Federal Court declares Alinta breached s87B undertakings

The Federal Court has made orders settling the litigation between the Australian Competition and Consumer Commission and Alinta 2000 Ltd by consent of the parties.

The orders include a declaration that Alinta breached section 87B undertakings and an order that Alinta pay the ACCC's costs.

In September 2006, the ACCC filed proceedings against Alinta Ltd (now known as Alinta 2000 Ltd) in the Federal Court for breach of the undertakings under section 87B of the Trade Practices Act 1974 that Alinta gave to the ACCC at the time of its part acquisition of the Dampier to Bunbury Natural Gas Pipeline in Western Australia.

The Federal Court has ordered the following:

• a declaration that at all material times from 23 January 2006 until 6 October 2006, a member of Alinta staff was in a position in which she was involved in commercial negotiations between DBNGP Holdings Pty Limited and gas shippers
• a declaration that Alinta's conduct in transferring the member of staff into the above position, and permitting her to remain there in circumstances where Alinta Ltd knew that she was involved in commercial negotiations with gas shippers, constituted a breach by Alinta of the undertakings, and
• an order that Alinta pay the ACCC's costs.

The parties consented to orders made.

"This is a positive outcome for the ACCC and for competition in Australia," ACCC Chairman, Mr Graeme Samuel said today. "The undertakings were put in place to ensure that Alinta's competitors were not negotiating with Alinta staff about their use of the pipeline.

"The situation that arose was unacceptable and constituted a real risk to competition. The ACCC takes 87B undertakings extremely seriously and will pursue breaches of these undertakings to the full extent of the law."

Background

Alinta purchased a 20 per cent interest in the pipeline in October 2004 and its subsidiary, Alinta Asset Management was appointed to assist in managing the pipeline. In order to address potential competition issues arising from that fact that Alinta would become an owner and manager of the pipeline, as well as a shipper on the pipeline, the ACCC required Alinta to give undertakings to the ACCC to address its competition concerns.

The undertakings sought to prevent Alinta from using its part ownership of the pipeline and management role, to discriminate against other gas shippers that used the pipeline. In particular, the undertakings provided that no member of staff of Alinta was to engage in commercial negotiations between the company charged with operating the pipeline and other shippers on the pipeline.