Eimear O’Sullivan, Christina Shin, Alice Waterston and Peta Stevenson outline the key takeaways from the High Court’s decision in the ACCC’s proceedings against J Hutchinson Pty Ltd and the CFMEU.
On 2 April 2025, the majority of the High Court dismissed an appeal by the ACCC from the Full Federal Court’s decision in the ACCC’s proceedings against construction company J Hutchinson Pty Ltd (Hutchinson) and the Construction, Forestry and Maritime Employees Union (CFMEU).
This judgment clarifies that parties do not arrive at an understanding where, without more, one party unilaterally decides to act in a particular way in response to another party’s request, even if that request involves the making of a demand accompanied by a threat. Rather, some evidence of a consensus or ‘meeting of the minds’ is necessary to establish an understanding (unless one party has dispensed with such a requirement for the other party to communicate their consent).
The decision upholds an earlier appeal by Hutchinson and the CFMEU against a Federal Court ruling that they had contravened sections 45E(3) and 45EA of the Competition and Consumer Act 2010 (CCA) by reaching an anti-competitive arrangement or understanding to a ‘secondary boycott’ of a third party’s services.
Facts
Hutchinson, a construction company, was the head contractor for a construction project in South Brisbane (known as the Southpoint Project). Hutchinson was covered by an enterprise bargaining agreement (EBA) with the CFMEU under which it was obliged to consult with the CFMEU and its employees about the appointment of subcontractors in circumstances where the job security of its employees may be affected.
The relevant events occurred as follows:
- March 2016 – Hutchinson engaged a subcontractor who did not have an EBA with the CFMEU to perform waterproofing works at the Southpoint Project site. No consultation with the CFMEU occurred prior to the engagement.
- 11 June 2016 – a CFMEU representative met with Hutchinson’s project manager and threatened to undertake industrial action if the subcontractor was allowed to return to the Southpoint Project site.
- 13 June 2016 – Hutchinson informed the subcontractor via email of the threat of industrial action and that they were excluded from the Southpoint Project site due to not having an EBA.
- Between 13 June 2016 and July 2016 – Hutchinson sought to assist the subcontractor in obtaining an EBA and discussed the matter with the CFMEU representative, who said words to the effect of ‘[the subcontractor] won’t be doing your waterproofing, he won’t be able to get an EBA’. Further, the CFMEU representative suggested that Hutchinson instead engage a subcontractor ‘like Spanos’ noting that Spanos had an EBA.
- Between 4 July 2016 and 20 July 2016 – Hutchinson engaged Spanos to perform waterproofing work at the Southpoint Project site.
- 26 July 2016 – Hutchinson terminated the subcontract by letter.
Subsequently, the ACCC commenced civil penalty proceedings against Hutchinson and the CFMEU. The ACCC alleged that:
- Hutchinson had contravened ss 45E and 45EA of the CCA by making and giving effect to an arrangement or understanding with the CFMEU which contained a provision to the effect that Hutchinson would terminate the subcontract and which thereby had the purpose of preventing hindering Hutchinson from acquiring or continuing to acquire the subcontractors services;
- the CFMEU was knowingly concerned in, or party to, Hutchinson’s contraventions, and had induced those contraventions by threatening industrial action, within s 76 of the CCA; and
- the arrangement or understanding arose out of the 11 June 2016 meeting between Hutchinson and the CFMEU in which the threat of industrial action was conveyed, and was made or arrived at when Hutchinson succumbed to that threat by excluding the subcontractor and terminating the subcontract on 26 July 2016.
Primary judgment & Full Federal Court appeal
At first instance, Downes J held that:
- Hutchinson and the CFMEU had contravened ss 45E and 45EA of the CCA and subsequently imposed penalties of $600,000 on Hutchinson and $750,000 on the CFMEU.
- The existence of an arrangement or understanding between Hutchinson and the CFMEU arose from facts and circumstances which had ‘such a concurrence of time, character, direction and result as naturally to lead to the inference that [their] separate acts were [the] manifestations of mutual consent to carry out a common purpose’ (at [336]).
For a more detailed summary of the Federal Court’s decision at first instance, see our previous InCompetition articles on the liability judgement here and the penalty judgment here.
However, the Full Federal Court set aside the decision on appeal on the basis that it was not open to her Honour to infer any relevant ‘meeting of minds’ or consensus between Hutchinson and the CFMEU for the termination of the services. In particular:
- Wigney J found that the existence of an arrangement or understanding required some form of communication of assent. Further, that even if such assent was established, there was insufficient evidence to establish that such a provision was for a proscribed purpose as his Honour considered that an equally probable inference could be drawn that Hutchinson’s purpose in terminating was simply to avoid industrial action by the CFMEU.
- Bromwich and Anderson JJ jointly reasoned that capitulation to a unilateral demand can occur ‘with or without the indispensable meeting of the minds by the communication of assent’ and that ‘[i]f either is equally likely, no arrangement or understanding is established’.
The ACCC’s single appeal ground
The ACCC’s appeal to the High Court was based on the premise that an ‘understanding’ has arisen between two parties for the purposes of s 45E(3) if:
- one party makes a threat and demand to a second person, and
- the second party capitulates to that threat and acts as demanded.
The ACCC contended that an inference that Hutchinson terminated the subcontract for no other reason than to avoid industrial action by the CFMEU was sufficient to establish that Hutchinson had arrived at an understanding with the CFMEU.
The High Court’s focus on reciprocity
Gageler CJ, Gleeson J and Beech-Jones JJ in their joint judgment, with Edelman J separately agreeing, rejected the ACCC’s proposition as overly broad and upheld the Full Federal Court’s judgment, finding that:
- a party who acts in accordance with a demand made by another under threat of industrial action,
- without expressly or tacitly communicating a commitment to act in accordance with the threat,
has not arrived at an understanding with the threatening party for the purposes of ss45E(3) and 45EA of the CCA.
A. Requirement of a ‘consensus’ or ‘meeting of the minds’
Sections 45E(3) and 45EA make clear that although an ‘arrangement’ or ‘understanding’ describes something less than a legally binding contract, and may be informal as well as unenforceable, it:
- must be made or arrived at by a person ‘with’ one or more other persons; and
- requires reciprocity in the sense of there being a ‘consensus’ or ‘meeting of the minds’ being two persons.
The majority reasoned that while it is possible for an understanding to follow receipt of a demand that is accompany by a threat, a unilateral decision to act in response to another person’s conduct (even when that conduct involves a demand and a threat) does not alone amount to an understanding. Their Honours further stated that there is no ‘special category’ of understandings that arrived at simply because a person succumbs to the threat of industrial action. Without further evidence, the act of succumbing to such a threat could be explained as ‘a rational, commercial response to the threat rather than a form of collusive behaviour aimed at achieving a proscribed purpose.’
Edelman J went further, separately holding that:
- In situations where one party makes a unilateral undertaking and requests some action from the other party, the latter party must communicate its assent to engaging in the requested action (unless the requirement for such communication has been waived by the requesting party).
- The requirement of reciprocity is reinforced by references in s 45E(3) to ‘mak[ing]’ an arrangement, and ‘arriv[ing]’ at an understanding (defined in s 4(1) of the CCA as including ‘reach or enter into’), ‘with’ another person.
B. Evidencing a reciprocal understanding
Importantly, neither the majority nor Edelman J excluded the possibility of an understanding arising from a unilateral decision to act in response to a demand and accompanying threat made by another person. Rather, such conduct could result in a reciprocal understanding if the person making the threat had expressly or impliedly conveyed that no communication of assent was required.
Edelman J noted that similar findings were made in Keith Russell Simplicity Funerals Pty Ltd v Cremation Society of Australia (ACT) Ltd (1982) 40 ALR 125 in the context of an ‘ultimatum’ that had been given by a union to a provider of chapel and cremation services which threatened industrial action if the provider continued to supply its services to a specified funeral provider. In that case, the Court dismissed the proceeding as the absence of evidence that the need for communication of assent had been dispensed with by the union meant that mere compliance with the ultimatum did not establish an arrangement or understanding.
C. Hutchinson’s conduct did not give rise to an understanding
Although it was accepted that the threat made by the CFMEU on 11 June 2016 constituted an implied request for Hutchinson to cease engaging the subcontractor under threat of industrial action, the High Court found that there was insufficient evidence that:
- Hutchinson objectively assented to the CFMEU’s demand on or around that date, such that an understanding was reached on 11 June 2016, and that Hutchinson’s attempt to assist the subcontractor in obtaining an EBA acted as evidence to the contrary; or
- any subsequent conduct by Hutchinson was referable to the CFMEU’s earlier demand, such that an understanding was reached as soon as Hutchinson excluded the subcontractor and terminated the subcontract.
D. Steward J’s dissent – The statutory context of s 45E
In dissent, Steward J rejected the majority’s view that the making of an arrangement or arriving at an understanding under s 45E required reciprocity or ‘a meeting of the minds’ and allowed the appeal.
His Honour drew a distinction between the concept of an arrangement or understanding in s 45E and the use of like concepts in other provisions of the CCA. In particular, his Honour observed that:
- Interpretations of an ‘understanding’ or ‘arrangement’ in the context of s 45 of the CCA were not applicable to s 45E as:
- s 45 is concerned with the common mind between parties engaging prohibited cartel conduct and where the outcome of the contravening arrangement or understanding is one which both parties actively want to achieve,
- by contrast, the outcome of any contravening arrangement or understanding under s 45E is one which involves a party succumbing to the threat of another and therefore, ‘is invariably not what one counterparty wants’.
- The evident purpose of s 45E is to prevent corporations from succumbing to threats of industrial action which disturb obligations or arrangements for the supply or acquisition of goods or services. In such circumstances, it is ‘unrealistic’ to expect that the parties would ‘verbalise, record or evidence their illegal conduct’ or to ‘search for a form of words whereby the blackmailed corporation somehow assents to the course of conduct sought to be secured through threats’.
Consequently, Steward J found that, absent the CFMEU’s threat, Hutchinson would have continued to use its preferred contractor. Therefore, this outcome did not involve a consensus, rather, a mere act of compliance with a union threat. Steward J held that such an act of compliance with the threat suffice to trigger an application of s 45E. To require more, including a true ‘meeting of minds’ would be misconceived having regard to s 45E’s manifest function and purpose.
Key takeaways
The High Court’s decision provides a useful clarification that:
- parties do not arrive at an understanding where, without more, one party unilaterally decides to act in a particular way in response to another party’s request
- this is the case even if that request involves the making of a demand accompanied by a threat.
- rather, some evidence of mutual consent is necessary to establish an understanding (unless one party has dispensed with such a requirement to communicate consent).
While the High Court’s judgment considered the secondary boycott provisions of the CCA, the decision may have broader application to the meaning of an understanding under other provisions of the CCA, including the cartel provisions.
The extent of its impact may be shown quickly, as the Full Federal Court is expected to opine on the requirements for arriving at an understanding in the context of the cartel provisions later this year, as part of BlueScope Steel’s appeal of 2023 findings that BlueScope had attempted to induce suppliers of flat steel products in Australia to contravene s 44ZZRJ of the CCA by arriving at an understanding that contained a cartel provision to fix the price of flat steel products. The appeal was heard by the Full Court in August 2024, and judgment is reserved.
Image Credit: ‘Hand Shake – Man and Woman‘ by amtec_photos / Wikimedia Commons / CC BY-SA 2.0. / Remixed to B&W and resized
