Following a breakdown in negotiations, the Australian Competition and Consumer Commission today instituted proceedings in the Federal Court, Sydney against Seven Network Limited, Nine Network Australia Pty Limited, Golden West Network Pty Limited, related companies and five individuals.
The ACCC alleges that the companies breached the following provisions of the Trade Practices Act:
section 45, which prohibits contracts, arrangements or understandings between competitors which substantially lessen competition, and which also prohibits competitors boycotting particular customers in a market (section 4D); and section 47 which prohibits exclusive dealing conduct.
On 31 October 1995 Golden West Network entered into an exclusive 15 year program supply agreement with the Nine Network. On 1 November 1995 Territory Television Pty Ltd, a Nine Network subsidiary in Darwin, entered into an exclusive ten year with a five year option program supply agreement with Amalgamated Television Services, a Seven Network subsidiary.
The ACCC alleges that in about the latter half of October 1995, the Nine Network and the Seven Network made an overall agreement that the Nine Network would not express an interest for any second commercial television licences for regional Western Australian licence areas and that the Seven Network would withdraw its expression of interest for the second commercial television licence for the Darwin area. Part of this overall agreement was that the Nine Network would enter into an exclusive program supply agreement with Golden West Network and that the Seven Network would enter into an exclusive program supply agreement with Territory Television.
The ACCC alleges that the object of these three agreements was to hinder or prevent potential entrants from acquiring any second commercial television licences for Darwin and for regional Western Australia and therefore to enable Territory Television and Golden West to be in a position to be allocated any second commercial television licences for Darwin and regional Western Australia licence areas respectively.
The auction for the second commercial television licence for Darwin is to take place on Tuesday, 29 October 1996. The ACCC has instituted its proceedings today to ensure the market is informed on this matter.
Other parties named in the statement of claim, who form part of the Golden West Network in regional Western Australia, are Geraldton Telecasters Pty Ltd, Mid Western Television Pty Ltd and Golden West Satellite Communications. Westrac Equipment Pty Limited and Australian Capital Equity, who are the ultimate holding companies for Golden West Network Pty Ltd, and related companies are also named. Other parties include Territory Television Pty Ltd, the Darwin television licensee and a subsidiary of Nine Network Australia Pty Limited and Amalgamated Television Services Pty Ltd a subsidiary of Seven Network Limited.
Individuals named in the proceedings are Mr Gary Rice, Managing Director of Seven Network Limited; Mr Nicholas Falloon, Finance Director and director of Nine Network; Mr William Rayner, a director of Seven Network and the Chief Executive Officer and director of Golden West Network; Mr Peter Gammell, a director of the Seven Network and a director of Australian Capital Equity; and Mr Robin Waters, a director of Westrac Equipment and Australian Capital Equity.
Westrac and Australian Capital Equity, with which Mr Gammell and Mr Waters are associated, entered into an agreement with the Nine Network under which Westrac agreed to pay the Nine Network a significant sum of money for entering into the exclusive program supply agreement. Australian Capital Equity guaranteed the performance of Westrac's obligations under the agreement. It is alleged that both Westrac and Australian Capital Equity have been knowingly concerned in contraventions of the Trade Practices Act.
The ACCC alleges that the overall market sharing agreement between the Seven and Nine Networks contains an exclusionary provision and alternatively has the effect of substantially lessening competition for commercial free-to-air television services in the Darwin and regional Western Australian markets.
The ACCC alleges that the two exclusive program supply agreements between Territory Television, Nine and Amalgamated Television Services and Seven on the one hand and Golden West Network and Nine Network on the other hand amount to exclusive dealing in contravention of the Act. Each of the individuals named in the proceedings are alleged to have been knowingly concerned in the contravention of the exclusive dealing provisions.
"The ACCC has given ample opportunity for the parties to unwind these agreements," Acting ACCC Chairman," Mr Allan Asher, said.
"These agreements would deny entry to new broadcasters into these television markets or substantially reduce their programming options. In the ACCC's view this would also deny both national advertisers and local businesses in particular access to competitively priced television advertising services."
The ACCC is seeking pecuniary penalties and injunctions against each of the companies and individuals, and declarations that the agreements contravene the Act.
