The Federal Court has today imposed penalties totalling $600,000 against Rural Press Group for misusing its market power and for making and giving effect to a market sharing agreement contrary to the Trade Practices Act 1974.
Justice Mansfield also imposed individual penalties totalling $70,000 against the General Manager of Rural Press' Regional Publishing Division, Mr Ian Law, and its South Australian State Manager, Mr Trevor McAuliffe, for being knowingly concerned in the contraventions.
Penalties totalling $75,000 were imposed against Waikerie Printing House and its director, Mr Paul Taylor, for entering into the market sharing arrangement with Rural Press.
'The Act is designed to protect competition in rural and regional markets as much as in metropolitan markets for the benefit of rural consumers and small businesses", Australian Competition and Consumer Commission Chairman, Professor Allan Fels, said. "The Court's decision seeks to send a deterrent message to large businesses that operate in rural and remote Australia and may be tempted to misuse their market power".
Waikerie Printing House, and its parent company, publish three regional newspapers, The River News, The Loxton News and The Murray Pioneer, in the Riverland region of South Australia. The River News had traditionally circulated in Waikerie and as far south down the Murray River as Swan Reach. In July 1997 the circulation area of The River News was extended further south to Mannum, a town not far from the regional centre of Murray Bridge which had traditionally been serviced by a Rural Press newspaper, The Murray Valley Standard. The River News reported on news and events occurring in and around Mannum, appointed a local resident as its correspondent and attracted advertising revenue from the area by providing a new opportunity and extra choice for small businesses in Mannum to promote their businesses.
In deciding that Rural Press had misused its market power, Justice Mansfield found that from July 1997 to April 1998 senior representatives of Rural Press threatened Waikerie Printing House not to solicit advertising in The River News from the Mannum area.
Rural Press wanted The River News to stick to the Waikerie district of the Riverland region, its prime circulation area. It told Waikerie Printing House that it had already begun the groundwork to introduce an opposition regional newspaper throughout the Riverland. This was in retaliation for Waikerie Printing House entering into the Murray Bridge market for regional newspapers for the purposes of driving out Waikerie Printing House from that market. Heeding the threat, Waikerie Printing House advised Rural Press that it would withdraw The River News from the Mannum area. Rural Press and Waikerie Printing House entered into and implemented a market sharing agreement to that effect. As a result Waikerie Printing House withdrew from the Mannum area in May 1999 and Rural Press did not proceed with its plans for a new newspaper in the Riverland area.
Justice Mansfield found that Rural Press and, its subsidiary, Bridge Printing (which published the Murray Valley Standard) had substantial market power in the Murray Bridge market for regional newspapers by virtue of their financial resources, their strength, and their capacity to immediately carry out the threat, and that they had misused their market power by making the threat to Waikerie Printing House.
"The ACCC took this case to the Federal Court because a powerful player in a market had used its power to threaten a family operated publisher. Rural Press not only succeeded in getting Waikerie Printing House to stop competing against a Rural Press newspaper but it also ensured that Waikerie Printing House contravened the Act by entering into an anti-competitive market sharing arrangement with it. The message from the Court is that firms that are threatened or bullied by bigger businesses should not succumb to the pressure or temptation to break the law. If they do succumb, commercial pressure or temptation will not be an acceptable excuse. Alerting the ACCC to such conduct or pressure would be an appropriate response".
The parties were ordered to pay the ACCC's legal costs.