On 2 April 2025, the High Court of Australia delivered a significant decision on the scope of the definition of the term “understanding”, which is a key part of Australian competition law. A number of prohibitions under the Competition and Consumer Act 2010 (Cth) (CCA) rely on establishing that a “contract, arrangement or understanding” has been reached between competitors or others.
A number of recent cases have enlivened debate about what degree of mutual communication and commitment is needed before two parties can be said to have reached an understanding. In coming down against the broad interpretation of the ACCC, the High Court in ACCC v J Hutchinson; ACCC v CFMEU [2025] HCA 10 has provided important guidance that may flow through a number of other cases before the Courts.
What this means for you
While the judgment focuses on the secondary boycott provisions given the factual circumstances of the case, the majority decision confirms that to establish an understanding, it is not enough to try to infer that one was reached through the conduct of one party, including if they respond to a threat.
The majority found that an understanding between two people:
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.
Those two elements: communication and a commitment, are key. The case is significant in the context of significant debate over the definition that has arisen in light of the decision in ACCC v BlueScope (No 5) [2022] FCA 1475; (No 6) [2023] FCA 1029, decision on appeal pending, where O’Bryan J found that an understanding may exist without proof of a commitment.
Some wriggle room still exists however, with the separate but concurring judgment of Edelman J suggesting a potentially broader interpretation may be possible in certain circumstances.
Background
This case commenced in 2020 when the ACCC brought proceedings against J Hutchinson Pty Ltd (Hutchinson) and the Construction, Forestry and Maritime Employees Union (the CFMEU) for conduct which occurred in 2016. Hutchinson was the head contractor on a construction project in Queensland and had entered into a subcontract in March 2016 for waterproofing works at the site with a company called Waterproofing Industries Qld Pty Ltd (WPI). The CFMEU (which had an enterprise bargaining agreement with Hutchinson, but not with WPI) threatened Hutchinson with industrial action if WPI was allowed on site post June 2016. Hutchinson reacted to this threat by excluding WPI from the site and by eventually terminating the subcontract in late July 2016.
The prosecution involved the ‘secondary boycott’ provisions in section 45E and 45EA, which apply to arrangements between firms and union that target or boycott third parties, such as contractors.
At first instance, the primary judge in the Federal Court found that a secondary boycott had occurred, through Hutchinson reaching an agreement with the CFMEU (in response to its threat) to terminate WPI. These findings were then overturned on appeal to the Full Federal Court, which found that an understanding had not been reached merely because Hutchinson had unilaterally responded to a threat from the union.
The High Court’s findings in relation to what constitutes an understanding
Majority finds no understanding
The main majority judgment of the High Court (Gageler CJ, Gleeson and Beech-Jones JJ) upheld the Full Court decision. Their Honours emphasised 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.
It was important, in this regard, that an understanding is not a vague or amorphous thing. Under the CCA, an understanding must:
be sufficiently clear to be said to be made ‘with’ one or more people
be able to contain a “provision”, which is included for a particular purpose
be something that someone can give effect to.
In this context, the majority found (at [18]) that the approach proposed by the ACCC (which would have extended the concept of an understanding to a person succumbing to a threat but without any express or even tacit communication of a commitment to do so) was too broad. They reinforced that there must be a consensus or meeting of the minds.
The other judgments
In a separate but concurring judgment, Edelman J agreed with the outcome reached by the majority, he considered that there could be circumstances where the need for communication of assent could be dispensed with if the requesting party made clear that they did not require such communication. His Honour stated that:
In a situation where a unilateral undertaking is made by one party with a request for some performance by the other, a communication that the requested performance has been or will be undertaken will be necessary unless the party making the unilateral undertaking expressly or impliedly dispenses with any need for that communication.
However, his Honour still strongly endorsed the need for ‘reciprocity’ to find an understanding had been reached and was not satisfied that it occurred in this case.
Finally, Justice Steward dissented, commenting that the “result is troubling” in the context of the specific secondary boycott provisions given that Hutchinson had indeed capitulated to the CFMEU's threat to avoid having its site subjected to industrial loss or damage. His Honour distinguished between an understanding in the context of secondary boycotts under 45E from other parts of the CCA where the term ‘understanding’ is used (such as in cartel cases).
It was clear in this regard, that the nature of secondary boycotts will often involve threatening conduct by unions, so a different approach is justified for those provisions that turn on commercial parties agreeing to engage in coordinated conduct. In this regard, he said that the right question under s45E was whether, “a party has been induced to change its preferred course of action by reason of the action of an organisation of employees. That is the type of arrangement or understanding which s 45E concerns”.
Key takeaways
Our approach to the term 'understanding' can return with greater confidence to one that requires both communication and some form of commitment (or reciprocity) between two parties about how one or both will act. Communication may be tacit, but it must be real. There must be a meeting of the minds, or consensus reached.
The decision will have a significant impact on other decisions concerning the requirements for arriving at an “understanding”. In the ACCC’s cases against BlueScope and Delta Building Automation, in which cartel conduct is alleged, the scope of the definition of the alleged understandings is a key issue. Both are currently on appeal to the Full Federal Court.