The Full Court of the Federal Court (Middleton, Perram and O’Bryan JJ) recently dismissed the ACCC’s appeal from, and allowed the respondents’ cross-appeals in relation to, Beach J’s decision to dismiss the ACCC’s claim that Pacific National’s proposed acquisition of Aurizon’s Acacia Ridge rail terminal would contravene s 50 of the Competition and Consumer Act 2010 (Cth) (CCA). The Full Court’s decision addresses several important matters.
First, market definition. Market definition is important when assessing the likely effect on competition of mergers, acquisitions or other conduct: too narrow a market may overstate the effect, and too broad a market may understate it. The decision addresses the circumstances in which it is appropriate to define a market by reference to a subset of customers for a particular good or service who are particularly likely to be harmed by the conduct in issue, and the level of precision required in that exercise.
Secondly, the meaning of “likely” under the CCA. The question of “how likely” a particular effect on competition must be in order to be a “likely” effect for the purpose of the CCA has been the subject of much debate, and while it was not strictly necessary to decide this issue, the majority judgment addresses it in detail.
Thirdly, the Court’s power to accept an undertaking from a party proposing to make an acquisition, which operates to prevent or ameliorate the potential effect of that acquisition on competition. Both judgments consider this issue, and are likely to affect the manner in which such undertakings are offered and accepted in future.