NT Power Generation v Power & Water Authority

Legislative framework 33 The application in this matter was made under ss 82 and 87 of the Trade Practices Act 1974 (Cth) ("the TPA"). Relevantly those sections provide: "82(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV … may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention." "87(1) … where, in a proceeding instituted under, or for an offence against, this Part, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in … in contravention of a provision of Part IV … the Court may … make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention … if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage." 34 The provision of Part IV of the TPA upon which NT Power places reliance for the purposes of ss 82 and 87 is s 46. Subsection 46(1) provides: "A corporation that has a substantial degree of power in a market shall not take advantage of that power for the purpose of: (a) eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market; (b) preventing the entry of a person into that or any other market; or (c) deterring or preventing a person from engaging in competitive conduct in that or any other market." 35 Division 1 of Part 5 of the Competition Policy Reform Act 1995 (Cth) ("the Reform Act") introduced into the TPA, as a new section, s 2B. Section 2B(1) of the TPA, which commenced operation on 20 July 1996, relevantly provides as follows: "The following provisions of this Act bind the Crown in right … of the Northern Territory … so far as the Crown carries on a business, either directly or by an authority of the … Territory: (a) Part IV; … (c) the other provisions of this Act so far as they relate to the above provisions." 36 Section 2C(1) of the TPA relevantly provides: "For the purposes of sections 2A and 2B, the following do not amount to carrying on a business: … (b) granting or refusing to grant, revoking, suspending or varying licences (whether or not they are subject to conditions); … ." 37 Section 4 of the TPA defines "authority" in relation to a Territory to mean: "(a) a body corporate established for a purpose of … the Territory by or under a law of … the Territory; or (c) an incorporated company in which … the Territory, or a body corporate referred to in paragraph (a), has a controlling interest." 38 However, s 89 of the Reform Act, which is to be found in Division 2 of Part 5 of that Act, relevantly provides: "(1) Subsections (2) and (3) apply in deciding whether a person has contravened Part IV of the Principal Act [ie the TPA] at any time after the commencement of the amendments made by Division 1 of this Part. (2) Existing contracts, and things done to give effect to existing contracts, are to be disregarded to the same extent that they would have been disregarded if the amendments made by Division 1 of this Part … had not been made. … (5) In this section: 'cut-off date' means 19 August 1994; 'existing contract' means a contract that was made before the cut-off date." 39 The Trade Practices Amendment (Telecommunications) Act 1997 (Cth) by clause 1 of Schedule 1 repealed subs 2B(1) of the TPA and replaced it with a subsection which, in effect, expanded the operation of the subsection by bringing within its ambit Part XIB of the Act as well as Part IV. The alleged significance of this amendment is discussed in [105] below. 40 The application also called‑in‑aid the Competition Policy Reform (Northern Territory) Act (NT) ("the Competition Act"). The Competition Act is described by its long title as "[a]n Act to apply certain laws of the Commonwealth relating to competition policy as laws of the Territory, and for other purposes." The Competition Act enacts a Competition Code for the Northern Territory the text of which consists of: (a) the Schedule version of Part IV of the TPA (see Part I of the Schedule to the TPA); (b) the remaining provisions of the TPA (other than certain exceptions not presently relevant) so far as they would relate to the Schedule version if the Schedule version were substituted for Part IV of that Act; and (c) the regulations under the TPA, so far as they relate to any provisions covered by (a) or (b) above.

41 Section 46(1) of the Schedule version of Part IV of the TPA provides: "A person (the 'first person')who has a substantial degree of power in a market shall not take advantage of that power for the purpose of: (a) eliminating or substantially damaging a competitor of the first person or of a body corporate that is related to the first person in that or any other market; (b) preventing the entry of a person into that or any other market; or (c) deterring or preventing a person from engaging in competitive conduct in that or any other market." 42 Section 5 of the Competition Act provides that the Competition Code text, as in force for the time being, applies as a law of the Northern Territory. Section 13 of the Competition Act has the effect that the Competition Code binds (so far as the legislative power of the Legislative Assembly of the Northern Territory permits) the Crown in right of the Northern Territory so far as the Crown carries on a business, either directly or by an authority of the Northern Territory.

reasons of primary judge 43 The primary judge noted that the claim by NT Power against PAWA was made on two bases. First that PAWA had contravened s 46 of the TPA, and s 46 of the Schedule version of Part IV of the TPA and thus the Competition Code of the Northern Territory, by failing or refusing to supply to NT Power access to PAWA's infrastructure so as to enable NT Power to sell electricity to persons in the Northern Territory and by failing or refusing to continue to negotiate with NT Power in relation to its obtaining access to PAWA's infrastructure. NT Power contended that the conduct of PAWA of which it complained was engaged in for the substantial purpose of deterring or preventing NT Power from engaging in competitive conduct in the market for the sale and supply of electricity to consumers of electricity in the Darwin/Katherine area. NT Power further contended that PAWA had, and took advantage of, substantial power which it enjoys in the market or markets which NT Power described as the market for the transmission and distribution of electricity in the Northern Territory or alternatively the separate markets for the transmission of electricity in the Northern Territory and for the distribution of electricity in the Northern Territory. 44 In the alternative, NT Power argued that the following terms should be implied into a licence dated 26 June 1998 ("the Licence") granted by PAWA to NT Power whereby NT Power was authorised to generate and sell electricity upon terms contained in the Licence: (a) that PAWA would permit NT Power to have access to and the use of PAWA's infrastructure on reasonable terms for the purpose of selling electricity to persons in the Northern Territory for the period of and in accordance with the terms of the Licence;

(b) that PAWA would do all that was necessary to secure performance of the Licence and in particular to enable NT Power to have the benefit of the Licence; and

(c) that PAWA would deal fairly and in good faith with NT Power in relation to the performance of the Licence.

NT Power contended that PAWA had breached each of the above terms.

45 Mansfield J further noted that NT Power's claim against Gasgo was confined to claims that Gasgo had contravened s 46 of the TPA, and s 46 of the Schedule version of Part IV of the TPA contrary to the Competition Code of the Northern Territory, by refusing and continuing to refuse to give an undertaking that it would not exercise the right of pre‑emption given to it by the Mereenie Agreement. NT Power alleged that there is a Northern Territory market for the purchase of gas for the generation of electricity and that Gasgo has substantial power in that market. Its failure or refusal to waive its pre‑emptive right was, it was alleged, an exercise of that market power for the purpose of preventing NT Power from entering into the electricity sale (or supply) market or for the purpose of deterring or preventing NT Power from engaging in competitive conduct in that market or those markets by selling electricity to consumers in the Northern Territory in accordance with its licence. 46 As it was not contended before the primary judge that s 13 of the Competition Act exposed either PAWA or Gasgo to a liability which did not arise under s 2B of the TPA, his Honour referred to the claims of NT Power under the TPA without referring in every case also to s 13 of the Competition Act. I shall adopt the same approach. 47 Mansfield J identified the first two issues to be addressed as whether PAWA and Gasgo are capable of enjoying the immunity of the Crown and, if they are, whether s 2B of the TPA operates so as to extend the application of the TPA to them in the circumstances that his Honour was required to consider. 48 After giving careful consideration to the Power and Water Authority Act (NT) ("the PAWA Act"), his Honour concluded that PAWA was intended to be the instrument whereby the Northern Territory Government operated in the field of providing electricity, water, gas and sewerage services. In his Honour's view, PAWA is entitled to the same immunity as the Northern Territory Government. On that basis Mansfield J found that the application of the TPA to PAWA was governed by s 2B of that Act. 49 The primary judge concluded that Gasgo was not itself an emanation of the Crown in right of the Northern Territory. However, his Honour was satisfied that the order sought by NT Power against Gasgo would have the effect of exposing PAWA, and thus the Northern Territory Government, to having to renegotiate through Gasgo for supplies of gas beyond those presently contracted even though its demand for gas is increasing as electricity usage in the Northern Territory increases. That is, his Honour concluded that the order which NT Power sought was one that would deprive the Northern Territory Government of the benefit which it derived from the pre-emptive right given to Gasgo by the Mereenie Agreement. On that basis, his Honour took the view that on its proper construction, and subject to consideration of the operation of s 2B of the TPA, s 46 of the TPA did not apply to Gasgo in respect of its having entered into, and enjoyed the benefits of the rights of pre‑emption under, the Mereenie Agreement. 50 The primary judge then turned to give consideration to s 2B of the TPA. His Honour considered that it was clear that PAWA is a body corporate established for a purpose of the Northern Territory under the PAWA Act. He also considered it clear that Gasgo is an incorporated company in which PAWA, a body corporate falling within paragraph (a) of the relevant definition of "authority" (see [37] above), has a controlling interest. On these bases, the primary judge found that each of PAWA and Gasgo is an "authority" of the Northern Territory for the purposes of s 2B of the TPA. 51 Mansfield J further found that PAWA was not trading or attempting to trade in the service of providing access to its infrastructure and that this situation was not changed by the approach made to it by NT Power or by the ensuing discussions. His Honour concluded that the application of the TPA to the Northern Territory in so far as it carries on a business, did not have the result that the TPA applied to PAWA in relation to its conduct in refusing in August 1998 to grant access to its infrastructure to NT Power or in refusing to indicate to NT Power the terms upon which it would grant access to its infrastructure to NT Power. 52 As to Gasgo, the primary judge concluded that s 89(2) of the Reform Act (see [38] above) preserved the Mereenie Agreement, and things done to give effect to that agreement, as if s 2B of the TPA had not been enacted. His Honour rejected the argument that s 89 of the Reform Act relates only to s 2B as it stood before it was repealed and replaced as provided for by s 3 and Schedule 1 Clause 1 of the Trade Practices Amendment (Telecommunications) Act 1997 (Cth). He also rejected the argument that the exercise of pre-emptive rights does not amount to giving effect to a contract within the meaning of s 89(2) of the Reform Act. 53 For the above reasons the primary judge concluded that the claims by NT Power against PAWA and Gasgo for contravention of s 46 of the TPA necessarily failed. However, recognising the possibility of a challenge to his conclusion with respect to PAWA, his Honour gave consideration to the substantive arguments addressed by the parties with respect to the alleged contravention by PAWA of s 46 of the TPA. His Honour did not adopt the same course with respect to the claim against Gasgo presumably because of the terms of s 89 of the Reform Act. 54 The primary judge rejected the contention of PAWA that its conduct in refusing access to its infrastructure should be characterised as regulatory rather than the exercise of market power, finding that the decision to refuse access was a commercial rather than a regulatory judgment. His Honour also rejected the contention that the relevant conduct of PAWA was an exercise of its rights as the owner of infrastructure and not an exercise of market power. In the circumstances of the present case his Honour found the suggested dichotomy to be false. Finally, his Honour rejected the argument advanced by PAWA that the operative decision to refuse to grant access to its infrastructure to NT Power was not an exercise of its market power but a decision of the Minister for Essential Services. His Honour found that the decision was that of PAWA made through the Minister. 55 The primary judge was satisfied on the evidence before him that PAWA decided in August 1998 to cease dealing with NT Power on the subject of access to PAWA's infrastructure in part because NT Power's immediate participation in the electricity supply market would have been likely to affect adversely PAWA's marketability or the amount that would be received by the Northern Territory for PAWA if it were privatised. This his Honour found to be a decision to take advantage of market power. The fact, as his Honour found it to be, that PAWA was motivated by a desire to encourage genuine and efficient competition in the medium to long term, his Honour considered of no relevance. 56 As to the claim of NT Power based on the asserted implied terms of its Licence, Mansfield J concluded that there were three substantial hurdles in the way of NT Power succeeding in this aspect of its claim. The first was that his Honour was not satisfied that the terms that NT Power contended were to be implied were terms to which the parties had failed to direct their respective minds. The second was the nature of the contract between PAWA and NT Power: namely a statutory authorisation rather than an agreement involving an exchange of promises or other consideration. No authority was drawn to his Honour's attention in which terms of the kind for which NT Power contended had been implied upon the grant of a licence pursuant to a statutory function and responsibility. The third hurdle identified by his Honour was that the Licence contained a "whole agreement" clause which his Honour concluded effectually excluded any implied term.

issues on appeal 57 The Further Amended Notice of Appeal does not provide the assistance in identifying the real issues arising on the appeal that the Court is entitled to expect that such a document will provide. In Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157 the Full Court gave consideration to the nature of an appeal to the Full Court and to the appropriate form of a notice of appeal (see Branson J at [2]-[5] and Weinberg and Dowsett JJ at [48]-[54]). The observations made in these respects in Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd are equally applicable to this case. It is not necessary that they be again set out here. 58 The principal issues raised by NT Power on the appeal were: (a) whether PAWA is an emanation of the Crown in right of the Northern Territory so as to enjoy the benefit of the common law presumption that a statute is not intended to bind the Crown;

(b) if PAWA is an emanation of the Crown in right of the Northern Territory, whether the Crown in right of the Northern Territory at the relevant time carried on business by PAWA within the meaning of s 2(B)(1) of the TPA;

(c) whether Gasgo was relevantly entitled to the immunity of the Crown on the basis that the Crown in right of the Northern Territory would be prejudiced by the application of s 46 of the TPA to Gasgo;

(d) if Gasgo was otherwise relevantly entitled to the immunity of the Crown, whether s 89(2) of the Reform Act operates so as to exclude the Mereenie Agreement from the operation of s 46 of the TPA; and

(e) whether the Licence granted to NT Power by PAWA included the implied terms pleaded by NT Power.

59 By a Notice of Contention filed in apparent reliance on O 52 r 22(3) of the Federal Court Rules, PAWA raised the following issues: (a) whether the conduct of PAWA in refusing NT Power access to its infrastructure was conduct falling within s 2C(1)(b) of the TPA;

(b) whether Gasgo is an emanation of the Crown in right of the Northern Territory so as to enjoy the benefit of the common law presumption that a statute is not intended to bind the Crown;

(c) whether, on the proper construction of s 46 of the TPA, conduct which is calculated to enhance competition, and thus to protect consumers, can be found to contravene s 46 of the TPA;

(d) whether there was a relevant market in which PAWA has a substantial degree of power within the meaning of s 46 of the TPA; and

(e) if there was a relevant market in which PAWA had a substantial degree of power, whether the conclusion that PAWA took advantage of its market power in refusing to give NT Power access to its infrastructure was the proper conclusion in circumstances where PAWA (a) exercised a regulatory function as dictated by the Minister for Essential Services in pursuance of the Northern Territory Government's duty to establish an effective access regime in accordance with its obligations under the Competition Principles Agreement; and/or (b) exercised its property rights in respect of its infrastructure.

PAWA and Crown Immunity 60 In Bradken Consolidated Ltd v The Broken Hill Proprietary Company Ltd ("Bradken") (1979) 145 CLR 107 the High Court held that the TPA did not bind the Crown in right of a State. For that reason s 45 of the TPA, which proscribes certain conduct by corporations, was held not to apply to the Commissioner for Railways of the State of Queensland ("the Commissioner") whether or not the Commissioner was a trading corporation, and thus a "corporation" within the meaning of s 45 of the TPA. Gibbs ACJ observed at 113: "The first question raised by the defence, whether the Commissioner is a trading corporation with the Trade Practices Act, is not the question which logically first falls for decision. If the Commissioner is entitled to the immunities of the Crown, and if for that reason the Trade Practices Act does not apply either directly or indirectly to prejudice his interests, it is immaterial whether or not he is a trading corporation. On that hypothesis, even if he were a trading corporation, the Trade Practices Act would still not apply to him. Since, for reasons which I shall elaborate, I have reached the conclusion that the Trade Practices Act does not apply to prejudice the interests of the Commissioner, I need not decide whether he is a trading corporation." 61 This appeal was argued, as it seemed to me, on the basis that it was appropriate for the issue of whether the TPA reaches to the conduct of PAWA of which the appellant complains to be approached in the same way. That is, for consideration to be given first to whether PAWA is an emanation of the Crown in right of the Northern Territory, or as a I would prefer to express it, whether PAWA is the Crown in right of the Northern Territory, or more particularly, whether the conduct of PAWA with which this proceeding is concerned is properly to be seen as conduct of the Crown in right of the Northern Territory. 62 I doubt, however, that the approach which was appropriate in Bradken is, in the circumstances of this case, the appropriate approach. The TPA, at the time that Bradken was decided, was silent on the question of whether it was intended to bind the Crown in right of a State or in right of a Territory. However, the TPA is not now silent on the question of the extent to which the Act binds the Crown in right of a State or in right of a mainland Territory. Section 2B of the TPA (see [35] above) provides explicitly for certain provisions of the Act to bind the Crown in right of a State, or in right of a mainland Territory, "so far as the Crown carries on a business, either directly or by an authority of the State or Territory". The reference in s 2B to the carrying on of a business "directly or by an authority", taken together with the broad definition of "authority" in relation to a State or Territory contained in s 4 of the TPA (see [37] above), indicates, in my view, an intention for s 2B to provide explicitly in respect of a State or a mainland Territory for that which the High Court identified by a process of construction in respect of a State in Bradken; that is the extent to which the TPA is intended to bind the Crown both directly and indirectly. 63 Thus, in my view, the first question to be answered in respect of PAWA is whether it is "a body corporate established for a purpose of … the Territory by or under a law of … the Territory" (see the definition of "authority" in relation to a State or Territory contained in s 4 of the TPA - see [37] above). If PAWA is such a body corporate, and thus an "authority", of the Territory, the second question to be answered is whether the Crown in right of the Northern Territory carries on a business, either directly or indirectly, by PAWA. If PAWA is an authority of the Crown in right of the Northern Territory, and if the Crown carries on a business by PAWA, then by reason of s 2B of the TPA, the TPA will apply to conduct of PAWA to the extent indicated by s 2B. However, if PAWA is a body corporate established for a purpose of the Territory by a law of the Territory, but the Crown in right of the Northern Territory does not carry on a business, directly or indirectly, by PAWA, s 2B of the TPA, in my view, discloses an intention that the TPA is not to apply to conduct of PAWA. 64 I turn to give consideration to the first question identified above. The PAWA Act by s 4(1) establishes the Power and Water Authority. The same Act by s 4(2)(a) provides that PAWA is a body corporate. PAWA is thus a body corporate established by a law of the Territory. Was PAWA established "for a purpose of … the Territory?" Section 14 of the PAWA Act identifies the functions of PAWA. In relation to electricity those functions are: "(a) to supply electricity within or outside of the Territory; (b) to plan and co-ordinate the generation and supply of electricity for the Territory or elsewhere; (c) to promote the safe use of electricity; (d) to control the supply of electricity; (e) to purchase and sell electricity; (f) to set and enforce standards of electrical installation, apparatus, equipment, implement or thing used or available for use within the Territory in the generation, reticulation or consumption of electricity; (g) to enforce standards set under any law in force in the Territory relating to electrical workers or contractors; (h) to advise the Minister on all matters concerning electricity; (j) to evaluate the present and future needs of the Territory or any place outside of the Territory in respect of fuel, energy and power for the purpose of generating electricity; (k) to investigate, research and evaluate the optimum utilization of fuel, energy and power for the purpose of generating electricity; and (m) to consult with the Commonwealth or a State or an instrumentality, body, corporation or person on matters relating to fuel, power or energy which is being used, or has the potential to be used, for the generation of electricity." 65 In relation to water and sewerage services the functions of PAWA are: "(a) to carry out the functions and duties imposed upon it, and to exercise the discretions given to it, by or pursuant to the Water Supply and Sewerage Act; (b) to assess, manage and develop water resources in or outside of the Territory; (c) to advise the Minister on all matters concerning water and the provision of sewerage services; and (d) to consult with the Commonwealth or any State or any instrumentality, body, corporation or person on any matters relating to water or sewerage." 66 Section 16 of the PAWA Act provides: "The Authority, in the exercising of its powers and the performance of its functions, is subject to the directions of the Minister." 67 In my view, the above provisions make it plain, almost beyond argument, that PAWA was established for a purpose of the Territory. Its functions include the supply of essential services to residents of the Territory, the setting and enforcement of regulatory standards, the provision of advice to a Minister of the Crown and the evaluation of the present and future needs of the Territory in respect of energy. It is therefore necessary for consideration to be given to the issue of whether the Crown in right of the Northern Territory carries on a business, either directly or indirectly, by PAWA. 68 However, before turning to this issue, I consider it appropriate, in deference to the careful arguments of the parties, and lest my above approach be found to be erroneous, to give consideration to whether PAWA is the Crown in right of the Northern Territory. An additional advantage of adopting this course is that a conclusion that PAWA is the Crown in right of the Northern Territory will provide an answer to the question of whether, if the activities, or some of the activities, of PAWA constitute a business, that business is carried on by the Crown in right of the Northern Territory by PAWA. It is not necessary to consider whether the reverse would be true. 69 As the PAWA Act itself is silent on the point, the question of whether PAWA is an emanation of the Crown in right of the Northern Territory, or as I would prefer to express it, whether the conduct of PAWA with which this proceeding is concerning is properly to be seen as conduct of the Crown in right of the Northern Territory, depends on the intention to be derived from the PAWA Act (see Townsville Hospitals Board v Townsville City Council (1982) 149 CLR 282 at 289 per Gibbs CJ, with whom the other members of the Court agreed). That intention is most likely to be revealed by consideration of the nature and extent of the control over PAWA able to be exercised by the Northern Territory executive, via the responsible Minister of the Crown, and the nature of the activities which PAWA is authorised to carry out. 70 PAWA is established as a body corporate by s 4(1) of the PAWA Act. It consists of its Chief Executive Officer only (s 5) and the powers and functions of PAWA under any Act are to be exercised and performed by the Chief Executive Officer (s 6). Section 3 of the PAWA Act provides for the Chief Executive Officer to be appointed under the Public Sector Employment and Management Act (NT) ("the Public Sector Act"). This provision has the consequence that the Public Sector Act applies to the Chief Executive Officer. Section 23 of that Act provides: "(1) A Chief Executive Officer is responsible to the appropriate minister for the performance of the Chief Executive Officer's functions under this Act in relation to his or her Agency and for its proper, efficient and economic administration. (2) A Chief Executive Officer shall comply with all Employment Instructions applicable to the Chief Executive Officer or his or her Agency and to all directions given under the Act by the Commissioner or an Appeal Board." 71 The functions of a Chief Executive Officer under the Public Sector Act are identified by s 24 of that Act in broad terms which reflect the role which a chief executive officer of a government agency would be expected to fill. A particular function identified by s 24(b) is "to ensure the attainment by the Agency of any objectives set by the appropriate minister". Section 24(m) refers to "such other functions as are imposed on the Chief Executive Officer by or under this or any other Act". Section 28 of the Public Sector Act requires a Chief Executive Officer to present a report to the appropriate minister on the operations of his or her agency within three months after the end of the financial year or within any longer period determined by the Treasurer under the Financial Management Act (NT). 72 As is mentioned above, PAWA, in the exercising of its powers and the performance of its functions, is subject to the direction of the Minister for Essential Services of the Northern Territory ("the Minister") (s 16). The intimate financial relationship between PAWA and the Crown is illustrated by ss 28 and 29 of the PAWA Act. Section 28 of the PAWA Act provides for certain property previously held by the Crown in right of the Northern Territory to vest in PAWA. Section 29 provides: "(1) the Treasurer may, from time to time by instrument in writing, in relation to property of the Territory vested in the Authority under or pursuant to section 28 - (a) specify an amount as being the value of the property mentioned in the instrument; and (b) specify whether or not the amount is to be treated as a debt owing by the Authority to the Territory and, if so, the terms and conditions, including the rate of interest (if any), upon which the debt is to be repaid. (2) the value of all property vested in the Authority under or pursuant to section 28 shall be accounted for on the basis of the book value of the property immediately before its vesting." 73 The primary judge, rightly in my view, placed considerable weight on s 17 of the PAWA Act which provides: "(1) Subject to this Act and within a budget approved by the Minister, the Authority shall act in a commercial manner. (2) Where the Minister considers it necessary or desirable for electricity, water, gas or sewerage or other services to be provided in any area or areas, whether for domestic or non-domestic purposes, and where the Authority considers it appropriate to seek a contribution from the Territory whether by grant, subsidy or loan to provide the services, the Treasurer may make such contribution towards the capital outlay necessary to provide the services or towards their operation as may be estimated by the Authority and agreed by the Treasurer." 74 As to s 17(2), his Honour said: "The direction implicitly contemplated by s 17(2) extends to the principal functions of PAWA under s 14 of supplying electricity, gas, water and sewerage services. It also extends to both domestic and non‑domestic services, so it clearly contemplates such direction beyond the provision of services to remote localities or small communities. The capacity to direct the provision of such services is, in my view, an indication of PAWA being susceptible of being the means or part of the means of implementing governmental policy." 75 As Mansfield J observed, the establishment, by s 7 of the PAWA Act, of the Power and Water Advisory Council is a further indication that, in his Honour's words "the ministerial control to which PAWA is subordinate under the PAWA Act concerns matters of general governmental policy and its implementation". The Advisory Council consists of the Chief Executive Officer, or an employee of PAWA nominated by the Chief Executive Officer, and six members appointed by the Minister who, in the opinion of the Minister, represent community or commercial interests in the Territory (s 7(2)). The functions of the Advisory Council are to advise the Minister (as opposed to PAWA) on all matters concerning electricity and water and the provision of sewerage services (s 10). As the primary judge pointed out, a process by which commercial and community interests are given a role in providing advice to a Minister carries with it the suggestion that the relevant responsibility of the Minister includes matters of broad governmental policy. 76 The statutory functions of PAWA, which are referred to in part above, are also such as to suggest that it is intended not only to be a provider of power and water services but also to serve governmental purposes. 77 Further, as the primary judge observed, the fact that land vested in, committed to the care, control and management of, or acquired by PAWA is exempt from local government rates, charges and taxes (s 19(1)) and the fact that an employee or agent of the Authority is not personally liable for any act or default of that person or PAWA done in good faith in the course of the operations of PAWA or for the purposes of the PAWA Act (s 20), tends to indicate that PAWA is to be identified with the Crown. 78 The appellant placed reliance on the observation of Barwick CJ, McTiernan, Taylor and Menzies JJ in State Electricity Commission of Victoria v City of South Melbourne (1968) 118 CLR 504 at 510 that: "… there is evident in modern authorities a strong tendency to regard a statutory corporation formed to carry on public functions as distinct from the Crown unless Parliament has by express provision given it the character of the Crown." 79 However, neither that case, nor Launceston Corporation v The Hydro‑Electric Commission (1959) 100 CLR 654 to which it referred, suggests other than that the principal consideration is the language of the relevant statute. To the extent that the appellant may have argued that there is a presumption that the conduct of a statutory corporation is not the conduct of the Crown, I do not believe the argument to be well founded. First, a "tendency" to regard a statutory corporation as distinct from the Crown is not of itself sufficient to suggest the existence of a legal presumption. Secondly, each of State Electricity Commission of Victoria v City of South Melbourne and Launceston Corporation v The Hydro‑Electric Commission was concerned with whether land in the ownership of a statutory corporation was exempt from local government rates; neither case was concerned with whether conduct was to be regarded as conduct of the Crown. 80 The correct test, in my view, is that articulated by Kitto J in Inglis v Commonwealth Trading Bank of Australia (1969) 119 CLR 334 at 337-338: "The decisive question is not whether the activities and functions with which the respondent is endowed are traditionally governmental in character, though their possession of a traditional or generally accepted governmental character may well help in the ascertainment of the legislative intention. The question is rather what intention appears from the provisions relating to the respondent in the relevant statute: is it, on the one hand, an intention that the Commonwealth shall operate in a particular field through a corporation created for the purpose; or is it, on the other hand, an intention to put into the field a corporation to perform its functions independently of the Commonwealth, that is to say otherwise than as a Commonwealth instrument, so that the concept of a Commonwealth activity cannot realistically be applied to that which the corporation does?" 81 In my view, having regard to the matters referred to above, the conclusion reached by Mansfield J in this regard was correct. The PAWA Act, in my view, discloses a clear intention that the Northern Territory itself should provide electricity services of a broad kind through PAWA. For this reason I conclude that the conduct of PAWA of which the appellant complains, being conduct concerned with the operation of, and access to, its infrastructure in respect of the supply of electricity services, is to be seen as conduct of the Crown in right of the Northern Territory.

Does the Crown Carry on a Relevant Business by PAWA? 82 Section 2B of the TPA provides that certain provisions of the TPA bind the Crown in right of the Northern Territory "so far as the Crown carries on a business". These words are plainly intended to limit the operation of the section. It is therefore necessary to determine their intended meaning. 83 It appears that no significance is to be attached to the slight difference in wording between s 2A(1) and s 2B(1) of the TPA. Section 2A(1) speaks of the Act binding the Crown in right of the Commonwealth "in so far as the Crown … carries on a business" (emphasis added) while s 2B(1) speaks of the Act binding the Crown in right of each of the States, the Northern Territory and the Australian Capital Territory "so far as the Crown carries on a business." In Bass v Permanent Trustee Co Ltd (1999) 198 CLR 335 at 348 six members of the High Court said that the consequence of the insertion of s 2B into the TPA was "that Pts IV and XIB now bind the States in so far as they carry on business … ." It is therefore appropriate to have regard to authorities concerned with the proper construction of the phrase "in so far as the Crown … carries on a business" in s 2A of the TPA. 84 In J S McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 at 356 Emmett J, in considering s 2A of the TPA, said: "I consider that that expression signifies that the Commonwealth is to be bound only where the conduct complained of is engaged in, in the course of carrying on the business. In other words, persons dealing with the Commonwealth in relation to the actual conduct of a business will have the same protection as when dealing with a private trader who is carrying on such a business but will not have protection when entering into other dealings with the Commonwealth. That appears to me to be consistent with the reason for the introduction of s 2A as explained by the Minister on the second reading of the Bill for the amendment which introduced s 2A House of Representatives, Debates, 3 May 1977, p 1447) as follows: 'Government Commercial Operations I announced last December that the Government had decided in principle that its commercial operations should be subject to the same restraints of the Trade Practices Act as apply to like operations of private enterprise. I then informed this House that the Government was studying the detailed implementation of this decision. This Bill gives effect to that decision in clause 4 which provides that the Act is to apply to all business undertakings of the Commonwealth Government and its authorities.'"

"A one off decision to cease engaging in the activities of AGPS [the Australian Government Publishing Service], to dispose of the plant and equipment relevant to those activities, to undertake not to engage in those activities in the future and, in the capacity of client, to invite private enterprise to take on those activities, is not conduct in the carrying on of a business … ." 85 In Corrections Corporation of Australia Ltd v Commonwealth of Australia (2000) 104 FCR 448 Finkelstein J at [451] said: "Before giving further consideration to whether the described activities of the Commonwealth amount to carrying on a business, it is necessary to deal with the meaning of that concept. As Mason J observed in Federal Commissioner of Taxation (Cth) v Whitfords Beach Pty Ltd (1982) 150 CLR 355 at 378-379 there is often ambiguity about the meaning of words like 'business', 'commercial' and 'trading'. The meaning that the word 'business' is to bear, must be considered in the context in which it is used. Here that context is legislation that is, generally speaking, concerned with the conduct of trading corporations and financial corporations that compete in a market for the provision of goods and services (Pt IV of the Trade Practices Act), or that are engaged in trade or commerce or are otherwise involved in the provision of goods and services (Pt V of the Trade Practices Act). Thus it is plain enough that the 'carrying on of a business' that will bring the Commonwealth under the Trade Practices Act is intended to refer to activities undertaken in a commercial enterprise or as a 'going concern'." 86 The conduct of PAWA concerning which the appellant complains is PAWA's exclusive use in its business of its own infrastructure. The appellant argued that the exclusive use by PAWA of its own infrastructure was an integral aspect of its business and that it was a systematic and repetitive activity the object of which was to advance its business. In those circumstances, the appellant contended, the conduct of PAWA in determining to continue to use its infrastructure on an exclusive basis was conduct "so far as [it] carries on a business" within the meaning of s 2B of the TPA. 87 PAWA operates a vertically integrated enterprise in which it purchases gas, generates electricity, transmits electricity and finally sells that electricity. In one sense, PAWA's "business" could be characterised as the totality of these activities. However, I do not consider that the mere fact that an activity is part of PAWA's overall enterprise means that PAWA is "carrying on a business" in relation to that aspect of its enterprise. It seems to me that the limitation "so far as the Crown carries on a business" requires the Court to consider whether PAWA is carrying on a business in relation to each individual aspect of its enterprise. I note that this was the approach adopted by Sundberg J in Sirway Asia Pacific Pty Ltd v Commonwealth of Australia [2002] FCA 1152 at [55] and [57]. The critical question to be answered is the extent of the business or businesses that PAWA carries on. 88 To determine whether any aspect of PAWA's enterprise, including its use of its infrastructure to transmit and distribute electricity, constitutes the carrying on of a business, it is necessary, in my view, to consider whether in relation to that activity PAWA is "competing in the market for the provision of goods and services" and whether the activity is "undertaken in a commercial enterprise or as a 'going concern'" (see [85]). 89 It seems clear that PAWA carries on a business to the extent that it sells electricity. It is a player in the market for the provision of electricity in the Northern Territory and it undertakes its sales of electricity as a commercial enterprise. It may also be that PAWA is in the business of acquiring gas to fire its generators. PAWA enters the commercial marketplace to acquire gas. However, even if it be accepted that PAWA carries on a business so far as the first and the last activities of its vertically integrated enterprise are concerned, this is not alone sufficient to demonstrate that the totality of PAWA's enterprise constitutes the carrying on of a business. 90 Like the learned primary judge, I take the view that the argument of the appellant outlined at [86] above is misconceived. PAWA does not compete with others either to obtain the use of infrastructure or to provide access to its infrastructure to third parties. It is not in the commercial marketplace in relation to its infrastructure. The notion of a "systematic and repetitive activity" of not sharing one's infrastructure (see [86] above) seems to me to be a highly artificial notion of little assistance in determining the extent of the business carried on by PAWA. In any event, as Sundberg J demonstrated in Sirway Asia Pacific Pty Ltd v Commonwealth of Australia at [60] repetition, system and regularity are not indicia which compel a conclusion that a business is being carried on. I am not persuaded that PAWA's use of its own infrastructure to transmit electricity which it sells in the market means that PAWA carries on an additional business in respect of that infrastructure. In this regard PAWA seems to me to be in a comparable position to a livestock auctioneer which sells livestock from its own saleyards. A livestock auctioneer's use of its own property for the purpose of conducting auctions does not place it in the business of granting licences or leases of saleyards (Dowling v Dalgety Australia Ltd (1992) 34 FCR 109 at 146). 91 In my view, s 2B of the TPA discloses an intention that where the Crown in right of the States, or the Crown in right of either of the mainland territories, determines to go into business, its conduct is to be subject to the same legal standards as the TPA imposes on business generally. Sections 2A and 2B can be seen as being intended together to achieve the result that the Crown in each of its above aspects, on the one hand, and private enterprise, on the other, should conduct business operations on equal terms so far as restrictive trade practices are concerned. However, the sections disclose no intention, in my view, to require the Crown in any of its aspects to engage in a business activity; rather they are concerned with the standards of conduct which are to be observed if the Crown does chose to engage in a business activity. In this case, the Crown through PAWA has not chosen to undertake the commercial activity of providing access to its infrastructure to others; rather it decided not to carry on a business of providing access to its infrastructure. I am not able to discern a legislative intention that where the Crown makes such a choice it can nonetheless be forced, in effect, to carry on that business. 92 The above conclusion is strengthened, in my view, by the existence of compelling reasons for concluding that s 2B of the TPA is not intended to introduce by a sidewind a regime ab initio for the provision of access to infrastructure owned by the Crown in right of a State or a Territory. It is not necessary for present purposes to reach a conclusion as to whether s 46 of the TPA is apt to deal with access issues generally (for a discussion of this issue see Hanks and Williams (eds) Trade Practices Act: A Twenty-Five Year Stocktake, Federated Press 2001 per Kench at p122 and Pengilley at p161). Even if s 46 is apt to deal with access issues, there are significant constitutional complexities associated with a law of the Commonwealth which purports to interfere with the property rights of a State. Nothing in s 2B of the TPA suggests that it is intended to have a different application in respect of the Northern Territory and the Australian Capital Territory than in respect of the States. 93 Another reason for concluding that the interaction between s 2B and s 46 is not intended to introduce an access regime is the significant difficulties involved in a court framing orders to grant access to Crown infrastructure. If no access has previously been granted to particular Crown infrastructure, on what basis would the Court exercise its powers under ss 80, 82 and 87 of the TPA should it determine that a failure to provide access constituted a breach of Part IV of the TPA? In particular, if an order requiring the provision of access were to be made, on what basis would the Court, consistently with its duty to act judicially, determine the terms upon which access should be granted? I note that some of the difficulties in this area are discussed in Wright, Robinson, 'Injunctive Relief in Cases of Refusal to Supply', Australian Business Law Review 19, 1991 at 65. 94 The difficulties faced by a Court when attempting to frame orders that require a party to behave as it would in a competitive market where in fact there is no such market by which to determine this behaviour is a general challenge posed by s 46. However, when a case involves Crown infrastructure there are added complexities which derive from the special position of the Crown. Public policy considerations, other than the desirability of promoting competition, commonly and properly inform decisions made by Crown enterprises. 95 The legislative history of Part IIIA of the TPA tends to confirm that Parliament did not intend that s 2B and s 46 should together operate to allow access to Crown infrastructure. Section 2B of the TPA was inserted into the Act by the same statute that introduced Part IIIA into the TPA (ie the Reform Act). Part IIIA, which is constituted by ss 44B‑44ZZQ, is concerned with access to services. Part IIIA is expressed to bind the Crown in right of the Commonwealth, of each of the States, of the Australian Capital Territory and of the Northern Territory without any limitation with respect to the carrying on of a business (see s 44E). In this regard the Part gives effect to the Competition Principles Agreement entered into in 1995 by the Commonwealth of Australia and each of the States and the two mainland Territories following the report of the National Competition Policy Review. In my view, no legislative intention may in the circumstances be discerned that s 2B, together with Part IV, should provide an alternative means to the complex process established by Part IIIA by which, provided that no other effective access regime is in place, access to State or Territory infrastructure may in certain circumstances be obtained - at least where the Crown is not already in the business of providing access to that infrastructure. 96 Mansfield J, in my view, rightly concluded that s 2B of the TPA does not have the effect that Part IV of the TPA applied to PAWA in relation to its conduct in refusing in August 1998 to grant access to its infrastructure to NT Power or in refusing to indicate to NT Power the terms upon which it would grant access to its infrastructure to NT Power.

Implied Terms of the Licence: 97 Mansfield J at [382] of his reasons for judgment stated: "In my judgment, NT Power seeks to have implied into the Licence terms which it should not be presumed that NT Power and PAWA would have agreed upon had they turned their minds to those topics. The failure specifically to address those topics in the Licence is not a consequence of a failure to have directed their minds to those topics at all and by oversight to have made no explicit provision for them. It was a conscious decision by NT Power and PAWA not to raise those matters in the Licence agreement for the reason that, as I accept, the grant of the Licence was part of the regulatory function of PAWA distinct from its commercial function as a generator and provider of electricity into the Northern Territory." 98 In my view, the evidence before his Honour provided clear support for the judgment which his Honour reached. By a letter dated 10 February 1998 from PAWA to NT Power, PAWA drew a distinction between the grant of the Licence, as to which it foresaw "no impediment", and the need for access arrangements, which it expected that NT Power would "be required to formally consider … as [sic] due course." Mr Hutchison, a director and Chief Executive Officer of NT Power, gave evidence that he was told by Mr Gardner, the Chief Executive Officer of PAWA, that use of PAWA infrastructure was a separate matter from the grant of the Licence which involved complex issues relating to pricing for the use of transmission lines and pricing for the use of the distribution facilities. He also acknowledged that the process was that the licence having been granted, the next step was to address the terms upon which access would be granted to the infrastructure. 99 The fact that the parties proceeded on the basis that, having received the Licence, NT Power would press for access to PAWA's infrastructure, is in no way inconsistent with the approach taken by his Honour to the issue of the asserted implied terms of the Licence. It was open to NT Power to proceed on the basis, as his Honour in effect found that it did, that it would accept the risk involved in entering into the Licence Agreement without having reached agreement with PAWA in respect of access to its infrastructure. A decision by NT Power, through Mr Hutchison, to proceed this way would be consistent with Mansfield J's assessment of Mr Hutchison as an achiever with a forceful personality who aims to get things done quickly and who tends to proceed as though proposals made by him had been acquiesced in when they may not have been. 100 In my view, no error has been demonstrated in the primary judge's approach to the question of the alleged implied terms. His conclusions in this regard ought not, in my view, be set aside.

Gasgo 101 The legal status of Gasgo is that it is a duly incorporated company. It does not appear that its memorandum or articles of association were received in evidence, although an extract from its articles of association was received. I assume that it was incorporated, or deemed to be incorporated, in the Northern Territory. On that basis, as a body corporate that is incorporated in the Territory, it would fall within the definition of a "corporation" contained in s 4 of the TPA. However, in the circumstances here under consideration, it is necessary for consideration to be given to s 2B of the TPA. 102 As is mentioned above, s 2B of the TPA is, in my view, intended to govern the extent of the application of the TPA to the Crown in right of the States and the mainland Territories. For present purposes, s 2B, read with the definition of "authority" in s 4 of the TPA, provides, in effect, that the TPA applies to the Crown in right of the Northern Territory so far as the Crown carries on business, either directly or indirectly by an incorporated company in which the Territory, or a body corporate established for the purposes of the Territory under a law of the Territory, has a controlling interest. Section 2B, in my view, does not in the circumstances of this case, invite consideration, in the first instance, of whether Gasgo is the Crown in right of the Northern Territory; rather it invites consideration of whether the Crown in right of the Northern Territory carries on business by an incorporated company (ie Gasgo) in which the Territory, or a body corporate established for the purposes of the Territory under the law of that Territory, has a controlling interest. In my view, the evidence before the primary judge demonstrated that the Crown in right of the Northern Territory does carry on the business of acquiring power resources by Gasgo. Further Gasgo is an incorporated company in which PAWA, a body corporate established for the purposes of the Territory, has a controlling interest. 103 For the above reasons, in my view, the TPA has a prima facie application to the business activities of Gasgo. However, in the circumstances of this case, consideration must be given to s 89 of the Reform Act (see [38] above). 104 The written submissions of the appellant on this issue are as follows: "4.1 Section 2B was originally introduced into the TPA by the 1995 Competition Policy Reform Act. That Act had provisions which quarantined contracts entered into prior to 19 August 1994. 4.2 The Trade Practices Amendment (Telecommunication) Act 1997 (Cth) wholly repealed s 2B and introduced a new version of s 2B. The 1997 Act did not reintroduce a quarantine date for contracts entered into prior to 19 August 1994. His Honour recognised that a new quarantine provision is absent from the 1997 Act. Nevertheless, his Honour concluded it 'would not be consistent with the integrity of the legislative compact if the harmony were to be diminished by the repeal and re‑enactment in 1997 of section 2B(1) of the Trade Practices Act in the relatively same terms as when first introduced …'. 4.3 Where there is an ambiguity in a statute, it is permissible to have regard to extrinsic evidence as to the intention of Parliament. However it is not permissible to patch perceived gaps or defects in legislation through a process of construction. There is no provision in the TPA Act which precludes s 2B and s 46 from applying to the 1988 contracts entered into by Gasgo and his Honour was in error to decide to the contrary." (footnotes omitted) 105 In my view, the primary judge rightly rejected the above submissions. Section 89(1) of the Reform Act identifies a transitional regime to apply in deciding whether a person has contravened Part IV of the TPA "at any time after the commencement of the amendments made by Division 1 of this Part.". That is, the reference to the commencement of the amendments made by Division 1 of Part 5 of the Reform Act was for a temporal purpose. It identified that the time after which subs (2) and (3) of the section were to have an application. The repeal by the Trade Practices Amendment (Telecommunication) Act 1997 (Cth) of s 2B in the form that it was introduced into the TPA by the Reform Act, and its replacement by a new s 2B, in my view, had no impact at all on the operation of s 89 of the Reform Act. Subsection (1) continued as before to identify the temporal circumstances in which subss (2) and (3) have an operation for the purpose of determining whether a refusal has contravened Part IV of the TPA. 106 The Mereenie Agreement was an existing contract at the time of the commencement of the amendments made by Division 1 of Part 5 of the Reform Act (ie 20 July 1996). For the purpose of determining whether a person has contravened Part IV of the TPA at any time after 20 July 1996, the Mereenie Agreement is to be disregarded to the same extent that it would have been disregarded if the amendments made by Division 1 of Part 5 of the Reform Act (other than s 86) had not been made. 107 Prior to the introduction of s 2B into the TPA, the Mereenie Agreement would have been disregarded to the extent that the application of the TPA to the Agreement would prejudice the interests of the Crown in right of the Northern Territory (see Bradken per Gibbs ACJ at 123‑124; Stephen J at 129 and Mason and Jacobs JJ at 138). Gasgo, as the primary judge found, is a wholly owned subsidiary of PAWA which acquires gas and sells it to PAWA for PAWA to operate its electricity generator. I do not think that it was seriously argued that PAWA, and thus the Crown in right of the Northern Territory, would not be prejudiced if Gasgo were required to forego its right of pre‑emption under the Mereenie Agreement. His Honour found, rightly in my view, that if Gasgo were required to forego its right of pre‑emption, PAWA, and thus the Northern Territory Government, would be exposed to having to renegotiate through Gasgo for supplies of gas beyond those presently contracted at a time when its demand for gas is increasing as electrical usage in the Northern Territory increases.

Notice of Contention 108 As I have formed the view that the appeal should be dismissed it is not strictly necessary for me to give consideration to the respondents' Notice of Contention. In particular, it is not strictly necessary for consideration to be given to whether, if it be accepted that there was a relevant market in which PAWA had a substantial degree of power, PAWA took advantage of that power for one of the purposes proscribed by s 46 of the TPA. However, as the other two members of the Court have expressed different views in this regard, it seems desirable that I should express some view also. I will do so only briefly. 109 Considerable difficulty, if not embarrassment, attends the expression of a view by me on whether PAWA took advantage of market power within the meaning of s 46 for one of the purposes proscribed by the section. For the reasons given above, I am persuaded that Part IV of the TPA is not intended to have an operation that would allow access to Crown infrastructure, at least where the Crown is not already in the business of providing access to that infrastructure. For this reason, I find it impossible to reconcile the operation of s 46 with the public policy concerns which his Honour found to have motivated PAWA's decision to refuse to give NT Power access to its electricity infrastructure. Those public policy concerns included protecting PAWA's marketability and value should it be privatised and the encouragement of genuine and efficient competition in the Northern Territory electricity distribution market in the medium to long term. In my view, s 46 has not been drafted in a way which allows recognition to be given to public policy concerns of this kind because it was not intended to have any application where such concerns could be operative. 110 However, the authorities make plain that a corporation will "take advantage" of its market power within the meaning of s 46 of the TPA if it uses its market power; no notion of moral blameworthiness is involved (Queensland Wire Industries Pty Ltd v Broken Hill Pty Co Ltd (1989) 167 CLR 177; Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 205 CLR 1). The learned primary judge found that PAWA refused NT Power access to its infrastructure to prevent NT Power from entering, in the short term, the market for the sale of electricity. There is no basis, in my view, upon which this finding of fact can be challenged although there may be room for debate as to precisely what motivated the refusal. His Honour rightly rejected the contention that PAWA's conduct in refusing access to its infrastructure was regulatory in nature rather than an exercise of market power. The finding of fact that PAWA's decision was a commercial one is not, having regard to the evidence, open to reasonable challenge. Nor do I consider that the finding of fact made by his Honour that the relevant conduct of PAWA was not an exercise of ownership rights but was an exercise of market power is open to be disturbed. 111 In my view, on the assumption that s 46 has an operation in the circumstances of this case, it necessarily follows from his Honour's finding that PAWA took advantage of its market power to prevent the entry of NT Power into that market within the meaning of the section.

conclusion 112 In my view, the appeal should be dismissed with costs.

I certify that the preceding eighty-three (83) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson.

NORTHERN TERRITORY DISTRICT REGISTRY D13 of 2001

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT FINKELSTEIN J: 113 The National Competition Policy Review by the Independent Committee of Inquiry, commonly referred to as the Hilmer Committee after its chairman, was published in August 1993. The Hilmer Committee recommended the implementation of a national competition policy, recognising that Australia, for all practical purposes, is a single integrated market exposed to domestic and international competition (Hilmer Review at v). A key recommendation made by the Hilmer Committee was that there should be a national competition law based on the antitrust provisions in Part IV of the Trade Practices Act 1974 (Cth). Being of the opinion that government businesses should not enjoy any competitive advantage when competing with other businesses, the Hilmer Committee recommended that the Trade Practices Act be amended so that it applies to "commercial transactions between Commonwealth businesses in competition with private firms" and to State and Territory businesses to the same extent as it applies to Commonwealth businesses (Hilmer Review at xxvii). As an alternative to unilateral Commonwealth legislation it was suggested that State and Territory legislation be enacted to apply the antitrust provisions to State and Territory businesses (Hilmer Review at 343). Another key recommendation was that there should be a statutory regime for access to "essential facilities", that is facilities for which there is a natural monopoly. By way of example of the problem to be overcome, the Hilmer Committee referred to "a business that owned an electricity transmission grid and was also participating in the electricity generation market [that] could restrict access to the grid to prevent or limit competition in the generation market. Even the prospect of such behaviour may be sufficient to deter entry to, or limit vigorous competition in, markets that are dependent on access to an essential facility" (Hilmer Review at 241). 114 In 1995 the Council of Australian Governments entered into a series of agreements to give effect to the recommendations of the Hilmer Committee. One, the Competition Principles Agreement, had as its main object the introduction of a "competitive neutrality policy", according to which government businesses should no longer enjoy any competitive advantage resulting from their public ownership: Competition Principles Agreement, cl 3(1). Each contracting state was free to "determine its own agenda" for the implementation of this policy (cl 3(2)) but it was contemplated that each contracting state would establish a regime for third party access to services provided by significant infrastructure facilities where it was not economically feasible to duplicate the facility (cl 6). The Council also entered into the Conduct Code Agreement by which the contracting states agreed to apply a Competition Code - comprising substantially Pt IV of the Trade Practices Act with certain variations and additions - to all persons within their legislative competence: Conduct Code Agreement, cl 5(1). 115 In pursuance of these agreements the Northern Territory enacted the Competition Policy Reform (Northern Territory) Act in 1996. Section 13 of the Reform Act applies the Competition Code to the Crown in right of the Northern Territory "so far as the Crown carries on a business, either directly or by way of an authority of the jurisdiction". Obviously not all government activity involves the carrying on of a business. Indeed the Reform Act itself deems certain activities not to constitute the carrying on of a business. The exempted activities include the imposition or collection of taxes, levies or fees, the granting of licences, transactions involving persons only representing the Crown or an authority of the Crown and the acquisition of primary products by a government body under legislation: see s 15. 116 The main issue raised by this appeal is whether the Competition Code applies to the Power and Water Authority (PAWA), a statutory authority, in relation to conduct that it engaged in during 1998. The conduct in question is PAWA's refusal to grant access to certain of its facilities. If the provisions do apply then it will be necessary to determine whether PAWA has contravened cl 46 of the Competition Code. Clause 46(1) provides that: "A person (the 'first person') who has a substantial degree of power in a market shall not take advantage of that power for the purpose of: (a) eliminating or substantially damaging a competitor of the first person or of a body corporate that is related to the first person in that or any other market; (b) preventing the entry of a person into that or any other market; or (c) deterring or preventing a person from engaging in competitive conduct in that or any other market." This clause is in the same terms as s 46 of the Trade Practices Act except that the word "person" has been substituted for the word "corporation". The constitutional power of the Commonwealth Parliament is relevantly limited to making laws with respect to "trade and commerce" and "foreign corporations and trading or financial corporations" (Constitution, s 51(i) and (xx)). The Northern Territory Parliament is not subject to the same limitations, so its legislation can have a wider reach. 117 This case is concerned with the electricity industry in the Northern Territory. It is necessary therefore to have some understanding of the statutes pursuant to which the generation and use of electricity is regulated. For many years the supply of electricity in the Northern Territory was controlled by South Australian legislation which remained in force in the Territory until 1935. In that year the South Australian legislation was repealed and replaced by a new regime which was introduced by the Electric Light and Power Ordinance (NT). Under this ordinance the generation and distribution of electricity was under the direct control of the Administrator of the Territory. This remained the position until 1978 with the passage of the Electricity Commission Ordinance, later renamed the Electricity Act. The Electricity Commission Ordinance remained in force until 2000. It established the Northern Territory Electricity Commission to administer the generation and supply of electricity in the Northern Territory. The Commission (which no longer exists) was constituted as a body corporate with perpetual succession (s 4(2)) and consisted of a chairman and two members, each of whom was appointed by the Administrator (s 5(1)). The Chairman and members could be removed from office for misbehaviour or incapacity (s 6(3)) and were required to be removed upon bankruptcy, absence without leave of the Minister from three meetings in any twelve month period or on becoming of unsound mind (s 6(4)). The functions of the Commission were enumerated in s 13 and included the following: "(a) to supply electricity within the Northern Territory"; "(d) to control the supply of electricity in the Northern Territory"; "(e) to purchase and sell electricity". Section 14 gave the Commission power to do all things necessary or convenient to be done in connexion with, or incidental to, the performance of its functions. In addition, the Commission was given the following specific powers: "s 14(a) to generate electricity in and for the Northern Territory"; "(b) to transit and reticulate electricity in the Northern Territory"; "(j) to enter into contracts for the purchase and sale of electricity". Section 14(6) provided that the Commission would carry out its functions and exercise its powers and duties subject to such directions as the Minister may give. Part III of the Electricity Commission Ordinance made provision for electrical inspectors who were required to inspect or test electrical installations, apparatus, equipment and the like under the direction of the Commission. Part IV governed the installation of electrical equipment, Part V authorised the Commission to grant licences to persons wishing to generate, store, reticulate and sell electricity and Part VIII dealt with charges for electricity. 118 In 1987 the Northern Territory government decided that the functions performed by the Commission and the Northern Territory Water Authority (another statutory authority) should be "brought together under 1 Minister, 1 board and 1 chairman": Hansard, 7 May 1987 at 489. The purpose was to "achieve better coordination in the delivery of services, allow more efficient performance of common functions … and help in establishing both the water and power areas of government on a sound commercial footing": Hansard at 489. Four pieces of legislation were enacted to achieve this object; the Power and Water Authority Act (NT) (PAWA Act), the Electricity Commission Amendment Act 1987 (NT), the Water Supply and Sewerage Amendment Act 1987 (NT) and the Public Service Amendment Act 1987 (NT). The first of these enactments established the new umbrella authority, PAWA, as a body corporate (s 42(a)) which was "declared to be the same body corporate as the Northern Territory Electricity Commission" (s 4(1)(d)) and consisted of at least five members - all to be appointed by the Administrator - one of whom was to be appointed as chairman and another as deputy chairman (s 5(1)). The power of the Administrator to remove members of PAWA was substantially the same as the power of removal of members of the Commission (see s 7). The functions of PAWA in relation to electricity were much the same as the functions of the Commission (see s 14) and it had similar powers (see s 15). Like the Commission, "the Authority, in the exercising of its powers and the performance of its functions, [was] subject to the directions of the Minister": s 16. On the second reading of the Power and Water Authority Bill the Treasurer drew attention to "the bill's provisions, which emphasise[d] that the authority [was] to be guided by commercial principles": Hansard, 7 May 1987 at 489. So, one finds in the PAWA Act a provision which states that "subject to this Act and within a budget approved by the Minister, the Authority shall act in a commercial manner": see 17(1). 119 In 1994 the composition of PAWA was changed by the Power and Water Authority Amendment Act 1994 (NT) s 5 of which repealed and replaced ss 5 to 10 of the principal Act. According to the new sections PAWA now consisted of the Chief Executive Officer (new s 5) who exercised and performed the powers and functions of PAWA (new s 6). The Chief Executive Officer's appointment was governed by the Public Sector Employment and Management Act (NT): see s 3 and Sch 1 of the Public Sector Employment and Management (Consequential Amendment) Act 1993 (NT). According to the Public Sector Employment and ManagementAct the Chief Executive Officer was appointed by the Administrator (s 19(2)), and his or her appointment could be terminated at will by the appropriate Minister (s 20). The Chief Executive Officer was subject to the direction of the Minister (s 22(1)) except in relation to matters concerning PAWA's employees (s 22(2)). (In passing I note that since the occurrence of the events that gave rise to this litigation there have been further legislative changes. The PAWA Act has been renamed the Power and Water Corporation Act and a new corporation, the Power and Water Corporation (PAWC), has been established to replace PAWA as the body responsible for administering the generation and use of electricity under the relevant legislation. These changes were made by the Power and Water Authority Amendment Act 2001 (NT)). 120 The complex facts that give rise to this litigation are set out in detail in the judgment of the trial judge, Mansfield J. Since the ambit of the dispute on the appeal is much narrower than in the court below, it is only necessary to recount the facts in outline. PAWA generated electricity at five facilities in the Northern Territory. Its generating capacity was augmented by a number of independently owned generators which were constructed to provide electricity to mining operations in the Territory. PAWA purchased surplus electricity from those producers. One of the independent producers is the appellant, NT Power Generation Pty Ltd (NT Power). It operates a gas-fired power station at Mount Todd. The power station was constructed to supply electricity to the Mount Todd mine, which is now known as the Yimuyn Manjerr mine. 121 In late 1987 NT Power decided to sell electricity to consumers in the Darwin and Katherine regions of the Northern Territory in competition with PAWA. To achieve its objective it needed to transmit electricity from its generation facilities at Mount Todd to its proposed customers. However, PAWA owned all the power transmission substations and transformer lines in the Northern Territory with a carrying capacity of 33kV or more (which is the carrying capacity required for the transmission of electricity), save for a short section between Darwin and Katherine which was owned in large part, though indirectly (through a series of companies and trusts), by Power Facilities Pty Ltd (the parent of NT Power). PAWA also owned all the distribution lines which carried electricity from the power transmission lines to each individual consumer. 122 In January 1998 NT Power proposed that its existing licence to sell electricity be amended so that it could sell electricity to "any customer on the interconnected electrical system". It also sought access to PAWA's infrastructure. Without that access NT Power could not transmit electricity to its proposed customers, as the cost of constructing its own transmission lines and associated facilities was prohibitive. After months of negotiations PAWA refused to grant the access that had been sought. It is this refusal which brings the parties to court. NT Power claims that by refusing to grant access to its facilities PAWA contravened cl 46 of the Competition Code and its seeks appropriate relief. 123 The principal questions that arise on this appeal are: (1) Is the refusal by PAWA to provide access to its infrastructure conduct to which cl 46 can apply? and (2) If yes, does that conduct contravene cl 46? The trial judge gave a negative answer to each question. I will explain his reasons in a moment. First it is necessary to return to the Reform Act. That enactment applies the Competition Code to persons carrying on business within the Territory (s 8(1)(a)), to bodies corporate incorporated or registered in the Territory (s 8(1)(b)) and, it will be remembered, to the Crown "as far as the Crown carries on a business, either directly or by an authority". Accordingly, every person other than the Crown has the capacity to violate the Competition Code. In the case of the Crown, however, the Code's operation is limited. A distinction must be drawn between conduct that is engaged in while "the Crown carries on a business" and conduct of the Crown which is unconnected with the carrying on of a business. Only conduct of the former kind attracts the operation of the Competition Code. We can now consider the first question on the appeal. To answer the question it is necessary to determine two preliminary issues: (1) Was PAWA the Crown or an authority of the Crown? and (2) If it was, can PAWA's refusal to grant access to its infrastructure be described as conduct that was engaged in "in so far as [PAWA] carrie[d] on a business"? 124 It is relatively common for governments to carry on their activities through corporations established by statute. Sometimes it is necessary to determine whether such a corporation is the alter ego (or, as some would say, "agent" or "emanation") of the Crown. Commonly this question arises when a corporation claims immunity from a statute that does not bind the Crown. But it will also arise in any situation where the Crown is entitled to be treated differently from other persons. 125 The question whether PAWA was the alter ego of the Crown cannot be decided by any single test. In one of the first articles published on this subject ("Liability for Acts of Public Servants" (1907) 23 LQR 12) Sir Harrison Moore wrote (at 20): "In determining whether any given body is a part of the general government of the country and in this sense 'the hands of the Crown', it is material to consider the nature of the function or office - whether its essential character is governmental, ie implies the exercise of authority, or whether it is the mere substitute for private enterprise (either in the way of profit or of philanthropy); whether it belongs to the general welfare of the country or to the special interest of some part of it; the history of the function or the organ in the particular community; and the control or direction under which it is exercised." (emphasis added) (footnotes omitted) 126 An examination of the leading cases including Grain Elevators Board (Vict) v Dunmunkle Corporation (1946) 73 CLR 70, Inglis v Commonwealth Trading Bank of Australia (1969) 119 CLR 334, Superannuation Fund Investment Trust v Commissioners of Stamps (SA) (1979) 145 CLR 330 and Townsville Hospitals Board v Townsville City Council (1982) 149 CLR 282 suggests that the so called functions test (that is whether the activities and functions of the corporation are governmental in character) is not of much relevance, though there are cases such as Superannuation Fund Investment Trust (at 349) which still treat this issue as a relevant factor. The better approach is to examine the relationship between the corporation and the Crown. If the Crown is able to control the activities of the corporation (whether directly, by instruction or direction, or indirectly, pursuant to a power to remove those in control of its operations otherwise than for misconduct or incapacity,) the corporation will usually be the alter ego of the Crown. So in every case where the question arises it is necessary to examine the nature and degree of control that the Crown exercises over the corporation. If the corporation is subject to the same control as a governmental department it is likely to be the alter ego of the Crown. If the corporation is largely free of ministerial control then it is unlikely to be the Crown's alter ego. See generally Hogg and Monahan, Liability of the Crown 3rd ed. (2000) at 334 - 337. 127 I have no doubt that PAWA was the alter ego of the Crown. The judge reached the same conclusion and my reasons are substantially the same as his. My reasons are based upon the ability of the Crown to control PAWA both directly and indirectly. The judge set out the relevant statutory provisions and I will only refer to the principal ones. I have already mentioned s 16 of the PAWA Act pursuant to which the Minister had direct control over PAWA by his ability to give directions regarding the manner in which PAWA exercised its powers or performed its functions, and his power to give directions to the Chief Executive Officer under s 22(1) of the Public Sector Employment and Management Act. The Crown also exercised control over PAWA by the following means. PAWA was required to act in accordance with a budget approved by the Minister: PAWA Act, s 17(1). The Chief Executive Officer was responsible to the Minister for the performance of his functions under the PAWA Act and for PAWA's proper, efficient and economic administration: s 23(1). He was required to comply with all employment instructions applicable to his agency: s 23(2). If it were necessary to have regard also to the functions test, then one could say that the generation and supply of electricity in the Northern Territory has been a responsibility assumed by government from the earliest days. This is hardly surprising given the size of the Territory, its relatively small population, and the cost of establishing an electricity industry. The fact is that it is simply not possible for private enterprise to have undertaken this activity. 128 The next step in the enquiry is to determine whether PAWA carried on business. I draw attention to the fact that my enquiry is not whether PAWA carried on any particular type of business, such as the business of generating, transmitting, reticulating or selling electricity. Such an enquiry is a distraction for reasons which I hope will soon become apparent. Before we can consider whether PAWA carried on business it is necessary to deal with the meaning of the word "business" as it is used in s 13 of the Reform Act. In Re Australian Industrial Relations Commission; Ex parte Australian Transport Officers Federation (1990) 171 CLR 216 the High Court (Mason CJ, Gaudron and McHugh JJ) said (at 226): "Of all words, the word 'business' is notorious for taking its colour and its content from its surroundings. Its meaning depends upon its context. It is common and apt to speak of 'the business of government'. In the context [under consideration] it is plain enough that the [relevant] clause relates back to the activities of public authorities and departments of government, which do not or may not carry on commercial undertakings for profit, as well as to such undertakings." (citations omitted) In the present context it is plain that the word "business" does not contemplate only a commercial enterprise which is conducted for profit. When considering the position of the Crown it would include conduct such as acquiring or offering to acquire goods or services in circumstances which would have a commercial flavour if the conduct were engaged in by a private organization. 129 Whether or not the activities in which PAWA engaged amounted to "carrying on a business" should be considered by reference to its governing statute. That statute shows that in relation to electricity PAWA had a number of functions, some regulatory, some advisory and some commercial in character. I have already drawn attention to the fact that PAWA was responsible for the supply of electricity in the Northern Territory. To meet this responsibility PAWA was given power to generate electricity (PAWA Act, s 15(2)(a)), transmit electricity to its customers (s 15(2)(b)) in transmission lines which it constructed (s 15(2)(h)) and collect fees and charges for the electricity which it provided (s 15(2)(r)). PAWA was also charged with the responsibility of setting and enforcing standards for electrical equipment used in the generation, reticulation and consumption of electricity (s 14(1)(f)), advising the Minister on all matters concerning electricity (s 14(1)(h)) and granting licences to persons for the purpose of generating and selling electricity (s 15(2)(d)). 130 None of PAWA's functions of granting licences for the generation and sale of electricity, establishing and enforcing standards, and advising government on matters relating to electricity could be regarded as "carrying on a business" in the sense contemplated by s 13. Those activities are bare administrative or advisory functions. But the generation, distribution and sale of electricity are of a different character. They do have the flavour of trade or commerce. In many Western countries, and in some Australian states, these activities are part of the private economy, and are activities which are, or are intended to be, conducted for profit. 131 For the purpose of considering whether cl 46 had application to PAWA's actions the judge said that it was necessary to decide whether PAWA's conduct in declining to grant access to its infrastructure was conduct "engaged in the course of PAWA carrying on its business". He said that the conduct was not of that character because, while PAWA used its infrastructure in its business of generating and selling electricity, the use of infrastructure assets "is not itself the conduct of the business of acquiring those assets or the business of providing either to itself or to third parties access to those assets. The ownership and use of PAWA's infrastructure by PAWA is not conduct in respect of the carrying on of business by PAWA in the provision of access to its infrastructure". And later the judge said that until NT Power first approached PAWA seeking access to its infrastructure, "PAWA was not in any sense trading or attempting to trade in the service of providing access to its infrastructure. It was simply using its infrastructure as part of the means of conducting the business of generating and supplying electricity." 132 In adopting this approach the judge has proceeded on the assumption that the Competition Code only applies to a statutory authority to the extent to which the conduct in question itself amounts to carrying on a business, and that the Competition Code does not apply to conduct that may be engaged in during the course of a business. Before I consider whether this assumption is correct as a matter of construction, it is convenient to refer to other provisions of the Competition Code to which the Crown has been made subject in order to consider, among other things, the consequences that would flow from an acceptance of the judge's view. I will begin that task with a number of preliminary comments. 133 Antitrust laws serve a variety of aims, such as the efficient use of resources, the development of cheaper production methods and improved products, stability in output and employment and an equitable distribution of income: Kaysen and Turner Antitrust Policy: An Economic and Legal Analysis (1959) at 11. So, antitrust legislation strikes down collusive agreements that restrict competition, as well as unilateral conduct that affects competition, including misuse of market power and price discrimination. Speaking generally there are two types of collusive practices which affect competition. One involves anti-competitive agreements between competing firms (so-called "horizontal arrangements") that seek to limit competition. The other, which is exclusionary in form (and is sometimes referred to as "vertical agreements"), involves co-operation by a group of firms to make it unprofitable for others to compete with them. 134 The Trade Practices Act makes illegal unilateral conduct or agreements that affect or restrict competition. For example, agreements or covenants that have the purpose or likely effect of substantially lessening competition are prohibited by ss 45 and 45B. Vertical agreements under which firms at one stage in the production process impose restrictions upon the conduct of firms at another stage are outlawed by s 47. Thus s 47 prohibits "tying arrangements", "full line forcing", "third line forcing", and "exclusive dealing". The prohibitions are not confined to activities in connexion with the supply of goods or services. They also cover conduct that concerns the acquisition of goods or services. For example, s 45 bans arrangements that contain an exclusionary provision. According to the definition in s 4D, a provision is exclusionary if it is an arrangement among competitors that has the purpose of preventing, restricting or limiting the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons. See also s 47(2), (4), (5) and (8). 135 We know that PAWA acquired gas for its gas-fired generators. It was not, however, in the business of acquiring gas. Let it be assumed that PAWA and one of its competitors, say NT Power (who also is not in the business of purchasing gas), enter into an agreement that neither of them will take any gas from a particular supplier in the Territory but will favour another supplier with their business. According to PAWA's construction of s 13 of the Reform Act (being the construction accepted by the judge) this conduct would not contravene cl 45 of the Competition Code as the Code would have no application to it. On the other hand, subject to any derivative immunity it may claim (as to which see Bradken Consolidated Ltd v Broken Hill Proprietary Company Limited (1979) 145 CLR 107), NT Power would be in breach of cl 45 by making the agreement. This could hardly be what Parliament had in mind. 136 Let us take another example. Clause 47 strikes down anti-competitive behaviour such as exclusive dealing and third line forcing. A person will engage in exclusive dealing in a variety of circumstances, including where that person acquires goods or services on condition that the person from whom those goods or services are acquired will not supply goods or services to a particular person. The evidence discloses that PAWA purchased its gas from the Mereenie gas and oil field and the Palm Valley gas field. Suppose that NT Power also purchased gas from the Mereenie producers to fire its generator at Mount Todd. What would be the position if PAWA refused to acquire gas from the Mereenie producers until they ceased supplying gas to NT Power? To take PAWA's argument to its logical conclusion, its refusal would not contravene cl 47 although its conduct was plainly anti-competitive and potentially harmful to the economy of the Territory. Yet, if NT Power were to engage in precisely the same conduct, it would breach cl 47 and suffer the penalty. It is necessary to consider whether the Reform Act should, as PAWA would have it, be construed in a way that would bring about this result. 137 An issue similar to that which arises here was considered by the High Court in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594. The respondent had sustained injuries at a work site. He sued his employer, the appellant, for damages under the Trade Practices Act for false and misleading conduct, claiming that the foreman had given him misleading information about the area where he was to carry out his work. To succeed, the employee had to establish that the conduct complained of fell within s 52, which in turn meant that he had to show that the conduct was "in trade or commerce". In the course of considering this issue, the majority (Mason CJ, Deane , Dawson and Gaudron JJ) said (at 602-603): "As a matter of language, a prohibition against engaging in conduct 'in trade or commerce' can be construed as encompassing conduct in the course of the myriad of activities which are not, of their nature, of a trading or commercial character but which are undertaken in the course of, or as incidental to, the carrying on of an overall trading or commercial business. … Alternatively, the reference to conduct 'in trade or commerce' in s 52 can be construed as referring only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character."

Having noted that the arguments for and against either construction were "fairly evenly balanced", the majority opted for the latter, narrower, construction. This result was mandated by the context in which s 52 is found, namely as one of a number of provisions in Part V of the Trade Practices Act which are all concerned with "Consumer Protection". The majority said (at 603-604):

"[I]t is plain that s 52 was not intended to extend to all conduct, regardless of its nature, in which a corporation might engage in the course of, or for the purposes of, its overall trading or commercial business. … What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character. " 138 It must be said, however, that the Competition Code has a different context. The provisions are aimed at procuring and maintaining a free market system that will operate as an efficient means of allocating scarce resources between competing ends. If the operation of s 13 is restricted so that the Competition Code will only apply to conduct which is itself the carrying on of business, one of the principal objects of the Code (putting government business on the same footing as private enterprise) will not be achieved. Private corporations that are regulated by the Competition Code, and the Trade Practices Act (upon which the Code is modelled), are caught by their provisions if they engage in anti-competitive conduct in the course of carrying on their commercial activities, not because that conduct is itself an aspect of their respective businesses. Moreover, a good deal of the activities that are caught by the antitrust provisions could not be characterised as being of a trading or commercial character. So it should be with the Crown. In my opinion, if conduct by the Crown is engaged in during the course of carrying on a business, that is sufficient to bring it under the Code's umbrella. Any other construction would unduly limit the Code's operation, and would certainly not put the Crown and its agencies on the same footing as private enterprise. 139 Having come to the conclusion that the Competition Code applies to conduct that is not of itself the carrying on of a business it is, strictly speaking, unnecessary for me to consider the other basis upon which NT Power relies to bring PAWA's refusal to grant access within the reach of the Competition Code. However, as this case may go on appeal, it is preferable that I express my views on the argument. I will be brief. 140 To meet the judge's approach head on, NT Power says that PAWA was in fact in the business of transmitting and distributing electricity. This argument has two limbs. The first is that PAWA was in the transmission and distribution business because it provided these services to itself. The second limb is that PAWA entered into "good faith" negotiations with NT Power in relation to access to its infrastructure, and thus "it regarded as part of its business functions the undertaking of that type of negotiation". 141 I have already mentioned that the word "business" is not without its difficulties. In Rolls v Miller (1884) 27 Ch 71, 88 Lindley LJ said that the word can mean "almost anything which is an occupation, as distinguished from a pleasure - anything which is an occupation or duty which requires attention is a business". In Hope v Bathurst City Council (1980) 144 CLR 1, 8-9 Mason J said that the word "business" denotes "activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis." These meanings will not always be of assistance, and they cannot be relied upon in this case because the word is defined to include a business not carried on for profit. Yet whatever meaning is to be given to the word, it will not encompass a set of dealings that are wholly internal. In such a case there is no commercial, or even quasi-commercial, enterprise in existence, and nothing in the nature of a going concern. Put another way, there can be no business in the absence of dealings, or the potential for dealings, with third parties. Moreover, I do not believe that acts which are preparatory to the setting up of a commercial enterprise or going concern amount to carrying on a business. That is to say, there will be no business when there is nothing more than negotiations for its establishment, though a business will commence if the negotiations are successfully concluded. 142 Now it is necessary to determine whether PAWA's refusal to grant access to its distribution facilities breached cl 46. A breach of that clause will be established if: (1) PAWA had a substantial degree of market power, (2) PAWA took advantage of that power and (3) PAWA did so for a relevant purpose. I will deal with each issue in turn, beginning with the question of market power. 143 It is a convenient but not an essential approach to determining whether a firm has market power first to identify the market in which it is said that power exists and then to ascertain whether the firm has power in that market. This is the approach that was adopted by the judge and I will follow his path. Both NT Power and PAWA relied upon the expert evidence of economists. Dr Fitzgerald was called by NT Power and Professor Teece by PAWA. Their evidence dealt with a number of topics, including the type of market or markets that exist in the "electricity industry". On this issue there was very little difference between them. Dr Fitzgerald defined a market as "a collection of buyers and sellers that have the potential to interact resulting in the possibility of exchange". Because this definition includes all buyers and all sellers of all goods, Dr Fitzgerald acknowledged that at least for antitrust purposes it is necessary to place boundaries on the market. To that end he employed the notion of "substitution", noting the definition of market in s 4E of the Trade Practices Act where a market for goods or services is defined to include substitutable goods or services. Reference should also be made to the authoritative statement by the Trade Practices Tribunal in Re Queensland Co-operative Milling Association Ltd (1976) 8 ALR 481, 517 that "a market is the field of actual and potential transactions between buyers and sellers amongst whom there can be strong substitution, at least in the long run, if given a sufficient price incentive." A slightly different definition is preferred by G Stigler and R Sherwin in their article "The Extent of the Market" 28 Journal of Law and Economics 555 (1985). They define a market (at 555) as "that set of suppliers and demanders whose trading establishes the price of a good". So, products are in the same market "when their relative prices maintain a stable ratio" (Stigler and Sherwin at 566): that is, when the cross-elasticises of supply and demand are high. 144 Dr Fitzgerald said that it is usual to distinguish four markets in the electricity industry: a market for the generation of electricity, a market for the transmission of electricity (the transmission being from the place of generation to the point of distribution), a market for the distribution of electricity (the distribution being from a distribution point to the customer) and a market for the sale of electricity . Dr Fitzgerald said that for a variety of reasons, including the small scale of operations in the Northern Territory, it was appropriate to approach this case on the basis that there were two markets: a supply market which incorporates the generation and sale of electricity and a carriage market which includes both the transmission and distribution of electricity. 145 Professor Teece divided the electricity industry into four "economically separable functional elements: • generation; • transmission (at high voltages); • distribution (generally at lower voltages); and • sale - either wholesale or retail, although the distinction between wholesale and retail is often quite blurred." He said that each of these functions was economically distinct, partly because one could not be substituted for another. Professor Teece was of the view that each separable functional element was a separate market. He disagreed with Dr Fitzgerald's consolidation of these markets into two. This difference of opinion is relatively insignificant in this case and certainly will not affect its outcome. 146 While there was substantial agreement at trial about the particular markets that exist in the electricity industry, especially that there was a market both for the transmission and distribution of electricity, on appeal PAWA contends that there were no such markets. In support of this argument PAWA relies upon what I regard as a discredited theory, namely that there can be no market for the purposes of the antitrust legislation if there is no trade in that "market". 147 I say that the theory is discredited for two reasons. In the first place orthodox industrial organisation economics consistently considers the existence of potential as well as actual competitors when identifying the participants in a market. Orthodox theory also has regard to potential as well as actual substitutes for the purposes of determining what products are in a market. The reason why potential competitors, and potential demand and supply substitutes, are taken into account is because they constrain those who operate in the market. It is not a far step from this approach to conclude that there is a market where there is a demand for a product and one can find a person willing to supply that product. In any event, as I have mentioned, Professor Teece acknowledged that there are markets for the distribution and transmission of electricity. He reasoned that PAWA was a supplier of these services because it notionally supplied them to itself. It was a "self-supplier" to use his language. 148 The second reason for rejecting the theory is that it was rejected by the High Court in Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177. I appreciate that Queensland Wire has come under attack in Melways Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 75 ALJR 600. But it is not in that category of case which one might describe as dead but not yet buried. In any event, on the issue now under consideration, Queensland Wire was not overruled. It will be remembered that Queensland Wire concerned a constructive refusal to supply goods. The respondent, BHP, had substantial market power in the market for steel and steel products. BHP only offered to supply Y-bar, a product used in the manufacture of a popular type of rural fencing, to the appellant, QWI, at an excessively high price. QWI commenced proceedings claiming that BHP's conduct amounted to a refusal to supply contrary to s 46. The claim was dismissed at first instance on the ground that to fall within s 46 it was necessary to establish some hostile intent, some sort of "reprehensible", "predatory" or "unfair" conduct: see (1987) 16 FCR 50, 65, 68. The Full Court ((1987) 17 FCR 211) dismissed the appeal but on the ground that, as Y-bar had never been sold, there had never been a market for Y-bar so as to attract the operation of s 46. On appeal the High Court found for QWI, rejecting unanimously the trial judge's determination that the words "take advantage" in s 46 required the establishment of some conduct deserving of criticism. The High Court also rejected the Full Court's view that there was no market in steel or steel products. In that connection Deane J said (at 196): "While actual competition must exist and be assessed in the context of a market, a market can exist if there be the potential for close competition even though none in fact exists. A market will continue to exist even though dealings in it be temporarily dormant or suspended. Indeed, for the purposes of the Act, a market may exist for particular existing goods at a particular level if there exists a demand for (and the potential for competition between traders in) such goods at that level, notwithstanding that there is no supplier of, nor trade in, those goods at a given time - because, for example, one party is unwilling to enter any transaction at the price or on the conditions set by the other." Dawson J said (at 200): "[T]he existence or non-existence of sales of a product cannot conclude whether a market exists or not. It must be sufficient to constitute a market that there is a product for exchange, regardless of whether exchange or negotiation for exchange has actually taken place." Toohey J said (at 211-212): "[T]he absence of existing buyers does not mean that there is no market for Y-bar. It would be a curious consequence if the offering by BHP of a limited supply of Y-bar established a market for that product but the withholding of supply altogether meant that there was no market." 149 The next question is whether PAWA had a substantial degree of power in the market or markets for the transmission and distribution of electricity. On this question there was a sharp difference of opinion between the economists. Dr Fitzgerald took as his starting point the following definition of market power: "Market power is the ability of a corporation to behave persistently in a manner different from the behaviour that a competitive market would enforce on a corporation facing otherwise similar cost and demand conditions. Consistent with this definition, subsection 46(3) directs that, in determining the degree of market power held by a corporation, regard needs to be paid to the extent to which that corporation is constrained by actual and potential competitors, suppliers and purchasers." 150 This definition is consistent with that usually put forward by industrial organization economists. Generally, they define 'market power' as a firm's ability to raise its price above the competitive level without losing so many sales that the price is unprofitable: see eg Landes and Posner, "Market Power in Antitrust Cases" 94 Harvard Law Review, 937 (1981), Hay, "Market Power in Antitrust" 60 Antitrust Law Journal 807 (1992), Areeda et al, Antitrust Law 2nd ed. (2000) vol IIA, ch 5, sub-ch 5A and vol IIIA, ch 8, sub-ch 8A. In this approach "price" is not confined to the rate of exchange for the goods in question. It includes such things as the quality of goods and the terms of trade upon which the goods will be supplied, all of which have an economic value. So, in the definition one could substitute "reduce quality below competitive levels" for "raise price above competitive levels". Put differently, indeed putting it the way that Professor Teece did in his analysis, market power is the ability of a firm to exercise discretion in the market place. A more complete statement of Professor Teece's position, which in my view is substantially correct, is that market power "is the ability to exercise discretion in the marketplace, such as in setting prices, sales terms or quantities. Except in perfectly competitive markets, firms generally can exercise at least some (albeit small) measure of market power - as in monopolistically competitive markets - because they face downward sloping demand curves." 151 It is implicit in each of these definitions (which do not differ greatly) that market power will only exist when there is the ability to raise prices or exclude competition for a significant period. That is to say, it would not be useful to show that a firm could only raise its price temporarily without any loss of sales. If that were to be the sole test of market power few firms would lack that power. It is the requirement that a firm has the ability to behave persistently in a manner different from how it would in a competitive market that PAWA relies upon for its contention that it had no market power. 152 Ordinarily PAWA's position as a monopolist in the market or markets for the transmission and distribution of electricity would give it substantial market power. In the absence of its consent, or legislation that restricted its rights, PAWA had the exclusive capacity to distribute and transmit electricity in the Northern Territory (with the exception of the presently irrelevant Darwin to Katherine 132kV transmission line). Its market conduct was unconstrained by the existence of any competitors or any potential competitors, because there could be none. However, when PAWA refused to grant NT Power access over its infrastructure it could only maintain that refusal for a relatively short period. The Northern Territory government had committed itself to implementing an access regime for electricity infrastructure. By April 1998 the government's position was that "it will probably be two to three years before the process is complete". In 2000 that access regime came into force with the passage of the Electricity Networks (Third Party Access) Act (NT) and related legislation. The access regime provides a legal framework for third parties, including electricity retailers, generators and industrial users, to negotiate access formerly to PAWA's and now PAWC's transmission and distribution facilities so that they can transmit electricity to their own customers: Electricity Networks (Third Party Access) Code (Part 2); Electricity Networks (Third Party Access) Act (Part 1). PAWA was, and its successor now is, required to use all reasonable endeavours to accommodate the requirements of those seeking access to the electricity network: Electricity Networks Code, cl 6. PAWA argues that by 1998 it lacked substantial market power because whatever market power it may once have had was no longer sustainable in light of the imminent introduction of the new access regime. 153 It must be accepted that any discussion of market power is temporal. A firm must have market power for some appreciable period before it has significance for antitrust purposes. Most firms could raise prices above competitive levels for a day, or even for a week, but competition would soon bring them back into line. Thus to have market power implies having the ability to maintain raised prices or exclude competition for a significant period. But that period need not necessarily be measured according to the calendar. The reference is to operational time, such as the time within which a potential competitor who is waiting in the wings could acquire the facilities needed to enter into the market to take advantage of the possibility of making a profit. Moreover, the determination of the temporal dimension of a market involves an inquiry that has no economic based answer, but involves policy judgments: Hovencamp, "Exclusive Joint Ventures and Antitrust Policy" 73 Columbia Business Law Review, 1 at 80-82 (1995). This case has the added problem of identifying the point of time at which the existence of market power must be evaluated. 154 Professor Teece says that if market power could not be exercised for more than a year or so, then the electricity market should be treated as if it were fully contestable. At what point of time does Professor Teece's one year period commence? He has nominated as the starting point the time when the alleged contravening conduct is engaged in. At face value this seems to be a reasonable approach. But on closer examination, it produces curious results. Assume that from a given point in time (which I will identify as "X") a firm has the ability to raise its price above competitive levels for a period of five years. Let us see whether the firm has market power at two points in time: X plus three and a half years and X plus four and a quarter years. According to Professor Teece the firm would have market power at the point X plus three and a half years because its position and power as a monopolist would continue for more than one year. That has within it the point which is X plus four and a quarter years, at which time it is still deemed to have market power. But, according to Professor Teece, if the allegedly offending conduct takes place at X plus four years, the firm would not have market power at that point because it faces competition in nine months. My purpose in raising this hypothetical example is to demonstrate the apparent inconsistencies which would follow upon the selection of an arbitrary period of time during which power must continue to exist before it can be said that the firm has market power, and also to point out the difficulty that arises if the position is examined solely by reference to the time of the allegedly contravening conduct. 155 In my opinion sometimes it will be appropriate for market power to be analysed on the basis of long term horizons, and on other occasions short term horizons will do. In the case of a long term monopolist who has, and will continue to have, discretionary power in a market it is not always necessary to consider for how long into the future that power will continue to exist. The relevant feature of the market is not that the temporal dimension of the market power, whatever that may be, has only a short period to run. The monopolist has market power until its ability to exercise its discretionary power is eliminated or significantly reduced by an actual or potential competitor. Until that time, the monopolist will have market power for the purposes of the antitrust provisions of the Competition Code. 156 Turning now to the issue at hand, PAWA's position in 1998 must be examined by reference to the different markets in which it operated. In the generation and supply markets, in particular the supply market, the likelihood that an access regime would soon be introduced no doubt affected PAWA's dominant position. As Professor Teece pointed out, the access regime would eliminate the main barrier to entry into these markets (the requirement for access to transmission and distribution facilities). Accordingly, PAWA was forced to react to the threat of competition from new entrants, especially NT Power, by taking steps the details of which I will mention later. Things were different in the transmission and distribution markets. There was never to be any competition in these markets. There would only be statutory control which would prevent the exercise of market power. In 1998 it was not known when the regime would be introduced and what form it would take. These matters depended upon political considerations which, by their very nature, are uncertain. Professor Teece is correct when he says that "the regulatory and political oversight that [would] exist under the open access regime being proposed would prevent the exercise of any market power that derived from natural monopoly in these [markets]". But until the introduction of the regime PAWA's market power continued to exist. That is to say, in 1998 there was no potential competitor whose existence could affect the way PAWA behaved in the distribution and transmission markets and the threat of legislation to regulate its conduct in these markets, where there was no other owner of distribution or transmission facilities, could have no effect on its conduct. Indeed the evidence shows that in fact it had no effect because PAWA was able to maintain its refusal to grant access to its facilities until the new regime was in place. Professor Teece made the point that until the new regime came into existence PAWA remained a natural monopolist with the powers that came from that position. The following answers that he gave in cross-examination are instructive: Q. Are you saying there in effect that once in place that regime will prevent the exercise of any market power that derived from natural monopoly in the transmission and distribution functions? A. Yes Q. Do we take it from that that you accept that the result of its natural monopoly in the transmission and distribution functions, that PAWA prior to the introduction of this access regime, has a substantial degree of market power? A. In the literal sense that I mentioned earlier. Q. Are you saying in effect that once this regime comes into place, the exercise of that market power will be constrained or possibly prevented? A. Yes. The qualification to which Professor Teece referred was that PAWA was under the control of the Minister who could set PAWA's prices. I do not regard this as a relevant constraint on market power which affects PAWA's position as a monopolist. 157 Now it is necessary to determine whether PAWA used its substantial power in the market (that is the distribution and transmission markets) to refuse to grant NT Power access to its infrastructure. PAWA contends that it did not take advantage of its power and that its refusal can be characterised as the performance of a duty imposed by s 16 of the PAWA Act, the exercise of a regulatory function or the exercise of a property right. It is convenient to deal separately with each of these contentions. 158 It will be remembered that s 16 of the PAWA Act provided that, in the exercise of its powers and in the performance of its functions, PAWA was subject to the direction of the Minister. According to PAWA it refused to grant NT Power access to its infrastructure because it was under a direction to that effect, a direction with which it was bound to comply. In that event, so the argument goes, the refusal could not be regarded as the use of market power. I need to mention another aspect of this submission. It concerns the purpose of the refusal to grant access. PAWA says that the only relevant purpose is that of the Minister who gave the direction, and his purpose cannot be attributed to PAWA. 159 Lying behind these submissions are two unstated assumptions that were not explored at trial or on appeal. Those assumptions are: (1) That the Crown in right of the Northern Territory and PAWA are to be regarded as separate bodies for all purposes and (2) That if the Minister exercised his power of direction under s 16, the Minister's purpose should not be attributed to PAWA. It may be, however, that neither assumption is well founded. 160 Speaking generally, a reference to "the Crown" in legislative provisions such as s 13 of the Reform Act is a reference to the executive government of the particular polity, and certainly not to the reigning monarch: M v Home Office [1994] 1 AC 377, 395. The executive government comprises ministers, many officials, departments of state, and often both statutory and non-statutory bodies. In Town Investments Ltd v Department of the Environment [1978] AC 359 at 381 Lord Diplock said that instead of "the Crown", it would be better to speak of "the government": "a term appropriate to embrace both collectively and individually all of the Ministers of the Crown and parliamentary secretaries under whose direction the administrative work of government is carried on by the civil servants employed in the various government departments. It is through them that the executive powers of Her Majesty's government in the United Kingdom are exercised, sometimes in the more important administrative matters in Her Majesty's name, but most often under their own official designation. Executive acts of government that are done by any of them are acts done by 'the Crown' in the fictional sense in which that expression is now used in English public law."

The business of government is also conducted "through other institutions or instrumentalities created for the purpose". In Re Residential Tenancies Tribunal of New South Wales and Henderson; Ex parte the Defence Housing Authority (1997) 190 CLR 410, 438 the High Court said:

"The Crown's functions nowadays extend beyond the traditional, or clearly regal, functions of government to activities of an entrepreneurial or commercial kind which, in general were previously engaged in only by subjects of the Crown." 161 So, a statutory corporation which answers the description of an emanation of the Crown (an expression which has been repeatedly criticised as in International Railway Company v Niagara Parks Commission [1941] AC 328, 342-3; Bank Voor Handel en Scheepvaart NV v Slatford [1953] 1 QB 248, 284) or a Crown agent (which can be an equally difficult expression: see Commercial Oil Refiners Pty Ltd v South Australia (1974) 9 SASR 88, 93) should be regarded as part of the executive government, that is part of the Crown itself. It is not necessary to consider the position of a statutory corporation whose functions are in part governmental and in part private where different considerations will arise. 162 If it be accepted, as I think it should, that a statutory corporation may be part of the executive government - together with the ministers of the Crown, government departments and the public service - the fact that PAWA may have been acting in pursuance of a direction under s 16 would not assist its case. If the authority is just a part of the government of the Territory, there is only one true actor in what has occurred. 163 Another reason why a direction under s 16 may not assist PAWA is that it is likely that the Minister's intention in giving the direction would be attributed to PAWA. PAWA was a corporation that was constituted by its Chief Executive Officer. The acts of the Chief Executive Officer carried out under the authority of the PAWA Act were attributed to PAWA. Section 6(2) of the PAWA Act so provided. Even if this provision were absent from the legislation it is likely that the common law would produce the same result: Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500. However PAWA's affairs were controlled not only by the Chief Executive Officer, but also by the Minister. When ministerial control was exercised through the medium of s 16 the Minister supplanted the Chief Executive Officer as the corporation's decision-maker. In that circumstance there is no reason in principle why the reasons that motivated the Minister in giving a particular direction should not be attributed to PAWA. Unless that is done there could be cases where PAWA acted in a particular way with an absence of purpose. On the other hand, if the Minister's purpose became PAWA's purpose this anomalous situation would not occur. It also means that it will not be possible for a government to avoid the operation of purposive provisions such as cl 46 of the Competition Code by the simple expedient of a Ministerial direction. 164 In the end, however, the real answer to PAWA's submission is that the underlying premise upon which it is based, namely that there was a direction under s 16, cannot be sustained. To explain why I have reached this conclusion (which is contrary to that of the judge) it is necessary to refer to the events that immediately preceded the so-called "direction". Representatives of NT Power and PAWA had been involved in negotiations for access to PAWA's infrastructure since March 1998. The negotiations covered most of the matters upon which agreement was required. The judge said that the negotiations had been conducted in good faith. However, by August 1998 the negotiations had come to an end. At that point NT Power called for meetings to resurrect the negotiations, but to no avail. On 17 August 1998 NT Power's solicitors wrote to the Chief Executive Officer of PAWA complaining about PAWA's failure to continue the negotiations. Here are some extracts from their letter: "[O]n 28 May 1998 representatives of our client met with you and other officials of your authority to discuss the charges that would be applied to [NT Power] for use of the PAWA Network to transmit to its customers electricity generated from the … facility at Mount Todd Mine… … It is very important from our client's point of view that [these] charges … be established expeditiously to enable it to meet its commitment to commence distribution of power in the Northern Territory by 1 October 1998… … All of [the information contained in the letter] has now been before PAWA since 15 July 1998 and the whole matter has been before you since 28 May last. … We are instructed by our client that it has sought a further meeting with you in an attempt to resolve the matter but to no avail. Our client has been informed that you will not be available until some indefinite time in the future... … On our instructions … it appears that this relatively simple process of fixing [charges] is being used in an attempt to stall our client's commencement date and consequently competition for PAWA… … We understand from a technical point of view that if the charges are not fixed by 1 October, our client can use the network anyway and pay the estimated charges into a trust account but there seems no reason why such a commercially untidy arrangement should have to be adopted with so much time available." 165 A copy of the letter was sent to the Minister for Resources and Energy. Almost immediately Mr Noonan, PAWA's solicitor, was asked to consider what the government's response should be. He gave his advice to Treasury by letter dated 20 August 1998. The letter contained a section headed "Summary" and another headed "Conclusions" which state: "Summary PAWA has no legal obligation to provide access to the PAWA network to Power Facilities although the possibility exists for that position to be challenged under Part IIIA of the TPA and possibly under section 46 of the TPA or on the basis that PAWA is estopped from denying access. No course of action by Power Facilities is likely to result in any legal proceedings being successful in the short term. There is also the danger that by acceding to Power Facilities' request for access to the PAWA network Government policy of commercial/domestic consumer cross-subsidisation and regional cross-subsidisation would or could be lost. Conclusions We advise that you have the following options:- a) authorise us to send the attached reply to Power Facilities' solicitors, or b) advise the PAWA Minister to direct PAWA not to enter into any arrangements pending the Scoping Study report concerning, inter alia, third party access to PAWA's network. On balance, option a) is recommended if the political imperatives prevent option b). " 166 This letter seems to be the genesis of the so-called "direction". PAWA says that the direction takes the form of a briefing note to the Minister for Essential Services and the Treasurer from the Chief Executive Officer of PAWA and the acting Under Treasurer. It is a typical briefing note. It begins with recommendations, which are in the following terms: " It is recommended that you:- a) agree that PAWA should defer the establishment of access arrangements for the above until the outcome of the PAWA Review is decided by Cabinet, but continue the technical background work to develop an appropriate access regime for the Territory; and b) agree that James Noonan and Associates, acting as legal advisers to Government in the PAWA Review, be authorised to respond to the legal representative of Power Facilities Pty Limited, in accordance with the attached draft response."

In the last section of the briefing note, headed "Current Situation", reference is made to Mr Noonan's advice. The Minister and Treasurer are informed that the solicitors "have settled the draft reply [a copy of which was attached to the briefing note]. Treasury, PAWA and the consultants agree that this is a suitable response".

167 The Minister's and Treasurer's acceptances of the recommendations are evidenced by their signatures on the last page of the briefing note. To appreciate precisely what they accepted it is necessary to consider the second recommendation, namely that Mr Noonan's advice be followed. As explained earlier, the advice he provided in the letter written to Treasury was that one of two options be taken: either he be instructed to write a letter in accordance with the draft attached to the briefing note or the Minister give a direction to PAWA under s 16. It is clear from the briefing note that the Treasurer and Minister accepted Mr Noonan's first option which had been Mr Noonan's preferred option. Moreover this was the conclusion reached by the Chief Executive Officer and the acting Under Treasurer, because shortly after the recommendation was accepted Mr Noonan wrote to NT Power's solicitors in the terms of his draft letter. 168 From this material the only inference open to the judge was that the Minister had decided not to give a direction under s 16. Yet he found that the Minister had given such a direction for he said that the briefing note "had that status". The judge reasoned that "[a]s a matter of practice, as the communications between PAWA and the Minister demonstrate, the procedure of a minute from the Chief Executive Officer and his response by endorsement on that minute, was the normal means by which the Minister (where he considered it appropriate) gave directions under s 16 of the PAWA Act." I do not think that this is an accurate statement. It is true that communications between the Minister and PAWA were often by way of a briefing note or minute from the Chief Executive Officer with an endorsement by the Minister. This method of communication is not unique to the Northern Territory government; it is a procedure followed by many other governments. It is also true that by this style of communication the Minister made known his wishes regarding the manner in which the powers and functions of PAWA should be exercised. But that is a far cry from giving a direction which, if ignored, could be enforced by action brought in the name of the Attorney-General and could result in the removal from office of the Chief Executive Office. In the ordinary course of events it would be very unusual for a minister to make use of a power such as s 16, if his or her wishes could be put into effect by less coercive steps. The judge seems to have been of opinion that whenever the Minister desired to have PAWA act in accordance with his wishes, a direction to that effect was given. That opinion is not supported by the evidence. In any event, past practices are not always a reliable guide to future conduct, as this case demonstrates. For whatever may have been the position in the past, the Minister did not intend to give a direction under s 16, having accepted the advice of Mr Noonan that a different course should be followed. 169 This brings me to the next point which is whether the refusal to grant access was an exercise of regulatory power and not market power. This argument calls in aid cases such as Plume v Federal Airports Corporation (1997) 19 ATPR 41-589 and Stirling Harbour Services Pty Ltd v Bunbury Port Authority (2000) 22 ATPR 41-472; on appeal (2000) 22 ATPR 41-783. Plume was concerned with the licensing power of a statutory authority, and the court held that the exercise of the power to grant a licence could not constitute the exercise of market power. In Stirling (at first instance) French J provided the explanation. He said (at 40,734) that: "… the exercise by [the corporation] of a statutory power to licence the provision of towage services in the Port of Bunbury is not an exercise of market power but rather the discharge of a regulatory function conferred upon it by the legislature in the public interest. That said, the fact that the conduct of a statutory body is supported by statutory authority will not necessarily take it out of the scope of s 46. Without exploring the limits of the exempting characteristic it is sufficient in my opinion to say that the grant of a statutory licence under an express power granted by the Parliament is well within it."

It would in any event be surprising to find that the exercise of a licensing power would be caught by cl 46 if only because of the unlikelihood that such a power would ever be exercised for the purpose of preventing competitive conduct. Accordingly, the question whether the proper exercise of a statutory licensing power could result in a contravention of cl 46 is unlikely to arise.

170 According to the judge, the exercise by PAWA of the power to refrain from giving access to its infrastructure was an exercise of market power and not the discharge of a regulatory function. The judge said that the conduct was not designed to achieve by regulation any specific public purpose of the legislature, especially because the issue of access to PAWA's infrastructure for the purpose of enabling third parties to supply electricity was not a matter which was dealt with by any express licensing power. I agree with these observations, and they are an answer to PAWA's contention. 171 In this case the point may in any event be covered by statute. I have already referred to s 15 of the Reform Act which provides that for the purpose of s 13 certain conduct does not amount to carrying on a business. For present purposes it is necessary to refer to s 15(1)(b) according to which the act of granting, refusing to grant, revoking, suspending or varying a licence does not amount to carrying on a business. Licence is defined to mean "a licence that allows the licensee to supply goods or services": s 15(3). It is clear that s 15 does not exempt a refusal to grant access to infrastructure from the operation of s 13. It is not to be supposed, that Parliament intended conduct which is much broader than a mere licensing power to be beyond the reach of s 13. I appreciate that the exclusions in s 15(1) are not intended to limit the things that do not amount to carrying on a business: s 15(2). But s 15(1) does provide some indication of the type of power Parliament intended to be beyond the reach of s 13, and a refusal to grant access to infrastructure is far removed from that which was in contemplation. 172 The third submission is that cl 46 would not be infringed by the denial of access because that denial is no more than an incident of the right of a property owner, and the exercise of such a right cannot constitute the taking advantage of market power. In essence the argument is that if a person is legally entitled to act, or refrain from acting, in a particular way, then so to act, or not act, can never amount to a use of market power. If this far ranging proposition were to be accepted then typically monopolistic conduct such as the refusal to supply goods and services, the imposition of high prices on goods and services to deter competition (a constructive refusal to supply), price discrimination between different purchasers of goods or services, exclusive dealing, and what for convenience is sometimes referred to as predatory pricing could never contravene cl 46. Of course that is an untenable proposition. It would mean that there is no purpose to cl 46 for there would be little, if any, conduct it could regulate. Moreover, the submission fails to appreciate the true scope of cl 46. This provision is designed to prevent action or inaction that a firm would be unlikely to engage in if the firm lacked market power either because it would not be commercially effective conduct or because it would be commercially counterproductive. If there is an absence of market power and an absence of an anti-competitive purpose (as specified in cl 46(1)(a), (b) or (c)) there is no restriction on a firm exercising its rights of ownership, and engaging, or not engaging, in any conduct it regards to be in its commercial best interests. On the other hand, if a firm does have a substantial degree of power in a market, and makes use of that power for an anti-competitive purpose, the conduct will not be taken outside cl 46 merely because the action or inaction (as the case may be) is otherwise lawful. I believe this view is consistent with what was said by Lockhart J in Dowling v Dalgety Australia Ltd (1992) 34 FCR 109. 173 It would in any event be an extraordinary result if a monopolist could successfully defeat a cl 46 claim with the proposition that the monopolist's ownership of the property in question entitles it to do as it pleases, even if its conduct is anti-competitive or predatory. As long ago as 1810 Lord Ellenborough CJ said that, although in general "every man may fix what price he pleases upon his own property or the use of it," the possessor of a monopoly, "if he will take the benefit of the monopoly … must as an equivalent perform the duty attached to it on reasonable terms": Allnut v Inglis (1810) 12 East 525, 538; 104 ER 206, 210-211. In the United States s 2 of the Sherman Antitrust Act (1890) prohibits "monopoliz[ation] or attempt[s] to monopolize". The provision will be violated if a monopolist refuses to provide reasonable access to a facility which is essential to a competitor but which the competitor could not practically or reasonably duplicate. The principle has been applied to centralised market facilities such as the New York Stock Exchange (Silver v New York Stock Exchange 373 US 341 (1963)); a multiple listing service for residential real estate (Montgomery County Association of Realtors Inc v Reality Photo Master Corporation 878 FSupp 804 (1995)); a computerised airline reservation system (Alaska Airlines Inc v United Airlines Inc 948 F2d 536 (9th Cir 1991), cert denied 503 US 977 (1992); railway networks (Delaware and Hudson Railway Co v Consolidated Rail Corporation 902 F2d 174 (2d Cir 1990), cert denied 500 US 928 (1991); and natural gas pipelines (City of Chanute v Williams National Gas Co 955 F2d 641 (10th Cir 1992), cert denied 506 US 831 (1992). Interestingly, the principle was applied to a regional electricity distribution network. In Otter Tail Power Co v United States 410 US 366 (1973) the Supreme Court found that the appellant, Otter Tail, an electricity supplier, infringed s 2 of the Sherman Act when it refused to "wheel" (transfer) electric power over its lines from electric power suppliers to existing or proposed municipal systems. In Europe article 82 of the Treaty Establishing the European Community (formerly the European Economic Community Treaty), 25 March 1957, CMND 5179 provides: "Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market insofar as it may affect trade between Member States." The article is aimed at controlling the abusive exercise of monopoly power. A number of cases have established that the section will be infringed when a monopolist refuses to give access to its facilities needed by new entrants wanting to compete in a market. A recent example is the Court of Justice decision in Bronner v Mediaprint [1999] 4 CMLR 112. The idea that conduct that is rendered unlawful by the antitrust statutes in the United States and European Community may be lawful in this country, notwithstanding local legislation designed to achieve the same result, is something that I cannot accept. 174 The next question is whether the evidence discloses that PAWA took advantage of its market power by its refusal to grant access. The first limb of this inquiry depends upon the meaning to be given to the words "take advantage of" in cl 46. In Queensland Wire it was held that these words means "use". This was accepted as a correct statement in Melway Publishing (75 ALJR at 606). Accordingly, there must be a sufficient nexus between the existing market power and the conduct about which complaint is made to lead to the conclusion that the market power has been "used" to engage in that conduct. How is that nexus established? According to the High Court in Queensland Wire it is necessary to determine how the firm would have behaved in a competitive market. Thus, Mason CJ and Wilson J said (at 192): "It is only by virtue of its control of the market and the absence of other suppliers that BHP can afford, in a commercial sense, to withhold Y-bar from the appellant. If BHP lacked that market power - in other words, if it were operating in a competitive market - it is highly unlikely that it would stand by, without any effort to compete, and allow the appellant to secure its supply of Y-bar from a competitor." Dawson J said (at 202): "For the reasons given by Deane J I am of the view that the words 'take advantage of' do not have moral overtones in the context of s 46. That being so, there can be no real doubt that BHP took advantage of its market power in this case. It used that power in a manner made possible only by the absence of competitive conditions. Inferences in this regard can be drawn from the fact that BHP could not have refused to supply Y-bar to QWI if it had been subject to competition in the supply of that product." Toohey J said (at 216): "The only reason why BHP is able to withhold Y-bar (while at the same time supplying all the other products from its rolling mills) is that it has no other competitor in the steel product market who can supply Y-bar. It has dominant power in the steel products market due to the absence of constraint. It is exercising the power which it has when it refuses to supply QWI with Y-bar at competitive prices; it is doing so to prevent the entry of QWI into the star picket market; and it has been successful in that attempt." 175 This line of reasoning is unexceptional. It holds that a firm will use its market power if it engages in conduct that it would not otherwise have engaged in if it were not in a dominant position in the market. The focus of attention is on the action of the firm in an uncompetitive market. Where the firm has a substantial degree of power it is logical for the point of comparison to be between, on the one hand, the firm's behaviour in the uncompetitive market and, on the other hand, the firm's hypothetical behaviour if it had competitors but was otherwise in the same circumstances. In Melway Publishing the High Court did not reject this approach, although it is apparent that it did not agree with its application to the facts in Queensland Wire. It is an approach which was accepted as correct by the Privy Council in Telecom Corporation of New Zealand Ltd v Clear Communications Ltd [1995] 1 NZLR 385 when considering a similar provision. 176 In Melway Publishing the High Court pointed out that determining how a firm might behave under competitive conditions requires some analysis of the likely structure of the often hypothetical competitive market followed by either a process of economic analysis to form conclusions about the likely behaviour in that market or, if possible, conclusions based on direct observation (75 ALJR at 610). It is hard to disagree with these comments. But they carry this difficulty. The likely structure of a competitive market, and the manner in which competitors will behave in that market, especially a hypothetical market, are matters about which there will be different views, as is apparent from the differences of opinion between the judges in Melway Publishing and Queensland Wire. I suppose the reason for the difficulty is this. The analysis will usually be based on matters that require some business judgment, rather than theoretical economic analysis. Perhaps judges are able to decide purely commercial issues. By and large, however, they do suffer the disadvantage of having had no involvement in any commercial enterprise, so that it is inevitable that their opinions will differ, and their judgments may err. 177 In this case, as in others, it is necessary to ask how PAWA would have behaved in an hypothetical competitive market making certain assumptions about the nature of that market. The reason why it is necessary to construct an hypothetical market is that there has never been a competitive market for the supply of infrastructure in the Northern Territory, and there is never likely to be one because of the cost involved. A process of analysis based on direct observation (that is observation of a competitive market in action) is therefore not an available option. What will be the structure of our hypothetical market? As the High Court pointed out in Melway Publishing it would not be a market in which there is perfect competition. So much is obvious: the economic model of a perfectly competitive market probably does not exist in actuality. In 1998 we had a market in which a monopolist controlled the supply of particular services, namely the transmission and distribution of electricity. To construct a competitive market it must be assumed (as was the fact) that PAWA had the capacity to allow its infrastructure to be used by third parties who intended to supply electricity to customers in the geographic area in which PAWA sold electricity. It is also necessary to assume that there was at least one firm which had similar infrastructure, that is infrastructure, that was located in substantially the same geographic region as PAWA's infrastructure and that this firm also had the capacity to make its infrastructure available for use by third parties. With these assumptions we now have markets for the distribution and transmission of electricity in which there are at least two competitors who are equally able to satisfy the demands of third parties during peak and off-peak periods. Another assumption that I will make is that both PAWA and its hypothetical competitor were willing to make their infrastructure available to third parties on reasonable terms and conditions, including terms as to price. By reasonable terms and conditions, I include terms that are concerned with the manner of access, so that the owner of the infrastructure can adequately protect its assets. By reasonable price I mean a price that would give a reasonable return to the owner of the infrastructure for permitting a third party to make use of it. The evidence shows that PAWA was able to negotiate such terms and there is no reason to suppose that an hypothetical competitor would not be able to do likewise. 178 The final assumption concerns the supply market and deals with the effect in that market of competition for the supply of electricity. I propose to assume that there is a high risk that PAWA would lose business to an effective competitor. I make this assumption because that was PAWA's view. In 1997 it prepared a strategic marketing plan, one object of which was "to keep [it] attuned to the [rapidly emerging] competitive environment" flowing from the national competition policy. The plan described the effect of competition to be "dramatic", encompassing: "- Competition for construction, maintenance, ownership and management of assets - Reduced earnings from asset ownership - ie return on assets - Falling market share - Falling profit margins - Higher shareholder expectations - Higher customer expectations - Increasing Tariff Pressure" A number of competitors, including NT Power, were identified. This was followed by an analysis of the threat to sales revenue, the result of which was summarised in the following terms: "[The analysis] shows that for the Large Commercial/Govt segment and Nationally-based companies, the relative threat to [PAWA] is high. It is easier to market to a few large customers and tailor an offering to the customer's expectations. We are seen to be inflexible with regard to tariffs when compared with interstate offerings and the Government Tariff is relatively high. Hence these groups have the propensity to defect from our standard offering and must be regarded as most at-risk. An analysis of threats to Electricity customers only has been undertaken at this stage." 179 Let us now examine the issues which PAWA would face in a competitive market if it were asked to make its facilities available to a third party who wished to distribute and transmit electricity in the area where PAWA's customers are located so that it could compete with PAWA for those customers. A profit maximising firm in a competitive market (we are now speaking of the transmission and distribution markets) would not stand by and allow a competitor to supply the third party with distribution and transmission facilities. At least it would make a bid for that business. PAWA, however, is faced with this difficulty. If it were to permit access to its facilities it would open the door for the third party to become its competitor in the electricity supply market where it could take business from PAWA. Would that be a reason why a rational firm would deny access to its infrastructure as a means of protecting its downstream business? The answer must be no. In a competitive market for the supply of distribution and transmission facilities PAWA could not prevent the third party from competing for PAWA's customers with the potential that it would lose business. This is because in our hypothetical competitive market there is an organisation that can provide distribution and transmission facilities to the third party. So it is impossible for PAWA to keep the third party away from its customers. How would a rational firm act in that situation? In my view a rational firm would act pragmatically and make its infrastructure available. It would do so to get what it could from the difficult situation in which it found itself. The only thing it could get by way of recompense for the loss of business that it would be likely to suffer in a competitive market is a, perhaps smaller, return from letting out its infrastructure. 180 I can reach the same result by a different path. In Queensland Wire Deane J adopted the view that in refusing Y-bar to QWI in order to prevent it becoming a manufacturer of picket posts (a proscribed purpose), BHP had taken advantage of its market power. As the High Court pointed out in Melway Publishing (75 ALJR at 606): "Deane J saw the case as one in which the identification of the purpose for which BHP was refusing to supply QWI led directly to the conclusion that BHP was taking advantage of its market power. That was because the nature of the purpose was such that, in the circumstances of that case, it could not have been achieved by the conduct impugned (a refusal to supply) had it not been for the existence of the market power." It was only because of BHP's market power that it was able to achieve its purpose. Although the other members of the High Court adopted a different approach, Deane J's analysis may still be utilised: Melway Publishing at 610. It is an approach that has present relevance. Just as BHP had the capacity to prevent QWI from becoming a manufacturer of star pickets in Queensland Wire, so here PAWA had the capacity to keep NT Power out of the electricity supply market. It had that power because it was the monopolist in the transmission and distribution markets. I regard the conclusion that PAWA used its market power in those markets to keep NT Power out of the electricity supply market as self-evident. The implementation of PAWA's purpose of preventing NT Power from becoming a supplier of electricity (as to which see later) was to take advantage of its monopoly power. 181 This brings me to the last aspect of the inquiry whether PAWA has contravened cl 46, namely what was PAWA's purpose in refusing to grant access to its infrastructure. The judge found that the refusal was for the purpose of preventing NT Power from entering into the electricity supply market (cl 46(1)(b)) and for the purpose of deterring or preventing NT Power from engaging in competitive conduct in that market (cl 46(1)(c)). Because these findings are challenged by PAWA it is necessary to explain how the judge arrived at them. The following summary is taken from his reasons for judgment. 182 Public monopolies are not necessarily profit maximising or efficient. In 1998 PAWA was certainly not an efficient public utility. It operated on the basis of a "cross subsidisation tariff policy" under which commercial and industrial users were charged a high tariff so that, by way of comparison, domestic users could be charged very little and PAWA could provide services to remote or small communities. Accordingly PAWA was not in a position to compete efficiently in an open market for the supply of electricity. 183 Once it became clear that the national competition policy would be implemented it was necessary for the Northern Territory government to devise a strategy that would result in PAWA becoming more efficient so that it could become an effective competitor in the new environment. The Treasurer announced such a review in his budget speech on 28 April 1998. The review began in mid 1998 with the appointment of Merrill Lynch International (Australia) Limited, a financial management and advisory company, and Fay Richwhite Australia Limited, a merchant banker. 184 The judge found that in refusing to allow access to its infrastructure the overriding object of PAWA and the Northern Territory government was "to encourage genuine and efficient competition in the medium and long term". This was to be achieved in part by the access regime which was expected to be introduced in 2000. In the meantime PAWA needed to "eliminate or reduce tariff mismatches and poor work practices within PAWA". If it did not do so "NT Power might 'cherry-pick' the larger consumers leaving PAWA with its inefficient cost structure but with diminished revenue and the ongoing obligation of servicing the smaller customers and those in remote localities. In other words, it would have to supply that segment of the electricity supply market which required greater expense to service". Moreover, the judge found that included in its reasons "was the desire in the interests of what [the Under Treasurer] called 'sensible competition', to have time for PAWA to operate in a more economic and efficient way. The fear was not simply that PAWA would not then compete effectively with NT Power, but that its inability to do so in the short term (that is, for a period of one year of [sic] so) would mean that its operating losses would impose a greater burden upon the Northern Territory community as it would require further subsidy or would require a significant increase in tariffs to domestic customers." Accordingly the judge found that "the decision was driven by the judgment and belief that the [then contemplated] access regime would provide 'effective competition'", in the electricity supply market. 185 PAWA says that in virtue of these findings, namely that its refusal to grant access was motivated by a desire that there be genuine long term competition in the electricity supply market and that to advance that aim it was necessary to keep NT Power out of that market for two years or so, the conclusion that PAWA had a cl 46(1)(b) or (c) purpose was just not open. I think, however, that this submission both confuses purpose with motive and fails to acknowledge that a person may have more than one purpose for engaging in particular conduct. 186 The judge did not ignore the difference between purpose and motive. He said that "notwithstanding my acceptance of the 'higher' long term intention of PAWA, I consider that a substantial purpose of PAWA's refusal was to deter or prevent NT Power from participating in either of those markets until it introduced an access regime. That was the particular means by which the ultimate desired end was in part to be achieved. But it was a real consideration in achieving that ultimate end that NT Power not be able to participate in the Electricity Supply Market in competition with PAWA". He could equally have said that PAWA had two purposes, one being its "higher purpose" of ensuring that ultimately there would be an effective and competitive market and another purpose being to keep PAWA out of the market for some period. One must not lose sight of the fact (and it was an undoubted fact) that PAWA needed to use the period during which access was denied to shore up its position so that it could effectively meet competition when it was to hand. Its plan was to establish firm relations with its existing customer base, especially its 50 largest commercial customers who were most vulnerable to poaching, and where possible enter into long term contracts with those customers at lower than current rates. It intended to get rid of inefficiencies. It hoped to alter its price structure to eliminate, or at least reduce, cross-subsidisation. PAWA required a period in which it did not face competition in the electricity supply market to bring about these changes. Indeed the longer it could keep out a competitor the better. It is clear that PAWA's purposes at least included the purposes mentioned in cl 46(1)(b) and (c) and so its conduct engaged the operation of that clause. 187 Two things remain to be mentioned. The first is to note that NT Power put its case against PAWA on an alternative basis. NT Power held a licence to sell electricity in the areas of the Yimuyn Manjerr mine. During the course of negotiations to obtain access to PAWA's infrastructure, NT Power sought an amendment to its existing licence but instead obtained a new licence which permitted it to sell electricity to any person in the Northern Territory. The new licence was granted because, according to the judge, there was no basis upon which the request could be refused. NT Power says that its new licence carried with it, by way of implication, the right to access PAWA's infrastructure on reasonable terms and that PAWA was under a duty, also imposed by way of implication, to negotiate those terms fairly and in good faith. The judge rejected this argument after a detailed analysis of the cases dealing with the implication of terms in a contract, which he then applied to the licence. In my view NT Power's argument is hopeless at least for the reasons given by the trial judge. It may also be hopeless for another reason. It is by no means self-evident that the law relating to the implication of terms in a contract, whether the implication be by law, by fact, or by custom, can be applied to the type of licence that we are considering in this case. My own tentative view is that there is not a sufficient similarity between a contract negotiated by arms length parties and a licence granted under a statutory power to permit the incorporation of the law relating to implied terms. The effect of this approach might be to add terms to the permission granted pursuant to the exercise of the statutory power, which could impose obligations upon the grantor or grantee being terms not found in the enabling statute. To say the least this would be a curious result. However, as these issues were not raised in argument it is best that I do not express any concluded view on them. 188 The final matter to be mentioned is that NT Power also makes a claim against Gasco Pty Ltd (a wholly owned subsidiary of PAWA) based on its refusal to give an undertaking that it would not exercise the right of pre-emption which it has to purchase gas from the Mereenie producers which right, if exercised, would preclude NT Power from acquiring gas from those producers to operate its generator at Mount Todd. NT Power says that by refusing to give that undertaking Gasco breached cl 46 of the Competition Code and its federal counterpart, s 46 of the Trade Practices Act. The only part of the claim against Gasco considered by the judge was whether the Competition Code applied to it. The judge found that Gasco was entitled to derivative Crown immunity so that its conduct was beyond the reach of the Code. He also found that, in any event, the Code did not apply because the transitional provisions of the Reform Act protected a party from claims arising from a contract made before 19 August 1994. Gasco's claim for derivative Crown immunity depended upon the judge finding that PAWA was entitled to claim immunity. Once that finding is set aside, as I think it should be, Gasco's dependent claim cannot succeed. Whether or not the Reform Act applied to Gasco is therefore not to the point. The Trade Practice Act did apply and that part of the claim was not dealt with by the judge. 189 For the foregoing reasons I would allow the appeal, set aside the orders made by the trial judge, declare that PAWA contravened cl 46 of the Competition Code when it refused to provide NT Power with access to, and the use of, its electricity transmission and distribution facilities to enable NT Power to transmit electricity generated by it at its facility at Mount Todd and remit the matter to the trial judge to determine what damages should be awarded and what other relief should be granted against PAWA. As, in my view, this case should go back to the judge it is appropriate that he also consider the Trade Practices Act claim against Gasco. I propose this course because it will be necessary to evaluate the evidence given by a number of witnesses on matters relevant to Gasco's position. Finally, PAWA should pay NT Power's costs of the appeal and of the trial below. I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.

Counsel for the Appellant: Mr A Bannon SC Mr A Henskens

Solicitor for the Appellant: Colin Biggers & Paisley

Counsel for the First and Second Respondents: Mr B Oslington QC Mr L Foster SC Mr A Tonking

Solicitor for the First and Second Respondents: Noonans Lawyers

Counsel for the Intervenor (ACCC): Mr S Rushton SC Mr N Williams

Solicitor for the Intervenor (ACCC): Australian Government Solicitor

Date of Hearing: 21 - 24 August 2001

Date of Judgment: 2 October 2002