ACCC v Hutchinson: understanding an “understanding”

Gadens acted for Hutchinson Builders (Hutchinson) in a recent High Court case,[1] in which the ACCC unsuccessfully sought to overturn a finding made by the Full Court[2] that an “understanding” for the purposes of s 45E(3) of the Competition and Consumer Act 2010 (Cth) (CCA) requires communication of assent that precedes and is distinct from conduct giving effect to the understanding. The High Court (4:1) dismissed the ACCC’s appeal with costs.

Section 45E

Section 45E(3) of the CCA relevantly provides that in an “acquisition situation” (where one party has been accustomed, or is under an obligation, to acquire goods or services from another person), a party must not make a contract or arrangement, or arrive at an understanding, with another party “if the proposed contract, arrangement or understanding contains a provision included for the purpose, or for purposes including the purpose, of … preventing or hindering the first [party] from acquiring or continuing to acquire such goods or services from the second [party]”.

The ACCC originally alleged that Hutchinson made an arrangement or arrived at an understanding with the CFMEU concerning the termination of a subcontractor in 2016 following industrial pressure. Though by its appeal to the High Court, the ACCC no longer contended that Hutchinson made an arrangement with the CFMEU. Rather, it contended that Hutchinson arrived at an understanding with the CFMEU.[3] Hence, the use of the word “understanding” in section 45E was a focus of the High Court’s decision.[4]

A history of “understanding”

Section 45E falls within Part IV of the CCA, which contains provisions designed to prohibit restrictive trade practices in various circumstances. The word “understanding” is used throughout Part IV of the CCA,[5] and has long been used in comparable jurisdictions, e.g., in US antitrust legislation.

Notably, the Trade Practices Act 1965 (at Part IV) prohibited certain types of “agreements”, and at section 91(2) explained that “An arrangement or understanding, whether formal or informal and whether express or implied, shall be deemed to be an agreement.” When that section was debated in parliament in 1965, it was met with some push back, on the basis that it was confusing. For example, the Hansard of the House of Representatives’ second reading of the Trade Practices Bill 1965 records the member for Parkes querying how the proposed new provisions could leave “any reasonable room for confusion in the minds of the commercial community”, and the member for Isaacs responding:

I am surprised by the arguments that the honorable member for Parkes (Mr. Hughes) advanced a little while ago. He said that he supported this clause and that there was no confusion in any ordinary agreement from day to day. I would like him to look at clause 91 of the Bill. He is a lawyer, so he might be able to tell me something about sub-clause (2) of that clause, which reads—
An arrangement or understanding, whether formal or informal and whether expressed or implied, shall be deemed to be an agreement.
If anybody can tell me that that is without confusion, I do not know what the word “confusion” means … [emphasis added]

Nonetheless, the controversial provisions were enacted and the word “understanding” has continued to be used in Australian trade practices legislation.[6]

A history of section 45E

The original section 45E of the CCA became law in Australia in 1980.[7] It was introduced to extend the operation of existing laws by prohibiting secondary boycotts of non-corporate persons and restricting abuses of power by unions.[8] It was then repealed in 1994,[9] and later reintroduced in 1996.[10]

When the legislature reintroduced “new” section 45E in 1996, it did so along with various other significant industrial law changes concerning industrial action, registered organisations and freedom of association. The relevant explanatory memorandum stated:

… New section 45E prohibits a person making an agreement with a union for the purposes of preventing or hindering trade between that person and another person (the target). New section 45E is directed at situations where a person capitulates in order to avoid loss or damage as a result of threatened industrial action against the target. It complements sections 45D and 45DA, ensuring that the prohibition on secondary boycott action is not weakened by collusion between firms and unions.

Various courts over the years have considered the meaning of the word “understanding” and what will (and will not) give rise to an understanding for the purposes of section 45E and other restrictive trade practices provisions. Despite this, issues of what constitutes an understanding and what is needed to prove an understanding are still often, and unsurprisingly… misunderstood. As Wigney J observed in Hutchinson v ACCC, the terms of section 45E are “arcane and awkward”.[11]

The High Court’s consideration of section 45E

The Majority

In their joint judgment, Gageler CJ, Gleeson J and Beech-Jones J confirmed that an understanding is not, without more, arrived at where one person unilaterally decides to act in a particular way in response to conduct of another, even if that conduct involves the making of a demand accompanied by a threat. The act of a person succumbing to a threat does not, without more, amount to arrival at an understanding to do what is demanded. Their Honours found that, once it is accepted that arrival at an understanding requires proof of express or tacit communication between the parties of a commitment on the part of one party to do that which the other party has demanded of it, the ACCC’s contention that the understanding was formed by Hutchinson’s conduct in terminating the subcontract to avoid industrial action must be rejected.

In a separate judgment, Edelman J considered in further detail the relevant legislative history, text and context of section 45E. His Honour found that concepts of arrangements and understandings connote reciprocity, which require that if one party makes an undertaking to another with a request for some performance by the other then, unless dispensed with by the undertaking party, the other party must communicate assent in the sense of informing the first party that the requested performance has been or will be undertaken. Because there was no objective assent by Hutchinson to the CFMEU’s request or demand, nor was there any performance by Hutchinson which was referable to the request or demand, his Honour found that the ACCC did not prove reciprocity and agreed with Gageler CJ, Gleeson J and Beech-Jones J that the ACCC’s appeal should be dismissed with costs.

Justice Steward (in dissent)

Steward J wrote a sole dissenting judgment. His Honour had particular regard to the relevant explanatory memorandum from when section 45E was reintroduced in 1996. That explanatory memorandum explained that section 45E “is directed at situations where a person capitulates in order to avoid loss or damage as a result of threatened industrial action against the target“. His Honour considered that section 45E can still apply where there is no clear evidence of assent being communicated, and emphasised that it would be unrealistic to expect parties to verbalise, record or evidence their illegal conduct in some way, and to search for a form of words whereby a blackmailed corporation somehow assents to a course of conduct sought to be secured through threats.

Steward J stated that, in the context of section 45E, with its evident purpose of preventing corporations from succumbing to threats of industrial action which disturb existing obligations or arrangements for the supply or acquisition of goods or services, the making of a threat and a change thereafter in a course of conduct in response to that threat is capable of evidencing an arrangement that had been made or an understanding that had been reached. His Honour commented that it should be inferred that the CFMEU, and those who act in accordance with its threats, do not advertise their impugned dealings.

Key takeaway/conclusion

The High Court’s decision will inform future restrictive trade practices cases dealing with the concept of an “understanding”, and will provide much needed clarity for the construction industry and other heavily unionised industries. The decision will also foreseeably assist the ACCC moving forward (which stated that it “took this appeal because the issue of what is needed to prove an arrangement or understanding is an important one for the enforcement of our competition laws”)[12] and future courts that will be required to consider the issue – both in Australia and internationally.[13]

Notwithstanding the clarity that this decision provides – and as was flagged by the member for Isaacs back in 1965 – there will inevitably still be ongoing confusion with respect to the application of such “arcane and awkward” legislative provisions (for as long as they remain as currently drafted).[14] The facts of cases such as this are seldom the same, and different facts can often lead to different outcomes. Hence, businesses that are considering whether to cease acquiring goods or services from a supplier should exercise caution before making such decisions – particularly if a third-party stakeholder has had any kind of say with respect to the decision. To avoid potentially severe consequences, business in such situations should seek legal advice before acting.

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Authored by:
Guy Edgecombe, Partner
Mitchell Byram, Special Counsel

[1] ACCC v J Hutchinson Pty Ltd; ACCC v Construction, Forestry and Maritime Employees Union [2025] HCA 10.

[2] J Hutchinson Pty Ltd v ACCC [2024] FCAFC 18. See previous Gadens article, 13 March 2024: https://www.gadens.com/legal-insights/hutchinson-builders-v-accc-full-court-finds-termination-of-subcontract-did-not-contravene-boycotting-laws-clears-hutchies-of-wrongdoing.

[3] [2025] HCA 10 at [18].

[4] NB: Edelman J at [54] cited authority suggesting that “arrangement” and “understanding” may be treated as synonymous, and Steward J at [81] observed that nothing turned upon any perceived difference in meaning between the words “arrangement” and “understanding”.

[5] For example, the word “understanding” appears in sections 44ZZRA, 44ZZRC, 44ZZRD, 44ZZRF, 44ZZRG, 44ZZRH, 44ZZRJ, 44ZZRK, 44ZZRL, 44ZZRN, 44ZZRO, 44ZZRP, 44ZZRR, 44ZZRS, 44ZZRT, 44ZZRU, 44ZZRV, 45, 45C, 45E, 45EA, 46, 49 and 51. As noted in the judgment of Gageler CJ, Gleeson J and Beech-Jones J at [19], the collection of the words “contract, arrangement or understanding” appears in section 45E(3) as well as in sections 45AC, 45AD, 45AF, 45AG, 45AH, 45AJ, 45AK, 45AL, 45AN, 45AO, 45AP, 45AQ, 45AR, 45AS, 45AT, 45AU and 45.

[6] The Restrictive Trade Practices Act 1971 contained the same language at section 138(2) as was contained in section 91(2) of the Trade Practices Act 1965. Section 45 of the Trade Practices Act 1974 later used the expression “make a contract or arrangement, or enter into an understanding“. As Edelman J explained at [45] of his judgment, that expression replaced an earlier expression “make a contract, or engage in or be a party to a combination or conspiracy” from a version of the Trade Practices Bill 1973 that ultimately lapsed.

[7] Section 45E of the Trade Practices Act 1974 was introduced through the Trade Practices (Boycotts) Amendment Act 1980.

[8] Second reading speech for the Arbitration (Boycotts) Amendment Bill 1980.

[9] The Trade Practices Act 1974 was amended 30 March 1994 to remove section 45E: Industrial Relations Reform Act 1993, section 44.

[10] Schedule 17 of the Workplace Relations and Other Legislation Amendment Act 1996 (“Boycotts”) re-introduced section 45E and other related provisions (e.g., sections 4F, 45EA, 87AA) back into the Trade Practices Act 1974.

[11] J Hutchinson Pty Ltd v ACCC [2024] FCAFC 18 at [84].

[12] See ACCC Media Release, 2 April 2025: https://www.accc.gov.au/media-release/accc-appeal-against-cfmeu-and-hutchinson-boycott-judgment-dismissed.

[13] Australian jurisprudence in this area has been considered by other international courts, such as the Court of Appeal of New Zealand: Giltrap City Ltd v Commerce Commission [2004] 1 NZLR 608.

[14] Insofar as the legislature seeks to expand restrictive trade practices laws to capture certain proscribed unilateral conduct, Edelman J at [70] suggested certain language that could be used. Though existing Commonwealth industrial laws such as section 355 of the Fair Work Act already appear to address the phenomenon of coercion or “industrial muscle”.