The basic characteristic of effective competition in the economic sense is that no one seller, and no group of sellers acting in concert,
has the power to choose its level of profits by giving less and charging more. Where there is workable competition, rival sellers, whether existing competitors or new potential entrants into the field, would keep this power in check by offering
or threatening to offer effective inducements. Or again, … the antithesis of competition is undue market power, in the sense of the power to raise price and exclude entry.
[emphasis added]
7 Further, at p 188, the Tribunal said:
… where there is significant market power the firm (or group of firms acting in concert) is sufficiently free from market pressures to “administer” its own production and selling
policies at its discretion.
... if their business [firms] conduct is not subject to severe market constraints this is not competition.
[emphasis added]
8 The Tribunal noted that in such a case, the values, incentives and penalties of management are substituted for the efficiency disciplines
of the marketplace. The Tribunal then expressed its well-known observations at pp 188 and 189 which ought to be repeated here:
Competition expresses itself as rivalrous market behaviour …
In our view effective competition requires both that prices should be flexible reflecting the forces of demand and supply and that
there should be independent rivalry in all dimensions of the price-product-service packages offered to consumers and customers.
Competition is a process rather than a situation. Nevertheless, whether firms compete is very much a matter of the structure of the markets in which they operate. The elements of market structure which we would stress as needing to be scanned in any case
are these: (1) the number and size distribution of independent sellers, especially the degree of market concentration; (2) the height of barriers to entry, that is the ease with which new firms may enter and secure a viable market; (3) the extent to which the products of the industry
are characterised by extreme product differentiation and sales promotion; (4) the character of “vertical relationships” with customers and with suppliers and the extent of vertical integration; and (5) the nature of any formal, stable and fundamental arrangements between firms which restrict their ability to function as independent entities.
Of all these elements of market structure, no doubt the most important is (2), the condition of entry. For it is the ease with which
firms may enter which establishes the possibilities of market concentration over time; and it is the threat of the entry of a new firm or a new plant into a market which operates as the ultimate regulator of competitive conduct.
[emphasis added apart from the reference “vertical relationships”]
9 Having regard to these structural considerations in determining the process of competition within a market, it followed for the Tribunal
that “the identification of markets must be the essential first step in assessment of present competition and likely competitive effects. However, the Tribunal noted that the “usefulness” of the market concept goes beyond the determination of concentration ratios, to
the “identification of rivalrous relationships between sellers”. Nevertheless, the Tribunal notes at p 189 that the analytical process
of market definition is “but a first step” and “mere speculation of markets cannot be determinative, by itself, of some ultimate issue”.
10 In framing the first step examination, the Tribunal said this at p 190 about the concept of a market:
We take the concept of a market to be basically a very simple idea. A market is the area of close competition between firms or, putting it a little differently, the field of rivalry between them. (If there is no close competition there is of
course a monopolistic market). Within the bounds of a market there is substitution – substitution between one product and another, and between one source of supply and another, in response to changing prices.
So a market is the field of actual and potential transactions between buyers and sellers amongst whom there can be strong substitution, at least in the long run, if given a sufficient price incentive.
Let us suppose that the price of one supplier goes up. Then on the demand side buyers may switch their patronage from this firm’s
product to another, or from this geographic source of supply to another. As well, on the supply side, sellers can adjust their production
plans, substituting one product for another in their output mix, or substituting one geographic source of supply for another.
Whether such substitution is feasible or likely depends ultimately on customer attitudes, technology, distance, and cost and price incentives.
[emphasis added]
11 The reference to substitution is not any substitution possibility but rather strong substitution, at least in the long run, if given a sufficient price incentive.
12 The reference to “in the long run” is a reference to the span of operational time required for organising and implementing a re-deployment
of existing capacity (Re AGL Cooper Basin Natural Gas Supply Arrangements [1997] ATPR 41-593). The policy objectives of the TPA are not served by focusing attention upon a short-run transitory situation as doing so is unlikely
to reveal the evidence of what is likely to happen to patterns of consumption and production should suppliers raise prices or offer
less favourable terms: Re Tooth & Co. Ltd and Tooheys Ltd (1979) 39 FLR 1 at pp 38 and 39.
13 As to the question that might be asked in determining the outer boundaries of a market, the Tribunal said this at p 190:
It is the possibilities of such substitution which set the limits upon a firm’s ability to “give less and charge more”. Accordingly,
in determining the outer boundaries of the market we ask a quite simple but fundamental question: if the firm were to “give less
and charge more” would there be, to put the matter colloquially, much of a reaction? And if so, from whom?
In the language of economics the question is this: from which products and which activities could we expect a relatively high demand
or supply response to a price change, i.e. a relatively high cross-elasticity of demand or cross-elasticity of supply?
The distinction between markets and sub-markets can be merely one of degree. Sub-markets are the most narrowly defined, typically registering some discontinuity in substitution possibilities. Where the defining feature of a market is the existence of close substitutes (whether in demand or supply), the defining feature of a sub-market is the existence of still closer and more immediate substitutes.
[emphasis added]
14 The defining feature of a market therefore is close substitutes by which the Tribunal means strong substitution in the long run if
given a sufficient price incentive.
15 Although the Tribunal made it plain that it was not seeking to establish principles of restriction having regard to the very rich
concept of competition, the Tribunal expressed itself in terms that the antithesis of competition is undue market power in the sense of the power to raise price and exclude entry within a field of rivalry characterised by close competition amongst whom there can be strong substitution. Where there is significant market power, the firm is free from the disciplines of the market and if the conduct of firms is not subject to severe market constraints, this is not competition. Moreover, close substitutes in demand or supply are the defining feature of a market.
16 The Tribunal therefore had expressed itself in reasonably emphatic language as to the strength of substitution and the severity of
market constraints which are emblematic of competition. The question of degrees of substitution possibilities arose only in the context of the discussion of the distinction between markets and sub-markets.
17 In framing the question which might test the outer boundaries of a market, the Tribunal used language which was less emphatic. The
“quite simple but fundamental question” is if the firm were to “give less and charge more” would there be colloquially put, “much
of a reaction”? That question seems to contemplate degrees of substitution.
18 The question, framed in that way, was said by the Tribunal to be a colloquial analogue of the question framed in the language of economics
of, from which products and which activities, could we expect a relatively high demand or supply response to a price change, that is, relatively high cross-elasticities of demand or supply.
19 Notwithstanding the colloquial expression of the economic test, the Tribunal’s formulation in its more emphatic language seems to
suggest that the outer boundaries of a market are to be determined by questions of close competition informed by whether there is
unconstrained, undue or significant market power and whether a firm in its conduct is free from severe market constraints.
20 In 1977, the TPA was amended to introduce a new definition of “market” in these terms:
4E. For the purposes of this Act, “market” means a market in Australia and, when used in relation to any goods or services,
includes a market for those goods or services and other goods or services that are substitutable for, or otherwise competitive with,
the first-mentioned goods or services.
21 In Trade Practices Commission v Ansett Transport Industries [1978] FCA 21; (1978) 20 ALR 31, Northrop J took the view that the observations in Queensland Co-operative Milling apply to the s 4E definition of the market and also noted that the Tribunal in Re Howard Smith Industries Pty Ltd (1977) 15 ALR 645 had also defined the concept of a market saying that, from the point of view of buyers, a market “represents a range of goods or
services which are good substitutes for one another in satisfying the buyer’s requirements of a particular type”.
22 The substitution threshold seemed to be a question of “good substitutes”. In Dandy Power Equipment Pty Ltd & Anor v Mercury Marine Pty Ltd [1938] ArgusLawRp 7; (1982) 44 ALR 173 at p 191, Smithers J described competition in a market as “the sum of activity engaged in by persons in promoting the sale to potential
buyers of the goods with which the market is concerned” and the concept of substantially lessening competition in a market involved
assessing the nature and extent of the market, the probable nature and extent of competition which would exist in it but for the
conduct in question, the way the market operates and the nature and extent of the contemplated lessening. In applying that test,
Smithers J at p 191 said what is important is “the relevant significant portion of the market”.
23 In 1989, the High Court decided Queensland Wire: Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co. Ltd [1989] HCA 6; (1989) 167 CLR 177.
24 In that case, the trial judge had found that BHP was in a position to control the market for steel and steel products; BHP therefore
had a substantial degree of power in that market; the barriers to entry to that market were high; and BHP had constructively refused
to sell Y-bar to Queensland Wire for the purpose of preventing entry into the market for star picket posts. Mason CJ and Wilson J
observed that a contravention of s 46 necessarily begins with a description of the market in which the corporation is thought to have a substantial degree of power. At
p 187, their Honours said:
In identifying the relevant market, it must be borne in mind that the object is to discover the degree of the defendant’s market power [having regard to the statutory integers]. Defining the market and evaluating
the degree of power in that market are part of the same process, and it is for the sake of simplicity of analysis that the two are separated.
[emphasis added]
25 Their Honours said that if the defendant is vertically integrated, the relevant market for determining the degree of market power
will be at the product level which is the source of that power, and once the product level is determined the perimeters of the market must be identified by taking account, as s 4E
directs, of those products or services which are “substitutable for or otherwise competitive with” the defendant’s product. Their
Honours said that the process of defining a market by substitution possibilities involves including products which compete and excluding
those which do not and they accepted that the concept of a relevant market described in Hoffmann-La Roche v Commission [1979] 1 E.C.R. 461 implied the presence of effective competition between products forming part of the market and pre-supposed a “sufficient degree of interchangeability”. Their Honours adopted the explanation in Queensland Co-operative Milling of the defining feature of a market as “substitution”. For the Tribunal, that seemed to involve, strong substitution, at least in the long run, or put differently, close competition, within a field of rivalry. Mason CJ and Wilson J did not use the term close competition in their analysis although it is inherent
in the Tribunal’s notion of substitution.
26 In determining the degree of market power, s 46(3) required the Court to have regard to the extent to which the conduct of the corporation was constrained by the conduct of competitors
or potential competitors of the corporation and persons to whom or from whom the corporation supplied or acquired goods. Market power
was regarded as the ability of a firm to raise prices above the supply cost without rivals taking away customers in due time, supply
costs being the minimum cost an efficient firm would incur in producing the product, and “it is only when, for some reason, it is
not rational or possible for new entrants to participate in the market, that a firm can have market power”. New entrants may, “as
yet be unborn”.
27 The trial judge had noted that there were high barriers to entry to the market for steel and steel products without identifying what
they were other than the high cost of setting up a rolling mill.
28 As to the economic view of capital costs, Mason CJ and Wilson J said this:
Economists, with their faith in the efficiency of capital markets and the rational behaviour of businessmen, would question the conclusion
that high capital costs could constitute a barrier to entry. But it may be that the high capital costs of the steel industry, the
presence of an established and overwhelmingly large producer in a protected market, and large economies of scale may together be sufficient to constitute effective barriers to entry.
[emphasis added]
29 In the result, Mason CJ and Wilson J considered that it was in the market for rural fencing products where BHP exercised market power.
30 Deane J noted at p 195 that there is ordinarily little point in attempting to define a relevant market without first identifying precisely
what it is that is said to have been done in contravention of a particular section of the Act. In considering the notion of a market,
Deane J observed at p 195 that:
… [t]he word is not susceptible of precise comprehensive definition when used as an abstract noun in an economic context. The
most that can be said is that “market” should, in the context of the Act, be understood in the sense of an area of potential close competition in particular goods and/or services and their substitutes.
[emphasis added]
31 The identification of the relevant market, isolating market structures and boundaries, for the purpose of examining the corporation’s
conduct said to contravene a provision of the TPA involves, his Honour noted, at p 196:
… value judgments about which there is some room for legitimate differences of opinion. The economy is not divided into an identifiable number of discrete
markets into one or other of which all trading activities can be neatly fitted. One overall market may overlap other markets and
contain more narrowly defined markets which may, in their turn, overlap, the one or more others.
The outer limits (including geographic confines) of a particular market are likely to be blurred: their definition will commonly involve
assessment of the relative weight to be given to competing considerations in relation to questions such as the extent of product substitutability and the significance
of competition between traders at different stages of distribution.
While actual competition must exist and be assessed in the context of a market, a market can exist if there be the potential for close competition even though none in fact exists. A market will continue to exist even though dealings in it be temporarily dormant or suspended.
[emphasis added]
The Method
32 It follows that in defining the market one looks to the contended contravening conduct and examines the extent of actual contestability
in constraining the capacity of the corporation to give less and charge more; the area of potential close competition particularly
having regard to barriers of entry; whether, upon an hypothesis, if the corporation were to give less and charge more would there
be “much of a reaction”; and if so, what, how, where and from whom would the reaction arise? This inquiry is directed to determining
whether the corporation enjoys undue market power to raise price and exclude entry which is the antithesis of competition and substitutes
the values and incentives of management for the values and incentives of the market. The Tribunal in Queensland Co-operative Milling expressly framed the question in this way at p 188.
33 It follows that an examination of competitive constraints is necessarily inter-connected with an analysis of market power. The essence
of market power is the absence of constraint: Boral Besser Masonry Limited v ACCC [2003] HCA 10; (2003) 215 CLR 374 at 419 [121] per Gleeson CJ and Callinan J.
34 The starting point in defining the market is to properly frame or define the conduct said to contravene the TPA and then examine the
inter-dependent (or otherwise) set of relationships relevant to the conduct to determine the constraints upon the corporation and
its capacity to exercise undue market power. This applied or purposive approach derived from Queensland Wire has been applied in many cases including: Australian Competition and Consumer Commission v Universal Music Pty Ltd (2001) 115 FCR 442 at 523 and 524 [356] and [357] per Hill J; Boral [2003] HCA 10; (2003) 215 CLR 374 at 495 [373]; ACCC v Baxter Health Care Pty Ltd [2005] FCA 581; (2005) ATPR 42-066 at [498] to [502] and ACCC v Liquorland (Australia) Pty Ltd [2006] FCA 826; (2006) ATPR 42-123 at [437] to [445].
35 In considering the economic evidence, Deane J in Queensland Wire, considered whether the notion that a market for raw Y-bar did not exist was sustainable. He thought not and said this at p 196:
Notwithstanding some economic evidence on the hearing, I am unable to accept the proposition that the fact that AWI is a wholly owned
subsidiary of BHP means that sales of Y-bar by BHP to AWI must, for the purposes of market identification and definition, be treated
as if they simply did not exist as sales or purchases. … Notwithstanding the economist’s tendency to see [BHP and AWI] as
part of one “firm”, it would be as unreal to completely disregard the distinction between them for the purposes of market identification as it would be to treat them as independent.
[emphasis added]
36 Dawson J accepted that the basic test for determining the boundaries of an area in which the exchange of goods or services between
buyers and sellers is negotiated involves the ascertainment of the cross-elasticities of both supply and demand but also said however, at p 199:
Important as they are, elasticities and the notion of substitution provide no complete solution to the definition of a market. A question of degree is involved – at what point do different goods become closely enough linked in supply or demand to be included in the one market – which precludes any dogmatic answer. The process is an inexact one …
[emphasis added]
37 Dawson J then adopted the Tribunal’s observation that the defining feature of a market is the existence of close substitutes but said
at p 200:
Too rigid an approach in defining a market is apt to lead to unrealistic results … [t]he existence or non-existence of sales of a product cannot conclude whether a market exists or not. It must be sufficient to constitute a market that there is a product for exchange, regardless of whether exchange or negotiation for exchange has actually taken place. In truth, the need to define the relevant market
arises only because the extent of market power cannot be assessed otherwise than by reference to a market.
[emphasis added]
38 As to market barriers, Dawson J said this at p 201:
The existence of barriers to entry may be conclusive in determining the relevant market and the degree of market power in it. Market
power follows as a natural consequence of barriers to entry which are also a prerequisite to the establishment and maintenance of
a monopoly. The identification of barriers to entry helps both to define the relevant market and to establish the existence of market
power. However, it is less important to arrive at a precise meaning [of a barrier to entry and the role of high cost of entry] than
to recognise the assistance given by the identification of conditions, in the nature of barriers to entry, for the purpose of defining
the relevant market, measuring the extent of market power and determining whether that power has been exercised.
39 These notions of strong substitution in the long run, the presence of severe market constraints emblematic of competition, and close
competition between firms within a field of rivalry, have been cited and applied many times: QIW Retailers Pty Ltd v Davids Holdings Pty Ltd; Attorney-General (Commonwealth) v Davids Holdings Pty Ltd (No. 3) 1993 42 FCR 255 at 261 and 262 per Spender J; Hospitality Group Pty Ltd v Australian Rugby Union [2001] FCA 1040; (2001) 110 FCR 157 at 173 per Hill and Finkelstein JJ; Rural Press Ltd v ACCC [2002] FCAFC 213; (2002) 118 FCR 236 at [111] per Whitlam, Sackville and Gyles JJ. In Boral, McHugh J at pp 455 and 456 [252] said this:
Thus, the market is the area of actual and potential, and not purely theoretical, interaction between producers and consumers where
given the right incentive, a change in price or terms of sale – substitution will occur. That is to say, either producers will produce
another similar product or consumers will purchase an alternative but similar product. Section 4E should be taken to require close substitutability because in one way most products are substitutes for one another, meaning that market power would always be understated.
Professor Chamberlain stated (192) that “the only perfect monopoly conceivable would be one embracing the supply of everything, since
all things are more or less imperfect substitutes for each other”. Close substitutability and competition are evident when more than a few consumers switch from one product to another on some occasions.
[emphasis added]
40 In testing substitution possibilities the orthodox economic tool is the well-known hypothetical monopolist test: Merger Guidelines; Queensland Wire and many other authorities. The principal economic tool for determining “close substitutes” is the SSNIP test to determine a change
in demand or supply side market behaviour. In Boral, McHugh J at [250] put the test for cross-elasticities in these terms:
The concepts of substitution and competition to which s 4E of the Act refers require an analysis of the nature and characteristics
of each product alleged to compete in the one market. This analysis is a necessary step in determining whether consumers or producers
can replace one product with another without a great deal of difficulty in response to price or condition changes. This is termed
the cross-elasticity of demand or supply respectively. A high cross-elasticity of demand indicates close substitutability. Two products
that are perfect substitutes would have an infinite cross-elasticity of demand: an increase in the price of one would result in a
total consumer shift to the other product. Products that are not interchangeable have a cross-elasticity of zero: the price of one
has no effect on sales of the other product.
41 The need to focus on close substitutes in isolating the product dimension was a matter of particular emphasis in the Full Court decision
in Boral (Boral [BBM] v ACCC (2001) 106 FCR 328, per Beaumont J, Merkel and Finkelstein JJ agreeing) and in the High Court decision (per Gleeson CJ and Callinan J [134]; Gaudron,
Gummow and Hayne JJ [155] and McHugh J [256] to [258]). Beaumont J examined the evidence of changes in industry practice, the documents
generated within BBM speaking to its view of the product market, transaction details and pricing evidence and concluded that the
market was not one for “materials for use in the construction of walls and paving” (primary judgment[1999] FCA 1318; , (1999) 166 ALR 410 at [131] and [132]) but rather a market for concrete masonry products as that was the area of close competition on the evidence. Beaumont
J described the treatment by BBM itself of the relevant market as a market for the supply of concrete masonry products as a “critical
factor”. Finkelstein J at [310] and [311] gave particular emphasis to the specific differentiating characteristics of each of the
walling products, concluding that “a wall is not just a wall”, having regard to the technical limitations of the different materials.
42 In the same year as Queensland Wire, the Full Court of the Federal Court (Davies, Sheppard and Pincus JJ) gave judgment in Australia Meat Holdings Pty Limited (AMH) v Trade Practices Commission (TPC) [1989] FCA 25; (1989) ATPR 40-932. That case concerned a contention by the TPC of a contravention by AMH of s 50 of the TPA arising out of the acquisition of shares in a company operating abattoirs at Bowen and Mackay. The acquisition was said
to put AMH in a position of dominance in the North Queensland market for fat cattle having regard to AMH’s other abattoir interests
in a geographical area said to be that part of Queensland which lies north of a line drawn approximately “westerly from the coast
just north of Mackay to the Northern Territory border”. The trial judge found that there was a market for fat cattle; prior to the
acquisition AMH had not been in a position to dominate the market because of competition from the target’s abattoir at Bowen; and
AMH’s control of the Mackay abattoir assisted it to dominate the North Queensland geographical market, post-acquisition.
43 The question of interest for present purposes is the treatment of the evidence in determining the market. The trial judge determined
that all but 18.7% of the northern turnoff of fat cattle were slaughtered in Northern Queensland. If the statistics in relation to
feed lot cattle were excluded, fat cattle going “south” would be 12% of sales. Extensive evidence was called by the Commission from
producers who said that except under extraordinary conditions producers sell fat cattle locally either in the paddock, at a local
sales yard, or to the local abattoir within the North Queensland region. The trial judge determined that cattle prices tend to be
lower in North Queensland than in the south.
44 A finding was made that producers would not be willing to accept the risks of deterioration in the quality of the cattle and the transport
costs of moving fat cattle to an abattoir at, for example, Brisbane. A succession of cattle producers were called by Mr Sweeney QC
for the Commission to give direct evidence of their selling behaviour. The Commission contended that on the behavioural evidence,
AMH was able to dominate trade in fat cattle throughout the whole of northern Queensland:
… because abattoirs from southern areas were not substitutes. The case was put that the lack of substitutability arose from
transport costs, the loss in condition of fat cattle during transport, the bruising that occurred to fat cattle during transport,
the producers’ aim to fatten their cattle to prime condition and to have them slaughtered as quickly as possible thereafter and finally
the producers’ loyalty to local abattoirs.
45 AMH sought to rely upon a statistical analysis of fat cattle sales. AMH said that the statistics demonstrated that a sufficient price
differential would cause producers to send their fat cattle to a southern abattoir and thus the substitution possibilities meant
that the market was not a separate northern Queensland market. AMH contended that if there were a sufficient, sustained price differential,
there could be substitution of southern abattoirs. AMH called evidence from Professor Officer who had conducted an analysis of detailed
abattoir sales statistics which demonstrated that 18.7% of sales of cattle sold in the northern Queensland geographical market represented
sales to abattoirs outside the geographical area and if it was right to exclude cattle sold to feed lots for fattening, the proportion
of fat cattle sales was, in any event, 12%, that is, 12 in every 100 sales was an actual sale to an abattoir outside the geographic
market.
46 As to the weight to be attached to the statistical analysis, Pincus J at p 50,105, said this:
Economics is a study of human behaviour and to determine the boundary of a market, one has to consider what people do and what they are likely to do in the market – in fact and not merely in economic theory – although the doctrines evolved by economists are likely to be of assistance in analysing behaviour in the marketplace.
In this case the problem is not one of finding a test for markets of all kinds but the narrower problem of defining the boundary of a market in which primary products are bought.
[emphasis added]
47 At p 50,092, Davies J said this:
The existence of a market, a concept of economics and commerce, ought not to be determined by reference to theoretical possibilities. There was trade taking place in northern Queensland. A feature of that trade was that it was desirable to reduce so far as possible the distance between the production
of fat cattle and the place of slaughter. The cost of transport was a factor. Another factor was the desirability of having fat cattle
slaughtered whilst in prime condition. All such factors limited the practicability of competition from the south.
[emphasis added]
48 As to the question of practicality in weighing up the evidence, the Supreme Court in Brown Shoe Co. Inc. v United States [1962] USSC 112; 370 US 294 (1962) had said at p 336 that “Congress prescribed a pragmatic, factual approach to the definition of the relevant market and not
a formal, legalistic one. The geographic market selected must, therefore, both ‘correspond to the commercial realities’ (fn) of the
industry and be economically significant”. Those references were adopted in AMH.
Comments on the Approach to Dealing with Quantitative Data and Direct Evidence from Industry Participants
49 It seems to me that are a number of lessons to be learnt arising out of AMH. The question arising in AMH was how much expansion would it take of out-of-area of sales to act as a “price constraint” so as to represent potential close competition.
In that analysis, do you look at the percentage of sales itself or do you ask whether that percentage is indicative of ready expansion
if 18.7% of sales out of the proposed area is not “sufficient substitution”? The approach is to ask what do these statistical facts
show and has any proposition emerging from the quantitative data as to those statistical facts been tested with the industry experts?
Professor Officer was really saying in his evidence that the volume of out-of-area sales was so significant that sales to out-of-area
abattoirs rendered a price increase unprofitable. In other words, given those 18.7% of sales the question was how much of a deterioration
in price to growers would it take before “substitution” became viable or, in the words of Queensland Co-operative Milling, became strong substitution or in the language of Queensland Wire, a sufficient degree of interchangeability. Would 1% or 3% or 5% or 12% or 18% of quantitative sales be sufficient? What would cause
local growers to move sales? How much scope is there for least cost expansion if local abattoirs attempt to reduce the price? The
quantitative data, of course, cannot be denied but the question is what inferences arise from the quantitative data and what weight
should be attached to those inferences having regard to the direct evidence of the industry participants or industry experts?
50 The important thing to remember, however, about the evidence of industry experts or long term industry participants is that their
evidence is very likely to be the evidence of incumbency. Existing industry participants may not necessarily think about how people might react or how things might be done differently given
the price signals and price incentives mentioned earlier. The evidence of incumbency may not tell you very much at all about what
innovators might do and therefore you might learn nothing about the scope for potential substitution or potential close substitution.
51 In the following year, the proposed acquisition by Arnotts of Nabisco raised questions of contended contraventions of s 50 of the TPA: Arnotts Limited & Ors v Trade Practices Commission (1990) 24 FCR 313 (Lockhart, Wilcox and Gummow JJ). The primary judge found that there was a national biscuit industry; Arnotts was the clear leader; its business
plan was to maintain its dominant market position and maintain a market share of not less than 70% of the total Australian biscuit
market; and the strength of Arnott’s position in the methods of trade and distribution provided a considerable barrier to any new
entrant to the biscuit industry.
52 The Full Court adopted Professor Brunt’s observation in “Market Definition Issues in Australian and New Zealand Trade Practices Litigation” (1990) 18 ABLR 86 at 126 that it must be constantly borne in mind that market definition is but a tool to facilitate a proper orientation for the analysis
of market power and competitive processes and should be taken “only a sufficient distance” to achieve the legal decision. Professor
Brunt also said that the elaborateness of the exercise should be tailored to the conduct at issue and the integers of the statutory
provisions said to have been contravened: see also Liquorland [2006] FCA 826; [2006] ATPR 42-123 at [429]. In dealing with the Arnotts’ contention that product differentiation occurred between categories of biscuits which therefore fell
into different product markets, the Full Court had particular regard to activity reports and internal documents of Arnotts which
strongly suggested that Arnotts saw itself as being part of a biscuit industry. Similarly, biscuits formed a different product category
to confectionary.
53 In dealing with the various market definition issues the Court said that it was important to bear in mind that substitutability involves matters of degree and applied all of the tests formulated in Queensland Wire. The Court at p 332 noted the observations of Deane J, in the context of s 4E, that the outer limits of a particular market are likely
to be blurred and their definition will commonly involve assessments of the relative weight to be given to competing considerations in relation to product substitutability and the significance of competition between traders
at different stages of distribution.
54 The Court then gave some consideration to what degree of contestability might be sufficient and said this:
The question of substitutability is not to be disposed of merely by showing that, upon some occasions, some people consume one product rather than another or that some products within a claimed market do not directly compete with some other products in that market; or do compete with some products
outside that claimed market.
[emphasis added]
55 The Court recognised and illustrated the application of value judgments by degree, in these terms:
In the present case, emphasis is placed upon the fact that, upon some occasions, a consumer might select a non-biscuit product instead
of a biscuit; for example, corn crisps might be served with a savoury dip rather than dry biscuits; … But the fact that, upon
some occasions, some consumers select one product rather than another does not establish that the two products are “substitutable”,
so as to be within a single market. No doubt there are many people who sometimes drink tea and, at other times, coffee. But if, for
example, a particular company dominated the sale of tea within Australia, it would thwart the objectives of provisions such as ss 46 and 50 of the [TPA] to deny their application because that company did not dominate the “hot beverage market”. The fact is that tea and
coffee are distinct beverages, for each of which there is a distinct demand. … [a] rise in the price of tea would probably
cause few consumers to abandon tea for coffee.
It is important to remember that the notion of substitutability adopted in s 4E is one which looks to the market itself, not to the habits of individual consumers.
[emphasis added]
The Full Court’s View in Arnotts of the Emphasis in s 4E
56 In a conclusionary remark consequent upon the above observations, the Court noted at p 332 that s 4E speaks of “goods or services
that are substitutable for, or otherwise competitive with, the first-mentioned goods or services” [original emphasis]. The Court’s emphasis upon the phrase “or otherwise competitive with”
in the context of the above “tea and coffee” example must be taken to be a reference to a reinforcement of the statutory importance
of “close competition” for the purposes of s 4E.
57 The Court accepted as correct the observations in United Brands v European Communities Commission [1978] EUECJ C-27/76; [1978] 1 CMLR 429 that for bananas to constitute a separate product market it must be possible for bananas to be singled out by special features distinguishing
the fruit from other fruits such that “it is only to a limited extent interchangeable with them and is only exposed to their competition in a way that his hardly perceptible”.
Some Comments about Expert Evidence
58 In reaching its conclusions on the market, the Court, as it did in the AMH case, extensively examined the primary documents and the
evidence of market participants. The entire evidence of Arnott’s expert witness was rejected as inadmissible. The expert was taken
to various parts of the Statement of Claim and asked to consider extensively large parts of the evidence. He was asked to comment
from the standpoint of economic principle upon each of the matters in the Statement of Claim and to do so having regard to all of
the evidence he had seen in the proceedings while attending Court extensively and through his reading of the statements and transcript.
Although the expert made reference to economic principle, a large part of the evidence was directed to the expert’s own view of the
facts. Counsel for the Commission contended that the expert could properly express opinions based upon assumed facts but could not be asked whether there was evidence of a particular fact and pressed the notion that the expert had to state the basis on which he expressed his opinion. Any assumed
facts had to be properly identified.
59 The expert then commented upon a range of matters reflected in the lengthy opening by counsel for the Commission when the case began.
The expert was asked by Mr Sweeney QC for his opinion as to whether or not the appropriate market definition would be the market
for “all biscuits”. Counsel for the Commission objected contending that the question should be prefaced by asking what facts or what
assumptions the expert was making in expressing his opinion. The response was that the assumption is the “whole of the transcript
and the whole of the documentary evidence”. The question was allowed and the expert responded “my opinion would be that the evidence
and the exhibits have not succeeded in establishing such a market to my satisfaction”. The expert also said that he was not satisfied
that the evidence and exhibits had established that Arnotts was, prior to the acquisition, already in a state of dominance in a relevant
market, which was then a relevant integer of the contended contravention.
60 The Full Court in dealing with the challenge to the inadmissibility ruling, set out at pp 350 to 356 the correct methodology for framing
and giving expert evidence. At p 351, the Court said this:
… [i]t seems to us that an expert economist may legitimately give an opinion, for example, as to the proper method of defining
a market. The economist may go further, rendering that opinion more apposite to the case by proffering a definition relevant to a
particular case. By way of example, we point to the evidence given by expert witnesses, on each side, in Australia Meat Holdings; some saying that the relevant market was the Queensland fat cattle market, some suggesting that there was a separate North Queensland
market … What [matters] is that the assumptions upon which the opinion is based are identified and articulated. Of course,
if the assumptions made by the witness turned out to be different to those ultimately found by the Court, the opinion might have
little relevance.
61 The Court also noted that a further function of an expert is in the nature of acting as a “librarian”. In many cases the expert does
not know the answer to the problem from his own study or experience but being trained in the relevant discipline, he is able to refer
to works of authority in which the answer lies. In such a case the expert is not generalising but is making available the fruits
of generalisations of other people, either from their own experience or from the experience of others whose writings form part of
the literature: p 351.
62 The third function is to act as a statistician in the sense of applying proper statistical methods to data from a range of sources
and draw significant conclusions. This function is one particularly appropriate to an expert economist. The Court noted that the
fourth function represents an area where experts find themselves in the greatest trouble, that is, an expert acting as an advocate.
As to that, the Court embraced this approach at p 352.
63 It is of course not permissible for the expert to take over the role of advocate from counsel in the case. But the expert has a legitimate
role of advocacy in that, having expounded to the Tribunal the rules applicable to the case, his evidence may then consist of argument
as to the conclusions that should be drawn from the facts interpreted in the light of the identified rules or economic principles.
The difficulty arises however because the expert often finds it difficult to distinguish between argument as to principles falling
within the expertise, assuming the facts put forward by his side are correct, and telling the Court which facts should be accepted,
as true. If the expert makes the assumptions clear, there is no objection to the expert identifying the consequences, as a matter
of economic principle, of accepting those assumptions. The expert must strive to avoid becoming an advocate as to the ultimate questions
in issue or as to inferences open on assumed facts.
64 It might usefully be noted that a contention was put to the Court by counsel for Arnotts that in Part IV cases the Court ought to accept economic opinion evidence concerning the effect of the evidence given in a case where it is in any
practical sense impossible to reduce the entirety of the evidence to assumptions, particularly when one could not predict the permutations
and combinations necessary to cover all possible findings by the Court. As to that, the Court said this:
Nothing could be more mischievous. There are two reasons why we are of that opinion. The first is the very justification advanced
by counsel, the difficulty in predicting “the permutations and combinations necessary to cover all possible findings by the Court”.
If an economist were permitted to express opinions upon the effect of the evidence given, without identifying the facts which he
or she assumed for the purpose of those opinions, it would be impossible for the Court to know how to apply the evidence. One of
the permutations or combinations may have rendered the opinion inapplicable, in the expert’s eyes, but the Court would never know.
…
65 A further aspect of the proof of the scope of the market concerned survey evidence sought to be put to the Court. The appropriate
way to go about formulating survey evidence of utility is discussed at pp 358 to 365.
66 A further useful example of recourse to the evidence of industry participants as providing persuasive probative evidence of the market
in preference to reliance on the economic evidence is Davids Holdings Pty Ltd v Attorney-General of the Commonwealth (1994) 49 FCR 211 per von Doussa J.
67 It is of course important to now have regard to the Federal Court’s practice direction concerning expert evidence.
68 I now want to turn to a consideration of the C7 litigation.
Seven Network Ltd v News Ltd [2007] FCA 1062 (Sackville J);
Seven Network Ltd & Anor v News Ltd & Ors [2009] FCAFC 166; (2010) 262 ALR 160 (Mansfield, Dowsett and Lander JJ) (the “C7 litigation”)
69 Although this paper is entitled Recent Developments in Market Definition, time will only allow me to address the above two cases as the most recent expression of the principles applied in defining a market.
In the course of these observations, when making reference to the decision of the Full Court, I use the terms “the Full Court” or
“the Court” and in that context I am referring to the joint judgment of Dowsett and Lander JJ as it is in the joint judgment that
the principles of market definition are fully expounded for the purposes of the appeal.
The Contextual Background Facts
70 In these background facts, the use of the term “Seven” so far as it relates to parties to the litigation, is a collective name for
the applicants (and later the appellants), and “News” is a collective reference to the respondents at both trial and on appeal.
71 The free-to-air television market during the course of the relevant events consisted of Seven, Nine, Ten, the ABC and SBS (and now,
of course, multiple digital channels provided by each of those broadcasters). Retail pay television services commenced in Australia
in April 1995 with three participants emerging that year. They were the Australis-owned Galaxy service, Optus Vision and Foxtel. Australis, Optus and Foxtel broadcast predominantly in major population areas. Austar (with the exception of the Gold Coast) confined its broadcasts to rural areas. In March 1995, Australis provided programs (content)
including movies and sports to Foxtel. The sports content was provided by Fox Sports. Galaxy ceased broadcasting in May 1998 upon the liquidation of Australis leaving Austar, Optus and Foxtel in competition with market
shares of 30.4%, 16.5% and 53.1% respectively.
72 Foxtel was created in November 1994 as a joint venture between News Limited and Telstra. News held its interest through its subsidiary
Sky Cable and Telstra held its interest through its subsidiary Telstra Media. On 3 December 1998, PBL acquired a 50% interest in
Sky Cable. The ownership of Foxtel thereafter was News 25% and PBL 25% (each through Sky Cable) and Telstra 50%.
73 Fox Sports was formed in September 1994 as a joint venture between Liberty Sports and a subsidiary of Australis. It was initially branded as “Premier Sports Australia”, licensed content to Australis which was sublicensed
to Foxtel. On 26 September 1997, News acquired a 50% interest and moved to a 100% interest by mid 1998. In December 1998, PBL acquired
a 50% interest in Fox Sports which, from 3 December 1999, operated as a 50/50 partnership.
74 Importantly, Telstra had no interest in Fox Sports.
75 In April 1997, Telstra and News entered into an Umbrella Agreement which specified that News and its subsidiaries and affiliates including Fox Sports would offer to supply programs to Foxtel on terms
no less favourable than other “comparable programming”.
76 Pay television service providers described as “pay television platforms” package various content “channels” which they offer to subscribers
by offering a basic package of particular channels and then additional channels by way of “tiers” at extra cost. Pay television platforms
have an incentive to offer subscribers attractive packages over and above the base package. Movie channels and sports channels are offered by the platforms as tier packages.
77 These tier packages are often described as “subscription drivers”. In Australia there are only two premier or marquee sports which can be described as “major pay subscription drivers” of sports channel content and they are the AFL and the NRL. A pay television broadcaster that offers live television broadcasts of AFL or NRL matches will attract subscribers who are willing
to pay tier fees over and above basic package rates.
78 Sports Vision, between 1995 and 1998, was a joint venture between Tallglen (a Seven subsidiary), ESPN Inc, PBL and Optus. In 1995 the parties to
the Sports Vision joint venture entered into a Programming Distribution Agreement. Under that agreement PBL licensed Optus with the
right to broadcast NRL games between 1995 and 1998 by pay subscription.
79 At the same time, Optus also acquired the right to broadcast AFL games from Tallglen (7). In 1993 companies related to Seven held
broadcast rights to AFL games. In June 1995, Seven acquired the AFL pay television and free-to-air rights for the period 1999 to
2001. In November 1996, Seven and the AFL agreed that the AFL would allocate 36 games per season to pay television.
80 This consolidated agreement for free-to-air and pay television between Seven and the AFL was referred to by the primary judge, Sackville
J, as the AFL-Seven licence by which Seven acquired all AFL pay and free to air television broadcast rights exclusively for the period 1993 to 2001 with fees negotiated annually. For example, total AFL free-to-air and pay television rights fees paid
by Seven for the 2001 season were $33m.
81 In September 1997, Seven and the AFL entered into a First and Last Deed by which the AFL granted Seven a first and last right of refusal over free-to-air television rights for the period 2002 to 2011 and
Seven agreed to make “irrevocable offers” for free-to-air and pay television rights throughout that period. The deed contemplated
that the AFL would licence the rights for either a five or 10 year term. The deed contained a put option entitling the AFL to require
Seven to accept a licence for live free-to-air broadcast of all AFL matches at an annual fee of $36m (plus CPI) and, subject to particular
events, an irrevocable offer by Seven to form a 50/50 joint venture with the AFL for the exploitation of AFL pay television rights
with Seven guaranteeing a minimum return to the AFL of $15m per annum.
82 As to the NRL rights, News in 1995 sought to create its own domestic rugby league competition. The aim was to provide premium rugby
league content for Foxtel programming as News had experienced a major uplift in subscriber numbers for Sky in the U.K. once Sky obtained
the rights to English football. The new competition ran for one season in 1997 with the PBL owned Nine Network holding the free to
air broadcasting licence.
83 Following the resolution of the Super League dispute in late 1997 and the formation of the NRL structure, the rights to the NRL competition
came under the exclusive control of the NRL partnership. News, as part of the Merger Agreement in resolution of the dispute, had been granted the exclusive NRL pay television rights which
it had sublicensed to Foxtel, Optus and Austar for the period 1998 to 2001. However, the grant of the pay television rights to News
was to expire prior to the commencement of the 2001 season.
84 Fox Sports, owned 50/50 by PBL and News, produced the NRL channel content for Foxtel. A third party produced the NRL channel content
for Optus.
85 In 1998, Nine secured the NRL free-to-air rights for 10 years.
86 When News secured the NRL pay television rights in May 1998 as a legacy of the settlement, it also acquired a last right of refusal
over the free-to-air broadcasting rights subject to Nine ’s rights. However, Optus held a pre-existing right to be offered NRL content
on terms no less favourable than the terms offered by News to Foxtel in the event that News obtained the rights to NRL content in
the period 2001 to 2021. Accordingly, in May 1998, the NRL partnership also granted Optus the right to NRL content on the same terms
as that content had been offered to Foxtel by News.
87 There was, at this time, no AFL content on Fox Sports nor Foxtel which affected the capacity of Foxtel to attract subscribers outside
New South Wales and Queensland.
88 During 1998, Seven entered into the business of supplying channels to retail pay television operators through C7. A dispute within the Sports Vision partnership concerning the supply of AFL content by the Seven subsidiary, Tallglen, resulted
in Seven and PBL withdrawing from the Sports Vision joint venture. C7 was developed by Seven in the market as a replacement for Sports
Vision.
89 On 30 June 1998, C7 entered into an agreement with Optus under which C7 undertook to provide Optus with sports programs including
AFL matches on a non-exclusive basis for a period of 10 years ending on 31 December 2008. It was a term of the agreement that C7
would receive a minimum subscriber guarantee of approximately $30m. Optus could terminate the agreement in the event that C7 lost
the AFL pay television rights.
90 The C7 service provided to Optus consisted of a primary sports channel branded as C7 Gold and a secondary overflow channel branded C7 Blue. C7 received between 1998 and 2001 a sublicence of the non-exclusive NRL rights from Optus under Optus’s May 1998 arrangement with
the NRL partnership. These content rights were produced into a channel sports product and carried on the C7 Blue channel. That channel
became Optus’s channel for NRL broadcasts.
91 Seven also sought to sell the C7 channels to other pay television providers. C7 provided a non-exclusive sports channel to Austar
for the period 1 April 1999 to 28 February 2002. Fox Sports had granted Austar the right to broadcast NRL games provided through
one of the Fox Sports channels.
92 However, Foxtel refused to carry C7 channels notwithstanding Foxtel’s lack of AFL channel content.
Direct Acquisition of the Rights through the News Consortium
93 In July 1999, Foxtel decided that direct acquisition of the AFL rights would be preferable to taking up C7 channels. Foxtel decided
that there would be no dealing with C7 until the end of the bidding on the AFL rights which Foxtel anticipated would occur by the
end of 1999.
94 At the same time and throughout the period 1998 to 2000, Telstra on the one hand and News and PBL on the other were involved in a
dispute concerning the terms of carriage by Foxtel of Fox Sports channels. Telstra viewed the price charged to Foxtel for premium
sporting content by Fox Sports (in which Telstra had no interest) as unreasonably inflated and simply a profit transfer to News and
PBL and urged Foxtel to explore other options for acquiring similar content. Telstra told News and PBL that it regarded C7 as a supplier
of valuable sports channel content.
95 The price paid by Austar for C7 content was, by example, much more favourable than the price paid by Foxtel for Fox Sports content.
96 The dispute was however insoluble as Telstra, under the Foxtel joint venture arrangements, could not force Foxtel to reach an agreement
with C7 nor could it prevent Foxtel continuing to take Fox Sports at the previously agreed price. In addition, Telstra’s position
was complicated by reason of its competition with Optus in the telephony market. The end result was that Foxtel did not acquire any
C7 channels, denied itself the chance to broadcast AFL matches and, as a result, denied itself the opportunity of securing AFL sports
channel content as a major subscription driver.
97 The AFL free-to-air television rights which Seven had taken up and the pay television rights which C7 held were due to expire at the
end of 2001 season. The question as to who would acquire the rights during the period 2002 to 2006 was to be addressed at the end
of 2000 and the beginning of 2001. Seven had the advantage of incumbency.
98 In July 1999, Foxtel commenced a strategy to seek the direct acquisition of the AFL rights for the period 2002 to 2006. Foxtel resisted
any arrangements with C7 as urged by Telstra, until the ownership of the AFL pay television rights had been determined. News blocked
Telstra’s recommendation in October 2000 for an interim carriage arrangement by Foxtel with C7. The AFL strategy was implemented
in this way. News put together a News Consortium for the purpose of making a bid for the AFL television rights for the period 2002 to 2006 in which it was envisaged that Nine and
Ten would acquire the AFL free-to-air television rights and Foxtel would acquire the AFL pay television rights. It was contemplated
that News would acquire the NRL television rights as a result of which Fox Sports would acquire the NRL pay television rights.
99 As to implementation concerning the AFL pay television rights, it was contemplated that once News had secured the rights, it would
involve Nine and Ten and Foxtel by way of a put option requiring them to enter into sublicenses. Foxtel would pay $30m per annum
for which it would receive three exclusive live matches per week and the right to broadcast all other AFL matches on pay television
on a delayed basis.
100 As to the NRL pay television rights, Fox Sports would make a bid in cooperation with Telstra. Foxtel would agree to accept the Fox
Sports channels with NRL programming and would be given the right to sublicence those pay television rights to Optus. Fox Sports
would pay $30m per annum for the pay television rights.
The Arrangements
101 These arrangements were contained in a Master Agreement which included a Master Agreement provision. A meeting took place by teleconference on 13 December 2000. The primary judge concluded that an arrangement had been reached for
an understanding arrived at on 13 December 2000 between News, PBL, Telstra and Foxtel which contemplated that News would bid for
the AFL free-to-air and pay television rights and Fox Sports would bid for the NRL pay television rights. The understanding included
an understanding that if News was successful in relation to the acquisition of the AFL broadcast rights, it would exercise a put
option to Foxtel to sublicence the AFL pay television rights at the price $30m per annum (adjusted). The parties understood that
there were other put options which would be exercised in relation to the AFL free-to-air television rights and they also understood
that Fox Sports would make a bid for the NRL pay television rights supported by Telstra offering to acquire the internet and naming
rights.
102 The implementation agreements consisted of “the Nine Put, the Ten Put, the Foxtel Put, the News-AFL Licence, the News-Foxtel Licence,
the News-Nine Licence, the News-Ten Licence, the NRL Bidding Agreement and the Fox Sports-NRL Pay Rights Agreement”.
103 At [580], the Full Court summed up these events in these terms:
As at late 1999 News held the NRL pay television rights. However, that arrangement was to expire prior to the commencement of the
2001 season. Seven held the AFL rights. That arrangement was to expire prior to the commencement of the 2002 season. During 1999
and 2000 various respondents considered and discussed acquisition of the NRL and AFL rights when they next became available. The
Master Agreement was allegedly entered into on 13 December 2000. On 14 December 2000, the NRL announced that Fox Sports had been
awarded the NRL pay television rights for six years. By 2001 it was known that C7 had lost the AFL rights from the commencement of
the 2002 season and that News had acquired them. C7 ceased operations in May 2002.
Seven’s Contentions
104 Seven contended that the Master Agreement and the News-Foxtel licence provision had the purpose, effect or likely effect of lessening
competition thus giving rise to a contravention of s 45(2)(a)(ii) of the Trade Practices Act 1974 (Cth) (“TPA”) on entering into the agreement and/or licence and that one or more of the respondents had contravened s 45(2)(b)(ii) by giving effect to such provisions. Seven contended that the Master Agreement provided for the acquisition by various respondents
(or their associated entities) of the AFL and NRL rights and the distribution of those rights amongst themselves to the exclusion
of Seven and C7. The News-Foxtel licence granted Foxtel a sublicence of the AFL rights. Seven contended that as a result of these
arrangements and their implementation, C7 was unable to compete with Fox Sports in what was said to be the wholesale sports channel market and withdrew from the market in May 2002 thereby lessening competition in that market. The notion that Fox Sports and C7 supplied
sports channels in the alleged wholesale sports channel market was fundamental to Seven’s case. The wholesale sports channel market
was also central to Seven’s claim that Foxtel contravened s 46 of the TPA by using its market power in the retail pay television market to deter or prevent C7 from engaging in competitive conduct in the wholesale sports channel market.
The Asserted Markets
105 At trial, Seven asserted that there were four separate markets relevant to the case. They were, first, a retail pay television market being a market for the supply of pay television services to retail subscribers. Secondly, a wholesale sports channel market being a market for the wholesale acquisition and supply of channels containing sports programming, for supply to pay television platforms.
Thirdly, an AFL pay television rights market being a market for the acquisition and supply of the rights to broadcast AFL matches on pay television. Fourthly, an NRL pay television rights market being a market for the acquisition and supply of the rights to broadcast NRL matches on pay television.
The Approach and Findings of the Primary Judge
106 The primary judge found that the first of those markets, a retail pay television market, was made out but that no wholesale sports channel market nor an AFL pay rights market nor an NRL pay rights market were made out.
On appeal, Seven did not press a claim of an AFL pay rights market or an NRL pay rights market. Seven contended only that the trial
judge erred in finding that there was no wholesale sports channel market. Although News contended at trial that there was no retail
pay television market nor a wholesale sports channel market, it did not contend on appeal that the primary judge erred in finding
that there was a retail pay television market.
107 Accordingly, the question to be determined on appeal, so far as market definition was concerned, was whether the primary judge was
correct in concluding that there was no “wholesale sports channel market”. For the purposes of this discussion, I propose to examine
the approaches adopted in the analysis of that question.
The Pleaded Wholesale Sports Channel Market
108 The primary judge observed at [1857] that at trial, Seven contended that there is and has been since November 1998 a wholesale sports
channel market being a market for the wholesale acquisition and supply of channels consisting of sporting content for the providers
of pay television services and that according to the Statement of Claim:
· the channels are supplied by channel providers to the operators of pay television services in the retail pay television market who
incorporate sports channels into the package of channels constituting the pay television services provided to subscribers (para 145(a),
Statement of Claim);
· the suppliers in this market have been Foxtel (which until recently produced the Fox Footy Channel), Fox Sports, ESPN, TAB Ltd (“TAB”) and C7 (para 145(b)); and
· the acquirers of the channels are the pay television service providers, chiefly Foxtel, Optus and Austar.
109 It can be seen that Seven contended for a market described at para 145 of its pleading as “the wholesale acquisition and supply of
channels consisting of sports programming” which suggests a market for the acquisition of sports programming channels and the supply
of those channels. The primary judge observed that at various points in its argument Seven contended that C7 acted as a constraint
in relation to the acquisition of sports rights, particularly AFL and NRL pay television rights. However, the market for the acquisition of sports rights including AFL and NRL pay television rights was a different market to the acquisition and supply of “channels consisting of sports
programming for the providers of pay television services”, as pleaded.
Close Constraints
110 The trial judge observed that the focus of his examination needed to be on the close constraints on Fox Sports as a supplier of sports
channels to pay television platforms during the period 1998 to 2000 leading up to the meeting on 13 December 2000 and the respondents
entering into the Master Agreement and the offending provision.
The Hypothetical Monopolist
111 The primary judge said the correct question was whether a hypothetical monopolist of the supply of sporting channels could sustain
a price to pay television platforms above the competitive level for a non-transitory period. Seven contended that sports channels
are distinct from and not substitutable for channels with other program content because only sports channels are true “subscription
drivers” and secondly a wholesale sports channel must have as part of its content a marquee sport which in Australia means either
AFL or NRL.
112 Seven contended that prior to Foxtel obtaining the pay television rights to the AFL, those rights had been held by C7 and the purpose
and effect of the acquisition of those rights by Foxtel was to lessen competition in the wholesale sports market.
Seven’s Dilemma
113 However, the primary judge considered that these positions gave rise to a lacuna for Seven which he described in these terms at [1878]
and [1879]:
1878. The dilemma is that the more Seven stresses the unique character of each of exclusive AFL and NRL content as subscription drivers,
the more difficult it is to see a channel containing exclusive AFL live content as a close substitute for a channel containing exclusive NRL content. No doubt it is in theory possible to have two forms of subscription driving
content that appeal largely to the same audiences … but if each channel containing separate subscription driving content appeals
to a largely discrete audience or potential audience, it may be very difficult to conclude that one channel supplier can closely
constrain the other if it attempts to impose a SSNIP.
1879. Early in its Closing Submissions, Seven reiterates its pleading that a pay television operator must have access to material
that includes a marquee sport and that the only marquee sports in Australia are the AFL and NRL. The primary forensic reason for Seven’s emphasis on the unique attractions of AFL
and NRL content is clear enough. Its case is that once C7 was locked out of the AFL and NRL pay television rights in 2000, the channel
was doomed.
[emphasis of Sackville J]
114 The primary judge assumed, for the sake of the argument, that AFL and NRL content represents the most important subscription drivers
for pay television in Australia and found it difficult to understand how a wholesale sports channel market would also include ESPN
(a general international sports channel), TAB (a racing channel) neither of which have a marquee sport. Sackville J concluded that
neither of those channels represented any constraint upon Fox Sports as a wholesale channel supplier.
The Principles Applied
115 In determining market questions, the primary judge accepted that markets are not defined in the abstract but must be defined for the
purposes of analysing the process of competition in the context of the particular allegations made in the case noting Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2006] FCA 826; [2006] ATPR 42-123 at [429] per Allsop J; services that are substitutable for or otherwise competitive with the relevant services must be taken into account;
the orthodoxy of market concepts best expounded in Re Queensland Co-operative Milling Association Ltd (1976) 25 FLR 169 are to be applied; although these notions expounded in Queensland Co-operative Milling predate s 4E of the TPA they remain good and have been expressly approved in Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co. Ltd [1989] HCA 6; (1989) 167 CLR 177 and Boral Besser Masonry Ltd v ACCC [2003] HCA 10; (2003) 215 CLR 374; Seven would need to demonstrate strong substitution at least in the long run: Re Tooth & Co. Ltd [1979] ATPR 18, 174; a distinction has historically been made between contestability or “competition per se” and “close competition”
and in defining the boundaries of a market having regard to the features of a market identified in Queensland Co-operative Milling, this distinction is “crucial”; the hypothetical monopolist test is the standard analytical tool applied by economists in examining
cross-elasticities of demand and supply; the question of a small but significant non-transitory increase in price must be applied
to a demonstrated competitive price so as to avoid the cellophane fallacy of applying a SSNIP to a monopoly price: United States v E I Du Pont de Nemours & Co. [1956] USSC 87; 351 US 377 (1956); and consideration should be given to whether there is a buyer in the market who might enjoy the power to reduce price below
the competitive level or exclude other buyers from the market as a monopsonist.
The Expert Evidence
116 As to the question of the evidence going to these issues the primary judge noted that expert evidence had been called by Seven from
Professor R. Noll and Dr R. Smith. News called Professor F. Fisher and Professor P. Williams. PPBL called Professor G. Hay. The primary
judge observed that all the experts agreed that it was difficult to identify a competitive price for the purpose of applying a SSNIP
and in the absence of quantitative data the experts were called upon to make “qualitative assessments” which Dr Smith had described
as involving “a thought experiment”. Sackville J at [1784] and [1787] to [1789] said this about the use of qualitative assessments
in the absence of quantitative data:
1784. The reliable application of the SSNIP test requires sufficient quantitative data to permit the calculation or assessment, in
particular, of the competitive price for the product in question. As has been seen, it is the competitive price that provides the
starting point for determining whether a hypothetical monopolist could profitably impose a SSNIP. Whether or not it is ever possible
to apply the test on the basis of purely quantitative data, the experts agree that such an approach is not available in the present
case.
…
1787. One consequence of the limitations of the SSNIP test (in the absence of quantitative data) is that in certain respects the economic
evidence may not be as helpful as its volume (and the time spent on it in cross-examination) might suggest. This is not to deny the
value of economic evidence for certain purposes. Plainly, it can be very helpful in identifying and explaining the economic concepts
embodied in the TP Act. It can also be very helpful in explaining how economists go about the task of applying the economic concepts to particular situations.
The evidence is, however, apt to be less cogent when the experts are asked to apply economic principles to the particular circumstances
of a case. There are at least two reasons for this.
1788. The first is that a “qualitative assessment” necessarily involves the exercise of judgement upon which reasonable minds can differ. The sharp differences of opinion in this
case among well-qualified experts demonstrate that this is so. Moreover, the exercise of judgement, if the present case is any guide,
requires economists who may not have specialist expertise or experience in a particular industry to express their opinions about
the application of economic principles to that industry. Even if the witness has expertise or experience in the industry, the lack
of quantitative data may require what comes very close to speculation about the likely behaviour of industry participants, although
it may perhaps be described as informed speculation.
1789. The second reason is that the qualitative assessments by the expert economists must proceed on the basis of assumed facts since,
in the ordinary course, the facts have not yet been established by the Court. Like many competition cases, the present case is extremely
complex. In order to deal with the complexities, the parties deemed it appropriate to provide their respective experts with extraordinarily
elaborate sets of assumptions upon which to base their evidence.
117 At [1792], Sackville J said this of the utility of the economic evidence:
1792. In the end, however, [the experts] were required to express opinions concerning the application of economic principles to an
Australian industry with which none of them had detailed practical knowledge or experience. As Dr Smith said in her evidence, this
process required them not only to take into account different assumptions, but to interpret the common assumptions. In addition,
the experts had to analyse and construe documents such as board papers, emails and formal agreements, some of which were the subject
of extensive oral evidence. It is therefore perhaps not entirely surprising that they came to such divergent conclusions on market
definition and other issues.
118 As to the role of the judge, Sackville J said this at [1794]:
1794. Conclusions on market definition cannot simply be reached by choosing between the expert opinions. The task requires the application
of the statutory criteria, informed (as the authorities require) by economic principles. Ultimately, the conclusions must rest on
an assessment of the evidence as a whole including, where they are helpful, the opinions and reasoning of the experts. But the fact
that ss 45 and 46 of the TP Act incorporate economic principles and concepts does not mean that the application of those principles to the facts is, in effect, to
be delegated to the economists who are called to give their expert opinions.
The Best Evidence
119 It seemed to be common ground that in the absence of a quantitative SSNIP test, the “best evidence” of the dimensions of a market
will often be from those who work in the relevant industries rather than from economic theory. Not surprisingly, the parties disputed
the inferences that should be drawn from decisions, steps taken or opinions expressed by industry participants as reflected in emails,
letters and documents. The primary judge noted at [1796] the observations of Justice Heydon writing extra-judicially (J D Heydon,
Trade Practices Law (Lawbook Co., Subscription Service) at [3.245]:
[3.245] The dimensions of a market are real, not theoretical. To define those dimensions the best evidence will come from the people
who work in the market: the marketing managers and salesmen, the market analysts and researchers, the advertising account executives,
the buyers or purchasing officers, the product designers and evaluators. Their records will establish the dimensions of the market;
they will show the figures being kept of competitors’ and customers’ behaviour and the particular products being followed. They will
show the potential customers whom salesmen are visiting, the suppliers whom purchasing officers regularly contact, products against
which advertising is directed, the price movements of other suppliers which give rise to intra-corporate memoranda, the process by
which products are bought, what buyers might seek in terms of quantities, delivery schedules, price flexibility, why accounts are
won and lost.
120 The primary judge then had regard to particular evidence which was said by Seven to show that industry participants including representatives
of News regarded C7 as a competitor of Fox Sports and that from June 1998 it was apparent that the most likely source of competition
to Fox Sports in the “sports channel business” was Seven or part of the Seven group. The primary judge also observed that contemporaneous
conduct or expressions of opinion by market participants can often be ambiguous on questions of market definition as the sense in
which terms might be used can be anecdotal and references to markets might be made in the most general of senses.
Audience Differentiation
121 Although Sackville J cast doubts upon the utility of the evidence of the experts, he also noted that Professor Noll had failed to
explain why on the assumptions underlying its case as to marquee sports, C7 would constrain Fox Sports from imposing a SSNIP or could
otherwise be regarded as a close competitor of Fox Sports. Professor Noll emphasised that the audiences for these games are substantially
non-overlapping and therefore at [1903], Sackville J observed:
1903. If the AFL and NRL are separately subscription drivers and have accumulative effect on the revenue of pay television broadcasters
because they appeal to different audiences (the position Seven itself adopts) it would seem to follow that an AFL sports channel
supplier would be unlikely to constrain a SSNIP by an NRL sports channel supplier.
Switching by a Pay Platform
122 As to the question of whether a pay TV platform faced with a hypothetical increase in the price by, say, Fox Sports in relation to
an NRL channel might be met with a platform threatening to substitute C7 with an AFL channel for Fox Sports to constrain the increase,
Dr Smith said that if the price was more than a SSNIP, the platform might be persuaded to do that but given that the NRL appeals
to one particular group of subscribers and AFL appeals to a different group of subscribers, a very small change in price would not
be likely to result in a switch.
No Close Constraint
123 Thus it followed for the primary judge that C7 would not represent a close constraint upon Fox Sports imposing a SSNIP and thus there
was no wholesale sports channel market. In other words, there was no separate market for wholesale sports channel suppliers in which
C7 and Fox Sports competed. The primary judge concluded that the expert evidence called by the appellants provided “scant support”
for its case. The primary judge accepted PPBL’s submission that Fox Sports, built around NRL pay television rights and C7 built around
AFL pay television rights were not substitutes in demand or supply and thus Fox Sports and C7 products, that is, sports channels,
were not substitutable or otherwise competitive with each other.
Functional Dimension
124 As to the functional dimension of the market, the primary judge accepted the evidence of Professor Hay that a pay TV platform could
integrate backwards, acquire the rights directly from the leagues and thus impose constraints upon Fox Sports or C7. The primary
judge noted and accepted as persuasive at [1967] Professor Hay’s articulation of his thesis in these terms:
1967. … to the extent [the] applicants are claiming the exercise of a separate relevant market for the production of wholesale
premium sports channels, where a premium sports channel is defined as one that includes one of the marquee sports in Australia (at
a minimum, NRL and AFL) I do not believe that the economic analysis that underlies issues of market definition supports the claim.
If a hypothetical single producer of wholesale premium sports channels set out to acquire the NRL and/or AFL rights with the notion
of attempting to impose supra-competitive prices on the customers for those channels (the suppliers of pay TV services), there would
be nothing to prevent one or more of the providers of pay TV services from integrating backwards, acquiring the rights directly from the leagues, and either including the matches on existing channels or creating specialty channels.
Nor would a hypothetical single producer of premium sports channels be able to depress the price paid for the rights to the marquee
sports below competitive levels, given the ability of the leagues to integrate forward into the production of sports channels or to sell the rights directly to the providers of pay TV services.
[emphasis added]
125 The primary judge identified six different examples where there had been either actual or contemplated vertical integration by pay
television platforms between 1997 and 2001 and the findings in relation to those matters were not challenged on appeal.
Barriers
126 As to barriers as to entry into the wholesale sports channel market which in itself assumed the existence of such a market, the primary
judge had regard to the evidence of Mr Stokes who said that establishing a new pay television channel would be “pretty easy” and
that a free-to-air television station such as Ten could take over the production and supply of sporting channels to a pay television
operator such as Optus.
127 As to strategic barriers, the primary judge also relied upon the evidence of Mr Stokes that when Seven put its bid in for the AFL
television rights and, in particular, the pay television rights, Foxtel had signalled that it might not take the pay television rights
from C7. Thus Seven did not see Foxtel’s commercial position as a strategic barrier and moreover Mr Stokes gave evidence that in
December 2000 the Seven Board expected that if C7 acquired the NRL pay television rights Foxtel would take that channel. Further,
the primary judge thought that Seven’s 2005 bid for the AFL pay television rights proceeded on the footing that it expected Foxtel
would negotiate on commercial terms for a sublicence because Foxtel needed the AFL channel content in order to increase its subscriptions
in AFL States.
128 It followed from all of these considerations that even assuming that C7 and Foxtel were in competition with each other as to the products
offered, there could be no separate functional wholesale sports channel market. Rather, the market in which competition occurred
was the retail pay television market.
The Analysis of the Full Court
C7’s Business
129 Seven on appeal, contended that the primary judge’s analysis of the alleged wholesale sports channel market was misconceived due to
the mistaken characterisation of the context within which the inquiry arose. Seven contended that its business was that of supplying
sports channels to pay television platforms including Optus, Austar and Foxtel and in order to do so it needed to acquire pay television
broadcasting rights from the AFL or NRL. Seven’s complaint, on appeal, was that the respondents deprived C7 of access to those rights
by anti-competitive means and thus the fundamental question was “whether there was a market for the supply of wholesale pay television sports channels, being the relevant business carried on by Seven” which it alleged was harmed by the conduct. At [590], the Full Court noted Seven’s inconsistency of treatment in the formulation
of the market as between a market for the “wholesale acquisition [of sports channels] and supply of sports channels” and a market
for the “supply of wholesale pay television sports channels”. The Full Court thought the former description more closely reflected
Seven’s case.
The Relevant Respondent’s Market
130 The Full Court at [591] thought there was merit in the respondent’s criticism that it was erroneous to commence with an inquiry concerning
the market in which C7 participated because s 45(3) provides that competition for the purposes of s 45(2) means competition in any market in which a corporation which is a party to the relevant contract, supplies or acquires or is likely to supply or acquire the
relevant services. Section 45(2) prescribes conduct exhibiting the relevant purpose or effect or likely effect in such a market. Thus the primary focus of the inquiry is “identification of a market in which a relevant respondent or related entity supplies the
product in question” [591].
Constraints and Substitutes
131 Seven contended that the primary judge wrongly determined that because pay television platforms operated as constraints upon Foxtel
and Fox Sports as suppliers of sports channels, the relevant market was the retail pay television market. Seven contended that in
focusing upon constraints, the primary judge “confused principles associated with market power” (that is, constraints upon market power) with principles associated
with the identification of the boundaries of a market by reference to substitution possibilities. However, isolating actual or potential constraints upon supply or acquisition is part of the process of evaluating the degree of market power in a postulated market which is integral to market definition or as the High Court said in Queensland Wire per Mason CJ and Wilson J at p 187, “part of the same process”.
132 It is true that the primary judge accepted that the capacity of pay television platforms to integrate backwards and the ability of
the leagues to integrate forwards constituted constraints upon Foxtel and Fox Sports as suppliers of sports channels. However, the
Full Court concluded at [593] that the primary ground upon which Sackville J rejected the subsistence of a wholesale sports channel
market in which both Fox Sports and C7 competed was that the respective products (an NRL sports channel and an AFL sports channel respectively) were not substitutes in demand or supply due to audience differentiation and loyalty to the individual codes. In other words, their products were not in the same market and even if the products were substitutes, they were not in the same functional market because pay TV platforms could integrate backwards and the leagues could migrate forwards.
C7’s Contention that Non-Contestability is Counter-Intuitive
133 The Full Court at [593] identified its perception of the appellant’s real point which seemed to go to the counter-intuitive notion
that a pay television supplier to the platforms offering an NRL sporting channel is not in competition with a pay television channel
supplier offering the platforms an AFL sporting channel simply because the upstream codes reflect a downstream cohort of loyal followers
committed to one form of football as opposed to another with minor overlaps in code support. The real question required by the statutory
integers was whether a pay television platform in the business of seeking to secure subscribers through access to a sports channel
would regard a sports channel offered by C7 as a substitute for a sports channel offered by Fox Sports.
A Cohort of Subscribers
134 Although the product is a channel offering one of the marquee sports in Australia, what each channel offers, as a matter of real principle,
is a premium cohort of commercial subscribers who will pay tier fees above the base package for access to one or other of the marquee
sports. In one sense, an AFL channel represents a certain body of subscribers, a body of fee revenue capable of prediction or estimation
and a certain return based upon the financial operating model of the platform provider. An NRL channel represents precisely the same
thing although one may be more or less profitable than the other having regard to the financial structure and operating costs of
the platform provider.
135 The substitution question might come down to a question of whether a platform provider might be induced to switch to taking up an opportunity to attract one
cohort of premium sports subscribers to AFL rather than the NRL cohort should Fox Sports impose a non-transitory price increase at
a particular level, charge more and give less, or alter the quality and characteristics of the service, assuming, of course, that
switching is structurally possible having regard to churn, contractual arrangements and other factors.
136 Although Seven pleaded that the wholesale suppliers of sports channels were C7, Fox Sports, the Fox Footy Channel, ESPN, TAB (Sky
Racing) and Sports Vision, and the pay television platforms were Foxtel, Optus and Austar, the field of wholesale suppliers was narrower
than that in the sense that on appeal, the case was conducted on the footing that a sports channel provider offering either of the
two marquee sports was not relevantly in competition with a provider which did not offer either of them.
Separate Functional Market
137 Seven contended that entry by a pay television platform or a free-to-air broadcaster to a contended wholesale market to acquire either the AFL or NRL rights
was not a relevant inquiry in determining a separate functional market. The relevant inquiry was said to be whether the dynamics
of the market such as strong economies of joint production have the consequence that, in the long run, vertical integration is very
likely because firms cannot compete effectively if they confine themselves to one level of functional activity.
138 The relevance of that inquiry was said to derive from the Full Court’s acceptance in Application by Services Sydney Pty Ltd [2005] ACompT 7; [2006] ATPR 42-099 at 44, 784 of Professor Brunt’s observation that a market is a network of actual and potential transactions between buyers and sellers
of goods or services which are or could be close substitutes and the answer to the question of when would potential transactions
not exist is, “when there are such efficiencies of vertical integration … that market co-ordination between buyers and sellers
is superseded by in-house co-ordination” with the result that there is “no functional split to create transactions between stages
of production”.
139 That view was said to be supported by the evidence of Dr Smith and Professor Noll, observations of the Tribunal in Re Queensland Independent Wholesalers Ltd [1995] ATPR 41-438 at 40,951 and the observations of Deane J in Queensland Wire Industries [1989] HCA 6; (1989) 167 CLR 177 at 196.
140 Seven says that there was a demonstrated demand for “wholesale sports channels” and significant wholesale transactions suggesting
the existence of a separate functional market with no evidence of any efficiencies to be gained from vertical integration and evidence
of failed attempts at some degree of integration. Seven contended that the primary judge’s analysis of ease of entry was simply a
surrogate analysis of barriers to entry leading the primary judge to infer a wider market which confused issues relating to barriers
to entry with issues of market existence. One question might be whether the possibility of integration places a constraint upon the
entity whose conduct is at issue and whether the question of integration is measured by reference to the SSNIP test.
Substitutability and Section 4E of the TPA
141 Section 4E refers to goods or services being “substitutable for, or otherwise competitive with” other goods or services which might
suggest that substitutes, in the sense contemplated by s 4E are not the sole test for the purpose of identifying the market. Do the
words “or otherwise competitive with” add anything to the notion of substitution for the purposes of s 4E.
142 The Explanatory Memorandum accompanying the Trade Practices Amendment Bill 1977 (Cth) merely said, as to the proposed s 4E, that a market for goods or services has been defined to include “substitutable or competitive
goods or services”. In Queensland Co-operative Milling, the Tribunal formulated the well-known views mentioned earlier concerning the nature and characteristics of a market and the process
of competition as rivalrous market behaviour in all dimensions of the price-product-service offered to consumers and customers.
143 In particular, the Tribunal said that the “usefulness of the ‘market’ concept [extends] to the identification of rivalrous relationships
between sellers” within an “area of close competition between firms or, putting it a little differently, the field of rivalry between
them” and within the bounds of a market there is “substitution – substitution between one product and another, and between one source
of supply and another, in response to changing prices”: Queensland Co-operative Milling (1976) 25 FLR 169 at pp 189 and 190. It followed therefore, for the Tribunal, that a market is “the field of actual and potential transactions between
buyers and sellers amongst whom there can be strong substitution, at least in the long run, if given a sufficient price incentive” assuming substitution is “feasible or likely” having regard to
the factors identified by the Tribunal at p 190.
144 The introduction of s 4E seems to be an attempt to expressly capture within the language of the Act the substitution notion expounded
by the Tribunal comprehensively in its reasons in Queensland Co-operative Milling. It may be that the adoption of the reference to goods or services being “substitutable for” other goods or services is intended
to be a reference to an area of close competition within which there can be strong substitution at least in the long run consistent
with the central formulation of the Tribunal’s notion of a market.
145 It may also be that the words of extension “or otherwise competitive with” other goods or services are intended to bring within the
notion of a market, substitution possibilities which are actual or potential transactions between buyers and sellers which represent
substitution possibilities within a field of rivalry but not necessarily strong substitution emblematic of close competition. Such
substitution possibilities might render a good or service “otherwise competitive with” other goods, taking account of degrees of
feasibility or likelihood as explained by the Tribunal at p 190, having regard to customer attitudes, technology, distance, cost
and other price incentives.
146 At [621], the Full Court said this:
In the present case the parties do not submit that the words “or otherwise competitive with” should be construed as significantly
undermining the principle of substitutability. The better view is that s 4E addresses constraints upon the supply or acquisition
of the relevant goods or services. In that context the word “substitutable” is used in a narrow sense whilst the words “or otherwise
competitive with” include degrees of substitutability. We accept that the section addresses “close” competition and that “closeness”
is a matter of degree. We adopt the approach taken by Gyles J to the question of substitutability of major sports. That approach
may not necessarily lead to the conclusion that sports channels featuring marquee sports are not substitutable.
Australian Rugby Union Ltd v Hospitality Group Pty Ltd & Ors
147 The reference to the judgment of Gyles J is a reference to a passage in Australian Rugby Union Ltd v Hospitality Group Pty Ltd & Ors [2000] FCA 823; (2000) 173 ALR 702 at [83] where Gyles J comments upon observations of Burchett J in News Ltd v Australian Rugby Football League Ltd (1995) 58 FCR 447 at 478. In News Ltd, Burchett J observed that “the concept of substitutability as a matter of economic theory expresses the basis on which competition
may in reality, at least potentially, and at least in the long run, cover a wider field than that marked out by dealings in a particular
product” and further observed that framing the market “too narrowly” will “exclude part of the action to be observed” in the market
with the result that the market must be “sufficiently broadly delineated”. Burchett J also observed that “commercial reality” would
be overlooked if immediate or potential substitutes “significantly restraining the market power of an undertaking” were overlooked.
148 Accordingly, it seems that Burchett J had in mind, as part of the market, substitutes which “significantly” restrained the market
power of an undertaking although the decision is generally regarded as an expression of support for a broad or wide approach to market
definition.
149 Gyles J in Australian Rugby Union Ltd v Hospitality Group Pty Ltd criticised the reasoning of Burchett J in adopting an expansive approach to market definition (as one in which “it is essential that
the market be sufficiently broadly delineated”) and emphasised that the purpose of the adoption of s 4E of the TPA was not to specify
a wider rather than narrower market but to ensure that the economic understanding of a market as applied in overseas jurisprudence
would be applied in Australia, consistent with the analysis undertaken by the Full Court in Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313 at 332 per Lockhart, Wilcox and Gummow JJ and particularly the passage quoted at para 55 of this paper.
150 In other words, substitution at the margins or some examples of substitution do not broaden the market in a way which would result in the dilution of the effects test, for all practical purposes,
for prescribed conduct under the Act. The Full Court in the above quote at [621] adopted the approach of Gyles J to the question
of substitutability of major sports but noted that such an approach would not necessarily lead to the conclusion that sports channels featuring marquee sports are not substitutable. In considering the scope of s 4E, the Full Court noted the observation of Professor
Corones that “market boundaries should embrace the narrowest range of possible substitutes and only close substitutes should be included”
and also noted Professor Corones’s conclusion that the term “otherwise competitive with” in the s 4E definition of “market” should
be regarded as no more than “a synonym for ‘substitutable’”.
151 The Full Court however departed from that conclusion and construed the reference to “substitutable” as a use of the word in a narrow
sense whilst the words “or otherwise competitive with” include degrees of “substitutability”.
Market Definition – The Question
152 At [1870], Sackville J noted that market definition is a tool to facilitate analysis of the processes of competition and of market
power and, that being so, the focus of the inquiry must be on the close constraints on Fox Sports as a supplier of sports channels
to pay television platforms during the period 1998 to 2000 especially as the existence of the wholesale sports channel market was
in issue because Seven contended that Foxtel’s acquisition of the AFL pay television rights and Fox Sports’ acquisition of the NRL
pay television rights increased the market power of Fox Sports and Foxtel as suppliers of sports channels thus substantially lessening competition in the contended market.
153 The Full Court at [623] expressly agreed with that approach and said the existence of a sports channel market in which Fox Sports
and C7 were competing depended upon Seven showing that C7’s sports channel with AFL matches (and NRL matches licensed to Optus) were
in competition with Fox Sports’ channels with NRL matches, and the competition must be a “close constraint” upon Fox Sports, “closeness
being a question of degree”.
154 As to Seven’s complaint that the primary judge came to a finding of a retail pay television market in reliance on constraints imposed
upon contended wholesale suppliers by pay television platforms, the Full Court accepted at [624] that the possible direct acquisition
of rights by the platforms was relevant to the functional dimension of the market, the identification of other market participants
and barriers to entry.
The SSNIP Test
155 The Full Court at [631] accepted that the SSNIP test could not be applied quantitatively since there was no evidence of a competitive
price. The Full Court regarded the SSNIP test as simply an aid to focusing the inquiry which must proceed upon all evidence concerning
the dimensions of the alleged market including evidence of conduct, actions, steps and the opinions of the participants. The Full
Court noted that to “a large extent” the appeal addressed the way in which the primary judge dealt with that evidence and use of
the SSNIP test to assist him in doing so and in concluding that C7 and Fox Sports were not substitutes in either demand or supply
in the alleged market. That conclusion was anchored on four propositions. First, Seven’s expert evidence did not support the contended market. Secondly, an AFL sports channel could not compete with an NRL sports channel. Thirdly, the evidence of conduct said to be occurring in the alleged market was not referable to the subsistence of such a market and fourthly, the views of the market participants had to be discounted for reasons mentioned shortly.
156 The Full Court accepted the primary judge’s view that Seven’s expert evidence did not support a wholesale sports channel market and
then considered the primary judge’s assessment of the conduct evidence and the views of market participants. That evidence was analysed
against the background of market structures.
Structural Arrangements
157 As earlier mentioned, in Queensland Co-operative Milling at p 189, the Tribunal noted that whether firms engage in the process of competition is “very much a matter of the structure of the
markets in which they operate” and identified five elements of market structure warranting analysis, of which, ”no doubt, the most
important is the height of barriers to entry”. It was common ground on the appeal that barriers to entry to the retail pay television
market were “relatively high” due to the expense and difficulty concerning changes in the subscriber bases, known as “churn”. As
to the contended wholesale sports channel market, the primary judge found the barriers to entry were low once rights to a marquee
sport were obtained. Seven contended that acquiring such rights which were expensive and granted infrequently for long terms, was
a significant barrier. Third party entry would have to also confront the incumbency of special relationships. Nevertheless, the Full
Court accepted that it would have been open to either the AFL or the NRL to provide match coverage “as part of a sports channel”
or as the primary judge found, the pay platforms could have bid for AFL or NRL rights and then produced their own sports channels.
Thus, the barriers to entry into the “channel supply market” for each of the AFL, NRL and pay television platforms “might not have
been as high as they were for other potential entrants”.
The Conduct Evidence and Industry Views
158 Much of this evidence was contained in documents created between 1998 and 2001. Some actions of participants indicated a perception
that C7 and Fox Sports were “in competition in supplying channels to pay television platforms”. In the absence of a SSNIP test, the
evidence was said by Seven to be of “enhanced importance”. It was discounted by the primary judge. Some examples should be identified.
159 First, a director of News, Mr Macourt (also closely involved in the affairs of Foxtel, Fox Sports and the NRL partnership) accepted
that from June 1998, it was apparent that the “most likely source of competition to Fox Sports in the sports channel business was
Seven”.
160 Secondly, Optus made it plain in strong terms to News that if Optus could not strike an appropriate arrangement with Fox Sports, Optus
would enter into a long-term supply arrangement with C7. On 10 March 1999, Mr Macourt in a memorandum complained that Fox brands
(channels) were to be included in an Austar tier “with direct competitors of News Corporation in C7 and ESPN”. The Full Court accepted
that the memorandum did speak to C7’s position as a supplier of sports channels to pay television platforms. The Full Court regarded
Mr Macourt’s perception that C7 was in competition at some level with Fox Sports as “unsurprising” as he must have had in mind “the possibility that C7 might attract pay television platforms by offering something which Fox Sports could not”. Sackville J discounted the evidence
on the footing that Mr Macourt was asked about competition not about close competition.
161 Thirdly, Telstra documents suggested that Telstra perceived that both News and PBL considered C7 to be a competitor of Fox Sports
and that Fox Sports would be more valuable if C7 failed. Ms Lowes, a Telstra nominated director of Foxtel, prepared a draft Telstra
Board Report on 19 July 1999 noting News’s consistent indication that it would block Foxtel dealing with C7. The same theme was reflected
in a further email and a memorandum. The Full Court accepted that the Telstra documents suggested the perception that C7 was in competition
with Fox Sports; that Telstra saw C7 as a valuable addition to Foxtel’s service; and News and PBL saw C7 as being in competition
with Fox Sports. More importantly, in late 1998, News agreed to supply Fox Sports channels to Austar at a price substantially below
the supply price to Foxtel which angered Telstra. In a Foxtel Board meeting, Mr Lachlan Murdoch conceded that News had supplied Fox
Sports at a preferential discounted price, so as to win Austar’s business over that of C7. Mr Macourt held the same view. As to that
evidence, the Full Court at [655] said this:
Whether or not Austar would have given up Fox Sports with NRL for C7 with AFL, the point is that News appears to have taken the threat
seriously. News’s alleged fear that Austar might take C7 mirrors Telstra’s assertion that Foxtel should consider taking it. Both
sides in the Foxtel partnership were treating C7 as being, in some way, a threat to Fox Sports. We find it difficult to accept that
these major corporations were exchanging empty rhetoric, neither side expecting to be taken seriously.
162 In addition, News by its general counsel, Mr Philip, agreed that between 1998 and 2000 C7 was the most significant competitive threat
to Fox Sports. The primary judge discounted the evidence because Mr Philip viewed ESPN (without a marquee sport) in the same way
and Mr Philip had not been speaking or thinking in terms of “close competition”, which the primary judge thought was a critical distinction.
Mr Philip also agreed that in negotiating the supply of Fox Sports to Optus, News sought to insert a provision to exclude the possibility
of Optus carrying sports programs not provided by Fox Sports so as to prevent Optus carrying Seven’s sports programming.
163 As to the discounting of the probative value of the evidence due to the criticality of the distinction between competition and close
competition, the Full Court said this at [660]:
It is unlikely that any person, not an economist or competition lawyer, would draw such a distinction. The witnesses may not have
described the perceived competition as “close”, but it does not follow that it was not. In any event, “closeness” is a matter of
degree. The evidence must be scrutinized in context to identify the sense in which the term “competition” was used. It should not
be dismissed as ambiguous unless the ambiguity can be resolved.
164 In reflecting on the lay evidence the Full Court said this at [661]:
News’s concern about Austar taking C7 was based, at least in part, upon the fear that Fox Sports would lose its position as principal
supplier of Austar’s sporting content. The figures concerning increases in revenue, in the event that C7 disappeared, suggested a
focus upon competition between it and Fox Sports as suppliers of sports channels, as did the efforts to prevent C7 from deriving
any benefit from a perceived association with the Fox brand or NRL matches.
165 As to the danger of incumbency in not revealing the contestable threat of innovators, the Full Court said this at [662]:
A major step in his Honour’s reasoning was the conclusion that C7 (with AFL match coverage) was not a constraint upon Fox Sports (with
NRL match coverage) because pay television platforms carrying Fox Sports’ channels would not treat C7’s channels as substitutes.
This was because subscribers to a platform or channel with NRL coverage would not consider a platform or channel with AFL coverage
to be a substitute for it. We consider that this approach placed too great an emphasis upon existing circumstances and gave too little consideration to the potential
for change.
[emphasis added]
166 The Full Court accepted that News, PBL and Telstra saw benefit in acquiring both the AFL and NRL rights as, whilst C7 was supplying
AFL match coverage to pay television platforms, there was a “chance” that C7 with AFL would displace Fox Sports as supplier of NRL
to those platforms. The close relationship between News and the NRL partnership and News’s long-term preferential position may have
reduced the risk of switching. C7 thought it worthwhile to bid for the NRL rights and Fox Sports was a potential supplier of AFL
matches.
167 At [664], the Full Court said this:
We consider that this potential for replacement and displacement militates in favour of a description of the Fox Sports product which
recognises the need for marquee sport coverage, but does not necessarily involve the supply of NRL coverage.
[emphasis added]
168 At [667], the Full Court concluded:
We accept the appellant’s submission that Fox Sports and C7 should not be characterised as having been solely suppliers of NRL matches
or AFL matches. They were sports channel suppliers, having established arrangements with pay television platforms. In order to be
successful each needed a marquee sport. In the longer term each had the potential capacity to displace the other as supplier of the
latter’s marquee sport. We consider that the relevant product consisted of general sports channels which included marquee match coverage
(either NRL or AFL).
Use of the SSNIP Test
169 News contended that notwithstanding the limitations upon the applicability of the SSNIP test, an inference was open that a small but
significant non-transient increase in price, variation in quality or other changes in the terms of supply, would not have caused
a platform to switch from Fox Sports to C7 because subscribers to the platform carrying NRL were loyal to the NRL. Further, such
an inference “should be treated as utterly conclusive evidence that the two entities were not in close competition”.
170 The argument, put another way, seems to be that a platform would not switch under such an economic incentive because the dead-weight
of subscribers to one platform loyal to one marquee sport (NRL) would not stay with the platform (that is, maintain or renew subscriptions)
if it offered those subscribers the other marquee sport (AFL). At one level, presumably, the cohort of subscribers to Platform 1
(P1) (loyal to NRL) would follow the sport to Platform 2 (P2), the new supplier of NRL games, as P1 switched to C7 and offered subscribers
the other marquee sport. Presumably, subscribers loyal to AFL would, out of embedded loyalty to the code as contended, follow that
sport to P1.
171 Seven contended that to the extent that the inferences upon which it relied were inconsistent with the evidence or views of industry
participants, the evidence of the industry participants should be discounted.
172 As to the correct method of approach, the Full Court at [668] said this:
We doubt whether it is permissible to draw such a largely intuitive inference [as contended], or to accord such significance to it.
The exercise should rather involve an examination of all the evidence to determine whether C7 (carrying AFL matches and wanting to
carry NRL matches) in fact imposed a close constraint upon Fox Sports’ conduct as a supplier of sports channels (carrying NRL matches
and wanting to carry AFL matches).
173 The Full Court accepted that C7 may have responded to a price rise by Fox Sports by seeking more actively to acquire the NRL rights
apart from any competition manifested by innovation in the sports product.
The Utility of the SSNIP Test in a Qualitative Setting
174 At [670], the utility and role of the SSNIP test was expressed in these terms:
… a qualitative application of the test [in market definition] requires identification of its purpose. As we understand it,
the test looks to the actual or likely effect of competitive conduct, or potential competitive conduct, upon price and other conditions
of supply, including quality of the product. However the competitive conduct may not have an immediate and obvious effect upon those
matters. Particularly in a relatively new industry, competitors may be looking for longer term, rather than shorter term, advantages.
The “richness” of the concept of competition referred to in Re Queensland Co-operative Milling Association Ltd … means that competition may take many forms. Its effects may be immediate or delayed. The SSNIP test addresses the effects
of competition, but it does not define the way in which it occurs.
175 As to the question of competition between Fox Sports and C7, the Full Court observed that industry perceptions as to such competition
must be examined in the light of conditions in the industry and the way the industry operates. The Court noted that pay television
platforms derive most of their income from subscriptions and that channels containing marquee sports were subscription drivers. The
evidence demonstrated that pay television platforms would seek to broadcast both AFL and NRL matches. Optus and Austar had done so.
Foxtel broadcast only NRL. The Court noted that if a pay television platform were broadcasting a channel with AFL matches and a channel
with NRL matches, each channel being supplied by a different supplier, the suppliers would inevitably be in competition. Although
Foxtel had not enjoyed the AFL rights, the evidence demonstrated that News, PBL and Telstra decided that they should acquire the
AFL pay television rights if at all possible. The Full Court noted that:
It is impossible to avoid the conclusion that in seeking to obtain the AFL pay television rights, the respondents were seeking to
attract subscribers to Optus and Austar away from C7, thus reducing its attractiveness for those platforms. C7’s desire to obtain
the NRL rights was no doubt motivated by a similar motive concerning Fox Sports, at least with respect to Foxtel and Austar.
176 As to the potential for change on the part of subscribers, the Full Court said this at [680] and [684]:
680. We accept that for many subscribers and potential subscribers … there was a virtually indissoluble union with one
or other of the Marquee Sports. They subscribe, or would have subscribed, to a platform because or primary because, it carried their
Marquee Sport of choice. However, it cannot be assumed that no supporter of one Marquee Sport would ever have changed to the other.
It may be accepted that apostasy is not common. The respondents submit that such code loyalty meant that C7 was not in competition
with Fox Sports. We find that proposition difficult to accept. Firstly, it fails to take account of the possibility that either Fox
Sports or C7 might have sought to supply both Marquee Sports … Secondly, it assumes that a supplier would have had no interest
in attracting more subscribers to the pay television platform or platforms carrying its channels at the expense of the other supplier’s
channels. All of that seems quite unlikely.
…
684. … we do not accept that such loyalty necessarily justified the assumption that Fox Sports and C7 would not have sought
to “convert” existing subscribers who had such loyalties, attract existing subscribers who had no current loyalties or attract new
subscribers. These are areas in which one would expect fierce competition.
Constraints Exerted by C7 upon Fox Sports
177 The Court found that there could be little doubt that C7’s activities as a supplier of sports channels carrying a marquee sport had
an actual and potential effect upon Fox Sports’ behaviour as a supplier of similar channels and that there were “significant areas
of competition” between Fox Sports and C7 each having “established relationships” with pay television platforms. It followed for
the Court that C7 “imposed a constraint upon Fox Sports” and its marquee sport product “was a substitute for that of Fox Sports as
a supplier of NRL matches to Optus; as a general supplier of NRL matches (if it obtained the rights); as a supplier of AFL matches
(unless it lost the rights); as an alternative supplier of sports channels with a Marquee Sport to attract subscribers who had no
allegiance to either NRL or AFL; as an attraction to non-subscribers to become subscribers; and as an alternative for subscribers
who were inclined to change their code preferences”.
Were those Constraints “Close Constraints”?
178 The Court observed that the pre-eminent importance to pay television platforms of NRL and AFL matches suggested that any potential
challenge to the capacity of a supplier to obtain or retain either set of rights could have been a significant constraint upon its
business and although those rights may have been traded in markets separate from that in which sports channels were supplied and acquired, the acquisition or loss of such rights would have significantly affected
competition in the latter market. The Court inferred that “each supplier would have been anxious to supplant the other in this way”.
By either supplier acquiring both sets of rights, each could have improved its attractiveness to the platforms and acquired access
to greater subscriber revenue.
Established Relationships
179 The Court noted that the platforms however sought to avoid churn which might well have conditioned a platform’s reaction to a change
in supply conditions imposed by Fox Sports. Foxtel’s conduct was constrained by the capacity of News and PBL to maintain the status
quo. Austar considered NRL programming to be a necessary aspect of its own offering. From 1998 until 2000, Optus had televised its
own NRL matches using its sub-licence from News and C7’s production facilities. After the 2000 season, Optus continued to be entitled
to a sub-licence from News, if it held the NRL rights or a licence from the NRL partnership on similar terms. When Fox Sports acquired
the rights in 2001, Optus preferred to take up coverage from Fox Sports rather than the NRL partnership. As a general proposition,
it was unlikely that Foxtel would have considered substituting C7 (with AFL matches) for Fox Sports (with NRL matches). However,
the Court noted that Foxtel’s need to attract subscribers outside Queensland and New South Wales meant that for as long as C7 had
the AFL rights, C7’s attractiveness, from Foxtel’s point of view “was obvious”.
180 Having regard to the evidence of the industry participants and their views, the Court concluded that C7 and Optus imposed or had the
potential to impose a significant constraint upon Fox Sports in connection with the supply of NRL matches and in any event C7 was
a potential general supplier of NRL matches if it could acquire the rights. Similarly, if Fox Sports wished to be the supplier of AFL matches, it necessarily had to “attack C7’s
position as supplier of AFL match coverage”. In the end, both Fox Sports and C7 were seeking to maximise their respective shares
of pay television subscriptions through product offerings to platforms and, as the Court observed, “they could only do that at each
other’s expense” and the “primary measure of their respective capacities was the ability to supply either or both of the two Marquee
Sports”. At [703], the Court said:
They competed for carriage on the platforms, but the prize was access to subscriptions. On balance, we conclude that C7 constrained
Fox Sports in this way.
A Wholesale Market
181 Seven contended that “the existence of Fox Sports and C7 as wholesale suppliers demonstrates the existence of such a market”. In dealing
with that proposition, the Court examined the findings of the primary judge in relation to the evidence of, particularly, Professor
Hay, but also that of Professor Fisher, concerning the capacity of the platforms to integrate backwards and the leagues to migrate
forwards. The Court had previously discussed the barriers to entry to any market for sports channels with marquee sport content by
reason of the special relationships between Fox Sports and the NRL partnership on the one hand and C7 and the AFL on the other. Also,
arrangements existed between Fox Sports and C7 on the one hand and retail television platforms on the other as further barriers.
The Court noted that the NRL partnership and the AFL would have been well-placed to surmount the former barrier whilst the platforms
would have been well-placed to surmount the latter. The Court was satisfied that the primary judge’s conclusions reached in reliance
upon Professor Hay’s thesis of integration backwards by the platforms and migration forward by the leagues was supported by the evidence.
182 Seven also placed, as earlier mentioned, particular emphasis upon the observations of Professor Brunt concerning market dynamics and
the notion that once a network of actual and potential transactions between buyers and sellers of goods and services which are, or
could be, close substitutes is demonstrated at a particular functional level, then a market will be taken to exist at that functional
level unless there are demonstrated efficiencies of vertical integration such that market co-ordination between buyers and sellers is superseded by in-house co-ordination, there being, in that case, no functional differentiation to create transactions between particular stages of production. Those views
of Professor Brunt were adopted by the Tribunal in Application by Services Sydney Pty Ltd [2005] ACompT 7; (2006) ATPR 42-099 at [107] to [112].
183 As to this question of vertical integration, the Court noted that in the Services Sydney decision, the Tribunal was dealing with questions arising under the access regime established under Part IIIA of the TPA (rather than Part IV) which requires, firstly, the identification of the market in which the natural monopoly service provider operates and, secondly,
the separate market, upstream or downstream of the infrastructure services, in which access to the natural monopoly services would
promote competition. The Court noted that the Tribunal appeared to have accepted, in the Sydney Services decision, that there “was a difference in emphasis in identifying a market for the purposes of Part IIIA as opposed to doing so for the purposes of Part IV” (emphasis added) and said, by way of conclusion, at [719]:
We see no justification, either in the legislation or in the decision, for laying down firm evidentiary rules as to the way in which
cases under either part should be approached or for fragmenting the process of market identification. Such identification must depend
upon evidence of the circumstances in which the relevant entity was carrying on its business at the relevant time.
184 The Court seems to be suggesting that market delineation is first and foremost a function of the evidence of the way in which the
relevant entity conducts its business which might be measured by direct evidence from market participants of conduct, steps taken,
views expressed and quantitative data enlivening the application of orthodox economic tools which might aid findings of fact concerning
the circumstances in which the relevant entity is carrying on its business at the relevant time.
The Ultimate Question
185 In the present case the question was ultimately whether the evidence established that in late 2000, Fox Sports was supplying its channels,
in a market, in which supply was actually and potentially undertaken, by wholesalers. The Court concluded that aspects of the arrangements between Fox Sports and Foxtel and between Optus and C7 suggested that the market
was not simply a wholesale market. News saw Fox Sports’ primary role as supplying sports channels to Foxtel. The Court noted that
it supplied NRL match coverage to Foxtel under a sub-licence which had the characteristics of a “supply pursuant to a contract for
services, a partnership agreement or a joint venture agreement than wholesale supply” [720]. Fox Sports’ arrangements with Austar
seemed to have been struck “for strategic reasons rather than as part of a wholesaling business” [720]. It was, “at least arguable
that [Fox Sports’] dealings with Optus in 2000 were similarly motivated” and thus the Court concluded:
In those circumstances we doubt whether one can infer that its existence demonstrated that market conditions dictated the existence
of a wholesale market.
186 Similarly, the Court concluded that C7’s participation in the industry had only begun in the second half of 1998 and had ended in
early 2002 and, like Fox Sports’ supply of NRL match coverage to Foxtel, C7’s supply of NRL coverage using Optus’s sub-licence “was
not really wholesale supply” and even assuming that C7 was otherwise a wholesale supplier of sports channels with AFL match coverage,
“the existence of one wholesale supplier may not have been an adequate basis for inferring that market conditions dictated wholesale supply”: [712]. The Court further noted that although Seven and Ten jointly obtained the free-to-air and pay television
AFL rights for the 2007 to 2011 seasons, “they were acquired with the intention of sub-licensing the pay television rights to Foxtel
or some other party, and not for use in the wholesale supply of sports channels”: [712].
187 In addition, the Court accepted that proposals for non-wholesale supply relied upon by the primary judge, provided a basis for inferring
that persons experienced in the industry believed that such supply would be commercially “viable” and were thus suggestive of no
wholesale functional market [723] and [724]. In brief, those examples were Seven’s willingness to enter into a joint venture with
the AFL to exploit the AFL rights; Foxtel’s willingness to do so; from 1998 until 2000 Foxtel and Optus held non-exclusive rights
to broadcast NRL matches and used Fox Sports and C7 respectively to produce their coverage; Telstra had suggested that special sporting
events be acquired by one-off joint venture arrangements rather than by Fox Sports; and late in 2000, Austar proposed a joint venture
with C7 should Seven obtain the NRL rights: [724].
188 The Court concluded that all of this evidence supported the views expressed by the respondents’ expert witnesses that the AFL, the
NRL partnership and the pay television platforms were potential suppliers of general sports channels with marquee sport content and,
in addition, free-to-air broadcasters may also have been potential suppliers and Seven and Nine were already involved in C7 and Fox
Sports/Foxtel respectively, in any event. Moreover, the Court concluded that there was “ample evidence” that industry participants
had contemplated “non-wholesale supply with optimism” and “to the extent that [Seven] relies on the existence of C7 and Fox Sports
as proving the existence of a wholesale market, the argument is undermined by the ambiguous nature of at least some of their supply
arrangements”: [731]. Thus, it followed that there was “a real potential for entry by non-wholesale suppliers particularly the AFL,
the NRL partnership and, perhaps, pay television platforms which, by definition, excluded the existence of a wholesale market”: [737].
JUSTICE ANDREW GREENWOOD
Federal Court of Australia
29 May 2010
