The High Court has handed down its decision in the case of
BHP Billiton Iron Ore Pty Ltd v NCC. The Court had to
decide whether two railway lines operated by BHP Billiton in the
Pilbara region of Western Australia could be declared under Part
IIIA of the Trade Practices Act 1974
The High Court unanimously held that the services for which
declaration was sought do not involve 'the use of a production
process' – in other words the services can be
declared under Part IIIA of the TPA.
Although declaration of one of the rail networks, Mt Newman, had
already been refused by the former Federal Treasurer it is now
before the Australian Competition Tribunal.
In relation to the other rail network, the Goldsworthy line, the
National Competition Council (NCC) has made a
recommendation to the Federal Treasurer on a subsequent application
for declaration. The Treasurer has until 28 October to decide
whether or not to declare the service.
For a range of reasons, only a handful of services have been
declared under Part IIIA in the 12 years since it commenced
operation. This decision will not necessarily open the floodgates
to further declarations under the access regime.
The High Court's ruling, however, has removed one of the
perceived obstacles to declaration, and that has the potential to
make it easier for third parties to gain access to bottleneck
services such as railway lines. A higher risk of declaration under
Part IIIA may increase the pressure on service providers to allow
third party access to key infrastructure facilities.
Part IIIA of the TPA is an access regime for services provided
by means of infrastructure facilities. Gaining access is a two
stage process. The NCC must make a recommendation to the relevant
Minister on whether a service should be 'declared'. If the
relevant Minister declares the service, the Australian Competition
and Consumer Commission can arbitrate if either the service
provider or an access seeker cannot agree on the specific access
terms and conditions.
Only a 'service', as defined in section 44B of the TPA,
can be declared. This definition excludes 'the use of a
BHP Billiton operates two railway lines as part of its mining
operations in the Pilbara region. In 2004, Fortescue applied to the
NCC for declaration of these railway lines under Part IIIA.
The NCC decided that:
the service on the Goldsworthy line involved the use of a
production process. This meant it was not a 'service' and
could not be declared;
the service on the Mt Newman line did not involve the use of a
production process, and was therefore a 'service' that
could be declared.
Each finding was appealed to the Federal Court. In 2006, Justice
Middleton held that access to the railway lines did not involve the
use of a production process because neither service, by itself,
created or made a product, or transformed one thing into another.
As a result, both services could be declared.1 In this
judgment, the judge departed from the earlier Federal Court
decision in Hamersley Iron Pty Ltd v NCC.2
In 2007, the Full Federal Court dismissed BHP Billiton's
appeal against Justice Middleton's ruling.3 The
majority (Justices Sundberg and Greenwood; Justice Finkelstein
dissenting) concluded that the services involved the use of
part of a production process, but not the whole of BHP
Billiton's production process. Accordingly, both railway lines
were services that could be declared.
The decision of the High Court
The High Court took a similar approach to the majority in the
Full Federal Court and unanimously dismissed BHP Billiton's
appeal against the Full Federal Court's decision.
The High Court accepted that a production process is the
manufacture, by a series of operations, of a marketable
commodity.4 The Court noted that BHP Billiton used a
production process described as a Continuous Stockpile Management
System, which included elements of its mining, rail and port
operations.5 The rail track and associated systems to
which Fortescue sought access were components of this production
process. But this did not mean that each service was a production
process in its own right.6 Accordingly, the Court found
that the use of BHP Billiton's railway lines were services that
could be declared under Part IIIA of the Trade Practices Act.
1 BHP Billiton Iron Ore Pty Ltd v NCC  FCA
2  FCA 867
3 BHP Billiton Iron Ore Pty Ltd v NCC 
4  HCA 45 at paragraph 
5  HCA 45 at paragraph 
6  HCA 45 at paragraph 
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