Seven Network Limited v News Limited [2009] FCAFC 166

Federal Court of Australia Seven Network Limited v News Limited [2009] FCAFC 166 Mansfield, Dowsett and Lander JJ SUMMARY In accordance with a practice previously adopted in some cases of public interest, the following summary has been prepared to accompany the reasons for judgment delivered today. The summary is intended to assist understanding of the decision of the Court. It is not a complete statement of the conclusions reached by the Court or the reasons for those conclusions. The only authoritative statement of the Court's reasons is that contained in the published reasons for judgment. The published reasons for judgment and this summary will be available on the Internet at www.fedcourt.gov.au.

Seven Network Limited v News Limited [2009] FCAFC 166 SUMMARY 1 This appeal concerns events which occurred in the pay television industry in the late 1990s and early 2000s. It focuses on the conduct of Foxtel, a supplier of pay television services, Fox Sports, a supplier of pay television sports channels to pay television services, News Ltd, Consolidated Media Holdings Ltd (PBL), Telstra Corporation Ltd and others (the Foxtel/Fox Sports parties). It also concerns the effects of such conduct upon Seven Network Ltd and C7 Pty Ltd, its subsidiary. C7 also supplied pay television sports channels to pay television services. 2 The conduct of the Foxtel/Fox Sports parties occurred primarily in connection with their acquisition of the pay television rights for coverage of the AFL Competition in the years 2002 to 2006 and for coverage of the NRL Competition in the years 2001 to 2006. In effect Seven claimed that the Foxtel/Fox Sports parties had acquired both the AFL and NRL rights in order to put C7 out of business so that Fox Sports could dominate the market for supplying sports channels to pay television suppliers Foxtel, Optus and Austar, and so that Foxtel could dominate the market for the supply of pay television services to subscribers. 3 Sackville J dismissed Seven's claim. The Court upholds that decision, although its reasons for doing so differ to some extent from his Honour's. 4 Seven also claimed that Foxtel had contravened the anti-siphoning regime contained in the Broadcasting Services Act 1992 (Cth). Other claims were made against other parties, but they were not pursued on appeal. 5 The appellants alleged that Foxtel/Fox Sports' anti-competitive conduct occurred in one or more of four separate markets. His Honour found that only one such market existed: the retail pay television market in which Telstra, Optus and Austar provided pay television services to subscribers. On appeal, the appellants sought to establish that there was also a market for the supply of sports channels to those service providers, and that C7 and Fox Sports were suppliers in that market. The Court upholds his Honour's analysis of the alleged markets and agrees that only the retail pay television market was established on the evidence. The Court's reasons for concluding that there was no wholesale sports channel market differ to some extent from his Honour's. 6 The appellants contended at the trial that the respondents had engaged in conduct that had the purpose, effect or likely effect of substantially lessening competition in the retail pay television market. Sackville J dismissed the appellants' claims in that regard. The Court agrees with the trial Judge's conclusions that the appellants did not establish that the respondents' conduct was likely to have the effect, or had the effect, of substantially lessening competition in the retail pay television market. The Court also agrees that the appellants failed to establish an anti-competitive purpose. 7 The majority (Dowsett and Lander JJ) also disagree with Sackville J in two aspects of his construction of s 45 of the Trade Practices Act 1974 (Cth) (Trade Practices Act). However that difference of opinion does not lead to a different result in this case. Sackville J construed ss 45(2)(a)(ii) and (2)(b)(ii) as requiring that all parties responsible for inserting an anti-competitive purpose in a contract, arrangement or understanding have that subjective purpose in order that there be a contravention of the section. The majority consider that ss 45(2)(a)(ii) and (2)(b)(ii) should be construed as meaning that s 45 will be contravened if any party to the contract, arrangement or understanding, who was responsible for the inclusion of the impugned provision, had the subjective purpose of substantially lessening competition in the relevant market, provided that such purpose was, itself, a substantial purpose. The majority construe s 45 as not requiring a shared purpose. Mansfield J construes ss 45(2)(a)(ii) and (2)(b)(ii) in the same manner as did Sackville J. 8 The trial Judge held that an anti-competitive purpose can only contravene s 45(2)(b)(ii) if it relates to competition in an existing market. All members of the Court agree with that conclusion. The trial Judge, however, concluded that if an apparently anti-competitive purpose could not, in fact, be achieved so as substantially to lessen competition in a relevant market, there could be no contravention. The majority do not agree with that conclusion, considering that such a construction would require the Court to inquire into whether the relevant provision had the likely effect of substantially lessening competition in the market in question, thus failing to recognise that s 45 distinguishes between purpose and effect or likely effect. 9 Mansfield J does not disagree with his Honour's reasons. 10 Although the majority differ in those two respects from the views of the trial Judge, all members of the Court are of the opinion that the trial Judge was right to conclude as a matter of fact that none of the parties to the Master Agreement had an anti-competitive purpose in the retail pay television market. 11 Seven conceded on appeal that the decision of the High Court in Devenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32 meant that the case based on s 45D of the Act must fail. 12 All members of the Court have agreed with his Honour's conclusion that the respondents did not contravene s 46 of the Trade Practices Act. Section 46 prohibits the use of market power for an anti-competitive purpose. 13 The anti-siphoning regime ensures that important public events, including sporting events, are available to viewers of free-to-air television and not only to pay television subscribers. Seven claimed that the Foxtel/Fox Sports parties had tried to undermine the regime in order to benefit Foxtel. 14 All members of the Court agree with his Honour's reasons for dismissing the appellants' anti-siphoning case. 15 Telstra and a related corporation appealed against the trial Judge's refusal to award Telstra its costs after 16 August 2005 on an indemnity basis. All members of the Court consider that the cross-appeal should be dismissed. The trial Judge was bound to follow Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1. The Court sees no reason to doubt the correctness of that decision.