High Court to revisit derivative crown immunity

By Barry Dunphy.

Key Points:
The High Court will consider if the competition provisions of the Trade Practices Act attach to the conduct of Baxter Healthcare when it successfully tendered and subsequently entered into contracts with Government bodies.

The High Court is set to reconsider the principles relating to derivative crown immunity after it granted special leave to appeal to the ACCC in its litigation against Baxter Healthcare Pty Ltd.

The ACCC's request for special leave to appeal follows the Full Federal Court upholding the decision in of Justice Allsop in 2005[1], where the Court held that the competition provisions of the Trade Practices Act 1974 (Cth) ("TPA") did not attach to the conduct of Baxter Healthcare when it successfully tendered and subsequently entered into contracts with a number of State and Territory Purchasing Authorities for the supply of sterile fluids and peritoneal dialysis products to public health facilities. The ACCC had alleged that Baxter Healthcare had misused its market power and had engaged in the practice of exclusive dealing, in contravention of sections 46 and 47 of the TPA respectively.

The High Court will be asked to reconsider the general principles enunciated by the High Court 18 years earlier in its decision in Bradken Consolidated Limited v BHP Company Limited (1979) 145 CLR 107. That decision has stood for the principle that a court will not grant relief where to do so will impair the legal situation of the Crown.

In considering itself bound to follow the High Court's Bradken decision, the Full Federal Court noted the changed circumstances of the Crown since the late 1970s and hinted its approval of the dissenting opinion taken in that case by Justice Murphy; that is, that parties contracting with the Crown should not be able to engage in anticompetitive conduct to the detriment of their competitors and the public and be able to escape liability on a technical basis because the counter-party happens to be the Crown. Time will tell if this High Court agrees with this view.

For further information, please contact Barry Dunphy.