Case: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24
Outcome: followed
It is not conceivable that ACCC would come to a different decision if the matter were to be returned to it: cf Minister for Aboriginal Affairs v Peko Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 31 (per Gibbs CJ) and 40 (per Mason J). The reasoning expressed in the 2008 ULLS Pricing Principles and Indicative Terms, to which s 152AQA(6) would require ACCC to have regard, are inconsistent with the 2003 ULLS Model Terms over which they must prevail to the extent of the inconsistency: s 152AQB(10)(b). Severance 119 In the further alternative, Optus also argues that if there was an error by ACCC, it related only to the decision to backdate and so the Optus ULLS FD, in so far as it relates to the period from 18 November 2005 to 30 June 2006, can be severed from the FD in so far as it relates to the period after the latter date. 120 Telstra, on the other hand, argues that it is not possible to identify parts of the Optus ULLS FD or of the Optus ULLS FD Statement of Reasons that can be excised so as to save the remainder, from invalidity. 213 In two important paragraphs, [472] and [473], ACCC stated: [472] The conceptual argument presented by Telstra obviously does not allow for heterogeneity in terms of risk profiles, or requirements as to returns among investors or participants in capital markets. Put another way, the assumption made here is that all investors and by extension financiers in capital markets share a common view as to an appropriate WACC for an investment project. This implies that all investors have similar expected marginal costs and revenues (as this impacts the margin necessary for the project to be considered viable). In addition, it assumes that all potential investors have a homogenous risk profile. [Original emphasis] [473] In the Commission's view these assumptions are unlikely to reflect how investment decisions are actually made in practice. More generally, in the Commission's view, the decision as to whether or not to invest in a specific project can differ among different groups of investors, and over time, is dependant on factors such as the relative risk aversion and the expected returns required on different investments. As these are likely to differ among different investors and institutions, it is unlikely that there will always be a common view among investors and capital markets as to appropriateness of a particular return on capital. Rather investors will have different risk and return profiles for investment projects, and it is precisely the possibility to take advantage of these differences which arguably drive capital markets. For this reason, it is possible to observe in practice a combination of both high risk investments being undertaken at high rates of return, and at the same time, relatively low risk investments with correspondingly lower rates of return. 214 ACCC set out (at [487]) in a table the "resulting WACC values" in respect of the years 2000-01 to 2007-08. The WACC (post-tax vanilla) ranged from a high of 9.66% (in 2000-01) to a low of 8.26% (in 2003-04). The WACC (post-tax vanilla) for the most recent year in the table (2007-08) was 9.25%. 215 In order to estimate the WACC, ACCC used the same standard CAPM that it had used in the past. This was the Sharpe-Lintner CAPM. Telstra submits (at para 3.14) that it is not disputed that this CAPM gives a flat supply schedule (a horizontal straight line) for equity capital. However, Dr Hird and Mr Ockerby say that the CAPM that was used by ACCC can also be derived using homogeneous expectations. 389 I addressed the question of the duty imposed on ACCC by para (b) of s 152DB(1) in the Earlier Reasons at [164]-[166] where I said: I regard s 152DB(1) as a general exhortatory provision: it exhorts ACCC to strive to achieve broad objectives. Some of those broad objectives, at least if regarded in isolation, are antithetical to one another. The notions of "speed", "proper consideration of the dispute", "careful inquiry and investigation", "quick inquiry and investigation", "inquiry into and investigation of ... all matters affecting the merits" (emphasis added) and "fairness" pull in different directions: cf the discussion of ss 420 and 476 of the Migration Act 1958 (Cth) in Sun Zhan Qui v Minister for Immigration and Ethnic Affairs (unreported, Federal Court of Australia, Lindgren J, 6 May 1997) at 39-41, and see Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at [49] per Gleeson CJ and McHugh J. It may be noted in passing that achievement of the objectives depends not only on the diligence, awareness and qualifications of ACCC officers: it also depends on the levels of funding and workload of ACCC as they respectively exist at any particular time and from time to time. I do not imply, however, that these extraneous considerations have the potential to give rise to a fluctuating construction of s 152DB(1)(b). I find it difficult to conceive of circumstances in which a court would find that a failure to achieve the goal of speed or that of carefulness would, without more, provide a ground for the granting of relief in respect of an administrative decision. Surely the person aggrieved would have to show that the failure had had consequences in terms of one of the recognised grounds of judicial review. For example, absence of care (perhaps arising indirectly from excessive speed) could give rise to an overlooking of a relevant consideration or a failure to accord procedural fairness. It is not obvious what ground of judicial review, if any, might arise directly from a failure to act "speedily" or to inquire "quickly". It is another question whether the decision-maker could invoke the requirement of speed "in defence" against the consequences, in terms of grounds of judicial review, of a lack of care, but it is to be doubted. [My emphasis] I see no reason why my comments in the first sentence of [166] of the Earlier Reasons do not apply to the Failure to Inquire Ground.