(b) Arguments and analysis
255 The ACCC contends that his Honour was in error for seven reasons. It is convenient to address each of the identified reasons in turn.
256 First, it submitted that the withdrawal provision could not be "for purposes of a joint venture" insofar as it required the withdrawal of the MMNL EOI for the Glendon Brook coal release area because the putative joint venture did not extend to the Glendon Brook coal release area. On the terms of the Buffalo agreement, the putative joint venture was limited to the exploration and development of the Mount Penny coal release area. This was confirmed by Mr John McGuigan and Mr Poole, both of whom accepted that the joint venture did not include Glendon Brook. Accordingly, it submitted that the agreement by Buffalo to procure the withdrawal of the MMNL EOI in respect of Glendon Brook could not be "for the purposes" of the putative joint venture in connection with Mount Penny. According to the ACCC, the primary judge appeared to accept that submission at [559], yet nevertheless ultimately concluded that the respondents would have made out their defence under s 76C of the TPA ([565], [567]). So, the ACCC submitted that his Honour's ultimate conclusion was at odds with what he said at [559] and that his Honour did not explain how that conclusion could follow.
257 But as to this first reason, in our view his Honour correctly accepted that the joint venture, although in respect of Mount Penny, involved wider obligations including the withdrawal of any application in relation to Glendon Brook so that there was no other conduct which would contradict or undermine the activities of the joint venture. So, as his Honour said, "if Buffalo wanted to be involved with Cascade in a joint venture, it needed to promise that it would not compete with the activities contemplated by that joint venture" ([562]). Accordingly, the withdrawal provision, as it applied to Glendon Brook, was for the purposes of a joint venture even if that joint venture did not include Glendon Brook.
258 Further, as Mr Poole explained in evidence before the primary judge, the purpose of the withdrawal provision was to prevent conflicts between the joint venture parties. That extended to preventing Buffalo from seeking to obtain any knowledge or information derived from the Mount Penny development, relating to such matters as railway lines and freight, and then attempting to use that knowledge or information for the purpose of developing Glendon Brook. Indeed and in context, those were matters of commercial significance in circumstances where Mount Penny and Glendon Brook were connected by the same railway line and it was necessary to purchase limited space on the railway line.
259 Further, as the respondents correctly submitted, there is no reason to read down the words of s 76C "for the purposes of a joint venture" so as to require that the impugned provision regulate conduct covering the same geographical region as the joint venture. As Mr Poole's evidence demonstrated, the commercial reality was that conduct by Buffalo or its associates in respect of Glendon Brook had the potential to contradict or undermine the activities of the joint venture in respect of Mount Penny.
260 Second, the ACCC says that the primary judge erred in finding that the withdrawal provision was "for the purposes of a joint venture" (s 76C(1)(a)) in circumstances where the putative joint venture was itself only the product or consequence of, or pay off for, the anti-competitive conduct. According to the ACCC, this was not a case in which the relevantly anti-competitive provision was an incidental aspect of creating an otherwise bona fide joint venture that the putative joint venturers wished to pursue. Rather, in this case the putative joint venture was itself only created as the consideration for the anti-competitive conduct.
261 The ACCC referred to the fact that the primary judge found that the essence of the Buffalo agreement was that Buffalo would receive a joint venture interest in exchange for its agreement to procure the withdrawal of the MMNL EOIs in respect of the Mount Penny and Glendon Brook coal release areas. His Honour concluded that "the promises made by Cascade to establish a joint venture upon the terms set out in the Buffalo Agreement [were] entirely referable to the promises made by the Buffalo interests to procure the withdrawal of the MMNL EOIs for the Mt Penny and Glendon Brook coal release areas" ([483]). Similarly, at [489], the primary judge described the creation of the joint venture interest as "clearly the quid pro quo for the promises made by Buffalo, Loyal, Voope and Brook" in the Buffalo agreement and said that "[t]hat quid pro quo… was not referable to anything else."
262 The ACCC submitted before us that where the rationale for creating a joint venture was to reward a competitor for engaging in anti-competitive conduct, that anti-competitive conduct could not be "for the purpose of a joint venture" within s 76C. Rather, the anti-competitive conduct was the reason for the joint venture. The ACCC said that a related concept was discussed in the Explanatory Memorandum to what became the Trade Practices Legislation Amendment Act (No 1) 2006 (Cth) (2006 Amending Act) in relation to the defence then introduced in s 76C. The Explanatory Memorandum to the Trade Practices Legislation Amendment Bill (No 1) 2005 (Cth) at 74 said:
If the only activity being carried on jointly by the parties is the activity of making, or giving effect to, a contract, arrangement or understanding containing an exclusionary provision or other illegal provision, then the provision in question cannot be for the purposes of a joint venture.
263 According to the ACCC it is apparent from this passage that the provision must have a purpose, being a joint venture purpose, separate from its otherwise illegitimate purpose or role. Therefore, according to the ACCC, his Honour having found that the creation of the joint venture was entirely referable to the withdrawal provision, he should have found that the withdrawal provision was not "for the purposes of a joint venture" within the meaning of s 76C. Rather, it was merely the payoff for engaging in the anti-competitive conduct at issue.
264 The ACCC says that the primary judge appears to have reasoned that the withdrawal provision was "for the purposes of a joint venture" because it was "to ensure that [Buffalo and its associates] did not engage in conduct which would contradict or undermine the activities of the joint venture" ([562], [564(a)] and [565]). But the ACCC says that his Honour's conclusion in this regard was inconsistent with his reasoning as to how the withdrawal provision came about. According to the ACCC, his Honour found that the withdrawal provision was not merely an incidental protection conceived of by Cascade to prevent frustration of the objects of an otherwise legitimate, extant joint venture. Rather it was, as his Honour found, the quid pro quo for the creation of the joint venture itself ([474], [476], [483], [489]). According to the ACCC, in those circumstances, the primary judge should have rejected the proposition that the purpose of the withdrawal provision was simply to ensure that Buffalo did not compete with the joint venture.
265 We would reject the ACCC's second reason. The quid pro quo provided by Buffalo and its associates in exchange for the 25% interest in the joint venture was not confined to the withdrawal of the MMNL EOIs for Mount Penny and Glendon Brook.
266 It is convenient at this point to note our reading of the terms of the Buffalo agreement by observing the following, noting that the ACCC did not run any case below asserting that the agreement or any part of these terms were a sham. First, it recited or recognised "Buffalo's intellectual property contribution". Second, Buffalo accepted the obligations under the withdrawal provision. Third, Buffalo agreed to assist Cascade to explore and develop the EL and obtain relevant mining approvals. Fourth, Buffalo agreed to make available its expert knowledge to assist exploration concerning the contiguous area. Fifth, after the earlier of the granting of Mining Approval (as described in the Buffalo agreement) for 100 million tonnes or minimum exploration expenditure of $10 million, Buffalo was obliged to make a contribution to costs. At the least, by necessary implication it was so liable, if third party debt finance was unavailable. Further, the default mechanism of equity dilution was just that. That mechanism did not entail that there was no liability. Rather, it addressed the scenario where the liability was not met.
267 The primary judge (at [551] to [555]) did not embrace the proposition that the only consideration provided for the joint venture was the withdrawal provision. This was made clear by his Honour by the reference to Buffalo's obligation once exploration expenditure exceeded $10 million, which was expressed as a liability "to contribute its proportionate share of equity to fund costs should third party debt finance be unavailable, or insufficient to fund such costs, including proportionate costs of any land acquisition".
268 The ACCC says that Buffalo had no liability to pay, could elect not to pay and suffer dilution and thus could make no contribution. But we do not accept this characterisation. In our view, strictly Buffalo had a liability subject to various contingencies. But even if Buffalo had a right not to pay expenditure but could elect to dilute, the interest diluted was in substance a contribution to the joint venture because Buffalo's loss of interest would have value.
269 Further, as we have indicated, Buffalo gave other consideration in addition to the withdrawal provision. In this regard it promised to assist Cascade to explore and develop the EL, it undertook not to pursue mining rights in any contiguous area, and it promised to provide intellectual property. Indeed, Buffalo contributed intellectual property by making available for Cascade, in mid to late June 2009, materials contained on a USB stick handed by Mr Brook to Mr Poole, which included information relating to the MMNL EOIs for Mount Penny and Glendon Brook, environmental, traffic and geological reports and other reports and exploration data assembled by MMNL.
270 Further, Mr Brook accepted that at the meeting with Mr John McGuigan and Mr James McGuigan on 31 May 2009, there was discussion to the effect that MMNL was prepared to hand over the work that had been done in relation to its EOI application, that this work included environmental and access reports and reports on other matters, and that if a deal could be done this intellectual property would be provided. And as we have said, in June 2009 Mr Brook handed over to Mr Poole a USB stick on which various reports were contained.
271 Further, Buffalo and the Obeid interests provided for the benefit of the joint venture control of the land, which was critical to any successful mining operation. Control of the land was described by Mr Poole as the primary reason for the deal with Cascade. Mr Brook gave evidence that he was told by the Obeids from the outset that what they thought they had, by way of bargaining chips with anybody that might obtain an EL, was access to the land and the water rights. On this aspect we note that the primary judge accepted that the Obeids' control of the land, and the licences and the other permissions that went with the land, gave the Obeids "significant bargaining power with Cascade", irrespective of what Cascade was told regarding the MMNL EOIs ([431]). He accepted that Mr Brook and the Obeids' control of the land gave them "significant bargaining chips" in their negotiations with Cascade ([427]). And he accepted that the Buffalo agreement and the Landowners agreement were interdependent in the sense that the parties intended that performance of one required performance of the other ([471]).
272 In the circumstances, we accept the fourth and eighth respondents' contention that the primary judge at [483] may not have accurately described that "the essence of that which Buffalo and its associated parties committed to do", or "fairly much all that Buffalo and its associated and related parties had to do", was to procure the withdrawal of the MMNL EOIs for Mount Penny and Glendon Brook and not to pursue mining rights in respect of those areas and contiguous areas (if that was intended to be a finding that this was all Buffalo was required to do at any time, as opposed to in the immediate future), and at [489] that the quid pro quo provided by Cascade was "not referable to anything else". These findings are not fully consistent with the evidence and other findings we have just identified.
273 Further, although the ACCC also relied in this context upon the 6 June 2009 amendment, this was not signed until May 2010. We agree with the respondents that the execution of the amending agreement does not significantly affect determining whether the withdrawal provision in the Buffalo agreement was for the purposes of a joint venture.
274 Finally, the ACCC disputed the primary judge's finding that the joint venture contemplated a "pooling of assets" ([552]), because this was inconsistent with the fact that Buffalo was not a party to the Landowners agreement. But his Honour found that "the Buffalo Agreement and the Landowners Agreement were interdependent in the sense that the parties to those Agreements intended that performance of one required performance of the other" ([471]). The land was to be provided by Cascade for the benefit of the joint venture with Buffalo obliged to contribute to the costs of land acquisition. There is nothing in the ACCC's point on this aspect.
275 In summary, as the respondents correctly submitted, the rationale for the withdrawal provision was the joint venture rather than vice versa.
276 Third, the ACCC says that the primary judge erred in concluding that the joint venture defences were enlivened notwithstanding that the putative joint venture was never established. Now his Honour found that the putative joint venture did not exist at the time the withdrawal provision was made or given effect ([550]). Further, his Honour found that the putative joint venture was never formed ([528]). Nevertheless, his Honour concluded that these were not reasons for denying access to the defence under s 76C ([550]). That conclusion, so the ACCC submitted, involved a construction of the term "joint venture" to include "a contemplated joint venture". But according to the ACCC, there is no warrant for reading these additional words into the provision. The ACCC submitted that there was nothing in the definition of "joint venture" in s 4J that supported such a construction. That definition speaks in the present tense: e.g. "a reference to a joint venture is a reference to an activity in trade or commerce carried on jointly by two or more persons".
277 In support of its position, the ACCC submitted that the s 76C defence operated in respect of conduct that was otherwise illegal per se under the TPA. Moreover, it said that cartel conduct is generally regarded as the most pernicious of all breaches of competition law, a proposition which generally speaking we accept. The ACCC said that the rationale behind the joint venture exception created by s 76C is that, notwithstanding that such conduct is usually anti-competitive, it may be socially beneficial or pro-competitive where it is an aspect of a bona fide joint venture, for example because the joint venture provides a means of developing new products which would not be possible absent the joint venture, or the joint venture can provide economies of scale. But the ACCC says that such a rationale has no application in circumstances where a joint venture is contemplated, but never actually formed. In such circumstances, the impugned conduct carries with it all of the risks of anti-competitive harm but without any countervailing, pro-competitive benefit. The ACCC says that the language of s 76C should not be construed in a way that would encompass such an outcome. Accordingly, s 76C properly construed had no operation in the circumstances of the present case.
278 Now in response to this the respondents say that the ACCC's point is answered by the text of s 76C(1)(a), which requires that the offending provision be "for the purposes of a joint venture". The respondents submit that it does not say "existing" joint venture or a joint venture "which has already commenced". They say that the primary judge was correct to conclude that "the fact that the joint venture had not actually been established as at 5 June 2009 would not be a reason for denying access to the joint venture defences" ([550]). They point out that the primary judge held that there was a promise to establish a joint venture and that promise imposed obligations on Cascade to hold the benefit of its EOI application and any EL which may issue for the joint venture parties. That was a joint venture obligation which existed on and from 5 June 2009.
279 But the ACCC counters that engaging s 76C required, first, the identification of an "activity in trade or commerce" which Buffalo "carried on jointly" with Cascade (s 4J(a)). Now the relevant "activity" identified in the Buffalo agreement was the exploration and development of the Mount Penny Coal Release Area. But the ACCC says that it has not been satisfactorily identified what Buffalo did jointly with Cascade to explore and develop the Mount Penny Coal Release Area so as to constitute a joint venture within the meaning of s 4J. And the ACCC says that that is not a question answered by pointing to the consideration in the Buffalo agreement provided by Buffalo according to simple contract law or by asserting joint venture obligations. Further, it says that it is not plausible to say that Buffalo jointly carried on the activity of exploring and developing the Mount Penny Coal Release Area by being "silent and passive". But the respondents principally rely on three things being first, the prospect of the provision of equity by Buffalo, second, the supposed provision of intellectual property by Buffalo and, third, the provision of access to the land on which the Mount Penny Coal Release Area was located. But the ACCC says that none of these establish Buffalo's joint carrying on of exploration and development activities of the Mount Penny Coal Release Area. First, as the primary judge accepted at [552(a)], Buffalo had no obligation to provide equity, but could suffer a dilution of its equity interest. But the ACCC says that suffering a dilution of equity interest does not reflect any joint activity by Buffalo. Second, what the primary judge described as "vague and amorphous promises in relation to the delivery up of … intellectual property and future assistance" ([483]) and Mr Brook's handing over to Mr Poole of miscellaneous reports generated by MMNL did not reflect Buffalo's joint participation in exploring and developing the Mount Penny Coal Release Area. Indeed, the primary judge found the material was "actually useless" ([552(b)]). Third, the respondents' reliance on the provision of access to the relevant land has the problem that only Buffalo and Cascade were the parties to the joint venture ([548] to [549]). Buffalo was not a holder of any land access to which it could contribute to the joint venture. The ACCC says that these points support the primary judge's finding at [483] that the withdrawal of MMNL's EOI was "fairly much all that Buffalo and its associated and related parties had to do" under the Buffalo agreement and that the contemplated "pooling of assets" in the Buffalo agreement to which he referred at [554] did not manifest in any real joint activity establishing a joint venture within the terms of s 4J(a).
280 We reject the ACCC's submissions on this aspect.
281 It is immaterial that the proposed joint venture was not established and instead was superseded by a fresh agreement in 2010 ([528]).
282 Further, we agree with the respondents that the ACCC's submissions wrongly focus upon the language in the definitional provision in s 4J, which in any event is neutral on this point, whilst ignoring the express words of the substantive provision which creates the defence, namely s 76C. Section 76C(l)(a) relevantly requires a defendant to establish that "the provision … is for the purposes of a joint venture". That directs attention to the state of affairs at the time of entry into of the contract, arrangement or understanding which contains the provision, which in this case was 5 June 2009. There is no requirement to show that the provision is for the purposes of an existing joint venture.
283 Further, the "rationale" identified by the ACCC is, in terms, expressed as an example only. But there is no warrant for reading into s 76C additional, unexpressed, elements drawn from an incomplete description in the extrinsic materials of the intended operation of the defence. Contrary to the premise of the ACCC's argument, the availability of the defence must be assessed as at the time of the allegedly contravening conduct. A provision entered into "for the purposes of a joint venture" does not cease to answer that statutory description at the time of the alleged contravention merely because, at a later time and by reason of subsequent events, the contemplated joint venture does not come to pass.
284 Further, we reject the ACCC's submissions concerning the joint activity question. There were meaningful obligations imposed upon Buffalo in addition to the withdrawal provision.
285 Fourth, and related to the third point, it was said by the ACCC that the primary judge erred in finding that the withdrawal provision was for the purposes of a joint venture in circumstances where the obligation to withdraw the MMNL EOIs was unconditional, but the obligation to confer a joint venture interest was conditional and might never arise.
286 The ACCC pointed out that the primary judge found that the establishment of the joint venture was conditional upon Cascade being granted an EL ([549] to [550]). This was consistent with the terms of the Buffalo agreement, which made the obligation to create a joint venture "subject to" the grant of an EL to Cascade or an affiliate of Cascade ([320]). Contrastingly, the withdrawal of the MMNL EOIs for Mount Penny and Glendon Brook was unconditional and would, of its nature, be given effect prior to the grant of any EL. In those circumstances, according to the ACCC, the withdrawal provision could not be "for the purposes of a joint venture" because the relevant joint venture did not exist at the time that the withdrawal provision was agreed, would not exist at the time it was given effect, and might never come into existence if the condition precedent for the creation of the joint venture (the grant of an EL to Cascade or its affiliate) did not come to pass.
287 The ACCC submitted that the circumstance that the withdrawal provision obliged Buffalo and its associates to withdraw the MMNL EOIs in respect of Mount Penny and Glendon Brook irrespective of whether or not a joint venture was ever created is a powerful indication that the purpose of the provision was not to serve the interests of the prospective joint venture, but was rather to serve the independent interests of the Buffalo and Cascade parties. According to the ACCC, it reflected the fact that it served the purposes of Cascade to have the MMNL EOIs in respect of Mount Penny and Glendon Brook withdrawn in any event, and it served the interests of the Buffalo parties to try to monetise their power to procure that outcome by doing a deal with Cascade. Those were the purposes served by the withdrawal provision. The ACCC submitted that the fact that the ultimate consequence of the withdrawal provision was that a putative joint venture may have been created did not convert that bargain into one made, and given effect, for the purposes of a joint venture within the meaning of s 76C.
288 But as we have already indicated, the ACCC's submission ignores the fact that from 5 June 2009 joint venture obligations binding the parties came into existence. Further, the ACCC's point is also answered by the text of s 76C, which speaks of "the purposes of a joint venture", not the purposes of an "unconditional" joint venture or similar.
289 Further, we agree with the respondents that a construction of s 76C which precludes its application where an obligation to confer a joint venture interest is conditional and might never arise would undermine the utility of the defence. In many commercial contexts, such an obligation will necessarily be conditional because the activity in trade or commerce to be carried on jointly, spoken of in s 4J, cannot commence until a relevant permit or regulatory approval is granted. Nothing in the language of s 76C suggests that the joint venture must be unconditional and immediately operative. The legislature could readily have confined the provision to "unconditional" joint ventures if that is what it intended.
290 Fifth, and in some respects a repeat of some of its earlier points, it was said by the ACCC that the primary judge erred in finding that the parties agreed to form a joint venture within the meaning of s 4J in circumstances where, in reality, the parties did not jointly carry on, or intend jointly to carry on, any activity in trade or commerce. The definition of "joint venture" in s 4J relevantly requires that there be some identified "activity in trade or commerce", and that that activity either be carried on jointly by two or more persons or carried on by a body corporate formed by two or more persons for the purpose of enabling those persons to carry on that activity jointly. The ACCC said that this concept of a "joint activity" is traceable to the recommendations of the Trade Practices Act Review Committee chaired by Mr T.B. Swanson in its report to the Minister for Business and Consumer Affairs dated August 1976. The Swanson Committee's recommendations in relation to the treatment of joint ventures led to the introduction of s 4J into the TPA by s 6 of the Trade Practices Amendment Act 1977 (Cth).
291 The Swanson report recognised that there were the following difficulties in defining a "joint venture" for the purposes of competition law:
4.74 A joint venture may arise due to the desire or need for additional size or complementary nature of plant and equipment, staff, finance, know-how or property which amalgamation may achieve. That desire or need may be in respect of a single project, or a continuing relationship. …
4.75 There is an initial question as to the meaning of a 'joint venture'. The problem here is that joint ventures, as referred to in common parlance, take so many legal forms. In the ensuing discussion the Committee has regarded a joint venture as being an association between two or more enterprises to carry on together a joint activity... The joint activity need not require the creation of a separate corporation or partnership; there may merely be physical pooling of assets but retention of individual ownership. Alternatively, a separate joint organisation may be formed and it may, or may not, have a separate legal existence (e.g. company or partnership). …
292 According to the ACCC, the Swanson Committee adopted a definition of "joint venture" that operated by reference to the nature of its activities, rather than its legal form. That definition turned on whether the activities of the putative joint venture were truly "joint", in the sense of involving some contribution by each of the putative joint venturers. It was in this context that the Swanson Committee referred to the pooling of such things as plant, equipment, finance, know-how or property. What was envisaged was that to constitute a "joint venture", there must be some genuine and bona fide endeavour, to which each of the putative joint venturers made a real contribution.
293 The ACCC submitted that this concept of "joint venture" was retained with the introduction of s 76C into the TPA by the 2006 Amending Act. Consistently with the quoted passage from the Swanson report, the Explanatory Memorandum to what became the 2006 Amending Act indicated that the definition in s 4J requires some genuine joint activity (see at 74):
Section 4J defines a joint venture to be 'an activity in trade or commerce…carried on jointly by two or more persons' or 'an activity in trade or commerce…carried on by a body corporate formed by two or more persons for the purpose of enabling those persons to carry on that activity jointly'. Satisfying this requirement will ordinarily require the parties to provide evidence that the activity in question is separable from the activities they are individually engaged in and evidence of each party's contribution to that activity, for example, the capital or skill.
294 The ACCC submitted that this passage emphasises that to prove the existence of a joint venture for the purposes of ss 4J and 76C, a person must be able to demonstrate that the activities in question are truly joint and distinguishable from the activities of the individual joint venturers, and that each putative joint venturer makes some real and substantial contribution to the putative joint venture.
295 In some respects to repeat what has been previously discussed, the ACCC submitted that in the present case, the primary judge found that Buffalo's sole contribution in connection with the putative joint venture was procuring the withdrawal of the MMNL EOIs for the Mount Penny and Glendon Brook coal release areas (at [483]). As his Honour put it, "That was fairly much all that Buffalo and its associated parties had to do". His Honour observed that, "the promises made by Cascade to establish a joint venture… [were] entirely referable to the promises made by the Buffalo interests to procure the withdrawal of the MMNL EOIs for the Mt Penny and Glendon Brook coal release areas" ([483]). His Honour described this as "the essence of that which Buffalo and its associates committed to do" ([483]). According to the ACCC those findings were sufficient to demonstrate that the Buffalo agreement did not, as a matter of reality and substance, contemplate that there would be any joint activity in trade or commerce carried on by Cascade and Buffalo. The ACCC said that this was not an arrangement whereby two parties wished to pool plant, equipment, finance, know-how or property to carry out some joint endeavour. Rather, what was contemplated was that Cascade would simply reward Buffalo for withdrawing the MMNL EOIs for Mount Penny and Glendon Brook by conferring a 25% share of Cascade's resulting interest in Mount Penny. But the ACCC submitted that a transaction of that kind can only be described as "joint venture" in the sense that any anti-competitive, collusive arrangement might be so described. It is not a transaction that involves the parties jointly engaging in some activity in trade or commerce as required by s 4J.
296 Now the ACCC had to accept that notwithstanding his Honour's finding at [483], he also found that the relevant joint activity was established in the present case because Buffalo was contributing intellectual property, land and capital to the joint venture ([552] to [554]), and was jointly engaged with Cascade in the activity of exploring and developing Mount Penny ([558]). But the ACCC says that each of those conclusions was in error.
297 With respect to the contribution of intellectual property, the ACCC submitted that the Buffalo agreement contained what the primary judge characterised as "somewhat vague and amorphous promises" that Buffalo would contribute intellectual property and further assistance ([483]). And according to the ACCC, the evidence of Mr Poole was that those promises were of no substance. Mr Poole said that he proposed the inclusion of that language in the Buffalo agreement to ensure that there was some form of consideration sufficient to create a binding contract. According to the ACCC, the fact that Mr Poole thought that Buffalo was providing no consideration for the joint venture absent what it described as this "confected reference" demonstrated that Buffalo was not contributing to any joint activity at Mount Penny.
298 Further, with respect to the contribution of land, according to the ACCC the primary judge appeared to accept a submission by the Cascade respondents that the putative joint venture was constituted, in part, by a "pooling of assets" effected by the Landowners agreement ([552]). But the ACCC submitted that that submission was at odds with his Honour's conclusion at [548] that the only parties to the joint venture were Buffalo and Cascade (or their nominees). Buffalo was not a party to the Landowners agreement and did not own any of the land conveyed under that agreement. Further, the primary judge found (at [473]) that the parties to the Landowners agreement did not join in the promises made by Buffalo under the Buffalo agreement. In light of those findings, according to the ACCC it is unclear how his Honour could have reasoned that Buffalo was contributing land through the mechanism of the Landowners agreement. The ACCC submitted that the primary judge should have found that Buffalo was not contributing land to the joint venture, whether under the Landowners agreement or otherwise.
299 Further and as we have said, with respect to capital, according to the ACCC there was no obligation on Buffalo to contribute financially to the joint venture. The terms of the Buffalo agreement provided that Buffalo would not be liable to contribute to the costs of the joint venture "prior to the earlier of the, granting of the Mining Approval or minimum exploration expenditure of A$10m" ([320]). But even upon one of those events occurring, the ACCC said that Buffalo was not required to contribute funds to the joint venture.
300 Now in any event, and contrary to the ACCC's position, the primary judge rejected the proposition that these matters negated the existence of the putative joint venture for the purposes of s 4J. His Honour said that "[t]he fact that a party may elect to withdraw from the joint venture in the future, or diminish its participation in it, does not mean that there is no[t] presently a joint venture" ([552(a)]). But according to the ACCC, as a general statement that proposition is unobjectionable but it tended to misstate the factual circumstances before his Honour. According to the ACCC the relevant inquiry is whether Buffalo made some contribution to the exploration and development of the Mount Penny coal release area such that it could be said that it was engaged in a joint activity in trade and commerce with Cascade in that regard. But under the terms of the Buffalo agreement, Buffalo had no obligation at any time to fund the exploration and development of Mount Penny. If it elected not to do so, its interest might be diluted, but that consequence according to the ACCC did not alter the circumstance that it was free to make no financial contribution whatsoever. In those circumstances, so the ACCC submitted, his Honour erred in finding that Buffalo had agreed to make some financial contribution to the exploration and development of Mount Penny.
301 Further, the ACCC submitted that there were further indicia to suggest that, in reality, the Buffalo agreement did not give rise to, and was not intended to give rise to, any joint activity between Cascade and Buffalo in trade and commerce. When the EL for the Mount Penny coal release area was ultimately granted, all of the activity of exploring and developing Mount Penny, and of overseeing that exploration and development, was carried out by Cascade and its wholly-owned subsidiary, Mt Penny Coal Pty Ltd (Mt Penny Coal). But Buffalo was not involved in the formation of Mt Penny Coal, and had no ownership interest in Mt Penny Coal. The operations of Mt Penny Coal were directed by Cascade without the involvement of any representatives of Buffalo. According to the ACCC, the fact that the actual activity of exploring and developing Mount Penny was carried out by Cascade and Mt Penny Coal without the involvement of Buffalo was significant because that was the very activity which the primary judge said was to be carried out jointly by the putative joint venturers. Accordingly, so the ACCC submitted, the circumstance that those activities were performed unilaterally by only one of the putative joint venturers was clear evidence that there was no joint activity in trade or commerce for the purposes of s 4J.
302 Further, according to the ACCC the 6 June 2009 amendment to the Buffalo agreement provided that Buffalo had an option to obtain an interest, and otherwise had no interest, in the relevant "joint venture" entity. This further attenuated any possible joint venture, so the ACCC submitted.
303 Again, the ACCC says that the reality was that Buffalo contributed nothing of any substance to the putative joint venture, whether in terms of property, knowhow or capital, it was not involved in the exploration and development of Mount Penny in any respect, and it had no interest in, or control over, the entity which was engaged in that activity. According to the ACCC, taking into account those circumstances as a whole, it could not be said that as a matter of reality and substance Buffalo and Cascade were engaged in "a joint activity in trade or commerce" for the purposes of s 4J. Accordingly, it is said that his Honour erred in finding otherwise.
304 We reject the ACCC's contentions.
305 In our view the primary judge correctly held that the Buffalo agreement identified the joint activity to be carried out. Moreover, and as his Honour found, s 4J and the general law "do not require that the physical activity to be undertaken at Mt Penny be carried on by the parties together" ([558]).
306 Further, as we have already indicated, the ACCC's submission which treats [483] as the primary judge holding that Buffalo's only obligation, and the only consideration given by it, was the withdrawal provision, is incorrect. There was additional consideration constituted by the obligation to fund the exploration activities of the joint venture and provide the intellectual property, as the primary judge held ([551], [552]). Further, Mr Brook provided Cascade with reports on a USB stick. Further, the Buffalo agreement makes plain that Buffalo assumed an obligation to contribute to the costs of the exploration undertaken by the joint venture and that the ACCC's submission that Buffalo was not required to contribute funds to the joint venture is incorrect.
307 Further, the primary judge was correct to conclude at [552] that the circumstance that Buffalo would not be required to contribute money unless the threshold was satisfied did not place the joint venture beyond the reach of s 4J. It simply meant that the occasion for Buffalo to contribute money was deferred until relevant defined circumstances eventuated ([552]). Further, the Buffalo agreement and the Landowners agreement when read together specifically contemplated a pooling of assets, which was one of the hallmarks of a joint venture ([552]). Further, the fact that one party to a joint venture may contribute ideas, assets or skills that ultimately are not used does not change the nature of the arrangement between the parties.
308 But in any event, even if the actual contribution made, or proposed to be made, by Buffalo to the joint venture was minimal, that would be immaterial. Mr Brook's evidence confirmed that the Obeids had intended, from the outset, that their participation in any mining venture would be "silent and passive". As the respondents point out, many joint venture partners in a variety of industries including mining could be described aptly in those terms. Moreover, a joint venture does not cease to answer the description of s 4J simply because one of the joint venture partners performs, or is expected to perform, a smaller role than the other in the actual conduct of the joint venture activities. As the primary judge accepted (at [555]), a joint venture may exist notwithstanding that the contributions by the joint venture parties are unequal or disparate.
309 Further, and as we have said, if Buffalo did not provide funding and suffered dilution, any dilution of Buffalo's interest would necessarily involve an enhancement of Cascade's interest in the joint venture and would be a contribution.
310 Further, the ACCC's submissions concerning what ultimately occurred when the EL for the Mount Penny coal release area was granted depend upon hindsight analysis. Those considerations are not entitled to significant weight in assessing whether as at 5 June 2009 the withdrawal provision was for the purposes of a joint venture.
311 Further, we agree with the respondents that the question is not whether, as at the time of entry into the Buffalo agreement, Buffalo and Cascade were engaged in any joint activity in trade or commerce. Rather, the issue under s 76C was whether the respondents established that, as at 5 June 2009, the withdrawal provision was for the purpose of a joint venture. In our view the primary judge has not been shown to have made any operable error in holding that it was for that purpose.
312 Sixth, it is said by the ACCC that the primary judge erred in finding that parties were engaged in a joint venture for the purposes of s 4J in circumstances where the joint venture was to be an incorporated joint venture in accordance with the 6 June amendment, but no joint venture company was ever created. Under the 6 June amendment, the ACCC says that the type of joint venture in contemplation by the parties was that described in s 4J(a)(ii) being one carried on by a body corporate formed by two or more persons for the purpose of enabling those persons to carry on a joint activity in trade or commerce by means of their joint control or ownership of that body corporate. But the ACCC says that no such company was ever incorporated and so the intended joint venture never came into being.
313 Further, the ACCC says that whereas the Buffalo agreement had contemplated that the joint venture might be incorporated or unincorporated, the reference to an unincorporated joint venture was expressly deleted by the 6 June amendment. So, according to the ACCC, it is clear that with effect from 6 June 2009, the parties did not intend to operate as an unincorporated joint venture. Accordingly, so the ACCC submits, the primary judge should have found that the joint venture contemplated in the Buffalo agreement, as amended by the 6 June amendment, was never formed. Therefore, so the ACCC says, in the absence of any such joint venture the defences under s 76C could not operate.
314 But the ACCC's point should be rejected. The ACCC has engaged in hindsight analysis concerning the 6 June amendment, which in any event was not signed until the following year. The real question is the relevant purpose as at 5 June. Moreover, and as we have already said, the joint venture did not need to be constituted as at 5 June.
315 Seventh, it is said by the ACCC that the primary judge erred in finding that the withdrawal provision did not have the purpose, effect, or likely effect of substantially lessening competition as required to enliven the defence in s 76C ([565]). The ACCC says that his Honour stated that conclusion without identifying his underlying reasons.
316 According to the ACCC, the respondents bore the onus of establishing that the withdrawal provision did not have the proscribed purpose, effect or likely effect. And whilst the ACCC accepted that the respondents adduced evidence on the question of purpose, the respondents made no attempt to prove that the withdrawal provision did not have the effect or likely effect of substantially lessening competition. According to the ACCC, to discharge their onus in that respect, the respondents were required to negate the existence of any real chance of a commercially relevant or meaningful lessening of competition flowing from the withdrawal provision. Moreover, according to the ACCC, in order to prove these matters, the respondents were required to identify the relevantly affected market in which the competition occurred. But they made no effort to do so. In summary, it contended that in light of the respondents' failure to adduce any evidence on these matters, the primary judge ought to have rejected the defences under s 76C.
317 Again, we reject the ACCC's submissions on this aspect.
318 The primary judge stated his reasons in respect of this question at [564] and [565]. Further, it is not in doubt to us that the market in which the question of competition was to be assessed was the market for the supply and acquisition of the services particularised in the ACCC's further amended statement of claim (at [97]).
319 In our view there is adequate support for the primary judge's conclusion that the provision did not have the purpose, and did not have and was not likely to have the effect, of substantially lessening competition in the market for the acquisition or supply of the services particularised in [97] of the further amended statement of claim.
320 First, the withdrawal provision was not included in the Buffalo agreement for the purpose of substantially reducing competition between Loyal or Voope and Cascade. Rather, as we have already said, the purpose was to contribute to the foundation, protection, subsistence and success of the proposed joint venture.
321 Second, by 5 June 2009, MMNL had already determined that the MMNL EOIs would not proceed. Mr Poole was told that this was so. And Mr Brook admitted that it is likely he told Mr Poole this. That decision had been made by MMNL the previous month.
322 Third, even if Loyal, Voope or Buffalo could obtain or control ELs for Mount Penny or Glendon Brook, Loyal, Voope or Buffalo could only do so if the MMNL EOIs were to succeed. But neither Loyal nor Voope nor any other relevant person or entity including Buffalo had the financial capacity to satisfy the financial contribution conditions of the MMNL EOIs or had any intention of doing so. Accordingly, in the absence of a joint venture involving Cascade, there was no prospect that Loyal, Voope, or Buffalo at any time would succeed in obtaining or controlling an EL. We agree with the respondents that because each of Loyal, Voope and Buffalo lacked the financial capacity or intention, on its own, to perform the relevant function, namely, obtaining the "prize" of being invited by the Minister to apply for and obtain an EL for Mount Penny or Glendon Brook, the inclusion of the withdrawal provision in the Buffalo agreement did not substantially lessen competition.
323 Fourth, as at 5 June 2009, neither Loyal, Voope nor Buffalo had, or had expressed, any interest in an EL over Glendon Brook. And in this context, Mr Brook told Mr Poole on 3 June 2009 that he had no interest in Glendon Brook. This reflected the fact that, unlike Mount Penny, the Obeids did not have any interest in the land surrounding Glendon Brook.
324 In our view, and in summary, the primary judge was correct to conclude at [567] that, had all other elements of primary liability been established, nonetheless the respondents would have had a defence under s 76C in relation to any contravention of s 45(2)(a)(i) of the TPA.