On 27 January 2022, the Australian Competition and Consumer Commission (“ACCC”) issued a determination allowing Central Petroleum, Macquarie Mereenie, New Zealand Oil and Gas, and Cue Energy (“the Joint Venture”) to jointly market and sell natural gas produced from the Mereenie field located in the Amadeus basin in the Northern Territory of Australia. (“the Mereenie Field”).
Joint marketing and sale arrangements, such as those proposed by the Joint Venture, would ordinarily breach the cartel prohibitions contained within the Competition and Consumer Act (“CCA”). However, where businesses are concerned that their conduct may result in such a breach, they can seek an authorisation from the ACCC under s 88 of the CCA.
In general, the ACCC only grants an authorisation if the proposed conduct's public benefits outweigh its public detriment. To assess the public benefit, the ACCC routinely applies the “future with or without the proposed conduct” test.
The Joint Venture’s sole business is the production of oil and gas from the Mereenie field in the Northern Territory and it sought authorisation to:
According to the Final Determination published by the ACCC, it considered the following public benefits to be relevant in these circumstances:
Conversely, the ACCC’s assessment recognised that the Proposed Conduct presents some risk of public detriment, though it is unlikely to be significant. While the ACCC noted that there is some risk that the Proposed Conduct could lead to a significant increase in market concentration or a reduction in competition, it determined that this risk is substantially mitigated because of the market conditions, including the existence of a number of other supply sources.
Accordingly, the ACCC considered that the public benefit likely to follow the Proposed Conduct would outweigh any public detriment.
The ACCC’s authorisation of the Proposed Conduct serves as a reminder that conduct prohibited by the CCA may still possess a public benefit. The authorisation process provides a mechanism by which the ACCC can balance such a public benefit against any public detriment of proposed conduct, thereby ensuring an outcome that is consistent with the objectives of competition regulation, including the promotion of economic efficiency.
For more information please contact Thomas Jones, Patrick Cordwell and Jeff Tian