On 2 April 2025, the High Court dismissed the ACCC’s appeals from the Full Federal Court’s decision in the ACCC’s proceedings against J Hutchinson Pty Ltd (Hutchinson) and the Construction, Forestry and Maritime Employees Union (CFMEU).
The judgment is the highly anticipated conclusion of a legal saga that began in 2020 and revolved around whether Hutchinson and the CFMEU arrived at an ‘understanding’ in relation to the termination of a subcontractor, following threats of industrial action by the CFMEU, within the meaning of the secondary boycott provisions of the Competition and Consumer Act 2010 (Cth) (CCA).
This article focuses on the key takeaways from the High Court’s decision. For further context, please find an in-depth overview of the decision in our InCompetition article here.
Key Takeaways
- A degree of ‘consensus’, that is, a degree of ‘reciprocity’ or ‘meeting of the minds’ is required for two parties to arrive at an understanding under ss 45E(3) and 45EA of the CCA.
- Parties do not arrive at an understanding where one party acts consistently with a request of another party, unless the party performing the act has communicated its acceptance of the request or the party making the request has explicitly or implicitly waived the need for the other to communicate acceptance.
- This is the case even if the request involves the making of a demand accompanied by a threat.
What was the case about?
In 2020, the ACCC commenced civil penalty proceedings against Hutchinson and the CFMEU, alleging that:
- Hutchinson’s exclusion of a subcontractor from a worksite and termination of the subcontract in response to a threat of industrial action by the CFMEU if the subcontractor was not stood down, resulted in Hutchinson making, and giving effect to, an arrangement or understanding with the CFMEU that contained a secondary boycott provision in contravention of ss 45E and 45EA of the CCA; and
- 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.
At first instance, Downes J found that Hutchinson and the CFMEU had contravened the CCA and imposed penalties of $600,000 on Hutchinson and $750,000 on the CFMEU. For more information on the first instance decision, see our previous InCompetition articles here and here.
This decision was set aside by the Full Federal Court on the basis that the existence of an arrangement or understanding required some form of communication of assent, and on the evidence, it was not open to Downes J to infer that there was consensus between Hutchinson and the CFMEU for the termination of the services.
The ACCC appealed the Full Federal Court’s decision to the High Court, arguing that an understanding does arise if one party makes a demand which is accompanied by a threat, and the other party capitulates to that threat by acting consistently with that demand.
The need for a consensus
In upholding the Full Federal Court’s decision, a majority of the High Court emphasised that:
- An arrangement or understanding under ss 45E(3) and 45EA of the CCA requires reciprocity in the sense of there being a ‘consensus’ or ‘meeting of the minds’ being two persons.
- 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.
- 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.
Ultimately, the majority found that there was insufficient evidence that:
- Hutchinson objectively assented to the CFMEU’s demand when the threat was made, such that an understanding was reached for the termination of the subcontractor; or
- Hutchinson’s conduct following the CFMEU’s demand was referable the demand, such that an understanding was reached as soon as Hutchinson excluded the subcontractor and terminated the subcontract.
Implications of the decision
Given the increase in recent years in enforcement actions by the ACCC that concern allegations that parties have arrived at, or made, a proscribed ‘understanding’ or ‘arrangement’, this judgment provides helpful clarification that one party’s unilateral action, without more, does not amount to arriving at an understanding with another party, even if the act is in response to a demand and threat made by the other party. Some evidence of mutual consent is necessary to establish an understanding (unless one party has dispensed with such a requirement to communicate consent).
While this interpretation occurred in the context of the secondary boycott provisions of the CCA, the High Court’s decision may have broader application to the meaning of an understanding under other provisions of the CCA, including the cartel provisions.
The Full Court of the Federal Court will consider these provisions as part of BlueScope Steel’s civil cartel conduct appeal of 2023 findings that BlueScope had attempted to induce suppliers of flat steel products in Australia to contravene section 44ZZRJ of the CCA by arriving at an understanding to fix the price of flat steel products.
Please get in touch with one of our experts if you would like to discuss this or any other competition or regulatory issues.
Read more in our InCompetition article here.
For more information on the first instance decision, see our previous InCompetition articles here and here.
