29 August 2007
If Government is not "carrying on a business", it's not bound by the Trade Practices Act. Does that immunity generally extend to anyone negotiating or contracting with it? Today the High Court said "no".
For Government, the decision also has implications about the way it can undertake procurement.
The Government tenders, and Baxter's pricing
Various State and Territory Governments needed to buy sterile fluids and peritoneal-dialysis products for their health services. Baxter had a monopoly in sterile fluids but faced competition in peritoneal-dialysis products. It offered significantly lower prices for sterile fluids if the purchasing authorities also brought its peritoneal-dialysis products.
The Australian Competition and Consumer Commission said that this was bundling products in these tenders in breach of section 46 (misuse of market power) and section 47 (exclusive dealing) of the TPA.
Sharing the immunity?
Both sides accepted that the Government purchasing authorities were not carrying on a business and that the Act therefore did not apply to them. Did their immunity from the Act extend to Baxter?
No, said the High Court. There's no broad immunity granted to anyone negotiating or contracting with a Government body that is itself immune from the TPA.
What this means for Government and those dealing with it
For contractors this means that they will not be immune from the operation of the TPA when negotiating or contracting with Government. While Government might not be affected by the TPA in an arrangement, the contractor will be!
Government therefore should review their tenders and other contracting arrangements to ensure that they are not asking the other side to engage in conduct which could breach the TPA.
Contractors ought to look carefully at their tenders and contracts to ensure they haven't relied on what is now a wrong view of the law.
