The Australian Competition and Consumer Commission (ACCC) is seeking special leave to appeal to the High Court from the Full Court’s judgement in J Hutchinson Pty Ltd v Australian Competition and Consumer Commission.[1]

The focus of the special leave application is on what is required to demonstrate that parties have reached an anticompetitive “arrangement or understanding” – a fundamental concept under Australia’s competition laws. This has been a vexed question over the years and one that the ACCC understandably wishes to obtain clarity on given that it is a threshold requirement for establishing cartel contraventions (among other things).

Background

By way of background, the ACCC alleges that construction company, J Hutchinson contravened the Competition and Consumer Act 2010 (CCA) by making an arrangement or arriving at an understanding with the Construction, Forestry, Mining and Energy Union (CFMEU) to boycott a subcontractor, Waterproofing Industries (WPI), which meant that the subcontractor could no longer complete the work.

The following events are alleged to have given rise to the arrangement or understanding:

• Mr Clarke (a Hutchinson employee and delegate for CFMEU) told Mr Meland (project manager at Hutchinson) that he was under strict instructions to “sit the job down if WPI come on site”;
• Hutchinson had an enterprise bargaining agreement (EBA) with CFMEU, but WPI did not have one with the CFMEU;
• Mr Clarke told Mr Hadfield (a director of WPI) to contact certain people at the CFMEU to “get a go ahead with work” but his attempts to contact them were unsuccessful; 
• Mr Berlese (team leader at Hutchinson) told Mr Meland to “deal with it”;
• WPI experienced continued exclusion from the site.

Litigation history 

A key issue in the case was whether Hutchison and CFMEU had made an arrangement, or arrived at an understanding, to boycott the subcontractor. The primary judge agreed with the ACCC’s argument and inferred the existence of an arrangement or understanding based on the above events.

While the Federal Court accepted that WPI did experience continued exclusion and that this amounted to Hutchinson “succumbing” to CFMEU’s threat and demand, the Federal Court set aside the primary judge’s findings on this point. The Court instead held that “merely succumbing to a threat will not, without more, be enough for the purposes of establishing a contravention…” because a meeting of minds is required to form an arrangement or understanding.[2]

Special leave question 

The ACCC’s question to the High Court is whether making an arrangement or arriving at an understanding within the meaning of s 45E(3) requires communication of assent that precedes and is distinct from conduct that gives effect to the arrangement or understanding.[3]

Meeting of minds

In relation to the requisite state of mind to make an arrangement or arrive at an understanding, Bromwich and Anderson JJ of the Federal Court stated (emphasis added): 

“In order for minds to meet, there must be knowledge or awareness or a like state of mind on both sides as to the subject of that meeting of the minds. Logically, that must be manifested in some kind of communication, the existence of which may be inferred if a sufficient basis exists to support that inference. The need for such a communication is most obvious when what is relied upon is otherwise no more than parallel or acquiescent conduct, which can never suffice on its own. The communication of assent to a course of conduct to be adopted by one or more parties to the agreement or understanding completes the arrangement or understanding upon that assent being communicated. Of course, implementation, by giving effect to such an arrangement or understanding, may never occur.”

The ACCC contends that the effect of this passage is to say that the conduct required to give effect to an arrangement or understanding cannot form part of the words or deeds that manifest the requisite assent and give rise to the arrangement or understanding.

According to the ACCC, this proposition is wrong in law for a variety of reasons, namely:

1. There is no support for the proposition in any authorities including those cited in the joint judgment. 
2. The proposition is anomalous when considered as against a contract (i.e. conduct can constitute acceptance of an offer in contract law).
3. The proposition would circumvent the purpose of s 45E which is to prevent secondary boycotts in circumstances where there is an unequal bargaining position between organisations of employees and other persons reliant on the services provided by those employees.
4. The FC conflated “acquiescent conduct” with “parallel conduct.” The FC erroneously relied on the proposition that a mere hope by one party is insufficient to amount to an arrangement or understanding and that this view is inapt in circumstances where the conduct giving effect to the arrangement or understanding occurs concurrently with assent to that arrangement or understanding. 
5. The three justices relied on the “competing inference” that Hutchinson unilaterally succumbed to CFMEU’s threat of industrial action without arriving at an understanding or making an arrangement. However, it is not clear what the alternative “competing” explanation is, nor is the meaning of “unilateral” clear in this context. 

The case may prove to be a suitable vehicle to address the interpretation of what constitutes an “arrangement or understanding”, which is a fundamental concept in the CCA and still subject to some uncertainty. For that reason, we expect the High Court to grant the application although many special leave applications are unsuccessful. 

For more information or further guidance in this area, please contact Thomas Jones, Ruby Simpson and Dylan McGirr.

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[1] [2024] FCAFC 18.

[2] [2024] FCAFC 18 [112].

[3] Special Leave Application.