AN AGREEMENT that concluded a five-year dispute between Virgin Blue and Sydney Airport Corporation has significant implications for access to essential services, according to a law firm acting in the matter.
In 2003, Sydney Airport changed the way it calculated its charges for take-off and landing rights from one based on maximum take-off weight to a per-passenger basis.
Virgin Blue said this change severely disadvantaged its business by increasing its take-off and landing fees by 53 per cent.
Gilbert & Tobin advised Virgin Blue throughout the dispute. Lead partner Luke Woodward said the fact that they managed to gain regulated access to Sydney Airport was extremely significant in itself.
“This matter was remarkable for a number of reasons,” said Woodward. “This was the first time that the Federal Court had considered the declaration criteria in Part IIIA of the Trade Practices Act, which could have considerable implications for the manner in which companies can obtain access to essential services in Australia.”
After Sydney Airport change to its fees, Virgin Blue applied to the Australian Competition Tribunal for regulated access to the facilities at Sydney Airport by “declaring” it under Part IIIA of the Trade Practices Act.
The tribunal granted this, deciding that the change in charging was a misuse of Sydney Airport’s monopoly power, and had a detrimental effect on competition between the airlines.
Sydney Airport appealed the decision to the full court of the Federal Court, but it upheld the Tribunal’s decision. A request to appeal to the High Court by Sydney Airport was refused.
Woodward said the test that had now been established in this decision should greatly simplify any further determinations on access to essential infrastructure that has monopoly ownership, and not require the years of highly detailed analysis that went into the effect of declaration on the airline industry in this case.
“If you can point to monopoly infrastructure, and that access to that infrastructure is essential to compete in an upstream or downstream market, you don’t have to go on to show how the determination of any subsequent dispute might materially assist competition,” Woodward explained.
“You just have to show that by using that infrastructure that will promote competition, and you will be able to compete in that market that you otherwise wouldn’t be able to, or compete more effectively, then you would satisfy that test.”
The agreement reached between Virgin and Sydney Airport provides for pricing to once again be based on maximum take-off weight as well as a new Virgin Blue lounge to be established within the existing Terminal 2 function centre.
Mallesons Stephen Jaques advised Sydney Airport Corporation, led by special counsel Thomas Jones and senior associate Andrew Floro.
Anna Sutherland and Donald Robertson at Freehills acted in ACCC arbitration for Sydney Airport in previous Federal Court and High Court proceedings related to this matter.
Paul Schoff at Minter Ellison advised Qantas, and Simon Uthmeyer at DLA Phillips Fox advised the National Competition Council.
Anna Pritchard at the Australian Government Solicitor advised the Parliamentary Secretary to the Commonwealth Treasurer.