Secondary boycotts ban weakened by High Court ruling in ACCC v CFMEU

The ACCC's ability to police union action has been dealt a blow by the High Court today, which found that the ACCC had not shown a company and union had satisfied the consensus or "meeting of minds" requirement to establish that they had made an agreement or arrived at an understanding to boycott a subcontractor, as there was no proof of express or tacit communication between the parties – only proof that the company had succumbed to a threat made by the company (Australian Competition and Consumer Commission v J Hutchinson Pty Ltd; Australian Competition and Consumer Commission v Construction, Forestry and Maritime Employees Union [2025] HCA 10).

Hutchinson was the head contractor on a construction project. It had an enterprise bargaining agreement with the CFMEU, which obliged it to consult with the union when appointing subcontractors in certain circumstances. Hutchinson brought Waterproofing Industries Qld Pty Ltd (WPI) on to do waterproofing; the CFMEU objected and said it would "sit the job down" if WPI were allowed back onto the site. Hutchinson reacted by excluding the subcontractor from the site and then terminating the subcontract.

To the ACCC, this looked like the CFMEU had threatened Hutchinson, that Hutchinson had succumbed to the threat, and that this conduct was unlawful under section 45E(3) of the Competition and Consumer Act:

"Prohibition in an acquisition situation

(3) In an acquisition situation, the first person [a person who 'has been accustomed, or is under an obligation, to acquire goods or services' from a second person] must not make a contract or arrangement, or arrive at an understanding, with an organisation of employees, an officer of such an organisation or a person acting for and on behalf of such an officer or organisation, if the proposed contract, arrangement or understanding contains a provision included for the purpose, or for purposes including the purpose, of:

(a) preventing or hindering the first person from acquiring or continuing to acquire such goods or services from the second person".

When it was introduced in 1996, its purpose was described in the Explanatory Memorandum as being

"directed at situations where a person capitulates in order to avoid loss or damage as a result of threatened industrial action against the target."

There was no challenge to the finding below that the only reason Hutchinson terminated the subcontract with WPI was the threat of industrial action by the CFMEU. But had Hutchinson and the CFMEU made an arrangement or arrived at an understanding? Was Hutchinson's conduct in response to the CFMEU's threat enough to show an arrangement or understanding existed?

The majority today said it was not. The Court accepted that an agreement or understanding is less than a legally binding contract. But like a contract, it said, they both require a consensus or meeting of minds between the parties; an agreement or understanding:

"necessarily involves interaction between them by which one expressly or tacitly communicates by words or conduct to the other a commitment to act or refrain from acting in a particular way… The act of a person succumbing to a threat does not, without more, amount to arrival at an understanding to do what is demanded. The act may be explicable as a rational, commercial response to the threat rather than a form of collusive behaviour aimed at achieving a proscribed purpose."

In effect, a court won't be able to infer from conduct alone that an arrangement or understanding existed. After all, a company might be changing its conduct independent of the threat made against it.

The problems with this approach were pointed out by Justice Steward in his dissent. He was of the view that the specific context of section 45E did not require there to have been a meeting of minds which involved the communication of assent to a course of action. He said:

"It is otherwise unrealistic in this field to expect the parties to verbalise, record or evidence their illegal conduct in some way. It is also unrealistic to search for a form of words whereby the blackmailed corporation somehow assents to the course of conduct sought to be secured through threats."

Be that as it may, the High Court has said that some proof of express or tacit communication between the parties is required to find this type of secondary boycott has occurred. There is no special category of understandings that are arrived at because of a threat of industrial action. The act of a person succumbing to a threat does not, without more, amount to arrival at an understanding to do what is demanded. This makes the ACCC's job harder, but not impossible. Companies on the receiving end of such threats still must be careful in how they deal with them, as the High Court said even tacit communication could be enough to show an arrangement or understanding that is unlawful under section 45E.

As for the ACCC, it has already said “we remain committed to enforcing our laws and holding those who engage in anti-competitive conduct accountable.”