Australian Competition and Consumer Commission v News Corporation Ltd (No 2)

[1997] FCA 1174

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

JUDGE(S):	HILL J
DATE:	29 OCTOBER 1997
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT (N0.2)

In the course of the case management of this matter a question has arisen whether an interlocutory hearing should take place in the three weeks presently allocated commencing on 24 November 1997 or whether that period and any additional time thereafter that might be necessary should be devoted to a final hearing.  An undertaking has been proffered on the part of the respondents in  the event that a final hearing takes place on 24 November 1997; not in the meantime to implement the proposed merger which is the subject of the present proceedings.

I directed the parties to file evidence going to this question and in the result an affidavit was filed on behalf of the applicant, the Australian Competition and Consumer Commission (“the ACCC”) by Mr Alexander, a solicitor employed in the Australian Government Solicitor's office, having responsibility for the conduct of the case on behalf of the ACCC.  In addition evidence already filed in connection with the proposed interlocutory hearing was read, being in particular affidavit evidence from Mr Cassells, a public servant, sworn on 14 October, 20 October and 27 October 1997; evidence from Mr McCreath, who is a director of Australis Media Ltd (“Australis”), being an affidavit sworn 20 October and from a Ms Brawn, a solicitor, of 24 October 1997.

Apart from the affidavit of Mr Alexander, the other affidavits went largely to two issues: first, the correspondence passing between the parties or their solicitors and second, the consequences to various companies, particularly Australis and the Optus companies, of the proceedings and/or delay in them.

The evidence concerning history was put before me by the respondents in an attempt to persuade me that in essence the matter had been around for some time and in consequence the ACCC should have already substantially got its evidence together and so should be ready for a final hearing. I should say at this stage that the first and third respondents enthusiastically press for a final hearing in November this year. This evidence is coupled with the history of the course of pleadings in this matter. But a few days ago the case took a new turn with claims arising under s 45 of the Trade Practices Act 1974 (Cth) being pleaded for the first time. There was also recent clarifications of the allegation that the proposed merger would be likely to have a substantial effect on competition in the telephony market as defined in various ways in the pleading.

It is one thing to have correspondence pass back and forth seeking approval of a regulatory authority of conduct, consideration of applications and the giving or refusing it, as the case may be.  But it is another matter to prepare a case for hearing.  Ultimately the preparation of the case for hearing involves quite different considerations to those that may be involved when a competition regulator considers an application that a particular transaction be approved or disapproved.  It follows therefore, that I regard as more important the evidence of Mr Alexander and the consequences of the proceedings on Australis and Optus rather than the historical evidence to which I have referred.

Mr Alexander identifies in his affidavit the major issues as he sees then and outlines the work he believes would be necessary to undertake before the case is ready for a final hearing.  It is his evidence in effect that he has hardly begun the task of exploring the evidence that would be necessary for a final hearing to deal with the telephony market.  He freely acknowledges that he only commenced preparing the case on that aspect at least about a week ago and that part of the case is indeed in a very preliminary stage.  He deposes to the need for experts to be briefed and reports from them to be given as well as the need for factual evidence to be obtained particularly in respect of the telephony market, although it would seem that there is considerable work yet to be done on the balance of the case as well.

Mr Alexander was the subject of criticism in cross-examination, directed to the fact that although the terms of the merger had been known for some time to its client, not only had the nature of the case changed in the two respects to which I have referred but there was a suggestion that perhaps there had been some unnecessary delay on Mr Alexander’s part in commencing preparation of it.  I should say that there is nothing in Mr Alexander's evidence or his responses to cross-examination which would lead me to a conclusion that in any way he can properly be subjected to criticism.

The real concern in the case, and it is evident from the financial statements of Australis which are public record, that if the matter lingers on until a final hearing, which Mr Alexander says he could not be ready for until March or April next year, it may well be that Australis is by that stage no longer extant.  On the other hand, senior counsel for the ACCC points to other more optimistic evidence and of course it has never been suggested that Australis necessarily would go to the wall.  The question really is more one of possibility than of necessity.  Obviously much will depend on funding in the meantime.

It seems to me that if all of the respondents were prepared to have their evidence in reply on and to proceed to a final hearing, staggered as to issues if necessary, then the ACCC, albeit representing the public interest, should be required to take all steps necessary to ensure that there is a final hearing at the earliest possible date so that any real risk to Australis can be minimised.  However, late yesterday afternoon, after virtually a full day of argument, it became clear that Telstra Corporation Ltd (“Telstra”) would be unable to commit itself to a final hearing in November, given that the nature of the case concerning the telephony market had, so senior counsel says, only become clear in the last day or so and at this stage there is virtually no evidence that has been filed in connection with the interlocutory proceedings on the matter.  He says that his client would be prepared to participate in a final hearing on the case so far as it concerned the Pay TV market (and there seems to be, in the event of a final hearing occurring in November, agreement as to the existence of a Pay TV market), but it was only prepared to proceed with an interlocutory hearing on the telephony market.  It simply could not in the time available do justice to a case which has important commercial as well as legal significance to Telstra.

It is true that Telstra is not directly in any way financially vulnerable with regard to the outcome of the case, although obviously it does have a financial interest as a participant in the merger.  I do not think that it would be a useful exercise, as counsel for Telstra suggested, to split the proceedings so as to litigate the matter on a final basis in respect of the Pay TV market but not in respect of the telephony market.  The two issues are not really separate from each other but interlock.  Many of the facts relied upon by the ACCC as constituting a lessening of competition in the Pay TV market will be relevant to any alleged lessening of competition in the telephony market.  So too there will be witnesses that will probably participate in both aspects of the case.  Credit on one or other issue or both may be relevant.  Further, where at least one party, in this case the ACCC, objects to the case being split and where the split may not ultimately lead to a final resolution of the case, but only to potential split appeals.  It seems to me undesirable to embark on that course.

This leaves me having to decide whether or not to set down the proceedings for final hearing on 24 November 1997, notwithstanding the evidence that the ACCC would need further time for a final hearing and the statement from the bar table on behalf of Telstra.  Senior counsel for Telstra said, and I accept did so in good faith, that Telstra could not necessarily be ready for a final hearing in November, could not say, without knowing ultimately the evidence to be adduced by the ACCC, whether it would be ready.  He emphasised potential prejudice to Telstra as a result of the fact that there is other litigation presently in the Court which to some extent might overlap and where participants in that litigation would be scrutinising carefully the evidence adduced in this Court.

I have to weigh up those problems on the one hand against the potential impact to Australis and perhaps also Optus of an interlocutory hearing and the matter then continuing to drag on perhaps until August or September next year before a judgment might be given in a final hearing.  I am conscious of the fact that an interlocutory hearing might well ultimately become a final hearing by design or circumstance.  If that is so, of course, it may well solve the problems for the parties but I do not think where both the applicant and one of the respondents object to the matter proceeding as a final hearing in November, because they say that they cannot, or at least might not be able to, do justice to their clients' case and that the evidence necessary properly to determine the matter could not be ready in time, that I should force the parties on to a final hearing, notwithstanding both the public interest that the case be determined finally as soon as possible that be done and the impact upon Australis which my decision may well have.

In these circumstances I would propose to deal with the matter commencing on 24 November 1997 on an interlocutory basis on all issues.  This will require a timetable to be prepared of the steps that need to be taken to ensure that that interlocutory hearing does proceed and I will stand the matter over until 2.15pm to enable the parties to discuss a timetable for the further disposition of the interlocutory hearing. Costs should be costs in the proceedings.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill

Associate:

Dated:            29 October 1997

Counsel for the Applicant:	J R Sackar QC and S T White
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the First Respondent:	F M Douglas QC and R J H Darke
Solicitor for the First Respondent:	Allen Allen Hemsley
Counsel for the Second Respondent:	T F Bathurst QC and N Manousaridis
Solicitors for the Second Respondent:	Mallesons Stephen Jaques
Counsel for the Third Respondent:	J J Spiegelman QC and R W White
Solicitors for the Third Respondent:	Norton Smith & Co
Date of Hearing:	24 October 1997
Date of Judgment:	28 October 1997