CEPU appeal against Trade Practices Act breach dismissed

The Full Federal Court in Melbourne has dismissed an appeal by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia against a decision by the Federal Court earlier this year that it had procured and induced a power station operator to contravene the Trade Practices Act 1974.

The Full Federal Court comprising Justices Weinberg, Bennett and Rares affirmed the original decision of Justice Young.

In handing down his original judgment, Justice Young found that in August 2001 IPM Operation and Maintenance Loy Yang Pty Ltd (previously known as Edison Mission Operation and Maintenance Loy Yang Pty Ltd), the operator of the Loy Yang B power station in Victoria, contravened section 45E* of the Act by entering into an arrangement with the CEPU containing a provision which had the purpose of preventing IPM from engaging electrical contractors at the power station who did not have a current certified agreement with the CEPU. His Honour also found that IPM contravened section 45EA** of the Act by giving effect to the arrangement until November 2003.

On 16 January 2007 Justice Young imposed a penalty of $125,000 (and a costs order of $200,000) against the CEPU for procuring and inducing IPM to enter into and give effect to the arrangement and for being a party to and knowingly concerned in the arrangement.

Justice Young found that IPM entered into the arrangement after Mr Dean Mighell, the secretary of the Victorian branch of the Electrical Trades Union, a division of the CEPU, conveyed to IPM that the CEPU's signing of a construction site agreement with a company related to IPM was conditional on IPM agreeing to enter into the arrangement.

The CEPU also appealed against the level of penalty imposed against it alleging it was manifestly excessive.

In rejecting the union appeal, the Full Federal Court upheld the penalty of $125 000 imposed by the trial judge noting that: "had the matter been open to us to review… we would observe the penalty was at the lower end of the range for behaviour of the kind in which the CEPU engaged."

The Full Court stated that the conduct by the CEPU "constituted a serious contravention of s45E(3)" and that conduct of such nature "should be deterred by the imposition of appropriately substantial penalties when contraventions have been established."

ACCC Chairman, Mr Graeme Samuel, welcomed the Full Federal Court's decision.

"The Full Court's decision should serve as a clear warning to unions that they risk the imposition of substantial penalties for being involved in contraventions of the secondary boycott provisions of the Act.

"This case demonstrates that the court, notwithstanding the non-commercial nature of unions, is prepared to impose significant penalties in respect of unions flexing industrial power that affects commercial activities contrary to the law."

Mr Samuel noted that the Act precludes the ACCC from seeking penalties against individuals in relation to contraventions of sections 45E and 45EA (and also section 45D) of the Act.

Background

*Section 45E of the Trade Practices Act 1974 prohibits a person from making a contract or arrangement or arriving at an understanding with an organisation of employees if the proposed contract, arrangement or understanding contains a provision included for the purpose of:

• (a) preventing or hindering that person from acquiring goods or services from another person who it has been accustomed or is under an obligation to acquire such goods or services from; or
• (b) preventing or hindering that person from supplying goods or services to another person who it has been accustomed or is under an obligation to supply such goods or services to.

**Section 45EA of the Act prohibits a person from giving effect to a provision of a contract, arrangement or understanding if, because of the provision, the making of the contract or arrangement or arriving at the understanding by the person contravened section 45E.

The Act provides for the imposition against a corporation of a penalty not exceeding $750 000 for each act or omission whereby it:

• (a) has aided, abetted, counselled, procured, induced or attempted to induce a contravention of section 45E or section 45EA of the Act; or
• (b) has been knowingly concerned in or party to a contravention of section 45E or 45EA of the Act.

The proceeding which was the subject of the appeal was instituted by the ACCC against IPM and the CEPU. IPM did not contest the allegations made against it in the proceeding and admitted that it breached sections 45E and 45EA of the Act. On 9 February 2007 Justice Tracey imposed by consent a penalty of $120 000 against IPM.

See news release NR 32/07 Power Station Operator Penalised $120,000.