Australian Rugby Union Ltd v Hospitality Group Ltd [1999] FCA 1097

FEDERAL COURT OF AUSTRALIA

Australian Rugby Union Ltd v Hospitality Group Pty Ltd [1999] FCA 1097

AUSTRALIAN RUGBY UNION LTD v HOSPITALITY GROUP PTY LTD & ORS N 324 OF 1999 JUDGE: SACKVILLE J PLACE: SYDNEY

DATE: 9 AUGUST 1999

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 324 OF 1999

BETWEEN: AUSTRALIAN RUGBY UNION LIMITED

Applicant

AND: HOSPITALITY GROUP PTY LIMITED

First Respondent

ICM (MARKETING) PTY LIMITED

Second Respondent

AUSTRALIAN TOURS FOR SPORT PTY LIMITED

Third Respondent

CAMERON JACKSON

Fourth Respondent

JUDGE: SACKVILLE J

DATE: 9 AUGUST 1999

PLACE: SYDNEY

RULING ON EVIDENCE 1 The particular evidentiary issue that has arisen concerns the admissibility of par 5.1 of an affidavit prepared by Professor Bewley. Professor Bewley is a Professor of Econometrics at the University of New South Wales. In par 5.1 of his affidavit, Professor Bewley addresses the following question: "Define the market or markets in which the Hospitality Group Pty Limited ('THG') supplies hospitality services in connection with Rugby Union matches (the 'Hospitality Market')." 2 The definition of the market for hospitality services is relevant because the amended cross-claim filed by the first and second respondents ("THG" and "ICM", respectively) alleges that there is a market within Australia for the supply to business organisations of corporate hospitality packages in conjunction with national representative level rugby matches organised by the applicant/cross-respondent ("ARU"). This market is described in the pleading as the "Hospitality Market". The cross-claim alleges that the ARU, by supplying tickets subject to a condition forbidding resale except in limited circumstances, has engaged in conduct for the purposes of lessening competition in the Hospitality Market. 3 Professor Bewley expresses the opinion that the "Hospitality Market" is segmented on the demand side by location, time and sport. Nonetheless, he considers that the two particular events the subject of evidence in this case, namely the Centenary Test played on 26 June 1999 and the Bledisloe Cup match scheduled for 28 August 1999 (the "Matches"), are not in separate demand side market segments. However, Professor Bewley also considers that there are no other rugby matches of similar standing to be held in Sydney in 1999 and that, accordingly, there are no significant demand side substitution possibilities for hospitality services at the Matches ("Match Hospitality"). He says that it follows, from a demand perspective, that if the relative price of Match Hospitality to other hospitality services were to increase, there would be no significant incentive for what he describes as primary consumers to switch to other forms of hospitality. Primary consumers are those who purchase the hospitality packages that include premium tickets to particular events. 4 Professor Bewley also addresses, albeit briefly, supply side substitution possibilities. He says that, given the importance of a data base of potential primary consumers, there are major set-up costs for hospitality providers to enter new sports or non-sporting events. He expresses the view that, in the short to medium term, new event opportunities are likely to provide very limited supply side substitution possibilities. 5 Professor Bewley expresses his conclusion in this way: "It follows from this analysis that there is a separate market for Match Hospitality. That is, there are no significant substitutes on the demand side or the supply side for this service. There may or may not be separate market segments for the Centenary Test on the one hand and the Bledisloe Cup on the other. At least to the extent that nationals (or former nationals) of England and New Zealand have strong loyalty to Australia's opponents, separate market segments might be defined." 6 Mr Gleeson has objected to this material being admitted into evidence on two grounds. The first is that Professor Bewley's opinion evidence does not come within s 79 of the Evidence Act 1995 (Cth), and is therefore not admissible. Section 79 provides as follows: "If a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge'. 7 Mr Gleeson points out that Professor Bewley is a Professor of Econometrics. Econometrics is the analysis by statistical and mathematical methods of economic data and theories. Mr Gleeson says that much of Professor Bewley's published work appears to deal, as one would expect, with econometrics, rather than economic principles relevant to the definition of markets. Mr Gleeson submits that expertise in econometrics does not necessarily establish expertise of a kind that would allow the expression of an opinion as to the definition of a market. In particular, he contends that it does not supply the expertise necessary to determine the limits of substitutability in a market said to be constituted by two prestige rugby union events at Stadium Australia. 8 I think there is some force in the criticism that Professor Bewley's background, at least without further explanation, is by no means ideal to enable him to express the opinions that are incorporated in par 5.1 of his affidavit. There is nothing in the material presented by Professor Bewley that indicates that his expertise in statistical modelling and the like has assisted him in reaching the conclusions that he has expressed. 9 Nonetheless, it is clear that Professor Bewley has had training, both at a graduate and post graduate level, in economic theory. It also is clear enough that some (although not many) of his publications deal with topics relevant to the definition of markets. In these circumstances, I think it can be said that Professor Bewley does have specialised knowledge based on his training, study, or experience that would enable him to express an opinion about demand side substitution possibilities and supply side substitution possibilities relevant to the definition of a market for prestige rugby union events conducted at the Stadium Australia. 10 The matters to which Mr Gleeson has referred may well go to the weight that should be placed upon the opinions expressed by Professor Bewley. I am not, of course, in a position at this stage to make an assessment of that question. 11 The second criticism made by Mr Gleeson of Professor Bewley's analysis, is that his reasoning process is not exposed, or at least is insufficiently exposed, to allow the opinions to be admitted into evidence. Enough was said in the course of argument to indicate that there may well be some difficulties in the process of reasoning that appears to underlie the conclusions expressed by Professor Bewley. It is not clear, for example, that all the assumptions on which Professor Bewley relies are or will be supported by admissible evidence. Nor is it clear that he has directed attention to the characteristics of primary consumers of hospitality services and, in particular, whether they have special enthusiasm for a commitment to rugby union as distinct from other sporting or entertainment events. He contends that the "ordinary" spectators tend to have that enthusiasm, but it is far from clear that this is true of primary consumers or their guests. 12 In my opinion, at this stage of the proceedings, these matters go to the weight to be accorded to Professor Bewley's opinions, rather than to the admissibility of his evidence. If there are any deficiencies in his reasoning, they can be taken into account in determining whether his affidavit provides substantial support for for the submissions to be made on behalf of THG and IGM. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.