Federal Court Finds ACCC Compulsory Examination Notices Issued to Obeid Sons Are Valid
Friday 15 August 2014 @ 11.58 a.m. | Trade & Commerce
Last week, Justice Farrell of the Federal Court found that compulsory examination notices issued by the Australian Competition and Consumer Commission (ACCC) to Moses and Paul Obeid were valid in Obeid v Australian Competition and Consumer Commission [2014] FCA 839). The notices were issued on April 22, 2014, under section 155(1)(c) of the Competition and Consumer Act 2010 (Cth)("the Act"). Paul and Moses Obeid (the Obeids) are the second and third sons of controversial former Labor minister Eddie Obeid.
Facts
According to the ACCC, the notices “require Paul and Moses Obeid to attend the ACCC offices, give evidence and produce documents in private examinations.” As previously reported by TimeBase, the Obeids challenged the notices on the grounds that there was no “service” specified in the notice that would contravene any of the relevant cartel provision sections of the Act (including ss 44ZZRG and 44ZZRK, and s 45). They argued that the right to apply for the necessary approval for mining activities fell outside the definition of “service” in the relevant provisions of the Act.
The notices related to alleged cartel conduct during a NSW Department of Trade and Industry (the Department) tender process that occurred in 2009 for an exploration licence over a particular coal tenement. The Department invited expressions of interest (EOIs) from a group of persons for the exploration licences, without pursuing a public tender process. Later, the Department also allowed small and medium companies who had not been invited to also take part in the process.
Services?
Justice Farrell disagreed with the applicant’s contention “that the “services” specified in the Notices should be characterised as the right to apply for Ministerial Consent.” Instead, she found that “it was implicit in the EOI Information Documents that Ministerial Consent would be given to the successful applicant without the need for any further application or negotiation of any material terms; the grant would be on the terms of the EOI and the EOI Information Documents.” [at 49]. She found that the language in the notices encompassed:
"(1) Ministerial Consent given to the successful applicant under the EOI Process; (2) the statutory right (which flows from the Ministerial Consent) to apply for the exploration licences for the Relevant Areas; and (3) a possible contractual right conferred on the successful applicant in the EOI Process to apply for the exploration licences which may have encompassed contractual remedies if the licences were not granted." [at 50]
Justice Farrell then turned to the question of whether these were “services” as defined in s 4(1) of the Act. The Act uses inclusive language, saying merely that “services includes any right… (etc)”, so Her Honour considered the “ordinary meaning” of the term. She accepted the ACCC’s submission that the term is a broad one that suggests some kind of assistance or helpful activity and accepted that the services specified in the notice could be characterised as “services” under the Act.
Character of the services
The Court also rejected an argument that the services were not “in trade or commerce” criteria because of their need for Ministerial Consent. Her Honour concluded that:
“The EOI Process was conducted on a commercial, businesslike basis, whether or not the DPI can be characterised as carrying on a business in conducting it… The conduct of the EOI Process on this commercial basis appears to have been designed to maximise competition for, and financial gain from, the right to explore for the State’s coal reserves, as any private party might have done if the State had not reserved the mineral to itself.”
The ACCC says the matter is "subject to ongoing investigation".
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Sources:
Obeid v Australian Competition and Consumer Commission [2014] FCA 839
