In 'Queensland Wire', the Australian High Court Has Provided an Elegant Backstop to 'Use' of Market Power

Abstract

CONTEXT 2009. The initial version of this paper was published in hard-copy in 1995, when Queensland Wire Industries Pty Ltd. v. Broken Hill Proprietary Co. Ltd. (1989) was the first and only High Court case on mis-use of market power in Australia. Queensland Wire had been much critiqued and debate has continued. The Australian High Court next elaborated on trade practices and market power in Melway Publishing Pty Ltd. v. Robert Hicks Pty Ltd. in 2001.

In Queensland Wire argued that judges could well adjudicate commercial behaviour at limits of acceptable conduct and developed the ‘backstop’ concept in support, against prevailing commentary, of judicial focus on outer limits of conduct, as noted by Coull, [1998] Victoria University of Wellington Law Review 31: ‘Welsman convincingly argues that the test in Queensland Wire is useful because it requires the court to distinguish between acceptable and unacceptable conduct when determining whether s46 … has been breached’.

The University of Western Australia, Law School course from 2004 uses In Queensland Wire as the 'objective concept' paper. It was also referenced by the Organisation for Economic Cooperation & Development in 1997 in Competition Policy in OECD countries, along with Welsman (1994) Australia's local land-use planning laws and practices: Competition law's next challenge? Trade Practices Law Jnl. Concepts are further developed in Welsman (1996.2009) Commercial Power and Competitor Litigation, posted on SSRN and on our website. sjw 2009

CONCLUSION-ABSTRACT 1995. The High Court should be applauded rather than criticised for its sagacity in Queensland Wire. The Court has created a 'backstop' to the 'use' of market power: a 'backstop' located at the perimeter of conduct acceptable in a competitive market, which is quite tangible, yet retains a sufficient degree of 'mystery' to exclude it from the realm of 'regulation'. The High Court has indicated the broad circumstances in which behaviour is likely to prompt an order to change that conduct, and has indicated that the courts would and should resolve each specific argument as it comes before them. And, it has also shown that the preferred and commonsense, and most commercially flexible, pathway is negotiation or mediation and perhaps arbitration.

Any uncertainty engendered by Queensland Wire adds to the 'mystery', and to the impetus for the powerful to behave 'reasonably' and consistently with the spirit of competition policy and law, before being taken to the costly and very public forum of the courts, to have imposed on them (if they 'lose') a last resort set of prescribed 'terms and conditions'. The 'backstop' embodies within it a sense of commercial and socio-economic reasonableness in the context of the policy intentions of the TPA, and so it is somewhat imprecise. This creates an appropriate degree of marketplace tension and is almost certainly the most positive way to ensure that such 'deregulatory law' can still evolve in parallel with commercial ingenuity and public expectations. (This version refined in 2009.)

Keywords: Market power, commerce, law, statutory and judicial regulation, Australia, USA