High Court addresses meaning of "arriving at an understanding"

The High Court recently dismissed an appeal brought by the ACCC in relation to anti-competitive boycott proceedings against builder J Hutchinson (Hutchinson) and the Construction, Forestry and Maritime Employees Union (CFMEU).^[1]

Notably, the High Court clarified the requirements for proving the existence of an ‘arrangement’ or ‘understanding’ under the Competition and Consumer Act 2010 (Cth) (the Act). 

Facts and procedural history

In March 2016, Hutchinson engaged Waterproofing Industries Qld (WPI) to provide waterproofing services at a jobsite. Shortly after WPI commenced works, the CFMEU informed Hutchinson that it would not permit WPI to work at the site in circumstances where WPI did not have an enterprise agreement with the CFMEU and threatened to bring an industrial action should Hutchinson allow WPI to continue to work at the site. Thereafter, Hutchinson terminated the contract with WPI. 

The ACCC commenced proceedings in December 2020, alleging that Hutchinson and the CFMEU had entered into an arrangement or had arrived at an understanding for Hutchinson to terminate the subcontract with WPI, in contravention of sections 45E(3) and 45EA of the Act (which prohibit contracts, arrangements or understandings that contain a provision included for the purpose of preventing or hindering the acquisition of goods or services from a supplier). It was alleged that the CFMEU was knowingly concerned in, or party to, and had induced these contraventions.

The Federal Court at first instance found in favour of the ACCC and ordered the CFMEU and Hutchinson to pay penalties of $750,000 and $600,000 respectively. 

On appeal by Hutchinson and the CFMEU, the Full Federal Court overturned the first instance decision, concluding that there was insufficient evidence to support a finding that there had been an arrangement between the CFMEU and Hutchinson to terminate the WPI contract. 

The ACCC sought leave to appeal to the High Court on the sole question of whether an ‘understanding’ had been arrived at. 

High Court decision

The majority of the High Court dismissed the ACCC’s appeal and upheld the decision of the Full Federal Court. The majority held that arriving at an ‘understanding’ requires proof of express or tacit communications between the parties of a commitment on the part of one party to do that which the other party has demanded of it. No understanding is made out where one party unilaterally decides to act in a particular way in response to the conduct of another, such as a threat. 

Gageler CJ, and Gleeson and Beech-Jones JJ found that termination of the contract could ‘be explicable as a rational, commercial response to the threat rather than a form of collusive behaviour aimed at achieving the proscribed response.’^[2] As such, in the absence of any proof of communication of commitment between the parties, the ACCC’s case that the understanding was established by Hutchinson’s conduct in terminating the subcontract to avoid industrial action was rejected.^[3]

Edelman J held that while the concepts of arrangements and understandings are broader than the concept of a contract, arrangements or understandings still require an element of reciprocity.^[4] His Honour found that the ACCC had not discharged its onus of proving communication of assent between the parties. Interestingly, His Honour noted that an understanding could have been established if the ACCC had run a case that the CFMEU had dispensed with any requirement of communication by Hutchinson that it had terminated the WPI contract. 

In dissent, Steward J stated that in the absence of the CFMEU’s threat, Hutchinson would not have terminated the contract with WPI.^[5] Further, Hutchinson’s capitulation or succumbing to the CFMEU was ‘the product of precisely the type of intimidation that s 45E is concerned to prohibit.’^[6] 

Key takeaways 

The High Court’s decision clarifies that in order for an ‘understanding’ to exist, there must be reciprocity and a communication of commitment by the parties. There is lower risk of an arrangement or understanding being made out if the parties can point to a unilateral commercial reason for the conduct. 

^{[1] Australian Competition and Consumer Commission v Hutchinson; Australian Competition and Consumer Commission v Construction, Forestry and Maritime Employees Union [2025] HCA 10 (‘ACCC v Hutchinson; CFMEU’).  
[2] ACCC v Hutchinson; CFMEU at [23] per Gageler CJ, Gleeson and Beech-Jones JJ. 
[3] ACCC v Hutchinson; CFMEU at [26] per Gageler CJ, Gleeson and Beech-Jones JJ.
[4] ACCC v Hutchinson; CFMEU at [48] per Edelman J. 
[5] ACCC v Hutchinson; CFMEU at [85] per Steward J. 
[6] ACCC v Hutchinson; CFMEU at [85] per Steward J.}