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NZME Limited v Commerce Commission

NZME Limited v Commerce Commission

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PUBLIC VERSION

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA92/2018 [2018] NZCA 389

BETWEEN
NZME LIMITED

First Appellant

FAIRFAX MEDIA LIMITED Second Appellant

STUFF LIMITED Third Appellant

AND

COMMERCE COMMISSION Respondent

Hearing: 5–8 June 2018

Court:

Kós P, Miller and Asher JJ

Counsel:

D J Goddard QC, S C Keene, A S Butler and AJWO Lomas for
Appellants

J A Farmer QC, J D Every-Palmer QC, F J Cuncannon, PIC Comrie-Thomson and G C Spittle for Respondent

Judgment:

26 September 2018 at 4.00 pm

JUDGMENT OF THE COURT

A The appeal is dismissed.

BThe appellants are jointly and severally liable to pay the respondent costs for a complex appeal on a band B basis and usual disbursements.
We certify for second counsel.

NZME LIMITED v COMMERCE COMMISSION [2018] NZCA 389 [26 September 2018]

REASONS OF THE COURT

(Given by Miller J)

Table of Contents

The parties’ businesses and the transaction [6] The decisions below, in brief [15] The structure of this judgment [21] Media plurality and quality [25] Does the Act recognise only public benefits of an economic kind? [31] Salient provisions [31] Legislative history of the Act [35] The Act’s objectives [43] The authorities on public benefit [54] New Zealand practice [55] Australian practice compared [66] Public benefit: conclusions [69] Measuring benefits and detriments [82] “Likely” benefits and detriments [83] The ‘single owner risk’ [90] Objective, transparent and rigorous reasoning required [95] Adequacy of the Commission’s methodology [99] Were the Commission and the High Court wrong on the merits? [107] Quality detriments [109] Plurality [121] The paywall issue [127] The balancing exercise [133] Result [138]

[1] NZME Ltd and Stuff Ltd (formerly Fairfax New Zealand Ltd; we will call it Fairfax for convenience) publish between them New Zealand’s major daily newspapers, Sunday papers and news websites, and a large number of community newspapers. Their business model is being disrupted by digital media and their advertising revenues and subscriber numbers are in sharp decline. They say that they wish to merge to better navigate their transition to a world dominated by digital media.

[2] The Commerce Commission found that the transaction would substantially lessen competition in markets for the supply of online national news, for Sunday newspapers and advertising in them, and for community newspapers in ten centres and for advertising in them. It denied the parties an authorisation under s 67 of

the Commerce Act 1986.1 The Commission accepted that the transaction would deliver substantial and quantifiable public benefits in the form of productive efficiency gains for the merged firm, but it found that these were outweighed by losses in quality and of media “plurality”, by which is meant, broadly speaking, the number and diversity of views offered to the public. Media plurality contributes to the quality of public discourse and the health of a democracy, and so benefits the entire community.2

[3] The High Court (Dobson J and Professor Richardson)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] NZCA 389
Decision Date: 26 September 2018 at 4.00 pm

CaseChat Overview and Summary

This appeal concerns the proposed merger of NZME and Fairfax Media Limited. The appellants are NZME Limited and Fairfax Media Limited. The respondent is the Commerce Commission. The appeal concerns the Commission’s refusal to grant an authorisation under s 67 of the Commerce Act 1986 for the proposed merger. The High Court dismissed the appeal. The appellants sought leave to appeal to this Court and leave was granted. The questions that the High Court identified when granting leave were whether the High Court was correct to find that the Commission had jurisdiction to take into account non-economic, unquantified detriments when applying the legal test for authorisation under s 67(3) of the Commerce Act 1986, whether the High Court erred in law and fact in applying the statutory test of whether the unquantified detriments and plurality detriments identified by the Commission were “likely”, and whether the High Court erred in law and fact in its approach to balancing unquantifiable detriments against the net qualified benefits of the transaction. This Court dismissed the appeal. It found that the High Court was correct to find that the Commission had jurisdiction to take into account non-economic, unquantified detriments when applying the legal test for authorisation under s 67(3) of the Commerce Act 1986. It found that the High Court erred to the extent that it assigned weight to a risk that it considered remote, namely the risk that a single owner would exploit the merged entity for political purposes. It did not otherwise err. It found that the High Court did not err in fact and law in its approach to balancing unquantifiable detriments against the net qualified benefits of the transaction. The appeal is dismissed. The appellants are jointly and severally liable to pay the respondent costs for a complex appeal on a band B basis and usual disbursements.

Orders