Australian Competition and Consumer Commission v Pacific National Pty Limited

A. Introduction 1 This proceeding concerns the proposed sale of the Acacia Ridge Terminal (ART) by entities within the Aurizon group of companies (Aurizon) to entities within the Pacific National group of companies (Pacific National) pursuant to a Business Sale Agreement executed on 28 July 2017. The ART is a rail terminal located in Queensland, approximately 16 km south of the Brisbane central business district. It contains two terminals: the Brisbane Multi User Terminal, which is a standard gauge rail terminal that connects to the standard gauge interstate rail network; and the Queensland Terminal, which is a narrow gauge rail terminal that connects to the narrow gauge rail network within Queensland. Pacific National supplies rail linehaul services on the North-South and East-West standard gauge interstate railway lines and between terminals on the narrow gauge railway line in Queensland that runs along the coast between Brisbane and Cairns, referred to as the North Coast Line. Pacific National is the largest provider of rail linehaul services in Australia by revenue and volume of freight transported. 2 Pursuant to clause 5.1 of the Business Sale Agreement, completion of the sale was conditional on, amongst other things, the parties receiving competition law clearance for the sale in one of three ways: written confirmation from the Australian Competition and Consumer Commission (ACCC) that it did not propose to intervene in the acquisition pursuant to s 50 of the Competition and Consumer Act 2010 (Cth) (Act) (commonly referred to as informal clearance); authorisation of the acquisition by the Australian Competition Tribunal under Part VII of the Act; or the Federal Court declaring or making orders to the effect that the acquisition would not contravene s 50 of the Act. 3 The ACCC did not give the parties informal clearance. On 18 July 2018, it commenced a proceeding in the Federal Court alleging, amongst other things, that the sale of the ART pursuant to the Business Sale Agreement would contravene s 50 of the Act and sought orders restraining the parties from completing the sale. At the time of trial, the ACCC's allegation was that the acquisition of the ART by Pacific National would be likely to have the effect of substantially lessening competition in markets (defined with greater specificity below) for interstate rail linehaul services on the North-South corridor (essentially between Melbourne, Sydney and Brisbane) and on the East-West corridor (essentially between Perth, Adelaide and either Melbourne or Sydney), whether considered as separate markets or part of a single market. The relief sought by the ACCC included a declaration pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) that the acquisition would contravene s 50 of the Act and an injunction under s 80(1)(a)(i) of the Act restraining Pacific National from acquiring the ART. 4 On 15 May 2019, the primary judge delivered judgment: Australian Competition and Consumer Commission v Pacific National Pty Limited (No 2) [2019] FCA 669. His Honour concluded that, upon the Court accepting an undertaking proffered by Pacific National relating to the future conduct of the ART (the Undertaking), the proposed sale of the ART by Aurizon to Pacific National would not contravene s 50 of the Act (at [1611]). The primary judge stated that, if he had not accepted the Undertaking (which he referred to as a hypothetical scenario), "on balance, and not without some hesitation" he would have accepted the ACCC's s 50 case (at [1612]). More specifically, his Honour would have found that the acquisition of the ART by Pacific National would be likely to have the effect of substantially lessening competition in either: (a) a single market comprising the supply of rail linehaul services for the transport of intermodal freight (excluding bulk steel) over long distances on the North-South and East-West corridors to beneficial freight owners and freight forwarders for whom neither road services nor sea services provides an effective substitute for rail linehaul services; or (b) separate markets for the North-South and East-West corridors, which are referred to in the reasons of the primary judge as the "Interstate markets" (adopting a definition used in the ACCC's pleading). We prefer to use the descriptive term "interstate rail linehaul markets" to distinguish these markets from markets in which freight owners and freight forwarders consider that road services or sea services provide an effective substitute for rail linehaul services (which might be described as intermodal transport markets). His Honour found that the analysis of the competitive effects of the proposed acquisition of the ART is not affected by whether the relevant markets are defined as a single combined market or two separate markets, and there is no challenge to that finding on the appeal. 5 The primary judge made final orders on 6 June 2019, dismissing the ACCC's application and ordering the ACCC to pay 50% of the respondents' party-party costs of the proceeding: ACCC v Pacific National Pty Ltd (No 3) [2019] FCA 866. 6 On 26 June 2019, the ACCC filed a notice of appeal, which was subsequently amended on 26 November 2019. By the amended notice of appeal, the ACCC challenged the primary judge's acceptance of, and reliance on, the Undertaking in finding that the sale of the ART would not contravene s 50. The ACCC advanced two principal contentions. 7 First, the ACCC contends that the primary judge did not have power to accept the Undertaking. A central argument advanced by the ACCC is that the power to accept an undertaking in the circumstances of a case such as the present is a power that is enlivened once a contravention of s 50 is found, and the Court may then accept an undertaking in lieu of granting injunctive relief as a remedy for the contravention. The ACCC submitted that the primary judge erred by taking the Undertaking into account as part of the factual matrix in assessing whether the sale of the ART would contravene s 50. 8 Second, the ACCC contends in the alternative that, if the primary judge was empowered to accept the Undertaking, his Honour erred in doing so. The central argument advanced by the ACCC was that the primary judge erred in concluding that the Undertaking would be effective in preventing Pacific National from engaging in anti-competitive conduct in the operation of the ART following the acquisition and that the Undertaking was not formulated with the necessary precision such as to be capable of being readily obeyed and enforced. 9 On 18 July 2019, each of Pacific National and Aurizon filed notices of cross-appeal, which were subsequently amended on 8 November 2019. The grounds of cross-appeal raised by the respondents were similar but not identical. However, because the interests of the respondents in the appeal are mutual, if a ground of appeal of either respondent is upheld by the Court, the other respondent will benefit from the successful appeal. Substantively, the respondents challenged the primary judge's reasoning with respect to market definition and the assessment of the likely competitive effects of the sale of the ART. 10 In relation to market definition, the respondents contend that the primary judge erred in concluding that interstate rail linehaul markets exist that are confined to a subset of Pacific National's rail linehaul customers, being those customers for whom neither road services nor sea services provides an effective substitute for rail linehaul services (so-called "captive" customers). The respondents contend that the primary judge erred in failing to find that the existence of such markets is dependent on two preconditions: first, that suppliers can identify and target "captive" customers with higher prices (that is, price discriminate); and, second, that profitable arbitrage must not be possible (that is, the non-captive customers must not be able to resell the product to the captive ones or purchase it on their behalf, thereby defeating the price discrimination). The respondents contend further that the evidence did not support a conclusion that Pacific National could identify and target "captive" customers with a sufficient degree of accuracy to engage in price discrimination profitably. 11 In relation to the likely effect of the acquisition on competition, the central argument advanced by the respondents was that the primary judge erred in concluding that the acquisition of the ART by Pacific National would have the likely effect of substantially lessening competition by increasing barriers to entry into the interstate rail linehaul markets in circumstances where: (i) in the medium term, a competing rail terminal would be built (through the Inland Rail Project); and (ii) barriers to entry were already high and there was no realistic prospect of new entry within that timeframe in any event. 12 Aurizon also advanced the contention that the primary judge erred in construing the word "likely" in s 50 as synonymous with there being a "real chance". Aurizon contends that the word means "more probable than not". 13 The respondents further contend that, if the primary judge erred by taking the Undertaking into account as part of the factual matrix in assessing whether the sale of the ART would contravene s 50 as the ACCC contends, his Honour should have accepted the Undertaking in lieu of granting the injunction sought by the ACCC because, for substantially the reasons his Honour gave, the Undertaking sufficiently addressed the likely anti-competitive effects of the acquisition. 14 On 26 November 2019, the ACCC filed a notice of contention in response to the respondents' amended notices of cross-appeal. The notice raises two matters. The first concerns the assessment of the competitive effect of the acquisition, and specifically the timeframe within which the primary judge ought to have considered the potential for new entry. The second concerns the Undertaking and advances a contention that the Court is not empowered to accept the Undertaking in lieu of the injunctive relief sought by the ACCC for reasons that include: (a) the power to accept an undertaking in lieu of injunctive relief granted pursuant to s 80(1) of the Act is limited to an undertaking in a form that reflects the relief sought by the ACCC; and (b) the acceptance of the Undertaking would not involve an exercise of the judicial power of the Commonwealth and would infringe Chapter III of the Constitution. 15 For the reasons that follow, we would allow the cross-appeals and dismiss the appeal. 16 By way of summary, in respect of the respondents' cross-appeals, we are of the view that: (a) the primary judge did not err in defining the relevant markets in which to assess the competitive effects of the proposed acquisition; (b) the primary judge did not err in construing the word "likely" in s 50 as meaning a real commercial likelihood, whether or not the likelihood is greater or less than 50%; (c) respectfully, the primary judge erred in concluding that, in the absence of the Undertaking, the proposed acquisition would contravene s 50. 17 The finding that the proposed acquisition would not contravene s 50 requires the dismissal of the ACCC's appeal and renders the ACCC's grounds of appeal moot. Although it is not strictly necessary to address the ACCC's grounds of appeal, it is appropriate to do so in case the matter goes further and also because the issues are of some importance and the Court has heard full argument. In summary, we are of the view that the power to accept an undertaking in the circumstances of a case such as the present is a power that is enlivened once a contravention of s 50 is found, and the Court may then accept an undertaking in lieu of granting injunctive relief as a remedy for the contravention. It follows, in our respectful view, that the primary judge erred in taking the Undertaking proffered by the respondents into account as part of the relevant factual matrix and, on that basis, reaching a conclusion that the acquisition of the ART by Pacific National would not contravene s 50. However, the form of undertaking that may be accepted by the Court in lieu of injunctive relief is not limited to the form of injunctive relief sought by the ACCC in the proceeding. It would therefore have been open to the primary judge, as a matter of legal power, to accept an undertaking that ameliorated the anti-competitive effects of the proposed acquisition in lieu of granting an injunction to prevent the proposed acquisition. We are not persuaded that, if the primary judge had exercised the discretionary power to accept the Undertaking in lieu of injunctive relief, the exercise of power would have been erroneous.

B.3 The relevant transactions 33 The primary judge set out the background to the relevant transactions at [9]-[13] and [51]-[80]. Given the narrowing of the ACCC's case at trial, and the further narrowing of issues on this appeal, it is unnecessary to refer to the detailed chronology of the relevant transactions. The following is a summary of the principal events. 34 In February 2017, Aurizon initiated Project Eyre, which was an assessment of market interest in the sale or shutdown of, or joint venture to own and operate, its intermodal business including the ART, the interstate intermodal business and the Queensland intermodal business. 35 From April 2017, Aurizon conducted a sale process for the ART, the interstate intermodal business and the Queensland intermodal business. In May 2017, Aurizon received six non-binding offers for parts or all of that business: (a) two indicative offers from Qube and Oaktree for the whole of the intermodal business, including the ART, the interstate intermodal business and the Queensland intermodal business; (b) two indicative offers from Genesee & Wyoming and Pacific National for the Queensland intermodal business and the ART only; and (c) two indicative offers from the Australian Rail Track Corporation (ARTC) and Charter Hall for the ART. 36 Aurizon invited Pacific National, Qube and three other bidders to make binding bids by 4 August 2017. 37 On 20 July 2017, Pacific National made a pre-emptive binding bid for the ART. Following subsequent negotiations, on 28 July 2017 Aurizon and Pacific National entered into a package of agreements: (a) the Business Sale Agreement, pursuant to which Aurizon agreed to sell, and Pacific National agreed to buy, the ART for a purchase price of $170 million, as adjusted in accordance with the terms of the agreement; and (b) the Terminal Services Subcontract, pursuant to which Pacific National was appointed as operator of the Brisbane Multi User Terminal in place of Qube from 1 December 2018. 38 On 11 August 2017, Aurizon and Pacific National also executed an agreement under which Pacific National agreed to acquire the Queensland intermodal business for a payment of $20 million, also conditional on competition law clearance. On the same day, Aurizon resolved to close its interstate intermodal business, which was announced on 14 August 2017. In December 2017, Aurizon closed its interstate intermodal business. 39 On 12 February 2018 and 15 March 2018, Aurizon announced that it would close its Queensland intermodal business if it was not able to gain ACCC approval for its sale to Pacific National. 40 In its originating application filed on 18 July 2018, the ACCC sought an interlocutory injunction requiring Aurizon to carry on its Queensland intermodal business in the ordinary and usual course. On 13 August 2018, the primary judge granted that interlocutory injunction: Australian Competition and Consumer Commission v Pacific National Pty Ltd [2018] FCA 1221. 41 In January 2019, Aurizon sold its Queensland intermodal business to Linfox under arrangements whereby Aurizon supplies a "hook and pull" service to Linfox, described below.

Contention 2 187 In relation to contention 2, the respondents submitted that the trial judge erred by interpreting the word "likely" as meaning a "real chance" rather than its ordinary meaning "more probable than not". The respondents observed that the "real chance" test follows a line of authority about the meaning of the word "likely" in provisions of the Act that traces back to the decision of Deane J in Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union (1979) 42 FLR 331 (Tillmanns) where his Honour interpreted the meaning of the word as it appeared in s 45D. The approach of Deane J has been adopted in the different statutory contexts, in most cases without substantive analysis or challenge from any party. There are no binding decisions of the Full Court as to the meaning of the term in s 50 of the Act. There are some obiter observations of the Full Court in Metcash 198 FCR 297, but no party in that case contended that "likely" bore its ordinary meaning. 188 Starting with the text, the respondents submitted that the natural and ordinary meaning of the word "likely" is "probable", i.e. more probable than not, relying on definitions provided by the Oxford English Dictionary and the Macquarie Dictionary. That the ordinary meaning of "likely" is "probable" is confirmed by judicial decisions which have considered the meaning of the word, citing as examples Australian Telecommunications Commission v Krieg Enterprises Pty Ltd (1976) 14 SASR 303 at 312-313 per Bray CJ and Assistant Minister for Immigration and Board Protection v Splendido [2019] FCAFC 132 at [57] per Mortimer J, with whom Moshinsky J agreed, and at [127] per Wheelahan J. 189 The respondents submitted that neither the statutory context nor the statutory purpose of s 50 provides a justification for departing from the ordinary meaning of the word "likely". 190 The respondents observed that Tillmanns concerned s 45D of the Act which relevantly provided that a person shall not, in concert with another person, engage in conduct that hinders or prevents the supply of goods or services by a third person to a corporation where the conduct is engaged in for the purpose, and would have or be likely to have the effect, of causing substantial loss or damage to the business of the corporation. The respondents submitted that that provision is materially different from the current s 50, in that it requires the existence of both a relevant purpose and the effect of causing substantial loss or damage to the business of the corporation. Bowen CJ (with whom Evatt J agreed) noted (at 339) that "the word 'likely' is one which has various shades of meaning", but concluded (at 340) that it was unnecessary to determine its meaning in the context of s 45D because "whichever meaning is adopted the evidence leads me to the conclusion that the likelihood of substantial loss or damage has been established". While Deane J concluded that, in s 45D, "likely" means a real chance or possibility, the respondents submitted that that conclusion was affected by the terms of s 45D which required proof of purpose and effect. Deane J's conclusion was as follows (at 347-348): Section 45D (1) proscribes conduct only if it be engaged in for the purpose of causing loss or damage to the business of the relevant corporation. Even though conduct be engaged in for such a purpose it will be outside the proscription contained in the subsection unless it "would have or be likely to have" that effect. Plainly the reference to "would be likely to have" is meant to convey a lower degree of likelihood than the reference to "would have". In the case where conduct has not occurred, a court would be constrained to determine whether conduct "would have" the specified effect by reference to the ordinary standard of whether it was more likely than not that it would. In such a case, if "likely" is interpreted as meaning "more likely than not", it would add little to the practical scope of the section. On the other hand, if conduct had run its ordinary course and had not had the specified effect, it would be but rarely that a court would feel justified in disregarding the lesson of the event and finding that while the conduct did not have the specified effect it had been more likely than not that it would have that effect (see per Dixon J. Willis v. Commonwealth (20)). The conclusion which I have reached is that, in the context of s. 45D (1), the preferable view is that the word "likely" is not synonymous with "more likely than not" and that if relevant conduct is engaged in for the purpose of causing loss or damage to the business of the relevant corporation, it will suffice, for the purposes of the subsection, if that conduct is, in the circumstances, such that there is a real chance or possibility that it will, if pursued, cause such loss or damage. Whether or not such conduct is likely (in that sense) to have that effect is a question to be determined by reference to well-established standards of what could reasonably be expected to be the consequence of the relevant conduct in the circumstances. In determining the answer to that question, it will be relevant that the persons engaging in the conduct did so with the purpose of causing such loss or damage. 191 The respondents acknowledged that there are two strands to the above reasoning. One strand, relied on by the respondents, is the fact that the section depends upon proof of purpose as well as effect. The second strand concerns the use, in the statutory provision, of two tests or legal standards: whether the conduct would have the effect, or whether the conduct would be likely to have the effect, of causing substantial loss or damage to the business of the corporation. Deane J reasoned that the latter test must be intended to convey a lower degree of likelihood in comparison to the former test. However, as the application of the ordinary standard of proof has the consequence that the former test requires proof of the effect on the balance of probabilities, it must follow that the latter test requires proof to a lower standard of certainty. The respondents noted that similar reasoning was applied by French J in AGL No 3 at [347]. The respondents submitted that the second strand of reasoning conflates the relevant fact to be proved with the standard of proof required to establish that fact. They illustrated the difficulty in that strand of reasoning by reference to the prohibition of cartel conduct in Division 1 of Part IV of the Act. Relevantly, under s 45AD(2), a provision of a contract, arrangement or understanding between competitors will be a cartel provision if it has or is likely to have the effect of fixing prices. It can be observed that the definition uses two tests: has the effect or is likely to have the effect. Under Division 1, cartel conduct is both a criminal offence (see Subdivision B) requiring proof beyond reasonable doubt and a civil wrong (see Subdivision C) requiring proof on the balance of probabilities. The respondents submitted that the meaning of the word "likely" in the definition of the prohibited conduct cannot be determined by whether the criminal or civil provisions are applied. 192 The respondents acknowledged that Deane J's interpretation of "likely" has been applied in relation to other provisions of the Act that use the expression "likely", but they submitted that that has been done with little critical examination or challenge. The respondents provided the Court with a table highlighting the common drafting technique in Part IV of the Act that uses a dual legal standard: viz whether conduct "is or is likely to be", "has or is likely to have the effect" or "would have the effect or be likely to have the effect". That drafting technique appears in the definition of cartel provisions in s 45AD and in ss 45, 45D, 45DA, 45DB, 46, 47, 50 and 50A and related provisions. The same drafting technique is used in s 18 of the Australian Consumer Law (Schedule 2 to the Act) (ACL), which prohibits conduct that is misleading or deceptive or is likely to mislead or deceive. Section 18 is the successor to s 52, which was formerly in Part V of the Act. The respondents referred the Court to the following appellate authorities (set out below in chronological order) in which Deane J's reasoning in Tillmanns has been applied with (on the respondents' submission) little critical examination: (a) In Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 (Global Sportsman) at 87, the Full Federal Court concluded that "likely", in the context of s 52(1) of the Act (now s 18 of the ACL) meant "real or not remote chance or possibility regardless of whether it is less or more than fifty per cent", referring to Deane J's reasoning in Tillmanns. (b) In News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 (News Limited) at 564-565, the Full Federal Court adopted the real chance test in relation to the prohibition of exclusionary provisions, previously defined in s 4D (now repealed), referring to both Deane J's reasoning in Tillmanns and Global Sportsman. (c) In Monroe Topple & Assocs Pty Ltd v Institute of Chartered Accountants in Australia (2002) 122 FCR 110 (Monroe Topple), the Full Federal Court concluded that the reasoning of Deane J in Tillmanns was equally applicable to s 45 (at [111] per Heerey J, with whom Black CJ and Tamberlin J agreed. (d) In Universal Music Australia Pty Ltd v ACCC (2003) 131 FCR 529 (Universal Music) at [247], the Full Federal Court adopted the real chance test in the context of s 47, following Monroe Topple. (e) In Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592, another case concerning s 52 of the Act, Gleeson CJ, Hayne and Heydon JJ referred to the real chance test in Global Sportsman with apparent approval (at [112]). (f) In Seven Network Limited v News Ltd (2009) 182 FCR 160 (Seven Network), News Limited contended that the word "likely" did not mean "real chance" in the context of s 45(2) of the Act. Dowsett and Lander JJ said that "there is a substantial body of authority which supports" the real chance meaning, "in particular the decision of the Full Court in Monroe Topple". Their Honours concluded that they should follow Monroe Topple unless satisfied that it was clearly wrong (at [750]). (g) In Australian Competition and Consumer Commission v Cascade Coal Pty Ltd [2019] FCAFC 154 (Cascade Coal) at [148], the Full Federal Court again construed "likely" as meaning real chance in the context of s 4D. 193 The respondents observed that the meaning of "likely" in the context of s 50 was considered in Metcash 198 FCR 297, but none of the parties in that case sought to argue that the "real chance" meaning was wrong (although Metcash and Franklins formally reserved their rights to do so) (at [218]). Nor did the case turn on the question, because the Court found that the ACCC's case did not even satisfy the lower threshold (at [230]-[231] per Yates J, with whom Finn J agreed). Nevertheless, in obiter dicta remarks, Buchanan J concluded that the real chance test should not be applied to s 50 (at [37]-[89]). His Honour observed that the reasoning of Deane J in Tillmanns was influenced by the particular statutory context of s 45D, and that none of the Full Court decisions applying the reasoning of Deane J involved any detailed consideration. 194 The respondents submitted that there are a number of reasons for not applying the "real chance" test when considering s 50. First, it does not reflect the ordinary meaning of the words of the statute. Second, the relevant extrinsic materials acknowledge that mergers can lessen competition or improve efficiencies, which requires a line to be drawn between those mergers that are likely to be beneficial and those which are likely to be detrimental to the community (Commonwealth, Parliamentary Debates, House of Representatives, 3 November 1992, 2405-2406 (Michael Duffy, Attorney-General). This suggests that the prohibition is only intended to operate if the anti-competitive effects are likely in the sense of being probable. Third, the real chance test is inherently uncertain because it does not define the level of probability that is sufficient for the chance to be "real". 195 An alternative argument advanced by the respondents is that, even if the word "likely" means "real chance", the ACCC could not succeed in a case under s 50 unless the Court concludes: (i) that it is more probable than not that one of the ACCC's counterfactuals will come to pass if the proposed acquisition does not proceed; and (ii) that there is a real chance that, if the proposed acquisition does proceed, that would result in a substantial lessening of competition compared to the scenario in which one of the ACCC's counterfactuals comes to pass. The respondents submitted that that was the approach adopted by Emmett J at first instance in Metcash 282 ALR 464 (at [146]). On appeal in Metcash 198 FCR 297, Yates J (with whom Finn J agreed) refrained from expressing a concluded view on the proper construction of, and standard of proof that is to be applied in relation to, s 50, but expressed the provisional view (at [227]) that there was but a single question. As noted earlier, Buchanan J concluded that the real chance test should not be applied at all, but that if it was appropriate to apply that test at all, he agreed with the approach taken by Emmett J (at [90]).

The statutory language and the meaning of "likely" 213 Before turning directly to the meaning of the word "likely", a number of preliminary matters about s 50 should be noted. There was no material dispute between the parties about these matters. 214 First, a contravention of s 50 is a civil wrong which must be proved on the balance of probabilities: s 140 of the Evidence Act 1995 (Cth). The matter that must be proved on the balance of probabilities is that the impugned acquisition would have, or be likely to have, the effect of substantially lessening competition in any market. 215 Second, the matter that must be proved - the effect on competition of the acquisition - might be described as an "economic fact". It is a conclusion about a condition of the real world - it is in one sense observable - but the condition is observed and described through the tools and language of the social science of economics. Competition describes the nature and extent of rivalry between firms engaged in trade and commerce. Many of the observable facts that contribute to a conclusion about competition are listed in s 50(3) of the Act and include: (a) whether products and sources of supply are substitutes for acquirers (on the demand side) or for suppliers (on the supply side); (b) the level of concentration in a given market; (c) the height of barriers to entry to a given market, which necessarily requires an understanding of the nature or cause of the barriers; (d) the extent of vertical integration in a given market; (e) whether acquirers have countervailing power, which also requires an understanding of the commercial conditions that cause that power to exist; (f) the dynamic characteristics of the market, including growth, innovation and product differentiation over time; and (g) pricing behaviours which might reveal market power or the absence of market power. 216 Third, the prohibition in s 50 is a forward-looking test and requires a comparison between the nature and extent of competition in the future with the acquisition and without the acquisition in any market potentially affected by the acquisition. It involves a prediction about the future. While the subject of the prediction - the effect on competition of the acquisition - must be proved on the balance of probabilities, it is not necessary that each relevant predicted fact be proved on the balance of probabilities. 217 An analogy, although imperfect, can be drawn with the Court's assessment of damages in respect of future periods of time, for example loss of earning capacity or the loss of a contractual opportunity. In Malec, the High Court confirmed that, in such circumstances, the court does not ignore a possible eventuality because the likelihood of it occurring is less than 50%. Rather, the court evaluates the possibilities, applying an appropriate discount to reflect the likelihood of the eventuality occurring in arriving at an assessment of damages (at 639-640 per Brennan and Dawson JJ and at 642-643 per Deane, Gaudron and McHugh JJ). While Malec concerned damages for personal injuries, that approach has been applied in the context of contractual damages (The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64) and statutory damages in respect of a contravention of s 52 of the Act (Sellars). The analogy is imperfect because the assessment of damages differs in many respects from the assessment required by s 50. In the context of damages, the court is concerned about the unfairness that would arise for a plaintiff that has been wronged if future eventualities (which would be otherwise compensable) could not be proved on the balance of probabilities (Malec at 643 per Deane, Gaudron and McHugh JJ). Nevertheless, s 50 requires the court to undertake a forward-looking assessment of the effect on competition of the acquisition. A common sense approach requires the court to assess what may occur in the relevant market in the future, taking into account the likelihood as a matter of possibility as well as probability, and weigh such predictions in the overall assessment of whether the acquisition would have, or be likely to have, the effect of substantially lessening competition on the balance of probabilities. 218 In the usual case, predictions about the nature and extent of competition in the future with and without the acquisition will be rooted firmly in past and present market conditions, which are susceptible of proof in the ordinary way. Most markets have a history from which an assessment of substitution possibilities, concentration, barriers to entry and other commercial behaviours and conditions can be undertaken and reliable predictions about the future can be made. Further, some future facts are more certain than others. For example, commercial firms and governments make plans about investment or entry into markets, which are observable facts able to be proved in the ordinary way. Such facts provide a platform on which a court is able to undertake the assessment required by s 50. 219 Fourth, the matter that must be proved is a substantial lessening of competition. "Substantial" is an evaluative, rather than a precise, legal standard. In Rural Press, in the context of s 45 of the Act, Gummow, Hayne and Heydon JJ adopted with apparent approval the statement of French J in Stirling Harbour (2000) ATPR 41-752 that the relevant question is whether the effect is substantial in the sense of being meaningful or relevant to the competitive process (at [41]). However, at footnote 67, their Honours noted that French J had referred to three authorities: Tillmanns in which Deane J expressed the view that "substantial" (in s 45D) meant "real or of substance and not insubstantial or nominal"; Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1982) 62 FLR 437 in which Lockhart J said that (at 445) "[in s 45] the lessening of competition must be at least real or of substance", and said that he saw "considerable force in the view . . . that, in the context of s 45, the word means substantially in the sense of considerably"; and Eastern Express Pty Ltd v General Newspapers Pty Ltd (1991) 30 FCR 385 in which Wilcox J rejected the view that an effect on competition which was more than insignificant was, for that reason alone, substantial (at 420-422). Their Honours observed that it was not necessary to decide between the foregoing statements, but concluded that it is plain that the authorities do not support the proposition that it would be sufficient for liability if the relevant effect on competition was quantitatively "more than insignificant" or "not insubstantial". The current state of the authorities shows that "substantial" means "real or of substance" and, in that sense, meaningful or relevant to the competitive process. 220 Fifth, s 50 contains two legal standards or limbs. The section is contravened if the acquisition would have the effect of substantially lessening competition; and the section is also contravened if the acquisition would be likely to have the effect of substantially lessening competition. No party suggested that the two legal standards have the same meaning. Each party accepted that the first limb imposes a higher standard of certainty than the second limb. Each party also accepted that the lower standard in the second limb effectively rendered the first limb redundant, although the ACCC emphasised that the redundancy was not impermissible and that it is a frequent redundancy in the law that a norm may be stated in two forms, one of which is more difficult to satisfy than the other. It should be observed, however, that there are two legal standards; it may well be, for instance, after looking at the evidence, a court could be satisfied to the necessary level of satisfaction that the acquisition would have the effect of substantially lessening competition. The dual legal standard in s 50 is also to be found in ss 45, 46, 47 and 50A, and a similar form of language is to be found in ss 45AD, 45D, 45DA and 45DB. It must be accepted that the same redundancy exists in each of those provisions and the language used is a form of drafting that has been replicated throughout the provisions of Part IV of the Act. 221 With that background, the meaning of "likely" can be considered in light of textual, contextual and purposive considerations. 222 As to the text, in our view the ordinary meaning of the word "likely" in everyday language is "probable" (in the sense of more probable than not) and that meaning is consistent with dictionary definitions. The ACCC argued that the definition in the Macquarie Dictionary, "reasonably to be believed or expected", conveyed a lower degree of expectation than "more probable than not". However, the whole definition is "seeming like truth, fact, or certainty, or reasonably to be believed or expected; probable", which conveys the sense of "more probable than not". The ACCC also relied on a passing comment of Mason, Wilson and Deane JJ in Boughey to the effect that the ordinary meaning of "likely" included "a substantial - a 'real and not remote' - chance regardless of whether it is less or more than 50 per cent" (at 21). However, the ratio of the case was the meaning to be given to the word in its statutory context (s 157(1) of the Criminal Code Act 1974 (Tas)), not the meaning of the word in ordinary language. Gibbs CJ, in agreement as to the result, considered that the ordinary meaning of the word is "probable" (at 14), and Brennan J, in dissent, observed that the dictionary definitions treat "likely" and "probable" as synonyms (at 42). The more significant point to be taken from cases such as Boughie, Jungarrayi and Deerubbin is that the word is capable of bearing a meaning of a real or substantial chance, even if it is less than 50%. 223 The juxtaposition of the dual legal standards in the section also supports the conclusion that "likely" means "probable". The first legal standard is that the acquisition would have the effect of substantially lessening competition, which conveys certainty. Of course, that standard must be proved to the civil standard on the balance of probabilities, but the language in which the standard is expressed conveys certainty of outcome. The second legal standard is that the acquisition would be likely to have the effect of substantially lessening competition. As a natural counterpoint to the first legal standard, the second legal standard would be expected to convey a probable outcome, not a "real chance". Respectfully, the reasoning of Deane J in Tillmanns, also adopted by French J in AGL No 3, that the first legal standard is concerned with the balance of probabilities conflates the standard of proof of the contravention with the legal test for contravention. The two matters are conceptually separate. As Middleton J observed in Vodafone Hutchison Australia Pty Limited v Australian Competition and Consumer Commission [2020] FCA 117 at [68] and the parties before us accepted: …One must distinguish between the requirements of the substantive law (s 50) and the principles or rules of evidence. The content of s 50 is not addressing the evidentiary burden. … The burden of proof is set out in s 140 of the Evidence Act 1995 (Cth), …This does not take away from the evaluative or quantitative judgment a Court still needs to make, which will involve the concepts referred to by French J in AGL: 'commercially relevant or meaningful' (at 420 [355]), not 'a mere possibility' (at 416-417 [348]), and operating 'in the real world' (at 416-417 [348]). These concepts are relevant to the substantive requirement of s 50 to give effect to competition law and policy in the context of merger management. … 224 As to context, it is relevant to consider the legislative history and the broader statutory framework. It is also relevant to have regard to the decided cases in the context of the legislative history. 225 The original form of s 50, enacted in 1974, was similar to the present form, but it contained a single legal standard (likely to have the effect) rather than a dual standard. It stipulated that a corporation shall not acquire, directly or indirectly, any shares in the capital, or any assets, of a body corporate where the acquisition is likely to have the effect of substantially lessening competition. The relevant extrinsic materials are uninformative about the meaning of the word "likely". 226 As at 1974, the prohibition in s 45(1) was directed to contracts, arrangements or understandings in restraint of trade. However, s 45(4) used a dual legal standard. It stipulated that a contract, arrangement or understanding is not in restraint of trade unless the restraint has, or is likely to have, a significant effect on competition. Similarly, the form of s 47 as enacted in 1974 also used a dual legal standard. Section 47(10) stipulated that s 47(1) did not apply to the practice of exclusive dealing unless engaging in that practice has the purpose, or has or is likely to have the effect, of substantially lessening competition. 227 In 1977, s 50 was amended by the Trade Practices Amendment Act 1977 (Cth). The new section also contained a dual legal standard, but of a different kind. The section prohibited acquisitions if, as a result of the acquisition, the acquirer would be, or would be likely to be, in a position to control or dominate a market. The section also prohibited acquisitions by an acquirer that was already in a position to control or dominate a market where the acquisition would, or would be likely to, substantially strengthen the power to control or dominate that market. Section 45 was also amended to a form very similar to its present form. It prohibited the making of contracts, arrangements or understandings that contained a provision that has the purpose, or would have or be likely to have the effect, of substantially lessening competition, and the giving effect to such a provision. Section 45D was also enacted at that time. It prohibited what are colloquially called secondary boycotts. An element of the prohibition is that the conduct is engaged in for the purpose, and would have or be likely to have the effect, of causing substantial loss or damage to the business being boycotted. 228 The amended s 50 was considered by Northrop J in Trade Practices Commission v Ansett Transport Industries (Operations) Pty Ltd (1978) 32 FLR 305. His Honour construed the word "likely" as meaning more probable than not (see for example at p 344 and 346), although it does not appear that the meaning of the word was the subject of debate. 229 The newly inserted s 45D was considered in Tillmanns. Bowen CJ, with whom Evatt J agreed, preferred not to put a gloss on the word "likely" by preferring one meaning over another as it was unnecessary in deciding the case (at 340). The relevant part of Deane J's reasons has been reproduced earlier. His Honour construed the word to mean "a real chance or possibility", although his Honour qualified those words by explaining: "Whether or not such conduct is likely (in that sense) to have that effect is a question to be determined by reference to well-established standards of what could reasonably be expected to be the consequence of the relevant conduct in the circumstances" (at 347-348). The qualification highlights the difficulties with synonyms. 230 A case that is often overlooked in this context is Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 (TNT Management). It involved a contravention of the original form of s 45(1), and considered the meaning of the word "likely" in s 45(4). Franki J noted the warning given by Bowen CJ in Tillmanns not to place a gloss on the section by preferring one meaning of "likely" rather than another if that is not necessary for the determination of a particular case. However, his Honour expressed a preference for the view that, whilst the meaning need not be restricted to a situation where the odds are greater rather than equally balanced or somewhat less than equally balanced, the probability must be something not very far short of "more probably than not" (at 49). His Honour also considered that the word "has" requires the question to be tested against the established facts, whereas the words "likely to have" allows any reasonable inference to be drawn (at 50). 231 As noted earlier, s 50 took its present form (in relevant respects) in 1992 by amendments enacted under the Trade Practices Legislation Amendment Act 1992 (Cth). The Explanatory Memorandum to the enacting Bill made the following observations: 11. The previous test of market dominance has been interpreted by the court as a situation where one firm has a commanding influence in the market. It is a test which focuses largely on changes to the structure of a market that would be affected by the acquisition but it also takes some account of the likely effect on the competitive process of such an acquisition. The substantial lessening test focuses on changes to the state of competition in the relevant market. As the Trade Practices Act is about competition, a test which concentrates on competition and whether there is a lessening of that competition is more consistent with the policy underlying the legislation. 12. The term 'substantially lessening competition' is used widely through the Principal Act. It is here intended to mean an effect on competition which is real or of substance, not one which must be large or weighty. While in many cases, a merger or acquisition would be caught by either the 'dominance' or the 'substantial lessening' test, there are some acquisitions that are more likely to be subject to the new test, for example, where an acquisition of a small effective competitor resulted in two well-matched competitors being left in the market. 232 The foregoing statements provide limited assistance in the interpretation of the word "likely". The language in paragraph 11 is consistent with a higher degree of certainty in the test (whether there is a lessening of competition) but does not directly address the intended meaning of the word "likely". Paragraph 12 makes clear that the phrase "substantial lessening of competition" was intended to have the same meaning as had been given to that phrase in other provisions of Part IV, namely "real or of substance". Again, though, the paragraph does not directly address the meaning of the word "likely". As at 1992, Tillmanns, TNT Management and Global Sportsman had been decided, but there is no reference to those cases or the "real chance" test (or any other test) in the Explanatory Memorandum. 233 The legislative history makes clear that the use of a dual legal standard in the provisions of Part IV was a legislative drafting style incorporated into the Act when it was first enacted (albeit not in the case of s 50) and was subsequently continued. As each of ss 45, 47 and 50 address a similar subject matter, trading and commercial conduct that harms competition, the dual legal standard must be given the same meaning in each provision. 234 As already noted in connection with the parties' submissions, the interpretation favoured by Deane J in Tillmanns has been followed on a number of occasions by the Full Federal Court: News Limited in 1996 in relation to s 4D (now repealed); Monroe Topple in 2002 in relation to s 45; Universal Music in 2003 in relation to s 47; Seven Network in 2009 in relation to s 45; and, most recently, Cascade Coal in 2019 in relation to s 4D (now repealed). 235 The prohibition of cartel conduct in Division 1 of Part IV was enacted in 2009 by the Trade Practices Amendment (Cartel Conduct and Other Measures) Act 2009 (Cth). As enacted, s 44ZZRB (now s 45AB) contained a definition of the word "likely" as including "a possibility that is not remote". In Division 1, the word "likely" is used in connection with the definition of cartel conduct, which is a different use to the competition tests in ss 45, 47 and 50. The Explanatory Memorandum to the enacting Bill explained the inclusion of the definition in the following terms (at 1.51): The term likely appears in the purpose/effect condition, the purpose condition and the competition condition. It enables a court to look not only at what has been established on the facts, but also to infer, from those facts, the likely consequences of the provision of the contract, arrangement or understanding. The term is also used in other provisions of the Bill in so far as they relate to those conditions. Likely is defined to include a possibility that is not remote, in relation to four fact situations: a supply of goods or services, an acquisition of goods or services, the production of goods, or the capacity to supply services. This clarifies the position following judicial observations made in the case law in relation to the term (for example, in Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union (1979) 42 FLR 331, 27 ALR 367, by Bowen CJ at 339 and by Deane J at 346). 236 The first two sentences of the Explanatory Memorandum appear to be referencing Franki J's observation in TNT Management that the word "likely" allows the Court to have regard to reasonable inferences arising from the established facts. The latter sentences express a legislative preference for the "real chance" test in Tillmanns. However, the amending Act was not concerned with the prohibitions in ss 45, 47 and 50. 237 Section 46 was amended in 2017 by the Competition and Consumer Amendment (Misuse of Market Power) Act 2017 (Cth). The section now prohibits a corporation with substantial market power from engaging in conduct that has the purpose, or has or is likely to have the effect, of substantially lessening competition. Thus, the prohibition now has a similar form to ss 45, 47 and 50. The Explanatory Statement to the amending Bill stated (at para 1.22): The concept of the purpose, effect or likely effect of substantially lessening competition is new to section 46. This concept already exists in a number of provisions in Part IV of the Act, and it is intended that the existing jurisprudence will inform the application of this concept in the context of section 46. 238 At the time of enactment, the "existing jurisprudence" must be taken to include, at the least, Monroe Topple, Universal Music and Seven Network. 239 The legislative history reveals the following matters. First, the prohibitions in Part IV of the Act have been drafted with a dual legal standard from their enactment in 1974. Second, from a relatively early date, the word "likely" was not interpreted as being synonymous with "probable", although a number of phrases have been used to express the necessary degree of likelihood from time to time (even within Tillmanns itself). Third, the provisions of Part IV of the Act have been amended on a regular basis over the past 46 years, without any change to the use of the dual legal standard. A conclusion which can be drawn is that the judicial approach to the interpretation of the dual legal standard has not caused any perceived difficulties requiring legislative intervention. 240 As to the broader statutory framework, the ACCC referred to the fact that acquisitions that would contravene s 50 are able to be authorised by the ACCC if it is satisfied that the acquisition would result or be likely to result in a net public benefit (see s 90(7)). The contention was to the effect that the legislative policy was to prohibit mergers where there is a risk of competitive harm that is less than probable, because beneficial mergers can be authorised. In our view, the availability of administrative authorisation of mergers does not assist in the construction of the word "likely". Whichever legal standard applies under s 50, administrative authorisation will be applicable to allow mergers that can be shown to generate public benefits that outweigh anti-competitive detriments. 241 As to statutory purpose, s 2 states that the object of the Act is to enhance the welfare of Australians through, relevantly, the promotion of competition. It can be accepted that the Act reflects a policy objective of promoting competition in Australian markets, and that policy is believed to enhance the welfare of Australians. It is consistent with that policy objective to prohibit conduct that creates a risk of substantially harming competition, even if that result is not certain. However, the statutory purpose does not otherwise assist in defining the degree of risk that must exist for the prohibitions in Part IV to apply. 242 Turning to the existing authorities, the respondents correctly submitted that, in almost all of the Full Federal Court decisions since Tillmanns, the meaning of the word "likely" has not been contested and the Court has generally adopted the approach of Deane J without further analysis. The one exception is Seven Network. In that case, the Full Court concluded that it should follow Monroe Topple, observing (at [750]): … We therefore consider that we should follow the decision in applying s 45 unless we are satisfied that it is clearly wrong. Reconsideration of policy matters will not generally be an appropriate basis for such satisfaction, at least in the absence of any evidence as to wide-spread inconvenience or injustice caused by the established approach. The decision in Monroe Topple 122 FCR 110 has stood since 2002. News's submissions do not cause us to doubt its correctness. 243 We are of the same view. Strong arguments, based on the statutory text, can be made for construing the word "likely" to mean "probable". However, the word "likely" has been construed to mean a likelihood that is less than probable for 40 years (from Tillmanns) and there is no evidence of widespread inconvenience in the application of the law. To the contrary, the law has been amended on numerous occasions without any suggestion that the dual legal standard should be changed. In an analogous context in News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563, coincidentally involving the interpretation of a provision of the Act, McHugh J observed (at [42]) that questions of statutory construction are notorious for generating opposing answers, none of which can be said to be either clearly right or clearly wrong. His Honour concluded that he would not overrule the subjective interpretation of the word "purpose" in s 4D, reasoning (at [41]): If the interpretation of s 4D was being considered for the first time, I would prefer the view that, for the purposes of s 4D, the purpose of an alleged exclusionary provision is to be determined objectively without regard to the mental state of the parties who made the provision. But the subjective interpretation has stood for seventeen years, been approved by the Full Court of the Federal Court and been followed on numerous occasions. Given the terms of s 4F, s 4D is clearly open to the construction that "purpose" in both sections means the subjective purpose of the makers of the provision. Certainly, it is impossible to hold that the subjective interpretation is plainly wrong. 244 Similarly, if the meaning of the word "likely" was being considered for the first time, we would have been inclined to adopt the meaning probable, but there is insufficient reason to change course at this point in time. For those reasons, we reject ground 4 of Aurizon's amended notice of cross-appeal. 245 Nevertheless, substituting a synonym such as "real chance" for the statutory word "likely" creates the risk that the synonym may convey a different standard to the statutory language and may introduce a further element of uncertainty. As already noted, in Tillmanns Deane J observed that likelihood ought to be determined by reference to well-established standards of what could reasonably be expected to be the consequence of the relevant conduct in the circumstances. Similarly, in AGL No 3, French J observed (at [348]) that: The meaning of "likely" reflecting a "real chance or possibility" does not encompass a mere possibility. The word can offer no quantitative guidance but requires a qualitative judgment about the effects of an acquisition or proposed acquisition. The judgment it requires must not set the bar so high as effectively to expose acquiring corporations to a finding of contravention simply on the basis of possibilities, however plausible they may seem, generated by economic theory alone. On the other hand it must not set the bar so low as effectively to allow all acquisitions to proceed save those with the most obvious, direct and dramatic effects upon competition. By the language it adopts and the function thereby cast upon the Court and the regulator in their consideration of acquisitions s 50 gives effect to a kind of competition risk management policy. The application of that policy, reflected in judgments about the application of the section, must operate in the real world. The assessment of the risk or real chance of a substantial lessening of competition cannot rest upon speculation or theory. To borrow the words of the Tribunal in the Howard Smith case, the Court is concerned with "commercial likelihoods relevant to the proposed merger". The word "likely" has to be applied at a level which is commercially relevant or meaningful as must be the assessment of the substantial lessening of competition under consideration - Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [41]. 246 In the present case, the primary judge followed the authorities referred to above in construing the word "likely" as meaning "real commercial likelihood" (at [1275]), as explained by French J in AGL No 3. In our view, there is no error in his Honour's interpretation of the statutory language. We also respectfully agree with his Honour's statement of the proper approach to the application of s 50, namely: (a) the application of s 50 requires a single evaluative judgment (at [1276]); (b) it is a distraction (and, we would add, wrong) to ask what standards of proof apply to the primary facts which will involve predictions about the future (at [1278]); (c) however, the degree of likelihood of any particular future fact existing or arising will be relevant to the assessment of the likely effect on competition of the acquisition (at [1279]).

Reasoning of the primary judge 311 In support of their submissions concerning judicial power, the parties emphasised different aspects of the primary judge's reasons. 312 The ACCC focussed on the primary judge's ultimate conclusion that, in circumstances where Pacific National had given the Undertaking unconditionally, its acquisition of the ART would not contravene s 50. Consistently with that conclusion, the primary judge dismissed the ACCC's application and ordered the ACCC to pay 50% of the respondents' costs. The ACCC argued that the primary judge's acceptance of the Undertaking was not associated with a finding of contravention of s 50 and associated relief. 313 While accepting and supporting the primary judge's ultimate conclusion, the respondents also emphasised the primary judge's findings that, in the absence of the Undertaking, the acquisition of the ART by Pacific National would contravene s 50. The respondents argued that the acceptance of the Undertaking was a condition of the decision not to make a declaration of contravention and was in lieu of injunctive relief. As the acceptance of the Undertaking obviated the need for any other relief, the primary judge dismissed the ACCC's application. 314 The primary judge's reasons contain the elements emphasised by both the ACCC and the respondents. The primary judge reasoned that: (a) the ACCC would have established its s 50 case (i.e. Pacific National's acquisition would have contravened s 50) in the absence of the Undertaking (see [47], [49], [1418] and [1612]); however, (b) in circumstances where Pacific National had given the Undertaking unconditionally, its acquisition of the ART would not contravene s 50 (see [49], [1418], [1426] and [1611]). 315 Subsidiary factual findings were made on the same basis. In particular, the primary judge found that, if Pacific National owned the ART, it would have the ability to discriminate against third party users, and that ability would deter new entry, in the absence of the Undertaking (see [828]-[831], [903]-[904], [918], [924], [1307] and [1351]-[1353]), but it would not have that ability having given the Undertaking (see [832], [838]-[839], [1005], [1307], [1343], [1351]-[1353] and [1376]). 316 The primary judge concluded expressly that the obligations imposed by the Undertaking could be taken into account in the assessment of competition in the future with the acquisition (at [49], [1431] and [1611]). The primary judge described as hypothetical the question whether, if he had not accepted the Undertaking, he would have found for the ACCC on its s 50 case (but went on to state that he would have accepted the ACCC's case) (at [1612]). 317 The primary judge's reasons with respect to the costs of the proceeding ([2019] FCA 866) do not advance the analysis. While his Honour ordered the ACCC to pay 50% of the respondents' costs of the proceeding, on any view the ACCC had mixed success in the proceeding, having abandoned aspects of its case before trial and having failed on its s 45 allegations concerning the Terminal Services Subcontract. It is not possible to read the costs reasons as indicating that the primary judge found that the ACCC failed on its s 50 case. His Honour noted that: the ACCC won on market definition (at [24]); the parties had mixed success on the s 50 question (at [26]); by originally offering the Undertaking if the Court first concluded that the acquisition would contravene s 50, Pacific National had put the ACCC to proof on its s 50 case (at [27]); and the ACCC was justified in seeking to restrain the respondents from completing the acquisition and in seeking declarations that the acquisition would breach s 50, at least until when the Undertaking was given unconditionally (at [28]). 318 The arguments concerning judicial power advanced before this Court were not advanced in the same manner below. Before the primary judge, the arguments focussed on the Court's power to impose monitoring and enforcement obligations on the ACCC (at [1429]), whether Pacific National was seeking an advisory opinion (at [1431]), whether the Court should make orders requiring it to monitor detailed contractual arrangements (at [1432]), and other asserted deficiencies in the Undertaking. In that context, the primary judge did not expressly address the power being exercised by the Court in accepting the Undertaking. Certainly, the primary judge did not say expressly that the Undertaking was being accepted in lieu of injunctive relief under s 80 of the Act; nor did the primary judge say that the Undertaking was being accepted as a condition of refusing to give declaratory relief under the FCA Act. While the primary judge referred (at [1433]) to the decision in AGL No 3 in which French J accepted an undertaking in connection with declaratory relief sought by the parties to the transaction (declaring that the acquisition would not contravene s 50), no arguments were addressed to the primary judge about the power being exercised by French J in that case. 319 Ultimately, the question for determination is whether the primary judge had power to accept the Undertaking in the circumstances in which it was accepted, not whether the primary judge explained the power nor the reasoning for accepting the Undertaking. In the discussion that follows, we will address the ACCC's grounds of appeal under three topics. The first will consider the powers available to the Court to accept an undertaking in connection with the resolution of a proceeding for contravention of s 50 of the Act. That part of the discussion will not address the specific form of the Undertaking, but will assume that it is an undertaking capable of enforcement and preventing (or deterring) the anti-competitive discriminatory conduct in issue in this proceeding. The second topic will consider the asserted Constitutional limits and other statutory limits to the acceptance of the Undertaking in this case. Again, that part of the discussion will not descend to the detail of the Undertaking, but consider the issues from the perspective of an undertaking of the kind accepted in this case. The third topic will consider the asserted defects in the Undertaking, addressing the questions whether the terms of the Undertaking are too uncertain to be accepted by the Court and whether the primary judge was correct to find that it would be effective in preventing Pacific National from engaging in anti-competitive discrimination at the ART.

Power to accept the Undertaking 320 Although the respondents argued that there were a wide range of circumstances in which a superior court may accept undertakings, the circumstances adverted to are not analogous to the present. The respondents principally supported the power of the primary judge to accept the Undertaking on the basis of s 21 of the FCA Act, when read with FCR 1.33 and ss 22 and 23 of the FCA Act, and s 80 of the Act. 321 As noted earlier, by its originating application, the ACCC sought declaratory relief under s 21 of the FCA Act and injunctive relief under s 80 of the Act. 322 There was no dispute between the parties that the ACCC is entitled to seek declaratory relief under s 21 of the FCA Act, which provides that the Court may, in civil proceedings in relation to a matter in which it has original jurisdiction, make binding declarations of right, whether or not any consequential relief is, or could be, claimed. The parties agreed that the Federal Court is given original jurisdiction, in respect of cases brought by the ACCC for alleged contraventions of s 50 of the Act, under s 39B(1A) of the Judiciary Act, thereby enlivening the power under s 21. 323 The ACCC disputed, however, that the Court is empowered by FCR 1.33 to accept the Undertaking as a condition of dismissing the ACCC's application for declaratory relief. FCR 1.33 states that the Court may make an order subject to any conditions the Court considers appropriate. The respondents argue that the power to impose a condition, referred to in FCR 1.33, is to be found in ss 22 and 23 of the FCA Act. Section 22 of the FCA Act provides that the Court shall, in every matter before the Court, grant, either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided. Section 23 provides that the Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate. 324 It is therefore necessary to consider the nature of the powers conferred on the Court by, on the one hand, ss 21 to 23 of the FCA Act and on the other, s 80 of the Act, as well as the interaction between those powers. 325 It can be accepted that the powers conferred on the Federal Court by ss 21 to 23 of the FCA Act are broad. In the absence of other remedial powers given to the Court in respect of a matter before the Court, those sections confer the powers customarily exercised by a superior court. As observed by Deane J in Jackson (at 622), though the power in s 23 of the FCA Act is wide, it is nevertheless restricted to the making of the kinds of order, whether final or interlocutory, which are capable of properly being seen as appropriate to be made by the Federal Court in the exercise of its jurisdiction. In many contexts, for example the review of Federal administrative decisions pursuant to s 39B of the Judiciary Act, the Court may decline to give declaratory or injunctive relief sought under ss 21 to 23 of the FCA Act on acceptance of an undertaking by a respondent if the undertaking is appropriate (being clear in its terms, capable of enforcement and not inconsistent with the kinds of orders which are capable of being made by the Court). 326 However, it has long been held that "[w]hen a specific statute which invests the Court with jurisdiction in matters of a particular class does so in such a way as to limit the power of the Court to grant relief of a particular kind, there is no basis for transcending that limitation by recourse to the general provisions of the Federal Court of Australia Act": Thomson at 161; see also Patrick Stevedores at [27]-[28] and Cardile at [33]. In Thomson, the High Court concluded that the provisions of that FCA Act do not empower the Court to grant injunctions restraining, or relating to, contraventions of the Act in situations falling outside the boundaries drawn by s 80 of that Act. One element of the High Court's reasoning, which is no longer applicable, is that s 86 of the Act was the sole source of jurisdiction for the Court in respect of contraventions of the Act (at 162). As noted above, s 39B(1A) of the Judiciary Act, enacted after the decision in Thomson, is now also a source of jurisdiction. Nevertheless, the second element of the High Court's reasoning remains relevant and has been followed in Patrick Stevedores and Cardile: that s 80 is an exclusive charter to grant injunctions restraining, or relating to, contraventions of the Act (at 162). That conclusion was based on the special provisions for such injunctions made in s 80. The High Court concluded that "The inference is irresistible that Parliament looked upon s 80 as a complete and comprehensive statement of the circumstances in which injunctions might be granted in respect of relief sought under the Trade Practices Act". 327 While s 80 (and related provisions) have been amended since Thomson, the amendments do not detract from the High Court's conclusion. As considered further below, s 80(1) now empowers the Court to grant an injunction "in such terms as the Court determines to be appropriate". In contrast to the form of the provision considered in Thomson, it is clear that the Court's power is not confined to granting an injunction enjoining contravening conduct (in the case of s 50, an acquisition), but the power is confined by what is appropriate. Other subsections regulate the grant of an injunction by consent of the parties, who can apply for an injunction, and whether an undertaking as to damages can be required in respect of an interim injunction. In our view, it continues to be the case that s 80 is a complete and comprehensive statement of the circumstances in which injunctive relief might be granted in respect of contraventions or threatened contraventions of the Act. It follows that the FCA Act is not an available source of power for injunctive relief in respect of a contravention of s 50. 328 That leaves open the question whether, and in what circumstances, the Federal Court may accept an undertaking from a respondent in answer to a claim under s 50 and decline other relief. Specifically, is the Court empowered to do so under the FCA Act, or is the necessary source of power derived from s 80? 329 In Thomson, the High Court said that the power to accept and to enforce an undertaking is an invariable attribute of a superior court whose proceedings are protected by rules relating to contempt of court and is inherent in the grant of jurisdiction to grant injunctive relief (at 164). The High Court went on to say (at 164-166): An undertaking to the court is given in lieu of an injunction and, if broken, is treated as the equivalent of an order for the purpose of enforcement; it may therefore be enforced in the same manner as an injunction - Milburn v. Newton Colliery Ltd; London and Birmingham Railway Co. v. Grand Junction Canal Co; In re National Federated Electrical Association's Agreement; Biba Ltd. v. Stratford Investments Ltd. As an undertaking is given in lieu of an injunction and is enforceable in like manner, the principles which govern the grant of an injunction by a court must guide it in deciding whether it should accept an undertaking. Limitations which affect the court's jurisdiction or power to grant a final injunction must be observed in the acceptance of an undertaking when it is offered as a substitute for a final injunction. The court cannot escape such limitations by the expedient of accepting an undertaking in lieu of an injunction. The court cannot put itself in the position of enforcing conduct which it has no capacity to command or compel. No doubt the Federal Court has power to accept an undertaking at an interlocutory stage when the undertaking is reasonably related to the orderly procedure of the Court or to the subject matter of the litigation, as Deane and Fisher JJ. observed, even though it is not in a form which falls within s. 80. But, with great respect to their Honours, this does not justify the conclusion that the Court has power to accept an undertaking by way of final disposition of the case when the Court lacks power to make a final order in that form and the effect of the undertaking is to restrain conduct which the Court has no power to restrain. … Nothing we have said is to be taken as throwing doubt on the practice of the courts in accepting undertakings to publish an apology in defamation cases and in accepting undertakings by a defendant to pay a particular account as a basis for assessing damages. In each of these two instances what the defendant undertakes to do is clearly relevant to the court's function in assessing damages - the publication of an apology mitigates damages and the payment of an account has a similar effect. 330 It is clear from the above passage that the High Court was referring to an undertaking that is offered as a substitute for a final injunction. The High Court distinguished undertakings given at an interlocutory stage of a proceeding that are related to the orderly procedure of the Court or the subject matter of the litigation and undertakings related to the assessment of damages. In the case of undertakings offered in lieu of a final injunction, the Court's power to accept the undertaking is confined by the limits applicable to the grant of an injunction. Thus, Thomson is not entirely determinative of the question raised in this appeal. 331 In AGL No 3, the Australian Gas Light Company (AGL) brought an application in the Federal Court against the ACCC seeking a declaration that a proposed acquisition would not contravene s 50. The application was brought pursuant to s 163A of the Act and/or s 21 of the FCA Act, with jurisdiction invoked under s 163A of the Act and s 39B(1A) of the Judiciary Act. In Australian Gas Light Company v ACCC (No 2) [2003] FCA 1229, French J concluded that the Court had jurisdiction to hear the matter, observing (at [49]) that "the general jurisdiction conferred by s 39B(1A) coupled with the power of the Court to award declaratory relief under the provisions of the Federal Court of Australia Act would appear to be sufficient to support the grant of the relief sought by AGL". In AGL No 3, French J concluded that the proposed acquisition would not contravene s 50 and that it was appropriate to make a declaration to that effect. His Honour also found (at [10]) that that "conclusion is reinforced by the structural arrangements which are the subject of the undertaking offered by AGL to the ACCC and which AGL has in turn offered to the Court. The declaration which I make is subject to that undertaking…" and (at [614]) that "the undertaking is…an appropriate condition for the grant of the declarations". Thus, it was apparent from his Honour's reasons that the undertaking was accepted as a condition of making the declaration under s 21 of the FCA Act. No argument appears to have been raised that the Court lacked power to accept the undertaking. Further, the case did not involve an application for an injunction under s 80 of the Act. 332 In the present case, we have no doubt that the Court has power, in lieu of granting an injunction requiring the respondents to do an act or thing (see subsection (5)), to accept an undertaking from the respondents to the same effect, provided the obligations imposed by the undertaking could be imposed by the Court under s 80. However, it is less clear that the Court has power to accept such an undertaking requiring the respondents to do an act or thing as a condition of declining to grant other relief. The doubt over the latter course arises because it would involve the use of the general powers in ss 21 to 23 of the FCA Act to outflank the regime for injunctive relief under s 80. For that reason, we prefer to base our decision on the power to accept an undertaking derived from s 80. 333 As noted earlier, the primary judge reasoned that the ACCC would have established its s 50 case (ie Pacific National's acquisition would have contravened s 50) in the absence of the Undertaking, but in circumstances where Pacific National had given the Undertaking unconditionally, its acquisition of the ART would not contravene s 50 (at [49], [1431] and [1611]). The ACCC challenges that aspect of the primary's judge's reasoning, arguing that it was not permissible to take the Undertaking into account in determining whether the acquisition would contravene s 50 and, in doing so, the primary judge failed to make the finding of threatened contravention that was necessary to enliven the power to grant injunctive relief under s 80 and thereby accept an undertaking in lieu. 334 With respect to the primary judge, we accept the ACCC's submission that an undertaking made to the Court by a respondent does not constitute part of the relevant facts on which the Court is to decide the issue of contravention. For the reasons already given, the Court's power to accept an undertaking in the context of a proceeding under the Act for a contravention of s 50 must be regarded as remedial in nature, deriving from the Court's power to grant injunctive relief under s 80. The power arises if the Court is satisfied that threatened conduct would constitute a contravention. There is a contradiction if the Court purports to take the undertaking into account in concluding that there would be no contravention. Respectfully, in our view, the primary judge's conclusion that the Undertaking could be taken into account in the assessment of whether the acquisition would contravene s 50 was in error. 335 In the present case, however, the point is more semantic than substantive. That is because the primary judge also expressly found that, in the absence of the Undertaking, the ACCC had established its case. Further, the primary judge expressly found that the Undertaking would prevent Pacific National from engaging in anti-competitive discrimination as owner of the ART, and thereby prevent the acquisition from having the effect of substantially lessening competition. Accordingly, the primary judge made the requisite findings to enliven the Court's power to accept the Undertaking in lieu of granting the injunctive relief sought by the ACCC.

[1981] HCA 48

[1992] HCA 64

(2017) 262 CLR 207

(2018) 261 FCR 301

(1990) 24 FCR 313

(2018) 262 CLR 157

(2015) 236 FCR 78

(2013) 310 ALR 165

(2016) 261 CLR 203

(2011) 198 FCR 297

(2011) 282 ALR 464

(1999) 161 ALR 79

(1997) 78 FCR 197

(1965) 112 CLR 483

(2003) 137 FCR 317

(1976) 14 SASR 303

(2019) 94 ALJR 51

(2003) 215 CLR 374

(1986) 161 CLR 10

(2001) 117 FCR 424

(2004) 218 CLR 592

(1995) 185 CLR 410

(1999) 198 CLR 380

(1991) 174 CLR 64

(2015) 258 CLR 482

(1982) 64 FLR 238

(1991) 30 FCR 385

(1986) 161 CLR 438

(2006) 149 FCR 135

(2003) 214 CLR 118

(1984) 2 FCR 82

(1936) 55 CLR 499

(1992) 38 FCR 248

(1979) 39 FLR 1

(1987) 162 CLR 612

(2010) 274 ALR 85

(1992) 34 FCR 496

(2004) 62 NSWLR 567

(1990) 169 CLR 638

(2019) 93 ALJR 848

(2001) 50 NSWLR 665

(2011) 245 CLR 1

(2002) 122 FCR 110

(1996) 64 FCR 410

(2003) 215 CLR 563

(2004) 219 CLR 90

(1982) 66 FLR 120

(1994) 181 CLR 404

(1998) 195 CLR 1

(2012) 246 CLR 379

(1991) 173 CLR 167

(1976) 25 FLR 169

(1989) 167 CLR 177

(1956) 94 CLR 254

(1982) 62 FLR 437

(2003) 216 CLR 53

(1994) 179 CLR 332

(2009) 182 FCR 160

(1999) 73 ALJR 306

(2016) 90 ALJR 376

(2007) 233 CLR 307

(1981) 148 CLR 150

(1979) 42 FLR 331

(1978) 32 FLR 305

(1985) 6 FCR 1

(2003) 131 FCR 529

(2007) 231 CLR 570

(1995) 183 CLR 525

(2018) 264 FCR 536

(2018) 261 FCR 317

(2013) 251 CLR 396

(1982) 44 ALR 667

[2019] FCAFC 154

[2018] FCAFC 93

[2017] FCAFC 150

[2017] HCA 21

[2003] FCA 1525

[1979] FCA 132

[1936] HCA 40