Case: NT Power Generation Pty Limited v Power and Water Authority [2004] HCA 48 ; (2004) 219 CLR 90
Outcome: distinguished
It would be a false dichotomy to suggest that there is a distinction between taking advantage of market power and taking advantage of property rights: see NT Power Generation Pty Limited v Power and Water Authority [2004] HCA 48 ; (2004) 219 CLR 90 (" NT Power ") at [125]. Property rights can be a source of market power attracting liability under s 46 of the Act . 981 The position in the present case is quite different from that which existed in NT Power . There, the owner of electricity and distribution infrastructure which refused access to a competitor was held to have a substantial degree of power in the market for transmission and distribution of electricity. The owner was held to have taken advantage of its power for a proscribed purpose. 982 However, by contrast with the present case, the market power of the infrastructure owner in NT Power derived from its ownership and control of the infrastructure. The majority justices said at [63] that the critical fact underlying the owner's market power was its control of the infrastructure; see also at [114]. 983 Mr Ergas sought to overcome this difficulty in PN's case by arguing that QR had market power by reason of its ability as owner to refuse to grant a lease and to thereby undermine PN's security of tenure. This, he said, could increase PN's costs by reducing its ability to invest in improvements to the AR terminal which would increase PN's costs on the East Coast Line, thereby giving exclusionary market power to QR. 984 Mr Ergas added to this that if PN does not have secure long term leasing arrangements the effect is to threaten investment security and impede it from operating efficiently, forcing it to have higher costs and, in turn, raising rival's costs. 1004 QR also submitted that it was not a supplier of the relevant service, namely access. It pointed to the statement in NT Power at [115] that s 46(4)(c) provides that the relevant power is supplier power or acquirer power. It submitted that QR was not a supplier of access, that service being supplied by PN through its existing control of the AR terminal. 1005 In NT Power at [115] the majority justices were merely identifying "the character or capacity in which the corporation has whatever market power it has". They distinguished this from other forms of power such as that of a financial institution. 1006 This leaves open the possibility that in certain circumstances an owner whose market power derives from its capacity as owner may have "supplier power" in the sense referred to by McHugh ACJ, Gummow, Callinan and Heydon JJ in NT Power . However, in the present case, it seems to me that without any right of possession, and in circumstances in which QR's own requests for access has been refused, it cannot be said that it has the requisite capacity. 1007 A further question arises on the pleadings. It is whether QR has market power in the SG Rail Infrastructure Market by reason of its control of the track from the AR terminal to the NSW border. However, I accept QR's submission that this is a false issue because there is no complaint that QR has sought to injure NRC as a competitor by denying or restricting its access to the track. 1008 Accordingly, I do not need to consider QR's submission that there are various constraints on the power. Nevertheless, I would observe that there is considerable force in Mr Ergas' argument that a self imposed constraint is no constraint at all. This seems to me to answer QR's submission that the East Coast Line is administered by QR's NAG in the same way as the infrastructure on the North Coast Line which is the subject of a statutory undertaking. I doubt that the NAG is truly ringfenced as contended by QR. 1128 Third, in my view, QR's longstanding offer to grant access rights to NRC and its desire to establish a common user or multi-user facility at the AR terminal are inconsistent with the purposes for which NRC contends. This distinguishes the case from NT Power, where the infrastructure owner appreciated the existence of its market power and of the capacity to exercise that power to deliver access to the infrastructure: see NT Power at [150]. 1129 Fourth, although they post date the impugned conduct, the General Freight Agreement of 10 November 2003 for access to the East Coast Line, and the North Coast Access Agreement of 1 October 2004 for access to the North Coast Line, are inconsistent with the suggestion of proscribed purposes. 1130 In cross-examination of Mr Merrigan it was suggested that certain observations in his report of March 2000 revealed a purpose of eliminating NRC as a competitor. He was taken to his remarks that NRC would not be a player in the long term and that this would be to QR's competitive advantage; see [422] [423]. Mr Merrigan said that this was a reference to NRC ceasing to exist as such after privatisation. There is force in Mr Walker's proposition that this was "meritless fencing". But I do not see that the comments of a consultant to QR, without more, are sufficient to give rise to an inference of proscribed purpose.