The Full Court of the Federal Court recently upheld the
validity of compulsory examination notices issued by the ACCC to
Paul and Moses Obeid, sons of former NSW government minister Edward
Examination notices can require parties to appear at the ACCC
offices, give evidence and produce documents in private
The ACCC issued the notices to the Obeid brothers after an
Inquiry by the Independent Commission Against Corruption (ICAC)
exposed corrupt and anti-competitive conduct.
In 2008, the NSW Department of Primary Industries (DPI) invited
expressions of interest (EOIs) from a limited group of companies in
respect of exploration licences over particular mining areas. The
DPI did not pursue a public tender process (which was available to
it), but did later allow other non-invited companies to take part
in the process.
The ICAC investigation into the EOI process found that the Obeid
brothers, their father and former state mining minister Ian
McDonald had engaged in corrupt conduct in relation to the grant of
the coal exploration licence.
The ACCC investigation was prompted by the ICAC findings and
focused on contraventions of the Competition and Consumer Act
2010 (CCA) by the Obeid brothers. The conduct of the brothers
allegedly breached both the civil and criminal prohibitions in the
CCA against cartel arrangements. These sections prohibit entering
into a contract, arrangement or understanding that contains
exclusionary provisions, such as where the parties agree for one
party not to proceed with a request for a bid until a later
prescribed point of time, or withdraw its bid completely.
The brothers appealed a previous decision on this case and
sought a narrow construction of the words 'services' in
'trade or commerce', as defined in the relevant provisions
of the CCA (sections 45, 4D, 44ZZRG and 44ZZRK).
They argued that the exercise or potential exercise of statutory
authority by a Minister in relation to the tender process is not
something that can be characterised as in 'trade or
commerce' so as to fall under the definition of
The Full Court of the Federal Court dismissed the appeal and its
decision confirmed that the Minister in this circumstance had
engaged on a commercial basis with the companies who had been given
the right to participate in the EOI process.
This was not a situation of a mere application for a licence
renewal or approval in a regulatory context without more. Only one
criterion of the EOI process was thought to be
'governmental', with all other criteria being usual
commercial criteria that any commercial owner of a potentially
valuable mineral deposit would consider.
The most influential criterion was that the Additional Financial
Contributions were of a commercial character and not merely a
registration or licence fee.
The decision also confirmed that the cartel provisions in the
CCA apply to the acquisition of services, not just to their supply.
The Court found that where a contractual provision has the purpose,
whether directly or indirectly, of ensuring that, in the event of a
request for bids in relation to the supply or acquisition of
services, certain things occur (such as one or more parties not
bidding or proceeding with the bid), then the 'purpose
condition' of the cartel provisions is satisfied.
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