Australian Competition and Consumer Commission v News Corporation Ltd

[1997] FCA 1328

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 851 of 1997

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
APPLICANT

AND:

THE NEWS CORPORATION LIMITED
FIRST RESPONDENT

TELSTRA CORPORATION LIMITED
SECOND RESPONDENT

AUSTRALIS MEDIA LIMITED
THIRD RESPONDENT

AUSTRALIS MEDIA HOLDINGS PTY LIMITED
FOURTH RESPONDENT

GALAXY NETWORK INTERNATIONAL PTY LIMITED
FIFTH RESPONDENT

NEWS LIMITED
SIXTH RESPONDENT

JUDGE(S):	HILL J
DATE:	19 NOVEMBER 1997
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

Before the Court is a motion by MovieVision Pty Limited (“MovieVision”) seeking orders that a subpoena served upon it some time on or after 4 November 1997 be set aside or alternatively that the subpoena be stood over until at the earliest, Friday 21 November.  An alternative order is sought that all parties be denied access to documents produced under the subpoena if the subpoena is to be now called upon.

The ground upon which it is said that the subpoena should be set aside is that it is alleged that its issue is an abuse of process.  In support of the motion is an affidavit sworn by the business manager of MovieVision.  In that affidavit Mr Keeley deposes that MovieVision’s business is the packaging of movie programs and the supply of them, inter alia, to Optus Vision Pty Ltd.  To enable it to carry on its business it has agreements with various United States movie studios or affiliates, which agreements, Mr Keeley says, form not only the business structure of MovieVision but are of the utmost confidentiality.

He points out that News Corporation Limited and News Limited, the first and sixth respondents in the proceedings (“News”), are competitors of MovieVision operating, inter alia, an unincorporated join venture, namely Foxtel and 20th Century Fox, the maker of movies and the owner of what is often referred to as a film library.

Mr Keeley deposes as to what he says would be the significant commercial damage if details of these agreements were revealed to competitors and inferentially therefore to the News companies.  The application is made in the context of an article, which is in evidence, in the Australian Financial Review indicating financial difficulties on the part of Australis Media Limited and Australis Media Holdings Pty Limited, the third and fourth respondents and which also includes the fifth respondent, and the circumstance that News and Telstra Corporation Ltd (“Telstra”), as parties to the merger agreement the subject of the proceedings, had given notice presumably under the terms of the merger agreement that the agreement had been terminated.

It appears to be common ground that there is a better than even chance that the merger agreement will be terminated tomorrow and that accordingly, by Friday, the subject matter of the present proceedings will no longer exist.  It is suggested that when MovieVision sought to ascertain the relevance of the subpoenaed material to the proceedings it was, in essence, fobbed off by the response that the issues were so complicated that it would take a long time to communicate the relevance of the material.  I find it unbelievable that such a response should have been given, particularly if the response was given by a solicitor and one would hope that solicitors practising in this State treat each other with somewhat more courtesy than that evidence suggests.

The evidence does not, however, in my view lead me to conclude that the subpoena should be set aside as an abuse of process.  The forensic relevance of the material subpoenaed to the matters in question in the proceedings is really quite obvious.  The applicant, the Australian Competition & Consumer Commission, seeks to enjoin the merger involving the respondents, inter alia, on the basis of the effect on competition in the pay television market which the merger is likely to have.  It is claimed that a consequence of the merger will be a difficulty on the part of the Optus group in obtaining a supply of quality film programs.

It is obvious that in the pay television market, as indeed in the free to air television market, the great percentage of programs are either coverage of live events such as sporting fixtures or movies.  The involvement which MovieVision has in the movie programming side of television and the role it plays in its arrangements with Optus have a very obvious relationship with the issue which is raised by the applicant.  The fact that now there is a likelihood that the merger will not proceed can hardly be taken as evidence of an improper purpose on the part of those issuing the subpoena.  The subpoena was, after all, issued well before the notice that has only just now been given that the merger is not to proceed and the subpoena has already been called upon at an earlier stage before me and stood over.  I would accordingly not grant the first of the orders in the notice of motion.

The application that the subpoena be stood over until Friday has more substance in it.  It is obvious enough that the material in question is confidential and sensitive.  What I must do is weight up on the one hand the possible prejudice to the respondent companies, the News group and Telstra, in not obtaining the material subpoenaed, against the suggestion that is made by counsel for MovieVision that there exists the possibility of an inadvertent leakage of the details of some, at least, of the confidential material.

It should be said, of course, that if the material was to be made available to Telstra and News it would be pursuant to orders that would restrict the information to the lawyers at this stage and subject to undertakings to be given by them that they would not disclose the information to any person, including their clients, or make copies of it.  No doubt people are human, even lawyers, so that the possibility of inadvertent disclosure will always be there.  It is, however, in my view, a relevantly insignificant possibility.

Is then the adverse consequence, if any, to Telstra and Australis Media Ltd likewise insignificant?  I find this somewhat harder to assess.  Counsel for News said from the bar table, and I have no reason to dispute it, that it his instructing solicitors are waiting for the information and that if the case does proceed it will be necessary for work to commence immediately on the information produced in terms of assessing it and its significance.

Overall I think that the prejudice to News and Telstra outweighs the relatively insignificant risk to MovieVision of an inadvertent disclosure of the material.  In these circumstance, I am not prepared to stand over the subpoena until Friday and thereby lose effectively two working days.  I do this on the basis that, although there is a better than 50 percent chance of the merger not proceeding, there is also a not insignificant chance that the present proceedings will, in fact, proceed and if so, that there will be a necessity for considerable work on the part of the solicitors to have the case ready for hearing by next Monday.

I would, in these circumstances, dismiss the motion.

I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill

Associate:

Dated:            2 December 1997

Counsel for the Applicant to the Motion:	A G Bell
Solicitor for the Applicant to the Motion:	Freehill Hollingdale & Page
Counsel for the Applicant:	K Close
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the First and Sixth Respondents:	R J H Darke
Solicitor for the First and Sixth Respondents:	Allen Allen Hemsley
Counsel for the Second Respondent:	N Manousaridis
Solicitors for the Second Respondent:	Mallesons Stephen Jaques
Counsel for the Third, Fourth and Fifth Respondents:	M Brawn
Solicitors for the Third, Fourth and Fifth Respondents:	Norton Smith & Co
Date of Hearing:	19 November 1997
Date of Judgment:	19 November 1997