In the High Court decision of Port of Newcastle Operations Pty Limited v Glencore Coal Assets Australia Pty Ltd  HCA 39 (8 December 2021), the High Court was required to determine two issues under the Competition and Consumer Act 2010 (Cth) (CCA).
First, whether the respondent (Glencore) had a right to negotiate the charge levied by the appellant, Port of Newcastle Operations Pty Limited (PNO), for access to the Port of Newcastle (navigation service charge). Second, the amount of the navigation service charge.
PNO leases the port from the state of New South Wales and is the ‘operator’ of the port under the Ports and Maritime Administration Act 1995 (NSW) (PMA Act). The port is the only commercially viable means of exporting coal from coal mines operating in the Hunter Valley.
Glencore is the largest producer of coal in the Hunter Valley. Most of the coal produced by Glencore is sold to overseas buyers on a ‘free on board’ (FOB) contract. Under the FOB contract, Glencore is typically required to deliver the coal onto a vessel nominated by the buyer docked in the port. Glencore arranges transport of the coal from the Hunter Valley to the port, but the buyer charters the vessel that will convey the coal out of the country.
But, PNO controls the use of the port for coal export in two ways. First, PNO controls the loading berths located at the port terminals at which coal is loaded onto vessels. Second, PNO controls the shipping channels – first constructed by the state years ago – through which vessels must pass on entering or leaving the port. In respect of the latter, PNO levies the navigation service charge for passage.
The PMA Act entitles the PNO to levy a charge for the use of navigation channels. The PMA Act provides that the charge is payable by the ‘owner’ of the vessel which is defined to include a person who exercises any of the functions of the owner of the vessel, or holds him/herself out as exercising any of those functions.
After increases in charges levied by PNO, Glencore sought to trigger the regulatory process provided for in Part IIIA of the CCA for access to essential facilities. This involved two stages: having the service ‘declared’ (s44F, CCA) and a third party gaining ‘access’ to the declared service by way of a right to negotiate, enforceable by the Australian Competition & Consumer Commission (ACCC) (s44S(1), CCA).
Glencore asked the National Competition Council (NCC) to recommend to the designated Minister that he declare the service provided by PNO by means of the shipping channels. The NCC declined to make the recommendation sought by Glencore and the Minister decided not to make the declaration.
Glencore appealed the Minister’s decision to the Australian Competition Tribunal (tribunal). The tribunal set aside the Minister’s decision – finding the port to be a necessary input to effective competition – and declared the service.
The tribunal described the service as being the “provision of the right to access and use the shipping channels (including berths next to wharves as part of the channels) at the port, by virtue of which vessels may enter a port precinct and load and unload at relevant terminals located within the port precinct and then depart the port precinct” (service).
In the meantime Glencore had notified the ACCC of a dispute with PNO over access to the service. The ACCC made a final determination of the access dispute, as required by the CCA, and Glencore appealed the ACCC’s decision to the tribunal.
In its final determination the tribunal decided, among other things, that Glencore was excluded from the right to negotiate the navigation service charge when it sold its coal under a FOB contract. As to the price of the navigation service charge, the tribunal set aside the ACCC’s decision to reduce the price by taking into account the state’s investment in constructing the shipping channels. The tribunal was of the view that these contributions did not justify a deduction in price under the CCA on the limited material presented to the tribunal.
The Full Court of the Federal Court overturned the tribunal’s decision. The Full Court considered that the tribunal had taken an unduly physical view of access to the service. The Full Court held that access and use can be economic. Alternatively, the navigation service charge was indivisible from the service, which included loading coal onto a vessel docked in the port. The Full Court also held that the tribunal misapplied the CCA in determining the amount of the navigation service charge.
PNO appealed to the High Court with mixed success. In a unanimous decision, and a single joint judgment, the High Court held at  the Full Court was correct to conclude the tribunal erred in its approach to access to the service. However, the High Court held that the Full Court was wrong in finding the tribunal erred in fixing the amount of the navigation service charge.
In respect of access, the High Court considered the meaning of the term ‘access’ in the context of Part IIIA of the CCA, and concluded at  the meaning that appeared to best achieve the objects of Part IIIA is “the right or opportunity to benefit from or use a system or service”.
The High Court observed at  that: “To a supplier or buyer who is a competitor in that upstream or downstream market who wants to ensure that the use of the bottleneck facility (like the port) is on fair and reasonable terms, it cannot matter which person in the supply chain actually uses that facility”.
In respect of the amount of the navigation service charge, the High Court observed at  that s44X(1) required the tribunal to take certain, specified, matters into account in making the final determination. The High Court held that: “Provided the tribunal so took each of the specified matters into account, how the tribunal factored each of them into its decision-making process was a matter for it”.
Similarly, s44X(1)(h) of the CCA obliged the tribunal to take the pricing principles specified in s44ZZCA in making the final determination. And the High Court at  found the tribunal did, in fact, take into account these principles. So, PNO having lost the access fight and Glencore having lost the price fight, the High Court concluded at  that each of the parties was to bear their own cost.
Dr Michelle Sharpe is a Victorian barrister practicing in general commercial, real property, disciplinary and regulatory law, 03 9225 8722, email firstname.lastname@example.org. The full version of these judgments can be found at austlii.edu.au.