Australia: ACCC v Cement Australia: another ACCC misuse of market power case turns to ash

Key Points:

The misuse of market power provisions in section 46 of the Competition and Consumer Act 2010 (Cth) could be up for review.

Further debate is likely about perceived inadequacies in the misuse of market power provisions in section 46 of the Competition and Consumer Act 2010 (Cth) ("CCA") following the ACCC's failure to establish that Cement Australia and its related companies misused their market power when buying up large volumes of fly ash for use in the construction sector (Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2013] FCA 909).

However properly understood, the Cement Australia decision is not cause for major concerns over reform of section 46, because it was considered under the older form of the legislation that has since been significantly amended to capture a wider scope of conduct.

As such, the Cement Australia case may be little more than a legacy decision which says nothing about the current form of section 46 and whether it is striking the right balance today between outlawing abusive market conduct and encouraging companies to compete aggressively but lawfully.

That question will be a key concern for small business in the Federal Government's proposed root and branch review of the CCA, which is likely to be announced soon and possibly by the end of 2013.

In the case itself the ACCC succeeded on other issues in proving that the fly ash arrangements amounted to anti-competitive conduct contravening section 45 of the CCA.

Facts and fly ash

In September 2013, the Federal Court found that Cement Australia Pty Ltd and other respondents to the proceedings had not misused their market power when they entered into contracts for the purchase of fly ash. The judgment only became publicly available in mid-November after a preliminary review by the parties for any confidentiality concerns.

Fly ash is a waste product generated from power stations, which is costly to dispose of and can be used in certain proportions as an economical alternative to cement in ready-mix concrete.

Cement Australia and its related companies entered into contracts with various power stations in south-east Queensland under which Cement Australia acquired or was entitled to acquire all or virtually all of the concrete-grade fly ash that was available from time to time.

The ACCC claimed (amongst other things) that Cement Australia did not need the fly ash from Millmerran Power Station to meet the demand of its customers or potential customers, as the fly ash it acquired from other power stations, substantially exceeded the demand of its customers or potential customers for concrete-grade fly ash.

On the ACCC's view, Cement Australia had no commercial need for the quantity of fly ash acquired from Millmerran Power Station, and by purchasing the fly ash it took advantage of its market power for the purpose of preventing entry of any competing acquirer of fly ash in breach of section 46 of the CCA.

In essence, the ACCC's section 46 case against Cement Australia was that it engaged in "predatory bidding" in order to "corner the fly ash market" and prevent competitors getting access to the resource.

The Court's approach to finding "taking advantage of market power"

In order to breach section 46 of the CCA, a company must:

  • have a substantial degree of power in a market; and
  • take advantage of that power;
  • for the purpose of damaging a competitor, preventing entry of a person into a market or deterring or preventing a person from engaging in competitive conduct in a market.

Justice Greenwood, in a judgment of nearly 1000 pages, found Cement Australia enjoyed a substantial degree of power in the concrete grade fly ash market in the south-east Queensland region.

However, he found that Cement Australia did not take advantage of its market power in entering the sourcing contracts, because another corporation in Cement Australia's position, but in a workably competitive market, could have entered into the contract on those same terms and conditions

By focusing on whether the same conduct "could" have been engaged in, by a company lacking substantial market power, Justice Greenwood applied previous High Court authority on section 46. He did not need to consider the changes made to the law in 2008, which make it easier to infer a "taking advantage" of market power.

The 2008 amendments make it easier to prove market power was "used" because they were intended to capture conduct which even a small company could have engaged in. A small company would be unlikely to pursue such conduct, whereas a powerful company is much more likely to behave in that way.

So it is possible the section 46 part of the Cement Australia case might have turned out differently if the 2008 amendments had applied because in determining now if a powerful corporation is "taking advantage" of its market power, the court can also consider whether:

  • the corporation's market power made it easier to engage in the conduct;
  • whether the corporation relied on its market power in any way;
  • whether the corporation "would" as opposed to "could" have engaged in the same conduct if it has little market power; and
  • any other links between its market power and the conduct in question

In contrast, the ACCC failed on the section 46 case because Justice Greenwood inferred it was not impossible for any company to have done the same thing: "The question, put simply, is whether a firm profitably could have engaged in the conduct in question in the absence of a substantial degree of power in the relevant market."

Justice Greenwood noted further: "If it can be demonstrated that Pozzolanic [a related company of Cement Australia] as a profit maximising firm operating in a workably competitive market could in a commercial sense profitably engage in the conduct in question having regard to the ordinary business rationale identified, it follows that the corporation has not used its market power in a manner made possible only by the absence of competitive conditions".

Justice Greenwood was not satisfied that Cement Australia's entry into the relevant contract was only made possible by the use of its market power. Accordingly the ACCC failed on section 46.

Will section 46 be on the agenda of the root and branch review?

The Federal Government has indicated that it will be conducting a root and branch review of competition laws and that the misuse of market power provisions will be firmly on the review agenda. It is likely that the review of section 46 will involve consideration of whether Australia should move to an effects-based test, as used in other jurisdictions around the world, or whether we should stick to the current purpose-based test.

We query whether, in this case, amendment of section 46 to an effects-based test would have made any difference to the end result. After all, Justice Greenwood was not be satisfied that Cement Australia had "taken advantage" of its market power, regardless of its purpose.

ACCC Chairman Rod Sims recently commented at an RBB Economics conference on 29 November 2013 that he did not see how adding an effects test to the section would be "inconsistent with the competitive process". The ACCC has not yet publicly outlined its views on this issue but will do so once the review is underway. Rod Sims has indicated that he is "looking forward to a wide ranging debate" ... and so are we!

You might also be interested in...

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.