NZME Ltd v Commerce Commission - [2017] NZHC 3186

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE

CIV 2017-485-445 [2017] NZHC 3186

BETWEEN
NZME LIMITED

First Appellant

AND

FAIRFAX MEDIA LIMITED Second Appellant

AND

FAIRFAX NEW ZEALAND LIMITED Third Appellant

AND

COMMERCE COMMISSION Respondent

Hearing: 16−20 October, 24–27 October 2017

Counsel:

D J Goddard QC, A S Butler, S C Keene, T J Pilkington, M W McMenamin and C M Marks for the Appellants

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

Judgment:

18 December 2017

JUDGMENT OF DOBSON J AND PROFESSOR RICHARDSON [Public, redacted version]

CONFIDENTIALITY:
The Court made orders on 31 July 2017 to protect the confidentiality of matters that were provided to
the Commerce Commission in confidence in the course of its investigation. Those orders are now made permanent, with the effect that no confidential material will be publicly available either in the content of the public version of this judgment, or by search of the Court file.

The unredacted version of this judgment has been distributed on a restricted basis to counsel and nominated representatives of the parties on the date appearing above. After receiving submissions from counsel on the extent to which confidential matters need to be redacted, the redacted version of the judgment was re-issued at 4.00 pm on 19 December 2017.

In a small number of paragraphs, text containing confidential material has been redacted. In a larger number of cases, where it is sufficient to support the content of this judgment by cross-reference, references have been made to confidential content in the non-publicly available version of the

NZME LIMITED v FAIRFAX MEDIA LIMITED [2017] NZHC 3186 [18 December 2017]

Commission’s determination. The scope of entitlement to access that document therefore dictates the scope of entitlement to have regard to that cross-referenced material in this judgment.

Contents

Introduction ............................................................................................................. [1] Outline of the appellants’ businesses................................................................... [3] The Commission’s determination ...................................................................... [14] Nature of the appeal ........................................................................................... [33] Grounds of appeal .............................................................................................. [39]

The clearance decision .......................................................................................... [41] Market definition................................................................................................ [41] The counterfactual ............................................................................................. [44] Functional dimension ........................................................................................ [47] Distribution of news and information? ............................................................. [52] Treatment of two-sided markets......................................................................... [60] Effect of zero price? ........................................................................................... [66]

Online national news reader market ................................................................... [70] Advertising constraints on quality ..................................................................... [72] Other business constraints on quality ............................................................... [87] Barriers to entry in the production of news ...................................................... [97] Multi-sourcing/multi-homing .......................................................................... [109] Prospect of a paywall........................................................................................ [118]

Sunday newspapers ............................................................................................. [125] The reader market ............................................................................................ [133] The advertising market .................................................................................... [139]

Community newspapers ..................................................................................... [149] The reader market ............................................................................................ [150] The advertising market .................................................................................... [160]

Conclusions on clearance appeal ....................................................................... [175]

The authorisation decision ................................................................................. [177] Relevance of loss of media plurality ................................................................ [177] Scope of Commission’s jurisdiction................................................................. [178]
Analysis............................................................................................................. [190]
(i) Legislative history ................................................................................. [190]

(ii) The position elsewhere .......................................................................... [196] (iii) Commission’s prior conduct and scope of expertise ............................. [202] (iv) Judicial consideration ........................................................................... [215]

Weight given to loss of plurality.......................................................................

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.

Keep reading for free

Create a free CaseChat account to read NZME Ltd v Commerce Commission and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2017] NZHC 3186
Decision Date: 18 December 2017

CaseChat Overview and Summary

- Parties:
The case involves NZME Limited, Fairfax Media Limited, and Fairfax New Zealand Limited (collectively referred to as the appellants) appealing against the decision of the Commerce Commission (the respondent).

- Nature of the dispute:
The appellants sought a clearance or authorisation from the Commerce Commission for a proposed merger of their New Zealand businesses. The Commission declined both applications, leading to the appellants' appeal against the Commission's determination.

- Court:
The High Court of New Zealand, Wellington Registry.

- Legal issues:
1. Whether the Commission correctly defined the markets in which the appellants operated and assessed the prospects of a substantial lessening of competition (SLC) in those markets.
2. Whether the Commission's assessment of the benefits and detriments of the merger was correct, particularly regarding the loss of media plurality and the reduction in quality of news content.
3. Whether the Commission's process in handling the merger application was proper, including the selection of post-conference interviewees and the terms of instructions to BDO.

- Court's reasoning and outcome:
1. The court found that the Commission's market definitions were appropriate and that the appellants' criticisms did not warrant a different conclusion on the prospects of SLC in various markets.
2. The court upheld the Commission's jurisdiction to consider detriments beyond economic detriments, such as the loss of media plurality, and found that the Commission's assessment of the merger's benefits and detriments was correct. The court concluded that the benefits did not outweigh the detriments, justifying the Commission's refusal to grant an authorisation.
3. The court rejected the appellants' process complaints, finding no material errors in the Commission's handling of the merger application. The court also dismissed the appellants' appeal against the Commission's clearance decision.

- Final orders:
The appeal against the Commission's clearance decision and authorisation refusal was dismissed. The Commission was entitled to costs, with a provisional view of a separate award for successfully opposing the process complaints.

Orders