Rural Press Ltd & Ors v ACCC & Ors; ACCC v Rural Press Ltd & Ors [2003] HCATrans 291 (13 August 2003)

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Rural Press Ltd & Ors v ACCC & Ors; ACCC v Rural Press Ltd & Ors [2003] HCATrans 291 (13 August 2003)

Last Updated: 20 August 2003

[2003] HCATrans 291

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Adelaide No A197 of 2003

B e t w e e n -

RURAL PRESS LIMITED

First Appellant

BRIDGE PRINTING OFFICE PTY LIMITED

Second Appellant

IAN LAW

Third Appellant

TREVOR McAULIFFE

Fourth Appellant

and

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

First Respondent

WAIKERIE PRINTING HOUSE PTY LIMITED

Second Respondent

PAUL TAYLOR

Third Respondent

Office of the Registry
Adelaide No A203 of 2003

B e t w e e n -

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Appellant

and

RURAL PRESS LIMITED

First Respondent

BRIDGE PRINTING OFFICE PTY LIMITED

Second Respondent

IAN LAW

Third Respondent

TREVOR McAULIFFE

Fourth Respondent

WAIKERIE PRINTING HOUSE PTY LIMITED

Fifth Respondent

PAUL TAYLOR

Sixth Respondent

GLEESON CJ
GUMMOW J
KIRBY J
HAYNE J
CALLINAN J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON WEDNESDAY, 13 AUGUST 2003, AT 11.29 AM

Copyright in the High Court of Australia

__________________

MR F.M. DOUGLAS, QC: May it please the Court, I appear with my learned friends, MR T.D. BLACKBURN and MR R.C. SCRUBY, for Rural Press and Bridge Printing in their appeal and as respondents to the appeal by the ACCC. (instructed by Blake Dawson Waldron)

MR N.J. YOUNG, QC: May it please the Court, I appear with my learned friend, MR M.H. O’BRYAN, for the Australian Competition and Consumer Commission in each of the appeals. (instructed by Australian Government Solicitor)

GLEESON CJ: There is a certificate from the Deputy Registrar that she has been informed by the solicitors for the second and third respondents in the first matter and the fifth and six respondents in the second matter that those parties will submit to any order of the Court save as to costs. Yes, Mr Douglas.

MR DOUGLAS: Thank you, your Honour. Your Honours, if it suits the convenience of the Court, I have spoken to Mr Young about this and we propose to deal with the three issues arising in our appeal first and then Mr Young will address your Honours on matters arising in his appeal and then I will reply to those matters. If there is any need for any further address, we can obviously seek to do that by leave, but that seems to us to be a convenient way to proceed.

GLEESON CJ: Very well.

MR DOUGLAS: The first issue which arises on our appeal - - -

HEYDON J: Mr Douglas, do you have a map of the region? In the trial I gather there was a map of the region which has not been reproduced in the appeal books. Do you have a map?

MR DOUGLAS: I do not have a map which has not been reproduced in the appeal book. We could possibly try and get it. There are some maps in the appeal book. I think there is one at 37 or 38, but you have to join that together. We find - - -

GLEESON CJ: Perhaps over the adjournment at lunchtime you can see if you can get hold of the one that has not been reproduced.

MR DOUGLAS: Yes, we will, your Honour. In the meantime – and I had intended to do this anyway – if the Court goes to page 404, the Court will see there is the town of Murray Bridge which is the heartland of the Standard, my client’s paper, the town of Mannum slightly to the north of that, the town of Walker Flat which is referred to in some of the evidence as being the point to which the River News would withdraw to, you will see slightly to the north and the right of Mannum; and then Waikerie, which is the heartland of the River News, appears near the top of the subdivided area of the map, if I can put it that way. That gives one a broad idea of the geographic location.

KIRBY J: Is this all a built-up area now or is truly rural?

MR DOUGLAS: It is essentially a rural area, your Honour. It is a couple of hours away from Adelaide, as I understand it. and it is an area of rural towns, irrigated farms, rural business predominantly. The question of arrangement or understanding is dealt with in the Full Court judgment at paragraphs 79 to 84, commencing at 1292.

GLEESON CJ: Mr Douglas, you have concurrent findings of fact against you. Are you seeking to displace those concurrent findings of fact or is your argument that there has been some misapprehension of legal principle by the Full Court?

MR DOUGLAS: There is one point of law which is the question of mutual commitment which is raised in Morphett Arms. In other words, we say there is no mutual reciprocal commitment by us found by the court if you closely analyse the reasons for decision of the trial judge not to publish a competing newspaper in the area where the River News circulated. So that is a legal question. Now, apart from that, we simply say that on the facts as found, it does not amount to a commitment. So that is a question of the characterisation of the evidence which has been given. That is a commitment to a certain extent to withdraw the circulation of the River News from the area surrounding Mannum. So, whilst undoubtedly there was this telephone conversation between Mr McAuliffe and Mr Taylor which is recorded, that was not in terms of the authorities a commitment which would give rise to an arrangement or understanding.

GLEESON CJ: But that is what it all comes down to in your appeal, is it?

MR DOUGLAS: Just on that aspect of it, yes, your Honour. On the second aspect of it, the question comes down to the question as to whether there was a substantial lessening of the competition.

GLEESON CJ: In a market. But you have no quarrel with the market definition?

MR DOUGLAS: No, we have not appealed the market definition.

GLEESON CJ: So the relevant market is what, the market for newspapers in Murray Bridge?

MR DOUGLAS: Essentially, yes, your Honour.

GLEESON CJ: If that is the market, the question is whether there was a substantial lessening of competition in the market by somebody undertaking a commitment – otherwise you do not get to this point – not to enter it?

MR DOUGLAS: Yes, your Honour. Then there is a third point about accessorial liability. Your Honour - - -

GUMMOW J: The third point of accessorial liability, that accepts Yorke v Lucas, does it not?

MR DOUGLAS: It does not involve - - -

GUMMOW J: It accepts Yorke v Lucas, it does not involve any reconsideration.

MR DOUGLAS: We do accept Yorke v Lucas. We say it was it was determined in a context different from the current context because one is looking, for example, at section 52 where there is a misrepresentation and knowledge of the making of a misrepresentation. Here we say that really all that has been established against the relevant executives of the respondents is that they were aware that they were engaging in what one might describe broadly as anti-competitive behaviour.

GUMMOW J: But the section is in Part VI, it is the same section?

MR DOUGLAS: It is the same section , yes. The findings of the Full Court are to be found at pages 1292 through to 1296.

GUMMOW J: Paragraphs?

MR DOUGLAS: Commencing at paragraph 79, your Honour.

GUMMOW J: Yes. So this is your first point?

MR DOUGLAS: Yes, your Honour. The question, “WAS THERE AN ARRANGEMENT?” So then the court refers to what was said by Justice Lindgren in Australian Competition and Consumer Commission v CC (NSW) to the effect that:

The cases required that at least one party ‘assume an obligation’ or give an ‘assurance’ or ‘undertaking’ that it will act in a certain way. A mere expectation that as a matter of fact a party will act in a certain way is not enough, even if it has been engendered by that party. In the present case, for example, each individual who attended the meeting may have expected that as a mater of fact the others would return to their respective offices by car, or, to express the matter differently, each may have been expected by the others to act in that way. Each may even have ‘aroused’ that expectation by things he said at the meeting. But these factual expectations do not found an ‘understanding’ in the sense in which the word is used in sections 45 and 45A. The conjunction of the word ‘understanding’ with the words ‘agreement’ and ‘arrangement’ and the nature of the provisions show that something more is required.

I think the only other passage from the authorities we wish to refer to is the Full Court decision in the decision of Email, if I could just hand up six copies of that to the Court. It is really on page 10 of 17 it commences, where it says:

The Commission put this basis of its case on two alternative grounds: first, on the ground that, as a result of the communications which were said to give rise to mutual expectations, each of the respondents accepted inhibitions as to its conduct: on Email’s part to issue price lists - - -

GUMMOW J: I have forgotten about Email. What was going on in Email?

MR DOUGLAS: I think it is what we set out in this paragraph here, your Honour, but the main relevance of it is really what is said in relation to the statement of principle, what appears in Morphett Arms halfway through the next page. It was:

a decision of the Full Court this Court, Bowen CJ, with whose reasons for judgment, Brennan and Deane JJ agreed, said with reference to Fisher J’s finding in the Nicholas Enterprises case: As at present advised, it seems to me that one could have an understanding between two or more persons restricted to the conduct which one of them will pursue without any element of mutual obligation, in so far as the other party or parties to the understanding are concerned. It is not, however, necessary that I reach or express any final view on this question since Mr Justice Fisher’s view that such an element of mutual commitment was required plainly imposed a heavier burden on the respondent Commission, and thereby favoured the appellant.

Now, if that statement of principle is correct, then the first point which I outlined to the Chief Justice will not succeed. But it was a basis on which Justice Fisher had determined the case at first instance. What we say is that when you look at the decision which has been made here by the trial judge - and I will take you to that - in reality, it is a case at best of a unilateral commitment.

GUMMOW J: But what did Justice Lockhart say about it?

MR DOUGLAS: Justice Lockhart said over on the next page, about the fourth paragraph on the page:

For my part I find it difficult to envisage circumstances where there would be an understanding involving a commitment by one party as to the way he should behave without some commitment by the other party. Unless there is reciprocity of commitment I do not readily see why the parties would come to an arrangement or understanding. Particularly is this so when it is remembered that the alleged parties to the arrangement or understanding in the present case are two large companies. Presumably, if they were to reach an understanding or arrangement each would have some commercial objective beneficial to itself in mind. I see no point in an arrangement bare of reciprocity.

GLEESON CJ: The finding of fact here was that they both acted on the basis ultimately, after a threat, that they would keep out of each other’s territory.

MR DOUGLAS: What your Honour puts to me - it is true that we continue to act as we had always behaved, but there is no finding by the judge that we essentially said that we would behave as we had always behaved.

GLEESON CJ: But this is a very common form of arrangement. The breweries used to do it, did they not, drawing a line somewhere in the southern coast of New South Wales? It is a very well-known form of business understanding.

HAYNE J: Sometimes reached for fear of some innominate, unspecified fell consequence, never spelled out.

MR DOUGLAS: Fels consequence, your Honour?

HAYNE J: Forgive that pun, that was not intended – but - - -

MR DOUGLAS: I appreciate, your Honour, that sometimes one can have understandings which are somewhat ephemeral but nonetheless intended to be enforced, as they were between breweries in New South Wales at some time in the past, but - - -

HAYNE J: Justice Lockhart’s analysis depends upon a degree of equality of bargaining that of course you will not do something unless you get something in return, but that assumes that you are in a position to bargain.

MR DOUGLAS: Yes. Your Honour, I suppose to cut to the chase, the findings of the Full Court essentially support those of the trial judge, if I can just make that point. That is at 1295 to 1296. Could I just go to those findings, it is at about point 35 on the page. It says:

over a period of time Rural Press threatened Waikerie Printing - - -

GUMMOW J: Can we just go back to Justice Lockhart again, I am not sure you have done him a justice.

MR DOUGLAS: Yes, your Honour.

GUMMOW J: After the paragraph you read to us, in the next paragraph:

I incline to the view that there is no necessity for an element of mutual commitment - - -

MR DOUGLAS: Yes, I had intended to read that to your Honour, but that is what he said. In other words, he said he inclined to that view. We are obviously contending to the contrary view and, as we would see it, the issue is open and has been left open by Morphett Arms and by Justice Lockhart in that decision.

HEYDON J: So you do want a decision on this point of law, do you, whether Chief Justice Bowen was correct or whether Mr Justice Fisher’s test was correct?

MR DOUGLAS: Yes, your Honour.

HEYDON J: You have not referred to any American authorities.

GUMMOW J: Yes, that is exactly what I was going to say.

MR DOUGLAS: No, we have not.

HEYDON J: I mean, if you want a decision on that point of law, it is something that has been debated for a century in America and 50 years in England, and I do not think that the Australian Competition and Consumer Commission have seen that point as one which you want decided.

MR DOUGLAS: I would have thought it was to the forefront of our submissions, your Honour. It starts off by saying whether and to what extent concerted action, mutuality of commitment, a meeting of minds or an assumption of an obligation is required to constitute an arrangement or understanding within the meaning of section 45 of the Trade Practices Act.

GLEESON CJ: There has to be a meeting of minds. If you open the door of a cage and all the mice leap it and head for the cheese, that does not mean they have an understanding, but the current findings are such, are they not, that it is difficult to see that this question of law that you want to agitate arises.

MR DOUGLAS: The summary of the findings of fact at 1295, point 35, over onto page 1296, is the Full Court’s understanding of the trial judge’s judgment where – could I just go to it. It says:

The evidence . . . suggested strongly that

over a period of time Rural Press threatened Waikerie Printing that if it did not withdraw from the Mannum area it would expand its operation so as to compete with the Taylors in the Riverland area;

the communications and threats were made on behalf of rural Press in the hope that Waikerie Printing would indeed withdraw from the Mannum area;

Waikerie Printing responded by giving a “mild assurance” that it would withdraw;

in consequence of the threats made by Mr Law on 3 April 1998, the Taylors, after some procrastination, finally decided to withdraw from the Mannum area;

their decision to withdraw was communicated by Paul Taylor to Mr McAuliffe on 9 April 1998; and

thereafter Waikerie Printing did in fact withdraw and Rural Press took no further action to expand its operation - - -

GLEESON CJ: Now, are you seeking to persuade us that on those findings of fact, it is not open to conclude that there is an understanding?

MR DOUGLAS: What those findings of fact do not set out is that Rural Press in fact undertook that it would take no further action in light of what it had been told on 9 April, and that emerges very clearly, with respect, from the trial judge’s judgment.

GLEESON CJ: So there is no mutual commitment because there is a threat and a response to the threat?

MR DOUGLAS: Yes, your Honour.

HAYNE J: There must be communicated compliance, must there, communication: “You have threatened us. We will comply with what you ask”.

MR DOUGLAS: I do not think we can shrink from the finding that it was found by the trial judge and accepted by the Full Court that what we did is we threatened that we would do something if in fact what they were doing continued, but we were not postulating there an agreement. It did get to the stage where a letter was going to be written by Rural Press seeking to arrive at an understanding and the managing director of Rural Press, that is on or about 7 April, two days before the understanding is said to have been reached, said that the letter was not to be sent, effectively, because he was concerned about the trade practices implications in relation to it. That letter is referred to in the Full Court – sorry, it is perhaps convenient now, because the Full Court has just summarised what the trial judge said, to go to page 1177 of volume 6. The text of the letter is to be found at appeal book volume 3 at page 735, but it is sufficient to have regard to the text of the letter as set out in the judgment of the trial judge at 1177. So Mr Law prepared a letter to be sent to Mr Taylor at the River News which was in draft, and was in the following terms:

“The attached copies of pages from the River News was sent to me last week. The Mannum advertising was again evidence, which suggests your Waikerie operator, John Pick, is still not focussing on the traditional area of operations.

I wanted to formally record my desire to reach an understanding with your family in terms of where each of us focuses our publishing efforts.

If you continue to attack in Mannum, a prime readership area of the Murray Valley Standard, it may be we will have to look at expanding our operations into areas that we have not traditionally services(sic).

I thought I would write to you so there could be no misunderstanding our position (sic). I will not bother you again on the subject.”

So that is what they were proposing on 7 April, and Mr McCarthy - - -

HEYDON J: Yes, but Mr Law actually signed that?

MR DOUGLAS: He signed that, yes.

HEYDON J: I know Mr McCarthy took a different view. It is hard to call it a draft.

MR DOUGLAS: Mr McCarthy was concerned about the trade practices implications, as his Honour sets out, and said that the letter should not be sent. So we were undoubtedly, without the intervention of Mr McCarthy, seeking unequivocally an arrangement or understanding which would have involved mutual obligations on the part of the parties.

When one looks at the reasoning of the trial judge on the question of arrangement or understanding, it commences at 1185 and he refers to Morphett Arms at the top of 1185 at about line 5, and he says:

it is clear that the ACCC here alleges mutual commitments on the part of Waikerie Printing on the one hand, and Rural Press and Bridge on the other. Waikerie Printing is alleged to have committed itself to withdraw the River News from circulation in the Mannum area in competition with the Standard. For their part, Rural Press and Bridge committed themselves not to pursue the introduction into the Riverland area of South Australia any new newspapers in competition with the newspapers published by the Taylors.

That is a matter which is commented on in the Full Court saying that the trial judge perceived himself as seeking to determine mutual commitments. Then a reference is again made to Justice Lindgren’s judgment. There is reference to the fact that there was no issue about competitors. Reference is then made to Pont Data and he then makes some findings disbelieving the Taylors, and it is really at pages 1191 to 1192 that he reaches his conclusion about arrangement. At about point 10 on the page he says:

In my judgment in March and April 1998, Waikerie Printing did come to an arrangement with Rural Press and Bridge of the nature alleged by the ACCC, and I further find that that arrangement contained an exclusionary provision, so as to contravene s45(2)(a)(i) of the Act. I consider that Rural Press and Bridge through Law and McAuliffe desired to procure Waikerie Printing’s commitment to withdraw the circulation and promotion of the River News in the Mannum area, and to revert to its previous prime circulation area ending about forty kilometres north of Mannum, and in exchange they were prepared not to countenance -

and that is the careful expression of language -

the introduction of a newspaper into the prime circulation areas of the Taylors’ newspapers in the Riverland. That was, I find, the clear effect and intent of the various communications from McAuliffe and Law in January and culminating in their communications in March 1998. Waikerie Printing was clearly slow to respond positively to their communications. I think that was largely because the Taylors were reluctant to confront Pick, and to direct him to reverse the expansion of the River News prime circulation area which he had undertaken. In my judgment, the Taylors for a time hoped that the issue would go away . . . There was a degree of procrastination by the Taylors because of their relationship with Pick before Waikerie Printing internationally committed itself -

that should be “intentionally” -

in the way I have found. However, in the face of the risk to their business which they perceived from the communications referred to, I consider that they committed Waikerie Printing to withdraw the River News from the Mannum area.

So that is a finding of commitment on that part

In this matter, I think that any remaining debate about whether the “purpose” . . . refers is a subjective purpose or an objective purpose is academic.

That seems to have been resolved by the decision handed down this morning:

In my view, the relevant subjective purpose clearly existed on the part of Law and McAuliffe as officers of Rural Press and on behalf of Bridge, and on the part of the Taylors as directors of Waikerie Printing. I consider the arrangement had the subjective purpose, common to each of them, of preventing or restricting or limiting the supply of services -

et cetera, and that goes to a 4D point. He says:

In the light of the evidence to which I have referred, in my judgment, the commitment of Waikerie Printing to withdraw was made or conveyed to Rural Press and Bridge ultimately by PT’s discussions with McAuliffe on 9 April 1998. Although that commitment was made under the belief about what Rural Press and Bridge might do if Waikerie Printing did not withdraw the River News from its active promotion in the Mannum area, as it was nevertheless a commitment made as part of the arrangement which I have found to be established. The decision of Waikerie Printing was not simply a decision made in the face of a perceived commercial threat, and without there being any arrangement between Rural Press and Bridge on the one hand and Waikerie Printing on the other. The fact of such an agreement is confirmed (but only as against Rural Press and Bridge) by the evidence that Price gave in her examination to the officers of the ACCC, although she says that the agreement was reached in early March 1998.

Now, that is some evidence which is to be found in the appeal book, volume 2 at page 384, which was the transcript of examination, and it is where she was being asked some questions about a document which is to be found at page 519. So it is a document – if you go to page 519, first, where it says:

The River News March 11^th edition showed no signs of the “agreement” as to not soliciting advertising in Mannum.

She was asked some questions about that.

GUMMOW J: This was transcript-in-confidence?

MR DOUGLAS: It was at one stage, your Honour, yes.

GUMMOW J: Not any more?

MR DOUGLAS: It was an examination under the provisions of the Act.

GUMMOW J: We need not bother about that any more. It is opened?

MR DOUGLAS: Yes, it is opened, your Honour, yes. It has been opened in the trial. It was tendered in the trial. I do not think there was any restriction upon the confidentiality of it when it was tendered at the trial. If you look at the evidence there, at pages 384 to 385, it is really just some understanding she refers to about an agreement. In our respectful submission, it is important to keep in mind that although the established position now is that when one is looking at the purpose of an agreement for the purposes of section 4D, one is looking at the subjective purpose of the parties to the agreement.

When one is looking at the question of whether or not there is an arrangement or understanding, there being no question of contract here, it really is a question objectively of what happened between the parties, not what one of the officers or one of the parties may have thought.

GLEESON CJ: There is a problem that the word “understanding” is ambiguous in its ordinary meaning.

MR DOUGLAS: Yes, your Honour.

GLEESON CJ: It can mean: I understand something will happen, that is to say, it is my belief it will happen. But in the context with which we are concerned, it refers to something like an agreement or arrangement; that is the context. But on the findings of fact that have been made by the trial judge in the Full Court here, is it not plainly an understanding?

MR DOUGLAS: He is plainly finding a commitment. He characterises it as a commitment by Waikerie Printing, but if you look at those paragraphs I have just read out, together with the paragraph below, he does not really at any stage say that we committed ourselves not to go over there. He uses words such as, “We were prepared not to countenance”, and in the paragraph at 1192 going over to 1193 he says:

Subsequent to 9 April 1998, Waikerie Printing did withdraw the River News from active circulation . . . Also, subsequent to that date, Rural Press and Bridge did not give any further consideration to embarking upon any conduct directly in competition with the River News or the Taylors other newspapers. The evidence does not disclose after about that date that either McAuliffe or Price sought to pursue any such conduct, or sought approval from Law to do so. I accordingly also find that Waikerie Printing, Rural Press and Bridge gave effect to the arrangements -

but he really at no time establishes where the arrangement was one which, by communication between the parties, we effectively said that as a result of what they said they would do on 9 April, we would not go into their territory. There had certainly been threats by us at an earlier stage, so characterised by the judge to the effect that, “Well, look, you know what the situation is, don’t you. If you keep on doing this, we’ll be giving consideration to coming over into your territory.” That, in our respectful submission, cannot then be used as a hinge to effectively say that we have committed ourselves to Waikerie Printing not to go into their territory as a result of what they said on 9 April, and the judge nowhere so finds. That is, I think, in a nutshell our short point on this issue.

HEYDON J: On 1192, is not line 23, though it is not grammatical, a finding that Waikerie Printing’s decision to withdraw was a commitment which was part of the arrangement? In other words, it must have been responsive to the negotiations from which the judge inferred the arrangement.

MR DOUGLAS: But the arrangement his Honour is referring to there, with respect, must be what he has set out in paragraph 90 on the preceding page where he says:

I consider that Rural Press and Bridge through Law and McAuliffe desired to procure . . . and to revert . . . and in exchange they were prepared not to countenance –

That is not a finding of some express communication between the parties. In other words, it is a finding as to what they themselves were prepared to do, not what they had undertaken to do. That is the point.

The next point which we wish to go to is the question of “substantially”.

HEYDON J: If you are leaving that, your notice of appeal says nothing about any challenge to what the correct proposition of law is in relation to the test for understanding. The Commission in its written submissions explicitly says that it is treating your argument on understanding as being a purely factual argument. I just want to get it clear. We are not being invited then to say whether Mr Justice Fisher was right or wrong?

MR DOUGLAS: Your Honour, I thought I had made it plain that we are saying that the absence of mutual commitment means that there is no arrangement or understanding. I know that the Commission in their submissions have said that our argument is purely factual, but in our submissions in reply I thought we had made it plain that we did not regard our argument as purely factual.

GUMMOW J: Could we see that? Your argument in reply, is it?

MR DOUGLAS: Yes, your Honour. If the Court goes to it, we say that the ACCC mischaracterises - - -

GUMMOW J: I am sorry, whereabouts?

MR DOUGLAS: Just commencing in the first paragraph, your Honour. So we just make it clear that it is not a challenge to the factual findings made by his Honour. We seek to make that clear in paragraphs 1 to 4.

GUMMOW J: You have a complaint about mischaracterisation at paragraph 7 too on page 4.

MR DOUGLAS: That is on the substantial point, your Honour. I think the ACCC is trying to put us into a situation of – in many ways this is a very factual appeal on both sides.

GLEESON CJ: Yes, that is right.

KIRBY J: Who participated in the special leave hearing of this matter?

MR DOUGLAS: At the time when special leave was given, Rural Press was perceived as being of significance in relation, as I understood it, to the South Sydney decision. South Sydney having been handed down this morning, it does become, in our respectful submission, a somewhat factual appeal. We have sought to make it clear, and I do not want to trouble this Court with upsetting concurrent findings of fact and I have just tried to refine the point down in relation to arrangement or understanding to that narrow ambit, but I had not understood, in answer to Justice Heydon’s question, that we were precluding ourselves from adopting what Justice Fisher had said in Morphett Arms.

GUMMOW J: Where do you say in your written reply that Justice Fisher rides again?

MR DOUGLAS: No, we have referred to Morphett Arms in our submissions in-chief and had intended to develop that in oral argument, your Honour, but our perspective of the situation was that there were two competing points of view. The Full Court had foreclosed the issue against us in the decision of Morphett Arms but it was an issue which was still open to be determined by this Court.

GLEESON CJ: In a case that has the right facts.

MR DOUGLAS: If your Honour thinks so.

HEYDON J: So we are to work it all out for ourselves, are we?

MR DOUGLAS: I think we have referred extensively to the Australian authorities, your Honour, but we have not referred, I admit, to the English and American authorities. So to that extent, if we have not raised those, yes, we have been derelict in our duty to the Court.

GUMMOW J: I think you need to amend your notice of appeal.

MR DOUGLAS: In this Court?

HEYDON J: At page 1362 of volume 6 is your notice of appeal, or part of it, and ground 4 says:

The Full Court should have found that there was no arrangement or understanding involving mutual commitments –

Does that not assume that the narrower test is the only test to be considered?

MR DOUGLAS: It would not be very useful if in fact the law simply required a unilateral commitment. In other words, success on that ground of appeal would not give us success.

GLEESON CJ: The word “commitment” might have different shades of meaning. We are here concerned with the meaning of that expression in the context where one person makes a threat to another and then does not perform the threat.

MR DOUGLAS: We are, yes.

GLEESON CJ: If a man says to me, “If you pay me a certain amount of money a week, I won’t kick in your shop window”, and then he does not kick in my shop window and I pay him a certain amount of money a week, it might be accurate to say he and I have an understanding.

MR DOUGLAS: On the other hand, it may simply just be – there is no sense of moral obligation in that example. Justice Lockhart, in the decision which I took the Court to before, referred to the concept of moral obligation. I would not have thought in those circumstances the chap who goes round kicking people’s windows in really has any sense of moral obligation to the shopkeeper.

GLEESON CJ: You could spell out an understanding from what people do and refrain from doing. If you look at the fact that over a long period of time breweries in Melbourne never sold their beer north of a town on the south coast of New South Wales and breweries in Sydney never sold their beer south of a town on the south coast of New South Wales, they might never have spoken to one another. They might never have communicated in writing or verbally, but you would not have much trouble coming to a conclusion that they had an agreement, arrangement or understanding. If the Trade Practices Act did not apply to that, it would not apply to anything.

MR DOUGLAS: I am just dealing with the particular facts of this particular case. Looking at the facts of this particular case, I think I can only put it, in light of the findings which have been made against us, as I have put it. I do not think I can go beyond that. So those are our submissions on the first point. If Justice Heydon does not feel that the Morphett Arms point is open on the notice of appeal or on the submissions which we have made, then obviously it is not open to us to contest it.

GUMMOW J: You would have to seek to amend your notice of appeal. You do not do so at the moment.

MR DOUGLAS: We would wish to do so, your Honour; it is a question of where.

GLEESON CJ: If you want to make an application to amend, you will have to make the amendment in writing and let us have a look at it after lunchtime.

MR DOUGLAS: If it please the Court.

GUMMOW J: We have to be clear about this. These cases have enormous importance in that country.

MR DOUGLAS: Let me consider my position in relation to that. So far as the substantial lessening of competition is concerned, that was dealt with by the Full Court at pages 1281 and following. It first sets out the findings of the trial judge at 1286. Then the analysis of the court is to be found at page 1312, paragraph 122. The first question which in a sense arises is really not so much the interpretation of the word “substantially” because we do not quarrel with the meaning which was applied to that word both by the trial judge and by the Full Court.

GLEESON CJ: But it is in the context of a finding as to market and the market is identified on line 25 on page 1312.

MR DOUGLAS: Yes, it is, your Honour, so it is a “Murray Bridge newspaper market”. So it is what is said by Justice Lockhart in Radio 2UE, which has been the subject of reference by a number of subsequent decisions both at first instance and in the Full Court. At paragraph 124 the Full Court says this:

Lockhart J, in a passage (at 445) also cited by the primary Judge, did not find it necessary to reach a final conclusion on the point “except to say that the lessening of competition must be at least real or of substance”. He did say, however, that the word as used in the context of s 45 of the TP Act means “considerably”. It would seem that the primary Judge, having referred to this passage, adopted that meaning.

As we understand the ACCC’s submissions, they contend for rather some lesser meaning, but we will deal with the submissions on that basis.

GLEESON CJ: Mr Douglas, could you just remind us: we only get to this point on the assumption that there was an understanding.

MR DOUGLAS: You do, your Honour.

GLEESON CJ: If there was at the time of the understanding a Murray Bridge newspaper market, what was the structure of the market? How many newspapers were selling in it?

MR DOUGLAS: What the court has found is that relevantly River News was the only competition to our paper, which was the Standard, but there were other papers circulating in it.

GLEESON CJ: Is everybody assuming – and I am not suggesting the assumption is wrong if it is made – that we are only concerned with regional or local newspapers? I mean, I presume you can get the Australian?

MR DOUGLAS: You can, your Honour, yes.

GLEESON CJ: Or the Adelaide Advertiser or whatever?

MR DOUGLAS: You can get quite a number of different types of newspapers, but the court - - -

GLEESON CJ: We are only concerned with regional newspapers, are we?

MR DOUGLAS: Relevantly, yes; the competition between regional newspapers for regional advertising and regional news.

GLEESON CJ: So is the market even more narrow? Is it the Murray Bridge market for regional newspapers or for local newspapers?

MR DOUGLAS: I do not think one would define it that narrowly, but the court has found - - -

GUMMOW J: What about the Land, for example? How does that fit in with this?

MR DOUGLAS: It undoubtedly circulates in that area.

GUMMOW J: But it would not be a regional rural newspaper, though it would have matters in it of rural interest, as it were.

MR DOUGLAS: The ACCC contended for the narrow market definition. They were successful in that. We appealed it to the Full Court. We have not appealed it to this Court.

GLEESON CJ: Geographically narrow, but I am just questioning – I am not saying it is wrong, but I just want to understand what is meant by the expression “newspaper market”. I cannot believe – and you have just told me it is not right – that the only newspaper you could buy in the Murray Bridge area was that published by your client.

MR DOUGLAS: No, it is not. There is a lot of percolation of other newspapers from other areas, but his Honour did find that effectively what was done when the River News ceased to circulate in this area is that the only competition to our newspaper had been snuffed out. We are published twice weekly. We publish about, I think, 4,500 papers a week. They have a much smaller circulation of about 2,500 published only once a week. There were some findings by the judge. They are at paragraphs 108 and 109. I think that is really the market which he found. He says:

My consideration of the whole of that evidence, including the evidence of Christopher Findlay (“Findlay”), Professor of Economics in the Asia Pacific School of Economics and Management at the Australian National University, leads me to the conclusion that the relevant product market is the market for the supply of services by the provision of information and news and advertising by regional newspapers rather than the wider product market which the respondents contended for.

GLEESON CJ: That is the point. It is regional newspapers that we are concerned with. If the local boy scouts are going to hold a raffle, then they want to advertise that in the regional newspaper; they do not want to put it in the Australian.

MR DOUGLAS: Yes, your Honour. His Honour says:

It is ultimately a question of degree, but I think that advertising in local commercial radio is not sufficiently linked either in supply or in demand terms to be included in that product market. It is of a different character, and it serves a different and wider community group. The evidence does not indicate to me that the selection of advertising in one or other of those media is price sensitive, but rather it is driven by the perception of advertisers as to the nature and effectiveness of the communication and the scope of the targeted market. That is, it is driven more by the sorts of considerations which indicate the differences in the form of the advertising product. There is nothing to suggest that readers of the Standard would cease purchasing the Standard, if its price were increased, by reason of a choice then made to obtain information or advertising information from Radio 5MU rather than the Standard.

That is one contention we were making, that it was a wider market and included the local radio stations.

There is also no evidence to suggest that a change in advertising rates in the Standard, or in a regional newspaper, would result in any local commercial radio station starting itself to supply advertising through the written medium of a regional newspaper, or that the reverse situation might also arise . . .

Accordingly, I find that there is a market in the Murray Bridge area for the supply of regional newspapers such as the Standard, which provide the services of providing information news and advertising to persons within that area. I accept that there is a Murray Bridge newspaper market, as defined above.

I think that is really the relevant finding.

GLEESON CJ: Right. So in that market you had a monopoly?

MR DOUGLAS: Not what one would describe as a complete monopoly but we were certainly pre-eminent, your Honour.

GLEESON CJ: And the effect of the understanding was to preserve it.

MR DOUGLAS: There was evidence which his Honour referred to, that throughout the whole of South Australia regional newspapers tended to circulate in particular geographical areas, and that appears to have been a longstanding understanding, if I could put it that way.

GLEESON CJ: But if there is such a market and if you had an effective monopoly in it and if the effect of the understanding that existed was to preserve your monopoly, why does that not involve a substantial lessening of competition in the market?

MR DOUGLAS: Your Honour, the question really is whether our monopoly was likely to be threatened in the long run anyway. There was evidence it was for a trial period. Secondly, there was also evidence that it would be a perfectly appropriate competitive response of ours to have done what we threatened to do, which was to go over into their market. Certainly, if there had in fact been an incursion for a considerable period of time into our market, as was happening, in the usual course one would expect that we would have gone into their market and competition would have erupted.

Now, if the mere threat by us of going into their market with a competing newspaper was sufficient to cause them not to seek to compete in our market, then the actual presence of a competing newspaper of ours in their market would almost certainly have done so. So regardless of whether their minor incursion into our market - and it was not into the whole of the market; it was an incursion into just that area represented by Mannum and its surrounding area - was not a very significant incursion even in the confines of our market, it only involved in the usual week approximately 100 newspapers a week.

There is substantial evidence before the Court to the effect that their newspaper, that is the River News, sold in our market area quite a number of copies in various places both prior to and after the conduct impugned and that advertisements were received and news was published in their newspaper which was relevant to the Mannum area, and one cannot look at it as a situation of a complete withdrawal from the market. They had a presence before and after.

All that was really happening during the period from about the middle of 1997 until about April 1998, when they finally apparently decided to “withdraw” from our market was that there was a Mr Emmins who lived in the town of Mannum and he was receiving advertising and he was promoting local news and things of that nature. So that the persons in Mannum and its immediate surrounding area were receiving more in terms of services from the River News than they were accustomed to receive; once his employment ceased, that act of promotion of the River News in that area ceased, but the River News did not cease being published there and it has continued to be published there.

The other aspect of the matter is - and I think this submission is developed more fully in our submissions in reply commencing at about paragraph 7 - we say that notwithstanding the market which has been found by the court, namely, the regional newspaper market in the circulation area of our newspaper, one is entitled to take into account in relation to the issue of competition conduct which, whilst it may be outside the relevant market, it nonetheless cannot be ignored in determining whether there is any likely substantial lessening of competition.

HEYDON J: No. That is a contradiction in terms, is it not?

MR DOUGLAS: What is that, your Honour?

HEYDON J: If the market is limited to regional newspapers Justice Mansfield has excluded commercial radio.

MR DOUGLAS: He has, yes, your Honour.

HEYDON J: Activity in commercial radio can say nothing about the state of competition in that market.

MR DOUGLAS: Well, obviously in terms of close competition that is true, relevant to a market. But if in fact part of those services can be provided by radio stations and other forms of media, including other newspapers which are not regional newspapers, then that tells you something about the state of competition in the market.

HAYNE J: The fudge lies, Mr Douglas, in the words “cannot be ignored”. What are you meant to do with it?

MR DOUGLAS: Well, what was done I think in Boral, your Honour; just that citation we have. I am probably going to be told it has been misused, but in footnote 16 we have a citation from the judgment of the Chief Justice and Justice Callinan in Boral where it is said:

There may be a wider, and narrower, area of rivalry; but, if the narrower area itself constitutes a market, then it is power and conduct in that area that must be examined. That is not to say, however, that an evaluation of power and conduct in the narrower area can be undertaken in isolation. It may be, in a given case, that the dynamics of rivalry in the narrower area are influenced by what goes on in the wider area.

That would seem to us to be commonsense. There are no, as we would see it, completely defined lines here. Then we have collected references to the evidence as to the question of competition, which is obviously evidence which was led by us not only in relation to this issue but also in relation to the question of market. But what one will see from that is that it is the presence of other media even if they are not within the market as defined which constrain, if one could put it that way, monopoly power within the market itself.

The other aspect of the evidence is that there was no evidence to the effect that, for example, the price of our newspaper changed after the relevant conduct had been engaged in. That submission I think is made in paragraph 13 of our written submissions where we say that the touchstone of increased or lessened competition has increased or lessened the prices and service levels.

There was no evidence adduced before the trial judge to suggest that before the incursion the appellants were charging otherwise than at competitive levels or that the appellants gave more and charged less after the incursion by the River News into Mannum. Nor was there any evidence adduced that the appellants did not charge at competitive levels or otherwise gave less or charged more after the withdrawal of the River News from promoted circulation in the Mannum area. Cover price and advertising rates for the Standard remained constant throughout the period immediately prior to and during the incursion and in the 18 months that followed, for which evidence was adduced. It is true that a level of local Mannum news content in the Standard did increase from prior levels during the period of the incursion. However, that increased level of local Mannum content in the Mannum Mercury insert continued after the withdrawal, and accordingly cannot evidence any lessening of competition.

So really what we submit here is that whilst the Full Court and the trial judge have put it in terms of competition being nipped in the bud, you have to really look at the size of the market in determining what is substantial within that market. So far as the first of those questions is concerned, the “nipped in the bud” argument has to take account of the fact that there is, as the trial judge and the Full Court have recited, this longstanding understanding between newspaper publishers in regional markets in South Australia, which is unrecorded in any way but apparently it means that they each have separate geographic areas.

The “nipped in the bud” argument really involves the breakdown of that understanding and the development of competition between the River News and the Standard in the circulation areas of both of those newspapers, because it would be illogical to suggest that if they were to engage in full-throated competition with us in our area that we would not go into their area. If that be so, really the finding that the competition has been nipped in the bud means that it is really a finding that this geographical isolation between the circulation areas of newspapers will be broken down by the conduct in question.

GUMMOW J: That is why you get an injunction against them.

MR DOUGLAS: I am sorry, your Honour?

GUMMOW J: The relief was declaration and injunction.

MR DOUGLAS: Yes, your Honour.

GUMMOW J: No damages.

MR DOUGLAS: No damages, yes, your Honour. In our respectful submission, part of the problem with the case, if I can put it that way, on this issue as well as on the section 46 case - and I will not deal with the second aspect of it - is the narrowness of the market which is being defined. On one view of the matter, if you were looking at a broader market, say, for example, a South Australian regional newspaper’s market, which seems to us to be an even more logical market which one is dealing with, there seems to be a tacit understanding in that market which, although the judge has said it is not an understanding in the sense of the Trade Practices Act in paragraph 4 of his judgment, there seems to have been a longstanding situation in that market that regional newspapers do not compete with each other in their prime areas.

A case could have been made out, for example, that conduct such as that which has been found against my client of threatening to break down these existing barriers if they are not adhered to could in a wider market amount to a substantial lessening of competition in that wider market because it is conduct which would effectively preserve the status quo, but to have a situation in which what the court is finding is that the withdrawal of the services of one individual from the Mannum area – that is Mr Emmins – from providing his part-time services to the River News and thereby augmenting its circulation by about 100 newspapers a week, that seems to us not in anyone’s sense of the language to be substantial, but that is the case which was put and that that is the case which we have met.

So far as the “nipped in the bud” point is concerned, it seems to us it is a necessary corollary of a “nipped in the bud” that what the court was finding was that the conduct of the River News that they could have continued with impunity to continue to circulate their newspaper in our market without us threatening them, and that they would not have withdrawn their competition in the face of full-throated competition from us. We have put, I think, the other matters in the written submissions, but in a nutshell, that is the way in which we would seek to approach the matter.

The last matter which we wish to deal with on our appeal is the question of accessorial liability. Now, so far as that is concerned, we accept Yorke v Lucas that you do not need to know that you are contravening the legislation, but that was decided - - -

GUMMOW J: Perhaps we should look at the relevant section, should not we?

MR DOUGLAS: Yes, we should.

GUMMOW J: Is there some point of construction of it?

MR DOUGLAS: Yes, it is 75B:

A reference in this Part to a person involved in a contravention of a provision of Part IV, IVA, IVB, V or VC . . . shall be read as a reference to a person who:

(a) has aided, abetted, counselled or procured the contravention;

(b) has induced, whether by threats or promises or otherwise, the contravention;

(c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or

(d) has conspired with others to effect the contravention.

Now, your Honour, at trial and I think on appeal, it was essentially put, as we would understand it, on a basis of knowingly concerned then or a party to the contravention.

If one goes to the consideration by the Full Court of this matter, it commences at page 1323, paragraph 154. To understand that appropriately one needs also to have regard to the full and factual findings of the trial judge, which are to be found at paragraph 135 of the trial judge’s judgment and following in volume 6 at pages 1208 through to 1211. So at 155, he said - we have already referred to his Honour’s findings on and to the evidence of the involvement of Mr Law and Mr McAuliffe in the communications with the directors of Waikerie Printing, and it is probably useful just to go to that. Commencing at about paragraph 138 he has referred to the principles and then said in paragraph 137:

I am satisfied that Law and McAuliffe were each knowingly concerned in the contraventions of s 45 and s 46 of the Act by Rural Press and Bridge which I have found.

They were each clearly aware of the general financial strength of Rural Press and of its relationship with Bridge. They were each aware of the general market in which the Standard competed, effectively until July 1997 without competition. They were each aware of the physical resources available to Rural Press and to Bridge if it were desired to embark upon publishing a regional newspaper in the Riverland area in competition with the newspapers published by the Taylors. I am satisfied that they were each also aware that the perceived that the communications with the Taylors, in one instance through Robinson, would have been perceived by the Taylors as the threat of a response by publishing a regional newspaper in the Riverland area which would potentially much reduce the profitability of the Taylors’ businesses. I do not consider it is necessary for the ACCC to demonstrate that each of them explicitly thought about the concepts which s 46 of the Act draws attention to, so that each in a precise way thought about the nature of the Standard’s market, or the extent of the power of rural Press and Bridge in that market, or whether their conduct on behalf of Rural Press and Bridge involved the exercise of any such market power.

HEYDON J: Mr Douglas, do you challenge that last sentence, beginning “I do not consider it is necessary for the ACCC to demonstrate”?

MR DOUGLAS: Your Honour, we do not challenge the factual findings of the judge.

HEYDON J: Well, paragraph 40 of your written submissions says there was no finding and no evidence of actual knowledge of a purpose or effect of substantially lessening competition.

MR DOUGLAS: I think I would have to withdraw that, your Honour.

HEYDON J: So paragraph 40 can be crossed out?

MR DOUGLAS: Yes, it can. Then:

Law became aware of the concerns of Price and McAuliffe about the move of the River News into Mannum soon after he assumed responsibility for the regional newspapers of Rural Press and assumed the primary decision-making role with respect to them. McAuliffe was at material times the regional manager for South Australia of Rural Press. Both Law and McAuliffe were each involved directly in communications with the directors of Waikerie Printing in the manner recorded in the findings above. They each kept informed about the course of those communications, and the conduct of Waikerie Printing in the light of them. They each intended, in my judgment, to procure by their communications some action by Waikerie Printing which involved Waikerie Printing ceasing to provide the information and services of the River News in the Mannum area, or beyond what had been the River News’ prime circulation area before July 1977 which, relevantly, was at a line about forty kilometres north of Mannum.

I also am satisfied that those communications were directed to securing the commitment of Waikerie Printing to that retreat, and that the quid pro quo for that commitment was that Rural Press and Bridge would not embark upon the establishment of a regional newspaper in the prime circulation area of the River News or the other newspapers published by the Taylors in the Riverland. I am also satisfied that each participated in that process because they perceived the circulation and promotion of the River News in the Mannum area as being in competition with the Standard published by Bridge. Price’s persistent requests that Rural Press take some aggressive competitive action, as well as the introduction of the Mannum Mercury pages into the Standard, confirm that finding. It may well be that, from the point of view of Law and McAuliffe, the competition to the Standard in its prime circulation area which was presented by the River News circulating in that part of the Standard’s prime circulation are around Mannum was not great. But it was, and was perceived by them to be, competition. That is so even if their motivation for securing the retreat of the River News from the Mannum area was in part to demonstrate to other regional newspapers that intrusion by other newspapers into the prime circulation area of a regional newspaper of Rural Press should not be undertaken without the risk of some competitive response. I am also satisfied that each of them were aware that the arrangement entered into, which was the very arrangement which they sought to secure, contained the exclusionary provision to which I have referred. I think it was disingenuous of Law to claim, as he did in evidence, that he wanted only to apprise Waikerie Printing of the concerns of Rural Press - - -

GUMMOW J: Mr Douglas, can we just look again for a minute at your submissions in-chief? They go from paragraphs 37 to 40; 40 is not pressed, is that right?

MR DOUGLAS: I think in light of what Justice Heydon pointed out to me, your Honour, it cannot be pressed.

GUMMOW J: Yes. What really then comes out of 37, 38 and 39 without 40?

MR DOUGLAS: Perhaps I could just revise my answer slightly in relation to Justice Heydon. It is the question of competition in the Murray Bridge newspaper market. You have a situation in which the offence is almost defined after the conduct in question, so the market is defined by the pleading of the ACCC and by virtue of that fact one then has an offence as framed. Whilst they would be aware of the market power which they had in the Murray Bridge newspaper market in a sense of their circulation area, it is arguable that that is not knowledge but there is a market, as has been found by the court.

GUMMOW J: Well, is 40 in or out or altered?

MR DOUGLAS: I think it is out, your Honour.

HEYDON J: That means 38 and 39 go out too.

MR DOUGLAS: Yes.

HEYDON J: Do 38 and 39 go out or stay in?

MR DOUGLAS: Yes, I agree.

HEYDON J: They go out?

MR DOUGLAS: Yes.

GUMMOW J: So we are left with 37.

HAYNE J: Which is an acceptance of Yorke v Lucas, which ain’t much, Mr Douglas.

MR DOUGLAS: I have always had some difficulty with this point.

HAYNE J: That was a death by three cuts, not a thousand even, Mr Douglas.

MR DOUGLAS: I am facing up to them quickly, your Honour.

We seek to put the case differently in our submissions in reply in paragraphs 16 through to 23 and it may be we have put it more artfully there, whether more successfully I am not sure. We refer to the authorities. The ACCC has made a submission that our earlier approach places an impractically high threshold on proof of accessorial liability and what we go on to say in paragraph 19 is that the findings of the trial judge outlined by the respondent at paragraph 61 of its submissions are not sufficient to bring Mr Law and Mr McAuliffe within the terms of 75B(1)(c) or 76(e) in respect of the alleged contraventions of 45(2)(a)(ii) and (b)(ii). The furthest these findings go is finding (i) and I think probably to understand that one needs to look at the submissions of the respondent.

The ACCC in paragraph 61 of their submissions summarises the findings of the trial judge and (i) is the paragraph at the top of page 14 referred to. What we say is that the furthest these findings go is finding (i), to the effect that Mr Law and Mr McAuliffe perceived that the River News was in competition with the Standard. This finding taken on its own, together with the other findings, does not amount to a finding that the purpose or likely effect of the arrangement had anything to do with such competition, nor does finding (i) amount to a finding that Mr Law and Mr McAuliffe perceived the River News as being in substantial competition with the Standard.

The approach argued for the appellants we say is consistent with the approaches adopted by Justice Hill in Australian Competition and Consumer Commission v Universal Music. I do not think the Court has copies of those but we have copies of those authorities. Regrettably, they are very bulky. We make the submission that it is necessary for the individuals concerned to know that the principal’s conduct was engaged in for the purpose or had the likely - - -

GUMMOW J: Is there not an appeal pending in Universal Music?

MR DOUGLAS: There is, your Honour, Mr Young tells me. We do not believe it is on this issue, your Honour.

GLEESON CJ: What was it that these people did not know that they needed to know to establish accessorial liability?

MR DOUGLAS: As we put it in our submissions, they did not know that the principal’s conduct was engaged in for the purpose or had the likely effect of substantially lessening competition, as was in the market as defined.

GUMMOW J: Could you say that again.

MR DOUGLAS: They did not know that the principal’s conduct was engaged in for the purpose or had the likely effect of substantially lessening competition.

HEYDON J: But people do not think like that; only lawyers think like that. Only a small class of lawyers think like that.

MR DOUGLAS: Yes.

HEYDON J: Mr Justice Mason and those who agreed with him Yorke v Lucas, as I think your submissions say, demands concentration on the essential facts constituting the contravention. Those are facts, as it were, at a lower level, a much greater degree of specificity than the general conclusion about the substantial effect on competition. What Justice Mansfield was endeavouring to do was simply to assemble a group of those essential facts and then saying they are a substantial effect on competition, and knowledge of those facts was knowledge of that characterisation. What essential fact in that sense did they not know?

MR DOUGLAS: Well, they must have known because they were the architects, in a sense, of seeking to prevent the River News from circulating in the area which they had circulated in, the venues both papers circulated in. I recognise that it is a statutory test, but whether that had a substantial effect upon the competition in that market is quite another matter.

GLEESON CJ: Would it make any difference to the accessorial liability of these two men if the evidence showed that they sat down with a copy of the Trade Practices Act in their hands, worked out what they were going to do and said, “We will be all right because as a matter of market definition there is no such thing as a regional Murray Bridge newspaper market”?

MR DOUGLAS: That seems to be an unlikely way to get off such a charge, your Honour.

GLEESON CJ: But if that were the fact it would not help them, would it?

MR DOUGLAS: No, that would not help them.

GLEESON CJ: It would just mean they disagreed with the trial judge about market definition.

MR DOUGLAS: They may have had no view about it, your Honour.

GLEESON CJ: Is that a convenient time, Mr Douglas?

MR DOUGLAS: Yes, your Honour.

GLEESON CJ: We will adjourn until 2.00 pm.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.02 PM:

GLEESON CJ: Yes, Mr Douglas.

MR DOUGLAS: Your Honours, we have considered over the luncheon adjournment whether to seek to amend the pleading in the way suggested in argument earlier this morning and we do not wish to amend.

GLEESON CJ: Thank you.

MR DOUGLAS: We also considered the argument on access - we do not seek to amend our pleading to raise the point we were raising. We have considered the argument about accessorial liability over the luncheon adjournment. Paragraph 40 is withdrawn. We cannot put the argument better than we have put it in our submissions in reply and really no development of that in oral argument would really progress the matter beyond those.

Having said that, there is only one other matter I wish to attend to and that is that there is an exhibit which is not reproduced which is referred to in footnote 33 on page 17 of our reply submissions. It just sets out some information in relation to the advertising rates of the papers which is in fact in the submissions, but just in case any member of the Court wishes to verify what is in the submissions, that is the exhibit which is referred to, otherwise we have nothing to add. If it please the Court.

GLEESON CJ: Thank you, Mr Douglas. Yes, Mr Young. Mr Young, it might have escaped your attention that Mr Douglas’ submissions were not received with the customary applause that we apply to them so you will take that into account, no doubt, when dealing with this appeal.

MR YOUNG: Yes. If the Court pleases, what we will do is to respond to the submissions on Bridge’s appeal as shortly as we think we can in the circumstances and then, if it meets the Court’s convenience, proceed immediately to our appeal.

I am not sure it arises any longer, but can I state the ACCC’s position on the question of law arising from Nicholas and Email? It is this. In the ACCC’s submission, an understanding can involve a commitment by one party to conduct itself in a particular way and there is no necessity that the understanding or arrangement or meeting of the minds need include commitments by each party as to the way each will conduct itself. That is to say, in our submission, the views expressed by Justice Fisher, Justice Lockhart, and then Justice Sackville most recently in Amcor, are correct.

Further support for that is found in section 4D itself in section 45A which refers, in effect, to a restriction affecting supply by one or other of the parties to the arrangement or understanding. However, having made that clear, let me hasten to add that it is our principal submission that the question of law does not arise because of the findings of fact both by the trial judge and the Full Court. It would only arise, if we are wrong, about the effect of the findings of fact.

Can I deal then with our learned friend’s arguments as to why there was no sufficient finding of an arrangement or understanding to satisfy section 45. It is our submission that the appellant’s starting point is to focus solely on that part of the arrangement, as found, that involved a commitment from Waikerie to withdraw the River News from circulation in the Mannum area and to ignore the commitments that arose from Bridge and Rural Press communicated earlier by various threats and other communications to the effect that in that event they would not seek to introduce a rival newspaper into Waikerie’s prime circulation area of the Riverland.

Our learned friends therefore, essentially, isolate the 9 April communication which was Waikerie’s response to the earlier threats and they say this, “You need to find after 9 April a communication or evidence that Bridge thereafter” - that is to say, after 9 April – “decided to take no action to introduce a rival newspaper into the Riverland”. They say the earlier communications are to be ignored.

In our submission, that is not only artificial but it misstates and ignores relevant findings made below to the effect that Bridge’s proposal that it would not enter if Waikerie withdrew was communicated by these earlier representations and threats and they remained on foot as of 9 April. So much is clear from the findings of the trial judge. Can I go to paragraph 90 at page 1191. Mr Douglas went to this passage in the learned trial judge’s judgment. He criticised the expression of the second sentence that spoke about the:

commitment to withdraw . . . and in exchange –

a preparedness -

not to countenance the introduction of a newspaper into . . . the Riverland.

The criticism was that that sentence by his Honour was not directed to communications but, at least in the latter part of it, was directed simply to the internal thinking of Bridge and Rural Press. In our submission, that is not so. The next sentence makes that clear:

the clear effect and intent of the various communications –

was to the effect just described. But it is not only that passage that makes it clear that the finding of a reciprocal commitment not to enter the Riverland appears from what his Honour earlier canvassed, by way of factual findings, as to the particular communications. Can I point to several paragraphs and only do that. First, at page 1169, paragraphs 26 and 27, particularly in paragraph 26, the second sentence. Then, in paragraph 27 dealing with other conversations, about line 44, communications:

to Pick that . . . Rural Press might be forced to respond commercially.

In paragraph 35 his Honour turned to some communications in January of which there was a contemporaneous handwritten memorandum of Mr Law’s. It included reference at the bottom of the page, line 45 to “willing to accede request”. We would point also to paragraphs 44 and 48. Paragraph 48 dealt with communications to Mr Robinson, a brother-in-law of one of the owners of Waikerie, but were clearly in the form of a threat to introduce:

an opposition newspaper in the Riverland -

line 25, at page 1176. Mr Robinson’s evidence is even more eloquent of the communication by prior threat as to what Bridge would do in the event that River News were withdrawn, that is, they would desist from a threatened introduction of a rival paper into the Riverland. His evidence is at volume 1, page 209 to 212. I will not go to it.

Can I, however, also point to findings of Justice Mansfield that followed paragraph 90 that indicate plainly that he was making a finding about communications when he spoke about reciprocal commitments - firstly, page 1200.

CALLINAN J: Is not all of this summarised in paragraphs 30 to 50 of the Full Court judgment?

MR YOUNG: It is, your Honour, yes.

CALLINAN J: And a lot of the material is actually extracted and quoted?

MR YOUNG: Yes, it is summarised at length in both the judgment below and in the Full Court and as well in volume 2, the various file notes and written communications appear from page 399 onwards and in volume 3 from page 720 onwards. Can I just point to two passages in Justice Mansfield’s judgment – at 1200, paragraph 111. That is a finding about an arrangement involving reciprocal elements. Similarly, at 1210, paragraph 140, the first and second sentences are likewise a finding about an arrangement involving reciprocal commitments.

There were really overwhelming elements of reciprocal commitments, Bridge’s commitment communicated in the course of the prior threats. They were conditional threats and the condition was what they would do unless the River News was withdrawn and the commitment from Waikerie was given in a number of communications culminating in 9 April. It is artificial to separate the two. For that reason, it is our submission that the argument that there was no arrangement really simply cannot stand in the light of the concurrent findings of the trial judge in the Full Court.

I make a couple of other brief points. Our learned friend referred to Mr McCarthy’s intervention, that he said resulted in the draft letter that was signed by Law, not being sent. He also conceded that Bridge, up to that point – that is to say, 7 April – had been pursuing an arrangement involving reciprocal commitments. Now, all that the intervention of McCarthy meant, if anything, was that the next communication did not take place in writing. He was concerned about putting in writing the attempts to arrive at this understanding. But the earlier communications were not withdrawn, and they were responded to. Therefore McCarthy’s intervention does not negate either court’s findings.

Can I then turn, if the Court pleases, to the next head of argument, substantial lessening of competition. The argument essentially was that the reduction of competition by an arrangement that resulted in the River News being withdrawn from the Mannum area was quantitatively small, and therefore insignificant, in the circumstances of this market. In our submission, that argument is amply answered by the reasons of both the trial judge and the Full Court. There is no challenge to the accepted state of authority that the expression, “substantially lessening competition”, has a qualitative component, not just quantitative. Nor is there any challenge to expressions in the authorities to the effect that the relevant lessening, prevention or injuring of competition will be inadequate unless – I will start again.

The authorities establish that the question is whether the relevant lessening, prevention or hindering is qualitatively important or relevant and meaningful to the competitive process, in the context of the findings about the particular market. That is the question that was posed by Justice French in Stirling, and recently endorsed by Justice Hill in the Universal Music Case. There appears to be no challenge to those principles.

KIRBY J: Have you given us the reference to Justice Hill’s treatment of this issue, because it is 150 pages of reasons.

MR YOUNG: I can, your Honour. Justice Hill dealt with the point in ACCC v Universal Music (2001) 115 FCR 442 - - -

KIRBY J: It was handed up before lunch, but it is 150 pages, Mr Young.

MR YOUNG: Yes, your Honour. The relevant passage, applying Stirling, is at paragraph 460, page 547. Justice Carr, in a recent case called ACCC v AMA, also applied Stirling.

HEYDON J: Mr Young, that cannot be the correct reference. Paragraph 460 does not refer to Mr Justice French.

MR YOUNG: I am sorry, your Honour. I am afraid I will have to take up Justice Kirby’s invitation to supply that reference a little bit later, if I may. I was about to give a reference to Justice Carr, [2003] FCA 686, at paragraphs [329] and [339] did apply Stirling. The substantial lessening argument must confront the findings of both courts. They are in similar terms, so it is convenient to turn to the Full Court, if I may, page 1314 in volume 6. In that paragraph, 128, the Full Court said this:

It is also true that the number of copies of the River News sold in the area was, in raw numbers, modest. But this does not mean that the level of competition introduced into the market by the River News can be dismissed as trivial or insubstantial. The circulation of the Standard itself was not large, reflecting the small population of the geographic area constituting the market. The River News was effectively the only competition in that market. The evidence of Mr Pick –

he was the managing director of the River News –

was that the River News was offering cheaper advertising rates than the Standard . . . and was taking steps to increase circulation.

Potential competition was accepted. A little bit later on on that page, fourth last line:

Not only did their actions effectively snuff out the services actually provided by the River News to readers and advertisers in Mannum, but also the potential for the River News to expand those services and compete more effectively with the Standard on price and quality.

Over the page, at 1315, the Full Court pointed to the fact that the incursion into the Mannum area by River News, line 10:

“prompted Rural Press and Bridge [Printing] to respond in a quite specific and firm way”.

A little bit later on, lines 15 to 16: the competitors “did not regard” the incursion “to be trivial or insubstantial”.

GUMMOW J: Your citation was correct of ACCC. It is 115 FCR 442 at page 547, which is paragraph 460 and following.

MR YOUNG: Yes. I think Justice Heydon’s point, though, was more specific. Your Honour was referring specifically to Stirling, and that is where I cited it, but - - -

GUMMOW J: I do not think it is there.

MR YOUNG: No. The passage deals more with - - -

GUMMOW J: I do not think there is a reference to Justice French’s judgment.

MR YOUNG: No, there is not. But it applies the broader view of “substantial” in that passage. Now, the reaction of Rural Press is noteworthy. Not only did they respond by increasing the level of service within the Standard, introducing a Mannum area supplement to the Standard, but they set about trying to achieve the removal of the River News through these threats and the arrangement that they sought to achieve. As Justice McHugh said in Boral:

The views and practices of those within the industry are often most instructive –

That passage was directed to market definition, but it might equally be directed towards the significance and substantiality of competition.

Our learned friends made several points then about the significance of the competition. The main points seemed to be that the competition was unlikely to last, because the Standard could lawfully go and compete in the Riverland, and, if they did that, that might lead to the withdrawal of the River News from the Mannum area and a restoration of the old prime circulation boundaries. Whether that might be so or not is really in the realm of speculation, but what is clear is that if they responded lawfully by competing, at least the outcome would be the product of the processes of competition.

You might have a winner and a loser, or you might have continuing competition between two rival newspapers in both areas. Who is to know? But it is no answer to say that the removal of the River News from the Mannum area was insubstantial and insignificant and could be dismissed because that result could have been achieved by lawful processes, rather than unlawful processes. Really, the argument, in our submission, does not logically deal with the reduction of competition that arose from an arrangement that the River News should cease to compete in the Mannum area, thereby restoring the old monopoly of the Standard.

There was also some attempt, it seems, by reference to Mr Emmins, to challenge the findings of both courts that the arrangement brought about an effective withdrawal of the River News. Those findings were made in both courts; by Justice Mansfield at these paragraphs – I will not go to them - 19, 55, 57, 62, 93, 111 and 116; and by the Full Court at 45, 47, 60, 83 to 84, and 127 to 129. In our submission, it is clear that the effective promotion of the River News in the Mannum area and its effective circulation ceased with this arrangement.

Lastly, our learned friend referred to the touchstone of an effect on prices, and said that the price of the Standard was unaltered through this period. Well, that rather cuts in the opposite direction than the appellants would like. The evidence was that the River News offered cheaper advertising rates than the Standard – that was accepted by Justice Mansfield at paragraph 64 and by the Full Court at paragraph 128. Indeed, the Full Court at that paragraph said:

the River News was offering cheaper advertising rates . . . and was taking steps to increase circulation.

It was that price competition that disappeared. The Standard did not have to reduce their advertising rates to compete; they got rid of the River News in another manner. Therefore, applying the touchstone of an effect on prices, the River News was effective price competition for the first time in the Mannum area. It was snuffed out.

Can I mention, as well, there was evidence from Ms Beryl Price, the manager of the Standard, that she became quite concerned when River News picked up a paid advertising account of a Mannum real estate firm, Weston Raine & Horne. That was a “reasonable advertiser” in the Standard. They swapped their patronage to the River News. That caused her concern. That is volume 2, page 367, another piece of evidence that the competition was qualitatively significant. For those reasons, it is our submission that the second ground of appeal should be rejected.

Can I turn to accessorial liability? The argument, in our submission, really misunderstands Yorke v Lucas, as, I think, some questions from Justice Heydon tried to indicate. Without going to the cases, it is clear that Yorke v Lucas required, for section 75B involvement, a knowledge of the essential facts and actions that resulted in the contravention. No case has ever said that the parties need to have in their minds the terminology of a provision such as 45, which uses terms such as “substantial lessening of competition”. What they have to know are the actual facts and conduct that are then found by a court to constitute the contravention of section 45.

That point was made both by Justice Mansfield at paragraph 138 and the Full Court at paragraph 162. The appellant’s argument really denies that understanding of Yorke v Lucas and essentially is an argument about terminology. The complaint is that the court’s finding of the actual facts, actions and conduct known to each of the parties, McAuliffe and Law, were not known to them in the terminology of section 45. But the essential facts were known, and both courts so found.

Can I illustrate the point by reference to Hamilton v Whitehead [1988] HCA 65; (1988) 166 CLR 121 at 128, which the Court might recall is an aiding and abetting case, concerned with contravention of the prescribed interest provisions of the Companies Act. Mr Hamilton was the sole actor in the company’s conduct. He published the advertisement calling for interest in syndicates to restore vehicles. Now, the definition in the Corporations Law of “prescribed interest” goes on for paragraphs, but it was never thought that there had to be a finding of knowledge in terms that replicated the definition of prescribed interest. All that had to be proved was that the relevant individual had the knowledge of the particular acts or conduct that resulted in the contravention of the Corporations Law. So too, here - - -

GUMMOW J: What is that citation again, Mr Young?

MR YOUNG: Sorry[1988] HCA 65; , 166 CLR 121 at 128.

GLEESON CJ: Hamilton against?

MR YOUNG: Whitehead.

GLEESON CJ: Thank you.

MR YOUNG: Likewise, there is a section 50 case under the Trade Practices Act, TPC v Australian Meat Holdings, a decision of Justice Wilcox. It is only reported in [1988] FCA 244; (1988) ATPR 40-876. There Justice Wilcox said this at 49,510:

each had knowledge of the facts giving rise to the finding that the effect of the acquisition would be to place AMH in a position of likely domination of the market.

The actual knowledge did not have to be of the terminology of section 50, “likely domination of the market”. What was requisite was knowledge of the facts giving rise to that finding. In our respectful submission, Justice Hill adopted the same approach in Universal Music at paragraphs 501, 510 and 517.

So if that is the correct test, do you step back and do you ask what were the facts that were found, or, to take the Chief Justice’s question, what facts or conduct is it alleged Mr Law and Mr McAuliffe had no knowledge of that were essential facts constituting elements in the contravention? The answer is nothing. They were the relevant individuals involved in all of the communications. They intended to procure, as the trial judge found, the withdrawal of the River News in exchange for a quid pro quo of no entry by Bridge or Rural Press into the Riverland market.

They knew of all the communications. They perceived that in the Mannum area the Standard had previously been the only regional newspaper, it effectively had a monopoly. The River News made an incursion which was a competitive threat and it was forced out. They are the relevant facts and circumstances known to the two individuals that the trial judge found and, in our respectful submission, they comprise knowledge of all the essential facts making up the contravention of section 45 and that is all that section 75B requires. So, if the Court pleases, those are our submissions on the appeal by Bridge and Rural Press.

Can I then turn to the appeal by the ACCC, if I may? There are two main issues in this appeal. The first concerns the operation of section 4D in conjunction with section 45(2)(a)(i) and (2)(b)(i). The other concerns the operation of section 46. In both respects the ACCC succeeded before the trial judge and in both respects the Full Court reversed the decision of the trial judge. May I deal firstly with section 4D and section 45.

The essential reasons the Full Court gave for reversing the decision of the trial judge could be summarised as follows. First, section 4D is a boycott provision and, accordingly, only applies to arrangements in the nature of a boycott that specifically target a particular individual or a particular class of persons for injury or damage. Secondly, and more broadly, the section 4D purpose does not include a purpose of preserving an absence of competition.

Next, and going to another limb of section 4D – and this is a related point – “particular persons or classes of persons” must be aimed at or specifically targeted it the sense of being targeted for injury or disadvantage. Lastly, and perhaps the ground with broadest potential application, the Full Court said that section 4D is generally inapplicable to market-sharing arrangements between competitors.

Now, the starting point of our argument is this. In reaching those conclusions the Full Court did not reject or overturn any factual finding by Justice Mansfield at all. Now, so far as section 4D was concerned, the trial judge found that Waikerie Printing, on the one hand, and Bridge and Rural Press on the other, were competitors with each other in the Murray Bridge regional newspaper market. There was no challenge to that finding. Indeed, I think it is correct that it was not appealed.

The second finding was that those parties came to an arrangement which contained the mutual commitments I have just described in the first appeal. The Full Court specifically upheld that finding of an arrangement between competitors involving mutual commitments, including a commitment by one, Waikerie, to withdraw the River News from circulation and promotion in the Mannum area.

GLEESON CJ: I do not think this matters at all in relation to your argument or Mr Douglas’, but was it an arrangement or an understanding that was found, or both?

MR YOUNG: I think it is fair to say that neither court distinguished between the two.

GLEESON CJ: No, it is just that Mr Douglas has put his argument on understanding and you are putting it on arrangement. You may both be right.

MR YOUNG: I think the trial judge’s findings were in terms of arrangement. That is why I have tended to use that expression.

GLEESON CJ: What were the Full Court’s findings?

MR YOUNG: I think the Full Court’s findings were likewise. Paragraphs 81 to 84 – I am sorry – perhaps I should start at 1292 paragraph 79, the Full Court posed the question, “Was there an arrangement” in the heading. They then upheld the trial judge’s findings of fact in the passages between 81 - - -

CALLINAN J: It is 1296 and their Honours says that it “was an arrangement or understanding”.

MR YOUNG: Yes, they do, your Honour is right. But I think it is fair to say the trial judge tended to use the expression “arrangement”.

CALLINAN J: There might be a lower threshold to you with “understanding” perhaps?

MR YOUNG: There might be, your Honour, but relevantly I think Justice Mansfield observed that it was unnecessary to distinguish between the two.

GLEESON CJ: Yes, I am not suggesting to the contrary. I just wanted to be sure that we are accurately understanding what was done by the judges in the Full Court.

MR YOUNG: Yes, your Honour.

KIRBY J: “Arrangement” in its normal sense would connote a greater degree of particularity, have gone a bit further along than an understanding which might be left in a gentleman’s agreement or without getting down to as much specifics. That is at least in the commonsense of it.

CALLINAN J: A wink and a nod.

MR YOUNG: Yes, it would certainly perhaps more readily fall into the understanding category, the wink and the nod, rather than - “arrangement” seems to be more particular than that.

KIRBY J: The collection of words - the Parliament has been careful to use such a collection of words as to try and make sure to catch all forms of consensus.

MR YOUNG: Yes, it is a good word. Can I return, though, to this point: there is a third finding that Justice Mansfield made that factually was not overturned or criticised or rejected. That was the finding of subjective and objective purpose. Justice Mansfield made that finding at page 1191 to 1192. As commonly occurs in these cases, the judges have addressed both the subjective test and an objective test.

KIRBY J: It happened as recently as this morning.

MR YOUNG: Perhaps in future they will not need to, your Honour, but historically they have and, as Justice McHugh pointed out in this morning’s judgment, in many cases it does not make a difference which way it is approached.

GLEESON CJ: I cannot remember in 25 years of practice encountering a case in which it made a difference which way it was approached.

MR YOUNG: No. At 1192 - - -

KIRBY J: It might affect the way you present the case because if your focus is upon the subjective, then you will try to get more out of the witness than perhaps you would if you were concentrating on the documentation and the judge’s assessment and characterisation of it.

MR YOUNG: Yes, your Honour, that is true. Here it does not matter, that distinction, because Justice Mansfield’s findings were clear and there was ample evidence to support the finding, whichever test was applied. He found at the top of 1192 a subjective purpose “on the part of Law - - -

KIRBY J: Would you give the paragraph as well because we will - - -

MR YOUNG: I am sorry, your Honour, I did – 91. He found a:

subjective purpose clearly existed on the part of Law and McAuliffe as officers of Rural Press and on behalf of Bridge, and on the part of the Taylors as directors of Waikerie . . . of preventing or restricting or limiting the supply of services to the particular class or classes of persons, being those in the Mannum area (or in that area and extending to a time –

“a line”, I think it should be –

about forty kilometres north of Mannum) who could otherwise receive the information and news in the River News or who could otherwise advertise in the River News or take advantage of advertising in the River News.

GLEESON CJ: Now, what is particular about them?

MR YOUNG: In our submission, it is quite particular in the sense that you may not be able to name every individual, but the relevant class of persons is geographically defined as those in the Mannum area or – and there was clear evidence of this – that a line was drawn 40 kilometres north of Mannum near Walkers Flat and the River News was not to be actively circulated or promoted south of that line. There could be nothing more particular than drawing a geographic boundary in that fashion.

GLEESON CJ: The object was to prevent the supply of goods or services to anybody.

MR YOUNG: No, your Honour, because the range of possible users of the regional newspaper services were essentially potential readers or potential advertisers within that area south of a line 40 kilometres north of Mannum. It was not anyone.

GLEESON CJ: It was also limited to anybody who could read.

MR YOUNG: Yes it is, but it is still not anybody in the world, it is anybody within a defined geographic region.

GLEESON CJ: Yes.

MR YOUNG: It is much like the breweries not selling their beer south of a line joining Wollongong and some other town on the way to Canberra.

GLEESON CJ: What everybody would, in the past, have regarded and, as I recollect it, did regard as a classic 45(2)(b)(ii) case.

MR YOUNG: No, your Honour, in our submission, it would also be regarded with the introduction of section 4D. As many cases show there is a classic section 4D case. That is 45(2)(a)(i) and (2)(b)(i). The cases are legion in which arrangements have been made for geographic division or for tender allocation in which it has been decided, for instance, that section 4D applies without knowing the identity of everyone caught within the particular class. But, in all events, your Honour, my point for the moment is that finding of fact was made as a finding in terms which was accepted by the Full Court - - -

GLEESON CJ: What do you say was the point of departure between the Full Court and the trial judge?

MR YOUNG: The Full Court said that that purpose identified by his Honour is not a relevant purpose for the purposes of section 4D. A different and more specialised purpose would have to be demonstrated, so the Full Court held, to establish a contravention of section 45(2)(a)(i) and (2)(b)(i), namely, a purpose of specifically targeting for injury or disadvantage some particular person or class of persons, and they would seem to add a requirement that that particular targeted person should also be a direct or indirect competitor.

GUMMOW J: How would they read all that off 4D(1)?

MR YOUNG: Our submission is they cannot, but they were the two glosses to which they added to his Honour’s finding of purpose.

GUMMOW J: There is no point arises about 4D(2), is there?

MR YOUNG: No, your Honour. The starting point for our submission is that is the finding of purpose. Our submission is it is a finding of purpose squarely within section 4D, satisfies its plain language, and that really should have been the end of the matter, as it was for his Honour Justice Mansfield. Can I go to what the Full Court did, first, at page 1284. The Full Court in this part of their Honour’s reasons summarised the findings of the trial judge without criticism or objection in any respect. At 1284, paragraph 56 they refer to his Honour’s finding of purpose without criticism. Then their Honours later turn to the question whether there was a purpose satisfying section 4D. That part of their Honour’s reasons starts at 1296.

Their Honours first noticed the arguments by Bridge and Rural Press, paragraph 86, the argument about ASX v Pont Data which does not really arise here, that is the supposed circularity of a class that is only identified by the fact of exclusion. That is not applicable here because the class was a geographic region. The alternative argument they noted at line 41 was that:

the provision nonetheless must be aimed at the relevant class.

And in line 44 must:

have the purpose of targeting the relevant class - - -

GLEESON CJ: So, we are not here concerned in this case with particular persons?

MR YOUNG: In our submission, that is correct, your Honour, but that is the subject of some - - -

GLEESON CJ: We are only concerned with a particular class of persons.

MR YOUNG: We are only concerned with a particular class of persons. The main foundation of their Honour’s decision seems to be a view about purpose rather than a view about the particular class because, ultimately – if I can leap ahead – their Honours say at 1306, line 5, that:

it is unnecessary for us to come to a final view as to the argument that there is a lack of particularity in the class of persons - - -

GUMMOW J: Paragraph?

MR YOUNG: That is paragraph 108, page 1306, line 6.

GLEESON CJ: I do not think that is quite what they said. They said they do not have to deal with the circularity problem. They said:

it is unnecessary for us to come to a final view as to the argument that there is a lack of particularity in the class of persons . . . by reason of circularity.

MR YOUNG: That is so. Your Honour is right, but at the same time we would really make this point, that insofar as their Honours did give any weight to the requirement that there be a particular class, it was really in the context of analysing what kind of purpose is required by section 4D, not in the context of assessing whether there was relevant particularity in the concept of Mannum area residents, or persons south of the line 40 kilometres north of Mannum.

GUMMOW J: Yes, but where do they accept the arguments they set out at 87? At paragraph 87 they set them out.

MR YOUNG: I was about to come to that, your Honour.

GUMMOW J: Yes.

MR YOUNG: They deal with it in stages. The first point I should address is at the top of page 1297, the first sentence – it really begins at the foot of the previous page:

As the argument for the appellants developed, it quickly appeared that identification of the class of persons was one aspect of a fundamental question as to the application of s 4D.

Then they mention it “is one of the two per se prohibitions” with no test of substantial lessening of competition attached to it. They then set out the extracts of the Swanson Committee Report which used, in paragraph 4.116 and 4.117, a reference to “boycott”, and they quote Hansard at 1298. That is all by way of introduction.

GLEESON CJ: In 4.116 they, that is the authors of the Swanson Report, used the expression “collective boycott” as synonymous with:

an agreement that has the purpose of or the effect of or is likely to have the effect of restricting the persons or classes of persons who may be dealt with - - -

MR YOUNG: Yes, which is, in large measure, the language of 4D. That is why, in our submission, consistently with this morning’s decision, we should turn to the language of the Act rather than to extraneous notions of boycott and the like.

GUMMOW J: Paragraph 93 is a non sequitur. It sets up the problem and then proceeds to answer it, but there may not be a problem.

MR YOUNG: Yes. Paragraph 93 is the commencing point of a search for something beyond the language of section 4D for some special feature that marks out the 4D restriction for per se prohibition. The answer they then identify, line 34, is this:

It must, we think, lie in the abhorrence of a boycott, namely, an intentional shutting-out of particular persons or classes of persons from access to goods or services, where that is the aim or object of the agreement.

GUMMOW J: In Visy Paper, which we have also under reservation, you will remember that on the section involved there there were arguments we were given that it cannot mean what it says. This seems to be a similar sort of idea.

MR YOUNG: I missed the end of your Honour’s question.

GUMMOW J: This seems to be a similar sort of idea, here, in paragraph 93.

MR YOUNG: Yes, your Honour, it is. It is taken a step further in this case, though, your Honour, because if we go across to 103 and 104, the ultimate destination is set out and it involves taking this concept of specific targeting another step away from the language of section 4D. This connects with the trial judge’s findings of purpose which were not rejected, not overturned and referred to with evident approval. The opening line of paragraph 103 is:

There was no discussion by his Honour of any evidence which would point to any of the persons involved in the arrangement having the actual purpose of specifically targeting the persons in the nominated geographic area or communicating such a purpose among themselves.

GLEESON CJ: You passed over that part of their judgment – you may be going to come back to it – where they agree with Justice Finn and Justice Heerey in the News Case.

MR YOUNG: Yes, I am going to come back to that, your Honour, if I may. I just really wanted to - - -

GLEESON CJ: We have upheld the decision of Justice Finn and Justice Heerey this morning.

MR YOUNG: Yes. I will come back to the concepts of boycott, specific targeting, direct or indirect competitors and so forth, and the geographic market division, but what I was endeavouring to deal with here is how their Honours have arrived at a finding that purpose was not proved yet they did not reject the trial judge’s finding as to purpose, and that is because they discern in section 4D the very special meaning of a purpose of restricting and limiting supply. The special meaning they discern is that which is discussed in paragraphs 103 and 104.

KIRBY J: What was the foundation for this gloss that their Honours are putting on it? What was the textual foundation for this view – for the text of the Act?

MR YOUNG: The textual foundation for this view seems to be twofold. One, the view that it is the legislative intention in enacting section 4D to deal with boycotts and only boycotts because it is the intentional shutting out inherent in a boycott which warrants draconian per se treatment.

GLEESON CJ: Is not the textual foundation the word “particular”? What different meaning does the section have from what you say it would have if the word “particular” were not there? On your argument as to the meaning of the section, what force does the word “particular” have in its application to classes of persons?

MR YOUNG: It means that there must be a class which is particular in the sense that those who make the arrangement have the purpose of restricting supply to that particular class.

GLEESON CJ: But the section would have exactly the same meaning, on your argument, would it not, if the word “particular” were not there?

MR YOUNG: No, your Honour, because it connects the class with the intended effect, the purpose. Can I deal with it this way, your Honour. In section 4D it is our submission that the subject of the restriction is, in essence, the line of supply from at least one of the parties to the contract arrangement or understanding with its competitors. This is, it must be understood, an arrangement between competitors. Competitors come together as a combination to agree on concerted action or to have an understanding about concerted action. The subject of the concerted action is that a line of supply or acquisition from one of those competitors shall be restricted or limited.

So the focus is not like a boycott provision in trying to only protect what has been called in some of these cases “the target”; it is really concerned with the combination between competitors that is trying to prevent, restrict or limit a line of supply or acquisition by one of those competitors. So at the heart of this is an arrangement between competitors and that means that, in our submission, the work that “particular” does is to require that when those competitors get together they must have an operative subjective purpose of restricting a line of supply to either a particular class or to a particular person.

So you cannot isolate the word “particular” and use it to support a boycott driven approach to the section. It needs to be kept constantly in mind that the section is aimed at an anti-competitive arrangement between competitors by which they are going to restrict the lines of supply to or from one of their number.

So, your Honours, our argument in this case, we say, does not depend at all on the word “particular”. We say his Honour’s finding as to the relevant affected class was a particular class: the residents of Mannum who, until this arrangement came into effect, had access for readership and advertising to the River News; when this arrangement came into effect, they ceased to have that access. Not every member of the class might have been identifiable but that has never been required by any of the cases dealing with “particular”. It has never been required by any of the cases dealing with “class”. It was a geographically-defined group.

GLEESON CJ: What different meaning would the section have, in your submission, if instead of the words “particular persons or classes of persons” there appeared the word “anybody”?

MR YOUNG: I think the answer to your Honour’s question is that if you insert “anybody”, it is easier to satisfy, and therefore residents of Mannum would fit within “anybody” because “anybody” is the whole world.

GLEESON CJ: The “class of persons”, on your argument, are just potential recipients of supply.

MR YOUNG: It is not only potential; it is those who actually in point of fact had been advertising in the River News from the Mannum area. It was not just a realm of unidentified people; it is those who had previously had access to advertising in the River News.

KIRBY J: There is the particularity that you say. It is geographical and it is the people who have had this available facility and who used it and are in a particular area of the country.

MR YOUNG: Yes.

KIRBY J: It is hard to think of a greater particularity. I mean, “any person” is the sort of thing that the ACCC dreams about. They do not have that; they have particularity - - -

GLEESON CJ: And they thought they had it in News Limited.

MR YOUNG: Your Honour, I will come to Souths v News Limited.

KIRBY J: We will not go into that.

MR YOUNG: The reasons for finding that the relevant purpose existed are quite distinct from this question of particularity. We really make two submissions. The word “particular” does not explain the result arrived at by the Full Court and, indeed, was quite incidental to their process of reasoning. Secondly, we say the class identified by the learned trial judge was a particular class and therefore it was satisfied.

HEYDON J: Mr Young, if the understanding had a provision which was that the River News should cease publication completely so that none of its former readers would get those services, would that be within 4D or not?

MR YOUNG: Yes, your Honour, because it would prevent the supply of the River News to a particular class, being those who had previously had access to it for readership and advertising plus a group of persons within the Mannum area who likewise potentially wished to have access to it. We would say it is still a particular class. “Particular” in a number of cases has never been held to require that you need to have at the time of the arrangement identified every member of the class.

KIRBY J: Otherwise you would not use the word “class”.

MR YOUNG: Exactly so.

GLEESON CJ: We know as a matter of history why they introduced the word “class”, do we not? The history of the section is set out by the Full Court.

MR YOUNG: Yes, it is Tradestock.

GLEESON CJ: It was originally limited to particular persons. We know the process of reasoning that led to the extension of it.

MR YOUNG: Yes, your Honour, but that really supports my argument rather than the contrary because - - -

GLEESON CJ: You will have to address that, I should have thought. I understood the Full Court to place considerable reliance on the legislative history.

MR YOUNG: That is so, your Honour. I am coming back to that.

GLEESON CJ: Including of course the parliamentary explanations of the legislative purpose.

MR YOUNG: I am coming back to that, your Honour, but I was simply going to observe that in Tradestock v TNT the case failed because – and I think this is accurate – the prohibition on dealing through brokers rather than directly was held not to be a restriction or limitation on particular persons but rather a limitation aimed at a class; that is, those who wish to deal through brokers. If that was the vice sought to be overcome, we would think that supports the view of “particular” that we have been urging. Not every member of the class of those who wish to deal through brokers was identifiable at the relevant time but that did not prevent the expression “particular class” being thought to be a remedy for that situation.

If I may, can I just point back to 103 and 104 in the Full Court to what we say is really the fulcrum of the reasoning. The first step is to say that the trial judge made no finding or did not discuss any evidence of an actual purpose of targeting the persons in the nominated geographic area. That is difficult to understand in one sense because his Honour made a specific finding that persons in the nominated geographic area were to have the supply of River News to them restricted or denied by virtue of this arrangement. So it is apparent there that their Honours are using the expression “actual purpose of specifically targeting those persons” in some specialised sense.

Next, at the top of 1303 the Full Court drew a distinction that we challenge:

On the findings of fact made by the primary Judge, the purpose of Rural Press and Bridge Printing was to maintain their market power in Murray Bridge by preserving the absence of competition in that market. They also intended to preserve their general position in the industry by demonstrating to observers elsewhere that they could not be trifled with by competitors, who should “keep off their grass”.

If I can stop there, we would ask rhetorically: what is the difference between the purpose found by the trial judge, that of restricting or limiting the availability of the River News to persons in the Mannum area, and a purpose of preserving the absence of competition in the Murray Bridge newspaper market? Beyond semantics, in our respectful submission, there is no difference. Their Honours continue:

Waikerie Printing and Paul Taylor succumbed to the pressure exerted by Rural Press and Bridge Printing, and went along with the geographic zoning in order to prevent an attack by Rural Press and Bridge Printing upon their commercial position elsewhere.

We make no criticism of that. That is the arrangement that both courts found. But then it continues in passages that seek to give some kind of special meaning to the concept of “specifically targeting persons in the Mannum area”:

It would not be expected that those involved in making such an arrangement would give a thought to the interests of the residents of the Mannum area in coming to the arrangement, and certainly not a second thought. It is hardly surprising that there is no finding that the arrangement was aimed at the class of persons defined by his Honour, or that they were specifically targeted by any of the parties to the arrangement. For the parties to act in this way would make no sense.

Can I just stop there. It made a lot of sense to Bridge to force the removal of the River News from its availability to those persons, but this idea of aiming at those persons and specifically targeting them seems to connote something other than restricting the availability of the line of supply to them. Their Honours continue:

The class of persons identified by the primary Judge simply consisted of customers or potential customers of the River News.

Granted that is all they need be in terms of 4D.

They were not direct or indirect competitors of either party to the arrangement.

There is nothing in section 4D that says the object of the restriction, that is to say the person at the other end of the line of supply, need be a direct or indirect competitor of either party to the arrangement.

There is no reason to suppose that either party should have had any purpose to injure or disadvantage those persons.

That seems to be the crux of the reasoning, namely, that you will not have a class of persons the subject of a restrictive purpose within 4D unless they are aimed at and specifically targeted in the sense of having a purpose of injuring or disadvantaging those persons, presumably because they are direct or indirect competitors of the parties to the arrangement.

HAYNE J: This being some deleterious consequence over and above whatever detriment is suffered through preventing, restricting or limiting?

MR YOUNG: Yes, your Honour. We would say the detriment is simply that you have competitors come together to restrict the line of supply by one or other of those competitors.

KIRBY J: I thought in News this morning Justice Gummow specifically disapproved of this targeting notion. Is that a correct recollection? Have you had time to analyse - - -

MR YOUNG: Not only Justice Gummow but other members of the Court as well. Yes, we have had time to digest News and I will take the Court to it. It is our respectful submission that this line of reasoning is incompatible with the approach adopted by I think all members of this Court in this morning’s decision in News.

HAYNE J: Unless emphasis is given to that last sentence of paragraph 103 in the way just identified, if you put paragraph 56 against paragraph 103, there seems an irreducible tension between them.

MR YOUNG: Yes, your Honour. Our starting submission is that this analysis of “purpose” is repugnant to the findings of fact by the trial judge which their Honours never overturned. In our respectful submission, it is not just the last line of 103. The whole thrust of the paragraph is that there needs to be some animus against, in effect, the residents of Mannum. Without that animus being found, without something being aimed and targeted at them in a deleterious fashion, you are not going to find a relevant section 4D purpose of restricting supply to them.

HAYNE J: That is, do you say that the Full Court is saying you read 4D as the provision has the purpose of injuring particular persons or classes of persons by preventing, restricting, limiting, et cetera?

MR YOUNG: Yes, your Honour, that is so. Thrown in there in a less discernible manner is this notion that it might be explicable that you would have that purpose of injuring by restricting the line of supply if they were direct or indirect competitors. Without that, if they are simply mere customers, residents of Mannum who had previously had access to the River News for advertising, et cetera, you are unlikely to find the requisite purpose of injuring or disadvantaging those people by restricting supply to them.

GLEESON CJ: We know, whether they were right or wrong, why they thought this, and it is in a part of their judgment that you have passed over. On page 1301 they agreed that what Justice Finn said in South Sydney v News at paragraph 99. That is the origin of their proposition that they then develop factually later. What do you say about what Justice Finn said in that passage that is quoted there?

MR YOUNG: We say several things, your Honour. I have not been trying to avoid the point; I am intending to come to it. I did go to the fact that their starting point was this concept of being aimed at specifically, which is really what they take from Justice Finn and his decision in Souths v News, that is, it must be “‘aimed at’ specifically”. The history of that phraseology is really this. In the first of those rugby league cases, News Limited v Australian Rugby Football League [1996] FCA 870; 64 FCR 410, the court used the expression “aimed at” simply as part of its factual discussion of the position. They were not attempting in that passage to define the purpose. They were not making any point about construction. They were simply describing the facts of the particular case. That is at page 577F, and that is the passage that Justice Finn has referred to. Justice Finn’s passage starts with what we would think is the important proposition:

For the class to have significance for s 4D purposes it must be the intended object of the discrimination envisaged by the section.

That is the restriction on supply by one of the competitors who is a party to this horizontal combination must be the object of the discrimination in that supply to a person who is going to be restricted or limited.

GLEESON CJ: Where does this idea of discrimination come from?

MR YOUNG: Discrimination comes from the fact that you have competitors, they presumably have lines of supply and acquisition, and the 4D arrangement is going to restrict, prevent or limit one of those lines of supply or acquisition, not generally, but in respect of a particular person or a particular class. I think that is the sense in which Justice Finn uses it, but - - -

GLEESON CJ: He talks of “intended objects of the discrimination”.

MR YOUNG: Yes, he does.

GLEESON CJ: Is that consistent with the section?

MR YOUNG: In this sense, your Honour. The person at the other end of the line of the supply, under section 4D, must be either a particular person or a particular class, but more accurately, we would say, that the object of the section is the line of supply from the competitor. In other words, the focus is on the restriction, limitation or prevention of that line of supply as much as it is on the ultimate recipient, but that is probably just a quibble. But there is a danger in the notion that section 4D is only enacted to protect the person at the end of the line of supply.

GUMMOW J: That person may, nevertheless, have an action for damages under 82.

MR YOUNG: Yes, absolutely. I use the expression “only”, but it is also designed to protect the competitive process by ensuring that competitors do not get together between themselves to agree on who should be supplied and who should not be supplied by one or other of those competitors. So the section is - - -

GUMMOW J: This Act is constructed with these particular norms which then spin out a whole system of remedies and, unless you keep that in mind, you tend to confuse the end by the beginning or the beginning by the end.

MR YOUNG: Yes.

GLEESON CJ: But this is not a section dealing with substantial lessening of competition.

MR YOUNG: No, it is not. It deals with a contravention that is established by establishing the requisite purpose, not by establishing - - -

GLEESON CJ: The effect.

MR YOUNG: - - - any effect on competition.

GLEESON CJ: It does not deal with effect.

MR YOUNG: Yes. I should rephrase that. Critical to the concept of exclusionary arrangement is purpose, but the offence under 45(2)(a)(i) and (2)(b)(i) is making such an arrangement, and containing such an exclusionary provision or giving effect to it, but it is true to say that there is no additional requirement that there be an effect on competition. It is presupposed in the nature of the arrangement that it is worthy of per se prohibition because at heart it is an arrangement between competitors to limit or restrict who one or other of them is going to supply.

Now, your Honours, can I deal with Justice Finn and how he used this concept of specific targeting, and this comes to what I foreshadowed about this morning’s decision. In Justice Finn’s view, the 14-team term was not aimed at Souths as a particular person or a member of a particular class, because that term was concerned with a selection process which was integral to the establishment of the new league, and to say that one or other candidate might ultimately be deselected, as it were, or not gain selection, was different from saying, you had a purpose of restricting supply to that person or that particular class. Ultimately, that is what was decisive in this morning’s decision.

So, essentially, South Sydney turned on the special features of the selection process and whether or not it could be fitted within section 4D. Can I make good that proposition by going to this morning’s decision. I am not sure if members of the Court have a copy.

GLEESON CJ: Yes, we have, thank you.

MR YOUNG: In the Chief Justice’s judgment – I will come back to the parts dealing with boycott and the like, but at page 7, paragraph 22, the last sentence, and also paragraph 23, last two sentences. In the judgment of Justice Gummow, in which Justice McHugh agreed, his Honour dealt with the ultimate purpose at paragraphs 79 and 80 at page 26.

KIRBY J: Which paragraph of Justice Gummow’s?

MR YOUNG: Paragraphs 79 and 80, your Honour, page 26.

KIRBY J: Is this on the point of no targeting?

MR YOUNG: Yes, your Honour.

KIRBY J: My recollection is that that was particularly strongly expressed and that I agreed with it.

MR YOUNG: It was. Really, I should refer the Court in this context to the previous page as well, commencing at paragraph 76. These are important passages for the present appeal, and can I indicate why. First, in paragraph 76, his Honour makes it clear that the 4D concept of “purpose” does not involve any requirement of:

infliction of damage or harm to those persons by reason of the operation of the purpose.

KIRBY J: That is consistent with them having that object and effect, but it is not necessary. It is not essential to the notion.

MR YOUNG: It is not an element of the section. It would not defeat the application of the section if additionally you had a purpose of harming the particular - - -

GLEESON CJ: What is said in paragraph 79 is that the element of the section is that the conduct is “‘directed toward’ a particular class”.

MR YOUNG: Yes, that is the point I was endeavouring to make. Can I come back to that in a moment, if I may, your Honour. In paragraph 77, his Honour expressed the view that expressions:

such as “targeted” and “aimed at” places an unwarranted gloss upon s 4D and incorporate assumptions and requirements derived from case law concerning collective boycotts. These submissions correctly emphasise the need to construe the terms of the legislation free from notions of anti-competitive conduct which are not necessarily incorporated in s 4D.

Then in paragraph 78:

4D is not limited to situations in which the traditional concept of a collective boycott would apply - - -

KIRBY J: That has a textual foundation because there is no reference in this part of the Act to boycott, yet there are other sections of the Act where it is referred to, certainly in the headings.

MR YOUNG: Yes, your Honour. In paragraph 78 Justice Gummow also noticed that boycott introduces this notion of deleterious consequences, observing that:

In the Full Court in the present case Heerey J described a boycott as a means of inflicting some adverse consequences on a person or class.

But then Devenish is adopted as warning against superimposing such extraneous requirements. Can I come to the Chief Justice’s observation about paragraph 79. Justice Gummow says in this paragraph:

It is preferable to speak of the purpose of the provision being “directed toward” a particular class rather than “aimed at” or “targeted”. This avoids the connotations of aggression or the inducement of harm, typically found in judicial discussions of boycotts, of which Souths and the ACCC rightly complain.

GLEESON CJ: Do you say that in the present case the conduct of Rural Press and the other people was directed towards, what, the residents of Mannum?

MR YOUNG: In the sense that it was directed towards the supply of River News to them and to the prevention of that supply continuing. That is why it is better to use the expression “directed toward” because it captures both aspects of section 4D, namely - - -

GLEESON CJ: Tell us again in what sense this conduct was directed towards the residents of Mannum.

MR YOUNG: It was directed towards them in that the effect of the arrangement and the purpose of the arrangement was that circulation of the River News to them and to their advantage was to cease. That is how it was directed towards them. They were to be deprived of access to the River News, so that the monopoly of the Standard could be restored in this area.

HAYNE J: I would have thought you would have simply quoted the trial judge’s finding of purpose, Mr Young.

MR YOUNG: I was trying to, your Honour, in a way.

GUMMOW J: Where do we see that?

HAYNE J: At paragraph 56 in the Full Court.

MR YOUNG: Yes, your Honour. That, in our submission, is quite fundamental to this whole section 4D issue. Those findings of purpose remain untouched by the Full Court.

KIRBY J: I think you said that.

MR YOUNG: Yes. Can I also refer to paragraph 80 where Justice Gummow observed that Souths really turned on the special features of the selection process, and his Honour found that:

There was an absence in the evidence of indications that the purpose of the adoption of the 14-team term was to prevent the supply of services to or acquisition of services from those clubs which under the operation of the selection process would –

perhaps it is better to say “might” –

turn out to be among the “losers”.

Now, those views of Justice Gummow were echoed in other passages. In the Chief Justice’s reasons, page 6, paragraph 19, eschewed construction by reference to the extraneous concept of boycott. Likewise, Justice Kirby agreed with the passages I have read from Justice Gummow at page 53, paragraph 157, and Justice Callinan dealt with the issue, slightly more broadly, at page 83, paragraphs 226 and 227, but his Honour also expressed the view that the purpose requirement in section 4D imports no element of hostility or antagonism or targeting of particular individuals.

So, in our submission, because of the very special facts of South Sydney concerned with the selection process for the establishment of new competition and because of what this Court said in its reasons in Souths this morning, there is in the Full Court’s reasons and its reference to Justice Finn in Souths really an unstable and inadequate foundation for the conclusions to which their Honours come in paragraphs 103 and 104. Even if one accepted a proposition that section 4D required a restriction on supply to be aimed at, or at least directed to, a particular person, it would not support the reasons advanced in paragraph 103 for saying that Justice Mansfield’s finding is inadequate or that to establish a breach of section 4D you would have to find a purpose of targeting someone in the sense of wishing to cause them injury or disadvantage.

KIRBY J: There seems to be language in the Full Court’s reasons which runs headlong into the approach which was approved this morning.

MR YOUNG: That, your Honour, is our submission.

KIRBY J: How significant is that for your appeal?

MR YOUNG: Your Honour, that is very significant for this finding in terms of section 4D because their Honours have essentially said that the findings below did not address the right question and they then pose the question, the 4D purpose question, in a way that does run headlong into confrontation with the reasons handed down this morning.

There are other findings by the Full Court itself that are equally in tension with what the court said in 103. Can I for instance point to paragraph 60 in the Full Court reasons at page 1286 – these are findings by the Full Court itself – line 63:

The immediate effect of the arrangement was that Waikerie Printing ceased actively circulating and promoting the River News in the Mannum area. The conduct in question had removed the only competition, limited as it was, to the Standard . . . The introduction of that competition into the market had been significant enough to prompt Rural Press and Bridge Printing to take steps to remove the source of the competition.

Also paragraph 84 on page 1295 – these are the findings about the arrangement. In the light of those findings, in our submission, not only the trial judge but the Full Court made findings of fact that this arrangement had the purpose of preventing, restricting or limiting the supply of goods or services to residents of the Mannum area by one of the parties to the arrangement, namely, Waikerie. So, there is a tension with the Full Court’s own treatment of the facts.

Can I go back to paragraph 103 and deal with the next paragraph, 104. In paragraph 104 the court attempted to draw a distinction between purpose and effect. It is our submission that the attempted distinction is also incompatible with the trial judge’s findings of fact and the Full Court’s own findings of facts. The paragraph commenced with the observation that:

It is, of course, obvious that the provision for geographic zoning would limit the ability of persons in the area to have access to a second local newspaper. But that is the effect of the arrangement rather than its purpose. The potential customers suffered what, in other contexts, is called collateral damage.

It is difficult to see why the denial of access to a second local newspaper in the area should be described as “collateral damage”. It was the primary intended object of this arrangement, as found by Justice Mansfield and as found by the Full Court. It was, moreover, the only damage, if we leave aside damage to the process of competition. Speaking of affected individuals, there was no one primarily damaged by an arrangement between Waikerie and Bridge to withdraw the River News. They were not just collateral damage; they were the main damage that was intended. So, in our submission, it is wrong to say the denial of access to persons in the area was simply collateral damage.

The reason why they are described as collateral damage would seem to be to say this is a mere unintended effect, not part of the purpose, and as section 4D does not address effect, only purpose, we can put the impact on the customers to one side.

GUMMOW J: There is a reference back in the first sentence of 93 to “draconian treatment” that you took us to. It may be that has to be read with the last two sentences of 104.

MR YOUNG: Yes, your Honour. Your Honour is right that the two drivers, in our respectful submission, of the Full Court’s reasoning were these: first, the notion of a boycott being the intended subject matter of section 4D, which brings in the requirement of animus against the target, but then, secondly, a view that is returned to in those passages at the end of 104 to the effect that these sort of arrangements really ought not to be per se breaches, but should be the subject of substantial lessening of competition tests under section 45(2)(a)(ii) and (2)(b)(ii), rather than a per se test, and hence, unless you have intended injury or damage to the particular class of persons or those persons affected are direct or indirect competitors, it is better to leave them outside section 4D, so that the resulting arrangement would fall to be dealt with under 45(2)(a)(ii).

GLEESON CJ: On page 1304 in paragraph 105 there is reference to a passage from ASX Operations causing “much controversy”. Where do we find that controversy? Is that a reference to decisions of the Federal Court or is it a reference to - - -

MR YOUNG: It is a reference to the decision in the Full Federal Court – I am looking for where the - - -

KIRBY J: The controversy is in the academic literature, is it not, in the literature that comments - - -

MR YOUNG: It is.

GLEESON CJ: That is my question to you: where do we find the controversy?

MR YOUNG: In the academic literature, but in part in cases such as this one itself, where the passage from ASX is quoted at 1302, paragraph 101.

GUMMOW J: And also in the judgment of Justice Hely in the interlocutory application in the football case. Remember, he had an interlocutory judgment in the football case.

MR YOUNG: Yes, that is so.

GUMMOW J: He was worried about Pont Data too, I think.

MR YOUNG: Yes, it is the circulatory issue that is said to be controversial.

GLEESON CJ: Could you – not now and not while you are arguing this case, but within the next seven days or so – please give us a reference to the controversy referred to in paragraph 105.

MR YOUNG: Yes, certainly, your Honour.

GUMMOW J: And 107 is their solution of it by saying Pont Data was really just a conventional boycott.

MR YOUNG: Yes, that is so. I will come in a moment if I may to ASX and that may, in part, answer some of your Honour’s questions.

GLEESON CJ: No, my question is only a question about references.

MR YOUNG: No, I understand that, your Honour.

GLEESON CJ: If it is the subject of academic controversy, then what I want is a reference to the academic writings.

MR YOUNG: I meant to refer to Justice Gummow’s question about the way in which ASX is later used in the Full Court, pages 1304 and 1305. The other notion I would like to come back to is that of direct and indirect competitors which was referred to in 103. It is that notion that seems to tie in with the subsequent discussion of ASX v Pont Data. The court cited the passage from ASX v Pont Data that is said to be controversial at page 1302, paragraph 101. Pont Data’s facts were relatively complicated but in essence ASX Operations had control of a – “Signal C information” it was called, financial information that was provided to participants in the marketplace. To get access to it they had to enter into a licence agreement. The licence agreement prevented them on-supplying Signal C information to anyone who had not itself signed a similar licence agreement with ASX. ASX had an associated business called JECNET which was in the same area of business and competitive with the Signal C information.

The controversial passage simply said that the provision of the licence agreement that said you may not supply the information to persons unless they accept and become bound by the restraints imposed by the licence agreement itself was held to be a formula of exclusion or restriction falling within section 4D. What is said to be controversial is that the fact of exclusion defines the class.

Now, the way in which the Full Court explained ASX Operations v Pont Data was to say that the purpose of the exclusionary provision denying the right to on-supply had as a purpose denying the right to on-supply to people who might compete with JECNET, the ASX business. Therefore, the purpose of that provision was directed at:

a conventional boycott situation where competitors come to an arrangement in order to prevent other competitors entering the market.

I am quoting from paragraph 107 at page 1305. Two observations about that if we may. First, in our submission, it misstates what the Full Court said in ASX v Pont Data. The reason why it was treated as a restriction did not depend on any finding that it was aimed at competitors; it was treated as a section 4D restriction simply because it refused or prevented supply to a defined class, namely, people who have not signed a similar licence agreement, full stop. Secondly, that explanation of ASX v Pont Data is used by the Full Court to support their approach to purpose, as explained in paragraph 103 and, in our submission, ASX v Pont Data affords no support to the way in which the Full Court defined purpose.

KIRBY J: I suppose it is inevitable in this field of law, because a lot of money hangs on these things, that the cases are decided by reference to judicial dicta. Huge quantities in a multitude of cases, but, really, the result is that you can sometimes get away from the Act and its language and purpose.

MR YOUNG: Yes. Well, the point we make about - - -

KIRBY J: You spent a lot of time on the judicial observations.

MR YOUNG: Yes, your Honour. The point we make is ASX v Pont Data may have been a fact situation where ASX had another competitive business, but that was not integral to the reasons for decision of the Full Court. Can I turn then to paragraph 108, page 1305. This is really the only passage where the Full Court turns its attention to the expression “particular class” in any precise or separate way. It says:

In our opinion, the lack of any finding by the primary Judge that the parties agreed upon a particular class at the time the arrangement came into effect, and the lack of any evidence upon which such a finding could have been based, means that no particular class was identified –

We challenge those observations. In our submission, they cannot stand beside the trial judge’s findings as to the arrangement and its purpose, or the Full Court’s endorsement of those findings. The finding of arrangement was the parties agreed that River News would be withdrawn from persons in the Mannum area.

Now, that, in our submission, is an agreement upon a particular class at the time the arrangement was made, and it is difficult to see any support for the view that there is a lack of a finding by the primary judge about this matter, or a lack of any evidence. Let me give an illustration. In the trial judge’s treatment of the facts, if the Court turns to 1172 and the memorandum quoted at the bottom of that page – this is Law’s memorandum of his conversation with Darnley Taylor.

“Da agreed willing to accede request
north of Mannum = 30 KM NORTH –

and then some towns on the opposite side of the boundary just drawn are mentioned. I ask the Court to pick up volume 2. There is a memorandum at page 530 by Mr McAuliffe, recording Waikerie’s commitment. The first entry is:

OK to draw a line 40 km north of Mannum. No ads will be sought from that area – some papers are sold into that area but that has been the case for a long time.

Now, juxtapose those pieces of evidence – and that is simply a sampling and there is a lot of other evidence to the same effect.

GUMMOW J: Have you noted that in your outline?

MR YOUNG: I am sorry, your Honour?

GUMMOW J: Is there a note of that other evidence in your outline of submissions? If not, there should be.

MR YOUNG: No. I will add it to the note that we are going to give the Chief Justice, if we may.

GUMMOW J: It will save time.

MR YOUNG: Yes. I was going to juxtapose that against the passage at 108 in the Full Court’s reasons, where the Full Court said:

lack of any evidence upon which such a finding could have been based –

that the parties agreed upon a particular class. The explanation, in our submission, for what seem to be unsupportable statements at the outset of paragraph 108 and at the outset of 103 about there being no evidence and no findings is really that the Full Court had adopted a very specialised concept of what sort of purpose was legally requisite in terms of section 4D. Can I turn – thus far I have dealt with the reasoning about 4D purpose that depends on notions of boycott, specific targeting, direct or indirect competitors - - -

GUMMOW J: An upshot of your appeal would be that the matter go back for further consideration of penalty, would it? There is declaratory and injunctive relief, of course.

MR YOUNG: Yes, your Honour. Can we think about that - - -

GUMMOW J: That is probably wide enough - - -

MR YOUNG: - - - because we would like to say that the position is simply to restore the trial judge’s orders, but the penalty order was reconsidered by the Full Court in one case, but on the assumption that other penalties had fallen away, so there may be a difficulty in that.

HEYDON J: But does it not follow that, although you are raising extremely interesting points on which no doubt a lot could be said on either side, it is virtually an academic controversy? Just speaking for myself, those declarations should never have been made, and it is not palatable to suggest that the whole point of your appeal is to restore them. Secondly, by the time this Court has delivered judgment, the three-year injunction period will have run out next April.

The injunctions themselves are open to some criticism, although it is not criticism that Mr Douglas has advanced, and the chance of the Full Federal Court or a single judge increasing the penalties when, really, what we are talking about is just a number of different ways of characterising, in legal terms, what was one single body of conduct – I know there is something slightly different to that effect from that in the Full Federal Court, but that is, at least, a strongly arguable position. Just for my part, I think it would be wrong to offer what might be just seen as a lot of obiter dicta about the construction of section 4D and, indeed, particularly if those obiter dicta are no more than academic opinions on hypothetical questions.

MR YOUNG: Yes. Your Honour, the overturning of the trial judge’s judgments on 4D and section 46 do not, in our submission, raise academic issues; they raise real issues as to whether those contraventions occurred. It really is a distinct matter - - -

HEYDON J: It is an academic – what remedy should flow, though.

MR YOUNG: Yes, it is a different question about what orders should be made addressing the orders that were made below. We take your Honour’s point about the injunction, but we are not - - -

HEYDON J: Your client – you can no doubt look after its own self-interest, but you are moving onto very dangerous territory by inviting an analysis of section 4D, where it is not absolutely necessary for that analysis to take place.

MR YOUNG: Well, your Honour, the next point we are about to come to is the reason why we believe that that analysis of section 4D is necessary. I was about to say that I have dealt with three pillars, as it were, of the Full Court’s reasons, but the last pillar, and perhaps the one of most concern to my client, was the broader finding that section 4D was not contravened here because section 4D is inapplicable to a geographic market-sharing arrangement. That is an issue I was about to turn to.

What we have been dealing with thus far are really the characterisation of the evidence and what it established in terms of purpose, as defined in section 4D, but the last and broadest basis that the Full Court founded itself on is one of far-reaching implications - - -

GLEESON CJ: I did not understand that to be an independent basis; I understood that to be a consequence of their earlier reasons, if those reasons were correct.

MR YOUNG: Your Honour may be right, but there is a certain generality in the way in which the relevant passages are expressed.

GLEESON CJ: Where is the passage?

MR YOUNG: It commences at page 1302 after the references to Souths, at paragraph 101. There their Honours address - - -

GLEESON CJ: Sorry, this is page 1302?

MR YOUNG: Sorry, 1302, paragraph 101, in the Full Court:

The specific argument of the appellants which was addressed by the primary Judge was that the alleged arrangement did not infringe s 45(2)(a)(i) because it was an arrangement for market sharing on a geographic basis.

Their Honours then go to the passages that I have criticised, and your Honours are probably right in thinking that this may not be an independent ground of the decision, but in 102 their Honours deal with the primary judge’s findings, which:

were based upon the view that if there were an arrangement for geographic market sharing (or, more particularly, zoning), that would be a breach of s 45(2)(a)(i) because it would deprive persons in that area of services otherwise available - - -

GLEESON CJ: Well, would necessarily be a breach. They seem to have attributed to the trial judge – rightly or wrongly – the view that all market-sharing or all geographical-sharing arrangements are necessarily within 4D. Is that the view that the trial judge took?

MR YOUNG: No, it is not the view the trial judge took, your Honour, but - - -

GLEESON CJ: Do you urge that view on us? Do you say to us that if you have a market-sharing agreement or a territorial division of the kind involved here, you do not have to concern yourself with whether there is a substantial lessening of competition, it is a per se offence?

MR YOUNG: The answer is, in the ordinary case, your Honour, and provided the elements of 4D are established by the evidence, yes, it will be a 4D situation, and not a substantial lessening situation.

GLEESON CJ: So the ordinary way in which you would deal with an old-fashioned brewery arrangement of the kind that I mentioned earlier is under 4D and 45(2)(a)(i)?

MR YOUNG: The ordinary way is, yes, 4D. I suggested they are alternatives. They are not alternatives; it is “and/or”. But that is so. Likewise with market rigging or other arrangements, “This tender is yours and the next one belongs to someone else”, and so forth.

GLEESON CJ: No, just limit it to geographical market division between competitors. You say, you never get into a substantial lessening of competition argument with those because it is always caught by 4D?

MR YOUNG: In the ordinary case it will be because there will be a purpose of an arrangement between competitors to restrict supply to a particular class, namely, the class within a defined geographic zone. We are not concerned here with vertical arrangements; we are concerned with arrangements between competitors, horizontally.

GLEESON CJ: I understand that.

MR YOUNG: The conclusion to the passages I have pointed to on geographic market sharing appears at the very end of paragraph 104. Can I start at 1303, third-last line:

The TP Act does not guarantee that customers will have access to the goods or services provided by a particular supplier. Pushing the concept of an exclusionary provision too far will have that consequence. In our opinion, market sharing or zoning of the kind involved in the present case, without more, is not an exclusionary provision, and the primary Judge fell into error in rejecting the appellants’ argument to that effect.

GLEESON CJ: But your submission is that if two people are in competition with one another, no matter what the size of the market, no matter what issues of market definition may arise, if those people who are in competition with one another agree between themselves to limit their supplies of goods or services by reference to geography or by reference to any other criterion, it falls within section 4D.

MR YOUNG: Yes, your Honour, but any other criterion – perhaps if we put that to one side. I mean, my proviso was that provided the evidence establishes the requisite subjective purpose in terms of 4D.

GLEESON CJ: But it always would on your argument because it would always have the purpose of preventing or restricting supply to a particular class of persons, that is to say, the persons who would have been supplied but for the agreement.

MR YOUNG: If there is a geographic restriction in the sense that supply is not to occur to a particular class of persons, namely those within a defined geographic zone, it is our submission that it squarely satisfies the plain language of section 4D.

GLEESON CJ: Yes, so it does not have to be geographic. As long as there are persons who would otherwise have been supplied and who by reason of the agreement will not be supplied, they constitute, on your argument, a class, the class being people who miss out.

MR YOUNG: Again, I add the rider, provided that there is evidence that that is the subjective purpose and that the Court is satisfied that there is a sufficient definition of the class that it satisfies the requirements of 4D, that is, particularity.

GLEESON CJ: But if there are people who are missing out on supply of goods or services, then they constitute a particular class, that is to say, those who miss out.

MR YOUNG: In the ordinary case, yes, your Honour, but - - -

KIRBY J: Because as consumers they lose the opportunity to choose.

MR YOUNG: Yes. Can I add that the view we urge is not all new. I mean, it is - - -

GLEESON CJ: That is the view of Justice Mansfield in this case.

MR YOUNG: Yes, your Honour, but it is the view of commentators, including Justice Heydon, that section 4D applies to geographic market restrictions.

GUMMOW J: Always.

MR YOUNG: Yes, provided the terms of the section are satisfied. But they are not disabled from being satisfied simply because your class is based on geography or some other criteria.

GLEESON CJ: No one has suggested that, but I understand your argument to be that they will necessarily be satisfied if it is based on geography. How could it be otherwise?

MR YOUNG: Well, I agree with your Honour. I just quibble about the word “necessarily”. I am using the more cautious expression of “ordinarily” or “in the usual case” and “provided the evidence of purpose is there”.

GLEESON CJ: I suppose you could exclude cases where it is an unintended or unforeseen consequence, something like that.

MR YOUNG: Yes, but, your Honour, many exclusionary arrangements, even ones about tender rigging, they have the restriction on supply or access imposed by virtue of some kind of formula. It is the common case, you say to one of your competitors, “You shall not encroach into my area or attempt to solicit any of my customers. Let us reach an agreement about that.” It is a section 4D arrangement, in our submission, of the ordinary case and it is no answer to say that the restricted class has been defined by virtue of some kind of formula such as current clients of mine, current or past clients of mine, residents of a particular geographic zone, customers who order more than 1,000 tons a month, et cetera. Just about every restrictive arrangement is done not by reference to the identification of particular individuals or particular companies, but by reference to some kind of class formula, and there is nothing novel about that.

The contrary view is novel, that is to say, if your definition of a class is based on geography, then prima facie it is outside section 4D because being a geographically-based class, it is unlikely that the members of the class will either be direct or indirect competitors and it is unlikely to be the case that you will have an intention or purpose of injuring them. That is the radical, novel view, in our submission. There is no reason in the terms of section 4D why a geographic formula, of all the formulas that might fit it, should be judicially excised from the reach of section 4D.

GLEESON CJ: Now, does that bring you to section 46?

MR YOUNG: It does, your Honour.

GUMMOW J: Before you get to that, where is the actual expression by the trial judge as a finding of what the contract arrangement or understanding was and what was its offensive provision?

MR YOUNG: It is paragraph 90.

GUMMOW J: It is actually encapsulated there, in the primary judge?

MR YOUNG: It is not the only place, but it is the central reference. It is expressed in the same substantive way, but perhaps with greater precision, in some other paragraphs that I mentioned earlier.

GLEESON CJ: I thought it was in paragraph 92 on the top of 1192.

MR YOUNG: Paragraph 92 is really an extension of paragraph 90, your Honour. The finding in paragraph 90 was that there was a:

commitment to withdraw the circulation and promotion of the River News from the Mannum area, and to revert to its previous prime circulation area ending about forty kilometres north of Mannum, and in exchange they were prepared not to countenance the introduction of a newspaper into the prime circulation areas of the Taylors’ newspapers in the Riverland.

GUMMOW J: Your side had the primary carriage of the minutes for the injunctions and declarations, did it not?

MR YOUNG: Yes, your Honour, I believe so.

GUMMOW J: Why were they not framed with a view to the language of the Act by identifying what the relevant provision was?

MR YOUNG: I cannot answer your Honour, but your Honour is right that - - -

GUMMOW J: Justice Lockhart and I wrote a number of judgments on this subject. They all seem to be ignored.

MR YOUNG: Yes, I am familiar with them, your Honour, and it is not a good practice.

GUMMOW J: No. We have been invited to reinstate them.

KIRBY J: Was this an order that you had formulated?

MR YOUNG: The injunctive order? I would assume so, your Honour.

GUMMOW J: Yes. You would have had the carriage of the short minutes.

KIRBY J: The criticism stands, then?

MR YOUNG: Yes, your Honours.

KIRBY J: Directed not at his Honour, but at you?

MR YOUNG: It is a fair criticism. I was about to turn to section 46. Can I turn in the time that remains directly to the Full Court passages in their Honours’ reasons where this part of the decision was explained.

GLEESON CJ: Was there any other market identified other than the Murray Bridge regional newspaper market?

MR YOUNG: Not relevantly, your Honour, not relevantly to the market power of Bridge and Rural Press. Can I go, your Honours, firstly, to paragraph 139 at page 1317 in the Full Court’s reasons. There the Full Court states the test for taking advantage of market power by reference to Melway and it is fair to say Queensland Wire. Then in paragraph 141, line 21, the court identifies what they are going to address as the relevant section 46 conduct. Their Honours say:

The operative conduct of Rural Press was found to be a threat to compete with Waikerie Printing in the Riverland market in which Rural Press and Bridge Printing had no market power (or, indeed, presence).

Then in paragraph 142, their Honours say:

In our opinion, the finding that that conduct constituted taking advantage of market power in the Murray Bridge market within the meaning of s 46 cannot be supported.

Their Honours then proceed to discuss the issue about power in one market and conduct in another. Now, in our submission, the reasoning goes astray at paragraph 141. First, it is our submission that in the last sentence of 141 the court mischaracterised the impugned conduct. The conduct identified and then that ruled on in the opening sentence of 142 is an incomplete description of the conduct.

GLEESON CJ: How would you characterise the impugned conduct?

MR YOUNG: The impugned conduct, in our submission, is the making of conditional threats that unless Waikerie withdrew River News from the Mannum area, Rural Press would introduce a rival newspaper in the Riverland market. In other words, the very same threat that was found to be the foundation of the arrangement, that same conduct was alleged to be the section 46 conduct. What the Full Court has done is to strip away the conditional or reciprocal elements of it and to focus only on the threat to compete in the Riverland market.

Now, that leads their Honours to then talk about the view that this was a threat to do something in another market, the Riverland market, in which the maker of the threat had no presence and no market power. That was the factor that their Honours decided was decisive in the case. A different analysis follows if one correctly identifies the relevant section 46 conduct, namely, the making of conditional threats for the purpose of achieving an anti-competitive arrangement that the River News should be withdrawn, where the threat of reprisal is integral to the conduct.

GLEESON CJ: How is threatening to do something in the Riverland market an exercise of power in the Murray Bridge market?

MR YOUNG: Well, in this way: it is not just threatening to do something in the Riverland market; it is threatening that something will be done in the Riverland market unless River News is withdrawn from the Murray Bridge market.

GLEESON CJ: Yes.

MR YOUNG: So the condition provides the connection to the Murray Bridge market, but next - - -

GLEESON CJ: But what you are looking for is connection to market power.

MR YOUNG: Yes, you are, your Honour, and the question to be asked, in our submission, is this – perhaps two questions can be asked: would such a conditional threat be made in the absence of Rural Press and Bridge having market power in the Murray Bridge market?

GUMMOW J: This seems one bridge too far for me, Mr Young.

MR YOUNG: It feels like that at this hour of the day, your Honour.

GUMMOW J: Yes.

GLEESON CJ: Do not let us stop you, Mr Young. Keep going.

MR YOUNG: I thought that was an invitation to stop. We would say the authorities - - -

GLEESON CJ: In a sense it was.

GUMMOW J: It was suggested never to have started.

MR YOUNG: We would say the authorities have searched for the connection that must exist between conduct and market power to satisfy the language of section 46 where it speaks of “take advantage” and, so far, that search for a way of describing the connection has proved somewhat elusive. One of the reasons, of course, is market power is an immunity in a way. It is a degree of freedom from the ordinary disciplines of competition and there is no sense in which market power is ever, as it were, directly used as if it were some sort of commodity. You will never find a case like that.

The other feature about conduct connected to market power is that just about every case I have ever come across, and I think the courts have ever come across, the conduct in question is pretty mundane, everyday, commercial action or inaction.

It may simply be, as in QWI, a supplier saying, “I will supply you Y-bar but only at this extremely high price”. So it is no more than a statement. It was treated in QWI as a constructive refusal to deal, but a refusal to deal is no more than a statement that, “I won’t deal”. Likewise, cutting prices, terminating a supplier, entering into some sort of arrangement with a competitor, it is all a pretty mundane every day thing. The question is: what connection must exist with market power to make it clear that such conduct is the taking advantage of market power?

In our submission, the cases have indicated that three approaches have been sanctioned. One is ascribed to Justice Deane in QWI, namely direct inference from evidence of purpose. The second is to pose a counterfactual, to put forward the hypothesis to this effect, “Would this participant in the market be likely to engage in the same conduct in the absence of market power, that is to say, in a competitive market?” That was the approach taken in both QWI and Melway.

The other approach that has been taken, partly in QWI by Justice Toohey and most recently by the Full Federal Court in Safeway, is to pose the question, “Why is the conduct being engaged in?” or, in similar phraseology, “What is the reason or rationale of the conduct?”

GUMMOW J: Is there a pending application for special leave in Safeway?

HAYNE J: There were cross-applications, Mr Young, both by Safeway and the Commission, is not that the position?

MR YOUNG: Yes. It sounds reminiscent of this case.

KIRBY J: It seems all of these cases come here.

MR YOUNG: To answer your Honour’s question, that is the Chief Justice’s question, can I pose this question. Treating the relevant conduct as the conditional threats, the proposal that there be an exchange, “We will not enter Riverland if you get out of Mannum”, the commercial rationale for making that proposal, or those conditional threats, needs to be examine. From the viewpoint of Bridge and Rural Press, they were offering to forgo potential revenue from expanding their business into the Riverland. Why would they offer to forgo that in exchange for a condition that Waikerie withdraw River News from Mannum? Ordinary, such a promise would not have a commercial purpose or make commercial sense. They would be giving up a business opportunity and it has an opportunity cost.

CALLINAN J: I thought they said that they were indifferent to whether they made any profit when they intruded into the new area.

MR YOUNG: They were indifferent to - - -

CALLINAN J: Whether it would be profitable or not. I thought there was some evidence that they did not care, that it would be a salutary lesson, any way. I am sure I did see some reference to that.

MR YOUNG: I am not sure about that, your Honour. I will check it overnight. What I am really postulating by asking two similar questions, “Why? What is the commercial rationale?” and, “Would this be done in a competitive market?”, is to expose this issue. Rural Press got no benefit from undertaking not to enter the Riverland. The only benefit they got was a benefit that could only be delivered if they had market power in the Mannum/Murray Bridge area. The benefit they got was the preservation of their monopoly.

If they already faced competitors in the Murray Bridge market, there was nothing in it for them to offer an undertaking that, “We won’t enter the Riverland”. That would achieve nothing because there would be other competitors over and beyond the River News. What they achieved was the elimination within the market in which they had market power of the newly intruded competitor, and it is for that reason we say there is a connection with market power.

GLEESON CJ: All right. We understand that point. Does that cover what you want to say about section 46?

MR YOUNG: No, not entirely, your Honour, but I can - - -

GLEESON CJ: How long are you likely to be? I am asking these questions for the benefit of the people in the special leave applications.

MR YOUNG: Yes, I understand that, your Honour. I think I can conclude what I want to say within 40 minutes, your Honour.

GLEESON CJ: What about you, Mr Douglas?

MR DOUGLAS: I would need less than that.

GLEESON CJ: We will adjourn until 9.30 in the morning.

AT 4.21 PM THE MATTERS WERE ADJOURNED
UNTIL THURSDAY, 14 AUGUST 2003