Issue 1
53 It is plain, as the NCC says, that s 44H(4) prescribes a number of criteria which must be satisfied before either the NCC or the Minister, or the Tribunal, may declare a service. There must be a degree of satisfaction of certain objective facts and on qualitative assessments: Re Telstra Corporation Ltd (2006) ATPR 42-121 at [20], [46], and [172]. It is plain that, in reaching or not reaching that level of satisfaction, there is no onus of proof because of the nature of administrative decision-making: Evans v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2012) 289 ALR 237 at [18]. Nevertheless, in a practical sense, an applicant for a declaration (perhaps, other than the Minister) has a responsibility to adduce evidence which may or should be sufficient to lead to the NCC and/or the Minister reaching a level of satisfaction on each of the criteria in s 44H(4).
54 Upon an application, the NCC is clearly not confined to the information provided by the applicant. It may seek additional information: s 44FA, and it may seek public submissions: s 44GB. It is not surprising that the NCC, in this instance, pursued such enquiries. The responses, including from PNO, are within the material relevant to the determination of the Tribunal.
55 It should also be noted that, once a decision-maker is satisfied of the relevant facts or judgments, there is no residual discretion in relation to that particular criterion or more broadly under s 44H(4) not to make the declaration sought: Pilbara HC at [115]-[119] and [192]-[193].
56 There was considerable debate in the course of submissions about the expression "access (or increased access)" in s 44H(4)(a). The NCC contention is that there is a disjunction of the notions of access and increased access, recognising that one or other of those concepts will be appropriate, depending upon whether the parties already have some degree of access to the service. It also says, perhaps not controversially, that the quantitative verb "increased" qualifying the concept of "access" reveals that the difference between the two concepts is one of degree rather than of time. Its point is that the inquiry is conducted along a continuum on which rights of access do not obtain, obtain on such nugatory terms as not to constitute access (constructive refusal), obtain to a limited but genuine extent, or obtain in an unimpeded manner. Hence, it says that where some degree of access does exist, the inquiry should focus upon increased access and then invites a counterfactual comparison of a future with access and a future with the restricted rights of access.
57 However, as its starting point, despite Glencore (and other users of the Service) having usage of the Service, Glencore said that it did not have "access" to the Service at all because it had no legal (arguably statutorily enforceable) right to do so. The resolution of that question in favour of Glencore is said to have been determined by the proper application of Sydney Airport FC. It is therefore appropriate to consider that decision carefully in the light of the competing submissions about its effect.
58 The Tribunal notes the caution expressed by counsel for the NCC that a judgment should not be read as an enactment, supported by the observation of McHugh J in a dissenting judgment in Scott v Davis (2000) 204 CLR 333 at [108]. That case concerned the issue of vicarious liability for the negligence of the pilot of a light plane, causing injury. The decisions to which his Honour referred to in that paragraph were decisions concerning vicarious liability for the negligence of a driver of a motor car, causing injury. His Honour at [109] also observed that he was considering a matter at common law rather than a matter of statutory construction. Consequently, the Tribunal does not see that the remark of McHugh J at [108] that:
In Broome v Cassell & Co Ltd [1972] AC 1027 at 1085, Lord Reid pointed out that judgments should not be read "as if they were provisions in an Act of Parliament" or that it was a function of judges "to frame definitions or to lay down hard and fast rules". His Lordship continued at [1085]:
It is their function to enunciate principle and much that they say is intended to be illustrative or explanatory and not to be definitive.
dictates that it should do other than apply the decision of the Full Court in Sydney Airport FC if it determines the legal issue which the Tribunal is required to consider. Indeed, the Tribunal is bound to do so.
59 Sydney Airport FC involved the judicial review of a decision of the Tribunal under Pt IIIA of the Act to declare a service in connection with the use of facilities at Sydney Airport.
60 At the relevant time, Sydney Airport was leased by the Commonwealth to Sydney Airport Corporation Ltd (SACL), so SACL provided the "airside" services at the airport to the air carriers, including all movement between runways and passenger arrival and departure gates and maintenance, equipping and re-equipping of the aircraft.
61 From 1 July 2003, SACL began levying aeronautical charges for the airside services on the basis of passenger numbers rather than (as previously) on the maximum take-off weight of the aircraft. By reason of the nature of the businesses carried on by Qantas and Virgin, the change significantly advantaged Qantas over Virgin.
62 Virgin then applied to the NCC under s 44F(2) for a recommendation that the airside service be declared. In November 2003, the NCC recommended to the relevant Minister that the airside service not be declared. On 29 January 2004, the relevant Minister decided not to declare the airside service.
63 Consequently, Virgin sought review of that decision by the Tribunal, and the Tribunal on 12 December 2005 determined to set aside that decision, and to declare the airside service (for a five year period): Sydney Airport Tribunal.
64 It is important to note that during this period, Virgin in fact had "access" to, that is was able to and did use, the airside service provided by SACL. That fact must inform a proper understanding of the decision in Sydney Airport FC, as discussed hereafter.
65 For the purposes of the judicial review of the Tribunal's decision in Sydney Airport FC concerning the criterion in s 44H(4)(a), the "market for the service" was the market for aeronautical services in Sydney, and the Tribunal's finding that the relevant dependent market was the carriage of domestic air passengers into and out of Sydney was not challenged.
66 It is helpful to note briefly the way the Tribunal reached its conclusion, having regard to the extensive and competing submissions of the parties on this application as to what the Full Court in Sydney Airport FC decided, and how (if at all) it should be applied by the Tribunal on this application. As the Full Court observed at [55], the submissions of Virgin, Qantas, SACL and the NCC on that application in the Tribunal were mirrored in their respective submissions to the Full Court.
67 In Sydney Airport Tribunal, the Tribunal at [137]-[144] said that the term "access" in criterion (a) is a noun meaning a "right or ability or opportunity" to make use of the service, and "increased access" is an "enhanced right, ability or opportunity" to make use of the service. It said that "access" means more than physical access, and includes the terms and conditions on which physical access is available. It noted that, as Virgin was really seeking different terms for the use of the service (the opportunity to engage in the second stage of arbitration under Div 3 of Pt IIIA following declaration), Virgin was seeking increased access by seeking different terms for access to the service.
68 To address the element of promotion of competition in criterion (a), the Tribunal then considered the dependent market future with declaration as against the future without declaration (as described by the Full Court in Sydney Airport FC at [56], and as Sydney Airport Tribunal at [153]-[157] of that Tribunal's reasons show) that analysis involved a review of the conduct of SACL in the relevant period having regard to its monopoly power, and any constraints on the exercise of that power.
69 As a result of that analysis of the past and present conduct of SACL, the Tribunal made findings about the likely future without declaration at [519] of its reasons, and consequently it concluded that increased access to airside services would promote competition in a dependent market.
70 As appears at [69] of Sydney Airport FC, SACL contended that s 44H(4)(a) had not properly been engaged, as there had in fact been no denial or restriction of access to the service. SACL said that the supply of the service had not in fact been denied or restricted, so no question of access or restricted access arose, and there was no justification for any counterfactual analysis. That proposition was finally rejected by the Full Court in Sydney Airport FC at [76]-[80]. It concluded at [79] that:
The whole scheme of Part IIIA, when understood against the background to its passing, is antithetical to s 44H(4)(a) operating to limit the possibility of declaration except where it can be demonstrated as a fact that the service provider has in the past denied or restricted access to the service or supply of the service.
71 As the parties to this application acknowledged, the Full Court then said at [80] that that reasoning was enough to lead to the dismissal of the SACL application, so that conclusion represents the ratio decidendi of the Full Court in Sydney Airport FC.
72 However, the Full Court proceeded at [81]-[88] with a considered analysis of, and adoption of, the submission of Virgin (both to the Tribunal and to the Full Court) that the relevant inquiry in s 44H(4)(a) is "between access and no access and limited access and increased access". It is not necessary to consider whether declaration of the service would promote competition, but rather to consider whether access or increased access would promote competition.
73 It is necessary to see how that conclusion was reached, and more importantly for present purposes how it was applied in [91] of the reasons of the Full Court. Certain of the reasons reflect steps there taken by the Tribunal.
74 After noting that the two stage approach in Pt IIIA (as set out in Div 2 and 3) does not necessarily lead to access or increased access for anyone, the Full Court in Sydney Airport FC at [83]-[85] continued:
… But "access" is an ordinary English word. Taking into account the context and background, we think that in this part of s 44H, the word "access" is being used in its ordinary English sense. Virgin is correct in its submission that all s 44H(4)(a) requires is a comparison of the future state of competition in the dependent market with a right or ability to use service and the future state of competition in the dependent market without any right or ability or with a restricted right or ability to use the service.
We do not accept the Tribunal's basis for rejecting the submission that it would be unrealistic to undertake a counterfactual analysis which discounts the fact that Virgin has access. That, with respect, is not the point. The terms of s 44H(4)(a) do not incorporate the requirement for comparison with what is factually the current position in any given circumstances. Once a declaration is made any potential user can take advantage of it. Thus, it is an unnecessary constriction of a provision by way of precondition, to engage in a detailed factual enquiry heavily dominated by the past and the present.
That is not to say that what has happened in relation to the service, how the provider has behaved and the degree to which it can be said that monopolistic behaviour has or has not impeded the efficient operation of the market in question may not be relevant considerations attending the making of the decision. For instance, if it can be demonstrated that the service has been provided in a manner that can be described as fair, even-handed and in a way most likely to maximise vigorous competition in the downstream market, that may be a powerful and relevant consideration as to why no declaration should be made. Thus, it may be that a with and without declaration counterfactual (or some aspect of it) can be seen as relevant to the decision at hand. That enquiry is simply not mandated by the pre-condition of satisfaction in s 44H(4)(a).
75 As can be seen, the word "access" is being used in an ordinary sense in those passages, to describe the fact that Virgin continued to be able to use the service (on the SACL terms). It is clearly said that an inquiry into how Virgin is using or receiving access to the service in fact is not an inquiry required or authorised by s 44H(4)(a). If there were any qualification of that proposition in the wording of the last sentence of [84], it is eliminated by the last sentence of [85] and the observation as to their irrelevancy in [94]. Hence, in our view, the counterfactual addressed at the end of [83], that is the assessment of the future state of competition of the dependent market without any right or ability or with a restricted right or ability to use the service was to be made without reference to the fact of usage of the service by Virgin or the way in which that usage was given.
76 That view as, we think, is clearly expressed by the Full Court in [86] and [87]:
This construction of s 44H(4)(a) conforms to the purpose of Part IIIA revealed by the background and context: see in particular the Hilmer Report, the COAG explanatory material referred to above and clause 6 of the Competition Principles Agreement referred to above. None of this material reveals any necessity to examine the current state of access or to engage in an enquiry based on assessing the future with and without declaration. The essential precondition discussed was that access (that is in its ordinary meaning) was necessary to permit effective competition in a downstream or upstream market.
Nor does the use of the phrase "increased access" lead to the conclusion that the base for the analysis is the current state of affairs. There was no separate treatment of the phrase in the background material. Access was discussed in the COAG explanatory material as the ability of buyers to purchase the use of essential facilities on fair and reasonable terms. Increased access can be seen as nothing more than an increased or enhanced ability to do so.
77 It is further confirmed by the Full Court's consideration of what it should then do in relation to the Tribunal's decision, having accepted Virgin's contention. That is apparent from [91]-[92]:
Virgin submitted that, on its alternative construction, which we favour, it is clear that s 44H(4)(a) would be satisfied. It submitted that this conclusion could be easily reached because (as substantially found by the Tribunal)
(a) Sydney Airport is a natural monopoly and SACL exerts monopoly power;
(b) the Airside Service is a necessary input for effective competition in the dependent market;
(c) neither Bankstown nor Richmond Airport could provide the service; and
(d) the parent company of SACL had the first right of refusal to build and operate any second major airport within 100 km of the Sydney CBD.
Further, there was no real debate among the experts before the Tribunal that, given the strategic nature of Sydney as Australia's largest city and a significant gateway to international air travel, access to Sydney Airport is essential to compete in the domestic passenger market.
In these circumstances, there appears little doubt that on Virgin's alternative argument s 44H(4)(a) must have been satisfied here.
78 The feature of that analysis is that it did not involve any consideration of the nature and extent of the access or usage that Virgin had had in the past and continued to have had during the period of the proceeding.
79 As that analysis and approach is a carefully considered view of the Full Court, the Tribunal will apply it, subject to consideration of the contentions that it is not applicable to the present application by reason of the 2006 Amending Act 2010 amendments to Pt IIIA of the Act, or to the consequences of the Pilbara HC decision.
80 The 2006 Amending Act came into force after the events to which the Sydney Airport Tribunal case related and Sydney Airport FC considered the Act as in force before its enactment.
81 As noted earlier in these reasons, the 2006 Amending Act introduced s 44AA to the Act, setting out the objects of Pt IIIA. Secondly, and more importantly for present purposes, is that s 44H(4)(a) was amended by the insertion of the words "a material increase in" after the word "promote". Parallel amendment was made to s 44G(2)(a). The only other amendments which might touch on the present application, are the insertion of s 44H(1A) also noted above, the procedural obligations on the Minister under s 44HA and the iterative obligation under s 44H(5)(9a) as then introduced requiring the Minister to have regard to the objects of Pt IIIA. The submissions made no point about those further amendments.
82 The Trade Practices Amendment (Infrastructure Access) Act 2010 (Cth) refined the procedural obligations of the NCC under Div 2 of Pt IIIA. The submissions did not identify any further amendments of significance to the present issues. There was some amendment to repeal parts of ss 44F, 44G and 44H (Part 1, Sch 5, Items 4-10 of that Act), which are noted simply for the purpose of recording that they have not been overlooked.
83 The Tribunal does not consider that the reasoning of the Full Court in Sydney Airport FC becomes inapplicable or less appropriate to the present issues by reason of any of those amendments.
84 The introduction of the objects of Pt IIIA expresses objects which are consistent with the approach of the Full Court in Sydney Airport FC.
85 The amendment to s 44H(4)(a) means that the declaration will only occur (if the criteria are all met) where the promotion of competition in the dependent market is material, or non-trivial. The Explanatory Memorandum to the Trade Practices Amendment (National Access Regime) Bill 2005 (Cth) at Item 16 (p 21) records that the amendment is to be made so that declaration will only occur where the promotion of competition in the dependent market is non-trivial. The Explanatory Memorandum states that the original drafting of criterion (a) did:
… not sufficiently address the situation where … declaration would only result in marginal increases in competition. The change will ensure access declarations are only sought where increases in competition are not trivial.
86 It did not propose any change to the expression "access (or increased access)" or to the word "promote". It may require a more robust, rather than a merely technical, measure of whether access (or increased access) would promote competition in a dependent market. It does not, by refining that measure, undermine or suggest that the reasoning of the Full Court in Sydney Airport FC is no longer apt and/or that that decision should not be followed by the Tribunal.
87 Additionally, it was said, the Tribunal need not follow the Sydney Airport FC decision, because it was made on a premise - the availability of a residual discretion under s 44H - which is not (or no longer) valid following the decision in Pilbara HC.
88 In the Full Court's reasons in Sydney Airport FC at [85] and [94] reference is made to the potential relevance of the conduct of the service provider. The proposition is apparently that such conduct may inform the decision whether or not to make the declaration, even if the criterion in (a) is satisfied (and by inference if the other criteria in s 44H(4) are satisfied). Those references must be on the basis that the NCC in its recommendation, and the Minister in the decision whether or not to declare the service, has a residual discretion after consideration of the specified criteria. Para [85] is set out above. Para [94] is at the point of the Full Court considering whether it should dismiss the application (thereby affirming the Tribunal's declaration of the service) where it regarded the Tribunal's approach to criterion (a) as erroneous. The Full Court, again apparently on the basis of there being a residual discretion, said that the matters the Tribunal took into account were:
Relevant to the enquiry as a whole as to whether to declare the service, even though they were irrelevant to a consideration of s 44H(4)(a).
89 As such consideration clearly would have led the Tribunal to making the determination in its (perceived) discretion, the Full Court simply dismissed the application.
90 It has now been authoritatively determined by Pilbara HC that there is no such residual discretion in the NCC, the Minister, or the Tribunal: see Pilbara HC per French CJ, Gummow, Crennan, Kiefel and Bell JJ at [119]; Heydon at [193].
91 Consequently, it is said, it is now appropriate for the Tribunal to proceed on the basis that those "discretionary considerations" are relevant (and were regarded by the Full Court in Sydney Airport FC as relevant), that they must have a "home" in the criteria in s 44H(4)(a)-(f), and that the appropriate "home" is in criterion (a). If the Tribunal proceeds on that basis, so the argument runs, it must treat the Sydney Airport FC decision as having been made in error, because of the assumption of a residual discretion in the decision-maker meant that it wrongly understood the scope of criterion (a).
92 The Tribunal does not take that step because it is clear from the Full Court in Sydney Airport FC (including from [94]) that criterion (a) does not accommodate those "discretionary matters" as the source of the residual discretion (before the High Court's rejection of it in Pilbara HC). Any such discretion was thought to reside in s 44H generally or possibly criterion (f). Therefore, even if Sydney Airport FC suffered from the residual discretion error (subsequently identified in Pilbara HC), it does not undermine the comments made there in relation to criterion (a). The Tribunal's consideration of the Full Court's reasons leave it convinced that the reasoning of the Full Court on the proper consideration and application of criterion (a) does not permit it to decline to follow Sydney Airport FC concerning criterion (a).
93 Finally, it was argued that the grounds upon which the Sydney Airport FC decision are based have sufficiently moved, as a result of the decision in Pilbara FC and in Pilbara HC as to make it plain that Sydney Airport FC is no longer a binding and applicable authority upon the Tribunal.
94 In support of that contention, senior counsel for PNO pointed out that in the analysis of the background and context to Pt IIIA in Sydney Airport FC remarked firstly at [37]:
… that it is necessary for the fact of access (in its ordinary meaning) to be relevant to effective competition in another market (upstream or downstream).
95 It was also pointed out that the Full Court said at [38] that the requirements of s 44H(4) are not apparently exhaustive of the relevant considerations, including some similar focus required by s 44H(2), but that:
… s 44H(4) is a statutory statement of necessary matters, it is not expressed to be a list of the only considerations that may be relevant to be considered.
And, as a further comment on that observation, it was said at [39] that that comment is relevant "when one comes to consider the meaning and content of s 44H(4)(a)", because after the considerations in s 44H(4) and (2) are addressed:
… the decision to be made whether or not to declare a service may be affected by a wide range of considerations of a commercial, economic or other character not squarely raised by, nor falling within the necessary pre-conditions in, s 44H(4).
96 Counsel then referred to the approach adopted by the Tribunal in Pilbara Tribunal No 1 in relation to the decision in Sydney Airport FC, in particular at [1048]-[1068]. The Tribunal there was not confronted by the submission now made by Glencore as to its primary submission. It was there seeking to apply the Sydney Airport FC decision - the course of its reconsideration of the very complex factual material. It is not necessary to do other than to observe, therefore, that the Tribunal as presently constituted does not consider that the reasons of the Tribunal in Pilbara Tribunal No 1 were intended to, or should be applied so as to, suggest that Sydney Airport FC was wrongly decided or should no longer be followed.
97 Similarly, such contentions were not made by counsel, or considered, in Pilbara FC where the focus was upon the criteria in s 44H(4)(b) and (f).
98 The decision of the Full Court in Pilbara FC was reversed by the High Court in Pilbara HC, but not in relation to the proper meaning and application in s 44H(4)(a). In short, it can be said that the High Court concluded:
(1) that the extensive reconsideration by the Tribunal of the Minister's decision had miscarried because the reconsideration should have been confined to the material before the Minister; and
(2) that the criteria under s 44G(2) and s 44H(4) were an exhaustive list of the considerations bearing on a declaration decision, so that there was no residual discretion to decide not to declare a service if those criteria were met.
It also disapproved of the Tribunal's approach to the criterion in s 44H(4)(f) in Pilbara Tribunal No 1, an aspect which will be considered further when addressing the contention of PNO.
99 In Pilbara HC, there was no need to address the proper construction or application of criterion (a). At the point of addressing the asserted existence of a residual discretion, the plurality (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ) at [115]-[119] referred to Sydney Airport FC only to note that it was relied on in argument in support of the exercise of the asserted discretion, as did Heydon J (who agreed with the plurality on this point at [193]). There was no consideration of whether, in any other respect, that conclusion meant that Sydney Airport FC should not otherwise be followed.
100 In those circumstances, it is clear that this Tribunal must continue to apply s 44H(4)(a) as interpreted and applied in Sydney Airport FC. The decision in that case has not been overruled either expressly or impliedly by the High Court: see Jacob v Utah Construction and Engineering Ltd (1966) 116 CLR 200 per Barwick CJ at 207; Ratcliffe v Walters (1969) 89 WN (NSW) Pt 1 497 at 505 per Street J. That now was reinforced by Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at [17] per Gaudron, McHugh, Gummow and Hayne JJ; and Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45 at [39] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ.
101 See also the observations of French J (as he then was) in Federal Commissioner of Taxation v Salenger (1988) 19 FCR 378 at 387-388. The proposition put on behalf of PNO is similar to that rejected by the Full Court of the Supreme Court of South Australia in: Public Service Association of SA Inc v Industrial Relations Commission of SA [2011] SASCFC 14 per Doyle CJ at [6], and by the Full Court of this Court in North Australian Aboriginal Legal Aid Service Inc v Bradley (2002) 192 ALR 701 at [131] per Black CJ and Hely J.
102 For those reasons, the Tribunal rejects the submission. It will follow and apply the decisions of the Full Court in Sydney Airport FC in relation to criterion (a).
103 The consequence is that the expression "access (or increased access)" in s 44H(4)(a) requires the analysis imposed by Sydney Airport FC. It is a compendious expression, as the NCC submitted, but it is an expression used in a way which precludes the comparison with whatever usage or access the service provider does or will provide voluntarily or with the terms on which the service provider provides voluntarily such usage or access. On that analysis of Sydney Airport FC, it is not necessary to explore any refined meaning of the terms used by the Full Court of "right", "ability" or "opportunity" or whether or not they constitute a hendiadys (as raised in submissions).
104 The Tribunal has not overlooked the contentions of PNO and the NCC that there are, nevertheless, other indicia in the text and context of s 44H and in Pt IIIA generally which would support a different construction of s 44H(4)(a).
105 It does not address those contentions in detail because it considers that it should apply Sydney FC as the Tribunal understands it. It has also not overlooked the PNO contention that the primary focus of Glencore in its application does not clearly express its primary contention as the basis for the application. It was not, however, said that the Tribunal should not entertain the contention.
106 The Tribunal turns to apply s 44H(4)(a) in that light. Having regard to the 2006 Amending Act, it is necessary to consider whether access would promote a material increase in competition in at least one dependent market. As noted above, the threshold of materiality will require a non-trivial increase in competition. While the counterfactual character of the exercise to be undertaken may not have changed, the qualitative assessment involved has plainly changed.
107 In identifying dependent markets for the purposes of criterion (a), what must be determined is whether any dependent market is distinct from the market for the service, and the effect access will have on the conditions for competition in that dependent market. This includes considering whether access will create or improve the environment in which competition may then flourish: see Sydney Airport FC at [107]. The Tribunal agrees with the NCC submission that "market" as used within Pt IIIA has a sense broader than when used within s 4E. By reason of s 44H(4)(a), relevant dependent markets may, geographically, be within or outside Australia. Otherwise, the analysis of market definition remains constant within the Act. The identification of markets in Pt IIIA is typically concerned with functionally distinct markets. Analysis of the functional dimension of a market identifies the stage of production, within a supply chain, at which the relevant economic activities occur. In order to consider the implications for competition in respect of certain conduct, one begins with the activities under consideration and then identifies adjacent activities in the supply chain (labelled upstream and downstream by economists). Upstream markets are markets for input factors, such as raw materials. In downstream markets these inputs are commercialised to produce outputs. In this analysis, it is not generally appropriate to consider whether one function ought to be substituted for another, because activity at each functional level complements activity at adjacent levels.
108 In this matter, there was no contention that Glencore had identified five relevant dependent markets, as accepted by the Minister and as set out above.
109 The additional dependent market which Glencore asserted, but which was not accepted to exist by the Minister, is a market for the financing of coal mining projects in the Hunter Valley. That was raised as a specific issue in the application: para 5(b).
110 That topic was addressed only briefly in the written submissions of Glencore: para 6.15 (and by incorporation, its submission to the NCC of 9 September 2015 and a letter from Rob Yeates and Associates Pty Ltd of 6 May 2015), and in oral submissions.
111 The Tribunal is not persuaded that there is a separate market for the financing of coal producers in the Hunter Valley. Obviously, financiers broadly speaking are indifferent to particular geographical limitations or to particular industry limitations. There is no evidence that financiers or any particular niche of financiers to industry in Australia have a particular focus on financing coal producers in the Hunter Valley. It is, on the other hand, clear enough also that financiers, when deciding whether to finance particular enterprise proposals and in the course of due diligence assessments for financing proposals, will be alert to the constraints applicable or potentially applicable to a category of actual or proposed enterprises such as coal producers in the Hunter Valley, including shipping access pricing. However, for the same reasons as those of the Minister, the Tribunal does not think that there is shown to be a separate market of the character asserted by Glencore. In particular, looked at from the viewpoint of the coal producers, there is no cogent historical data to suggest that the privatisation of the Port (or like bottleneck facilities) has in the past period impeded in any material way access to investment funding either by direct investors or by bank financing. Dr Yeates does not assert to the contrary.
112 The consideration of criterion (a) in the present circumstances, in accordance with the approach in Sydney Airport FC at [91], is quite straightforward.
113 To paraphrase Sydney Airport FC at [91] and [92]: the Service providing access to the shipping lanes is a natural monopoly and PNO exerts monopoly power; the Service is a necessary input for effective competition in the dependent coal export market as there is no practical and realistically commercial alternative; so access to the Service is essential to compete in the coal export market. In the circumstances (subject to one issue, arising from the amendment to s 44H(4)(a) referred to above), s 44H(4)(a) must have been satisfied.
114 In Sydney Airport Tribunal, the Tribunal said at [107] that "the promotion of competition involves a consideration that if the conditions or environment for improving competition are enhanced, then there is a likelihood of increased competition that is not trivial.
115 It is of course now necessary to apply the qualitative test of a material increase in competition, following the 2006 Amending Act.
116 In applying that test, it was argued that even applying Sydney Airport FC as urged by Glencore, criterion (a) would not be satisfied. It may be assumed that, at present and foreseeably, the charges of PNO for access to the Service are a relatively minor cost element in the overall cost of coal production and export. Counsel for Glencore responded that it is not a necessary consequence that access (or increased access) would not promote a material increase in competition in the coal export market on that basis. The certainty of the prospect of access on terms fixed by agreement or by arbitration under Div 3 of Pt IIIA would likely remove the risk of PNO imposing terms of access which would or could, he submitted, largely absorb the profit margin otherwise available to coal producers in the Hunter Valley, and which in turn in a buyers' market (where, as it is commonly accepted, the coal producers are price takers) may lead to the reduction in the number of producers or in the quality of coal produced or in the capital investment in coal production so in the coal production capacity of the Hunter Valley. All or any of those factors, or a combination of them, (it is argued) may have a measurable and not insignificant impact on the capacity of coal producers in the Hunter Valley competing in the market for the production and export of coal. However, more simply, without declaration, there is no entitlement to access (or enforceable opportunity for access) from PNO to the Service.
117 The Tribunal was also referred, in this context, to other information about the significance of Hunter Valley coal production and its significance, including the Treasury Ministerial Submission of 25 November 2015. It is briefly referred to at the commencement of these reasons for decision.
118 To revert to the approach to criterion (a) as stipulated by Sydney Airport FC, it is necessary to see if there is an entitlement or opportunity for access or increased access under the existing state of affairs.
119 The PMAA entitles PNO to fix and impose charges for the Service: ss 50 and 51, and to make agreements in respect of charges: s 67. It does not prescribe that any potential user has a statutory right of access to the Service.
120 The Lease from the State of New South Wales is for 98 years. It should be noted that the State's Objective is for the Port to be a major seaborne gateway for the State: cl 8.1, so it requires PNO to ensure the capacity of the Port to provide access to shipping: cl 8.2. Not surprisingly, it allows for the refusal of current access if past payment of charges has not been made: cl 8.6. Clause 8.7 recognises that those provisions do not prevent PNO fixing and imposing charges under the PMAA. Clause 10 ensures access to Port Regulators. It does not give any rights to third parties (including Glencore) to access the Service. Nor does it oblige PNO to provide access to all users of the Port (subject to payment of the prescribed rates).
121 Consequently, and notwithstanding the submissions of PNO and the NCC to the contrary, the Tribunal is satisfied that - adopting the approach mandated by the Sydney Airport FC decision - access to the Service would promote a material increase in competition in the market for the export of coal from the Hunter valley. That view is reached even though, as counsel for PNO says, PNO has an incentive to maximise the revenue from the provision of the Service (but perhaps by the balancing of volume and charges) and the Port is not capacity constrained. It is reached because, as the Full Court in Sydney FC said, in the absence of access (or increased access), the capacity to serve the coal export market is not to be measured against the actual existing usage but the entitlement to usage of the Service (to the extent it may exist.