Australian High Court quashes Tribunal decision on access to iron ore rail lines

The High Court of Australia (‘High Court’) today ruled that the Australian Competition Tribunal (‘the Tribunal’) had exceeded its powers in its decision regarding access to railway lines by mining companies in the Pilbara. The High Court has remitted the matter back to the Tribunal, under tighter constraints as to what evidence can be heard.

The matter started in 2004 when Fortescue Metals Group Ltd applied for declaration of railway lines owned and operated by BHP Billiton Ltd and Rio Tinto Ltd. Declaration is necessary for the Australian Competition and Consumer Commission to determine any terms of access. The decision to declare is made by the responsible minister, who must first be satisfied that certain criteria are satisfied. One of these criteria is that “it would be uneconomical for anyone to develop another facility to provide the service”.

The Minister declared three of the four railway lines, but this decision was appealed to the Tribunal by all the parties. At the Tribunal the parties presented substantial new evidence and the Minster’s decision was amended. Rio Tinto and BHP Billiton then applied to the High Court for judicial review of the Tribunal’s decision.

The High Court held that the Tribunal had exceeded its powers by conducting a re-hearing of the matter. It should only have considered those materials considered by the Minister supplemented, if necessary, by any extra information that it might request from the National Competition Council. The High Court remitted the matter to the Tribunal for determination within these constraints. The High Court also ruled that the word ‘uneconomical’ in the criteria for determination did not mean that the facility had to be a natural monopoly; rather, it meant ‘privately unprofitable’.

Frontier (Australia) advised Rio Tinto and gave expert evidence in the hearing before the Tribunal.

For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com or call on +61 (0)3 9620 4488.

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