The High Court decision upholding an appeal by News Limited from a majority decision by the Full Court of the Federal Court that the exclusion of South Sydney from the National Rugby League competition, was a breach of the Trade Practices Act 1974, has clarified some aspects of section 4D of the Act, Australian Competition and Consumer Commission Chairman, Mr Graeme Samuel, said today.
The majority view of the High Court has clarified that:
- the word 'purpose' in s 4D of the Act should be interpreted as the subjective purpose of the parties engaging in the conduct; and
- that the application of s 4D is not limited to circumstances that have traditionally been described as a 'boycott' where the purpose of the conduct is to harm a selected target.
In his judgment, Justice McHugh confirmed that purpose in s 4D referred to the subjective purpose of the parties to the alleged exclusionary provision.
However, Justice McHugh also expressly acknowledged that: "Unless s 4D is read as requiring an objective test, then in some cases, it will be impossible to determine what was the purpose of a provision….Moreover, an objective interpretation of s 4D seems more in accord with the Act's object of promoting competition, an object that is weakened if what is objectively anti-competitive conduct escapes proscription only because the parties did not in fact intend to achieve such a proscribed purpose".
In his judgment, Justice Gummow said: "It is clear that s 4D is not limited to situations in which the traditional concept of a collective boycott would apply, for example where two or more competitors exclude or restrict the supply of goods or services to a rival competitor".
While dissenting in the ultimate outcome of the appeal and on the approach to construction of s4D taken by the majority on a number of aspects, Justice Kirby agreed with the majority that s 4D was not limited to concerted boycott action by competitors.
The High Court challenge arose from the initial decision by News Limited and the Australian Rugby League to exclude the South Sydney District Rugby League Football Club from the 2000 National Rugby League competition.
In challenging the NRL's decision to exclude the team from the premier competition, Souths alleged before the Federal Court that the term of the partnership agreement between News Ltd and the ARL which restricted to fourteen the number of teams eligible to play in 2000 was an exclusionary provision in breach of the Act.
The ACCC sought to intervene before the High Court as the matter raised significant issues regarding the construction of the prohibition on exclusionary provisions contained in the Act. The High Court granted the ACCC leave to intervene.
The ACCC sought to put an argument that it believed could have avoided the unexpected result in the unusual circumstances of this case. That argument was not taken up by the parties to the appeal.
In his judgment, Chief Justice Gleeson said: "The appeal was argued by the parties on the basis that, at the time of the 1997 understanding, News and ARL [Australian Rugby League] were in competition with each other in relation to the supply or acquisition of goods or services to which the 14 team term of the understanding related. That was disputed by the ACCC, but that dispute would have involved a widening of issues in a manner that was inappropriate, at this stage of the litigious process, at the instigation of an intervener".