HIGH COURT OF AUSTRALIA
GLEESON CJ,
McHUGH, GUMMOW, KIRBY AND CALLINAN JJNEWS LIMITED & ORS APPELLANTS
AND
SOUTH SYDNEY DISTRICT RUGBY LEAGUE
FOOTBALL CLUB LIMITED & ORS RESPONDENTSNews Limited v South Sydney District Rugby League Football Club Limited
[2003] HCA 45
13 August 2003
S34/2002ORDER
1. Appeal allowed.
2. Set aside the orders of the Full Court of the Federal Court made on 6 July 2001 and, in lieu thereof, order that the appeal to that Court be dismissed.
On appeal from the Federal Court of Australia
Representation:
A J Meagher SC with M J Leeming for the appellants (instructed by Allens Arthur Robinson)
D F Jackson QC with S A Glacken for the first respondent (instructed by Nicholas G Pappas & Company)
No appearance for the second to twentieth respondents
Intervener:
N J Young QC with M H O'Bryan intervening on behalf of the Australian Competition and Consumer Commission (instructed by Australian Government Solicitor)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
News Limited v South Sydney District Rugby League Football Club Limited
Trade practices – Exclusionary provisions – Merger of competing sporting competitions – Provision that no more than a certain number of teams participate in new competition – Whether provision included for purpose of preventing, restricting or limiting supply of goods or services to, or acquisition of goods or services from, particular persons or classes of persons – Test for determining purpose – Trade Practices Act 1974 (Cth), ss 4D, 45(2)(a)(i), 45(2)(b)(i).
Practice and procedure – Interveners – Whether intervener may advance on appeal argument not adopted by parties to appeal.
Words and phrases – "purpose", "particular persons or classes of persons", "preventing, restricting or limiting".
Trade Practices Act 1974 (Cth), ss 4D, 4F, 45(2)(a)(i), 45(2)(b)(i).
GLEESON CJ. This appeal concerns the operation of s 45(2) of the Trade Practices Act 1974 (Cth) ("the Act"), read in the light of s 4D, which defines an "exclusionary provision". The four members of the Federal Court who considered the case were evenly divided on the outcome[1]. The Australian Competition and Consumer Commission ("the ACCC"), intervening by leave, acknowledged that "[i]t may be that the application of s 4D to the somewhat unusual circumstances of this case produces an unexpected result". The ACCC put an argument about the construction of the Act which, it submitted, could avoid such a result. That argument was not embraced by the parties on either side of the appeal. However, the ACCC also made some submissions as to the proper approach to the Act which were within the scope of the issues as defined by the parties.
[1]South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611; (2001) 111 FCR 456.
The facts are set out in the reasons for judgment of Callinan J. The litigation arises out of an agreement (to use a non-statutory term) made in 1997 between News Limited ("News") and Australian Rugby Football League Ltd ("ARL"). At the time of the agreement, News and ARL carried on competing businesses of conducting rugby league competitions. The reasons why conducting those sporting competitions was a business, and a very substantial business, are explained by Callinan J. It is unnecessary to expand upon them. It suffices to say that each business involved the supply and acquisition of valuable services. Each competition involved a certain number of clubs, which fielded teams. The activities of those clubs, in turn, involved commercial enterprises.
In 1997, there were 10 clubs participating in the News competition, and 12 clubs (including the first respondent ("Souths")) participating in the ARL competition. Like most sporting competitions, each of the competitions conducted by News and ARL respectively was, of its nature, exclusive, in the sense that it was not open to any club that wished to join in. Very few sporting competitions, especially those which aspire to excellence of performance, and which seek to attract large spectator interest, extensive media coverage, and commercial sponsorship, are open to all. Of its nature, a football competition can only be conducted between a limited number of participants. The 22 clubs which participated in the two competing News and ARL competitions in 1997 themselves represented only a small fraction of the rugby league clubs in Australia. The manner in which those 22 clubs came to participate in their respective competitions is not material. The point is that the organisation of each of those competitions involved a process which, by limiting the numbers of competitors, excluded other clubs. The competing businesses of News and ARL necessarily involved defining the nature and size of their respective competitions and, in that sense, and in consequence of that process of definition, selecting some, and excluding others, to or from whom services would be supplied or acquired.
On 19 December 1997, News and ARL entered into an understanding that they would merge their two competitions. For commercial reasons, each accepted the need for a united competition. What was involved, however, was more than a merger. They designed a new and different competition. It was to be national. It was envisaged (as occurred) that Melbourne would field a team for the first time. It needed to be smaller than the aggregate of the clubs in the two existing competitions. In particular, the number of Sydney teams had to be reduced.
The challenge to the legality of the 1997 understanding, and later agreements giving effect to it, was not based on s 45(2)(a)(ii) or s 45(2)(b)(ii) of the Act. It was not asserted that there was a contract, arrangement or understanding that had the purpose, or had or was likely to have the effect, of substantially lessening competition. It might have been thought that, in terms of competition law, the primary issue to be considered was whether the merger itself passed muster: it involved an agreement between two competing firms to cease their respective businesses and to create a new and different business which they (or related entities) would conduct jointly. If that involved a substantial lessening of competition in a market for goods or services then there would have been a contravention of s 45(2)(a)(ii) and s 45(2)(b)(ii). That was not alleged. Perhaps issues of market definition were thought to arise. Rugby league is only one form of sporting contest competing for the attention of the public. In fact, that is one of the reasons why the rivalry between the News and the ARL competitions was so damaging. Perhaps it was anticipated, as suggested in some of the evidence, that if there had been a continuation of the existing situation, before long the two rugby league competitions would have destroyed one another, and both would have gone out of existence.
The challenge was made on a narrower ground, based on s 45(2)(a)(i) and s 45(2)(b)(i). It was directed towards that aspect of the contract, arrangement or understanding that dealt with the number of clubs to participate in the new competition. Finn J, in the Federal Court, summarised the principal characteristics of the structure of the new competition as follows:
"(a) a progression from no more than twenty, to no more than sixteen, to no more than fourteen teams in 1998, 1999 and 2000 respectively – the 1998 figure giving all of the by then continuing ARL and Super League clubs (two had already dropped out from the 1997 number) an equal opportunity to participate in the rationalisation process; (b) provision for the national character of the competition – this to be secured through the 8-6/6-8 split; (c) the positive incentives given for entering mergers and joint ventures; and (d) the priority order in the grant of franchises, this being merged clubs, regional clubs and 'stand alone' Sydney clubs."
The 8-6/6-8 split is a reference to the distribution of clubs in the competition between those based in Sydney and those based elsewhere. Finn J pointed out that the 8-6/6-8 split, and the 14 team limitation on team numbers for 2000, were defining characteristics of the new competition. The reference to "the grant of franchises" is to the choice of participating clubs.
Souths was a stand-alone Sydney club. It was ultimately excluded from the 2000 competition. That is what gave rise to the present litigation. There were elaborate criteria for inclusion or exclusion, but they are not presently material. It is not claimed in this appeal that they were discriminatory, or that they were misapplied. Souths challenged the 14 team limitation on the basis that it was an exclusionary provision, and therefore contravened s 45(2)(a)(i) and s 45(2)(b)(i), regardless of whether there was a substantial lessening of competition. An exclusionary provision is defined in s 4D of the Act as follows:
"(1) A provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if:
(a)the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and
(b)the provision has the purpose of preventing, restricting or limiting:
(i)the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons; or
(ii)the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions;
by all or any of the parties to the contract, arrangement or understanding or of the proposed parties to the proposed contract, arrangement or understanding or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate.
(2) A person shall be deemed to be competitive with another person for the purposes of subsection (1) if, and only if, the first-mentioned person or a body corporate that is related to that person is, or is likely to be, or, but for the provision of any contract, arrangement or understanding or of any proposed contract, arrangement or understanding, would be, or would be likely to be, in competition with the other person, or with a body corporate that is related to the other person, in relation to the supply or acquisition of all or any of the goods or services to which the relevant provision of the contract, arrangement or understanding or of the proposed contract, arrangement or understanding relates."
The appeal was argued by the parties on the basis that, at the time of the 1997 understanding, News and ARL were in competition with each other in relation to the supply or acquisition of goods or services to which the 14 team term of the understanding related. That was disputed by the ACCC, but that dispute would have involved a widening of issues in a manner that was inappropriate, at this stage of the litigious process, at the instigation of an intervener.
The 14 team term, which was reflected in the written documents signed at various times, was described by Souths in its pleadings as follows:
"In the 2000 season and thereafter the number of teams to participate in the NRL competition would be restricted to 14, with no more than eight and no fewer than six teams from Sydney."
It was not found, and is not suggested in this Court, that the purpose of the 14 team term was to exclude Souths, or any other particular club, from the competition in the 2000 season. Indeed, the process of merger, and the formation of joint ventures, intended to be fostered under the new arrangements, could have eliminated the need for active exclusion of any of the original 22 clubs. However, subject to that possibility, the consequence of the 14 team term was that no more than 14 clubs could compete in 2000, and, if more than 14 clubs wanted to compete, one or more would be excluded. So also, of course, would all the other rugby league clubs throughout Australia which, if they had wished, might have applied to join in the competition. As noted above, exclusivity is a necessary feature of such a competition, and unless, by coincidence or by force of other circumstances, the number of clubs wishing to compete was no greater than the number which those conducting the competition were willing to accept as participants, then exclusion was inevitable.
Finn J made the following point:
"Clearly, at the time of the 19 December [1997] Understanding no club had any right to have its team participate in the new competition's 1998 season, though it was envisaged that all available clubs would be offered participation. Thereafter for the 1999 and 2000 seasons there was to be a selection process in which clubs could participate. No club was in December 1997 given, or intended to be given, a right to have its team participate in 1999 and 2000 other than as a result of the admission process."
We are not concerned with any challenge to the admission process.
Finn J also found that a clear and intended effect of the 14 team term was that the (new) NRL partnership would not provide its competition-organising services to, or acquire team services from, a greater number of teams than the number so fixed. The real question was whether the term was included for the purpose, or for purposes that included the purpose, of preventing, restricting or limiting the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons. He answered that question in the negative. In the Full Court of the Federal Court, Heerey J agreed with Finn J. The majority (Moore and Merkel JJ) reached the opposite conclusion.
The 14 team term was one of a number of provisions that defined the shape and structure of the new competition. There had to be some such provisions. The competition could not be open to any rugby league club in Australia that wanted to join in. In that respect, it is worth considering what difference there was between Souths, or any other of the 22 clubs which participated in one or other of the 1997 competitions, on the one hand, and, on the other hand, some rugby league club that had not previously participated in either the News or the ARL competitions, but wanted to participate, in 2000, in the NRL competition. In fact, one such club, Melbourne, participated in the NRL competition. Obviously there was a practical difference, in that exclusion of one of the original 22 clubs would be more likely to be a cause of complaint. However, for the purposes of ss 45 and 4D of the Act, it appears that the only potentially material difference, if there is one, is in the particularity of the persons or class of persons said to be the object of the proscribed purpose.
Bearing in mind that it is not alleged that the 14 team term was aimed at excluding Souths, or any other particular club, it is necessary to examine the way Souths put its case on this point. The primary allegation, as summarised by Finn J, was that the designated persons or classes of persons that were the objects of ARL's and News' purpose of preventing the supply or acquisition of competition-organising, and team, services, were the clubs which had participated in the 1997 ARL and Super League competitions and which had not withdrawn from those competitions, other than the 14 clubs which would be selected to participate in the competition in the year 2000. That is rather different from the way in which the case for Souths was put in this Court. Here it was argued that "the particular persons or particular class of persons were the Clubs that had fielded teams in the 1997 competition".
Although the arguments of the parties, and the reasoning in the Federal Court, addressed sequentially the issues of purpose and particularity of objects in considering the application of s 4D, and although in some respects that is a convenient method of analysis, it is to be remembered that what is involved is a compound concept: the purpose of preventing, restricting or limiting supply or acquisition of services to or from particular persons or classes of persons.
We are concerned with the purpose of a provision (here, the 14 team term), in the context of a definition section (s 4D) of the Act defining an expression used in another section (s 45) which distinguishes between purpose and effect. The distinction between purpose and effect is significant. In a case such as the present, it is the subjective purpose of News and ARL in including the 14 team term, that is to say, the end they had in view, that is to be determined[2]. Purpose is to be distinguished from motive. The purpose of conduct is the end sought to be accomplished by the conduct. The motive for conduct is the reason for seeking that end. The appropriate description or characterisation of the end sought to be accomplished (purpose), as distinct from the reason for seeking that end (motive), may depend upon the legislative or other context in which the task is undertaken. Thus, for example, in describing, for the application of a law relating to tax avoidance, the purpose of an individual, or of an arrangement, it will be necessary to look at what is sought to be achieved that is of fiscal consequence, not at a more remote, but fiscally irrelevant, object, such as increasing a taxpayer's disposable income. Similarly, in the context of competition law, it is necessary to identify purpose by describing what is sought to be achieved by reference to what is relevant in market terms. The purpose of the 14 team term was the objective, in relation to the nature of their business arrangements, that News and ARL sought to achieve; not the reason why they sought to achieve that objective. They may have had different, and multiple, reasons for their conduct. The manifest effect of a provision in an agreement, in a given case, may be the clearest indication of its purpose. In other cases, it may be difficult, or even impossible, to determine the purpose (of a kind relevant to the operation of the Act) of a provision in a written contract merely by reading the document. And, of course, the legislation deals with contracts, arrangements or understandings.
[2]Hughes v Western Australian Cricket Association (Inc) (1986) 19 FCR 10 at 37-38; ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 at 474-477. See also s 4F of the Act.
While the use of the term "boycott" may be a convenient method of exposition of some aspects of the operation of s 4D, and may be a useful means of explaining part of what it was intended to achieve, that term itself does not have a precise meaning, and there is a danger that argument might be directed towards seeking to find the meaning of "boycott" rather than the proper task, which is finding the meaning of the statutory language[3].
[3]Devenish v Jewel Food Stores PtyLtd (1991) 172 CLR 32 at 55; Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 205 CLR 1 at 17 [26].
The particularity of the persons or classes of persons who are the objects of the purpose defined by s 4D and proscribed by s 45 is essential to the concept of an exclusionary provision. Suppose two firms conduct, in competition with each other, restaurant businesses, and each restaurant can accommodate 50 customers. Suppose they agree to close down their existing businesses, and, in partnership, open a new restaurant that can accommodate 60 customers. The effect will be to reduce their combined capacity from 100 to 60. Agreeing on the size of the new restaurant would be a necessary aspect of defining the scope of their new business venture. On the bare facts stated, it could not be predicated that the purpose of limiting the size of the new restaurant to one that would cater for 60 customers related to reducing the facilities to be made available to any particular persons or classes of persons, although it would clearly have the effect of reducing the accommodation for diners generally. It would not make any difference if the reason for the agreement was that the two competitors considered that their future profitability depended on it.
In the present case, as in the example just given, specifying the number of clubs to be admitted to participation in the new competition was a necessary part of the definition of the new business venture to be undertaken by News and ARL (in effect) in partnership. It was not considered feasible to conduct a 22 club competition. It is not suggested that the method by which the 14 clubs were to be chosen for 2000 was discriminatory, or that the 14 team term, considered either alone or in the wider context of the whole plan, was aimed at Souths or at any other club. Bearing in mind that two clubs were to drop out anyway, any number less than 20, chosen as the number of participants in the 2000 competition, had the potential to require the exclusion of some of the clubs who competed in either the News or the ARL competitions in 1997. It is the fact that, when they were conducting two competitions, News and ARL, in aggregate, were supplying services to, and acquiring services from, 22 clubs (of which Souths was one), and that in 2000 their new joint business would only supply services to, and acquire services from, 14 clubs (not 14 of the same clubs, bearing in mind the geographical aspects of the new competition, the entry of Melbourne, and the possibilities of mergers and joint ventures), that must be said to make the difference.
There had to be some definition of the size, geographical spread, and other characteristics of the new competition. Since no case is made under s 45(2)(a)(ii) or s 45(2)(b)(ii), it is accepted that putting an end to the two former competitions, and establishing a new competition, was of itself not in contravention of the Act. The contravention is said to lie in defining the size of the new competition in such a way that would mean that, in 2000, only 14 clubs could participate in that new competition. The purpose of the 14 team term was to define the size of the competition, (something that, in the nature of the competition, had to be done), and to do so in such a way as to produce the result that, in 2000, only 14 clubs would participate.
Any limitation upon the size of the competition (even a limitation to 22 clubs) would have had the effect of potentially excluding some rugby league clubs in Australia that might have wanted to join the competition if given the opportunity. But exclusion of clubs of that kind would not have been the purpose of the provision, any more than designing a restaurant to accommodate 60 customers has the purpose of excluding people in excess of the number of 60 who turn up on a given occasion. In relation to such clubs, it cannot be said that, because the 14 team term had the effect of excluding them, it had that purpose. Exclusion of such teams was not the purpose; and there is no characteristic by reference to which they could be described as "particular" objects of any purpose at all. In any event, that is not the way Souths put its case in this Court.
In the case of the 22 clubs, they are readily identifiable as being, in some respects, in the contemplation of News and ARL at the time of the 1997 understanding. It is, perhaps, more plausible to suggest that News and ARL had a purpose relating to them. Once again, any limitation upon the size of the new competition to a number less than 22 (or 20) could have had the effect of excluding some of the original 22. But the purpose of the 14 team term was not to exclude any particular club or clubs. Nor was a purpose of the 14 team term to limit or restrict the supply of services to, or the acquisition of services from, any particular club or clubs.
If, as Souths argued in this Court, the particular persons said to be the object or objects of the proscribed purpose are the clubs that had fielded teams in the 1997 competitions, then there was no purpose of preventing supply to, or acquisition from, them. They were the aggregate of two groups of competitors in separate competitions. Most of them would continue to participate, and receive and supply services. Nor was there a purpose of restricting or limiting supply. There was no purpose of partial supply or acquisition of services to or from anyone. In the context of s 4D, restricting or limiting supply to one particular person must mean partial supply. The relationship between preventing, on the one hand, and restricting or limiting, on the other hand, is the same, whether the object is one person, or a number of persons. Although it does not cover the whole field of operation of s 4D, a paradigm case of an exclusionary provision would be one aimed at a particular person. Preventing supply to such a person would be a typical "boycott". But the legislation obviously had to cover something less than a complete boycott, and included restriction or limitation of supply as well as prevention. It appears to mean the same thing when applied to a number of particular persons, or a class. In the case of a number of persons, maintaining full supply to some, and preventing supply to others, would ordinarily be dealt with as a case of preventing supply to the second group. It may be that there are exceptional cases where it is appropriate to treat those who retain supply, and those who do not, as a single class to which supply is limited, but it is not easy to fit that in with the scheme of the Act as to prevention of supply.
Even if it were possible to treat restriction or limitation of supply as covering, not merely partial supply, but also maintaining full supply to some and cutting off supply to others, then that would require both treating those who will continue to receive supply, and those who will no longer be supplied, as a single class, and treating the class as the object of the proscribed purpose. The clubs which participated in the 1997 competitions were not, either as a class, or as "particular persons", the object of a single purpose. There was to be a substantial re-structuring. The two competitions would become one. The geographical aspects would change. It was contemplated that some of the clubs would merge (as they did) between 1997 and 2000, and that at least one new club (Melbourne) would join the new competition. Merkel J expressed "some difficulty with the restriction or limitation case pleaded by Souths". It is a difficulty I share.
As Finn J pointed out, it is possible to think of circumstances in which the method of selection of the clubs to participate in the 2000 competition could have demonstrated a purpose of preventing, restricting or limiting supply or acquisition which had as its object a particular club or particular clubs. But that is not the present case. Having regard to the absence of any criticism of the method of choosing the 14 participants for the 2000 competition, the present case, in point of law, is no different from what it would have been if the 14 teams were to be chosen by drawing lots. It is accepted that the occasion to put an end to the two existing competitions, and to create a new single competition, was, of itself, lawful. The parties had to specify the size of the new competition. They had to state how many clubs would participate. They were under no legal obligation to accept any particular clubs as participants. Nor were they under any legal obligation to accept all of the 22 clubs from 1997 as participants. As soon as they selected a number less than 22 (or 20), the possibility of exclusion of some club or clubs arose. But they had no purpose of excluding any particular club or clubs. The 22 clubs which participated in 1997, considered individually or together, did not constitute particular persons in respect of whom there was a proscribed purpose.
The appeal should be allowed. The orders of the Full Court should be set aside. In place of those orders it should be ordered that the appeal to that Court be dismissed. The appellants seek no orders as to the costs of the proceedings before this Court or the Full Court of the Federal Court, and this Court was informed that the parties have agreed that, in the event that the appeal succeeds, the appellants will not enforce any of the costs orders of Finn J.
McHUGH J. The principal issue in this appeal is whether cl 7 of an agreement made between the News Limited ("News") and Australian Rugby Football League Limited ("ARL") parties is an "exclusionary provision" within the meaning of s 45 of the Trade Practices Act 1974 (Cth). The issue turns on whether those parties entered into cl 7 of the agreement for the purpose of "preventing, restricting or limiting" their services to South Sydney District Rugby League Football Club Limited or a "class of persons" which included Souths. If they did, they entered into an agreement containing an unenforceable exclusionary provision, as defined by s 4D of the Act.
Clause 7 was a fundamental term of an agreement entered into by News and ARL after they agreed to end their competing Rugby League competitions and to bring into existence a new competition that would be limited to 14 teams for the 2000 football season. Souths alleges that cl 7 was inserted with the object of preventing the supply of the services of News and ARL to particular persons or to a particular "class of persons" – the 22 clubs that had participated in the two separate competitions in 1997. Souths alleges that it was either one of those persons or one of those clubs. It points out that those clubs that did not meet the specified criteria for the awarding of franchises were to be excluded. If more than 14 clubs met the criteria, those clubs whose "order of priority" fell below 14 in the rankings were also to be excluded. For that reason, Souths contends that the purpose of cl 7 was to limit the number of clubs eligible to compete in the 2000 competition to 14 clubs and to deny the organising services of the News/ARL parties to the remaining eight clubs. Because it was one of the 22 clubs, it contends that cl 7 had the purpose of denying to it the services of News/ARL. And, as it was either a "particular person" or a member of a particular "class of persons" within the meaning of s 4D of the Act, cl 7 was an exclusionary provision.
As the judgment of Gummow J demonstrates, if the term "purpose" in s 4D means the subjective purpose of the News and ARL parties, the essential findings of the trial judge (Finn J) compel the conclusion that those parties did not have the purpose that Souths alleges. But does the term "purpose" in s 4D refer to the subjective purpose of the parties to the alleged exclusionary clause? Or is the purpose of the parties to be determined objectively without reference to their mental states?
For 17 years, Federal Court judges have accepted that the test of purpose in s 4D is a subjective test. In 1986 in Hughes v Western Australian Cricket Association (Inc)[4], Toohey J held that the purpose referred to in s 4D[5]:
"is the subjective purpose of those engaging in the relevant conduct ... All other considerations aside, the use in s 45(2) of 'purpose' and 'effect' tends to suggest that a subjective approach is intended by the former expression. The application of a subjective test does not exclude a consideration of the circumstances surrounding the reaching of the understanding."
[4](1986) 19 FCR 10.
[5](1986) 19 FCR 10 at 38.
Four years later in ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1)[6], the Full Court of the Federal Court approved the interpretation that Toohey J had given to the term "purpose" in s 4D. The Court acknowledged that there would necessarily be some difficulty in establishing a single subjective purpose given that there will be two or more parties to the contract, arrangement or understanding. The Full Court pointed out that a question may arise "[w]here not all the parties have the necessary subjective purpose, how is one to describe the contract they make as having a particular purpose in this sense?"[7] The Court also noted that s 260 of the Income Tax Assessment Act 1936 (Cth) (which, similarly to s 4D, speaks of contracts, agreements or arrangements which have a particular purpose) has generally been interpreted as requiring an objective test of purpose[8]. However, the Full Court thought that, as s 260 and s 45 concerned very different subject matters, the interpretation of s 260 did not necessarily support an objective construction of s 45.
[6](1990) 27 FCR 460.
[7](1990) 27 FCR 460 at 475.
[8]Federal Commissioner of Taxation v Gulland (1985) 160 CLR 55 at 94.
In Pont Data[9], the Full Court thought that the critical factor was the wording of s 4F of the Act, which deems a provision to have a particular purpose in certain circumstances:
"In its operation upon provisions stated to have a particular purpose, s 4F uses the words 'the provision was included in the contract ... for that purpose or for purposes that included or include that purpose'. This indicates that s 4F, in this operation, requires one to look to the purposes of the individuals by whom the provision was included in the contract, arrangement or understanding in question. It therefore directs attention to the 'subjective' purposes of those individuals."
[9](1990) 27 FCR 460 at 476.
From time to time, judges of the Federal Court have queried whether the term "purpose" in s 4D refers to the subjective purposes of those who made the impugned provision[10]. But, so far as I am aware, no judge has ever applied an objective test to the term "purpose" in s 4D since Hughes was decided in 1986.
[10]Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 at 264 [98].
The problem courts have had in determining whether the "purpose" referred to in s 4D is subjective or objective derives from the contrasting wording of s 4D and s 4F. The terms of s 4D tend to suggest an objective purpose because it refers to the purpose of the provision. It does not refer to the purpose of those who actually made the provision. It tends to suggest that the purpose of the provision is to be determined by reference to the mind of a notional person who had drafted the provision. In that respect, it is different from s 4F(1)(b) which refers to "a person" and s 4F(1)(a) which refers to the purpose for which a provision was included in the contract, arrangement or understanding. These two clauses suggest that s 4F requires an inquiry into the actual purpose in the mind of those who made that contract, arrangement or understanding.
One way of harmonising the apparently different meanings of purpose in s 4D and s 4F would be to read s 4D as the leading provision and s 4F as extending its scope. On that view, s 4D would require the court to look to the intended object of the parties by reference to the background of the transaction and the terms of the alleged exclusionary provision, independently of their mental states. If, read against that background, the provision pointed to the parties having a proscribed purpose, it would be an exclusionary provision for the purposes of the Act. On the other hand, if the provision were capable of an explanation other than the parties having a proscribed purpose, the provision would not fall within s 4D. Nevertheless, it might fall within s 4F and be an exclusionary provision if those who made the agreement subjectively had a proscribed purpose.
An objective interpretation of s 4D is supported by the consequences that may flow from using a subjective test. Unless s 4D is read as requiring an objective test, then in some cases, it will be impossible to determine what was the purpose of a provision. If the parties have different subjective purposes[11] or have never turned their minds to the purpose of the provision, neither s 4D nor s 4F would have any operation. Moreover, an objective interpretation of s 4D seems more in accord with the Act's object of promoting competition, an object that is weakened if what is objectively anti-competitive conduct escapes proscription only because the parties did not in fact intend to achieve such a proscribed purpose.
[11]As in Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Ltd (1987) 16 FCR 351 at 356. But see ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 at 477.
It is true that only persons can have a purpose, for the notion of purpose involves the intention of a person to achieve an object. That is to say, it involves an examination of the mental state of a person. Thus, in Chandler v Director of Public Prosecutions[12], Lord Devlin said:
"A purpose must exist in the mind. It cannot exist anywhere else. The word can be used to designate either the main object which a man wants or hopes to achieve by the contemplated act, or it can be used to designate those objects which he knows will probably be achieved by the act, whether he wants them or not."
[12][1964] AC 763 at 804-805.
But in some cases – in the case of legislative purpose, for example – the tribunal of fact must attribute a purpose to an artificial or notional mind that is deemed responsible for some act or omission. In such contexts, the tribunal of fact deduces the purpose of the artificial or notional person from the background of the act or omission including relevant statements and what was done or not done. Similarly, when legislation refers to the purpose of a provision, it is not absurd to regard the legislature as referring to the purpose in the notional mind of those responsible for the provision. In such cases, the test must inevitably be an objective test.
If the interpretation of s 4D was being considered for the first time, I would prefer the view that, for the purposes of s 4D, the purpose of an alleged exclusionary provision is to be determined objectively without regard to the mental state of the parties who made the provision. But the subjective interpretation has stood for 17 years, been approved by the Full Court of the Federal Court and been followed on numerous occasions. Given the terms of s 4F, s 4D is clearly open to the construction that "purpose" in both sections means the subjective purpose of the makers of the provision. Certainly, it is impossible to hold that the subjective interpretation is plainly wrong.
Questions of construction are notorious for generating opposing answers, none of which can be said to be either clearly right or clearly wrong. Frequently, there is simply no "right" answer to a question of construction. The interpretation of s 4D falls into that category.
For the above reasons, I would not overrule the subjective interpretation of the section.
Moreover in practice, in most cases it will probably make little difference whether the courts consider only the subjective purpose of the parties or the subjective purpose and the objective purpose in the manner to which I have referred[13]. In News Ltd v Australian Rugby Football League Ltd[14], the Full Court of the Federal Court said that, on the facts of that case, it made no difference whether a subjective or objective test was used. Moreover, as Toohey J pointed out in Hughes[15], the application of a subjective test does not exclude a consideration of the circumstances surrounding the reaching of the understanding. By considering the surrounding circumstances, the court will be using objective considerations to determine whether the parties held the subjective purpose they claim. In Dowling v Dalgety Australia Ltd[16], Lockhart J said:
"The effect of a contract is a relatively simple concept requiring examination of the results, but proof of purpose is more difficult. It will generally be inferred from the nature of the contract, the circumstances in which it was made and its likely effect."
[13]Robertson, "The Primacy of 'Purpose' in Competition Law – Part 2", (2002) 10 Competition and Consumer Law Journal 42; McMahon, "Church Hospital Board or Board Room?: The Super League Decision and Proof of Purpose under Section 4D", (1997) 5 Competition and Consumer Law Journal 129.
[14](1996) 64 FCR 410 at 576.
[15](1986) 19 FCR 10 at 38.
[16](1992) 34 FCR 109 at 134.
Nor is it the case that the purpose of a provision has been examined objectively only where there is no evidence of subjective purpose. In Eastern Express Pty Ltd v General Newspapers Pty Ltd[17], the party alleged to have breached s 46 of the Act made an admission of its intention to restrict the market. Lockhart and Gummow JJ warned that these statements were not to be taken at face value – their "probative force ... must be determined with regard to the circumstances in which they were made"[18]. And, in another decision, their Honours made a similar point in relation to s 45D, noting that[19]:
"Where purpose or other state of mind of an individual in relation to a given transaction is in issue, the statements of that person in the witness box, in a sense provide, the 'best evidence'. But the court may well take the view that these statements should be tested closely."
[17](1992) 35 FCR 43.
[18](1992) 35 FCR 43 at 68-69.
[19]Australian Builders' Labourers' Federated Union of Workers (WA Branch) v J‑Corp Pty Ltd (1993) 42 FCR 452 at 467.
Given the findings of fact made by Finn J and applying a subjective test of purpose, the appeal must be allowed for the reasons in the judgment of Gummow J.
Order
The appeal should be allowed.
GUMMOW J. This appeal is brought from a decision of the Full Court of the Federal Court (Moore and Merkel JJ; Heerey J dissenting)[20] which allowed an appeal from a decision of Finn J[21]. The appellants in this Court are News Limited ("News"), a large media company, National Rugby League Investments Pty Limited ("Investments"), Australian Rugby Football League Limited ("ARL") and National Rugby League Limited ("NRL").
[20]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456.
[21]South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611.
Finn J dismissed an application brought by the present first respondent, South Sydney District Rugby League Football Club Limited ("Souths") against News, Investments, ARL and NRL and others. There had also been an application by Souths for interlocutory injunctive relief which had been dismissed by Hely J[22].
[22]South Sydney District Rugby League Football Club Ltd v News Ltd (1999) 169 ALR 120.
The only grounds amongst those relied upon by Souths at trial which remain alive in this Court concern alleged contraventions of Pt IV of the Trade Practices Act 1974 (Cth) ("the Act"). The Full Court, after allowing the appeal by Souths, went on to grant declaratory and injunctive relief and remitted to the primary judge the assessment of damages recoverable under s 82 of the Act. In particular, declarations were made to the effect that, in entering into a Memorandum of Understanding on 18 February 1998 and into a Merger Agreement dated 14 May 1998, the appellants in this Court contravened pars (a)(i) and (b)(i) of s 45(2) of the Act. Those provisions are concerned respectively with the making of contracts or arrangements and the arrival of understandings containing an exclusionary provision within the meaning of s 4D of the Act, and the giving effect to such an exclusionary provision. The Full Court also enjoined the present appellants from giving effect to an exclusionary provision identified as the "14‑team term", whereby in the 2000 season and thereafter the number of teams to participate in the NRL competition would be restricted to 14.
The appeal to this Court should be allowed, the orders of the Full Court set aside and, in place thereof, it should be ordered that the appeal to that Court be dismissed. The position respecting costs is explained in the reasons of the Chief Justice.
The circumstances surrounding the entering into the Memorandum of Understanding and the Merger Agreement and the relevant factual findings are detailed by Callinan J. His Honour also analyses the reasons of the primary judge and of the members of the Full Court and what follows in this judgment should be read with that analysis in mind.
Like Callinan J, and subject to what follows, I am in general agreement with the approach to the issues of construction of the Act taken by Finn J and Heerey J.
Section 4D
The issues of construction primarily concern s 4D of the Act. This was inserted by s 6 of the Trade Practices Amendment Act 1977 (Cth) ("the Amendment Act"). It is convenient to begin with the text of s 4D. This defines an "exclusionary provision" as follows:
"(1)A provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if:
(a)the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and
(b)the provision has the purpose of preventing, restricting or limiting:
(i)the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons; or
(ii)the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions;
by all or any of the parties to the contract, arrangement or understanding or of the proposed parties to the proposed contract, arrangement or understanding or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate."
Section 4D is included in Pt I (ss 1‑6AA) of the Act which is headed "Preliminary" and includes a number of definitions both in the usual sense (seen in s 4) and in the special sense exemplified in s 4D. Section 4D has no normative operation by itself. Rather, as the opening words of the section indicate (in particular, the phrase "shall be taken to be"), it operates upon those other substantive provisions which bear upon the criterion "exclusionary provision" and gives content to that criterion.
What are important for this appeal are the prohibitions imposed by pars (a)(i) and (b)(i) of s 45(2) of the Act. The first prohibition (par (a)(i)) is upon a corporation making a contract or arrangement, or arriving at an understanding, if it contains an exclusionary provision. The second (par (b)(i)) is upon a corporation giving effect to a provision of a contract, arrangement or understanding which is an exclusionary provision. These are per se prohibitions in the sense that they apply without the operation of a further criterion that the provision have the purpose or effect or likely effect of substantially lessening competition in any market.
In the present case, it is accepted by all parties that at all relevant times a contract, arrangement or understanding was in existence within the meaning of s 4D(1)(a). Section 4D(1) contains two relevant primary elements; the first concerns the character of the relevant actors and the second the purpose of the provision. Accordingly, there must exist a state of competition in relation to the supply or acquisition of the relevant goods or services between two or more parties to the contract, arrangement or understanding (s 4D(1)(a)); and, further, there must be the purpose of preventing, restricting or limiting the supply to, or acquisition of goods or services from, particular persons or classes of persons as spelt out in the precise terms of s 4D(1)(b).
Section 4D(2) gives further content to the phrase "are competitive with each other" in par (a) of s 4D(1). It does so by requiring the satisfaction ("if, and only if") of a condition respecting the first party which is said to be competitive with another for the purposes of par (a). The condition is that the first party or a related corporation be, be likely to be, or would be or would be likely to be, (in the circumstances detailed in s 4D(2)) in competition in a specified sense with the second party or a related corporation. That specified sense is competition in relation to the supply or acquisition of all or any of certain goods or services. These are the goods or services to which there relates the alleged exclusionary provision identified in the opening words of s 4D(1) ("a provision") and carried into par (b) of s 4D(1) ("the provision").
Purpose
Section 4D speaks of "the purpose" of the contract, arrangement or understanding, rather than any deleterious effect which it might have on competition. In so providing, the Parliament did not implement the recommendations of the 1976 Trade Practices Act Review Committee Report which commented[23]:
"We consider that a collective boycott, ie an agreement that has the purpose of or the effect of or is likely to have the effect of restricting the persons or classes of persons who may be dealt with, or the circumstances in which, or the conditions subject to which, persons or classes of persons may be dealt with by parties to the agreement, or any of them, or by persons under their control, should be prohibited if it has a substantial adverse effect on competition between the parties to the agreement or any of them or competition between those parties or any of them and other persons."
"Purpose" is not defined in the Act. At trial, Finn J stated[24]:
"While the purpose of a provision may be evidenced in the effects it produces, the purpose for its inclusion in a contract etc is not to be determined necessarily by, or simply by reference to, its effects[25]. What is to be ascertained is the reason (or reasons) for its inclusion. And that reason, or those reasons, can be determined by ascertaining the effect or effects the parties subjectively sought to achieve through the inclusion of the provision in the understanding, etc[26]."
It will be noted that Finn J focused on the subjective reasons of the parties to the contract in which the relevant provision is contained. At first glance, such an approach might appear to conflict with the terms of s 4D(1)(b), which speaks not of human or corporate actors but of the provision itself having the purpose of preventing, restricting or limiting the supply or acquisition of the relevant goods or services. A construction which fixes upon subjective intent also may be difficult to apply to a multipartite contract, arrangement or understanding. However, s 4F of the Act doubtless has a role to play in such circumstances.
[23]Commonwealth, Report to The Minister for Business and Consumer Affairs, August 1976 at [4.116]. In 1993, the Independent Committee of Inquiry recommended against any change to the purpose element: Commonwealth, National Competition Policy, August 1993 at 46.
[24](2000) 177 ALR 611 at 659.
[25]Dowling v Dalgety Australia Ltd (1992) 34 FCR 109.
[26]cf ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 at 475.
Nevertheless, Finn J's construction is not without support[27] and was accepted as correct by each member of the Full Court[28]. Moreover, there are good reasons for a construction of s 4D which focuses upon the effect or effects the parties sought to achieve through the inclusion of the impugned provision in the contract, arrangement or understanding. Such a construction gives full effect to s 4F of the Act[29]. That section, which, with s 4D, is found in Pt I of the Act, is headed "References to purpose or reason". Like s 4D(2), s 4F uses the term "deemed". It does so, not to create a "statutory fiction", but for the definitional purpose identified by Windeyer J in Hunter Douglas Australia Pty Ltd v Perma Blinds, namely to "state the effect or meaning which some matter or thing has"[30].
[27]Hughes v WA Cricket Association (Inc) (1986) 19 FCR 10 at 37‑38; ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 at 474‑477; Adamson v NSW Rugby League Ltd (1991) 31 FCR 242 at 245, 261, 283; cf Newton v Commissioner of Taxation (Cth) [1958] AC 450 at 465 (in the context of s 260 of the Income Tax and Social Services Contribution Assessment Act 1936 (Cth)).
[28](2001) 111 FCR 456 at 472 per Heerey J, 487 per Moore J, 518 per Merkel J.
[29]Inserted by s 6 of the Amendment Act.
[30](1970) 122 CLR 49 at 65. See also Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 308; Malika Holdings Pty Ltd v Stretton (2001) 204 CLR 290 at 320 [96].
Section 4F relevantly states:
"(1) For the purposes of this Act:
(a)a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, or a covenant or a proposed covenant, shall be deemed to have had, or to have, a particular purpose if:
(i)the provision was included in the contract, arrangement or understanding or is to be included in the proposed contract, arrangement or understanding, or the covenant was required to be given or the proposed covenant is to be required to be given, as the case may be, for that purpose or for purposes that included or include that purpose; and
(ii)that purpose was or is a substantial purpose". (emphasis added)
The operation of s 4F upon provisions stated to have a particular purpose is significant. The phrase "the provision was included in the contract … for that purpose or for purposes that included or include that purpose" suggests that s 4F requires examination of the purposes of the individuals by whom the provision was included in the contract, arrangement or understanding in question[31]. Moreover, s 4F contemplates that a provision may be included in a contract, arrangement or understanding for a plurality of purposes and, in such circumstances, directs that the relevant purpose must be "substantial". This is a further indication that the Act requires examination of the purposes of individuals, the inevitable multiplicity of which may be contrasted with an examination of the "objective" purpose of an impugned provision. In this way, the introduction of a "substantial purpose" test avoids difficulties in discerning the relevant purpose of multiple parties to a contract, arrangement or understanding.
[31]ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 at 476.
Before this Court, the Australian Competition and Consumer Commission ("the ACCC"), as intervener, submits that both the subjective purpose of the parties to the relevant contract, arrangement or understanding and the objective purpose of the impugned provision are relevant when determining whether or not the provision falls within the purview of s 4D. However, a construction which, depending upon the facts of the case, may require examination of either the subjective purpose of the parties or the objective purpose of the provision, or both, is not the product of reasoned statutory interpretation and falls foul of the provisions in s 4F. In addition, there is a danger that an examination of the objective purpose of a provision will give undue significance to the substantive effect of the provision, as opposed to the effect that the parties sought to achieve through its inclusion. The consistent distinction drawn in the Act, particularly in s 45 when read with s 4D, between "purpose" and "effect" demonstrates the impermissibility of such an approach.
At trial, Finn J accepted the evidence of relevant actors that they believed that the participation in 2000 of only 14 teams could or would be achieved without the necessity of excluding any club. Finn J said[32]:
"I accept the evidence of Mr Whittaker that he believed the 14 teams for 2000 could be, and of Mr Frykberg that they would be, achieved without resort to exclusion. And I consider the early and continuing significance they attributed to the formation of mergers and joint ventures as being consistent with the absence of a proscribed purpose. The significance so attributed to mergers, etc, evidenced a form of recognition of both the wish and the need to maintain some level of participation of the established clubs in a competition not designed to accommodate them all individually."
[32](2000) 177 ALR 611 at 675.
In the Full Court, one member of the majority, Merkel J, discerned error on the part of the trial judge. This was because Finn J had failed to determine whether the 14‑team term had "a discrete purpose" and had looked more broadly at the Merger Agreement[33]. I agree with what is said by Callinan J in his reasons on this point. In particular, as his Honour points out, the discovery of the purpose of a provision is by no means necessarily to be gained by an examination of that provision divorced from an understanding of the contract, arrangement or understanding of which it forms part.
[33](2001) 111 FCR 456 at 523.
Finn J concluded that the 14‑team term had not been included for the purpose of, among other things, preventing the supply of competition-organising services or of the acquisition of team services[34]. It followed that the 14‑team term did not satisfy the second of the two primary elements in s 4D, that concerned with purpose. This conclusion, which should be accepted, is sufficient to require the upholding of the present appeal.
[34](2000) 177 ALR 611 at 675.
Particular classes of persons
However, Finn J went on to hold that the case made by Souths must fail for a related reason[35]. This was because those said to be prevented from supplying or requiring the relevant services did not constitute a "particular class of persons" for the purposes of s 4D(1).
[35](2000) 177 ALR 611 at 675.
There are dangers in splitting up the definition in s 4D by disjoining consideration of the purpose of preventing, restricting or limiting the supply or acquisition of the relevant services from the identification of those said to comprise the particular persons or classes of persons. The case pleaded by Souths had been that the 14‑team term was an exclusionary provision because it had the purpose of preventing the acquisition of the services of teams to play in the NRL competition, the teams being all clubs willing and able to play in a top level rugby league competition other than the 14 clubs (including therein merged clubs) selected to participate in the NRL competition from the year 2000.
Against that background, Finn J dealt with the purpose of the inclusion of the 14‑team term and concluded that the evidence concerning its adoption was "bereft of any indication that its purpose was to prevent the supply of services to, or acquisition of services from, any person or class of persons"[36].
[36](2000) 177 ALR 611 at 675.
That conclusion, with respect correctly reached, foreclosed the need for any further inquiry as to whether, as a discrete step, it was necessary to consider whether the provision had been "aimed specifically" at particular clubs otherwise able and willing to compete with the objective of harming them[37].
[37](2000) 177 ALR 611 at 675‑676.
His Honour did envisage[38]:
"a size provision with its proposed ancillary criteria being designed with the substantial purpose in mind, not simply of limiting the size of the competition for reasons that are considered to be in the interests of the game and its stakeholders, but of specifically targeting a club or clubs that is or are anticipated to be applicants for selection".
But he concluded[39]:
"There is a significant difference between being merely an unsuccessful contender for selection in a process not designed to preordain that particular outcome and being a target for exclusion in a selection process designed to that end. The latter, but not the former, if otherwise the product of a s 4D understanding, is capable of being found to be an exclusionary provision."
[38](2000) 177 ALR 611 at 675.
[39](2000) 177 ALR 611 at 675.
The earlier decision of the Full Court of the Federal Court in ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) proceeded upon similar lines of reasoning which did not involve any breaking up of the second primary element in s 4D, being that concerned with the necessary purpose of the alleged exclusionary provision.
In Pont Data, ASX, by its subsidiary ASXO, provided information (known as Signal C) concerning stock transactions to, amongst others, Pont Data. That company in turn supplied the information to its own customers. ASXO competed with Pont Data in relation to the supply of such information in the downstream market. ASX and ASXO required Pont Data to enter into supply contracts obliging the latter to disclose to them the names of its customers. These customers in turn were required to enter tripartite agreements with ASXO and Pont Data pursuant to which the customers were prevented from reselling the information to third parties. Pont Data was also prevented by the supply contracts from selling information purchased from ASXO to any person other than a customer which had entered a tripartite agreement with Pont Data and ASXO. Pont Data and ASXO were both rivals and, at the same time, ASXO was the sole supplier to Pont Data and to the other subscribers of information essential to them if they were to continue to compete with ASXO in the services offered to third parties[40]. Pont Data alleged contravention of ss 45, 46 and 49 of the Act.
[40](1990) 27 FCR 460 at 466.
One issue was whether the supply contracts entered into by Pont Data contained an exclusionary provision attracting the operation of s 45. Thus it was necessary for the Full Court to determine whether it was an answer to the attraction of par (b) of s 4D(1) that persons who would not be supplied with the information unless they accepted and became bound by the restraints were not a "particular class". The Full Court said[41]:
"It was said that the persons or classes excluded must still be 'identified' if s 4D is to apply. That may be conceded, but they are identified, in the present case, by the characteristic that they may not be supplied with the information in question, unless they accept and become bound by the restraints imposed by the Dynamic Agreement. Such persons come within a particular category or description defined by a collective formula[42]. They ordinarily would be treated as constituting a particular class, even though at any one time the identity of all the members of the class might not readily be ascertainable. What distinguishes the class and makes it particular is that its members are objects of an anti‑competitive purpose, with which s 4D is concerned."
[41](1990) 27 FCR 460 at 488.
[42]cf Pearks v Moseley (1880) 5 App Cas 714 at 723.
The Full Court in Pont Data considered[43] the circumstances in which the phrase "or classes of persons" had been added to s 4D after the words "particular persons". The change was made by s 6 of the Trade Practices Revision Act 1986 (Cth) and appeared to respond to limitations upon the words "particular persons" which had been suggested in two cases. In Bullock v Federated Furnishing Trades Society of Australasia (No 1)[44], the Full Court of the Federal Court left open the question whether Gray J had been correct in limiting those words to "persons whose identity is known or can be ascertained". In Trade Practices Commission v TNT Management Pty Ltd[45], Franki J accepted that, because the arrangement or understanding proved was not limited to refusals to deal with Tradestock but extended to "a class of intermediaries", it did not satisfy the requirement in s 4D that it be one restricting dealing with "particular persons".
[43](1990) 27 FCR 460 at 488.
[44](1985) 5 FCR 464 at 473.
[45](1985) 6 FCR 1 at 75‑76.
Against this background, the use by the Full Court in Pont Data of the term "objects" recognised the legislative goal of removing a limitation upon s 4D which required the precise identification of those sought to be prevented, restricted or limited in their conduct by the purpose of the exclusionary provision. The goal was not to require the infliction of damage or harm to those persons by reason of the operation of the purpose. An object may be one on, or about whom, something (here, the purpose) acts or operates.
In the present case, it appears to have been accepted (correctly in my view) that there may be a "particular class" notwithstanding that at any one time the identity of all of its members is not readily ascertainable. However, both Souths and the ACCC submit that the use of expressions in some of the later cases[46] such as "targeted" and "aimed at" places an unwarranted gloss upon s 4D and incorporates assumptions and requirements derived from case law concerning collective boycotts. These submissions correctly emphasise the need to construe the terms of the legislation free from notions of anti‑competitive conduct which are not necessarily incorporated in s 4D[47].
[46]See News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at 577.
[47]Devenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32 at 41‑43, 51‑52, 55, 58.
It is clear that s 4D is not limited to situations in which the traditional concept of a collective boycott would apply, for example where two or more competitors exclude or restrict the supply of goods or services to a rival competitor. In the Full Court in the present case, Heerey J described a boycott as a means of inflicting some adverse consequences on a person or class[48]. But, to adapt a statement of Deane J made in Devenish v Jewel Food Stores Pty Ltd[49], when dealing with s 45D(1):
"[T]he literal effect of the words of [s 4D] should not be confined in a way which would exclude from the scope of the section any conduct which does not satisfy some superimposed requirement ascertained by reference to a perception of the kinds of conduct with which the section is primarily concerned."
[48](2001) 111 FCR 456 at 477.
[49](1991) 172 CLR 32 at 51‑52.
Nevertheless, the terms of s 4D take as a compound element the purpose of preventing, restricting or limiting the supply or acquisition of goods or services to or from particular persons or classes of persons. It is preferable to speak of the purpose of the provision being "directed toward" a particular class rather than "aimed at" or "targeted". This avoids the connotations of aggression or the inducement of harm, typically found in judicial discussions of boycotts, of which Souths and the ACCC rightly complain.
The critical point for the present case is not found in pondering such questions as the defining characteristics that make a class "particular". What is important for this case is the notion that any selection process with more applicants than positions available will necessarily result in "winners" and "losers". There was an absence in the evidence of indications that the purpose of the adoption of the 14‑team term was to prevent the supply of services to or acquisition of services from those clubs which under the operation of the selection process would turn out to be among the "losers".
That brings me to the remaining issue of construction.
Preventing, restricting or limiting
In the Full Court, Moore J, one of the majority, considered[50]:
"the question of whether competitors can have a purpose of restricting or limiting supply of services to particular persons and the acquisition of services from them if it is not known, when the exclusionary provision was agreed to, who of the particular persons would bear the burden of the restriction or limitation though it could be expected some of the particular people would not".
His Honour continued[51]:
"Arrangements could be entered that were intended to have an apparently proscribed effect on some but not all of the competitors' suppliers or customers. That is, it was proposed that supply or acquisition of goods would be reduced, by operation of the arrangement, on some but not all of the suppliers or customers because of events that had not yet occurred. Those events may be influenced by the conduct of the suppliers or customers. However the fundamental or underlying purpose of the competitors would have been to limit or restrict supply to or acquisition from particular persons with the burden of the limitation or restriction being revealed as the exclusionary provision was given effect to by the colluding competitors."
Moore J then concluded[52]:
"In my opinion, the fact that the 14‑team term contemplated some of the 1997 clubs would continue to field their own teams in 2000 and following years does not remove the 14‑team term from the scope of s 4D as enlivened by s 45(2)(a)(i)."
Thus, it was no answer to the operation of the provision that, whereas 22 teams had supplied or been supplied with services in 1997, from 2000 only 14 would be in that situation.
[50](2001) 111 FCR 456 at 507.
[51](2001) 111 FCR 456 at 507‑508.
[52](2001) 111 FCR 456 at 508.
Heerey J pointed out that a case of this nature had not been pleaded or run at first instance[53]. His Honour also declared that it was too late to raise such an argument because it raised an infinite range of factual dispute. For that reason, this Court should decline to enter upon the matter.
[53](2001) 111 FCR 456 at 479.
Submissions by the ACCC
In its original submissions, the ACCC suggested, in effect, that any attack in respect of what had taken place should have been launched at an earlier stage and against the merger of the competitions. The ACCC questioned whether, as the litigation had been cast, the requirement contained in par (a) of s 4D(1), as further elucidated in s 4D(2), relating to the existence of a state of competition between two or more parties to the contract, arrangement or understanding, had been satisfied. Were the answer to that question in the negative, s 4D would not be engaged and the prohibition contained in par (b)(i) of s 45(2) would not apply.
The ACCC stressed the need to identify with particularity the services to which the relevant provision in this case, the 14‑team term, relates. Those services were to be provided from December 1997 as essential elements of a single new competition established and provided by News and ARL in partnership through a joint venture company, NRL. It followed, in the ACCC's submission, that News and ARL could not be considered competitors in relation to the supply or acquisition of goods or services by NRL. This was because NRL came into existence as a result of the cessation of the rugby league competition businesses of News and ARL.
After the conclusion of the hearing, the appeal was relisted in order to allow each party to make further submissions concerning the proposition put by the ACCC. In further written submissions, News and the other appellants adopted the submissions of the ACCC. However, the appellants' subsequent written submissions, and their oral submissions during the further hearing, eschewed, and indeed sought to controvert, the ACCC's submissions.
Souths took a similar stance to the appellants. In particular, Souths submitted that the reasoning in Re McBain; Ex parte Catholic Bishops[54] indicated that it should not be open to a party in the position of the ACCC to seek to disturb the course taken by the litigation conducted by the parties at trial and on appeal.
[54](2002) 209 CLR 372 at 395 [23].
The grant of leave to the ACCC to intervene, made on the first day of the hearing, was in general terms. Nevertheless, in the light of what has subsequently transpired, that general grant should not be construed as permitting the entertainment on the appeal of these further arguments.
Conclusion
Orders should be made as indicated earlier in these reasons.
KIRBY J. Once again I disagree with the majority of this Court on the application of the Trade Practices Act 1974 (Cth) ("the Act"). Once again, the Court reverses a decision of the Full Court of the Federal Court of Australia and favours a more limited application of the Act than was adopted by that Court[55]. The Act's purpose is stated to be "to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection"[56]. Where the meaning of particular provisions is contested, the Act should be construed, so far as the words permit, to uphold these important economic and social objectives[57].
[55]Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 205 CLR 1; Boral Besser Masonry Ltd v Australian Competition and Consumer Commission (2003) 77 ALJR 623; 195 ALR 609; see also Qantas Airways Ltd v Aravco Ltd (1996) 185 CLR 43; Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494.
[56]The Act, s 2.
[57]Bropho v Western Australia (1990) 171 CLR 1 at 20. See also Devenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32 at 44, 45.
This appeal arises out of ongoing controversies within the code of rugby league football as played in Australia. The contest results from the attempt of those who took charge of the premiership competition to limit the number of participating teams. An earlier instance of a similar conflict, involving a challenge by the Western Suburbs District Rugby League Football Club, was rejected by this Court in Wayde v New South Wales Rugby League Ltd[58]. In that case different legislation was involved and distinct issues were decided[59]. In the present appeal, the dispute concerns South Sydney District Rugby League Football Club Limited ("Souths"), a decision to refuse it entry into the rugby league premiership competition for 2000 and whether such action involved a breach of the Act.
[58](1985) 180 CLR 459 affirming New South Wales Rugby League Ltd v Wayde (1985) 1 NSWLR 86.
[59]The case concerned the Companies (New South Wales) Code, s 320(2) and a claim of oppression of a minority. See Fridman, "Sport and the Law: The South Sydney Appeal", (2002) 24 Sydney Law Review 558.
The proceedings in the Federal Court
Proceedings at first instance: Following its exclusion, Souths made application to the Federal Court for relief on a number of grounds. The only one of them still in issue concerns Souths' claim pursuant to s 45(2) of the Act. An initial application for an interlocutory injunction was dismissed by Hely J in December 1999[60]. His Honour found that there was a serious question to be tried as to whether what was described as "the 14-team term"[61], in a merger agreement designed to merge competing national rugby league premiership competitions, ("the merger agreement") constituted an "exclusionary provision" contrary to the Act. However, Hely J concluded that the balance of convenience did not favour the grant of an interlocutory injunction.
[60]South Sydney District Rugby League Football Club Ltd v News Ltd (1999) 169 ALR 120.
[61]The relevant clause is set out in full in the reasons of Callinan J at [169]. See particularly cll 7.5 and 7.9.
Nothing daunted, Souths sought final relief in the Federal Court in the form of injunctions, declarations and damages against News Limited ("News"), one of its subsidiaries, National Rugby League Investments Pty Ltd ("Investments"), Australian Rugby Football League Ltd ("ARL") and National Rugby League Ltd ("NRL"). NRL was jointly owned and controlled by Investments and ARL. The merger agreement provided for the conduct of a single national rugby league competition. Souths' proceedings sought relief as a result of its exclusion from the NRL competition for 2000. It claimed that such exclusion was a consequence of the making of, or giving effect to, the merger agreement and specifically the 14-team term with its provision for the funding of only those 14 teams selected to participate.
In the Federal Court, the primary judge, Finn J, in November 2000, after a lengthy hearing, rejected Souths' application for relief[62]. Relevantly to the claim based on the alleged breach of s 45 of the Act (read with ss 4D and 4F), the primary judge accepted that Souths' claim was enlivened by the language of the 14-team term. However, he decided that the claim failed primarily because the "purpose" of the impugned provision was not the impermissible exclusionary purpose alleged by Souths but a permissible purpose. This was variously described as a purpose to establish a financially viable and sustainable rugby league competition; to avoid damage to the game of rugby league football caused by competing national competitions; and to satisfy the pressures and demands of media companies interested to broadcast the games and therefore to support the code of rugby league financially[63].
[62]South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611.
[63](2000) 177 ALR 611 at 672 [270]. These were similar to the statement of objectives of the merger agreement: cl 2.
Secondly, as an alternative basis for rejecting the claim, the primary judge found that Souths had not established that a purpose of the impugned provision was to limit the supply or acquisition of services to or from "particular … classes of persons"[64] within the meaning of the Act[65].
[64]The Act, s 4D(1).
[65](2000) 177 ALR 611 at 675 [287].
Thirdly, the primary judge concluded that, even if Souths had made out its case based on s 45 of the Act, injunctive relief should be denied as inappropriate in the circumstances of the case, viewed as a whole[66].
[66](2000) 177 ALR 611 at 682 [327]-[328].
Proceedings on appeal: Souths appealed to the Full Court of the Federal Court. By majority[67], that Court, in July 2001, upheld the appeal[68]. All members of the Full Court held that the 14-team term enlivened s 45(2) of the Act, being a provision of a contract or arrangement made between parties who were competitive with each other[69]. They rejected the argument of News that, to attract s 4D of the Act, it was necessary to show that the parties were competitive with each other at the time when the exclusionary provision took effect[70]. But the concurrence in the reasoning of the judges of the Full Court ended at that point. By different routes, the majority in the Full Court came to the conclusion that Souths had made out its case for relief from the effects of the 14-team term as an exclusionary provision; that damages were not an adequate remedy[71]; that injunctive relief should be granted to restrain News, Investments, ARL and NRL from giving (or continuing to give) effect to the 14-team term[72] and that, in addition, Souths was entitled to damages, pursuant to s 82 of the Act. Such damages were ordered to be assessed[73].
[67]Moore and Merkel JJ; Heerey J dissenting.
[68]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456.
[69](2001) 111 FCR 456 at 480-481 [110]-[116] per Heerey J, 508 [208] per Moore J, 516 [234] per Merkel J.
[70](2001) 111 FCR 456 at 480-481 [112]-[115] per Heerey J, 508 [208] per Moore J, 516 [234] per Merkel J.
[71](2001) 111 FCR 456 at 534 [304].
[72](2001) 111 FCR 456 at 508 [210] per Moore J, 532 [300] per Merkel J.
[73](2001) 111 FCR 456 at 508 [210] per Moore J, 534 [306] per Merkel J.
The dissenting judge in the Full Court (Heerey J) substantially agreed with the reasoning of the primary judge. He rejected Souths' appeal. However, he concluded further that, if the construction of the Act by Souths were to succeed, an injunction should be withheld on discretionary grounds[74]. He added reasons to those given by the primary judge for limiting any remedies to which Souths was entitled to an award of damages.
[74](2001) 111 FCR 456 at 484 [137].
Proceedings in this Court: Special leave to appeal was then granted by this Court. The issues in the appeal overlap, to some extent, others in an appeal which stands for judgment[75] and in another in respect of which special leave was later granted[76]. The Australian Competition and Consumer Commission ("the ACCC") sought and was granted leave to intervene in these proceedings. It provided written and oral argument. It drew attention to many cases, decided or pending, where the resolution of the issues raised in this appeal would be significant, or determinative.
[75]Visy Paper Pty Limited & Ors v Australian Competition and Consumer Commission reserved by the Court on 3 December 2002.
[76]Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236. See Rutgers, "Case Notes – ACCC v Rural Press Limited", (2001) 9 Trade Practices Law Journal 273; Griggs, "Exclusionary provisions: The Full Federal Court awaits High Court deliberations – but is the solution to be found elsewhere?", (2002) 10 Competition and Consumer Law Journal 218 at 225.
Moore J took a broader view of the meaning of "particular class" under s 45(2), excluding from its ambit such provisions as would "operate only on the generality of persons[179]". Moore J concluded[180]:
"In my opinion the expression 'particular persons' is to be taken to be a reference to identified or identifiable persons whether or not there are other identified persons or otherwise on whom the apparently exclusionary provision is not intended to operate. That is, it is not necessary that a provision operate selectively in the way just discussed for it to be an exclusionary provision."
[179]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 506 [197].
[180]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 507 [200].
In his Honour's view, s 45(2) would apply even if, at the time the contract, arrangement or understanding was entered into, it was not known who would bear the burden of the restriction or limitation[181]:
"This leads to a consideration of the second question posed … namely whether it can be said there existed a purpose of restricting or limiting of supply or acquisition to the 1997 clubs if it was in contemplation that some but not all of the 1997 clubs would field a team in conjunction or collaboration with other clubs though some of the 1997 clubs would continue to field a team in their own right. This really raises the question of whether competitors can have a purpose of restricting or limiting supply of services to particular persons and the acquisition of services from them if it is not known, when the exclusionary provision was agreed to, who of the particular persons would bear the burden of the restriction or limitation though it could be expected some of the particular people would not.
The language of s 4D (when read with s 45(2)(a)(i)) does not, in my opinion, preclude its application in these circumstances nor would such an application be inconsistent with the apparent purpose of the provision. It may be accepted that if s 4D were to operate in this way, it would be because the expressions 'supply … to' and 'acquisition … from' are not to be read as meaning 'supply … to each of (or all)' or 'acquisition … from each of (or all)' the particular persons or members of the particular class. In relation to the parties to the contract, s 4D(1)(b) speaks of 'all or any of the parties', which might suggest the expressions just referred to should not, in the absence of the same or similar words, be given the same or a similar meaning. However there is no apparent reason for giving the expressions 'supply … to' and 'acquisition … from' that meaning, in a way that might limit the operation of s 4D as enlivened by s 45, in a statutory context where notions of purpose and preventing, hindering and restricting are central."
[181]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 507 [201]-[202].
Heerey J preferred the trial judge's view of what may constitute a class, or person or persons, for the purposes of s 45(2). His Honour said[182]:
"A boycott necessarily involves a target, a person or persons 'aimed at specifically': News Ltd v Australian Rugby Football League Ltd[183]. It is hard to see how this notion can apply to a class not defined in advance but only defined in an essential respect by the fact of exclusion, if and when it happens. And if it is wrong, as I think it is, to have a class defined by the fact of exclusion, it is in principle no different when exclusion is one of a number of defining characteristics. Either way, the class cannot be ascertained unless and until all putative members satisfy the test of exclusion – whether or not other tests must be satisfied.
Looked at another way, if a particular class can be defined by the fact of exclusion, in effect the 'class' becomes the whole world, because anybody has the potential to be excluded."
[182]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 477 [90]-[91].
[183](1996) 64 FCR 410 at 577.
Heerey J concluded[184]:
"If Souths' argument is correct, competitors who enter into a partnership and agree to provide a lesser range of goods or services (or deal with a narrower range of customers) will have contravened s 45(2). Nothing in the stated object of the Act ('to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection': s 2) would suggest such a startling result.
Once attention is diverted from the essential elements of boycott proscribed by ss 4D and 45(2) – the targeting of a particular person or class of persons identified at the time the exclusionary provision is created – there is an inevitable slide into prohibition of conduct which amounts to no more than persons deciding the limits of the business in which they wish to engage." (original emphasis)
Heerey J also held that an injunction would not lie in any event. To grant it would be to dictate that the competition have no fewer than 15 competitors or conceivably as many in addition to those as could satisfy the basic criteria. His Honour said[185]:
" ... a Federal Court mandated 15-team rugby league competition, an outcome which confers no public benefit, contradicts the freely negotiated agreement of those who know the game and its commercial setting, and achieves no discernible purpose of the Act."
[184]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 477-478 [94]-[95].
[185]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 484 [137].
Resolution of the issues in this Court
It seems to me that the submissions of Souths with respect to "purpose" have about them in the circumstances of the case, something of an air of unreality. This is so despite the sympathy that one might feel for a club that has survived and flourished in times when sport was principally that, and not a major commercial enterprise, which, although providing entertainment to many, is also now a means of valuable advertising including indirect advertising by sponsorships and endorsement, and a source of revenue for many, including players, officials and telecasters. The reality is that a popular spectacle such as a game of rugby league played between superior teams has a monetary value transcending the pleasure that it may bring to its participants, whose rewards, it may be noted, nowadays often include substantial financial ones as well. The game is, as I mentioned earlier, essentially a winter game. That is no doubt why therefore, a contest of 14 teams requiring 28 match days for home and away games together with such other days as might be required for semi-finals, finals and a grand final, and time for players to rest and recover from injuries, might be regarded as the best possible sort of contest to conduct. In continuing competition with each other the prospects of each contest operator, and the game itself were bleak. That itself is enough to suggest that neither the "market" for the game, nor the number of players of a sufficiently high standard, could support two competitions in the long term. But in any event that was the evidence of the experts on the game and it was accepted by the trial judge. Furthermore, no one residing in the eastern states of this country in the last 10 years could be unaware of the fact that rugby league competes, not only commercially, and in respect of a finite number of sponsors and advertisers, but also for free-to-air time, and players, with other codes of football and winter games.
There is nothing novel in the wish, for not only commercial reasons, but also to achieve better and excellent standards of sporting achievement, that organizers of sporting contests might, as here, by reference to objective criteria, the seasons, and the capacity of operators to accommodate a certain number of contestants only, decree that a certain number of teams only may compete. So called "masters" tournaments, and the attainment of particular levels of excellence as a qualification for entry into competitions, in golf and tennis for example have become familiar, as have, again as here, the issue of sporting franchises or licences. It does seem, to say the least, a little contradictory that an objective of establishing a very high, indeed excellent competition of the best, largely objectively ascertained, and itself in competition in the "sporting marketplace" for funds, sponsorship, and public exposure, should be regarded as proscribable in the public interest, and as directed against "particular persons or classes" of persons. Whether that is so or not however, effect must be given to the language of the Act. But that does not mean that the established factual background against which an agreement is made is irrelevant to the purpose of its making. That, and because of their relevance to the ACCC's application is why I have mentioned the matters that I have.
Purpose of preventing supply
I should say at the outset that I am generally in agreement with the reasoning of the primary judge.
The "purpose" of the provision of the contract, arrangement or understanding to which s 4D directs attention is the parties' subjective reason for its inclusion of the provision in the contract, arrangement or understanding[186]. At first instance, Finn J accepted the evidence of Messrs Whittaker and Frykberg that they believed that an outcome, of the participation of 14 teams only in 2000, could or would be achieved without resort to the exclusion of any club[187]. Neither Heerey J[188] nor (apparently) Moore J[189] doubted the correctness of this finding of fact made by the trial judge.
[186]ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 at 474-477 approving Toohey J in Hughes v Western Australian Cricket Association (Inc) (1986) 19 FCR 10 at 37-38; see also Dowling v Dalgety Australia Ltd (1992) 34 FCR 109 at 134; Newton v Commissioner of Taxation (Cth) [1958] AC 450 at 465.
[187]South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611 at 675 [284] per Finn J.
[188]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 472-473 [68]-[71].
[189]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 493 [158].
Merkel J however was of the view that the trial judge erred in failing to distinguish between the purpose of the merger agreement, in its entirety, and the 14-team term[190]. He held that the purpose of the merger was to act as the sanction ("carrot"), and the 14-team term as a buttress ("stick") to achieve "exclusion" if the sanction ("carrot") failed[191]. His Honour said that while the 14-team term was a means to the end of a viable and sustainable national competition, the trial judge erred because he failed to consider whether that means had a more immediate purpose, to exclude any clubs in excess of the 14 selected to provide teams to participate in 2000[192].
[190]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 522 [262], 522-523 [264]-[265].
[191]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 522 [263].
[192]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 526-527 [278].
I am unable to agree that the trial judge failed to distinguish between the purpose of the 14-team term and the purpose of the merger provisions as a whole. His Honour identified the purpose of the 14-team term as the achievement of a viable and sustainable national competition. And that was also a substantial purpose of the merger agreement itself. A further purpose of both was that of encouraging mergers by clubs by providing incentives to those which agreed to merge, to obviate, if possible, the need for the exclusion, by, it should again be pointed out, reference largely to objective criteria, of any club[193]. This follows from the trial judge's finding of fact, not doubted by Heerey J and Moore J, that Messrs Whittaker and Frykberg believed the operation of the 14-team term could, or would be achieved without exclusion.
[193]South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611 at 672 [271] per Finn J.
In conducting an annual competition it was, and is necessary to set a limit on the number of participants. That number, because of the nature of the competition and competition itself is a defining characteristic of the competition. That the appellants may have nominated in advance of 2000 the maximum number of teams which would be permitted to compete does not mean that their purpose was to exclude any or any particular teams. That was neither the result that they expected nor the outcome that they desired.
There was in my opinion, no conflation as Merkel J held, of the purpose of the merger overall, and the purpose of the 14-team term. The fact that s 45(2) of the Act refers to a provision does not mean that the provision has to be read in isolation. It is the purpose of the provision that is important. The discovery of that purpose is by no means necessarily to be gained by an examination of the provision itself only. As with any term of an agreement or arrangement, a provision may, sometimes must, be read with, and seen for its true meaning, effect and purpose, the relevant agreement or arrangement as a whole. Here, the 14-team term cannot be divorced from the agreement as a whole. It was no more than facilitative, and then only contingently so, of the purpose of establishing a viable competition of a superior kind within the temporal, financial, and other practical constraints which were operating. That something may happen, indeed that it may have even been a foreseeable happening, in the course of the effectuation of a purpose, or even that it may help to achieve that effectuation, does not mean that a provision designed to accommodate that happening, has the occurrence of that happening as its purpose.
Preventing supply to a particular person or class of persons
In my opinion to attract the operation of the proscriptive provisions, there must also be an identifiable person, or class of persons at whom the purpose is directed at the time of the making of the agreement or arrangement. This is one aspect or consequence of the use of the word "particular". For a provision to have a prohibited purpose with respect to a class, the class must have a defining characteristic distinguishing it from others, and marking out its members as the object of it: the class must be identifiable at the time the agreement or arrangement is made[194]. It follows, that in a case, as this one is, that is concerned with the prevention of supply, a class cannot be defined by the mere fact of non‑supply or exclusion. Here the specification of the basic objective criteria and the possibility and encouragement of club mergers, had the consequence that there was no way of knowing, let alone specifying in advance, those that would come to fail to satisfy them. In this respect there was a randomness about the identity of the participants, and randomness is a concept remote from particularity of identity.
[194]cf South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 477 [93] per Heerey J; Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 at 264 [99]-[100].
Souths was not a particular person or a member of a class for the purposes of s 4D.
Restricting or limiting supply to a particular person or class
Souths further contended that a substantial purpose of the 14-team term was to restrict or limit the supply of competition-organising services to particular persons, being the 20 clubs which had participated in the two competitions in 1997. There was said to be a restriction or limitation on the supply of those services because, whereas 20 teams had been supplied with services in 1997, only 14 would be supplied from 2000, some of those clubs having merged in the meantime.
This argument was rejected by the trial judge. It was also rejected by Heerey J on two grounds: first, because there was to be no restriction or limitation of the relevant services; although in 2000 some clubs would be fully supplied and some would not be supplied at all. Secondly, the 14-team term would of necessity operate with respect to "new" clubs coming into existence as a result of the mergers. Clubs, certainly in 1997, could not therefore be characterized as "particular" persons for the purposes of s 4D[195].
[195]South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611 at 677 [294]-[299] per Finn J; South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 478 [100]-[102] per Heerey J.
Moore J accepted Souths's argument that as a substantial purpose of the 14-team term was to bring about a situation in which some of the clubs fielding a team in 1997 would only field a team in 2000 in collaboration with other clubs, this would involve a "restricting or limiting" of supply in 2000 to the 20 1997 clubs, because some would only be supplied as a merged or joint venture club[196].
[196]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 507 [201]-[202], 508 [204].
The opinions of Finn J and Heerey J are to be preferred. But further, as Heerey J pointed out[197], and correctly so in my opinion, such a case was not pleaded or made at first instance, or on appeal to the Full Court. The evidence led at trial did not address the factual issues whether the services were restricted or limited as they were provided to the clubs in 2000, in comparison with the services supplied to the clubs in 1997. For that reason, the argument should not have been permitted to be raised on appeal to the Full Court of the Federal Court and should not be permitted to be urged in this Court now[198].
[197]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 479 [105].
[198]Water Board v Moustakas (1988) 180 CLR 491 at 497; Bond v The Queen (2000) 201 CLR 213 at 223-224 [30].
The relief sought
Both Finn and Heerey J would not have granted an injunction even if they had held that cl 7 was an exclusionary provision. In view of what I have so far held it is unnecessary to say more than that a grant of the relief sought could have serious repercussions for other clubs. Which club or clubs would then face exclusion? How many clubs should the appellants admit to the competition? Would a club excluded by reason of Souths's admission have any, and if any, what remedies? These are serious questions which might have to be answered had Souths established a proscribed purpose.
The application by and submissions of the ACCC
What I have said is sufficient to dispose of the issues between the parties in this Court. But there remains the application of the ACCC to intervene and the matters which it would seek to raise.
First, in its written submissions, the ACCC submitted that when a provision has the clear effect of preventing, restricting or limiting supply, and this is a foreseeable and foreseen eventuality of the implementation of the provision, the finding will be open that a substantial purpose of the provision is the prevention, restriction or limitation of supply, regardless whether that eventuality is a means towards another end. That submission is answered by what I have already said and need not repeat.
Next, the ACCC submitted that the inquiry as to "purpose" should not be coloured by a search for an antagonistic or hostile intent of the kind said to be introduced by Heerey J in asking the rhetorical question[199]:
"Why would the men running rugby league want to exclude Souths, or any other club?"
[199]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 472 [70].
The answer to this question, it was submitted by the ACCC, was clear. ARL and News Ltd decided that only 14 teams would be permitted to participate in the competition in the year 2000. The ultimate aim of this decision was to make a profit. No hostility or antagonism toward the excluded clubs was necessary or relevant to the decision, which was a decision to exclude. So much may be accepted. But there must nonetheless be an object of the, or indeed any, purpose, and that object must be a particular person or class of persons, something which I have held to be absent here.
Then the ACCC wished to contend that Finn J and Heerey J adopted too narrow a construction of the expression "particular classes of persons", and that in doing so they were influenced by two factors: a concern generated by the unusual circumstances of the case; and secondly, an inclination to interpret s 4D as a "boycott" provision, requiring the identification of a specific and narrowly defined target. In the case of Heerey J, this latter concern also led his Honour to superimpose a necessity for a hostile intent in the inquiry which s 4D dictated be made. It was sufficient that "[the classes be] identified ... by the characteristic that they may not be supplied with the [service] in question, unless they accept and become bound by the restraints imposed by the [relevant agreement]."[200] This I take to be a slightly different expression of the conclusion of Merkel J that the fact of exclusion is determinative of the class, and accordingly one that I would reject for the reasons that I have stated.
[200]ASX Operations Pty Ltd v Pont Data Australia Pty Ltd(No 1) (1990) 27 FCR 460 at 488.
The ACCC made a fourth submission that the words "restrict" and "limit" should be broadly construed. It contended that the primary judge[201] and Heerey J[202] erred in holding that the reference to "restricting or limiting" in s 4D(1) is concerned with partial supply of services to, or partial acquisition of services from, particular persons or classes of persons, and not with supply or acquisition of services to or from some only of the particular persons. The better view was that of Moore J, whose opinion was that the words "restricting or limiting" ought not to be confined to situations in which there is a partial supply, in the sense that all previous recipients or providers continue to acquire or supply the goods or services but in a reduced amount.[203] Heerey J pointed to the possibility that evidence bearing on the question might have been adduced had it been raised at the hearing. In those circumstances it is not a matter which either the parties or an intervener should be permitted to raise now.
[201]South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611 at 677 [299].
[202]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 478 [101]-[102].
[203]South Sydney District Rugby League Football Club Ltd v News Ltd (2001) 111 FCR 456 at 499 [177], 501 [181].
In oral submissions, and less explicitly in revised written submissions it became apparent that the ACCC really wished to put that any attack upon, or in relation to, the arrangement should be or have been launched against the merger of the competitions. It was at that stage, and at that level that it was appropriate to test the validity under the Act of the arrangements to which it gave effect, including the exclusionary provision.
All parties to the appeal were opposed to the ACCC's attempt to rely upon an argument of the last kind. They also submitted that it was misconceived and wrong.
Disposition of the ACCC's application
The ACCC sought leave to intervene at a late stage in the litigation despite the publicity which the proceedings attracted throughout.
The appellants have proceeded in accordance with the arrangements for some years. In making their arrangements the appellants have had to operate within the practical constraints to which I have referred. The principal argument the ACCC sought to advance was not one which any of the appellants chose to advance or adopt. Evidence relevant to it might have been, but was not called. Intervention could have been sought at, or before the trial itself. This was not a case in the original jurisdiction of this Court. To allow the ACCC to argue the last mentioned matter would be tantamount to the addition of an unwanted ground of appeal to the Notice of Appeal. The ACCC has powers and responsibilities under the Act. It would be an overstatement to say that it administers the Act. This had been purely inter-parties litigation for a long time and throughout many hearings.
In the circumstances the ACCC should not be permitted to intervene to argue any of the issues.
I would allow the appeal and join in the orders proposed by the Chief Justice.