Australian Competition & Consumer Commission v Rural Press Limited - [2001] FCA 116 - FCA 2001 case summary — Zoe

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Australian Competition & Consumer Commission v Rural Press Limited

[2001] FCA 116

Federal Court of Australia|2001-07-01|Before: Mansfield J

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Court

Federal Court of Australia

Decision date

2001-07-01

Before

Mansfield J

Source

Original judgment source is linked above.

Judgment (57 paragraphs)

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Australian Competition & Consumer Commission v Rural Press Limited [2001] FCA 116 TRADE PRACTICES - alleged contraventions of ss 45(a) and (b) and 46 of Trade Practices Act 1974 (Cth) against two publishers of regional newspapers in South Australia and parent company of one publisher - one publisher broadened its regional newspaper circulation into part of the prime circulation area of other publisher but subsequently withdrew that extended circulation - communications between officers of respondent companies - whether the circumstances surrounding the withdrawal constituted an arrangement or understanding containing an exclusionary provision in contravention of s 45(2)(a) of the Trade Practices Act 1974 (Cth) - consideration of what constitutes an "arrangement" or "understanding" - meaning of "exclusionary provision" in s 4D - whether purpose subjective or objective. TRADE PRACTICES - the market - consideration of what should be the relevant market for the purposes of s 45(2) - whether broad identification of market should be made - applicant contended that the market should be limited to the provision of services by the publication of newspapers in the relevant area - respondents contend it should extend to include competition with radio and newspapers in other regional areas - 'substitutability' in s 4E - whether arrangement had purpose or effect of substantially lessening competition in market where competition existed in small part of market only and subsequently was withdrawn. TRADE PRACTICES - market power - whether contravention of s 46(1) of the Trade Practices Act 1974 (Cth) - first respondent alleged to have taken advantage of a substantial degree of market power in the identified market - consideration of relevant factors in determining whether substantial degree of market power - relevance of general financial resources and strength of first respondent. TRADE PRACTICES - involvement of the directors in the contraventions - whether they were knowingly concerned in or parties to the alleged contraventions within the meaning of s 75B.

Trade Practices Act 1974 (Cth) ss 4A(5), 4D(1), 4E, 45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i), 45(2)(b)(ii), 45(3), 46, 155 Local Government Act 1934 (SA) Morphett Arms Hotel Pty Ltd v Trade Practices Commission (1980) 30 ALR 88 referred to Australian Competition and Consumer Commission v CC (NSW) Pty Ltd (1999) 92 FCR 375 applied ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No1) (1990) 27 FCR 460 applied Adamson v New South Wales Rugby League Ltd (1991) 31 FCR 242 referred to News Ltd v Australian Rugby Football League Ltd (1996) 58 FCR 447 referred to Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 referred to Queensland Wire Industries Pty Ltd v Broken Hill Pty Co Ltd (1989) 167 CLR 177 applied Arnotts Ltd v Trade Practices Competition (1990) 24 FCR 313 referred to Re Queensland Cooperative Milling Association Ltd; Re Defiance Holdings Ltd (1976) 25 FLR 169 applied Davids Holdings Pty Ltd v Attorney-General of the Commonwealth (1994) 49 FCR 211 considered Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1982) 62 FLR 437 applied Eastern Express Pty Ltd v General Newspapers Pty Ltd (1992) 35 FCR 43 applied Trade Practices Commission v Pioneer Concrete (Qld) Pty Ltd (1994) 50 FCR 160 considered Trade Practices Commission v Pioneer Concrete (Qld) Pty Ltd (1994) 52 FCR 164 considered Williams v Papersave Pty Ltd (1987) ATPR 40-781 referred to Natwest Australia Bank Ltd v Boral Gerrard Strapping Systems Pty Ltd (1992) ATPR 41-196 applied Top Performance Motors Pty Ltd v Ira Berk (Queensland) Pty Ltd (1975) 24 FLR 286 considered Dowling v Dalgety Australia Ltd (1992) 34 FCR 109 applied Yorke v Lucas (1985) 158 CLR 661 at 670; Crocodile Marketing Ltd v Griffith Vinters Pty Ltd (1989) 28 NSWLR 539 applied Hamilton v Whitehead (1988) 166 CLR 121 applied Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1999) 166 ALR 74 applied AUSTRALIAN COMPETITION & CONSUMER COMMISSION v RURAL PRESS LIMITED (ACN 000 010 382), BRIDGE PRINTING OFFICE PTY LIMITED (ACN 007 547 024), IAN LAW, TREVOR McAULIFFE, WAIKERIE PRINTING HOUSE PTY LIMITED (ACN 007 623 270), PAUL TAYLOR and DARNLEY TAYLOR S 56 of 1999 MANSFIELD J 1 MARCH 2001 ADELAIDE

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THE BACKGROUND FINDINGS 2 Much of the evidence was uncontentious. It is therefore possible to record my background findings in the narrative form. Much, however, turns upon the effect and detail of certain particular conversations. There is inconsistent evidence concerning them, and the matter is further complicated by the fact that certain of the evidence touching upon them has been admitted only against the first to fourth respondents, and certain evidence admitted only against the fifth to seventh respondents (for instance, the transcript of examinations of officers of Rural Press and Bridge on the one hand and of Waikerie Printing on the other conducted voluntarily or under s 155 of the Act). Furthermore, one piece of evidence clearly admissible only against the first to fourth respondents is a letter from solicitors for the first respondent dated 16 March 1999 providing a response to certain questions directed to the first respondent by the ACCC. There is, as counsel for the ACCC pointed out, some inconsistency between the material provided by way of admission in that letter, and the oral evidence in particular of Law. The complication confronting the Court is the need to ensure that, in making findings of fact relevant to the claims against the several respondents, the Court only has regard to the evidence properly admitted and admissible against each of them. 3 The parties have acknowledged that evidence admissible against Rural Press is admissible against each of the first to fourth respondents, and evidence admissible against Waikerie Printing is admissible against each of the fifth to seventh respondents. 4 It is common ground that, as a matter of history, publishers of regional newspapers (at least in South Australia) have for many years had a more or less well defined geographic area within which their respective newspapers were circulated. It is not suggested that this is by reason of some particular arrangement or understanding between the publishers of the various regional newspapers, but simply the way in which over many years the respective markets for regional newspapers developed and existed. There is one exception to that serendipitous circumstance, concerning regional newspapers published in the Barossa Valley. It will be necessary to return to that matter later in these reasons. 5 About one hour's drive east of Adelaide is the township of Murray Bridge, population about 13,000. As its name suggests, it is on the River Murray. Bridge, a wholly owned subsidiary of Rural Press, at material times published in Murray Bridge a regional newspaper called the Murray Valley Standard ("the Standard"). It circulated in Murray Bridge and surrounding districts ("the Murray Bridge district"). The standard was published twice weekly, on Tuesdays and Thursdays, at a price of 90 cents. Its circulation was about 4,000-4,500 on Tuesdays and about 4,500 or perhaps more on Thursdays. The Standard covers local news occurring in the community in the Murray Bridge district, and it solicits and publishes advertising mainly from and concerning that district. 6 The Murray Bridge district in which the Standard was circulated extended north upstream along the River Murray to include the township of Mannum about thirty kilometres from Murray Bridge (population about 2,000). It also circulated in the area north of Murray Bridge in the townships of Sedan, Cambrai and Palmer and in smaller rural settlements. In some evidence, the term "prime circulation area" was used to describe the area of a regional newspaper in which the vast majority of its newspapers are circulated and from which most of its advertising revenue is obtained. The Murray Bridge district is the prime circulation area of the Standard. Of course, its prime circulation area also extended in areas around Murray Bridge in other directions. 7 As noted, Mannum is about thirty kilometres from Murray Bridge, also on the River Murray. It is the geographic centre of the events about which this application relates. 8 There are other regional newspapers sold in the Murray Bridge district, which were published in adjacent regional areas, including the Leader, the River News, the Southern Argus, the Times and the Courier. On the evidence, few copies of those other regional newspapers were sold in the Murray Bridge district including Mannum, at least until the events to which this proceeding relates took place. Effectively there was no competition to the Standard in the Murray Bridge district until July 1997. 9 Further up river from Murray Bridge and Mannum is the Riverland area, including the township of Waikerie (population about 1800). Waikerie Printing there publishes a regional newspaper called the River News ("the River News"). It is published weekly on Wednesdays, at a price of 60 cents. It has a circulation of about 2,000-2,500 copies. Prior to the events to which this application relates, and prior to the change in the District Council regions, its circulation was around the township of Waikerie and extending west along the River Murray areas to Morgan (where the River Murray turns to flow roughly south towards Murray Bridge) and south to about Nildottie and Swan Reach. That happens to be about half way between Murray Bridge and Waikerie. The River News sold a few copies in Cambrai and Sedan. It also sold a few copies in Mannum, a little further south or south-east of Nildottie. Mannum was not regarded as part of the prime circulation area of the River News. It also included in its prime circulation area an area extending further up river. 10 As one moves further upriver (the River Murray now meanders in a roughly east-west direction) past Barmera one arrives at Loxton. The Loxton News Pty Ltd publishes the Loxton News, another small regional newspaper and further up river at Renmark the Murray Pioneer Pty Ltd publishes the Murray Pioneer. Those two companies, together with Waikerie Printing are effectively controlled by PT and DT. They are each directors. John Pick ("Pick") is the managing editor of the River News and is also a director of Waikerie Printing. The River News is printed under arrangement with Murray Pioneer Pty Ltd which operates a printing press at Renmark. 11 Pick as managing editor of the River News made the day to day decisions about its operations in almost every respect. 12 The events to which this application relates followed, and on the evidence were precipitated by, a rearrangement of local district council areas effected by changes made under the Local Government Act 1934 (SA) in 1997. 13 The Mid Murray Council was established on 1 July 1997 as a result of the amalgamation of the district councils of Morgan, Ridley-Truro, Mannum and a portion of the district council of Mount Pleasant. The previous Mannum Council area was in the prime circulation area of the Standard. Immediately to the north of the area of the Mannum Council, the previous council area of Ridley-Truro was partly in the prime circulation area of the Standard and partly in the prime circulation area of the River News. The next council area to the north, the area of the Morgan Council, was in the prime circulation area of the River News as was the area of the Waikerie Council immediately to its east. To the south, the district council of Mannum then abutted the area of the City of Murray Bridge, and relevantly the district council of Mannum was to some extent abutted also by the Waikerie and Loxton Councils. 14 The area of the Mid Murray Council, when established, largely but not exclusively included areas which previously were in the prime circulation area of the River News. As noted, because it incorporated the previous area of the Mannum Council, its area partly extended south into the Mannum area which was part of the prime circulation area of the Standard. 15 In those circumstances, Pick thought that it would be of benefit if the River News, when carrying local government notices and advertisements for the Mid Murray Council, had a newspaper circulation extending over the whole of the area of the Mid Murray Council. At 1 July 1997, the area of the new Mid Murray Council was serviced by the Standard in its southern part and by the River News in its northern and central parts, and by the Leader (published in the Barossa Valley) in its central and eastern parts, as well as by two smaller three monthly community newspapers neither of which is regarded by the Mid Murray Council as an appropriate vehicle for its statutory notices. 16 The consequence was that the River News became a competitor with the Standard for readers and advertisers in a part of the prime circulation area of the Standard, namely in and around Mannum. Pick set about putting in place arrangements to procure newsworthy material and later advertisements from the advertisers from the Mannum area, and indeed from other smaller towns in the Mid Murray Council area to the north of Mannum previously also (and still) in the prime circulation area of the Standard. Pick appointed several casual local correspondents in those towns for that purpose. For a time, he also spent part of his time in Mannum procuring newsworthy information, but his other commitments meant that he really could not continue to do that. 17 In September 1997 he engaged Duncan Emmins ("Emmins") to procure newsworthy information and later advertising revenue from that area. Initially Emmins was engaged on a piece work or casual basis, but from 29 January 1998 he was put on a retainer or permanent part-time basis. Emmins' retainer with the River News was terminated on 1 May 1998 in circumstances to which it will be necessary to refer later in these reasons. As a result, from about July 1997 the River News expanded in size by four pages each issue (from 20 or 24 to 24 or 28) as it carried a number of articles each week relating to news and events in the Mannum area. 18 The River News circulation overall increased somewhat by its extended circulation into the Mannum area. It is difficult to conclude with precision the extent of that increased circulation, as it varied from week to week. It was probably in the order of about 100 copies of the River News per week, although in weeks of particular interest or significance it was quite a lot more, up to 180 in one week. Some other evidence suggested the sales increase was of the order of 350-500 copies per week. 19 In May 1998, Waikerie Printing withdrew the River News from promoted circulation in the Mannum area. It has continued to meet orders from the Mannum newsagency for the River News and still provides about fifty copies per week to that newsagency. It does not solicit advertising from the Mannum area. It is the circumstances in which that "withdrawal" of the River News from circulation in the Mannum area which give rise to these proceedings. 20 Pick's reason for extending the River News prime circulation area into Mannum was simply because Mannum fell into the new Mid Murray Council area. He wanted to provide local government news to all the constituents of the new Mid Murray Council through the River News as it was the regional newspaper which, because of its existing prime circulation area, covered the affairs of constituents of the Mid Murray Council. Council elections were looming at the time. Pick considered it appropriate to include in the River News information of interest to all members of the community within that new council area. He also recognised that that occasion provided an opportunity to expand the circulation and profitability of the River News. He did not consult with the Taylors before doing so. Not surprisingly, he also did not inform anyone from Bridge of his plans to do so. He intended to "give Mannum a twelve month trial" to see if it could be financially viable. 21 In late June or early July 1997 he arranged for two successive editions of the River News to be posted or delivered to all households in Mannum free of charge. The Mannum residents were notified at the same time that the River News would be available at the Mannum newsagency or on order thereafter. Up to that time, there had been no real competition for readers or advertisers in the Mannum area or from the Mannum area between the Standard and the River News. They had each served their respective and distinctive regional centres and surrounding areas. From July 1997, the River News was then promoted directly into the Mannum area in competition with the Standard in that area. Although it was within Pick's authority to have made the decision to do so without reference to the Taylors, and he in fact did so without reference to them, they very soon became aware of his activities in that regard. 22 Before proceeding to address the communications which took place, the occasions of which are not in issue, it is convenient to note the status and role of the participants in those communications. At July 1997, Beryl Price ("Price") was the manager of Bridge, and directly responsible for the publication and well-being of the Standard. She reported to McAuliffe, who was the regional manager for South Australia of Rural Press. He was responsible for various subsidiary companies of Rural Press, including Bridge, which published regional newspapers in South Australia. Price also served as the regional accountant for South Australia for Rural Press. McAuliffe in turn reported to Greg Watson ("Watson") who, until December 1997 was the general manager for special projects of Rural Press. Watson reported then to the managing director of Rural Press, Brian McCarthy ("McCarthy"). On 1 January 1998 Law was appointed as the general manager of the regional publishing division of Rural Press, and from that time McAuliffe reported to Law, who in turn reported to McCarthy. 23 One other participant in communications which, it is contended, are relevant is Anthony Robinson ("Robinson") who at material times was the managing director and editor of Leader Newspapers Pty Ltd, the publisher of the Leader in Angaston. The Leader was published weekly on Wednesdays, and had a circulation of about 7,000 primarily in the Barossa Valley but secondarily as far east as Waikerie and as far south as Mannum. It had the same prime circulation area as the Barossa and Light Herald ("the Herald") published by a subsidiary of Rural Press and which, to promote competition with the Leader, was provided free in that prime circulation area. As noted earlier, that was the only instance in South Australia of regional newspapers directly competing for readers and advertisers within the same prime circulation area. Robinson was a brother-in-law of PT. 24 Bridge was not happy about the intrusion of a competitor into the Mannum area of its prime circulation area. Price took the opportunity at a meeting of the Country Publishers Association (SA) at Mount Gambier during July 1997 to inform Pick that she was disappointed that he had not told her of his intended plans for the River News before implementing them. Pick explained to her why he had done so, by reference to the commencement from 1 July 1997 of the new Mid Murray Council. 25 The matter did not, however, rest there. On 29 July 1997, McAuliffe visited Pick at the Waikerie office of Waikerie Printing. That was the start of a series of communications between officers of Rural Press with either the Taylors or Pick, and in one instance allegedly through the intermediary of Robinson, concerning the promotion or expansion of the River News into the Mannum area. For the reason I have already expressed, at this point I will note generally the occasions of those conversations and the participants but where the terms of the communication are contentious I will not record the detail of the communication. That detail will have to be carefully considered in due course. The occasions themselves, and the participants, are not in issue. In some instances there is also no dispute about the terms of the communication. 26 The Rural Press respondents did not really challenge the finding, which I make, that both Rural Press and Bridge, in particular through McAuliffe and Price, were unhappy with the move of the River News into the Mannum area and that both McAuliffe and Price expressed that unhappiness and concern to the Taylors and to Pick in a series of communications. They also do not really challenge the further finding that they indicated that unless Waikerie Printing reconsidered the decision to extend the coverage of River News into the Mannum area, then Rural Press would have to consider reacting commercially to that step and that such commercial reaction may include publishing a rival newspaper in the Riverland area. That is the prime circulation area of the River News and of the other papers of the Taylors published in Renmark and Loxton. They also acknowledged that it would be open for the Court to find that, following the decision of Waikerie Press to "downscale the Mannum operation", Rural Press did not take any further steps to publish a competing newspaper in the Riverland area. I also make that finding. 27 The fact of the River News seeking to extend its circulation into the Mannum area was clearly discussed between Price and McAuliffe. As noted, on 29 July 1997 McAuliffe visited Pick at the Waikerie offices of the River News and, according to McAuliffe's notes, discussed with him the merits of his push into Mannum. He expressed surprise to Pick that the River News would come into the Rural Press area, and said that Rural Press might be forced to respond commercially. Although Pick told McAuliffe that he would revisit the decision to extend the River News into the Mannum area, Pick did not then intend to do much about it as he did not think that it really represented a major threat to the Standard, at least in the short term. 28 On 1 August 1997, Price wrote to McAuliffe on the topic. He indicated that, to combat the push into Mannum, the editorial department at the Standard were focussing on Mannum to give it good coverage with some special features. She added:

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"The above action is really only protecting our circulation area. John Pick has broken longstanding, established circulation boundaries and I am concerned that we should not be seen to accept his intrusion without a whimper. We should consider distributing the Murray Valley Standard in his area particularly Morgan and also consider the publication of a Murraylands Bulletin to be distributed free throughout Waikerie/the Riverland." 29 Despite his conversation with McAuliffe, Pick continued to promote the River News in the Mannum area. He sought to procure local coverage. As noted earlier, on 17 September 1997 he appointed Emmins as a resident Mannum correspondent with the River News. Pick knew Emmins to be well known in the Mannum area, and to know the Mannum area well, and regarded him as an energetic operator. His brief initially was to obtain articles and photographs of interest concerning Mannum and its residents, and only later to seek advertising revenue. In fact Emmins started seeking advertising and revenue towards the end of 1997. 30 Each month McAuliffe provided a regional report to Watson, and from January 1998 to Law. His report of September 1997 simply noted that the River News was still being sold at the Mannum newsagency but that no advertisers from the Mannum area had yet appeared in the River News. Following the appointment of Emmins, Pick had letterbox drops in the Mannum homes advising of his appointment. McAuliffe learnt that and on 25 September 1997 informed Watson of that. The report of that information was not apparently significant enough, by that stage, to include in Watson's September report to McCarthy dated 29 September 1997. Price included in her monthly report to McAuliffe dated 27 October 1997 the information that the Standard was now publishing two pages of Mannum community news in each Tuesday edition of the Standard under the "Mannum Mercury" banner in an endeavour to combat the River News intrusion. She noted that the River News had still not picked up any advertising support from the Mannum area. She also noted that circulation numbers in Mannum of the Standard were not showing any decline and that the Mannum Mercury pages had been well received. 31 Despite that apparently sanguine position, Rural Press contemplated further action. On 21 November 1997, Price proposed to McAuliffe the publication of a Murraylands bulletin in Waikerie and surrounding towns, that is specifically in the prime circulation area of the River News, in the lead up to Christmas. She proposed distribution in the week commencing 15 December 1997 of a free bulletin which would operate at minimal profit having regard to predicted advertising revenue and cost as

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"The manager explained that circulation gains had been made in the Mannum area and advertising was forthcoming as a result. The chairman [DT] questioned the viability of this in the long term given the relatively small gains in circulation that could be achieved." The ACCC challenges the veracity of that minute. The minute produced comprises three pages of which page three appears to be in a different type. It is not a signed minute. 33 The inactivity, except in the sense of combating the River News by editorial additions to the Standard, was obviously concerning Price. On 24 December 1997, she wrote again to McAuliffe on the matter, referring in some detail to the content of recent issues of the River News, in particular the Mannum content. She again urged a move into the Waikerie market into the New Year. Her monthly report to McAuliffe dated 22 January 1998 noted that the River News was still distributing in Mannum, and that it then had some Mannum advertising and was promoting directly the River News as serving the Mannum area. Despite that, the circulation numbers of the Standard were not diminishing. 34 On 28 January 1998, Law (who had now taken over the role of Watson albeit under a different formal title) sent a memo to McAuliffe asking for up to date information about the River News position in Mannum. The memo offered that Watson would contact DT if the River News was still being actively sold into the Mannum area. Watson had obviously been briefed on the situation, but I do not know in what circumstances or in what terms. McAuliffe responded by indicating that River News was still operating as previously, and he asked Law to call DT as he and Price were very keen to act. His monthly report for January 1998 to Law reported that the River News was being promoted positively into "our traditional circulation area" and as serving Mannum and the mid Murray district. 35 At about the end of January 1998 Law did telephone DT. He asked DT what Waikerie Printing was doing regarding Mannum. DT told him that it would revisit the decision to circulate actively into the Mannum area. Law told him that Rural Press' local people want to respond commercially, including as one option a free newspaper into the Riverland. There is some evidence that Law said to him that he wanted Waikerie Printing to pull back from Mannum, possibly to a line thirty kilometres north of Mannum, and that in that event Bridge might employ Emmins. DT, who is the only other party to that conversation, did not recall those particular things being said. However, the evidence of Law in the trial (as distinct from his examination) is admissible generally. He acknowledged that he asked DT to rethink their strategy in relation to Mannum, and that DT said that they would do so. He positively disputed having said or suggested to DT that the River News should withdraw to a line thirty kilometres north of Mannum, or that any point of delineation north of Mannum was discussed. There is in evidence as a business record a document which I find is a contemporaneous memorandum of Law's as to that conversation. It is obviously in note form. It includes reference to

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"We went over your conversation - just to make sure we understood each other. He indicated that Darnley understood as well - but they have not spoken to Pick yet - and didn't sound like he was looking forward to it. … Four weeks to go! - We will continue with our planning." (The last reference is, I find, prompted by the circumstance that Pick and McAuliffe had been told by Law that if the issue had not been resolved in some way by the end of February 1998, Rural Press would consider authorising them to take further action). 38 On 3 February 1998, Price reported to McAuliffe that she intended to publish a Murraylands bulletin type publication for the Riverland area, with a proposed circulation of 13,500 copies per month (to compete with the Taylors' newspapers). It was to be free, and on her projected advertising revenue would make a profit. She noted that the River News was still publishing and promoting itself as serving Mannum, and had picked up further advertising revenue. That memorandum came to the attention of Law who, on 4 February 1998, told McAuliffe that he assumed Price would do nothing until "we contact Paul Taylor at the end of Feb". 39 It is obvious that the end of February was somehow seen as a watershed date. There is no evidence as to how that came about, but it is clear that at this point Waikerie Printing had not entered into any arrangement to restrict its publication and that Rural Press and Bridge were awaiting to see what happened in the light of its approaches at that time. On 24 February 1998 McAuliffe reported to Law that the Mannum correspondent for the Standard was leaving to move interstate. It noted "four days to go". 40 The monthly report (presumably of McAuliffe to Law) for February 1998 reported that the River News was still distributing in Mannum, and actively sponsoring a fishing competition in Mannum. It said that the River News was giving no indication of scaling down its involvement in Mannum. 41 The situation was clearly being closely watched. On 2 March 1998 Price reported to McAuliffe that the River News was showing no signs of pulling out of distribution in Mannum. She had checked with Emmins to see if he was still reporting for the River News in Mannum and confirmed from him that he was. She added: "Are we serious about our threat to enter the Riverland market?" The monthly report for February, dated 3 March 1998, of Law to McCarthy again did not refer to the issue of the River News. As noted earlier, in circumstances which I need not inquire into, Rural Press through another subsidiary had embarked upon promoting the Herald in the Barossa Valley as a free newspaper in competition with the Leader published by Robinson's company. That report noted that advertising sales for the Herald were still significantly less than cost of production at February 1998, and that extensive staff resources were being put into procuring greater advertising revenue. 42 On "schedule", on 3 March 1998 Law again telephoned PT. The conversation centred around Waikerie Printing's intentions with respect to the River News in Mannum. Perhaps unbeknown to the Taylors, Law was not enthusiastic about distributing a free newspaper into the Riverland because the experience of doing so with the Herald nearby in the Barossa Valley was presenting a sufficient challenge in itself. However, as Law put it, if the River News chose to pull out of Mannum that would be good for Rural Press. In that conversation, according to Law, PT said that the River News was no longer selling advertising in Mannum but was still selling a few papers. He said that the Taylors were keeping an eye on Pick. PT also said that they were downgrading their activities in Mannum. The letter of the solicitors for Rural Press of 16 March 1999 adds that Law said that his South Australian staff were still concerned about the move into Mannum, and asked what Pick was up to. PT also said that they might continue to run some council news, but that he would keep an eye on it. 43 I infer that within Rural Press and Bridge the results of that conversation were discussed with McAuliffe and Price. On 13 March 1998 Price sent a facsimile to McAuliffe reporting that, contrary to that conversation, the River News of 11 March 1998 showed no signs of the "agreement" as to not soliciting advertising in Mannum. It gave some details of Mannum sourced advertising in the River News. She added that "we are looking like wimps". 44 On 20 March 1998 Law on behalf of Rural Press wrote to PT at the River News in the following terms:

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"Thank you for taking the time to talk to me recently. I was keen for you to understand our concern about the move of the River News into the Mannum are [sic] - which is a prime readership and circulation area for the Murray Valley Standard. I note that John Pick (or Duncan - see attached advertisement) is still selling advertising in Mannum (Mannum Club, private motoring classified, image makers and Mannum agricultural). I hope you can convince him to stick to the prime circulation area of the River News." 45 Internally, Price reported that the next edition of the River News still contained Mannum sourced advertising. That picture was also confirmed in McAuliffe's regional report of March 1998 to Law. 46 Apparently for the first time, the River News' promotion into part of the Standard's prime circulation area, was referred to in Law's report to McCarthy dated 31 March 1998. He referred to the focus on Mannum, with the sales representative canvassing the town to sell advertising space on the Mannum Mercury pages, and that the River News was continuing to distribute in Mannum and has also sold feature advertising in Mannum in early March. The report is in terms which tends to suggest that McCarthy was already aware of the River News activities although it had not appeared in previous reports. 47 Price, by memo of 11 April 1998 to McAuliffe again reported that the River News still had significant advertising out of Mannum. She remarked "being nice is not working." That memo was brought to the attention of Law as well as McAuliffe. 48 It is in that context that a significant meeting took place in Sydney of the Country Press Australia Committee of Management on 3 April 1998. Law was present, along with Robinson. PT was not an attendee, although he formally apologised for not attending. Price also attended. There had been previous negotiations between Rural Press and Robinson's company involving the possibility of Robinson buying out the Herald published by Rural Press or a subsidiary in the Barossa Valley. Those negotiations failed. Subsequently, in 1997, Rural Press through its subsidiary commenced to distribute the Herald free in the Barossa Valley in direct competition with Robinson's paper the Leader. It may be inferred that the business of the Leader suffered as a result. I also find Law was aware that Robinson was in some way related to PT. Robinson was approached during a tea break in the morning by Law. Price was present. She did not give evidence. Robinson's version of that conversation was that Law asked him:

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"… J Pick won't run any more Mannum news and will tell the newsagent that the River News won't be available in Mannum." 58 She also records having spoken with Duncan Emmins who said he could not work for Rural Press. On 21 April 1998 McAuliffe also reported to Law that Price had met with Emmins, and that Emmins had declined to be involved with Rural Press and had said "it's not over". It also recorded that Pick spoke with Price yesterday (20 April 1998) and was "OK" but said he was having a meeting with the Taylors the following Friday. 59 At about that time the River News pulled out of Mannum. The circumstance in which it did so is of course the principal issue in these proceedings. There was then considerable local media discussion about the circumstances in which that had occurred. 60 It is clear that, following July 1997 when the River News came to be actively promoted in the Mannum area, Rural Press and Bridge regarded that as an intrusion into the prime circulation area of the Standard. It is equally clear that Rural Press and Bridge, principally through McAuliffe and Price, regarded that intrusion as requiring some reaction on the part of Rural Press and Bridge. The reaction included the commercial one of including in the Standard the additional focus upon Mannum news under the "Mannum Mercury" banner. 61 As the course of events shows, the reaction also included a series of communications with the Taylors and with Pick and (it is alleged) indirectly through Robinson. 62 The course of events also show that, in about April 1998, the Rivers News "withdrew" from Mannum. It terminated its engagement of Emmins as its Mannum correspondent and ceased promoting circulation in the Mannum area including ending its focus on Mannum news. It ceased to seek advertising revenue in Mannum. In effect, it reverted to its previous prime circulation area. As it happens, that is at a line about forty kilometres north of Mannum. Its circulation in the Mannum area dropped very significantly in the following months.

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THE REASON WHY THE RIVER NEWS WITHDREW FROM MANNUM 63 The reason given by Waikerie Printing and by the Taylors for that conduct was that the expansion into the Mannum area was not financially viable. 64 I do not accept the evidence of the Taylors that that was the reason for the withdrawal of the River News from being promoted in the Mannum area. The circumstance giving rise to Pick's initial decision, namely the change of local government boundaries, was an ongoing consideration. At the time he made the decision to expand the Rivers News circulation into the Mannum area, Pick recognised that it would not be instantly profitable and that it would take a period of twelve months or so to be able to assess the profitability of that action. The evidence of Pick, which I accept, indicated that the River News had been well received by people in the Mannum area and its advertising rates were significantly lower that those of the Standard. The satisfactory progress of Pick's plans is confirmed by the engagement of Emmins on a more formal basis in January 1998. There had been a progressive increase in sales of the River News in the Mannum area, and its advertising revenue from that area was increasing. 65 The minutes of the meeting of Waikerie Printing of 19 December 1997 (relevantly set out in par 32 above) indicate that the viability of the expansion was then raised. I do not accept that document as accurately recording a discussion which took place at that meeting. In my judgment, that page of the minutes was added at a later time and does not record accurately any discussion which then took place. The page of the minutes which records that matter is clearly in a typeface different from that of the first two pages. DT did not explain how that might have come about, and I got the clear impression during his cross examination on the topic that he was being less than frank about his knowledge on that score. He said he was unable to explain it. There had by that time been a significant increase in the River News circulation and its advertising revenue from the Mannum area was slowly building. In the face of any such comment (if it was made), it is unlikely that Pick would have proceeded to engage Emmins on a fixed retainer in January 1998. I accept that business decisions by the Taylors may have been made commonly without formal business papers such as feasibility studies, but I found that the attempts by both DT and PT to describe their "knowledge" of matters which led them to suspect at that time, and later to believe, that the expansion of the River News into Mannum was unprofitable to be unconvincing, and strained. They did not clearly identify any specific factors which might reasonably have led them to that suspicion, or later that belief. No specific analysis was done by them with which they might have confronted Pick or discussed the reversal of his decision with him. They had no reason, from anything Pick conveyed to them, to form any such suspicion, and later that belief. 66 I also do not accept the accuracy of the minutes of meeting of the directors of Waikerie Printing of 22 May 1998 on this topic. Those minutes record that:

[21]

"The Chairman raised concerns at the expansion of circulation into Mannum. After discussing the long term financial prospects it was generally agreed that push into Mannum area would not be profitable. Manager agreed not to seek more advertising and circulation from this area." 67 In fact, no decision to that effect was taken at that meeting. The decision to withdraw from Mannum was made in April 1998. On 9 April 1998, as noted above, a business record of Rural Press and Bridge reported a telephone conversation between McAuliffe and PT in which Waikerie Printing through PT conveyed that it would withdraw the River News from the Mannum area. PT acknowledged that part of the conversation, although he disputed that he then discussed drawing a line forty kilometres north of Mannum. On 21 April 1998, Price and Pick also had a conversation in which the withdrawal of the River News from the Mannum area was acknowledged and on 24 April 1998, a meeting of the Taylors with Pick and Emmins took place in the context of that decision already having been made. Pick and Emmins wanted the decision to be revisited, but they were unsuccessful. In addition, the Taylors were each aware on or shortly after 8 May 1998 of local media interest in their decision, and in the ACCC investigating the circumstances in which that decision was taken. In that circumstance, the minute is remarkably bland. It is surprising that the minute makes no reference to either Rural Press or to the ACCC. 68 I find, contrary to that minute, that Waikerie Printing withdrew circulation and promotion of the River News from the Mannum area in April 1998 because the Taylors feared that the businesses would suffer if Rural Press and Bridge retaliated. It was not due to any concerns about the profitability of that expansion in its own right. In making that finding, I reject the evidence of DT and PT on that topic. In my judgment, it occurred because the Taylors perceived a very significant threat to the well being of their businesses as a result of the communications from McAuliffe and Law. Emmins, whose evidence I accept generally, said that at the meeting on 24 April 1998, DT attributed the decision directly to the damage Rural Press could do to their businesses if Rural Press commenced some form of competing newspaper in the Riverland District, which comprised the prime circulation area for their newspapers. I found Emmins to be a frank and impressive witness, who answered questions directly and simply. PT did not disagree with Emmins' evidence on that particular topic. The events of that meeting, which was summoned in part at least to enable Emmins to endeavour to reverse the Taylors' decision and so to keep his job, are matters which he had good reason to reliably recall. Moreover, accepting the terms of the communications from McAuliffe and Law directly to the Taylors, as they acknowledged them, it is entirely natural that they should have perceived the threat of Rural Press starting a newspaper in competition with the River News and then other newspapers. In significant reports, Emmins' evidence about that meeting was confirmed by Pick. 69 As I have indicated, I reject the evidence of DT and of PT that was contrary to those findings. The reason that they put forward as forming the basis of their decision is, in my judgment, inherently improbable. The views I have formed about the unreliability of the minutes of meetings of the directors of Waikerie Printing of 19 December 1997 and 22 May 1998 lead me to have doubts about their reliability as witnesses. I also observe that PT did not give consistent evidence to the Court and at his examination under s 155 of the Act about what was said at the meeting on 24 April 1998 and DT, for his part, appeared to have a very poor recollection of the meeting at all although its purpose - including a potential confrontation with Emmins and Pick - would have meant that the meeting was a significant one. 70 I do not consider that the evidence of the accountant engaged by Waikerie Printing, throws any useful light upon that issue. His evidence was, as I understand it, to indicate by financial analysis carried out well after the relevant events the general accuracy of the intuitive judgment, or at least the judgment based on anecdotal material and general experience, of the Taylors by April 1998 that the expansion of the River News into the Mannum area was likely to be unprofitable. I do not consider that such ex post facto analysis really helps in showing the process of reasoning of the Taylors in April 1998, in the face of the other direct evidence to which I have referred. They did not seek any financial analysis from their accountant at the time. In addition, I do not consider that the financial analysis provides any sound basis for concluding that the expansion was unprofitable because, as the cross-examination showed, it was flawed in some significant aspects. He assessed the average cost of publishing each copy of the River News into Mannum rather than the marginal cost of doing so, an approach which is acknowledged to be more appropriate. He did not amortise capital expenditure. He did not fully account for advertising revenue. And finally, his assessment did not concern the profitability or potential profitability of the expansion of the River News into the Mannum area but looked at whether there had been actual financial gain in that expansion for the closed period July 1997 to April 1998. 71 There was also some suggestion in the evidence of DT and PT that one real reason for withdrawing the River News from circulation in the Mannum area was in response to complaints from Waikerie residents that there was too much focus in the River News on Mannum. The cross examination disclosed that the complaints were oral only, and not very forceful. They would have been weighed against the good reception the River News had received in the Mannum area in terms of its circulation and their general awareness that Mannum readers were satisfied with its content. I find that that factor played no part in the decision to withdraw the River News from circulation in the Mannum area. 72 In my judgment, given the terms of the communications between Law and McAuliffe and the Taylors, and the finding I have made about the terms of the communication between Law and Robinson and Law's purpose in undertaking that communication, the reason that Waikerie Printing withdrew circulation and promotion of the River News from the Mannum area was the Taylors' fear of the consequences of not doing so. Those apprehended consequences were that Rural Press and Bridge might introduce into the Riverland area where the Taylors' newspapers had their prime circulation areas, or into some part of the Riverland area, a new regional newspaper in competition with them. They did not want that competition. They were aware that a subsidiary of Rural Press was publishing the Herald as a free regional newspaper in the Barossa Valley area in competition with the Leader, published by Robinson's company. They were aware that Rural Press had significant financial resources and that it had printing facilities at Murray Bridge capable of producing such a newspaper. They thought such a newspaper would be very detrimental to the profitability of Waikerie Printing or of their other companies. No other suggested reason for the withdrawal of the River News from the Mannum area in April 1998 was put forward, other than the two reasons which I have already rejected.

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"The cases require that at least one party "assume an obligation" or give an "assurance" or "undertaking" that it will act in a certain way. A mere expectation that as a matter of fact a party will act in a certain way is not enough, even if it has been engendered by that party. In the present case, for example, each individual who attended the Meeting may have expected that as a matter of fact the others would return to their respective offices by car, or, to express the matter differently, each may have been expected by the others to act in that way. Each may even have "aroused" that expectation by things he said at the Meeting. But these factual expectations do not found an "understanding" in the sense in which the word is used in ss 45 and 45A. The conjunction of the word "understanding" with the words "agreement" and "arrangement" and the nature of the provisions show that something more is required." 77 The respondents acknowledge that Waikerie Printing, and Rural Press and Bridge, are entities who were competitors with each other in the Mannum area within the meaning of s 4D of the Act. There is also no issue that each, through the River News on the one hand and through the Standard on the other, provide or supply services including the provision of local news to readers of those newspapers and the provision of advertising for businesses wishing to promote their businesses to readers of those newspapers. 78 They contend, however, that the alleged arrangement (even if made out) does not infringe s 45(2)(a)(i) because it is an arrangement for market sharing, that is the arrangement was to the effect that the Standard would continue to provide the services in the Mannum area and the River News could desist from providing the services in that area, and the River News would continue to provide the services in the Waikerie area and the Standard (or any associated newspaper) would not commence to provide the services in that area. It is argued that such an arrangement cannot be said to contain an exclusionary provision because it lacks the particularity required to fall within s 4D of the Act, that is that it does not have the purpose of preventing, restricting or limiting the supply of the services to "particular … classes of persons". 79 In ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No1) (1990) 27 FCR 460 at 488 ("ASX") the Full Court (Lockhart, Gummow and von Doussa JJ) said:

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"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, 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." 80 There is, in my judgment, a sufficient degree of particularity in the class of persons to be deprived of the services of the River News, to attract the application of s 4D of the Act. It is true that it would be difficult to identify exactly all members of the class at any particular time. But, whether the arrangement was in respect of the Mannum area, or in respect of those persons in the Mannum area and extending to a line about forty kilometres north of Mannum, that group of persons is an identifiable class. They were the persons who, by reason of the alleged arrangement, were to be deprived of the services otherwise available to them from the River News. 81 The respondents also dispute that there was any meeting of the minds of Law and McAuliffe, with the Taylors, so as to give rise to the alleged arrangement. I have rejected the claims that the decision of Waikerie Printing in April 1998 to withdraw from the Mannum area was made because it was unprofitable to continue to provide services to that area, or because it was unwise to continue to provide services to that area because of the dissatisfaction of its readers or advertisers in the Waikerie area. I have also found that the reason that decision was taken by Waikerie Printing was through the fear of repercussions of Rural Press and Bridge establishing a competing newspaper in the Waikerie area or in the wider Riverland area. That does not mean that they did so pursuant to any arrangement with Rural Press and Bridge. Their decision may nevertheless have been one reached independently of any arrangement but simply in response to their understanding of the potential threat which Rural Press and Bridge presented to Waikerie Printing's expansion of its circulation into the Mannum area, in the light of the clearly expressed concern by McAuliffe and Law about that expanded circulation. The decision, if driven by such a fear, would not involve making or giving effect to an arrangement made in contravention of s 45(2)(a)(i) or (b)(i) of the Act, unless the arrangement itself was entered into. 82 Absent the evidence of the Taylors, which specifically denies that any such arrangement was made, I think it is relatively easy to infer that the withdrawal of the River News from the Mannum area was pursuant to an arrangement between Waikerie Printing and Rural Press and Bridge. The alternative reasons for the decision put forward by the Taylors, namely that the expansion of the River News into the Mannum area was unprofitable and that the Waikerie readers of the River News were discontent at the extent of Mannum related news in the River News, have already been rejected. Neither DT nor PT claimed that their decision was directly in response to the communications they had received from McAuliffe and Law, and in fear of the prospect of competition in the prime circulation areas of their newspapers, rather than motivated by commercial judgment independent of that factor. I have however found that consideration was the reason for this decision. 83 It is plain the Rural Press and Bridge were progressively trying to give to the Taylors the message that the continued circulation of the River News in the Mannum area could attract some commercial competitive reaction in the prime circulation areas of their newspapers. Law's contact with the Taylors, including his telephone conversation of 3 March 1999 was, as he agreed in evidence, to avoid "angst" and a "deterioration of relationships" [T.355]. He wanted the Taylors

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"Yes, of course they could do what they wanted to do but you hoped - and your purpose in talking to him was that following your talking to him he would be induced into not only thinking again but, as a result of having thought again, withdrawing from Mannum?---I hoped that's what he would do. And that's the reason you rang him?---No, I think as primary a reason was to put it on the record, so that if something happened further down the track - I was seeking to put it on the record, if you like, that we were concerned about the Mannum situation. Let me say to you Mr Law, that I accept that you wanted to put things on the record as well, but I want to put to you that it wasn't just a matter of having things on the record, as it were; that you would never actually have to look at the record because by reason of your communicating with him he would be induced to see the error of his ways and that he would withdraw?----I don't know that I could necessarily agree with that wording. What's wrong with the wording?---Well, I think I was just trying to say to him, "This could be a problem and I just wanted you to know where Rural Press stood on it," and it was of concern to our local people and I just asked him would he look at it again. And you asked him to have a look at it again and you also hoped and wanted that once he had looked at it again he could withdraw?---I hoped that he would, yes. And that's why you spoke to him. Is that right?---Yes." [T 366] 87 On the other end of the communications, PT in his evidence said of the conversation on 3 March 1998 with Law: "You gave him a mild sort of assurance that you may be pulling out perhaps in a month, Isn't that so?---Yes, that would be reasonable to say. And you told him that you would no longer sell advertising in the Mannum market?---That would have been a third of the whole thing, yes You said that to him?---Well, I don't remember specifically but that certainly would have been the gist of our company decision over Mannum. That you were only selling a few papers in Mannum?---Yes. Yes, that would be right. That you were curtailing and gradually pulling out altogether? Did you tell him that?---I don't remember that specifically but that certainly would have been our - yes, that would have been the developments at that time." [T 442] And later in his evidence:

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"You're talking about the letter of 20 March, you'll agree?---Yes, that's the only letter I had. Exactly, and then you're asked this: "To further that understanding did you tell John not to go out and actively seek advertising?" Do you see that?---Yes. Your answer is, "I know I didn't come on in a strong, heavy-handed way. I more or less said, point - I used this letter more or less to suggest that, Well, look, I think we ought to consider our situation in Mannum a little differently," and I think I said to him that I've had this conversation with Ian Law and that I've more or less given him an assurance that we'll be taking a lower profile in Mannum." Do you see that?---Yes And then you're asked, "What did you mean by lower profile?" and your answer is, "We wouldn't be running the volume of news and events in the Mannum area in the paper in the future"?---Yes. Right, "And then as a natural consequence, the profile of Mannum in the River News would be lower, which would have an effect of reducing sales and reducing advertising as a flow-on effect"?---Yes, that's--- It's all true, isn't it?---That's correct, yes. All true?---Yes, I couldn't deny that." [T 448] 89 Although his evidence was rather uncertain about the terms of his conversation with McAuliffe of 9 April 1998, PT did not dispute having told McAuliffe at about that time that Waikerie Printing had decided to withdraw the River News from the Mannum area and to return "to where we were before". In practical terms, that "line" was about forty kilometres north of Mannum. 90 In my judgment in March and April 1998, Waikerie Printing did come to an arrangement with Rural Press and Bridge of the nature alleged by the ACCC, and I further find that that arrangement contained an exclusionary provision, so as to contravene s 45 (2)(a)(i) of the Act. I consider that Rural Press and Bridge through Law and McAuliffe desired to procure Waikerie Printing's commitment to withdraw the circulation and promotion of the River News from the Mannum area, and to revert to its previous prime circulation area ending about forty kilometres north of Mannum, and in exchange they were prepared not to countenance the introduction of a newspaper into the prime circulation areas of the Taylors' newspapers in the Riverland. That was, I find, the clear effect and intent of the various communications from McAuliffe and Law in January and culminating in their communications in March 1998. Waikerie Printing was clearly slow to respond positively to their communications. I think that was largely because the Taylors were reluctant to confront Pick, and to direct him to reverse the expansion of the River News prime circulation area which he had undertaken. In my judgment, the Taylors for a time hoped that the issue would go away by Rural Press and Bridge simply accepting the River News' expanded prime circulation area for what it was, namely a very limited expansion due to the new local council boundaries. There was a degree of procrastination by the Taylors because of their relationship with Pick before Waikerie Printing internationally committed itself in the way I have found. However, in the face of the risk to their business which they perceived from the communications referred to, I consider that they committed Waikerie Printing to withdraw the River News from the Mannum area. 91 In this matter, I think that any remaining debate about whether the "purpose" to which s 4D(1)(b) refers is a subjective purpose or an objective purpose is academic. The preponderance of authority favours the former: ASX; Adamson v New South Wales Rugby League Ltd (1991) 31 FCR 242 at 245, 261; News Ltd v Australian Rugby Football League Ltd (1996) 58 FCR 447 at 519 but cp. Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 at 75. In any event I am obliged to follow the decision of the Full Court in ASX on that question. In my view, the relevant subjective purpose clearly existed on the part of Law and McAuliffe as officers of Rural Press and on behalf of Bridge, and on the part of the Taylors as directors of Waikerie Printing. I consider the arrangement had the subjective purpose, common to each of them, of preventing or restricting or limiting the supply of services to the particular class or classes of persons, being those in the Mannum area (or in that area and extending to a time about forty kilometres north of Mannum) who could otherwise receive the information and news in the River News or who could otherwise advertise in the River News or take advantage of advertising in the River News. If the relevant purpose is an objective one, in my view the same conclusion would be reached in the particular circumstances of this case. 92 In the light of the evidence to which I have referred, in my judgment, the commitment of Waikerie Printing to withdraw was made or conveyed to Rural Press and Bridge ultimately by PT's discussions with McAuliffe on 9 April 1998. Although that commitment was made under the belief about what Rural Press and Bridge might do if Waikerie Printing did not withdraw the River News from its active promotion in the Mannum area, as it was nevertheless a commitment made as part of the arrangement which I have found to be established. The decision of Waikerie Printing was not simply a decision made in the face of a perceived commercial threat, and without there being any arrangement between Rural Press and Bridge on the one hand and Waikerie Printing on the other. The fact of such an agreement is confirmed (but only as against Rural Press and Bridge) by the evidence that Price gave in her examination to officers of the ACCC, although she says that the agreement was reached in early March 1998. 93 Subsequent to 9 April 1998, Waikerie Printing did withdraw the River News from active circulation in the Mannum district and to its previous prime circulation area which was to a line about forty kilometres north of Mannum. Also, subsequent to that date, Rural Press and Bridge did not give any further consideration to embarking upon any conduct directly in competition with the River News or the Taylors other newspapers. The evidence does not disclose after about that date that either McAuliffe or Price sought to pursue any such conduct, or sought approval from Law to do so. I accordingly also find that Waikerie Printing, Rural Press and Bridge than gave effect to the arrangements to which they had come, so as to contravene s 45(2)(b)(i) of the Act. 94 It is apparent that I have not accepted the direct evidence of Law, or of DT or PT, that no arrangement between Rural Press and Bridge on the one hand and Waikerie Printing on the other hand was arrived at. I carefully considered each of their evidence. Law inherited a difficult situation when he commenced his duties as the general manager for regional publishing for Rural Press in January 1998. Both Price and McAuliffe had formed a clear and firm desire that Rural Press or Bridge should react aggressively against Waikerie Printing for its expansion of the River News prime circulation area into Mannum, and it was necessary for Law to address that desire. His evidence was given with what I considered to be an awareness of the line over which he should not cross in terms of any contravention of the Act. However, when he was questioned about the purpose of, and the terms of, certain of his communications both with the Taylors and with Robinson and his internal communications within Rural Press, and the terms of the letter from Deacon Graham James of 16 March 1999, he gave unsatisfactory replies which involved some artificial or strained constructions upon certain of those words. It may be that, at this distance from the relevant events, he did not believe that he had overstepped the legal line and his responses may have been driven by that belief. But there were a number of instances where his answer carried an air of artificiality as a result. His draft letter of 9 April 1998 suggests that, at that time, he may not have been so aware of the provisions of the Act as he now is. His evidence was also directly contradicted by Robinson about one significant occasion. As I have indicated, I found Robinson to be a frank and impressive witness. Robinson's conduct immediately following the conversation with Law on 3 April 1998, when he conveyed the threat he had perceived to have been made by Law, in my mind also tends to confirm his version of that conversation. 95 I have already discussed, to some extent, the evidence of PT and DT. I found that their insistence upon commercial reasons being the foundation of their decision that Waikerie Printing should withdraw the River News from being promoted in the Mannum area was not accurate. The attempts by PT in particular to adhere to that line led to the impression that he was evasive in answering clear questions. He was at times contradictory in his answers, including between answers given during his evidence and when he was examined under s 155 of the Act. His evidence about the meeting of 24 April 1998 was directly contradicted by Emmins, and I found Emmins to be an entirely credible witness. His adherence to the view that the minutes of the two meetings of directors of Waikerie Printing of 19 December 1997 and 22 May 1998 were accurate, in the face of the appearance of the minutes of 19 December 1997 and in the face of their terms having regard to the circumstances surrounding them at the time, adds to my conclusion that I should not accept his evidence on critical issues. DT's evidence was unsatisfactory partly for the same reasons, but also because it was so general. When he was questioned about a significant matter, often his response was that he did not remember. I was left with the firm impression that I should place little weight on his evidence, either because in fact he played little role in the relevant events or because he was being less than frank in telling the Court about those events. It is not really credible, to my mind, that he could have been closely involved in the relevant events but have been able to recall with any accuracy so little of them.

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THE MARKET 96 For the purpose of considering the alleged contraventions of s 45(2)(a)(ii) and (b)(ii) and of s 46, it is necessary to determine in what market the Standard relevantly competed. Section 45(2)(a)(ii) and (b)(ii) require that the arrangement which I have found to exist had the purpose of or was likely to have the effect of substantially lessening competition, and s 45(3) defines "competition" for the purposes of the section relevantly as a market in which Waikerie Printing supplied services through and by the River News. Section 46 involves having and taking advantage of a substantial degree of power in a market for a proscribed purpose. 97 The ACCC contends that the relevant market is the market for the provision of services by the publication of regional newspapers containing information and news and advertising, and providing the opportunity for advertising, in the Murray Bridge area (including the Mannum area). It is convenient to call that claimed market "the Murray Bridge newspaper market". It submits that, as the River News was for a period between July 1997 and April 1998 the only competitor of Rural Press and Bridge in that market, albeit that the River News was servicing only that part of that market which comprised the Mannum area, that the arrangement which I have found to exist led to a substantial lessening of competition in that market. It is submitted that "substantial" means no more than not insubstantial. 98 Rural Press, which together with Bridge, Law and McAuliffe I will call the Rural Press respondents, disputed that the relevant market is the Murray Bridge newspaper market. They contend that that identification of the market is too narrow, because it does not reflect the competition which existed between regional newspapers and commercial radio stations operating in the same area. They also contend that even if the relevant market be the Murray Bridge newspaper market, the arrangement which I have found to exist did not have the purpose or effect, and was not likely to have the effect, of substantially lessening competition in that market. 99 The identification of the relevant market is also of importance in considering the ACCC's claim against the Rural Press respondents for contravention of s 46(1)(a) or (c) of the Act. It is alleged that Rural Press and Bridge took advantage of its market power in the Murray Bridge newspaper market, that either or both Rural Press and Bridge had a substantial degree of power in that market, and that Rural Press and Bridge threatened to introduce into the Riverland area a regional newspaper to compete with the River News and the other newspapers published by the Taylors in Loxton and Renmark if Waikerie Printing did not withdraw the River News from active circulation and promotion in the Mannum area. That conduct is then claimed to constitute Rural Press and Bridge taking advantage of their market power in the Murray Bridge newspaper market, and doing do for the substantial purpose of deterring or preventing Waikerie Printing from engaging in competitive conduct by circulating and promoting the River News in the Mannum area. Thus, the ACCC alleges that Rural Press and Bridge contravened s 46 of the Act. It also alleges that Law and McAuliffe were knowingly concerned in those contraventions, contrary to s 76 (1)(e) of the Act. 100 In Queensland Wire Industries Pty Ltd v Broken Hill Pty Co Ltd (1989) 167 CLR 177 ("Queensland Wire"), Mason CJ and Wilson J at 187-188 said: "In identifying the relevant market, it must be borne in mind that the object is to discover the degree of the defendant's market power. Defining the market and evaluating the degree of power in that market are part of the same process, and it is for the sake of simplicity of analysis that the two are separated. Accordingly, if the defendant is vertically integrated, the relevant market for determining degree of market power will be at the product level which is the source of that power; see the discussion of market power below. After identifying the appropriate product level, it is necessary to describe accurately the parameters of the market in which the defendant's product competes: too narrow a description of the market will create the appearance of more market power than in fact exists; too broad a description will create the appearance of less market power than there is." 101 Their Honours, at 191, pointed out that the object of s 46 (and it may be said, of Pt IV of the Act) is to protect the interests of consumers by the fostering of competition. See also Arnotts Ltd v Trade Practices Competition (1990) 24 FCR 313 at 328 ("Arnotts") per Lockhart, Wilcox and Gummow JJ. Their Honours in that case at 329 quoted with approval a passage from the reasons of the Trade Practices Tribunal in Re Queensland Cooperative Milling Association Ltd; Re Defiance Holdings Ltd (1976) 25 FLR 169 at 190 to the following effect:

[36]

"A market is the area of close competition between firms or, putting it a little differently, the field of rivalry between them…Within the bounds of a market there is substitution - substitution between one product and another, and between one source of supply and another, in response to changing prices. So a market is the field of actual and potential transactions between buyers and sellers amongst whom there can be strong substitution, at least in the long run, if given a sufficient price incentive….Whether such substitution is feasible, distance, and cost and price incentives. … in determining the outer boundaries of the market we ask a quite simple but fundamental question: If the firm were to "give less and charge more" would there be, to put the matter colloquially, much of a reaction?" 102 The principle point of contention between the parties was whether the product market should be confined to the supply of information news and advertising services by regional newspapers, or whether it should be extended to encompass the provision of those services to commercial radio stations operating in the Murray Bridge area. 103 There was no real issue that the relevant geographical market was the Murray Bridge area (effectively, the prime circulation area of the Standard). The fact that it may be difficult to draw an unambiguous line defining the extent of a geographical market is not itself a reason not to define the geographical market in that way: Davids Holdings Pty Ltd v Attorney-General of the Commonwealth (1994) 49 FCR 211 at 239 and 242. The evidence clearly was that, as a matter of practice, the Murray Bridge area represented a clearly understood geographical area for the supply of the services of information news and advertising through regional newspapers in that area. That reflects the more general position, which has obtained in South Australia for many years, that members of a particular local community respond to the provision of such services through the medium of a local newspaper, and that (with the exception of the competition between the Leader and the Herald in the Barossa Valley) the local newspapers have supplied those services to their respective prime circulation areas without competition. It is not necessary to refer to the witnesses who, from varying perspective, contributed to that picture. It was not a picture which any of the respondents contradicted in evidence. It was confirmed by the evidence of the president of the Country Press Association of SA Inc. 104 The evidence was not so clear cut about the product market. Section 4E of the Act directs attention not just to regional newspapers, but to other suppliers of services which are substitutable for the services which regional newspapers, in particular in the present circumstances the Standard, provide. The essential question in the present circumstances is whether the services supplied by commercial radio stations broadcasting to the Murray Bridge area are substitutable for the services provided by the Standard. In addressing that question, I bear in mind that substitutability involves questions of degree. In Queensland Wire at 196, Deane explained:

[37]

"The economy is not divided into an identifiable number of discreet markets into one or other of which all trading activities can be neatly fitted. One overall market may overlap other markets and contain more narrowly defined markets which may, in turn, overlap, the one with one or more others. The outer limits (including geographic confines) of a particular market are likely to be blurred: their definition will commonly involve assessment of the relative weight to be given to competing considerations in relation to questions such as the extent of product substitutability and the significance of competition between traders at different stages of distribution." 105 The fact that, on some occasions, some people may make use of the advertising services of local commercial radio rather than the advertising services of the Standard is not determinative of that value judgment: cp Arnotts at 32. The Full Court stressed that the notion of substitutability adopted in s 4E looks to the market itself, not to the habits of individual consumers. 106 The Standard, as with other regional newspapers, supplies to its consumers a package of information and advertising. The information, including newsworthy items of particular local interest, is presented in printed form so that it is readily accessible as and when required. It may be passed among members of a household, and may be put aside for a period or used for reference. The demand for such material is demonstrated by the stable history of local communities' acquisition of regional newspapers in their particular geographic areas over time. The nature of information provided by local or community radio stations, relevantly to the Murray Bridge area Radio 5MU, is of a different character. It is , necessarily ephemeral, except to the extent that it repeated form time to time, and generally speaking it is presented in a manner which is not stored for later reference. Unlike the Standard, Radio 5MU presents its information free of charge, although of course it charges its advertisers. On the other hand, the evidence shows that there is competition for advertisers both generally between regional newspapers and local commercial radio stations broadcasting into the prime circulation area of a particular regional newspaper, and that such competition exists between Bridge as the publisher of the Standard and Radio 5MU. That was not the view of every advertiser or potential advertiser from the Murray Bridge or Mannum areas who gave evidence. Some would not switch their advertising from the Standard to Radio 5MU. There was a range of evidence as to the degree to which the selection of advertising in a regional newspaper rather than a local commercial radio station, or vice versa, was dependent upon the respective advertising rates. Although the overall picture was that competition for the advertising dollar existed between the publishers of regional newspapers and the operators of local commercial radio stations, the overall effect of the anecdotal or "lay" evidence leads me to think that the choice of advertising medium was not generally driven by price, but by the advertiser's preference for one particular advertising medium over the other or as to the appropriate mix of advertising media for that advertiser. 107 I have also borne in mind the evidence that the target audience of local commercial radio stations is generally different from, and wider than, the target consumers or readers of regional newspapers. The former general manager of Radio 5MU, operated by Australian Regional Broadcasters Pty Ltd, explained that radio stations are licensed by the Australian Broadcasting Authority to broadcast within a prescribed area. In the case of Radio 5MU, its permitted broadcast area is much broader than the prime circulation area of the Standard. There is, as she explained, an intersection of the broadcasting areas of a range of local commercial, metropolitan based, and community radio stations competing for advertising to varying degrees. The breadth of the licence area of Radio 5MU is also illustrated by the fact that there are eleven regional newspapers circulating in the area in which it broadcasts. Despite the fact that the advertisers in the Standard were, in some respects, the same entities as advertisers on Radio 5MU, she explained that the different nature of the advertising due to the different form of media meant that the regional newspapers were not in close or direct competition for advertising revenue. At almost the opposite extreme, the general manager of The Border Watch, a regional newspaper circulating in the Mount Gambier area and a president of the Country Press Association of SA Inc regarded all media (including regional and state-wide radio and television) and other forms of promotion such as billboards and free catalogues were competitors for the same advertising revenue. As noted earlier, there was evidence from a number of advertisers indicating preferences for advertising in regional newspapers or on local commercial radio, and as to the factors dictating their preferences and the circumstances in which advertising revenue might be directed from one form of media to another. 108 My consideration of the whole of that evidence, including the evidence of Christopher Findlay ("Findlay"), Professor of Economics in the Asia Pacific School of Economics and Management at the Australian National University, leads me to the conclusion that the relevant product market is the market for the supply of services by the provision of information and news and advertising by regional newspapers, rather than the wider product market which the respondents contended for. It is ultimately a question of degree, but I think that advertising in local commercial radio is not sufficiently linked either in supply or in demand terms to be included in that product market. It is of a different character, and it serves a different and wider community group. The evidence does not indicate to me that the selection of advertising in one or other of those media is price sensitive, but rather it is driven by the perception of advertisers as to the nature and effectiveness of the communication and the scope of the targeted market. That is, it is driven more by the sorts of considerations which indicate the differences in the form of the advertising product. There is nothing to suggest that readers of the Standard would cease purchasing the Standard, if its price were increased, by reason of a choice then made to obtain information or advertising information from Radio 5MU rather than the Standard. There is also no evidence to suggest that a change in advertising rates in the Standard, or in a regional newspaper, would result in any local commercial radio station starting itself to supply advertising through the written medium of a regional newspaper, or that the reverse situation might also arise. There is significant capital expenditure and resources required to be able to do so. Effectively, there is no real competition for readers or listeners between the Standard and Radio 5MU. 109 Accordingly, I find that there is a market in the Murray Bridge area for the supply of regional newspapers such as the Standard, which provide the services of providing information news and advertising to persons within that area. I accept that there is a Murray Bridge newspaper market, as defined above.

[39]

"The word "substantial" is imprecise and ambiguous. Its meaning must be taken from its context. It can mean considerable or big: Palser v. Grinling [1948] A.C. 291, at p. 317 per Viscount Simon. It can also mean not merely nominal, ephemeral or minimal. Sometimes it is used in a relative sense, and at other times to indicate an absolute size or quantity. In the context of s. 45, the word "substantial" is used in a relative sense. The very notion of competition imports relativity. One needs to know something of the businesses carried on in the relevant market and the nature and extent of the market before one can say that any particular lessening of competition is substantial." 113 After reviewing certain authorities as to the meaning of the word "substantial", his Honour indicated that he did not need to reach a conclusion as to the meaning of the word "substantially", as the result of the case did not turn upon that. He did say at 445 that the lessening of competition must be at least real or of substance, and he saw considerable force in the view that the word "substantially" means "considerably". 114 In the Murray Bridge newspaper market, there was no real competition to the Standard published by Bridge before July 1997. After April 1998, the same position obtained. The conduct in question removed from that market the limited competition which the River News presented to the Standard for a period of about ten months. That competition was limited, as it was restricted to the Mannum area, an area which is but a small part of the Murray Bridge area or of the prime circulation area of the Standard. That was, however, the first competition to the Standard in that market. That introduction of competition, moreover, prompted Rural Press and Bridge to respond in a quite specific and firm way. It was not, apparently, so insignificant an introduction of competition in the Murray Bridge market that Rural Press and Bridge chose either to respond only by improving the quality of the coverage of Mannum-related matters in the Standard, or to simply ignore the competition. They determined to take steps to secure the removal of that competition from that market. In that, they were successful. 115 In effect, such competition in that market was removed by the arrangement between Waikerie Printing and Rural Press and Bridge. But for the arrangement, I consider that Pick would have continued to publish and promote the River News into Mannum in competition with the Standard. By the engagement of Emmins on a more specific basis in January 1998, he signalled that he was content with the progress into that market. If Rural Press and Bridge had not initiated communications with the Taylors to express concern at that competition, I do not think that the Taylors would have sought to give any direction to Pick to change his plans for the River News' continued circulation in the Mannum area. 116 Although the numbers of sales of the River News in the Mannum area was relatively small, and reflected only a small part of its total circulation, the result of the arrangement was that the residents of the Mannum area who wished to read the River News and those in the Mannum area who may have placed advertising in the River News were effectively deprived of those opportunities. They were put in the position, which existed before July 1997, of having in a practical sense only the Standard to receive their information and news and to place their advertising.

[41]

"Market power is concerned with power which enables a corporation to behave independently of competition and of the competitive forces in a relevant market. The primary consideration in determining market power must be taken to be whether there are barriers to entry into the relevant market. This is the fundamental point made in Queensland Wire; see also Arnotts (at 336, 339) and Dowling (at 137-138). To what extent is it rational or possible for new entrants to enter the market in this case? That is the primary question in considering whether each of the respondents has a substantial degree of market power. Other factors to be taken into account in defining and identifying market power are referred to in the judgment in Queensland Wire, in particular per Mason CJ and Wilson J (at 188-190), namely: · "the ability of a firm to raise prices above the supply cost without rivals taking away customers in due time, supply cost being the minimum cost an efficient firm would incur in producing the product"; · "the extent to which the conduct of [any of the respondents] in that market is constrained by the conduct of … competitors, or potential competitors …" (s 46(3)); · Market share of each respondent must be examined but this alone is generally not determinative of market power as "the relative effect of percentage command of a market varies with the setting in which that factor is placed" (per Mason CJ and Wilson J when adopting the language of Reed J in United States v Columbia Steel Co (supra)); · The presence of vertical integration is another factor, but its presence does not necessarily mean that a substantial degree of power exists." 118 Counsel for the ACCC also drew attention to the observations of Cooper J in Trade Practices Commission v Pioneer Concrete (Qld) Pty Ltd (1994) 50 FCR 160 at 170-171 at first instance to the effect that a circumstance that may be relevant to the existence of market power is the ability of a participant in the market to act without regard to its competitors because of its access to capital or the extent of its own financial resources. 119 I accept the contention for the ACCC that there are a wide variety of circumstances which bear upon the question whether Rural Press and Bridge have a substantial degree of power in the Murray Bridge newspaper market. Relevant factors were referred to in the passage quoted from Eastern Express, but of course their Honours did not purport to list exhaustively the relevant factors. There may be factors extraneous to the market which bear upon that question: see eg. per Sheppard J (with whom Jenkinson and Drummond JJ agreed) in Trade Practices Commission v Pioneer Concrete (Qld) Pty Ltd (1994) 52 FCR 164 at 172-174 ("Pioneer Concrete"). In addition to the height of barriers to entry to the market, Findlay concluded that

[42]

"In the relevant markets here, the features of the production technology, the range of output over which unit costs are falling relative to the size of the market, mean that each of these markets is served by only one firm. Even if there is only one firm in the market, that firm may not have substantial market power if it is subject to entry by new competitors. However, in the presence of barriers to entry, each supplier has market power. It can therefore behave independently of competition and competitive forces in the absence of the threat of significant entry. Since each firm is the only supplier in its market, its market power is substantial." 120 To enter the market for the supply of information and news and advertising by a regional newspaper in the Murray Bridge area, there would be costs incurred which would not be recoverable on exit from that market. They include establishing systems for the collection of news, marketing the advertising activity, arranging distribution of newspapers, providing information and news which was of sufficient quality to establish credibility or acceptance amongst its readers and advertisers, and direct production costs. In the case of that market, as the reaction of Rural Press and Bridge shows, they also had the resources to respond to any new entrant into the market by altering and improving the Standard (by the Mannum Mercury pages) and by reacting against any new competitor by reducing its pricing or converting its regional newspaper into a free newspaper (it converted the Herald in the Barossa Valley to a free newspaper to compete with the Leader published by Robinson). If the new entrant had an existing regional newspaper in another area, they had the capacity both physical and financial to enter that new entrant's existing market in competition including by a free new regional newspaper. That is the response which Price proposed if Waikerie Printing did not withdraw the River News from promoting circulation in the Mannum area. 121 Rural Press is a very significant enterprise. It prints and publishes regional newspapers and magazines throughout regional Australia and overseas, including publishing thirteen of the thirty-one regional newspapers published in South Australia. It has very significant turnover in Australia, and reports a substantial net profit. It operates printing presses at Murray Bridge and at Whyalla, from which it prints and publishes its regional newspapers in South Australia. Those facilities would be available to print and publish a new regional newspaper for circulation, for example, in the Waikerie area. It has the management and newspaper expertise to ensure that it would do so very effectively and competently. 122 In the light of such considerations, the Rural Press respondents accepted that Bridge as the printer and publisher of the Standard has a substantial degree of power in the market which I have found to exist. They also accept that, because it is a wholly owned subsidiary of Rural Press, those two corporations are related to each other for the purposes of the Act: s 4A(5). Consequently, it is accepted that Rural Press also is deemed to have a substantial degree of power in that market: s 46(2)(a). 123 The Rural Press respondents contend, however, that neither Rural Press nor Bridge took advantage of that power in that market for the purpose of eliminating Waikerie Printing as a competitor in that market (s 46(1)(a) of the Act) or for the purpose of deterring or preventing Waikerie Printing from engaging in competitive conduct in that market (s 46(1)(c) of the Act). In a nutshell, the submission is that even if Waikerie Printing was deterred or prevented from engaging in competitive conduct in the Murray Bridge area (or the Mannum area as part of that wider area) by the threat of reprisal by a competitive regional newspaper in the Riverland area, that threat did not represent Rural Press and Bridge taking advantage of their significant market power in the Murray Bridge newspaper market for that purpose. The fact that Rural Press and Bridge were the publishers of the only regional newspaper in the Murray Bridge area to June 1997, and had substantial power in that market, was not (they submit) the factor or a factor which gave the threat substance. The factor which gave the threat substance was that Rural Press had very significant economic and financial resources. Williams v Papersave Pty Ltd (1987) ATPR 40-781 provides an illustration of circumstances in which a corporation with substantial power in a market was held not to have taken advantage of that power in that market in relation to the transaction under inquiry. Moreover, they contend, Bridge did not take advantage of its substantial power in that market because it did not relevantly do anything. 124 In Pioneer Concrete, the Full Court declined to strike out certain paragraphs of a statement of claim of the Trade Practices Commission which alleged contravention of s 46 of the Act. Relevantly, the paragraphs in question pleaded that the Pioneer Group of companies and Pioneer Concrete (Qld) Pty Ltd had substantial financial resources and considerable financial strength, so as to have the capacity to sustain losses in any particular aspect of one of the businesses, and had assured access to the raw materials for concrete production. They also alleged that both the Group and the company desired to maintain a substantial market share in all markets in Queensland for the supply of concrete, as well as the particular local concrete market with respect to which the anti-competitive conduct was allegedly engaged in. The Full Court refused to strike out the allegations, as they were capable (if proved) of being facts relevant to determining whether the respondents had a substantial degree of power in the particular market pleaded: see per Sheppard J at 172-174, Drummond J at 176. Sheppard J also said of those allegations at 174:

[47]

"The relevant distinction is between the exercise of rights of a kind exercisable only in non-competitive conditions (which are vulnerable to a s 46 attack) and the exercise of rights which come into existence and are exercisable in competitive conditions." 129 That distinction seems to flow from the reasons for decision of Lockhart J in Dowling v Dalgety Australia Ltd (1992) 34 FCR 109 at 144-145. His Honour said that s 46 discourages conduct which would not be possible in a competitive market. 130 In my judgment, in the present circumstances, the power of Rural Press and Bridge in the relevant market should be measured as including the financial resources and strength of Rural Press, as well as its existing publishing resources and expertise. There is no complaint about the response represented by the Standard improving the extent and quality of its Mannum coverage, in particular by the Mannum Mercury pages. That conduct clearly falls into the category of conduct which is a normal commercial response to the competition presented by the River News. The ACCC's complaint is about the series of private communications between Law and McAuliffe on the one hand with the Taylors, and in one instance with Robinson, on the other by which the Taylors were given to understand that, if the River News was not withdrawn from active circulation in the Mannum area, Rural Press or Bridge would publish a competitive regional newspaper in the Riverland area. 131 In my judgment, the conduct of Rural Press and Bridge, through those persons, did amount to them taking advantage of their market power in the market which I have found to exist. The undertaking of such private communications is not routine nor conduct commonly involving the exercise of competitive rights. It was conduct which carried significance to the Taylors not simply because Rural Press was a substantial and well-resourced corporation, but because it and Bridge had immediate and ready access to a printing press and to the necessary administrative and professional structure to publish a competing newspaper. Those factors had significance by reason of the relevant market power of Rural Press and Bridge. That market power rendered it a matter of marginal cost only to fulfil that threat. The threats were made only because that market power existed, and they were made to maintain and preserve that market power. The threats made had significance because of that fact. That too, in my judgment, is a matter tending to show that in the particular circumstances, the conduct of Rural Press and Bridge did involve them taking advantage of their market power in the Murray Bridge market for regional newspapers. 132 It is not a consequence of my conclusion that Rural Press or Bridge may not engage in competitive conduct by publishing a new regional newspaper in a regional market in competition with another publisher. Nor is it intended to be a consequence of my conclusion that Rural Press could not, if it so decided, commence to publish a regional newspaper in competition with the River News or the other newspapers published by the Taylors. Of course, there may be particular circumstances applicable at the time relevant to whether such conduct might infringe a provision of the Act. Counsel for the Rural Press respondents submitted that, if Rural Press could commence to compete with (for example) the River News in that way, Rural Press would not be taking advantage of its power in the Murray Bridge newspaper market to make a public announcement to that effect. Accepting that those contentions may be correct, I do not think that they provide an answer to the ACCC's claim in the circumstances of this matter. It was the private and conditional nature of the communications, in conjunction with the fact that Waikerie Printing had something to give, that is the withdrawal of the River News from the Mannum area, which involved taking advantage of the market power which existed in the Murray Bridge newspaper market where that market power included the financial and physical resources of Rural Press, and of Bridge. But for the existence of that market power, in my judgment Rural Press and Bridge would not have acted in the way in which they did. The credibility of the threats contained in the communications existed or was enhanced by reason of the market power in the Murray Bridge newspaper market which was enjoyed by Rural Press and by Bridge. 133 The findings made above also clearly lead to the conclusion that the purpose of the communications from Law and McAuliffe over the relevant period were for the purpose of deterring or preventing Waikerie Printing from engaging in competitive conduct in the Murray Bridge newspaper market and for the purpose of eliminating Waikerie printing in that market. Subsequent to the initial reaction of Price to the fact that the River News was being actively circulated and promoted in the Mannum area, she urged from time to time the adoption of a commercial and competitive response by the introduction of some form of regional newspaper or short term publication in the prime circulation area of the River News or of the Taylors' others papers. I find, however, that Watson and later Law, in conjunction with McAuliffe, were cautious about undertaking that course of action. It may well have been that Rural Press did not wish to adopt an aggressively competitive role in South Australia. That may have been because of its experience with the adoption of that role in the Barossa Valley area by means of the Herald in competition with the Leader. The more senior heads than Price in Rural Press may have had reservations about the potential profitability of doing so. It may have been because Rural Press was reluctant to upset the circumstance that, generally speaking in South Australia, regional newspapers were published without competition in their respective geographic areas. For whatever their reason, or combination of reasons, I am satisfied that Rural Press and Bridge engaged in the private communications with the Taylors, and on one occasion with Robinson, to secure the withdrawal of the River News from competing with the Standard in the Mannum area. 134 Accordingly, in my judgment, Rural Press and Bridge have contravened s 46(1)(a) and s 46(1)(c) of the Act.

[48]

THE PERSONAL RESPONDENTS 135 The ACCC further contends that each of Law, McAuliffe, DT and PT were knowingly concerned in or were parties to the contraventions of s 45 and s 46 of the Act which have been established against Rural Press, Bridge and Waikerie Printing contrary to s 75B of the Act. 136 It is necessary that each of those persons participated in, or assented to, the contraventions with actual knowledge of the essential elements constituting the contraventions: Yorke v Lucas (1985) 158 CLR 661 at 670; Crocodile Marketing Ltd v Griffith Vinters Pty Ltd (1989) 28 NSWLR 539. If it is shown that those persons had knowledge of all material circumstances and engaged in conduct which was part of the conduct constituting the commission of Rural Press, Bridge and Waikerie Printing respectively of the contraventions, those persons may be liable as accessories to the contraventions and knowingly concerned in, or party to them: Hamilton v Whitehead (1988) 166 CLR 121 at 128. It is not necessary that the accessory should have appreciated that the conduct was unlawful: Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1999) 166 ALR 74 at 117. There was no real issue between the parties as to those principles. 137 In the application of those principles, I am satisfied that Law and McAuliffe were each knowingly concerned in the contraventions of s 45 and s 46 of the Act by Rural Press and Bridge which I have found. 138 They were each clearly aware of the general financial strength of Rural Press and of its relationship with Bridge. They were each aware of the general market in which the Standard competed, effectively until July 1997 without competition. They were each aware of the physical resources available to Rural Press and to Bridge if it were desired to embark upon publishing a regional newspaper in the Riverland area in competition with the newspapers published by the Taylors. I am satisfied that they were each also aware that the communications with the Taylors, in one instance through Robinson, would have been perceived by the Taylors as the threat of a response by publishing a regional newspaper in the Riverland area which would potentially much reduce the profitability of the Taylors' businesses. I do not consider it is necessary for the ACCC to demonstrate that each of them explicitly thought about the concepts which s 46 of the Act draws attention to, so that each in a precise way thought about the nature of the Standard's market, or the extent of the power of Rural Press and Bridge in that market, or whether their conduct on behalf of Rural Press and Bridge involved the exercise of any such market power. 139 Law became aware of the concerns of Price and McAuliffe about the move of the River News into Mannum soon after he assumed responsibility for the regional newspapers of Rural Press and assumed the primary decision making role with respect to them. McAuliffe was at material times the regional manager for South Australia of Rural Press. Both Law and McAuliffe were each involved directly in communications with the directors of Waikerie Printing in the manner recorded in the findings above. They each kept informed about the course of those communications, and the conduct of Waikerie Printing in the light of them. They each intended, in my judgment, to procure by their communications some action by Waikerie Printing which involved Waikerie Printing ceasing to provide the information and services of the River News in the Mannum area, or beyond what had been the River News' prime circulation area before July 1997 which, relevantly, was at a line about forty kilometres north of Mannum. 140 I also am satisfied that those communications were directed to securing the commitment of Waikerie Printing to that retreat, and that the quid quo pro for that commitment was that Rural Press and Bridge would not embark upon the establishment of a regional newspaper in the prime circulation area of the River News or the other newspapers published by the Taylors in the Riverland. I am also satisfied that each participated in that process because they perceived the circulation and promotion of the River News in the Mannum area as being in competition with the Standard published by Bridge. Price's persistent requests that Rural Press take some aggressive competitive action, as well as the introduction of the Mannum Mercury pages into the Standard, confirm that finding. It may well be that, from the point of view of Law and McAuliffe, the competition to the Standard in its prime circulation area which was presented by the River News circulating in that part of the Standard's prime circulation area around Mannum was not great. But it was, and was perceived by them to be, competition. That is so even if their motivation for securing the retreat of the River News from the Mannum area was in part to demonstrate to other regional newspapers that intrusion by other newspapers into the prime circulation area of a regional newspaper of Rural Press should not be undertaken without the risk of some competitive response. I am also satisfied that each of them were aware that the arrangement entered into, which was the very arrangement which they sought to secure, contained the exclusionary provision to which I have referred. I think it was disingenuous of Law to claim, as he did in evidence, that he wanted only to apprise Waikerie Printing of the concerns of Rural Press about the move of the River News into the Mannum area but did not want to persuade or induce a reversal of the decision to do so. That outcome was, as I have found, his clear intention. 141 In my judgment, both PT and DT were involved in the contraventions of the Act by Waikerie Printing which I have found. I have set out my findings as to the roles which each had in the communications with officers of Rural Press at material times. I think it is clear that, in the face of the threat from Rural Press and Bridge which they perceived, they each participated in the communications referred to and in the decision by Waikerie Printing to enter into the arrangement with Rural Press and Bridge in March or April 1998 to withdraw the River News from active promotion and circulation in the Mannum area. They understood that the River News and the Standard were competitors in that part of the Murray Bridge area around Mannum, and that the purpose of the arrangement was that that competition should come to an end and that Rural Press and Bridge would not then enter the Riverland area with any regional newspaper. They also understood that the members of the community in and around Mannum, and its local businesses, would no longer then be able to get access to the information and news in the River News or to its advertising as had been the case between July 1997 and April 1998. Effectively, in my judgment, they knew that the competition as the River News had offered the Standard in the Mannum area to that time would come to an end.