Seven Network Ltd v News Ltd

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Seven Network Limited v News Limited
[2007] FCA 1062
SACKVILLE J

SUMMARY

In accordance with the practice of the Federal Court in some cases of public interest, the following Summary has been prepared to accompany the reasons for judgment delivered today.  The Summary is intended to assist understanding of the decision of the Court.  It is not a complete statement of the conclusions reached by the Court or the reasons for those conclusions.  The only authoritative statement of the Court’s reasons is that contained in the published reasons for judgment.  The published reasons for judgment and this Summary will be available on the Internet at align="center">Seven Network Limited v News Limited
[2007] FCA 1062
SACKVILLE J

SUMMARY

1.                 THE DISPUTE

  1. The heart of the dispute in this case is the complaint by ‘Seven’ (as I call the Applicants) that in May 2002 it was forced to shut down the business of C7 Pty Ltd (‘C7’), a producer and distributor of sports channels for Australian pay television platforms. Seven says that the closure of C7’s business was forced on it because some of the Respondents, notably the News, PBL and Telstra parties and their associated corporations, engaged in anti-competitive conduct in contravention of ss 45 and 46 of the Trade Practices Act 1974 (Cth) (‘Trade Practices Act’), during the period from 1999 to 2001.

    2.                 MEGA-LITIGATION

  2. The case is an example of what is best described as ‘mega-litigation’.  By that expression, I mean civil litigation, usually involving multiple and separately represented parties, that consumes many months of court time and generates vast quantities of documentation in paper or electronic form.  An invariable characteristic of mega-litigation is that it imposes a very large burden, not only on the parties, but on the court system and, through that system, the community. 

  3. Before briefly explaining the issues in the case and the outcome, I wish to record some of the features of this particular example of mega-litigation.

  4. The trial lasted for 120 hearing days and took place in an electronic courtroom.  Electronic trials have many advantages, but reducing the amount of documentation produced or relied on by the parties is not one of them.  The outcome of the processes of discovery and production of documents in this case was an electronic database containing 85,653 documents, comprising 589,392 pages.  Ultimately, 12,849 ‘documents’, comprising 115,586 pages, were admitted into evidence.  The Exhibit List would have been very much longer had I not rejected the tender of substantial categories of documents that the parties, particularly Seven, wished to have in evidence.

  5. Quite apart from the evidence, the volume of written submissions filed by the parties was truly astonishing.  Seven produced 1,556 pages of written Closing Submissions in Chief and 812 pages of Reply Submissions (not counting confidential portions of certain chapters and one electronic attachment containing spreadsheets which apparently runs for 8,900 or so pages).  The Respondents managed to generate some 2,594 pages of written Closing…

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Details
Case
[2007] FCA 1062
Decision Date

CaseChat Overview and Summary

Seven Network Ltd commenced proceedings against News Ltd and several other respondents, alleging anti-competitive conduct which caused or contributed to the failure of the C7 digital pay television service. The Court was required to determine whether the conduct of the respondents, specifically News Ltd, amounted to anti-competitive behaviour under Australian law and if such conduct caused or contributed to the failure of C7. The judgment, which is lengthy and complex, was divided into 21 substantive chapters, outlining the facts and legal reasoning. The Court found that News Ltd did engage in anti-competitive conduct but did not find that this conduct caused or contributed to the failure of C7.

The Court's reasoning involved a detailed examination of the alleged anti-competitive conduct, including the refusal of Foxtel, a joint venture involving News Ltd, PBL, and Telstra, to negotiate with C7 for the carriage of its sports channels, and the terms of the Master Agreement. The Court held that News Ltd's conduct was anti-competitive, as it was designed to harm C7 and favour the interests of Fox Sports. However, the Court concluded that while the conduct was anti-competitive, it did not cause or contribute to the failure of C7. The Court found that C7's failure was due to a combination of factors, including market conditions, the financial position of C7, and strategic errors made by Seven Network Ltd.

The Court's decision highlights the complexities involved in determining causation in cases involving anti-competitive conduct and its impact on market outcomes. The Court's findings on the anti-competitive conduct have significant implications for the regulation of markets in Australia, particularly in the media and telecommunications sectors. The Court's decision also underscores the importance of careful analysis and evidence in determining the causal link between anti-competitive conduct and market outcomes.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

It is difficult to understand how the costs incurred by the parties can be said to be proportionate to what is truly at stake, measured in financial terms. In my view, the expenditure of $200 million (and counting) on a single piece of litigation is not only extraordinarily wasteful, but borders on the scandalous. 4. THE JUDGMENT Mega-litigation, if it proceeds to finality, often generates very long judgments. Regrettably, this is a prime example. The judgment is divided into 21 substantive Chapters and a short final Chapter. It is about 1120 pages in length. The first 11 Chapters explain the litigation and set out the facts in great detail. The final ten substantive Chapters contain my reasoning on the many causes of action on which Seven relies. Because of the complexity of the issues and the length of the judgment, this summary can be no more than a bare outline of the parties’ contentions and my conclusions. The abbreviations used in this Summary correspond to those used in the judgment.5. SEVEN’S CASE Seven commenced the proceedings on 19 November 2002. It originally sought damages, declarations, injunctions and other relief against a total of 19 respondents. Since then proceedings have been discontinued against two of the respondents (the Australian Football League Ltd (‘AFL’) and Network Ten Pty Ltd) and three other respondents have been added. 5.1 Alleged Anti-Competitive Conduct The two major instances of anti-competitive conduct which Seven says caused or contributed to the demise of C7 are these:·First, from mid-1999 until December 2000 when the AFL awarded the AFL pay television rights for 2002 to 2006 to News, the Foxtel Partnership (the partners in which are effectively News, PBL and Telstra) refused to negotiate with C7 for the carriage of its sporting channels on the Foxtel retail pay television platform. Foxtel refused, so Seven argues, even though the C7 channels contained attractive programming (such as AFL matches which were not otherwise available to Foxtel subscribers) and even though Telstra, one of the partners, considered that C7’s proposals, if accepted, would be highly beneficial to Foxtel’s business. Seven says that the conduct of Foxtel, which was largely dictated by News with the support of PBL, was designed to harm C7 and favour the interests of Fox Sports, C7’s competitor in the market for the supply of sports channels to retail pay television platforms. Indeed, Seven says that News and PBL had the explicit purpose of ‘killing C7’ and that Telstra, ultimately at least, acquiesced in that purpose.·Secondly, at a teleconference held on 13 December 2000, a ‘consortium’, including representatives of News, Foxtel, PBL and Telstra, made an arrangement, referred to in the case as the ‘Master Agreement’. The Master Agreement was intended to facilitate Foxtel’s acquisition of the AFL pay television rights for the 2002 to 2006 seasons. The Master Agreement provided that News would bid for and acquire the AFL broadcasting rights and then sub-license the AFL pay television rights to Foxtel and the AFL free-to-air rights to Nine and Ten, on previously agreed terms. These terms required Foxtel to pay $30 million per annum, plus adjustments, for the AFL pay television rights, in circumstances where, according to Seven, the Foxtel partners were aware that Foxtel was overpaying for the rights and that the acquisition would result in a loss to it over the five year term of the sub-licensing agreement. The Master Agreement also contemplated that Fox Sports (jointly owned by News and PBL) would acquire the pay television rights to National Rugby League (‘NRL’) matches for the 2001 to 2006 seasons from the NRL Partnership.

Ratio Decidendi

Legal Principle Established

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