Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd
[1982] FCA 223
•15 OCTOBER 1982
And: STEREO F.M. PTY. LIMITED (1982) and 2 DAY-FM LIMITED (1982) 62 FLR 437
No. G 1 OF 1982
Trade Practices
FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J.(1)
Trade Practices - restraint of trade - Trade Practices Act sub-s. 45 (2) and sub-s. 45A (1) - whether combined advertising rate card has effect of substantially lessing competition or fixing or maintaining price.
Trade Practices Act, 1974 as amended s. 45, s. 45A, s. 80
Trade Practices - Competing commercial radio broadcasting stations - Contract to produce combined rate card to attract advertising - Whether contract had effect of substantially lessening competition or of "fixing" or "maintaining" prices - Meanings of "substantial", "likely", "fixing" and "maintaining" considered - Trade Practices Act 1974 (Cth), ss. 45, 45A, 80.
The applicant and respondent companies were three Sydney commercial radio broadcasting stations which were competing for increased maket shares of the Sydney radio listening audience. The applicant company, Radio 2UE Sydney Pty. Ltd. (2UE), had operated the AM station 2UE for some years. The first respondent, Stereo F.M. Pty. Ltd. (2MMM), which operated the FM station 2MMM, and the second respondent 2DAY-FM (2DAY), which operated the FM station 2DAY, had both commenced broadcasting in or about August 1980. The first and second respondents produced a combined Sydney FM rate card (the combined card) aimed at attracting advertisers to place advertising with both 2MMM and 2DAY and was expressed to be effective from 1st December, 1981. Evidence showed that each respondent fixed and charged its own advertising rates independently of the other and was free to change its rates whenever it wished.
On 4th January, 1982, the applicant commenced proceedings to prevent the respondents from using the combined card, alleging that the contract made by the respondents to introduce the combined rate card constituted breaches of s. 45(2)(a)(ii) and (2)(b)(ii) of the Trade Practices Act 1974 (the Act); and contravention of s. 45A(1) of the Act, thus constituting a breach per se of s. 45.
The question before the court was whether the contract which was made by the respondents to introduce the combined card had the purpose or would have had or be likely to have had the effect of substantially lessening competition.
Held: (1)(a) The applicant 2UE had failed to show that the respondents 2MMM and 2DAY had breached s. 45(2)(a)(ii) or (2)(b)(ii) of the Act. (b) It was not necessary for the court to reach a conclusion as to the meaning of the words "substantially" or "likely" which appeared in various contexts in the Act.
(2)(a) The conduct of the respondents 2MMM and 2DAY impugned by the applicant 2UE did not, in purpose or effect, lessen competition between the respondents, or between the respondent FM radio stations and AM radio stations including the applicant 2UE, substantially or at all, nor would it be likely to do so. (b) The court was satisfied on the evidence of the operation of the combined card that the conduct of the respondents 2MMM and 2DAY improved and would be likely to improve competition, although probably only slightly, between the respondents on the one hand, and AM radio stations, including 2UE, on the other hand.
Board of Trade of the City of Chicago v. United States (1918) 246 US 231; United States v. Socony-Vacuum Oil Co. Inc. (1940), 310 US 150 referred to.
(3) Accordingly, the application would be dismissed.
Per Lockhart J. - Section 45A can have no application unless there is some form of arrangement between people. There can be no arrangement without each of the parties communicating with each other and raising an expectation in the mind of the other. Otherwise there is no requisite meeting of the minds. There must be a consensus as to what is to be done and not just a mere hope as to what might be done or happen. Independently held beliefs are not enough.
Trade Practices Commission v. Nicholas Enterprises Pty. Ltd. (1978) 40 FLR 74; Trade Practices Commission v. Email Ltd. (1980) 43 FLR 383, referred to.
Per Lockhart J. - The "fixing" of a price for the purpose of s. 45A does not necessarily connote an element of permanency, but generally suggests the settling or determining of a price for a period of time that is not instantaneou s or merely ephemeral. A person may fix a price for his goods knowing that he may wish to vary it at some future time, but generally not so soon as would to business people be regarded as merely momentary or transitory.
Per Lockhart J. - "Maintain", where used in s. 45A, has a similar connotation to the verb "fix" in that it involves some element of continuity, not merely being momentary or transitory. Generally, to maintain a price assumes that it has been fixed beforehand.
Sydney, 1982, August 19-20, 23-24; October 15. #DATE 15:10:1982
APPLICATION.
The applicant sought injunctions pursuant to s. 80 of the Trade Practices Act 1974 to restrain the respondents from allegedly contravening the provisions of s. 45 of the Act.
The facts appear in the judgment.
D.M.J. Bennett Q.C. and F.M. Douglas, for the applicant.
A.B. Shand Q.C. and G.K. Downes, for the first respondent.
J.D. Heydon, for the second respondent.
Cur. adv. vult.
Solicitors for the applicant: Allen Allen & Hemsley.
Solicitors for the first respondent: Boyd House & Partners.
Solicitors for the second respondent: Stephen Jaques & Stephen.
J.D. WHITEHEAD
THE COURT ORDERS THAT:
1. The application be dismissed
2. The applicant pay the costs of the respondents Application dismissed.
This is a battle between three Sydney commercial radio broadcasting stations for increased market shares of the Sydney radio listening audience.The Sydney commercial radio market is highly competitive. The applicant is Radio 2UE Sydney Pty. Limited ("2UE") which operates, and has for some years operated, Sydney AM radio station 2UE. The first respondent is Stereo F.M. Pty. Limited ("2MMM") which operates Sydney FM radio station 2MMM. It first went to air in August 1980 not long after the introduction of broadcasting stations to the FM radio band in Sydney. The second respondent, 2DAY-FM Limited ("2DAY"), operates Sydney FM commercial radio station 2DAY and it too commenced broadcasting about August 1980.
Radio stations and advertisers accept the regular periodic survey of listeners conducted by McNair Anderson Associates Pty. Limited ("McNair Anderson") as being the best available guide to the audience share attracted by radio stations in Australia. McNair Anderson publishes 4 rating surveys each year. A comparison of the McNair Anderson rating survey No. 4 for 1980 (to November 1980) with survey No. 1 of 1982 (to 27 March 1982) shows that 2MMM increased its market share of the Sydney radio listening audience during the period November 1980 to March 1982 from 2.6% to 7.2%, an overall increase of about 175%. 2MMM reached 386,000 different listeners each week by March 1982. 2DAY increased its market share over the same period from 2.0% to 4.3%, an increase of over 100%. 2UE's market share on the other hand declined from 19.2% to 15.7%, a loss of almost 20%. In March 1982 2MMM had a large share of the Sydney radio listening audience aged 18 to 24. 2DAY was in a similar position with respect to the 25 to 39 year old age group.
The results of the fourth McNair Anderson survey for 1981 were disclosed to each of the respondents in November 1981. They showed, especially in the case of 2MMM, a considerable improvement on past ratings. The respondents then decided to join forces by producing a combined Sydney FM rate card ("the combined card") for advertisers on 2MMM and 2DAY. The combined card was introduced to draw the attention of advertisers to what the two stations conceived as the real advantage to be gained by advertising with them as they had increased their market shares considerably since they first went to air.
Roderick Leonard Muir, the Executive Director of 2MMM and the person primarily responsible for the promotion of 2MMM, described the purpose of introducing the combined card in evidence in these terms:-
'...We had on FM gone through an intolerable time of attack from the AM stations who, firstly, claimed publicly that the medium would take 20 years to introduce. Secondly, they claimed that we could not achieve viability within the first five years; that our target objectives were a myth. Generally they gave us a hard time. This was the first opportunity we had as an exercise to point out the very real advantages that had been covered and were continuing to be covered on the FM band. It was a retaliatory marketing gesture... against the people who were trying to hold our heads under water.'
The advertising revenue derived by each respondent from the use of the the combined card has not been great. Indeed, it accounts for only a small percentage of their advertising revenue, one of the reasons being the pendency of these proceedings which were commenced on 4 January 1982.
2UE wants to stop the respondents from using the combined card. It seeks injunctions pursuant to s. 80 of the Trade Practices Act 1974 ("the Act") to restrain the respondents from contravening s. 45. It alleges that the contract made by the respondents to introduce the combined card has the purpose of substantially lessening competition and thus constitutes a breach of sub-para. 45 (2) (a) (ii); that by giving effect to that contract the respondents are breaching sub-para. 45 (2) (b) (ii); and that the contract has the purpose, or has or is likely to have the effect, of fixing or maintaining the price for the advertising services supplied by the respondents in competition with each other and is therefore deemed by sub-s. 45A (I) to have the purpose, or to have or be likely to have the effect, of substantially lessening competition, thus constituting a breach of s. 45 per se.
Sections 45 and 45A, so far as relevant, provide:-
'45. (2) A corporation shall not _
(a) make a contract or arrangement, or arrive at an understanding, if _
...
(ii) a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; ...
(b) give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision _
...
(ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition.
(3) For the purposes of this section and section 45A, 'competition', in relation to a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, means competition in any market in which a corporation that is a party to the contract, arrangement or understanding or would be a party to the proposed contract, arrangement or understanding, or any body corporate related to such a corporation, supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the provision, supply or acquire, or be likely to supply or acquire, goods or services...
45A. (1) Without limiting the generality of section 45, a provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be deemed for the purposes of that section to have the purpose, or to have or to be likely to have the effect, of substantially lessening competition if the provision has the purpose, or has or is likely to have the effect, as the case may be, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price for, or a discount, allowance, rebate or credit in relation to, goods or services supplied or acquired or to be supplied or acquired by the parties to the contract, arrangement or understanding or the proposed parties to the proposed contract, arrangement or understanding, or by any of them, or by any bodies corporate that are related to any of them, in competition with each other.
...
(8) The reference in sub-section (1) to the supply or acquisition of goods or services by persons in competition with each other includes a reference to the supply or acquisition of goods or services by persons who, but for a provision of any contract, arrangement or understanding or of any proposed contract, arrangement or understanding, would be, or would be likely to be, in competition with each other in relation to the supply or acquisition of the goods or services.'
There is no real dispute about the facts. No party impugned the credit of any witness, but counsel for 2UE submitted that the evidence of Mr. Muir on certain matters should be viewed with some caution as he tended to cast an unduly favourable light on evidence favouring the case of 2MMM. There are some inconsistencies between the witnesses on a few matters; but nothing of any consequence turns on them. Mr. Muir impressed me as a rugged man with strong views. He displayed in the witness box qualities which have doubtless led to his success in the competitive world of radio broadcasting. It is true that he was not particularly enthusiastic about making concessions in favour of 2UE. Indeed, he was somewhat reluctant to make concessions even in favour of his co-respondent 2DAY. Overall, I am satisfied that Mr. Muir was a reliable witness.
I turn to the facts. It is common ground that the parties are in competition with each other. They compete for the attention of radio audiences and for advertising revenue. Audience shares are divided into age and other groups and are measured by reports of bodies such as McNair Anderson. These reports are used by advertisers, including advertising agencies, as a guide to the size and class of the radio listening audience likely to hear their advertisements. Advertising revenue is vital to the commercial radio stations. Some products lend themselves to advertising on both television and radio, some to television alone or radio alone, some to both F.M. and A.M. radio, others to F.M. alone or A.M. alone. A wide range of products is advertised on 2MMM. Many of the advertised products are sold throughout Australia. 2MMM advertising time is sold to advertisers who carry on business in Sydney, Melbourne, Brisbane, Adelaide and Hobart. The combined card is directed to advertisers and is used to attract 'the advertising dollar' throughout Australia.
The relevant market in this case is not the radio listening audience, but the advertisers, including advertising agencies, for whose business radio stations compete. The market comprises advertisers throughout Australia.
I turn to the events leading up to the introduction of the combined card. Since it first went to air each respondent has published and used its own rate card. Neither respondent has consulted with the other when compiling or changing its card. The combined card is a marketing exercise aimed at attracting advertisers to place advertising with both 2MMM and 2DAY, thus giving them access to a broader age group than each by itself could reach _ an age group described by Mr. Muir as comprising people 'moving into the Volvo set'. The respondents acquired a shelf company as the vehicle to transact business through the combined card. Its name was changed to Stereo FM Facilities Pty. Limited ("Facilities") and its share capital is owned by the respondents. Advertisers who wish to place business through the combined card (that is for advertisements on both stations) make only one telephone call to a number which is in fact a number of 2MMM. On the other hand, the advertising copy is sent by the advertiser to the address of 2DAY. It seems that Facilities makes the necessary arrangements with each respondent for the airing of commercials. One invoice only is sent by Facilities to the advertiser for both stations. Moneys received by Facilities in payment of invoices are distributed between the respondents according to their respective shares of the composite price quoted on the combined card.
The combined card sets out 'package rates' charged to advertisers for particular 'runs' on the two stations including a 'weekend package'. The rates shown on the card vary according to the time of day or night on which the advertisement is 'run'. For example, thirty combinations of sixty seconds each on each station (in what is called zone two _ 9.00 a.m. to 4.00 p.m. Monday to Friday, 8.00 p.m. to midnight Monday to Saturday) costs the advertiser $144.00 for each combination, a total of $4,320.00. The card states 'Book both Sydney FM stations with one call _ 387-5165...'.
The rates appearing on the combined card are the sum of the individual rates offered by each respondent for a spot of the relevant category appearing in its individual rate card. 2MMM's rates are higher than those of 2DAY.
The first combined card was expressed to be effective from 1 December 1981. The evidence is unclear as to the extent to which and the period during which the first combined card was used. Mr. Muir's evidence is that, in the case of 2MMM, clients were charged the old rates appearing on 2MMM's individual rate card in force immediately before 1 December 1981 for orders placed before the end of February 1982, and that the first combined card only operated in fact, so far as 2MMM's rates were concerned, for the month of March. Mr. Preece, station manager of 2MMM since about March 1982 and before that its sales manager, gave evidence that the first combined card applied for the first three months of 1982. This evidence probably cannot be reconciled; but I do not think it matters. A second combined card was published to be effective from 1 April 1982 and the rates it quoted were higher than those on the first combined card, the increase reflecting the higher individual rates charged by 2MMM. 2DAY's rates do not appear to have increased, although the evidence is not very clear about this.
The rates appearing on the individual rate cards of the respondents are not always the rates actually charged to clients. Bargaining takes place and benefits given to clients include discounted rates, more spots or more favourable times for spots _ the last two benefits being called 'quality' discounts.
Counsel for 2UE submitted that there was some inconsistency between the witnesses as to whether discounting took place where advertisers placed business through the combined card. Mr. Muir's evidence was said to be in conflict with the evidence of other witnesses and with contemporaneous documents on this point. It is not suggested that the inconsistency affected Mr. Muir's credit; but that it reflected adversely on his reliability. I do not think this criticism was established.
Other organisations carry on basically the same activities as the respondents do through the combined card. An organisation known as The Major Network comprises a number of radio stations, including 2UE, in different cities throughout Australia. The organisation publishes composite rates for advertising on various stations in The Major Network. The advertiser who wishes to advertise through The Major Network makes one telephone call to a service company which acts on behalf of the members of the network. The service company then sells advertising space to advertisers wishing to advertise on the member stations at prices offered by the individual stations themselves. The service company quotes a total figure to the advertiser for advertising space on the various stations after consultation with each station for its current rate at the relevant time.
The Macquarie Broadcasting System is another organisation which publishes rates for advertisers who wish to place advertising through the system. The system comprises a number of radio stations in different cities in Australia but no one city has more than one Macquarie station. The Macquarie Broadcasting System operates on a similar basis to The Major Network.
Another organisation known as the Capital Radio Network comprises stations in a number of cities. It too operates in much the same way as the other organisations for the selling of advertising space on more than one radio station. The Capital Radio Network advertises 'One Order, One Invoice, One Cheque'.
There are differences in the mode of operation of each of the organisations and of the combined card. I need not refer to them. It is sufficient to say that in my view none of the differences are material so far as relevant to the issues in the present case.
There is no dispute that there is a contract between the respondents for the publication and use of the combined card. The issue is whether the contract has the purpose or would have or be likely to have the effect of substantially lessening competition.
The word 'substantial' is imprecise and ambiguous. Its meaning must be taken from its context. It can mean considerable or big: Palser v. Grinling (1948) A.C. 291 per Viscount Simon (at p. 317). It can also mean not merely nomimal, ephemeral or minimal. Sometimes it is used in a relative sense, and at other times to indicate an absolute size or quantity.
In the context of s. 45, the word 'substantial' is used in a relative sense. The very notion of competition imports relativity. One needs to know something of the businesses carried on in the relevant market and the nature and extent of the market before one can say that any particular lessening of competition is substantial.
The Act is concerned to promote and stimulate competition between business people and to discourage and remove unfair business practices which inhibit competition. Parliament cannot have intended trivial or insubstantial interferences with competition to fall within the prohibition of s. 45.
The word 'substantial' appears in various contexts in the Act itself. It has been considered by judges of this Court as meaning real or of substance. See Cool & Sons Pty. Limited v. O'Brien Glass Industries Limited, a judgment of Keely J., (1981) 35 A.L.R. 445 (at p. 458); Hecar Investments No. 6 Pty. Limited v. Outboard Marine Australia Pty. Limited, a judgment of Franki J., 1982 A.T.P.R. 43,699 (at p. 43,705). In Dandy Power Equipment Pty. Limited v. Mercury Marine Pty. Limited a judgment of Smithers J. 14 September 1982, unreported, his Honour said that the word 'substantially' in the context of the phrase 'substantially lessening competition' (sub-ss. 47 (10) and (13) of the Act) was used 'in a sense importing a greater rather than a less degree of lessening'.
In Tillmans Butcheries Pty. Limited v. Australasian Meat Industry Employees' Union (1980) 42 F.L.R. 331, a Full Court of this Court considered the meaning of the word 'substantial' where it appeared in s. 45D in the context of substantial loss or damage to the business of a corporation, a different context to competition in a market. Bowen C.J. said that 'substantial' loss meant loss that is more than trivial or minimal, but no specific level of loss need be proved. Deane J. found it unnecessary to reach a concluded view on the meaning of the word in sub-s. 45D but inclined to the view that in that context it meant loss or damage that, in the circumstances, was real or of substance and not insubstantial or nominal.
In Re Queensland Co-Operative Milling Association Ltd; Re Defiance Holdings Ltd. (1976) 25 F.L.R. 169 the Trade Practices Tribunal (Woodward J. President; Mr. Shipton and Professor Brunt, members) said, in considering the meaning of the word 'substantial' where appearing in the phrase 'substantial benefit to the public' in sub-s. 90 (5) of the 1974 Act with respect to authorisation of mergers, that the benefit must be substantial in the sense of considerable, large or weighty (p. 183).
I do not find it necessary to reach a conclusion as to the meaning of the word 'substantially' where appearing in sub-s. 45 (2) as the result of this case would be the same regardless of which of the various meanings is given to the word, except to say that the lessening of competition must be at least real or of substance. However, I see considerable force in the view contended for by counsel for 2DAY that, in the context of s. 45, the word means substantially in the sense of considerably. As I have not reached any final view on this question I prefer to leave it open.
The word 'likely' is susceptible of various meanings. It may mean 'probable' in the sense of more likely than not or more than a 50% chance. It may mean a real or not remote possibility. There are other possible meanings.
In Tillmann, Bowen C. J. did not find it necessary to decide which of the various alternative meanings he preferred. Deane J. said that in the context of sub-s. 45D (1) it would suffice if the relevant conduct was, in all the circumstances, such that there was a real chance or possibility that it would, if pursued, cause loss or damage (p. 347).
I do not find it necessary to determine this question for myself. The conclusion I have reached would be the same whichever construction of the word 'likely' is adopted, but I reject the view that, in the context of sub-s. 45 (2), it means a mere possibility, whether real or not.
Counsel for 2UE relied on various matters to make good the assertion that there was or was likely to be a substantial lessening of competition from the use of the combined card. First, he submitted that there was an agreement between the respondents not to allow advertisers who placed business through the combined card any discounts, whether price or 'quality' discounts, and that no such discounts have in fact been allowed.
I approach this submission with some caution because this question of discounts was raised for the first time by 2UE in the course of the evidence during the hearing before me. It finds no mention in the pleadings, particulars, interrogatories tendered in evidence or the opening address of counsel for 2UE. Notwithstanding my reservations as to whether in these circumstances the argument can be advanced at all I propose to deal with it. I touched on this question to some extent earlier when dealing with criticisms made by 2UE of the evidence of Mr. Muir. I am satisfied that there was no agreement between the respondents against the granting of discounts. The evidence relied on by 2UE is too vague, general and ambiguous to establish any such agreement. There is positive evidence, including a contemporaneous document namely, a memorandum of Mr. Preece as Sales Manager of 2MMM to that station's interstate representatives dated 3 December 1981, tending to the contrary. It is true that there has been in fact no discounting by either respondent in respect of business lodged through the combined card but that is hardly surprising as so little business has been done under the card at all. Further, even if one could spell out of the evidence an agreement by each respondent not to offer any advertiser a discount where business was placed through the combined card, I am not satisfied that the agreement has the purpose or would have or be likely to have the effect of substantially lessening competition.
Counsel for 2UE submitted that another vice inherent in the combined card was that it reduced the flexibility of each respondent to change its advertising rates. This submission is contrary to the evidence. Both respondents are, like all radio stations, sensitive to the results of the McNair Anderson surveys and ready to adjust their advertising rates in the light of those results. 2MMM has altered its rates more than once following improved ratings. 2DAY has not yet proved as successful as 2MMM but doubtless it too would increase its rates when it thought it could do so. 2MMM has itself issued interim rate notices to take advantage of an opportunity to increase its charges pending the preparation of properly printed cards. The evidence satisfies me that the combined card does nothing to reduce either respondents' flexibility to change its advertising rates whenever it wishes.
Another submission by 2UE was that the combined card promoted a tendency between the respondents to co-operate with each other in relation to matters concerning price. There is no evidence to support this contention. Indeed, the evidence points plainly to the contrary conclusion. There has been no collaboration between the parties with respect to the fixing of their respective prices for advertising. The combined card is essentially an addition of the two. I reject the submission.
Counsel for 2UE then made two submissions which I need refer to only briefly. It was submitted that each respondent would be reluctant to 'steal' a client who was put in touch with it through the use of the combined card, using 'steal' in the sense of offering benefits to entice the client away from the other respondent, thus inhibiting competition. It was then submitted that a joint marketing exercise like the combined card would have, or tend to have, dangerous effects on competition between the respondents. Little was said in support of either of these submissions and I see no substance in them.
2UE fails in its attack on the combined card on this first branch of its argument.
I turn to the second branch of 2UE's argument namely, that sub-s. 45A (1) has been contravened. 2UE submitted that the contract between the respondents relating to the combined card has the purpose or has or is likely to have the effect of fixing or maintaining a price for the advertising services supplied by them. It was not submitted that there was any 'controlling' of price.
Section 45A was introduced into the Act by Act No. 81 of 1977 and came into operation on 1 July 1977. To my knowledge this is the first time the section has been considered by a court. The section renders price fixing (I use this term for convenience to encompass also controlling or maintaining price) among competitors unlawful per se. It applies to any contracts, arrangements or understandings between competitors which in purpose or effect inhibit price competition.
The Court's task is to characterise the conduct before it in a given case. Care must be taken in performing that task because, by its very nature, the violation of s. 45A is deemed, for the purposes of s. 45, to substantially lessen competition per se. Such a finding may have far reaching consequences to the competitors concerned.
It is important to distinguish between arrangements (I use this expression for convenience to encompass also contracts and undertakings) which restrain price competition and arrangements which merely incidentally affect it or have some connection with it. Not every arrangement between competitors which has some possible impact on price is per se unlawful under the section.
Nor in my view was s. 45A introduced by Parliament to make arrangements unlawful which affect price by improving competition. It is fundamental to both ss. 45A and 45 that the relevant conduct, in purpose or effect, substantially lessens competition or would be likely to do so. If competition is improved by an arrangement I cannot perceive how it could be characterised as a price fixing arrangement within the ambit of those sections. This case is an example in my view of such an arrangement. Later cases will doubtless provide other examples. If competitors make an arrangement to establish a better market by, for example, forming an organisation through which they operate by exchanging information in ways that make prices more competitive, I do not see how such an arrangement is, per se, prohibited by s. 45A.
My approach to the construction and operation of s. 45A is generally in accord with the approach taken by the courts of the United States of America in decisions under the Sherman Act. They reflect the concern of those courts to carefully consider the relevant conduct before characterising it as an arrangement in restraint of price competition and they distinguish between arrangements which directly or indirectly restrain price competition and those which merely incidentally affect it. See Board of Trade of the City of Chicago v. United States 246 U.S. 231 (1918) and United States v. Socony-Vacuum Oil Co. Inc. 310 U.S. 150 (1940).
Section 45A can have no application unless there is some form of arrangement between people. There can be no arrangement without each of the parties communicating with each other and raising an expectation in the mind of the other. Otherwise there is no requisite meeting of the minds. There must be a consensus as to what is to be done and not just a mere hope as to what might be done or happen. Independently held beliefs are not enough. See Trade Practices Commission v. Nicholas Enterprises Pty. Limited (1978) 40 F.L.R. 74 per Fisher J. (at p. 79) and Trade Practices Commission v. Email Limited (1980) 43 F.L.R. 383, a decision of mine (at p. 385).
The words 'fixing' and 'maintaining' require some consideration. It is helpful to refer to some relevant meanings in the Dictionaries.
The Shorter Oxford English Dictionary defines the verb 'fix' as:
'To fasten, make firm or stable;...to attach firmly;...to settle permanently.'
The Macquarie Dictionary defines the word as:
'1. To make fast, firm, or stable. 2. To place definitely and more or less permanently. 3. To settle definitely; determine: to fix a price.'
In my view the fixing of a price for the purpose of s. 45A does not necessarily connote an element of permanency, but generally suggests the settling or determining of a price for a period of time that is not instantaneous or merely ephemeral. A person may fix a price for his goods knowing that he may wish to vary it at some future time, but generally not so soon as would to business people be regarded as merely momentary or transitory.
The verb 'maintain' is defined by The Shorter Oxford English Dictionary as _
'To continue, persevere in;...to continue in, preserve, retain.'
The Macquarie Dictionary defines the word as-
' 1.To keep in existence or continuance; preserve; retain...3. To keep in a specified state, position etc.'
In my view 'maintain', where used in s. 45A, has a similar connotation to the verb 'fix' in that it involves some element of continuity, not merely being momentary or transitory. Generally, to maintain a price assumes that it has been fixed beforehand.
Applying these principles to the facts of this case none of the essential ingredients of price fixing are present. Nothing in the agreement between the respondents has anything to do with price fixing. Each respondent in fact fixes and charges its own prices independently of the other. Each is free to change its prices whenever it wishes. 2MMM has done so.
Commercial FM radio stations did not find it easy to survive at first. When the ratings of 2MMM and 2DAY improved considerably in late 1981 they decided to produce the combined card as 'a retaliatory marketing gesture' to the commercial AM radio stations. The smaller stations were becoming a marketing force to be reckoned with. The respondents hoped that the combined card would draw the attention of advertisers to the real benefits of advertising on the FM band. They were concerned essentially to make potential advertisers perform the exercise of adding together the combined audience shares of the two respondents because they represented the vast share of radio audiences on the FM band.
The conduct of the respondents impugned by 2UE does not, in purpose or effect, lessen competition at all, let alone substantially. Nor would it be likely to do so. My earlier observations, including my description of the way the card was intended to operate and does in fact operate, is sufficient to dispose of the suggestion that it limits competition between the respondents themselves. But even if there were room for doubt about this I am satisfied on the evidence that the conduct of the respondents improves and would be likely to improve competition between the respondents on the one hand and AM radio stations, including 2UE, on the other hand.
Mr. Maitland, the Sales Manager of 2UE, gave evidence that the use of the combined card by the respondents presented a greater degree of competition to 2UE in that 2MMM and 2DAY by selling their advertising time jointly were able to offer to advertisers access to a wider audience (the 18-39 year old age group) than 2UE which caters essentially for an audience over 25 years of age. He said also that a subsidiary benefit from the use of the combined card was that:-
'from time to time it has been suggested in this industry the idea of getting one billing does tend to be an attractive proposition to some agencies in terms of their paper work'
and that more vigorous competition for the advertising dollar was presented to 2UE.
Overall I am satisfied that the combined card does not inhibit competition between anybody, but promotes competition, although probably only slightly.
In the result, 2UE has failed to establish its case. I would dismiss the application with costs.
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