Water Week

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Baxter case to return to Fed Court for hearing; trade practices lawyers hit law books to consider how far ACCC’s reach extends after new ruling

Posted by waterweek on 2 October 2007

In a majority decision, the High Court found that the Baxter Healthcare group was not entitled to the shield of the Crown over ACCC allegations that intravenous solution supply contracts between Baxter and the governments of NSW, South Australia, Western Australia and Queensland breached sections 46 and 47 of the Trade Practices Act, which prohibited misuse of market power and exclusive dealing, reported Malcom Maiden in The Age (30/8/2007, p.8).

Threat to all quangos? The High Court decision potentially opened up to ACCC scrutiny a host of connections between governments and the private sector. Joint ventures between governments and corporations, private-sector contracts awarded through government tenders, and the sale of assets by a government to private-sector buyers that resulted in increased market share now appeared to be limited by competition law as far as the private sector was concerned, instead of being protected by an extension of government immunity.

Ruling: immunity extends to corps dealing with Govt: The commission appealed to the High Court after Baxter successfully argued in the Federal Court and the Full Federal Court that on the precedent set by the High Court in a 1979 decision, Bradken Consolidated versus BHP, it was immune from competition law as far as its supply contracts with state governments were concerned. In its Bradken decision, the High Court found that the immunity from prosecution that federal and state governments and their agencies enjoy extended to corporations that represent the Crown, or have contracts with the Crown.

Lawyers troll for potential implications : The Federal Court heeded the precedent in 2005 when it ruled that even though there had been conduct likely to impair competition, Baxter had not contravened the Trade Practices Act, because it was dealing with state government departments that were not carrying on business. Now that is history. The Baxter case will return to the Federal Court for hearing — and trade practices lawyers will return to their law books to consider just how far the ACCC’s reach has been extended.

The Age, 30/8/2007, p. 8

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