FEDERAL COURT OF AUSTRALIA

South Sydney District Rugby League Football Club Ltd v News Limited

[2001] FCA 862

TRADE PRACTICES – exclusionary provision – rival rugby league competitions with total of 20 teams – agreement in 1997 for uniform competition which by 2000 would consist of 14 teams – agreement that criteria would be developed to determine which clubs, if any, were to be excluded – criteria applied in October 1999 with appellant being excluded from 2000 competition – whether proscribed exclusionary purpose established – whether a “particular class of persons” can be defined in part by fact of exclusion – whether restricting number of persons to or from whom services are supplied or acquired constitutes “restricting or limiting” supply or acquisition of services – whether parties to an exclusionary provision must be competitive with each other at time provision takes effect – discretion to grant injunction – likelihood of threatened conduct occurring – whether damages an adequate remedy.

WORDS OR PHRASES – “particular persons”, “particular class”, “purpose”, “restricting or limiting”.

Trade Practices Act 1974 (Cth) ss 4D,4F, 45(2)(a)(i), 45(2)(b)(i), 80(4), 82

Acts Interpretation Act 1901 (Cth) s 29(b)

News Ltd v Australian Rugby Football League Ltd (1996) 58 FCR 447 mentioned

News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 mentioned

South Sydney District Rugby League Football Club Ltd v News Ltd (1999) 169 ALR 120 mentioned

South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611 considered

ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 applied

Rutman Wine Co v E & J Gallo Winery 82 F2d 729 (1987) at 735 mentioned

Newton v Commissioner of Taxation [1958] AC 450 at 465 mentioned

Hughes v Western Australian Cricket Association (1986) 19 FCR 10 at 37-38 mentioned

Wribrass Pty Ltd v Swallow (1979) 38 FLR 92 at 102 mentioned

Industrial Enterprises Ltd v Federated Storemen and Packers’ Union of Australia (1979) ATPR 40-100 mentioned

Tillmans Butcheries Pty Ltd v Australasian Meat Industry Employees’ Union (1979) 42 FLR 331 at 338 and 351 mentioned

Transport Workers Union of Australia v Leon Laidely Pty Ltd (1980) 43 FLR 168 mentioned

Jewel Food Stores Pty Ltd v Amalgamated Milk Vendors Association Inc (1989) 24 FCR 127 at 133-135 considered

Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225 discussed

Byrne v Australian Airlines Ltd (1994) 47 FCR 300 at 304-305 mentioned

Eastern Express Pty Ltd v General Newspapers Pty Ltd (1991) 30 FCR 385 at 420 mentioned

Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd (1985) 7 FCR 432 at 531-532 mentioned

Australian Competition and Consumer Commission v Visy Paper Pty Ltd [2000] FCA 240 mentioned

Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275 at 318 mentioned

Health Services for Men Pty Ltd v D’Souza (2000) 48 NSWLR 448 at 461 mentioned

ICI Australian Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 256-257 mentioned

Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 178 ALR 253 at [60] mentioned

Gallagher v Pioneer Concrete (NSW) Pty Ltd (1993) 113 ALR 159 mentioned

Bullock v Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464 mentioned

Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 mentioned

Devenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32 mentioned

Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 mentioned

Trade Practices Commission v The Gillette Company (1993) 45 FCR 366 mentioned.

SOUTH SYDNEY DISTICT RUGBY LEAGUE FOOTBALL CLUB LIMITED v

NEWS LIMITED & ORS

N 1264 OF 2000

HEEREY, MOORE & MERKEL JJ

6 JULY 2001

SYDNEY

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

THE COURT MAKES THE FOLLOWING ORDERS:

1.      The appeal be allowed.

2.      A declaration that the making and arriving at of the Understanding described in para 10 of the Third Further Amended Statement of Claim (“the Statement of Claim”), the Memorandum of Understanding described in para 22A of the Statement of Claim, and the Merger Agreement described in par 22B of the Statement of Claim contravened s 45(2)(a)(i) of the Trade Practices Act 1974 (Cth) (“the Act”).

3.      A declaration that by giving effect to the fourteen team term described in pars 19, 22A and 22B of the Statement of Claim the first, second, third and fourth respondents contravened s 45(2)(b)(i) of the Trade Practices Act 1974 (Cth) (“the Act”).

4.      The first, second, third and fourth respondents whether by their agents, servants or howsoever otherwise be restrained from giving effect to, or continuing to give effect to, the fourteen team term referred to in order 3 above.

5.      The matter be remitted to the trial judge for the assessment, under s 82 of the Act, of the loss or damage (if any) suffered by the appellant by reason of the conduct of the first, second, third and fourth respondents described in orders 2 and 3 above, and for the determination of the costs of the proceedings below.

6.      The first, second, third and fourth respondents pay the appellant’s costs of and incidental to the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

HEEREY J

I Introduction

1                     From 1908 the New South Wales Rugby League (NSWRL) conducted a rugby league competition in that State. A leading club from the inception of the competition was the appellant South Sydney District Rugby League Football Club Limited (Souths). Playing in their traditional red and green, Souths teams won more premierships than any other club in the competition’s history. Souths’ nickname was “the Rabbitohs” which comes from the cries of rabbit vendors in the streets of Redfern and other parts of South Sydney in former years. To its supporters, Souths was a much loved institution inspiring great loyalty.

2                     By the early 1990s the competition was being conducted by the NSWRL on behalf of the third respondent the Australian Rugby Football League Limited (ARL). Clubs from outside New South Wales had joined. By 1995 the competition comprised 20 clubs.

3                     During 1995 there was a split in top level rugby league in Australia. The first respondent News Ltd (News), a large media company, sponsored a rival competition, called Super League, consisting of some clubs who broke away from the ARL/NSWRL competition together with some new entrants. Other clubs, including Souths, continued to play in the ARL/NSWRL competition. Heavy litigation followed. The ARL was initially successful: News Ltd v Australian Rugby Football League Ltd (1996) 58 FCR 447. However the decision of the primary judge was reversed on appeal: News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410. The Super League competition commenced in 1997 with ten clubs. The ARL/NSWRL competition continued with twelve clubs.

4                     As early as May 1997 the existence of two rival competitions was proving to be financially disastrous and damaging to the game of rugby league. Following extensive negotiations between ARL and News an agreement was reached in December 1997 for a unified competition, to be called the National Rugby League (NRL) Competition. Although formal documentation was not completed until 14 May 1998, a critical step occurred on 19 December 1997 when ARL and News each publicly announced details of an in principle agreement, hereafter referred to as “the Understanding”. All ARL/NSWRL clubs approved the terms of the Understanding, with the exception of Souths and Balmain, another club from the inner suburbs of Sydney.

5                     Relevantly for present purposes the essential elements of the Understanding were

·          a 50/50 partnership between News and ARL

·          a united NRL Competition

·          a joint venture company would grant licences to participate in the NRL Competition

·          applicants would have to satisfy licence criteria determined by that company

·          twenty teams would be licensed to play in 1998 on a one year licence, but Brisbane, Newcastle and Auckland would be assessed against criteria for five year licences

·          sixteen teams would be licensed to play in 1999

·          fourteen teams would be licensed to play in 2000 (hereafter referred to as “the 14-team term”)

·          mergers or joint ventures before March 1998 would receive a $4 million grant for the 1998 and 1999 competitions and a five year licence

·          mergers or joint ventures before December 1998 would receive a $4 million grant for the 1999 competition and a five year licence

·          in a fourteen team competition there would be no less than six teams and no more than eight teams from Sydney and no less than six teams and no more than eight teams from outside Sydney (hereafter referred to as “the 8-6/6-8 split”)

·          all things being equal, licences were to be allocated in the following order of priority:

·          merged clubs

·          regional clubs

·          stand alone Sydney clubs

6                     The legal structure ultimately adopted was as follows. National Rugby League Investments Ltd (NRLI), a subsidiary of News, and ARL entered into a partnership (the NRL Partnership). The NRL Partnership entered into a services agreement with the fourth respondent National Rugby League Ltd (NRL), a not-for-profit company limited by guarantee and owned equally by ARL and News, under which NRL was to operate and manage the NRL Competition.

7                     On 18 February 1998 ARL and News and some other parties executed a Memorandum of Understanding (MoU) which essentially set out the Understanding of the previous December in more formal and detailed terms. Clause 7.2 of the MoU provided that before 1 May 1998 NRL

(a) would inform all clubs that no less than sixteen teams, but no more than twenty teams (the actual number to be determined by NRL subject to the approval of the NRL Partnership) would be granted a franchise to play in 1999, and no more than fourteen teams would be granted a franchise to play in 2000; and

(b) would release the franchise criteria for 1999 and beyond.

8                     By cl 7.5 it was provided that no more than fourteen teams would participate in the 2000 competition “on varying terms depending on the level of satisfaction of the franchise criteria”.

9                     On 14 May 1998 the parties executed an agreement (the Merger Agreement) which was the final contractual documentation. The terms of the MoU already referred to were included, except that the date for informing clubs and releasing the franchise criteria for 1999 and beyond became 30 June 1998.

10                  On 8 May 1998 NRL published draft admission criteria. The draft stated that aims of the criteria were to “create and maintain a viable national competition” and to “set and apply criteria for inclusion in the competition in a fair and reasonable manner”. An extensive consultative process followed. The draft was explained to the clubs and comments received from them. A consultant statistician provided a number of reports dealing with such topics as how the criteria interacted, what risk there was of perceived bias in the proposed weighting system, and the transparency and integrity of the criteria.

11                  Souths made some comments which were expressed to be “without prejudice to its right to pursue relief in the courts”. It restated its opposition to the reduction of teams from twenty. It put the view that

“… rugby league is an icon to be preserved for the people who love and support it, not a product to be carved up to the media for their own financial gratification.”

12                  After further discussion and consideration NRL on 8 September 1998 published the finalised version of the criteria. There were three classes of criteria: (i) Basic Criteria, to be satisfied by all clubs, dealing with such matters as playing facilities and solvency, (ii) Qualifying Criteria, which applied only to the Brisbane, Auckland and Newcastle clubs and (iii) Selection Criteria, which were to be applied to all clubs that had participated in the “relevant years” (these were specified by individual criteria) save for clubs that had merged early enough for the newly merged entity to participate in the 1999 competition. Only St George and Illawarra effected an “early enough” joint venture. The Selection Criteria provided for a matrix of six criteria: Crowd numbers (home games), crowd numbers (away games), competition points, gate receipts (home games), sponsorship and other income and profitability. Points were to be awarded on a scale of 1-20. For example, 20 points would be awarded to the club with the highest aggregate crowd at home games, 19 points to the club with the next highest aggregate and so on. There was to be weighting for points for gate receipts (1.25) and sponsorship and other income (2).

13                  Souths played in the NRL Competition in 1998 and 1999. In 1998 twenty clubs participated, including the new club Melbourne. At the end of that year Gold Coast and Adelaide withdrew and St George and Illawarra entered into a joint venture.

14                  The 1999 competition consisted of 17 teams. During that year Balmain and Wests obtained NRL approval for a joint venture.

15                  On 1 October 1999 Souths was informed that it was one of the clubs that had met the Basic Criteria and thus would be subject to the Selection Criteria. Norths failed for solvency reasons to meet the Basic Criteria. The net result was that ten clubs were applying under the Selection Criteria for nine licences, the remaining five licences having gone to Brisbane, Auckland and Newcastle and the two joint venture entities, St George – Illawarra and Wests – Balmain.

16                  On 15 October the NRL Board considered the recommendation of its admission criteria committee, the effect of which was that Souths missed out. NRL advised Souths accordingly by letter on the same day. On 27 October NRL approved a joint venture between Manly and Norths.

17                  On 12 November 1999 Souths commenced the present proceeding and sought an interlocutory injunction which would have the effect of requiring ARL and News to allow it to participate in the 2000 NRL Competition. That application was dismissed by Hely J: South Sydney District Rugby League Football Club Ltd v News Ltd (1999) 169 ALR 120. The substantive trial was held before Finn J over 40 days between June and September 2000. On 3 November 2000 his Honour gave judgment dismissing the application: South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611. Souths now appeal from that decision.

II THE JUDGMENT OF THE PRIMARY JUDGE

18                  Although Souths relied at trial on causes of action in contract and for misleading and deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth) (the Act), the only part of his Honour’s judgment challenged on appeal was his rejection of Souths’ case that the 14-team term was an exclusionary provision within the meaning of s 4D of the Act and that by entering into the Understanding, the MoU and the Merger Agreement, all of which contained that term, ARL and News contravened s 45(2)(a)(i) of the Act. (Also alleged was a giving effect to that exclusionary term contrary to s 45(2)(b)(i). However this part of the case does not call for separate consideration.)

1. Legislation

19                  Section 45(2) of the Act provides:

“(2) A corporation shall not:

(a) make a contract or arrangement, or arrive at an understanding, if:

(i) the proposed contract, arrangement or understanding contains an exclusionary provision; or

(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; or

(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:

(i) is an exclusionary provision; or

(ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition.

20                  By virtue of s 4 the formula “give effect to” includes “do an act or thing in pursuance of or in accordance with or enforce or purport to enforce”.

21                  “Exclusionary provision” is defined in s 4D(1) as follows:

“(1) A provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if:

(a) the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and

(b) the provision has the purpose of preventing, restricting or limiting:

(i) the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons; or

(ii) the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions;

by all or any of the parties to the contract, arrangement or understanding or of the proposed parties to the proposed contract, arrangement or understanding or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate.”

22                  As to “competitive”, s 4D(2) provides:

“(2) A person shall be deemed to be competitive with another person for the purposes of subsection (1) if, and only if, the first-mentioned person or a body corporate that is related to that person is, or is likely to be, or, but for the 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 the other person, or with a body corporate that is related to the other person, in relation to the supply or acquisition of all or any of the goods or services to which the relevant provision of the contract, arrangement or understanding or of the proposed contract, arrangement or understanding relates.”

23                  As to “purpose”, s 4F(1) provides:

“(1) For the purposes of this Act:

(a) a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, or a covenant or a proposed covenant, shall be deemed to have had, or to have, a particular purpose if:

(i) the provision was included in the contract, arrangement or understanding or is to be included in the proposed contract, arrangement or understanding, or the covenant was required to be given or the proposed covenant is to be required to be given, as the case may be, for that purpose or for purposes that included or include that purpose; and

(ii) that purpose was or is a substantial purpose; and

(b) a person shall be deemed to have engaged or to engage in conduct for a particular purpose or a particular reason if:

(i) the person engaged or engages in the conduct for purposes that included or include that purpose or for reasons that included or include that reason, as the case may be; and

(ii) that purpose or reason was or is a substantial purpose or reason.”

2. Souths’ case

24                  It was Souths’ case that the purpose of the 14-team term was to prevent, restrict or limit the supply or acquisition of four discrete types of services:

(i) Organising and running top level rugby league competitions (competition organising services);

(ii) Acquiring the services of rugby league teams (team services);

(iii) Supplying entertainment services (i.e. top level rugby league matches) (entertainment services); and

(iv) Providing funding to clubs participating in the top level rugby league competitions (funding services).

25                  His Honour rejected Souths’ case on two main grounds. First, the 14-team term did not have the proscribed purpose ([279]-[286]) and, secondly, there were not “particular persons or classes of persons” which were the object of such a purpose ([289]-[292]).

3. Agency

26                  A preliminary issue was whether NRL was acting as the agent of the NRL Partnership. His Honour held that notwithstanding provisions in the services agreement that NRL acted “solely as an independent contractor”, NRL was on a proper analysis of the evidence acting as agent: see [138] to [167] and in particular [160].

4. Timing

27                  It was not in dispute that at the time of the Understanding News and ARL were competitive with each other for the supply of competition organising services and the acquisition of team services.

28                  His Honour held that the parties to an exclusionary provision need not be in competition with each other at the time the provision takes effect. Therefore it was no answer to Souths’ case for the respondents to say that at the time the 14-team term came into effect, that is to say in the 2000 season, News and ARL would no longer be in competition with each other: [191] to [201].

5. Purpose

29                  His Honour observed (at [208]) that while the purpose of a provision may be evidenced in the effects it produces, the purpose for its inclusion in a contract, arrangement or understanding is not to be determined necessarily by, or simply by reference to, its effects. What has to be ascertained is the reason (or reasons) for its inclusion. And that reason, or those reasons, could be determined by ascertaining the effect or effects the parties subjectively sought to achieve through the inclusion of the provision in the contract, arrangement or understanding.

30                  His Honour first dealt with the supply of competition organising services and team services. Souths argued that notwithstanding that News and ARL had the purpose of encouraging mergers or joint ventures to avoid exclusion of clubs from these services, it was one of their purposes that, if the requisite reduction in numbers could not be so achieved, then one or more of the clubs that had participated in the 1997 season of either competition would be denied entry in 2000. It was said that this purpose was a substantial one, even if it was a subsidiary and immediate purpose and not the dominant and ultimate purpose, for the inclusion of the 14-team term.

31                  His Honour (at [215] to [250]) reviewed the historical background of the Understanding, including the following:

·          The Bradley Report, commissioned by ARL/NSWRL in 1992 when there were sixteen clubs in the competition including eleven Sydney clubs, recommended the reduction of the total number to fourteen, to enable two complete rounds to be played, and the number of Sydney clubs to five

·          By 1995 the competition had increased to twenty teams, the four new entrants all being from outside New South Wales (South Queensland, North Queensland, Perth and Auckland)

·          As already mentioned, the Super League was established in 1995. Its competition was projected to start in 1996 but that was prevented by the injunction granted at first instance. Two new clubs – Adelaide and Newcastle – joined the Super League

·          After the Full Court’s reversal of the primary decision the Super League competition commenced in 1997

·          By May 1997 it was clear to Mr Neil Whittaker (CEO of ARL and General Manager of NSWRL) and the Chairmen of both bodies that fans had been alienated, the ability to attract sponsors had been damaged, there had been an explosion in player salaries and other expenses and a number of clubs in both competitions were in a precarious financial position

·          Mr Whittaker then believed the future of the game was in doubt unless there was a return to a single competition, the number of participating clubs was reduced to a number that would allow the competition to be compelling to spectators, economically viable and competitive, there was a reduction in the Sydney teams to a number that was economically sustainable in that area and the competition had a significant national spread. He did not believe that two competitions could survive

·          From June onwards there were intensive discussions within ARL and NSWRL of possible alternatives. Financial modelling indicated that a fourteen team competition was preferable

·          From June onwards there were many discussions between Mr Whittaker and other ARL/NSWRL representatives and Mr Ian Frykberg of Super League and Mr Peter Macourt of News

·          Major issues in these discussions were the number of teams in any new competition (ARL at one stage wanting sixteen from 2000 onwards and News insisting on fourteen) and the identification of clubs which might form mergers or joint ventures and financial incentives for such a purpose.

32                  His Honour made findings as to the beliefs and motivations of the principal negotiators (at [252] to [260]).

33                  Mr Macourt accepted Mr Frykberg’s advice that the fairest and most attractive competition would be a home and away one and that fourteen teams was a maximum for such a competition. From his (Mr Macourt’s) financial modelling a competition of that size would be viable. He accepted in cross-examination that the process of reducing the teams to fourteen by 2000 had to be “buttressed” by some provision for excluding a club or clubs if there was one or more too many. He also accepted that the purpose of excluding by criteria a club or clubs if more than fourteen applied was central to the Understanding.

34                  Mr Frykberg said the purpose in pursuing a merged competition was to ensure that rugby league was financially viable and sustainable in the future. Three important aspects of such a competition were: (a) a home and away competition constrained by climatic conditions and competing media demands between summer and winter sports; (b) competitors had to be financially viable; and (c) the quality had to be consistently high. The best number of teams was fourteen. He considered that a fourteen team competition could be achieved without exclusion of any club and that a reduction to fourteen teams was likely to occur through mergers and joint ventures. He accepted in cross-examination that an essential element of the Understanding was that there had to be a mechanism in place which would arrive at fourteen teams as agreed, but it was his “fervent view… that no club would be excluded”.

35                  Mr Whittaker’s purpose was to secure the future of the game through a merged competition. He agreed to fourteen as News’ position was that that figure was not negotiable. His view in December 1997 and thereafter was that a fourteen team competition could be achieved without any club who wished to participate being excluded. Financial considerations would lead teams to form joint ventures or mergers or choose to play in a state-based competition. He accepted there had to be a mechanism in place to determine which teams would gain admission if more than fourteen applied.

36                  His Honour’s reasoning was as follows ([269] et seq):

·          A clear and intended effect of the 14-team term was that the NRL Partnership would not provide its competition-organising services to, or acquire team services from, a greater number of teams than the number so fixed

·          A foreseeable and, for News and ARL, foreseen consequence of the 14-team term was that if more than the stipulated number sought participation in the NRL Competition, the excess (howsoever determined) would be denied the provision of the NRL Partnership competition-organising services and they would not have their team services acquired by the Partnership

·          The NRL Competition was not simply to be a unified competition and no more; rather it was a distinctive one with particular, often interrelated, objectives including

·          a national competition

·          financially viable with club expenditure (particularly on player salaries) reined in significantly

·          of a quality that would sustain community interest and be attractive to television broadcasters

·          a smaller competition with a fixed number of teams rather than an aggregate of those competing in the two existing competitions and which wished to continue

·          a reduction in the number of Sydney teams

·          reduction in the number of Sydney teams plus the need for a smaller competition prompted the early recognition in negotiations of the need for a policy of positive incentives for mergers and joint ventures

·          mergers and joint ventures came to be seen by Mr Whittaker and Mr Frykberg as the means available to clubs to accept the foreseeable consequence of the 14-team term should there be more than that number of teams wishing to participate in the 2000 season.

37                  His Honour concluded (at [274]) that the primary purpose of the Understanding itself was to constitute a partnership to own and conduct the proposed NRL Competition which was “… a new competition that supplanted the two competitions it was designed to replace”. As with the 8-6/6-8 split, the 14-team term for 2000 “provided one of the defining characteristics of the new competition”: [275]. Those terms were included in the Understanding for the purposes of achieving the objectives referred to: [276]. His Honour accepted that the 14-team term limited, and was intended to limit, the number of clubs for the supply to and acquisition of services by the NRL Partnership. It equally had that foreseeable, and foreseen, consequence. But it did not follow that a purpose for including the 14-team term was to prevent the supply of services to, or acquisition of services from clubs in excess of the stipulated fourteen. ARL and News proposed to create a new business running a new competition having particular characteristics, one of which was that it would have a maximum number of clubs. For present purposes it did not matter what the number was. What was important was that the competition so designed embodied a limit to the number of clubs to or from which the NRL Partnership would provide or acquire services.

38                  His Honour said:

“[281] … One can envisage a size provision with its proposed ancillary criteria being designed with the substantial purpose in mind, not merely of limiting the size of the competition for reasons that are considered to be in the interests of the game and it stakeholders, but of specifically targeting a club or clubs that is or are anticipated to be applicants for selection. Such is far from the present case. A selection process having more applicants than positions necessarily results in there being winners and losers. What for s 4D purposes is important for those who lose is the manner of their losing.

[282] There is a significant difference between being merely an unsuccessful contender for selection in a process not designed to preordain that particular outcome and being a target for exclusion in a selection process designed to that end. The latter, but not the former, if otherwise the product of a s 4D understanding, is capable of being found to be an exclusionary provision.”

39                  His Honour concluded that the evidence as to the adoption of the 14-team term was “bereft of any indication that its purpose was to prevent the supply of services to, or the acquisition of services from, any person or class of persons. The term had an intended effect and foreseen consequences”. But these did not, in his Honour’s view require it to be found that a purpose of the term’s inclusion in the Understanding was a purpose proscribed by s 4D(1).

40                  His Honour then said:

“[284] I accept the evidence of Mr Whittaker that he believed the 14 teams for 2000 could be, and of Mr Frykberg that they would be, achieved without resort to exclusion. And I consider the early and continuing significance they attributed to the formation of mergers and joint ventures as being consistent with the absence of a proscribed purpose. The significance so attributed to mergers, etc, evidenced a form of recognition of both the wish and the need to maintain some level of participation of the established clubs in a competition not designed to accommodate them all individually.

[286] For these reasons I conclude that the term does not fall within s 4D(1) in that it was not included in the 19 December Understanding for a purpose that included the prevention of the supply of competition organising services or of the acquisition of team services.”

41                  His Honour found it unnecessary to consider funding services as a separate issue: [187]. Such services were inextricably bound up with competition organising services and team services. As to entertainment services, it was not a purpose of the 14-team term to deprive fans of such services. On the contrary, it was to enhance such services: [302]-[303].

6. Particular class of persons

42                  His Honour’s finding as to lack of the proscribed purpose was determinative of the case. However he went on to consider a number of other issues, commencing with the question whether “the person or class said to be prevented from supplying or acquiring the relevant services is not a ‘particular class of persons’ for the purposes of s 4D(1)” (at [287]).

43                  At this point mention should be made of Souths’ pleading. In the final version of the statement of claim par 20 dealt with the supply of competition organising services by ARL and News and par 21 with the acquisition of team services by those respondents. Paragraph 20 alleged that the 14-team term had the purpose of (a) restricting or limiting the supply of competition organising services to particular persons, namely

“the clubs which had participated in the ARL competition and the Super League competition prior to 19 December 1997 and who had not withdrawn from those competitions before that date.”

and (b) preventing the supply of competition organising services to particular classes of persons, namely

“(i) the clubs which participated in the 1997 ARL and Super League competitions and who had not withdrawn from those competitions before that date, other than the 14 clubs (including merged clubs as a single club), who would be selected to participate in the competition from the year 2000; and

(ii) all rugby league clubs which were willing and able to participate competitively in a top level rugby league competition other than the 14 clubs (including merged clubs as a single club) who would be selected to participate in the NRL competition from the year 2000.”

44                  Paragraph 21 dealt with purpose in relation to the acquisition of team services by ARL and News in terms which precisely mirrored par 20.

45                  Thus Souths’ pleading alleged a purpose, in relation to the relevant services, of

·          restricting or limiting supply to or acquisition from particular persons

·          preventing supply to or acquisition from particular classes of persons

46                  Notwithstanding that pleading, the argument on appeal (and one suspects, at trial also) paid little separate attention to “particular persons” as an element distinct from “particular classes of persons”. No doubt the explanation for this is that on any view the clubs, if any, to be excluded in 2000 could not be identified as at 19 December 1997. So attention naturally focused on whether or not there was a “particular class of persons” with which the relevant purpose was concerned.

47                  On the appeal Souths’ written submissions (par 31) defined the “particular class” in terms which, although in different language, did not differ in substance from pars 20(b)(i) and 21(b)(i) of the statement of claim. The submissions said:

“31. The excluded class consisted of a club or clubs which had played in one or other of the rival competitions but whose team would not be one of the fourteen teams selected to participate in the competition from 2000.”

48                  The class alleged in pars 20(a)(ii) and 21(b)(ii) was not mentioned on the appeal. No more need be said about it.

49                  His Honour (at [291]) rejected the argument that a s 4D(1) class could be constituted simply by the defining characteristic of failing to secure selection for entry in the 2000 NRL Competition. Those who failed to be selected could properly be described as a class in that failure was a shared and defining characteristic of the class. But his Honour said that in the setting of s 4D(1):

“… to be able to say that one belongs to a class (whatever its defining characteristic) is of no practical significance unless that class is the object of the proscribed purpose – unless it is ‘aimed at specifically’….”

50                  His Honour’s conclusion was in these terms:

“[292] In the present case while the purpose of having resort to the proposed selection criteria underpinning the 14-team term was to differentiate between those who would and those who would not be selected for participation in the 2000 competition, it did not on the evidence before me have or have as well the purpose of discriminating against a particular applicant or class of applicants for selection. (It is unnecessary in this to consider the priority order provision which is not the subject of challenge and which is, in my view, inoffensive in any event.) Not having that purpose, the fact that a group could exist that could be said to constitute a class by reason of the fact of their not being selected is without significance or consequence for s 4D purposes.

[293] In the event then, I am not satisfied that Souths has made out its claim. I would, though, make this additional comment. If Souths’ contention is correct it seemingly would carry the consequence that, if competitors later enter into partnership and define the scope of the partnership business in a way that curtails the range or extent of services they will now supply compared with those they supplied competitively when sole traders, no matter how justifiable their reasons for so doing, they will have agreed to an exclusionary provision.”

7. Restricting or limiting the supply or acquisition of services

51                  On Souths’ case supply and acquisition of services was to be restricted or limited in respect of the twenty two clubs that participated in the two 1997 competitions by the stipulation that such services would not be supplied to or acquired from more than fourteen clubs from 2000.

52                  His Honour held (at [299]) that s 4D(1) is concerned with partial supply to, or acquisition of services from, particular persons or classes of persons. The “restriction or limitation” was directed to supply or acquisition of part only of services, not to supply or acquisition or services to or from some only of particular persons. Moreover, as at 19 December 1997 it was contemplated (as subsequently in fact happened) that the new Melbourne club would field a team in the 1998 competition and be involved in the selection process for 2000. His Honour said [299] that

“… (t)o ignore Melbourne, or for that matter merged or joint venture teams, simply contrives artificially the particular persons at whom the proscribed purpose is alleged to be directed.”

53                  In this regard his Honour adopted the construction preferred by Hely J: 169 ALR at [61].

III SOUTHS’ ARGUMENT ON APPEAL

54                  Souths contended that s 4D is only concerned with whether an understanding contains a provision which has the proscribed purpose – not whether the purpose or overall objective of the understanding as a whole offends s 4D. It did not follow that, because the 14-team term was the only available means to secure the objectives of the Understanding, the adoption of that term had no other purpose than to achieve those objectives.

55                  The primary judge was wrongly influenced by his assessment that the overall objectives of the Understanding – a viable, unified national rugby league competition – were commercially legitimate and that there were no means available, other than the 14-team term, to achieve the same objective. Section 4D is not subject to an implied qualification excluding arrangements assessed by the Court as reasonable and not anti-competitive. It is a per se proscription. If the agreement for the NRL Competition conferred a public benefit then ARL and News should have sought authorisation by the Australian Competition and Consumer Commission under Pt VII of the Act.

56                  It was irrelevant that the 14-team term did not specifically target a club or clubs which were anticipated to be applicants for selection.

57                  As to the “particular persons or classes or persons” point, there was an excluded class consisting of a club or clubs which had played in one or other of the rival competitions but whose team would not be one of the fourteen selected for the NRL Competition in 2000. It was not necessary that at the time the exclusionary provision was entered into the identity of the members of the excluded class could then be ascertained. The class may be identified by the fact of exclusion itself. The present case was indistinguishable from the decision of a Full Court of this Court in ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460.

58                  As to the “restricting or limiting” point, ARL and News had supplied competition organising services to or acquired team services from the twenty-two clubs in the competing competition services in 1997. Those clubs constituted a “particular class of persons”. The 14-team term meant that such services not be supplied to or acquired from more than fourteen of those clubs. Hence there was a “restricting or limiting” of the supply or acquisition of such services. Section 4D(1)(b) was not confined to the supply or acquisition of partial services, in the sense of supply or acquisition of some only of services previously supplied or acquired.

59                  ARL and News should be restrained by injunction from continuing to give effect to the 14-team term by continuing to exclude Souths from participation in the NRL Competition in pursuance of that term.

IV respondents’ arguments on appeal

60                  News and NRL were separately represented, as were ARL and the clubs in the NRL Competition. They supported the reasoning of Finn J. They also contended that the judgment could be supported on other grounds, some of which had not found favour with his Honour, viz

(i) NRL was not the agent of the NRL Partnership,

(ii) For the purposes of s 4D, parties must be in competition with each other at the time the exclusionary provision takes effect,

(iii) Section 47(4) of the Act provided a defence to Souths’ claim,

(iv) Even if Souths succeeded, no more than declaratory relief and damages were appropriate; as a matter of discretion an injunction should not be granted.

v purpose

61                  Making a contract etc containing an exclusionary provision contrary to s 45(2)(a)(i) or giving effect to such a provision contrary to s 45(2)(b)(i) is prohibited, whether or not such conduct lessens competition, or has the potential to do so.

62                  In its 1976 review of the Act the Swanson Committee recommended (par 4.116) that a “substantial adverse effect on competition” should be necessary, but in the amendments made by the Trade Practices Amendment Act 1978 (Cth) this course was not taken. In 1993 the Hilmer Committee recommended against any change: National Competition Policy Report at 46.

63                  In “Competition Law and Policy: Cases and Materials” (1999) at 233 Clarke and Corones comment:

“One reason for this strict approach to boycotts may be that they are seen as objectionable on non-economic grounds as well as because of their potential to have an adverse impact on competition. In particular, they are disliked because they can be used to take away the freedom of firms and individuals to trade as they wish and because they can be used to threaten the very existence, commercially or professionally, of targets having little or no countervailing economic power. The potential for boycotts to generate and exploit power is seen as inherently objectionable, regardless of whether or not they are used to lessen competition. For this reason, they are seen as being properly the subject of a per se prohibition.”

64                  In the United States by contrast, the anti-competitive purpose need not be directed at particular persons or classes of persons. As was said in Rutman Wine Co v E & J Gallo Winery 82 F2d 729 (1987) at 735:

“The intent proscribed by the antitrust laws lies in the purpose to harm competition in the relevant market, not to harm a particular competitor.”

65                  “Purpose” as used in s 4D is an ordinary English word and not a technical legal or economic term. Standard dictionary definitions include

“an intended or desired result; end or aim” (Macquarie)

“an object to be attained, an intention, an aim” (New Shorter Oxford)

It was put in argument on behalf of News, and I accept, that your purpose is “what you wish to achieve”.

66                  That meaning is consistent with the construction put on “purpose” in s 260 of the Income Tax Assessment Act 1936 (Cth) by the Privy Council in Newton v Commissioner of Taxation [1958] AC 450 at 465:

“The word ‘purpose’ means, not motive but the effect which it is sought to achieve – the end in view.”

67                  It was common ground that the purpose spoken of in s 4D is the actual subjective purpose of the individuals by whom the provision was included in the contract, arrangement or understanding in question: Pont Data 27 FCR at 474-477, approving Hughes v Western Australian Cricket Association (1986) 19 FCR 10 at 37-38.

68                  In that setting, the findings of his Honour as to the states of mind of Messrs Whittaker, Macourt and Frykberg are critical and, in my opinion, determinative of this appeal.

69                  On his Honour’s findings none of those gentlemen wanted or desired or sought to achieve the exclusion of Souths (or any other club or clubs) from the 14-team competition in 2000. They believed that in the two years that followed mergers and joint ventures – encouraged by very substantial financial assistance – would result in all clubs being accommodated in a 14-team competition, which was in their view the only viable solution for the possibly terminal crisis facing top level rugby league in Australia.

70                  His Honour’s fact finding was not challenged on appeal. Moreover, its inherent logic is compelling. Why would the men running rugby league want to exclude Souths, or any other club? As far as can be ascertained from the arguments on the appeal, Souths’ case did not suggest any personal antagonism towards it, or any other club or clubs, as explaining theadoption of the 14-team term. To exclude a club would run the risk of many, if not most, of its supporters turning away from the game. That would be to nobody’s benefit. On the other hand, a merger or joint venture might not be the ideal solution, but could rationally be seen as a lot better than the disappearance of a club’s name from senior competition. And it would not matter whether or not Souths or any particular club or clubs merged, as long as there were no more than fourteen clubs (an outcome which of course could also be achieved by the voluntary withdrawal or collapse of one or more clubs, something which had already happened with some clubs).

71                  The recognition of a possible outcome detracting from the desired purpose does not alter the nature of the purpose. Assume a surgeon is about to perform a major operation which historically has had a fatal outcome in ten per cent of cases. The surgeon knows and accepts this, but believes the operation is essential and the risk acceptable (as does the properly informed patient). If the operation is not performed the patient is likely to die anyway. The operation is performed but the risk materialises and the patient dies. It would surely be a misuse of language to say that the purpose (or a purpose) of the surgeon in performing the operation was to cause the patient’s death.

72                  Souths relied on a line of cases in this Court under s 45D of the Act: Wribrass Pty Ltd v Swallow (1979) 38 FLR 92 at 102, Industrial Enterprises Ltd v Federated Storemen and Packers’ Union of Australia (1979) ATPR 40-100, Tillmans Butcheries Pty Ltd v Australasian Meat Industry Employees’ Union (1979) 42 FLR 331 at 338 and 351, Transport Workers Union of Australia v Leon Laidely Pty Ltd (1980) 43 FLR 168 at 171, 1769-180 and Jewel Food Stores Pty Ltd v Amalgamated Milk Vendors Association Inc (1989) 24 FCR 127 at 133-135.

73                  Typically these cases involved A and B (say a Union and its members) taking action against C (say calling C’s workers out on strike) with the object of preventing or persuading C from dealing with D in order to bring pressure on D in relation to some dispute between A and B on the one hand and D on the other. There will be a contravention of s 45D where the conduct of A and B is engaged in for the purpose, and would have or be likely to have the effect, of causing substantial loss or damage to the business of D. This is known as a secondary boycott.

74                  Time and again unions and workers in such cases argued that their purpose was not to cause loss or damage to D but to protect their working conditions or achieve other union objectives. The response was always the same, perhaps best exemplified in the judgment of Bowen CJ (with whom Evatt J agreed) in Tillmans. His Honour said (at 338):

“Nevertheless, the fact that a union and its members acting together have a union purpose does not necessarily exclude the possibility that they had, also, the purpose of causing substantial loss or damage to the business of a corporation. The statement of Evatt J in McKernan v Fraser (1931) 46 CLR 343 is apposite. His Honour in that case (at 403) said: ‘Sir Godfrey Lushington said, in special reference to combined action against employers or non-unionists on the part of unionists, that to ask the question whether they acted to defend their own trade interests or to injure their economic adversary for the time being, is equivalent to asking of a soldier, who shoots to kill in battle, whether he does so for the purpose of injuring his enemy or of defending his country. The analogy is sound, because combined strike action is usually undertaken for the purpose, both of causing harm to the employers and for the improvement or maintenance of the standards of unionists.’”

75                  Those cases are far removed from the present one. The achievement of the union purpose and the loss or damage to D were inevitable concomitants, two sides of the one coin. They were consequences of the one act, like the soldier shooting to kill. You could not have one without the other, however much you protested that you did not really want the other.

76                  In the present case, however, the purpose has to be characterised as at 19 December 1997 (and also at the time of the February 1998 MoU and the May 1998 Merger Agreement, but the situation was not relevantly different on those dates). Any exclusion of a club from the 2000 14-team competition was two years in the future. It was something hypothetical and dependant on multiple, interacting contingencies. As at 19 December 1997

·          the need to exclude a club or clubs in 2000 might not arise

·          if it did arise, it could not be determined which club or clubs would not comply with the criteria, since the criteria were yet to be defined

·          when the criteria were defined, whether Souths or any other club complied would depend not only on its own compliance but on how its own compliance compared with that of other clubs.

77                  Merkel J has suggested that the conditionality of the alleged purpose is covered by s 4D(b)(ii) which extends to an exclusionary purpose which may be operative in “particular circumstances”. The short answer is that such a contention was neither pleaded nor argued by Souths. Paragraphs 20 and 21 of the statement of claim allege a purpose of restricting or limiting (sub-par (a)) or preventing (sub-par(b)) which is quite unconditional. Reliance was placed on s 4D(b)(i) which is distinct from s 4D(b)(ii). It is only the latter which speaks of “particular circumstances” or “particular conditions”. Had Souths sought to rely either primarily or in the alternative on a purpose of restricting etc which was to operate only in “particular circumstances”, it would have been essential to so plead and to give particulars as to what the “particular circumstances” were. Such a pleading may well have affected the way evidence was adduced. In any case, the expression “in particular circumstances or on particular conditions” in s 4D(1)(b)(ii) contemplates in my opinion something which the contravenors actually intend will happen, for example a term that they will be supplying goods or services to a particular customer only on payment of cash on delivery or where those customers accept certain obligations (as for example in Pont Data).

78                  The question of substantial purpose within the meaning of s 4F does not arise. For the reasons mentioned, exclusion of clubs was not a purpose at all.

vI PARTICULAR CLASSES OF PERSONS

79                  It was common ground that as a matter of language “particular” in s 4D(1)(b)(i) qualifies “classes of persons” as well as “persons”. Also the plural “persons” and “classes of persons” includes the singular “person” and “class of persons”: Acts Interpretation Act 1901 (Cth) s 29(b).

80                  Argument on this issue revolved around the decision of the Full Court in Pont Data. In Pont Data ASX supplied information in electronic form concerning stock exchange transactions to Pont Data and other subscribers. Pont Data then supplied the information to its own customers. ASX was a competitor of Pont Data in relation to the supply of such information. ASX required Pont Data to enter into supply contracts which inter alia required Pont Data to disclose to ASX the names of its customers. Those customers (called “Licensees”) were to enter into a tripartite agreement called a “Dynamic Agreement” with ASX and Pont Data under which the Licensees were restricted as to the use of the information, and in particular as to reselling it. Pont Data itself was not to sell the information to any person other than a Licensee. Pont Data alleged a contravention of ss 45, 46 and 49 of the Act.

81                  Relevantly for present purposes the Full Court held that persons other than those bound into the Dynamic Agreement as Licensees were a “particular class” within the meaning of s 4D(1)(b). Their Honours said (27 FCR at 488):

“… the appellants contended that the restraints upon the use of the Signal C information by persons other than those bound into the Dynamic Agreement as ‘Licensees’ could not have the purpose of preventing, restricting or limiting the supply of services to a ‘particular’ class of persons, or the acquisition of services by a ‘particular’ class of persons. It was said that the persons or classes excluded must still be ‘identified’ if s 4D is to apply. That may be conceded, but they are identified, in the present case, by the characteristic that they may not be supplied with the information in question, unless they accept and become bound by the restraints imposed by the Dynamic Agreement. Such persons come within a particular category or description defined by a collective formula: cf Pearks v Moseley, Re Moseley’s Trusts (1980) 5 App Cas 714 at 723. They ordinarily would be treated as constituting a particular class, even though at any one time the identity of all the members of the class might not readily be ascertainable. What distinguishes the class and makes it particular is that its members are objects of an anti-competitive purpose, with which s 4D is concerned.”

82                  In the last sentence of that passage the reference to “anti-competitive purpose” perhaps overlooks the fact that, as already mentioned ([61] to [64] above), the “exclusionary provision” of s 4D which forms part of the s 45(2)(a)(i) and s 45(2)(b)(i) proscription is not concerned with protecting competition as such. By contrast, other parts of s 45(2) are so concerned: see s 45(2)(a)(ii) and s 45(2)(b)(ii), both of which refer to the purpose or effect of “substantially lessening competition”. In Pont Data the Court had to deal with both limbs of s 45(2)(a) and s 45(2)(b). Indeed the primary judge (Wilcox J) had only made findings in relation to the “substantially lessening competition” limbs of s 45(2)(a) and (b) and found it unnecessary to decide whether the agreements contained an exclusionary provision: Pont Data Australia Pty Ltd v ASX Operations Ltd (1990) 21 FCR 385 at 419-420. The point was raised on appeal by way of notice of contention: 27 FCR at 473. Somehow it seems anti-competitive purpose has been transposed from the s 45(2)(a)(ii) and (b)(ii) issues to the s 45(2)(a) (i) and (b)(i) issues.

83                  In the present case it was not in dispute that a class may be a particular class even though at any one time the identity of all members of the class might not readily be ascertainable. But there remains the issue whether, as the respondents argued, there must be a common feature distinguishing persons who form the class other than the mere fact of them being subjects of exclusion. In the interlocutory judgment Hely J thought there was “some force” in such a submission but that Pont Data “provides otherwise”: 169 ALR at [87].

84                  Since Pont Data the High Court has considered a statutory provision which, although far removed in subject matter from s 45 and s 4D, uses analogous language and concepts. In Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225 the issue was whether the appellants were refugees within the meaning of Art 1 of the Convention Relating to the Status of Refugees, that provision being incorporated by s 4(1) of the Migration Act 1958 (Cth) as it then stood. The Convention provided relevantly that a refugee was any person who “owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion is outside the country of his nationality and unable or, owing to such fear, unwilling to avail himself of the protection of that country”. The appellants, a married couple who had one child and wished to have more, feared that if they were returned to the People’s Republic of China that country’s one child policy would be enforced against them by compulsory sterilisation or abortion.

85                  The High Court (Dawson, McHugh and Gummow JJ, Brennan CJ and Kirby J dissenting) held that the appellants were not members of a “particular social group”.

86                  Dawson J said (at 241):

“The word ‘particular’ in the definition merely indicates that there must be an identifiable social group such that a group can be pointed to as a particular social group. A particular social group, therefore, is a collection of persons who share a certain characteristic or element which unites them and enables them to be set apart from society at large. That is to say, not only must such persons exhibit some common element; the element must unite them, making those who share it a cognisable group within their society.”

87                  His Honour went on to observe that there was no reason to confine a particular social group to small groups or to large ones; nor was there anything which would suggest that the uniting particular must be voluntary. His Honour continued (at 242):

“However, one important limitation which is, I think, obvious is that the characteristic or element which unites the group cannot be a common fear of persecution. There is more than a hint of circularity in the view that a number of persons may be held to fear persecution by reason of membership of a particular social group where what is said to unite those persons into a particular social group is their common fear of persecution. A group thus defined does not have anything in common save fear of persecution, and allowing such a group to constitute a particular social group for the purposes of the Convention ‘completely reverses the statutory definition of Convention refugee in issue (wherein persecution must be driven by one of the enumerated grounds and not vice versa)’ Chan v Canada [1993] 3 FC 675 at 692-693 per Heald JA.”

88                  Later his Honour said (at 249):

“In truth, the social group contended for by counsel for the appellants may be described in these words of Beaumont, Hill and Heerey JJ in the court below:

‘X fears persecution by reason of circumstances A, B and C which are applicable to him or her. X is therefore a member of a particular social group constituted by all people to whom circumstances A, B and C are applicable.’

As their Honours pointed out, that is an argument which has been rejected by a line of United States cases. The argument amounts to little more than the assertion of common demographic factors. What the appellants need to demonstrate is that circumstances A, B and C, or any one of them, operate to unite people such that they are an identifiable social group apart from the fact that they all face persecution. They have not done so.”

89                  Likewise McHugh J said (at 263) that persons seeking to fall within the definition of “refugee” in the Convention

“… must demonstrate that the form of persecution that they fear is not a defining characteristic of the ‘particular social group’ … the group must exist independently of, and not be defined by, the persecution.”

Gummow J (at 285-287) held to the same effect.

90                  This approach can logically be applied to the concept of “particular classes of persons” in s 4D. It is also consistent with the notion of boycott. While this term does not appear in the language of s 45, s 4D or s 45D it is widely used to encapsulate the concept underlying parts of those sections, which, as already mentioned ([61] to [64] above), are concerned with matters other than competition regulation. The word comes from the name of Captain Hugh Boycott whose activities made him obnoxious in the eyes of tenant farmers in County Mayo in the 1880s. The whole point of a boycott is that the conduct or interests of some person or class of persons is seen as being inimical to the interests of the boycotters. The boycott is adopted as a means of inflicting some adverse consequences on that person or class. A boycott necessarily involves a target, a person or persons “aimed at specifically”: News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at 577. It is hard to see how this notion can apply to a class not defined in advance but only defined in an essential respect by the fact of exclusion, if and when it happens. And if it is wrong, as I think it is, to have a class defined by the fact of exclusion, it is in principle no different when exclusion is one of a number of defining characteristics. Either way, the class cannot be ascertained unless and until all putative members satisfy the test of exclusion – whether or not other tests must be satisfied.

91                  Looked at another way, if a particular class can be defined by the fact of exclusion, in effect the “class” becomes the whole world, because anybody has the potential to be excluded. This is actually what happened with the Melbourne club, which was not in either competition in 1997, or indeed in existence then, but became one of the ten clubs competing for the remaining nine licences for 2000. In theory at least, other applicant clubs could have emerged in the meantime.

92                  The way that Finn J dealt with this issue (at [287] – [292]) has already been mentioned. I would approach the matter perhaps somewhat differently. As indeed his Honour noted, the components of s 4D, although requiring individual analysis, also have to be considered as part of an organic whole. There must be a purpose of preventing etc supply etc to a particular class of persons. “Particular” in this context means

“pertaining to some one person, thing, group, class, occasion etc, rather than to others or all; special, not general” (Macquarie)

“relating to a single definite thing or person, a set of things or persons, as distinct from others; of one’s (its, etc) aim; special; not general” (Shorter Oxford)

93                  So there has to be an identified and defined class of persons in the minds of the alleged contravenors at the time the exclusionary provision is included in the contract etc. The class must then be “aimed at specifically”. The class must be defined by some shared characteristic before it can be aimed at. The rules of good marksmanship dictate that the shooter first identifies the target and then aims at it.

94                  In this context it is worth repeating the observation of Finn J (at [292]) already quoted above. If Souths’ argument is correct, competitors who enter into a partnership and agree to provide a lesser range of goods or services (or deal with a narrower range of customers) will have contravened s 45(2). Nothing in the stated object of the Act (“to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection”: s 2) would suggest such a startling result.

95                  Once attention is diverted from the essential elements of boycott proscribed by s 45(2) and s 4D – the targeting of a particular person or class of persons identified at the time the exclusionary provision is created – there is an inevitable slide into prohibition of conduct which amounts to no more than persons deciding the limits of the business in which they wish to engage.

96                  The respondents did not submit that Pont Data was wrongly decided in regard to the present issue. We were not therefore asked to turn our minds to the special considerations which apply when a Full Court is asked to reconsider and depart from a decision of an earlier Full Court: see Byrne v Australian Airlines Ltd (1994) 47 FCR 300 at 304-305. Rather it was contended Pont Data was distinguishable. As was Hely J, I am not persuaded that it is. An essential element of the Full Court’s ruling is that a “particular class” within the meaning of s 4D(1)(b) can be defined by the fact of exclusion.

97                  Were this issue determinative an appropriate course would be to reconvene the Court for further argument as to whether Pont Data should be followed. But since the effect of the other judgments is that the appeal will succeed on other grounds, the expense of such a course is not warranted.

VII RESTRICTING OR LIMITING

98                  Contrary to Souths’ argument, in my opinion the natural meaning of “restricting or limiting” in s 4D(1)(b) is that it is the supply or acquisition of goods or services, not the persons or classes of persons, that must be the subject of the restriction or limitation.

99                  The section is concerned with provisions which might interfere with (to use a neutral term) the flow of goods and services. Such an interference can occur by stopping (preventing) the flow or doing something less than stopping, which still amounts to an interference. For example there might be a restricting, in that deliveries are only to be made on weekdays, or a limiting in that goods above a stipulated number or value are not to be supplied.

100               There could of course also be an interference taking the form of a reduction in the number of persons to or from whom goods or services have been supplied or acquired. But this eventuality is dealt with under the element of “particular persons or classes of persons”. If competitors X and Y each previously supplied goods to each of A, B and C and insert a provision in a contract between them that henceforth they (X and Y) will only supply A and B, the provision would fall within s 4D(1)(b)(i) since it would have the purpose of preventing the supply of goods to a particular person, namely C.

101               I would agree with and adopt the way the matter was put by Hely J. His Honour said (169 ALR at [61]) that

“… there was to be no restriction or limitation (in the sense of partial supply or acquisition) of services to the 1997 clubs. Some would be fully supplied, and would fully supply NRL, and others not at all.”

102               In my view, Finn J was correct in holding that Souths’ claim failed on this issue also.

VIII Summary of conclusions on Souths’ appeal

103               Before passing to the matters raised by the respondents by way of notice of contention, it is convenient to summarise my views on the outcome of Souths’ appeal case, expressed in terms of Finn J’s findings. (The sequence is that of Souths’ pleading, although his Honour dealt with issues in the reverse sequence.)

·          restricting or limiting supply to or acquisition from particular persons:

·          no proscribed purpose because result not intended or desired

·          no partial supply or acquisition

·          no “particular persons” because clubs other than 1977 clubs might be affected (eg Melbourne)

·          preventing supply to or acquisition from particular classes of persons:

·          no proscribed purpose (for the same reason)

·          no “particular class” of persons because exclusion part of class definition.

104               Moore J has found a restricting or limiting of services in that the services in 2000 would relate, in the case of some clubs, to a hybrid team of two or more merged or joint venture clubs.

105               This case was not pleaded and not run at first instance. I am not sure it was even put on appeal. Since the nature of the restricting or limiting is an aspect of the alleged proscribed purpose, and since the latter is a question of fact, it is too late to raise such an argument. It raises an infinite range of factual dispute. For example, it could be said that if St George providing in 2000 a team in conjunction with Illawarra called St George-Illawarra is to be characterised as a different team from that fielded in 1997, then equally a team fielded by St George in one week in 1997 (or 2000) might contain different players from that of the previous week and so be not the “same service”. By the same token, a change in name, nickname, colours or sponsorship might all be said to make a team “different” and thus not the “same service”. Moreover, as already mentioned, reduction to fourteen teams in 2000 by mergers and joint ventures was not the only possibility as at 1997. There could be a withdrawal of clubs

106               In any case, the prospect of clubs merging or entering into joint ventures was seen, in 1997, as one which would necessarily involve the voluntary choice of those clubs. Substantial financial incentives were offered. If clubs freely exercised that choice so as to get the money and avoid or lessen the risk of exclusion, then that was a matter for them. The concept of boycott in s 45(2) and s 4D does not seem to fit the situation where the supposed target is not a passive victim but freely enters into a mutually satisfactory agreement with the supposed boycotters.

IX AGENCY

107               There was a very detailed attack by News and ARL on his Honour’s finding that NRL relevantly was acting as their agent.

108               However, as Senior Counsel for Souths put it, this was a “self-generated issue”. To establish that the 14-team term was an exclusionary provision within the meaning of s 4D, Souths did not have to establish that NRL was the agent of the NRL Partnership in the sense of being authorised by the Partnership to enter into contractual obligations which would bind the Partnership as principal. The case did not (relevantly for present purposes) concern the contractual liability of the NRL Partnership to anybody.

109               Rather it was a question whether the 14-team term had the purpose of preventing, restricting or limiting the supply or acquisition of the relevant services “by” News and ARL. If the other elements of 4D were made out, it would not matter that the role of NRL was filled by a totally independent entity – say, a company which held itself out as an organiser of sporting competitions.

X TIMING

110               It is helpful for the consideration of this issue to identify the elements of s 4D(2) in the form adopted by Finn J. His Honour said:

“[192] Section 4D(2) can be said to deem one person to be competitive with another if, and only if, the first mentioned person:

(i) is in competition with the other; or

(ii) is likely to be in competition with the other; or

(iii) but for the provision of any contract, arrangement or understanding, would be or would be likely to be in competition with the other; or

(iv) but for the provision of any proposed contract, arrangement or understanding, would be or would be likely to be in competition with the other –

in relation to the supply or acquisition of all or any of the goods or services to which the relevant provision of the contract, arrangement or understanding relates.”

111               Before his Honour, and on appeal, the respondents argued that Souths had to show that News and ARL would have been competitive for the relevant services in the year 2000 and thereafter, that is to say at the time the exclusionary provision was to take effect. On their construction the concluding words of s 4D(2) (“all or any of the … services to which the relevant [exclusionary] provision … relates”) make any temporal limitation on the operation of the exclusionary provision intrinsic to the designation or characterisation of the services themselves. The relevant services were not just competition organising services and team services but competition organising services and team services for the year 2000.

112               But I agree with his Honour’s view (at [198]) that insofar as s 4D(2) imposes a temporal requirement as to when the parties are to be in competition, that is to be found in the range of possibilities envisaged by the contingencies of s 4D(2) itself ((i) to (iv) in his Honour’s analysis at [192] quoted above).

113               The respondents’ argument involves importing an additional requirement into s 4D(2). True it is that the competition must relate to the relevant services which are the subject of the provision, so that the “area of competition coincide(s) with the area of contractual regulation” (Eastern Express Pty Ltd v General Newspapers Pty Ltd (1991) 30 FCR 385 at 420), but the section says nothing of the time, manner or place of the delivery of those services and whether the parties must be competitive in any or all of these circumstances of delivery of the services.

114               The time at which services are provided does not define the nature of, or characterise, the services themselves in respect of which competition must be demonstrated. Both in 1997 when the arrangement was made, and in the year 2000, the relevant services remain the same: the supply and acquisition of services in the course of organising and running top level rugby league competitions. Section 4D(1)(b)(ii) recognises that the circumstances in which a service would be supplied (which may include the time at which the service would be supplied) is not a defining characteristic of the service itself. The fact that the exclusionary provision limits the supply of services from a given year may be a particular circumstance (dealt with by s 4D(1)(b)(ii)) in which the supply of services will be prevented, restricted or limited, but is not a defining feature of the services themselves.

115               In the nature of things a provision which has the purpose of preventing, restricting or limiting the supply or acquisition of goods or services will operate in the future. Such a provision might operate immediately after the arrangement was made or after some lapse of time, and might operate either indefinitely or for a limited period. In every case it will operate for the future. Section 4D(2) then provides that the person shall be deemed to be competitive with another person if, inter alia, the person “is” in competition with the other in relation to the supply or acquisition of services to which the provision relates.

116               I would accordingly, as did his Honour, uphold Souths’ argument on this issue. It is therefore unnecessary to consider two further issues. The first is whether “likely” and “would likely to be” require a probability of being in competition as distinct from a “real chance or possibility”. The former construction would require a departure from the decision of the Full Court in News Ltd v Australian Rugby Ltd League (1996) 64 FCR 410 at 564-565. The second further issue is, depending on which construction is adopted, whether on the evidence there was a probability or a possibility that News and ARL would have been in competition in and from 2000.

XI Section 47(4)

117               Broadly speaking, s 45 does not apply to exclusive dealing arrangements; conduct of that kind is regulated by s 47: see the judgment below at [314] and also per Hely J, 169 ALR at [90], [92].

118               Section 45(6) excludes from the operation of s 45, inter alia, making a contract, arrangement or understanding which contains a provision, the giving effect to which would constitute a contravention of s 47.

119               Section 47(4) in so far as presently relevant provides:

“A corporation … engages in the practice of exclusive dealing if the corporation:

(a) acquires … services;

(b) …

on the condition that the person from whom the corporation acquires … services … will not supply … services …

(c) to particular persons or classes of persons or to persons other than particular persons or classes of persons.”

120               His Honour held (at [315], [316]) that for the purposes of s 47(4) the relevant services had to be acquired by NRL on its own account and that his finding as to agency made the defence unavailable. However, his Honour expressed the view that, absent agency, s 47(4) would apply, on the following basis:

“[320] If, for s 47(4) purposes, the partnership acquired services from NRL under the Services Agreement on condition that it not supply competition organising services to particular persons or classes of persons, an incident of that condition would be that team services not be acquired from those same particular persons or classes of persons. I incline, then, to the view that s 47(4) would provide a defence to Souths’ case in relation to its team services claim.”

121               As Souths submit, the Court must look at the commercial reality of the dealings between the parties. The central consideration is always the actual conduct of the parties in their business dealings in which contractual terms or other forms of commitment play a part: Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd (1985) 7 FCR 432 at 531-532, Australian Competition and Consumer Commission v Visy Paper Pty Ltd [2000] FCA 140.

122               Souths go on to argue, correctly in my view, that even if NRL is not found to be the agent of the NRL Partnership, it cannot reasonably be said that there was any prospect that NRL would seek to offer services to clubs other than the clubs nominated by the Partnership so as to invoke the alleged “condition” which would trigger s 47(4). There is no basis on which to find a real “design or intention” on the part of News and ARL “to prevent” NRL dealing with other clubs in competition with the NRL Partnership in a manner envisaged by s 47(4). NRL would only ever do what it was directed to do.

123               I conclude that if Souths otherwise succeeded, s 47(4) would not avail News and AFL.

xiI DiscretionARY GRANT OF INJUNCTION

124               His Honour held (at [327] - [328]) that even if Souths made out its s 45 claims the injunctive relief sought ought to be refused. Souths’ s 45 claims go no further than an assertion that it cannot lawfully be excluded in reliance on the 14-team term. But it could be excluded for any other lawful reason. If it was refused admission into the 2001 competition (or, relevantly for this Court, the 2002 and subsequent competitions) this would not necessarily involve any impropriety on the part of NRL or the NRL Partnership. The prohibitory injunction sought would in substance involve no more than a declaration of right cast in injunctive form. This is usually undesirable: Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275 at 318, Health Services for Men Pty Ltd v D’Souza (2000) 48 NSWLR 448 at 461.

125               However, his Honour did not refer to s 80(4)(a) of the Act, which expressly provides that the power to grant an injunction restraining a person from engaging in conduct in contravention of the Act may be exercised whether or not it appears to the Court that the person intends to engage again, or continue to engage, in conduct of that kind.

126               Section 80(4) is deliberately designed to adjust the principles evolved by Equity in relation to the discretionary remedy of injunction, for the reasons explained by Lockhart J in ICI Australian Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 256-257:

“Injunctions are traditionally employed to restrain repetition of conduct. A statutory provision that enables an injunction to be granted to prevent the commission of conduct that has never been done before and is not likely to be done is a statutory enlargement of traditional equitable principles. But this is because traditional doctrine surrounding the grant of injunctive relief was developed primarily for the protection of private proprietary rights. Public interest injunctions are different … This does not mean that the traditional equitable doctrines are irrelevant. For example, it must be relevant to consider questions of repetition of conduct or whether it has ever occurred before or whether imminent substantial damage is likely: but the absence of any one or more of these elements is not fatal.”

127               If Souths otherwise succeed, it falls to this Court to decide whether the injunction sought should be granted. It was not suggested that this issue be remitted to his Honour. I would not grant an injunction, but for different reasons than those mentioned by his Honour.

128               Souths expressly stated before his Honour that, should it be successful, it did not seek the exclusion of any other club. The practical effect of the injunction sought by Souths would be either a 15-team competition (including Souths) or a competition of an unlimited number of teams (again including Souths) subject only to clubs satisfying the Basic Criteria. The former would in substance require News and ARL to conduct themselves as if the Undertaking, the MoU and the Merger Agreement contained a 15-team term instead of a 14-team term. On the rationale of Souths’ case, this would amount to the Court mandating conduct which was also in contravention of the Act.

129               Moreover, both outcomes would involve this Court mandating something (a 15-team or a 15 plus-team competition) fundamentally different from that which emerged at the end of intensive negotiations in December 1997. In 1997 ARL and News were faced with a crisis. The only solution was a unified competition. That of necessity involved a reduction in the number of teams. There was nothing new in this. The Bradley Report had recommended a reduction to fourteen teams in 1992, long before Super League appeared on the scene. The entry of Super League was, as an earlier Full Court found, not unlawful. But it proved to be commercially disastrous. So a limited number of teams had to be agreed on. Otherwise top level rugby league might well have disappeared – leaving a gap in the lives of millions of Australians, not to mention financial loss.

130               But on the assumption that Souths’ case of a breach of s 45(2) is made out, any limitation of the number of teams – no matter what the number – would be unlawful and should be restrained by injunction. So, properly advised that the law was as Souths now contend, ARL and News would not have entered into the Understanding, the MoU or the Merger Agreement. There could be no unified competition at all. There seem to be strong public policy reasons against the grant of a discretionary remedy which would produce such a result. Moreover, practical difficulties in the framing of an injunction may give some guide as to the true meaning and effect of the statute: cf Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 178 ALR 253 at [60].

131               There are two possible solutions to this dilemma. The first, as contended by Souths on this appeal, is that authorisation under Pt VII of the Act should have been obtained. It was not quite clear whether Souths accepted that, in the event of it succeeding on the present appeal, authorisation would still be available. But in any event it may reasonably be assumed that authorisation would be opposed before the Commission – and on review to the Administrative Appeals Tribunal under s 101 and an appeal therefrom to a single judge and thereafter a Full Court of the Federal Court – with all the vigour Souths has displayed in the present litigation.

132               The second solution is to leave Souths to a remedy in damages under s 82. The declining of injunctive relief where damages are an adequate remedy is not one of the discretionary considerations made irrelevant by s 80(4).

133               In opposing a remedy of damages only, Senior Counsel said that Souths is a non profit organisation. But all that means is that it cannot distribute profits amongst its members. Such organisations can earn substantial revenues and own substantial assets. The extent of the financial loss Souths could demonstrate it suffered by exclusion was not canvassed on this appeal. But if damages are otherwise an appropriate remedy (for example when a seller fails to deliver goods readily available elsewhere) the fact that little or no damage can be shown in the particular circumstances is not a reason for granting equitable relief. In any case, Souths made a claim for damages at trial and on appeal sought that the assessment of damages be remitted to the primary judge (submissions par 59), so presumably Souths can show they have suffered loss compensable in damages, even if an injunction is granted. If there is no injunction, the quantum of damages could only be increased.

134               At the forefront of its case on the appeal Souths contended that Finn J erred by determining that “the purpose of the Understanding as a whole was a legitimate commercial endeavour, and … that the purpose of the impugned provision was not in breach of s 4D(1) as it was only included to further the aims of the Understanding as a whole” (submissions par 10).

135               A fair reading of the judgment shows, in my opinion, that his Honour did no such thing. However, the undoubtedly correct observation that the 14-team term is only a part of the larger agreement constituted by the Understanding becomes important when the discretionary grant or refusal of injunctive relief is considered. Apart from the 14-team term, which the majority of this Court holds to be an exclusionary provision, the Understanding did not contravene the Act and was not otherwise unlawful. Not only that, but it conferred self-evident public benefit and continues to do so. Without it, rugby league might not have survived as a top level sport in Australia.

136               And if the Understanding was in general a desirable thing, it is also true to say that it could not have come about without some limiting number of clubs being fixed, be it fourteen, sixteen or any other number. The findings of his Honour, and the evidence on which those findings were based, show that an agreement for a unified competition open to any club which satisfied the Basic Criteria was never an option. And, some stipulated number being essential, it is purely fortuitous that, in the events which happened, the number chosen has turned out to be not high enough to accommodate all clubs qualified to join, and that the one club to miss out was Souths.

137               So a just solution, it seems to me, would be relief from this Court which would preserve the good thing – the Understanding and the NRL Competition it founded – and compensate Souths by damages for any loss they have suffered as a result of that part – the 14-team term – said to be bad. The alternative is a Federal Court mandated 15 team rugby league competition, an outcome which confers no public benefit, contradicts the freely negotiated agreement of those who know the game and its commercial setting, and achieves no discernible purpose of the Act.

138               Moreover, contraventions of the competition law provisions of Pt IV of the Act will usually harm the community in general or a wide section, whose members and their actual loss are impossible to identify. This is one reason why an injunction is usually an appropriate remedy. In the present case, however, the contravention is, for the reasons already mentioned ([61] to [64]), essentially not a matter of competition law. There is only one entity that is affected adversely by the contravention, namely Souths. A damages award can compensate Souths while leaving the NRL Competition unaffected. Since exclusionary provisions are concerned with alleviating harm to persons “aimed at specifically”, a fair result would be to mould relief which gives full compensation to loss suffered by those persons while at the same time not causing loss to others.

XII Orders

139               The appeal should be dismissed with costs.

Associate:

Dated: 6 July 2001

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

MOORE J:

Introduction

140               South Sydney District Rugby League Football Club Ltd ("Souths") fielded a team in the premier rugby league competition in 1999. The next year it did not. There was no Souths team in 2000 even though there was a long history and strong tradition of a Souths team, supported by the local community, playing in the competition since the early years of last century. The club's position in the sport of rugby league appears to have been pre-eminent. Souths won the first competition in 1908 and by 1997 it had won more premierships than any other club in the history of top grade rugby league and had produced more international players than any other club.

141               These proceedings concern the effect on Souths of arrangements between competing interests which followed what has been described as an "assault upon the League" by News Ltd ("News"): see News Limited v Australian Rugby Football League Limited (1996) 58 FCR 447 at 471 per Burchett J in which the history is discussed as it is also in the judgment of the Full Court in News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 (“the 1996 appeal decision”). Souths sought to restrain the application of one aspect of those arrangements which was that in the year 2000, fourteen teams only would play in the competition.

142               This is an appeal against the judgment of the learned primary judge refusing Souths the relief it sought and dismissing its application. In his reasons: [2000] FCA 1541 and (2000) 177 ALR 611, his Honour dealt comprehensively with a large number of issues raised by the parties. Souths has isolated a limited number of issues determined by his Honour and has raised them again in this appeal. So too have the respondents, News, National Rugby League Investments Pty Ltd ("NRLI"), Australian Rugby Football League Limited ("ARL"), National Rugby League Limited ("NRL") and fifteen companies who field teams in the competition which, by notices of contention, canvassed his Honour's conclusions about a limited number of additional issues.

Background in outline

143               In his reasons, the learned primary judge set out in detail the general background, events leading to the making of the arrangements central to this appeal and the implementation of those arrangements. No challenge has been made in this appeal to any finding of primary fact by his Honour (though some of the inferences which can be drawn from them are in issue). Moreover some of the more pertinent facts have been set out again in a more summary way in the reasons for judgment of Heerey J in this appeal, which I have had the benefit of reading in a draft form. Accordingly it is unnecessary to repeat, in detail, what the primary judge found or refer to the evidence other than when it is necessary to do so.

Legislation

144               Central to this appeal are two sections of the Trade Practices Act 1974 (Cth) ("the Act") concerning exclusionary provisions. Section 45 prohibits conduct of a specified type and subs (2) provides:

“(2) A corporation shall not:

(a) make a contract or arrangement, or arrive at an understanding, if:

(i) the proposed contract, arrangement or understanding contains an exclusionary provision; or

(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; or

(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:

(i) is an exclusionary provision; or

(ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition.”

It can be seen that a corporation cannot agree or give effect to a provision of a contract, arrangement or understanding which is an exclusionary provision. What is an exclusionary provision is described in s 4D which provides:

“(1) A provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if:

(a) the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and

(b) the provision has the purpose of preventing, restricting or limiting:

(i) the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons; or

(ii) the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions;

by all or any of the parties to the contract, arrangement or understanding or of the proposed parties to the proposed contract, arrangement or understanding or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate.’

(2) A person shall be deemed to be competitive with another person for the purposes of subsection (1) if, and only if, the first-mentioned person or a body corporate that is related to that person is, or is likely to be, or, but for the 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 the other person, or with a body corporate that is related to the other person, in relation to the supply or acquisition of all or any of the goods or services to which the relevant provision of the contract, arrangement or understanding or of the proposed contract, arrangement or understanding relates.”

In this appeal the following elements of s 4D assume importance. Firstly the section, like s 45, operates on a provision of a contract, arrangement or understanding and not, in terms, on the entire contract, arrangement or understanding. Secondly the provision must have a proscribed purpose. It is settled law and was common ground that the relevant purpose is of the parties to the contract, arrangement or understanding and it is their subjective purpose: see ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 (“Pont Data”). Thirdly the purpose must be to prevent, restrict or limit one or both of two things. They are the supply of goods or services or the acquisition of goods or services. Fourthly the supply must be to or the acquisition must be from, particular persons or particular classes of persons (it was common ground and appears to be correct that the adjective "particular" qualifies both "persons" and "classes"). In this judgment I will continue to use the word “persons” used in the section even if the word “people” were, in context, more apt. A related element in s 4D also found in s 45 is that the provision is being given effect to by a corporation. That section does not, in terms, require that the corporation giving effect to the provision is itself a party to the contract, arrangement or understanding containing the provision.

145               Mention should be made of two further provisions. The expression "give effect to" is defined in s 4 of the Act. It is an expression which:

“includes do an act or thing in pursuance of or in accordance with or enforce or purport to enforce.”

146               The other is s 4F(1) which gives meaning to the word "purpose" and provides, for present purposes, that:

“(a) a provision of a contract, arrangement or understanding … shall be deemed to have had, or to have, a particular purpose if:

(i) the provision was included in the contract, arrangement or understanding … for that purpose or for purposes that included or include that purpose; and

(ii) that purpose was or is a substantial purpose.”

It is against this legislative background that this appeal is to be determined.

Reasons of the primary judge

147               My conclusions in this appeal can be explained more clearly if reference is made to the reasons of the primary judge as various issues raised in the appeal are considered. It is convenient to set out those parts of his Honour’s reasons at that point in these reasons. I will use the abbreviations and acronyms used by his Honour.

Issues in the appeal raised by Souths

148               Central to Souths case both at first instance and on appeal is what is described as the fourteen team term. It was said to be the provision which was an exclusionary provision of the proscribed type. The way Souths described the provision in the pleadings was:

"[i]n the 2000 season and thereafter the number of teams to participate in the NRL competition would be restricted to 14, with no more than eight and no fewer than six teams from Sydney.”

The matters raised by Souths in the appeal were whether:

(i) the primary judge erroneously focussed on the purpose of the 19 December Understanding and ascertained what its purpose was and whether, in approaching the matter this way, his Honour failed to focus on the relevant legal question, namely what was the purpose of the fourteen team term.

(ii) his Honour, in considering whether the fourteen team term was an exclusionary provision, was unduly influenced by questions such as whether the 19 December Understanding had a commercially legitimate objective and the impugned provision was a means of achieving it and whether his Honour failed to recognise that it was unnecessary for an exclusionary provision to have an anti-competitive effect or otherwise have an illegal purpose.

(iii) in considering whether the fourteen team term was an exclusionary provision, his Honour was erroneously influenced by whether or not the term specifically targeted a club or clubs or discriminated against a club or clubs.

(iv) his Honour’s analysis of what constituted a particular class also manifest error, because it was unnecessary for the membership of the class to be identified at the time the exclusionary provision was entered into by News and ARL.

(v) his Honour misconstrued s 4D(1)(b) when considering the question of whether there might be a limiting or restricting of the supply by News and ARL of their services as competition organisers to particular persons (the clubs that participated in the rival 1997 competitions), or a limiting or restricting of the acquisition of teams’ services from those clubs, and whether his Honour erred in treating that provision as relating only to the supply or acquisition of partial services and placed a gloss on the provision.

I will adopt the approach of the primary judge and focus on the 19 December Understanding. The position revealed by the later agreements does not appear to me to result in any difference in analysis or conclusion.

Resolution of the issues raised by Souths

(i) Purpose

149               In his reasons the primary judge concluded that the fourteen team term was not an exclusionary provision of the type Souths alleged. His Honour described the purpose alleged by Souths as it related to the prevention of supply and acquisition in the following passage (at [263]):

“[263] Both ARL and News had the purpose that from 2000, the competition would be reduced to fourteen teams with no more than eight teams and no fewer than six teams from Sydney…… Notwithstanding that News and ARL had the purpose of encouraging mergers or joint ventures to avoid exclusion of clubs from the services, it was one of their purposes that, if the requisite reduction in numbers could not be achieved by joint ventures and mergers, then one or more of the clubs that had participated in the 1997 season in either competition would be denied entry in 2000. That purpose was a substantial purpose (see s 4F of the TP Act) even if it was a subsidiary and immediate purpose and not the dominant and ultimate purpose for the inclusion of the fourteen team term: Jewel Food Stores Pty Ltd v Amalgamated Milk Vendors Association Inc (1989) 24 FCR 127 at 134-135.”

150               In relation to the question whether the purpose of the provision was, relevantly, to prevent acquisition and supply, the primary judge concluded that the provision did not have that purpose. His Honour's reasons for reaching this conclusion appear, in part, in the following passage (at [269] and [270]):

“[269] A clear and intended effect of the fourteen team term was that the NRL partnership would not provide its competition organising services to, or acquire team services from, a greater number of teams than the number so fixed. This was a fundamental element of the peace deal. A foreseeable and, for ARL and News, a foreseen consequence of the term was that if more than the stipulated number sought participation in the NRL competition, the excess over the stipulated number (howsoever determined) would be denied the provision of the partnership's competition organising services and would not have its (their) team services acquired by the partnership. There can be no controversy about both the effect and the consequence I have described. The real matter in issue is whether the term was included in the 19 December Understanding and its successor documents for the purpose, or for purposes that included the purpose, alleged by Souths. To resolve this it is necessary at the outset to place the 19 December Understanding and the fourteen team term within it, in their respective contexts.

[270] The objective the 19 December Understanding was working towards was to bring together in one competition the separate competitions of ARL/NSWRL and Super League, the latter at News' instigation having broken away from the former. The parties to the Understanding clearly appreciated and, for somewhat varying reasons, accepted the need for a united competition. As the evidence of Mr Macourt, Mr Frykberg and Mr Whittaker indicates, as also did contemporary documentary evidence, a variety of factors informed that need. For present purposes I need mention only three and in general terms. First, positively, there was the perceived need to establish a financially viable and sustainable competition. Secondly, negatively, there was the wish to avert continuing damage to the game. And thirdly, there was the need both to satisfy and to respond to the pressures and demands of the media companies on whose financial support both the several and the proposed competitions had relied or would rely for their survival.”

151               Several comments can be made about this passage. The first is that the primary judge spoke in the first sentence of providing services to or acquiring services from "teams". A similar formulation was used by his Honour elsewhere and apparently reflected a formulation used by Souths in its submissions. While the respondents in the appeal did not criticise the use of the formulation in the reasons (nor, obviously enough, did Souths) the respondents emphasised in the appeal that relevant services were being provided to or acquired from clubs and not teams. This, in my opinion, is correct and is of some significance as I explain later. Secondly, his Honour focussed in the first paragraph on the purpose of the impugned provision, the fourteen team term, but went on in the second paragraph to consider the overall objective of the 19 December Understanding. His Honour then discussed in more detail how the negotiations were directed to creating a new and quite distinctive competition and a national competition which was viable. It was noted that no team had a right to participate in the new competition's 1998 season and, as matters developed, would undergo a selection process to participate in the 2000 competition. His Honour went on to consider the question of purpose (at [274]):

“[274] Against this background, the purpose or purposes for which the fourteen team term was included in the 19 December Understanding become(s) more apparent. The primary purpose of the Understanding itself was to constitute a partnership to own and conduct the proposed NRL competition. I need not further consider the reasons that led to the proposed formation of the partnership. I would note, though, that the proposed NRL competition structure served an important role in defining the scope of the partnership's business both in providing competition organising services and in acquiring team services. While the NRL competition has variously been described as a "merged" or "unified" competition, it was in my view a new competition that supplanted the two competitions it was designed to replace.”

152               The preceding passage involves a discussion of the overall purpose of the 19 December Undertaking. His Honour then noted that the fourteen team term was one of the defining characteristics of the new competition and his Honour went on to deal in more detail with the question of purpose, as it related to prevention, in a lengthy passage which should be set out in full (at [276] to [287]):

“[276] I have not repeated the individual reasons given by Mr Macourt, Mr Frykberg or Mr Whittaker for their agreeing to the fourteen team term. They are consistent with what I have said above. Equally I have not referred to the authorisations etc given by News and ARL/NSWRL for such light as they throw on what were their respective purposes in the matter. I am, however, satisfied that the fourteen team term (including the 8-6/6-8 split) was included in the 19 December Understanding for the purpose of achieving the objectives to which I have referred.

[277] Can it be said, though, that this was the only (hence only substantial) purpose for the inclusion of the term? In his judgment in the interlocutory proceeding when responding to the submission that the term was not included for the purpose of excluding anyone but that exclusion was an incidental and unwished for outcome, Hely J said ((1999) 169 ALR at 132):

‘I do not agree. One of the motivations behind the inclusion of the 14 team term in the arrangements was to restrict the supply and acquisition of the services to which the term relates to 14 clubs, in order to establish a viable and sustainable competition. This is not to confuse purpose with effect. It is merely an acknowledgment of the reality of the situation. The purpose of the 14 team term was not merely to achieve the desired "end", but to do so by particular means. For this reason it cannot be said that the only purpose of the provision is the establishment of a viable or sustainable competition.’

[278] For my own part I cannot, with respect, so readily accept this conclusion, or at least its implication. My reasons for this reticence relate to the quite particular character of the purpose required to be shown to attract s 4D and to that purpose's targeting of particular persons or classes of person. Though these two matters - the required purpose and the targeted class - are parts of a composite whole, I will for convenience in exposition consider each separately.

[279] The fourteen team term limited, and was intended to limit, the number of teams to which the partnership would provide its services and from which it would acquire services. It equally had the foreseeable, and foreseen, consequence to which I earlier referred. But does that intended effect with its foreseeable consequence necessitate the conclusion that a purpose for including the provision was to prevent the supply to, or acquisition of services, to teams in excess of the stipulated fourteen?

[280] Unlike Hely J, I am not satisfied that this question can be answered by differentiating ends from means. ARL and News proposed to create a new business running a new competition having particular characteristics. One characteristic was that it would have a maximum number of teams. For present purposes it would not matter what that number was - twelve, fourteen, sixteen, eighteen. What is important is that the competition so designed embodied a limit to the number of teams to or from which the partnership would provide or acquire services. Given the objectives it was intending to pursue in creating the competition, this number was selected as Mr Frykberg put it ‘as the best number of teams’.

[281] The competition was to draw its participants from the pool of teams that had participated in the ARL and Super League competitions. While those teams would have to release their respective competition organisers from their commitments to them if the new competition was to become a reality, the clubs in the pool (apart from being offered the opportunity to participate in the 1998 and later the 1999 NRL competitions), were to be offered at least the opportunity to participate in the selection process for participation in the 2000 competition. If a particular club was successful in that, the partnership would provide services to it and acquire services from it. If it was unsuccessful, no services would be made available to it or be acquired from. But this, in my view, would not necessarily mean that a purpose of the relevant competition size provision was to prevent the supply etc to or from that club. That may or may not have been the purpose for including the particular size provision. One can envisage a size provision with its proposed ancillary criteria being designed with the substantial purpose in mind, not simply of limiting the size of the competition for reasons that are considered to be in the interests of the game and its stakeholders, but of specifically targeting a club or clubs that is or are anticipated to be applicants for selection. Such is far from the present case. A selection process having more applicants than positions necessarily results in there being winners and losers. What for s 4D purposes is important for those who lose is the manner of their losing.

[282] There is a significant difference between being merely an unsuccessful contender for selection in a process not designed to preordain that particular outcome and being a target for exclusion in a selection process designed to that end. The latter, but not the former, if otherwise the product of a s 4D understanding, is capable of being found to be an exclusionary provision.

[283] In the present case the evidence concerning the adoption of the fourteen team term is bereft of any indication that its purpose was to prevent the supply of services to, or acquisition of services from, any person or class of persons. The term had an intended effect and foreseen consequences. But these do not in my view require it to be found that a purpose of the term's inclusion in the 19 December Understanding, etc was a purpose proscribed by s 4D(1).

[284] I accept the evidence of Mr Whittaker that he believed the fourteen teams for 2000 could be, and of Mr Frykberg that they would be, achieved without resort to exclusion. And I consider the early and continuing significance they attributed to the formation of mergers and joint ventures as being consistent with the absence of a proscribed purpose. The significance so attributed to mergers, etc, evidenced a form of recognition of both the wish and the need to maintain some level of participation of the established clubs in a competition not designed to accommodate them all individually.

[285] Further, while it may be said that the fourteen team term was only a means to achieving the objectives I have mentioned, the evidence (i) does establish that that term was fundamental to the 19 December Understanding and (ii) does not establish that there was another means available not involving the fourteen team term (or for that matter any maximum size stipulation) that would have been likely to secure either the merger itself or the objectives sought to be achieved in the competition structure. In these circumstances I am unable to conclude that a variety of means was available to the parties such that the adoption of the fourteen team term was merely a means to an end and as such had another purpose as well as that of securing the objectives sought.

[286] For these reasons I conclude that the term does not fall within s 4D(1) in that it was not included in the 19 December Understanding for a purpose that included the prevention of the supply of competition organising services or of the acquisition of team services.

[287] Even if I am incorrect in this conclusion and that, as Hely J suggested as a possibility, the term embodied as one of its purposes preventing the supply or acquisition of services to more than fourteen teams, I am satisfied that Souths' claim must fail for a related reason. On the evidence before me, the person or class said to be prevented from supplying or acquiring the relevant services is not a ‘particular class of persons’ for the purposes of s 4D(1).”

(Emphasis added)

153               It can be seen that in the fourth paragraph ([279]) in the preceding extract, his Honour again spoke of "teams" when it would have been more appropriate, in my respectful opinion, to speak of clubs. His Honour did so again in [287]. I do not intend to criticise his Honour's choice of language. However the emphasised sentence in the fourth paragraph contains the critical question concerning purpose at least as it related to prevention. In my opinion, there may be a material difference in the result if the question is put slightly differently as I consider it should. The significance of whether one considers "clubs" rather than "teams" when evaluating or determining purpose is more apparent when the question of restricting or limiting supply or acquisition is considered.

154               Central to Souths’ challenge to the primary judge’s conclusions concerning purpose was that s 4D(1)(b) raised for consideration the purpose of the provision said to be an exclusionary provision and not, at least as a central consideration, the purpose of the contract, arrangement or understanding of which the provision may be but a part. It was submitted that what his Honour did was ascertain the purpose or objectives of the 19 December Understanding and from there move to consider the purpose of the fourteen team term. In so doing his Honour erred and was influenced by the commercial legitimacy of the 19 December Understanding overall having regard to the objectives sought to be achieved by the Understanding. His Honour also erred, it was submitted, by considering whether the impugned provision specifically targeted a particular club or clubs or discriminated against a particular club or clubs.

155               The immediate difficulty, for my part, in dealing with these submissions is that his Honour’s detailed consideration of the question of purpose was in the context of the contention that the fourteen team term had a purpose of preventing the supply of organising services to or the acquisition of team services from a particular class of persons. His Honour reached a conclusion about that matter at [286] quoted above. That conclusion can be contrasted with the observations of Hely J in the interlocutory proceedings (which the primary judge set out in [277] quoted above but indicated he did not unconditionally accept) which concerned motivation and possible purpose, but related, importantly, to restricting supply and acquisition and not prevention. Yet the substantial issue raised by Souths in this appeal, in my opinion, concerns the approach of the primary judge to the question of restriction and limitation of supply and acquisition and not prevention.

156               As will be apparent from a passage from his Honour’s reasons set out later, the primary judge imported, without elaboration, his conclusion about purpose relating to prevention, into his consideration of whether the fourteen team term had a purpose of restricting or limiting the supply or acquisition of services in relation to particular persons. As I discuss shortly, I consider that his Honour took an unduly narrow view of s 4D(1)(b) as it might apply to a provision said to have a purpose of restricting or limiting supply or acquisition though not on precisely the same basis advanced by Souths.

157               Accordingly, I propose to focus on the question of whether the primary judge’s approach and conclusion on the question of purpose reveals error as it might apply to the question of restricting or limiting supply and acquisition of services.

158               The finding made by his Honour in [284] quoted above was, in substance, that the individuals who entered the 19 December Understanding on behalf of ARL and News intended, by the fourteen team term, to require at least some of the clubs who participated in the rival 1997 competitions to merge or enter joint ventures if they were to remain in the competition. By these means those clubs would continue to field teams. His Honour accepted (a finding not challenged) that those individuals believed there could or would be no club excluded. That is, all clubs would or might be accommodated at least in the sense that some would field a team but in conjunction or collaboration with other clubs. It can readily be inferred, and it is the preferable inference, that this was a substantial purpose of the fourteen team term. That is, a purpose of the fourteen team term, which was a substantial purpose, was to bring about a situation where some of the clubs participating in the rival 1997 competitions would not field their team in the year 2000 as they had done in 1997 but would do so in conjunction or collaboration with other clubs. However if the primary findings of his Honour reveal this purpose, the fourteen team term attracts the operation of s 4D only if, as I shortly discuss, it is directed to restricting or limiting the acquisition and supply of services as pleaded. The fact that the fourteen team term was included in the 19 December Understanding to achieve particular commercial objectives which were, in a sense, unexceptionable does not lead to some other characterization of the purpose of the fourteen team term.

159               In addition, the fact (which I accept) that the fourteen team term was intended to operate on any other clubs entering the new competition after December 1997 would indicate that the term had purposes in addition to the purpose just described. However the existence of that additional purpose does not preclude the fourteen team term having a substantial purpose operating in December 1997 on the clubs who had earlier that year participated in the rival competitions.

160               It is convenient to move straight to the question of the restriction or limitation of supply or acquisition.

(ii)               restricting or limiting supply or acquisition

161               Part of the case advanced by Souths was that the fourteen team term had a proscribed purpose of restricting or limiting the supply of organising services or restricting or limiting the acquisition of team services. This was dealt with comparatively briefly by his Honour in the following passage (at [294] to [299]):

“[294] As pleaded the particular persons said to be the objects of the proscribed purposes were the clubs that had participated in the ARL and Super League competitions prior to December 1997 and that had not withdrawn from those competitions before that date.

[295] The finding I have made above as to the purpose of the parties in including the fourteen team term in the 19 December Understanding is fatal to this claim as well. Nonetheless there is a number of matters I should address in relation to it specifically.

[296] Souths' contention is that the effect and purpose of the fourteen team term was to ‘limitor restrictthe supply’ by ARL and News of their services as competition organisers to ‘particular persons’, being the twenty clubs that participated in the 1997 competitions, by their stipulating that such services would not be supplied to more than fourteen teams from 2000. Conversely, the effect and purpose of the provision was to ‘restrict’ or "limit the acquisition" of teams' services from ‘those particular persons’ by being willing to acquire the services of only fourteen teams.

[297] In the interlocutory proceedings Hely J rejected the argument in the following way ((1999) 169 ALR at 131):

‘The case sought to be made by ASC paras 20(a) and 21(a) is misconceived. It alleges a purpose of restricting or limiting the supply of competition organising services to, and the acquisition of team services from, clubs which had participated in the 1997 competitions and who had not withdrawn from those competitions prior to 19 December 1997. But there was to be no restriction or limitation (in the sense of a partial supply or acquisition) of services to the 1997 clubs. Some would be fully supplied, and would fully supply NRL, and others not at all. Further, the pleaded case does not accommodate the factual situation, in as much as Melbourne Storm, and three new clubs coming into existence as a result of mergers, are to participate in the year 2000 competition.’

[298] Souths now contends that his Honour was in error as the words ‘restricting or limiting’ qualify supply or acquisition, not services. Supply or acquisition relates both to the service to be supplied or acquired and the persons to or from whom the services would be supplied or acquired. "Restriction" or "limitation" is not confined to the supply or acquisition of only part of the services. It extends to the supply or acquisition of services to or from some only of the particular persons.

[299] For my own part I agree with the construction placed on s 4D(1) by Hely J. The concern of the provision for present purposes is with the partial supply to, or acquisition from, particular persons or classes of persons. Equally I agree with his Honour that the pleading does not reflect the known and anticipated facts as at 19 December 1997. Though not a club participating in the 1997 competition, it was envisaged (as happened) that Melbourne would be a team in the 1998 competition and would be involved in the selection process for 2000. To ignore Melbourne, or for that matter merged or joint venture teams, simply contrives artificially the particular persons at whom the proscribed purpose is alleged to be directed.”

Two points can be made, at this point, about this passage. The first, as mentioned already, is that no express and separate finding is made by his Honour about the alleged proscribed purpose of the fourteen team term as it concerns restriction or limitation of the supply or acquisition of the relevant services. Reference is simply made to the earlier finding about purpose as it concerns prevention. Secondly, the primary judge again speaks of supply of services to "teams" and acquisition of services from "teams" in [296] though it must be immediately acknowledged that in so doing his Honour was apparently paraphrasing the submission of Souths.

162               Before further considering this issue it is necessary to refer to the pleadings and the submissions made by Souths at the trial to deal with an issue in the appeal about the nature of the case put by Souths to the primary judge and the extent to which the case raised in the appeal was broader. The respondents contended it was, which can be illustrated by the following exchange during the hearing of the appeal with senior counsel for News counsel:

“MOORE J: … When in the facts of this case one is considering restriction or limitation because it seems to me, at least on one view, both the effect and purpose of the whole arrangement was to ensure that of the 22 clubs existing as at December 1997 some, if not all of them, would be acquiring services in a different context. That is as joint venturers or as merged entities and would be providing services in the same context. I must say I find difficulty in not seeing that sort of arrangement as an arrangement that has the effect of restricting or limiting the service that was provided and acquired if one takes, to use an expression I used yesterday, a snapshot of circumstances in December 1997. Because it would have meant that Souths, at least potentially, would have been providing a service and acquiring a service. Not as a stand-alone club with its own team, as a merged entity providing presumably a hybrid team and acquiring services in the same context.

MR MEAGHER: The short answer to your Honour's question is that case was never run.

MOORE J: Well, I know you’ve said that but I don't understand what the case was that his Honour’s dealing with in paragraphs 294 and 5.”

163               Souths took issue with the contention that its case had been as narrowly framed as the respondents suggested. Senior counsel for Souths handed up extracts from its contentions and written submissions before the primary judge which are referred to shortly.

164               In the third further amended statement of claim (“the statement of claim”) the issue of restricting or limiting was addressed in paragraphs 20 and 21 which provided:

“20. In entering into the NRL Partnership Agreement the ARL and News contravened s.45(2)(a)(i) of the Act and of the Schedule version of Part IV of the Act in that they made a contract or arrangement or arrived at an understanding containing an exclusionary provision within the meaning of s.4D(1) of the Act (namely, the 14 team term) which had the purpose of:

(a) restricting or limiting the supply of services (namely organising and running top level rugby league competitions) by the NRL Partnership to particular persons, namely, the clubs which had participated in the ARL competition and the Super League competition prior to 19 December 1997 and who had not withdrawn from those competitions before that date; and

(b) …

21. In entering the NRL Partnership Agreement, the ARL and News contravened s.45(2)(a)(i) of the Act and of the Schedule version of Part IV of the Act in that they made a contract or arrangement or arrived at an understanding containing an exclusionary provision within the meaning of s.4D(1) of the Act (namely, the 14 team term) which had the purpose of:

(a) restricting or limiting the acquisition by the NRL Partnership of services, (namely, the provision of rugby league teams to play in the NRL competition) from particular persons (namely, the clubs which had participated in the 1997 ARL and Super League competitions and who had not withdrawn from those competitions before 19 December 1997); and

(b) …”

It can be seen that paragraph 20 raised the issue of whether ARL and News through the NRL Partnership were parties to an exclusionary provision which had the purpose of restricting or limiting the supply of services to the clubs participating in the rival competitions prior to 19 December 1997 (but which had not withdrawn). The pleaded services, the supply of which was said to be restricted or limited, were organising and running top level rugby league competitions. Paragraph 21 raised a similar issue in relation to the acquisition of services, the provision of rugby league teams to play in the NRL competition, from the same clubs. We were not taken to any answers to particulars or other material which could be viewed as limiting the case as pleaded.

165               As noted earlier, in this appeal Souths handed up an extract of a statement of issues and contentions and written submissions it provided to the primary judge. In the issues and contentions the following is said:

“Purpose of reduction or limitation of supply of competition organising services or of acquisition of teams services to particular persons

11. The effect and purpose of the 14 team term is to limit or restrict the supply by the ARL and News of their services as competition organisers to particular persons, being the 20 clubs which participated in the 1997 competitions, by their stipulating that such services would not be supplied to more than 14 teams from 2000. Conversely, the effect and purpose of the provision was to restrict or limit the acquisition of teams’ services from those particular persons by being willing to acquire the services of only 14 teams.

12. Hely J rejected this argument on the basis that there would be no restriction or limitation (in the sense of a partial supply or acquisition) of services to the 1997 clubs. Rather some would be fully supplied and would fully supply NRL, and others not at all. (Judgment 9 December 1999, para 61). However, the words ‘restricting or limiting’ qualify supply or acquisition, not services. Supply or acquisition relate both to the services to be supplied or acquired and the persons to or from whom the services would be supplied or acquired. ‘Restriction’ or ‘limitation’ is not confined to the supply or acquisition of only part of services. It extends to the supply or acquisition of services to or from some only of particular persons.”

166               A similar theme emerges in Souths’ written submissions. They read:

“Purpose of restriction or limitation of supply of competition organising services or of acquisition of team services to particular persons (or particular class)

78. It is clear that the clubs which participated in the 1997 rival competitions were particular persons within the meaning of s.4D and comprised a particular class. The effect and purpose of the arrangements announced on 19 December 1997 (and the subsequent agreements), was that competition organising services would not be supplied to more than 14 teams from 2000 and team services would not be acquired from more than 14 teams in 2000. This was a restriction or limitation on the supply of competition organising services to those clubs and the acquisition of team services from them. The position of Melbourne as a new entrant is irrelevant. For the reasons advanced in paragraphs 11 and 12 of the applicant’s statement of issues and contentions, the words “restricting or limiting” are not confined to the partial supply or acquisition of services in the sense of the supply or acquisition of only some services. “Restricting or limiting” qualifies supply or acquisition, not services. Supply or acquisition relate both to the services to be supplied or acquired and the persons to or from whom the services would be supplied or acquired. The words ‘restricting or limiting’ extend to the supply or acquisition of services to or from some only of the particular persons (or persons in the particular class) to or from whom the parties to the arrangement supplied and acquired services at the time the arrangement was made.”

167               The approach of this Full Court must be consistent with the principles in Water Board v Moustakas (1997) 180 CLR 491 at 497 and also Nescor Industries Group Pty Ltd v Miba Pty Ltd (1997) 150 ALR 633. However I rather apprehend the position is as stated by senior counsel for Souths in reply in the appeal:

“Our learned friends have referred on a number of occasions to the way in which the case was conducted below, as though there was some kind of magic about it and every aspect of the case had to be like the rich person riding the camel through the pin hole, as it were. But if one looks at the pleadings, the opening submission of the evidence, the closing submissions and the judge’s reason, one can see the case wasn’t on a very narrow basis. In a sense, all that one has is a situation where you’ve got the arrangements that were entered into were clearly established.

One had a situation where the evidence of the witnesses was evidence which said what one would expect them to say about the documents and in those circumstances really, the question really was whether it was a case to which section 4D applied.”

168               I am satisfied that Souths raised as an issue the question of whether the fourteen team term was an exclusionary provision because of its effect on both the provision of services to and the acquisition of services from the clubs participating in the rival competitions before 19 December 1997 (but which had not withdrawn). It did so by alleging that the clubs were particular people and the fourteen team term had a purpose of limiting or preventing the supply and acquisition of services to and from those clubs in a way proscribed by ss 45 and 4D.

169               It may be accepted that in par 78 of the quoted extract from Souths’ written submissions reference was made to supply to and acquisition from teams and not clubs (and also par 11 of the contentions which spoke of both supply to the clubs and also to the teams). To this extent the submissions departed from both the pleaded assertion and the contention in pars 11 and 12 of the contentions (which are ambiguous) which speak of supply to and acquisition from clubs. However the application of ss 4D and 45 to the fourteen team term as it might impact on the clubs viewed as particular people was raised by Souths in the proceedings before the primary judge and can be ventilated again in the appeal.

170               In par 5 of the statement of claim, Souths pleaded that in 1997, teams were provided for the ARL competition by Souths and what appear to be twelve other clubs though their status or identity was not specified. In par 6, Souths pleaded that in 1997 teams were provided for the Super League competition by eleven clubs though their identity was not specified. While all or some of these matters were not admitted in the defences of News and NRLI and of NRL, the primary judge accepted (at [19], [20] and [173]) that there were twenty-two clubs providing their teams. It appeared to be common ground in this appeal that each club was incorporated and it was not suggested each was not “a person”: see also the 1996 appeal decision (section II and, in particular, part 9). Reference is sometimes made to twenty clubs (see, for example, paragraph 11 of the contentions quoted in par 165 above) and not the twenty-two clubs referred to in the pleadings. This is probably because three teams fielded by clubs in 1997 did not participate in the 1998 competition and one new team played in the 1998 competition (Melbourne). In the appeal, the parties could not say with certainty whether the clubs that dropped out did so before the 19 December Understanding was arrived at though the terms of the Understanding suggest it was before (that is, the Perth, Hunter and South East Queensland teams had dropped out). For my part, I do not view it as significant whether the discussion concerns twenty or twenty-two clubs. I will refer to them as the 1997 clubs.

171               The services provided by the 1997 clubs (and correspondingly acquired) before 19 December 1997 were referred to in par 7 of the statement of claim:

“(c) the acquisition of services, being the provision of rugby league teams to play in the top level rugby league competitions organised and run by the ARL on the one hand, and News and SLPL on the other hand, from Souths, the clubs and franchisees which had participating [sic] in 1997 in the ARL Optus Cup and the Super League competition including certain of the Clubs and any other rugby league club willing and able to provide a team to participate competitively in a top level rugby league competition.”

172               This is a reference to, among other things, the provision of a team by each 1997 club in the rival competitions prior to 19 December 1997. It was those clubs who also received services from the competition organisers of the rival competitions. Those services, relevantly, were referred to in par 7 as:

“(b) the supply of the services of organising and running top level rugby league competitions to Souths, the clubs and franchisees which had participating [sic] in 1997 in the ARL Optus Cup and the Super League competition including the Clubs, and to any other rugby league club willing and able to provide a team to participate competitively in a top level rugby league competition”.

173               Again, the focus of the services pleaded is the provision of services to a club who had provided a team or wished and was able to provide a team.

174               I should briefly comment on the way Souths’ case was pleaded in pars 20(a) and 21(a) of the statement of claim. There is no apparent reason why it is necessary to isolate and consider by reference to the facts, particular elements of the expression “purpose of preventing, restricting or limiting”. Neither the language or purpose of the section suggest this is necessary. The “or” is, in my opinion, dispersive: see Electricity Trust of South Australia v Krone (Australia) Technique Pty Ltd (1994) 51 FCR 540 and Minister for Immigration & Ethnic Affairs v Baker (1997) 73 FCR 187.

175               That the words are dispersive is reinforced, in my opinion, by the separate use of the words “limiting” and “restricting”. It is difficult to discern what is intended by the separate use of those words. The defined meaning of the verbs “restrict” and “limit” are in the Macquarie Dictionary:

“restrict: to confine or keep within limits, as of space, action, choice, quantity etc

limit: to restrict by or as by fixing limits; to confine or keep within limits; (Law) to fix or assign definitely or specifically”

and in The New Shorter Oxford Dictionary:

“restrict: limit, bound, confine; restrain by prohibition, prevent from.

limit: assign, make within limits, appoint, fix definitely, specify.”

The resort in each definition to the other word suggests that if there is a distinction to be drawn between the meaning of the two words, it is not a significant one. It may be that the use of the word “restricting” flows from the enactment of the Trade Practices Act 1965 (Cth) adopting, it would appear, notions of “restriction” from the Restrictive Trade Practices Act 1956 (UK): as to the meaning of which see: Re Telephone Apparatus Manufacturers’ Application (1963) LR 3 RP 462 at 473, 483, [1963] 2 All ER 302 at 307; Re British Waste Paper Association’s Agreement (1963) LR 4 RP 29, [1963] 2 All ER 424; Re Ravenseft Properties Ltd’s Application [1978] QB 52 at 66-67, [1977] 1 All ER 47 at 53-54. The notion of limiting appears to have arisen in the amendments made in 1977 to the Act (which included the introduction of s 4D) following the Swanson Report. However it is unlikely that words without discernably different meanings are intended to identify, in the one phrase, alternatives.

176               While a provision may be an exclusionary provision because it has a purpose of, for example, only preventing the supply of goods or services, it may be a provision with a purpose of doing all or any of preventing, restricting or limiting supply to the particular persons or classes of persons in combinations or permutations that may not be revealed until and unless the provision was given effect to by the parties to the contract arrangement or understanding. However having regard to the way the case has been pleaded, it is necessary to focus on the restriction or limitation of the supply and acquisition of the services identified in the pleadings.

177               This leads to the question of whether the primary judge erred in construing and applying s 4D(1)(b). It is to be recalled that his Honour’s view was that the fourteen team term was thought to have application if there was to be a restriction or limitation by a partial supply or acquisition of services but, as Hely J had concluded, there was to be, as a matter of fact in this matter, no partial supply. Some 1997 clubs would be fully supplied and would supply fully, others not at all. For my part, I do not view the language or apparent statutory purpose of par (b) of s 4D(1), to the extent that it speaks of “restricting or limiting”, as rendering the paragraph applicable only to situations where there is partial supply in the simple sense that all the previous recipients or providers of the services continued to acquire or supply them but in a reduced amount or at a reduced level. The meaning of “services” is not constrained by the definition in s 4 which is in wide terms and not exhaustive: see Sun Earth Homes Pty Ltd v Australian Broadcasting Commission (1990) 98 ALR 101 at 107 and would comprehend services which could be intangible in character and potentially unquantifiable in terms of amount or volume supplied or acquired. This is illustrated by Trade Practices Commission v Legion Cabs (Trading) Co-operative Society Ltd (1978) 35 FLR 372 in which Franki J held that a radio service provided to taxi drivers constituted the provision of services for the purposes of s 4. Services comprehended by the Act might have characteristics involving quality, quantity and frequency. They might have other characteristics. Two competitors may agree, in relation to services provided to or by each of them, that their suppliers provide (and they acquire) or consumers (in the broadest sense) receive services with one or a number of these characteristics altered in a way that would limit or restrict the supply or acquisition of services that had been provided, to that point, to or by the suppliers or consumers.

178               Indeed if a substantial purpose of the fourteen team term is as I have described it in par 158 above, two questions arise about the scope of s 4D(1)(b)(i) as it might apply to the fourteen team term enlivened by s 45. The first is whether there would be a restricting or limiting of the supply or acquisition of the pleaded services if the fourteen team term might result in some of the 1997 clubs having to field a team in conjunction or collaboration with one or a number of the other clubs. The second and related question is whether it can be said to be a restricting or limiting of supply or acquisition if the fourteen team term might have the result that only some but not all of the 1997 clubs would field a team in conjunction or collaboration with other clubs but some of the 1997 clubs would continue to field a team in their own right.

179               I turn to consider the first question. The underlying purpose of s 4D in the statutory scheme in which it is found was described by Lockhart J in Gallagher v Pioneer Concrete (NSW) Pty Ltd (1993) 113 ALR 159 at 209:

“Section 4D defines the term ‘exclusionary provision’ for the purposes of s 45 as being in essence a collective boycott, by referring to any provision in an agreement between competitors which has the purpose of either restricting the supply of goods or services by all or any of those competitors to particular persons or classes or restricting the acquisition of goods or services by all or any of those competitors from particular persons or classes of persons.”

If ss 4D and 45 are intended to prevent competitors engaging in collective boycotts by, amongst other things, restricting the supply or acquisition of services, then there is no apparent reason for treating “restricting” or “limiting” as operating only in a way where there might be a quantifiable reduction in the services provided or acquired.

180               It must also be borne in mind as the Full Court said in the 1996 appeal decision at 558:

“The prohibition imposed by s 45 of the TP Act applies irrespective of the extent to which putative exclusionary provisions affect competition in a market. It is plain that the Parliament regarded horizontal arrangements of an exclusionary character as having a necessary tendency to inhibit competition and that this was regarded as sufficient to proscribe the making of such arrangements.”

181               It may be accepted that, as a matter of grammar, the expression “preventing, restricting or limiting” in s 4D(1)(b) qualifies the words “the supply” and “the acquisition” in both subpars (i) and (ii). However it does not follow, in my opinion, that s 4D was not intended to comprehend provisions, which had as their purpose the cessation of supply or the provision of partial supply on the footing that the services provided or acquired were constant in character or that changes to the services were irrelevant. The supply of something (being services) to a number of people can be restricted or limited if the character of that which is supplied is altered though its fundamental character remains the same. The same can be said in relation to the acquisition of those services.

182               I note, in passing, that the services alleged to have been provided by the ARL clubs and which were accepted by the Full Bench in the 1996 appeal decision as an element in the successful claim by News that provisions in the Commitment and Loyalty agreements were exclusionary provisions, were the participation “by their teams in rugby league competitions” (emphasis added): see (1996) 64 FCR at 559 as to the description of the services and 560 – 566 as to the conclusion concerning competition. These were the services the clubs were providing in competition with each other.

183               A central question posed by s 4D(1)(b) in the present matter is whether a substantial purpose of the fourteen team term was to effect a restriction or limitation.

184               Before 19 December 1997 the services supplied by each of the 1997 clubs and acquired by the organisers of the rival competitions was the provision of a team. To indicate, as the adoption of the fourteen team term did, that the 1997 clubs then supplying twenty-two teams could, in the year 2000, supply, and the organiser would only acquire, fourteen teams (even if the clubs were able to do so as a merged club or through a joint venture) constituted, in my opinion, conduct which had the purpose of at least restricting or limiting the acquisition of team services from the 1997 clubs and probably the supply of organising services to them.

185               This may be illustrated by referring to the position Souths was in though considered in the context of the position each of the other clubs (identified by reference to their circumstances at 19 December 1997) was in also. Souths had its own team and had fielded it in the 1997 competition. Souths (unlike some, but not all, of the other 1997 clubs) had fielded its team for decades. It had provided a team and the ARL had acquired the services (that is, the provision of a team) from Souths both in 1997 and earlier. The ARL had provided services which facilitated Souths competing with its team in a top level rugby league competition. The adoption of the fourteen team term was effectively a declaration to Souths and each of the other clubs competing in the rival competitions that they collectively could not do what to that point each of them had done, namely field their team in a top level rugby league competition.

186               The organisers of the rival competitions were indicating that they would no longer acquire the services the clubs had been providing and would both limit and restrict the services they would acquire. They would not acquire services manifest by the provision of twenty or twenty-two teams but would acquire services manifest by the provision of fourteen teams. It may be accepted that under the 19 December Understanding any club, including Souths, would, at the least, be able to continue to provide a team by merging or forming a joint venture. However the provision of a team of this character was not the provision of the same services that had been provided, and correspondingly acquired, before the adoption and implementation of the fourteen team term. It would not be a team of that club but a hybrid team of two or more clubs. In this way, the services to be acquired by operation of the fourteen team term, would, as to some of the 1997 clubs, not be the same services that had been acquired formerly when the two competitions conducted the rival competitions. The services acquired would be limited and restricted.

187               Before turning to the second question referred to in par 178 above, it is convenient to deal with one further matter concerning the application of s 4D(1)(b). In supplementary written submissions, some respondents put in issue whether the 1997 clubs were, for the purposes of s 4D(1)(b), particular persons on the footing that for persons to be particular they had to be part of a larger universe of persons. It was submitted the 1997 clubs were not.

188               The meaning of the expression “particular persons” was considered in Bullock v Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464. In issue before the Full Court was whether an interim injunction should have been dissolved by the primary judge. The undisputed facts were that a union forced carpet suppliers to enter agreements to the general effect that they would not give work to self-employed carpet layers working as independent contractors. There were apparently 680 such carpet layers in Melbourne and a total of 1275 in all of Victoria. One of the issues addressed by the primary judge in that matter was whether the agreements were intended to operate in relation to particular persons. The primary judge said:

“Section 4D(1)(b)(i) and (ii) make reference to the preventing, restricting or limiting the acquisition of services from ‘particular persons’. In my view, none of the agreements relevant to this proceeding would fall within the definition of ‘exclusionary provision’ in s 4D. The reason for this is that in each case the agreement intends to exclude all carpet layers and not particular persons from operating otherwise than in accordance with its terms. In my view, s 4D is plainly designed to apply to provisions which exclude particular persons in the sense of persons whose identity is known or can be ascertained. It is not directed towards the exclusion of the entirety of the available body of persons who could conceivably be called upon to perform or supply the relevant services.”

(Emphasis added.)

Of these conclusions, Woodward J said (Smithers and Sweeney JJ agreeing) (at 473):

“It is unnecessary and undesirable that any concluded view on the meaning of these sections should be reached for the purposes of this application. It is sufficient to say that, in my view, it is clearly arguable that ‘self-employed carpet layers’ or at least ‘the self-employed carpet layers who have in the past been employed by the carpet suppliers who have been forced to sign the FFTSA agreement’ are particular persons within the meaning of the Act. It is arguable that particular persons may be identified by general description, or as members of a designated class, without being individually named.”

189               It must be accepted that the construction referred to by his Honour was advanced as arguably correct which was all the Full Court was, in the circumstances, being called on to consider. Nonetheless, this passage suggests that persons can be particular persons if they are all the persons potentially affected by the allegedly proscribed conduct as long as they can be identified.

190               A day after the Full Court’s judgment in Bullock, Franki J gave judgment in Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1. One issue was whether an understanding between freight carriers not to deal through transport brokerage agencies was a proscribed arrangement or understanding within s 4D (which, in the form it was then in, referred to “particular persons” but not “classes of persons”). As to whether the arrangement or understanding concerned “particular persons” his Honour said (at 75-76):

“… The requirement of s 4D(b)(i) and (ii) that the ‘purpose of’ relates to the supply of services to or the acquisition of services from particular persons or the supply of services to or the acquisition of services from particular persons in particular circumstances or in particular conditions must be satisfied.

It is necessary to have regard to the meaning of the words ‘particular persons’. The arrangement or understanding proved is not limited to Tradestock but extends to a class of intermediaries although the statement of claim excludes all but Tradestock in the allegations of giving effect to. Further, the arrangements or understandings proved did not extend to the question of dealing with any ‘particular persons’ in the category of those seeking freight forwarding services.

The question arises whether the arrangement or understanding proved is sufficient to satisfy the words ‘particular persons’ in s 4D.

It is relevant to note that s 47, the exclusive dealing section of the Act, draws a distinction between ‘particular persons’ and ‘classes of persons’.

I accept the submissions of the defendants in this regard that an arrangement or understanding not to deal with a class or category of persons does not satisfy the requirement of an arrangement or understanding not to deal with ‘particular persons’. However, the word ‘persons’ will also include the singular. That conclusion is sufficient of itself to answer the claim made of giving effect to an exclusionary provision.”

191               The problem revealed in that case was that the persons affected were not identified or identifiable. It was following this decision that the words “or classes of persons” were added by the Trade Practices Revision Act 1986 (Cth). The amendments were made to ensure that a provision of a contract, arrangement or understanding could be an exclusionary provision even if the identities of the individual persons on whom it might operate were not known but the persons could be identified as members of an identified or identifiable class. This was accepted by the Full Court in Pont Data which said at 488:

“(T)he appellants referred to the form taken by s 4D before it took its present form after it was amended by s 6 of the Trade Practices Revision Act 1986 (Cth), which inserted the words ‘or classes of persons’ after ‘particular persons’. The amendment appears to have been made in the light of what had been said as to the limitations upon the phrase ‘particular persons’ in Bullock v Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464 at 473, and in Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 at 75-76. The result would appear to broaden the definition of s 4D by going from particular persons to particular classes of persons.

However, in a submission having an unpleasing resonance of the class-closing rules and of distinctions between general, special and ‘hybrid’ powers of appointment, the appellants contended that the restraints upon the use of the Signal C information by persons other than those bound into the Dynamic Agreement as ‘Licensees’ could not have the purpose of preventing, restricting or limiting the supply of services to a ‘particular’ class of persons, or the acquisition of services by a ‘particular’ class of persons. It was said that the persons or classes excluded must still be ‘identified’ if s 4D is to apply. That may be conceded … .”

192               The word “particular” as an adjective qualifying “persons” may mean no more than identified or identifiable or ascertained or ascertainable persons to whom or from whom the goods or services are supplied or acquired in contradistinction to the generality of people who might acquire or be supplied with the services. As Toohey J said in Hughes v Western Australian Cricket Association Inc (1986) 19 FCR 10 (at 39-40):

“Section 4D(1)(b)(i) was amended by the Trade Practices Revision Act 1986 (Cth), which was assented to on 13 May 1986 and took effect as from 1 June. But, in its unamended form which is the form relevant to this proceeding, the subparagraph refers to the purpose of preventing, restricting or limiting the supply of services to or the acquisition of services from ‘particular persons’, not particular ‘classes of persons’. The identity of the persons excluded must be known or capable of ascertainment. The provision is not directed to the exclusion of the entirety of the available body of persons who could conceivably be called upon to perform the relevant services. The question is one of fact: Bullock v Federated Furnishing Trades Society Australasia (1985) ATPR 40-577. In the TNT case Franki J held (at 75) that the class of persons in question was not sufficiently particular.”

193               The meaning of the adjective “particular” used in a broadly analogous way has been considered on two other occasions though in different statutory contexts. In R v Nicholas [2000] 1 VR 356, the Victorian Court of Appeal considered whether a warrant authorizing the use of a listening device was invalid because it failed to identify the suspected person or persons sufficiently to satisfy the expression “a particular person” in s 219B(5) of the Customs Act 1901 (Cth), which relevantly provides:

“Where, upon application being made to a Judge for the issue of a warrant to a Commonwealth law enforcement agency under this section authorizing the use of a listening device in relation to a particular person, the Judge is satisfied, by information on oath, that:

(a)...

(b)...

the Judge may, by warrant under his hand in accordance with the prescribed form, authorize officials of the agency, ... to use a listening device …”

194               A warrant was issued under s 219B authorising the use of a listening device in relation to “a particular person, namely a person who obtains or seeks to obtain possession of a bag described as an “ELITE” brand, soft sided, carry bag on casters, black in colour with brown trimming, containing 24 blocks of compressed white powder each weighing....”. The Court held (at [78]) that:

“upon a proper construction of the section and its evident purposes, the person or persons suspected were clearly not sufficiently identified for one or more of them to satisfy the expression “a particular person” within the meaning of s 219B(5). At the very least, even assuming a person or persons can be identified by characteristics other than their names and addresses or occupations, there was no identification of any individual, only the identification of the type of act or acts which might on their occurrence purport to bring an individual within the purview of the warrant.”

195               In response to the argument that the power to issue warrants should be more generously interpreted, the Court of Appeal said (at [94]):

“There would have been no need to employ the word “particular” if the interpretation placed on the words by the Crown were to be accepted. The word “person” or “that person” could equally have been adopted …. Particularity was intended, in our opinion, by the legislature to ensure that warrants should not be issued of a general kind, of the kind indeed upon which the common law has for at least three centuries frowned.”

196               In Chenoa Pty Ltd v Shell Company of Australia Ltd (1988) 81 ALR 1, a Full Court of this Court had to consider the meaning of the phrase “particular corporation” in the context of s 6(1D) of the Petroleum Retail Marketing Franchise Act 1980 (Cth) (“the Franchise Act”). Section 6(1D) provided that, inter alia:

“Where –

(a)   premises were, in a statement lodged under s 11 of the Petroleum Retail Marketing Sites Act 1980 at any time before 1 September 1984, specified as being a retail site operated by a particular corporation; and

(b)   …”

the provisions of the Franchise Act did not apply.

197               Shell Company of Australia Ltd’s parent company, Shell Australia Ltd, had lodged a statement in purported compliance with s 11. The name of the operating corporation listed in relation to the retail site which was the subject of the proceedings was simply recorded as “Shell”. The issue arose whether the requirements of s 6(1D) had been satisfied notwithstanding that the Shell group generally had been named as the site operator and not Shell Company of Australia Ltd specifically. The Full Court (at 10) held:

“It is a condition precedent to the application of s.6(1D) to a particular franchise agreement that such agreement concerns premises which were, in a statement lodged under s.11 before 1 September 1984, "specified as being a retail site operated by a particular corporation". It is difficult to think of words more apt to convey the insistence of the legislature that the relevant statement shall have precisely identified a single corporation. The Shorter Oxford English Dictionary gives, as one meaning of the word "particular", the words "relating to a single definite thing or person ... as distinguished from others". We think that it is in this sense that the word is used in the present context, to refer to a single corporation as distinguished from others.”

What then is intended by the use of the word “particular” in s 4D? It appears to have two possible meanings. The first is that the word when qualifying “persons” serves to limit the operation of s 4D to an apparently exclusionary provision which is proposed by the colluding competitors to operate on identified or identifiable persons known to the competitors although it would not be material whether it might operate on other persons as well. On this approach, s 4D would have no application if the colluding competitors made or arrived at a contract, arrangement or understanding which was proposed simply to operate on any person who might be affected by it and the colluding parties did not know, when making or arriving at the contract arrangement or understanding, who any of the persons might be. That is, the provision would be an exclusionary provision if it was to operate on identified or identifiable persons but it would not be if it was to operate only on the generality of persons. The second, and narrower meaning, is that the word serves to limit the operation of s 4D to an apparently exclusionary provision that is proposed by the colluding competitors to operate only on identified or identifiable persons and that the competitors intended that the provision would not operate on others who were persons to whom or from whom the competitors might acquire or supply goods or services. That is, the provision would be an exclusionary provision only if it was intended to operate selectively on identified or identifiable persons.

198               In my opinion the word has the former of these meanings. There is no apparent reason to give the provision a narrower meaning then the language might reasonably bear. I would respectfully adopt the observations of Mason CJ in Devenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32. The Chief Justice was in a minority concerning the meaning to be given to s 45D(1)(b) of the Act. However the majority did not disapprove of his Honour’s observations (see, in particular, Brennan J (Dawson J agreeing) at p 47.9) though plainly there was a difference concerning the result of the application of those principles. The Chief Justice said at 44:

“Moreover, s. 45D(1) falls within Pt IV of the Act, the general purpose and scope of which have been described by Deane J. as containing ‘provisions which proscribe and regulate agreements and conduct and which are aimed at procuring and maintaining competition in trade and commerce’: Refrigerated Express Lines (A/asia) Pty. Ltd. v. Australian Meat and Live-stock Corporation [No. 2] (1980) 44 FLR 455, at p. 460; 29 ALR 333, at p. 340. The evident purpose and policy underlying this Part of the Act recommends a broad construction of its constitutent sections. In a similar context, the United States Supreme Court has stated:

‘It has been said, of course, that the antitrust laws, and Robinson-Patman in particular, are to be construed liberally, and that the exceptions from their application are to be construed strictly. … Because the [Robinson-Patman] Act is remedial, it is to be construed broadly to effectuate its purposes’: Abbott Laboratories v. Portland Retail Druggists Assn., Inc. (1976) 425 US 1, at pp. 11-12.

(See also United States v. McKesson & Robbins (1956) 351 US 305, at p. 316; Perkins v. Standard Oil Co. (1969) 395 US 642, at p. 647.) Section 45D(1) may similarly be described as being of remedial legislative character and accordingly ‘should be construed so as to give the fullest relief which the fair meaning of its language will allow’: Bull v. Attorney-General (N.S.W.) (1913) 17 CLR 370, at p. 384, per Isaacs J. See also Samuel v. Newbold [1906] AC 461, at p. 467; Wilson v. Moss (1909) 8 CLR 146, at p. 165; Holmes v. Permanent Trustee Co. of New South Wales Ltd. (1932) 47 CLR 113, at p. 119; Waugh v. Kippen (1986) 160 CLR 156, at p. 164. My comments in another context are equally applicable to this case:

‘It is reasonable to impute to Parliament an intention that the provision, which is a protective provision, be given “the widest possible scope”’: Day & Dent Constructions Pty. Ltd. v. North Australian Properties Pty. Ltd. (1982) 150 CLR 85, at p. 108.”

and at 45:

“When a provision in a statute is intended to be protective and remedial and to that end proscribes certain conduct, strong reasons are required to justify an interpretation of the provision which would narrow the scope of the provision and exclude conduct falling within its literal terms.”

199               These observations were adopted and applied by Lockhart and Gummow JJ in Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 503 and Burchett J in Trade Practices Commission v The Gillette Company (1993) 45 FCR 366 at 375.

200               Section 4D is intended to operate in conjunction with s 45. The former section is part of the statutory scheme found in Part IV (notwithstanding that it is located in Part 1) about which Mason CJ spoke in the passage just quoted. In my opinion the expression “particular persons” is to be taken to be a reference to identified or identifiable persons whether or not there are other identified persons or otherwise on whom the apparently exclusionary provision is not intended to operate. That is, it is not necessary that a provision operate selectively in the way just discussed for it to be an exclusionary provision.

201               This leads to a consideration of the second question posed in par 178 above, namely whether it can be said there existed a purpose of restricting or limiting of supply or acquisition to the 1997 clubs if it was in contemplation that some but not all of the 1997 clubs would field a team in conjunction or collaboration with other clubs though some of the 1997 clubs would continue to field a team in their own right. This really raises the question of whether competitors can have a purpose of restricting or limiting supply of services to particular persons and the acquisition of services from them if it is not known, when the exclusionary provision was agreed to, who of the particular persons would bear the burden of the restriction or limitation though it could be expected some of the particular people would not.

202               The language of s 4D (when read with s 45(2)(a)(i)) does not, in my opinion, preclude its application in these circumstances nor would such an application be inconsistent with the apparent purpose of the provision. It may be accepted that if s 4D were to operate in this way, it would be because the expressions “supply … to” and “acquisition … from” are not to be read as meaning “supply … to each of (or all)” or “acquisition … from each of (or all)” the particular persons or members of the particular class. In relation to the parties to the contract, s 4D(1)(b) speaks of “all or any of the parties”, which might suggest the expressions just referred to should not, in the absence of the same or similar words, be given the same or a similar meaning. However there is no apparent reason for giving the expressions “supply … to” and “acquisition … from” that meaning, in a way that might limit the operation of s 4D as enlivened by s 45, in a statutory context where notions of purpose and preventing, hindering and restricting are central.

203               Section 4D (enlivened by s 45(2)(a)(i)) is directed to arrangements between competitors that may adversely affect their suppliers or customers. It has in this field of operation, as it central focus, the purpose of the competitors when entering such arrangements. Arrangements could be entered that were intended to have an apparently proscribed effect on some but not all of the competitors' suppliers or customers. That is, it was proposed that supply or acquisition of goods would be reduced, by operation of the arrangement, on some but not all of the suppliers or customers because of events that had not yet occurred. Those events may be influenced by the conduct of the suppliers or customers. However the fundamental or underlying purpose of the competitors would have been to limit or restrict supply to or acquisition from particular persons with the burden of the limitation or restriction being revealed as the exclusionary provision was given effect to by the colluding competitors.

204               Again, adopting the approach of Mason CJ in Devenish v Jewel Food Stores Pty Ltd, there is no apparent reason to read down, or treat as qualified, the expression “supply … to” or “acquisition … from” in the way just discussed. As the Chief Justice said, strong reasons are required to justify an interpretation of the provision which would narrow the scope of the provision and exclude conduct falling within its literal terms. In my opinion, the fact that the fourteen team term contemplated some of the 1997 clubs would continue to field their own teams in 2000 and following years does not remove the fourteen team term from the scope of s 4D as enlivened by s 45(2)(a)(i).

205               For these reasons I am satisfied that the fourteen team term was an exclusionary provision.

(iii)             What is comprehended by class

206               In his judgment the primary judge dealt with a submission of Souths that the circumstances considered by the Full Court in Pont Data were an analogue of the present case and the application of the Full Court's reasoning led to the conclusion that the class relied on by Souths was a class on whom News’ and ARL’s conduct impacted in a proscribed way.

207               Having regard to the conclusions I have reached about Souths' case concerning the 1997 clubs as particular persons, it is unnecessary to consider in detail the case advanced by Souths' based on the contention that the fourteen team term was an exclusionary provision operating on the pleaded particular class. However, the view I have taken about the scope of s 4D(1)(b) as it applies to particular persons is conformable with the conclusion of the Full Court in Pont Data which viewed the provision as having a wide operation in circumstances where the identity of each of the persons on whom the alleged exclusionary provision might operate was neither ascertained nor ascertainable at the time the agreement was entered.

Resolution of the issues raised by the respondents

208               I agree with Heerey J for the reasons his Honour gives that each of the contentions raised by the respondents should be rejected.

Remedy

209               It follows from what I have said to this point, that Souths has established that ARL and News contravened s 45(2)(a)(i). It would also follow, from the facts as found by the primary judge, that the fourteen team term was given effect to by ARL and News in contravention of s 45(2)(b).

210               Since preparing the above reasons, I have had the benefit of reading the reasons of Merkel J in a draft form. While we have adopted a different approach to the issues raised in the appeal, we have reached the same ultimate conclusion. For the reasons given by Merkel J in [297] to [301] and [303] to [307], I would make the orders his Honour proposes.

211               In relation to Merkel J’s observations in [302], I do not consider that orders should not be made because they may result in another breach of the Act. Whether, following judgment, there are further breaches of the Act by the respondents and what are their consequences is to be determined if and when there is a breach and steps taken, if at all, to enjoin those involved. Also, as Merkel J points out in the final sentence of that paragraph, the orders do not mandate conduct that would result in a breach of the Act.

212               The only additional observation I would wish to make is that the respondent clubs who took an active part in the appeal indicated they did not wish to make submissions on the question of whether injunctive relief should issue against the other respondents restraining the implementation of the fourteen team term. They adopted this position because such an order would not affect them.

Associate:

Dated: 6 July 2001

REASONS FOR JUDGMENT

MERKEL J:

213               The background to the appeal and the issues argued, as well as the contentions of the parties in relation to those issues, are set out in the reasons for judgment of Heerey J. The question raised by the appeal is whether a provision of an agreement, arrangement or understanding between the two premier league rugby competition organisers, News Ltd and its subsidiaries (“News”) and Australian Rugby League Limited (“ARL”) that their merged National Rugby League competition (“the NRL competition”) was to be limited to fourteen teams is an exclusionary provision as defined by s 4D(1) of the Trade Practices Act 1974 (Cth) (“the Act”).

214               Section 45(2) of the Act prohibits a corporation from making a contract or arrangement, or arriving at an understanding that contains an exclusionary provision, and from giving effect to an exclusionary provision. Section 4D(1) of the Act, relevantly, defines an exclusionary provision:

“A provision of a contract, arrangement or understanding … shall be taken to be an exclusionary provision … if:

(a)         the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and

(b)         the provision has the purpose of preventing, restricting or limiting:

(i)                 the supply of … services to, or the acquisition of … services from, particular persons or classes of persons; or

(ii)               the supply of … services to, or the acquisition of … services from, particular persons or classes of persons in particular circumstances or on particular conditions;

by all or any of the parties to the contract, arrangement or understanding … or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate.”

Section 4D(2) deems a person to be competitive with another person:

“… if, and only if, the first-mentioned person … is likely to be, or, but for the provision of any contract, arrangement or understanding … would be, or would be likely to be, in competition with the other person, … in relation to the supply or acquisition of all or any of the … services to which the relevant provision of the contract, arrangement or understanding … relates.”

Section 4F(1)(a) provides:

“a provision of a contract, arrangement or understanding shall be deemed to have had, or to have, a particular purpose if:

(i) the provision was included in the contract, arrangement or understanding … for that purpose or for purposes that included or include that purpose; and

(iii)             that purpose was or is a substantial purpose.”

215               The provision limiting the NRL competition to fourteen teams (“the fourteen team term”), was pleaded by the appellant (“Souths”) as follows:

“[i]n the 2000 season and thereafter the number of teams to participate in the NRL competition would be restricted to 14, with no more than eight and no fewer than six teams from Sydney.”

Souths claims that the fourteen team term:

·                    had the purpose of preventing, restricting or limiting the supply of competition organising services by News (through its subsidiary, National Rugby League Investments Pty Ltd (“NRLI”)) and ARL to, and the acquisition of team services from, particular persons or classes of persons within the meaning of s 4D(1)(b) of the Act;

·                    was therefore an exclusionary provision that had been included in a contract, arrangement or understanding in breach of s 45(2) of the Act.

216               Souths alleges that the respective services were to be supplied or acquired, as the case may be, by News (through NRLI) and ARL as equal partners (“the NRL partners”). Although ultimately the partners were NRLI and ARL, NRLI was a subsidiary of Super League Pty Ltd (“Super League”) which was a subsidiary of News. It is convenient to refer to News in these reasons for judgment as including NRLI and Super League. No party suggested that anything turned on News using or acting through its subsidiaries in establishing the merged NRL competition with ARL. The “competition organising services” of the NRL partners were pleaded as:

“the supply of the services of organising and running top level rugby league competitions to Souths, the clubs and franchisees which had participat[ed] in 1997 in the ARL Optus Cup and the Super League competition including the Clubs, and to any other rugby league club willing and able to provide a team to participate competitively in a top level rugby league competition;”

The “team services” were pleaded as:

“the acquisition of services, being the provision of rugby league teams to play in the top level rugby league competitions organised and run by the ARL on the one hand, and News and [Super League] on the other hand, from Souths, the clubs and franchisees which had participat[ed] in 1997 in the ARL Optus Cup and the Super League competition including certain of the Clubs and any other rugby league club willing and able to provide a team to participate competitively in a top level rugby league competition.”

As Hely J observed in South Sydney District Rugby League Football Club Ltd v News Ltd (1999) 169 ALR 120 at 131 (“South Sydney”), the two services are “opposite sides of the same coin”.

217               The trial judge concluded that although the fourteen team term was in a contract, arrangement or understanding made between News and ARL, who were competitive with each other, the term did not have the purpose of preventing, restricting or limiting the supply of services by News and ARL to, or the acquisition by News and ARL of services from, particular persons or classes of persons. Souths, in its appeal against the decision of the trial judge, does not challenge the primary findings of fact made by his Honour. Rather, Souths claims his Honour erred in concluding, on the basis of those findings, that there was not a proscribed purpose and, in any event, no particular persons or particular class of persons were the objects of any such purpose.

218               Souths also relied upon the proposed supply by the NRL partners of the benefit or facility of funding, by way of an annual grant of $2 million, to each of the clubs providing team services in the NRL competition from 2000 onwards. Although, at trial, the funding service was relied upon by Souths as a separate service for the purposes of its s 4D claims, it did not challenge the trial judge’s finding that the purpose of the funding service was to pay $2 million to the fourteen clubs to which competition organising services were supplied and from which the team services were acquired. Accordingly, Souths accepted that the provision of funding was not a service independent of, and separable from, the competition organising and team services. It follows that, as the supply of funding services is not severable from the other services, it does not require separate consideration.

219               The fourteen team term was pleaded to have the purpose of:

“(a) restricting or limiting the supply of services (namely organising and running top level rugby league competitions) by the NRL Partnership to particular persons …; and

(b) preventing the supply of services (namely, organising and running top level league competitions) by the NRL Partnership to particular classes of persons…

…”

and of:

“(a) restricting or limiting the acquisition by the NRL Partnership of services (namely, the provision of rugby league teams to play in the NRL competition) from particular persons (…); and

(b) preventing the acquisition by the NRL Partnerships of the services of the provision of rugby league teams to play in the NRL competition from particular classes of persons,

…”

220               Although the trial judge dealt with the issues of “preventing” and “restricting or limiting” the supply or acquisition of the relevant services as separate issues, Souths did not plead them as such. Rather, the case pleaded was that the fourteen team term had the purpose of restricting or limiting the supply and acquisition of the relevant services to or from (as the case may be) particular persons and of preventing the supply and acquisition of the relevant services to or from (as the case may be) a particular class of persons. The particular persons were pleaded to be:

“…the clubs which had participated in the ARL competition and the Super League competition prior to 19 December 1997 and who had not withdrawn from those competitions before that date;”

and the particular classes of persons were pleaded to be:

“(i) the clubs which participated in the 1997 ARL and Super League competitions and who had not withdrawn from those competitions before that date other than the 14 clubs (including merged clubs as a single club), who would be selected to participate in the competition from the year 2000; and

(ii) all rugby league clubs which were willing and able to participate competitively in a top level rugby league competition other than the 14 clubs (including merged clubs as a single club) who would be selected to participate in the NRL competition from the year 2000.”

221               The pleading distinguishes between the “clubs”, to whom the competition organising services are to be supplied by the NRL partners, and the “teams”, which are the subject of the team services to be acquired by the NRL partners. In the context of premier league sport it is understandable that the club and the team it fields are often treated as synonymous. However, in a legal context a distinction is to be drawn between a service supplier or acquirer and the service supplied. Thus, in the context of s 4D, the services said to be the subject matter of the purpose (the team and organisational services proposed to be prevented, restricted or limited) are to be distinguished from the clubs or entities alleged to be the objects of the purpose. In that context the fourteen team term is a quantitative restriction or limitation, as the relevant services are to be restricted or limited to fourteen teams fielded by the fourteen clubs or entities selected to participate in the 2000 NRL competition.

222               Before turning to the form of the fourteen team term as it appeared in the 19 December 1997 Understanding (“the December 1997 Understanding”), the 18 February 1998 Memorandum of Understanding (“the February 1998 MoU”) and the 14 May 1998 Merger Agreement (“the Merger Agreement”) made or arrived at between News and ARL, it is appropriate to re-iterate certain aspects of the factual setting in which the term was to operate.

223               Prior to the merged NRL competition, twelve clubs each fielded a team in the ARL Optus Cup competition: Balmain, Manly, Norths, Parramatta, St George, Souths, Sydney City, Wests, Newscastle, Illawarra, Gold Coast and South Queensland. When News’ Super League competition commenced in 1997, ten newly created or former ARL clubs each fielded a team in that competition: Brisbane, Cronulla, Canberra, Penrith, Canterbury, Auckland, Perth, North Queensland, Adelaide and Hunter. The two competitions were the two premier rugby league competitions in Australia in 1997.

224               Two Super League clubs, Perth and Hunter, had ceased to exist at the end of 1997 and one ARL club, South Queensland, did not participate in the merged competition in 1998. The nineteen remaining clubs and a new club, Melbourne, each fielded a team in the merged NRL competition, which commenced on 13 March 1998. In October 1998 Gold Coast and Adelaide withdrew from the NRL competition and the St George and Illawarra clubs merged. Consequently, the 1999 NRL season commenced on 13 March 1999 with seventeen clubs (treating St George/Illawarra as one club) fielding seventeen teams. In late July 1999 the NRL approved the formation of a joint venture between Balmain and Wests for the 2000 NRL competition.

225               Under the fourteen team term there were to be only fourteen licenses available to fourteen clubs or entities to enable fourteen teams to compete in the 2000 NRL competition.

226               Norths failed for solvency reasons to meet the Basic Criteria for eligibility to compete in the 2000 NRL competition. Five five year licences had been granted under the priority system for regional or merged clubs: Brisbane, Auckland, Newcastle, St George/Illawarra and Wests/Balmain. Thus, the ten remaining clubs were applying for nine licences to field nine teams. The selection criteria governed eligibility for the nine licences, although it appears that Melbourne, as a regional club, was to enjoy some priority under the criteria.

227               Souths was notified on 15 October 1999 that it failed to secure admission to the 2000 NRL competition. The remaining clubs received three year licences on the same day. On 27 October 1999 NRL approved a joint venture of Manly and Norths.

228               It is plain that Souths was excluded from the NRL competition by reason of the fourteen team term. It was eligible, and ready, willing and able, to compete as it met the “Basic Criteria” but was not admitted into the competition as it received the lowest number of points under the selection criteria.

229               It is in the above context that the contracts, arrangements or understandings containing the fourteen team term need to be considered. The trial judge at [93]-[100] summarised the relevant contracts, arrangements and understanding as follows:

“93. It is a matter of concession by News, NRLI and NRL that at or about 19 December 1997 there was an understanding between ARL and News as to their future conduct of a single premier rugby league competition, and it was a part of that understanding that the competition would be limited to fourteen teams in the year 2000. …

94. The premise of the understanding was that ARL and News (via Super League) would cease to conduct their existing competitions and would form a 50/50 partnership to own and control the proposed competition; that competition would be operated by a 50/50 joint venture company (then referred to as ‘NRLC’ or ‘NRLC Co’ but later as ‘NRL’); and, to quote the Executive Summary in part, the ‘Competition Structure’ would involve (inter alia):

·                                                         NRLC will grant licences to participate in the NRLC competition.

…

·                                                         20 teams will be licensed to play in 1998 on a 1 year licence, but Brisbane, Newcastle and Auckland are assessed against criteria for 5 year licences.

·                                                         16 teams will be licensed to play in 1999.

·                    14 teams will be licensed to play in 2000.

…

·                    In a 14 team competition there will no less than 6 teams, and a maximum of 8 teams, from Sydney.

·                    Conversely, there will be no less than 6 teams, and a maximum of 8 teams, from regions outside Sydney, being:

* Adelaide * North Queensland

* Melbourne * Newcastle

* Auckland * Gold Coast

* Canberra * Central Coast

* Brisbane’

95. It also was understood at the time, as stated in the News media release, that ‘[the] teams that will compete in the streamlined competition will be determined by strict criteria, to be agreed on by February 28, 1998’. … This theme of selection by reference to criteria is common both to the pre-19 December documentation as also to that culminating in the 14 May 1998 documentation that finally gave formal effect to the ‘peace deal’.

96. Turning to the MoU and the Merger Agreement, I do not understand the respondents now to suggest that these two agreements did not give effect to the 19 December Understanding. The MoU, formally executed on 18 February 1998 after an iterative process that began at least shortly after 19 December 1997, was an agreement between ARL, NSWRL, News and Super League. As its ‘Purpose’ clause stated, it outlined the parties’ then ‘current understanding’ on a merger of the two rugby league competitions. It confirmed the intention of the parties ‘to negotiate and finalise all necessary agreements … to implement the Merger’. Clause 7 detailed the ‘Competition Structure’ including the fourteen team term in a near-final form. The MoU clearly was a carrying forward of - a giving effect to - the 19 December Understanding.

97. The Merger Agreement of 14 May 1998 was one of the complex of interlocking documents executed on that day that formalised the web of relationships of the various entities involved in the ownership, conduct, financing, etc, of the NRL competition. This agreement was between not only the parties to the MoU but also NRLI. Again this agreement carried forward, this time to finality, what was envisaged in the 19 December Understanding and the MoU. Indeed recital D of the agreement stated that it ‘supersedes the Memorandum of Understanding’.

98. Insofar as presently relevant, the Merger Agreement’s purpose was reflected in its recital B:

‘The Parties wish to merge the ARL Competition and the Super League Competition, on the terms set out in this Agreement, so that there is one premier rugby league competition in Australia, called the NRL Competition, on and from the 1998 rugby league playing season in Australia.’

99. Because it contains the then definitive form of the agreed NRL competition structure including the fourteen team term, it is appropriate at this point to set out the provisions of cl 7 of the Agreement in their entirety:

‘7.COMPETITION STRUCTURE

7.1         The Parties agree that the structure of the NRL competition will be as set out in this clause 7 and each of ARL and NRLI agree to procure NRL to comply with this clause 7.

7.2         Before 30 June 1998, NRL must:

(a)       inform Clubs that no less than 16 teams, but no more than 20 teams (the actual number to be determined by NRL and approved by the Partners), will be entitled to Franchises in 1999, and not more than 14 teams will be entitled to Franchises in 2000; and

(b)       release the franchise criteria for 1999 and beyond.

7.3         No more than 20 teams will participate in the 1998 NRL Competition, each team being granted a Franchise for a term of one year. However, once the franchise criteria are determined, Brisbane, Newcastle and Auckland will be assessed by NRL against the franchise criteria and, if NRL is satisfied, the term of their Franchises will be extended to five years.

7.4         No less than 16 teams but no more than 20 teams, (the actual number to be determined by NRL and approved by the Partners), will participate in the 1999 NRL Competition, on varying terms depending on the level of satisfaction of the franchise criteria. These Franchises will be granted no later than 1 October 1998. NRL will be entitled to extend the term of Franchises at this time if it is in the best interests of the NRL Competition.

7.5         No more than 14 teams will participate in the 2000 NRL Competition on varying terms depending on the level of satisfaction of the franchise criteria.

7.6         Clubs entering into mergers or joint ventures before March 1998 with the approval of NRL are entitled to:

(a)    receive grants of $4 million per annum in respect of the merged club in 1998 and 1999 rather than a single $2 million grant under clause 7.12(a); and

(b)   a 5 year Franchise.

7.7 Clubs entering into mergers or joint ventures before 1 October 1998 with the approval of NRL are entitled to:

(a)      receive a grant of $4 million in 1999 rather than a single $2 million grant under clause 7.12(a); and

(b)      a 5 year Franchise.

7.8 On or before 1 October 1999 NRL must determine the Franchisees for 2000 (there being no more than 14 Franchisees).

7.9  In a 14 team NRL Competition, there will be no less than six teams, and a maximum of eight teams, from Sydney. Conversely, there will be no less than six teams, and a maximum of eight teams, from regions outside Sydney.

7.10     Until 2001, the regions outside Sydney are:

(a) Adelaide;

(b) Melbourne;

(c) Auckland;

(d) Canberra;

(e) Brisbane;

(f) North Queensland;

(g) Newcastle;

(h) Gold Coast; and

(i) Central Coast.

7.11 The Parties recognise that it is in the best interests of rugby league to prioritize the grant of Franchises, for example, to encourage:

(a) mergers of Sydney clubs; and

(b) a national competition.

If the number of applicants satisfying the franchise criteria exceed the number of available Franchises, the grant of available Franchises will be determined in the following order of priority:

(a) merged clubs;

(b) regional clubs; and

(c) stand alone Sydney clubs.

Otherwise, NRL will determine the grant of Franchises on the level of satisfaction of the franchise criteria.

7.12 A Franchise will entitle each Franchisee to:

(a) an annual grant of $2 million from NRL; and

(b) the payment of all travel costs and accommodation for the 1998 and 1999 NRL Competition seasons. The payment of travel and accommodation costs for 2000 and beyond will be reviewed by NRL in 1999.

7.13     Each of ARL, NRLI and News must make its decisions on the franchise criteria, the grant (or withdrawal) of Franchises, and any other matter to be determined under this clause 7 and, when executed, the Franchise Agreements, in the best interests of the NRL Competition, disregarding any conflicting (or potentially conflicting) interests, such as interests in Franchisees.’”

230               Souths, in its Particulars, relied upon cll 7.1, 7.2, 7.5, 7.8 and 7.10 of the Merger Agreement as particulars of the fourteen team term. In its Particulars of the fourteen team term as formulated in the February 1998 MoU, Souths also relied upon cl 7.9 which was in the same form as cl 7.9 of the Merger Agreement.

231               The trial judge found at [104] that, subject to consensual variation, the fourteen team term was intended to express “what for the future was to be the status quo” for the NRL competition. The finding was amply supported by the evidence. In particular, under the Services Agreement, pursuant to which NRL was appointed by the NRL partners to manage the NRL competition, NRL was obliged not to grant any more than “14 Franchises in 2000 or in any year thereafter (without the approval of the NRL Partnership)” (cl 3.3(e)) and to “comply with clause 7 of the Merger Agreement unless otherwise directed by the [NRL] Partners” (cl 3.3(h)).

232               The parties argued the case on the basis that there was little, if any, significance in the changes to the form of the fourteen team term in the December 1997 Understanding, the February 1998 MoU and the Merger Agreement. It appears to have been accepted that the purpose of the term did not change and that, in any event, the February 1998 MoU and the Merger Agreement gave effect to the December 1997 Understanding. Nevertheless, it is relevant to note that when the merged competition commenced for the 1998 NRL season on 13 March 1998, it did so on the basis of the February 1998 MoU.

233               At the outset it is appropriate to dispose of the questions of whether the NRL partners were competitive with one another, whether they intended to supply and acquire the relevant services and whether a defence is available to the NRL partners under s 45(6) of the Act.

234               The trial judge (at [196]) concluded that at the time of the December 1997 Understanding, News and ARL were “actually competitive” in relation to the services to which the alleged exclusionary provision related, and that that satisfied the requirements of s 4D(2). For the reasons given by the trial judge and by Heerey J at [110]-[116] I agree with that conclusion. As the subsequent February 1998 MoU and the Merger Agreement gave effect to the December 1997 Understanding, that conclusion is dispositive of this issue for the purposes of s 4D(1) and (2).

235               In any event, the evidence establishes that, but for the February 1998 MoU and the Merger Agreement, at the date of each of those agreements News and ARL would be likely to have been in competition with each other in relation to the relevant services, in the sense that there was a “real chance or possibility” that they would have been in competition with each other: see News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 564-565.

236               The respondents also argued before the trial judge and on the appeal that the services the subject of the alleged exclusionary provision were to be supplied or acquired by NRL as an independent contractor, with the consequence that those services would not be supplied or acquired by News or ARL and therefore would not be supplied or acquired by any of the parties to the contract, arrangement or understanding. For the reasons given by the trial judge (at [147]-[163]) and by Heerey J (at [107]-[109]) this argument must be rejected.

237               I would add that, as with the competition issue under s 4D(2), the time at which this issue is to be determined is the date of the relevant contract, arrangement or understanding. As the Merger Agreement and the February 1998 MoU gave effect to the December 1997 Understanding, it would be sufficient for Souths to establish that, at the date of that Understanding, the fourteen team term had the purpose of preventing, restricting or limiting the supply or acquisition of the relevant services by News and ARL. The determination of that issue is essentially one of fact, rather than of law. The trial judge found against the respondents on that question of fact on each of the three relevant dates in any event. Although the trial judge expressed greater doubt about his conclusion as to agency as at the date of the Merger Agreement, it is clear at [147] that he had little doubt that, at the date of the December 1997 Understanding, “the factual relation to which parties were then intending to commit themselves…had the characteristics of that of principal and agent”.

238               Further, there is also an issue of whether, in any event, NRL is a body corporate that is related to News (or NLRI) and ARL for the purposes of s 4D(1). Although s 4D(1) is, relevantly, concerned with the supply or acquisition of services by all or any of the parties to the contract, arrangement or understanding the sub-section provides that if a party is a body corporate, the supply or acquisition of services by a related body corporate is equivalent to supply or acquisition by the party. Read together, ss 4A(1) and 4A(5) provide that a body corporate is related to another body corporate if, inter alia, it controls the composition of the board of directors, or holds more than one half of the allocated share capital, of the other body corporate. There is some force in the contention that, for the purposes of ss 4D(1) and 4A(5), the singular can include the plural (see s 23(b) of the Acts Interpretation Act 1901 (Cth)) with the consequence that where, as in the present case, two parties to the contract, arrangement or understanding (News and ARL) together control the composition of the board and own all of the allocated capital of the other company (NRL), then the other company is a company related to the parties to the contract. If the contention of News and ARL, that they are not related to NRL, were to be accepted, s 4D could be easily circumvented by competitors establishing an “independent contractor”, which they wholly own and control, to prevent, limit or restrict the supply or acquisition of goods or services for an exclusionary purpose. In view of the conclusions I have reached on agency it is unnecessary to further pursue this question.

239               News, ARL and NRL also relied upon s 47(4) of the Act as a defence to Souths’ claims under s 45(2) of the Act. They contend that giving effect to the fourteen team term would, but for the operation of s 47(10) (which imposes a competition test), fall within s 47(4) with the consequence that s 45(2) does not apply (see s 45(6)). It is contended that, on Souths’ case as pleaded, ARL and News engaged in the practice of exclusive dealing as they acquired services from NRL on condition that NRL will not supply its competition organising services to the particular persons or classes of persons relied upon by Souths.

240               For the reasons given by Heerey J (at [117]-[123]) I agree that, if Souths succeeds in its claim that the fourteen team term is an exclusionary provision, s 47(4) of the Act will not avail News, ARL or NRL.

241               I would add that there was a degree of unreality about the s 47(4) defence which, unlike s 4D(1), is concerned with “the condition” on which services are acquired, rather than with the purpose of any of the parties. Irrespective of agency, as between News, ARL and NRL, the condition on which NRL was to supply its competition organisation services was that it was to supply them as directed from time to time by News and ARL: see cll 3.1(d), 3.3(e) and 3.3(h) of the NRL Services Agreement. Thus, although particular persons or classes of persons may have been the objects of the purpose of the NRL partners in agreeing to the fourteen team term, in their contractual arrangements with NRL they retained complete control over the persons to whom licences or franchises to participate in the NRL competition were to be granted. Thus, the requirement of particularity in s 47(4)(c) is not met.

242               That leads me to the two issues on which the outcome of the appeal turns; purpose and particular persons and classes of persons.

243               The purpose, of which s 4D speaks, requires consideration of the subjective purpose or purposes of the party or parties as a result of whose efforts the alleged exclusionary provision was included in the relevant contract, arrangement or understanding: see ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 (“Pont Data”) at 474-477. In distinguishing between the purpose and effect of a contract, arrangement or understanding for the purposes of s 45 of the Act, the Full Court in Pont Data at 475 cited the following statement of the Judicial Committee in Newton v Commissioner of Taxation (Cth) [1958] AC 450 at 465 (which related to s 260 of the Income Tax Assessment Act 1936 (Cth)):

“The word ‘purpose’ means, not motive but the effect which it is sought to achieve - the end in view. The word ‘effect’ means the end accomplished or achieved.”

The dictionary definitions of purpose cited by Heerey J at [65] include:

“an intended or desired result; end or aim” (Macquarie)

“an object to be attained, an intention, an aim” (New Shorter Oxford)

244               In Dowling v Dalgety Australia Limited (1992) 34 FCR 109 at 134 Lockhart J spoke of the motivation and the reasons of the parties for introducing the relevant provision.

245               Whichever phraseology is employed, the Court is required to consider, as a question of fact, the effect sought to be achieved or the result intended by the inclusion of the alleged exclusionary provision. Section 4D(1) mandates that the focus of the enquiry be the provision in question, rather than the contract, arrangement or understanding in which it was included. This distinction is critical as often the overall result or effect intended by a contract will be quite inconsistent with the result or effect intended by a particular provision in the contract. For example, when parties include a provision for a property settlement in the event of a marriage breakdown as part of a marriage contract, it is plain that the purpose of the contract and of the settlement are inconsistent with each other. The purpose of the contract is a marital relationship “until death do us apart” but the purpose of the provision for the settlement is “but if that is not to be so then the settlement ensues”.

246               I accept, as Heerey J states at [71], that the recognition of a possible outcome detracting from the desired or intended purpose does not alter the nature of the purpose. In support of that proposition his Honour proffers the example of a surgeon conducting a high risk operation to save a patient’s life. His Honour notes that the surgeon does not have the purpose of causing the patient’s death in the event that that recognised risk materialises. However, the example may be taken a little further. If the surgeon’s contract with the patient contains a clause excluding liability for death in the event of that risk materialising, one will get quite different answers to the question of the purpose of the contract (to enable the patient to live) than to the purpose of the exclusion clause (but if the patient dies, the surgeon is not to be liable).

247               Interestingly, in the present case little attention has been given to the addition in s 4D(1)(b)(ii) of the words “in particular circumstances or on particular conditions”. Those additional words would appear to embrace a “but if” situation (particular circumstances) or exclusion on certain conditions (particular conditions).

248               Finally, s 4F provides that a provision shall be deemed to have had a particular purpose where the purpose is one of several purposes, provided that the particular purpose “was or is a substantial purpose”.

249               In Peter Williamson Pty Ltd v Capital Motors Ltd (1982) 61 FLR 257 at 265, Franki J stated:

“…it is not possible to place precise limits on the meaning of the word ‘substantial’ in s 4F. I consider that the proscribed reason in s. 96(3)(d) must be one which is of real significance in the decision to withhold supply of goods, or to adopt the words of Barwick C.J., an ‘operative’ reason”.

250               Burchett J considered the meaning of “substantial” in s 4F in News Limited v Australian Rugby Football League Limited (1995) 58 FCR 447 at 521 – 523. His Honour said at 521:

“…the necessity to find a ‘substantial purpose’ ensures that a process of evaluation must be undertaken, which rejects any mechanical application of the section, and looks at the importance of the alleged purpose as a factor that produced the inclusion of the provision”.

and concluded at 523:

“But, in whatever context it is used, the authorities I have cited suggest [substantial] connotes real significance.”

251               On appeal in News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 576 (“News Ltd”) the Full Court discussed competing views of the meaning of “substantial” in s 4F although, in the result, found it unnecessary to resolve the question. The Full Court noted that in Dowling v Dalgety Australia Ltd (1992) 34 FCR 109 Lockhart J reiterated his view that “substantial” means considerable or large, rather than the lower threshold of “real or of substance and not insubstantial or nominal” cf Tillmanns Butcheries Pty Ltd v Australiasian Meat Industry Employees’ Union (1979) 42 FLR 331 at 348.

252               The concept of substantiality is used in the Act in different contexts. A substantial lessening of competition (see s 45(1), for example), involves a quantitative evaluation, while the meaning of “substantial” in the context of purpose in s 4F involves a qualitative evaluation. In the context of s 4F I regard a substantial purpose as meaning a significant operative purpose. As questions of fact, degree and evaluation are involved it is not helpful to seek to be more precise. However, as I later explain, in the present case the same result follows from each of the meanings of substantial discussed in News Limited, with the consequence that it is unnecessary to finally resolve which of the competing views is to be adopted.

253               Souths criticised the trial judge’s approach to purpose, contending that his Honour failed to maintain the requisite distinction between the purpose of the fourteen team term and the purpose of the contract, arrangement or understanding. Souths argued that his Honour’s reasoning “confuses the purposes of the Understanding with purposes of the provision, which was to achieve the desired ‘end’ by the particular means of not supplying competition organising services to (or acquiring team services from) more than 14 teams from 2000, and more than 8 from Sydney”.

254               Souths pointed to the observation of Lockhart J in Gallagher v Pioneer Concrete (NSW) Pty Ltd (1993) 113 ALR 159 at 209 that s 4D is concerned with any provision of a contract, arrangement or understanding between competitors that has the proscribed purpose. Thus, so it contended, the trial judge was in error in failing to confine his enquiry to the purpose of the parties’ inclusion of the fourteen team term in their contract, arrangement or understanding.

255               The respondents contend that his Honour addressed the purpose of the fourteen team term provision relied upon by Souths and correctly concluded, as a matter of fact, that there was not only no evidence of any exclusionary purpose but, rather, there was an inclusionary purpose – that is, that all existing clubs be induced to participate in the merged NRL competition.

256               Souths did not dispute, as was found by the trial judge (see [270] and [276]), that a purpose of the fourteen team term was to achieve the overall objective of News and ARL of bringing together the separate ARL and Super League competitions as a unified competition. This unification was desired because there was:

·                    a need to “establish a financially viable and sustainable competition”;

·                    a “wish to avert continuing damage to the game”;

·                    a “need both to satisfy and to respond to the pressures and demands of the media companies on whose financial support both the several and the proposed competitions had relied or would rely for their survival”.

257               The trial judge considered (at [271]-[276]), that the vehicle chosen to achieve those objectives, which included the reduction of the number of Sydney teams to ensure the viability and national character of the competition, found its definitive expression in cl 7 of the Merger Agreement. In that regard the noteworthy characteristics of cl 7, as a means to the end sought to be achieved, were stated by his Honour (at [272]) to be:

“(a) a progression from no more than twenty, to no more than sixteen, to no more than fourteen teams in 1998, 1999 and 2000 respectively - the 1998 figure giving all of the by then continuing ARL and Super League clubs (two had already dropped out from the 1997 number) an equal opportunity to participate in the rationalisation process; (b) provision for the national character of the competition - this to be secured through the 8-6/6-8 split; (c) the positive incentives given for entering mergers and joint ventures; and (d) the priority order in the grant of franchises, this being merged clubs, regional clubs and ‘stand alone’ Sydney clubs.”

258               His Honour (at [275]) stated that the purpose of including the fourteen team term, which he referred to as “one of the defining characteristics of the new competition”, was that “fourteen teams provided the appropriate maximum number to achieve [the parties overall objectives]”. His Honour then concluded at [276] that “the fourteen team term (including the 8-6/6-8 split) was included in the 19 December Understanding for the purpose of achieving [those] objectives” (which for convenience I will refer to as the viability and sustainability of a national competition).

259               The trial judge accepted that the fourteen team term had the clear and intended effect of preventing the NRL partners from supplying the relevant services to, or acquiring the relevant services from, a greater number of teams than the numbers fixed in their contract, arrangement or understanding. His Honour also accepted that:

·        the foreseen consequence was that if more than the agreed number sought admission the excess would be denied the relevant services (at [269]);

·        the fourteen team term “limited, and was intended to limit, the number of teams to which the partnership would provide its services and from which it would acquire services” (at [279]).

260               Nonetheless, his Honour concluded at [277]-[286] that the fourteen team term had no purpose other than achieving the viability and sustainability of a national competition:

“277. Can it be said, though, that this was the only (hence only substantial) purpose for the inclusion of the term? In his judgment in the interlocutory proceeding when responding to the submission that the term was not included for the purpose of excluding anyone but that exclusion was an incidental and unwished for outcome, Hely J said ((1999) 169 ALR at 132):

‘I do not agree. One of the motivations behind the inclusion of the 14 team term in the arrangements was to restrict the supply and acquisition of the services to which the term relates to 14 clubs, in order to establish a viable and sustainable competition. This is not to confuse purpose with effect. It is merely an acknowledgment of the reality of the situation. The purpose of the 14 team term was not merely to achieve the desired ‘end’, but to do so by particular means. For this reason it cannot be said that the only purpose of the provision is the establishment of a viable or sustainable competition.’

278. For my own part I cannot, with respect, so readily accept this conclusion, or at least its implication. My reasons for this reticence relate to the quite particular character of the purpose required to be shown to attract s 4D and to that purpose's targeting of particular persons or classes of person. Though these two matters - the required purpose and the targeted class - are parts of a composite whole, I will for convenience in exposition consider each separately.

279. The fourteen team term limited, and was intended to limit, the number of teams to which the partnership would provide its services and from which it would acquire services. It equally had the foreseeable, and foreseen, consequence to which I earlier referred. But does that intended effect with its foreseeable consequence necessitate the conclusion that a purpose for including the provision was to prevent the supply to, or acquisition of services, to teams in excess of the stipulated fourteen?

280. Unlike Hely J, I am not satisfied that this question can be answered by differentiating ends from means. ARL and News proposed to create a new business running a new competition having particular characteristics. One characteristic was that it would have a maximum number of teams. For present purposes it would not matter what that number was - twelve, fourteen, sixteen, eighteen. What is important is that the competition so designed embodied a limit to the number of teams to or from which the partnership would provide or acquire services. Given the objectives it was intending to pursue in creating the competition, this number was selected as Mr Frykberg put it ‘as the best number of teams’.

…

283. In the present case the evidence concerning the adoption of the fourteen team term is bereft of any indication that its purpose was to prevent the supply of services to, or acquisition of services from, any person or class of persons. The term had an intended effect and foreseen consequences. But these do not in my view require it to be found that a purpose of the term's inclusion in the 19 December Understanding, etc was a purpose proscribed by s 4D(1).

284. I accept the evidence of Mr Whittaker that he believed the fourteen teams for 2000 could be, and of Mr Frykberg that they would be, achieved without resort to exclusion. And I consider the early and continuing significance they attributed to the formation of mergers and joint ventures as being consistent with the absence of a proscribed purpose. The significance so attributed to mergers, etc, evidenced a form of recognition of both the wish and the need to maintain some level of participation of the established clubs in a competition not designed to accommodate them all individually.

285. Further, while it may be said that the fourteen team term was only a means to achieving the objectives I have mentioned, the evidence (i) does establish that that term was fundamental to the 19 December Understanding and (ii) does not establish that there was another means available not involving the fourteen team term (or for that matter any maximum size stipulation) that would have been likely to secure either the merger itself or the objectives sought to be achieved in the competition structure. In these circumstances I am unable to conclude that a variety of means was available to the parties such that the adoption of the fourteen team term was merely a means to an end and as such had another purpose as well as that of securing the objectives sought.

286. For these reasons I conclude that the term does not fall within s 4D(1) in that it was not included in the 19 December Understanding for a purpose that included the prevention of the supply of competition organising services or of the acquisition of team services.”

261               His Honour appeared to regard s 4D as requiring that particular persons or classes of persons be specifically targeted or “aimed at” (see [281] and [291]). While nothing may turn on his Honour’s requirement of specificity, it should not be taken to be more than a statement that, as the objects of an exclusionary provision are particular persons or classes of persons, some specificity is required to establish that fact.

262               In my view Souths has not fairly characterised the trial judge’s reasoning. Although, as I shortly explain, his Honour has conflated the purpose of the provisions in cl 7 which grant incentives to induce club mergers and joint ventures (cll 7.6, 7.7 and 7.11) and encourage regional participation in a national competition (cll 7.3, 7.9, 7.10 and 7.11) with the purpose of the fourteen team term (cll 7.1, 7.2, 7.5, 7.8 and 7.10), he did not conflate the overall purpose of the agreement, arrangement or understanding with the purpose of the fourteen team term.

263               The merger, joint venture and regional club provisions were an incentive (the carrot) to induce the achievement of a fourteen team NRL competition voluntarily. The fourteen team term was the sanction or buttress (the stick) that ensured the fourteen team NRL competition would be achieved if the inducement was not effective. While the carrot and the stick aspects of cl 7 may be inter-related, the purpose of each appears to be severable and distinct. A finding that the effect or result sought to be achieved or intended by the “carrot” was to prevent exclusion without resort to the “stick”, is not inconsistent with a finding that the effect or result sought to be achieved or intended by the “stick” was to achieve exclusion if the “carrot” approach failed to achieve the desired result.

264               In my view, in reaching the conclusion at which he arrived the trial judge failed to distinguish between the purpose of the club merger, joint venture and regional participation provisions on the one hand and the purpose of the fourteen team term on the other. His Honour appeared to assume that the purposes of the two sets of provisions can be conflated. See for example the reasoning at [284]. It was in that context that the trial judge found that the evidence is bereft of any exclusionary purpose. But if the two sets of provisions have discrete purposes, which is a question of fact, his Honour would have fallen into error in conflating the purpose of the merger, joint venture and regional participation provisions with the purpose of the alleged exclusionary provision.

265               The question his Honour was required to determine was whether the fourteen team term had a discrete purpose and, if so, whether it was a proscribed exclusionary purpose. In order to resolve the question of whether there were severable or distinct purposes for each of the two sets of provisions to which I have referred, it is necessary to more carefully consider his Honour’s findings and the evidence on which those findings were based.

266               His Honour acted on the evidence as to purpose given by the three main witnesses called by the NRL partners on that issue: Mr Ian Frykberg of Super League, Mr Peter McCourt of News and Mr Neil Whittaker, the CEO of ARL. His Honour accepted the credibility and evidence of all three witnesses. As there is no issue of credibility in relation to that evidence, the present case is one where the appellate court is, substantially, in as good a position as the trial judge to draw conclusions and inferences from it, after making appropriate allowance for the need for appellate caution when revising the trial judge’s evaluation of the facts: see Esso Australia Resources Ltd v Commissioner of Taxation (1998) 84 FCR 541 at 554, State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In liq) (1999) 160 ALR 588 at 621 and Greater Dandenong City Council v Australian Municipal Clerical and Services Union [2001] FCA 349 at [136].

267               The trial judge found that the fourteen team limitation was chosen in order to achieve the overall objective of the NRL partners of a viable and sustainable national competition. His Honour also found that the clear and intended effect of the term was that the NRL partners would not supply or acquire the relevant services to or from any more than “fourteen teams”. Of course, the parties were more flexible on the team numbers up to 2000 in order to allow all clubs extra time in which to form mergers and joint ventures.

268               It is fairly clear from the evidence of the three witnesses that News, rather than ARL, insisted on the fourteen team limitation. Although ARL’s own research favoured the same limitation, ARL, through Mr Whittaker, considered that there might be “too much pain” in getting the competition down to fourteen teams and, as a result, ARL sought to have the merged competition provide for up to sixteen teams in 2000 and beyond. Plainly, ARL sought a sixteen team term in order to reduce or eliminate the prospect of exclusion. Mr Frykberg’s response was that the fourteen team limitation was not negotiable. The trial judge at [275] found that the figure was “dogmatically” insisted upon by News and “reluctantly” accepted by the ARL. In those circumstance the purpose of News, at whose insistence the term was included, rather than ARL, may be the relevant purpose. However, as I later explain, little turns on that distinction.

269               The trial judge found at [253] that Mr McCourt accepted that:

·        the process of reducing the teams to fourteen in 2000 had to be buttressed by some provision for choosing the fourteen teams to be included, and for excluding a club or clubs if too many were seeking selection;

·        the purpose of excluding by criteria a club or clubs, if more than fourteen applied for admission to the 2000 competition, was central to the merger agreement entered into by the NRL partners.

Mr McCourt was cross-examined by Mr Hughes QC, senior counsel for Souths:

“MR HUGHES: While you were negotiating the arrangement that was announced on 19 December 1997 was it apparent to you that the process of reducing the number of teams in the premiership competition to 14 by the year 2000 had to be buttressed by some provision for excluding a club or clubs if there was one more club or more than one club too many seeking admission for 2000?---Yes.

Therefore as at 19 December 1997 will you agree it was from your perspective essential to have some exclusory process of the kind with which you’ve just agreed included in the arrangement?---Yes, there had to be a way of choosing 14 teams.

And that has always been the position as you’ve understood it from the time you participated in the negotiations up to 15 October, 1999, is that right?---Yes.

…

MR HUGHES: The purpose of excluding by criteria a club or clubs if more than 14 applied for admission to the 2000 competition was central to the operation of the peace deal announced on 19 December 1997, was it not?---Yes, I think it was, but I---”

270               Although it was Mr Frykberg’s “fervent view” that the fourteen team competition could be achieved by mergers or joint ventures without resort to exclusion, he accepted that it was an essential element of the 19 December 1997 Understanding that, in the absence of being able to reach a fourteen team competition voluntarily, the selection criteria was the mechanism to arrive at the agreed number: see [256] of the trial judge’s reasons. Mr Frykberg was also cross-examined by Mr Hughes QC as to purpose:

“From your perspective, as at 19 December 1997, was it essential to the effective operation of the arrangements made between you and Mr Whittaker and others in the negotiations that there should be an effective mechanism to determine which clubs would and which clubs wouldn’t be admitted to the 2000 competition, consisting of 14 teams, if there were to be as things turned out more applicants for places in that competition?---Yes, that was the effect of the agreement.

That was, would you agree, an essential element in the agreement reached on 19 December or before 19 December 1997?---It was an essential element of the agreement that there be in the absence of being able to reach a 14 team competition naturally that there be a mechanism in place which would arrive at a 14 team as agreed by both sides.

I beg your pardon?---As agreed by both sides.

And that effective mechanism, to provide for the contingency that there would be more applicants for entry to the premiership competition in 2000 than available places, was a mechanism based upon, as you understood the position in December 1997, the formulation of admission criteria, is that right?---Yes.

Will you agree that the criteria that you and Mr Whittaker discussed between yourselves with Mr Lockwood and Mr McDonald and Mr McCourt in the course of the negotiations were criteria that would be drawn up later, is that right?---Yes.

But would be criteria providing for the ranking of clubs for admission or exclusion purposes if there should be a surplus of applicants over available vacancies?---That was the effect of it. We didn’t discuss it in that such detailed way, but that would be the effect of it, yes.”

271               Mr Whittaker’s evidence was to the same effect. In cross examination Mr Whittaker accepted that a “fundamental” part of the merger agreement was the formulation of the criteria to determine who would participate from 2000 onwards if there were more than fourteen teams seeking entry.

272               The trial judge found that there was no purpose to the fourteen team term other than achieving the NRL partners’ overall objective of a viable and sustainable national competition. His Honour said at [285] that the fourteen team term was “only a means” to achieving the NRL partners overall objective. His Honour (at [280]) did not regard the number selected as significant; he said any competition would have a maximum number of teams. However, in the present case the precise number was regarded by the NRL partners as significant. It appears that Mr Whittaker unsuccessfully sought a sixteen team limit as he expected that that limit would probably avoid any exclusion, with the consequence that with that limit there may have been no exclusionary purpose. News, however, required the fourteen team limit as a buttress or sanction to secure exclusion if the merger and regional provisions failed to achieve their objective of fourteen teams. It is the exclusionary purpose of the fourteen team term, rather than any other, that is in issue in the present case.

273               His Honour also drew some support for his conclusions from his finding that there were no other means available to achieve the NRL partners’ objective. If there was an absence of any other means, which is not self-evident, that only serves to emphasise the significance attached by the parties to the means chosen by them to secure their objective. If, however, his Honour was seeking to import some rule of reason or, put another way, to treat as relevant a public benefit in securing the merger or its objectives by limiting the competition to fourteen teams, that can be of no relevance to whether the fourteen team term is an exclusionary provision. Public benefit is relevant to whether, under s 88(1)(b) of the Act, an authorisation should be granted in respect of an exclusionary provision on the ground that the provision has resulted or is likely to result in such a benefit to the public that the contract, arrangement or understanding of which the provision forms part should be given effect to: see s 90(8)(b) of the Act. As the NRL partners did not apply for an authorisation, the issue of public benefit or the lack of any other means of achieving the partners’ objectives is not relevant to whether the fourteen team term is an exclusionary provision.

274               The trial judge’s conclusion that the fourteen team term was only a means to an end did not absolve him from determining the purpose of the means selected; whether it was a substantial purpose and, if so, whether it was a proscribed exclusionary purpose.

275               The problem of distinguishing between the purpose of the means selected to achieve the end and the end itself is not new. In Jewel Food Stores Pty Ltd v Amalgamated Milk Vendors Association Inc (1989) 24 FCR 127 (“Jewel Food Stores”) the Full Court, in the context of a claim of contravention of s 45D of the Act, considered whether the purpose of certain milk vendors, in denying supply to Jewel Food Stores (a large retailer), was to protect their businesses (the ultimate end sought) or to cause harm to Jewel Food Stores (the immediate means selected). Sheppard and Wilcox JJ, in deciding that it was no defence to say that the immediate purpose of inflicting harm was not a substantial purpose because it was not the ultimate purpose of the conduct in question, said at 134-135:

“The only relevant question is whether, despite the existence of that [ultimate] purpose, the respondents had, as a substantial purpose, the infliction of damage upon the business of the appellant.

As we see the case, there can be no doubt that the respondents possessed such a purpose. It is true that this purpose was an immediate purpose rather than an ultimate purpose, but it is too late in the day to contend, at least in this Court, that the only type of purpose which may satisfy a description in s 45D(1)(b) is an ultimate purpose. The point was made in Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees’ Union (1979) 42 FLR 331. In that case Bowen CJ, with whom Evatt J agreed, dealt with duality of purpose in this way (at 338):

‘Nevertheless, the fact that a union and its members acting together have a union purpose does not necessarily exclude the possibility that they had, also, the purpose of causing substantial loss or damage to the business of a corporation. The statement of Evatt J in McKernan v Fraser (1931) 46 CLR 343 is apposite. His Honour in that case (at 403) said: ‘Sir Godfrey Lushington said, in special reference to combined action against employers or non-unionists on the part of unionists, that to ask the question whether they act to defend their own trade interests or to injure their economic adversary for the time being is equivalent to asking of a soldier, who shoots to kill in battle, whether he does so for the purpose of injuring his enemy or of defending his country. The analogy is sound because combined strike action is usually undertaken for the purpose both of causing harm to the employers and for the improvement of maintenance of the standards of unionists.’’

…

Ordinarily, the purpose of inflicting damage upon the business of a person is to cause that person to modify its behaviour in some way for the advantage of the person occasioning the damage, or its members. In other words the damage is a means to an end. Consequently, although a primary purpose of the milk vendors was to protect their own businesses, another purpose which they had was to damage or injure the appellant’s business. That was the means by which they intended to achieve their primary purpose. Upon the view of s 45D(1) long accepted in this Court, that is enough.”

276               Although the decision of the Full Court was reversed on appeal on a different issue (see Devenish v Jewel Food Stores Pty Limited (1991) 172 CLR 32) nothing was said that would cast doubt on the above passage.

277               A similar situation arose in Pont Data which I discuss in more detail later in these reasons. In that case the ultimate purpose of the respondent, ASX, was to prevent and deter competition in the wholesale and retail markets respectively for certain information services. The means selected by ASX to achieve that purpose was to require persons who wished to acquire the information services to, inter alia, agree to restraints that prevented them from reselling the information. The exclusionary purpose of the means selected by ASX led the Full Court to conclude that that means constituted an exclusionary provision irrespective of whether ASX’s ultimate purpose was a proscribed exclusionary purpose for the purposes of s 4D(1).

278               An analogous approach can be taken with respect to the fourteen team term. The ultimate purpose of the term (the end) is the achievement of a viable and sustainable national competition, but its immediate purpose (the means) is to exclude any clubs or entities in excess of the fourteen selected to provide teams to participate in the 2000 NRL competition. Put another way, the immediate purpose is to limit or restrict the supply or acquisition of the relevant services to or from (as the case may be) the fourteen clubs or entities selected to provide the fourteen teams. The ARL partners’ contention that the possibility of exclusion as a result of the fourteen team term was an “undesired consequence” of the term incorrectly focuses on the purpose of cl 7 rather than on the purpose of the fourteen team term.

279               Of course, in Jewel Food Stores the purpose of the means employed was to cause immediate injury or harm to secure the ultimate end sought to be achieved. Similarly, in Pont Data the means was immediate and direct. In the present case the purpose of the means employed was to exclude, but only if exclusion was required because there were more than fourteen clubs or entities seeking to provide teams to participate in the 2000 NRL competition. If the case were to be decided under s 4D(b)(i) an issue might arise as to whether the purpose of the fourteen team term was truly exclusionary, as the exclusionary outcome was qualified by the intent that it occur in the circumstance that the inducement to clubs to merge, or to regional clubs to enter the competition, failed to reduce to fourteen the number of clubs or entities applying to participate in the 2000 NRL competition. However, as explained above, s 4D(1)(b)(ii) extends the proscribed exclusionary purpose to one that may be operative in “particular circumstances”. Thus, the fact that the exclusionary outcome was intended to bring about certain consequences in particular circumstances (that is, where there were more eligible clubs or entities applying than licences available) does not take the fourteen team term outside of the operation of s 4D(1)(b)(ii).

280               As noted earlier, little attention was given to the significance of the additional words in s 4D(1)(b)(ii). Nonetheless, it is quite clear the case was contested by the parties on the basis that it was always Souths’ case that the exclusionary purpose was intended to be operative in the circumstance that there were more applicants than teams. The trial judge stated Souths’ case in those terms (at [263]) and found (at [269] and [283]) that there “can be no controversy” that exclusion was an intended effect and foreseen consequence in that circumstance. Indeed, that conclusion followed from the evidence given by Messers Frykberg, McCourt and Whittaker.

281               While that particular circumstance may not have been expressly stated in Souths’ pleadings it was plainly implicit as it was the only circumstance in which the fourteen team term could have, or be intended to have, an exclusionary outcome. Further it was, and remained, Souths’ case that the fourteen team term was an exclusionary provision within the meaning of s 4D(1) of the Act. Indeed, the trial judge’s finding that the term was not an exclusionary provision was Souths’ first ground of appeal.

282               In all the circumstances I am satisfied that the issue of whether the fourteen team term was an exclusionary provision, as defined in s 4D(1) of the Act, was “fairly fought out” at trial and on appeal (Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in Liquidation) (1916) 22 CLR 490 at 417). Thus, even if I am in error in concluding that the “particular circumstances” element in s 4D(b)(ii) was implicit in the pleading, it was nonetheless one of the issues litigated at trial and on appeal: see Water Board v Moustakas (1988) 180 CLR 491 at 497.

283               On the issue of substantiality of purpose the trial judge accepted that the means chosen to achieve the fourteen team limitation was one of the “defining characteristics of the new competition” and “a fundamental element of the peace deal” between the ARL and News. It is clear the exclusionary purpose of the provision, the “buttress” to secure the fourteen team outcome, was a significant operative purpose and therefore, in my view, a “substantial” purpose. Even if substantiality requires a higher threshold such as “considerable or large”, I am satisfied that the evidence accepted by the trial judge established that the exclusionary purpose was a substantial purpose of News, the party through whose efforts the fourteen team term was introduced. The exclusionary purpose was also, albeit more reluctantly in the events that occurred, a substantial purpose of ARL.

284               However, I agree with the trial judge that under s 4D(1) any exclusionary purpose, and the objects to which it is directed, are parts of “a composite whole”. Accordingly, determination of the issue of exclusionary purpose requires consideration of the objects of that purpose.

285               Souths’ case was one of prevention of the supply or acquisition of the relevant services to or from a particular class of persons, and the restriction or limitation of the supply or acquisition of the relevant services to or from particular persons. The particular class of persons pleaded was, in substance, the existing ARL and Super League clubs and any other top level rugby league clubs that wished to be included in, but were excluded from, the fourteen team 2000 NRL competition.

286               Of course, the finalised version of the selection criteria, which would lead to exclusion, was not published until 8 September 1998. The stated aim of the finalised criteria was to “create and maintain a viable national competition” by applying criteria for inclusion in the competition “in a fair and reasonable manner”. While it is correct that the criteria were not in existence at the time of the contracts, arrangements and understandings relied upon by Souths, I do not regard anything of significance as turning upon that fact. It is clear that the aim stated in the finalised criteria fairly stated what was always intended by the NRL partners, namely that if there were more clubs than licences available, the clubs that were to be excluded from the 2000 NRL competition were those who were least able to satisfy the criteria that were to be designed by the NRL partners to ensure what they considered to be appropriate to achieve a viable and sustainable national competition.

287               One of the main issues on this appeal concerned whether the clubs or entities intended to be excluded from the competition, by reason of failing to meet the selection criteria are members of a particular class of persons. The distinction between a class of persons and a particular class of persons, in the context of s 4D, was considered by the Full Court in Pont Data. Pont Data was a subscriber for information within the exclusive control of ASX. The information (known as Signal C) related to the trading operations of the stock markets conducted by ASX or its subsidiaries and other sources. ASX (which, for convenience, I treat as including its wholly owned subsidiary ASXO) was a competitor of Pont Data in relation to the supply of such information. ASX required Pont Data to enter into supply contracts which required Pont Data to disclose to ASX the names of its customers. In order to receive the information, the customers (“licensees”) were required to enter into a tripartite agreement (the “Dynamic Agreement”) with ASX and Pont Data under which the licensees were restricted as to the use of the information and, in particular, as to reselling it. Pont Data was not to sell the information to any person other than a licensee. Pont Data alleged, inter alia, that the Dynamic Agreement contained an exclusionary provision.

288               The Full Court looked at the subjective purposes of ASX, the party as a result of whose efforts the exclusionary provision was included in the Dynamic Agreement. The trial judge found the restriction imposed on Pont Data that it require licensees not to resell the information to have had the purpose of preventing, restricting or limiting the supply of information services by Pont Data to any person other than a licensee restricted under the Dynamic Agreement from reselling the information.

289               The Full Court dealt with the s 4D claim at 487-488:

“The submission for Pont was that:

(i) Pont and ASXO (alias JECNET) as parties to the Dynamic Agreement were competitors in relation to the sale of the information contained in Signal C;

(ii)               That agreement obliged one of the parties, Pont, not to sell or supply the information, whether alone or with other information, to any person other than the Licensee; and

(iii)             Having regard to the finding of the primary judge as to purpose, when dealing with s 46(1)(c), it is clear that those provisions had the purpose of preventing or restricting or limiting the supply of services by Pont to any person other than a Licensee who was a party to the agreement in question. In this connection, Pont pointed to cl 3(2), and 3(6) of the Dynamic Agreement; no complaint was made as to the provision dealing with price.

In response, the appellants [ASX] referred to the form taken by s 4D before it took its present form after it was amended by s 6 of the Trade Practices Revision Act 1986 (Cth), which inserted the words ‘or classes of persons’ after ‘particular persons’. The amendment appears to have been made in the light of what had been said as to the limitations upon the phrase ‘particular persons’ in Bullock v Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464 at 473, and in Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 at 75-76. The result would appear to broaden the definition of s 4D by going from particular persons to particular classes of persons.

However, in a submission having an unpleasing resonance of the class-closing rules and of distinctions between general, special and ‘hybrid’ powers of appointment, the appellants contended that the restraints upon the use of the Signal C information by persons other than those bound into the Dynamic Agreement as ‘Licensees’ could not have the purpose of preventing, restricting or limiting the supply of services to a ‘particular’ class of persons, or the acquisition of services by a ‘particular’ class of persons. It was said that the persons or classes excluded must still be ‘identified’ if s.4D is to apply. That may be conceded, but they are identified, in the present case, by the characteristic that they may not be supplied with the information in question, unless they accept and become bound by the restraints imposed by the Dynamic Agreement. Such persons come within a particular category or description defined by a collective formula: cf Pearks v Moseley (1880) 5 App Cas 714 at 723. They ordinarily would be treated as constituting a particular class, even though at any one time the identity of all the members of the class might not readily be ascertainable. What distinguishes the class and makes it particular is that its members are objects of an anti-competitive purpose, with which s. 4D is concerned.

As we understood the argument for the appellants, if their submission as to the construction of the phrase ‘particular persons or classes of persons’ was not accepted, and if, as has proved to be the case, the Court upheld the holding of the primary Judge as to ‘purpose’ in the setting of s 46 (1)(c), that holding also provided a sufficient footing for a holding of ‘purpose’ for s. 4D. In the result, we would accept the submission for the respondent [Pont Data] that its case on s. 4D has been made good.”

290               In the application for interlocutory relief in the present matter ((1999) 169 ALR 133) Hely J stated at [76]:

“The respondents submitted that the distinguishing feature of the class cannot be the fact of exclusion itself. In other words, in order for persons the target of an exclusionary provision to be a class, there must be a common feature distinguishing those persons other than the mere fact of them being subjects of exclusion. It may be thought that there is some force in this submission. However, Pont Data provides otherwise: a class may be identified by reference to the fact that its members may not be supplied with services unless those members accept and become bound by restraints imposed by, in that case, the supply agreement. This suggests that the unifying characteristic of a group can include the fact of exclusion itself. Here, the unifying characteristic of the group is that the relevant clubs were participants in the 1997 competitions, and are not within the groups to be carved out therefrom.”

291               On one view, as pleaded, the defining factor that distinguishes the class intended to be excluded from the 2000 NRL competition, and makes it particular, is the fact of exclusion. However, in the present case it is more accurate to identify the distinguishing exclusionary factor by reference to the reason for the intended exclusion, that is, a club’s failure to meet the requisite level in the selection criteria for inclusion in the fourteen team NRL competition as from 2000 by reason of fourteen other clubs better satisfying the criteria. In Pont Data, where the subjects of the exclusionary provision were aimed at for a reason or purpose (in that case, ASX’s anti-competitive purpose), the reason or purpose was found to be of assistance in defining or distinguishing the class excluded.

292               In each case it is necessary to identify the characteristic distinguishing the class in order to determine if it is sufficiently particular to constitute a particular class that is the object of an exclusionary purpose proscribed by s 4D(1). The fact of exclusion, without more, may not be a sufficient formula or distinguishing characteristic to identify the particular class intended to be excluded.

293               In Pont Data the main issue under s 4D(1) related to whether the class, the object of ASX’s anti-competitive purpose, was a particular class. The immediate reason or purpose of ASX for the restraint imposed on the licensees was the anti-competitive purpose of preventing the reselling of information by restricting or limiting the information services to licensees willing to accept the restraint on reselling. Thus, the exclusionary purpose of preventing supply of the information services was directed at those unwilling to accept the restraint, namely, potential competitors in the relevant markets for the information. The Full Court regarded the particular characteristic of not being entitled to receive the Signal C information without signing the Dynamic Agreement as sufficient to enable the members of the relevant class to come within a particular category or description or to be defined by a collective formula and thereby constitute a particular class. The fact that at any one time the identity of all of the members of the class was not readily ascertainable did not prevent the class from being a particular class. The Court appeared to treat as significant the fact that the members of the class were the objects of ASX’s anti-competitive purpose.

294               Souths claimed that, save that the NRL partners had an exclusionary rather an anti-competitive purpose, the present case falls within the principles acted upon in Pont Data. In my view it is more accurate to say that Souths’ case is supported by the outcome in Pont Data. As set out above in my carrot and stick explanation, a significant effect or result sought to be achieved by the NRL partners by the fourteen team term was to prevent the supply or acquisition of the relevant services to or from such of the still existing ARL and Super League clubs, merged clubs (being new legal entities) or the regional clubs (including the new clubs that were intended to be established, Central Coast and Melbourne) as were eligible, and ready, willing and able, to participate in the NRL competition, other than the fourteen clubs or entities which best satisfied the selection criteria. The prevention of supply or acquisition was intended to be achieved by restricting or limiting the supply or acquisition of the relevant services to the fourteen clubs or entities which were eligible, and ready, willing and able, to participate in the competition and best satisfied the criteria for participation. The characteristic that identified and distinguished the class intended to be excluded from participation, and makes it particular, was that its members, the top level rugby league clubs eligible to participate (for example, by meeting the “Basic Criteria”) but not achieving the requisite level in the selection criteria achieved by fourteen other clubs or entities, would not be supplied with team organisation services and team services would not be acquired from them. Accordingly, the particular class the subject of the NRL partners’ exclusionary purpose has a distinguishing or identifying characteristic in addition to the mere fact of exclusion. As explained above, the evaluation of particularity in the context of s 4D(1) involves questions of fact and degree. Although the matter is not free of doubt, I have concluded that the objects of the NRL partners exclusionary purpose are sufficiently distinguishable and specific to constitute a particular class.

295               In summary, the class aimed at by the NRL partners’ exclusionary purpose of preventing the supply or acquisition of the relevant services by or from the NRL partners was a particular class of persons for the purposes of s 4D(1). Analogously to Pont Data the proscribed exclusionary purpose of the NRL partners was to prevent supply or acquisition to or from a particular class of persons (the excluded class) by restricting or limiting supply or acquisition to or from the clubs or entities selected to be included in the 2000 NRL competition. Accordingly, Souths has established that the trial judge erred in dismissing its case in so far as it relied upon s 4D(1) of the Act.

296               Souths also argued that the fourteen team term had the purpose of restricting or limiting supply or acquisition of the relevant services to or from particular persons namely, the twenty remaining clubs that had participated in the 1997 ARL and Super League competition. I have some difficulty with the restriction or limitation case pleaded by Souths. In order to succeed, Souths must establish that the twenty clubs were the objects of the NRL partners’ purpose to restrict or limit the relevant supply or acquisition of services. The evidence, however, does not appear to support that conclusion. Rather, as explained above, the persons in respect of whom the relevant supply or acquisition of services in the 2000 NRL competition was intended to be restricted or limited (by the services being reduced to fourteen teams) were such of the still existing twenty clubs, merged clubs or regional clubs that met the criteria to participate in the 2000 NRL competition. Thus, any such exclusionary purpose of limitation or restriction was directed at members of a class, rather than particular persons.

297               Finally, that brings me to the question of relief. Souths is entitled to declaratory relief that the making and arriving at of the December 1997 Understanding, the February 1998 MoU and the Merger Agreement, and the giving of effect to the fourteen team term contained in those contracts, arrangements or understandings, contravened s 45(2) of the Act.

298               However, before the trial judge and on appeal the principal remedy Souths sought was an injunction restraining News, ARL and NRL from excluding Souths from the NRL competition in reliance upon the fourteen team term. The form of the relief sought by Souths confuses two discrete issues; giving effect to the fourteen team term and Souths’ entitlement to be included in the NRL competition. The former but not the latter issue is relevant to the appeal. A difficulty that has beset Souths’ claim to injunctive relief to date stems from the fact that, implicitly if not explicitly, it appears to be seeking an order for admission into the NRL competition, an order to which Souths is not entitled as a matter of legal right.

299               Section 80 of the Act confers power upon the Court to grant an injunction where it is satisfied that a person is engaging, or proposing to engage, in conduct that constitutes or would constitute, inter alia, a contravention of the Act. As was explained in ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248, s 80 confers a very broad discretion on the Court which, although devoid of traditional equitable constraints, must be exercised judicially, appropriately and consistently with the policy of the Act: see Lockhart J at 256, Gummow J at 267 and French J at 268. See also Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 at 203-204.

300               It follows from my conclusion on Souths’ s 4D(1) case that when it commenced its proceeding in the Court, subject to any relevant discretionary considerations, its entitlement as a matter of legal right was to restrain News, NRLI, ARL and NRL from giving effect to the fourteen team term (s 45(2)(b) of the Act). The NRL partners and NRL have continued to give effect to the fourteen team term in their respective roles in conducting and operating the NRL competition from and since 2000. As explained earlier in these reasons I agree with the trial judge’s conclusion that the fourteen team term was intended to express “what for the future was to be the status quo”. Accordingly, in the absence of appropriate injunctive relief, if Souths applied for a licence to participate in the 2002 NRL competition it would again be prevented from being granted the licence by reason of the fourteen team term. In these circumstances, the injunctive relief to which Souths is, prima facie, entitled is an injunction to restrain News, NLRI, ARL and NRL from giving effect to, or continuing to give effect to, the fourteen team term. That relief does not require that Souths be included in the 2002 NRL competition nor does it require that the NRL competition be a fifteen team competition. Rather, the relief would remove the unlawful fetter of the fourteen team term which led to Souths’ exclusion from the 2000 NRL competition.

301               In my view there are no valid discretionary reasons for refusing injunctive relief in the present case. Sections 45(2) and 4D(1) operate to prohibit competitors (News and ARL) from entering into an agreement, arrangement or understanding for the purpose, inter alia, of preventing the supply or acquisition of services to or from a particular class of persons. While the exclusionary provision in the present case may be unexceptionable if it were imposed by a sole competition organiser, it is a per se contravention of the Act in the event that two competing organisers agree to impose it in pursuit of their exclusionary purpose. That purpose is critical to the conclusions I have reached. Thus, in the usual course, an injunction would be granted to restrain the repetition of a per se contravention of Pt IV of the Act.

302               I do not accept the argument that an injunction should be refused as it would, in effect, prohibit a “legitimate commercial endeavour” by the NRL partners to establish, in the public interest, any viable and sustainable national competition with an agreed limitation on the number of competing teams. It is suggested that a sixteen team competition, the imposition of the “Basic Criteria”, or any other limitations on entry, would likewise constitute exclusionary provisions and that the Court ought not make an order that would have the effect of causing a different breach to the one complained of. As explained above, in my view the sixteen team competition proposed by ARL probably did not have an exclusionary purpose. The “Basic Criteria” intended to be, and in fact, used by the NRL partners to determine the clubs that were able to compete in their top level rugby league competition also probably did not have an exclusionary purpose. That is because those provisions do not target for exclusion any particular persons or class of persons and, to the extent there might be any exclusionary purpose, it is not a substantial purpose. Rather, and unlike the fourteen team term, such provisions appear to be intended, inter alia, to include all of the top level rugby league clubs or entities that were likely to be eligible, and ready, willing and able, to participate in the 2000 NRL competition. Even if such provisions had an exclusionary effect it does not follow that they had an exclusionary purpose. In any event, the injunction that I regard as appropriate in the present case does not have the effect of mandating any conduct that would result in a different breach of the Act.

303               I also do not accept that injunctive relief should be refused on public policy grounds. Implicit in that contention is the suggestion that the fourteen team term would satisfy the public benefit test under the Act and therefore would be authorised. The short answer to the contention is that whether the provision can satisfy the test is not self evident and, in any event, that is a matter that is required to be determined in accordance with the procedures laid down in the Act. In that regard I note that in the February 1998 MoU the NRL partners agreed that they “will (if necessary) inform, and make a joint submission to, the ACCC (about the Merger)”. Plainly, the parties were aware that the merger of their respective competitions raised issues under Pt IV of the Act but they proceeded with the merger without seeking any authorisation for it. In my view it is inconsistent with the policy of the Act for the Court to refuse injunctive relief in respect of conduct that contravenes the Act on the ground that the parties might satisfy the public benefit test, particularly where those parties have wilfully abstained from seeking an authorisation for their conduct. Further, while it may be accepted that there is a public benefit in a unified competition it does not follow that such a competition could only be viable or sustainable if it were limited to fourteen teams. That was not the ARL’s view when it sought a sixteen team limitation.

304               Damages is not an adequate remedy. The raison d’être of Souths is to compete in the top level rugby league competition, rather than to reap an award of damages for being wrongfully excluded from competing in that competition.

305               Finally, I do not consider that there is any substance in the claims of the NRL partners of delay and harm to third parties. Souths has not delayed but rather has acted reasonably in only bringing its claim when it was excluded from the 2000 NRL competition. Further, as the relief I would grant does not mandate any particular conduct I do not accept that that relief will result in undue harm to any innocent third parties.

306               Souths is also entitled, under s 82 of the Act, to damages to be assessed in respect of any loss and damage suffered by it by the conduct of News, NLRI, ARL and NRL that contravened s 45(2) of the Act. Accordingly, the assessment of damages should be remitted to the trial judge.

307               Souths has succeeded on its appeal. I would order that the main respondents to the appeal, News, NLRI, ARL and NRL pay Souths’ costs of the appeal. Souths failed on its misleading and deceptive conduct and contract causes of action at trial. Some allowance in respect of the costs of that failure may be appropriate as those causes of action were not pursued on the appeal. In all the circumstances the determination of the costs of the proceedings below should be remitted to the trial judge.

Associate:

Dated: 6 July 2001

THE SCHEDULE

CANBERRA DISTRICT RUGBY LEAGUE

FOOTBALL CLUB LIMITED (ACN 008 568 634)

Fifth Respondent

CANTERBURY-BANKSTOWN RUGBY

LEAGUE CLUB LTD (ACN 001 869 405)

Sixth Respondent

CRONULLA-SUTHERLAND DISTRICT RUGBY

LEAGUE FOOTBALL CLUB LIMITED (ACN 002 692 186)

Seventh Respondent

NEWCASTLE KNIGHTS LIMITED (ACN 003 363 228)

Eighth Respondent

ST GEORGE ILLAWARRA RUGBY LEAGUE

FOOTBALL CLUB PTY LIMITED (ACN 085 008 340)

Ninth Respondent

BRISBANE BRONCOS RUGBY LEAGUE

CLUB LIMITED (ACN 010 769 025)

Tenth Respondent

COWBOYS RUGBY LEAGUE

FOOTBALL LIMITED (ACN 060 382 961)

Eleventh Respondent

MELBOURNE STORM RUGBY

LEAGUE CLUB LIMITED (ACN 081 369 468)

Twelfth Respondent

MANLY WARRINGAH DISTRICT RUGBY LEAGUE

FOOTBALL CLUB LIMITED (ACN 003 348 436)

Thirteenth Respondent

NORTH SYDNEY DISTRICT RUGBY LEAGUE

FOOTBALL CLUB LIMITED (ACN 003 009 158)

Fourteenth Respondent

EASTERN SUBURBS DISTRICT RUGBY LEAGUE

FOOTBALL CLUB LIMITED (ACN 002 687 416)

Fifteenth Respondent

PENRITH DISTRICT RUGBY LEAGUE FOOTBALL

CLUB LIMITED (ACN 003 908 583)

Sixteenth Respondent

PARRAMATTA DISTRICT RUGBY LEAGUE

CLUB LTD (ACN 002 254 980)

Seventeenth Respondent

WESTS TIGERS RUGBY LEAGUE FOOTBALL

PTY LIMITED (ACN 090 076 403)

Eighteenth Respondent

AUCKLAND WARRIORS RUGBY

LEAGUE LIMITED (Registered in NZ No. 508 646)

Nineteenth Respondent

MANLY-NORTHS RUGBY LEAGUE FOOTBALL CLUB PTY LTD

(ACN 090 093 833)

Twentieth Respondent

VALIMANDA PTY LTD (ACN 002 639 778)

Twenty-first Respondent

AH CB PTY LIMITED (ACN 068 819 152)

Twenty-second Respondent

BRISBANE BRONCOS CORPORATION PTY LTD (ACN 057 607 208)

Twenty-third Respondent