 September 2007

CaseChat Overview and Summary

In Unison Networks Ltd v Commerce Commission, the Supreme Court of New Zealand considered the validity of price path thresholds set by the Commerce Commission under Part 4A of the Commerce Act 1986 for regulating large electricity lines businesses. Unison Networks Limited, an appellant, challenged the Commission's initial and revised thresholds as being set in breach of the Act's requirements. The central issue before the Court was whether the thresholds were unlawful. The Court found that the Commission had not exceeded its statutory powers in setting the thresholds. The Court concluded that thresholds need not screen for inefficiency or excess profitability, but rather must contribute in a rational way to the Commission's process. The initial threshold, which set a price freeze, and the revised threshold, which considered relative productivity and profitability, both contributed to the administration of the targeted control regime. The appeal by Unison was dismissed, and Unison was ordered to pay the Commission's costs of $25,000 plus reasonable disbursements.

Orders